Document:

AlphaRx, Inc.: Exhibit 10.1 - Prepared by TNT Filings Inc.

 

Exhibit 10.1 

JOINT VENTURE AGREEMENT 

______________ 

among 

BASIN INDUSTRIAL LIMITED 

and 

ALPHARX INTERNATIONAL HOLDINGS LIMITED 

and 

ALPHA AP INC. 

JOINT VENTURE AGREEMENT 

This Joint Venture Agreement ("Agreement") is
entered into as of this 22nd day of April, 2005 between 
Basin Industrial Limited, a British
Virgin Islands corporation located at 12 Dai Fu Street, Tai Po Industrial
Estate, Tai Po, New Territories, Hong Kong ("Basin"), AlphaRx International
Holdings Limited, a British Virgin Islands corporation located at Unit A,
19/F Sang Woo Building, Nos. 227-228, Gloucester Road, Causeway Bay Hong Kong ("AIH"),
and Alpha AP Inc., a
British Virgin Islands corporation located at c/o Advance Pharmaceutical Co.,
Ltd., 12 Dai Fu Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong
Kong ("Alpha"). 

WHEREAS: 

  A.
  AlphaRx, Inc. ("AlphaRx")
  is an emerging speciality pharmaceutical company that develops, formulates and
  commercializes innovative therapeutic products using proprietary drug delivery
  technologies, and in particular is focused on the discovery, development and
  marketing of products in pain management an inflammation treatment; 
  

  B.
  AIH is a wholly-owned
  subsidiary of AlphaRx; 

  C.
  Basin is a wholly-owned
  subsidiary of Advance Pharmaceutical Company Limited ("APC"); and 

  D.
  Basin and AIH have
  established Alpha, which joint venture company will specialize in the
  manufacturing, distribution and commercialization of the Products in the
  Territory, all in accordance with the terms of this Agreement and the related
  agreements contemplated by this Agreement. 

NOW THEREFORE THIS AGREEMENT WITNESSES
that in consideration of the mutual agreements set forth herein, the parties
hereto agree as follows: 

1.
DEFINITIONS AND EXHIBITS

Wherever used in this Agreement, the following words and terms
shall have the respective meanings ascribed to them as follows: 

  1.1
  "Accountant" means the
  auditor or accountant, as the case may be, of Alpha appointed from time to
  time; 

  1.2
  "Affiliate(s)" means with
  respect to any corporation, any other corporation which directly or indirectly
  controls or is controlled by or is under direct or indirect common control
  with such first mentioned corporation or any corporation which is directly or
  indirectly controlled by a corporation which controls the first mentioned
  corporation. 

  1.3
  "AIH License Agreement"
  means the license agreement between AlphaRx and AIH whereby AlphaRx has
  granted AIH all the necessary rights to enable it to enter into 

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  and perform its obligations under the AIH Manufacturing and
  Distribution License Agreement and to grant certain licenses to the Products.
  

  1.4
  "AIH Manufacturing and
  Distribution License Agreement" means the manufacturing and distribution
  license agreement between AIH and Alpha whereby AIH has granted Alpha
  manufacturing and distribution rights to the Products in the Territory. 
  

  1.5
  "AIH Shares" means the
  Shares from time to time owned by AIH. 

  1.6
  "Alpha IPO" means the
  initial underwritten public offering of Alpha's Shares on: (i) a recognized
  securities exchange in Hong Kong, or (ii) a recognized securities exchange
  worldwide if agreed between the Holders. 

  1.7
  "Alpha Liquidity Event" means either: 1.7.1 an Alpha IPO, or 1.7.2 
  an Alpha Reverse Takeover. 
  

  1.8
  "Alpha Reverse Takeover"
  means a reverse takeover whereby the Holders sell all Shares in Alpha to a
  public company in exchange for shares of the public company, such public
  company to be listed on: (a) a recognized securities exchange in Hong Kong, or
  (b) a recognized securities exchange worldwide if agreed between the Holders.
  

  1.9
  "Ancillary Agreements"
  means the AIH License Agreement and the AIH Manufacturing and Distribution
  License Agreement. 

  1.10
  "Articles" means the
  Memorandum and Articles of Association, Articles of Incorporation, or other
  charter document of Alpha, including any amendments thereto. The initial
  Articles will be substantially in the form of Schedule "A". 

  1.11
  "Basin Shares" means the
  Shares from time to time owned by Basin. 

  1.12
  "Board" means the board of
  directors of Alpha. 

  1.13
  "Business Day" means any
  day other than a Saturday, a Sunday, or a day which is a common law or
  statutory bank holiday in Hong Kong. 

  1.14
  "Countries" means each of
  the countries that collectively form the Territory which countries are listed
  in Schedule "B" as such Schedule may be amended from time to time on the
  mutual agreement of the Parties 

  1.15
  "Effective Date" means the
  date of this Agreement set out on page 1 hereof. 

  1.16
  "Founder" means Basin or
  AIH, as applicable and "Founders" means Basin and AIH together. 

  1.17
  "Holder" means any holder
  of Shares who is a Party to this Agreement. 

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  1.18
  "HK$" means Hong Kong
  Dollars. 

  1.19
  "Party" means each of
  Basin, AIH, any other Holder, or Alpha, as applicable, and "Parties" means all
  of the foregoing. 

  1.20
  "Products" means the
  authorized products as listed in Schedule "C" attached hereto, manufactured,
  purchased, marked, sold or otherwise used in accordance with the AIH
  Manufacturing and Distribution License Agreement. 

  1.21
  "Shares" means common
  shares of Alpha as specified in the Articles. 

  1.22
  "Territory" means the
  geographic area comprised of the Countries. 

2.
INITIAL MATTERS 

  2.1
  Incorporation and
  Continuance of Alpha. Alpha shall be incorporated as a British Virgin Islands
  corporation. 

  2.2
  Subscription. Upon the
  Effective Date, Alpha shall issue severally and not jointly (a) 5,000 Shares
  to Basin at the issue price of HK$1 per share for an aggregate issue price of
  HK$5,000, and (b) 5,000 Shares to AIH at the issue price of HK$1 per share for
  an aggregate issue price of HK$5,000. Alpha shall prepare documents for
  subscription of the Shares in the names of Basin and AIH, and Alpha shall
  issue to Basin and AIH certificates evidencing the Shares purchased. 
  

  2.3
  Funding. Basin and AIH
  acknowledge that Alpha will require initial funding of HK$15,000,000 in order
  to manufacture and distribute the Products in the Territory. In order to fund
  this requirement, Basin has agreed to provide debt financing to Alpha of
  HK$1,250,000 quarterly for three years, which shall be repayed without any
  interest and as soon as net profit appears in the management accounts of Alpha
  from time to time or upon the occurrence of an Alpha Liquidity Event, subject
  to the terms and conditions of the Alpha Liquidity Event (including but not
  limited to conditions placed on the use of proceeds and restrictions that may
  be imposed by underwriters). 

  2.4
  Initial Public Offering or
  Reverse Takeover. The Holders shall take no action which would prevent Alpha
  from (i) maintaining records adequate to permit a Liquidity Event and (ii)
  obtaining an annual audit of Alpha's financial statements. The Holders may
  cause the Board, subject to their fiduciary duties, to consider an Alpha
  Liquidity Event. If the Board determines to pursue an Alpha Liquidity Event,
  then, subject to subsection 4.3.17, each Holder shall: 

  
    2.4.1
    in the case of an Alpha
    IPO, sign customary agreements requested by the IPO underwriters (such as
    lockups and questionnaires required for regulatory compliance) which are
    signed by other Alpha shareholders; and 

    2.4.2
    in the case of an Alpha
    Reverse Takeover, provide such further documents or instruments reasonably
    required by the other Holders or any applicable third 

  

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    party to effect the Alpha Reverse Takeover or to carry out
    its obligations thereunder. 

  

  However, this Section 2.4 does not require a
  Holder to take any action that it reasonably believes would be detrimental to
  Alpha's or the Holder's business and does not constitute a representation or
  warranty by a Holder or by Alpha that an Alpha Liquidity Event will occur.
  

3.
BUSINESS OF ALPHA 

  3.1
  Business of Alpha. Alpha
  shall be granted an exclusive license in the Territory by AIH to manufacture,
  distribute, market and sell the Products, on the understanding that Alpha will
  sub-contract the manufacturing of the Products to APC, as described in this
  Agreement and as provided for in the AIH Manufacturing and Distribution
  License Agreement and any sub-contracting agreement to be entered into between
  Alpha, Basin and APC. 

  3.2
  License and Royalty Fees.
  Alpha will pay AIH the license fee and royalties as provided for in the AIH
  Manufacturing and Distribution License Agreement. 

  3.3
  Management Fees. Alpha will
  pay Basin a management fee of five percent (5%) of gross revenues of Alpha, as
  provided for in the AIH Manufacturing and Distribution License Agreement and
  any sub-contracting agreement to be entered into between Alpha, Basin and APC.
  

4.
MANAGEMENT OF ALPHA 

  4.1
  Board of Directors. 
  

  
    4.1.1
    The Board shall initially
    have four authorized positions. Basin and AIH shall each have the right to
    nominate two members to the Board, subject to the other provisions of this
    Section 4.1.1. Should the number of Board positions be increased or
    decreased, Basin and AIH will continue to hold equal Board seats, subject to
    the other provisions of this Section 4.1.1. Each Founder shall have the
    right to replace any director which it is exclusively entitled to nominate
    at any time effective upon notice to Alpha, the director to be removed and
    the other Founder. Basin and AIH together shall have the right to request
    removal of any other director upon notice to Alpha and the director to be
    removed. Each Holder will vote all Shares held by it or to which it has the
    right to direct the vote so as to elect the Founders' nominees, remove
    Founders' directors for whom removal has been requested by the respective
    Founder, and to otherwise maintain the Board constituency described in this
    Section 4.1.1. 

    4.1.2
    Directors of Alpha will
    serve without compensation. Each Founder shall indemnify the other Founder
    and Alpha against any claim for compensation made by a Alpha director
    nominated by that Founder. Alpha will reimburse reasonable travel costs of
    any director attending a Board meeting. 

  

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    4.1.3
    The directors shall from
    time to time shall select a director to act as chairman of the Board. 
    

  

  4.2
  Quorum of the Board of
  Directors; Approval by Board of Directors. A quorum of the Board requires the
  presence (physically, by telephone or by other permitted means) of at least
  two of the directors, including at least one director nominated by Basin and
  one nominated by AIH (if they are entitled to nominate one or more directors
  at the relevant time under Section 4.1.1.). Except as provided in Section 4.3,
  any action or determination by the Board requires the affirmative vote of a
  majority of the Board members present at the meeting. In the case of an
  equality of votes, the chairman shall not have a second or casting vote.
  Subject to any requirements of applicable law, Board meetings shall be held at
  least quarterly in Hong Kong at times and places to be determined by the
  Board. 

  4.3
  Founders' Approval. As permitted under British Virgin Islands law, Alpha shall
  not take the following actions under this Section 4.3 without prior and
  independent approval of each of the Founders (except for Section 4.3.4, which
  will only require the approval of the Founder that originally nominated the
  director). A Founder's approval will be considered given if all of the
  Founder's representatives who are present
  at a shareholder meeting or directors present at a Board meeting, vote in
  favour of the action, or approve of the action by a written resolution
  executed by all directors of Alpha. 

  
    4.3.1
    Making any basic change
    in the general nature or scope of business of Alpha as defined or
    contemplated in Section 3.1, including, without limitation Alpha entering
    into any new line of business. 

    4.3.2
    Amending the Articles,
    including, without limitation, changing its name or the name under which it
    carries on business, increasing or decreasing the number of authorized
    shares of Alpha, creating a new class of shares of Alpha, or changing the
    rights, preferences or privileges of the Shares. 

    4.3.3
    Increasing or decreasing the authorized number of directors on the Board.
    

    4.3.4
    Removing a director nominated by a Founder. 

    4.3.5
    Dissolving, winding up or
    liquidating Alpha. 

    4.3.6
    Repurchasing, redeeming
    or cancelling Shares; or increasing the number of shares reserved for
    issuance under any Share option or purchase plan. 

    4.3.7
    Amalgamating, merging or
    consolidating Alpha with another entity, or selling, leasing, or otherwise
    disposing all or substantially all of the assets of Alpha, whether in one
    transaction or a series of transactions. 

    4.3.8
    Entering into any transaction not in the ordinary course of business having
    a value or involving an expense in excess of 
    [HK$1,000,000] or having
    a term greater than two years. 

  

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    4.3.9
    Investing in any other
    entity. 

    4.3.10
    Entering into any
    agreement with any director or shareholder of Alpha or an Affiliate of that
    director or shareholder (except this Agreement but including the Ancillary
    Agreements) , except as otherwise permitted in any agreement between Alpha
    and each Founder. 

    4.3.11
    Declaring dividends.
    

    4.3.12
    Acquiring assets for consideration in excess of 
    [HK$1,000,000] except as
    otherwise provided for in Alpha's then-approved budget. 

    4.3.13
    Borrowing in excess of 
    [HK$1,000,000] (other than from Basin in accordance with this
    Agreement). 

    4.3.14
    Sale of securities other
    than pursuant to a prospectus to any person reasonably deemed to compete
    with Alpha or either Founder. 

    4.3.15
    Encumbering its
    technology, except as otherwise permitted in this Agreement or any agreement
    between Alpha and AIH. 

    4.3.16
    Opening an office outside of the Territory. 

    4.3.17
    Deciding to effect the Alpha IPO. 

    4.3.18
    Changing the rights described in this Section 4.3. 

    4.3.19
    Changing Alpha's
    executive management structure. 

    4.3.20
    Approving annual budgets,
    budget revisions, business plans or business plan revisions during the
    period. 

    4.3.21
    Issuing any security of
    Alpha, whether Shares, securities convertible into Shares or debt
    securities. 

    4.3.22
    Entering into, or amending once entered into, any agreement that represents
    an expense, over the life of the contract, in excess of 
    [HK$50,000]. 

    4.3.23
    Incorporating any
    subsidiary. 

    4.3.24
    Entering into any
    partnership or joint venture arrangement, except in the ordinary course of
    business for the purpose of establishing offices and branches within the
    Territory. 

    4.3.25
    Factoring or assigning
    any of its book debts. 

    4.3.26
    Giving any guarantee or
    indemnity for or otherwise securing the liabilities or obligations of any
    person. 

  

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    4.3.27
    Making, amending or
    terminating any arrangements relating to franchising, patents, know-how or
    trade marks. 

    4.3.28
    Purchasing or selling any
    freehold or leasehold property or any interest therein. 

    4.3.29
    Taking any action in
    relation to pensions, retirement schemes, share options, profit sharing or
    bonus schemes or any other officer or employee benefits. 

    4.3.30
    Granting any power of attorney or delegating director's powers. 

    4.3.31
    Changing its auditors. 

    4.3.32
    Altering its financial year end. 

    4.3.33
    Amending its accounting policies or reporting practices. 

    4.3.34
    Electing, settling or
    compromising any major tax claims or elections. 

    4.3.35
    Commencing, defending or
    settling any litigation, arbitration or other proceedings which are material
    in the context of Alpha's business. 

  

  4.4
  Officers. The Board shall
  elect the officers of Alpha. For a period of six months from the Effective
  Date, this election shall be subject to Basin and AIH together reviewing and
  approving the recommendations for each proposed officer. 

  4.5
  Financial Statements and
  Accounting Records. Alpha's fiscal year will be January 1 through December 31.
  Alpha's external auditors shall be an independent accounting firm acceptable
  to Basin and AIH. Alpha shall prepare its annual financial statements in
  compliance with generally accepted accounting principles in the Territory.
  Alpha shall provide each Holder: 

  
    4.5.1
    audited financial
    statements within 90 days after each fiscal year end; 

    4.5.2
    monthly unaudited balance
    sheets, profit and loss statements and statements of sources and uses of
    cash within 30 days after each month end; and 

    4.5.3
    quarterly 90-day
    projections plus yearly annual projections of Alpha revenues. 

  

  4.6
  Right of Inspection. During
  office hours of Alpha, each Founder will, subject to the provisions for the
  protection of Confidential Information set forth in Section 7.1 and Schedule
  "D" to this Agreement, have full access to all properties, books of account,
  records and the like of Alpha with the right to make copies. Any information
  obtained by the Founders through exercise of this right shall be used by the
  Founder only for purposes that are consistent with its status as an equity
  holder in Alpha (e.g., to the extent used to determine compliance with this
  Agreement), and not for the pursuit of business interests outside Alpha
  (except to the extent the Founder 

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  otherwise has rights for access to such information e.g.,
  information or property which is owned by the Founder). 

  4.7
  Employee Matters. If the
  Board and a Holder agree that a Holder or its Affiliate will second an
  employee for a defined term to Alpha, then Alpha shall reimburse the seconding
  Holder for salary and benefits paid the employee during the term of secondment
  (other than stock options actually paid to or provided for the benefit of the
  employee during the period loaned to Alpha). Alpha shall not bear any other
  costs of loaned employees. Each Alpha employee, and any employee of another
  entity working for Alpha but not a regular employee of Alpha, shall sign an
  employment agreement. 

5.
REPRESENTATIONS 

  5.1
  Basin. Basin represents and
  warrants the following as of the Effective Date: 

  
    5.1.1
    Basin is a corporation
    duly organized, validly existing and in good standing under the laws of the
    British Virgin Islands and has the corporate power and authority to engage
    in its business and to enter into this Agreement and to perform its
    obligations hereunder. 

    5.1.2
    All corporate action on
    the part of each of Basin and its officers and directors necessary for the
    authorization, execution, delivery and performance of this Agreement has
    been taken. This Agreement constitutes a valid, legally binding and
    enforceable obligation of Basin. 

    5.1.3
    Except for those
    governmental consents or regulatory approvals which may need to be obtained
    (which approvals Basin will use reasonable commercial efforts to obtain), no
    consent, authorization, license, permit, registration or approval of any
    governmental or public body or authority, or regulatory authority, is
    required in connection with Basin's execution and delivery of this Agreement
    or with Basin's performance of its obligations hereunder. 

    5.1.4
    The execution and
    delivery of this Agreement by Basin, performance of its obligations
    hereunder and its consummation of the contemplated transactions shall not, (i)
    to the best of its knowledge, violate any provision of any law, statute,
    rule or regulation to which it is subject; (ii) violate any judgment, order,
    writ, injunction or decree of any court applicable to it; (iii) to the best
    of its knowledge, have any effect on its compliance with any laws, statutes,
    rules, regulations, orders, decrees, licenses, permits or authorizations
    that would materially and adversely affect it; (iv) to the best of its
    knowledge, result in the breach of, or be in conflict with, any term,
    covenant, condition or provision of, or affect the validity, enforceability
    and subsistence of, any agreement, lease or other commitment to which it is
    a party and that would materially and adversely affect it; or (v) to the
    best of its knowledge, result in the creation or imposition of any lien,
    pledge, mortgage, claim, charge, or encumbrance upon any of its assets.
    

  

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    5.1.5
    Basin nor has not
    obligated Alpha to any person in any way other than as described in this
    Agreement. Basin has not retained any person or entity to act on its behalf,
    nor has any person or entity contended that it was so retained, to assist
    Basin as its broker, finder or agent in connection with this joint venture
    who might have any claim on this venture. 

  

  5.2
  AIH. AIH represents and
  warrants the following as of the Effective Date: 

  
    5.2.1
    AIH is a corporation duly
    organized, validly existing and in good standing under the laws of the
    British Virgin Islands and has the corporate power and authority to engage
    in its business and to enter into this Agreement and to perform its
    obligations hereunder. 

    5.2.2
    All corporate action on
    the part of each of AIH and its officers and directors necessary for the
    authorization, execution, delivery and performance of this Agreement has
    been taken. This Agreement constitutes a valid, legally binding and
    enforceable obligation of AIH. 

    5.2.3
    Except as to those
    government consents and approvals contemplated by the AIH License Agreement
    and AIH Manufacturing and Distribution License Agreement which may need to
    be obtained (which consents and approvals AIH will use reasonable commercial
    efforts to obtain), no consent, authorization, license, permit, registration
    or approval of any governmental or public body or authority, or regulatory
    authority, is required in connection with AIH's execution and delivery of
    this Agreement or with AIH's performance of its obligations hereunder.
    

    5.2.4
    The execution and
    delivery of this Agreement by AIH, performance of its obligations hereunder
    and its consummation of the contemplated transactions shall not, (i) to the
    best of its knowledge, violate any provision of any law, statute, rule or
    regulation to which it is subject; (ii) violate any judgment, order, writ,
    injunction or decree of any court applicable to it; (iii) to the best of its
    knowledge, have any effect on its compliance with any laws, statutes, rules,
    regulations, orders, decrees, licenses, permits or authorizations that would
    materially and adversely affect it; (iv) to the best of its knowledge,
    result in the breach of, or be in conflict with, any term, covenant,
    condition or provision of, or affect the validity, enforceability and
    subsistence of, any agreement, lease or other commitment to which it is a
    party and that would materially and adversely affect it; or (v) to the best
    of its knowledge, result in the creation or imposition of any lien, pledge,
    mortgage, claim, charge, or encumbrance upon any of its assets. 

    5.2.5
    AIH nor has not obligated
    Alpha to any person in any way other than as described in this Agreement.
    AIH has not retained any person or entity to act on its behalf, nor has any
    person or entity contended that it was so retained, to assist AIH as its
    broker, finder or agent in connection with this joint venture who might have
    any claim on this venture. 

  

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6.
TERM AND TERMINATION

  6.1
  Term. This Agreement shall
  continue in full force and effect for three years from the Effective Date and
  may be renewed by the Parties upon mutual agreement in writing for a further
  seven year period unless and until terminated as provided herein. 

  6.2
  Grounds for Termination.
  This Agreement shall terminate immediately only in the case of one or more of
  the following: 

  
    6.2.1
    by a Founder which
    exercises its right to terminate in accordance with Sections 6.3 or 6.4;
    

    6.2.2
    upon termination for
    breach of the material obligations under the AIH Manufacturing and
    Distribution License Agreement or AIH License Agreement, in accordance with
    Section 6.5; 

    6.2.3
    by agreement of the
    Holders, in accordance with Section 6.7.1; 

    6.2.4
    upon expiration of the
    license grants to AIH under the AIH License Agreement, upon expiration of
    the license grants to Alpha under the AIH Manufacturing and Distribution
    License Agreement, in accordance with Section 6.7.2; 

    6.2.5
    when only one Holder remains subject to this Agreement; or 6.2.6 upon an
    Alpha IPO. 

  

  
  6.3 
  Termination Upon Bankruptcy or Insolvency of a Founder. 
  

  
    6.3.1
    Notice of Bankruptcy
    Event. If any of the following events occurs to a Founder, that Founder
    shall immediately notify the other Founder and Alpha of the occurrence of
    the event: 

    (a)
    the commencement by or
    against the Founder of any proceeding under the bankruptcy laws of any
    jurisdiction; 

    (b)
    the commencement of any
    proceeding seeking the liquidation, dissolution or winding-up of the
    Founder; 

    (c)
    a reorganization,
    arrangement or composition of the Founder or any of its property or the
    making of any proposal under any bankruptcy, insolvency or reorganization
    laws or other similar laws in respect of the Founder; or 

    (d)
    the appointment of a
    receiver or trustee for the Founder's property; 

    in each case provided: 

  

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      (i)
      such proceedings or
      proposals have not been vacated, dismissed or set aside or the receiver or
      trustee is not removed within 60 days from the date of commencement; or
      

      (ii)
      if an order, judgement
      or decree is made then such 60 day period may be extended to 90 days if
      the Founder is diligently appealing such order, judgement or decree.
      

    

    6.3.2
    Right to Terminate. If
    the event is not cured within 15 days following an event occurring under
    Section 6.3.1, the other Founder shall have the right (but not the
    obligation) to terminate this Agreement by giving notice in writing to the
    affected Founder. 

    6.3.3
    Right to Purchase. After
    notice of termination under Section 6.3.2, the Founders shall consult in
    good faith for 60 days concerning the disposition of their interests in
    Alpha and the future operations of Alpha. If the Founders do not sign a
    written agreement regarding the matters during such 60 days, then the
    Founder that gave notice of termination shall have the option to purchase
    the Shares of the affected Founder pursuant to Section 6.8. 

  

  6.4
  Termination Upon
  Bankruptcy, Insolvency or Nonperformance of Alpha. 

  
    6.4.1
    Right to Terminate. To
    the extent permitted by law, if any of the following events occurs to Alpha
    and the event is not cured within 30 days following the event, either
    Founder shall have the right (but not the obligation) to terminate this
    Agreement by giving notice in writing to the other Founder: 

    (a)
    the commencement by or
    against Alpha of any proceeding under the bankruptcy laws of any
    jurisdiction; 

    (b)
    the commencement of any
    proceeding seeking the liquidation, dissolution or winding-up of Alpha;
    

    (c)
    a reorganization,
    arrangement or composition of Alpha or any of its property or the making of
    any proposal under any bankruptcy, insolvency or reorganization laws or
    other similar laws in respect of Alpha; or 

    (d)
    the appointment of a
    receiver or trustee for Alpha's property; 

    in each case provided: 

    
      (i)
      such proceedings or
      proposals have not been vacated, dismissed or set aside or the receiver or
      trustee is not removed within 60 days from the date of commencement; or
      

    

  

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      (ii)
      if an order, judgement
      or decree is made then such 60 day period may be extended to 90 days if
      the Founder is diligently appealing such order, judgement or decree.
      

    

    6.4.2
    Right to Dissolve. After
    notice of termination by a Founder under 6.4.1, the Founders shall consult
    in good faith for 60 days concerning the disposition of their interests in
    Alpha and the future operations of Alpha. If the Founders do not sign a
    written agreement regarding such matters within the 60 days and if any
    application or petition is not submitted for the commencement of any
    proceedings described in Sections 6.4.1(a) or 6.4.1(b) above, then the
    Founder who gave the termination notice shall have the option to cause the
    dissolution of Alpha under British Virgin Island law by giving written
    notice of dissolution to the other Founder and Alpha. Upon such notice, each
    Founder and Alpha will take all actions (including voting of Shares in
    favour for dissolution) required to dissolve and liquidate Alpha in
    accordance with applicable laws and regulations. In this dissolution, Alpha
    will first auction its assets to the Founders in a process structured and
    supervised by Alpha's independent auditors, and then sell any remaining
    assets to third parties. 

  

  6.5
  Termination Upon Material
  Breach. 

  
    6.5.1
    Right to Terminate. If
    either Founder commits a material breach of a material term of this
    Agreement, and such material breach is not cured within 60 days following
    notice thereof to the breaching Founder by the other Founder, the other
    Founder shall have the right to terminate this Agreement by giving notice
    thereof in writing to the breaching Founder. 

    6.5.2
    Right to Purchase. After
    notice of termination by a Founder under Section 6.5.1, the Founders shall
    consult in good faith for 60 days concerning the disposition of their
    interests in Alpha and the future operations of Alpha. If the Founders do
    not resolve such matters in writing within the 60 days, the Founder that
    gave notice of termination shall have the option to (i) purchase the Shares
    of the breaching Founder pursuant to Section 6.8, for a price equal to the
    Fair Market Value of such Shares less an amount equal to the damages to
    Alpha and the terminating Founder caused by the breaching Founder's breach,
    or (ii) cause the breaching Founder to purchase all of the Shares then held
    by the terminating Founder pursuant to Section 6.8, for a price equal to the
    Fair Market Value of such Shares plus an amount equal to the damages to
    Alpha and the terminating Founder caused by the breaching Founder's breach.
    

    6.5.3
    Remedies Not Affected.
    The foregoing shall not limit the ability of any Party to seek legal and
    equitable remedies (including damages not fully offset by the reduction in
    purchase price) related to a material breach by another Party or the failure
    of a Party to perform any other duty or obligation under this Agreement.
    

  

- 13 - 

  6.6
  Termination Upon Deadlock.
  If the Board fails at two consecutive regular meetings to approve any proposal
  or matter material to Alpha's operations which was submitted to the Board,
  then a "Deadlock" shall be deemed to have occurred. If a Deadlock occurs, then
  the Holders shall negotiate in good faith for no less than 60 days to resolve
  the Deadlock. If no resolution of the Deadlock results, then the chief
  executive officer (or his designee) of each Holder shall meet personally at
  Alpha's offices and negotiate in good faith to resolve the Deadlock on at
  least two occasions within an additional 60 days. For each Deadlock which may
  occur, if no resolution of the Deadlock in question results, then either
  Founder may invoke the "buy-sell" provisions in Section 6.9, or if neither
  Founder elects this alternative, the issues creating the Deadlock shall be
  submitted to arbitration pursuant to Section 7.3. 

  6.7
  Other Termination
  Procedures. 

  
    6.7.1
    Upon the agreement of
    Holders owning 75% of the Shares, and subject to Section 4.3, the Holders
    may agree to liquidate and dissolve Alpha, whereupon the assets of Alpha
    shall be distributed to the Holders (after payment of all debts of Alpha,
    including debts to Holders) pro rata in accordance with each Holder's
    respective capital contribution to Alpha. 

    6.7.2
    Upon termination of this
    Agreement under Section 6.2.5, the Holders shall consult in good faith for
    sixty (60) days concerning the disposition of their respective interests in
    Alpha and the future operations of Alpha. If the Holders do not resolve such
    matters in writing within such sixty (60) days, each Founder shall be
    entitled to initiate a sale of Shares under Section 6.9. 

  

  6.8
  Purchase Procedures -
  Breach or Founder Bankruptcy. 

  
    6.8.1
    If a Founder receives
    notice of termination in accordance with Sections 6.3.3 or 6.5.2
    (hereinafter in this Section 6.8 referred to as the "Offeror"), the other
    Founder (hereinafter in this Section 6.8 referred to as the "Offeree") shall
    have the right to purchase all, but not less than all, of the Shares
    beneficially owned by the Offeror (hereinafter in this Section 6.8 referred
    to as the "Offered Shares"). 

    6.8.2
    The price of the Offered Shares shall be the fair value of such Shares (the
    AFair Market Value@) as
    determined by the Accountant (except where the Accountant is not a chartered
    business valuator, in which case by a person qualified in that regard and
    being a chartered business valuator) in accordance with generally accepted
    accounting principles as at the end of the fiscal quarter of Alpha
    immediately preceding the fiscal quarter in which the notice referred to in
    Sections 6.3.3 or 6.5.2 was given. Such determination shall be made in
    writing and given to all of the Holders and to Alpha within 20 Business Days
    of the date in which the notice referred to in Sections 6.3.3 or 6.5.2 was
    given or as soon thereafter as may be reasonably possible. 

  

- 14 - 

  
    6.8.3
    The Offeree purchasing
    Shares under this Section 6.8 shall pay in cash or other immediately
    available funds the aggregate purchase price for the Shares to be sold to
    the Offeree upon receipt of the certificate or certificates for the Shares
    to be sold to the Offeree. 

  

  6.9
  Deadlock Purchase
  Procedures. 

  
    6.9.1
    At any time without
    limitation, where a Deadlock is not resolved within 60 days or as otherwise
    provided in this Agreement, either Founder (in this Section 6.9 the "Offeror")
    shall have the right to give notice (in this Section 6.9 the "Notice") to
    the other Holders (in this Section 6.9, collectively, the "Offerees" and,
    individually, an "Offeree") and to Alpha, which Notice shall contain the
    following: 

    (a)
    an offer by the Offeror
    to purchase all of the Shares and debt beneficially owned by the Offerees
    (in this Section 6.9 an "Offer to Purchase"); 

    (b)
    an offer by the Offeror
    to sell all of the Shares and debt beneficially owned by the Offeror to the
    Offerees pro-rata based upon the number of Shares beneficially owned by the
    Offerees (in this Section 6.9 an "Offer to Sell"); and 

    (c)
    the price to be paid for
    each Share pursuant to the Offer to Purchase and the Offer to Sell, which
    shall be the same for both Offers (the price of the debt being its principal
    amount) (such prices being in this Section 6.9 the "Purchase Price"). 
    

    The Notice shall stipulate that the
    aggregate Purchase Price resulting from the acceptance (or deemed
    acceptance) of the Offer to Purchase or Offer to Sell shall be paid by one
    or more certified cheques or bank drafts at the time of closing of the
    purchase and sale of Shares and debt. The Notice shall also incorporate by
    reference the other provisions of this Section 6.9. 

    6.9.2
    Within 10 Business Days
    of the Notice being given, each Offeree shall be entitled to accept either
    the Offer to Purchase or the Offer to Sell by giving notice of such
    acceptance to the Offeror, to the other Offerees and to Alpha. 

    6.9.3
    If all of the Offerees
    accept the Offer to Purchase, the Offerees shall sell and Offeror shall
    purchase all of the Shares and debt beneficially owned by each Offeree at
    the Purchase Price and the transaction of purchase and sale shall be
    completed at Alpha's registered office within 10 Business Days of the expiry
    of the 10 Business Day period specified in Section 6.9.2. 

    6.9.4
    If all of the Offerees
    accept the Offer to Sell, the Offerees shall purchase, pro-rata based upon
    the number of Shares and debt beneficially owned by the Offerees, and the
    Offeror shall sell all of the Shares beneficially owned by the Offeror at
    the Purchase Price and the transaction of purchase and sale 

  

- 15 - 

  
    shall be completed at Alpha's registered office within 10
    Business Days of the expiry of the 10 Business Day period specified in
    Section 6.9.2. 

    6.9.5
    If any Offeree does not
    accept either the Offer to Purchase or the Offer to Sell within the 10
    Business Day period specified in Section 6.9.2, such Offeree shall be deemed
    to have accepted the Offer to Purchase of the Offeror and to have given
    notice of such acceptance pursuant to the provisions of Section 6.9.2 on the
    last Business Day upon which such notice may have been given. 

    6.9.6
    If one or more of the
    Offerees accept or are deemed to have accepted the Offer to Purchase
    pursuant to the provisions of Section 6.9.2 or Section 6.9.5, respectively,
    (in this Section 6.9.6 the "Selling Offerees") and one or more of the
    Offerees accept the Offer to Sell pursuant to the provisions of Section
    6.9.2 (in this Section 6.9.6 the "Purchasing Offerees"), the Purchasing
    Offerees shall be entitled to purchase the Shares and debt beneficially
    owned by the Offeror and the Shares and debt beneficially owned by the
    Selling Offerees by giving notice of the exercise of such right to the
    Offeror, to the Selling Offerees and to Alpha within 10 Business Days after
    the expiry of the 10 Business Day period specified in Section 6.9.2 and, if
    each of the Purchasing Offerees gives notice pursuant to the provisions of
    this Section 6.9.6, the Offeror and the Selling Offerees shall sell the
    Shares and debt beneficially owned by them to the Purchasing Offerees and
    such transaction of purchase and sale shall be completed at Alpha's
    registered office within 20 Business Days of the date upon which Alpha was
    given the last of such notices by the Purchasing Offerees. If there is more
    than one Purchasing Offeree, the Purchasing Offerees
    shall purchase the Common Shares of the Offeror and the Selling Offerees
    pro-rata based upon the number of Shares beneficially owned by the
    Purchasing Offerees. 

    6.9.7
    Two or more Offerees may
    jointly accept the Offer to Sell pursuant to the provisions of Section 6.9.2
    and, in such event, the further provisions of this Section 6.9 shall apply,
    with such changes in detail as required, except that the number of Shares
    and debt to be purchased by each of them pursuant to the provisions of this
    Section 6.9 may be set out in the notice given by them pursuant to the
    provisions of Section 6.9.2 and this Section 6.9.7, provided that the
    aggregate of such numbers equals the number of Shares beneficially owned by
    the Offeror. 

  

  6.10
  Continuation of Business.
  During any period in which a Founder has the right to purchase or is
  purchasing the Shares of the other Founder pursuant to this Section 6: 
  

  
    6.10.1
    Alpha shall continue its
    business in the ordinary course. Each Holder will use its best efforts to
    maintain and preserve the business of Alpha pending the consummation of the
    purchase. 

  

- 16 - 

  6.10.2
  The Holders shall negotiate
  in good faith an agreement providing that employees of the selling Holder(s)
  working full time for Alpha will be made available full time to Alpha for such
  period as is reasonably required up to six months to effect an orderly
  transition to a new ownership by the non-selling Holder, and each Holder will
  use its best commercially-reasonable efforts to make all those employees
  available on this basis. 

7.
GENERAL PROVISIONS 

  7.1
  Confidentiality. Each Party
  to this Agreement agrees to be bound by the terms of the Mutual Non-Disclosure
  Agreement set out in Schedule "D". Each Party agrees that disclosure of all
  "Confidential Information" that is owned by AIH, Basin or Alpha (each, as
  owner or discloser, a "Disclosing Party") to any other Party or a third Party
  (each a "Receiving Party") shall be subject to the provisions set forth in
  Schedule "D". 

  7.2
  Survival. The provisions of
  this Section 7 (including the provisions of Schedule "D") which are expressly
  included herein), unless otherwise permitted in such sections, shall survive
  any termination or expiration of the Agreement, the license grants and other
  provisions of the AIH License Agreement, the AIH Development Agreement and any
  other related agreement and shall continue in full force and effect for five
  years after the latest of any such termination or expiration. 

  7.3
  Governing Law; Arbitration.
  This Agreement and its application and interpretation will be governed by the
  laws of New York excluding any conflict of laws rule or principle that might
  refer such construction to the laws of another jurisdiction. All disputes
  arising out of or in connection with the present contract shall be finally
  settled by arbitration. The arbitration will be according to The Commercial
  Arbitration Rules of the American Arbitration Association. The dispute shall
  be decided by three arbitrators appointed in accordance with said rules. The
  place of the arbitration shall be New York, NY. The language of the
  arbitration shall be English. The award shall be final and binding for both
  parties. 

  7.4
  Force Majeure. If the
  performance of this Agreement or any obligations hereunder, except for
  non-payment of any amounts payable hereunder, is prevented, restricted or
  interfered with by reason of fire or other casualty or accident, strikes or
  labour disputes, war or other violence, any law, order, proclamation,
  regulations, ordinance, demand or requirement of any government agency, or any
  other act or condition beyond the reasonable control of the Parties hereto,
  the Party so affected upon giving prompt notice to the other Parties shall be
  excused from performance during the prevention, restriction or interference.
  

  7.5
  Currency. Unless otherwise
  specified, all currencies are in United States dollars. 

  7.6
  Publicity. Prior to issuing
  any reports, statements, press releases or other disclosures to third parties
  regarding this Agreement or the contemplated transactions, AIH, Basin and
  Alpha shall exchange copies of the documents and shall consult with each
  

- 17 - 

  other regarding their content. Except as
  otherwise required by law, neither AIH nor Basin nor Alpha will issue any such
  disclosure without the prior approval of the other. No other Party will issue
  any such disclosure without the prior approval of AIH, Basin and Alpha. 
  

  7.7
  Notices and Other
  Communications. Every notice by any Party shall be in writing and delivered
  either by personal delivery, or by a nationally recognized overnight courier
  service, or by registered or certified mail, postage prepaid, or by facsimile
  or electronic mail (when confirmation copy is sent by registered or certified
  mail), where notice are addressed as set forth on the first page of this
  Agreement, or at such other address as the intended recipient previously shall
  have designated by written notice to the other Parties. All notices delivered
  in person shall be deemed to have been delivered to and received by the
  addressee and shall be effective on the date of personal delivery. All notices
  delivered by courier service shall be effective upon receipt. All notices
  delivered by registered or certified mail shall be effective upon the fifth
  day after the mailing thereof. All notices delivered by facsimile or
  electronic mail, shall be effective upon receipt. 

  7.8
  Counterparts. This
  Agreement may be executed in any number of counterparts or duplicate
  originals, and each counterpart or duplicate original shall constitute an
  original instrument, but all separate counterparts or duplicate originals
  shall constitute one and the same instrument. 

  7.9
  Written Agreement to
  Govern. This Agreement and the Ancillary Agreements set forth the entire
  understanding and supersedes all prior and contemporaneous agreements and
  discussions among the Parties relating to the subject matter contained herein
  and therein, and no Party will be bound by any definition, condition,
  representation, warranty, covenant or provision other than as expressly stated
  in or contemplated herein or therein or as subsequently is set forth in
  writing and executed by a duly authorized representative of the Party to be
  bound thereby. 

  7.10
  No Waiver of Rights. All
  waivers hereunder must be made in writing, and failure at any time to require
  another Party's performance of any obligation under this Agreement shall not
  affect the right subsequently to require performance of that obligation. No
  waiver of any breach of any provision of this Agreement shall be construed as
  a waiver of any continuing or succeeding breach of that provision or a waiver
  or modification of that provision. 

  7.11
  Severability. Whenever
  possible, each provision, portion and extent of this Agreement shall be
  interpreted in such manner as to be effective and valid under applicable law,
  but if any provision, portion or extent of this Agreement should be prohibited
  or invalid under applicable law, such provision, portion or extent shall be
  ineffective but only to the extent of such prohibition or invalidity without
  invalidating the remainder of such provision, portion or extent or the
  remaining provisions of this Agreement. In such event, the Parties agree to
  negotiate, in good faith, a valid, legal and enforceable substitute provision,
  portion or extent that most nearly effects the Parties' intent in entering
  into this Agreement. 

- 18 - 

  7.12
  Subject Headings. The
  subject headings of the Sections of this Agreement are included for the
  purposes of convenience only, and shall not affect the construction or
  interpretations of any of its provisions. 

  7.13
  Further Assurances. The
  Parties shall each perform those acts, execute and deliver those instruments
  and documents, and do all other things as may be reasonably necessary to
  accomplish the transactions contemplated in this Agreement. 

  7.14
  Expenses and Finder's Fees.
  Subject to Section 2.1 in respect of the expenses related to the incorporation
  of Alpha, the Parties shall each bear their own costs and expenses (including
  attorneys' fees) incurred in connection with the negotiation and preparation
  of this Agreement and the consummation of the contemplated transactions. Each
  Party shall indemnify the others against any claim for brokerage or finder's
  fees arising out of the transactions contemplated herein by any person
  claiming to have been engaged by the indemnifying Party based upon any action
  or communication, or any alleged action or communication, by the indemnifying
  Party or any of its officers or employees. 

  7.15
  Relationship Between
  Parties. Each Party shall, in all matters relating to this Agreement, be and
  act as an independent contractor. Except as otherwise provided herein, no
  Party shall represent that it has any authority to assume or create any
  obligation, express or implied, on behalf of any other Party, or to represent
  the other Party as agent, employee or in any other capacity. 

  7.16
  Assignment and Transfer of
  Shares. This Agreement shall inure to the benefit of, and shall be binding
  upon, the Parties and their respective successors and assigns. No Party may
  assign or delegate this Agreement or any of its rights or duties under this
  Agreement without the prior written consent of the other Parties. Except in
  accordance with Section 6, no Founder may transfer, sell or otherwise dispose
  of its Shares without the prior written consent of the other Founder. 
  

  7.17
  Compliance with Laws. The
  Parties shall use reasonable efforts to ensure that no part of Alpha's capital
  or other funds will be accepted or used by Alpha knowingly for any purpose,
  nor will Alpha take any action, that would constitute a violation of any
  applicable law of the various jurisdictions in which it conducts business.
  

- 19 - 

IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written. 

	BASIN INDUSTRIAL
    LIMITED	ALPHARX
    INTERNATIONAL
	 	HOLDINGS LIMITED
	 	 
	
    Per:____________________	
    Per:____________________
	
    Name:__________________	
    Name:__________________
	
    Title:___________________	
    Title:___________________
	 	 
	ALPHA AP INC.	 
	 	 
	
    Per:____________________	 
	
    Name:__________________	 
	
    Title:___________________	 

SCHEDULE "A" 

Form of Articles 

(To be agreed)

SCHEDULE "B" 

Countries 

	Country	Language
	 	 
	Hong Kong	Mandarin
	 	 
	China	Mandarin
	 	 
	Japan	Japanese
	 	 
	 	 
	Korea	Korean

SCHEDULE "C" 

Products 

1. 1% Indaflex (1% Indomethacin) 

2. 1% Diclofenac 

3. Flexogan (6% Menthol, 6% Camphor, 16% Methyl Salicylate)

 

SCHEDULE "D" 

Form of Non-disclosure Agreement

	
  Disclosing Party possesses certain information relating to
  contract and/or other scientific or clinical research, which information the
  Disclosing Party is willing to disclose to the Receiving Party together with
  documents and data related thereto (hereinafter such information, documents
  and data shall be referred to as "Confidential Information"). 

 

	The Disclosing Party is willing to disclose Confidential Information to
  the Receiving Party on the following terms: 

  
    (a) The Receiving Party will receive, maintain, and hold
    the Confidential Information in strict confidence and will use the same
    level of care in safeguarding it that it uses with its own confidential
    material of a similar nature; 

    (b) The Receiving Party agrees to take all steps
    necessary and appropriate to ensure that Receiving Party's employees,
    co-workers, agents and/or assistants treat the Confidential Information as
    confidential and to ensure that such employees, coworkers, agents and/or
    assistants are familiar with and abide by the terms of this Agreement; 

    (c) The Receiving Party will not utilize Confidential
    Information, except as provided herein, without first having obtained the
    Disclosing Party's written consent to such utilization; and 

  

	The obligations set forth in Paragraph 1 above shall not extend
  to any portion of Confidential Information: 

  
    (a) which is known to the Receiving Party prior to disclosure or is
    information generally available to the public; 

    (b) which was not acquired directly or indirectly from the Disclosing
    Party and which the Receiving Party lawfully had in its own possession prior
    to the Effective Date; 

    (c) which, hereafter, through not act on the part of the Receiving Party,
    becomes information generally available to the public; 

    (d) which corresponds in substance to information furnished to the
    Receiving Party on a non-confidential basis by any third party having a
    legal right to do so: or 

    (e) which the Receiving Party can demonstrate was
    developed by or for the Receiving Party independently of the disclosure of
    Confidential Information by the Disclosing Party. 

  

	
  At any time upon the request of the Disclosing Party, (a)
  the Confidential Information, including all copies, shall be returned to the
  Disclosing Party and (b) all other embodiments of the Confidential Information
  in the possession of the Receiving Party, including all copies, and/or any
  other form of reproduction and/or description thereof made by the Receiving
  Party, shall, at the Disclosing Party's option, be returned to the Disclosing
  Party or destroyed.AlphaRx, Inc.: Exhibit 10.2 - Prepared by TNT Filings Inc.

 

Page 1 of 30 

Exhibit 10.2 

MANUFACTURING AND DISTRIBUTION LICENSE
AGREEMENT 

THIS AGREEMENT, 
effective this 22nd day of
April, 2005, 

BETWEEN: 

  
    
      AlphaRx International Holdings Limited,
      a corporation incorporated under the laws of the British Virgin Islands,
      and having its principal place of business at Unit A, 19/F Sang Woo
      Building, Nos. 227-228, Gloucester Road, Causeway Bay Hong Kong. 
      

    

  

("Licensor") 

- and - 

  
    
      Alpha AP Inc.,
      a corporation incorporated under the laws of the British Virgin Islands,
      and having its principal office c/o Advance Pharmaceutical Co., Ltd., 2/F,
      12 Dai Fu Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong
      Kong. 

    

  

("Licensee") 

WHEREAS: 

  A.
  AlphaRx, Inc. ("AlphaRx")
  is an emerging specialty pharmaceutical company that develops, formulates and
  commercializes innovative therapeutic products using proprietary drug delivery
  technologies, and in particular is focused on the discovery, development and
  marketing of products in pain management and inflammation treatment; 
  

  B.
  AlphaRx owns and/or
  has rights to the Intellectual Property Rights (as defined herein) relating to
  a pharmaceutical agent for pain management and inflammation treatment; 
  

  C.
  The Licensor is a
  wholly-owned subsidiary of AlphaRx; 

  D.
  Pursuant to a license
  agreement between AlphaRx and the Licensor, AlphaRx has granted the Licensor
  all the necessary rights to enable it to enter into this Agreement, grant the
  licenses (including the rights to the Intellectual Property Rights) and to
  perform all of its obligations hereunder; 

  E.
  The Licensee is a
  joint venture between the Licensor and Basin Industrial Limited, a
  wholly-owned subsidiary of Advance Pharmaceutical Co., Ltd., which is being
  established to specialize in the manufacturing, distribution and
  commercialization of pharmaceutical compounds in the Territory (as defined
  herein); and 

Page 2 of 30 

  F.
  The Licensee desires
  to obtain certain manufacturing and distribution rights to the pharmaceutical
  agent for pain control and inflammation treatment (the "Product" as defined
  herein) in the Territory, and the Licensor desires to grant such manufacturing
  and distribution rights to the Licensee, upon the terms and conditions set
  forth herein. 

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

  1.
      
  RECITALS 

  1.1
     The
  Parties hereby acknowledge and declare that the foregoing recitals are true
  and accurate in substance and fact. 

  2.
      
  DEFINITIONS 

  Wherever used in this Agreement,
  the following words and terms shall have the respective meanings ascribed to
  them as follows: 

  2.1
  "Accounting Period"
  means a three month period commencing on the first day of the month and ending
  on the last day of the month, with each successive Accounting Period to
  commence on the first business day following the close of the preceding
  Accounting Period. The Accounting Period will end on the last day of each
  March, June, September and December during the term of this Agreement and any
  subsequent renewals. The first accounting period under this Agreement will be
  for a period commencing on the Effective Date of this Agreement and concluding
  on June 30, 2005. 

  2.2
  "Affiliate(s)" means
  with respect to any corporation, any other corporation which directly or
  indirectly controls or is controlled by or is under direct or indirect common
  control with such first mentioned corporation or any corporation which is
  directly or indirectly controlled by a corporation which controls the first
  mentioned corporation; 

  2.3
  "Agreement" means this
  Manufacturing and Distribution License Agreement, and includes authorized
  amendments and Schedules; 

  2.4
  "Applicable Laws"
  means all laws, statutes, codes, ordinances, decrees, rules, regulations,
  by-laws, any law, statute, code, ordinance, decree, rule, regulation, by-law,
  statutory rules, principles rule, principle of law, published policies policy
  and guidelines guideline, judicial or arbitral or administrative or
  ministerial or departmental or regulatory judgments, orders, decisions,
  rulings or awards judgment, order, decision, or ruling, including general
  principles of common and civil law, and terms and conditions of any grant of
  approval, permission, authority or license of any Governmental Entity,
  statutory body or self-regulatory authority; 

  2.5
  "Alpha IPO" means the
  initial underwritten public offering of Alpha's Shares on: (i) a recognized
  securities exchange in Hong Kong, or (ii) a recognized securities exchange
  worldwide if agreed between the Holders. 

  2.6
  "Alpha Liquidity
  Event" means either: (i) an Alpha IPO or (ii) an Alpha Reverse Takeover;
  

Page 3 of 30 

  2.7
  "Alpha Reverse
  Takeover" means a reverse takeover whereby the Holders sell all Shares in
  Alpha to a public company in exchange for shares of the public company, such
  public company to be listed on: (a) a recognized securities exchange in Hong
  Kong, or (b) a recognized securities exchange worldwide if agreed between the
  Holders. 

  2.8
  "Confidential
  Information" means any and all information, in whatever, form, that is not
  generally available to third parties or the public including, without limiting
  the generality of the foregoing, all research, data, specifications, plans,
  drawings, prototypes, models, documents, recordings, instructions, manuals,
  papers, business practices and strategies, business plans, know-how,
  inventions, techniques, processes, methods of doing business, software,
  personnel data, contracts, purchase requirements, business plans, forecasts
  and market strategies, plans production processes, product specifications and
  formulas, methods, technical and product bulletins, data on equipment sold and
  serviced, surveys, and research and development programs, or other materials,
  of any nature or embodiment whatsoever, whether written or otherwise, relating
  to same, as well as the existence of this Agreement and its terms and
  conditions. Confidential Information does not include any information which is
  publicly available at the time of disclosure or subsequently becomes publicly
  available through no fault of the recipient party, or is rightfully acquired
  by the recipient party from a third party who is not in breach of an agreement
  to keep such information confidential; 

  2.9
  "Control" means with
  respect to any corporation, the ownership of securities of the corporation to
  which are attached more than fifty per cent of the votes that may be cast to
  elect directors of the corporation and the votes attached to those securities
  are sufficient, if exercised, to elect a majority of directors of the body
  corporate; 

  2.10
  "Contraindication"
  means any reaction to the Products by a person that is not a side effect as
  specified or identified by the Licensor; 

  2.11
  "Countries" means each
  of the countries that collectively form the Territory which countries are
  listed in Schedule "D" as such Schedule may be amended from time to time on
  the mutual agreement of the parties; 

  2.12
  "Distribution Rights"
  means the right to use, store, package, sell, offer for sale, market,
  advertise, promote or otherwise commercially exploit the Products; 

  2.13
  "Effective Date" shall
  mean the date first written above; 

  2.14
  "Field" means the use
  of the Products in pain management and inflammation treatment; 

  2.15
  "GAAP" means Generally
  Accepted Accounting Principles in the Territory; 

  2.16
  "Governmental Entity"
  means any (a) multinational, federal, provincial, state, regional, municipal,
  local or other government, governmental or public department, central bank,
  court, administrative or regulatory board, agency or body, tribunal, arbitral
  body, commission, board, bureau or agency, domestic or foreign, (b) any
  subdivision, agent, commission, board, or authority of or any of the
  foregoing, or (c) any quasi-governmental or 

Page 4 of 30 

  private body exercising any regulatory, expropriation or
  taxing authority under or for the account of any of the foregoing; 

  2.17
  "Gross Revenue" means
  the aggregate of all sales and other income from whatever source derived by
  the Licensee in relation to Products whether or not collected by the Licensee,
  including without limitation all proceeds from business interruption insurance
  but excluding all refunds and discounts made in good faith for Products that
  are defective. The date of sale for the purposes of this agreement shall be
  the date on which the revenue is recorded in accordance with GAAP in the
  Territory; 

  2.18
  "Intellectual Property
  Rights" means all rights, including common law and equitable rights and all
  rights of priority in all patents and designs, inventions, trade-marks,
  service-marks, copyrights, industrial designs, trade names, logos, graphics,
  commercial symbols, Confidential Information, Trade Secrets, and other
  intellectual property rights, including but not limited to, any pending
  applications and rights to file applications for any of the aforementioned,
  whether registered or not, that are owned by or licensed to Licensor or
  AlphaRx, including all pending applications and rights to file applications,
  and any improvements and discoveries in relation to formulations for topical
  delivery of pharmaceutically active ingredients designed for pain management
  and inflammation treatment; those applications and registrations listed in
  Schedule "A" - Applications and Registrations for Intellectual Property
  attached hereto; 

  2.19
  "Manufacturing Rights"
  means the right to manufacture and produce the Products and its components;
  

  2.20
  "Minimum Annual
  Royalty" has the meaning given to such term in Article 6.2 hereof; 

  2.21
  "Minimum Gross
  Revenue" means the minimum Gross Revenue identified in Schedule "C" attached
  hereto; 

  2.22
  "Minimum Performance
  Targets" means the Minimum Gross Revenue and the Minimum Annual Royalty;
  

  2.23
  "Products" means the
  authorized products as listed in Schedule E attached hereto, manufactured,
  purchased, marketed, sold or otherwise used in association with the
  Intellectual Property Rights pursuant to the formulations or product
  descriptions provided in said Schedule, as may be amended from time to time at
  the sole discretion of the Licensor; 

  2.24
  "Registration
  Authority" means the appropriate Governmental Entity in each Country in the
  Territory whose approval is required by the Licensee in order for the Licensee
  to exercise the Distribution Rights and/or Manufacturing Rights in such
  Country; 

  2.25
  "Registration
  Information" means such information as is in the possession of the Licensor as
  may be required by the Registration Authority in each Country in the Territory
  in order for the Licensee to obtain the required Regulatory Approvals to
  permit the Licensee to exercise the Distribution Rights and/or Manufacturing
  Rights in such Country; 

Page 5 of 30 

  2.26
  "Regulatory Approvals"
  means any and all approvals, consents or licenses from the any Governmental
  Entity in the applicable Country necessary to manufacture, produce, warehouse,
  store, package, sell, offer for sale, market, advertise, promote, and
  otherwise commercially exploit the Products in the that Country; 

  2.27
  "Regulatory Documents"
  means, with respect to the Products, all regulatory documents, materials or
  other information required by the applicable Governmental Entity in the
  applicable Country for the necessary Regulatory Approvals in the applicable
  Country including: (i) new drug applications; (ii) market and reimbursement
  approvals; (iii) product labels; and (iv) product inserts; 

  2.28
  "Reporting Period"
  means a monthly period commencing on the first day of the month and ending on
  the last day of the month, with each successive Reporting Period to commence
  on the first business day following the close of the preceding Reporting
  Period; 

  2.29
  "Royalty" has the
  meaning given to such term in Article 6.1 hereof; 

  2.30
  "Schedules" mean
  schedules annexed and forming part of this Agreement, as amended from time to
  time and comprise the following: 

  2.30.1
  Schedule "A" - Applications and Registrations for Intellectual Property;

  2.30.2 Schedule "B" - Standards
  of Quality;

  2.30.3 Schedule "C" - Minimum
  Performance Targets; and

  2.30.4 Schedule "D" - List of
  Countries that comprise the Territory;

  2.30.5 
  Schedule "E" - List of
  Products 

  2.31
  "Standards of Quality"
  shall mean the standards specified by the Licensor and communicated to the
  Licensee from time to time as listed in Schedule B to this Agreement as may be
  amended from time to time at the sole discretion of the Licensor; 

  2.32
  "Term" means the Term
  of this Agreement and any Renewal Terms; 

  2.33
  "Territory" means the
  geographic area comprised of the Countries; 

  2.34
  "Trade-marks" means
  the all common law rights and registrations, pending applications for
  registrations and rights to file applications for trade-marks, including all
  rights of priority to trade names, designs, graphics, logos and other
  commercial symbols whether registered or not by the Licensor and which are
  used in connection with or in association with the Products identified in a
  Schedule to this Agreement; 

  2.35
  "Trade Secrets" shall
  mean written information, including formulae, patterns, compilations,
  programs, devices, methods, know-how, techniques, process or business
  information that derives independent economic value, actual or potential, from
  not being generally known to, and not being readily ascertainable by proper
  means by, other persons who can obtain economic value from its disclosure or
  use, and is the subject of efforts that are reasonable 

Page 6 of 30 

  under the circumstances to maintain its
  secrecy. However, such disclosure shall not be considered "Trade Secrets" for
  the purposes of this Agreement if and when it: 

  
    i)
       is made
    subject to an order by judicial or administrative process requiring the
    recipient to disclose any or all of the Trade Secrets, provided however that
    the recipient shall promptly notify the provider and allow the provider
    reasonable time to oppose such process before disclosing any of the Trade
    Secrets; 

    ii)
       is
    published or becomes available to the general public other than through a
    breach of this Agreement; 

    iii)
      is obtained
    by the recipient from a third party with a valid right to disclose it,
    provided that said third party is not under a confidentiality obligation to
    the provider; 

    iv)
      is
    independently developed by employees, agents or consultants of the recipient
    who had no knowledge of or access to the provider's Trade Secrets as
    evidenced by the recipient's business records; or 

    v)
      was possessed
    by the recipient prior to receipt from the provider, other than through
    prior disclosure by the provider, as evidenced by the recipient's business
    records; 

  

  2.36
  "Transfer" means any
  event pursuant to which rights or obligations of the affected party under this
  Agreement are or are attempted to be sold, disposed of, assigned, pledged,
  hypothecated, charged, mortgaged, encumbered, sublicensed or transferred and
  includes any transfer by operation of law; and 

  2.37
  "Translated Documents"
  has the meaning given to such term in Article 16.1.1 hereof. 

  3.   
  GRANT AND TERM
  

  3.1
  Subject to the terms
  of this Agreement, the Licensor hereby grants to the Licensee exclusive and
  non-transferable Manufacturing Rights and Distribution Rights for the Products
  and to use the Intellectual Property Rights in each Country in the Territory
  for the duration of the Term to the extent required to practice the exclusive
  rights granted herein to the Products, provided such Products conform to the
  Standards of Quality defined in the Agreement. 

  3.2
  The grant of this
  license by the Licensor is conditional upon the occurrence of all of the
  following events: 

  
    3.2.1
    The Licensee shall have filed all Regulatory Documents and obtained all
    Regulatory Approvals, and any other approvals, consents or licenses required
    under Applicable Laws, for the commercial exploitation of the Products in
    the applicable Country in the Territory in accordance with this Agreement;
    

    
    3.2.2 
    The Licensee shall have
    notified the Licensor in writing, with evidence satisfactory to the
    Licensor, in its sole discretion, that the Licensee has met all of the
    conditions; 

  

Page 7 of 30 

  
    3.2.3
    The Licensor shall
    have provided written confirmation to the Licensee that it accepts that the
    Licensee has fulfilled its obligations set out in this Article 3.2. 
    

  

  3.3
  The Licensee shall not
  manufacture, market, sell or otherwise commercially exploit or permit to be
  commercially exploited the Products, either directly or indirectly outside the
  Territory granted under this Agreement. 

  3.4
  This Agreement shall
  be for an initial term of Five (5) years commencing on the Effective Date, and
  it shall automatically be renewed on terms as provided in this Agreement.
  

  3.5
  This Agreement will be
  automatically renewed for additional terms of [One/Two] (1/2) years each
  unless: 

  
    3.5.1
    The Licensee shall have given to
    the Licensor at least six (6) months prior written notice of its election
    not to renew this Agreement; 

    
    3.5.2 
    The Licensor shall have given to the
    Licensee at least six (6) months prior written notice of its election not to
    renew this Agreement; or 

    
    3.5.3 
    The Agreement is
    otherwise terminated pursuant to Article 12 herein. 

  

  4.   
  USE OF THE
  INTELLECTUAL PROPERTY BY LICENSEE 

  4.1
  The Licensee shall
  take all necessary steps and use its best efforts to diligently, market,
  promote, sell and commercialize the Products under this Agreement within the
  Territory. 

  4.2
  The Products shall be
  commercialized in accordance with or exceed the Standards of Quality and
  specifications listed by the Licensor in the Schedule to this Agreement and
  applicable laws. 

  4.3
  The Licensee
  understands and agrees that: 

  
    4.3.1
    As between the Licensor and the
    Licensee, the Licensor is the exclusive owner of the Intellectual Property
    Rights and all goodwill associated therewith; 

    
    4.3.2 
    Any unauthorized use of the Intellectual
    Property Rights is and shall be deemed an infringement of the Licensor's
    rights; 

    
    4.3.3 
    Except as expressly provided in this
    Agreement, the Licensee acquires no right, title or interest in the
    Intellectual Property Rights; 

    
    4.3.4 
    The Licensee shall use the Intellectual
    Property Rights only in connection with the authorized Products; 
    

    
    4.3.5 
    The Licensee shall ensure that all
    materials bearing the Trade-marks will properly identify the ownership of
    the Trade-marks and that the Trade-mark use by the Licensee is a licensed
    use, in the form as provided by the Licensor from time to time; 
    

    
    4.3.6 
    The Licensee shall
    comply with any and all other marking provisions reasonably designated by
    Licensor from time to time and as prescribed by Applicable Laws;

  

Page 8 of 30 

  
    4.3.7
    The Licensee shall,
    throughout the Term, meet the requirements of all Applicable Laws and obtain
    the permits necessary to perform its obligations under this Agreement.
    

  

  4.4
   The Licensee
  understands and agrees that it shall not: 

  
  
    
    4.4.1
    in any manner represent that it has any ownership interest in the
    Intellectual Property Rights or applications or registration therefore;
    

    
    4.4.2 reverse engineer, or permit
    its Affiliates or any person to reverse engineer, the Products; 

    
    4.4.3 itself use, store, sell,
    offer for sale, market, advertise, promote or otherwise commercially exploit
    the Products outside of the Field or Territory, or otherwise permit any
    Affiliate or third party to use, store, sell, offer for sale, market,
    advertise, promote or otherwise commercially exploit the Product outside of
    the Field or Territory; 

    
    4.4.4 retain any person to
    exercise any of its rights or obligations under this Agreement without the
    prior written consent of the Licensor. Where the Licensor provides its prior
    written consent to the Licensee to subcontract any of its rights or
    obligations under this Agreement, the Licensee shall ensure that any
    permitted subcontractor abides by all of the provisions of this Agreement as
    they apply to the Licensee, including the obligations relating to
    confidentiality of information, regulatory approval and reporting of and
    Contraindications. Any breach of this Agreement by any subcontractor will be
    deemed to be a breach by the Licensee; 

    
    4.4.5 warehouse, store, sell,
    offer for sale, market, promote or commercially exploit any Products without
    first satisfying all of the requirements of Article 3.2; 

    
    4.4.6 alter the Trade-marks in
    any manner; 

    
    4.4.7 use any other trade-mark or
    any trade name or product name or any other means of designation or
    commercial identification in connection with the Products without the
    express written consent of the Licensor; 

    
    4.4.8 without the prior written
    consent of the Licensor, use any word or symbol or combination thereof which
    is not a trade-mark in close association with the Trademarks or any other
    trade-mark or business, trade, corporate, partnership or other name or
    symbol such that the use thereof would be likely to result in a loss of
    distinctiveness or goodwill of the Trade-marks; 

    
    4.4.9 use or advertise the
    Trade-marks in association with any products other than the Products or use
    in any manner any trade mark confusing with or similar to the Trademarks in
    association with the Products or in association with any other wares or
    services; 

    
    4.4.10 
    without the prior written
    consent of the Licensor, use any of the Trade-marks as a verb or in the
    plural or in any manner that results in the Trade-marks being incorrectly
    spelled and/or depicted; 

  

Page 9 of 30 

  
    4.4.11
    use the Trade-marks as part of its corporate or other business or trade name
    and agrees to use, promote and advertise the Products under the Trade-marks
    without any prefix, suffix or modifying words, terms, designs or symbols,
    unless authorized in writing by Licensor; 

    
    4.4.12 use the Trade-marks in
    signing any contract, cheque, purchase agreement, negotiable instrument or
    other legal document, application for any license or permit, or in any
    manner that may incur liability of Licensor for any debt or obligation of
    the Licensee; 

    
    4.4.13 
    create any derivative
    product(s) which could likely compete with the Products in the opinion of
    the Licensor. 

  

  4.5
  The Licensee shall not
  sell the Products to any person who might in turn sell the Products outside
  the Territory. If there are any sales of the Products outside the Territory,
  the Licensee shall immediately cease such sales and be responsible and
  accountable any such sales to the Licensor. 

  5.
     
  INSPECTION AND QUALITY STANDARDS 

  5.1
  The Licensee
  acknowledges the Licensor's right to exercise control over the character and
  quality of the wares and services sold by the Licensee under the Trade-marks.
  

  5.2
  The Licensee shall at
  all reasonable times permit the Licensor or its authorized representative, to
  inspect the premises of the Licensee where the Products are manufactured,
  stored, performed or sold to determine whether the Licensee is maintaining the
  Licensor's Standards of Quality. 

  5.3
  The Licensee shall
  supply to the Licensor from time to time, upon request, representative current
  sample products and packaging of all use of the Trade-marks and other
  Intellectual Property Rights. 

  5.4
  The Licensee agrees to
  submit to the Licensor, if requested by the Licensor for reasonable inspection
  and testing, samples of every type of the Products and to withdraw from the
  course of manufacture, trade and from the market any Products or items that do
  not comply with the Standards of Quality as determined by the Licensor. 
  

  6.
     
  ROYALTIES AND OTHER PAYMENTS 

  6.1
  In consideration of the ongoing rights, licenses and privileges granted under
  this Agreement and subject to the provisions of Article 6.3 and 6.4, the
  Licensee shall pay to the Licensor: (a) a one-time license fee of United
  States Dollars Ten Million (US$10,000,000.00) on the Effective Date; and (ii)
  within thirty (30) days after the last day of each Accounting Period a royalty
  of Five Percent (5%)
  of the Minimum Gross Revenue (the "Royalty") for such Accounting Period.
  

  6.2
  The Minimum Annual
  Royalty payable by the Licensee to the Licensor shall be as stated in Schedule
  "C" to this Agreement. 

Page 10 of 30 

  6.3
  The Royalty payable within thirty (30) days after the last day of each
  Accounting Period by the Licensee to the Licensor under Article 
  6.1 shall be the greater of:
  

  
    6.3.1
    the Royalty; or
    

    6.3.2
    One quarter (1/4) of
    the Minimum Annual Royalty. 

  

  6.4
  Notwithstanding
  Article 6.1, the Licensee shall not be required to pay the lump-sum amount set
  out in clause 6.1 until the occurrence of an Alpha Liquidity Event. The
  Licensee shall pay the Licensor this amount in the manner directed by the
  Licensor within ten (10) days of the Alpha Liquidity Event. 

  7.
     
  RECORDS AND REPORTS 

  7.1
  The Licensee shall
  keep complete and accurate books and records with respect to the Products and
  in particular in relation to the purchasing, marketing, selling and
  commercializing efforts in relation to the Products. The Licensee shall grant
  the Licensor and its authorized representative reasonable access during
  business hours to inspect and audit such portions of such books and records
  and make copies thereof. The Licensee shall also permit the Licensor and its
  representative to inspect its premises and the Products and obtain any
  necessary samples during business hours. The Licensee shall keep and preserve
  the accounts and records referred to in this Agreement for the duration of
  this Agreement and its renewals and for a period of six (6) years thereafter.
  

  7.2
  The Licensee shall
  keep separate records in sufficient detail to permit the determination of
  Royalties payable hereunder. At the request of the Licensor, the Licensee
  shall permit independent auditors or technical consultants selected by the
  Licensor to examine, during ordinary business hours, up to a maximum of four
  (4) times in each calendar year such records and other documents as may be
  necessary to verify or determine the Gross Revenue and Royalties paid or
  payable under this Agreement. 

  7.3
  The fees and expenses
  of the Licensor's representatives performing any examination of records under
  this Agreement shall be borne by the Licensor. However, if an error or
  variance in Royalties of more than ten percent (10.0%) of the total Royalties
  due is discovered for any year examined, then the total fees and expenses of
  these representatives shall be borne by the Licensee. 

  7.4
  The Licensee shall
  submit to the Licensor within thirty (30) days of each Reporting Period a
  complete and accurate statement of account detailing the Gross Revenue within
  that Reporting Period. All such statements shall include a calculation of the
  amount due to the Licensor for Royalties and be certified as accurate by an
  officer of the Licensee. 

  7.5
  The Royalty payable by
  the Licensee to the Licensor shall be payable in United States dollars within
  thirty (30) days after the last day of each Accounting Period to the Financial
  Institution specified by the Licensor. The Licensee shall also provide a
  complete and accurate statement of account detailing the Gross Revenue within
  that Accounting Period. All such statements shall include a calculation of the
  amount due to the Licensor for Royalties and be certified as accurate by an
  officer of the Licensee. 

Page 11 of 30 

  7.6
  If the Licensee sells
  the Products to an Affiliate who sells or re-sells the Products to the
  consumer at a higher price, the Gross Revenue shall be based on the greater of
  the prices charged between the prices charged to the Affiliate and the process
  charged by the Affiliate to the ultimate consumer. 

  7.7
  The statement of
  account required for the Reporting Period and the Accounting Period shall
  include the following information: 

  
    7.7.1
    the quantity of each item for the Products manufactured and distributed upon
    which Royalty has accrued; 

    
    7.7.2 identification of the
    Royalty basis used under Article 6.3 for the Products; 

    
    7.7.3 the Gross Revenue, the
    amount of Royalties due for each of the Products type, all information
    required to show how such amount has been calculated, and the aggregate
    amount of all Royalties due; and 

    
    7.7.4 
    in the event no Royalties
    are due, the Licensee's report shall so state. 

  

  7.8
  All Royalties for the
  Accounting Period computed on invoiced amounts in currencies other than United
  States dollars shall be converted directly into United States dollars, without
  intermediate conversions to another currency, at the Telegraphic Transfer
  Selling (TTS) rate quoted by either the edition of the Wall Street Journal or
  the head office of Citibank N.A. of New York, New York at the close of banking
  on the last business day of such Accounting Period. The Licensee shall bear
  and pay, for its activities and supplier's activities, all taxes required by
  its national government, including any political subdivision thereof, as the
  result of the existence or operation of this Agreement, except any necessary,
  appropriate and required national income tax imposed upon Royalties or other
  payments by the national government of the Licensor. The Licensee may deduct
  or withhold such national income tax from said Royalties or other payments,
  provided the Licensee furnishes the Licensor with an original tax certificate
  or other original document evidencing payment of such income tax as may be
  requested by the Licensor. 

  8.   
  INTEREST ON OVERDUE
  ROYALTIES AND OTHER PAYMENTS 

  8.1
  The Licensee shall be
  liable for interest at a rate of two percent (2.0 %) per month (24 per cent
  annually) compounded annually on any overdue Royalty or other payment payable
  under this Agreement, commencing on the date such Royalty or other payment
  becomes due. 

  8.2
  Interest on such
  overdue Royalty or other payment shall continue to accrue, and the duty to pay
  such interest shall continue beyond any expiration or termination of this
  Agreement. If such interest rate exceeds the maximum legal rate in the
  jurisdiction where a claim therefore is being asserted, the interest rate
  shall be reduced to such maximum legal rate. 

  9.
     
  PROTECTION AND PRESERVATION OF INTELLECTUAL PROPERTY 

  9.1
  The Licensor and the
  Licensee mutually covenant that they will at all times use their best efforts
  to preserve the value and validity of the Intellectual Property Rights. 
  

Page 12 of 30 

  Prosecution
  Obligations 

  9.2
  The Licensor, at its
  sole discretion and expense, shall have the exclusive right to file, prosecute
  and maintain in its own name any patent applications and patents directed to
  the Products relating in any manner to the importation, sale, use, manufacture
  or other exploitation of the Products. The Licensee shall cooperate and comply
  with all reasonable requests made by the Licensor in furtherance of the said
  filing, prosecution and/or maintenance of such patent applications and patents
  and the Licensor shall reimburse the Licensee for its reasonable costs
  incurred in providing such cooperation. In addition, the Licensee shall
  cooperate with the Licensor in obtaining patent term extensions or
  supplemental protection certificates or their equivalents relating to the
  Products in the Territory where applicable and, in the Licensor's opinion,
  commercially reasonable. 

  Patent Office
  Proceedings 

  9.3
  The Licensee shall
  notify the Licensor forthwith upon becoming aware of any request for, filing
  or institution of any proceeding before a patent office seeking to protest,
  oppose, cancel, reexamine, declare and an interference proceeding, or initiate
  a conflict proceeding or other process proceeding affecting the scope,
  ownership, validity or term of a patent application or patent directed
  relating to the Products and/or the Intellectual Property Rights. The Licensor
  shall have the right to conduct such any proceeding before a patent office
  seeking to protest, oppose, cancel, reexamine, declare an interference
  proceeding, or initiate a conflict proceeding or other proceeding affecting
  the scope, ownership, validity or term of a patent application or patent
  relating to the Products as it sees fit and the Licensee shall cooperate fully
  with the Licensor's reasonable requests with respect to any such proceeding.
  The Licensor shall reimburse the Licensee for its reasonable costs incurred in
  providing such cooperation. 

  Infringement of
  Intellectual Property Rights 

  9.4
  The Licensee shall
  have no right to commence legal action affecting the Intellectual Property
  Rights in its own name or on behalf of the Licensor, unless the Licensor first
  consents in writing, such consent to be within the sole discretion of the
  Licensor. However, the Licensee shall immediately notify the Licensor in
  reasonable detail of any instance of apprehended, actual or suspected
  infringement of any Intellectual Property Rights in the Territory which may
  come to the Licensee's knowledge. 

  9.5
  The Licensor shall
  have no obligation to commence legal action against such third party. 
  

  9.6
  If the Licensor
  determines, after taking professional advice, that a good cause of action
  exists, the Licensor and the Licensee, under the direction and with the
  approval of the Licensor, will take reasonable and necessary action in an
  effort to prevent and restrain such infringements of the Intellectual Property
  Rights in the Territory. The Licensee shall also make all necessary efforts to
  assist the Licensor in the prosecution of any action relating to the
  Intellectual Property Rights including, but not limited to, law suits,
  expungement proceedings and oppositions. 

Page 13 of 30 

  9.7
  The costs and expenses
  of any such actions of the Licensee described in Article 9.6 shall be borne by
  the Licensee. The proceeds and any damages awarded in any such proceedings
  shall be paid to the Licensor who shall pay to the Licensee the costs and
  expenses of such actions from any such award. 

  9.8
  The Licensor may in
  its sole discretion compromise or settle any dispute involving the
  Intellectual Property Rights with any third party at any time on behalf of the
  Licensee without compensation or Notice to the Licensee. 

  Infringement of Third Party
  Intellectual Property Rights 

  9.9
  The Licensee shall
  given notice to the Licensor immediately of any action or threatened action by
  any person alleging that the use the Intellectual Property Rights infringes
  the rights of the third person. The Licensee shall undertake the defense of
  any such action and the Licensor shall make all necessary efforts to assist
  the Licensee in the defence of any action including, but not limited to, law
  suits, expungement proceedings and oppositions. 

  9.10
  Each party shall bear
  its own costs and expenses in connection with any action described in Article
  9.9. If there are any costs or other amounts awarded to the Licensee in any
  such proceedings, the Licensee shall reimburse the Licensor for its costs and
  expenses in connection with such proceedings from any such award. 

  9.11
  The Licensee may not
  compromise or settle any dispute involving the infringement of any third party
  rights by the Intellectual Property Rights without the prior written consent
  of the Licensor acting in its sole discretion. 

  Protection of Intellectual
  Property Rights 

  9.12
  The Licensee
  undertakes to assist in any Intellectual Property Rights application in the
  Territory or elsewhere worldwide and to execute any such documents and to take
  such action as may be necessary or requested by the Licensor to make or
  support such application or to retain, enforce or defend such application, or
  any registration of the Trade-marks. 

  9.13
  The Licensee agrees to
  use its best efforts and diligence to prevent the dilution of the Intellectual
  Property Rights of the Licensor. 

  9.14
  In the event that the
  Licensee declines or fails to defend or protect the Intellectual Property
  Rights to the satisfaction of the Licensor, the Licensor may assume conduct of
  the protection of the Intellectual Property Rights and the Licensee shall be
  responsible for all legal and attorney costs. 

  VALIDITY OF LICENSED RIGHTS
  

  9.15
  The Licensee
  acknowledges that as between the Licensor and the Licensee, the Licensor is
  the exclusive owner of the Intellectual Property Rights and of the goodwill
  associated therewith. 

Page 14 of 30 

  9.16
  The Licensee shall
  not, either directly or indirectly, whether in any proceedings brought against
  it by the Licensor to enforce the provisions of this Agreement or in any
  independent action, contest or question the validity of any right of the
  Licensor to own and use the Intellectual Property Rights or assist any other
  person, directly or indirectly, to do the same. 

  9.17
  The Licensee shall
  not, either directly or indirectly, dilute the value of the goodwill
  associated with the Intellectual Property Rights or assist any other person,
  directly or indirectly, to do the same. 

  9.18
  The Licensee expressly
  recognizes and agrees that any and all goodwill associated with the
  Intellectual Property Rights, including any goodwill with respect thereto
  which might be deemed to have arisen from the Licensee's activities hereunder
  enure directly and exclusively to the benefit of and shall belong solely to
  the Licensor, irrespective of whether or not such activities are a breach of
  this Agreement. 

  10.   
  NO WARRANTY 
  

  10.1
  The Licensor makes no
  representations or warranties, expressly or implicitly, with respect to the
  Intellectual Property Rights. By way of example but not of limitation, the
  Licensor makes no representations or warranties that the use of any of the
  Intellectual Property Rights will not infringe any registered or common-law
  intellectual property rights of others. 

  11.   
  NO RIGHT EXCEPT
  UNDER LICENSE 

  11.1
  This Agreement does
  not confer any right of ownership or any other rights in and to the
  Intellectual Property Rights upon the Licensee and the Licensee confirms that
  it has no interest or right in and to the Intellectual Property Rights except
  the limited right to use the same as a licensed user pursuant to this
  Agreement. 

  11.2
  If this Agreement
  terminates, whenever and however that occurs and for whatever reason, the
  Licensee shall not at any time thereafter directly or indirectly use: 
  

  
    11.2.1
    the Intellectual
    Property Rights; or 

    11.2.2
    any other
    trade-mark, or any other mark or any trade name or product name, or any
    other means of designation or commercial identification which is likely to
    be confused with the Intellectual Property Rights or likely to dilute the
    value of the goodwill associated with the Intellectual Property Rights.
    

  

  12.   
  TERMINATION 
  

  12.1
  Omission or default by
  the Licensee in the performance of any of its obligations as set out in this
  Agreement constitutes grounds for termination of this Agreement. 

  12.2
  The Licensor shall
  give the Licensee thirty (30) days notice in writing of the Licensee's default
  or omission constituting grounds for termination, and of the Licensor's
  election to terminate this Agreement. If within thirty (30) days after the
  receipt of such notice, the Licensee cures the default or omission to the
  satisfaction of the Licensor, the termination 

Page 15 of 30 

  notice shall be without force or effect. If
  the omission or default specified in said notice is not cured within the
  thirty (30) day period, this Agreement and the Licensee's rights hereunder
  shall immediately terminate. 

  12.3
  Notwithstanding
  Article 12.2, if the Licensee fails to meet the Minimum Performance Targets
  for Minimum Gross Revenue and remit the Minimum Annual Royalty under Article
  6.2 and Schedule "C", the Licensor may, in its sole discretion, either: 
  

  
    12.3.1
    Terminate this
    Agreement in whole or in part; or 

    12.3.2
    Notify the Licensee
    in writing that the Manufacturing Rights and/or the Distribution Rights
    shall immediately become non-exclusive, and thereafter this Agreement shall
    be deemed to be so amended. 

  

  12.4
  Notwithstanding
  Article 12.2, the Licensee shall be deemed to be in default under this
  Agreement and the Licensor may at its option terminate this Agreement and all
  rights granted to the Licensee herein effective immediately without notice or
  opportunity to cure the breach if: 

  
    12.4.1
    The Licensee ceases to carry on business or makes a general assignment for
    the benefit of creditors or a proposal or arrangement under bankruptcy
    legislation; or if a liquidator, trustee in bankruptcy, custodian, receiver,
    receiver and manager or any other officer with similar powers is appointed
    for the Licensee; or Insolvency, bankruptcy, liquidation or other
    proceeding, voluntary or involuntary is, commenced, affecting the status of
    the Licensee, or if the Licensee is placed in receivership, or makes an
    assignment for the benefit of its creditors; or 

    
    12.4.2 If the Licensee makes a
    sale of all or a substantial portion of its assets, or if any shareholder
    sells or transfers any of the shares in Licensee without consent of the
    Licensor, or if there is material change in the control and management of
    the Licensee without the consent of the Licensor; 

    
    12.4.3 The Licensee Transfers or
    attempts to Transfer this Agreement or any rights hereunder to any person
    without the prior written consent of the Licensor; 

    
    12.4.4 There is a change in
    Control of Licensee; 

    
    12.4.5 
    The Licensor notifies the
    Licensee in writing of an omission or a default and the Licensee has
    previously received from the Licensor during any consecutive twelve (12)
    month period more than three (3) notices relating to an omission or default
    under this Agreement even if such events have been cured within the time
    permitted for same. 

  

  13.   
  LICENSEE'S
  OBLIGATIONS ON TERMINATION 

  13.1
  Upon the termination,
  expiration or non-renewal of this Agreement the Licensee shall immediately
  cease to be a licensee of the Licensor and shall: 

Page 16 of 30 

  
    13.1.1
    Immediately cease to have any Manufacturing Rights, any Distribution Rights
    or any rights to use the Intellectual Property Rights; 

    
    13.1.2 Remove the Products and
    the Intellectual Property Rights from and deliver to the Licensor or its
    duly authorized representatives all materials, including sign and
    advertising materials in its possession, custody or control upon which the
    Intellectual Property Rights appear; 

    
    13.1.3 Immediately pay to the
    Licensor all fees, Royalties, amounts and other charges as have became due
    hereunder; 

    
    13.1.4 Immediately cease to and
    thereafter not, directly or indirectly, hold itself out as a Licensee for
    the Products under the Intellectual Property Rights or this Agreement;
    

    
    13.1.5 Execute and deliver such
    documents and take such other steps as may be necessary or desirable to
    evidence that any and all rights the Licensee may have had with respect to
    the Products Intellectual Property Rights no longer exist and that all
    manufacture, distribution and/or use of the Products and/or Intellectual
    Property Rights by the Licensee has immediately ceased. 

    
    13.1.6 
    Any surplus of PRODUCTS
    shall be purchased by Licensor from Licensee at manufacturing price, at
    termination of the Agreement. 

  

  13.2
  Termination of this
  Agreement shall be without prejudice to any existing rights and/or claims that
  the Licensor may have against the Licensee. 

  14.   
  CONFIDENTIALITY AND
  NON-COMPETITION 

  14.1
  The Licensee agrees
  that all Confidential Information which it will acquire or which may come to
  its knowledge during the term this Agreement will at all times (both during
  the term of this Agreement and subsequent to the termination thereof) and for
  all purposes be held by the Licensee in confidence and the Licensee agrees
  that it will not, both during the term of this Agreement and subsequent to the
  termination thereof, however caused, disclose, divulge, communicate orally, in
  writing or otherwise to any person or persons any Confidential Information.
  

  14.2
  Confidential
  Information received by the Licensee under this Agreement may only be
  disclosed by the Licensee: 

  
    14.2.1
    To persons within or employed by the Licensee in order to carry out the
    purposes of this Agreement; and 

    
    14.2.2 
    To contractors approved in
    writing by the Licensor for use only within the framework of their contracts
    with the Licensee in relation to work relating to the subject matter of the
    Confidential Information, 

  

  providing that any such Confidential
  Information shall only be disseminated to such persons upon terms and
  obligations of confidentiality similar to those in this Agreement. 

Page 17 of 30 

  14.3
  Immediately following
  the termination of this Agreement, however caused, the Licensee agrees to
  transfer and deliver to the Licensor all documents, notebooks, charts, files
  and records, including electronic records, containing or referencing
  Confidential Information including copies, summaries, and notes in its
  possession or control. 

  14.4
  The Licensee shall:
  

  
    14.4.1
    disclose and assign to the Licensor all right, title and interest that the
    Licensee may have in and to all inventions, works, discoveries, improvements
    and innovations developed or created by the Licensee solely or jointly with
    others which relate to the Intellectual Property Rights and the Products
    together with any intellectual property rights residing therein including,
    without limitation, patents, trade-marks, copyrights, industrial designs and
    trade secrets as well as any applications or registrations filed or obtained
    thereon in any of the Countries in the Territory or any other countries,
    

    
    14.4.2 execute all necessary
    documents and provide assistance during and subsequent to the term of this
    Agreement to enable the Licensor to perfect and maintain its title to and to
    obtain for itself or its nominees such intellectual property rights in the
    Countries in the Territory and all other countries, and execute and deliver
    all assignments thereof, when requested at the reasonable expense of the
    Licensor, and 

    
    14.4.3 
    keep and maintain for the
    Licensor precise and up-to-date written and electronic records of all such
    inventions, works, discoveries, improvements or innovations, and must not
    take any action, directly or indirectly, which could adversely affect the
    value of the such inventions, works, discoveries, improvements or
    innovations or the validity or enforceability of any intellectual property
    rights residing therein. 

  

  14.5
  The Licensee shall
  not, directly or indirectly, whether as owner, shareholder (except to the
  extent of a less than five per cent (5%) ownership interest of the outstanding
  shares of a publicly held corporation), director, agent, officer, employee,
  consultant, independent contractor or in any other capacity whatsoever, of a
  corporation, partnership or proprietorship: 

  
    14.5.1
    compete with, or engage in, or be financially concerned or interested in, or
    advise, lend money to, guarantee the debts or obligations of or permit their
    name to be used or employed by any person engaged in or concerned with or
    interested in the business within any Country in the Territory which is the
    same as, or competitive with the business of the Licensor, and/or 
    

    
    14.5.2 
    for a period of Five (5)
    years from the date of termination of this Agreement, however caused, the
    Licensee will not for any reason whatsoever, directly or indirectly, solicit
    or accept business with respect to products which are the same as, or
    competitive with the business of the Licensor. 

  

  15.   
  GOVERNMENTAL AND
  REGULATORY COMPLIANCE 

  15.1
  The Licensee shall
  advise the Licensor in writing as to what Registration Information is required
  for each Country in the Territory. Following receipt of such information, the
  

Page 18 of 30 

  Licensor shall provide the Registration
  Information to the Licensee as completely as may be necessary, and as is in
  the possession of the Licensor in order that the Licensee may use it for
  registration of the Products. The Licensee may not use the Registration
  Information for purposes other than those set forth in this Agreement. 
  

  15.2
  As soon as possible,
  but in no case no longer than a period of ninety (90) days after the Licensee
  receives the Registration Information, it must perform all actions that may be
  necessary to apply for registration from the corresponding Registration
  Authority in each Country in the Territory, in the name of the Licensee as
  holder and owner of the registration, due to mandatory provisions of each
  Country in the Territory. The registration must be done under the trademark as
  attached. 

  15.3
  The Licensee must
  comply with all requirements of the Registration Authority and exert its best
  effort to obtain a rapid registration of the Product. If to obtain or maintain
  the registration, any additional documentation is required, such as, for
  example, a clinical analysis, or if a change in the Registration Information
  is necessary, the Licensee may not take any step whatsoever without the
  express written consent from the Licensor. All necessary measures may only be
  performed by the Licensee at its expense with the authorization of the
  Licensor, assisted by the Licensor without cost. The remaining details shall
  be separately agreed by the parties. 

  15.4
  The Licensee must
  report to the health registration department of the Licensor concerning
  progress of the registration procedure for the Products at intervals of three
  (3) months, and must for this purpose send to the Licensor all correspondence
  with the Registration Authority. It must immediately report any eventuality
  that may arise in the registration procedure. 

  15.5
  The Licensee must
  report to the Licensor any particulars of the authorization immediately upon
  obtainment thereof, and must send to the Licensor a certified copy of the
  registration. 

  15.6
  The Registration
  Information, any other information communicated by the Licensor, and any
  copies of the foregoing, are and shall continue to be the property of the
  Licensor. 

  15.7
  Maintenance of the
  registration is the responsibility of the Licensee, and it shall use all means
  at its disposal therefor. 

  15.8
  In the case of
  modification or cancellation of the registration, or if there are changes in
  the Applicable Laws that may affect the registration, or if the Licensee
  learns of a requirement by the Registration Authority or a proposed change or
  cancellation, the Licensee shall immediately so notify the Licensor. The
  Licensee must proceed in accordance with the instructions from the Licensor
  and shall provide thereto any help that may be needed to protect the
  registration. If Applicable Laws make it necessary for the Licensee to
  commence a proceeding, or be a party in litigation, the Licensee must act
  pursuant to the instructions of the Licensor and it shall assume the necessary
  costs arising for the proceeding. 

  15.9
  The registration
  obtained shall be the property of the Licensor. The Licensee shall not be
  empowered to dispose of the registration, nor to cancel it, nor to modify it
  or transfer it to 

Page 19 of 30 

  third parties, nor to otherwise use it for
  other purposes without the prior written consent of the Licensor. 

  15.10
  After receipt of
  written notice from the Licensor, the Licensee must, on any date and without
  any delay whatsoever, and pursuant to the instructions given thereto, transfer
  it to a third party or must cancel the registration. Any right of withholding
  is excluded. 

  Product Labels
  

  15.11
  The Licensee shall
  create and include with each of the Products sold to end-users or otherwise
  put into use a label ("Product Label") which conforms with all Applicable Laws
  in each Country in the Territory including those that pertain to marking and
  labeling of pharmaceutical products. In addition, all Product Labels shall
  contain all applicable patent numbers so as to indicate that the Product is
  the subject of Intellectual Property Rights protection or that applications
  for such Intellectual Property Rights protection have been made. Prior to any
  use or distribution or the Production in any Country in the Territory in any
  manner whatsoever, the Licensee will submit all Product Labels to the Licensor
  for prior written approval. 

  Licensor's
  Cooperation 

  15.12
  On request from the
  Licensee, the Licensor shall provide to the Licensee at the Licensee's
  expense, all relevant research, pre-clinical data and clinical data related to
  the Products that the Licensee reasonably requires in order to fulfill its
  obligations to obtain Regulatory Approvals in each Country in the Territory.
  All such research, pre-clinical data and clinical data provided by the
  Licensor to the Licensee shall be deemed Confidential Information, and subject
  to the confidentiality provisions under this Agreement. 

  16.    
  COMMERCIALIZATION
  COVENANTS 

  16.1
     The
  Licensee covenants that: 

  
    16.1.1
    at no cost to the Licensor, it will cause the translation to the languages
    set out in Schedule "D" of all Product Labels, Product Inserts, marketing
    materials and any other documents or materials that are necessary to perform
    its obligations under this Agreement (collectively, the "Translated
    Documents") and will be solely responsible for ensuring that any Translated
    Documents or portions thereof that have been translated from English
    accurately reflect the version on which the translation is based; and 
    

    
    16.1.2 
    if any portion of the
    Translated Documents contains an error or misleading statement or an
    omission which renders the Translated Documents or any part thereof
    erroneous or misleading, the Licensee will, as soon as practicable and in no
    event later than thirty (30) days after the deficiency is brought to the
    Licensee's attention (through notice from the Licensor or otherwise), recall
    all incorrect or deficient materials, correct any errors, misleading
    statements or omissions and deliver to the appropriate person(s)
    replacements of the Translated Documents or the deficient parts thereof in
    the same form and in the same manner as required in this Agreement 
    

  

Page 20 of 30 

  with respect to the original Translated
  Documents. 

  16.2
  The Licensee shall
  prepare and submit on or before May 31, 2005, at no cost to the Licensor, a
  timetable which contains a detailed description of the Licensee's plans to
  obtain Regulatory Approvals. The Licensee agrees that all Regulatory Approvals
  for the Products in each Country in the Territory, Product Labels and Product
  Inserts will be issued in the name of the Licensor and will be for the sole
  benefit of the Licensor. 

  16.3
  If any change in any
  of the research materials, pre-clinical or clinical data renders the
  Translated Documents out of date or inaccurate, the Licensee will, as soon as
  practicable and in no event later than thirty (30) days after the date on
  which such change becomes effective, recall all incorrect or deficient
  materials, correct any errors, misleading statements, omissions or other
  inaccuracies, and deliver to the appropriate persons replacements of the
  Translated Documents or parts thereof in the same form and in the same manner
  as required in this Agreement with respect to the original Translated
  Documents. 

  16.4
  The Licensee shall
  prepare quarterly sales forecasts for the Products in each of the Countries in
  the Territory (the "Marketing Timetable"). The Licensee shall provide to the
  Licensor written reports within twenty (20) days after each Reporting Period
  describing the progress made under the most recent Marketing Timetable. 
  

  16.5
  During the Term of
  this Agreement, each Party's representatives shall meet on a regular basis,
  including a meeting by tele-conference, and in any event not less than once in
  any calendar month, at a mutually agreeable place and time, to discuss the
  obligations of the Parties under this Agreement. Unless expressly identified
  to the contrary, all information disclosed during such meetings shall
  constitute Confidential Information of the disclosing party. 

  16.6
  The Licensee covenants
  that it shall will continually use its best efforts to advertise, market,
  promote and distribute sell the Products and protect and promote the
  reputation and goodwill of the Licensor and the Products. Without limiting the
  generality of the foregoing, the Licensee shall, at no cost to the Licensor:
  

  
    16.6.1
    maintain at all times adequate facilities and a sufficient number of
    qualified staff to fulfill its obligations under this Agreement; 

    
    16.6.2 effect introduction of the
    Products into the Territory as soon as practicable; 

    
    16.6.3 achieve the Minimum
    Performance Targets set out in Schedule "C"; 

    
    16.6.4 cause its employees and
    staff to adopt an effective training and development program to effectively
    implement this Agreement; 

    
    16.6.5 
    at no time engage in any
    illegal, deceptive, unfair or unethical trade practice which may adversely
    affect the reputation and or goodwill of the Products, the Licensor, or the
    Intellectual Property Rights of the Licensor, and at no time make false,
    misleading or disparaging representations concerning the Products, the
    Licensor or the Intellectual Property Rights of the Licensor; 

  

Page 21 of 30 

  
    16.6.6
    manufacture, distribute and market the Product in accordance with this
    Agreement and only for the purposes contemplated in this Agreement; 
    

    
    16.6.7 produce and distribute to
    customers and potential customers marketing materials and brochures in the
    Territory; 

    
    16.6.8 ensure that the
    appropriate educational, tradeshow, advertising, and marketing support for
    the Product is provided to customers and potential customers in the
    Territory; and 

    
    16.6.9 
    at all times conduct its
    business in such a way as to protect, safeguard and avoid any detriment to
    the Licensor's good name, reputation, image and good will or that of the
    Licensor's Products. 

  

  16.7
  The Licensee shall be
  responsible, at no cost to the Licensor, for investigating and monitoring all
  reports, complaints, correspondence, and other information ("Feedback") in
  whatever medium and however received, concerning the manufacture, packaging,
  labeling, side effects, Contraindications, and use of the Product in the
  Territory by any Person. 

  16.8
  The Licensee will
  notify the Licensor in writing of any Feedback received by it or its
  Affiliates or subcontractors as promptly as practicable, but in any event not
  less than once each Reporting Period. Without limiting the generality of the
  foregoing, if the Licensee or its Affiliates or subcontractors receive any
  Feedback relating to any incidents of serious and unexpected Contradictions
  resulting from the use of the Products, the Licensee will notify the Licensor
  in writing, no more than three (3) days following the date on which the
  Licensee receives such Feedback and provide all details relating to any such
  incidents known to the Licensee, or its Affiliates or subcontractors. 
  

  16.9
  For purposes of this
  Section, a Contraindication will be deemed to be "unexpected" if it is not a
  side effect; and a reaction will be deemed to be "serious" if it is fatal,
  life threatening, requires inpatient hospitalization, is disabling, or
  requires intervention to prevent impairment or damage. 

  17.  
  ENTIRE AGREEMENT
  AND NO WAIVER OF RIGHTS 

  17.1
  This Agreement
  constitutes the entire Agreement between the parties hereto with respect to
  the subject matter hereof and supersedes all prior agreements and
  understandings, representations, written or oral, between the parties with
  respect thereto. 

  17.2
  There are no
  representations, promises, warranties, covenants or undertakings other than
  those contained in this Agreement including the schedules hereto, which
  together represent the entire understanding of the parties. 

  17.3
  This Agreement may not
  be released, amended or modified by the parties hereto in any matter except by
  written instrument signed on behalf of each of the parties by their duly
  authorized officers or representatives. 

  17.4
  The failure of or
  delay on the part of any party hereto to enforce any of its rights under this
  Agreement shall not be deemed a continuing waiver or a modification by such
  party of any 

Page 22 of 30 

  of its rights under this Agreement, and any
  party, within the time provided by the applicable law, may commence
  appropriate legal proceedings to enforce any or all of its rights under this
  Agreement, and any prior failure to enforce or delay in enforcement shall not
  constitute a defence. 

  18.
  NOTICES 

  18.1
  Notices intended to be
  given hereunder must be given in writing and shall be deemed to be properly
  given on the tenth (10th) business day following posting, if duly
  sent by prepaid registered mail and addressed as follows, 

  in the case of Licensor to: 

  
  AlphaRx International Holdings Limited,
  

  Unit A, 19/F Sang Woo Building 

  Nos 227-228, Gloucester Road 

  Causeway Bay Hong Kong 

  Attention: Edward Li 

  and in the case of Licensee to: 

  
  Alpha AP Inc., 

  c/o Advance Pharmaceutical Co., Ltd. 

  2/F, 12 Dai Fu Street 

  Tai Po Industrial Estate 

  Tai Po, New Territories 

  Hong Kong 

  Attention: Conroy Cheng 

  18.2
  Notices and
  communication may be given by any other means in use between the parties,
  including facsimile and electronic communication. 

  19.
    GOVERNING
  LAW AND ARBITRATION 

  19.1
  This Agreement and its
  application and interpretation will be governed by the laws of New York
  excluding any conflict of laws rule or principle that might refer such
  construction to the laws of another jurisdiction. 

  19.2
  All disputes arising
  out of or in connection with the present contract shall be finally settled by
  arbitration. The arbitration will be according to The Commercial Arbitration
  Rules of the American Arbitration Association. The dispute shall be decided by
  three arbitrators appointed in accordance with said rules. The place of the
  arbitration shall be New York, NY. The language of the arbitration shall be
  English. The award shall be final and binding for both parties. 

Page 23 of 30 

  20.  
  SEVERABILITY 
  

  In the event that any part, section, Article, clause,
  paragraph or subparagraph of this Agreement shall be held to be indefinite,
  invalid, illegal or otherwise avoidable or unenforceable (hereinafter 
  AInvalid Provision@),
  the entire Agreement shall not fail on account thereof, and the balance of the
  Agreement shall continue in full force and effect. The parties agree to
  negotiate to replace the Invalid Provision with a valid provision which
  follows the original intent of the Invalid Provision as closely as possible.
  

  21.  
  HEADINGS,
  CONSTRUCTION AND INTERPRETATION 

  21.1
  The parties agree that
  the headings contained in this Agreement have been inserted for convenience
  only and shall not be construed as part of this Agreement. 

  21.2
  The parties
  acknowledge that this Agreement has been the subject of full opportunity for
  negotiation and amendment and that the party who has taken the role of drafter
  shall not suffer any adverse construction of any terms or language of this
  Agreement because of such role. 

  22.  
  AGREEMENT BINDING
  ON SUCCESSORS AND ASSIGNS 

  22.1
  This Agreement shall
  endure to the benefit of and are binding upon the parties hereto and their
  respective successors and permitted assigns. 

  23.
    ASSIGNMENT
  

  23.1
  This Agreement and any
  rights or obligations hereunder may not be assigned by the Licensee and any
  and all rights to use the Intellectual Property Rights in association with the
  Products may not be sub-licensed by the Licensee, without the prior written
  consent of the Licensor. 

  24.
    GUARANTEE
  AND INDEMNITY 

  24.1
  The Licensor shall not
  be obligated or be held liable for any injury or death of any persons or
  damage to any property or on behalf of any person caused by or relating to the
  Products or the Licensee's actions or omissions, negligence or wilful conduct,
  nor for any liability of the Licensee. The Licensee undertakes to hold
  appropriate and adequate insurance to cover its liability and shall extend
  such coverage to the Licensor as well. The insurance policy shall name the
  Licensor as an additional insured. 

  24.2
  The Licensee will
  indemnify and save the Licensor harmless from all fines, suits, judgments,
  claims, demands or actions, of any kind or nature whatsoever arising or
  growing out of or otherwise connected with the activities of Licensee,
  including without limitation, use of the Intellectual Property Rights,
  including the payment of attorney and client fees and charges. 

  25.  
  LIMITATION OF
  LIABILITY 

  25.1
  In no event shall the
  Licensor be liable to the Licensee under this Agreement for any special,
  consequential, exemplary or incidental damages or for any damages for lost
  business, loss of 

Page 24 of 30 

  profits or business interruption arising
  from or relating to this Agreement or the subject matter hereof, whether based
  in contract, tort (including negligence) or otherwise, and even if the
  Licensor is advised of the possibility or likelihood of same. 

  25.2
  The Licensor does not
  warrant that the Intellectual Property Rights and the Products will
  necessarily meet the Licensee's requirements or that of Regulatory Authorities
  or Governmental Entities. The Intellectual Property Rights are provided "as
  is" without warranty, express or implied, of any kind or nature, including,
  but not limited to, any warranties of performance or merchantability or
  fitness for a particular purpose. 

  26.
     
  FURTHER ASSURANCES 

  26.1
  The parties shall from
  time to time execute and deliver all such other and further deeds, documents,
  instruments and assurances as may be necessary or required to carry out and to
  put into effect the purpose and intent of this Agreement. 

  27.
     
  RELATIONSHIP OF PARTIES 

  27.1
  Nothing in this
  Agreement is intended, nor shall it be deemed, to confer on or constitute
  either party as the agent of the other or to create a partnership, joint
  venture, franchise or similar relationship between the parties. Neither party
  shall have the power to obligate or bind the other party in contract, tort or
  otherwise howsoever except as provided in this Agreement. 

  28.
     MUTUAL
  REFERRALS 

  28.1
  The Licensee agrees to
  refer to the Licensor all enquiries and orders for Products and items relating
  to the Intellectual Property Rights that are received from potential or
  prospective purchasers outside of the Territory, and the Licensor agrees to
  refer to the Licensee all enquiries and orders for Products that are received
  from potential or prospective purchasers within the Territory. 

  29.
     
  SURVIVAL 

  29.1
  All obligations of the
  Licensor and the Licensee which expressly or by their nature survive the
  termination, expiration or non-renewal of this Agreement shall continue in
  full force and effect subsequent to and notwithstanding such termination,
  expiration or non-renewal and until they are satisfied. 

  30.
     FORCE
  MAJEURE 

  30.1
  Neither party shall be
  responsible to the other for the non-performance nor delay in performance
  (other than the payment of money) occasioned by any causes beyond its control
  including acts of civil or military authority, embargoes, insurrections.
  

  30.2
  If any such delay
  occurs, any applicable time period shall be extended for a period equal to the
  time lost, provided that the party affected makes reasonable efforts to
  mitigate the consequences of such an event and gives the other party prompt
  notice of any such delay. 

Page 25 of 30 

  31.
    CURRENCY 
  

  31.1
  All amounts in this
  Agreement are stated and shall be paid in the lawful currency of the United
  States of America. 

  32.
    PUBLICITY
  

  32.1
  The Parties will use
  their reasonable efforts to agree upon a mutually acceptable press release
  with respect to the Agreement and to jointly issue and release such press
  release at a date mutually agreed upon. 

  32.2
  Notwithstanding the
  foregoing, if the Parties cannot agree on the content and/or timing of a press
  release, the Licensee acknowledges and agrees that the Licensor may be
  required by law, securities policy or rule or policy of any applicable stock
  exchange, to make a public announcement or press release concerning the
  matters referred to in this Agreement without the prior agreement of the
  Licensee. 

  32.3
  During the Term of
  this Agreement, the Licensee will not issue an independent press release or
  any other public statement with respect to this Agreement, or the transactions
  contemplated by this Agreement, the Licensor or the Products without the prior
  written consent of the Licensor. 

  32.4
  No copy of this
  Agreement may be provided by the Licensee to any other person without the
  prior written consent of the Licensor, such consent not to be unreasonably
  withheld or delayed. 

  33.
     
  COUNTERPARTS 

  33.1
  This agreement may be
  executed in any number of counterparts and all of these counterparts shall for
  all purposes constitute one agreement, binding on the parties, notwithstanding
  that all parties are not signatory to the same counterpart. 

  

IN WITNESS WHEREOF
the parties have executed this Agreement as of the date first above written.

	
    AlphaRx International Holdings Limited	
    Alpha AP Inc.
	 	 	 
	Per:	 	 	Per:	 	 
	Name: 	Edward
    Li	Name:	Conroy
    Cheng
	Title: 	
    President	Title:	
    President

Page 26 of 30 

SCHEDULE "A" 

Applications and Registrations for Intellectual
Property 

1.
Chinese Patent
Application No. 03165005.8 

Filed: September 27, 2003 

Title: VEHICLE FOR TOPICAL DELIVERY OF ANTI-INFLAMMATORY COMPOUNDS 

Inventors: Joseph Schwarz; Michael Weisspapir Our Ref: 9-16071-1CN 

Status: Pending - Request for examination due by September 27, 2005 

This application
corresponds to U.S. Patent Application No. 10/255,951 

2. 
Japanese Patent
Application No. 2003-338818 

Filed: September 29, 2003 

Title: VEHICLE FOR TOPICAL DELIVERY OF ANTI-INFLAMMATORY COMPOUNDS 

Inventors: Joseph Schwarz; Michael Weisspapir Our Ref: 9-16071-1JP 

Status: Pending - Request for examination due by September 29, 2006 

This application corresponds to U.S. Patent Application
No. 10/255,951 

 

Page 27 of 30 

SCHEDULE "B" 

STANDARDS OF QUALITY 

  1.
  The average particle
  size of the Products shall be less than 1,000 nanometres or 1 micron. 
  

  2.
  The Products must be
  manufactured in compliance with local GMP requirements. 

  3.
  Licensee will perform
  the required method transfer, method development and method validation work
  required to support the manufacture of the Products. Analytical protocols will
  be provided by Licensor for validation activities. Upon completion of the
  method transfer and development activities, Licensee will provide a summary of
  the data to the Licensor for approval. The analytical methods have been based
  upon HPLC and GC unless otherwise stated. 

  4.
  All active ingredients
  and excipients will undergo complete analytical release testing in compliance
  with USP/NF or local Health Authority requirements. 

  5.
  Licensee will prepare
  a master batch record, which will be provided to the Licensor for approval
  prior to manufacturing, that specifies manufacturing procedures and acceptance
  criteria. 

  6.
  For 1% Indaflex,
  Indomethacin concentration in blood plasma shall not exceed 15% of oral
  administration. 

Page 28 of 30 

SCHEDULE "C" 

MINIMUM PERFORMANCE TARGETS 

	
    Year	
    Minimum Gross	
    Minimum Annual
	 	
    Revenues	
    Royalty
	1	
    HK$2,000,000	
    HK$100,000
	2	
    HK$4,000,000	
    HK$200,000
	3	
    HK$4,000,000	
    HK$200,000
	4	
    HK$40,000,000	
    HK$2,000,000
	5	
    HK$40,000,000	
    HK$2,000,000

 

 

Page 29 of 30 

SCHEDULE "D" 

COUNTRIES AND REQUIRED LANGUAGES

	Country	Language
	 	 
	Hong Kong	Mandarin
	 	 
	China	Mandarin
	 	 
	Japan	Japanese
	 	 
	Korea	Korean

 

 

 

 

 

Page 30 of 30 

SCHEDULE "E" 

LIST OF PRODUCTS 

  1.
  1% Indaflex (1%
  Indomethacin) 

  2.
  1% Diclofenac 
  

  3.
  Flexogan (6% Menthol,
  6% Camphor, 16% Methyl Salicylate)

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