MEDICAL
DISCOVERIES, INC.
1338
S.
Foothill Drive #266
Salt
Lake
City, Utah 84108
October
__, 2007
Dear
Shareholder:
You
are
cordially invited to attend a special meeting of the shareholders of Medical
Discoveries, Inc. to be held at 10:00 A.M. local time on Tuesday, October
30,
2007, at the Company's offices located at 6033 W. Century Blvd., Suite 1090
Los
Angeles, California 90045.
As
more
fully described in the attached notice of special meeting and the accompanying
proxy statement, the business to be addressed at the special meeting is
consideration of a proposal to sell for cash, and the assumption of certain
liabilities, all of our rights in and to “SaveCream”, a developmental stage
topical aromatase inhibitor cream, to Eucodis Pharmaceuticals Forschungs
- und
Entwicklungs GmbH, an Austrian company.
Whether
or not you plan to attend the special meeting, please submit your proxy to
ensure your representation.
The
Board
of Directors recommends that you vote “FOR” the proposal to sell substantially
all of our assets. You may attend the special meeting and vote in person
even if
you have submitted your proxy.
| |
Sincerely,
Judy
M. Robinett
Chief
Executive Officer
|
MEDICAL
DISCOVERIES, INC.
1338
S.
Foothill Drive #266
Salt
Lake
City, Utah 84108
NOTICE
OF
SPECIAL MEETING OF SHAREHOLDERS
TO
BE
HELD ON OCTOBER 30, 2007
Notice
is
hereby given that a special meeting of the shareholders of Medical Discoveries,
Inc. will be held at 10:00 A.M. local time on Tuesday, October 30, 2007,
at
the Company's offices located at 6033 W. Century Blvd., Suite 1090 Los
Angeles, California 90045, for the following purposes:
1. To
vote
on a proposal to sell all of our rights in and to “SaveCream”, a developmental
stage topical aromatase inhibitor cream, to Eucodis pursuant to the terms
of
that certain sale and purchase agreement, dated July 6, 2007, as amended
(“Eucodis Agreement”), by and among Medical Discoveries, Inc., MDI Oncology,
Inc., our wholly-owned subsidiary (“MDI Oncology”), and Eucodis Pharmaceuticals
Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”), as more
fully described in the proxy statement accompanying this notice.
2. To
transact such other business as may properly come before the special meeting
or
any adjournments or postponements thereof.
We
have
fixed the close of business on September 24, 2007, as the record date for
the
determination of shareholders entitled to notice of and to vote at the special
meeting. Only our shareholders of record at the close of business on that
date
will be entitled to notice of and to vote at the special meeting or any
adjournments or postponements thereof. This notice of special meeting and
the
accompanying proxy statement and proxy card are being sent to shareholders
on or
about October __, 2007.
You
are
cordially invited to attend the special meeting, but whether or not you plan
to
attend, please complete and sign the enclosed form of proxy and mail it promptly
in the enclosed envelope. The proxy may be revoked at any time by filing
a
written revocation with our corporate secretary, by executing a later dated
proxy and delivering it to our corporate secretary, or by attending the special
meeting and voting in person.
| |
By
Order of the Board of Directors,
JUDY
M. ROBINETT
Chief
Executive Officer
|
October
__, 2007
|
YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN
ORDER TO
ENSURE THAT YOUR SHARES ARE VOTED, PLEASE SIGN, DATE AND RETURN
THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. IF GIVEN, YOU MAY
REVOKE YOUR
PROXY BY FOLLOWING THE INSTRUCTIONS IN THE PROXY
STATEMENT.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF
THE PROPOSAL DESCRIBED IN THE ATTACHED PROXY
STATEMENT.
|
SUMMARY
TERM SHEET
- TRANSACTION WITH EUCODIS
This
Summary Term Sheet summarizes certain material information regarding the
proposed sale of assets to Eucodis under the Eucodis Agreement. You should
carefully read this entire proxy statement for a more complete understanding
of
the transaction with Eucodis.
| · |
Assets
Sold (page 15)
|
|
The
assets being sold to Eucodis include (i) all of our right, title
and
interest in a certain Asset Purchase Agreement between Medical
Discoveries, Inc. and the liquidator of Savetherapeutics AG, a
German
company in liquidation, dated as of March 11, 2005; (ii) all of
our right,
title and interest in that certain agreement between MDI Oncology
and
Eucodis, dated as of July 29, 2006, in connection with the co-development
and licensing of “SaveCream”; and (iii) all
of our right, title and interest under certain contracts relating
to
“SaveCream”.
The foregoing represents a substantial portion of our
assets.
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| · |
Purchase
Price (page 16)
|
|
The
purchase price paid by Eucodis is approximately 4,007,534 euros
or
approximately $5,641,000 based on the currency conversion rate
in effect
as of September 25, 2007, comprising a cash payment of approximately
$1.95
million, and Eucodis’s assumption of certain of our obligations and
liabilities aggregating approximately $3.69 million. The financial
terms
of the Eucodis Agreement are denominated in euros, and we will
be paid in
euros. However, for convenience, the financial terms have been
converted
throughout the text of this proxy statement into U.S. dollars.
Unless
otherwise indicated, all amounts have been converted based upon
the
currency exchange rate in effect on September 25, 2007 of 1.4076
U.S.
dollar for one euro. The currency exchange rate in effect as of
the
closing of the Eucodis transaction or at any future date may
differ.
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| |
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|
| · |
Obligations
Assumed
and
Discharged
Indebtedness
(page 16)
|
|
Eucodis
has agreed to assume aggregate of approximately $3.69 million or
our
current indebtedness that we owe to certain of our creditors. Eucodis
will
also assume all of our financial and other obligations under certain
contracts relating to “SaveCream,” and certain other costs we have
incurred since February 28, 2007 in connection with preserving
the sold
assets for the benefit of Eucodis through the closing of the transaction.
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| |
|
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|
| · |
Non-Competition
(page 17)
|
|
We
have agreed to a non-compete provision for the duration of five
years
after the closing of the Eucodis transaction. Specifically, the
non-compete provision restricts us from undertaking research and
development activities with respect to “SaveCream.”
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| |
|
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| · |
Representation
and Warranties (page 17)
|
|
The
Eucodis Agreement contains customary representations, warranties
and
covenants, which survive through the closing of the
transaction.
|
| |
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| · |
Closing
Conditions (page 17)
|
|
The
closing of the transaction depends on meeting a number of conditions,
including the following: our delivery to Eucodis of certain documents
necessary to effect the transfer of the assets being sold, and
us
obtaining additional capital or a credit facility in the aggregate
amount
of at least $250,000.
|
| |
|
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| · |
The
Special Meeting (page 11)
|
|
At
the special meeting of our shareholders to be held on October 30,
2007,
you will be asked to approve the transaction with
Eucodis.
|
| |
|
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| · |
Our
Board’s Recommendation (page 14)
|
|
Our
board of directors has unanimously determined that the transaction
with
Eucodis is advisable, fair to, and in the best interests of our
shareholders.
|
QUESTIONS
AND ANSWERS ABOUT THE TRANSACTION
|
Q:
|
WHAT
IS THIS PROXY STATEMENT AND WHY AM I RECEIVING
IT?
|
|
A:
|
You
are receiving this proxy statement in connection with a special
meeting of
shareholders called by our Board of Directors for the purpose of
soliciting shareholder votes for the sale of our SaveCream asset
to
Eucodis, our current European licensee and development partner,
as more
fully described in this proxy statement. You have been sent this
proxy
statement and the enclosed proxy card because our board of directors
is
soliciting your proxy to vote at the special meeting of shareholders
called for the purpose of voting on the foregoing sale. Eucodis
currently
holds the exclusive rights to SaveCream within the European Union
and
certain other countries.
|
The
assets being sold to Eucodis include (i) all of our right, title and interest,
along with all of MDI Oncology’s right, title and interest, in that certain
asset purchase agreement between Medical Discoveries, Inc. and the liquidator
of
Savetherapeutics AG, a German company in liquidation, dated as of March 11,
2005
(the “Savetherapeutics
Contract”),
including, among other things, our rights in and to “SaveCream”, a developmental
topical aromatase inhibitor cream; (ii) all of MDI Oncology’s right, title and
interest in that certain agreement between MDI Oncology and Eucodis, dated
as of
July 29, 2006, in connection with the co-development and licensing of the
“SaveCream” product; and (iii) all
of
our (and MDI Oncology’s) right, title and interest under certain contracts
relating to the “SaveCream” product ((i),(ii) and (iii) collectively, the
“Purchased Assets”).
This
sale of the SaveCream asset to Eucodis will terminate any further obligation
on
the part of the Company or its subsidiary, MDI Oncology, to spend additional
monies to develop SaveCream. This sale may constitute a sale of substantially
all of our assets for purposes of Utah law, which governs our corporate matters.
Accordingly, the sale is being submitted to our shareholders for approval
pursuant to Section 16-10a-1202 of the Utah Revised Business Corporation
Act.
|
Q:
|
HOW
MANY VOTES ARE REQUIRED TO APPROVE THE
TRANSACTION?
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A:
|
Each
share of common stock will entitle the holder to cast one vote.
A majority
of the issued and outstanding shares of our common stock, represented
in
proxy or in person, shall constitute a quorum. If a quorum exists,
the
affirmative vote of a majority of the shares of our common stock
outstanding on the record date for the special meeting will be
necessary
for the approval of the Eucodis transaction. Abstentions and broker
nonvotes will have the same effect as votes against the proposed
transaction. Our outstanding shares of Series A Convertible Preferred
Stock are not entitled to vote.
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Q:
|
WHAT
WILL HAPPEN IF THE SHAREHOLDERS APPROVE THE
TRANSACTION?
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A:
|
If
the shareholders approve the transaction, then shortly following
the
special meeting, subject to the satisfaction of certain conditions
set out
in the sale and purchase agreement, the Company and MDI Oncology
will sell
to Eucodis the Purchased Assets in exchange
for:
|
| |
·
|
a
cash purchase price of approximately $1.95 million, which is payable
to
the Company at the closing; and
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·
|
Eucodis’s
assumption of approximately $3.69 million of certain of our liabilities,
as more fully discussed under “Proposal I - Terms of Sale and Purchase
Agreement - Assumption of Liabilities”.
|
The
approximately $1.95 million in cash proceeds received from the Eucodis sale
will
be used for general business purposes during the winding up of our old business
operations. In addition, since we intend to either acquire or develop a new
business, some of the cash proceeds may also be used for that new business.
See,
“Use of Proceeds” on page 14. It is currently our intent to retain the proceeds
indefinitely in the Company. We do not anticipate that any distributions
will be
made to our shareholders in the near future,
if
at
all.
|
Q.
|
WHY
IS THE BOARD OF DIRECTORS PROPOSING THE SALE OF
SAVECREAM?
|
To
date,
we have been a developmental-stage bio-pharmaceutical company engaged in
the
research, validation, development and ultimate commercialization of two drug
candidates referred to as MDI-P and SaveCream. Both of these drug candidates
are
still in development and neither has been approved by the U.S. Food and Drug
Administration (the “FDA”). The total cost to develop these two drugs and to
receive the approval from the FDA would cost many millions of dollars and
take
many more years. The Board of Directors has determined that we can no longer
fund the development of the two drug candidates, and cannot obtain additional
funding for these drug candidates. Accordingly, we have sought to maximize
our
return from our drug assets through their sale at this time, and to use the
proceeds that we receive from the disposition of these technologies to pay
off
all creditors of the Company, and invest any residual proceeds into our new
renewable bio-fuels business.
|
Q:
|
WILL
WE CONTINUE TO OPERATE AFTER THE EUCODIS TRANSACTION IS
CLOSED?
|
A: The
Eucodis sale will not result in the dissolution or liquidation of this company,
and we plan to continue to operate the company, albeit in a new industry.
We
have agreed that, following the closing of the Eucodis transaction, neither
we
nor MDI Oncology will undertake research and development activities with
respect
to “SaveCream” or any other product which could be used in reasonable
substitution of “SaveCream”, or commercialize any products based on “SaveCream”,
except as may be otherwise expressly requested by Eucodis. We also intend
to
dissolve our MDI Oncology subsidiary after the sale to Eucodis.
Since
signing the Eucodis Agreement, we have actively sought to develop a new
business to maximize shareholder value. As disclosed on September 17, 2007,
we
have acquired some intellectual property related to the development of
alternative energy bio-fuels, and have hired a seasoned energy executive
with
many years of experience in the alternate energy and bio-fuels industry,
as our
new President and Chief Operating Officer. We currently intend to develop
this
new alternative bio-fuels business.
Additional
information regarding the bio-fuels purchase that we announced on September
17,
2007, and information regarding the additional members of our management
team is
available at the website of the Securities and Exchange Commission at
www.sec.gov. You should also review the “Risk Factors” section beginning on page
10 for a discussion of some of the risks related to our future operations.
|
Q:
|
HAS
THE COMPANY RECEIVED A VALUATION OR FAIRNESS OPINION WITH RESPECT
TO THE
SALE?
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A:
|
No.
Based on all factors, including the price paid for the SaveCream
assets,
the uncertainty as to title of those assets, and the book value
of those
assets, our Board of Directors determined that the purchase price
being
paid by Eucodis was fair to this
company.
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Q;
|
WHAT
HAPPENS IF THE SHAREHOLDERS DO NOT APPROVE THE
TRANSACTION.
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A;
|
If
the sale of the SaveCream assets is not approved by the shareholders,
the
sale will be cancelled, and we will continue to own the SaveCream
assets.
However, since our Board has determined that it is not in the best
interests of this company or our shareholders to continue to operate
as a
drug development company, and since we will no longer invest any
funds in
the development of SaveCream, we will not continue our efforts
to develop
that drug candidate. In fact, under the Eucodis Agreement, if the
shareholders do not approve the sale of SaveCream to Eucodis, we
are
obligated to attempt to transfer to Eucodis, by means of a license,
or
otherwise, our rights to SaveCream.
|
| Q; |
WHEN
IS THE EUCODIS
TRANSACTION EXPECTED TO BE
COMPLETED?
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A:
|
The
transaction will close when certain conditions set forth in the
sale and
purchase agreement are satisfied or waived, or at such other time
as is
agreed by the parties. We expect the transaction to close on or
before
October 31, 2007.
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Q:
|
DOES
THE BOARD OF DIRECTORS OF MEDICAL DISCOVERIES, INC. RECOMMEND VOTING
FOR
THE ACQUISITION?
|
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A:
|
Yes.
After careful consideration of our financial position, the value
of the
SaveCream assets, the amount of time and funds needed to further
develop
the SaveCream drug candidate, and other factors, our board of directors
has unanimously approved the sale of the SaveCream assets to Eucodis
and
determined that it is in the best interests of us and our shareholders.
Our board of directors unanimously recommends that our shareholders
vote
“FOR” approval of the sale.
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A:
|
SEND
IN YOUR PROXY CARD. After reviewing this document and its appendixes,
indicate on your proxy card how you want to vote, and sign, date,
and mail
it in the enclosed envelope as soon as possible to ensure that
your shares
will be represented at the special meeting. If you sign, date,
and send in
your proxy and do not indicate how you want to vote, your proxy
will be
voted in favor of the proposed transaction and amendments. If you
do not
sign and send in your proxy, and if you do not attend and cast
your vote
in person at the special meeting, it will have the effect of voting
against the transaction.
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Q:
|
IF
MY SHARES ARE HELD IN “STREET NAME” BY MY BROKER, BANK OR OTHER NOMINEE,
WILL IT VOTE MY SHARES FOR ME?
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A:
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YES,
IF YOU GIVE YOUR NOMINEE INSTRUCTIONS ON HOW TO VOTE. Your broker,
bank or
other nominee holder will vote your shares only if you provide
it with
instructions on how to vote. You should instruct your nominee how
to vote
your shares by following the directions it provides. If you do
not provide
instructions to your nominee, your shares will not be voted and
this will
have the effect of voting against the proposed transaction and
amendments.
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|
Q:
|
CAN
I CHANGE MY MIND AND REVOKE MY
PROXY?
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A:
|
YES.
You may revoke your proxy up to the time of the special meeting
by taking
any of the actions explained under “The Special Meeting--Solicitation,
Voting and Revocation of Proxies” on page 11 of this proxy statement,
including by giving a written notice of revocation, by signing
and
delivering a new later-dated proxy, or by attending the special
meeting
and voting in person.
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Q:
|
CAN
I VOTE MY SHARES IN PERSON?
|
|
A:
|
YES.
You may attend the special meeting and vote your shares in person
even if
you sign and mail your proxy card.
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|
Q:
|
DO
I HAVE DISSENTERS’ RIGHTS?
|
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A:
|
No.
Under Utah law, “dissenters’ rights” are not available to companies that
have more than 2,000 shareholders. Based on information provided
to us by
our transfer agent, we have approximately 2,950 shareholders.
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Q:
|
HOW
WILL THE ACQUISITION AFFECT MY SECURITIES OF MEDICAL DISCOVERIES,
INC.
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A:
|
Following
the closing of the Eucodis transaction, you will continue to hold
the
shares of our common stock that you owned prior to the sale.
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Q.
|
WHO
IS PAYING FOR THIS PROXY
SOLICITATION?
|
|
A:
|
Our
board of directors is making this solicitation and we will pay
the entire
cost of preparing, assembling, printing, mailing and distributing
these
proxy materials. In addition to the mailing of these proxy materials,
the
solicitation of proxies or votes may be made in person, by telephone
or by
electronic communications by our directors, officers and employees,
who
will not receive any additional compensation for such solicitation
activities. We will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses
for
forwarding proxy and solicitation materials to
shareholders.
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Q:
|
WHOM
CAN I CALL WITH QUESTIONS?
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A:
|
If
you want additional copies of this document, or if you want to
ask any
questions about the asset purchase agreement or the transaction,
you
should contact ____________, at
(_____)
|
SUMMARY
This
summary highlights selected information from this proxy statement. It does
not
contain all of the information that you may consider to be important in
determining how to vote on the proposed transaction. You should carefully
read
the entire document and the other documents to which we refer. These will
give
you a more detailed description of the proposed transaction. Each item in
this
summary refers to the pages where that subject is discussed in greater detail
elsewhere in this proxy statement. In this proxy statement, the terms “we,”
“our” and “us” refer to Medical Discoveries, Inc. and its wholly owned
subsidiary, MDI Oncology, Inc., unless the context indicates
otherwise.
THE
PROPOSAL (PAGE 12)
At
the
special meeting of shareholders, our shareholders will consider and vote
upon a
proposal to approve the sale and purchase agreement, dated July 6, 2007,
as
amended (the “Eucodis Agreement”), between Medical Discoveries, Inc., MDI
Oncology, Inc. (“MDI Oncology”), our wholly-owned subsidiary, and Eucodis
Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company
(“Eucodis”), which provides for the sale of certain of our assets to Eucodis,
for an aggregate of approximately $5,641,000 (based on the currency conversion
rate in effect as of September 25, 2007), comprising an approximately $1.95
million cash payment and Eucodis’ assumption and discharge of certain
liabilities and indebtedness, in the aggregate amount of approximately $3.69
million. The closing of the transactions contemplated by the Eucodis Agreement
is subject to the satisfaction of certain conditions, including our obligation
to obtain additional capital or a credit facility in the aggregate amount
of at
least $250,000. We have already satisfied this condition. The Eucodis Agreement
is the document that controls the proposed transaction between the three
companies. We encourage you to read the entire Eucodis Agreement, which is
attached to this proxy statement as Appendix A.
ASSETS
TO
BE SOLD AND PURCHASE PRICE (PAGE 15)
The
assets being sold to Eucodis include (i) all of our right, title and interest
in
that certain asset purchase agreement between Medical Discoveries, Inc. and
the
liquidator of Savetherapeutics AG, a German company in liquidation, dated
as of
March 11, 2005, including, among other things, our rights in and to “SaveCream”,
a developmental topical aromatase inhibitor cream used to treat breast cancer
tumors; (ii) all of our right, title and interest in that certain agreement
between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection
with
the co-development and licensing of “SaveCream”; and (iii) all
of
our right, title and interest under certain contracts relating to
“SaveCream”.
In this
proxy statement, we refer to the assets being sold to Eucodis as the “Purchased
Assets”.
The
purchase price paid by Eucodis for the Purchased Assets is approximately
$5.64
million comprising:
| |
·
|
a
cash payment of approximately $1.95 million, which is payable to
the
Company at the closing; and
|
| |
·
|
Eucodis’s
assumption of certain obligations and liabilities, and discharge/pay-off
of certain indebtedness on our behalf in the aggregate amount of
approximately $3.69 million.
|
OBLIGATIONS
TO BE ASSUMED AND DISCHARGED INDEBTEDNESS (PAGE 16)
Eucodis
has agreed to relieve us of an aggregate of approximately $3.69 million
constituting current indebtedness owed to seven of our creditors. In addition,
Eucodis will assume all of our financial and other obligations under certain
contracts relating to “SaveCream”, which will be assigned to Eucodis when the
transaction closes, and certain other costs we have incurred since February
28,
2007, in connection with preserving the Purchased Assets for the benefit
of
Eucodis through the closing of the transaction. Other than the foregoing
obligations, Eucodis will not assume or be liable for any of our obligations
or
liabilities.
NON-COMPETITION
(PAGE 17)
We
have
agreed to a non-compete provision for the duration of five years after the
closing of the Eucodis transaction. Specifically, the non-compete provision
restricts the us from undertaking research and development activities with
respect to “SaveCream”, or any other product which could be used in reasonable
substitution of “SaveCream, or commercializing any products based on “SaveCream,
unless expressly authorized by Eucodis.
OUR
REASONS FOR THE TRANSACTION (PAGE 12)
To
date,
we have been a developmental-stage bio-pharmaceutical company engaged in
the
research, validation, development and ultimate commercialization of two drug
candidates referred to as MDI-P and SaveCream. MDI-P is a drug candidate
being
developed as an anti-infective treatment for bacterial infections, viral
infections and fungal infections. SaveCream is a drug candidate being developed
to reduce breast cancer tumors. Both of these drug candidates are still in
development and neither has been approved by the U.S. Food and Drug
Administration (the “FDA”). The total cost to develop these two drugs and to
receive the approval from the FDA would cost many millions of dollars and
take
many more years.
Our
board
has now determined that we can no longer fund the development of the two
drug
candidates and cannot obtain additional funding for these drug candidates.
Instead, our board has decided to maximize return from these assets and to
invest the proceeds that it receives from the disposition of these technologies
into a new business that we would develop. In reaching this decision, the
board
of directors considered a number of factors, including the
following:
| |
·
|
The
limited capital raising opportunities available to us, and the
unlikely
possibility that another entity would be interested in funding
our drug
development operations.
|
| |
·
|
The
unlikelihood that we will receive requisite FDA approvals to pursue
our
MDI-P drug candidate through to
commercialization.
|
| |
·
|
The
costs of further development of the MDI-P and SaveCream drugs weighed
against the limited markets for both
drugs.
|
| |
·
|
The
uncertainty of our title in the SaveCream assets. One of the co-inventors
of the SaveCream technology is challenging title to the invention
in
legal
proceedings in Hamburg, Germany.
|
The
foregoing discussion of the information and factors considered by our board
of
directors is not intended to be exhaustive, but includes the material factors
considered. In view of the variety of factors considered in connection with
its
evaluation of the transaction and the offer price, the board did not find
it
practicable to, and did not, quantify or otherwise assign relative weight
to the
specific factors considered in reaching its determinations and recommendations,
and individual directors may have given differing weight to different
factors.
Our
board
of directors has unanimously approved Eucodis Agreement. The board of directors
believes that the transaction and the terms and provisions of the Eucodis
Agreement are fair to and in the best interests of our shareholders. Therefore,
the board of directors has unanimously recommended that you vote to approve
the
Eucodis Agreement and the transactions contemplated in the Eucodis Agreement.
USE
OF
PROCEEDS AND OPERATIONS AFTER THE TRANSACTION (PAGE 14)
Following
the closing of the Eucodis transaction, neither we nor MDI Oncology will
undertake research and development activities with respect to “SaveCream” or any
other product which could be used in reasonable substitution of “SaveCream”, or
commercialize any products based on “SaveCream”, except as may be otherwise
expressly requested by Eucodis.
At
the
closing of the Eucodis transaction, in addition to Eucodis’s assumption of
certain indebtedness, as further described in this proxy statement, we will
receive from Eucodis cash proceeds in the aggregate of approximately $1.95
million. At the time of the execution of the Eucodis Agreement, it was our
intention to use the remaining net cash we receive from the Eucodis sale
for our
future working capital purposes and to fund the development of our recently
announce bio-fuels business. At the time that we entered into the Eucodis
Agreement, we had not made any determination about future business plans
once
the transaction with Eucodis closed.
It
is
currently our intent to retain the proceeds indefinitely in the Company,
and use
such proceeds towards the start up of our new bio-fuels business. We do not
anticipate that any distributions will be made to our shareholders in the
near
future, if at all.
Since
signing into the Eucodis Agreement, we have actively sought to develop a
new
business to maximize shareholder value. As disclosed on September 17, 2007,
we
have acquired some intellectual property related to the development of
alternative energy bio-fuels and have hired a seasoned energy executive with
many years of experience in the alternate energy and bio-fuels industry,
as our
new President and Chief Operating Officer. We currently intend to develop
this
new bio-fuels business.
Additional
information regarding the bio-fuels purchase that we announced on September
17,
2007 and information regarding the additional members of our management team
is
available at the website of the Securities and Exchange Commission at
www.sec.gov. You should also review the “Risk Factors” section beginning on page
10 for a discussion of some of the risks related to our future
operations.
WE
DID
NOT OBTAIN AN INDEPENDENT APPRAISAL OF THE SAVECREAM ASSETS
Our
board
of directors did not obtain an appraisal of the SaveCream assets. However,
our
board of directors believes that the purchase price being paid by Eucodis
is at
least equal to the fair market value of the Eucodis assests. The belief by
our
board of directors that we will receive at least the fair market value is
based
on the following factors: (a) We currently only own limited distribution
and
other rights available to license other parties - the rights to SaveCream
in the
European Union countries and certain other countries have already been licensed
to Eucodis; (b) The market for a topical neoadjuvant therapeutic for the
treatment of breast cancer is comparatively small compared to the cost to
gain
FDA approval; and (c) The uncertainty concerning ownership of title to the
SaveCream asset due to on-going litigation in Germany between the Company,
the
German Bankruptcy Court, and one of the inventors of SaveCream. Additionally,
because Eucodis currently is our development partner, holds rights to SaveCream
in certain regions of the world, and is willing to assume all risk associated
with the SaveCream, the board of directors believes the purchase price being
paid by Eucodis represents fair value for the sale of the SaveCream
asset.
OUR
RECOMMENDATION TO OUR SHAREHOLDERS (PAGE 14)
Our
board
of directors believes that the transaction is fair to, and in the best interests
of the company and its shareholders, and unanimously recommends that you
vote
“FOR” the proposal to approve the Eucodis Agreement and the transactions
contemplated in the Eucodis Agreement.
CONDITIONS
TO CLOSING OF THE TRANSACTION (PAGE 15)
The
closing of the transaction depends on meeting a number of conditions, including
the following:
| |
·
|
obtaining
the consent of a majority of our outstanding voting
shares;
|
| |
·
|
the
accuracy of our representations and warranties under the Eucodis
Agreement
being true on the closing date;
|
| |
·
|
our
performance of all covenants and obligations required under the
Eucodis
Agreement;
|
| |
·
|
our
delivery to Eucodis of certain documents necessary to effect the
transfer
of the Purchased Assets; and
|
| |
·
|
we
obtain additional capital or a credit facility in the aggregate
amount of
at least $250,000 (a condition that we have already satisfied).
|
REGULATORY
APPROVALS (PAGE 15)
There
are
no regulatory approvals required to close the transactions contemplated by
the
Eucodis Agreement.
REPRESENTATIONS
AND WARRANTIES; COVENANTS (PAGES 17)
The
Eucodis Agreement contains customary representations, warranties and covenants,
which survive through the closing of the transaction.
CLOSING
OF THE TRANSACTION (PAGE 15)
The
closing of the transaction will take place promptly following the satisfaction,
or waiver, of certain conditions set forth in the Eucodis Agreement, or at
such
other time as is agreed by the parties. The transaction is expected to close
on
or before October 31, 2007.
FEDERAL
INCOME TAX CONSEQUENCES (PAGE 15)
We
expect
that we will recognize taxable gain for U.S. federal income tax purposes
as a
result of the transaction. However, because of our prior losses, we do not
believe that we will have to pay any federal or state income taxes on the
profit
we make from this sale. We do not expect that our shareholders will recognize
any gain or loss for U.S. federal income tax purposes as a result of the
transaction.
ACCOUNTING
TREATMENT (PAGE 15)
The
transaction will be accounted for by us as a sale of assets.
THE
SPECIAL MEETING (PAGE 11)
We
will
hold a special meeting of our shareholders at 10:00 A.M. local time, on Tuesday,
October 30, 2007 at the Company's offices located at 6033 W. Century Blvd.,
Suite 1090 Los Angeles, California 90045. At the meeting, we will ask our
shareholders to approve the transaction with Eucodis.
RECORD
DATE; VOTING POWER (PAGE 11)
You
may
vote at the special meeting if you owned shares of our common stock as of
the
close of business on September 24, 2007, which was set as the record date
for
the special meeting by our board of directors. You will have one vote for
each
share of common stock you owned on that date. The holders of our outstanding
shares of Series A Convertible Preferred Stock may not vote their shares
of
preferred stock.
VOTE
REQUIRED (PAGE 11)
If
a
quorum is present at the special meeting, then the proposals will be approved
if
more than 50% of the shares of common stock issued and outstanding on the
record
date cast votes favoring approval of the Eucodis Agreement and the transactions
contemplated thereby. On the record date, 198,041,557 shares of our common
stock
were outstanding. Broker nonvotes will not be counted towards a quorum at
the
special meeting, and will count as votes against the proposal. Abstentions
will
be counted towards a quorum at the special meeting, and also will count as
votes
cast against the proposal. If you return the attached proxy card with no
voting
decision indicated, the proxy will be voted FOR the approval of all proposals
made at the meeting.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This
proxy statement, and the documents to which we refer you to in this proxy
statement, contain “forward-looking” statements that reflect our current views
as to future events and financial performance with respect to our operations
in
the feedstock/bio-diesel market and the expected closing of the transaction
with
Eucodis. There are forward-looking statements throughout this proxy statement,
including, among others, in statements containing the words “believes,”
“expects,” “anticipates,” “intends,” or other similar expressions.
You
should be aware that forward-looking statements involve known and unknown
risks
and uncertainties. Although we believe that the expectations reflected in
these
forward-looking statements are reasonable, we cannot assure you that the
actual
results or developments we anticipate will be realized. These forward-looking
statements speak only as of the date on which the statements were made, and
we
undertake no obligation to update or revise any forward-looking statements
as a
result of new information, future events, or otherwise.
In
addition to other factors and matters contained or incorporated in this
document, we believe the following factors could cause actual results to
differ
materially from those discussed in the forward-looking statements:
IF
THE
TRANSACTION WITH EUCODIS IS NOT CONSUMMATED, WE LOSE APPROXIMATELY $5.2 MILLION
OF CASH AND ASSUMPTION OF INDEBTEDNESS AND, THEREFORE, WILL HAVE TO FIND
ADDITIONAL FUNDS TO CONTINUE OUR OPERATIONS.
In
the
event that the sale of the SaveCream assets is not consummated, we will not
receive a net cash inflow of approximately $1.95 million and will not be
relieved of our obligation to repay approximately $3.69 million of outstanding
indebtedness that we currently owe. The foregoing $1.95 million of cash would
be
used to fund some of our working capital needs. Without these funds, we will
have to find alternative sources of revenues and funds, including raising
funds
from the sale of securities. No assurance can be given that we will be able
to
raise additional funds or that we will be able to continue our operations.
In
addition, if the sale to Eucodis is not consummated, we will still be obligated
to repay approximately $3.69 million of currently outstanding debts and other
liabilities. We do not have the resources to repay these amounts. Accordingly,
these creditors may bring legal action against us to enforce their obligations,
or they may elect to put this company into bankruptcy. In the event that
this
company is forced into bankruptcy, the shareholders could lose their entire
investment in this company’s shares. However, based on the expected net proceeds
from the Eucodis transaction, if the Eucodis transaction is completed, based
on
our current internal forecast, we believe that we will have sufficient capital
to fund our working capital expenditures (excluding any capital expenditures
for
new project costs, and excluding any revenues that our new business may
generate) for approximately three months after the date of the closing of
the
Eucodis sale.
OUR
FUTURE BUSINESS IS UNCERTAIN.
We
anticipate that we will use the proceeds from the Eucodis transaction to
fund
our future working capital needs for our new line of business. In September
2007, we acquired certain intellectual properties related to the development
of
a new business in the rapidly growing biofuels industry. However, we have
not
yet acquired any assets or generated any revenues from this new business,
and
our ability to successfully develop a new business in this industry is highly
uncertain. We will have substantial competition for business opportunities
in
the bio-fuels business.
THE
TRANSACTION MAY NOT BE CONSUMMATED IF CERTAIN CLOSING CONDITIONS ARE NOT
SATISFIED.
The
closing of the Eucodis transaction is contingent on us satisfying certain
closing conditions, including the satisfaction of the closing conditions
set
forth in the Eucodis Agreement, including, obtaining the consent of a majority
of our outstanding voting shares.
THE
SPECIAL MEETING
GENERAL
This
proxy statement is being furnished to the shareholders of Medical Discoveries,
Inc. (the “Company”) in connection with the solicitation of proxies by the board
of directors of the Company for use at the special meeting of the shareholders
of Company to be held on October 30, 2007, and at any adjournments or
postponements thereof. The purpose of the special meeting is to consider
and
vote upon the sale and purchase agreement, as amended, among the Company,
MDI
Oncology, Inc. (“MDI Oncology”), a wholly-owned subsidiary of the Company, and
Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company
(“Eucodis”),
pursuant to which the Company will sell certain of its assets to Eucodis.
RECORD
DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED TO APPROVE THE
TRANSACTION
The
board
of directors of the Company has fixed the close of business on September
24,
2007, as the date for the determination of shareholders entitled to vote
at the
special meeting. There were 198,041,557 shares of the Company’s common stock
outstanding (“Common Stock”), each entitled to one vote per share, as of the
record date.
The
presence at the special meeting, in person or by proxy, of the holders of
a
majority of the issued and outstanding shares of the Common Stock on the
record
date is necessary to constitute a quorum for the transaction of business
at the
special meeting. In the absence of a quorum, the special meeting may be
postponed from time to time until shareholders holding the requisite number
of
shares of the Common Stock are represented in person or by proxy. If a quorum
is
present, then the transaction will be approved if the holders of a majority
of
the issued and outstanding shares of common stock vote in favor of the
transaction, whether such votes are present in person or represented by proxy
at
the special meeting. Broker non-votes will not be counted towards a quorum
at
the special meeting, and will count as votes against the transaction.
Abstentions will be counted towards a quorum at the special meeting, but
will
also count as votes cast against the transaction. If you return the attached
proxy card with no voting decision indicated, the proxy will be voted FOR
the
approval of the transaction. Each holder of record of shares of the Common
Stock
is entitled to cast, for each share registered in his or her name, one vote
on
the transaction as well as on each other matter presented to a vote of
shareholders at the special meeting.
If
the
transaction is approved at the special meeting, it is expected that a closing
of
the transaction will occur promptly after the other conditions to the
transaction are satisfied. See “Terms of the Sale and Purchase Agreement --
Conditions to Closing the Transaction.”
SOLICITATION,
VOTING AND REVOCATION OF PROXIES
This
solicitation of proxies is being made by the board of directors of the Company,
which will pay the entire cost of preparing, assembling, printing, mailing
and
distributing these proxy materials. In addition to the mailing of these proxy
materials, the solicitation of proxies or votes may be made in person, by
telephone or by electronic communications by directors, officers and employees
of the Company, who will not receive any additional compensation for such
solicitation activities. The Company also will reimburse brokerage houses
and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to
shareholders.
Shares
of
the Common Stock represented by a proxy properly signed and received at or
prior
to the special meeting, unless properly revoked, will be voted in accordance
with the instructions on the proxy. If a proxy is signed and returned without
any voting instructions, shares of the Common Stock represented by the proxy
will be voted “FOR” the proposal to approve the sale and purchase agreement and
the transaction and in accordance with the determination of the majority
of the
board of directors of the Company as to any other matter which may properly
come
before the special meeting, including any adjournment or postponement thereof.
A
shareholder may revoke any proxy given pursuant to this solicitation by:
(i)
delivering to the corporate secretary of the Company, prior to or at the
special
meeting, a written notice revoking the proxy; (ii) delivering to the corporate
secretary of the Company, at or prior to the special meeting, a duly executed
proxy relating to the same shares and bearing a later date; or (iii) voting
in
person at the special meeting. Attendance at the special meeting will not,
in
and of itself, constitute a revocation of a proxy. All written notices of
revocation and other communications with respect to the revocation of a proxy
should be addressed to:
Medical
Discoveries, Inc.
6033
W.
Century Blvd, Suite 1090
Los
Angeles, California, 90045
The
Company’s board of directors is not aware of any business to be acted upon at
the special meeting other than consideration of the transaction described
herein. If, however, other matters are properly brought before the special
meeting, or any adjournments or postponements thereof, the persons appointed
as
proxies will have the discretion to vote or act on such matters according
to
their best judgment.
PROPOSAL
1 - APPROVAL OF THE EUCODIS TRANSACTION
GENERAL
At
the
special meeting, the Company’s shareholders will consider and vote upon a
proposal to approve the sale and purchase agreement, dated July 6, 2007 as
amended (a copy of which is attached to this proxy statement as Appendix
A and
incorporated herein by reference) by and among the Company, MDI Oncology
and
Eucodis, which provides for the sale of certain assets of the Company and
MDI
Oncology to Eucodis in exchange for approximately $1.95 million in cash and
Eucodis’ assumption of approximately $3.69 million of liabilities and
indebtedness of the Company and MDI Oncology. The terms of the sale and purchase
agreement are more fully described below under “Terms of the Eucodis Agreement.”
THE
BOARD
OF DIRECTORS URGES THE SHAREHOLDERS TO EXECUTE AND RETURN THE ENCLOSED PROXY
CARD AS SOON AS POSSIBLE AND UNANIMOUSLY RECOMMENDS THAT THE SHARES REPRESENTED
BY THE PROXY BE VOTED IN FAVOR OF THE EUCODIS AGREEMENT AND THE TRANSACTION.
BACKGROUND
AND REASONS FOR THE TRANSACTION
To
date,
the Company has been a developmental-stage bio-pharmaceutical company engaged
in
the research, validation, development and ultimate commercialization of two
drug
candidates referred to as MDI-P and SaveCream. MDI-P is a drug candidate
being
developed as an anti-infective treatment for bacterial infections, viral
infections and fungal infections. SaveCream is a drug candidate being developed
to reduce breast cancer tumors. Both of these drug candidates are still in
development and neither has been approved by the U.S. Food and Drug
Administration (the “FDA”). The total cost to develop these two drugs and to
receive the approval from the FDA would cost many millions of dollars and
take
many more years. The Company attempted to fund its development costs through
the
sale of its equity securities, including the sale of its Series A Convertible
Preferred Stock.
At
the
end of 2006, the Company had virtually no cash, had no source of revenues,
had a
working capital deficit of nearly $5,000,000, and had a total shareholders
deficit of $5,500,000. In addition, the holders of the Series A Convertible
Preferred Stock informed the Company that they were no longer willing to
fund
the Company’s then current operations and biotechnology business strategy. In
December 2006, three of the Company’s five directors resigned.
Because
of its lack of capital, the Company was unable to fund any on-going operations
and was not able to pay its professionals to audit the Company’s year end
financial statements and to prepare the public company period reports the
Company is required to file with the Securities and Exchange Commission.
As a
result, the Company is delinquent in its Securities and Exchange Commission
filings and, in July 2007, the Company was de-listed from the OTC Bulletin
Board.
In
February 2007, the Company engaged a consulting firm to assist it in resolving
its financial issues, to obtain advice regarding any strategic alternatives
that
may be available to it, and to prevent the Company from losing all of its
assets
in bankruptcy. During the past several months, the Company has explored a
number
of transactions that would (i) prevent the Company’s shareholders from losing
their entire investment in the Company and (ii) enable the Company to repay
some
of its currently outstanding debts and liabilities.
The
Company’s Board evaluated the value of both of its developmental stage drug
candidates. The commencement of human clinical trials of the Company’s MDI-P
currently is on Full Clinical Hold by FDA under 21 CRF 312.42(b), and may
not be
initiated until deficiencies in the Company’s IND application are resolved to
the FDA’s satisfaction. The FDA has concluded that the Company’s IND application
did not contain sufficient toxicology and genetic toxicology data to support
the
safety of the proposed clinical trial. The Company considered the uncertainty
of
the efficacy and safety data of the MDI-P compound, the costs involved in
further developing the compound, and the limited market, and thereafter
concluded that the Company did not have the capability or capacity to take
the
MDI-P compound to commercialization. The Company also evaluated the value
of its
SaveCream drug candidate that is currently being co-developed with Eucodis
Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company
(“Eucodis”), and determined that the highest value for this drug candidate could
be realized through a sale of that drug candidate to Eucodis.
In
reaching this decision, the Company’s Board considered several, including, but
not limited to the following:
| |
·
|
The
limited capital raising opportunities available to the Company,
and the
unlikely possibility that another entity would be interested in
funding
the development of the Company’s drug
candidates.
|
| |
·
|
The
unlikelihood that the Company will receive the requisite FDA approvals
for
MDI-P to pursue the development of that drug candidate through
to
commercialization.
|
| |
·
|
The
costs of further development of the MDI-P and SaveCream drugs weighed
against the limited markets for both
drugs.
|
| |
·
|
The
availability of a potential buyer due to Eucodis’s pre-existing interest
in the SaveCream drug (Eucodis currently is our development partner
and
holds rights to SaveCream in certain regions of the
world).
|
The
foregoing discussion of the information and factors considered by the Board
is
not intended to be exhaustive, but includes the material factors considered.
In
view of the variety of factors considered in connection with its evaluation
of
the transaction and the offer price, the Board did not find it practicable
to,
and did not, quantify or otherwise assign relative weight to the specific
factors considered in reaching its determinations and recommendations, and
individual directors may have given differing weight to different factors.
On
July
6, 2007, the Company entered into an agreement with Eucodis (the “Eucodis
Agreement”) to sell SaveCream for an aggregate of 4,007,534 euros (approximately
U.S. $5,641,000 based on the currency conversion rate in effect as of September
25, 2007), which consideration is payable in cash and by the assumption of
certain of the Company’s outstanding liabilities. The Company thereafter also
entertained various offers to purchase the Company’s rights to the MDI-P
compound, and on August 9, 2007, the Company sold the MDI-P compound for
$310,000 in cash.
USE
OF
PROCEEDS AND OPERATIONS AFTER THE TRANSACTION
Following
the closing of the Eucodis transaction, neither we nor MDI Oncology will
undertake research and development activities with respect to “SaveCream” or any
other product which could be used in reasonable substitution of “SaveCream”, or
commercialize any products based on “SaveCream”, except as may be otherwise
expressly requested by Eucodis.
At
the
closing of the Eucodis transaction, in addition to Eucodis’s assumption of
certain indebtedness, as further described in this proxy statement, we will
receive from Eucodis cash proceeds in the aggregate of approximately $1.95
million. These proceeds will be used to fund our future working capital needs
and our future opertions. At the time of the execution of the Eucodis Agreement,
we had not yet made any determination about future business plans once the
transaction with Eucodis closed. Since signing into the Eucodis Agreement,
we
have actively sought to develop a new business to maximize shareholder value.
As
disclosed on September 17, 2007, we have acquired some intellectual property
related to the development of alternative energy bio-fuels and have hired
a
seasoned energy executive with many years of experience in the alternate
energy
and bio-fuels industry, as our new President and Chief Operating Officer.
We
currently intend to develop this new alternative bio-fuels
business.
The
Board
of Directors has decided to develop a business to produce and sell seed oils,
including seeds oils harvested from the planting and cultivation of Jatropha
Curcas
plant,
for the purpose of providing feedstock oil intended for the generation of
methyl
ester, otherwise known as bio-diesel. The Company concluded that there was
a
significant opportunity to participate in the rapidly growing biofuels industry,
which previously was mainly driven by high priced, food oil-based feedstocks.
In
order to commence its new Jatropha based biofuels business, effective September
7, 2007, the Company (i) hired Richard Palmer, an energy consultant, to act
as
the Company’s new President, Chief Operating Officer and future Chief Executive
Officer, (ii) engaged Mobius Risk Group, LLC, a Texas company engaged in
providing energy risk advisory services, to provide the Company with consulting
services related to the development of the Jatropha bio-diesel business,
and
(iii) acquired certain proprietary rights, intellectual property, know-how,
business plans, contracts, term sheets, business relationships, and other
information relating to the cultivation and production of seed oil from the
Jatropha plant for the production of bio-diesel. In order to fund the Company’s
operations until cash is generated from the sale of the Eucodis sale and
from
the new Jatropha business, the Company on September 7, 2007 entered into
a
$1,000,000 loan and security agreement.
Additional
information regarding the bio-fuels purchase that we announced on September
17,
2007 and information regarding the additional members of our management team
is
available at the website of the Securities and Exchange Commission at
www.sec.gov.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
The
Board
has determined that the approval of the sale and purchase agreement and the
transaction is in the best interest of the Company’s shareholders. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY’S SHAREHOLDERS VOTE IN FAVOR
OF THE APPROVAL OF THE AGREEMENT AND THE TRANSACTION.
REGULATORY
APPROVALS
There
are
no regulatory approvals required to close the transactions contemplated by
the
Eucodis Agreement.
CERTAIN
FEDERAL INCOME TAX CONSEQUENCES
We
expect
that the Company and MDI Oncology, with which the Company files a consolidated
tax return, will recognize taxable gain for U.S. federal income tax purposes
as
a result of the transaction. However, the Company believes that any taxes
payable as a result of this sale will be offset by the Company’s prior operating
losses and by losses during the remainder of fiscal 2007.
We
do not
expect that our shareholders will recognize any gain or loss for U.S. federal
income tax purposes as a result of the transaction.
ACCOUNTING
TREATMENT
The
transaction will be accounted for by the Company and MDI Oncology as a sale
of
assets.
TERMS
OF THE EUCODIS AGREEMENT
The
following sets forth a summary of the material provisions of the sale and
purchase agreement between the Company and Eucodis (the “Eucodis Agreement”).
The description does not purport to be complete and is qualified in its entirety
by reference to the sale and purchase agreement, a copy of which is attached
hereto as Appendix A. All shareholders are urged to read the sale and purchase
agreement in its entirety.
GENERAL
The
Eucodis Agreement provides that, subject to approval by the shareholders
of the
Company and satisfaction of certain other conditions described below at
“Conditions to Closing the Transaction,” the Company will sell certain of its
assets to Eucodis.
ASSETS
TO
BE SOLD
The
assets being sold to Eucodis include:
| |
·
|
all
of the Company’s right, title and interest, along with all of MDI
Oncology’s right, title and interest, in that certain asset purchase
agreement between Medical Discoveries, Inc. and the liquidator
of
Savetherapeutics AG, a German company in liquidation, dated as
of March
11, 2005 (the “Savetherapeutics Contract”), including, among other things,
our rights in and to “SaveCream”, a developmental topical aromatase
inhibitor cream;
|
| |
·
|
all
of MDI Oncology’s right, title and interest in that certain agreement
between MDI Oncology and Eucodis, dated as of July 29, 2006, in
connection
with the co-development and licensing of the SaveCream drug;
|
| |
·
|
any
and all of the Company’s and MDI Oncology’s rights, title and interests in
the patents and patent applications acquired under the Savetherapeutics
Contract, and any other patent and/or patent application pertaining
to the
SaveCream drug, owned or in possession or control of the Company
or MDI
Oncology;
|
| |
·
|
any
and all United States and foreign regulatory files and data relating
to
the SaveCream drug in the possession of the Company and/or MDI
Oncology,
including marketing authorization procedures and preclinical and
clinical
studies;
|
| |
·
|
all
of the Company’s right, title and interest in that certain asset purchase
agreement between the Company and Attorney Hinnerk-Joachim Muller
as
Liquidator of Savetherapeutics AG i.
L.;
|
| |
·
|
all
of the Company’s right, title and interest in that side letter to the
asset purchase agreement between the Company and Attorney Hinnerk-Joachim
Muller as Liquidator of Savetherapeutics AG i.
L.;
|
| |
·
|
all
of MDI Oncology’s right, title and interest in that certain Assignment of
Patent, Participation and Research Development Agreement between
MDI
Oncology and Professor Heinrich
Weiland;
|
| |
·
|
all
of MDI Oncology’s right, title and interest in that certain Assignment 1
to the Assignment of Patent, Participation and Research Development
Agreement between MDI Oncology and Professor Heinrich Weiland;
and
|
| |
·
|
all
of the Company’s right, title and interest in that certain consulting
agreement between the Company and Marc
Ksessemeier.
|
The
foregoing are collectively referred to in this proxy statement as the “Purchased
Assets”.
In
the
event the sale to Eucodis is not approved by shareholders, we are obligated
under the Eucodis Agreement to transfer to Eucodis rights to SaveCream, by
means
of a license or otherwise, on terms to be determined by the
parties.
OBLIGATIONS
TO BE ASSUMED BY EUCODIS
Eucodis
has agreed to relieve us of an aggregate of approximately $3.69 million
constituting current indebtedness owed to certain of our creditors.
Specifically, at or prior to the closing Eucodis will relieve the Company
(and
MDI Oncology, as applicable) from the indebtedness owed to Epstein, Becker
and
Green, LLP; H3 Pharma Consulting Group; Mayer, Brown, Rowe and Maw, LLP;
Professor Heinrich Weiland; the Liquidator of Savetherapeutics AG i. L.;
Marc
Ksessemeier; and Millbank Tweed,
The
foregoing obligations to be assumed by Eucodis are collectively referred
to in
this proxy statement as the “Assumed Indebtedness”.
Further,
Eucodis will assume all of our financial and other obligations under certain
contracts relating to “SaveCream”, which will be assigned to Eucodis when the
transaction closes, and certain other costs we have incurred since February
28,
2007 in connection with preserving the Purchased Assets for the benefit of
Eucodis through the closing of the transaction. Other than the foregoing
obligations, Eucodis will not assume or be liable for any of our obligations
or
liabilities.
PURCHASE
PRICE
In
exchange for the Purchased Assets, Eucodis shall relieve the Company of
approximately $3.69 million of outstanding indebtedness (see “Obligations to be
Assumed by Eucodis”) and pay to the Company a cash payment of approximately
$1.95 million, which is payable to the Company on or before September 30,
2007.
NON-COMPETITION
Under
the
Eucodis Agreement, the Company and MDI Oncology have agreed to a non-compete
provision for the duration of five years after the closing of the Eucodis
transaction. Specifically, the non-compete provision restricts the us from
undertaking research and development activities with respect to “SaveCream”, or
any other product which could be used in reasonable substitution of “SaveCream,
or commercializing any products based on “SaveCream, unless expressly authorized
by Eucodis.
REPRESENTATIONS
AND WARRANTIES
The
Eucodis Agreement contains various representations and warranties of the
Company
and MDI Oncology including among others, representations and warranties related
to:
|
·
due
incorporation
|
|
·
due
authorization,
|
|
·
consents
|
|
·
enforceability
|
|
·
corporate
authority
|
|
·
contracts
|
|
·
no
defaults or violations
|
|
·
litigation
|
|
·
no
liens
|
|
·
no
infringement
|
The
Eucodis agreement contains various representations and warranties of Eucodis
including among others, representations and warranties related to:
|
·
due
incorporation
|
|
·
corporate
authority
|
|
·
enforceability
|
|
·
due
authorization
|
INDEMNIFICATION
The
Company and MDI Oncology have agreed to indemnify Eucodis and its directors,
officers, employees, agents and consultants against, and hold them harmless
from, any and all losses incurred or suffered by any of them arising out
of any
of the following:
| |
·
|
any
breach of any representation, warranty, covenant or agreement made
by
either of the Company or MDI Oncology under the Eucodis Agreement;
and
|
| |
·
|
any
act or omission by either of the Company or MDI Oncology in connection
with the Purchased Assets to the extent that the cause for such
claim was
existing prior to or on July 6, 2007, or in connection with the
transactions contemplated by the Eucodis
Agreement.
|
Eucodis
has agreed to indemnify the Company and MDI Oncology and their directors,
officers, employees, agents or consultants against, and hold them harmless
from,
any and all losses incurred or suffered by them arising out of any of the
following:
| |
·
|
any
breach of any representation, warranty, covenant or agreement made
by
Eucodis under the Eucodis
Agreement;
|
| |
·
|
non
payment by Eucodis of the Assumed Indebtedness;
and
|
| |
·
|
any
act or omission by Eucodis in connection with the Purchased Assets
to the
extent that the cause for such claim was created after July 6,
2007, or in
connection with the transactions contemplated by the Eucodis Agreement.
|
OTHER
COVENANTS
Each
of
the Company, MDI Oncology and Eucodis have agreed:
| |
·
|
to
strictly protect and maintain the confidentiality of the confidential
information belonging to the other parties with at least a reasonable
standard of care that is no less than that which it uses to protect
similar confidential information of its own;
|
| |
·
|
not
to disclose, nor allow to be disclosed, the confidential information
belonging to the other parties to any person other than to employees,
consultants and counsel, on a need to know basis provided, that
such
recipients of the confidential information are bound by obligations
of
confidentiality no less strict than those contained in the Eucodis
Agreement
|
| |
·
|
unless
otherwise expressly provided for in the Eucodis Agreement, not
use the
confidential information belonging to the other parties for any
purpose
other than in relation to the exercise of its rights and obligations
under
the Eucodis Agreement;
and
|
| |
·
|
take
all necessary precautions to restrict access of the confidential
information belonging to the other parties to unauthorized personnel.
|
CONDITIONS
TO CLOSING THE TRANSACTION
The
consummation of the transactions contemplated under the Eucodis Agreement
is
contingent on approval by the Company’s shareholders. In addition, the
obligations of Eucodis, the Company and MDI Oncology to consummate the
transaction at the closing are, subject to satisfaction of the following
conditions precedent on or before the closing date:
| |
·
|
the
accuracy of the Company’s and MDI Oncology’s representations and
warranties under the Eucodis Agreement being true on the closing
date;
|
| |
·
|
the
Company’s and MDI Oncology’s performance of all covenants and obligations
required under the Eucodis
Agreement;
|
| |
·
|
the
Company’s and MDI Oncology’s delivery to Eucodis of certain documents
necessary to effect the transfer of the Purchased Assets;
and
|
| |
·
|
the
Company obtaining additional capital or a credit facility in the
aggregate
amount of at least $250,000.
|
AMENDMENT
OF THE EUCODIS AGREEMENT
The
Eucodis Agreement may be amended, modified or supplemented but only in writing
signed by all of the parties.
CLOSING
The
closing of the transaction is to take place promptly following approval by
the
Company’s shareholders and the satisfaction of all of the closing conditions set
forth in the Eucodis Agreement.
INFORMATION
ABOUT THE COMPANIES
MEDICAL
DISCOVERIES, INC.
Medical
Discoveries, Inc. was incorporated on November 20, 1991 as a Utah
corporation and maintains its principal offices at 1338 S. Foothill
Drive, #266, Salt Lake City, Utah 84108. Information regarding our company
is
available at (212) 732-4300. We are a developmental-stage bio-pharmaceutical
company engaged in the research, validation, development and ultimate
commercialization of two drugs: MDI-P and SaveCream. Both of these drugs
are
still in development and have not been approved by the U.S. Food and Drug
Administration (FDA). To date, we have not generated significant revenues
from
operations or realized a profit. In September 2007, the Company’s Board
of
Directors decided to develop a business to produce and sell seed oils, including
seeds oils harvested from the planting and cultivation of Jatropha
Curcas
plant,
for the purpose of providing feedstock oil intended for the generation of
methyl
ester, otherwise known as bio-diesel. The Company currently intends to operate
solely as a bio-fuel company and will no longer pursue its drug development
operations.
MDI
Oncology, Inc., is our wholly owned subsidiary.
EUCODIS
Eucodis
Pharmaceuticals Forschungs - und Entwicklungs GmbH (“Eucodis”) is an Austrian
company and with principal offices are located at Brunnerstrasser 59, 1235,
1230, Vienna, Austria.
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The
following table includes, as of September 30, 2007 information for each
shareholder known by the Company to be the beneficial owner of more than
5% of
the outstanding shares of common stock, each director and Named Executive
Officer (as defined in Item 402 of Regulation S-B under the Securities Act
of
1933) of the Company, and all directors and executive officers of the Company
as
a group. Unless otherwise indicated, the Company believes that all persons
named
in the table have sole voting and investment power with respect to all shares
of
common stock beneficially owned by them.
|
Name
and Address of Beneficial Owner (1)
|
|
Shares
Beneficially
Owned
(2)
|
|
Percent
of
Class
|
|
Certain
Beneficial Owners:
|
|
|
|
|
| |
|
|
|
|
|
Mercartor
Momentum Fund, LP
555
S. Flower St., Suite 4500
Los
Angeles, CA 90071
|
|
46,970,374
(3)(12)
|
|
20.1%
|
|
Mercartor
Momentum Fund III, LP
555
S. Flower St., Suite 4500
Los
Angeles, CA 90071
|
|
39,198,211
(4)(12)
|
|
17.2%
|
|
Monarch
Pointe Fund, Ltd.
555
S. Flower St., Suite 4500
Los
Angeles, CA 90071
|
|
71,336,909
(5)(12)
|
|
27.4%
|
|
Mobius
Risk Group, LLC
Three
Riverway, Suite 1700
Houston,
Texas 77056
|
|
54,810,220
(6)
|
|
27.7%
|
|
Name
and Address of Beneficial Owner (1)
|
|
Shares
Beneficiall
Owned
(2)
|
|
Percent
of
Class
|
|
Directors/Named
Executive Officers:
|
|
|
|
|
| |
|
|
|
|
|
Judy
M. Robinett
|
|
2,000,000
(7)(12)
|
|
*
|
|
Richard
Palmer
|
|
9,135,037
(8)
|
|
4.6%
|
|
David
R. Walker
|
|
1,583,333
(9)
|
|
*
|
|
Eric
J. Melvin
Three
Riverway, Suite 1700
Houston,
Texas 77056
|
|
54,810,220
(10)
|
|
27.7%
|
|
Martin
Schroeder
92
Natoma St., #200
San
Francisco, California 94105
|
|
5,000,000
(11)(12)
|
|
2.5%
|
| |
|
|
|
|
|
All
Named Executive Officers and Directors as a group (5
persons)
|
|
72,528,590
|
|
35.2%
|
__________________
* Less
than
1%
(1)
Unless otherwise indicated, the business address of each person listed is
c/o
Medical Discoveries, Inc., 1338 S. Foothill Drive, #266, Salt Lake City,
Utah
84108.
(2)
For
purposes of this table, shares are considered beneficially owned if the person
directly or indirectly has the sole or shared power to vote or direct the
voting
of the securities or the sole or shared power to dispose of or direct the
disposition of the securities. Shares are also considered beneficially owned
if
a person has the right to acquire beneficial ownership of the shares within
60
days of September 30, 2007.
(3)
Includes 18,036,277 shares that may be acquired upon the exercise of currently
exercisable warrants, and 17,430,000 shares of common stock issuable upon
conversion of 8,715 shares of Series A convertible preferred stock based
on an
assumed conversion price of $0.05, which is the minimum price at which such
shares of Series A convertible preferred stock can be converted.
(4)
Includes 9,360,701 shares that may be acquired upon the exercise of currently
exercisable warrants, and 20,590,000 shares of common stock issuable upon
conversion of 10,295 shares of Series A convertible preferred stock based
on an
assumed conversion price of $0.05, which is the minimum price at which such
shares of Series A convertible preferred stock can be converted.
(5)
Includes 4,575,495 shares that may be acquired upon the exercise of currently
exercisable warrants, and 57,854,000 shares of common stock issuable upon
conversion of 9,917 shares of Series A convertible preferred stock based
on an
assumed conversion price of $0.05, which is the minimum price at which such
shares of Series A convertible preferred stock can be converted.
(6)
Includes 23,490,095 shares subject to forfeiture in the event the Company
has
not satisfied certain conditions by September 7, 2009.
(7)
Includes 2,000,000 shares that may be acquired upon the exercise of currently
exercisable options.
(8)
Includes 3,915,016 shares subject to forfeiture in the event the Company
has not
satisfied certain conditions by September 7, 2009. Mr. Palmer owns 13.33%
of the
outstanding membership interests of Mobius. Mr. Palmer has options to acquire
12,000,000 shares of common stock, which options are not currently exercisable
and will not become exercisable unless certain conditions are met. Neither
the
shares held by Mobius, nor the foregoing options to purchase 12,000,000 shares
have not been included in the table.
(9)
Includes 750,000 shares that may be acquired upon the exercise of currently
exercisable options.
(10)
Includes 54,810,220 shares held in the name of Mobius Risk Group, LLC, a
Texas
limited liability company (“Mobius”). Mr. Melvin is the Chief Executive Officer
and a director of Mobius.
(11)
Includes 5,000,000 shares that may be acquired upon the exercise of currently
exercisable warrants held by Emmes Consulting Group, LLC, a California limited
liability company (“Emmes”). Mr. Schroeder is the Executive Vice President and
Managing Director of Emmes.
(12)
Notwithstanding the foregoing percentages, each person listed herein,
individually or in the aggregate is limited by the terms of our Series A
convertible preferred stock and by applicable warrants to owning no more
than
9.99% of our outstanding common stock at any given time.
OTHER
MATTERS
Management
does not intend to present any other items of business and knows of no other
matters that will be brought before the special meeting. Whether or not you
plan
to attend the special meeting, please sign and date the enclosed proxy card
and
return it in the enclosed envelope to ensure your representation at the special
meeting.
WHERE
YOU CAN FIND MORE INFORMATION
The
Company files reports, proxy statements, and other information with the SEC.
You
can read and copy these reports, proxy statements, and other information
concerning the Company at the SEC’s Public Reference Room at 450 Fifth Street,
N. W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further
information on the Public Reference Room. You can review the Company’s
electronically filed reports, proxy and information statements on the SEC’s
Internet site at http://www.sec.gov.
PLEASE
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE
AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY GIVING WRITTEN NOTICE
OF
REVOCATION TO THE COMPANY PRIOR TO THE SPECIAL MEETING, BY EXECUTING A LATER
DATED PROXY AND DELIVERING IT TO COMPANY’S CORPORATE SECRETARY PRIOR TO THE
SPECIAL MEETING OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN
PERSON.
| |
By
Order of the Board of Directors,
David
Walker
Chairman
|
October
__, 2007
MEDICAL
DISCOVERIES, INC.
1338
S.
FOOTHILL DRIVE #266
SALT
LAKE
CITY, UTAH 84108
PROXY
FOR
THE SPECIAL MEETING OF SHAREHOLDERS
TO
BE
HELD OCTOBER 30, 2007.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned, having received notice of the Special Meeting of Shareholders
of
Medical Discoveries, Inc. (the “Company”) to be held at the Company's
offices located at 6033 W. Century Blvd., Suite 1090 Los Angeles, California
90045 10:00 A.M. local time on Tuesday, October 30, 2007, hereby designates
and appoints Richard Palmer and Martin Schroeder, and each of them, as attorney
and proxy for the undersigned, with full power of substitution, to vote all
shares of common stock of Medical Discoveries, Inc. that the undersigned
is
entitled to vote at such meeting or at any adjournment thereof, with all
the
powers the undersigned would possess if personally present, such proxies
being
directed to vote as specified below and in their discretion on any other
business that may properly come before the meeting.
This
proxy when properly executed will be voted in the manner directed herein
by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR
PROPOSAL 1.
PROPOSAL
1. To approve the sale of the SaveCream assets of Medical Discoveries, Inc.
to
Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company
(“Eucodis”), pursuant to the terms of that certain sale and purchase agreement,
as amendmed, by and among Medical Discoveries, Inc, MDI Oncology, Inc., our
wholly-owned subsidiary, and Eucodis.
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
|
2.
|
In
their discretion the proxies are authorized to vote upon such other
business as may properly come before the
meeting.
|
The
undersigned reserves the right to revoke this Proxy at any time prior to
the
Proxy being voted at the Meeting. The Proxy may be revoked by delivering
a
signed revocation to the Company at any time prior to the Meeting, by submitting
a later-dated Proxy, or by attending the Meeting in person and casting a
ballot.
The undersigned hereby revokes any proxy previously given to vote such shares
at
the Meeting.
| |
|
|
Signature
|
| |
|
|
Date:
|
|
| |
|
| |
|
|
Signature
|
| |
|
|
Date:
|
|
| |
|
|
NOTE:
Please sign exactly as name appears hereon. Joint owners should
each sign.
When signing as attorney, executor, administrator, trustee, guardian
or
corporate officer, please give full title as
such.
|
APPENDIX
A
SALE
AND
PURCHASE AGREEMENT
AMONG
MEDICAL
DISCOVERIES INC.
AND
MDI
ONCOLOGY, INC.
AND
EUCODIS
PHARMACEUTICALS FORSCHUNGS-und ENTWICKLUNGS GmbH
Dated
July
6, 2007
SALE
AND ASSET PURCHASE AGREEMENT
This
Sale
and Asset Purchase Agreement (this “Agreement”,
which
term is intended to include all exhibits, schedules and other documents attached
hereto or referred to herein) is made and entered into on July 6, 2007 (the
“Effective
Date”)
by and
among Medical Discoveries, Inc., a Utah corporation, whose principal place
of
business is 1338 South Foothill Drive, #266, Salt Lake City, Utah 84108
(“MDI”),
MDI
Oncology, Inc., a Delaware corporation and wholly-owned subsidiary of MDI,
whose
principal place of business is 1338 South Foothill Drive, #266, Salt Lake
City,
Utah 84108 (“MDI
Oncology”
and,
together with MDI, the “MDI
Parties”)
and
Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company
whose principal place of business is Brunnerstrasse 59, 1230, Vienna, Austria
(“EUCODIS”;
collectively, the MDI Parties and EUCODIS are referred to as the “Parties”).
RECITALS
MDI
purchased substantially all of the intellectual property assets of
Savetherapeutics AG a German company in liquidation pursuant to an agreement
with its liquidator dated March 11, 2005 (the “Savetherapeutics
Contract”),
as a
result of which the MDI Parties own, among other things, patents, patent
applications, pre-clinical study data and anecdotal clinical trial data
concerning “SaveCream”, a developmental topical aromatase inhibitor cream (the
“Product”).
MDI
Oncology and EUCODIS entered into an agreement for the co-development and
license of the Product as of July 29, 2006 (the “Co-Development
Contract”).
On
March
8, 2007, the Parties entered into a letter of intent for the acquisition
by
EUCODIS of all of the MDI Parties’ rights under the Savetherapeutics Contract,
and all intellectual property and other rights belonging to the MDI Parties,
whether subsequently acquired or developed by or though the efforts of the
MDI
Parties or otherwise which are related to the Product.
NOW,
THEREFORE,
in
consideration of the mutual covenants, agreements, representations and
warranties herein, the Parties agree as follows:
ARTICLE
1
DEFINITIONS
For
purposes of this Agreement, the following definitions shall apply unless
specifically stated otherwise
1.1 “Affiliate”
shall
mean, with respect to any Person, any other Person controlling, controlled
by or
under direct or indirect common control with such Person. A Person shall
be
deemed to control a corporation (or other entity) if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation (or other entity), whether through
the ownership of voting securities, by contract or otherwise
1.2 “Agreement”
shall
have the meaning set forth in the heading of this document.
1.3 “Assigned
Contracts”
shall
have the meaning set forth in Section 3.2(a) of this Agreement.
1.4 “Closing”
shall
have
the
meaning set forth in Section 4.1(b).
1.5 “Co-Development
Contract”
shall
have the meaning set forth in the Recitals to this Agreement.
1.6 “Commitment”
shall
have the meaning set forth in Section 4.1 of this Agreement.
1.7 “Confidential
Information”
shall
have the meaning set forth in Section 8.1 of this Agreement.
1.8 “Creditor
Indebtedness”
shall
have the meaning set forth in Section 3.1(a) of this Agreement.
1.9 “Effective
Date”
shall
have the meaning set forth in the heading of this Agreement.
1.10 “Encumbrance”
shall
mean any title defect, mortgage, assignment, pledge, hypothecation, security
interest, lien, charge, option, claim of others or encumbrance of any
kind.
1.11 “Escrow
Agent”
shall
mean the New York City law firm of Otterbourg, Steindler, Houston & Rosen,
P.C.
1.12 “EUCODIS”
shall
have the meaning set forth in the heading of this Agreement.
1.13 “Excess
Portion”
shall
have the meaning set forth in Section 3.1(b) of this Agreement.
1.14 “MDI”
shall
have the meaning set forth in the heading of this Agreement.
1.15 “MDI
Creditor”
shall
have the meaning set forth in Section 3.1(a) of this Agreement.
1.16 “MDI
Oncology”
shall
have the meaning set forth in the heading of this Agreement.
1.17 “MDI
Parties”
shall
have the meaning set forth in the heading of this Agreement.
1.18 “MDI
Retained Creditors”
shall
have the meaning set forth in Section 6.1(s) of this Agreement.
1.19 Parties”
shall
have the meaning set forth in the heading of this Agreement.
1.20 “Patent
Rights”
shall
mean all of the MDI Parties' right, title and interest in the patents and
patent
applications acquired under the Savetherapeutics Contract or in connection
therewith, and any other patent and/or patent application pertaining to the
Product, owned or in possession or control of or under contract for the MDI
Parties, and any division, continuation, continuation-in-part, renewal,
extension, reexamination or reissue of each such patent and any and all
corresponding US and foreign counterpart patent applications or
patents.
1.21 “Product”
shall
have the meaning set forth in the Recitals to this Agreement.
1.22 “Purchased
Assets”
shall
have the meaning set forth in Section 2.1 of this Agreement.
1.23 “Purchase
Price”
shall
have the meaning set forth in Section 3.1 of this Agreement.
1.24 “Person”
shall
mean any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture or other entity of any
kind.
1.25 “Savetherapeutics
Contract”
shall
have the meaning set forth in the Recitals to this Agreement.
1.26 “Schmidt
Litigation”
shall
have the meaning set forth in Section 3.2(b) of this Agreement.
1.27 “Transfer
Documents”
shall
have the meaning set forth in Section 2.5 of this Agreement.
ARTICLE
2
SALE,
ASSIGNMENT AND TRANSFER OF PURCHASED ASSETS
2.1 Subject
to the terms and conditions set forth in this Agreement and in reliance upon
the
representations and warranties of the Parties herein set forth, promptly
following satisfaction of the conditions to the Closing set forth in Article
4
of this
Agreement, the MDI Parties are
selling, assigning, transferring, conveying and delivering,
as the
case may be, to EUCODIS,
and
EUCODIS shall purchase and, as set forth in Article 3 of this Agreement,
pay
for,
all of
the MDI Parties’ rights, title and interests in and relating to the Product and
the following related assets of the MDI Parties (collectively, the “Purchased
Assets”):
(a) All
of
the intellectual property and all contractual and other rights, if any, acquired
by the MDI Parties pursuant to the Savetherapeutics Contract;
(b) All
of
the rights of the MDI Parties under the Co-Development Contract, including
without limitation the intellectual property and all contractual and other
rights acquired by the MDI Parties pursuant to the Co-Development
Contract;
(c) Any
and
all Patent Rights, inventions, discoveries, rights in confidential data
(including know-how and trade secrets), manufacturing methods and processes,
trademarks, trade names, brand names, logos, trade dress, copyrights and
other
intellectual property and goodwill associated with the Product, owned or
in
possession or control of or under contract to acquire by the MDI Parties,
in
each case whether registered or unregistered, and including without limitation
all applications for and renewals or extensions of such rights, and all similar
or equivalent rights or forms of protection;
(d) Any
and
all United States and foreign regulatory files and data relating to the Product
in the possession or control of the MDI Parties, including without limitation
marketing authorization procedures and preclinical and clinical studies;
and,
(e) All
rights of the MDI Parties under the Assigned Contracts.
2.2 The
Purchased Assets are being sold, assigned, transferred, conveyed and delivered
to EUCODIS free of any and all liabilities, obligations and Encumbrances
except
only for those as may be described in reasonable detail in Exhibit
2.2
(to the
extent that Exhibit 2.2 has been attached to this Agreement prior to the
Effective Date).
2.3 Upon
the
Closing, all of the Purchased Assets and all non-publicly available information
relating thereto shall be considered to be Confidential Information belonging
to
EUCODIS, and the MDI Parties shall no longer have any rights thereto or
therein.
2.4 The
MDI
Parties shall be solely responsible for all sales, use, transfer, value added
and other related taxes, if any, arising out of the sale by MDI Parties of
the
Purchased Assets to EUCODIS pursuant to this Agreement.
2.5 Simultaneously
with the execution and delivery of this Agreement by the Parties, the MDI
Parties shall deliver to the Escrow Agent (in original, fully executed form)
all
assignments, bills of sale and other documents which are necessary, sufficient
or reasonably desirable to effect the transfer of the Purchased Assets to
EUCODIS, along with all other documents referred to in this Agreement as
being
delivered to EUCODIS on or prior to the Closing (collectively, the “Transfer
Documents”). The Transfer Documents shall be held by the Escrow Agent for
delivery as set forth in Article 4 of this Agreement.
ARTICLE
3
PURCHASE
PRICE; TIMING OF PAYMENTS; DISCHARGE OF CERTAIN DEBTS
3.1 The
purchase price for the Purchased Assets (the “Purchase
Price”)
shall
consist of the following:
(a) Relief
of
the MDI Parties from an aggregate of two million four hundred sixty-nine
thousand seventy-two Euros (2,469,072€) of indebtedness, which is comprised of
the following amounts (each a “Creditor
Indebtedness”)
owed
to the following creditors of the MDI Parties (each an “MDI
Creditor”):
(i) 1,850,000
€ owed to the Liquidator of Savetherapeutics AG;
(ii)
205,000
€ owed to Professor Wieland;
(iii)
188,197€
owed to Mayer, Brown, Rowe and Maw, LLP;
(iv)
127,875
€ owed to Epstein, Becker and Green, LLP;
(v)
46,000 €
owed to H3 Pharma;
(vi)
31,000 €
owed to Millbank Tweed (Bob Koch); and
(vii)
21,000 €
owed to Marc
Kessemeier
(b) An
aggregate of one million five hundred thirty-eight thousand four hundred
and
sixty-two Euros (1,538,462€) (herein, the “Excess
Portion”).
(c) On
or
before September 30,
2007,
EUCODIS shall pay
the
Excess Portion to the MDI Parties or to another party as the MDI Parties
may so
direct.
(d) MDI
Parties shall be responsible to cause the transfer of the Purchased Assets
to
EUCODIS by the Closing.
(e)
On
Closing, EUCODIS shall deliver to the MDI Parties, in form and substance
reasonably satisfactory to the MDI Parties, releases from each of the MDI
Creditors forever discharging and releasing the MDI Parties from any liability
for any of their respective Creditor Indebtedness.
3.2 In
addition, on
the
Closing, EUCODIS shall assume and shall be financially responsible
for:
(a) The
financial obligations of the MDI Parties arising under the assigned
contracts described
in reasonable detail in Exhibit
3.2(a)
(to the
extent that Exhibit 3.2(a) has been attached to this Agreement prior to the
Effective Date);
provided,
however,
that
the
benefits of each of such assigned contracts (the “Assigned
Contracts”)
has
been validly assigned to EUCODIS in accordance with the terms
thereof.
(b) All
costs
accruing after February 28, 2007 which were necessarily incurred by or on
behalf
of the MDI Parties to maintain any of the Purchased Assets, including but
not
limited to: (i) the costs to file and maintain, throughout the world, any
of the
Patent Rights, and (ii) the legal fees and related legal costs incurred in
connection with the legal proceedings in Hamburg, Germany to obtain certain
rights belonging to the MDI Parties by co-inventor Dr. Alfred Schmidt (the
“Schmidt
Litigation”);
provided,
however,
that a
reasonably detailed description of such costs are set forth in Exhibit
3.2(b)
(to the
extent that Exhibit 3.2(b) has been attached to this Agreement prior to the
Effective Date)
and
that such costs are backed up by duly rendered invoices (or receipts) and
the
amounts set forth thereon for any costs do no exceed the amounts listed on
Exhibit 3.2(b) by more than ten percent (10%). After the Effective
Date,
the MDI
Parties shall continue to vigorously prosecute the Schmidt action (which
shall be
conducted at the direction, and under the control, of EUCODIS) at the sole
expense of EUCODIS until such time, if any, as EUCODIS can be substituted
for
the MDI Parties in such action. For purposes of clarification, the reasonably
incurred out-of-pocket expenses of the MDI Parties and their representatives
(including legal fees and costs), in furnishing such assistance as may be
reasonably requested by EUCODIS, shall be at the sole expense of EUCODIS.
ARTICLE
4
CONDITIONS
TO THE CLOSING
4.1.
The
Closing shall occur if the following conditions are met:
(a) The
MDI
Parties shall have delivered to the Escrow Agent all of the Transfer
Documents,
(b) The
Escrow Agent shall not deliver the Transfer Documents to EUCODIS until such
time
as EUCODIS has delivered to the MDI Parties (i) the Excess Portion of the
Purchase Price without any off set or deduction, and (ii) releases
from each of the MDI Creditors in which such MDI Creditors forever discharges
and releases the MDI Parties from any liability for any of their respective
Creditor Indebtedness, or paid in full the amounts set forth in Section 3.1(a)
to the MDI Parties for the account of such MDI Creditor.
4.2 In
the
event that the Closing does not occur by September 30, 2007, and unless the
parties have otherwise agreed in writing, the Escrow Agent shall deliver
the
Transfer Documents to the MDI Parties or to whomever as the MDI Parties may
so
direct.
4.3 Irrespective
of any provision of this Agreement to the contrary, the obligation of EUCODIS
to
purchase the Purchased Assets is subject to the fulfillment, at or before
the
Closing, of each of the following conditions (all or any of which may be
waived
in whole or in part by EUCODIS in its sole discretion):
(a) Each
of
the representations and warranties made by the MDI Parties in this Agreement
shall be true and correct in all material respects on and as of the Closing
as
though such representation or warranty was made on and as of the
Closing.
(b) The
MDI
Parties shall have performed and complied with, in all material respects,
each
agreement, covenant and obligation required by this Agreement to be so performed
or complied with by the MDI Parties at or before the Closing.
(c) The
MDI
Parties shall have delivered to the Escrow Agent all of the Transfer
Documents.
(d) Since
the
Effective Date, MDI shall have obtained additional capital or a credit facility
aggregating in the amount of at least $250,000.00.
(e) The
MDI
Parties shall have delivered or caused to be delivered to the Escrow Agent
or to
EUCODIS any and all originals and copies of documents pertaining to Purchased
Assets and the Product, which are within the possession or control of the
MDI
Parties, along with any additional documents reasonably requested by
EUCODIS.
4.4 In
the
event that, before the Creditor Indebtedness of any MDI Creditor has been
fully
satisfied, actions are taken pursuant to which either of the MDI Parties
voluntarily declares bankruptcy (however evidenced), or involuntary is caused
to
become bankrupt, then the unpaid amount(s) of any still outstanding Creditor
Indebtedness shall be paid into the court having jurisdiction over the
bankrupt’s estate.
4.5 If
valid
transfer of title to any Purchased Assets or portion thereof is not made
on the
Closing and can not be made by the MDI Parties promptly thereafter, or if
the
circumstances that make such assignment or transfer or any claim to any of
the
Purchased Assets to EUCODIS questionable or impracticable for any reason,
it
shall be the obligation of the MDI Parties to determine another way by which
EUCODIS shall be able to utilize the Purchased Assets with equal or at least
substantially similar economical effect, including (if agreeable to EUCODIS)
under an exclusive, royalty-free, perpetual license with the right to
sublicense.
ARTICLE
5
DELIVERIES
BY THE MDI PARTIES; RESIDUAL RIGHTS
5.1 As
soon
as possible, but no later than within fifteen (15) business days after the
Effective Date, the MDI Parties shall deliver or cause to be delivered to
the
Escrow Agent any
and
all originals and copies of documents pertaining to Purchased Assets and
the
Product, which are within the possession or control of the MDI Parties. All
of
such documents
after
the Closing
are
considered to be Confidential Information of EUCODIS in accordance with Article
8 of this Agreement.
5.2 Promptly
after the Effective Date, the MDI Parties shall deliver to the
Escrow Agent (or if the Closing has occurred, to EUCODIS)
such
additional
assignments and bills of sale transferring title to the Purchased Assets
and the
Product as EUCODIS reasonably shall request, and
promptly
following the Closing
shall
cause the change of title to such assets to be recorded by applicable
patent
offices as appropriate
5.3 The
MDI
Parties shall be entitled to retain one copy of any documents being delivered,
but only in its legal files for evidential purposes in respect of its
confidentiality obligations in relation to this Agreement or other matters
related hereto.
5.4 It
is
expressly understood and agreed that EUCODIS is not the successor to either
of
the MDI Parties in their business affairs, and EUCODIS undertakes no
responsibility, obligation or liability, expressed or implied, under any
contract of the MDI Parties that are not Assigned Contracts, and that such
other
contracts shall remain the sole responsibility of the MDI Parties.
5.5 For
the
period of five (5) years from the Closing,
neither of the MDI Parties, nor any of its or their Affiliates shall be a
party
to, or assist with or undertake, either on its own, with third parties or
on
behalf of third parties, any research and development with respect to the
Product or any product which could be used in reasonable substitution thereof,
nor commercialize any products based on the Product, save as requested by
EUCODIS.
ARTICLE
6
REPRESENTATIONS,
WARRANTIES AND COVENANTS
6.1 The
MDI
Parties represent, warrant and covenant to EUCODIS
as of
the Effective Date and at the Closing as follows:
(a) MDI
is a
corporation duly and validly existing and in good standing under the laws
of the
State of Utah. MDI Oncology is a corporation wholly-owned by MDI which is
duly
and validly existing and in good standing under the laws of the State of
Delaware, and does not conduct business in any other jurisdiction. Each of
the
MDI Parties has all requisite power and authority to own its assets, including
the Purchased Assets, and to carry on its business as presently conducted.
(b) Each
of
the MDI Parties has all requisite power and authority to execute and deliver
and
perform its obligations under this Agreement and to consummate the transactions
contemplated by this Agreement.
(c) All
acts
(corporate or otherwise) required to be taken by or on the part of, and all
approvals required to be obtained by, each of the MDI Parties necessary to
enter
into this Agreement, consummate the transactions contemplated by this Agreement
and perform its obligations under this Agreement have been duly and properly
taken by such MDI Party.
(d) This
Agreement has been duly and validly executed and delivered by the MDI Parties,
and constitutes the legal, valid and binding obligation of the MDI Parties
enforceable against the MDI Parties in accordance with its terms, subject
to
applicable bankruptcy, moratorium, reorganization, insolvency and similar
laws
of general application relating to or affecting the rights and remedies of
creditors generally and to general equitable principles (regardless of whether
a
proceesings is brought in
equity
or at law).
(e) The
Purchased Assets do not constitute all
or
substantially
all of the assets of MDI.
(f) The
execution and delivery of this Agreement by each of the MDI Parties, the
consummation by it of the transactions contemplated by this Agreement, and
the
performance by it of its obligations under this Agreement does not, and will
not
at all relevant times (i) violate or conflict with any provision of
its
respective
Certificate of Incorporation or By-Laws, or (ii) result in a violation by
such
MDI Party of any law to which it or any of its properties or assets are
subject.
(g) The
execution and delivery of this Agreement by each of the MDI Parties, the
consummation by it of the transactions contemplated by this Agreement, and
the
performance by it of its obligations under this Agreement does not, and will
not
at all relevant times violate, or conflict with, or result in a breach of
any
provision of, or constitute a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any agreement lease, instrument, obligation, understanding or arrangement
to
which such MDI Party is a party or by which any of its properties or assets
is
subject.
(h) Except
as
set forth in Exhibit
6.1(h)
(to the
extent that Exhibit 6.1(h) has been attached to this Agreement prior to
the Effective
Date),
there
is no litigation, proceeding, investigation, arbitration or claim pending,
or,
to the best of the knowledge of the MDI Parties, threatened against the MDI
Parties, and there is, to the best of the MDI Parties’ knowledge, no reasonable
basis for any such action, which affects in whole or in part either MDI Party’s
ability to consummate the transactions contemplated by this Agreement, the
performance of the MDI Parties obligations hereunder or the ability of EUCODIS
to fully enjoy the Purchased Assets.
(i) To
the
best of the MDI Parties’ knowledge,
the use
of the Purchased Assets does not infringe intellectual property rights of
third
parties,
except
to the extent as may have been alleged in the Schmidt Litigation,
(ii) the
Purchased Assets are free from any liens, charges and Encumbrances or other
rights of third parties, (iii) the full enjoyment of the Purchased Assets
are
not dependant on any rights of third parties, (iv) no fraudulent or other
improper document has been filed with any third governmental agency which
may
invalidate any of the rights enjoyed by the Purchased Assets, and (v) the
Purchased Assets are, to the best knowledge of the MDI Parties, valid and
enforceable against third parties, and there are no grounds for revocation,
invalidation or re-examination of any of the Purchased Assets
(j) Except
as
set forth in Exhibit
6.1(j)
(to the
extent that Exhibit 6.1(j) has been attached to this Agreement prior to the
Effective
Date),
no
permit, consent, approval or authorization of, or declaration, filing or
registration with, any governmental authority or other third party is or
will be
necessary to be made or obtained by the MDI Parties in connection with (i)
the
execution and delivery by MDI of this Agreement, (ii) the consummation by
them
of the transactions contemplated under this Agreement, or (iii) the performance
by the MDI Parties of their obligations under this Agreement.
(k) One
or
both of the MDI Parties are a party to each of the Assigned Contracts, all
of
which (i) are in full force and effect, (ii) constitute binding and enforceable
obligations, (iii) subject to the terms and conditions thereof, are assignable
to EUCODIS, and (iv) are being duly assigned to EUCODIS at the
Closing.
(l) Except
as
set forth in Exhibit
6.1(l)
(to the
extent that Exhibit 6.1(l) has been attached to this Agreement prior to
the Effective
Date),
all of
the Purchased Assets are legally, beneficially, and solely owned by the MDI
Parties, and there are no pending or threatened claims or any other undisclosed
liabilities that could impair any right or claim of the MDI Parties is assigning
and transferring that
may
be deemed to be part of, or arise under or are related to,
the
Purchased Assets to EUCODIS under this
Agreement or
that
may
cause
any liability to
be
incurred by
EUCODIS
as the result of its use of the Purchased Assets
after
the Closing.
(m) The
MDI
Parties have not granted any third parties any rights relating to the Product
or
relating in any way to any of the rights obtained pursuant to the
Savetherapeutics Contract.
(n) Schedule
6.1(n)
contains
a complete and correct list of (i) all documents relating to the
Savetherapeutics Contract, including without limitation the Savetherapeutics
Contract, all exhibits and schedules thereto, all amendments thereof and
all
correspondence pertaining thereto with, or on behalf of, the liquidator of
Savetherapeutics AG, dated subsequent to March 11, 2005, (ii) all invoices
and
other debit memoranda from each of the MDI Creditors which support the Creditor
Indebtedness, and (iii) all contracts, findings and correspondence with any
other third parties, including consultants, which relate to the Purchased
Assets
and which were obtained on or after March 11, 2005. Prior to or on the Effective
Date, the MDI Parties have delivered or are delivering to EUCODIS or as it
may
direct a true and complete copy of each item listed on Schedule
6.1(n).
(o) As
specifically set forth in this Agreement, the MDI Parties shall timely fulfill
obligations which relate to or otherwise affect, in any respect, the Purchased
Assets. The
MDI
Parties shall indemnify and reimburse EUCODIS and its officers, directors,
employees, consultants and agents from and against all liabilities, claims,
damages, costs and expenses incurred by
EUCODIS and its officers, directors, employees, consultants and agents arising
from any claims by the contractual parties of the Assigned Contracts in relation
to the non-fulfillment of any obligations of the MDI Parties prior to the
Effective Date.
(p) The
MDI
Parties shall be responsible for obtaining any consents and approvals by
the
contractual parties to the Assigned Contracts necessary to effectuate the
assignment of the Assigned Contracts to EUCODIS, and to obtain the consent
and
approval of the MDI Creditors for the assumption and transfer of their debt
to
EUCODIS; provided,
however,
that
EUCODIS shall render the MDI Parties reasonable help in obtaining such consents
and approvals.
(q) If
valid
transfer of title to any Purchased Assets or portion thereof is not made
on the
Closing and can not be made by the MDI Parties promptly thereafter, or if
the
circumstances that make such assignment or transfer or any claim to any of
the
Purchased Assets to EUCODIS questionable or impracticable for any reason,
it
shall be the obligation of the MDI Parties to determine another way by which
EUCODIS shall be able to utilize the Purchased Assets with equal or at least
substantially similar economical effect, including (if agreeable to EUCODIS)
under an exclusive, royalty-free, perpetual license with the right to
sublicense.
(r) Prior
to
or on the Effective Date, the MDI Parties have delivered or are delivering
to
the
Escrow Agent an
opinion of recognized counsel,
addressed to EUCODIS,
relating
to the representations contained in clauses (a) through (f) above reasonably
satisfactory to counsel for EUCODIS, which may contain such reasonable
qualifications and exceptions as are customary.
(s) Schedule
6.1(s)
contains
a complete and correct list of creditors of the MDI Parties (including the
MDI
Creditors) and the amounts owed by the MDI Parties as of June
30,
2007, except for not more than in aggregate of $5,
000
of
unlisted indebtedness.
After
subtracting from such list any Creditor Indebtedness of a MDI Creditor included
on such list, the remaining balance is less than $1,850,000.
6.2 EUCODIS
represents, warrants and covenants to the MDI Parties as follows:
(a) EUCODIS
is a company duly organized, validly existing and in good standing under
the
laws of Austria and has all requisite power and authority to own its assets
and
to carry on its business as presently conducted.
(b) EUCODIS
has all requisite power and authority to execute and deliver and perform
its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
(c) All
acts
(corporate or otherwise) required to be taken by or on the part of, and all
approvals required to be obtained by, EUCODIS necessary to enter into this
Agreement, consummate the transactions contemplated by this Agreement and
perform its obligations under this Agreement have been duly and properly
taken
by EUCODIS.
(d) This
Agreement has been duly and validly executed and delivered by EUCODIS and
constitutes the legal, valid and binding obligation of EUCODIS enforceable
against EUCODIS in accordance with its terms, subject to applicable bankruptcy,
moratorium, reorganization, insolvency and similar laws of general application
relating to or affecting the rights and remedies of creditors generally and
to
general equitable principles (regardless of whether a proceedings is brought
in
equity or at law).
(e) The
execution and delivery of this Agreement by EUCODIS, the consummation by
it of
the transactions contemplated by this Agreement, and the performance by it
of
its obligations under this Agreement does not, and will not at all relevant
times (i) violate or conflict with any provision of its operative governing
documents, or (ii) result in a violation by EUCODIS of any law to which it
or
any of its properties or assets are subject.
(f) The
execution and delivery of this Agreement by EUCODIS, the consummation by
it of
the transactions contemplated by this Agreement, and the performance by it
of
its obligations under this Agreement does not, and will not at all relevant
times violate, or conflict with, or result in a breach of any provision of,
or
constitute a default (or give rise to any right of termination, cancellation
or
acceleration) under, any of the terms, conditions or provisions of any agreement
lease, instrument, obligation, understanding or arrangement to which EUCODIS
is
a party or by which any of its properties or assets is subject.
(g) EUCODIS
shall timely fulfill after the Closing all
obligations incurred to the MDI Parties under or pursuant to this Agreement.
EUCODIS shall indemnify and reimburse the MDI Parties and their officers,
directors, employees and agents from and against all liabilities, claims,
damages, costs and expenses incurred by
the
MDI Parties and their officers, directors, employees and agents arising from
any
claims by the contractual parties of the Assigned Contracts in relation to
the
non-fulfillment of any obligations of EUCODIS arising on
or
after
the
Closing..
(h) If
any
MDI Creditor does not agree to have its debt obligation assumed by, and
transferred to, EUCODIS, then EUCODIS shall pay the amount set forth in Section
3.1(a) to MDI for the account of such MDI Creditor, and MDI shall immediately
make payment to such MDI Creditor and will be solely responsible for such
payment. MDI shall provide written notification to EUCODIS that said payment
to
such MDI Creditor has been made by MDI.
6.3 In
addition to any obligations of indemnification by the MDI Parties set forth
under this Agreement, the MDI Parties shall indemnify, defend and hold harmless
EUCODIS and its officers, directors, employees, consultants and agents from
and
against all liabilities, claims, damages, costs and expenses (including
reasonable attorney's fees) incurred by EUCODIS and its officers, directors,
employees and agents arising from the breach of any of the representations,
warranties or covenants made by the MDI Parties under this
Agreement.
6.4 In
addition to any obligations of indemnification by EUCODIS set forth under
this
Agreement, EUCODIS shall indemnify, defend and hold harmless the MDI Parties
and
their officers, directors, employees, consultants and agents from and against
all liabilities, claims, damages, costs and expenses (including reasonable
attorney's fees) incurred by the MDI Parties and its officers, directors,
employees and agents arising from the breach of any of the representations,
warranties or covenants made by EUCODIS under this Agreement.
ARTICLE
7
INDEMNIFICATION
7.1 From
and
after the Closing, the MDI Parties shall defend, indemnify and hold harmless
EUCODIS and its officers, directors, employees, consultants and agents from
and
against all liabilities, claims, damages, costs and expenses (including
reasonable attorney's fees) incurred by EUCODIS and its officers, directors,
employees, consultants and agents arising from or out of (a) any breach of
any
representation, warranty, covenant or agreement made by the MDI Parties in
this
Agreement, (b) any act or omission by the MDI Parties (or their agents and
employees) in connection with (i) the Purchased Assets, (ii) the Assigned
Contracts, to the extent that the cause for such claim was existing prior
to or
on the Effective Date, or (iii) the transactions contemplated by this Agreement;
provided,
however,
that
with respect to the Creditor Indebtedness owing to the MDI Creditors, the
MDI
Parties shall have no liability.
7.2 From
and
after the Closing, EUCODIS shall defend, indemnify and hold harmless the
MDI
Parties and their officers, directors, employees, consultants and agents
from
and against all liabilities, claims, damages, costs and expenses (including
reasonable attorney's fees) incurred by the MDI Parties and their officers,
directors, employees, consultants and agents arising from or out of (a) any
breach of any representation, warranty, covenant or agreement made by EUCODIS
in
this Agreement, (b) non-payment of the Creditor Indebtedness to the MDI Parties,
or (c) any act or omission by EUCODIS (or its agents and employees) in
connection with (i) the Purchased Assets, (ii) the Assigned Contracts, to
the
extent that the cause for such claim was created after the Effective Date,
or
(iii) the transactions contemplated by this Agreement.
7.3 No
obligation of indemnification shall arise relating to a third party claim
or
cause of action unless the indemnified Party making such claim shall: (a)
notify
the indemnifying Party of such claim promptly upon becoming aware of the
existence or threatened existence of any such claim giving rise to or that
may
give rise to a claim of indemnification hereunder, and (b) allow the
indemnifying Party full control over the defense of such claim and (c) cooperate
in the defense of such claim at the indemnifying Party’s expense.
Notwithstanding any contrary provision in this Article, the failure to so
notify, provide information and assistance shall not relieve the indemnifying
Party of its obligations to the indemnified Party hereunder if and to the
extent
that the indemnifying Party is materially prejudiced thereby. If the
indemnifying Party does not timely acknowledge its indemnification obligation
hereunder with respect to such claim, or elects not to defend such claim,
the
indemnified Party shall have the right, but not the obligation, to defend
and
settle such claim until such time as the indemnifying Party acknowledges
in
writing its indemnification obligation hereunder with respect to such claim
or
elects in writing to defend and settle such claim in accordance with the
indemnification provisions herein. The indemnified Party shall, at its own
cost,
have the right to participate in any legal proceeding, settlement negotiation
or
other like event, and to contest and defend a claim and to be represented
by
legal counsel of its choosing, but shall have no right to settle a claim
without
the prior written approval of the indemnifying Party.
7.4 Each
Party shall cooperate with and provide to the other all information and
assistance which the latter may reasonably request in connection with any
claim
entitling any party to indemnification hereunder.
7.5 No
party
shall be responsible for or bound by any settlement that imposes any obligation
on it that is made without its prior written consent, which consent shall
not be
unreasonably withheld, conditioned or delayed.
7.6 For
avoidance of any doubt, this Section applies to the situation when (a) both
Parties are named defendants, as well as (b) a Party is named a defendant
and
deems that it may have any right to recourse or indemnification against the
other Party under this Agreement.
ARTICLE
8
CONFIDENTIALITY
8.1 For
purposes of this Agreement, “Confidential
Information”
shall
mean information and data in any medium, including oral, written or electronic,
disclosed in connection with this Agreement, relating to the Purchased Assets
or
the transactions contemplated by this Agreement, along with any trade secrets,
business information, technical information, or marketing information that
the
party disclosing the information deems confidential and has appropriately
marked
as such prior to disclosing such information to the receiving party. The
terms
and conditions of this Agreement (but not its existence) are deemed to be
Confidential Information that shall not be disclosed to third parties without
the written consent of the Parties, with the exception of any regulatory
filings, press releases as set forth in Section 9.11, or disclosures to
investors that a Party may be required to make under either applicable laws
and
regulations. Irrespective of the foregoing, Confidential Information shall
not
include information that (a) was reported as nonconfidential by EUCODIS in
writing prior to disclosure, (b) was lawfully in the public domain prior
to
Closing, or becomes publicly available other than through breach of this
Agreement, (c) is publicly disclosed pursuant to legal, judicial or
administrative proceedings or otherwise required by law (including, without
limitation, regulations promulgated by the U.S. Securities and Exchange
Commission), subject to the MDI Parties giving all reasonable prior notice
and
assistance to EUCODIS to allow it to seek protective or other court orders;
and/or (d) is approved for release in writing by EUCODIS. From and after
the
Closing, all Confidential Information relating to the Purchased Assets shall
be
deemed to be Confidential Information belonging to EUCODIS.
8.2 Each
Party shall:
(a) strictly
protect and maintain the confidentiality of the Confidential Information
belonging to any other Party with at least a reasonable standard of care
that is
no less than that which it uses to protect similar confidential information
of
its own;
(b) not
disclose, nor allow to be disclosed, the Confidential Information belonging
to
any other Party to any person other than to employees, consultants and counsel,
on a need to know basis; provided,
however,
that
such recipients of the Confidential Information are bound by obligations
of
confidentiality no less strict than those contained herein;
(c) unless
otherwise expressly provided for in this Agreement, not use the Confidential
Information belonging to any other Party for any purpose other than in relation
to the exercise of its rights and obligations under this Agreement;
and,
(d) take
all
necessary precautions to restrict access of the Confidential Information
belonging to any other Party to unauthorized personnel; and immediately notify
the Party to which the Confidential Information belongs in the event of any
unauthorized disclosure or loss of such Confidential Information.
8.3 The
MDI
Parties shall not publish or otherwise disclose any Confidential Information
about or in relation to the Purchased Assets generated or known to them before
or after the Effective Date, without the explicit prior written approval
of
EUCODIS.
8.4 No
Party
shall assert that anything disclosed or discussed constitutes a waiver of
attorney-client privilege or attorney work-product.
8.5 The
Parties acknowledge and agree that monetary damages may not be adequate in
the
event of a default under this Article and that the non-defaulting Party shall
be
entitled, without the posting of a bond, to seek injunctive relief by a court
or
other body granting such relief, in which event such relief or receipt of
monetary damages shall not constitute an election of remedies; and the
non-defaulting Party is independently entitled to each and every remedy
available by law for a default under this Article.
8.6 The
provisions of this Article, from and after the Effective Date, shall supersede
and fully replace any confidentiality obligations established between the
Parties in relation to the Purchased Assets prior to the Effective
Date.
ARTICLE
9
MISCELLANEOUS
9.1 Notice.
All
notices, requests, demands or other communications to or upon the respective
Parties hereto shall be deemed to have been given or made the earlier of
(a)
actual receipt or refusal to accept receipt, (b) two (2) business days after
deposit with a recognized overnight courier service, (c) receipt by facsimile
or
electronic means, when such delivery is confirmed by the recipient or his
agent,
or (d) five business days after mailing when deposited in the mails, registered
mail or certified, return receipt requested, postage prepaid, addressed to
the
respective party at the following address (or to such other person or address
as
is specified elsewhere in this Agreement for specific purposes):
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If
to EUCODIS:
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Eucodis
Pharmaceuticals Forschungs - und Entwicklungs GmbH
Brunnerstrasser
59, 1235
1230,
Vienna, Austria
Attention:
Wolfgang Schoenfeld, M.D.
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If
to MDI:
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Medical
Discoveries, Inc.
1338
South Foothill Drive # 266
Salt
Lake City, Utah 84108
Attention:
Judy M. Robinett
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If
to MDI Oncology:
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MDI
Oncology, Inc.
1338
South Foothill Drive # 266
Salt
Lake City, Utah 84108
Attention:
Judy M. Robinett
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The
above
addresses for receipt of notice may be changed by any Party by notice, given
as
provided herein, which notice shall be effective only upon actual
receipt.
9.2 Entire
Agreement.
This
Agreement contains the entire understanding of the Parties with regard to
the
transactions contemplated by this Agreement, superseding in all respects
any and
all prior oral or written agreements or understandings pertaining to the
subject
matter hereof, other than the Co-Development Contract. This Agreement can
be
amended, modified or supplemented only by an agreement in writing which is
signed by the Parties to be charged.
9.3 Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules attached to this Agreement are incorporated herein
and
are hereby made a part of this Agreement.
9.4 Severability.
If and
to the extent that any court of competent jurisdiction holds any provision
or
part of this Agreement to be invalid or unenforceable, such holding shall
in no
way affect the validity of the remainder of this Agreement before any other
court or in any other jurisdiction.
9.5 Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of the Parties.
9.6 Assignment The
benefits of this Agreement (but not the obligations set forth hereunder)
can be
assigned or otherwise transferred in whole or in part by either party without
the transferring party receiving prior written consent of the other party;
provided,
however,
that
the rights of the non-transferring party under this Agreement remain
unaffected.
9.7 Waiver.
A
waiver by any party of any of the terms and conditions of this Agreement
in any
instance shall not be deemed or construed to be a waiver of such term or
condition for the future.
9.8 Headings.
Headings in this Agreement are included for ease of reference only and have
no
legal effect.
9.9 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one and the
same
instrument.
9.10 Applicable
Law.
This
Agreement is governed by and shall be construed in accordance with the laws
of
the State of Delaware, regardless of any conflicts of laws provisions. Any
disputes under this Agreement shall be first submitted to resolution by the
chief executive of the MDI Parties and CEO of EUCODIS, and if
the
said persons (or their nominees) cannot reach agreement on the disputed issue
within a period of thirty (30) days, the Parties shall refer the issue to
arbitration
under
the Rules of Arbitration of the American Arbitration Association, to which
the
Parties hereby consent. The arbitration shall take place in New York City,
New
York with three arbitrators, two of whom shall have significant experience
in
the biotech/pharmaceutical licensing area. The arbitration proceedings shall
be
conducted in the English language. The arbitrators shall apportion the expenses
of the arbitration (including the legal fees and expenses incurred by the
parties) between the parties. Any judgment of the arbitrators shall be
enforceable in any court of competent jurisdiction.
9.11 Further
Assurances.
The
Parties shall provide, grant and/or execute any additional documents or
declarations and shall provide any other assistance that may reasonably be
requested to enable EUCODIS to acquire and manage the Purchased Assets properly
and in full. Except (a) as otherwise provided herein to the contrary, and
(b)
for the costs of recording any assignments to EUCODIS for the Patent Rights
in
patent offices worldwide, which cost shall be at the expense of EUCODIS,
each of
the Parties shall bear its own expenses, including without limitation the
expenses relating to the duplication and delivery of documents and the expenses
relating to the preparation of this Agreement, the documents referred to
herein
and the actions being taken (whether before or after the Effective Date)
to
enable such Party to comply with its representations, warranties, covenants
and
agreements contained herein.
9.12 Press
Release.
The
Parties shall have the right to issue press releases relating to its entry
into
this Agreement; provided,
however,
that
prior to release, the releasing Party provides the other Parties with a draft
of
the press release in sufficient time for the non-releasing Party to comment
on
the release. At
no
time shall any Party issue a release which places the other Parties at risk
with
any governmental authority as such relates to its public company
position.
SIGNATURE
PAGE
In
Witness Whereof,
the
Parties have caused this Agreement to be duly executed in their respective
names
and on their behalf, on the date first above written.
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EUCODIS
PHARMACEUTICALS FORSCHUNGS-
UND
ENTWICKLUNGS GmbH
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MEDICAL
DISCOVERIES, INC.
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By:
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By:
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Wolfgang
Schoenfeld, M.D.
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Judy
Robinett
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Title:
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Chief
Executive Officer
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Title:
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President
&
CEO
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MDI
ONCOLOGY, INC.
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By:
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Judy
Robinett
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Title:
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President
& CEO
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