JOINT VENTURE AGREEMENT

CONFIDENTIAL


CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.


JOINT VENTURE AGREEMENT


AMONG


GRELAN PHARMACEUTICAL CO., LTD.


AND


BIONUMERIK PHARMACEUTICALS, INC.


AUGUST 30, 2000
TABLE OF CONTENTS


Recitals.................................................................... 1


1. Definitions............................................................. 2
1.1 BNP7787 Products.................................................. 2
1.2 Karenitecin Products.............................................. 2
1.3 Mercedes Products................................................. 2
1.4 PDE4 Products..................................................... 2
1.5 COX-2 Products.................................................... 3
1.6 Venture Products BN............................................... 3
1.7 Venture Products GR............................................... 3
1.8 Venture Products.................................................. 3
1.9 BioNumerik Improvements........................................... 3
1.10 Grelan Improvements............................................... 3
1.11 Improvements...................................................... 3
1.12 BioNumerik Patent Rights.......................................... 4
1.13 Grelan Patent Rights.............................................. 4
1.14 Patent Rights..................................................... 4
1.15 Patents........................................................... 4
1.16 Know-How.......................................................... 4
1.17 Affiliate(s)...................................................... 4
1.18 Confidential Information.......................................... 5
1.19 Effective Date.................................................... 5
1.20 Government Regulatory Approvals................................... 5
1.21 IND Submission.................................................... 5
1.22 New Drug Application Approval or NDA Approval..................... 5
1.23 Steering Committee................................................ 5
1.24 Stock Purchase Agreement.......................................... 6
1.25 Sublicensee....................................................... 6
1.26 Territory......................................................... 6
1.27 Trademarks........................................................ 6


2. LICENSE GRANTS BY BIONUMERIK............................................ 6
2.1 Research and Development Grant.................................... 6
2.2 Grant to Market, Sell and Distribute.............................. 6


3. LICENSE GRANTS AND TRANSFER BY GRELAN................................... 7
3.1 Research and Development Grant.................................... 7
3.2 Grant to Market, Sell and Distribute.............................. 7
3.3 Transfer Regarding Rights Under Existing BNP7787 Agreement........ 7


4. SUBLICENSES AND OTHER DISTRIBUTION METHODS FOR VENTURE PRODUCTS......... 8
4.1 Distribution Methods and Branch Office............................ 8
4.2 Identification of Sublicensees.................................... 8
4.3 Right to Grant Sublicenses........................................ 8
4.4 Division of Sublicensing Fees and Other Payments.................. 9
4.5 Third Party Offers or Statements of Interest...................... 9


i 5. RIGHTS OF FIRST REFUSAL FOR VENTURE PRODUCTS BN AND DEVELOPMENT RIGHTS.. 9
5.1 Right of First Refusal............................................ 9
5.2 Development Rights................................................ 10
5.3 Development Outside Territory..................................... 10


6. INFORMATION SHARING AND DEVELOPMENT COSTS............................... 11
6.1 Pre-Clinical Studies.............................................. 11
6.2 Government Approvals and Clinical Trials.......................... 11
6.3 Copies and Provision of Information............................... 13
6.4 Supplies of Product for Pre-Clinical Studies and Clinical Trials.. 14
6.5 Provision of Know-How............................................. 14


7. MANUFACTURING RIGHTS FOR VENTURE PRODUCTS AND


PURCHASE OF APPROVED PRODUCTS BY THE VENTURE............................ 15
7.1 Manufacturing Rights for Venture Products BN ..................... 15
7.2 Manufacturing Rights for Venture Products GR ..................... 16
7.3 Distribution and Sale of Venture Products ........................ 17
7.4 Commercial Supply Arrangements ................................... 18
7.5 Product Labeling ................................................. 18


8. STEERING COMMITTEE ..................................................... 18
8.1 Formation and Composition......................................... 18
8.2 Duties............................................................ 19
8.3 Meetings.......................................................... 19
8.4 Recommendation Regarding Management............................... 19
8.5 Identification of Consultants..................................... 19


9. DEVELOPMENT AND COMMERCIALIZATION PLAN.................................. 19
9.1 General Diligence Efforts......................................... 19
9.2 Target Development and Commercialization Plan..................... 19


10. PATENT MATTERS.......................................................... 20
10.1 BioNumerik Patent Maintenance .................................... 20
10.2 Grelan Patent Maintenance and Assistance ......................... 20
10.3 No Present Notification of Infringement- BioNumerik .............. 21
10.4 No Present Notification of Infringement- Grelan .................. 21
10.5 Enforcement of Patents and Proprietary Rights .................... 21


11. IMPROVEMENTS............................................................ 22
11.1 BioNumerik Improvements Included.................................. 22
11.2 Grelan Improvements Included...................................... 23
11.3 Joint Improvements................................................ 23
11.4 Sublicense of Improvements........................................ 23


12. TRADEMARKS AND TRADEMARK RIGHT.......................................... 24
12.1 .................................................................. 24
12.2 .................................................................. 24
12.3 .................................................................. 24


ii 13. CONFIDENTIALITY......................................................... 24
13.1 Confidential and Proprietary Information.......................... 24
13.2 Matters Not Included as Confidential Information.................. 25
13.3 Survival of Confidentiality....................................... 26


14. PROVISION FOR VENTURE FUNDING........................................... 26


15. ACCOUNTING.............................................................. 26


16. USE OF NAMES............................................................ 27


17. INDEMNIFICATION......................................................... 28
17.1 BioNumerik Indemnification........................................ 28
17.2 Grelan Indemnification............................................ 28
17.3 KI Pharma Indemnification ........................................ 28


18. DURATION AND TERMINATION OF AGREEMENT................................... 29
18.1 Duration.......................................................... 29
18.2 Termination....................................................... 29
18.3 Effect of Expiration or Termination............................... 30


19. BIONUMERIK REPRESENTATIONS & WARRANTIES................................. 32
19.1 Due Organization and Authority.................................... 32
19.2 Safety of Product(s).............................................. 32
19.3 No Pending Action Against BioNumerik.............................. 32


20. Grelan Representations and Warranties................................... 33
20.1 Due Organization and Authority.................................... 33
20.2 Safety of Product(s).............................................. 33
20.3 No Pending Action Against Grelan.................................. 33


21. ASSIGNMENTS............................................................. 33
21.1 Assignment Restrictions........................................... 33
21.2 Sale of Business.................................................. 34
21.3 Assignment to Affiliates.......................................... 33


22. MISCELLANEOUS........................................................... 34
22.1 Regulatory Communications......................................... 34
22.2 Adverse Events.................................................... 35
22.3 Liability Insurance............................................... 35
22.4 Litigation........................................................ 35
22.5 Auditors.......................................................... 35
22.6 Marketing Analysis and Reports.................................... 35
22.7 Notice / Reports.................................................. 36
22.8 Severability...................................................... 36
22.9 Counterparts...................................................... 36
22.10 Warranty Disclaimer............................................... 37
22.11 Force Majeure..................................................... 37
22.12 Arbitration....................................................... 37


iii
22.13 Export Controls................................................... 38
22.14 Construction / Jurisdiction / Official Language................... 38


23. ENTIRE AGREEMENT........................................................ 38


24. CAPTIONS................................................................ 39


SIGNATURES.................................................................. 39


ATTACHMENT A-1.............................................................. 41 ATTACHMENT A-2.............................................................. 42 ATTACHMENT A-3.............................................................. 43 ATTACHMENT A-4.............................................................. 44 ATTACHMENT A-5.............................................................. 45 ATTACHMENT B-1.............................................................. 46 ATTACHMENT B-2.............................................................. 47 ATTACHMENT C ............................................................... 48 ATTACHMENT D................................................................ 50 ATTACHMENT E................................................................ 52 ATTACHMENT F................................................................ 54 ATTACHMENT G................................................................ 72


iv
AGREEMENT


THIS JOINT VENTURE AGREEMENT ("Agreement") is made and entered into effective as of August 30, 2000, by and between BIONUMERIK PHARMACEUTICALS, INC., a Texas corporation, with its office located at 8122 Datapoint Drive, Suite 1250, San Antonio, Texas 78229, U.S.A. (hereinafter referred to as "BIONUMERIK") and GRELAN PHARMACEUTICAL CO., LTD., a Japanese corporation having its place of business at Ogura Bldg. 5F, Nihonbashi Kobunacho 6-6, Chuo-ku, Tokyo 103-0024, Japan (hereinafter referred to as "GRELAN").


R E C I T A L S:


WHEREAS, GRELAN and BIONUMERIK intend to create a Delaware limited liability company to be called KI Pharmaceuticals, L.L.C. (hereinafter referred to as "KI PHARMA" or the "Venture") for the purpose of developing, marketing, distributing, manufacturing and selling certain specified products in the territory of Japan.


WHEREAS, as described in the organization documents of KI PHARMA, KI PHARMA will be owned 50% by BIONUMERIK, 49% by GRELAN, and 1% by Dr. Hashime Kanazawa.


WHEREAS, additional information describing the ownership, management, officers, allocation of profits, and other allocations and distributions regarding KI PHARMA will be contained in an Operating Agreement of KI PHARMA (the "Operating Agreement"), the terms of which will be agreed to by BIONUMERIK and GRELAN.


WHEREAS, GRELAN and BIONUMERIK are parties to a collaboration agreement dated as of May 28, 1996 and amended as of June 8, 1999 regarding the BNP7787 Products (as defined below) and related technology (the "Existing Agreement") and the parties wish that GRELAN transfer certain rights it has thereunder to KI PHARMA, without prejudice to any and all rights GRELAN or BIONUMERIK may retain, and thereafter the Existing Agreement is immediately terminated, as described in detail in Section 3.3 below.
WHEREAS, following creation of KI PHARMA and signing of the Operating Agreement, KI PHARMA will agree to be bound by the terms of this Agreement.


WHEREAS, the parties wish to enter into this Agreement to evidence the license and transfer of certain rights to KI PHARMA and to specify certain commitments, rights and obligations of the parties in connection with the Venture.


WHEREAS, the licenses and other rights granted by GRELAN and BIONUMERIK herein are granted subject to the obligations to make payments and take other actions provided by the parties herein.


NOW, THEREFORE, in consideration of the terms, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:


1. DEFINITIONS. When used in this Agreement, each of the following defined terms shall have the meanings set forth in this Section. There are other terms defined in this Agreement parenthetically, and such terms shall have the meanings apparent from the context in which such terms are parenthetically defined.


1.1 "BNP7787 Products" means the compounds, pharmaceutical formulations, and technology described in Attachment A-1 hereto.


1.2 "Karenitecin Products" means the compounds, pharmaceutical formulations, and technology described in Attachment A-2 hereto.


1.3 "[**]" means the pharmaceutical formulations and related technology described in Attachment A-3 hereto.


1.4 "PDE4 Products" means the compounds, pharmaceutical formulations, and technology described in Attachment A-4 hereto.


[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


2
1.5 "COX-2 Products" means the compounds, pharmaceutical formulations, and technology described in Attachment A-5 hereto.


1.6 "Venture Products BN" means the [**].


1.7 "Venture Products GR" means the [**].


1.8 "Venture Products" means the Venture Products BN and the Venture Products GR.


1.9 "BioNumerik Improvements" means any and all inventions, developments, discoveries and improvements directly relating to Venture Products, including, without limitation, formulae, specifications, designs, chemical and physical data, clinical data, and information concerning synthesis, processes, formulations, applications, toxicity, operations, regulatory affairs and marketing, that are developed by or for BIONUMERIK subsequent to the date of this Agreement and during the term of this Agreement, subject in all cases to any restrictions that may exist on the ability of BIONUMERIK to license such inventions, developments, discoveries or improvements to KI PHARMA and/or GRELAN, as applicable, in or outside the Territory.


1.10 "Grelan Improvements" means any and all inventions, developments, discoveries, and improvements directly relating to Venture Products, including, without limitation, formulae, specifications, designs, chemical and physical data, clinical data, and information concerning synthesis, processes, formulations, applications, toxicity, operations, regulatory affairs and marketing, that are developed by or for GRELAN subsequent to the date of this Agreement and during the term of this Agreement, subject in all cases to any restrictions that may exist on the ability of GRELAN to license such inventions, developments, discoveries or improvements to KI PHARMA and/or BIONUMERIK, as applicable, in or outside the Territory.


1.11 "Improvements" means the BioNumerik Improvements and the Grelan Improvements.


[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


3
1.12 "BioNumerik Patent Rights" means those exclusive rights granted in Japan to BIONUMERIK, that follow from any of the patent applications referred to in Attachment B-1 hereto or from any reissue, reexamination, continuation, divisional, continuation-in-part, utility model, or any other patent application in Japan of BIONUMERIK whose claimed subject matter covers any of the Venture Products BN, processes to make any of the Venture Products BN, or their use. BIONUMERIK's current patent applications in Japan relating to the Venture Products BN and their uses are identified in Attachment B-1 hereto.


1.13 "Grelan Patent Rights" means those exclusive rights granted in Japan to GRELAN, that follow from any of the patent applications referred to in Attachment B-2 hereto or from any reissue, reexamination, continuation, divisional, continuation-in-part, utility model, or any other patent application in Japan of GRELAN whose claimed subject matter covers any of the Venture Products GR, processes to make any of the Venture Products GR, or their use. GRELAN's current patent applications in Japan relating to the Venture Products GR and their uses are identified in Attachment B-2 hereto.


1.14 "Patent Rights" means the BioNumerik Patent Rights and the Grelan Patent Rights.


1.15 "Patents" means those patents embodying the Patent Rights in the Territory.


1.16 "Know-How" means all data and information owned by BIONUMERIK and/or GRELAN, as the case may be, and directly relating to the Venture Products, including, without limitation, formulae, specifications, designs, chemical and physical data, clinical data, information concerning synthesis, processes, formulations, applications, administration to patients, clinical protocols, toxicity, operations, regulatory affairs and marketing, that have been developed by or for BIONUMERIK and/or GRELAN, as the case may be, on or before the date of this Agreement and which is useful in the development, manufacture or sale of the Venture Product(s) in the Territory, subject in all cases to any restrictions that may exist on the ability of BIONUMERIK and GRELAN, as applicable, to license such Know-How to KI PHARMA, BIONUMERIK and/or GRELAN, as applicable, in or outside the Territory.


1.17 "Affiliates " means, with respect to each party, any organization, company, firm, or other entity which controls, is controlled by, or is under common control with said party. A company shall be deemed to have control of another if it owns directly or indirectly a majority of the voting shares of or is entitled directly or indirectly to appoint a majority of the directors of the other company.


4
1.18 "Confidential Information" means all information which is of a confidential and proprietary nature, including without limitation, trade secrets, inventions and unpatented Know-How and Improvements and related technology, and any and all material information which any of the parties hereto may acquire concerning the financial, business and marketing goals and plans of the other parties, including the terms of this Agreement.


1.19 "Effective Date" means the first date after which all of the following have occurred: (a) KI PHARMA has been formed, (b) the Operating Agreement has been signed by GRELAN, BIONUMERIK and Dr. Hashime Kanazawa, (c) the Stock Purchase Agreement (hereinafter defined) has been signed by GRELAN and BIONUMERIK and GRELAN has purchased BIONUMERIK preferred stock in accordance with the terms of the Stock Purchase Agreement, and (d) KI PHARMA has agreed to be bound as an additional party to this Agreement.


1.20 "Government Regulatory Approvals" means all government approvals, health registrations and/or permits, including NDA Approvals, required for import into or manufacture in the Territory and sale and distribution in the Territory of Venture Products.


1.21 "IND Submission" with respect to a Venture Product means submission of an Investigational New Drug regulatory application ("Chiken Todoke" corresponding to an IND application in the U.S.) to authorities for approval to initiate any new phase of human trials of the product in a jurisdiction in the Territory.


1.22 "New Drug Application Approval" or "NDA Approval" means approval from the Japanese Ministry of Health and Welfare or other applicable regulatory body, as the case may be, of a New Drug Application which authorizes or allows the import to or manufacture in the Territory of and sale in the Territory of a Venture Product.


1.23 "Steering Committee" means the Steering Committee of KI PHARMA, as such committee is further described in Section 8 hereof.


5
1.24 "Stock Purchase Agreement" means that certain Stock Purchase Agreement to be entered into by GRELAN and BIONUMERIK providing for the purchase by GRELAN of U.S. $4 million of BioNumerik Series G Preferred Stock.


1.25 "Sublicensee" means an entity to whom KI PHARMA has granted pursuant to Section 4.3 or 5.1 a sublicense to develop, market, sell, distribute or otherwise commercially dispose of Venture Products within the Territory, based on KI PHARMA's exclusive license set forth in Sections 2.2 and 3.2 and its rights transferred by GRELAN under Section 3.3.


1.26 "Territory" means Japan and any of its possessions or territories.


1.27 "Trademarks" means (i) the brand name(s) selected by KI PHARMA, with the approval of BIONUMERIK and GRELAN, for Venture Products in the Territory, and (ii) all Katakana or Hiragana transliterations of the names referenced above, and all equivalents thereof, for use with Venture Products.


2. LICENSE GRANTS BY BIONUMERIK.


2.1 Research and Development Grant. Effective as of the Effective Date, BIONUMERIK hereby grants to KI PHARMA and GRELAN an exclusive license under the BioNumerik Patent Rights, Know-How and BioNumerik Improvements to conduct and have conducted research and development of the Venture Products BN in the Territory for the purpose of obtaining Government Regulatory Approvals in the Territory.


2.2 Grant to Market, Sell and Distribute. Effective as of the Effective Date, BIONUMERIK hereby grants to KI PHARMA an exclusive license under the BioNumerik Patent Rights, Know-How, BioNumerik Improvements and Trademarks to import Venture Products BN into the Territory and/or market, sell, distribute or otherwise commercially dispose of Venture Products BN in the Territory during the term of this Agreement. Except as otherwise provided in this Agreement, (a) BIONUMERIK shall not, without prior written consent from GRELAN, directly or indirectly, except through KI PHARMA, import Venture Products BN into the Territory nor distribute or sell Venture Products BN in the Territory, and (b) KI PHARMA and GRELAN without prior written consent from BIONUMERIK shall not directly or


6 indirectly manufacture Venture Products BN in the Territory or develop, manufacture, promote, distribute or sell Venture Products BN outside the Territory or export Venture Products BN from the Territory.


3. LICENSE GRANTS AND TRANSFER BY GRELAN.


3.1 Research and Development Grant. Effective as of the Effective Date, GRELAN hereby grants to KI PHARMA an exclusive license under the Grelan Patent Rights, Know-How and Grelan Improvements to conduct and have conducted research and development of the Venture Products GR in the Territory for the purpose of obtaining Government Regulatory Approvals in the Territory.


3.2 Grant to Market, Sell and Distribute. Effective as of the Effective Date, GRELAN hereby grants to KI PHARMA an exclusive license under the Grelan Patent Rights, Know-How, Grelan Improvements and Trademarks to market, sell, distribute or otherwise commercially dispose of Venture Products GR in the Territory during the term of this Agreement. Except as otherwise provided in this Agreement, (a) GRELAN shall not directly or indirectly, except through KI PHARMA, distribute or sell Venture Products GR in the Territory, and (b) KI PHARMA and BIONUMERIK shall not directly or indirectly develop or manufacture Venture Products GR in the Territory, import Venture Products GR into the Territory or develop, manufacture, promote, distribute or sell Venture Products GR outside the Territory or export Venture Products GR from the Territory.


3.3 Transfer Regarding Rights Under Existing BNP7787 Agreement. Effective as of the Effective Date, GRELAN hereby transfers to KI PHARMA all rights with respect to the import, marketing, sale, distribution or disposal of the BNP7787 Products under the Existing Agreement. Following the Effective Date, all other rights and obligations under such Existing Agreement shall terminate, provided that (i) BIONUMERIK shall have no obligation to repay any amounts previously paid by GRELAN under such Existing Agreement, (ii) BIONUMERIK shall continue after the Effective Date to have the right to use all data and results obtained from the pre-clinical and non-clinical studies and clinical trials obtained by GRELAN under the Existing Agreement up to the execution of this Agreement, and (iii) the confidentiality obligations of GRELAN and BIONUMERIK contained ...