Quoin Pharmaceuticals (QNRX) 20-F2021 FY Annual report (foreign)

1.

Definitions

(a)

“Act” means the United States Federal Food, Drug, and Cosmetic Act.

(b)

“Active Pharmaceutical Ingredient” as used herein shall mean the active drug or biologic substance or substances contained in the Study Drug.

(c)

“FDA” as used herein shall mean the United States Food and Drug Administration.

(d)

“IND” as used herein shall mean an Investigational New Drug Application, as defined by the FDA.

(e)

“IRB” as used herein shall mean the board(s) established pursuant to 21 CFR Part 56 for the purpose of reviewing clinical investigations.

(f)

“Investigator(s)” as used herein shall mean a licensed physician or other licensed medical practitioner who is a qualified clinical investigator willing and able, and engaged to conduct a clinical investigation of the Study Drug as set forth in a Protocol.

(g)

“NDA/BLA” as used herein shall mean a New Drug Application or Biologic License Application, respectively, as defined by the FDA, or foreign equivalent.

(h)

“Project” as used herein shall mean those specific composite goals, objectives, activities, times, durations, costs and responsibilities described in a Work Order.

(i)

“Protocol” as used herein shall mean particular preclinical or clinical testing procedures and conditions for the clinical evaluation of the Study Drug used from time to time, during the Term (as defined in Section 3(a)).

(j)

“Services” as used herein shall mean the services to be provided to QUOIN by THERAPEUTICS pursuant to a Work Order (as defined in Section 2).

(k)

“Study” as used herein shall mean the preclinical or clinical research described in a Protocol for which THERAPEUTICS is engaged by QUOIN to perform Services as described on a Work Order.

(l)

“Study Drug” as used herein shall be defined in a Work Order and shall mean the drug, biologic, or similar product including any and all of its components, and including related test articles being tested in a Study for which THERAPEUTICS is providing Services as described in a Protocol or product development plan.

(m)

Additional terms and conditions are defined in the section indicated in the table below:

2.

Work Orders, Nature of Work

(a)

Work Orders  The details of each Project under this Master Agreement shall be separately specified in writing in a work order signed by each Party (together with any Change Order with respect thereto, a “Work Order”).  Each Work Order will include, as applicable, the Protocol title or project description, a description of the Services to be performed by THERAPEUTICS, the specifications of the applicable Study Drug including the Active Pharmaceutical Ingredient, the estimated timeline, budget and payment schedule and such other terms as shall be agreed upon by the Parties.  The terms of this Master Agreement shall be automatically incorporated into the terms of any Work Order.  This Master Agreement and each Work Order, independent from other Work Orders, constitute the entire agreement for a Project.  To the extent any terms or provisions of a Work Order conflict with the terms and provisions of this Master Agreement, the terms and provisions of this Master Agreement shall control, unless otherwise expressly set forth in the Work Order.

(b)

Change Orders  Any material change in a Work Order shall require execution of an amendment to the Work Order (a “Change Order”).  Each Change Order shall set forth the changes to the applicable task, responsibility, duty, budget, timeline or other matters.  A Change Order will only become effective upon the execution of the Change Order by both Parties.

(c)

Transfer of Obligations  Notwithstanding any other provision of this Master Agreement, and in addition to any other specific responsibilities of THERAPEUTICS which are set forth herein, pursuant to 21 CFR Part 312.52, QUOIN may, from time to time, transfer to THERAPEUTICS, and if it so agrees THERAPEUTICS may assume, all or some of the specific obligations of QUOIN as '‘Sponsor” under the Act.  A description of such obligations to be transferred to THERAPEUTICS will be provided in each Work Order.  It is agreed that the same description and extent of obligations transferred will be included in Section #13 of any applicable INDs filed on Form FDA 1571.  THERAPEUTICS agrees to cany out diligently all transferred obligations that it agrees to assume.

(d)

Performance of Services  THERAPEUTICS agrees to use reasonable efforts to diligently perform, and to cause its employees, officers, permitted subcontractors and representatives to diligently perform the Services in accordance with the terms and conditions of this Master Agreement and each Work Order and with the standard of care customary in the contract research organization industry.  Such efforts may include, without limitation, implementing reasonable procedures such as bonuses and other incentives for timely completion of the Services.  EXCEPT AS SET FORTH IN THIS SECTION 2(d) OR ELSEWHERE IN THIS MASTER AGREEMENT, THERAPEUTICS MAKES NO OTHER COVENANTS, REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SERVICES, EXPRESS OR IMPLIED, AND THERAPEUTICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES TO BE PROVIDED HEREUNDER.

3.

Term and Termination

(a)

This Master Agreement shall commence on the Effective Date and shall have an initial term of three (3) years (the “Initial Term”), unless earlier terminated as provided herein.  The Initial Term will be automatically renewed for additional one (1) year terms (“Subsequent Term(s)”).  The Initial Term and any Subsequent Terms shall be referred to collectively as the “Term”.

(b)

QUOIN may terminate this Master Agreement for any reason upon ninety (90) days prior written notice to THERAPEUTICS.

(c)

Either Party may terminate any Work Order and this Master Agreement as it applies to such Work Order, upon written notice to the other Party, if the other Party materially breaches such Work Order and this Master Agreement as it applies to such Work Order.  Both Parties agree to allow the breaching Party a reasonable time, but not more than ninety (90) days, to use reasonable efforts to correct such a breach (other than a breach of payment obligations, as to which this sentence and the next sentence do not apply) and provide

(d)

QUOIN may terminate any Work Order for any reason upon ninety (90) days prior written notice to THERAPEUTICS, subject to Section 3(h).

(e)

If either Party believes termination of any Work Order is necessary to protect the safety or welfare of the Study subjects, then such Party shall have the right to terminate the applicable Work Order upon written notice to the other Party; provided, however, that after receipt of such notice of termination, the Parties shall commence any wind-down activities for any on-going Study for which the Parties have any responsibility hereunder in which any Study subject dosing has commenced.  QUOIN shall be responsible for any costs associated with such wind-down activities.

(f)

In the event of termination of this Master Agreement or any Work Order, QUOIN and THERAPEUTICS agree to discuss, cooperate and coordinate termination of activities being conducted by THERAPEUTICS.  As soon as reasonably possible after receipt of any written termination notice by either Party, THERAPEUTICS will use commercially reasonable efforts to stop initiation of any tasks or activities not yet started as of the date of termination notice, whether to be conducted by THERAPEUTICS or a third party, unless another plan of termination is agreed to by both Parties.  However, both Parties acknowledge non-cancelable costs may exist and will require payment as detailed in Section 3(h).  In all cases of termination, a reasonable plan of action for cessation of activities will be agreed to by both Parties (such agreement not to be unreasonably conditioned, delayed or withheld) in order to ensure an orderly cessation of on-going tasks and activities and in order to protect the safety and rights of patients, as well as to facilitate compliance with the legal responsibilities of all Parties involved according to applicable local, federal and/or state laws, regulations and ordinances.  THERAPEUTICS will use commercially reasonable efforts to terminate all Work Order associated tasks according to the plan so agreed to by both Parties.

(g)

Upon termination of this Master Agreement or any Work Order, THERAPEUTICS will, at QUOIN’s written request, promptly provide QUOIN with a copy of all records relating to Project performance and all periodic reports and/or patient records, maintaining confidentiality.

(h)

Should QUOIN choose to terminate a Work Order prior to completion for any reason other than THERAPEUTICS’ material breach of this Master Agreement or any Work Order or THERAPEUTICS’ insolvency or bankruptcy, QUOIN agrees to pay THERAPEUTICS:

(i)

all reasonable direct fees, including monthly fees for project management, medical monitoring, transfer of records or similar fees earned hereunder for Services performed up to the effective date of termination in accordance with the terms of the Work Order being terminated;

(ii)

all non-cancelable costs for third party contracted Services and other expenses, including THERAPEUTICS’s related administrative fees, incurred in connection with any Work Order being terminated to the date of termination; and

(iii)

a separate termination fee equal to 10% of the remaining clinical Study Work Order budget,

(i)

In the event a Work Order is terminated by QUOIN before conclusion by reason of any uncured material breach by THERAPEUTICS pursuant to Section 3(c) above, any third-party pass-through costs associated with terminating the Work Order, e.g. laboratory costs, etc. will be:

(i)

borne by THERAPEUTICS if attributable to THERAPEUTICS’s material breach of its obligations under the Master Agreement or Work Order and previously paid to THERAPEUTICS;

(ii)

borne by QUOIN if not previously paid to THERAPEUTICS; or

(iii)

borne by and as between QUOIN and THERAPEUTICS as they agree (such agreement not to be unreasonably conditioned, delayed or withheld) if neither of the above (i) and (ii) applies,

(j)

Sections 3(f, g, h, and i), 5(b), 6, 7, 8, 10, 11, 12, 13, 15, 16(c), 24, 25 and 27 shall survive any expiration or termination of this Master Agreement to the extent of the terms detailed in each respective Section.

4.

Work Order Compensation

(a)

Unless otherwise provided for and agreed to in a particular Work Order, the following shall apply with respect to all payments by QUOIN for Services under a Work Order:

(i)

THERAPEUTICS will be compensated for its Services, itemized expenses, and pass- through costs, net of discounts, incurred in the performance of the Services pursuant to the budget and payment schedule set forth in each respective Work Order.

(ii)

All income related taxes (and penalties thereon) imposed by the United States or any state or locality of the United States on any payment by QUOIN to THERAPEUTICS shall be the responsibility of THERAPEUTICS.  With respect to any other taxes imposed on THERAPEUTICS or required to be withheld by QUOIN from any amount payable to THERAPEUTICS under this Master Agreement or any Work Order (“Other Taxes”), in addition to all other amounts payable to THERAPEUTICS under this Master Agreement or any Work Order,

(iii)

THERAPEUTICS will submit monthly invoices to QUOIN which shall contain sufficient itemizations for fees, expenses and pass-through costs related to a Work Order.

(iv)

THERAPEUTICS will invoice QUOIN promptly upon achievement of agreed to milestones (if other than monthly), as set forth in the applicable Work Order, for payment of Services.

(v)

Invoices shall be payable in U.S. dollars by QUOIN within thirty (30) days from the date of the invoice (late payments will incur interest at a rate equal to 1.5% for each 30 day period, or part thereof, an invoice remains unpaid after the due date).

(b)

If any portion of an invoice is disputed, then QUOIN shall notify THERAPEUTICS in writing and shall pay the undisputed amounts in compliance with Section 4(a)(v) and the Parties shall use good faith efforts to reconcile the disputed amount as soon as practicable.  THERAPEUTICS shall maintain adequate accounting records for all receipts and disbursements of supplies and monies directly related to any Work Order.  QUOIN shall be permitted to audit these records, at QUOIN’s expense, during normal business hours upon reasonable notice to THERAPEUTICS.  THERAPEUTICS will be reimbursed for reasonable expenses, including related labor expenses related to all audit activities.

(c)

It is the Parties’ expectation that the budget for any Work Order relating to Services to be provided by THERAPEUTICS will be negotiated by the Parties prior to submitting a formal Work Order for Services.

5.

Personnel

(a)

The Services with respect to each Project shall be performed by THERAPEUTICS under the direction of a Project Manager.  Subject to the terms and conditions of any Work Order and this Master Agreement as it applies thereto, THERAPEUTICS will perform its Services in a professional and timely manner and will ensure that the personnel or subcontractors it uses to perform the Services are appropriately trained and qualified.  QUOIN shall be entitled in good faith to request that the Project Manager be removed and replaced with a new Project Manager, and THERAPEUTICS shall make reasonable efforts to honor such request.  QUOIN shall, upon request, be entitled to review credentials of all other personnel providing Services as per the Work Order and in good faith may request that any staff member be replaced and THERAPEUTICS shall make reasonable efforts to honor such request.

(i)

Non-solicitation by QUOIN - QUOIN agrees that during the Term of this Master Agreement, and for a period of two (2) years after the termination of this Master

(ii)

Non-solicitation by THERAPEUTICS - THERAPEUTICS agrees that during the Term of this Master Agreement, and for a period of two (2) years after the termination of the Master Agreement, THERAPEUTICS will not directly or indirectly solicit any personnel of QUOIN to leave the service of QUOIN to become employed by THERAPEUTICS.

(iii)

Enforceability - The provisions of this Non-Solicitation Section shall be construed as enforceable in both law and equity, including by temporary or permanent restraining orders, notwithstanding the existence of any claim or cause of action by either Party against the other Party whether predicated on this Master Agreement or otherwise.

6.

Confidentiality

(a)

Any confidential and proprietary information (“Confidential Information”) of a Party (“Discloser”) acquired by the other Party (“Recipient”) under this Master Agreement or any Work Order, including, without limitation, the results of any Study or Project, shall not be disclosed to any third party who does not have a need to know such Confidential Information for purposes of performing Recipient’s obligations under this Master Agreement or any Work Order, without the prior written authorization from Discloser.  Recipient shall use the Confidential Information only for the purpose of fulfilling its obligations under this Master Agreement or any Work Order.  Recipient represents and warrants that it has obtained or will obtain agreements with its employees and agents (including subcontractors) to maintain the confidentiality of all Confidential Information as provided herein.

(b)

The obligations of Recipient with regard to Confidential Information shall continue for a period of seven (7) years from the date that such Confidential Information is acquired by Recipient.

(c)

The obligations of Recipient regarding the confidentiality and nondisclosure of Confidential Information as provided in this section shall not apply to information that:

(i)

is already known to Recipient without prior disclosure from Discloser, as shown by Recipient’s prior written records;

(ii)

Recipient can demonstrate by written records was developed for or by Recipient, independent of any Confidential Information of the Discloser;

(iii)

becomes publicly available through no fault of Recipient;

(iv)

is received from a third party that has the legal right to disclose it to Recipient; or

(v)

is required by law to be disclosed; provided that Recipient notifies Discloser in writing of its intention to disclose Confidential Information with sufficient time to allow Discloser to seek a protective order or file an application for confidential treatment as may be permissible.

(d)

Recipient acknowledges that the disclosure of Confidential Information without Discloser’s express permission may cause Discloser irreparable harm and that the breach or threatened breach of nondisclosure provisions of this Master Agreement may entitle Discloser to seek injunctive relief, in addition to any other legal remedies that may be available.

7.

Ownership and Inventions

(a)

THERAPEUTICS shall have no claim to any materials, documents and information, programs and suggestions of every kind and descriptions evidencing Confidential Information of QUOIN that may be provided by QUOIN to THERAPEUTICS, and THERAPEUTICS hereby assigns to QUOIN all data or reports resulting from any Study or prepared by THERAPEUTICS in connection with the Services performed hereunder,.

(b)

THERAPEUTICS shall retain and preserve one (1) copy only of all materials, documents and information, program and suggestions provided by QUOIN to THERAPEUTICS and all data and reports resulting from Services performed hereunder for a period of two (2) years after the NDA has been approved by the FDA or a Project has been discontinued.  At the end of such two (2) year period, THERAPEUTICS shall give QUOIN written notice of its intent to destroy any of such material at least thirty (30) days prior to destruction.  If QUOIN requests such material, THERAPEUTICS shall provide such material to QUOIN at QUOIN’S expense.  Failure of QUOIN to request such material or to respond to such notice within the thirty (30) day period shall constitute QUOIN’s acquiescence to the destruction of such material.

(c)

THERAPEUTICS hereby assigns to QUOIN any and all right, title and interest that THERAPEUTICS may have in any discoveries or inventions by THERAPEUTICS directly arising from the Services provided to QUOIN pursuant to this Master Agreement and/or Work Order that are directly related to the Active Pharmaceutical Ingredient, regardless of inventorship, unless otherwise agreed to by the Parties.  THERAPEUTICS will promptly disclose in writing to QUOIN or its nominee any and all such inventions and discoveries of which THERAPEUTICS becomes aware.  Whenever requested to do so by QUOIN, THERAPEUTICS will execute any and all applications, assignments or other instruments and give testimony reasonably necessary for QUOIN to apply for and obtain patent letters in the United States or any foreign country or to otherwise protect QUOIN’s interests, therein, at QUOIN’s sole cost and expense, including the payment of THERAPEUTICS’ standard rates thereof.  These obligations shall continue beyond the termination of this Master Agreement for a period of one (1) year and shall be binding upon THERAPEUTICS’ successors, assignees, administrators and legal representatives.

8.

Access to Records

9.

Adverse Experience Reporting

10.

Publications

11.

Indemnification

(a)

QUOIN agrees to indemnify, defend and hold harmless THERAPEUTICS, its respective officers, trustees, affiliates, agents, servants, employees and successors and (hereafter collectively referred to as “THERAPEUTICS Indemnitees”) from and against any and all losses, costs (including the reasonable costs of providing medical care), expenses (including reasonable attorneys’ fees and charges), claims, actions, liability and/or suits (collectively, “Claims”) by a Third Party (as defined in subsection (e) below) suffered or incurred by a THERAPEUTICS Indemnitee as a result of (i) bodily injury to a patient or Study-related personnel in any Study being conducted pursuant to this Master Agreement or any Work Order directly or indirectly caused by administration of a Study Drag or any procedure under the Protocol or (ii) QUOIN’s gross negligence or any intentional or reckless misconduct by QUOIN, except to the extent that any such Claims are caused by the gross negligence or intentional or reckless misconduct of any THERAPEUTICS Indemnitee.

(b)

THERAPEUTICS agrees to provide QUOIN with prompt notice of any such Third-Party Claim.  In the event the aforesaid indemnity is invoked, QUOIN shall have the right, but not the obligation, to manage and control the defense and settlement of any and all such actions and lawsuits, and shall have the right to select and engage counsel of its own choice.  THERAPEUTICS shall cooperate reasonably with QUOIN in the defense of any and all actions and lawsuits.  No THERAPEUTICS Indemnitee shall be entitled to compromise or settle any such Third-Party Claim without prior written approval of QUOIN (such approval not to be unreasonably conditioned, delayed or withheld)-

(c)

THERAPEUTICS agrees to indemnify, defend and hold harmless QUOIN, its parents, subsidiaries and affiliates, as well as the officers, directors, employees and agents of each (hereafter collectively referred to as “QUOIN Indemnitees”) against and in respect of any and all Third Party Claims suffered or incurred by any QUOIN Indemnitee resulting from THERAPEUTICS’s gross negligence or intentional or reckless misconduct.

(d)

QUOIN agrees to provide THERAPEUTICS with prompt notice of any such Third-Party Claims.  In the event the aforesaid indemnity is invoked, THERAPEUTICS shall have the right, but not the obligation, to manage and control the defense and settlement of any and all such actions and lawsuits, and shall have the right to select and engage counsel of its own choice.  QUOIN shall cooperate reasonably with THERAPEUTICS in the defense of any and all actions and lawsuits.  No QUOIN Indemnitee shall be entitled to compromise or settle any such Third-Party Claim without prior written approval of THERAPEUTICS (such approval not to be unreasonably conditioned, delayed or withheld).

(e)

For purposes of these Indemnification provisions, “Third Party” shall mean any person or entity which is neither a Party to this Agreement nor an affiliate of a Party.  For purposes of these Indemnification provisions, an “affiliate” shall mean any person or entity who directly or indirectly controls, is controlled by or is under common control with a Party to this Agreement by means of at least fifty (50%) percent ownership or more of the voting stock or similar interest.  For purposes of this definition, “control,” “controls” or “controlled” means ownership directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a Party appoints or elects or has the right to appoint or elect the majority of the board of directors or equivalent governing body of a corporation or other entity, or the ability to cause the direction of the management or policies of a corporation or other entity.  The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence; provided that such foreign investor has the power to direct the management and policies of such entity.

12.

Force Majeure and Delays

13.

Notices

Therapeutics, Inc.
9025 Balboa Avenue, Suite 100
San Diego, CA 92123
Attn: Daniel J. Piacquadio, M.D., President and CEO

Quoin Pharmaceuticals Ltd.
42127 Pleasant Forest Ct
Ashburn, VA 20148
Attn: Michael Myers, Ph.D., Chairman & CEO

14.

Legal Compliance

15.

Regulatory Inspections

(a)

Responsibilities of THERAPEUTICS:  If any governmental or regulatory authority conducts or gives notice to THERAPEUTICS of its intent to conduct an inspection of THERAPEUTICS or any study site or take any other regulatory action with respect to the Services provided under this Master Agreement or any Work Order, THERAPEUTICS

(b)

THERAPEUTICS Support of Study Site for Audit:  In the event that a clinical site is notified by any governmental or regulatory authority of an inspection or audit of a study under any prior completed or current Work Order, upon QUOIN’s consent, THERAPEUTICS will provide audit assistance to that site in preparation for the inspection.  THERAPEUTICS will be reimbursed for reasonable expenses, including travel reimbursement and labor expenses at daily rates, related to all regulatory inspections.  Inspection/audit fees charged by the sites will be billed directly to QUOIN, if applicable.

16.

Insurance

(a)

THERAPEUTICS and QUOIN each represents that it maintains and will continue in force during the Term of this Master Agreement, at its sole cost and expense, the minimum insurance coverage listed below.  Each Party shall provide to the other certificates of insurance evidencing the insurance required hereunder and will provide prompt written notice to the other Party prior to any cancellation of such coverage or material change in such coverage.

(i)

Comprehensive automobile liability insurance for vehicles furnished by such Party or used by such Party in the performance of this Master Agreement or any Work Order with bodily injury and property damage limits of at least $1,000,000 each occurrence, combined single limit;

(ii)

Commercial general liability insurance with bodily injury and property damage minimum limits of $1,000,000 each occurrence, with an aggregate combined single limit of at least $2,000,000;

(iii)

Excess liability insurance with minimum limits of $1,000,000 per occurrence/aggregate combined single limit which shall be excess of the coverage described in Section 16(a)(i) and Section 16(a)(ii) above; and

(iv)

With respect to QUOIN only, product and clinical trials liability insurance in the amount of at least $5,000,000 combined single limit with the obligation to continue for a minimum of three (3) years beyond the termination of the Study.

(b)

To the extent permitted by law, the insurance set forth above as well as any other coverage agreed to be purchased hereunder shall contain waivers of subrogation and/or rights of recovery as to claims against the other Party.  This waiver shall not apply if the responsible Party was grossly negligent.

(c)

THERAPEUTICS shall be identified as an additional insured under QUOIN’s product and clinical trials liability insurance described in Section 16(a)(iv) above.

(d)

THERAPEUTICS and QUOIN agree that with regard to this Master Agreement, the insurance coverage to be provided hereunder shall be considered as primary insurance and not contributory with any similar instance which the other Party and/or its employees and agents may maintain on their own behalf.

17.

Assignment

18.

Independent Contractors

19.

Relationship with Investigators

20.

Advertising