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EXHIBIT 10.18
Dated the 31st day of August, 2000
PHARMAPRINT INC.
AND
KINGSWAY PHARMAPRINT ASIA LIMITED
LICENCE AND DISTRIBUTION AGREEMENT
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THIS LICENCE AND DISTRIBUTION AGREEMENT IS MADE THE 31ST DAY OF AUGUST, 2000.
BETWEEN
(1) PHARMAPRINT INC, a company incorporated under the laws of Delaware,
United States of America and having its registered office at 4701 Von
Karman Avenue, Suite 201, Newport Beach, CA 92660, U.S.A. ("Party A");
and
(2) KINGSWAY PHARMAPRINT ASIA LIMITED, a company incorporated under the laws
of the British Virgin Islands and whose registered office is situate at
P.O. Box 957 Offshore Incorporations Center, Road Town, Tortola, British
Virgin Islands ("Party B").
WHEREAS:
(A) Party A is a company that develops, manufactures and markets dietary
supplements, functional foods and pharmaceuticals derived from natural
plant extracts. Party A is the proprietary owner of the PharmaPrint(TM)
Process technology. The PharmaPrint(TM) Process technology enables the
precise identification and consistent replication of the active
ingredients from the natural plant extracts that are scientifically
believed to provide the desired health benefits.
(B) Party A has entered into a joint venture shareholders' agreement with
Capital Alert Investments Limited, a company incorporated under the laws
of the British Virgin Islands on August 31, 2000 for the formation and
operation of Party B.
(C) Party A has agreed to grant to Party B a licence for the manufacturing,
marketing and distribution of the Product in the Asia Pacific Region as
set forth herein.
NOW IT IS AGREED between the parties as follows:
1. DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings:
"Asia Pacific Region" are countries within Asia Pacific, including but
not limited to, Hong Kong, The People's Republic of China, North and
South Korea, Japan, Singapore, Taiwan, Macau, Indonesia, Malaysia,
Thailand, Vietnam, The Philippines, India, Pakistan, Brunei, Bangladesh,
Sri Lanka, Papua New Guinea and Myanmar, Australia and New Zealand.
"Know-How" means Party A's information and manufacturing directions,
drawings, processing information, standards and specifications as to the
materials to be used, control methods and test data necessary to
manufacture Products.
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"Patented Technology" means the PharmaPrint(TM) Process technology
itemized on Schedule 1.1 hereto including the modifications and updates
developed by Party A and its Related Company and as further modified
pursuant to clause 16.1. Schedule 1.1 may be amended from time to time
as Party A applies for or is issued additional patents.
"Product" means the dietary supplements, functional foods and
pharmaceuticals derived from natural plant extracts produced by Party B
or any sublicensee, contractor or other third party using the Patented
Technology.
"Related Company" in respect of a company means its Subsidiary, its
Holding Company or another company within the same Group of Companies as
the first mentioned company (as those terms are defined in Section 2 of
the Companies Ordinance (cap. 32)).
"Services" means the provision of access rights, maintenance and usage
of the Patented Technology to third parties, and training programs.
1.2 In this Agreement, unless the context otherwise requires, words
importing a gender shall include every gender and words importing the
singular shall include the plural and vice versa.
1.3 Headings in this Agreement are inserted for convenience only and shall
be ignored in construing this Agreement.
2. LICENCE AND DISTRIBUTION AGREEMENT
2.1 Party A hereby assigns, transfers and sets over to Party B all
right, title and interest to all patents, registrations and/or
applications filed by Party A or its agent in any jurisdiction in the
Asia Pacific Region as set forth on Schedule 1.1 (the "Asia Patents").
Party A hereby grants Party B a non-exclusive (subject to Section 9),
perpetual, royalty- free (except pursuant to Section 5) and fully-paid
license (i) to use, modify, reproduce, display, make, deploy and
otherwise exploit the Patented Technology, Know-How and the associated
intellectual property rights therein in the manufacturing of the
Products, and (ii) to sublicense any of the foregoing rights pursuant to
Section 14 in any jurisdiction in the Asia Pacific Region (collectively,
the "Technology License"), each during the term of this Agreement. Party
A hereby grants Party B an exclusive, perpetual, royalty-free (except
pursuant to Section 5) and fully-paid license (i) to use the Licensed
Marks (as defined in Section 10.2) in the Asia Pacific Region and (ii)
to sublicense any of the foregoing rights pursuant to Section 14 in any
jurisdiction in the Asia Pacific Region (collectively, the "Trademark
License"), each during the term of this Agreement. Party A hereby grants
to Party B an exclusive and perpetual right and license to market,
promote and distribute ("the Distribution Right") the Product in the
Asia Pacific Region on the terms and conditions set out below during the
term of this Agreement. Notwithstanding the foregoing, the Technology
License, Trademark License and Distribution Right granted in this
Section 2 (collectively, the "Licenses") shall not include the right to
pharmaceutical discovery or development of any Product which
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would require U.S. Food and Drug Administration approval or any similar
U.S. government approval process prior to their sale. Party B hereby
grants to Party A a perpetual, royalty free non-exclusive and fully paid
license to use, modify, reproduce, display, make, deploy and otherwise
exploit the Asia Patents and to sublicense any of the foregoing rights
subject to the limits provided for herein, including, without
limitation, such rights that are granted exclusively to Party B.
3. PRODUCTS AND SERVICES
3.1 The Licences shall include the right to manufacture, market, promote and
distribute the Product manufactured by using the Patented Technology in
the Asia Pacific Region and the right to sublicense the Patented
Technology and Know-How for the manufacture, marketing, promotion and
distribution of Products in the Asia Pacific Region.
3.2 For the avoidance of doubt, Party B shall have the unfettered right
subject to the terms and conditions hereof to lay down the terms and
conditions for the use of the Patented Technology and Services by
customers and charge such fees and conditions as Party B may think fit.
4. CUSTOMIZATION AND LAUNCHING OF SERVICE
4.1 Party B shall have the right to test the Product, by itself or a
qualified person, before the Launch Date to verify that the Product
complies with the legal requirements and standards in the Asia Pacific
Region.
4.2 Party A and Party B shall discuss from time to time the standard of the
Product and seek ways to improve and upgrade the Product.
4.3 Party A shall use reasonable efforts to make all improvements,
modifications, enhancements and updates to the Patented Technology and
Know-How as Party A reasonably considers necessary, but Party B shall
bear and pay all cost for the customization of such improvements,
modifications, enhancements and updates for the Asia Pacific Region
requested by Party B. Party A shall provide an estimated cost prior to
the customization.
4.4 Party A shall provide operating manuals and training to the extent such
exist (including update manuals and training) and technical support
services to Party B and its staff in a timely manner. Party B shall
reimburse Party A for its reasonable costs and expenses associated with
providing such training and services, including, without limitation, the
per diem salary costs of Party A employees providing requested training
and support services and the reasonable expenses for necessary travel.
5. ROYALTY
In consideration of the granting of the Licences, Party B agrees to pay
a royalty of 5% of the gross sales of Products and 5% of any other
revenues generated directly or indirectly
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from the Patented Technology or Know-How, less reasonable provisions for
bad debts computed in accordance with international accounting standards
or those generally accepted in Hong Kong and agreed between the parties.
The royalty is payable to Party A within 30 days after the end of each
calendar quarter (i.e. no later than April 30, July 30, October 30 and
January 30).
6. NAME OF THE PRODUCTS AND SERVICES
The Product shall be launched under "PharmaPrint" or in such other
manner as mutually agreed between the parties.
7. PROMOTION
Party B will promote the Product in Hong Kong and other countries or
cities within the Asia Pacific Region as Party B shall deem appropriate
and as governed by this Agreement.
8. CUSTOMIZATION FOR OTHER ASIAN MARKETS
If requested by Party B, Party A shall customize the Product, within a
time table and costs mutually agreeable to both parties, for other
countries or cities within the Asia Pacific Region in manner as
requested by Party B so as to make the Product suitable for market and
distribution in such countries or cities. Party B shall have the same
right to promote, market and use all such technology and know-how in the
same manner as set out above.
9. EXCLUSIVE AND PERPETUAL RIGHT
9.1 Party B shall have the perpetual, non-exclusive right to use the
Patented Technology and Know-How to manufacture the Product during the
term hereof and the exclusive and perpetual right and license to market
and distribute the Product within the Asia Pacific Region during the
term hereof as provided in Section 2 hereof.
9.2 Subject to the proviso in Section 2 hereof, Party A shall not, and shall
not permit any other person except Party B during the license period to:
(a) license in connection with the sale or distribution of Product,
the Patented Technology and Know-How or similar technology and
know-how to any person or company within the Asia Pacific
Region, or
(b) license in connection with the sale or distribution of Product,
any person or company to use the Patented Technology and
Know-How or any similar technology and know-how developed by
Party A or its Related Companies in the Asia Pacific Region, or
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(c) license in connection with the sale or distribution of Product,
any person or company to use the Patented Technology and
Know-How or any similar technology and know-how developed by
Party A or its Related Companies in a way as to compete with
Party B's business in the Asia Pacific Region, or
(d) market and distribute the Product or similar products in the
Asia Pacific Region utilizing the Patented Technology and
Know-How or any similar technology and know-how in a way as to
compete with Party B's business or license any third party to do
any of the same.
9.3 Notwithstanding the foregoing, in the event that any third party (a
"Manufacturing Licensee") will obtain a license to the Patented
Technology, Know-How or similar technology from Party A or its Related
Companies for the manufacture of the Products in the Asia Pacific
Region:
(a) Party A shall provide to Party B prompt written notice of
negotiations with a potential Manufacturing Licensee prior to
the date that Party A and such Manufacturing Licensee enter into
a definitive agreement(s);
(b) The shares of such Manufacturing Licensee's capital stock must
be listed on the New York Stock Exchange or on the Nasdaq
National Market; and
(c) Any definitive agreement between Party A and a Manufacturing
Licensee shall include a provision whereby the Manufacturing
Licensee acknowledges (i) that it has no rights to distribute
Products in the Asia Pacific Region and (ii) that Party B has
the exclusive right to distribute Products in the Asia Pacific
Region.
9.4 Notwithstanding the foregoing, a Manufacturing Licensee may enter into
subcontracts with entities which do not comply with the requirements
contained in Clause 9.3(b) in connection with any such manufacturing
license for the manufacture of the Products in the Asia Pacific Region.
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10. USE OF PARTY A'S TRADEMARKS AND LOGOS
10.1 Party A has the right to use, adopt, incorporate, show and display the
name of Party A and all trade marks, service marks, business names and
all marks, signs and logos of Party A and its affiliates, including all
names, marks, signs and logos which may in the future be used or adopted
by Party A and its affiliates for or in connection with the Products or
the Services or the promotion or marketing thereof.
10.2 Party B shall during the term hereof have the right to use, adopt,
incorporate, show and display the name of Party A, service marks,
business names and all marks, signs and logos of Party A as exhibited in
Schedule 10.2 and future service marks, business names and all marks,
signs and logos of Party A from time to time ("the Licensed Mark") for
and in connection with the Product and the manufacture, promotion and
marketing thereof.
10.3 Party B must not modify or alter the Licensed Mark without the prior
written consent of Party A, which consent shall not be withheld
unreasonably where such modification or alteration solely relates to the
use of the logo in any particular country or city in the Asia Pacific
Region in which the Services are provided.
10.4 If any Licensed Mark is modified or altered under clause 10.3, the
property in that mark shall be the property of Party B and Party A must
assign to Party B all intellectual property rights arising out of the
modification or alteration.
11. QUALITY STANDARDS
11.1 Party A shall establish reasonable quality standards for the Products
and Services provided under the Licensed Marks for the purpose of
protecting the Licensed Marks as provided herein.
11.2 Party B agrees to adopt the quality standards established by Party A
pursuant to Clause 11.1 for the Products and Services provided under the
Licensed Marks as the minimum standard of quality for the Products and
Services.
11.3 Party B shall have the right to create and distribute promotional and
marketing literature and materials for the Products and Services using
the Licensed Marks and materials and content provided by Party A. Party
A shall have the right to control the quality of all promotional and
marketing literature and materials bearing the Licensed Marks and Party
B's use of the Licensed Marks.
11.4 Party A shall use reasonable efforts to promptly inform Party B of all
of their marketing initiatives and advertising campaigns that would be
reasonably likely to significantly affect the Asia Pacific Region for
the Products and Services. Upon request by Party B, Party A shall
provide copies of their advertising and promotional materials to assist
Party B in the development of its own such materials for the Asia
Pacific Region.
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11.5 Party A shall as soon as reasonably practicable include an appropriate
reference approved by Party B on its internet home page (as well as
certain of its advertising and promotional materials as determined in
Party A's sole discretion) that the Products and Services in relation to
the Asia Pacific Region are being granted and will be available to
customers through Party B.
12. REPRESENTATIONS AND WARRANTIES
12.1 Party A warrants and represents to Party B that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and it has the
corporate power and is authorized under its Certificate of
Incorporation and its Bylaws to carry on its business as now,
and as proposed to be, conducted;
(b) it has performed all corporate actions and received all
corporate authorizations necessary to execute and deliver this
Agreement and to perform its obligations hereunder;
(c) this Agreement has been validly executed and delivered by it and
constitutes the valid, binding and enforceable obligations of it
in accordance with its terms;
(d) it has and shall maintain the power and authority and all
material governmental licenses, authorizations, consents and
approvals to be obtained within the United States to own its
assets, carry on its business and to execute, deliver, and
perform its obligations under this Agreement;
(e) except as set forth on Schedule 12 hereto, there are no (A)
non-governmental third parties and (B) governmental or
regulatory entities in the United States who are entitled to any
notice of the transaction, licenses and services contemplated
hereunder or whose consent is required to be obtained by Party A
for the consummation of the transaction contemplated hereunder;
(f) except as set forth on Schedule 12 hereto, it is the sole and
rightful owner of all right, title and interest in and to the
Patented Technology and the Licensed Marks and all related
intellectual property rights therein or holds adequate licenses
or otherwise holds all rights necessary to use the Patented
Technology and the Licensed Marks and all related intellectual
property rights therein free and clear of all liens, claims and
encumbrances, and it has the unrestricted right to market,
license and exploit the Patented Technology and the Licensed
Marks and all related intellectual property rights therein and
such marketing, licensing and exploitation of the Patented
Technology and the Licensed Marks and all related intellectual
property rights therein will in no way constitute an
infringement or other violation of any patent, copyright, trade
secret, or trademark or other third party rights;
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(g) except as set forth on Schedule 12 hereto, no claims have been
made in respect of the Patented Technology or Licensed Marks and
any related intellectual property rights therein and no demands
of any third party have been made pertaining to them, and no
proceedings have been instituted or are pending or, to the best
of its knowledge, threatened that challenge the rights of Party
A in respect thereof; and
(h) All services by Party A to Party B will be provided in a
professional, diligent and timely manner using staff
knowledgeable and suitably qualified for the performance of the
respective tasks for which they are responsible and Party A will
use reasonable efforts to ensure that the quality and
reliability of such services are no less favorable to Party B
than the equivalent services provided by Party A it for its own
purposes.
12.2 Party B warrants and represents to Party A that:
(a) it is a company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation;
and it has the corporate power and is authorized under its
Articles and Memorandum of Association to carry on its business
as now, and as proposed to be, conducted;
(b) it has performed all corporate actions and received all
corporate authorizations necessary to execute and deliver this
Agreement and to perform its obligations hereunder;
(c) this Agreement has been validly executed and delivered by it and
constitutes the valid, binding and enforceable obligations of it
in accordance with its terms;
(d) it has and shall maintain the power and authority and all
material governmental licenses, authorizations, consents and
approvals to be obtained in Hong Kong, as necessary, to own its
assets, carry on its business and to execute, deliver, and
perform its obligations under this Agreement;
(e) it is in compliance with all requirements of any Hong Kong, or
to the best of its knowledge, any other law (statutory or
common), treaty, rule or regulation or determination of an
arbitrator or of a governmental authority, in each case
applicable to or binding upon it or any of its property or to
which any of its business related to the Products is subject,
except where failure to be in compliance could not reasonably be
expected to have a material adverse change in, or a material
adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of Party B taken as a whole
(subject to obtaining any special governmental licenses required
in any particular jurisdiction to manufacture, market, promote
and/or distribute the Products);
(f) there are no (A) non-governmental third parties or (B)
governmental or regulatory entities in Hong Kong who are
entitled to any notice of the transactions
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contemplated hereunder or whose consent is required to be
obtained by Party B for the consummation of the transaction
contemplated hereunder; and
(g) it has the staff, capacity, skill and experience to market and
promote the Service and Products in the Asia Pacific Region.
13. INDEMNIFICATION
13.1 Party A shall defend, indemnify and hold harmless Party B, its Related
Companies and any sublicensees and any of their respective officers,
directors, agents and employees (each a "Party B Indemnified Party")
from and against any damages, liabilities, losses, claims, demands,
judgments, suits, costs and expenses, including but not limited to
reasonable attorneys' fees, if any, suffered or incurred by a Party B
Indemnified Party as a result of any breach of any warranty or
representation given by Party A hereunder, provided that (i) Party A is
promptly notified of any and all threats, claims and proceedings related
thereto, (ii) Party A shall have sole control of the defense and/or
settlement of any claim or proceeding, except that Party A may not enter
into such settlement without Party B's prior written consent thereto,
which shall not be unreasonably withheld, (iii) Party B furnishes to
Party A, upon request, information available to Party B for such
defense, and (iv) Party B provides Party A with reasonable assistance at
Party A's expense.
13.2 Party B shall defend, indemnify and hold harmless Party A and its
Related Companies and any of their respective officers, directors,
agents and employees (each a "Party A Indemnified Party") from and
against any damages, liabilities, losses, claims, demands, judgments,
suits, costs and expenses, including but not limited to reasonable
attorneys' fees, if any, suffered or incurred by a Party A Indemnified
Party as a result of any breach of any warranty or representation given
by Party B hereunder.
14. RIGHT TO SUB-LICENSE
14.1 Party B shall have the exclusive right to sub-license the Patented
Technology, KnowHow, Services and Licensed Marks to other persons or
companies as necessary or required to distribute Products in the Asia
Pacific Region. In addition, Party B shall have the exclusive right to
sub-license the Distribution Right of Products to persons or other
companies in the Asia Pacific Region only.
14.2 Any sub-licence granted by Party B:
(a) must expressly acknowledge and bind the sub-licensee to observe
and preserve the rights of Party A granted under this Agreement;
and
(b) must terminate immediately if this Agreement terminates for any
reason whatsoever.
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(c) Party B will ensure that the sub-licensee follows the quality
standards set by Party A as per clause 11.1. Party B will
include a clause in its sub-license agreement that specifies
compulsory quality compliance as part of the agreement for the
sub-license.
15. PARTY B'S RIGHT OF FIRST REFUSAL
Party A agrees to negotiate in good faith a license agreement with Party
B, prior to negotiating with any third party, for any and all new
technology and know-how developed by Party A or its Related Company or
its joint ventures, its partnerships or similar entities which are not
directly related to or derivative of the Patented Technology and which
does not constitute an update or modification to the Patented Technology
(the "New Technology") for use in the Asia Pacific Region during the
term of this Agreement, provided that no third party or partner of Party
A that has ownership rights or a license to such New Technology (as a
result of its support of the development of such New Technology) objects
to such negotiations.
16. INTELLECTUAL PROPERTY
16.1 To effect the physical transfer and/or operational availability of the
Patented Technology by Party A to Party B, Party A shall provide to
Party B, as soon as reasonably practicable after the Effective Date (and
with respect to any modifications or updates, as soon as reasonably
practical but no later than such modifications or updates are delivered
to Party A's other customers or partners (joint venture or otherwise)),
the Patented Technology in tangible form (including but not limited to
those items described in Schedule 1.1). Party A agrees to undertake and
provide services related to the Patented Technology and Services
pursuant to this Agreement and as further mutually agreed to by the
parties. Party A agrees to cooperate and, at the Party B's expense,
assist in the filing of all patent applications in the Asia Pacific
Region, assign existing patents and patent applications in the Asia
Pacific Region, and take such other action for the protection of its
rights in any jurisdiction within the Asia Pacific Region as reasonably
requested by Party B; and, upon the completion of such registration,
such rights shall be deemed to be Patented Technology hereunder. Any
modifications or updates to the Patented Technology developed by Party B
shall be owned solely by Party B. Party B agrees to negotiate in good
faith a license agreement with Party A for any such modifications and
updates.
16.2 Except as set forth in clause 16.1, the ownership of the Patented
Technology and its modifications and updates shall remain with Party A.
16.3 If the Patented Technology contains any intellectual property belonging
to third parties, Party A will notify Party B in writing of such third
parties rights.
16.4 Party B will promptly notify Party A of any infringement of Party A's
rights in or to the Patented Technology, Product and the Licensed Marks
as soon as Party B is aware of such infringement. Party B agrees
promptly to take such commercially reasonable steps and actions to
protect and enforce Party A's right in or to the Patented Technology,
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Product and the Licensed Marks on the condition that Party A agrees to
pay and indemnify Party B against all costs and liabilities that may be
incurred by Party B.
17. CONFIDENTIALITY
17.1 "Confidential Information" means the confidential information of a party
which relates to the subject matter of this Agreement and includes
information relating to:
(a) the design, specification and content of the Patented
Technology, the Product and the Services;
(b) the personnel, policies or business strategies of Party A and
Party B; and
(c) the terms on which the Patented Technology and Product are being
supplied and installed under this Agreement;
all of which information is deemed proprietary.
17.2 A party must not, without the prior written approval of the other party,
disclose the other party's Confidential Information.
17.3 It is not a breach of section 17 for a party to disclose Confidential
Information which it is obliged by law to disclose to the person to whom
it is disclosed or to the general public, if necessary or disclosure of
Confidential Information in the ordinary course of a party's business
provided such Confidential Information is not proprietary.
17.4 Each party must take all reasonable steps to ensure that its employees
and agents, and any sub-contractors engaged for the purposes of this
Agreement, do not make public or disclose the other party's Confidential
Information.
17.5 Each party may at any time require the other party's employees, agents
or sub-contractors engaged in the performance of this Agreement to
execute a suitable confidentiality deed.
17.6 Each party must on demand return to each other any documents supplied by
each other in connection with this Agreement.
17.7 Despite any other provision of this clause 17, each party may disclose
the terms of this Agreement (other than Confidential Information of a
technical nature) to its Related Company, solicitors, auditors, insurers
or accountants, but must ensure that every person to whom that
disclosure is made uses that information solely for the purposes of
advising or reporting to such party.
17.8 This clause 17 survives the termination of this Agreement.
18. MUTUAL EXCLUSIVITY
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Each party agrees that they will not during the term of this Agreement,
engage or approach other third parties with a purpose of licensing,
distributing or providing the same or similar type of Patented
Technology, in connection with the Product and Services, other than
under the provisions of this Agreement.
19. DEFAULT
19.1 Each of the following is an event of default ("Event of Default"):
(a) pursuant to the final decision of an arbitrator in accordance
with clause 24 (if the Defaulting Party objects to the Notice of
Default);
(b) any party fails to carry out any material provision of this
Agreement and the failure is not capable of remedy or the
failure is capable of remedy and such party does not remedy that
failure within 30 days after written notice to the such party
requiring it to be remedied; notwithstanding the foregoing,
material breaches of clauses, other than clauses 2, 5, 10, 14
and 17 by Party B, and other than clauses 2, 3, 4, 8, 9,
12.1(f), 12.1(g), 14, 16 and 17 by Party A, shall not be Events
of Default;
(c) it becomes unlawful for any party to perform its material
obligations under clauses 2, 5, 9, 10 or 14 of this Agreement.
19.2 After an Event of Default occurs in relation to any party, the other
party may, without prejudice to its other rights and remedies, terminate
this Agreement by giving notice in writing to the defaulting party;
provided, however, that if the Defaulting Party objects to such notice
within 14 days, this agreement may be terminated only upon the final
decision of an arbitrator in accordance with clause 24.
19.3 On termination of this Agreement under this clause 19.2 each party
retains the rights it had against the other party in respect of any past
breach, in addition to any other rights, powers or remedies provided by
law.
19.4 In case an Event of Default occurs in relation to any party (the
"Defaulting Party"), the Defaulting Party must on demand pay to the
other party all of the expenses incurred by such other party in
connection with the breach or default including the giving of a notice
under clause 19.2 and otherwise in connection with the termination of
this Agreement.
20. TERMINATION
20.1 Notwithstanding the foregoing, Party A shall have the right to terminate
this Agreement on thirty (30) days prior written notice if (i) the
dollar amounts received by Party A under Section 5 hereof in any year,
beginning in Party B's second accounting year, are less than US$50,000
or (ii) if for any six month period beginning on that date which is six
months after the date hereof Party B is either not actively
manufacturing or marketing or distributing Products. Notwithstanding the
foregoing, in the event that the dollar amounts
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received by Party A under Section 5 hereof (i) in the aggregate during
the first five years of this Agreement are less than US$500,000 or (ii)
in any year, beginning in year six hereunder, are less than US$100,000,
then the licenses granted hereunder shall become in all respects
non-exclusive.
20.2 If, at any time during the term of this Agreement, Party A: (a) files a
voluntary petition in bankruptcy under Chapter 7 or 11 of the United
States Bankruptcy Code (the "Bankruptcy Code"); or (b) has an
involuntary petition in bankruptcy filed against it under Chapter 7 of
the Bankruptcy Code, which petition is not dismissed within ninety (90)
days (each a "Party A Bankruptcy"), Party B may elect to retain its
right in the licenses granted in this Agreement, subject to the terms of
this Agreement, in accordance with Chapter 3, Section 365(n) of the
Bankruptcy Code. The licenses granted in this Agreement will be deemed
licenses of "intellectual property" under Section 365(n) of the
Bankruptcy Code. In addition, in the event of a Party A Bankruptcy, the
parties agree that such proceeding shall not affect the terms or
validity of this Agreement.
20.3 Upon termination of this Agreement for any reason other than pursuant to
clause 19.1(b) by reason of a material breach by Party A or by reason of
Party A Bankruptcy, Party B shall automatically and without the parties
having to take any action, assign, transfer and set over to Party A all
right, title and interest to the Asian Patents. Party B shall agree to
execute any and all instruments and documents reasonably requested by
Party A to evidence such assignment. Party B will not, without Party A's
prior written consent, transfer any interest in the Asian Patents other
than the sublicenses contemplated hereunder
21. LEGAL COSTS
Each party shall bear and pay its own legal costs relating to the
Licence and Distribution Agreement which inure after the date hereof.
22. SEVERABILITY
If any provision of this Agreement is held illegal, invalid or
unenforceable by a court of competent jurisdiction or the parties
otherwise mutually agree that a provision is or becomes illegal or
invalid, that provision will be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
23. LAWS
This Agreement shall be governed and interpreted in accordance with the
laws of Hong Kong Special Administrative Region ("Hong Kong") of the
People's Republic of China without regard to conflicts of law provisions
thereof and without regard to the United Nations Convention on Contracts
for the International Sale of Goods.
24. ARBITRATION
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The parties agree to submit all disputes arising out of the Licence and
Distribution Agreement to arbitration in Hong Kong in accordance with
the Model Law on International Commercial Arbitration adopted by the
United Nations Commission on International Trade Law.
25. NOTICES
Any notice required or permitted to be given hereunder shall be in
writing and shall be (a) personally delivered, (b) transmitted by
internationally recognized air courier service, or (c) transmitted by
facsimile, in each case to the parties as follows, as elected by the
party giving such notice, to the other parties at the addresses set
forth on the first page of this Agreement or as amended by notice
pursuant to this subsection. Except as otherwise specified herein, all
notices and other communications shall be deemed to have been duly given
on (i) the date of receipt if delivered personally, (ii) three (3)
Business Days after delivery to the courier, or (iii) the next Business
Day in the jurisdiction of the recipient following the date of
transmission with electronic confirmation if transmitted by facsimile,
whichever shall first occur. Any party may change its address for
purposes hereof by notice to the other parties. All notices and other
communications shall be in the English language.
26. ENTIRE AGREEMENT
This Agreement, and all Attachments, schedules and exhibits hereto,
supersedes all proposals, oral or written, all negotiations,
conversations, or discussions between or among the parties relating to
the subject matter of this Agreement and all past dealing or industry
custom.
27. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF the parties have duly executed this Agreement the day
and year first above written.
PHARMAPRINT INC.
By:
-----------------------------------
Steven A. Bowman
Its: Chief Executive Officer
KINGSWAY PHARMAPRINT
ASIA LIMITED
<PAGE> 16
By:
-----------------------------------
Its:
<PAGE> 17
SCHEDULE 1.1
PATENTED TECHNOLOGY
AUSTRALIA
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Grade Botanical Drugs 04/15/97 28131/97 Issued
Pharmaceutical Grade Echinacea 10/23/98 13634/99 Pending
Pharmaceutical Grade Ginkgo Biloba 10/23/98 13633/99 Pending
Pharmaceutical Grade Ginseng 10/23/98 11183/99 Pending
Pharmaceutical Grade Saw Palmetto, 10/23/98 13635/99 Pending
Serenoa Repens
Pharmaceutical Grade St. John's Wort 10/23/98 13631/99 Pending
Pharmaceutical Grade Valerian, Black 10/23/98 13632/99 Pending
Cohosh, Vitex Agnus-Castus, Bilberry and
Milk Thistle
</TABLE>
CANADA
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Grade Botanical Drugs 04/15/97 2252426 Pending
Pharmaceutical Grade Echinacea 10/23/98 2307614 Pending
Pharmaceutical Grade Garlic 10/23/98 2306812 Pending
Pharmaceutical Grade Ginkgo Biloba 10/23/98 2307194 Pending
Pharmaceutical Grade Ginseng 10/23/98 2307047 Pending
Pharmaceutical Grade Saw Palmetto, 10/23/98 2307602 Pending
Serenoa Repens
Pharmaceutical Grade St. John's Wort 10/23/98 2306818 Pending
Pharmaceutical Grade Valerian, Black 10/23/98 2307399 Pending
Cohosh, Vitex Agnus-Castus, Bilberry and
Milk Thistle
</TABLE>
CHINA
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Grade Botanical Drugs 04/15/97 97195565.4 Published
Pharmaceutical Grade Ginkgo Biloba 10/23/98 PCT/US98/22506 Pending
Pharmaceutical Grade Ginseng 10/23/98 N/A Pending
</TABLE>
EUROPEAN PATENT CONVENT
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
DATE
----
<S> <C> <C> <C>
Mistletoe Extract and Method 04/13/96 96912546.7 Pending
Pharmaceutical Grade Botanical Drugs 04/15/97 97922474.8 Pending
Pharmaceutical Grade Echinacea 10/23/98 98957358.9 Published
Pharmaceutical Grade Ginkgo Biloba 10/23/98 98957357.1 Published
Pharmaceutical Grade Saw Palmetto, 10/23/98 N/A Pending
Serenoa Repens
Pharmaceutical Grade St. John's Wort 10/23/98 98957355.5 Pending
</TABLE>
HONG KONG
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Grade Botanical Drugs 04/15/97 N/A Pending
</TABLE>
JAPAN
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Mistletoe Extract and Method 04/3/96 08-531053 Pending
Pharmaceutical Grade Botanical Drugs 04/15/97 09-537454 Pending
Pharmaceutical Grade Ginkgo Biloba 10/23/98 2000-516688 Pending
Pharmaceutical Grade Ginseng 10/23/98 2000-516689 Pending
</TABLE>
MEXICO
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Grade Botanical Drugs 04/15/97 988527 Pending
</TABLE>
UNITED STATES
<TABLE>
<CAPTION>
TITLE FILING DATE SERIAL NO. STATUS
----- ----------- ---------- ------
<S> <C> <C> <C>
Pharmaceutical Preparations Derived from 04/14/95 5,547,674 Issued
European Mistletoe
Pharmaceutical Preparations Derived from 04/14/95 5,565,200 Issued
Korean Mistletoe
Mistletoe Extract and Method 07/14/98 5,780,037 Issued
Pharmaceutical Grade Botanical Drugs 04/15/97 08/838,198 Pending
Pharmaceutical Grade Botanical Drugs 06/2/99 08/632,273 Pending
</TABLE>
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
Pharmaceutical Grade Valerian, Black 12/2/99 09/331,831 Pending
Cohosh, Vitex Agnus-Castus, Bilberry and
Milk Thistle
Pharmaceutical Grade Echinacea 06/23/99 09/331,797 Pending
Pharmaceutical Grade Garlic 06/23/99 09/331,824 Pending
Pharmaceutical Grade Ginkgo Biloba 06/23/99 09/331,827 Pending
Pharmaceutical Grade Saw Palmetto 10/23/97 6,039,950 Issued
Pharmaceutical Grade Saw Palmetto 08/20/99 09/378,774 Pending
Pharmaceutical Grade Saw Palmetto 06/23/99 09/331,832 Pending
Pharmaceutical Grade St. John's Wort 10/23/97 08/956,602 Allowed
Pharmaceutical Grade St. John's Wort 09/23/98 09/159,313 Pending
Standardized Functional Food Products 09/20/99 60/154,842 Pending
Pharmaceutical Grade Ginseng 10/22/98 09/177,702 Pending
</TABLE>
<PAGE> 20
SCHEDULE 10.2
LICENSED MARK
United States:
1. PharmaPrint: published for opposition.
2. Three Leaf Logo: pending; office action was issued and has been
addressed.
3. PharmaPrint Certified: pending; office action was issued and has been
addressed.
Canada:
1. Notice of allowance given for PharmaPrint. Need to demonstrate that this
mark has been commercially used in Canada to complete the registration.
2. Notice of allowance given for Three Leaf Logo. Need to demonstrate that
this mark has been commercially used in Canada to complete the
registration.
Japan:
1. Three Leaf Logo: is registered.
2. PharmaPrint: is registered.
<PAGE> 21
SCHEDULE 12
DISCLOSED MATTERS
Clause 12 (e): Consents to Transaction.
None.
Clause 12(f): Claims and Infringements.
None.
Clause 12(g): Claims and Proceedings.
None.
