MASTER AGREEMENT
THIS
MASTER AGREEMENT (this
“Agreement”), dated effective as of August 19, 2008 (the “Effective Date”), is
made by and among ▇▇▇▇▇▇ Science Inc., a Delaware corporation (“Eugene”); ▇▇▇
Biotech, LLC, a Delaware limited liability company (“▇▇▇”); Onbio Corporation, a
Republic of Korea corporation (“Onbio”); ▇▇▇▇▇-▇▇▇▇
Noh
(“Noh”);
ASA Opportunity Fund L.P., a Delaware limited partnership, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Zhonghua Chen, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ Du (collectively, the “Lenders”) and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ (“Wilcoxon,” collectively with the Lenders, “Creditors”).
WITNESSETH:
WHEREAS on
or
about August 24, 2007, the
Lenders and SummitBridge
National Investments LLC (“SummitBridge”) advanced funds to Eugene under the
terms of that certain Note and Warrant Purchase Agreement (the “Purchase
Agreement”) and were issued notes (the “Notes,” collectively, with the Purchase
Agreement, the “Loan Documents”) and warrants (the “Warrants”) in connection
therewith;
WHEREAS
Wilcoxon
has purchased the Note held by SummitBridge;
WHEREAS
Eugene
is in the business of developing, manufacturing, and marketing nutraceuticals;
WHEREAS
Eugene
would like to terminate the Loan Documents and extinguish any rights,
obligations, and conditions related thereto;
WHEREAS
Onbio,
which is related to and a shareholder in Eugene and intends to merge with
Eugene, has agreed to transfer certain patents related to a composition enriched
in diglyceride with conjugated linoleic acid to Eugene in exchange for good
and
valuable consideration provided by Eugene; and
WHEREAS
Creditors, through ▇▇▇ (a newly formed entity owned by Creditors), desire to
exploit on a worldwide basis the products and intellectual property developed
by
Eugene for the benefit of Eugene and ▇▇▇.
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE
I.
DEFINITIONS
As
used
in this Agreement, the following terms shall have the meanings set forth below:
1.01 “Competing
Products” means any and all products that compete in any market in any territory
with Licensed Products, as defined herein, but which do not employ or are not
produced by the practice of inventions described in any claim in any issued
patent included within the ▇▇▇▇▇▇ Patents, as defined herein.
1.02 “Eugene
Patents” means those patents and patent applications listed on Schedule A and
any divisions, reissues, continuations, renewals, and extensions of the
foregoing, and patents which may issue upon such applications.
1.03 “Improvement”
means any modification to a component, element, material or process described
by
claims in the Eugene Patents or useful in practicing the inventions disclosed
in
the ▇▇▇▇▇▇ Patents which is first conceived and actually or constructively
reduced to practice by Eugene or its contractors prior to the third anniversary
of the Effective Date.
1.04 “Licensed
Products” means any and all products which employ or are produced by the
practice of inventions described in any claim in any issued patent included
within the ▇▇▇▇▇▇ Patents.
1.05 “Net
Sales Revenues” means gross sales receipts, including any commissions and
royalties received, less (i) expenses incurred from the sale of Licensed
Products and related taxes, duty fees and insurance on products sold and (ii)
deductions for returns, discounts, allowances, credits and repayments due to
rejections and defects.
1.06 As
further defined and described in
Section
2.04, “Onbio Patents” means those patents and patent applications listed on
Schedule B and any divisions, reissues, continuations, renewals, and extensions
of the foregoing, and patents which may issue upon such
applications.
1.07 As
further defined and described in Section 2.04, “Onbio Licensed Products” means
any and all products which employ or are produced by the practice of inventions
claimed in the Onbio Patents.
ARTICLE
II.
ASSIGNMENT
OF PATENTS
2.01 Assignment.
(a) Eugene
hereby assigns all of its rights, title, and interest in and to the ▇▇▇▇▇▇
Patents to ▇▇▇. Eugene agrees to contemporaneously execute the Patent Assignment
attached hereto as Exhibit A and subsequently execute other assignment documents
that ▇▇▇ may supply from time to time.
(b) Eugene
agrees to cooperate fully with ▇▇▇ to execute all documents necessary to
transfer and record the change of ownership of the ▇▇▇▇▇▇ Patents to ▇▇▇ and
perform such other actions which may be or become necessary, expedient or as
reasonably requested by ▇▇▇ to effectuate and carry out the terms of this
Agreement. Without limiting the generality of the foregoing, Eugene agrees
to
execute and deliver documents, including without limitation documents required
by any government, to effect the assignment under this Agreement when requested
by ▇▇▇.
2.02 Agreement
to Extinguish Debt.
In
consideration of the foregoing assignments and the remaining terms and
conditions of this Agreement, each of the Creditors does hereby release, cancel,
forgive, and forever discharge the obligations of Eugene under the terms of
the
Loan Documents, but not the Warrants, from all actions, claims, demands,
damages, obligations, liabilities, controversies and executions, of any kind
or
nature whatsoever, whether known or unknown, whether suspected or not, which
have arisen, or may have arisen, or shall arise, except claims of fraud or
intentional misrepresentation on the part of ▇▇▇▇▇▇ or any party associated
with
▇▇▇▇▇▇ or claims arising out of this Agreement. In connection therewith,
Creditors shall ▇▇▇▇ the Notes “canceled” and surrender the same to Eugene.
Nothing in this section shall release Eugene of its obligation or ability to
issue additional warrants pursuant to any existing and outstanding agreements
between Eugene and any Creditors.
Page
2 of
15
2.03 Maintenance
and Right of First Refusal.
Following the execution of this Agreement, the maintenance of all Eugene Patents
successfully transferred to ▇▇▇ shall be the responsibility of ▇▇▇. If ▇▇▇
intends to abandon any of the ▇▇▇▇▇▇ Patents, ▇▇▇ shall notify Eugene in writing
of such intention upon the earlier of (i) KIP’s decision to abandon such
patent(s) and (ii) ninety (90) days prior to such patent(s) becoming abandoned,
and in either event, ▇▇▇ shall provide Eugene the option of acquiring such
patent(s) from ▇▇▇ at no charge to Eugene other than related transfer expenses.
If Eugene elects to acquire such patent(s) in writing within sixty (60) days
after such notification, ▇▇▇ shall take such actions and execute and deliver
such documents as are necessary in order to transfer and assign such patents
to
Eugene.
2.04 Onbio
Patents.
Eugene
and Onbio represent that they intend to consummate a merger subject to
regulatory approvals. Within ninety (90) days of the completion of the merger,
Eugene or the merged companies will transfer ownership of the Onbio Patents
to
▇▇▇. Upon the execution of one or more assignments transferring ownership of
the
Onbio Patents to ▇▇▇, the parties agree that (i) for purposes of this Agreement
“Onbio Patents” shall be considered “Eugene Patents,” and “Onbio Licensed
Products” shall be considered “Licensed Products;” (ii) ▇▇▇ grants to Eugene
licenses to the Onbio Patents under the same terms and conditions as those
provided in Sections 3.01(a), (b), and (c); and (iii) Section 3.01(d) shall
be
null and void.
ARTICLE
III.
LICENSES
3.01 Grants.
Subject
to the terms and conditions set forth in this Agreement, the parties agree
to
the following license grants:
(a) ▇▇▇
grants to Eugene an exclusive, revocable, nontransferable license to market
and
sell Licensed Products in Japan and the Republic of Korea.
(b) ▇▇▇
grants to Eugene a nonexclusive, revocable, nontransferable license to market
and sell Licensed Products in the People’s Republic of China.
(c) ▇▇▇
grants to Eugene an exclusive, revocable, nontransferable license to manufacture
Licensed Products (i) for sales in connection with Sections 3.01(a) and (b)
and
(ii) for sales to ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company. This license shall not
restrict KIP’s right to contract with third parties to manufacture Licensed
Products for sale by ▇▇▇ in territories other than Japan and the Republic of
Korea or to customers other than ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company.
(d) Onbio
grants to ▇▇▇ an exclusive, irrevocable, transferable license to make, use,
and
sell Onbio Licensed Products worldwide and to license others to make, use,
and
sell Onbio Licensed Products worldwide.
Page
3 of
15
3.02 Revocability.
▇▇▇
shall have the right in its sole discretion exercised in good faith, upon sixty
(60) days notice of the same, to revoke any of the licenses granted in Sections
3.01(a), (b), and (c) if (i) Eugene fails to meet the best available fully
loaded cost of delivered goods available in the markets of Japan or the Republic
of Korea with respect to delivered cost, volume, or delivery after being
notified of such failure and being given ten business days to match the best
market rate, or (ii) Eugene manufactures or sells Licensed Products that are
materially defective or otherwise cause material injury to the reputation of
▇▇▇
or Licensed Products in any territory due to product quality, including any
failure to properly package or ship products which materially affects product
quality. In addition, ▇▇▇ shall have the right to convert any of the licenses
granted in Sections 3.01(a) and (c) from exclusive to nonexclusive under these
same conditions. Failure of ▇▇▇ to exercise any right in this section for any
period of time shall not constitute a waiver of the rights granted
herein.
3.03 Sublicensing
Prohibited.
Eugene
shall not sublicense any license or right granted by ▇▇▇ herein without the
express written consent of ▇▇▇, and any purported sublicense or transfer of
any
such license or right without the express written consent of ▇▇▇ shall be null
and void.
3.04 Marking.
Eugene
agrees to ▇▇▇▇ all Licensed Products sold by it under the licenses granted
with
the words “Patent Pending,” “Patent,” or “Patents” and the number or numbers of
the ▇▇▇▇▇▇ Patents applicable thereto.
ARTICLE
IV.
IMPROVEMENTS
AND COOPERATION
4.01 Improvements.
(a) Eugene
shall disclose to ▇▇▇ all information in its possession pertaining to each
and
every Improvement which may be necessary or useful for the preparation and
filing of patent applications for the protection of such Improvement. Such
disclosure shall take place within thirty (30) days of the Improvement being
actually or constructively reduced to practice. Eugene shall thereafter supply
to ▇▇▇ such additional information as may be necessary or desirable to
facilitate prosecution of such applications.
(b) ▇▇▇
shall
have the exclusive right to file patent applications worldwide based upon any
Improvement. ▇▇▇ shall inform Eugene in writing of its election to exercise
its
exclusive right to file patent applications based upon any Improvement within
thirty (30) days of the disclosure thereof pursuant to the preceding paragraph.
Eugene agrees to cooperate fully with ▇▇▇ to provide information and perform
such actions which may be or become necessary, expedient or as reasonably
requested by ▇▇▇ to effectuate and carry out its right to file. Eugene hereby
assigns to ▇▇▇ the entire right, title and interest in and to all Improvements
on which ▇▇▇ exercises its right to file. Eugene agrees to execute and deliver
documents, including without limitation documents required by any government,
to
effect any assignment under this paragraph when requested by ▇▇▇.
(c) For
any
Improvement on which ▇▇▇ declines to exercise its right to file pursuant to
the
prior paragraph, expressly or otherwise, Eugene may file patent applications
based upon any such Improvement and shall have no obligation to assign any
resulting patent or patent application to ▇▇▇; provided
that
Eugene
shall comply with all provisions of this Agreement with respect to any
Improvement for which the practice of said Improvement results in a product
that
is a Licensed Product or a Competing Product.
Page
4 of
15
4.02 Competing
Products.
Eugene
and Onbio may develop Competing Products subject to the following conditions:
(a) Eugene
and Onbio agree to grant and hereby grant to ▇▇▇ (i) an exclusive, irrevocable,
perpetual license to manufacture and sell Competing Products owned by Eugene
or
Onbio in all territories except the People’s Republic of China, Japan, and the
Republic of Korea, and (ii) a nonexclusive, irrevocable, perpetual license
to
manufacture and sell Competing Products owned by Eugene or Onbio in the People’s
Republic of China. All other rights are reserved to Eugene and
Onbio.
(b) ▇▇▇
shall
pay a royalty to Eugene for any Competing Products sold by ▇▇▇ under a license
granted in the preceding paragraph in accordance with the payment terms provided
in Section 6.02 and related sections of this Agreement.
(c) Eugene
and Onbio shall pay ▇▇▇ for any Competing Products owned by Eugene or Onbio
and
sold by Eugene or Onbio prior to the third anniversary of the Effective Date,
in
accordance with the royalty terms provided in Section 6.01(a) and related
sections of this Agreement.
4.03 Joint
Inventions.
(a) Each
party hereto shall grant any consents necessary to the other in the event one
or
more countries require the consent of inventors or assignees to the grant of
licenses or rights under patents issued for joint inventions, and shall obtain
such consent from its employees, officers and/or contractors as required to
make
full and effective any such licenses and rights respecting any Eugene
Patent.
(b) Each
party shall obtain whatever other consents are necessary to make full and
effective such licenses and rights respecting any joint invention purported
to
be granted by it hereunder. If, in spite of such reasonable steps, such party
is
unable to obtain the requisite consents from such third parties, the resulting
inability of such party to make full and effective its purported grant of such
licenses and rights shall not be considered to be a breach of this
Agreement.
4.04 Infringement
by Third Parties.
(a) Eugene
shall notify ▇▇▇ in writing within ten (10) days of learning of any alleged
or
threatened infringement of any patent right licensed or assigned in this
Agreement.
(b) In
Japan
and the Republic of Korea, Eugene, in its own name or jointly with ▇▇▇ (if
required by law), will bring and will diligently prosecute suits for
infringement of the ▇▇▇▇▇▇ Patents.
(c) Outside
of Japan and the Republic of Korea, ▇▇▇ shall have the sole right to bring
and
control any action or proceeding with respect to infringement of any licensed
right in its sole discretion, at its own expense, and by counsel of its own
choice. Eugene agrees to cooperate fully in any such action or proceeding
on issues related to the validity of any of the ▇▇▇▇▇▇ Patents.
Page
5 of
15
(d) In
the
event either ▇▇▇ or Eugene brings an infringement action in accordance with
this
section, the other party shall cooperate fully, including, if required to bring
such action, the furnishing of a power of attorney or being named as a
party.
4.05 Infringement
of Third Party Rights.
Subject
to Article 9, Eugene shall promptly notify ▇▇▇ in writing of any allegation
by a
third party that the activity of either of the parties pursuant to this
Agreement infringes or may infringe the intellectual property rights of such
third party. ▇▇▇ shall have the sole right to control any defense of any such
claim involving alleged infringement of third party rights by KIP’s activities
at its own expense and by counsel of its own choice.
4.06 Non-Interference.
(a) Eugene
and Onbio agree that they will not (i) interfere with KIP’s rights to exploit
the Eugene Patents, (ii) take any position or make any statement inconsistent
with KIP’s ownership of the Eugene Patents or the continued validity and
commercial viability of the Eugene Patents, or (iii) vilify,
disparage, slander or defame ▇▇▇, or any of its officers, board members,
employees, businesses or business practices.
(b) Eugene
shall not sell or provide Licensed Products to any person or entity which Eugene
knows or has any reason to know is distributing Licensed Products in territories
other than Japan, the Republic of Korea, and the People’s Republic of
China.
ARTICLE
V.
SUPPLEMENTAL
AGREEMENTS
5.01 Technical
and Sales Support.
Eugene
agrees to provide technical and sales support to ▇▇▇ and its customers for
all
sales generated by ▇▇▇ of any products sold outside of Japan and the Republic
of
Korea at all times during the term of this Agreement. In addition to other
remedies ▇▇▇ may have at law or in equity, in the event that that the technical
and sales support is not provided in a meaningful way, ▇▇▇ may suspend any
payment due hereunder in good faith, provided
that
Eugene
fails to resolve any issues with the technical and sales support after being
given seven (7) business days written notice of such issues.
5.02 Japan
CZ Patent.
Eugene
shall make best efforts in good faith to secure a release of the pledge in
favor
of Hokuyo Koeki and Early Bird relating to the Japan CZ patent, Patent No.
3535147 (the “CZ Patent”) on or before December 31, 2008. At its sole
discretion, ▇▇▇ may make payments otherwise due Eugene under Section 6.02
directly to Hokuyo Koeki and Early Bird in order to satisfy any amounts owed
by
Eugene to Hokuyo Koeki and Early Bird and thus obtain release of the pledge.
5.03 Account
Relationships.
Absent
any contractual restrictions on assignment that cannot be reasonably overcome,
Eugene will transfer all of its customer accounts (including
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company) to ▇▇▇ within thirty (30) days of the date
of
this Agreement in all territories other than the Republic of Korea, Japan and
the People’s Republic of China. Eugene will thereafter direct all correspondence
related to such accounts to the appropriate representatives of ▇▇▇.
Page
6 of
15
5.04 ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland
Contract.
Eugene
and ▇▇▇ acknowledge and agree that ▇▇▇ will use its commercially reasonable
efforts to renegotiate the Strategic Alliance Agreement of April 8, 2004 between
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland
Company
and
Eugene in order to increase revenue receipts to Eugene and/or ▇▇▇.
5.05 AD/ADD
Tonnage Study.
▇▇▇ may
at its discretion pay KRIBB Republic of Korean Research Institute for Bioscience
& Biotechnology the balance owing to receive the completed AD/ADD tonnage
study.
5.06 Agreement
between Noh and ▇▇▇.
Noh and
▇▇▇ agree to enter into a consulting and noncompetition agreement within ninety
(90) days of the Effective Date, under the terms of which Noh will provide
continued research and development expertise to ▇▇▇ to the exclusion of parties
other than Eugene, and ▇▇▇ will provide market based equity incentives to Noh
whereby Noh will participate in the scientific and economic successes of ▇▇▇
and
its affiliates.
5.07 CZ
Oil.
Eugene,
Onbio, and ▇▇▇ acknowledge the existence of potential third-party rights
relative to sterol products that can be integrated to edible oils (“CZO”).
Eugene and Onbio hereby agree to use their commercially reasonable best efforts
to secure exclusive access to all rights, title, and interest associated with
the development of CZO for the exclusive benefit of Eugene and ▇▇▇ and their
affiliates under the terms of this Agreement.
5.08 CZ
Soluble.
Eugene,
Onbio, and ▇▇▇ acknowledge the existence of potential third-party rights
relative to water soluble sterol products (“CZ Soluble”). Eugene and Onbio
hereby agree to use their commercially reasonable best efforts to secure
exclusive access to all rights, title, and interest associated with the
development of CZ Soluble for the exclusive benefit of Eugene and ▇▇▇ and their
affiliates under the terms of this Agreement.
ARTICLE
VI.
ROYALTIES
AND PAYMENTS
6.01 Royalty
from Eugene to ▇▇▇.
(a) Eugene
shall pay a royalty to ▇▇▇ in the amount of five percent (5%) of its Net Sales
Revenues directly or indirectly received by Eugene from the sale or lease of
any
Licensed Products.
(b) Eugene
shall pay a royalty to ▇▇▇ in the amount of seven and a half percent (7.5%)
of
its Net Sales Revenues directly or indirectly received from
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company by Eugene from the sale or lease of any Licensed
Products until Eugene has successfully transferred its ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland
account to ▇▇▇, at which time Eugene shall have no obligation to pay a royalty
under this Section 6.01(b).
6.02 Payment
from ▇▇▇ to Eugene.
Subject
to the Payment Advance Addendum attached hereto as Exhibit B, ▇▇▇ shall pay
Eugene in the amount of five percent (5%) of its Net Sales Revenues directly
or
indirectly received by ▇▇▇ from the sale of any products which employ or are
produced by the practice of inventions claimed in the ▇▇▇▇▇▇ Patents while
such
patent claims are valid and enforceable.
Page
7 of
15
6.03 Future
Sale of Patents.
In the
event that ▇▇▇ ▇▇▇▇▇, assigns or otherwise transfers (other than a license)
any
of the ▇▇▇▇▇▇ Patents, ▇▇▇ shall pay the appropriate amount(s) set forth below.
The payment of such amount shall extinguish the obligations of ▇▇▇ to make
the
payments set forth in Section 6.02 with respect to the ▇▇▇▇▇▇ Patents so
transferred.
(a) If
the
sale, assignment or transfer occurs within twelve
(12) months of the Effective Date, ▇▇▇ shall pay Eugene thirty percent (30%)
of
the net proceeds of such sale.
(b) If
the
sale, assignment or transfer occurs between twelve (12) and twenty-four (24)
months after the Effective Date, ▇▇▇ shall pay Eugene twenty percent (20%)
of
the net proceeds of such sale.
(c) If
the
sale, assignment or transfer occurs more than twenty-four (24) months after
the
Effective Date, ▇▇▇ shall pay Eugene ten percent (10%) of the net proceeds
of
such sale.
As
used
herein, the term “net proceeds” shall mean the gross amount received from a
purchaser of the ▇▇▇▇▇▇ Patents less all expenses in connection with offering,
selling, transferring and assigning such Eugene Patents and all maintenance
and
enhancement fees paid by ▇▇▇ in connection with the maintenance of the ▇▇▇▇▇▇
Patents as well as any costs incurred by litigation involving the transfer,
assignment or validity thereof. In the event that the ▇▇▇▇▇▇ Patents are
transferred in connection with the sale of any other assets of ▇▇▇, the
accountants regularly servicing the books and records of ▇▇▇ shall in good
faith
determine the relative proportion of value paid which is attributed to the
▇▇▇▇▇▇ Patents. Payments of such net proceeds (whether in the form of cash,
principal and interest, securities or royalties) to Eugene shall be made within
fifteen (15) days of the actual receipt thereof by ▇▇▇.
6.04 Accrual,
Reports, Records, and Payments.
(a) Within
thirty (30) days after the end of each calendar quarter, Eugene agrees to
provide ▇▇▇ with a written report indicating (i) Eugene’s Net Sales Revenues
during the just completed calendar quarter resulting from sales of Licensed
Products and any and all products or services generated from or using,
incorporating or otherwise involving Licensed Products,
and
(ii) the amount of the royalties due for such calendar quarter. Simultaneously
with making such report, Eugene shall pay to ▇▇▇ the amount of royalties then
due. Eugene shall have no obligation to pay ▇▇▇ while any uncured material
breach of this Agreement remains outstanding; provided
that
▇▇▇ has
not cured such breach after thirty (30) days of Eugene having identified such
breach to ▇▇▇ in writing in lieu of or in addition to a written report.
(b) Subject
to the Payment Advance Addendum attached hereto as Exhibit B, within thirty
(30)
days after the end of each calendar quarter, ▇▇▇ agrees to provide Eugene with
a
written report indicating (i) KIP’s Net Sales Revenues during the just completed
calendar quarter resulting from sales of any products which employ or are
produced by the practice of inventions claimed in the ▇▇▇▇▇▇ Patents while
such
claims are valid and enforceable,
and
(ii) the amount of payment due for such calendar quarter. Simultaneously with
making such report, ▇▇▇
shall
pay
to Eugene
the
amount then due. ▇▇▇ shall have no obligation to pay Eugene while any uncured
material breach of this Agreement remains outstanding, provided
that Eugene
has not cured such breach after thirty (30) days of ▇▇▇ having identified such
breach to Eugene in writing in lieu of or in addition to a written
report.
Page
8 of
15
(c) Each
of
▇▇▇ and Eugene shall in good faith keep detailed and accurate records with
respect to all products and shall furnish any information which the other party
may reasonably prescribe from time to time to enable it to ascertain the proper
royalty or payment due hereunder on account of products sold. The other party
shall have the right through its accredited auditors to make an examination,
during normal business hours, of all records and accounts bearing upon the
amount payable to it hereunder. Prompt adjustment shall be made to compensate
for any material errors or omissions disclosed by such examination.
(d) Obligations
to pay accrued amounts of royalties or payments shall survive termination of
licenses and rights under the terms of the Agreement, but in no event shall
any
new royalty or payment be due or owing on any expired patent.
(e) Payments
by either Eugene or ▇▇▇ may be made to the other party at the addresses
specified in this Agreement. Alternatively, payments may be made by bank wire
transfers by arrangement of the parties.
ARTICLE
VII.
REPRESENTATIONS
AND WARRANTIES
7.01 Mutual
Representations and Warranties.
Each of
Eugene, Onbio and ▇▇▇ hereby represents, warrants, and covenants to the other
party the following:
(a) It
is a
corporation duly organized and validly existing and in good standing under
the
laws of the state, country, province or territory of its incorporation and
is in
good standing in each other jurisdiction where a failure to be in good standing
would have a material adverse effect on the operations of such
party.
(b) It
has
all necessary right, power and authority to enter into this Agreement and
perform its obligations hereunder, and, in so doing, will not violate any other
agreement to which it is a party.
(c) It
has
taken all corporate action necessary to authorize the execution and delivery
of
this Agreement. This Agreement is legally binding upon it, enforceable in
accordance with its terms.
7.02 Eugene’s
Representations and Warranties.
Eugene
specifically represents, warrants, and covenants that:
(a) it
has
full authority to execute this Agreement;
(b) its
execution, delivery, and performance of this Agreement will not violate any
judgment, award, decree, agreement, or other instrument to which it is a
party;
(c) it
is not
required to obtain any approval, authorization, consent, order, or action of
or
filing with any court, administrative agency, or other governmental authority
for it to execute and deliver this Agreement;
Page
9 of
15
(d) there
are
no actions, suits or proceedings now pending or threatened relating to the
▇▇▇▇▇▇ Patents or threatened against Eugene, or before or by any governmental
agency or instrumentality;
(e) it
is the
sole and exclusive owner of the ▇▇▇▇▇▇ Patents, including all the rights and
title associated with such an interest, and the ▇▇▇▇▇▇ Patents are free of
all
liens, claims, security interests, and other encumbrances other than those
running in favor of Creditors and the pledge on the CZ Patent, and upon
execution of the Patent Assignment attached hereto as Exhibit A, ▇▇▇ will
receive the ▇▇▇▇▇▇ Patents free and clear of any and all such encumbrances,
except the pledge on the CZ Patent;
(f) it
is and
will be the sole and exclusive owner of all Improvements; and
(g) its
Licensed Products will conform to all specifications and quality control
standards that ▇▇▇ may provide from time to time.
ARTICLE
VIII.
TERM
AND TERMINATION
8.01 Term.
This
Agreement shall continue in effect until the expiration of the last to expire
of
the Eugene Patents or upon termination as described in this
Article.
8.02 Termination
for Cause.
▇▇▇ may
terminate any number of the licenses and rights granted by it to Eugene
hereunder if (i) Eugene fails to make commercially reasonable efforts to exploit
the Licensed Products in Japan, the Republic of Korea, and the People’s Republic
of China; (ii) ▇▇▇▇▇▇ ▇▇▇▇▇ or transships Licensed Products outside of Japan,
the Republic of Korea, and the People’s Republic of China; or (iii) ▇▇▇▇▇▇ or
Onbio materially breaches this agreement; provided
that ▇▇▇
has
given Eugene thirty (30) days written notice of (a) such failure to exploit,
faulty sale or transshipment, or material breach, as applicable; (b) the
effective date of termination; and (c) any affected patent, product, and/or
territory; and Eugene has failed to cure or adequately explain to KIP’s
satisfaction such failure to exploit, faulty sale or transshipment, or material
breach, as the case may be, within said thirty (30) days.
8.03 Insolvency.
Either
party may terminate this Agreement immediately upon written notice if the other
party ceases conducting business in the normal course, becomes insolvent, makes
a general assignment for the benefit of creditors, suffers or permits the
appointment of a receiver for its business or assets, avails itself of or
becomes subject to any petition or proceeding under any statute of any state
or
country relating to insolvency or the protection of the rights of creditors,
or
any other insolvency or bankruptcy proceeding or other similar proceeding for
the settlement of the other party’s debt is instituted. Upon termination of this
Agreement under this section the licenses granted by ▇▇▇ shall automatically
terminate.
8.04 Survival.
The
obligations and rights of the parties under Article 4, Article 9 and Sections
2.01 and 6.04 shall survive expiration or termination of this Agreement or
any
portion thereof. All other provisions of this Agreement shall be of no further
force and effect upon expiration or termination of this Agreement.
Notwithstanding the foregoing, expiration or termination of this Agreement
shall
not release either party from any obligation that has accrued prior to such
expiration or termination, including without limitation any obligation to pay
any amount which became due and payable under the terms and conditions of this
Agreement prior to such expiration or termination.
Page
10 of
15
ARTICLE
IX.
INDEMNIFICATION
9.01 Mutual
Indemnification.
Each
party agrees to indemnify and hold the other parties and its affiliates,
officers, directors, employees, agents and shareholders harmless against any
and
all losses, liabilities, damages, claims, judgments, demands, and expenses
(including reasonable attorneys' fees) and costs (together or individually,
a
"Loss") arising out of or in connection with the breach by the indemnifying
party of any of its representations or warranties or the nonperformance, partial
or total, of any covenants of the indemnifying party contained in this
Agreement.
9.02 KIP’s
Additional Indemnification.
▇▇▇
further agrees to indemnify, defend and hold Eugene and Onbio and its directors
officers, employees and agents (“Eugene/Onbio Indemnities”) harmless from and
against any and all Losses to which any Eugene/Onbio Indemnities may becomes
subject as a result of any claim, demand, action or other proceeding by any
third party to the extent such Losses arise directly or indirectly out of:
(a)
the practice by ▇▇▇ of any license granted to it hereunder; or (b) the
manufacture, use, handling, storage, sale or other disposition of any product
licensed hereunder by ▇▇▇; except, in each case, to the extent such Losses
result from the gross negligence or willful misconduct of a Eugene/Onbio
Indemnities or the breach by Eugene or Onbio of any warranty, representation,
covenant or agreement made by ▇▇▇▇▇▇ or Onbio in this Agreement.
9.03 Eugene’s
Additional Indemnification.
Eugene
further agrees to indemnify, defend and hold ▇▇▇ and its directors, officers,
employees and agents (“▇▇▇ Indemnitees”) harmless from and against any and all
Losses, to which any ▇▇▇ Indemnitee may become subject as a result of any claim,
demand, action or other proceeding by any third party to the extent such Losses
arise directly or indirectly out of: (a) the practice by Eugene of any
license granted to it hereunder; (b) the manufacture, use, handling,
storage, sale or other disposition of any Licensed Product by Eugene;
(c) any dispute regarding the ownership of any Improvement; or (d) any
dispute regarding the inventorship or ownership of any Eugene Patent arising
out
of any transaction or occurrence taking place on or before the assignment of
said patent to ▇▇▇; except, in each case, to the extent such Losses result
from
the gross negligence or willful misconduct of any ▇▇▇ Indemnitee or the breach
by ▇▇▇ of any warranty, representation, covenant or agreement made by ▇▇▇ in
this Agreement. Eugene will indemnify ▇▇▇ for any damages suffered by ▇▇▇ in
connection with its failure to secure the release of the pledge on the CZ
Patent.
9.04 Conditions
to Indemnification.
As a
condition to the indemnified party's right to indemnification under this Article
IX, the indemnified party shall give prompt notice to the indemnifying party
of
any suits, claims or demands by third parties or the indemnified party which
may
give rise to any Loss for which indemnification may be required under this
Article IX. The indemnifying party shall be entitled to assume the defense
and
control of any suit, claim or demand of any third party at its own cost and
expense; provided, however, that (i) the other party shall have the right to
be
represented by its own counsel at its own cost in such matters, and (ii) any
settlement of such suit, claim or demand shall be subject to the prior written
consent of such other party, which consent shall not be withheld or delayed
unreasonably.
Page
11 of
15
ARTICLE
X.
MISCELLANEOUS
PROVISIONS
10.01 Nonassignability.
▇▇▇ has
entered into this Agreement in contemplation of personal performance by Eugene
and Noh and intends that the licenses, rights, and obligations hereunder shall
not be transferred to third parties without KIP's express written consent.
▇▇▇
shall have the right to transfer ownership of this agreement in whole or in
part.
10.02 Confidential
Information.
The
parties may provide to each other certain valuable confidential trade secret
information under this Agreement including, but not limited to, financial
information, marketing information, product samples, specifications, methods
of
operation, techniques, trade secrets, documentation, systems, ideas, know-how,
and concepts related thereto. Each party agrees to hold such confidential
information in confidence and not to disclose any confidential information
at
any time to third parties or use such information for the benefit of third
parties without the express written authorization of the disclosing
party.
10.03 Governing
Law; Proceedings.
This
Agreement and the respective rights and obligations of the parties hereto shall
be governed by the laws of the state of Minnesota. With
respect to any dispute, controversy or claim arising out of or relating to
this
Agreement or the relationship between the parties, each party hereto agrees
and
consents to jurisdiction of and exclusive venue in the United States District
Court, District of Minnesota,
Fourth
Division or in the Minnesota State Courts, Hennepin County, Fourth Judicial
District. Each
party hereby irrevocably (i) submits to the jurisdiction of such courts and
(ii) waives any objection it may now or hereafter have as to the venue of
any such action or proceeding brought in such court or that such court is an
inconvenient forum.
10.04 Contractor
Status.
Nothing
contained in this Agreement or otherwise shall be deemed to create any agency,
employment, partnership or joint venture among the parties hereto. No party
hereto, nor any of their employees will hold itself/themselves out as anything
but an independent contractor of one another based upon this
Agreement.
10.05 Notices.
All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly served or delivered (i) upon
actual physical delivery when delivered in person or via courier such as Federal
Express, (ii) if sent by facsimile to the facsimile number of such party set
forth hereinafter, upon receipt of confirmation of the transmission thereof
to
that number, provided that the sender thereof mails a copy of such notice,
request, demand or other communication by the business day next succeeding
the
date such facsimile or email was transmitted, or (iii) if mailed, on the fourth
business day after being deposited in the United States Mail, provided it is
sent by certified mail, return receipt requested, postage prepaid, and addressed
as follows:
Page
12 of
15
(a)
if to
▇▇▇▇▇▇ Science Inc., to:
▇▇▇▇▇▇
Science, Inc
8th
Floor, LG Palace Building
▇▇▇-▇
▇▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇-▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇▇ of Korea
Attn: Chief
Executive Officer
Fax: ▇▇-▇-▇▇▇-▇▇▇▇
With
a
copy (which will not constitute notice) to:
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
(b)
if to
the Creditors or ▇▇▇, to:
ASA
Opportunity Fund L.P.
c/o
ASA
OF Advisors LLC, General Partner
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Managing Member
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With
a
copy (which will not constitute notice) to:
Winthrop
& Weinstine, P.A.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Any
party
hereto may from time to time, by written notice to the other parties given
in
the manner hereinabove set forth, designate a different address or different
facsimile number, which shall be substituted for the one specified above for
such party.
10.06 Integration.
This
Agreement, together with all Exhibits and Schedules referred to herein, sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior discussions between them. None
of
the parties shall be bound by any warranties, understandings, or representations
with respect to such subject matter other than as expressly provided herein
or
in a writing signed contemporaneously with or subsequent to execution hereof
by
an authorized representative of the party to be bound thereby.
10.07 Attorney
Fees.
If any
party brings a legal action or other proceeding to enforce this Agreement,
or
because of an alleged dispute, breach, default or misrepresentation relating
to
this Agreement, the successful or prevailing party in such dispute shall be
entitled to recover reasonable attorney’s fees and other costs incurred in such
action or proceeding. Such relief shall be in addition to any other relief
to
which that party may be entitled.
Page
13 of
15
10.08 Successors
and Assigns.
This
Agreement is and shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors, and permitted
assigns.
10.09 Amendments.
This
Agreement may not be changed or modified except in a writing signed by the
parties hereto.
10.10 Waiver.
A
failure or delay of either Party to enforce any of the provisions of this
Agreement may in no way be construed to be a waiver of such
provision.
10.11 Savings.
Any
provision of this Agreement that is invalid, illegal, or unenforceable for
any
reason shall be ineffective only to the extent of such invalidity, illegality,
or unenforceability, without affecting in any way the remaining provisions
or
rendering any other provision of this Agreement invalid, illegal, or
unenforceable.
10.12 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, and all of which, taken together, shall constitute one
document. Facsimile and facsimile signatures shall be deemed originals in all
cases.
10.13 Force
Majeure.
No
party hereto shall be liable for failures or delays in performance hereunder
due
to fire, explosion, breakdown of plant, lockout, labor dispute, casualty or
accident, lack or failure of source of supply of labor, raw materials, power
or
supplies, acts of God or the public enemy, interference by civil or military
authority, compliance with laws of any governmental authority, or any other
cause beyond the control of the party in question.
[The
remainder of this page is intentionally blank.]
Page
14 of
15
IN
WITNESS WHEREOF,
each of
the parties hereto has caused this Agreement to be signed as of the date first
written above.
|
▇▇▇▇▇▇
SCIENCE INC.
|
▇▇▇
BIOTECH, LLC
|
||||||||
|
By:
|
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. | ||||||
|
Name:
|
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇.
|
||||||
|
Title:
|
President and CEO |
Title:
|
Managing Member | ||||||
|
ASA
OPPORTUNITY FUND L.P.
|
ONBIO
CORPORATION
|
||||||||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. |
By:
|
/s/ ▇▇▇▇▇-▇▇▇▇ Noh | ||||||
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇.
|
Name:
|
▇▇▇▇▇-▇▇▇▇
Noh
|
||||||
|
Title:
|
Managing Member of General Partner |
Title:
|
President | ||||||
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
/s/
Zhonghua Chen
|
||||||||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
Zhonghua
Chen
|
||||||||
|
/s/
▇▇▇▇▇ ▇▇▇▇
|
/s/
▇▇▇▇▇-▇▇▇▇ ▇▇▇
|
||||||||
|
▇▇▇▇▇
▇▇▇▇
|
▇▇▇▇▇-▇▇▇▇
Noh
|
||||||||
|
/s/Kang
Du
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
||||||||
|
▇▇▇▇
Du
|
▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇
|
||||||||
Page
15 of
15