Exhibit 10.3
EXCLUSIVE SUB-LICENSE AGREEMENT
This Exclusive Sub-License Agreement ("Agreement") is made, as of July
29, 2003, by and among Applied DNA Sciences, Inc., a Nevada corporation, having
its principal offices at 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxx,
Xxxxxxxxxx 00000 (hereinafter referred to as "APDNA" or the "Company"); Biowell
Technology Inc., a company duly incorporated and organized under the laws of
Taiwan, Republic of China, ("ROC), having its principal office at 00X, Xx. 000,
Xxxxx-Xxxxx Xx., Xxxxx-Xx Xxxx, Xxxxxx Xxxxxx, Xxxxxx, 235 ROC, (hereinafter
referred to as "Biowell"); and G.A. Corporate Finance, Ltd., a British
corporation, having its principal offices at 00 Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx, Xxxxxx Xxxxxxx XX0 X0XX (hereinafter referred to as "UK Licensee""),
all which may be referred to as a "Party" or collectively as the "Parties."
RECITALS:
1. APDNA is in the business, inter alia, of providing DNA-embedded security
solutions for the prevention of fraud, forgery and counterfeiting of products
and intellectual property by utilizing a patented line of biotechnology
products.
2 UK Licensee is in the business, inter alia, of developing existing sales and
distribution networks and establishing new networks, with specific focus on
businesses in market segments in the United Kingdom, which segments shall be
explored and further defined by the parties as the development process
progresses.
3. Biowell is a biotechnology company; having developed products such as DNA
based anti-counterfeiting technologies, and owns the rights to patents and
patent applications covering several aspects of the technologies.
4. APDNA holds an exclusive license from Biowell Technologies, Inc.("Biowell")
to sell and distribute its technologies in various international territories
pursuant to that certain Technology Exclusive Licensing Agreement, dated October
8, 2002, between APDNA and Biowell (the "Licensing Agreement").
5. APDNA desires to expand the geographical reach of its business activities and
the distribution of its products to include the United Kingdom (hereinafter
referred to as the "UK" or the "Region").
6. UK Licensee desires to provide APDNA sales and distribution channels for
intensive marketing of APDNA's products through UK Licensee's current and future
sales networks to business customers in the Region.
7. APDNA and UK Licensee desire to enter into this Agreement in order to set
forth their respective rights and obligations with respect to the distribution
and marketing of APDNA's products in the Region.
DEFINITIONS
Unless the context requires otherwise, whenever used in this Agreement,
the following terms and expressions shall have the following meanings:
"Accepted New Product" shall mean a new product that has successfully
achieved its Minimum Guarantee by the conclusion of the required New Product
Initial Exclusive Term, after which, a New Product License shall be granted and
will subject to the terms and conditions of this Agreement.
"Agreement" shall mean this agreement including its Exhibits, as it may
be amended from time to time only by written agreement of all parties.
"APDNA Products" means Products manufactured by APDNA or Biowell.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the city of Taipei and New York are authorized by law
to close.
"Business Methods" refers to business methods developed, licensed to,
and/or owned by Biowell relating to the Technology and Products.
"Collaborative Technologies" means any technology or product developed
by APDNA and/or Biowell and UK Licensee or as a result of the collaborative
efforts of APDNA and/or Biowell and UK Licensee.
"Company" shall mean APDNA
"Confidential Information" includes all information, whether written or
oral, in whatever form disclosed, concerning any technologies, products,
developments, business methods, business plans, marketing, investment,
management, financial and other business affairs in connection with all matters
relating to or arising out of this Agreement, including without limitation the
Technology, the Business Methods and Know How.
"Customers" means any natural or legal person(s) or entities primarily
solicited by UK Licensee under this Agreement in the Territory.
"Delivery Date" shall mean the date specified by UK Licensee pursuant
to a Purchase Order on which a Product or Product Material is required to be
delivered by APDNA to UK Licensee.
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"Float" means to list a subject company on an internationally
recognized stock exchange or listing service.
"Gross Revenues" shall mean any revenue generated by UK Licensee
directly or indirectly with respect to any Product of APDNA and/or Biowell,
whether from products sales, sub-licensing, etc.
"Intellectual Property Rights" shall mean:
(a) patents, designs, utility models, schemes, drawings, design
rights, copyrights, database rights, topography rights, trade
or service marks or names (whether or not registered) or any
similar rights in brands;
(b) applications for any of the foregoing and the right to apply
therefore in any jurisdiction;
(c) Know-How, trade secrets, proprietary and other Confidential
Information;
(d) domain name registrations; and
(e) all or any similar or equivalent rights arising or subsisting
in any jurisdiction.
"Know-How" means all technical, operational and commercial Confidential
Information (including but not limited to Confidential Information relating to
product development, business plans, business models, marketing, and other
business affairs of the disclosing party) required for the exploitation of
Technology or related to the Products, and including such Confidential
Information as may relate to any Intellectual Property therein.
"Licensed Products," means Products as described in Exhibit 3
manufactured by UK Licensee incorporating Product Materials.
"Maintain its Markets" means when UK Licensee achieves revenues equal
to or greater than the Minimum Guarantees outlined in the Agreement during a
specified time period.
"Minimum Guarantee" shall mean the minimum quantity of business volume
to be generated by UK Licensee on behalf of APDNA as further described in
Section 1.3 and the attached Exhibit 2.
"Net Profits" means Gross Revenue minus cost of goods.
"New Product" means any new Product introduced pursuant to Section 1.3.
"New Product Initial Exclusive Term" shall have the meaning set forth
in Section 1.3 .
"New Product License" shall have the meaning set forth in Section 1.3.
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"Product" means either Licensed Product or APDNA Product, as the
context requires, as specified in Exhibit 3 attached hereto. Products in Exhibit
3 are also referred to as the "Initial Product Line."
"Product Materials" means any and all raw materials required to
manufacture the Licensed Products for resale in the Territory.
"Purchase Order" shall mean an order for APDNA Products that UK
Licensee submits and APDNA accepts. All Purchase Orders will be gathered and
controlled by the terms of this Agreement unless otherwise agreed to in writing
by UK Licensee and APDNA.
"Technology" means all technology underlying the Licensed Products.
"Territory" means the territories specified in Exhibit 1.
"Unlicensed Territory" means any territory not included in Exhibit 1 of
this Agreement.
1. Grant of Exclusive Right
1.1 Subject to the terms and conditions of this Agreement and for so long
as UK Licensee is in compliance with all of its obligations hereunder
and APDNA has a valid license from Biowell, APDNA hereby grants an
exclusive right (solely as stated in clauses (a) and (b) hereof) for UK
Licensee to: (a) manufacture the Products using only Product Materials
purchased from APDNA or its authorized designees for resale in the
Territory; and (b) resell the Products, either purchased from APDNA
directly or manufactured by UK Licensee using Product Materials
purchased from APDNA, in the Territory (collectively, "Exclusive
License"). UK Licensee shall purchase Product Materials only from APDNA
or its authorized designees. The parties understand that the
exclusivity of the manufacturing arrangement requires that UK Licensee
give an undivided priority of the highest loyalty to the Products in
all business endeavours. Notwithstanding anything to the contrary
stated herein, no express or implied licenses of any type for the
Technology, except as expressly stated in (a) and (b) above, shall be
granted to UK Licensee. APDNA represents that it has a valid license
with Biowell and is in the process of exercising a Note for the five
year license fee in the License Agreement and will forward such note to
UK Licensee upon its completion.
1.2 Notwithstanding anything to the contrary stated herein, APDNA reserves
the right to enter into a world wide agreement to sell or license its
products and services to an international customer. In the event of
such an international sale, the UK Licensee shall be entitled to a fee
of 20% of Net Profits generated from such sale, when received by APDNA,
if the corporate headquarters of that international customer is solely
based in the Territory. If UK Licensee is the direct source of such
customer agreement, fees will be shared as outlined in section 3 under
"Revenue Sharing." UK Licensee may also purchase finished Products from
APDNA for resale in the Territory under the procedures otherwise set
forth in this Agreement.
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1.3 Upon the terms specified in this section, APDNA shall sub-license any
new improvements, modifications or alterations related to the Products
in this Agreement to UK Licensee (each, a "New Improvement License").
Subject to the terms of this Agreement, APDNA shall also grant an
exclusive license to market every new anti-fraud product developed by
Biowell (to the extent it may contractually do so) and APDNA while this
Agreement remains in effect ("New Product License", which term shall
also include New Improvement Licenses as the context so requires). Such
New Product License shall remain exclusive for eighteen months after
the date UK Licensee's New Product License Application has been
accepted (New Product Initial Exclusive Term"), upon which acceptance,
Licensee can sell such New Product in the Territory. In order to
maintain the exclusivity of such New Product License in UK Licensee's
Territory for the eighteen month period, UK Licensee must provide APDNA
with generated Gross Revenues for every such New Product amounting to
US$100,000.00 ("Minimum Guarantee for New Products") during the first
eighteen months. Licensee is required to increase its sales by 20%
annually for the second full year after the initial eighteen month
period, and an additional 20% for each of the third, fourth and fifth
years after the eighteen month period, in order to keep its exclusive
license for any New Products. (See Exhibit 4). After the end of the
fifth year, these New Products will become subject to all other terms
and conditions of the Agreement.
1.4 APDNA shall provide reasonable telephonic and electronic mail
("e-mail") customer support to UK Licensee (only to UK Licensee and not
to UK Licensees agents, vendors or customers) on an as needed basis,
during APDNA's regular business hours. APDNA shall appoint a liaison to
communicate with UK Licensee, and UK Licensee shall funnel its
inquiries through such appointed liaison so as to minimize any
disruption to the staff of APDNA. UK Licensee agrees to provide APDNA
with timely written notification containing specific details of
problems to enable APDNA to diagnose and remedy any matters brought to
its attention regarding such problems. This provision is not a full
warrantee of the Products and is merely a reasonable efforts
requirement upon APDNA.
1.5 UK Licensee may wish to build lab(s) in its Territory, at its own cost,
for the purpose of analyzing, testing and/or manufacturing Licensed
Products, and APDNA agrees at its own discretion and at UK Licensee's
cost, to assist UK Licensee by providing UK Licensee with reasonable
professional guidance, technical support and training; the terms and
conditions of which guidance, support and training will be subject to
an additional written agreement between. A minimum fee to APDNA of
$250,000 shall be paid by UK Licensee for providing the support
necessary to construct a laboratory
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2. Term
2.1 Unless otherwise terminated in accordance with the terms of this
Agreement, this Agreement shall be effective as of the date of
execution of this Agreement, and shall remain in effect for 5 (five)
calendar years following the execution of this Agreement ("Initial
Term"). In the event that UK Licensee complies with all of the Minimum
Guarantee targets described in Exhibit 2 and is not otherwise in
default under the terms of this Agreement, this Agreement shall be
automatically renewed for five calendar years following the Initial
Term ("Second Term"). If during the Second Term, UK Licensee fails to
comply with the Minimum Guarantee target set forth in Exhibit 2 in any
calendar year during such Second Term, then UK Licensee shall forfeit
its exclusive license granted in Section 1 for the Products that failed
to comply with the Minimum Guarantee. If all Products fail to meet the
Minimum Guarantee, APDNA reserves the right to terminate this Agreement
with immediate effect by giving written notice to UK Licensee. APDNA,
at its sole discretion, can determine whether or not UK Licensee may
then continue selling Products on a non-exclusive basis it its
territory. APDNA may elect to retain UK Licensee on this basis until
APDNA re-sells (sublicenses) the UK Territory.
2.2 In the event of circumvention, of this Agreement by either party,
directly or indirectly; the circumvented party shall be entitled to a
legal and monetary penalty equal to the maximum benefit it would have
realized from such a transaction had the circumventing party not
circumvented the relationship set forth in this Agreement plus any and
all expenses including but not limited to all costs and expenses
incurred to recover the lost revenue.
2.3 To the extent an affiliate of APDNA or another third party known to
APDNA introduces any clients to UK Licensee (either leads already
identified by APDNA or to be identified in the future); such party
shall receive a minimum referral fee equal to 10% of the Net Profits
received by UK Licensee from such clients.
3. Price and Payment
3.1 In connection with the appointment of UK Licensee as APDNA's licensee
hereunder, UK Licensee shall within 45 days from the effective date of
this Agreement pay APDNA a one-time nonrefundable discounted franchise
fee of Three Million U.S. Dollars (US$3,000,000) ("Fee"). The Fee,
represents the full, final and complete consideration payable by UK
Licensee to APDNA in consideration for the distribution rights granted
hereunder. The Fee shall be payable by UK Licensee to APDNA by wire
transfer pursuant to instructions to be provided by APDNA as follows:
$25,000 shall be due and payable upon execution of this Agreement, and
APDNA will hold a promissory note ("Note") for $2,975,000, which shall
bear interest at a rate of 5% per
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annum and shall be payable over a five year period with payments of
unpaid principal and accrued interest thereon at a rate of 15% of UK
Licensee's Net Profits, as received by UK Licensee. The form of
interest bearing Note is attached hereto as Exhibit 8. Any amounts not
paid during the term shall be immediately due and payable at the end of
the initial five year term; provided, however, that as long as UK
Licensee continues meeting its Minimum Guarantee requirements at the
end of the five (5) year period and makes payments on the Note, the
five (5) year term shall be extended for another five (5) years.
3.2 Interest.
(i) APDNA intends to form a New International Subsidiary sometime in
2003. APDNA desires to Float this company on a recognized Stock
Exchange but does not guarantee this event will take place ("New Public
Company"). If this event does take place, the UK Licensee shall be
required to and agrees to comply in exchanging the shares of the UK
Licensee's entity for new shares in the New Public Company. The number
of shares that the UK Licensee's entity (to be formed by UK Licensee)
shall receive in the New Public Company will be based upon a
proportional share of his/her/its investment, in licensing the UK
market, to the overall total investment amounts of the other Entities
that will be involved in the New Public Company. The valuation of such
investment and any other valuations either specifically required in
this Agreement or practically required by the nature of the
transactions set forth herein shall be approved by or made by APDNA in
its sole discretion. When the UK Licensee exchanges his shares for
shares in the New Public Company, they will be exchanged as follows:
70% of the UK Licensee's entity exchanges shares in the New Public
Company will go to the UK Licensee's entity, and 30% of the UK
Licensee's entity exchanged shares in the New Public Company will go to
APDNA.
(ii) This issuance of the shares by the APDNA New Subsidiary shall be
executed in full accordance with any rules or laws imposed by any
applicable regulatory body and those existing under the U.S. Securities
Laws. Furthermore, the APDNA New Public Company shares issued will be
duly authorized, validly issued and outstanding, fully paid and
non-assessable and will not be subject to any liens or encumbrances. At
such time as this event takes place the revenues from the UK Licensee's
entity will flow as follows: 5% of the Net Profits generated by the UK
Licensee in its territory will remain with the original UK Licensee
(s), 20% will flow to APDNA and 75% will flow to the New Public Entity.
(iii) UK Licensee shall receive 80% of the Net Profits that he
generates prior to the International Subsidiary going public. 20% of
the Net Profits generated by the UK
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Company (formed by UK Licensee) prior to the Subsidiary going public
will go to APDNA, the US Company. These payments will be made quarterly
based upon Net Profit.
(iv) If UK Licensee sells products, services or rights, or otherwise
generates revenue, in a territory outside of the Region, and if that
outside territory has not yet been licensed by APDNA, UK Licensee shall
receive 40% of the Net Profits from the initial sale, and APDNA shall
receive 60% until such territory is sold by APDNA. UK Licensee. If the
outside territory/franchise has been sold or licensed by APDNA, UK
Licensee shall receive a referral fee of 10% of the Net Profits in year
one and two. Any years following the UK Licensee will receive a 5%
override for the next three years, and 2% thereafter. UK Licensee shall
not sell products outside of its territory without prior written
consent of APDNA.
3.3 The prices charged by APDNA for Products and Product Materials shall be
those set forth as Exhibit 5. All prices are FOB Taiwan or the United
States and payment to APDNA from UK Licensee shall be due thirty
calendar days after delivery of the relevant Products and Product
Material to the carrier for shipment to UK Licensee. Prices are
exclusive of costs of transportation, insurance, taxes, customs,
duties, landing, storage and handling fees, and/or documents or
certificates required for exportation or importation, which will be
separately itemized and billed to UK Licensee in accordance with this
Section 3.3. All Parties agree to negotiate a fee for APDNA Product and
Product Materials that will make the UK Licensee commercially
competitive in the Territory with any other potential competition that
may arise over the period. This competitive rate should not be
increased more than the previous calendar years published inflation
rate in the United States or 10 percent, whichever is higher, without
the consent of the UK Licensee.
3.4 No amounts payable to APDNA pursuant to the Agreement may be reduced
due to counterclaim, set-off, adjustment or other right that UK
Licensee may have against APDNA unless the UK Licensee has received
defective product at which time APDNA will be obligated to rectify this
situation in accordance with the relevant terms of this Agreement. Any
payment not made within the due date specified in each relevant
Purchase Order shall bear interest at a rate equal to the rate
specified in the relevant Purchase Order affected by the late payment.
3.4 APDNA reserves the right to request from the UK Licensee a cash deposit
or irrevocable letter of credit in a form to be approved by APDNA and
issued by a bank
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acceptable to it in an amount not exceeding the total credit extended
by APDNA for each Purchase Order, provided that APDNA reserves the
right to obtain an increase in the amount of the letter of credit in
its sole discretion (the "Letter of Credit"). UK Licensee agrees to
continuously renew or replace the Letter of Credit, as necessary, to
keep it in effect during the term of APDNA's extension of credit to UK
Licensee under any Purchase Order and shall within ten (10) Business
Days of any draw down on the Letter of Credit by APDNA, replenish any
amounts drawn down so that the amount of the Letter of Credit never
falls below the amount set forth in this Section, as the same may be
increased pursuant to this Section. Nothing contained herein shall
limit or be interpreted to limit APDNA's right to remedies against UK
Licensee for breaches by UK Licensee of its obligations hereunder.
4. Board of Advisor and Consultant
4.1 An authorized member or nominee of APDNA will have the right to serve
in an advisory capacity to UK Licensee, and will have the right to
receive notice of and participate in the meetings of the board of
director of UK Licensee without voting powers.
4.2 APDNA may form a new International consortium of which UK Licensee will
have the right to have a representative as a member.
5. Obligations
5.1 UK Licensee will source, solicit, and attract potential customers in
the Territory for purchasing. Products either made by UK Licensee using
Product Materials or purchased directly from APDNA and UK Licensee
shall promote, market, and extend the sale of the Products in the
Territory to potential customers in the Territory. UK Licensee shall
not bind APDNA to any express or implied legal obligation with any
third parties, including UK Licensee's customers, while UK Licensee is
utilizing its license under this Agreement. UK Licensee shall market,
promote, and resell the Products on its own behalf and not as an agent
or representative of APDNA.
5.2 UK Licensee will perform any and all post-sale servicing of any type
for customers. APDNA shall not perform any support services to UK
Licensee's customers unless all parties agree otherwise in writing.
5.3 If any dispute arises in the Territory involving APDNA under this
Agreement, UKLicensee will use its best endeavors to limit the
potential damages to APDNA that could be caused by the dispute.
Further, UK Licensee will inform APDNA without undue delay of the
nature of the dispute and comply with all reasonable directions of
APDNA in relation thereto.
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5.4 Subject to APDNA's prior written approval, UK Licensee shall have the
right to sub-license in its Territory in accordance with this Section
5.4. Specifically, UK Licensee shall have the right to authorize any
third party to receive or utilize any benefit derived by UK Licensee
under this Agreement. Each such authorization or sub-licensing must be
approved by APDNA and any resulting agreement must be co-signed by
APDNA. APDNA shall be reasonable with any such request. Any new UK
Licensee shall comply in all respects with the same restrictions placed
on UK Licensee by APDNA in the original sub- license. Nothing hereunder
shall relieve UK License from its obligations under this Agreement,
including, but not limited to, its obligations under Section 6.
6. Indemnity
Each Party ("Indemnifying Party") will indemnify, defend, and hold the
other Party, its officers, successors, assigns, directors, agents,
employees, and affiliates ("Indemnity Parties") harmless from and
against any and all liabilities, damages, losses, expenses, claims,
demands, suits, fines or judgments, including reasonable attorney fees,
costs and expenses incidental thereto, which may be suffered by,
accrued against, charged to or recoverable from the Indemnity Parties,
arising out of any third party claim resulting from a breach of this
Agreement or performance of its duties and rights hereunder. Promptly
after receipt by the Indemnity Parties of a threat of any action, or a
notice of the commencement or filing of any action against which the
Indemnity Party may be indemnified hereunder, the Indemnity Party shall
give written notice thereof to Indemnifying Party. Indemnifying Party
shall have sole control of the defense and of all negotiations for
settlement of such action. The indemnity provided herein shall not
apply if the alleged claim arises from any action or inaction however
attributable to Indemnity Parties. UK Licensee specifically indemnifies
APDNA from any third party claims resulting directly or indirectly from
its marketing and sales of Product to third parties.
7. Product and Product Materials Ordering Procedure, Forecasts, Change
Orders and Cancellation
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7.1 APDNA, within the limitations contained in this Agreement, agrees to
use best efforts to sell to UK Licensee, such quantities of Product and
Product Materials as UK Licensee may order in accordance herewith.
7.2 Subject to the terms and conditions of this Agreement, APDNA hereby
agrees to sell and UK Licensee agrees to purchase the Products and
Product Materials during the term of this Agreement.
7.3 UK Licensee agrees to meet the relevant as set forth in Section 1.3 and
Exhibit 2 attached to this Agreement for each relevant sales period
described in Section 1.3 and Exhibit 2. Failure to meet the Minimum
Guarantee on any single occasion constitutes a material breach of this
Agreement permitting APDNA to terminate this Agreement after written
notice has been given to the UK Licensee, provided that upon any such
failure to meet the relevant Minimum Guarantee, APDNA may either (i)
provide UK Licensee with a period in which to cure such breach, (ii)
make the license set forth herein non-exclusive or (iii) otherwise
terminate this Agreement, and the decision of APDNA to follow any one
of (i) - (iii) s at its sole discretion.
7.4 Approximately thirty (30) Business Days prior to the first calendar day
of each calendar month during the term of this Agreement, UK Licensee
will provide APDNA with a [six (6)] month forward-looking rolling
forecast for internal planning requirements (the "Forecast"). UK
Licensee shall provide the first of such Forecast three (3) months
after the execution date of this Agreement.
7.5 Purchases shall be initiated by UK Licensee's written or electronically
dispatched Purchase Orders referencing the quantity, the Product,
applicable price, shipping instructions and requested Delivery Dates.
All Purchase Orders for Products and Product Materials placed by UK
Licensee hereunder shall be governed by the terms and conditions of
this Agreement. In the event of a conflict between the provisions of
this Agreement and the terms and conditions of UK Licensee's Purchase
Order or APDNA's acknowledgement or other written or oral
communications, the provisions of this Agreement shall prevail and any
such conflicting terms and conditions are hereby rejected. APDNA shall
use reasonable efforts to fill orders promptly, but shall not be liable
for any damages (consequential or otherwise) to UK Licensee or any
third party for failure to fill any orders, or for any delay in
delivery or error in filling any orders. APDNA will use its best
efforts to accept each Purchase Order issued by UK Licensee. APDNA will
ship all Product within the Lead Time set forth therein unless UK
Licensee's Purchase Order specifically states a delivery schedule for
Product different from such lead time and such delivery schedule is
accepted in writing by APDNA.
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7.6 Purchase Orders issued by UK Licensee shall, to the extent necessary
for APDNA to fulfill the terms thereof, include: (i) description of
Products and Product Materials, (ii) quantity of Products and/or
Product Materials, (iii) price per unit of Products and Product
Materials (iv) total order price, (v) Delivery Date, and (vi) delivery
location. Except as otherwise explicitly provided in this Agreement,
any changes to or rescheduling of an accepted Purchase Order must be
mutually agreed and incorporated into a written Change Order
referencing the original Purchase Order.
7.7 Within ten calendar days of its receipt of the Purchase Order, Licensor
must send written notice to UK Licensee for acceptance of the order
("Confirmation");
7.8 All Products delivered to UK Licensee shall be FOB (Taipei, Taiwan, or
the United States) or other place of shipment as specified in writing
by UK Licensee and agreed to by APDNA. APDNA may ship partial orders
provided that APDNA notifies UK Licensee and UK Licensee agrees to the
partial order prior to shipment. UK Licensee's Purchase Order shall
specify the carrier or means of transportation or routing, and APDNA
will comply with UK Licensee's instructions. If UK Licensee fails to
provide shipping instructions, APDNA shall select the best available
carrier, on a commercially reasonable basis.
7.9 Any modification to a Purchase Order shall be made in writing by an
authorized representative of UK Licensee ("Change Order") and sent to
APDNA, and such Change Order shall be subject to acceptance in writing
by APDNA and shall not be binding until such acceptance.
8. Non-competition and Non-solicitation
8.1 During the term of this Agreement APDNA shall not solicit Customers
solely developed by UK Licensee ("the UK customers or approved
customers outside of the Region.") Upon any termination of this
Agreement, the above restriction shall apply for a period of thirty
days with the exception of customers under contract to receive Product
from APDNA. APDNA shall be entitled to a detailed and exhaustive list
of all contact information of any and all Customers under contract to
receive APDNA Products as well as prospective customers with which UK
Licensee is negotiating. This list must be delivered to APDNA within
five Business Days of the date of termination of this Agreement.
8.2 Customers of the UK Licensee are the sole property of the UK Licensee
and are not under any restraints or conditions implied by APDNA and
will not be contacted or solicited by APDNA for a period of thirty days
following any termination or dissolution of this agreement.
8.3 UK Licensee and APDNA shall not, without the prior written consent from
the other party directly or indirectly (including without limitation,
through any Affiliate of either
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party), (i) solicit or request any person who is at the time an
employee of or a consultant of the other party to leave the employment
of or terminate such person's relationship with that party or (ii)
employ, hire, engage or be associated with, or endeavor to entice away
from the respected party any such person.
8.4 UK Licensee or APDNA shall not, directly or indirectly (including
without limitation, through any Affiliate of either party) (i) solicit
any existing customer of either party or any entity that shall have
been a customer of that party at any time within twelve (12) months of
terminating this agreement to cease doing business in whole or in part
with that party (ii) intentionally attempt to limit or interfere with
any business agreement or relationship existing between either party
and/or its Affiliates with any third party; or (iii) disparage the
business reputation of the party (or its management team) or take any
actions that are harmful to the party's goodwill with its customers,
providers, vendors, employees, the media or the public.
9. Confidentiality
9.1 UK Licensee shall not use or divulge or communicate to any person
(other than those whose province it is to know the same or as permitted
or contemplated by this Agreement or with the written approval of the
other party or as may be required by law):
(i) any Confidential Information ; or
(ii) any of the terms of this Agreement
9.2 UK Licensee shall prevent the unauthorised publication or disclosure of
any such information, materials or documents and ensure that any
person, subject to the written approval of APDNA, to whom the
information, materials or documents are disclosed, is aware that the
same is confidential and is covered by a similar duty to maintain
confidentiality.
9.3 UK Licensee shall ensure that its employees are aware of and comply
with the confidentiality and non-disclosure provisions contained in
this Section and shall indemnify APDNA against any loss or damage which
APDNA may sustain or incur as a result of any breach of confidence by
UK Licensee's employees. APDNA also specifically has the right to seek
injunctive relief as a remedy to a breach of Article 9.
10. Reservation of Rights
10.1 APDNA reserves the right at any time:
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( i ) to make modifications or additions to the Technology,
Product Materials, and Products in respect to any designs as APDNA may
in its discretion determine; and such modifications or additions will
be automatically granted to the UK Licensee and will be considered an
improvement to the licensed product line;
(ii) to discontinue selling Product Materials and Products if
those products or parts therefore are discontinued or replaced except
for those Products and Product Materials accepted to be delivered under
a confirmed purchase order;
(iii) to require UK Licensee to obtain advance written
approval from APDNA on all advertising and promotional material prior
to any printing, email distribution or publication. The UK Licensee
reserves the right to cease using APDNA advertising or promotional
material in respect to the Product Materials and Products if it
considers such material to be not in its best interests to use. UK
Licensee must notify APDNA, in writing, thirty days in advance, and
present APDNA with its alternative advertising or promotional material,
and APDNA shall have final approval of such material; and
(iv) to require UK Licensee to obtain advance written approval
from APDNA prior to Sub-Licensing any of its Territory.
11. Legal Relationship
11.1 Nothing herein shall contain any facts as to suggest that APDNA and UK
Licensee are engaging in a joint venture or partnership. UK Licensee
shall have no authority to bind APDNA in any legal obligation. UK
Licensee shall only contract with customers on its own behalf.
12. Termination
Notwithstanding anything else contained herein, this Agreement may be
terminated as set forth
12.1 APDNA may terminate this Agreement if the UK Licensee: (a) sells,
assigns, attempts to sell or assign, or ceases to carry on, its main
business or the business related to this Agreement unless parties
mutually agree otherwise; (b) fails to meet any Minimum Guarantee
target (not including the relevant Minimum Guarantee for New Products
under Section 1.3, which shall be subject to Section 13.6) during the
then current term of the Agreement; or (c) fails to comply with any of
its obligations under this Agreement;
14
12.2 Immediately by APDNA if the control of UK Licensee has been transferred
without the prior written approval of APDNA which approval shall not be
unreasonably denied;
12.3 Immediately by either if the other party becomes insolvent or starts
negotiations about re-composition with its creditors or a petition in
bankruptcy is filed by or against it or it makes an assignment for the
benefit of its creditors with any proceeding not being dismissed within
60 days thereafter;
12.4 By either party after having given 60 days notice in writing to the
other party if the other party breach any of its material obligations
under this Agreement and such breach is not cured within the
above-mentioned period;
12.5 With regard to the license granted hereunder, UK Licensee shall not be
entitled to any compensation or reimbursement for its Fee (whether for
loss of distribution rights, goodwill or otherwise) as a result of the
termination of this Agreement in accordance with its terms. If, for any
reason, the Agreement is terminated, any outstanding royalties will be
prorated and paid by UK Licensee within 90 days, upon collection. (See
Section 7, Indemnity).
12.6 Except as otherwise stated herein, in case APDNA has ground(s) to
terminate this Agreement because UK Licensee had failed to meet any
Minimum Guarantee target (not including the relevant Minimum Guarantee
for New Products under Section 1.3) during the then current term of the
Agreement, APDNA (in addition to asserting any legal right and remedy
at law or in equity) shall have the right to terminate the Exclusive
License granted in this Agreement in which case such Agreement shall
remain effective to the extent that UK Licensee shall remain as a
non-exclusive licensee (the right to so remain a licensee on a
non-exclusive basis being at the sole discretion of APDNA), with the
same shipping terms and conditions and the same price for Products for
existing Customers as of the date of termination, but price for the
Products may be increased by up to 10% for new Customer orders only in
year one. Prices may be increased at the sole discretion of APDNA in
years going forward. APDNA agrees to act in good faith in making its
products competitively priced for the UK Licensee. All other terms and
conditions shall be subjected to the Parties' agreement. For the
avoidance of any doubt, such right to remain as a non-exclusive
licensee shall not be available to UK Licensee in the event that APDNA
terminates this Agreement for any other reason specified in this
Agreement.
15
12.7. UK Licensee shall have any time period otherwise set forth herein to
remedy/cure any potential breach or violation of terms in this
Agreement from the date it receives written notification by courier or
US mail. APDNA hereby may grant, in its sole discretion, to UK Licensee
a special termination-option to convert its UK Licensee designation to
that of a non-exclusive manufacturer in the event of a non-curable
breach. As an alternative to forced termination, UK Licensee may, at
its own discretion, exercise this option prior to the initiation of
termination. UK Licensee shall have this option available, in lieu of
termination for any reason and at its sole discretion, to become a
non-exclusive manufacturer of APDNA and/or a UK Licensee for the
Products and Technology in the Territory on such terms and conditions
to be determined by the parties.
13. Effect of Termination
Upon the termination of this Agreement:
13.1 All rights and obligations of the parties hereunder shall automatically
terminate except for such rights of action as shall have accrued prior
to such termination and any obligation which expressly or by
implication are intended to come into or continue in force on or after
such termination.
13.2 UK Licensee shall, at its own expense, return to APDNA or otherwise
dispose of as APDNA may instruct, all technical and promotional
materials and other documents and papers whatsoever sent to UK Licensee
and relating to the Technology, Product Materials and Products or the
business of APDNA (other than correspondence between the parties) and
all property of APDNA in UK Licensee's possession or under its
control., unless UK Licensee is acting as a non-exclusive sub-licensee.
13.3 Any and all sub-licences granted by UK Licensee must be turned over to
APDNA. At its sole discretion, APDNA may allow UK Licensee to maintain
its sub-licenses, but decisions will be made on a case by case basis.
13.4 UK Licensee will be entitled to any fees due and or commissions from
existing customers for sales consummated for a period on 12 months
following the termination of this Agreement.
13.5 If, for any reason, APDNA should lose its exclusivity with Biowell,
Biowell shall honor this Sub-License Agreement for the remainder of its
term so long as Sub-Licensee meets its Minimum Guarantees, as defined
herein, in its Territory.
14. Exclusion of Liability
14.1 Except as set out in this Agreement or to the extent prohibited by law,
all conditions, warranties and representations, expressed or implied by
(i) statute, (ii) civil code or (iii) otherwise, in relation to any
Technology, Product Materials and Products, are excluded by APDNA.
16
14.2 Except as otherwise provided in this Agreement, APDNA shall not be
liable to UKLicensee, whether for negligence, breach of contract,
misrepresentation or otherwise, for:
(a) loss or damage incurred by UK Licensee as a result of third
party claims (whether in relation to Intellectual Property Rights
or otherwise); or
(b) indirect or consequential damage suffered by UK Licensee,
including, without limitation, loss of profits, goodwill, business
opportunity or anticipated saving.
14.3 APDNA shall not be liable for any loss, damages, expenses or
liabilities arising from an infringement or claim of infringement of
third party rights in the Intellectual Property Rights subsisting in
the Technology, Product Materials and Products howsoever arising in
connection with this Agreement.
14.4 APDNA warrants that all Products and Product Materials sold by APDNA to
UK Licensee under the terms of this Agreement will be materially free
from defects in workmanship and materials and substantially conform to
the relevant Specifications under normal use and service for a period
of 60 days after delivery to the carrier for shipment to UK Licensee.
Within five Business Days of UK Licensee's receipt of the relevant
Product Materials and Products, UK Licensee shall notify APDNA if any
Product Materials or Products contains a material defect in materials
or workmanship, or otherwise fails to conform materially to the
Specifications during the warranty period. APDNA shall correct, at its
own expense, any such defect by repairing such defective Product
Materials and Products or, at APDNA's option, by delivering to UK
Licensee an equivalent Product Materials and Products replacing such
defective Product Materials and Products. APDNA may inspect and verify
such alleged defect in the Territory and UK Licensee will need to ship
the alleged defective items to the United States or Taiwan within two
weeks of making such claims. If the product is found to be defective
APDNA will bear the costs of shipping. Such remedies for any breach of
warranty as listed in this Section 15.4 shall be the sole and exclusive
remedies available to UK Licensee at law or in equity.
14.5 WARRANTY EXCLUSIONS. APDNA SHALL NOT BE LIABLE UNDER ANY WARRANTY IF
ITS TESTING AND EXAMINATION DISCLOSES THAT THE ALLEGED DEFECT IN THE
PRODUCT OR PRODUCT MATERIAL DOES NOT EXIST OR WAS CAUSED BY UK
LICENSEE'S OR ITS END USER'S MISUSE, NEGLECT, IMPROPER INSTALLATION OR
TESTING, UNAUTHORIZED ATTEMPTS TO REPAIR, OR BY ACCIDENT, FIRE,
LIGHTNING OR OTHER HAZARD. APDNA MAKES NO OTHER WARRANTIES, EITHER
EXPRESS OR IMPLIED, INCLUDING OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, EXCEPT AS EXPRESSLY SET FORTH HEREIN.
17
14.6 APDNA will be liable for the product manufactured by APDNA or Biowell.
APDNA will cause such action to take place as necessary that will grant
the representative the rights to handle product liability for clients
in the territory. UK Licensee's customers are not required to go to
licensor directly to file a claim against product liability. UK
Licensee will handle the liability on behalf of the licensor. All
expenses in this matter shall be paid by licensor or licensor's insure.
14.7 EXCEPT FOR THE EXPRESS WARRANTIES CREATED UNDER THIS AGREEMENT AND
EXCEPT AS SET FORTH OTHERWISE IN THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS
AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED
ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE
OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED
OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE
LIMITED REMEDIES IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.
In no event shall the aggregate liability of APDNA in connection with
this Agreement, or any other materials or services provided under this
Agreement, whether arising in contract, tort or under any other legal
theory (including, without limitation, negligence or strict liability),
exceed the total value of the relevant Purchase Order.
14.8 UK Licensee will not pass through to its retailers or customers or any
other third party any warranties made by APDNA or Biowell hereunder and
will expressly indicate to its retailers or customers that they must
look solely to UK Licensee in connection with any problems, warranty
claims or other matters concerning the Product. APDNA will only warrant
what claims they have made publicly.
15. Intellectual Property Rights
15.1 All Intellectual Property Rights, including without limitation patents,
designs, utility models, copyrights trade or service marks, Know-How,
trade secrets and other proprietary information, in or relating to the
Technology, Product Materials and Products and any other products and
services related thereto are and shall remain the
18
sole and exclusive property of APDNA and Biowell. UK Licensee shall
have no right to obtain or grant any licenses with respect to the
Technology, Products, Product Materials, or any other related products
or services or any of the Intellectual Property Rights therein or
relating thereto, except as set forth herein. Furthermore, UK Licensee
may sub license its rights hereunder, with the prior written consent of
APDNA.
15.2 UK Licensee shall notify APDNA as soon as it receives any knowledge of
any illegal or unauthorized use of any of the Technology and Products
or any of the Intellectual Property Rights therein or relating thereto
and will assist APDNA (at APDNA's expense) in taking all steps
necessary to defend APDNA's rights therein.
15.3 UK Licensee shall not in any way: (a) modify, disassemble, decompile,
or reverse engineer the Technology, Product Materials, and Products and
any related products supplied hereunder; (b) transfer possession of any
Technology, Product Materials, and Products and any related products
supplied hereunder to another party, except as expressly permitted
herein; or (c) use the Technology, Product Materials, and Products and
any related products supplied hereunder in any way not expressly
provided for this Agreement. There will be no implied licenses.
15.4 Subject to the express prior written approval of APDNA, Sub- UK
Licensee must use the trademarks and logos of both APDNA and Biowell
for the sole purpose of marketing, reselling and promoting the Products
in the Territory under, and during the term of, this Agreement.
15.5 The provisions of this section 16 will survive the termination of this
Agreement.
16. General
16.1 UK Licensee and APDNA hereby agree to bring any matter not resolved in
good faith negotiations before an arbitrator in the State of
California. The Parties shall select an arbitrator from a list provided
by the American Arbitration Association.
16.2 This Agreement may be executed in any number of counterparts, each of
which will be an original but all of which together will form one
agreement. Delivery of an executed copy of this Agreement by facsimile
transmission will have the same effect as delivery of an original
signed counterpart.
16.3 The failure of either party hereto to insist upon the strict adherence
to any term of this Agreement on any occasion shall not be considered
as a waiver of any right hereunder
19
nor shall it deprive that party of the right to insist upon the strict
adherence to that term or any other term of this Agreement at some
other time.
16.4 UK Licensee, and not APDNA, will be responsible for all taxes and
expenses incurred in UK Licensee's business, including UK Licensee's
business with APDNA. If UK Licensee is required by law to make any
deduction or withholding from any payment due hereunder to APDNA, then,
notwithstanding anything in this agreement to the contrary, the gross
amount payable by UK Licensee to APDNA, will be increased so that,
after any such deduction or withholding for taxes, the net amount
received by APDNA will not be less than the amount that it would have
received had such deduction or withholding not been required.
16.5 UK Licensee agrees that all rights, commitments, grants, privileges,
fees, duties, any value will be automatically granted in whole to the
New International Subsidiary at such time as APDNA is ready to Float
the International Subsidiary on a recognized exchange of APDNA's
choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
two copies of which each has received one.
Applied DNA Sciences, Inc. G.A. Corporate Finance, Ltd. Biowell Technology Inc.
(for and behalf of)
By: /s/ Xxxxx Xxx By: /s/ Fredericck von Nidda By: /s/ Jun-Xxx Xxxx
Xxxxxxxx Xxx Xxxxxxxxx von Nidda, Director Jun-Xxx Xxxx
Title: President & CEO Title: CEO Title: CEO
Date: Date: Date:
20
Exhibit 1
UK Licensee Territory Application
The Region or Territory:
United Kingdom. In order to be considered UK-based, the entity's corporate
office and headquarters must be in the UK regardless of concentration of
worldwide sales. APDNA shall be the sole authority for the resolution of cross
territorial disputes, in its sole discretion.
21
Exhibit 2
UK Minimum Guarantee Targets for
Initial Product Line
To maintain the Exclusive License granted in this Agreement by APDNA to UK
Licensee, UK Licensee agrees to meet all of the following UK Licensee Minimum
Guarantee targets ("SL-MG-Target").
a) During the first anniversary of this Agreement, APDNA must receive at least
US$50,000.00 (net of any taxes or fees of any kind) from Purchase Orders
placed for Products or Product Materials by UK Licensee.
b) During the second anniversary of this Agreement. APDNA must receive at least
US$150,000.00 (net of any taxes or fees of any kind) from Purchase Orders
placed for Products or Product Materials by UK Licensee. Alternatively,
Licensee may meet this Minimum Guarantee for the second year by paying
US$150,000 to APDNA.
c) During the third anniversary of this Agreement, UK Licensee shall increase
the Minimum Guarantee amounting to US$300,000.00 (net of any taxes or fees
of any kind) from Purchase Orders placed for Products or Product Materials
by UK Licensee.
d) During the fourth anniversary of this Agreement, UK Licensee shall increase
the third year MG Target by at least twenty per cent to a minimum guarantee
of $360,000.00
e) During the fifth anniversary of this Agreement, UK Licensee shall increase
the fourth year MG Target by at least twenty per cent to a minimum guarantee
of $432,000.00.
f) During the sixth anniversary of this Agreement, APDNA must receive at least
US$475,200 (net of any taxes or fees of any kind) from Purchase Orders
placed for Products or Product Materials by UK Licensee.
g) During the seventh anniversary of this Agreement. APDNA must receive at
least US$522,720.00 (net of any taxes or fees of any kind) from Purchase
Orders placed for Products or Product Materials by UK Licensee.
h) During the eighth anniversary of this Agreement, UK Licensee shall increase
the Minimum Guarantee amounting to US$574,992.00 (net of any taxes or fees
of any kind) from Purchase Orders placed for Products or Product Materials
by UK Licensee
i) During the ninth anniversary of this Agreement, UK Licensee shall increase
the eighth year MG Target by at least twenty per cent to a minimum guarantee
of $632,491.00
j) During the tenth anniversary of this Agreement, UK Licensee shall increase
the ninth yearn MG Target by at least twenty per cent to a minimum guarantee
of $695,740.00.00.
22
k) In the event that UK Licensee complies with all of the Minimum Guarantee
targets described herein, the Agreement shall be automatically renewed for
five calendar years following the Initial Term ("Second Term"). If the UK
Licensee continues to maintain its markets and to abide by the terms and
conditions of this agreement than the UK Licensee will remain at a minimum
the non- exclusive distributor for APDNA`s products and all parties agree to
make all reasonable efforts to allow the UK Licensee to remain as the
Exclusive UK Licensee in its territories for a period of 20 years.
23
Exhibit 3
Initial Product Line
(1) BWACI-C001 Covert AC-Ink-I;
(2) BWACI-I001 Instant AC-Ink-I;
(3) BWACI-K001 Instant Ink Detection Kit
(4) BWACC-C001-I AC-Chip
(5) BWACC-R001-I AC-Chip Reader
(6) BWACL-I001 Instant detection DNA Label
(7) DNA/ACCESS ACCESS Security System
(8) BWACC-M001 DNA Anti-Counterfeiting Identification Chip Module Set (Basic
Model)
(9) BWACC-M002 DNA Anti-Counterfeiting Identification Chip Module Set
(Security Model)
(10) Applied DNA Textile Marker
24
Exhibit 4
Minimum Guarantee Targets for
New Products
(Not including Initial Product Line)
a) During the first eighteen month period, APDNA must receive at
least US$100,000.00 (net of any taxes or fees of any kind)
from Purchase Orders for each new product from UK Licensee.
b) During the second year (the twelve months following the
eighteen month period) APDNA must receive at least
US$150,000.00 (net of any taxes or fees of any kind) from
Purchase Orders for each new product from UK Licensee.
c) During the third year (the twelve months following the second
year) APDNA must receive at least $300,000.00(net of any taxes
or fees of any kind) from Purchase Orders for each new product
from UK Licensee.
d) During the fourth year (the twelve months following the third
year) APDNA must receive at least $360,000.00 (net of any
taxes or fees of any kind) from Purchase Orders for each new
product from UK Licensee.
e) During the fifth year (the twelve months following the fourth
year) APDNA must receive at least $432,000 (net of any taxes
or fees of any kind) from Purchase Orders for each new product
from UK Licensee.
If the UK Licensee achieves these minimum guarantees the new product will
fall under the terms and conditions of the original APDNA and UK Sub-License
Agreement. If they fail to meet minimum guarantees, APDNA can exercise its
right to sell this product directly into the UK market or to sub-license this
product to a third party.
25
Exhibit 5
Price for Products and Product Materials
(To be provided)
26
Exhibit 6
Representations and Warranties
(a) UK Licensee, individually, has full power and authority to enter into this
Sub-License Agreement, and this Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited
by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(b) UK Licensee and the Company represent to the other respective party that
it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the
Securities and the business, properties, prospects and financial condition
of the Company.
(c) UK Licensee further represents to the other respective party that it is an
UK Licensee in securities of companies in the development stage and
acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks
of the investment in the Securities. UK Licensee is an accredited investor
as such term is defined in Regulation D promulgated under the Securities
Act of 1933.
27
Exhibit 7
NEW PRODUCT LICENSE APPLICATION
Name of Date of Collaborative Technology
New Product Code Application Product (Yes or No)
----------- ---- ----------- -------------------
PRODUCT ADMITTED: ___________
PRODUCT DENIED: ___________
If Denied, state reason:
---------------------------------------------------------------------
Date New Product Initial Exclusive Term: _________________
Applied DNA Sciences, Inc. Biowell Technology Inc.
By:__________________________ By:__________________________ By:__________________________
Name: _______________________ Name: Xxxxx Xxx Name: Jun-Xxx Xxxx
Title: Title: President Title: Chairman & CEO
Date: ______, 200_ Date: ______, 200_ Date: ______, 200_
28
Exhibit 8
PROMISSORY NOTE
$2,975,000 July 29, 2003
FOR VALUE RECEIVED, G. A. Corporate Finance Ltd., the undersigned UK
Licensee, a business entity located at 00 Xxxxxxxxx Xxxxxx Xxxxxx, XX0X 0XX,
Xxxxxxx, promises to pay to the order of Applied DNA Sciences, Inc., at 0000 X.
Xxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX 00000 or such other place as the holder
may designate in writing to the undersigned, the principal sum of $2,975,000,
together with interest thereon from date hereof until paid, at the interest rate
of 5% per annum as follows: twenty (20) consecutive quarterly installments of
Principal and Interest in the amount equal to the lower of $185,937.50 or 35% of
Gross Revenues for that quarter (see breakdown below) due on the final day of
the quarter ended, commencing September 30, 2003 and ending June 30, 2008. If a
quarterly payment is only partially paid, the unpaid balance of that payment
will accrue to the following quarterly payment due without penalty. As long as
the Minimum Guarantees are met (see Exhibit 2 of the Exclusive License
Agreement) the Promissory Note shall be extended without penalty, through 2013.
Quarterly payments shall be applied first to accrued interest and the balance to
principal. Such payments are to be derived from 15% of UK Licensee's quarterly
Gross Revenues (including cash, sub-license fees, revenues from sales, etc.).
The combined quarterly payment AND the revenue sharing commitment of 20% as
defined in paragraph 3.2(iii), shall never exceed 35% of UK Licensee's Gross
Revenues. It is acknowledged by the parties that there are no "cost of goods"
associates with sub-licensing.
All or any part of the aforesaid principal sum may be prepaid at any time and
from time to time without penalty. Notwithstanding the foregoing, no such
prepayment may be made prior to September 30, 2003.
This Promissory Note is assignable by the UK Licensee, G. A. Corporate Finance
Ltd., upon written consent and approval of Applied DNA Sciences, Inc.
In the event of termination by the parties, the remaining payments due on this
Promissory Note will be cease to be due, however, any existing contracts with
customers that are held by UK Licensee, and any Gross Revenues derived
therefrom, shall be subject to paragraph 3.2(iii) revenue sharing as outlined in
the Exclusive Sub-License Agreement. In case suit or action is instituted to
collect this note, or any portion hereof, the maker promises to pay such
additional sum, as the court may adjudge reasonable, attorneys' fees in said
proceedings. Xxxxxxxxx von Nidda, the authorized signatory for G. A. Corporate
Finance Ltd., is hereby indemnified by Applied DNA Sciences, Inc. and shall not
be held personally liable on this Promissory Note.
This note is made and executed under, and is in all respects governed by, the
laws of the State of Nevada, in the United States of America.
G. A. Corporate Finance Ltd.
/s/ Xxxxxxxxx von Nidda
------------------------------
Xxxxxxxxx von Nidda
