Exhibit 10.1
EXCLUSIVE LICENSING AGREEMENT
This Exclusive Licensing Agreement ("Agreement") is made as of Oct. 8, 2002 by
and between 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 Applied DNA Sciences, Inc., a
corporation duly incorporated under the laws of the State of Nevada, United
States of America with principal office at 0000 Xxxx Xxxxxx Xxxx. Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, XXX ("Licensee"), either or both of which is referred
to as a "party" or the "parties.
RECITALS
A. Biowell has developed various technologies and know-how including, without
limitation, various DNA based anti-counterfeiting technologies
("Technology"), and owns the rights to patents and patent applications
covering several aspects of this Technology. In addition Biowell possesses
proprietary knowledge of the Technology. Biowell desires to license the
right to manufacture Licensed Products for Licensee to manufacture Licensed
Products in the Territory as defined in Exhibit 1 attached hereto using
materials purchased from Biowell. Biowell also desires to sell various
parts and components related to the Products to Licensee for Licensee to
manufacture the Licensed Products. Biowell also desires to sell finished
Biowell Products to Licensee.
B. Licensee desires to: (a) purchase materials to manufacture the Licensed
Products itself for sale in the Territory; or (b) purchase finished Biowell
Products from Biowell for resale in the Territory.
DEFINITIONS
Unless the context requires otherwise, whenever used in this Agreement the
following terms and expressions shall have the following meaning:
"Agreement" shall mean this agreement including its Exhibits, as it may be
amended from time to time by written agreement of both parties.
"Average Biowell Share Price" means the average closing price of Biowell
common shares as reported on the relevant national market exchange for each of
the [fifteen (15)] trading days immediately preceding the date of exercising the
Biowell Option.
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"Average Licensee Share Price" means the average closing price of Licensee
common shares as reported on the relevant national market exchange for each of
the [fifteen (15)] trading days immediately preceding the date of exercising the
Licensee Option.
"Biowell Option" means the option issued to Licensee or its lawful
successor-in-interest by Biowell as further described in Section 4.
"Biowell Option Shares" means the number of shares of common stock in
Biowell deliverable upon exercise of the Biowell Option, as adjusted from time
to time.
"Biowell Products" means Products manufactured by 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" mean business methods developed, licensed to, and/or
owned by Biowell relating to the Technology and Products.
"Company" shall mean either Licensee or Biowell where relevant.
"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 Licensee under this Agreement in the Territory.
"Delivery Date" shall mean the date specified by Licensee in a Purchase
Order on which a Product or Product Material is required to be delivered by
Biowell to Licensee.
"Exercise Period" means the three calendar years immediately following the
Effective Date of this Agreement.
"Holder" means Licensee where Licensee is the holder of the Biowell Option
or is offering to exercise the Biowell Option; and means Biowell where Biowell
is the holder of the Licensee Option or is offering to exercise the Licensee
Option.
"Intellectual Property Rights" shall mean:
(a) patents, designs, utility models, design rights, copyrights, database
rights, topography rights, trade or service marks (whether or not
registered) or any similar rights in brands;
(b) applications for any of the foregoing and the right to apply therefor
in any jurisdiction;
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(c) Know-How, trade secrets and other Confidential Information; and
(d) domain name registrations;
(e) and 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.
"Maximum Licensee Shares" means 500,000 common shares in Licensee or
Licensee's successor-in-interest.
"Maximum Biowell Shares" means 500,000 common shares in Biowell.
"Minimum Guarantee" shall mean the minimum quantity of business volume to
be generated by Licensee on behalf of Biowell as further described in the
attached Exhibit 2.
"Product" means either Licensed Product or Biowell Product as the context
requires, as specified in Exhibit 3 attached hereto.
"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 Biowell Products that Licensee
submits and Biowell accepts. All Purchase Orders will be gathered and controlled
by the terms of this Agreement unless otherwise agreed to in writing by Licensee
and Biowell.
"Licensee Option" means the option issued to Biowell by Licensee as further
described in Section 4.
"Licensee Option Shares" means the number of shares of common shares in
Licensee or Licensee's successor-in-interest deliverable upon exercise of the
Licensee Option, as adjusted from time to time.
"Licensed Products" means Products as described in Exhibit 3 manufactured
by Licensee incorporating Product Materials.
"Territory" means the territories specified in Exhibit 1.
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1. Grant of Exclusive Right
1.1 Subject to the terms and conditions of this Agreement and for so long as
Licensee is in compliance with all of its obligations hereunder, Biowell
hereby grants an exclusive right for Licensee to: (a) manufacture the
Products using only Product Materials purchased from Biowell or its
authorized designees for resale in the Territory; and (b) resell the
Products, either purchased from Biowell directly or manufactured by
Licensee using Product Materials purchased from Biowell, in the Territory
(collectively, "Exclusive License"). Licensee shall purchase Product
Materials only from Biowell or its authorized designees. The parties
understand that the exclusivity of the manufacturing arrangement requires
that Licensee give an undivided priority of the highest loyalty to the
Products in all business endeavours. No express or implied licenses of any
type for the Technology shall be granted to Licensee.
1.2 Licensee may also purchase finished completed Biowell Products from Biowell
for resell in the Territory under the procedures set forth in this
Agreement.
1.3 Upon the terms specified in this section, Biowell shall license any new
improvements, modifications or alterations related to the Products in this
Agreement to Licensee ("New Improvement License"). Subject to the terms of
this Agreement, Biowell shall also grant an exclusive license to market
every new anti-fraud products developed by Biowell while this Agreement
remains in effect ("New Product License"), Such New Product License shall
remain exclusive for 365 calendar days after the date Licensee can actually
sell the New Products in the Territory. In order to maintain the
exclusivity of such New Product License in Licensee's Territory for the
second calendar year, Licensee must provide Biowell with received gross
order for such every New Products amounting to US$100,000.00 ("Minimum
Guarantee for New Products") during the first calendar year. Licensee will
need to increase its sales by 20% annually in years 2, 3, 4, and 5 in order
to keep its exclusive license for any new products at which point these
products will fall into the same category and conditions placed on the
original licensed product line.
1.4 Support. Biowell shall provide reasonable telephonic and electronic mail
("e-mail") support to Licensee on an as needed basis, during Biowell's
regular business hours. Biowell shall appoint a liaison to communicate with
Licensee, and Licensee shall funnel its inquiries through such appointed
liaison so as to minimize any disruption to the staff of Biowell. Licensee
agrees to provide Biowell with timely written notification containing
specific details of problems to enable Biowell to diagnose such problems.
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1.5 Professional Guidance Licensee wishes to build lab(s) in its Territory, at
its own cost, for the purpose of analyzing, testing and/or manufacturing
Licensed products, and Biowell agrees at its own discretion and at
Licensee's cost, to assist Licensee by providing Licensee with reasonable
professional guidance, technical support and training; the terms and
conditions of which guidance, support and training will be subject to the
written agreement of the parties.
2. Term
2.1 Unless 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 five calendar years following the execution
of this Agreement ("Initial Term"). In the event that Licensee complies
with all of the Minimum Guarantee targets described in Exhibit 2, this
Agreement shall be automatically renewed for five calendar years following
the Initial Term ("Second Term"). If during the Second Term, Licensee fails
to fully comply with the Minimum Guarantee target set forth on paragraph
(e) of Exhibit 2 in any calendar year during such Second Term, then
Licensee shall forfeit its Exclusive License and Biowell reserves the right
to terminate this Agreement with immediate effect by giving written notice
to Licensee. Licensee reserves the right to remain as the non-exclusive
Licensee with the term and conditions to be determined by both parties.
2.2 Biowell can not sell Products to Customers of the Licensee without
Licensee's prior consent and without paying licensee its fee and without
written consent by the licensee for the term of this agreement and for 1
(one) year following the expiration or termination of this Agreement, on
condition that non-exclusive License Agreement is in effect. Introducing
any new Products to these Customers may only be done with written consent
by the Licensee and shall be done on such terms as are mutually agreed by
both Licensee and Biowell.
2.3 NON CIRCUMVENTION. In the event of circumvention of this agreement by
either party directly or indirectly; the circumvented party shall be
entitled to a legal monetary penalty equal to the maximum benefit it should
realize from such a transaction affected by such breach plus any and all
expenses including but not limited to all legal costs and expenses incurred
to recover the lost revenue.
2.4 In the event of termination not attributable to Licensee Biowell will have
the responsibility to continue to honor this Agreement with Licensee in
respect of assisting Licensee to fulfill any outstanding agreements with
Customers of the Licensee. In the event of termination, Biowell will have
the responsibility to continue to honor any outstanding agreements with
customers of the Licensee and must pay Licensee or designee it's fees for
the life of the relationship with this customer as the non-exclusive
Licensee unless the parties have mutually agreed to end this relationship
at which time Biowell will not be required to pay Licensee a fee to service
the customers. Biowell only has a right to work with customers of Licensee
that are under contract all others on the contact list provided by Licensee
may not be contacted for a period of one year following any termination of
this agreement.
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3. Price and Payment
3.1 In consideration for receiving the Exclusive License for the Initial Term,
Licensee shall issue or cause to be issued to Biowell one million five
hundred thousand shares (1,500,000 shares) of the new publicly listed
company following the proposed merger with ADNAS. This consideration will
satisfy the royalty for the Initial Term of the Exclusive License and will
be rendered to Biowell within 60 days after the closing of the proposed
merger with a public company and such shares shall be non-refundable by
Biowell under any circumstances. If for any reason, such as inability to
obtain necessary government or third party approvals for the issuance
contemplated in this Section, Biowell is unable to obtain such share
issuance or is only able to obtain a portion of such share issuance within
six (6) months following the execution of this Agreement, Biowell may
terminate this Agreement. Full and timely fulfillment of its obligation
concerning the above mentioned consideration shall entitle Licensee to
receive such training sessions and written materials from Biowell related
to Biowell Products, as Biowell in its sole discretion shall decide to
provide. Biowell reserves all Intellectual Property Rights in any materials
provided in such training.
3.2 Biowell agrees to negotiate the terms and to abide by a leak out agreement
and conditions of a standstill agreement with Licensee. Upon acceptance of
such terms and conditions by both Parties, Biowell shall execute such
standstill agreement and shall agree not to sell its shares obtained under
this agreement for a period of one calendar year after the expiration of
the standstill period. Biowell agrees that if it decides to sell such
shares, then each such transaction shall be subject to Rule 144 until
Biowell's position is outside of Rule 144 and Biowell has decreased it's
ownership in ADNAS below 10% at which time Biowell agrees to abide by a
leak out not to exceed gross selling of 5% of the previous months trading
volume. This stand still /leak out agreement will apply to any designee,
assignee or successor that may gain ownership of said shares secured by
Biowell under the terms or conditions of this Agreement.
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3.3 The prices charged by Biowell for the Biowell Products and Product
Materials shall be those set forth as Exhibit 4. All prices are FOB
(Taiwan, ROC) and payment to Biowell from Licensee shall be due thirty
calendar days after delivery of the relevant Biowell Products and Product
Material to the carrier for shipment to 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
Licensee in accordance with this Section 3.3. Both Parties agree to
negotiate a fee for Biowell Product and Product Materials that will make
the Licensee very 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 by the Licensee.
3.4 No amounts payable to Biowell pursuant to the Agreement may be reduced due
to counterclaim, set-off, adjustment or other right which Licensee may have
against Biowell unless the Licensee has received defective product at which
time Biowell 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.
3.5 Security. Biowell reserves the right to request from the Licensee a cash
deposit or letter of credit in a form to be approved by Biowell and issued
by a bank acceptable to it in an amount not exceeding the total credit
extended by Biowell for each Purchase Order, provided that Biowell reserves
the right to obtain an increase in the amount of the letter of credit in
its sole discretion (the "Letter of Credit"). Licensee agrees to
continuously renew or replace the Letter of Credit, as necessary, to keep
it in effect during the term of Biowell's extension of credit to Licensee
under any Purchase Order and shall within ten (10) Business Days of any
draw down on the Letter of Credit by Biowell, 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 Biowell's right.
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4 Option and Subscription of Shares
4.1 Subject to obtaining the necessary corporate, third party and government
approvals, including without limitation, the approval by the Securities and
Futures Commission and the Investment Commission of the ROC, Licensee may
subscribe for new shares of common stock issued by Biowell in an amount up
to the Maximum Biowell Shares under the Biowell Option granted to Licensee
under this Section 4. Biowell agrees to make such shares available to
Licensee by any lawful means possible.
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4.2 Grant of Licensee Option. For value received in the form of the mutual
grant of warrants between the parties, Licensee hereby irrevocably grants
to Biowell the Licensee Option as of the Effective Date of this Agreement
(the "Option Issue Date"). Subject to the terms and conditions hereinafter
set forth, Biowell is entitled, upon delivery of the Licensee Option at the
principal office of Licensee (or at such other place as Licensee shall
notify the Holder hereof in writing) in accordance with this Section 4, to
purchase from Licensee such number of Licensee Option Shares up to the
Maximum Licensee Shares at the strike price of US$ 2 per share or 20% below
the Average Licensee Share Price, which ever is lower. The number of shares
of Licensee Option Shares issuable pursuant to this Section 4.2 shall be
subject to adjustment pursuant to this Agreement.
4.3 Grant of Biowell Option. For value received in the form of the mutual grant
of warrants between the parties, Biowell hereby irrevocably grants to
Licensee or its lawful successor-in-interest the Biowell Option as of the
Effective Date of this Agreement (the "Option Issue Date"). Subject to the
terms and conditions hereinafter set forth, Licensee is entitled, upon
delivery of the Biowell Option at the principal office of Biowell (or at
such other place as Biowell shall notify the Holder hereof in writing) in
accordance with this Section 4, to purchase from Biowell such number of
Biowell Option Shares up to the Maximum Biowell Shares at the strike price
of US$ 3 per share or 20% below the Average Biowell Share Price, which ever
is lower. The number of shares of Biowell Option Shares issuable pursuant
to this Section 4.2 shall be subject to adjustment pursuant to this
Agreement.
4.4 Both Biowell and Licensee shall use good faith and fair dealing to
negotiate the standard industry terms and conditions for piggy back
registration rights relating to their respective Option shares and the
underlying shares, where permitted under the local laws.
4.5 Exercise Period of Option. The Licensee Option and Biowell Option shall be
exercisable, in whole or in part, from their respective Option Issue Date
and shall terminate at 5:00 p.m. Taipei time on the Business Day
immediately following the end of the Exercise Period.
4.6 Method of Exercise of Option. While the option of either Parties remain
outstanding and exercisable in accordance with this Section 4, the
respective Holder of such Option may exercise, in whole or in part, the
purchase rights evidenced hereby. Such exercise shall be effected by:
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(a) the surrender of the respective Option, together with a duly
executed copy of the form of Notice of Election attached hereto
as Exhibit 5, to the secretary of the relevant company at its
principal office ("Exercise Notice") at the address listed in
this Agreement; and
(b) the payment to the relevant company of an amount equal to the
relevant exercise price for the relevant shares being purchased.
4.6 Upon such delivery and payment, the Holder shall be deemed to be the Holder
of record of the relevant Licensee Option Shares or Biowell Option Shares,
as the case may be, notwithstanding that the stock transfer books of the
relevant company shall then be closed or that certificates representing
such shares shall not then be actually delivered to the Holder or that, to
the extent permitted by law, the covenants undertaken in Exhibit 6 have not
all been performed.
4.7 Covenants of Both Parties. Each Party hereby covenants to the other Party
to undertake the activities listed in Exhibit 6, attached and made a part
of this Agreement.
4.8 Representations & Warranties of Both Parties. Each Party hereby warrants
and represents to the other Party that the matters stated in Exhibit 7 are
substantially true and correct as of the date of this Agreement. In
addition, Licensee represents and warrants to Biowell that it has the
necessary ability and experience to carry out the obligations assumed by it
under this Agreement with the highest standards of the industry. Licensee
further warrants that by entering into this Agreement, it is not and will
not be in breach of any express or implied obligation to any third party.
4.9 Adjustment of Shares. The number of and kind of shares purchasable upon
exercise of the relevant option and the relevant option exercise price
shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of the Exercise Period
subdivide its common shares, by split-up or otherwise, or combine
its common shares, or issue additional shares of its common
shares as a dividend, the number of Shares issuable on the
exercise of the relevant option shall forthwith be
proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase
price payable for the total number of the relevant option shares
purchasable under the relevant option (as adjusted) shall remain
the same. Any adjustment under this Section 4.9(a) shall become
effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such
dividend, or in the event that no record date is fixed, upon the
making of such dividend.
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(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the
common shares of the relevant Company (other than as a result of
a subdivision, combination, or stock dividend provided for in
Section 4.9(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision
shall be made, and duly executed documents evidencing the same
from the Company or its successor shall be delivered to the
Holder, so that the Holder shall have the right at any time prior
to the expiration of the relevant option to purchase, at a total
price equal to that payable upon the exercise of the relevant
option, the kind and amount of shares of stock and other
securities and property receivable in connection with such
reclassification, reorganization, or change by a Holder of the
same number of shares of common stock as were purchasable by the
Holder immediately prior to such reclassification,
reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest
of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other
securities and property deliverable upon exercise hereof, and
appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate relevant exercise
price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the
relevant option, or in the relevant option exercise price, the
Company shall promptly notify the Holder of such event and of the
number of shares of the relevant option shares or other
securities or property thereafter purchasable upon exercise of
the relevant option.
(d) No Impairment. The Company and the relevant Holder will not, by
any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company or the Holder, respectively, but will at
all times in good faith assist in the carrying out of all the
provisions of this Section 4.9 and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the Company and the Holder against impairment.
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4.10 Issuance of Shares. The Company shall ensure that the relevant shares, when
issued pursuant to the exercise of the relevant option, will be duly and
validly issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issuance thereof.
4.11 Transfer of Option. Subject to compliance with applicable securities laws,
the options granted hereunder and all rights (but only with all related
obligations) hereunder are transferable in whole or in part by the Holder
upon the prior written consent of the Company. The transfer shall be
recorded on the books of the Company upon (i) the surrender of the relevant
option, properly endorsed, to the Company at its principal offices, (ii)
the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer and (iii) such transferee's agreement in
writing to be bound by and subject to the terms and conditions of the
relevant option. In the event of a partial transfer, the Company shall
issue to the holders one or more appropriate new options.
5. Board of Advisor and Consultant
5.1 Xx. Xxxx or his authorized nominee or Biowell will have the right to serve
as Board of Advisor in Licensee, who will have right to receive notice of
and participate in the meetings of the board of director of Licensee
without voting powers.
5.2 Biowell will invite a nominee of Licensee as a consultant to participate
meetings of the board of directors of Biowell without voting powers.
6. Licensee Obligations
6.1 Licensee will source, solicit, and attract potential customers in the
Territory for purchasing Products either made by Licensee using Product
Materials or purchased directly from Biowell and Licensee shall promote,
market, and extend the sale of the Products in the Territory to potential
customers in the Territory. Licensee shall not bind Biowell to any express
or implied legal obligation with any third parties, including Licensee's
customers, while Licensee is executing this Agreement. Licensee shall
market, promote, and resell the Products on its own behalf and not as an
agent or representative of Biowell.
6.2 Licensee will perform any and all post-sale servicing of any type for
customers. Biowell shall not perform any support services to Licensee's
customers unless both parties agree otherwise in writing.
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6.3 If any dispute arises in the Territory involving Biowell under this
Agreement, Licensee will use its best endeavors to limit the potential
damages to Biowell that could be caused by the dispute. Further, Licensee
will inform Biowell without undue delay of the nature of the dispute and
comply with all reasonable directions of Biowell in relation thereto.
6.4 Licensee shall have the right to sub-license in its Territory in accordance
with this Section 6.4. Specifically, Licensee shall have the right to
authorize any third party to receive or utilize any benefit derived by
Licensee under this Agreement. Each, such authorization or sub-licensing
must be approved by Biowell and any resulting agreement must be co-signed
by Biowell. Biowell shall be reasonable with any such request. Any new sub
licensee shall comply in all respects with the same restrictions placed on
Licensee by Biowell in the original license.
7. Indemnity
7.1 Indemnity against any Third Party Claims. Each Party ("Indemnifying Party")
will indemnify, defend, and hold the other Party, its officers, 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. 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.
8. Product & Product Materials Ordering Procedure, Forecasts,
Change Orders, & Cancellation
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8.1 Biowell, within the limitations contained in this Agreement, agrees to use
best efforts to sell to Licensee, respectively, such quantities of Product
and Product Materials as Licensee may order in accordance herewith.
8.2 Purchase of Products. Subject to the terms and conditions of this
Agreement, Biowell hereby agrees to sell and Licensee agrees to purchase
the Products and Product Materials during the term of this Agreement.
8.3 Licensee agrees to meet the relevant Minimum Guarantee as set forth in
Exhibit 2 attached to this Agreement for each relevant sales period
described in Exhibit 2. Failure to meet the Minimum Guarantee on any single
occasion constitutes a material breach of this Agreement permitting Biowell
to terminate this Agreement after written notice has been given to the
Licensee and the Licensee has been given 60 days to comply with the
relevant Minimum Guarantee not met by Licensee by either making up the
shortfall in cash payable to Biowell or new Purchase Orders in order to
rectify any potential breach of this agreement.
8.4 Forecast. Approximately thirty (30) Business Days prior to the first
calendar day of each calendar month during the term of this Agreement,
Licensee will provide Biowell with a [six (6)] month binding
forward-looking rolling forecast for internal planning requirements (the
"Forecast"). Licensee shall provide the first of such Forecast three (3)
months after the signing date of this Agreement.
8.5 Purchase Orders. Purchases shall be initiated by 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
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 Licensee's Purchase Order or
Biowell'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. Biowell shall use reasonable efforts to
fill orders promptly, but shall not be liable for any damage to Licensee or
any third party for failure to fill any orders, or for any delay in
delivery or error in filling any orders. Biowell will use its best efforts
to accept each Purchase Order issued by Licensee. Biowell will ship all
Product within the Lead Time unless 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 Biowell.
8.6 Purchase Order Information. Purchase Orders issued by Licensee shall, to
the extent necessary for Biowell 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
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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.
8.7 Confirmation. Within five calendar days of its receipt of the Purchase
Order, Licensor must send written notice to LICENSEE for acceptance of the
order ("Confirmation");
8.8 Delivery Terms. All Products delivered to Licensee shall be FOB (Taipei,
Taiwan, ROC) or other place of shipment as specified in writing by Licensee
and agreed to by Biowell. Biowell may ship partial orders provided Biowell
notifies Licensee and Licensee agrees prior to shipment. Licensee's
Purchase Order shall specify the carrier or means of transportation or
routing, and Biowell will comply with Licensee's instructions. If Licensee
fails to provide shipping instructions, Biowell shall select the best
available carrier, on a commercially reasonable basis.
8.9 Change Orders and Rescheduling. Any modification to a Purchase Order shall
be made in writing by an authorized representative of Licensee ("Change
Order") and sent to Biowell, and such Change Order shall be subject to
acceptance in writing by Biowell and shall not be binding until such
acceptance.
9. Non-competition & Non-solicitation
9.1 During the term of this Agreement, Biowell shall not solicit Customers
solely developed by Licensee. Upon any termination of this Agreement, the
above restriction shall apply for a period of one year with the exception
of customers under contract to receive Product from Biowell. Biowell shall
be entitled to a detailed and exhaustive list of all contact information
for any and all Customers under contract to receive Biowell Products. This
is due to Biowell within five Business Days of the date of termination of
this Agreement and will follow provisions as described in section 2 (2.4).
9.2 Customers of the Licensee are the sole property of the licensee and are not
under any restraints or conditions implied by Biowell and will not be
contacted or solicited by Biowell for a period of one year following any
termination or dissolution of this agreement with the exception of 2 (2.4).
9.3 Licensee and Biowell shall not, without the prior written consent from the
other party directly or indirectly (including without limitation, through
any Affiliate of either 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.
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9.4 Licensee or Biowell 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 parties goodwill with its customers, providers, vendors, employees,
the media or the public.
10. Confidentiality
10.1 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
10.2 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 Biowell, 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.
10.3 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 Biowell against any loss or damage which Biowell may
sustain or incur as a result of any breach of confidence by Licensee's
employees.
10.4 The provisions of this section 10 shall survive the termination of this
Agreement with 10 years.
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11. Reservation of Rights
11.1 Biowell reserves the right at any time:
( i ) to make modifications or additions to the Technology, Product
Materials, and Products in respect to any designs as Biowell may in its
discretion determine; and such modifications or additions will be automatically
granted to the 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 therefor are discontinued or replaced except for those
Products and Product Materials accepted to be delivered under a confirmed
purchase order; and
(iii) to require Licensee either not to use or to cease to use any
advertising or promotional material in respect to the Product Materials and
Products which Biowell considers not to be in Biowell's best interests, upon 30
days written notice to licensee.
12. Legal Relationship
12.1 Nothing herein shall contain any facts as to suggest that Biowell and
Licensee are engaging in a joint venture or partnership. Licensee shall
have no authority to bind Biowell in any legal obligation. Licensee shall
only contract with customers on its own behalf.
13. Termination
Notwithstanding anything else contained herein, this Agreement may be
terminated.
13.1 Biowell may terminate this agreement if the 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;
13.2 Immediately by Biowell if the control of Licensee has been transferred
without the prior written approval of Biowell which approval shall not be
unreasonably denied;
13.3 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;
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13.4 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;
13.5 Licensee shall not be entitled to any compensation (whether for loss of
distribution rights, goodwill or otherwise) as a result of the termination
of this Agreement in accordance with its terms.
13.6 Except as otherwise stated herein, in case Biowell has ground(s) to
terminate this Agreement because 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,
Biowell (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 Licensee shall remain as a non-exclusive Licensee, 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. 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 Licensee in case Biowell terminates this
Agreement for any other reason specified in this agreement.
13.7 Remedy of Breach and Alternative to Termination: Licensee shall have 60
days 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. Biowell hereby grants to Licensee a special termination-option to
convert its Licensee designation to that of a non-exclusive manufacturer in
the event of a non-curable breach. As an alternative to forced termination,
Licensee may, at its own discretion, exercise this option prior to the
initiation of termination. 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 Biowell and/or a Licensee for the Products
and Technology in the Territory on such terms and conditions to be
determined by the parties.
14. Effect of Termination
On the termination of this Agreement:
14.1 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;
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14.2 Licensee shall, at its own expense, return to Biowell or otherwise dispose
of as Biowell may instruct, all technical and promotional materials and
other documents and papers whatsoever sent to Licensee and relating to the
Technology, Product Materials and Products or the business of Biowell
(other than correspondence between the parties) and all property of Biowell
in Licensee's possession or under its control.
15. Exclusion of Liability
15.1 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 Biowell.
15.2 Except as otherwise provided in this Agreement, Biowell shall not be liable
to Licensee, whether for negligence, breach of contract, misrepresentation
or otherwise, for:
(a) loss or damage incurred by 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 Licensee, including,
without limitation, loss of profits, goodwill, business opportunity or
anticipated saving.
15.3 Biowell 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.
15.4 Limited Warranty.
----------------
Biowell warrants that all Products and Product Materials sold by Biowell to
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 [
twelve 12 ] months after delivery to the carrier for shipment to Licensee.
Within five Business Days of Licensee's receipt of the relevant Product
Materials and Products, Licensee shall notify Biowell if any Product
Materials or Products contains a material defect in materials or
workmanship, or otherwise fails to materially conform to the Specifications
during the warranty period. Biowell shall at its expense correct any such
defect by repairing such defective Product Materials and Products or, at
Biowell's option, by delivering to Licensee an equivalent Product Materials
and Products replacing such defective Product Materials and Products.
Biowell may inspect and verify such alleged defect in the Territory and
Licensee will not need to ship the alleged defective items to Taiwan. Such
remedies for any breach of warranty as listed in this Section 15.4 shall be
the sole and exclusive remedies available to Licensee at law or in equity.
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15.5 WARRANTY EXCLUSIONS. BIOWELL 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 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.
15.6 Biowell will be liable for the product manufactured by Biowell. Biowell
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. Licensee's customers are not required to go to licensor directly
to file a claim against product liability. Licensee will handle the
liability on behalf of the licensor. All expenses in this matter shall be
paid by licensor or licensor's insure.
15.7 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 Biowell 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.
15.7 Licensee will not pass through to its retailers or customers or any other
third party any warranties made by Biowell hereunder and will expressly
indicate to its retailers or customers that they must look solely to
Licensee in connection with any problems, warranty claims or other matters
concerning the Product.
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16. Intellectual Property Rights
16.1 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 sole and exclusive
property of Biowell. 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.
16.2 Licensee shall notify Biowell 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 Biowell (at Biowell's expense) in taking all steps necessary to
defend Biowell's rights therein.
16.3 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.
16.4 Subject to the express prior written approval of Biowell, Licensee may use
the trademarks and logos of Biowell for the sole purpose of marketing,
reselling and promoting the Products in the Territory under, and during the
term of, this Agreement.
16.5 The provisions of this section 16 will survive the termination of this
Agreement.
17. General
17.1 Governing Law and Dispute Resolution. This Agreement shall be governed by,
construed and take effect in accordance with ROC law without regard to the
choice of law principles thereof. Any dispute, controversy, or claims
arising out of or relating to this Agreement which cannot be resolved
within sixty (60) business days shall be exclusively submitted to final
resolution by arbitration pursuant to the Arbitration Law in Hong Kong.
17.2 Counterparts and Facsimile Execution. 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.
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17.3 Waiver. 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 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.
17.4 Taxes & Fees. Licensee, and not Biowell, will be responsible for all taxes
and expenses incurred in Licensee's business, including Licensee's business
with Biowell. If Licensee is required by law to make any deduction or
withholding from any payment due hereunder to Biowell, then,
notwithstanding anything in this agreement to the contrary, the gross
amount payable by Licensee to Biowell, will be increased so that, after any
such deduction or withholding for taxes, the net amount received by Biowell
will not be less than the amount that would have received had such
deduction or withholding not been required.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in two
copies of which each has received one.
Biowell Technology Inc. Applied DNA Sciences, Inc.
By: /s/ JUN-XXX XXXX By: /s/ XXXXX XXX
---------------- -------------
Name: Jun-Xxx Xxxx Name: Xxxxx Xxx
Title: Chairman & CEO Title: President
Date: 08 Oct. 2002 Date: 07 Oct. 2002
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