MEMORANDUM OF UNDERSTANDING
Exhibit 10.18
THIS MEMORANDUM OF UNDERSTANDING ("JV/MOU") is entered into on the date set
forth on the signature page hereof.
BETWEEN: One World Cannabis Ltd. ("OWC"),
a legal entity organized under the laws of the State of Israel, having a place
of business at 00, Xxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, herein acting and
represented by Xxx Xxxxxx, its Chief Operating Officer, duly authorized for the
purposes hereof as he so declares;
AND: Michepro Holding Ltd, a legal
entity constituted under the laws of the State of Cyprus, having a place of
business in Nicosia ("EU Partner"); herein acting and represented by Xxxxxxx X
Xxxxx, its Director, duly authorized for the purposes hereof as he so declares.
WHICH PARTIES DECLARE THE FOLLOWING:
WHEREAS, OWC is a wholly-owned
Israeli subsidiary of OWC Pharmaceutical Research Corp., a public company
organized under the laws of the State of Delaware (OTCQB: OWCP) ("OWCP"), is
focused on discovering, developing and commercializing cannabis-based novel
therapeutics products and treatments specifically designed for several medical
conditions ("OWC's Products"). In addition, OWC offers medical cannabis
regulatory compliance services and patient-care consultancy services.
WHEREAS, EU Partner has extensive experience and business connections that are
required for the marketing and distribution of the OWC's Products in the
European Union (the "EU"); and
WHEREAS, on the parties wish to cooperate
in order to jointly promote the marketing and distribution of the OWC's Products
in the EU pursuant to the terms of this MOU; and
WHEREAS, the parties are
entering into this MOU to set forth their mutual intentions;
NOW
THEREFORE, in consideration of the mutual understandings and agreements set
forth herein, the parties agree as follows:
1. Strategic Alliance;
Responsibilities of the Parties; Financing
1.1. The parties wish to enter
into a strategic marketing and distribution alliance to promote the sale of the
OWC's Products in the EU according to the guidelines set forth in this MOU.
1.2. The strategic marketing and distribution alliance will be executed through
the establishment of a joint venture, the incorporation of a new corporation in
Cyprus to be owned by the parties, or any other form of contractual or other
form of cooperation that will be mutually decided by the parties following tax
and legal advice by their respective consultants, as shall be documented in the
definitive agreements to be executed between the parties (the "JV").
1.3.
Upon the establishment of the JV, the interest of the parties in the JV shall be
held by the parties such that the EU Partner shall hold 25% of such interest and
OWC shall hold the remaining 75% of such interest.
1.4. From and after the
establishment of the JV, OWC shall provide the JV with the OWC's Products for
sale and distribution solely in the EU, at prices to be agreed between the
parties from time to time.
1.5. EU Partner shall be responsible to the
day-to-day management of the JV, at its own costs, and for this purpose shall
make available to the JV its knowledge, business connection and personnel, all
in order to maximize the sales of the OWC's Products in the EU through the JV.
1.6. Other activities of the JV shall be financed by the JV funds. To the extent
the JV requires further financing from the parties, the parties shall contribute
such financing based on their respective holdings in the JV. To the extent one
of the parties does not invest its full pro-rata portion of such investment, its
holdings will be diluted, based on a pre-money valuation of the JV to be agreed
by the parties, and if the parties are unable to agree on such valuation within
7 days after the request of either party, such valuation shall be decided by E&Y
or a third party appointed by them.
1.7. To remove any doubt, neither party
shall have any authority whatsoever to bind the other party in any manner.
2. Exclusivity
2.1 The cooperation of the parties pursuant to this MOU is
on an exclusive basis, such that from and after the establishment of the JV, and
as long as the JV markets and sells the OWC's Products in the EU, OWC shall not
sell any OWC's Products in the EU other than through the JV.
2.2 In
addition, during said period EU Partner shall be prohibited from using,
developing, marketing, licensing, or otherwise disposing of products in the EU
competing with the OWC's Products.
3. Approvals. The JV shall conduct its
activities at all time pursuant to any applicable law. Among others, the JV
shall be responsible to obtain any approvals required for the import, storage,
marketing and distribution of the OWC's products in the EU (the "Approvals").
The parties shall reasonably assist to the JV in obtaining such approvals.
4. JV Corporate Governance
4.1 The JV shall be managed by its board of
directors (to the extent the JV is a corporation) or equivalent managing forum.
The parties shall be entitled to appoint members to such managing forum on a
pro-rata basis to their holdings in the JV. Decisions in the managing forum
shall be made by majority vote.
4.2 The JV shall be managed by its board of
directors (to the extent the JV is a corporation) or equivalent managing forum.
The parties shall be entitled to appoint members to such managing forum on a
pro-rata basis to their holdings in the JV. Decisions in the managing forum
shall be made by majority vote.
4.3 Decisions of the parties as the JV
owners shall be made by majority vote based on the parties' holdings.
4.4
Each year the JV shall allocate to the parties at least 50% of any profits
available for distribution.
4.5 Unless agreed otherwise, the parties shall
not transfer their interest in the JV to any third party (other than transferees
to affiliates and other permitted transferees that may be agreed in the
definitive documents).
5. Additional Consideration to the EU Partner. In
order to provide the EU Partner an additional incentive to promote the business
of the JV, and as special consideration for its agreement to manage and operate
the JV's business without charge, OWC agrees that the EU Partner will be
entitled to the following securities of OWCP:
5.1 A certificate evidencing
1,442,308 shares of common stock of OWCP, par value $0.0001 (the "OWCP Shares").
5.2 A Warrant for the purchase of 1,250,000 additional OWCP Shares at an
exercise price of US$ 0.08 during the period commencing on the date of execution
of definitive agreement and expiring 12 months from the date of execution of
this MOU.
5.3 An additional Warrant for the purchase of 448,462 OWCP Shares
at an exercise price of US$ 0.25 during the period commencing on the date of
execution of definitive agreement and expiring 24 months the date of execution
of this MOU.
5.4 Another additional Warrant for the purchase of 448,462 OWCP
Shares at an exercise price of US$ 0.40 during the period commencing on the date
of execution of definitive agreement and expiring 36 months from the date of
execution of this MOU.
5.5.1 THE ISSUANCE OF THE OWCP SHARES, THE WARRANTS
AND THE OWCP SHARES UNDERLYING THE WARRANTS (COLLECTIVELY, THE "SECURITIES")
UNDER THIS MOU IS BEING MADE PURSUANT TO REGULATION S PROMULGATED BY THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT").
5.5.2 THE OWCP SHARES, THE WARRANTS AND THE
OWCP SHARES UNDERLYING THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE ACT, OR
ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR
SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS
DEFINED HEREINBELOW) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING
THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
5.5.3
THE ABOVE-REFERENCED SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SEC, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING, OR THE ACCURACY OR ADEQUACY OF THE DISCLOSURE IN THIS SUBSCRIPTION
AGREEMENT. ANY SUCH REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
1.
6. EU
Partner shall bear any and all taxes relating to grant and/or exercise and/or
sale of the above securities. OWC and OWCP may withhold taxes according to the
requirements of any applicable laws, rules, and regulations, including
withholding taxes at source in connection therewith. Furthermore, EU Partner
shall indemnify OWC and OWCP and shall hold them harmless against and from any
and all liability for any such tax or interest or penalty thereon, including
without limitation, liabilities relating to the necessity to withhold, or to
have withheld, any such tax from any payment made to or by the Grantee. OWCP
shall not be required to release any of the above securities to EU Partner until
all required tax payments have been fully made.
7. Term and Termination.
7.1 The term of this MOU shall begin on the date of its execution and shall
terminate on the earlier of: (a) the execution of definitive agreement between
the parties; (b) termination of this MOU upon mutual agreement of the parties;
(c) the non-completion of the definitive agreement within 90 days of signing
this MOU, unless extended by the mutual consent of the parties hereto.
7.2 In
addition, the non-breaching party may terminate the MOU with immediate effect if
the other party fails to comply with any material obligation hereunder, and such
breach is not cured within 14 days following written notice.
8.
Confidentiality; IP Rights.
8.1 The parties acknowledge that, in the course
of their negotiations under this MOU, it may be necessary for the parties to
provide documentation, technical and business information and/or intellectual
property, in whatever form recorded (collectively, "Confidential Information"),
to each other. All Confidential Information provided or disclosed by any party
to the other parties hereunder shall remain the property of the furnishing
party, and shall be held in strict confidence by the receiving party, unless the
furnishing party otherwise consents in writing or unless disclosure of such
Confidential Information is required by the applicable laws (as detailed below).
Confidential Information furnished by any party hereunder (a) shall not be
reproduced or copied, in whole or in part, by the receiving party except for use
as specifically authorized by this MOU; (b) shall, together with any copies
thereof, be returned to the disclosing party, or at the request of the
disclosing party, destroyed, when no longer needed for purposes of this MOU or
at the request of the disclosing party; and (c) shall only be disclosed by the
receiving party to its employees, attorneys, accountants and other professional
advisors ("Representatives") who have a need to know such Confidential
Information in connection with the performance of this MOU; and who have agreed
to comply with the confidentiality obligations set forth herein, and provided
that the receiving party is responsible to ay breach of confidentiality by its
Representatives. (d) If required to be disclosed by law, provided, however, that
receiving party gives disclosing party prompt notice thereof and shall furnish
only that portion of the Confidential Information which is legally required, and
shall exercise all efforts required to obtain confidential treatment for such
information.
8.2 All rights of OWC in any of the OWC's Products and/or
related intellectual property are and shall remain at all times the sole
property of OWC
9. Publicity. The parties understand and agree that OWC
is a wholly-owned subsidiary of a public company organized under the laws of
Delaware and with reporting obligations under the United States federal
securities laws and the rules and regulations of the SEC promulgated thereunder.
As a result, the parties acknowledge and agree that while either party may issue
any press release or otherwise publicize or disclose to any third party the
existence or nature of this MOU, They shall do so only with notice to and the
prior written consent of the other party. Notwithstanding the above, the first
publication of either party will be pre-coordinated between the parties.
10. Miscellaneous.
10.1 Entire Agreement. The terms of the MOU include in
full all that has been stipulated and agreed between the parties regarding the
matters included herein, and they supersede any engagement, consent,
presentation and obligation that preceded the signing of the MOU.
10.2
Non-Solicitation. Each party agrees and undertakes that during the MOU period,
and for a period of 12 months thereafter, it will not, directly or indirectly,
for any purpose or in any place solicit for employment any person employed by
the other party.
10.3 Headings. The headings contained herein are for
reference purposes only and shall not affect the meaning or interpretation of
this MOU.
10.4 Governing Law. This MOU shall be governed by the laws of the
State of New York without reference to conflicts of laws principles. EACH PARTY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
HEREUNDER.
10.5 Assignment. No party may assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto, other than assignment to affiliated entities or in connection with the
merger or sale of all or substantially all of the assets or shares of the
assigning party.
10.6 Amendment. This MOU may not be revised or amended
except in a writing signed by the parties.
IN WITNESS WHEREOF THIS
MOU HAS BEEN EXECUTED BY THE PARTIES.
November 3, 2016 One World
Cannabis Ltd.
By: /s/: Xxx Xxxxxx
Title: CEO_
November 3 2016
Michepro Holding Ltd
By: /s/: Xxxxxxx X Xxxxx
Title: Director
We confirm the provisions of Section 5 above:
OWC PHARMACEUTICAL
RESEARCH CORP.
By: /s/: Xxxxxxxxx Bignitz
Title: CEO
