EXECUTION VERSION GLOBAL PHARMA LICENSE AGREEMENT
Exhibit 10.8
EXECUTION VERSION
GLOBAL PHARMA
This License Agreement (this “Agreement”), dated as of April 13, 2017 (the “Effective Date”), is by and between Tikun Olam Ltd., an Israeli corporation, registration number 514263771 (“Licensor”) and Tikun Olam IP Ltd., a Cayman Islands company (“Licensee”). Licensor and Licensee shall each be individually referred to as a “Party” and collectively as the “Parties”.
Section 1. Definitions. Capitalized terms used herein are as set forth on Exhibit A hereto.
2.2 Ownership of Intellectual Property and New IP.
(a) Licensor Ownership. Subject to Section 2.3 hereof, Licensor shall (i) continue to own all Licensor IP owned by Licensor prior to April 19, 2015, and (ii) own all Intellectual Property developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates ("Licensor Additional IP").
(b) Licensee Ownership. Licensee shall own any and all Intellectual Property and improvements and modifications of the Licensor IP relating to the Pharmaceutical Business developed or acquired on or after April 19, 2015 (i) solely by Licensee, or (ii) jointly or collaboratively with Licensee anywhere in the world (collectively, the “New IP”), except to the extent such New IP is owned by the Pharmaceutical Affiliate, and is subject to that certain License Agreement of even date herewith between Licensor and the Pharmaceutical Affiliate (the “Affiliate Pharmaceutical License Agreement”). The New IP shall be used and/or licensed to third parties by Licensee solely within the Territory and solely in connection with the Pharmaceutical Business; however, the use of the New IP by (a) the Pharmaceutical Affiliate outside of the Territory for its Pharmaceutical Business, pursuant and subject to the Affiliate Pharmaceutical License Agreement; and (b) Tikun Olam LLC, a Delaware company, which is also an Affiliate of Licensee (hereinafter “TO LLC”), outside the Territory, pursuant to the License Agreement dated April 20, 2016, between Licensor and TO LLC (the “US Medical Cannabis License Agreement”), shall be permitted and shall not be a breach of this Agreement.
(c) New IP. Licensee shall have the right to use all New IP owned by it solely in connection with the Pharmaceutical Business, and/or license to third parties the right to use such New IP, solely in connection to the Pharmaceutical Business, in each case solely within the Territory. Licensor shall not have the independent right to use or license to third parties the right to use such New IP owned by Licensee in the Territory in connection with any business similar to or competitive or potentially competitive with the Pharmaceutical Business, but shall be granted a license, pursuant to Section 2.4 below, to use the New IP in the Territory solely in connection with its Cannabis Business. Any Licensor Additional IP not owned by Licensee or its Affiliates shall be subject to the License granted hereunder.
(d) New Strains. If Licensee, in connection with the Pharmaceutical Products or the Pharmaceutical Business, during the Term of this Agreement or thereafter, makes any improvements to the Licensor IP, including by developing new strains, including any Essentially Derived Variety, based on the TO Strains (collectively, the “New Strains”), Licensee shall own all rights, title and interest in such New Strains and the New IP; provided however, that (i) Licensee shall be entitled to use such New Strains only within the Territory and subject to the terms and conditions set forth in this Agreement regarding the use of the TO Strains; (ii) the Pharmaceutical Affiliate shall be entitled to use such New Strains outside of the Territory subject to the terms and conditions set forth in the Affiliate Pharmaceutical License Agreement; and (iii) pursuant to Section 2.4 hereof, Licensor shall be granted an non-revocable (subject to the terms hereof), perpetual, sub-licensable, royalty-free license to use the New Strains, and shall be entitled to use them solely in connection with its Cannabis Business, and not any Pharmaceutical Business, in the Territory.
2.3 Clinical Trials. The results of the Clinical Trials and all Intellectual Property in connection therewith and relating thereto shall be owned (a) by Licensor to the extent they were developed by Licensor prior to April 19, 2015 or developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non-de minimis financial contribution pursuant to Section 7.1(e) hereof, and (b) by Licensee, to the extent developed solely or primarily by Licensee or developed by Licensor on or after April 19, 2015 with specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non-de minimis financial contribution by Licensee or its Affiliates, anywhere in the world, except to the extent owned by the Pharmaceutical Affiliate pursuant to the Affiliate Pharmaceutical License Agreement or by TO LLC pursuant to the US Medical Cannabis License Agreement.
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4.1 The License granted under this Agreement is perpetual and non-revocable (subject to the terms hereof).
Section 5. Licensor Representations and Warranties.
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Section 6. Licensee Representations and Warranties.
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7.1 Licensor Covenants. Licensor shall:
(a) Continue to conduct research and development efforts in connection with the Pharmaceutical Business within Israel and assist Licensee (at its request) with such research and development worldwide;
(b) provide to Licensee and its Affiliates training and assistance with research and development in connection with Licensee’s Pharmaceutical Business (the “Training Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself, relating to training of the Licensee’s the staff and employees of Licensee, to the extent required or requested by Licensee;
(c) assist Licensee with design and establishment of operations in connection with the cultivation and production of Cannabis extracts for Pharmaceutical Products (collectively, “Design and Operations Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with the design, establishment and operation of Licensor’s Cannabis Business, and in any event in a manner and to the extent sufficient to comply with Applicable Law;
(d) assist Licensee in connection with conducting Clinical Trials and provide all related Clinical Trials Services. In this connection, Licensor shall use a reasonable degree of care, ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with its own clinical trials in Israel related to Cannabis Products, including extracts, and in any event in a manner and to the extent sufficient to comply with Applicable Law; and
(e) devote and pay not less than an aggregate of Three Hundred Seventy-Five Thousand U.S. Dollars ($375,000) to further develop and enhance the Licensor IP, including in connection with (i) patent prosecution, (ii) purchasing of equipment, and (iii) by funding up to Two Hundred Fifty Thousand U.S. Dollars ($250,000) in connection with the Clinical Trials, in amounts equal to funding therefor provided by Licensee and its Affiliates. In addition, Licensee, together with its Affiliates, the Pharmaceutical Affiliate and TO LLC, or such other Affiliates of Licensee as Licensee may determine, shall pay the aggregate remaining costs in connection with such Clinical Trials, if any. The obligations of Licensee and its Affiliates pursuant to this Section 7.1(e) shall be shared as determined by Licensee between Licensee and its Affiliates. The obligations of Licensor, Licensee or any of its Affiliates under this Section 7.1(e) and the obligations of Licensee’s Affiliates under any similar provisions of any other agreements, including the Affiliate License Agreements, shall not be duplicative of each other. Accordingly, the aggregate financial commitment of each of Licensor (on the one hand) and of Licensee and its Affiliates (on the other hand) pursuant to clause (iii) above shall be such Two Hundred Fifty Thousand U.S. Dollars ($250,000), and the amounts required pursuant to the second sentence of this Section 7.1(e) shall be shared among Licensee and its Affiliates. Licensee and Licensor acknowledge and agree that as of the date hereof, Licensor has already contributed $125,000 toward its obligations pursuant to clauses (i) and (ii) of this Section 7.1(e) and shall therefore only be required to contribute an additional $250,000, which shall be applied toward Licensor’s obligation to pay for 50% of the aggregate costs in connection with the Clinical Trials as set forth in clause (iii) above of this Section 7.1(e), any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the Affiliate Pharmaceutical License Agreement or any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the US Medical Cannabis License Agreement.
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7.2 Licensee Covenants. Licensee shall:
(a) without prejudice to Section 7.1(e), in connection with the Services provided pursuant to Section 7.1, reimburse Licensor for all reasonable and actual out-of-pocket expenses (the “Expenses”), including the cost of air travel, accommodations and meals for employees of Licensor who in so providing such Services are required to travel outside Israel (not including salaries or other compensation paid to its employees, consultants, or related parties, except as Licensee may otherwise agree in writing), in each case upon submission of appropriate documentation evidencing such Expenses consistent with Licensee’s customary expense reimbursement policies; The obligations of Licensee or any of its Affiliates under this Section 7.2 and the obligations of Licensee’s Affiliates under any similar provisions of the Affiliate License Agreements shall not be duplicative of each other; and
(b) use commercially reasonable efforts to obtain any necessary jurisdictional, governmental, regulatory approvals to the extent required by Applicable Law in connection with the Pharmaceutical Business in the Territory.
Section 8. Regulatory Disclosures.
8.1 The Parties acknowledge and agree that there is (a) an unpredictable regulatory environment in the area of cannabis law and that existing or new laws, interpretations of law, or enforcement policies may adversely impact the Parties’ business and (b) notwithstanding the favorable treatment under the laws of certain jurisdictions, Cannabis is a prohibited controlled substance under the laws of many jurisdictions.
(a) Licensee and its suppliers or vendors, including Licensor, could be subject to criminal prosecution at any time pursuant to Applicable Law or other Governmental Authority;
(b) Certain jurisdictions, under Applicable Law or other Governmental Authority, may take actions to stop, hinder, delay or harm Licensee or take other actions that would be detrimental to Licensee; and
(c) This Agreement may be deemed void for illegality in whole or in material part.
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From time to time during the term of this Agreement, either Party (as the ”Disclosing Party”) may disclose or make available to the other Party (as the ”Receiving Party”) information which is considered proprietary or confidential by that Party, including without limitation: technology, business practices, trade secrets, processes, policies, procedures, techniques, technical information, formulae, plant strains, financial/financing contacts, investors, contractors, specifications, information data, the identity and special needs of customers or potential customers, databases, data, systems, methods of operation, client or customer lists, solicitation leads, marketing or advertising materials, techniques, know-how, processes, cost data, marketing data, business data, technical data and other technical know-how, Intellectual Property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, whether disclosed to the other Party or obtained by such Party through observation or examination of the other Party’s facilities or procedures or materials, and whether or not marked, designated or otherwise identified as “confidential” (collectively, ”Confidential Information”). Confidential Information shall not include information that, at the time of disclosure and as established by documentary evidence: (i) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Section 9 by the Receiving Party or any of its Representatives; (ii) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third-party is not and was not prohibited from disclosing such Confidential Information; (iii) was known by or in the possession of the Receiving Party or its Representatives prior to being disclosed by or on behalf of the Disclosing Party; (iv) was or is independently developed by the Receiving Party without reference to or use, in whole or in part, of any of the Disclosing Party's Confidential Information; or (v) is required to be disclosed pursuant to applicable federal, state or local law, regulation or a valid order issued by a court or Governmental Authority of competent jurisdiction. The Receiving Party shall: (A) protect and safeguard the confidentiality of the Disclosing Party's Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (B) not use the Disclosing Party's Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (C) not disclose any such Confidential Information to any person or entity, except to the Receiving Party's Representatives who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under the Agreement. The Receiving Party shall be responsible for any breach of this Section 9 caused by any of its Representatives. On the expiration or termination of the Agreement, the Receiving Party shall promptly return, and shall require its Representatives to return to the Disclosing Party all copies, whether in written, electronic or other form or media, of the Disclosing Party's Confidential Information, or destroy all such copies and certify in writing to the Disclosing Party that such Confidential Information has been destroyed. Neither Party will use any Residual Information for any purpose whatsoever, including without limitation, the development of its own products or business. The Parties’ obligations under this Section 9 shall continue indefinitely and shall survive the termination of this Agreement. In addition to all other remedies available at law, the Disclosing Party may seek equitable relief (including injunctive relief) against the Receiving Party and its Representatives to prevent the breach or threatened breach of this Section 9 and to secure its enforcement.
Section 10. Intellectual Property Matters.
10.2 Licensee agrees that Licensor shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to Licensee, to inspect the premises of Licensee and elsewhere as Licensor considers necessary in order to verify Licensee's compliance with the terms hereof, including for appropriate quality control with respect to Licensee's use of the Licensor Trademarks.
10.3 Licensee agrees that it will not do or permit any act or thing that would endanger any proprietary right of Licensor with respect to the License granted pursuant to this Agreement and that Licensee will not claim any proprietary interest in the Licensor IP (including the Third-Party IP). Licensee agrees to cooperate with Licensor in registering, protecting and defending the License, including, but not limited to, if so requested by Licensor, executing and filing any and all documents and papers necessary or advisable in order to register or protect the License, including, without limitation, this Agreement or an abstract hereof.
10.4 In utilizing the Licensor IP in accordance with the terms of this Agreement, Licensee shall apply the same standards that Licensee uses for Licensee's own Intellectual Property and shall not utilize any of the Licensor IP (including without limitation, the Licensor Trademarks):
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(a) in such a fashion that would cause confusion with, dilute or damage the reputation or image of Licensor, its products or services; provided however, that Licensee shall not be considered to be in breach of this Section 10.4(a) as a result of the sale by Licensee of Pharmaceutical Products bearing the Licensor name or other Licensor Trademarks; and/or
(b) in connection with any material that is obscene, pornographic, excessively violent, libelous or defamatory.
10.5 Licensee shall have the right, but not the obligation, at its own expense, to take any action it deems advisable in its sole discretion to apply for and prosecute registration of or otherwise protect the Licensor IP (including without limitation, the TO Strains and Licensor Trademarks) and the New IP (including without limitation, New Strains and Essentially Derived Varieties) in connection with the Pharmaceutical Products or the Pharmaceutical Business in the Territory. Licensor agrees to cooperate with Licensee in registering, protecting and defending the Licensor IP, including, but not limited to, if so requested by Licensee, executing and filing any and all documents and instruments necessary or advisable in order to register or protect the Licensor IP. All filings, registrations and applications shall be made in the name of the Party designated as the owner of the applicable Intellectual Property in accordance with the provisions of Section 2.2 hereof.
Section 11. Use of Licensor Trademarks.
11.1 Licensor hereby grants to Licensee and its Affiliates a right and license to use and to sublicense the right to use the Licensor Trademarks in connection with the Pharmaceutical Business, corporate names, and advertising, marketing, promoting and selling of Pharmaceutical Products and other related services within the Territory.
11.2 The Parties recognize the value of the goodwill associated with the Licensor Trademarks, and acknowledge that the Licensor Trademarks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to the Licensor, and the Licensee shall not acquire any rights in the Licensor Trademarks, other than as expressly granted in this Agreement. Licensee shall not do anything inconsistent with Licensor's ownership of its Licensor Trademarks. In particular, but without limitation, Licensee shall not attack the validity of the Licensor Trademarks or the Licensor's rights in and to its Licensor Trademarks. Subject to the terms and provisions hereof, the Licensor retains the right to use and to license the use of its Licensor Trademarks for any and all goods or services.
11.3 Licensee shall not misuse or misappropriate any of the Licensor Trademarks. Licensee shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Licensor Trademarks or any registrations of any of the Licensor Trademarks, or that dilutes or might dilute the distinctive quality of any of the Licensor Trademarks, or that disparages or might disparage any of the Licensor Trademarks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, Licensee may not use any of the Licensor Trademarks on any materials or products unless it has received Licensor's prior written approval for such use, which shall not be unreasonably withheld, delayed or conditioned, except that Licensee shall not be required to obtain such approval in connection with the use of Licensor Trademarks on materials or products which does not materially differ from previously approved uses.
11.4 In addition to each Party’s other rights and remedies under this Agreement or otherwise, Licensee shall upon receipt of notice from the Licensor immediately discontinue any use of, and remove from its premises, all materials bearing any of the Licensor Trademarks, including any signs, labels, stationery, advertising, promotional material and literature that, in Licensor's reasonable opinion, constitutes an improper use of the Licensor Trademarks or reflects non-negligibly adversely on Licensor's reputation or brand image or any of its corporate affiliates or partners or on any of Licensor’s products or services.
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11.5 All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “Marks”), created by or on behalf of Licensor that include or refer to the Licensor Trademarks, shall belong exclusively to Licensor, and Licensee assigns Licensor all rights, title and interest in and to said items; provided, that any Marks created by Licensee or its representatives that include or refer to the Licensor Trademarks or which are based on or derived from or combined with any Licensor IP in connection with its business shall be deemed to be Licensee IP, shall be owned by Licensee and shall be used by Licensor pursuant to Section 2.4 hereof subject to all restrictions applicable to New IP. Notwithstanding anything to the contrary herein, all Marks owned by Licensee, to the extent subject to Section 2.4 hereof shall, except with the written consent of Licensee, be used by Licensor in the form created by Licensee without material modification thereto except to the extent required by Applicable Law or applicable Governing Authority.
11.6 Licensee shall not engage in any conduct or take part in any activity that is or might be considered unfair competition or an infringement or other violation of the Licensor's rights in the Licensor Trademarks. Except as otherwise provided herein, Licensee acknowledges that it has no right whatsoever to object to or otherwise prevent the Licensor from allowing any other person to display the Licensor Trademarks or use them as part of any firm, corporation or business name except that Licensor shall not use or permit the use of Licensor Trademarks in the Territory in connection with any business which is similar to or competitive or potentially competitive with the Licensee’s Pharmaceutical Business in the Territory.
Section 12. Third-Party Infringement.
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(a) Licensee shall first send to the Licensor a notice (the “Offset Notice”) specifying the amount of Licensee's claim and the manner in which it was calculated, identifying, to the extent applicable, the provisions hereof asserted to give rise to the Claim and briefly identifying the facts which constitute the basis of such obligation or Claim.
(b) Within 30 days after Licensee delivers the Offset Notice to Licensor, Licensor shall deliver to Licensee a written notice (the “Dispute Notice”) identifying in reasonable detail which Claims, or parts thereof, Licensor questions in good faith or does not question in good faith, as the case may be, and the reasons therefor. If within 30 days after giving the Offset Notice, Licensee does not receive a Dispute Notice from Licensor, Licensee shall be entitled to request TO LLC in writing, with a copy to Licensor, to offset the amount of any such Claim against payments due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis License Agreement; provided, that if such Claim is later defeated, defensed, settled or otherwise resolved for a cost to Licensee (the “Claim Resolution Amount”) which is less than the amount offset with respect to such Claim, then Licensee shall promptly instruct TO LLC to remit to Licensor the amount of the difference between the amount of such offset and the Claim Resolution Amount; provided, that if such instruction to TO LLC is not effectuated by TO LLC, then Licensee shall remit such amount directly to Licensor.
(c) If within 30 days after giving the Offset Notice, Licensee receives a Dispute Notice from Licensor, then (i) with respect to any portion of a Claim not questioned, the offset provisions of Section 13.7(b) above shall apply, and (ii) with respect to any portion of a Claim questioned, Licensee shall be entitled to request TO LLC to provisionally offset the amount thereof against MM Royalties due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis Agreement, by depositing any such amount in escrow with legal counsel to TO LLC.
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(d) Any amounts questioned and held in escrow pursuant to Section 13.7(c)(ii) shall be held until six (6) months from the date of Licensee’s receipt of a Dispute Notice from Licensor, unless by such date the Claim becomes subject to a litigation, arbitration or other legal proceeding between the Parties or against one or more of the Parties (a ”Proceeding”). In the event the Claim does not become subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute € (e) Notice from Licensor, the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor. In the event the Claim becomes subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute Notice from Licensor, the funds shall continue to be held in escrow until the Claim in respect thereof is resolved by agreement of the parties or an order of a court of competent jurisdiction directs payment of the disputed amount.
(e) Upon resolution of a Claim in accordance with the provisions of Section 13.7(d), the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor to the extent required in accordance with the terms of the resolution of such Claim, and to the extent not so required to be so paid over to Licensor shall be paid to Licensee in settlement of its Claim, and all interest or other income, if any, which has been earned with respect to any such cash amount shall be allocated between Licensor and Licensee in proportion to their respective entitlements to such sum. Licensee and Licensor shall have no other responsibility or liability to account for any interest with respect to any amount so withheld or otherwise with respect to any Claim.
14.1 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, Licensor and any Affiliate thereof, will not market or sell Pharmaceutical Products derived from Cannabis or provide advisory services relating thereto in the Territory without the prior written consent of Licensee, which after a Licensor Exit Event will not be unreasonably withheld, delayed or conditioned; provided, that in such event reasonable provisions are effectuated to protect Licensee’s confidential information and business operations.
14.2 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, subject to the Affiliate License Agreements, Licensee and its Affiliates will not, within the Territory, without first obtaining the written consent of Licensor, market or sell Cannabis Products or provide advisory services relating thereto; provided, that the above restriction shall not apply with respect to Acquired IP and Licensee Excluded IP (and with respect to Licensee Excluded IP, subject to Section 2.7).
14.3 The obligations of each Party under this Section 14 run and inure to the benefit of each Party together with their successors and permitted assigns and shall survive the termination or expiration of this Agreement.
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If to Licensor: | Tikun Olam Ltd. |
000 Xxxxxx Xxxxxx | |
Xxx Xxxx, Xxxxxx | |
Attention: Xxxxxx Xxxxx, Director & Xxxxxx Xxxxxx, CEO | |
Fax: x000-0-0000000 | |
Email: xxxxxx@xxxxx-xxxx.xx.xx; xxxxxx@xxxxx-xxxx.xx.xx | |
with a copy to: | Xxxxxxx – Lax Law Offices |
Xxxxxxx Xxxxxx Tower, | |
11 Xxxxxxxx Xxxxx Rd., 12th floor | |
Ramat Gan | |
Attention: Xxxx Xxxxxxx, Adv. | |
Fax: x000-0-0000000 | |
Email: Xxxx@xx-xxx.xx.xx | |
If to Licensee: | Tikun Olam IP Ltd. |
c/o Trident Trust Company (Cayman) Ltd. | |
X.X. Xxx 000, Xxxxx Xxxxxx, XX0-0000 | |
Xxxxxx Xxxxxxx | |
Attention: Mirae Connor | |
Fax: + 0 (000) 000 0000 | |
Email: xxxxxxx@xxxxxxxxxxxx.xxx and | |
xxxxxxxxxxx0@xxxxx.xxx | |
with a copy to: | Xxxxxxx & Associates, LLC |
000 Xxxxx Xxxxxxx, Xxxxx X-00 | |
Xxxxxxxxx, Xxx Xxxx 00000 | |
Attention: Xxxx X. Xxxxxxx, Esq. | |
Fax: (000) 000-0000 | |
Email: xxxxxxxx@xxxxxxx-xxxxxxxxxx.xxx | |
and | |
xxxxxx@xxxxxxxxx.xxx | |
xxxxxxx@xxxxxxxxx.xxx |
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16.2 Prior Agreements/Oral Modification. Except as otherwise provided herein, this Agreement supersedes all prior agreements and constitutes the entire agreement and understanding between the Parties or otherwise with respect to the subject matter of this Agreement, including without limitation that certain Memorandum of Understanding dated as of April 19, 2015 between Licensor and Innocuous, LLC, a New York limited liability company, as amended by that certain letter agreement dated as of September 17, 2015 (the “MOU”). This Agreement may not be amended, modified in any manner or terminated orally or by course of conduct; no amendment, modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the Parties against whom the same is sought to be enforced. In the event of any explicit or implicit contradiction between the terms of this Agreement and the terms of the MedReleaf License which are applicable to Licensor or relate to the Tikun Olam IP (as defined in the MedReleaf License) the provisions of this Agreement shall prevail as between the Parties hereto.
16.4 Governing Law; Jurisdiction. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflict of laws provisions thereof. The Parties agree that, in the event of any action or suit as to any matters of dispute between the Parties, service of any process may be made upon the other Party in the same manner as the giving of notices under Section 16 of this Agreement. Notwithstanding anything to the contrary contained herein, in the event that any provision of this Agreement is unenforceable under the laws of the State of New York, and such provision is enforceable under the laws of any other state or jurisdiction, the Parties expressly agree that said provision shall be interpreted and construed under the laws of that state or jurisdiction.
16.5 Dispute Resolution. In the event of any dispute, claim, question, or disagreement arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both Parties. If the dispute cannot be settled through negotiation within a period of seven (7) days, the Parties agree to attempt in good faith to settle the dispute through mediation, administered by a mediator mutually agreeable to both Parties, before resorting to arbitration. If they do not reach such solution, or an agreed upon mediator cannot be identified, within a period of thirty (30) days, then, upon notice by either Party to the other, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
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16.6 Successors and Assigns; Assignment.
(a) The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Unless clearly inapplicable, all references in this Agreement to a Party shall be deemed to include any such Party’s successors and assigns. No Party to this Agreement will have the right to assign its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that (i) Licensee shall be permitted to assign its rights or obligations under this Agreement to any Affiliate of Licensee, and (ii) in the event of sale or transfer by Licensee of all or substantially all of its assets, this Agreement may be assigned to any successor or assignee thereof, except that the rights and obligations under this Agreement may not be assigned by Licensee in connection therewith without Licensor’s prior written consent prior to September 30, 2018, unless at the time of such assignment (y) the Enterprise Value (as defined below) of Licensee and the Pharmaceutical Affiliate on a consolidated basis in connection with such sale transaction equals or exceeds fifty million dollars ($50,000,000), or (z), the combined Enterprise Value of TO LLC, the Pharmaceutical Affiliate and Licensee, in each case on a consolidated basis, equals or exceeds two hundred fifty million dollars ($250,000,000).
(b) For purposes of this Section 16.6, the “Enterprise Value” of the Pharmaceutical Affiliate, TO LLC and Licensee shall be equal to (i) the pre-transaction value of such company in connection with or immediately prior to the sale of such company or its business (whether in connection with a sale of membership interests, or assets or a merger or consolidation) or (ii) if no such sale transaction has occurred, then the post-transaction value in connection with its most recent financing transaction; provided, however; that if the Parties do not agree on the determination of such Enterprise Value within ten (10) Business Days from the date that a proposed assignment by a Party subject to this Section 16.6 is disclosed by such Party to the other Party, then the determination thereof shall be made by the appointment by mutual agreement of an impartial United States recognized firm of independent certified public accountants or recognized valuation professionals (a “Valuator”), which Valuator shall be instructed to deliver a detailed report containing its calculation of the Enterprise Value (in connection with which calculation of Enterprise Value of the Valuator shall not include any minority discount) and within thirty (30) days after its engagement, which Valuator’s determination of Enterprise Value shall be final and binding. If one or more of the Parties objects or does not agree to the appointment of a Valuator within ten (10) Business Days after request by the other Party, the selection of the Valuator shall be submitted to binding arbitration pursuant to Section 16.5 hereof. The decision of the Valuator may be entered in any court having jurisdiction in New York and the costs and expenses incurred in connection with the arbitration shall be borne equally by the Parties.
(c) For purposes of this Section 16.6 and only this Section 16.6, a merger, consolidation or similar business combination as a result of which the members or stockholders owning a majority of the voting power of a company prior to the consummation thereof own less than a majority of the voting power of the surviving company in connection with such transaction shall be considered to be a sale of all or substantially all the assets of such company.
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(Signature page to follow)
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Tikun Olam Ltd. |
By: | /s/ Xxxxxx Xxxxx | |
Name: | ||
Title: |
Tikun Olam IP Ltd. | |
By: TO HOLDING GROUP LLC, Manager | |
By: T.O. GLOBAL LLC, Manager |
By: | /s/ Xxxxxxx Xxxxxx | |
Name: Xxxxxxx Xxxxxx | ||
Title: Chief Executive Officer |
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Exhibit A
Definitions
1. | “Acquired IP” shall mean Intellectual Property licensed by or acquired by Licensee or any Affiliate thereof from a third-party, provided it is not based on, derived from, inseparably or exclusively combined with, or inextricably embedded in any Licensor IP or in which any Licensor IP is inextricably embedded, or (b) owned, or the rights to which are owned, by the surviving company referenced in clause (a) or the acquirer of assets under clause (b) of the definition of “Change of Control Event”. |
2. | “Affiliate” shall mean with respect to any Person, any Person which directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person. |
3. | “Affiliate License Agreements” shall mean the Affiliate Pharmaceutical License Agreement and the US Medical Cannabis License Agreement. |
4. | “Affiliate Pharmaceutical License Agreement” shall have the meaning set forth in Section 2.2 of this Agreement. |
5. | “Agreement” shall have the meaning set forth in the preamble of this Agreement. |
6. | “Applicable Law” means all current constitutions, treaties, laws, statutes, codes, ordinances, official plans, orders, decrees, rules, regulations, and by-laws, whether domestic, foreign or international, of any Governmental Authority, and the common law, binding on or affecting any Person, property or matter referred to in the context in which such words are used. |
7. | “Business Day” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Applicable Law to be closed for business |
8. | “Cannabis” shall mean recreational and medical cannabis, and shall include hemp, hemp products and any compounds derived from Cannabis or hemp plants. |
9. | “Cannabis Business” shall mean cultivating, harvesting, producing, promoting, researching, developing, marketing, selling and distributing Cannabis Products, which include, but are not limited to, Cannabis plants or any parts thereof in dry or wet forms, extracts, infusions, and any compositions or formulations consisting of Cannabis plants' constituents as active ingredients or supplements, and further methods of obtaining all of the above (e.g. methods of extraction or processing), clinical and non-clinical uses, applications, and delivery systems and devices related thereto. |
10. | “Cannabis Product” shall mean any Cannabis or any Cannabis-derived and related product, including plant products, cultivation products, extraction products, infusion products, delivery or ingestion devices, machines, apparatuses or products and packaging products and marketing materials relating thereto, which is not a Pharmaceutical Product. |
11. | “Change of Control Event” shall mean (a) a sale or transfer of equity or other ownership interests or merger, consolidation or similar business transaction or combination as a result of which the ultimate members or stockholders owning, directly or indirectly, all of the voting power of Licensee prior to the consummation thereof shall own in the aggregate less than a majority of the voting power of the surviving company, or (b) a sale of all or substantially all of the assets of Licensee to an unrelated third party. |
12. | “Claim” shall mean any claim threatened in writing or any claim which is mature, non-contingent, fixed in amount and has been commenced or filed with an applicable Governmental Authority. |
13. | “Claim Resolution Amount” shall have the meaning set forth in Section 13.7 of this Agreement. |
14. | “ Clinical Trials” shall mean the conduct of research studies, clinical or non-clinical testing, and clinical trials, including but not limited to pre-clinical investigations and randomized, placebo-controlled trials of cannabis-based or cannabis-derived compounds, whether or not as a continuation of prior clinical trials and research studies conducted by Licensor or new clinical trials and research studies, whether conducted by Licensor with specific or direct collaboration with Licensee or otherwise by Licensee. |
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15. | “Clinical Trials Services” shall mean the services provided by Licensor relating to and in connection with all aspects of the conduct of Clinical Trials. |
16. | “Cayman Payment” shall have the meaning set forth in Section 3 of this Agreement. |
17. | “Confidential Information” shall have the meaning set forth in Section 9 of this Agreement. |
18. | “Design and Operations Services” shall have the meaning set forth in Section 7.1(c) of this Agreement. |
19. | “Disclosing Party” shall have the meaning set forth in Section 9 of this Agreement. |
20. | “Effective Date” shall have the meaning set forth in the preamble of this Agreement. |
21. | “Enterprise Value” shall have the meaning set forth in Section 16.6 of this Agreement. |
22. | “Essentially Derived Variety” shall mean any strain of Cannabis derived from any of TO's Strains, whether intentionally or otherwise. |
23. | “Governmental Authority” shall mean any federal, state, national, supranational, local or other government, whether domestic or foreign, including any subdivision, department, agency, instrumentality, authority (including any regulatory authority), commission, board or bureau thereof, or any court, tribunal or arbitrator. |
24. | “Indemnified Party” shall have the meaning set forth in Section 13.4 of this Agreement. |
25. | “Indemnifying Party” shall have the meaning set forth in Section 13.4 of this Agreement. |
26. | “Infringement Claim” shall have the meaning set forth in Section 13.1 of this Agreement. |
27. | “Intellectual Property” shall have the meaning set forth in the second recital of this Agreement. |
28. | “License” shall have the meaning set forth in Section 2.1 of this Agreement. |
29. “Licensee” shall have the meaning set forth in the preamble of this Agreement.
30. | “Licensee Excluded IP” shall mean Intellectual Property created by Licensee or an Affiliate thereof outside of the State of Israel, without any non-deminimis involvement of Licensor, and which is not based on, derived from or inseparably or exclusively combined with or inextricably embedded in any Licensor IP or in which any Licensor IP shall be inextricably embedded, written notice of the development of such Licensee Excluded IP shall have been provided by Licensee to Licensor reasonably promptly upon commencement of its use, which notice shall include a description thereof. Licensee Excluded IP shall not include Acquired IP. |
31. | “Licensee IP” shall mean the New IP, New Strains and the results of Clinical Trials, other than (i) Licensee Excluded IP and (ii) Acquired IP. |
32. | “Licensor” shall have the meaning set forth in the preamble of this Agreement. |
33. | “Licensor Additional IP” shall have the meaning set forth in Section 2.2 of this Agreement. |
34. | “Licensor IP” shall have the meaning set forth in the second recital of this Agreement. |
35. | “Licensor Exit Event” shall mean (a) a sale or transfer of all of the equity or other ownership interests or merger, consolidation or similar business transaction or combination with or to a purchaser which, directly or through an Affiliate, on a consolidated basis, is a competitor of Licensee, as a result of which the ultimate members or stockholders owning, directly or indirectly, all of the equity interests of Licensee prior to the consummation thereof shall own no equity interests in the surviving company, or (b) a sale of all or substantially all of the assets of Licensor to an unrelated third party. |
36. | “Licensor Trademarks” means Licensor-owned, but not licensed, trademarks, trade names, logos, service marks, designs, emblems, signs, slogans, other similar designations of source or original and general intangibles of like nature, specified in Exhibit C, together with the goodwill relating thereto. |
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37. | “Losses” means all losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, or out of pocket third-party costs or expenses of whatever kind, including reasonable attorneys’ fees, the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers, actually awarded or incurred, including attorneys’ fees and expenses. |
38. | “Marks” shall have the meaning set forth in Section 11.5 of this Agreement. |
39. | “Medical Cannabis Product” shall mean any Cannabis or any Cannabis-derived or related product, including plant products, cultivation products, extraction products, infusion products, delivery or ingestion devices, machines, apparatuses or products and packaging products and marketing materials relating thereto, which (a) is used for medical purposes, (b) is not a Pharmaceutical Product, and (c) is not subject to regulation as a drug, medicine or controlled substance by the European Medicines Agency (if within the European Union) or a similar regulatory authority in the applicable jurisdiction. |
40. | “MedReleaf” shall mean MedReleaf Corporation, a corporation organized under the laws of the Province of Ontario, Canada. |
41. | “MedReleaf License” shall mean that certain License Agreement, dated as of July 17, 2013, as amended, by and between MedReleaf and Licensor. |
42. | “MOU” shall have the meaning set forth in Section 16.2 of this Agreement. |
43. | “MM Royalties” shall have the meaning set forth in Section 12.3 of this Agreement. |
44. | “New IP” shall have the meaning set forth in Section 2.2 of this Agreement; provided, however, that following a Change of Control Event, for purposes hereof, “New IP” shall not include Intellectual Property created by Licensee or an Affiliate thereof within the State of Israel, without any non-deminimis involvement of Licensor, and which is not based on, derived from or inseparably or exclusively combined with or inextricably embedded in any Licensor IP or in which any Licensor IP shall be inextricably embedded. |
45. | “New Strains” shall have the meaning set forth in Section 2.2 of this Agreement. |
46. | “Organizational Documents” shall mean the certificate or articles of incorporation, organization or formation and the bylaws, operating agreement, memorandum or articles of association or organization, or similar organizational documents, as applicable. |
47. | “Notice” shall have the meaning set forth in Section 2.7 of this Agreement. |
48. | “Offer” shall have the meaning set forth in Section 2.7 of this Agreement. |
49. | “Offeror” shall have the meaning set forth in Section 2.7 of this Agreement. |
50. | “Party” shall mean the signatories to this Agreement as set forth in the preamble of this Agreement. |
51. | “Payment” shall have the meaning set forth in Section 3 of this Agreement. |
52. | “Person” shall mean an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity. |
53. | “Pharmaceutical Affiliate” shall mean TO Pharmaceuticals LLC., a Delaware limited liability company. |
54. | “Pharmaceutical Business” shall have the meaning set forth in the preamble of this Agreement. |
55. | “Pharmaceutical Product” shall mean, with respect to each applicable jurisdiction, any product, compound, medicine or therapeutic which is subject to regulation as a medical drug, medicine or controlled substance in such jurisdiction by the European Medicines Agency (if within the European Union) or any national regulatory agency or authority. |
56. | “Receiving Party” shall have the meaning set forth in Section 9 of this Agreement. |
57. | “Representative” shall mean any director, officer, employee, member, manager, agent, contractor or advisor who shall have access to any Confidential Information. |
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58. “Residual Information” means any Confidential Information, which may be retained, following the termination of this Agreement, in intangible form in the minds of the Representatives.
59. | “Services” shall mean the Training Services, the Design and Operations Services and the Clinical Trials Services. |
60. | “Shortfall” shall have the meaning set forth in Section 13.3 of this Agreement. |
61. | “Territory” shall have the meaning set forth in Section 2.1 of this Agreement. |
62. | “Third-Party Claim” shall have the meaning set forth in Section 13.4 of this Agreement. |
63. | “Third-Party IP” shall have the meaning set forth in Section 2.10 of this Agreement. |
64. | “TO LLC” shall have the meaning set forth in Section 2.2 of this Agreement. |
65. | “TO Strains” shall have the meaning set forth in Section 2.6 of this Agreement. |
66. | “Training Services” shall have the meaning set forth in Section 7.1(b) of this Agreement. |
67. | “United States” shall mean the United States of America and its territories and possessions. |
68. | “US Medical Cannabis License Agreement” shall have the meaning set forth in Section 2.2 of this Agreement. |
69. | “Valuator” shall have the meaning set forth in Section 16.6 of this Agreement. |
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Exhibit B
List of Licensor IP
· | All of Licensor’s logos, names, tag lines, packaging, trade dress and other proprietary property or rights reflecting or relating to the Tikun Olam brand and the trademarks or trade names of any strains subject to this License Agreement. |
· | Licensor’s Trademarks, Tradenames and Service Marks worldwide, including those listed on Exhibit C here to. |
· | Licensor Patent and Patent Applications |
CANNABIS PLANT NAMED EREZ | ||||||
Type | Country | Filing Date | App No. | |||
PLANT | United | 11/12/2015 | 14/757,040 | |||
PATENT | States | |||||
APPLICATION | ||||||
CANNABIS PLANT NAMED MIDNIGHT | ||||||
Type | Country | Filing Date | App No. | |||
PLANT | United | 11/12/2015 | 14/757,041 | |||
PATENT | States | |||||
APPLICATION | ||||||
CANNABIS PLANT NAMED AVIDEKEL | ||||||
Type | Country | Filing Date | App No. | |||
PLANT | United | 11/12/2015 | 14/757,039 | |||
PATENT | States | |||||
APPLICATION | ||||||
CANNABINOID AND CANNABIS-BASED COMPOSITIONS AND METHODS FOR THE TREATMENT OF INFLAMMATORY CONDITIONS OF THE GASTROINTESTINAL TRACT | ||||||
Type | Country | Filing Date | App No. | |||
PROVISIONAL | United | 28/3/2016 | 62/313,882 | |||
APPLICATION | States | |||||
A MODEL FOR OPTIMIZING TREATMENT WITH CANNABIS-BASED AND/OR CANNABINOID COMPOSITIONS AND A SYSTEM AND METHODS USING THEREOF | ||||||
Type | Country | Filing Date | App No. | |||
PROVISIONAL | United | To be filed | ||||
APPLICATION | States |
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· | Licensor’s Applications for Plant Breeders Rights (PBR). |
EREZ | ||||||
Type | Country | Filing Date | App No. | |||
PBR | Israel | 13/3/2013 | 4436/13 | |||
PBR | Canada | To be filed | ||||
MIDNIGHT | ||||||
Type | Country | Filing Date | App No. | |||
PBR | Israel | 13/3/2013 | 4437/13 | |||
PBR | Canada | To be filed | ||||
AVIDEKEL | ||||||
Type | Country | Filing Date | App No. | |||
PBR | Israel | 13/3/2013 | 4438/13 | |||
PBR | Canada | To be filed |
· | The following strains of Cannabis: |
Variety Name | Type | ||
o | El-na | Indica | |
o | Avidekel | Indica | |
o | Xxxxxx | Indica | |
o | Midnight | Sativa | |
o | Alaska | Sativa | |
o | Or | Indica | |
o | Erez | Indica | |
o | Xxxxx | Indica | |
o | Gog & Magog | Indica | |
o | Little Devil | Indica | |
o | Jasmine | Indica | |
o | Zohar | Sativa | |
o | Shira | Sativa | |
o | Tal | Indica | |
o | Barak | Indica | |
o | Omer | Sativa | |
o | Mango | Sativa | |
o | Xxxx Xxxxx | Indica |
· | Proprietary Trade Secrets, including genetics, cultivating, harvesting, extraction, and distillation techniques and processes, including: |
Tikun Olam Grow System
Tikun Olam has developed proprietary cultivation methods that rely on environmental systems designs that provide the optimal formula for the cultivation of consistent pharmaceutical-grade cannabis at above industry average yields.
Formulas
Optimized nutrient mixes (irrigation product applications) for cultivating healthy plants targeting active ingredients such as THC and CBD production. Applicable for mother plants, clone plants and flowering plants.
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Designs
Validated production room designs that meet GPP and Israeli Ministry of Health’s technical specifications. Applicable for flowering rooms, drying rooms, mother rooms and cloning rooms, designs are proven to meet the technical release criteria allowing for repetitive compliance and quick to market sale of products.
ISO & GMP Certification – Tikun Olam’s grow system, processes and workflow have been designed to meet ISO guidelines and ultimately GMP certification.
Environmental systems – The implementation of our environmental systems ensure optimal temperature, humidity, CO2, odor control and air quality within the grow rooms. This system is designed to provide the perfect environment in all stages of production and processing.
Centralized Irrigation Systems – Fully automated centralized irrigation systems to ensure consistent and ideal levels of water and nutrients. This system features water purification, sterilization and complete monitoring and control.
Integrated Control Systems – The implementation of our control system integrates lighting, HVAC, irrigation and other components to control all aspects of the operation.
Advanced Cultivating Techniques – A grow system that has been optimized for plant cycle length, density, pruning, harvesting, drying and curing. This system incorporates advanced cultivating techniques that will maximize yields and provide consistently high quality product.
Advanced Extraction Expertise – Experience in all different types of extraction methods, which will be taught to Licensee.
Isolating Cannabinoids - Provide knowledge and know-how to Licensee related to the process of isolating cannabinoids found within the cannabis plant.
Quality Control Systems
A Quality Control/Assurance framework, including comprehensive Standard Operating Procedures (SOPs) designed to carry out specific cannabis production methods in compliance with GPP and Israeli Ministry of Health requirements. Maintains operational consistency and compliance while allowing IP methods to achieve their desired outputs.
Patient Treatment Information
Patient data that provides guidance on treatment.
Product Lines
All of Tikun Olam’s proprietary products, including delivery devices, delivery methods, packaging and ancillary products will be provided to Licensee.
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Exhibit C
List of Licensed Trademarks, Tradenames and Service Marks
Registered:
Type | Country | Filing Date | App No. | TM | ||||
TRADEMARK | United States | 13/11/2012 | 85/777,588 | Tikun Olam | ||||
TRADEMARK | United States | 23/01/2014 | 86/172,750 | EREZ | ||||
TRADEMARK | United States | 23/01/2014 | 86/172,744 | MIDNIGHT | ||||
TRADEMARK | United States | 23/01/2014 | 86/172,749 | AVIDEKEL |
Unregistered:
o | El-na |
o | Xxxxxx |
o | Alaska |
o | Or |
o | Xxxxx |
o | Gog & Magog |
o | Little Devil |
o | Xxxxxxx |
x | Xxxxx |
o | Shira |
o | Xxx |
x | Xxxxx |
o | Xxxx |
o | Mango |
O | Xxxx Xxxxx |
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