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PRODUCT LICENSE, DISTRIBUTION AND
MANUFACTURING AGREEMENT
This Agreement (this
“ Agreement ”), effective this 28th day of
March, 2008, by and between MYGENE INTERNATIONAL, INC. (“
MGI ”), a Utah corporation, having its principal place
of business at 7651 South 700 West, Suite 102, Midvale, Utah,
84047, USA and AMDL, INC. (“ AMDL ”), a Delaware
corporation, having its principal place of business at 2492 Walnut
Ave., Suite 100, Tustin CA 92780-6953, USA. MGI and AMDL may
hereinafter each be referred to as a “ Party ”
or collectively as the “ Parties. ”
WITNESSETH
WHEREAS,
MyGene Co., Ltd., a South Korean company, has granted MGI an
exclusive worldwide license to Product (as hereinafter defined),
excluding North Korea and South Korea;
WHEREAS,
such license agreement between MyGene Co., Ltd and MGI is hereby
incorporated into this Agreement FOR REFERENCE ONLY, and with no
implied rights, and is attached as Exhibit A to this
Agreement;
WHEREAS,
MGI has certain licensed rights from MyGene Co., Ltd., including
the right to grant sublicenses with respect to certain Patents (as
hereinafter defined), Trademarks (as hereinafter defined),
Technology (as hereinafter defined), and Product;
WHEREAS,
MGI wishes to grant to AMDL an Exclusive (as hereinafter defined)
sublicense to use the Patent, Trademark and Technology in
manufacturing, promoting, marketing, distributing, and selling
Product in Territories One and Two (as hereinafter defined);
WHEREAS,
AMDL desires to obtain said sublicense, on the terms and subject to
the conditions set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the promises, mutual covenants, and
agreements contained herein, MGI and AMDL hereby agree as
follows:
1. DEFINITIONS
1.1.
“ Affiliate ” of a Party shall mean any
corporation or other business entity directly or indirectly owned
or controlled by a Party through ownership of more than twenty-five
percent (25%). As used herein, the term “control” means
possession of the power to direct, or cause the direction of the
management and policies of a corporation or other entity whether
through the ownership of voting securities, by contract or
otherwise.
1.2
“ Change of Control ” means (a) any
transaction as a result of which any person or entity becomes the
“beneficial owner” (as defined in Rule 13d-3 of
the U.S. Securities and Exchange Act of 1934), directly or
indirectly, of securities of such Party, representing more than 50%
of the total voting power of any of their then outstanding voting
securities of such Party; or (b) the sale, transfer or other
disposition of all or substantially all of the assets of any of
such Party; provided , however , that a transaction
shall not constitute a Change of Control if its sole purpose is to
change the state of incorporation of such Party or to create a
holding company that will be owned in substantially the same
proportions by the persons who held the securities of such Party
(as applicable) immediately before such transaction.
1.3.
“ Closing Date ” shall mean the date that is
ninety (90) days after the Effective Date, or such earlier
date as the Parties mutually agree.
1.4.
“ Effective Date ” shall mean the date indicated
first above as the date on which this Agreement will take
effect.
1.5.
“ Exclusive ” shall mean that MGI will not in
Territory One and Territory Two: (a) directly or indirectly market,
sell or distribute the Product, or any component, Technology,
Patent or Trademark related to the Product to any other person or
entity for the Licensed Use; (b) make, manufacture, or have
made the Product by any person or entity that would violate the
Licensed Use; or (c) permit or allow any of the foregoing.
1.6.
“ Licensed Use ” shall mean the right to make,
manufacture, and have made, use and sell the Product, the
Technology, the Patents and the Trademark, as applicable, pursuant
to Sections 2.1-2.4.
1.7.
“ Net Sales ” shall mean gross sales of Product,
less transportation charges, insurance, taxes and other
governmental charges, normal and customary trade, quantity and cash
discounts, and allowances or credits to customers.
1.8.
“ Patents ” shall mean all patents and patent
applications related to the Product or to the Licensed Use of the
Product, in existence as of the Effective Date, and any divisions,
re-issues, continuations, and continuations-in-part of their
equivalents, and any foreign equivalents thereof that may or may
not yet have been filed. Patents shall also include any patents or
patent applications filed by MGI before or during the Term, which
disclose improvements made to the Product, use of Product, or
methods of manufacturing Product, as described in Section 2.4.
Exhibit B to this Agreement lists all known MGI owned
and licensed Patents related to the Product or to the Licensed Use
of the Product, filed on or before the Closing Date, which are
relevant to Territories One and Two. If the contents of
Exhibit B change between the Effective Date and the
Closing Date, MGI shall update Exhibit B , which
updated version shall become part of this Agreement.
1.9.
“ Product ” shall mean “MyHPV
Kit™” and any improvements made solely to the specific
“MyHPV Kit™” system at anytime before or during
the Term. “MyHPV Kit™” is an HPV chip diagnostic
test kit, as described in the license agreement attached hereto as
Exhibit A , to which MGI has an exclusive worldwide
license, excluding North Korea and South Korea, and to which MGI
has granted AMDL a right to the Licensed Use of the Product in
Territory One and Territory Two.
1.10.
“ Technology ” shall mean MGI’s
information and know-how related to the Patents, Product, and
methods of manufacturing Product, which are necessary to the
Licensed Use of the Product in Territory One and Territory Two.
1.11.
“ Territory One ” shall mean the country of
China (including Hong Kong).
1.12
“ Territory Two ” shall mean: Taiwan, Singapore,
Malaysia, Thailand, Cambodia and Vietnam. Together Territory One
and Territory Two may hereinafter be referred to as “
Territories One and Two ” or the “
Territories .”
1.12.
“ Trademark ” shall mean all registered and
common law trademarks associated with the Product as of the
Effective Date of this Agreement or at anytime during the Term.
Exhibit C to this Agreement details all Trademarks that
exist as of the Effective Date of this Agreement.
2. GRANT OF
LICENSE
2.1.
Subject to the terms of this Agreement, MGI hereby grants AMDL,
during the Term, an Exclusive sublicense to the Licensed Use of the
Product, Patents, Trademark and Technology in Territory One.
2.2.
Subject to the terms of this Agreement, MGI also grants to AMDL,
during the Term, an Exclusive sublicense to the Licensed Use of the
Product, Patents, Trademark and Technology for Territory Two. The
Parties agree that Territory One will be pursued first. AMDL shall
begin such production promptly after its manufacturing capabilities
for the Product have been established.
2.3. AMDL
will not directly or indirectly manufacture, make, have made,
market, sell or distribute the Product (a) outside the
Territories or (b) inside the Territories for use other than
the Licensed Use, in each case without prior written consent from
MGI.
2.4.
Notwithstanding anything to the contrary in this Agreement, AMDL
acknowledges that MGI owns and shall continue to own the Product,
the Patents, Technology and the Trademark worldwide. The
sub-license that MGI is granting to AMDL pursuant to this Agreement
does not constitute a sale by MGI to AMDL of MGI’s ownership
interests in the Product, the Patents, Technology and the Trademark
within or without Territories One and Two. If, during the term of
this Agreement, MGI materially develops or otherwise materially
acquires any modifications to the Product or methods of
manufacturing the Product, such modifications shall be the sole and
exclusive property of MGI, and shall be included within the scope
of Product as defined in Article 1 of this Agreement. AMDL
shall have the right to make, have made, use, market and sell the
modified Product, in accordance with the terms of this
Agreement.
3. LICENSE FEES AND
ROYALTIES
3.1. In
consideration for the license granted hereunder, AMDL shall pay MGI
the following initial license fee in U.S. Dollars:
(a) AMDL shall remit to MGI an initial license fee of two
hundred and fifty thousand dollars ($250,000), which shall be
payable as follows: A non-refundable payment of ten thousand
dollars ($10,000) of the two hundred and fifty thousand dollar
($250,000) initial license fee is due immediately on the Effective
Date of the Agreement. Thirty (30) days after the Effective
Date, AMDL shall remit to MGI an additional non-refundable ten
thousand dollar ($10,000) deposit. Sixty (60) days after the
Effective Date, AMDL shall remit to MGI a third non-refundable ten
thousand dollar ($10,000) deposit. This initial aggregate thirty
thousand dollar ($30,000) deposit is non-refundable and represents
AMDL’s payment in exchange for its right to perform due
diligence between the Effective Date and the Closing Date. On the
Closing Date AMDL shall remit to MGI an additional non-refundable
twenty thousand dollar ($20,000) deposit. AMDL shall pay MGI the
final two hundred thousand dollars ($200,000) of the initial
license fee on or before the date that is ninety (90) days
after the Closing Date.
(b) At any time during the first ninety (90) days from
the Effective Date, AMDL shall have the unconditional right to
terminate the Agreement based on the findings of its due diligence
investigation; provided that if AMDL elects to so terminate,
AMDL shall expressly inform MGI in writing of its intent at anytime
up to and including the Closing Date, at which point this Agreement
shall terminate; if AMGL does not so notify MGI, this Agreement
shall remain in full force and effect through the remainder of the
Term, unless otherwise terminated as provided herein. In the event
of such an early termination by AMDL, all license fees paid will
remain non-refundable and all the Parties’ costs in
connection with their due diligence will remain the responsibility
of the Party incurring such costs.
3.2. In
consideration for the license granted hereunder, and in addition to
the license fees due under Section 3.1 above, AMDL shall pay
MGI the following royalty fees in U.S. Dollars:
(a) During the term of the Agreement, a royalty fee of fifteen
percent (15%) on the Net Sales of Product in Territory One and Two,
until such time as royalty fee payments reach a total of seven
hundred and fifty thousand dollars ($750,000). The payment of
royalty fees on Net Sales shall be payable within thirty
(30) days of the end of each calendar quarter. AMDL shall have
the right to prepay any and all such royalty fees and shall have
the right to deduct such prepayment from future royalty payments as
required under this Agreement.
(b) Once AMDL has paid MGI the seven hundred and fifty
thousand dollar ($750,000) minimum threshold royalty fee payments,
the royalty fee will decrease to seven and one half percent (7.5%)
on Net Sales of the Product in Territory One and Two for the
remainder of the Term.
3.3. AMDL
shall pay to MGI royalties as set forth in Section 3.2 within
thirty (30) days of the end of each calendar quarter. If the
payment is not mailed within the thirty (30) day grace period,
it is considered delinquent, and MGI may charge AMDL an annual
interest rate, compounded monthly of up to the Wall Street Journal
published Prime Rate.
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4. MARKET APPROVAL,
TECHONOLOGY, AND COMMERCIALIZATION
4.1. AMDL,
at its sole expense, shall use its reasonable commercial efforts
to: (a) establish manufacturing capabilities; and (b) to
obtain regulatory market approval as necessary and in accordance
with State Federal Drug Administration (SFDA) requirements, or
appropriate regulatory requirements, for commercialization and
manufacturing in Territory One within one year from the Closing
Date.
4.2. AMDL
shall use its commercially reasonable efforts to accomplish the
following:
(a) In Territory One:
(i) obtain all regulatory market approvals necessary for
commercialization of the Product; (ii) launch the Product
within one year; and (iii) manufacture or have manufactured,
market, promote and sell the Product throughout the Term. Regarding
Territory One, if AMDL has not launched the Product in Territory
One within one year as specified above due to regulatory delay
beyond AMDL’s control, and AMDL has received MGI’s
written acceptance of the regulatory delay within 30 days, which
shall not unreasonably be withheld so long as AMDL is making
commercially reasonable efforts toward commercialization, AMDL
shall not be in default of this Agreement;
(b) In Territory Two:
(i) obtain all regulatory market approvals necessary for
commercialization of the Product; (ii) launch the Product
within two years; and (iii) manufacture or have manufactured,
market, promote and sell the Product throughout the Term. Regarding
Territory Two, if AMDL has not launched the Product in Territory
Two within two years as specified above due to regulatory delay
beyond AMDL’s control, and AMDL has received MGI’s
written acceptance of the regulatory delay, which shall not
unreasonably be withheld so long as AMDL is making commercially
reasonable efforts toward commercialization, AMDL shall not be in
default of this Agreement.
4.3. MGI
shall from time to time furnish AMDL with Technology as and to the
extent AMDL reasonably requests such Technology in connection with
any regulatory compliance necessary or appropriate for the Licensed
Use of the Product.
4.4. AMDL
shall provide to MGI, no later than 5 business days prior to the
Closing Date, a two-year commercialization plan for the
Territories, which plan shall be reasonably satisfactory to MGI. If
such plan is reasonably satisfactory to MGI, it shall be added as
Exhibit D to this Agreement and shall become part of
this Agreement. AMDL’s plan shall include: (a) a
regulatory plan for the Territories and an approximate timeline;
(b) a forecast of AMDL’s manufacturing capabilities in
the Territories; (c) a marketing plan for the Territories and
an approximate timeline; (d) a market opportunity profile; and
(e) a quarterly two-year sales projection, beginning from the
Closing Date of this Agreement.
5. REPORTING AND
REGULATORY OBLIGATIONS
5.1. AMDL
shall maintain or cause to be maintained a true and correct set of
records pertaining to the Net Sales. Beginning from the first
quarter of the first calendar year AMDL begins to sell the Product,
AMDL shall provide MGI with quarterly progress reports, detailing
the amount of Product sold and the realized Net Sales in the
Territories.
5.2. If a
disagreement arises, or at MGI’s reasonable request, during
the term of this Agreement with respect to royalty fees paid by
AMDL to MGI, AMDL shall permit an accountant selected and paid for
by MGI and reasonably acceptable to AMDL to have access during
ordinary business hours to such records as are maintained by AMDL
and may be necessary, as mutually agreed by the Parties, to
determine the correctness of any report and/or payment made under
this Agreement. Such accountant shall maintain in confidence, and
shall not disclose to MGI, any information concerning AMDL or its
operations or properties other than information directly relating
to the correctness of such reports and payments. If any royalty
payment is found to be under reported by more than 10%, then the
accountant fees will be paid by AMDL.
5.3. Each
of the Parties shall promptly notify the other Party in writing of
any technical or clinical advances, useful modifications, side
effects or new government regulations relating to the Product or
manufacturing of the Product that shall come to its knowledge. MGI
shall promptly inform AMDL of all actions and communications (even
if believed by MGI to be without foundation) by or threatened by a
regulatory or other governmental authority relating to Licensed Use
of the Product.
5.4.
Either Party shall notify the other promptly in writing of:
(a) any new market trends related to the Product or the
manufacturing of the Product, which may come to either
Party’s knowledge; and (b) any new product, which may be
competitive with the Product together with full details thereof
including prices and copies of any known promotional material.
6. INTELLECTUAL
PROPERTY
6.1. AMDL
shall cooperate fully with MGI on matters related to the filing and
prosecution of Patent applications related to all new inventions or
improvements on the Product developed by AMDL or an Affiliate
during the term of the Agreement.
6.
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