Exhibit 10.10

 

[Portions of this exhibit have been omitted because the information is both not
material and would likely cause competitive harm to the registrant if publicly
disclosed. The omissions have been indicated by bracketed asterisks (“[***]”).]

 

Patent and Know-How License and Cooperation Agreement

 

This Patent and Know-How License and Cooperation Agreement (the “Agreement”),
dated as of March 28, 2019 (the “Effective Date”), is by and between Applied DNA
Sciences, Inc., a Delaware corporation, with an address of 50 Health Sciences
Drive, Stony Brook, New York 11790, APDN (B.V.I.), Inc., a fully owned
subsidiary of Applied DNA Sciences, Inc. with an address of PO Box, 3170, Road
Town, Tortola, British Virgin Islands (collectively “Applied DNA” or “Licensor”)
and ETCH BioTrace S.A., a Panama corporation and a fully owned subsidiary of
TheraCann International Benchmark Corporation, with an address of International
Business Park Unit 5B, Building 3860 Panama Pacifico, Republic of Panama, 000000
(“ETCH BioTrace” or “Licensee”). Applied DNA and ETCH BioTrace shall each be
referred to as a “Party” and collectively as the “Parties.”

 

WHEREAS, Licensor is the owner of entire right, title, and interest in and has
the right to license to Licensee the Licensed Patents (as defined below), the
Licensed Know-How (as defined below) and the Applied DNA Technology (as defined
below);

 

WHEREAS, Licensee wishes to practice the Licensed Patents, the Licensed Know-How
and the Applied DNA Technology in the Exclusive and Non-Exclusive Fields of Use
(as defined below) in the Territory (as defined below), and Licensor is willing
to grant to Licensee a license to and under the Licensed Patents, the Licensed
Know-How and Applied DNA Technology upon the terms and conditions set out in
this Agreement; and

 

WHEREAS, the Parties further wish to collaborate on the strategic
commercialization of the Applied DNA Technology in the Exclusive and
Non-Exclusive Fields of Use.

 

NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.  Definitions. For purposes of this Agreement, the following terms shall have
the following meanings:

 

“Action” has the meaning set forth in Section 14.1.

 

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” for purposes of this
Agreement means the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise/direct or indirect ownership of more than fifty percent
(50%) of the voting securities of a Person, and “controlled by” and “under
common control with” have correlative meanings.

 

“Agreement” has the meaning set forth in the preamble.

 

 

 

  

“Applied DNA Technology” means Applied DNA’s proprietary or patented DNA
tagging, DNA tag application and DNA tag authentication technologies marketed
under SigNature® and/or CertainT® in the Exclusive and Non-Exclusive Fields of
Use.

 

“Backup License” has the meaning set forth in Section 16.1.

 

“Backup License Event” means an event where the Licensor:

 

(a) is dissolved or liquidated or takes any corporate action for such purpose;

 

(b) becomes insolvent or is generally unable to pay, or fails to pay, its debts
as they become due;

 

(c) files or has filed against it a petition for voluntary or involuntary
bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any
proceeding under any domestic or foreign bankruptcy or insolvency Law;

 

(d) makes or seeks to make a general assignment for the benefit of its
creditors; or

 

(e) applies for or has a receiver, trustee, custodian, or similar agent
appointed by order of any court of competent jurisdiction to take charge of or
sell any material portion of its property or business;

 

(f) ceases its business operations generally, or ceases to function as a going
concern or to conduct its operations in the normal course of business as
previously conducted;

 

(g) ceases the manufacture of the Applied DNA Technology in the Exclusive or
Non-Exclusive Field of Use; or

 

(h) fails to provide material aspects of the Applied DNA Technology to Licensee
for a period of more than twenty (20) consecutive Business Days, wherein said
failure is not caused by a Force Majeure Event or a Mutual Pricing Dispute.

 

“BL Exercise” shall mean written notice to Licensor of Licensee’s intention to
exercise its rights under the Backup License.

 

“Business Day” means a day other than a Saturday, Sunday, or other day which
commercial banks in New York, NY are authorized or required by Law to be close
for business.

 

 

 

 

“Confidential Information” means any business or technical information that is
disclosed hereunder by one Party or any of its Affiliates (the disclosing Party)
to the other Party or any of its Affiliates (the receiving Party). Confidential
Information shall include any and all technical and business information,
whether written, oral or graphic, that representatives of either Party may
disclose or reveal to the other Party, including but not limited to the Licensed
Know-How, financial plans and records, Information, marketing plans, business
strategies and relationships with third parties, client lists, present and
proposed products, trade secrets, information regarding customers and suppliers,
founders, employees and affiliates, that the receiving Party has a reasonable
basis to believe is confidential to the disclosing Party and is treated by the
disclosing Party as confidential. Confidential Information shall also include
the terms of this Agreement. Samples provided by one Party to the other are
understood to be Confidential Information of the providing Party. Such
Confidential Information shall not include information that:

 

(a)was known to the receiving Party prior to receipt from the disclosing Party,
as documented in written records or publications that lawfully are in the
possession of the receiving Party or known to the receiving Party prior to such
receipt;

 

(b)was lawfully available to the trade or to the public prior to receipt from
the disclosing Party;

 

(c)becomes lawfully available to the trade or to the public after receipt from
the disclosing Party through no act or omission on the part of the receiving
Party, its Affiliates or their directors, officers or employees;

 

(d)corresponds in substance to any information received in good faith by the
receiving Party from any third party and which is not subject to confidentiality
limitations; or

 

(e)is independently developed by an employee or agent of the receiving Party,
without reference to information received from the disclosing Party subsequent
to receipt of such information from the disclosing Party.

 

For all purposes of this Agreement, Confidential Information that is specific
shall not be deemed to be within any of the specified exceptions merely because
it is embraced by more general information in such exception. In addition, any
combination of features shall not be deemed to be within any of the specified
exceptions merely because individual features are in such exception, but only if
the combination itself and its principle of operation are in such exception.

 

“Development Plan” has the meaning set forth in Section 7.3.

 

“Effective Date” means the date set forth in the preamble.

 

“Exclusive Field of Use” means cannabis sativa L and cannabis sativa L
derivative products, excluding use in textiles.

 

“Force Majeure Event” has the meaning set forth in Section 19.2.

 

“Governmental Authority” means 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.

 

“Improvement” means any modification or enhancement to the Applied DNA
Technology whether developed or owned by Licensor, including, but not limited to
modifications and/or enhancements that increase performance, ease of use,
efficacy, broaden functionality, reduce cost and/or marketability.

 

“Improvement Notice” has the meaning set forth in Sections 5.1.

 

 

 

 

“Improvement Patent(s)” means all patent applications, and all patents issuing
therefrom, that claim Improvements, having a filing date or acquired by,
transferred, or licensed to Licensor on or after the Effective Date.

 

“Knowledge” means the actual knowledge of Licensor and its Affiliates.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any federal, state, local, or foreign government or political subdivision
thereof, or any arbitrator, court, or tribunal of competent jurisdiction.

 

“Licensed Know-How” means any and all technical information, trade secrets,
formulas, prototypes, specifications, directions, instructions, test protocols,
procedures, results, studies, analyses, raw material sources, data,
manufacturing data, formulation or production technology, conceptions, ideas,
innovations, discoveries, inventions, processes, methods, materials, machines,
devices, formulae, equipment, enhancements, modifications, technological
developments, techniques, systems, tools, designs, drawings, plans, software,
documentation, data, programs, and other knowledge, information, skills, and
materials owned or controlled by Licensor pertaining to the Licensed Patents and
useful in the sale, or use of the Applied DNA Technology, and any modifications,
variations, derivative works, and improvements of or relating to any of the
foregoing.

 

“Licensed Patent(s)” means the patents and patent applications listed in
Schedule A together with all patents that issue therefrom and all continuations,
continuations-in-part, divisionals, extensions, substitutions, reissues,
re-examinations, international counterparts, and renewals of any of the
foregoing.

 

“Licensed Patent Challenge” has the meaning set forth in Section 9.4.

 

“Licensee” has the meaning set forth in the preamble.     

 

“Licensor” has the meaning set forth in the preamble.

 

“Losses” means all losses, damages, liabilities, deficiencies, claims, actions,
judgments, settlements, interest, awards, penalties, fines, costs, or expenses
of whatever kind, including reasonable attorneys’ fees and the cost of enforcing
any right to indemnification hereunder, and the cost of pursuing any insurance
providers. 

 

“Mutual Pricing Dispute” has the meaning set forth in Section 7.4.

 

“Mutual Pricing Dispute Notice” has the meaning set forth in Section 7.4.

 

“Non-Exclusive Field of Use” means cannabis sativa L and cannabis sativa L
derivative products for use in textiles.

 

“Person(s)” means an individual, corporation, partnership, joint venture,
limited liability company, governmental authority, unincorporated organization,
trust, association, or other entity.

 

“Representatives” means a party’s and its Affiliates’ employees, officers,
directors, consultants, and legal advisors.

 

 

 

 

“Staged Payments” has the meaning set forth in Section 6.1.

 

“Sublicensee or Sublicensees” means any Person to whom or which Licensee grants
a sublicense, in whole or in part, under this Agreement.

 

“Supply Agreement” has the meaning set forth in Section 18.1(b).

 

“Term” has the meaning set forth in Section 15.1.

 

“Territory” shall mean worldwide.

 

“Valid Claim” means, on a country-by-country basis, a claim of an unexpired
issued or granted Licensed Patent as long as the claim has not been admitted by
Licensor or otherwise caused to be invalid or unenforceable through reissue,
disclaimer, or otherwise, or held invalid or unenforceable by a Governmental
Authority of competent jurisdiction from whose judgment no appeal is allowed or
timely taken.

 

2.License Grant.

 

2.1   Patent and Know-How License. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee during the Term a sublicensable,
pursuant to Section 4, exclusive right and license under the Licensed Patents
and Licensed Know-How to use, offer to sell, sell and import the Applied DNA
Technology in the Exclusive Field of Use in the Territory. Subject to the terms
and conditions of this Agreement, Licensor hereby also grants to Licensee during
the Term a sublicensable, pursuant to Section 4, non-exclusive right and license
under the Licensed Patents and Licensed Know-How to use, offer to sell, sell and
import the Applied DNA Technology in the Non-Exclusive Field of Use in the
Territory.

 

2.2  Limited Grant. Except for the rights and licenses granted by Licensor under
this Section 2, or otherwise set forth hereunder, this Agreement does not grant
to Licensee or any other Person any right, title, or interest by implication,
estoppel, or otherwise. All rights, titles, and interests not specifically and
expressly granted by Licensor hereunder are hereby reserved.

 

3.Transfer of Licensed Know-How. Licensor shall, within thirty (30) Business
Days after the Effective Date, disclose the Licensed Know-How to Licensee.
During the Term, upon reasonable notice and during Licensor’s normal business
hours, Licensor shall (a) designate one or more technical liaisons for
communications with Licensee’s technical staff, and (b) provide Licensee with
all necessary technical assistance from Licensor’s technical liaisons to answer
Licensee’s questions concerning the use of the Licensed Know-How as Licensee
reasonably requests.

 

4.Sublicensing.

 

4.1 Scope of Sublicense. No sublicense shall exceed the scope of rights granted
to Licensee hereunder. Licensee shall require all sublicensees to be in writing
and to: (a) include an agreement by the Sublicensee to be bound by the terms and
conditions of this Agreement; (b) include Licensor’s right to enforce its rights
in the Licensed Patents and Licensed Know-How; (c) provide that the term of the
sublicense thereunder shall not extend beyond the Term; and (d) indicate that
Licensor is a third party beneficiary and entitled to enforce the terms and
conditions of the sublicense. Licensee shall enforce all sublicenses at its cost
and shall be responsible for the acts and omissions of its Sublicensees. In the
event of the termination or expiration of this Agreement, all sublicense rights
shall terminate effective as of the termination or expiration of this Agreement.

 

 

 

 

4.2 Licensee Liability. Notwithstanding any sublicense agreement, Licensee shall
remain primarily liable to Licensor for all of Licensee’s duties and obligations
contained in this Agreement, including the payment of all consideration
hereunder. Any act or omission of a Sublicensee that would be a breach of this
Agreement if committed or omitted by Licensee will be a breach by Licensee. Each
sublicense agreement shall contain a right of termination by Licensee for the
Sublicensee’s: (a) breach of any payment; or (b) breach of any other terms or
conditions of the sublicense agreement that is also set forth, in substance, in
this Agreement, which breach would constitute a breach of this Agreement if
Licensee failed to comply therewith. In the event of a Sublicensee breach of
these obligations, and if after a reasonable cure period provided in the
sublicense agreement, not to exceed sixty (60) Business Days, the Sublicensee
fails to cure the Sublicensee breach, then Licensee shall terminate the
sublicense agreement by written notice to the Sublicensee within five (5)
Business Days thereafter and concurrently provide a copy of such notice to
Licensor.

 

4.3 Notice of Sublicense Agreement. Licensee shall deliver to Licensor a true,
complete, and correct copy of each sublicense agreement entered into by
Licensee, and any modification or termination thereof, within five (5) Business
Days following the applicable execution, modification, or termination of the
sublicense agreement.

 

5.Improvements

 

5.1  Notice of Improvements. No later than five (5) Business Days after the
filing date or, where applicable, the effective date of any assignment or
transfer to Licensor, of any relevant Improvement Patents, Licensor shall
provide written notice to Licensee (“Improvement Notice”) that identifies each
Improvement Patent and its filing or acquisition date and includes a summary of
the subject matter claimed in each Improvement Patent/copy of each Improvement
Patent. Immediately upon delivery of the Improvement Notice to Licensee, and
with no additional action required of the Licensee, each Improvement Patent
shall be a Licensed Patent. Licensor further agrees to license said Improvement
know-how to Licensee in the Exclusive and Non-Exclusive Fields of Use for the
Term.

 

5.2 Ownership of Improvements – Licensor. Subject to the terms of this
Agreement, all right, title and interest in the Improvements conceived, made or
reduced to practice in whole or in part by Licensor during the Term of this
Agreement, and all of Licensor’s patents and patent applications claiming any of
the same, shall remain the sole property of Licensor.

 

5.3 Ownership of Improvements – Licensee. All right, title, and interest in any
Improvements conceived, made, or reduced to practice in whole or in part by
Licensee during the Term of this Agreement, and all of Licensee’s patents and
patent applications claiming any of the Improvements, shall be jointly owned by
the Parties. Licensor agrees to exclusively license its ownership interest in
Improvements to Licensee in the Exclusive and Non-Exclusive Fields of Use in the
Territory for the Term without additional compensation under this Agreement.

 

 

 

 

6.Payments to Licensor.

 

6.1 Staged Payments. In consideration of the rights granted under Section 2,
Licensee shall make the following series of non-refundable payments to Licensor
as follows (the “Staged Payments”):

 

(a)$1,000,000 USD on or before April 15, 2019;

 

(b)$2,000,000 USD on or before June 30, 2019; and

 

(c)$2,000,000 USD on or before August 15, 2019

 

6.2 Payment upon Sale of Licensee. If Licensee is purchased or otherwise
acquired by a third-party, Licensor shall be entitled to twenty-five percent
(25%) of the purchase price consideration, whether such consideration is in the
form of cash, equities or a combination thereof. Payment to Licensor under this
Section 6.2 shall be made with thirty (30) Business Days of the closing of the
transaction.

 

7.Conversion to Non-Exclusive License

 

7.1 Minimum Cash Payments. Licensee agrees that during the Term, Licensee (or
its Sublincensees) must meet the following annual cash payment minimums to
Licensor in order to maintain the exclusive license provided in Section 2.1:

 

Year  Annual Cash Min.
Payment  1  $0  2  $2,000,000  3  $7,000,000  4  $10,000,000  5-9  $12,000,000 
10 - 14  $16,000,000  15- term  $20,000,000 

 

The Parties agree that the above annual cash payment minimums to Licensor may be
comprised of any combination of cash payments from Licensee or any Sublicensee
for DNA taggant, profit share, DNA authentication devices/reagents, DNA
authentication services, project fees, other service or product fees, and/or
other cash payments. Each annual cash payment minimum term shall be calculated
from the Effective Date anniversary.

 

7.2 Conversion to Non-Exclusive License. Subject to Section 7.3, in the event
Licensor does not receive the applicable annual cash payment minimum from
Licensee or any Sublicensee, the exclusive license grant in Section 2.1 shall
become non-exclusive for the Term. All other terms of this Agreement shall
remain unchanged.

 

 

 

 

7.3 Joint Development Plan. In lieu of the annual cash payment minimums for
years 1 and 2, the Parties agree to create, within sixty (60) Business Days of
the Effective Date, a mutually agreeable development plan for Licensee’s
commercialization of the Applied DNA Technology in the Exclusive and
Non-Exclusive Fields of Use (the “Development Plan”). The Development Plan will
contain Licensee commercialization milestones that shall be met by Licensee in
lieu of annual cash payment minimums for years 1 and 2. Licensee’s failure to
meet the commercialization milestones in the Development Plan shall be curable
by either: the payment of the annual cash payment due; or meeting the applicable
commercialization milestones in the Development Plan within sixty (60) Business
Days of Licensor’s written notice to Licensee of Licensee’s failure to meet such
applicable commercialization milestone. Licensee’s failure to meet the
applicable commercialization milestone within the 60 Business Day cure period,
wherein said failure is not cause by a Force Majeure Event, shall result in the
exclusive license grant in Section 2.1 reverting to a non-exclusive license
grant for the Term. All other terms of this Agreement shall remain unchanged.

 

7.4 Pricing Dispute. If after good faith negotiations, the Parties cannot reach
mutually agreeable pricing as set forth in Section 18 for a period of more than
fifteen (15) consecutive Business Days (a “Mutual Pricing Dispute”), Licensee
shall provide written notice to Licensor of the pricing dispute (the “Mutual
Pricing Dispute Notice”). If the Mutual Pricing Dispute is not resolved between
the Parties within seven (7) Business Days of Licensor’s Mutual Pricing Dispute
Notice, the annual cash payment minimum(s) applicable during the Mutual Pricing
Dispute shall be reduced pro rata according to the duration of the Mutual
Pricing Dispute utilizing the following formula: (((value of applicable annual
cash payment minimum)/261) x (number of Business Days of the Mutual Pricing
Dispute)) x (dispute value/historical 12 month sales))). If a Mutual Pricing
Dispute occurs within a time period encompassing more than one annual cash
payment minimum period, the aforementioned formula shall be used to calculate
the pro rata annual cash payment minimum reduction for each applicable annual
cash payment minimum period.

 

If a Pricing Dispute is not resolved between the Parties within thirty (30)
Business Days of the Mutual Pricing Dispute Notice, the Parties agree to submit
their dispute to a mutually agreeable third-party mediator whose decision on
pricing shall be binding for a period of one (1) year. If the Mutual Pricing
Dispute is submitted to a third-party mediator, the Mutual Pricing Dispute shall
be deemed resolved upon the date of the mediator’s decision.

 

8.Patent Prosecution and Maintenance.

 

8.1 Patent Prosecution. Subject to Section 8.2 and 8.3, for each patent
application and patent under the Licensed Patents, Licensor shall:

 

(a)  prepare, file, and prosecute such patent application:

 

(b)  maintain such patent;

 

(c)  pay all fees and expenses associated with its activities pursuant to
Section 8.1(a) and Section 8.1(b);

 

 

 

 

(d)  keep Licensee currently informed of the filing and progress of all material
aspects of the prosecution of such patent application and the issuance of
patents from any such patent application;

 

(e) notify Licensee six (6) months prior to the national phase entry deadline
for obtaining patent protection in any country or region of the world under the
Licensed Patents, and shall timely file national (or regional) stage patent
applications in accordance with Section 8.2(c) of this Agreement; and

 

(f)  notify Licensee in writing of any additions, deletions, or changes in the
status of such patent or patent application.

 

8.2 Abandonment.

 

(a) Licensor wishes to abandon any patent application or patent in respect of a
Licensed Patent, it shall give Licensee one-hundred-eighty (180) calendar days’
prior written notice of the desired abandonment, and Licensor shall not abandon
any such Licensed Patent except upon the prior written consent of Licensee. On
Licensee’s request, which may be provided at any time after the notice of
desired abandonment, Licensor shall assign to Licensee any such patent
application or patent that the Licensor wishes to abandon. Effective as of the
effective date of the assignment, such patent application or patent shall no
longer be a Licensed Patent.

 

(b) Licensee reasonably believes that Licensor, for any reason, is not
diligently prosecuting or maintaining any patent application or patent in
respect of a Licensed Patent, Licensee shall provide written notice to Licensor
of the perceived prosecution and/or maintenance deficiency. Licensor shall have
sixty (60) days to cure the deficiency to the reasonable satisfaction of
Licensee. If after the 60 day cure period Licensee reasonable believes that
Licensor has not cured the perceived prosecution and/or maintenance deficiency,
the Parties shall submit their dispute to a mutually agreeable third-party
mediator. In the event the third-party mediator concludes that Licensor has
failed to cure the prosecution and/or maintenance deficiency raised by Licensee,
Licensor shall immediately assign such patent application or patent to Licensee.
Effective as of the effective date of the assignment, such patent application or
patent shall no longer be a Licensed Patent.

 

(c) Licensee shall provide a list of countries or regions where patent
protection is sought within forty five (45) days of receiving a notice under
8.1(e) of this Agreement. The Parties shall agree on a filing strategy for each
country and Licensor shall pay for patent application filings, translations,
attorneys fees, prosecution costs and fees, and patent maintenance fees. Should
Licensee require patent protection in regions or countries not agreed to by
Licensor, Licensor shall assign the right to file, own and prosecute national
stage patent applications in such countries or regions to Licensee, such
national stage patent applications shall include those claiming priority to
PCT/US19/16385 and any related patent applications, but not those whose
international filing date has lapsed as of the Effective Date of this Agreement.

 

 

 

 

8.3 Vesting of Prosecution and Maintenance Obligations. In the event the
Licensor:

 

(a) takes any corporate action for dissolution or liquidation;

 

(b) becomes insolvent or is generally unable to pay, or fails to pay, its debts
as they become due;

 

(c) files or has filed against it a petition for voluntary or involuntary
bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any
proceeding under any domestic or foreign bankruptcy or insolvency Law;

 

(d) makes or seeks to make a general assignment for the benefit of its
creditors; or

 

(e) applies for or has a receiver, trustee, custodian, or similar agent
appointed by order of any court of competent jurisdiction to take charge of or
sell any material portion of its property or business;

 

for each patent application and patent under the Licensed Patents, the
obligation to:

 

(i) prepare, file, and prosecute such patent application:

 

(ii) maintain such patent; and

 

(iii) pay all fees and expenses associated with its activities pursuant to
Section 8.3(i) and Section 8.1(ii);

 

shall immediately vest with the Licensee.

 

9.Enforcement of Licensed Rights

 

9.1 Notice of Infringement or Third-Party Claims. If (a) either Party believes
that a Licensed Patent or Licensed Know-How is being infringed or
misappropriated by a third party in the Exclusive and/or Non-Exclusive Field of
Use in the Territory, or (b) if a third party alleges that any Licensed Patent
is invalid or unenforceable, or claims that the Applied DNA Technology, or its
use, development, manufacture, or sale infringes such third party’s intellectual
property rights in the Exclusive and/or Non-Exclusive Field of Use in the
Territory, the party possessing such belief or awareness of such claims shall
promptly provide written notice to the other party and provide it with all
details of such infringement or claim, as applicable, that are known by such
Party.

 

9.2 Right to Bring Action or Defend.

 

(a) Subject to Section 9.3(b), Licensor has the sole right and discretion to
prevent or abate any actual or threatened misappropriation or infringement and
attempt to resolve any claims relating to the Licensed Patents and Licensed
Know-How, including by (a) prosecuting or defending any inter-partes review,
post-grant review, covered business method patent review, opposition,
derivation, interference, declaratory judgment, federal district court, US
Patent and Trademark Office, US International Trade Commission, or other
proceeding of any kind, and (b) taking any other lawful action that Licensor, in
its sole discretion, believes is reasonably necessary to protect, enforce, or
defend any Licensed Patent or Licensed Know-How. Licensor has the right to
prosecute or defend any such proceeding in Licensor’s own name or, if required
by applicable Law, in the name of Licensee and may join Licensee as a party if a
court of competent jurisdiction determines Licensee is an indispensable party to
such proceeding. Licensee shall cooperate in all respects with Licensor in the
all actions taken under this Section 9, and assist in all reasonable ways,
including having its employees testify when requested, and make available for
discovery or trial exhibit relevant records, papers, information, samples,
specimens, and the like. Licensor shall bear its own costs and expenses in all
such proceedings and have the right to control the conduct thereof and be
represented by counsel of its own choice therein.

 

 

 

 

(b) If Licensor undertakes the enforcement or defense of any Licensed Patent:

 

(i)  any recovery, damages, or settlement derived from such suit, action, or
other proceeding shall be retained in its entirety by Licensor; and

 

(ii)  Licensor may settle any such suit, action, or other proceeding, whether by
consent order, settlement, or other voluntary final disposition, without the
prior written approval of Licensee provided that Licensor shall not settle any
such suit, action, or other proceeding in a manner that adversely affects the
rights of any of Licensee concerning the Licensed Patents and Licensed Know-How
without Licensee’s prior written consent, which consent may not be unreasonably
withheld or delayed.

 

9.3  Claims.

 

(a) If any suit, action, or other proceeding alleging invalidity or infringement
of any Licensed Patent is brought against Licensee or any Sublicensee, Licensor,
shall, as soon as practicable and, in no event later than thirty (30) Business
Days after commencement of such suit, action, or other proceeding, intervene and
take over the sole defense of the suit, action, or other proceeding at its own
expense.

 

(b) If Licensor fails to defend any such suit, action or other proceeding
alleging invalidity or infringement of any Licensed Patent against Licensee or
any Sublicensee, and the failure to so defend would have an adverse effect on
any Licensed Patents, then Licensee shall have the right to assume the defense
against such claim at its own expense and by counsel of its own choice; provided
Licensee shall not have the right to settle any patent infringement litigation
under this Section 9.3(b) in a manner that diminishes the rights or interests of
the Licensor without the consent of the Licensor (which shall not be
unreasonably withheld).

 

(c) During the pendency of any such proceeding or any appeal thereof, any
payment hereunder to Licensor shall be paid by Licensee into an interest-bearing
escrow account pending the outcome of such proceeding. Upon a favorable final
resolution of such proceeding or any appeal thereof retaining the full rights,
Licensee shall resume paying Licensor all amounts due under this Agreement, and
all funds in such escrow account shall be paid to Licensor. Upon an unfavorable
final resolution of such proceeding or any appeal thereof, the funds in such
escrow account shall be applied toward the damage award in such action, if any,
and the balance, if any, paid to Licensor.

 

 

 

 

9.4 Licensee Challenge To Licensed Patents. If, during the Term, Licensee, its
Affiliate and/or any Sublicensee institutes or actively participates as an
adverse party in, or otherwise provides material support to, any action, suit,
or other proceeding in the Territory to invalidate or limit the scope of any
Licensed Patent claim or obtain a ruling that any Licensed Patent claim is
unenforceable or not patentable (a ”Licensed Patent Challenge”), Licensor has
the right to immediately terminate this Agreement with notice to Licensee and
with no opportunity for Licensee to cure and this Agreement will immediately
terminate effective as of the first date of Licensee’s, its Affiliate’s and/or
any Sublicensee’s first filing or participation in the Licensed Patent
Challenge.

 

10.Compliance with Laws.

 

10.1 Regulatory Clearance. Licensee itself or through any of its Sublicensees
shall, at Licensee’s or Sublicensees’ expense, comply with all regulations and
safety standards concerning the Applied DNA Technology developed and
commercialized by or under the authority of Licensee and obtain all necessary
governmental approvals for the development, production, distribution, sale, and
use of the Applied DNA Technology developed and commercialized by or under the
authority of Licensee, including any safety or clinical studies.

 

10.2 Recordation of License. If recordation of this Agreement or any part of it
by a national or supranational agency is necessary for Licensee or Licensor to
fully enjoy the rights, privileges, and benefits of this Agreement, Licensee
shall, at its own expense and within sixty (60) Business Days of the Effective
Date, record this Agreement or all such parts of this Agreement and information
concerning the license granted hereunder with each such appropriate national or
supranational patent agency. Licensee shall (a) provide to Licensor for
Licensor’s review and approval all documents or information it proposes to
record at least thirty (30) Business Day’s prior to the recordation thereof, and
(b) promptly notify Licensor with verification of Licensee’s recordation or any
related agency ruling. In making any such disclosures, Licensee shall maintain,
to the fullest extent permitted by Law, the confidentiality of this Agreement,
the terms and conditions of this Agreement, and any other Licensor Confidential
Information. Any specific disclosure made in accordance with this Section and
not objected to by Licensor shall not constitute a breach of the Licensee’s
obligations under Section 11(Confidentiality).

 

10.3 Export Compliance. Neither Licensee nor any of its permitted Sublicensees
shall, directly or indirectly, export or re-export the Applied DNA Technology
(including any associated products, items, articles, computer software, media,
services, technical data, and other information) in violation of any applicable
U.S. Laws. Licensee and each Sublicensee shall include a provision identical in
substance to this Section in its agreements with its permitted Sublicensees,
third party wholesalers, distributors, customers, and end-users requiring that
these Persons comply with all applicable U.S. Laws, including all applicable
U.S. export Laws.

 

10.4 Patent Marking. Licensee and any permitted Sublicensee shall comply with
the patent marking provisions of 35 USC § 287(a), if applicable, by marking all
Licensed Products with the word “patent” or the abbreviation “pat.” and either
the numbers of the relevant Licensed Patents or a web address that is freely
accessible to the public and that associates the Licensed Products with the
relevant Licensed Patents. Licensee and any permitted Sublicensee shall also
comply with the patent marking laws of the relevant countries in the Territory.

 

 

 

 

11.Confidentiality

 

11.1 Confidentiality Obligations. Each Party (the “Receiving Party”)
acknowledges that in connection with this Agreement it will gain access to
Confidential Information of the other Party (the “Disclosing Party”). As a
condition to being provided with Confidential Information, the Receiving Party
shall, during the Term and for five (5) years thereafter:

 

(a) not use the Disclosing Party’s Confidential Information other than as
strictly necessary to exercise its rights and perform its obligations under this
Agreement; and

 

(b)  maintain the Disclosing Party’s Confidential Information in strict
confidence and, subject to Section 11.2, not disclose the Disclosing Party’s
Confidential Information without the Disclosing Party’s prior written consent,
provided, however, the Receiving Party may disclose the Confidential Information
to its Representatives who:

 

(i) have a need to know the Confidential Information for purposes of the
Receiving Party’s performance, or exercise of its rights concerning the
Confidential Information, under this Agreement;

 

(ii) have been apprised of this restriction; and

 

(iii) are themselves bound by written nondisclosure agreements at least as
restrictive as those set forth in this Section 11.1, provided further that the
Receiving Party shall be responsible for ensuring its Representatives’
compliance with, and shall be liable for any breach by its Representatives of,
this Section 11.1.

 

The Receiving Party shall use reasonable care, at least as protective as the
efforts it uses for its own confidential information, to safeguard the
Disclosing Party’s Confidential Information from use or disclosure other than as
permitted hereby.

 

11.2 Exceptions. If the Receiving Party becomes legally compelled to disclose
any Confidential Information, the Receiving Party shall:

 

(a)  if legally permitted to do so, provide prompt written notice to the
Disclosing Party so that the Disclosing Party may seek a protective order or
other appropriate remedy or waive its rights under this Section 11; and

 

(b)  disclose only the portion of Confidential Information that it is legally
required to furnish.

 

If a protective order or other remedy is not obtained, or the Disclosing Party
waives compliance under this Section 11, the Receiving Party shall, at the
Disclosing Party’s expense, use reasonable efforts to obtain assurance that
confidential treatment will be afforded the Confidential Information.

 

 

 

 

11.3 Compulsory Disclosure. If a Party is disclosing any Confidential
Information because it is required to do so to comply with a statute, ordinance
or regulation or compulsory legal process, including, without limitation, its
reporting requirements under the Securities Exchange Act of 1934, as amended,
and/or the Securities Act of 1933, as amended, such Party intending to make such
disclosure shall give the other Party at least five (5) Business Days prior
notice in writing of the text of the intended disclosure, unless such statute,
ordinance, regulation or compulsory legal process would require earlier
disclosure, in which event the notice shall be provided as early as practicable.
A Party that determines it is required to file this Agreement with the U.S.
Securities and Exchange Commission, Canadian SEDAR (System for Electronic
Document Analysis and Retrieval) or any other governmental authority, shall
request confidential treatment with respect to the terms of this Agreement,
shall consult in good faith with the other Parties regarding such confidential
treatment and shall use commercially reasonable efforts to have redacted from
any publicly available version such provisions as the Parties may agree from any
copies filed pursuant to such statute, ordinance, regulation or compulsory legal
process.

 

11.4 Disclosure of Agreement Existence. The Parties expressly acknowledge and
agree that each Party is permitted to publicly disclosure the existence of this
Agreement subject the confidentiality obligations contained herein with regards
to the terms of this Agreement.

 

12.Representations and Warranties

 

12.1 Mutual Representations and Warranties. Each party represents and warrants
to the other party that as of the Effective Date:

 

(a)  it is duly organized, validly existing, and in good standing as a
corporation or other entity as represented herein under the laws and regulations
of its jurisdiction of incorporation, organization, or chartering;

 

(b)  it has, and throughout the Term shall retain, the full right, power, and
authority to enter into this Agreement and to perform its obligations hereunder;

 

(c)  the execution of this Agreement by its representative whose signature is
set forth at the end hereof has been duly authorized by all necessary
corporate/organizational action of the party; and

 

(d)  when executed and delivered by such party, this Agreement shall constitute
the legal, valid, and binding obligation of that party, enforceable against that
party in accordance with its terms.

 

12.2 Licensor’s Representations and Warranties. Licensor represents and warrants
that:

 

(a)  The Licensed Patents are all the patents and/or patent applications owned
by Licensor or in which Licensor has a licensable interest, that, with the
accompanying licensed Know-How, are necessary or useful for Licensee to, use,
offer to sell, sell, and import the Applied DNA Technology in the Exclusive and
Non-Exclusive Fields of Use, and, to the extent rights in any such additional
patents and patent applications are required during the Term, Licensor hereby
grants Licensee a license thereto;

 

 

 

 

(b)  it is the sole and exclusive legal and beneficial owners of the entire
right, title, and interest in and to the Licensed Patents and Licensed Know-How,
and are, and shall remain, during the Term, the record owner of all patent
applications and issued patents that are Licensed Patents;

 

(c)  neither its grant of the licenses, nor its performance of any of its
obligations, under this Agreement does or to its knowledge will at any time
during the Term:

 

(i)  conflict with or violate any applicable Law;

 

(ii)  require the consent, approval, or authorization of any governmental or
regulatory authority or other third party; or

 

(iii)  require the provision of any payment or other consideration to any third
party.

 

(d)  there is no settled, pending, or to its Knowledge threatened litigation or
reissue application, re-examination, post-grant, inter partes, or covered
business method patent review, interference, derivation, opposition, claim of
invalidity, or other claim or proceeding (including in the form of any offer to
obtain a license):

 

(i)  alleging the unpatentability, invalidity, misuse, unregisterability,
unenforceability, or noninfringement of, or error in any Licensed Patents; or

 

(ii)  challenging Licensor’s ownership of, or right to practice or license any
Licensed Patents or the Licensed Know-How, or alleging any adverse right, title,
or interest with respect thereto.

 

(e)  it has no Knowledge, after reasonable investigation, of any factual, legal,
or other reasonable basis for any litigation, claim, or proceeding described in
Section 12.2(d);

 

(f)  it has not received any written, oral, or other notice of any litigation,
claim, or proceeding described in Section 12.2(d);

 

(g)  it has not brought or threatened any claim against any third party alleging
infringement/misappropriation of any Licensed Patents or the Licensed Know-How,
nor, to its Knowledge, is any third party infringing or, to its Knowledge,
preparing or threatening to infringe any patent, or practicing any claim of any
patent application, included as Licensed Patents;

 

(h) it has not granted, and will not knowingly grant, licenses or other rights
under the Licensed Patents and Licensed Know-How that are in conflict with the
terms and conditions of this Agreement;

 

(i) to its Knowledge, Licensee’s contemplated use of the Licensed Patents and
Licensed Know-How as represented to Licensor does not infringe any valid rights
of any third party;

 

 

 

 

(j) there are no actions for infringement against Licensor with respect to items
it manufactures and sells embodying the invention of the Licensed Patents
anywhere in the world; and

 

(k) the Applied DNA Technology is safe for the purposes expressed in this
Agreement, including the use of the Applied DNA Technology on substrates used
for human consumption.

 

12.3 Licensee’s Representations and Warranties. Licensee represents and warrants
that:

 

(a) it has not received any notice or threat of any claim, suit, action, or
proceeding, and has no knowledge or reason to know of any information, that
could: (i) invalidate or render unenforceable any claim of any Licensed Patents;
or (ii) cause any claim of any Licensed Patent to fail to issue or be materially
limited or restricted as compared with its currently pending scope;

 

(b) with the exception of a Backup License Event, it will not procure, or
attempt to procure, the Applied DNA Technology, including without limitation,
DNA tags, DNA tag authentication technologies, and/or DNA tag application
technologies from any third-party unless approved in writing by Licensor or in
the case of material breach of this Agreement by Licensor; and

 

(c) it has conducted satisfactory due diligence regarding the Licensed Patents,
the Licensed Know-How and the Applied DNA Technology and is satisfied with the
outcome of its due diligence inquiry.

 

13. Exclusion of Consequential and Other Damages. TO THE FULLEST EXTENT
PERMITTED BY LAW, NEITHER PARTY SHALL NOT BE LIABLE TO THE OTHER PARTY (OR ANY
SUBLICENSEE) OR ANY OTHER PERSON FOR ANY INJURY TO OR LOSS OF GOODWILL,
REPUTATION, BUSINESS, PRODUCTION, REVENUES, PROFITS, ANTICIPATED PROFITS,
CONTRACTS, OR OPPORTUNITIES (REGARDLESS OF HOW THESE ARE CLASSIFIED AS DAMAGES),
OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE, OR
ENHANCED DAMAGES WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING
NEGLIGENCE), OR OTHERWISE (INCLUDING THE ENTRY INTO, PERFORMANCE, OR BREACH OF
THIS AGREEMENT), REGARDLESS OF WHETHER SUCH LOSS OR DAMAGE WAS FORESEEABLE OR
THE PARTY AGAINST WHOM SUCH LIABILITY IS CLAIMED HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSS OR DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ANY
AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.

 

14.Indemnification.

 

14.1 Licensor Indemnification. Licensor shall indemnify, defend, and hold
harmless Licensee and its officers, directors, employees, agents, successors,
and assigns (each, a “Licensee Indemnitee”) against all Losses arising out of or
resulting from any third party claim, suit, action, or proceeding (each an
“Action”) related to, arising out of, or resulting from Licensor’s breach of any
representation, warranty, covenant, or obligation under this Agreement including
but not limited to claims by a third party of infringement based on the
manufacture, use, or sale of items embodying the inventions of the Licensed
Patents and/or the Applied DNA Technology.

 

 

 

 

14.2 Licensee Indemnification. Licensee shall indemnify, defend, and hold
harmless Licensor and its officers, directors, employees, agents, successors,
and assigns (each, a “Licensor Indemnitee”) against all Losses arising out of or
resulting from any Action related to, arising out of, or resulting from Licensee
breach of any representation, warranty, covenant, or obligation under this
Agreement.

 

14.3 Indemnification Procedure. The indemnified party shall promptly notify the
indemnifying party in writing of any Action and cooperate with the indemnified
party at the indemnifying party’s sole cost and expense. The indemnifying party
shall immediately take control of the defense and investigation of the Action
and shall employ counsel reasonably acceptable to indemnified party to handle
and defend the same, at the indemnifying party’s sole cost and expense. The
indemnifying party shall not settle any Action in a manner that adversely
affects the rights of any indemnified party without the indemnified party’s
prior written consent, which shall not be unreasonably withheld or delayed. The
indemnified party’s failure to perform any obligations under this Section 14.3
shall not relieve the indemnifying party of its obligation under this Section
14, except to the extent that the indemnifying party can demonstrate that it has
been materially prejudiced as a result of the failure. The indemnified party may
participate in and observe the proceedings at its own cost and expense with
counsel of its own choosing.

 

15.Term and Termination.

 

15.1 Term. This Agreement shall commence on the Effective Date and, unless
terminated earlier in accordance with Section 15.2, remain in force on a
country-to-country basis as follows (the “Term”):

 

(a) for rights and obligations concerning the Licensed Patents, until the
expiration of the last to expire Valid Claim of a Licensed Patent in such
country; and

 

(b) for rights and obligations concerning the Licensed Know-How, until twenty
(20) years after the Effective Date.

 

15.2 Termination

 

(a) Either party may terminate this Agreement on written notice to the other
party if the other party materially breaches this Agreement and such breach:

 

(i)  is incapable of cure; or

 

(ii)  being capable of cure, remains uncured sixty (60) Business Days after the
breaching party receives written notice thereof.

 

 

 

 

(b) Either Party may terminate this Agreement, effective immediately, if the
other party:

 

(i)  is dissolved or liquidated or takes any corporate action for such purpose;

 

(ii)  becomes insolvent or is generally unable to pay, or fails to pay, its
debts as they become due;

 

(iii)  files or has filed against it a petition for voluntary or involuntary
bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any
proceeding under any domestic or foreign bankruptcy or insolvency Law;

 

(iv)  makes or seeks to make a general assignment for the benefit of its
creditors; or

 

(v)  applies for or has a receiver, trustee, custodian, or similar agent
appointed by order of any court of competent jurisdiction to take charge of or
sell any material portion of its property or business.

 

15.3 Return of Confidential Information. On any expiration or termination of the
entirety of this Agreement, the Receiving Party shall (a) return to the
Disclosing Party all documents and tangible materials (and any copies)
containing, reflecting, incorporating, or based on the Disclosing Party’s\
Confidential Information; (b) permanently erase the Disclosing Party’s
Confidential Information from its computer systems; and (c) certify in writing
to the Disclosing Party that it has complied with the requirements of this
Section 15.3.

 

15.4 Survival. The rights and obligations of the parties set forth in this
Section 15.4 and Section 1 (Definitions), Section 11 (Confidentiality), Section
12 (Representations and Warranties), Section 13 (Limitation of Damages) Section
14, (Indemnification), Section 16 (Backup License) and Section 19
(Miscellaneous), and any right, obligation, or required performance of the
parties in this Agreement which, by its express terms or nature and context is
intended to survive termination or expiration of this Agreement, will survive
any such termination or expiration.

 

16.Backup License

 

16.1 Scope of Grant. Subject to the terms and conditions of this Agreement, upon
the occurrence of a Backup License Event, Licensor agrees to grant, and hereby
grants, to Licensee and its Affiliates, with the exceptions set forth below, the
Backup License solely to enable Licensee to manufacture and/or practice the
Applied DNA Technology in the Exclusive and Non-Exclusive Fields of Use, to the
extent required to comply with Licensee’s ongoing commercial obligations. The
Backup License shall become effective only upon the occurrence of a Backup
License Event and receipt by Licensor of the BL Exercise from Licensee. In the
event of a Backup License Event, Licensee shall have the right to grant
sublicenses under the Backup License only to (ii) its Affiliates; and/or (ii)
third parties, but only to the extent such sublicense is necessary to comply
with Licensee’s ongoing commercial obligations.

 

 

 

 

16.2 Effect of BL Exercise.

 

(a)       A BL Exercise may occur only while a Backup License Event is
continuing. In the event of a BL Exercise, Licensor shall cooperate with
Licensee in effecting the transfer of such technology as is necessary or useful,
and shall provide such technical assistance as may reasonable required and
recommending suitably qualified and experienced personnel for undertaking the
responsibilities necessary for Licensee to manufacture and/or practice the
Applied DNA Technology to the extent required to comply with Licensee’s ongoing
commercial obligations. In addition, upon the commencement of and during the
pendency of a Backup License Event, Licensee shall have a right of first refusal
to purchase from Licensor any physical asset necessary to manufacture the
Applied DNA Technology.

 

(b)       Should any Backup License under this Article 16 fail due to legal,
equitable, or regulatory reasons, Licensor covenants that neither it nor any of
its Affiliates, successors, or designees, will assert any claim of any Licensed
Patent hereunder against Licensee, its Affiliates or customers during the
continuation of a Backup License Event.

 

16.3 Backup License Event. Licensee shall not exercise the Backup License
granted herein unless and until the occurrence of Backup License Event.

 

16.4 Termination of Backup License. Upon Licensor’s cure of a Backup License
Event, the Backup License shall immediately terminate.

 

16.4 Escrow. Within sixty (60) Business Days after the Effective Date, Licensor
agrees to place into escrow with an escrow agent and enter into an escrow
agreement reasonably acceptable to Licensee, all Know-How pertaining to the
Applied DNA Technology necessary for Licensee to exercise its Backup License
under this Section 16.

 

17.Limited Trademark License.

 

17.1 License Grant. During the term of this Agreement, Licensor grants to
Licensee and any Sublicensee a non-exclusive, royalty-free license to use the
trademarks following trademarks owned by Licensor solely for the purpose of
promoting, marketing and disclosing the Applied DNA Technology to its customers
and potential customers in the Exclusive and Non-Exclusive Fields of Use. All
goodwill and benefit arising from such use of the trademarks shall insure to the
sole and exclusive benefit of Licensor.

 

-   SigNature®

 

-   CertainT®

 

-   AppliedDNASciences®

 

17.2 Licensor Monitoring. The Licensee confirms and agrees that with respect to
any use of the marks licensed pursuant to this Section 17, Licensor has the
authority to and shall exercise the following monitoring and quality control
rights: (i) each press release, advertisement, promotional material, web site
content, disclosure document or other material or document (“Materials”) on
which the Licensee proposes to display any of the licensed marks shall be
submitted to Licensor for its prior written approval before such Materials are
used, (ii) all such Materials shall be of high quality so as to support and
enhance the reputation of the Licensor, (iii) all permitted advertising,
marketing and promotion using the marks shall be conducted in compliance with
all applicable laws and regulations, (iv) the Licensee agrees to use such
trademark notices as the Licensor may reasonably require in connection with its
use of any of the marks, and (v) in order for the Licensor to verify the
Licensee’s compliance herewith, the Licensee shall provide Licensor with such
samples of, and shall allow Licensor such access for inspection of, any
Materials bearing any of the marks as Licensor may reasonably request from time
to time.

 

 

 

 

17.3 Effect of Termination. Subject to the terms of this Agreement, upon
termination or expiration of this Agreement for any reason, the Licensee shall
immediately cease all use of Licensor’s Marks, either alone or in conjunction
with another term, as well as all Materials. Licensee agrees that they will not
thereafter readopt or use any trademark, service mark, trade or corporate name
or business title, or other indicium of origin, which consists of, or includes
therein, any of the Licensor Marks, any portion thereof, or any trademark
confusingly similar to any of the Licensor Marks.

 

18.Additional Party Obligations

 

18.1Obligations in General.

 

(a) The Parties will collaborate on the strategic commercial development of the
Applied DNA Technologies in the Exclusive and Non-Exclusive Fields of Use. The
Parties will work collaboratively with potential or actual customers to
facilitate the commercialization of the Applied DNA Technology in the Exclusive
and Non-Exclusive Fields of Use, to set mutually agreeable pricing and create
marketing content.

 

(b) Within sixty (60) Business Days of the Effective Date of this Agreement, the
Parties shall use good faith efforts to execute a mutually acceptable supply and
pricing agreement for the Applied DNA Technology (the “Supply Agreement“)
including, without limitation, all DNA taggants, DNA authentication
devices/reagents and DNA taggant application systems utilizing the exemplary
pricing set forth in Schedule B. In the event the Parties fail to reach a
mutually agreeable Supply Agreement within 60 days of the Effective Date, the
Parties agree to submit their dispute to a mutually agreeable third-party
mediator whose decision shall be binding.

 

18.2Obligations of Licensor. Licensor shall, from the Effective Date:

 

(a) Upon mutually agreed upon prices, supply all DNA taggants, DNA
authentication devices/reagents and DNA taggant application systems to Licensee
and/or any Sublicensee necessary to practice the Applied DNA Technology in the
Exclusive and Non-Exclusive Fields of Use;

 

(b) provide technical and commercial support relating to the Applied DNA
Technology to Licensee and/or Sublicensees, including attending customer
meetings;

 

(c) attend at least 6 international trade shows and other industry events
annually with Licensee; and

 

(d) provide all materials as reasonably necessary to assist Licensee in the
marketing of the Applied DNA Technology in the Exclusive and Non-Exclusive
Fields of Use.

 

 

 

 

18.3Obligations of Licensee. Licensee shall, from the Effective Date:

 

(a) work with Licensor to establish mutually acceptable customer pricing for the
Applied DNA Technology in the Exclusive and Non-Exclusive Fields of use, taking
into account economic feasibility;

 

(b) exclusively obtain or purchase DNA taggants, DNA authentication
devices/reagents and DNA taggant application systems from Licensor. This
obligation shall extend to all Sublicensees, and Licensee agrees to include this
obligation in any sublicense agreement;

 

(c) use commercially reasonable efforts to market the Applied DNA Technology
within the Exclusive and Non-Exclusive Fields of Use. The foregoing does not
prohibit Licensor from undertaking additional marketing activities, at its
discretion, for the Applied DNA Technologies in the Exclusive and Non-Exclusive
Fields of Use;

 

(d) to promptly inform Licensor of any alternative technologies competing with
the Applied DNA Technologies in the Exclusive and Non-Exclusive Fields of Use
for the tracking and tracing of legal cannabis, hemp, or their derivative
products; and

 

(e) provide to Licensor, at Licensor’s request, an annual marketing plan, sales
plan and 12-month sales forecast for the Applied DNA Technology in the Exclusive
and Non-Exclusive Fields of Use.

 

19.Miscellaneous.

 

19.1 Bankruptcy. All rights and licenses granted by Licensor under this
Agreement are and shall be deemed to be rights and licenses to “intellectual
property”’ as such term is used in, and interpreted under, Section 365(n) of the
United States Bankruptcy Code (the “Code”) (11 U.S.C. § 365(n)). Licensee shall
have all rights, elections, and protections under the Code and all other
bankruptcy, insolvency, and similar laws with respect to the Agreement, and the
subject matter hereof. Without limiting the generality of the foregoing,
Licensor acknowledges and agrees that, if Licensor or its estate shall become
subject to any bankruptcy or similar proceeding:

 

(a)  subject to Licensee’s rights of election under Section 365(n), all rights,
licenses, and privileges granted to Licensee under this Agreement will continue
subject to the respective terms and conditions hereof, and will not be affected,
even by Licensor’s rejection of this Agreement; and

 

(b)  Licensee shall be entitled to a complete duplicate of, or complete access
to, as appropriate, all such intellectual property and embodiments of
intellectual property, which, if not already in Licensee’s possession, shall be
promptly delivered to Licensee or its designee, unless Licensor elects to and
does in fact continue to perform all of its obligations under this Agreement.

 

19.2 Force Majeure. Neither party shall be liable or responsible to the other
party, nor be deemed to have defaulted under or breached this Agreement, for any
failure or delay in fulfilling or performing any term of this Agreement,
including any obligation to timely make any payment hereunder, when and to the
extent such failure or delay is caused by:

 

 

 

(a)acts of nature;

 

(a)flood, fire, or explosion;

 

(b)cyber attack;

 

(c)  war, terrorism, invasion, riot, or other civil unrest;

 

(d)  embargoes or blockades in effect on or after the date of this Agreement;

 

(e)  national or regional emergency;

 

(f)  strikes, labor stoppages or slowdowns, or other industrial disturbances;

 

(g)  any passage of law or governmental order, rule, regulation, or direction,
or any action taken by a governmental or public authority, including imposing an
embargo, export or import restriction, quota, or other restriction or
prohibition; or

 

(h) national or regional shortage of adequate power or telecommunications or
transportation facilities:

 

(each of the foregoing, a “Force Majeure Event”), in each case, provided that
(i) such event is outside the reasonable control of the affected party; (ii) the
affected party provides prompt notice to the other party, stating the period of
time the occurrence is expected to continue; and (iii) the affected party uses
diligent efforts to end the failure or delay and minimize the effects of such
Force Majeure Event.

 

19.3 Further Assurances. Each Party shall, upon the reasonable request, and at
the sole cost and expense, of the other Party, promptly execute such documents
and perform such acts as may be necessary to give full effect to the terms of
this Agreement.

 

19.4 Independent Contractors. The relationship between the Parties is that of
independent contractors. Nothing contained in this Agreement shall be construed
as creating any agency, partnership, joint venture, or other form of joint
enterprise, employment, or fiduciary relationship between the Parties, and
neither party shall have authority to contract for or bind the other party in
any manner whatsoever.

 

19.5 No Public Announcements. Neither party shall issue or release any
announcement, statement, press release, or other publicity or marketing
materials relating to this Agreement or, unless expressly permitted under this
Agreement, otherwise use the other Party’s trademarks, service marks, trade
names, logos, domain names, or other indicia of source, association, or
sponsorship, in each case, without the prior written consent of the other Party.

 

19.6 Notices. All notices, requests, consents, claims, demands, waivers, and
other communications (other than routine communications having no legal effect)
shall be in writing and shall be deemed to have been given (a) when delivered by
hand (with written confirmation of receipt); (b) one Business Day after being
sent, if sent by a nationally recognized overnight courier; (c) on the date sent
by e-mail, if sent during normal business hours of the recipient, and on the
next Business Day if sent after normal business hours of the recipient; or (d)
on the fourth Business Day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such communications must be
sent to the respective parties at the addresses indicated below (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section).

 

 

 

 

If to Licensor:

Applied DNA Sciences, Inc.

50 Health Sciences Drive

Stony Brook, New York 11790

 

Attention: James A. Hayward, Chief Executive Officer

 

E-Mail: james.hayward@adnas.com

    If to Licensee:

ETCH BioTrace S.A.,

 

International Business Park Unit 5B
Building 3860 Panama Pacifico

Republic of Panama, 000000

 

Attention: Jason Warnock, Chief Executive Officer

 

E-Mail Address:

jwarnock@theracanncorp.com

 

19.7 Interpretation. For purposes of this Agreement, (a) the words “include,”
“includes,” and “including” shall be deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a
whole. Unless the context otherwise requires, references herein: (x) to Sections
and Schedules refer to the Sections of and Schedules attached to this Agreement;
(y) to an agreement, instrument, or other document means such agreement,
instrument, or other document as amended, supplemented, and modified from time
to time to the extent permitted by the provisions thereof; and (z) to a statute
means such statute as amended from time to time and includes any successor
legislation thereto and any regulations promulgated thereunder. This Agreement
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. Any Schedules referred to herein shall be
construed with, and as an integral part of, this Agreement to the same extent as
if they were set forth verbatim herein.

 

19.8 Headings. The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.

 

 

 

 

19.9 Entire Agreement. This Agreement, together with any Schedules and any other
documents incorporated herein by reference, constitutes the sole and entire
agreement of the parties to this Agreement with respect to the subject matter
contained herein, and supersedes all prior and contemporaneous understandings
and agreements, both written and oral, with respect to such subject matter.

 

19.10 Assignment. Licensee may freely assign or otherwise transfer all or any of
its rights, or delegate or otherwise transfer all or any of its obligations or
performance, under this Agreement without Licensor’s consent. Licensor may not
assign or otherwise transfer all or any of its rights, or delegate or otherwise
transfer all or any of its obligations or performance, under this Agreement
without Licensee’s prior written consent, which consent shall not be
unreasonably withheld. This Agreement is binding upon and inures to the benefit
of the Parties hereto and their respective permitted successors and assigns.

 

19.11 Amendment; Modification; Waiver. This Agreement may only be amended,
modified, or supplemented by an agreement in writing signed by each Party
hereto. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the waiving
party. Except as otherwise set forth in this Agreement, no failure to exercise,
or delay in exercising, any rights, remedy, power, or privilege arising from
this Agreement shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power, or privilege.

 

19.12 Severability. If any term or provision of this Agreement is invalid,
illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon a determination that any term or other provision is invalid,
illegal, or unenforceable, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

19.13 Governing Law, Jurisdiction and Enforcement. This Agreement and all
related documents, and all matters arising out of or relating to this Agreement,
are governed by, and construed in accordance with, the laws of the State of New
York, United States of America, without regard to the conflict of laws
provisions thereof to the extent such principles or rules would require or
permit the application of the laws of any jurisdiction other than those of the
State of New York.

 

Any dispute, controversy or claim arising under, out of or relating to this
Agreement and any subsequent amendments of this Agreement, including, without
limitation, its formation, validity, binding effect, interpretation,
performance, breach or termination, as well as non-contractual claims, and
excepting claims for temporary or preliminary injunctive relief or any form of
equitable relief, shall be submitted to mediation in accordance with the WIPO
Mediation Rules. The place of mediation shall be New York, NY. The language to
be used in the mediation shall be English.

 

 

 

 

If, and to the extent that, any such dispute, controversy or claim has not been
settled pursuant to the mediation within ninety (90) days of the commencement of
the mediation, it shall, upon the filing of a Request for Arbitration by either
party, be referred to and finally determined by arbitration in accordance with
the WIPO Expedited Arbitration Rules. Alternatively, if, before the expiration
of the said period of 90 days, either party fails to participate or to continue
to participate in the mediation, the dispute, controversy or claim shall, upon
the filing of a Request for Arbitration by the other party, be referred to and
finally determined by arbitration in accordance with the WIPO Expedited
Arbitration Rules. The arbitral tribunal shall consist of a sole arbitrator. The
language to be used in the arbitration shall be English.

 

19.14 Waiver of Jury Trial. Each Party irrevocably and unconditionally waives
any right it may have to a trial by jury in respect of any legal action arising
out of or relating to this Agreement or the transactions contemplated hereby.

 

19.15 Equitable Relief. Each Party acknowledges that a breach by the other party
of this Agreement may cause the non-breaching party irreparable harm, for which
an award of damages would not be adequate compensation, and agrees that, in the
event of such a breach or threatened breach, the non-breaching party will be
entitled to seek equitable relief, including in the form of a restraining order,
orders for preliminary or permanent injunction, specific performance, and any
other relief that may be available from any court, and the parties hereby waive
any requirement for the securing or posting of any bond or the showing of actual
monetary damages in connection with such relief. These remedies shall not be
deemed to be exclusive but shall be in addition to all other remedies available
under this Agreement at law or in equity, subject to any express exclusions or
limitations in this Agreement to the contrary.

 

19.16 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement delivered by
e-mail, or other means of electronic transmission (to which a signed PDF copy is
attached) shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

19.17 Waiver of Illegality Defense. The Parties acknowledge that there is a
certain level of legal uncertainty relating to contracts for the provision of
services to the legal cannabis industry. As such, both Parties hereby expressly
waive any defense based upon illegality in relation to any dispute arising in
connection with this Agreement.

 

19.18 Press Release. Any press release, publicity or other form of public
written disclosure related to this Agreement prepared by one Party shall be
submitted to the other Party prior to release for approval, which approval shall
not be unreasonably withheld or delayed by such other Party. The Parties agree
to issue a mutually agreeable press release within seven (7) days of the
Effective Date.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS THEREOF, the Parties, through their authorized officers, have
executed this Agreement as of the Effective Date.

 

Applied DNA Sciences, Inc.      

By:

/s/ James A. Hayward

 

Name: James A. Hayward

 

Title: Chief Executive Office

 

Date: March 28, 2019

 

 

APDN (B.V.I.), Inc. 

     

By:

/s/ James A. Hayward

 

Name: James A. Hayward

 

Title: Chief Executive Office

 

Date: March 28, 2019

     

ETCH BioTrace S.A.

     

By:

/s/ Jason Warnock

 

Name: Jason Warnock

 

Title: Chief Executive Officer

 

Date: March 28, 2019

 

 

 

 

 

 

Schedule A

 

·US 16/265,631 System and Method for Tracking Origin if Cannabis Products and
Cannabis Derivative Products

 

·PCT/US19/16385 System and Method for Tracking Origin if Cannabis Products and
Cannabis Derivative Products

 

·US 62/700,021 Plant Material Spraying System

 

·US 9,919,512 DNA Marking of Previously Undistinguished Items for Traceability

 

·US 9,790,538 Alkaline Activation for Immobilization of DNA Taggants

 

·CA 2,903,728 Security System and Method of Marking an Inventory and/or Person
in the Vicinity

 

·EU 18178632.8 Security System and Method of Marking an Inventory and/or Person
in the Vicinity

 

·EU 13847647.8 Security System and Method of Marking an Inventory and/or Person
in the Vicinity

 

·US 14/570,242 Security System and Method of Marking an Inventory and/or Person
in the Vicinity

 

·US 9,266,370 DNA Marking of Previously Undistinguished Items for Traceability

 

 

 

 

[Portions of this exhibit have been omitted because the information is both not
material and would likely cause competitive harm to the registrant if publicly
disclosed. The omissions have been indicated by bracketed asterisks (“[***]”).]

 

Schedule B

 

All pricing contained in this Schedule is exemplary, and is based upon current
tagging and testing methods as developed as of the Effective Date of the
Agreement. All prices are in USD.

 

Unit Pricing

 

 

Product Description   Price to be paid by Licensee DNA taggant   $[***] per
[***] DNA taggant application system   $[***] per unit DNA authentication device
  $[***] per unit DNA authentication reagents   $[***] per test well

 

Profit Share

 

The Parties agree that no profit share shall be paid between the Parties until
such time as Licensee has gross profits of $6M from the ETCH BioTrace
Platform. Immediately upon Licensee reaching $6M in gross profits from the ETCH
BioTrace Platform, Licensor shall receive a fifty percent (50%) profit share
from Licensee based on Licensee’s Net Proceeds relating to the ETCH BioTrace
Platform. “Net Proceeds" shall mean Licensee’s gross sales on the ETCH BioTrace
Platform less Licensee’s costs of goods for the ETCH BioTrace Platform. The
“ETCH BioTrace Platform” shall be defined as any platform or platform
implementations and support services that utilize or relate to the Applied DNA
Technology in the Exclusive and/or Non-Exclusive Fields of Use, including but
not limited to the platform described by the website https://etchbio.solutions/,
as amended or updated from time-to-time.