Exhibit 10.1

 

LICENSE TERMINATION AND SETTLEMENT AGREEMENT

 

This License Termination and Settlement agreement (“LTSA”) is entered between
Michael Tempesta (“Tempesta”), an individual, and Jaguar Health, Inc. and its
affiliate Napo Pharmaceuticals, Inc., as well as their predecessors
(collectively, “Jaguar”).  Together Tempesta and Jaguar are referred to
hereinafter as “the Parties.”

 

Whereas on February 8, 1990 Tempesta entered into a License Agreement (“1990
License”) with Shaman Pharmaceuticals (“Shaman”) related to a substance
described therein as SP 303, and

 

Whereas Napo Pharmaceuticals (“Napo”) is a successor-in interest to Shaman, and

 

Whereas Napo and Tempesta entered into a modified license agreement on
October 16, 2002, thereby terminating the 1990 License (“2002 License”), and

 

Whereas Napo is now wholly owned by Jaguar Health, Inc. and Jaguar has the
relevant rights and responsibilities under the 1990 and 2002 License Agreements
(“License Agreements”), and

 

Whereas Tempesta commenced an audit of royalty payments made to him during the
period from 2015 through the third quarter of 2018 (“Audit”), an audit that is
on-going, and

 

Whereas a dispute has arisen between Tempesta and Jaguar, and

 

Whereas Jaguar contends that the License Agreements are not enforceable and that
all patent licenses and patents related to the License Agreements expired before
2019 (see Brulette v Thys and Kimble v Marvel Entertainment), and

 

Whereas Tempesta contends that the License Agreements are trade secret licenses
since no patent or patent applications related to SP 303 were in existence at
the time of the 1990 License Agreement and Shaman was not compelled by the
agreement to seek any, and, therefore, it has not expired (see e.g. Warner
-Lambert v Reynolds), and

 

Whereas Tempesta claims that Brulette and Kimble and related cases have no
application to a license that was cancellable at the will of a licensee, and
Jaguar disagrees, and

 

Whereas Tempesta claims that SP-303 related patents other than the ones that
list him as an inventor are and have been in force at relevant times and are a
basis for non-expiration and that he should have listed him as an inventor on
those patents in addition to his listing on the 5211944 and 5494661 patents, and
Jaguar disagrees, and

 

Whereas it is the position of each party that the claims of the other party have
no merit, and

 

Whereas Jaguar represents that it does not possess or has been unable to locate
certain back up documents requested by the auditor, and Whereas the Parties wish
to settle the Audit, close out any and all claims regarding under or over
payments of royalties for periods preceding January 1, 2019 and resolve all
other disputes between them:

 

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THEREFORE, For good and valuable consideration to each of them, the sufficiency
of which is hereby acknowledged, the Parties agree as follows:

 

1.                   LICENSE TERMINATION

 

The 2002 License, subject to the provisions below regarding an Event of Default,
shall be deemed terminated as of September 30, 2018.

 

2.                   AUDIT RIGHTS TERMINATED; PAST ROYALTY ISSUES CLOSED

 

The Audit shall be deemed completed with no further royalties due from Jaguar to
Tempesta.  Tempesta will pay the cost of the Audit.  No further audits may be
conducted.  Tempesta may not claim that royalties were underpaid and Jaguar may
not claim they were overpaid.  Jaguar’s books and records are hereby closed for
purposes of any royalty payment to Tempesta.

 

3.                   CASH CONSIDERATION

 

Upon execution (which shall be the “Effective Date”) of this LTSA, and in
consideration for the Audit termination, 2002 License termination, and the
releases below, Jaguar will pay $50,000.00 (the “Initial Payment”) to Tempesta
and deliver to him an executed copy of an unsecured promissory note for the
amount of $550,000.00 (“Note”).  The Note shall bear simple interest at 2 1/2 %
per year.  Aggregate payments of $100,000.00 per year plus interest will be paid
by Jaguar to Tempesta in two $50,000.00 payments plus accrued interest each
year, beginning on March 1, 2020 and then on September 1, 2020 and on March 1
and September 1 each year thereafter until the Note is paid in full.   A copy of
the Note to be executed is attached as Exhibit A.

 

4.                   STOCK CONSIDERATION

 

Upon execution of this agreement and as further consideration for the Audit
termination, 2002 License termination and the release below, Jaguar will deliver
to Tempesta 40,000 shares of JAGX common stock (the “Shares”) with a market
value of $48,000.  The Shares have been priced using the closing price as of the
Closing Date (as defined in Section 9).  The Shares shall be “locked-up” and not
tradeable by Tempesta prior to October 1, 2020.  On or before October 1, 2020,
if necessary, Jaguar will provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute and applicable state securities laws with regard
to the Shares.

 

5.                   MUTUAL AND UNCONDITIONAL RELEASES

 

Tempesta, for himself and his heirs, hereby releases and forever discharges
Jaguar and its subsidiaries, predecessors, affiliates, officers, directors and
attorneys from any and all claims, causes of action, and fees and costs of any
nature whatsoever, known or unknown related to the Audit and past paid royalty
calculations and payments.  Jaguar, for itself and its subsidiaries,
predecessors, affiliates, officers, directors, and attorneys  hereby release and
forever discharge Tempesta from any and all claims, causes of action and fees
and costs of any nature whatsoever, known or unknown, including without limit 
any claims for past License Agreements royalty miscalculations or overpayments.

 

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6.                   TEMPESTA CONDITIONAL RELEASE

 

Tempesta, for himself and his heirs, hereby releases and forever discharges
Jaguar and its subsidiaries or any other predecessors or affiliates, and their
respective officers, directors, and attorneys, from any and all claims, causes
of action, and fees and costs of any nature whatsoever, known and unknown,
except that, if Jaguar fails to make timely payments of principal and/or
interest on the Note and fails to cure any default, as defined below (“An Event
of Default”), the Tempesta post-January  1, 2019 claims related to the 2002
License agreement, are not released and Tempesta may proceed with a claim for
royalty payments under the 2002 License for periods after January 1, 2019.   
For clarity, in An Event of Default, Jaguar will be free to contest Tempesta’s
claims regarding the 2002 License and assert any claim that the license(s) were
unenforceable or void as a matter of law, including, without limitation that the
2002 License is void under Brulette and Kimble .  Further, if there is an Event
of Default and a claim is successfully asserted by Tempesta under the 2002
Royalty Agreement, any monies paid to Tempesta pursuant to the Note plus the
Initial Payment and the value of the shares as of the Effective Date of this
agreement as recited in this agreement shall be an offset to any final damages
awarded in favor of Tempesta.

 

7.                   DEFAULT AND THE RIGHT TO CURE

 

If any payment on the Note has not been paid within 15 calendar days of its due
date, including interest payments, Tempesta shall provide by letter and email to
Jaguar a notice of the delinquency.   Jaguar shall have 30 calendar days from
receipt of the email to cure the deficiency by making the requested payment.  If
Jaguar fails to cure such default, Tempesta may declare that an Event of Default
will have occurred pursuant to this LSTA and either a) seek damages pursuant to
Section 6 hereof or b) elect to accelerate the Note pursuant to Section 6
thereof.

 

8.                   STATUTE OF LIMITATIONS; LACHES AND ESTOPPEL; STATEMENT OF
GROSS INCOME

 

Jaguar agrees that, in an Event of Default, it may not assert as a response to a
claim for royalty payments post January 1, 2019 a defense of either the statute
of limitations, laches or estoppel based on delay.   Applicable statute of
limitations are tolled during the period from the date of this agreement to the
date the Note is fully paid or an Event of Default occurs. Beginning with the
calendar year 2019, Jaguar will calculate the annual amount of Gross Income, as
defined in the 2002 License, and within 15 days of Jaguar filing its 10-K with
the SEC for each such year, Jaguar will send a statement of those earnings to
Arnold & Porter in a sealed envelope to be deposited unopened in that law firm’s
safe. If, and only if, there is an Event of Default, the envelopes may be opened
and inspected by Tempesta and used in any proceeding, if and as relevant.  Once
the Note is paid off, the reports will be destroyed or be returned to Jaguar at
Jaguar’s election. Notwithstanding the foregoing, if Tempesta elects to
accelerate the Note pursuant to Section 6 thereof, this Section 8 shall become
null and void.

 

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9.                   CLOSING DATE AND TIME

 

The date and time of the execution and closing for this Agreement (the “Closing
Date”) shall be October 1, 2019, after 5:00 pm Eastern Standard Time.  The
closing of the transactions contemplated by this Agreement shall occur at such
location as may be agreed to by the parties.

 

10.            TAXES AND ATTORNEY FEES

 

Each of the Parties will be responsible for its own taxes and each will bear its
own attorney fees.

 

11.            WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542

 

The Parties acknowledge that each understands the provisions of CCP 1542 which
provides:

 

“A general release does not extend to claims that the creditor or releasing
party does not know or suspect in his or her favor at the time of executing the
release, and that, if known by him or her, would have materially affected his or
her settlement with the debtor or released party.”

 

Except in the case of an Event of Default, the Parties waive and relinquish
every right or benefit each may have under CCP 1542 with respect to the released
matters to the full extent each may do so.  The Parties acknowledge that each
may discover facts in addition to or different from those each may now know or
believe with respect to released matters, but it is nevertheless the intent of
each to fully and finally settle and release all claims, notwithstanding
discovery of new or additional facts.

 

12.            NO ADMISSIONS

 

Except as expressly set forth herein, the Parties agree and acknowledge that
nothing in this LTSA shall be construed as admissions by either party with
respect to the merits of the underlying dispute.

 

13.            MUTUAL DRAFTING; RELIANCE ON OWN COUNSEL

 

The Parties acknowledge that each and their counsel have been fully Involved in
the drafting and negotiations of this LTSA.   The Parties acknowledge that they
have carefully and fully reviewed and read this LTSA and that they are relying
on the advice of their own counsel and have freely and voluntarily executed the
LTSA. Each acknowledges that, except as set forth herein, it is not relying on
any representations made by the other and that none have been made.

 

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14.            ENTIRE AGREEMENT AUTHORITY

 

This LTSA is the entire agreement between the Parties and it supersedes, except
in an Event of Default, all prior agreements, oral or written.  Each person
signing this agreement represents and warrants that he or she has the authority
to do so and that neither of the Parties has assigned its rights to a third
party.

 

15.            AMENDMENTS

 

This LTSA may be amended only by a writing signed by both Parties.  An email
exchange shall not be considered an amendment in writing.

 

16.            CHOICE OF LAW

 

This LTSA is entered into in California and shall in all respects be governed
and enforced by California law, without regard to its conflict of laws
provisions.

 

17.            DISPUTE ATTORNEY FEES

 

Should any action be necessary to enforce the provisions of this LTSA or the
Note, the prevailing party will be entitled to reasonable attorney fees and
costs, including the costs and fees of an arbitrator and an arbitration.

 

18.            BINDING ARBITRATION

 

The Parties agree that any disputes arising out of this LTSA and, including
without limit proceedings in an Event of Default, shall be submitted to final
and binding JAMS arbitration conducted in San Francisco, California. 
Proceedings, in an Event of Default, to reinstate the License Agreements shall
be conducted under JAMS Comprehensive Rules. The arbitration, if instead, is to
enforce the obligations in this Agreement, including without limitation, payment
of the Note, it will be according to the JAMS Streamlined Rules.   Any
arbitration shall be before a single neutral arbitrator chose by the parties,
or, if they are unable to choose one, before a single arbitrator chosen under
JAMS rules.   Either party may enforce a final arbitration award in any court of
competent jurisdiction.

 

12.            SUCCESSORS AND ASSIGNS

 

The LTSA shall bind and inure to the benefit of the Parties hereto and their
successive assigns, heirs, administrators, executors and conservators.

 

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13.            NOTICE AND PAYMENTS

 

Payments directed to Tempesta shall be made out to the Michael Tempesta Trust
Fund and sent to:

 

Arnold & Porter

c/o Marty Glick

3 Embarcadero Center

10th floor

San Francisco, CA 94111

 

Notices to Tempesta shall be sent to both the above address and to

 

Michael Tempesta

 

Notices to Jaguar shall be sent to:

 

Jonathan Wolin

General Counsel

Jaguar Health, Inc.

201 Mission Street, Suite 2375

San Francisco, CA 94105

 

With a copy to:

 

Morgan Lewis

Attn:  Benjamin Smith

One Market Street Tower

San Francisco, CA 94105

 

14.            COUNTERPARTS

 

The LTSA may be signed in counterparts and when each party has signed and
delivered (by fax, mail, email, pdf or otherwise) one such counterpart to the
other, each counterpart shall be deemed an original, and all counterparts taken
together will constitute one and the same agreement which will be binding and
effective as to all Parties.

 

[SIGNATURES ON FOLLOWING PAGE]

 

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ACCEPTED AND AGREED BY:

 

 

MICHAEL TEMPESTA

/s/ Michael Tempesta

 

DATE:

9/30/19

 

 

 

 

 

 

 

 

 

 

JAGUAR HEALTH INC.

/s/ Lisa A. Conte

 

DATE

October 1, 2019

 

 

 

TITLE:

CEO and President

 

 

 

 

 

 

 

NAPO PHARMACEUTICALS, INC

/s/ Lisa A. Conte

 

DATE

October 1, 2019

 

 

TITLE:

CEO and President

 

 

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