Document:

Exhibit 10.18

 

SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT, (“Agreement”) is
made this      day of           ,
2005, by and between ICOP DIGITAL, INC., a Colorado Corporation, 11011 King
Street, Suite 260, Overland Park, KS 66210, (hereinafter “Borrower”), and
Lender(s) (hereinafter  “Bridge Note
Lenders”) as listed on Exhibit ”A” of this Agreement.

 

WHEREAS, this Agreement is given to secure
performance of the obligations under (a) the Bridge Note(s) of even date
herewith, executed by Borrower, to Bridge Note Lenders as lenders and in the
amounts listed on Exhibit ”A” attached hereto and incorporated herein by
reference, together with interest thereon as provided for in the Bridge Notes;
and (b) all other liabilities of all kinds of Borrower to Bridge Note Lenders,
whether created directly or acquired by Bridge Note Lenders by assignment or
otherwise, and whether now or existing or hereafter arising, absolute or
contingent, due or to become due, (all such liabilities shall collectively be
referred to as the “Obligations”).

 

NOW, THEREFORE, in consideration of the loans
made by the Bridge Note Lenders to Borrower, and further consideration of the
covenants and promises contained in this Agreement, and for other good and
valuable consideration, the parties agree as follows:

 

1.                                       Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:

 

(a)                                  “Collateral” has the meaning set forth in paragraph
2 hereof.

 

(b)                                 “PTO” means the United States Patent and
Trademark Office.

 

(c)                                  “UCC” means the Uniform Commercial Code as in
effect in the States of Kansas and Colorado.

 

(d)                                 Terms Defined in UCC. Where applicable in the context of this
Agreement and except as otherwise defined herein, terms used in this Agreement
shall have the meanings assigned to them in the UCC.

 

(e)                                  Construction. In this Agreement, the following rules of
construction and interpretation shall be applicable: (i) no reference to “proceeds”
in this Agreement authorizes any sale, transfer, or other disposition of any
Collateral by Borrower; (ii) ”includes” and “including” are not limiting; (iii) ”or”
is not exclusive; and (iv) ”all” includes “any” and “any” includes “all.”

 

2.                                       Security Interest.

 

(a)                                  Grant of Security Interest. As security for the payment and performance
of the Obligations, Borrower hereby assigns, transfers and conveys to Bridge
Note Lenders, and grants to Bridge Note Lenders a security interest in and to
all of Borrower’s right, title and interest in, to

 

 

and under the following property, in each
case whether now or hereafter existing or arising or in which Borrower now has
or hereafter owns, acquires or develops an interest and wherever located
(collectively, the “Collateral”):

 

(i)                                     Accounts;

 

(ii)                                  Chattel Paper and Electronic Chattel Paper;

 

(iii)                               Fixtures;

 

(iv)                              Goods;

 

(v)                                 Inventory;

 

(vi)                              Software;

 

(vii)                           all patents, trademark, patent applications and trademark applications,
domestic or foreign, all licenses relating to any of the foregoing and all
income and royalties with respect to any licenses (including such patents,
trademark, patent applications and trademark applications as described in Exhibit ”B”),
all rights to sue for past, present or future infringement thereof, all rights
arising therefrom and pertaining thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof.  Borrower represents and warrants to Bridge
Note Lenders that a true and correct list of all of the existing Collateral
consisting of U.S. patents, trademark, patent applications and trademark
applications or registrations owned by Borrower, in whole or in part, is set
forth in Exhibit B;

 

(viii)                        all General Intangibles and all intangible intellectual or other similar
property of Borrower of any kind or nature, associated with or arising out of
any of the aforementioned properties and assets and not otherwise described
above; and

 

(ix)                                all Proceeds of any and all of the foregoing Collateral (including
license royalties, rights to payment, accounts and proceeds of infringement
suits) and, to the extent not otherwise included, all payments under insurance
(whether or not Bridge Note Lenders is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to the foregoing Collateral.

 

(b)                                 Continuing Security Interest. Borrower agrees that this Agreement shall
create a continuing security interest in the Collateral which shall remain in
effect until terminated in accordance herewith.

 

3.                                       Collateral
Free of Other Security Interests. 
Borrower warrants that no financing statement covering any of the
Collateral or its proceeds is on file in any public office at this date or will
be on file with respect to the Collateral at the time the Collateral becomes
subject to this Agreement (except any purchase money security interests). No
other security interest of any kind

 

2

 

affects the Collateral at this date, and no arrangement exists whereby
the Collateral will in the future become subject to a security interest senior
to the Agreement.

 

Borrower will not sell, assign or otherwise
alienate the ownership of the Collateral or its use or operation except any
sale or replacement in the ordinary course of Borrower’s business; and Borrower
will not use the Collateral in violation of any ordinance or state or federal
statute or any administrative rule or regulation of law.

 

Borrower authorizes Bridge Note Lenders at
their option and their sole discretion to discharge any taxes, charges, assessments,
liens or other security interests or other encumbrances to which the Collateral
may become subject. Bridge Note Lenders may pay amounts to preserve and
maintain the Collateral, if Borrower fails to do so. Borrower agrees to
reimburse Bridge Note Lenders within ten(10) days after demand for any
payment made or any expense incurred by Bridge Note Lenders pursuant to the
foregoing authorization, together with interest on the amount expended at the
rate of fifteen percent (15%) per annum from the date of the payment. Any such
amounts shall be secured by and under this Agreement.

 

4.                                       Fees
and Taxes.  Borrower will timely pay
any and all license fees, taxes, assessments and public charges, general and
special, that may at any time be levied or assessed upon or against Collateral.

 

5.                                       Maintenance
of Collateral.  Borrower will, at
Borrower’s expense, maintain and keep the Collateral at its present location in
good order and repair, ordinary wear and tear excepted, and shall not remove,
demolish or substantially alter the Collateral, except any sale or replacement
in the ordinary course of Borrower’s business, without the prior written
consent of the Bridge Note Lenders. Borrower will not attempt to or actually
dispose of, lend, transfer, lease or assign the Collateral, except any sale or
replacement in the ordinary course of Borrower’s business, without the prior
written consent of Bridge Note Lenders.

 

Borrower may remove the Collateral in its
ordinary course of business, provided, that such Collateral shall be replaced
with property of a similar nature of equal or greater value.  The security interest created by this Agreement
will immediately attach to the substitute property when it is acquired, and the
substitute property will become part or the Collateral defined in this Agreement.

 

Borrower will not permit the Collateral to be
attached or seized by any legal process. Borrower will defend and indemnify
Bridge Note Lenders from all expense and liability of every kind to any person
or to the property of any person by reason of or in connection with the
delivery, possession or use of the Collateral.

 

6.                                       Insurance.  Throughout the life of this Agreement,
Borrower shall keep the Collateral insured by companies rated A+, Class VI
or better by Best’s Insurance guide, against loss by fire, earthquake,
lightening, all hazards included within the term “extended coverage” insurance,
including a vandalism and malicious mischief endorsement or an “all perils”
endorsement, and such hazards as Bridge Note Lenders may from time to time
reasonably require. This insurance shall be maintained in an amount equal to
the full insurable value of the Collateral.

 

3

 

All insurance policies shall be in form
reasonably acceptable to Bridge Note Lenders and shall provide that they cannot
be modified or canceled except upon thirty (30) days’ prior written notice to
Bridge Note Lenders. The policies shall contain endorsements that no act or
negligence of the insured or any occupant, and no occupancy or use of the
property for any purposes more hazardous than those permitted by the terms of
this policy, will affect the validity or enforceability of the insurance as to
Bridge Note Lenders. All policies shall, notwithstanding anything herein that
might permit lower amounts of insurance, be written in such amounts s will
prevent Borrower from becoming a co-insurer. All policies will be in force and
effect on the date hereof and will be completely paid for the current policy
year. Copies of all policies or certificates and copies of blanket policies
shall be furnished to and kept by Bridge Note Lenders. Borrower shall promptly
furnish to Bridge Note Lenders copies of renewal notices and premium receipts,
if requested.

 

7.                                       Further Acts. On a continuing basis, Borrower shall make,
execute, acknowledge and deliver, and file and record in the proper filing and
recording places, all such instruments and documents, and take all such action
as may be necessary or advisable or may be requested by Bridge Note Lenders to
carry out the intent and purposes of this Agreement, or for assuring,
confirming or protecting the grant or perfection of the security interest
granted or purported to be granted hereby, to ensure Borrower’s compliance with
this Agreement or to enable Bridge Note Lenders to exercise and enforce its
rights and remedies hereunder with respect to the Collateral, including any
documents for filing with the PTO or any applicable state office. Bridge Note
Lenders may record this Agreement, an abstract thereof, or any other document
describing Bridge Note Lenders’ interest in the Collateral with the PTO, at the
expense of Borrower. In addition, Borrower authorizes Bridge Note Lenders to
file financing statements describing the Collateral in any UCC filing office
deemed appropriate by Bridge Note Lenders. If the Borrower shall at any time
hold or acquire a commercial tort claim arising with respect to the Collateral,
the Borrower shall immediately notify Bridge Note Lenders in a writing signed
by the Borrower of the brief details thereof and grant to the Bridge Note
Lenders in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form
and substance satisfactory to the Bridge Note Lenders.

 

8.                                       Authorization to Supplement. If Borrower shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent
or trademark, the provisions of this Agreement shall automatically apply
thereto. Borrower shall give prompt notice in writing to Bridge Note Lenders
with respect to any such new patent or trademark rights. Without limiting
Borrower’s obligations hereunder, Borrower authorizes Bridge Note Lenders
unilaterally to modify this Agreement by amending Exhibit ”B” to include
any such new patent or trademark rights. Notwithstanding the foregoing, no
failure to so modify this Agreement or amend Exhibit ”B” shall in any way
affect, invalidate or detract from Bridge Note Lenders’ continuing security
interest in all Collateral, whether or not listed on Exhibit ”B”.

 

9.                                       Default.
The breach or failure of any term, agreement, covenant or term of this
Agreement or the occurrence of an event or default upon any term contained in
the Bridge Note(s) shall constitute a default hereunder.

 

4

 

10.                                 Remedies.
Upon the occurrence of any default as defined above, Bridge Note Lenders will
have the right at their option to enforce and to exercise any or all of their
rights under this Agreement or otherwise. In addition to all other rights and
remedies, Bridge Note Lenders shall have the remedies of a secured party under
the Uniform Commercial Code. In exercising these remedies, Bridge Note Lenders
and Borrower agree as follows:

 

(a)                                  Bridge Note Lenders
may, at their option, required Borrower to assemble the Collateral and make it
available to Bridge Note Lenders at a place to be designated by Bridge Note
Lenders which is reasonably convenient to both parties. In the event Borrower
fails or refuses to assemble the Collateral, Bridge Note Lenders shall have the
right, and Borrower hereby authorizes and empowers Bridge Note Lenders, to
enter the premises upon which the Collateral is located in order to remove the
same.

 

(b)                                 Bridge Note Lenders
will give Borrower reasonable notice of the time and place of any public sale
of the Collateral, or of the time after which any private sale or other
intended disposition of the collateral is to be made, unless the Collateral is
perishable, threatens to decline speedily in value, or is of a type customarily
sold on a recognized market. The requirement of reasonable notice shall be met
if a written notice is mail to Borrower, postage prepaid, to the address of
Borrower last known to Bridge Note Lenders, at least ten (10) days prior
to the date of the sale or disposition.

 

(c)                                  Borrower agrees to
surrender possession of the collateral to Bridge Note Lenders in event Bridge
Note Lenders elects to foreclose this security interest. Borrower waives any
notice of the exercise of any and all options reserved to Bridge Note Lenders
by this Agreement.

 

(d)                                 Borrower will, upon
Bridge Note Lenders’ request, deliver to Bridge Note Lenders all original
invoices, bills, charge or credit card receipts, books and records and other
documents evidencing or describing any of the account receivable constituting a
part of the Collateral. Borrower will also execute and deliver to Bridge Note
Lenders an assignment of the right to receive payments under all such Accounts.
The parties recognize, however, that in the event of default such Accounts
shall be deemed assigned to Bridge Note Lenders, whether or not the assignments
described above are actually delivered.

 

(e)                                  Bridge Note Lenders
shall have the right and are hereby authorized to collect all amounts due under
the Accounts; sue or take other actions to collect the same in their own name
or as assignee of or in the name of Borrower; compromise or give acquittance
for amounts due; and use such other measures as Bridge Note Lenders may in its
sole discretion deem appropriate for collection of the Accounts. All such
actions shall be taken at the sole expense of Borrower, who agrees to reimburse
Bridge Note Lenders for all reasonable amounts expended (including a reasonable
attorney’s fee), together with interest thereon from the date of expenditure at
the rate then applicable under the Bridge Notes.

 

(f)                                    This Agreement
constitutes a direction to and full authority to any Account debtor to pay directly
to Bridge Note Lenders any such accounts. No proof of default shall be
required. Any such debtor is herby irrevocably and unconditionally authorized
to rely upon and comply

 

5

 

with any notice from Bridge Note Lenders. The debtor shall not be
liable to Borrower or any person claiming under Borrower for making any payment
or rendering any performance to Bridge Note Lenders. The debtor shall have no
obligation or right to inquire whether any default has occurred or is then
existing. By its execution of this Agreement, Borrower irrevocably and
unconditionally joins in, authorizes and consents to the above instructions.

 

(g)                                 The proceeds of any sale
of the Collateral shall be applied to the following items in the following
order: (a) the reasonable expenses of repossessing the Collateral and
preparing for the holding the sale, including without limitation all reasonable
attorney’s fees incurred by Bridge Note Lenders; (b) interest an principal
then due (by acceleration or otherwise) under the Bridge Notes and any other
debts specifically secured by the Agreement; (c) interest and principal
then due (by acceleration or otherwise) under any other debts of Borrower to
Bridge Note Lenders (to be applied in whatever order Bridge Note Lenders may in
their sole discretion determine); (d) indebtedness of Borrower to other
secured parties, provided written notice of demand therefore is received by
Bridge Note Lenders before the sale (to bee applied in the order Bridge Note
Lenders receives the requires); and (e) the balance, if any, to Borrower.

 

11.                                 Set-off.
Upon default by Borrower under this Agreement, Bridge Note Lenders (or the
holder or owner of any debt secured by this Agreement) shall immediately have
the right without further notice to Borrower to set off against the Bridge
Notes and any other debts secured by this Agreement all debts of Bridge Note
Lenders (or such holder or owner) to Borrower, whether or not then due.

 

12.                                 Notice.
Any and all notices, requests, consents and demands required or permitted to be
given hereunder shall be in writing and shall be deemed given and received (i) upon
personal delivery, (ii) upon the first business day following the receipt
of confirmation of facsimile transmission to the telefax number as indicated
below, or (iii) upon the third business day after deposit in the United
States mail, by certified or registered mail, postage prepaid and addressed to
the appropriate party at the address provided for herein.  Any party may change by notice the address to
which notices to that party are to be addressed.

 

13.                                 Miscellaneous.
The following provisions are additional terms of this Agreement:

 

(a)                                  Bridge Note Lenders
have no duty to maintain, repair or protect the Collateral.

 

(b)                                 No waiver by Bridge
Note Lenders of any default shall operate as a waiver of any other default or
of the same default on a future occasion.

 

(c)                                  All rights and
remedies of Bridge Note Lenders are cumulative and may be exercised
successively or concurrently, and shall inure to the benefit of Bridge Note
Lenders’ assigns.

 

(d)                                 All obligations of
Borrower shall bind his trustees, custodians, general partners, successors and
assigns.

 

6

 

(e)                                  The captions of the
sections of this Agreement are inserted for convenience only and shall not be
used in the interpretation or construction of any provisions hereof.

 

(f)                                    If any provisions
of this Agreement is held invalid or unenforceable, the holding shall affect
only the provision in question and all other provisions on this Agreement shall
remain in full force and effect.

 

IN WITNESS WHEROF, Borrower has executed this
Agreement the day and year first above written.

 

 

	
   

  	
  ICOP Digital, Inc.

  
	
   

  	
  A Colorado Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DAVID C. OWEN, President and CEO

  

 

7

 

EXHIBIT “A”

 

BRIDGE
NOTE LENDERS

 

	
  Name and Address

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

8

 

EXHIBIT “B”

 

PATENTS,
TRADEMARKS AND APPLICATIONS

 

1)                                      Data
Acquisition and Display System with Method of Establishing Chain of Custody,
filed on or about October 22, 2003, and assigned Serial No. 60/513,
646; and

 

2)                                      Data
Acquisition and Display System with Method of Operating Same, filed August 26,
2003, and assigned Serial No. 60/498,035.

 

3)                                      The
trademark application for the mark ICOP Digital having Serial No. 76/428,
063 has been allowed, and a Statement of Use will be submitted for this
application.  A request for the first
extension of time to file a Statement of Use has been granted.

 

4)                                      The
trademark application for the mark ICOP having Serial No. 76/428, 064 has
also been allowed, and a Statement of Use will also be submitted.  A request for the first extension of time to
file a Statement of Use has been granted.

 

5)                                      The
ICOP Digital and Design mark was recently redesigned, so that a new trademark
application was filed on January 16, 2004, and assigned Serial No. 78/353,
155.  The previously filed ICOP Digital
and Design trademark application was filed on July 8, 2002, and assigned
Serial No. 76/428062 has been allowed.

 

9Exhibit
4.47

 

Certain portions of this
Exhibit have been omitted pursuant to a request for “Confidential Treatment”
under Rule 24b-2 of the Securities and Exchange Commission. Such portions have
been redacted and bracketed in the request and appear as [*] in the text of
this Exhibit. The omitted confidential information has been filed with the
Securities and Exchange Commission.

 

THIS LICENCE AND
DISTRIBUTION AGREEMENT is made on        2003

 

BETWEEN

 

(1)                                  LAXDALE
LIMITED, a Company incorporated in Scotland under the Companies Acts (Company Number:
SC179838), having its place of business at Kings Park House, Laurelhill
Business Park, Stirling, FK7 9JQ (“Laxdale”);

 

and

 

(2)                                  SCIL
BIOMEDICALS GMBH having a place of business at Fraunhofer Strasse 15 D-82152 Martinsried,
Germany (“Scil”).

 

WHEREAS

 

(A)                              Laxdale
has developed and is the owner of certain IP Rights (as after defined)
including the Licensed Patent (as after defined) and the Trade Mark (as after
defined) in relation to the Licensed Product (as after defined) for the
treatment inter alia of Huntington’s Disease;

 

(B)                                Laxdale
has agreed to appoint Scil as its distributor in the Territory (as after
defined) on an exclusive basis and insofar as necessary to perform its
obligations as distributor to license Scil under the Licensed Patent and the
Trade Mark and Scil has agreed to accept such licence and appointment on the terms
and conditions of this Agreement

 

NOW
THEREFORE IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                                                                       Definitions and interpretation

 

1.1                                                                                 In this Agreement, unless the context
requires otherwise, the following words and expressions shall bear the
following meanings:

 

	
  “Additional
  Field”

  	
   

  	
  means
  the treatment of depression;

  

 

 

	
  “Change
  of Control”

  	
   

  	
  means a change of control in relation to Scil. “Control”
  for these purposes means the power of a person to secure:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)  
  by means of holding shares or the possession of voting power in or in
  relation to that or any other body corporate; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)  
  by virtue of any powers conferred by the articles of association or other
  document regulating that or any other body corporate

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  that
  the affairs of the first mentioned body corporate are conducted in accordance
  with the wishes of that person;

  
	
   

  	
   

  	
   

  
	
  “Cost
  of Goods”

  	
   

  	
  means
  the cost incurred by Laxdale in relation to a Unit supplied on to Scil
  pursuant to Purchase Orders;

  
	
   

  	
   

  	
   

  
	
  “Effective
  Date”

  	
   

  	
  means
  the last date of signature hereof by or on behalf of each of the parties
  hereto by persons duly and expressly authorised;

  
	
   

  	
   

  	
   

  
	
  “EMEA”

  	
   

  	
  means
  the European Agency for the Evaluation of Medical Products or such successor
  or replacement body as may from time to time supersede it;

  
	
   

  	
   

  	
   

  
	
  “Field
  of Use”

  	
   

  	
  means
  the marketing, distribution and Sale of Licensed Product for the therapeutic
  treatment and/or prevention of Huntington’s Disease it being acknowledged
  that in the event Laxdale, in its sole discretion, widens the development of
  the Licensed Product to include the treatment of Spino-cerebellar atrophy;
  Progressive Supranuclear Palsy; Fragile X and Friedreich’s ataxia these
  treatments shall be included in this definition of Field of Use for the
  purposes of this Agreement. To avoid any doubt Laxdale shall be under no
  obligation to widen the scope of the development as aforesaid;

  
	
   

  	
   

  	
   

  
	
  “Group
  Company”

  	
   

  	
  Means
  any company which is for the time being a subsidiary or holding company of Scil
  or any subsidiary of such holding company;

  
	
   

  	
   

  	
   

  
	
  “Improvements”

  	
   

  	
  means
  all improvements or modifications or

  

 

2

 

	
   

  	
   

  	
  adaptations
  to the Licensed Product within the Field of Use which may be made or acquired
  by Laxdale during the Term (as after defined);

  
	
   

  	
   

  	
   

  
	
  “Major
  Improvement”

  	
   

  	
  means
  all improvements or modifications or adaptations to the Licensed Product by
  Laxdale which would render the Licensed Product to be considered by the
  relevant regulatory authority as a new and separate Licensed Product and
  which (a) obtains it’s own orphan drug designation and (b) requires
  completion of a clinical program for it’s development in order to obtain a
  Marketing Authorisation within the Territory To avoid any doubt, the
  development of Licensed Product within the Field of Use is not a Major
  Improvement

  
	
   

  	
   

  	
   

  
	
  ‘‘Minor
  Improvement”

  	
   

  	
  means
  all improvements or modifications or adaptations to the Licensed Product by
  Laxdale which only require standard pharmacokinetic, bioequivalence or
  similar such studies in order to satisfy its addition to the Marketing
  Authorisation of the existing Licensed Product within the Field of Use;

  
	
   

  	
   

  	
   

  
	
  “IP
  Rights”

  	
   

  	
  means
  all patents, registered designs, unregistered design rights, copyrights,
  topography rights, trade marks, trade names, logos, trade secrets and
  know-how, moral rights, supplementary protection certificates, petty patents,
  utility models, applications for any of the above and the right to make
  applications and any and all other intellectual or industrial property rights
  of any description (and rights of a similar nature) anywhere in the world,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)
  existing now or at any time in the future; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)
  whether or not registered or registrable;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  related to the Licensed Product.

  
	
   

  	
   

  	
   

  
	
  “Launch
  Date”

  	
   

  	
  means
  a date to be agreed between the parties hereto which shall be no later than
  three (3) months following approval of the Licensed Product by the EMEA
  except for those countries within the Territory in which the price of the
  Licensed Product must be negotiated with the local authorities where Launch
  Date shall be no later than nine (9) months following approval of the
  Licensed Product by the

  

 

3

 

	
   

  	
   

  	
  EMEA;

  
	
   

  	
   

  	
   

  
	
  “Licensed
  Patent”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)  the patent applications referred to in Part
  1 of the Schedule including any amended or divided applications;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)  all patent applications that may be filed
  in the Territory by or on behalf of Laxdale which are based on or claim
  priority from such patent applications including any amended or divided
  applications;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)  all patents actually granted pursuant to
  any such patent applications, including any amended or divided applications;

  
	
   

  	
   

  	
   

  
	
  “Licensed
  Product”

  	
   

  	
  means
  the product owned by Laxdale and sold by Scil pursuant to this Agreement in
  the Field of Use which falls within the claims of the Licensed Patent or the
  Orphan Drug Designation and which has obtained Marketing Authorisation by
  EMEA;

  
	
   

  	
   

  	
   

  
	
  “Marketing
  Authorisation”

  	
   

  	
  means
  a marketing authorisation which enables Scil to sell Licensed Product for the
  approved indication in Huntington’s disease being part of the Field of Use in
  all countries of the Territory;

  
	
   

  	
   

  	
   

  
	
  “Milestone
  Payments”

  	
   

  	
  means
  the sums due to Laxdale against the performance of the Milestones as more
  particularly detailed in Part 1 of the Schedule;

  
	
   

  	
   

  	
   

  
	
  “Minimum
  Sales”

  	
   

  	
  means
  the aggregate minimum sales within all countries of the Territory to be achieved
  by Scil as set out in Part 1 of the Schedule;

  
	
   

  	
   

  	
   

  
	
  “Net
  Sales Value”

  	
   

  	
  means
  the actual invoiced price of Units Sold to a third party, net of (i)Value
  Added Tax or other equivalent sales taxes or duties; (ii) trade discounts
  actually granted, not to exceed 5%;of the list price;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Net Sales Value shall also include any and all lump sums or other benefits
  whether in cash or in kind receivable by Scil from any third party in
  consideration of the Sale and/or distribution of

  

 

4

 

	
   

  	
   

  	
  Units;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In
  the case of any sale or disposal of Units which is not an arm’s length sale,
  the Net Sales Value shall be the open market price for the Licensed Product
  in the country to which the Licensed Product is supplied;

  
	
   

  	
   

  	
   

  
	
  “Order
  Acknowledgement”

  	
   

  	
  means
  a written acknowledgement of any Purchase Order from Laxdale containing
  details such as price, delivery dates and quantities agreed by Laxdale;

  
	
   

  	
   

  	
   

  
	
  “Orphan
  Drug Designation”

  	
   

  	
  means
  the orphan designation for the Licensed Product in the treatment of
  Huntington’s disease issued by the EMEA Committee for Orphan Medicinal
  Products on 27 October 2000;

  
	
   

  	
   

  	
   

  
	
  “Purchase
  Order”

  	
   

  	
  means
  an irrevocable written order (and any amendments to the same accepted by
  Laxdale) from Scil to Laxdale for the purchase of Licensed Products for sale
  by Scil in a format approved in advance by Laxdale;

  
	
   

  	
   

  	
   

  
	
  “Quarter”

  	
   

  	
  means
  each period of 3 months in each year of the Term, the first quarter
  commencing at the start of the month during which the Licensed Product is
  first sold (“Quarterly” being construed accordingly);

  
	
   

  	
   

  	
   

  
	
  “Sale”

  	
   

  	
  means
  the sale or other disposal of Licensed Products (whether or not title is
  transferred and whether or not for value) and “Sold” shall be construed
  accordingly;

  
	
   

  	
   

  	
   

  
	
  “Samples”

  	
   

  	
  means Units to be supplied to Scil free of
  charge, labelled as samples ready for distribution to authorised persons in
  an amount to be requested and agreed between Laxdale and Scil. The amount of
  samples shall not exceed 1000 and shall not be lower than 500 Units in each
  of the first and second years within the total Territory after the Launch
  Date. Thereafter the Units of Samples shall be negotiated between the parties
  in good faith;

  

 

5

 

	
  “Schedule”

  	
   

  	
  means
  the schedule in 3 parts annexed and executed as relative hereto;

  
	
   

  	
   

  	
   

  
	
  “Term”

  	
   

  	
  means
  the term of this Agreement as detailed in Clause 2.1;

  
	
   

  	
   

  	
   

  
	
  “Territory”

  	
   

  	
  means
  Germany, France, Austria, Luxembourg, Netherlands and Belgium;

  
	
   

  	
   

  	
   

  
	
  “Total
  Net Sales Value”

  	
   

  	
  means
  the aggregate Net Sales Value of all Sales of Units by Scil to the date of
  the relevant calculation;

  
	
   

  	
   

  	
   

  
	
  “Trade
  Mark”

  	
   

  	
  Means
  the trade mark to be selected by Laxdale prior to the first Launch Date, and
  owned solely by Laxdale, with which Licensed Products shall be branded;

  
	
   

  	
   

  	
   

  
	
  “Transfer
  Price”

  	
   

  	
  means
  [ *]  percent ([ * ]%) of the Total Net
  Sales Value;

  
	
   

  	
   

  	
   

  
	
  “Unit”

  	
   

  	
  means
  the standard pack size (for 28 days treatment) containing 112 capsules (based
  on 4 per day)each of which contains 500mg of the Licensed Product of which
  485mg is the active substance ethyl icosapentaenoate (95% e-EPA), finally
  packed, labelled and marked with the Trade Mark and being in compliance with
  all local regulations and the Marketing Authorisation, ready for Sale to a customer
  in the Territory;

  
	
   

  	
   

  	
   

  
	
  “Working
  Day”

  	
   

  	
  Means
  Monday to Friday 09:00 till 17:00 excluding all UK and English public
  holidays.

  

 

1.2                                                                                 References in this Agreement to the singular
shall (except where the context requires otherwise) include a reference to the
plural (and vice versa) and references to one gender shall include a reference
to all other genders. References to Clauses and the Schedule are to the
clauses and schedule of this Agreement. Headings used in this Agreement
are for convenience only and shall not affect interpretation.

 

6

 

2.                                                                                       Term

 

2.1                                                                                 Subject to Clause 2.2 this Agreement shall
come into force on the Effective Date and subject to termination in accordance
with Clause 24 shall continue until the later to expire of a period of 10 years
or the expiry of the last of the patent applications referred to in Part 1 of
the Schedule or the expiry of Orphan Drug Designation in the Territory.

 

2.2                                                                                 Notwithstanding Clause 2.1 the parties may
extend the period of this Agreement beyond the Term provided such extension has
been agreed between the parties and subject always to agreeing a revised
Transfer Price being the actual Cost of Goods plus a percentage of the Net
Sales Value to be negotiated in good faith. The extension to the Term and the
revised Transfer Price shall be notified at least six (6) months prior to the
scheduled expiry of the Term otherwise the Agreement shall automatically
terminate upon expiry of the Term.

 

3.                                                                                       Appointment and scope of rights

 

3.1                                                                                 Subject to the terms of this Agreement,
Laxdale hereby grants to Scil an exclusive, non-transferable licence to market,
distribute and sell Licensed Products , in each
country within the Territory (subject always to Clause 7.1) within the Field of
Use only and under the Licensed Patent and Trade Mark and Orphan Drug
Designation. Scil shall not be entitled to sub-license or sub-contract any of
its rights hereunder without Laxdale’s prior written consent such consent not
to be unreasonably withheld. Such prior written consent is not needed in case Scil
wants to transfer the rights granted under this Agreement to a Group Company
subject always to: (i) said Group Company being obliged to fulfil all of the
obligations of Scil in terms of this Agreement (including but not limited to
payment obligations); (ii) said Group Company providing Laxdale with such
evidence as Laxdale shall reasonably require to show its ability to be able to
fulfil the obligations of Scil in terms of this Agreement; (iii) the details of
said Group Company being provided to Laxdale; (iv) said Group Company not being
further entitled to transfer said rights and; (v) said Group Company being
obliged to immediately transfer said rights back to Scil if it should cease to
be a Group Company. It is acknowledged by Scil that Laxdale hereby expressly
reserves the exclusive right to market, distribute and sell (either itself or
by way of licensing a third party) Licensed Products within the Field of Use in
any country in the World other than the Territory.

 

3.2                                                                                 Scil shall not represent or hold itself out
as Laxdale’s agent for the sales of the Licensed Products or as being entitled
to bind Laxdale in any way provided always that Scil shall be entitled to
describe itself as Laxdale’s authorised distributor for the Licensed Products
within the Territory.

 

4.                                                                                       Minimum Sales

 

4.1                                                                                 It will be considered a material breach of
this Agreement should Scil fail to achieve Minimum Sales (as set out in part I
of the schedule) in any two years during the Term whether consecutive or not.

 

4.2                                                                                 The Minimum Sales are set out in Schedule 1.

 

4.3                                                                                 For the avoidance of doubt the provision of
Samples by Scil shall not be included in the calculation of the Minimum Sales.

 

7

 

4.4                                                                                 Subject to Clauses 4.1 and 5.2 and, provided
that Scil’s failure is not due to the impact of parallel imports of the
Licensed Product, if Scil fails to achieve the Minimum Sales Laxdale shall be
entitled to terminate this Agreement with immediate effect and shall be free to
appoint new distributors, agents and/or licensees in the Territory (on a
non-exclusive or exclusive basis) and/or proceed with the marketing,
distribution and sale of the Licensed Products in the Territory on its own
account, as it deems appropriate.

 

5.                                                                                       Supply of the Licensed Products

 

5.1                                                                                 With effect from the first Launch Date, Scil shall provide Laxdale with a forecast
of its requirement of Units for the following 12 month period and shall during
every Quarter of each such year during the Term provide Laxdale with an updated
forecast for the year then following the date of such forecast. Such forecast
shall take the form of a written schedule and shall specify all details of
anticipated sales and shall be calculated and presented in a true and accurate
manner.

 

5.2                                                                                 All orders for the purchase of the Units
shall be made by Scil to Laxdale by submitting a Purchase Order each quarter
for supply in the next six (6) months. Following the first anniversary of the
first Launch Date Laxdale shall be obliged to comply with Scil’s requirements
as set out in their forecasted quantities in terms of Clause 5.1 together with
such additional quantities of Units if such additional quantities do not exceed
115% of the forecasted quantity for the delivery period in question and it
being further acknowledged that Scil shall be obliged to purchase 80% of the
forecasted quantities. Any additional orders to the foregoing shall only become
binding once they have been accepted by Laxdale and an Order Acknowledgement
issued. It is acknowledged by Laxdale that Scil shall not be in breach of any
requirement to make the Minimum Sales if such failure is due to Laxdale’s
rejection of Purchase Orders and/or defective Licensed Product which would
otherwise have allowed Scil to achieve such Minimum Sales.

 

5.3                                                                                 At the time of submitting the relevant Order
Acknowledgement, Laxdale shall inform Scil of Laxdale’s estimated delivery date
for consignments and shall, subject to Clause 5.2, be obliged to deliver the
Units no later than 6 months following the date of the Order Acknowledgement
which shall be issued by Laxdale within 2(two) weeks of receipt of the relevant
order. Delivery of the Licensed Products shall be made Ex-Works (Incoterms
2000) from one location within Europe (the “Delivery Location”) as notified by
Laxdale to Scil at the time of Order Acknowledgement.

 

5.4                                                                                 For the avoidance of doubt, at the end of the
first year of this Agreement following the Launch Date and at the end of each
year thereafter the parties may review this ordering process with a view to
modifying or adapting it from time to time for the benefit of the parties.

 

6.                                                                                       Approvals

 

6.1                                                                                 Subject to Clauses 6.3 to 6.5 it shall be
Laxdale’s responsibility (at its own cost) to manage the clinical trials and to
obtain regulatory approval of the Licensed Product in Huntington’s Disease and
in this respect Laxdale shall submit the relevant dossier to EMEA for the
purposes of obtaining Marketing Authorisation in Huntington’s Disease. For the
avoidance of

 

8

 

doubt, ownership of the results of all such trials and clinical or other
data arising from such clinical trials shall vest in and remain vested in
Laxdale.

 

6.2                                                                                 Laxdale shall be responsible for any other indications
within the Field of Use other than the treatment of Huntington’s
Disease and shall at its sole discretion prepare and be responsible for
the conduct of clinical trials and at Laxdale’s sole discretion shall be
responsible for securing regulatory approval in the Territory.

 

6.3                                                                                 Subject to Clauses 6.1 and 6.2 above Scil
shall be responsible for complying with the laws in the Territory applicable to
marketing, distributing and selling the Licensed Products pursuant to this
Agreement and for paying all applicable customs duties, taxes and other costs
in respect of the marketing, distribution and sale of the Licensed Products in
the Territory.

 

6.4                                                                                 Scil shall be responsible, at its own cost,
for any regulatory matters specific to the Territory, or any part of it (“Local
Regulations”), limited to obtaining pricing reimbursement or approval with the
pricing authority or other relevant body. Without prejudice to the foregoing
Laxdale shall provide reasonable assistance to Scil free of charge in gaining
approvals under, or otherwise complying with, the Local Regulations.

 

6.5                                                                                 Subject to any Major Improvements neither
party shall at any time nor under any circumstance do anything (whether
directly or indirectly) to interfere with or prejudice the Orphan Drug Designation
of the Licensed Product or with EMEA’s or any other regulatory body’s approval
of the Licensed Product. Scil shall (at the request of Laxdale from time to
time) do all such acts and things as may be necessary to assist with
maintaining all necessary regulatory approvals of the Licensed Product with
regard to safety aspects thereof. In this respect, Scil shall promptly provide
Laxdale with all information and data to prepare the periodic safety update
reports (PSUR’s) and other documentation reasonably necessary to be submitted
to EMEA or other regulatory authority from time to time.

 

6.6                                                                                 For the avoidance of doubt, intentional or
negligent failure by either party to comply with any of the provisions of
Clause 6.5 will amount to a material breach of this Agreement.

 

7.                                                                                       Duties
of Scil

 

7.1                                                                                 Subject to Laxdale complying with Clause 5.2
and the following provisions of this Clause, Scil shall be obliged to launch
Sales of the Licensed Product in each country of the Territory by the
appropriate Launch Date (as defined). Failure to so launch shall entitle
Laxdale to remove the appropriate country from the scope of the Territory and
the definition of Territory for the purposes of this Agreement shall be amended
accordingly. For the avoidance of doubt should failure to launch be directly
due to a delay in Scil obtaining pricing reimbursement caused by acts and/or
omissions of the relevant regulatory authority and not the acts and/or
omissions of Scil, the provisions of this Clause in relation to a removal of a
country from the Territory shall not apply.

 

7.2                                                                                 Without prejudice to its obligation to
achieve Minimum Sales and subject to Laxdale complying with the provisions of
Clause 5.2, Scil shall use best endeavours to sell the Licensed Products in
terms of its exclusive appointment under this Agreement.

 

9

 

7.3                                                                                 Scil shall use best endeavours to enhance the
reputation and acceptance of the Licensed Product amongst customers and
prospective customers within the Territory and in this respect Scil shall
jointly agree with Laxdale, after the Effective Date but prior to the first
Launch Date key promotional messages. Scil shall be consistent in its use of
the agreed messages and shall use them, as appropriate, for all sales
literature, promotional, marketing and other materials in relation to the
Licensed Products. A copy of all sales literature produced shall be delivered
to Laxdale.

 

7.4                                                                                 Scil shall refrain from taking any action
that would damage the reputation and standing of Laxdale and/or the Licensed
Product.

 

7.5                                                                                 Scil shall not re-sell,
ship, export or otherwise dispose of the Licensed Products in any manner which
may or would violate applicable export laws and/or regulations in the
Territory.

 

7.6                                                                                 To avoid any doubt, all costs and expenses
incurred by Scil in carrying out its obligations under this Agreement, shall be
borne solely and exclusively by Scil. In addition, all expenses incurred by Scil
acting in its capacity as exclusive distributor shall be borne solely by Scil.

 

7.7                                                                                 Scil shall promptly bring to Laxdale’s notice
any information or knowledge received or gained by it which is likely to be of
major interest, use or benefit to Laxdale in relation to the development,
marketability or sale of the Licensed Product or otherwise.

 

7.8                                                                                 Scil shall be responsible for training its
employees in the successful sale of the Licensed Products.

 

7.9                                                                                 Scil shall at all times keep Laxdale informed
of the progress of its marketing and promotional activities including providing
twice yearly reports in writing of activity in the preceding half year and
proposed activity with international relevance in the forthcoming half year
Both Parties shall meet when reasonably requested from time to time in order to
discuss progress as aforesaid.

 

7.10                                                                           Scil shall notify Laxdale in writing of all
serious adverse events occurring in relation to the Licensed Product within 3
working days of Scil becoming aware of such events.

 

7.11                                                                           Scil acknowledges that it is in both parties best interests to provide each other with
appropriate information on request to allow both parties to be commercially
successful in their implementation of this Agreement.

 

7.12                                                                           Scil shall, in the event of the need for a
Post Marketing Surveillance Study (“PMSS”), agree with Laxdale in good faith
how to proceed

 

8.                                                                                       Duties of Laxdale

 

8.1                                                                                 Throughout the Term of this Agreement Laxdale
shall:

 

8.1.1                                                                        refrain from taking any action that would damage the
reputation and standing of Scil;

 

10

 

8.1.2                                                                        promptly bring to Scil’s notice any
information or knowledge received or gained by it which is likely to be of
major interest, use or benefit to Scil in relation to the marketability,
marketing or sale of the Licensed Product or otherwise;

 

8.1.3                                                                        notify Scil in writing of all serious adverse
events occurring in relation to the Licensed Product within 3 working days
hours of Laxdale becoming aware of such events

 

8.1.4                                                                        supply and sell the Licensed Products to Scil
upon the terms and conditions set forth in this Agreement together with all
necessary and appropriate documentation, warnings and instructions in English
as may be required in accordance with the relevant regulatory approvals from
time to time; and

 

8.1.5                                                                        inform Scil of the intention to recruit
investigators within the Territory to carry out clinical trials within the
Field of Use using the Licensed Product. Laxdale shall keep Scil appraised of
the progress of the clinical trials and shall meet with Scil, when reasonably
requested from time lo time by Scil to discuss progress as foresaid. In the
event Laxdale, in its sole discretion, intends to carry out further clinical
trials on the Licensed Product within the Territory, Scil shall assist Laxdale,
upon request, to suggest potential investigators to carry out the intended
clinical trials.

 

8.1.6                                                                        in the event of the need for a PMSS agree with Scil
in good faith how to proceed.

 

8.1.7                                                                        acknowledge that it is in both parties best interests to
provide each other with appropriate information on request to allow both
parties to be commercially successful in their implementation of this
Agreement.

 

9.                                                                                       Milestone Payments

 

9.1                                                                                 In consideration of the grant of the rights
under this Agreement, Scil shall pay Laxdale the Milestone Payments within 30
days of achievement of each of the Milestones respectively and Laxdale shall
promptly confirm in writing the achievement of each Milestone to Scil.
Milestone Payments are exclusive of applicable VAT which shall be payable in
addition thereto.

 

9.2                                                                                 For the avoidance of doubt, Milestone
Payments are non-refundable and shall not constitute an advance on the Transfer
Payments.

 

10.                                                                                 Transfer Price

 

10.1                                                                           Within (30) thirty Working Days of delivery
under each Purchase Order, Scil shall pay Laxdale € [ *
] per Unit multiplied by the total number of Units supplied in the Purchase
Order (“Delivery Payment”)

 

11

 

10.2                                                                           Within 30 days after the end of each Quarter,
Scil shall provide to Laxdale a statement showing a breakdown of the Transfer
Price, Total Net Sales Value, individual Net Sales
Values for Sales, trade discounts given, taxes applied, as appropriate. Scil
shall pay the balance of the Transfer Price due in accordance with such
statement minus the aggregate amount of payments made with respect to Clause
10.1 within thirty (30) days after the end of each Quarter

 

10.3                                                                           For the purposes of calculating the Net Sales
Value in accordance with this Agreement, the invoiced value of Units returned
but not replaced due to being faulty and samples shall not be included.

 

10.4                                                                           If the actual Cost of Goods is greater than
20% of the weighted average Net Sales Value per Unit within the Territory,
Laxdale and Scil agree to negotiate, in good faith, alternative payment terms
to better reflect the investment Laxdale has made in developing the Licensed
Product. In the event Laxdale and Scil fail to agree on alternative payment
terms, Laxdale shall be entitled to:

 

(i) convert Scil’s exclusive appointment herein to a non-exclusive
appointment and shall be free to appoint new distributors, agents and/or
licensees in the country of the Territory with the lowest ratio of Cost of
Goods/ Net Sale Value per Unit and/or proceed with the marketing, distribution
and sale of the Licensed Products in such country on its own account, as it
deems appropriate; or

 

(ii) to remove the country with the lowest
ratio of Cost of Goods/ Net Sale Value per Unit from the scope of the
Territory.

 

11.                                                                                 Payments

 

11.1                                                                           All payments hereunder shall be paid by
electronic transfer to Laxdale’s bank account at Bank of Scotland or to such
other bank account as may be notified to Scil from time to time.

 

11.2                                                                           All payments hereunder shall be made in EURO
without deduction or set off of any kind. Scil shall use reasonable endeavours
to use rights under any applicable double taxation treaty (if any) to minimise
any taxation liability to sums payable under this Clause 11. Laxdale undertakes
to also use reasonable endeavours to support Scil in such efforts.

 

11.3                                                                           Unless specifically stated otherwise, all
payments are exclusive of Value Added Tax and all other applicable taxes and/or
duties which shall be payable if applicable at the relevant rate from time to
time by Scil.

 

11.4                                                                           Without prejudice to any other right or
remedy of Laxdale, if any sum due by Scil is not paid within the relevant time
period specified in this Agreement, interest shall be payable from the last
date for payment under this Agreement until actual payment (whether before or
after judgement) at a rate of [3%] per annum above EURIBOR together with all
expenses (including legal fees) incurred by Laxdale in recovering the sum
outstanding.

 

12

 

12.                                                                                 Accounts

 

12.1                                                                           Scil shall keep at its office at the address
on the front of this Agreement (or such other address as may be agreed by the
parties from time to time), detailed, accurate and separate records and
accounts showing the calculation of the Transfer Price to Laxdale in respect of
the Licensed Products and all other payments payable by Scil hereunder and all
matters covered by statement rendered under Clause 10.2 including but not
limited to Net Sales Values, returns, taxes and Sales. Such records shall be in
a form which allows speedy and accurate checks to be made and shall be
supported by all relevant vouchers, invoices, Purchase Orders, Order
Acknowledgements, delivery notes and the like and shall be properly cross
referenced.

 

12.2                                                                           Scil shall permit any duly authorised
independent auditor selected by Laxdale (and under a professional obligation of
confidentiality) access to such records, accounts and statements of Scil upon
reasonable notice (being not less than 10 Working Days) and shall provide such
information and explanations as such representatives shall require to verify
the statements rendered by Scil in terms of this Agreement for the purpose of
verification in relation to the Licensed Product only. Notwithstanding expiry
or termination of this Agreement for any reason such access shall be given, as
aforesaid, until all outstanding claims have been settled to the satisfaction
of both parties. If any inspection by Laxdale as aforesaid reveals an under
calculation or underpayment of 5% or more of the Transfer Price due to Laxdale,
the costs of such inspection shall be borne by Scil.

 

13.                                                                                 Title and Risk

 

13.1                                                                           Property and title in and to all Licensed
Products supplied to Scil shall remain with Laxdale until the Delivery Payment
has been paid in accordance with Clause 10.1. Notwithstanding the foregoing, Scil
shall be entitled to sell Licensed Product in the ordinary course of business
and Scil shall keep all such Licensed Products safe until all such monies are
so paid.

 

13.2                                                                           Notwithstanding the provisions of Clause
13.1, risk of loss or damage to the Products shall pass to Scil upon delivery
by Laxdale to the Delivery Location in terms of Clause 5.3 and Scil shall be
responsible for insuring the Products accordingly.

 

14.                                                                                 Inspection/ Quality of Licensed Product

 

14.1                                                                           Subject to Clause 16, Scil shall have a
period of 14 days from receipt of the Licensed Products to confirm that the
quantity of Licensed Products received is correct and that the Licensed
Products otherwise conform to the relevant Purchase Order with respect to
obvious defects. The procedures in respect of the foregoing shall be dealt with
in a separate Quality Assurance Agreement to be agreed upon between the
Parties.

 

14.2                                                                           In case of hidden defects (which shall be
limited to defects caused during the manufacturing of the Licensed Product or
as a result of the active substance going out of specifications), the above
stated 14 day period shall be the 14 day period from discovery of the same.

 

13

 

14.3                                                                           If such notification of hidden defect is
given by Scil, Laxdale shall as soon as is reasonably practicable, replace such
defective quantities at its sole expense. Notwithstanding the foregoing, in the
event that the hidden defect has been caused by, but is not limited to
mishandling or inadequate storage by Scil or a third party contractor acting on
Scil’s behalf following collection of the Licensed Product from the Delivery
Location, then Scil shall bear all costs associated with replacement of such
defective Licensed Products.

 

15.                                                                                 Additional Field

 

15.1                                                                           In the event, during the Term of this
Agreement, Laxdale is in a position to appoint a distributor for a product in
the Additional Field, and subject always to Scil having performed all of its
obligations under this Agreement to the satisfaction of Laxdale and not being
in breach of this Agreement, Scil shall have the first option to negotiate the
terms of a licence and distribution agreement for such a product within the
Territory.

 

15.2                                                                           Laxdale shall give written notice of its
intention to appoint a distributor for such product to Scil and Scil shall have
four (4) weeks to give written notice to Laxdale to exercise its option to
enter into negotiations. To assist Scil in it’s decision to enter negotiations
Laxdale will provide (i) the results of the research and development program to
date, and; (ii) a draft Heads of Agreement setting out the main commercial
terms of the proposed agreement. In the event no such notice is given to
Laxdale by Scil, the option in Clause 15.1 shall be deemed to have expired and
it shall be at Laxdale’s sole discretion whether to enter into negotiations
with Scil.

 

15.3                                                                           Upon receipt by Laxdale of notice, in
accordance with Clause 15.2, Laxdale and Scil shall negotiate, in good faith,
the terms of a licence and distribution agreement. In the event the terms of an
agreement have not been reached within four (4) month of receipt by Laxdale of
the foregoing notice from Scil, then all negotiations shall terminate and
Laxdale at it’s sole discretion may enter into
negotiations with any third party in relation to the product in the Additional
Field within the Territory. Notwithstanding the foregoing, Laxdale shall not
grant such third party conditions more favourable than those offered to Scil.

 

16.                                                                                 Warranty

 

16.1                                                                           Subject as herein provided, Laxdale warrants
to Scil that:

 

(a)                                  until a Licensed Product has reached its expiry
date as indicated on it, it shall conform to Laxdale’s specification for the
Licensed Product as approved by EMEA;

 

(b)                                 it is the rightful owner of all necessary
rights including but not limited to, patents and know-how with regard to
Licensed Product, the Trademark and the Marketing Authorisation (when granted)
and declares to the best of it’s knowledge at the

 

14

 

Effective Date, that such rights do not infringe any
third party rights and that it is not aware at the Effective Date of any
potential future infringements ;

 

(c)                                  to
the best of its knowledge at the Effective Date, none of the above stated
rights have been subject to infringement-proceedings with regard to third
parties rights, or have been challenged by third parties in the past, nor, so
far as Laxdale is aware as at the Effective Date, is such a potential future
challenge expected –

 

(d)                                 subject
always to Clauses 20.3 and 20.4 it will maintain and hold upright the above stated
rights, especially, but not limited to, the Licensed Patents, the Trademark and
the Marketing Authorisation (When granted) and the Orphan Drug designation (subject
to Major Improvements) throughout the term of this Agreement;

 

(e)                                  it has full authority to grant the rights as set fourth in
this Agreement; and

 

(f)                                    that Licensed Product has a remaining shelf-life of at least
24 month as at the date of delivery.

 

16.2                                                                           Subject always to the limitations set out in
Clause 17 below, in case of any breach of the above stated warranties, Laxdale
shall indemnify and hold harmless Scil.

 

17.                                                                                 Limitation of liability

 

17.1                                                                           Other than in relation to liability for death
or personal injury, the liability of both of the parties to this agreement
shall be limited to the aggregate amount of Milestone Payments, provided that
such damage was not caused by an intentional misconduct of the party being
liable.

 

17.2                                                                           If Scil receives any third party claims in
respect of death or personal injury alleged to have been caused by Licensed
Products sold by Scil under this Agreement, Laxdale shall handle all such
claims including but not limited to the defence and/or settlement thereof. Scil
shall (a) promptly notify Laxdale on any claims against Scil being made and
allow Laxdale to handle them; (b) make no admissions or statements in respect
of such claims without Laxdale’s consent, except insofar as required to do so
by law (and then only subject to prior consultation with Laxdale where this is
reasonably practicable); and (c) fully and effectively co-operate and provide
reasonable assistance to Laxdale in relation to the handling of such claims at
Laxdale’s reasonable expense

 

17.3                                                                           Both parties shall during the Term maintain
comprehensive insurance cover with a reputable EU insurer in sufficient terms
to cover its potential liability pursuant to the terms of this Agreement. Both
parties shall promptly present evidence as to the existence of such insurance
cover and the payment of relevant premiums to the other party, upon request,
from time to time.

 

15

 

18.                                                                                 Trade marks and Logos

 

18.1                                                                           For the duration of this Agreement Laxdale
shall grant Scil in the Territory an exclusive licence to utilise the Trademark
and the laxdale logo (as provided by Laxdale) (“Laxdale Logo”) subject to the
following restrictions and within the Field of Use only:

 

18.1.1                                                                  The Trade Mark and Laxdale Logo shall be used
by Scil only on or in respect of the Licensed Product and no other trade name
or trade mark shall be used by Scil on or in relation to the Licensed Product;

 

18.1.2                                                                  The use by Scil of the Trade Mark and Laxdale
Logo shall not confer on Scil (nor on any other person) nor give rise to or
create any right, title or interest in the Trade Mark or Laxdale Logo contrary
to the rights of Laxdale.

 

18.1.3                                                                  Scil hereby agrees that it shall not claim
nor commit any other person to claim any right, title or interest in or to the
Trade Mark or Laxdale Logo or to any trade name or trade mark of Laxdale and
shall promptly cease to use the Trade Mark and Laxdale Logo and all such other
trade marks or other trade name immediately upon termination of this Agreement
for any reason whatsoever subject to Clause 25 and;

 

18.1.4                                                                  the exclusivity granted in relation to the Trade
Mark and the Laxdale Logo shall only be in relation to the use of the Licensed
Products in the Territory.

 

18.2                                                                           Scil recognises that the Trade Mark and
Laxdale Logo used on or relative to the Licensed Product (and any other rights
attaching to the Licensed Product) are the property of Laxdale. If so requested
by Laxdale, Scil shall from time to time render all reasonable assistance to
Laxdale in connection with the registration of the Trade Mark upon reasonable
compensation by Laxdale.

 

19.                                                                                 Improvements

 

19.1                                                                           Scil undertakes not to make any improvements
of whatsoever nature to the Licensed Product and it is acknowledged by Scil
that any breach of this Clause 19.1 shall be deemed to be a material breach of this
Agreement.

 

19.2                                                                           If during the Term Laxdale conceives or
develops any Major Improvement, Scil shall have the right to market and
distribute the same under the conditions of this Agreement. However, it is
agreed that Laxdale shall be entitled to claim additional milestone payments in
relation to said Major Improvements in an amount not to exceed the amount of
the Milestone Payments. If the Major Improvement should be ready for marketing
and distribution prior to the lapse of the 10 year period as set forth in Article 2.1
above, Laxdale is only entitled to claim new milestone payments in an amount
not to exceed the Milestone Payments and to be calculated as follows:

 

	
  Total amount of Milestone Payments

  	
   

  	
  X

  	
  number of completed years since the launch date within the first
  country in the Territory but limited to the 10 years of the Orphan Drug
  Designation

  
	
  10

  

 

16

 

The Parties shall agree in good faith on the time at which such new
milestone payments became due and payable

 

19.3                                                                           If during the Term, Laxdale conceives or
develops any Minor Improvement (as defined), Scil shall have the automatic
right to have said Minor Improvement included within the Field of Use and
within the Territory under the conditions as set forth in this Agreement.

 

20.                                                                                 Intellectual Property

 

20.1                                                                           Other than as expressly provided herein
nothing contained in this Agreement shall be construed as conferring or vesting
any right, title or interest in or to any of the Licensed Patent, the Trade Mark
or other IP Rights in or relating to the Licensed Product in favour of Scil or
any other third party.

 

20.2                                                                           Laxdale gives no warranty to Scil that the
utilisation of Licensed Patents will not infringe any IP-rights of any third
parties concerning the manufacture of the active ingredient. Notwithstanding
the foregoing:

 

20.2.1                                                                  Laxdale asserts that it is not aware as of
the Effective Date of any such third party rights with respect to the
manufacture of the active ingredient; and

 

20.2.2                                                                  to minimise the risk of delivery problems with
regard to active ingredient due to patent infringements or other reasons,
Laxdale undertakes to use reasonable endeavours to enter into a supply
agreement with an alternative supplier who may use an alternate method of manufacture
if required.

 

20.3                                                                           Laxdale shall use all reasonable endeavors to
defend its Licensed Patents and/or any other IP Right related to the Licensed
Product against validity challenges of third parties. In case a third party
successfully claims that Licensed Patent and/or any other IP Right related to
the Licensed Product infringe their rights and Scil is no longer able to market
and distribute Licensed Product without infringing such third party right.
Laxdale shall use its reasonable endeavours to (i) either modify Licensed
Patent and/or other IP Rights related to the Licensed Product in such manner
that the same does no longer infringe the rights of such third party, or (ii)
if it is commercially viable for Laxdale to do so, to provide Scil with a
royalty free license from such third party which enables Scil to continue its
marketing and distribution activities of Licensed Product on the same terms as
this Agreement (including but not limited to payment terms).

 

20.4                                                                           Scil shall forthwith advise Laxdale of any
infringement or purported infringement of the Licensed Patent, the Trade Mark
and/or any other IP Rights of Laxdale of which it becomes aware. Laxdale shall
in its sole discretion decide whether to take any action (at its own expense)
against any infringement or purported infringement of the foregoing which comes
to its knowledge. Scil shall promptly give Laxdale all reasonable assistance in
relation to such proceedings (including becoming a party to them, if so
requested by Laxdale), upon being indemnified by Laxdale in respect of any
reasonable costs and in that event any damages, profits or other compensation
received from such proceedings shall belong to Laxdale (subject to Scil’ right
to be recompensed for its reasonable costs as aforesaid). In the event Laxdale,
in

 

17

 

its sole discretion, decides to take no action Scil shall be entitled to
take such action as it sees fit. To avoid any doubt any action so taken by Scil
shall be at its own expense and Scil shall indemnify Laxdale in relation to any
costs, claims or damages incurred by Laxdale as a result of Scil taking such
action.

 

21.                                                                                 Confidential information

 

Neither Scil nor Laxdale shall either during the Term (or any extension
thereof) or thereafter, disclose to any third party (other than in the proper
course of business to its professional advisers) any confidential business
information of the other whether relating to the Licensed Product, any IP
Rights relating to the Licensed Product, (including but not limited to the
Licensed Patent and/or the Trade Mark), any terms of this Agreement, or in
relation to each others’ business including but not limited to trade secrets,
proprietary information or any information relating to the business affairs of
each other. For the avoidance of doubt, the aforesaid restriction shall not
apply to information which is in the public domain at the Effective Date, which
enters the public domain thereafter through no fault of Scil or Laxdale as the
case may be, or any information required to be disclosed by law or other
regulatory authority.

 

22.                                                                                 Press
Releases

 

Subject to Clause 21, during the term of this Agreement each party has
the right to approve the wording of any press release within the Territory
relating to the terms of this Agreement or in relation to the Licensed Product
within the Territory. Neither party shall use the other party’s name without
their prior written consent.

 

23.                                                                                 Force Majeure

 

23.1                                                                           If either of the parties is prevented or
delayed by force majeure from the performance of any of its obligations under
this Agreement (the “Defaulting Party”), and gives written notice to the other
party (the “Non-Defaulting Party”) specifying the matters constituting force
majeure and (where possible to predict) the period for which such prevention or
delay shall continue, then the party in question shall be excused from the
performance or the punctual performance (as the case may be) of the relevant
obligation as from the date of such notice for so long as such cause of
prevention or delay to its relevant obligations shall continue.

 

23.2                                                                           The parties shall co-operate with each other
and the Defaulting Party shall use its utmost endeavours to make alternative
arrangements to enable the relevant obligations to be performed and if such
relevant alternative arrangements are not arranged or if they are not arranged
to the satisfaction of the Non-Defaulting Party, the Non-Defaulting Party may
make alternative arrangements to enable such obligations to be performed.

 

24.                                                                                 Termination

 

24.1                                                                           Subject as provided herein, both Parties may
terminate this Agreement by written notice to the other Party with immediate
effect upon the occurrence of any of the following events:

 

18

 

24.1.1                                                                  liquidation, receivership, appointment of an
administrator of the other Party or the institution of insolvency proceedings
or any general composition, formal or informal, with or for the benefit of
creditors or anything analogous to any of the foregoing in any jurisdiction in
the World;

 

24.1.2                                                                  the other Party ceasing or threatening to cease
carrying on its business or a substantial part thereof;

 

24.1.3                                                                  in the event of a material breach of any of
the provisions of this Agreement by the other party which cannot be remedied or
if it can be remedied remains unremedied on the expiry of [45] days after
notice is given by the non-breaching party specifying the nature of the breach
and the action required to remedy same.

 

24.2                                                                           Subject as provided herein, Laxdale may
terminate this Agreement by written notice to Scil with immediate effect upon
the occurrence of any of the following events:

 

24.2.1                                                                  Change of Control of Scil where the new
company would be in breach of Clause 24.2.3 of this Agreement;

 

24.2.2                                                                  if Scil challenges and/or assists any third
party to challenge the IP Rights (including the Licensed Patent and/or the
Trade Mark) of Laxdale;

 

24.2.3                                                                  if during the first 5 years of the Term it
comes to the attention of Laxdale that Scil is concerned or involved in the
marketing, distribution or sale of any product which competes with the Licensed
Product within the Field of Use; or

 

24.2.4                                                                  in terms of Clause 4.4 hereof.

 

25.                                                                                 Effect of termination

 

25.1                                                                           In the event of termination or expiry of this
Agreement for any reason:-

 

25.1.2                                                                  Scil’ appointment and right to sell the
Licensed Products hereunder shall automatically terminate other than in
relation to Licensed Products for which binding orders have been received by Scil
from its customers which Scil shall be entitled to fulfil. With regard to
remaining quantities Laxdale shall be entitled to repossess all Licensed
Products (subject to payment by Laxdale for any such repossessed Licensed
Products which Scil has paid for at cost);

 

25.1.3                                                                  Both Parties shall return to the other all
correspondence, documents and other property provided by the other Party (or
any of its representatives or agents) which may be in such Party’s possession
or under its control including all Licensed Products, the title of which have
not passed to such Party.

 

19

 

25.1.4                                                                  All sums due to Laxdale at the date of
termination (excluding sums in respect of any unfulfilled Purchase Orders)
shall immediately become due and payable within 21 days.

 

25.2                                                                           Termination or expiry of this Agreement for
any reason whatsoever shall not affect any rights of the parties in relation to
the period prior to the date of termination or expiry and/or which due to their
nature are due to be performed or observed following such termination including
but not limited to Clauses 11,12, 13, 16, 17, 21 and
26.

 

26.                                                                                 General

 

26.1                                                                           Other than as set out in Clause 3.1, Scil
shall not be entitled to transfer, assign or sub-license any of its rights or
obligations under this Agreement without the prior written consent of Laxdale.
Laxdale shall be entitled to transfer, assign or sub-license any of its rights
or obligations under this Agreement to a company within its group of companies
as defined by the Companies Act 1985 (the “Act”) or to its holding company (as
defined in the Act) or a company within the group of companies of its holding
company or companies.

 

26.2                                                                           This Agreement constitutes the entire
agreement and understanding between the parties hereto regarding its subject
matter and cancels, terminates and supersedes any and all prior agreements and
understandings of any nature (written, oral or otherwise) relating to such
subject matter but that without excluding either party’s liability for fraud or
fraudulent misrepresentation. Any variation or addition to the provisions of
this Agreement shall not be effective unless reduced to writing and signed by
or on behalf of the parties hereto by a person duly authorised to do so.

 

26.3                                                                           The relationship between the parties in
relation to the subject matter of this Agreement is as described in this
Agreement and no employment, partnership, joint venture or agency relationship
shall be deemed to exist between the parties and neither shall have the power
to bind or pledge the credit of the other.

 

26.4                                                                           Failure by either party to enforce at any
time any of the provisions of this Agreement, or to exercise any option
provided herein shall not constitute a waiver of such provision or option, nor
affect the validity of this Agreement or any part thereof, or the right of the
willing party to enforce thereafter each and every such provision or option.

 

26.5                                                                           If any provision of this Agreement is held to
be invalid or unenforceable, the remainder of this Agreement shall continue in
full force and effect.

 

26.6                                                                           Any notice or other document to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given if left at or sent by hand or by registered post; or by facsimile or by
other electronic media to a party at the address set out herein for such party
or such other address as one party may from time to time designate by written
notice to the other. Any such notice or other document shall be deemed to have
been received by the addressee two working days following despatch if the
notice or other document is sent by registered post, or simultaneously with the
delivery or transmission if sent by hand or other electronic means.

 

20

 

27.                                                                                 Applicable law and jurisdiction

 

This Agreement shall be governed by and construed in accordance with
English law.   The parties hereby submit
to the non-exclusive jurisdiction of the English courts.

 

AS WITNESS the hand of the parties thereto the date and year first
before written.

 

	
  Signed
  for and on behalf of

  
	
  LAXDALE
  LIMITED

  
	
  Director

  
	
  at

  	
   

  	
   

  
	
   

  
	
  on

  
	
   

  
	
  Director/Company
  Secretary

  
	
  at

  	
   

  	
   

  
	
   

  
	
  on

  
	
   

  
	
  Signed
  for and on behalf of

  
	
  SCIL
  BIOMEDICALS GMBH

  
	
  Director

  
	
  at

  	
   

  	
   

  
	
   

  
	
  on

  
	
   

  
	
  Director/Company
  Secretary

  
	
  at

  	
   

  	
   

  
	
   

  
	
  on

  

 

21

 

Schedule

 

Part I

 

1                                          Minimum
Sales (The number of Units of Licensed Product sold within the total Territory
in each 12 month period following the Launch Date in the first country of the
Territory)

 

Year 1 –  [
* ]  Units of the Licensed Product in the
first 12 month period after the first Launch Date

 

Year 2 –  [
* 1  Units of the Licensed Product in the
second 12 month period after the first Launch Date

 

Years 3, 4 & 5 – [ * ]  Units
of the Licensed Product in each of the third, fourth and fifth 12 month period
after the first Launch Date

 

Minimum sales for Year 6 to Term shall be agreed between both parties
no later than 6 months prior to the end of Year 5 to take into account the
current status and market conditions at that time, If no agreement is reached
within this time then the Minimum Sales for Years 3, 4 & 5 will apply for
all subsequent years during the Term.

 

2.                                       Licensed Patent:

 

EPO 00900733.7

 

International Filing Date: 21.01.00

 

Status: Pending

 

3.                                       Timetable

 

	
  Milestone

  	
   

  	
  Milestone Payments

  	
   

  
	
  Milestone
  1 – on the Effective date

  	
   

  	
  [ * ] million Euro

  	
   

  
	
  Milestone
  2 – submission by Laxdale of dossier to EMEA

  	
   

  	
  [ * ] million Euro

  	
   

  
	
  Milestone
  3 – regulatory approval of Licensed Product by  EMEA 

  	
   

  	
  [ * ] million Euro

  	
   

  

 

22

 

	
  Milestone
  4 – Launch Date of Licensed Product in Germany

  	
   

  	
  [
  * ] million Euro

  	
   

  
	
  Milestone
  5 – Launch Date of Licensed Product in France

  	
   

  	
  [
  * ] million Euro

  	
   

  

 

 

23

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