Exhibit 10.22
CO-OPERATIVE JOINTVENTURE CONTRACT
between
GINGER CAPITAL INVESTMENTHOLDING,LTD.
and
BIONIK LABORATORIESCORP.
with respect tothe establishmentof
ChinaBionik Medical Rehabilitation TechnologyLtd.
May17,2017
TABLEOFCONTENTS
| Page | |
| CHAPTER 1 DEFINITIONS | 1 |
| CHAPTER 2 PARTIES | 5 |
| CHAPTER 3 ESTABLISHMENT OF THE COMPANY | 6 |
| CHAPTER 4 PURPOSES, SCOPE AND SCALE OF BUSINESS | 7 |
| CHAPTER 5 TOTAL INVESTMENT, REGISTERED CAPITAL AND TERMS OF COOPERATION | 8 |
| CHAPTER 6 RESPONSIBILITIES OF THE PARTIES | 10 |
| CHAPTER 7 LICENSE | 11 |
| CHAPTER 8 PURCHASING, SALES AND REGULATORY COMPLIANCE | 12 |
| CHAPTER 9 BOARD OF DIRECTORS | 12 |
| CHAPTER 10 BUSINESS MANAGEMENT | 15 |
| CHAPTER 11 LABOR MANAGEMENT | 16 |
| CHAPTER 12 TAXATION, FINANCE, INSURANCE AND INSPECTION | 17 |
| CHAPTER 13 PROFIT DISTRIBUTION | 18 |
| CHAPTER 14 TERM | 18 |
| CHAPTER 15 TERMINATION AND LIQUIDATION | 18 |
| CHAPTER 16 CONFIDENTIALITY AND NON-COMPETITION | 21 |
| CHAPTER 17 FORCE MAJEURE | 22 |
| CHAPTER 18 GOVERNING LAW | 23 |
| CHAPTER 19 DISPUTE RESOLUTION | 23 |
| CHAPTER 20 LIABILITIES FOR BREACH OF CONTRACT | 24 |
| CHAPTER 21 MISCELLANEOUS | 24 |
| SCHEDULE I | PRODUCTS |
| SCHEDULE II | PARTY A’S CONTRIBUTION SCHEDULE |
| SCHEDULE III | BIONIK IP |
| EXHIBIT A | FORM OF LICENSE AGREEMENT |
| EXHIBIT B | FORM OF DISTRIBUTION AGREEMENT |
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CO-OPERATIVEJOINTVENTURE CONTRACT
Preamble
In accordance withtheLaw of the People’s Republic of China on Chinese-Foreign Co-Operative Joint Venture Enterprises andits implementing regulations (hereinafter collectively referred to as the “CJVLaw”)and in conformity with otherrelevant Laws of the PRC,and adhering to the principles of equality andmutual benefit and through friendly consultations,Ginger Capital InvestmentHolding,Ltdof Hong Kong andBionik Laboratory,Corp.of the USA agree to enter into this cooperative joint venture contract (this “Contract”)to establish a co-operative joint venture enterprise in Beijing,the PRC, to carry on business activities as permittedby Law for the purposes set forth herein below.
Chapter One
Definitions
Unless the contextotherwiserequires,capitalizedterms used in this Contractshall have the following meanings:
“Acquired FutureProduct”shall mean any Party B medical device product otherthanCurrent Products that PartyBproposesto market in thePRC afterthedate of this Contractand which Party A acquires the license to do so.
“Acquirer” means the Personacquiring Control of the equity interests and/orassets of either Party through a Change-of-Control Event.
“Additional Capital” has the meaning ascribed theretoin Section 5.5.
“Affiliate”means, withregard to a givenPerson,a Person that Controls, is Controlledby, orisundercommonControlwith, thegiven Personwhere “Control” means (i) ownership of more than fifty percent of the equityinterest or voting stock, (ii)the powerto appoint or elect a majority of the directors,or (iii) the power todirect themanagement and policies of a Person,directly or indirectly, whetherthrough the ownership of voting securities,by contract or otherwise.
“Application Date” has the meaning ascribedtheretoin Section 3.3(a).
“ApprovalAuthority”has the meaning ascribed theretoill Section 3.3(a).
“ApprovalCertificate” has the meaning ascribedthereto in Section 3.4(a)
“Approval Date”means the dateof issuance ofthe ApprovalCertificate.
“Approval Letter” has themeaning ascribedthereto in Section 3.4(a).
“Articles ofAssociation”meansthe Articles of Association of the Company executed by the Partieson the datehereof,as amended, modified orsupplementedfrom time to time andas approved by the ApprovalAuthority.
“Auditor” has the meaning ascribed thereto in Section 12.5.
“Board”means the board of directors of the Company.
“Business”has the meaning ascribed thereto in Section 4.2.
“BusinessDay” means a day other than a Saturday,Sunday or public holiday on which banks in the PRC are openfor general business.
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“BusinessLicense” has the meaning ascribed theretoin Section 3.4.
“Business Plan”has the meaning ascribed thereto in Section10.6.
“Chairman”has the meaning ascribed thereto in Section 9.2(b).
“CFDARegistrations” means the registrations withChinaFood &Drug Administration.
“CFO”has the meaning ascribed thereto inSection10.1.
“Change-of-ControlEvent” means with respect to an entity(i)any consolidation or merger involving suchentity pursuant to which such entity’s shareholders or other equity holders after such event ownlessthanfifty percent (50%) of the voting securities or other equity interests of the surviving entity or (ii] the sale of all or substantially all of the assets of such entity.
“CJVLaw”hasthe meaning ascribed thereto inthePreamble hereto.
“Company”has the meaning ascribed thereto in Section 3.1.
“Confidential Information” has the meaning ascribed thereto in Section 16.1(a).
“Contract” has the meaning ascribed thereto in thePreamble hereto.
“CurrentProducts” shall meantheProducts listed in Schedule I attached hereto,together with allfollow-ondosage forms, strengths and indications of such products.
“Director”means a member of theBoard of the Company.
“Dispute” has the meaning ascribed thereto inSection19.1(a).
“EstablishmentDate”has the meaning ascribedthereto in Section 3.4.
“Financialand AccountingSystem” has the meaning ascribed theretoin Section 12.2.
“FinancialBudget” has the meaning ascribed thereto in Section 12.4.
“FiscalYear” means a period beginning on January 1 and ending December 31of eachcalendar year, provided that the first Fiscal Year of the Company shall commence on theEstablishmentDate andendontheDecember 31immediatelyfollowing suchDate and the finalFiscal Yearof the Company shall end on the date of dissolution of the Company.
“ForceMajeure Event” has themeaning ascribed thereto in Section17.1(a).
“General Manager” has themeaning ascribedthereto in Section10.1.
“Hindered Party” has the meaning ascribed thereto inSection17.1 (a).
“HKIAC” means theHongKongInternational Arbitration Center.
“Hong Kong” means theHong Kong SpecialAdministrative Region.
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“Intellectual Property” means any and all: (i)inventions (whetherpatentableorunpatentable and whether or not reduced to practice), all improvements thereto, andall patents,patentapplications and patentdisclosures,togetherwith allre-issuances, continuations,continuations in pan, revisions,extensions andre-examinations thereof; (ii) registered and unregistered trademarks, service marks, tradedress,logos,trade names,assumed names,together with all translations, adaptations,derivations and combinations thereof and including all goodwillassociatedtherewith,and all applications, registrations andrenewals 111connection therewith;(iii) copyrightable works, allcopyrights and all applications, registrations andrenewals in connection therewith,works of authorship; (iv) rights inthe nature ofthe aforesaid items 111 any country,and rights to sue forpassing off (whether forpast, present orfuture infringement).
“Law”means any published laws, regulations,rules, provisions, circulars,permits, authorizations,interpretations,orders or decisions of any government authorities orlegislative authorities orjudgments,awards,decisions or interpretations of any judicialauthorities.
“License and Distribution Agreements” have the meaning ascribed thereto in Section 5.2.
“Liquidation Committee” has the meaning ascribed thereto in Section 15.6(a).
“BIONIK IP”means allIntellectual Propertyrights owned or otherwise held byPartyBand its Affiliates relatingto thoseitems set forth onScheduleIII.
“Party” or “Parties” hasthe meaning ascribed in Section 2.1.
“Party A”has themeaning ascribed thereto in Section 2.1(a).
“PartyB” has the meaning ascribedthereto inSection 2.1(b).
“Person” means any naturalperson,company,corporation,association,partnership,organization,business,firm, joint venture, trust, unincorporated organizationor any otherentity or organization.
“PRC” means the People’s Republic of China (solely for thepurpose of this Contract,excluding the province ofTaiwan,HongKongand the MacauSpecial Administrative Region).
“Products” meansthe those products as listed in theScheduleI.
“RegistrationAuthority” hasthemeaning ascribed thereto in Section 3.4.
“RMB” meansthe lawfulcurrency of thePRC.
“Services Contract” hasthe meaning ascribed theretoin Section 6.1 (d).
“Terminating Party” hasthe meaning ascribed thereto inSection15.4.
“Territory” meansthePRC,Hong Kong,and theMacau SpecialAdministrativeRegion.
“ThreeFunds” has themeaning ascribed thereto in Section 13.1.
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“Transition Period”hasthemeaning ascribedthereto in Section 15.5.
“Transfer”has themeaningascribed thereto inSection5.6(a).
“Transferring Party”hasthe meaning ascribed thereto in Section 5.6(b).
“U.S.,US orUSA”means The UnitedStatesofAmerica.
“USGAAP”hasthe meaningascribed thereto inSection 12.2.
“Vice Chairman”hasthemeaning ascribedthereto in Section 9.2(b).
Chapter Two
Parties
| 2.1 | Parties.On the date ofthesigning ofthisContract,the corporate information oftheParties to this Contract is as follows: |
| (a) | Ginger Capital Investment Holding, Ltd. (hereinafter referred to as “Party A”), an enterprise registered in Hong Kong, in accordance with the Law of Hong Kong, having its principal office at ________________________, P.R. China. |
Legal representative:
Name:
Position: Legal Representative
Nationality: USA
| (b) | Bionik Laboratories Corp. (hereinafter referred to as “Party B”), a company incorporated in accordance with the Law of the U.S., having its principal office at 483 Bay Street, Office NJ OS, Toronto, ON M5G 2C9, Canada. |
Legal representative:
Name: Peter Bloch
Position: CEO
Nationality: Canada
In thisContract,Party A and PartyB are collectively referred to as “Parties”; and a “Party” means each oreither of theParties,asthe context mayrequire.
| 2.2 | Representationsand Warranties. |
| (a) | PartyAand PartyBeach represents and warrantsto theotherthat:(i)it is a duly organized and validlyexisting independent legal Person in itsjurisdiction offormation and has the full power and right to conductits businessin accordancewithitsbusinesslicenses,articlesofassociationorsimilar corporateorganizational documents;(ii) it possessesfull power andauthoritytoenterinto this Contract and to performitsobligations hereunder; (iii)its representative whosesignature is affixed hereto has been fully authorized tosign this Contractand to bind the respective Partythereby;and (iv)upon theeffective date of thisContract,the provisions ofthis Contractshouldconstituteitslegal, valid and bindingobligations. |
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| (b) | PartyB representsand warrantsthat(i)ithasallrightsnecessarytoenable PartyAtosell theProducts except suchapprovals asare necessaryunder thelawsoftheTerritory,(ii) therightsgranted underthis Contract do not conflictwiththosecontainedInany instrumentor otheragreementtowhichParty B is a party, (iii) theProductshavebeenfullyapprovedforsaleineverylocationin whichtheyarecurrentlysoldexcept forthe Territory,(iv)noclaimshave been made against Party Bforinfringement of theIntellectual Propertyofany third partyasaresultofthe sale ofthe Productsand ParryB is notawareof anyvalid basisfor any suchclaim, (v)itisthesaleandexclusiveowner or licenseeof the BIONIK IP, (vi)it hasthepower and authority tomakethegrant ofrightstoParty A asprovided In Section 2.1 ofthe License Agreement with respectto BIONIK IP and(vii) exceptas provided inScheduleIVno productliability claimshave been made by anyPerson with respect toanyoftheProducts. |
| (c) | PartyAand PartyBeachshall beresponsibleto theother for,and, hold harmlessand indemnify theother against,anyand alldirect and foreseeablelosses,damages,expensesor liabilitiesarising from itsbreach of any ofthe foregoingrepresentationsand warranties. Notwithstanding anything to thecontrary herein,theindemnityof either Party under thisContractdoes not applyto indirect, special,incidental or consequentiallosses. |
| 2.3 | Change ofLegalRepresentative.Each Partyshallhave theright tochange itslegal representativebutshall promptly notifytheother Party of such change and the name,position and nationalityofits newlegal representative. |
Chapter Three
Establishment ofthe Company
| 3.1 | Establishment. Inaccordance withthe CJVLaw and other relevant Law of thePRC,Party A and Party 8 hereby agree to establish a Chinese-foreign co-operative jointventure enterprise in Beijing,the PRC (hereinafter referred to as the “Company”). |
| 3.2 | Name of the Company.The name of the Company in Chinese is |
The name of the Company in English is “ChinaBionik Medical RehabilitationTechnology Ltd.”
| Theregistered address of the Companyis WatersidePavilionGarden No.1Building, Suite 2003, NankaiDistrict, Tianjin,PRC. |
| 3.3 | Application. |
| (a) | This Contractandthe Articles of Associationshall be submitted to the Ministry of Commerce of thePRC or its authorizedlocal office(the “Approval Authority”) forexamination and approval (the date of such submission is hereinafterreferred to as the“Application Date”). |
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| (b) | The Parties agree that the submission of allfilings and other documents relating to Sections 3.3 to 3.4will be made onbehalf of thePartiesby Party A,with prompt and necessary cooperationfrom Party B,and that the Company willberesponsible for all reasonable expenses incurred by Party A in connectiontherewith. |
| 3.4 | Approvals and Business Licenses. |
| (a) | Promptly afterthe date ofthe issuance bythe Approval Authority of an approval letter (the“Approval Letter”) and aPRC Foreign Invested EnterpriseApproval Certificate (the “ApprovalCertificate”) approvingthe establishment of the Company,Party A shallnotify Party Bbydelivering or faxing toParty B a copy of the Approval Letter andthe Approval Certificate. |
| (b) | After the issuance of the Approval Certificate,the Parties agreethatParty A shall, with prompt andnecessary cooperationby PartyB, apply to the State Administration forIndustry and Commerce orits competent local office (the“RegistrationAuthority”) to register the Company as a foreigninvestedlimitedliability company andto obtain the Company’s businesslicense (the “Business License”)on behalf of theParties. The date of the issuance of the Business License shallbe referred to asthe“Establishment Date”. |
| 3.5 | Benefitof Chinese Law.The Company shall be registered as a PRC legalPerson.Allactivities ofthe Company shall comply withand shallbe entitled to the benefits and protection of the relevant Laws of the PRC. |
| 3.6 | Limited Liability. The Company shall be alimited liability company. The Company shallbe liable for all itsdebts andobligations tothe extent of its own assets. Each Party is onlyliableto the Company uptothe share of the registered capitalof the Company that such Party shall subscribe for as setforthhereunder or up tothe terms of cooperationthat suchParty shallprovide hereunder.Creditors of the Company (including taxation and other authorities) shallhavenorecourse whatsoever against eitherParty for the debts of the Company.The Company shallindemnify andholdtheParties harmless againstany andalllosses,damages,orliabilities suffered by theParties Inrespect of any thirdparty claims arising out of the operation of theCompany. |
ChapterFour
Purpose,ScopeandScaleofBusiness
| 4.1 | Purpose.The purposes ofthe Parties in establishingthe Company are: |
| (a) | to strengthen economic cooperationandtechnical exchange and adoptadvanced andappropriatetechnology and scientific managementmethods throughdistributing andpromoting theProducts as listed in theScheduleI, in order to achieve the objectives ofthe Company; |
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| (b) | to promote the continued growth of the Company so asto enable each Party to obtain satisfactoryreturns onitsinvestment. |
| 4.2 | Scope of Business.The business scope ofthe Company is to sell, and distribute medical and healthcare products,provide relatedtechnicalconsulting, repair and after-sale services, and import and exportproduct andtechnology (the “Business”).1 |
| 4.3 | Scale of Operations. The anticipatedscale of operations ofthe Company is set forth in the feasibility study reportrelating totheCompany.To the extent permitted byLaw,the Company mayincreaseor decrease its scale of operationsin accordance with changes in marketdemand andother factors. |
ChapterFive
Total Investment,RegisteredCapitalandTermsof Cooperation
| 5.1 | Registered Capital.Theregistered capitalof the Company shall beTenMillionRMB orOneMillion Four Hundred FiftyThousand United States Dollars (US$1.45 million), all of which will be contributed by Party A incashininstallments onthe dates and in the amounts set forth onScheduleII. |
| 5.2 | Terms of Cooperation. As a term ofits cooperationunder this Contract,Party B shall grant the Company an exclusive,nontransferable,revocable androyalty-freelicense inthe Territoryto market,sell and distribute the Products (as designated inSchedule I) inaccordance with theprovisions set forthunder Chapter Seven by executing anddelivering a License Agreementand aDistribution Agreement with the Company in the form attached asExhibit AandExhibitB,respectively hereto(collectively, the “License and Distribution Agreements”). |
| 5.3 | ConditionsPrecedent to Capital Contributions. |
| (a) | Notwithstanding anythingto the contrary set forth inSection5.1,PartyAshall notbe obligated tomake any contributionto theregistered capitalofthe Companyunlesseachof the following conditionshas been satisfied and remains true: |
| (l) | TheBusiness Licenseissued by theRegistration Authoritytothe Company is inthe form and substanceincompliance withtheprovisions hereof; |
| (2) | The Company andPartyBshallhaveexecuted anddelivered the License andDistribution Agreements,and suchagreements havebeenduly registeredwith the Approval Authorityin charge of technologyimportation andshallremain effective bythetimeof such contribution; |
| (3) | Party Bis not inbreachof this Contract ortheLicenseandDistribution Agreements. |
1Drafting note: Subject to approval by the Approval Authority.
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| 5.4 | Investment Certificates. AfterParty A has made a required contribution to the Company’s registered capitalpursuantto Section5.1,the Company shall,at itsown expense,retain an independentaccounting firm registeredin thePRCtoverifysuch capital contribution,and, on thebasis of a verificationreport issuedby suchaccounting firm,issueto Party A an investment certificate evidencing the total amount ofthe capital contributionsPatty Ahas made as of the date ofthecertificate. |
| 5.5 | Additional Financing. In addition to the registered capital ofthe Company,andwithoutlimiting the provisions ofSection 15.6(h) of this Contract,the Company’s futureadditional financing may be obtained from PartyAand/or from othersources in the PRC or outsidethe PRC uponsuch terms and conditions asthe Boardshall deem appropriate, subjectto the next succeeding sentence. Unless the Parties agree that an externalequity capital raise iswarranted,Party A agrees toperiodically contribute additionalcapital (“AdditionalCapital”) to theCompany asParty A deemsnecessary to cover the costs and expenses of the Company’s operation,including,salesand marketing costs,and other overheadoperating costs of the Company,subjecttothe Parties’ joint approval of the budget forthe operating costs submittedbytheCompanyand provided alwaysthat PartyB’sequityinterestsin theCompanyshallnotbe changedin any way whatsoever without itsexplicit consent in writing. After Party A hashelped obtainPRC Food and DrugAdministration(“CFDA”) approvalfor Party B’s Current Products (in this case,InMotionArm,InMotionHand and InMotionWrist),andthoseproducts are ready forsale inTerritory,if additional capitalisneeded forthe Company’s future growth,anexternal equity capital raisemay be necessary. |
| 5.6 | Transfers of Ownership Interest. |
| (a) | Duringthe term of this Contract,bothPartymaynotsell,assign,pledge,give or otherwisedispose of(each a “Transfer”)any partof itsinterest intheCompany without theprior writtenconsent of theotherPartyif the other Party’s equity position gets diluted (which consent shall not be unreasonably delayed or withheld)andthe approvalof the Approval Authority. |
| (b) | Withoutprejudiceto(a)above,ifeither Party wishestoTransferallof itsinterest in the Companytoa thirdparty, it must still receivetheprior writtenconsent ofthe otherParty. TheParty wishingto Transferallof itsinterestintheCompany (the “Transferring Party”) shallgive writtennotice tothe otherParty stating its wish tomake such Transfer,the interestitwishes totransfer, the price of such interestand the identity of theproposed transferee,The otherParty shallhave therightof first refusal to purchase such interest on terms noJess favorable than thoseofferedto or by such intendedtransferee.Withinthirty (30) days after notice to such effect from theTransferringParty, the otherParty shalldeliver itsresponse stating whetherit choosesto exercise itsright topurchase the TransferringParty’s interest in the Company.Ifthe otherParty fails torespondto suchnotice of intentto Transferwithinthe aforementionedthirty (30)-dayperiod, it shallbe deemed tohave givenitsprior writtenconsenttotheTransferringParty’sTransfer ofits interest to theIntended transferee on the terms set forth111the above-mentioned notice.Notwithstandingthe aboveprovisions,neither Party shaltTransferany ofits ownership interest in the Companyto athird party whichconducts business incompetition with the business of theCompany or any Affiliate ofthe Company.Further neither Party shall Transfer any equity interest in the Company withoutthe prior written consent ofthe otherParty,suchconsent not tobe unreasonably withheld. |
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| (c) | Each Party agreesto assist in applying to the Approval Authority withregard to theapproval ofanyTransfer pursuantto paragraph(b) above. |
| (d) | Any transferee of aninterest inthe Company shallassumethe corresponding obligations and responsibilities of the Transferring Party as stipulatedin this Contract. |
| (e) | Upon anyTransfer by a Party ofallor any partofitsinterest in the Company pursuant to this Section 5.6, the Transferring Party shall tum in to the Company forcancellation its investment certificate, if any,issued bythe Company, andthe Company shall issueinitsplace a new investment certificate or certificates,as appropriate. |
ChapterSix
Responsibilitiesof the Parties
| 6.1 | Party A’s Responsibilities. In addition to its obligations stated in other provisions of this Contract,Party A shallbe responsible forthe followingmatters: |
| (a) | handle mattersto establishthe Company,including,submission ofallfilings andother documents relating Sections 3.3to 3.4 hereunder; |
| (b) | directthe Company and attendingto its day-to-day operations,withoversight from theBoard,in obtaining,sourcing, purchasing or leasing or otherwise acquiring from either domestic orforeign vendors adequate supplies of allequipment, facilities, articles foroffice use, services or otheritemsnecessary ordesirable for the Company’s operation; |
| (c) | recruitment of personnel for the Company; |
| (d) | provide the sales and marketing services to the Company and, within a reasonable period of time after the Establishment Date, execute a sales service contract with the Company (the “Services Contract”), with the terms to be mutually determined; |
| (e) | assist the Company in obtaining RMB and foreign exchange loans from financial institutions in the PRC; |
| (f) | assist the Companyin applyingfor and obtaining allpossible tax reductionsand exemptions and allother relevantinvestment incentives,privileges and preferences available totheCompanyunder theLaws of thePRC; |
| (g) | assisttheCompany in marketing, selling and distributing itsProducts in thePRC; |
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| (h) | assist the Company in itsrelations withgovernment authoritiesand PRCdomestic companies; |
| (i) | periodically contribute Additional Capital to the Company to cover the costs and expenses of the Company’s operation, including, sales and marketing costs, and other overhead operating costs of the Company; |
| (j) | assist theCompany in obtainingloansor investments; |
| (k) | assist the Company in applying for and obtaining CFDA approval and all other requisite approvals forthecommercial marketing,saleand distribution of ProductsintheTerritory and maintainingthesame; |
| (l) | attendingto all relevantworkin connectionwiththeseekingand obtainingofthe said approvals,includingwithout limitation, coordinatingwith hospitals, clinicsandmedical institutionsto conductclinical trialsand collate trial data;and |
| (m) | handlesuch other mattersas are entrustedto itby the Company. |
| 6.2 | PartyB’sResponsibilities.Inaddition toitsobligationsstated inother provisionsofthisContract,Party Bshallbe responsible for thefollowing matters: |
| (a) | assist Party Ain handling mattersto establishthe Company,including,assist inthe submission of allfilingsand other documentsrelating Sections3.3 to 3.4 hereunder; |
| (b) | provide therelevantProductsto theCompanypursuant tothe License and DistributionAgreementsasstated under Section 5.2; |
| (c) | assist the Companyin arranging foreignvisasandaccommodations for personneland directorsof the Company travelling abroad onCompanybusiness; |
| (d) | assist the Company in obtaining loans or investments; |
| (e) | provideallnecessary technical support,documentation,and other assistance and,as promptly as reasonablypractical,provide cooperationrequired toreceive theregulatory approvals (including butnotlimited to CFDARegistrations) of allrelevant Products;and |
| (f) | handle such othermatters as are entrustedto itby the Company. |
ChapterSeven
License
| 7.1 | Execution oftheDistribution Agreement.On or before the Establishment Date, PartyB, as thelicensor,and the Company,as the licensee,shallenterinto theDistribution Agreement under which PartyBshall grant tothe Companyanexclusive, nontransferable,revocable and royalty-freelicenseto market, selland distribute theProducts withintheTerritory. |
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| 7.2 | Registration of the License Agreement.Parties willcooperate to carry out formalities to register theLicenseAgreement with theApproval Authority incharge of technology importation within sixty (60) days after the Company entersintotheLicense Agreement withPartyB ifrequiredby applicableLaw. |
ChapterEight
Purchasing, Sales and RegulatoryCompliance
| 8.1 | Purchasing Policy. |
(a) The Companyshall purchase requiredthe Products from ParryB pursuantto the Distribution Agreement inExhibitB hereto on or beforetheEstablishmentDate. The Company shall haveright of firstnegotiationand rightof first refusal with respect to any new productsParty B plansto introduce into the Territory from timeto time during the term of theContract.If and when theParties decide to sellor distribute anewproduct withintheTerritory,ScheduleIwillbe modified accordingly andsuch new product willbe deemed aProductunder this Contract.Allproducts soldunder the Distribution Agreementtothe Company underany purchase ordershall be pricedapproximately forty per cent(40%)off thelist price of the DistributionProducts in otherterritories.AfterCFDAapprovalor six month after theestablishment ofthe JV,if thegovernment-approvedsellingpnceis below or abovethe Company’s expected selling price,the Company may renegotiate the purchaseprice fromParty B.
| 8.2 | RegulatoryCompliance. |
| (a) | The Companyis primarily responsible for all regulatory approvals relatingtotheCompany’soperation(including butnot limited to CFDA RegistrationsofallProducts) and allcosts associatedwith gaining these approvals, exceptthat Party B shall cooperate andlend any assistance necessary in order forCompanyto accomplishthis responsibility. |
| (b) | A thirdparty consultant acceptableto bothParties shall be appointed for regulatory compliance related to the Productsmanufactured by the Company. |
| (c) | The Company shallat all times comply with allapplicable U.S.anti-corruption Laws including,without limitation, the Foreign CorruptPractices Act, as if itwere a U.S.person, all applicablePRC anti-corruptionLaws,andallotherapplicable Law inthePRe. |
ChapterNineBoard of
Directors
| 9.1 | Establishment.The Board of the Company shall be established on the Establishment Date.TheBoard of Directors shall be the highestauthority of the Company, and shalldecide on all matters concerning the Company unless the Board ofDirectors otherwise authorizes or delegatesthe relevant decision-making powerto a member of the Company’s managementteam. The Board shall set the annual forecasts of profits, capitalexpenditures or cashflows of the Company mutually agreeable tobothParties. |
| 9.2 | Size; Appointments. |
| (a) The Boardof Directors shall consist of five (5) Directors,of whom Party A shall appoint three (3)Directors and Party B shall appoint two (2)Directors. Each Directorshall serve aterm of three (3) years, renewable uponreappointment.Each Party shallhave the powerto remove,reappoint and/or designate any successors to any directorwhich it is entitled to appoint to the Board hereunder by written noticeto the Company and the other Party. |
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| (b) The Chairman of theBoard(the “Chairman”) shall be appointedalternately byParty A andParty B fromamong theDirectors serving on the Board. If one Party appoints the Chairman,the other Party shallbe entitledto appoint the Vice Chairman of the Board(the “Vice Chairman”) from among theDirectors serving on the Board.Forthe firstthree (3)-yearterm of the Board commencing on EstablishmentDate,Party A shall designate one of theDirectors appointed by Party A tobethe Chairman,andPartyBshalldesignate one of theDirectors appointed by Party Bto be the Vice Chairman.Thereafter, in eachsubsequent three (3)-year term of the Board,the power to designate the Chairmanand the Vice Chairmanshall, effective as of therelevant anniversary of the Establishment Date,alternate betweenParty A andParty B. |
| 9.3 | Duties of Chairman. The Chatman shallbe the legalrepresentative of the Company and shall exercise his authority within the limits prescribed bythe Board. The ViceChairman shall discharge the responsibilities of the Chairman whenthe Chairman for any reasonisunable to perform his or her duties. lf the Vice Chairmanis alsounable to perform suchduties,theBoard shallauthorize another Director to perform suchduties. |
| 9.4 | Quorum.The quorum forall Board meetings shall be notless thanthree (3)Directors present throughoutthe meeting, one of whomhasto be aDirectorappointed byParty B.However, if propernoticeto convene aboardmeeting has been given and if any of the Directors failto attendthemeeting, and therefore a quorum is not present in accordance with the preceding sentence, such Boardmeeting shallbe adjournedand reconvened atthe same locationand time on the seventh (7th) BusinessDay thereafter, or at suchother time asISdesignatedby a majority of the Directors presentimmediately priorto such adjournment, and noticed to allDirectors. No resolutions by theBoard may be approvedat any Board meeting unless notice of such meeting has been givento allDirectors in accordance with the provisions of Section9.5 or such notice has been waived by each Director that is not present at suchmeeting (it being agreed and understood that a Director’s presence at a meeting shall beautomatically deemed a waiver of any such notice requirements by such Director unless such presence is for the sale purpose of objecting to the holding of the meeting and announced as such by suchDirector at the beginning of the meeting). |
| 9.5 | Board Meeting.Board meeting shallbe called and presided over by the Chairman or aDirector authorized by the Chairman.Regular meetings of the Board shall be convened at least twice each year and heldalternatively in thePRC and the USA.Save as provided in Section 9.11below with respect to the Director’s travelexpenses, Party A shall bear allreasonable costs incurred for organizing the Boardmeeting in the PRC and Party B shallbear all reasonable costsIncurred for organizingthe Board meeting in the USA. Specialmeetings oftheBoard shall be convened bythe Chairman, Vice Chairman or aDirector authorized by the Chairman at any time on a motion of any Director.Each Director(including the Chairman) shall have one voteIn Board meetings. Inthe event that anydeadlock occurs in the Board meeting, both Parties shall usetheir respective reasonable efforts to resolve such deadlockin accordance with the dispute resolutionprocedures set forth in Chapter Nineteen ofthis ContractNot less than fourteen (14) days’ notice (orsuchshorterperiod of notice in respect of any particular meeting as maybe agreed by all theDirectors) of eachmeeting oftheBoard specifying the date, place andtime, of the meeting andthe business tobe transacted thereat shallbe given to all Directors. |
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| 9.6 | Proxies.lf aDirector is unableto attend a meeting of the Board, he may appointa proxyin writing to be present and vote on his behalf A proxy may representoneor more Directors. If aDirector neither attends themeeting norappoints a proxy, he will be considered tohave abstainedfrom voting. A proxy shall have the same rights andpowers as the Directorwho appointedhim. A proxy’s presence at a Board meeting shallbe deemed to be the presence at such meeting of theDirector who appointed him. |
| 9.7 | Majority Vote Standard.Subjectto Section 9.8, resolutions of any Board meeting shallbe passed with the approval of more than half of the Directors present at the meeting. |
| 9.8 | Actions Requiring UnanimousConsent.Resolutions involving the followingmattersmayonly be adoptedat aduly constitutedandconvenedmeeting of theBoard upon the unanimous affirmative vote of each Director in attendance atthemeeting, whether in personor byproxy: |
| (a) | amendment to this Contract andthe Articles of Associationof the Company; |
| (b) | terminationordissolution of the Company; |
| (c) | increase orreduction ofthe Company’s registeredcapital; |
| (d) | mortgageof the assets oftheCompany; |
| (e) | annualsales forecast, FinancialBudget,Business Planand staffing ofthe Company; |
| (f) | change in equity interests of the Parties, |
| (g) | selling price of Productsin the Territory; |
| (h) | appointment of anysub-distributors or sub-licensees; |
| (i) | appointof theAuditor; and |
| (j) | merger,division orchange inthe form of theorganization of the Company. |
| 9.9 | Written Consent.Aresolutioncirculated to all the Directors for the time being and signed by such number oftheDirectors asrequiredto approve such resolution under Sections9.7 or9.8 as appropriate,shallbe valid and effectualasifit had beena resolution passed at a meeting of theBoard(i)duly convened andheld and(ii) attended by all theDirectors andmay consist ofseveraldocuments inthe like form,each signed byone or morepersons.For the purpose of thisSection 9.9, a“resolutioncirculated” means a notice inEnglish andChinese to eachParty setting forth adescription of thematterbeing submitted for Board approval andcopies of all reports, documents and other materials relevant foradequate andinformed consideration ofthe matter.For the purpose of this Section9.9,“inwriting” and“signed”include approval by cable,e-mail, fax,telegram. |
| 9.10 | ConferenceTelephones. Any Directormay participateat a meeting oftheBoardby conferencetelephone or by means of similarcommunicationequipment whereby allpersons participatingin the meeting are abletohear each other,in which eventsuchDirectorshall be deemedto be present at the meeting. ADirectorparticipating in ameeting inthemanner aforesaid shallalsobetakeninto account in ascertaining thepresence of a quorum at the meeting. |
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| 9.11 | Remuneration. Each Director shall serve III such capacity without any remuneration, but all reasonable costs incurred by the Directors in the performance of their duties as members of the Board (such as transportation and accommodation costs) shall be borne or reimbursed by the Company, except that the Company shall bear and pay its Directors’ out-of-pocket expenses incurred in attending the Board meetings including the related travel expenses. |
| 9.12 | Indemnification. To the greatest extent permitted by applicableLaw, the Parties shall cause the Company to indemnityeachDirectoragainstall claims andliabilitiesincurred by suchDirector in his/her capacity as aDirectorof the Company; providedthat any acts oromissions of suchDirector which giverise to such claims andliabilities do not constitute intentional misconduct, gross negligence orviolations of criminalLaw. |
Chapter Ten
BusinessManagement
| 10.1 | ManagementPersonnel.The Company shallestablish an operations managementstructure,to be responsible for the Company’s day-to-day work of operations management.Themanagement of the Company shall be undertaken by the following officers, subjectto the supervision anddirection of the Board and the other limitations set out herein: |
| (a) | a general manager(the“General Manager”), who willbe responsible forthe overall command and direction of the Company and theBusiness; |
| (b) | a chief financial officer (the“CFO”),who will responsible forthe financial management of the Company,includingthe preparationand administration of budgets,cash management,accounting andtax matters, together with all administrationand compliance functions,including the retention of legal counsel,and such other matters as the Board determines; and |
| (c) | suchother officers asthe Parties shalljointly agree upon. |
Party A shallnominate the General Manager end Party B shallapprove the nomination within three (3) months of EstablishmentDate.Parry A shallsimilarly be entitled to recommendthe removalof the General Managerbut suchremoval shallbe subject to approvalby PartyB.The Parties shall discuss and approve the recruitment and appointment of the CFO at a subsequentdate depending on the needs of the Company. In the absence of the CPO,the latter’s duties shallbe borne by the General Manager.
Any vacancy of the abovementionedpositions caused by theresignation,death or removalthereof shallbe filled only by the joint concurrence of theParties as evidenced by a formalunanimous approval by the Board.
Other management personnelshallbe selected by the GeneralManager through openrecruitment subject to the annual sales forecast, FinancialBudget and staffing as approvedby the Parties, Managementpersonnel shall be employedpursuant to such terms as shallbe set outin an employment contract entered into between each employeeCompany. The GeneralManager may inhis or her discretion dismiss,at any time,any personnelother thanthe CFO.
| 10.2 | Responsibilities. |
| (a) | The responsibilities of theGeneralManager shall be to implement the vancusresolutions of theBoard and to organize and leadtheday-to-day operations management work ofthe Company, as more fully providedinthe Articles of Association. |
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| (b) | Theresponsibilities of the CFOshallbe to implement and maintain financial controls and procedures to meetthe reporting,taxation,financial and auditingrequirements of the Company,as outlined in Chapter Twelve of this Contract. |
| 10.3 | Removal orReplacement. |
| (a) | In case of graft orserious dereliction of duty,or for any other reason, theGeneral Manager,orthe CFOmay be removed andreplaced at any timeuponresolution of theBoard. |
| (b) | If any officeris discharged or departs,a successorshallbe nominated and appointed in the same manner as the original appointee. |
| 10.4 | Compensation andBenefits.The salaries and welfare and other benefits of bothPRC and foreignmanagementpersonnel of the Company shall be determined in accordance with the following principles: |
| (a) | Compensation including salaries, appropriateliving allowances,and similar benefits for any member of the senior management staff nominated by either of the Parties willbe set by the Boardbasedon established standards of such member’s home country and established standards of the localbusiness environment. |
| (b) | Other personnel shallreceive salaries and welfare andotherbenefits from the Company commensurate with their expertise and experiencein accordance with the establishedlocal standards and applicable Laws of thePRC. |
| 10.5 | Operational Rules. The Parties shall cause the Board to adopt and require the Company to adhere to a set of policies and procedures in all major operational areas, including, without limitation, sourcing, marketing, sales, human resources, environmental protection, health and safety, and matters relating to proper business practices, compliance with all applicable Law. |
| 10.6 | Business Plan. The Company shall operate111 accordance with an annualsales forecast (including the overall sales volumeplan) and business plan(the“Business Plan”) preparedby the General Manager and unanimously approved by the Board.The General Manager shallsubmitthe initialBusinessPlanto the Board for its consideration as soon as practicable following the EstablishmentDate,andthereafter shall submit an annualrevision ofthe BusinessPlan no later than the December1 that precedes the calendar yearfor whichtheBusinessPlan has been prepared.The Board shall have the power and authority to approve theBusinessPlan as submitted or with any modifications or/andrecommendations as it may deem appropriate. |
ChapterElevenLabor
Management
| 11.1 | Employees.Employees of the Company (other than the General Manager, and CFOnominated and appointedby theParties) shallbeemployed through openrecruitment or pursuant to a Services Contractbased onqualification,experience and competency.Employment plans and contracts covering the recruitment, qualifications,testing, employment, dismissal, resignation, wages,laborinsurance, welfare benefits, bonuses,labordisciplines,retirement insurance and other matters concerning the employees ofthe Company shall be handled infull compliance withrelevant Law of thePRC.All employees of the Company (including management personnel) shallbe required, atthetime they are hired,to agree in writing to comply withthe operationalrules of the Company described in Section10.5. |
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ChapterTwelve
Taxation, Finance,Insurance and Inspection
| 12.1 | Taxation. TheCompany and the Parties shallpaytaxes and customs duties in accordance withthe Law of the PRC. TheParties shall seek to confirm thebenefits forthe Company,theParties and all oftheir personnel of all ofthe applicable tax exemptions,reductions, privileges and preferences which are now or in the future become obtainable under the Law of the PRC and under any applicable treaties or international agreementsto which the PRC maynow be ormayhereafter become a party. |
| 12.2 | Financial and Accounting System.The CFO shall formulate the Company’s internal accounting controlsystem and financial accounting and reporting system (the“FinancialandAccountingSystem”) and submit it to theBoard [or approval.Such Financial and Accounting System shall be in accordance withthe Law ofthePRC,including the PRC Enterprise Accounting System,the particular circumstances of the Company and, to the extent permitted by the Law of thePRC,those methods and principles that are consistent withthe generally accepted accounting principles of the U.S.(“US GAAP”). Changes inaccountingprocedures andpractices may be implemented only upon approvalbytheBoard. |
| 12.3 | Currency.The Company shalluse the RMB as its accounting unit.The conversion of foreign currencies into RMB for accounting purposesshall be calculated according to the meanRMB-U.S.dollar exchange rateannounced by the China ForeignExchange Trading System (__________) (as published on the official website or thePeople’s Bank of China) forthe relevant currency on the date of the relevant transaction, unless theParties agree on and applicable Law permits theuse of another exchange rate for suchconversions. |
| 12.4 | Financial Budget. As soon as practicable after theEstablishment Date, and thereafter prior tothe beginning of each Fiscal Year, the CFO shall, ina manner consistentwith theformandtiming requirements of the Parties, prepare and submittotheBoard an annual plan andbudget for the ensuingFiscalYear (the“Financial Budget”),including at aminimum a financial budget, aplan forcapital investments anddispositions andborrowings, forecastsof price levels, sales, expenses,earningsanddistributableprofits, and such otheritems as are required [orproduction andbusiness operations of the Company. |
| 12.5 | Auditing.The Company shallselect and appoint as its auditor(the “Auditor”) an accounting firmregisteredinthePRC acceptable to the Boardthat shallbe (i) a foreign invested accountingfirm withgoodinternationalreputation and (ii) capable of performing accounting workmeetingboth PRC domestic accounting standards and US GAAP. |
| 12.6 | Bank Accounts. The Company may open RMB bank accounts and foreign currency bank accounts inthe PRC.The Company may also open foreign currency bank accounts outside of thePRCin accordance with relevantPRC foreign exchangeLaws. |
| 12.7 | Insurance. The Company shall, atits own expense,at all times purchase and maintain fromreputable insurance companies within the PRC fulland adequate insurance of the Company against productliability,loss or damage by fire and such otherrisks as may be decidedby the Board or are customarily insured against. |
| 12.8 | Inspection.TheCompany shall ensure that each Party and its authorized personnel (including,but not limited to,its internal auditors) shallbe permitted,at such Party’s expense,to examine any property owned orusedby the Company,thebooks of account and records of the Company and discuss thebusiness,finances andaccounts of the Company withthe Directors,senior officers,employees,Auditor and legal counsel thereof,all at such reasonable times as suchParty may request. |
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| 12.9 | Audit of Party A.Within two years followingthe Establishment Date,with at least thirty (30) days priorwrittennotice, PartyBshall haveright,at its expense, to authorize a representative who shall be SUbject to reasonable confidentiality obligationstoParty A, to audit Party A’s financial statementsduring the normal business hours. |
Chapter Thirteen
Profit Distribution
| 13.1 | Three Funds. The Company shall make allocations of after tax profitsto a reserve fund,an enterprise expansion fund and a bonus and welfare fund for employees of the Company (collectively,the “Three Funds”),as determinedbythe Boardin accordance withthe business circumstances of the Companyand applicablePRC Law. Any amounts to be contributedto such theThree Funds shallbe set aside prior to distribution of after-tax profit. |
| 13.2 | Accumulated Losses and Profits. The Company maynotdistribute profits until the losses of the previous FiscalYears have been madeup. Undistributed profits from previous Fiscal Years may be distributed together withthe profits of the current FiscalYear as determined bythe Board. |
| 13.3 | Profit Distribution. The profit distribution plan and the amount of profits to be distributed to eachPartyshallbe determined by the Board within the first four(4) monthsfollowingtheclose of each Fiscal Year after launchingthe first Product of the Company. TheCompany will adopt aprofit distribution plan such that all after-tax profits(remaining aftercontributions aremadeto the Three Fundsin accordance with Section 13.1 above) aredistributed in accordance with the Parties’respective interests in theCompany,i.e.seventy-five percent (75%) to Party A andtwenty-five percent(25%)to PartyB. |
ChapterFourteen Term
| 14.1 | Term. This Contract shall take effect from the Approval Date. The term of this Contract and the Company shall be ten (10) years from the Establishment Date unless otherwise provided under this Contract or earlier termination by the Parties pursuant to Sections 15.2 and 15.3. |
| 14.2 | Extension. Subject to the Law of the PRC and the approval by the Approval Authority, the term of this Contract and the Company specified in Section 14.1 above shall be extended automatically for further five (5) years unless written notice of termination is given by either Party before one hundred and eighty (180) days prior to the expiration of such term. If the Contract is extended, an application for extension shall be filed with the Approval Authority not later than one hundred and eighty (180) days prior to the expiration of such term. |
ChapterFifteen
Terminationand Liquidation
| 15.1 | Termination upon Expiration of Term. Except for extension of the term set forth under Section 14.2, this Contract shall automatically terminate upon expiration of the term specified under Section 14.1. |
| 15.2 | Termination by Mutual Agreement. The Parties may mutually agree in writing to terminate this Contract at any time. |
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| 15.3 | Early Termination. Either Party (except as otherwise provided below in this Section 15.3) shall have the right to terminate this Contract in accordance with the provisionsof Section 15.4 forso long asany of the following eventsoccursandcontinues: |
| (a) | Either Party or its Affiliatesbreaches amaterial provision of this Contract, andsuch breach, ifcapable of beingcured,isnot cured within sixty (60)days after the date of written notification of such breach, in which eventonlythe non-breaching Partyhasthe right toterminate; |
| (b) | Either Partybecomesbankrupt,or isthesubjectof proceedingsfor liquidation or dissolution,or ceasesto canyon businessor becomes unableto pay itsdebts as they come due,inwhich event the other Partyhasthe right to terminate; |
| (c) | EitherPartybecomes entitled to terminate this Contract under Section 17.1(c); |
| (d) | The expiration or terminationofeithertheLicense andDistributionAgreement.; and |
| (e) | EitherParty engages in any act of fraud or commits any crime which has resultedin a materialeffect onsuch Party’s capacity toperform this Contract. |
| 15.4 | Process. In the event a Party desires toterminate this Contract under Section15.3(the“Terminating Party”),the following process shall apply: |
| (a) | The TerminatingParty shallprovide written noticeto the otherParty indicating its desire to terminate this Contract and detailing the effected sub-section inSection 15.3; |
| (b) | The Parties (acting through their respective mostsenior officers) attempt toremove or cure the reason during a sixty (60)-dayperiod following the notice; and |
| (c) | Ifunresolved by the end of the sixty (60)-day period, this Contract shall be terminated. |
| 15.5 | Change-of-ControlEvent of a Party.Upon the occurrence of a Change-of-ControlEvent of aPatty,there is no change tothe status ofthe Company.However, the Party undergoing the Change-of-Control Eventorits Acquirer shallhave theright, butnotthe obligation, exercisable by written notice tothe other Patty, to terminatethis Contract in accordance with the following: |
| (a) | Beforethe Contract can beterminated, it shall first automatically be extended for two (2) additional years from the dale when the other Puny receivesthe written termination notice,or four (4) years if the written terminationnotice is receivedprior to the end ofthethird (3)anniversary ofthis Contract (“Transition Period”); |
| (b) | If the Change-of-Control Event occurs to PartyBand the Acquirer of Party B intends toterminate this Contract, Party B shallmake the following payments toParty A: |
| (1) | Upon the date Party A receives the termination notice, an upfront termination fee of three (3) times of the capital invested by Party A into the Company, including Registered Capital and Additional Capital invested by Party A to cover the operation cost of the Company up to the date of termination; and |
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| (2) | At the end of the Transition Period, four times of the revenue of the trailingtwelve (12) months of the Company,lessthe upfront termination fee stipulated above, plus remaining unsold inventory still viable for sale. |
| (c) | If the Change-of-Control Eventoccurs toParty A and theAcquirerofParty Aintends to terminatethis Agreement,allsaleanddistribution rights ofthe Company shallreturntoPartyB immediately. PartyAshallperformthe following obligations: |
| (1) | Cause the Company to continue to supply theProducts toPartyBuntil theCFDARegistrations can be transferredwithin theTransitionPeriod. |
| (2) | Cause the Company totransferitsBusinesstoPartyB, including customer lists, CFDARegistrations andthe Company’sIntellectualProperty,to the extent permittedby theLaw ofthePRC.Party A would be responsibleforthe staff costs during thetransfer andParty B would beresponsible forall outof pocket costs of suchtransfer. |
| 15.6 | Liquidation. |
| (a) | At the expiration of the term set forthunder Section 14.1 (orany extensionthereof) withoutrenewal, orinthe eventthat this Contract is terminatedpursuantto Sections15.1,15.2,15.3 15.4, or 15.5,the Board shall,withinten (10) days,appoint aliquidation committee (the“LiquidationCommittee”) which shall have the power to represent the Company in all legalmatters. The Liquidation Committee shall value and liquidate the Company’s assets in accordance withthe applicableLaw of thePRC and the principles setout herein. |
| (b) | The Liquidation Committee shallconsistof four(4) members, of whichtwo (2) members shallbe appointed byParty A,andtwo (2) members shallbe appointed by Party B.Decisions ofthe Liquidation Committee shall be madebymajority vote.Members of the Liquidation Committee may,but neednot be, directors or senior employees ofthe Company.Any Party may appointprofessionaladvisorsto the members of the Liquidation Committee and the Liquidation Committeemay also appointprofessional advisors to assist it. |
| (c) | The Liquidation Committee shallconduct a thoroughexamination of the Company’s assets andliabilities, on thebasis of whichit shall,in accordance with the relevant provisions of this Contract,develop a liquidation plan which, if approved by theBoard, shall be executedunderthe Liquidation Committee’s supervision. The liquidationplan shall provide thatthe Parties willhave apriority right, assuming equalprice and otherterms, over third parties to purchase any of the Company’s machinery,equipment and other facilities. |
| (d) | In developing and executing the liquidation plan, the Liquidation Committee shall use every effort to obtain the highest possible price for the Company’s assets. |
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| (e) | Thetechnology andproprietary information whichis licensed by PartyBto the Company shallnotbe deemed an asset ofthe Company for purposes ofliquidation proceedings,and maynot betransferred. |
| (f) | The liquidationexpenses,includingremuneration ofmembers andadvisors totheLiquidationCommittee, shall bepaidout oftheCompany’s assets in prioritytothe claimsofothercreditors. |
| (g) | Aftertheliquidationofthe Company’s assets andthe settlementofallof its outstandingdebts,the remaining assets ofthe Company shallbepaid tothe Partiesin proportionto their then respectiveequityownership of the Company.TheParties agree thatfollowing the EstablishmentDate the ownership percentages ofthe equityinterestsin the Companyheld byParty A and Party B shallbe deemed as seventy-fivepercent (75%) and twenty-fivepercent (25%) equity interest,respectively. |
| (h) | On completion of all liquidation procedures,theLiquidation Committee shallsubmitto the Approval Authority a finalreportapproved bytheBoardand an independent accountingfirmregisteredinthePRCtothe ApprovalAuthority, surrendertheBusinessLicenseto the Registration Authority and complete all other formalities fornullifying the Company’s accounting books and otherdocuments at its own expenses but the originals thereof shall beleft in the careofParty A, and Party Bshall be entitled to retain copiesthereof. |
| 15.7 | Effect ofTermination. Theterminationof this Contract for any reason shall not release aParty fromitsliability to pay any sums ofmoney accrued,due andpayable to the otherParty,or to discharge its then-accrued andunfulfilledobligations,including any obligation to the Company orto the other Parry in respectof breachof this Contract or any obligation otherwise stipulated in this Contract. |
| 15.8 | FurtherObligations. TheParties hereby agree to causetheir appointedDirectorsto actin such manner as to giveeffecttothe provisions ofthis ChapterFifteen. |
ChapterSixteen
ConfidentialityandNon-Competition
| 16.1 | Confidentiality |
| (a) | All technology, know-how, techniques, trade secrets, trade practices, methods, specifications, designs and other proprietary information disclosed by either Party to the Company under the terms of this Contract or otherwise, or developed by the Company, as well as the terms of this Contract and other confidential business and technical information (collectively, “Confidential Information”) shall be used by the Company and its personnel solely for the Company’s account and purposes. Each Party and the Company shall maintain the secrecy of all Confidential Information that may be disclosed or furnished to it by the Company or the other Party, and it shall not disclose or reveal any such Confidential Information to any third party absent explicit written authorization from the Board or the relevant Party, as the case may be. |
| (b) | ConfidentialInformation obtained by aParty that isrestricted hereunder may be disclosed bythatParty only to its designated employees whoseduties require suchdisclosure forthe implementation ofthisContract.In that event, thereceivingParty shall take allreasonable precautions, Including the conclusionof confidentiality contractswitheach suchemployee,topreventsuchemployees from using ConfidentialInformationfor theirpersonalbenefitandto preventanyunauthorized disclosure of such ConfidentialInformationto any third party. |
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| (c) | Notwithstandingthe foregoing,theParties andthe Company may with priorwritten approval of the Party who disclosedthe Confidential Information revealConfidentialInformation to governmentpersonneltothe extent necessary to obtainany required governmental approval, and to outside lawyers,accountants and consultants to the extentnecessary forthemto provide theirprofessional assistance,provided thatConfidential Information so revealed in writtenformismarked confidentialandthatsuchgovernment personneland outsideindividuals shallbe requested to undertake to respectthe confidentialityprovisions of this Contract. |
| 16.2 | Non CompetitionEachParty agreesthatduring the periodwhen it holds, directly or indirectly, anyinterest inthe Company,itshall not, andshall not causeits Affiliatesnotto engage orparticipate in the ownership, management, controlorfinancing of, orbe employed by,or consult foror otherwiserender services to, anyPersonthat competesin any place in the Territory with the Company or any Affiliate ofthe Company in activities identicalor substantiallyidentical withtheBusiness conducted orcontinued by the Company or anyAffiliate of the Company,without theprior written consent of the other Party. |
Chapter Seventeen
ForceMajeure
| 17.1 | ForceMajeure |
| (a) | Whenthe obligations of a Partyunder this Contract cannot be performed infull or inpart according to the agreedterms as a direct result of an event that is unforeseeable andthe occurrence and consequences of which cannotbe prevented oravoided, such as earthquake,typhoon, flood, fire andothernatural disasters, war,insurrection and similar military actions,civilunrest and strikes, slowdowns and otherlabor actions (a “Force MajeureEvent”),theliability of the Party that encounters such ForceMajeure Event (the“Hindered Party”)shallbe releasedin full orin partinlight of the impact of the eventupon this Contact, if allof the following conditions aremet: |
| (1) | The ForceMajeure Event wasthe direct cause of the stoppage,impediment ordelay encountered by theHinderedParty in performing its obligations under this Contract; |
| (2) | TheHinderedParty useditsbest efforts toperform its obligations underthis Contract and to reduce the losses to the other Party ortothe Company arising fromtheForce Majeure Event; and |
| (3) | Atthe time ofthe occurrence of the Force Majeure Event, theHindered Partyimmediately informedthe otherParty,providing writteninformation on such event within fifteen (15) days of its occurrence, including a statement of thereasons for the delay in implementing or partially implementing thisContract. |
| (b) | If a Force Majeure Event shall occur,the Parties shall decide whether this Contractshould be amendedin lightof the impact ofthe event uponthe implementation hereof, and whether theHinderedParty should be partially or fully freed from its obligations hereunder. |
| (c) | If aForce Majeure Event lasts for morethan sixty (60) days, eitherParty shall be entitled to terminate this Contract in accordance with Sections 15.3 to 15.4. |
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ChapterEighteen
GoverningLaw
| 18.1 | Governing Law. The formation, validity,interpretation, execution,amendmentand termination of and settlement ofDisputes under this Contractshallall be governed by the Law of thePRC.Whenthe Law of thePRC do not cover a certain matter,internationallegalprinciples andpractices shall apply. |
ChapterNineteen
DisputeResolution
| 19.1 | Resolution of Disputes |
| (a) | Notwithstanding Section 18.1, any dispute, controversy or claim arising out of or relating to this Contract, or the interpretation, breach, termination or validity hereof (a “Dispute”)”, shall be resolved through friendly consultation. Such consultation shall begin immediately after one Party has delivered to the other Party a written request for such consultation. If within thirty (30) days following the date on which such notice is given the Dispute cannot be resolved, the Dispute shall be submitted to arbitration upon the request of either Party with notice to the other Party. |
| Thearbitration shall be conducted m HongKong under the auspices of theHKIAe.There shall be three arbitrators. Each Party shall selectone arbitrator within thirty (30) days aftergiving or receiving thedemand for arbitration. Such arbitrators shallbe freely selected, and theParties shall notbelimited in their selection to any prescribed list.The Secretary Generalof theHKJAC shall select the thirdarbitrator.If aParty does not appoint an arbitrator who has consented to participate withinthirty (30) days after the selection of the first arbitrator, the relevantappointment shall be made by the Secretary Generalof the HKlAC. |
| (b) | The arbitration proceedings shall be conducted in English. The arbitrationtribunal shall apply the ArbitrationRules ofthe United Nations Commission onInternationalTrade Law in effect at the time ofthe arbitration. However, if suchrules are in conflict with the provisions of this Section 19.1,including the provisions concerning the appointment of arbitrators, the provisions ofthisSection 19.1 shall prevail. |
| (c) | EachParty shallcooperate withthe other in making fulldisclosure of and providing complete access to all information anddocuments requested by the otherPartyinconnection with sucharbitration proceedings, subject only to any confidentiality obligations binding on such Party. |
| (d) | The award of the arbitration tribunalshall be final and bindingupon the disputingParties, andeitherPartymay apply to a court ofcompetentjurisdiction for enforcement of suchaward. |
| (e) | EitherParty shall be entitledto seek preliminary injunctiverelief, if possible, from any court of competentjurisdiction pending the final decision oraward ofthe arbitrators. |
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| 19.2 | Other Matters UnaffectedDuring the period when a Disputeis being resolved,except for the matterbeing disputed,theParties shall in all other respects continue their implementationof this Contract. |
Chapter Twenty
Liabilities for Breach of Contract
| 20.1 | Breach of Contract.Subject to theprovisions of Chapter Seventeen,a Party shallbe in breachof this Contractif it fails fully to perform,or unlawfully suspends its performance of,its obligations underthis Contract,and if it does not correct such failure within thirty (30)days from receipt ofnotice thereof from the otherParty or the Company. |
| 20.2 | Damages |
| (a) | If the Company suffers any cost, liability orloss, including but notlimited to lost profits,asa result of a breachofthis Contract by either Party,the Party in breach shallindemnify andhold the Company harmless in respect of any such cost, liability orloss, Including, butnot limited to,interest paid or lost as a resultthereof and reasonable attorney’s fees and expenses. |
| (b) | If a non-breachingParty suffers any cost,liability or loss directly as a result of a breach ofthis Contract,the Party in breach shallindemnify and holdsuch non-breaching Party harmless inrespect of any suchcost,liability orloss incurred by such non-breaching Party, including,butnot limited to,interest paid or lost as a result thereof andreasonable attorney’s fees and expenses. |
| 20.3 | Limitationof Liability. IN NO EVENT SHALL EITHER PARTY ORITS AGENTS, OFFICERS, OREMPLOYEES,BE LIABLE FOR ANY SPECIAL DAMAGES, INCIDENTALDAMAGES,INDIRECTDAMAGES,CONSEQUENTIAL DAMAGES, OREXEMPLARY DAMAGES WHATSOEVER (INCLUDING DAMAGESFOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF INFORMATION),HOWEVER CAUSED, WHETHER ORNOTTHE POSSIBILITY OF SUCHDAMAGES HAS BEENDISCLOSED TO THE OTHERPARTY IN ADVANCE; PROVIDED,HOWEVER,THATTHEFOREGOING SHALLNOT APPLY TOANDSHALLNOT BECONSTRUED TO PRECLUDERECOVERY FROM ANINDEMNIFYINGPARTY BYAN INDEMNIFIEDPARTYIN RESPECTOFANYOF SUCH LOSSESDIRECTLY INCURREDFROMTHIRD PARTY CLAIMS. |
Chapter Twenty-One
Miscellaneous
| 21.1 | Survival.The agreements of thePartiescontained in Sections2,Chapter Fifteen,Chapter Sixteen, ChapterSeventeen,Chapter Eighteen, Chapter Nineteen,Chapter Twenty and Chapter Twenty-One shall continue to survive after the expiration or termination of this Contract and the dissolution of the Company. |
| 21.2 | Notices.Noticesorothercommunications required to begiven by either Partyor theCompany pursuantto this Contractshall be written in English and Chinese and sent inletter form orby facsimile to the address of the other Party setforthbelow or to such other addressasmayfrom time to time be designated bythe other Patty through notification to such Party,and tothe Company atits legal address as in effectfrom time to time.The dates onwhich notices shall bedeemed to havebeen effectively given shallbe determined as follows: |
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| (a) | Notices given by personaldeliveryshall bedeemed effectivelygiven on the date of personal delivery, |
| (b) | Noticesgiven inletter form shall bedeemed effectivelygiven on the seventhday afterthe date mailed(asindicated by the postmark)byregistered airmail,postageprepaid,or the third day after delivery to an internationally recognized courier service; |
| (c) | Noticesgivenby facsimile shallbe deemedeffectively given uponreceiptbythesender of a confirmed transmittal receipt. |
| Party A: | Ginger Capital Investment Holding, Ltd. | |
| Attention: Rita Jiang | ||
| Fax Number: +1-646-691-5047 | ||
| Party B: | Bionik Laboratories Corp | . |
| 483 Bay Street, Office N105 | ||
| Toronto, ON M5G 2C9 | ||
| Canada | ||
| Attention: Peter Bloch | ||
| Phone: (416) 640-7887 |
| 21.3 | Entire Agreement This Contract andits appendices hereto constitute the complete and only agreement betweenthe Parties on the subject matter ofthis Contract and replaces all previous oral or written agreements, contracts, understandings and communications of the Parties in respect ofthe subject matterofThis Contract.In the event of any inconsistency between the terms and provisions of thisContract and the terms and provisions of the Articles of Association,theterms and provisions of this Contractshallprevail. |
| 21.4 | No Implied Waivers. A Party that in a particular situation waives its rights in respect of a breach of contractby the otherParty shall not be deemed to have waived its rights against the other Party for a similar breach of contract in other situations. |
| 21.5 | Severance. If any provision of this Contract orpart thereof is rendered void, illegal or unenforceable in any respect under anyLaw,the validity, legality and enforceability of the remaining provisions shallnot in any way be affected orimpairedthereby. |
| 21.6 | Amendments. Amendments to this Contract must be made by a written agreement signed by each of theParties in both Chinese and English texts,each of which shall have equal validity and legal effect, and shall be submitted to the original ApprovalAuthority (orits successor) for approvalbefore they can become effective. |
| 21.7 | No Assignment.This Contract shallbe binding upon and shall be enforceable by eachParty hereto and its respective successors and assigns including the Acquirer.No Party may assign any of its rights or obligations hereunder to any person or Party without the prior written approval ofthe other Party. |
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| 21.8 | Language.This Contract andits exhibitare written in Chinese and English in five counterparts in each language. Each Party shallretainone counterpart in each language and one counterpart in eachlanguage shallbe submitted to the Approval Authority for approval.Any remaining counterparts shallbe retained by the Company for use as necessary.Both language versions shallhave the same validity and legal effect. |
| 21.9 | Counterparts. This Contract and any amendment hereto or any other agreement (or document) delivered pursuant hereto may be executed in one or more counterparts and by different parties in separate counterparts. All of such counterparts shall constitute one and the same agreement (or other document) and shall become effective (unless otherwise therein provided) when one or more counterparts have been signed by each party and delivered to the other parties. |
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IN WITNESS HEREOF,both Partieshereby causethis Contracttobeexecuted by theirduly authorizedrepresentatives on May 17th,2017.
Party A:
GINGER CAPITAL INVESTMENT HOLDING, LTD.
| By: | /s/ Rongrong Jiang | |
| Name: | Rongrong Jiang | |
| Capacity: | Legal Representative | |
| Party B: | ||
| BIONIK LABORATORIES CORP. | ||
| By: | /s/ Peter Bloch | |
| Name: | Peter Bloch | |
| Capacity: | CEO | |
| 27 |
Schedule I
Products
1. InMotion Arm
2. InMotion Arm/Hand
3. InMotion Wrist
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ScheduleII
Party A’s Contribution Schedule
| PaymentDate | AmountofParryA’s Contribution for EachInstalment (US$) | |
| Within 30days after | US$290,OOO.OO | |
| EstablishmentDate | ||
| Within 12 months after | US$435,OOO.OO | |
| EstablishmentDate | ||
| Within 60 months after | US$725,OOO.OO | |
| EstablishmentDate |
| 29 |
Schedule III
BIONIK IP
1.US201 50025423,EP3021796A4,EP3021796AI,WO/2015/006853AI
2. US20140276261,WO/2014/13887IAI,
3. US20140276263
4 US20140276265,WO/2014/138872AI
5. US20140276264,9421143
6. US20150359697,7618381
7. US7556606,US8608674
8. US8613691
9 InMotion ARM™
10.InMotion WRIST™
11.InMotion Hand™
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EXHIBIT A & B
FORMS OF LICENSE AND DISTRIBUTION AGREEMENTS
| 31 |