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EXHIBIT 10.13
PRODUCT SALES AND SUBLICENSE AGREEMENT
FOR
CONTROLLED DELIVERY TECHNOLOGY AND
MOLECULAR DISPERSION TECHNOLOGY PRODUCTS
This Agreement, dated as of March 6, 2000, is made and entered into by
and between Nutraceutix, Inc. ("Nutraceutix") and MET-Rx, USA, Inc. ("MET-Rx").
Nutraceutix has the exclusive worldwide license, with right to sublicense, (i)
the controlled delivery technology described in U.S. Patent Application
08/958,470 filed October 27, 1997 and any foreign counterpart thereof, and any
continuations, continuations-in-part, divisions, re-issues, additions, renewals
or extensions thereof, and any patents issuing therefrom ("CDT") and (ii) the
molecular dispersion technology currently applied to MET-Rx's Androgen-based
products ("MDT"). MET-Rx wishes to obtain the right to purchase from Nutraceutix
and market under MET-Rx's labels health supplement products and sports nutrition
products which incorporate CDT, MDT or both (hereinafter referred to
collectively as "Licensed Products") and bearing Nutraceutix's trademark for the
CDT and/or MDT, as applicable, as described in the attached Exhibit A (the
"Trademarks"). Therefore, in consideration of the mutual covenants set forth
herein, Nutraceutix and MET-Rx agree as follows:
Section 1. Sublicense.
1.1 Sublicense. Nutraceutix hereby grants MET-Rx a sublicense (the
"Sublicense") from April 1, 2000 through March 31, 2001 to (i) sell products
containing CDT and/or MDT in the North American health supplement market and the
North American sports nutrition market through all trade channels except
multilevel, (ii) use the Trademarks in connection with such marketing and (iii)
use Nutraceutix's research data regarding CDT and MDT (hereinafter referred to
collectively as the "Technology") for such marketing, all on the terms and
conditions set forth herein. In addition, Nutraceutix hereby grants MET-Rx an
option to extend the Sublicense from April 1, 2001 through March 31, 2002,
provided that this option shall be null and void if MET-Rx does not meet the
requirements set forth in paragraph 1.2 below. If MET-Rx does meet the
requirements set forth in paragraph 1.2 below, the Sublicense shall be
automatically extended from April 1, 2001 through March 31, 2002 unless MET-Rx
gives Nutraceutix sixty (60 days prior written notice that it does not wish to
extend the Sublicense. Nutraceutix shall have and at all times retain the right
to produce, market and otherwise distribute other products containing the
Technology and to use the Technology as it sees fit, provided the same does not
violate the terms of the exclusive Sublicense granted by this Agreement.
1.2 Exclusivity. The Sublicense shall be nonexclusive with respect to
sales of Licensed Products in the health supplement market. The Sublicense shall
be exclusive with respect to sales of Licensed Products in the sports nutrition
market so long as MET-Rx meets or exceeds the following requirements:
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(i) MET-Rx shall purchase (both order and pay for) at least
$4,000,000 of finished Licensed Products from Nutraceutix from April 1,
2000 through March 31, 2001, with no less than $700,000 purchased per
calendar quarter.
(ii) MET-Rx shall introduce at least four new Licensed Products
incorporating either CDT or MDT, or both CDT and MDT, by June 1, 2000.
(iii) If the Sublicense is extended pursuant to the option
described in paragraph 1.1 above, MET-Rx will: (a) purchase (both order
and pay for) finished Licensed Products from Nutraceutix during the
period from April 1, 2001 to March 31, 2002, and in each calendar
quarter of said period, in such amounts as MET-Rx and Nutraceutix shall
agree to in writing prior to April 1, 2001; provided that if MET-Rx and
Nutraceutix cannot reach such an agreement prior to April 1, 2001, these
product purchase requirements shall be 120% of the product purchase
requirements set forth in paragraph 1.2 (i) above; and (b) introduce
into the North American sports nutrition market at least four new
Licensed Products incorporating either CDT or MDT, or both CDT and MDT
(in addition to the new products referred to in paragraph 1.2 (ii)
above), by June 1, 2001.
If MET-Rx does not meet or exceed the purchase volume and new product
introduction requirements set forth in parts (i), (ii) and (iii) of this
paragraph 1.2, the Sublicense shall continue in all respects except that it
shall become non-exclusive for the sports nutrition market; provided that MET-Rx
can retain the exclusive rights for the sports nutrition market set forth in the
Sublicense if it cures the purchase volume shortfall within the first fifteen
(15) days of the following calendar quarter. If Nutraceutix is incapable of
delivering Licensed Products as necessary to enable MET-Rx to meet the
requirements set forth in parts (i), (ii) and (iii) of this paragraph 1.2, those
requirements shall be equitably adjusted as necessary to give MET-Rx a realistic
opportunity to comply with them. If MET-Rx fails to meet or exceed the
requirements set forth in parts (i), (ii) and (iii) of this paragraph 1.2,
Nutraceutix's only remedies shall be as set forth in paragraph 1.1 and this
paragraph 1.2, and Nutraceutix shall not be entitled to monetary compensation
for such failure.
1.3 Termination. Nutraceutix shall have the right to terminate the
Sublicense at any time if MET-Rx (i) ceases marketing all Licensed Products for
a period of three (3) or more consecutive months or (ii) breaches this Agreement
(other than failure to meet or exceed the requirements set forth in parts (i),
(ii) and (iii) of paragraph 1.2) and said breach is not cured in accordance with
this paragraph 1.3. If Nutraceutix wishes to terminate the Sublicense because of
such breach by MET-Rx, Nutraceutix shall deliver to MET-Rx a written notice of
termination specifying the breach in question. Thereupon the Sublicense shall
automatically terminate thirty (30) days after the date of such notice unless
MET-Rx cures the breach within said thirty (30) day period; provided that if the
breach cannot reasonably be cured within said thirty (30) day period, the
Sublicense shall not be terminated so long as MET-Rx commences the cure within
said thirty (30) day period and thereafter diligently prosecutes the same to
completion. MET-Rx may terminate the Sublicense at any time upon sixty (60) days
advance written notice to Nutraceutix.
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1.4 Protection of Proprietary Rights. MET-Rx acknowledges that the
Technology and the Trademark involve valuable trademarks, trade secrets and
other proprietary rights of Nutraceutix and Temple University - Of The
Commonwealth System of Higher Education ("Temple"), which is the owner and
Nutraceutix's licensor of the Technology. Nutraceutix and Temple reserve all
such trademarks, trade secrets and other proprietary rights. MET-Rx shall not
infringe or violate, and shall take appropriate precautions for the protection
of, such rights. Without limiting the generality of the foregoing, MET-Rx shall
not reverse engineer or otherwise attempt to discover the Technology, and shall
not apply for or attempt to obtain any proprietary rights in the Technology, the
Trademark, Nutraceutix's or Temple's research data regarding the Technology, or
any other item licensed pursuant to the Sublicense. No title to or ownership of
any item licensed pursuant to the Sublicense is transferred by virtue of the
Sublicense, manufacture of any Licensed Product, or any use by MET-Rx of the
Sublicense, a Licensed Product or any such item.
Section 2. Product Purchases and Sales.
2.1 Exclusive Supplier. Nutraceutix shall manufacture all Licensed
Products. MET-Rx shall, and shall ensure that each sublicensee, contractor or
agent of MET-Rx shall, acquire Licensed Products exclusively from Nutraceutix
pursuant to this Agreement. MET-Rx shall not, and shall ensure that each
sublicensee, contractor or agent of MET-Rx shall not, purchase or otherwise
acquire Licensed Products or any purported substitute therefor from any person
or entity other than Nutraceutix. If Nutraceutix is incapable of manufacturing
Licensed Products in quantities reasonably sufficient to enable MET-Rx to meet
its requirements, Nutraceutix shall supply bulk CDT/MDT caplets or capsules as
necessary for bottling by other manufacturers, who shall be approved in advance
by MET-Rx.
2.2 Sales and Delivery to MET-Rx. Nutraceutix shall produce and deliver
to MET-Rx, FOB Nutraceutix's manufacturing facility, such quantity of Licensed
Products as MET-Rx orders during the term of this Agreement described in
paragraph 1.1 above (the "Term") pursuant to purchase orders accepted by
Nutraceutix. MET-Rx's purchase orders shall specify type, quantity and the
delivery dates for the products ordered, which delivery dates shall be at least
forty five (45) days after the date the purchase order in question is delivered
to Nutraceutix. On or before the last day of each month of the Term, MET-Rx
shall provide Nutraceutix in writing a non-binding projection setting forth by
product type, volume and purchase date MET-Rx's projected purchases of Licensed
Products during the ensuing three months.
2.3 Purchase Price. MET-Rx's purchase prices for Licensed Products shall
be Nutraceutix's standard prices for products incorporating the Technology,
which prices depend on the formula and product type in question, except that
special pricing shall apply to special packaging such as floor displays, wing
racks and PDQ's. MET-Rx shall pay for all Licensed Products based on
Nutraceutix's standard terms, i.e., net thirty (30) days upon approval of
credit, except the first order of any new Licensed Product shall be paid fifty
percent (50%) when placed and fifty percent (50%) upon delivery. Any amount
which is not paid when due shall bear interest at the rate of one percent (1%)
per month, computed and compounded monthly, from the date due until the date
paid.
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2.4 Development Fee. MET-Rx shall pay Nutraceutix a development fee of
six thousand dollars ($6,000) for each Licensed Product developed by
Nutraceutix, which fee shall be applied toward payment of MET-Rx's initial order
of the Licensed Product in question.
2.5 Packaging, Labels and Promotional Items. MET-Rx shall provide all
labels and boxes for products purchased from Nutraceutix. All packaging, labels
and promotional items for Licensed Products shall comply with the labeling
provisions set forth on the attached Exhibit A. MET-Rx shall be solely
responsible and liable for any other or additional language or items set forth
on packaging, labels and promotional items. MET-Rx shall obtain Nutraceutix's
prior written approval of all packaging, labels and promotional items in advance
of their use in commerce, which approval shall (i) relate solely to proper use
of the Trademark and provisions protecting the Trademark, and (ii) not be
unreasonably withheld or delayed.
2.6 Sales by MET-Rx. MET-Rx shall be solely responsible for all sales
and distribution of Licensed Products following delivery thereof by Nutraceutix
to MET-Rx. Subject to the provisions of paragraph 2.4, MET-Rx may package and
sell Licensed Product under such brands, trademarks and names and for such
prices as it deems appropriate.
Section 3. Representations, Warranties, Indemnities and Insurance.
3.1 Representations and Warranties.
3.1.1 Of Nutraceutix. Nutraceutix hereby represents and warrants
to MET-Rx that (i) Nutraceutix is entitled to use the Technology in North
America and grant the Sublicense contemplated hereunder to MET-Rx; (ii) the
Technology does not constitute an infringement of any existing intellectual
property rights when used on the Licensed Products; (iii) the Licensed Products
when delivered to MET-Rx will be free of manufacturing defects, will be
manufactured in compliance with any and all applicable requirements of the
Federal Food, Drug and Cosmetic Act (the "FFDCA") and the rules and regulations
promulgated thereunder, conform to the description of the Licensed Products set
forth on the applicable purchase orders therefor, and not be adulterated or
misbranded within the meaning of the FFDCA or any state of local laws, the
adulteration and misbranding provisions of which are essentially similar to
those in the FFDCA; provided, however, Nutraceutix does not warrant against the
Licensed Products becoming adulterated or misbranded within the meaning of the
FFDCA or said laws after delivery of the Licensed Products to MET-Rx; (iv) the
Licensed Products will meet the controlled release and enhanced bioavailability
characteristics claimed by the sublicensed Technology; (v) Nutraceutix has the
full power, capacity and right to enter into this Agreement, including but not
limited to the ability and wherewithal to provide for the manufacture of the
Licensed Products in compliance with the quality and quantity standards
contemplated by this Agreement; (vi) Nutraceutix has not licensed the Technology
or any aspect thereof in any manner inconsistent with the Sublicense granted
hereunder; (vii) neither the execution and delivery of this Agreement nor
compliance with the obligations of Nutraceutix hereunder will violate any law or
regulation, or any order or decree of any applicable court or governmental
agency, or will conflict with, or result in the breach of, or constitute a
default under, any contract, agreement, instrument or judgment to which
Nutraceutix or any officer, director, employee or controlling person of
Nutraceutix is a party, or which is binding upon Nutraceutix or any of the
foregoing persons; and
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(viii) the Licensed Product will not infringe on any United States patent,
trademark, trade dress or other intellectual property right of any third party.
Notwithstanding anything to the contrary in this paragraph 3.1.1, Nutraceutix
makes no representation or warranty regarding, and shall not be liable or
responsible for any product or infringement claim arising out of, any formula,
know-how, trademark, trade dress, indicia or other specification, or materials
including raw materials and components, provided or requested by MET-Rx.
Nutraceutix makes no other representation or warranty with respect to Licensed
Products, the Technology or the Trademark.
3.1.2 Of MET-Rx. MET-Rx hereby represents and warrants to
Nutraceutix that (i) it has the full power, capacity and right to enter into
this Agreement; (ii) it knows of no pending or threatened action in law or in
equity which could adversely threaten the rights granted herein; (iii) neither
the execution and delivery of this Agreement nor compliance with the obligations
of MET-Rx hereunder will violate any law or regulation, or any order or decree
of any applicable court or governmental agency, or will conflict with, or result
in the breach of, or constitute a default under, any contract, agreement,
instrument or judgment to which MET-Rx or any officer, director, employee or
controlling person of Nutraceutix is a party, or which is binding upon MET-Rx or
any of the foregoing persons; and (iv) no action, approval or consent, including
but not limited to any action, approval or consent by any federal, state,
municipal or other governmental agency, commission, board, bureau or
instrumentality is necessary in order to constitute this agreement as a valid,
binding and enforceable obligation of MET-Rx in accordance with its terms.
3.2 Product Remedy of MET-Rx. If any Licensed Product when delivered to
MET-Rx fails to meet the warranties set forth in paragraph 3.1.1(iii) and (iv),
Nutraceutix shall replace the same at Nutraceutix's cost.
3.3 Infringement Indemnity of MET-Rx. Nutraceutix shall defend MET-Rx at
Nutraceutix's expense against any judicial proceeding based upon infringement by
the Technology or the Trademark of any proprietary right of any third party;
provided that (a) the infringement was not caused by MET-Rx's breach of the
Sublicense or by any formula, know-how, trademark, trade dress, indicia or other
specification, or materials including raw materials and components, provided or
requested by MET-Rx, (b) MET-Rx notifies Nutraceutix of such proceeding soon
enough after it is commenced that Nutraceutix has a reasonable opportunity to
respond before a default is granted, a waiver is incurred or a litigation
position is established, and (c) MET-Rx provides such assistance in the
proceeding as Nutraceutix may reasonably request. Nutraceutix shall have
exclusive control over any such proceeding, and MET-Rx shall comply with any
settlement or court order made in connection with such proceeding.
3.4. Product Indemnity of MET-Rx. Nutraceutix releases and shall defend,
indemnify and hold harmless MET-Rx from and against any and all claims, losses,
costs, harm, liabilities, damages (direct and consequential) and expenses
(including but not limited to attorneys' fees) arising out of the failure of a
Licensed Product to comply with the warranty set forth in paragraph 3.1.1(iii)
and (iv), provided that the failure was not caused by any formula, know-how,
trademark, trade dress, indicia or other specification, or materials including
raw materials and components, provided or requested by MET-Rx. Notwithstanding
the foregoing, Nutraceutix shall not be required to so defend, indemnify or hold
harmless MET-Rx from any claims, losses,
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costs, harm, liabilities, damages or expenses arising out of injury to any
person or damage to any property to the extent and in the percentage the same is
caused by or results from the fault or negligence of MET-Rx.
3.5 Waiver. MET-RX WAIVES AND RELEASES ALL RIGHTS AND REMEDIES OF MET-RX,
AND ALL WARRANTIES, OBLIGATIONS AND LIABILITIES OF NUTRACEUTIX, EXPRESS OR
IMPLIED, EXCEPT THOSE SPECIFICALLY SET FORTH IN THIS SECTION 3, INCLUDING BUT
NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE AND CLAIM FOR ANY CONSEQUENTIAL DAMAGES.
3.6 Indemnity of Nutraceutix. MET-Rx releases and shall defend,
indemnify and hold harmless Nutraceutix and Temple (the "Indemnitees") from and
against any and all claims, losses, costs, harm, liabilities, damages (direct
and consequential) and expenses (including but not limited to attorneys' fees)
arising out of or in connection with marketing, distribution or use of any
Licensed Product or other product, MET-Rx's formulation for any Licensed Product
or other product, and any packaging, label or promotional item connected
therewith, manufactured, marketed or distributed by or through MET-Rx or any
sublicensee, contractor, employee, agent, representative, customer, or person or
entity affiliated with or who obtained the Licensed Product or other product
from or through MET-Rx. Notwithstanding the foregoing, MET-Rx shall not be
required to so defend, indemnify or hold harmless an Indemnitee from any claims,
losses, costs, harm, liabilities, damages or expenses arising out of (i) injury
to any person or damage to any property to the extent and in the percentage the
same is caused by or results from failure of a Licensed Product to comply with
the warranties set forth in paragraph 3.1.1(iii) or (iv), or other fault or
negligence of such Indemnitee or (ii) infringement of a third party's
proprietary rights by the Technology or the Trademark.
3.7 Insurance of Nutraceutix. Nutraceutix shall maintain in full force
and effect throughout the Term product liability insurance with limits of not
less than two million dollars ($2,000,000) per occurrence, two million dollars
($2,000,000) aggregate and deleting the repackaging and relabeling exclusion.
Such insurance shall name MET-Rx as an additional insured, shall have broad form
vendor's coverage, and shall be placed with an insurance company which has a
most recent rating given by Best's Key Rating Guide of at least A (Excellent) or
VII or above, or in such other companies as MET-Rx may approve, which approval
shall not be unreasonably withheld or delayed. Nutraceutix shall promptly
deliver to MET-Rx certificates of said insurance, and shall notify MET-Rx
immediately in the event such insurance policy is amended or terminated.
3.8 Insurance of MET-Rx. MET-Rx shall maintain in full force and effect
throughout the Term product liability insurance with limits of not less than two
million dollars ($2,000,000) per occurrence, two million dollars ($2,000,000)
aggregate and deleting the repackaging and relabeling exclusion. Such insurance
shall name Nutraceutix as an additional insured, shall have broad form contract
coverage, and shall be placed with an insurance company which has a most recent
rating given by Best's Key Rating Guide of at least A (Excellent) or VII or
above, or in such other companies as Nutraceutix may approve, which approval
shall not be unreasonably
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withheld or delayed. MET-Rx shall promptly deliver to Nutraceutix certificates
of said insurance, and shall notify Nutraceutix immediately in the event such
insurance policy is amended or terminated.
Section 4. Miscellaneous.
4.1 Access to Research Results. Each party shall provide the other
access to all of such party's research results regarding the performance of
Licensed Products promptly after those results are obtained.
4.2 Ownership and Sale of MET-Rx's Formulations. Except as provided to
the contrary in paragraph 1.4, MET-Rx shall have all right, title and interest
in product formulations developed by MET-Rx. Nutraceutix shall not sell to any
third party Licensed Products whose formulations were developed by MET-Rx.
4.3 Excused Performance. Nutraceutix shall not be liable for, or be
considered to be in breach of this Agreement on account of, any delay or failure
to perform as required by this Agreement as a result of any cause beyond
Nutraceutix's reasonable control (including but not limited to: fire, casualty,
acts of God or the elements; court orders; acts, delays and failures to act by
civil, military or other governmental authority; labor disputes, sabotage and
war; breakdown or destruction of, or damage or casualty to, any equipment,
facilities or other property; unavailability of ingredients, equipment,
personnel or other necessary items; disruption of utilities; and acts or
omissions of persons or entities other than Nutraceutix).
4.4 Assignment. This Agreement shall be fully binding upon, inure to the
benefit of and be enforced by the parties hereto and their respective successors
and assigns; provided that MET-Rx may not assign this Agreement or sublicense
any Sublicense rights to any third party without the prior written consent of
Nutraceutix, which consent shall not be unreasonably withheld. Without limiting
the generality of the foregoing, the Sublicense is granted solely to MET-Rx, and
not to any entity which controls, is controlled by or is under common control
with MET-Rx, and thus Sublicense rights may not be sublicensed or otherwise
transferred to any such entity without the prior written consent of Nutraceutix.
4.5 Entire Agreement. This Agreement constitutes the entire agreement
between Nutraceutix and MET-Rx, and supersedes any and all prior agreements,
with respect to Licensed Products and licensing of Technology during the Term;
provided that this Agreement is in addition to the license agreement between
Nutraceutix and MET-Rx with respect to licensing of CDT dated December 16, 1998,
as amended by letter agreement dated March 16, 1999, and the license agreement
between Nutraceutix and MET-Rx with respect to licensing of MDT dated March 16,
1999, both of which agreements are hereby reaffirmed to the extent that they
apply to periods prior to April 1, 2000 (but are superseded by this agreement to
the extent that they apply to periods within the Term); and provided further
that this Agreement is in addition to the license agreement between Nutraceutix
and MET-Rx dated June 25, 1999 with respect to licensing of MET-Rx's graphic
design for identification of CDT, which agreement remains in full force and
effect. No amendment, modification or waiver of any of the provisions of this
Agreement shall be valid unless set forth in a written instrument signed by the
party to be bound thereby.
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Nutraceutix shall not be bound by, and specifically objects to, any term,
condition or other provision which is different from or in addition to the
provisions of this Agreement (whether or not it would materially alter this
Agreement) which is proffered by MET-Rx in any purchase order, receipt,
acceptance, confirmation, correspondence or otherwise, unless Nutraceutix
specifically agrees to such provision in a written instrument signed by
Nutraceutix.
4.6 No Partnership. This Agreement, or acquisition, marketing or other
use by MET-Rx of Licensed Products or the Trademark does not create an
association, joint venture or partnership between the parties or impose any
partnership obligation or liability upon either party. Neither party is an agent
of the other.
4.7 Press Releases. Nutraceutix and MET-Rx may issue press releases
regarding this Agreement with the prior written consent of the other party.
4.8 Applicable Law. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Washington.
Any action arising out of this Agreement shall be brought in the courts located
in Washington, and the parties hereby irrevocably consent to the jurisdiction of
said courts. The prevailing party in any dispute under this Agreement shall be
entitled to recover from other party its reasonable attorney's fees and costs.
4.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall constitute one and the same Agreement.
Nutraceutix: MET-Rx:
Nutraceutix, Inc. MET-Rx USA, Inc.
By: /s/ Xxxxxxx X. St. Xxxx By: /s/ J. Xxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxxx X. St. Xxxx X. Xxxxx Xxxxxxx
President President
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EXHIBIT A
TO
PRODUCT SALES AND SUBLICENSE AGREEMENT
FOR
CONTROLLED DELIVERY TECHNOLOGY AND
MOLECULAR DISPERSION TECHNOLOGY PRODUCTS
1. The Trademarks are:
(i) CDT:
(ii) MDT:
2. Labeling provisions referred to in paragraph 2.5 are as follows:
(i) all packaging, labels and promotional items for Licensed Products
shall have the following prominently displayed thereon:
(ii) packaging, labels and promotional items for Licensed Products may
have the following displayed thereon:
Nutraceutix: MET-Rx:
Nutraceutix, Inc. MET-Rx USA, Inc.
By: /s/ Xxxxxxx X. St. Xxxx By: /s/ J. Xxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxxxx X. St. Xxxx X. Xxxxx Xxxxxxx
President President
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