MANUFACTURING LICENSE AGREEMENT
Exhibit 10.1
This Manufacturing License Agreement (the “Agreement”) is made and entered into as of this
13th day of August, 2009 by and between InnoZen, Inc., a Delaware corporation with offices at 0000
Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx (“InnoZen”) and Supplemental Manufacturing &
Ingredients, LLC., dba SMI Manufacturing, an Arizona limited liability company with offices at 0000
Xxxx 0xx Xxxxxx, Xxxxx, Xxxxxxx (“SMI”).
RECITALS
WHEREAS, InnoZen has experience in the formulation, development, manufacturing, distribution
and sale of edible thin film-strips containing dietary supplement, nutraceutical, and drug active
ingredients;
WHEREAS, SMI has begun and desires to design, build and operate a state-of-the-art, cGMP,
edible film-strip manufacturing facility in Arizona.
WHEREAS, SMI desires to manufacture InnoZen’s edible film-strip products in its Arizona
facility.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, InnoZen and SMI agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms, whether used in the singular or plural, shall
have the following meanings:
1.1. “Affiliate” shall mean any company or other business entity controlled by, controlling or
under common control with a party, control being presumed if there is direct or indirect ownership
of at least 35% (or, if less, the maximum permitted by applicable law) of the voting stock, equity
or income interest.
1.2. “Change of Control Transaction” shall mean a transaction (i) in which a Party sells
ownership of 50% or more of all of its classes of voting securities or ownership interests to a
single investor or group of related investors, or (ii) in which a Party sells all or substantially
all of its assets.
1.3. “Cost” shall mean the actual cost of goods sold associated with the manufacture of a
particular Product based on generally accepted accounting principles.
1.4. “FDA” shall mean the United States Food and Drug Administration (or a successor agency).
1.5. “Field” shall mean the sale of the Products to InnoZen or its Affiliates.
1.6. “Force Majeure” shall mean a failure to fulfill a requirement under this Agreement due to
fire, flood, strike or other labor dispute, accident to machinery, act of sabotage, riot,
precedence or priority granted at the request of or for the benefit, directly or indirectly, of any
government, including but not limited to the United States of America federal or state, or a
Territory, foreign government or any subdivision or agency thereof, export. or import restriction,
delay in transportation or lack of transportation, facilities, restriction imposed by United States
of America federal or state or a Territory, foreign legislation or rule or regulation there under,
or war or insurrection or any cause beyond the control of either party.
1.7. “GMP” shall mean current good manufacturing practices as defined under FDA and other
regulatory authority rules and regulations and that are applicable to the manufacture of the
Products.
1.8. “Licensed Technology” shall mean (i) all Patent Rights, (ii) all intellectual property,
derivatives, know-how, trade secrets, processes and data, including, but not limited to,
formulations, manufacturing procedures, and specifications owned or possessed by InnoZen as of the
date of this Agreement relating to the Manufacture and commercialization of the Products but only
to the extent such information and data is necessary to commercially exploit the Products in the
Field.
1.9. “Manufacture” shall mean the production and making of the Products by labor and
machinery, but shall not include any making or production of the Products related to research and
development activities or functions.
1.10. “Party” shall mean SMI or InnoZen; “Parties” shall mean SMI and InnoZen.
1.11. “Patent Applications” shall mean United States non-provisional patent application U.S.
Serial No. 10/713,544 filed on November 14, 0000, Xxxxxx Xxxxxx non-provisional patent application
U.S. Serial No. 10/402,273 filed on March 28, 0000, Xxxxxx Xxxxxx non-provisional patent
application U.S. Serial No. 10/921,770 filed on August 18, 0000, Xxxxxx Xxxxxx non-provisional
patent application U.S. Serial No. 11/417,676 filed on May 3, 0000, Xxxxxx Xxxxxx non-provisional
patent application U.S. Serial No. 11/371,167 filed on March 7, 2006, and United States provisional
patent application U.S. Serial No. 60/981,389 filed on October 19, 2007 (collectively, the “Patent
Applications”); all United States and foreign patents and patent applications deriving priority
from the Provisional Applications, and any divisions, continuations, continuations-in-part,
re-examinations and reissues of such patent applications.
1.12. “Patent Rights” shall mean all rights arising in connection with the Patent
Applications, and any patents ultimately issued in connection therewith.
1.13. “Product” or “Products” shall mean any commercial, edible film-strip product that
utilizes the Patent Rights or Licensed Technology.
1.14. “Territory” shall mean world-wide, except that, it shall not include South
Korea. In the case of South Korea, the Parties intend to enter into a joint venture or other
business relationship for the development of the South Korean market and the manufacture and supply
of edible film strip products in South Korea.
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II. MANUFACTURING LICENSE
2.1. License. Subject to (i) the termination provisions set forth in Section 2.3 herein, (ii)
the reservation of rights set forth in Section 2.4 herein, and (iii) the other terms of this
Agreement, InnoZen hereby grants to SMI a non-exclusive license in and to the Patent Rights and the
Licensed
Technology to Manufacture the Products in the Territory for the Field and other customers
authorized in writing by InnoZen.
2.2. Term of License. The non-exclusive license granted in Section 2.1 herein shall be for a
term of twelve (12) years, unless terminated earlier under the terms of this Agreement. In
addition, upon mutual agreement of the Parties, the Agreement may be extended for an additional
twelve (12) year term.
2.3. Termination of License.
(a) SMI shall provide to InnoZen a quarterly report relating to its GMP status and to its
federal, state, and local regulatory certification and authorization. In the event that SMI loses
its GMP status or its certification or authorization under any federal, state or local regulatory
authority, and after written notice thereof is provided by InnoZen, then, in addition to all other
rights and remedies under this Agreement and otherwise available at law, InnoZen shall have the
right, at its option, to temporarily suspend or terminate the license granted in Section 2.1
whereupon such license shall be temporarily suspended or terminated. If SMI is unable to regain
its GMP status or its regulatory certification or authorization for a period of sixty (60) days
after written notice thereof is provided by InnoZen, then, all rights granted to SMI by InnoZen
under this Agreement (including without limitation all Patent Rights and Product and Licensed
Technology rights) shall terminate, become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole option, terminate this Agreement in its entirety.
(b) In the event SMI materially breaches or fails to perform any provision of this Agreement
and such material breach or failure continues for a period of thirty (30) days after written notice
thereof is provided by InnoZen, then, in addition to all other rights and remedies under this
Agreement and otherwise available at law, InnoZen shall have the right, at its option, to
temporarily suspend or terminate the license granted in Section 2.1 whereupon such license shall be
temporarily suspended or terminated. If there occurs any other or additional material breach or
failure of SMI to perform its duties under this Agreement within six (6) months after the date of
the initial material breach or failure to perform (excluding any cure period) or at any time
thereafter if the initial material breach or failure to perform remains uncured, all rights granted
to SMI by InnoZen under this Agreement (including without limitation all Patent Rights and Product
and Licensed Technology rights) shall terminate, become null and void, and shall revert in their
entirety to InnoZen, and InnoZen may, in its sole discretion, terminate this Agreement in its
entirety.
2.4. Reservation of Rights. InnoZen retains all rights in and to the Products, the Patent
Rights and all of the Licensed Technology not specifically granted in
Section 2.1. herein.
Consequently, in addition to other rights that SMI shall not have, SMI shall not have the right to
use, distribute, offer for sale, or sell the Products to any entity other than InnoZen or those
InnoZen designees approved and appointed by InnoZen in writing.
2.5. Reversion. Upon termination of this Agreement, SMI shall return and deliver to InnoZen
the Patent Rights, the Licensed Technology and all other information relating to the grant of the
license rights in Section 2.1, herein.
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III. MANUFACTURING / SUPPLY
3.1. Facility and Equipment. SMI intends to design, build, and operate a state-of-the-art,
GMP, FDA-approved facility in Arizona, capable of manufacturing edible film-strip products
utilizing InnoZen’s Licensed Technology and Patent Rights (the “Arizona Facility”). The
Arizona Facility project is slated to begin prior to execution of this Agreement, and is projected
to contain up to four (4) production lines capable of producing dietary supplement,
over-the-counter drug, and pharmaceutical drug products from raw materials through to finished
goods. The first production line will utilize certain equipment from InnoZen’s Oxnard, California
facility (the “First Line”). InnoZen shall retain title to such equipment and shall have the right
to xxxx or label the equipment, file UCC financing statements or take other action reasonably
necessary to protect its ownership interest in such equipment. SMI shall have the right to use
such equipment during the term of this Agreement and shall maintain such equipment in good working
order, reasonable wear and tear expected. InnoZen agrees to provide all reasonably required and
agreed upon assistance in getting the First Line operational as soon as reasonably practicable.
The remaining production lines at the Arizona Facility are scheduled to be operational as soon as
reasonably practical given the lead times required in obtaining the associated equipment to be
ordered and purchased by SMI. SMI’s commitments and obligations under this Agreement to build,
equip, validate and operate these remaining production lines is based and contingent upon InnoZen
providing reasonable written order forecasts supported by written customer commitment indications
supporting the financial viability of the additional investment required to build and operate the
remaining production lines. The Parties agree that unless Product orders exist, are pending or are
reasonably forecast by InnoZen that will fully utilize the First Line’s capacity, there will not be
a commercially reasonable need for the remaining production lines.
3.2. Failure to Build/Operate Facility. Notwithstanding the provisions of Section 3.1 herein,
in the event that the First Line is not operational or is not capable of producing commercially
sellable Product from the raw material and blending stage of production through to the packaging
and finished goods stages within six (6) months of the execution of this Agreement and provided
that such delay or failure is not due to InnoZen’s breach of any material provision under this
Agreement, then, in addition to all other rights and remedies under this Agreement and otherwise
available at law, InnoZen shall have the right, at its option, to terminate this Agreement in its
entirety.
3.3. Exclusive Manufacturing — Right of First Refusal. Subject to (i) the terms set forth in
Section 3.4 herein, (ii) the termination provisions set forth in Section 3.5 herein, and (iii) the
other terms of this Agreement, SMI shall have the first right to exclusively negotiate with InnoZen
for the Manufacture of the Products in the Territory for the Field (the “Right of First Refusal”).
3.4. Exercise of Right of First Refusal. The Right of First Refusal shall operate on a
Product-by-Product basis, and SMI shall exercise the Right of First Refusal for each Product
separately. InnoZen shall notify SMI in writing of its intent to commercially exploit a particular
Product and shall provide SMI a dossier for each such Product which contains the Product
formulation, specifications, requirements, manufacturing procedures and other information necessary
for SMI to Manufacture the Product. SMI shall then have ten (10) days from receipt of such
notification in which to exercise the Right of First Refusal for such Product and shall inform
InnoZen in writing of its decision to exercise the Right of First Refusal for such Product. Upon
SMI’s notification of its decision to exercise the Right of First Refusal for such Product, the
Parties shall immediately begin good faith negotiations for the Manufacture of such Product under a
separate Manufacturing Agreement as provided in Section 3.6 herein.
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3.5. Termination of Right of First Refusal.
(a) In the event that SMI (i) refuses to manufacture a particular Product, (ii) fails to
fulfill a purchase order for a particular Product, or (iii) is unable to meet all product
specifications, capacity requirements, quality requirements, manufacturing requirements, reasonable
customer requirements, or regulatory requirements related to a particular Product and such
refusal, failure or inability continues for a period of thirty (30) days after written notice
thereof is provided by InnoZen, then, in addition to all other rights and remedies under this
Agreement and otherwise available at law, InnoZen shall have the right, at its option, to revoke
and terminate the Right of First Refusal for that particular Product and the Right of First Refusal
for that particular Product shall be null and void. In such event, and without limiting any other
InnoZen rights and remedies, InnoZen shall have the right to grant to any person(s) or entity(ies)
the right and license to manufacture the particular Product and to do the foregoing itself. This
Section 3.5(a) shall apply and be enforceable at all times during the term of this Agreement
including both prior to SMI’s exercise of the Right of First Refusal for the particular Product and
after the exercise of such Right of First Refusal for the particular Product.
(b) SMI shall provide to InnoZen a quarterly report relating to its GMP status and to its
federal, state, and local regulatory certification and authorization. In the event that SMI loses
its GMP status or its certification or authorization under any federal, state or local regulatory
authority, and after written notice thereof is provided by InnoZen then, in addition to all other
rights and remedies under this Agreement and otherwise available at law, InnoZen shall have the
right, at its option, to revoke and terminate the Right of First Refusal for all Products and the
Right of First Refusal for all Products shall be null and void until such time as SMI is able to
regain its GMP status or its regulatory certification or authorization. In such event, and without
limiting any other InnoZen rights and remedies, InnoZen shall have the right to grant to any
person(s) or entity(ies) the right and license to manufacture the Products and to do the foregoing
itself. If SMI’s failure to maintain its GMP status or its regulatory certification or
authorization remains uncured for a period of sixty (60) days after written notice thereof is
provided by InnoZen, then, all rights granted to SMI by InnoZen under this Agreement (including
without limitation all Right of First Refusal rights, Patent Rights and Product and Licensed
Technology rights) shall terminate, become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole option, terminate this Agreement in its entirety. This
Section 3.5(b) shall apply and be enforceable at all times during the term of this Agreement
including both prior to SMI’s exercise of the Right of First Refusal for any Products and after the
exercise of such Right of First Refusal for any Products.
(c) In the event SMI materially breaches or fails to perform any provision of this Agreement
and such material breach or failure continues for a period of thirty (30) days after written notice
thereof is provided by InnoZen, then, in addition to all other rights and remedies under this
Agreement and otherwise available at law, InnoZen shall have the right, at its option, to revoke
and terminate the Right of First Refusal for all Products and the Right of First Refusal for all
Products shall be null and void until such time as SMI is able to cure such breach. In such event,
and without limiting any other InnoZen rights and remedies, InnoZen shall have the right to grant
to any person(s) or entity(ies) the right and license to manufacture the Products, and to do the
foregoing itself. If there occurs any other or additional material breach or failure of SMI to
perform its duties under this Agreement within six (6) months after the date of the initial
material breach or failure to perform (excluding any cure period) or at any time thereafter if the
initial material breach or failure to perform remains uncured, all rights granted to SMI by InnoZen
under this Agreement (including without limitation all Right of First Refusal rights, Patent Rights
and Product and Licensed Technology rights) shall terminate, become null and void, and shall revert
in their entirety to InnoZen, and InnoZen may, in its sole option, terminate this Agreement in its
entirety. This Section 3.5(c) shall apply and be enforceable at all times during the term of this
Agreement including both prior to SMI’s exercise of the Right of First Refusal for any Products and
after the exercise of such Right of First Refusal for any Products.
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3.6. Manufacturing Agreements. The manufacturing relationship between the Parties shall be
governed by this Agreement and by a separate Manufacturing Agreement to be negotiated by the
parties in good faith for each particular Product. Each such Manufacturing Agreement shall be in
the form attached hereto as Exhibit A and shall contain the standard provisions
therein, including but not limited to, provisions relating to payment terms,
forecasting/projections, purchase orders, shipping, product specifications, and product returns.
In the event of a conflict between this Agreement and any Manufacturing Agreement, the provisions
of this Agreement shall govern.
3.7. Pricing. The Parties shall negotiate (in good faith) and agree upon the price for each
Product that will be charged to InnoZen by SMI for any orders placed by InnoZen on its own behalf
or on behalf of an InnoZen designated third party. The Parties hereby agree to use best efforts to
negotiate a price for each Product that is low enough to be competitive in the industry. In the
event that the Parties are unable to agree upon a price for any Product, the Parties hereby agree
that for any such Product orders placed by InnoZen on its own behalf or on behalf of an InnoZen
designated third party, SMI shall only charge InnoZen for the Cost of such order plus a fee of
[***] of such Cost.
3.8. Audit Rights; Records. SMI shall keep, or cause to be kept, accurate books, records and
data in sufficient detail to verify the calculation of Cost under Sections 1.3 and 3.7 herein and
shall retain such books, records and data at its principal place of business for at least five (5)
years after the end of the fiscal year to which they pertain. InnoZen shall have the right, at its
expense and not more frequently than once per quarter, to have its accountants and/or auditors
examine, during normal business hours, all books, records and data of SMI or its Affiliates
relating to the calculation of Cost for any period during which SMI is required to keep the books,
records and data. If such examination discovers an error in excess of three percent (3%) for the
period under review, SMI shall reimburse InnoZen for its reasonable costs of audit and examination.
3.9. No Competing Products/Technology. Except as pursuant to this Agreement, SMI, its
Affiliates, or its subsidiaries shall not manufacturer, produce or otherwise fabricate any edible
film-strip products or technology of any sort without the prior written consent of InnoZen. Any
violation of this Section 3.9 by SMI shall be considered a material default according to Section
8.1 herein.
3.10. First Right of Negotiation. In the event that a Party intends to enter negotiations or
has, in fact, entered into negotiations for a Change of Control Transaction, then such Party shall
notify the other Party in writing of such intent or action as soon as reasonably practicable. The
notified Party shall then have thirty (30) days from the date of such notice in which to enter
competing negotiations or to propose its own offer for a Change of Control Transaction. Each Party
agrees that during the thirty (30) day period it shall not enter into a binding agreement to effect
a Change of Control Transaction with any third party purchaser. It is understood and agreed,
however, that at any time following the expiration of the thirty (30) day period a Party may enter
into a Change of Control Transaction with a third party purchaser on such terms as the Party may
approve in its sole and absolute discretion.
IV. LICENSE FEE, INVESTMENT AND KEY PERSONNEL
4.1. License Fee. In consideration of the rights granted to SMI by InnoZen hereunder, and the
other undertakings of InnoZen herein, SMI shall pay $150,000 to InnoZen upon execution of the
Agreement. The $100,000 previously paid in connection with the Parties’ Letter of Intent shall be
applied to this license fee. The remaining $50,000 of the license fee shall be paid within ninety
(90) days of execution of this Agreement. Such license fee is non-refundable and shall be made to
InnoZen by check or wire transfer.
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4.2. Subscription. In consideration of the rights granted to SMI by InnoZen hereunder, SMI
hereby subscribes and agrees to purchase $1,000,000 worth of shares of common stock of
HealthSport, Inc., the parent corporation of InnoZen, at a per share price of $0.235 (the
“Subscription”). The payment of the purchase price for the shares shall be made in installments as
follows:
a.) $150,000 on or before August 15, 2009;
b.) $150,000 on or before September 15, 2009;
c.) $150,000 on or before October 15, 2009;
d.) $150,000 on or before November 15, 2009;
e.) $400,000 on or before December 31, 2009.
The shares purchased with each scheduled installment payment shall not be fully paid for until the
entire purchase price is paid for such shares. InnoZen shall have the right to hold the stock
certificates for such shares until such shares are fully paid. In connection with the
Subscription, SMI represents and warrants to InnoZen as follows: (a) SMI is an accredited investor
as that term is defined in Regulation D promulgated under the Securities Act of 1933, (b) SMI is
purchasing the shares for its own account and for investment purposes, (c) SMI has conducted its
own due diligence investigation concerning the investment in the shares and is not relying upon any
representation or warranty of InnoZen or HealthSport which is not contained in this Agreement, (d)
SMI acknowledge that the shares will not have been registered under the Securities Act of 1933 and
therefore will be subject to, and will bear “restricted legends” with respect to certain
restrictions on transfer. Failure by SMI to transfer all monies according to the dates and
schedule set forth in this Section 4.2 shall be considered a material default according to Section
8.1 herein. In the event of such a default, and after termination of this Agreement under Section
8.1 or other provisions of this Agreement, InnoZen shall, in its sole option (i) demand specific
performance of performance by SMI to complete the payment for the shares, or (ii) terminate this
Agreement and any other related documents in their entirety, without obligation other than to
provide share certificates for any shares fully paid by SMI.
4.3. Key Personnel. The Parties recognize and agree that the successful performance of the
Agreement will require the services and expertise of the key InnoZen personnel listed in
Exhibit B, hereto (the “Key Personnel”). Accordingly, the Parties will make all
commercially reasonable efforts to negotiate and execute a consulting agreement simultaneously with
this Agreement whereby SMI pays a monthly consulting fee to InnoZen for the services and expertise
of the Key Personnel (the “Consulting Agreement”). The Consulting Agreement shall be in the form
attached hereto as Exhibit C. The Parties hereby agree that the total of fees payable by
SMI under this Consulting Agreement shall be a minimum of $40,000 and that such amount shall be
payable to InnoZen in four (4) equal monthly installments with the first such payment due thirty
(30) days after the date of execution of the Agreement.
4.4. Taxes. Each Party agrees to bear all of the sales and use taxes imposed as a result of
the existence or operation of this Agreement on each Party, including any tax on or measured by
sales or other payment.
V. LICENSED TECHNOLOGY AND PATENT RIGHTS
5.1. Ownership.
(a) All works of authorship, discoveries, improvements and inventions made, authored, or
invented by InnoZen, and/or any of its Affiliates in the performance of this Agreement
or which otherwise relates to the Product, the Patent Rights and/or the Licensed Technology
(collectively, “InnoZen Improvements”) shall be owned by InnoZen.
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5.2. Infringement.
(a) Each Party shall promptly notify in writing the other Party during the term of this
Agreement of any: (1) known infringement or suspected infringement of any of the Patent Rights; or
(2) unauthorized use or misappropriation of the Licensed Technology by a third party of which it
becomes aware, and shall provide the other Party with all available evidence supporting said
infringement, suspected infringement or unauthorized use or misappropriation. Within ninety (90)
days after InnoZen becomes, or is made aware of any of the foregoing, InnoZen shall decide whether
or not to initiate an infringement or other appropriate action and shall notify SMI of its decision
in writing. The failure of InnoZen to inform SMI of InnoZen’s decision within such ninety (90) day
period shall be deemed a decision not to initiate an infringement or other appropriate action.
Notwithstanding anything else herein to the contrary, InnoZen agrees to and does hereby commit to
defend, indemnify and hold SMI harmless against and from any third party actions claiming or
challenging SMI’s right to Manufacture Products for the Field to the extent that such claim alleges
that the Licensed Technology infringes intellectual property rights owned by a third party.
(b) In the event that InnoZen notifies SMI of its intent to initiate an infringement or other
appropriate action within the ninety (90) day period provided in Section 6.2(a), provided such
infringement is continuing, InnoZen shall initiate such an infringement or other appropriate action
within thirty (30) days of the end of such 90-day period. InnoZen shall be entitled to join SMI as
a party to such suit, but SMI shall be under no obligation to participate except to the extent that
such participation is required as the result of being a named party to the suit or being involved
in the commercialization of any Patent Rights and/or Licensed Technology at issue. If SMI chooses
to participate, SMI shall have the right to be represented by its own counsel at its own expense.
InnoZen shall not settle any such suit involving rights of SMI nor make an admission of liability
on behalf of SMI without obtaining the prior written consent of SMI, which consent shall not be
unreasonably withheld. In the event InnoZen initiates proceedings pursuant to this Section 6.2(b),
InnoZen shall be entitled to 100% of any and all amounts recovered in such suit, whether through
judgment, settlement or otherwise, including without limitation, any punitive damages that may be
awarded, up to the amount of InnoZen’s costs of suit, and InnoZen and SMI shall each be entitled to
50% of all amounts recovered in such suit, whether through judgment, settlement or otherwise,
including without limitation, any punitive damages that may be awarded, in excess of InnoZen’s
costs of suit.
(c) In the event that InnoZen decides not to initiate, or is deemed to have not decided to
initiate an infringement or other appropriate action within the 90-day period provided in Section
6.2(a), or does not initiate such an infringement or other appropriate action within 30 days of
such 90-day period as provided in Section 6.2(b), SMI shall have the right, at its expense, to
initiate an infringement or other appropriate action, and shall be entitled to join InnoZen as a
party to such suit, but InnoZen shall be under no obligation to participate except to the extent
that such participation is required as a result of its being a named party to the suit or being the
owner of any Patent Rights and/or Licensed Technology at issue. Notwithstanding the foregoing, in
the event that InnoZen is engaged at the end of said 90-day period in negotiations for the
settlement of the said patent infringement which has been the subject of notice from SMI to InnoZen
and has advised SMI in writing of such negotiations, then the above mentioned right and option of
SMI to bring suit shall be exercised only with the written consent of InnoZen which will not be
unreasonably withheld. If InnoZen chooses to participate in any suit initiated by SMI, InnoZen
shall have the right to be represented in any such suit by its own counsel at its own expense. SMI
shall not settle any such suit involving rights of InnoZen nor make an admission of liability
on behalf of InnoZen without obtaining the prior written consent of InnoZen, which consent
shall not be unreasonably withheld. In the event SMI initiates proceedings pursuant to this Section
6.2(c), SMI shall be entitled to 100% of any and all amounts recovered in such suit, whether
through judgment, settlement or otherwise, including without limitation, any punitive damages that
may be awarded, up to the amount of SMI’s costs of suit, and InnoZen and SMI shall each be entitled
to 50% of all amounts recovered in such suit, whether through judgment, settlement or otherwise,
including without limitation, any punitive damages that may be awarded, in excess of SMI’s costs of
suit.
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(d) Nothing herein contained shall be construed to require either party to expend money in
litigation or in the enforcing of Patent Rights and/or Licensed Technology rights unless it so
elects and in the event a party proceeds with litigation in the name of the other party in any
cause in which such other party is not voluntarily a party, as evidenced by written notice, such
party shall and agrees to hold the other party harmless from any all liabilities arising
thereunder, including, but not limited to, attorney’s fees, court costs, and damages arising out of
counterclaims, cross-claims and the like.
5.3. Assistance. Each Party shall provide to the other Party reasonable assistance as
necessary for the Parties to exploit its rights under this Article V.
VI. REPRESENTATIONS AND WARRANTIES
6.1. Additional Warranties. Each Party represents and warrants to the other party that (a) it
has full right, power and authority to enter into this Agreement and to carry out the provisions
hereof, (b) it has all necessary corporate approvals for its execution, delivery and performance of
this Agreement, and (c) it has not, and will not during the term of this Agreement, grant any
rights or enter into any agreement that would conflict with the terms of this Agreement. InnoZen
represents and warrants that as a result of its prior relationship with and due diligence on
Migami, Inc., that, as of the date of execution of this Agreement, it has no intention or desire to
enter into a new transaction substantially similar to this Agreement with Migami, Inc.
VII. CONFIDENTIAL INFORMATION, SIGNAGE
7.1. Confidential Information. The Parties will receive certain Confidential Information (as
defined below) of each other, one as the “Disclosing Party” and the other as the “Receiving Party.”
The Parties are willing to provide such Confidential Information to each other only subject to the
terms set forth in this Agreement. For purposes of this Article VII, “Confidential Information”
shall mean information of any type, in any form, which a Party or its respective officers,
directors, employees, attorneys, agents, consultants, advisors, accountants, subsidiaries or
affiliates may now possess or may hereafter obtain relating to the Disclosing Party, including, but
not limited to, information relating to the Disclosing Party’s financial condition, intellectual
property, patents, patent applications, inventions, trade secrets, know-how, technology,
operations, business, business plans, business forecasts, marketing, product pricing, sales,
assets, liabilities, future prospects, customers, suppliers, manufacturing procedures, processes,
designs, equipment, personnel, research, production, formulations or products, which information
would, under the circumstances, (i) appear to a reasonable person to be confidential or
proprietary, or (ii) is designated by the Disclosing Party as being confidential or proprietary.
Except as otherwise provided in this Article VII and as contemplated by this Agreement, during the
term of this Agreement and for a period of five (5) years thereafter, such Confidential Information
shall not be disclosed, published or made accessible in any form by the Receiving Party or its
subsidiaries or Affiliates to any person, business, or entity at any time without the prior written
consent of the other Party. The restrictions on disclosure of Confidential Information set forth
above shall not apply
to any Confidential Information which the Receiving Party can demonstrate (i) was wholly and
independently developed by the Receiving Party without the use of Confidential Information of the
Disclosing Party, or (ii) is or has become generally known to the public without breach of this
confidentiality provision by the Receiving Party, or (iii) at the time of disclosure to the
Receiving Party was known to such Receiving Party free of restriction and evidenced by
documentation in such Receiving Party’s possession; or (iv) as may otherwise be required by law.
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7.2. Authorized Disclosure. Each Party may disclose Confidential Information received from
the other Party (a) to third parties under appropriate terms and conditions, including
confidentiality provisions substantially equivalent to this Article VII, for manufacturing or
external testing with respect to a Product and (b) to the extent such disclosure is reasonably
necessary in connection with submissions to regulatory authorities for purposes of this Agreement
or complying with applicable governmental regulations; provided, however, that in
the event of any proposed disclosure described in clause (b), the Disclosing Party will, except
where impracticable (e.g., medical emergencies) or where such disclosure is made for the purpose of
carrying out any obligation under this Agreement, give reasonable advance notice to the other Party
of such disclosure requirement and will use its reasonable efforts to secure confidential treatment
of the Confidential Information to be disclosed.
7.3. Public Announcements. Except to the extent required by applicable law or regulations or
to the extent the substance thereof has previously been reviewed and released by the Parties or is
in the public domain through no fault of the originating Party, neither Party shall make any
announcement, news release, public statement, publication or presentation regarding (i) the
material terms or performance of this Agreement, or (ii) the business relationship of the Parties
without the prior written consent of the other Party, which consent shall not be unreasonably
withheld. The Parties will consult with one another regarding the provisions of this Agreement to
be redacted in any filing made by the parties with regulatory agencies (e.g., Securities and
Exchange Commission) or as otherwise required by law. The Parties will use commercially reasonable
efforts to coordinate the initial announcement or press release relating to this Agreement such
that each Party’s initial announcement or press release may be made contemporaneously.
7.4. Signage. In consideration of the rights granted to SMI herein, SMI shall permit InnoZen
and its Affiliates to display company signage and Product brand signage and advertisement inside
and outside the offices and manufacturing facilities of SMI, provided that, all such
signage and advertisement is reasonable under the circumstances, does not interfere with SMI’s
signage or business operations, and is intended predominantly for the purpose of providing company
and brand recognition to customers and investors of InnoZen and its Affiliates that may, from time
to time, visit SMI.
VIII. TERMINATION
8.1. Termination for Breach.
(a) By SMI. SMI shall be entitled to terminate this Agreement by written notice to
InnoZen in the event that InnoZen shall be in material default of any of its obligations hereunder
and shall fail to remedy any such default within thirty (30) days after written notice thereof by
SMI.
(b) By InnoZen. InnoZen shall be entitled to terminate this Agreement by written
notice to SMI in the event that SMI shall be in material default of any of its obligations
hereunder and shall fail to remedy any such default within thirty (30) days after written notice
thereof by InnoZen.
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8.2. Effect of Termination. Termination of this Agreement shall not relieve either party of
its obligations incurred up to the date of termination. Except as otherwise provided in this
Agreement, upon termination, all rights in the Products, the Patent Rights and Licensed Technology
shall revert to and automatically be assigned to and owned by InnoZen. Upon termination, InnoZen
shall be the sole proprietor of all rights in the Products, the Patent Rights and the Licensed
Technology. Upon termination of this Agreement, no Party shall be relieved of any obligations,
including any liability for breach of this Agreement, incurred prior to such termination.
8.3. Survival of Obligations; Return of Confidential Information. Notwithstanding any
termination of this Agreement, the obligations of the Parties with respect to Confidential
Information (Article VIII), as well as any other provisions which by their nature are intended to
survive any such termination, shall survive and continue to be enforceable. Upon any termination of
this Agreement, each Party shall promptly return to each other Party all written Confidential
Information, and all copies thereof, of such other Party.
IX. INDEMNIFICATION
9.1. By SMI. SMI shall provide all proper safeguards and shall assume all risks in its
performance of this Agreement and shall indemnify and save InnoZen and its Affiliates, employees,
agents, representatives, directors, officers, members and shareholders harmless from and against
any and all loss, liability, damages, claims for damages, suits, recoveries, judgments or
executions, including costs, expenses and reasonable attorneys’ fees, that may be claimed asserted
or recovered against InnoZen by any person, firm or corporation whatsoever or whomsoever, on
account of any actual or alleged injury to person or property or death occurring to any person
whatsoever and arising out of: (i) any breach by SMI of any representation, warranty, covenant or
obligation under this Agreement, or (ii) the negligence, misrepresentations or misconduct of SMI,
its employees, or its Affiliates.
9.2. By InnoZen. InnoZen shall provide all proper safeguards and shall assume all risks in
its performance of this Agreement and shall indemnify and save SMI and its Affiliates, employees,
agents, representatives, directors, officers, members and shareholders harmless from and against
any and all loss, liability, damages, claims for damages, suits, recoveries, judgments or
executions, including costs, expenses and reasonable attorneys’ fees, that may be claimed asserted
or recovered against SMI by any person, firm or corporation whatsoever or whomsoever, on account of
any actual or alleged injury to person or property or death occurring to any person whatsoever and
arising out of: (i) any breach by InnoZen of any representation, warranty, covenant or obligation
under this Agreement, or (ii) the negligence, misrepresentations or misconduct of InnoZen, its
employees, or its Affiliates.
X. MISCELLANEOUS
10.1. Governing Law. This Agreement shall be governed by, and construed in accordance with
the laws of the United States of America and the State of California without regard to its rules
governing conflicts of law.
10.2. Waiver. The waiver by any Party of a breach or a default of any provision of this
Agreement by any other Party shall not be construed as a waiver of any succeeding breach of the
same or any other provision, nor shall any delay or omission on the part of a Party to
exercise or avail itself of any right, power or privilege that it has or may have hereunder operate
as a waiver of any right, power or privilege by such Party.
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10.3. Notices. Any notice or other communication in connection with this Agreement must be in
writing and if by mail, by certified mail, return receipt requested, and shall be effective when
delivered to the addressee at the address listed below or such other address as the addressee shall
have specified in a notice actually received by the addressor.
| If to InnoZen: | InnoZen, Inc. 0000 Xxxxxxxxxxxx Xxxxxx Xxxxxxxx Xxxxx, XX 00000 Attn: Xxxxxx Xxxxxxx Facsimile: 818.593.4808 |
|||
| If to SMI: | SMI, Inc. 0000 Xxxx 0xx Xxxxxx Xxxxx, XX 00000 Attn: Xxxxx Xxxxxx and Xxxx Xxxx |
10.4. Entire Agreement. This Agreement contains the full understanding of the Parties with
respect to the subject matter hereof and supersedes all prior understandings and writings relating
hereto. No waiver, alteration or modification of any of the provisions hereof shall be binding
unless made in writing and signed by the Parties.
10.5. Headings. The headings contained in this Agreement are for convenience of reference
only and shall not be considered in construing this Agreement.
10.6. Severability. In the event that any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any
relevant jurisdiction, the validity of the remaining provisions shall not be affected.
10.7. Assignment. Either Party shall have the right to transfer all of its rights under this
Agreement to any successor or assign of all, or substantially all, such Party’s assets or equity
interests; provided, however, that the proposed successor or assign agrees in
writing to remain bound by the terms of this Agreement. Other than as set forth above, neither
Party may assign its rights or obligations hereunder without the prior written consent of each
other Party.
10.8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their successors and permitted assigns.
10.9. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of such together shall constitute one and the same
instrument.
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10.10. No Partnership. This Agreement does not constitute and shall not be construed as
constituting an agency, partnership or joint venture relationship between SMI and InnoZen. Neither
SMI nor InnoZen shall have the right to obligate or bind the other party in any manner
whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind
to any third persons.
10.11. No Third-Party Beneficiaries. There are no third-party beneficiaries of this
Agreement.
10.12. Litigation Costs. In the event of any litigation arising out of or with respect to
this Agreement, the non-prevailing party shall pay the costs of the prevailing party including its
reasonable attorneys’ fees incurred in connection therewith through and including the costs of any
appeals and appellate costs relating thereto, and the reasonable attorneys’ fees and costs incurred
in connection with any bankruptcy proceeding.
10.13. Expenses in Connection with this Agreement. Each party shall bear their own costs and
expenses in connection with the negotiation, preparation, due diligence, and closing of this
Agreement.
10.14. Cooperation. Each party shall cooperate fully with the other party in carrying out the
terms of this Agreement and shall take any action or execute any document reasonably necessary to
effectuate the Agreement.
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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed in their name
by their properly and duly authorized officer or representative and this Agreement shall be
effective and create a binding obligation of such Party as of the date first above written.
| INNOZEN: INNOZEN, INC., a Delaware corporation |
||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxx | |||
| Title: | CEO | |||
| SMI: Supplemental Manufacturing & Ingredients LLC dba SMI Manufacturing, an Arizona limited liability company |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | CEO | |||
IN WITNESS WHEREOF, HealthSport, Inc., by its signature below and as of the date first above
written consents to InnoZen, Inc.’s execution of this Agreement and agrees to issue the shares of
HealthSport, Inc. common stock in accordance with the terms of Section 4.2 of this Agreement.
| HEALTHSPORT, INC., a Delaware corporation |
||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxx | |||
| Title: | Chairman | |||
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