EVALUATION AGREEMENT
THIS AGREEMENT is made as of this 23rd day of May, 1997 between ONTRO, INC.
of 00000 Xxxxxxxxx Xx., #000, Xxxxx XX 00000 ("Ontro") and NESTLE USA, INC. of
000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxxxxx, XX 00000 ("Nestle").
BACKGROUND
A. Ontro has developed a self-heating container for foods and beverages (the
"Container"), for which United States Patents Nos. 5,461,867 and 5,626,022 have
been granted and PCT Application WO 95/32656 has been filed, and has developed
technology relating to the functionality of the Container.
B. Ontro has requested Nestle to evaluate its possible commercial interest in
the Container, with the intent that if Nestle's evaluation of the Container is
favorable, the parties may negotiate an agreement under which Nestle would have
the right to utilize the Container in the production and sale of designated food
and/or beverage products. Nestle is willing to evaluate its commercial interest
in the Container on the terms and conditions set forth below.
IT IS AGREED as follows:
1. During the term of this Agreement, (i) Nestle will evaluate its interest in
the Container for use in packaging beverage and liquid food products, including
but not limited to infant formula (the "Product Categories") and (ii) Ontro will
not grant any right or license or enter into any agreement with respect to the
Container which would in any way prevent or restrict Ontro's ability to grant
Nestle the right to utilize the Container in the Product Categories.
2. To enable Nestle to carry out its evaluation, Ontro shall, promptly upon
execution of this Agreement,
(a) make a full disclosure to Nestle of all business and technical
information in Ontro's possession or under its control regarding the Container,
which may be reasonably required by or useful to Nestle in conducting its
evaluation of the Container, including, without limitation, specifications,
drawings, cost and pricing information, manufacturing information, suppliers,
economic studies and forecasts, patent enforcement and validity opinions, and
the like, provided, however, that Ontro shall not be obligated to disclose
information which it has received from third parties under conditions of
confidentiality;
(b) disclose to Nestle all information in Ontro's possession or under its
control regarding State and/or Federal regulatory petitions, requirements,
requests, exemptions,
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clearances, inquiries, and the like concerning the Container, its ingredients,
construction, or use;
(c) provide Nestle with a reasonable number of functional samples of the
Container, up to a maximum of 5,000 units, to enable Nestle to test the
functional effectiveness and storage and handling characteristics and stability
of the Container;
(d) make available for consultation with Nestle, upon Nestle's reasonable
request, during regular business hours, those officers, employees and
representatives of Ontro knowledgeable in the Container to freely discuss with
Nestle business and technical information concerning the Container. Such
consultations shall be at Ontro's offices in Poway, CA or at such other places
as Nestle may designate, provided that Nestle shall pay the travel and living
expenses of Ontro's personnel for meetings outside of Poway, CA.
3. A research study (the "Study") shall be established with the BASES group to
obtain (i) qualitative information regarding the concept of using the Container
in the packaging of foods and beverages and the pricing of Containers, and (ii)
quantitive information concerning sales volume potentials for foods and
beverages in the Product Categories packaged in the Containers. The protocol for
the Study shall be mutually agreed to by Ontro and Nestle, and Ontro and Nestle
shall each pay one-half of the cost of the Study. Ontro and Nestle shall both
be entitled to all information generated or provided from or as a result of the
Study.
4. All information disclosed by Ontro to Nestle pursuant to this agreement,
including the Containers, shall be subject to the confidentiality and limited
use provisions of the Confidential Disclosure Agreement of April 15, 1997
between the parties, provided that the information is identified as confidential
at the time of disclosure as provided in paragraph I of said agreement. Also,
the terms, conditions and exclusions set out in the Confidential Disclosure
Agreement regarding information disclosed by Ontro shall also apply to
information disclosed by Nestle to Ontro pursuant to this Agreement.
5. Nestle shall consult with Ontro from time to time during the course of its
evaluation of the Container, with regard to the status and current results of
its evaluation. Within thirty (30) days after the expiration or termination of
this Agreement, Nestle shall notify Ontro of the results of its evaluation of
the Container.
(a) If Nestle informs Ontro that as a result of its evaluation it desires
to acquire rights for the commercial use of the Container, the parties shall use
their reasonable best efforts to negotiate a mutually acceptable agreement for
Nestle's commercial use of the Container for the Product Categories.
(b) If Nestle informs Ontro that it has no interest in the commercial use
of the Container, Nestle shall promptly return to Ontro all information
regarding the Container disclosed to it by Ontro in written form as well as any
remaining Containers. Any analysis, compilations, studies or other documents
prepared by Nestle during the course of its evaluation,
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which contains Confidential Information of Ontro, will be destroyed.
6. The period of Nestle's evaluation of the Container shall be eight (8)
months from the date of this Agreement, or four (4) months from the date Ontro
provides Nestle with all samples of the Container reasonably required by Nestle
for shelf life and storage stability testing, whichever is last to occur.
7. The parties shall at all times be independent contractors and neither shall
have the right to act as the agent of the other in any respect. This Agreement
shall in no way constitute or give rise to a partnership, agency, or joint
venture between the parties.
8. This Agreement is only for the purpose of evaluation of the Container by
Nestle. No other right is granted by Ontro.
9. Any dispute relating to this Agreement shall be resolved in accordance with
the rules of the American Arbitration Association.
10. This Agreement, together with the Confidential Disclosure Agreement, sets
forth the entire understanding between the parties relating to the subject
matter hereof and supersedes all prior agreements and understandings between the
parties (whether written or oral) relating thereto. No modification shall be
effective unless made in writing and signed by a duly authorized representative
of each party.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
signed by its duly authorized representative.
ONTRO, INC. NESTLE USA, INC.
By By
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Title Title
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