EXHIBIT 10.3
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED BY MARKING SUCH
PORTIONS WITH ASTERISKS (THE "XXXX"). THIS EXHIBIT HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE COMMISSION WITHOUT THE XXXX PURSUANT TO THE COMPANY'S
APPLICATION REQUESTING CONFIDENTIAL TREATMENT.
SUPPLY & LICENSE AGREEMENT
This Supply & License Agreement (this "Agreement") is made and entered into
on January 29, 2002 (the "Effective Date"), by and between ADVANCED TISSUE
SCIENCES, INC., a Delaware corporation ("ATS"), and ADVANCED NUTRACEUTICALS,
INC., a California corporation ("Buyer").
WHEREAS, ATS is a leading tissue engineering company engaged in the
development of human-based tissue products for therapeutic applications;
WHEREAS, certain manufacturing processes of ATS produce a nutrient solution
with the properties described in Exhibit A hereto (the "ATS Nutrient
Solution,");
WHEREAS, Buyer wishes to obtain certain rights to use the ATS Nutrient
Solution in Buyer's nutraceutical products for sale in the Marketplace (as
defined below), and ATS is willing to grant such rights to Buyer and to supply
Buyer with ATS Nutrient Solution pursuant to the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises which are hereby
incorporated by reference herein and the terms, covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ATS and Buyer agree as follows:
1. DEFINITIONS
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1.1 "Affiliate" means any company owned or controlled to the extent of at
least fifty percent (50%) of its issued and voting capital by a party to this
Agreement and any other company so owned or controlled (directly or indirectly)
by any such company or the owner of any such company.
1.2 "ATS Patent Rights" shall mean those inventions described in claims of
the patent application(s) set forth on attached Exhibit 1.2, together with any
patents that may be issued on such patent applications and any amendment,
equivalent, foreign counterpart, reissue, re-exam or continuation of such
patents.
1.3 "ATS Nutrient Solution" has the meaning set forth in the Recitals
above.
1.4 "Buyer's Product" means and nutraceutical or nutritional supplement
product of Buyer containing the ATS Nutrient Solution as described on Exhibit B.
1.5 "Contract Term" means the period commencing on the Effective Date and
ending on the earlier of (i) June 30, 2007, unless this Agreement is renewed in
accordance with Section 7.1 in which case, the expiration of the Renewal Term
then in effect, or (ii) the date on which this Agreement is terminated pursuant
to Section 7 hereof.
1.6 "Contract Year" means each twelve (12) month period of the Contract
Term commencing on July 1st and ending the following June 30th The "First
Contract Year" means the twelve (12) month period commencing July 1, 2002 and
ending June 30th, 2003; the "Second Contract Year" means the twelve (12) month
period commencing July 1st, 2003 and ending June 30th, 2004; etc.
1.7 "Delivery Date" means an acknowledged and confirmed date for which
delivery of ATS Nutrient Solution is properly requested in a purchase order.
1.8 "Effective Date" has the meaning set forth in the preamble to this
Agreement.
1.9 "FDA" means the United States Food and Drug Administration or any
successor agency or authority, the approval of which is required to market
healthcare products in the United States.
1.10 "First Commercial Sale" means the first commercial sale by Buyer or
its sublicensees (if any) of any Buyer's Product.
1.11 "Intellectual Property Rights" means Patent rights, copyrights, trade
secret rights and all other intellectual property rights of any sort.
1.12 "Inventions" means all inventions, discoveries, improvements or other
technology conceived or reduced to practice during the Contract Term solely or
jointly by employees or others acting on behalf of Buyer or ATS or their
Affiliates to the extent relating to ATS Nutrient Solution, the Manufacturing
Know-How or any improvements thereto.
1.13 "Manufacturing Know-How" means all information, techniques, practices,
methods, knowledge, skill and data, which are not generally known including, but
not limited to, a proprietary "trade secret" or other Intellectual Property
Rights, whether or not patentable or copyrightable, relating to or useful for
the production, assembly, manufacture, storage and/or transport of ATS Nutrient
Solution.
1.14 "Marketplace" means the direct response market, all owned, franchised
or licensed anti-aging centers as well as the retail market, subject to payment
of the retail exclusivity fee). The marketplace does not include the multi level
market or professional market (other than the anti-aging centers).
1.15 "Patent(s)" means all patents, both foreign and domestic (including
without limitation, all substitutions, extensions, reissues, renewals,
registrations, confirmations, reexaminations, patents of addition, supplementary
protection certificates and inventors' certificates thereof), and all patent
applications (including provisional applications, divisionals, continuations and
continuations-in-part), heretofore or hereafter filed or having any legal force
in any country, together with any patents that have issued or in the future
issue therefrom.
1.16 "Territory" shall mean worldwide.
2. LICENSE.LICENSE GRANTS. Subject to the terms and conditions of this
----------------------
Agreement, and to the extent necessary to facilitate the supply agreement set
forth in Section 3, below, ATS hereby grants to Buyer, under the ATS Patent
Rights (excluding those relating to any Inventions), a limited, nontransferable,
nonassignable, nonsublicensable (except as permitted in this Section 2.1 and
Section 4.2), terminable, exclusive license for the Contract Term and solely
within the Territory, to use the ATS Nutrient Solution (i) solely in the
Marketplace and solely as an ingredient in nutraceutical products; (ii) to sell,
offer for sale, market and distribute the ATS Nutrient Solution as included in
the Buyer's Product in the Marketplace; and (iii) to sell, offer for sale,
market and distribute the ATS Nutrient Solution as an ingredient in Buyer's
Product to end users ("License"). The License set forth above will only be
sublicensable with ATS' prior written approval, which approval shall not be
unreasonably withheld.
2.1 Retained Rights. This Agreement will not prevent ATS from licensing
---------------
the ATS Nutrient Solution for use and sale outside of the Marketplace or outside
the Territory. Nothing herein shall be
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construed as limiting in any manner ATS' marketing, distribution, development or
licensing activities or ATS' appointment of other dealers, distributors,
licensees or agents for sale or use of ATS Nutrient Solution or other ATS
products outside of the Marketplace. Except for the License granted to Buyer
hereunder, as between the parties, ATS retains all right, title and interest in
and to the Intellectual Property Rights (including without limitation, the ATS
Patent Rights) covering the ATS Nutrient Solution.
2.2 Inventions. Buyer agrees to promptly disclose any Invention conceived
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or reduce to practice by Buyer (or any employee or other party acting on behalf
of Buyer) during the Contract Term related to the ATS Nutrient Solution.
Notwithstanding anything to the contrary contained herein, Buyer understands and
agrees that it shall have no right or license to use any such Inventions (or any
Intellectual Property Right of ATS covering such Inventions) without obtaining
the prior written consent of ATS, which consent may be withheld in ATS' sole
discretion. In the event that ATS grants its written consent to Buyer to use
such Inventions, the use of such Inventions by Buyer shall be subject to the
license terms and conditions set forth in such written consent.
3. SALE AND PURCHASE OF ATS NUTRIENT SOLUTION.
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3.1 Exclusive Supplier Arrangement.
------------------------------
3.1.1 Subject to the provisions of Section 7 hereof, so long as this
Agreement shall remain in effect, Buyer agrees to satisfy solely through Buyer's
purchase of the ATS Nutrient Solution under this Agreement, 100% of Buyer's and
Buyer's sublicensees' (if any) requirements of solutions containing ingredients
substantially similar to the ATS Nutrient Solution and that it shall not (and
shall cause its sublicensees, if any, not to), directly or indirectly, use, sell
offer for sale, market or distribute any solution competitive with the ATS
Nutrient Solution.
3.1.2 Subject to the terms and conditions of this Agreement
(including, without limitation, Section 5.1), ATS shall not during the Contract
Term sell ATS Nutrient Solution or any other substantially similar solution to
any non-Affiliate third party for use as an ingredient for nutraceuticals within
the Marketplace within the Territory ("Supply Restriction"). ATS, within the
limitations contained in this Section 3, agrees to use commercially reasonable
efforts to sell to Buyer such quantities of ATS Nutrient Solution as Buyer may
require during the Contract Term. It is understood that ATS shall have the right
in connection with its supply obligations hereunder to contract with respect to
the manufacture of the ATS Nutrient Solution with such third parties as ATS
deems advisable in its sole discretion.
3.2 Quantity; Forecasts.
--------------------
3.2.1 With respect to the purchase of the ATS Nutrient Solution under
this Section 3, Buyer shall deliver to ATS: (i) a rolling twelve (12) month
forecast of Buyer's quantity requirements for ATS Nutrient Solution on the first
day of each calendar quarter, with the first calendar quarter commencing on July
1, 2002; and (ii) at least at the beginning of one (1) full calendar quarter
prior to the calendar quarter in which the First Commercial Sale is projected to
occur, Buyer's firm purchase order and Delivery Dates for ATS Nutrient Solution
for such calendar quarter, which shall be subject to acceptance by ATS, which
acceptance shall not be unreasonably withheld. Thereafter, Buyer shall deliver
to ATS at the beginning of each calendar quarter, Buyer's firm purchase order
and Delivery Date for ATS Nutrient Solution for the next calendar quarter
following such calendar quarter, which shall be subject to acceptance by ATS,
which acceptance shall not be unreasonably withheld. If a required forecast or
purchase order for a quarter is not timely submitted for the ATS Nutrient
Solution, the immediately preceding forecast for that quarter shall become the
new forecast or purchase order; if there
-3-
is no preceding forecast for a quarter, the forecast or purchase order for the
immediately preceding quarter shall become the forecast or purchase order.
3.2.2 For each forecast of ATS Nutrient Solution following the first
such forecast delivered by Buyer, the amount of any ATS Nutrient Solution
forecasted for delivery in the first quarter of the four (4) calendar quarters
forecasted shall not be less then seventy percent (70%) nor more than one
hundred thirty percent (130%) of the most recent previous forecast for such
quarter. In addition, no firm purchase order for a particular quarter shall
cover an amount of ATS Nutrient Solution greater than one hundred twenty-five
percent (125%) or less than seventy-five percent (75%) of the amount of ATS
Nutrient Solution ordered for the previous quarter.
3.2.3 The total amount of ATS Nutrient Solution ordered by Buyer for
delivery in any calendar quarter for which a purchase order is required may not
be less than seventy-five percent (75%) of Buyer's most recent forecast of its
requirements for ATS Nutrient Solution for such quarter. In addition, ATS will
not be obligated to supply more than one hundred twenty-five percent (125%) of
Buyer's most recent forecast of its requirements for ATS Nutrient Solution for
such quarter. If Buyer's ATS Nutrient Solution requirement for any quarter
exceeds 125% of Buyer's most recent forecast of its requirements for ATS
Nutrient Solution for such calendar quarter, ATS and Buyer will discuss in good
faith the additional amount, if any, which ATS is willing to accept to supply
consistent with its other obligations and Buyer will adjust its purchase order
accordingly. Buyer shall indemnify ATS and reimburse it promptly upon request
for all reasonable out-of-pocket costs and expenses, including the cost of
carrying increased inventory, to the extent caused by any deviation in order
quantities from the limits imposed by the preceding sentence, and ATS will act
reasonably to mitigate any such costs and expenses.
3.2.4 Buyer's forecasts and purchase orders shall reflect its good
faith expectations of customer demand and Buyer shall act in a commercially
reasonable manner to schedule orders to avoid creating production capacity
problems for ATS as determined in the sole discretion of ATS.
3.2.5 Notwithstanding the foregoing, in the event that the total
aggregate amount of ATS Nutrient Solution for which firm purchase orders have
been received by ATS from all of ATS' customers (including Buyer) in any quarter
is greater than ATS' available inventory of ATS Nutrient Solution for such
quarter, then Buyer shall be entitled only to its pro-rata portion of the
available ATS Nutrient Solution as determined by multiplying the amount of ATS
Nutrient Solution for which firm purchase orders have been received by ATS from
Buyer for such quarter by a fraction, the numerator of which is the amount of
ATS Nutrient Solution for which firm purchase orders have been received by ATS
from Buyer for such quarter and the denominator of which is the aggregate total
of ATS Nutrient Solution for which firm purchase orders have been received by
ATS from all of ATS' customers (including Buyer) for such quarter.
3.3 Supply Price.
------------
3.3.1 The purchase price for the Nutrient Solution shall be the higher
of [** ] per liter or [** ] of
the net selling price (price received by Buyer less returns and allowances) for
the Buyer's Product. A price adjustment payment will be made thirty (30) days
after the end of each quarter to reflect the difference between the actual
revenue due ATS for the quarter based on the above formula and the minimum paid
at the beginning of each quarter.
3.3.2 After annual gross revenues of the Buyer's Product exceed [**
] the purchase price for the Nutrient Solution shall
be the higher of [** ] per liter or [**
] of the net selling price (price received by Buyer less returns and
allowances) for Buyer's Product in the retail market.
-4-
3.3.3 Buyer would agree to minimum quarterly purchases of ATS Nutrient
Solution payable in advance of the applicable quarter (no later than June 30th,
September 30th, December 31st, March 31st preceding such quarter) as follows :
Year One (7/01/02 - 6/30/03)
Quarter 1 commencing 7/01/02 $750,000
Quarter 2 commencing 10/01/02 $1,000,000
Quarter 3 commencing 1/01/03 $1,000,000
Quarter 4 commencing 4/01/03 $1,500,000
Year Two (7/01/03 - 6/30/04)
$1,800,000 per quarter
Year Three (7/01/04 - 6/30/05)
$2,400,000 per quarter
Year Four (7/01/05 - 6/30/06)
$3,000,000 per quarter
Year Five (7/01/06 - 6/30/07)
$3,600,000 per quarter
The exclusivity minimum for any renewal terms shall be the per quarter amount
for the fifth year adjusted annually by the Consumer Price Index for that year.
3.3.4 After the Initial Contract Term, ATS shall have the right once
annually, at its sole discretion, to adjust the Purchase Price for the ATS
Nutrient Solution provided that such adjustment shall not exceed the increase in
the consumer price index for the prior year.
3.3.5 Buyer shall pay to ATS the Purchase Prices for the ATS Nutrient
Solution within thirty (30) days of the date of ATS' invoice to Buyer therefor.
3.4 Retail Exclusivity Fee. Upon the launch of the Buyer's Product in the
----------------------
retail market (to be defined as the initial sale of product to a third party
distributor and/or marketing partner in the retail market), Buyer shall pay ATS
a non-refundable retail exclusivity fee of five hundred thousand dollars
($500,000).
3.5 Delivery.
--------
3.5.1 All ATS Nutrient Solution delivered to Buyer shall be F.O.B.
ATS' plant or other place of shipment as determined by ATS. ATS shall use its
commercially reasonable efforts to deliver the ATS Nutrient Solution within ten
(10) days of the applicable Delivery Dates and, upon Buyer's reasonable request,
shall assist Buyer, at Buyer's sole cost and expense, in arranging any desired
insurance (in amounts that Buyer shall determine) and transportation, via air
freight unless otherwise specified in writing, to any destinations specified in
writing from time to time by Buyer (subject to Section 11.12). All customs,
duties, costs, taxes, insurance premiums and other expenses relating to such
transportation and delivery shall be at Buyer's expense.
3.5.2 ATS shall use the packaging methods and containers as determined
by ATS unless Buyer provides to ATS written specifications therefor, in which
case, if such packaging and
-5-
container specifications are acceptable to ATS, ATS shall, at Buyer's additional
cost and expense, use such specified packaging methods and containers.
3.6 Rejection of ATS Nutrient Solution in Case of Nonconformity.
-----------------------------------------------------------
3.6.1 Subject to Section 3.5.2 hereof, Buyer may reject any portion of
any shipment of ATS Nutrient Solution which is not conforming in all material
respects with the specifications contained in Exhibit A hereto. In order to
reject a shipment, Buyer must (i) give written notice to ATS of Buyer's intent
to reject the shipment within fifteen (15) days of receipt of the ATS Nutrient
Solution together with a detailed written indication of the reasons for such
possible rejection, and (ii) as promptly as reasonably possible thereafter but
in any event within an additional thirty (30) days, provide ATS with written
notice of final rejection and the full basis therefor. After notice of intention
to reject is given, Buyer shall fully cooperate with ATS in ATS' determination
of whether rejection is necessary or justified. If no such written notice of
intent to reject is timely received by ATS, Buyer shall be deemed to have
accepted such shipment of ATS Nutrient Solution for all intent and purposes.
3.6.2 If ATS disagrees with any alleged nonconformity, then an
independent laboratory (or other expert) of recognized repute, selected by ATS
and reasonably acceptable to Buyer, shall analyze a sample or such other
portions of a shipment, furnished by Buyer from the shipment received by Buyer,
as may be necessary to substantiate whether the shipment rejected by Buyer
conformed (or not) to the specifications. The laboratory (or expert) shall use
such procedures and tests as the laboratory may consider necessary or
appropriate to reach a conclusion. Both parties agree to cooperate with the
independent laboratory's reasonable requests for assistance in connection with
its analysis hereunder. Both parties shall be bound by the laboratory's results
of analysis, which, absent manifest error, shall be deemed final as to any
dispute over compliance of the shipment of ATS Nutrient Solution with the
specifications. The costs incurred by the laboratory shall be borne by the
losing party. If the independent laboratory determines that the shipment of ATS
Nutrient Solution is conforming, then Buyer shall be responsible for the
purchase price for the allegedly nonconforming shipment of ATS Nutrient
Solution, as well as, upon receipt and acceptance by Buyer in accordance with
the procedures (and at the same price charged in the original shipment) set
forth herein, the replacement shipment of ATS Nutrient Solution.
3.6.3 On properly rejected ATS Nutrient Solution ATS shall provide
replacement ATS Nutrient Solution at the time it is ultimately rejected,
provided that if ATS disputes the rejection, replacement shall be made, if at
all, at the time the dispute is finally resolved in accordance with Section
3.5.2. ATS shall notify Buyer as promptly as reasonably possible whether it
accepts Buyer's basis for rejection.
3.6.4 Buyer shall, upon receipt of ATS' request for return, promptly
dispatch said batch to ATS, at ATS' cost. If ATS does not request the return to
it of a rejected batch within ninety (90) days of receipt of Buyer's notice of
rejection, Buyer shall destroy such batch promptly and provide ATS with written
certification of such destruction.
3.7 Buyer's Obligations. Buyer agrees:
-------------------
3.7.1 to ascertain and comply with all applicable laws and regulations
and standards of industry or professional conduct (including without limitation
the FDA and any agency outside of the United States which is comparable to the
FDA) in connection with the use, distribution and/or promotion of the ATS
Nutrient Solution as contemplated herein, including without limitation, those
applicable to exportation, importation, product claims, labeling, approvals,
registrations and notifications;
-6-
3.7.2 to obtain and maintain at its sole expense any applicable
approvals, authorizations, registrations, notifications or the like, in the
United States and any countries where such approvals are legally required, by
the appropriate governmental entity or entities with regard to the use of the
ATS Nutrient Solution as contemplated under this Agreement and the marketing,
using, selling, pricing, labeling or otherwise promoting or making claims
regarding the ATS Nutrient Solution or their uses or reimbursement therefor in
the Marketplace. Buyer acknowledges and agrees that its right under this
Agreement to commercialize the ATS Nutrient Solution as an ingredient for
nutraceuticals is subject to completion of regulatory review and clearance if
any are required by applicable law. Buyer shall not file any application or
document or conduct any study associated with obtaining or maintaining such
approvals, authorities, registrations, notifications or the like without ATS'
prior written consent, which consent shall not be unreasonably withheld. To the
extent allowed by law (i) all approvals, authorizations, registrations,
notifications and the like (and all documents, applications and information
related thereto) and all rights thereunder or thereto relating to the ATS
Nutrient Solution shall be solely owned by and in the name of ATS, and (ii) all
approvals, authorizations, registrations, notifications, and the like (and all
documents, applications and information related thereto) and all rights
thereunder or thereto relating to the Buyer's Product shall be solely owned by
and in the name of Buyer. Buyer will provide ATS with any information regarding
the foregoing that ATS may request reasonably (with English translations);
3.7.3 to immediately notify ATS of any adverse or unexpected results,
any complaints about the Buyer's Products and the use of the ATS Nutrient
Solution as contemplated under this Agreement or any actual or potential
government action relevant to the Buyer's Products and the use of the ATS
Nutrient Solution as contemplated under this Agreement (but in no event later
than twenty-four (24) hours after any such government action) and, if and to the
extent requested by ATS in writing, to suspend use and distribution of the ATS
Nutrient Solution;
3.7.4 to keep (and make reasonably available for ATS' use and copying)
for five (5) years after termination of this Agreement (or longer if required by
applicable law) records of all sales of ATS Nutrient Solution sufficient to
adequately administer a recall of any ATS Nutrient Solution and to cooperate
fully in any decision by ATS to recall the ATS Nutrient Solution;
3.7.5 that upon termination of the license set forth in Section 2.1,
if Buyer has any right, title or interest in any approvals, authorizations,
registrations, notifications and the like (and all documents, applications and
information related thereto) referred to in Sections 3.6.1 or 3.6.2 related to
the ATS Nutrient Solution it will immediately assign all such right, title and
interest to ATS and take all necessary action to ensure that ATS obtains the
full benefit thereof or, if ATS so requests in writing with respect to any such
item, take any necessary action to surrender and cancel such item and the
related rights, title and interest;
3.7.6 except as limited by applicable law, Buyer shall not, directly
or indirectly, sell the ATS Nutrient Solution to any third party outside of or
for use outside of the Marketplace; and
3.7.7 to provide to ATS and make available for ATS (and/or its
Affiliates) to use, all clinical and other data generated by Buyer related to
the ATS Nutrient Solution, including without limitation, information related to
the use of ATS Nutrient Solution as a nutraceutical ingredient.
3.8 ATS' Obligations. ATS agrees:
----------------
3.8.1 to immediately notify Buyer of any actual or potential
government action relevant to ATS Nutrient Solution;
-7-
3.8.2 to provide available data to Buyer related to ATS Nutrient
Solution and to provide for the use of such data by Buyer to the extent the
control and use of such data is within ATS' control;
3.8.3 to provide Buyer, at no cost to Buyer, reasonable quantities of
the ATS Nutrient Solution to undertake Buyer's evaluation; and
3.8.4 that all decisions related to the suitability of the ATS
Nutrient Solution for Buyer's intended use remain with Buyer including decisions
related to the sale and marketing of Buyer's Product.
3.9 Mutual Obligations.
------------------
3.9.1 ATS agrees to promptly communicate in writing to Buyer all
information that comes to its attention pertaining to any adverse reaction,
product anomalies, stability problems or complaints having a material bearing on
the ATS Nutrient Solution. Buyer agrees to promptly communicate in writing to
ATS all information which comes to its attention pertaining to any adverse
reactions, product anomalies, stability problems or complaints relative to or
having a bearing on the ATS Nutrient Solution alone or used in Buyer's Product.
Buyer and ATS shall each use commercially reasonable efforts to cooperate and to
promptly identify and resolve any such problems. In the event of a recall of any
batch(es) of any of ATS Nutrient Solution solely as a result of deficiencies in
the ATS Nutrient Solution (unmodified and unadulterated as delivered to Buyer by
ATS hereunder), ATS shall bear the expense of such recall. In all other events,
Buyer shall bear the expense of such recall.
3.9.2 Each party shall maintain in full force and effect all necessary
licenses, permits and other authorizations required by law to carry out its
duties and obligations under this Agreement. Each party shall comply with all
laws, ordinances, rules and regulations (collectively, "Laws") applicable to its
activities under this Agreement. Buyer and ATS each shall keep all records and
reports required to be kept by applicable Laws. The parties will reasonably
cooperate with one another with the goal of ensuring full compliance with Laws,
including without limitation providing such letters, documentation and other
information on a timely basis as the other party may reasonably require to
fulfill its reporting and other obligations under applicable Laws to applicable
regulatory authorities. Except for such amounts as are expressly required to be
paid by a party to the other under this Agreement, each party shall be solely
responsible for any costs incurred by it to comply with its obligations under
applicable Laws.
3.9.3 Buyer and ATS each hereby agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or proper to make effective the
transactions contemplated by this Agreement, including such actions as may be
reasonably necessary to obtain approvals and consents of governmental or other
regulatory authorities; provided, however, that no party shall be required to
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(i) pay money (other than as expressly required pursuant to this Agreement), or
(ii) assume any other material obligation not otherwise required to be assumed
by this Agreement.
3.10 Limitation of Liability. ATS' LIABILITY FOR DAMAGES FROM ANY CAUSE OF
-----------------------
ACTION WHATSOEVER RELATING TO ATS' AGREEMENT TO SUPPLY TO BUYER SUCH QUANTITIES
OF ATS NUTRIENT SOLUTION AS BUYER MAY REQUIRE SHALL BE LIMITED TO THE AMOUNT
PAID BY BUYER FOR THE ATS NUTRIENT SOLUTION FOR THE PRIOR CONTRACT YEAR.
3.11 Method of Payment. Except as otherwise set forth in this Agreement or
-----------------
directed by ATS in writing to Buyer, all payments due under this Agreement to
ATS shall be paid by Buyer to ATS by
-8-
wire transfer of immediately available United States dollars in the requisite
amount to such bank account as ATS may from time to time designate by notice to
Buyer.
3.12 Pricing Adjustment. ATS agrees that in the event ATS enters into an
-----------------
agreement with a third party for sale of the Nutrient Solution for a
nutraceutical application on financial terms that are more favorable to such
third party than the terms offered to Buyer hereunder, that ATS will adjust the
terms of this Agreement with Buyer to be equivalent to the terms offered to such
third party.
4. COMMERCIALIZATION, MARKETING AND PROMOTION
------------------------------------------
4.1 Commercialization. Except as described elsewhere in this Section 4,
-----------------
all decisions regarding commercialization, including without limitation, pricing
and terms of sale with respect to the ATS Solution in connection with
nutraceuticals including safety and efficacy, shall be determined by Buyer in
its sole discretion. Buyer agrees to use diligent efforts to promote and market
the ATS Nutrient Solution this Agreement during the Contract Term. Buyer
acknowledges that its ability to commercialize the ATS Nutrient Solution is
limited to the Marketplace.
4.2 Marketing Partners. With ATS' prior written consent (which shall not
------------------
be unreasonably withheld), Buyer shall have the right to appoint one or more
third-party marketing partners to promote, co-promote, distribute, market or
co-market the ATS Nutrient Solution within the Marketplace in the Territory in
accordance with the License granted to Buyer in Section 2.1.
4.3 Use of Names and Marks. Buyer agrees that Buyer and its affiliates and
----------------------
licensees would not use ATS's name or trademarks in the advertising or
commercialization of any product or disclose ATS's involvement in any way other
than as required by law. ATS agrees that ATS and its affiliates and licensees
would not use Buyer's name or trademarks in the advertising or commercialization
of any product or disclose Buyer's involvement in any way other than as required
by law.
4.4 Promotional Material. In addition to the obligations set forth in
--------------------
Section 4.3, Buyer agrees to deliver to ATS, upon ATS' request, copies of all
advertising, promotional and other printed materials used in connection with the
promotion, marketing and sale of Buyer's Product containing the ATS Nutrient
Solution.
4.5 Marketing Development. ATS shall, for the Contract Term, commit five
---------------------
(5) hours of one (1) appropriate, as determined by ATS, individual personnel of
ATS per month to support studies and other market development activities of
Buyer relating to ATS Nutrient Solution, which activities shall be subject to
the prior written approval of ATS.
5. EXCLUSIVITY & LICENSE MINIMUMS.
------------------------------
5.1 Exclusivity Threshold. Beginning July 1, 2002, in the event that Buyer
---------------------
does not purchase quantities of ATS Nutrient Solution equal to or greater than
the minimums under Section 3.3.3 (the "Exclusivity Threshold", then the Supply
Restriction imposed on ATS pursuant to Section 3.1.2 shall automatically become
null and void and of no further force or effect for the remainder of the
Contract Term and ATS shall have the right at its option to convert the
agreement to non-exclusive, effective upon notice to Buyer and following a
ninety (90) day period to cure such failure.
5.2 Supply & License Agreement Threshold. In the event Buyer does not
------------------------------------
purchase quantities of ATS Nutrient Solution equal to at least sixty percent
(60%) of the Exclusivity Threshold (the "Supply
-9-
& License Agreement Threshold") then ATS shall have the right at its option to
terminate the Agreement, effective upon notice to Buyer and following a ninety
(90) day period to cure such failure.
6. INFORMATION AND REPORTING OBLIGATIONS
-------------------------------------
6.1 Sales Reports. Buyer will provide a report to ATS no later than the
-------------
tenth (10th) business day of each month starting on the month following the
month during which the First Commercial Sale took place, which report shall show
(a) the quantity of ATS Nutrient Solution sold by Buyer during the prior month,
(b) the retail price charged for such ATS Nutrient Solution sold, and (c) the
gross revenue generated from such sale.
6.2 Records. Buyer shall keep books and records accurately showing the use
-------
and sale of ATS Nutrient Solution under the terms of this Agreement for a period
of two (2) years following the calendar year in which the treatment was made.
Upon written request and after reasonable notice, Buyer shall permit an
independent, nationally recognized certified public accountant selected by ATS
("Accountant") to inspect such books and records after notice at reasonable
times for the purpose of verifying the accuracy of the monthly reports and the
payments due; provided, however, there shall not be more than two (2) such
inspections per calendar year. The fees and expenses of the Accountant
performing such an examination shall be borne by ATS; provided, however, that if
errors of two percent (2%) or more in ATS' favor are discovered as a result of
such examination, Buyer shall reimburse ATS for the fees and expenses of such
examination and pay the deficiency (with interest) immediately. As a condition
to such examination, the Accountant shall execute a written agreement,
reasonably satisfactory in form and substance to Buyer, to maintain in
confidence all information obtained during the course of any such examination
except for disclosure to ATS as necessary for the above purpose. The opinion of
the Accountant shall be binding on the parties hereto.
6.3 Business Update. Buyer shall provide to ATS, either in person or in
---------------
writing, a business update no less than quarterly providing to ATS information
relating to the performance of the business as well as any known or anticipated
changes in the business performance or outlook.
7. TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
----------------------------------------------------
7.1 Term. Unless terminated by ATS pursuant to Section 5.1 of this
----
Agreement, or either party pursuant to this Section 7, this Agreement shall
commence on the Effective Date and continue in effect until June 30, 2007 (the
"Initial Term"). At the option of Buyer and provided that the Exclusivity
Threshold is satisfied by Buyer during the Initial Term and each Renewal Term
(as defined below) hereof, Buyer shall have the option (the exercise of which
shall be made by Buyer providing written notice to ATS thereof no later than one
hundred and eighty (180) days prior to the expiration of the Initial Term or any
Renewal Term then in effect) to renew this Agreement for two (2) subsequent
three (3) year terms (each, a "Renewal Term") following the Initial Term.
7.2 Termination by ATS. In the event the First Commercial Sale does not
------------------
occur on or before November 1, 2002, ATS may terminate this Agreement at any
time before December 1, 2002 with thirty (30) days prior written notice.
7.3 Termination by Buyer. Buyer may terminate this Agreement upon written
--------------------
notice to ATS at any time prior to June 30, 2002 if the results of Buyer's
safety and clinical studies do not support the commercialization of Buyer's
Product, such determination to be made in Buyer's reasonable discretion.
7.4 Termination for Default. If either party materially defaults in the
-----------------------
performance of any material agreement, condition or covenant of this Agreement,
and such default or noncompliance shall not
-10-
have been remedied, or steps initiated to remedy the same to the other party's
reasonable satisfaction, within ninety (90) days (or ten (10) days in the case
of non-payment) after receipt by the defaulting party of a notice thereof from
the other party, the party not in default may terminate this Agreement.
7.5 Failure to Meet Minimum Thresholds. Buyer's failure to meet the Supply
----------------------------------
and License Agreement Threshold set forth in Section 5.2 of this Agreement shall
permit ATS to terminate this Agreement as set forth therein.
7.6 Rights and Obligations on Expiration or Termination. Except to the
---------------------------------------------------
extent expressly provided to the contrary, the following provisions shall
survive the termination of this Agreement: Sections 3.6.3-3.6.7, Section 3.9,
Section 5, Section 6, Section 7.7, Section 8, Section 9 and Section 11. Any
rights of ATS to payments accrued through termination as well as obligations of
the parties under firm purchase orders for purchase and delivery of ATS Nutrient
Solution at the time of such termination shall remain in effect, except that in
the case of termination under Section 7.5, ATS may elect whether obligations
under firm purchase orders will remain in effect. ATS shall have the option, in
its sole discretion, to repurchase from Buyer all or any portion of Buyer's
remaining inventory of ATS Nutrient Solution at the Purchase Price paid by Buyer
(the "Repurchase Right"). If ATS does not exercise its Repurchase Right or does
not repurchase all of Buyer's inventory of ATS Nutrient Solution within thirty
(30) days of termination of this Agreement, then Buyer shall, at ATS' written
request, destroy all remaining inventory of ATS Nutrient Solution. Upon
termination or expiration of this Agreement, each party shall cease all use of
the Confidential Information of the other party and, at the direction of the
other party, either return to the other party or destroy any and all such
Confidential Information.
8. CONFIDENTIALITY; OWNERSHIP
--------------------------
8.1 Confidentiality.
---------------
8.1.1 Nondisclosure and Nonuse Obligations. Except as otherwise
------------------------------------
provided in this Section 8, each party shall maintain in confidence, and use
only for purposes of this Agreement, all Confidential Information of the other
party. "Confidential Information" of Buyer shall mean all chemical formulas,
names and expertise of employees and consultants, know-how, formulas, processes,
ideas, inventions, schematics, and other business, financial, customer and
product development plans, forecasts, strategies and information and data,
whether disclosed prior to or after the date of this Agreement and whether
disclosed in written, electronic or oral form, by Buyer to ATS under this
Agreement and marked "Confidential." "Confidential Information" of ATS shall
mean all cell lines, biological materials, chemical formulas, names and
expertise of employees and consultants, know-how, formulas, processes, ideas,
inventions, schematics, and other business, financial, customer and product
development plans, forecasts, strategies and information and data, whether
disclosed prior to or after the date of this Agreement and whether disclosed in
written, electronic or oral form, (a) that constitutes, embodies or relates to
any portion of ATS Nutrient Solution, or (b) all cell lines, biological
materials, chemical formulas, names and expertise of employees and consultants,
know-how, formulas, processes, ideas, inventions, schematics, and other
business, financial, customer and product development plans, forecasts,
strategies and information and data not described in clause (a) above but
supplied by ATS to Buyer under this Agreement and marked "Confidential."
8.1.2 Permitted Disclosures. To the extent it is reasonably necessary
---------------------
or appropriate to fulfill its obligations or exercise its rights under this
Agreement, (i) a party may disclose Confidential Information it is otherwise
obligated under this Section 8.1 not to disclose to its Affiliates,
sublicensees, consultants, outside contractors and clinical investigators, on a
need-to-know basis, provided that such persons have entered into a written
agreement obligating them to keep the Confidential Information confidential and
not use the Confidential Information for the same time periods and to the same
extent as
-11-
such party is required under this Agreement; and (ii) a party may disclose such
Confidential Information to government or other regulatory authorities to the
extent that such disclosure is required by applicable law, regulation or court
order, or is reasonably necessary to obtain Patents or authorizations to conduct
clinical trials with, and to commercially market the Licensed Product, provided
that the disclosing party shall provide written notice to the other party and
sufficient opportunity to object to such disclosure or to request confidential
treatment thereof.
8.1.3 Information that is Not Confidential. The obligation not to
------------------------------------
disclose or use Confidential Information shall not apply to any part of such
Confidential Information that (i) is or becomes patented, published or otherwise
part of the public domain other than by acts of the party obligated not to
disclose such Confidential Information or its Affiliates, sublicensees,
consultants, outside contractors or clinical investigators in contravention of
this Agreement; (ii) is disclosed to the receiving party or its Affiliates,
sublicensees, consultants, outside contractors or clinical investigators by a
third party, provided such Confidential Information was not obtained by such
third party directly or indirectly from the other party under this Agreement on
a confidential basis; or (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates,
sublicensees, consultants, outside contractors or clinical investigators,
provided such Confidential Information was not obtained directly or indirectly
from the other party under this Agreement. Notwithstanding the foregoing, all
Confidential Information designated as owned by or assigned to a party in
connection with this Agreement shall be deemed Confidential Information of such
party and exception (iii) above will not be applicable thereto.
8.1.4 Injunctive Relief. Each party acknowledges and agrees that due
-----------------
to the unique nature of the other's Confidential Information, there can be no
adequate remedy at law for any breach of its obligations under this Section 8.1
and, therefore, that upon any such breach or threat thereof, the other party
shall be entitled, notwithstanding anything to the contrary in this Agreement,
to injunctive relief and other appropriate equitable relief in addition to
whatever remedies it may have at law from any court of competent jurisdiction in
any jurisdiction authorized to grant the relief necessary to prohibit the breach
or threatened breach.
8.1.5 Terms of this Agreement. Buyer shall not disclose any terms or
-----------------------
conditions of this Agreement to any third party without the prior consent of
ATS, except as required by applicable law, regulation or court order, provided
that Buyer shall provide written notice to ATS and sufficient opportunity to
object to such disclosure or to request confidential treatment thereof. Any
public announcement or press release relating to this Agreement and the
transactions contemplated herein by Buyer shall be mutually agreed upon by both
parties.
8.1.6 Disclosure. Should Buyer be required by law to make a public
----------
disclosure about this Agreement, then Buyer may do so; provided, however, it
-------- -------
gives at least five (5) business days prior written notice to ATS and, during
such five (5) day period, allow ATS to comment on the proposed disclosure and
incorporate ATS' comments in such disclosure. Otherwise, Buyer shall not make
any press release or other public disclosure of the terms or conditions of this
Agreement without the prior written consent of ATS.
8.2 Ownership. As between the parties, ATS exclusively shall have all
---------
right, title and interest (including all Intellectual Property Rights throughout
the world) in any Inventions, the ATS Nutrient Solution, works-of-authorship,
know-how, ideas or information, made or conceived or reduced to practice by ATS,
Buyer or the parties jointly in the course of development under this Agreement.
Buyer will have no right or license in the foregoing, except as expressly
provided in this Agreement.
-12-
8.3 Assignment. Buyer hereby makes any and all assignments of Intellectual
----------
Property Rights to ATS necessary to accomplish the ownership provision of
Section 8.2. In interpreting such ownership provision anything made or conceived
or reduced to practice by an employee or contractor of Buyer in the course of
performance under this Agreement will be deemed so made or conceived or reduced
to practice by Buyer. Buyer represents, warrants and covenants that it has and
will have appropriate agreements with all such employees and contractors
necessary to fully effect the provisions of this Section. Buyer acknowledges and
agrees that ATS has the exclusive rights to (i) evidence, record and perfect the
assignment and (ii) apply for and obtain recordation of such proprietary right.
At ATS' request, Buyer shall assist ATS in every proper way with respect to ATS'
exercise of its aforementioned exclusive rights. In the event that ATS is unable
for any reason whatsoever to secure Buyer's signature to any document it is
entitled to under this Section, Buyer hereby irrevocably designates and appoints
ATS and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in its behalf and instead of Buyer, to execute
and file any such document and to do all other lawfully permitted acts to
further the purposes of the foregoing with the same legal force and effect as if
executed by Buyer.
8.4 Prosecution of Patent Rights. As between the parties, ATS shall have
----------------------------
the exclusive right, at its sole cost and expense, to prepare, file, prosecute,
and maintain throughout the world (and otherwise control the conduct of any
proceedings before any patent official or patent office) with respect to ATS
Patent Rights and any other Patent rights assigned to ATS pursuant to Section
8.3 and Buyer shall provide all assistance as reasonably requested by ATS in
relation thereto. Such cooperation includes, without limitation, (a) promptly
executing all papers and instruments or requiring employees to execute such
papers and instruments as reasonable and appropriate so as to enable ATS to
prepare, file, prosecute, and maintain the ATS Patent Rights and any other
Patent rights assigned to ATS hereunder in any country; and (b) promptly
informing ATS of matters that may affect the preparation, filing, prosecution,
or maintenance of any such Patent rights.
8.5 Enforcement of Patent Rights. ATS, in the case of all ATS Patent
----------------------------
Rights and Patent rights assigned to ATS pursuant to Section 8.3, shall have the
right, at its expense, to determine the appropriate course of action to enforce
such rights or otherwise xxxxx the infringement thereof, to take (or refrain
from taking) appropriate action to enforce such rights, to control any
litigation or other enforcement action and to enter into, or permit, the
settlement of any such litigation or other enforcement action with respect to
such rights. At ATS' request, Buyer shall fully cooperate with ATS in any action
to enforce any such rights.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
----------------------------------------------------------
9.1 Representations, Warranties and Covenants of ATS. ATS represents,
------------------------------------------------
warrants and covenants to Buyer as follows:
9.1.1 Organization of ATS. ATS is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of Delaware with full
corporate power and authority adequate for executing and delivering and
performing its obligations under this Agreement;
9.1.2 Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action on the
part of ATS and this Agreement, when executed and delivered, shall constitute a
legal, valid and binding obligation of ATS, enforceable against ATS in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors;
9.1.3 Compliance With Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement do not and will not conflict with or contravene
any provision of the charter documents
-13-
or by-laws of ATS or any material agreement, document, instrument, indenture or
other obligation of ATS;
9.1.4 Other Agreements. ATS shall not enter into any agreement, make
----------------
any commitment, take any action or fail to take any action that would contravene
any material provision of this Agreement;
9.1.5 Intellectual Property Rights. To the best of ATS' knowledge, ATS
----------------------------
has sufficient legal and/or beneficial title and ownership to the ATS Patent
Rights to grant the License provided in Section 2 of this Agreement; and
9.1.6 Grant of Rights. ATS has not, and shall not during the Contract
---------------
Term, grant any right to any third party which would violate the terms of or
conflict with the rights granted to Buyer hereunder.
9.2 Representations, Warranties and Covenants of Buyer. Buyer represents,
--------------------------------------------------
warrants and covenants to ATS as follows:
9.2.1 Organization. Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of California with
full corporate power and authority adequate for executing and delivering and
performing its obligations under this Agreement;
9.2.2 Authorization. The execution, delivery and performance of this
-------------
Agreement have been duly authorized by all necessary corporate action on the
part of Buyer, and this Agreement, when executed and delivered, shall constitute
a legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors;
9.2.3 Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement do not and will not conflict with or contravene
any provision of the charter documents or by-laws of Buyer or any material
agreement, document, instrument, indenture or other obligation of Buyer;
9.2.4 Other Agreements. Buyer shall not enter into any agreement, make
----------------
any commitment, take any action or fail to take any action that would contravene
any material provisions of this Agreement; and
9.2.5 Evaluation. Buyer agrees to use its best efforts to complete its
----------
evaluation of the material within 180 days of the effective date of the
agreement. Buyer agrees to provide to ATS a report of the results of each
evaluation of the Buyer's Product within 15 days of the date the results are
received by Buyer and shall provide a full report to ATS once all aspects of the
evaluation are complete.
9.3 Limitation on Remedies. BUYER ACKNOWLEDGES THAT THE ATS NUTRIENT
----------------------
SOLUTION (AND THE INTELLECTUAL PROPERTY RIGHTS OF ATS RELATING THERETO) IS
LICENSED AND SOLD TO BUYER "AS IS" AND ATS EXPRESSLY DISCLAIMS AND HEREBY
WAIVES, RELEASES AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
THE ATS NUTRIENT SOLUTION AND THE UNDERLYING INTELLECTUAL PROPERTY RIGHTS OF
ATS, INCLUDING, WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, OR FITNESS
FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, ATS DISCLAIMS ALL WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED.
-14-
9.4 ATS Indemnification. ATS shall indemnify Buyer against any and all
-------------------
liability, damages, cost and expenses, including reasonable attorneys' fees made
against or sustained by Buyer arising from the death of, or bodily injury to,
any person directly on account of any specific and explicit claims made by ATS
related to the use of the ATS Nutrient Solution as a nutraceutical ingredient
and any reasonable ATS-approved out-of-pocket costs to Buyer of the recall of
any ATS Solution (collectively "Buyer Losses") to the extent such Buyer Losses
are finally determined by a court of competent jurisdiction or by specific
reference in a settlement of litigation consented to by ATS in writing pursuant
to Section 9.7 to have been caused by ATS' gross negligence or willful
misconduct.
9.5 Buyer Indemnification. Buyer shall indemnify ATS against any and all
---------------------
liability, damages, cost and expenses, including reasonable attorneys' fees made
against or sustained by ATS arising from the death of, or bodily injury to, any
person on account of the use of the ATS Nutrient Solution in Buyer's Product
(collectively "ATS Losses") to the extent such ATS Losses are finally determined
by a court of competent jurisdiction or by specific reference in a settlement of
litigation consented to by Buyer pursuant to Section 9.7 to have been caused by
(a) Buyer's gross negligence or willful misconduct or (b) Buyer's (or its direct
or indirect distributors') failure to properly disclaim to their customers all
warranties and liabilities on behalf of ATS to the same extent as disclaimed
herein.
9.6 Limitations to Indemnity. The indemnities of Sections 9.4 and 9.5
------------------------
shall not apply (i) if the indemnified party fails to give the indemnifying
party prompt notice of any claim it receives and such failure materially
prejudices the indemnifying party, or (ii) unless the indemnifying party is
given the opportunity to approve any settlement, which approval shall not be
unreasonably withheld. Furthermore, the indemnifying party shall not be liable
for attorneys' fees or expenses of litigation of the indemnified party unless
the indemnified party gives the indemnifying party the opportunity to assume
control of the defense or settlement. In addition, if the indemnifying party
assumes such control, it shall only be responsible for the legal fees and
litigation expenses of the attorneys it designates to assume control of the
litigation, provided, however, that in the event of a conflict of interest
between the indemnifying party and the indemnified party, the indemnified party
shall be permitted to retain separate counsel acceptable to and at the expense
of the indemnifying party, if, upon request of the indemnifying party, it first
delivers to the indemnifying party a legal opinion prepared by counsel
acceptable to the indemnifying party, which counsel shall not be affiliated or
have been previously retained by the indemnified party or any of its Affiliates,
concluding that there is a conflict of interest sufficient to warrant the
retention of separate counsel. In no event shall the indemnifying party assume
control of the defense of the indemnified party without the consent of the
indemnified party (which consent shall be given or not at its sole discretion).
9.7 Settlement. In no event shall the indemnified party be entitled to
----------
settle any of the above-mentioned claims without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
9.8 Insurance. Buyer shall procure, and at all times during the Contract
---------
Term and for a period of three (3) years after the expiration or termination
hereof, maintain in full force and effect liability insurance coverage of at
least $3,000,000 per occurrence. Such insurance shall be designed to cover any
and all of ATS Losses for which indemnification is provided by Section 9.5
above. Buyer, upon the request of ATS, will provide ATS appropriate certificates
of insurance evidencing the insurance required under this Section 9.8.
-15-
10. MISCELLANEOUS
------------
10.1 Entire Agreement. This Agreement contains the entire agreement of the
----------------
parties regarding the subject matter hereof and supersedes all prior agreements,
understandings and negotiations regarding the same. This Agreement may not be
changed, modified, amended or supplemented except by a written instrument signed
by both parties. Furthermore, it is the intention of the parties that this
Agreement be controlling over additional or different terms of any order,
confirmation, invoice or similar document, even if accepted in writing by both
parties, and that waivers and amendments shall be effective only if made by
non-pre-printed agreements clearly understood by both parties to be an amendment
or waiver.
10.2 Assignability. This Agreement may be assigned by ATS. This Agreement
-------------
may not be assigned by Buyer without the prior consent of ATS which consent
shall not be unreasonably withheld (and any attempt to do so will be void)
except for a change in control of the ownership of Buyer where the acquiring
company is a successor in interest and in fact to the obligations of Buyer
hereunder.
10.3 Severability. If any provision of this Agreement shall be held illegal
------------
or unenforceable, that provision shall be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full force and
effect and enforceable.
10.4 Further Assurances. Each party hereto agrees to execute, acknowledge
------------------
and deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
10.5 Use of Party's Name. Except as otherwise expressly provided herein, no
-------------------
right, express or implied, is granted by this Agreement to either party to use
in any manner the name of the other or any other trade name or trademark of the
other in connection with the performance of this Agreement.
10.6 Notice and Reports. All notices, consents or approvals required by
------------------
this Agreement shall be in writing sent by internationally recognized overnight
carrier or by facsimile to the parties at the following addresses or such other
addresses as may be designated in writing by the respective parties:
To ATS: Advanced Tissue Sciences, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx
Xx Xxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile: [** ]
With a copy to: Xxxxxxx, Phleger & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: [** ]
Facsimile: [** ]
-16-
To Buyer: Advanced Nutraceuticals, Inc.
000 Xxxxx Xxxxxxxxx 0X
Xx Xxxxx, XX 00000
Attn: [** ]
Facsimile: [** ]
Notices shall be deemed effective one day following delivery to such overnight
courier or by facsimile.
10.7 Relationships of the Parties. Both parties are independent contractors
----------------------------
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute ATS and Buyer as partners, agents or joint
venturers with respect to this Agreement. Neither party hereto shall have any
express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
10.8 Waiver. The waiver by either party of a breach of any provisions
------
contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision or the waiver of the provision
itself.
10.9 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the state of California without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction and venue of
any action with respect to this Agreement shall be the state or federal courts
located within the state of California and each of the parties hereto submits
itself to the exclusive jurisdiction and venue of such courts for the purpose of
any such action. Service of process in any such action may be effected in the
manner provided in Section 11.6 for delivery of notices. The prevailing party in
any legal action to enforce or interpret this Agreement shall be entitled to
reasonable costs and attorney's fees.
10.10 Captions. Paragraph captions are inserted for convenience only and in
--------
no way are to construed to define, limit or affect the construction or
interpretation hereof.
10.11 Force Majeure. A party shall not be liable for nonperformance or
-------------
delay in performance (other than of obligations regarding confidentiality)
caused by any event reasonably beyond the control of such party including,
without limitation, wars, hostilities, revolutions, riots, civil commotion,
national emergency, strikes, lockouts, unavailability of supplies, epidemics,
fire, flood, earthquake, force of nature, explosion, embargo, or any other Act
of God, or any law, proclamation, regulation, ordinance, or other act or order
of any court, government or governmental agency.
10.12 Export Control. Buyer agrees to comply with all applicable export
--------------
laws, restrictions and regulations of the U.S. Department of Commerce, the U.S.
Department of Treasury and any other United States or foreign agency or
authority. Buyer will not export or re-export, or allow the export or reexport
of any ATS Nutrient Solution (or technical data or information related thereto)
or any direct product thereof in violation of any such restrictions, laws or
regulations, or, without all necessary licenses and approvals, to any country to
which such export or reexport is prohibited, including, without limitation,
export or re-export to or any country subject to U.S. trade embargoes, or to any
party on the U.S. Export Administration Table of Denial Orders or the U.S.
Department of Treasury List of Specialty Designated Nationals, or to any
prohibited destination in any of the Country Groups specified in the then
current Supplement No. 1 to Port 740 or the Commerce Control List specified in
the then current Supplement No. 1 to part 738 of the U.S. Export Administration
Regulations (or any successor supplement or regulations). Buyer shall obtain and
bear all expenses relating to any necessary licenses and/or exemptions with
respect
-17-
to the export from the U.S. of the ATS Nutrient Solution to any location in
compliance with all applicable laws and regulations.
10.13 Basis of Bargain. EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
----------------
DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL
BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT
AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER
THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS AGREEMENT.
[Remainder of This Page Intentionally Left Blank]
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first written above.
ADVANCED TISSUE SCIENCES, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Title: President
------------------------------
Print Name: Xxxx X. Xxxxxxxx
-------------------------
ADVANCED NUTRCEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: CEO
------------------------------
Print Name: Xxxxxx X. Xxxxxx
-------------------------
EXHIBIT A
ATS NUTRIENT SOLUTION
---------------------
o The ATS Nutrient Solution is a byproduct of the ATS manufacturing process
comprised of [** ] and containing at least the
following:
[**
]
A-1
EXHIBIT B
BUYER'S PRODUCT
---------------
BUYER'S PRODUCT DESCRIPTION TO BE DETERMINED AND APPENDED NO LATER THAN JUNE 30,
2002.
B-1
EXHIBIT C
ATS MARKS
---------
Trademarks claimed or applied for - not yet registered.
NouriCel
NouriCel MD
NouriCel Spa
BioNuvia
C-1
EXHIBIT 1.2
ATS PATENT RIGHTS
-----------------
US Patent Application Serial No. 09/313,538, by Xxxxxxxx et al., entitled
"Conditioned Cell Medium Compositions and Methods of Use"; filed May 14, 1999.
International Patent Application No. PCT/US00/13016, entitled "Conditioned Cell
Medium Compositions and Methods of Use"; filed May 12, 2000 (Designating all
countries, including the US).
