EX 10.9
EXECUTION VERSION
REDACTED - AS FILED
[PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Brackets "[ ]" ARE USED TO INDICATE WHERE A PORTION OF THIS EXHIBIT HAS BEEN
OMITTED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS. A COMPLETE COPY OF THIS EXHIBIT, CONTAINING ALL OF THE OMITTED
PORTIONS, HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
TOGETHER WITH THE REQUEST FOR CONFIDENTIAL TREATMENT.
LICENSE AGREEMENT
This License Agreement (this "Agreement") is entered into as of
February 22, 2006 (the "Effective Date"), by and between Xxxx'x LLP, a Delaware
limited liability partnership ("Licensor"), and PacificHealth Laboratories,
Inc., a Delaware corporation ("Licensee").
WHEREAS, Licensor is the owner of certain patents, patent applications,
trademarks, and technical information related to the research, development,
testing, production, manufacture, marketing, sale and distribution of Licensed
Products (as hereinafter defined);
WHEREAS, Licensor acquired the right, title and interest to such
patents, patent applications, trademarks, and technical information from
Licensee, pursuant to that certain Asset Purchase Agreement, dated as of
February 22, 2006, by and between Licensor and Licensee (the "Asset Purchase
Agreement");
WHEREAS, Licensee desires to acquire the right to use such patents,
patent applications, trademarks, and technical information in research,
development, testing, production, manufacture, marketing, sale and distribution
of Licensed Products; and
WHEREAS, Licensor desires to acquire the right to use the name
"PacificHealth Laboratories" for certain purposes;
NOW, THEREFORE, in consideration of the premises, the terms and
provisions set forth herein, the mutual benefits to be gained by the performance
thereof and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:
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1. DEFINITIONS
As used herein, the following terms shall have the respective meanings ascribed
to them below:
A. "Invention" or "Inventions" means the inventions disclosed in the
Patents.
B. "Patent" or "Patents" means the U.S. patents and U.S. patent
applications identified on the attached Schedule A, as well as any U.S.
and foreign patents to be issued pursuant thereto, and all
provisionals, continuations, continuations-in-part, reissues,
substitutes, and extensions thereof.
C. "Technical Information" means know-how, trade secrets, and any
unpublished development information, unpatented inventions, and
proprietary technical data, which Licensor owns that directly relate to
the Inventions, is reasonably necessary to practice the Inventions and
which Licensor has the right to provide to Licensee as a result of the
transactions contemplated by the Asset Purchase Agreement.
D. "Trademark" or "Trademarks" means the U.S. Trademark registrations
identified on the attached Schedule B, all logo and design variations
thereof, and any corresponding trademark registrations that are
registered in jurisdictions outside the U.S.
E. "Licensed Intellectual Property" means the Inventions, Patents,
Technical Information and Trademarks.
F. "Brand Names" shall have the meaning ascribed to such term in the Asset
Purchase Agreement.
G. "Developed Products" shall have the meaning ascribed to such term in
the Asset Purchase Agreement.
H. "Licensed Territory" means the geographical area set forth on Schedule
C, as the same may be amended from time to time by mutual written
agreement of the parties hereto.
I. "Licensed Products" means only the products in powder, gel or pill form
(or such other forms as to which Buyer may consent in writing after the
date hereof) that are being marketed and sold by Licensee under the
Brand Names on the date of this Agreement and identified on Schedule D.
2. PATENT LICENSE
Licensor hereby grants to Licensee and Licensee accepts, to the extent
of the Licensed Territory, an exclusive, royalty-free license under the Patents
to make, have made, and sell Licensed Products.
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3. TECHNICAL INFORMATION LICENSE; CONFIDENTIALITY
A. Licensor hereby grants to Licensee and Licensee accepts, to the extent
of the Licensed Territory, an exclusive, royalty-free license to use
the Technical Information to make, have made, and sell the Licensed
Products.
B. Licensee acknowledges that in connection with this Agreement and the
transactions contemplated by the Asset Purchase Agreement, Licensee
has, or may from time to time obtain, access to the Acquired
Intellectual Property (as defined in the Asset Purchase Agreement) and
certain confidential or proprietary information of Licensor and its
Affiliates, including information relating to the businesses, products,
technology, services, customers, prospective customers, methods or
tactics of Licensor or its Affiliates (any such confidential or
proprietary information which is marked or identified, orally or in
writing, as "confidential," "privileged" or "proprietary" or which
could reasonably be understood to be confidential or proprietary as a
result of the nature of the information or the manner or circumstances
under which it is provided, being hereinafter referred to as
"Confidential Information"). Licensee further acknowledges that the
Confidential Information includes certain trade secrets and other
Assets (as defined in the Asset Purchase Agreement) and agrees that any
such trade secrets and other Assets shall remain the property of
Licensor at all times during the term of this Agreement and after the
expiration or termination hereof. Licensee shall not publish,
disseminate, distribute, disclose, sell, assign, transfer, copy,
commercially exploit, or otherwise make use of any Confidential
Information to or for the use or benefit of Licensee or any other
Person, except as specifically authorized under this Agreement or
otherwise in writing by Licensor. In addition, Licensee shall employ
safeguards and precautions to ensure that unauthorized access to the
Confidential Information is not afforded to any Person, and such
safeguards and precautions shall be at least equivalent to those which
Licensee uses to protect its own similar information and in any event
not less than reasonable under the circumstances. Upon any expiration
or termination of this Agreement, or if Licensor so requests at any
time, Licensee shall promptly return to Licensor all Confidential
Information in Licensee's possession, without retaining any copies,
extracts or other reproductions thereof. Notwithstanding the foregoing,
nothing contained in this Section 4.B. shall prevent the disclosure by
Licensee of Confidential Information (i) with the prior written consent
of Licensor; (ii) which is generally available to the public at the
time of the use or disclosure thereof (other than through (x) a breach
by Licensee of any confidentiality obligations owed to Licensor,
whether pursuant to or in connection with this Agreement or the Asset
Purchase Agreement or otherwise, or (y) a breach by Portman of any of
the terms of the Portman Consulting, License and Noncompetition
Agreement); (ii) which is lawfully obtained by Licensee from a source
other than Licensor, Portman or their respective Affiliates, directors,
officers, employees, agents or other representatives (provided, that
such source is not bound by a confidentiality agreement with Licensor
or its Portman and is not otherwise under an obligation of secrecy or
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confidentiality to Licensor or Portman); (iii) which is required to be
disclosed by applicable legal process (provided, that Licensee complies
fully with the provisions of Section 4.C.); or (iv) to subcontractors
and agents of Licensee who have a need to know the Confidential
Information in connection with the development or manufacturing of the
Licensed Products in accordance with this Agreement, provided that such
subcontractors and agents are subject to a written confidentiality
agreement with Licensee covering such Confidential Information
including terms at least as restrictive as the confidentiality terms of
this Agreement. Any combination of Confidential Information shall not
be considered public merely because individual elements thereof are in
the public domain, unless the combinations and its principles are in
the public domain. Licensee shall not disclose the existence of this
Agreement or any terms of this Agreement to third parties without the
prior written consent of Licensor, unless, and only to the extent that,
such disclosure is required by law.
C. If Licensee is requested (whether by oral questions, interrogatory,
request for documents, subpoena, civil investigative demand or other
legal process) to disclose any part of the Confidential Information,
Licensee shall (i) give prompt written notice to Licensor of the
existence of, and the circumstances attendant to, such request, (ii)
consult with Licensor as to the advisability of taking legally
available steps to resist or narrow any such request or otherwise to
eliminate the need for such disclosure, and (iii) if disclosure is
required, cooperate with Licensor in obtaining a protective order or
other reliable assurance in form and substance satisfactory to Licensor
that confidential treatment will be accorded to such portion of the
Confidential Information as is required to be disclosed.
4. TRADEMARK LICENSE
A. Licensor hereby grants to Licensee and Licensee accepts, to the extent
of the Licensed Territory, an exclusive, royalty-free, license to use
the Trademarks solely in connection with the marketing and sale of the
Licensed Products.
B. So long as Licensor is actively using the name "PacificHealth
Laboratories" pursuant to the license granted in Section 5 and the
license granted in Section 4.A. above remains in effect, Licensor shall
maintain a link on its product website to the page on Licensee's
website that provides for electronic commerce transactions in the
Licensed Products; provided, that Licensee shall be fully responsible
for the management and effectiveness of Licensee's website and all
transactions conducted thereon.
5. LICENSE TO USE NAME OF LICENSEE
Licensee hereby grants to Licensor and Licensor accepts a
non-exclusive, worldwide, royalty-free license to use the name "PacificHealth
Laboratories" and all derivatives thereof in the packaging, marketing and sale
of the Developed Products or as otherwise reasonably related thereto. Licensee
will have the right to pre-approve all uses of Licensee's name, which approval
will not be unreasonably withheld. Any materials submitted to Licensee for
approval of the use of its name will be deemed to have been approved if the same
is not expressly disapproved in writing by Licensee within five business days
after receipt by Licensee. From time to time Licensor may request that Licensee
provide approval of the use of Licensee's name on an expedited basis and
Licensee will use reasonable efforts to comply with such expedited requests.
Subject to Section 9.E, but notwithstanding any other provision of this
Agreement, the term of the license granted in this Section 5 shall commence on
the Effective Date and shall continue in full force and effect until the
scheduled expiration of the last term (whether the Initial Term or any renewal
term) of this Agreement. For avoidance of doubt, such term shall not terminate
upon any early termination of this Agreement by Licensor pursuant to Section 9
but instead shall continue through the scheduled end of the then-current term as
though such early termination had not occurred.
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6. RESERVATION OF RIGHTS; SUBLICENSING; EXCLUSIVITY
A. Nothing in this Agreement shall be deemed to limit Licensor's ability
to use or otherwise exploit the Licensed Intellectual Property other
than with respect to the Licensed Products in the Licensed Territory.
B. Licensee shall not grant any sublicenses hereunder without the prior
written consent of Licensor.
C. If consent is given for Licensee to grant any sublicense hereunder, for
any such sublicense to be valid, all obligations of Licensee under this
Agreement shall extend to and bind such sublicensee, such sublicense
shall be documented in writing and such sublicensee shall be required
to provide to Licensor written confirmation of acceptance of such
obligations. Licensee's obligations hereunder shall not be eliminated
or diminished in any manner as a result of any such sublicense.
D. If this Agreement is terminated for any reason, any and all sublicenses
granted by Licensee also shall be terminated automatically.
7. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS
A. Licensee shall use the Trademarks only in connection with the marketing
and sale of Licensed Products, in the manner and style used on the date
of this Agreement or such manner and style as shall have the prior
written approval of Licensor, which approval shall not be unreasonably
withheld or delayed, and in connection with such legends, markings and
legal notices as are required by trademark law.
B. Licensee shall label and package the Licensed Products using labels and
packaging consistent with specifications approved by Licensor. Licensor
hereby approves Licensee's continued use after the Effective Date of
Licensee's current labels and packaging that are in stock or in
process; [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*. Licensee shall
be responsible for obtaining labeling bearing approved artwork and
packaging in conformance with approved specifications. Licensee shall
be responsible for and incur all expenses related to any and all
changes, modifications or revisions to labels and packaging as may be
required by Licensor from time to time. Such changes, modifications and
revisions shall be fully implemented by Licensee within 30 days to the
extent the change involves a legal or regulatory issue, unless a legal
or regulating agency allows for additional time and in no event beyond
the time granted by such agency, and within 120 days (or such other
reasonable period of time mutually agreed by the parties to allow for
the use of then existing labeling and packaging in stock or in process)
of written notice to Licensee by Licensor requiring such change,
modification or revision, where a legal or regulatory issue is not
involved.
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C. The products of Licensee in connection with which the Trademarks are
used shall be of a level of quality that is consistent with (i) the
quality of products of Licensee on the date of this Agreement, or (ii)
Licensor's reasonable standards and specifications, as the same may be
communicated from Licensor to Licensee from time to time with
reasonable notice, and as may be modified by Licensor and communicated
to Licensee. The products of Licensee in connection with which the
Trademarks are used shall comply at all times with such standards of
quality. Licensee shall comply with any and all specifications for the
Licensed Products as approved by Licensor and shall never use
ingredients or manufacturing processes that in any way violate or fail
to meet applicable U.S. or foreign laws, rules and regulations.
D. Licensor shall not use the Patents, Trademarks, or Technical
Information in any manner that conflicts with or results in a violation
or breach of any provision of the Asset Purchase Agreement (including
without limitation Section 5.9 thereof).
E. In the manufacturing, packaging, distributing and selling of Licensed
Products, Licensee shall comply with all applicable laws, regulations
and ordinances pertaining to the operation of its plants and all
specifications developed by Licensee and approved by Licensor (which
approval shall not be unreasonably withheld) and will maintain such
plant(s) at all times in a clean, wholesome and sanitary condition
consistent with the provisions contained in the Good Manufacturing
Practices Regulations of the Food and Drug Administration as set forth
in 21 Code of Federal Regulations and other applicable regulations as
from time to time modified. Licensor shall have the right to request,
review and approve, upon reasonable notice, the specifications used by
Licensee, and approval thereof shall not be unreasonably withheld by
Licensor.
F. Within seven business days after receiving written notice from
Licensor, Licensee shall provide to Licensor samples of all Licensed
Products being sold by Licensee. With at least two business days prior
notice, (i) Licensor's representatives shall be permitted to enter and
inspect, at reasonable times during business hours and Licensee's
plants and warehouses where Licensed Products are being manufactured,
packaged or stored and (ii) Licensee shall arrange for Licensor to have
access to the premises and management of any third party engaged or
involved in the manufacture or distribution of Licensed Products on
behalf of Licensee, to ensure compliance with the requirements of this
Agreement. Notwithstanding the foregoing, Licensor may inspect
Licensee's facilities without notice in the event of a potential recall
or other emergency.
G. Licensee covenants, warrants and guarantees that none of the Licensed
Products will be adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act of June 25, 1938, as amended (the
"FD&C Act") or within the meaning of any state or other food and drug
law, or similar laws of any applicable jurisdiction, or will be
rendered un-saleable as a consumer food in the course of retail trade
by actions within the control of Licensee, and that the Licensed
Products will not be produced or shipped in violation of the FD&C Act
or other health laws or similar laws of any applicable jurisdiction.
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H. If Licensee learns that it has manufactured, has in its possession or
control, and/or has shipped or sold Licensed Products which: (1) do not
conform in quality to the Licensed Products specimens previously
approved by Licensor; (2) are adulterated within the meaning of the
FD&C Act; or similar laws of any applicable jurisdiction; (3) are
un-saleable as a consumer food in the course of retail trade; (4) do
not conform with Licensor's specifications; and/or (5) are misbranded
within the meaning of the FD&C Act, or similar laws of any applicable
jurisdiction (in any such case, a "Sub-Standard Product"), then
Licensee shall notify Licensor of such fact promptly and in writing.
Upon notice to Licensor from Licensee, or upon notice given by Licensor
to Licensee of the existence of such Sub-Standard Products, Licensee
will promptly take whatever the appropriate actions are reasonably
determined by Licensor to be necessary to correct this situation. If
requested by Licensor, Licensee shall, solely at Licensee's expense,
promptly retrieve to Licensee's warehouse or plant all such
Sub-Standard Products and comply with instructions from Licensor as to
the handling of such Products. Licensee shall comply with all of
Licensor's commercially reasonable recall procedures and policies in
effect from time to time.
I. Any Licensed Products which fail in any respect to conform with
Licensor's standards of quality, instructions or other specifications
shall be the sole liability and responsibility of Licensee.
J. Licensee shall notify Licensor as soon as possible upon the inspection
by an inspection agency or other legal authority of any of Licensee's
facilities which manufacture, store or distribute the Licensed Products
and shall provide Licensor with all copies of any inspection reports or
other documentation and materials issued by an inspection agency or
authority.
K. Licensee shall promptly and appropriately respond to all customers,
consumer or other complaints relating to the Licensed Products. Within
24 hours after learning of any incident involving physical injury or
illness to a consumer caused by a Licensed Product, Licensee shall
furnish Licensor with a copy of the complaint or report and Licensee's
response thereto. Licensee will record all other customer and consumer
complaints, and Licensee will upon Licensor's request furnish Licensor
with a complete report regarding such other complaints not more than
monthly during the term of this Agreement.
8. DISCLAIMERS, INDEMNITY AND INSURANCE
A. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION OR WARRANTY BY LICENSOR OF THE ACCURACY, SAFETY, OR
USEFULNESS FOR ANY PURPOSE, OF ANY TECHNICAL INFORMATION, TECHNIQUES,
OR PRACTICES AT ANY TIME MADE AVAILABLE BY LICENSOR.
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B. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS (I) A
WARRANTY OR REPRESENTATION BY LICENSOR AS TO THE VALIDITY OR SCOPE OF
THE PATENTS, TRADEMARKS AND/OR TECHNICAL INFORMATION; OR (II) A
WARRANTY OR REPRESENTATION THAT USING THE PATENTS, TRADEMARKS AND/OR
TECHNICAL INFORMATION AS PERMITTED UNDER THIS AGREEMENT WILL NOT
INFRINGE ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.
C. EXCEPT AS PROVIDED IN SECTION 8.G., LICENSOR SHALL NOT BE LIABLE TO
LICENSEE IN CONTRACT, FOR NEGLIGENCE, IN TORT OR OTHERWISE FOR ANY LOSS
OR DAMAGE SUFFERED BY LICENSEE AS A RESULT OF OR IN CONNECTION WITH
LICENSEE'S EXERCISE OF THE RIGHTS GRANTED TO IT HEREUNDER.
D. LICENSOR SHALL NOT BE LIABLE TO LICENSEE OR ANY OTHER PERSON FOR OR ON
ACCOUNT OF ANY INJURY, LOSS, OR DAMAGE, OF ANY KIND OR NATURE,
SUSTAINED BY, OR ANY DAMAGE ASSESSED OR ASSERTED AGAINST, OR ANY OTHER
LIABILITY INCURRED BY OR IMPOSED UPON LICENSEE OR ANY OTHER PERSON,
ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM (I) THE
PRODUCTION, USE, OR SALE OF ANY APPARATUS OR PRODUCT, OR THE PRACTICE
OR USE OF THE LICENSED INTELLECTUAL PROPERTY BY LICENSEE; (II) THE USE
BY LICENSEE OF ANY LICENSED INTELLECTUAL PROPERTY, TECHNIQUES, OR
PRACTICES DISCLOSED BY LICENSOR; OR (III) ANY ADVERTISING OR OTHER
PROMOTIONAL ACTIVITIES WITH RESPECT TO ANY OF THE FOREGOING OTHER THAN
THOSE REQUIRED OR SUPPLIED BY LICENSOR.
E. Licensee shall indemnify and hold harmless Licensor, its Affiliates (as
defined in the Asset Purchase Agreement) and any of their officers,
directors, agents, servants and employees ("Indemnified Parties") from
and against any liability, claim, administrative action, cause of
action, suit, damages, and expenses (including reasonable attorneys'
fees and costs) which any such Indemnified Parties may suffer or incur
as a result of, arising out of, or otherwise in connection with
Licensee's exercise of the rights granted to it under this Agreement,
including but not limited to any damages for personal injuries, death
or property damage, which:
(1) result from adulteration or misbranding (within the meaning of the
FD&C Act, or within the meaning of any state or other food and
drug law or similar applicable foreign law) of any Licensed
Products, due in whole or part to the negligence of Licensee; or
(2) result from, or are in any way related to, the preparation,
manufacture, packaging, labeling, storage, warehousing,
distribution or sale of the Licensed Products manufactured and
sold under the license granted to Licensee herein or the conduct
of the business of the Licensee; or
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(3) result from the un-salability of the Licensed Products as consumer
food in the course of retail trade, due in whole or part to the
negligence of Licensee; or
(4) result from any disputes with the trade resulting from Licensee's
dealing or relations therewith; or
(5) result from any advertising, promotion, labeling or other actions
or inactions by Licensee in furtherance of its rights under the
Agreement except to the extent such advertising, promotion or
labeling was required, supplied and implemented by Licensor or
such other actions or inactions were made or taken solely at the
express direction of Licensor (and not merely approved by
Licensor); or
(6) result from Licensee's failure to comply with the specifications,
ingredient procedures, good manufacturing processes and related
laws, failure to pass an inspection, or otherwise comply with any
reasonable processes, policies or procedures provided by Licensor;
or
(7) are due to Licensee's breach of any warranty, covenant or
agreement of Licensee contained herein; or
(8) result from any consumer's use or possession of the Licensed
Products to the extent related in whole or in part to the
negligence of Licensee; or
(9) result from a recall or retrieval caused by Licensee's acts or
omissions or failure to comply with the terms of the Agreement; or
(10) result from Licensee's negligence, gross negligence, or commission
of any intentional torts which emanate from actions or inactions
by Licensee in furtherance of its rights and/or obligations under
the Agreement; or
(11) result from any product liability or similar claim based on or
relating to the Licensed Products.
The obligations contained in this Section 8E shall survive the
expiration or termination of this Agreement.
F. Licensee agrees to carry general commercial liability insurance
(including product liability and contractual liability) with a minimum
limit of liability of at least $5,000,000 per occurrence and Licensor
shall be named as an additional insured party therein. Such insurance
may be obtained in conjunction with a policy of product liability
insurance that covers goods other than the products, and shall provide
for at least 30 days' prior written notice to Licensor of the
cancellation or substantial modification thereof. Said insurance shall
be obtained from an insurer with an A.M. Best rating of at least A+.
Licensee shall deliver to Licensor a certificate evidencing the
existence of such insurance policies within ten days of the execution
of this Agreement by Licensee. Licensee agrees and covenants to
maintain such insurance in full force and effect from the effective
date of this license until six months after the eventual termination of
this Agreement.
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G. Licensor shall indemnify and hold harmless Licensee, its Affiliates (as
defined in the Asset Purchase Agreement) and any of their officers,
directors, agents, servants and employees ("Licensee Indemnified
Parties") from and against any liability, claim, administrative action,
cause of action, suit, damages, and expenses (including reasonable
attorneys' fees and costs) arising from claims by third parties which
any such Licensee Indemnified Parties may suffer or incur which:
(1) are due to Licensor's breach of any warranty, covenant or
agreement of Licensor contained herein; or
(2) are due to Licensor's use of the name PacificHealth Laboratories
or any derivative thereof; or
(3) directly result from any act or omission made or taken by Licensee
solely at the express direction of Licensor in connection with
Licensee's activities under this Agreement (excluding acts or
omissions of Licensee that are merely subject to approval of
Licensor hereunder) and not otherwise required to comply with
applicable laws and regulations, industry standards or common
practices.
9. TERM AND TERMINATION
A. Unless sooner terminated in accordance with the other provisions of
this Agreement, this Agreement (including the licenses granted in
Sections 2, 3 and 4) shall continue in force for an initial term (the
"Initial Term") that begins on the Effective Date and continues through
and including [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*, and
thereafter will renew automatically for successive additional
[ONE-YEAR]* renewal terms in accordance with Section 9.B. unless and
until either (i) the applicable Renewal Criteria specified in Section
9.B. for a year are not satisfied (in which case this Agreement
(including the licenses granted in Sections 2, 3 and 4) shall expire)
or (ii) Licensee terminates this Agreement as of the end of the
then-current term by giving Licensor a notice in writing at least 90
days prior to the end of the then-current initial or renewal term.
B. For purposes of Section 9.A., applicable "Renewal Criteria" shall mean
the then-applicable Base Sales Renewal Criteria or Reset Base Sales
Renewal Criteria, and the term of this Agreement will renew or expire,
in accordance with the following:
(1) [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*
(2) [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*
C. Either party shall have the right to terminate this Agreement by giving
written notice thereof if the other party fails to observe the terms,
covenants, and conditions hereof in any material respect, and fails to
cure such defaults (and the effects thereof) within 30 days after such
party has been given written notice thereof. Such termination shall
take effect upon expiration of such 30-day period. The notice of
termination shall specify the breach alleged to have occurred.
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D. Unless sooner terminated in accordance with the other provisions of
this Agreement, Licensor shall have the right to terminate this
Agreement as follows:
(1) upon 30 days written notice by Licensor if:
(i.) in 2006 (A) Licensee's aggregate annual sales for its powder
and gel Licensed Products are less [REDACTED - CONFIDENTIAL
TREATMENT REQUESTED]* and (B) Licensor has expended (in
cash, cash equivalents or advertising equivalents) an
aggregate of at least [REDACTED - CONFIDENTIAL TREATMENT
REQUESTED]*for such calendar year (or prorated for any
partial calendar year) to support the Brand Names; or
(ii.) in any calendar year after 2006 during the Initial Term (A)
Licensee's aggregate annual sales for its powder and gel
Licensed Products are less than 105% of its annual sales for
such product lines in the immediately preceding calendar
year and (B) Licensor has expended (in cash, cash
equivalents or advertising equivalents) an aggregate of at
least [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* for
such calendar year (or prorated for any partial calendar
year) to support the Brand Names;
(2) upon 30 days written notice by Licensor if prior to the second
anniversary of the Product Launch Date (as defined in the Asset
Purchase Agreement) Portman shall cease (other than as the result
of his death or disability which renders him unable to perform
substantial functions of his position) to act on behalf of Seller
on a full time basis, in either an employee or independent
contractor capacity or to have made other arrangements reasonably
satisfactory to Licensor to continue activities relevant to the
Licensed Products;
(3) upon 30 days written notice by Licensor if Licensee breaches any
of the covenants or agreements in the Asset Purchase Agreement
(including any of the covenants contained in Article V thereof)
and such breach could materially and adversely affect Licensee's
rights in the Assets (as defined in the Asset Purchase Agreement)
or the value or reasonably expected benefit to Licensor of the
Assets, and Licensee fails, within such 30 days, to cure such
breach and the effect thereof;
(4) upon 30 days written notice by Licensor, if (i) Portman breaches
any of the covenants in the Portman Consulting, License and
Noncompetition Agreement (as defined in the Asset Purchase
Agreement) that address restrictions on competition,
non-disparagement or confidentiality, or materially breaches his
service obligations thereunder considered in the aggregate, (ii)
Portman fails, within 30 days after notice to Portman and Seller,
to cure such breach and the effect thereof and (iii) Portman
admits such fault or is finally determined through the mediation
and arbitration provisions of such agreement to have so breached
such covenants or obligations and failed to have timely cured such
breach and the effect thereof;
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(5) upon 30 days written notice by Licensor, if Licensee or Portman
takes any action that has a detrimental effect on the Brand Names
or the Acquired Intellectual Property (as defined in the Asset
Purchase Agreement), and Licensee or Portman (as applicable)
fails, within 30 days after receiving written notice from
Licensor, to cure such breach and the effect thereof and such
breach could materially and adversely affect Licensee's rights in
the Assets (as defined in the Asset Purchase Agreement) or the
value or reasonably expected benefit to Licensor of the Assets;
(6) immediately upon written notice by Licensor, if any of the
facilities manufacturing the Licensed Products fail any health or
quality inspection of a third party agency, and Licensee fails,
within 20 days after such inspection, to cure such breach and any
effect thereof;
(7) immediately if Licensee files or institutes proceedings for any
type of bankruptcy (whether voluntarily or involuntarily), becomes
insolvent, makes an assignment for the benefit of creditors or
commences or becomes subject to any similar action or proceeding;
or
(8) upon a Change in Control (as defined in the Asset Purchase
Agreement) of Licensee, but only if Licensor determines, in its
reasonable discretion, that Licensee's successor, transferee or
new controlling person could be detrimental to the value or
usefulness of the Assets acquired by Licensor pursuant to the
Asset Purchase Agreement or the business of Licensor in any
respect, whether because Licensee's successor, transferee or new
controlling person is a current or potential competitor of
Licensor, questions or concerns regarding the financial status or
operational capabilities of such Person, or other reasonable and
articulated reasons. In the event that any such Change in Control
is proposed, Licensee shall notify Licensor in writing not later
than [[REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*. Licensor
shall have [30]* days to determine whether to consent to such
Change in Control. If Licensor does not notify Licensor of its
objection to the Change in Control for the reasons allowed above
during such [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* day
period, Licensor shall be deemed to have waived its right to
object to the Change in Control. If Licensor does timely object on
such basis, and such Change in Control occurs, then this Agreement
shall terminate and be of no further force or effect.
E. Upon any termination as described in this Section 9, Licensee shall
lose all rights to the Licensed Intellectual Property granted hereunder
and any sublicenses granted by Licensee shall also be terminated
automatically. Unless this Agreement is terminated by Licensee pursuant
to Section 9.C., the license granted to Licensor in Section 5 will not
terminate upon any termination of this Agreement but instead will
continue in full force and effect until the expiration of the Initial
Term or the then-current renewal term of this Agreement (as though such
early termination had not occurred).
F. Upon any event that gives rise to Licensor's right to terminate this
Agreement pursuant to this Section 9, Licensor may, in its sole
discretion and in lieu of terminating this Agreement, by giving 30 days
written notice to Licensee, cause the licenses granted in Sections 2, 3
and 4 to cease to be exclusive to Licensee, in which case each such
license shall become and thereafter be non-exclusive.
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G. After expiration of the term of this Agreement (without renewal), or
the termination of this Agreement pursuant to Section 9.D.(1), Licensee
may sell on a non-exclusive basis those Licensed Products that are on
hand or in process of manufacture at the time such expiration or
termination is effective, for a period of [REDACTED - CONFIDENTIAL
TREATMENT REQUESTED]*after the expiration or termination; provided,
however, that all Licensed Products and the sale of Licensed Products
during such "sell-off" period shall be subject to all applicable
provisions of this Agreement.
10. LITIGATION
A. Licensee shall promptly notify Licensor in writing of any suspected
infringement(s) of the Patents in the Licensed Territory by any third
party, and shall inform Licensor of, and provide to Licensor any
evidence of such infringement(s).
B. Licensor shall have the sole right, at Licensor's sole discretion, to
institute suit for infringement(s) of the Patents or Trademarks, or the
disclosure or misappropriation of the Technical Information. Any
amounts recovered pursuant to such infringement suit shall be retained
by and be the sole property of Licensor, unless Licensor determines, in
its sole discretion, that a significant portion of such recovery is
based upon damages suffered by Licensee with respect to the Licensed
Intellectual Property, in which case any amounts recovered pursuant to
such suit shall be first applied to the cost of the suit and the
remainder shall be equitably allocated between Licensor and Licensee
based on the relative damages suffered by the parties. If Licensor
determines not to institute suit for any such infringement, disclosure
or misappropriation that relates to the Licensed Products, Licensee may
request in writing the right to institute such suit and Licensor, in
its sole discretion, may grant Licensee consent to do so, in which
case, unless otherwise agreed, any amounts recovered pursuant to such
suit would be first applied to the cost of the suit and the remainder
shall (i) be retained by and be the sole property of Licensee if the
infringement relates solely to a product competitive with the Licensed
Products in the Licensed Territory or (ii) otherwise, shall be
equitably allocated between Licensor and Licensee based on the relative
damages suffered by the parties.
11. PATENTS AND TRADEMARKS
A. Licensor shall have the sole right to file, prosecute, and maintain all
of the Patents covering the Inventions, and shall have the right to
determine whether or not, and where, to file a patent application, to
abandon the prosecution of any patent or patent application, or to
discontinue the maintenance of any patent or patent applications.
13
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B. In the event that Licensee develops or acquires Intellectual Property
Rights (as defined in the Asset Purchase Agreement) that are
Enhancements (as defined in the Asset Purchase Agreement) to the
Acquired Intellectual Property (as defined in the Asset Purchase
Agreement), Licensee agrees to promptly disclose and irrevocably
assign, and hereby does irrevocably assign, to Licensor such
Enhancements, at no cost to Licensor, provided that Licensee shall
retain a license under the terms of this Agreement to such
Enhancements. Licensee agrees further to execute any and all powers of
attorney, applications, assignments, declarations, affidavits and any
other papers in connection therewith, which Licensor deems necessary to
perfect the right, title and interest of such Enhancements in Licensor.
Licensor shall have the sole right to file, register, prosecute and
maintain all patents, patent applications, trademarks and/or trademark
applications related to such Enhancements, and shall have the right to
determine whether or not, and where, to file such patent or trademark
applications, to abandon the prosecution of any patent or trademark
application, or to discontinue the maintenance of any such patents,
patent applications, trademarks and/or trademark applications. In the
event Licensor develops or acquires Intellectual Property Rights that
are improvements to the Licensed Intellectual Property
("Improvements"), Licensor agrees to promptly disclose such
Improvements to Licensee and such Improvements shall be deemed within
the license granted to Licensee in this Agreement.
C. Licensor shall have the sole right to file, prosecute, protect,
maintain and enforce all Trademarks, and shall have the sole right to
determine whether or not, and where to file any trademark application,
to abandon the prosecution of any trademark or trademark application,
or to discontinue the maintenance of any trademark or trademark
application.
D. Licensee shall not acquire and shall not claim any ownership of the
Licensed Intellectual Property, and shall not initiate any action that
destroys, damages or impairs in any way the ownership or rights of
Licensor in the Licensed Intellectual Property. All goodwill from the
use of the Trademarks by Licensee pursuant to this Agreement shall
inure to the benefit of Licensor. Should use of the Trademarks in any
jurisdiction vest title thereto in Licensee, then Licensee agrees to
assign and hereby assigns, such title and/or rights to Licensor.
Licensee shall not take any action, or assist any third party in taking
any action, to invalidate, challenge, or otherwise oppose the licensed
Intellectual Property.
12. MARKING
Licensee shall xxxx in accordance with 35 USC 287 (in a conspicuous
location) any product(s) made, offered for sale or sold, that embody any of the
inventions claimed in the Patents. Licensee shall comply with all patent marking
guidelines that may be provided and/or modified by Licensor from time to time
during the term of this Agreement. Licensee shall provide to Licensor, upon the
request of Licensor, documents and information sufficient to confirm that the
marking requirement set forth herein has been complied with by Licensee.
13. EXPORTATION OF TECHNICAL INFORMATION; COMPLIANCE WITH LAW
Licensee agrees not to export from the United States, directly or
indirectly, any Technical Information (or the direct product thereof) furnished
to Licensee either directly or indirectly by Licensor, except to the extent and
to the countries permitted by the laws of the United States. Licensee shall
comply with all applicable laws in connection with its activities under the
license granted to Licensee pursuant to this Agreement.
14
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14. EXPENSES
Each party shall pay its own expenses and costs relating to the
negotiation, execution and performance of this Agreement.
15. NOTICES
Any notices or other communications required or permitted hereunder
shall be given in accordance with the terms of the Asset Purchase Agreement.
16. ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns, but except as expressly
herein provided, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party without the prior written
consent of the other party; provided, however, that Licensor may assign this
Agreement and any or all of its rights, interests or obligations hereunder to
any subsidiary or Affiliate (as defined in the Asset Purchase Agreement) of
Licensor or to any assignee of all or any substantial portion of the Acquired
Intellectual Property (as defined in the Asset Purchase Agreement) without the
consent of Licensee; provided, however, that Licensor may not assign its rights
under Section 5 hereof to any Person other than a subsidiary or Affiliate of
Licensor without the consent of Licensee, which consent shall not be
unreasonably withheld. Any such assignee of Licensor shall agree in writing to
be bound by all of the terms and conditions of this Agreement, whereupon
Licensor shall be immediately and fully released from all obligations under this
Agreement. If Licensee desires to transfer this Agreement, or its rights,
interests or obligations hereunder, Licensor may grant or withhold such consent,
in its sole discretion, including if Licensor determines that the transfer by
Licensee to such transferee could be detrimental to the value or usefulness of
the Assets acquired by Licensor pursuant to the Asset Purchase Agreement or the
business of Licensor in any respect, because the proposed transferee is a
current or potential competitor of Licensor, due to questions or concerns
regarding the financial status or operational capabilities of such proposed
transferee, or otherwise.
17. COMPLETE AGREEMENT
This Agreement, together with the Asset Purchase Agreement and the
agreements between the parties executed and delivered pursuant to the Asset
Purchase Agreement, contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior arrangements or
understandings with respect thereto. There are no restrictions, agreements,
promises, warranties, covenants or undertakings with respect to the subject
matter hereof other than those expressly set forth herein or therein.
15
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18. GOVERNING LAW
This Agreement and all matters relating to this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
without giving effect to the choice of law principles thereof.
19. CURE OF INVALID PROVISIONS
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from this Agreement;
provided, however, that if such illegal, invalid or unenforceable provision may
be made legal, valid and enforceable by limitation thereof, then the provision
shall be revised and reformed to make it legal, valid and enforceable to the
maximum extent permitted by law.
20. AMENDMENT; WAIVERS
The terms and provisions of this Agreement may be modified or amended
only by a written instrument executed by each of the parties hereto, and
compliance with any term or provision hereof may be waived only by a written
instrument executed by each party entitled to the benefits of the same. Except
as expressly provided herein to the contrary, no failure to exercise any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege granted
hereunder.
21. SPECIFIC PERFORMANCE
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with the terms hereof. Accordingly, the parties agree that each of
them shall be entitled to seek injunctive relief to prevent breaches of the
terms of this Agreement and to seek specific performance of the terms hereof, in
addition to any other remedy now or hereafter available at law or in equity, or
otherwise.
22. FORCE MAJEURE
Any delays in or failures of performance by either party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including: acts of God; the intervention of any governmental
authority; strikes or the concerted acts of workers; fires; floods; explosions;
riots; wars; rebellion; and sabotage. Any time for performance hereunder shall
be extended by the actual time of delay caused by such occurrence; provided,
that if any such delaying cause shall continue for more than 60 calendar days,
the party injured by the inability of the other to perform shall have the right,
upon written notice, to terminate this Agreement.
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23. INTERPRETATION
The headings herein are for convenience of reference only, do not
constitute a part of this Agreement and shall not be deemed to limit, extend or
otherwise affect the meaning of any of the provisions hereof. The words
"include," "includes," and "including" shall be deemed to be followed by the
words "without limitation." Unless otherwise specifically provided for herein,
the term "or" shall not be deemed to be exclusive.
24. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[Signature page follows]
17
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IN WITNESS WHEREOF, the parties have executed this agreement as of the
date first set forth above.
LICENSOR:
XXXX'X LLP
By:______________________________________
Name:
Title:
LICENSEE:
PACIFICHEALTH LABORATORIES, INC.
By:______________________________________
Name:
Title:
18
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SCHEDULE A
PATENTS
Patent/
Application No. Title Status
--------------- ----- ------
UNITED STATES:
---------------------------------------------------------------------------------------------------------------
US 5,585,101 Method to Improve Performance During Exercise Using the Issued December 17,
Ciwuji Plant 1996.
--------------------------- ---------------------------------------------------------- ------------------------
US 6,051,236 Composition for Optimizing Muscle Performance During Issued April 18, 2000.
Exercise
--------------------------- ---------------------------------------------------------- ------------------------
US 6,989,171 Sports Drink Composition for Enhancing Glucose Uptake Issued January 24,
and Extending Endurance During Physical Exercise 2006.
--------------------------- ---------------------------------------------------------- ------------------------
USSN 09/824,357 Sports Drink Composition for Enhancing Glucose Uptake Abandoned.
and Extending Endurance During Physical Exercise
--------------------------- ---------------------------------------------------------- ------------------------
[REDACTED - CONFIDENTIAL [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* Pending - Filed
TREATMENT REQUESTED]* January 20, 2006.
--------------------------- ---------------------------------------------------------- ------------------------
[REDACTED - CONFIDENTIAL [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* Pending - Filed
TREATMENT REQUESTED]* January 23, 2006.
---------------------------------------------------------------------------------------------------------------
FOREIGN (NON-U.S.):
---------------------------------------------------------------------------------------------------------------
[[REDACTED - CONFIDENTIAL [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* Pending.
TREATMENT REQUESTED]*
--------------------------- ---------------------------------------------------------- ------------------------
2000 AU 0016200 Composition for Optimizing Muscle Performance During Abandoned.
Exercise
--------------------------- ---------------------------------------------------------- ------------------------
[REDACTED - CONFIDENTIAL [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* Pending.
TREATMENT REQUESTED]*
--------------------------- ---------------------------------------------------------- ------------------------
2001 ZA 0004738 Composition for Optimizing Muscle Performance During Granted 2001/4728.
Exercise
--------------------------- ---------------------------------------------------------- ------------------------
[REDACTED - CONFIDENTIAL [REDACTED - CONFIDENTIAL TREATMENT REQUESTED]* Pending.
TREATMENT REQUESTED]*
--------------------------- ---------------------------------------------------------- ------------------------
CA 2240677 Method to Improve Performance During Exercise Using the Abandoned.
Ciwujia Plant
--------------------------- ---------------------------------------------------------- ------------------------
1997 AU 0014214 Method to Improve Performance During Exercise Using the Abandoned.
Ciwujia Plant
--------------------------- ---------------------------------------------------------- ------------------------
1996 EP 0944396 Method to Improve Performance During Exercise Using the Abandoned.
Ciwujia Plant
--------------------------- ---------------------------------------------------------- ------------------------
1997 JP 0522942 Method to Improve Performance During Exercise Using the Abandoned.
Ciwujia Plant
---------------------------------------------------------------------------------------------------------------
19
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SCHEDULE B
TRADEMARKS
Application/
Registration No. Trademark Status
---------------- --------- ------
FEDERAL:
76-537986 (DESIGN ONLY) Registered
76-537987 ACCELERADE (and Design) Registered
76-537988 ARE YOU ACCELERADED? Registered
76-564326 ACCEL GEL (Stylized) Registered
76-337391 POWERING MUSCLES Registered
76-096182 ACCELERADE Registered
75-614117 OPTIMUM RECOVERY RATIO Registered
75-614119 (DESIGN ONLY) Registered
75-560480 R4 (Stylized) Registered
75-027605 ENDUROX Registered
75-214632 ENDUROX PROHEART Abandoned
75-179076 ENDUROX EXCEL Abandoned
75-179075 ENDUROX ACTIVE Abandoned
INTERNATIONAL:
1,122,170 ACCELERADE (CANADA) Registered
TMA 497,754 ENDUROX (CANADA) Registered
3071855 ACCELERADE (CHINA) Registered
2001-104987 ACCELERADE (JAPAN) Registered
4167993 ENDUROX (JAPAN) Registered
18874/2001 ACCELERADE (HONG KONG) Registered
01-100,249 ACCELERADE (COLOMBIA) Registered
10.1-023 ACCELERADE (VENEZUELA) Registered
T01/18001E ACCELERADE (SINGAPORE) Registered
002459956 ACCELERADE (EUROPE) Registered
2,359,000 ACCELERADE (ARGENTINA) Registered
894943 ACCELERADE (AUSTRALIA) Registered
823.933.032 ACCELERADE (BRAZIL) Registered
90048699 ACCELERADE (TAIWAN) Registered
538,408 ENDUROX (MEXICO) Registered
425231 ENDUROX (EUROPE) Registered
739007 ACCELERADE (MEXICO) Registered
20
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SCHEDULE C
LICENSED TERRITORY
[REDACTED - CONFIDENTIAL TREATMENT REQUESTED]*
21
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SCHEDULE D
LICENSED PRODUCTS
EnduroxR4, FP, 14 servs,
EnduroxR4, FP, 28 servs,
EnduroxR4, TO, 14 servs,
EnduroxR4, TO, 28 servs,
EnduroxR4, LL, 14 servs,
EnduroxR4, LL, 28 servs,
XxxxxxxX0, XX, 00 xxxxx,
XxxxxxxX0, XX, 00 servs,
XxxxxxxX0, XX, 00 xxxxx,
XxxxxxxX0, XX, 00 servs,
EnduroxR4 Single Serve 175pc. LL
EnduroxR4 Single Serve 100pc. FP
EnduroxR4 Single Serve 100pc. TO
Endurox Excel 36pc MC
Accel Gel, SK, 24-ct
Accel Gel, MIX, 6-ct
Accel Gel, MIX, 00-xx
Xxxxx Xxx, XX, 00-xx
Accel Gel, VN, 24-ct
Accelerade, TO, 12 servs
Accelerade, TO, 28 servs
Accelerade, TO, 56 servs
Accelerade, LL, 12 servs
Accelerade, LL, 28 servs
Accelerade, LL, 56 servs
Accelerade, FP, 12 servs
Accelerade, FP, 28 servs
Accelerade, FP, 56 servs
Accelerade, BR, 12 servs
Accelerade, BR, 28 servs
Accelerade, BR, 56 servs
Accelerade Single Serve Packets-TO
Accelerade Single Serve Packets-LL
Accelerade Single Serve Packets-FP
"Licensed Products" shall also include any flavor, size or similar variations of
the foregoing products that are sold in powder, gel or pill form and are
approved by Licensor, which approval will not be unreasonably withheld (it being
understood that Licensor's granting or witholding approval based on Licensor's
strategy concerns will be deemed reasonable for this purpose).
22
