EXHIBIT 10.15
OPTION AGREEMENT
KINGS, INC.
WESTON CENTRE
XXXXXXX XXXXX
00 XXXXXXXXXXXXX
XXXXXX XX0X0XX
September 24, 2002
Pilot Therapeutics, Inc.
000 X. Xxxxxxxx Street, Xxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. "Ski" Xxxxxxx III, PhD.
President, Chief Executive Officer
and Chief Scientific Officer
Re: Option Agreement
Dear Ski:
Kings, Inc. ("Kings") and Pilot Therapeutics, Inc. ("Pilot")
acknowledge and agree that Kings has in its possession and/or under its control
approximately 900 metric tons of borage seed ("Seed") and/or Seed converted into
borage oil ("Oil"). Seed and Oil are collectively referred to herein as "Borage
Products". Kings agrees that Pilot shall have the option (the "Option") to
purchase all or a portion of the Borage Products from Kings during the period
from January 1, 2003 to December 31, 2005 (the "Option Period") by providing
written notice (the "Exercise Notice") of Pilot's exercise of the Option to
Kings at least ninety days prior to the Borage Products estimated delivery date.
The Exercise Notice shall specify the estimated Borage Products delivery date
and delivery location. The purchase price for any (i) Seed purchased by Pilot
pursuant to an Exercise Notice shall be $2,948 per metric ton and (ii) Oil
purchased by Pilot pursuant to an Exercise Notice shall be as calculated in the
Agreement for the Supply of Borage and Echium Oil, dated April 14, 2002, between
Kings and Pilot (the "Supply Agreement"). All Borage Products delivered by Kings
to Pilot pursuant to this Option shall meet the Quality Requirements, as
specified in the Supply Agreement.
Kings agrees that during the Option Period it shall provide
Pilot with written notice of any proposed sale of Borage Products (a "Proposed
BP Sale") to a third party (the "Proposed BP Sale Notice"). The Proposed BP Sale
Notice shall specify all of the material terms and conditions of the Proposed BP
Sale, including, price, quantity and target delivery dates. Pilot shall have the
right to advise Kings, in writing, within three business days of Pilot's receipt
of the Proposed BP
Sale Notice, that it wants to purchase all or a portion of the Borage Products
specified in the Proposed BP Sale Notice on the terms set forth in the Proposed
BP Sale Notice (the "Pilot Purchase Notice"). Upon Kings receipt of a Pilot
Purchase Notice, Kings (i) shall sell and deliver to Pilot the Borage Products
specified by Pilot in the Pilot Purchase Notice and (ii) may sell the Borage
Products specified in the Proposed BP Sale Notice not purchased by Pilot to the
third party on the same terms and conditions set forth in the Proposed BP Sale
Notice within thirty days of the date of the Proposed BP Sale Notice. If Kings
does not receive a Pilot Purchase Notice within three business days of Pilot's
receipt of a Proposed BP Sale Notice, Kings may sell the Borage Products
specified in the Proposed BP Sale Notice to a third party on the same terms and
conditions set forth in the Proposed BP Sale Notice within thirty days of the
date of the Proposed BP Sale Notice. If Kings does not sell the Borage Products
specified in the Proposed BP Sale Notice to a third party within thirty days of
the date of the Proposed BP Sale Notice, Kings shall be required to comply with
the notice and sale provisions, and Pilot shall have the purchase rights,
specified in this paragraph before Kings may sell the Borage Products originally
specified in the Proposed BP Sale Notice to a third party.
Subject to the immediately preceding paragraph, Pilot agrees
that if Pilot has not delivered an Exercise Notice with respect to all Borage
Products on or before the last day of the Option Period, (x) this Option shall
terminate, on the last day of the Option Period (the "Third Party Permitted Sale
Date"), with respect to all Borage Products not subject to a previously
delivered Exercise Notice ("Unpurchased Borage Products") and (y) Kings shall
have the right, after the Third Party Permitted Sale Date, to sell Unpurchased
Borage Products to a third party and have no further obligations to Pilot with
respect to Unpurchased Borage Products hereunder.
Pilot agrees that it shall not purchase any borage seed and/or
borage oil from a third party during the Option Period unless it has delivered
to Kings an Exercise Notice with respect to all of the Borage Products remaining
in Kings' possession and/or under its control prior to any Pilot purchase of
borage seed and/or borage oil from such third party.
Pilot and Kings agree that this Option shall replace in its
entirety the Purchase Order, dated November 27, 2001, relating to borage seed
commitment for future Crossential GLA and borage crop commitment for future
Crossential GLA (the "Purchase Order") and the Purchase Order shall be of no
further force and effect as of the date hereof.
Pilot and Kings agree that any purchase of Borage Products
pursuant to this Option shall be made in accordance with the terms and
conditions of the Supply Agreement.
Please sign in the space indicated below to confirm Pilot's
acceptance of the terms of the Option set forth herein.
Very truly yours,
KINGS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
ACCEPTED AND AGREED as
of the 24th day of September 2002.
PILOT THERAPEUTICS, INC.
By: /s/ Xxxxx X. Xxxxxxx III Ph.D.
-----------------------------------------
Name: Xxxxx X. "Ski" Xxxxxxx III, PhD.
Title: President, Chief Executive Officer
and Chief Scientific Officer
