NOTICE: CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN LICENSE AGREEMENT
Exhibit 10.02
NOTICE: CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN
PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN
This License Agreement (“Agreement”) is made and entered into as of the 28th day of
October, 1992, by and between Martek Biosciences Corporation, a Delaware corporation
(“Licensor”), and Xxxx Xxxxxxx & Company, a Delaware corporation (“Licensee”).
WITNESSETH:
WHEREAS, Licensor has developed certain technology (the “Technology”) relating to the
production by microbial fermentation of Omega-3 and Omega-6 long-chain polyunsaturated fatty
acid-containing triglycerides for possible incorporation into infant formula; and
WHEREAS, Licensee is in the business of developing, manufacturing and marketing infant
nutritional products; and
WHEREAS, Licensee desires to obtain a non-exclusive license from Licensor for the
Technology and Licensor is willing to grant such license subject to the conditions and
pursuant to the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants of the
parties hereto, each party hereby agrees with the other as follows:
ARTICLE I
DEFINITIONS
Section 1.1. “Affiliate” shall mean any person, corporation, firm, partnership
or other entity which directly or indirectly owns Licensee, is owned by Licensee or is owned
by a party which owns Licensee to the extent of at least 50% of the equity having the power
to vote on or direct the affairs of the entity.
Section 1.2. For purposes of Section 1.3 of this Agreement, “ARASCO” shall mean
a Martek Product containing no less than 15% arachidonic acid by weight of fatty acids.
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Section 1.3. [ * ]
Section 1.4. “Commercially Reasonable Volumes” shall mean
a minimum of 1500 Kg. of ARASCO per year and 500 Kg. of DHASCO per year.
Section 1.5. For purposes of Section 1.3 of this Agreement, “DHASCO” shall mean a
Martek Product containing no less than 30% docosahexaenoic acid by weight of fatty acids.
Section 1.6. “Infant Formula Product” shall mean an enteral product formulated for the
nutritional support of premature infants and/or a breast milk substitute formulated industrially in
accordance with applicable Codex Alimentarius and United States Food and Drug Administration
standards to satisfy the total normal nutritional requirements of infants up to between four and
six months of age and adapted to their physiological characteristics and fed in addition to other
foods to infants up to approximately one year of age.
Section 1.7. “Licensed Patents” shall mean the patent applications attached hereto as
Exhibit III and all patents and patent applications throughout the world which cover the
Technology, including all patents and patent applications covering inventions, improvements or
modifications conceived or developed by Licensor during the term of this Agreement and included in
the Technology.
Section 1.8. “Martek Product” shall mean triglycerides containing Omega-3 and/or.
Omega-6 long-chain polyunsaturated fatty acids produced by microbial fermentation using technology
which is proprietary to Licensor.
Section 1.9. “Xxxx Xxxxxxx Product” shall mean a product (i) which is an Infant
Formula Product, (ii) which is in a form for utilization by consumers, (iii) which is developed by
Licensee or its Affiliates, (iv) which bears Licensee’s label or the label of an Affiliate or label
licensed by Licensee or an Affiliate, and (v) into which the Martek Product is incorporated.
Section 1.10. “Technology” shall mean the organisms, microorganisms, specifications,
biological materials, designs, formulae, processes, standards, data, trade secrets, knowhow,
copyrights and technology relating to the development and production of the Martek Product and
proprietary to Licensor and any modifications, improvements and enhancements to any of the
foregoing made by Licensor, which, in Licensor’s opinion, is or are necessary in the production and
development of the Martek Product.
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Section 1.11. “Territory” [ * ]
Section 1.12. “Third Party” shall mean any party other than Licensor, Licensee and
Affiliates.
ARTICLE II
GRANT OF LICENSE AND OTHER RIGHTS
Section 2.1. License.
(i) Licensor hereby grants to Licensee for the term of this Agreement and subject to the
conditions of this Agreement, a non-exclusive, non-transferable right and license throughout the
Territory, directly or through an Affiliate, under Licensed Patents and the Technology, (A) to
produce the Xxxx Xxxxxxx Product, (B) to use and make the Martek Product for purposes of making and
having made the Xxxx Xxxxxxx Product and (C) to use, market and distribute directly or indirectly
the Xxxx Xxxxxxx Product.
(ii) Licensor further grants to Licensee the option to add the territory of [ * ] to the
license granted under Section 2.1.(i) so that the Territory as defined herein will include all
countries throughout the world, such option to be exercisable at any time during the term of this
Agreement upon payment of an additional fee as specified in Section 4.1(i) of this Agreement.
Section 2.2. Licenses to Third Parties
(i) Licenses to Third Parties Generally. Licensor shall be entitled to grant any
license to any Third Party relating to the Technology, the Martek Product or the Licensed Patents
upon any terms whatsoever; provided, however, that Licensor shall not grant any license to any
Third Party for the incorporation of the Martek Product into, or for the use of the Technology for
the production of, an Infant Formula Product with payment terms which are more favorable to such
Third Party than the payment terms provided in this Agreement with respect to the Licensee, without
the prior written consent of Licensee or unless such more favorable payment terms prospectively are
extended to Licensee. Notwithstanding the preceding sentence, Licensor shall be entitled to charge
lesser lump sum payments to a Third Party licensee (similar to those provided in subsections 4.1(i)
and (ii) of this Agreement) without the prior consent of Licensee and without being obligated
prospectively to extend such a payment term to Licensee, if the license to such a Third Party is
territorially restricted and if the amount of the reduction in the lump sum charged
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reasonably is
related to the reduced marketing opportunities available to such Third Party licensee due to the
territorial restrictions applicable to use of the Technology and the Martek Product.
(ii) Licenses to Third Party Suppliers. Licensor shall be obligated to license the
Technology, the Licensed Patents and the Martek Product to Third Parties as follows:
(A) Licensor shall use reasonable efforts further to license the Technology or the Licensed
Patents or otherwise to produce the Martek Product, itself or through a Third Party whether or not
pursuant to another licensing arrangement, for the purpose of creating a sufficient supply of the
Martek Product to satisfy Licensee’s and its Affiliates’ requirements with respect to their
marketing and sale of the Xxxx Xxxxxxx Product; provided, however, that such requirements and any
increases or decreases thereof, shall be communicated in writing by Licensee to Licensor not less
than nine (9) months prior to Licensor’s obligation to satisfy such requirements or increases or
decreases thereof.
(B) If Licensor licenses the Martek Product, the Licensed Patents and the Technology to a
Third Party pursuant to subsection (i) of this Section 2.2, Licensor shall permit Licensee to
negotiate the terms of the purchase and supply arrangements between the Licensee and such Third
Party directly with such Third Party; provided, however, that such direct negotiations or
arrangements shall not affect Licensor’s rights to royalties or other fees from Licensee or such
Third Party.
(C) If the Third Parties to whom the Martek Product and the Technology are licensed and Martek
in the aggregate are unable to satisfy Licensee’s and its Affiliates’ requirements for the Martek
Product (as established and communicated pursuant to subsection (ii)(A) of this Section 2.2),
Licensor shall appoint one or more additional licensed suppliers who are reasonably acceptable to
Licensee and who can satisfy the excess demands of Licensee and its Affiliates.
(D) Licensor and Licensee acknowledge and agree that, at the time of the execution of this
Agreement, the production cost of the Martek Product in gross quantities, the fair market value
thereof and the commercial volumes thereof necessary to meet Licensee’s demands are not
ascertainable, and Licensor and Licensee covenant and agree that, prior to the first sale of a Xxxx
Xxxxxxx Product, Licensor and Licensee shall negotiate in good faith and agree upon reasonable
terms relating to the consideration to be payable by Licensee or its
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Affiliates to Licensor or
Third Parties for amounts of the Martek Product produced by or on behalf of Licensor and delivered
to Licensee or its Affiliates and upon commercially reasonable volumes of Martek Product required
by Licensee.
(iii) Transfer of Martek Product. Nothing in this Section 2.2 or in this Agreement
shall be construed to permit Licensee or its Affiliates to sub-license the Martek Product or the
Technology or otherwise unilaterally to transfer to any Third Party the Martek Product or the
Technology except as the same are incorporated into the Xxxx Xxxxxxx Product.
Section 2.3. Sublicensinq. The grants to Licensee under this Article II shall not
include the right to grant sublicenses.
Section 2.4. Trademarks. In addition to the license granted hereunder relating to the
Martek Product and the Technology, Licensor hereby grants to Licensee the non-exclusive,
non-transferable right and license to use throughout the Territory the Trademark solely on, and in
connection with the manufacture and sale of, the Xxxx Xxxxxxx Product, subject to the following
terms and conditions:
(i) Licensee shall not use the Trademark as or part of its corporate or business name or the
name of any business entity which is controlled by it, whether an Affiliate or otherwise.
(ii) Licensee and its Affiliates shall have no right to sublicense any of the rights in the
Trademark conveyed hereunder.
(iii) Licensee and its Affiliates shall not affix or use the Trademark on any product other
than the Xxxx Xxxxxxx Product.
(iv) Licensee recognizes and acknowledges Licensor’s ownership of the Trademark and Licensor’s
intent to protect the Trademark in such foreign countries as Licensor, in its sole discretion,
deems appropriate. Licensee covenants and agrees that it and its Affiliates shall not challenge, or
cause a Third Party to challenge, Licensor’s right, title or interest in and to the Trademark
anywhere in the world. All use by Licensee or its Affiliates of the Trademark anywhere in the world
shall inure to the benefit of Licensor, and Licensee and its Affiliates shall make no use or apply
for any registration thereof except as permitted by this Agreement. Nothing in this Agreement
shall be construed so as to require Licensor to take any actions or measures to protect or secure
any rights in or obtain or apply for registration of the Trademark.
(v) Licensee covenants that, upon notification from
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Licensor that Licensor has obtained a U.S.
Federal Registration on the Trademark, Licensee will use the trademark registration symbol® each
time it or its Affiliates uses the Trademark on the Xxxx Xxxxxxx Product or on the labels, labeling
or packaging thereof and on all material originating with Licensee or its Affiliates and used to
promote the sale of Xxxx Xxxxxxx Products, and the following legend prominently shall appear at
least once in each such Xxxx Xxxxxxx Product or material: “Formulaid® is a registered trademark of
Martek Biosciences Corporation.” Until such time as Licensor obtains a U.S. Federal Registration
on the Trademark, Licensee shall substitute the symbol
“TM” in place of the
symbol® as specified herein. Licensee further agrees that it will comply with the marking and
registered user requirements of all foreign countries in which the Trademark is used, including,
but not limited to, requirements relating to the
execution of any documentation needed in order to effectuate the purpose of this provision.
(vi) Licensee covenants that Xxxx Xxxxxxx Products manufactured for and by it and sold by it
shall be of a high standard and quality so as to reflect favorably upon the business of both
Licensor and Licensee and the goodwill associated therewith. To effectuate the foregoing:
(A) Prior to the time that Licensee or its Affiliates shall sell or offer for sale, in the
regular course of business, any Xxxx Xxxxxxx Product bearing the Trademark, Licensee shall submit
to Licensor, for its approval, samples of the Xxxx Xxxxxxx Product as well as samples of all
materials used to sell or to promote the sale of Xxxx Xxxxxxx Products, including, but not limited
to, labels, labeling, packaging materials, advertising and other promotional materials.
Thereafter, Licensee and its Affiliates shall not make any change to the Xxxx Xxxxxxx Product or to
the way in which the Trademark is used or depicted in connection with the Xxxx Xxxxxxx Product or
make any change in such materials used to sell or promote the sale of the same without first
submitting such proposed change to Licensor and obtaining its approval.
(B) Licensor shall have the right, at all times and upon reasonable advance notice to
Licensee, to request and receive without charge at reasonable intervals throughout the term of this
Agreement, a reasonable number of samples of Xxxx Xxxxxxx Products and other materials that depict
the Trademark, in order that Licensor may satisfy itself that such Xxxx Xxxxxxx Products and
materials which depict the Trademark conform to the samples thereof approved by Licensor.
(C) No approval required of Licensor under this
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subsection (vi) shall be unreasonably withheld
or delayed, and any sample of a Xxxx Xxxxxxx Product bearing the Trademark or materials used to
sell or promote the sale of Xxxx Xxxxxxx Products bearing the Trademark which have not been
disapproved within fifteen business days after receipt thereof shall be deemed to have been
approved.
(D) Licensee shall advise Licensor of any infringement of the Trademark of which it or its
Affiliates becomes aware, but Licensee and its Affiliates shall not bring any action with respect
to any such infringement without Licensor’s prior written consent. Licensee and its Affiliates
shall cooperate with Licensor, at Licensor’s request, with respect to any of Licensor’s efforts to
protect its interests in the Trademark. Nothing in this Agreement shall be construed so as to
require Licensor to take any actions or measures with respect to any alleged, suspected or known
infringement of the Trademark.
(E) Licensee shall notify Licensor in writing prior to any material alterations to the formula
of the Xxxx Xxxxxxx Product bearing the Trademark.
(vii) Nothing in this Section 2.4 or in this Agreement shall be construed to require Licensee
or its Affiliates to use the Trademark on the Xxxx Xxxxxxx Product or on the labels, labeling or
packaging thereof or on materials used to promote the sale of the Xxxx Xxxxxxx Product.
Section 2.5. Services. Licensor shall make its officers and other employees available
at reasonable times to provide technical and other consultation services relating to (i) the
delivery of the Technology as contemplated under this Agreement and (ii) instructions pertaining to
the production of the Martek Product at commercial volumes and costs, but only to the extent that
such services are commercially reasonable. This obligation to perform services shall terminate on
the first to occur of (i) the termination of this Agreement, (ii) the fifth anniversary date of
this Agreement, (iii) the second anniversary of the date on which the Xxxx Xxxxxxx Product is first
commercially introduced anywhere in the world and (iv) the performance by Licensor’s employees of [ * ] hours of such services.
Section 2.6. Other Patents. Licensor shall not assert against Licensee or its
Affiliates any patent other than the Licensed Patents now or later owned or controlled by Licensor
which prevents Licensee or its Affiliates from exploiting the Technology or the Martek Product.
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Section 2.7. Licensee’s Property. Nothing in this Article II or any other provision of
this Agreement shall be construed to prevent Licensee or its Affiliates from exploiting any
technology which an Affiliate independently develops and which does not infringe upon any Licensed
Patents, whether or not such technology is similar to the Technology or to the Martek Product;
provided, however, that (i) no technology shall be considered hereunder to be independently
developed by an Affiliate unless such Affiliate develops such technology under circumstances where
no individual associated with the development of such technology has been exposed to confidential
information delivered to Licensee or its Affiliates pursuant to Article XII hereof or has otherwise
been exposed directly or indirectly to the Technology or the Martek Product; (ii) this Section
shall not be construed to permit Licensee or its Affiliates to exploit the Technology or the Martek
Product, to market the Xxxx Xxxxxxx Product or to disclose information which is confidential under
Article XII hereof except as otherwise expressly permitted under this Agreement; (iii) in the case
of the exploitation by Licensee or its Affiliates of any technology or the disclosure of any
information which is or are challenged by Licensor in a court of competent
jurisdiction as constituting a breach of this Agreement or an infringement of Licensor’s
proprietary rights in the Technology or the Martek Product, Licensee or its Affiliates, as
applicable, shall bear the burden of proving that such technology was independently developed by an
Affiliate; and (iv) nothing in this Section shall be construed to prohibit Licensor or Licensee
from enforcing a valid patent granted to it in any jurisdiction against the Licensee, Licensor, its
Affiliates or any Third Person.
ARTICLE III
TERM AND TERMINATION
Section 3.1. Term. This Agreement shall commence on the date of this Agreement and,
unless earlier terminated pursuant to this Article III, shall expire, as to each country in which
the Xxxx Xxxxxxx Product is sold or otherwise distributed for consumer use, on the date which is
twenty five (25) years after the first commercial introduction of the Xxxx Xxxxxxx Product in such
country. Upon expiration, Licensee shall have a fully paid, royalty free license to continue in
perpetuity to utilize the Martek Product and the Technology as provided for in Section 2.1.
Section 3.2. Material Breach; Opportunity to Cure. Either party to this Agreement may
immediately terminate this Agreement by written notice and without judicial intervention if the
other party shall materially fail to comply with or shall materially breach any of its obligations
and covenants hereunder and shall not
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remedy and make good such breach or failure, or have
undertaken to cure the same, within thirty (30) days from the receipt of a written notice of
failure of compliance or breach.
Section 3.3. Termination in case of Infringement. Licensor or Licensee shall have the
right to terminate this Agreement with respect to the manufacture, use or sale of the Technology or
the Martek Product in a particular jurisdiction within the Territory if a court of competent
jurisdiction therein determines by final order that the Technology or the Martek Product, infringes
upon the patent of any Third Party; provided, however, that Licensor and Licensee hereby covenant
and agree that, prior to any such termination, Licensor and Licensee shall engage in reasonable,
good faith efforts to develop, and shall cooperate with the other in developing, a lawful method of
using, selling or manufacturing, as applicable, the Xxxx Xxxxxxx Product in the applicable
jurisdiction, including, but not limited to, commercially reasonable efforts to procure a license
from such Third Party or to alter the design or offending composition of the Martek Product, the
Technology or the Xxxx Xxxxxxx Product, as applicable, so as to eliminate the infringement. Any
costs incurred by Licensor for its procurement of a license from such a Third Party shall be the
responsibility of Licensor.
Section 3.4. Post-Termination Rights. Effective upon the date of termination of this
Agreement pursuant to Section 3.2 or 3.3 hereof, Licensee and its Affiliates shall cease
manufacturing the Martek Product and the Xxxx Xxxxxxx Product provided, however, that, to the
extent lawful, Licensee and its Affiliates may continue to distribute the Xxxx Xxxxxxx Products
manufactured prior to such date if Licensee continues to make payments under Section 4.1 with
respect to such Xxxx Xxxxxxx Products and otherwise continues to comply with the terms and
conditions of this Agreement. Notwithstanding the preceding, upon the earlier to occur of (i) the
sale by Licensee and its Affiliates of all of their inventory of Xxxx Xxxxxxx Products manufactured
prior to the date of the termination of this Agreement pursuant to Section 3.2 or 3.3 hereof and
(ii) the date which is six months after the date of the termination of this Agreement pursuant to
Section 3.2 or 3.3 hereof, Licensee and its Affiliates shall cease all use of the Technology, sale
of the Xxxx Xxxxxxx Product and use of the Trademark and Licensee and its Affiliates shall have no
further rights under this Agreement.
Section 3.5. Inability to Market the Xxxx Xxxxxxx Product
(i) Refund. If Licensee and its Affiliates are prevented by applicable law (e.g.,
inability to obtain legally required regulatory approval or the existence of a Third Party patent
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which, upon Licensee’s marketing of the Xxxx Xxxxxxx Product, would subject Licensee to liability
for infringement of such Third Party patent, as concluded by a legal opinion issued by an
independent Third Party counsel mutually selected by Licensor and Licensee) from marketing the Xxxx
Xxxxxxx Product in the United States despite its satisfaction of the refund- conditions
set forth in subsection (ii) of this Section by the third anniversary date of this Agreement, or if
Licensor is unable to refine the development process for the Martek Product or supply the Martek
Product (directly or through Third Parties) in each case at Commercially Reasonable Volumes and
Commercially Reasonable Costs, in accordance with the specifications set forth in Exhibit
IV of this Agreement and pursuant to representations and warranties substantially similar in
scope to those set forth in Exhibit V of this Agreement by the third anniversary of date of
this Agreement, or if Licensor is incapable of producing the Martek Product or having the Martek
Product produced by a Third Party in compliance with all applicable environmental laws, regulations
and permits by the third anniversary date of this Agreement, then in any such case Licensee shall
be entitled to elect, within sixty days after such date, to terminate this Agreement. If Licensee
elects to terminate this Agreement pursuant to the previous sentence, all fees paid by Licensee to
Licensor by such date pursuant to subsection (i) of Section 4.1 of this Agreement (and not as of
such date otherwise refunded to Licensee), including any advances paid pursuant to the Letter of
Intent between Licensor and Licensee executed on or about March 24, 1992 (the “Letter of Intent”),
shall
be refunded, without interest, to the Licensee as follows:
(A) If the stockholders of Licensor with a right of first refusal respecting issuances of
Licensor’s Common Stock, $.10 par value per share (the “Common Stock”), fail to exercise such right
such that it is possible for the Licensor lawfully to issue ,shares of Common Stock to
Licensee, Licensor shall issue to Licensee Common Stock against such refundable fees at a rate of
one share of Common Stock per: (1) in the event of a registered initial public offering by Licensor
of the Common Stock occurring subsequent to the execution of this Agreement and prior to the third
anniversary date of this Agreement, the lesser of (x) $100 and (y) the last sale price of the
Common Stock on the national securities exchange on which the Common Stock is traded, or, if the
Common Stock is not traded on a national securities exchange, the average of the bid and asked
prices for the Common Stock as reported by a recognized quotation service, determined as of the
date of Licensee’s election to terminate this Agreement; or, (2) if a registered initial public
offering by Licensor of the Common Stock does not occur prior to the third anniversary date of this
Agreement, $100. The $100 figure specified in clause (2) of this subparagraph (A) shall be
adjusted appropriately if, after the date
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of this Agreement, a change in the number of issued
shares of Common Stock occurs as the result of a subdivision or consolidation of then outstanding
shares of Common Stock or if then unissued authorized stock (similarly adjusted for subdivision or
consolidation) is subsequently issued or for any other condition which materially dilutes the
Licensee’s potential ownership share of the Licensor after the Agreement date.
(B) If the stockholders of Licensor exercise their rights of first refusal such that Licensor
is unable lawfully to issue Common Stock to Licensee in satisfaction of its refund obligations
under this Section 3.5, Licensor shall refund all refundable sums in cash.
Licensee’s right to terminate this Agreement and receive a refund of fees under this Section
3.5 shall be Licensee’s exclusive remedy for Licensor’s failure sufficiently to refine the
development process of the Martek Product or supply Martek Product (directly or through Third
Parties) and such right shall terminate at the earliest to occur of the date which is sixty days
after the third anniversary of this Agreement, the date on which the Xxxx Xxxxxxx Product is first
commercially introduced anywhere in the world, or the date on which Licensee materially breaches
this Agreement.
(ii) Refund Conditions. Licensee’s rights to a refund of amounts paid pursuant to
subsection (i) of Section 4.1 of this Agreement shall be contingent upon Licensee’s use of
reasonable efforts to obtain, at its expense and as soon as practicable, all necessary regulatory
approvals with respect to the use, mannufacture and sale of the Xxxx Xxxxxxx Product in the United
States, Licensee
being responsible for performing all acts necessary for obtaining such approvals, including,
but not limited to, the preparation of all necessary petitions or pre-market approval applications
with regulatory agencies and the performance of all necessary tests and data preparation. Such
refund is further contingent upon Licensee promptly communicating to Licensor the details of all
regulatory approvals and efforts to obtain such approvals in the United States and in any other
jurisdiction in which approval for the Xxxx Xxxxxxx Product is sought by Licensee or its
Affiliates, and Licensee promptly making available to Licensor any documents relating thereto,
provided that Licensor maintains the confidentiality of such communications and documentation as
required under Section 12.1 of this Agreement. If Licensee reasonably concludes that it and its
Affiliates cannot, after diligent efforts, lawfully distribute for sale the Xxxx Xxxxxxx Product in
the United States, such refund shall further be contingent upon Licensee’s use of reasonable
efforts to market the Xxxx Xxxxxxx Product in one or more jurisdictions within the Territory which
are not subject to the jurisdiction of the applicable regulatory agencies
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of the United States and
which, alone or in the aggregate, offer comparable marketing opportunities for the Xxxx Xxxxxxx
Product to the marketing opportunities available thereto in the United States. Licensee shall not
be deemed to have satisfied the refund conditions of this subsection (ii) if Licensee fails to use
reasonable efforts to distribute for sale in the United States the Xxxx Xxxxxxx Product if such
distribution would be lawful in the absence of affirmative regulatory approval.
Section 3.6. Other Rights and Remedies. Unless another provision of this Agreement
specifically provides to the contrary, the rights of termination as herein provided shall be in
addition to all other rights and remedies which either party may have to enforce this Agreement or
to secure damages for the breach hereof, and the exercise of any right of termination as herein
provided by either party shall not relieve the other of any of its obligations under this Agreement
accruing prior to the effective date of termination, including, but not limited to, the obligation
to pay fees and Royalties pursuant to Section 4.1 or to render reports with respect thereto.
ARTICLE IV
PAYMENTS BY LICENSEE
Section 4.1. Fees and Royalties. Licensee shall pay to Licensor as compensation for
the license and other rights granted hereby and for the agreement by Licensor to continue to refine
and develop the Technology:
(i)(A) A sum in U.S. dollars equal to the amount described in subparagraph (B)
of this subsection payable
by Licensee to Licensor on the date hereof. On the first anniversary of the
date of this Agreement, Licensee shall make an additional payment in U.S. dollars in
an amount equal to two-thirds (2/3) of the amount described in paragraph (B) of this
subsection (as increased as provided in the first sentence of paragraph (C) of this
subsection, if applicable).
(B) The amount described in this paragraph (B) shall be an amount equal to the
product of (x), (y) and (z) where (x) equals $1,500,000, (y) equals the percentage
of the world infant formula market represented by the infant formula market of the
Territory (the “Market Percentage”), and (Z) equals 2 if the Market Percentage is
less than 25*, 1.5 if the Market Percentage is equal to or greater than
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25% but
less than 50k, 1.25 if the Market Percentage is equal to or greater than 50k but
less than 75k, or 1 if the Market Percentage is equal to or greater than 75%.
(C) If, after the date of this Agreement, Licensee elects to expand the
Territory, Licensee shall be obligated to pay an. additional license fee equal to
the difference, if any, between the amount it had paid as of such date pursuant to
paragraph (A) of this subsection, and the amount it would have paid if the
territory, as expanded, constituted the Territory as of the date of this Agreement.
If, after the first anniversary date of this Agreement, Licensee elects to expand
the Territory, Licensee shall be obligated to pay an additional license fee equal
to the difference, if any, between the amount it had paid as of the first
anniversary date pursuant to paragraph (A) of this subsection, and the amount it
would have paid if the territory, as expanded, constituted the Territory as of the
first anniversary date of this Agreement.
(ii)(A) During the term described in paragraph (iii)(A), below, a royalty
payment (the “Royalty”) in an amount equal to [ * ] of the greater of (x)
the cost of goods sold applicable to the Xxxx Xxxxxxx Product, as determined using
generally acceptable accounting principals and methodologies reflected on
Licensee’s audited annual financial statements and as mutually agreed to by
Licensor and Licensee (the “Cost of Goods Sold”), or (y) the amount received by
Licensee or its Affiliates from the sale for value of each Xxxx Xxxxxxx Product to
Third Parties, which amount received by Licensee or its Affiliates shall not be
reduced by taxes assessed on income from such sales but shall not include: amounts
paid by Licensee or its Affiliates to Third Party suppliers of the
Martek Product attributable to expenses paid by such Third Party to Licensor
and denominated by Licensor and such Third Party as royalties; normal returns and
allowances actually paid or allowed by Licensee or its Affiliates; customary
discounts, whether cash or trade; rebates; and sales and other taxes based on the
sales prices of the Xxxx Xxxxxxx Product whether or not absorbed by Licensee or its
Affiliates (the “Sales Price”) .
(B) During the term described in paragraph (iii) (B), below, a Royalty in an
amount equal to [ * ] of the greater of (x) Cost of Goods Sold applicable to
the Xxxx
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Xxxxxxx Product, or (y) the Sales Price of each Xxxx Xxxxxxx to ThirdParties.
(iii)(A) As to each country in the Territory in which the Xxxx Xxxxxxx Product
is sold or otherwise distributed for consumer use, for a term of ten (10) years
after the first commercial introduction of the Xxxx Xxxxxxx Product in such
country; provided, however, that if a patent is obtained with respect to the
Technology or the Martek Product in such country prior to the twenty-fifth (25th)
anniversary of the date of first commercial introduction of the Xxxx Xxxxxxx
Product in such country, from the date of the issuance of such patent until the
earlier of (x) the date of the expiration, lapse or invalidation of such patent and
(y) the twenty-fifth (25th) anniversary of the date of the first commercial
introduction of the Xxxx Xxxxxxx Product in such country.
(B) As to each country in the Territory in which the Xxxx Xxxxxxx Product is sold or
otherwise distributed for consumer use, for such additional period of time following the
period described in paragraph 4.1(iii)(A) above, if any, and ending on the twenty-fifth
(25th) anniversary after the first commercial introduction of the Xxxx Xxxxxxx Product in
such country.
Section 4.2. Manner of Royalty Payment. All Royalty payments with respect to each Xxxx
Xxxxxxx Product sold shall be made quarterly, within sixty days of the close of each of Licensee’s
three month and annual accounting periods, based on Licensee’s fiscal year, with respect to
Licensee’s and its Affiliates’ sales occurring during such quarters, at Licensor’s office as set
forth below. Royalty payments shall be made in U.S. Dollars at the sales price applicable thereto
if in U.S. Dollars or, if in another currency, in U.S. Dollars at the currency exchange rate in
effect at 10:00 a.m. London time, Barclays Bank PLC, on the last day of the quarter with respect to
which the Royalty is payable.
Section 4.3. Reimbursement of Expenses. Licensee
agrees to pay to Licensor, in addition to the amounts specified in Section 4.1 above, all
reasonable traveling, living and out-of-pocket expenses for services rendered by Licensor pursuant
to Section 2.5 of this Agreement which are incurred after the first anniversary of this Agreement,
which services are performed outside of the State of Maryland.
Section 4.4. Commercialization and Other Expenses. Licensee and its Affiliates shall
pay all expenses for the
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commercialization of the Xxxx Xxxxxxx Product, including, but not limited
to, expenses benefiting Licensor, the Martek Product or the Technology, and such expenses shall not
be chargeable in any portion to Licensor. Licensee shall compensate Licensor for any samples of the
Martek Product reasonably requested by Licensee at a reasonable price to be agreed upon by Licensor
and Licensee pursuant to good faith negotiation. For purposes of the preceding sentence, “samples”
shall mean quantities which are requested by Licensee or its Affiliates for research, development
or testing purposes and not requested for the purpose of incorporation thereof into a Xxxx Xxxxxxx
Product which is to be distributed to Third Parties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. Licensor’s Representations and Warranties. Licensor represents and
warrants to the Licensee as follows:
(i) Exhibit II sets forth a complete and accurate list of the Licensed Patents as of
the date of this Agreement.
(ii) Licensor has all necessary corporate power and authority to enter into this Agreement,
perform its obligations hereunder and license the Technology and the Martek Product pursuant to the
terms of this Agreement. Licensor’s performance under this Agreement does not conflict with any
other contract to which Licensor is bound.
(iii) Licensor has, prior to the date of this Agreement, informed Licensee of all Third Party
patents relevant to the Technology or the Licensed Patents and known to Licensor.
(iv) Licensor has recently become aware of European Patent EP-B-231904 of Milupa (the “Milupa
Patent”), which is currently under study. With the exception of the Milupa Patent, at the time of
this Agreement, Licensor has no actual knowledge (A) of the existence of other patents which would
be infringed by the commercial exploitation by Licensee or its Affiliates of the Technology, the
Martek Product or the Licensed Patents or (B) that the Technology, the Martek Product or the
Licensed Patents are being infringed by Third Parties.
(v) Licensor is the owner of the Technology.
(vi) Licensor shall in good faith attempt to comply with all environmental laws and
regulations in the course of its development work which is under its direct control, will in good
faith attempt to
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develop commercial processes which can be operated under applicable environmental
laws, regulations, and permits in production and will in good faith attempt to institute management
systems and procedures to ensure good environmental practices.
SECTION 5.2. DISCLAIMERS. (i) LICENSOR HEREBY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RELATING TO THE MARTEK PRODUCT OR THE
TECHNOLOGY AND ANY OTHER WARRANTY OR WARRANTIES RELATING THERETO AND NOT EXPRESSLY SET FORTH IN
THIS AGREEMENT. LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES AND HAS NO DUTY TO ENSURE THAT THE
TECHNOLOGY OR THE MARTEK PRODUCT IS USABLE WITH THE XXXX XXXXXXX PRODUCT OR THAT THE TECHNOLOGY OR
THE MARTEK PRODUCT ARE SAFE OR CAN BE INCORPORATED SAFELY INTO THE XXXX XXXXXXX PRODUCT. IT IS
HEREBY ACKNOWLEDGED AND AGREED THAT IT SHALL BE LICENSEE’S RIGHT AND OBLIGATION TO DETERMINE THE
SAFETY AND UTILITY OF THE MARTEK PRODUCT AS IT RELATES TO INFANT FORMULA PRODUCTS.
(ii) LICENSOR HEREBY DISCLAIMS ANY WARRANTY THAT THE TECHNOLOGY, THE MARTEK PRODUCT OR THE
LICENSED PATENTS ARE FREE FROM INFRINGEMENT BY THIRD PARTIES, EXCEPT AS SET FORTH IN SUBSECTION
5.1(IV) OF THIS AGREEMENT. LICENSOR FURTHER DISCLAIMS ANY WARRANTY RELATING TO THE PATENTABILITY
OF, OR THE VALIDITY OF ANY PATENTS RELATING TO, THE TECHNOLOGY OR THE MARTEK PRODUCT AND MAKES NO
REPRESENTATIONS WHATSOEVER WITH REGARD TO THE SCOPE OF ANY SUCH PATENTS OR, EXCEPT AS SET FORTH IN
SUBSECTION 5.1(IV) OF THIS AGREEMENT, THAT SUCH PATENTS MAY BE COMMERCIALLY EXPLOITED WITHOUT
INFRINGING OTHER PATENTS.
(iii) LICENSOR DISCLAIMS AND SHALL NOT BE LIABLE FOR ANY DAMAGES OF ANY NATURE RESULTING OR
ARISING FROM OR RELATING TO (A) THE USE, MANUFACTURE, DISTRIBUTION, MARKETING, OR SALE BY LICENSEE,
ITS AFFILIATES OR ANY THIRD PARTY OF THE TECHNOLOGY, THE MARTEK PRODUCT OR THE XXXX XXXXXXX
PRODUCT, OR (B) ANY IMPROVEMENTS OR MODIFICATIONS TO THE TECHNOLOGY, THE MARTEK PRODUCT OR THE XXXX
XXXXXXX PRODUCT WHICH ARE NOT MADE BY AND PROPRIETARY TO LICENSOR, UNLESS THE LIABILITY RESULTS
FROM (X) LICENSOR’S FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT OR (Y) IF LICENSOR
ELECTS TO MANUFACTURE THE MARTEK PRODUCT, LICENSOR’S FAILURE TO MANUFACTURE THE MARTEK PRODUCT IN
ACCORDANCE WITH LICENSEE’S SPECIFICATIONS. NOTWITHSTANDING THE PREVIOUS SENTENCE AND AS A
LIMITATION THERETO, LICENSOR SHALL NOT BE LIABLE FOR CONSEQUENTIAL DAMAGES IN CONNECTION WITH ANY
CLAIM BY LICENSEE OR ANY THIRD PARTY, UNLESS THE DAMAGES RESULT FROM LICENSOR’S WILLFUL OR
DELIBERATE FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT.
Section 5.3. Licensee’s Representations and Warranties. Licensee represents and
warrants to the Licensor as follows:
(i) The execution and delivery of this Agreement and the performance by Licensee of the
transactions contemplated hereby have
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been duly authorized by all necessary corporate actions.
(ii) The performance by Licensee of any of the terms and conditions of this Agreement will not
constitute a breach or violation of any other agreement or understanding, written or oral, to which
it or its Affiliates is a party.
ARTICLE VI
COVENANTS
Section 6.1. Compliance with Law, Regulatory Approval and Commercial Introduction.
Licensee covenants and agrees that it and its Affiliates shall conduct all of their operations
dealing with the Technology, the Martek Product and the Xxxx Xxxxxxx Product in material compliance
with all applicable laws, regulations and other requirements which may be in effect from time to
time, of all national governmental authorities, and of all states, municipalities and other
political subdivisions and agencies thereof, including, without limiting the generality of the
foregoing, the Infant Formula Act of 1980, the Federal Food, Drug, and Cosmetic Act, the
regulations and other requirements of the United States Food and Drug Administration, similar state
laws and regulations and similar laws and other requirements as may be applicable in any
jurisdiction throughout the Territory in which the Xxxx Xxxxxxx Product is sold. Except insofar as
Licensee or its Affiliates have, as a condition to receiving a refund of money paid in connection
with this Agreement upon the occurrence of certain events described in Section 3.5 of this
Agreement, affirmative obligations to obtain regulatory approvals, to practice the Technology, to
produce or use the Martek Product and to make, use and distribute the Xxxx Xxxxxxx Product, nothing
herein shall be construed to require Licensee to obtain regulatory approvals, to practice the
Technology, to produce or use the Martek Product or to make, use, market or distribute the Xxxx
Xxxxxxx Product.
Section 6.2. Performance and Product Quality. Licensee covenants and agrees that it
and its Affiliates shall exercise a reasonable standard of care in the testing, manufacturing,
marketing, packaging, distribution and sale of the Xxxx Xxxxxxx Product. Licensee further covenants
and agrees that it and its Affiliates shall maintain quality control, provide adequate tests of
materials, provide quality workmanship, and do such other things as are necessary to assure high
quality production of the Xxxx Xxxxxxx Product and the development of the Martek Product and the
Technology. In this regard, and without limiting the applicability of the general
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indemnification
provisions applicable to the representations,
warranties and covenants made by the parties to this Agreement as provided in Article XI of
this Agreement, Licensee hereby covenants and agrees to indemnify, defend and hold harmless
Licensor and Licenser’s directors, officers, employees and agents from and against all claims,
actions or causes of action (whether sounding in contract, negligence or strict liability), suits
and proceedings and all loss assessments, liability, damages, and expenses incurred in connection
therewith (including reasonable attorneys’ fees) for which Licensor or its directors, officers,
employees or agents may become liable or incur with respect or relating to (a) the use,
modification, manufacturing, marketing, sale, distribution or storage by Licensee, its Affiliates
or any third party of the Xxxx Xxxxxxx Product, or (b) the Technology or the Martek Product as
incorporated in the Xxxx Xxxxxxx Product, or any modification or enhancement to the Technology or
the Martek Product made by Licensee, unless Licensor is expressly liable for such damages under
Section 5.2(iii) of this Agreement.
Section 6.3. Licensee’s Records. Licensee covenants and agrees that, for as long as
Royalties are due under this Agreement, Licensee will keep true and accurate records adequate to
permit Royalties due to Licensor to be computed and verified, which records shall be made available
upon prior written request by Licensor, during business hours, for inspection by an independent
accountant who is reasonably acceptable to Licensee and who shall be bound by a confidentiality
agreement with the Licensee, to the extent necessary for the determination of the accuracy of the
reports made hereunder, and such records shall be retained for a period of three years following
the year to which they relate. Licensor covenants and agrees that, for as long as Royalties are
due under this Agreement, Licensor will keep true and accurate records adequate to permit Licensee
to confirm that provisions described in Section 2.2(i) are adhered to, and Licensee waives the
confidentiality provisions of this Agreement to the extent reasonably necessary to allow an
independent accountant to make such confirmation. For purposes of this Section 6.4, any of the six
largest accounting firms in the United States shall be deemed reasonably acceptable to the parties.
Licensor shall bear the full cost of an inspection of the Licensee’s records unless a discrepancy
of five percent or greater of Royalties due hereunder is discovered by the accountant, in which
case Licensee shall bear the full cost of the inspection. Licensee shall bear the full cost of an
inspection of the Licensor’s records unless a material deviation in the payment terms described by
2.2(i) among licensees is discovered by the accountant, in which case Licensor shall bear the full
cost of the inspection.
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Section 6.4. Protection of Licensor’s Proprietary Interest. Licensee
acknowledges and agrees that the Licensed Patents and the Martek Product are proprietary to
Licensor, and Licensee hereby covenants and agrees that Licensee and its
Affiliates (i) shall not use the Technology or the Martek Product for any purpose not
provided for hereunder, (ii) shall take all necessary steps to maintain and protect Licensor’s
valid proprietary rights to the Martek Product and the Technology, (iii) shall not intentionally
undermine Licensor’s valid proprietary rights to the Martek Product and the Technology, (iv)
shall not challenge Licensor’s proprietary rights to the Martek Product and the Technology
without a good faith belief that Licensor does not have valid rights in the Martek Product or the
Technology, and without having first given written notice to Licensor setting forth in reasonable
detail the basis for such belief, and (vi) shall cooperate with Licensor in protecting Licensor’s
rights to the Technology, the Licensed Patents and the Martek Product. The provisions of this
Section 6.5 shall survive the termination or expiration of this Agreement, whether the
termination is occasioned by the Agreement’s natural expiration pursuant to Section 3.1 of this
Agreement or is earlier terminated pursuant to the other Sections of Article III of this
Agreement.
Section 6.5. United States Export Regulation. Licensee covenants and agrees that it
and its Affiliates shall not knowingly export or re-export, directly or indirectly, the Technology,
the Martek Product, or the Xxxx Xxxxxxx Product or any part or direct product thereof, to any
country in violation of the United States Export Administration Regulations.
Section 6.6. Product Development and Use. Licensee covenants and agrees that it and
its Affiliates shall, throughout the term of this Agreement, use reasonable efforts to use and
develop the Technology and the Martek Product with respect to the Xxxx Xxxxxxx Product in a way
which is consistent with the parties’ objective of developing a final marketed product which has a
polyunsaturated fatty acid composition effectively equivalent to that of human breast milk.
ARTICLE VII
ENHANCEMENTS
Section 7.1 Improvements to Products. During the first two years of this Agreement,
Licensor covenants and agrees to use reasonable efforts to refine the development process for the
Technology and the Martek Product and timely to notify Licensee of any improvements or
modifications thereto and to make the relevant
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information and technology available as promptly as
possible for use by Licensee in accordance with this Agreement. In the event that Licensee
terminates this Agreement on or before the second anniversary date of this Agreement due to
Licensor’s failure to comply with its obligations described in the preceding sentence, Licensee
shall be entitled to elect to terminate this Agreement and, (A) if such election is made before the
first anniversary date of this
Agreement, Licensee shall be relieved of its obligation to pay to Licensor the fee payable on
the first anniversary of this Agreement and described in Section 4.1 of this Agreement and shall be
entitled to elect to have the fee paid on the date hereof refunded to it in the manner specified in
Section 3.5 of this Agreement (except as provided in the following sentence) or, (B) if such
election is made after the first anniversary date of this Agreement and before the second
anniversary date of this Agreement, Licensee shall be entitled to elect to have the fee paid on the
date hereof and on the first anniversary date of this Agreement and described in Section 4.1 of
this Agreement refunded to it in the manner specified in Section 3.5 of this Agreement (except as
provided in the following sentence), and such relief from such obligation and/or such refund, as
applicable, shall be Licensee’s sole and exclusive remedy with respect to Licensor’s failure to
comply with its obligations described in the preceding sentence. Licensee’s election to terminate
this Agreement pursuant to this Section 7.1 shall terminate at the earliest to occur of the second
anniversary of this Agreement, the date on which the Xxxx Xxxxxxx Product is first commercially
introduced anywhere in the world, or the date on which the Licensee breaches this Agreement.
Licensee shall have the right to make improvements or modifications to the Technology or the Martek
Product during the term of this Agreement, and, in the event Licensee makes any improvements or
modifications to the Technology or the Martek Product, Licensee shall be the sole owner of such
improvements or modifications and shall be under no obligation to cross license or share such
improvements with Licensor or any Third Party.
ARTICLE VIII
PATENT PROSECUTION AND ENFORCEMENT
Section 8.1. Patent Applications. Exhibit III of this Agreement sets forth the
complete texts of all United States patent applications filed by Licensor in the Territory which
reasonably relate to the Licensed Patents, and Licensor has delivered to Licensee prior to the date
of this Agreement all foreign patent applications in the Territory reasonably relating to the
Licensed Patents. The responsibility for the prosecution of, and the exclusive
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right to prosecute,
such patent applications and the exclusive right to apply for patent applications in any and all
jurisdictions shall be and remain with Licensor except as provided below. Licensor shall exercise
all reasonable efforts in this regard. Licensor agrees to keep Licensee informed of the course of
such patent prosecution.
Section 8.2. Infringement Notice. Either party to this Agreement shall notify the
other promptly in writing of any infringement within the Territory of any issued Licensed Patent or
other interference with Licensor’s proprietary interests relating to
the Technology or the Martek Product, which becomes known to them. If Licensor determines that
a material infringement exists within the Territory, Licensor shall communicate such determination
to Licensee in writing and take prompt action to attempt to eliminate that infringement.
Section 8.3. Infringement Actions. If Licensor receives Licensee’s infringement
notice under Section 8.2 of this Agreement or becomes aware of an infringement by any other means
and within a reasonable time thereafter Licensor is unsuccessful in eliminating the infringement,
Licensor shall have the first right to bring, at its own expense, an infringement action against
any Third Party within a reasonable time no longer than six months from the date of Licensee’s
notice of an infringement under Section 8.2 of this Agreement or from the date Licensor otherwise
discovers the possible infringement, and to use Licensee’s name in connection therewith. If
Licensee reasonably and in good faith determines that an infringement exists and Licensor waives
its right to bring such an infringement action in writing to Licensee or has not eliminated such
infringement or-initiated an infringement suit within the later of six months from the date
Licensor discovers the possible infringement or thirty days after Licensor receives notice from
Licensee that Licensee intends to bring an infringement action relating to such an infringement,
Licensee shall be entitled to bring such infringement action at its own expense and cease paying
royalties on the Xxxx Xxxxxxx Product in the affected markets; provided, however, that if the
infringement is effectively eliminated or if the infringement is found not to have existed,
Licensor shall be entitled to all royalty payments it would have otherwise been entitled to, less
reasonable costs incurred by Licensee in eliminating or establishing that infringement does not
exist. The party conducting such action shall have full control over its conduct, including
settlement thereof. Regardless of which party brings the suit, Licensor and Licensee shall assist
one another and cooperate in any such litigation at the other’s request and expense.
Section 8.4. Defense of Infringement Actions. Licensor and Licensee hereby
acknowledge and agree that each party shall be
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responsible for defending, at its own expense, any
infringement action brought against such party by any Third Party, and Licensor and Licensee agree
reasonably to cooperate with the other in any such defense and in responding to any threatened
infringement action.
ARTICLE IX
ASSIGNMENT
Section 9.1. Assignment. This Agreement and the rights granted hereunder shall not be
assignable (except to Affiliates), in whole or in part, by Licensee, nor shall its obligations
hereunder be delegated, without the prior written consent
of Licensor. Licensor may assign its rights under this Agreement freely and without Licensee’s
consent. Licensor shall be entitled to delegate its obligations hereunder only with the prior
written consent of Licensee, which consent may not unreasonably be withheld, until the date on
which the Martek Product can be produced at commercial volumes and costs, which date will be deemed
to have occurred upon the first commercial introduction of the Xxxx Xxxxxxx Product anywhere in the
world. After the Martek Product can be produced at commercial volumes and costs, Licensor shall be
entitled to delegate any or all of its obligations, if any, hereunder without the consent of
Licensee.
ARTICLE X
PARTIES’ RELATIONSHIP
Section 10.1. Relationship Between Parties. Neither party to this Agreement shall
have the power to bind the other by any guarantee or representation that either party may give, or
in any other respect whatsoever, or to incur any debts or liabilities in the name of or on behalf
of the other party, and for purposes of this Agreement, the parties hereto hereby acknowledge and
agree that they shall not be deemed partners, joint venturers, or to have created the relationship
of agency or of employer and employee between the parties.
ARTICLE XI
INDEMNITY
Section 11.1. Indemnity. Licensee shall indemnify, defend and hold harmless Licensor
and Licensor’s directors, officers, employees and agents from and against all claims, actions or
causes
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of action (whether sounding in contract, negligence or strict liability), suits and
proceedings and all loss, assessments, liability, damages, costs and expenses incurred in
connection therewith (including reasonable attorneys’ fees) for which Licensor or its directors,
officers, employees or agents may become liable or incur or be compelled to pay and arising out of
a breach of any of the Licensee’s covenants, representations and warranties contained herein.
Licensor shall indemnify, defend and hold harmless Licensee, its Affiliates, and Licensee’s
and its Affiliates’ directors, officers, employees and agents from and against all claims, actions
or causes of action, suits and proceedings and all loss, assessments, liability, damages, costs
and expenses incurred in connection therewith (including reasonable attorneys’ fees) for which
Licensee, its Affiliates or the directors, officers, employees or agents of either of them may
become liable or incur or be compelled
to pay and arising out of a breach of any of the Licensor’s covenants, representations and
warranties contained herein.
The indemnifications provided in this Agreement, including that provided in this Article and
in Section 6.2 of this Agreement, shall survive the termination of this Agreement, whether the
termination is occasioned by the Agreement’s expiration pursuant to Section 3.1 of this Agreement
or is earlier terminated pursuant to the other Sections of Article III of this Agreement.
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ARTICLE XII
CONFIDENTIALITY
Section 12.1. Disclosure of Information. All the Technology and all other information
exchanged by the parties pursuant to, and in execution of their obligations and in exercise of
their rights under, this Agreement shall be deemed confidential. Licensor and Licensee acknowledge
and agree that the value of the Technology and the Martek Product is based, to a large extent, on
maintaining the confidentiality of the Technology and the Martek Product and preventing any
unauthorized dissemination to or use by Third Parties of information relating to the Technology or
the Martek Product. Disclosure of confidential and proprietary information hereunder, whether
orally or in written form, shall be safeguarded by the recipient and shall not be disclosed to
Third Parties and shall be made available only to the receiving party’s employees or other agents
who have a need to know such information for purposes of performing the party’s obligations, or for
purposes of exercising the party’s rights, under this Agreement and such employees or other agents
shall have a legal obligation to the employer or principal, as applicable, not to disclose such
information to Third Parties. In order to carry out the purposes of this Agreement, it may be
desirable for a party hereto to disclose confidential information of the other party to Third
Parties, such as consultants and independent contractors; such disclosure may be made on a
need-to-know basis, provided such Third Party is bound by an obligation of confidentiality no less
stringent than the obligation of the party who makes such disclosure. Each party shall treat any
and all such confidential information in the same manner and with the same protection as such party
maintains its own confidential information. These mutual obligations of confidentiality will not
apply to any information to the extent that such information (i) was part of the public domain
prior to the date of this Agreement; (ii) became part of the public domain not due to some
unauthorized act or omission of the receiving party; (iii) was disclosed to the receiving party by
a Third Party having the lawful right to make such disclosure; (iv) the receiving party receives
written permission from the transmitting party authorizing such disclosure or use; or (v) is in the
possession of the receiving party in written or other recorded form at the time of its disclosure
hereunder.
All information which is to be considered confidential under this Section 12.1 shall be
identified as confidential in writing, or if orally disclosed, submitted in writing and identified
as confidential within 30 days after disclosure.
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Notwithstanding the preceding, (i) Licensor and Licensee may disclose any otherwise
confidential or proprietary information as and to the extent required by applicable law, including,
but not
limited to, any applicable disclosure requirements under the federal securities laws or
regulations thereunder which arise by virtue of a public offering of the securities of Licensor,
upon prior written notice to the other party that the information is required to be disclosed under
applicable law and following steps exercised upon the advice and consent, which consent may not
unreasonably be withheld, of the other party to maintain the confidentiality of such information to
the extent permissible under applicable law, (ii) Licensor and Licensee may disclose the fact and
the terms of this Agreement to its attorneys and accountants and (iii) Licensor may disclose the
fact of this Agreement to its shareholders and potential investors.
Section 12.2. Post-Termination Obligations. The provisions of this Article XII shall
survive to the later of (i) the termination of this Agreement or (ii) fifteen years after the
receipt of the information to which the confidentiality obligation relates. At the termination of
this Agreement, Licensee promptly shall return to Licensor all the Technology, microbial strains,
Martek Product samples, documents, records, and all other property or documentation disclosed or
delivered to Licensee or its Affiliates pursuant to this Agreement and then in existence, including
all copies thereof, and Licensee shall destroy or promptly deliver to Licensor any documentary
material in its possession created by it or its Affiliates during the course of this Agreement, and
thereafter, which contains information about Licensor or the Technology or the Martek Product that
is not in the public domain, including notes, memoranda or correspondence, except that Licensee
shall be permitted to retain one copy of such documentation for archival purposes and only for
archival purposes.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Free Flow of Information. Licensor and Licensee covenant and agree,
except as prohibited by an enforceable arms’ length agreement existing prior to the date of this
Agreement with a Third Party, promptly to share with the other all material information obtained by
the Licensor or Licensee concerning the progress of clinical. and pre-clinical testing of the
Technology and the Martek Product and adverse reaction data relating to the Technology and the
Martek Product, and Licensor and Licensee shall maintain the confidentiality of such information as
required under Section 12.1 of this Agreement.
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Section 13.2. Arbitration. Licensor and Licensee covenant and agree to use their best
efforts to resolve any disputes (other than for injunctive relief) that arise between them in the
future and are related to this Agreement through negotiation and mutual agreement and, if good
faith efforts to so negotiate and mutually agree are unavailing, through binding arbitration under
the
procedures set forth below. When either party learns of a dispute subject to arbitration under
this Agreement, it shall promptly send written notice of the dispute to the other party. The
parties agree that for a period of thirty {30) days from the sending of such written notice, they
shall in good faith negotiate to resolve the dispute. Subject to the foregoing, disputes arising in
connection with this Agreement shall be finally settled under the Rules of the American Arbitration
Association by three arbitrators appointed in accordance with such Rules. Unless the parties to
such dispute agree otherwise in writing, any such arbitration shall be conducted in Baltimore,
Maryland and the results of such Arbitration shall be final and binding on the parties.
Section 13.3. Force Majeure. Neither party to this Agreement shall be liable for
damages due to delay or failure to perform any obligation under this Agreement if such delay or
failure results directly or indirectly from circumstances beyond the control of such party. Such
circumstances shall include, but shall not be limited to, acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of the government in either its sovereign or contractual
capacity, perturbation in telecommunications transmissions, inability to obtain suitable equipment
or components, accident, fire, water damages, flood, earthquake, or other natural catastrophes.
Section 13.4. Construction of Agreement. This Agreement shall be construed and the
respective rights of the parties shall be determined under and pursuant to the laws of the State of
Delaware, without regard to the principles of conflict of laws thereof.
Section 13.5. Notices. Notices required under this Agreement shall be in writing and
sent by registered mail or by facsimile transmission or hand delivery to the respective parties at
the following addresses:
Notices to Licensor:
Martek Biosciences Corporation
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xx. Xxxxx Xxxxxxx, Xx.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xx. Xxxxx Xxxxxxx, Xx.
*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
WITH THE SECURITIES AND EXCHANGE COMMISSION
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With a copy to:
Piper & Marbury
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Xx., Esquire
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Xx., Esquire
Notices to Licensee:
Xxxx Xxxxxxx & Company
0000 Xxxx Xxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxx, Xx.
0000 Xxxx Xxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxx, Xx.
With a copy to:
Xxxx Xxxxxxx & Company
0000 Xxxx Xxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esquire
0000 Xxxx Xxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esquire
or to such other address as either party may designate by a notice given in compliance with this
paragraph, and shall be deemed effective when received.
Section 13.6. Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the parties hereto and there are no representations,
warranties or covenants relative hereto, including those set forth in the Letter of Intent, which
shall survive the execution of this Agreement unless fully set forth herein.
Section 13.7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. No person,
firm or corporation other than the parties hereto and their successors and permitted assigns shall
derive rights or benefits under this Agreement.
Section 13.8. Counterparts. This Agreement may be executed in counterparts.
*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
WITH THE SECURITIES AND EXCHANGE COMMISSION
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Section 13.9. Severability. If any provision of this Agreement is declared void or
nonenforceable by any relevant judicial or administrative authority such declaration shall not of
itself nullify the remaining provisions of this Agreement. Consequently, the parties shall meet to
determine the effect of any such declaration and any variations to this Agreement which are
mutually desirable.
Section 13.10. Headings. Article, Section, and subsection headings used in this
Agreement are inserted for convenience of reference only and shall not affect the construction of
the respective Articles, Sections and subsections hereof.
Section 13.11. Waiver. No waiver by either party of any breach of any of the terms or
conditions herein provided to be performed by the other party shall be construed as a waiver of any
subsequent breach, whether of the same or of any other term or condition hereof.
*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
WITH THE SECURITIES AND EXCHANGE COMMISSION
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in their
respective behalves as of the day and year first written above.
| WITNESS/ATTEST: | MARTEK BIOSCIENCES CORPORATION | |||||
/s/ Xxxxx Xxxxx
|
By: | /s/ Xxxxx Xxxxxxx Xx. | ||||
| Print Name: Xxxxx Xxxxxxx Xx. | ||||||
| Print Title: Chairman & CEO | ||||||
| WITNESS/ATTEST: | XXXX XXXXXXX & COMPANY | |||||
/s/
Xxxx X. Speaker
|
By: | /s/ Xxxxxx X. Xxxxxx | ||||
| Assistant Secretary | Print Name: Xxxxxx X. Xxxxxx | |||||
| Print Title: President | ||||||
*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
WITH THE SECURITIES AND EXCHANGE COMMISSION
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