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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 Mott's
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,
