NOTICE: CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED FOR
PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN
This License
Agreement (“Agreement”), is made and entered into as of
the 10th day of September, 1992, by and between Martek Biosciences
Corporation, a Delaware corporation (“Licensor”), and
Bestuurcentrum der Verenigde Bedrijven Nutricia B.V., a corporation
organized and existing under the laws of the Netherlands
(“Licensee”).
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 use
of the Technology in the Territory (as defined below) 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:
Section1.1.
“ Affiliate ” shall mean any person,
corporation, firm or 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.
“ Infant Formula Product ” shall mean a breast
milk substitute formulated industrially in accordance with
applicable Codex Alimentarius 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 1.3.
“ Licensed Patents ” shall mean all patents and
patent applications throughout the world which cover the
Technology, including all
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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 1.4.
“ Martek Product ,” shall mean triglycerides
containing Omega-3 and/or Omega-6 long-chain polyunsaturated fatty
acids produced by microbial fermentation using the
Technology.
Section 1.5.
“ Nutricia Formulaid 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, and (v) into which the Martek Product is
incorporated.
Section 1.6.
“ 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 which are proprietary to
Licensor and any modifications, improvements and enhancements to
any of the foregoing made by Licensor, Licensee or Licensee’s
Affiliates, which, in Licensor’s opinion, is or are necessary
in the production and development of the Martek Product.
Section 1.7.
“ Territory ” shall mean
[ *
]
Section 1.8.
“ Third Party ” shall mean any party other than
Licensor, Licensee and Affiliates.
Section 1.9.
“ Trademark ” shall mean the trademark
“Formulaid”, together with the registration thereof
attached hereto as Exhibit I.
GRANT OF LICENSE AND OTHER
RIQHTS
Section 2.1.
License. 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, directly or
through an Affiliate, (i) to use the Technology for the
production of the Nutricia Formulaid Product within the Territory,
(ii) to use and make within the Territory the Martek Product
for purposes of producing the Nutricia Formulaid Product within the
Territory and (iii) to use, market and distribute by sale
within the Territory the Nutricia Formulaid Product.
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Section 2.2.
Licenses to Third Parties and Arrangements
with Suppliers. Licensor shall be entitled to, and shall be
obligated to, license the Technology, the Licensed Patents and the
Martek Product to Third Parties as follows:
(i) 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 Nutricia Formulaid Product; provided, however, that
Licensee shall communicate forecasts of twelve month requirements
at least three months prior to any twelve month period to which
such requirements relate and Licensor shall not be obligated to use
reasonable efforts to satisfy any such communicated requirements to
the extent that such requirements exceed 20 percent of any
prior forecast relating to the same period.
(ii) 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.
(iii) 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 (i) 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.
(iv) Licensor
shall be entitled to grant any license to any Third Party relating
to the Technology, the Martek Product or the Licensed Patent Rights
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 a royalty rate which
is more favorable to such Third Party than the royalty rate
provided in this Agreement with respect to the Licensee, without
the prior written consent of Licensee or unless such more favorable
royalty rate prospectively is extended to Licensee. 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 the provisions
described in this subsection (iv) 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.
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(v) Nothing
in this Section 2.2 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 Nutricia Formulaid Product.
(vi) 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 and the fair market value thereof are
not ascertainable, and Licensor and Licensee covenant and agree
that, prior to the first sale of a Nutricia Formulaid 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 Affiliates to Licensor for amounts of the Martek
Product produced by or on behalf of Licensor and delivered to
Licensee or its Affiliates.
Section 2.3.
Sublicensing . 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 the Trademark solely on, and in connection with the
manufacture and sale of, the Nutricia Formulaid 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 Nutricia Formulaid 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.
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(v) Licensee
covenants that, upon notification from 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 Nutricia Formulaid 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 Nutricia Formulaid Products, and the following legend
prominently shall appear at least once in each such Nutricia
Formulaid 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 Nutricia Formulaid Products manufactured for and by
it or its Affiliates and sold by it or its Affiliates 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 Nutricia Formulaid
Product bearing the Trademark, Licensee shall submit to Licensor,
for Licensor’s review of Licensee’s compliance with its
obligations under this Agreement, samples of the Nutricia Formulaid
Product as well as samples of all materials used to sell or to
promote the sale of Nutricia Formulaid 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 Nutricia Formulaid
Product or to the way in which the Trademark is used or depicted in
connection with the Nutricia Formulaid 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.
(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 Nutricia Formulaid Products and
other materials that depict the Trademark, in order that Licensor
may satisfy itself that such Nutricia Formulaid Products and
materials which depict the Trademark conform to the samples thereof
delivered pursuant to subparagraph (A) of this subsection
(vi).
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(C) No
approval required of Licensor under this subsection (vi) shall
be unreasonably withheld or delayed, and any sample of a Nutricia
Formulaid Product bearing the Trademark or materials used to sell
or promote the sale of Nutricia Formulaid 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 Nutricia Formulaid 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
Nutricia Formulaid Product or on the labels, labeling or packaging
thereof or on materials used to promote the sale of the Nutricia
Formulaid 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 the use of the Technology,
the production of the Martek Product, the securing of any
regulatory approvals as are required under Section 6.1 of this
Agreement and/or the incorporation of the Martek Product into the
Nutricia Formulaid Product to the extent of [
*
] hours in the aggregate by
all such officers and employees over the term of this Agreement. If
greater than [ *
] hours of consultation
services in the aggregate are required and requested by Licensee or
its Affiliates, Licensor and Licensee hereby agree that, prior to
the provision of additional consultation services, they shall enter
into good faith negotiations relating to compensation and other
terms for such additional consultation services, which compensation
and other terms shall be commensurate with industry
standards.
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Section 3.1.
Term. This Agreement shall commence on the date of this
Agreement and, unless earlier terminated pursuant to this
Article III, shall terminate, as to each country in which the
Nutricia Formulaid Product is sold for consumer use, on the later
of: (i) the date which is ten years after the first commercial
introduction of the Nutricia Formulaid Product in such country, or,
(ii) if a patent is obtained with respect to the Technology or
the Martek Product in such country within 10 years from the
date of this Agreement, the date of the expiration, lapse or
invalidation of such patent.
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 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 and
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, materially 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 Nutricia Formulaid Product in the applicable
jurisdiction, including, but not limited to, efforts to procure a
license from such Third Party or efforts to alter the design or
offending composition of the Martek Product, the Technology or the
Nutricia Formulaid Product, as applicable, so as to eliminate the
infringement.
Section 3.4.
Payments Due Upon Termination or Cancellation . Upon
expiration or termination of this Agreement, pursuant to any of the
foregoing Sections, all amounts due pursuant to Article IV
shall be immediately payable as of the date of termination or
cancellation.
Section 3.5.
Sale of Inventory Upon Termination . Effective upon the date
of expiration or termination of this Agreement, Licensee and its
Affiliates shall cease manufacturing the Martek Product and the
Nutricia Formulaid Product; provided, however, that, to the extent
lawful, Licensee and its Affiliates may continue to distribute
within the Territory the Nutricia Formulaid Products manufactured
prior to such date if Licensee continues to make payments under
Section 4.1 with respect to such Nutricia Formulaid Products
and otherwise continues to comply with the terms and conditions of
this Agreement. Notwithstanding the preceding, upon the
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earlier to
occur of (i) the sale by Licensee and its Affiliates of all of
their inventory of Nutricia Formulaid Products manufactured within
the Territory prior to the date of the expiration or termination of
this Agreement or (ii) the date which is six months after the
date of the expiration or termination of this Agreement, Licensee
and its Affiliates shall cease all use of the Technology, sale of
the Nutricia Formulaid Product and use of the Trademark and
Licensee and its Affiliates shall have no further rights under this
Agreement.
Notwithstanding
the preceding, Licensee and its Affiliates shall not be required to
cease manufacturing the Martek Product and the Nutricia Formulaid
Product if, at the time of expiration or termination of this
Agreement, Licensor (or its assignee) no longer have an exclusive
proprietary interest in the Technology or the Martek
Product.
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.
Section 3.7.
Termination by Licensee. At any time after the first
anniversary date of this Agreement, Licensee shall have the right
to terminate this Agreement of its own volition upon ninety
(90) days prior written notice to Licensor.
Section 4.1.
Fees and Royalties. Licensee shall pay Licensor as
compensation for the license and other rights granted
hereby:
(i) A sum in U.S.
dollars equal to the amount described in subparagraph (ii) of
this Section within five (5) business days following the date
of this Agreement. Licensee shall make an additional payment in
U.S. dollars by the first anniversary date of this Agreement in an
amount equal to two-thirds (2/3) of the amount described in
subparagraph (ii), of this Section (as increased as provided in the
first sentence of subparagraph (iii), of this Section, if
applicable).
(ii) The amount
described in this subparagraph (ii) shall be an amount equal
to the product of (A), (B) and (C), where
(A) equals
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$1,500,000,
(B) equals the percentage of the world infant formula market
represented by the infant formula market of the Territory (the
“Market Percentage”), and (C) equals 2 if the
Market Percentage is less than 25%, 1.5 if the Market Percentage is
equal to or greater than 25% but less than 50%, 1.25 if the Market
Percentage is equal to or greater than 50% but less than 75%, or 1
if the Market
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