LICENSE AGREEMENT
This
License Agreement (this “Agreement”) is entered into
and made effective as of December 1, 2006, by George Andrew Eby
III, (“EBY”) and Auriga Laboratories, Inc., a Delaware
corporation (“AURIGA”) with respect to the facts set
forth below.
RECITALS
A.
EBY has developed certain products and technology relating to the
treatment of the common cold with zinc and has obtained certain
patents relating to the treatment of the common cold with
zinc.
B.
AURIGA is engaged in research and development of, among other
things, pharmaceutical products intended for the treatment of the
common cold and pharmaceutical products containing zinc
acetate.
C.
EBY desires to grant to AURIGA, and AURIGA wishes to acquire, a
worldwide right and license to EBY’s products, technology and
patents.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, EBY and AURIGA hereby agree as
follows:
1.
Definitions . Capitalized terms shall have the
meaning set forth below.
1.1 “
Affiliate ”shall mean any entity which directly or
indirectly controls, is controlled by or is under common control
with AURIGA. The term “ control ” as used herein
means the possession of the power to direct or cause the direction
of the management and the policies of an entity, whether through
the ownership of a majority of the outstanding voting securities or
by contract or otherwise.
1.2 “
Combination Product ” shall mean a product containing
a Licensed Product together with one or more other active
ingredients, devices, products, equipment or components that are
themselves not Licensed Products.
1.3 “
Commercial Launch ” shall mean the initial commercial
sale of a Licensed Product by AURIGA or a third party authorized to
sell products on behalf of AURIGA.
1.4 “
Confidential Information ” shall mean any and all
proprietary or confidential information of EBY or AURIGA which may
be exchanged between the parties at any time and from time to time
during the term of this Agreement. Information shall not be
considered confidential to the extent that it:
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1.4.1 Is
publicly disclosed through no fault of any party hereto, either
before or after it becomes known to the receiving party;
or
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1.4.2 Was
known to the receiving party prior to the date of this Agreement,
which knowledge was acquired independently and not from another
party hereto (or such party’s employees); or
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1.4.3 Is
subsequently disclosed to the receiving party in good faith by a
third party who has a right to make such disclosure; or
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1.4.4 Has
been published by a third party as a matter of right.
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1.5 “
Developed Technology ” shall mean intellectual
property and technical know-how, including all rights in
discoveries, knowledge, experience, improvements, processes,
products, reports, models, codes, inventions, works of authorship,
trade secrets, pending patent applications, patents, copyrights, or
other proprietary information (whether or not patentable,
copyrightable or the subject of any other type of intellectual
property protection) that is discovered or developed by AURIGA,
including, without limitation, any of the foregoing that is based
or incorporates any EBY Technology.
1.6 “
Existing Licenses ” shall mean the non-exclusive
license agreements EBY has entered into with F&F Foods and
Weider Nutrition, respectively.
1.7 “
Licensed Product ” shall mean any product which cannot
be developed, manufactured, used or sold without (i) infringing one
or more claims under EBY Technology or (ii) utilizing any part of
EBY Technology.
1.8 “
EBY Technology ” shall mean all intellectual property
and technical know-how, including all rights in discoveries,
knowledge, experience, improvements, processes, products, reports,
models, codes, inventions, works of authorship, trade secrets,
pending patent applications, patents, including without limitation,
the following patents: U.S. Patent 5,409,905 (as revised by
Re-Examination SN90/004,518); 5,095,035; 5,002,970; and 4,956,385;
and Canadian Patent 2,099,670, copyrights, or other proprietary
information (whether or not patentable, copyrightable or the
subject of any other type of intellectual property protection) that
is owned by EBY concerning zinc and the common cold. In addition,
“Ideas and Inventions” developed under that certain
Consulting Agreement, by and between Eby and Auriga, dated as of
the date hereof (the “Consulting Agreement”), as that
term is defined in the Consulting Agreement, shall be included
within “Eby Technology.”
1.9 “
Manufacturing Instructions ” shall mean the
technology, trade secrets, know-how and other proprietary
information and other information used for the manufacture,
packaging, release testing, validation, stability and shelf life of
Licensed Products that are in existence and in the possession of,
under the control of, or accessible to, the EBY as of the date of
this Agreement, including, without limitation, all (i) current
manufacturing processes, (ii) current test methods, (iii) current
specifications for raw materials, (iii) current manufacturing and
packaging instructions, (iv) the most recently available chemical,
pharmacological, toxicological, safety, quality control and
clinical data, (iv) current master formulae, (v) validation
reports, (vi) stability data, (vii) analytical methods, (viii)
records of complaints from the twenty-four (24) month period ending
as of the date of this Agreement, (ix) annual product reviews from
the prior twenty four (24) months, and (x) other master documents
necessary for the manufacture, control and release of Licensed
Products as conducted by, or on behalf of, EBY.
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1.10 “
Net Sales ” shall mean the gross amount invoiced by
AURIGA, or its Affiliates and Sub-licensees, or any of them, on all
sales of Licensed Products less (i) actual returns and actual
credits taken, (ii) freight, postage, and shipping expenses
(including insurance relating thereto) absorbed by Auriga; and
(iii) sales and other excise taxes, tariffs, customs duties or
other duty and any other governmental charges. For purposes of
determining Net Sales, a sale shall be deemed to have occurred when
an invoice therefore shall be generated or the Licensed Product
shipped for delivery. Only sales of Licensed Products by AURIGA, or
an Affiliate or Sub-licensee of AURIGA to unrelated parties shall
be deemed Net Sales hereunder. If the Licensed Product is sold in
the form of a Combination Product, then for the purpose of
calculating royalties owed under this Agreement on sales of the
Combination Product, Net Sales shall mean an amount equal to the
actual net sales of such Combination Product (calculated using the
method described above) multiplied by the fraction A/(A+B), where A
is the weighted (by sales volume) average invoice price of the
actual Licensed Product component of such Combination Product, and
B is the total of the weighted (by sales volume) average invoice
prices of the other products, active ingredients, devices,
equipment or components of such Combination Product.
1.11 “
Product Marketing Materials ” shall mean all marketing
materials used solely and specifically with respect to Licensed
Products that are in existence as of the date of this Agreement, to
the extent such materials are within the possession of EBY and are
legally permitted to be assigned, including all advertising and
display materials, product data, price lists, sales materials,
marketing information, marketing plans, sales, training and
education materials, promotional materials, scientific and
commercial publications, market research, artwork for the
production of packaging components and other materials associated
solely and specifically with Licensed Products that EBY has the
right to transfer.
1.12 “
Regulatory Documentation ” shall mean copies of any
and all dossiers and packages, labels and regulatory certificates,
any correspondence with the U.S. Food and Drug Administration, or
any other regulatory bodies, drug reports, periodic safety update
reports, medical inquiries and standard communication letters
relating to Licensed Products.
1.13 “
Sourcing Documentation ” shall mean all copies of any
documentation and information under the possession of, or
reasonably accessible to, EBY relating to sourcing of raw materials
and necessary to manufacture Licensed Products.
1.14 “
Technical Information ” shall mean all technical,
scientific, chemical, biological, pharmacological, and
toxicological data generated specifically for Licensed Products,
other than the Manufacturing Information, that are in existence as
of the date of this Agreement, to the extent such materials are
within the possession or control of, or accessible to,
EBY.
2.
License Terms and Conditions .
2.1
Grant of License .
2.1.1 Subject
to the Existing Licenses, EBY hereby grants to AURIGA an exclusive,
worldwide license, including the right to sublicense, to the EBY
Technology, to make, to have made, to use, and to sell Licensed
Products, subject to the terms of this Agreement. In addition, the
license granted to Auriga pursuant to this Section 2.1.1 shall be
exclusive even as to Eby, but such exclusivity even as to Eby shall
continue only while that certain Consulting Agreement (as defined
in Section 1.8 hereof) remains in effect.
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2.1.2 Upon
execution of this Agreement, EBY shall provide to AURIGA, without
charge (other than the royalties payable pursuant to Section 2.4
below), copies of any and all Manufacturing Instructions, Product
Marketing Materials, Regulatory Documentation, Sourcing
Documentation and Technical Information and all embodiments,
including, without limitation, documents, writings and other media,
of EBY Technology.
2.1.3 EBY
shall promptly disclose to AURIGA in writing, without charge (other
than the royalties payable pursuant to Section 2.4 below), any
improvements upon EBY Technology made during the term of this
Agreement, and shall deliver to AURIGA any and all embodiments,
including, without limitation, documents, writings and other media,
of such improvements.
2.2
Ownership . The patent applications
filed and the patents obtained by AURIGA pursuant to Section 4.1
hereof, all Combination Products and all Developed Technology shall
be owned solely by AURIGA.
2.3
Sublicense . AURIGA shall have
the right to grant sublicenses to any party wit