LICENSING AGREEMENT NUTRACEUTICAL STANDARDS

Exhibit 10.9

LICENSING AGREEMENT
NUTRACEUTICAL STANDARDS

THIS AGREEMENT is made and entered into by and between The University of Mississippi, an education and research institution chartered under the laws of the State of Mississippi, with a principal address at University, Mississippi 38677 (“UNIVERSITY”) and ChromaDex, Inc. an incorporated company with a principal address at 8 Garzoni Aisle, Irvine California, 92606 (“CHROMADEX”).

RECITALS

1. UNIVERSITY leads a program of natural products discovery, development and commercialization, and its National Center for Natural Products Research is the nation’s only university-based research center dedicated to an integrated program of discovering, developing and commercializing new pharmaceuticals and agrochemicals derived from natural sources.

2. UNIVERSITY has developed and owns rights to Know-how, data, methods of analysis, trade secrets, technology, skill, and experience relating to the scientific investigation, extraction, purification of chemical constituents, analysis and development of reference standards from a wide variety of natural product sources which, to the extent not disclosed in issued patents, are confidential and proprietary.

3. CHROMADEX is a company engaged in the development, marketing and selling of reference standards for the Nutraceutical market and the identification and isolation of the constituents thereof and methodologies related thereto, and is interested in obtaining from UNIVERSITY an exclusive license to the Technology herein defined in the USA and foreign countries.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements of the parties contained in this Agreement, the parties agree as follows:

ARTICLE I
DEFINITIONS

As used in this Agreement, the following terms will have those meanings set forth in this Article unless the context dictates otherwise:

1.01 “ Effective Date of this Agreement ” means December 31, 1999.

1.02 “ Technology ” means any and all information, and all patentable and non-patentable inventions, discoveries, improvements, claims, formulae, trade secrets, processes, methods, data and Know-how developed, conceived, first reduced to practice or demonstrated to have utility by or on behalf of UNIVERSITY on the compounds specified in the Research Project as detailed in Appendix A that relates to the extraction, isolation and purification of chemical constituents for use as reference standards and for the further purification or characterization of reference standards acquired from other sources. “Methods Technology” means all methods, processes and related data and Know-how included in the Technology, and “Products Technology” means all reference standards developed included in the Technology. Excluded from Technology are any and all information, and all patentable and non-patentable inventions, discoveries, improvements, claims, formulae, trade secrets, processes, methods, data and Know-how developed, conceived, first reduced to practice or demonstrated to have utility by or on behalf of UNIVERSITY on the compounds specified in the Research Project as detailed in Appendix A that relates to the research and development of new pharmaceutical or agrochemical ingredients or products.

1.03 “ Affiliate ” means any corporation, company, partnership, joint venture or other entity that controls, is controlled by or is under common control with CHROMADEX. For the purposes of this definition, “control” means the direct or indirect ownership of at least fifty percent (50%), or such lesser amount that is the maximum percentage allowed by applicable law, of the shares entitled to vote or of the ownership Interest.

1.04 “ Field of Use ” means the use of the Methods Technology for the identification, isolation and purification of chemical constituents for use as reference standards, and the commercialization thereof; and the development, manufacture, marketing and other commercialization of the Products Technology.

1.05 “ Territory ” means the entire world.

1.06 “ Reference Standard ” means any material sold for the purposes of providing a material in a purified or semi-purified form for use in analytical testing of materials from other sources.

1.07 “ Licensed Standard ” means any Reference Standard or part thereof originating directly from the conduct of the Research Project as detailed in Appendix A that (a) uses in whole or in part any information covered in the UNIVERSITY Know-how or any issued, unexpired claim or pending claim contained in the patent rights in the country in which any such standard or part thereof is made, used or sold; or (b) is covered in whole or in part or is manufactured using a process or is employed to practice a process covered in the UNIVERSITY Know-how or any issued, unexpired claim or pending claim contained in the Patent Rights in the country in which any such Reference Standard or part thereof is made, used or sold.

1.08 “ Gross Sales ” means the gross receipts from the sale of Licensed Standards by CHROMADEX, and its Affiliates, less allowances for:

	(a)		any cash, trade or quantity discounts;
	(b)		sales taxes, duties or similar taxes or levies;
	(c)		returns and replacements.

Licensed Standards will be considered “sold” when billed out or invoiced.

1.09 “ Net Profits ” shall be determined on a quarterly basis as follows: Net Profits shall equal the gross revenues of CHROMADEX for such fiscal quarter less all costs and expenses directly associated with the generation of revenue; provided, however, that depreciation and amortization shall not be a deduction, and capital expenditures, debt service payments of principal and interest and tax payments shall be deductions in calculating Net Profits for such quarter.

1.10 “ Know-how ” means all existing information, materials and devices, whether or not patented or patentable, pertaining to the claims that describe the Technology and any related patent rights that are owned or controlled by UNIVERSITY or its affiliates as of the date of this Agreement and all of the above developed by UNIVERSITY and delivered by UNIVERSITY to CHROMADEX during the term of the Research Project funded by CHROMADEX as detailed in Appendix A.

1.11 “ UNIVERSITY Personnel ” means any University of Mississippi employee, student, or independent contractor, including any consultant under obligation of confidentiality to UNIVERSITY.

1.12 “ CHROMADEX Personnel ” means any CHROMADEX employee or independent contractor, including any consultant under obligation of confidentiality to CHROMADEX.

1.13 “ Research Project ” means the project conducted by UNIVERSITY under a grant from CHROMADEX as detailed in Appendix A to develop specific botanical reference standards that is incorporated herein by reference. The Research Project may be amended by mutual agreement in writing by both parties. An amendment to the Research Project will be attached as an amendment to this Agreement unless the scope of the Research Project has changed such that either party requests a separate licensing agreement to cover the intellectual property that may result from the amended research plan.

1.14 “ Licensing Income ” means payments made by CHROMADEX to UNIVERSITY in consideration of the license rights granted by UNIVERSITY to CHROMADEX to make, have made, use and sell Licensed Standards and Technology.

ARTICLE II
LICENSE

2.1 Grant . UNIVERSITY grants to CHROMADEX the exclusive right and license to Technology originating from the Research Project in the Territory for the Field of Use, and to the extent not prohibited by patents owned by third parties to make, have made, use and sell Licensed Standards and Technology until the end of the Term of this Agreement (as hereinafter defined) unless CHROMADEX’s rights under this Agreement are sooner terminated according to the terms hereof.

2.2 Reservation . UNIVERSITY reserves the right to practice Methods Technology and utilize Products Technology and Know-how for research and product development purposes outside the Field of Use, UNIVERSITY reserves the right to practice Methods Technology and utilize Products Technology and Know-how for its own research purposes.

2.3 Sublicenses . CHROMADEX will have the right to enter into sublicensing agreements for the rights, privileges and licenses granted hereunder during the Term of this Agreement subject to advanced written consent of the UNIVERSITY. Such written consent will not be unreasonably withheld or delayed. CHROMADEX agrees that any sublicenses granted by it will provide that the obligations to UNIVERSITY including Articles 4, 5, 6, 7, 8 and, 9 of this Agreement will be binding upon the Sublicensee as if it were a party to this Agreement. CHROMADEX agrees to forward to UNIVERSITY a full and complete copy of any and all sublicense agreements within ten (10) days of execution by the parties, which UNIVERSITY will treat as Confidential Information. Upon any termination of this Agreement, rights of any sublicensees will also terminate, subject to Paragraph 6.5 hereof.

2.4 Equity Position . CHROMADEX grants UNIVERSITY a two percent (2%) equity position in CHROMADEX based on the capitalization of CHROMADEX as of the date hereof, as set forth in Appendix B which is incorporated herein by reference. In any transaction under which CHROMADEX’ capital stock is issued, CHROMADEX shall issue additional shares to UNIVERSITY at no cost, such that UNIVERSITY’s capital stock shall be undiluted until CHROMADEX has issued capital stock at a valuation of at least four million dollars ($4,000,000), but in any case UNIVERSITY’s capital stock shall not be treated in a manner less favorable than the capital stock of the founders. UNIVERSITY will accomplish vesting in the equity position by the completion of the specific milestone activities agreed to by both parties as defined in Appendix B, which is incorporated herein by reference. Should UNIVERSITY be unable to complete the milestones stipulated in Appendix B due to the lack of availability of, or delay in providing the raw materials that are to be supplied by CHROMADEX, then the parties will negotiate in good faith a modification of the milestone deadlines, which they will then agree to in writing.

2.5 Licensing Income . In addition to the Equity Position stipulated in Paragraph 2.4 hereof, CHROMADEX will pay UNIVERSITY on a quarterly basis twenty-five (25) percent of the Net Profits of the company, including revenue generated by CHROMADEX from business activities outside the sale of Licensed Standards and Technology, or two (2) percent of the Gross Sales of the Licensed Standards and Technology whichever is greater, not to exceed a total annual payment of $325,000 per 12-month period until the total of such payments equals $487,500 and thereafter two (2) percent of the Gross Sales of the Licensed Standards. In addition to the two (2) percent payment referred to above on CHROMADEX’ Gross Sales, UNIVERSITY will be entitled to receive a “pass through royalty” (the “Pass Through Royalty”) of twenty (20) percent of all license fees, milestone payments, maintenance fees, and royalties received by CHROMADEX from sublicensees, but not in excess of two (2) percent of such sublicensees’ Gross Sales, and specifically excluding any payment to UNIVERSITY with regard to consideration received by CHROMADEX for research and development activities or the acquisition of securities of CHROMADEX. Payments will be paid by CHROMADEX within forty-five (45) days of the close of each quarter to The University of Mississippi, University, Mississippi 38677 or at such other places as UNIVERSITY may reasonably designate.

ARTICLE III
TECHNOLOGY TRANSFER, PUBLICATIONS AND INVENTIONS

3.0 Cooperation . UNIVERSITY agrees to provide assistance to CHROMADEX in the transfer of the methods, of preparing and analyzing the Licensed Standards and in presenting technical data at conferences and trade shows. The UNIVERSITY agrees to make Dr. Ikhlas Khan of UNIVERSITY available to CHROMADEX under the terms of a separate consulting agreement to be negotiated in good faith by both parties. Termination of the consulting agreement or Dr. Khan’s departure from UNIVERSITY is not a breach of this Agreement as described in Section 6.1.

3.1 Publications . UNIVERSITY will be free to publish or present any data generated on the Technology prior to the signing of this agreement. Both parties recognize that either party may wish to publish the results of its work under this Agreement. However, both parties recognize the importance of acquiring patent protection on inventions. Consequently, any proposed publication arising from work conducted under this Agreement by UNIVERSITY or CHROMADEX Personnel will comply with this section. At least thirty (30) days before a manuscript is to be submitted to a publisher, UNIVERSITY or CHROMADEX Personnel will provide the other party with a copy of the manuscript.

If UNIVERSITY or CHROMADEX Personnel wish to make an oral presentation, they will provide the other party with a copy of the abstract (if one is submitted) at least thirty (30) days before it is submitted. UNIVERSITY or CHROMADEX Personnel will also provide the other party with a copy of the text of the presentation, including all slides, posters, and any other visual aids, at least thirty (30) days before the presentation is made. CHROMADEX or UNIVERSITY will review the manuscript, abstract, or text to determine if patentable subject matter is disclosed. CHROMADEX or UNIVERSITY will notify the party that desires to publish within twenty-one (21) days of receipt of the proposed Publication if they determine that patentable subject matter is or may be disclosed, or if they believe confidential or proprietary information is or may be disclosed. If it is determined by CHROMADEX or UNIVERSITY that patent applications should be field, UNIVERSITY or CHROMADEX Personnel will delay its publication or presentation for a period not to exceed ninety (90) days from CHROMADEX’s or UNIVERSITY’s receipt of the proposed Publication to allow time for the filing of patent applications covering patentable subject matter. In the event that the delay needed to complete the filing of any necessary patent application will exceed the ninety (90) day period, UNIVERSITY or CHROMADEX Personnel will discuss with the party that desires to publish the need for obtaining an extension of the publication delay beyond the ninety (90) day period. The publication delay will not exceed 120 days from the date that the proposed publication was first submitted to CHROMADEX or UNIVERSITY for review, except that, by mutual agreement, as provided in this Section, this delay may be extended past the 120 day period for purposes of filing patent applications. If it is determined by CHROMADEX and UNIVERSITY that confidential or proprietary information is being disclosed, the parties will consult among themselves in good faith to arrive at agreement on mutually acceptable modifications to the proposed publication to avoid such disclosure.

3.2 Ownership of Inventions . It is recognized that inventions may be developed, conceived, first reduced to practice or demonstrated to have utility during the conduct of or arising from or resulting from the work conducted under the Research Plan. As a guide to allocation of ownership of such inventions, whether patentable or unpatentable, the parties agree that:

(a)

Inventions made solely by employees of CHROMADEX (“CHROMADEX Inventions”) shall be owned by CHROMADEX.

(b)

Inventions made solely by employees of UNIVERSITY (“University Inventions”) shall be owned by UNIVERSITY; and

(c)

Inventions made jointly by UNIVERSITY personnel and CHROMADEX personnel (“Joint Inventions”) will be jointly owned by UNIVERSITY and CHROMADEX. All UNIVERSITY Inventions and Joint Inventions shall constitute Technology hereunder licensed exclusively to CHROMADEX in accordance with the terms of this Agreement

ARTICLE IV
CONFIDENTIALITY

4.0 Confidentiality; Exceptions . Except to the extent expressly authorized by this Agreement or as otherwise agreed to in writing, UNIVERSITY and CHROMADEX agree that any technical information, data and Materials which they exchange in connection with this Agreement will be treated as Confidential Information, and that each party will not use such Confidential Information for its own purposes except as permitted hereunder, nor disclose it to others, except to the extent that it can be established by the receiving party by competent proof that such Confidential Information:

(a) was a part of the public domain at the time of its disclosure to the receiving party; or

(b) became a part of the public domain after its disclosure to the receiving party, but not due to some unauthorized act by or omission of such party; or

(c) was already known to the receiving party, other than under an obligation of confidentiality at the time of disclosure by the other party, as evidenced by its written records; or

(d) was disclosed to the receiving party, other than under an obligat