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Exhibit 10.01
NOTICE: CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED FOR
PORTIONS OF THIS DOCUMENT AS INDICATED HEREIN
LICENSE AGREEMENT
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").
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 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:
ARTICLE I
DEFINITIONS
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.
ARTICLE II
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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ARTICLE III
TERM AND CANCELLATION
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.
ARTICLE I
PAYMENTS BY LICENSEE
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 Percentage is equal to or greater than 75%.
(iii) If, after the dat
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