Exhibit 10.44
AGREEMENT TO
SUBLICENSE
This Agreement to Sublicense
(“ Agreement ”) is made and entered into
effective as of March 3, 2009 (“ Effective Date
”), by and between Natural Alternatives International, Inc.,
a Delaware corporation (“ NAI ”), and Compound
Solutions, Inc., a California corporation (“ CSI
”).
RECITALS
A. NAI is a party to that certain
License Agreement effective as of April 28, 1997, by and among
Roger Harris and Mark Dunnett (collectively, the “
Licensors ”) and NAI, as amended by that certain
Amendment to License Agreement dated March 17, 2001, as
further amended by that certain Second Amendment to License
Agreement dated March 26, 2007, and as may be further amended
from time to time (the “ License Agreement
”).
B. The License Agreement grants NAI
a sublicenseable, exclusive, worldwide license to manufacture, use,
sell, offer for sale and otherwise commercially dispose of certain
Licensed Products (as hereinafter defined) made in accordance with
or incorporating the Licensed Rights (as hereinafter
defined).
C. NAI is also the owner of certain
registered trademarks related to the mark “Carnosyn”
(as further described herein below and collectively, the “
Trademark Rights ”).
D. CSI is in the business of raw
material sourcing and sales, including the sourcing and sale to
third parties of certain raw materials set forth on Exhibit A
attached hereto that are necessary for the design, research,
development and formulation of Licensed Products (the “
Raw Materials ”).
E. CSI desires NAI grant to third
parties who purchase the Raw Materials from CSI a sublicense of
certain of its Licensed Rights under the License Agreement and a
license to use its Trademark Rights, and NAI desires to grant such
sublicenses and licenses in accordance with the terms and
conditions of this Agreement.
Incorporating the foregoing recitals
and in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
1.1 “Field of Use” means
dietary supplements and other foods for human performance
nutrition. For avoidance of doubt, the Field of Use does not
include the use of the Raw Materials and/or Licensed Rights to
treat dogs, horses and/or camels or for any human medical related
use.
1.2 “Licensed Products”
means those products made from or in accordance with, produced or
manufactured using, or otherwise incorporating in whole or in part
any of the Licensed Rights, including, without limitation, any
products incorporating or made from the Raw Materials or any
material, substance, organism, component or product derived or
developed from or based upon the Raw Materials and covered in whole
or in part by any of the claims of the Licensed Rights.
1.3 “Licensed Rights”
means NAI’s rights in information, discoveries, concepts,
techniques, designs, processes and technology claimed in the
following United States patents, and any reissues, reexaminations,
or extensions, continuations, continuations-in-part, or divisionals
of any of the following and any international counterparts, and in
the inventions and discoveries described, covered and claimed
therein:
(a) US 5,965,596 filed
August 12, 1997, entitled “Methods and Compositions for
Increasing the Anaerobic Working Capacity in
Tissues;”
(b) US 6,172,098 filed May 25,
1999, entitled “Methods and Compositions for Increasing the
Anaerobic Working Capacity in Tissues;”
(c) US 6,426,361 filed
January 9, 2001, entitled “Methods and Compositions for
Increasing the Anaerobic Working Capacity in
Tissues;”
(d) US 6,680,294 filed July 30,
2002, entitled “Methods and Compositions for Increasing the
Anaerobic Working Capacity in Tissues;” and
(e) Allowed US application serial
no. 10/717,217 filed November 18, 2003, entitled
“Methods and Compositions for Increasing the Anaerobic
Working Capacity in Tissues.”
1.4 “Trademark Rights”
means NAI’s rights as the owner of the following registered
trademarks:
(a) CARNOSYN (standard character
mark), Registration No. 3,146,289;
(b) CARNOSYN CARNOSINE SYNTHESIZER
(standard character mark), Registration No. 3,121,544;
and
(c) CARNOSYN CARNOSINE
SYNTHESIZER & Design, Registration
No. 3,091,092.
2.1 Subject to the terms and
conditions of this Agreement, NAI hereby agrees to grant to the
customers of CSI who purchase the Raw Materials from CSI a
worldwide, non-exclusive, non-transferable, non-assignable,
non-sublicenseable, royalty-free (i) sublicense of NAI’s
rights under the Licensed Rights to manufacture, offer for sale,
and/or sell Licensed Products within the Field of Use (the “
Sublicense ”), and (ii) license to use and
reproduce the trademarks comprising the Trademark Rights solely to
advertise, market, and promote the Licensed Products within the
Field of Use (the “Trademark License”). The term of
such Sublicense and Trademark License shall automatically expire
upon the expiration of NAI’s Licensed Rights under the
License Agreement and/or expiration of NAI’s Trademark
Rights.
2.2 CSI agrees to provide to each of
its customers that purchases Raw Materials from CSI a copy of the
Sublicense Agreement, in the form set forth in Exhibit B attached
hereto (the “ Sublicense Agreement ”), which
Sublicense Agreement may not be altered, amended, or modified
except with the express written consent of an authorized officer of
NAI. No Sublicense or Trademark License shall be granted or deemed
to have been granted to any customer of CSI that does not receive
and accept the Sublicense Agreement and, except as expressly
provided in this Section 2, nothing contained in this
Agreement is intended to confer by implication, estoppel, or
otherwise, upon CSI or any customer of CSI a license or rights in
any intellectual property or other rights of NAI.
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3.
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RESERVATION OF RIGHTS
.
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3.1 CSI acknowledges and agrees that
during the term of this Agreement, NAI and its affiliates will
continue to design, develop, manufacture, sell, and distribute
Licensed Products using the Licensed Rights and Trademark Rights
and NAI may grant sublicenses and/or licenses of its rights under
the Licensed Rights and Trademark Rights to manufacture, offer for
sale and/or sell Licensed Products to third parties who are not
customers of CSI and/or who did not purchase Raw Materials from
CSI. Nothing in this Agreement shall be interpreted to limit in any
manner or to any extent NAI’s rights and ability to act in
accordance with the foregoing and NAI hereby expressly reserves
such rights.
3.2 CSI acknowledges and agrees the
Licensed Rights and the Trademark Rights are and will remain the
sole and exclusive property of NAI, subject to the rights of the
Licensors, and that NAI is the owner of all proprietary rights and
intellectual property rights associated therewith including without
limitation all trademarks, trade dress, trade names, logos, domain
names and service marks, together with all translations,
adaptations, derivations and combinations, including all associated
goodwill, and all applications, registrations, reservations and
renewals in connection therewith, whether or not registered for the
Licensed Rights or the Trademark Rights. Except as otherwise
permitted herein, CSI will not take any action inconsistent with
NAI’s ownership of and rights under the Licensed Rights and
Trademark Rights. CSI will not contest or aid others in contesting
the validity, enforceability or NAI’s ownership of and/or
rights in the Licensed Rights and Trademark Rights.
4.1 In consideration of NAI’s
agreement to grant Sublicenses and licenses to use the Trademark
Rights pursuant to the terms of this Agreement, CSI agrees to pay
to NAI, in United States dollars, the fees and amounts set forth on
Schedule 1 attached hereto (the “ Sublicense Fees
”).
4.2 The Sublicense Fees must be paid
to NAI within thirty (30) days after the end of the calendar
quarter in which such Sublicense Fees are earned. CSI shall submit
to NAI with its payment of the Sublicense Fees a quarterly report
summarizing total sales of Raw Materials to third parties during
the immediately preceding calendar quarter. The report shall be in
form and content as agreed to by the parties.
4.3 If any Sublicense Fees to be
paid by CSI to NAI under this Agreement become delinquent, the
delinquent amount shall bear interest until paid in full with such
interest. The interest will be compounded annually and will accrue
at the lesser of (i) the highest annual rate allowed under
applicable law at the time the outstanding amount becomes
delinquent, or (ii) 0.0005 multiplied by the outstanding
amount per day of delinquency.
4.4 CSI agrees to keep and maintain
accurate and adequately detailed accounting records, including
copies of all purchase orders, for all sales of Raw Materials sold
to third parties. Such accounting records shall be kept for a
minimum of three (3) years following the end of the calendar
quarter in which such sales were made. During the term of this
Agreement and for one year thereafter, copies of all purchase
orders for the sale of Raw Materials to third parties shall be made
available to NAI upon request and NAI or its agents shall otherwise
have the right, upon reasonable prior notice and during ordinary
business hours, to inspect the relevant accounting records of CSI
to verify the accuracy of the Sublicense Fees paid or payable to
NAI. Any such inspection shall be conducted so as to not
unreasonably interfere with CSI’s normal business
activities.
4.5 CSI agrees to take commercially
reasonable actions to promote, market and sell the Raw
Materials.
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5.
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PROSECUTION AND ENFORCEMENT OF LICENSED
RIGHTS .
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5.1 NAI will have sole control over,
but, subject to Section 5.2, no obligations to CSI with
respect to, the filing, prosecution, and maintenance (collectively,
the “ Prosecution ”) of the Licensed Rights and
the Trademark Rights. CSI will not have any right to participate in
the Prosecution of any Licensed Rights and/or Trademark
Rights.
5.2 During the term of this
Agreement, NAI agrees to use commercially reasonable efforts to
maintain and protect the Licensed Rights and Trademark Rights, to
make any necessary filings, and to pay any necessary fees or other
amounts due with respect thereto.
5.3 During the term of this
Agreement, CSI agrees to promptly notify NAI in writing upon
becoming aware of any known or suspected infringement or other
improper use of any Licensed Rights or Trademark Rights. Such
notice will include the identity of the third party or parties
known or suspect to have infringed the Licensed Rights and/or
Trademark Rights and any available information that is relevant to
such infringement. NAI shall have sole control over enforcement and
defense of all Licensed Rights and Trademark Rights. CSI shall not
take any action to notify a known or suspected infringing party but
shall use best efforts and cooperate with NAI, at NAI’s
request, in litigating, settling or otherwise terminating any such
infringement of the Licensed Rights and/or Trademark Rights. NAI
shall be entitled to any and all damages awarded as a result of or
agreed to in a monetary settlement of any such claim of
infringement.
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6.
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REPRESENTATIONS AND WARRANTIES OF
CSI .
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6.1 CSI represents and warrants that
all Raw Materials provided to customers of CSI that receive a
Sublicense shall be of the best quality and pure and free from
adulteration within the guidelines of the Food, Drug and Cosmetic
Act of the United States as amended.
6.2 CSI further represents, warrants
and guarantees that at the time of delivery of the Raw Materials to
its customers the Raw Materials will, when delivered, conform to
the description on the face of the purchase order relating to such
Raw Materials, and be free of defects in materials and workmanship
and further, that the Raw Materia