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Exhibit
10.1
SUPPLY AND LICENSE
AGREEMENT
This Agreement is made
effective as of August 20, 2007 by and among Colloral LLC, a
Delaware limited liability company (“Colloral”),
Bronson Laboratories, LLC a New York limited liability company,
Futurebiotics, LLC, a New York limited liability company, and
Jenasol LLC, a New York limited liability company.
1.
DEFINITIONS
1.1. Bronson Companies
means Bronson Laboratories LLC, Futurebiotics, LLC, and Jenasol
LLC.
1.2. Bronson Company
means any one of the Bronson Companies.
1.3. Bronson
Representative means Steve Welling, COO, Futurebiotics,
LLC
1.4. Commencement Date
means September 1, 2007.
1.5. Confidential
Information means business and technical information and other
similar information, including, without limitation, the terms of
this Agreement, communicated to one party by the other party in any
manner in connection with this Agreement, whether before or during
the term of this Agreement, but expressly excludes information
that: (i) is or becomes generally available to the public,
other than as a result of disclosure by the recipient party in
violation of this Agreement; (ii) becomes available to the
recipient party from a source other than the disclosing party; as
long as such source is not itself bound by a confidentiality or
non-disclosure agreement with the disclosing party or otherwise
prohibited from disclosing such Confidential Information by a
legal, contractual or fiduciary obligation; (iii) was
rightfully in the recipient party’s possession prior to
receipt from the disclosing party; or (iv) is independently
developed by the recipient party without the use of the disclosing
party’ s Confidential Information.
1.6. Direct Response
Channels means direct mail, telemarketing, direct response
radio advertising, direct response television advertising, direct
response magazine advertising, direct response newspaper
advertising, but excludes, without limitation, catalogs and
websites.
1.7. Effective Date
means the date of this Agreement.
1.8. Futurebiotics
Agreements means the Supply and License Agreement by and
between Colloral and Futurebiotics, LLC dated effective
January 10, 2007 and the Supply and License Agreement by and
between Colloral and Futurebiotics, LLC dated effective
April 9, 2007.
1.9. Improvements
means any findings, discoveries, inventions, additions, patents,
know-how, modifications, formulations, or changes that relate to or
are incorporated into the Product made during the term of this
Agreement. Trademarks are specifically excluded from the definition
of Improvements.
1.10. Intellectual
Property means any invention, idea, concept, discovery, design,
development, technique, methodology, innovation, process, formula,
data, know-how, trade secret, or intellectual property right,
writing, documentation, data, computer software and hardware, and
related documentation whatsoever, or any interest therein, whether
or not patentable or registrable or subject to analogous protection
relating to or incorporated in the Product, including, without
limitation, any Improvements, whether made by Colloral, its
licensors, the Bronson Companies, or any of such parties working
together.
1.11. Losses means
liabilities; claims, whether asserted by a third party or by a
party to this Agreement; losses; damages; judgments; awards; costs;
and expenses, including, without limitation, reasonable
attorneys’ fees.
1.12. Product means
Colloral’s proprietary dietary supplement for the relief of
joint pain that Colloral currently markets under the names COLLORAL
® and
THE COLLAGEN SOLUTION TM in
its current form or any form later developed, as a stand alone
product and not in combination with or as a component of other
products.
1.13. Territory means
the United States of America.
1.14. Website means
the website through which Colloral sells the Product under the
trademark, THE COLLAGEN SOLUTION, which website is currently
located at www.collagensolution.com.
2. LICENSE
2.1. Grant . Subject
to the terms and conditions of this Agreement, Colloral hereby
grants to the Bronson Companies a non-transferable and
non-assignable license to market, offer for sale, and sell the
Product, in the Territory, solely through Direct Response Channels.
The Bronson Companies hereby covenant that they will use their best
efforts to market the Product through Direct Response Channels in
the Territory.
2.2. Limited
Exclusivity . The license granted to the Bronson Companies
hereunder will be exclusive for a period of [****] following the
Commencement Date. The exclusivity of the license will extend
automatically under the following conditions:
(a) If the Bronson Companies
purchase and pay for at least [****] units of Product in the period
between the Effective Date and the [****] anniversary of the
Commencement Date, the exclusivity will extend to the [****]
anniversary of the Commencement Date;
(b) If (i) exclusivity
extends through the [****] anniversary of the Commencement Date and
(ii) the Bronson Companies purchase and pay for at least
[****] units of Product in the period between the [****]
anniversary of the Commencement Date and the [****] anniversary of
the Commencement Date, the exclusivity will extend to the [****]
anniversary of the Commencement Date; and
(c) If (i) this
Agreement renews and (ii) the Bronson Companies purchase and
pay for at least [****] units of Product in the period between the
[****] anniversary of
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the Commencement Date and the
[****] anniversary of the Commencement Date, the exclusivity will
extend to the [****] anniversary of the Commencement
Date.
If exclusivity renews under
Subsection 2.2(c) above, the parties shall negotiate in good faith
to set minimums for maintaining exclusivity for the last [****]
years of the renewal term, which levels shall in no event be below
[****] units.
2.3. No Sublicenses .
The Bronson Companies may not sublicense their rights under this
Agreement without Colloral’s prior written
consent.
(a) Media and Distribution
Partnerships . Notwithstanding the restriction on sublicenses
above, the Bronson Companies are expressly granted the right to
engage third party media and distribution partners to market and
distribute the Product on their behalf and under their branding on
a market by market basis, but any such engagements must expressly
restrict the third parties from marketing or distributing the
Product (i) through channels other than Direct Response
Channels and (ii) outside the Territory. The Bronson Companies
shall be responsible for the actions of such third parties, and any
marketing and distribution by such third parties that does not
comply with the restrictions in this Agreement, or other Agreements
with any of the Bronson Companies shall be deemed a material breach
by the Bronson Companies of this Agreement.
(b) Rights to Media
and Distribution Partnerships . The Bronson Companies
shall provide notice to Colloral identifying the third party media
and distribution partners it uses. Colloral shall not work with
those parties to distribute Product in the Territory and shall not
encourage such parties to cease working with the Bronson Companies
or to work with others to distribute Product in the
Territory.
2.4. Retention of
Rights . Colloral retains all rights not expressly granted to
the Bronson Companies hereunder, including, without limitation, the
right to market, offer for sale, and sell (a) its proprietary
dietary supplement for the relief of joint pain that it currently
markets under the names COLLORAL ® and THE COLLAGEN SOLUTION TM , in its current form or any form later
developed, in combination with or as a component of other products
and (b) subject to the Futurebiotics Agreements, the Product
through any channels and in any territory not expressly covered by
the license granted to the Bronson Companies under this Agreement.
Colloral may license third parties to exercise its retained
rights.
3. MARKETING
EFFORTS
3.1. Catalog . The
Product shall be included as an offering in the Bronson
Companies’ September 2007 catalogs.
3.2. Test of Concept .
On or before the first anniversary of the Commencement
Date:
(a) The Bronson Companies
shall send a minimum of [****] e-mail solicitations offering the
Product for sale.
(b) The Bronson Companies
shall feature the Product in at least [****] copies of its
newsletters, whether distributed electronically or in hard
copy.
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(c) The Bronson Companies
shall mail at least [****] catalogs that include the Product as an
offering.
(d) The Bronson Companies
shall include the Product as an offering in at least [****] inserts
that are included in packages of products shipped to the Bronson
Companies’ customers.
4.
TRADEMARKS
4.1. The Bronson
Companies . The Bronson Companies may not market, offer for
sale, or sell the Product under the trademarks, COLLORAL or THE
COLLAGEN SOLUTION, or as a generic version of such products. The
Bronson Companies shall develop, and identify the Product by, their
own trademarks.
4.2. Brand Protection
. Colloral may not identify the Product as marketed under its
trademarks as being the same as the Product as marketed under the
Bronson Companies’ trademarks, nor may it make comparisons
between the Product as marketed under its trademarks as being the
same as the Product as marketed under the Bronson Companies’
trademarks, and the Bronson Companies may not identify the Product
as marketed under their trademarks as being the same as the Product
as marketed under Colloral’s trademarks, nor may they make
comparisons between the Product as marketed under their trademarks
as being the same as the Product as marketed under Colloral’s
trademarks. Colloral covenants that it will use commercially
reasonable efforts to prevent any other person to whom it licenses
the right to market and sell the Product from identifying the
Product as being the same as the Product marketed by the Bronson
Companies and from making comparisons between the Product as
marketed by the licensee and the Product as marketed by the Bronson
Companies. In no event, however, shall Colloral be required to
restrict or prevent another licensee from identifying the origin of
the Product.
5. SUPPLY
5.1. Basic Arrangement
. Colloral shall manufacture, package, label, pack for shipment,
and tender to carriers, and the Bronson Companies shall purchase
from Colloral, the Product in bulk, packaged in bottles or other
appropriate packaging containing either a [****],[****], or [****]
supply, pursuant to purchase orders submitted by the Bronson
Companies to Colloral from time to time.
5.2. Colloral
Responsibilities . Colloral shall be responsible for purchasing
or providing all raw materials and packaging, labor, utilities, and
equipment necessary to manufacture the Product and for packing the
Product for shipment.
5.3. The Bronson
Companies’ Responsibilities . Each of the Bronson
Companies shall be responsible for supplying its own labels. If
Colloral does not have sufficient labels for a particular order, it
may delay shipment of the entire order until the applicable Bronson
Company provides the necessary labels. Each Bronson Company shall
be responsible (i) for obtaining all required permits and
licenses and complying with all applicable laws, regulations,
rules, ordinances, licensing and registration requirements, export
and import restrictions, and anything
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else necessary for it to market and sell
the Product in the Territory and (ii) for the costs associated
therewith.
5.4. Three-Month Rolling
Forecast; Scheduling . Each of the Bronson Companies shall
provide to Colloral a non-binding rolling three-month forecast of
anticipated orders prior to the beginning of each calendar month.
Colloral shall use commercially reasonable efforts to ensure that
it can ship each order placed by the Bronson Companies under this
Agreement within six weeks of the date it receives the
order.
5.5. Shipment . All
sales of Product under this Agreement shall be by refrigerated
truck, F.O.B. St. George, Utah. Title to, and risk of loss of,
Product shall be transferred to the applicable Bronson Company by
Colloral upon tender by Colloral to such Bronson Company’s
designated carrier. In the event that Colloral desires to tender
the Product to carriers at a location other than St. George, Utah,
Colloral shall notify the Bronson Representative at least 30 days
prior to effecting such change, and the Bronson Representative
shall have the right to object to the change. If the Bronson
Representative does not object to the new location within such
30-day period or if the Bronson Representative affirmatively
indicates its approval, Product shall be shipped F.O.B. the new
location.
5.6. Certificates of
Analysis . Each shipment of Product will be certified by the
manufacturer for compliance with Product specifications including
potency and purity of finished product. The form of certificate is
attached hereto as Schedule A .
5.7. Technical
Resource . Colloral shall respond promptly to any reasonable,
technical questions posed by the Bronson Companies on behalf of
their customers and their customers’ customers, provided,
however, than in no event shall Colloral be required to disclose
any Confidential Information.
5.8. Exclusivity . The
Bronson Companies may not purchase the Product from any person or
entity other than Colloral.
5.9. Annual Review .
The Bronson Companies shall schedule a meeting between the parties
during the last three months of each year of the Term to review
sales of the Product to date, forecasts for the coming year and the
Bronson Companies’ sales and marketing activities.
5.10. Price and Payment
Terms . The Bronson Companies shall pay to Colloral the prices
described on Schedule B in U.S. dollars. The Bronson
Companies shall be responsible for all sales and use taxes and for
all other taxes and charges applicable to the sale of Product to or
by the Bronson Companies, other than taxes on Colloral ‘s
income. Colloral shall issue invoices for Products shipped to the
Bronson Companies on or promptly following the date the Products
are tendered to the carrier. The Bronson Companies shall pay
Colloral for Product orders within 30 days from the date of
shipment of the particular order. If an invoice is not paid within
the applicable period, the overdue amount shall bear interest from
the date that it was due at the rate of [****]% per annum or, if
lower, the highest rate permitted by law.
6. TERM;
TERMINATION
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6.1. Term . The term
of this Agreement shall commence as of the Effective Date and shall
remain in effect until the third anniversary of the Commencement
Date, unless otherwise terminated as set forth below. The Bronson
Companies shall have the option to renew this Agreement for one
additional three-year term if the Bronson Companies purchased and
paid for at least 150,000 units in the period between the second
anniversary of the Commencement Date and the third anniversary of
the Commencement Date. The Bronson Companies may exercise their
option to renew by the Bronson Representative providing notice of
exercise to Colloral at least 60 days prior to the third
anniversary of the Commencement Date.
6.2. Termination .
Colloral may terminate this Agreement by giving notice to the
Bronson Representative under any of the following
circumstances:
(a) If any of the Bronson
Companies fails to perform or comply in any material respect with
any of its obligations under this Agreement (except pursuant to a
force majeure event set forth in Section 14.2) and such
failure is not remedied within 30 days after receipt of notice of
such failure;
(b) If any of the Bronson
Companies (i) is unable to pay, or admits in writing its
inability to pay, its debts as they mature; (ii) makes a
general assignment for the benefit of creditors; (iii) applies
for or consents to the appointment of a receiver, trustee, or
liquidator of all or a substantial par
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