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Royalty Agreement

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CHROMADEX CORP. | Calgary, AB | CHROMADEX CORPORATION | NEUTRISCI INTERNATIONAL INC

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Title: ROYALTY AGREEMENT
Governing Law: New York     Date: 3/29/2013
Industry: Biotechnology and Drugs     Sector: Healthcare

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Exhibit 10.5

ROYALTY AGREEMENT

 

THIS AGREEMENT is made effective as of the 28th day of March 2013

 

BETWEEN:

CHROMADEX CORPORATION , a corporation incorporated pursuant to the laws of the State of Delaware (“ CDX ”)

 

- and -

 

 

NEUTRISCI INTERNATIONAL INC., a corporation incorporated pursuant to the laws of the Province of Alberta (referred to as the “ NSI ”) (collectively the " Parties ")

 

WHEREAS :

 

A.

NSI has purchased all of the assets, rights and title of CDX in and to the products containing pterostilbene formerly marketed by CDX under the brand, “BlūScience” including, but not limited to the products under the names, “HeartBlū”, “MemoryBlū”, “EternalBlū”, “TrimBlū” and “Blū2Go” (the “ BlūScience Products ”) including the trademarks related to the “BlūScience Products (“ Trademarks ”); and

 

 

B.pursuant to the purchase and sale of the “BlūScience Products, NSI has agreed to pay a royalty to CDX pursuant to the terms and conditions hereinafter set forth;

 

C.

concurrently herewith, NSI and CDX have entered into a supply agreement (the “ Supply Agreement ”) for the supply by CDX to NSI of the product, PteroPure, being a raw ingredient in the manufacture of the BlūScience Products;

 

NOW THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties agree as follows:

 

1.   INTERPRETATION

 

1.1   Definitions .  The definitions set out in Appendix “A” to this Agreement shall govern the meaning of the terms defined therein when used in this Agreement unless there is something in the subject matter or context patently inconsistent therewith.

 

(a)  

BlūScience Products ” has the meaning given in the preamble of this Agreement;

 

(b)  

Business Day ” means every day other than a Saturday, Sunday or any other day on which the principal banks located in either New York,  New York  or Calgary, Alberta are not open for business during normal banking hours;

 

(c)  

Net Sales ” means the gross billing price  NSI or its subsidiaries directly or indirectly charges to their customers for BlūScience Products, less transportation costs, sales taxes, use taxes, occupation taxes and excise taxes, discounts, returns and allowances;

 

(d)  

Royalty ” has the meaning given in Section 2.1 of this Agreement;

 

(e)  

Royalty Period ” has the meaning given in Section 2.1 of this Agreement

 

(f)  

Supply Agreement ” has the meaning given in the preamble of this Agreement;

 

 

-1-


 

 

(g)  

Term ” has the meaning set out in Section 4.1 of this Agreement;

 

(h)  

Termination Date ” has the meaning set out in Section 4.4 of this Agreement; and

 

(i)  

Trademarks ” has the meaning given in the preamble of this Agreement.

 

1.2   Interpretation .  Any reference in this Agreement to a paragraph, section or appendix is a reference to the respective paragraph, section or appendix of this Agreement, unless otherwise expressly indicated. Unless specified otherwise, “$” and “Dollars” means the lawful currency of the United States of America.

 

2.   ROYALTY PAYMENT AND ONGOING OBLIGATIONS

 

2.1   The Royalty :  Subject to early termination pursuant to Section 4.2, for so long as  NSI shall sell the BlūScience Products (the “ Royalty Period ”), NSI shall pay CDX a royalty in the amount of 6% of Net Sales (the “ Royalty ”) from its sales of (a) any BlūScience Products, (b) any products that include the Trademarks, or (c) any products hereafter marketed in connection with the Trademarks or any other trademarks created by NSI for use in connection with BlūScience Products, derivatives of the BlūScience Products or products marketed by NSI that include PteroPure or pterostilbene.

 

2.2   Quarterly Reporting.   During the Royalty Period, NSI shall provide CDX with a quarterly report (whether or not NSI has generated any Net Sales) showing all amounts of Net Sales during that quarter.  The quarterly reports shall also show the calculation of the Royalty for that quarter, if any.

 

2.3   Payment.   Royalties shall be payable on a quarterly basis.

 

3.   REPRESENTATIONS AND WARRANTIES

 

3.1   CDX's Representations and Warranties .  CDX warrants and  represents to NSI that as of the date hereof:

 

(a)  

CDX is duly incorporated, validly subsisting and in good standing under the laws of the State of Delaware with full capacity and authority to enter into this Agreement and complete the actions and transactions contemplated by this Agreement;

 

(b)  

CDX has (i) taken all corporate actions necessary to authorize the execution and delivery of this Agreement and completion of the actions and transactions contemplated herein and (ii) validly executed and delivered this Agreement; and

 

(c)  

this Agreement constitutes a legal, valid and binding obligation of CDX enforceable against CDX in accordance with its terms and conditions, provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally.

 

3.2   NSI's Representations and Warranties .  NSI warrants, and represents to CDX that as of the date hereof:

 

(a)  

NSI is duly incorporated, validly subsisting and in good standing under the laws of the Province of Alberta  with full capacity and authority to enter into this Agreement and complete the actions and transactions contemplated by this Agreement;

 

(b)  

NSI has (i) taken all corporate actions necessary to authorize the execution and delivery of this Agreement and completion of the actions and transactions contemplated herein and (ii) validly executed and delivered this Agreement; and

 

(c)  

this Agreement constitutes a legal, valid and binding obligation of NSI enforceable against NSI in accordance with its terms and conditions; provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally.

 

 

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4.   TERM AND TERMINATION

 

4.1   Term.   This Agreement shall be effective from the date hereof and, subject to termination in accordance with Section 4.2, be considered as an ongoing contract   thereafter pursuant to the terms of this Agreement.

 

4.2   Early Termination.   This Agreement may be t


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