SECOND AMENDED
AND RESTATED
LICENSE AND
PRODUCT SUPPLY AGREEMENT
THIS SECOND AMENDED AND RESTATED
LICENSE AND PRODUCT SUPPLY AGREEMENT (“ Agreemen
t”) is made as of the 29th day of May, 2009 (the “
Effective Date ”), by and between UNIGEN
PHARMACEUTICALS, INC., a Delaware corporation whose principal
place of business is located at 2660 Willamette Drive NE, Lacey, WA
98516 (“Licensor”), and SCHIFF NUTRITION GROUP,
INC., a Utah corporation whose principal place of business is
located at 2002 South 5070 West, Salt Lake City, Utah 84104
(together with its subsidiaries “ Licensee
”).
WHEREAS , Licensor is the owner of
valuable data, trade secrets, science, technology, information,
formulas, know-how, patents, trademarks and other intellectual
property relating to the design and manufacture of a proprietary
patented and patent pending compound (as more fully described in
Schedule A hereto, the “ Compound
”), which is suitable for use in the manufacture and
distribution by Licensee of dietary supplements and consumer health
products which Licensee intends to market for certain joint and
musculo-skeletal health or other purposes as set forth on
Schedule B hereto (the “ Purposes
”);
WHEREAS , Licensee develops,
manufactures, markets and sells nutritional supplements and
consumer health products under various brands and through several
different channels of distribution;
WHEREAS , Licensor has either been
issued or made application for certain patents (the “
Patents ”) (the Patents are set forth on Schedule
C hereto and shall hereinafter along with any data, trade
secrets, science, technology, formulas, know-how, intellectual
property or other information relating to the Compound (other than
the Trademark, as defined below) collectively be referred to as the
“ Property ”);
WHEREAS , the parties entered into a
License and Product Supply Agreement dated as of May 18, 2004 and
amended and restated as of October 13, 2006 regarding, among other
matters, the grant of an exclusive license for the Compound, the
Property and the trademark Univestin® (the “
Trademark ”) to Licensee in connection with the
manufacturing, marketing and sale of joint and musculo-skeletal
health related products containing the Compound in certain channels
of trade in the United States, Mexico, Canada and certain other
territories;
WHEREAS , Licensee now desires to obtain
a non-exclusive license from Licensor and Licensor desires to
terminate the existing licenses and grant to Licensee a
non-exclusive license to use the Compound and Property in
association with the offering for sale, advertising, promotion,
manufacturing, packaging, shipping, marketing, sale and
distribution of certain dietary supplement and other products which
contain the Compound as an active ingredient (collectively, the
“ Products ”) in the food, drug and mass
(including club) or other authorized channels of trade as set forth
on Schedule B hereto (the “ Authorized Channels of
Trade ”) in the United States and the other territories
as set forth on Schedule B hereto (the “
Territories ”) for the Purposes;
and
WHEREAS , Licensee further desires to
purchase its total requirements of the Compound solely and
exclusively from Licensor (to the extent Licensee's use of the
Compound would be covered by the Patents) and Licensor desires to
sell the Compound to Licensee in raw material form in accordance
with the specifications attached hereto as Schedule D (as amended
in writing from time to time by mutual agreement of the parties,
the “ Specifications ”). Each party
agrees that its consent to amend the Specifications will not be
unreasonably withheld or delayed.
NOW, THEREFORE
, in consideration
of the mutual promises, covenants and conditions contained herein,
the parties hereby agree as follows:
1. Grant of
License/Rights . Subject to the terms and conditions
of this Agreement, Licensor hereby grants to Licensee and Licensee
accepts a non-exclusive license to use the Compound and Property in
connection with the advertising, promotion, manufacturing,
packaging, shipment, distribution and sale of the Products in the
Authorized Channels of Trade in the Territories solely for the
Purposes. The parties hereby agree that the grant of this license
shall mean that Licensee is permitted, directly or indirectly, in
the applicable Authorized Channel of Trade in the applicable
Territories to manufacture, advertise, promote, package, ship,
distribute or sell the Compound, any product containing the
Compound or any product which incorporates, uses or relies on the
Property, or any reasonable variation thereof solely for the
Purposes. Licensor understands and agrees that Licensee
may outsource the manufacture of the Products in whole or in part,
and is permitted to sublicense its rights to use the Property to
the extent required to do so. All of the Property licensed to
Licensee hereunder shall be on a royalty-free basis.
2. Ordering
Compound; Production Quantities .
(a) Purchase
Orders . Licensor agrees to sell and Licensee agrees
to purchase its total requirements of the Compound solely from the
Licensor (to the extent Licensee's use of the Compound would be
covered by the Patents), for the Purposes pursuant to specific
purchase orders submitted from time to time by Licensee which shall
include, among other things, the required quantity of the
Compound. No purchase order is binding on Licensee
unless and until it is in writing and signed by Licensee's
authorized representative. Licensor shall provide
written confirmation within 2 business days of receipt of the
purchase order. Each purchase order shall be deemed to
be submitted pursuant to this Agreement and subject to the terms
and conditions therein and herein. In the event of a
conflict between the terms of the purchase order and this
Agreement, the terms of this Agreement shall apply. Each
purchase order shall be for a minimum of twenty-five (25) kilograms
of the Compound.
(b) Forecasts;
Minimum Lead Times . Licensee shall provide Licensor
with a six (6) month non-binding forecast, updated once per
quarter. Licensee shall provide Licensor with a two (2)
month binding minimum forecast; provided that Licensee may delay
delivery of the Compound purchased. Production lead time
shall be at least two (2) calendar weeks prior to a requested
delivery date from the date of the confirmed purchase order,
provided, however, that Licensor shall use all commercially
reasonable efforts to deliver the Compound to Licensee as soon as
possible after receiving the purchase order unless otherwise
requested by Licensee. Licensee shall have the right to
cancel any order at no charge at any time upon four (4) weeks
written notice prior to the requested delivery date.
(c) Scheduling
. Licensor will manufacture the Compound for a
particular shipment on a schedule such that the Compound will be
finished and ready for shipment on or immediately before the
shipping date as indicated on the purchase order. The
Compound must be shipped not later than five (5) days after
production and quality testing is completed unless otherwise
requested by Licensee.
(d)
Inventories . Licensor will source, purchase and
warehouse all raw materials and maintain at all times sufficient
inventories of ingredients and supplies to meet its obligations
hereunder. Any expenditure Licensor may make based on
projected future sales to Licensee (including any forecasts by
Licensor or Licensee) are Licensor's responsibility and at
Licensor's own risk. Licensor shall not be entitled to
reimbursement of any production costs or expenses unless
specifically authorized in writing in advance by
Licensee.
(e) Timeliness
. Licensor shall manufacture, ship and deliver the
Compound in raw material form reasonably acceptable to Licensee, in
a timely manner in accordance with the purchase orders submitted by
Licensee. Licensor agrees that all Compound purchased by
Licensee shall meet the Specifications. Licensee shall
have forty-five (45) days to inspect
the Compound in order to
determine that the Compound meets the Specifications. If
the Compound does not meet the Specifications, then such Compound
may be rejected by Licensee at Licensor's expense. If
Licensee fails to inspect the Compound within such 45-day period,
then the Compound shall be deemed to be
accepted. Licensor agrees that it will notify Licensee
immediately of any real or anticipated delays that could impact the
supply of the Compound or the ability of Licensor to fulfill its
obligations under this Agreement, including, but not limited to,
component supply or labor shortages, or events which involve
health, safety, building code, or regulatory issues or
violations.
(f) Licensor
Failure to Supply . If Licensor fails to supply the
Compound in the manner and within the time frames set forth in this
Agreement, or is unable to supply the Compound for any reason,
Licensor shall:
|
|
grant Licensee a non-exclusive
license that allows Licensee to obtain Compound or the components
constituting the Compound, from third parties during the period
Licensor is unable to or chooses not to supply Licensee with
Compound hereunder (but only for such period), and to use such
Compound and the Property in connection with the advertising,
promotion, manufacturing, packaging, shipment, distribution and
sale of the Products in the Authorized Channels of Trade in the
Territories solely for the Purposes without violating the sole
source provisions of this Agreement and without violating the
Patents. In connection with such third party supply
during such period, Licensor shall provide Licensee with necessary
production documentation (under the Confidentiality Agreement) and
with access to Licensor’s raw material suppliers;
|
|
|
pay to Licensee (x) the
difference between the price Licensee would have charged its
customer for the applicable lost or delayed sales and the product
cost of goods sold and (y) the difference between the price
Licensee would have paid for the Compound hereunder and the actual
price, if greater, that Licensee pays for raw materials to replace
the Compound Licensor is unable to provide under subsection
(i);
|
|
|
Licensor will also pay to
Licensee any penalties or other costs incurred by Licensee and owed
to or credited to third parties in connection with such lost or
delayed sale.
|
The amount of Compound ordered
from such third party during such period will be counted towards
satisfaction of the Annual Minimum Purchase Requirement described
in Schedule F. In addition, Licensor agrees that if
Licensee loses a customer due to such delay or failure to supply,
the parties will make good faith efforts to renegotiate the Annual
Minimum Purchase Requirement, which shall at a minimum be reduced
by the greater of (i) the amount of sales to the lost customer
during the 12 month period (or an annualized amount if sales
covered a shorter period) preceding the failed or delayed delivery
and (ii) the amount of sales to the lost customer contracted for
the 12 month period (or an annualized amount if contracted for a
shorter period) following the failed or delayed
delivery.
To the extent Licensee purchases
in excess of 125% of Licensee’s written forecasted purchases
(as updated in writing) for a given six-month period under 2(b)
above, Licensor shall have three weeks from the date of requested
delivery to correct any failure to supply the Compound in the
manner and within the time frames set forth in this Agreement prior
to being required to pay the amounts prescribed in Section 2(f)
above.
3. Term
. Unless sooner terminated as provided herein, the term
of this Agreement shall be for a period of 5 years (the “
Initial Term ”) commencing on the Effective Date and
continuing until the fifth anniversary thereof. This
Agreement shall automatically be renewed for additional periods of
one (1) year (each, a “ Renewal Term ” and
collectively, the “ Renewal Terms ”) (the
Initial Term and the Renewal Term(s), if any, shall hereinafter be
collectively referred to as the “ Term ”) unless
Licensee provides Licensor with written notice of its intention not
to renew this Agreement no less than one hundred eighty (180) days
prior to the end of the existing term. For each one-year period
following the Initial Term, the Licensor shall increase or decrease
the price of the Compound to an amount equal to the price of the
Compound for the previous year (the “ Base Price
”) plus or minus a percentage of the Base Price that
is equal to the percentage increase or decrease, respectively, of
the U.S. Bureau of Labor Statistics’ Consumer Price Index for
All Urban Consumers Less Food and Energy (the “ Core
Index ”) since the first day of such previous year, not
to exceed 2.5% per year.
4. Permitted
Uses .
(a) Subject to the
provisions of Section 5 hereof, the license granted in Section 1
hereof entitles Licensee, directly or indirectly, to use the
Property in connection with the advertising, promotion, packaging,
manufacturing, shipment, distribution and sale of the Products in
the Territories for the Purposes, including, without limitation,
letterhead, business cards, invoices and receipts, oral
presentations, and all other documentation and communications to
third parties relating to the sale, promotion and advertising of
the Products. No consents, approvals or authorizations
shall be required from Licensor in order for Licensee to market the
Products.
(b) Licensee shall
cause to appear on all its Products and other materials or media
described in Section 4(a) hereof the appropriate patent
notification which shall be of such size and in such location as
shall make it readily observable.
5. Prohibited
Uses .
(a) Licensee shall
use the Property only in the manner, for the approved Purposes and
to the extent provided in this Agreement. It is
understood that Licensor shall remain the sole owner of the
Property and that neither the performance of this Agreement nor the
use by Licensee thereof shall confer on Licensee any ownership
rights thereto. It is understood that Licensee shall
remain the sole owner of its trademarks and the formulas for its
Products and that the performance of this Agreement shall not
confer on Licensor any ownership rights thereto.
(b) Licensee shall
not advertise, promote, manufacture, package, ship, distribute or
sell the Products outside of the Authorized Channels of Trade or
Territories or for any purpose other than the Purposes.
(c) Licensee shall
not use the Trademark or any trademark confusingly similar to the
Trademark or any other trademark, service mark or business name
owned by Licensor whether registered or not, for any purpose or in
any manner whatsoever without the express written consent of
Licensor. Licensor acknowledges that "Uniflex" is not
confusingly similar to the Trademark.
(d) During the Term
hereof, Licensor or any of its agents, employees, representatives
or affiliates, may use or grant any party the right, directly or
indirectly, to use the Property and the Compound. Licensor’s
sale of the Compound to Licensee will be on a non-exclusive basis,
and Licensor is free to sell the Compound to other third parties
inside or outside the Authorized Channels of Trade, or for the
Purpose or other purposes; provided, however that Licensor will
give Licensee first preference when filling orders for the
Compound.
(e) Unless the
clinical proven daily dosage for the Compound decreases or unless
approved in advance, in writing, by Licensor, Licensee shall not
recommend a daily dosage of Compound less than the amount set forth
on Schedule E on any of its Product labels or
packaging.
6. Developments
and Improvements .
(a) If during the
Term hereof, Licensor shall develop or obtain new or derivative
rights or make or acquire any new developments, improvements or
modifications to the Property or developments, improvements or
modifications to the Compound not amounting to a Compound
Derivative as defined below (the “ Licensor’s
Improvements ”) relating to the Purposes, Licensor shall
promptly advise Licensee of any and all information concerning the
Licensor’s Improvements. The Licensor’s
Improvements relating to the Purposes shall be deemed to be
included in the licenses granted herein by Licensor to Licensee;
provided, however, that the Licensor’s Improvements shall be
and remain the exclusive property of Licensor. To the
extent that a compound is developed by Licensor after the date of
this Agreement that is derived from the Compound, has a similar
structure to the Compound or has similar biological activity as the
Compound and is of sufficient magnitude of difference to the
Compound that experts in the field would agree that it is a
different compound than the Compound (a “ Compound
Derivative ”), then Licensor shall offer Licensee the
first right to license the Compound Derivative for the Purposes in
the Territories in the Authorized Channels of Trade. Licensor shall
make an offer, in writing, to Licensee to license such Compound
Derivative and shall provide Licensee with sufficient safety,
efficacy, and other relevant data, similar to that provided for the
Compound, to enable Licensee to ascertain interest in such the
Compound Derivative (“ Data
”). Licensee shall either reject such offer in
writing or the parties shall negotiate in good faith the rights to
such the Compound Derivative during the 90 day period, which period
begins when Licensor provides Licensee with all Data, following
Licensor’s written offer. If the parties do not
execute a license to such the Compound Derivative during such 90
day period, Licensor shall be free to offer the Compound Derivative
to any third party for any use whatsoever, but on substantially
similar terms as those offered to Licensee.
At Licensee's request, Licensor
agrees to continue to provide the Compound as comprised as of the
Effective Date irrespective of any of Licensor's Improvements or
Compound Derivatives.
(b) If during the
Term hereof, Licensee shall develop or obtain new rights or make or
acquire any new developments, improvements or modifications
relating to the Purposes to (i) the Property or the Compound, all
of such improvements shall be owned by Licensee, provided that
Licensee does not use any Confidential Information (as defined in
the Confidentiality Agreement) in developing or obtaining such
rights; and (ii) the Products, all of such improvements shall be
owned by Licensee. Licensee shall also own all right,
title and interest in any trademarks and copyrights developed by
Licensee for use on the Products. Licensee shall not
have any ownership rights to the formula for the
Compound.
7.
Licensee’s Obligations . Licensee
shall ensure that the Products, and the sale thereof, materially
comply with applicable laws and regulations of the United
States. Without limiting the generality of the
foregoing, it shall be the sole responsibility of Licensee to
obtain and maintain all material licenses, permits, authorizations
or product registrations required by the applicable Territory in
order to sell the Products in such jurisdictions (“ Health
Registrations ”), except for all patent search,
application, registration and maintenance requirements and fees
relating to the Property or the Compound on Schedule C,
which shall be the sole responsibility of
Licensor. Licensor shall comply with all reasonable
requests for assistance by Licensee in connection with such Health
Registrations, including, without limitation, the furnishing of
documents. All such Health Registrations of Products
obtained by Licensee shall be in the name of Licensee or its
designee and Licensee shall be the sole owner
thereof. If Licensee receives any notice from any such
governmental authority raising any issues concerning the safety,
efficacy or quality of any of the Compound, Licensee shall
immediately notify Licensor in writing. Upon receipt of
such notification, Licensor shall make all efforts to cure such
safety, efficacy or quality issue(s) as they relate to the Compound
as promptly as possible. Any Health Registrations of the
Products that are required in the Territories shall be at
Licensee’s expense.
8.
Licensor’s Obligations .
(a) At
Licensee’s request, Licensor shall, at its sole expense,
provide to Licensee any information in Licensor's possession or
control as to the contents of the Compound or any other information
in Licensor's possession or control required by any governmental
authorities in any Territory. Licensor shall provide
documentation and other information reasonably requested by
Licensee in support of Licensee’s application, if any, for
USP certification of the Products. Licensee shall be
solely responsible for any USP certification application, including
the information contained in such application.
(b) Licensor shall be
responsible for the proper and lawful acquisition, maintenance,
storage and handling of the ingredients and components of the
Compound and all Compound-related inventory while in Licensor's
possession and control.
(c) Licensor shall
manufacture or have manufactured, package, label, supply and
deliver the Compound in accordance with the highest standards of
the nutritional supplement industry and in strict compliance with
(i) all applicable regulatory requirements, and (ii)
Licensee’s current “Supplier Shipping & Compliance
Guide,” a copy of which is attached as Schedule G. Licensor
shall deliver to Licensee all documentation nec
