TECHNOLOGY LICENSE AGREEMENT

This Technology License Agreement (the “Agreement”) dated as of March 16, 2005 is entered into by and between Nostrum Pharmaceuticals, Inc., a Delaware corporation (“Nostrum”), and Bionutrics, Inc., a Nevada corporation (“Bionutrics”), and replaces in its entirety that certain Product Development and License Agreement dated as of June 16, 2004, as amended, previously entered into by the parties.

WHEREAS, Bionutrics is researching, developing, manufacturing, marketing and selling pharmaceutical products; and

WHEREAS, Bionutrics desires to license from Nostrum the exclusive right to employ Nostrum’s technology to research, develop, manufacture, market, sell and otherwise commercialize certain pharmaceutical products, and Nostrum desires to grant such license to Bionutrics, all on the terms and conditions hereinafter set forth;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree, as follows:

The capitalized terms set forth below shall for the purposes of this Agreement have the meanings ascribed as follows.

“Affiliate” means any Person which controls, is controlled by or is under common control with a party. The term “control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the voting stock or equity interest of a Person, or the right to receive over fifty percent (50%) of the profits or earnings of a Person or any other relationship which in fact conveys the power to control the management, business and affairs of a Person.

“Effective Date” means March 16, 2005.

“FDA” means the United States Food and Drug Administration or any successor agency of the United States government.

“Formulation” means the design, creation, and production of a specific pharmaceutical composition defined by dosage, method of release, strength and attendant pharmacokinetics which uses the Nostrum Technology and includes a Target Active Agent together with other components that, in the case of 505(b)(2) Products, produces unique functionality in the taste, solubility, absorption, food-effect or other attributes that modify the Target Active Agent’s pharmacokinetics or side-effects, and, in the case of Generic Products, achieves bioequivalence with the Target Active Agent.

“Functional Nutrition Products” shall have the meaning set forth in Section 2.3(b).

“Gross Profit”, for any Product, means, with respect to any period, Net Sales for the Product in that period less Bionutrics’ cost of goods sold for the Product, calculated in accordance with generally accepted accounting principles. For purposes of this Agreement, the term “cost of goods sold” shall mean, as applicable, (i) the purchase price paid by Bionutrics to the third party manufacturer of the Product plus the costs of shipment paid by Bionutrics that are associated therewith, or (ii) the fully allocated cost-of-goods of the Product if manufactured by Bionutrics or an Affiliate of Bionutrics, as calculated in accordance with generally accepted accounting principles; provided, however, that no amount for selling or marketing expenses shall be included and that amounts for general or administrative expenses or costs of working capital shall be included only to the extent that those amounts are directly attributable to the manufacture of the Product based upon the actual use of the manufacturing facilities by Bionutrics or an Affiliate of Bionutrics for that purpose. Notwithstanding any provision herein to the contrary, any amounts accounted for in the calculation of Net Sales shall not also be included in determining the cost of goods sold.

“Litigation Expenses” means out-of-pocket costs and expenses incurred by Bionutrics (i) in connection with the defense of any claim, suit or other legal action alleging that a Generic Product being developed, marketed and/or sold by Bionutrics hereunder infringes upon or misappropriates a third party’s patent or other intellectual property right, or (ii) in connection with the resolution of any such claim, suit or other legal action, including any judgments or awards against Bionutrics or any Affiliate of Bionutrics or subcontractor and any amounts paid in settlement (including license fees and royalties).

“Net Sales”, for any Product, means, with respect to any period, the amounts actually received by Bionutrics or its Affiliates from unaffiliated third parties (whether an end-user, distributor or otherwise) for the sale of the Product in the Territory, and exclusive of inter-company transfers or sales between or among Bionutrics and its Affiliates, less the following reasonable and customary deductions (without duplication) from such gross amounts:

“Nostrum Technology” means all of Nostrum’s proprietary information, know-how, materials and technology related to the Products (including without limitation, manufacturing information) and any related patent applications or patents owned or controlled by Nostrum or its Affiliates to the extent they cover the Products or any such information, trade secrets, know-how, materials or technology as applied to the Products.

“Person” means any natural person, corporation, unincorporated organization, partnership, association, joint stock company, joint venture, limited liability company, trust or government, or any agency or political subdivision of any government, or any other entity.

“Pivotal Study” means, as applied to a Generic Product, the pivotal pharmacokinetic biostudy or biostudies conducted by a fully licensed biostudy facility mutually satisfactory to Bionutrics and Nostrum which is reasonably expected to demonstrate, to the satisfaction of the FDA, the intended AB rated bio-equivalence of the Generic Product with the Target Active Agent sufficient to enable Bionutrics to submit to the FDA an acceptable ANDA for the manufacture and commercial sale of the Generic Product.

“Prestudy” means a pharmacokinetic biostudy which is intended to indicate the likelihood of demonstrating bio-equivalence of a Formulation with the Target Active Agent, typically carried out in a smaller number of volunteers than those required by FDA for pivotal pharmacokinetic biostudies.

“Product” means any 505(b)(2) Product (as defined below) or Generic Product (as defined below) which meets all of the following criteria: During the Three-Year Period, (i) Bionutrics notifies Nostrum that it has targeted the product for development and commercialization pursuant to this Agreement and provides Nostrum with a description of the product and the requested functionality therefor and (ii) Nostrum informs Bionutrics in writing within sixty (60) days following receipt of the notice that Nostrum believes, based on its preliminary study of the proposed product, that it has the ability, using the Nostrum Technology, to formulate the product with the functionality requested by Bionutrics and that nothing has come to Nostrum’s attention that makes Nostrum believe that the product or the Nostrum Technology as applied to the product would infringe any third party patents, patent applications or other intellectual property rights.

“505(b)(2) Products” means certain brandable pharmaceutical products that qualify for filing with the FDA under a “505(b)(2)” application, or a New Drug Application (“NDA”), pursuant to the federal Food, Drug and Cosmetic Act (the “Act”), using Formulations of Target Active Agents that are defined specifically by dosage, method of release, strength and the attendant pharmacokinetic effect resulting therefrom.

“Generic Products” means certain pharmaceutical products that are AB rated, generic bio-equivalents of branded products which qualify for filing with the FDA pursuant to an Abbreviated New Drug Application (“ANDA”) under the Act, using Formulations of Target Active Agents that are defined specifically by dosage, method of release, strength and the attendant pharmacokinetic effect resulting therefrom.

“Target Active Agent” means a specific pharmaceutical compound, which has been approved by the FDA as a branded drug for manufacture and sale to the public for one or more specific disease indications, which Bionutrics targets for development as a 505(b)(2) Product or a Generic Product.

“Territory” means the world.

“Three-Year Period” means three years from the Effective Date.

2.1 License Grant . (a) Nostrum hereby grants to Bionutrics, and Bionutrics accepts, an exclusive license under the Nostrum Technology to develop, make, have made, use, import, offer for sale, market, sell and otherwise commercialize Products in the Territory. Subject to the terms of this Agreement, each Product shall be owned by Bionutrics, and Bionutrics shall have exclusive rights thereto.

(b)   Technology License Grant Limit . Notwithstanding anything herein to the contrary, the license grant provided in Section 2.1 shall be limited to no more than ten (10) 505(b)(2) Products and no more than ten (10) Generic Products which in all such cases shall have been designated by the parties as Products (as defined in Article 1) within the Three-Year Period.

 2.2   Retained Rights . Subject to the license granted to Bionutrics hereunder, Nostrum shall remain the sole owner of all Nostrum Technology, including that which Nostrum shall have furnished to Bionutrics in connection with the performance of Nostrum’s obligations pursuant to this Agreement. Nostrum shall retain all right, title and interest to use or license the Nostrum Technology in connection with any Product, Formulation or process except for the Products.

2.3   Development of Other Products .

(a)   Bionutrics shall not have any rights with respect to any products other than the Products, as determined in accordance with the terms of Section 2.1.

(b)   The parties shall within thirty (30) days of the date of this Agreement execute a product license agreement for the development and commercialization of functional foods, medical foods, dietary supplements and similar non-pharmaceutical products based on Bionutrics’ compositions employing Nostrum Technology for product formulation, pursuant to which (i) Bionutrics and Nostrum shall act in good faith in the selection and approval of the products for development and commercialization (“Functional Nutrition Products”); (ii) Nostrum shall make reasonable efforts to develop these products; and (iii) Nostrum shall receive no royalties for this license or for the performance of its product development obligations thereunder. Subject to Nostrum’s retained rights as the sole owner of any Nostrum Technology used or transferred in connection with the product license agreement, Bionutrics shall have exclusive rights with respect to all such Functional Nutrition Products.

(c)   During the Three-Year Period, the parties shall negotiate in good faith one or more agreements for Formulations and/or Prestudies with respect to Target Active Agents jointly selected in good faith by the parties.

2.4   Effectiveness of License . Notwithstanding any other provision of this Agreement, the license grant provided for in this Article 2 shall not be effective and binding on either party for any purpose unless and until (i) all notes and other indebtedness of Bionutrics convertible into common stock of Bionutrics shall be paid, discharged or converted into common stock of Bionutrics; (ii) Bionutrics has no indebtedness that is secured by property of Bionutrics; (iii) Bionutrics has obtained agreement and signatures per a Lock-Up Agreement (substantially in the form of Exhibit A hereto) from Bionutrics’ shareholders constituting a minimum 19,500,000 shares of Bionutrics’ outstanding common stock; and (iv) Bionutrics has certified in writing to Nostrum that the events described in clauses (i) through (iii) have occurred.

Article 3 - Research Program

3.1   Nostrum’s Obligations

(a)   Bionutrics and Nostrum shall confer on a regular basis regarding the status of Nostrum’s development of potential 505(b)(2) Products and Generic Products and Bionutrics’ interest in licensing those Products pursuant to this Agreement; provided, however, that Nostrum shall have no obligation to confer with, or disclose information to Bionutrics regarding any product that Nostrum has licensed, or concerning which it is negotiating a license with a third party (collectively, “Exempt Products”).

(b)   Pursuant to Bionutrics’ reasonable request, Nostrum agrees that it will conduct and complete (or will have conducted and completed, as provided below) Formulations and Prestudies with respect to Products other than Exempt Products to establish in vivo performance with respect to those Products (the sequence of events in each case, a “Project”). Prior to the commencement of a Project, the parties shall develop a written Project plan setting forth the subject matter of the Project and an estimate of the costs and expenses that would be incurred by Nostrum in connection with the Project. Nostrum shall have the right, in its sole discretion, to contract with Enem Nostrum Remedies Pvt. Ltd. (“Enem”) or any of their respective Affiliates or to use third-party contractors to conduct Formulations and Prestudies in connection with the Projects as well as any other work under this Section 3.1. Nostrum agrees that the services to be provided by Nostrum, Enem, any of their Affiliates, or a third party shall be provided to Bionutrics at cost to Nostrum.

(c)   With respect to each Project, Nostrum and Bionutrics shall provide each other with access to all information and copies of all records relating to the Project and the results of any related Prestudies.

(d)   Nostrum will cooperate with Bionutrics in all phases of the work to be performed under Section 3.2, including, without limitation, the scale up, any Pivotal Studies and process validation.

(e)   Within thirty (30) days of Bionutrics’ receipt of Nostrum’s invoice therefor, Bionutrics shall pay or reimburse Nostrum for its reasonable costs and expenses incurred in connection with the performance of the obligations set forth in this Section together with the costs and expenses that Nostrum may have incurred in connection with any Project agreed upon by the parties prior to the Effective Date.

3.2   Bionutrics Obligations .

(a)   Bionutrics shall be responsible for all work preparatory to, and necessary for, the performance of any clinical studies (including Pivotal Studies for Generic Products) in connection with Projects initiated by Bionutrics with respect to any Products. Bionutrics’ obligation to conduct such studies with respect to any Product shall be contingent upon the Product’s successful completion of a Prestudy as well as stability testing and successful manufacture and release of finished product for use in the clinical studies.

(b)   In the event that clinical studies conducted or arranged by Bionutrics on any Products demonstrate efficacy and safety in accordance with applicable FDA regulations, Bionutrics in cooperation with Nostrum shall prepare, submit and prosecute an application (an NDA or an ANDA, as the case may be), with the FDA. Bionutrics and Nostrum will each keep the other fully informed with respect to the development and commercialization of these Products including the preparation for, and the results of, any clinical studies and the prosecution of any applications with the FDA. Upon request by Bionutrics or Nostrum, the other party will provide the requesting party with copies of all documents and records in its possession or control relating to these activities. In the case of Generic Products, Bionutrics shall start the Pivotal Study within nine (9) months of the completion the respective Prestudy. Following the completion of a given Generic Product Pivotal Study, Bionutrics will within six (6) months file an ANDA with the FDA on that Generic Product. All applications shall be filed in the name of Bionutrics, which shall be responsible, at its own expense, for continuing the post-clinical and stability testing of the Product necessary for the approval thereof and for obtaining all governmental approvals for the manufacture and commercial sale of the Product in the Territory. Bionutrics will have full and complete ownership thereof.

(c)    Bionutrics shall be responsible for all costs and expenses incurred by it in connection with the performance of its obligations under this Section. Within thirty (30) days of Bionutrics’ receipt of Nostrum’s invoice therefor, Bionutrics shall pay or reimburse Nostrum for all reasonable costs and expenses which it may incur in providing assistance to Bionutrics in the performance of its obligations under this Section.

3.3   Diligence . Following Bionutrics’ receipt of FDA approval with respect to the manufacture and commercial sale of any Product in the United States, Bionutrics shall use diligent efforts to manufacture, market, distribute and sell the Product.

3.4   Excused Performance . All of Bionutrics’ diligence obligations with respect to the development and commercialization of a Product under this Agreement are expressly conditioned upon the continuing absence of any adverse condition or event relating to the safety or efficacy of the Product, or lack of regulatory approval, which warrants a delay in the commercialization of the Product.

3.5   Ownership of Results . Subject to the provisions of Section 9.6, all data and results obtained or generated by or on behalf of either Nostrum or Bionutrics in the performance of any Prestudy, Pivotal Study or other development activities related to the Products to be performed pursuant to this Agreement shall be the sole property of Bionutrics and shall be treated as Bionutrics’ Confidential Information pursuant to Article 5 of this Agreement. Nostrum will, at Bionutrics’ expense, undertake, without undue delay, to provide any and all documents deemed necessary to perfect this right, on an as-needed, as-requested basis.

3.6   Manufacture/Supply . Bionutrics shall have the right to manufacture or supply the Products or to have the Products manufactured and supplied by an Affiliate of Bionutrics; provided that the cost of goods for Products manufactured by Bionutrics or such Affiliate is competitive with the cost of goods for the Product as and if manufactured by a qualified third party manufacturer. Alternatively, Bionutrics shall have the right to contract with a suitable third party to manufacture and supply Bionutrics’ requirements for commercial supplies of the Products. Upon request Nostrum shall cooperate with Bionutrics in transferring and implementing the Nostrum Technology and Formulations related to the manufacture of the Products to the site Bionutrics chose for the manufacture of the Products in accordance with FDA guidelines applicable to the proposed transfer. Bionutrics shall reimburse Nostrum within thirty (30) days of Bionutrics’ receipt of Nostrum’s invoices for all reasonable out-of-pocket expenses which Nostrum may incur in connection with the performance of its obligations pursuant to this Section.

4.1   Stock Payment. In partial consideration for the license and other rights granted to Bionutrics hereunder, Bionutrics has issued to Nostrum Six Million (6,000,000) shares of its common stock in accordance with the provisions of a certain Stock Purchase Agreement between the parties dated as of June 16, 2004 (the “First Stock Purchase Agreement”), a copy of which is attached hereto as Exhibit B. The terms, conditions, representations and warranties contained in the First Stock Purchase Agreement are incorporated herein by reference.

4.2   Additional Stock Payment .

(a)   In partial consideration for the license and other rights granted to Bionutrics hereunder, Bionutrics shall issue to Nostrum an additional Six Million (6,000,000) shares of its common stock (the “Shares”) in accordance with the provisions of that certain Stock Purchase Agreement between the parties dated as of March 16, 2005 (the “Second Stock Purchase Agreement”), a copy of which is attached hereto as Exhibit C. The terms, conditions, representations and warranties contained in the Second Stock Purchase Agreement are incorporated herein by reference.

(b)   In the event that more than fifty percent (50%) of the Products tested during the Three-Year Period fail Pivotal Studies or other applicable clinical studies, and Bionutrics terminates the Projects relating to such Products by reason of such failure, Nostrum shall be required at the conclusion of the Three-Year Period to return to Bionutrics thirty-three percent (33%) of the Shares received pursuant to the Second Stock Purchase Agreement (adjusted for stock splits, stock dividends, reclassifications, recapitalizations, combinations and exchanges of shares) (the “Return Shares”). In the case of Nostrum’s failure to redeliver the Return Shares pursuant to this Section 4.2(b), Nostrum hereby authorizes Bionutrics to cancel the Return Shares. Nostrum hereby irrevocably and unconditionally (and by way of security for the performance of its obligations under this Section 4.2(b)) appoints any director of Bionutrics from time to time (other than a person who is also an officer or employee of Nostrum) its attorney in fact to execute in its name and on its behalf all documents, and to do all acts and things which the attorney shall in his discretion consider necessary or reasonable to effect the cancellation of the Return Shares.

4.3   Royalties . Bionutrics agrees to pay to Nostrum royalties on Net Sales of Generic Products in the Territory equal to fifty percent (50%) of Gross Profit (“Royalties”). These Royalties shall not apply to, nor shall Nostrum be entitled to Royalties on Net Sales of 505(b)(2) Products.

4.4   Manner of Payment . Within thirty (30) days after the first commercial sale of a Generic Product in the Territory, Bionutrics shall provide Nostrum with written notice to that effect. Thereafter, Bionutrics shall furnish to Nostrum within sixty (60) days following the close of each calendar quarter, a written report for the calendar quarter showing the Net Sales and Gross Profits from the sale of each Generic Product sold by Bionutrics and its Affiliates in the Territory during the calendar quarter and the Royalties payable under this Agreement for the calendar quarter. Simultaneously with the submission of the written report, Bionutrics shall pay to Nostrum, for the account of Bionutrics or the applicable Affiliate, as the case may be, a sum equal to the aggregate Royalty due for the calendar quarter calculated in accordance with this Agreement (reconciled for any previous overpayments or underpayments). All payments to Nostrum hereunder shall be made by wire transfer of immediately available funds to the account designated in writing by Nostrum.

4.5   Recordkeeping/Audits .

(a)   Bionutrics and, to the extent applicable its Affiliates, shall keep complete and accurate records in sufficient detail to enable the Royalties payable hereunder to be determined. Upon the written request of Nostrum and not more than twice in each calendar year, Bionutrics and, to the extent responsible for the manufacture, sale or distribution of the Generic Products, its Affiliates, shall permit an independent certified public accounting firm of nationally recognized standing, which is bound by a confidentiality agreement in favor of Bionutrics to have access, at Nostrum’s expense, during normal business hours to those records of Bionutrics and such Affiliates which may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any twelve (12) month period. Nostrum shall provide notice at least thirty (30) days prior to the date of the intended audit. Nostrum shall have no right to audit any records with respect to any twelve (12) month period which ended more than ninth-six (96) months prior to the date of the request. The accounting firm shall only disclose to Nostrum the relevant Net Sales, Gross Profits and cost of goods sold information and whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be shared by the accounting firm with Nostrum. Nostrum’s audit rights under this Section shall survive the expiration or termination of this Agreement for a period of one (1) year.

(b)   The cost of each audit conducted under this Section shall be borne by Nostrum unless an audit correctly determines that Bionutrics underpaid the Royalties due to Nostrum hereunder by more than five percent (5% ) during any twelve (12) month period, in which case Bionutrics shall pay to Nostrum the deficiency (as Bionutrics is required to do regardless of the amount thereof or the results, requirement or pendency of any audit) within fifteen (15) days of the date that a final audit report is issued, and shall also bear the cost of the audit. In the event that an audit determines that Bionutrics overpaid the Royalties due to Nostrum, Nostrum shall refund to Bionutrics the amount of the overpayment within fifteen (15) days of the date that a final audit report is issued.

(c)   Nostrum shall treat all financial information subject to review under this Agreement in accordance with the confidentiality provisions of this Agreement and shall cause its accounting firm to enter into an acceptable confidentiality agreement with Bionutrics, obligating it to maintain all such financial information in confidence pursuant to the confidentiality agreement.

4.6   Withholding . If at any time, any jurisdiction within the Territory requires the withholding of income taxes or other taxes imposed upon payments set forth in this Article, Bionutrics shall make the withholding payments as required and subtract the withholding payments from the payments set forth in this Article or, if applicable, Nostrum will promptly reimburse Bionutrics or its designee the amount of those payments. Bionutrics shall provide Nostrum with documentation of the withholding and payment. Any withholdings paid when due hereunder shall be for the account of Nostrum and shall not be included in the calculation of Net Sales or Gross Profits, as applicable. In addition, if any deficiency in the amount or failure to make any withholding payment is caused, in whole or in part, by any intentional or negligent action or inaction on the part of Nostrum, Nostrum shall be liable for any fine, assessment or penalty imposed by any taxing authority in the Territory for the deficiency in the amount of the withholding or the failure to make the withholding payment. If Bionutrics is required to pay a deficiency, or any fine, assessment or penalty for any deficiency, Nostrum shall promptly reimburse Bionutrics for those payments for which Nostrum is liable in accordance with this Section, which reimbursement shall not be included in the calculation of Net Sales or Gross Profits.

4.7   Board Representation . In further consideration for the license granted hereunder, Bionutrics agrees to use its best efforts to cause the Board of Directors of Bionutrics (i) to be comprised of at least three (3) members and (ii) to include at least one nominee of Nostrum; provided that Nostrum and its Affiliates are beneficial owners as of the record date for the election of directors of a minimum of two million shares of Bionutrics’ common stock (adjusted for stock splits, stock dividends, reclassifications, recapitalizations, combinations and exchanges of shares).

5.1   Confidentiality .

(a)   During the term of this Agreement and for a period of ten (10) years after its expiration or termination, each party shall maintain as confidential the Nostrum Technology, any know-how relating to the Products, and any other proprietary, technical or business information received from the other party pursuant to this Agreement (“Confidential Information”) and shall only use the Confidential Information in furtherance of this Agreement. Both parties agree that any employees provided or given access to the other party’s Confidential Information shall be bound by confidentiality obligations essentially the same as those set forth herein. The foregoing obligations of confidentiality and use restrictions shall not apply, however, to the extent that the Confidential Information:

(b)   Confidential information disclosed under this Agreement shall not be deemed to be within the foregoing exceptions set forth in this Section merely because the Confidential Information is embraced by more general information in the public domain or in receiving party’s possession. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because individual features are in the public domain or receiving party’s possession, but only if the combination itself and its principle of operation are in the public domain or in receiving party’s possession without having been supplied by disclosing party.

5.2   No Publicity or Disclosure of Agreement Terms . Neither party may use the name of the other party or its Affiliates in any publicity or advertising without the prior written permission of the other party. Notwithstanding the provisions of this Article, either party may disclose the terms of this Agreement to the extent necessary to (a) actual or potential lenders or investors; (b) actual or potential joint venture or merger partners; (c) the party’s agents, consultants, Affiliates and/or other third parties necessary to facilitate an actual or potential loan, investment, joint venture or merger with those parties; or (d) the party’s accountants, consultants and attorneys, for other corporate transactions and business, on a need to know basis. Bionutrics may also disclose portions of this Agreement in an 8-K or similar disclosure notice, as deemed necessary in its counsel’s sole discretion, to meet the public company reporting requirements of the Securities and Exchange Commission and applicable federal and state laws, rules and regulations.

(a)   In the event that Bionutrics’, or its Affiliates’ making, having made, using, offering for sale, selling or importing the Products infringes or misappropriates, will infringe or misappropriate or is alleged by a third party to infringe or misappropriate a third party’s patents or other intellectual property rights, the party hereto becoming aware of any of the foregoing situations shall promptly notify the other. The parties shall thereafter attempt to agree upon a course of action with respect thereto.

(b)   Bionutrics shall be responsible, at Bionutrics’ expense, for the defense of any claims, demands, actions or proceedings arising from allegations that development, making, having made, using, offering for sale, selling or importing the Products infringes or misappropriates or will infringe or misappropriate a third party’s patents or other intellectual property rights. Upon Bionutrics’ request and expense, Nostrum shall cooperate with Bionutrics in the defense; provided that Bionutrics shall promptly reimburse Nostrum for reasonable out-of-pocket costs and expenses incurred by Nostrum in providing that cooperation.

(c)   Notwithstanding anything to the contrary in this Agreement, Bionutrics shall be entitled to offset against any royalties due Nostrum hereunder (but only to the extent of reducing the royalties due Nostrum by up to fifty percent (50%) in any calendar quarter) fifty percent (50%) of any Litigation Expenses which Bionutrics may have incurred through the close of the calendar quarter for which royalties are then payable.

6.2   Infringement of Nostrum’s Intellectual Property Rights by a Third Party .

(a)   Bionutrics and Nostrum shall promptly notify each other of any infringement of the patent rights included in the Nostrum Technology as applied to the Products, and/or any misappropriation or unauthorized use of any of the Nostrum Technology as applied to the Products, in the Territory which may come to their attention. Bionutrics shall have three (3) months to undertake reasonable efforts to obtain a discontinuance of the aforesaid infringement or unauthorized use of the patent rights and the Nostrum Technology as applied to the Products, and, if not successful, Bionutrics shall have the option, but is not required, to bring suit, at Bionutrics’ expense, against the infringer or unauthorized user. Nostrum may elect to join any suit initiated by Bionutrics.

(b)   If Bionutrics fails or elects not to obtain a discontinuance of the infringement or unauthorized use and elects not to bring suit against the third party, then in that event Bionutrics shall give notice in writing to Nostrum of its election not to bring suit, within thirty (30) days following that election, and of the circumstances of the infringement or unauthorized use, including the evidence of the infringing activities and/or misappropriation or unauthorized use. Nostrum may, but is not required to (i) obtain a discontinuance of the infringing operation or unauthorized use; or (ii) bring suit against the third party. Any suit or action by Nostrum under this Section shall be conducted either in the name of Nostrum, or jointly in the names of Bionutrics and Nostrum, as may be required by the laws of the forum. Bionutrics shall, upon request, reasonably cooperate with Nostrum in the conduct of the suit or action. Nostrum shall, after reimbursing Bionutrics for Litigation Expenses, be entitled to retain and keep any damages received whether by judgment, settlement or otherwise, as a result of the suit or action.

7.1   Representations and Warranties by Each Party . Each of Bionutrics and Nostrum hereby represents and warrants to the other party that:

(a)   it is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of incorporation or formation

(b)   the execution, delivery and performance of this Agreement by such party has been duly authorized by all requisite corporate action;

(c)   it has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

(d)   the execution, delivery and performance by such party of this Agreement and its compliance with the terms and provisions hereof does not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) the provisions of its charter documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound;

(e)   except for the governmental and regulatory approvals required to market the Product in the Territory, the execution, delivery and performance of this Agreement does not require the consent, approval or authorization of, or notice, declaration, filing or registration with, any governmental or regulatory authority and the execution, delivery or performance of this Agreement will not violate any applicable law, rule or regulation;

(f)   this Agreement constitutes such party’s legal, valid and binding obligation enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to the availability of particular remedies under general equity principles; and

(g)   it shall comply with all applicable material laws, rules and regulations relating to the performance of its obligations relating to the Products under this Agreement.

7.2   Representations and Warranties of Nostrum . Nostrum hereby represents and warrants to Bionutrics that:

(a)   it owns all right, title and interest in and to the Nostrum Technology as applied to the Products, free and clear of all liens and other charges and encumbrances;

(b)   there are no adverse actions, suits or claims pending against Nostrum or any of its Affiliates in or before any court or governmental or regulatory authority with respect to the Products and/or the Nostrum Technology as applied to the Products, and no such actions, suits or claims have been threatened against Nostrum or any of its Affiliates;

(c)   as of the Effective Date, to the best of Nostrum’s knowledge, there is no reason ( e.g ., debarment under the Act) that would prevent Bionutrics from using data and information supplied by Nostrum, as part of Bionutrics’ regulatory submissions for the Product.

7.3   Representations and Warranties of Bionutrics . Bionutrics hereby represents and warrants to Nostrum that it will make all filings required under applicable federal and state laws, rules and regulations.

7.4   Continuing Representations . The representations and warranties of each party contained in Sections 7.1, 7.2 and 7.3 shall survive the execution of this Agreement.

7.5   No Inconsistent Agreements . As of the Effective Date, each party represents to the other party that it has not and will not during the term of this Agreement, enter into, any oral or written agreement or arrangement that would be inconsistent with its obligations under this Agreement.

8.1   Indemnification by Nostrum . Nostrum shall, at its sole cost and expense, defend, indemnify and hold harmless Bionutrics and its Affiliates, and their respective officers, directors, agents and employees from and against all claims, liens, demands, damages, liability, actions, causes of action, losses, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees) (each a “Claim” and collectively “Claims”) to the extent the Claims arise out of or in connection with, result from, or are caused by: (i) any breach by Nostrum of its representations or warranties contained in Sections 7.1 or 7.2 of this Agreement; or (ii) the gross negligence or willful misconduct of Nostrum in the performance of its obligations under this Agreement; provided, however, that Nostrum shall have no liability or indemnification obligations hereunder to the extent a Claim is caused by the gross negligence or willful misconduct of Bionutrics, its Affiliates or their respective officers, directors, agents and employees.

8.2   Indemnification by Bionutrics . Bionutrics shall, at its sole cost and expense, defend, indemnify and hold harmless Nostrum and its Affiliates, and their respective officers, directors, agents and employees from and against all Claims to the extent the Claims arise out of or in connection with, result from, or are caused by: (i) any breach by Bionutrics of its representations or warranties contained in Section 7.1 or Section 7.3 of this Agreement; (ii) the gross negligence or willful misconduct of Bionutrics or its Affiliates in the performance of its or their obligations under this Agreement; (iii) the marketing, manufacture, use or sale of the Products in the Territory by or on behalf of Bionutrics or its Affiliates; or (iv) allegations that the manufacture, use or sale of the Products in the Territory by or on behalf of Bionutrics or its Affiliates infringes third party patents; provided, however, that Bionutrics shall have no liability or indemnification obligations hereunder to the extent that the Claim is caused by the gross negligence or willful misconduct of Nostrum, its Affiliates or their respective officers, directors, agents and employees.

8.3   Conditions to Indemnification . The obligations of the indemnifying party under Articles 8.1 and 8.2 are conditioned upon the delivery of written notice to the indemnifying party of any potential Claim promptly after the indemnified party becomes aware of the potential Claim. The foregoing notwithstanding, the parties acknowledge and agree that failure of the indemnified party promptly to notify the indemnifying party of a potential Claim shall not constitute a waiver of, or result in the loss of, a party’s right to indemnification under Articles 8.1 or 8.2, except to the extent that the indemnifying party’s rights, and/or its ability to defend against a Claim are materially prejudiced by the failure to notify. The indemnifying party is hereby authorized to carry out the sole management and defense of the potential Claim, and shall have the right to assume the defense of any suit or claim related to the Claim if it has assumed responsibility for the Claim in writing. However, if in the reasonable judgment of the indemnified party, the Claim involves an issue or matter which could have a materially adverse effect on the business operations or assets of the indemnified party, the indemnified party may waive its rights to indemnity under this Agreement and control the defense or settlement thereof. If the indemnifying party defends the suit or claim, the indemnified party may participate in (but not control) the defense thereof at its sole cost and expense.

8.5   Limitation of Liability . With respect to any claim by one party against the other arising out of the performance or failure of performance of the other party under this Agreement, the parties expressly agree that the liability of a party to the other party for the breach shall be limited under this Agreement or otherwise at law or equity to compensatory damages only and in no event shall a party be liable for punitive or exemplary damages. The foregoing limitation will not prevent a party entitled to indemnification pursuant to this Agreement from recovering all components of any judgment or award against a party by an unaffiliated party.

9.1   Term and Expiration . This Agreement shall continue unless and until terminated as provided herein and otherwise shall continue in effect for as long as Bionutrics and/or any of its Affiliates are marketing any Product.

9.2   Rights of Bionutrics to Terminate . Bionutrics may, upon written notice, terminate this Agreement with respect to a Product in the event that (i) Bionutrics reasonably believes that use of any portion of the Nostrum Technology as applied to the Product pursuant to the license granted hereunder would infringe any patent, copyright, trademark or other intellectual property right of a third party or misappropriate any trade secret of a third party; or (ii) the Product loses substantially all of its commercial value for Bionutrics, due to: (1) expected extraordinary competition or direct competition, or (2) decrease in sales of any corresponding product in the Territory based on International Marketing Service data or e