MANUFACTURING LICENSE
AGREEMENT
This Manufacturing License Agreement (the
“Agreement”) is made and entered into as of this 13th
day of August, 2009 by and between InnoZen, Inc., a Delaware
corporation with offices at 6429 Independence Avenue, Woodland
Hills, California (“InnoZen”) and Supplemental
Manufacturing & Ingredients, LLC., dba SMI Manufacturing, an
Arizona limited liability company with offices at 2401 West 1st
Street, Tempe, Arizona (“SMI”).
WHEREAS , InnoZen has experience in the formulation,
development, manufacturing, distribution and sale of edible thin
film-strips containing dietary supplement, nutraceutical, and drug
active ingredients;
WHEREAS , SMI has begun and desires to design, build and
operate a state-of-the-art, cGMP, edible film-strip manufacturing
facility in Arizona.
WHEREAS , SMI desires to manufacture InnoZen’s
edible film-strip products in its Arizona facility.
NOW ,
THEREFORE , in consideration of the mutual covenants and
promises contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, InnoZen and SMI agree as follows:
As used in this Agreement, the following terms,
whether used in the singular or plural, shall have the following
meanings:
1.1. “Affiliate” shall mean
any company or other business entity controlled by, controlling or
under common control with a party, control being presumed if there
is direct or indirect ownership of at least 35% (or, if less, the
maximum permitted by applicable law) of the voting stock, equity or
income interest.
1.2. “Change of Control
Transaction” shall mean a transaction (i) in which a
Party sells ownership of 50% or more of all of its classes of
voting securities or ownership interests to a single investor or
group of related investors, or (ii) in which a Party sells all
or substantially all of its assets.
1.3. “Cost” shall mean the
actual cost of goods sold associated with the manufacture of a
particular Product based on generally accepted accounting
principles.
1.4.
“FDA” shall mean the United States Food and Drug
Administration (or a successor agency).
1.5.
“Field” shall mean the sale of the Products to
InnoZen or its Affiliates.
1.6. “Force Majeure” shall
mean a failure to fulfill a requirement under this Agreement due to
fire, flood, strike or other labor dispute, accident to machinery,
act of sabotage, riot, precedence or priority granted at the
request of or for the benefit, directly or indirectly, of any
government, including but not limited to the United States of
America federal or state, or a Territory, foreign government or any
subdivision or agency thereof, export. or import restriction, delay
in transportation or lack of transportation, facilities,
restriction imposed by United States of America federal or state or
a Territory, foreign legislation or rule or regulation there under,
or war or insurrection or any cause beyond the control of either
party.
1.7. “GMP” shall mean current
good manufacturing practices as defined under FDA and other
regulatory authority rules and regulations and that are applicable
to the manufacture of the Products.
1.8. “Licensed Technology”
shall mean (i) all Patent Rights, (ii) all intellectual
property, derivatives, know-how, trade secrets, processes and data,
including, but not limited to, formulations, manufacturing
procedures, and specifications owned or possessed by InnoZen as of
the date of this Agreement relating to the Manufacture and
commercialization of the Products but only to the extent such
information and data is necessary to commercially exploit the
Products in the Field.
1.9. “Manufacture” shall mean
the production and making of the Products by labor and machinery,
but shall not include any making or production of the Products
related to research and development activities or
functions.
1.10.
“Party” shall mean SMI or InnoZen;
“Parties” shall mean SMI and InnoZen.
1.11. “Patent Applications”
shall mean [***].
1.12. “Patent Rights” shall
mean all rights arising in connection with the Patent Applications,
and any patents ultimately issued in connection
therewith.
1.13. “Product” or
“Products” shall mean any commercial, edible
film-strip product that utilizes the Patent Rights or Licensed
Technology.
II.
MANUFACTURING LICENSE
2.1. License. Subject to (i) the
termination provisions set forth in Section 2.3 herein, (ii)
the reservation of rights set forth in Section 2.4 herein, and
(iii) the other terms of this Agreement, InnoZen hereby grants
to SMI a non-exclusive license in and to the Patent Rights and the
Licensed Technology to Manufacture the Products in the Territory
for the Field and other customers authorized in writing by
InnoZen.
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Confidential treatment requested as
to certain portions of this exhibit. Such portions have been
redacted and filed separately with the SEC.
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2.2. Term of License. The non-exclusive
license granted in Section 2.1 herein shall be for a term of
twelve (12) years, unless terminated earlier under the terms
of this Agreement. In addition, upon mutual agreement of the
Parties, the Agreement may be extended for an additional twelve
(12) year term.
2.3.
Termination of License.
(a) SMI shall provide to InnoZen a
quarterly report relating to its GMP status and to its federal,
state, and local regulatory certification and authorization. In the
event that SMI loses its GMP status or its certification or
authorization under any federal, state or local regulatory
authority, and after written notice thereof is provided by InnoZen,
then, in addition to all other rights and remedies under this
Agreement and otherwise available at law, InnoZen shall have the
right, at its option, to temporarily suspend or terminate the
license granted in Section 2.1 whereupon such license shall be
temporarily suspended or terminated. If SMI is unable to regain its
GMP status or its regulatory certification or authorization for a
period of sixty (60) days after written notice thereof is
provided by InnoZen, then, all rights granted to SMI by InnoZen
under this Agreement (including without limitation all Patent
Rights and Product and Licensed Technology rights) shall terminate,
become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole option, terminate this
Agreement in its entirety.
(b) In the event SMI materially breaches or
fails to perform any provision of this Agreement and such material
breach or failure continues for a period of thirty (30) days
after written notice thereof is provided by InnoZen, then, in
addition to all other rights and remedies under this Agreement and
otherwise available at law, InnoZen shall have the right, at its
option, to temporarily suspend or terminate the license granted in
Section 2.1 whereupon such license shall be temporarily
suspended or terminated. If there occurs any other or additional
material breach or failure of SMI to perform its duties under this
Agreement within six (6) months after the date of the initial
material breach or failure to perform (excluding any cure period)
or at any time thereafter if the initial material breach or failure
to perform remains uncured, all rights granted to SMI by InnoZen
under this Agreement (including without limitation all Patent
Rights and Product and Licensed Technology rights) shall terminate,
become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole discretion, terminate this
Agreement in its entirety.
2.4. Reservation of Rights. InnoZen
retains all rights in and to the Products, the Patent Rights and
all of the Licensed Technology not specifically granted in
Section 2.1.herein. Consequently, in addition to other rights
that SMI shall not have, SMI shall not have the right to use,
distribute, offer for sale, or sell the Products to any entity
other than InnoZen or those InnoZen designees approved and
appointed by InnoZen in writing.
2.5. Reversion. Upon termination of this
Agreement, SMI shall return and deliver to InnoZen the Patent
Rights, the Licensed Technology and all other information relating
to the grant of the license rights in Section 2.1,
herein.
III.
MANUFACTURING / SUPPLY
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Confidential treatment requested as
to certain portions of this exhibit. Such portions have been
redacted and filed separately with the SEC.
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3.3. Exclusive Manufacturing — Right of
First Refusal. Subject to (i) the terms set forth in
Section 3.4 herein, (ii) the termination provisions set
forth in Section 3.5 herein, and (iii) the other terms of
this Agreement, SMI shall have the first right to exclusively
negotiate with InnoZen for the Manufacture of the Products in the
Territory for the Field (the “Right of First
Refusal”).
3.4. Exercise of Right of First Refusal.
The Right of First Refusal shall operate on a Product-by-Product
basis, and SMI shall exercise the Right of First Refusal for each
Product separately. InnoZen shall notify SMI in writing of its
intent to commercially exploit a particular Product [***]. SMI
shall then have ten (10) days from receipt of such
notification in which to exercise the Right of First Refusal for
such Product and shall inform InnoZen in writing of its decision to
exercise the Right of First Refusal for such Product. Upon
SMI’s notification of its decision to exercise the Right of
First Refusal for such Product, the Parties shall immediately begin
good faith negotiations for the Manufacture of such Product under a
separate Manufacturing Agreement as provided in Section 3.6
herein.
3.5.
Termination of Right of First Refusal.
(a) In the event that SMI (i) refuses
to manufacture a particular Product, (ii) fails to fulfill a
purchase order for a particular Product, or (iii) is unable to
meet all product specifications, capacity requirements, quality
requirements, manufacturing requirements, reasonable customer
requirements, or regulatory requirements related to a particular
Product and such refusal, failure or inability continues for a
period of thirty (30) days after written notice thereof is
provided by InnoZen, then, in addition to all other rights and
remedies under this Agreement and otherwise available at law,
InnoZen shall have the right, at its option, to revoke and
terminate the Right

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