License Grant
Licensor hereby grants to Licensee a nonexclusive license under the Licensed Patents to make, have made, use, offer to sell, sell, and import Licensed Products within the Field of Use throughout the world for the Term of this License Agreement.
License Property
Licensee sells certain nutritional supplements containing the amino acid L-Arginine, Licensee admits that the sale of its L-Arginine containing products infringes certain claims contained in the Issued Patents (the 'Infringed Claims'), Licensee admits the validity and enforceability of the Issued Patents and Licensee desires to obtain a nonexclusive license to the Issued Patents so that it may continue selling products containing L-Arginine in accordance with this License Agreement.
'Licensed Patents' means the Issued Patents and any patents that hereafter issue in the United States from applications pending before the U.S. Patent and Trademark Office as herein described, and any other patents issued or licensed to, or acquired by, Licensor in the United States or elsewhere in the world that relate to composition of L-Arginine Based Products, or to any method of orally administering L-Arginine Based Products. Without limiting the generality of the foregoing, Licensed Patents shall include any patent issuing pursuant to U.S. Patent Application No. 10/060,252 entitled 'Enhancement of Vascular Function by Modulation of Endogenous Nitric Oxide Production or Activity' filed February 1, 2002 (the 'Pending Application').
'L-Arginine-Based Products' means products intended for human consumption that contain the amino acid L-Arginine, including but not limited to salts and peptides or other compositions in which L-Arginine may be bonded to other moieties, as an ingredient for enhancing nitric oxide, reducing vascular resistance, increasing blood flow, and/or enhancing physical performance.
'Cardiovascular' means referring or relating to the human heart and circulatory system including veins, arteries, and capillaries, and further including references to diseases of the human cardiovascular system.
Field of Use
The 'Field of Use' is enhancing human sexual performance, specifically nutritional supplements that are offered, promoted and/or marketed as enhancing human sexual performance through products containing L-Arginine or oral administration of L-Arginine. Field of Use shall include and permit Cardiovascular claims that are limited to human sexual performance as specifically permitted in Article VII of this License Agreement.
Royalty rate description
In consideration for the patent license granted in Paragraph 2.1, Licensee shall pay Licensor a continuing royalty every Quarter of the Term as specified in this Article III. Royalty obligations will be calculated and paid quarterly based upon Licensee’s total Net Sales invoiced within the Fiscal Year associated with that Quarter. Royalty Payments are due forty-five (45) days after the end of each Quarter. Royalty Payments shall be calculated for each Quarter as follows
(a) For Total Net Sales of Licensed Products within a Fiscal Year up to Six Million Dollars ($6,000,000), the Royalty Payment is two percent (2%) of the total Net Sales invoiced in the Quarter.
(b) During any Quarter in which Total Net Sales within a Fiscal Year exceeds Six Million Dollars ($6,000,000), but is less than Twenty-Five Million Dollars ($25,000,000), the Royalty Payment is two percent (2%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Six Million Dollars ($6,000,000), and five percent (5%) of the remaining additional Net Sales invoiced in the Quarter.
(c) During any Quarter in which Total Net Sales within a Fiscal Year exceeds Twenty-Five Million Dollars ($25,000,000), the Royalty Payment is two percent (2%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Six Million Dollars ($6,000,000), five percent (5%) of that portion of the additional Net Sales invoiced in the Quarter that brings the Fiscal Year total to Twenty-Five Million Dollars ($25,000,000), and ten percent (10%) of the remaining additional Net Sales invoiced in the Quarter.
　
Whereas the parties have agreed that the Pending Application, if granted by the U.S. Patent Office, would cover the Licensed Products, and whereas Licensee desires that this License Agreement address such an eventuality, the parties agree to implement the Provisional Royalty Calculation defined in this paragraph in consideration for including within the Licensed Patents any patent that issues from the Pending Application. This Provisional Royalty Calculation will automatically become effective in the Quarter following the Quarter in which a U.S. Patent issues containing at least one claim that is substantially the same as or broader than the present claim number 22 in the Pending Application, a copy of which claim is attached hereto as Exhibit B. When the Provisional Royalty Calculation is effective, royalty obligations will be paid quarterly based upon Licensee’s total Net Sales invoiced within the Fiscal Year associated with that Quarter, due forty-five (45) days after the end of each Quarter, and calculated for each Quarter as follows
(a) For Total Net Sales of Licensed Products within a Fiscal Year up to Five Million Dollars ($5,000,000), the Royalty Payment is three percent (3%) of the total Net Sales invoiced in the Quarter.
(b) During any Quarter in which Total Net Sales within a Fiscal Year exceeds Five Million Dollars ($5,000,000), but is less than Twenty-Five Million Dollars ($25,000,000), the Royalty Payment is three percent (3%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Five Million Dollars ($5,000,000), and six percent (6%) on the remainder of total Net Sales invoiced in the Quarter.
(c) During any Quarter in which total Net Sales within a Fiscal Year exceeds Twenty-Five Million Dollars ($25,000,000), the Royalty Payment is three percent (3%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Five Million Dollars ($5,000,000), six percent (6%) of that portion of the additional Net Sales invoiced in the Quarter that brings the Fiscal Year total to Twenty-Five Million Dollars ($25,000,000), and ten percent (10%) of the remaining additional Net Sales invoiced in the Quarter.
