EXHIBIT 10.4
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
REDACTED COPY
AMENDMENT NO. 1
to
DEVELOPMENT AND LICENSE AGREEMENT
This Amendment No. 1 to Development and License Agreement (this "Amendment"), is
entered into as of August 20, 2003 by and among:
(1) e-nutriceuticals, Inc., a Delaware corporation ("e-nut");
(2) Vital Living, Inc., a Nevada corporation ("Vital Living");
(2) Jagotec AG, a Swiss Corporation; and
(3) SkyePharma PLC, a company incorporated in England and Wales.
W I T N E S S E T H:
WHEREAS, e-nut and SkyePharma PLC have entered into a
Development and License Agreement, dated as of December 28, 2001 (the "DLA");
WHEREAS, on January 23, 2002 all rights and obligations of
SkyePharma PLC under the DLA were assigned to its wholly owned subsidiary
Jagotec AG (which for the purposes of this Amendment shall be referred to as
"Skye");
WHEREAS, e-nut and Skye desire to amend the DLA in certain
respects, subject to the terms, conditions and limitations hereof;
WHEREAS, e-nut, Vital Living and VLEN Acquisition Corporation
expect to enter into an Agreement and Plan of Merger (the "Merger Agreement")
immediately after the execution of this Amendment; and
WHEREAS, the parties hereto desire to provide for the
assignment of the DLA, as amended hereby, by e-nut to Vital Living concurrently
with the consummation of the transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
conditions set forth below, the parties agree as follows:
ARTICLE ONE - AMENDMENTS
1.0 Interpretation. Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in the DLA.
1.1 Amendment of Exhibit 1. Exhibit 1 attached to this Amendment is the
Skye Patent Exhibit 1 referred to in Section 1. (o) i) of the DLA.
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
1.2 Amendment of Section 2.1. Section 2.1 is hereby amended and restated to
read in its entirety as follows:
"2.1 Products. Through the period up to ***, (i) e-nut shall have the
exclusive right to identify up to *** product candidates in the Field for
Development using the Skye Technology (each, a "Product"), (ii) Skye shall not
have the right to license the Technology (or any Joint Patent) to third parties
for products in the Field and (iii) Skye shall not have the right to use the
Technology (or any Joint Patent) to independently develop products in the Field.
The Parties acknowledge and agree that as of the date of this Amendment, *** of
the *** Products have been identified and formulated and *** product remains to
be identified and formulated, and all *** products have been paid for. The ***
product is to be identified prior to ***. In the event of the *** Product not
being identified by ***, e-nut's rights to identify a *** Product under Section
2.1(i) will terminate and be of no further effect."
1.3 Amendment of Section 2.2. Section 2.2 is amended and restated in its
entirety as follows:
"Section 2.2. Additional Products.
(a) Beginning on ***, e-nut shall have the right until *** to identify
additional product candidates in the Field (each, an "Additional Product") for
Development using the Skye Technology, provided, however, that: (i) at least ***
Additional Products are identified by e-nut in each calendar year and all ***
Additional Products are capable of being formulated by Skye (as determined by
Skye in its reasonable judgment), or (ii) beginning on *** Skye receives Product
Development Fees of at least *** from e-nut (or any affiliate) in each calendar
year as adjusted for inflation in accordance with Section 3.2.
(b) The terms and conditions upon which Skye would formulate the
Additional Products are to be negotiated in good faith by e-nut and Skye but in
any event shall be no worse than the terms for the development of the first six
Products specified in Section 3.2 of the DLA.
(c) The rights of e-nut to submit annual Additional Products shall
extend beyond *** if the Skye Patents extend beyond such date, and in such
case, ***.
(d) For the avoidance of doubt, in the event that *** new Additional
Products are not acceptable to Skye in accordance with Section 2.2(a) during the
calendar year of *** or any calendar year thereafter, then, exclusivity shall
terminate at the end of such calendar year and Skye shall have the right to
license the Technology (or any joint Patent) to third parties for products in
the Field and the right to independently develop products in the field. As to
any new Additional Products submitted by e-nut after such termination of
exclusivity, such products may be licensed at SkyePharma's option on a
non-exclusive basis, it being acknowledged that all prior Additional Products
shall remain subject to the exclusive marketing rights of e-nut.
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
(e) Notwithstanding the foregoing, in the event that Skye determines
that an Additional Product is not capable of being formulated by Skye (in
accordance with Section 2.2(a)), it shall not count as an Additional Product for
purposes of determining whether four Additional Products have been submitted.
(f) e-nut will pay to Skye ***.
1.4 Amendment of Section 2.4. The second sentence of Section 2.4, which
reads:
"The License will be exclusive until ***, after which date the License will be
non-exclusive save with respect to Products and Additional Products and Skye may
grant licenses within the Field to other parties."
shall be deleted in its entirety and replaced with the following:
"The License will be exclusive until ***, subject to extension(s) thereof for
the life or extension(s) thereof of the Skye Patents. The License shall however
become non-exclusive on *** of any year, beginning on *** if in the preceding
calendar year the conditions of Section 2.2 (a) are not fulfilled."
1.5 Amendment of Section 2.5 (ii). Section 2.5 (ii) of the agreement which
reads:
"agrees to pay Skye quarterly in arrears royalties equal to *** of e-nut's Net
Sales of Products or Additional Products during the term of this Agreement where
the Product or Additional Product and its exploitation under the terms of this
Agreement are covered by a Valid Claim."
shall be deleted in its entirety and replaced with the following:
"agrees to pay Skye quarterly in arrears royalties equal to *** of e-nut's Net
Sales of Products or Additional Products until the last to expire of the Valid
Claims covering the Product or Additional Product and thereafter until e-nut
ceases to derive revenues from or make sales of such Products or Additional
Products."
1.6 Amendment of Section 2. Section 2 is hereby amended by the addition of
a new Section 2.6 and Section 2.7, which shall read in their entirety as
follows:
"2.6 Marketing in China. e-nut is hereby appointed as Skye's exclusive
marketing partner to pharmaceutical companies for the licensing of all Skye
Technology (including the Geomatrix technology) relating to the delivery of
drugs or other vitamins or nutraceuticals, whether existing now or herein after
created, in the Peoples Republic of China, Taiwan and Hong Kong (the "Chinese
Territory"). For each Introduction made or facilitated by e-nut which results in
any fees or revenues being paid to Skye or any of Skye's Affiliates in the
Chinese Territory, Skye shall pay to e-nut a royalty equal to *** of such gross
fees or revenues, payable on the same terms and conditions as the other royalty
payments set forth in this Agreement. Gross fees and revenues shall include all
cash
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
compensation excluding those for research and development for purposes of
computing the royalty payment.
On each *** of ***, if Skye shall not have received as of such *** *** (as
adjusted for inflation as of such date in accordance with the inflation
adjustment methodology established in Section 3.2) in gross cash fees and
revenues in the *** prior to such *** date generated by Introductions made or
facilitated by e-nut (which gross cash fees and revenues for purposes of this
calculation shall not include any research and development fees but shall for
the *** periods ended on the *** of *** include any payments for research and
development pursuant to feasibility studies ("Adjusted Revenues")), then unless
Skye shall have received as of the next following *** date an aggregate of ***
(as adjusted for inflation as of such date in accordance with the inflation
adjustment methodology established in Section 3.2) in Adjusted Revenues in
respect of the *** period ending on such *** date generated by Introductions
made or facilitated by e-nut, (i) exclusivity shall terminate as of such date
and (ii) Skye shall thereafter not be bound by any of the provisions of this
Section 2.6 and shall retain all rights with respect to the Chinese Territory,
which shall include the right to directly or indirectly market its products in
the Chinese Territory for the purpose of licensing the Skye Technology without
any obligation to make any payment to e-nut; provided, however, that Skye will
be required to continue to pay the *** payment referred to above, which shall
remain payable, and shall be paid, during the duration of the relevant Skye
Patent to the extent that revenues are derived from an Introduction.
For purposes of this Agreement, the term "Introduction" shall mean ***.
"2.7 Additional License Fees. In consideration of additional rights granted
by this Amendment in respect of (i) Section 2.1 and 2.2, of the DLA, e-nut
hereby pays to Skye a one time fee of *** by the issuance to Skye of *** shares
of Common Stock of e-nut, convertible into *** shares of Common Stock of Vital
Living on the terms and conditions set out in the Merger Agreement, Subscription
Agreement and Registration Rights Agreement of even date herewith ("TRANSACTION
AGREEMENTS"), and (ii) Section 2.6, e-nut hereby pays to Skye a one time fee of
*** by issuance to Skye of *** shares of Common Stock of e-nut convertible into
*** shares of Common Stock of Vital Living, on the terms and conditions set out
in the Transaction Agreements."
1.7 Amendment of Section 10. Section 10.1 is amended and restated in its
entirety as follows:
"10.1 Term. Unless terminated by the parties pursuant to Sections 10.2 and
10.3 below, this Agreement shall remain in effect until e-nut ***.
Notwithstanding the foregoing, the rights granted to e-nut under Sections 2.1,
2.2, and 2.3 above shall terminate with respect to a particular Product or
Additional Product upon the Abandonment of such Product or Additional Product;
provided however, that e-nut may continue to refer to such abandoned Product in
its promotional or other materials (subject to Section 6)."
1.8 Amendment to Section 11.1. Section 11.1 is amended and restated in its
entirety as follows:
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
11.1 Assignment. This Agreement and the licenses herein granted shall be
binding upon and shall inure to the benefits of the parties, their Affiliates
and successors; provided that e-nut and its permitted assignee may not assign
its rights, duties or obligations under this Agreement without the prior written
consent of Skye except for the assignment and assumption effected pursuant to
the Assignment and Assumption Agreement dated as of August 20, 2003.
ARTICLE TWO - REPRESENTATIONS
2.1 Representations of Skye. Skye represents and warrants that as of the
date hereof (i) the DLA is in full force and effect and (ii) there are no facts
known to Skye which would reasonably serve as a basis of any claim that Skye
does not have the right to use or license the Skye Technology to e-nut as
contemplated by the DLA as amended hereby. Skye has not licensed or otherwise
transferred, or entered into any agreement, commitment or arrangement (whether
oral or written) to license or otherwise transfer, to any other person any of
the Skye Technology or any rights thereto or interests therein, which now, or
with the passage of time will, conflict with or impair the rights to and
interest in the Skye Technology transferred to e-nut pursuant to the DLA as
amended hereby.
2.2 Representations of e-nut with Respect to the Amendment Shares. E-nut
represents and warrants to Skye that all corporate action on the part of e-nut,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Amendment, including the issuance of the shares
of Common Stock of e-nut (the "Amendment Shares") referred to in Section 1.6 of
this Amendment (containing new Section 2.7 of the DLA) has been taken. Upon
issuance in accordance with the DLA as amended, the Amendment Shares will be
validly issued, fully-paid and nonassessable, and free from all preemptive
rights.
ARTICLE THREE - ASSIGNMENT
3.1 Assignment. Each of Vital Living and e-nut agree to execute the
Assignment and Assumption Agreement, attached hereto as Exhibit 2, immediately
upon the execution of this Amendment.
3.2 Acknowledgement. Skye and Vital Living acknowledge and agree that upon
the execution of such Assignment and Assumption Agreement, Vital Living will
succeed e-nut as a party to the DLA, as amended hereby, with all the rights,
remedies, duties and obligations held by e-nut under the DLA, as amended hereby.
ARTICLE FOUR - GENERAL PROVISIONS
4.1 Full Force and Effect. Upon (i) the execution of this Amendment by each
of the parties hereto and (ii) the consummation of the merger contemplated by
the Merger Agreement, the terms of the DLA shall be as amended hereby. Except as
expressly amended hereby, the DLA and all other documents, agreements and
instruments relating thereto, are and shall remain, unmodified and in full force
and effect.
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
4.2 Choice of Law. The validity, performance, construction, and effect of
this Amendment shall be governed by the laws of the State of New York.
4.3 Dispute Resolution. In the case of any disputes between the parties
arising from this Amendment, Section 11.7 of the DLA shall apply.
4.4. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4.6 Compliance with Laws. If any provision of this Amendment is found by
any court or administrative body of competent jurisdiction to be invalid or
unenforceable, such invalidity or unenforceability shall not affect the other
provisions of this Amendment which shall remain in full force and effect. If any
provision of this Amendment is so found to be invalid or unenforceable but would
be valid or enforceable if some part of the provision were deleted or amended,
the provision in question shall apply with such modification(s) as may be
necessary to make it valid and enforceable.
[Signature Page Follows]
CONFIDENTIAL TREATMENT REQUESTED BY VITAL LIVING, INC.
IN WITNESS WHEREOF, the parties have executed this Agreement.
E-NUTRICEUTICALS, INC.
By__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Sole Officer and Director
VITAL LIVING, INC.
By__________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
President
By__________________________________
▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
JAGOTEC AG
By__________________________________
Name:
Title:
SKYEPHARMA PLC
By__________________________________
Name:
Title: