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Table of Contents [form10q_q1fy07.htm]
EXHIBIT 10.19

AMENDED AND RESTATED
LICENSE AND PRODUCT SUPPLY AGREEMENT

THIS AMENDED AND RESTATED LICENSE AND PRODUCT SUPPLY AGREEMENT (“Agreement”) is
made as of the 13th day of October, 2006 (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 or patent pending blend of ingredients, Univestin® (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,
which Schedule may be amended from time by mutual written agreement of the
parties (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 received registration or made application for
certain trademarks (the “Trademarks”) and certain patents (the “Patents”) (the
Trademarks and 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
collectively be referred to as the “Property”);

 
WHEREAS, the parties entered into a License and Product Supply Agreement dated
as of May 18, 2004 regarding, among other matters, the grant of an exclusive
license for the Compound and the Property to Licensee in connection with the
manufacturing, marketing and sale of joint and musculo-skeletal health related
products containing the Compound in the food, drug and mass (including club)
retail channel in the United States, Mexico and Canada;

WHEREAS, Licensee desires to obtain from Licensor and Licensor desires to grant
to Licensee certain exclusive, semi-exclusive or shared rights 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, Mexico and
Canada or the other territories as set forth on Schedule B hereto (the
“Territories”) for the Purposes, as applicable; and

WHEREAS, Licensee further desires to purchase the Compound from Licensor and
Licensor desires to sell the Compound to Licensee in raw material form in
accordance with the specifications most recently attached to that certain
confirmed purchase order dated September 26, 2006 (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.

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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 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 for the Purposes as set forth on
Schedule B hereto. The scope of the license (i.e. exclusive, semi-exclusive or
shared) granted for the applicable Authorized Channels of Trade, Territories and
Purposes, as applicable, is set forth on Schedule B under the heading “Scope”.
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 for use for any applicable Purpose as set forth on
Schedule B hereto. 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.

2.  Ordering Compound; Production Quantities.

(a)  Purchase Orders. Licensor agrees to sell and Licensee agrees to purchase
the Compound 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 its
best 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 two (2)
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.
 
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(e)  Timeliness. Licensor shall manufacture, ship and deliver the Compound in
raw material form 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 agrees to pay to Licensee 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. Licensor
will also pay to Licensee any penalties or other costs incurred by Licensee in
connection with such lost or delayed sale. The amount of Compound ordered will
be counted towards satisfaction of the Annual Minimum Purchase Requirement
described in Section 9 below. In addition, Licensor agrees that if Licensee
loses a customer due in whole or in part 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.

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, 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 trademark and/or patent
notification which shall be of such size and in such location as shall make them
readily observable, provided, however, thatLicensee, in its sole discretion,
shall decide which trademarks, including one or more of Licensor’s Trademarks,
to use in connection with the Products.

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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.

(c)  Except for the licenses granted hereunder, Licensee shall not use any
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.

(d)  During the Term hereof, neither Licensor nor any of its agents, employees,
representatives or affiliates, shall use or grant any party the right, directly
or indirectly, to use (i) the Property, (ii) the Compound, or (iii) any property
which although not expressly subject to the Agreement, infringes the Property
licensed hereunder, in each case in any manner that conflicts with the rights
granted to Licensee under this Agreement.

(e)  Unless the clinical proven daily dosage for the Compound decreases or
unless approved in advance by Licensor, Licensee shall not recommend a daily
dosage of Compound less than the amount set forth on Schedule D 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 the Compound (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.

(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; 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.

(c)  Notwithstanding anything to the contrary contained herein, Licensee may, in
its sole discretion, decide whether or not to use any of the Trademarks on any
of the Products or whether to use another trademark.

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 and trademark search, application,
registration and maintenance requirements and fees relating to the Property or
the Compound 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.

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8.  Licensor’s Obligations.

(a)  At Licensee’s request, Licensor shall, at its sole expense, provide to
Licensee any information as to the contents of the Compound or any other
information 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.

(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”. Licensor shall deliver to Licensee all documentation necessary to
adequately document the safety, quality and quantity of all ingredients
contained therein and the efficacy of the Compound.

Such documentation shall also include, without limitation, a Certificate of
Analysis which provides qualitative and quantitative confirmation of the active
ingredient content of the Compound and the accompanying laboratory results for
each and every lot of the Compound. Licensee may rely on the content of the
Certificate of Analysis for any purposes. Failure to provide Compound of
suitable quality conforming to the Compound’s Specifications or documentation
set forth in this Section 8 in support thereof shall be grounds for rejection of
the Compound by the Licensee and a material breach of this Agreement which, if
not cured within sixty (60) days, shall provide Licensee with the right to
terminate this Agreement. The Property shall not infringe upon or misappropriate
the intellectual property or other rights of any third party and shall be of
acceptable style, appearance and quality to Licensee.
 
(d)  Licensor shall materially comply with applicable laws, regulations, rules
and orders applicable in the United States, including, without limitation, those
of the U.S. Federal Food and Drug Administration (the “FDA”) and those relating
to the Dietary Supplements and Health Education Act of 1994, as amended. The
Compound is guaranteed by Licensor to be not adulterated or misbranded within
the meaning of the Federal Food, Drug and Cosmetic Act, and not an article which
may not, under such Act, be introduced into interstate commerce. The Compound
shall be merchantable and fit for the intended use by Licensee and the
purchasers of the Products. Licensor shall promptly notify Licensee if any audit
is conducted by the FDA while any of the Compound is being manufactured. If the
FDA pulls a sample of a lot of the Compound, Licensor shall immediately send a
matching sample to Licensee. Licensor shall promptly notify Licensee of any
customer orother complaints, governmental inquiries, quality issues or product
liability issues relating to the Compound or any of its components.

(e)  Licensor shall use its best efforts to (i) file all applications for
Patents and Trademarks in the Territories where they have not already been
filed; and (ii) prosecute all pending applications with the appropriate
governmental authorities in the Territories in order to obtain the issuance of
the Patent and Trademark registrations contemplated hereunder.

(f)  Licensor shall use reasonable commercial efforts to promptly provide
Licensee the results of any clinical studies relating to the Compound.

(g)  Licensor represents and warrants that it has provided to Licensee all
results of each clinical study performed on the Compound to date, and that such
results have not been changed, summarized or altered in any way. Licensor
further represents and warrants that, to the best of its knowledge after due
inquiry, that the results of all clinical studies provided to Licenses are
complete and accurate.

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9.  Annual Minimum Purchase Requirement; Exclusivity Fee.

(a)  All of the Property licensed to Licensee hereunder shall be on a
royalty-free basis.

(b)  In consideration for the license granted to Licensee hereunder and in order
to maintain the exclusive or semi-exclusive rights, as applicable, to the
license granted hereunder as set forth on Schedule B, Licensee hereby agrees to
purchase from Licensor the quantities of Compound (“Annual Minimum Purchase
Requirement”) set forth in Schedule E for the years indicated thereon.

If Licensee fails to meet the Annual Minimum Purchase Requirement during any
year of the Term, Licensee may, at its sole option, agree to pay a penalty fee
equal to the dollar amount that would be required to purchase 40% of the
difference between the Annual Minimum Purchase Requirement and the amount of the
Compound actually purchased by the end of the applicable annual period (the
“Penalty Fee”) with an annual fee cap of $200,000. If Licensee elects to pay the
Penalty Fee, the Annual Minimum Purchase Requirement shall be deemed satisfied
for the applicable annual period. If Licensee fails to either meet the Annual
Minimum Purchase Requirement or pay the Penalty Fee, Licensor’s sole remedy
shall be to either (i) maintain the license granted hereunder; or (ii) terminate
such license granted hereunder and grant Licensee a non-exclusive license to use
the Compound and the Property in the applicable Territories for the applicable
Authorized Channels of Trade and Purposes; or (iii) terminate this Agreement.
Licensee shall in no event owe Licensor any monies or other compensation for
Licensee’s failure to satisfy its Annual Minimum Purchase Requirement if
Licensor determines to terminate this Agreement. If the parties cannot in good
faith agree on an Annual Minimum Purchase Requirement for Year 4, Year 5 and/or
each year of the Renewal Term(s), then the Annual Minimum Purchase Requirement
for each such year shall be 110% of the prior year’s Annual Minimum Purchase
Requirement.

(c)  Licensor acknowledges that in consideration for the license granted to
Licensee hereunder, Licensee paid to Licensor an exclusivity fee as described on
Schedule F hereto.

10.  Pricing, Payment Terms; Shipment, Delivery and Inspection of Goods.

(a)  Basic Pricing. The price of the Compound shall be the price set forth on
Schedule G hereto, which price shall cover all costs and charges necessary to be
paid by Licensee to Licensor hereunder. The price for the Compound includes,
without limitation, Licensor’s cost of complying with all of Licensee’s
Specifications including, but not limited to, usual packing of good quality so
as to sustain (without damages) normal motor freight transportation to the point
of delivery. The freight,crating, packaging and all other charges are to be paid
by Licensor, and these charges shall be expressly identified to Licensee. The
price covers all federal, state and local taxes and duties from which Licensor
cannot obtain exemption. The amounts of any such taxes or duties are the sole
responsibility of Licensor and shall be separately shown to Licensee. Such taxes
and duties shall be paid by Licensor when due. Licensor represents that the
price Licensee pays for the Compound is Licensor’s lowest price currently in
effect for goods of similar quantity and quality. Should any lower price, or any
better terms, be quoted by Licensor to any of its customers for goods of similar
quantity or quality, prior to completion of the delivery of the goods, Licensor
will promptly notify Licensee and, thereupon, such lower price or better terms
will apply to this Agreement, provided that the granting of such lower price or
better terms to Licensee would not be in violation of any applicable law. In
calculating the price, Licensor shall take into account all rebates, discounts,
charge-backs, promotions, credits or other favorable terms or similar
arrangements. Licensor represents and warrants that, to the best of its
knowledge, the prices set forth herein do not and will not violate any federal,
state, county or municipal law or regulation relative to price discrimination,
price-fixing, or price stabilization.

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(b)  Price Adjustments. The price set forth on Schedule G hereto is not subject
to escalation of any kind or for any reason, except for modifications or
improvements to the Compound which have been requested by Licensee.

(c)  Payment Terms; Delivery and Acceptance of Goods. All Compound shall be
shipped prepaid ground transportation, FOB Licensee’s designated address in the
United States. Payment terms shall be net thirty (30) days from the later of
Licensee’s receipt of the Compound and the invoice pertaining to such Compound.
Licensee shall be entitled to a 2% discount on the price of all Compound for
which Licensee pays within ten (10) business days of the later of Licensee’s
receipt of the Compound and the invoice pertaining to such Compound. Late
payment is considered a violation of this agreement. All payments shall be made
in U.S. dollars. Unless Licensee transports the goods with its trucks, the risk
of loss or damage of the goods shall pass to Licensee at the time goods are
actually accepted at the delivery address and the entire risk of loss or damage
in transit shall be upon the Licensor. Licensor bears the risks and all costs of
ground transportation delivery to the delivery address, including without
limitation, import duties, taxes and other charges of delivering the goods to
the delivery address, cleared for importation. An acceptance of goods shall not
be deemed to occur until after Licensee has had a minimum of forty-five (45)
days to inspect the Compound. Acceptance of any part of a commercial unit shall
not be deemed to be an acceptance of the entire unit.

(d)  Nonconforming Goods. Without waiving any other rights or remedies available
at law or equity, Licensee may reject or revoke acceptance of goods or any
portion thereof which, without limitation, are (i) not in conformity with
Licensee’s quality control standards, (ii) defective, (iii) otherwise not in
conformity with quantities or descriptions referred to in this Agreement or made
a part hereof, (iv) not in conformity with the Specifications under which the
goods are to be sold, (v) not in compliance with any mutually approved sample,
or (vi) not in compliance with Licensee’s current “Supplier Shipping &
Compliance Guide” (collectively, “Nonconforming Goods”). Licensor shall make no
shipment of Nonconforming Goods, whether as an accommodation or otherwise,
unless first authorized in writing by the Licensee. Upon rejection or
revocation, Licensee, at its option, may return at Licensor’s expense any or all
of the goods or require correction or replacement at Licensor’s expense within
five business days.

(e)  Inspection. Licensee shall have the option to inspect the goods, including
materials used in the manufacture or packaging of the goods, and records
relating thereto at reasonable times and places before, during and after the
manufacture or delivery of the goods. Licensee reserves the right to inspect any
facility in which the goods are manufactured, packaged or stored and any raw
materials, goods in process, or finished goods. An inspection or failure to
inspect shall not relieve Licensor of any responsibility or liability with
respect to the goods, including material used in themanufacture or packaging of
the goods, nor shall an inspection be interpreted as an acceptance of goods by
Licensee.

(f)  Failure to discover Nonconforming Goods. Notwithstanding the foregoing
paragraphs, Licensee’s failure to discover Nonconforming Goods or other defects
shall not relieve Licensor of its obligations under Section 17 or any other
provision of this Agreement or the applicable purchase order or limit any rights
or remedies Licensee may have under applicable law or equity.

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11.  Representations and Warranties.

(a)  Representations and Warranties of Licensor. Licensor hereby represents and
warrants to Licensee that (i) Licensor is the sole owner of the right, title and
interest in and to the Compound and the Property (ii) Licensor is entitled to
grant the licenses contemplated hereunder to Licensee, (iii) the Property does
not constitute an infringement of any existing intellectual property rights when
used on the Products; (iv) the Compound is suitable for the purposes for which
it will be used by Licensee; (v) the Compound as delivered by Licensor to
Licensee will be free of defects, will be manufactured in accordance with good
manufacturing practices and conform to the description of the Compound ordered
by Licensee; (vi) the Compound as delivered by Licensor to Licensee shall
continue to be the same qualitative and quantitative formula as the Compound
tested in any clinical studies; (vii) Licensor has the full power, capacity and
right to enter into this Agreement, including, but not limited to, the ability
and wherewithal to provide for the manufacture of the Compound in compliance
with the quality and quantity standards contemplated by this Agreement; (viii)
Licensor has not licensed the Compound or Property or any aspect thereof in any
manner inconsistent with the licenses granted hereunder; (ix) Licensor shall
convey good, clear and unencumbered title to the Compound supplied; (x) Licensor
has not granted any rights relating to the Compound or the Property to any other
person or entity in the Authorized Channels of Trade in the Territories for the
Purposes for which Licensor has granted Licensee exclusive rights; (xi) neither
the execution and delivery of this Agreement nor compliance with the obligations
of Licensor hereunder, will violate any law or regulation, or any order or
decrees of any court or government instrumentality, or will conflict with, or
result in the breach of, or constitute a default under, any contract, agreement,
instrument or judgment to which Licensor is a party; and (xii) no action,
approval or consent, including but not limited to, any action, approval or
consent by any United States federal, state, municipal or other governmental
agency, commission, board, bureau or instrumentality is necessary in order to
constitute this Agreement as a valid, binding and enforceable obligation of
Licensor in accordance with its terms.

(b)  Representations and Warranties of Licensee. Licensee hereby represents and
warrants to Licensor that (i) it has the full power, capacity and right to enter
into the Agreement; (ii) it knows of no pending or threatened action in law or
in equity, which adversely affects the rights granted herein; (iii) neither the
execution and delivery of this Agreement nor compliance with the obligations of
Licensee hereunder will violate any law or regulation, or any order or decree of
any court or governmental instrumentality, or will conflict with, or result in
breach of, or constitute a default under, any contract, agreement instrument or
judgment to which Licensee is a party; and (iv) no action, approval or consent,
including but not limited to, any action, approval or consent by any United
States federal, state, municipal or other governmental agency, commission,
board, bureau or instrumentality is necessary in order to constitute this
Agreement as a valid, binding and enforceable obligation of Licensee in
accordance with its terms.

12.  Acknowledgment of Ownership of the Property. Licensee acknowledges
Licensor's right, title and interest in and to the Property and the goodwill
associated therewith. Licensee shall not represent in any manner that it has any
ownership right, title or interest in the Property other than as set forth in
this Agreement.
 
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13.  Infringement.

(a)  Licensee shall notify Licensor in the event that Licensee learns of any
actual or apparent infringement of the Property.

(b)  Licensor shall be required to take all necessary actions to protect the
validity of the Property at its sole expense. Such action shall include, but not
be limited to, assuming responsibility at its expense for the defense of any
lawsuit challenging or affecting the rights to the Property, settling
litigation, and/or instituting litigation at its expense to protect its rights
to the Property. Licensee shall comply, at Licensor’s expense, with all
reasonable requests for assistance in connection therewith, including, without
limitation, the furnishing of documents and having its officers or other persons
reasonably designated by Licensor appear as witnesses.

14.  Termination.

(a)  In addition to any other rights of termination contained in this Agreement,
this Agreement may be terminated prior to the expiration of the Term set forth
in Section 3 hereof, by either party for the failure by the other party to
perform any material obligation hereunder, and if a failure to cure such breach
shall continue for a period of ninety (90) days after written notice of default
is sent by the non-breaching party to the breaching party.

(b)  This Agreement may be terminated by either party upon written notice if the
other party files or has filed against it a petition under any bankruptcy laws,
makes an assignment for the benefit of creditors or has a receiver appointed for
it or any of its assets.

15.  Rights of Parties Upon Expiration or Termination. In the event of the
expiration or termination of this Agreement, Licensee shall have the right for a
period of twelve (12) months from the date of such termination or expiration to
continue the use of the Property and the Compound in conjunction with the
advertising and sale of Products in the Territories and allowing for the
continued manufacture of the Products in order for Licensee to effect an orderly
transition with its customers and to sell though its existing inventory of
Compound, Products and related packaging materials. After such twelve (12) month
period, Licensee shall thereafter cease all use of the Property and the
Compound. Termination or expiration of this Agreement shall not affect the
indemnification obligations hereunder or any other provisions intended by their
nature to survive the termination or expiration of this Agreement.

16.  Confidentiality. The Confidentiality Agreement dated July 15, 2002 by and
between the Licensor and the Licensee (the “Confidentiality Agreement”) is and
shall remain in full force and effect. The parties acknowledge and agree that
the existence of this Agreement and the terms and conditions hereof shall
constitute Confidential Information under the Confidentiality Agreement.
Licensor acknowledges that Licensee may file this Agreement or any portion
hereof with the Securities and Exchange Commission if Licensee in its discretion
deems such to be necessary or advisable. Any such filing will not affect the
parties’ obligations of confidentiality with respect to Confidential Information
not disclosed in such a filing.

17.  Indemnification; Exclusion of Certain Damages; Insurance.

(a)  Licensor agrees to indemnify, defend and hold harmless Licensee and its
officers, directors, agents, employees and affiliates (such persons, together
with their successors and assigns, are referred to herein as “Indemnified
Parties”) from and against any claim, demand, action, proceeding or cause of
action made or brought against Licensee or any of its Indemnified Parties by any
third party, including, without limitation, any damages, settlement payments,
penalties, liabilities, costs and expenses or any judgment rendered against or
incurred by Licensee or any of its Indemnified Parties in any such action and
reasonable attorneys' fees and expenses incurred byLicensee or its Indemnified
Parties in defending any such claim brought against it or them except as
otherwise provided below ("Damages"), arising out of or resulting from (i) this
Agreement, including a breach of this Agreement by Licensor; (ii) product
liability attributable, directly or indirectly, in whole or in part, to the
Compound or (iii) the violation or infringement of any patent, trademark, trade
dress, copyright or other intellectual property right relating to the Compound,
the Property or other specifications or materials selected by Licensor, provided
that none of such occurrences are caused by the negligence or willful misconduct
of Licensee.

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(b)  Licensee agrees to indemnify, defend and hold harmless Licensor and its
Indemnified Parties from and against any claim, demand, action or cause of
action which is made against Licensor or any of its Indemnified Parties by any
third party, including, without limitation, any damages, settlement payments,
penalties, liabilities, costs and expenses or any judgment rendered against or
incurred by Licensor or any of its Indemnified Parties in any such action and
reasonable attorneys' fees and expenses incurred by Licensor or its Indemnified
Parties in defending any such claim brought against it or them except as
otherwise provided below, to the extent arising out of or resulting from (i) a
breach of this Agreement by Licensee, (ii) the improper, labeling (including
packaging materials), promotion or use of the Products by Licensee or its
respective employees or agents unless such claim results from incorrect
information supplied by Licensor for the Compound or Property; or (iii) the
violation or infringement of any trademark or trade dress rights relating to the
Products (other than those owned by Licensor and licensed to Licensee hereunder)
or other specifications or materials selected by Licensee, provided that none of
such occurrences are caused by the negligence or willful misconduct of Licensor.

(c)  Upon the occurrence of an event which would give rise to a right of
indemnification under this Agreement, the party claiming the right to
indemnification (the "Indemnitee") shall give prompt written notice to the other
party providing reasonable details of the nature of the event and basis of the
indemnity claim. The party obligated to provide the indemnification (the
"Indemnitor") shall then have the right, at its own expense and with counsel of
its choice, to defend, contest or otherwise protect against any such suit,
action, investigation, claim or proceeding ("Action"). If the Indemnitee
reasonably determines that its interests are not adequately represented by the
Indemnitor’s counsel, Indemnitee shall have the right to participate, at the
Indemnitor’s expense, in the defense thereof with counsel of its choice
reasonably acceptable to the Indemnitor. In any event, the Indemnitee shall also
have the right, but not the obligation, to participate at its own expense in the
defense thereof with counsel of its choice. The Indemnitee agrees to cooperate
to the extent reasonably necessary to assist the Indemnitor in defending,
contesting or otherwise protesting against any such Action provided that the
reasonable cost in doing so shall be paid by the Indemnitor. If the Indemnitor
fails within fifteen (15) days after receipt of such notice to (i) notify the
Indemnitee of its intent to defend, or (ii) defend, contest or otherwise protect
against such Action, or fails to diligently continue to provide such defense
after undertaking to do so, the Indemnitee shall have the right upon five (5)
days' prior written notice to the Indemnitor, to defend, settle and satisfy any
such Action and recover the costs of the same from the Indemnitor. Any amounts
owed by the Indemnitor to the Indemnitee may, at the Indemnitee’s option, be
applied to offset amounts owed by the Indemnitee to the Indemnitor pursuant to
this Agreement.

(d)  EACH OF LICENSOR AND LICENSEE ACKNOWLEDGES THAT, EXCEPT AS EXPLICITLY SET
FORTH IN THIS AGREEMENT, IN NO EVENT SHALL IT BE LIABLE FOR ANY INDIRECT,
SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGE, LOSS OR EXPENSE,
INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF GOODWILL, LOSS OF PROFITS,
LOSS OF USE, LOST TIME AND ANY AND ALL OTHER COMMERCIAL DAMAGES, EVEN IF ADVISED
OF THEIR POSSIBLE EXISTENCE. The foregoing exclusion of certain damages shall
apply regardless of the success or effectiveness of other remedies, but shall
not apply to any indemnification obligations and/or amounts owed pursuant to
Section 17(a) and (b) above.
 
(e)  The provisions of this Section 17 shall survive the expiration of the Term
or any other termination of this Agreement.
 
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(f)  The parties shall each maintain in full force and effect throughout the
Term general product liability insurance with limits of not less than one
million dollars ($1,000,000) per occurrence, two million dollars ($2,000,000) in
the aggregate. Licensor’s insurance shall name Licensee and its affiliates as an
additional insured, shall have broad form vendor’s coverage, and shall be placed
with an insurance company which has a most recent rating given by Best’s Key
Rating Guide of at least a “B” or above, or in such other company as Licensee
may approve. Each party agrees to promptly deliver certificates or other proof
of said insurance to the other party. Licensor’s insurance required by this
Agreement shall be primary with respect to any other insurance available to
Licensor and shall contain a waiver of subrogation by Licensor’s insurance
carrier against Licensee and its insurance carrier with respect to all
obligations assumed by Licensor pursuant to this Agreement. Each party will
provide a copy of any contract of insurance required under this Agreement, upon
request from the other party.

18.  Force Majeure. None of the parties shall be liable for any failure to
perform or delay in performance of its obligations hereunder (other than the
obligation to pay monies due and owing for the shipment of Compound under this
Agreement) caused by any circumstances beyond its reasonable control occurring
in any of the countries in the applicable Territory, including, but not limited
to, fire, earthquake, war, civil commotion, any act of central or local
government, industrial disputes, lockouts and strikes, provided, however, that
if the period of default continues for more than sixty (60) days, the other
party shall be entitled to terminate this Agreement forthwith by notice in
writing.

19.  Further Assurances. The parties shall execute such documents and consents
and take such other action as may be necessary to register this Agreement with
the appropriate governmental authorities of the countries in the Territories.

20.  Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by both
parties and making specific reference to this Agreement.

21.  Waivers. Neither Licensor's nor Licensee's failure to enforce any of the
provisions of this Agreement shall constitute a waiver of its rights to later
enforce such terms or conditions. Any waiver under this Agreement must be in
writing signed by the party to be charged therewith and expressly purporting to
constitute such a waiver. Any such waiver shall be effective only for the
specific instance and circumstance with respect to which it is executed and
delivered.

22.  Notices. All notices under this Agreement shall be in English and shall be
(a) in writing; (b) given by regularly scheduled express courier service,
hand-delivered or facsimile (confirmed by such airmail, express courier or
hand-delivered correspondence); and (c) addressed to the parties at the
addresses set forth immediately below, or to such other address as either party
may advise the other in writing in accordance with the terms hereof:

 
if to Licensor:
      Unigen Pharmaceuticals, Inc.

2660 Willamette Drive NE
Lacey, Washington 98516
Attention: Regan Miles,
President and CEO
Facsimile: (360) 413-9135

with a copy to:

Unigen Pharmaceuticals, Inc.
2660 Willamette Drive NE
Lacey, Washington 98516
Attention: Thomas J. Hoolihan
Executive Vice President and General Counsel
Facsimile: (360) 413-9135

 
if to Licensee:
      Schiff Nutrition Group, Inc.

2002 South 5070 West
Salt Lake City, UT 84104
Attn: General Counsel
Facsimile: (801) 975-1924
 
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Notices shall be deemed given (i) on the scheduled delivery date, if sent by
regularly scheduled express courier service; and (ii) when transmitted, if
transmitted by facsimile and confirmed in one of the manners aforesaid.

23.  Assignments And Sub-Licenses. Neither Licensor nor Licensee shall assign
its rights hereunder without the prior written consent of the other party
hereto, which shall not be unreasonably withheld; provided, however, Licensee or
Licensor may, at any time, assign this Agreement without the prior written
consent of Licensor to any affiliated company, or in the event of a change of
ownership or control of Licensee, including a sale of substantially all the
assets of the Licensee. Licensee may sublicense its rights under this Agreement
to affiliates of Licensee upon the prior written consent of Licensor, such
consent not to be withheld or delayed unreasonably. Licensee may outsource the
manufacture of the Products in whole or in part, and is permitted to sublicense
its rights under this Agreement to the extent required to do so.

24.  Brokers. Each of the parties represents and warrants that such party has
dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement, and, insofar as such party knows, no broker or
other person is entitled to any commission or finder's fee in connection with
any of these transactions. The parties each agree to indemnify and hold harmless
one another against any loss, liability, damage, cost, claim or expense incurred
by reason of any brokerage commission or finder's fee alleged to be payable
because of any act, omission or statement of the indemnifying party.

25.  Execution; Governing Law; Arbitration.

(a)  This Agreement shall not be binding until it has been executed on behalf of
each party by a duly authorized officer of each party.

(b)  This Agreement, and any and all disputes arising out of or relating to this
Agreement, or the subject matter, enforceability or breach thereof, shall be
governed by, and construed and interpreted in accordance with, the laws of the
United States and the State of Washington, without application of any conflicts
of laws principles, except that the Arbitration provision in Paragraph 26(c)
below, shall be governed by the Federal Arbitration Act to the extent that it is
applicable.

(c)  Any and all controversies, claims or disputes arising out of or relating to
this Agreement, or the subject matter, enforceability or breach thereof, shall
be settled and determined exclusively by final and binding arbitration
administered by JAMS under its Streamlined Arbitration Rules and Procedures and
shall be heard in Seattle, Washington. The state or Federal courts of the states
of Washington and Utah shall have concurrent jurisdiction to issue preliminary
injunctive or other equitable relief in order to enforce the terms of this
Agreement. Judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction over the parties. Each party to this Agreement
waives any objection to personal jurisdiction of the state or Federal courts in
Seattle, Washington and Salt Lake City, Utah.

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(d)  In no event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such claim, dispute or
other matter in question would be barred by the applicable statutes of
limitation.

26.  Prevailing Party. The prevailing party in any arbitration, litigation or
other proceeding arising out of or relating to this Agreement, or the subject
matter, enforceability or breach thereof, shall be entitled to recover from the
non-prevailing party its costs and reasonable attorney’s fees, as determined by
the arbitrator(s) or court.

27.  Entire Agreement. This Agreement, including the Schedules hereto, the
purchase orders, including the Specifications (as defined above), submitted by
Licensee to Licensor from time to time and the Confidentiality Agreement
represent the entire understanding and agreement between the parties with
respect to the subject matter hereof, and supersedes all other negotiations,
understandings and representations (if any) made by and between such parties.
 
28.  Headings. Any headings used herein are for convenience in reference only
and are not a part of this Agreement, nor shall they in any way affect the
interpretation hereof.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

SCHIFF NUTRITION GROUP, INC.,

By: /s/  Thomas H. Elitharp            
Name: Thomas H. Elitharp
Title:    Executive Vice President -
 Operations and Support Services

UNIGEN PHARMACEUTICALS, INC.,

By: /s/  Regan Miles               
Name: Regan Miles
Title:    President and CEO
 
 
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