Strategic Partnership Agreement: Definition & Sample

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What is a Strategic Partnership Agreement?

• Access important technology
• Create new distribution outlets, broaden market base, and reach new markets
• Collaborate on business concept, product, or service
• Increase revenue and/or reduce costs
• Build customer awareness and drive brand development

Common Sections in Strategic Partnership Agreements

Below is a list of common sections included in Strategic Partnership Agreements. These sections are linked to the below sample agreement for you to explore.

Strategic Partnership Agreement Sample

STRATEGIC PARTNERSHIP AGREEMENT

This Strategic Partnership Agreement (the “ Agreement ”) is made and entered into as of the 20 th of December, 2011 (the “ Effective Date ”), by and between MedPodium Health Products, Inc., a Delaware corporation with offices at 12255 El Camino Real, Suite 250, San Diego, CA 92130, and its parent company MedPodium Health Sciences, Inc., a Delaware corporation with offices at 12255 El Camino Real, Suite 250, San Diego, CA 92130, and its parent company Cardium Therapeutics, Inc., a Delaware corporation with offices at 12255 El Camino Real, Suite 250, San Diego, CA 92130, each on behalf of itself and its affiliates (individually and collectively referred to hereafter as “ Cardium ”), and Source One Global Partners, LLC, an Illinois limited liability company with offices at 445 E. Illinois, Suite 345, Chicago, IL 60611 (“ SourceOne ”). Cardium and SourceOne are each referred to as a party and collectively parties to this Agreement.

Cardium desires to acquire from SourceOne a license to develop a portfolio of products and to jointly develop products with SourceOne (the “ Schedule A Products ,” “ Schedule B Products ,” “ Technology Products ” and “ Joint Products ” described below, collectively “ Licensed Products ”) for commercialization worldwide by Cardium and/or its agents, affiliates and transferees, and SourceOne is willing to license technology to Cardium and jointly develop products with Cardium as provided herein.

NOW, THEREFORE, for good and valuable consideration, the parties, intending to be bound legally, agree as follows:

The terms “commercialize,” “commercialization” and related terms as used herein refer to, without limitation, developing, making, have made, import, use, offer to sell, sell, or have sold a product or technology.

The term “Customer Service” as used herein refers to the provision of service to customers before, during and/or after the purchase of Licensed Product, including but not limited to a call center where customers can purchase Licensed Product, seek information about Licensed Product, or seek redress regarding a Licensed Product related problem.

The term “Distribution” as used herein refers to the shipment of product to customers or resellers and the associated billing and collection of revenue from the sales of Licensed Product.

The term “Excess Budget” as used herein refers to any portion of a Product Development Budget (including any amounts set forth in a Supplemental Product Development Budget) that exceeds Three Hundred and Sixty Thousand Dollars ($360,000).

The term “Excess Contribution” as used herein refers to, with respect to a Joint Product, any portion of the Joint Product Contribution that exceeds Three Hundred and Sixty Thousand Dollars ($360,000).

The term “Fulfillment” as used herein refers to the process whereby Licensed Product is sent to a person who has ordered or purchased Licensed Product. A person may include a consumer or reseller of Licensed Product.

The term “Joint Product Contribution” as used herein refers to, with respect to a Joint Product, the combined amounts of the Product Development Contribution and Market Development Contribution for that Joint Product.

The term “Marketing” as used herein refers to the process of promoting and delivering product from the manufacturer to the consumer. Marketing includes advertising, packaging, Fulfillment, and Distribution.

The term “Marketing Costs” as used herein refers to costs incurred from Marketing activities.

The term “Medical Food” as used herein refers to a medical food as defined under Section 5 of the U.S. Orphan Drug Act, as may be amended from time to time, or under any foreign laws or regulations related to the use of medical foods, including, without limitation any food which is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.

The term “Nutraceuticals” as used herein refers to articles promoted and/or confirmed to provide potential health or medical benefits other than Pharmaceuticals, including without limitation a food or food product to provide health and medical benefits, such as isolated nutrients, dietary supplements, and herbal products.

The term “Pharmaceutical” as used herein refers to a drug as defined and regulated in accordance with the U.S. Federal Food, Drug, & Cosmetics Act (“FD&C Act”), or under any foreign laws or regulations related to the use of pharmaceuticals including, without limitation, articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease; or articles, other than foods, intended to effect the structure or any function of the body of man or other animals.

The term “Product Development” as used herein refers to any activity prior to Product Launch related to developing a Joint Product for commercial profitability including, without limitation, design, formulation, product development, testing, clinical trials, regulatory approval, and the manufacture of Product for testing, development, and launch.

The term “Product Development Contribution” as used herein refers to any contribution from the parties pursuant to a Product Development Budget or Supplemental Product Development Budget for Product Development and/or Product Development Costs related to a Joint Product including, capital contributions, the fully burden cost of employee hours, the cost of goods contributed, third party expenses or consulting costs, and any other expenses.

The term “Product Development Costs” as used herein refers to any cost incurred from activities related to Product Development.

The term “Product Launch” as used herein refers to activities related to the initial launch and marketing of a Joint Product following its completion and any necessary approval for sales.

The term “Product Standards” as used herein refers to any applicable quality standards or manufacturing practices required by the FDA and set forth in the FD&C Act or FDA Regulations (including without limitation 21 CFR 210 and 211) and/or applicable foreign laws or regulations related to the production and testing of Pharmaceutical, Nutraceutical, or Medical Food products or their ingredients, and the corresponding requirements of each applicable Regulatory Authority and their foreign equivalents.

The term “Release Value” as used herein refers to the fifteen (15) day volume weighted average trading price of Cardium common stock as of the date that Cardium provides notice to SourceOne of the designation of a Joint Product.

The term “Release Date Value” as used herein refers to the Release Value of Licensed Equity at the time of its release from escrow.

The term “SourceOne Technology” as used herein refers to any and all technology and intellectual property rights (including without limitation patents, patent applications and unpatented inventions, as well as trade secrets, know-how, data and other technical or commercially useful information) which SourceOne or its affiliates now own, in-license or otherwise have rights to and is relevant to or useful for the Product Development and/or commercialization of any Nutraceutical, Pharmaceutical, or Medical Food product or any Licensed Product. SourceOne Technology includes, but is not limited to, Vesisorb ® , and technology relevant to or useful for the Product Development and/or commercialization of products and technologies listed on Appendix A attached hereto.

The term “Working Capital” as used herein refers to capital that is used to fund the ongoing operations of a business.

2. Technology and Product License .

(a) SourceOne hereby grants to Cardium a license (the “ Technology and Product License ”) to commercialize Licensed Products using any SourceOne Technology on the terms and conditions contained in this Agreement.

(b) Under the Technology and Product License, Cardium shall have the non-exclusive rights, subject to any Conflicting Third Party Contract (as provided below), to commercialize products it may select from time to time from Source One’s science based products, proprietary formulas and ingredients listed on Appendix A, and optionally incorporating SourceOne Technology (“ Schedule A Products ”), which may be branded and marketed as MedPodium or Cardium products or such other brand as Cardium or its sublicensee may determine.

(c) Under the Technology and Product License, Cardium shall have the exclusive rights, subject to any Conflicting Third Party Contract (as provided below), to commercialize up to five (5) products derived from or including SourceOne Technology for use as or in a Pharmaceutical and/or Medical Food (“ Schedule B Products ”), which may be branded and marketed as MedPodium or Cardium products or such other brand as Cardium may determine.

(d) Under the Technology and Product License, Cardium shall receive the exclusive rights, subject to any Conflicting Third Party Contract (as provided below), to commercialize up to five (5) products derived from or including SourceOne Technology (“ Technology Products ”), which may be branded and marketed as MedPodium or Cardium products or such other brand as Cardium may determine.

(e) Under the Technology and Product License, Cardium shall receive the exclusive rights to commercialize Joint Products as defined in Section 5 of this Agreement.

(f) Right of First Refusal of New Products. During the term of this Agreement, in the event SourceOne receives a bona fide offer from a third party to commercialize a SourceOne Technology (a “New Product”), and Cardium has not yet selected all five (5) Schedule B Products and all five (5) Technology Products, SourceOne shall promptly notify Cardium of the offer and whether or not it intends to negotiate with the offeror, making all relevant information related to the offer and SourceOne available to Cardium (“New Product and Terms Notice”). If Cardium does not designate in writing the New Product as a Schedule B Product or Technology Product, as the case may be, within (30) calendar days of receipt of the New Product and Terms Notice, SourceOne will be free to commercialize the New Product in accordance with the terms set forth in the New Product and Terms Notice.

(g) SourceOne represents and warrants that it has all legal rights to develop, make, have made, license, sublicense, use, sell distribute or otherwise commercialize all of the SourceOne Technology including but not limited to technology related to or useful in connection with the manufacture and/or commercialization of products listed on Appendix A. SourceOne further represents and warrants that it is able to procure and provide in commercial quantities and quality all of the SourceOne Technology listed on Appendix A and that SourceOne Technology can and will be provided to Cardium free and clear of any limitations or encumbrances that might reduce or impair Cardium’s ability to commercialize such technology in accordance with this Agreement.

(h) Cardium, in its sole discretion, may elect to purchase ingredients for any Licensed Product from SourceOne. SourceOne agrees to supply such ingredients to Cardium at the lowest possible cost that SourceOne can obtain such ingredients from third party suppliers (“Cost”) plus a profit margin (the “Margin”) that is the lesser of (i) seven percent (7%) or (ii) the lowest profit margin charged to third parties for similar or analogous products or ingredients. SourceOne represents and warrants that all ingredients supplied pursuant to this Agreement will comply with the relevant Product Standards.

(i) In the event that the current terms of a third party contract prevent SourceOne from being able to supply an ingredient to Cardium (a “Conflicting Third Party Contract”), SourceOne shall provide Cardium with a copy of such Conflicting Third Party Contract and will at Cardium’s request at any time thereafter use its commercially reasonable efforts to obtain an amendment of the agreement to allow for such supply to Cardium.

3. Technology and Product License Fee .

(a) In connection with SourceOne’s grant of the Technology and Product License as provided above, Cardium shall pay to SourceOne an upfront license fee (the “ Technology and Product License Fee ”) with good and valuable consideration in the form of shares of Cardium common stock representing Seven Hundred and Fifty Thousand Dollars ($750,000) (“ License Equity ”), the value per share to be calculated by the greater of (i) the fifteen (15) day volume weighted average trading price of Cardium common stock as of the date of the Closing, or (ii) $0.50 per share and subject to certain restrictions as set forth below.

(b) The License Equity shall be granted in accordance with the terms of the License Equity Stock Transfer Agreement attached as Exhibit 1 . Transfer of the License Equity is subject to the requirements of Rule 144 of the Securities Act of 1933 (“Rule 144”) and a lock up agreement between the parties such that no shares of the Licensed Equity shall be transferable to third parties for a period of six (6) months from the Closing as defined hereunder. The License Equity will held in escrow pursuant to the terms of the License Equity Escrow Agreement attached as Exhibit 2 . Upon notice of designation of each Joint Product (up to ten (10) Joint Products) the escrow agent will be instructed to release to SourceOne a number of License Equity shares with a Release Value approximately equal to the lesser of (i) One Hundred and Ten Thousand Dollars ($110,000) or (ii) the total Release Value of all remaining shares of License Equity held in escrow. Any License Equity still held in escrow after four years from the Closing will be divided evenly between SourceOne and Cardium with half of the remaining shares being released to SourceOne and the other half of the remaining shares being released to Cardium to cancel, hold, or sell at its election.

4. Equity Cross Investment

(a) Cardium will purchase an option to acquire a Fifteen Percent (15%) ownership interest in SourceOne (calculated on a fully-diluted basis) (the “ Option ”) at the Closing. Cardium will purchase the Option for the price of Seven Hundred and Fifty Thousand Dollars ($750,000) (the “ Option Consideration ”) and SourceOne will apply such amount to the purchase from Cardium of One Million Five Hundred Thousand (1,500,000) shares of Cardium’s common stock ( “Cross Investment Equity” ) , the value per share of the Cardium stock to be calculated by the greater of (i) the fifteen (15) day volume-weighted average closing price of Cardium stock as of the date of closing, or (ii) $0.50 per share. The sale and transfer of the Cross Investment Equity shall be subject to certain restrictions as set forth below.

(b) The Cross Investment Equity will be available for sale and trade subject to Rule 144 and the following schedule: (i) the first tranche, of 25% of the Cross Investment Equity (up to 375,000 shares), will be available for sale and transfer six (6) months from the Closing;

(ii) a second tranche of shares, consisting of 25% of the Cross Investment Equity (up to 375,000 shares), will be available for sale and transfer nine (9) months from the Closing; (iii) a third tranche of shares, consisting of 25% of the Cross Investment Equity (up to 375,000 shares), will be available for sale and transfer twelve (12) months from the Closing; and (iv) a fourth and final tranche of shares, consisting of 25% of the Cross Investment Equity (up to 375,000 shares), will be available for sale and transfer eighteen (18) months from the Closing. All Cross-Investment Equity may be used by SourceOne to fund ordinary Working Capital. All Cross Investment Equity will be granted in accordance with the terms of the Cross Investment Equity Stock Transfer and Option Purchase Agreement and deposited with an escrow agent pursuant to the Cross Investment Equity Escrow Agreement attached as Exhibit 3 and Exhibit 4 respectively.

5. Joint Products

(a) SourceOne will, as requested by Cardium, apply its commercially reasonable efforts to jointly develop with Cardium (i) up to five (5) products employing SourceOne Technology, through an appropriate FDA registration pathway with properly designed and powered clinical studies to secure or support relevant clinical claims (e.g. as a Medical Food or Pharmaceutical) and (ii) up to five (5) products employing SourceOne Technology for Nutraceutical channels (“ Joint Product ”) Each Joint Product will be designated by Cardium in writing, and may be branded and marketed as MedPodium or Cardium products or such other brand as Cardium may determine. Except as otherwise set forth in this Section 5, and the provision of information related to Prospective Products as provided under Section 9, Cardium shall be solely responsible for the Product Development of Joint Products, and shall own all regulatory applications, filings, approvals and licenses for each Joint Product. SourceOne will contribute Ninety Thousand Dollars ($90,000) (the “ SourceOne Capital Contribution ”) to the development of each Joint Product and shall use its commercially reasonable best efforts to advise and provide technical assistance to Cardium in the development of Joint Products.

(b) Upon designation of a Joint Product, Cardium will provide to SourceOne notice of such designation and a plan setting forth the tasks needed for the development of the Joint Product and the number of hours and party assigned to each task (“ Work Plan ”). SourceOne will reasonably cooperate as requested by Cardium in the development of the Work Plan. Cardium will also provide to SourceOne a budget for the projected Product Development Costs of the Joint Product, including the projected Product Development Contribution required for the development of the Joint Product (the “ Product Development Budget ”). SourceOne will have forty five (45) days after receipt of the Product Development Budget to provide to Cardium the SourceOne Capital Contribution for such Joint Product, provided that the total amount of all SourceOne Capital Contributions will not exceed the cumulative Release Date Value of all License Equity released from escrow. If at any time during the development of a Joint Product it is determined that additional capital is required in excess of that projected in the Product Development Budget, Cardium will provide to SourceOne a supplemental Product Development Budget (“ Supplemental Product Development Budget ”) including the amount of further capital required. SourceOne will have the option but not an obligation to contribute up to 25% of the capital required for any Excess Budget (“ Excess Budget Contribution ”), if SourceOne provides Cardium notice of intent to make such a contribution within thirty (30) days of receipt of the Product Development Budget (or Supplemental Product Development Budget) and does

contribute such capital within ninety (90) days of the date the capital is projected to be spent under the Product Development Budget (or Supplemental Product Development Budget), with the amount of any such contribution calculated into the SourceOne profit share as described below. If SourceOne fails to contribute 25% of the capital required for any Excess Budget of a Joint Product, SourceOne’s right to make any future Excess Budget Contribution for that Joint Product will be waived.

(c) “Profit” shall mean, with respect to sales of a Joint Product in a calendar quarter, all actual invoiced sales of a Joint Product sold by Cardium, its affiliates or their respective sublicensees in such calendar quarter less (i) the costs of goods sold as determined in accordance with GAAP; (ii) Marketing Costs allocable to sales of the Joint Product; (iii) reasonable general administrative and overhead costs allocable to the Joint Product; (iv) returns, recalls, breakage, uncollected debt, credits or allowances, if any, given or made in the ordinary course of business consistent with past practice; (v) sales, use, value added or other excise taxes, if any, imposed on the sale by any governmental entity; (vi) royalties owed by SourceOne to licensors of SourceOne owned or controlled intellectual property for the sale of such Joint Product by Cardium or its affiliates; and (vii) royalties owed by Cardium to licensors of Cardium owned or controlled intellectual property for the sale of such Joint Product by Cardium or it’s affiliates. Cardium shall pay to SourceOne’s licensor as SourceOne shall direct, the amounts described in clause (vi) above concurrently with SourceOne’s share of Joint Product Profit, and shall pay the amounts described in clause (vii) above directly to the licensors of Cardium.

(d) “Loss” shall mean, with respect to sales of a Joint Product in a calendar quarter, the amount that invoiced sales of a Joint Product sold by Cardium, its affiliates or their respective sublicensees in such calendar quarter are exceeded by (i) the costs of goods sold as determined in accordance with GAAP; (ii) Marketing Costs allocable to sales of the Joint Product; (iii) reasonable general administrative and overhead costs allocable to the Joint Product; (iv) returns, recalls, breakage, uncollected debt, credits or allowances, if any, given or made in the ordinary course of business consistent with past practice; (v) sales, use, value added or other excise taxes, if any, imposed on the sale by any governmental entity; (vi) royalties owed by SourceOne to licensors of SourceOne owned or controlled intellectual property for the sale of such Joint Product by Cardium or its affiliates; and (vii) royalties owed by Cardium to licensors of Cardium owned or controlled intellectual property for the sale of such Joint Product by Cardium or it’s affiliates.

(e) Within sixty (60) days after the end of each calendar quarter during the term of this Agreement, and within sixty (60) days following the expiration or termination of this Agreement, Cardium shall furnish to SourceOne a written report (the “Quarterly Product Report”) showing in reasonably specific detail as to each Joint Product and on a country-by-country basis, (i) the calculation of Profit or Loss; (ii) the withholding taxes, if any, required by law to be deducted with respect to such sales; and (iii) the exchange rates, if any, used in determining the amount of United States dollars. Within six (6) months after the end of the annual period, Cardium shall also provide to SourceOne a final annual report in which a “true-up” calculation reconciles any additional credits or debits arising during such calendar year that have not previously been accounted for, or were inaccurately accounted for, in the Quarterly Product Reports. All amounts in any such written report shall be expressed in United States

dollars. With respect to sales of Joint Products invoiced in a currency other than United States dollars, all such amounts shall be expressed both in the currency in which the distribution is invoiced and in the United States dollar equivalent. The United States dollar equivalent shall be calculated using the average of the exchange rate (local currency per US $1) published in The Wall Street Journal, Western Edition, under the heading “Currency Trading” on the last business day of each month during the applicable calendar quarter.

(f) Beginning in the first quarter in which Product Launch occurs and in each quarter thereafter, in the event of a Loss with respect to a Joint Product, and provided that SourceOne has not waived the right to make an Excess Budget Contribution for that Joint Product, SourceOne may elect to make a contribution (“Market Development Contribution”) of up to 25% of the amount of the Loss, the funds for which shall be provided to Cardium within thirty (30) days of SourceOne’s receipt of the Quarterly Product Report. If SourceOne fails to make a Market Development Contribution of the full 25% of any Loss, SourceOne’s right to make any future Market Development Contributions for that Joint Product will be waived. Any Loss not compensated for by a Market Development Contribution from SourceOne will be considered a Market Development Contribution by Cardium.

(g) Profits from a Joint Product will be divided 25% to SourceOne and 75% to Cardium, provided that no Excess Contribution was used or incurred for the Joint Product. If an Excess Contribution was used or incurred for the Joint Product and SourceOne contributed less than 25% of the total Joint Product Contribution to that Joint Product (e.g. as a result of opting out of or providing less than 25% of any Excess Budget or Market Development Contribution), SourceOne’s share of the Profits shall be adjusted to the percentage of the total Joint Product Contribution it had contributed for the Joint Product (the “Amended Profit Share Percentage”), which shall be subject to future adjustments in the event of any future quarterly Loss. Profits will be payable by Cardium sixty (60) days following the end of each financial quarter in which such Profits were realized. The Joint Product Contribution of each party will be calculated as of the last day of the quarter in which the Profits were realized.

(h) Upon the written request of SourceOne and not more than once in each calendar year, Cardium shall permit an independent certified public accounting firm of nationally recognized standing, selected by SourceOne and reasonably acceptable to Cardium, at SourceOne’s expense, to have access during normal business hours to such of the records of Cardium as may be reasonably necessary to verify the accuracy of the payment reports hereunder for any year ending not more than twenty four (24) months prior to the date of such request. If such accounting firm concludes that additional amounts were owed during the audited period, then the parties agree to meet and discuss the calculation of the additional amounts. If it is determined that Cardium still owes the additional amounts, then Cardium shall pay such additional amounts within thirty (30) days of the date SourceOne delivers to Cardium such accounting firm’s written report so concluding.

(i) All payments by a party to the other party under this Agreement shall be paid in United States dollars and all such payments shall be originated from a United States bank located in the United States and made by bank wire transfer in immediately available funds to such account as the payee shall designate.

(j) SourceOne shall exercise commercially reasonable care to maintain any licenses which cover a Joint Product, and or its sale, offer for sale, distribution, promotion, importation, exportation, or use, in good standing, and SourceOne shall promptly notify Cardium if any such license is terminated.

6. Intellectual Property .

(a) Limited Trademark License. Subject to the terms of this Agreement, SourceOne hereby grants to Cardium and any of its sublicensees the right to use any trademark owned, licensed, or controlled by SourceOne in connection with the promotion, Marketing, advertising, or commercialization of any Licensed Product.

(b) Product Names and Logos. All original trademarks, including names and logos created and used to market Licensed Product shall be exclusively owned by Cardium (“ Trademarks ”). Nothing contained in this Agreement shall grant to SourceOne any right, title or interest in the Trademarks, whether or not specifically recognized or perfected under applicable laws, and SourceOne irrevocably assigns to Cardium all such right, title, and interest, if any, in any Trademarks.

(c) Notification of Infringement and Enforcement. SourceOne shall notify Cardium of any infringement or misuse of the Trademarks of which SourceOne becomes aware. Cardium shall be solely responsible for prosecution and enforcement of any infringement of the Trademarks.

(d) Patents. Any invention created or conceived during the development of any Licensed Product will be the exclusive property of Cardium. SourceOne hereby assigns any such invention to Cardium and SourceOne agrees to execute any documents requested to effect and/or record such an assignment to Cardium, and to secure patent protection thereon in the United States or any foreign jurisdiction.

7. Non-Compete . During the term of this Agreement, SourceOne will not promote, sell, license, or sublicense, any product that competes with any Schedule B Product, Technology Product, or Joint Product.

8. Third Party Contractors . Cardium may select and contract with third parties to handle manufacturing, clinical trials, Fulfillment, Distribution, Marketing, Customer Service or any other task relating to any Licensed Product.

9. Associated Technical Cooperation and Assistance for Licensed Products . Upon the written request of Cardium in connection with a potential Licensed Product (“ Prospective Product ”), SourceOne shall provide Cardium with all requested technical cooperation and assistance to enable a full and complete assessment of: (i) the characteristics of the Prospective Product, including without limitation its ingredients and their sources, formulation, costs of production and potential uses relative to competitive products (“ Product Characteristics ”); (ii) the Prospective Product’s safety and risk profile relative to potential uses as reflected in any