LICENSE AGREEMENT
THIS AGREEMENT, by and between, Naturol Limited, maintaining principal
offices at Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xx. Xxxxxxx, Xxxxxx XX0 0XX,
("Licensor") and Naturol, Inc, a Nevada corporation having an office at 0000
Xxxxx Xxxxxxxxx Xxx, Xxx Xxxxx, Xxxxxx 00000 (hereinafter "Licensee") is
entered into as of August 21, 2001.
RECITALS:
A. WHEREAS, Xxxxx Xxxxx ("Inventor") is the inventor of a Process and
Apparatus for Preparing Extracts and Oils from Natural Plants and Other
Matter, a Process for Extracting Fixed and Mineral Oils and Refining of Crude
Extracts employing HFC134a, such inventions covered by or to be covered by
PCT Patent Applications as herein after defined ("Invention(s)");
B. WHEREAS, Xxxxx Xxxxx has assigned his rights in the said Inventions, the
PCT Patent Applications covering same and all corresponding National Stage
Applications, and improvements thereto to Licensor;
C. WHEREAS, Xxxxx Xxxxx represents that he had and has the right to assign
the Inventions and PCT Patent Applications and all National Stage
Applications corresponding thereto and improvements thereto to Licensor and
Licensor represents that it has the right to grant licenses under the
assignment to Licensee;
D. WHEREAS, Licensee desires to secure exclusive rights and licenses to
practice the invention in the United States, Canada and Mexico including, but
not limited to, the right to make, have made, use, sublicense, offer to sell
and sell the Invention and products made using the Invention throughout the
United States; and
E. WHEREAS, Licensor is willing to grant these rights and licenses upon the
terms and conditions recited below.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
a) "PCT Patents" shall mean
1) PCT Patent Application Serial Number WO 01/10527 filed 4 August 2000,
based on British Patent Application 9918436.8 filed 5 August 1999, now GB
Patent 2 352 724, and
2) PCT Patent Application Serial Number WO 00/43471 filed 20 January 2000,
based on British Patent Applications 9901617.2 filed 25 January 1999 and
9905054.4 filed 5 March 1999,
3) A PCT Patent Application (or National stage applications claiming
priority thereto) based on British Patent Application GB200106972.3, and
4) any subsequent patent applications filed by Xxxxx Xxxxx or Licensor
related thereto, a copy of said patent applications and evidence of the
filing of said patent applications enclosed as Attachment A hereto.
b) "Licensed Patent(s)" shall mean any patent Applications filed in the
United States, Canada or Mexico corresponding to the PCT Patents, and any
United States, Canadian and Mexican Patents issuing there from, any
divisional, continuation, continuation-in-part, re-examination or reissue
patents based thereon and any Improvement thereto presently existing or
developed in the future.
c) "Improvements" shall mean any betterments or modifications to the
Inventions developed by Inventor or Licensor, or which Inventor or Licensor
has a right to manufacturer, use or sell.
d) "Invention" shall mean the inventions described or claimed in the PCT
Applications and the Licensed Patents, including but not limited to all
product, methods, compositions and procedures covered by, or made in
accordance with the teachings of the Licensed Patents or which are covered by
the claims of the Licensed Patent.
e) "Commercial Sales" shall mean sales by Licensee or Sublicensees of
products claimed in, or produced using methods claimed in, the Licensed
Patents to third parties.
f) "Licensed Products" shall mean all products produced using of the
Invention claimed in the Licensed Patents by Licensee, or Sublicensees
thereof, for the benefit third parties
g) "Licensed Services" shall mean all uses of the Invention claimed in the
Licensed Patents by Licensee, or Sublicensees thereof, for the benefit third
parties.
h) "Net Sales" shall mean:
1) Licensee's gross xxxxxxxx with respect to Commercial Sales by Licensee
or Sublicensee, or Licensed Services provided by Licensee or Sublicensee,
subsequent to the effective date of this Agreement less (a) sales tax
directly imposed upon said sales, (b) outbound transportation charges, (c)
prompt payment discounts actually allowed, (d) actually allowed returns, and
(e) allowances actually credited for damaged goods, or
2) royalties or payments received by Licensee from third parties based on
research and/or development activities or the manufacture, use or sale of the
products or services or Licensed Products by said third parties.
i) "Territory" shall mean the United States, Canada and Mexico.
j) "License Year" shall mean each twelve (12) month period, beginning on
the effective date of this Agreement first written above and thereafter on
the anniversary date thereof.
k) "Payment Period" shall be the three (3) month periods starting with
January 1, April 1, July 1 and October 1 of each year.
l) "Strategic Partner" shall mean an organization which enters into a
contract with Licensee for the development and/or commercialization of
Licensed Products, said contract including the payment to Licensee, upon
execution of said contract or on completion of a defined milestone within one
year of execution, of at least one million dollars ($1,000,000).
m) "Licensed Trademark" shall mean Naturol for use on the Licensed Product
and in conjunction with the marketing and sale of the Licensed Product.
n) "Sublicensee" shall mean a party contracted to assume some or all of the
rights and obligations of Licensee.
o) "Confidential Information" shall mean all information, know-how and
inventions (including, but not limited to, patent applications) disclosed by
Licensor to Licensee or Licensee to Licensor pursuant to this Agreement
which relate to the Invention, technical service and existing and potential
customers but not including anything which the receiving party can show by
clear and convincing evidence (i) is already known to the recipient without
restriction on its use or disclosure; (ii) is or becomes public information
in a bona fide manner; (iii) is lawfully obtained by the receiving party from
a third party without an obligation of confidentiality: or (iv) is disclosed
with the prior written approval of the other party.
p) "Effective Date" shall mean the last date set forth on the signature
page of this Agreement.
2. GRANT OF LICENSOR'S RIGHTS IN INVENTION
Licensor gives and grants to Licensee an exclusive power, authority and
license throughout the United States, Canada and Mexico to manufacture, have
manufactured for it, assemble, use, offer for sale and/or sell the Invention
covered by the Licensed Patents, together with the right to sublicense
others. Licensor also gives and grants to Licensee an exclusive power,
authority and license throughout the United States, Canada and Mexico to the
Licensed Trademark and the good will related thereto. Licensor shall also
provide consulting services regarding the Invention as addressed herein
below.
3. CONSIDERATION
A. In consideration of the licenses granted herein Licensee shall
deliver to Licensor three hundred and sixty thousand dollars ($360,000),
which shall constitute the first Annual Compensation payment, and shall pay
to Licensor Annual Compensation, as further defined herein below. Starting
with the first anniversary of this Agreement, the Annual Compensation for
each License Year until a First Commercial Sale of Licensed Product, and for
three years thereafter, shall, as a minimum, be three hundred and sixty
thousand dollars ($360,000), payable quarterly as set forth below. The Annual
Compensation may be reduced to the extent of a like amount of royalties paid
to Licensor during each Annual Period. After License Year 5 the Annual
Compensation to Licensor shall consist solely of royalties on Licensed Sales
or Licensed Services
B. Licensee will pay Licensor an eight percent (8.0%) Royalty based on Net
Sales of the Licensed Products or Licensed Services made, used, sold or
offered for sale by Licensee or any Sublicensee in a country where Licensed
Patents covering said Licensed Products or Licensed Services are still
pending or in effect. In addition, a two percent (2.0%) Royalty shall be
paid based on the use by Licensee or any Sublicensee of the Licensed
Trademark. In the event Licensee shall grant sublicenses hereunder, said
sublicense shall include an obligation that Licensor shall be entitled to the
same royalties based on the sales of the Sublicensee as set forth above and
said Sublicensee shall agree to the obligations relating thereto set forth in
this Agreement. Any royalties in excess thereof shall belong to Licensee. A
product shall be considered "sold" for purposes of calculating Royalties when
payment is received from Licensee's or Sublicensee's customer. When Licensee
takes back a product upon which a license Royalty has been paid, the Royalty
paid to Licensor shall be a credit against Royalties payable to Licensor in
the next succeeding Payment Period.
C. At least ninety thousand dollars ($90,000), constituting the pro rata
portion of the Annual Compensation, and any additional Royalty payments then
due shall be paid to Licensor within forty -five (45) days following the end
of each Payment Period with the Reports as set forth below.
D. Licensor shall make available to Licensee the services of all of its
employees and consultants to assist in the further development and
commercialization of Licensed Products. All prior approved out of pocket
expenses incurred by Licensor, or Licensor's employees or consultant, in
providing such services shall be reimbursed by Licensee upon delivery of
receipts for such expenses incurred. No additional compensation shall be due
to Licensor for providing said services.
4. COMMERCIALIZATION OBLIGATIONS
If Licensee, or any sublicensee or Strategic Partner(s), decides not to
manufacture, market or sell, or to cease the manufacture, marketing or sale
of the Licensed Product without the bona fide intent to resume said
manufacture market or sale, or to enter into new sublicenses or strategic
agreements, for a period in excess of one (1) year Licensor may terminate
this Agreement and the licenses granted herein. In such an instance, all
rights granted to Licensee shall revert back to Licensor.
5. USE OF THE LICENSED TRADEMARK AND OTHER TRADEMARKS
A. Licensee has the exclusive right to use and register with the U.S.,
Canadian and Mexican Patent and Trademark Office any trademark other than the
Licensed Trademark, or a xxxx confusingly similar thereto, which it selects
in the advertising, promotion, marketing and sale of the Licensed Product.
B. The rights in the Licensed Trademark granted hereunder are conditioned
upon Licensee's full and complete compliance with the marking provisions of
the trademark laws of the United States and any other relevant foreign
countries. The Licensed Products, as well as all promotional, packaging, and
advertising material related thereto, shall include all appropriate legal
notices as required by Licensor.
C. The Licensed Products shall be of a quality no less than specified by
Licensor.
D. If the quality of the Licensed Products falls below such agreed to
quality, Licensee shall use its best efforts to restore such quality. In the
event that Licensee has not taken appropriate steps to restore such quality
within thirty (30) days after notification by Licensor, Licensor shall have
the right to require that the Licensee cease using the Licensed Trademarks.
E. At least every six (6) months during the term of this Agreement,
Licensee shall make available to Licensor representative samples of each of
the Licensed Products bearing the Licensed Trademark for evaluation and
approval of the quality thereof. In addition, at least thirty (30) days
prior to the introduction of each new Licensed Product bearing the Licensed
Trademark and each new labeling or advertisement for Licensed Product bearing
the Licensed Trademark, Licensee shall make available to Licensor
representative samples of each such new Licensed Product, and provide samples
of labeling and advertising for approval by Licensor. Procedures for review
and approval of new uses of the Licensed Trademark and new advertising or
labeling shall be established by mutual agreement of the parties. No new
labeling or advertising bearing the Licensed Trademark shall be released or
used by Licensee until approved by Licensor, which approval shall not be
unreasonably withheld.
F. Licensee acknowledges Licensor's exclusive rights in the Trademark and,
further, acknowledges that the Trademark is unique and original to Licensor
and that Licensor is the owner thereof. Licensee shall not, at any time
during or after the effective Term of the Agreement, dispute or contest,
directly or indirectly, Licensor's exclusive right and title to the
Trademarks or the validity thereof. Licensee agrees that its use of the
Licensed Trademarks inures to the benefit of Licensor, that the Licensee
shall not acquire any rights in the Licensed Trademarks as a result of this
license, and that such use by Licensee is evidence of continued use by
Licensor.
G. Licensor will take all action reasonable necessary to apply for
registration of the Licensed Trademark, as a minimum, in the United States,
Canada and Mexico and the European Community, file additional applications
for registration of the xxxx for new uses and, subject to the terms herein,
maintain any registration of the Licensed Trademark.
H. Licensor will have the right, but not the obligation to enforce the
Licensed Trademark against infringers. If Licensor and Licensee agree to
jointly pursue infringers, they will share all cost and split any damages
awarded appropriately. If Licensor refuses to pursue infringers, Licensee
may do so at its cost and Licensor will cooperate as necessary to allow
Licensee to bring such action, all at Licensees cost. Licensors refusal to
pursue infringers will not be a basis for termination of this Agreement.
6. REPRESENTATIONS AND WARRANTEES
Licensor, makes no representations or warranty with respect to the
validity of any patent, trademark, or copyright that may issue or be granted
covering the Licensed Product or the Licensed Trademark or that the
manufacture, use or sale of the Licensed Product or the use of the Licensed
Trademark will not infringe the rights of others. However, Licensor has no
knowledge that would lead it to believe that the Licensed Patent is invalid
or the manufacture, use or sale of the Licensed Product or use of the
Licensed Trademark would infringe the rights of any third parties.
7. RECORDS, ROYALTY PAYMENTS AND INSPECTION
A. For as long as Licensor is receiving Royalties, Licensee shall keep
accurate records, certified by it, showing the number of Licensed Product
sold by Licensee or its Sublicensees. As a part of these records, Licensee
will prepare a statement within forty-five (45) days of the end of each
Payment Period showing the number of Licensed Product sold by Licensee or
sublicensees during the immediately preceding Payment Period and will forward
a copy of the statement to Licensor, together with any Royalty payment as may
be owed for the sale of Licensed Product during the preceding Payment Period.
B) Licensee agrees that it will, on reasonable notice, during regular
business hours, permit an independent certified public accountant or
knowledgeable auditor, who is acceptable to Licensee, to have access to its
records pertaining to the sale of Licensed Products to audit and verify the
accuracy of the Royalty reports submitted by Licensee and the Royalty
payments made by Licensee pursuant to this Agreement. Such independent
certified public accountant shall report to Licensor only its conclusions
regarding the accuracy of submitted royalty reports and the underlying basis
therefor. The cost of any such audit shall be borne by Licensor, and only
one such audit shall be made in any one fiscal year. Any information
obtained from an audit shall be kept confidential and used only for the
purpose of determining the accuracy of such royalty reports and for enforcing
payment of Royalties due and payable to Licensor. Licensee's obligation to
maintain records of sales of Licensed Products for the purposes of an audit
shall extend only for a period of three (3) years from the date of sale.
This obligation shall not effect the statutory reporting requirements of
Licensee to Licensor as one of its equity holders.
8. TERM AND TERMINATION OF AGREEMENT
A. If not terminated sooner pursuant to section 8B below, the license to
the Licensed Patent shall last until the expiration date of the last Licensed
Patent covering Licensed Products or Licensed Services or a declaration by
the Court, not overturned in any timely filed appeals, that the Licensed
Patent is invalid. The License to the Licensed Trademark shall last as long
as the Licensee or any Sublicensee continues to use the Licensed Trademark in
accordance herewith.
B. Licensor may terminate this Agreement for a failure or default on the
part of the Licensee to perform an obligation or duty required herein, or
enforce such obligation on any Sublicensee, but Licensee or Sublicensee must
first be given thirty (30) days advance written notice and the opportunity
and time, as may be reasonably required, to correct such failure or default.
9. RIGHTS OF PARTIES UPON TERMINATION
A. Upon cancellation or termination of this Agreement for any reason,
Licensee, or any Sublicensee, may complete and sell Licensed Products, or
complete the delivery of Licenses Services, which are in the process of
manufacture or delivery and can be completed within six (6) months following
notice of termination or which have been manufactured, provided only that
Licensee shall be required to pay Licensor those Royalties and/or dividends
which would otherwise be owed if this Agreement were still in force.
B. Termination of this Agreement shall be without prejudice to Licensee's
right to recover any advance payment of Royalties or fees made.
10. INFRINGEMENT CLAIMS
A. Should any action be commenced against Licensee that alleges that the
Licensed Product infringes the claims of any patent, Licensor shall have the
right, but shall not be obligated, to defend such action. If Licensor
decides not to defend such action, Licensee shall have the option, at its
sole expense, to defend and the right to join Licensor in the suit as a
codefendant.
B. If, by virtue of a judgment against it or as a result of a good faith
settlement of a bona fide claim against it, Licensee is required to pay a
Royalty to a third party on the basis of a patent claim covering the Licensed
Product or Licensed Services and Licensor still has a validly existing patent
covering Licensed Products or Licensed Services, any Royalties due to
Licensor shall be reduced by the Royalties paid to the third party. If
Licensor has no such valid patent, then Royalties due to Licensor shall
cease. However, this shall not effect other Compensation payable to
Licensor.
11. THIRD PARTY INFRINGEMENT
A. Should a third party infringe the Licensed Patent, Licensee shall have
the first right to pursue said infringers. If Licensee decides not to
prosecute infringers, then Licensor shall have a right to prosecute
infringers and to join Licensee in the suit. In regard to actions against
third parties, by Licensee, Licensee may retain any money collected through
such action which is based on lost sales or profits of Licensee and Licensee
shall pay to Licensor the Royalties he would have earned on those lost sales
or profits.
B. Each party agrees, at the request of the other party, to cooperate and
assist in the prosecution or defense of any infringement actions. Reasonable
out-of-pocket expenses incurred in connection with any such requested
cooperation and assistance shall be paid as an expense of the suit within
thirty (30) days after receipt of a written request for payment, which shall
itemize the expenses and be accompanied by documentation supporting such
expenses.
12. ASSIGNABILITY OF AGREEMENT AND LICENSED PATENTS AND
SUBLICENSING OF LICENSED PATENTS
A. This Agreement is binding upon and shall inure to the benefit of both
Licensor, Licensee and their successors and assigns.
B. This Agreement and the licenses granted may not be assigned or
sublicensed by Licensee without consent of Licensor, which shall not be
unreasonably withheld. Any assignment shall be conditioned upon Licensee
giving Licensor reasonable prior written notice thereof and the assignee's
written agreement with Licensee to be bound by the terms and conditions of
this License Agreement. Licensor may assign its rights to receive Royalties
under this Agreement by notifying Licensee of such assignment and providing
Licensee with a copy of such assignment.
13. NOTICES, CONSTRUCTION AND ENTIRETY OF AGREEMENT
A. All notices required pursuant to this Agreement shall be in writing and
shall be sufficient if sent by first class registered or certified mail and
addressed to the party to whom it is to be given as follows:
To Licensee:
Naturol, Inc.
________________
Las Vegas, Nevada
Attention:
To Licensor:
Naturol Limited
Xxxxxxx Xxxxx,Xxxxx Xxxxxx
Xx. Xxxxxxx, Xxxxxx XX0 0XX,
Attention:
The date of postmark shall be the date of the notice. All Royalty payments
shall be made by first-class mail to ___________________________________ at
the above address.
B. The parties agree that any disputes that arise as a result of
performance or nonperformance under this Agreement shall, prior to litigation
thereof, be submitted to arbitration before an internationally recognized
organization established for arbitration purposes and at a location mutually
agreeable to the parties.
C. This Agreement shall be interpreted in accordance with the laws of the
State of Nevada and shall be binding on each of the legal representatives of
the parties hereto. It may not be modified or extended except by written
document, signed by an authorized officer or representative of Licensor and
Licensee.
D. This Agreement, and the documents attached hereto, constitutes the
complete agreement between Licensor and Licensee. No modifications shall be
binding upon Licensor or Licensee against whom enforcement of such
modification is sought unless it is made in writing, referring to this
Agreement and is signed on behalf of both Licensor and Licensee by one of its
officers or related principal(s).
E. If any obligation of this Agreement is in conflict with the law or
public policy in a jurisdiction where challenged, the validity of the entire
Agreement will not be affected by the omission of the conflicting
requirement.
NATUROL LIMITED NATUROL, INC.
By: /s/ Xxxx XxXxxxx By: /s/ Xxxxx Xxxx
Name: Xxxx XxXxxxx Name: Xxxxx Xxxx
Director Director
Dated: 8/17/01 Dated:8/20/01
Witnessed By: /s/ Xxxxx Xxxxxx Witnessed By:/s/ Xxxx Xxxxx
Name: Xxxxx Xxxxxx Name: Xxxx Xxxxx
