EXHIBIT 10.14
AGREEMENT BETWEEN
QUEST PRODUCTS CORPORATION
AND
XXX X. XXXX
Quest Products Corporation ("Quest") and Xxx X. Xxxx ("Xxxx") by this
document set forth the material terms of the agreement that they have reached in
connection with the sale and assignment by Xxxx to all right, title and interest
in U.S. Patent No. 5,859,419 to a corporation to be formed entitled Xxxx
Technologies, Inc. Quest and Xxxx, by setting forth their signatures below,
expressly state that they intend that this document set forth the material terms
of a mutually binding agreement between them although the parties intend and
hereby agree forthwith to enter into a more formal legal document which sets
forth the terms hereof and such other terms as both Quest and Xxxx shall
mutually agree to be bound by in writing. However, until such time as the
parties enter into the long form agreement, this document shall be deemed a
mutually binding and complete agreement between the parties.
The material terms of the agreement between Quest and Xxxx are as follows:
1. Quest shall, within five (5) business days from the date hereof,
cause to be formed a corporation entitled Xxxx Technologies, Inc. The stock of
Xxxx Technologies, Inc. shall be owned sixty-five percent (95%) by Quest and
thirty-five percent (35%) by Xxxx.
2. Within five (5) business days after the formation of Xxxx
Technologies, Inc. Xxxx shall sell and assign all right, title and interest in
U.S. Patent No. 5,859,419 ("the Patent") to Xxxx Technologies, Inc. and shall
execute an assignment of patent document on the appropriate forms to be recorded
in the United States Patent and Trademark Office.
-1-
3. Xxxx shall be entitled to receive two percent (2%) of the gross
revenues of Xxxx Technologies, Inc., provided, however, that Xxxx'x right to the
two percent (2%) of gross revenues shall not be exclusive of his right to
dividends in proportion to his share holdings, i.e, thirty-five percent (35%).
The parties acknowledge that if Xxxx Technologies. Inc. elects to simply
sub-license the patent the corporate expenses shall be de minimus and the
dividends to Xxxx shall approximate thirty-five percent (35%) of the sub-license
fees. Xxxx Technologies, Inc. shall account to Xxxx at least quarterly in the
form of income and expense statements.
4. As further consideration for entering into this agreement, Xxxx
shall receive options to purchase Common Stock in Quest, exercisable for fIve
(5) years from delivery, as follows:
(i) Within five (5) days of the execution of this agreement, Quest
shall deliver to Xxxx options to purchase 5,000,000 shares of the Common Stock
of Quest at the option exercise price of five cents ($.05) per share;
(ii) Upon Xxxx Technologies, Inc. achieving $10,000,000 in
cumulative revenues, Quest shall deliver to Xxxx options to purchase an
additional 5,000,000 shares of Common Stock of Quest at the option exercise
price of seven cents ($.O7) per share and;
(iii) Upon Xxxx Technologies, Inc. achieving the sum of $30,000,000
in cumulative revenues, Quest shall deliver to Xxxx options to purchase
10,000,000 shares of the Common Stock of Quest at the option exercise price of
ten cents ($.1Q) per share.
-2-
5. Quest will have until May 30, 2001 to raise a minimum of $1,000,000
(One Million Dollars) needed for financing the further research, development and
commercialization of the business which is covered by the Patent.
6. Quest will have until December 31, 2002 to secure bona fide
third-party revenue-generating agreements for the business covered by the
Patent, which agreements shall be subject to the written approval of Xxxx and
Quest, said approval not to be unreasonably withheld.
7. Quest agrees that a business plan and schedule shall be completed
no later than August 2, 2001 for the further research, development and
commercialization of the business covered by the Patent, which business plan and
schedule shall be subject to the written approval of Xxxx and Quest, said
approval not to be unreasonably withheld.
8. As soon as Xxxx Technologies, Inc. achieves $100,000,000 in
cumulative revenue, Xxxx shall be entitled to one (1) seat on the Board of
Directors of Quest
9. As soon as Xxxx Technologies, Inc. achieves $200,000,000 in
cumulative revenue, Xxxx shall be entitled to lead a design-engineering center
in California which shall be financed by Xxxx Technologies, Inc.
10. Xxxx Technologies, Inc., notwithstanding the respective voting
positions of both Quest and Xxxx, shall require the prior approval of Xxxx for
any sale or merger of Xxxx Technologies, Inc.
11. In the event that Quest fails to raise the required capital for
this project as set forth in Paragraph 5 above, or Quest fails to secure revenue
generaUng agreements as set forth in Paragraph 6 above, or fails to complete a
business plan and schedule
-3-
as set forth in Paragraph 7 above, Xxxx shall be entitled to purchase Quest's
sixty-five percent (65%) interest in Xxxx Technologies, Inc. for the sum of
$10.00.
12. Xxxx Technologies, Inc., if necessary, shall have the right to
sub-license rights to this agreement and to Patent in connection with any
revenue generating contracts contemplated in Paragraph 6 above.
13. Without the written consent of Xxxx, there shall be no sale,
hypothecation or encumbrance of U.S. Patent No. 5,859,419, which Patent shall
remain the property of Xxxx Technologies, Inc., free and clear of any liens or
encumbrances and subject only to the buy-back provisions of Paragraph 11 above
and the sub-licensing provisions of Paragraph 12 above.
14. Any dispute between the shareholders of Xxxx Technologies, Inc.
shall be subject to the exclusive jurisdiction of the U.S. District Court of the
Eastern District of California, Sacramento Division, which shall exercise
diversity and/or federal question jurisdiction. In the event that court lacks
jurisdiction or abstains, the Superior Court for the State of California, County
of Sacramento, shall have exclusive jurisdiction. In either event, the laws of
the State of California governing closely held corporations shall apply.
AGREED TO BY THE PARTIES.
QUEST PRODUCTS CORPORATION
November 2, 2000 By:/S/:
----------------------------------------
Xxxxxx X. Xxxxxxxxx, Chairman and CEO
November 2, 2000 /S/:
----------------------------------------
Xxx X. Xxxx
-4-
