LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is entered into as of this 29th
day of April, 2001, by and between Torbjorn Lundqvist ("Lundqvist"), and
Aviation Upgrade Technologies, Inc., a Nevada corporation ("AUT").
RECITALS
A. Lundqvist has a patent pending for an electronic tire valve cap
which signals inadequate tire pressure for use in airplanes, automobiles and
other vehicles with pneumatic tires (the "Product"). Lundqvist holds all the
rights necessary to manufacture, market and sell the Product.
B. AUT desires to acquire, and Lundqvist desires to grant to AUT, the
worldwide exclusive right to market, sell and distribute the Product together
with all improvements thereto, including, but not limited to, any related
products developed by Lundqvist, on the terms and subject to the conditions
specified in this Agreement.
C. AUT and Lundqvist anticipate that AUT and Lundqvist will enter into
a Manufacturing Agreement whereby Lundqvist will agree to manufacture the
Product and AUT will agree to purchase the Product from Lundqvist.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I
GRANT OF LICENSE
1.1 Grant of Exclusive License. The Lundqvist hereby grants, and AUT
hereby accepts, the sole and exclusive right to market, sell, distribute and
otherwise exploit the Product anywhere in the world.
1.2 Sublicense. AUT may sublicense any of the rights specified in
Section 1.1 of this Agreement only after (i) providing written notification to
Lundqvist of AUT's intention to sublicense; and (ii) receiving Lundqvist's
written consent for such sublicense. AUT may also sell the Product to other
distributors acting as the "master distributor".
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ARTICLE II
PAYMENT
2.1 Licensing Fees. For the rights specified in Section 1.1 and Section
1.2 of this Agreement, Lundqvist shall receive the following compensation:
(a) Licensing Fees. AUT shall pay to the Lundqvist, on a monthly basis
and within forty five (45) days of the end of each calendar month during the
License Period (hereinafter defined) and any renewals thereto, a licensing fee
equal to twelve percent (12%) of the gross profit ("gross profit" shall refer to
the difference between the cost of the goods sold and the selling price)
realized by AUT from the sale of the Product.
(b) Sublicensing Fees. In the event that AUT sublicenses the Product
during the License Period, including any renewals thereto, AUT shall pay to
Lundqvist, on a monthly basis and within forty five (45) days of the end of each
calendar month during the License Period and any renewals thereto, a
sublicensing fee in the amount of twelve percent (12%) of gross profits realized
by AUT's sublicense of the Product.
2.2 Development Costs.
(a) Reimbursement of Development Expenses. Concurrent with the
execution of this Agreement, AUT shall deliver or cause to be delivered to
Lundqvist a check in the amount of Six Thousand Four Hundred Ten Dollars and
thirty-four cents ($6,410.34) which shall be intended to reimburse Lundqvist for
research and development costs previously incurred by Lundqvist. Within thirty
(30) days of the execution of this Agreement, AUT shall also issue, as
development expenses, (i) fifty thousand (50,000) shares to Xx. Xxxxx Xxxxxxxx
(for his efforts in co-designing the product with Lundqvist); and (ii) one
thousand (1,000) shares to Xx. Xxxx Xxxx for the name "Air Alert Valve Cap".
(b) Ongoing Development Costs. During the License Period and any
renewals thereto, AUT shall pay any and all fees, expenses and costs related to
the development of the Product, including, but not limited to, any application
for patents and trademarks. Notwithstanding the foregoing, AUT's obligation to
pay such development costs shall not exceed Fifty Thousand Dollars ($50,000)
unless otherwise agreed to in writing by AUT and Lundqvist.
2.3 Sales and Marketing Costs. During the License Period, including any
renewals thereto, AUT shall pay any and all sales and marketing costs related to
the sale and marketing of the Product by AUT.
2.4 Sales Reports. AUT shall provide Lundqvist with a written report of
all Product sales in detail satisfactory to Lundqvist at the time AUT pays its
monthly licensing or sublicensing
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fee. In his sole and absolute discretion, Lundqvist shall have the right to
request additional detail or information, which AUT shall promptly provide,
pertaining to any such report.
2.5 Payment of Taxes. AUT shall pay all taxes that may be assessed on
the Product or any item derived therefrom by AUT or its use or distribution,
including personal property taxes, sales and use taxes and excise taxes.
2.6 Inspection of Books and Records. AUT shall keep complete, true and
correct books and records specifying the sales and other data, in detail
satisfactory to Lundqvist to calculate the licensing fees and any sublicensing
fees payable pursuant to this Agreement. Lundqvist shall have the right to
inspect, upon written request given at least five (5) business days prior to
such inspection, all financial books, records, reports and statements of AUT at
AUT's premises or wherever the same may be maintained, during normal business
hours. Lundqvist's right to inspect shall apply to its duly authorized attorney,
accountant, representative, agent or advisor.
ARTICLE III
PROPERTY RIGHTS
3.1 Title to Technology. Title to the Product is reserved to Lundqvist.
Lundqvist is, and shall remain, the sole and exclusive owner of the Product, to
the exclusion of all others. AUT shall take no acts inconsistent with the
foregoing.
3.2 Infringement or Litigation. AUT shall promptly notify Lundqvist of
any infringement of the licensed Product and any litigation instituted by any
person, firm, corporation, or governmental entity against AUT or Lundqvist
involving the licensed Product or the ownership thereof. In the event Lundqvist
undertakes the defense or prosecution of any litigation relating to the licensed
Product, AUT shall execute any and all documents and do any such act or thing as
may, in the opinion of counsel for Lundqvist, be necessary to carry out such
defense or prosecution.
3.3 Pricing. AUT shall have the right to establish the prices, charges
and terms governing the sale of the Product (collectively the "Sales Policies"),
but agrees to reasonably consider the advice of Lundqvist regarding the Sales
Policies. The Sales Policies in effect from the date of this Agreement until
further notice are set forth on Exhibit A attached hereto. AUT shall be
responsible for conforming all of its Sales Policies to all pertinent federal,
state, and local statutes, ordinances, rules, and regulations. At least sixty
(60) days prior to a change in the Sales Policies of AUT, AUT shall give written
notice to Lundqvist of such proposed change and shall specify therein the
effective date of such change. Lundqvist shall have thirty (30) days after
receipt of AUT's proposed changes to notify AUT, in writing, of any
recommendations regarding proposed pricing changes.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LUNDQVIST
Lundqvist hereby represents and warrants to AUT as follows:
4.1 Warranty of Title. Lundqvist has good title to the Product and the
right to license its use to AUT free of any proprietary rights of any other
party or any other encumbrance whatsoever. However, Lundqvist and AUT
specifically acknowledge that the application for the patent to the Product
filed by Lundqvist may not be granted for reasons beyond Lundqvist's control,
including, but not limited to, the United States Patent and Trademark Office's
("USPTO") determination that the patent infringes on another patent or where the
USPTO first issues a similar patent to an applicant who filed for the patent
prior to Lundqvist. In either instance, AUT may be forced to cease and desist
marketing and selling the Product.
4.2 Full Power and Authority. Lundqvist has full power and authority to
grant to AUT the license specified in Section 1.1 of this Agreement and
Lundqvist has not done or omitted to do and will not do or omit to do any act or
thing by license, grant or otherwise, which will or may impair or encumber any
of the rights granted in this Agreement or interfere with AUT's full enjoyment
of said rights. Lundqvist is not aware of any claims or litigation pending or
threatened, which will or might adversely affect any of the rights granted to
AUT.
4.3 Indemnification. Lundqvist will, at his expense and at AUT's
request, defend any claim or action brought against AUT to the extent it is
based on a claim that the Product infringes or violates any patent, copyright,
trademark, trade secret or other proprietary right of a third party, and
Lundqvist will indemnify and hold AUT harmless from and against any liability,
loss, damages, costs, fees or expenses, incurred by AUT, including, but not
limited to, fees of attorneys and other professionals; provided Lundqvist is
notified promptly in writing, and is given all necessary information and the
authority required for the defense and settlement of any such suit or
proceeding.
AUT shall save Lundqvist harmless from and against and shall indemnify
Lundqvist for any liability, loss, costs, expenses, or damages howsoever caused
by reason of any injury (whether to body, property, or personal or business
character or reputation) sustained by any person or to property by reason of any
act, neglect, default or omission of AUT or any of AUT's agents, employees, or
other representatives, and AUT shall pay all amounts to be paid or discharged in
case of an action or any such damages or injuries. If Lundqvist is sued in any
court for damages by reason of any of the acts of AUT, AUT or such other party
shall defend the resulting action (or cause same to be defended) at AUT's
expense and shall pay and discharge any judgment that may be rendered in any
such action; if AUT fails or neglects to so defend in such action, Lundqvist may
defend such action and any expenses, including reasonable attorneys' fees, which
Lundqvist may pay or incur in defending such action and the amount of any
judgment which Lundqvist may be required to pay shall be promptly reimbursed by
AUT upon demand by Lundqvist.
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ARTICLE V
TERM AND TERMINATION
5.1 License Period. The licenses granted in this Agreement shall remain
in force for a period of five (5) years from the date of this Agreement, unless
terminated prior to that time as provided in Section 5.4 of this Agreement
("License Period"). The term of this Agreement shall be renewed automatically
for succeeding periods of three (3) years each unless either party gives to the
other party written notice, at least one hundred eighty (180) days prior to the
expiration of any term, of the noticing party's intention not to renew the term
of this Agreement.
5.2 Expiration of License Period. Upon expiration of the License Period
or any renewals thereto, or other termination pursuant to this Agreement, AUT
shall immediately cease all activities with regard to the Product and all right,
title and interest of AUT in and to the Product shall terminate and vest in the
name of the Lundqvist.
5.3 Cause for Termination. The licenses granted in this Agreement shall
be terminated at the sole and absolute discretion of Lundqvist, with at least
thirty (30) days written notice to AUT, upon the occurrence of any of the
following:
(a) Expiration of the term specified in Section 5.1, or of any
optional renewal term in the absence of a subsequent renewal in
accordance with the terms of this Agreement;
(b) Refusal by, or failure of, AUT to pay any periodic license
fee or sublicense fee provided for in this Agreement;
(c) Cessation of business by AUT or any successor or assign to
whom the licenses granted in this Agreement have been legitimately
transferred;
(d) Refusal by, or failure of, AUT to provide the sales reports
as provided for by Section 2.2 of this Agreement;
(e) Sale or other disposition by AUT of a significant amount of
its assets, otherwise than in the ordinary course of business. The
term "disposition" includes every sale, disposition by lease,
exchange, merger, consolidation, reorganization, mortgage, or
hypothecation of assets, assignment, whether for the benefit of
creditors or otherwise, abandonment, destruction or disposition;
(f) Refusal by, or failure of, AUT to provide the Lundqvist
access to its books and records as provided for under Section 2.5 of
this Agreement; or,
(g) Commission by AUT of an event of default as specified in
Section 5.4.
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5.4 Events of Default. AUT shall have committed an event of default,
and this Agreement and the licenses granted hereunder shall terminate, if any of
the following occur:
(a) AUT attempts to use the Product in any manner contrary to
the terms of this Agreement;
(b) AUT fails or neglects to perform or observe any of its
existing or future obligations under this Agreement, including,
without limitation, the timely payment of any sums due Lundqvist
within thirty (30) days after written notice that the payment is
delinquent;
(c) AUT makes an assignment of AUT's business for the benefit
of creditors;
(d) A petition in bankruptcy is filed by or against AUT;
(e) A receiver, trustee in bankruptcy, or similar officer is
appointed to take charge of all or part of AUT's property;
(f) AUT is adjudicated a bankrupt; or
(g) AUT sublicenses the rights to the Product without complying
with the provisions of Article I, Section 1.2 of this Agreement.
ARTICLE VI
NON-DISCLOSURE OF PROPRIETARY INFORMATION
6.1 Non-Disclosure of Proprietary and Confidential Information By AUT.
In consideration and recognition of the fact that during the License Period and
any renewals thereto, AUT may have access to Proprietary Information (as used in
this Article VI, "Proprietary Information" shall mean and include, without
limitation, any and all data concerning the Lundqvist's services, designs,
methods, inventions, improvements, discoveries, designs whether or not
patentable, "know-how", training and techniques, and any other information of a
similar nature disclosed to AUT or otherwise made known to AUT as a consequence
of or through this Agreement during the term hereof. The term Proprietary
Information shall not include any information that (i) at the time of the
disclosure or thereafter is or becomes generally available to and known by the
public, other than as a result of a disclosure by AUT or any agent or
representative of AUT in violation of this Agreement, or (ii) was available to
AUT on a non-confidential basis from a source other than the Lundqvist, or any
of the Lundqvist's officers, directors, employees, agents or other
representatives) or other information and data of a secret and proprietary
nature which the Lundqvist desires to keep confidential, and that the Lundqvist
has furnished, or during the term will furnish such information to AUT, AUT
agrees and acknowledges (as used in this Article VI, AUT shall mean and include,
AUT and any subsidiaries, affiliates, related entities, officers, agents,
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shareholders, partners, principals and/or employees) that the Lundqvist has
exclusive proprietary rights to all Proprietary Information, and AUT hereby
assigns to the Lundqvist all rights that it might otherwise possess in any
Proprietary Information. Except as required in the performance of AUT's duties
to the Lundqvist, AUT will not at any time during or after the term hereof,
directly or indirectly use, communicate, disclose, disseminate, lecture upon,
publish articles or otherwise put in the public domain, any Proprietary
Information relating to the Lundqvist or the Lundqvist's services, Product or
business. AUT shall deliver to the Lundqvist any and all copies of Proprietary
Information in the possession or control of AUT upon the expiration or
termination of this Agreement, or at any other time upon request by the
Lundqvist. The provisions of this section 6.1 shall survive the termination of
this Agreement.
ARTICLE VII
INDEPENDENT CONTRACTOR STATUS
7.1 Status of AUT. AUT is not an employee of the Lundqvist for any
purpose whatsoever, but is an independent contractor. The Lundqvist is
interested only in the results obtained by AUT, who shall have the sole control
of the manner and means of performing under this Agreement. The Lundqvist shall
not have the right to require AUT to do anything which would jeopardize the
relationship of independent contractor between AUT and the Lundqvist. AUT does
not have, nor shall it hold itself out as having, any right, power or authority
to create any contract or obligation, either express or implied, on behalf of,
in the name of, or obligating the Lundqvist, or to pledge the Lundqvist's
credit, or to extend credit in the Lundqvist's name unless the Lundqvist shall
consent thereto in advance in writing. The AUT shall have the right to appoint
or otherwise designate suitable representatives (herein collectively referred to
as "AUT's Representatives"). AUT shall be solely responsible for AUT's
Representatives and their acts. AUT's Representatives shall be at AUT's own
risk, expense, and supervision, and AUT's Representatives shall not have any
claim against the Lundqvist for salaries, commissions, items of cost, or other
form of compensation or reimbursement, and AUT represents, warrants, and
covenants that AUT's Representatives shall be subordinate to AUT and subject to
each and all of the terms, provisions and conditions applying to AUT hereunder.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
8.1 Notices. All written notices or other written communications
required under this Agreement shall be deemed properly given when provided to
the parties entitled thereto by personal delivery (including delivery by
commercial services such as messengers and airfreight forwarders), by electronic
means (such as by electronic mail, telex or facsimile transmission) or by mail
sent registered or certified mail, return receipt requested, postage prepaid at
the following addresses (or to such other address of a party designated in
writing by such party to the others):
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If To Lundqvist: Torbjorn Lundqvist
--------------- 00000 Xxxxxx Xxx Xxxxx, #X000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: 949.499.4424
If To AUT: Aviation Upgrade Technologies, Inc.
---------- 00000 Xxxxxx Xxx Xxxxx, #X000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: 949.499.4424
All notices given by electronic means shall be confirmed by delivering to the
party entitled thereto a copy of said notice by certified or registered mail,
postage prepaid, return receipt requested. All written notices shall be deemed
delivered and properly received upon the earlier of five (5) days after mailing
the confirmation notice or upon actual receipt of the notice provided by
personal delivery or electronic means.
8.2 Assignment of Contract. AUT may assign or otherwise transfer its
rights pursuant to this Agreement, including the license granted hereunder, with
the prior written consent of the Lundqvist. Any attempt to make such an
assignment without the Lundqvist's consent shall be void.
8.3 Amendments. The Lundqvist and AUT agree that this Agreement shall
be modified only by a written agreement duly executed by persons authorized to
execute agreements on their behalf.
8.4 Waivers. No waiver by either party, expressed or implied, of any
breach of any term, condition or obligation of this Agreement by the other party
shall be construed as a waiver of any subsequent breach of that term, condition,
obligation or of any term, condition or obligation of this Agreement of the same
or different nature.
8.5 Attorneys' Fees. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees in addition to any other relief to which that party may be
entitled. This provision shall be construed as applicable to the entire
Agreement.
8.6 Severability. If any part of this Agreement is adjudged by any
court of competent jurisdiction to be invalid, that judgment shall not affect or
nullify the remainder of this Agreement, and the effect shall be confined to the
part immediately involved in the controversy adjudged.
8.7 Governing Law. This Agreement shall be deemed to have been made in
the State of California, and shall be construed pursuant to the laws of the
State of California.
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8.8 Complete Agreement. This Agreement sets forth the complete
understanding of the parties relating to the subject matter hereof and
supersedes all prior written and oral agreements and understandings. This
Agreement and any provision hereof may be amended, modified or waived only by an
instrument in writing signed by a duly authorized representative of the party
against whom such amendment, modification or waiver is sought to be enforced. In
the event of any conflict between the provisions of this Agreement and the
provisions of any document other than a modification hereof, this Agreement
shall prevail.
8.9 Disclaimer. The AUT acknowledges that it has conducted an
independent investigation of the Agreement being offered to it by the Lundqvist
and recognizes that the business venture contemplated by this Agreement involves
certain business risks and that the success or failure of the AUT will be
largely dependent upon the ability and resourcefulness of the AUT. The Lundqvist
expressly disclaims the making of, and the AUT hereby acknowledges that it has
not received, any warranty or guarantee express or implied as to the potential
volume, profits, or success of the business venture contemplated by this
Agreement. The Lundqvist shall not, by virtue of the approval or advice provided
to the AUT, assume responsibility or liability to the AUT or to any third person
or party for the success of or failure of AUT's business. The AUT acknowledges
that he received a copy of this Agreement for his review at least three days
prior to the date of execution.
8.10 Subject Headings. The subject headings of the paragraphs of this
Agreement are included solely for purposes of convenience and reference only,
and shall not be deemed to explain, modify, limit, amplify or aid in the
meaning, construction or interpretation of any of the provisions of this
Agreement.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.12 Interpretations and Definitions. In this Agreement, whenever the
context so requires, the gender includes the neuter, feminine and masculine and
the number includes the singular and the plural and the words "person" and
"party" include individuals, corporations, partnerships, firms, trusts or
associations. All references to dollars shall mean United States Dollars.
8.13 Custom. All parties to this Agreement shall have the right at all
times to enforce the provisions contained in this Agreement, and in all other
agreements and documents required or provided for herein, in strict accordance
with the terms thereof, notwithstanding any custom or practice in the area or
any conduct or continuing conduct on the part of any party hereto to the
contrary unless expressly agreed to in writing. The failure of any party hereto,
at any time or from time to time, to enforce any of its rights under any
provision herein, strictly in accordance with the same, shall not be construed
as varying the terms hereof, in any
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way or manner, contrary to the specific provisions of this Agreement or be
construed as modifying or waiving such provision.
8.14 Force Majeure. No party shall be liable for any failure or delay
in performing its obligations hereunder due to any external cause beyond its
reasonable control, including without limitation, fire, accident, acts of the
public enemy, war, rebellion, labor dispute or unrest, insurrection, sabotage,
transportation delays, shortage of raw materials, energy or machinery, acts of
God, government or the judiciary, or other matters beyond the reasonable control
of a party.
8.15 ADVICE OF COUNSEL. EACH PARTY HAS BEEN ADVISED OF AND UNDERSTANDS
THE TERMS AND CONDITIONS OF THIS AGREEMENT. THIS AGREEMENT HAS BEEN FREELY AND
VOLUNTARILY ENTERED INTO AND EXECUTED BY THE PARTIES, EACH OF THE PARTIES HERETO
BEING DULY REPRESENTED BY COUNSEL OR HAVING THE BENEFIT OF ADVICE OF COUNSEL.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
signed on the date first written above.
By: /s/ Torbjorn B. Lundqvist
--------------------------
Torbjorn B. Lundqvist
AVIATION UPGRADE TECHNOLOGIES, INC.,
a Nevada corporation
By: /s/ Xxxxxxx Xxxxxx
------------------
Its: President
By: /s/ Xxxx Xxxxxxxx
-----------------
Its: Vice President
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