GEYSER PRODUCTS, LLC
Sublicense Agreement
1. Introduction.
This Sublicense Agreement (the "Agreement") is made between
GEYSER PRODUCTS, LLC (referred to as "Licensor"), a Delaware
limited liability company doing business at 0000 X. XxXxxxxxx,
Xxxxx 000, Xxxx, XX 00000, and STAR BEVERAGE, INC. (referred to
as "Licensee"), a Nevada corporation doing business at 0000 X.
Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000.
2. The Property
The Property refers to all proprietary rights, including but not
limited to copyrights, trade secrets, business methods, formulas,
research data, know-how and specifications related to Geyser as
well as any trademark rights and associated good will.
3. Licensed Products.
Licensed Products are defined as any products or services sold by
Licensee that incorporate the Property.
4. Grant of Rights.
Licensor grants to Licensee a non-exclusive, non-transferable
license to make, use and sell the Property solely in association
with the manufacture, sale, use, promotion or distribution of the
Licensed Products.
5. Sublicense.
Licensee may not sublicense the rights granted pursuant to this
agreement.
6. Reservation of Rights.
Licensor expressly reserves all rights other than those being
conveyed or granted in this Agreement.
7. Territory and Market.
The rights granted to Licensee are worldwide (the "Territory")
and for all markets and industries.
8. Term.
This Agreement shall commence upon the latest signature date,
(the "Effective Date") and shall extend for a period of one (1)
year (the "Term"). The Term shall be automatically extended for
additional one year renewal periods (the "Automatic Renewal
Term"), provided that:
(a) either Party may prevent such automatic renewal by delivery
of written notice to the other Party at least thirty (30) days
prior to the expiration of the then current Term; and
(b) Licensee has, within one (1) year of Effective Date, offered
Licensed Products for sale; and
(c) Licensee has sustained gross sales from Licensed Products for
a period of one (1) year or more immediately preceding the end
the then effective term (either the Term or the Automatic Renewal
Term) of not less than $2,000.000 per year.
9. Royalties.
All royalties ("Royalties") provided for under this Agreement
shall accrue when the respective items are sold, shipped,
distributed, billed or paid for, whichever occurs first.
Royalties shall also be paid by the Licensee to Licensor on all
items, even if not billed (including, but not limited to
introductory offers, promotions, or distributions) to individuals
or companies which are affiliated with, associated with or are
subsidiaries of Licensee. Royalties on items not billed shall be
computed as if billed by Licensee at a gross invoice amount which
is the greater of the list price and average selling price of the
item.
10. Net Sales.
"Net Sales" are defined as Licensee's gross sales (i.e., the
gross invoice amounts billed customers) less quantity discounts,
returns actually credited and applicable sales taxes. A quantity
discount is a discount made at the time of shipment and actually
shown on the invoice. No deductions shall be made for cash or
other discounts, for commissions, for uncollectible accounts, or
for fees or expenses of any kind which may be incurred by the
Licensee in connection with the Royalty payments. In no event
shall the total amount: deducted from gross sales (for discounts,
credits or returns) during any royalty period exceed fifteen (15)
percent of the gross sales of Licensed Products during that
royalty period.
11. Licensed Product Royalty.
Licensee agrees to pay a Royalty of four percent (4%) percent of
all Net Sales, which includes all products sold net of return and
allowances.
12. License Fee.
As a nonrefundable, nonrecoupable fee for executing this license,
Licensee agrees to pay to Licensor upon execution of this
Agreement the sum of $1.00.
13. Payments.
All payments, with the exception of payments for consulting as
defined in Section 16, shall be paid on the 10th day of each
month following shipments. Payment for consulting as defined in
Section 16 shall be made to Licensor within thirty (30) days of
the end of each month.
14. Audit.
Licensee shall keep accurate books of account and records
covering all transactions relating to the license granted in this
Agreement, and Licensor or its duly authorized representatives
shall have the right upon five (5) days prior written notice, and
during normal business hours, to inspect and audit Licensee's
records relating to the Property licensed under this Agreement.
Licensor shall bear the cost of such inspection and audit, unless
the results indicate an underpayment greater than $1,000 for any
six-month period. In that case, Licensee shall promptly reimburse
Licensor for all costs of the audit along with the amount due
with interest on such sums. Interest shall accrue from the date
the payment was originally due and the interest rate shall be two
percent (2%) per month, or the maximum rate permitted by law,
whichever is less. All books of account and records shall be made
available in the United States and kept available for at least
two (2) years after the termination of this Agreement.
15. Late Payment.
Time is of the essence with respect to all payments to be made by
Licensee under this Agreement. If Licensee is late in any payment
provided for in this Agreement, Licensee shall pay interest on
the payment from the date due until paid at a rate of 1.5% per
month, or the maximum rate permitted by law, whichever is less.
16. Licensor Warranties.
Licensor warrants that it has the power and authority to enter
into this Agreement and has no knowledge as to any third party
claims regarding the proprietary rights in the Property which
would interfere with the rights granted under this Agreement.
Licensee acknowledges that, inasmuch as Property may depend on
technology or intellectual property belonging to third parties,
additional licenses with said third parties may be required for
Licensee to derive commercial benefit from Property and that
Licensor makes no warrantees to the contrary.
17. Indemnification by Licensor.
Licensor shall indemnify Licensee and hold Licensee harmless from
any damages and liabilities (including reasonable attorneys' fees
and costs), arising from any breach of Licensor's warranties as
defined in Licensor's Warranties, above, provided: (a) such
claim, if sustained, would prevent Licensee from marketing the
Licensed Products or the Property; (b) such claim arises solely
out of the Property as disclosed to the Licensee, and not out of
any change in the Property made by Licensee or a vendor, or by
reason of an off-the-shelf component or by reason of any claim
for trademark infringement; (c) Licensee gives Licensor prompt
written notice of any such claim; (d) such indemnity shall only
be applicable in the event of a final decision by a court of
competent jurisdiction from which no right to appeal exists; and
(e) that the maximum amount due from Licensor to Licensee under
this paragraph shall not exceed the amounts due to Licensor under
the Payment Section from the date that Licensor notifies Licensee
of the existence of such a claim. The maximum amount due from
Licensor to Licensee under this paragraph shall not exceed fifty
percent (50%) of the Royalty amounts due to Licensor under
Sections 11 and 13 above from the date that Licensor notifies
Licensee of the existence of such a claim. After the commencement
of a lawsuit against Licensee that comes within the scope of this
paragraph, Licensee may place fifty percent (50%) of the said
Royalties thereafter due to Licensor under Sections 11 and 13
above in a separate interest bearing fund hereinafter referred to
as the "Legal Fund." Licensee may draw against such Legal Fund to
satisfy all of the reasonable expenses of defending the suit and
of any judgment or settlement made in regard to this suit. In the
event the Legal Fund shall be insufficient to pay the then
current defense obligations, Licensee may advance monies on
behalf of the Legal Fund and shall be reimbursed as payments are
credited to the Legal Fund. Licensor's liability to Licensee
shall not extend beyond the loss of its royalty deposit in the
Legal Fund. After the suit has been concluded any balance
remaining in the Legal Fund shall be paid to Licensor and all
future Royalties due to Licensor shall be paid to Licensor as
they would otherwise, become due. Licensee shall not permit the
time for appeal from an adverse decision on a claim to expire.
18. Licensee Warranties.
Licensee warrants that it will use its best commercial efforts to
market the Licensed Products and that their sale and marketing
shall be in conformance with all applicable laws and regulations,
including but not limited to all intellectual property laws.
19. Indemnification by Licensee.
Licensee shall indemnify and defend Licensor and hold Licensor
harmless from any damages and liabilities (including reasonable
attorneys' fees and costs), (a) arising from any breach of
Licensee's warranties and representation as defined in the
Licensee Warranties, above, (b) arising Out Of any alleged
defects or failures to perform of the Licensed Products or any
product liability claims or use of the Licensed Products; and
(c), any claims arising out of advertising, distribution or
marketing of the Licensed Products.
20. Limitation of Licensor Liability.
Licensor's maximum liability to Licensee under this agreement,
regardless on what basis liability is asserted, shall in no event
exceed the total Royalty amounts paid to Licensor under this
Agreement. Licensor shall not be liable to Licensee for any
incidental, consequential, punitive or special damages.
21. Intellectual Property Protection.
Licensor may, but is not obligated to seek, in its own name and
at its own expense, appropriate patent, trademark or copyright
protection for the Property. Licensor makes no warranty with
respect to the validity of any patent, trademark or copyright
which may be granted. Licensor grants to Licensee the right to
apply for patents on the Property or Licensed Products provided
that such patents shall be applied for in the name of Licensor
and licensed to Licensee during the Term and according to the
conditions of this Agreement. Licensee shall have the right to
deduct its reasonable out of pocket expenses for the preparation,
filing and prosecution of any such U.S. patent application (but
in no event more than $5,000) from future Royalties due to
Licensor under this Agreement. Licensee shall obtain Licensor's
prior written consent before incurring expenses for any foreign
patent application.
22. Compliance with Intellectual Property Laws.
The license granted in this Agreement is conditioned on
Licensee's compliance with the provisions of the intellectual
property laws of the United States and any foreign country in the
Territory. All copies of the Licensed Products as well as all
promotional material shall bear appropriate proprietary notices.
23. Infringement Against Third Parties.
In the event that either party learns of imitations or
infringements of the Property or Licensed Products, that party
shall notify the other in writing of the infringements or
imitations. Licensor shall have the right to commence lawsuits
against third persons arising from infringement of the Property
or Licensed Products. In the event that Licensor does not
commence a lawsuit against an alleged infringing party within
sixty days of notification by Licensee, Licensee may commence a
lawsuit against the third party. Before the filing suit, Licensee
shall obtain the written consent of Licensor to do so and such
consent shall not be unreasonably withheld. Licensor will
cooperate fully and in good faith with Licensee for the purpose
of securing and preserving Licensee's rights to the Property. Any
recovery (including, but not limited to a judgment, settlement or
licensing agreement included as resolution of an infringement
dispute) shall be divided equally between the parties after
deduction and payment of reasonable attorneys' fees to the party
bringing the lawsuit.
24. Exploitation.
Licensee agrees to manufacture, distribute and sell the Licensed
Products in commercially reasonable quantities during the term of
this Agreement and to commence such manufacture, distribution and
sale within the following time period: two (2) years. This is a
material provision of this Agreement.
25. Samples and Quality Control.
Licensee shall submit a reasonable number of production samples
of the Licensed Products to Licensor to assure that the product
meets Licensor's quality standards. In the event that Licensor
fails to object in writing within ten (10) business days after
the date of receipt the Licensed Products shall be deemed to be
acceptable. At least once during each calendar year or with each
major revision of Licensed Products, Licensee shall submit two
production samples of each Licensed Product for review. The
quality standards applied by Licensor shall be no more rigorous
than the quality standards applied to similar products but at
least as rigorous as quality standards applied by Licensee to
Licensee's other products.
26. Insurance.
Licensee shall, no later than thirty (30) days prior to the first
sale of a Licensed Product and continuing throughout the
remainder of the Term, obtain and maintain, at its own expense, a
standard product liability insurance coverage policy, naming
Licensor as additional named insureds. Such policy shall provide
protection against any claims, demands and causes of action
arising out of any alleged defects or failure to perform of the
Licensed Products or any use of the Licensed Products. The amount
of coverage shall be a minimum of $1,000,000 with no deductible
amount for each single occurrence for bodily injury or property
damage.
Licensee shall, no later than thirty (30) days prior to the first
sale of a Licensed Products and continuing throughout the
remainder of the Term, obtain and maintain, at its own expense, a
policy insuring against suit for infringement, naming Licensor as
additional named insureds. Such policy shall provide protection
against any claims, demands and causes of action alleging that
Licensed Products or any use of Licensed Products infringe upon
the intellectual property of any third party. The amount of
coverage shall determined by a reasonable assessment of the risk
by an independent insurance expert familiar with relevant
infringement law suits and with no deductible amount for each
single occurrence of infringement.
Each policy shall (a) be maintained with a carrier having a
Xxxxx'x rating of at least B; and (b) provide for notice to the
Agent and Licensor from the insurer by Registered or Certified
Mail in the event of any modification or termination of
insurance. Licensee shall furnish Licensor and Agent a
certificate from its insurance carrier or carriers evidencing
said insurance coverage in favor of Licensor, and in no event
shall Licensee distribute the Licensed Products before the
receipt by the Licensor of evidence of insurance. Each of the
provisions of this section shall survive termination for a period
of not less than two (2) years.
27. Confidentiality.
The parties acknowledge that each may be furnished or have access
to confidential information that relates to each other's business
(the "Confidential Information"). In the event that Information
is in written form, the disclosing party shall label or stamp the
materials with the word "Confidential" or some similar warning.
In the event that Confidential Information is transmitted orally
the disclosing party shall promptly provide a writing indicating
that such oral communication constituted Confidential
Information. The parties agree to maintain the Confidential
Information in strictest confidence for the sole and exclusive
benefit of the other party and to restrict access to such
Confidential Information to persons bound by this Agreement,
providing such access only on a need-to-know basis. Neither
party, without prior written approval of the other, shall use or
otherwise disclose to others, or permit the use by others of the
Confidential Information.
The parties agree that the Terms and Conditions of this Agreement
are Confidential Information as defined herein and shall not
disclose said Terms and Conditions except as mutually agreed in
writing.
28. Licensor's Right to Terminate.
Licensor shall have the right to terminate this Agreement for the
following reasons:
(a) Licensee fails to pay Royalties or any other amounts when
due or fails to accurately report Net Sales, as defined in the
Payment Section of this Agreement, and such failure is not cured
within thirty (30) days after written notice from the Licensor;
(b) Licensee fails to introduce the product to market by October
1, 2003 or to sell the Licensed Products in commercially
reasonable quantities during any subsequent year;
(c) Licensee fails to maintain confidentiality regarding
Licensor's trade secrets and other Information;
(d) Licensee fails to charge a competitive price for Licensed
Product such that the average price per unit, or price per use if
sold as a service, is less than seventy (70) percent of the
average market price of competitive products or services;
(e) Licensee assigns or sublicenses in violation of the
Agreement;
(f) Licensee fails to maintain or obtain product liability
insurance as required by the provisions of this Agreement; or
(g) Licensee engages in immoral, unethical, or illegal
activities, either provably or is publicly alleged to have done
so in a manner which damages Licensor.
In addition, Licensor shall have the right to terminate the grant
of license under this Agreement with respect to any country or
region included in the Territory, or with respect to any industry
or market in which Licensee fails to offer the Licensed Products
for sale or distributions or to secure a sublicensing agreement
for the marketing, distribution and sale of the product within
the Term or Automatic Renewal Term of this Agreement.
29. Effect of Termination.
Upon termination of this Agreement, all Royalty and other
obligations as established in the Payments Section shall
immediately become due. After the termination of this license,
all rights granted to Licensee under this Agreement shall
terminate and revert to Licensor, and Licensee will refrain from
further manufacturing, copying, marketing, distribution, or use
of any Licensed Product or other product which incorporates the
Property. Within thirty (30) days after termination, Licensee
shall deliver to Licensor a statement indicating the number and
description of the Licensed Products which it had on hand or is
in the process of manufacturing as of the termination date.
Licensee may dispose of the Licensed Products Covered by this
Agreement for a period of three months after termination or
expiration except that Licensee shall have no such right in the
event this agreement is terminated according to the Licensor's
Right to Terminate, above. At the end of the post-termination
sale period, Licensee shall furnish a royalty payment and
statement as required under the Payment Section. Upon
termination, Licensee shall deliver to Licensor all tooling and
molds used in the manufacture of the Licensed Products. Licensor
shall bear the costs of shipping for the tooling and molds.
30. Survival.
The obligations of Sections 13, 14, 15, 16, 17, 18, 19, 20, 21,
22, 23, 26, and 27 shall survive any termination of this
Agreement.
31. Attorneys' Fees and Expenses.
The prevailing party shall have the right to collect from the
other party its reasonable costs and necessary disbursements and
attorneys' fees incurred in enforcing this Agreement.
32. Mediation and Arbitration.
The Parties agree that every dispute or difference between them,
arising under this Agreement, shall be settled first by a meeting
of the Parties attempting to confer and resolve the dispute in a
good faith manner. If the Parties cannot resolve their dispute
after conferring, any Party may require the other Parties to
submit the matter to non-binding mediation, utilizing the
services of an impartial professional mediator approved by all
Parties. If the Parties cannot come to an agreement following
mediation, the Parties agree to submit the matter to binding
arbitration at a location mutually agreeable to the Parties. The
arbitration shall be conducted on a confidential basis, pursuant
to the Commercial Arbitration Rules of the American Arbitration
Association. Any decision or award as a result of any such
arbitration proceeding shall include the assessment of costs,
expenses and reasonable attorney's fees and shall include a
written record of the proceedings and a written determination of
the arbitrators including an explanation for all conclusions of
law and fact. Absent an agreement to the contrary, any such
arbitration shall be conducted by an arbitrator experienced in
intellectual property law, invention licensing law, and computer
software technology. The Parties reserve the right to object to
any individual who shall be employed by or affiliated with a
competing organization or entity. In the event of any such
dispute or difference, either Party may give to the other notice
requiring that the matter be settled by arbitration. An award of
arbitration shall be final and binding on the Parties and may be
confirmed in a court of competent jurisdiction.
33. Governing Law and Jurisdiction.
This Agreement shall be governed in accordance with the laws of
the State of Nevada.
The parties consent to the exclusive jurisdiction and venue of
the federal and state courts located in Xxxxx County, Nevada in
any action arising out of or relating to this Agreement. The
parties waive any other venue to which either party might be
entitled by domicile or otherwise.
34. Waiver.
The failure to exercise any right provided in this Agreement
shall not be a waiver of prior or subsequent rights.
35. Invalidity.
If any provision of this Agreement is invalid under applicable
statute or rule of law, it is to be considered omitted and the
remaining provisions of this Agreement shall in no way be
affected.
36. Entire Understanding.
This Agreement expresses the complete understanding of the
parties and supersedes all prior representations, agreements and
understandings, whether written or oral. This Agreement may not
be altered except by a written document signed by both parties.
37. Attachments and Exhibits.
The parties agree and acknowledge that all attachments, exhibits and
schedules referred to in this Agreement are incorporated in this
Agreement by reference.
38. Notices.
Any notice or communication required or permitted to be given under
this Agreement shall be sufficiently given when received by certified
mail or overnight courier to the party at the then legal address of
said party, or such other address as may be agreed by the parties in
writing.
39. No Joint Venture.
Nothing contained in this Agreement shall be construed to place the
parties in the relationship of agent, employee, franchisee, officer,
partners or joint ventures. Neither party may create or assume any
obligation on behalf of the other.
40. Assignability.
Licensee may not assign or transfer its rights or obligations pursuant
to this Agreement without the prior written consent of Licensor. Such
consent shall not be unreasonably withheld. Any assignment or transfer
in violation of this section shall be void.
Each party has signed this Agreement through its authorized
representative. The parties, having read this Agreement, indicate
their consent to the terms and conditions by their signature below:
Licensor Name: Geyser Products, LLC
By: /s/ Date: 9/6/02
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
Licensee Name: Star Beverage, Inc.
By: /s/ Date: 9/6/02
Name: Xxxxx Xxxxxxx
Title: President
