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EXHIBIT 10.6
LICENSING AGREEMENT
This Licensing Agreement ("Agreement") dated September 5, 1996, is
made and entered into by and between Innovative Products, Inc. ("Licensor"), a
corporation organized and existing under the laws of the State of Virginia and
having its principal place of business at 00000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, and Level Best Golf, a corporation organized and existing under
the laws of the State of Florida and having its principal place of business at
00000 - 00xx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Licensee").
W I T N E S S E T H
WHEREAS the Licensor has certain right, title and interest in and to
the Product (as hereinafter defined); and
WHEREAS the Licensor desires to offer the Licensee the opportunity to
commercialize the Product in the United States of America ("U.S.A."); and
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WHEREAS the Licensee desires to obtain an exclusive license to make,
sell, and market the Product throughout the United States of America without
rights to sublicense.
WHEREAS the Licensor is willing to provide such license to Licensee as
a means of facilitating the manufacture, marketing and sale of the Product in
exchange for the payment of royalties;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Definitions. As used herein, the terms "Agreement," "Licensor," and
"Licensee" shall have the meanings indicated above. As used herein,
the following terms shall have the following meanings:
1.1 "Effective Date" shall mean the date first written above.
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1.2 "Patent Rights" shall mean (1) United States Provisional Patent
Application Serial No. 60/018,245 filed May 24, 1996 and any patents
which issue therefrom and any and all divisions, reissues,
re-examinations, renewals, continuations, continuations-in-part,
extensions and patents thereof, and any and all other counterpart
applications in any other countries and patents and inventors'
certificates, utility models and the like issuing therefrom.
1.3 "Product" shall mean the BDS 2000 as claimed and disclosed in the
Patent Rights, including any approved design modifications.
1.4 "Date of First Royalty Payments" shall mean the end of the first
calendar quarter following the first date of Product shipment.
1.5 "Gross Collected Sales" shall mean all gross receipts collected by
Licensee from buyers of Product and all other value received by
Licensee, all with no deductions for sales, marketing, or
administrative expenses.
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2. Term and Grant of License
2.1 Grant of License. Subject to the terms and conditions hereof,
effective as of the Effective Date, Licensor hereby grants Licensee an
exclusive right and license under the Patent Rights to make, sell and
market the Product in the United States of America, and furthermore
hereby grants Licensee a non-exclusive right and license to make, sell
and market the Product outside the United States of America. The
exclusive license granted hereunder with respect to Product is
strictly limited to the manufacture, sale and marketing of Products in
the United States of America. Nothing in this Agreement shall give
Licensee the right to sublicense the Product without the written
approval of Licensor under separate agreement. Upon Licensor's
request, Licensee agrees to sell Product to Licensor at twenty percent
(20%) above Licensee's manufacturing cost. Licensor shall have the
non-exclusive right to market and sell the Product outside the U.S.A.
2.2 Term of License. The Term of the license shall be for five years from
the first date of Product shipment provided that
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Licensee maintain sales of the following minimum quantities from the
first date of Product shipment:
First twelve months 150,000 units
Second twelve months 250,000 units
Third twelve months 300,000 units
Fourth twelve months 150,000 units
Fifth twelve months 100,000 units
Should Licensee fail to maintain the above minimum sales quantities for any
twelve month period, this license shall terminate unless the parties hereto
agree otherwise. Furthermore, should Licensee fail to ship product to a buying
customer by June 1, 1997, this license shall terminate unless the parties
hereto agree otherwise.
2.3 Manufacturing and Marketing Costs. Licensee agrees to incur all
manufacturing and marketing costs associated with the Product.
2.4 Design Modifications. Licensee agrees to submit to Licensor samples
of Product including any proposed design changes for
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approval by Licensor. Such approval shall not be unreasonably
withheld.
3. Royalties and Reimbursements.
3.1 Royalties Resulting from Income.
Royalty Income: Licensor shall receive from Licensee $3.50 (three
dollars and fifty cents) per unit on the first 10,000 units sold and
will pay Licensee an ongoing royalty of 11% (eleven percent) of the
Gross Collected Sales on all subsequent units sold. Excluded from
this are any units sold from Licensee to Licensor.
3.2 Due Dates. Payments of all Royalties by Licensee shall be due within
thirty (30) days of the end of each calendar quarter after the first
date of Product shipment has occurred. Any such payments shall be
made by check drawn in U.S. funds on a U.S. bank and paid to Licensor
substantially concurrently with the reports as defined in Section
3.3(2) of this Agreement.
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3.3 Reports. (1) From the Effective Date to the first date of Product
shipment, Licensee shall provide a bi-monthly report to Licensor
indicating progress toward commercialization and sale of the Product.
(2) After the first date of Product shipment, Licensee shall
provide a detailed summary of sales for each calendar quarter which
will include a statement of the amount of quarterly Gross Collected
Sales realized by Licensee, the amount of any royalty due to Licensor,
and the total payment due from Licensee to Licensor.
3.4 Patent Procurement. Licensor shall be responsible for procurement of
all Patent Rights and for all reasonable costs incurred during the
Term of this Agreement in prosecuting and maintaining all U.S. patent
applications of Patent Rights and obtaining and maintaining all
patents of Patent Rights. Licensor shall be responsible for filing
for patent protection for approved design changes. Licensee agrees
that all approved design changes are the property of Licensor.
Licensee agrees to obtain all requisite documentation assigning any
patent rights in such approved design changes
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to Licensor. Licensor shall keep Licensee fully informed regarding
all such U.S. patents and patent applications.
3.5 Audit Rights. Licensee shall maintain the usual books of account and
records showing the Gross Collected Sales of Products by Licensee.
Such books and records shall be open to inspection by Licensor at its
expense during usual business hours, by an independent certified
public accountant to whom Licensee has no reasonable objection, for
two (2) years after the calendar year to which they pertain, for the
purpose of verifying the accuracy of the payments made to Licensor by
Licensee pursuant to this Agreement. Inspection shall be reasonably
limited to those matters related to Licensee's payment obligations
under this Agreement.
4. Representations and Warranties.
4.1 Licensor. Licensor hereby represents and warrants that:
(a) it is a corporation validly existing and in good standing
under the laws of the state of Virginia;
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(b) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
Licensor;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement;
(d) Licensor has not encumbered, restricted, transferred, or
otherwise burdened the application of the Product within the
United States of America;
(e) to the best of Licensor's knowledge, there is no infringement
or suspected infringement of the Patent Rights or misuse,
misappropriation, theft, or breach of confidence of other
proprietary rights in the Product by a third party;
(f) to the best of Licensor's knowledge, it has all rights to the
Product and the authority to transfer such rights to the
Licensee without violating the rights (whether primary,
residual, vested, or nonvested) of any other person; and
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Licensor specifically disclaims all warranties including, but not
limited to, warranties of merchantability or fitness for a particular
purpose.
4.2 Licensee. The Licensee represents and warrants that:
(a) it is a corporation validly existing and in good standing
under the laws of the State of Florida;
(b) the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate action on
the part of the Licensee;
(c) it has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations under
this Agreement.
5. Protection of Property Rights.
5.1 Confidentiality. Except as provided below, each of the parties
hereto agrees to use all reasonable efforts to keep confidential all
information related to the Product received from the other party and
designated as confidential during the term of this Agreement, together
with any and all
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documentation and other physical manifestations or embodiments
thereof. Without limiting the foregoing, each party shall use the
same degree of care, effort and procedures in protecting such
confidential information as such party utilizes in connection with
protecting its own information of similar character.
5.2 Exceptions. The foregoing provisions of Section 5.1 shall not apply
to information which:
(a) at the time of its disclosure hereunder was generally known to
the public or subsequently becomes known to the public through
no fault of the parties;
(b) was in possession of the receiving party prior to disclosure
by the disclosing party hereunder and was not acquired
directly or indirectly from any third party under obligation
of confidentiality to the disclosing party;
(c) subsequent to its disclosure hereunder, is obtained from a
third party not subject to a contractual or fiduciary
obligation for confidentiality to the disclosing party;
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6. Infringement.
6.1 Notification, Expenses, and Recovery. Subject to the consent of
Licensor, which consent shall not be unreasonably withheld, Licensee
shall have the right, in its sole discretion and at its sole expense,
to initiate, respond to, prosecute and conclude legal proceedings in
Licensor's name or its own name against any infringer of the Patent
Rights in the U.S.A. Any settlement or recovery received by or
awarded to Licensee (or to Licensor, if Licensee brings suit in the
name of Licensor) in any such proceeding shall be divided seventy
percent (70%) to Licensee and thirty percent (30%) to Licensor after
Licensee deducts from any such settlement or recovery its counsel fees
and out-of-pocket expenses relative to any such legal proceeding. If
Licensee decides not to initiate legal proceedings against any such
infringer, or in the event that Licensee decides not to pursue legal
proceedings which have been initiated, then Licensor shall have the
right in its sole discretion, to initiate or continue such legal
proceedings. Any Settlement or recovery received from any such
proceeding shall be divided thirty percent (30%) to Licensee and
seventy percent (70%) to
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Licensor after Licensor deducts from any such settlement or recovery
its reasonable counsel fees and out-of-pocket expenses relative to any
such legal proceeding. In the event that either party initiates or
carries on legal proceedings to enforce any Patent Rights against an
alleged infringer, the other party shall fully cooperate with and
supply all assistance reasonably requested. Further, the other party
at its expense, shall have the right to be represented by counsel of
its choice in any such proceeding, provided that the party who
initiates or carries on the legal proceedings shall have the sole
right to conduct such proceedings.
6.2 Consent of Other Party. Neither party to this Agreement shall settle
any action in which both parties are plaintiffs without first
obtaining the consent of the other party, which consent will not be
unreasonably withheld.
7. Independent Contractor.
7.1 Relationship of Licensor and Licensee. It is agreed that the
relationship of Licensee to Licensor in the performance of this
Agreement is as an independent contractor and that the
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Licensee is not an agent of Licensor. Licensee agrees to refrain from
representing itself as being the agent of Licensor in performing or
acting pursuant to this Agreement. Neither party shall have the power
or authority to bind or otherwise commit the other party nor shall
either party attempt to do so. No joint venture or partnership shall
arise from or be imputed under this Agreement.
8. Indemnification And Insurance
8.1 Indemnification. Licensee hereby agrees to indemnify and hold
Licensor harmless from liability arising from any claims, costs,
damages, or other liabilities, suits or judgments resulting from
Licensee's use, application, or marketing of the Products so long as
such claims, costs, damages or other liabilities, suits, or judgments
are not attributable to grossly negligent or intentionally wrongful
acts or omissions by Licensor, its trustees, employees and/or agents.
This indemnity is conditioned upon Licensor's obligation to: (i)
advise Licensee of any claim or lawsuit, in writing promptly after
Licensor has received notice of said claim or lawsuit and (ii) assist
Licensee and its
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representatives in the investigation and defense of any lawsuit and/or
claim for which indemnification is provided.
8.2 Insurance. Prior to marketing or otherwise making the Product
commercially available, Licensee shall purchase Commercial General
Liability Insurance, including Product Liability Insurance, for all
Products developed, manufactured, or marketed as a result of this
Agreement. Coverage for Bodily Injury/Property Damage shall be for
one million dollars ($1,000,000) combined single limit per occurrence
with an annual aggregate of at least three million dollars
($3,000,000). If permitted, all policies shall name Licensor as an
additional insured as respects the subject matter of this Agreement.
The Product Liability Insurance shall provide territorial coverage
commensurate in scope with sales of the Product by Licensee and shall
be on an "occurrence" basis. Evidence of all required insurance
coverage shall be delivered to Licensor within ten (10) days of the
policy effective date. Each policy shall contain a provision that the
Insurer will not terminate the policy or materially reduce its
coverage without forty-five (45) days advance written notice to
Licensor.
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9. Breach, Excuse of Performance, and Termination.
9.1 Term. As stated in Article 2.2 above, this Agreement shall have a
Term of five years from the first date of Product shipment.
9.2 Breach. If either party at any time commits any material breach of
this Agreement, and fails to remedy it within 90 (ninety) days after
receiving written notice from the other party of such breach, then in
such case the non-breaching party may cancel this Agreement by
notifying the breaching party in writing. The remedies in this
Section 9.2 are in addition to any other remedies to which the parties
hereunder may be entitled. Any failure to cancel this Agreement for
any breach will not constitute a waiver by the aggrieved party of its
right to cancel this Agreement for any other breach whether similar or
dissimilar in nature.
9.3 Effect of Breach upon License. Any license granted hereunder shall
terminate automatically upon any permitted unilateral termination or
unremedied breach, including, but not limited to, the non-shipment of
Product by June 1, 1997, and the
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non-payment of royalties as specified in Article 3 herein, of this
Agreement by the Licensee unless, in the case of Licensee's
termination of this Agreement, such termination is for an unremedied
material breach by Licensor, in which event the license grant shall
not terminate.
10. Miscellaneous.
10.1 Assignment. This Agreement shall inure to the benefit of and shall be
binding upon each of the parties and their respective successors and
assigns; however, it may not be assigned, in whole or in part, by
either party without the prior written consent of the other party.
Assignment will not be reasonably withheld.
10.2 Amendment of Agreement. No amendment, modification, or addition to
this Agreement shall be binding upon either party unless reduced to
writing and duly executed by each of the parties in the same manner as
the execution of this Agreement.
10.3 Notice. Any notice or other communication to either party to this
Agreement required or persisted under this Agreement
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shall be in writing and shall be deemed to have been served upon such
party five days after having been dispatched, to such party by
overnight carrier to the address set below; provided, however, that
any notices of termination or alleging a breach of this Agreement
shall also be sent by certified mail:
If to the Licensor:
Innovative Products, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
If to the Licensee:
Level Best Golf, Inc.
00000 - 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx
Chief Operating Officer
10.4 Additional Documents. Each party agrees to execute any documents or
instruments reasonably necessary to permit such
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other party to enjoy the full benefit of the rights granted to such
other party under this Agreement.
10.5 Invalidity of Separable Provisions. If any term or provision of this
Agreement is for any reason held invalid, such invalidity shall not
affect any other term or provision, and this Agreement shall
thereafter be construed as if such invalid term or provision had never
been contained in this Agreement.
10.6 Entirety. This Agreement contains the entire understanding and
agreement between the parties relative to its subject matter, and
there are no understandings, agreements, conditions, or
representations, oral or written, express or implied, with reference
to such subject matter that are not merged or superseded by this
Agreement.
10.7 Effect of Headings. The headings to sections of this Agreement are
for convenience of reference only and do not form a part of this
Agreement, and shall not in any way affect the interpretation of this
Agreement.
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10.8 Choice of Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Virginia. Any lawsuits
between Licensor and Licensee which pertain to this Agreement shall be
brought in the appropriate State or Federal Court of competent
jurisdiction within the State of Virginia.
10.9 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed and delivered as of the day and year first above written.
INNOVATIVE PRODUCTS, INC. LEVEL BEST GOLF, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx Xxxxx
--------------------------------- -------------------------------------
Its: CEO Its: COO
-------------------------------- ------------------------------------
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