LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and dated this 2 day
of April, 1998, by and between CAL-AMERICAN BUILDING COMPANY, INC., a California
corporation and XXXXXX X. XXXXXXXXX, jointly and severally (collectively, the
"LICENSOR") and MAJESTIC MODULAR BUILDINGS, LTD., a Maryland corporation (the
"LICENSEE").
RECITALS
A. The Licensor owns all right, title and interest in and to the
Approval Rights, as defined in Section 1.2 hereof, and Technical Information,
as defined in Section 1.4 hereof, relating to the Licensed Products; and
B. The Licensor has the right to grant licenses to the Approval Rights
and Technical Information for the use; and
C. The Licensee desires to obtain a license to enable it to use the
Approval Rights and Technical Information, under the terms and conditions
hereinafter set forth, for the purpose of developing and marketing the Licensed
Products for the purposes and in the Territory specified in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings contained herein, the parties to this Agreement do hereby covenant
and agree as follows:
1. DEFINITIONS.
1.1 "Approval Rights" shall mean any existing Plan Checks, licenses,
approvals, authorizations, permits and other documents for the construction and
assembly of Licensed Products in the States of California, Nevada and Arizona,
as are listed in Schedule A annexed hereto, any continuation,
continuation-in-part, or division of such rights, any applications based on the
subject matter of said rights or improvements thereof, and any applications
based on the subject matter of said rights or improvements thereof, and any
rights issuing on said applications.
1.2 "Licensed Products" shall mean the various types and models of
modular buildings and structures, and component parts thereof, to be
manufactured, assembled and sold by the Licensee using the Approval Rights and
Technical Information licensed by the Licensor to the Licensee hereunder as more
fully described on Schedules A and B annexed hereto.
1.3 "Subcontractor Licensee" shall mean a licensee under Article 2 of
this Agreement who has been awarded a limited license to manufacture and/or sell
Licensed Products. The Licensee shall remain responsible for all of its duties
agreed upon in this Agreement, regardless of the award of licenses to
Subcontractor Licensee(s).
1.4 "Technical Information" shall mean the know-how, trade secrets,
technical data, design data, drawings, test results, and the like, licensed by
the Licensor to the Licensee hereunder which relate uniquely to the manufacture
of the Licensed Products for sale, all as listed on Schedule B annexed hereto.
2. LICENSE
2.1 The Licensor hereby grants to the Licensee, and the Licensee hereby
accepts from the Licensor, upon the terms and conditions hereinafter specified,
and subject to the provisions of Section 2.2 below, an exclusive license (except
as to PC 292, PC 371 and PC 339 as set forth below) to use the Approval Rights
and Technical Information solely to develop, manufacture, use, sell and service
the Licensed Products and replacement and spare parts therefor strictly in
compliance with all federal, state and local laws, regulations and rules.
2.2 The license granted by the Licensor to the Licensee under this
Agreement in the Territory as provided above shall be an exclusive license
arrangement. The Licensor represents that no rights have been granted to others
which would conflict with the license rights of the Licensee under this
Agreement or which would diminish the value of the rights conveyed hereunder.
2.3 The license granted herein shall not be assignable by the Licensee,
nor shall the Licensee have the right to grant sublicenses without the written
consent of the Licensor. The prohibition against assignment shall not preclude
the assignment of this Agreement to any corporation or other entity which is a
wholly owned subsidiary of the Licensee. The prohibition against assignment
shall further not preclude the Licensee from subcontracting to Subcontractor
Licensees for the manufacture and/or assembly of the Licensed Products, any
component parts thereof or any replacement parts therefor.
3. TECHNICAL ASSISTANCE AND INFORMATION
3.1 The Licensor agrees that the Licensor shall furnish to the Licensee
such Technical Information as will enable the Licensee to develop and
manufacture the Licensed Products.
3.2 All Technical Information furnished hereunder shall be used by the
Licensee exclusively for the purpose of performing its obligations under this
Agreement and shall not be used for any other purpose without the specific
written approval of the Licensor.
4. CLAIMS BY THIRD PARTIES
4.1 The Licensor declares that, to the best of its knowledge, the
Approval Rights do not infringe any right or other protection owned or
controlled by persons other than the Licensor, excepting a non-exclusive license
to Dura-Bilt Modular Company, Inc. to use PC 292, PC 371 and PC 339. However,
nothing in this Agreement shall be construed as a representation or a warranty
by the Licensor as to the validity of any right or other protection hereby
agreed to
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be licensed or that manufacture, use or sale of the Licensed Products
will not infringe any right or other protection owned or controlled by persons
who are not parties to this Agreement.
4.2 In the event any action is instituted against the Licensee based
upon the exercise of any of the licenses or rights granted under this Agreement,
the Licensee shall promptly notify the Licensor and the Licensor shall
thereafter, through legal counsel of its choice, defend and prosecute any legal
action which results therefrom. The parties hereto will cooperate fully in all
respects in the conduct of such litigation or any settlement negotiations. The
Licensor may not, however, without the prior written approval of the Licensee,
enter into any compromise, stipulation or other agreement of settlement which
may prejudice the Licensee's rights or obligate the Licensee to pay any monies
or other consideration to a third party. Any costs or expense incurred, or any
profits or awards obtained under this Section 4.2 will be paid or collected by
the Licensee and thereafter deducted or added to the "gross selling price" for
the appropriate reporting period under Section 9 of this Agreement.
4.3 In the event any action is instituted against the Licensor based
upon the exercise of any of the licenses or rights granted under this Agreement,
the Licensor shall promptly notify the Licensee and the Licensee shall have the
right to participate in any legal action which results therefrom. The parties
hereto will cooperate fully in all respects in the conduct of such litigation or
any settlement negotiations. The Licensor may not, however, without the prior
written approval of the Licensee, enter into any compromise, stipulation or
other agreement of settlement which may substantially affect the Licensee's
rights or obligate the Licensee to pay any monies or other consideration to a
third party.
5. TECHNICAL REALIZATION AND COMMERCIAL EXPLOITATION
5.1 The obligations of the Licensor hereunder shall be fully
discharged upon the furnishing to Licensee of the Technical Information as
hereinabove described. The Licensee acknowledges that it fully understands the
subject matter of the license granted under this Agreement and has sufficient
knowledge concerning the Licensed Products to manufacture it in a manner which
will render it suitable for the particular purpose for which it is designed.
5.2 The Licensor agrees that, from and after the date of execution of
this Agreement and until this Agreement shall expire or be sooner terminated,
the Licensor shall not manufacture any Licensed Products, directly or
indirectly.
6. QUALITY
6.1 The Licensee agrees that all Licensed Products manufactured and
sold by the Licensee shall be of the standards of quality and reliability
required by applicable laws and regulations pertaining to the Licensed Products.
6.2 The representatives of the Licensor and/or the Licensor shall have
the right, in conjunction with representatives of the Licensee and during
reasonable business hours, to inspect the assembly and/or manufacturing
facilities of the Licensee relating to the Licensed
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Products and the Licensor shall have the right to test the Licensed Products at
Licensor's expense on the premises of the Licensee or in other facilities of its
own selection; provided, however, that such inspection rights shall be limited
to two visits annually.
7. MODIFICATIONS
Both parties agree that any modifications of the Licensed Products
conceived or acquired by either of them shall be made available to the other
during the term of this Agreement, provided that an agreement with respect to
such modifications or improvements, including the payment of reasonable
royalties therefor, shall have been reached.
8. INSURANCE
8.1 The Licensee shall be responsible for obtaining and maintaining in
full force and effect workers' compensation, employers' liability, business
automobile liability, umbrella liability, intellectual property liability and
commercial general liability insurance pursuant to the requirements of this
Section hereinafter set forth and any other requirements contained herein. The
Licensee shall comply with all state and local insurance statutes and
regulations. The Licensee's commercial general liability and umbrella insurance
policies shall include contractual liability, with commercially reasonable
limits, and shall include all defense costs, including, but not limited to,
attorneys' fees, court costs, and other similar costs and expenses. It is
understood and agreed that any insurance limits shall not be construed as a
limitation on the Licensee's liability. The policies shall provide coverage for
any liability the Licensee (including its employees, agents, invitees,
contractors and subcontractors) may have for bodily injury or death, personal
and advertising injury, or property damage. The Licensor, including its
divisions, subsidiaries, parent and corporate affiliates, and its owner,
shareholders, officers, directors, employees, and agents shall be included as
"additional insureds" under all insurance policies provided by the Licensee, if
requested by the Licensor, and each policy shall provide a waiver of
subrogation.
8.2 If at any time the Licensee fails to obtain insurance (or provide
proof of insurance) in accordance with this Agreement, or otherwise required by
the Licensor, the Licensor may obtain the coverage specified in this Agreement
and charge all associated premiums and costs to the Licensee. The Licensee shall
reimburse the Licensor the cost thereof within fifteen (15) days of receipt of
notice from the Licensor
9. ROYALTIES
9.1 During the term of this Agreement, the Licensee agrees to pay to
the Licensor a royalty of (i) three and one-half percent (3 1/2%) of Licensee's
gross selling price with respect to sales of Licensed Products, made by the
Licensee, up to Five Million Dollars ($5,000,000.00) annually, and (ii) two
percent (2%) of such gross selling price in excess of Five Million Dollars
($5,000,000.00) annually. Upon execution of this Agreement, the Licensee shall
tender to and deposit with the Licensor the sum of Five Thousand Dollars
($5,000.00) as an advance payment of royalties due under this Agreement. Such
amount shall be used to satisfy the
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initial royalties due hereunder in the amount of the deposit.
9.2 The Licensor's right to receive payment of the royalty shall accrue
when Licensed Products shall have been completed and shipped by the Licensee and
payment or other consideration is received therefor.
9.3 For the purpose of computing royalties under this Agreement, the
Licensee's "gross selling price" shall be the Licensee's gross invoice price,
without deductions, for Licensed Products, exclusive of transportation costs,
taxes, duties and other miscellaneous charges paid by the Licensee, regardless
of whether subsequently reimbursed by the customer. The "gross selling price"
shall not include amounts which are derived from sales of products, including
modular buildings and structures, which are manufactured and assembled without
the use of, or reliance on the Approval rights licensed hereunder.
10. SETTLEMENT OF ACCOUNTS
10.1 Royalties for each three month period (the "Quarter") shall be due
and payable within thirty (30) days after the end of the Quarter. Within thirty
(30) days after the expiration of the Quarter, the Licensee shall deliver to the
Licensor a true and accurate report in writing, giving such particulars of the
business conducted by the Licensee during the preceding Quarter as are pertinent
to any accounting for any such royalties under this Agreement.
10.2 Each quarterly royalty payment shall be by bank draft, payable in
U.S. currency and delivered to such account or accounts of the Licensor as shall
be designated in writing by the Licensor on or before the due date specified in
Section 10.1.
10.3 The Licensee agrees to keep records showing the quantity,
description and total gross selling price of all Licensed Products and parts and
manuals therefor that have been sold or otherwise disposed of and such other
related information in sufficient detail to enable the compensation payable
hereunder by the Licensee to be determined . The Licensee further agrees to
permit its books and records to be examined from time to time by an outside
auditor selected by the Licensor, at the Licensor's expense, to verify the
reports provided for in Section 10.1 hereof and the compensation due and
payable hereunder.
11. COVENANTS OF PARTIES
11.1 Neither party shall be obligated to disclose to the other party
any proprietary information of a third party without the consent of such third
party, nor any information the furnishing of which would require the payment of
consideration to a third party other than an employee of the party furnishing
the information.
11.2 Each party will use reasonable efforts to perform its obligations
under this Agreement, but shall, except for Licensee's obligation to make any
payment of money under this Agreement, be excused for failure to perform or for
delay in performance hereunder due to (1) causes beyond its reasonable control
or (2) acts of God, acts of the other Party or its contractors,
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acts of civil or military authorities (including the Governments of Canada and
the United States and political subdivisions thereof), U.S. Government
priorities, fires, strikes, floods, epidemics, war, riot, delays in
transportation, or (3) causes beyond its reasonable control to obtain necessary
labor or materials.
12. CONFIDENTIALITY OF TECHNICAL INFORMATION
12.1 All Technical Information furnished by the Licensor to the
Licensee pursuant to this Agreement shall be treated as confidential by the
Licensee, even after the expiration or earlier termination of this Agreement.
The Licensee shall take all necessary steps to prevent disclosure of any and all
such Technical Information. With the prior consent of the Licensor, the
Licensee shall have the right to disclose to subcontractors such Technical
Information as is necessary but only if a confidentiality agreement
substantially in acceptable form to the Licensor, shall have been executed by
such subcontractor in accordance with this paragraph.
12.2 All Technical Information provided by the Licensor to the Licensee
under this Agreement, as well as any copies or translations thereof made by the
Licensee, shall remain the property of the Licensor and shall be returned by the
Licensee within thirty (30) days from the date of termination or expiration of
this Agreement. At the discretion of the Licensor, the Technical Information
shall be destroyed by the Licensee upon termination or expiration of this
Agreement when so requested by the Licensor, whereupon the Licensee shall
destroy the Technical Information within thirty (30) days from its receipt of
such request and thereafter promptly provide a written certification to the
Licensor that all Technical Information has been destroyed.
13. WARRANTY AND LIMITATION OF LIABILITY
13.1 The Licensor represents to the Licensee that the Technical
Information furnished pursuant to this Agreement will correspond to the
Technical Information used by the Licensor.
13.2 The Licensor makes no express warranty, and no warranty shall be
implied, with respect to any Technical Information furnished by it under this
Agreement. It is agreed that the Licensor shall not be liable, whether in
contract, tort or otherwise, nor in any way responsible for:
1. The accuracy, utility, or adequacy of any Technical Information furnished
or disclosed by it in connection with this Agreement, or
2. The performance of products manufactured or repaired or overhauled by
Licensee on the basis of any Technical Information furnished in connection
with this Agreement.
13.3 The Licensee hereby agrees to indemnify, defend and hold harmless
the Licensor from and against any claim, demand, action, cause, liability,
obligation, cost or expense,
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including reasonable attorney's fees, arising out of any breach by the Licensee
of its covenants set forth in Section 2.1 of this Agreement.
14. DURATION OF THE AGREEMENT
14.1 This Agreement shall become effective after it has been executed
by both Parties hereto and shall continue in force for an initial term of three
(3) years. The Licensee may elect to renew the term of this Agreement for three
(3) successive renewal terms of three (3) years each by providing written notice
of renewal to the Licensor not less than ninety (90) days prior to the
expiration of the initial term or any renewal term hereunder.
14.2 Either party shall have the right to terminate this Agreement if
the other party shall be in default of any material obligation hereunder. In
such event, the non-defaulting party may give written notice of its election to
terminate the Agreement under this Section 14.2, specifying such default. Unless
the defaulting party remedies the default within ninety (90) days after receipt
of such notice, the non-defaulting party may terminate this Agreement by written
notice, effective on receipt.
14.3 Upon the termination of this Agreement, the Licensee shall
immediately cease and desist from offering for sale or selling any Licensed
Products parts or manuals therefor or services relating thereto, provided,
however, that the Licensee may make sales and perform services required by
contracts or agreements entered into and effective one hundred eighty (180)
calendar days before the date of termination of this Agreement.
14.4 The Licensee's obligations under this Agreement will continue
until the termination or expiration date, for whatever reason, of this
Agreement. In particular, any royalties accrued prior to the effective date of
expiration or termination, or any royalties payable as a result of sales made
after the date of expiration or termination as provided in Section 14.3 above,
shall be payable in accordance with Article 9. In addition, the Licensee's
obligations under Sections 12.1 and 12.2 shall remain in full force and effect
after termination of this Agreement for whatever reason.
15. SEVERABILITY
15.1 In the event that any particular provision or requirement of this
Agreement is held to be invalid, such provision or requirement shall remain in
full force and effect to the extent it is not invalid or otherwise
unenforceable, and all other provisions and requirements of this Agreement shall
remain in full force and effect.
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15.2 In the event that any provision or requirement hereof shall be
held invalid by any court or other tribunal of competent jurisdiction, the
parties hereto shall endeavor to agree on a new provision or requirement of
comparable economic effect.
16. AMENDMENTS AND AMPLIFICATIONS
16.1 This Agreement, including its Schedules, contains the entire
understanding of the parties with respect to the subject matter herein.
16.2 All amendments, amplifications and interpretations, including
additions and notices of termination, must be in writing and shall not be
binding unless signed by both parties hereto.
17. GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of California.
18. ARBITRATION
The parties shall attempt, in good faith, to resolve by negotiation any
claim or controversy arising out of or relating to this Agreement. If a dispute
cannot be resolved by negotiation, such dispute shall be resolved by arbitration
conducted in San Diego, California, in accordance with the rules of the American
Arbitration Association, which rules are deemed to be incorporated by reference
into this Agreement. There shall be three arbitrators, one to be chosen by the
Licensor, one to be chosen by the Licensee, and the third, who shall be chairman
of the arbitration panel, to be chosen by the two arbitrators selected by the
parties, or, if such persons fail to agree, by the American Arbitration
Association. The arbitration shall be conducted in a single hearing, and the
arbitrators shall render their decision within thirty (30) days of the
conclusion of the hearing. The expenses of the arbitration (including reasonable
attorneys' fees) shall be borne as specified in the decision of the arbitrators
and shall be allocated based on the relative merit of the two positions, as
determined by the arbitrators. The decision of the arbitrators shall be final
and nonappealable. Judgment upon any decision rendered by the arbitrators may be
entered by any court having jurisdiction. Notwithstanding the foregoing:
(1) At the discretion of the party seeking relief, any claim for
temporary or permanent injunctive relief under this Agreement may be heard in
and decided by the state or federal courts in the State of California, and in
no other courts, and each party consents to the jurisdiction of such courts
for such purpose.
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(2) If an action is brought in such a court for such injunctive relief,
such court shall also decide, in the same action, any claims for damages
related to Article X and the Confidentiality Agreement that may be raised in
the same action.
This Section 18 shall apply to all disputes under this Agreement, whether
arising before or after the date of this Agreement.
19. FORCE MAJEURE
Neither party shall be liable to the other for delay or failure in
performance of any of the obligations imposed by this agreement if such failure
is beyond the reasonable control of such party due to FORCE MAJEURE. Force
majeure shall include any act of God, action of the elements, fire, accident,
riot, labor disturbance, failure or lack of transportation facilities, issuance
of governmental laws, orders, or regulations, or other cause, whether similar or
dissimilar, beyond the reasonable control of the party required to perform. The
party whose performance is impeded by the force majeure condition shall notify
promptly the other party upon the discovery of the force majeure condition,
indicating the anticipated duration and effect of the force majeure condition,
and such party shall be diligent in attempting to remove such force majeure
condition.
20. NO JOINT VENTURE
Nothing herein contained shall be construed to place the Licensor and
Licensee in the relationship of partners or joint ventures and neither shall
have any power to obligate or bind the other in any manner whatsoever.
21. NOTICES
Any notice or consent required or permitted by or in connection with
this Agreement shall be in writing and made by hand delivery, by wire or by
certified mail, return receipt requested, postage prepaid, addressed to the
Licensor or the Licensee at the appropriate address set forth below or to such
other address as may be hereafter specified by written notice by the Licensor or
the Licensee, and shall be considered given as of the date of hand delivery,
wire or as of two (2) business days after the date of mailing, as the case
may be:
If to the Licensee:
MAJESTIC MODULAR BUILDINGS
0000 Xxx Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Chief Executive Officer & President
Fax No.: (000) 000-0000
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If to the Licensor:
CAL-AMERICAN BUILDING COMPANY, LTD.
Xxxxxx X. Xxxxxxxxx
000 0xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
22. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of
the Licensor and the Licensee and their respective heirs, legal representatives,
successors and assigns.
23. WAIVER OF BREACH
The waiver by either party hereto of a breach of any provisions of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by either party.
24. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of
the first date set forth above.
WITNESS: LICENSOR:
CAL-AMERICAN BUILDING COMPANY, INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ XXXXXX X. XXXXXXXXX (SEAL)
------------------------------- ------------------------------------
Xxxxxx X. Xxxxxxxxx, President
/s/ Xxxxx X. Xxxxxxxx /s/ XXXXXX X. XXXXXXXXX (SEAL)
------------------------------- ------------------------------------
Xxxxxx X. Xxxxxxxxx, President
LICENSEE:
MAJESTIC MODULAR BUILDINGS
COMPANY, INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ XXXXXXX X. XXXXXXXXX (SEAL)
------------------------------ -----------------------------------
Xxxxxxx X. Xxxxxxxxx
President & Chief Executive Officer
