Exhibit 10.4
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made this 29th day of
December, 2000 by and between Ovation Products Corporation, a Delaware
corporation with a principal address of 000 Xxxx Xxxxxxxxx Xxxx, Xxxxxx, Xxx
Xxxxxxxxx 00000 ("Ovation" or "Licensor") and X X Electro Systems, Inc., a
Minnesota corporation with a principal address of X.X. Xxx 0000, Xxxxxxx Xxxxx,
Xxxxxxxxx 00000 ("SJE" or "Licensee").
WITNESSETH
WHEREAS, Ovation and SJE are parties to a Series A Preferred Stock
Purchase Agreement, Promissory Note, Stock Pledge Agreement, Confidentiality
Agreement, and Intellectual Agreement (collectively the "Stock Purchase
Documents"), a Strategic Alliance Agreement, a Distribution Agreement and this
Agreement (collectively the "Strategic Alliance Documents") all of even date
herewith;
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the same meaning as may be set forth in the Stock Purchase Documents or the
Strategic Alliance Documents; and
WHEREAS, this Agreement is an integral part of the transactions
contemplated by each of the Stock Purchase Documents and Strategic Alliance
Documents.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. GRANT OF LICENSE. Subject to the terms and conditions as hereinafter
set forth, the Licensor hereby grants to the Licensee an exclusive
license to the Licensor's intellectual property which is now or
hereafter used or useful in the Septic Appliance, as defined in the
Strategic Alliance Agreement, including any and all patent
applications, patents, copyrights, know-how and trade secrets, for
the Term, as defined below, to manufacture, assemble, warehouse,
market, distribute, and sell the Products in the Territory, unless
this Agreement is sooner terminated as hereinafter provided (the
"License").
2. TERM. The term of this Agreement ("Term") begins on the date that
both parties agree in writing that sales in commercial quantities of
Products, as defined in the Distribution Agreement, are first made
(the "Commencement Date," which shall be mutually agreed and
recording in writing as close to the date agreed upon as
practicable) and ends on the later of (a) the seventh (7th)
anniversary of the Commencement Date or (b) the date on which
Licensee has received $50,000,000 in Profit Sharing Payments, as
defined in the Strategic Alliance Agreement, provided that in no
event shall the Term extend beyond the tenth (10th) anniversary of
the Commencement Date. Upon the expiration of the Term, or the
sooner termination of this Agreement as provided in Section 3 below,
the License granted herein shall automatically terminate and expire.
3. TERMINATION. Prior to the commencement of the Term, this Agreement
may only be terminated upon the mutual consent of the Licensor and
the Licensee. During the Term, this Agreement may be terminated (i)
by the Licensee upon six (6) months prior written notice, (ii)
immediately by the Licensor in the event that the Licensor exercises
its option to terminate the Distribution Agreement pursuant to
Section 5.1 thereof, or (iii) immediately by the Licensor in the
event that Licensee does not cure a material breach of the
Distribution Agreement within thirty (30) days of receipt of written
notice of such material breach, or (iv) upon the mutual consent of
the Licensor and the Licensee.
4. PAYMENT OF ROYALTIES.
During the Term, the Licensee agrees to pay to the Licensor a
royalty on all sales of Product in the Territory in the amount of
five percent (5%) of the invoice amount of such sales, net of any
taxes, Licensee Discounts and/or freight charges.
5. PAYMENT OF ROYALTIES. The Licensee shall have no obligation to pay
any royalty to the Licensor until the Licensee is paid for such
sale. Such royalties shall be paid to the Licensor on or before the
15th day of the calendar month after which any partial or final
payment for such Products is received by the Licensee. In the event
that a customer returns Products to the Licensor, the royalties
associated with such returned Products shall be debited from the
Licensor's royalty account. A statement showing in detail the
royalties credit and debited, the payments made on account of
royalties and the current status of the Licensor's royalty account
shall be furnished to the Licensor with each royalty payment. Upon
termination of this Agreement for any reason, the Licensee shall not
be liable to the Licensor for any royalties not then due.
6. ASSIGNMENT. Neither this Agreement nor the License may be assigned
by either party without the prior written consent of the other,
which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, either party may assign this Agreement as part of a
sale of substantially all of the assets of such party without
obtaining the consent of the other. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted
assigns of the parties.
the Licensor for any royalties not then due.
7. ASSIGNMENT. Neither this Agreement nor the License may be assigned
by either party without the prior written consent of the other,
which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, either party may assign this Agreement as part of a
sale of substantially all of the assets of such party without
obtaining the consent of the other. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted
assigns of the parties.
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8. HEADINGS. The headings in this Agreement are solely for convenience
of reference and shall not affect the interpretation hereof.
9. WAIVER. The waiver of one party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision
in this Agreement by the other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Hampshire, without
regard to its choice or conflicts of laws and provisions.
11. ENTIRE AGREEMENT. This Agreement, the Strategic Alliance Documents,
and the Stock Purchase Documents set forth the entire understanding
and agreement of the parties with respect to the subject matter
hereof. This Agreement may be altered, modified or amended only by a
written document specifically referring to this Agreement signed by
the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by the duly authorized representative, under seal, as of the day and year first
above written.
OVATION PRODUCTS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: CEO
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X X ELECTRO SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxxx
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Title: CEO
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