EX-10.1
LICENSE AGREEMENT WITH STITCH FREE TECHNOLOGY, INC.
LICENSE AGREEMENT
BETWEEN
STITCH FREE TECHNOLOGY, INC. AND FREEDOM SURF, INC.
EFFECTIVE DATE: May 1, 2000
This license agreement ("Agreement") is made as of May 1, 2000 between Stitch
Free Technology, Inc. a California corporation ("SFT") and Freedom Surf, Inc., a
Nevada corporation ("FREEDOM").
RECITALS
A. SFT has developed certain know-how, processes and procedures related
to the manufacture of wetsuits, collectively referred to as "Stitch
Free Technology" (defined below).
B. FREEDOM is currently developing a surf brand and is desirous of
securing an exclusive license to use the Stitch Free Technology to
manufacture wetsuits for the North American market.
AGREEMENT
In consideration of the mutual covenants contained in this agreement the parties
agree as follows:
1. DEFINITIONS
"BONDING AGENT" means a chemical used to adhere two same or different types of
materials.
"INTELLECTUAL PROPERTY" all trademarks, patents, know-how, proprietary processes
and information related to the business of SFT, including but not limited to the
STITCH FREE TECHNOLOGY.
"STITCH FREE" means any seam joined without the use of stitching.
"STITCH FREE TECHNOLOGY" means the technology developed by SFT to join neoprene,
rubber and or synthetic materials utilizing specialized adhesives or "SPECIAL
BONDING AGENTS" as defined herein.
"SPECIAL BONDING AGENT" means SFT's proprietary BONDING AGENTs as they currently
exist plus any new or modified BONDING AGENT developed by SFT during the term of
this AGREEMENT.
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"SURF WETSUITS" means wetsuits and accessories (such as booties and gloves)
specifically designed to be used in the sport of surfing, boogie-boarding and
other surface ocean sports.
2. LICENSE
Upon receipt of the Initial Payment defined in section 3.0 and subject to the
continuing terms and conditions of this agreement SFT grants FREEDOM an
exclusive, non-transferable worldwide license to use the STITCH FREE TECHNOLOGY
in the manufacture of SURF WETSUITS. SFT further grants FREEDOM the right to
display the trademarks "STITCH FREE" on products manufactured using the
technology.
2.1 LICENSE RESTRICTIONS
Except as specifically granted in this Agreement SFT owns and retains all right,
title and interest in all information, data, content, software or other
intellectual property provided by SFT to FREEDOM in connection with the STITCH
FREE TECHNOLOGY. The Agreement does not transfer ownership rights of any
description in SFTs intellectual property to FREEDOM or to any third party.
FREEDOM will utilize the SFT only for the purpose of manufacturing SURF WETSUITS
as defined herein. FREEDOM agrees not to modify, reverse engineer or otherwise
copy any intellectual property of SFT, or to intentionally create derivative
products or processes based on such intellectual property. FREEDOM agrees not to
provide any information or sub- license any of the SFT to any other person or
entity other than as contemplated by this Agreement or to make any other use of
the SFT. FREEDOM agrees to display SFT copyright and trademark notices as stated
herein and to take other steps necessary to protect SFT intellectual property
rights as specified herein.
3.0 PAYMENT
In consideration of the granting of a license as defined herein FREEDOM will pay
SFT as follows:
Upon the execution of this Agreement FREEDOM shall deliver to SFT an Initial
Payment of 1,000,000 (one million) shares in FREEDOM SURF. SFT understands that
such shares shall fall under Rule 144 and be restricted from sale for a period
of 12 months from the date of issuance.
Starting in the second year of the Agreement and continuing through the life of
the Agreement, FREEDOM shall pay to SFT an annual royalty equal to 5% (five
percent) of the total revenue derived from the sale of products using STITCH
FREE TECHNOLOGY or $1,000,000 (one million dollars) whichever is greater. This
royalty fee shall be paid quarterly and shall be considered receivable on the
last day of each quarter. FREEDOM is exempt from paying any royalty for the
first 12 months of this Agreement.
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FREEDOM shall pay SFT 25% (five percent) of all revenues derived from
sub-licensing the SFT. Each sub-licensing agreement must be reviewed and
approved by SFT prior to signing by any licensee. SFT reserves the right to deny
or cancel any sub-licensee contract for any reason it deems appropriate and
necessary to protect the STITCH FREE TECHNOLOGY and fully develop the
international market for SFT. FREEDOM may only sublicense the SFT for the
specific purposes of manufacturing SURF WETSUITS as defined herein. FREEDOM
agrees to include performance clauses or minimum royalty payments in all
sub-licensee agreements.
4.0 FIRST RIGHT OF REFUSAL
Should SFT decide to sell the STITCH FREE TECHNOLOGY outright to a third party,
FREEDOM would have 14 days to make a counter offer to purchase the STITCH FREE
TECHNOLOGY outright. Such an offer would have to be in writing. Acceptance or
rejection of such offer by SFT would be in writing within 14 days of receipt of
the counter offer by FREEDOM.
5.0 AUDIT RIGHTS
FREEDOM agrees to maintain accurate and timely records of all sales of products
using STITCH FREE TECHNOLOGY and to provide regular monthly and quarterly
reports to SFT detailing unit sales and revenues by product, region,
sub-licensee and any other reasonable information requested by SFT for the
purpose of evaluation.
SFT may inspect the accounting records of FREEDOM in a manner that does not
unreasonably interfere with FREEDOMs business activities. Should SFT use an
independent auditing firm for such inspection such firm may be required to sign
an agreement protecting the confidentiality of FREEDOM's business and shall be
authorized only to report information related to Royalties due and payable.
FREEDOM agrees that upon receiving a written request from SFT for an audit it
will allow the auditors access to the records requested within a 14 day period
of such request and use their best reasonable efforts to assist such auditors.
Requests for audits by SFT shall not occur more than twice per calendar year.
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If the auditors discover any discrepancies in royalty payments by FREEDOM to SFT
such differences shall be due and payable to SFT within 7 days of such
discovery.
6.0 TERM
The term ("Term") of the agreement is five (5) years from the Effective Date.
The Agreement will renew automatically for additional one (1) year terms unless
either party notifies teh other in writing at least ninety (90) days before the
expiration of the term or renewal term of it's desire to terminate the
Agreement.
7.0 TERMINATION
Either party has the right to terminate the Agreement as follows:
a) By either party for any material breach of this contract that is not
cured within ninety (90) days of the other party receiving written
notice of such breach.
b) By either party should (a) a substantial portion of the assets of
the other party be turned over to an assignee for the benefit of
creditors or to a receiver or a trustee in bankruptcy.
c) By SFT should FREEDOM be subject to a hostile takeover by a third
party.
d) By SFT should FREEDOM fail to make royalty payments pursuant to this
agreement.
7.1 RIGHTS UNDER TERMINATION
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7.11 SFT RIGHTS ON TERMINATION
On termination, (a) all rights granted to FREEDOM cease and FREEDOM agrees to
use all commercially reasonable efforts to, which shall in no event extend more
than ninety (90) days from the date of termination, to cease all use and
production using the SFT INTELLECTUAL PROPERTY and (b), FREEDOM will promptly
return all documents and materials related to the INTELLECTUAL PROPERTY of SFT
to SFT, or destroy all copies in its possession. SFT has and reserves all rights
and remedies that is has by operation of law or otherwise to enjoin the unlawful
or unauthorized use of the SFT INTELLECTUAL PROPERTY.
7.12 FREEDOM RIGHTS UPON TERMINATION
FREEDOM shall have the right to complete reasonable manufacturing batches
currently in process and to distribute such products to the market pursuant to
the terms and conditions of this contract. Once all production batches in
process at the moment of termination have been completed, all production will
cease and FREEDOM agrees to cease all further production of products using the
SFT INTELLECTUAL PROPERTY as detailed above.
7.2 SURVIVAL UPON TERMINATION
Upon termination of this Agreement sections of this Agreement relating to
confidentiality and indemnity will survive termination or expiration of this
Agreement.
8.0 TECHNICAL SUPPORT AND PRODUCT IMPROVEMENTS
SFT will provide technical support and information on any SFT product
improvements to FREEDOM for the duration of this agreement. FREEDOM and SFT
agree to work closely to monitor product performance and to assist eachother in
making improvements where required in the BONDING AGENTs and manufacturing
processes used in the STITCH FREE TECHNOLOGY. Both parties agree that any
product improvements or process improvements enure to the benefit of SFT and
become part of the SFT INTELLECTUAL PROPERTY. Should FREEDOM desire to make any
changes or proposed improvements to the way in which STITCH FREE TECHNOLOGY is
used in manufacturing wetsuits it will immediately notify SFT in writing of such
proposed changes and allow SFT to evaluate such proposed improvements or
modifications. SFT agrees to use it's best efforts to evaluate such proposed
modifications within a reasonable period of time so as to allow FREEDOM the
opportunity to incorporate any approved changes as soon as reasonably possible.
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9.0 INFRINGEMENT INDEMNITY
SFT agrees to indemnify, defend and hold FREEDOM harmless from and against any
claims, actions or demands alleging that all or any part of the SFT INTELLECTUAL
PROPERTY infringes any United States patent, copyright, trademark or other
United States intellectual property right of a third party. If use of the SFT
INTELLECTUAL PROPERTY is permanently enjoined for any reason SFT, at SFT's
option and sole discretion, may (a) modify the SFT INTELLECTUAL PROPERTY so as
to avoid infringement or (b) procure the right for FREEDOM to continue to use
and reproduce the INTELLECTUAL PROPERTY or (c) terminate this agreement, in
which case FREEDOM shall be given a refund of a prorated amount of the payment
indicated in section 3.0 of this agreement, not including any royalties paid or
due and payable through the date of termination. SFT shall hav no obligation
under this section of the Agreement for or with respect to claims, actions or
demands alleging infringement that arise solely as a result of, (i) the
combination of non-infringing items supplied by FREEDOM combined with infringing
items not supplied by SFT, or (ii) modification of the SFT INTELLECTUAL PROPERTY
by FREEDOM without the prior written consent of SFT or, (iii) continued alleged
infringing activity by FREEDOM after FREEDOM has been notified by SFT to cease
activity pursuant to this agreement.
OTHER INDEMNITY
Each party (the "Indemnifying Party") shall indemnify the other party (the
"Indemnified Party") against any and all claims,losses, costs and expenses,
including reasonable attorneys' fees, which the Indemnified Party may incur as a
result of claims in any form by third parties arising from the Indemnifying
Party's acts, omissions or misrepresentations. The Indemnified Party shall (i)
give the Indemnifying Party notice of the relevant claim, (ii) cooperate with
the Indemnifying Party, at the Indemnifying Party's expense, in the defense of
such claim, and (iii) give the Indemnifying Party the right to control the
defense and settlement of any such claim, except that the Indemnifying Party
shall not enter into any settlement that affects the Indemnified Party's rights
or interest without the Indemnified Party's prior written approval. The
Indemnified Party shall have the right to participate in the defense at its
expense.
LIMITATION ON LIABILITY
EXCEPT IN THE EVENT OF A BREACH OF A LICENSE GRANT BY LICENSEE, NEITHER PARTY
SHALL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS
(HOWEVER ARISING, INCLUDING NEGLIGENCE) ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT. EXCEPT IN THE EVENT OF A BREACH OF A LICENSE GRANT, A FAILURE TO
PAY FEES, OR AN INDEMNITY CLAIM, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY IN AN AMOUNT GREATER THAN THE AMOUNTS ACTUALLY PAID BY FREEDOM TO
SFT UNDER THIS AGREEMENT.
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10.0 PRESS RELEASES
The parties may issue press releases announcing the Agreement. The parties agree
that any such press releases shall acknowledge that the Service is based on
technology licensed from SFT. Each party, agrees to obtain the permission of the
other, which shall not be unreasonably withheld, BEFORE RELEASING PRESS RELEASES
OR OTHER FORMS OF PROMOTION THAT MENTION THE OTHER IN REGARDS TO THIS AGREEMENT,
except that each party may use specific information previously approved for
public release by the other, without further approval. Neither party shall
disclose the terms and conditions of this Agreement to any, third party,
including, but not limited to, any information relating to the royalties or fees
paid by FREEDOM to Licensor pursuant to this Agreement except as required by
law.
11.0 GENERAL PROVISIONS
GOVERNING LAW
This Agreement will be governed and construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles. Both
parties agree that the Agreement shall be interpreted as if the actions within
the Agreement where performed within the State of New York.
CONFIDENTIALITY
All disclosures of proprietary and/or confidential information in connection
with this Agreement or the transaction contemplated by this Agreement shall be
governed by the terms of the Corporate Disclosure Agreement previously executed
by the parties, a copy of which is attached as Exhibit A to this Agreement.
ASSIGNMENT
Neither party may assign this Agreement, or any part of this Agreement, without
the prior written consent of the other party., except that this Agreement may be
assigned by either party, without the other party's consent, to an entity
acquiring all or substantially all of the outstanding shares of the assigning
party's stock or all or substantially all of the assigning party's assets.
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SEVERABILITY; HEADINGS
If any provision herein is held to be invalid or unenforceable for any reason,
the remaining provisions will continue in full force without being impaired or
invalidated in any way. Headings are for reference purposes only and in no way
define, limit, construe or describe the scope or extent of such section.
FORCE MAJEURE
If performance hereunder is prevented, restricted or interfered with by any act
or condition whatsoever beyond the reasonable control of a party, the party, so
affected, upon giving prompt notice to the other party, shall be excused from
such performance to the extent of such prevention, restriction or interference.
INDEPENDENT CONTRACTORS
The parties are independent contractors, and no agency, partnership, joint
venture, employee-employer or franchisor- franchisee relationship is intended or
created by this Agreement. Neither party shall make any warranties or
representations on behalf of the other party.
COMPLIANCE WITH LAWS
At its own expense, each party shall comply with all applicable laws,
regulations, rules, ordinances and orders regarding its activities related to
this Agreement.
NOTICE
Any notices hereunder shall be given to the appropriate party, at the following
addresses or at such other address as the party shall specify, in writing.
FOR SFT FOR FREEDOM
X.X. Xxx 000 000 X. 000xx Xx.
Xxxxxxxxxx Xxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: Legal Department Attn: Legal Department
Notice shall be deemed given: upon personal delivery; if sent by fax, upon
confirmation of receipt; or if sent by certified or registered mail, postage
prepaid, 5 days after the date of mailing.
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ENTIRE AGREEMENT, AMENDMENT AND WAIVER
This Agreement sets forth the entire understanding and agreement of the parties,
and supersedes any and all oral or written agreements or understandings between
the parties, as to the subject matter of this Agreement. It may be changed only
by a writing signed by both parties. The waiver of a breach of any provision of
this Agreement will not operate or be interpreted as a waiver of any other or
subsequent breach.
COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together constitute one and the same
agreement. A facsimile copy of this Agreement, including the signature pages,
will be deemed to be an original.
IN WITNESS WHEREOF, SFT and FREEDOM have executed this License Agreement as of
the Effective Date.
STITCH FREE TECHNOLOGY, INC. FREEDOM SURF, INC.
By: s/Xxxx Xxxxxxx By: Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxx Xxxxx Xxxxxxxxxx
President President
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