Exhibit 10.2
AGREEMENT
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THIS AGREEMENT ("Agreement") is made by and between Xxx X. Xxxxxxxxxxx,
000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 ("Licensor") and Children's Beverage
Group, Inc., a Delaware corporation, having a business address at 000 Xxxxxx
Xxxxx, Xxxxx Xx. 0, Xxxxxxxxxx, Xxxxxxxx 00000 ("Licensee") (also identified
individually "Party" or collectively as "Parties" hereinbelow).
Licensor is the inventor of a "Self-Contained Fluid Dispensing System"
("Invention"). Pursuant to a confidential relationship between Licensor and
Licensee, Licensor has disclosed to and permitted Licensee to use certain
confidential and proprietary information involving and including Trade Secrets
with respect to the Invention ("Confidential Information"). Licensor is the
owner of U.S. Patent No. 5,941,642 issued on August 24, 1999 and pending
application number 09/378,194 for the Invention (the "Patent"). Licensee desires
to confirm rights previously granted to it with respect to the Confidential
Information and obtain exclusive rights to the Patent for commercialization
purposes.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, the Parties agree as follows.
SECTION 1
ADDITIONAL DEFINITIONS
The following capitalized terms used in this Agreement shall mean:
A. "Affiliate" means, as to any person or entity, any other person or
entity which directly or indirectly controls, is controlled by or is under
common control with such person or entity. Control shall mean the right to
control, or actual control of, management of such other entity, whether by
ownership of voting securities, by agreement, or otherwise.
B. " Field" means all commercial uses.
C. "Licensed Products" means any product covered by the scope of any Valid
Claim contained in the Patent or a product made by a process, method or
technique covered by the scope of any Valid Claim in the Patent or methods of
using any product covered by the scope of any Valid Claim contained in the
Patent or was produced based upon Confidential Information disclosed by Licensor
to Licensee.
D. "Sublicensee" means any person, company or other entity granted a
sublicense by Licensee under Paragraph 2. B. below, including Affiliates of the
Sublicensee.
E. "Sublicense" means the license agreement entered into by Licensee with
a Sublicensee under Paragraph 2. B. below.
F. "Territory" means worldwide.
G. "Valid Claim" means an issued claim of the Patent which has not been
held unenforceable, unpatentable or invalid by a decision of a court or
governmental body of competent jurisdiction, in a ruling that is unappealable or
unappealed within the time allowed for appeal, which has not been rendered
unenforceable through disclaimer or otherwise; and which has not been lost
through an interference proceeding.
SECTION 2
GRANT OF LICENSE AND RESERVATION OF RIGHTS
X. Xxxxx Licensor hereby grants to Licensee and its Affiliates an
exclusive license to make, have made, use, import, offer to sell and sell
Licensed Products Within the Field and within the Territory.
B. Sublicense. Licensee shall have the exclusive right to grant
sublicenses to third parties to the rights granted Licensee under Paragraph 2. A
on terms consistent with the terms of this Agreement. Prior to entering into any
Sublicense, Licensee shall obtain the written approval of Licensor to the terms
of the Sublicense, which approval shall not be unreasonably withheld. All
Sublicenses shall provide that the Sublicensee may not grant further Sublicenses
to third parties, except for Affiliates of the Sublicensee. Each Sublicense
shall state that if this Agreement terminates for any reason, except expiration
pursuant to Paragraph 8. A., the Sublicense shall automatically terminate
effective the same date without the necessity of any notice from Licensor to the
Sublicensee. In each case, Licensor agrees to negotiate in good faith for a
period of ninety (90) days following the termination of this Agreement with each
Sublicensee for a license directly from Licensor granting die Sublicensee
substantially the same rights as those contained in the Sublicense with
Licensee. If no agreement is reached within the ninety (90) days, Licensor shall
have no further obligation to the Sublicensee.
C. Reservation of Rights. Licensor reserves for himself the worldwide
right to practice the inventions claimed in the Licensed Patent and disclosed as
Confidential Information to Licensee for any additional invention development
and research purposes he may choose in his own discretion and without any
payment therefore.
SECTION 3
ROYALTIES AND PATENT MAINTENANCE PAYMENTS
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A. License Payment. For the license granted in Paragraph 2. of this
Agreement, and within ninety (90) days of the Effective Date, Licensee shall
transfer to Licensor an amount of common stock equal to the value of the License
granted hereunder in lieu of cash or other compensation as determined by an
independent valuation specialist chosen by agreement between Licensor and
Licensee. The License value shall be reevaluated periodically but no less
contemporaneous with the payment of the patent maintenance fees and, if the
value of the License has increased, additional common stock shall be transferred
to Licensor. If at any time the value of the License has decreased, Licensor has
no obligation to return stock transferred to him or reimburse other amounts paid
or transferred to him by Licensee.
B. Records. Licensee shall, and shall cause its Sublicensees and
Affiliates of either, to keep full and accurate books and records in sufficient
detail so that the compensation due Licensor hereunder can be properly
calculated. Such books and records shall be maintained for at least five (5)
years after the Term of this License. During the Term hereof and for three (3)
calendar year thereafter, Licensee shall permit, and shall cause its
Sublicensees and Affiliates of either to permit, accountants designated by
Licensor, to whom Licensee has no reasonable objection, to examine its books and
records for the purpose of verifying the accuracy of amounts paid or payable to
Licensor. Licensor may conduct such examination no more than once in any
calendar year. After completion of any such examination, Licensor shall promptly
notify Licensee in writing of any proposed additional transfers to be made to
Licensor by Licensee in order to cover a shortfall. Licensee shall promptly
transfer the stated amounts within thirty (30) days of the written notice. Such
examination shall be made at the expense of Licensor, except that if such
examination discloses a discrepancy of five percent (5%) or more in the amount
of transfers due to Licensor, then Licensee shall reimburse Licensor for the
cost of such examination.
C. Maintenance of Patent. Licensor shall be solely responsible for
the maintenance of the Patent. Licensee agrees to reimburse Licensor for all
fees and costs associated therewith within thirty (30) days of written notice
from Licensor identifying such fees and costs.
SECTION 4
DUE DILIGENCE
If Licensee, prior to the second anniversary of the date of this Agreement,
either fails to (1) begin commercial sale of a Licensed Product or (2) provides
information to Licensor that Licensor in his sole discretion provides a full,
complete, and reasonable explanation for the lack of such commercial sales,
Licensor may terminate this Agreement at any time thereafter on written notice
to Licensee. Such termination shall be effective on the date of receipt by
Licensee.
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SECTION 5
NO WARRANTIES; INDEMNIFICATION; INSURANCE
A. Disclaimer of Warranties. Licensor makes no representations or
warranties of any kind, express or implied, with respect to the invention(s)
claimed in the Patent or with respect to the Patent itself, including but not
limited to, any representations or warranties about (i) the validity, scope or
enforceability of Patent; (ii) the accuracy, safety or usefulness for any
purpose of any information provided by Licensor to Licensee, its Sublicensees or
Affiliates of either, with respect to the invention(s) claimed in the Patent or
with respect to the Patent itself and any products developed from or covered by
it; (iii) whether the practice of any claim contained in any of the Patent will
or might infringe a patent or other intellectual property right owned or
licensed by a third party; (iv) the patentability of any invention claimed in
the Patent or (v) the accuracy, safety, or usefulness for any purpose of any
product or process Made or carried out in accordance with or through the use of
the Patent.
B. Indemnification. Licensee agrees, and agrees to cause its Sublicensees
and Affiliates of either, to indemnify, defend and hold harmless Licensor, his
Affiliates and all trustees, directors, officers, employees, fellows and agents
of any of the foregoing (including Licensor and its Affiliates, each an
"Indemnified Person") from and against any and all claims, demands, loss,
damage, penalty, cost or expense (including attorneys' and witnesses' fees and
costs) of any kind or nature, arising from the development, production, use,
sale or other disposition of Licensed Products and all activities associated
therewith by Licensee, its Sublicensees or Affiliates of either, or any use of
information provided by Licensor to Licensee, its Sublicensees or Affiliates of
either. Licensee agrees and agrees to cause each of its Sublicensees and
Affiliates of either to agree not to xxx any Indemnified Person in connection
with the development, production, use, sale or other disposition of Licensed
Products and all activities associated therewith. Licensor shall be entitled to
participate at their option and expense through counsel of their own selection,
and may join in any legal actions related to any such claims, demands, losses,
damages, costs, expenses and penalties. Licensee, its Sublicensees and
Affiliates of either, shall not enter into any settlement affecting any rights
or obligations of any Indemnified Person or which includes an express or implied
admission of liability, negligence or wrongdoing by any Indemnified Person,
without the prior written consent of such Indemnified Person.
C. Assumption of Risk. The entire risk as to the performance, safety and
efficacy of any invention claimed in the Patent or of any Licensed Products is
assumed by Licensee, its Sublicensees and Affiliates of either, provided that
such assumption of the risk shall not apply to the intentional misconduct or
gross negligence by Indemnified Persons. Indemnified Persons shall not, except
for their intentional misconduct or gross negligence, be responsible or liable
for any injury, loss, or damage of any kind, including
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but not limited to direct, indirect, special, incidental or consequential
damages or lost profits to Licensee, any Sublicensee, Affiliates of either or
customers or any of the foregoing, or for any such injury, loss or damage to any
other individual or entity, regardless of legal theory based on the development,
manufacture, use, sale or other disposition of Licensed Products and all
activities associated therewith. The above limitations on liability apply even
though the Indemnified Person may have been advised of the possibility of such
injury, loss or damage, Licensee shall not, and shall require all Sublicensees
and Affiliates of either to not, make any agreements, statements,
representations or warranties or accept any liabilities or responsibilities
whatsoever with regard to any person or entity which are inconsistent with this
Paragraph.
D. Insurance. Licensee agrees and agrees to cause its Sublicensees and
Affiliates of either to list Licensor and its Affiliates, at Licensee's, its
Sublicensees' or Affiliates' of either of them, expense, whichever is relevant,
as additional named insureds under each liability insurance policy that
Licensee, its Sublicensees and Affiliates of either shall have or shall obtain
that includes any coverage of claims relating to the inventions in the Licensed
Products, the Patent or Licensed Products. At Licensor's request Licensee will
supply Licensor from time to time with copies of each such policy, and will
notify Licensor in writing at least thirty (30) days prior to any termination of
or change in coverage under any such policies.
SECTION 6
CONFIDENTIALITY
A. Confidentiality. All information submitted by the Licensor to Licensee
concerning the Invention(s) claimed in the Patent, the Patent and Licensed
Products shall be considered as confidential ("Confidential Information") and
shall be utilized only pursuant to the licenses granted hereunder. During the
Term of this Agreement and for a period of ten (10) years thereafter, Licensee
shall not disclose to any third party any Confidential Information received from
the Licensor without his specific written consent; provided, however, that,
Licensee may disclose Confidential Information belonging to Licensor to
potential sublicensees for the purpose of evaluating their interest in entering
into a Sublicense but only after entering into a confidentiality and non-use
agreement on the same terms as those contained in this Paragraph. The foregoing
shall not apply where such information a) was or becomes public through no fault
of the receiving party, b) was, at the time of receipt, already in the
possession of receiving party as evidenced by its written records, c) was
obtained from a third party legally entitled to use and disclose the same, or d)
is required by law to be disclosed to a governmental agency.
B. Publications. Licensee shall provide to Licensor copies of any proposed
written publication by Licensee containing any Confidential Information at least
ninety (90) days in advance of the proposed publication. Licensor may object to
such proposed publication
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or disclosure on the grounds that the publication contains Confidential
Information of the Licensor. At the request of the Licensor, Licensee agrees to
delete the Confidential Information from the publication.
SECTION 7
INFRINGEMENT
In the event of an infringement of the Patent, the following shall apply:
A. Notice. Each party shall give the other written notice if one of them
becomes aware of any infringement by a third party of the Patent. Upon notice of
any such infringement, the parties shall promptly consult with one another with
a view toward reaching agreement on a course of action to be pursued.
B. Licensee's Right to Bring Infringement Action.
(1) If a third party infringes the Patent, Licensee shall have the right to
institute and prosecute an action or proceeding to xxxxx such infringement and
to resolve such matter by settlement or otherwise. Licensee agrees to notify
Licensor of its intention to bring an action or proceeding prior to filing the
same and in sufficient time to allow Licensor the opportunity to discuss with
Licensee the choice of counsel for such matter. Licensee agrees to hire counsel
reasonably acceptable to Licensor. Licensee shall keep Licensor timely informed
of material developments in the prosecution or settlement of such action or
proceeding. Licensee shall be responsible for all costs and expenses of any
action or proceeding against infringers which Licensee initiates. Licensor shall
cooperate fully by joining as a party plaintiff if required to do so by law to
maintain such action or proceeding and by executing and making available such
documents as Licensee may reasonably request. Licensee agrees to promptly
reimburse Licensor for its reasonable third party out-of-pocket fees and
expenses incurred in joining an action or proceeding or cooperating with
Licensee. Licensor may be represented by counsel in any such legal proceedings,
at Licensor's own expense, subject to reimbursement under Paragraph 7.B(2).,
acting in an advisory but not controlling capacity.
(2) The prosecution, settlement, or abandonment of any action or proceeding
under Paragraph 7.B.(1) shall be at Licensee's reasonable discretion provided
that Licensee shall not have any right to surrender any of Licensor's rights to
the Patent or to grant any infringer any rights to the Patent.
(3) Except as provided herein, all amounts of every kind and nature
recovered from an action or proceeding of infringement by Licensee shall belong
to Licensee. If the amounts recovered by Licensee exceed Licensee's reasonable
third party out-of-pocket fees and expenses, Licensee shall reimburse Licensor
for Licensor's reasonable
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out-of-pocket fees and expenses incurred in hiring its own counsel.
C. Licensor's Right to Bring Infringement Action. If a third party
infringes the Patent within the Field which Licensor wishes to prosecute,
Licensor shall first notify Licensee in writing and request that Licensee bring
an action or proceeding against the infringing third party. If Licensee declines
or fails to bring such an action or proceeding within thirty (30) of receipt of
the notice, Licensor shall have the right, at its discretion, to institute and
prosecute an action or proceeding to xxxxx such infringement and to resolve such
matter by settlement or otherwise. Licensee shall cooperate fully by joining as
a party plaintiff if required to do so by law to maintain such action and by
executing and making available such documents as Licensor may reasonably
request. If the amounts recovered by Licensor exceed its reasonable third party
out-of-pocket fees and expenses, Licensor agrees to pay Licensee for its
reasonable out-of-pocket third party expenses incurred by it in cooperating in
the action or proceeding. Except as specifically provided in this Paragraph,
Licensor shall have the right to retain all amounts recovered of every kind and
nature.
SECTION 8
TERM AND TERMINATION
A. Term. Unless terminated earlier, this Agreement shall begin on the
Effective Date of this Agreement and expire on the expiration date of the Patent
("Term").
B. Licensor's Right to Terminate. Licensor shall have the right to
terminate this Agreement as follows, in addition to all other available
remedies:
(1). If Licensee fails to make any payment or reimbursement when due, this
Agreement shall terminate effective ten (10) days after Licensor's written
notice to Licensee to such effect, unless Licensee cures such failure within ten
(10) days of the notice.
(2). If Licensee fails to observe any other material obligation of this
Agreement, this Agreement shall terminate effective thirty (30) days after
Licensor's written notice to Licensee describing such failure, unless Licensee
cures such failure within the thirty (30) days.
(3). If Licensee shall have filed by or against it a petition under any
bankruptcy or insolvency law and such petition is not dismissed within sixty
(60) days of its filing, or if Licensee makes an assignment of all or
substantially all of its assets for the benefit of its creditors Licensor may
terminate this Agreement by written notice effective as of the (i) date of
filing by Licensee of any such petition, (ii) date of any such assignment to
creditors, or (iii) end of the sixty (60) days if a petition is filed against it
and not dismissed by such
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time, whichever is applicable.
(4). If Licensee shall be dissolved, liquidated or otherwise ceases to
exist, other than for reasons specified in Paragraph 8. B. (3). above, this
Agreement shall automatically terminate as of (i) the date articles of
dissolution or a similar document is filed on behalf of Licensee with the
appropriate government authority or (ii) the date of establishment of a
liquidating trust or other arrangement for the winding up of the affairs of
Licensee.
C. Licensee's Right to Terminate. Licensee may terminate this Agreement at
any time by giving Licensor ninety (90) days prior written notice.
D. Survival. All causes of action accruing to either party under this
Agreement shall survive termination for any reason, as well as (1) Licensee's
obligation to make the required payments and reimbursements accrued prior to the
date of termination and which were not paid or payable before termination.
SECTION 9
ARBITRATION
If the parties cannot satisfactorily settle any claim, disagreement or
controversy arising out of or related to this Agreement or its interpretation,
performance, nonperformance, breach or their respective rights and obligations
hereunder, such disagreement shall, at the request of either party, be settled
by arbitration as follows:
A. Panel. All such disputes shall be referred to an arbitration panel
comprised of three persons, one to be selected by each party hereto and the
third selected by the first two. The arbitrators shall be persons involved in
and familiar with the licensing and technology transfer field. Each party shall
select an arbitrator within twenty (20) days of request for arbitration by
either party. The first two arbitrators shall select the third member of the
panel within fifteen (15) days after their selection. The arbitration shall be
held as soon as is reasonably possible after selection of the arbitration panel.
The proceedings shall be held in an informal manner as reasonably determined by
the arbitrators. Except for the right of appeal as set forth in subparagraph b.
below, the parties shall be bound by a decision of the arbitration panel with
respect to the matter in dispute. All proceedings of the arbitration panel shall
be held in Chicago, Illinois. The panel's costs and fees shall be borne by the
losing party. The arbitrators shall presume that all claims of the Patent are
valid and enforceable, and shall not have the power to access validity.
B. Appeals. There shall be no appeal from an arbitration panel's unanimous
decision. In the event of a majority decision by the arbitration panel, a
dissatisfied party may appeal the panel's decision to the American Arbitration
Association (AAA) for an
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independent binding decision. All appeals shall be heard in Chicago, Illinois.
The dissatisfied party must make such an appeal within thirty (30) days after
receipt of the arbitration panel's decision and if it loses the appeal must bear
the parties' expenses and costs for such appeal. The AAA is hereby authorized to
make arrangements for such arbitration, to be held under the procedures provided
by its arbitration rules. Judgment upon any award rendered by all or a majority
of the appeal arbitrators or a unanimous judgment of the initial panel may be
entered in any court in any county having jurisdiction, after any and all
applicable appeal periods have passed.
SECTION 10
MISCELLANEOUS
A. Marking. Licensee shall and agrees to cause its Sublicensees and
Affiliates of either, to place in a conspicuous location on Licensed Products
(or its packaging where marking the Product is physically impossible) sold to
third parties, a patent notice in accordance with the laws concerning the
marking of patented articles in the country in which such articles are sold.
B. Entire Agreement, Amendment, Waiver. This Agreement constitutes the
entire agreement between the parties regarding the subject matter hereof, and
supersedes all prior written or oral agreements or understandings (express or
implied) between them concerning the same subject matter. This Agreement may not
be amended or modified except in a writing signed by duly authorized
representatives of each party. No waiver of any default hereunder by either
party or any failure to enforce any rights hereunder shall be deemed to
constitute a waiver of any subsequent default with respect to the same or any
other provision hereof.
C. Notice. Any notice required or otherwise made pursuant to this Agreement
shall be in writing, sent by registered or certified mail properly addressed, or
by facsimile with confirmed answer-back, to the other party at the address set
forth above or at such other address as may be designated by written notice to
the other party. Notice shall be deemed effective three (3) business days
following the date of sending such notice if by mail, on the day following
deposit with an overnight courier, if sent by overnight courier, or upon
confirmed answer-back if by facsimile.
D. Assignment. This Agreement shall be binding on the parties hereto
and upon their respective successors and assigns. Either party may at any time,
upon written notice to the other party, assign or delegate to a successor to all
or substantially all of its business any of its rights and obligations
hereunder, provided that, any such assignment or delegation shall in no event
relieve either party of its primary responsibility for the same. Except as
provided in the preceding sentence, Licensee may not assign or delegate any
right or obligation hereunder without the prior written consent of Licensor,
which consent
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shall not be unreasonably withheld, and any attempted assignment or delation in
violation thereof shall be void. Licensor may assign this Agreement at any time
to any third party on written notice to Licensee. In such event, the assignee
shall be substituted for Licensor as a party hereto, and Licensor shall no
longer be bound hereby.
E. Governing Law. The interpretation and performance of this Agreement
shall be governed by the laws of the State of Illinois applicable to contracts
made and to be fully performed in that state.
F. Severability. In the event that any term or provision of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceablility shall not affect any
other term or provision and this Agreement shall be interpreted and construed as
if such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, has never been contained herein.
G. Advertising. Except with the prior written request or consent of the
Licensor, Licensee agrees not to use, and shall prohibit its Sublicensees and
the Affiliates of either from using, the name of the Licensor in any commercial
activity, marketing, advertising or sales brochures.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers or representatives
effective as the date last executed below.
Date: September 17, 1999 By: /s/ Xxx X. Xxxxxxxxxxx
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XXX X. XXXXXXXXXXX
CHILDREN'S BEVERAGE GROUP, INC.
Date: September __, 1999 By: /s/ Xxxxxx X. Xxxxx
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Print Name: Xxxxxx X. Xxxxx
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Its: Secretary
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