Exhibit 10.14
License and Distribution Agreement
THIS LICENSE AGREEMENT is entered into as of October 6th, 2003 (the
"Agreement Date"), by and between:
Imagenetix, Inc., a corporation organized under the laws of
California ("Supplier") and having a usual place of business at 00000 Xxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx Xxxxxxxxxx 00000 and
America China Technology Systems LLC, a corporation organized under
the laws of California("Licensee") and having a usual place of business at
00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000.
1. Introduction
Supplier has developed the Product defined below and is the
owner of various patents, know-how, and other intellectual property
rights relating thereto. Licensee conducts, or will conduct,
business within the Territory and desires to obtain rights
to market, and distribute the Product. Accordingly, in
consideration of the mutual promises contained herein, the parties
agree to the terms and conditions set forth in this Agreement.
2. Definitions
As used in this Agreement:
(a) "Affiliated Parties" of either party to this Agreement
means entities that are owned or controlled by or which own or
control such party or which are owned or controlled by a person or
entity that owns or controls the party. An entity shall be deemed
to be "owned or controlled" by the person or entity having a direct
or indirect right to vote a sufficient portion of the subject
entity's equity securities (or other voting interests) to control
management's policies and directives.
(b) "Base Technology" means the inventions, discoveries,
methods, techniques, know-how, data and other information known to
Supplier on the Agreement Date that is necessary or useful in the
design, development, or manufacture of the Product and that
Supplier has the right to make available to Licensee as provided
herein. This Base Technology compromises the information and the
knowledge to transform Supplier's proprietary compound (esterified
oils) into a finished product (i.e., a topical cream, pill or
liquid).
(c) "New Developments" means inventions, discoveries, methods,
know-how, data, or other information useful to the design,
development, or manufacture of the Product that is developed
after the date of this Agreement.
(d) "Patents" means the patents, if any, set forth in
Exhibit B.
(e) "Product" means the product within the Territory, as
defined in Exhibit A.
(f) "Territory" means the geographical area set forth in
Exhibit A.
(g) "Trademarks" means the trademarks or service marks set
forth in Exhibit C, as it may be amended by Supplier from time to
time.
3. License and Appointment
(a) Supplier hereby appoints Licensee as its sole
distributor of the Product in the Territory and hereby grants
Licensee a non-transferable, exclusive license to utilize the Base
Technology and Patents solely to distribute the Product, in its
original form or in combination with other substances or materials,
in the Territory. These rights may be sublicensed by Licensee
only to its Affiliated Parties located in the Territory which
agree in writing to be bound by the provisions of this Agreement
as if such Affiliated Parties were the Licensee.
(b) Supplier hereby grants Licensee a non-transferable,
license to use the Trademarks in connection with Licensee's
marketing, sales, and distribution of the Product in the
Territory. Licensee shall take whatever action is reasonably
requested by Supplier (at Supplier's expense) to protect
Supplier's rights to these Trademarks in the Territory, including
without limitation using appropriate notices and applying to
become a registered user. Licensee shall have the right to establish
its own Trademark/Tradenames.
(c) If Licensee fails to purchase the amounts of Product
specified in Exhibit D, but is not in default of any other
provision of this Agreement, Supplier shall not have a right to
terminate the Agreement pursuant to Section 12(e) below, but the
license granted in Section 3(a) above shall become nonexclusive
and Supplier and any agents or licensees it designates shall be
entitled to manufacture, market, distribute, sell, and service the
Product in the Territory and to use the Trademarks in connection
therewith.
4. Modifications
(a) If Supplier creates a New Development, it will not offer
to sell or license the New Development to any third party in the
Territory, unless Supplier shall have first offered to sell or
license the New Development to Licensee. If Supplier's offer
consists of a license with respect to such New Development, the
license shall be on an exclusive basis in the Territory, subject
to negotiated provisions regarding termination and loss of
exclusivity. Once Supplier has offered to sell or license the
New Development to Licensee, Licensee shall have 14 calendar
days to accept or reject the offer. If Licensee has not
accepted the offer in writing within that period, the offer shall
be deemed to have been rejected as of the expiration of the
period. If Licensee rejects Supplier's offer, Supplier may offer
to sell or license the New Development to any third party
without limitation. However, Supplier may not offer to grant a
license to any third party on terms that are materially more
favorable to the third party than the terms of the license offered
to Licensee without first giving Licensee 14 calendar days to
accept or reject an offer comparable to the one made to the third
party.
(b) If Licensee develops a New Development, Licensee shall
provide information regarding this New Development to Supplier
sufficient to enable Supplier to understand the New Development.
Licensee hereby grants Supplier a nonexclusive, royalty-free
perpetual license to use such information in its research,
development, design, manufacture, and marketing activities relating
to the Product and related items.
5. Product Pricing and Payment
(a) Licensee shall pay Supplier for Product in its oil form provided
in one or more whole drums, each drum containing 170 kilograms of
the Product in oil form, at a price of $12,750 per drum. This is
equivalent to $75 per kilo of oil Product.
(b) Licensee shall pay Supplier for Product in its powder form
provided in one or more whole drums, each drum containing 25
kilograms of the Product in powder form, at a price of $1,625 per
drum. This is equivalent to $65 per kilo of powder Product.
(c) All payments shall be made in U.S. dollars.
(d) The cost per drum is FOB San Diego.
(e) Payment will be 25 percent paid upon placing order, with 75
percent paid when Licensee receives verification and
documentation that Product has been transferred from Supplier
to Licensee in San Diego or Long Beach, California.
6. Technical Assistance
(a) Within 30 days following the Agreement Date, Supplier
shall deliver to Licensee all recorded technical information
in its possession with respect to the Base Technology. Supplier
shall provide Licensee with such technical assistance as may be
reasonably necessary to inform Licensee fully about the Base
Technology. If requested by Licensee from time to time and
subject to the availability of appropriate Supplier personnel,
Supplier will provide Licensee with engineering assistance for
the purpose of improving or modifying the Product at Supplier's
then-effective billing rates for such services plus out-of-pocket
expenses.
(b) Licensee shall provide purchasers of the Product with
whatever information, technical assistance, and service,
as may be customary in the Territory for such products.
7. Intellectual Property Rights
(a) The Base Technology and Patents are and shall continue to
be the property of Supplier exclusively and may be used by
Licensee only as provided in this Agreement.
(b) Any inventions or improvements (whether or not
patentable), know-how, or other information developed by
either party with respect to the Product shall belong solely to
the developing party, subject (i) in the case of New Developments
developed by Supplier, to Licensee's rights pursuant to Section
4(a) above, and (ii) in the case of New Developments developed by
Licensee, to Supplier's rights pursuant to Section 4(b) above.
(c) All Products manufactured by or for Licensee pursuant to
this Agreement shall be labeled with patent and other notices in
form and content sufficient to protect fully Supplier's
intellectual property rights. Licensee agrees to use any
reasonable form of notice, and manner of affixing such notice,
specifically requested in writing by Supplier.
8. Commercialization and Marketing
(a) Licensee shall undertake all expenses of commercializing
the Product in the Territory, such as funding capital equipment
requirements, packaging, and production start-up expenses.
(b) Licensee, at its own expense, shall take all steps that
must be taken to satisfy all requirements applicable within the
Territory with respect to declaring, recording, filing,
notifying, authenticating, or otherwise rendering this Agreement
valid. Licensee, at its own expense, also shall apply for and
secure within 180 days after the Agreement Date all governmental
and regulatory approvals necessary to sell the Product in the
Territory.
(c) Licensee shall use commercially reasonable efforts to
optimize sales of the Product in the Territory.
(d) Licensee agrees neither to sell the Product bundled with
other products to which a single price applies, nor to reduce the
price of the Product to customers who also purchase other
products from Licensee.
(e) Licensee shall obtain Supplier's prior approval of each use of
Supplier's name or Trademarks and, to such end, shall submit a
prototype of each such use to Supplier for review. Supplier
shall be deemed to have approved a proposed use of its name or
Trademarks if it has not objected in writing within 14 calendar
days following its receipt of the prototype.
9. Confidentiality
All proprietary information disclosed by one party to the
other and marked as confidential or proprietary shall be treated
as confidential and not disclosed or transferred by the recipient
to third parties, other than the recipient's agents, sub-licensees
and employees who need to know this information to serve the
recipient and who are obligated to treat this information as
confidential. In addition, Licensee acknowledges that the Base
Technology and New Developments of Supplier constitute trade secrets
and proprietary properties of Supplier and agrees not to disclose
or transfer such information or materials (or any copy or
counterpart) to any third person, nor use these in any manner
except pursuant to this Agreement; and Licensee shall take the
more stringent of reasonable measures, and the measures it uses
to protect its own comparable information and material, to
prevent this transfer and use, including without limitation
restricting access to its employees who require access to serve
Licensee and who are obligated to treat such information as
confidential. The foregoing non-disclosure provisions shall not
apply to any information that is or becomes part of the public
domain without breach of any obligation to the party owning or
controlling such information.
11. Representations and Warranties
(a) Supplier hereby represents and warrants to Licensee
that:
(i) it owns all Patents or patent applications, free and
clear of liens or encumbrances, and has no actual
knowledge of any conflicting patents or patent
applications;
(ii) it has the full authority to enter into this
Agreement without the prior consent or
authorization of any court, agency, or other
third party;
(iii) the undersigned officer has the full authority and
approval of the Board of Directors of Supplier to
enter into this Agreement; and
(iv) this Agreement does not violate the terms of any
agreement, order, or other arrangement to which
Supplier is subject or by which it is bound.
SUPPLIER MAKES, AND LICENSEE RECEIVES, NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, EXCEPT AS SPECIFICALLY STATED
IN THIS AGREEMENT.
(b) Licensee hereby represents and warrants to Supplier
that:
(i) it has the full authority to enter into this
Agreement without the prior consent or other
authorization of any court, agency, or other third
party;
(ii) the undersigned officer has the full authority and
approval of the Board of Directors of Licensee to
enter into this Agreement; and
(iii) this Agreement does not violate the terms of any
agreement, order, or other arrangement to which
Licensee is subject or by which it is bound.
12. Term and Termination
(a) This Agreement shall remain in effect for an initial term
of 10 years, and shall be renewed for successive additional terms
of 5 years unless at least 60 days prior to commencement of any
additional term either party, acting in its sole discretion,
notifies the other of its intent not to renew, or unless the
Agreement is otherwise terminated as permitted in this Section 12.
(b) Supplier may terminate this Agreement immediately by
written notice to Licensee if Licensee or any Affiliated Party of
Licensee begins marketing a product that competes with the Product
or that renders the Product obsolete, or upon the occurrence of any
of the following events:
(i) the institution of proceedings by Licensee in
bankruptcy, reorganization, receivership, or
dissolution;
(ii) the institution of proceedings against Licensee in
bankruptcy, reorganization, receivership, or
dissolution, unless such proceedings have been
dismissed or otherwise terminated within 60 days
following the date they were initiated; or
(iii) the making of an assignment for the benefit of
creditors by Licensee.
(c) Either party may terminate this Agreement at any time
for a default by the other party, effective on the date specified
in a notice of termination, provided that at least 30 days prior
to giving such notice of termination the terminating party shall
have notified the defaulting party of the default and the
defaulting party shall have failed to remedy the default within
such 30-day period or, if the default is not susceptible of being
remedied within such period, shall have failed to initiate action
within such period that is reasonably calculated to remedy the
default as promptly as practicable or shall have failed to pursue
such action diligently to completion.
(d) Upon expiration or termination of this Agreement for any
reason, the licenses and appointment set forth in Section 3 above
shall terminate.
(e) Upon termination of this Agreement, Licensee shall
return to Supplier, or destroy, all materials in its possession
that constitute or describe, in whole or in part, any
confidential or trade secret information of Supplier, including
without limitation confidential information concerning the Base
Technology and New Developments of Supplier. However, Licensee
may retain one copy of any materials reasonably necessary
for any maintenance or support obligations to its customers which
it reasonably assumed. Within 10 business days after termination
Licensee shall notify Supplier of any materials it intends to retain
pursuant to the preceding sentence; shall certify in writing, by an
officer, that it has returned or destroyed all other such materials;
and shall agree in writing to hold all such materials, and the
information they contain, in confidence in accordance with Section
10.
(f) If this Agreement is terminated, then the terminating
party shall not be liable to the other for any damages,
indemnification, expenditures or loss of profits or prospective
profits of any kind sustained or arising out of such termination,
both parties hereby irrevocably waiving any such rights to the
fullest extent permitted under the laws of their respective
countries and of any other jurisdiction. Neither party shall
bring any action or proceeding of any nature whatsoever in any
court, before any tribunal, or under any arbitration proceeding
provided for herein, seeking or claiming any such damage or loss.
Each party recognizes and acknowledges that the other party is
entering into this Agreement in reliance upon and in
consideration of the agreements and covenants contained in this
paragraph (h).
(g) Sections 4(b), 5(c), 5(d), 7, 9, 10, 12(d), 12(e),
12(f), 13, 14, 17, and 22 shall survive termination of this
Agreement.
13. Indemnification
(a) Supplier shall indemnify and hold harmless Licensee
and its officers, directors, employees, licensees, and agents
from and against any liabilities, costs, or other damages
(including reasonable attorneys' fees and litigation costs)
arising out of a breach of any of Supplier's representations or
warranties expressed in Section 11 above, provided Licensee took
reasonable actions to minimize such damages.
(b) Licensee shall indemnify and hold harmless Supplier
and its officers, directors, employees, licensees, and agents
harmless from and against any liabilities, costs, or other
damages (including reasonable attorneys' fees and litigation
costs) arising out of Licensee's or its Affiliated Parties'
manufacture, use, or sale of the Product or their improvements or
alterations thereto or from a breach of any one or more of
Licensee's representations or warranties expressed in Section
11 of this Agreement, provided Supplier took reasonable actions to
minimize such damages.
14. Infringements
(a) Although Supplier believes that Licensee's contemplated
use of the Base Technology and Patents pursuant to the license
granted by Section 3(a) will not infringe any valid patent,
trade secret, or other intellectual property right of a third
party in the Territory, it cannot warrant this as a fact.
Accordingly, Supplier's sole responsibility, and Licensee's
exclusive remedy, in connection with any claim of such
infringement shall be to defend any suit or proceeding brought
against Licensee so far as it is based on a claim that the use
of the Base Technology or Patents by Licensee or its customers
constitutes an infringement or misappropriation of the rights of
a third party, provided Supplier is notified within ten (10)
calendar days after the commencement of such suit or proceeding
and receives Licensee's full and complete authority,
information, and assistance (at Supplier's expense) for its
defense; and Supplier shall pay all damages and costs awarded
in the action against Licensee, but shall not be
responsible for any compromise made without its consent. If such
use of the Base Technology or Patents is claimed or held to
constitute such an infringement, or if Supplier determines
that such claim or holding is likely to be made, Supplier, at
its option and expense, may either procure for Licensee the
right to continue using the allegedly infringing item; modify
the item so that it becomes non-infringing; replace the item with
a non-infringing counterpart; or terminate the associated
license rights, require the return of the applicable material,
and, if appropriate, adjust or refund the payments made or to be
made by Licensee. The foregoing indemnity shall not apply to
the extent that the claim of infringement either is based upon
Licensee's use of the allegedly infringing item with an article
or process developed by Licensee or obtained from a third party,
or arises from Licensee's activities outside the scope of the
Section 3(a) license, or arises from uses of the Product by
Licensee's customers in ways that were not intended.
(b) If either party learns of any possible infringement or
misappropriation of Supplier's rights in the Base Technology,
Patents or Product, it shall give notice thereof to the other
party. Licensee agrees to cooperate with the Supplier's
reasonable efforts to seek legal remedies for such
infringements and misappropriations.
(c) Supplier makes no warranty and undertakes no liability
or responsibility with respect to Licensee's use of the
Trademarks in the Territory. Licensee shall research the
availability of the Trademarks for use and registration in the
Territory before actually using them; notify Supplier if it has
reason to believe that the Trademarks are not available and
cooperate with Supplier in determining an appropriate course of
action; and indemnify Supplier and hold it harmless from any
infringement claims that arise in connection with Licensee's use
of the Trademarks unless, despite Licensee's notice of
unavailability, Supplier requires their use and agrees to assume
responsibility therefor.
(d) Supplier does not hereby assume any liability or
obligation in connection with infringement claims relating to its
New Developments. Rather, any such liability or obligation shall
be subject to good faith negotiation between the parties at the
time Licensee seeks rights to such New Development pursuant to
Section 4(a) above.
15. Assignment and Sublicensing
(a) Licensee may sublicense any third party to
manufacture, market, distribute, sell, or service the Product.
All proposed sublicense agreements shall contain
provisions pursuant to which the sublicensee agrees: (i) to
maintain the secrecy of confidential information and to sign a
Confidentiality Agreement substantially in the form of Section
10; and (ii) to comply with and perform the obligations delegated
to it by Licensee under this Agreement as if this Agreement were
binding on it.
(b) Licensee may not assign this Agreement, or any rights or
obligations under it, to any third party without obtaining the
prior written consent of Supplier.
16. Independent Contractor Status.
Supplier and Licensee are independent contractors, and this
Agreement shall not be deemed to constitute either party a
partner, joint venturer, franchisee, servant, agent, or employee
of the other.
17. USA Export Controls
Licensee agrees not to export, re-export, or permit the re-
exportation of any Product to any country now or hereafter
included in the U.S. Department of Commerce's list of countries
to which exportation of products of such type is or may be
restricted or prohibited, unless that exportation or re-
exportation is authorized specifically by a special license
issued by the Office of Export Administration of the United
States of America. This provision shall not be interpreted to
expand the definition of "Territory" set forth above.
18. Force Majeure
Neither party shall be deemed to be in default under this
Agreement as long as its failure to perform any of its
obligations hereunder is occasioned solely by fire, labor
disturbance, acts of civil or military authorities, acts of God,
or any similar cause beyond such party's reasonable control.
[However, if a party is so rendered incapable of performing for
a continuous period of 45 days or more, the other party may
terminate this Agreement immediately upon notice to the non-
performing party, subject to the provisions of Section
12(d)-(g).]
19. Further Assurances
Each party shall cooperate fully with the other party,
execute such further instruments, documents, and agreements, and
give such further written assurances, as may be reasonably
requested by the other party to carry into effect the intents and
purposes of this Agreement.
20. Counterparts
This Agreement may be executed in separate counterparts, each
of which shall be deemed an original and, even if executed
separately by each party, shall constitute a single original
instrument, effective as if the parties had executed one and the
same instrument.
21. Waiver
No waiver of any term or condition of this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be
deemed to be a further or continuing waiver of that term or
condition or a waiver of any other term or condition.
22. Notices
All notices and other communications called for hereunder
shall be in writing, shall specifically refer to this Agreement,
and shall be delivered in person or sent by international carrier
or overnight mail, by telex or telecopy, or by other means
providing proof of delivery, to the parties at their respective
addresses set forth above, or to any other address of which a
party notifies the other. All notices shall be deemed to be
effective on the date of actual receipt or five days after
transmission as provided above, whichever is sooner.
23. Entire Agreement; Amendment and Modification
This Agreement constitutes the entire agreement between the
parties with respect to its subject matter and may be amended
only by a writing executed by each of the parties.
24. Binding Effect; Successors and Assigns; Language
This Agreement, as set forth in English, shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The parties have specifically requested
that English be the official language for the Agreement, that
all related documents be drawn up in English, and that all
communications and dispute resolution take place in English.
25. Severability; Enforceability
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provisions. If any law or rule within the Territory should
prohibit, make impossible, or limit any obligation of Licensee
under this Agreement, Supplier shall have the right, at its
option, to suspend or terminate this Agreement or modify it
as may be reasonably necessary to obtain the benefits
contemplated herein.
26. Headings
The section headings contained in this Agreement are for
informational purposes only and are not to be construed to affect
the meaning or application of any provision.
27. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of California, U.S.A. The
State of California shall be the venue for any action arising with
respect to this Agreement or the relationship between the
parties, and each party hereby expressly consents to the
jurisdiction of the courts of California and U.S.A. for
this purpose.
28. Arbitration of Disputes
Any controversy or claim arising out of or relating to this
Agreement or its breach, which the parties fail to resolve by
agreement within thirty (30) days of notice of such controversy
or claim, shall be resolved by binding arbitration under the
rules and auspices of the American Arbitration Association and
shall be conducted by a single arbitrator with experience to apply
the laws of the state of California.
The arbitrators shall have no authority to award punitive
damages. The costs of the arbitration shall be borne equally by
the parties and each party shall bear its own associated costs,
except that if the arbitrator in its discretion determines that
there is good cause for doing so (such as willful misconduct or
bad faith) it may award the prevailing party its reasonable
attorneys' fees and costs incurred in connection with the
arbitration.
Notwithstanding the foregoing, the parties reserve the right
to seek and obtain injunctive relief, whether in the form of a
temporary restraining order, preliminary injunction, injunction
to enforce an arbitration award, or other order of similar
import, from any court of competent jurisdiction prior to,
during, or after commencement or prosecution of arbitration
proceedings or the final decision and award of the arbitrators.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed as an instrument under seal as of the date first
written above.
IMX ACTS
SUPPLIER LICENSEE
By:/s/Xxxxxxx X. Xxxxxxx By:/s/Xxxxxx X. Xxxxxxxx
(signature) (signature)
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: President Title: CEO
EXHIBIT A
Product, Territory and Miscellaneous
I. Definitions
A. Product: Supplier's proprietary esterified oils compound
used by Licensee to manufacture finished product in the form
of a topical cream, ingestibles (such as tablet, capsule and
softgel), liquid and other discoveries in the area of
transforming Supplier's proprietary compound into acceptable
consumer delivery form.
B. Territory: The Peoples Republic of China, Vietnam, Thailand,
Singapore, Philippines, Myanmar, Malaysia, Laos, Indonesia,
Cambodia, Brunei
C. Exclusivity does not include direct-to-consumer distribution
in the form of television and multi-level marketing or
direct selling businesses such as Amway and Avon.
IMX ACTS
SUPPLIER LICENSEE
By:/s/Xxxxxxx X. Xxxxxxx By:/s/Xxxxxx X. Xxxxxxxx
(signature) (signature)
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: President Title: CEO
EXHIBIT B
Patents and Patent Applications
For purposes of the Agreement the term "Patents" shall refer
to the letters patent listed below and to the letters patent
subsequently issued with respect to the patent applications
listed below.
I. Patents:
Country Number Expiration Date
II. Patent Applications:
Country Serial Number Filing Date
U.S.
Trademarks and Service Marks
For purposes of the Agreement the term "Trademarks" shall refer to
the Marks listed below, whether registered or unregistered.
Xxxx Registration/ Country Date of Issuance/
Application No. Filing
EXHIBIT D
Purchases Of Product Related To Exclusivity Provisions
For purposes of the Agreement and the exclusivity provisions of Section 3 (d),
the Licensee shall make minimum twelve-month purchases of Product as listed
below;
Twelve-month period Minimum
following final governmental Twelve-Month
approval in the Territory Purchase
Months 1-12 $250,000
Months 13-24 $1.5 million
Months 25-36 $3 million
Months 37-48 $5 million
Months 49-60 $7 million
