EXHIBIT 10.1
EXCLUSIVE LICENSE AGREEMENT
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This Exclusive License Agreement (the "AGREEMENT") is made as of May 1,
2006 (the "EFFECTIVE DATE"), by and between Smoky Systems, LLC, a Nevada limited
liability company ("LICENSOR"), and Smoky Market Foods, Inc., a Nevada
corporation ("LICENSEE"). This Agreement may refer to the parties individually
as a "PARTY" or collectively as the "PARTIES."
RECITALS
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A. Licensor owns certain intellectual property rights (including but
not limited to the trademark SMOKY MARKET(R)), contract rights, and other rights
relating to the production, marketing, distribution, and/or sale of meats, fish,
poultry, vegetables, and other food products.
B. Licensee desires to obtain, and Licensor is willing to grant to
Licensee, an exclusive worldwide license to exercise those intellectual property
rights and related rights.
COVENANTS, PROMISES, AND OBLIGATIONS
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NOW, THEREFORE, in consideration of the recitals set forth above, the
mutual covenants, promises, and obligations set forth herein, and for other good
and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged by the Parties, and intending to be legally bound hereby,
Licensor and Licensee agree as follows:
1. DEFINITIONS. In addition to terms defined elsewhere in this Agreement,
including without limitation in the preamble and Recitals, the following
terms shall have these meanings:
1.1 "AFFILIATE" means, with respect to a Party, any Person controlled
by, controlling, or under common control with the Party. For this
purpose, control means direct or indirect beneficial ownership of
at least a fifty percent (50%) interest in the income, stock, or
other ownership structure of such Person or other operational
control. Notwithstanding the foregoing definition, the term
"Affiliate" when used with respect to Licensee shall not include
Licensor and when used with respect to Licensor shall not include
Licensee, except as expressly stated otherwise in this Agreement.
1.2 "IMPROVEMENTS" means (a) any and all improvements to any of the
Intellectual Property Rights that Licensor and/or any of its
Affiliates makes, authors, invents, discovers, conceives, designs,
reduces to practice, or otherwise develops during the Term; and (b)
any and all "derivative works" (as defined under the United States
Copyright Act) of any works of authorship available for use by
Licensee pursuant to the Licensed Rights under this Agreement that
Licensee and/or any of its Affiliates authors or creates, or
contracts with third parties to author or create, during the Term.
1.3 "INTELLECTUAL PROPERTY RIGHTS" means (a) patents, utility models,
patent applications, and continuing (continuation, divisional, or
continuation-in-part) applications, re-issues, extensions,
renewals, and re-examinations thereof and patents issued thereon
("PATENTS"); (b) registered and unregistered trademarks, service
marks, trade names, domain names, and all of the associated
goodwill ("MARKS"); (c) registered and unregistered copyrights and
all other literary and author's rights ("COPYRIGHTS"); (d) trade
secrets, know-how, show-how, concepts, ideas, methods, processes,
designs, discoveries, improvements, and inventions, whether
patentable or unpatentable ("TRADE SECRETS"); (e) all other
intellectual, industrial, and proprietary rights now or hereafter
coming into existence throughout the world; (f) applications for
and registrations, renewals, and extensions of any of the
foregoing; and (g) exclusive and non-exclusive license rights to
any of the foregoing. Any and all Intellectual Property Rights that
expire and/or that are finally determined by court(s) or other
government bodies of competent jurisdiction to be invalid or
unenforceable shall thereafter be excluded from this definition of
"Intellectual Property Rights."
1.4 "LICENSED RIGHTS" means any and all Intellectual Property Rights,
sub-licensable or otherwise delegable contract rights, and other
related rights owned or otherwise held by Licensor with respect to
the production, marketing, distribution, and/or sale of meat, fish,
poultry, vegetable, and other food products.
1.5 "LICENSED PRODUCTS" means any and all meat, fish, poultry,
vegetable, and other food products identified on Exhibit A to the
Processing Agreement and all related and derivative food products
developed during the Term by Licensor and/or its Affiliates. A food
product shall be considered a "related" or "derivative" food
product if (a) absent this Agreement, it would infringe or
otherwise violate any of the Licensed Rights; (b) it is made using
a process, method, or machine that, when used absent this
Agreement, would infringe or otherwise violate any of the Licensed
Rights; and/or (c) is marketed or sold using modular kiosks and/or
buildings designed by Licensor.
1.6 "LICENSED MARKS" means the registered Xxxx "SMOKY MARKET" and
associated logo(s), the Marks "SMOKE-BAKED," "SouthernQ, BarBQ
Station," "BarBQ2U" and "SMOKE-BAKING," and all other Marks owned
by and licensed to Licensor relating to the production, marketing,
distribution, and/or and sale of meats, fish, poultry, vegetables,
and other food products.
1.7 "PERSON" means any natural person, corporation, partnership, trust,
limited liability company, association, organization, governmental
authority, or other legal entity.
1.8 "PROCESSING AGREEMENT" means that certain Processing Agreement
dated January 10, 2001 between Licensor and May Ann's Specialty
Foods, Inc. (the "PROCESSOR"), as the same may be amended from time
to time.
1.9 "PROCESSING AND SPECIAL FACILITIES COST" means the sum of (a) the
cost to Licensee, its Affiliates, sublicensees, and/or franchisees
of purchasing Licensed Products from the Processor and/or
manufacturing Licensed Products; (b) the purchase, manufacturing,
and/or lease costs of Licensee, its Affiliates, sublicensees,
and/or franchisees associated with the proprietary ovens used to
produce Licensed Products; and (c) the purchase, manufacturing
and/or lease costs of Licensee, its Affiliates, sublicensees,
and/or franchisees associated with any and all modular kiosks and
buildings and mobile kitchen trailers designed by Licensor and used
by Licensee, its Affiliates, sublicensees, and/or franchisees in
the production, marketing, and/or sale of Licensed Products.
1.10 "ROYALTY" means five percent (5%) of the Processing and Special
Facilities Cost.
1.11 "SALES" means the gross amounts invoiced by Licensee, its
Affiliates, sublicensees, and/or franchisees on sales of Licensed
Products, without double-counting any invoice amounts for the same
products, minus any amounts refunded or credited back to
Affiliates, sublicensees, franchisees, and customers on returns of
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Licensed Products. If a Licensed Product is sold in a single-priced
package with non-Licensed Products, "Sales" of that Licensed
Product will be calculated based on the average Sales amount
invoiced for that Licensed Product on a stand-alone basis during
the same quarter or, if no such Sales took place, at a reasonable
amount to be agreed by the Parties.
1.12 "TERRITORY" means the world.
2. GRANT OF RIGHTS.
2.1 LICENSES. Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee, under the Licensed Rights and
any Improvements, the exclusive right and license in the Territory
during the Term, to: (a) make, have made, use, sell, and import
Licensed Products; (b) make, have made, use, and import machines,
tools, materials, and other instrumentalities, insofar as such
machines, tools, materials, and other instrumentalities are
involved in or incidental to the development or production of
Licensed Products; (c) convey to any customer the right to resell
Licensed Products (whether or not as part of a larger combination);
(d) otherwise exercise the License Rights in the production,
marketing, and/or sale of Licensed Products; (e) sublicense to
third parties any or all of the foregoing rights; and (f) engage in
franchising.
2.2 LICENSED MARKS.
2.2.1 Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee the exclusive right and
license in the Territory during the Term, to use the
Licensed Marks to identify, promote, advertise, distribute,
sell, and/or offer to sell Licensed Products and otherwise
exercise Licensee's rights under this Agreement.
2.2.2 All proprietary rights and goodwill in the Licensed Marks
arising from the use of the Licensed Marks pursuant to this
Agreement shall inure to the benefit of and be owned by
Licensor and not the Licensee. Licensee shall acquire no
property rights whatsoever in the Licensed Marks by reason
of its use thereof, and if, by operation of law or
otherwise, Licensee is deemed to, or appears to, own any
property rights in any of the Licensed Marks, Licensee
shall, at Licensor's request and expense, execute any and
all documents necessary to conform or otherwise establish
Licensor's rights therein.
2.2.3 Licensee agrees to identify Licensor as the owner of the
Licensed Marks in all written materials using the Licensed
Marks and to comply with all of Licensor's reasonable
written guidelines concerning use of the Licensed Marks and
the quality of Licensed Products bearing the Licensed Marks,
to the extent that Licensee has actual notice of them.
Licensee shall cooperate with Licensor's efforts to monitor
compliance with its standards regarding product quality.
2.2.4 Licensee agrees to provide Licensor with samples or
photographs of each of Licensee's proposed uses of the
Licensed Marks at least ten (10) business days before such
use commences. If Licensor does not provide written notice
to Licensee of Licensor's disapproval of the proposed use
within such period and the reasons for such disapproval, the
use will be deemed approved by Licensor.
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2.3 "SMOKY MARKET" WEBSITES. Licensee shall have the right to operate
any and all websites using any and all domain names registered by
Licensor or any of its Affiliates containing the term "Smoky
Market" or any of the other Licensed Marks. If Licensor declines to
register a given domain name containing the term "Smoky Market" or
any of the other Licensed Marks, Licensee may register and use such
domain name(s) as part of its trademark license under this
Agreement.
2.4 MARKETING MATERIALS, RECIPES, AND DESIGNS.
2.4.1 As part of Licensee's rights under this Agreement, Licensee
shall have the right to use and modify during the Term, and
Licensor shall promptly provide to Licensee, any and all
marketing materials, recipes, and designs (including but not
limited to technical designs with respect to ovens) relating
to the Licensed Products, including without limitation
materials that constitute, describe, or otherwise reflect
any Improvements (collectively, the "LICENSED MATERIALS").
2.4.2 To the extent that Licensee creates any "derivative works"
(as defined under the United States Copyright Act) of any
Licensed Materials, Licensee agrees that Licensor (and/or
its suppliers or licensors) shall own all Copyrights in and
to such derivative works. Licensee shall, at Licensor's
request and expense, execute any and all documents necessary
to transfer and assign the Copyrights in such derivative
works to their rightful owner, except that Licensee shall
have and retain (regardless of the termination of this
Agreement for any reason) an exclusive license of all of the
Copyrights in and to any such derivative works to the extent
that they reflect any inventions, whether patentable or
unpatentable, conceived, created, reduced to practice, or
otherwise developed by Licensee.
2.5 SUBLICENSES. For each sublicense or franchise that Licensee grants
pursuant to this Agreement, Licensee shall enter into a written
agreement requiring the sublicensee or franchisee to be bound by
and comply with the pertinent provisions of this Agreement, as
designated by Licensor in writing. Each agreement shall expressly
grant Licensor the right, but not the obligation, to enforce those
provisions against the sublicensee or franchisee. Notwithstanding
the foregoing sentence, Licensee shall be responsible to Licensor
for its sublicensees' and franchisees' compliance with those
provisions, shall notify Licensor of any breaches thereof that come
to the attention of Licensee, and shall make commercially
reasonable efforts to enforce them, subject to Licensor's
preeminent right to protect its Intellectual Property Rights.
2.6 NATURE OF LICENSES. The licenses granted under this Agreement and
Licensor's obligations with respect thereto are intended by the
Parties to constitute the licenses of intellectual property for
purposes of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code.
2.7 NOTICE OF IMPROVEMENTS. Licensor shall provide Licensee prompt,
written notice of any and all Improvements, which shall be included
as part of the Licensed Rights.
2.8 RETAINED RIGHTS. Licensor shall retain a limited right to exercise
and license others to exercise the Licensed Rights, but solely for
purposes of developing Improvements.
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3. CONSIDERATION TO LICENSOR.
3.1 LICENSE FEE. As soon as reasonably practicable after execution of
this Agreement, Licensee shall transfer to Licensor 40,000,000
shares of Licensee's common stock.
3.2 ROYALTY. As additional consideration for the Licensed Rights
granted to Licensee, Licensee agrees to pay Licensor the Royalty in
U.S. dollars on a monthly basis, within ninety (90) days after the
end of the month in which Licensee incurs the respective Processing
and Special Facilities Cost. Licensee shall provide Licensor a
reasonably detailed statement of the Royalty calculation with each
Royalty payment.
3.3 ROYALTY TERM. Licensee's obligation to pay the Royalty to Licensor
will start on the Effective Date and will continue until this
Agreement terminates, unless any of the following events occurs
before termination, in which case the Royalty obligation shall
terminate as of the earliest of them: (a) the expiration of the
last of the Licensed Rights; or (b) courts other government bodies
of competent jurisdiction finally determine that the last of the
Licensed Rights is/are invalid or unenforceable.
3.4 TAXES. Licensee agrees to pay and bear the liability for all taxes
associated with the production, marketing, distribution, and/or
sale of Licensed Products, including but not limited to sales, use,
excise, added value, and similar taxes, and all customs, duties or
governmental impositions, whether imposed by the government of the
United States, any state, county, city or municipality, but
excluding taxes on Licensor's net income, capital, or gross
receipts, or any withholding taxes imposed if such withholding tax
is allowed as a credit against United States income taxes of
Licensor. If Licensee is required to withhold any such taxes,
Licensee agrees to furnish Licensor all required documentation
substantiating such withholding.
4. LICENSEE RECORDS; AUDIT RIGHTS.
4.1 LICENSEE RECORDS. Licensee agrees to keep complete and accurate
records to support its calculation of the Royalty and its
compliance with this Agreement.
4.2 AUDIT RIGHTS. Licensor shall have the right no more frequently than
once per year, upon reasonable notice to Licensee, during
Licensee's ordinary business hours, and at Licensor' expense, to
examine and take excerpts from such records for the purpose of
determining Licensee's compliance with its obligations under this
Agreement. Such records shall be maintained by Licensee and kept
available for inspection by Licensor on a three (3) year rolling
basis. Any and all expenses associated with Licensor's audit of
Licensee's records shall be borne solely by Licensor, unless an
audit demonstrates an underpayment of ten percent (10%) or more for
an annual period, in which case Licensee shall pay the reasonable
costs of such audit.
4.3 CONFIDENTIALITY. Any copies of Licensee records and any information
obtained from Licensee in any examination pursuant to Section 4.1
shall be Confidential Information of Licensee within the meaning of
Section 11.1 of this Agreement, regardless of whether such
information or records are marked "confidential" or "proprietary."
5. CONDITIONS FOR MAINTAINING EXCLUSIVE NATURE OF LICENSE RIGHTS. Licensee
agrees that, as a condition to maintaining the exclusive nature of its
license rights under this Agreement, Sales of Licensed Products for the
fifth (5th) year of this Agreement shall equal or exceed thirty million
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U.S. dollars (US$30,000,000). If Licensee fails to meet that minimum Sales
amount during the fifth (5th) year of this Agreement, or Sales thereafter
fall below that minimum annual amount for any one (1) year, Licensor shall
have the option, on written notice to Licensee, to make Licensee's license
rights under this Agreement non-exclusive for the remainder of the Term.
6. INTELLECTUAL PROPERTY PROTECTION.
6.1 LICENSED RIGHTS. Licensor, at its own expense, shall use all
commercially reasonable efforts to defend and protect the
Intellectual Property Rights associated with the Licensed Rights,
subject to the provisions of this Section 6.
6.2 PATENTS.
6.2.1 PATENT REGISTRATION. Licensor shall have the right, but not
the obligation, to seek patent registration or other
protection under the patent laws of the United States or any
foreign jurisdiction, at its own expense, regarding
patentable Improvements developed by Licensor, its
Affiliates, and/or its contractors. Licensee shall have the
right, but not the obligation, to seek patent registration
or otherwise to seek or maintain protection under the patent
laws of the United States or of any foreign jurisdiction, at
its own expense, with regard to any inventions discovered,
conceived, designed, reduced to practice, or otherwise
developed by Licensee or any individuals employed or
otherwise contracted by or on behalf of Licensee. If, after
any appointment of a trustee-in-bankruptcy or
court-appointed receiver of the assets or business of
Licensor, Licensor (or such trustee or receiver) or its
applicable Affiliate does not elect to seek patent
registration or other protection available under United
States law within ninety (90) days of the discovery and/or
development of any Improvement(s) developed by Licensor
and/or any of its Affiliates, or at least sixty (60) days
prior to the running of any provisional application or any
period of protection under the U.S. patent laws, Licensee
shall have the right to pursue such patent protection for
the sole benefit and on behalf of Licensee, and Licensor and
its Affiliates agree to cooperate fully with Licensee's
efforts. If Licensor or any of its Affiliates determines
that it will not seek patent protection for any
Improvement(s) with respect to which it has the right to
obtain such protection, Licensor shall notify Licensee of
such determination promptly, and, in any event, so as not to
prejudice Licensee's ability to obtain such patent
protection if Licensee desires in its sole discretion to
seek it, and Licensee shall have the right to pursue such
patent protection for the sole benefit and on behalf of
Licensee.
6.2.2 PATENT MAINTENANCE. Licensor shall pay all required
maintenance and other fees necessary to maintain the
validity of any Patents included in the Licensed Rights and
to undertake commercially reasonable efforts to defend the
validity and enforceability of such Patents. If Licensor or
any of its Affiliates, as applicable, decides to abandon or
otherwise fails to protect any such Patents, e.g., by not
paying maintenance, not defending a Patent, or otherwise,
Licensor shall first notify Licensee in sufficient time to
enable Licensee to undertake all necessary actions to
preserve and defend such Patents, and Licensee shall have
the right but not the obligation to undertake any such
actions, and Licensor and its Affiliates shall cooperate
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with Licensee in its efforts to do so. All amounts expended
and obligations reasonably incurred by Licensee in doing so
shall be allowed by Licensor as a credit against Royalties
due under this Agreement.
6.3 COPYRIGHTS, MARKS, AND TRADE SECRETS. Licensor shall use
commercially reasonable efforts to preserve, maintain, and protect
any Copyrights, Marks, and Trade Secrets included in the Licensed
Rights, including without limitation the making of appropriate
filings with respect to registered Copyrights and registered Marks
and, subject to the provisions of Section 6.2, the protection of
the confidentiality of Trade Secrets. Notwithstanding the foregoing
sentence, Licensor shall not be required to seek registration of
any unregistered Copyrights or Marks where, in Licensor's
reasonable discretion, the benefits outweigh the likely costs of
registration. In all such instances, however, where Licensed Marks
or significant works of authorship are involved, Licensor shall
provide Licensee the opportunity and assistance required to seek
registration of such unregistered Copyrights and Marks pursuant to
Section 6.4.
6.4 ADDITIONAL PROTECTION BY LICENSEE. Licensee, at its expense, may in
its sole discretion seek additional protection of Intellectual
Property Rights associated with the Licensed Products and the
exercise of its rights under this Agreement, consistent with the
provisions of this Section 6 and the other provisions of this
Agreement.
6.5 THIRD PARTY INFRINGEMENTS.
6.5.1 If, during the Term, Licensor becomes aware of any
infringement(s) of the Licensed Rights by any third party,
Licensor, at its cost and expense, agrees to use all
commercially reasonable efforts to bring such
infringement(s) to an end. Licensee shall provide all
reasonable assistance to Licensor in these efforts, at
Licensor's request and expense. Any and all monetary
settlements and other recoveries obtained by Licensor in
such efforts, after recovering all of Licensor's associated
out-of-pocket expenses, including without limitation
attorneys' fees and court costs, shall be divided equally
between the Parties.
6.5.2 No settlement, consent judgment, or other voluntary final
disposition of a suit or action brought pursuant to Section
6.5.1 may be entered into without Licensee's and Licensor's
express written consent, which shall not be unreasonably
withheld, delayed, or conditioned.
7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
7.1 REPRESENTATIONS AND WARRANTIES.
7.1.1 LICENSEE. Licensee represents and warrants to Licensor that:
(a) this Agreement has been duly and validly executed and
delivered by Licensee and constitutes the legal, valid and
binding obligation of Licensee; (b) Licensee has full
authority to execute, deliver, and perform this Agreement;
(c) Licensee's execution, delivery, and performance of this
Agreement will not conflict with or violate (1) any
provision of any law, rule, or regulation to which Licensee
is subject, or (2) any agreement or other instrument
applicable to Licensee or binding upon its assets or
properties; (d) none of the Licensed Products sold and
distributed by Licensee, its sublicensees, and/or its
franchisees will be defective; and (e) that Licensee, its
sublicensees, and its franchisees will place or use
appropriate Intellectual Property Rights notices on all
Licensed Products, marketing materials, and other materials
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relating to the Licensed Products. As used in this Section
7.1.1, the term "defective" means that the Licensed Product
(i) is not produced, packaged, labeled, marketed,
distributed, and/or sold in compliance with all applicable
laws, regulations, and government standards; (ii) does not
meet the Licensee's, its sublicensee's, and/or its
franchisee's written descriptions of such Licensed Products;
(iii) does not meet the Licensor's quality standards of
which Licensee has actual notice; and/or (iv) lacks
sufficient quality at the stated price to pass without
objection in the trade.
7.1.2 LICENSOR. Licensor represents and warrants to Licensee that:
(a) except as set forth on Schedule 7.1.2 attached hereto,
Licensor is the owner of the entire right, title, and
interest in and to the Licensed Rights and has not licensed
any of them to any third party; (b) Licensee has obtained
any and all third-party consents necessary to enable
Licensor to enter into this Agreement and to grant the
rights granted to Licensee under this Agreement; (c)
Licensor has obtained from the Processor, Xxxx Ovens, and
each of other Person involved in the development of the
Licensed Products or any proprietary methods associated with
producing the License Products enforceable, written
nondisclosure and invention assignment agreements in a form
or forms reasonably acceptable to Licensee; (d) Licensee's
exercise of the Licensed Rights as authorized herein will
not infringe the Patents, Copyrights, Trade Secrets, Marks,
or other Intellectual Property Rights of any third party;
(e) Licensor has explained to Licensee any and all approvals
obtained from, or required by, the United States Department
of Agriculture with respect to the production, marketing,
distribution, and/or sale of the Licensed Products; (f)
after execution of this Agreement, Licensee shall have the
right to produce, market, distribute and/or sell Licensed
Products under the same terms and conditions as Licensor
enjoyed prior to the execution of this Agreement; (g) this
Agreement has been duly and validly executed and delivered
by Licensor and constitutes the legal, valid and binding
obligation of Licensor; (h) Licensor has full authority to
grant the rights granted to Licensee under this Agreement
and to execute, deliver, and perform this Agreement; and (i)
Licensor's execution, delivery and performance of this
Agreement will not conflict with or violate (1) any
provision of any law, rule, or regulation to which Licensor
is subject, or (2) any agreement or other instrument
applicable to Licensor or binding upon its assets or
properties.
7.2 INDEMNITY OBLIGATIONS. Subject to the requirements of Section 7.3,
each Party will defend, indemnify, and save harmless the other
Party, its successors and permitted assigns, if any, and all of
their officers, directors, employees, Affiliates, and agents, from
and against any and all losses, costs, damages, expenses
(including, without limitation, reasonable attorneys' fees, expert
witness fees, court costs, and other expenses), fines, suits,
proceedings, claims, demands, or actions of any kind or nature
(whether based on tort, contract, trade, regulatory, or other law)
("CLAIMS") brought by any third party arising from or relating to
the indemnifying Party's (a) breach of any of the representations
and/or warranties provided under this Agreement, and (b) any other
breach of this Agreement (collectively "COVERED CLAIMS"). Any
amounts owed by Licensor to Licensee pursuant to its indemnity
obligations under this Agreement may, at Licensee's option, be
netted against any Royalties payable to Licensor.
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7.3 NOTICE AND ASSISTANCE. Upon receipt of actual notice of any Covered
Claims, the Party entitled to indemnification under Section 7.2
("INDEMNIFIED PARTY") shall (a) promptly notify the other Party
("INDEMNIFYING PARTY") of such claims; (b) allow the Indemnifying
Party to control the defense of such claims, except that the
Indemnified Party shall have the right but not the obligation, at
its sole expense, to have its own legal counsel participate in all
aspects of the proceedings; (c) allow the Indemnifying Party to
settle or compromise such claims, with the consent of the
Indemnified Party, which consent shall not be unreasonably
withheld, delayed, or conditioned, and (d) fully cooperate with the
Indemnifying Party and provide such Party all authority,
information, and assistance (at the Indemnifying Party's request
and expense) that are reasonably necessary for the Indemnifying
Party to defend any such Covered Claims.
8. ADDITIONAL COVENANTS RELATING TO CERTAIN AGREEMENTS. Licensor shall use
its reasonable best efforts (a) to cause the Processor to permit Licensee
to assume all of the rights and future obligations of Licensor under the
Processing Agreement, the oven lease, the distribution center lease, and
all similar and related agreements, and/or (b) to facilitate the
negotiation of superseding agreement(s) to which Licensee is a party.
Prior to any such assumption of rights and future obligations by Licensee
and/or the execution of any such superseding agreement(s), Licensor shall
comply with all of the terms and conditions of such agreements and shall
make any and all of Licensor's rights thereunder available to Licensee in
exchange for Licensee's reimbursement to Licensor of all reasonable
associated costs and Licensee's cooperation in complying with all of the
terms and conditions of such agreements.
9. DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY.
9.1 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER TO THE
OTHER PARTY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. ANY
AND ALL SUCH IMPLIED WARRANTIES ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED TO THE FULLEST EXTENT ALLOWED BY LAW.
9.2 LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE,
INCIDENTAL, INDIRECT, OR SPECIAL DAMAGES OR FOR ANY LOSS OF PROFITS
OR GOODWILL ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER OR
NOT THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THE FOREGOING SHALL APPLY REGARDLESS OF THE NEGLIGENCE OR
OTHER FAULT OF EITHER PARTY AND REGARDLESS OF WHETHER SUCH
LIABILITY SOUNDS IN CONTRACT, NEGLIGENCE, TORT OR ANY OTHER THEORY
OF LIABILITY. THIS SECTION 9.2 SHALL NOT LIMIT IN ANY WAY EITHER
PARTY'S INDEMNITY OBLIGATIONS UNDER SECTION 7 OF THIS AGREEMENT.
10. TERM AND TERMINATION.
10.1 TERM. Agreement shall become effective on the Effective Date and
shall remain in effect until the date ten (10) years from the first
day of the first quarter that follows the Effective Date and, at
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Licensee's option, for four additional renewal periods of ten (10)
years each from that date, unless this Agreement is earlier
terminated in accordance with its provisions. The initial period
plus any renewal periods shall constitute the "TERM." Licensee may
exercise its renewal rights by providing written notice of renewal
at least ninety (90) days before the end of the then-existing Term.
10.2 TERMINATION FOR MATERIAL BREACH. Either Party may, in its sole
discretion, terminate this Agreement if the other Party has
committed a material breach of this Agreement and has failed to
cure such material breach within ninety (90) days after receipt of
written notice from the non-breaching Party specifying the nature
of the breach.
10.3 BANKRUPTCY. Licensor may terminate this Agreement immediately upon
written notice, to the extent allowed by law, if (a) a bankruptcy
petition is filed against Licensee that is not dismissed within
sixty (60) days, or (b) Licensee files a petition for bankruptcy.
10.4 TERMINATION FOR CONVENIENCE. Licensee may, within its discretion,
terminate this Agreement for convenience upon ninety (90) days
written notice to Licensor.
10.5 REMEDIES. In the event of any breach of this Agreement, the
non-breaching Party shall have all rights and remedies provided in
law or equity relating to such breach, including, without
limitation, the right of specific performance and damages, as
appropriate.
10.6 EFFECT OF TERMINATION. Upon termination of this Agreement, all of
the licenses and rights granted to Licensee under this Agreement
shall terminate, except that for a period of 120 days after
termination of this Agreement, Licensee shall have the right to
sell off its inventory of Licensed Products and to make use of the
Marks to do so, subject to all of the applicable terms and
conditions of this Agreement.
11. CONFIDENTIALITY; NON-COMPETITION.
11.1 CONFIDENTIALITY.
11.1.1 During the Term and following termination of this
Agreement for any reason, each Party shall keep
confidential the information of the other Party which,
in accordance with the terms of this Agreement or
otherwise, has been learned by, disclosed to or
otherwise provided to such party including, but not
limited to, financial, administrative, accounting, and
personnel information, provided that the disclosing
Party has prominently marked the information
"Confidential" or "Proprietary" ("CONFIDENTIAL
INFORMATION"). If the Confidential Information is
disclosed in intangible form (e.g., orally or visually),
it must be identified by the disclosing Party as
"confidential" or "proprietary" at the time of
disclosure and must be followed by written confirmation
delivered to the receiving Party within thirty (30) days
of the original disclosure indicating the date of
disclosure and summarizing the information that the
party considers to be Confidential Information. Section
4.3 contains an exception to this marking requirement.
11.1.2 The receiving Party will protect disclosing Party's
Confidential Information with at least the same degree
of care it uses to protect its own proprietary
information, but in no case with less than reasonable
care. The receiving Party will not disclose the
disclosing Party's Confidential Information to any third
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Party except as provided for in this Agreement. Licensor
shall only use any Confidential Information of Licensee
to exercise Licensor's rights under this Agreement.
Without limiting the generality of the foregoing
statement, Licensor shall not use any of Licensee's
Confidential Information to compete with Licensee or to
enable any other person to compete with Licensee.
11.1.3 The restrictions contained in Section 11.1.2 shall not
apply to any information that (a) was rightfully known
to the receiving Party without any duty of
confidentiality before receiving it from the disclosing
Party; (b) is or becomes publicly available through no
fault of the receiving Party; (c) is rightfully received
by the receiving Party from a third Party without a duty
of confidentiality; (d) is independently developed by
the receiving Party without a breach of this Agreement;
or (e) is disclosed by the receiving Party with the
disclosing Party's prior written approval. If a Party is
required by a government body, court of law, or other
legal authority to disclose Confidential Information of
the other Party, the Party under the disclosure
obligation shall give the other Party reasonable advance
notice and other reasonable cooperation so that it may
contest the disclosure or seek an appropriate protective
order with respect to such Confidential Information.
11.1.4 Any and all copies made of a Party's Confidential
Information shall be and remain the property of the
disclosing Party. Upon termination of this Agreement for
any reason whatsoever, each Party shall promptly deliver
to the other Party all Confidential Information of such
other Party in such Party's possession or control,
except that a Party main retain one copy solely for
archive purposes, which archive copy shall remain
subject to all of the confidentiality restrictions of
this Section 11. The Parties acknowledge and agree that
violation of this Section 11 may cause irreparable
injury, that the remedy at law for any violation or
threatened violation thereof would be inadequate, and
that Party that owns the Confidential Information shall
be entitled to temporary and permanent injunctive relief
or other equitable relief without the necessity of
proving actual damages or posting bond. The Parties
acknowledge that the restrictions contained in this
Section 11 are reasonable. If a court of competent
jurisdiction determines that the restrictions set forth
in this Section 11 are unreasonable, then the Parties
agree that such court is authorized to establish
reasonable restrictions, and the Parties agree to comply
with the restrictions established by such court.
11.1.5 No alleged failure by a Party to protect or guard against
the unauthorized disclosure of the other Party's
Confidential Information shall be a basis for diminishing
such other Party's obligation to protect as confidential
and not to use, copy, reproduce or disclose, or allow
others to use, copy, or disclose, in an unauthorized
manner, the alleged violator's Confidential Information.
11.2 NON-COMPETITION. Licensor shall not sell, distribute, or otherwise
make available, or directly or indirectly assist any other Person
to sell, distribute, or otherwise make available, any product that
competes with any Licensed Product during the Term.
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12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
be binding upon the respective successors and permitted assigns, if any,
of the Licensor and the Licensee. Neither Party shall assign any of its
rights or delegate any of its duties under this Agreement to any other
Person, by operation of law or otherwise, without the express written
consent of the other Party, which consent shall not be unreasonably
withheld, delayed, or conditioned.
13. FORCE MAJEURE. Any cause or circumstance of whatever nature which prevents
or delays performance by a Party of its obligations hereunder, including,
without limitation, any riot, labor dispute, strike or civil disturbance,
or any governmental statute, rule, regulation or other or approval, which
cause or circumstance is not within the control of the Party chargeable,
and which cannot by the exercise of reasonable diligence by such Party be
prevented or overcome, shall extend the time for performance thereof,
provided such cause or circumstance was the proximate cause of the failure
to perform.
14. FURTHER ACTION. The Parties agree to execute and deliver all documents,
provide all information and take or forebear from all such action, as may
be necessary or appropriate, to achieve the purposes of this Agreement.
15. NOTICES. All notices and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given (a) when
delivered personally, (b) when sent by facsimile (with receipt confirmed),
or (c) when receipt by the addressee is confirmed by the U.S. Postal
Service or a nationally-recognized express delivery service, if sent by
Express Mail or nationally-recognized express delivery service (receipt
requested), in each case to the other Party at the Notice Address and
facsimile number (or to such other address or facsimile number for a Party
as shall be specified by like notice; provided that notices of a change of
address or facsimile number shall be effective only upon actual receipt
thereof).
16. SECTION HEADINGS; CONSTRUCTION. The Section headings throughout the
Agreement are for reference purposes only, and the words contained therein
shall in no way be held to explain, modify, or aid in the interpretation,
construction, or meaning of this Agreement. References in this Agreement
to "Section" and "Sections" shall be deemed and construed to refer to the
corresponding sections of this Agreement. As used in this Agreement, the
term "day" alone shall mean a calendar day, and the term "business day"
shall mean any day, other than Saturday and Sunday, during which banks are
open for business in Aptos, California. The term "quarter" shall mean a
calendar quarter beginning on January 1, April 1, July 1, or October 1,
and any reference to a "year" or an "annual" period or amount refers to
the first four calendar quarters of a given year following the Effective
Date or the anniversary of the Effective Date. This Agreement shall be
construed as if each Party has had the opportunity to participate in
drafting it and shall not be construed against either Party.
17. NO THIRD PARTY BENEFICIARIES. The provisions of the Agreement are for the
benefit of the Parties hereto and not for any creditor of a Party or for
any other Person.
18. MODIFICATION, AMENDMENT, AND WAIVER. No modifications or amendments to the
Agreement and no waiver of any provisions hereof shall be valid unless
made in writing signed by duly authorized representatives of the Parties.
Any failure or delay by either Party to exercise or partially exercise any
right, power or privilege hereunder shall not be deemed a waiver of any of
the rights, powers or privileges under this Agreement. The waiver by
either Party of a breach of any term, condition or provision of this
Agreement shall not operate as, or be construed as, a waiver of any
subsequent breach thereof.
12
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa, without giving effect to
the choice of law provisions thereof.
20. REMEDIES. Except as otherwise provided for herein, no remedy conferred by
any of the specific provisions of the Agreement is intended to be
exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder,
now or hereafter existing at law or in equity or by statute or otherwise.
The election of any one or more remedies by Licensor or Licensee shall not
constitute a waiver of the right to pursue other available remedies.
21. SEVERABILITY. If under applicable law any term, provision or part of the
Agreement is to any extent held invalid, void or unenforceable by a court
of competent jurisdiction, the remainder of the Agreement shall not be
impaired or affected thereby, and each term, provision, and part shall
continue in full force and effect, and shall be interpreted in a manner
consistent with the Parties' intent. To the full extent, however, that the
provisions of such applicable law may be waived, however, they are hereby
waived to the end that this Agreement be deemed to be a valid and binding
agreement enforceable in accordance with all of its terms. The Parties
further agree to replace any invalid provision with a new provision that
has the most nearly similar permissible, economic, or other effect.
22. SURVIVAL. Any terms, conditions, representations, and warranties contained
in the Agreement that by their sense and context are intended to survive
the termination of this Agreement shall survive the termination of this
Agreement. Such provisions include, but are not necessarily limited to,
Sections 1, 2.4.2, 4, 6.2.1, 7, 9, 10, 11.1, and 12 through 28.
23. ATTORNEYS' FEES. In connection with any action or proceeding arising under
or relating to this Agreement, the prevailing Party is entitled to
recover, in addition to any other amounts awarded, costs and reasonable
attorneys' fees, through all stages of litigation, including all
proceedings and appeals and all settlement, enforcement, and collection
proceedings.
24. DISPUTE RESOLUTION.
24.1 JURISDICTION AND NATURE OF DISPUTE. Any and all disputes under this
Agreement involving the proper calculation of the Royalty or Sales
or the payment of the Royalty shall be resolved by binding
arbitration as set forth in Section 24.2 below, and (b) all other
disputes arising under or relating to this Agreement shall be
decided by litigation in a court of competent jurisdiction sitting
in the State of California. The jurisdiction and methods for
resolving disputes set forth herein shall be the sole means for
resolving any disputes arising out of or relating to this
Agreement, and the Parties hereby acknowledge that they are subject
to the jurisdiction of the courts sitting in the State of
California and that they have waived and relinquished the
jurisdiction of any other court.
24.2 ARBITRATION: The Parties shall submit disputes involving the proper
calculation of the Royalty and Sales and the payment of the Royalty
to binding arbitration in accordance with the then-current
Commercial Arbitration Rules of the American Arbitration
Association in effect as of the date of the demand for arbitration
or such other rules as the Parties may mutually agree (the
"RULES"). Unless otherwise mutually agreed by the Parties, the
arbitration shall be conducted before a single arbitrator who is an
independent certified public accountant. The arbitration hearing
shall be conducted in one session of consecutive business days;
13
provided, however, that if the cumulative amount in controversy
totals less than US$50,000, the arbitration hearing shall not
exceed one business day, and if the cumulate claims total more than
US$50,000 but less than US$100,000, the arbitration hearing shall
not exceed two business days. Discovery shall be allowed only as
provided in the Rules, by order of the arbitrator upon a showing of
substantial need, or by agreement of the Parties. The demand for
arbitration shall be given within a reasonable time after written
notice of the Royalty dispute has been given to the other Party and
in no event later than one (1) year from the time the dispute
arose. The arbitrator shall have authority to enter an award in
favor of Licensor if s/he determines that there has been an
underpayment of the Royalty but shall not have authority to enter
any award that is contrary to Iowa law or that is not supported by
substantial evidence. If the arbitrator enters an award that is
contrary to Iowa law or that is not supported by substantial
evidence, the arbitrator shall be deemed to have acted outside
his/her authority. All arbitration proceedings shall be held in
Aptos, California, unless the parties otherwise mutually agree.
This provision shall not prevent a Party from seeking temporary or
preliminary injunctive relief in any court of competent
jurisdiction sitting in the State of California.
24.3 WAVIER OF JURY TRIAL. THE PARTIES HEREBY AGREE THAT NEITHER WILL
REQUEST A JURY FOR ANY DISPUTE ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND EXPRESSLY WAIVE ANY AND ALL SUCH RIGHTS TO A JURY
TRIAL THAT MAY EXIST UNDER STATE, FEDERAL, OR CONSTITUTIONAL LAW.
25. RELATIONSHIP OF THE PARTIES. In the performance of this Agreement, both
Parties are acting in their separate capacities as independent contractors
and not as employees, partners, joint venturers, associates,
representatives, or agents of one another. Each Party acknowledges that it
does not have the authority to act for or in the name of the other Party
or to commit the other Party in any manner whatsoever with respect to the
performance of this Agreement.
26. SECURITIES LAW REPRESENTATIONS. In connection with its receipt of the
shares of Licensee's common stock issuable pursuant to Section 3.1 (the
"Shares"), Licensor hereby represents and warrants to Licensee as follows:
26.1 REPRESENTATIONS NOT MADE BY COMPANY. Licensor represents and
affirms that none of the following information has ever been
represented, guaranteed or warranted to Licensor, expressly or by
implication, by any person: (i) the approximate or exact length of
time that Licensor will be required to remain a security holder of
Licensee; (ii) the percentage of profit and/or amount of or type of
consideration, profit or loss to be realized, if any, as a result
of an investment in Licensee; or (iii) the possibility that the
past performance or experience on the part of Licensee or any
affiliate, or any officer, director, employee or agent of the
foregoing, might in any way indicate or predict the results of
ownership of any Security or the potential success of Licensee's
operations.
26.2 PURCHASE FOR OWN ACCOUNT. Licensor is the sole and true party in
interest, is acquiring the Shares for its own account for
investment, is not purchasing the Shares for hereby for the benefit
of any other person, and has no present intention of holding or
managing the Shares with others or of selling, distributing or
otherwise disposing of any portion of the Shares. Licensor is duly
organized and in good standing in its jurisdiction of organization
and has its principal place of business in the State of California.
14
26.3 DISCLOSURE AND REVIEW OF INFORMATION. Licensor acknowledges and
represents that it has been given a reasonable opportunity to
review all documents, books and records of Licensee pertaining to
this investment, and has been supplied with all additional
information concerning Licensee and the Shares that has been
requested by Licensor, has had a reasonable opportunity to ask
questions of and receive answers from Licensee or its
representatives concerning this investment, and that all such
questions have been answered to the full satisfaction of Licensor.
Licensor has received, and acknowledges that it is receiving, no
representations, written or oral, from Licensee or its officers,
directors, employees, attorneys or agents other than those
contained in this Agreement. In making his/her decision to purchase
the Shares, Licensor has relied solely upon its review of this
Agreement and independent investigations made by it or its
representatives without assistance of Licensee.
26.4 SPECULATIVE INVESTMENT. Licensor understands that (i) it must bear
the economic risk of the investment in the Shares for an indefinite
period of time because the Shares have not been registered under
the Securities Act or qualified under the Securities Act of 1933,
as amended or the securities laws of any other jurisdiction and
(ii) its investment in Licensee represented by the Shares is highly
speculative in nature and is subject to a high degree of risk of
loss in whole or in part. Licensor has adequate means of providing
for its current needs and possible contingencies, and is able to
bear the high degree of economic risk of this investment,
including, but not limited to, the possibility of the complete loss
of Licensor's entire investment and the limited transferability of
the Shares, which may make the liquidation of this investment
impossible for the indefinite future.
26.5 INVESTMENT EXPERIENCE. Licensor has experience as an investor in
securities and acknowledges that it can bear the economic risk of
its investment in the Shares. By reason of Licensor's business or
financial experience or the business or financial experience of its
professional advisors who are unaffiliated with and who are not
compensated by Licensee or any affiliate or selling agent of
Licensee, directly or indirectly, Licensor has the capacity to
protect its own interests in connection with its purchase of the
Shares. Licensor has the financial capacity to bear the risk of
this investment and has received from Licensee all information it
has requested and considers necessary or appropriate for deciding
whether to purchase the Shares. Licensor has not been organized
solely for the purpose of acquiring the Shares. The manager of
Licensor is the founder, Chairman and CEO of Licensee.
26.6 RESTRICTED SECURITIES. Licensor understands that the Shares are and
will be "restricted securities" under the Securities Act inasmuch
as they are being acquired from Licensee in a transaction not
involving a public offering, and that, under the Securities Act and
applicable regulations thereunder, such securities may be resold
without registration under the Securities Act only in certain
limited circumstances. In this connection, Licensor represents that
it is familiar with Rule 144 promulgated under the Securities Act,
as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act. Licensor further
confirms and agrees that Licensee is under no obligation to
register the re-sale of the Shares under the Securities Act or any
state securities laws.
15
26.7 LEGENDS. Licensor understands that the certificates evidencing the
Shares will bear the legend set forth below, together with any
other legends required by the laws any other state with
jurisdiction:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES
ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS A REGISTRATION STAEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, IS IN EFFECT WITH RESPECT
TO SUCH SECURITIES OR LICENSEE HAS RECEIVED AN OPINION IN FORM
AND SUBSTANCE SATISFACTORY TO LICENSEE PROVIDING THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933, AS AMENDED, IS AVAILABLE.
26.8 The legend set forth above shall be removed by Licensee from any
certificate evidencing any of the Shares only (i) upon receipt by
Licensee of an opinion in form and substance satisfactory to
Licensee that such legend may be removed pursuant to Rule 144
promulgated under the Securities Act, or (ii) upon confirmation
that a registration statement under the Securities Act is at that
time in effect with respect to the legended Shares and that such
transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Share was issued.
27. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the Parties with respect to subject matters hereof, and
supersedes all prior written and oral communications, agreements, letters
of intent, representations, warranties, statements, negotiations,
understandings and proposals, with respect to such subject matters.
28. COUNTERPARTS. Once this Agreement is signed by both Parties, any
reproduction of it made by reliable means (e.g., photocopy or facsimile)
shall be deemed an original. This Agreement may be executed in
counterparts or with detachable signature pages and shall constitute one
and the same Agreement binding on all Parties as if all Parties signed the
same copy. Signature pages may be signed and delivered via facsimile,
mail, or otherwise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Exclusive License Agreement as of the Effective Date.
LICENSOR: LICENSEE:
SMOKY SYSTEMS, LLC, SMOKY MARKET FOODS, INC.,
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx Name: Xxxxxx Xxxxxxxx
Title: Manager Title: Manager
Notice Address: ____________________ Notice Address: _____________________
____________________________________ _____________________________________
Attn: ______________________________ Attn: _______________________________
Facsimile: _________________________ Facsimile: __________________________
17
