LICENSE AGREEMENT
This Agreement is made effective the 6th day of January, 2003, by
and between (i)Exerciting, LLC., ("Exerciting"), a limited liability
corporation with a principal place of business at 0000-X Xxxx Xxxx
Xxxxx, Xxxxxx, XX 00000 and (ii) Advanced Sports Technologies, Inc.,
("Company"), a Florida corporation with its principal place of business
at 0000 Xxx Xxxxxx, Xxxx Xxxxx, XX 00000 who, intending to be legally
bound, hereby agree as follows:
1. INTRODUCTION
The Company wishes to acquire and Exerciting wishes to
grant to the Company the exclusive rights (subject to Licensor's
retained rights as defined in Section 3.1 herein) to use and otherwise
exploit all of Exerciting's rights in respect to the Licensed Patents
and Company desires such a license, all in accordance with the terms
and conditions set forth below.
2. DEFINITIONS
"Buns Technology" shall mean Exerciting's portable gym with
elastomer resistance and heel cup which is covered under U.S. patents
#5,558,609 and U.S.#5,695,437 and any Improvements and may be marketed
under the trademark name Better Buns r U.S Reg. #2,279,957.
"Effective Date" shall mean the date set forth in the preamble.
"Gross Revenues" shall mean all cash consideration actually
received by Company as payment of the Selling Price for Royalty Products.
"Improvements" shall mean any modifications or enhancements
to, or derivative works based upon, any Licensed Patents.
"Licensed Patent(s)" shall mean all current and future
United States and foreign patents and patent applications related to
the Buns Technology which are owned by Exerciting, including without
limitation those set forth in Appendix A, together with any and all
continuations, patent extensions, divisional and re-issue
applications, reexaminations, and continuation-in-part applications
thereof.
"Licensed Product" shall mean any product which is covered
under the Licensed Patent(s) or by any claim being prosecuted in any
pending and un-abandoned application included within the definition of
Licensed Patent.
"Patent Applications" shall mean the patent applications
set forth in Appendix A.
"Person" means any individual, corporation, association,
partnership, limited liability company, estate, trust or any other
entity or organization.
"Royalty Patents" shall mean any patents issued pursuant to
the Patent Applications.
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"Royalty Product" shall mean any product which is sold or
licensed by Company in the ordinary course of business and either: (i)
which, but for the licenses granted herein, infringes a Valid Royalty
Claim contained in a Royalty Patent; or (ii) which is covered by any
allowed claims being prosecuted in any pending and un-abandoned Patent
Application. For purposes of this Agreement, a product shall be
considered sold or licensed upon Company's actual receipt of cash
consideration payable to Company in respect of such sale or license as
specified in accordance with the terms of the agreement relating to
such license or sale.
"Selling Price" for purposes of computing royalties for any
Royalty Product under this Agreement shall mean Company's invoice
price for such Royalty Product (a) after deduction of any regular
trade, quantity discounts, or cash discounts, and (b) excluding, any
taxes, duties, shipping charges, packing costs, and interest charged
to customers.
"Valid Claim" shall mean a claim of an issued, unexpired
Licensed Patent which shall be presumed to be valid unless and until
it has been held to be invalid by a final judgment of a court of
competent jurisdiction from which no appeal can be or is taken.
"Valid Royalty Claim" shall mean a claim of an issued,
unexpired Royalty Patent which shall be presumed to be valid unless
and until it has been held to be invalid by a final judgment of a
court of competent jurisdiction from which no appeal can be or is
taken.
3. GRANT OF RIGHTS
3.1 License Grant. Exerciting hereby grants and Company
accepts, subject to the terms and conditions of this Agreement, a
worldwide, exclusive license under the Licensed Patents to (a) make,
have made, use, sell, have sold, offer to sell, transfer, market,
reproduce and distribute any Licensed Products; (b) develop
Improvements; (c) otherwise use, commercialize and exploit the
Licensed Patents; and (d) sublicense part or all of the rights granted
in this Section 3.1 to one or more third parties. Notwithstanding
anything to the contrary contained in this Paragraph 3.1, Licensor
shall retain the exclusive royalty free right to use the Licensed
Patents and Improvements solely in connection with Licensor or its
sublicensee's manufacturing, marketing and distribution of Licensed
Product in connection with the marketing of Licensor's abdominal
products. Therefore, Licensor shall have no obligation to pay
Licensee any payment or royalty from such sales of these Licensed
Products.
3.2 Improvements. In the event that Company discovers or
develops an Improvement or an Improvement is created on Company's
behalf, Licensor shall own all right, title and interest in such
Improvement.
3.3 Disclaimer of Obligation to Exploit. Exerciting
hereby acknowledges and agrees that Company shall not have any
obligation to use, market or otherwise exploit the Licensed Patents.
Nothing in this Agreement or in the relationship between the parties
shall be construed to impose such an obligation on Company.
4. PATENT PROSECUTION AND ENFORCEMENT
4.1 Prosecution and Maintenance. Exerciting shall have
the right and obligation, consistent with sound and reasonable
business practices and judgment, (a) to file, prosecute, and maintain
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all of the Licensed Patents in any and all jurisdictions and (b) to
determine whether or not to abandon the prosecution of any patent
application for Buns Technology or to discontinue the maintenance of
any Licensed Patent. However, in the event that Exerciting elects not
to file or continue prosecution of a patent application for any Buns
Technology in any jurisdiction, or to maintain any Licensed Patent in
any jurisdiction, it will promptly notify Company in writing, and
Company shall have the right, but not the obligation, to file and
prosecute any such patent application, and/or to maintain any such
Licensed Patent, and Exerciting will provide all reasonable assistance
with such prosecution and maintenance. Company shall have the right
to deduct all expenses it may incur hereunder in connection with
filing and prosecuting any patent application, and/or maintaining any
Licensed Patent from amounts due to Exerciting in accordance with
Section 5.1.
4.2 Enforcement. Company and Exerciting shall each
provide prompt written notice to the other party of any alleged
infringement or misappropriation by a third party of the Licensed
Patents and provide such other party with any available evidence of
such infringement. During the term of this Agreement, Company shall
have the first right to institute and control, at its expense, any
action against a third party for infringement or misappropriation of
the Licensed Patents. Exerciting agrees to join any such action as a
plaintiff at Company's request and expense. If Company elects not to
initiate action within one hundred eighty (180) days after receiving
notice of the infringement of any Licensed Patents by a third party,
Company shall so notify Exerciting in writing, and Exerciting shall be
free to bring such action in Exerciting's own name at Exerciting's
expense. Company shall assist Exerciting and cooperate in such action
at Exerciting's reasonable request and expense, and Exerciting shall
be entitled to retain all proceeds of such action.
5. ROYALTIES
5.1 Royalties. In consideration of the grant of the license by
Exerciting to Company in Section 3 above, Company agrees to pay
Exerciting royalties equal to eight percent (8%) of Gross Revenues.
No multiple royalties shall be payable because any Royalty Products
are covered by more than one of the Royalty Patents. The royalty
payments required to be made by Company shall be paid with respect to
Gross Revenues received in any quarter within forty-five (45) days of
the last day of the quarter in which such Gross Revenues are received
by Company. Minimum quarterly royalty payments are due within forty-
five (45) days of the last day of the quarter.
5.2 Minimum Royalty Payment. Beginning with the fiscal
quarter of the Company's ending December 31, 2003 and each quarter
thereafter the quarterly minimum Royalty payable to Exerciting under
Section 5.1 above will be fifty thousand dollars ($50,000.00) and the
Company agrees that such Minimum Royalty will be paid within forty-
five (45) days of the last day of each quarter. Failure by the
Company to make the Minimum Royalty Payment shall be deemed a material
breach of this agreement.
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5.3 Definitions.
(a) "Bankruptcy" shall mean, and a Person shall be deemed
"Bankrupt" upon, (i) the entry of a decree or order for relief of a
Person by a court of competent jurisdiction in any involuntary case
involving a Person under any bankruptcy, insolvency, or other similar
law now or hereafter in effect; (ii) the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or other
similar agent for a Person or for any substantial part of a Person's
assets or property; (iii) the ordering of the winding up or
liquidation of a Person's affairs; (iv) the filing with respect to a
Person of a petition in any such involuntary bankruptcy case, which
petition remains undismissed for a period of ninety (90) days or which
is dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United
States bankruptcy law); (v) the commencement by a Person of a
voluntary case under any bankruptcy, insolvency, or other similar law
now or hereafter in effect; (vi) the consent by a Person to the entry
of an order for relief in an involuntary case under any such law or to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar agent for
a Person or for any substantial part of a Person's assets or property;
(vii) the making by a Person of any general assignment for the benefit
of creditors; or (viii) the failure by a Person generally to pay its
debts as such debts become due.
5.4 Payment Terms. Company shall remit all royalty
payments due in accordance herewith, less any deductions authorized by
this Agreement, on a quarterly basis. Except as otherwise directed,
all amounts owing to Exerciting under this Agreement shall be paid in
U.S. dollars to Exerciting.
5.5 Audit. Exerciting shall have the right, upon
reasonable prior notice and during normal business hours, to audit the
books, records and accounts of Company relating to Company's payment
of royalties hereunder. The expense of any such audit shall be borne
by Exerciting and Exerciting shall not be permitted to conduct more
than two audits in any twelve-month period.
6. OPTION TO PURCHASE
Following the occurrence of the Bankruptcy of Exerciting, Company
shall have the right and option, but not the obligation, to purchase
all of Exerciting's interest in the Licensed Patents at the then
current fair market value to Company of the Licensed Patents:
7. WARRANTIES
7.1 By Exerciting. Exerciting represents and warrants to
Company that (a) Exerciting is the sole owner of the Licensed Patents,
(b) Exerciting has the full right, power and authority to enter into
this Agreement, to grant to Company the rights granted herein and to
perform Exerciting's obligations hereunder, (c) this Agreement does
not conflict with, result in a breach of, or constitute a default
under any agreement, contract, instrument, order or decree to which
Exerciting is a party or by which Exerciting is otherwise bound, and
(d) prior to the Effective Date, Exerciting has not granted any third
party a license to any rights in the Licensed Patents, except as
retained under Section 3.1.
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8. TERM AND BREACH
8.1 Term. The term of this Agreement shall begin on the
Effective Date and continue until the last Licensed Patent has expired
or upon the abandonment of the last to be abandoned of any patent
applications included in the definition of Licensed Patent, whichever
is later, unless sooner terminated in accordance with this Section 8.
8.2 Termination. This Agreement shall automatically
terminate upon Company's exercising of its option set forth in
Section 6 to purchase Exerciting's ownership interest in the Licensed
Patents.
8.3 Effect of Breach. In the event Exerciting materially
breaches the terms of this Agreement, Company shall have the right to
suspend payment of all royalty obligations under Section 5 until
Exerciting has cured all such breaches. The foregoing shall not
prevent Company from pursuing all other remedies available at law or
in equity. In the event Company materially breaches the terms of this
Agreement, Exerciting's sole remedy shall be that it may terminate
this Agreement and the license granted hereunder.
8.4 Survival of Obligations. In the event this Agreement
terminates or expires in accordance with Sections 8.1 or 8.2, each
party's rights and obligations under Section 9 will survive
termination or expiration of this Agreement.
9. CONFIDENTIALITY
Each party shall hold any proprietary or confidential information
disclosed by the other party ("Confidential Information") in strict
confidence, shall not disclose it to others or use it in any way,
commercially or otherwise, provided, however, the foregoing shall not
limit, prohibit, or otherwise restrict or be construed to limit,
prohibit or otherwise restrict either party from exercising, enforcing
or otherwise enjoying rights and benefits granted to such party under
this Agreement. Each party further agrees to take all action
reasonably necessary to protect the confidentiality of the
Confidential Information including, without limitation, implementing
and enforcing operating procedures to minimize the possibility of
unauthorized use or copying of the Confidential Information.
Notwithstanding the foregoing, the term "Confidential Information"
shall not include any information which (a) is or becomes part of the
public domain through no fault of the other party, or (b) is required
to be disclosed by applicable law, rule or regulation, including
disclosure obligations under applicable state and federal securities
laws.
10. LIMITATIONS OF LIABILITY
NEITHER PARTY SHALL BE LIABLE FOR LOSS OF PROFITS OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER
PARTY AND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. THE
ESSENTIAL PURPOSE OF THIS PROVISION IS TO EXCLUDE EACH PARTY'S
LIABILITY TO THE OTHER PARTY FOR ANY AND ALL DAMAGES OTHER THAN DIRECT
DAMAGES.
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11. MISCELLANEOUS
11.1 Governing Law; Severability. This Agreement shall be
construed in accordance with the laws of the State of Florida, without
regard to its conflict of laws provisions. In the event that it is
determined by a court of competent jurisdiction that any provision of
this Agreement is invalid, illegal, or otherwise unenforceable, such
provision will be enforced as nearly as possible in accordance with
the stated intention of the parties, while the remainder of this
Agreement will remain in full force and effect and bind the parties
according to its terms. To the extent any provision cannot be
enforced in accordance with the stated intentions of the parties, such
provisions will be deemed not to be a part of this Agreement.
11.2 Independent Contractors. The parties hereto are
independent contractors, and neither is an agent or employee of, and
has no authority to bind, the other by contract or otherwise. Nothing
in this Agreement shall be deemed to constitute, establish, create,
give effect to or otherwise recognize a joint venture, partnership or
formal business entity of any kind, and the rights and obligations of
the party shall be limited to those expressly set forth herein.
11.3 Waiver. The failure of either party to assert a
right hereunder or to insist upon compliance with any term or
condition of this Agreement shall not constitute a waiver of that
right or excuse a similar subsequent failure to perform any such term
or condition by the other party.
11.4 Notices. Any required or permitted notices hereunder
must be given in writing at the address of each party set forth on the
first page of this Agreement, or to such other address as either party
may substitute by written notice to the other in the manner
contemplated herein, by one of the following methods: hand delivery;
registered, express, or certified mail, return receipt requested,
postage prepaid; nationally-recognized private express courier; or
facsimile. Notices will be deemed given on the date when hand
delivered or transmitted by facsimile, five (5) days after being sent
by express mail or nationally-recognized private express courier, and
ten (10) days after being sent by registered or certified mail.
11.5 Force Majeure. Each party hereto shall be excused
from any breach of this Agreement which is proximately caused by
governmental regulation, act of war, strike, act of God or other
similar circumstances normally deemed outside the control of the
parties.
11.6 Compliance with Law. Each party agrees to comply
with all applicable international, national, state, regional and local
laws and regulations in performing its duties hereunder and in any of
its dealings with respect to the technical information disclosed
hereunder or direct products thereof. Neither party shall export or
re-export, directly or indirectly, any technical information disclosed
hereunder or direct products thereof to any destination prohibited or
restricted by the export control laws and regulations of the United
States, including the U.S. Export Administration Regulations, without
the prior authorization from the appropriate governmental authorities.
11.7 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
considered an original instrument, but all of which
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shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the
parties hereto.
11.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns.
11.9 Complete Agreement. The parties hereto acknowledge
that this Agreement, including Appendix A, sets forth the entire
agreement and understanding of the parties hereto as to the subject
matter hereof, and shall not be subject to any change or modification
except by the execution of a written instrument subscribed to by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the dates indicated below.
Exerciting LLC Advanced Sports Technologies, Inc.
By: /s/ Xxxx Xxxxxxxxxx By: Xxxxxx Xxxxxxxxxx
-------------------- ------------------
Title: President Title: President
Date: January 6, 2003 Date: January 6, 2003
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APPENDIX A
LICENSED PATENTS
Country USA
Patent # 5,558,609
Issue Date September 24, 1996
Country USA
Patent # 5,695,437
Issue Date December 9, 1997
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