EXHIBIT 10.10
AGREEMENT
This AGREEMENT is made and entered-into this 1st day of
March, 2000, by and between
Technical Consumer Products, Inc. (hereinafter "TCP"), an
Ohio corporation, having principal office located at 000
Xxxx Xxxxx, Xxxxxx, Xxxx 00000, U.S.A., represented by Xxxxx
Xxx, President
and
Practical Innovations, Inc. a Delaware corporation having a principal
place of business at 000 Xxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000, XXX,
and Xxxxxxx Xxxxx, an individual residing at 000 Xxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxx 00000, (collectively "PRACTICAL").
This AGREEMENT incorporates the terms of initial agreement covering
related subject mater made and entered into on the 18th day of June, 1996
by and between TCP and PRACTICAL (hereinafter called the "1996
AGREEMENT").
WHEREAS, PRACTICAL owns technologies related to Electronic Ballasts
for Gas Discharge Laps, and PRACTICAL has knowledge and know-how of
Engineering, Development, Design, Manufacturing, and Market of Electronic
Ballasts and Gas Discharge Laps; and
WHEREAS, TCP is desirous of acquiring rights to use PRACTICAL's
technologies, knowledge and know-how; and
WHEREAS, TCP and PRACTICAL entered into the "1996 AGREEMENT") under
which, PRACTICAL granted a license to TCP under certain patents owned by
PRACTICAL and transferred certain knowledge and know-how to TCP; and
WHEREAS, said 1996 AGREEMENT was amended in certain respects by
entering into an amendment on November 13, 1998 (hereinafter called the
"1998 AMENDMENT";
NOW, THEREFORE, based on the mutual consideration herein specified,
the parties hereto agree as follows:
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1. DEFINITIONS
1.01 "EXCLUSIVE PATENT MATTER" shall mean: the inventions as specified
in "EXHIBIT A" hereto or any additional exhibit subsequently agreed-on
and attached to this AGREEMENT any time in the future.
1.02 "NON-EXCLUSIVE PATENT MATTER" shall mean: the inventions as
specified in "EXHIBIT B" hereto or any additional exhibit subsequently
agreed-on and attached to this AGREEMENT any time in the future.
1.03 "KNOW-HOW" shall mean and include ANY and ALL INFORMATION
disclosed by PRACTICAL to TCP in one of the following form: oral -
confined in writing, written, graphic, and/or sample form, or which is
obtained by TCP from access to a facility of PRACTICAL, and such
information is related to: EXCLUSIVE PATENT MATTER, NON-EXCLUSIVE PATENT
MATTER, PRODUCTS, manufacture, use, sale of PRODUCTS, electronic
lighting, electronic ballast for gas discharge lamps, gas discharge
lamps, market of lighting, market reassert and studies, competitive
analysis, and other related information.
1.04 "PRODUCTS" shall mean and include: (i) any and all types of
electronic ballasting means and/or systems suitable for powering gas
discharge lamps, as well as any and all other types of products which
include said ballasting means and/or systems, based on or derived from
the EXCLUSIVE PATENT MATTER, NON-EXCLUSIVE PATENT MATTER, or KNOW-HOW, or
(ii) any and all ballasting means and/or systems suitable for powering
gas discharge lamps, as well as any and all other types of products which
include said ballasting means developed, engineered, designed and/or
provided by PRACTICAL to TCP and not derived from and/or related to the
EXCLUSIVE PATENT MATTER or NON-EXCLUSIVE PATENT MATTER, or (iii) any and
all products based on or derived from KNOW-HOW, or (iv) any product
developed, engineered, designed and/or provided by PRACTICAL to TCP.
1.05 "SELLER" shall mean (i) TCP to the extent that TCP sells or acts
as the marketing agent for PRODUCTS, and/or (ii) TCP's marketing
agent(s), to the extent that TCP uses or permits other persons or
entities to sell PRODUCTS under any kind of licensing and/or restricted
marketing arrangement.
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1.06 "NET SALES" shall mean SELLER's gross selling price of
PRODUCTS, less the following items: (i) trade discounts actually
deducted, (ii) credits actually deducted for PRODUCTS returned, and
(iii) taxes, if any, collected and remitted by the SELLER.
1.07 "TERRITORY" shall mean and include: all countries of
the world.
2.0 GRANT
2.01 Subject to termination and modification rights retained herein,
PRACTICAL hereby grants to TCP an EXCLUSIVE LICENSE to manufacture,
use, sell and offer to sell the PRODUCTS under the EXCLUSIVE PATENT
MATTER within the TERRITORY.
2.02 Subject to termination and modification rights retained herein,
PRACTICAL hereby grants to TCP a NON-EXCLUSIVE LICENSE to manufacture,
use, sell and offer to sell the PRODUCTS under the NON-EXCLUSIVE PATENT
MATTER within the TERRITORY.
2.03 TCP may transfer or assign any or all of its rights and
obligations under this AGREEMENT, provided however that PRACTICAL
agrees to such transfer with prior written consent and PRACTICAL shall
receive a reasonable consideration therefor. The nature and amount of
this consideration must be acceptable to both TCP and PRACTICAL.
2.04 Any contract manufacturer or supplier selected by TCP to
manufacture PRODUCTS for TCP shall not be considered a licensed party
under this AGREEMENT.
3.0 WARRANTY
3.01 PRACTICAL warrants that: to the best of its knowledge it owns
all right, title and interest in or to the EXCLUSIVE PATENT MATTER and
NON-EXCLUSIVE PATENT MATTER, and it does not know of any right, title
or interest of any person or entity other than PRACTICAL in or to the
EXCLUSIVE PATENT MATTER and NON-EXCLUSIVE PATENT MATTER.
No warranties other than as specifically stated herein are expressed
or implied relative to the EXCLUSIVE PATENT MATTER or to the
NON-EXCLUSIVE PATENT MATTER and/or relative to any rights that any
party may assert in respect to the manufacture, use or sale of
PRODUCTS.
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4.0 LICENSE FEE AND ROYALTIES
4.01 License Fee
In consideration of the Licenses granted hereunder TCP shall issue a
Shareholder's Certificate equal to five percent (5%) of all TCP stock
shares in the name of Xxxxxxx Xxxxx ("License Fee"). Such Shareholder's
Certificate shall be non-refundable and free of any costs to Xxxxxxx
Xxxxx or PRACTICAL.
4.02 Monthly Royalty Payments
In addition to the License Fee, TCP shall pay to PRACTICAL a
non-refundable Monthly Royalty Payments based on the following terms:
For each and every calendar month, on or before the 15th day of the
following calendar month during the term of this AGREEMENT and/or as long
as PRODUCTS are sold by TCP or any other SELLER, the Monthly Royalty
Payments shall be equal to twenty cents ($0.20) multiplied by the
aggregate number of PRODUCTS sold during that particular month. However,
in no case shall the Monthly Royalty Amount be higher than:
a) Four percent (4%) of the first five hundred thousand dollars
($500,000) of the NET SALES of all PRODUCTS, as defined in this
AGREEMENT; and
b) Two percent (2%) of all NET SALES above the first five hundred
thousand dollars ($500,000) and up to one million five hundred thousand
dollars ($1,500,000) during that particular calendar month; and
c) One percent (1%) of all NET SALES above the one million five hundred
thousand dollars ($1,500,000) and up to two million five hundred thousand
dollars ($2,500,000) during that particular calendar month; and
d) One half percent (0.5%) of all NET SALES above the two million five
hundred thousand dollars ($2,500,000) during that particular calendar
month.
4.03 Monthly Minimum Royalty Payments
TCP recognizes that because the rights transferred to it
under this AGREEMENT are, at least in portion, exclusive in nature, it is
only reasonable to require monthly NET SALES to meet certain minimum
levels. Therefore, notwithstanding the amount of monthly NET SALES, for
every calendar month during the term of this AGREEMENT and/or as long as
PRODUCTS
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are sold by any SELLER, TCP shall pay Monthly Minimum Royalty Payments
equal to twenty thousand dollars ($20,000).
4.04 TCP shall keep accurate and verifiable records of all operations
under this AGREEMENT, and shall furnish to PRACTICAL written MONTHLY
STATEMENTS OF SALES. These statements shall include monthly data as
follows:
1. Total quantity of units of PRODUCTS sold during the month, list each
model separately.
2. Total of gross sales for the month with listed amounts for each
PRODUCT model separately
3. Total of all discount actually deducted, with listed amounts for each
discount category
4. Total deductions for sales returns, with listed amounts for each
PRODUCT model separately
5. Total of NET SALES for the month
6. Monthly Royalty Amount based on NET SALES, according to paragraph
4.02.
7. Monthly Royalty Amount based on quantities sold, equal to a result of
multiplication of twenty cents times total quantity, as per "1" above.
8. Monthly Minimum Royalty due, as per paragraph 4.03.
9. Amount of royalty due PRACTICAL for the month, equal to largest of the
amount stated in "6" or "7" or "8".
These statements are to be provided to PRACTICAL together with Monthly
Royalty payments.
4.05 PRACTICAL shall have the right, at its own expense and not more
often than annually, to have TCP's books examined by a Certified Public
Accountant ("CPA") for the purpose of verifying the Monthly Royalty
Payments. In the event that a variance of at least ten percent (10%) is
found to the detriment of PRACTICAL, then TCP shall pay to PRACTICAL an
amount equal to three (3) times the variance within 15 days of such
determination. In addition, TCP shall pay for all costs of the audit. TCP
will fully cooperate with the CPA with regard to any and all documents
reasonably requested which are related to, but not limited to, past
Monthly Royalty Payments delivered to PRACTICAL by TCP.
4.06 If any payment due hereunder is not timely paid, then the unpaid
balance will bear interest until paid at annual rate of fifteen percent
(15%) compounded monthly, until the delinquent balance is paid in full.
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4.07 Payments according to paragraphs 4.02 and 4.03 shall be made for
as long as either: (i) the PRODUCTS are covered by at least one claim of
one of PRACTICAL'S pending or issued unexpired US patent, or (ii) the
EXCLUSIVE PATENT MATTER or NON-EXCLUSIVE PATENT MATTER contains at least
one pending or issued unexpired US patent, or (iii) the PRODUCTS sold
have been developed, and/or engineered, and/or designed and provided by
PRACTICAL to TCP, or (iv) PRODUCTS have been developed by TCP based on,
or derived from: (a) EXCLUSIVE PATENT MATTER, and/or NON-EXCLUSIVE PATENT
MATTER, and/or KNOW-HOW, or (b) any product developed, and/or engineered,
and/or designed, and/or provided by PRACTICAL to TCP under this AGREEMENT
or 1996 AGREEMENT.
5.0 OTHER PROVISIONS
5.01 PRACTICAL will provide to TCP the following information and
services:
a) engineering expertise and complete and detailed designs, including
Schematic Diagrams and Xxxx of Materials, for the PRODUCTS as described
in EXHIBIT C hereto;
b) assistance in the selection of production materials and
components for the PRODUCTS;
c) assistance with the selection of supplies and supplier
relation development and the coordination of all custom
parts development; and
d) assistance with the coordination of all necessary
regulatory approvals.
5.02 PRACTICAL will not be obligated to provide the services set forth
in paragraph 5.01 if TCP is not in compliance with any paragraph of this
AGREEMENT at the time and written notice is given by PRACTICAL and TCP
has not remedied the default as provided herein.
5.03 In order for PRACTICAL to provide the required services, TCP will
pay all expenses of PRACTICAL including: all approved in writing by TCP
travel expenses, shipping expenses, parts purchasing expenses, third
party costs of special parts development and design.
5.04 TCP hereby warrants that it will not acquire any new
technologies and/or inventions related to: Electronic Lighting,
Electronic Ballasts or Hybrid (magnetic
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electronic) Ballasts for gas discharge lamps, Gas Discharge Lamps by
entering into a some form of licensing agreement with any third party
other than PRACTICAL - without making a formal written request to
PRACTICAL. If PRACTICAL is not willing or is unable to provide such new
technology to TCP within sixty (60) days on terms mutually acceptable to
TCP and PRACTICAL, then TCP shall have the right to acquire the
technology from any other third party.
5.05 TCP will not develop AND CLAIM AS ITS OWN, any new products
and/or technologies and/or inventions (patentable or not) derived from or
based on, in part or in whole, any information or KNOW-HOW received from
PRACTICAL under this AGREEMENT or 1996 AGREEMENT.
5.06 TCP shall xxxx all PRODUCTS with the appropriate trademark and
patent markings, including patent pending and actual patent numbers where
applicable.
5.07 If either party discovers that the EXCLUSIVE PATENT MATTER is
infringed upon by a third party, it shall communicate the details to the
other party. TCP shall thereupon have the right, but not the obligation,
to take whatever action (in its own name) he deems necessary, including
filling of lawsuits, to protect the right of parties to this AGREEMENT
and to terminate such infringement. PRACTICAL shall cooperate with TCP,
including cooperation and join TCP as necessary party as required in
certain states, but all of TCP's expense due to actions initiated by TCP
shall be borne by TCP. Upon resolution of any of such action of TCP, by
final, non-appealable judicial order or settlement or otherwise, the
proceeds which may be awarded in the final resolution shall be
distributed as follows: all third party (outside) legal expenses of TCP
associated with such action shall be paid first from the amount of award,
and any amount left above such expenses shall be divided with seventy
five percent (75%) for TCP and twenty five percent (25%) for PRACTICAL.
5.08 If either party discovers that the NON-EXCLUSIVE PATENT MATTER is
infringed upon by a third party, it shall communicate the details to the
other party. Both parties may jointly, at each party's own expense, and
discretion, take whatever action is necessary, including filling of
lawsuits, to protect the right of parties to this AGREEMENT and to
terminate such infringement. Upon resolution of any of such joint action,
by final, non-appealable judicial order or
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settlement or otherwise, the proceeds which may be awarded in the final
resolution shall be distributed as follows: all third party (outside)
legal expenses of both parties associated with such action shall be paid
first from the amount of award, and any amount left above such expenses
shall be divided equally between TCP and PRACTICAL.
5.09 In the event that TCP receives notice that PRODUCT infringes the
patent rights of others, and TCP decided to continue sell PRODUCTS,
notwithstanding the amount of NET SALES, TCP shall pay, without
interruptions, any and all amounts due PRACTICAL under this AGREEMENT, as
follows:
a) fifty percent (50%) of each Monthly Royalty Payment amount into
interest-bearing escrow account; and
b) fifty percent (50%) of each Monthly Royalty Payment amount to
PRACTICAL.
In that event, PRACTICAL shall not be paid any royalty if TCP is
forced and decided, in view of the notice, not to sell PRODUCTS and
actual NET SALES are equal to zero US Dollars ($US0.0)
The money placed into escrow account shall not be used to pay any
expenses of TCP associated with defensive action in such event.
Upon resolution of any such action by final, non-appealable judicial
order or settlement, or otherwise, the proceeds from the escrow account
shall be distributed as directed or agreed in any such final resolution.
5.10 Except as specified in paragraph 3, nothing herein shall be
construed as a warranty or representation by PRACTICAL as to the scope or
validity of the EXCLUSIVE PATENT MATTER or NON-EXCLUSIVE PATENT MATTER or
any patent(s) issuing thereon. TCP, as the manufacturer of PRODUCTS, will
be solely responsible for defending any claims against it for design
defects or patent infringement claims arising from the manufacture, sale
or use of all models of PRODUCTS. TCP will also defend and hold PRACTICAL
and Xxxxx harmless against any such claim for damages and TCP will not
xxx PRACTICAL or Xxxxx as a result of any such claim.
5.11 TCP and PRACTICAL hereby agree to effectively cooperate, to the
best of their abilities, in the process of design, verification,
qualification for manufacturing and sale or use of all models of
PRODUCTS.
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5.12 TCP will indemnify, defend and hold PRACTICAL and Xxxxx harmless
from any and all losses, judgments, settlements, claims, or damages,
including attorney fees, costs and expenses incurred as a result of any
claim arising out of or in connection with TCP's manufacture, use,
promotion, marketing, distribution, offer for sale, or sale of PRODUCTS,
including, but not limited to, claims arising out of the alleged
negligence in TCP's manufacture, use, promotion, marketing, distribution,
offer for sale, or sale of the PRODUCTS or claims based upon product
liability, provided that TCP is promptly notified in writing of such
claims against PRACTICAL and provided further that PRACTICAL permits TCP
to defend, compromise, or settle such claim and gives TCP all available
information, reasonable assistance, and authority to enable TCP to do so.
5.13 Neither TCP nor PRACTICAL shall challenge or contest the validity
of this AGREEMENT. TCP agrees and warrants that TCP or any SELLER will
not challenge or contest validity of any patent application or issued
patents owned by or assigned to PRACTICAL or Xxxxxxx Xxxxx.
5.14 TCP shall use its best effort to maintain in confidence all
proprietary matters associated with the EXCLUSIVE PATENT MATTER, and/or
NON-EXCLUSIVE PATENT MATTER, and/or KNOW-HOW, and/or PRODUCTS, as well as
any other Proprietary or Confidential Information or Trade Secrets
("PROPRIETARY MATTER") provided by PRACTICAL in connection with this
AGREEMENT.
To the extent reasonable necessary, PROPRIETARY MATTER may be
disclosed to those employees or agents of TCP who are reasonably required
to have access to the PROPRIETARY MATTER in order to accomplish TCP's
manufacturing, sale, and/or marketing of PRODUCTS. However, any
disclosure under circumstances whereby such employee signs a
confidentiality agreement and understands its obligation to maintain in
confidence all PROPRIETARY MATTERS received from TCP or PRACTICAL.
5.15 If any dispute arises under this AGREEMENT, the parties shall
negotiate in good faith to settle such dispute. If the parties cannot
resolve such dispute themselves, then they shall submit the dispute to
arbitration by any mutually-acceptable arbitrator. If no arbitrator is
mutually acceptable, than the parties shall submit the matter to
arbitration under the rules of the
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American Arbitration Association ("AAA") . Under any arbitration, both
parties shall cooperate and agree to abide finally by any decision of the
arbitration proceedings. If AAA is selected, the arbitration shall take
place under the auspices of the nearest branch of the AAA most convenient
to both parties. The cost of the arbitration shall be born according to
the decision of the arbitrator, who may apportion costs equally, or in
accordance with any finding of fault or lack of good faith of either
party. The arbitrator's award shall be non-appealable and enforceable in
any court of competent jurisdiction.
5.16 PRACTICAL hereby directs TCP to make all payments due PRACTICAL
under this AGREEMENT payable to "Practical Innovations" by a check or
wire transfer to a designated bank account at any US Bank.
5.17 In the event that either party hereto shall be required, or
shall deem it necessary or advisable, to give notice to the other party,
such notice shall be served upon the other party by depositing said
notice in the United States mail, postage paid certified mail with return
receipt requested, and addressed to:
Xxxxx Xxx, President
Technical Consumer Products, Inc.
000 Xxxx Xxxxx
Xxxxxx, Xxxx 00000
or
Xxxxxxx Xxxxx, President
Practical Innovations, Inc.
000 Xxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
as appropriate. Any notice so given shall be deemed received on the third
business day following its deposit in the US Mail. Either party hereto
may change the address at which such party shall receive notices
hereunder by giving notice of such change of address to the other party
hereto in accordance with the provisions of this paragraph.
5.18 If either party shall be in default in any terms of this
AGREEMENT, the other party may give written notice of its intention to
terminate this AGREEMENT, specifying such default. Unless the default is
not remedied within thirty (30) days after the receipt of such written
notice, this
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AGREEMENT shall terminate as of the expiration of such thirty day
period.
5.19 In the event that: (i) the License granted hereunder is
terminated as per paragraph 5.18 and SELLER continues to sell PRODUCTS,
then TCP shall nevertheless remain obligated to make Monthly Royalty
Payments due PRACTICAL under this AGREEMENT.
5.20 If TCP shall go into receivership, bankruptcy, or insolvency,
or make an assignment, this AGREEMENT may be immediately terminated by
PRACTICAL by written notice, but without prejudice in regards to any
rights of PRACTICAL hereunder.
5.21 TCP may cancel all its rights and obligations under this
AGREEMENT at any time provided if it so cancels: (i) TCP shall keep in
confidence any and all proprietary information received from PRACTICAL
under or in connection with this AGREEMENT; (ii) TCP shall pay to
PRACTICAL all payments due under this AGREEMENT up to the time of
cancellation; and (iii) TCP shall refrain from manufacturing, use, sale
and/or marketing PRODUCTS, as well as from using the EXCLUSIVE PATENT
MATTER and/or NON-EXCLUSIVE PATENT MATTER, and/or KNOW-HOW in any way,
except sale of current inventories for which royalties shall be paid as
provided hereunder.
5.22 This AGREEMENT shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns including any and all worldwide subsidiaries, affiliates,
suppliers, customers, and legal representatives.
5.23 This AGREEMENT may not be alerted or amended except in
writing, signed by the parties hereto or their respective successors
and assigns.
5.24 This AGREEMENT shall be governed by and construed in
accordance with the laws of state of Illinois.
5.25 TCP represents and warrants that the execution and delivery by
it of this AGREEMENT has been authorized by appropriate action of its
Board of Directors in accordance with provisions of law and its
by-laws.
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IN WITNESS WHEREOF the parties hereto have duly executed this
AGREEMENT on the day and year first above written.
Technical Consumer Products, Inc. (TCP)
By: /s/Xxxxx Xxx March 1st, 2000
--------------------------------- ---------------------
Xxxxx Xxx, President Date
Practical Innovations, Inc.
By: /s/Xxxxxxx Xxxxx March 1st, 2000
--------------------------------- ---------------------
Xxxxxxx Xxxxx, President Date
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EXHIBIT A
---------
EXCLUSIVE PATENT MATTER
U.S. Patent No. Issue Date Title
5,448,137 Sept.5, 1995 ELECTRONIC ENERGY
CONVERTER HAVING TWO
RESONANT CIRCUITS
5,502,635 Mar.26,1996 PARALLEL RESONANT
INTEGRATED INVERTER
BALLAST FOR GAS
DISCHARGE LAMPS
5,801,492 Sep.1, 1998 ELECTRONIC BALLAST FOR
GAS DISCHARGE LAMP
HAVING PRIMARY AND
AUXILIARY RESONANT
CIRCUIT
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EXHIBIT B
NON-EXCLUSIVE PATENT MATTER
U.S. Patent No. Issue Date Title
5,434,480 July 18,1995 ELECTRONIC DEVICE FOR
POWERING A GAS
DISCHARGE LOAD FROM
A LOW FREQUENCY SOURCE
5,436,529 July 25, 1995 CONTROL AND PROTECTION
CIRCUIT FOR ELECTRONIC
BALLAST
5,371,438 Dec. 6, 1994 ENERGY CONVERSION DEVICE
HAVING AN ELECTRONIC
CONVERTER WITH DC INPUT
TERMINAL FOR DELIVERING
A HIGH FREQUENCY SOURCE
5,982,106 Nov.9,1999 SELF-PROTECTED SERIES
RESONANT ELECTRONIC
ENERGY CONVERTER
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