LICENSE AGREEMENT
This Agreement is made and entered into as of the 31st day of October (the
effective date) by and between Xxxxxxx X. Xxxxxxxx residing at 0000 Xxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, Xxxxx Xxx, residing at 0000 Xxxxxxx Xxxx
Xxxxx, Xxxxxxxxxx, Xxxx 00000 and Xxxxx X. Xxxxxxxx, residing at 0000 X. Xxxxxx,
Xxxxx Xxxxxx, Xxxxxxxx ("Licensor") and Quest Products Corporation Inc., a
Delaware corporation located at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxx, Xxx Xxxx 00000
("Licensee").
WHEREAS, LICENSOR represents that they are the owners of all right, title
and interest in and to the Patent (as hereinafter defined), and that said patent
is owned free and clear of all liens, encumbrances and licenses, and
WHEREAS, Licensor represents and warrants to Licensee that Licensor is
legally empowered to grant an exclusive license in and to the manufacturer,
and/or sale and/or use of the Invention, and
WHEREAS. LICENSEE desires to acquire an exclusive license under said Patent
to make use and sell the patented inventions and LICENSOR is willing to grant
such exclusive license,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter contained, it is hereby agreed as follows:
X. XXXXX OF LICENSE.
1.1 Licensor hereby grants under United States Patent No. 5.546,141, issued
or assigned to LICENSOR and any reissues, divisions, continuances, and
extensions thereof as well as improvement patents related thereto issued to
LICENSOR, or to any of their controlled entities or corporations (hereinafter
"the
Patent") the exclusive license to make, use and sell the patented Inventions
through all channels of distribution and to otherwise practice the patent on an
exclusive basis to the exclusion of the entire world including the inventor. The
Patent licensed hereunder relates to an adjustable glasses product including but
not limited to sunglasses, ski goggles and diving masks (hereinafter "the
Product").
1.2 Licensee shall have the right to enter into sub-licenses of the Patent
under which Licensee grants to third parties the right to practice the Patent.
1.3 Licensee agrees to xxxx the Product or the packaging of each Product
covered by this license with the appropriate patent notice in accordance with 35
U.S.C. ss. 287.
II. TERRITORY.
2.1. The Territory covered by the License is the World.
III. ROYALTY PAYMENTS.
3.1. In consideration for the License granted herein, LICENSEE shall pay
LICENSOR, at the times and in the manner hereinafter provided, a Royalty as set
forth below on sales of the Product:
(a) LICENSEE agrees to pay LICENSOR, as a Royalty Payment, the sum of
thirty cents (.30) for each Product which is covered by the Patent sold by
LICENSEE to third parties throughout the Territory during the term of the
License, as defined in Section VI hereof, where the Product takes the form
of eyeglasses, sunglasses, ski goggles, diving masks or other type of
wearable sport glasses, On ski
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goggles, diving masks or other types of sport glasses (but not sunglasses)
the royalty will be 1% of the wholesale price charged by licensee where
that price is over $30.00.
(b) Where the Product takes some form other than as described in
subparagraph (a) above and provided that the Product is covered by the
claims of the Patent, Licensee agrees to pay Licensor, as a Royalty
Payment, a sum equal to 3% of the wholesale price charged by Licensee for
the Product for each Product sold throughout the Territory during the term
of the License as defined in Section VI hereof.
3.2. In the determination of the Royalties due LICENSOR hereunder an
allowance shall be permitted to LICENSEE for returned merchandise.
3.3. Sales of Products by LICENSEE to third parties shall be deemed to have
accrued for purposes of calculating Royalty Payments on the date upon which the
invoice to which they relate is paid by the third party.
3.4. Royalty Payments as specified herein shall be calculated as of the
last day of each six month period for all sales accruing in that six month
period. L1CENSEE shall remit Royalty Payments accruing in that six (6) month
period within thirty (30) days after the last day of that period for each period
up to and including the first day of any such month following the termination of
this Agreement. For purposes of this license the first six-month royalty period
shall commence on the date of the first commercial sale of any of the Products
covered under this License by Licensee to a third party, provided, however that
this Agreement shall be cancellable at the election of Licensor if the first
commercial sale does not take place within eighteen (18) months after the
effective date of this Agreement as set forth above.
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3 5. LICENSEE agrees that notwithstanding the provisions for calculating
Royalty Payments as set forth in Sections 3.1., 3.2 & 3.3 above, LICENSEE agrees
to make a minimum annual Royalty Payment to LICENSOR in an amount not less than
$25,000 under the following terms and conditions:
(a) The minimum annual Royalty Payment shall be paid to Licensor on
the following basis: (i) ten thousand dollars ($10,000) at the commencement
of each twelve month period; (ii) additional royalty payments, if any are
due pursuant to P. P. 3.1. 3.2 & 3.3, at the close of the six month period
in accordance with P. 3.4 with the understanding that the $10,000 advance
shall be credited against all royalty payments due until exhausted; and
(iii) additional royalty payments, if any are due pursuant to P. P. 3.1,
3.2 & 3.3, at the close of the twelve month period in accordance with P.
3.4 with the understanding that the balance of the $25,000 annual minimum
royalty, if any, shall be paid at this time.
(b) Notwithstanding sub-paragraph (a) the first minimum annual Royalty
Payment advance in the amount of $10,000 shall be paid at the time of
execution of this license and applied against Royalty Payments, if any,
which are due during the first and second semi-annual royalty periods.
(c) Notwithstanding sub-paragraph (a) the first year's minimum annual
royalty period shall not commence to run until the first commercial sale of
any of the Products covered under this License by Licensee to a third party
which sale shall immediately be reported in writing by Licensee to
Licensor.
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3.6 As further and additional consideration to the LICENSOR for the grant
of this exclusive license, LICENSEE agrees to issue to LICENSOR or to his
designee(s) within five (5) days after the execution hereof warrants to purchase
1,000,000 shares of the common stock of LICENSEE at a price per share which is
25% less than the closing price of the stock, as reported on the NASDAQ bulletin
board, on the date that this license is executed by LICENSOR and delivered by
facsimile to LICENSEE.
(a) These warrants shall be exercisable by LICENSOR or his designee(s)
at said price for a period of thirty (36) months from the date of the first
commercial sale of any of the Products covered under this License by
Licensee to a third party which sale shall immediately be reported in
writing by Licensee to Licensor.
IV. REPORTS AND PAYMENTS.
4.1. Within thirty (30) days after the close of each six month royalty
period, LICENSEE shall render a written Royalty Report for the preceding six (6)
months showing the quantity of Products sold and paid for which are covered
under the Patent.
4.2. Within thirty (30) days after the close of each six month royalty
period Licensee shall render a written report setting forth the calculation of
the minimum annual Royalty Payment, if any, for the period as described in
Section 3.5.
4.3. Each Report described in this Section 4 shall be accompanied by the
payment of any Royalties due for such period including any minimum annual
Royalty Payment in the manner provided in Section III.
4.4. Each Report shall be signed and certified to be accurate by an officer
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of L1CENSEE,
4.5 All royalty checks will be made payable to, and all reports will be
rendered to: Xxxxx X. Xxxxxxxx, at Price, Heneveld, Xxxxxx XxXxxx and Xxxxxx,
X.X. Xxx 0000, Xxxxx Xxxxxx, Xxxxxxxx 00000
V. ACCOUNTING AND EXAMINATION OF BOOKS.
5.1. LICENSEE shall keep, at its own expense, correct and complete records
of books of account covering all transactions relating to this License, and
containing all information required for the computation and verification of the
Royalties to be paid hereunder. LICENSEE agrees, at the request and cost of
LICENSOR to permit an independent public accountant selected by LICENSOR (except
one to whom LICENSEE has some reasonable objection), to have access (for the
purpose of examination and/or audit) during ordinary business hours, to such
records and books of account and all other documents and materials in the
possession of or under the control of LICENSEE, relating to or pertaining to the
subject matter of this License, and to make copies and/or extracts therefrom as
may be necessary: (1) to determine in respect of any six month royalty period
ending not more than one year prior to the date of such request, the correctness
of any report and/or payment made under this Agreement, or (2) to obtain
information as to the Royalties payable for any six month period in case of
failure of LICENSE to report and/or pay pursuant to the terms of this Agreement.
Such accountant shall be entitled, at LICENSEE'S request, to furnish LICENSEE
with a written report on the accuracy and preparation of any report required
hereunder.
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5 2. LICENSEE shall keep all such records and books of account available to
LICENSOR for at least one (1) year after the termination or expiration of this
License or any extensions or renewals thereof.
5.3. If any audit or examination of the independent public accountant shall
reveal a deficiency of Royalty due, and LICENSEE agrees with such deficiency,
than LICENSEE shall make payment to LICENSOR of such deficiency. Payment of such
deficiency, if not disputed, shall be made in the manner prescribed in Section
IV within thirty (30) days of notification of LICENSEE by LICENSOR of such
deficiency. If the deficiency is disputed by LICENSEE the matter of the amount
of Royalty due for any disputed period covered under this Agreement shall be
submitted to Arbitration in accordance with Section XI below.
VI. DURATION.
6,1. This Agreement shall remain in full force and effect until the
expiration of the Patent. This Agreement shall terminate automatically upon such
expiration, without the obligation of notice from one party to the other
relating thereto.
6.2. In the event that LICENSEE shall at any time materially fail to make
Royalty payments or minimum annual Royalty Payments or render Royalty reports as
herein provided, LICENSOR shall have the right to notify LICENSEE of such
default by certified mail, return receipt requested and that it intends to
terminate this Agreement unless such default is cured. Unless such default shall
be cured by L1CENSEE within sixty (60) days from the date of such notice,
LICENSOR shall be entitled to terminate this Agreement at any time after the end
of said sixty (60) day period.
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(a) It shall not be grounds for termination of this Agreement that
there is a dispute as to a Royalty deficiency as described in Section 5
unless and until LICENSEE fails to remit said deficiency pursuant to the
ruling of an Arbitrator as contemplated in Section XI below within thirty
(30) days after service of the Arbitrator's ruling upon LICENSEE by
certified mail, return receipt requested.
6.3 The termination of this Agreement for any reason shall not prejudice
LICENSOR'S rights to Royalties due hereunder and unpaid on the effective date of
termination, or to any examination of LICENSEE'S books and records for any
period as herein provided.
6.4. If, for any reason, this Agreement is validly terminated, such
termination shall not affect the rights of either party against the other with
respect to antecedent breaches by the other.
VII. DISCLAIMERS, WARRANTIES AND REPRESENTATIONS
7.1. Nothing in this Agreement shall be construed as:
(a) A warranty or representation by LICENSOR as to the validity or
scope of the Patent; or
(b) A warranty or representation that anything made, used, sold or
otherwise disposed of under the License is or will be free from
infringement of any patents or claims of any third parties; or
(c) An obligation on the part of LlCENSOR to defend or reimburse
LICENSEE in whole or in part for the defense of any legal action brought by
any third party for patent infringement or any other claim based on
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LICENSEE manufacturing, using, selling or otherwise disposing of anything
under this License; or
(d) An obligation on the part of LICENSOR to bring or prosecute
actions or suits against third parties for infringement.
7.2 Notwithstanding the above, LICENSOR agrees to cooperate fully in any
lawsuit for patent infringement brought against LICENSEE arising out of the
Patent and LICENSEE further agrees to cooperate fully in any lawsuit for patent
infringement brought by LICENSEE against a third party and hereby consents to
being named as a nominal plaintiff in such proceeding with all costs and
expenses of such litigation to be borne by LICENSOR. However, in such a case
where LICENSOR is a nominal plaintiff, LICENSOR shall not be entitled to retain
separate counsel at LICENSEE's expense.
7.3. L1CENSOR makes no representations, extends no warranties of any kind,
either express or implied, and assumes no responsibilities whatsoever with
respect to the use, sale or other disposition by LICENSEE or its vendees or
other transferees of any products related to the Patent.
7.4. LICENSEE will hold LICENSOR harmless against all liabilities, demands,
damages, expenses or losses arising out of any use, sale or other disposition by
LICENSEE or its vendees or other transferees of any products related to the
Patent.
7.5 Licensor agrees to cooperate with Licensee with respect to the filing
of any re-issues, divisions, continuances and extensions of the Patent provided
that Licensee bears the full cost of all such prosecutions.
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VIII. ASSIGNMENT.
8.1. This Agreement may be assigned, sold, transferred or sublicensed by
LICENSEE provided that such assignee, successor or sublicensee or purchaser
shall agree in writing to assume, or otherwise abide, by all of the obligations
of the transferor under this Agreement.
8.2. This Agreement and the provisions hereof shall be binding at all times
upon and inure to the benefit of the parties hereto, their successors and
permitted assigns, and any others who may derive their interest from any of the
parties hereto.
IX. ARBITRATION OF ROYALTY DISPUTES.
9.1 LICENSOR and LICENSEE agree that there shall be mandatory Arbitration
of any Royalty deficiency dispute which arises under this Agreement,
9.2. The Arbitration shall be in accordance with the Rules of the American
Arbitration Association in New York City and shall be conducted before a single
Arbitrator.
9.3, The ruling of the Arbitrator shall be final and binding on the
LICENSOR and LICENSEE.
9.4. It shall be a pre-requisite to the commencement of Arbitration by
LICENSOR: (I) that LICENSOR has conducted an audit of the books and records of
LICENSEE as described in Section 5 hereof and that an independent public
accountant has found a royalty deficiency to exist for any one or more quarters;
and (ii) that LICENSEE disputes the deficiency.
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9.5. The mandatory arbitration provisions of this Section shall only be
applicable to disputes limited to Royalty deficiencies as that term is used in
Section 7 hereof.
X. MISCELLANEOUS.
10.1. This writing constitutes the entire Agreement between the parties and
there are no understandings representations or warranties of any kind which form
part of this agreement except as expressly provided herein. None of the
provisions hereof shall be deemed to be waived or modified, nor shall they be
renewed, extended, altered, changed or modified in any respect, except by an
express agreement in writing duly executed by the party against whom enforcement
of such waiver, modification, etc. is sought.
10.2. Any notice required or permitted to be given or made under this
Agreement by one of the parties to the other shall be deemed to have been
significantly given or made for all purposes if mailed, by registered or
certified mail, postage prepaid, addressed to such party at such party's address
indicated at the beginning of this Agreement, or to such other address as the
addressee shall have furnished in writing to the address or for the purpose of
providing notice under this Agreement. The date of mailing shall be deemed the
date of notice.
10.3. This Agreement shall be construed, interpreted and applied in
accordance with the laws of the State of New York applying to contracts fully
executed and performed in New York.
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10.4. LICENSOR and LICENSEE and any of their successors and assigns agree
to submit to jurisdiction in the courts (both Federal and State) of New York for
any action brought by LICENSOR or LICENSEE hereunder. LICENSOR and LICENSEE
further agree to accept service of process by mail at the addresses indicated at
the beginning of this Agreement.
10.5. The titles and headings of the sections of this Agreement are
inserted merely for convenience and identification, and shall not be used or
relied upon in connection with the construction or interpretation of this
Agreement.
10.6. The parties agree that it is the intention of neither party to
violate any public policy, statutory or common law, or governmental regulation;
that if any sentence, paragraph, clause or combination of the same is, or
becomes, in violation of any applicable law or regulation, or is unenforceable
or void for any reason, such sentence, paragraph, clause or combination shall be
inoperative and the remainder of the Agreement shall remain binding upon the
parties.
10.7. This Agreement has been entered into after negotiation and review of
its terms and conditions by parties with substantially equal bargaining power
and under no compulsion to execute and deliver a disadvantageous agreement. The
Agreement incorporates provisions, comments and suggestions proposed by both
parties. No ambiguity or omission in this Agreement shall be construed or
resolved against either party on the ground that this Agreement to any of its
provisions was drafted or proposed by that party.
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10.8 All notices that may or are required to be given under this Agreement
or with respect to it, shall be in writing, and shall be given by fax and
certified mail, return receipt requested, addressed to the respective parties as
follows:
(a) If to Licensee;
Quest Products Corporation
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
With a copy to:
Fabricant & Yeskoo LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Fax No. (000) 000-0000
(b) If to Licensor:
Xxxxx X. Xxxxxxxx, Esq.
Price, Heneweld, Xxxxxx, Xxxxxx and Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
ATTEST
IN WITNESS WHEREOF and intending to be legally bound thereby, the parties
have caused this instrument to be duly executed in duplicate as of the date and
the year first above written. The officers of both LICENSOR and LICENSEE
executing this Agreement represent that they have been authorized by their
respective corporations to enter into this Agreement and to legally bind their
corporation hereto.
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Dated: October 31, 1999 By: /s/XXXXXXX X. XXXXXXXX
--------------------------------
XXXXXXX X. XXXXXXXX
/s/XXXXX X. XXXXXXXX
--------------------------------
XXXXX X. XXXXXXXX
/s/XXXXX XXX
--------------------------------
XXXXX XXX
Dated: November 22, 1999 QUEST PRODUCTS CORPORATION
By: /s/XXXXXXX XXXXXXXX
--------------------------------
President
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