EXHIBIT 10
EXCLUSIVE PATENT LICENSE AGREEMENT
THIS EXCLUSIVE PATENT LICENSE AGREEMENT ("Agreement") is made and entered into
on this _______ day of _______________, 2004 by and between Lo-Tow Axles Pty.
Ltd., an Australian business entity (the "Licensor"), Xxxx Xxxxxxx, an
individual residing in the State of Florida ("Xxxxxxx") and Dtomi, Inc.
("Licensee") a Nevada corporation, having its principal office at 000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxxx, Xxxxxxx 00000.
WITNESSETH
WHEREAS, Licensor is the sole owner and holder of the Patent and Licensed
Products (defined herein); and
WHEREAS, Xxxxxxx acknowledges that Licensor is the sole owner and holder of the
Patent and Licensed Products; and
WHEREAS, Licensee desires to acquire an exclusive License (defined herein) for a
definite term under such Patent and Licensed Products; and
WHEREAS, Licensor is willing to grant such License to Licensee.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties hereto agree as follows:
1. Definitions.
When used in this License Agreement, the terms listed below shall have the
following meanings:
1.1 "Improvement" or "Improvements" shall mean the improvements,
modifications, or enhancements to the Patent.
1.2 "Licensed Products" shall mean any and all products which employ or
are produced by the practices of inventions claimed in the Patent any and all
products which if unlicensed would infringe on the patent..
1.3 "Licensed Territory" shall mean the countries in which the Patent is
in existence at any time.
1.4 "Patent" shall mean those patents, improvements, inventors'
certificates and patent applications set forth in Exhibit A, together with any
improvements, renewal, division, continuation, continued prosecution application
request for continued examination (RCE) or continuation-in-part of any of such
patents, certificates and applications, any and all patents or certificates of
invention issuing thereon, and any and all reissues, reexaminations, extensions,
divisions, renewals and or improvements of or to any of the foregoing, and any
foreign counterparts of any of the foregoing.
2. Condition Precedent. Notwithstanding the parties' execution of this
Agreement, this Agreement shall not become effective until such time as the
following event occurs:
(a) The parties hereto execute that certain Settlement and Release
Agreement, attached hereto as Exhibit B.
3. License Granted.
3.1 License. Licensor hereby grants to Licensee for the Term, as defined
in Section 4 herein, an exclusive and nonassignable right and license to use the
Patent and the Licensed Products in order to aid in the commercialization of the
Patent and the Licensed Products in the Licensed Territory.
3.2 Exclusions. Neither this License Agreement, nor the rights conveyed or
obligations assumed hereunder, nor any security interest herein may be assigned,
sold, encumbered, or sublicensed by Licensee without the written consent of
Licensor, or except as provided herein.
3.3 Sublicenses to sublicensee. Licensee may grant nontransferable,
personal, nonexclusive sublicenses (without further right to sublicense) to
end-users for the sole purpose of using the Licensed Product.
4. Term. This License Agreement shall be effective as of the August 1, 2004 and
shall automatically terminate on May 12, 2019 (the "Term"), subject to the
provisions of Section 9 of this Agreement.
5. Payment.
5.1 Initial Payment. In consideration of the transactions described in
this Agreement, Licensee shall issue to Licensor sixty four thousand dollars
worth of shares ($84,000) of its common stock, due as of the Effective Date, as
defined herein. Share value to be calculated as 100% of the weighted average of
the closing price of the Licensee's common stock for the prior 3 months
immediately preceding the date of this Agreement.
5.2 Monthly License Fee. In consideration of the transactions described in
this Agreement, Licensee shall pay Licensor a monthly license fee (the "MLF") of
Ten Thousand Dollars ($10,000) per calendar month or any portion thereof,
payable as follows: Licensee shall pay Four Thousand Dollars ($4,000) of each
MLF payment to Licensor and shall pay Six Thousand Dollars ($6,000) of each MLF
payment directly to Xxxxxxx, commencing December 1, 2004, and continuing for the
duration of the Term, or for so long as, and to the extent that, the Patent is
valid and enforceable in any one jurisdiction in the Licensed Territory.
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(a) Payments of the MLF shall be due to Licensor and Xxxxxxx on the first
day of each month ("Payment Due Date"), although Licensee shall not be in
breach ofthe provisions hereunder unless such payment has not been made
within thirty (30) days of the Payment Due Date.
(b) The MLF payments shall be adjusted upward annually on January 31
according to the annual CPI increase for the previous twelve (12)
consecutive months for the metropolitan Miami, Florida area, or anything
amending or replacing the same and such adjustment shall be agreed to in
writing by the parties, and such writing shall constitute a valid
amendment to this Agreement.
5.3 Stock Grant. Immediately upon the Effective Date, defined as the
earlier of July 7, 2005 or the date that the financing (described in
Exhibit C, attached hereto, hereinafter referred to as the
"Financing") vests in Licensee, Licensee will grant Licensor a
sufficient quantity of common shares of Licensee such that Licensor
shall own eight point eight percent (8.8%) of all issued and
outstanding shares of Licensee as of the Effective Date. The parties
acknowledge that as of the Effective Date, eight point eight (8.8 %)
of all issued and outstanding shares of Licensee is estimated to be
approximately 2,525,624 common shares. Xxxxxxx shall be entitled to
thirteen point two percent (13.2%) of all issued and outstanding
shares which is estimated to be approximately 3,788,437 common
shares. Immediately prior to the signing of this agreement by
Licensor, Licensee is to provide Licensor a statement of Licensee
share capital and shares actually issued to Xxxxxxx.
(a) Common shares issued to Licensor shall have piggyback
registration rights in accordance with the terms of the attached Exhibit D.
(b) The restriction on shares already issued to Xxxxxxx will apply
proportionately to the shares issued to Licensor. (I.e., should 1,000,000 have
already been issued to Xxxxxxx with a restriction date to be released as at the
end of April 2004 then Licensor will receive 666,666 (1,000,000/60*40) shares
also having the restriction lifted by the end of April 2004).
5.4 Licensor shall have an option to appoint a Board member and an
alternate member to serve on the Board of Directors of Licensee (the "Board"),
for as long as this Agreement, remains in effect. Licensee agrees to pay
annually reasonable expenses, subject to Licensee's prior, written approval,
including economy airfare and mid-range accommodations for Licensor's director
or its alternate director to attend board meetings and necessary inspections of
Licensee to facilitate compliance with such director-responsibilities.
6. Licensee's Duty to Maintain the Patent and Pay Patent Expenses. Licensee
agrees to maintain the Patent and pay all patent fees and expenses required to
so maintain the Patent.
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7. Representations and Warranties.
7.1 Licensee's Duty not to Disclose. Licensee acknowledges, represents,
and warrants that the Patent is the sole, proprietary and confidential property
of Licensor. Accordingly, Licensee shall not, without the prior express written
consent of Licensor, disclose or reveal to any third party or utilize for its
own benefit, other than pursuant to this Agreement, any such Patent information,
provided that such information was not previously known to Licensee or to the
general public. Licensee further agrees to take all reasonable precautions to
preserve the confidentiality of the Patent and shall assume responsibility for
ensuring that its employees, officers, subsidiaries, affiliates, and
sub-licensees will similarly preserve this information against any disclosure to
any third parties. The provisions of this clause shall survive termination of
this Agreement.
7.2 Authority to Grant. Licensor represents and warrants that it has the
right and power to grant the exclusive license granted herein and that there are
no other agreements with any other party in conflict with such grant.
7.3 Licensee's Commercialization Efforts. Licensee represents that it has
or will hereafter acquire or develop the business operations that will enable it
to reasonably commercialize the Licensed Products throughout the Licensed
Territory, and that it shall use its best efforts to promote the distribution
and sale of such Licensed Products in the Licensed Territory in good faith.
Licensee further agrees that it will, in good faith and with reasonable
diligence, conduct all operations, including manufacturing, marketing,
distribution and sale of Licensed Products, in accordance with the highest
standards of business customs of the industry and that it will endeavor to sell
Licensed Products throughout the Licensed Territory, utilizing its skill and
resources in such effort to the extent that high standards of business practice
and judgment dictate.
Should the Licensee give written notice to the Licensor that it does not
intend to commercialize the Licensed Products in a part or parts of the Licensed
Territory, then in that event the Licensor or its agent may commercialize the
Licensed Products in that or those parts.
(a) Licensee represents that it will meet ninety percent (90%) of its
quarterly gross revenue projections ("Gross Revenue Projections") during
the initial twenty-four (24) month period (the "Initial Period"), which
commences upon the Effective Date. . (All values in Exhibit C are units of
$1,000).The Gross Revenue Projection for the twelve (12) month period
subsequent to the Initial Period shall equal the Gross Revenue Projection
for the period commencing on the first day of the thirteenth month
following the Financing and ending on the last day of the twenty-fourth
month following the Financing plus 25% of that amount.
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8. Compliance With Local Laws. In the event that the Patent is to be used in
foreign countries by Licensee, Licensee shall obtain all necessary permits
required by the laws of that particular country. Licensee shall take all steps
necessary for obtaining from the appropriate governmental authority all
approvals and permits necessary to carry out the terms of this Agreement.
Licensor shall cooperate with Licensee relative to supplying any
information and material necessary for the approvals and consents of the
appropriate governmental authority.
9. Termination. Licensor shall have the right to immediately terminate this
Agreement and to pursue any remedies available in law or in equity in the event
that Licensee shall:
(a) fail to obtain or maintain product liability insurance in the amount
and of the type provided for herein;
(b) file a petition in bankruptcy or be adjudicated a bankrupt or
insolvent, or make an assignment for the benefit of creditors or an arrangement
pursuant to any bankruptcy law, or discontinue or dissolve its business, or if a
receiver is appointed for Licensee or for Licensee's business and such receiver
is not discharged within 30 days;
(c) fail to observe or perform any of the other covenants, conditions, or
obligations of this Agreement; provided, however, any such failure shall not
constitute a default hereunder, unless otherwise expressly provided herein,
unless and until Licensor shall have given Licensee notice thereof and a period
of 10 days shall have elapsed, during which period Licensee may correct or cure
such failure, upon failure of which a default shall be deemed to have occurred
hereunder without further notice or demand of any kind being required.
(d) fail, after the occurrence of the Effective Date to meet 90% of its
Gross Revenue Projections for any quarter during the following thirty-six (36)
months, as provided by Exhibit E, herein. By way of illustration, if the
Financing is completed November 30, 2004, Licensor shall have the right to
terminate this Agreement if Licensee fails to meet ninety percent (90%) of its
Gross Revenue Projections for any quarter between December 1, 2004 through
November 30, 2007. The Parties agree that
o Completion of the Financing is deemed to be when warrant call
expires.
o Revenue, for the purpose of this provision, is defined as when the
goods are delivered and invoiced.
(e) fail to maintain the patent as required in clause 6.
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10. Effects of Expiration or Termination.
(a) Upon the expiration or termination of this Agreement, all rights
granted to Licensee under this Agreement shall forthwith terminate and
immediately revert to Licensor.
(b) Upon the expiration or termination of this Agreement, Licensor may
require that Licensee transmit to Licensor, at no cost, all promotional and
research material relating to the Patent.
11. Indemnification.
(a) Licensee agrees to defend, indemnify and hold Licensor, and its
officers, directors, agents and employees, harmless against all costs, expenses
and losses (including reasonable attorneys' fees and costs) incurred through
claims of third parties against Licensor based on the commercialization of the
Licensed Products, including, but not limited to, actions founded on product
liability or Licensee's breach of this Agreement, or negligence.
(b) Licensor agrees to defend, indemnify and hold Licensee, and its
officers, directors, agents and employees, harmless against all costs, expenses
and losses (including reasonable attorneys' fees and costs) incurred through
claims of third parties against Licensee based on a breach by Licensor of this
Agreement.
12. Insurance. Licensee shall, throughout the term of this Agreement, obtain and
maintain at its own cost and expense, from a qualified insurance company
licensed to do business in Washington and having a Xxxxx'x Rating of "B+" or
better, standard product liability insurance naming Licensor as additional
insured. Such policy shall provide protection against all claims, demands and
causes of action arising out of any defects or failure to perform, alleged or
otherwise, of the Licensed Products or any material used in connection therewith
or any uses thereof. The amount of coverage shall be $1,000,000. The policy
shall provide for 30 days' notice to Licensor from the insurer by registered or
certified mail, return receipt requested, in the event of any modification,
cancellation or termination thereof. Licensee agrees to furnish Licensor a
certificate of insurance evidencing same within 30 days after execution of this
Agreement, if practical, and, in no event shall Licensee commercialize the
Patent or Licensed Products prior to receipt by Licensor of such evidence of
insurance.
13. Notices.
(a) Any notice required to be given pursuant to this Agreement shall be in
writing and mailed by certified or registered mail, return receipt requested to
the following:
If to Licensor: Attention: Xxx Xxxxxx
Lo-Tow Axles Pty. Ltd.
X.X. Xxx 000 33 The Xxxx
Nambucca Heads, NSW Australia 2448
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With a copy to:
Xxxxx Xxxxxxx
MBT Lawyers
Xxxxx 0, 00 Xxxxxx Xxxxxx
XXXXX XXXXXXX XXX XXXXXXXXX 0000
If to Licensee: Xxxx Xxxxxxx
Dtomi, Inc.
000 Xxxxx Xxxx Xxxxxx Xxxx Xxxxxxxxxx, XX 00000
with copy to: Xxxxx X. Xxxx
The Xxxx Law Group
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Xxxxxxx: Xxxx Xxxxxxx
000 0xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
(b) Either party may change the address to which notice or payment is to
be sent by written notice to the other party pursuant to the provisions of this
paragraph.
(c) If, during the Term of this Agreement, Licensee becomes aware that one
or more third parties are infringing or are threatening to infringe the Patent
or Licensed Products licensed hereunder, Licensee shall immediately report such
information to Licensor and shall provide in such report all details in
Licensee's knowledge or possession concerning the kind and character of the
infringement and any other pertinent information that Licensee may have ("Notice
of Infringement"). Within 10 days of Notice of Infringement or within 10 days
after Licensor became aware that one or more third parties are infringing or are
threatening to infringe the Patents licensed hereunder, Licensor shall, in its
sole judgment, be satisfied that there exists a reasonable likelihood of
infringement, Licensor may, at its option, demand that Licensee take such steps,
including notification, to place the putative infringer on notice of Licensor's
claims or assist Licensor in pursuing other legal or equitable remedies. The
form of the notification and the manner and nature of any communications between
Licensor and the alleged infringer shall be within the sole discretion of
Licensor. Lo-Tow is under no obligation to pay costs of pursuing remedies.
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14. Defense of Third-party Claim. In the event of the institution of any suit by
a third party against Licensor or Licensee for patent infringement involving the
manufacture, use, sale, distribution, marketing or other utilization of the
Patents or the Licensed Products, the party sued shall promptly notify the other
party in writing. Licensee shall be obligated to provide Licensor the first
right to defend and shall pay Licensor's costs in the defense, settlement or
payment of judgments or decrees arising from any such action. Except in the case
of a conflict of interest, Licensee and Licensor shall assist one another and
cooperate in any such litigation at the other's request without expense.
15. Confidential Information.
15.1 Scope. Licensor and Licensee agree that they shall safeguard
Confidential Information, as defined herein, which they receive from the other
party.
15.2 Definition of Confidential Information. For the purposes of this
License Agreement, "Confidential Information" shall mean any information
concerning the Patent or the Licensed Products which is furnished now or in the
future, by or on behalf of Licensor in accordance with the provisions of this
Agreement. Without limiting the generality of the foregoing, Confidential
Information includes, but is not limited to, the following types of information
and other information of a similar nature (whether or not reduced to writing or
still in development, and whether or not separately marked by Licensor as
confidential): designs, concepts, drawings, ideas, inventions, specifications,
techniques, discoveries, models, data, source code, object code, documentation,
diagrams, flow charts, research, development, processes, procedures, know-how,
new product or new technology information, marketing techniques and materials,
marketing plans, timetables, strategies and development plans (including
prospective trade names or trademarks) and other information related to
customers, pricing policies and financial information. "Confidential
Information" does not include information which: (i) is or becomes generally
available to the public other than as a result of a disclosure by either party,
or (ii) becomes available to Licensee on a nonconfidential basis from a source
other than Licensor, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation to either
party with respect to such information.
16. Choice of Law. This Agreement and the performance of the parties hereunder
shall be construed and governed in accordance with the laws of the State of
Washington.
17. Arbitration.
17.1 Any controversy, dispute, or claim arising out of or relating to this
Agreement, including specifically the breach thereof, shall be settled by
binding arbitration in Seattle, Washington.
17.2 Procedure. Any party to this Agreement can initiate arbitration
pursuant to this Agreement by serving notice on the other party of intent to
arbitrate. The notice shall specify with particularity the claims or issues that
are to be arbitrated. Within ten days of receipt of the notice by all parties,
the parties shall obtain a list of available arbitrators from the local office
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of the Judicial Arbitration and Mediation Service ("JAMS") and select a mutually
acceptable arbitrator. If the parties are unable to agree on an arbitrator
within ten days, any party may petition the Presiding Judge of the Superior
Court for King County to select a single arbitrator from the JAMS list. The
Parties shall have the discovery rights available under Washington's Civil
Rules, subject to the limitation that each side shall be limited to no more than
five interrogatories and five depositions unless, upon a showing of good cause,
the Party can convince the arbitrator that more interrogatories or depositions
should be permitted. All discovery must be concluded within 60 days of the
selection of an arbitrator. The arbitration hearing must be concluded within 30
days of the close of discovery and it will be conducted in accordance with
Washington Rules of Evidence. The arbitrator's final decision shall be rendered
within ten days of the final hearing day. Judgment upon the arbitrator's final
award may be entered in any court having jurisdiction thereof.
17.3 Costs and Fees. The parties shall bear in equal shares the
arbitrator's fees and costs. The prevailing party in the arbitration shall be
awarded its reasonable attorneys' fees and all costs, other than the
arbitrator's fees and costs. For the purposes of determining who is the
prevailing party, each side will submit to the other a single written offer of
settlement ten days prior to the start of the arbitration hearing and the Party
whose offer most closely approximates the arbitrator's award shall be deemed the
prevailing Party for the purpose of awarding attorneys' fees.
18. Agreement Binding on Successors. This License Agreement shall be binding on
and shall inure to the benefit of the parties hereto, and their heirs,
administrators, successors and assigns. Licensor shall be free to assign its
rights or obligations under this Agreement at any time without the approval or
consent of Licensee or any other person or party.
19. Waivers. No waiver by either party of any default under this Agreement shall
be deemed as a waiver of any prior or subsequent default of the same or other
provisions of this Agreement.
20. Severability. If any provision hereof is held invalid or unenforceable by a
court of competent jurisdiction, such invalidity shall not affect the validity
or operation of any other provision and such invalid provision shall be deemed
to be severed from this Agreement.
21. Representation by Counsel. This Agreement is the result of negotiation
between the parties, who acknowledge that they have been represented by counsel
during such negotiation; accordingly, this Agreement shall not be construed for
or against either party regardless of which party drafted this Agreement or any
portion thereof.
22. Complete Agreement. This Agreement constitutes the entire understanding of
the parties, revokes and supersedes all prior agreements between the parties,
and is intended as a final expression of their agreement. It shall not be
modified or amended, except in writing signed by the parties hereto and
specifically referring to this Agreement. This Agreement shall take precedence
over any other documents that may be in conflict therewith.
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23. Captions. The captions used in this Agreement are for convenience only, and
are not to be used in interpreting the obligations of the parties under this
Agreement.
24. Counterparts. This Agreement may be executed in counterparts. Each of which
shall be deemed an original but all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have each caused to be affixed hereto its or his/her hand and seal as of the
date hereof.
LICENSOR:
By
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Name
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Title
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LICENSEE:
By
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Name
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Title
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ACKNOWLEDGED AND AGREED:
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Xxxx Xxxxxxx
Individually
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