LICENSE AGREEMENT
This LICENSE AGREEMENT ("Agreement") is dated as of November 19,
1998 ("Effective Date"), between GolfGear International, Inc., a
Nevada corporation, 0000X Xxxxxxxxxx Xxxxx, Xxxxxxxxxx Xxxxx, XX
00000 ("Licensor"), and Xxxxxx Sporting Goods Co., 0000 X. Xxxx
Xxxx, Xxxxxxx, Xxxxxxxx 00000 ("Licensee");
RECITALS
WHEREAS, Licensor owns certain patent rights relating to golf
club technology;
WHEREAS, Licensor has agreed to grant a license to Licensee, to
use such technology covered by Licensor's patent rights under the
terms and conditions set forth in this Agreement.
THEREFORE, the Licensor and the Licensee agree as follows:
1. Definitions
1.1 "Affiliate" shall mean any person or entity in which a party
or a direct or indirect parent of a party owns, directly or
indirectly, stock or other indicia of ownership representing at
least 50% of the voting control over such person or entity.
1.2. "Licensed Patent Rights" shall mean the United States and
foreign patents and patent applications of the Licensor listed in
attached Schedule 1, which is incorporated as an integral part of
this Agreement, and any continuations, continuities-in-part,
divisions, reissues, re-examination, extensions, additions, and
foreign or other counterparts thereof
1.3. "Licensed Product" shall mean a golf club, component of a
golf club, or golf club or component made by a method coming
within a claim of any patent or patent application which issues
into a patent under the Licensed Patent Rights.
1.4. "Net Selling Price" shall mean Licensee's invoiced price of
all Licensed Products to a customer who is not an Affiliate,
minus any returns.
2. License Grant
2.1. Licensor hereby grants to Licensee a non-exclusive,
worldwide license, with no right to grant sublicenses, to make,
have made, use, sell, offer to sell and otherwise dispose of
Licensed Products utilizing the Licensed Patent Rights. Such
license of Licensed Patent Rights shall be subject to the
royalties provided in Section 3. Xxxxxx agrees to limit sales of
its currently designed Pro Staff insert irons to 1,200 sets, in
jurisdictions where Licensor has a patent within the Licensed
Patent Rights.
2.2. Licensor warrants that it is the exclusive owner of the
Licensed Patent Rights, which are not encumbered in any way, and
that it has the full power to enter into this Agreement and make
the grants set forth above.
2.3. Licensor makes no warranties or representations that any
Licensed Products do not infringe any patents of third parties.
3. Compensation
3.1. Advance Payment. Licensee shall make an advance payment to
Licensor upon the signing of this Agreement by both parties as
specified in attached Schedule 2. This payment shall not be
credited against any amounts payable as royalties under paragraph
3.2 or paragraph 3.3.
3.2. Royalties. Licensee shall pay Licensor a royalty as
specified in attached Schedule 2, for each golf club or golf club
component made, used, sold or offered by Licensee or on its
behalf in a geographical area where such activity would
constitute an infringement of a Licensed Patent Right in that
area.
3.3. Minimum Royalties. In any year during which any Licensed
Patent Rights remain in effect and Licensee makes, uses, sells or
offers to sell any Licensed Products in a geographical area in
which such activity constitutes an infringement of a Licensed
Patent Right in that area, Licensee shall make a minimum annual
royalty payment to Licensor as specified in attached Schedule 2
(which minimum amount shall be pro rated for any partial year
during which the minimum applies).
3.4. Royalties Not Refundable. Any Payments or royalties paid by
Licensee under this Agreement shall not be refundable for any
reason.
3.5. Termination of Royalties. The obligation to pay royalties
for Licensed Products payable under this Agreement shall be
terminated for a patent in the event that the United States
Patent and Trademark Office or a court of competent jurisdiction
holds that a patent under the Licensed Patent Rights is invalid
and/or unenforceable, in a decision from which no further rights
of appeal are available, and when such event occurs no father
royalties shall be due under that patent.
3.6. Royalty Payments. Licensee shall pay the royalties
required hereunder within thirty (30) days following each
calendar quarter after the Effective Date of this Agreement,
except for minimum royalties which shall be paid at the end of
each calendar year.
3.7. Reports. On or before each royalty payment date,
Licensee shall render to Licensor a written statement setting
forth the quantity of Licensed Products sold during the previous
royalty period, together with a statement of the amount of
royalties due for such products. During any period that
royalties are payable hereunder, Licensee shall keep written
records respecting such products so the royalties payable
hereunder may be accurately established and determined, and
Licensee shall permit such records to be inspected no more than
once during any calendar year by a Certified Public Accountant
appointed by the Licensor at any reasonable time during regular
business hours, upon written notice to Licensee at least five (5)
working days in advance of the inspection, to verify compliance
with this Agreement. If an underpayment of royalties is verified
of more than 5% of the amount due for any year, Licensee shall
pay the cost of the inspection.
3.8 Future Products of Licensee. For future products of
Licensee that (a) employ an insert as disclosed by the Licensed
Patent Rights or (b) employ a forged face with a cast body, if
Licensee believes such a product is not a Licensed Product
because it does not come within a claim of any patent or patent
application under the Licensed Patent Rights, Licensee shall
identify such product and provide a detailed explanation of the
basis of its belief. A failure to comply with this section shall
constitute a breach of this Agreement.
4. Term and Termination
4.1. The terms, conditions and obligations of this Agreement
become effective as of the Effective Date of this Agreement.
4.2. This Agreement shall remain in effect for five years from
and after the Effective Date with Licensee's option to renew for
an additional five years.
4.3. This Agreement may be terminated by Licensor prior to its
expiration, by prior written notice to the Licensee, for failure
to comply with any obligation hereunder; provided, however, that
the Licensee shall have thirty (30) days from the date of
delivery of such notice within which to remedy such breach.
5. Consequence of Termination
5.1. Termination of the Agreement for any reason shall not
relieve Licensee of its obligation to pay royalties accrued, due
or payable up to the date of such termination.
6. Miscellaneous
6.1. Governing Law. This License Agreement shall be governed and
construed in accordance with the laws of the State of California.
6.2. Assignment. All rights of Licensor under this Agreement can
be assigned without any prior notice to or consent by the
Licensee. Licensee shall have no right to assign any of its
rights or obligations under this Agreement without the prior
written consent of the Licensor. Subject to such restrictions,
this Agreement shall be binding upon and inure to the benefit of
the parties, their successors and assigns.
6.3. Notices. Any notice or other communication provided for
herein or given hereunder to a party hereto shall be in writing
and shall be hand-delivered or mailed by first class registered
or certified mail, postage prepaid, or sent by facsimile
telephone transmission or telex addressed to the attention of the
person specified below, in each case addressed or sent as follows:
If to Licensor:
Pacific Golf Holdings, Inc.
c/o GolfGear International, Inc.
0000X Xxxxxxxxxx Xxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Attention: President
Facsimile Telephone Number: (000) 000-0000
If to Licensee:
Xxxxxx Sporting Goods Co.
0000 X. Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Director of Technology, Golf Division
Facsimile Telephone Number: (000) 000-0000
or to such other address or number, or the attention of such other
person, with respect to either party as such party shall have
communicated to the other by written notice given in accordance with
this section.
6.4. Waiver and Other Action. No party, may waive any of
the terms or conditions of this Agreement except by a duly signed
writing referring to the specific provisions to be waived.
6.5. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement shall continue in full force and effect and shall in no
way be affected, impaired or invalidated.
6.6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which shall constitute but one instrument. Telecopy
versions of signed documents shall be deemed to be original
documents for purposes of this Agreement.
6.7. Entire Agreement. This Agreement constitutes the entire
agreement between the parties, or any of them, with respect to
the subject matter hereof and supersedes any and all prior
agreements or understandings with respect thereto.
6.8. Relationship. It is expressly agreed that the parties
intend by this Agreement to establish between Licensor and
Licensee the relationship of independent contractors. It is
further agreed that a party has no authority to create or assume
in the other party's name or on behalf of the other party for any
purpose whatsoever. Neither Licensor nor Licensee is the
employer, employee, agent, partner or co-venturer of or with the
other, each being independent.
IN WITNESS WHEREOF, the parties to this Agreement have caused
this Agreement to be executed on the date first above written.
GOLFGEAR INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx, President
XXXXXX SPORTING GOODS CO.
By: /s/ Xxxxx Xxxxxxx, Xx.
Xxxxx Xxxxxxx, Director of Research and Development
SCHEDULE 1
LICENSED PATENT RIGHTS
Jurisdiction Title Number Date of Patent
United States Golf Club Head and
Method of Forming Same 5,024,437 6/18/91
United States Golf Club Head and
Method of Forming Same 5,094,383 3/10/92
United States Golf Club 5,255,918 10/26/93
United States Golf Club Head and
Method of Forming Same 5,261,663 11/16/93
United States Golf Club with Recessed
Non-Metallic Outer Face Plate 5,261,664 11/16/93
United States Golf Club Head and Method
of Forming Same 5,344,140 9/6/94
United States Golf Club with recessed,
Non-Metallic Outer Face
Plate 5,417,419 5/23/95
United States Structure and Process for
Affixing a Golf Club Head
Insert to a Golf Club Head
Body 5,720,673 2/24/98
SCHEDULE 2
PAYMENTS
Advanced Payment. The advance payment under paragraph 3.1 is:
$25,000.00 (contrary to paragraph 3.1, this is to be credited against
advanced royalty payments)
Royalties. The royalty under paragraph 3.2 per golf club or golf
club component is:
for irons:
$1.00/club for first 250,000
$.75/club for next 250,000 to 500,000
$.50/club for 500,000 up
for xxxxx:
$1.00/club for first 500,000
$.75/club for 500,000 up
Minimum Royalties. The minimum royalty per year is: $15,000.00
