MASTER LICENSE AGREEMENT
Exhibit
4(a)(i)
THIS
LICENSE AGREEMENT (hereinafter referred to as the “License Agreement”), by and
between MK Enterprises LLC, a Nevada corporation, having a place of business
at
0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000 (hereinafter referred to as the
“Licensor”), and Valcent Products, Inc., an Alberta Canada corporation, having a
place of business at Xxxxx 000, 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx (hereinafter referred to as the “Licensee”).
W
I T
N E S S E T H:
WHEREAS,
Licensor is the owner of certain Patent Rights and Know-How, hereinafter
defined, and has acquired and developed certain Licensed Products, hereinafter
defined, which utilize the Patent Rights and Know-How; and
WHEREAS,
Licensee desires to license the Patent Rights and Know-How to commercialize
the
Licensed Products and to be the exclusive world-wide licensed manufacturer,
marketer, and seller of the Licensed Products, all as set forth in this License
Agreement; and
WHEREAS,
Licensor desires to grant to Licensee such rights and licenses, as set forth
in
this License Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and obligations hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
Each
of
the following terms, wherever found in this License Agreement, shall be used
and
understood in accordance with the corresponding definition below:
1.1 “Territory”
shall mean the entire world and each and every country, jurisdiction and/or
sovereign nation therein.
1.2 “Licensed
Products” shall mean all products listed on Exhibit “A”, attached hereto and
made a part hereof, and any other goods that embody, employ, include or
incorporate the Patent Rights and Know-How. Licensed Products shall also
include
Elected Improvements. Any of such Licensed Products may also be referred
to
individually and termed Licensed Product.
1.3 “Ancillary
Products” shall mean any goods or services relating to particular Licensed
Products including goods and services sold as a part of a particular Licensed
Product, goods sold as replacement parts for a particular Licensed Product,
or
goods and services sold to repair a particular Licensed Product.
1.4 “Patent
Rights” shall mean and include the patents and applications set forth on Exhibit
“B”, attached hereto and made a part hereof, and/or any divisions, continuations
or reissues thereof, all foreign patent applications corresponding thereto,
and
all United States and foreign patents issued upon any such applications.
The
term Patent Rights shall further include any United States and foreign patents
and patent applications covering the Elected Improvements but shall not include
continuation-in-part applications unless the new matter in the
continuation-in-part application is an Elected Improvement.
1.5 “Know-How”
shall mean all of the technical know-how, trade secrets, technical information,
and knowledge, directly or indirectly, relating to the manufacture and use
of
the Licensed Products, including, without limitation, configurations, formulas,
engineering, materials, scientific and practical information and the disclosure
in the Patent Rights, whether patentable or unpatentable, and all physical
manifestations or embodiments of the Licensed Products including without
limitation all data specifications, prototypes, drawings, schematics, notes,
records and other writings; all such Know-How to be used or practiced or
capable
of being used or practiced in the manufacture and use of the Licensed
Products.
1.6 “Improvements”
shall mean and include any improvements and modifications to particular Licensed
Products, including, without limitation, the materials and configuration
of the
Licensed Products and any machinery or equipment for the manufacture or use
of
the Licensed Products, together with any improvements and modifications thereof,
developed by Licensor during the term that the particular Licensed Product
is
licensed under this License Agreement.
1.7 “Elected
Improvements” shall mean those Improvements elected by Licensee pursuant to
Paragraph 4.2 hereof.
1.8 “Unit
Sales” for any given period shall mean the sale, transfer, exchange, or other
disposition of Licensed Products by Licensee or sublicensees during the said
period, such sale, transfer, exchange, or other disposition being deemed
consummated upon the first to occur of: (a) receipt of payment from the
purchaser, or (b) if otherwise transferred, exchanged, or disposed of, when
such
transfer, exchange, or other disposition occurs. Unit Sales shall be adjusted
for exchanges and returns of Licensed Products sold during a previous period.
Unit Sales shall not include any charges for freight, packing, or insurance
if
such charges are identified and billed separately and in addition to the
list
price for the Licensed Product; nor shall Unit Sales include charges for
tax or
duty on sales or delivery of Licensed Product.
1.9 “Net
Sales” of Licensed Products and Ancillary Products for any given period shall
mean monies actually received by Licensee during the said period in
consideration for Licensed Products and Ancillary Products, adjusted for
exchanges and returns of Licensed Products and Ancillary Products sold or
delivered during a previous period. Net Sales shall not include any charges
for
freight, packing, or insurance if such charges are identified and billed
separately and in addition to the list price for the Licensed Products and
Ancillary Products; nor shall Net Sales include charges for tax or duty on
sales
or delivery of Licensed Products and Ancillary Products.
1.10 “License
Year” shall mean each successive period of twelve months, commencing on March
31
in the year in which the License Agreement becomes effective.
1.11 “Effective
Date” shall mean the date of execution of this License Agreement, which is the
day on which this License Agreement shall begin effect.
1.12 “Affiliate”
shall mean a company, sole proprietorship, partnership, joint venture or
corporation in which one of the parties hereto and/or their officers, directors
or shareholders, owns or controls, directly or indirectly, at least twenty
percent (20%) of the voting stock and/or equity, or a company, sole
proprietorship, person, partnership, joint venture, or corporation which
owns at
least twenty percent (20%) of the voting stock and/or equity of one of the
parties hereto.
ARTICLE
II
GRANT
OF LICENSES
2.1 Licensor
grants to Licensee the exclusive right and license throughout the Territory
to
use and employ the Patent Rights and Know-How to make, use and sell the Licensed
Products and
Ancillary Products for
the
term hereof and subject to the provisions of this License
Agreement.
2.2 The
licenses granted pursuant to Paragraph 2.1 above shall specifically include
the
right of Licensee to grant sublicenses throughout the Territory. Any sublicense
granted by Licensee shall be consistent with the terms of this License Agreement
and shall grant to Licensor rights parallel to those contained herein including,
but not limited to, the right to receive royalty payments from sublicensees
in
accordance with the Royalty Schedule set forth in Exhibit “C”, attached hereto
and made a part hereof. Any sublicense granted pursuant to this Paragraph
2.2
that varies the terms of this License Agreement or does not grant to Licensor
rights parallel to this License Agreement shall require the prior written
approval of Licensor. Licensee shall provide Licensor with copies of all
documents or contracts regarding any sublicense hereunder.
2.3 Within
ten (10) days after execution of this License Agreement, Licensor shall supply
to Licensee, at a mutually agreeable location, without expense to Licensee,
all
Know-How, including materials and written information related to the Licensed
Products not previously delivered.
ARTICLE
III
CONSIDERATION
- PAYMENT - REPORTING - RECORDS
3.1 Licensee
agrees to pay a one-time, non-refundable license fee (“License Fee”). The
License Fee shall include Twenty Million (20,000,000) shares of the stock
of
Licensee, a payment of One Hundred and Twenty-five Thousand Dollars ($125,000)
(“License Fee Payment”), and reimburse for product development costs incurred
since March 17, 2005 in the amount of approximately One Hundred and Twenty-five
Thousand Dollars ($125,000) (“Product Development Cost Reimbursement”), the
amount of the Product Development Cost Reimbursement being subject to review
and
confirmation between the Licensee and Licensor. Three Hundred Thousand (300,000)
of the Twenty Million shares of Licensee shall be registered for resale by
way
of an SB-2 registration to be filed within sixty (60) days after the date
of
execution of this License Agreement. Licensee shall pay the License Fee Payment
upon the execution of this License Agreement and shall issue the Twenty Million
shares of stock, and pay the Product Development Cost Reimbursement within
Sixty
Days after execution of this License Agreement.
3.2 Licensee
agrees to pay a royalty (hereafter “Running Royalty”) to Licensor for the term
of this License Agreement in accordance with the Royalty Schedule set forth
in
Exhibit “C”.
3.3 The
amount of the Running Royalties payable according to Paragraph 3.2 have been
negotiated to include payment of the licenses for the Know-How and the Patent
Rights without regard to the patentability of the Patent Rights.
3.4 Beginning
in the second License Year, in the event that the total Running Royalty paid
by
Licensee to Licensor according to Paragraph 3.2 in a License Year for a
particular Licensed Product, does not exceed a Minimum Royalty for such License
Year for that particular Licensed Product as set forth in the attached Exhibit
“D”, attached
hereto and made a part hereof,
then
Licensee shall pay to Licensor an amount (hereafter “Adjustment Royalty”) equal
to the Minimum Royalty for such License Year for that particular Licensed
Product, as set forth in Exhibit “D”, less the total Running Royalty actually
paid for that particular Licensed Product during such License Year.
3.5 Beginning
in the second License Year, in the event that the aggregate of the total
Royalties paid by Licensee to Licensor, or to selected interested parties
pursuant to Paragraph 3.6 below, in a License Year according to Paragraphs
3.2
and 3.4 of this License Agreement for all Licensed Products plus the total
Royalties paid by Licensee to Licensor, or to selected interested parties,
pursuant to the Product License Agreements entered into pursuant to the Product
Development Agreement dated _____, 2005, (hereinafter “Product Development
Agreement”), plus the Consulting Fee paid by Licensee to Licensor for the
services of Xxxxxxx Xxxx Xxxxx according to the Valcent-MK Consulting Agreement,
(hereinafter “Aggregate Annual Payment”), does not exceed a Minimum Annual
Payment of Four Hundred Thousand Dollars ($400,000) from Licensee to Licensor
for such License Year,
then
Licensee shall pay to Licensor an amount (hereafter “Adjustment Annual Payment”)
equal to the Minimum Annual Payment, less the Aggregate Annual Payment actually
paid by Licensee during such License Year.
3.6 Licensor
and selected interested parties have beneficial ownership and the right to
receive the consideration set
forth
in Paragraphs 3.1 and 3.2. Licensor has beneficial ownership and the right
to
receive of such consideration at least Three Million (3,000,000) shares of
Licensee of which 300,000 shall be registered as set forth in Paragraph 3.1,
Thirty Thousand Dollars of the License Fee Payment, and the following Running
Royalties: $0.75 of Net Sales of the Dust Xxxxx, $3.75 of Net Sales of the
Sonique, Three Percent of Net Sales of the Tomorrow Garden, and Two Percent
of
Net Sales of the Ancillary Products of the Dust Xxxxx, Sonique, and Tomorrow
Garden. Therefore, notwithstanding anything to the contrary contained in
this
License Agreement and particularly Article IX, Licensor shall have the right
to
transfer or assign a portion of the consideration set forth in Paragraphs
3.1
and 3.2 to such selected interested parties upon written notice to Licensee
within thirty days after the execution of this License Agreement. Such
consideration shall be made directly to such selected interested parties
and
rights to such consideration shall be governed by and be subject to this
License
Agreement.
3.7 In
the
event that Licensee fails to pay the Adjustment Royalty pursuant to Paragraph
3.4 for a particular Licensed Product or fails to pay the Adjustment Annual
Payment pursuant to Paragraph 3.5, Licensor shall give Licensee written notice
of such failure and request confirmation of Licensee’s intent not to pay such
Adjustment Royalty or such Adjustment Annual Payment. If Licensee responds
that
such failure was not intentional, then Licensee shall have 30 days after
receiving said notice to pay the Adjustment Royalty or Adjustment Annual
Payment.
3.8 In
the
event Licensee intentionally fails to pay the Adjustment Royalty for a License
Year for a particular Licensed Product, then Licensor shall have the right
to
terminate that portion of this License Agreement relating to the license
of such
particular Licensed Product pursuant to the terms and conditions as stated
in
Article VIII. In the event of a dispute between the parties as to the Adjustment
Royalty, the parties agree to submit the matter to binding mediation and
arbitration pursuant to Article XII.
3.9 In
the
event Licensee intentionally fails to pay the Adjustment Annual Payment for
a
License Year, then Licensor shall have the right to terminate this License
Agreement pursuant to the terms and conditions as stated in Article VIII.
In the
event of a dispute between the parties as to the Adjustment Annual Payment,
the
parties agree to submit the matter to binding mediation and arbitration pursuant
to Article XII.
3.10 For
the
purposes of computing and paying the Running
Royalty, the Adjustment Royalty, and the Adjustment Annual Payment
(“Royalties”)
pursuant
to this Article:
(a) The
Licensed Products and Ancillary Products shall be deemed sold and Licensor’s
Running Royalty thereon earned upon receipt by Licensee of amounts invoiced
for
the Licensed Products and Ancillary Products, and Licensor’s Running Royalty
shall be due as set out in Paragraphs (c) and (d) below.
(b) Payment
of the Royalties shall be in U.S. Dollars by certified check or wire transfer
to
a bank account specified by Licensor and the selling price, for purposes
of
computations of such Royalties, shall be converted to U.S. Dollars, when
necessary, as of the date when the Licensed Products and Ancillary Products
are
deemed sold.
(c) Payment
of the Running Royalty shall be due and paid to Licensor within sixty (60)
days
of the close of each three (3) month period during each License Year
of
the
term of this License Agreement.
(d) Payment
of the Adjustment Royalty and Adjustment Annual Payment shall be due and
paid to
Licensor within sixty (60) days of the close of each License Year.
(e) The
Royalties due hereunder shall be calculated using U.S. Generally Accepted
Accounting Principles.
3.11 Together
with each quarterly payment, Licensee shall render to Licensor a written
report
stating, for the preceding three-month period covered by such payment, the
number of units of each of the Licensed Products sold by Licensee and
sublicensees in such quarter, the Unit Sales of Licensee and sublicensees
for
each of the Licensed Products, the Net Sales of Licensee and sublicensees
for
the Licensed Products and Ancillary Products, the royalties or other
consideration received from sublicensees, the Running Royalty and any Adjustment
Royalty or Adjustment Annual Payment due to Licensor, the Running Royalty
paid
by Licensee and sublicensees for said three-month period, and the Aggregate
Payment made according to Paragraph 3.5 for said three-month
period.
3.12 Licensee
agrees to keep records of the Licensed Products and Ancillary Products sold
in
sufficient detail to enable the Running Royalty payable by it to Licensor
to be
determined and further agrees to permit its books and records pertinent to
Licensed Products and Ancillary Products to be examined from time to time,
but
not more often than twice a year, during normal business hours by providing
at
least five business days written notice, to the extent necessary to verify
the
amount of Royalties payable hereunder.
3.13 Pursuant
to Paragraph 3.12, Licensor shall have the right to appoint an independent
certified public accountant (“CPA”) at its own expense to determine that the
correct amount of Royalties have been paid. If the Licensor determines there
are
discrepancies requiring adjustment, the Licensee shall pay the amount of
any
underpayment of Royalties within 30 days unless both parties cannot reach
agreement whereby the parties shall subject themselves to binding mediation
and
arbitration pursuant to Article XII forthwith. Any overpayment of Royalties
shall be deducted from future Royalty payments without recourse to
Licensor.
3.14 If
the
results of the examination pursuant to Paragraphs 3.12 and 3.13 determine
that
the Royalties were underpaid by an amount greater than or equal to 5% of
the
actual Royalties calculated over the last four quarters covering Licensee’s
fiscal year resulting from matters within Licensee’s control, then Licensee
agrees to pay the cost of the examination plus a penalty equal to 10% of
the
amount of the underpayment in Royalties, the amount of the underpayment and
the
reimbursement of the costs of examination to be paid within thirty days of
written notice of the underpayment. Further Licensor shall have the right
to
examine the calculation of Running Royalties over the succeeding two quarters
at
Licensee’s cost.
ARTICLE
IV
IMPROVEMENTS
4.1 Licensor
and Licensee agree that they shall keep each other mutually informed of any
Improvements of which they become aware during the term hereof, whether they
become aware of such Improvements through their own efforts or efforts of
third
parties. Licensor and Licensee shall inform one another of the nature and
substance thereof within thirty (30) days following awareness of such
Improvements.
4.2 Licensee
shall have the right, for a period of ninety (90) days following a written
communication to Licensee by Licensor describing the Improvements that have
been
reduced to practice by Licensor, to elect to include such Improvements within
the terms of this License Agreement whereby such Improvements shall become
Elected Improvements. If Licensee fails or refuses to so elect, Licensee
hereby
releases any rights to such Improvements to Licensor and Licensor shall be
free
to commercialize such Improvements without accounting to Licensee. Should
Licensor elect such Improvements and subsequently and commercialize such
Improvements, Licensee agrees to pay Royalties on such Improvements in
accordance with the Royalty Schedule set forth in Exhibit “C”.
4.3 Licensor
and Licensee agree to execute any documents or papers deemed necessary to
effectuate the intent of this Article IV and further to execute such documents
or papers as may be necessary for the prosecution of any patents or applications
for patents covering the Elected Improvements. All expenses with respect
to such
assignments or patent applications shall be borne by the party making such
request and prosecuting such applications.
ARTICLE
V
PATENT
APPLICATIONS AND PATENTS
5.1 The
parties hereto agree that Licensor’s consultant, Xxxxxxx Xxxx Xxxxx, shall hold
the entire right, title, and interest in and to the Patent Rights and Know-How,
and Licensee agrees to perform all acts and to execute, acknowledge and deliver
all instruments or writings reasonably requested and necessary for Xxxxxxx
Xxxx
Xxxxx to perfect title to the Patent Rights and Know-How. Xxxxxxx Xxxx Xxxxx
shall xxxxx an exclusive license of the Patent Rights and Know-How to Licensor
who shall grant rights and licenses in the Patent Rights and Know-How to
Licensee.
5.2 The
parties hereto agree that they will procure Patent Rights on the Licensed
Products. Licensor shall have the sole right to prosecute, control, and pursue
such Patent Rights under the patent laws of the United States and foreign
countries. Licensor agrees to prosecute, with good faith and due diligence,
all
pending and future patent applications. All fees, costs and expenses shall
be
borne by Licensee. Licensee agrees to cooperate with Licensor to whatever
extent
is necessary to procure such patent protection.
5.3 In
the
event Licensee decides to abandon any pending United States or foreign patent
application or to not pay any annuity or maintenance fee required by any
country, Licensee shall give Licensor thirty (30) days prior written notice
of
such decision and shall allow Licensee to become the owner of such United
States
or foreign patent or application and to pay such fee. Licensee’s decision shall
have no effect on the Royalties.
5.4 Licensor
agrees to keep Licensee fully informed, at Licensee’s expense, of the
prosecution of all U.S. and foreign patent applications including submitting
to
the Licensee copies of all official actions and responses thereto.
5.5 Licensee
shall have the right to conduct an audit of the Patent Rights to ensure that
the
Patent Rights are in good standing and that Licensor has maintained them
in good
standing during the term of this License Agreement. In the event that Licensee
determines that the Patent Rights are not in good standing, then Licensee
shall
have the right to place such Patent Rights in good standing and if necessary,
to
seek relief through binding mediation and arbitration pursuant to Article
XII if
the failure to maintain the Patent Rights in good standing may cause or has
caused the Licensee damages.
5.6 Licensee
agrees to comply with any marking requirements of Licensor to insure compliance
with 35 U.S.C. § 287, and agrees to insure compliance by its sublicensees, if
any.
ARTICLE
VI
CONFIDENTIALITY
6.1 Subject
to the rights of the parties pursuant to the licenses granted in Article
II, the
parties agree to receive and hold in confidence the Know-How, Patent Rights,
and
Improvements revealed pursuant to this License Agreement. The provisions
of this
paragraph shall not be applicable with respect to any portion of the Know-How,
Patent Rights and Improvements which:
(a) is,
or
shall have been in the possession of disclosee prior to the first disclosure
by
discloser thereof to disclosee;
(b) is,
or
through no fault of the disclosee, becomes published or otherwise available
to
others or the public under circumstances such that such others or the public
may
utilize the Know-How, Patent Rights and Improvements without any direct or
indirect obligation to Licensor or Licensee;
(c) is,
or at
any time may be, acquired by the disclosee from any third party rightfully
possessed of the Know-How, Patent Rights and Improvements and having no direct
or indirect obligation to the discloser with respect to such Know-How, Patent
Rights and Improvements; or
(d) is
necessarily disclosed through the sale of Licensed Products pursuant to this
License Agreement.
6.2 Licensee
agrees to protect and safeguard the Know-How, Patent Rights, and Improvements
(“Confidential Information”) against unauthorized publication or disclosure by
the same procedures utilized by Licensee in regard to its own Confidential
Information, and agrees not to use any of the Confidential Information except
for such purposes and licenses as are authorized and granted by this License
Agreement. Licensee further agrees that the Confidential Information will
be
disclosed only to such of Licensee’s employees, sublicensees, agents, or
contractors as have need for such Confidential Information in furtherance
of the
purposes for which Licensee is authorized to use it. Licensee will cooperate
with Licensor in the enforcement of any secrecy agreement executed by such
persons and will insure that all sublicensees, employees, and others to whom
Licensee discloses Confidential Information executes such a secrecy
agreement.
ARTICLE
VII
INFRINGEMENT
BY OTHERS; PROTECTION OF PATENTS
7.1 Licensor
and Licensee shall each promptly inform the other of any suspected infringement
of any Patent Rights by a third party, and Licensor and Licensee each shall
have
the right to institute an action for infringement of the Patent Rights against
such third party in accordance with the following procedure:
(a) Licensee
shall have the right to institute suit in its name. Licensee shall bear the
entire cost thereof, including attorneys’ fees, and shall be entitled to retain
the entire amount of the recoveries, if any, whether by judgment, award,
decree
or settlement, subject to Licensor’s right of approval of any provisions
relating to the validity and/or infringement of the Patent Rights and provided,
however, that Licensor shall be paid any back Royalties relating to such
action.
Licensee shall exercise control over such actions; provided, however, that
Licensor may, if it so desires, be represented by counsel of its own selection,
the fees for which counsel shall be borne by Licensee.
(b) If
Licensee determines not to institute a suit and in the event that Licensor
and
Licensee agree to institute suit jointly, the suit shall be brought in both
their names, the cost thereof, including attorneys’ fees, shall be borne by
mutual agreement and in the event the parties cannot reach mutual agreement,
then the cost thereof shall be borne equally. The recoveries, if any, whether
by
judgment, award, decree or settlement, shall be shared in proportion to the
costs borne by each party. Licensor’s share of the costs of such suit shall be
deducted, at Licensor’s option, from Royalties payable to Licensor pursuant to
Article III. Licensor shall exercise control over such actions; provided,
however, that Licensee may, if it so desires, be represented by counsel of
its
own selection, the fees for which counsel shall be borne by
Licensee.
(c) In
the
absence of agreement to institute a suit jointly and if Licensee determines
not
to institute a suit, Licensor may institute suit. Licensor shall bear the
cost
of such litigation including attorneys’ fees and shall be entitled to all
recoveries, if any, whether by way of judgment, award, decree or
settlement.
7.2 Should
either party commence a suit under the provisions of Paragraph 7.1 and
thereafter elect to abandon the same, it shall give timely notice to the
other
party who may, if it so desires, continue prosecution of such suit; provided,
however, that the sharing of expenses and recovery in such suit shall be
agreed
upon between the parties.
ARTICLE
VIII
TERM
AND TERMINATION
8.1 This
License Agreement shall terminate upon the termination of Licensee’s payment of
Royalties due in accordance with this License Agreement, unless sooner
terminated as provided in this License Agreement.
8.2 Notwithstanding
anything to the contrary contained in this License Agreement, Licensee shall
have the absolute right to terminate this License Agreement by notifying
Licensor in writing, discontinuing sales and paying any Royalties due. Licensee
shall have the further right to terminate this License Agreement with respect
to
any particular Licensed Product set forth on Exhibit “A”, upon six months prior
written notice to Licensor, without terminating the remainder of the License
Agreement.
8.3 In
the
event Licensee shall commit a substantial breach of any of the provisions
of
this License Agreement, Licensor shall provide written notice of the substantial
breach to Licensee. If such breach is capable of being remedied or made good,
Licensee shall have thirty (30) days to remedy or make good such breach or
to
submit the matter to binding mediation and arbitration pursuant to Article
XII.
If such breach is remedied within such time period, this License Agreement
shall
continue in full force and effect. If such breach is not remedied or submitted
to mediation and arbitration within such time period, Licensor may terminate
this License Agreement upon ten (10) days written notice.
8.4 This
License Agreement shall automatically terminate if Licensee shall become
bankrupt, or if a receiver shall be appointed for any of the property or
assets
of Licensee, or if Licensee shall make a general assignment or compromise
of its
obligations with its creditors, if Licensee files for bankruptcy protection,
or
if the Licensee becomes insolvent, or if the whole or any part of the business
or shareholdings of Licensee shall be subjected to compulsory acquisition,
nationalization, or forced sale.
8.5 Licensor
shall have the right to terminate that portion of this License Agreement
relating to the rights and licenses granted with respect to a particular
Licensed Product upon the failure of Licensee to pay the Adjustment Royalty
for
such particular Licensed Product pursuant to Article III. If the matter is
submitted to binding mediation and arbitration pursuant to Article XII, then
this License Agreement shall not be terminated while the arbitration is pending
and the arbitrator’s decision has not yet been rendered.
8.6 Licensor
shall have the right to terminate this License Agreement upon the failure
of
Licensee to pay the Adjustment Annual Payment pursuant to Paragraphs 3.5
and
3.9. If the matter is submitted to binding mediation and arbitration pursuant
to
Article XII, then this License Agreement shall not be terminated while the
arbitration is pending and the arbitrator’s decision has not yet been
rendered.
8.7 Licensor
shall not have the right to cancel this License Agreement for any reason
other
than as provided for under this License Agreement.
8.8 Upon
termination of this License Agreement pursuant to the foregoing provisions
of
this Article VIII, the license granted hereunder shall terminate, and Licensee
shall have no duty to pay the Royalties pursuant to Article III. Any Royalties
accrued but not paid as of the date of such termination shall be paid to
Licensor within thirty (30) days after such termination.
8.9 Irrespective
of the existence of an issued and unexpired Patent Rights and upon termination
of this License Agreement, Licensee may complete and sell any Licensed Products
or Ancillary Product in the process of production or sale by Licensee at
the
time of termination or for which raw materials for the production have been
purchased, and may sell any inventory of Licensed Products or Ancillary Products
produced or sold by Licensee on hand at the time of termination; provided
that
Licensee shall continue to account for and pay Running Royalties thereon
as
if the
License Agreement had not been terminated. Notwithstanding the above, Licensee
shall not have the right to make further sales of a particular Licensed Product
after termination of the rights and licenses to that particular Licensed
Product
pursuant to Paragraph 8.5 without the express written approval of Licensor.
Notwithstanding the above, Licensee shall have no right and license to sell
Licensed Products or Ancillary Products six months after the effective date
of
the termination of this License Agreement.
8.10 Upon
termination of this License Agreement for any reason, Licensee shall assign
to
Licensor all sublicenses granted pursuant to Paragraph 2.2 such that all
Royalties or other consideration to be paid by sublicensees thereafter shall
be
paid to Licensor.
8.11 The
duties and obligations of the parties pursuant to Paragraphs 3.2, 6.1, and
6.2
shall survive any termination of this License Agreement.
ARTICLE
IX
ASSIGNMENT
AND SALE
9.1 Licensor
agrees not to transfer or assign its interest in this License Agreement,
except
to Xxxxx X. Xxxxxx and/or Xxxxxxx Xxxx Xxxxx, without the prior written consent
of the Licensee. If Licensor transfers this License Agreement to Xxxxx X.
Xxxxxx
and/or Xxxxxxx Xxxx Xxxxx, Xxxxx X. Xxxxxx and/or Xxxxxxx Xxxx Xxxxx shall
be
equally bound to Licensor’s obligations to the Licensee as defined in this
License Agreement.
9.2 In
the
event Licensor desires to assign all or any part of its rights, privileges
and
interests under this License Agreement, Licensor shall first offer (“Right of
First Offer”) such assignment to Licensee by notifying Licensee in writing of
the terms and conditions upon which Licensor would be willing to make such
an
assignment; and Licensee shall have the right to acquire said rights, privileges
and interests of Licensor by accepting the offer in accordance with said
terms
and conditions or equivalent cash. If within fifteen (15) days after receipt
of
Licensor’s notice, Licensee advises Licensor of its acceptance of the offer as
stated in the notice, Licensor agrees to promptly make the assignment to
Licensee on the stated terms and conditions and shall have an additional
thirty
(30) business days, if the assignment price is less than $1 Million Dollars
and
sixty (60) days if the assignment price is over $1 Million Dollars, to pay
for
the same with delivery against payment.
9.3 If
within
fifteen (15) days after receipt of Licensor’s notice, Licensee does not indicate
its acceptance of the offer as stated in the notice, Licensor shall thereafter
have the right, subject to the prior written consent of Licensee, to make
the
assignment to another person, firm or corporation on the same terms and
conditions as stated in the notice. Should the Licensee not exercise its
Right
of First Offer and should the contemplated assignment not be completed within
ninety (90) days from the date of Licensor’s notice, or should the terms and
conditions thereof be altered in any way, this Right of First Offer shall
be
reinstated in any subsequent proposed assignment, or the altered terms and
conditions for the current transaction, must again be offered by Licensor
in
accordance with the terms of Paragraph 9.2.
9.4 Immediately
prior to Licensor going into bankruptcy, Licensee shall have a Right of First
Offer on any of Licensor’s assets at fair market value.
9.5 It
is
hereby agreed that prior to sale to a third party contemplated pursuant to
Paragraphs 9.1 and 9.2 above, the purchaser shall agree to be bound by the
terms
of this License Agreement and to assume all of Licensor’s obligations to
Licensee thereunder.
9.6 Licensee
shall have the right to transfer and/or assign this License Agreement by
providing written notice to Licensor, provided that Licensee is in good standing
under this License Agreement and the transferee or assignee assumes all
obligations of Licensee to Licensor under this License Agreement.
ARTICLE
X
REPRESENTATIONS
AND WARRANTIES
10.1 Licensor
hereby represents and warrants to Licensee that Licensor is a corporation
duly
organized, validly existing and in good standing under the laws of the State
of
Nevada. Licensor further represents and warrants that it has not heretofore
made
any license, commitment or agreement, or will Licensor make any license,
commitment or agreement for the term of this License Agreement which is
inconsistent with this License Agreement and the rights granted herein, and
that
it has full and complete power and authority to enter into and carry out
its
obligations under this License Agreement and under any agreements and documents
which may be executed in connection herewith. Licensor represents and warrants
that to the best of its knowledge, the Patent Rights do not infringe upon
the
proprietary rights or patents of any third party. Licensor represents that
to
the best of its knowledge, Licensor is not aware of any regulations or laws
in
the Territory that might presently apply such that the sales potential of
any of
the Licensed Products is limited or reduced through legal violation or potential
violation. Licensor agrees to indemnify and hold Licensee harmless of any
liabilities, costs and expenses (including attorneys’ fees and expenses),
obligations and causes of action arising out of or relating to any breach
of the
representations and warranties made by Licensor herein.
10.2 Licensor
does not represent and warrant to Licensee that patents will issue or be
granted
on any of the Patent Rights; or that any of the marks associated with the
Licensed Products are registrable as a trademark; or that any of the Know-How
is
copyrightable. Further Licensor does not represent and warrant to Licensee
that
any of the Patent Rights have commercial value.
10.3 Licensee
hereby represents and warrants to Licensor that Licensee is a corporation
duly
organized, validly existing and in good standing under the laws of Canada.
Licensee further represents and warrants that it has not heretofore made
any
license, commitment or agreement, or will Licensee make any license, commitment
or agreement for the term of this License Agreement which is inconsistent
with
this License Agreement and the rights granted herein, and that it has full
and
complete power and authority to enter into and carry out its obligations
under
this License Agreement and under any agreements and documents which may be
executed in connection herewith. Licensee further represents and warrants
that
the authorized equity capitalization of the Licensee consists of an unlimited
number of shares of Common Stock, without nominal or par value, of which
3,750,000 are issued and outstanding and that all of the Licensee’s outstanding
securities are validly issued, fully paid and non-assessable and that the
Licensee does not, on the date of execution hereof, have any outstanding
subscriptions, warrants or other agreements or commitments obligating the
Licensee to issue additional shares of stock or other securities, except
as
stated in the current Licensee’s SEC filings and in this License Agreement. The
Licensee further represents and warrants that the shareholders of the Licensee
do not have preemptive rights or cumulative voting. Licensee represents and
warrants that it is Licensee’s policy not to misappropriate or violate the
proprietary trade secret or confidential information of third parties. Licensee
agrees to indemnify and hold Licensor harmless of any liabilities, costs
and
expenses (including attorneys’ fees and expenses), obligations and causes of
action arising out of or relating to any breach of the representations and
warranties made by Licensee herein.
ARTICLE
XI
PRODUCT
QUALITY AND PRODUCTS LIABILITY
11.1 Licensee
agrees that the Licensed Products and Ancillary Products will be produced
in
compliance with all federal, state and local laws. Licensee further agrees
to
submit samples of all finished Licensed Products and Ancillary Products,
including packaging, shipping containers, and advertising, to Licensor for
approval, which approval shall not be unreasonably withheld. In the event
Licensee concludes that Licensor is withholding its approval unreasonably,
Licensee may at its cost submit the matter to binding mediation and arbitration
pursuant to Article XII with the arbitrator determining if Licensor’s approval
has been unreasonably withheld. The arbitrator’s decision will be final and
binding upon all parties.
11.2 Licensee
shall carry products liability insurance in an amount commensurate with the
risks connected with the production and sale of the Licensed Products and
Ancillary Products. Such insurance shall name Licensor and the inventors
of the
Patent Rights as co-insureds. As proof of insurance, Licensee shall submit
to
Licensor a certificate of insurance naming Licensor and the inventors of
the
Patent Rights as insured parties and shall require the Licensee’s insurer to
notify Licensor upon the failure to pay premiums due under the policy. This
submission shall be made prior to any Licensed Product or Ancillary Products
being distributed or sold.
11.3 Licensee
agrees to indemnify and hold Licensor harmless against any and all claims,
liabilities, losses, expenses, fees, including without limitation attorneys’
fees, damages, including without limitation amounts of judgment and/or amounts
paid in settlement or costs (all of the foregoing being collectively called
“Costs”) incurred by it and arising out of or attributable to the production and
sale of Licensed Products and Ancillary Products; provided, however, that
such
indemnity shall be null and void as to any cause of action, which can be
shown
by Licensee that Licensor knew or should have known and failed to timely
inform
Licensee of such cause of action. Promptly after receipt of notice of the
commencement of any action or assertion of any claim against Licensor in
respect
of which indemnification be sought, Licensor shall notify Licensee in writing
of
the commencement of such action or assertion of such claim. Upon receipt
of the
notice of commencement of suit or assertion of such claim, Licensee shall
notify
Licensor within fifteen (15) days that Licensee shall appear and defend
(including the sole authority to compromise and settle such claims; provided,
however, that such settlement or compromise does not affect in any way the
activities or rights of Licensor) against any such suit or claim at Licensee’s
expense, with an attorney of its choice. In the event Licensee shall fail
to
give notice of and undertake to appear and defend within such fifteen (15)
day
period, then it is hereby expressly agreed that the right to appear and defend
by Licensee has been waived, and Licensor shall proceed on its sole authority,
at Licensee’s expense.
ARTICLE
XII
MEDIATION
AND ARBITRATION
12.1 If
a
dispute arises between the parties regarding this License Agreement, the
parties
agree to resolve the dispute in the following manner:
(a) Negotiation.
(1) The
parties shall attempt in good faith to resolve any dispute arising out of
or
relating to this License Agreement promptly by negotiation between executives
of
the parties who have authority to settle the controversy. Any party may give
the
other party written notice of any dispute not resolved in the normal course
of
business. Within 15 days after delivery of the notice, the receiving party
will
submit to the other a written response. The notice and the response will
include
(i) a statement of each party’s position and a summary of arguments supporting
that position, and (ii) the name and title of the executive who will represent
that party and of any other person who will accompany the executive. Within
30
days after delivery of the disputing party’s notice, the executives of both
parties will meet at a mutually acceptable time and place, and thereafter
as
often as they reasonably deem necessary, to attempt to resolve the dispute.
All
reasonable requests for information made by one party to the other will be
honored.
(2) All
negotiations pursuant to this clause are confidential and will be treated
as
compromise and settlement negotiations for purposes of applicable rules of
evidence.
(b) Non-binding
Mediation.
If the
dispute has not been resolved by negotiation within 60 days of the disputing
party’s notice, or if the parties failed to meet within 45 days, the parties
will endeavor to settle the dispute by mediation under the presently effective
Center for Public Resources (“CPR”) Model Procedure for Mediation of Business
Disputes. The neutral third party will be selected from the CPR Panels of
Distinguished Neutrals with the assistance of CPR.
(c) Arbitration.
Any
controversy or claim arising out of or relating to this License Agreement,
or
the enforcement, breach, termination or validity thereof, that has not been
resolved by mediation pursuant to the preceding paragraph within 90 days
from
the appointment of a neutral third party will be settled by arbitration in
accordance with the CPR Rules for Non-Administered Arbitration of Business
Disputes in effect on the date of this License Agreement, by a sole arbitrator.
If the parties cannot agree upon an arbitrator for a panel recommended by
CPR,
then CPR will select the arbitrator. Any other choice of law clause to the
contrary in this License Agreement notwithstanding, the arbitration will
be
governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and judgment
upon the award rendered by the Arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration will be Houston, Texas.
Insofar as the proceeding relates to patents, it will also be governed by
35
U.S.C. § 294, to the extent applicable. The arbitrator is not empowered to award
trebled, punitive or any other damages in excess of compensatory damages,
and
each party irrevocably waives any claim to recover any such damages. The
arbitrator will make a reasoned award. If the result achieved in arbitration
by
the party instituting the arbitration is not more favorable to that party
than
the last offer made by the other party during the mediation, the former party
will reimburse the legal fees, expert fees and other expenses reasonably
incurred by the latter in the arbitration.
ARTICLE
XIII
GENERAL
13.1 Binding
Agreement.
This
License Agreement shall be binding upon the successors and assigns of the
parties hereto. Nothing contained in this License Agreement shall be construed
to place the parties in the relationship of legal representatives, partners,
or
joint venturers.
13.2 Applicable
Law.
This
License Agreement shall be construed, interpreted and applied in accordance
with
the laws of the State of Texas.
13.3 Notices.
All
notices, demands or other writings in this License Agreement provided to
be
given or made or sent, or which may be given or made or sent, by either party
hereto to the other, shall be deemed to have been fully given or made or
sent
when made in writing and deposited in the United States mail, first class,
postage prepaid, sent certified or registered mail, and addressed to the
addresses first hereinabove given or at such other address as either party
hereto may specify by notice given in accordance with this
paragraph.
13.4 Waiver.
Each
party covenants and agrees that if the other party fails or neglects for
any
reason to take advantage of any of the terms hereof providing for the
termination of this License Agreement, or if, having the right to declare
this
License Agreement terminated, such other party shall fail to do, any such
failure or neglect shall not be or be deemed or be construed to be a waiver
of
any subsequently occurring cause for the termination of this License Agreement,
or as a waiver of any of the terms, covenants or conditions of this License
Agreement or the performance thereof. None of the terms, covenants or conditions
of this License Agreement can be waived except by the written consent of
the
waiving party. Except as otherwise stated herein, each of the parties hereby
waives any claims which it might have against the other prior to the date
of
execution of this License Agreement.
13.5 Force
Majeure.
Neither
party hereto shall be liable to the other party for failure or delay in the
performance of any duties or obligations hereunder or in making shipments
of
Licensed Products produced hereunder due to strikes, lockouts, acts of God,
acts
of war, fire, flood, explosions, embargo, litigation or labor disputes,
Government or any other laws and regulations, or any other cause beyond the
control or without the fault of such party.
13.6 Scope
of Agreement.
This
License Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof.
13.7 Construction.
The
parties acknowledge that each party and its counsel have reviewed and revised
this License Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall
not be
employed in the interpretation of this License Agreement or any amendments
or
exhibits hereto.
13.8 Headings.
The
subject headings of the paragraphs of this License Agreement are included
for
purposes of convenience only, and shall not effect the construction or
interpretation of any of its provisions.
13.9 Counterparts.
This
License Agreement may be executed in one or more counterparts, and also executed
shall constitute one agreement, binding on both parties hereto, notwithstanding
that both parties are not signatory to the same counterpart.
13.10 Severability.
If any
part or parts of this License Agreement are found to be illegal or
unenforceable, the remainder shall be considered severable, shall remain
in full
force and effect, and shall be enforceable.
13.11 Further
Documents.
Each of
the parties shall take all necessary actions, including the execution and
delivery of all necessary documents or instruments, as may be reasonably
requested by the other party in order to effectuate the intent of this License
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this License Agreement
in
duplicate originals, individually, or by their duly authorized officers or
representatives, as of the date of the last party to execute this License
Agreement.
| MK ENTERPRISES LLC | ||
| |
|
|
| WITNESS:__________________________________________ | By: | /s/ |
|
|
||
|
Xxxxx
X. Xxxxxx, President
Date:_______________
|
||
| VALCENT PRODUCTS, INC. | ||
| |
|
|
| WITNESS:__________________________________________ | By: | /s/ |
|
|
||
|
Name:
Title:
Date:
|
||
EXHIBIT
“A”
LICENSED
PRODUCTS
|
Licensed
Product One:
|
DUST
WOLF
|
The
duster is a simple device that fits on the end of most standard vacuum cleaners.
It uses the negative pressure of the incoming air to drive a rotating brush
that
is covered with soft bristles. The alignment of the brush is such that upon
each
rotation of the brush, the bristles move across the air import vent that
runs
the length of the brush. Using the vacuum power, this cleans the brush on
each
rotation and prevents the spread of dust to surrounding areas. The brush
is
driven by an impeller mounted in the base of the Dust Wolf just above the
connection port that goes to the vacuum cleaner hose. The incoming rush of
air
drives the impeller and thus turns the brush. The length of the brush is
designed to allow the Dust Wolf to easily clean a large surface, specifically
several mini-blind blades at a time.
|
Licensed
Product Two:
|
SONIQUE
|
Sonique
is a sonic skin care system with various attachments that facilitates personal
hygiene. It utilizes specific ultrasonic frequencies to vibrate a cleaning
head
at the end of the device. This ultrasonic vibration has many beneficial effects
on the skin’s surface that can be enhanced through the use of different
attachments, i.e. deep-seated soil can be brought to the surface, dead skin
can
be exfoliated and the skin can be rejuvenated. The system is operated on
a
rechargeable battery that is built into the unit.
|
Licensed
Product Three:
|
TOMORROW
GARDEN
|
The
Tomorrow Garden (TG) and associated Plant Tissue Culture (PTC) Process result
in
a kit designed to take advantage of PTC and offer, direct to the consumer,
an
easy to use kit featuring plants not readily available in the marketplace.
These
plants are of a guaranteed superior quality and have significantly improved
“Fresh Life” span. PTC or ‘micro-propagation’ is a laboratory process that
allows for the rapid production of mass quantities of genetically identical
plants. This process removes the randomness of genetics by using the plant’s own
cells that already exhibit the identified desirable traits. The Tomorrow
Garden
Kits are multi-plant packages (typically 6 packs) arranged in pre-selected
themes i.e. Italian herbs, pet plants, African violets, etc. to suit the
client’s preferences.
EXHIBIT
“B”
PATENT
RIGHTS
Dust
Removal Device, US App No 60/687,152, filed June 3, 2005.
Ultrasonic
Skin Cleaner, US App No 10/890,041, filed 7/13/04
Ultrasonic
Skin Cleaner, PCT No PCT/US04/22476, filed 7/14/04
EXHIBIT
“C”
RUNNING
ROYALTY SCHEDULE
Licensed
Product One: DUST WOLF: $2.00
US
per unit
Ancillary
Products to Licensed Product One:
Three
Percent (3%) of Net Sales of Ancillary Products to Licensed Product
One
Licensed
Product Two: SONIQUE: $10.00
US
per unit
Ancillary
Products to Licensed Product Two: Three
Percent (3%) of Net Sales of Ancillary Products to Licensed Product
Two
Licensed
Product Three: TOMORROW GARDEN:
Four and
One Half Percent (4.5%) of Net Sales of Licensed Product
Three
Ancillary
Products to Licensed Product Three: Three
Percent (3%) of Net Sales of Ancillary Products to Licensed Product
Three
EXHIBIT
“D”
MINIMUM
ROYALTY SCHEDULE
DUST
WOLF
and Ancillary Products: $37,500
for the Second License Year
$50,000
for each succeeding License Year
SONIQUE
and Ancillary
Products:
$37,500
for the Second License Year
$50,000
for each succeeding License Year
TOMORROW
GARDEN and Ancillary Products: $37,500
for the
Second License Year
$50,000
for each succeeding License Year
