LICENSE AGREEMENT
Exhibit 10.1
This License Agreement (“Agreement”) is made this 2nd
day of January, 2008 (“Effective Date”) by and
between Let’s Go Aero, Inc. a Colorado corporation located at 0000 X. Xx Xxxx
Xx., Xxxxx X, Xxxxxxxx Xxxxxxx, Xxxxxxxx (“LGA”) and Cequent Towing
Products, Inc., located at 00000 Xxxxxx Xxxxx Xxxx, Xxxxxxxx XX
00000, on behalf of itself and its parent, subsidiaries, sister companies and
any current or future related companies (collectively, “Cequent”).
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1.
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LGA
has developed, will develop and will continue to develop and is the sole
owner of all right, title and interest in and to such intellectual
property, including certain patents, patent applications, complete designs
and designs in process, that relate to the design, manufacture and sale of
products specified on Exhibit A, as well as
all future cargo management and towing products that will be added by the
parties as a signed addendum to Exhibit A (collectively, the “Products”), all of which
will be attached to this Agreement and made part of it in its
entirety.
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2.
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LGA
will provide to Cequent written notification of all future cargo
management and towing products that LGA designs, develops or continues to
develop during the Term (as later defined), which writing will be signed
by the parties and added to Exhibit A, as subsequent X-0, X-0,
etc.
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3.
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The
intellectual property owned by LGA and related to the design, manufacture
and sale of Products is collectively referred to in this Agreement as the
“Licensed
Technology.”
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4.
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Cequent
desires to acquire a license for the Licensed Technology, in order to
manufacture, make, have made, use, distribute, offer to sell, import and
sell Products utilizing the Licensed Technology, referred to in this
Agreement as the “Licensed
Products.”
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The
parties agree that the recitals above are binding on the Parties and further
agree as follows:
1. License
Grant
1.1 LGA
grants to Cequent a worldwide limited exclusive license for the Licensed
Technology and all improvements thereto developed, owned or controlled by LGA to
make, manufacture, have made, use, import, offer for sale and sell the Licensed
Products set forth on Exhibit A under Cequent trademarks or trade names or such
other brands as Cequent may determine in its sole discretion, for a period
beginning as of the Effective Date and ending December 31, 2009 (the “Exclusive
License”). The Parties acknowledge and agree that should LGA
develop or design a Product during the Term (as defined below), LGA will grant
to Cequent a worldwide limited exclusive license as stated in this paragraph 1
for the new Licensed Product, which two year period will begin upon the
execution of the signed addendum to Exhibit A and the exclusivity will end two
years thereafter, which license will also be designated as the “Exclusive
License” as the term is used throughout this Agreement.
1.2 Upon
expiration of any Exclusive License period, LGA grants to Cequent a worldwide
nonexclusive license for the Licensed Technology and all improvements thereto
owned or controlled by LGA to make, manufacture, have made, use, import, offer
for sale and sell the Licensed Products under Cequent trademarks or trade names
or such other brands as Cequent may determine in its sole discretion, for a
period beginning as of the expiration of any Exclusive License period through
the expiration or cancellation of any patents (the “Non-Exclusive Period”)
covering the Licensed Technology and Products (the “Non-Exclusive
License”). The Exclusive License(s) and the Non-Exclusive
License(s) are collectively referred to in this Agreement as the “License”.
1.3 Cequent
shall have the right to grant sublicenses under this Agreement to third parties
for the manufacture of the Licensed Product on behalf of Cequent, provided that
Cequent requires such third party to enter into a nondisclosure agreement
protecting the confidentiality of the Licensed Technology and the
License. For a two year period beginning upon the expiration of any
Exclusive License period for Licensed Products and for a period not greater than
the first two years of any Non-Exclusive period, should LGA solicit direct sales
of Licensed Products, LGA agrees to purchase exclusively from Cequent all
required parts to manufacture and assemble the Licensed Products at the lowest
price that Cequent gives to any other customer. All rights not
specifically granted to Cequent under this Agreement shall be reserved to
LGA.
2. Term &
Termination Unless earlier terminated by Cequent, this
Agreement will be effective as of the Effective Date or the date of execution by
the parties of any written Addendum(s) to Exhibit A and shall expire
simultaneously with the cancellation or expiration of the patents covering the
Licensed Technology for the Licensed Products (the “Term”). Cequent
shall have the right to terminate this Agreement without penalty or
consideration of any kind. LGA may terminate this Agreement only upon
Cequent’s failure to cure a material breach of the Agreement within 60 days
after receipt of written notice of the material breach from LGA.
3. Royalties
and Other Payments
3.1 Within
30 days from the date of this Agreement, Cequent shall pay a $400,000 fee to
LGA, which fee will include payment for the transition of existing Product sales
to current customers from LGA to Cequent and services related to the
commercialization and transition of the Products to
Cequent. Additionally, as further consideration for the License
during the Term, Cequent will pay to LGA a royalty in the amount of 7% of the
Net Sales Price for the Licensed Products, as sold by Cequent to its customers,
except for a maximum of three customers specifically set forth in Exhibit B attached to this
Agreement and made part of it in its entirety (the “Special
Customers”). Cequent will pay to LGA a royalty in the amount of 5% of
the Net Sales Price for the Licensed Products sold by Cequent to the Special
Customers. All Special Customers shall be mass-market retailers
unrelated to Cequent, and shall be mutually agreed upon in writing by Cequent
and LGA. Cequent and LGA may amend Exhibit B, Special
Customers by mutual written consent of Cequent and LGA, which consent
will not be unreasonably withheld. As used in this
Agreement, “Net Sales Price” means Cequent’s invoice price for the Licensed
Product as sold independently as a stand alone product to third parties,
exclusive of freight, packaging and delivery charges and sales or other taxes,
sales incentives and commissions, rebates, returns and warranty related expenses
and also excluding import or export duties shown on the invoice.
3.2 The
Royalties shall be paid in US dollars, on or before the 30th day following the
end of each calendar quarter (being the 30th day of January, April, July and
October, respectively) of each year.
3.3 A
report of all sales made during the quarter shall accompany the Royalties
payment; however Cequent need not list the names of the customers, except for
the Special Customers.
3.4 LGA
shall have the right to conduct an audit of such sales no more than once per
year. Such audit shall be made by an independent auditor, be made no
sooner than after one week’s notice and shall be conducted in such a manner as
not to disrupt Cequent’s business. If discrepancies amounting to more
than 5% of the amount due are discovered, then Cequent shall bear the cost of
the audit.
4. Warranties LGA
represents and warrants that: (i) it is the sole and exclusive owner
of the Licensed Technology; (ii) it has the right to grant the rights and
licenses granted herein; (iii) that the royalty rates specified in paragraph 3.1
above are no less favorable than the royalty rates provided to any other future
licensee of the Licensed Technology, (iv) that during the Non-Exclusive
Period(s), no other licensee of the Licensed Technology will be charged a
royalty rate less than 10.5% of the Net Sales Price and (v) as of the Effective
Date, there are no threatened or pending actions, suits, investigations, claims
or proceedings in any way relating to the Licensed Technology or the Licensed
Products and there are no actions for infringement against LGA or Cequent with
respect to items it manufactures and sells embodying the Licensed Technology
anywhere in the world. In the event that the Licensed
Technology shall be found to infringe upon the rights of a third party, LGA
shall (i) find a suitable replacement, or (ii) design a suitable non-infringing
substitute.
5. Indemnification
LGA will indemnify Cequent and hold Cequent harmless against, any claims for
loss, liability, damage or expenses (including, without limitation, reasonable
attorneys' fees, court costs and costs of investigation) arising in connection
with the manufacture, marketing, sale and use or warranty (express or implied)
related to the Licensed Technology for Licensed Products manufactured by LGA and
unmodified by Cequent, as well as infringement of patent(s), trademark(s) or
other intellectual property rights owned or possessed by a third party and
related to the Licensed Technology. Cequent will indemnify
LGA and hold LGA harmless against any claims for loss, liability, damage or
expenses (including, without limitation, reasonable attorneys' fees, court costs
and costs of investigation) arising in connection with the manufacture,
marketing, sale and use or warranty (express or implied) related to the Licensed
Technology for Licensed Products manufactured by Cequent or a third party under
the direction of Cequent and unmodified by LGA. In the event Cequent
becomes aware of a third party's infringement of any rights of LGA with respect
to the Licensed Technology, Cequent will immediately notify LGA in writing. If
LGA chooses to bring suit against the allegedly infringing party, Cequent agrees
to provide LGA with such assistance and cooperation as may be reasonably
necessary in connection therewith. LGA will reimburse Cequent’s reasonable costs
associated with any such assistance, (including any legal costs), provided that
such assistance was specifically requested by LGA. Should LGA
determine that it will not bring suit against the allegedly infringing party
within 60 days after receipt of notice of the alleged infringement, Cequent
reserves the right to bring suit on its behalf.
6. Governmental Approvals /
Compliance LGA will take all actions necessary to
obtain approvals from the proper governmental authorities or agencies for all
obligations and undertakings of LGA under this Agreement, if required, and must
keep Cequent apprised of the status and approvals received. The
parties will comply with any and all applicable laws, regulations and standards
in force in the country of manufacture and sale, including those may relate to
quotations, pricing, manufacture, labeling, transportation, importation,
exportation, licensing, approval, performance and/or certification of the
Licensed Product, and those relating to environmental matters, wages, hours and
conditions of employment, discrimination, occupational health/safety and such
other laws, regulations and standards as may be applicable.
7. Ownership As
between the parties, LGA will retain ownership of the Licensed Technology, and
any improvements, modifications or enhancements made thereto by
LGA. Any improvements, modifications or
enhancements made to the Licensed Products or Licensed Technology by Cequent
shall be owned by Cequent. LGA shall have the right to utilize the
improvements, modifications or enhancements made by Cequent in the Licensed
Products.
8. Confidential
Information Either party may disclose confidential and/or
proprietary information from time to time to the other party in order to further
their business relationship. Each party agrees to maintain such
disclosed information as confidential and not to use such information except to
the benefit of the disclosing party and in furtherance of this
Agreement. The parties agree that the terms and conditions of the
Nondisclosure Agreement executed by the parties will apply to this Agreement in
their entirety, nonwithstanding any expiration of the Nondisclosure
Agreement.
9. Notices Any notice
required to be given pursuant to this Agreement must be in writing and mailed by
certified or registered mail, return receipt requested or delivered by a
national overnight air courier service, to the party’s address provided
above. Notices will be considered to have been given three (3)
business days after deposit in the mail or one (1) day after delivery to an
overnight air courier service at the addresses provided above or to such other
address as may be furnished by the recipient in writing to the other parties
hereto.
10. Limitation of Liability IN NO
EVENT WILL LGA OR CEQUENT BE LIABLE FOR LOST PROFITS, OR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT. THIS LIMITATION
WILL APPLY EVEN IF LGA AND CEQUENT HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
11. Governing Law This
Agreement shall be governed by and interpreted and enforced in accordance with
the laws of the state of Colorado without regard to its conflicts of laws
principles. Any action or proceeding brought by either party against
the other party arising out of or related to this Agreement shall be brought
exclusively in a state or federal court of competent jurisdiction located in the
state of Colorado.
12. Misc. No waiver by
either party of any default will be deemed as a waiver of any prior or
subsequent default of the same or other provisions of this
Agreement. If a court of competent jurisdiction hereof holds any
provision invalid or unenforceable, such invalidity shall not affect the
validity or operation of any other provision and such invalid provision will be
deemed to be severed from the Agreement. Cequent may not assign the
License granted hereunder except as specified in this Agreement without prior
written consent of LGA which will not be unreasonably
withheld. This Agreement will be binding upon and shall
inure to the benefit of the parties hereto, their heirs, administrators,
successors and assigns.
13. Entire
Agreement. This Agreement represents the entire understanding
of the parties with respect to its subject matter and supersedes all previous
representations, understandings or agreements, oral or written including any
prior license agreements between the parties. Any amendment of this
Agreement must be in writing. For purposes of the validity and
enforcement of this Agreement, any party’s facsimile signature to the Agreement
or signatures sent electronically via PDF format shall be considered original
signatures.
The parties have caused this
Agreement to be executed as of the Effective Date.
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“LGA”
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“Cequent”
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By: /s/ Xxxxx X.
Xxxxxxxx
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By: /s/ Xxxx X.
Xxxxxx
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Print
Name: Xxxxx X.
Xxxxxxxx
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Print
Name: Xxxx X.
Xxxxxx
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Title: President &
CEO
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Title: VP New Business
Development
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EXHIBIT
A
Name
of Product / Patent No., Patent Pending
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1.
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Pixie: 11/697294
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2.
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Silent
Hitch Pin: Patent No.
6,409,203---6,609,725---6,945,550---10/604805
(CamLok)
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3.
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Gear
Cage: 11/767166
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4.
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Gear
Deck: 11/160087---6,042,175---6,213,539—6,398,290---6,910,609
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5.
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Gear
Space: 6,042,175---6,213,539—6,398,290---6,910,609
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6.
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Twin
Tube: 09/788299
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7.
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Juice
Box: 11/160087
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8. Gear
Bed: 10/605776 (C-channel no-drill drop-in cargo management system
for pickups. 2003 GMC Product of the Year award winner.)
EXHIBIT
B
SPECIAL
CUSTOMERS
5%
Royalty
Target
WalMart
KMart
