SUBLICENSE AGREEMENT
This SUBLICENSE AGREEMENT (this "Agreement"), dated as of November 11,
2004 (the "Effective Date"), is by and between EarthShell Corporation, a
Delaware corporation ("EarthShell"), and EarthShell Xxxxxxx X.X. de C.V., a
Corporation of Mexico ("Sublicensee"). Each of EarthShell and Sublicensee may be
referred to herein individually as a "Party" or collectively as the "Parties".
RECITALS
WHEREAS, pursuant to that certain Amended and Restated License Agreement,
dated February 28, 1995, as amended (the "EKI License Agreement"), between E.
Khashoggi Industries LLC, a Delaware limited liability company ("EKI"), and
EarthShell, EarthShell has the exclusive right to utilize, and to sublicense to
others the right to utilize, specified technology to manufacture and sell
certain food service disposables; and
WHEREAS, EarthShell is willing to grant, and Sublicensee desires to
accept, a sublicense of such technology for use in certain food service
disposables to be sold in the territory specified below upon the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and agreements set forth herein, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. Definitions.
Capitalized terms used herein shall have the meanings set forth
below:
(a) The term "Agreement" shall have the meaning set forth in the
preamble.
(b) The term "Bankruptcy" shall mean, with respect to any Person,
(i) such Person (a) admits in writing its inability to pay its debts as they
come due, (b) makes an assignment for the benefit of, or any composition or
arrangement with, its creditors, or (c) a trustee, receiver, liquidator or other
custodian is appointed for itself, its business or all or a substantial part of
its property, (ii) any case or proceeding under any bankruptcy, insolvency or
similar law of any applicable jurisdiction, or any dissolution, winding up or
liquidation case or proceeding shall be commenced in respect of such Person, or
(iii) such Person takes any action to authorize, or in furtherance of, any of
the events described in clauses (i) or (ii) above.
(c) The term "Confidential Information" shall have the meaning set
forth in Section 16.
(d) The term "Customers" shall mean those prospective customers of
Products within the Market Segments that are located in the Territory.
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(e) The term "EarthShell" shall have the meaning set forth in the
preamble.
(f) The term "EarthShell Improvements" shall have the meaning set
forth in Section 6(a).
(g) The term "EarthShell Infringement Action" shall have the meaning
set forth in Section 8(c).
(h) The term "EKI License Agreement" shall have the meaning set
forth in the recitals.
(i) The term "Equipment" means items of equipment capable of
producing finished commercial Products from the mixing of Raw Materials through
the packaging of finished Products in accordance with the applicable
specifications.
(j) The term "Food Service Disposables" shall have the same meaning
as is assigned to that term in the Amended and Restated License Agreement, dated
February 28, 1995, between E. Khashoggi Industries, LLC and EarthShell, as
amended, as set forth in Exhibit B hereto.
(k) The term "Gross Profits" shall mean Net Sales less direct costs
incurred by Sublicensee in manufacturing Products, including cost of raw
materials, labor and manufacturing costs, but excluding any indirect costs,
royalty payments to third parties, depreciation, or selling, general and
administrative expenses, all as determined in accordance with generally accepted
accounting principles, consistently applied.
(l) The term "Gross Sales" shall mean the gross invoice price of Products sold
by Sublicensee to Customers during the relevant fiscal period.
(m) The term "Improvement" shall mean any improvement, enhancement,
refinement, modification or other new invention or discovery, whether patentable
or unpatentable, deriving from or otherwise relating to, in whole or in part,
any of the claims of any of the Patents described in Exhibit A hereto, any of
the Trade Secrets or the Products.
(n) The term "Licensed Patents" shall mean the Patents that are
licensed to EarthShell by EKI pursuant to the EKI License Agreement, including,
without limitation, the Patents that are described on Exhibit A hereto and all
Patents covering Improvements that hereafter are acquired by or licensed to
EarthShell (in the case of any such Patents that are hereafter licensed to
EarthShell, subject to EarthShell having the right to grant sublicenses
thereunder and Sublicensee agreeing to pay any royalty that is payable in
connection with exercising rights under any such sublicense).
(o) The term "Market Segments" shall mean the broad market segments
in all or any part of the Territory for the manufacture, distribution and/or
sale of any or all of the Products which are depicted on Exhibit C.
(p) The term "Modules" shall mean a manufacturing unit capable of
forming, trimming and laminating substrates for Products (such as, for example,
a DTE "Cobra" Module or comparable unit).
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(q) The term "Net Sales" shall mean, with respect to the Products,
the Gross Sales for the relevant fiscal period, reduced by (i) cash, trade or
quantity discounts actually given by Sublicensee; and (ii) credits actually
allowed by Sublicensee.
(r) The term "Patents" shall mean unexpired patents, utility models,
industrial designs, certificates of invention or similar grants of intellectual
property rights that are filed, registered, issued or granted in the Territory,
including without limitation, any divisionals, reissues, continuations,
continuations-in-part, renewals, reexaminations, and extensions of any of the
foregoing, and any applications therefor (and patents which may issue on such
applications).
(s) The term "Person" shall mean an individual, partnership,
corporation, limited liability company, trust, governmental or political
subdivision and any other entity that has legal capacity to own property in its
own name and to xxx or be sued.
(t) The term "Plant Facility" shall have the meaning set forth in
Section 3(a).
(u) The term "Products" shall mean the Food Service Disposables
specified in Exhibit D. Upon mutual agreement the Parties may add to or
otherwise change the types of Products covered by this Agreement by amending the
Exhibit D in accordance with Section 20 hereof.
(v) The term "Raw Materials" shall have the meaning set forth in
Section 10(h).
(w) The term "Representative" shall have the meaning set forth in
Section 5(a).
(x) The term "Royalty" shall have the meaning set forth in Section
4.
(y) The term "Royalty Report" shall have the meaning set forth in
Section 4(a).
(z) The term "Sublicense" shall have the meaning set forth in Section 2(a).
(aa) The term "Sublicensee Improvements" shall have the meaning set
forth in Section 6(b).
(bb) The term "Technology" shall mean the Licensed Patents and the
Trade Secrets.
(cc) The term "Territory" shall mean the territory designated in
Exhibit E hereto.
(dd) The term "Trade Secrets" shall mean (i) know-how, formulas,
methods, processes, systems and other proprietary information owned by
EarthShell or licensed to EarthShell pursuant to the EKI License Agreement that
are or may be useful or necessary in the production, distribution, use,
marketing or sale of any of the Products, and (ii) subject to Section 6, any
non-patented Improvement or other proprietary information now or hereafter owned
by or licensed to EarthShell that is or may be useful or necessary in the
production, distribution, use, marketing or sale of any of the Products.
(ee) The term "Trademarks" shall have the meaning set forth in
Section 2(d).
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2. The Sublicense.
(a) Subject to the terms and conditions of this Agreement,
EarthShell hereby grants to Sublicensee the following royalty-bearing
non-exclusive sublicenses to the Technology (the "Sublicense"):
i. to use, make or have made, at the Plant Facility, the
Products and to import the Products into the Territory;
and
ii. to sell, offer to sell, and otherwise dispose of
Products to Customers within the Market Segments solely
within the Territory.
(b) Sublicensee shall have the right to extend all or any part of
the rights granted under the Sublicense to a qualified entity in which it has an
equity interest of more than a 50% interest. If Sublicensee desires to extend
all or any part of the rights granted under the Sublicense to an entity in which
Sublicense holds an equity interest of not more than 50%, or if Sublicensee
desires to grant a sublicense of a scope that is inconsistent with the scope of
the Sublicense, Sublicensee must obtain the prior written approval from
EarthShell. Any purported sublicense by Sublicensee or attempt to extend all or
any part of the rights granted under the Sublicense other than as expressly
permitted by the foregoing provisions of this Section 2(b) shall require the
prior written consent of EarthShell and any purported grant of any such other
sublicense or extension of such rights without such consent shall be null and
void and shall constitute a material breach for purposes of Section 13(b)
hereof.
(c) Sublicensee shall not, directly or indirectly, market,
distribute, sell or attempt to dispose of any Product to any Person outside the
Territory, or to any Person within the Territory, if Sublicensee knows or has
reason to believe that such Person intends to use the Product in question
outside the Territory. A breach of the foregoing shall constitute a material
breach for purposes of Section 13(b) hereof.
(d) Subject to Section 10(e) hereof, Sublicensee is authorized and
required to use, in connection with the marketing, distribution and sale of
Products in the Territory, the trademarks and service marks (collectively, the
"Trademarks") owned by or licensed to EarthShell that are designated to
Sublicensee by EarthShell prior to commercial production of the Products by
Sublicensee or from time to time thereafter. In addition, Sublicensee is
authorized to adopt and maintain as its legal name or trade name during the term
of this Agreement a name that includes "EarthShell", including without
limitation "EarthShell Xxxxxxx X.X. de C.V."; provided that Sublicensee agrees
to change its legal name and trade name to a new name that does not include the
word "EarthShell" as soon as reasonably practicable following any termination or
expiration of this Agreement. To the extent that EarthShell has not already done
so, Sublicensee, at its sole cost and expense, is authorized to make such
filings and registrations in the name of Sublicensee as are necessary or
appropriate to secure registrations of the Marks or any derivatives thereof in
the Territory or any part thereof, in the name of Sublicensee; provided that
Sublicensee shall assign to EarthShell, for no additional consideration, all
such registrations and any rights related thereto as soon as reasonably
practicable following any termination or expiration of this Agreement.
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(e) Sublicensee shall achieve the respective minimum annual Net
Sales amounts set forth in Exhibit F hereto. If Sublicensee fails to achieve any
such minimum annual Net Sales requirements in respect of any annual period
during the term of this Agreement, EarthShell may elect to convert the license
granted hereunder to Sublicensee to a fully non-exclusive license without the
benefit of the covenant by EarthShell in Section 2(g) hereof. If, following any
such election by EarthShell to convert Sublicensee's license to a non-exclusive
license without the benefit of the covenant by EarthShell in Section 2(g)
hereof, Sublicensee fails to achieve in respect of any calendar year the minimum
annual Net Sales of at least $10,000,000, EarthShell shall have the right to
terminate this Agreement upon written notice to Sublicensee.
(f) Notwithstanding the anything herein to the contrary, if
Sublicensee is unable to satisfy fully the requirements of any Customer for
Products because of insufficient plant capacity within six (6) months after such
Customer has given Sublicensee notice of such requirements in writing (the
amount of such unsatisfied requirements being referred to as "Unfulfilled
Customer Requirements"), Sublicensee agrees that the Unfulfilled Customer
Requirements for Products may be satisfied by another EarthShell sublicensee
that is designated by EarthShell without violating the exclusive rights granted
by EarthShell hereunder; provided that Sublicensee shall in such event retain
its exclusivity with respect to all Product requirements that Sublicensee has
sufficient capacity to fulfill on a timely basis.
(g) EarthShell covenants and agrees that, subject to Sublicensee
purchasing, installing and making operational 96 Modules prior to the third
anniversary of the Effective Date and subject to Sublicensee's compliance with
its obligations under Section 2(e), EarthShell shall not hereafter grant any
sublicense to the Technology to make or sell Products to Customers in the Market
Segments in the Territory to any other Person.
3. Plant Facility
(a) Within thirty (30) days after the Effective Date, Sublicensee
will identify a plant facility in a mutually acceptable location in the
Territory that will be acquired or leased by Sublicensee (the "Plant Facility").
The Plant Facility shall have, by no later than twelve (12) months after the
Effective Date, a minimum production capacity of 200,000,000 units per year. The
size, physical location and specifications of the Plant Facility will be subject
to EarthShell's reasonable approval. The cost of acquiring the Plant Facility
and the cost of any required infrastructure improvements thereto shall be borne
solely by Sublicensee. Without limiting the generality of the foregoing,
Sublicensee shall make the capital investments in Equipment during the five year
period commencing on the Effective Date that are described in Exhibit G.
Sublicensee, at its sole cost and expense, shall make all repairs and
replacements necessary to maintain and operate the Plant Facility in material
compliance with all applicable legal and administrative code standards of the
Territory, and satisfy all applicable customary and reasonable industry
practices with respect thereto in the Territory throughout the term of this
Agreement.
(b) Sublicensee will permit EarthShell personnel or consultants
access to the Plant Facility as is reasonably necessary in order for them to
fulfill EarthShell's obligations or protect its rights under this Agreement.
Prospective or existing licensee/joint venture partners of EarthShell will be
permitted to have reasonable access to the Plant Facility, upon reasonable
advance notice by EarthShell and during normal business hours, for the purpose
of observing the Plant Facility in operation. Notwithstanding the foregoing,
Sublicensee will have no obligation to provide access to the Plant Facility to
any prospective or existing licensee or joint venture partner of EarthShell that
has not agreed to permit access to any plant facility owned or leased by it or a
joint venture entity that is being or in the future will be used to manufacture
EarthShell products.
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(c) Sublicensee will procure and install Equipment at the Plant Facility as
required to meet its production and revenue obligations under this Agreement.
The cost of acquiring and installing such Equipment, including the direct
engineering, design, debugging and start-up fees and expenses shall be borne
solely by Sublicensee. Sublicensee shall upgrade each material component of such
Equipment on a regular basis and shall make all repairs and replacements
necessary to maintain and the Equipment in material compliance with all
applicable legal and administrative code standards of the Territory, and satisfy
all applicable customary and reasonable industry practices with respect thereto
in the Territory throughout the term of this Agreement. (d) Without limiting the
foregoing, Sublicensee shall pay all other costs and expenses of whatever nature
in connection with the start-up and operation of the Plant Facility and the
manufacture, use, sale, offering for sale and importation into and
commercialization of the Products in the Territory. (e) The Parties will
cooperate to ensure that sufficient equipment manufacturing capacity is
available to meet the demands of the Sublicensee. Such cooperation shall include
identifying additional qualified equipment manufacturers.
4. Royalty.
(a) In consideration for the grant of the Sublicense, Sublicensee
shall pay to EarthShell a royalty (the "Royalty") of 20% of Net Sales but not to
exceed 50% of the Gross Profits of Sublicensee during the relevant period, when
and as provided in Section 4(b). In addition to the foregoing, Sublicensee shall
pay a technology fee of $1,000,000 upon the signing of this Agreement. Further,
Sublicensee agrees to purchase 250,000 shares of ERTH common stock @ $4 per
share according to the terms and conditions of the attached Stock Purchase
Agreement and such shares will be released by EarthShell to the Sublicensee when
the second million dollars in royalties are due and paid. The Technology Fee
payments shall be creditable against, the Royalties that shall begin accruing on
April 1, 2006; provided that the amount of the Technology Fee payments that can
be credited against the Royalties payable by Sublicensee after April 1, 2006 in
no event shall exceed fifty percent (50%) of the amount of Royalty payments
otherwise payable by Sublicensee in respect of the calendar quarter in question
prior to crediting the Technology Fee payments against such Royalties.
(b) No Royalties will be payable with respect to Products shipped
and invoiced prior to April 1, 2006 (subject to Sublicensee paying the
Technology Fee as specified in Section 4(a)). Sublicensee shall pay to
EarthShell the Royalty payable in respect of all Products shipped and invoiced
by Sublicensee during the preceding calendar quarter (or partial calendar
quarter, in the case of the first Royalty period). Each Royalty payment shall be
accompanied by a written report (the "Royalty Report") prepared by Sublicensee
and certified as accurate by the Chief Financial Officer or Treasurer of
Sublicensee. Each Royalty Report shall set forth, for the calendar period
covered by the Royalty Report, (i) the number of each of the Products shipped by
Sublicensee, (ii) the gross invoice price for each of such Products, (iii) any
reductions to the gross invoice price for purposes of calculating Net Sales and
(iv) the Gross Profits recognized during such calendar period. For Royalty
Reports covering any of the part of the five-year period commencing on the
Effective Date, the Royalty Report shall also set forth the amount of the
capital investment in Equipment made by Sublicensee during the relevant calendar
period.
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(c) All payments due under this Agreement shall be paid by
Sublicensee in United States dollars.
(d) If Sublicensee fails to make a timely payment due under this
Section 4, interest at an annual compounded rate equal to twelve percent (12%)
shall accrue on the amount of payment for each day such payment is overdue;
provided, however, that such interest rate shall in no event exceed the maximum
rate permitted by applicable law.
(e) Any failure to make timely payment of any Royalty or Technology
Fee shall constitute a material breach for purposes of Section 13(b) hereof. (f)
EarthShell acknowledges that the Royalties payable by Sublicensee to EarthShell
under this Agreement may be subject to withholding taxes that may be assessed
under applicable law by any jurisdiction in the Territory and, if Sublicensee is
required to so withhold any tax on Royalties, then the amount of Royalties
actually remitted to EarthShell will be net of such withholding. Sublicensee
will promptly furnish EarthShell with the official receipt of payment of these
taxes to the appropriate taxing authority. Following the Effective Date and at
EarthShell's option, the Parties agree to cooperate to restructure the Royalty
payments payable hereunder in a manner that will optimize the tax treatment of
such payments, including by possibly converting the Royalty obligation into a
profits participation by EarthShell in Sublicensee (it being agreed that any
such restructuring would not be intended to adversely affect the net economic
benefits intended to be conferred on Sublicensee hereby).
5. Right to Audit.
(a) Sublicensee shall keep and maintain complete and accurate
records concerning the sale of the Products and the calculation of Net Sales and
Gross Profits at its principal executive offices or at such other locations as
the Parties shall agree. EarthShell or its designated representative (the
"Representative") shall have the right at EarthShell's cost and expense to
review the financial and other records of Sublicensee on a quarterly basis
during the term of this Agreement during normal business hours and upon
reasonable prior notice to Sublicensee.
(b) If Sublicensee is ultimately determined to have failed to pay to
EarthShell the full amount of a Royalty payment actually due hereunder,
Sublicensee shall promptly pay the full amount of such discrepancy to
EarthShell, with interest thereon, at an annual rate equal to twelve percent
(12%), compounded annually; provided, however, that such interest rate shall in
no event exceed the maximum rate permitted by applicable law. Furthermore,
should the results of an audit reveal an underpayment of a Royalty payment due
hereunder in excess of five percent (5%), than all costs and expenses related to
such audit shall be reimbursed to EarthShell by Sublicensee within thirty (30)
days of the completion of such credit.
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(c) If Sublicensee is ultimately determined to have overpaid
EarthShell a Royalty payment actually due hereunder, EarthShell shall promptly
pay the full amount of the overpayment to Sublicensee, with interest thereon, at
an annual rate equal to twelve percent (12%), compounded annually; provided,
however, that such interest rate shall in no event exceed the maximum rate
permitted by applicable law.
6. Improvements to Technology.
(a) As between EarthShell and Sublicensee, EarthShell will own all
Improvements, whether made by or for EarthShell or by or for Sublicensee (in
each case, whether individually or jointly with others), in connection with this
Agreement and that relate to materials composition and commercial products (the
"EarthShell Improvements"). Subject to EarthShell's right to do so, all
EarthShell Improvements shall be included in the Technology licensed hereunder
to Sublicensee without additional royalty or other obligation being imposed on
Sublicensee.
(b) As between EarthShell and Sublicensee, Sublicensee will own all
Improvements whether made by or for EarthShell or by or for Sublicensee (in each
case, whether individually or jointly with others), in connection with this
Agreement and that relate to manufacturing processes (the "Sublicensee
Improvements"). All Sublicensee Improvements will be licensed to EarthShell on a
non-exclusive, worldwide and royalty-free basis, with the right to grant
sublicenses. EarthShell acknowledges that Sublicensee shall have the right to
license Sublicensee Improvements to third parties on such terms and conditions
as it shall determine which shall not conflict with this Agreement.
(c) Any material Improvements developed by or for any third party
(including an EarthShell sublicensee other than Sublicensee) and licensed to
EarthShell shall, if requested by Sublicensee and subject to EarthShell's right
to do so, be sublicensed to Sublicensee hereunder, subject to the applicable
terms and conditions of such sublicense.
(d) Each Party that develops or acquires a material Improvement
during the term hereof will disclose such Improvement in writing to the other
Party promptly after the development or acquisition of such Improvement by such
Party.
(e) Any Improvement made by or for EarthShell or by or for
Sublicensee (in each case, whether individually or jointly with others) that
does not constitute a Sublicensee Improvement shall be deemed to be an
EarthShell Improvement.
(f) The Parties contemplate a cooperative development of an RFID
package system that would allow the complete tracking and data history of a
product through the supply chain using the package as the information carrier.
Such development will be jointly owned as an improvement to the basic EarthShell
technology and any profits or royalties beyond the basic package will be shared
equally.
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7. Patent Matters.
(a) EarthShell shall have the right, in its sole discretion, to (i)
affirmatively seek patent protection for any EarthShell Improvement at its sole
cost and expense or (ii) maintain any EarthShell Improvement as a trade secret;
provided that such EarthShell Improvement shall be maintained as a trade secret
during the pendency of any patent application.
(b) Sublicensee shall have the right, in its sole discretion, to (i)
affirmatively seek patent protection for any Sublicensee Improvement at its sole
cost and expense or (ii) maintain any Sublicensee Improvement as a trade secret;
provided that such Sublicensee Improvement shall be maintained as a trade secret
during the pendency of any patent application.
(c) Each Party shall provide the other Party, at the other Party's
expense, with such assistance as may be reasonably requested, from time to time,
in connection with efforts to seek patent protection for any Improvement in
accordance with Section 7(a) or (b), including the execution of any documents
necessary to obtain and maintain such patent protection.
8. Infringement Matters.
(a) Each of EarthShell and Sublicensee will promptly, and in any
event within thirty (30) days of discovery, notify the other in writing of any
apparent infringement of the Technology in the Territory which comes to its
attention while this Agreement remains in effect. EarthShell shall have the sole
right, at its sole cost and expense and in its absolute discretion, to bring any
suit to enjoin such infringement and to recover damages therefor for its sole
account.
(b) In any action brought by EarthShell pursuant to Section 8(a)
hereof, Sublicensee shall (i) cooperate fully with EarthShell and provide
whatever assistance is reasonably requested by EarthShell in connection with
such suit, including the preparation and signing of documents at EarthShell's
expense.
(c) Sublicensee shall promptly notify EarthShell in writing of (i)
any claim or threatened claim by any Person that the use of the Technology by
Sublicensee in connection with the manufacture, use or sale of any Product by
Sublicensee within the scope of the license granted to Sublicensee hereunder
infringes or violates the patent, trade secret or other intellectual property
rights of such Person and (ii) the commencement of any lawsuit against
Sublicensee, or any of its respective customers, asserting any such claim (an
"EarthShell Infringement Action"). EarthShell shall assume and control the
defense of any EarthShell Infringement Action, at its sole cost and expense,
irrespective of whether EarthShell is named as a defendant therein. Sublicensee
will assist EarthShell in the defense of any EarthShell Infringement Action by
providing such information, fact witnesses and other cooperation as EarthShell
may request from time to time; provided that EarthShell shall reimburse
Sublicensee for any out-of-pocket expenses incurred by Sublicensee in connection
therewith. Sublicensee shall have the right to be represented in connection with
an EarthShell Infringement Action by its own legal counsel, at its own expense,
provided that such legal counsel will act only in an advisory capacity. If
EarthShell does not assume the defense of any EarthShell Infringement Action,
Sublicensee shall have the right, but not the obligation, to assume the defense
of such lawsuit, utilizing legal counsel of its choice. EarthShell shall bear
the reasonable costs and expenses of such legal counsel. If Sublicensee so
assumes the defense of an EarthShell Infringement Action, Sublicensee shall have
no right to settle such EarthShell Infringement Action unless Sublicensee shall
have received the prior written consent of EarthShell which shall not be
unreasonably withheld or delayed.
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(d) If the court, in any EarthShell Infringement Action, enters a
final and non-appealable order finding that the Technology infringes or
violates, in whole or in part, the intellectual property rights of another
Person in any of the Territory and requiring Sublicensee (i) to obtain a license
under any third party's patent not licensed hereunder in order to continue make
and sell in the Territory any Products incorporating Technology as contemplated
by this Agreement, and to pay a royalty or fee under such license, and the
infringement of such patent cannot reasonably be avoided by Sublicensee, or (ii)
to pay any damages on account of such infringement or violation, EarthShell
shall pay the amount of any such fee or royalty payable and any such damages to
the extent that the infringement or violation found by such court resulted from
Sublicensee's use of Technology in the Territory within the scope of the
Sublicense granted hereunder; provided that, in no event shall EarthShell's
liability under this Section 8(d) exceed the specified amount in Section 12(b)
hereof.
9. Duties and Obligations of EarthShell.
In addition to, and not in limitation of, the other duties and obligations
of EarthShell, as set forth in this Agreement, EarthShell shall have the
following obligations hereunder:
(a) Within 60 days after the Effective Date, EarthShell shall
provide to Sublicensee copies of written materials in which all Trade Secrets
necessary for Sublicensee effectively to exercise the rights granted to it under
the Sublicense are disclosed, including without limitation the following:
(i) technical and engineering specifications and typical
engineering layouts for the manufacturing process for the Products;
(ii) detailed engineering specifications for molds and tooling
for the Products;
(iii) detailed specifications for raw materials required for
the manufacture of the Products and lists of approved vendors thereof;
(iv) detailed mix designs and process parameters for
manufacturing the Products; and
(v) specifications of process equipment for the Products with
a list of approved vendors thereof.
(b) Subject to the availability of EarthShell staff, EarthShell
shall, at Sublicensee's reasonable request and at EarthShell's then standard
hourly rates, provide to Sublicensee technical support including assisting
Sublicensee in installing the lines of equipment necessary to make the Products
at any Plant Facility, providing direct engineering, design, and debugging
services to Sublicensee in connection with the start-up and operation of any
Plant Facility and modifying the Products to meet the performance requirements
of customers.
10. Other Duties and Obligations of Sublicensee.
In addition to, and not in limitation of, the other duties and obligations
of Sublicensee, as set forth in this Agreement, Sublicensee shall have the
following obligations hereunder:
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(a) Sublicensee shall prominently display and utilize such
Trademarks (whether owned by or licensed to EarthShell) as may be designated by
EarthShell from time to time in connection with the advertisement, marketing,
distribution and sale of the Products. The right to use such Trademarks is
included within the Sublicense herein granted. Except as otherwise agreed by
EarthShell, Sublicensee shall use its reasonable efforts to cause each Product
manufactured by Sublicensee to bear at least one of the Trademarks designated by
EarthShell. The specific placement, size, and detail of any Trademark on each
Product must be approved by EarthShell (which approval shall not be unreasonably
withheld or delayed) Sublicensee shall not in any manner represent that it has
any ownership interest any Trademarks licensed hereunder. Sublicensee
acknowledges that use of the Trademarks shall not create in its own favor any
right, title, or interest in or to the Trademarks, and that all uses thereof by
Sublicensee shall inure to the benefit of EarthShell. Sublicensee shall
cooperate with EarthShell in the execution of any appropriate and necessary
documents in connection with the registration of any Trademarks.
(b) Upon termination of this Agreement, Sublicensee shall cease and
desist from use of the Trademarks in any way, including any word or phrase that
is similar to or likely to be confused with any of the Trademarks. However, in
the event of termination of this Agreement, Sublicensee shall have the right to
sell existing stock and inventory of manufactured Products for a period of sixty
(60) days and thereafter shall deliver to EarthShell or its duly authorized
representative all materials upon which the Trademarks appear.
(c) Sublicensee acknowledges that the Technology in existence on the
date hereof is novel and unique in the foodservice disposable products industry.
Sublicensee shall not challenge or question the validity or ownership of the
Trademarks or, subject to the provisions of applicable law, any Licensed
Patents. Sublicensee shall continue to make all required payments under this
Agreement to EarthShell during any challenge of the validity of any of the
Licensed Patents (or claims thereof) included in the Technology. In the event
Sublicensee fails to continue to make such payments based upon or in connection
with such a challenge, EarthShell may at its option terminate this Agreement
upon written notice to Sublicensee.
(d) Sublicensee represents, warrants and covenants to EarthShell
that (i) the Products manufactured by Sublicensee shall conform with all of the
specifications provided by EarthShell pursuant to Section 9(a) and that (ii)
Sublicensee shall maintain quality standards for the Products in conformity with
EarthShell's standard quality control manual or procedures, which EarthShell
agrees shall be commercially reasonable.
(e) Sublicensee shall obtain or provide, and maintain at all times,
product liability insurance as is reasonable and customary for the industry with
such insurer as shall be reasonably satisfactory to EarthShell; provided,
however, any insurer rated by AM Best (or a comparable agency) at a rating of
A-10 or better (or a comparable rating) shall at all times be deemed a
reasonably satisfactory insurer. Each such insurance policy will require that
the insurer give EarthShell at least thirty (30) days prior written notice of
any alteration in or cancellation of the terms of such policy. Sublicensee shall
furnish to EarthShell a certificate or other evidence reasonably satisfactory to
EarthShell that such insurance coverage is in effect and that EarthShell is an
additional insured with respect to such policy.
11
(f) Sublicensee shall xxxx all of the Products and related documents
with all applicable patent numbers, in accordance with EarthShell's instructions
and as required by the patent laws in effect in the Territory or as reasonably
instructed by EarthShell.
(g) Sublicensee or its agents shall be solely responsible for the
payment and discharge of any taxes, duties, or withholdings relating to any
transaction of Sublicensee or its agents in connection with the manufacture,
use, sale or commercialization of the Technology or the Products in the
Territory, excluding any tax or duty based on the income of EarthShell.
(h) Sublicensee shall regularly and routinely inform EarthShell of
all of its requirements for raw materials for Products (the "Raw Materials")
prior to purchasing any Raw Materials from any other Person. Sublicensee may
request EarthShell to submit a bid or proposal offer for the supply of
particular Raw Materials. If EarthShell desires to supply particular Raw
Materials to Sublicensee, EarthShell may submit a bid or proposal for the supply
of such Raw Materials ("Offered Raw Materials") and, if such a bid or proposal
is made by EarthShell, EarthShell and Sublicensee shall negotiate in good faith
to enter into a supply agreement or purchase order with regard to such Offered
Raw Materials; provided nothing herein shall preclude Sublicensee from accepting
a written offer from a third-party for such Offered Raw Materials at a price and
on terms and conditions materially more favorable to Sublicensee than those
offered or proposed by EarthShell.
11. Representations and Warranties of EarthShell.
(a) EarthShell hereby represents and warrants to Sublicensee that
EarthShell has a valid and enforceable license to use the Technology within the
scope of the rights granted under the Sublicense and has the right to sublicense
the Technology to Sublicensee within the scope of the rights granted under the
Sublicense as set forth in this Agreement.
(b) EXCEPT AS EXPRESSLY SET FORTH IN SECTION 11(a) OF THIS
AGREEMENT, EARTHSHELL DOES NOT MAKE OR GIVE, AND HEREBY EXPRESSLY DISCLAIMS, ANY
AND ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN
REGARD TO (i) ANY PRODUCTS WHICH MAY BE MANUFACTURED, USED OR SOLD BY
SUBLICENSEE AND WHICH ARE BASED UPON OR UTILIZE ANY OF THE TECHNOLOGY; AND (ii)
IN REGARD TO ANY SERVICES PROVIDED TO SUBLICENSEE BY EARTHSHELL HEREUNDER.
(c) Nothing in this Agreement shall be construed as:
i. a warranty or representation by EarthShell as to the
validity or scope of any Licensed Patents;
ii. a requirement that EarthShell file any patent application,
secure any patent or maintain any patent in force;
iii. conferring a right to use in advertising, publicity or
otherwise any Trademark of EarthShell except as and to the extent
specifically provided herein,; or
12
iv. granting by implication, estoppel, or otherwise any
license or rights under patent or other intellectual property rights
of EarthShell other than the Licensed Patents and Trade Secrets
included in the Technology, to the extent sublicensed as provided in
Section 2.
12. No Consequential Damages; Limitation of Liability.
(a) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL LOSSES, EXPENSES OR DAMAGE WHATSOEVER,
INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE OR PROFITS, INCREASED COSTS OF
PRODUCTION, DAMAGES OR LOSSES AS A RESULT OF SUCH OTHER PARTY'S INABILITY TO
OPERATE, INABILITY TO FULFILL CONTRACTS WITH THIRD PARTIES, OR SIMILAR MATTERS
OR EVENTS ARISING FROM THE USE OR INABILITY TO SELL THE PRODUCTS OR ANY FAILURE
TO FULFILL A PURCHASE ORDER IN A TIMELY FASHION, NOR SHALL EITHER PARTY BE
LIABLE FOR ANY LOSS, EXPENSE OR DAMAGE SUFFERED OR INCURRED BY THE OTHER PARTY
AS A RESULT OF CLAIMS, DEMANDS, SUITS OR OTHER PROCEEDINGS BY ANY OTHER PARTY OR
PERSONS, WHETHER PRIVATE, PUBLIC OR GOVERNMENTAL IN NATURE. The limitations,
exclusions and disclaimers in this Agreement shall apply irrespective of the
nature of the cause of the action or demand, including but not limited to breach
of contract, negligence, tort or any other legal theory and shall survive any
breach or breaches and/or failure of the essential purpose of this Agreement, or
any remedy contained in this Agreement.
(b) IN NO EVENT SHALL EARTHSHELL'S CUMULATIVE LIABILITY IN RESPECT
OF CLAIMS ARISING UNDER THIS AGREEMENT OR OTHERWISE RELATING TO THE USE,
MANUFACTURE OR SALE OF PRODUCTS (WHETHER IN CONTRACT, TORT OR ANY OTHER THEORY
OF LIABILITY) EXCEED THE AGGREGATE AMOUNT OF ROYALTIES THERETOFORE PAID TO
EARTHSHELL HEREUNDER.
13. Term and Termination.
(a) The term of this Agreement shall commence on the Effective Date
and, subject to earlier termination as provided herein, shall continue for a
period of ten (10) years; provided that, at the election of Sublicensee made by
written notice to EarthShell at least one year prior to the expiration of the
initial term of this Agreement, the term of this Agreement may extend for a
renewal term of an additional period of ten (10) years.
(b) Either Party may terminate this Agreement for a material breach
by the other Party of the terms and conditions of this Agreement upon written
notice to the breaching party, which is given no less than thirty (30) days
prior to an effective date of termination, and which specifies in reasonable
detail the nature of such breach. If the breaching Party cures such breach prior
to the effective date of termination, this Agreement shall not terminate and
will continue in full force and effect.
13
(c) Either Party may, by giving the other Party written notice of
termination, immediately terminate this Agreement if upon the occurrence of a
Bankruptcy with respect to the other Party is adjudicated bankrupt, files a
voluntary petition of bankruptcy, makes a general assignment for the benefit of
creditors, is unable to meet its obligations in the normal course of business as
they fall due or if a receiver is appointed on account of the other Party's
insolvency.
(d) EarthShell shall have the right to terminate this Agreement when
and as provided in Section 2(e) hereof.
(e) From and after the effective date of the expiration of the term
of this Agreement or the termination of this Agreement pursuant to this Section
13 hereof, Sublicensee shall have no right, whatsoever, to utilize the
Technology or Trademarks, and Sublicensee shall promptly return to EarthShell
all written materials or other tangible media containing any Trade Secrets which
are then in the possession of Sublicensee. Sections 4, 5, 6, 8, 10(g), 12,
13(e), 14, 15, 16, 17, 18, 19, and 21 shall survive termination of this
Agreement. The obligation of Sublicensee to pay to EarthShell the Royalty for
all Products actually sold by Sublicensee prior to the effective date of the
expiration or termination of this Agreement shall survive the expiration or
termination of this Agreement.
(f) EarthShell shall have the right to terminate this Agreement upon
written notice to Sublicensee if (i) Sublicensee does not place a binding
purchase order with an authorized equipment vendor of EarthShell for the
purchase of eight (8) Modules to be delivered as soon as practicable that is
unconditionally accepted by such vendor no later than five (5) calendar days
after the Effective Date or (ii) the initial Module ordered by Sublicensee is
not fully installed and operational within six months after the Effective Date.
14. Relationship of the Parties.
This Agreement shall not create any partnership, joint venture or similar
relationship between Sublicensee and EarthShell, and no representation to the
contrary shall be made by either party. Neither Sublicensee nor EarthShell shall
have any authority to act for or on behalf of or to bind the other in any
fashion, and no representation to the contrary shall be made by either such
party.
15. Notices.
(a) Any notice which is required or permitted to be given to a Party
pursuant to this Agreement shall be deemed to have been given only if such
notice is reduced to writing and (a) delivered personally, or (b) sent by a
reputable overnight courier service to the Person in question to the address
given below:
If to EarthShell: EarthShell Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxx
Attn: Chief Executive Officer
Telephone: 000- 000-0000
Fax: 000- 000-0000
If to Sublicensee: Sr. Xxxxx Xxxxxx
EarthShell Xxxxxxx X.X. de X.X.
Xxxxxx, X.X. 00000
Xxxxxx
Telephone: (5255) 0000-0000
Fax: 000-000-0000
14
or to such other address as either Party shall have specified by notice in
writing to the other Party at a later point of time.
(b) If delivered personally, a notice shall be deemed delivered when
actually received at the address specified above. Any notice given by a
reputable overnight courier shall be deemed delivered on the next business day
following the date it is placed in the possession of such courier.
16. Confidentiality.
Either a separate Confidentiality Agreement will be signed, or the
following section will apply: Any information relating to this Agreement, the
Technology or the business of Sublicensee or EarthShell is hereinafter referred
to as "Confidential Information." All Confidential Information in tangible form
(plans, writings, drawings, computer software and programs, etc.) or provided to
or conveyed orally or visually, shall be presumed to be proprietary to the
disclosing Party at the time of delivery to the other party; provided that all
such information or material relating to the Technology shall be deemed to be
Confidential Information of EarthShell. All Confidential Information of the
disclosing Party hall be protected by the receiving party from disclosure with
the same degree of care with which the receiving party protects its own
Confidential Information of the disclosing Party from disclosure but in no event
with less than a reasonable degree of care. The receiving party agrees (i) not
to disclose such Confidential Information to any Person except to those of its
employees or representatives who need to know such Confidential Information in
connection with the conduct of its business and who have agreed in writing to
maintain the confidentiality of such Confidential Information, and (ii) that
neither it nor any of its employees or representatives will use such
Confidential Information for any purpose other than in connection with the
conduct of its business pursuant to this Agreement; provided that such
restrictions shall not apply if such Confidential Information (A) is or
hereafter becomes public other than by a breach of this Agreement, (B) was
already in the receiving party's possession and not subject to an obligation of
confidentiality prior to any disclosure of the Confidential Information to the
receiving party, (C) has been or is hereafter obtained by the receiving party
from a third party which, to the knowledge of the receiving party, was not bound
by any confidentiality obligation with respect to the Confidential Information,
(D) is required to be disclosed pursuant to judicial order, but only to the
extent of such order and after reasonable notice to the disclosing party so as
to allow the disclosing party to intervene to seek confidential treatment or (E)
is required to be disclosed by any government authority which regulates the
business of the receiving party, but only to the extent of such required
disclosure and after reasonable notice to the disclosing party so as to allow
the disclosing party to intervene to seek confidential treatment. Without
limiting the generality of the foregoing, Sublicensee shall ensure that no third
party is given access to the Plant Facility unless such third party has entered
into a non-disclosure agreement with each of Sublicensee and EarthShell (it
being understood that such non-disclosure agreements will not be required from
couriers, suppliers, or other third parties that have limited access only to
loading docks, mail rooms, office reception areas and other areas in which
Products are not being manufactured and in which no Confidential Information is
visible or accessible).
15
17. Savings Clause.
Should any part or provision of this Agreement be rendered or declared
invalid by reason of any law or by decree of a court or competent jurisdiction,
the invalidation of such part or provision of this Agreement shall not
invalidate the remaining parts or provisions hereof, and the remaining parts and
provisions of this Agreement shall remain in full force and effect.
18. Waiver.
Neither the failure or delay on the part of either Party to exercise any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or privilege preclude any other
or further exercise thereof or of any other right or privilege.
19. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of Delaware, without giving effect to the choice of law rules thereof.
20. Amendment.
This Agreement may be amended only by the consent of each of the Parties
expressed in writing, signed by their duly authorized representatives.
21. Dispute Resolution.
(a) All claims, disputes, controversies and other matters in
question arising out of or relating to this Agreement, or to the alleged breach
hereof, which cannot be resolved by the Representatives shall be settled by
negotiation between the executives of Sublicensee and EarthShell. If such
executive negotiation is unsuccessful within ten business days, Sublicensee and
EarthShell shall submit the dispute to non-binding mediation with an independent
party mutually acceptable to Sublicensee and EarthShell (with the cost of the
mediation to be borne equally by Sublicensee and EarthShell). If Sublicensee and
EarthShell cannot mutually agree to a resolution within ten business days,
either Party may refer the dispute to binding arbitration in accordance with
procedures set forth in this Section 21. Each of Sublicensee and EarthShell (i)
waives the right to bring an action in any court of competent jurisdiction with
respect to any such claims, controversies and disputes (other than any such
action to enforce the award or other remedy resulting from any arbitration
pursuant to this Section 21), and (ii) waives the right to trial by jury in any
suit, action or other proceeding brought on, with respect to or in connection
with this Agreement.
(b) Upon filing of a notice of demand for binding arbitration by
either Sublicensee or EarthShell, arbitration with the American Arbitration
Association, or comparable association if the American Arbitration Association
is no longer in existence, shall be commenced and conducted as follows:
16
i. All claims, disputes, controversies and other matters in
question shall be referred to and decided and settled by a standing
panel of three arbitrators, one selected by each of Sublicensee and
EarthShell and the third by the two arbitrators so selected.
Selection of arbitrators shall be made within thirty days after the
date of the first notice of demand given pursuant to this Section 21
and within thirty days after any resignation, disability or other
removal of such arbitrator. Following appointment, each arbitrator
shall remain a member of the standing panel, subject to refusal for
just cause or resignation or disability.
ii. The cost of each arbitration proceeding, including without
limitation the arbitrators' compensation and expenses, meeting room
charges, court reporter transcript charges and similar expenses
shall be borne by the party whom the arbitrators determine has not
prevailed in such proceeding, or borne equally by Sublicensee and
EarthShell if the arbitrators determine that neither party has
prevailed. The arbitrators shall also award the party that prevails
substantially in its pre-hearing position its reasonable attorneys'
fees and costs incurred in connection with the arbitration. The
arbitrators are specifically instructed to award attorneys' fees for
instances of abuse of the discovery process.
iii. The sites of the arbitration shall be in Santa Barbara,
California unless Sublicensee and EarthShell agree otherwise.
(c) The arbitrators shall have the power and authority to, and to
the fullest extent practicable shall, abbreviate arbitration discovery in a
manner that is fair to Sublicensee and EarthShell in order to expedite the
conclusion of each alternative dispute resolution proceeding.
(d) The arbitration shall be governed by, and all rights and
obligations specifically enforceable under and pursuant to, the Federal
Arbitration Act (9 U.S.C. ss. 1, et. seq.).
(e) The arbitrators are empowered to render an award of general
compensatory damages and equitable relief (including, without limitation,
injunctive relief), but are not empowered to award punitive damages. The award
rendered by the arbitrators (i) shall be final, (ii) shall not constitute a
basis for collateral estoppel as to any issue, and (iii) shall not be subject to
vacation or modification. The arbitrators shall render any award or otherwise
conclude the arbitration no later than one hundred and eighty (180) days after
the date notice is given pursuant to this Section 21.
22. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
17
23. Assignment.
The rights and obligations in, to and under this Agreement shall be
binding upon and inure to the benefit of the Parties, their legal
representatives, successors and assigns. Neither Party may assign this Agreement
or any rights hereunder without the prior written consent of the other Party;
provided that EarthShell may assign this Agreement in connection with a merger,
sale of all or substantially all of its assets or other acquisition transaction
and Sublicensee may assign this Agreement to an entity in which Sublicensee
holds an equity interest of more than 50% of the total equity interest.
24. Entire Agreement.
This Agreement supersedes any prior understandings or agreements, whether
written or oral, and any contemporaneous oral agreements, between the Parties
hereto in regard to the subject matter hereof contains the entire agreement
between the Parties in regard to the subject matter hereof.
IN WITNESS WHEREOF, the Parties have caused this Technology Sublicense
Agreement to be executed and delivered by their duly authorized representatives
upon the date first herein written.
EARTHSHELL CORPORATION
By:
---------------------------
Name:
Title:
EarthShell Xxxxxxx X.X. de C.V.
By:
---------------------------
Name:
Title:
18
EXHIBIT A
Licensed Patents
Patent or Application No. Brief Title
19
EXHIBIT B
Definition of Food Service Disposable
[Excerpts from Amended and Restated License Agreement, dated
February 28, 1995, between EKI and EC, as amended]
The term "Food Service Disposables" shall mean any disposable, single use
product, container, apparatus, device or equipment for packaging, storing,
portioning, serving or dispensing food or beverages intended for consumption
within a short period of time (less than twenty four hours), which incorporate
in whole or in part any portion of the Technology and, to the extent not
otherwise excepted or excluded, are encompassed in those items included within
the scope of the Disposal Product Categories set forth in the Clinton Associates
1994 DISTRAK Five study of Disposables Utilization in Food Services Segments
(hereinafter referred to as the "DISTRAK V Study"), including all products
specifically set forth therein. Any product that has substantially the same
shape, composition, mixture and functional properties as a product within the
scope of the definition of Food Service Disposables shall be considered within
the scope of such definition no matter the manner in which that product is used,
unless expressly excepted below. Notwithstanding any other provision of this
Agreement, the parties agree that the following items shall not be within the
scope of the definition of "Food Service Disposables" or otherwise licensed
under this Agreement: (i) sealed containers for the long-term storage of liquids
whether for single or multiple portions (e.g., soft drink cans, milk cartons,
sealed juice or drink containers), except that single service (e.g., 16 ounces
or less) milk-containing cartons shall be within the scope of Food Service
Disposables; (ii) boxes or containers for the long-term storage of single or
multiple servings of foods or which are designed to extend the shelf life of
foods beyond same-day consumption (e.g., dry cereals boxes, egg cartons,
prepackaged frozen food containers and packaging, dairy product containers,
produce containers, condiment packaging, and meat and deli trays); (iii) aseptic
or sealed packaging; (iv) all secondary packaging (e.g., corrugated containers
and paper bags); and (v) wrapping products for consumer use. By way of
illustration, Exhibit H hereto provides a noncomprehensive, noninclusive list of
items within the definition of "Food Service Disposables" hereunder and also a
noncomprehensive, noninclusive list of items that fall outside the definition of
"Food Service Disposables" hereunder. Exhibit H hereto shall control in the
event of any conflict between it and the DISTRAK V Study. In the event of any
disagreement between the parties whether a particular item not listed in Exhibit
H hereto is within or without the definition of Food Service Disposables, the
parties may submit the matter to arbitration pursuant to the provisions of
paragraph 29. The parties hereby agree that, if available, Clinton Associates
shall act as arbiter in any arbitration proceeding involving a dispute as to the
definition of Food Service Disposable.
20
Exhibit C
Mexican Market Segments
The following market segments for the Disposable Food Service Packaging Market
in Mexico are granted to Grupo Industrial EarthShell de Mexico, SA on an
exclusive basis:
Market Segments Granted
I. All foam laminate products regardless of distribution area, method, or
customer base
Also includes, on a non-exclusive basis, the distributors required to service
all customers granted in this exhibit.
EarthShell Corporation reserves the right to change, remove or modify licensed
market segments based on performance.
21
Exhibit D
Products
Plates
9-inch uncompartmented
9-inch compartmented
10.25-inch uncompartmented
10.25-inch compartmented
6-inch bread
7-inch dessert
7-inch x 9-inch oval
11-inch oval
Bowls
3.5 oz.
5 oz.
12 oz.
20 oz.
30 oz.
Cafeteria trays
Casserole / potato dish
6 oz.
7 oz.
8 oz.
22
Exhibit E
Territory
All States of Mexico
23
Exhibit F
Minimum Annual Sales Requirements
Sublicensee shall achieve the respective minimum annual Net Sales amounts:
Year 1 (annual period ending on first anniversary of Effective Date): $ 0.
Year 2 (annual period ending on second anniversary of Effective Date): $10
million
Year 3 (annual period ending on third anniversary of Effective Date): $20
million
Year 4 (annual period ending on fourth anniversary of Effective Date): $50
million.
Year 5 (annual period ending on fifth anniversary of Effective Date) and each
annual period ending on each subsequent anniversary of Effective Date): $50
million
24
Exhibit G
Minimum Equipment Capital Investments
Sublicensee shall make the following capital investments in Equipment during the
five year period commencing on the Effective Date.
Year 1 (annual period ending on first anniversary of Effective Date): 16 DTE
Cobra Modules or equivalent.
Year 2 (annual period ending on second anniversary of Effective Date): 16 DTE
Cobra Modules or equivalent.
Year 3 (annual period ending on third anniversary of Effective Date): 16 DTE
Cobra Modules or equivalent.
Year 4 (annual period ending on fourth anniversary of Effective Date): 16 DTE
Cobra Modules or equivalent.
Year 5 (annual period ending on fifth anniversary of Effective Date): 16 DTE
Cobra Modules or equivalent.
25
EXHIBIT H
Illustrative List of Disposable, Single Use Food Service Disposables
Examples of Items within the Definition of "Food Service Disposables":
Bags o for carry out of food purchased in
food service disposable packages,
with or without handles
Beverage containers o Hot and/or cold beverage
o May or may not be insulating
o With or without handles. Includes
collectables that are disposable/
reusable
o Malt mixing collars
o Single service milk-containing cartons (16 oz. or
less)
Beverage Container Lid All types, including
o no spill
o domed
o sippers
Bowls All shapes, sizes
Cutlery (including o knife, fork, spoon
Sticks/Skewers) o large serving utensils
o chopsticks
o hors d'ouvers picks
o popsicle sticks
o corndog sticks
o shish-kabob skewers
o tooth picks
o steak markers
Food Containers tubs used for:
o popcorn
o deli salads
o takeout anything
o ice cream
o chicken buckets
Portion cups (souffle cups)
o sauces
o condiments
o butter
o candies
o side orders
o pills, medications
26
Trays used for:
o french fries
o nachos
o tacos
o burritos
o snacks
o hot dogs
o meal service
o vending
o single or multi-compartments
Boxes as used for:
o fry scoops
o popcorn
o chinese takeout
o kid's fun meal
o candy (vending)
o pie wedges
o bulky meals, pies, single compartment
o multi-compartment meals
Boats as used for:
o egg rolls
o ice cream sundaes
o hot dogs,
o chili dogs
o hoagies, sub sandwiches
o chicken fingers
o baked potatoes
Cones
o snow cones
o ice cream cone holders
o foods
Food Container Lids All kinds
Hinged Lid Containers Clamshells type boxes for specialty or
general food portion or meal carryout such as:
o hamburgers
o chicken nuggets
o salads
o single or multi-portion meals
o with or without multiple compartments
27
Napkins All kinds
Plates/Platters o All shapes, including round
o oval
o rectangular
o deep
o with or without compartments
o individual portion or serving sized o cake/pie plates
Plates/Platters Lids All types including domed, insulating, etc.
Placemats/Table Covers o placemats
o tray liners
o doilies
o menus
o table covers
Serving Dishes o pitchers
o catering trays
o casserole dishes
o chafing/steam table dishes
Straws/Stirrers o drinking straws
o puncture straws
o stirring straws/sticks
Wraps Wraps of all kinds, for all kinds of foods:
o burger/hot dog wraps
o pizza sheets
o doggie bags/wraps
o popcorn/snack bags
o french fry sleeves
o sandwich bags
28
Outside the Definition of "Food Service Disposables":
Baking o pie/cake tins
o muffin/eclair tins
o muffin/eclair cups
o fluted pan liners
o cake circles/squares
o loaf pans
o bundt pans
o casseroles
o cookie/cake sheets
o cake decorating triangles
Single or Multiple o cereal boxes/bowls
Portion Packaged Foods o sealed yogurt/desert cups
o sealed soups, stews, chili, pasta
o condiment packs (salt, pepper, catsup,
salsa, relish, etc.)
o sealed frozen food containers
o egg cartons
o dairy product containers
o produce containers
o meat & deli trays
Wraps o freezer papers
o bakery papers
o candy bar wrappers
Aeseptic or Sealed
Packaging
Secondary Packaging o corrugated containers
o paper bags
Sealed Containers for o soft drink cans
Long Term Storage o milk cartons
of Liquids o sealed juice or drink containers
