EXCLUSIVE LICENSE AGREEMENT
This Agreement (the "Agreement") is dated for reference the 5th day of June,
2002
BETWEEN:
COOL CAN TECHNOLOGIES, INC.,
------------------------------
a Minnesota corporation having an address at
Suite 206, 0000 Xxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(the "Licensor")
OF THE FIRST PART
AND:
BALSAM VENTURES, INC.,
-----------------------
a Nevada corporation having an address at
Xxxxx 000, 000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
(the "Licensee")
OF THE SECOND PART
WHEREAS:
A. The Licensor holds patents covering a proprietary technology (the
"Technology") for self-chilling beverage containers.
B. The Licensee wishes to acquire the exclusive worldwide license to use,
commercialize and license the Technology on the terms and subject to the
conditions contained of this Agreement.
-2-
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, the following words and phrases shall have the following
meanings:
(A) "Apparatus" means any apparatus for a self-cooling beverage container
described in the Cool Can Patents or that incorporates any of the Cool
Can Patents, the Know-how and/or the Intellectual Property;
(B) "Cool Can Patents" means the patents and patents pending described in
Schedule "A" and any improvements, modifications or variant of the
patents and patents pending described in Schedule A and any apparatus
or invention incorporating, or any improvement, modification or
variant to any Apparatus incorporating the patents and patents pending
described in Schedule "A", all know how and intellectual property
relating to the Patents and Patents Pending described in Schedule "A";
(C) "Gross License Revenues" means any license revenues or other payments
or royalties received by the Licensee from any license of the
Technology, Inventions, Patents, Know-how and Intellectual Property;
(D) "Gross Profits" means the gross sales of the Apparatus or Products
realized by the Licensee, less costs of goods sold of the Apparatus or
Products and shipping, marketing and related costs attributable to
sales of the Apparatus, each as determined in accordance with
generally accepted accounting principals (for greater certainty, no
sales made by sub-licensees shall be included in the calculation of
Gross Profits);
(E) "Improvement" means any modification or variant of the Apparatus and
the Invention, whether patentable or not, which, if manufactured,
used, or sold, would fall within the scope of the Apparatus, the
Invention or at least one claim of at least one of the Cool Can
Patents.
(F) "Intellectual Property" means all copyrights, patent rights, trade
secret rights, trade names, trademark rights, process information,
technical information, designs, drawings, inventions and all other
intellectual and industrial property rights of any sort related to or
associated with Invention and the Apparatus;
(G) "Inventions" means the inventions described in the Cool Can Patents
and embodied in the Apparatus;
(H) "Inventors" means Xxxxxx X. Xxxxxx, Xxxxx St. Xxxxx and Xxxxxxx X. St.
Xxxxx;
(I) "Know-how" means all know-how, knowledge, expertise, inventions, works
of authorship, prototypes, technology, information, know-how,
materials and tools relating thereto or to the design, development,
manufacture, use and commercial application of the Invention and the
Apparatus;
(J) "Products" means commercial goods or products incorporating the
Apparatus;
(K) "Technology" means the Cool Can Patents, the Intellectual Property,
the Know How and the Inventions;
(L) "Trademarks" means the trademarks described in Schedule "B".
2. GRANT OF EXCLUSIVE LICENSE
-----------------------------
2.1 The Licensor grants to the Licensee the exclusive worldwide right and
license to enjoy, commercialize and exploit the Technology and to manufacture,
use and sell throughout the world, Apparatus and Products embodying the
Technology (the "Exclusive License").
2.2 In consideration of the grant of the Exclusive License, the Licensee
agrees to
a. pay to the Licensor a license fee of $200,000 US, within 90 days
following the date of execution of this Agreement;
b. make the development expenditures set out in Article 3; and
c. pay royalties set out in Article 4.
2.3 The Exclusive License will be for a term of 40 years unless sooner
terminated in accordance with the provisions of this Agreement or extended for a
further period by mutual written Agreement.
3. TECHNOLOGY DEVELOPMENT EXPENDITURES
-------------------------------------
3.1 Within 24 months following the date of execution of this Agreement, the
Licensee shall expend not less than $1,800,000 US to develop and commercialize
the Technology which expenditures shall include, without limiting the generality
of the foregoing, research and development expenditures, marketing expenditures,
patent and trademark filing expenditures and legal, accounting, travel and
promotional expenditures related to licenses or proposed licenses of the
Technology.
-4-
4. ROYALTIES
---------
4.1 The Licensee shall pay to the Licensor royalties on the following basis:
a. a Sales Royalty on the sale of Apparatus or Products by the Licensee
equal to 5% of Gross Profits; and
b. a License Royalty on revenues to the Licensee from sub-licensing equal
to 5% of Gross License Revenues.
4.2 The royalties shall be payable on a quarterly basis within 52 days of
the end of the Licensee's fiscal quarter provided that the royalties payable
with respect to the last quarter of each fiscal year will be payable within 107
days of the end of the Licensees fiscal year.
4.3 The royalties in respect of any fiscal year, following the fiscal year
ended June 30, 2004 shall not be less than $200,000 per year (the "Minimum
Royalty"). Any amount required to bring the total royalties paid in respect of
any fiscal year up to the amount of the Minimum Royalty shall be payable 107
days after the end of such fiscal year.
5. RIGHT TO SUB-LICENSE
----------------------
5.1 The Licensee shall have the right during the continuance of this
agreement to enter into agreements with other persons, firms or corporations,
giving and granting to them or any of them the right to manufacture, use and
sell Products embodying the Technology on such terms as the Licensee shall deem
proper, except that in no case shall such terms, covenants and conditions impose
a greater obligation on the Licensor than is provided by this Agreement.
5.2 The Licensee shall, prior to entering into any sub-license agreement,
advise the Licensee of its intention to enter into the sub-license agreement and
shall immediately after entering into any sub-license agreement provide a copy
of the agreement to the Licensor.
6. TITLE TO INTELLECTUAL PROPERTY / IMPROVEMENTS
--------------------------------------------------
6.1 The Technology and the Cool Can Patents and trademarks included in the
Technology shall remain the property of the Licensor subject to the Exclusive
License granted by this Agreement. The Licensor shall, upon demand, execute and
deliver to the Licensee such documents as may be deemed necessary by counsel for
the Licensee for filing in appropriate government offices to evidence the
granting of the Exclusive License.
6.2 In the event the Licensee shall make any Improvements said Improvements
and any applications and patents therefor shall likewise come under this
Agreement and be subject to all the terms and provisions thereof.
-5-
7. PATENT FILING
--------------
7.1 After the Licensor has provided all necessary information, drawings,
blueprints, and all other necessary data and has executed all necessary papers,
documents, and instruments, the Licensee shall cause to be prepared, filed, and
prosecuted at it own expense and with the least possible delay an application or
applications for letters patent of the United States on the patents pending set
out in Schedule "A" and, insofar as is reasonably possible, on all improvements
hereafter made by the Licensor, Licensee, or sub-licensees selected by the
Licensee, as well as corresponding applications for letters patent in such other
countries a may be deemed advisable by mutual consent, unless the Licensee is
advised by its patent counsel that such course is inadvisable, and the Licensor
does not make written demand upon the Licensee that it proceed with the
application for letter patent on such inventions. In connection with
applications for letters patent of the United States or foreign counties, the
Licensor shall, without further consideration, at the request of the Licensee,
do all acts necessary for obtaining, sustaining, reissuing, disclaiming, or
extending letters patent on such patent applications and shall give testimony
and provide evidence in cases of interference.
8. RIGHT OF FIRST REFUSAL
-------------------------
8.1 The Licensor shall not transfer, sell, convey or assign the Technology
or any component of it otherwise than in accordance with this Article.
8.2 Should the Licensor intend to dispose of all or any portion of the
Technology or its interest in it, the Licensor shall first give notice in
writing to the Licensee of such intention together with the terms and conditions
on which the Licensor intends to dispose of the Technology or its interest in
it.
8.3 If the Licensor receives any offer to dispose of all or any portion of
the Technology or its interest in it, which it intends to accept, it shall not
accept the same unless it has first offered to sell such interest to the
Licensee on the same terms and conditions as in the offer received and the same
has not been accepted by the Licensee.
8.4 Any communication of an intention to sell pursuant to sections 8.2 and
8.3 (the "Offer") shall be in writing and shall:
(a) set out in reasonable detail all of the terms and conditions of any
intended sale;
(b) if it is made pursuant to section 8.3, include a photocopy of the
Offer; and
(c) if it is made pursuant to section 8.3, clearly identify the offering
party and include such information as is known by the Licensor about
such offering party;
and such communication will be deemed to constitute an Offer by the Licensor to
the
-6-
Licensee to sell the Licensor's interest to the Licensee on the terms and
conditions set out in such Offer.
8.5 Any Offer made as contemplated in section 8.4 shall be open for
acceptance by the Licensee for a period of 30 days from the date of receipt of
the Offer by the Licensee.
8.6 If the Licensee accepts the Offer within the period provided for in
section 8.5, such acceptance shall constitute a binding agreement of purchase
and sale between the Licensor and the Licensee, for the Interest on the terms
and conditions set out in such Offer.
8.7 If the Licensee does not accept the Offer within the period provided for
in section 8.5, the Licensor may complete a sale and purchase of its Interest or
a portion thereof on terms and conditions no less favorable to the Licensor than
those set out in the Offer and, in the case of an Offer under section 8.3, only
to the party making the original offer to the Licensor and in any event such
sale and purchase shall be completed within nine months from the expiration of
the right of the Licensee to accept such Offer or the Licensor must again comply
with the provisions of this Article.
8.8 If the Licensee does accept the Offer within the period provided for in
section 8.5 but fails to close the transaction contemplated thereby within 90
days following receipt of such Offer, the Licensor may complete a sale and
purchase of its Interest or a portion thereof on any terms and conditions but in
any event such sale and purchase shall be completed within nine months from the
expiration of the right of the Licensee to accept such Offer or the Licensor
must again comply with the provisions of this article.
8.9 While any Offer is outstanding no other Offer may be made until the
first mentioned Offer is disposed of and any sale resulting therefrom completed
or abandoned in accordance with the provisions of this Article.
9. TECHNICAL ASSISTANCE
9.1 The Licensor shall, at the Licensee's request and expense, provide
technical assistance to the Licensee within fifteen (15) days of a request by
the Licensee to provide such assistance.
10. AUDIT
-----
10.1 The Licensee shall keep and maintain during the currency of this
Agreement such full and accurate records (including books of account) as are
necessary to determine the amounts payable hereunder and shall permit a member
of the American Institute of Public Accountants designated by the Licensor
during normal business hours and upon reasonable notice to have full access to
such records, to audit them, and to make copies of them solely for the purpose
of verifying the accuracy thereof. The Licensor shall bear all
-7-
costs of such examination unless such examination reveals a material
misstatement or mispayment of the amount owing by the Licensee to the Licensor
of 5% or more, in which event the Licensee shall bear all costs of such
examination, and the Licensee agrees to promptly reimburse Licensor for such
costs.
If any such inspection reveals a shortfall in the royalties payable to the
Licensor hereunder then the Licensee shall forthwith pay the full amount of such
shortfall, plus interest as herein provided, to Licensor.
10.2 For each of the Licensee's fiscal years occurring wholly or partly
during term of this Agreement, the Licensee shall within six months after the
end of each such fiscal year, deliver to the Licensor a copy of the Licensee
financial state-ments for such fiscal year.
11. INFRINGEMENT OF THIRD PARTY PATENTS OR TRADEMARKS
-------------------------------------------------------
11.1 If any complaint alleging infringement or violation of any Patent,
Trademark or other proprietary rights is made against the Licensor or its
customers, licensees or sub-licensees in respect of the manufacture, use or sale
of Products in any country, then the following procedure shall be adopted. The
Licensee shall promptly upon receipt of any such complaint notify the Licensor
of same, and shall throughout the pendency of such complaint keep the Licensor
fully informed of the actions and positions taken by the complain-ant and taken
and proposed to be taken by the Licensee. The Licensor may elect to participate
formally in any litigation involving the complaint, to the extent that the court
permits, but any additional expenses generated by such formal participation
shall be borne entirely by the Licensor (subject to the possibility of recovery
of some or all of such additional expenses from the complainant).
12. INFRINGEMENT OF PATENTS OR TRADEMARKS
-----------------------------------------
12.1 The Licensee shall keep a diligent watch in order to detect any
products which infringe, or possibly infringe the Patents or Trademarks. Upon
detection of any such infringement, or possible infringement, the Licensee shall
take appropriate legal action to restrain such infringement and/or recover
damages in respect thereof unless the Licensee is advised by its legal counsel
that the infringement, in the opinion of counsel, is immaterial and is not
necessary to protect the patent. The Licensor will, at no cost to the Licensee,
assist the Licensee in such action by testifying in any legal proceedings,
signing all necessary papers, and rendering any other assistance (except
financial assistance) which may, in the opinion of the Licensee or its counsel,
reasonably be required to prosecute such action to a successful conclusion. If
the Licensee is successful in obtaining any award of damages as a result of such
legal action, the Licensee shall be entitled to retain 95% of the proceeds from
such action and the Licensor shall be entitled to retain 5% of the proceeds. If
the Licensee does not undertake legal action to restrain such infringement
and/or recover damages in respect thereof, then the Licensor may undertake such
action at
-8-
the Licensor's expense and be entitled to retain the full amount of any proceeds
from such legal action.
13. DEFAULT
-------
13.1 If The Licensee is in default of any material obligation under this
Agreement, then the Licensor may give notice of default (a "Notice of Licensee
Default") to the Licensee. Upon receipt of a Notice of Licensee Default and
subject to the Licensee's right to arbitrate a dispute as to a default, The
Licensee will have a period in which to remedy the default (a "Licensee Remedy
Period"). The Licensee Remedy Period will equal thirty (30) days if the default
relates to non-payment of the License Fee or Royalties. The Licensee Remedy
Period will equal sixty (60) days in any other case.
13.2 If the Licensee disputes that it is in default, it may give a notice to
arbitrate to the Licensor (a "Notice to Arbitrate"). A Notice to Arbitrate must
be given within the applicable Licensee Remedy Period. If the Licensee delivers
a Notice to Arbitrate, then the dispute will be arbitrated in accordance with
the arbitration provisions of this Agreement and the Licensee Remedy Period will
be suspended until such time as the arbitrator reaches a decision. If the
arbitrator determines that the Licensee is not in default of its obligations
under this Agreement, then the Licensee will be deemed not to be in default of
its obligations under this Agreement. If the arbitrator determines that the
Licensee is in default of its obligations under this Agreement, then the
Licensee Remedy Period will be deemed to re-commence on the date of the decision
of the arbitrator and the Licensee will have either thirty (30) or sixty (60)
days, as applicable, to remedy the default.
13.3 If the Licensee fails to remedy a default within the applicable
Licensee Remedy Period, then the Exclusive License will terminate.
13.4 If the Licensor is in default of any material obligation under this
Agreement, then the Licensee may give notice of default (a "Notice of Licensor's
Default") to the Licensor. Upon receipt of a Notice of Licensor's Default and
subject to the Licensor's right to arbitrate a dispute as to a default, the
Licensor will have a period of sixty (60) days in which to remedy the default
(an "Licensor's Remedy Period").
13.5 If the Licensor disputes that it is in default, the Licensor may give a
notice to arbitrate to the Licensee (a "Notice to Arbitrate"). A Notice to
Arbitrate must be given within the applicable Licensor's Remedy Period. If the
Licensor delivers a Notice to Arbitrate, then the dispute will be arbitrated in
accordance with the arbitration provisions of this Agreement and the Licensor's
Remedy Period will be suspended until such time as the arbitrator reaches a
decision. If the arbitrator determines that the Licensor is not in default of
its obligations under this Agreement, then the Licensor will be deemed not to be
in default of their obligations under this Agreement. If the arbitrator
determines that the Licensor is in default of its obligations under this
Agreement, then the Licensor's Remedy Period will be deemed to commence on the
date of the decision of the arbitrator and the Licensor will have thirty (30) to
remedy the default.
-9-
13.6 If the Licensor fails to remedy a default within the applicable
Licensor's Remedy Period, then the obligation of the Licensee to pay royalties
or make Development Expenditures will be suspended until such time as the
default is remedied by the Licensor, provided that the Licensee will be entitled
to deduct any damages arising from the default from any future payment of
Royalties.
14. ARBITRATION OF DISPUTES
-------------------------
14.1 Arbitration of any dispute arising under this Agreement will be held in
Las Vegas, Nevada under the commercial rules of the American Arbitration
Association. Any matter presented for arbitration will be settled by
arbitration proceedings conducted by three arbitrators. Within fifteen (15)
days after a demand of arbitration is sent, the Licensor and the Licensee will
each select one arbitrator, and the two arbitrators so selected will select a
third arbitrator. The decision of the arbitrators as to any matter in dispute
under this Agreement will be binding and conclusive upon the parties. The
decision of the arbitrators will be rendered in writing and will include the
basis for the decision. Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction. The non-prevailing party to an
arbitration will pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association and the expenses,
including without limitation, attorneys' fees and costs, reasonably incurred by
the prevailing party to the arbitration.
15. INTEREST ON OVERDUE PAYMENTS
-------------------------------
15.1 Except as otherwise specified herein, interest shall accrue on all
overdue payments hereunder from the due date for such payment until actual
payment, such interest to be computed at an effective annual interest rate of
twelve percent (12%) per annum.
16. EQUAL PARTICIPATION IN DRAFTING
----------------------------------
16.1 The parties have equally participated in the drafting of the within
Agreement, each having had the opportunity to be independently represented by
counsel. The Licensor acknowledges that Cane & Company have acted solely for
the Licensee in connection with the preparation, negotiation and execution of
this Agreement and the Licensor has been advised to obtain the advice of
independent legal counsel in entering into this Agreement.
17. REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
---------------------------------------------------
17.1 The Licensor represents and warrants to The Licensee that:
-10-
(A) The execution and delivery of this Agreement by The Licensor has been
duly authorized. The person executing this Agreement on behalf of The
Licensor has full and proper authorization to execute same, and this
Agreement is the valid and binding agreement of The Licensor and is
enforceable against The Licensor in accordance with its terms.
(B) The Licensor warrants that the Cool Can Patents and the Trademarks are
genuine and valid, that it has sole title to them, and full right,
authority and power to enter into this Agreement, and that it shall
indemnify and save harmless the Licensee against any and all rights
and contracts that may be held or claimed by others.
18. REPRESENTATIONS AND WARRANTIES OF THE LICENSEE
18.1 The Licensee represents and warrants to The Licensor that:
(A) The execution and delivery of this Agreement by The Licensee has been
duly authorized. The person executing this Agreement on behalf of The
Licensee has full and proper authorization to execute same, and this
Agreement is the valid and binding agreement of The Licensee and is
enforceable against The Licensee in accordance with its terms.
19. MISCELLANEOUS PROVISIONS
19.1 Modification And Waiver. No cancellation, modification, amendment,
------------------------
deletion, addition or other change in this Agreement or any provision hereof, or
waiver of any right or remedy hereby provided, shall be effective for any
purpose unless specifically set forth in writing, signed by the party to be
bound thereby. No waiver of any right or remedy in respect of any occurrence or
event on one occasion shall be deemed a waiver of such right or remedy in
respect of such occurrence or event on any other occasion.
19.2 Governing Law. This Agreement shall be construed in accordance
--------------
with, and governed by, the laws of the State of Nevada.
19.3 Headings. The headings are inserted solely for convenience of
--------
reference and shall not be deemed to restrict or modify the meaning of the
Articles to which they pertain.
19.4 Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties with respect to all matters herein contained, and its
execution has not been induced by, nor do any of the parties hereto rely upon or
regard as material, any representations or writings whatsoever not incorporated
herein and made a part hereof. This Agreement shall not be amended, altered or
qualified except by an instrument in writing, signed by all parties
-11-
hereto and any amendments, alterations or qualifications hereof shall not be
binding upon or affect the rights of any party who has not given its consent in
writing.
19.5 Interpretation. The division of this Agreement into articles and
--------------
sections is for convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
19.6 Severability. In the event that any of the covenants herein
------------
contained shall be held unenforceable or declared invalid for any reason
whatsoever, such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining provisions of this Agreement and
such unenforceable or invalid portion shall be severable from the remainder of
this Agreement.
19.7 Force Majeure. In the event of an inability or failure by any party
--------------
by reason of any fire, explosion, war, riot, strike, walk-out, labour
controversy, flood, shortage of water, power, labour transportation facilities
or necessary materials or supplies, default or power failure of carriers,
breakdown in or the loss of production or anticipated production from plant or
equipment, act of God or public enemy, any law, act or order of any court,
board, government or other authority of competent jurisdiction, or any other
direct cause (whether or not of the same character as the foregoing) beyond the
reasonable control of the party, then the party shall not be liable to the other
party and will not be deemed to be in default during the period and to the
extent of such inability or failure.
19.8 Notices. Any notice required or permitted to be given hereunder
-------
shall be in writing and shall be effectively given if:
(A) Delivered personally;
(B) Sent by prepaid courier service or mail;
(C) Sent prepaid by telecopiers, fax, telex or other similar means of
electronic communication; or
(D) Addressed to the relevant Party at the address/fax number shown for
that Party at the beginning of this Agreement.
Any notice so given shall be deemed conclusively to have been given and received
when so personally delivered or, if sent by telex, fax, telecopier or other
electronic communication, on the first business day thereafter, or if sent by
mail on the third business day thereafter. Any party may change any particulars
of its address/fax number for notice by notice to the others in the manner above
described.
19.9 Time of the Essence. Time shall be of the essence of this Agreement.
---------------------
-12-
19.10 Further Assurances. The parties agree to sign such other
-------------------
instruments, cause such meetings to be held, resolutions passed and by-laws
enacted, exercise their vote and influence, do and perform and cause to be done
and performed such further and other acts and things as may be necessary or
desirable in order to give full effect to this Agreement.
19.11 Successors and Assigns. This Agreement shall enure to the benefit of
----------------------
and be binding upon the parties hereto and their respective successors and
permitted assigns.
19.12 Relationship. The relationship between the Licensor and the Licensee
------------
is, and during the term of this Agreement shall be that of independent
contractors. No party shall be deemed a legal representative or agent of the
other party for any purpose and shall have no right or authority to assume or
create in writing or otherwise, any obligation of any kind, express or implied,
with respect to any commitments, in the name of the other party or on behalf of
the other party, unless given with the express written authority of such party.
Furthermore, the relationship among the Licensor and the Licensee hereunder
shall not constitute a joint venture, general partnership or similar
arrangement.
19.13 Counterparts. This agreement may be executed in one or more
------------
counter-parts, each of which so executed shall constitute an original and all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement and as of the
date and year first above written.
COOL CAN TECHNOLOGIES, INC. BALSAM VENTURES, INC.
by its authorized signatory by its authorized signatory:
/s/ Xxxxx Xxxxxx /s/ Xxxxxx Xxxxx
--------------------------------- ----------------------------------
Signature of Authorized Signatory Signature of Authorized Signatory
Xxxxx Xxxxxx /s/ Xxxxxx Xxxxx
--------------------------------- ----------------------------------
Name of Authorized Signatory Name of Authorized Signatory
PRESIDENT PRESIDENT
--------------------------------- ----------------------------------
Position of Authorized Signatory Position of Authorized Signatory
SCHEDULE A
----------
to that Exclusive License Agreement dated as of June 5, 2002
PATENTS AND PATENTS PENDING
1. Patent No. 5,609,038 - "Self-chilling beverage container and parts
therefor".
2. Patent Pending Application No. 60/244,942 for the self-chilling pet bottle.
SCHEDULE B
----------
to that Exclusive License Agreement dated as of June 5, 2002
TRADEMARKS AND TRADENAMES
1. Instacool
2. InstaKool
3. Cool Can
4. Cool Can Technologies
5. Kool Kan
6. Kool Can
