Sublicense Agreement - EarthShell Container Corp. and Genpak Corp.
GENPAK-ECC
SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT (the "Agreement") is made upon and shall be
effective as of November 9, 1994, by and between EARTHSHELL CONTAINER
CORPORATION, a Delaware corporation ("ECC"), and GENPAK CORPORATION, a
corporation formed and existing under the laws of the State of New York
("Sublicensee").
RECITALS:
A. ECC has the exclusive right to utilize certain Technology (as
defined herein) to manufacture, use and sell, within a certain Field of Use
(as defined herein), certain containers made from inorganically filled
moldable composites and compounds for packaging, storing, portioning,
dispensing, carrying, presenting, serving and consuming food or beverages.
B. ECC has the right and authority to grant sublicenses which will permit
selected entities to utilize such Technology in order to manufacture, use and
sell certain food or beverage containers made from inorganically filled moldable
composites and compounds.
C., Sublicensee desires to obtain from ECC a sublicense to utilize the
Technology to manufacture, use and sell certain designated food or beverage
containers within a designated geographical area.
D. ECC is willing to grant a sublicense to Sublicensee upon the terms and
conditions set forth herein.
EXHIBIT 10.15
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AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals, the
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties covenant and agree as follows:
1. DEFINITIONS. The capitalized terms used in this Agreement shall have
the meanings set forth below:
(a) The term "Affiliate" shall mean, with respect to any given
entity, any other entity directly or indirectly controlling, controlled by, or
under direct or indirect common control with such given entity. For purposes of
this definition, the ownership of a twenty-five percent (25%) or greater equity
interest in an entity shall be deemed control of such entity, and the ownership
of less than a twenty-five percent (25%) equity interest in an entity (absent
any other exercise of control) shall be deemed not to be control of such entity.
(b) The term "Core Technology" shall mean all of the confidential,
secret, or proprietary technology involving inorganically filled compositions
which are described or claimed in (i) any of the patents or patent applications
listed in Exhibit "A" hereto, including without limitation, any continuations,
divisionals or continuations-in-part, reissues and extensions thereto, and any
patents issued therefrom, and (ii) any future patent applications under the
Patent Cooperation Treaty, any future European Patent applications, and/or any
future national patent applications in or for any country that are based on any
of the applications listed in Section B or D of Exhibit "A" hereto, and any
patents issued therefrom.
(c) The term "Design Improvement" shall mean any improvement to the
physical shape, ornamental design or configuration of Products.
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(d) The term "Field of Use" shall mean (i) the use and sale of
Products in the food service and restaurant industry, (ii) the use and sale
of Products in other retail establishments selling Products (E.G., grocery
stores, convenience stores, food warehouses, and the like), but only with
respect to Products that have been introduced into the food service and
restaurant industry by a customer of an ECC sublicensee (including any
Affiliates) that operates retail outlets in the food service and restaurant
industry in at least six locations, (iii) the incidental use and sale in any
manner of those Products which are manufactured by Sublicensee hereunder
where the predominant use is within the food service and restaurant industry,
and (iv) the sale of Products to distributors and wholesalers for resale and
use in retail outlets in the food service and restaurant industry and,
subject to cause (ii) above, in retail establishments. As used in this
subparagraph, the term "food service and restaurant industry" is intended to
include any facility (whether commercial, nonprofit, governmental, or other),
including vending machines wherever located, where food or beverages are (x)
sold for consumption on the premises or (y) packaged for take-out in single
or multiple portions intended for immediate or same day consumption off the
premises without substantial additional preparation. By way of example, the
term "food service and restaurant industry" includes such facilities as
eating establishments, diners, dining rooms, dine-in restaurants, cafes,
cafeterias, including institutional cafeterias, coffee shops, delicatessens,
quick service restaurants, take out restaurants, snack bars, cocktail lounges,
bars, saloons, night clubs, cabarets, sports arenas and the like, and their
distributors, brokers and wholesalers, but does not include other food
industry facilities outside of the food service and restaurant industry (such
as packaging for pre-packaged foods in food processing facilities, grocery
stores, and food distributors, brokers and wholesalers) except as
specifically provided in clause (ii) of this subparagraph. As used in this
subparagraph, the term "incidental use and sale" shall encompass Products
designed for and predominantly used in the
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food service and restaurant industry but which, beyond the control or reasonable
ability of Sublicensee to properly account for their end-use, ultimately are
used or sold outside of the Field of Use.
(e) The term "Moldable Compound Technology" shall mean all of the
confidential, secret, or proprietary technology involving inorganically filled
composites, including moldable compounds (both foam and non-foam applications),
articles manufactured from inorganically filled composites, the compositions and
uses of such inorganically filled composites or articles made therefrom, and
apparatus and methods for manufacturing same, which are described or claimed in
(i) any of the patents or patent applications listed in Exhibit "B" hereto,
including without limitation, any continuations, divisionals or continuations-
in-part, reissues and extensions thereto, any patents issued therefrom, and (ii)
any future patent applications under the Patent Cooperation Treaty, any future
European Patent applications, and/or any future national patent applications in
or for any country that are based on any of the applications listed in Section B
or D of Exhibit "B" hereto, and any patents issued therefrom.
(f) The term "Net Sales Price" shall mean the gross invoice price
charged by Sublicensee, or its Affiliate as applicable, in the sale of a Product
to a non-Affiliate reduced by (i) any credit allowed by Sublicensee for the
return of the Product; (ii) trade, quantity and cash discounts allowed by
Sublicensee; (iii) excise, value added and sales taxes actually paid by
Sublicensee on the Product; and (iv) freight charges actually paid by
Sublicensee for the shipment and delivery of the Product. In the case of non-
cash consideration, "Net Sales Price" shall be the fair market value of all non-
cash consideration actually received by Sublicensee or its Affiliate for such
Product. The "Net Sales Price" of Products set aside for Sublicensee's own use,
or sold or transferred to an Affiliate or set aside for the Affiliate's own use,
shall be deemed to be the price then charged
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to unrelated parties in arms-length transactions for such Products in similar
quantities and under similar terms of sale.
(g) The term "Products" shall mean only those articles described
in Exhibit "C" hereto made from inorganically filled moldable composites or
compounds that incorporate or utilize the Technology in whole or in part.
(h) The term "Product Improvement" shall mean any improvement
or change, irrespective of whence derived, relating in whole or in part to
the composition, formulation or use of a Product or the Technology, including
any improvement, development or change relating to a Product by process
(I.E., any change in the processing of a Product which yields a materially
different Product), such as a change in chemical composition, change in
physical characteristics or properties brought about by substitution or
replacement of elements or components, change in method of formulation,
change in rheology, etc. The term "Product Improvement" shall not include
improvements to the physical shape, ornamental design, or configuration of
Products (hereinafter "Design Improvements").
(i) The term "Process Improvement" shall mean any improvement,
development, or change relating in whole or part to the Technology or a Product
which involves an apparatus, machine or process so long as such improvement,
development or change does not materially alter the finished Product, but rather
yields a more efficient production of a Product. The term "Process Improvement"
shall also include any development, refinement, improvement or change relating
in whole or in part to the application of materials, chemical compositions,
coatings or other substances, including the processes of application, to a
Product after the finish trim and forming or conversion of the Product is
completed to the extent that such development, refinement, improvement or change
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is not already known by ECC (unless ECC's prior knowledge is pursuant to a
confidentiality agreement with Sublicensee) or in the public domain.
(j) The term "Technology" shall refer collectively to the Core
Technology, the Moldable Compound Technology and the Trade Secrets.
(k) The term "Territory" shall mean that certain geographic
territory described in Exhibit "F" hereto. Upon written notice to ECC that
Sublicensee services, or intends to expand its business to service,
geographic areas outside of the Territory and that Sublicensee desires to
commercialize Products in such additional geographic areas, which notice
shall include evidence of such intent reasonably satisfactory to ECC, ECC
shall cooperate in amending this Agreement to include such additional
geographic areas by amending Exhibit "F" hereto; provided, however, that the
parties must first reach an agreement as to the royalty rate that shall apply
to such additional geographic area and provided further that ECC shall have
no obligation to grant rights to Sublicensee in any country in which (i) ECC
has already granted to a third party an exclusive license of the Technology
or (ii) it is necessary or desirable for ECC to enter into an exclusive
license with a citizen of the country at issue due to monetary restrictions
or other legal, tax or business considerations under the local laws of such
country.
(l) The term "Trade Secrets" shall mean the proprietary information
of ECC that is related to the Technology and which is described in Exhibit "D"
hereto or which is delivered to Sublicensee by ECC and marked "Confidential",
but only to the extent that such proprietary information is directly utilized in
the manufacture, use, or sale of Products.
2. THE SUBLICENSE.
(a) Subject to the terms and conditions set forth in this Agreement,
ECC hereby grants to Sublicensee a non-exclusive, royalty-bearing sublicense
(the "Sublicense") to use the
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Technology to make, use, sell and otherwise commercialize the Products solely
within the Territory and solely within the Field of Use.
(b) Sublicensee shall not have the right to further sublicense,
assign or transfer the Technology, or any interest in or rights under the
Sublicense except (i) to an Affiliate, or (ii) in the case of the sale of
substantially all of Sublicensee's assets that are dedicated to the Technology,
with the prior written consent of ECC, which consent will not unreasonably be
withheld. Any attempted unauthorized sublicense or transfer shall be void and
shall constitute a breach of a material obligation of Sublicensee under this
Agreement.
(c) ECC is free to grant additional sublicenses to other third
parties to utilize the Technology to make, use and sell Products in the Field of
Use and in the Territory.
(d) Nothing in this Agreement shall be construed to
constitute a grant by ECC to Sublicensee of rights broader than that which
ECC is entitled to grant under its license from ECC's licensor of the
Technology (hereinafter referred to as "Licensor"). If and to the extent it
is determined that Sublicensee is selling, or desires to sell, Products
outside of the Field of Use (as defined in the master license agreement
between ECC and its Licensor) granted to ECC by its Licensor, then it is
understood and agreed that Sublicensee must obtain an appropriate license
from, and pay royalties directly to, ECC's Licensor.
3. ROYALTIES
(a) As consideration for the grant of the Sublicense,
Sublicensee shall pay to ECC a royalty (the "Royalty") of twenty-two percent
(22%) of the Net Sales Price for each Product sold by Sublicensee during the
term of this Agreement.
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(b) Sublicensee shall be deemed to have "sold" a Product, and
ECC shall be deemed to have earned the Royalty, upon the earliest date that
Sublicensee actually ships, delivers, or invoices the Product to any person,
firm or entity other than an Affiliate of Sublicensee, or upon the earliest
date that Sublicensee sets such Product aside for Sublicensee's own use. For
Products transferred to an Affiliate, Sublicensee shall be deemed to have
"sold" the Product, and ECC shall be deemed to have earned the Royalty, upon
the earliest date that the Affiliate to whom the Product was transferred
either (i) sets aside such Product for an Affiliate's own use, or (ii) ships,
delivers or invoices such Product to any person, firm or entity which is not
an Affiliate of Sublicensee.
(c) Notwithstanding subparagraph (a) of this paragraph, during
the first three years of the term of this Agreement ECC shall be sensitive to
Sublicensee's ability to produce Products profitably under this Agreement. If,
during the first three years of the term of this Agreement, Sublicensee
demonstrates to ECC's reasonable satisfaction that a material change in
circumstance has occurred affecting Sublicensee's ability to produce Products
profitably under this Agreement, ECC shall cooperate with Sublicensee in
negotiating such adjustments as may be commercially reasonable under the
circumstances. If the parties are unable, in good faith, to reach an agreement
as to a mutually acceptable adjustment, then the matter may be referred to
arbitration under paragraph 32 hereof. By way of example, a "material change in
circumstance" may include a significant and unexpected increase in the cost of
one or more of the raw materials required for the manufacture of the Products.
(d) Between the third and fourth anniversaries of the
effective date this Agreement, the parties shall jointly review and evaluate
the continued benefit of the advertising allowance set forth in subparagraph
20(b) hereof and the economic impact thereof and shall cooperate in
negotiating such adjustments as are commercially reasonable under the
circumstances.
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If the parties are unable to agree as to the need for, or the nature or amount
of, such an adjustment, then the matter may be referred to arbitration under
paragraph 32 hereof.
4. PAYMENT OF THE ROYALTY.
(a) Within sixty (60) days after the fina1
day of each calendar month
(or fiscal month if Sublicensee is reporting on a fiscal basis) which occurs
during the term of this Agreement (a "Month"), Sublicensee shall pay to ECC the
Royalty earned on all Products sold by Sublicensee during such Month. Each
Royalty payment shall be accompanied by a written report (the "Royalty Report")
prepared by Sublicensee and certified as accurate by the appropriate financial
officer of Sublicensee. Each Royalty Report shall set forth, for the Month
covered by the Royalty Report, (i) the number of each of the Products sold by
the Sublicensee, (ii) the Net Sale for each of such Products, and (iii)
reductions to the Net Sales Price for applicable returns, discounts, freight
charges, bad debts/uncollected accounts and taxes with respect to the Products.
(b) The Royalty payment shall accrue interest from the date payment
should have been made until actual payment is made at the per annum base rate on
corporate loans published as the "Prime Rate" in the WALL STREET JOURNAL on the
next business day following the day the Royalty payment was due.
(c) Failure to make payment when due of any Royalty hereunder is a
breach of a material obligation of Sublicensee and may result in the termination
of this Agreement.
5. SUBLICENSEE COVENANTS.
Sublicensee hereby covenants:
(a) not to utilize the Technology except strictly in accordance with
the terms and conditions set forth in this Agreement;
(b) to utilize the Technology solely in connection with the
manufacture, marketing, distribution, use and sale of the
Products;
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(c) not to utilize the Technology for any purpose other than the
manufacture, marketing, distribution, use and sale of the
Products;
(d) not to manufacture, market, distribute, use and sell Products
except in strict accordance with the terms and conditions of this
Agreement;
(e) to manufacture, market, distribute, use and sell Products solely
within the Territory;
(f) not to market, distribute or sell any Product to any person, firm
or entity outside the Territory, or to any person, firm or entity
within the Territory if Sublicensee knows or has reason to
believe that such person, firm or entity intends to make or sell
the Product in question outside the Territory;
(g) to market, distribute, use and sell Products solely within the
Field of Use; and
(h) not to market, distribute, use or sell Products outside of the
Field of Use.
Any breach by Sublicensee of any one or more of the foregoing covenants shall
constitute a breach by Sublicensee of a material obligation under this
Agreement.
6. RIGHT TO AUDIT.
(a) Sublicensee shall keep and maintain complete and accurate
records concerning the manufacture and sale of the Products. ECC or its
designee (the "Representative") shall have the right, at ECC's expense, to
periodically review those records and operations of Sublicensee which deal
with the design, manufacture, shipment or sale of the Products or with
Product Improvements or Process Improvements developed by Sublicensee. Such
reviews may take place only during the normal business hours of Sublicensee
and only upon written notice to Sublicensee given at least three (3) business
days prior to such review. The Representative conducting such review shall
be required to execute a confidentiality agreement pursuant to which the
Representative shall agree that it will not disclose or use the information
obtained pursuant to such review to or for the benefit of any person or
entity except ECC unless required to do so in connection with the resolution
of any dispute concerning any payment required by this Agreement.
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(b) ECC shall give written notice to Sublicensee of any dispute as to
proper payment of any Royalty due hereunder. If the parties are unable to
resolve any disputes raised by ECC in the notice to Sublicensee within (30) days
from the date of such notice, then the dispute shall be submitted to arbitration
or mediation for resolution as provided under this Agreement.
7. IMPROVEMENTS TO THE TECHNOLOGY.
(a) PRODUCT IMPROVEMENTS. If, while the Sublicense remains in
effect, Sublicensee should develop any Product Improvement, Sublicensee shall
notify ECC of such Product Improvement within a reasonable time of, and in no
event more than ninety (90) days after, its development and shall provide ECC
with access to all information concerning such Product Improvement as ECC
shall reasonably request; provided, however, that all such information shall
be confidential and shall be subject to all restrictions on disclosure as set
forth in this Agreement. Sublicensee shall assign to ECC all rights, title
and interest in the Product Improvement for an assignment fee of $1,000.00,
and ECC shall grant back to Sublicensee the non-exclusive right to utilize
the Product Improvement within the Field of Use and within the Territory as
if such Product Improvement were originally within the scope of the
Sublicense. There shall be no royalty charged to Sublicensee for the right
to utilize the Product Improvement. For a period of (i) one year from the
date of commercialization of such Product Improvement, or (ii) two years from
the date of the development of such Product Improvement, whichever is
shorter, ECC shall not grant any right to utilize the Product Improvement
within the Field of Use to any third party within the Territory. The failure
of Sublicensee to disclose any such Product Improvement to ECC within the
time period set forth above shall constitute a material breach of this
Agreement.
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(b) PROCESS IMPROVEMENTS. If, while the Sublicense remains in
effect, Sublicensee should develop any Process Improvement, then Sublicensee
shall notify ECC of such Process Improvement within a reasonable time of, and
in no event more than ninety (90) days after, its development and shall
provide ECC with access to all information concerning such improvements as
ECC shall reasonably request; provided, however, that all such information
shall be confidential and shall be subject to all restrictions on disclosure
as set forth in this Agreement. For a single lump sum payment of $1,000.00
by ECC to Sublicensee, Sublicensee shall grant to ECC an exclusive, fully
paid-up license (including the right to further sublicense and/or assign its
rights to ECC's Licensor) to utilize the Process Improvement in connection
with the Product and/or the Technology (i) outside of the Territory and (ii)
within the Territory, outside of the Field of Use. The license granted to
ECC under this subparagraph 7(b) shall be irrevocable and shall survive
termination or expiration of this Agreement for any reason whatsoever. The
failure of Sublicensee to disclose any such Process Improvement to ECC within
the time period set forth above shall constitute a material breach of this
Agreement.
(c) PATENT RIGHTS FOR PRODUCT IMPROVEMENTS. ECC shall have the right
to seek patent protection for any Product Improvement at its own cost and
expense. Sublicensee shall provide to ECC or its assignee with such assistance
as may be reasonably requested, from time to time, in connection with such
efforts, including the execution of any documents necessary to obtain and
maintain such patent protection; provided, however, that ECC or its assignee
will reimburse Sublicensee for any out-of-pocket fees and expenses reasonably
incurred by Sublicensee in providing such assistance.
(d) PATENT RIGHTS FOR PROCESS IMPROVEMENTS. Sublicensee shall have
the right to seek patent protection for any Process Improvement at its own cost
and expense. ECC shall provide
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Sublicensee or its assignee with such assistance as may be reasonably
requested, from time to time, in connection with such efforts, including the
execution of any documents necessary to obtain and maintain such patent
protection; provided, however, that Sublicensee or its assignee will
reimburse ECC for any out-of-pocket expenses reasonably incurred by ECC in
providing such assistance. Sublicensee shall keep ECC informed of the status
of the prosecution of each patent application that Sublicensee elects to
pursue and shall consult with ECC on all material aspects of such
application, although all final decisions in regard to a patent application
shall remain within the sole discretion of Sublicensee. In the event
Sublicensee elects not to seek patent protection for a Process Improvement,
Sublicensee shall promptly notify ECC in writing, and ECC shall have the
option, for a period of ninety (90) days after its receipt of such written
notice, to acquire by assignment from Sublicensee all rights, title and
interests in and to the Process Improvement in question, including the right
to seek patent protection in ECC's name or its designee, in consideration of
a single lump-sum payment of One Thousand Dollars ($1,000.00). In the event
ECC exercises the option provided for in the preceding sentence, Sublicensee
shall provide to ECC or its designee such assistance as may reasonably be
requested, from time to time, in connection with ECC's or its designee's
efforts to obtain protection of the Process Improvement in question,
including the execution of any documents necessary to obtain and maintain
such patent protection; provided, however, that ECC or its assignee will
reimburse Sublicensee for any out-of-pocket fees and expenses reasonably
incurred by Sublicensee in providing such assistance.
(e) PROPRIETARY RIGHTS OF SUBLICENSEE. ECC acknowledges and agrees
that Sublicensee presently owns certain patents, trade secrets and other
proprietary information relating to the Products and/or Technology ("Sublicensee
Proprietary Property") which is more fully set forth on Exhibit "E" attached
herein and incorporated herein. The Sublicensee Proprietary Property is and
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shall remain the exclusive property of Sublicensee. All Sublicensee Proprietary
Property shall be subject to the conditions and obligations of confidentiality
which apply to all confidential and proprietary information of the respective
parties hereto as required under this Agreement. Except for any developments,
improvements or modifications to the Sublicensee Proprietary Property which are
Product or Process Improvements which are otherwise governed by this Agreement,
ECC shall not acquire any right, title, interest or license in any of the
Sublicensee Proprietary Property as a result of this Agreement, or as a result
of any dealings between the parties pursuant to this Agreement. Any proprietary
information or technology relating to the Products and/or the Technology and not
set forth in Exhibit "E" hereto shall be subject to the terms and conditions of
this Agreement governing Product Improvements and Process Improvements unless
such proprietary information or technology is in the public domain or in the
possession of ECC.
(f) IMPROVEMENTS TO PRODUCT CONFIGURATION. Sublicensee shall own the
rights to any Design Improvements that may be developed by Sublicensee during
the term of this Agreement.
(g) ECC DEVELOPED AND JOINTLY DEVELOPED PRODUCT, PROCESS AND DESIGN
IMPROVEMENTS. Any Product Improvements, Process Improvements or Design
Improvements developed by ECC during the term of this Agreement (hereinafter
referred to as "ECC Improvements") and any Product Improvements, Process
Improvements or Design Improvements developed jointly by ECC and Sublicensee
during the term of this Agreement (hereinafter referred to as "Jointly Developed
Improvements") shall be owned by ECC and, except as otherwise provided in this
Agreement, may be disclosed and/or licensed by ECC to third parties at ECC's
discretion. For a period of (i) one year from the date of commercialization of
any Jointly Developed Improvement, or (ii) two years from the date of the
development of the Jointly Developed Improvement, whichever is shorter, ECC
shall not grant any right to utilize the Jointly Developed
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Improvement within the Field of Use to any third party within the Territory.
Any Jointly Developed Improvements shall be deemed to be licensed to Sublicensee
under this Agreement, shall be deemed to be included within the definition of
Technology, and shall be subject to all of the terms, conditions and
restrictions of this Agreement applicable to the Technology.
(h) DISCLOSURE OF PRODUCT IMPROVEMENTS AND PROCESS IMPROVEMENTS.
ECC shall promptly disclose to Sublicensee (i) all Product Improvements and all
Process Improvements that may be developed solely by ECC during the term of this
Agreement and (ii) unless contractually restricted from doing so by any
agreement ECC may have with a third party, all Product Improvements and all
Process Improvements that may be developed jointly by ECC and a third party or
otherwise acquired by ECC or licensed to ECC (along with the right to sublicense
such improvements) during the term of this Agreement. All such Product
Improvements and Process Improvements that may be disclosed by ECC to
Sublicensee pursuant to this subparagraph shall be deemed to be licensed to
Sublicensee under this Agreement, shall be deemed to be included within the
definition of Technology, and shall be subject to all of the terms, conditions
and restrictions of this Agreement applicable to the Technology.
8. INFRINGEMENT.
(a) ECC and Sublicensee will promptly notify (within 30 days) one
another of any apparent infringement of the Technology (whether or not such
apparent infringement is within the Field of Use) or of the Trademarks which
comes to their attention while the Sublicense remains in effect, and if in ECC's
opinion the apparent infringement has substantial and adverse consequences, ECC
shall, at its sole cost and expense, bring suit to enjoin such infringement and
to recover damages therefor. In any action brought by ECC pursuant to this
subparagraph, ECC shall select and control counsel for the prosecution of such
suit. Sublicensee shall (i) have the right to
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receive, from time to time, full and complete information from ECC concerning
the status of such suit, (ii) have the right, at Sublicensee's own expense,
to be represented therein by counsel in an advisory capacity, and (iii)
cooperate fully with ECC and provide whatever assistance is reasonably
requested by ECC in connection with such suit, including the preparation and
signing of documents. If ECC decides not to bring suit to enjoin an alleged
infringement either because it is deemed inadvisable or DE MINIMIS, no such
action will be required by ECC; however, ECC's Licensor shall, at its own
cost and expense, have the right, but not the obligation, to bring suit to
enjoin such infringement and to recover damages therefore. In the event
ECC's Licensor elects to bring suit, Sublicensee's rights and obligations
hereunder shall be the same as if ECC had undertaken to enjoin such
infringement. In the event the action taken by ECC or its Licensor is not
satisfactory to Sublicensee, then Sublicensee shall have the right, at its
sole cost, to take whatever action it deems appropriate in its own name
against an alleged infringer. Additionally, ECC and its Licensor shall (i)
have the right to consult with Sublicensee prior to Sublicensee pursuing
legal action against a potential infringer and thereafter shall have the
right to receive, from time to time, full and complete information from
Sublicensee concerning any actions Sublicensee has taken against an allege
infringer, and (ii) have the right, at ECC's or its Licensor's, as applicable,
own expense, to be represented by counsel in an advisory capacity in any
legal proceedings initiated by Sublicensee.
(b) ECC and Sublicensee will promptly notify (within 30 days) one
another of any apparent infringement of any Sublicensee owned Process
Improvement (whether or not such apparent infringement is within the Field of
Use) which comes to their attention and, if in Sublicensee's opinion, the
apparent infringement has substantial and adverse consequences, Sublicensee
shall, at its sole cost and expense, bring suit to enjoin such infringement and
to recover damages therefor. In any action brought by Sublicensee pursuant to
this paragraph, Sublicensee
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shall select and control counsel for the prosecution of such suit. ECC shall
(i) have the right to receive, from time to time, full and complete information
from Sublicensee concerning the status of such suit, (ii) have the right, at
ECC's own expense, to be represented therein by counsel in an advisory capacity,
and (iii) cooperate fully with Sublicensee and provide whatever assistance is
reasonably requested by Sublicensee in connection with such suit, including the
preparation and signing of documents. If Sublicensee decides not to bring suit
to enjoin an alleged infringement of Sublicensee owned Process Improvements
either because it is deemed inadvisable or DE MINIMIS, no such action will be
required by Sublicensee. In the event the action taken by Sublicensee is not
satisfactory to ECC, then ECC shall have the right but not the obligation, at
its sole cost, to take whatever action it deems appropriate in its own name
against an alleged infringer. Additionally, Sublicensee shall (i) have the
right to consult with ECC prior to ECC pursuing legal action against a potential
infringer and thereafter shall have the right to receive, from time to time,
full and complete information from ECC concerning any actions ECC has taken
against an alleged infringer, and (ii) have the right, at Sublicensee's own
expense, to be represented by counsel in an advisory capacity in any legal
proceedings initiated by ECC with respect to infringement of Sublicensee owned
Process Improvements.
(c) The parties shall notify (within 30 days) each other of any claim
by any person that the manufacture or use of the Technology with respect to any
Product by Sublicensee in the Field of Use infringes the rights of such person
or of the commencement of any lawsuit against ECC, Sublicensee, or any customers
of the foregoing, as the result of such alleged infringement. ECC may assume
and control the defense of any such lawsuit, at its sole cost and expense,
irrespective of whether ECC is named as a defendant such litigation.
Sublicensee will assist ECC in the defense of such suit or action by providing
information and fact witnesses as needed; provided, however, that
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ECC shall reimburse Sublicensee for all out-of-pocket costs, excluding
attorney fees except as pre-approved by ECC, incurred by Sublicensee in
connection with such action by allowing a credit or offset against the
Royalty due hereunder. Sublicensee shall have the right to be represented in
such suit or action only in an advisory capacity. If ECC decides not to
assume the defense of infringement lawsuit described in the subparagraph,
then ECC's Licensor shall have the right, but not the obligation, to do so.
In the event ECC's Licensor elects to assume the defense, Sublicensee's
obligations shall be the same as if ECC were assuming the defense of such
litigation. If ECC's Licensor does not assume defense of such litigation,
then Sublicensee shall have the right, but not the obligation, at
Sublicensee's own cost and expense, to assume the defense of such lawsuit
utilizing legal counsel of its choice.
(d) If, as the result of any lawsuit referred to in the preceding
subparagraph, Sublicensee is required by final court order from which no appeal
can be taken (or by a court order which ECC's legal counsel believes has no
reasonable likelihood of success for modification on appeal) to obtain a license
under any third party's patent not licensed hereunder in order to continue with
Sublicensee's activities as contemplated by this Agreement, and to pay a royalty
under such license, and the infringement of such patent cannot reasonably be
avoided by Sublicensee, the future payment of the Royalty shall thereafter be
reduced by an amount equal to 100% of any fee or royalty payable by Sublicensee
under such additional license, but in no event shall the Royalty be reduced to
an amount less than zero, as long as the infringement was due to the Technology
licensed hereunder. In addition, if Sublicensee settles and infringement action
referred to in the foregoing subparagraph, after obtaining the prior written
consent of ECC (which shall not be unreasonably withheld), and pursuant to such
settlement Sublicensee obtains a license under any patent not licensed
hereunder, to make, use or sell the Products in any manner contemplated by this
Agreement,
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and agrees to pay a royalty under such license, and the infringement of such
patent cannot reasonably be avoided by Sublicensee, the Royalty shall thereafter
be reduced by an amount equal to 100% of the sum payable by Sublicensee pursuant
to such settlement, but in no event shall the Royalty be reduced to an amount
less than zero, as long as the settlement was for claims of infringement due to
the Technology licensed hereunder.
9. ADDITIONAL DUTIES OF THE SUBLICENSEE. In addition to, and not in
limitation of, the other duties and obligations of the Sublicensee, as set forth
in this Agreement, Sublicensee shall:
(a) Use all commercially reasonable efforts to diligently
exploit the Sublicense by developing a commercial manufacturing capacity for the
Products and by actively manufacturing, marketing, advertising and selling the
Products within the Territory.
(b) Continue to make all required payments under this
Agreement to ECC during any challenge of the validity of any of the patents
(or claims thereof) issued in connection with the Technology. In the event
Sublicensee terminates such payments based upon or in connection with such a
challenge, ECC may at its option terminate this Agreement upon written notice
to Sublicensee. Notwithstanding the foregoing, if ECC or its Licensor does
not assume the defense of any litigation set forth in subparagraph 8(c) and
Sublicensee does assume the defense of such litigation, all Royalty payments
due during the pendency of such litigation shall be paid into a mutually
agreeable escrow, and such Royalty payments shall be held in escrow until the
litigation becomes final, from which no further appeal can be taken. Once
the litigation is final, the Royalty payments held in escrow shall be paid to
ECC less an amount equal to any damage or loss Sublicensee sustained as a
result of the litigation, excluding attorney fees and costs, which amounts
shall be paid to Sublicensee.
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(c) If Sublicensee is a publicly traded corporation or is
otherwise required to publicly disseminate its financial statements, Sublicensee
shall provide ECC with annual financial reports of Sublicensee which are
published and detail Sublicensee's annual earnings and statement of net worth
for the preceding calendar or fiscal year. If Sublicensee is required to file
financial reports with the S.E.C., then Sublicensee may provide ECC with copies
of those financial reports required to be filed with the S.E.C., in lieu of the
foregoing.
(d) Forty-five (45) days after the final day of each of
Sublicensee's calendar or fiscal quarter end (the "Quarter"), Sublicensee shall
deliver to ECC a written report (the "Development Report"), which shall set
forth, in reasonable detail, the scope and results of all research and
development activities relating to the Technology and/or Products undertaken by
Sublicensee during the Quarter which report shall also set forth, in reasonable
detail, a description of all marketing activities for the Products undertaken
during the Quarter by Sublicensee. The Development Reports shall be certified
as correct and accurate by an appropriate officer of Sublicensee.
10. REPRESENTATIONS AND WARRANTIES OF ECC. ECC hereby represent and
warrants to Sublicensee that:
(a) ECC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. ECC has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted, and is duly qualified to do
business in every jurisdiction wherein the nature of the business conducted or
the assets owned or leased by it make such qualification material to the conduct
of its business.
(b) ECC has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder, including but not
limited to the right to
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sublicense the Technology. This Agreement has been duly and validly authorized,
executed and delivered by ECC and, assuming the due authorization, execution and
delivery by Sublicensee, is the legal, valid and binding obligation of ECC,
enforceable against it in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
(c) To the best knowledge of ECC, no person, firm or entity has
made any claims or threatened, in writing or otherwise, that ECC is in violation
of or has infringed any patent, patent license, trade name, trademark, service
mark, brand mark, brand name, copyright, know-how, formula or other proprietary
or trade rights of such third party as they relate to the Technology. To the
best of ECC's present knowledge and belief, the use of the Technology in the
manufacture of the Products pursuant to the terms of this Agreement will not
constitute infringement of the proprietary rights of any third party. Except as
provided in this subparagraph, ECC makes no representation or warranty as to the
ownership of validity of the Technology. The license granted to Sublicensee
under this Agreement does not exceed the scope of the rights granted to ECC by
Licensor.
(d) To the best knowledge of ECC, the execution, delivery and
performance of this Agreement by ECC and the consummation by it of the
transactions contemplated hereby will not (i) constitute a violation (with or
without the giving of notice or lapse of time) of any provision of applicable
law, (ii) require any consent, approval or authorization of any person or
governmental authority, (iii) result in a default under, acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel any agreement, lease, franchise, permit, note or
other restriction, encumbrance, obligation or liability to which ECC is a party
or by which it is bound or to which any of its assets are subject, (iv) result
in the creation of any lien or encumbrance upon ECC's assets, (v) conflict with,
result in the breach of, or constitute a default under any
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provision of ECC's certificate of incorporation or bylaws, or (vi) conflict
with, result in a tortious interference as a result of such conflict with, or
otherwise violate, any material contract or arrangement between ECC and any
other person. The representation and warranty given in this subparagraph shall
not be deemed or construed to expand or modify the representation and warranty
given by ECC in subparagraph 10(c).
(e) Neither ECC, nor anyone acting on its behalf, has taken any
action relating to any broker, finder, consultant or other expert which could
result in the imposition upon the Sublicensee of any obligation to pay a fee to
any broker, finder, consultant or similar expert in connection with the
transactions contemplated hereby.
11. REPRESENTATIONS AND WARRANTIES OF SUBLICENSEE. Sublicensee hereby
represents and warrants to ECC that:
(a) Sublicensee is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
Sublicensee has all requisite power and authority to own, operate and lease the
properties and to carry on its business as now being conducted, and is duly
qualified to do business in every jurisdiction wherein the nature of the
business conducted or the assets owned or leased by it make such qualification
material to the conduct of its business.
(b) Sublicensee has all requisite power and authority to enter
into this Agreement and to perform its obligations hereunder. This Agreement
has been duly and validly authorized, executed and delivered by Sublicensee and,
assuming the due authorization, execution and delivery by ECC, is a legal and
binding obligation of Sublicensee, enforceable against it in accordance with its
terms, subject only to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to general
principles of equity.
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(c) To the best knowledge of the Sublicensee, the execution,
delivery and performance of this Agreement by Sublicensee and the consummation
by it of the transactions contemplated hereby will not (i) constitute a
violation (with or without the giving of notice or lapse of time) of any
provision of applicable law, (ii) require any consent, approval or authorization
of any person or governmental authority, (iii) result in a default under,
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any agreement, lease, franchise,
permit, note or other restriction, encumbrance, obligation or liability to which
Sublicensee is a party or by which it is bound or to which any of its assets are
subject, (iv) result in the creation of any lien or encumbrance upon
Sublicensee's assets, (v) conflict with, result in the breach of, or constitute
a default under any provision of Sublicensee's charter documents, or (vi)
conflict with, result in tortious interference as a result of such conflict
with, or otherwise violate, any contract or arrangement between ECC and any
other person.
(d) Neither Sublicensee, not anyone acting on its behalf, has
taken any action relating to any broker, finder, consultant or other expert
which could result in the imposition upon ECC of any obligation to pay a fee to
any broker, finder, consultant or similar expert in connection with the
transactions contemplated hereby.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties, as set forth herein, shall be true and accurate
as of the effective date of this Agreement, and shall survive the execution of
this Agreement.
13. DISCLAIMER OF WARRANTIES
NEITHER ECC NOR ITS LICENSOR MAKE OR GIVE, AND THEY HEREBY EXPRESSLY
DISCLAIM ANY AND ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL,
INCLUDING BUT NOT LIMITED TO THE WARRANTIES
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OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE, IN REGARD TO THE
TECHNOLOGY AND/OR ANY PRODUCTS WHICH MAY BE MANUFACTURED, USED OR SOLD BY
SUBLICENSEE AND WHICH ARE BASED UPON OR UTILIZE THE TECHNOLOGY.
14. INDEMNIFICATION
(a) ECC shall defend, indemnify and hold Sublicensee harmless
from and against, and hereby assumes liability for the payment of any and all
loss, liability or damage, and for all costs and expenses (including
reasonable costs of investigation, and reasonable attorneys, accountants, and
expert witness fees) that may be imposed upon, suffered or incurred by, or
successfully asserted against Sublicensee as a consequence of or in
connection with any claim (i) that may be asserted against Sublicensee that
the Technology infringes the valid patent rights of any third party, (ii)
that may be asserted against Sublicensee based on a breach of any
representations or warranties set forth in paragraph 10 hereof, or (iii)
based on the negligence or willful misconduct of ECC. However, ECC's
liability to Sublicensee for any matter arising under this Agreement or any
claims asserted against Sublicensee which relate, in whole or in part, to the
Technology, shall be limited to the total amount of all Royalties paid to ECC
by Sublicensee under this Agreement for (x) the 24-month period preceding the
date that Sublicensee suffered a loss requiring indemnification by ECC under
this subparagraph or (y) in the case of patent infringement litigation
brought by a third party against Sublicensee, the period from the date
written notice of such infringement is received by Sublicensee to the date
final judgment is entered, whichever is longer.
(b) Sublicensee shall defend, indemnify and hold ECC and its
Licensor harmless from and against, and hereby assumes liability for the payment
of any and all loss, liability or damage, and for all costs and expenses
(including reasonable costs of investigations and
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reasonable attorneys, accountants, and expert witness fees) that may be imposed
upon, suffered or incurred by, or successfully asserted against ECC or its
Licensor as a consequence of or in connection with any claim or liability, other
than those expressly set forth in subparagraph 14(a) hereof, arising out of or
as a consequence of this Agreement, included, but not limited to, any product
liability claims that may be asserted against ECC or its Licensor in relation to
any Products manufactured, marketed, distributed, used and/or sold by
Sublicensee pursuant to this Agreement. In the event any action, suit or
proceeding is brought against ECC or its Licensor with respect to which there
may be indemnification pursuant to this subparagraph, the defense of such
action, suit or proceeding (including all settlements and arbitrations, trials,
appeals or other proceedings) shall be conducted by Sublicensee at its sole cost
and expense through legal counsel selected by Sublicensee. ECC and its Licensor
shall have the right to participate in such defense at their own expense through
legal counsel of their choice. If Sublicensee fails to defend any such action,
suit or proceedings, for any reason, such failure shall constitute a material
breach of this Agreement by Sublicensee, and ECC or its Licensor may undertake
defense of such action, suit or proceeding, through legal counsel of their
choice at the sole cost and expense of the Sublicensee (provided such legal
costs and expenses are reasonable under the circumstances). The parties shall
make available to one another, their legal counsel and accountants, all
information and documents reasonably available to them which relate to such
action, suit or proceeding and shall render such other assistance as they may
reasonably require of one another in order to insure proper and adequate defense
of any such action, suit or proceeding.
(c) Neither party shall have any liability to the other party
pursuant to an indemnity provided by this paragraph unless and until the
aggregate amount of all indemnified losses suffered or incurred by such
indemnified party after the effective date hereof equals or exceeds
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$100,000 (U.S. Dollars), at which time the indemnifying party shall be obligated
to pay the indemnified party the full amount of all indemnified losses,
including such initial $100,000 (U.S. Dollars) in losses. The amount of
indemnity payable pursuant to this paragraph shall be calculated after giving
affect to any insurance proceeds actually received by the indemnified party
provided that neither party shall subrogate to any insurance carrier any rights
or claims which it may have against the other party.
(d) The obligations set forth in this paragraph 14 shall survive the
expiration or termination of the Agreement for any reason whatsoever.
15. PRODUCT LIABILITY INSURANCE. In addition to the indemnification
provided under subparagraph 14(b) hereof, Sublicensee shall obtain, and shall
maintain during the entire term of this Agreement, a product liability
insurance policy with a reputable insurance carrier reasonably acceptable to
ECC. For United States carriers, such carriers must have an A.M. Best rating
of "A-VI" or better. Such policy shall provide Sublicensee with product
liability coverage with minimum liability coverage in the amount of
$1,000,000.00 (U.S. Dollars) aggregate and $1,000,000.00 (U.S. Dollars) per
occurrence. Such product liability insurance policy shall provide that ECC
will be given thirty (30) days prior written notice of any amendment or
modification that would reduce or change coverage under, or termination or
cancellation of, the policy. Upon ECC's request, Sublicensee shall provide
ECC with a copy of such policy and of all amendments or modifications
thereto. Sublicensee shall be required to obtain and maintain the product
liability insurance policy called for by the provisions of this subparagraph
only from and after the date of the first commercial sale of a Product by
Sublicensee, or the first public testing of a Product by Sublicensee. If
Sublicensee has a net worth in an amount satisfactory to ECC, then
Sublicensee shall not be required to obtain and maintain the product
liability insurance required in this subparagraph; however, Sublicensee shall
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be required to reimburse ECC or its Licensor for any loss suffered by ECC or its
Licensor which would have been covered under the product liability insurance
policy Sublicensee otherwise would have been required to obtain under this
subparagraph.
16. CONFIDENTIALITY.
(a) Sublicensee acknowledges that ECC claims that the Technology,
as it may exist from time to time, as well as the other confidential or
proprietary information (including business and financial information) of ECC
(whether owned by ECC or acquired by license from third parties) are and
shall remain the valuable, special, unique and proprietary assets of ECC, and
shall constitute "Confidential Information" hereunder. In order for any
information other than the Technology to be deemed to be "Confidential
Information" hereunder, whether disclosed orally or in writing, it must be
identified, orally or in writing, to Sublicensee as "Confidential
Information" at time of disclosure, or reasonably thereafter, or be
reasonably understood by Sublicensee to be "Confidential Information."
Additionally, as used herein, "Confidential Information" shall not include
any information or data which Sublicensee can show: (i) is in, or becomes a
part of, the public domain by any means other than the failure by Sublicensee
to fulfill its obligations hereunder; or (ii) is rightfully known to
Sublicensee at the time of disclosure by ECC; or (iii) is, at any time,
disclosed to Sublicensee by a third party who has received and disclosed such
information without the breach of any obligation of confidentiality to ECC or
to any third party assignor of such Confidential Information. For purposes
of this subparagraph, information shall not be deemed to be a part of the
public domain or in Sublicensee's knowledge merely because it may be embraced
in a more general disclosure or simply because it may be derived from
combinations of disclosures or information generally available to the public
or within Sublicensee's knowledge. The parties acknowledge that disclosure
to Sublicensee of Confidential Information will be necessary in order
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to enable Sublicensee to utilize the Sublicense in the manner contemplated by
this Agreement, and ECC will make such disclosures of the Confidential
Information to Sublicensee as it is necessary, required or appropriate in
that regard. The parties acknowledge that they have a confidential
relationship with one another and, accordingly, Sublicensee shall maintain
all Confidential Information disclosed to it pursuant to this Agreement in
confidence and shall not disclose the same to any third party (with the
exception of its employees, accountants, attorneys and other agents and
professional advisors) either during or after the term of this Agreement
unless required to do so by court order or by law, in which case Sublicensee
shall notify ECC, in writing, prior to making such disclosure and shall
cooperate with ECC to preserve and protect the confidentiality of the
Confidential Information in question to the fullest extent possible.
Additionally, except as specifically contemplated by this Agreement,
Sublicensee shall not utilize any Confidential Information for its own
benefit or for the benefit of any third party. Prior to making any permitted
disclosure of any Confidential Information to its employees, accountants,
attorneys and other agents and professional advisors, Sublicensee shall use
commercially reasonable efforts to require such persons, firms, or entities
to execute and deliver written disclosure agreements which shall obligate
such persons, firms, or entities to comply with the same obligations of
confidentiality and non-use as imposed upon Sublicensee in this subparagraph.
The obligation of confidentiality as it relates to the Confidential
Information shall survive the termination of this Agreement and continue
unabated until the expiration of the last patent, including any extensions,
reissues, or continuations thereof, which has been or may be issued with
respect to the Technology.
(b) From time to time during the term of this Agreement, Sublicensee
may disclose to ECC certain information which Sublicensee deems to be
proprietary and confidential, including but not limited to, business plans,
marketing plans, financial information, and process
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technology (the "Sublicensee Confidential Information"). The definition of
"Sublicensee Confidential Information," and ECC's use and disclosure thereof,
shall be governed by terms and conditions identical to those which govern
Confidential Information, as set forth in the preceding subparagraph; provided,
however, that ECC shall have the right to disclose Sublicensee Confidential
Information to ECC's Licensor subject to its accepting and treating it as
Confidential Information in writing to Sublicensee.
17. TERM AND TERMINATION.
(a) The term of this Agreement shall commence upon the effective date
hereof. Unless sooner terminated as hereinafter provided, this Agreement shall
continue in full force and effect until the expiration of the last material and
substantial patent covering the Technology which is utilized by Sublicensee, or
for so long as Sublicensee produces the Products which utilizes material and
substantial proprietary information or a material and substantial Trade Secret
of ECC; provided, however, that upon the expiration of the last aforementioned
patent, if Sublicensee desires to continue the Agreement in force, it will be
subject to an appropriate negotiated adjustment to the Royalty Payments or
License Fee. Any dispute as to the term of this Agreement shall be resolved by
arbitration as provided under this Agreement.
(b) Sublicensee may terminate this Agreement, at any time, with or
without cause, upon sixty (60) days prior written notice of such termination to
ECC.
(c) If either party is in breach of any of its material obligations
hereunder, then the non-breaching party may give the breaching party written
notice of such breach. If such breach is not cured within ninety (90) days
after the date such written notice is delivered or, if such default cannot be
cured within such ninety day period but the breaching party has taken action to
cure such default, then if the default is not cured within one hundred eighty
(180) days from the date of the
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original notice, the non-breaching party shall have the right immediately to
terminate the Sublicense by written notice to the breaching party.
(d) Notwithstanding any other provision of this Agreement, ECC shall
have the right, at its sole discretion, to terminate the Sublicensee, upon
thirty (30) days written notice to Sublicensee, in the event that the amount of
the Royalty paid to ECC in any calendar year is not at least the greater of
(i) 50% of the Royalty payment amount for the preceding calendar year, or
(ii)commencing in calendar year 1996, $100,000 (U.S. Dollars). In the event of
termination of this Agreement pursuant to this subparagraph, Sublicensee shall
have the right to sell at market price existing stock and inventory of
manufactured Products for a period of one hundred and eighty days.
(e) For the calendar year 1996 only, if the aggregate royalty
attributable to Sublicensee's sales of Products in calendar year 1996 is less
than $100,000, Sublicensee shall be entitled to pay to ECC the difference
between $100,000 and the royalties attributable to actual Product sales in
calendar year 1996 in order to maintain this Agreement in effect and, in such
event, such difference shall be treated as prepaid royalties that may be
credited against royalties for Products actually sold in calendar year 1997.
In the event any amount is carried over from calendar year 1996 and credited
against royalties due for calendar year 1997 pursuant to this subparagraph,
the minimum royalty set forth in subparagraph 17(d) hereof for the calendar
year 1997 will be $100,000 plus the amount of the carry-over from calendar
year 1996.
18. EFFECT OF EXPIRATION OR TERMINATION.
(a) From and after the effective date of the expiration or
termination of this Agreement, Sublicensee shall have no right, whatsoever, to
utilize the Technology (except for Process Improvements then owned by
Sublicensee) or the Trademarks pertinent to this Agreement, and shall return to
ECC all copies of Confidential Information which is then in the possession of
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Sublicensee or destroy the same and provide satisfactory assurances of the
destruction of all Confidential Information; provided, however, that nothing
contained herein shall, or shall be deemed to, restrict the Sublicensee's
ability or right to use, free of Royalty, any Technology, trade name, know-how
or confidential information which is or has come into the public domain through
no fault of Sublicensee and is not otherwise deemed Confidential Information.
ECC shall also be required to return to Sublicensee all copies of Confidential
Information of Sublicensee which are then in the possession of ECC or destroy
and provide satisfactory assurances of the destruction of all Confidential
Information.
(b) The right of termination under paragraph 17 hereof shall be in
addition to, and not in lieu of, all other rights and remedies the terminating
party may have under this Agreement, at law or in equity.
(c) The obligation of Sublicensee to pay to ECC the Royalty for all
Products actually sold by Sublicensee prior to the effective date of the
expiration or termination of this Agreement, as well as the obligations
concerning indemnification, product liability and of confidentiality set forth
in this Agreement, shall survive the expiration or termination of the Sublicense
and of this Agreement.
19. MARKING.
(a) Where feasible, Sublicensee shall mark the Products and related
documents with the applicable United States patent numbers, as required by
applicable law, or as reasonably instructed by ECC.
(b) Sublicensee shall comply with all applicable laws, rules and
regulations of the United States, including but not limited to, the Export
Regulations of the United States Department of Commerce, in connection with the
Technology. Sublicensee acknowledges that ECC
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has not made and does not make any representations that any license is or is not
required in connection with such export or, if required, that such license will
be issued by the United States Department of Commerce; provided, however, that
ECC shall apply for all licenses required or necessary to enable the Sublicensee
to export the Technology within the Territory without imposing any additional
Royalty.
20. TRADEMARKS.
(a) Sublicensee may utilize, in connection with the manufacture,
marketing, distribution and sale of the Products, the EARTHSHELL-TM- trademark
and such other trade names, trademarks, service marks, slogans and logo marks
that may be designated in writing by ECC to Sublicensee prior to commercial
production of the Products by Sublicensee or from time to time thereafter
(collectively the "Trademarks").
(b) To the extent Sublicensee elects to use the Trademarks on or
in connection with manufacture, marketing, distribution, use and/or sale of
Products hereunder, Sublicensee shall be entitled to receive an advertising
allowance credit equal to Two Percent (2%) of the Net Sale Price of such
Products that bear the Trademarks. To qualify for the aforementioned
advertising allowance credit, Sublicensee shall submit to ECC written
documentation, reasonably satisfactory to ECC, of sales by Sublicensee of
Products that bear the Trademarks, and ECC shall credit the appropriate amount
against future royalties payable by Sublicensee hereunder.
(c) To the extent Sublicensee elects to use the Trademarks on or
in connection with the marketing, distribution, use and/or sale of the Products,
the specific placement, size, and detail of the Trademarks on the Product must
be approved by ECC, but shall not be required to be placed on the Products in
such a size, placement, detail or configuration so as to impair the
marketability of the Product. In addition, on any Products manufactured,
marketed, distributed and
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sold by Sublicensee and bearing any Trademark, Sublicensee shall also include
the following legend: "This product is manufactured by ________________ under
license from EarthShell Container Corporation." To the extent it is not
feasible to include the foregoing legend directly on any Product itself, then
such legend shall appear on the secondary packaging materials in which such
Products are shipped or transported.
(d) In connection with any use of the Trademarks by Sublicensee,
Sublicensee shall not in any manner represent that it has any ownership interest
therein and shall not challenge or impugn the ownership of the Trademarks.
Sublicensee acknowledges that use of the Trademarks shall not create in its own
favor any right, title, or interest in or to the Trademarks, but that all uses
of these marks by Sublicensee shall inure to the benefit of ECC or its Licensor.
Sublicensee shall cooperate with ECC or its Licensor in the execution of any
appropriate and necessary documents in connection with the registration of any
Trademark. 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 such marks. However, in the event
of termination, Sublicensee shall have the right to sell at market price
existing stock and inventory of manufactured Products for a period of one
hundred and eighty days and thereafter shall deliver to ECC or its duly
authorized representative all materials upon which the Trademarks appear.
(e) All Products produced pursuant to this Agreement bearing
any Trademark shall be produced in compliance with the specifications and
procedures set forth in the ECC Quality Standards Manual, which shall be
provided to Sublicensee within eighteen months from the date of this Agreement.
Sublicensee shall permit ECC to conduct periodic inspections/audits to ensure
compliance with the ECC Quality Standards Manual.
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(f) Should any Product bearing any Trademark that is
manufactured, sold or otherwise commercialized by Sublicensee contain any
material defect in its appearance or function, Sublicensee shall cease any
further manufacture, sale or other commercialization of such Product containing
such material defect. Unless Sublicensee corrects such defect within a
reasonable time following its discovery by or disclosure to Sublicensee,
Sublicensee shall be in breach of a material obligation of this Agreement.
21. SPECIAL TAX PROVISIONS. 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; except that ECC shall be responsible for taxes,
duties or withholding relating to the payment to ECC of any Royalty payment
under this Agreement and Sublicensee shall be permitted to perform any
withholding with respect to such payments and fees required by law or
regulation.
22. TECHNOLOGY TRANSFER.
(a) Sublicensee acknowledges and agrees that ECC has delivered
and made to Sublicensee a disclosure of a general introduction to the Technology
and to its commercial feasibility prior to the execution of this Agreement.
Except to the extent such information falls within one or more of the exceptions
to the definition of "Confidential Information", all information disclosed by
ECC to Sublicensee prior to the execution of this Agreement shall be deemed to
constitute part of the Technology and shall be deemed to be confidential. The
timing and extent of additional disclosure by ECC to Sublicensee shall be as set
forth in subparagraph 22(b) hereof.
(b) Upon execution of this Agreement, ECC shall provide
Sublicensee with copies of the patents listed in Section B of Exhibit "B"
hereto. Beyond that, ECC shall not be
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required to provide additional information concerning, or disclosure of, the
Technology to Sublicensee until Sublicensee provides to ECC (i) written notice
of Sublicensee's intent to commercialize a Product, which written notice shall
include detailed specifications for the designated Product, and (ii) evidence,
reasonably satisfactory to ECC, of Sublicensee's intent to commercialize the
designated Product in the form of written documentation of orders placed by
Sublicensee of the equipment needed by Sublicensee to produce and commercialize
the designated Product or in the form of written documentation from Sublicensee
confirming the dedication and/or modification of existing equipment necessary to
produce the designated Product. Within ninety (90) days after ECC's receipt of
the items described in the preceding sentence, ECC shall provide to Sublicensee
the following additional disclosure: (w) a Product specific recipe for the
production of the designated Product; (x) Product specific process
specifications for the production of the designated Product; (y) copies of all
patent applications listed in the Exhibits hereto that ECC deems relevant to the
production of the designated Product; and (z) a list of known raw materials
suppliers and preferred equipment vendors.
23. McDONALD'S CORPORATION. Because of work jointly undertaken by
ECC and McDonald's Corporation ("McDonald's") (as used herein the term
"McDonald's" shall include purchasing agents and franchisees thereof) with
regards to studies of market potential and food package design, it has been
agreed that McDonald's is to receive "priority" with regard to the
distribution of the Products that are ordered by it and covered by this
Agreement. In compliance with this arrangement, for a period of two (2)
years from the effective date of this Agreement, Sublicensee shall give
priority to McDonald's orders for Products, in that, on a regional basis,
Sublicensee shall dedicate to the production and delivery of Products to
McDonald's such portion of Sublicensee's production capacity (i) as is
available at the time of receipt of a purchase order from
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McDonald's and (ii) is reasonably necessary to fill such purchase order at the
rate of production and/or the delivery schedule contained in such order, and
Sublicensee shall not accept additional purchase orders from, or deliver
Products to, any entity in the food service and restaurant industry other than
McDonald's unless or until Sublicensee has production capacity in excess of that
required to fill, on a timely basis, purchase orders from McDonald's that have
previously been accepted by Sublicensee. A region shall be that geographic area
which is serviced by a specific "distribution center" that supplies products
solely or primarily to McDonald's in that geographic area.
24. DOMESTIC SUBLICENSES. In the event ECC grants any domestic
(within the United States of America) sublicense of the Technology to any third
party containing terms that are more favorable than those granted to Sublicensee
under this Agreement, ECC shall notify Sublicensee of such more favorable terms
and, upon written request by Sublicensee, this Agreement shall be amended to
incorporate such more favorable terms; provided, however, that this paragraph 24
shall not apply with respect to exclusivity provisions or the grant of rights to
specific Products contained in any other sublicense of the Technology by ECC.
25. EQUITABLE RELIEF. A breach or default by Sublicensee of the
provisions of paragraph 5 and/or paragraph 16 hereof shall cause ECC to suffer
irreparable harm and, in such event, ECC shall be entitled, as a matter of
right, to a restraining order and other injunctive relief from any court of
competent jurisdiction, restraining any further violation thereof by
Sublicensee, its officers, agents, servants, employees, and those persons in
active concert or participation with them. The right to a restraining order or
other injunctive relief shall be supplemental to any other right or remedy ECC
may have, including, without limitation, the recovery of additional damages for
the breach or default of any of the terms of this Agreement.
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26. RELATIONSHIP OF THE PARTIES. This Agreement shall not create any
partnership, joint venture or similar relationship between the parties hereto
(or ECC's Affiliates) and no representation to the contrary shall be made by
either party. Neither party shall have any authority to act for or on behalf of
or to bind the other party in any fashion, and no representations to the
contrary shall be made by either party.
27. NOTICES. Any notice which is required or permitted to be given to ECC
or Sublicensee pursuant to this Agreement shall be deemed to have been given
only if such notice is reduced to writing and delivered personally, or by United
States mail with postage prepaid and return receipt requested, or by telecopier
(FAX) transmission, confirmed by letter by United States mail with postage
prepaid and return receipt requested, or by reputable overnight courier
(pursuant to instructions requiring next-day delivery) to the person in question
as set forth below:
ECC: EarthShell Container Corporation
800 Miramonte Drive
Santa Barbara, California 93109-1419
Attention: President
Fax: (805) 897-2298
with copy to:
EarthShell Container Corporation
800 Miramonte Drive
Santa Barbara, California 93109-1419
Attention: Chief Legal Officer
Fax: (805) 897-2298
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Sublicensee: Genpak Corporation
68 Warren Street
Glen Falls, New York 12801
Attention: James J. Reilly
Fax (518) 798-3302
with copy to:
Genpak Corporation
1001 Westing Boulevard
Charlotte, North Carolina 28273
Attention: Walt Harfmann, R & D Manager
Fax: (704) 588-8239
ECC or Sublicensee may change its address by giving notice of such change in the
manner set forth herein. If delivered personally, a notice shall be deemed
delivered when actually received at the address specified herein. Any notice
given by mail shall be deemed delivered three (3) days following the date upon
which it is deposited in the mail, with postage prepaid and return receipt
requested. Any notice given by FAX shall be deemed delivered on the date it is
actually transmitted to the person in question at the FAX number specified
above. Any notice given by overnight courier shall be deemed delivered on the
next business day following the date it is placed in the possession of such
courier.
28. ENTIRE AGREEMENT. This Agreement supersedes all prior
understandings or agreements, whether written or oral, and any
contemporaneous oral agreements, between the parties hereto in regard to the
subject matter hereof and contains, along with the two side letter agreements
attached, the entire agreement between the parties in regard to the subject
matter hereof, and the parties hereby mutually acknowledge and agree that
that certain Sublicense Agreement by and between ECC and Sublicensee, dated
June 3, 1993, is hereby terminated. This Agreement may not be changed or
modified orally, but only by an agreement, in writing, signed by both the
parties hereto.
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29. 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 of
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.
30. 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.
31. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the choice of law rules thereof.
32. RESOLUTION OF DISPUTES.
(a) In the event of a breach of this Agreement, or a dispute as to
the meaning of this Agreement, or any of its terms which the parties cannot
resolve by themselves amicably, the parties agree to submit such dispute to
resolution in the manner hereinafter described. First, the parties shall
endeavor to resolve the dispute through the use of an acceptable alternative
dispute resolution procedure. If, within 30 days after one party notifies
the other in writing of the existence of a dispute which it desires to be
resolved under this paragraph, the parties have not agreed upon an acceptable
alternative dispute resolution procedure, then the matter shall be resolved
by arbitration as set forth below and according to the rules of the American
Arbitration Association, except as herein modified by the parties. Unless
otherwise agreed to in writing, all alternative dispute resolutions or
arbitration hearings will be held in Los Angeles, California.
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(b) The parties shall cooperate and use their respective best efforts
to encourage compliance with the following time periods: (i) within 10 days
after the failure to agree to an acceptable alternative dispute resolution
procedure, each party will select an arbitrator, and notify the other party of
its selection; (ii) within 15 days after such notice, the respective arbitrators
will select a third arbitrator as Chairman of the panel; (iii) a hearing by the
arbitration panel shall be held within 30 days after the selection of the
Chairman; and (iv) a majority decision and resolution shall be reached within 30
days of such hearing. Decisions of the panel must be in writing and will be
final and binding on the parties, and judgment may be entered thereon by any
court having jurisdiction of the parties.
(c) Each party shall bear its own costs of presenting its case in an
alternative dispute resolution procedure, or arbitration, as the case may be.
(d) The validity, construction and performance of this Agreement
shall be governed by and interpreted in accordance with the laws of the State of
California (as if all aspects of the Agreement were to be performed in
California).
33. FORCE MAJEURE. The failure of either party to perform its obligations
under this Agreement (except the obligation to make payments) shall not subject
such party to any liability to the other or subject this Agreement to
termination if such failure is caused by acts such as, but not limited to, acts
of God, earthquake, explosion, flood, drought, war, riot, sabotage, embargo,
compliance with any order or regulation of any governmental entity acting with
color of right, intervention or delays created by any regulatory authority, or
by any other similar cause beyond the reasonable control of the parties. The
party so affected shall promptly notify the other party of the event of force
majeure, and shall use all reasonable efforts to remove such event as soon as
reasonably practicable.
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34. 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.
35. TERMINOLOGY. As used in this Agreement, the singular shall include
the plural and the plural shall include the singular. Titles of sections and
paragraphs in this Agreement are for convenience only, and neither limit nor
amplify the provisions of the Agreement, and all references in this Agreement to
a section or a paragraph shall refer to the corresponding section or paragraph
of this Agreement unless specific reference is made to the sections of another
document or instrument.
IN WITNESS WHEREOF, the parties have caused this Sublicense Agreement to be
executed and delivered by their duly authorized representatives upon the date
first herein written.
ECC: SUBLICENSEE:
EarthShell Container Corporation Genpak Corporation
By: /s/ Simon K. Hodson By: /s/ James J. Reilly
---------------------------- ---------------------------------
Simon K. Hodson James J. Reilly
Its: Chief Executive Officer Its: President
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EXHIBIT "A"
CORE TECHNOLOGY
A. ISSUED UNITED STATES LETTERS PATENTS
1. U.S. Letters Patent No. 4,225,247, issued September 30, 1980, and entitled
"Mixing and Agitating Device."
2. U.S. Patent No. 4,552,463, issued November 12, 1985, and entitled "Methods
and Apparatus for Producing a Colloidal Mixture."
3. U.S. Letters Patent No. 4,944,595, issued July 31, 1990, and entitled
"Apparatus for Producing Cement Building Material."
4. U.S. Letters Patent No. 5,061,319, issued October 29, 1991, and entitled
"The Process for Producing Cement Building Material."
5. U.S. Letters Patent No. 5,232,496, issued August 3, 1993, and entitled
"Process for Producing Improved Building Material and Product Thereof."
6. U.S. Patent No. 5,356,579, issued October 18, 1994, and entitled "Methods
of Manufacture and Use for Low Density Hydraulically Bonded Cement
Compositions."
7. U.S. Patent No. 5,358,676, issued October 25, 1994, and entitled
"Hydraulically Bonded Cement Compositions and Their Methods of Manufacture
and Use."
B. PENDING UNITED STATES PATENT APPLICATIONS
8. U.S. Patent Application entitled "Food and Beverage Containers Made from
Inorganic Aggregates and Polysaccharide, Protein, or Synthetic Organic
Binders, and the Methods of Manufacturing Such Containers."
9. U.S. Patent Application entitled "Cementitious Materials for Use in
Packaging Containers and their Methods of Manufacture."
10. U.S. Patent Application entitled "Cementitious Materials for Use in
Cushioning, Spacing, Partitioning, Portioning or Wrapping Objects and the
Methods of Manufacturing Such Materials."
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11. U.S. Patent Application entitled "Design Optimized Compositions and
Processed for Microstructurally Engineering Cementitious Mixtures."
12. U.S. Patent Application entitled "Highly Insulative Cementitious Matrices
and Methods for Their Manufacture."
13. U.S. Patent Application entitled "Hydraulically Settable Containers and
Other Articles for Storing, Dispensing, and Packaging Food and Beverages
and Methods for their Manufacture."
14. U.S. Patent Application entitled "Methods and Systems for Manufacturing
Containers and Other Articles of Manufacture from Hydraulically Settable
Mixtures."
15. U.S. Patent Application entitled "Articles of Manufacture Molded from
Inorganically Filled Compositions."
16. U.S. Patent Application entitled "Methods of Molding Articles from
Inorganically Filled Compositions."
17. U.S. Patent Application entitled "Coated Hydraulically Settable Containers
and Other Articles for Storing, Dispensing, and Packaging Food or
Beverages."
18. U.S. Patent Application entitled "Compressed Low Density Hydraulically
Bonded Composite Articles."
19. U.S. Patent Application entitled "Compressed Hydraulically Bonded Composite
Articles."
C. ISSUED FOREIGN PATENTS.
20. Canadian Patent No. 1,207,212 issued July 8, 1986, and entitled "Method and
Apparatus for Producing a Colloidal Mixture."
21. Canadian Patent No. 1,298,282, issued March 31, 1992, and entitled
"Apparatus for Producing Cement Building Material."
22. Canadian Patent No. 1,298,830, issued April 14, 1992, and entitled "Process
for Producing Cement Building Material."
23. Canadian Patent No. 1,321,609, issued August 24, 1993, and entitled "Cement
Building Material."
D. PENDING FOREIGN PATENT APPLICATIONS
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24. Canadian Patent Application entitled "Process for Producing Improved
Building Material and Product Thereof."
25. Canadian Patent Application entitled "Hydraulically Bonded Cement
Compositions and Their Methods of Manufacture and Use."
26. PCT Patent Application entitled "Hydraulically Settable Containers and
Other Articles for Storing, Dispensing and Packaging Food and Beverages and
Methods for their Manufacture."
27. PCT Patent Application entitled "Design Optimized Compositions and
Processes for Microstructurally Engineering Cementitious Mixtures."
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EXHIBIT "B"
MOLDABLE COMPOUND TECHNOLOGY
A. ISSUED UNITED STATES LETTERS PATENTS
B. PENDING UNITED STATES PATENT APPLICATIONS
1. U.S. Patent Application entitled "Inorganically Filled, Starch-Bound
Compositions for Manufacturing Containers and Other Articles Having a
Thermodynamically Controlled Cellular Matrix."
2. U.S. Patent Application entitled "Methods and Systems for Manufacturing
Containers and Other Articles Having a Thermodynamically Controlled Cellular
Matrix From Inorganically Filled, Starch-Bound Compositions."
3 U.S. Patent Application entitled "Compositions and Methods for
Manufacturing Fiber-Reinforced, Inorganically Filled, Starch-Bound Articles
having a Foamed Cellular Matrix."
C. ISSUED FOREIGN PATENTS
D. PENDING FOREIGN PATENT APPLICATIONS
4. PCT Patent Application entitled "Methods and Systems for Manufacturing
Packaging Materials, Containers, and Other Articles of Manufacture from
Hydraulically Settable Mixtures and Highly Inorganically Filled
Compositions."
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EXHIBIT "C"
PRODUCTS
As used in the appended Agreement, the term "Products" shall mean the
following:
1. Clamshells:
2. Sandwich containers;
3. Breakfast platters;
4. Trays;
5. Plates; and
6. Bowls.
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EXHIBIT "D"
TRADE SECRETS
The term "Trade Secrets" as used in the Agreement shall include any
technical or business information, any invention, equipment or apparatus,
method or process, technology, know-how, trade secret, drawing, data,
evaluation, specifications, quality and inspection standards, sales
literature, report, business plan, memorandum, market study, customer lists,
training materials, computer program or software (including both source and
object code), or any other document or thing which is in whole or in part
confidential, proprietary, or secret and which is owned or controlled by,
licensed or assigned to ECC or for which ECC has the right to grant licenses
thereon during the term of this Agreement and which relates in whole or in
part to any of the following:
1. The compositions, including the variable and preferred parameters for
each component, used in the Products or the Technology based on
inorganically filled cellular composites.
2. The processing steps, including the variable and preferred parameters for
each step, used in the Technology.
3. The equipment and apparatus used in the manufacture of Products.
4. Quality control, testing and research and development data, reports and
information, including patent applications in preparation.
5. Customers and suppliers of the components and equipment of the
Technology, including any agreements.
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EXHIBIT "E"
SUBLICENSEE PATENT, TRADE SECRET AND PROPRIETARY INFORMATION
RELATING TO THE PRODUCTS AND/OR THE TECHNOLOGY
Product Design - Includes data on wall angles, stack height, nesting, etc.,
for existing Genpak Products.
Tooling Design - Includes techniques for manufacture (Tool manufacture and
tool path programming), material of construction, coating, finishes, and
in mold slot design.
Handling and Packaging of Finished Product
Box erectors and sealers
Automated sleeving and counting
Slurry pumping systems.
High shear mixing technology
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EXHIBIT "F"
TERRITORY
As used in the appended Agreement, the term "Territory" shall mean all
fifty states of the United States of America and any territories or
possessions of the United States of America. The term "Territory" also shall
include Canada, Mexico, Central America, and the Caribbean islands and
nations, subject to any foreign territory being removed at ECC's option, if
Sublicensee has not commenced commercial production or sales of Products in
such foreign territory prior to January 1, 1999.
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