Exhibit 10.31
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is entered into this 15th day of
December, 1997 by and between Life International Products, Inc., a California
corporation (the "Licensor"), and Seven Star International Holding, Inc., a
British Virgin Islands corporation (the "Licensee"), with respect to the
following:
WHEREAS, Licensor is the owner and developer of the Process, as that term
is defined below, and is the owner, by assignment, of patents and patent
applications in the United States, Canada and various other countries throughout
the world claiming the Process for its manufacture; and
WHEREAS, Licensee desires to obtain a license from Licensor to use the
Process to process, produce, promote and sell products in Licensee's fields of
interest as described in this Agreement, and to use the Equipment or Unit(s), as
defined below, provided by the Licensor to enable Licensee to so utilize the
Process and Licensor is willing to grant such license and provide such Unit(s).
NOW, THEREFORE, in consideration of the terms and conditions and mutual
promises and covenants contained herein, the parties hereto agree as follows:
1. Definitions. Terms defined in this Section 1 and elsewhere in this
Agreement, parenthetically and/or in quotations, shall have the same meaning
throughout the Agreement. Defined terms may be used in the singular or plural.
1.1. "Process" shall mean the process for enriching water with oxygen,
developed and owned by Licensor wherein the liquid is saturated with a high
concentration of dissolved oxygen as more fully described in Exhibit A and
in the Intellectual Property.
1.2. "Intellectual Property" shall mean the patents, patent
applications, trademarks, service marks, copyrights, technology and
know-how owned by Licensor and relating to the Process and includes,
without limitation, the patents and patent applications listed on Exhibit B
and any reissue, extension or addition to any such patents and/or patent
applications.
1.3. "Intellectual Property Rights" shall mean Licensor's sole and
exclusive right to make use of the Intellectual Property, including the
right to license to any party the Intellectual Property, or any portion
thereof.
1.4. "Equipment" shall mean the P2 model manufactured by Licensor
which makes use of the Process in order to produce oxygenated water. Each
individual unit of such equipment shall be referred to as a "Unit".
1.5. "Products" shall mean Licensee's products in the field of drinks
and beverages, encompassing only the following products:
A. Life O2 Water bottled and packaged with the Life O2 label as
approved by Licensor pursuant to Section 7.5 of this Agreement.
B. All other Life O2 drinks and beverages bottled or otherwise
packaged by Licensor, its affiliates and licensees utilizing the
Process, such beverages to be pre-approved by Licensor.
1.6. "Territory" shall mean the Peoples' Republic of China (including
Hong Kong), Taiwan, Indonesia and Singapore.
1.7. "Purpose of this Agreement" shall mean the processing,
production, promotion and sale of the Products in the Territory.
1.8. "Confidential Information" shall mean all confidential and
proprietary information disclosed by Licensor to Licensee, including this
Agreement, and all information related to the Process, the Intellectual
Property, the Equipment, Licensor technology, know-how, current products,
future products, potential products, drawings, intellectual property,
services marketing and other business information, whether disclosed orally
or in writing, and shall, without limiting the foregoing, specifically
include all information marked as "Confidential" or "Proprietary".
2. Confidential Information.
2.1. Licensee agrees, at all times, to promptly furnish to Licensor
any and all information it develops, maintains or otherwise has knowledge
of with respect to the Process and Products and grants to Licensor the
irrevocable right to use such information.
2.2. Without limiting the generality of the foregoing paragraph, if,
at any time, Licensee files information with any governmental agency (for
example, the Food and Drug Administration (the "FDA")), Licensee shall
furnish Licensor all such information developed by Licensee relating to the
Process and its inclusion in the Products, prior to such filings.
2.3. Licensee agrees to hold all Confidential Information in strict
confidence. Licensee may disclose the Confidential Information to its
responsible employees, consultants, sub-licensees, contractors and
affiliates who require such information in order to carry out the Purpose
of this Agreement. Licensee agrees to instruct all such parties regarding
the foregoing obligations. Licensee agrees that it shall take all
reasonable measures to protect the confidentiality of and avoid disclosure
or use of Confidential Information in order to prevent it from falling into
the public domain or the possession of persons other than those persons
authorized hereunder to have any such information, which measures shall
include the highest degree of care that Licensee utilizes to protect its
own confidential information of a similar nature. The obligation of
confidentiality imposed by this Section 2.3 shall be in effect for the term
hereof, as extended, plus fifteen (15) years. The foregoing obligations
shall not apply to any Confidential Information which Licensee can
demonstrate by written records: (i) relates to disclosures by Licensee
required by governmental agencies, such as the FDA; or (ii) is disclosed in
any of the Patents; or (iii) is or becomes publicly known through no
wrongful act of Licensee; or (iv) is disclosed to Licensee by a third party
not under an obligation of confidentiality to Licensor; or (v) was known by
Licensee prior to the disclosure thereof by Licensor. Licensee's obligation
to keep Confidential Information confidential shall not terminate upon the
termination of this Agreement.
2.4. Licensee agrees that for a period of five (5) years following the
termination of this Agreement, Licensee shall not use the Process or the
Units in any manner to manufacture, sell, or distribute any products,
including beverages, fortified with oxygen, whether or not in competition
with Licensor. Furthermore, during the term hereof, Licensee shall only be
permitted to manufacture, sell, or distribute such products under the terms
of and subject to this Agreement.
3. Grant of License.
3.1. Licensor hereby grants to Licensee the exclusive right and
license (the "License") to use the Process and the Intellectual Property
for the Purpose of this Agreement, to make or have made, use and sell, with
the right of purchasers to resell, throughout the Territory, Products for a
period of five (5) years (the "Initial Term") effective the date hereof;
provided, however, that for purposes of calculating the commencement date
of the first year of the Initial Term (the "First Year"), the First Year
shall commence on the earlier of the first day that Licensee produces the
Product for sale or resale or thirty (30) days after the Units are received
by Licensee at its plant site. It being agreed also that the First Year
shall be thirteen (13) months in duration. Nothing contained herein shall
be deemed to grant to Licensee the right or license to make use of the
Process for any other purpose within or outside of the Territory nor permit
others to do so.
3.1.1. The License shall include the right of Licensee to
sublicense to any subsidiary of Licensee or any other third party,
subject to the prior approval of Licensor which shall not be
unreasonably delayed or withheld, provided that such sublicensee
agrees to be bound by all of the obligations of Licensee and all of
the provisions of this Agreement as if such sublicensee was the same
as Licensee.
3.2. Extension of Term.
3.2.1. At Licensee's election, Licensee may extend the term of
this Agreement for an additional term of five (5) years (the "First
Renewal Term") by giving notice to the Licensor not later than ninety
(90) days prior to the expiration of the Initial Term, provided that
this Agreement has not been previously terminated and further provided
that Licensee, on the commencement of the First Renewal Term, is not
in breach of any material terms of this Agreement.
3.2.2. Licensee shall have the right to extend further the term
of this Agreement for successive five (5) year terms (each a
"Succeeding Renewal Term"), commencing on the expiration of the First
Renewal Term by giving notice to the Licensor not later than ninety
(90) days prior to the expiration of the First Renewal Term, provided
that this Agreement has not been previously terminated and further
provided that Licensee, on the commencement of such then-current
Succeeding Renewal Term, is not in breach of any material terms of
this Agreement.
3.3 Additional License Grants. Licensor hereby grants to Licensee the
sole right of first option for the exclusive right and license to use the
Process in the fields of aquaculture, bioremediation and waste water
treatment in the Territory for a period of two (2) years from and after the
commencement of the First Year. For purposes of the preceding sentence, the
phrase "right of first option" shall mean the Licensee shall have an
exclusive option to license the Process from Licensor in the fields and
Territory set forth above subject to mutually acceptable terms and
conditions.
4. Use of Units.
4.1. Within three (3) months of Licensee's request, Licensor shall
provide to Licensee the number of Units requested by Licensee and an
operations manual therefor (the "Original Units") to be used for the
manufacture of the Products. The Original Units shall be shipped to such
plant location as indicated by Licensee ("Licensee's Plant"). The Original
Units shall be installed at Licensee's Plant(s) by Licensor's technician.
The Original Units shall be shipped FOB Licensor's closest manufacturing
facility to Licensee's Plant(s), with all costs for shipment of the Units
to be borne by Licensee. Licensee shall pay for or reimburse Licensor for
all actual expenses associated with the installation, including travel,
hotel and incidental expenses, as reasonably incurred, for Licensor's
technician. Licensor shall provide the installation services and time of
the technician at no cost to Licensee.
4.2. The Units shall be the property of the Licensor, and shall bear
serial numbers recorded by the Licensor and acknowledged by Licensee prior
to shipment. Licensee shall pay to Licensor a one time rental fee of the
actual cost of manufacture for each Unit to be paid upon installation of
each Unit at Licensee's Plant(s). These payments shall be in addition to
the Guaranteed Minimum Royalty payments to be paid by Licensee to Licensor
in accordance with Section 5.2 below. For the First Renewal Term and for
all succeeding renewal terms, Licensor shall have the option of increasing
such rental fee by up to fifty percent (50%) over the rental fee for the
preceding term for all additional Units installed.
4.3. Licensor represents and warrants to Licensee that each Unit it
shall deliver to Licensee will be fit for the purpose intended, will be of
good and sound quality and be free from manufacturer's or design defects.
Licensor warrants and will be responsible for each Unit for a five (5) year
period commencing with the date of installation. Licensor shall provide the
services of a technician for the normal maintenance of the Units, with
Licensee responsible for paying or reimbursing Licensor for all actual
expenses associated with such maintenance, including travel, hotel and
incidental expenses for Licensor's technician. In the event that repairs
are required due to the negligence, mishandling, or improper day-to-day use
and maintenance of the Units by Licensee or its employees or agents,
Licensee shall pay for all expenses associated with such repair, including
the compensation for the technician's services. Licensee agrees to utilize
the Units properly and in accordance with the guidelines and instructions
contained in the operational manuals provided by Licensor. Licensor shall
have the right, without prior notice, to inspect the Units whether or not
they are in operation, at any time during normal business hours, or
otherwise (provided that inspections outside of normal business hours shall
require seven (7) days prior notice).
4.4. In the event that the term of this Agreement extends beyond ten
(10) years from the date of this Agreement, upon such ten (10) year
anniversary, Licensor shall replace all Units installed at Licensee's Plant
with the then-current models of Units. The replacement Units shall be
installed at Licensee's Plant by Licensor's technician. All costs for
shipment of the replacement Units will be borne by Licensee. Licensee shall
pay for or reimburse Licensor for all actual expenses associated with the
installation, including travel, hotel and incidental expenses for
Licensor's technician. Licensor shall provide the installation services and
time of the technician at no cost to Licensee.
4.5. Licensee shall have the right to any improvements to the
Equipment and to lease any new models of the Equipment or Units, if any, as
and when such improvements are made and such models are ready for
operation. The price for adding such improvements or leasing such new
models ("New Models") shall be equal to Licensor's actual fully burdened
cost for such New Model(s). Licensor's actual fully burdened cost shall not
include any costs incurred by Licensor with respect to the development,
manufacture or other expenses associated with the Equipment, the Units or
New Model(s) as used for purposes other than the production of beverages
(such as modifications for environmental uses of the equipment). Licensee
shall receive a credit against the above described New Model lease price
equal to the amount paid for any original Units replaced by the New
Model(s), reduced on an amortized basis of 20% per year commencing with the
date of installation of such original Units. By way of example, if the
original Unit price was $25,000 and the Licensee replaces same exactly one
year after the original Unit's installation, then the price for the new
Model(s) shall be reduced to $20,000 (i.e., 20% of the original price has
been depreciated off the original Unit). The New Models shall be the
property of Licensor, and shall bear serial numbers recorded by the
Licensor and acknowledged by Licensee (along with at least one complete
operations manual per New Model) FOB from the Licensor's manufacturing
facility closest to the Licensee's designated delivery site, with all costs
of shipment to be borne by Licensee. The New Models shall be installed at
Licensee's designated location by Licensor's technician. Licensee shall pay
for or reimburse Licensor for reasonable travel, hotel and other incidental
expenses if supported by receipts of Licensor's technician associated with
the installation. Licensor shall provide the installation and time of the
technician at no cost to Licensee.
5. Royalties; Minimum Guarantee.
5.1. In consideration of the grant of the License and all other rights
hereunder, and the use of the Units, during the Term of this Agreement,
Licensee and/or its sublicensees shall pay to Licensor as royalties
("Royalties") an amount equal to five percent (5%) of the Gross Receipts
(as defined below) collected in the First Year and seven (7%) percent of
the Gross Receipts collected in each subsequent year of this Agreement.
"Gross Receipts" shall be defined to mean the total annual gross sales of
the Products sold in the Territory by Licensee exclusive of any customs,
duties, federal, state or local taxes, tariffs, third party charges or any
other fees of any kind. All customs, duties, federal, state or local taxes
and/or tariffs paid by Licensee on the Royalties arising in the Territory
shall be net against and deducted from Royalties paid to Licensor by
Licensee. In the event that Licensee sells the Product to a related party,
then such portion of the Gross Receipts relating to related party sales
shall be calculated based on the assumption that the invoice price charged
by Licensee for the Products sold to a related party is equal to the lowest
invoice price charged by Licensee for the Products sold to an unrelated
third party in the same country within the Territory to the extent the
actual invoice price is lower.
5.2. As a condition of maintaining the License, Licensee shall be
required to pay to Licensor guaranteed minimum royalty amounts ("Guaranteed
Minimum Royalties") in accordance with this section. All Guaranteed Minimum
Royalties shall be applicable against the Royalties payable to Licensor
under this Agreement. Licensee agrees to pay to Licensor all Guaranteed
Minimum Royalties in accordance with the payment schedule set forth below:
5.2.1. Four Hundred Thousand Dollars ($400,000) as the Guaranteed
Minimum Royalty for the First Year payable upon execution of this
Agreement. It being agreed that a $40,000.00 good faith deposit has
previously been paid to Licensor by Licensee, receipt of which is
hereby acknowledged, and shall be credited to the First Year
Guaranteed Minimum Royalty.
5.2.2. Five Hundred Thousand Dollars ($500,000) as the Guaranteed
Minimum Royalty for the second year payable on the first business day
of the second year.
5.2.3. Six Hundred Thousand Dollars ($600,000) as the Guaranteed
Minimum Royalty for the third year payable on the first business day
of the third year.
5.2.4. Seven Hundred Twenty Thousand Dollars ($720,000) as the
Guaranteed Minimum Royalty for the fourth year payable on the first
business day of the fourth year.
5.2.5. Eight Hundred Sixty Four Thousand ($864,000) as the
Guaranteed Minimum Royalty for the fifth year payable on the first
business day of the fifth year.
5.3. On or before the 10th day after the beginning of each calendar
year quarter during the term hereof, and any extension thereof, Licensee
shall deliver to Licensor a written statement, certified to be true and
correct by the Chief Financial Officer of Licensee, setting forth (i) the
Gross Receipts received for the Products during the preceding calendar
year, (ii) the calculation of the Royalty amounts due under Section 5.1
above, and (iii) subtracting from the Royalties due any unapplied
Guaranteed Minimum Royalties for that Royalty year actually paid to
Licensor and any unapplied Unit Rental Fees actually paid to Licensor. At
such time as the Royalties due to Licensor for any Royalty Year begin to
exceed the Guaranteed Minimum Royalties paid for such year, giving a
positive balance due on such statement, Licensee shall remit with each such
statement a check in full payment of the Royalty amount due to Licensor. If
Licensee fails to pay any sum due hereunder within ten (10) days after its
due date, the amount owing will thereupon bear interest until paid at the
rate of two percent (2%) above the prime rate per annum as established by
First Union National Bank of Florida, with the amount of such interest
calculated from such time as said amounts were initially due hereunder
until they are actually paid. In no event shall the interest rate charged
exceed the maximum rate allowable under the relevant provisions of the laws
of Florida and Licensee's domicile. In addition, at the same time Gross
Receipts are reported, Licensee shall report the open unshipped orders and
prior months' bookings as of the close of the preceding calendar quarter.
5.4. Licensee shall keep full and accurate books and records in
sufficient detail so that Royalties can be properly calculated. At all
times during the term of this Agreement and for twelve (12) months
thereafter, Licensor, upon giving Licensee at least ten (10) days advance
written notice of its intention to do so, shall have the right to inspect
or audit all books and records of Licensee with respect to the Product. If
any such audit shall disclose that Licensee has understated Gross Receipts
or has underpaid Royalties for any reporting period, Licensee shall, within
three (3) days of receipt of written demand therefor, pay to Licensor the
amount, if any, by which the Royalties owing exceed Royalties paid, with
interest at two percent (2%) over the prime rate, as described in Section
5.3 above. In the event that Licensee has understated Gross Receipts in
excess of five percent (5%) or underpaid Royalties in excess of five
percent (5%) of the amount due, Licensee shall, within three (3) days of
written demand therefor, pay to Licensor all costs, fees and expenses
incurred by Licensor in conducting such audit, including without
limitation, reasonable travel expenses.
6. Licensor's Right to Terminate in Event of Nonmarketing of Licensed Use.
6.1. Licensor shall have the right to terminate this Agreement in its
entirety and the License granted herein in the event that (i) Licensee is
not actively and substantially producing the Product within sixty (60) days
of the installation of the Original Units, or (ii) Licensee fails to market
such Product to the trade or the consumer in commercially reasonable
quantities within sixty (60) days after the installation of the Original
Units or during any thirty (30) day period thereafter.
6.2. Termination of the license and this Agreement under this Section
6 shall be effective immediately upon written notice from Licensor to
Licensee of such termination.
7. Licensor Rights; Quality Controls.
7.1. The Products shall conform to such reasonable standards and
specifications as Licensor and Licensee shall agree from time to time.
Representatives of Licensor shall have the right, at all reasonable times
upon reasonable notice, to inspect those aspects of Licensee's operations
relating to the manufacture of the Products and the use of the Process,
both at the Licensee's Plant(s) and elsewhere, to carry out the purposes of
inspection. Any sublicense for the Product shall contain a provision for
inspection by Licensor.
7.2. Samples.
7.2.1. Licensee shall submit for the Licensor's approval ten (10)
initial samples of each Product, packaged and labeled in the form
approved by Licensor under Section 7.5 hereof, at least fifteen (15)
days before actually marketed.
7.2.2. Quarterly, at other times upon reasonable request by
Licensor, and at all times before any change is made in the packaging
or content of any Product, Licensee, at its own expense, shall submit
to the Licensor and without obligation on the part of Licensor to
return same:
(I) a reasonable number of samples (in no case less than ten) of
each batch of Products of Licensee's production, packaged as
it does or shall actually appear on the retail market; and
(ii) a reasonable number of samples (in no case less than ten) of
each label, tag, wrapper, carton, container, bottle and item
of promotional and/or advertising material which the
Licensee shall use in connection with each of the Products;
and
(iii)copies of reports (which must be no less frequently than
quarterly or as reasonably requested by Licensor), prepared
by professional food laboratories, which shall show whether
or not the Products comply with the standards and
specifications mutually agreed upon and with governmental
requirements, if any; and
(iv) tear sheets of all media advertising (as defined in Section
7.7 below) together with a statement of place(s) of
publication and date(s) of the advertisement.
7.3. Based upon the reports submitted under 7.2.2. (iii), if any
material aspects of the Product fail to comply with the standards and
specifications as mutually agreed upon, Licensee shall promptly proceed to
correct such defects, in accordance with the standards and specifications.
7.4. All of the Products shall be first quality, unadulterated food
products, equal in taste, quality of ingredients and appearance to the
sample submitted to the Licensor for preliminary approval, and in all
events each Product processed, distributed and sold hereunder will be equal
or superior in quality to the approved sample.
7.5. The Product shall be packaged and labeled in accordance with the
specifications of Licensor. Licensee shall not distribute the Product under
any name other than "Life O2" or such other name as approved in writing by
Licensor. Furthermore, prior to the dissemination by Licensee of any
packaging, labeling, advertising or promotional materials concerning the
Product or the Process, Licensee shall submit a specimen to the Licensor
for approval and Licensee shall not disseminate any such Product or
material without Licensor's prior written approval, which approval shall
not be unreasonably withheld or delayed. Licensee shall include Licensor's
"Life O2" logo indicating its particular process of oxygenation on Products
which it sells in the Territory; provided, however, that the size and
placement of such "Life O2" logo shall be at the reasonable discretion of
Licensee after due consultation with Licensor and all applicable regulatory
authorities. Licensee's "Life O2" logo shall be included in all of
Licensee's advertising of any Product. The dimensions of such logo on the
Product label and any other Licensee advertising of comparable size shall
be no smaller than 7 millimeters by 5.6 millimeters without any border, and
on all other Licensee advertising shall be no smaller than 1 centimeter by
1.2 centimeters, surrounded by a non-printed border of at least one
millimeter in thickness.
7.6. Licensee shall deliver to Licensor, promptly upon its receipt of
same, copies of all surveys, market studies, analyses, and the like
concerning the Products, whether made by or for the Licensee or which shall
otherwise come into Licensee's possession.
7.7. During each of its fiscal quarters during the term of this
Agreement, and any extensions thereof, the Licensee shall incur expenses
for media advertising which, in the aggregate, equals a sum which is no
less than five percent (5%) of the Gross Receipts for each fiscal quarter.
Any deficiency in any fiscal quarter may be corrected by an expenditure in
the calendar month immediately following such quarter in an amount equal to
such deficiency, such expenditure to correct the deficiency not to be
included in computing the advertising and promotion expenditure of the
Licensee for the quarter in which actually incurred. The term "media
advertising" shall not include any coop advertising or promotional payments
or discounts, but rather, shall be expressly limited to placement by or on
behalf of the Licensee for advertisements of the Products. Licensee shall
present a copy of the advertising to Licensor prior to its dissemination
for Licensor's prior written approval, which approval shall not be
unreasonably withheld or delayed.
7.8. Licensor agrees that, during each Royalty year during the term
hereof, it shall dedicate five percent (5%) of the total aggregate amount
of Royalties collected from Licensee hereunder to advertising, marketing,
and/or consumer education designed, in Licensor's sole discretion, to
increase marketplace awareness of the Process and the Products in the
Territory (such amount being referred to herein as the "Advertising
Amount"). Upon request of Licensee, Licensor shall make available to
Licensee one-half (1/2) of the Advertising Amount, in the form of a credit
against Royalties to be paid to Licensor hereunder (the "Advertising
Credit"); provided, however, that, subject to Section 7.8.1. hereof, in no
event shall the sum of the Advertising Credit and the Advertising Amount
exceed five percent (5%) of the aggregate amount of Royalties paid by
Licensee in the previous Royalty year, and provided, further, that (i)
Licensor's "Life O2" logo shall be displayed in connection with such
advertising in accordance with the requirements of Section 7.5 above, and
(ii) Licensee shall make no use of Licensor's logo or any Intellectual
Property of Licensor, including, without limitation, trademarks, service
marks or the like, which would diminish the value of the same.
7.8.1. In addition to the Advertising Credit, Licensee shall be
entitled, upon request, to receive an additional Advertising Credit
(the "Additional Credit") of one percent (1%) of Royalties paid by
Licensee for each 1,000,000 cases of Product sold during the previous
year, up to an aggregate limit of ten percent (10%) of such Royalties,
which aggregate limit shall include the Advertising Credit in its
calculation. Licensee's eligibility for such Additional Credit shall
be governed by the same terms as govern the Advertising Credit.
8. Insurance.
8.1. Within five (5) days of the date of installation of the Original
Units, the Licensee shall submit to Licensor proof, in form and substance
satisfactory to Licensor, that the Licensee has purchased comprehensive
liability insurance, or the equivalent in the Territory, in an amount not
less than $10,000,000 for personal injury and $1,000,000 for property
damage, for each occurrence related to the Products, subject to all
applicable legal limitations within the Territory. The Licensee shall
maintain such insurance in full force and effect at all times when selling
the Products and coverage shall survive termination of the License granted
hereby for any previously manufactured Products. Such insurance coverage
shall insure the Units at the Licensee's Plant(s), with acknowledgment in
the insurance policy that such Units are the property of Licensor. Each
insurance shall name the Licensor as an additional insured party and shall
require the insurer to give Lessor at least thirty (30) days notice of
cancellation before any cancellation shall be effective as to the Licensor.
Licensee shall submit to the Licensor proof of renewal of such insurance
coverage at least thirty (30) days prior to the expiration date of any such
policy. The Licensee shall request each contractor and subcontractor which
renders services to the Licensee with respect to the Products to provide
substantially similar insurance protection.
9. Termination.
9.1. This Agreement and the license granted hereunder shall terminate
at the expiration of the Initial Term or any renewal term hereof, unless
terminated earlier in accordance with this Section 9.
9.2. This Agreement may be terminated upon notice:
9.2.1. by Licensor pursuant to the terms of Section 6 hereof; or
9.2.2. by Licensor, in the event that the Licensee shall failed
to either remit Royalties in full when due (subject to Section 9.3
below), or intentionally and willfully failed to fully and fairly
report Gross Receipts, which failure shall be discerned by Licensor
pursuant to the audit rights provided by Section 5.5.
9.2.3. by either party, if the other party has breached or failed
to punctually perform any of its duties or obligations under this
Agreement and such breach remains uncured, is not in the process of
being cured or such failure to perform continues for at least thirty
(30) days after the aggrieved party has given notice to the other; or
9.2.4. by the Licensor, if Licensee is insolvent or becomes the
subject of a voluntary or involuntary petition in bankruptcy for its
reorganization or liquidation and does not post a bond, or makes any
assignment for the benefit of its creditors, or if a trustee or
receiver of its property is appointed, or if Licensee takes or is
subjected to any other similar action based upon its inability to meet
its financial obligations; or
9.2.5. by the Licensor, if there is a sale of substantially all
of the assets or a majority of the shares of the Licensee, or if there
is a change in control of the Licensee by contract, a change of
management or otherwise.
9.3. Section 9.2.2. notwithstanding, a notice of termination based
upon nonpayment or underpayment of Royalty shall be deemed withdrawn in the
event that the Licensee shall pay such unpaid amount within three (3) days
with interest from the date originally due at fourteen percent (14%) per
annum; provided, however, that the Licensee shall be able to effectuate
such Royalties in excess of one (1) time in any such period shall result in
the notice of termination as to any additional default being final, binding
and noncurable.
9.4. If the Initial Term (or renewal term, if applicable) expires or
if the Agreement is terminated, all rights of the Licensee (and
sublicensees, if any) under this Agreement shall cease and the Licensee
shall cease (and cause the sublicensees to cease) to use the Process or the
Units and shall cease the manufacture, use or sale of the Products, the
Licensee concurring that any such continued manufacture, use or sale shall,
in and of itself, cause irreparable injury to Licensor. Furthermore,
Licensee shall immediately return to and/or surrender control of the Units
to Licensor, who shall be granted the right to enter the Licensee's
Plant(s) to remove all of the Units provided to Licensee hereunder. In such
event, Licensee shall be obligated to assist Licensor with the removal of
such Units, to the extent requested by Licensor. Notwithstanding the above,
in the event that Licensee has any inventory of Products remaining at the
effective date of termination hereof, Licensee shall offer to sell such
inventory to Licensor at Licensee's actual purchase price thereof, and if
Licensor elects not to purchase such inventory, Licensee shall have a
period of six (6) months from the date of termination hereof in which to
sell the remaining Products.
9.5. Notwithstanding any termination of this Agreement and exercise of
any rights or remedies hereunder, the following rights and obligations
shall survive any such termination or exercise of rights to the degree
necessary to permit their complete fulfillment or discharge:
9.5.1. the Licensor's right to receive or recover, and the
Licensee's obligation to pay, all Royalties as may be due and payable
at the time of such termination, or as may become due and payable
after such termination, and any adjustments in payments required
thereafter as a result of any audits under Section 5.5; and
9.5.2. Licensee's obligations under Section 2 hereof;
9.5.3. Any other rights and obligations intended in this
Agreement to survive termination.
10. Improvements to Unit and Process.
10.1. Licensee acknowledges that any and all improvements, inventions,
modifications, technology or development (collectively "Improvements") made
by Licensee, its employees and agents, to the Units and/or Process, if any,
shall be the sole and exclusive property of Licensor and that Licensor
shall have the right to use, refrain from using, change, modify, add to,
subtract from and to file for any patents for the Improvements or any of
them in any manner and in any and all countries throughout the world, in
perpetuity, as Licensor in its sole discretion shall determine. Licensee
hereby irrevocably and exclusively assigns to Licensor, in perpetuity, all
rights (including without limitation all patents and renewals and
extensions thereof) in and to such Improvements. Licensee further agrees to
execute and cause its employees to execute any and documents (including
without limitation assignments, declarations and affidavits) requested by
Licensor or Licensor's attorneys in furtherance of the provisions of this
paragraph. Licensee hereby grants to Licensor its irrevocable power of
attorney, coupled with an interest, to execute, in Licensee's name, any and
all documents required under this paragraph. Notwithstanding the foregoing,
Licensee shall have the right to use such Improvements within the scope of
the License without any escalation in royalty.
11. Representations and Warranties; Indemnification.
11.1. Each party hereto represents and warrants the following:
11.1.1. Each party is a corporation, duly incorporated, in good
standing and authorized to transact business in the jurisdictions in
which the respective corporations transact business.
11.1.2. Each party hereto has taken the necessary corporate
action to properly authorize and bind the corporation to the terms and
conditions hereof. Nothing contained in the Agreement shall violate
any of the Articles of Incorporation, By-Laws or any other agreement
or arrangement of the respective corporations.
11.1.3. To the best of the parties' knowledge nothing in
existence prevents them from entering into this Agreement or
performing under this Agreement.
11.2. Each party ("Indemnifying Party") agrees to indemnify, hold
harmless, reimburse and defend the other party ("Indemnified Party") at all
times against any claim, costs, expense, liability, obligation, loss,
damage or judgment (including legal fees) of any nature (collectively
referred to as "Claim"), incurred by or imposed upon the Indemnified Party
which results, arises out of or is based upon any misrepresentation by the
Indemnifying Party. The Indemnified Party shall send notice to the
Indemnifying Party of any Claim, and within ten (10) business days
thereafter counsel for the Indemnified Party and counsel for the
Indemnifying Party shall determine if the Indemnifying Party shall assume
the defense of the Claim; provided, however, the failure to give notice
shall not affect the Indemnified Party's rights hereunder so long as the
Indemnified Party vigorously defends the Claim.
11.3. Licensor represents and warrants to Licensee that the Equipment
and each Unit shall be of good material and workmanship, shall be fully
operational and in good working order free and clear of any defects (normal
wear and tear excepted), shall be fit and sufficient for the purpose
intended, and shall meet or exceed the minimum specifications described in
Exhibit A attached hereto and made a part hereof.
12. Miscellaneous.
12.1. The terms of this Agreement are contractual, not mere recitals.
This Agreement is the result of protracted, arms-length negotiation between
the parties, each of whom has participated in the drafting hereof, through
their respective attorneys or legal representatives. The rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this
Agreement.
12.2. This Agreement shall, in all respects, be governed by the laws
of the State of Florida applicable to agreements executed and to be wholly
performed within the State of Florida. Nothing contained herein shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision contained herein and
any present or future statute, law, ordinance or regulation contrary to
which the parties have no legal right to contract, the latter shall prevail
but the provision of this document which is affected shall be curtailed and
limited only to the extent necessary to bring it within the requirements of
the law.
12.3. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience and reference and shall
not be construed as part of this Agreement. Should there be any conflict
between any such caption and the paragraph at the head of which it appears,
the paragraph and not such caption shall control and govern in the
construction of this document.
12.4. The relationship between the parties hereto is contractual only,
and nothing contained in this Agreement shall be construed so as to create
a joint venture or partnership between the parties hereto or a third party
beneficiary relationship to any third party. Furthermore, nothing contained
herein shall be deemed to create any franchise rights in Licensee; this
Agreement is not a franchise and does not include payment of a franchise
fee, and does not require distribution of the Product under the control or
plan of Licensor.
12.5. Any loss or damage, or delays in or failure of performance by
either party hereto shall not constitute default hereunder or give rise to
any claims for damages if, but only to the extent that, such loss, damage,
delay or failure is caused by "Force Majeure." As herein used, the term
"Force Majeure" means: war, mobilization, revolution, civil commotion,
riots, strikes, lockouts, floods, hurricanes, similar storms or other
extraordinary actions of the elements, acts of God or the public enemy,
acts of civil or military authorities, interruption of transportation
facilities, fire and any other cause which is beyond the reasonable control
of the party whose performance is affected and which, by the exercise of
reasonable diligence, such party is unable to prevent.
12.6. Any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing and shall be
validly given or made to another party if given by person, telex,
facsimile, telegram or if deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice,
demand or other communication be given by personal delivery, telex,
facsimile or telegram, service shall be conclusively deemed made at the
time of such personal service. If such notice, demand or other
communication is given by mail, such notice shall be conclusively deemed
given forty-eight (48) hours after the deposit thereof in the United States
mail addressed to the party to whom such notice, demand or other
communication is to be given as hereinafter set forth:
If to the Licensor: Life International Products, Inc.
Attn: Xxxxx XxXxxxxx
0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Licensee: Seven Star International Holding, Inc.
Attn: Li Xxx Xxxxx
Room 1810-1814 Xxxx-Xxxx Xxxxxx
0-00 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxx
Xxxx Xxxx
Telephone: (000) 0000-0000
Facsimile: (000) 0000-0000
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given in
the manner provided hereby to the other party or parties hereto.
12.7. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute or be deemed a waiver of any other provisions
hereof or of any subsequent breach of the same or any other provision.
12.8. This Agreement may be executed in one or more separate
counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one
and the same instrument. Any signed copy of this document or of any other
document or agreement referred to herein, or copy or counterpart thereof,
delivered by facsimile transmission shall for all purposes be treated as if
it were delivered containing an original manual signature of the party
whose signature appears in the facsimile, and shall be binding upon such
party in the same manner as though an originally signed copy had been
delivered.
12.9. No amendment, change or modification of this Agreement shall be
valid unless in writing and signed by all of the parties in interest at the
time of such amendment, change or modification.
12.10. Each of the parties hereto shall execute and deliver any and
all additional papers, documents, and other assurances, and shall do any
and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent of
the parties hereto.
12.11. Nothing contained herein is intended to or shall be construed
so as to limit the remedies which any party hereto may have against any
other party hereto in the event of a breach by any party of any
representation, warranty, covenant or agreement made under or pursuant to
this Agreement, it being intended that any remedies shall be cumulative and
not exclusive. Without limiting the generality of the foregoing, the rights
granted to Licensee pursuant to this Agreement are of a special, unique,
unusual, extraordinary and intellectual character which gives them a
peculiar value, the loss of which cannot be reasonably or adequately
compensated by damages in an action at law. As such, Licensor may seek, but
shall not be limited to, equitable relief, by injunction or otherwise, in
the event of a default by Licensee.
12.12. The parties hereto intend this Agreement, together with any
related documents referred to in this Agreement, to constitute the entire
understanding and agreement of the parties with respect to the subject
matter of this Agreement, and any and all prior agreements, understandings
or representations are hereby and intended to be terminated and canceled in
their entirety.
IN WITNESS WHEREOF, the parties have executed this License Agreement as of
the date first written above.
"Licensee" "Licensor"
SEVEN STAR INTERNATIONAL LIFE INTERNATIONAL PRODUCTS, INC.
HOLDING, INC.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx XxXxxxxx
---------------------- -----------------------------
Xxxxx X. Xxxxx Xxxxx XxXxxxxx
Vice Chairman/COO President/CEO
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