EXHIBIT 10.26
Chou Golf Design Labs, Inc.
Research, Development and Consulting Contract
This Agreement (the "Agreement") is entered into and effective as of
October 8, 1996, between Hippo, Inc. a corporation organized and existing under
the laws of the state of Delaware with its principal place of business at 0000
Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx ("Hippo") and Chou Golf
Design Labs, Inc., a corporation existing under the laws of the State of
Pennsylvania with its principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx xx
Xxxxxxx, Xxxxxxxxxxxx ("Chou"). In consideration of the mutual promises and
covenants contained in this Agreement, Hippo and Chou agree as follows:
1. Scope of Work
Chou shall perform research and development, engineering, consulting,
product testing and development tasks, hereinafter collectively referred to as
"Work" for Hippo during the term of this Agreement. In that capacity, Chou will
design, develop, source, and test at Hippo's direction such products which may
include, but are not limited to: golf clubs, golf club heads, shafts, grips, and
ferrules "Golf Equipment". Chou will also design, develop, source, and test at
Hippo's direction new methods of design, sourcing and manufacturing of golf
equipment and new materials used in the production, manufacturing of or assembly
of golf equipment. During the term of this Agreement, Chou shall use his best
efforts in performing the Work.
2. Compensation
2.1 In full consideration of Chou's performance of the Work under this
Agreement, Hippo shall pay Chou as follows:
(a) During the period from October 1, 1996 to September 30, 1997 Chou
shall be paid a monthly fee of $6,250.00. However, this fee will be credited
against royalties (if any) should they become owed to Chou under paragraph
2.1(b).
(b) Chou shall receive royalties at the rate of 2% of the Cost of
Goods sold on any product developed by Chou for Hippo and sold by Hippo to third
party customers for cumulative sales of each individual product line (based on
Cost of Goods) of $1.00 to $20,000,000.00 and 1% of the Cost of Goods Sold over
and above cumulative sales of $20,000,000.00.
(c) All monthly payments due under Paragraph 2.1(a) shall be made on
or before the last day of each month.
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(d) All royalty payment by Hippo shall be made quarterly, payable
within 45 days after each calendar quarter ending on the last of March,
June, September and December and based on sales by Hippo during the quarter for
which Hippo has received payment.
(e) "Cost of Goods" means the aggregate amount incurred by Hippo for
finished goods as either (i) the aggregate amount charged by the appropriate
manufacturer or supplier of the finished goods or (ii) in the case of goods
assembled by Hippo, the aggregate amount charged by the appropriate manufacturer
or supplier of the components, such as golf club heads, shafts or grips, plus
the aggregate amount of other costs associated with the assembly of such
components and the manufacture of the finished goods; in either case less
deductions for any taxes, duties and charges, however, designated, imposed by
any government or governmental agency, authority or subdivision thereof in
connection with the manufacture, assembly or sale of the goods.
2.2 Hippo shall reimburse Chou for travel expenses incurred by Chou at the
written request of Chou and approved by Hippo.
3. Chou's Warranties
3.1 Chou represents and warrants that it has disclosed to Hippo any
existing or contemplated activity which might involve a conflict of interest and
it will recognize and avoid any situation that might involve a conflict of
interest.
3.2 Chou represents and warrants that (i) it is authorized to enter into
and perform this Agreement, and (ii) it is subject to no contract or agreement
with any person, corporation or government agency or other entity that will, in
any manner, impede or prevent Chou from giving, and Hippo from receiving, the
benefit of the Work to be performed under this Agreement.
3.3 Chou represents and warrants that no information to be disclosed to
Hippo in performance of this Agreement was or will be acquired by Chou (i)
pursuant to any relationship in which Chou was obligated to hold such
information in confidence for the benefit of any third party or (ii) by any
unlawful or otherwise improper means.
3.4. Chou represents and warrants that no information, software, materials,
Golf Equipment Developments or other products delivered to Hippo under this
Agreement will infringe upon, conflict with or violate any patent rights,
copyrights, trade secrets or other proprietary rights of any person or entity.
3.5 Chou will indemnify Hippo and hold it harmless from and against all
losses, liabilities and claims that may arise out of or on account of any breach
of Chou's representations, warranties and covenants set forth in this Agreement.
4. Rights in Intellectual Property
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4.1 Chou agrees that all discoveries, inventions, ideas, concepts,
software, research and other information, processes, products, methods, designs,
developments and improvements (whether or not patentable or subject to copyright
protection), relating to or arising out of any of the Work, that are written,
made, conceived, developed or reduced to practice by Chou, whether alone or
jointly with others, (hereinafter collectively referred to as Developments)
during the term of this Agreement will be disclosed solely to Hippo. Chou
further agrees that Hippo has the right to independently and exclusively review
and test all Developments for a period of one hundred twenty (120) days after
their disclosure to Hippo ("Test Period").
4.2 Chou agrees that upon written notice from Hippo within thirty (30) days
after the expiration of the Test Period of Hippo's desired ownership of any
Development, Chou agrees to assign to Hippo all of Chou's right, title and
interest throughout the world in and to all Developments and to anything
tangible which evidences, incorporates, constitutes, represents or records any
Development. Chou agrees that to the extent the copyright laws of the United
States shall apply to the Developments, the Developments shall constitute work
made for hire under such copyright laws and hereby assigns and, to the extent
any such assignment cannot be made at present, it hereby agrees to assign to
Hippo all copyrights patents and other proprietary rights it may have in any
such development, together with the right to file for and/or own wholly without
restriction United States and foreign patents, trademarks, and copyrights with
respect thereto.
4.3 Hippo agrees to use its best efforts to manufacture and produce for
commercial distribution any Development assigned to Hippo within twenty (20)
months of the assignment by Chou to Hippo. Should Hippo fail to use its best
efforts to produce or manufacture for commercial distribution any Development
during the twenty (20) month period, upon written request from Chou, all rights
in said Development will be assigned by Hippo to Chou.
4.4 Chou agrees to, and hereby does assign to Hippo all of is right, title
and interest throughout the world in and to all products described in Appendix A
attached hereto and incorporated herein by reference (hereinafter collectively
referred to as "Hosel Products") and to anything tangible which evidences,
incorporates, constitutes, represents or records any Hosel Product. Chou agrees
that to the extent the copyright laws of the United States shall apply to the
Hosel Products, the Hosel Products shall constitute work made for hire under
such copyright laws and hereby assigns and, to the extent any such assignment
cannot be made at present, it hereby agrees to assign to Hippo all copyrights,
patents and other proprietary rights it may have in any such development,
together with the right to file for an/or own wholly without restriction United
States and foreign patents, trademarks, and copyrights with respect thereto.
Chou further agrees that the originals and all copies of all notebooks, disks,
tapes, computer programs, reports, proposals and other documents and materials
evidencing, incorporating, constituting, representing or recording any Hosel
Product shall be the sole property of Hippo.
4.5 Chou agrees that compensation for any Development by Chou, assigned to
Hippo shall be that compensation described in Section 2.1(b).
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4.6 Chou hereby undertakes, without payment of any consideration to Hippo
in addition to the compensation described in Section 2.1 (i) promptly disclose
developments to Hippo; (ii) assist Hippo in every reasonable manner to obtain
patents or copyrights thereon in any and all such countries for Hippo's benefit;
(iii) to execute all such patent applications, patent or copyright assignments
and other lawful documents, and to take all such other actions, as Hippo may
request to obtain for Hippo all right, title and interest in and to any of the
Developments or otherwise to carry out the purposes of this Agreement.
The out-of-pocket cost of prosecuting patent applications and obtaining
copyright registration shall be borne by Hippo.
4.7 It is understood that Sections 4.1, 4.2 and 7 of this Agreement apply,
without limitation, to any and all oral communications and writings, including,
without limitation, notes, drawings, specifications, schematics, flow charts,
software algorithms, and engineering, sales, marketing and financial plans, and
studies and reports that are prepared, compiled or acquired by Chou during the
term of this Agreement that relate to or arise out of any of the Work.
5. Non-Disclosure and Confidentiality
5.1 Chou acknowledges that in the course of performing work for Hippo, it
will receive information about, and access to, trade secrets and other
confidential and proprietary information (including, without limitation, the
information, software and materials described in Section 4 of this Agreement)
which are vital to the competitive position and success of Hippo. Hippo
acknowledges that during the term of this Agreement it will receive information
about, and access to, trade secrets and other confidential and proprietary
information (including, without limitation, the information, software and
materials described in Section 4 of this Agreement) which are vital to the
competitive position and success of Chou.
5.2 The Confidential Information will only be used for the purpose of
completing the Work and such Confidential Information will be kept confidential
by Chou and Hippo, except that the Confidential Information or portions thereof
may be disclosed to Chou's or Hippo's representatives who need to know such
Information and who agree to be bound by this Agreement.
5.3 Without Hippo's prior written consent, for a period of five years
following the disclosure of Confidential Information to Chou, neither Chou nor
its representatives will disclose to any person such Information, the fact that
such Information has been made available or that Chou is providing the Work,
except as required by law and then only with prompt prior written notice to us.
5.4 Without Chou's prior written consent, for a period of five years
following the disclosure of Confidential Information to Hippo, neither Hippo nor
its representatives will disclose to any person such Information, the fact that
such Information has been made available or that Hippo is contracting the Work,
except as required by law and then only with prompt prior written notice to us.
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5.5 This Agreement does not apply to such portions of the Confidential
Information which (i) are or become generally available to the public (other
than as a result of a disclosure by Chou or Chou's representatives), (ii) Chou
can show were available to Chou on a non-confidential basis prior to their
disclosure to Chou by Hippo from a source other than Hippo or one of its
representatives which is entitled to disclose it or (iii) Chou can show it
become available to Chou on a non-confidential basis from a source other than
Hippo or its representatives, provided that such source is not known by Chou or
Chou's representatives to be bound by a confidentiality agreement with Hippo or
otherwise prohibited from transmitting the information to Chou by a contractual,
fiduciary or other legal obligation.
5.6 This Agreement does not apply to such portions of the Confidential
Information which (i) are or become generally available to the public (other
than as a result of a disclosure by Hippo or Hippo's representatives), (ii)
Hippo can show were available to Hippo on a non-confidential basis prior to
their disclosure to Hippo by Hippo from a source other than Chou or one of its
representatives which is entitled to disclose it or (iii) Hippo can show it
become available to Hippo on a non-confidential basis from a source other than
Chou or its representatives, provided that such source is not known by Hippo or
Hippo's representatives to be bound by a confidentiality agreement with Chou or
otherwise prohibited from transmitting the information to Hippo by a
contractual, fiduciary or other legal obligation.
5.7 In the event Chou or anyone to whom Chou supplies Confidential
Information to become legally compelled to disclose any of the Confidential
Information, Chou will provide Hippo with prompt written notice of such event so
that Hippo may seek a protective order or other appropriate remedy. In the event
that such protective order or other remedy is not obtained, Chou agrees to
furnish only that portion of the Confidential Information which, in the opinion
of counsel, Chou is legally compelled to disclose and upon Hippo's request will
exercise Chou's best efforts to obtain reliable assurances that confidential
treatment will be accorded the Confidential Information.
5.8 In the event Hippo or anyone to whom Hippo supplies Confidential
Information to, become legally compelled to disclose any of the Confidential
Information, Hippo will provide Chou with prompt written notice of such event so
that Chou may seek a protective order or other appropriate remedy. In the event
that such protective order or other remedy is not obtained, Hippo agrees to
furnish only that portion of the Confidential Information which, in the opinion
of counsel, Hippo is legally compelled to disclose and upon Chou request will
exercise Hippo's best efforts to obtain reliable assurances that confidential
treatment will be accorded the Confidential Information.
5.9 The Term "Confidential Information" as used throughout this Agreement
shall mean all Developments and all trade secrets, confidential or proprietary
information and other data or information (and any tangible evidence, record or
representation thereof), whether prepared, conceived or developed by an employee
or consultant of Hippo (including Chou) or received by Hippo from an outside
source, which is in the possession of Hippo (whether or not the property of
Hippo) and which is maintained in secrecy or confidence by Hippo or which might
permit Hippo or any of its customers
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to obtain a competitive advantage over competitors who do not have access to
such Developments, trade secrets, confidential or proprietary information, or
other data or information.
6. Relationship of the Parties
In performing the Work under this Agreement, Chou will at all times act as
an independent contractor. This Agreement shall not constitute Chou an agent or
legal representative of Hippo for any purpose whatsoever and creates no
relationship of employment, principal and agent, partnership or joint ventures.
Chou shall have no authority to bind Hippo or to create any express or implied
obligation for Hippo, and Chou shall not hold itself out as having such
authority. Chou shall have full responsibility for payment of, and shall pay,
all compensation, social security, unemployment, withholding and other taxes and
charges for all persons engaged by it in the performance of services hereunder,
as and when the same become due and payable, and Hippo shall have no obligation
to pay or make available any employee benefit to Chou or any person employed by
or associated with Chou.
7. Term and Termination
7.1 Hippo may terminate this Agreement by sending written notice of
termination to Chou at any time after Chou fails or neglects to perform any of
its obligations hereunder, including, without limitation, the timely performance
of the Work, or otherwise after Chou's breach of any provision hereof, such
notice to be effective immediately upon sending. Following any such termination,
Hippo shall have no further obligation to Chou.
7.2 Chou may terminate this Agreement by sending written notice of
termination to Hippo at any time after Hippo fails or neglects to perform any of
its obligations hereunder, including Hippo's breach of any provision hereof,
such notice to be effective immediately upon sending. Following any such
termination, Chou shall have no further liability or obligation to Hippo.
7.3 This Agreement shall terminate automatically if a petition in
bankruptcy or seeking reorganization is filed by or against Chou, if an
assignment for the benefit of creditors is made by Chou or if a receiver is
appointed to take charge of all or part of Chou's assets or properties.
7.4 This Agreement shall terminate automatically if a petition in
bankruptcy or seeking reorganization is filed by or against Hippo, if an
assignment for the benefit of creditors is made by Hippo or if a receiver is
appointed to take charge of all or part of Hippo's assets or properties.
7.5 Hippo and Chou understand and agree that their obligations under
Sections 2.1(b), 3, 4, 5 and 8 hereof and this Section 7 shall survive and shall
not be affected by any expiration or earlier termination of this Agreement.
8 Miscellaneous
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8.1 Any notice required or permitted to be given under this Agreement shall
be given in writing and sent by certified or overnight mail to the party.
8.2 This Agreement sets forth the entire agreement and understanding
between the parties with respect to the subject matter hereof, and supersedes
all prior oral and written agreements and understandings between them relating
thereto.
8.3 It is understood that the majority of work performed by Chou under this
Agreement will be performed by Art Chou. This Agreement will automatically be
terminated should Art Chou no longer be a full time employee of Chou or should
Art Chou no longer perform the majority of the Work under this Agreement. Chou
shall not delegate or assign any of its rights, duties or obligations hereunder.
Any purported assignment or delegation thereof by Chou shall be void and
ineffective.
8.4 Chou acknowledges and agrees that in the event of any breach of this
Agreement, the Hippo would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that Hippo, in
addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and/or to compel specific performance of this
Agreement.
8.5 This Agreement shall be governed by, and construed and enforced in
accordance with the internal laws of the State of Florida and may be executed in
any number of counterparts, each of which shall, when executed, be deemed to be
an original and all of which shall be deemed to be one and the same instrument.
Any action on this Agreement shall be litigated in the courts of the State of
Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
Chou Golf Design Labs, Inc. Hippo
/S/ Art Chou /S/ Xxxx Xxxxxx 10/9/96
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By: Art Chou By: Xxxx Xxxxxx
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Its: President Its: CEO
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