LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into effective
as of the 15th day of March, 2000, by and between Xxxxx X. XxXxxxx (the
"Licensor"), 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, and XXXxxxxxx.xxx,
Inc. (the "Licensee"), a Colorado corporation, 0000 Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000.
WHEREAS, Licensee is engaged in the retail sale and distribution, via
juried art shows, online and otherwise, and other derivation of revenue from the
commercial exploitation, of photographic prints, images and likenesses
whatsoever (collectively, the "Prints") created from transparencies, from
time-to-time (the "Intellectual Property"), all right, title, and interest in
and to which is solely owned by Licensor, an award-winning photographer.
WHEREAS, Licensor has the right to grant the rights transferred under this
Agreement.
WHEREAS, Licensee is desirous of acquiring from Licensor exclusive rights
to utilize the Intellectual Property for the purpose of the creation,
reproduction, marketing, sale and distribution of Prints, and other commercial
exploitation for the purpose of deriving revenue, therefrom.
WHEREAS, Licensor is willing to grant such rights upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration for the mutual covenants and promises
contained in this Agreement, the parties agree as follows:
1. Definitions. For the purpose of this Agreement, the following terms
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shall have the stated meanings:
a. Intellectual Property shall mean all transparencies, from
time-to-time, of Licensor.
b. Subsidiary shall mean, for either party, a firm, corporation or
company in which a party owns or controls, directly or indirectly, at least
fifty per cent (50%) of the voting securities or control.
c. Parent shall mean, for either party, a firm, corporation or company
that owns or controls, directly or indirectly, at least fifty percent (50%) of
the voting securities or control of the party. For the purpose of this
definition, the securities owned or controlled by a particular corporation,
company or firm shall be deemed to include all securities owned or controlled,
directly or indirectly, by any other corporation, company or firm of which the
particular corporation, company or firm owns or controls, directly or
indirectly, at least a fifty per cent (50%) majority of the securities having
the right to vote for directors thereof.
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d. Affiliate shall mean, for either party, corporation, company or firm
as to which fifty per cent (50%) of the voting securities or control is owned or
controlled, directly or indirectly, by a Parent of the party.
e. Net Revenue shall mean the gross amount invoiced to purchasers and
any others whosoever by Licensee in respect to the retail sale of Prints and
other commercial exploitation of the Intellectual Property in any manner
whatsoever, without deduction except for freight and delivery charges,
insurance, returns, taxes, discounts and allowances actually given.
f. Prints shall mean all photographic prints, images and likenesses
whatsoever created from the Intellectual Property.
2. Grant. Subject to the terms and conditions of this Agreement,
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Licensor hereby grants to Licensee the exclusive right and license, not
including the right to sublicense others, to use the Intellectual Property to
create Prints for retail sale and distribution, via juried art shows, online and
otherwise, and to derive revenue from the commercial exploitation thereof in any
manner whatsoever. No license is granted to Licensee for the use of any product
or service other than the Intellectual Property.
3. License Issue Fee and Royalties.
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a. Licensee, as consideration for the license hereby granted to it, and
subject to the provisions of this Agreement permitting the suspension of royalty
payments, shall pay Licensor a royalty (the "Royalty") of ten per cent (10%) of
Net Revenue (as defined in this Agreement) in the amount of each increment of
$200,000 realized by Licensee from the sale of Prints created from the
Intellectual Property or other commercial exploitation of the Intellectual
Property in any manner whatsoever. Set forth below is the Royalty payable by the
Licensee upon the realization of each increment of $200,000 in Net Revenue for
the initial $1,000,000 of Net Sales:
$200,000: $20,000
$400,000: $40,000
$600,000: $60,000
$800,000: $80,000
$1,000,000: $100,000
The Royalty shall be paid in one lump sum on the date of realization by the
Licensee of each incremental amount of Net Revenue set forth above. Royalties
paid by Licensee under the terms and conditions of this section shall be
nonrefundable. In the event that Licensee fails to pay the Royalty specified in
this Agreement, Licensor may, at its option, terminate this Agreement.
b. Royalties provided for in this Agreement, when overdue, shall bear
interest at a rate per annum equal to one percent (1%) in excess of the "prime
rate" published by "The Wall Street Journal" at the time such payment is due,
and for the time period until payment is received by Licensor.
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c. Licensee covenants that it will use its best efforts to diligently
create, reproduce, market, sell and distribute the Prints and commercially
exploit the Intellectual Property.
4. Accounting Provisions.
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a. Records. Licensee shall keep or cause to be kept, in accordance
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with generally accepted accounting principles, books, records and accounts
covering its operations applicable to this Agreement and containing all
information necessary for the accurate determination of amounts payable
hereunder. Licensee also agrees to permit, at Licensor's expense unless a
discrepancy of more than ten per cent (10%) of the amount paid is found, a
certified public accountant to inspect, at reasonable intervals and during
regular business hours, such books, records and accounts as may be necessary to
determine the completeness and accuracy of accounting reports required to be
made hereunder.
b. Reports and Payment. As promptly as practicable and within
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forty-five (45) days after the end of each calendar quarter, any part of which
is within the term of this Agreement, Licensee shall deliver to Licensor a
report in writing, certified by an officer of Licensee, setting forth the number
of Prints sold and the amount of Net Revenue realized during such calendar
quarter by Licensee. Such report shall be made whether or not Licensee has sold
any Prints or realized any Net Revenue during such quarter. Licensee, at
Licensor's request, shall also provide Licensor an annual summary within
forty-five (45) days after the completion of each of Licensee's fiscal years,
prepared by an independent accounting firm attesting to the number of Prints
sold and the amount of Net Revenue realized by Licensee in that fiscal year. The
examination of books and records and preparation of this annual report shall be
at the expense of Licensee.
5. Force Majeure. Neither party shall be responsible to the other for
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failure to perform any of the obligations (other than the obligation to pay
money) imposed by this Agreement, provided such failure shall be occasioned by
fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil,
failure or destruction, in whole or in part, of machinery or equipment or
failure of supply of materials, discontinuity in the supply of power,
governmental interference, civil commotion, riot, war, strikes, labor
disturbance, transportation difficulties or labor shortage or by any cause
beyond the reasonable control of the party in question.
6. Term and Termination. This Agreement shall commence and be effective
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on March 15, 2000, and shall continue thereafter for an initial term of five (5)
years. Upon completion of the initial term of this Agreement, Licensee may renew
this Agreement and the rights granted hereunder for a second five (5) year term
upon six (6) months' written notice given to Licensor, upon the approval and
consent of Licensor.
a. Bankruptcy; Insolvency; Change of Ownership. If Licensee shall
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become bankrupt, or become insolvent, or files a petition for bankruptcy, and/or
if the business of Licensee shall be placed in the hands of a receiver, assignee
or trustee, and/or Licensee shall be liquidated or dissolved, and/or all or
substantially all of the assets or securities of Licensee shall be sold,
exchanged or transferred, and/or in the event of a merger or consolidation to
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which Licensee is a party, whether by the voluntary act of Licensee or
otherwise, this Agreement shall immediately terminate without notice by either
party.
b. Option at Default. Either party, at its option, may give notice of
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the termination of this Agreement if the other party defaults in the performance
of any material obligation, and if the default has not been remedied within
ninety (90) days after written notice to the defaulting party describing the
default.
c. Termination. In the event of any termination of this Agreement,
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Licensee shall have no further license of or rights to Licensor's Intellectual
Property.
7. Governing Law. This Agreement shall be governed and interpreted in
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accordance with the laws of the State of Colorado, except to the extent that
Colorado conflict of laws rules would require the application of the law of
another state or country.
8. General Terms and Conditions.
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a. Relationship of the Parties. This Agreement does not constitute a
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partnership agreement, nor does it create a joint venture or agency relationship
between the parties. Neither party shall hold itself out contrary to the terms
of this Paragraph. Neither party shall be liable to any third party for the
representations, acts or omissions of the other party.
b. Notices. Unless otherwise expressly provided for, all notices,
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requests, demands, consents or other communications required or permitted under
this Agreement must be in writing and must be delivered personally or sent by
certified or registered mail (postage prepaid and return receipt requested) to
the other party at 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (or to any other
address given by either party to the other party in writing). In the case of
mailing, the effective date of delivery of any notice, demand or consent shall
be considered to be ten (10) days after proper mailing.
c. Waiver and Amendment. No waiver, amendment or modification of this
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Agreement shall be effective unless it is in writing and signed by the party
against whom the waiver, amendment or modification is sought to be enforced. No
failure or delay by either party in exercising any right, power or remedy under
this Agreement shall operate as a waiver of the right, power or remedy. No
waiver of any term, condition or default of this Agreement shall be construed as
a waiver of any other term, condition or default.
d. Assignment. The respective rights and obligations of Licensee under
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this Agreement shall not be assigned or transferred without the prior written
consent of Licensor. Licensor may assign this Agreement to any of its
Subsidiaries, Parents or Affiliates without Licensee's consent.
e. Headings. The section and paragraph headings of this Agreement are
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intended as a convenience only, and shall not affect the interpretation of its
provisions.
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f. Singular and Plural Terms. Where the context of this Agreement
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requires, singular terms shall be considered plural, and plural terms shall be
considered singular.
g. Severability. If any provision of this Agreement is finally held by
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a court of competent jurisdiction to be unlawful, the remaining provisions of
this Agreement shall remain in full force and effect, unless as a result of such
unlawful provision there is a material failure of consideration as to a party
and such party is unwilling to waive such failure.
h. Entire Agreement. This Agreement constitutes the complete and final
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agreement and understanding between the parties, and supersedes and replaces all
prior negotiations and agreements between the parties concerning its subject
matter. The interpretation of this Agreement may not be explained or
supplemented by any course of dealing or performance, or by usage of trade.
i. Execution Required. This Agreement shall not be binding against
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either party until it is executed by both parties.
j. Confidentiality. All aspects of this Agreement shall remain
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confidential between Licensee and Licensor except for any governmental required
disclosures.
k. Indemnification. In the event that any claims for money damages are
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asserted against Licensor by third parties, where such claims arise out of
Licensee's activities under this Agreement, Licensor will promptly notify
Licensee of such claims. Licensee may defend such claims at its expense. If
Licensee fails to exercise its right to defend Licensor against such third party
claims, Licensor shall have the right to defend against such claims and take any
action deemed proper in Licensor's sole discretion to expeditiously resolve such
claims. Moreover, if Licensee does not defend Licensor, Licensee shall indemnify
Licensor for all fees and expenses incurred in preparing and presenting its
defense and regardless of the outcome of any ensuing litigation. In any event,
Licensee shall also indemnify Licensor for any payments made by Licensor to
third parties for claims arising under this paragraph, regardless of whether
such payments are in satisfaction of a judgment or constitute an out-of-court
settlement of such claims.
10. Warranties. Licensor represents and warrants that it owns the
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Intellectual Property and that such rights are not the subject of any
encumbrance, lien or claim of ownership by any third party.
IN WITNESS WHEREOF, this Agreement is made and entered into in duplicate
and each party has caused its name, by its duly authorized officer, or his name
to be hereunto subscribed, effective as of the date indicated above.
LICENSOR: LICENSEE:
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. XxXxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxx, Secretary/Treasurer
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