Contract No. ______________
THIS EXCLUSIVE OEM & LICENSE AGREEMENT ("Agreement") is made by and between Special Stone Surfaces, Es3 Inc., a Nevada corporation, having its principal place of business at 6330 Nancy Ridge Drive, Suite 108, San Diego, CA 92121, on behalf of itself and its affiliates, including but not limited to, its parent, subsidiaries, and successors and any entity merged into or with Special Stone Surfaces, Es3 Inc. (hereinafter referred to as "OEM") and Liquid Stone Manufacturing, Inc., a Nevada corporation, having its principal place of business at 2346 E. Russell Road, Las Vegas, NV 89119 (hereinafter referred to as "Licensor"). This Agreement shall be effective as of the last date written below ("Effective Date").
WHEREAS, the parties desire that OEM acquire from Licensor the right to manufacture, develop, license, sublicense and distribute and integrate with other products, the "Technology" (as defined herein below), on the terms and conditions set forth herein. This Agreement consists of:
OEM and Licensor have read, understand and agree to the terms of this Agreement and the undersigned represents that he or she is duly authorized to sign this Agreement on behalf of their respective party.
EXCLUSIVE OEM & LICENSE AGREEMENT
TERMS AND CONDITIONS
1.1 "Affiliate" of a party shall mean any entity which controls, is controlled by, or is under common control with that party, where control means ownership or control, direct or indirect, of more than fifty percent (50%) of the stock or other equity interest entitled to vote for the election of directors or equivalent governing body of the entity.
1.2 "Confidential Information" shall have the meaning specified in Exhibit D attached hereto.
1.3 "Distributor" shall mean any third party distributors, resellers or other intermediaries through whom OEM distributes Products utilizing the Technology.
1.4 "Documentation" shall mean the written materials related to the Technology to be provided to end user customers purchasing Products.
1.5 "Effective Date" shall mean the date of execution of this Agreement (including any counterpart original), as indicated on the signature page.
1.6 "Product" shall mean each product that OEM develops using the Technology.
1.7 "Technology" shall mean Licensor's technology, information, trade-secrets, other intellectual property and products related thereto set forth on Exhibit A attached hereto as amended from time to time and shall include all improvements, enhancements, upgrades, modifications and developments relating directly or indirectly thereto.
1.8 "Trademarks" shall mean Licensor's trademarks, servicemarks or tradenames.
2. LICENSE GRANT
2.1 License . Subject to the terms, conditions and restrictions of this Agreement, including the provisions of Exhibit B, Licensor hereby grants to OEM an exclusive, sub-licensable, assignable, terminable, royalty bearing, non-transferable license in North America, Central America and South America (the "Territory") only during the term of this Agreement:
(a) to use the Technology to manufacture, support and maintain Products.
(b) to distribute Products in the Territory; and
(c) to use, copy and distribute the Documentation in connection with distribution of Products.
2.2 Distribution Channels . This license is sublicensable and OEM shall be entitled to distribute Products directly to end users, through Distributors or via retail channels, or other commercially reasonable means.
2.3 No Rights to Derivative Works or Improvements so long as this Agreement is in Effect .
(a) OEM shall have no rights, other than the license rights set forth herein, with respect to the Technology and agrees not to reverse engineer the Technology or to reverse assemble, decompile, or otherwise attempt to derive the composition of the Technology. No right to modify or otherwise prepare derivative works of the Technology is granted.
(b) Any unauthorized modifications, derivative works, or any other intellectual property, or prospective jointly owned intellectual property, created directly or indirectly using or referring to the Technology, or components thereof, or enhancements of the Technology, shall belong exclusively to Licensor and OEM hereby assigns all rights in them (including without limitation, moral rights) to Licensor. OEM agrees to promptly enter into any further documentation required by Licensor in its sole discretion to legally or commercially effect such assignment, including, without limitation, ensuring that its employees and/or contractors do the same. OEM hereby expressly waives any rights it may obtain which are inconsistent with the foregoing.
2.4 Ownership . Subject only to the limited rights and licenses expressly granted to OEM in this Agreement, Licensor shall retain and own all right, title and interest in the Technology and Documentation, and each copy thereof and all intellectual property rights with respect thereto.
3. USE OF Licensor's TRADEMARKS
3.1 Limited Rights . OEM shall not acquire ownership of any Trademarks and shall not use such property or rights in any manner, except as herein permitted.
3.2 License . Licensor hereby grants OEM an exclusive, transferable, sub-licensable, except as expressly provided in this Agreement, non-assignable, terminable, license in the Territory to use only those Trademarks identified in Exhibit D to this Agreement and those additional Trademarks approved by Licensor in writing from time to time ("Licensed Trademarks"), for the authorized uses specified herein.
3.3 Control . OEM acknowledges and agrees that any and all use of the Licensed Trademarks by OEM inures solely to the benefit of Licensor and that Licensor reserves the right in its sole discretion to control the nature and quality of the goods sold or services rendered by OEM utilizing the Licensed Trademarks.
3.4 Ownership by Licensor . OEM acknowledges and agrees that Licensor holds all right, title and interest in the Licensed Trademarks. Any and all goodwill arising from OEM's use of the Licensed Trademarks shall inure solely to the benefit of Licensor, and neither during nor after the termination of this Agreement and the license granted hereunder shall OEM assert any claim to the Licensed Trademarks (or any confusingly similar mark) or such goodwill. OEM shall not directly or indirectly, during the term of this Agreement or thereafter, through itself or third parties, challenge Licensor's rights in the Licensed Trademarks. In no event shall OEM seek to register any Licensed Trademark or any other mark used by Licensor in any country, state or territory thereof. In the event that the laws, regulations or practices of any legal jurisdiction convey any right in any Licensed Trademark used by Licensor to OEM, OEM hereby assigns such right or interest to Licensor and agrees to enter into any further documentation required by Licensor, in its sole discretion, to perfect ownership of such right or interest in Licensor. OEM agrees to ensure that its successors, assigns and affiliated companies, if any, comply with the terms of this provision.
4.1 Prices . OEM shall pay to Licensor the applicable royalties and all other related fees as set forth in Exhibit B for the Technology and other exclusive rights provided pursuant to this Agreement.
4.2 Payments . OEM will report its sales of Products to Licensor quarterly within thirty (30) days of the end of each calendar quarter. The report will include the information reasonably necessary to calculate the royalties due hereunder. At the time of furnishing the report, OEM will pay to Licensor all unpaid royalties that accrued during the prior calendar quarter.
4.3 Interest . OEM shall pay to Licensor interest on overdue payments at an annual rate of 18 percent, compounded monthly, or, if lower, the maximum rate permitted by law.
4.4 Taxes . All payments to Licensor hereunder shall be net of all VAT, customs duties, sales, use and other taxes or charges that may be imposed upon such payments. If OEM shall be obliged to deduct any withholding tax from the royalties to be paid pursuant to this Agreement in accordance with any applicable tax law, OEM shall (i) pay such additional amounts as are necessary to ensure that the net amount actually received by Licensor, free and clear of all such taxes, will equal the full amount that Licensor would have received had no such taxes been levied, and (ii) promptly provide Licensor with the necessary certificate required by any applicable tax law showing, inter alia, that such deductions have been made. Licensor shall, at the request of OEM, apply for, and use reasonable endeavors to obtain, an exemption certificate or direction to pay gross in relation to withholding taxes on royalties under any applicable tax law.
4.5 Warrants . As additional compensation to Licensor under this Agreement, OEM shall issue to Licensor warrants pursuant to a warrant agreement attached as substantially in the form of Exhibit E.
5. TECHNICAL SUPPORT
5.1 OEM will provide direct, technical support to OEM's customers or other end users of Products. OEM shall at all times maintain competent and sufficient technical and sales personnel to satisfy OEM's support obligation with respect to any Products or Technology. OEM's technical support function shall at a minimum include, but not necessarily be limited to: using OEM's best efforts to answer Product and Technology use questions, diagnose problems, if any, and provide solutions to problems.
5.2 OEM will designate one of its employees as the Licensor contact person to whom Licensor shall provide second level technical support for Licensor Technology by telephone, facsimile or electronic mail. Licensor shall use commercially reasonable efforts to provide solutions to reported problems. Licensor shall have no obligation to provide consultation with OEM's Distributors or end users.
6. SALES SUPPORT
6.1 Marketing and Sales . During the term of this Agreement, at OEM's request and subject to availability and scheduling, Licensor will provide to OEM reasonable trade show support and joint sales calls on key customers, with respect to the Products and Technology. In addition, the parties will provide to each other reasonable cooperation in promoting the Technology and Products in regions in which OEM (or its Distributors) are marketing Products.
7. TERM AND TERMINATION
7.1 Term . This Agreement shall continue for an initial term of thirty (30) years (commencing on the Effective Date, unless sooner terminated in accordance herewith). The parties may extend the term or enter into a new agreement only by their formal, mutual consent expressed in writing. Nothing set forth in this Agreement, no course of conduct, and no oral statements shall be deemed to constitute such consent. In the event that through application of law or otherwise, OEM is provided rights to compensation or to extend the term of this Agreement, OEM expressly waives any and all such rights as part of the consideration for Licensor entering into this Agreement.
7.2 Default .
(a) If OEM fails to comply with any material undisputed payment obligation under this Agreement, and such failure is not remedied by OEM within 60 days following written notice from Licensor, Licensor may terminate this Agreement. For all other breaches, Licensor shall have no right to terminate this Agreement as it relates to OEM's right to sell the Products, and Licensor must rely solely on the recovery of damages and/or injunctive relief as appropriate in response to acts by OEM which are inconsistent with the rights granted hereunder.
(b) In the event of default by OEM for reason of non-payment only, Licensor in addition shall be entitled, on written notice to OEM, to require that OEM immediately cease all use and distribution of the Technology or Products until this default has been fully cured.
7.3 Insolvency . This Agreement may be terminated by either party, upon 30 days prior written notice:
(a) upon the institution by the other party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of its debts;
(b) upon the institution of such proceedings against the other party, which are not dismissed or otherwise resolved in its favor within sixty (60) days thereafter;
(c) upon the other party's making a general assignment for the benefit of creditors, or
(d) upon the other party's dissolution or ceasing to conduct business in the normal course.
7.4 Survival .
(a) Except as otherwise set forth herein, the parties' rights and obligations pursuant to Sections 8 and 9 shall survive any termination or expiration of this Agreement.
(b) If this Agreement is terminated or expires, then all of OEM's rights and licenses with respect to the Technology shall terminate, provided that, OEM shall be entitled to dispose of Products in its possession on the termination date, in accordance with OEM's royalty and other obligations pursuant to this Agreement.
8.1 Warranty. Licensor warrants that it owns the Technology or has all rights necessary to convey the licenses granted under this Agreement. Licensor warrants that Products manufactured by OEM in accordance with the specifications of the Technology will meet the applicable product specifications and be free of defects in materials and workmanship for a warranty period equal to twelve (12) months from the date that the materials are received by a customer as a Product. This warranty is provided to OEM only and does not apply to defects caused by misuse, abuse or any other use than the normal intended use of the materials or Products. OEM's exclusive remedy, and Licensor's sole liability, arising out of this warranty shall be for Licensor to repair any defect in the Technology and to provide replacement materials to OEM for defective materials returned by OEM to Licensor during the warranty period.
8.2 DISCLAIMER . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LICENSOR MAKES NO REPRESENTATIONS, WARRANTIES, CONDITIONS OR GUARANTEES, EITHER EXPRESS, IMPLIED, STATUTORY, ORAL, WRITTEN OR OTHERWISE, WITH RESPECT TO THE SERVICES OR GOODS COVERED BY OR FURNISHED PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY (i) OF SATISFACTORY QUALITY, (ii) OF FITNESS FOR A PARTICULAR PURPOSE, OR (iii) ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE.
8.3 LIMITATION OF LIABILITY . TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY IN THIS AGREEMENT, THE LIABILITY OF LICENSOR AND ITS AFFILIATES UNDER THIS AGREEMENT TO OEM, REGARDLESS OF THE BASIS OF LIABILITY OR THE FORM OF ACTION, SHALL IN NO EVENT EXCEED THE TOTAL FEES PAID TO LICENSOR BY OEM, NET OF ALL DISCOUNTS, REBATES, AND REFUNDS, FOR THE SERVICES OR GOODS DIRECTLY CAUSING THE LIABILITY. IN NO EVENT SHALL LICENSOR OR ITS AFFILIATES BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE ESSENTIAL PURPOSE OF THIS SECTION IS TO LIMIT THE POTENTIAL LIABILITY OF LICENSOR AND ITS AFFILIATES ARISING OUT OF THIS AGREEMENT.
9.1 Confidential Information . In connection with the transactions contemplated by this Agreement, the parties may become exposed to Confidential Information of the other. Accordingly, the parties shall be bound by the terms of the Confidentiality Agreement attached hereto as Exhibit D.
10.1 Governing Law . OEM acknowledges that OEM is based in the State of California, U.S.A. and requires uniformity and consistency in the laws under which it deals with all its domestic and international Licensors, and the services which are the subject matter of this Agreement are being provided in California. Accordingly, this Agreement shall be governed and construed in accordance with the laws of California, U.S.A., without regard to any conflicts of law principles.
10.2 Forum Selection . All disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of the state or federal courts in the County of San Diego, State of California; and the parties agree and submit to the personal and exclusive jurisdiction and venue of these courts. OEM hereby waives any and all rights it may have in and to any other forum or any other applicable law.
10.3 Government Requirements . OEM shall obtain and maintain all permits, licenses and government registrations necessary or appropriate to facilitate OEM's performance hereunder and for OEM to perform hereunder and shall make all filings with governmental authorities required of this Agreement by applicable law.
10.4 Severability . If any provision, or part thereof, of this Agreement is judicially declared invalid, void or unenforceable, each and every other provision, or part thereof, nevertheless shall continue in full force and effect, and the unenforceable provision shall be changed or interpreted so as best to accomplish the objectives and intent of such provision within the limits of applicable law.
10.5 Independent Contractor . The relationship of Licensor and OEM established by this Agreement is that of independent contractor. This Agreement does not give either party the power to direct and control the day to day activities of the other, and they shall take no action to directly or indirectly hold themselves out as legal partners, joint venturers, co-owners, principal agent, or otherwise participants in a joint or common undertaking, or allow either party to create or assume any obligation on behalf of the other party for any purpose whatsoever.
10.6 Entire Agreement Modification . This Agreement constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior or contemporaneous understandings or agreements, whether oral or written regarding the subject matter hereof. This Agreement shall be modified or amended only by a writing signed by both OEM and Licensor.
10.7 Executory Contract . OEM and Licensor agree that this Agreement is an executory contract.
10.8 Waiver . The failure of either party to enforce any of its rights hereunder or at law shall not be deemed a waiver or a continuing waiver of any of its rights or remedies against the other party, unless such failure or waiver is in writing.
10.9 Assignment .
(a) By Licensor . This Agreement may be assigned by Licensor in its sole discretion without notice to any entity which assumes its obligations and acquires ownership of or the right to use, sell, distribute and license the Technology as herein contemplated.
(b) By OEM. Licensor makes this Agreement in reliance upon the reputation of OEM and its management, and accordingly this Agreement may not be assigned or encumbered by OEM without Licensor's prior written consent, which consent shall be in its sole discretion.
10.10 Notices . All notices, requests or other communications under this Agreement shall be in writing, and shall be sent to the parties at their addresses listed on page 1 above, and shall be deemed to have been duly given on the date of service if sent by facsimile (provided a hard copy is sent in one of the manners specified below), or on the day following service if sent by overnight air courier service with next day delivery and with written confirmation of delivery, or five (5) days after mailing if sent by first class, registered or certified mail, return receipt requested. Each party is required to notify the other party in the above manner of any change of address or change of project manager
10.11 Force Majeure . Licensor shall not be liable for any delay or non-performance due to acts of God, natural casualties, war, trade embargoes, government regulations, strikes, power outages, material shortages, software viruses and/or bugs, civil unrest and/or other causes beyond its reasonable control (a "Force Majeure Event"). If a Force Majeure Event occurs, Licensor shall give OEM written notice within ten (10) days of such occurrence, detailing the circumstances of the Force Majeure Event and an estimate of the anticipated delay in performance. Licensor shall use commercially reasonable efforts to develop a mutually acceptable work-around plan in an attempt to minimize the impact of the Force Majeure Event. Performance shall be resumed upon termination of the Force Majeure Event. If the Force Majeure Event is expected to continue for more than six (6) months, the parties shall discuss whether to terminate this agreement.
10.12 No Third Party Beneficiaries . Unless otherwise expressly provided, no provisions of this Agreement are intended or shall be construed to confer upon or give to any person or entity other than Licensor and OEM any rights, remedies or other benefits under or by reason of this Agreement.
10.13 Compliance with Laws . OEM shall comply and instruct its Distributors to comply with all applicable laws and regulations applicable to its or their activities under this Agreement.
10.14 Government Approvals . OEM represents and warrants that no consent or approval with any governmental authority is required in connection with the valid execution and performance of this Agreement. OEM shall be responsible for any required filings of this Agreement with any government agencies.
10.15 English Language . English shall be used as the authoritative text of this Agreement, regardless of the existence of counterparts translated into another language, and all communications, arbitrations and other adjudications hereunder shall be made and conducted in English.
10.16 Currency . All dollar amounts specified herein are in U.S. dollars, and all payments pursuant to this Agreement shall be in U.S. dollars.
10.17 Attorney's Fees . In the event a dispute arises regarding this Agreement, the prevailing party shall be entitled to its reasonable attorney's fees and expenses incurred in addition to any other relief to which it is entitled.
10.18 Buy Out Option . All Technology and related intellectual property under this agreement may be purchased by OEM at its option at any time in accordance with the formula established in Exhibit F.
Technology: Formulas for:
Liquid Stone Acrylic Binder
Flagstaff Liquid Sandstone
White Liquid Sandstone
Pebble Render Production Sheet
Deliverables: Not Applicable
Type of License Exclusive 30 year right to manufacture, market and distribute Liquid Stone products
Territory North America, Central America and South America
Royalties and Minimum Fees
OEM shall pay to Licensor a royalty for the license on the Technology in an amount equal to OEM's net sales of Products based on the following scale:
For these purposes, "net sales" means the amount of revenue generated from the sale of Products, net of shipping, discounts, rebates, credits and returns
2. MINIMUM ANNUAL FEES
As a condition of retaining its rights under this Agreement, OEM must pay royalties to Licensor in the minimum annual amount of US $200,000 for sales made during the first full calendar year of this Agreement. Thereafter the minimum annual royalty shall increase at the rate of twenty percent (20%) per annum for each year that this Agreement is in effect.
Contract No. ______________
THIS CONFIDENTIALITY AGREEMENT ("Agreement") is made by and between Special Stone Surfaces, Es3 Inc., a Nevada corporation, having its principal place of business at 6330 Nancy Ridge Drive, Suite 108, San Diego, CA 92121, on behalf of itself and its affiliates, including but not limited to, its parent, subsidiaries, and successors and any entity merged into or with Special Stone Surfaces, Es3 Inc. and Liquid Stone Manufacturing, Inc., a Nevada corporation, having its principal place of business at 2346 E. Russell Road, Las Vegas, NV 89119. This Agreement is mutual and each party disclosing Confidential In