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Exhibit 10.96
LICENSE AND MARKETING AGREEMENT
THIS LICENSE AND MARKETING AGREEMENT (the "Agreement") is made
and
entered into this 13th day of February, 2007 (`Effective Date") by
and between
DIVERSE MEDIA GROUP CORP., a Utah corporation ("DMG"), CIRTRAN
CORPORATION, a
Nevada corporation ("Cirtran") and ARROWHEAD INDUSTRIES, INC., a
Florida
corporation ("Arrowhead").
RECITALS
A.
Arrowhead is engaged in the business of marketing and
distributing a door hinge removal tool known as the "Hinge Helper"
(the
"Product") pursuant to U.S. Patent No. 6,308,390 B1 (the "Patent").
Arrowhead
and Cirtran are parties to an Exclusive Manufacturing & Supply
Agreement dated
December 28, 2005 (the "Manufacturing Agreement") pursuant to which
Cirtran is
manufacturing the Product for Arrowhead.
B. DMG is
a subsidiary of Cirtran. DMG is engaged in the marketing
and distribution of products through various distribution channels,
including
traditional retail channels as well as catalogs, internet, live
shopping and
other channels.
C.
Arrowhead
desires to grant to DMG a non-exclusive, limited
license to use the Patent to fulfill DMG's obligations under this
Agreement with
respect to the Product, as well as the exclusive rights during the
term of this
Agreement to market and distribute and sell the Product through all
distribution
channels other than direct response television ("DRTV"), provided
that nothing
in this Agreement shall be construed as giving to DMG an exclusive
license to
the Patent. (herein the "Purpose").
C. The parties desire to
set forth their agreements in writing.
NOW THEREFORE, in consideration of the mutual covenants and
conditions
contained herein and other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, and intending to be
legally bound,
the parties agree as follows:
1.
License of Product Intellectual Property.
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(a) Subject to
the terms and conditions of this Agreement, Arrowhead
hereby grants to DMG during the term of this Agreement an
exclusive, worldwide,
license (i) to use the Patent to manufacture, sell and distribute
the Product
(the "License"); (ii) to use the trademark "Hinge Helper" and the
stylized Hinge
Helper logo for the Purpose (iii) to use the designs, technical
drawings,
manufacturing specifications and know-how related to the Product
for the
Purpose, and (iv) to use the information and technology related to
the Product
for the Purpose (the "Product Intellectual Property") in all
channels of trade
other than DRTV, provided that Arrowhead shall have the
distribution rights set
forth in Section 3(b) hereof, and further provided, that nothing in
this section
or in this Agreement shall be deemed to provide DMG with an
exclusive license to
use the Patent or to use the Patent in any way that is not related
to the
Purpose. For the avoidance of doubt, during the term of this
Agreement Arrowhead
shall not license any third party to make, market or distribute the
Product for
the Purpose and, except as provided in Section 3(b) below,
Arrowhead shall not
engage in any such activities related to the Purpose on its own
behalf.
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(b) Arrowhead
represents, warrants and covenants that it has all
necessary power and authority to grant to DMG the rights to the
Product
Intellectual Property in this Agreement, and neither the granting
of the rights
nor the exercise of them by DMG will infringe or violate the
intellectual
property or other proprietary or intangible rights of any other
person or
entity. Arrowhead has not been and is not, as of the date of this
Agreement, a
party to any litigation enforcing or defending Arrowhead's rights
in, to or with
respect to the Product or the Product Intellectual Property, and
Arrowhead is
not aware of any such claims made or threatened involving the
validity of
Arrowhead's rights in, to or with respect to the Product or Product
Intellectual
Property.
(c) Arrowhead
shall provide to DMG, and DMG shall have the right to
use during the term of this Agreement for the Purpose, such
modifications,
improvements, new versions, redesigns or adaptations of the
Product
(collectively "Improvements") as may be developed or controlled by
Arrowhead.
DMG shall also have the right to make such minor modifications and
improvements
necessary to correct any defects in Product design or in response
to customer
input. All such Improvements and minor modifications shall be the
sole property
of Arrowhead, both during and after the term of this Agreement.
2.
Manufacturing.
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DMG or its affiliates shall have the right to purchase the Product
from
Cirtran for sale pursuant to DMG's marketing and distribution right
granted
hereunder and Cirtran shall have the right to manufacture the
Product for DMG to
fulfill DMG's requirements for the Product with respect to the
Purpose. It is
anticipated by Cirtran and DMG that their agreement with respect to
the
manufacture of the Product will be informal and represented only by
purchase
orders between DMG and Cirtran. In the event Cirtran and DMG enter
into a formal
written manufacturing agreement for the Product, DMG and Cirtran
will provide a
copy of such manufacturing agreement to Arrowhead. The parties
acknowledge that
the intercompany transfer price of Product between Cirtran and DMG
need not be
the same as the price of Product sold to Arrowhead pursuant to the
Manufacturing
Agreement.
3.
Marketing and Distribution.
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(a) DMG shall have the right to
advertise, promote, market, sell and
otherwise distribute the Product throughout the world by means of
internet,
catalog, live home shopping, credit car stuffers, print and radio
campaigns
other than DRTV and through other retail and wholesale channels
(collectively,
the "DMG Territory"). DMG shall have the right to change or create
new packaging
for the Product for sale in the DMG Territory without the approval
of Arrowhead.
DMG and Arrowhead will jointly approve all advertising, broadcast
material and
other promotional literature created or used by DMG (collectively
"ADS") prior
to DMG's placement of such ADS, which approval will not be
unreasonably withheld
or delayed. It is acknowledged that such prior approval by
Arrowhead of ADS
shall not apply to any ADS used by customers of DMG which are not
developed by
DMG. DMG shall also have the right to sell and distribute the
Product in the DMG
Territory advertising with and using the Arrowhead trademarks as
described in
Section 1(a) above.
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(b) During the
term of this Agreement, Arrowhead covenants and agrees
that neither it nor any other person deriving their rights from
Arrowhead (other
than DMG and Cirtran) shall manufacture, market, advertise, sell or
distribute
the Product, any improvements or derivations thereof or any other
product based
on the Patent for any purpose that is competitive with the Purpose
for which DMG
is contracting with Arrowhead under this Agreement ("Restricted
Products");
provided that Arrowhead shall be entitled to advertise, promote,
market, sell
and otherwise distribute the Product (i) after written approval by
DMG, in its
discretion, on a non-exclusive basis, through retail and wholesale
channels in
specific markets (which may be specific geographic markets outside
the U.S. or
specific retailers) not served nor intended to be served by DMG
("Allowed
Markets"), and (ii) throughout the world by means of DRTV only
(together with
the Allowed Markets, the "Arrowhead Territory"). DMG may expressly
condition its
approval of an Allowed Market on Arrowhead's agreement to meet
performance
benchmarks in the Allowed Market based on sales revenue, sales
growth, marketing
activity, distribution penetration, customer satisfaction or other
criteria (the
"Performance Criteria"). If (i) DMG notifies Arrowhead that it has
failed to
attain or maintain to one or more of the Performance Criteria for
an Allowed
Market, and Arrowhead fails to correct such failure within thirty
days after
receiving such notice, and (ii) DMG intends to service such Allowed
Market, then
DMG may revoke its approval in writing as to such Allowed market
and Arrowhead
shall no longer service such market. If DMG grants permission for
Arrowhead to
distribute the Product under clause (i) above, Arrowhead agrees to
purchase all
such Product directly from DMG at the wholesale price DMG charges
third party
distributors and retailers for purchases of similar quantities. The
parties may
agree that DMG will provide other distribution services to
Arrowhead with
respect to such sales on mutually acceptable terms. If Arrowhead
submits a
written request to serve a market under clause (i) which DMG does
not approve,
DMG will not unreasonably withhold consent for a second request to
serve such
market Arrowhead may submit at least six months after the original
request and
prior to the time that DMG has commenced serving the market (which
may include
providing for the market in a written business plan or directing
sales efforts
to the market regardless of whether such efforts result in sales);
provided that
this sentence shall not limit DMG's ability to establish
Performance Criteria
for such market.
4.
Compensation; Calculation and Payment of Royalties. DMG shall
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compensate Arrowhead as follows:
(a) DMG shall
pay Arrowhead a royalty (the "Royalty") calculated as a
percentage of the price per unit of Product received by DMG (the
"Unit Price")
from third parties on all Products sold by DMG pursuant to this
Agreement as set
forth on Exhibit A. The Unit Price in the case of sales to a
distributor or
retailer (including Arrowhead as to sales in the Arrowhead
Territory) shall be
the price per unit received by DMG and not the price at which such
distributor
or retailer sells the Product to a third party. In the case of
sales by DMG
directly to consumers, the Unit Price shall be the price at which
DMG sells the
Product directly to such consumers.
(b) For purposes
of Section 4, the sales upon which Royalties are
earned shall be calculated on a cash basis so that Royalties are
due only when
payment is received for the Product. The Unit Price does not
include any
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separately stated charges for shipping and handling and are net of
any returns,
markdowns, charge backs, credit card discounts, rebates, refunds
and similar
charges.
(c) For purposes
of determining the Royalties, DMG will give
Arrowhead a quarterly report of sales and Royalties earned. The
quarterly
reports ("Quarterly Reports") will be given by end of the first
month after the
end of the quarter, reporting sales and Royalties earned for the
preceding
calendar quarter. Therefore, the Quarterly Reports will include the
quarters
ending March 31, June 30, September 30 and
