COMMERCIAL LICENSE AGREEMENT
This Commercial License Agreement (this " Agreement "), dated as of January 3, 2011 (the " Effective Date "), is made by and between Visualant, Inc., a Nevada corporation (" Visualant ") and Javelin, LLC, a Washington limited liability company (" Javelin "). Visualant and Javelin (sometimes referred to herein individually as a " Party " and collectively as the " Parties ") therefore agree as follows:
Section 1. Definitions
" Affiliate " means any corporation, limited liability company, joint venture, individual or other entity of which Javelin or its members has ownership and control of at least fifty percent (50%) of all outstanding shares or securities or other ownership interests that represent the power to direct the management and policies of such entity.
" Fields of Use " means the worldwide market for products and services relating to environmental testing (including but not limited to air, soil, industrial emissions, oil and water testing).
" Gross Revenue " means any revenue actually received by Javelin, or a Javelin Affiliate, as a result of the sale to any of Javelin’s or Javelin Affiliate’s customers or end users of Licensed Products that incorporate one or more of the unexpired Visualant IP; provided, however, that "Gross Revenue" does not include any (a) reimbursed expenses or costs that are passed through to a customer or end user (e.g., travel), (b) taxes collected by Javelin for remittance to governmental authorities, or (c) refunds or credits.
" Improvement " means any advancement, development, improvement, enhancement, correction, modification, adaptation, translation, transformation, annotation, extension, compilation, collective work or derivative work to or based upon the Visualant IP.
" Intellectual Property Rights " means any patent, copyright, trademark, trade secret, mask work, or other intellectual or propriety right under the laws of the State of Washington.
" License " means the license granted by Visualant to Javelin pursuant to Section 2.1 of this Agreement.
" Licensed Product " means any product or service of Javelin or its sublicensees intended for use in the Fields of Use and that incorporates or uses any of the Visualant IP.
" Third Party " means any individual, corporation, limited liability Company, partnership, trust, association, governmental authority or other entity that is not a Party.
" Third Party Infringement " means any infringement, misappropriation, unauthorized use or other violation of any of the Visualant IP within the Field of Use by any Third Party.
" Visualant IP " means the Visualant Patents, any other intellectual property assets listed in the attached Exhibit A , and any other intellectual property or proprietary rights owned or controlled by Visualant (see “Intellectual Property” above) that are necessary or useful for exploitation of the Licensed Products.
" Visualant Patent " means: (a) any patent or patent application owned, controlled by, or licensed to Visualant now or in the future listed, including any patents or patent applications listed under the heading of "Visualant Patents" in the attached Exhibit A , and any patents that may issue from the pending patent applications listed in the attached Exhibit A ; (b) any patent that may issue from any continuation or divisional that has priority based upon any of the patent applications described in (a) above; (c) any reissues, renewals, substitutions, re-examinations and extensions of any of the patents described in (a) or (b) above; and (d) any foreign patents corresponding to any of the patents described in (a), (b) or (c) above.
Section 2. License Grant; Covenants
License Grant . Subject to the provisions of
Section 2.2 below, Visualant hereby grants to Javelin an exclusive
(within the Fields of Use), worldwide
2.2 Performance Criteria and Termination . During the Term, and so long as Javelin satisfies the milestones set forth in this Section 2.2 (the " Milestones ") the License described in section 2.1 shall remain in effect, and Visualant will not produce or sell any licensed products or technologies by itself or through subsidiaries and will not grant to any Third Party any license under any of the Visualant IP to incorporate or utilize the Visualant IP in products or services intended for use in the Fields of Use. The following Milestones will apply to Javelin's efforts to commercialize the Visualant IP:
(a) Within twenty-four (24) months after the Effective Date, develop a demonstration unit of a Licensed Product; and
(b) Within thirty-six (36) months after the Effective Date, generate first sales of a Licensed Product and deliver the first License Fee to Visualant, or within thirty-six (36) months after the Effective Date, Consummate a license or transfer of the VISUALANT IP to a third party, resulting in upfront cash, equity, or assets of value (minimum total value of $500,000) being paid to JAVELIN, and deliver the 25% profit sharing check and/or transferred equity or assets (minimum value of $150,000).
If Javelin fails to satisfy any of the Milestones, the License will terminate and the restrictions on Visualant imposed by this Section 2 will terminate. Visualant must provide 30 days written notice of intent to terminate to Javelin. Javelin will have 60 days from initial date of the Visualant termination to either satisfy the milestone or begin arbitration through JAMS in Seattle, Washington, to determine if the milestone has been met. If arbitration is commences both Visualant and Javelin agree to standard arbitration procedural rules as outlined by the state of Washington. However, arbitration will be completed and the final ruling must occur prior to 120 days from the date of the initial Visualant written notice.
Section 3. Intellectual Property Rights
3.1 Administration of Visualant IP . Visualant will control the prosecution, maintenance, registration and other management of the Visualant IP. Visualant will keep Javelin informed of the status of all prosecution, maintenance, registration and other management activities related to the Visualant IP and will provide Javelin with a reasonable opportunity to advise Visualant on such activities. Without limiting the generality of the foregoing, if Visualant chooses to abandon any portion of the Visualant IP, Visualant will provide Javelin written notice at least sixty (60) days prior to the last allowable date for filing or taking any other action required with respect to the prosecution, maintenance or registration of such portion of the Visualant IP and Javelin may, at any time thereafter, take actions necessary to preserve the Visualant IP.
3.2 Third Party Infringement .
(a) If any Third Party Infringement comes to the attention of either Party, then such Party will give the other Party prompt written notice thereof (including, without limitation, a statement of the facts which are known by the Party giving the notice and which such Party believes might reasonably serve as a basis for a claim of Third Party Infringement, together with a copy of any documentation evidencing the same).
(b) Javelin will have the first right to respond to, address, and/or prosecute any alleged Third Party Infringement by securing cessation of the infringement or initiating an action or suit against the infringer or otherwise responding to, addressing and/or prosecuting such alleged Third Party Infringement. To exercise this first right, Javelin must initiate bona fide action to respond to, address, and/or prosecute any alleged Third Party Infringement within ninety (90) days of learning of such infringement. If Javelin chooses to institute suit or action against an alleged infringer, Javelin may bring such suit in its own name (or, if required by law, in its and Visualant’s name) and at its own expense. Further, if Javelin institutes an action or suit against an alleged infringer as provided in this Agreement, then (i) Visualant will fully and promptly cooperate and assist Javelin in connection with any such suit or action, and Javelin will pay Visualant’s reasonable attorney’s fees and other out-of-pocket directly associated expenses. Javelin will not settle any suits or actions in any manner relating to the Visualant IP without obtaining the prior written consent of Javelin, which will not be unreasonable withheld, delayed or conditioned. After Javelin has recovered its reasonable attorney's fees and other out-of-pocket expenses directly related to any action, suit, or settlement for infringement of Visualant IP, the remaining damages, awards, or settlement proceeds will be divided as follows: fifty percent (50%) to Javelin and fifty percent (50%) to Visualant.
(c) If Javelin fails, within ninety (90) days of learning of an alleged Third Party Infringement, to secure cessation of the alleged Third Party Infringement, institute suit against the alleged infringer, or to otherwise respond to, address and/or prosecute the alleged Third Party Infringement, then Visualant may, upon written notice to Javelin, assume full right and responsibility to institute suit or action against the alleged infringer. If Visualant elects to commence an action as described above, then Visualant may do so in its own name (or if required by law, in its own and Javelin’s name) and at its own expense. Further, if Visualant institutes an action or suit against an alleged infringer as provided in this Agreement, then Javelin will fully and promptly cooperate and assist Visualant in connection with the action or suit, and Visualant will pay all of Javelin’s reasonable attorney fees and other out-of-pocket directly as