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Exclusive License/royalty Agreement

Royalty Agreement

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 This Royalty Agreement involves

IDS SOLAR TECHNOLOGIES, INC. | IDS Solar Technologies, Inc | SP Innovations, Inc

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Governing Law: California     Date: 11/14/2012
Industry: Recreational Activities     Sector: Services

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THIS LICENSE AGREEMENT (the "Agreement") is made and is effective as of the last date of signature hereto (the "Effective Date") by and between Paul Aston, and SP Innovations, Inc. (collectively "Licensor") a California Corporation with its principal place of business at 9386 Pike Road, Santee, CA 92071 and IDS Solar Technologies, Inc., ("Licensee"), a Nevada corporation with its principal place of business at 533 Birch Street, Lake Elsinore, CA 92530 (collectively "Parties") WHEREAS, Paul Aston is the principal of SP Innovations, In c . and warrants that he is authorized to enter into this agreement on behalf of SP Innovations, Inc.


WHEREAS, Licensor represents and covenants that he is the sole owner of the entire right, title and interest in the entire line of products owned by SP Innovations, In c . ("Product"). As of the date of this Agreement, the Product specifically includes those products described on Schedule A hereto. Licensee shall also have the right of first refusal on any subsequent product created by Paul Aston and/ or SP Innovations, Inc.;


WHEREAS, Licensee desires to retain an exclusive license right to make, sell and use products derived within the scope of



WHEREAS, In consideration of the mutual promises and understandings hereinafter set forth, the parties intending to be legally bound do hereby agree as follows:


1) Licensor grants to Licensee an exclu s ive license, which is subject to the Provisions of Article (5) and Article (6) (iv) of this Agreement, the exclusive rights to manufacture, import, use and sell Product in the United States.


2) Licensee shall keep true and accurate books of account showing: the (i) quantity of licensed Product that is manufactured and the quantity sold, including, if applicable, the quantity manufactured and quantity sold by sublicenses during the term of this Agreement; (ii) the selling price per item thereof for the quantities sold and a total dollar amount per item; and other data necessary for an accurate determination of the payments called for herein.


3) Licensee shall produce and provide to the Licensor a Royalty Report providing (i) Sales information including item numbers, dates, invoice numbers, quantity, selling price per item and total dollar amount of sales per item and due date for payment to Licensee; and (ii) The Royalty Report shall be furnished to the Licensor on a monthly basis throughout the term of this Agreement and any extensions thereto, or until the Licensee no longer sells any Product pursuant to this Agreement, whichever period is longer.


4) On or before the 30th of each month throughout the term of this Agreement and any extensions thereto, or until the Licensee is no longer sells a n y Product pursuant to this Agreement, whichever period is longer, the Licensee shall pay to the Licensor a royalty of five percent (5%) of Licensee's wholesale price for all products the Licensee has sold and been paid for that were derived from Product in the preceding month. Wholesale price as used in this Agreement means Licensee's wholesale invoice price for Product, less any allowances for defective or returned Product an d , if applicable, shipping costs for return of defective or returned Product and deductions, such as volume rebates, cash disbursements for sales promotions, etc. The Parties agree that the first royalty payment shall not be before January 1, 2013


5) This exclusive license is in effect for two (2) years from the effective dat e . A minimum fee of $35,000 will be paid on the following schedule to maintain the exclusive license:


a) $5,000 within 30 days of execution of this agreement;

b) $15,000 within 60 days of execution of this agreement; and

c) $15,000 within 90 days of execution of this agreement.




6) Licensee shall at its sole discretion renew this agreement an additional 5 times each for a term of two (2) years ("Option Period"). During this Option Period, Licensee and Licensor shall be bound by the terms of this agreement as may be from time to time amended.


7) Upon the expiration of the Term as described in paragraph 5 and 6 supra, Licensee shall have the right of first refusal to enter into a subsequent licensing agreement with Licensor.


8) Licensors' specific right to warrants: upon the anniversary of this agreement, Licensor shall be entitled to warrants to purchase common stock in the Licensee at an exercise price of $1.75 per share, exercisable for a period of 3 years. The number of available warrants shall be 25,000 warrants per $1,000,000 in gross revenues of Licensors' products by Licensee. i.e. if Licensee's gross revenue from the sale of Licensor's products is $2,000,000, licensee shall be entitled to purchase 50,000 warrants. Licensor shall not be entitled to a pro-rata number of warrants.


9) Issuance of Common Stock to Licensor: Within ten (10) business days of the execution of this Agreement, Licensor shall be issued, as additional consideration hereunder, ten thousand (10,000) shares of common stock in the Licensee.


10) With respect to the shares of common stock and warrants to purchase shares of common stock to be issued to Licensor as consideration hereunder, and with respect to the shares of common stock which m a y be purchased by Licensor upon exercise of such warrants (collectively, the "Securities"), Licensor represents and warrants to Licensee the following:


a) Licensor acknowledges that an investment in the Securities involves a high degree of risk in that Licensee does not currently generate revenue and may require substantial funds to pursue its business plan;


b) Licensor recognizes that an investment in the shares is highly speculative and only investors who can afford the loss of their entire investment should consider investing in Licensee and the Securities;


c) Licensor and its officers and directors have such knowledge and experience in finance, securities, investments, including investment in unregistered securities, and other business matters so as to be able to protect its interests in connection with this transaction;


d) Licensor is an "Accredited Investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended;


e) Licensor acknowledges that only a limited market for the Securities presently exists and accordingly Licensor may not be able to liquidate its investment;


f) Licensor acknowledges that the Securities are subject to significant restrictions on transfer as imposed by state and federal securities laws, including but not limited to a minimum holding period of at least six (6) months;


g) Licensor hereby acknowledges (i) that this offering of Securities has not been reviewed by the United States Securities and Exchange Commission ("SEC") or by the securities regulator of any state; (ii) that the Securities are being issued by Licensee pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933; and (iii) that the certificate evidencing the Securities r

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