EXCLUSIVE LICENSING AGREEMENT
AGREEMENT, dated as of March 22, 1994, by and between ABL PROPERTIES
COMPANY, a New Jersey partnership, with an address at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereafter called "Licensor"), and TRB SYSTEMS
INC., a New York corporation, having a place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereafter called
"Licensee"). The parties agree as follows:
Part I. Background
1.1 Licensor has conducted research and experimental work relating to
Foot Operated Lever or Oscillating Pedal Propelled Bicycles and
Tricycles (hereafter called the "Technology") and is the owner of
certain patents and/or patent applications relating thereto which
are listed in Exhibit A to this Agreement and further including all
reissues, continuations, extensions, renewals, and divisions thereof
together with all priority rights therein (hereafter called "Patent
Rights") and is also the owner of unpatented know-how and trade
secrets relating to the Technology ("hereafter called "Know-How").
1.2 Licensee proposes to engage in the business of manufacturing and
selling Bicycles and Tricycles embodying the Technology and which
may be covered by the Patent Rights and Know-How (hereafter called
"Products" or "Licensed Products") and wishes to obtain a license to
use the Technology and information concerning the Technology from
the Licensor in the manufacture of such Products.
1.3 Licensor is willing to provide information concerning the Technology
and to grant licenses to the Licensee for the payments specified
hereafter to enable Licensee to manufacture and sell Licensed
Products.
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1.4 Licensee has, for the ease of accountancy, requested Licensor to
grant license rights at flat rates for Licensed Products utilizing
the Technology or embodying the Patent Rights and Know-How.
Part II. Grant and Grant-Back
2.1 Subject to the conditions hereafter set forth, Licensor hereby
grants to Licensee an exclusive license to use the Know-How
concerning the Technology and to make, have made, use and sell
Licensed Products within the scope of the Patent Rights in all
countries world-wide except Taiwan and Korea. The license granted
herein includes the right to sublicense, subject to the same
conditions, including payment of royalties and confidentiality.
Any sublicenses shall terminate or expire with the termination or
expiration of Licensee's license.
2.2 In the event that Licensee or any of Licensee's employees shall make
or acquire any invention or improvement relating to inventions
licensed under this Agreement, then Licensee shall disclose and
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communicate such invention or improvement to Licensor and shall aid
and assist Licensor in acquiring patent protection thereof at the
expense of Licensor. Any such invention or improvement shall be
assigned to Licensor, together with all patent rights thereunder,
so that Licensee and all other licensees of Licensor shall have a
noncancellable royalty-free license as to any such inventions or
improvements during the life of this Agreement.
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Part III. Assistance
3.1 Licensor shall promptly after the date this Agreement becomes
effective, provide Licensee with all drawings, disclosures,
technical reports, tests and other documents relating to the
manufacture, use and/or sale of the Technology as have been prepared
by the Licensor.
3.2 Licensor shall provide to Licensee, at Licensor's expense, upon
request and during a period ending 90 days following the
transmittal of information under Part 3.1, up to 5 man days of
technical assistance of an engineer in the employ of Licensor
having knowledge of the transmitted information, for the purpose
of explaining and answering questions with respect to the
Technology. Such technical assistance shall be provided as soon as
it is practicable to do so after the request for assistance is
received.
Part IV. Payments and Reports
4.1 Licensee shall pay to Licensor the sum of TWO HUNDRED THOUSAND
DOLLARS ($200,000) as an initial license fee upon the execution of
this Agreement. Thereafter during the term of this Agreement,
Licensee shall pay to the Licensor royalties in accordance with the
rates specified in the following schedule on the net selling price
or fair market value ("Sales Value") of each Licensed Product sold
by it or its sublicensees.
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Schedule of Royalty Rates
per Calendar Year Starting with
the Calendar Year During Which
the Effective Date of This Agreement Occurred
Sales Value Royalty Rate
First $10 million of Sales Value One Percent (1.0%)
Second $10 million of Sales Value Quarters of One Percent (0.75%)
More than $20 million of Sales Value One-Half of One Percent (0.5%)
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4.2 The net selling price means the sum which is billed to customers
in the usual course of business less quantity and cash discounts
actually allowed and less sales, use, and other similar taxes
and any transportation, installation, or delivery charges borne
by the Licensee. When royalties shall have been paid on Licensed
Products not accepted or returned and not paid for by the
customer, such royalties shall be credited against future
royalties to be paid hereunder.
In the event that any Licensed Product is put into use or
otherwise disposed of, or if sales are made otherwise than by an
arms-length transaction, the net selling price shall not be less
than the fair market value (which shall not be less than the
complete cost of the product plus the Licensee's usual profit
factor).
Licensed Products shall be regarded as sold upon the earliest of
(i) date shipment is billed, (ii) date shipment is delivered or
(iii) date payment is made.
4.3 In the case of sublicenses or distributorships granted by
Licensee to sublicensees or distributors for territories other
than the United States of America (hereinafter collectively
called "International Sublicensees"), the following special
provisions shall apply:
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4.3.1 Licensee shall pay to Licensor or cause the International
Sublicensees to pay directly to Licensor, all license fees payable
to Licensee by International Sublicensees under the respective
sublicense or distributorship agreements between Licensee and the
International Sublicensees, subject to the Aggregate Limit defined
in 4.3.3 below.
4.3.2 Licensee shall pay to Licensor all profit earned on the sale of
Licensed Products to International Sublicensees, subject to the
Aggregate Limit.
4.3.3 Once the amounts paid by or on behalf of Licensee under
Sections 4.3.1 and 4.3.2, together with royalties paid to Licensor
on account of sales of Licensed Products by International
Sublicensees (or their distributors or subdistributors) in
accordance with Section 4.1, equal in the aggregate THREE MILLION
THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($3,325,000)
(herein called the "Aggregate Limit"), Licensee shall have no further
obligation with respect to the payment of license fees and profit
specified in Sections 4.3.1 and 4.3.2., but Licensee shall remain
obligated to pay royalties in accordance with Section 4.1.
4.3.4 It is understood that Licensee may decide to conduct its business
through a holding company structure involving the establishment of
separate subsidiaries for international operations and domestic US
operations. In such case, the international subsidiary shall assume
any existing license or distributorship agreements with International
Sublicensees and shall conduct all future licensing and other
contracting with International Sublicensees. and such subsidiary
shall be responsible for fulfilling the obligations of
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Licensee under this Section 4.3 (and under Section
4.1 with respect to royalties on account of sales by
International Sublicensees or their distributors or
subdistributors); provided, however, that Licensee
shall remain fully liable for ensuring the
fulfillment of such obligations by its subsidiary.
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4.4 Royalties shall be paid within 30 days after the end of each
semiannual period ending on June 30 or December 31, commencing with
the semiannual period during which the effective date of this
Agreement occurred. Together with such payment, Licensee shall
furnish the Licensor a statement, certified by a responsible official
of the Licensee, showing all Licensed Products which were sold or
put into use during such semiannual period, the net selling price,
or where applicable, the fair market values thereof, and the amount
of royalty payable thereon. If no Licensed Product has been sold or
put into use, the statement shall show that fact.
4.5 Royalty payments provided for in this Agreement shall, when overdue,
bear interest at an annual rate of 1 % over the rate quoted by the
head office of Citibank, NA in New York City as its "prime rate"
from time to time during delinquency.
4.6 Licensee shall bear all taxes imposed as a result of the existence
for operation of this Agreement.
4.7 Licensee shall keep full and accurate and complete books of account
and records of its development, manufacturing, and marketing
activities respecting Licensed Products in sufficient detail to
enable the determination and verification of the payments of
royalties and other obligations of the Licensee hereunder. Licensee
further agrees to permit Licensor's representatives to inspect
Licensee's books and records at all reasonable times during usual
business hours. Such records shall be kept for the term of this
Agreement and at least three years thereafter.
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Part V Production and Marketing
5.1 Licensee shall allocate sufficient quantities of its resources,
capital equipment, material, and labor so as to manufacture Licensed
Products and make them available to customers.
5.2 If in any calendar year starting 1994 the royalty payable hereunder
for that year, does not amount to One Hundred Thousand dollars
($100,000.00) and Licensee does not make up the deficiency within
60 days of the end of such year, the Licensor may by 30 days notice
in writing terminate the licenses granted by this Agreement to
Licensee.
Part VI. Warranty Disclaimer and Confidentiality
6.1 Each party represents and warrants that it has the right to grant
the rights and licenses granted by this Agreement and undertake the
obligations provided for in this Agreement.
6.2 Nothing in this Licensing Agreement shall be construed as:
(a) a warranty or representation by either party as to the
validity or scope of any patent;
(b) a warranty or representation that anything made or used
under any license granted herein is or will be free from infringement
of patents or other intellectual property rights of third persons;
(c) a requirement that either party shall file any patent
application. secure any patent, or maintain any patent in force;
(d) an obligation to bring or prosecute actions or suits against
third persons for infringement of any patent or for violation of any
proprietary rights;
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ABL Properties/TRB License Agreement
(e) a granting by implication, estoppel, or otherwise any
licenses or rights under any technology or patents other than
expressly licensed by this Agreement; or
(f) a warranty or representation as to the accuracy, sufficiency,
or suitability for any use of any information furnished hereunder.
6.3 Licensor extends no warranty of any kind, express or implied, or
assumes any responsibility whatsoever with respect to the commercial
utility and profitability of the license to Licensee.
6.4 Licensee hereby agrees to indemnify and hold Licensor, his agents,
and employees harmless from any loss or expense or any claims arising
out of injury, disability, property damage, or death of Licensee's
employees, agents or representatives, or other parties acting on
Licensee's behalf who may visit Licensor's facilities, whether or
not such injury, disability, property damage. or death is due to the
negligence of Licensor, his agents, or employees.
6.5 The Licensee covenants to employ best efforts to protect the
Technology and Know-How, in particular not to make it accessible to
third parties, and to maintain the secrecy of documentary materials
set forth in Article 3.1., except as may be reasonably necessary for
the sale of Licensed Products or their commercial application after
sale.
6.6 The obligations set forth in Article 6.5 shall not apply to (a)
information which is disclosed notwithstanding Licensee's use of the
same precautions which it uses to protect its own confidential
Information; and (b) information which is confidential hereunder
but which comes into the public domain without breach of the
obligation of confidence as set forth herein, or is known to Licensee
prior to receipt, or is received by Licensee from a third party
without restriction. This Article and Article 6.5 shall survive the
expiration or termination of this Agreement.
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6.7 Should either party learn or believe that the Licensor's Patent
Rights or Know-How licensed hereunder is being infringed upon by a
third party, that party shall inform the other party of all facts
known to it concerning the infringement thereof without delay as soon
as such infringement shall become known. The parties will consult
with respect to the advisability of legal proceedings against the
infringer. Should the Licensor elect to undertake no legal procedures
in enforcement of such rights, the Licensee is empowered to initiate
such action in the Licensor's name and place, and Licensor shall
cooperate with the Licensee without charge, but upon payment of
Licensor's reasonable expenses.
6.8 Licensor will promptly notify licensee of any and all Issue Fees or
Maintenance Fees required to secure any patent or maintain any patent
in force and in the event the Licensor chooses not to pay such fees,
the Licensee shall have the right to make such payments in the
Licensor's name and Licensor shall cooperate with the Licensee
without charge, but upon payment of Licensor's reasonable expenses.
6.9 Should the Licensor elect not to file foreign patent applications,
which he has the right to file, Licensee shall have the right to
file such patent applications in any country except Taiwan and Korea
corresponding to any patent or patent application included in the
Patent Rights. Licensor shall permit the use of his name on any such
applications and shall cooperate with the Licensee without charge,
but upon payment of Licensor's reasonable expenses.
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ABL Properties/TRB License Agreement
Part VII. Termination
7.1 Unless earlier terminated as provided for herein, this Agreement shall
continue until the expiration of the last to expire patent included
in the Patent Rights.
7.2 If at any time either party shall fail any of its obligations and
where such failure, if remediable, is not remedied within 30 days of
the notice of the other party to do so, then the other party may
give a written notice declaring that this Agreement is terminated.
7.3 This Agreement shall terminate, upon occurrence of any of the
following events unless Licensor otherwise elects upon notice of
occurrence of the event:
(i) Licensee makes an assignment for the benefit of creditors, commences
(as the debtor) a case in Bankruptcy, or commences (as the debtor)
any proceeding under any other insolvency law;
(ii) A case in Bankruptcy or any proceeding under any other insolvency
law is commenced against Licensee (as the debtor) and is consented
to by Licensee or remains undismissed for 40 days, or Licensee
consents to or admits the material allegations against it in any
such case or proceeding; or
(iii) A trustee, receiver, or agent (however named) is appointed or
authorized to take charge of substantially all of the property of
Licensee for the purpose of enforcing a lien against such property
or for the purpose of general administration of such property for
the benefit of creditors.
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Part VII. Miscellaneous
8.1 Neither this Agreement nor any licenses or right hereunder, in whole
or in part, which are granted by Licensor to Licensee shall be
assignable or otherwise transferable without the written consent of
Licensor; provided, however, that this provision shall not be
construed to restrict Licensee from transferring its rights and
obligations hereunder to a newly formed Delaware corporation into
which Licensee may be merged or from sublicensing to wholly-owned
subsidiary corporations for the purpose of further sublicensing the
rights granted hereunder.
8.2 Any notice, request, or information shall be deemed to be
sufficiently given by one party when sent by certified mail
addressed to the other party and to the attention of the individual
executing this Agreement at its office above specified or at such
address and to the attention of such specified individual as the
other party shall have designated by written notice.
8.3 In the event that any provision of this Agreement shall be rendered
invalid or otherwise unenforceable by any competent or judicial
government authority, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision of this
Agreement unless such invalidity or unenforceability does substantial
violence to the Agreement as a whole.
8.4 The construction or performance of this Agreement shall be governed
by the law of the State of New York.
8.5 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges all
prior understandings, discussions, and negotiations between them. It
amends and supersedes the Exclusive Licensing Agreement between the
parties dated October 19, 1993. Neither of the parties shall be
bound by any conditions, definitions, warranties, understandings,
or representations with respect to such subject
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ABL Properties/TRB License Agreement
matter other than as expressly provided herein or as duly
set forth on or subsequent to the dates hereof in writing
and signed by a proper and duly authorized representative of
the parties to be bound thereby.
IN WITNESS WHEREOF, each of the parties have caused this Agreement
to be executed in duplicate originals by its duly authorized
representative on the respective dates entered below.
TRB SYSTEMS INC. ABL PROPERTIES COMPANY
(Licensee) (Licensor)
By: /s/▇▇▇▇▇ ▇.▇▇▇/s/ By: /s/▇▇▇▇▇ ▇.▇▇▇/s/
▇▇▇▇▇ ▇. ▇▇▇
President
Date: March 31, 1997 Date: March 31, 1997
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