EXHIBIT 10.1
AMENDED AND RESTATED LICENSE AGREEMENT
- --------------------------------------------------------------------------------
This Amended and Restated License Agreement (this "AGREEMENT") is entered
into effective as of January 1, 2007 by and between Electric Aquagenics
Unlimited, Inc, a Delaware corporation (a/k/a EAU Technologies, Inc., and
hereinafter referred to as "LICENSOR" or "EAU") and Zerorez Franchising Systems,
Inc., a Nevada corporation (f/k/a H20 AquaCare Franchising Systems, Inc., and
hereinafter referred to as "LICENSEE" or "ZEROREZ"), and amends, restates and
supersedes any and all prior oral and/or written agreements between Licensor and
Licensee pertaining to the subject matter hereof. Licensor and Licensee may be
referred to herein sometimes as the "PARTIES," collectively and the "PARTY,"
individually.
R E C I T A L S
A. WHEREAS, Licensor is engaged in the design, development, manufacture and
sale of patented and proprietary primacide commercial generators (the "PRIMACIDE
GENERATORS") that produce both an alkaline water that can be used for cleaning
purposes ("PRIMACIDE B FLUID") and a hypochlorous acid fluid that can be used
for disinfecting purposes ("PRIMACIDE A FLUID"), for use in various industries,
including the carpet and living surface cleaning industry;
B. WHEREAS, Licensee provides carpet and living surface cleaning services,
through its company-owned locations and through franchised outlets (referred to
herein as "ZEROREZ FRANCHISEES") throughout the United States and Canada
("FRANCHISE Services");
C WHEREAS, pursuant to a "Uniform Offering Circular" and "Franchise
Agreement" that each Zerorez Franchisee executes (collectively the "FRANCHISE
AGREEMENTS"), Zerorez licenses to each Zerorez Franchisee the use of Zerorez's
trademarks and technology and the use of trademarks and technology licensed from
EAU (the "ZEROREZ PROPRIETARY TECHNOLOGY") to allow the Zerorez Franchisees to
provide the Franchise Services to their customers;
D. WHEREAS, the Parties have entered into various agreements (referred to
herein collectively as the "ORIGINAL AGREEMENTS") whereby Licensor granted to
Licensee a license to allow Zerorez and the Zerorez Franchisees to acquire
Primacide Generators from Licensor and to use the Primacide B Fluid solely for
use in the Franchise Services (collectively, the "ORIGINAL LICENSE");
E. WHEREAS, in order to assure a supply of Primacide Generators and
Primacide B Fluid, Zerorez desires to commit to acquire all of its requirements,
and to require Zerorez Franchisees to acquire all their requirements, for
Primacide Generators and Primacide B Fluids from Licensor, and Licensor desires
to commit to supply to Zerorez and Zerorez Franchisees all of their requirements
for such Primacide Generators and Primacide B Fluids on the terms and conditions
set forth in this Agreement and the Equipment Purchase Agreement;
F. WHEREAS, this Agreement shall supersede, amend, restate and replace the
Original Agreements and the license and rights granted hereunder (the "LICENSE")
shall supersede, amend, restate and replace the Original License; and
G. WHEREAS, in connection with the License granted hereby, Licensor and
Licensee have agreed to enter into "Technology License Agreements," and escrow
agreements with ZFA, Inc., a California non profit corporation ("ZFA") comprised
of Zerorez Franchisees and established to protect the rights and interests of
the Zerorez Franchisees in the event Licensor and/or Licensee for any reason
fails to, or cannot, supply the Primacide Generators, the Primacide B Fluid, the
1
Zerorez Proprietary Technology, or the EAU Technology to the Zerorez Franchisees
(collectively referred to herein as the "TECHNOLOGY LICENSE AGREEMENTS");
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration described herein, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
SECTION I
DEFINITIONS
1.1 "AGREEMENT" means this Agreement and all exhibits, schedules,
certificates, lists, documentation and financial records, attached hereto or
made a part hereof, including any addenda or amendments thereto.
1.2 "CIP SYSTEM" means a clean-in-place cleaning system in a commercial
building or facility which uses a Primacide Generator to create Primacide B
Fluid or Primacide A Fluid to be used exclusively on or within the building or
facility where such fluids are being produced.
1.3 "EAU TECHNOLOGY" means patent, trademark, trade secret, copyright, mask
work and other intellectual property rights, other than trademark or service
mark rights, owned by Licensor, or licensed by Licensor with the right to grant
sublicenses thereof and/or to utilize such rights related to Licensor's
Primacide Generators and Primacide B Fluid in providing Franchise Services.
1.4 "EQUIPMENT PURCHASE AGREEMENT" shall mean the Master Equipment Purchase
Agreement in the form of Exhibit "A", attached hereto and incorporated herein by
reference, pursuant to which EAU agrees to sell to and Zerorez Franchisees (with
respect to franchised outlets) and Zerorez (with respect to company-owned
locations) agree to purchase from EAU the Primacide Generators for use in
providing the Franchise Services.
1.5 "FRANCHISE" shall mean the franchise rights granted to a Zerorez
Franchisee by Licensee.
1.6 "FRANCHISE AGREEMENTS" shall mean, collectively, the Zerorez Franchise
Offering Circular and Franchise Agreements that outline and describe all of the
terms and conditions between and among Zerorez as franchisor and the Zerorez
Franchisees as franchisees.
1.7 "FRANCHISE SERVICES" shall mean and be limited to the use of Primacide
B Fluid in conjunction with the Zerorez Proprietary Technology in the cleaning
of carpets, furniture and rugs as described and contemplated as within U.S.
Department of Labor, Occupational Safety & Health Administration, SIC Code 7217
Carpet & Upholstery Cleaning, and U.S. Census Bureau 2002 NAICS Definition
561740 Carpet & Upholstery Cleaning Services; the cleaning of stone, hardwood,
concrete, tile, walls, linoleum and other flooring and countertop materials; and
the cleaning of upholstery and soft fabric textiles. The term Franchise Services
specifically excludes Restoration Services (as hereinafter defined), except to
the extent any such services are incidental to any of the above described
cleaning services. The Franchise Services may be offered by Zerorez and Zerorez
Franchisees to residential and commercial customers throughout the United States
and Canada, excluding commercial facilities with a CIP System, including, but
not limited to, commercial buildings and facilities such as airports, hospitals,
food or beverage processing facilities, grocery stores, department stores, etc.
1.8 "IMPROVEMENTS" means improvements, modifications, adaptations,
revisions, enhancements, additions, or changes to any of the EAU Technology
which is the subject of the License granted to Zerorez pursuant to this
Agreement or to ZFA pursuant to the Technology License Agreements.
2
1.9 "LICENSE" means the license and rights granted to Licensee by Licensor
under this Agreement to purchase and use, and to have the Zerorez Franchisees
purchase and use, the Primacide Generators, the Primacide B Fluid and the EAU
Technology applicable to such Primacide Generators and Primacide B Fluid for
Franchise Services in the United States and in Canada during the Term of this
Agreement.
1.10 "PRIMACIDE GENERATORS" means equipment or generators that produce
Primacide B Fluid and Primacide A Fluid using EAU Technology. The term
"Primacide Generators" does not include, and specifically excludes, all
Primacide C Generators developed or owned by Licensor.
1.11 "PATENTS" shall mean any and all patents related to the Primacide
Generators and the carpet cleaning system owned by Licensor applicable to the
Franchise Services. Specifically, "Patents" includes, but is not limited to,
Licensor's Patent Number 6,638,364. The term "Patents" does not include, and
specifically excludes, all patents related to Primacide C Generators.
1.12 "RESTORATION SERVICES" shall mean, but not be limited to, the cleaning
and remediation of both residential and commercial buildings or facilities after
a man-made or natural disaster, including, but not limited to, water removal and
dehumidification, fire, smoke and soot remediation and restoration, mold
mitigation and remediation, removal and replacement of damaged building
materials, cleaning of all surfaces affected by such types of disasters, all of
which would be typically performed by licensed contractors.
1.13 "TECHNOLOGY LICENSE AGREEMENTS" shall mean those Technology License
Agreements between and among Licensee, Licensor and ZFA for the benefit of the
Zerorez Franchisees described in Recital G hereinabove.
1.14 "TERM" shall mean the License term described in this Agreement,
including any mutually agreeable extensions or renewals thereof.
1.15 "ZEROREZ FRANCHISEE" shall mean any existing or future owner of a
Zerorez Franchise under a Franchise Agreement or any person or entity whose
Franchise Agreement was terminated for any reason, other than as a result of
default by the Franchisee, but who continues to use a Primacide Generator,
Primacide B Fluid or any EAU Technology. The term "Zerorez Franchisee" shall
include (except for purposes of Section 8.2 of this Agreement) business entities
affiliated with Zerorez which provide Franchise Services, whose primary business
is carpet cleaning in the United States or Canada using Zerorez's name and
working specifically within the scope of the Zerorez Franchise business model.
1.16 "ZEROREZ PROPRIETARY TECHNOLOGY" means patent, trademark, trade
secret, copyright, mask work and other intellectual property rights, other than
trademark or service mark rights, owned by Zerorez or licensed by Zerorez with
the right to grant sublicenses thereof and/or to utilize such rights to provide
the Zerorez goods and services to Zerorez Franchisees, such as cleaning
techniques, designs and specifications for cleaning equipment, trucks and
supplies, operating manuals, methods of operation, lists of third party
suppliers and other business plans and procedures.
SECTION II
LICENSE GRANTED
2.1 GRANT OF LICENSE. During the Term of this Agreement, and any extensions
and renewals thereof, Licensor hereby grants to Licensee, subject to the terms
and conditions of this Agreement, the right to purchase and use, and to allow
the Zerorez Franchisees to purchase and use, Primacide Generators and Primacide
B Fluid, and to use the EAU Technology for providing Franchise Services in the
United States and Canada. Each Primacide Generator covered by this Agreement
shall be used by Zerorez or a Zerorez Franchisee only as part of a truck mounted
cleaning system or in a stationary location for the purpose of generating
3
Primacide B Fluid to perform and complete the Franchise Services. Primacide
Generators shall not be used by Zerorez or Zerorez Franchisees in any other
manner or for any other purpose. Any Improvements, whether designed or invented
by Licensor, Licensee or any Zerorez Franchisee, shall belong to Licensor during
and after the Term of this Agreement but will immediately be deemed to be a part
of the EAU Technology licensed pursuant to this Agreement and/or the Technology
License Agreements. Licensee shall execute, and shall require Zerorez
Franchisees to execute, such documents or instruments necessary and appropriate
to transfer, convey and assign to Licensor all rights, title and interest in and
to any such Improvements.
2.2 LICENSOR'S TRADEMARKS. During the Term of this Agreement, and any
extensions and renewals thereof, Licensor hereby grants to Licensee, subject to
the terms and conditions of this Agreement, the right to use, and to allow
Zerorez Franchisees to use, those trademarks, service marks and/or patents of
Licensor as are set forth on Schedule 2.2 attached hereto ("LICENSOR
TRADEMARKS"). Licensee shall affix on all such trademarks, service marks and
patents such registration designations listed on Schedule 2.2 and such other
reasonable marks as Licensor shall from time to time request, by written notice
to Licensee, to clearly indicate such marks or patents are owned and/or
registered by Licensor.
2.3 USE RESTRICTIONS. The License granted to Licensee under this Agreement
or to ZFA under the Technology License Agreement does not include or grant to
Licensee or to any Zerorez Franchisee the following:
(a) The right to sell Primacide A Fluid;
(b) The right to sell Primacide B Fluid except incidental to the
performance of Franchise Services;
(c) The right to use any equipment or generator, other than Licensor's
Primacide Generator, to produce Primacide B Fluid; or
(d) The right to sell, transfer, loan, lease or sub-lease Licensor's
Primacide Generators to any third party without Licensor's prior written
consent.
2.4 EXCLUSIVITY. The License granted under this Agreement shall be an
exclusive license during the term hereof for businesses providing Franchise
Services, but whose primary business is carpet cleaning in the United States and
Canada. Licensor will not, during the term hereof, grant to others the right to
use Primacide Generators, Primacide B Fluid or EAU Technology in the United
States or Canada involving Franchise Services, provided Licensee is not in
default of any material term of this Agreement or the Equipment Purchase
Agreement. Licensor reserves all rights in and to the EAU Technology and all
uses thereof, including the right to grant others all uses thereof, not licensed
to Licensee under this Agreement or to ZFA under the Technology License
Agreements, specifically including, but not limited to, the following:
(a) The use of Primacide Generators, Primacide B Fluid or Primacide A
Fluid in CIP Systems worldwide to clean carpet and living surfaces in commercial
buildings or facilities including, but not limited to, commercial facilities
such as airports, hospitals, food or beverage processing facilities, grocery
stores and department stores, which facilities house CIP Systems and which CIP
Systems in such facilities do not include the Zerorez carpet and living surface
cleaning system, i.e., a wand that disburses the Primacide B Fluid and vacuums
the same in a single process as employed by Zerorez and the Zerorez Franchisees.
(b) The use of Primacide Generators, Primacide B Fluid or Primacide A
Fluid for Restoration Services worldwide, including carpet cleaning that is
incidental to such Restoration Services.
4
2.5 REQUIREMENTS OBLIGATION. Licensee shall purchase and shall require the
Zerorez Franchisees to purchase all of their respective requirements for
Primacide Generators from Licensor during the Term hereof pursuant to the terms
and conditions of the Equipment Purchase Agreement. Zerorez, and Zerorez
Franchisees pursuant to the terms of the Franchise Agreements, shall be required
to use only the Primacide Generators to perform the Franchise Services.
Notwithstanding the foregoing, Zerorez and the Zerorez Franchisees shall be
entitled to purchase Primacide Generators and Primacide B Fluid from ZFA,
Licensee and/or their permitted contractors upon Licensor's breach of its
obligations to supply Primacide Generators required by Zerorez Franchisees for
any reason, as set forth in the Technology License Agreements between ZFA and
Licensor and in Section 2.6 below.
2.6 MANUFACTURING AND SALE RIGHTS OF LICENSEE. In the event Licensor and/or
its successors and assigns cease operations, or otherwise discontinues supplying
Primacide Generators and/or Primacide B Fluid to Licensee or Zerorez Franchisees
for any reason other than a default or breach of this Agreement by Licensee,
Licensee shall then have a non-exclusive license to use, and have Licensee's
employees and permitted contractors use, the EAU Technology to produce and sell
the Primacide Generators and Primacide B Fluid to Zerorez Franchisees. With
respect to such non-exclusive license, Licensor and Licensee will have rights
and obligations reasonably equivalent to those of Licensor and ZFA under
Sections 3 through 10 of their Technology License Agreement. The non-exclusive
license provided for in this Section 2.6 will apply only upon Licensor's
inability or unwillingness to provide Primacide Generators to Licensee or to
Zerorez Franchisees and Licensee is not in default of any material term of this
Agreement or the Equipment Purchase Agreement.
2.7 RIGHTS OF FRANCHISEES. Regardless of any breach of this Agreement by
Licensee, each Zerorez Franchisee, so long as it remains a Zerorez Franchisee,
shall have a non-exclusive right, which will continue after any termination
under Section III below, to purchase Primacide Generators and/or Primacide B
Fluid from Licensor upon the purchase, warranty and other terms set forth in
this Agreement and to use Primacide Generators, the Primacide B Fluid generated
by Primacide Generators and the EAU Technology in connection with the
performance of Franchise Services in the United States and CANADA.
SECTION III
TERM AND TERMINATION
3.1 TERM. This Agreement is effective as of January 1, 2007 and unless
sooner terminated will continue in force until December 31, 2011 (the "TERM").
If this Agreement is terminated for any reason whatsoever, whether by expiration
of its Term or otherwise, all future and continuing rights and obligations
hereunder will terminate, except:
(a) The Parties obligation to maintain the confidentiality of
Confidential Materials;
(b) Any claim or cause of action as of the date of termination will
survive and remain in full force and effect until such rights and obligations
are fully discharged or the applicable statute of limitations has expired; and
(c) All rights and obligations of the Parties under Section VI
relating to indemnification, Section VII relating to infringement, Section VIII
relating to miscellaneous provisions and this Section III shall survive the
termination of this Agreement.
3.2 AUTOMATIC EXTENSIONS. The Term of this Agreement shall be automatically
extended for three (3) succeeding terms of five (5) years each, absent a
premature termination pursuant to Section 3.3 below.
3.3 PREMATURE TERMINATION. This Agreement may be terminated prior to the
expiration of its Term, or any extension or renewal thereof, as follows:
5
(a) If either Party fails to meet any material obligation or duty
hereunder or is in default hereunder, the non-defaulting Party shall have the
right to terminate this Agreement upon giving sixty (60) days written "Notice of
Intent to Terminate," specifying such failure, breach, or default to the
defaulting Party. If the defaulting Party fails to make any payment in arrears,
or otherwise fails to cure the breach or default within such sixty (60) day
period, then the non-defaulting Party may send a written "Notice Of Termination"
to the defaulting Party, whereupon this Agreement shall terminate thirty (30)
days after the date of such Notice of Termination.
(b) Either Party may terminate this Agreement upon thirty (30) days
written notice in the event that any warranty, covenant, or representation made
by the other Party under this Agreement or any other materials provided by the
other Party, or any related agreement executed in connection with this Agreement
is determined by a court of competent jurisdiction to have been willfully false
in any material respect when made or furnished. Such a representation shall be
considered "willful" if it is made by either Party not in good faith and without
a reasonable belief that the representation was true.
3.4 EFFECT OF TERMINATION; LICENSEE'S CONTINUED RIGHTS IN THE EVENT OF
LICENSOR DEFAULT OR BANKRUPTCY. Nothing herein shall be construed to release
either Party of any obligation which matured prior to the effective date of a
termination of this Agreement or which may continue beyond such termination.
Licensor acknowledges and agrees that this Agreement and all rights and licenses
granted under or pursuant to this Agreement by Licensor to Licensee are, and
shall otherwise be deemed to be licenses to rights to intellectual property.
Licensor agrees that Licensee, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under applicable bankruptcy, insolvency or other similar law, including
specifically but without limitation, Section 365(n) of the U.S. Bankruptcy Code,
as amended. Licensor further agrees that, in the event of a Licensor default, or
a dissolution or other discontinuance of Licensor's business operations or
existence, or the commencement of a voluntary or involuntary proceeding against
Licensor seeking liquidation, rehabilitation, reorganization, conservatorship or
other relief with respect to it or its assets under any bankruptcy, insolvency
or other similar law, Licensee, in addition to its right to terminate this
Agreement, shall also have the right, at its election, to retain all of its
rights under this Agreement. In such event, Licensee shall further have the
right to either require Licensor to assign to Licensee any or all manufacturing,
supply, license or other agreements with third parties to which Licensor is a
party relating to the EAU Technology and/or the Primacide Generators and
Primacide B Fluid (as well as all related product regulatory approvals, permits
and licenses to the extent legally transferable or to enter into its own
agreements with such third parties and obtain its own regulatory approvals,
permits and licenses). Licensee and ZFA shall also be entitled to all of their
other remedies under the Technology License Agreements in such event.
SECTION IV
TERMS AND CONDITIONS OF LICENSE
4.1 USE CONDITIONS. Licensee shall conduct its business relative to
Primacide Generators and the Primacide B Fluid, and Licensee shall require the
Zerorez Franchisees to conduct their respective businesses relative to Primacide
Generators and the Primacide B Fluid, so as to maintain and increase the
goodwill and reputation of Licensor, and shall conform to all laws, rulings,
regulations and codes of ethics that are applicable to Licensee, its employees,
representatives and /or agents and Zerorez Franchisees and their employees,
representative and/or agents. Licensee shall use its commercially reasonable
best efforts to require each Zerorez Franchisee to abide by and timely perform
all of its duties and obligations under the Equipment Purchase Agreement.
Additionally, Licensee shall, and Licensee shall require the Zerorez Franchises,
to use the EAU Technology in conformance with all requirements of the Franchise
Agreements, and to abide by and maintain such quality control policies as
Licensor may, from time to time, reasonably deem necessary relative to the use
of the EAU Technology, including for example, but not limited to, the following:
6
(a) the use of each Primacide Generator for the operation of not more
than five (5) truck mounted cleaning systems;
(b) such packaging requirements as may be necessary to protect the
Licensor Trademarks;
(c) safety standards, practices and procedures as Licensor may deem
reasonable and necessary, including procedures for disposal of waste water; and
(d) any other quality controls deemed reasonably necessary by Licensor
to protect the EAU Technology, Licensor Trademarks and goodwill of Licensor.
4.2 ORDERING PROCESS. Licensee and Zerorez Franchisees shall place orders
with Licensor for Primacide Generators in writing, in accordance with the terms
and conditions of the Equipment Purchase Agreement.
4.3 PURCHASE PRICE AND TERMS. The purchase price to be paid by Zerorez and
Zerorez Franchisees to Licensor for the Primacide Generators and the related
payment terms shall be as set forth in the Equipment Purchase Agreement.
SECTION V
CONFIDENTIALITY, NON-COMPETITION
5.1 CONFIDENTIAL INFORMATION. The Parties agree that this Agreement and all
of the terms contained herein shall not be disclosed to any third party,
excluding the Zerorez Franchisees, ZFA and its agents, association members and
managers or any other party that is involved in the management and execution of
the Technology License Agreements, without the prior written consent of the
other Party, except to the extent required to be disclosed by law. Furthermore,
each of the Parties agrees to keep confidential all of the other Party's
confidential information, and strategies related to the its business, sales and
marketing materials, distribution methods, manufacturing information, trade
secrets and all technical information relating to the EAU Technology (the
"CONFIDENTIAL MATERIALS"). The Parties hereto agree and stipulate that as
between them the Confidential Materials are important, material and confidential
and materially affect the effective and successful conduct of Licensor's
business.
SECTION VI
INDEMNIFICATION, ASSUMPTION OF THIS AGREEMENT
6.1 MUTUAL INDEMNIFICATION. Each Party agrees to indemnify, hold harmless
and defend the other Party and its respective officers, directors, employees,
representatives, consultants and agents from and against any all third party's
(including governmental and/or regulatory bodies or agencies) claims, demands,
liabilities, lawsuits, judgments and any other action, arising out of, related
to or associated with the such Party's actions, inactions, representations and
conduct in connection with or related to this Agreement.
6.2 ASSUMPTION. Should Licensor, at any time during the Term of this
Agreement or any extension thereof, sell all or substantially all of its assets
to a third party ("THIRD PARTY COMPANY"), then Licensor shall use its
commercially reasonable best efforts to cause the Third Party Company acquiring
all or substantially all of the Company's assets, to assume this Agreement and
affirm its validity, enforceability and legality for the then remaining Term and
any extension(s) thereof, without any change, modification, interruption or
alteration to this Agreement and the terms and conditions contained herein.
Should the Third Party Company not assume this Agreement with all of its terms
and conditions, then the terms and conditions of the Technology License
7
Agreements shall apply and govern the rights and obligations of Licensee, ZFA
and the Zerorez Franchisees.
6.3 DISCLAIMER OF LIABILITY. Except as expressly set forth in this
Agreement (or resulting from any breach by Licensor under this Agreement),
Licensor shall have no liability to Licensee, the Zerorez Franchisees or any
other third party individual or entity, based upon any injury, loss or damage of
any kind or nature, sustained by or any damage assessed against, or any other
liability incurred or imposed upon Licensee, a Zerorez Franchisee or any other
third party, arising out of, connected with or resulting from Licensee's or any
Zerorez Franchisee's use of the Primacide Generators, Primacide B Fluid or any
other EAU Technology or equipment provided by Licensor pursuant to this
Agreement, the Equipment Purchase Agreement or the Technology License Agreements
(a "Claim"). Licensee shall indemnify, hold harmless and defend Licensor and its
officers, directors, employees, representatives, consultants and agents from and
against any losses, costs, expenses, liabilities, or damages of any kind or
nature, including attorney fees and costs, incurred or imposed upon Licensor
arising out of, connected with or resulting from any such Claim, except to the
extent the liability for such Claim has been determined by a court of competent
jurisdiction to have been caused by the willful misconduct or gross negligence
of Licensor or a breach of this Agreement by Licensor.
6.4 NO ASSIGNMENT BY LICENSEE. Licensee may not assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of Licensor, which consent may not be unreasonably withheld or delayed.
Despite such consent, no assignment by Licensee shall release the Licensee of
any of its obligations to be performed under this Agreement. Any attempted
assignment or delegation in violation of this provision shall be void, of no
force and effect and shall entitle Licensor to terminate this Agreement. As used
in this provision, "assignment" and "delegation" shall mean any sale, gift,
pledge, hypothecation, encumbrance, or other transfer of all or any portion of
the rights, obligations or liabilities in or arising from this Agreement to any
person or entity, whether by operation of law or otherwise, and regardless of
the legal form of the transaction in which the attempted assignment occurs.
6.5 ASSIGNMENT BY LICENSOR. The Licensor may assign all or part of its
rights under this Agreement and may delegate all or part of its duties under
this Agreement provided that any assignee assumes this Agreement and expressly
affirms in writing its validity, enforceability and legality for the then
remaining Term and any extension or renewal thereof, without any change,
modification, interruption, or alteration to this Agreement and the terms and
conditions contained herein.
SECTION VII
INFRINGEMENT
7.1. INFRINGEMENT. In the event that either Party shall learn of a material
infringement of any patent or misappropriation of any technology comprising the
Primacide Generator, the EAU Technology, the Zerorez Proprietary Technology or
any other related technology under this Agreement, that Party shall immediately
call the other Party's attention thereto in writing and shall provide such other
Party with reasonable evidence of such infringement or misappropriation. The
Parties shall cooperate with each other, and shall use their commercially
reasonable best efforts, to terminate such infringement or misappropriation
without litigation. If the efforts of the Parties are not successful in abating
the infringement or misappropriation within thirty (30) days after the
infringement or misappropriation comes to the attention of Licensor, Licensor
may in its sole discretion, and at its sole expense, take such further actions,
including (without limitation) bringing a legal action, as it deems necessary
and appropriate to enforce its rights and prevent unauthorized or illegal
infringement or misappropriation that is or would be adverse to Licensee or
Zerorez Franchisees. Licensor shall be entitled to any monetary recovery from
such an action.
7.2 LICENSEE RIGHTS. If Licensor elects not to prosecute any such
infringement or misappropriation, Licensee shall have the right to prosecute the
same in its own name, and at its sole expense. Each non-prosecuting Party agrees
8
to cooperate with and assist the other in a reasonable manner in any such
proceeding. This cooperation and assistance shall include (without limitation),
if necessary in order for such prosecution to occur, agreeing to be joined in
the prosecution as a nominal party and/or assigning to the prosecuting Party
rights necessary to prosecute the matter. Any recovery from any of the foregoing
proceedings shall belong to the Party bringing and paying for the proceeding,
provided that, if a joint prosecution is undertaken by the Parties, the expenses
and recovery, if any, shall be shared equally or as the Parties agree between
themselves. Notwithstanding the foregoing, should Licensee elect to prosecute an
infringement claim against a third party hereunder, and Licensor fails to
provide its cooperation and assistance, Licensor shall reimburse Licensee for
its reasonable attorneys' fees and costs of any such action should a court of
competent jurisdiction find in favor of Licensee with respect to such trademark
and/or patent infringement litigation.
7.3 COOPERATION. Each Party agrees to cooperate fully with the other in
litigation proceedings instituted hereunder and, upon request of the Party
bringing suit, the other Party shall make available to the Party bringing suit
all relevant records, papers, information, samples, specimens, and the like
which may be relevant and in its possession. The Party bringing the suit (or if
brought jointly, Licensor) shall have the right to control such litigation. In
the event a court of competent jurisdiction from which no appeal has or can be
taken determines that one or more patents covering the Primacide Generator or
any related EAU Technology is invalid or unenforceable, Licensee may terminate
this Agreement. Licensor shall not, however, be required to refund any payments
theretofore paid Licensor by Licensee or Zerorez Franchisees.
SECTION VIII
MISCELLANEOUS PROVISIONS
The following miscellaneous provisions are an integral part of this
Agreement.
8.1 BINDING OBLIGATION. This Agreement shall inure to the benefit of and
constitute a binding obligation upon the contracting parties, their respective
heirs, legal representatives and permitted assigns.
8.2 MODIFICATIONS. This Agreement may not be modified or amended except by
an instrument in writing signed by the Parties hereto. Notwithstanding the
foregoing, this Agreement may not be modified or amended in such a manner as to
have a substantial negative effect on the Zerorez Franchisees without the prior
written consent of (a) more than fifty percent (50%) of the Zerorez Franchisees
at that time; and (b) Zerorez Franchisees whose Franchises together have
accounted for more than fifty percent (50%) of the gross revenues of all
Franchises for the immediately preceding twelve (12) complete calendar months
ending at least 30 days prior to such amendment.
8.3 THIRD PARTY BENEFICIARIES. Zerorez Franchisees shall be third party
beneficiaries of this Agreement and are entitled to enforce their rights as set
forth in this Agreement.
8.4 HEADINGS. The headings used in this Agreement are inserted for
reference purposes only and shall not be deemed to limit or affect in any way,
the meaning or interpretation of any of the terms or provisions of this
Agreement.
8.5 SEVERABILITY. The provisions of this Agreement are severable, and
should any provision hereof be void, voidable, unenforceable, or invalid, such a
void shall not affect any other portion or provision of this Agreement.
8.6 WAIVER. Any waiver by any Party hereto of any breach of this Agreement
of any kind or character whatsoever by the other Party, whether such waiver is
direct or implied, shall not be construed as a continuing waiver or consent to
any subsequent breach of this Agreement on the part of the other Party.
9
8.7 APPLICABLE LAW. This Agreement shall be interpreted, construed, and
enforced according to the laws of the State of Georgia.
8.8 ATTORNEYS' FEES. In the event any action or proceeding is brought by
any Party under this Agreement, the prevailing Party shall be entitled to
recover attorneys' fees and costs in such an amount as a court may adjudge
reasonable.
8.9 MEDIATION. If any dispute arises under this Agreement, the Parties
shall negotiate in good faith to settle such dispute. If the Parties cannot
resolve such dispute themselves, then either Party may submit the dispute to
non-binding mediation by a mediator approved by both Parties. The Parties shall
both cooperate with the mediator.
8.10 VENUE AND JURISDICTION. In the event of any legal action or proceeding
for the interpretation or enforcement of this Agreement, each of the Parties
agrees to submit to the exclusive jurisdiction of the state court sitting in the
Superior Court of the State of Georgia, Fifth Judicial District, Atlanta
Judicial Circuit in any such proceeding, and agrees that all claims in any such
proceeding may be heard and determined in such court. Each Party also agrees not
to bring any action or proceeding in any other court. Each of the Parties
consents to venue in such jurisdiction, waives any defense of inconvenient forum
to the maintenance of any proceeding so brought and waives any bond, surety or
other security that might be required of any other Party with respect thereto.
8.11 ENTIRE AGREEMENT. This Agreement together with the Equipment Purchase
Agreement represents the entire agreement between and among the Parties and
supersedes any and all prior oral and/or written agreements between them with
respect to the subject matter of this Agreement and the Equipment Purchase
Agreement, provided that the Parties' obligations relating to any Primacide
Generators previously sold under the Original License shall continue in effect.
8.12 RECITALS. The Recitals set forth at the beginning of this Agreement of
any matters or facts shall be deemed to be representations and warranties of the
truthfulness thereof and shall be deemed a part of this Agreement.
8.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Parties authorize
each other to detach and combine original signature pages and consolidate them
into a single identical original. Any one of such completely executed
counterparts shall be sufficient proof of this Agreement.
8.14 FURTHER ASSURANCES. The Parties to this Agreement shall promptly
execute and deliver any and all additional documents, instruments, notices, and
other assurances, and shall do any and all other acts and things, reasonably
necessary to carry out and effectuate the terms of this Agreement. Each Party
agrees that such Party will not do or fail to do anything, directly or
indirectly, that will interfere with or adversely affect any of the rights
provided for herein or that would interfere with the performance of this
Agreement by the other Party.
8.15 GENERAL INTERPRETATION. The terms of this Agreement have been
negotiated by the Parties hereto and the language used in this Agreement shall
be deemed to be the language chosen by the Parties hereto to express their
mutual intent. This Agreement shall be construed without regard to any
presumption or rule requiring construction against the Party causing such
instrument or any portion thereof to be drafted, or in favor of the Party
receiving a particular benefit under the Agreement. No rule of strict
construction will be applied against any Party.
10
8.16 SPECIFIC PERFORMANCE. The Parties agree that irreparable damage will
result if this Agreement is not performed in accordance with its terms, and the
Parties agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the Parties hereunder shall be enforceable by a decree of
specific performance, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedies and all other remedies provided
for in this Agreement shall, however, be cumulative and not exclusive and shall
be in addition to any other remedies that a Party may have under this Agreement,
at law or in equity.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as
of the day and year first above written.
Licensor: ELECTRIC AQUAGENICS UNLIMITED, INC.
By: /s/ Wade Bradley
------------------------------------
Wade Bradley
Its: President & CEO
Licensee: ZEROREZ FRANCHISING SYSTEMS, INC.
By: /s/ James K. Stone
------------------------------------
James K. Stone
Its: CEO
11
SCHEDULE 2.2
LIST OF TRADEMARKS, SERVICE MARKS AND PATENTS
Trademarks:
Empowered Water(TM)
Empowering Water(TM)
Primacide(TM)
Primacide B(TM)
Service Marks
None
Patents
Patent # 6,638,364, effective October 28, 2003, describing Licensor's
carpet cleaning system to clean and disinfect carpets, fabrics and
hard surfaces.
12