EXHIBIT 10.6
LICENSE AGREEMENT
This Lincense Agreement, entered into as of this 9th day of December, 1992, by
and between RICHARD B. KENNEDY, of Ridgefield, Connecticut, PATRICK J. CREHAN of
Ridgefield, Connecticut (hereinafter referred to as "Kennedy") and SAFE
ALTERNATIVES CORPORATION OF AMERICA, INC., a Delaware Corporation having a
principal place of business in Ridgefield, Connecticut (hereinafter referred to
as "SAC");
W I T N E S S E T H
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WHEREAS, Kennedy owns the entire right, title and interest in and to
certain inventions and technology as set forth in the following United States
Patents:
U.S. Patent # Dated
4,520,139 5/28/85
4,530,777 7/23/85
4,515,638 5/7/85
4,521,544 6/4/85
RC 31-757
reissue of 4,291,129 12/4/84
4,417,998 11/29/83
4,400,475 8/23/83
4,291,129 9/22/81
patent application
07,490,136 3/13/90
Said technology is, however, exclusive of the right to use said technology
as packaging foam, which right is currently licensed to Sealed Air Corporation.
WHEREAS, the interests of Richard B. Kennedy, Patrick J. Crehan and Richard
J. Fricke in and to said technology are set forth in an Agreement dated February
26, 1992; and
WHEREAS, Kennedy has or shall apply for certain United States Letters
Patent
(hereinafter referred to as "Kennedy Patent Rights") and;
WHEREAS, SAC is engaged in the commercialization of new technologies and;
WHEREAS, SAC is desirous of acquiring from Kennedy an exclusive license to
practice said patents and trade secrets withing the Continental United States of
America under Kennedy Patent Rights and related Kennedy Technology and Know-How,
and Kennedy is willing to grant SAC such ans exclusive license; /1/
NOW, THEREFORE, in consideration of the mutual covenants and premises set
forth herein and subject to the terms and conditions hereinafter recited, it is
hereby agreed as follows:
I. DEFINITIONS
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1.01 The patents defined herein are proposed pursuant to Kennedy Technology
and Know-How and is or may be covered by Kennedy Patent Rights (i.e., the
manufacture, use and sale of which would otherwise entitle Kennedy to relief
under 35 U.S.C. section 271).
1.02 "Kennedy Patent Rights" means any issued or to be issued patents and
pending patent applications.
1.03 "Kennedy Technology and Know-How" means the technical information
and/or technology, either oral or written, relating to methods, products and
apparatus described or claimed in Patent Rights or other information patentable
or unpatentable made know during the term of this agreement by Kennedy to SAC,
SAC's agents or SAC's authorized representatives.
1.04 "Licensed Territory" means the Continental United States of America in
which
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/1/ Any licensing of Technology herein shall specifically exclude use in the
packaging foam industry.
Kennedy Patent Rights exist and/or in which Kennedy Technology and Know-How has
application.
1.05 "Kennedy Improvement" means any new invention, improvement or
addition to Kennedy Patent Rights or Kennedy Technology and Know-How made,
acquired or owned by Kennedy or any member thereof, during the term of this
Agreement.
1.06 "Joint Improvement" means any new invention, improvement or
development relating to this technology made jointly by Kennedy and SAC during
the term of this Agreement.
II. WARRANTIES
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2.01 Kennedy warrants that it is the owner of all Kennedy Patent Rights and
Kennedy Technology and Know-How and has the full rights and authority to make
this Agreement and to grant the exclusive rights provided for herein.
2.02 Kennedy warrants that it is not aware of any prior patents or
publications, prior public uses or sales, or other material facts which
adversely affect the validity of the Kennedy Patent Rights.
2.03 Kennedy warrants that it is not aware of an patent or other propietary
rights of any party which would be infringed upon by SAC's performance under any
provision hereof.
2.04 Kennedy warrants that the exclusive rights granted to SAC herein will
not conflict with any prior agreement, understanding or obligation of Kennedy or
otherwise relating to the Kennedy Patent Rights and/or Kennedy Technology and
Know-How.
III. EXCLUSIVE LICENSE
----------------------
3.01 Kennedy hereby grants to SAC an exclusive license under the Kennedy
Patent
Rights to practice said patent and trade secrets within the Continental United
States of America, Kennedy Technology and Know-How and Joint Patent Rights to
manufacture, use and sell and to sublicense.
3.02 The initial term of this exclusive license shall be the full term of
the Kennedy Patent Rights and Joint Patent Rights.
3.03 SAC shall pay Kennedy a continuing royalty of four (4%) per cent of
the gross sales by SAC of the product licensed hereunder. Only one royalty
shall be paid on any particular sale hereunder, e.g. inter-company transfers or
sales by SAC to a subsidiary or by a subsidiary to SAC or another subsidiary for
subsequent resale shall be deemed to be one sale. The "one" royalty payment, at
all times, shall be based upon the highest gross dollar amount generated from
the sale of the product which shall include all resales and/or transfers in
determining the gross amount. If resales and/or transfers are delayed, for any
reason, royalty payments will still be made on the highest gross dollar amount
generated from the sale of the product. Royalty payments will then be adjusted
accordingly at the time of each additional resale and/or transfer.
3.04 Continuing royalty payments hereunder shall be made quarterly within
thirty (30) days after the end of each calendar quarter. SAC shall pay Kennedy
four (4%) percent of all payments made by any sublicensee in accordance with
this paragraph.
3.05 SAC agrees to maintain complete records in accordance with generally
accepted accounting principals which accurately reflect the activities of SAC
under this Agreement as are pertinent to an accurate calculation of continuing
royalties. Kennedy shall have the right, at its own expense, to have the
records maintained by SAC hereunder inspected by a firm of nationally recognized
certified public accounts for the purpose of verifying the amount of
continuing royalties due and payable hereunder, but such rights of inspection
shall be limited to no more than two inspections per calendar year, and all
information provided or obtained by such certified public accountant, except the
total amount of continuing royalties accruing in each calendar quarter, shall be
held by them in strict confidence including as to Kennedy.
IV. PATENTS
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4.01 Kennedy represents to SAC that it has already filed or shall file for
United States Letters Patent covering this technology. Kennedy and SAC agree
that it is important to this Agreement that the Kennedy Patent Rights be
maintained.
4.02 For and in consideration of the right and license, SAC agrees to pay
all maintenance fees, all fees for filing and prosecuting pending patent
applications, etc., for those Kennedy Patent Rights and Kennedy Improvements
including any Joint Patents which Kennedy and SAC agree are important to this
agreement. Kennedy and SAC agree to cooperate fully with each other in such
filings and maintenance.
4.03 Kennedy and SAC shall cooperate in the licensing of any Joint Patent
Rights to others and shall share equally any royalties or other licensing income
equally between them. Kennedy and SAC agree to provide the other with quarterly
reports of any licensing income from Joint Patent Rights and to accompany such
reports with payment of their share of such licensing income. Such reports and
payments shall be made within forty-five (45) days of the end of each calendar
quarter.
4.04 Kennedy Patent Rights and Improvements shall remain the sole property
of Kennedy and SAC's only right therein are those granted by Kennedy herein.
4.05 Joint Improvements and Joint Patent right shall remain equally the
property of
Kennedy and SAC.
4.06 Similarly, Kennedy and SAC shall cooperated in the enforcement of any
Kennedy Patent Right or any Joint Patent Right. In the event of such
infringement of any patent Rights, SAC shall have the right but shall not be
obligated to bring suit against the infringer. All costs of the litigation
shall be the responsibility of SAC. Any recoveries from such litigation, or any
settlement thereof, shall go to SAC, with the provision that should the
recoveries exceed the outlays for such litigation, then SAC will pay to Kennedy
four (4%) percent of such excess. SAC will keep Kennedy fully and promptly
informed of the progress of such litigation. SAC shall have the power at its
option to enter into any settlement of such litigation; provided, however, that
any such settlement must uphold the existence of all the Patent Rights and this
Agreement. If SAC refuses or fails to enforce any patent Rights within a
reasonable time after notice, Kennedy may do so in his own name, at his sole
expense and for his sole benefit.
V. TERMINATION
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5.01 In the event Kennedy is in default of any substantial obligation, or
any warranty or material representation is breached or is untrue, then
commencing ninety (90) days after written notice to that effect SAC, without
limiting any rights or remedies SAC may have under this Agreement or at law or
in equity, all royalties accruing under this Agreement, shall be paid into
escrow for the time that Kennedy is in default. In the event Kennedy cures such
default, the royalties paid into escrow shall be paid to Kennedy and royalties
accruing after the date on which the default was cured shall be paid to Kennedy
immediately. Quarterly royalty payments will continue as provided for herein.
Kennedy shall pay to SAC any and all
costs and damages caused by such breach.
5.02 In the event SAC fails to make a payment for any reason after such
payment is due, or it is in default of any other substantial obligation under
this Agreement, then Kennedy may terminate this Agreement to be effective after
ninety (90) days from a written notice to that effect given by Kennedy to SAC
specifying the default; provided, however, that if SAC makes such payment or
cures such default within the notice period, this Agreement shall remain in full
force and effect as it would have had such notice not been given and provided
further that SAC shall pay to Kennedy any and all costs and damages caused by
such breach.
5.03 In the event of termination of this Agreement pursuant to paragraphs
5.01 or 5.02, SAC shall: (a) have the right to fill all outstanding orders upon
payment of the royalty due thereon, provided such sale is completed within six
(6) months after the date of termination; (b) return to Kennedy all confidential
information furnished to SAC by Kennedy and all Kennedy Patent Rights and all
Kennedy Technology Know-How (c) Kennedy is to be paid any royalties which have
been paid into escrow, including any interest or other income earned thereby.
5.04 In the event of any termination of this Agreement, Kennedy and SAC
shall be joint owners of any Joint Patent Rights with all rights and priveleges
attendant thereto. Any other existing licenses under such Join Patent Rights
shall survive any termination hereof and the provisions of this Agreement
relating to the division of royalties from such other licenses shall likewise
survive termination hereof.
5.05 Notwithstanding anything to the contrary, in the event this License
does not generate $20,000.00 per annum within two (2) years of the date of this
License, it shall become automatically a non-exclusive License. If, however,
said License generates the sum
of $20,000.00 in any one of the two (2) years, the License shall continue as an
exclusive License.
VI. DISPUTE RESOLUTION
----------------------
Any dispute arising between Kennedy and SAC with respect to any provision
of this Agreement or any matter relating to the Agreement shall be resolved if
at all possible by good faith negotiation between the parties hereto. If such
negotiation fails to resolve such dispute, Kennedy and SAC agree to submit the
dispute to binding arbitration conducted in Danbury, Connecticut, pursuant to
the rules of the American Arbitration Association.
VII. NO CONTINUING WAIVER
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Any waiver of any breach of this Agreement must be by notice in accordance
with Article X and any waiver of any breach shall not be deemed a waiver of any
breach of a continuing nature or any other breach of either the same of
different character.
VIII. FORCE MAJEURE
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The performance by the parties of their respective obligations under this
Agreement shall be suspended for such period of time as they are prevented from
performing such obligations by reason of acts of God, fire, flood, explosion,
insurrection, riot, enemy attack, malicious mischief, order of court or other
governmental authority, inability to secure or delay in securing rights of way,
privileges, franchises, permits equipment, and other events reasonably beyond
the control of the party subject thereto.
IX. ASSIGNMENT
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This Agreement shall be assignable by the SAC without the prior written
consent of the other party. This Agreement shall be binding upon and apply,
extend to, and inure to the benefit of the successors, heirs and assigns of the
respective parties hereunder.
X. NOTICES
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All notices required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed adequately given if delivered in person
or sent by registered or certified mail, return receipt requested, to the
following address:
SAFE ALTERNATIVES CORPORATION
c/o Richard J. Fricke, Esq.
27 Governor Street
Ridgefield, CT 06877
RICHARD B. KENNEDY
519 Branchville Road
Ridgefield, CT 06877
or such other address as may be designated by a party, by a notice in
compliance with this Article X.
XI. GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut.
XII. COMPLETE AGREEMENT
-----------------------
This Agreement represents the complete agreement of the parties with merged
herein. This Agreement may be amended or changed only by a written document
purporting to do so
and signed by the parties.
XIV. SEVERABILITY
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If it shall at any time appear that any right or obligation provided in
this Agreement is contrary to any law, treaty or regulation of a government to
which any party is subject, such right or obligation shall be deemed annulled,
or shall be modified to the extent required to comply with such law, treaty or
regulation.
XV. MARKING
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SAC agrees to permanently and legibly mark or cause to be marked in the
manner prescribed by title 35, Section 287, of the United States Code, or
appropriate foreign requirements all Kennedy Technology marketed by SAC or its
sublicensees, with the number or numbers of the patents of the Kennedy Patent
Rights insofar as it is reasonably practical.
XVI. CONFIDENTIALITY
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Except to the extent permitted under and necessary to enjoy the full
benefits of this Agreement, it is agreed that without the prior written approval
of the other party, neither party will during the term of this Agreement
disclose or permit to be disclosed to others or used for, its own benefit, any
know-how and unpublished information relating to the business, engineering,
research activites or trade secrets of the other acquired by the party during
the term of this Agreement, provided that such know-how and unpublished
information has been designated and marked as "CONFIDENTIAL" by the party to
whom the know-how and information belongs prior to its acquisition by the
receiving party; and provided further that
the know-how or unpublished information has not fallen into the public domain
through no fault of the receiving party and has not been received by the
receiving party from another source.
XVIII. DUPLICATE ORIGINALS
--------------------------
This Agreement is being executed in duplicate original form, each of which
shall serve and function as an original agreement for all purposes.
XIX. RESERVATION OF KENNEDY RIGHTS
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Kennedy represents, and based thereon SAC acknowledges, that Richard B.
Kennedy has expertise in numerous other areas. It is agreed by SAC that any
discoveries or inventions of Richard B. Kennedy which are not related to the
Kennedy Patent Rigths, Technology and Know-How and which do not come within the
purview of the definitions contained in Article I hereof shall remain the sole
property of Richard B. Kennedy.
XX. ROYALTY PAYMENTS
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Notwithstanding anything in this License Agreement to the contrary, the
royalty payments called for herein shall, at all times, be based upon the Fair
Market Value of the sale of the product. If there is a dispute about the Fair
Market Value of the product, said dispute shall be resolved in accordance with
the License Agreement.
under his hand and seal and SAC has caused this Agreement to be executed by its
duly authorized representative as of the date and year first above written.
Signed, Sealed and Delivered
In the presence of:
s/Jo Ellyn K. S. s/Richard B. Kennedy
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Richard B. Kennedy
s/Sharlet S. Wirzulis s/Richard J. Fricke
- -------------------------------------- -----------------------
Richard J. Fricke
s/Sharlet S. Wirzulis s/Patrick J. Crehan
- -------------------------------------- -----------------------
Patrick J. Crehan
- -------------------------------------- SAFE ALTERNATIVES CORPORATION
OF AMERICA, INC.
s/Sharlet S. Wirzulis s/Stpehen J. Thompson
- -------------------------------------- ---------------------------------------
Stephen J. Thompson, Its President
STATE OF CONNECTICUT )
) SS. Ridgefield
COUNTY OF FAIRFIELD )
Personally appeared RICHARD B. KENNEDY, Signer and Sealer of the foregoing
Instrument, and acknowledged the same to be his free act and deed, before me.
s/Sharlet S. Wirzulis
---------------------------------------------
STATE OF CONNECTICUT )
) SS. Ridgefield
COUNTY OF FAIRFIELD )
Personally appeared RICHARD F. FRICKE, Signer and Sealer of the foregoing
Instrument, and acknowledged the same to be his free act and deed, before me.
s/Sharlet S. Wirzulis
---------------------------------------------
STATE OF CONNECTICUT )
) SS. Ridgefield
COUNTY OF FAIRFIELD )
Personally appeared PATRICK J. CREHAN, Signer and Sealer of the foregoing
Instrument, and acknowledged the same to be his free act and deed, before me.
s/Sharlet S. Wirzulis
---------------------------------------------
STATE OF CONNECTICUT )
) SS. Ridgefield
COUNTY OF FAIRFIELD )
Personally appeared STEPHEN J. THOMPSON, President of SAFE ALTERNATIVES
COPORATION OF AMERICA, INC. and acknowledged the same to be his free act and
deed, and the free act and deed of said corporation, before me.
s/Sharlet S. Wirzulis
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