EXHIBIT 10.16
EXCLUSIVE LICENSING AGREEMENT
This Exclusive Licensing Agreement ("Agreement") is effective as of June 1,
2002, between Terra Block, Inc., a Florida corporation, with its principal place
of business at 2875 S. Orange Avenue, Suite 500-1208, Orlando, Florida 32806
("Licensor") and Terra Block Consolidated, Inc., a Nevada corporation with its
principal place of business at 2637 Erie Avenue, Suite 207, Cincinnati, Ohio
45208, ("Licensee").
1. GENERAL
The Licensor holds rights to the Licensed Patent Rights described below.
Licensee wishes to obtain the right to exploit the Licensed Patent Rights
and Trade Secrets Materials and all existing license rights in a commercial
setting.
In consideration for the mutual promises, covenants, and agreements made
below, the parties, intending to be legally bound, agree as follows:
2. GRANT OF LICENSE
2.1 GRANT OF EXCLUSIVE LICENSE AND OPTION. The Licensor hereby grants to the
Licensee:
(a) an exclusive license to make, have made, use and sell Licensed Products
under the Licensed Patent Rights, Trade Secret Materials and all existing
license rights in the Territory;
(b) the exclusive right and authority to grant Sublicenses of the rights
granted in Section 2.1(a) above, subject to the provisions of this Agreement;
(c) the exclusive right and option to purchase the Licensed Patent Rights
upon the terms and for the consideration set out in subsection (e) of this
Section 2.1;
(d) the term "Sublicense" means any grant by Licensee of any rights to a
sublicensee, under the terms of this Section 2.1. and "Territory" means anywhere
in the world.
(e) at any time during the term of this Agreement Licensee, and its
assigns, shall have the exclusive right and option to purchase the Licensed
Patent Rights and Trade Secret Materials and existing license rights for the
total consideration of $10,000,000 payable as follows:
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(i) $5,000,000 in cash by bank or federal reserve wire transfer upon
delivery of good and marketable title to the Licensed Patent Rights, Trade
Secrets, and existing license rights free and clear of any liens, claims,
license agreements (except those granted under the terms of this agreement
as noted hereinbefore); and
(ii) the number of common voting shares of Licensee determined by
dividing $5,000,000 on the date of delivery of title to the Licensed Patent
Rights, Trade Secret Material and existing license rights by the Current
Market Price per share. For the purpose of any computation under this
subparagraph (ii) the Current Market Price per share of Common Stock at any
date shall be deemed to be the average Sale Price for the thirty
consecutive trading days commencing forty-five trading days before the day
in question.
As used herein, "Sale Price" means the closing sales price of the Common Stock
(or if no sale price is reported, the average of the high and low bid prices) as
reported by the principal national or regional stock exchange on which the
Common Stock is listed or, if the Common Stock is not listed on a national or
regional stock exchange, as reported by the National Association of Securities
Dealers Automated Quotation System and if not so reported then as reported by
the National Quotation Bureau Incorporated. In the absence of a Sale Price the
Board of Directors shall in good faith determine the current market price on the
basis of such quotation as it considers appropriate.
2.2 LICENSED PRODUCTS. The term "Licensed Products" means any product within the
scope of any Valid Claim within the Licensed Patent Rights and any product made
by any art, method or process within the scope of any Valid Claim within the
Licensed Patent Rights, Trade secret materials and/or existing license rights.
"Valid Claim" means an issued claim of any unexpired patent, or a claim of any
pending patent application, which has not been held unenforceable, unpatentable
or invalid by a decision of a court or governmental body of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal,
which has not been rendered unenforceable through disclaimer or otherwise, and
which has not been lost through an interference proceeding. Notwithstanding the
foregoing to the contrary, a claim of a pending patent application shall cease
to be a valid claim if no patent has issued on such claim on or prior to the
fifth (5th) anniversary of the date of filing such patent application (or in the
case of a divisional or continuation application, the date of the filing of the
earliest parent application); provided that such claim shall once again become a
Valid Claim on the issue date of a patent that subsequently issues and covers
such claim.
"Licensed Patent Rights" means (a) the patents and patent applications listed on
Exhibit A attached hereto, and (b) all patents and patent applications which are
divisions, continuations, continuations-in- part, reissues, renewals,
re-examinations, counterparts, substitutions, or extensions of or to any patent
applications or patents described in clause (a) of this sentence.
3. TERM AND TERMINATION
3.1 TERM. The term of this Agreement will commence on the date stated above and
will continue until terminated as provided below.
3.2 TERMINATION. This Agreement may be terminated by the Licensee at any time
for any reason upon thirty (30) days prior notice to the Licensor. This
Agreement may be terminated by the Licensor:
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3.2.1 Upon any material breach of this Agreement by the Licensee that is not
remedied within thirty (30) days after the Licensee's receipt of notice of such
breach;
3.2.2 If the Licensee files a petition in bankruptcy, is adjudicated as
bankrupt, becomes insolvent, makes an arrangement or assignment for the benefit
of creditors, or discontinues its business, or if a receiver or custodian is
appointed for the Licensee or its business, or if a petition in bankruptcy is
filed against the Licensee that is not dismissed within 90 days after the date
of such filing; or
3.3 EFFECT OF TERMINATION. Upon termination of this Agreement by either party:
3.3.1 All rights granted to the Licensee under this Agreement will revert to the
Licensor free and clear of any lien, security interest or other encumbrance, and
the Licensee and its affiliates and subsidiaries will as soon as practicable
cease the manufacture, utilization, distribution, sale, promotion, advertising
and marketing of Licensed Products; provided, however, that for a period of one
hundred twenty (120) days after the termination of this Agreement the Licensee
and its affiliates and subsidiaries may complete any work in process.
3.3.2 All other amounts due under this Agreement, from either party to the other
will be paid within one hundred fifty (150) days after the date this Agreement
is terminated, at that time the Licensee will submit to the Licensor a final
account statement.
4. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
4.1 The Licensor represents and warrants to the Licensee that: (1) it is the
owner of the Licensed Products and has the power to grant the License to the
Licensee; (2) it has not granted to any person, other than those hereinbefore
disclosed, a license to manufacture, utilize, distribute or sell the Licensed
Products in the Territory; and (3) to the best of its knowledge, the Licensed
Products does not infringe any U.S. patent, copyright, trademark or other
proprietary right of any third party.
4.2 The Licensor will indemnify and hold the Licensee harmless from and against
any and all damages, liabilities, costs and expenses incurred by the Licensee in
connection with any final judgment arising out of or resulting from any breach
by the Licensor of its representations and warranties contained in Section 4.1
to the extent any such claim, proceeding or judgment relates to aspects of the
Licensed Products as originated by the Licensor. The provisions of this section
will survive the termination of this Agreement. Such indemnification will be in
addition to any other remedies available to the Licensee.
4.3 The Licensee represents and warrants to the Licensor that this Agreement
constitutes the legal, valid and binding obligation of the Licensee enforceable
against the Licensee in accordance with its terms.
4.4 The Licensee will indemnify and hold the Licensor harmless from and against
any and all damages, liabilities, costs and expenses incurred by the Licensor in
connection with any final judgment
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arising out of or resulting from: (1) the breach by the Licensee of its
representations and warranties contained in Section 4.3; (2) the manufacture,
utilization, distribution or sale of Licensed Products (except insofar as such
claims relate to the Licensor's representations and warranties contained in
Section 4.1); (3) any unauthorized use by the Licensee or any affiliate,
subsidiary or sublicensee of the Licensed Products; and (4) any defects (design
or otherwise) or inherent dangers in the Licensed Products caused by the
Licensee's negligence. The provisions of this section will survive the
termination of this Agreement. Such indemnification will be in addition to any
other remedy available to the Licensor.
5. PATENTS, COPYRIGHTS AND TRADEMARKS
5.1 ACQUISITION OF PATENT
5.1.1 The Licensor will keep the Licensee apprised of the status of all patent
applications, if any, filed by the Licensor with the United States Patent and
Trademark Office, and will promptly provide the Licensee with copies of any
pending patent applications and patents issued. If the Licensor elects not to
file and / or prosecute any such patent applications, the Licensee may do so at
its sole cost and expense.
5.1.2 The Licensee in its sole discretion and at its sole cost and expense may
apply for patents in Licensor's name covering the Property in any foreign
country in the Territory. At the Licensee's request, the Licensor will assist
the Licensee to the extent reasonably necessary in connection with any such
patent applications.
5.1.3 Despite anything to the contrary contained in Sections 8.1 and 8.2, all
patent applications filed and patents issued in connection with the Licensed
Products will be solely in the name of the Licensor; provided, however, that, at
the request of the Licensee, all such patents issued will be assigned to the
Licensee for the term of this Agreement.
5.2 The Licensor will be designated by the Licensee as the owner of all patents,
and all copyrights and trademarks originated by the Licensor, used in connection
with the sale of Licensed Products. The Licensee will affix patent, copyright
and trademark notices on all Licensed Products and all materials related thereto
including, without limitation, all advertising, packaging, promotional display,
printed and other materials indicating the Licensor's ownership of all such
patents, copyrights and trademarks.
5.3 As exclusive Licensee in the Territory, the Licensee will assist the
Licensor throughout the term of this Agreement, at the Licensor's sole cost and
expense, in obtaining protection of any patent, and any copyright or trademark
originated by the Licensor, used in connection with the sale of Licensed
Products.
5.4 The Licensee will not utilize any trademark in connection with any
advertising, packaging, promotional display, printed or other material used in
connection with the sale of Licensed Products without first submitting the same,
together with production samples to the Licensor for its approval,
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that will not be unreasonably withheld. The Licensor's approval will be deemed
given if it does not notify the Licensee of its disapproval within tern (10)
days after each such submission.
6. GENERAL PROVISIONS
6.1 ACCESS TO BOOKS AND RECORDS. The Licensee will keep complete and accurate
books and records with respect to the manufacture, distribution and sale of
Licensed Products. The Licensor will have the right, through an independent
accountant retained by the Licensor, to inspect the Licensee's books and records
relating to the subject matter of this Agreement once per year during the term
of this Agreement and for a period of two years thereafter on reasonable notice
to the Licensee, during regular business hours at the place where such books and
records are normally kept and to the extent reasonably necessary to determine
the accuracy of any royalty payments to be made under this Agreement. The
Licensee will be entitled to rely on the financial reports submitted to it by
its sublicensees' and the Licensee will not be required to verify such reports
by actual inspection of its sublicensees, books and records. However, the
Licensee will require its sublicensees to keep complete and accurate books and
records with respect to the manufacture, distribution and sale of the Licensed
Products. The Licensee will make available to the Licensor the results of any
audit it conducts of its sublicensees. Any and all information obtained by the
Licensor in such inspections will be considered strictly confidential and will
not be released or disclosed to any person, except in connection with any action
to enforce the rights of the Licensor under this Agreement.
6.2 ASSIGNMENT; BINDING NATURE
6.2.1 This Agreement will be binding upon and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns. The
Licensor may assign its rights and obligations under this Agreement to any third
party upon written agreement from Licensee which will not be unreasonably
withheld. The Licensee may assign its rights and obligations hereunder to an
affiliate or a subsidiary only; provided, however, that the Licensee will
continue to remain primarily liable to the Licensor for all such obligations.
6.2.2 For purposes of this Agreement the term: (1) "affiliate" will mean any
person that directly or indirectly, controls, is under common control with, or
is controlled by, the Licensee ("control" and any derivative will mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the person in question); and (2)
"subsidiary" will mean any corporation of which at least 51% of the outstanding
stock having by its terms the power to elect a majority of the board of
directors of such corporation is at that time directly or indirectly owned by
the Licensee.
6.3 WAIVER, AMENDMENT, MODIFICATION. No waiver, amendment or modification,
including those by custom, usage of trade, or course of dealing, of any
provision of this Agreement will be effective unless in writing and signed by
the party against whom such waiver, amendment or modification is sought to be
enforced. No waiver by any party of any default in performance by the other
party under this Agreement or of any breach or series of breaches by the other
party of any of
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the terms or conditions of this Agreement will constitute a waiver of any
subsequent default in performance under this Agreement or any subsequent breach
of any terms or conditions of that Agreement. Performance of any obligation
required of a party under this Agreement may be waived only by a written waiver
signed by a duly authorized officer of the other party, such waiver will be
effective only with respect to the specific obligation described in that waiver.
6.4 EMPLOYMENT. Licensee acknowledges and understand that a great deal of the
salability of the Licensed Products will depend upon the knowhow and experience
of the President of Licensor, Michael Gross, who has acquired the knowhow and
experience over an extended period of years working with Licensed Products.
Since this knowhow and experience of Michael Gross is not part of the Licensed
Products or patent rights so licensed, Licensee agrees to hire Michael Gross as
Chief Operations Officer and a Director of the Licensee. This agreement is
contingent upon the execution of an Employment Agreement between the Licensee
and Michael Gross in order to benefit from his knowledge and experience with the
Licensed Products.
6.5 FORCE MAJEURE. Neither party will be deemed in default of this Agreement to
the extent that performance of its obligations, or attempts to cure any breach,
are delayed or prevented by reason of circumstance beyond its reasonable
control, including without limitation fire, natural disaster, earthquake,
accident or other acts of God ("Force Majeure"), provided that the party seeking
to delay its performance gives the other written notice of any such Force
Majeure within fifteen (15) days after the discovery of the Force Majeure, and
further provided that such party uses its good faith efforts to cure the Force
Majeure. If there is a Force Majeure, the time for performance or cure will be
extended for a period equal to the duration of the Force Majeure. This Article
will not be applicable to any payment obligations of either party.
6.6 SETTLEMENT OF DISPUTES
6.6.1 Each party acknowledges and agrees that, if there is any breach of this
Agreement, including, without limitation, unauthorized use or disclosure of
confidential information or other information of the other party, the
non-breaching party will suffer irreparable injury that cannot be compensated by
money damages and therefore will not have an adequate remedy at law.
Accordingly, if either party institutes an action or proceeding to enforce the
provisions of this Agreement, such party will be entitled to obtain such
injunctive relief, specific performance, or other equitable remedy from a court
of competent jurisdiction as may be necessary or appropriate to prevent or
curtail any such breach, threatened or actual. These will be in addition to and
without prejudice to such other rights as such party may have in law or in
equity.
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6.6.2 Should there be any difference of opinion between the parties or if any
dispute arises as to any of the matters provided for in this Agreement, the
parties will first try to settle their dispute amicably through mutual
consultation. In case the dispute cannot be mutually settled, the matter will
next be submitted to mediation and if still unresolved after this, the parties
will submit for arbitration to the United States Commercial Arbitration
Association, whose award will be final upon both parties.
6.7 CUMULATIVE RIGHTS. Any specific right or remedy provided in this Agreement
will not be exclusive but will be cumulative upon all other rights and remedies
set forth in this section and allowed under applicable law.
6.8 GOVERNING LAW. This Agreement will be governed by the laws of theState of
Florida. Any dispute will be heard in the appropriate federal or state courts
located in Orange County, Florida.
6.9 ENTIRE AGREEMENT. The parties acknowledge that this Agreement expresses
their entire understanding and agreement, and that there have been no
warranties, representations, covenants or understandings made by either party to
the other except such as are expressly set forth in this section. The parties
further acknowledge that this Agreement supersedes, terminates and otherwise
renders null and void any and all prior or contemporaneous agreements or
contracts, whether written or oral, entered into between Terra Block, Inc. and
Terra Block Consolidated, Inc. with respect to the matters expressly set forth
in this Agreement.
6.10 COUNTERPARTS. This Agreement may be executed in multiple counterparts, any
one of which will be deemed an original, but all of which will constitute one
and the same instrument.
6.11 ATTORNEY FEES. If either party is required to retain the services of any
attorney to enforce or otherwise litigate or defend any matter or claim arising
out of or in connection with this Agreement, then the prevailing party will be
entitled to recover from the other party, in addition to any other relief
awarded or granted, its reasonable costs and expenses (including attorney fees)
incurred in the proceeding.
6.12 SEVERABILITY. If any provision of this Agreement is found invalid or
unenforceable under judicial decree or decision, the remainder will remain valid
and enforceable according to its terms. Without limiting the previous, it is
expressly understood and agreed that each and every provision of this Agreement
that provides for a limitation of liability, disclaimer of warranties, or
exclusion of damages is intended by the parties to be severable and independent
of any other provision and to be enforced as such. Further, it is expressly
understood and agreed that if any remedy under this
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Agreement is determined to have failed of its essential purpose, all other
limitations of liability and exclusion of damages set forth in this section will
remain in full force and effect.
6.13 NOTICES. All notices, demands or consents required or permitted under this
Agreement will be in writing and will be sent by facsimile or by registered air
mail to the addresses listed in the first paragraph or at such other address
that the party designates.
Captions and section headings used in this Agreement are for convenience
only and are not a part of this Agreement and will not be used in construing it.
The parties hereto have carefully read and reviewed this contract and agree
to and accept its terms and conditions. We are executing this Agreement as of
the day and year first written above.
LICENSOR: LICENSEE:
Terra Block, Inc. Terra Block Consolidated, Inc.
/s/ Michael Gross /s/ Gregory A. Pitner
- ------------------------------- -------------------------------
Michael Gross Gregory A. Pitner
President President
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