EXHIBIT 10.5
LICENSE AGREEMENT
This agreement (hereinafter, "Agreement") is made and is effective the date of
the last of the Parties to sign (hereinafter, "Agreement Date") by and between
MariCulture systems, Inc., a Florida corporation with its principle offices in
Washington (hereinafter, "MCSI") and David Earl Meilahn, an individual
(hereinafter "Meilahn").
Whereas, Meilahn is the owner, by way of grant, assignment, of right,
title, and interest in certain intellectual property covering a technology
generally recognized as "Aquaculture System" (hereinafter, "Technology") that is
identified in part by United States Patent Office number 5,762,024 and other
patents issued or not;
Whereas, MCSI is desirous of obtaining license rights to Meilahn's
intellectual property and Meilahn is willing to grant same so that MCSI will
develop, manufacture and install products derived from the Technology;
Therefore, in consideration of the obligations expressed herein, the
Parties ascribe to the recitals set forth above and agree as follows:
Article 1 - DEFINITIONS
1.1 "Meilahn", as used herein, shall mean David Earl Meilahn, an individual with
his principle place of residence at 7219 196th Street SW, Apt. #C-3, Lynnwood,
Washington, USA and his heirs or assigns.
1.2 "MCSI", as used herein, shall mean MariCulture Systems, Inc., a Florida
corporation with a principal place of business at 2504 Hartford Drive, Lake
Stevens, Washington 98258, USA and includes its Affiliate(s), provided they
become parties to and execute this agreement and in so doing, agree to abide by
its terms and conditions.
1.3 "Affiliate" or "Affiliate(s)", as used herein, shall mean any corporation,
firm, partnership or other business entity, whether now or in the future,
controlled by, controlling, or under common control with a Party. For this
purpose, "control" means direct or indirect beneficial ownership of or the right
to vote at least fifty percent (50%) of the voting stock or at least fifty
percent (50%) interest in the income of a Party.
1.4 "Technology", as used herein, shall mean a technology generally recognized
as "Aquaculture System", and described at least in part, in Meilahn corporate
drawings and files and covered in part by United States Patent #5,762,024 and/or
any other actual patents, either foreign or domestic, which may or may not be
issued.
1.5 "Field of Use", as used herein, shall mean the industry generally known as
"aquaculture", pertaining directly to the rearing or raising of fish, shellfish
or other live aquatic organisms in a human-controlled or augmented environment.
1.6 "Licensed Technology Product", as used herein, shall mean:
a) A manufactured apparatus for the rearing of aquatic organisms, only
generally characterized as floating enclosed culture systems, regardless of
the number of enclosures or other key components, which is covered by any
one or combination of the Patent Rights; and
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b) any composition of matter, product, article of manufacture, apparatus,
or component part of a system or apparatus, in whole or in part, which is
made, Used, or Sold and which uses a process, design, composition,
material, procedure or method covered by any one or combination of the
Patent Rights.
Where a Licensed Technology Product forms an integral part or component of
another product or package of products, that portion of the product or package
of products to be proportionally considered Licensed Technology Product shall be
that portion which falls under the definition in Subparagraph a) and b), above.
1.7 "Patent Rights", as used herein, shall include:
a) The United States and foreign patents;
b) The foreign patent application and its claims, any divisionals,
continuations, or continuations-in-part of same;
c) Foreign patents issued from the patent application; and
d) any reissues of the patents;
e) Any foreign Patents or deriving from the Patent or patent application in
Subparagraph a) through d) above of which Meilahn becomes the licensee or owner
after the Agreement Date.
Patent Rights shall be considered valid and enforceable until they expire under
governmental authority or unless deemed invalid and unenforceable by judgment of
a court of competent jurisdiction from which there is no possibility of appeal
or similar recourse.
Article 2 - GRANT
2.1 Meilahn hereby grants, to the extent he lawfully may, and subject to the
express limitations of this Agreement and the preexisting rights possessed by
Third Parties as set forth in Paragraph 10.1, an exclusive license to MCSI to
make, have made, Use, allow the right to Use Licensed Technology Products in the
Field of Use.
2.2 All rights not expressly granted hereby are held and reserved by Meilahn.
Article 3 - PAYMENTS AND ROYALTIES
3.1 In consideration of the grants herein to MCSI by Meilahn, MCSI agrees to pay
to Meilahn a non- refundable up-front fees payment in the amount of Two Hundred
Thousand Dollars ($200,000) and a Royalty, as set forth in Paragraph 3.2 below,
based on total sales of Licensed Technology Products. The fees payment is due in
full upon on the Date of this Agreement. If MCSI is unable to make the required
fees payment on the Date of this Agreement, no rights will be granted to MCSI
and this Agreement will be suspended for a period not to exceed two years until
payment is made in full. MCSI may optionally split the fees payment by paying
the amount of One Hundred Thousand Dollars ($100,000) due on the activation of
this Agreement and a second payment of One Hundred Thousand Dollars ($100,000)
due within Twelve (12) months of the date of the intial payment. If the fees
payment is split by MCSI, the balance due will bear interest at 10% per annum to
be paid with the second payment and all rights granted under this Agreement will
be held as temporary until such time as the total up-front fees payment is made
in full to Meilahn.
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3.2 MCSI agrees to pay to Meilahn a quarterly royalty payment in the amount of
3.0 % of the total gross sales of systems sold by MCSI, its affiliates,
sublicensees, and associates under this Agreement for a period to remain in
effect until the final abandonment, expiration, or invalidation of the last
remaining Patent Rights. All payments are to be made to Meilahn, his heirs or
his assigns within 30 days following the end of the calendar quarter during
which licensed sales were made. Each payment is based on total dollar value of
all sales of Licensed Technology Products received and booked by MCSI during
that quarter whether MCSI receives full or partial payment from their customer.
Any adjustments to sales agreements accepted by MCSI will also be subject to a
royalty payment that will be paid following the quarter in which the sales
adjustment is booked by MCSI.
Article 4 - GRANT BACK OF RIGHTS
4.1 Subject to the terms and conditions herein, Meilahn further grants to MCSI
the right to sublicense the Improvements, but only upon termination of this
Agreement and only in conjunction with Licensed Technology Products.
4.2 MCSI shall provide to Meilahn a report, by July 10th of each year, certified
by MCSI's Chief Executive Officer stating that MCSI has investigated whether or
not undisclosed Improvements, whether new or in addition to previously disclosed
Improvements exist or were made in the preceding year.
4.3 In order to effect the licensing of Improvements, Meilahn shall have the
right, upon providing reasonable request, to access specified records of MCSI
and its Affiliate(s), on site or at a location jointly agreed upon, during
regular business hours and subject to at least Ten (10) days written notice from
Meilahn. This right of access is strictly limited to documentation and records
pertaining to Improvements. Prior to commencing a site visit any Third Party to
accompany Meilahn on such visits shall first execute a confidentiality agreement
and shall be approved by MCSI, which approval may not be unreasonably denied.
Site visits will be limited to no more than Two (2) such visits within any
calendar year.
4.4 Meilahn shall have no liability for infringement or misappropriation claims
made by Third Parties regarding the Improvements licensed by MCSI. MCSI's
licensing of the Improvements may, however, be relied upon by Meilahn as
evidencing an absence of any knowledge or belief on the part of MCSI that the
subject matter of the Improvement violates any Third Party's patent, Trademark,
copyright, trade secret, or other intellectual property rights.
Article 5 - SUBLICENSES
5.1 MCSI shall not execute a sublicense agreement without the prior written
consent of Meilahn, and Meilahn shall grant such consent provided that the
restrictive effect of the terms and conditions of the proposed sublicense
agreement are substantially similar to those herein. MCSI shall promptly notify
Meilahn of its intent to execute any sublicense agreement with a Third Party
and, in a timely manner, provide Meilahn with any information as requested by
Meilahn relating to the Third Party, including but not limited to, name of
entity, business interests, sales volume and other financial data. MCSI shall
give Meilahn no less than Ten (10) days to review the final draft of any
sublicense agreement prior to its execution. A copy of the executed sublicense
agreement shall be provided Meilahn by MCSI within Five (5) days of the
execution date.
Article 6 - DILIGENT EFFORTS
6.1 MCSI shall, upon execution of this Agreement, diligently proceed in its
efforts for the development, manufacture and installation of Licensed Technology
Products.
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6.2 MCSI shall use diligence in gathering complete Test Results and/or
Production Data and keeping accurate records thereof.
6.3 MCSI shall provide customers and the public at large with reasonable notice
of the Patent Rights by marking Licensed Technology Products and/or their
accompanying labels, literature, or packaging.
6.4 In making determinations pertaining to this section, Meilahn shall consider
prudent and reasonable business practices and judgment and shall consider
reports provided hereunder by MCSI.
Article 7 - PATENT INFRINGEMENT
7.1 In the event of the initiation of any suit by a Third Party against Meilahn,
MCSI, its Affiliate(s) or its sublicensees for a Third Party patent infringement
involving the manufacture, use, sale, distribution, marketing or other
utilization of Licensed Technology Product, the Party sued shall promptly notify
the other Party in writing. MCSI shall have the first right to defend, or, at
its option, to settle such suit at its own expense. Except in the case of a
conflict of interest, Meilahn and MCSI shall assist one another and cooperate in
any such litigation at the other's request without expense to the requesting
Party.
Article 8 - USE OF TRADEMARKS
8.1 Nothing contained in this Agreement shall be construed as conferring any
right to use, in advertising, publicity, or other promotional activities with
respect to the Licensed Technology Products, any name, Trademark or other
designation of either Party hereto, including any contraction, abbreviation or
simulation of any of the foregoing, unless the express written permission of the
other Party has been obtained, which permission shall not be unreasonably
withheld. The use of the names "Meilahn" or "Merriam Research" or "Management
Technology Services, Inc.", by MCSI in connection with such marketing is
expressly prohibited unless express written permission is obtained in each case.
8.2 MCSI, at its sole expense, shall be responsible for the selection,
registration and maintenance of all Trademarks which it employs in connection
with any Licensed Technology Product and shall own and except as provided for
herein, shall control such Trademarks during the life of this Agreement as well
as after its termination or expiration.
Article 9 - WARRANTIES
9.1 Meilahn warrants that he has the lawful right to grant the license set forth
herein, and that no consent, license or other conveyance is required by MCSI
from a Third Party to grant the license set forth herein.
9.2 Meilahn makes no express or implied warranties of merchantability or fitness
of the Licensed Technology Products for a particular purpose.
9.3 Nothing in this Agreement shall be construed as:
a) A warranty or representation by Meilahn as to the validity or scope of
any Patent Rights;
b) A warranty or representation that anything made Used, Sold or otherwise
disposed of under any license granted in this Agreement is or shall be free from
infringement of patents or proprietary rights of Third Parties; or
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c) An obligation to bring or prosecute actions or suits against Third
Parties for infringement.
9.4 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, MEILAHN MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OF VALIDITY OF THE PATENT RIGHTS, OR THAT USE
OF THE TECHNOLOGY WILL NOT INFRINGE ANY PATENT OR OTHER RIGHTS.
Article 10 - ASSIGNABILITY
10.1 MCSI shall not have the right to assign its rights under this Agreement
without the prior written consent of Meilahn, which consent shall not be
unreasonably withheld. MCSI shall notify Meilahn in a timely manner of its
intent to execute an assignment to an Affiliate or Third Party and at that time
provide Meilahn with any information as requested by Meilahn relating to the
Affiliate or Third Party, including but not limited to, name of entity, business
interests, sales volume and other financial data. MCSI shall give Meilahn no
less than Ten (10) days to review the final draft of any assignment agreement
prior to its execution. MCSI agrees that any such assignment agreement must
include provisions that MCSI and its assignee warrant that the assignee will
comply with all of the terms and conditions of this Agreement and assume any and
all outstanding obligations of MCSI to Meilahn, whether known or unknown, at the
time of assignment. A copy of the executed assignment agreement shall be
provided Meilahn by MCSI within Ten (10) days of the execution date.
Article 11 - INDEMNIFICATION
11.1 MCSI agrees to indemnify, hold harmless and defend Meilahn, its directors,
officers, employees, contractors, and agents, against any and all claims, suits,
losses, damage costs, fees and expenses, including legal expenses resulting from
or arising from any and all actions and omissions of MCSI, including those with
respect to the licensed Technology, and arising out of the exercise of this
Agreement including, but not limited to any damages, losses or liabilities
whatsoever with respect to death or injury to any person and damage to any
property arising from the possession, use or operation of the Licensed
Technology Products by MCSI, its Affiliate(s), or its sublicensees or their
customers in any manner whatsoever.
Article 12 - NOTICES
12.1 Any payment, notice or other communication required or permitted to be
given to either Party hereto shall be deemed to have been properly given and
received only if given in writing and when hand delivered (with acknowledgment
of receipt), sent by overnight courier (with notification by facsimile that
delivery is forthcoming), or sent by facsimile (with copy by first class mail).
Any such notice shall be deemed received the same date upon personal delivery or
facsimile transmission, or one business day following such sending in case of
overnight courier. Unless and until changed by written notice given as provided
for in this paragraph, the addresses of the Parties are as follows:
In the case of Meilahn: In the case of MCSI:
David Earl Meilahn MariCulture Systems, Inc.
7219 196th St SW, Apt C-3 PO Box 968
Lynnwood, Washington 98036, USA Lake Stevens, Washington 98258, USA
Attention: DEM Attention: President
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Article 13 - GOVERNING LAW
13.1 Except where Federal law prevails, this Agreement shall be construed and
governed under the laws of the state of Washington.
Article 14 - CONFIDENTIALITY
14.1. Except to the extent expressly authorized in this Agreement, Meilahn and
MCSI agree that, for the term of this Agreement and for Five (5) years
thereafter, the receiving Party of Proprietary Information by the providing
Party shall keep same completely confidential and shall not publish or otherwise
disclose such information except to the extent that it can be established by the
receiving Party by competent proof that Proprietary Information:
a) was already known to the receiving Party, other than under an obligation
of confidentiality, at the time of disclosure by the disclosing Party;
b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;
c) became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement;
d) was subsequently lawfully disclosed to the receiving Party by a Third
Party.
14.2. Each Party may disclose the other Party's Proprietary Information to the
extent such disclosure is reasonably necessary in prosecuting or defending
litigation or complying with applicable governmental regulations, subject to
Thirty (30) days prior written notification to the other Party.
14.3 MCSI agrees that Meilahn may disclose Test Results/Production Data it
receives from MCSI to its patent assignors under conditions of confidentiality.
14.4 Meilahn and MCSI may use each other's Proprietary Information only under
the following restrictions:
a) The Parties may duplicate or reproduce the disclosed Proprietary
Information; if duplicated or reproduced in whole or in part, the Proprietary
Information must carry a proprietary notice similar to that with which it was
submitted to the receiving Party.
b) Any person employed by the receiving Party and utilizing the Proprietary
Information will be advised of, and is subject to, the conditions in this
Article.
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14.5 The Parties agree to protect each other's Proprietary Information from
further disclosure by taking precautions equivalent to those used to protect
their own confidential information.
Article 15 - EXPORTS
15.1 MCSI warrants that neither it nor its Affiliate(s), sublicensees, agents or
distributors will export or re-export, directly or indirectly, Licensed
Technology Product to any country unless allowed and authorized by the laws of
the United States of America.
Article 16 - TERM
16.1 This Agreement shall be in full force and effect from the Agreement Date
and shall remain in effect until the final abandonment, expiration, or
invalidation of the last remaining Patent Rights, unless otherwise terminated by
operation of law or pursuant to the terms and conditions of this Agreement.
16.2 Expiration of the relevant, last remaining patents within the Patent Rights
shall not preclude MCSI from continuing to utilize the Patent Rights and without
further royalty or other payment to Meilahn.
Article 17 - TERMINATION
17.1 MCSI shall promptly notify Meilahn in the event MCSI voluntarily files for
or is involuntarily forced to file for a petition in bankruptcy or insolvency or
for reorganization or for an arrangement for the appointment of a receiver or
trustee of MCSI or of its assets in any country.
17.2 Prior to the final abandonment, expiration or invalidation of the last
remaining Patent Rights, and only after Five (5) years from the Agreement Date,
MCSI shall have the right to terminate this Agreement in its entirety without
cause, upon Sixty (60) days written notice to Meilahn. Thirty (30) days after
receipt by Meilahn of such notice, the license granted hereunder shall be deemed
terminated.
17.3 If either Party is in breach of any of the provisions of this Agreement,
including but not limited to: non-compliance with sublicensing conditions,
nonpayment of fees or royalties due or noncompletion of the required reports,
the citing Party will submit to the responding Party a written notification of
such breach. The responding Party shall have Ninety (90) days from the date of
notification to remedy the breach. If the breach is not corrected within this
period, the citing Party shall have the right to terminate this Agreement in its
entirety upon delivery of notice to the responding Party. Upon receipt by the
responding Party of such notice, the license granted hereunder shall be deemed
terminated.
Article 18 - RIGHTS AND DUTIES UPON TERMINATION
18.1 Upon termination of this Agreement, Meilahn shall have the right to retain
any sums already paid by MCSI or its sublicensees hereunder, and MCSI and its
sublicensees shall pay all sums accrued hereunder within Thirty (30) days of the
date this Agreement is terminated.
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18.2 Upon termination of this Agreement, MCSI shall fully and completely assign
to Meilahn any and all outstanding licenses with sublicensees, within Thirty
(30) days from the date of termination. 18.3 Upon the termination of this
Agreement, the Parties shall return to each other any Proprietary Information,
without retaining samples or copies, except as provided for herein.
18.4 Termination of this Agreement shall terminate all outstanding obligations
and liabilities between the Parties arising from this Agreement, except those
which, by their nature, extend beyond the term of this Agreement and except
those described in Articles 1 (Definitions), 9 (Warranties), 11
(Indemnification), 13 (Governing Law), 14 (Confidentiality), 18 (Rights and
Duties Upon Termination); and Paragraphs 4.2, 4.4 (Grant backs), 5.1
(Sublicensing), 8.1 (Trademarks), 15.1 (Exports).
18.5 the grant under Article 2 of this Agreement shall cease as of the date of
termination.
Article 19 - WAIVER
19.1 No omission or delay of either Party in requiring due and punctual
fulfillment of the obligations of any other Party shall be deemed to constitute
a waiver by such Party of its rights to require such due and punctual
fulfillment, or any other of its remedies hereunder.
Article 20 - SEVERABILITY
20.1 In the event that any part of this Agreement shall be held illegal, void or
ineffective, the remaining portions hereof shall remain in full force and
effect.
20.2 If any of the terms or provisions of this Agreement are in conflict with
any applicable statute rule of law, then such terms or provisions shall be
deemed inoperative only to the extent that they may conflict therewith and shall
be deemed to be modified to conform with such statute or rule of law.
20.3 In the event that the terms and conditions of this Agreement are materially
altered as a result of Paragraphs 20.1 and 20.2, the Parties will renegotiate
the terms and conditions of this Agreement to resolve any inequities.
Article 21 - MISCELLANEOUS
21.1 The headings of this Agreement are inserted for convenience and reference
only and shall not be utilized to affect the meaning or interpretation of this
Agreement.
21.2 This Agreement shall not be binding upon the Parties until it has been
signed by or on behalf of each Party, in which event, it shall be effective as
of the Agreement Date.
21.3 This Agreement shall bind and inure to the benefit of the respective
successors, heirs and assigns of the Parties.
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21.4 No amendment or modification hereof shall be valid or binding upon the
Parties unless made in writing and signed by both Parties.
21.5 This Agreement embodies the entire understanding of the Parties and
constitutes the only and final binding commitment between the Parties regarding
the subject matter hereof. This Agreement supersedes all prior discussions,
communications, representations, understandings or agreements, either oral or
written, between the Parties relating to the subject matter hereof. This
Agreement is independent of all other agreements and any rescission hereof shall
not be the basis for rescinding any other agreement.
In Witness Whereof, both Meilahn and MCSI have executed this Agreement,
in duplicate originals by their respective officers hereunto duly authorized, on
the day and year hereinafter written.
David Earl Meilahn MariCulture Systems, Inc.
/s/ David Earl Meilahn /s/ David Meilahn
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Signature Signature
David Earl Meilahn David Meilahn
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Printed Name Printed Name
President
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Title Title
December 21, 1999
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Date Date
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