NATIONAL ACCOUNTS LICENSE AGREEMENT- CANADA
-------------------------------------------
THIS AGREEMENT made effective as of the 29th day of
February, 2000 between:
Winsire Enterprises Corporation, a British Columbia
company having an address at #102 - ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(hereafter called "Winsire")
- and -
Mega Tools Ltd., a British Columbia corporation having
an address at #5 - ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(hereafter called "Mega Tools")
WHEREAS:
I. Winsire is the owner of the following patents (hereafter
the "Patents"") for an invention of Hermann Fruhm entitled
"Cartridge Type Screwdriver"" (hereafter the "Invention""):
Country Patent Number Issue Date Expiry Date
------------- ------------- ------------------ ----------------
Australia 668,616 17 September, 1996 15 October, ▇▇▇▇
▇▇▇▇▇▇▇ E148,647 5 February, 1997 15 October, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇-▇ 21 March, 2000 15 October, ▇▇▇▇
▇▇▇▇▇▇ 2,084,270 20 January, 1998 1 December, 2012
France EP 674,567 5 February, 1997 15 October, ▇▇▇▇
▇▇▇▇▇▇▇ 69308038.8-08 5 February, 1997 15 October, 2013
Hong Kong HK1004260 20 November, 1998 15 October, ▇▇▇▇
▇▇▇▇▇ EP 674,567 5 February, 1997 15 October, ▇▇▇▇
▇▇▇▇▇ 2,869,678 8 January, 1999 15 August, ▇▇▇▇
▇▇▇▇▇▇ EP 674,567 5 February, 1997 15 October, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ EP 674,567 5 February, 1997 15 October, 2013
Taiwan NI-084443 1 March, 1997 ▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ EP 674,567 5 February, 1997 15 October, 2013
U.S.A. 5,265,504 30 November, 1993 1 December, 2012
II. Winsire has filed applications (hereafter the
"Applications") to patent the Invention as follows:
Country Serial Number Filing Date Expiry Date
------------- ------------- ------------------ ----------------
South Korea 95-702,035 15 October, 1993 15 October, 2013
III. Mega Tools has previously been granted a license to
distribute products embodying the Invention pursuant to a
license agreement made effective the 8th day of November,
1995 and executed at Chicago, Illinois on the 15th day of
September, 1998.
Winsire and Mega Tools redefined the terms of their
agreement pertaining to the Invention by cancelling all of
their prior agreements pertaining to the Invention and by
simultaneously
entering into a new National Accounts
License Agreement and a separate Regular Accounts License
Agreement, both of which were made effective as of November
8, 1999
V By an agreement in writing dated February 29, 2000 Mega
Tools assigned to Mega Tools USA Inc. all its rights and
obligations under both the National Accounts License
Agreement and the Regular Accounts License Agreement with
respect to the Invention in the United States of America
and reserved unto itself all rights and obligations to the
Invention in Canada.
VI. This agreement is entered into pursuant to the Assignment
Agreement of February 29, 2000 and sets out the terms of
the agreement between Winsire and Mega Tools with respect
to the National Accounts License Agreement in Canada only.
VII. Both Mega Tools and Mega Tools USA are under the control of
the same parent company, Megapro Tools Inc.
NOW THEREFORE, in consideration of the mutual
covenants contained in this Agreement and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
DEFINITIONS
-----------
1. In this Agreement:
2.
(a) "Affiliate" has the meaning given that expression by
the Company Act (British Columbia), as amended.
(b) "Apparatus" means cartridge type screwdrivers produced
in accordance with any of the Licensed Patents and/or
the Know-how and includes any set of pre-manufactured
components capable of assembly into a cartridge type
screwdriver in accordance with any of the Licensed
Patents and/or the Know-how.
(c) "Associate" has the meaning given that expression by
the Company Act (British Columbia).
(d) "Control" where used in connection with any
corporation means:
(i) the right to exercise a majority of the votes
which may be voted at all general meetings of
such corporation; or
(ii) the right to elect or appoint, directly or
indirectly, a majority of all directors of such
corporation or other persons who have the right
to manage or supervise the management of the
affairs and business of the corporation.
(e) "Head License Agreements" means this agreement and
the following other license agreements executed
concurrently herewith by Winsire and either Mega Tools
or Mega Tools USA Inc.: the National Accounts License
Agreement -USA, the Regular Accounts License Canada
and the Regular Accounts License USA, as any of those
agreements may from time to time be modified, amended,
superseded or replaced.
2
(f) "Improvement" means any modification or variant of the
Apparatus, whether patentable or not, which, if
manufactured, used, or sold, would fall within the
scope of at least one claim of at least one of the
Licensed Patents.
(g) "Know-how" means technical information, knowledge, and
expertise concerning the design, construction and use
of the Apparatus, possessed by Winsire, which is not
otherwise lawfully readily available to Mega Tools as
a unitary package for a reasonable price except from
Winsire by virtue of this Agreement.
(h) "Licensed Patents" means the Patents and any patent
which issues from any of the Applications.
(i) "National Account Customer" means any one of the
following entities: Sears, Sears Canada, Home Depot,
Truserve, Ace, Home Hardware, WalMart, K-Mart,
Builders Square, Home Base, Target, ▇▇▇▇'▇ Home
Centers, The Contractor's Yard, ▇▇▇▇ ▇▇▇▇▇, Canadian
Tire, ▇▇▇▇▇▇ Canada, Howdens, Revy Home & Garden,
Grope, Sodisco Group, Zellers, Sam's, Costco, ▇.▇.'s,
Payless Cashways, Scotty's, BuyMart, Mid-States, Eagle
Hardware and Garden, Distribution America, Pro Group,
Shopko, Villager, AAFES and Menards (and their
respective successors).
(j) "National Accounts License Agreement - Canada" means
this agreement.
(k) "National Accounts License Agreement - USA" means
agreement the National Accounts License Agreement -
USA executed concurrently herewith by Winsire and Mega
Tools.
(l) "Regular Account Customer" means any entity which is
not a National Account Customer.
(m) "Regular Accounts License Canada" means the Regular
Accounts License Agreement - Canada executed
concurrently herewith by Winsire and Mega Tools.
(n) "Regular Accounts License USA" means the Regular
Accounts License Agreement - USA executed concurrently
herewith by Winsire and Mega Tools.
(o) "Territory" means Canada.
(p) "Trademark" means MEGAPRO, or MEGA-LOK, or such other
trademark as Winsire may authorise in writing. For
greater certainty, Winsire owns the following
trademark registrations and applications:
(q) Canadian trademark registration number 473,554 MEGAPRO
15 In 1 & Design;
(r) United States trademark registration number 2,083,666
MEGAPRO 15 In 1 & Design;
(s) United States trademark registration number 2,130,439
MEGAPROOF 16 In 1;
(t) Australian trademark registration number 771,100
MEGAPRO;
(u) New Zealand trademark registration number 297,017
MEGAPRO;
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(v) Application for Canadian registration of trademark
MEGAPRO filed on 22 October, 1999 under serial number
1,033,592; and,
(w) Application for United States registration of
trademark MEGAPRO filed on 28 October, 1999 under
serial number 75/833,890.
(x) The headings are inserted solely for convenience of
reference and shall not be deemed to restrict or
modify the meaning of the Articles to which they
pertain.
GRANT OF LICENCE
----------------
2. Subject to the terms and conditions of this Agreement, and
the making of payments as hereinafter provided, Winsire
hereby grants to Mega Tools (for the term of this Agreement
unless otherwise provided) a licence in respect of the
Licensed Patents, Trademark and Know-how in accordance with
the following particulars:
(a) Mega Tools is hereby granted an exclusive license to
sell Apparatus to National Account Customers for
subsequent sale of such Apparatus within the Territory
by such National Account Customers;
(b) Mega Tools is hereby granted a non-exclusive license
to:
(i) manufacture Apparatus in the Territory;
(ii) utilize the Know-how in manufacturing Apparatus
throughout the Territory; and,
(iii) use the Trademark in the Territory on and in
association with the Apparatus.
(c) Mega Tools may sub-license its rights hereunder,
provided that the rights conferred upon any such sub-
licensee shall be no more extensive than the rights of
Mega Tools, and provided that Mega Tools shall be
responsible to Winsire for the payment of any and all
royalties arising from the exercise of any such rights
by any such sub-licensee, to the same extent as if the
said rights had been exercised by Mega Tools itself.
Before entering into any sub-licensing agreement
(which includes any distributorship agreement), Mega
Tools shall provide Winsire with a complete copy of
the proposed sub-licensing (or distributorship)
agreement. Mega Tools shall not enter into any sub-
licensing (or distributorship) agreement until Winsire
has approved, in writing, the form and content of the
proposed sub-licensing (or distributorship) agreement.
(d) If, during the term of this Agreement, Winsire
develops or discovers, or is a co-developer or co-
discoverer of any Improvement then Winsire shall
promptly inform Mega Tools thereof, and the rights
hereby granted to Mega Tools shall, for the balance of
the term of this Agreement, be deemed to extend to the
manufacture, use and sale of such Improvement, without
the payment of any additional royalty.
(e) If, during the term of this Agreement, Mega Tools
discovers or develops or is a co-developer or co-
discoverer of any Improvement then Mega Tools shall
promptly inform Winsire thereof, Mega Tools shall
assign all rights in such Improvement to Winsire free
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and clear of all encumbrances, security interests or
adverse claims, and the rights hereby granted to Mega
Tools shall, for the balance of the term of this
Agreement, be deemed to extend to the manufacture, use
and sale of such Improvement, without the payment of
any additional royalty. For greater certainty, in any
case where an employee of Mega Tools or a contractor
retained by Mega Tools is considered to be an inventor
or joint inventor of an Improvement, Mega Tools shall
communicate to Winsire all known facts respecting such
Improvement, and shall each time request is made by
Winsire and without undue delay execute and deliver to
Winsire or cause to be executed and delivered to
Winsire all such papers as may be necessary or
desirable to perfect Winsire's title to such
Improvement, and shall generally do everything
possible to aid Winsire in obtaining and enforcing
proper patent protection for such Improvement in any
and all countries.
MOULDS
------
3. Winsire has paid for and therefore owns all moulds
presently existing in the Territory which are capable of
being used to manufacture any component of the Apparatus.
(a) Mega Tools shall not order or otherwise obtain, and
shall not permit any sub-licensee to order or
otherwise obtain, any moulds capable of being used to
manufacture any component of the Apparatus, without
first obtaining Winsire's written confirmation that
Winsire is satisfied that appropriate steps have been
taken to vest ownership of all such moulds in Winsire.
(b) Upon termination of this Agreement for any reason,
Mega Tools, upon written request by Winsire, shall
forthwith deliver to Winsire all moulds which are
capable of being used to manufacture any component of
the Apparatus, provided that with respect to those
moulds for which Mega Tools has made an equal
contribution as contemplated by subsection (e) hereof,
Winsire shall first reimburse Mega Tools for its
contribution by paying Mega Tools 50% of the invoiced
cost of such moulds less depreciation at the rate of
10% per annum.
(c) Mega Tools shall not permit possession of any mould
capable of being used to manufacture any component of
the Apparatus to pass to any party except Winsire,
without first obtaining Winsire's written consent.
Mega Tools shall take whatever steps may be necessary
to secure written verification, satisfactory to
Winsire, of Winsire's right to secure possession of
the moulds as aforesaid.
(d) With the exception of any additional, substitute,
replacement, repaired or refurbished moulds which Jore
Corporation of Ronan, Montana may deem it necessary to
obtain (and for which Jore Corporation shall be solely
responsible) in order to manufacture any component of
the Apparatus, Winsire and Mega Tools shall equally
share the cost of any additional, substitute,
replacement, repaired or refurbished moulds which, in
Winsire's sole opinion, may be required in the
Territory to manufacture any component of the
Apparatus.
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SUPPLY OF APPARATUS
-------------------
4.
(a) Mega Tools may purchase components for assembly of
Apparatus directly from any of Winsire's designated
fabricators, which are presently:
(i) SPI Industries
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
(ii) Delta Machining Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
(b) (Mega Tools may purchase Apparatus, including
unassembled components capable of assembly into
cartridge type screwdrivers, directly from any of
Winsire's designated additional fabricators, which are
presently:
(i) Jore Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
(ii) Taiwan Measuring Tape Co., Ltd.
▇▇. ▇▇ ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ City
Taipei Hsien
Taiwan R.O.C.
(c) Whenever Mega Tools orders Apparatus or components for
assembly of Apparatus, Mega Tools shall at the same
time provide Winsire with a copy of the purchase order
for such Apparatus or components. All such purchase
orders shall bear a written notice requiring the
fabricator of the Apparatus or components to deliver
to Winsire at the time such Apparatus or components
are shipped to Mega Tools, an accounting of the
quantity and description of such shipped Apparatus or
components. Such accounting may take the form of a
shipping invoice or packing slip.
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COMMUNICATION OF KNOW-HOW;
--------------------------
PRESERVATION OF CONFIDENTIAL INFORMATION
----------------------------------------
5.
(a) Winsire shall communicate to Mega Tools all Know-how
in the possession of Winsire reasonably relevant to
the design, manufacture, marketing, and use of the
Apparatus. During the term of this Agreement, Winsire
will continue to communicate to Mega Tools, all such
further Know-how as comes into Winsire's possession.
(b) Mega Tools shall communicate to Winsire all technical
information and know-how relevant to the design,
manufacture, marketing, installation or use of the
Apparatus, as comes into the possession of Mega Tools.
(c) All Know-how and technical information communicated
pursuant to either of sub-paragraphs (a) or (b) hereof
shall be deemed to be confidential information, except
information which has been previously published as a
package or is otherwise clearly in the public domain.
Mega Tools shall not disclose or authorise the
disclosure of such information to any third party,
except as expressly permitted by Winsire. Mega Tools
shall take reasonable precautions to prevent the
unauthorised disclosure to third parties of all such
confidential information. Mega Tools obligation of
confidentiality shall terminate with respect to
specific technical information only if and when the
said specific technical information (i) is publicly
disclosed by a third party having no obligation of
confidentiality to Winsire; or (ii) becomes available
to the public otherwise than through the wrongful act
or neglect of Mega Tools; or (iii) has been
communicated by Winsire to Mega Tools more than seven
years prior to disclosure thereof by Mega Tools and
this Agreement has been terminated.
(d) Winsire shall use its best efforts to verify the
accuracy of the information furnished and provided to
Mega Tools, but will not be liable for damages arising
out of or resulting from any information or
representations made available, or the use thereof,
under any circumstances.
ROYALTY PAYMENTS AND SHARED COSTS
---------------------------------
6.
(a) In consideration for the licence hereby granted, Mega
Tools shall pay Winsire a Unit Royalty in respect of
each and every unit of Apparatus:
(i) manufactured by or on behalf of Mega Tools or by
or on behalf of any authorised sub-licensee or
distributor of Mega Tools;
(ii) sold, shipped, or otherwise disposed of by or on
behalf of Mega Tools or by or on behalf of any
authorised sub-licensee or distributor of Mega
Tools;
7
provided however that only one Unit Royalty shall be
payable in respect of any one unit of Apparatus.
(b) The Unit Royalty amount payable pursuant to sub-
paragraph (a) hereof shall be U.S. thirty cents (U.S.
$0.30), as adjusted pursuant to sub-paragraph 6(e)
hereof, or as adjusted pursuant to paragraph 34
hereof, as the case may be.
(c) If the total Unit Royalties payable pursuant to the
Head License Agreements (as the same may be amended,
superseded or replaced, from time to time), including
the Unit Royalties payable pursuant to sub-paragraph
(a) hereof in respect of any particular period
terminating on a date tabulated below do not exceed
the Minimum Royalty tabulated below for such period
(as adjusted pursuant to sub-paragraph 6(f) hereof, or
as adjusted pursuant to paragraph 34 hereof, as the
case may be), then Mega Tools shall, no later than
thirty (30) days after such termination date tabulated
below, pay Winsire an amount equal to the difference
between such Minimum Royalty and such total Unit
Royalty for such period.
Period Terminating Minimum Royalty
------------------ ---------------
8 November, 2000 U.S. $150,000
8 November, 2001 U.S. $150,000
8 November, 2002 U.S. $150,000
8 November, 2003 U.S. $150,000
8 November, 2004 U.S. $150,000
8 November, 2005 U.S. $150,000
(d) Unit Royalties shall be paid by Mega Tools to Winsire
in respect of any particular unit of Apparatus by the
earlier of:
(i) thirty (30) days after the date on which
components for assembling such unit of Apparatus
are shipped to Mega Tools by the manufacturer of
such components; or,
(ii) thirty (30) days after the date on which such
unit of Apparatus is shipped or otherwise
disposed of by or on behalf of Mega Tools or by
or on behalf of any authorised sub-licensee or
distributor of Mega Tools; or,
(iii) two (2) business days after the date on which
Mega Tools receives payment for such unit of
Apparatus whether from a third party or from or
on behalf of any authorised sub-licensee or
distributor of Mega Tools.
(e) The Unit Royalty amount stipulated in paragraph (b)
hereof shall be adjusted on the 9th day of November,
2001 and on each subsequent November 9th during the
term of this Agreement by multiplying U.S. thirty
cents (U.S. $0.30) by the CPI on the 1st day of
November, in each such year (commencing with the 9th
day of November, 2001) and dividing the product
thereof by the CPI for November 1, 2000; provided that
under no circumstances shall the foregoing adjustment
have the effect of lowering the Unit Royalty amount in
question below U.S. thirty cents (U.S. $0.30). In
this paragraph (e) "CPI" means the consumer price
(monthly all-items) index for the City of ▇▇▇▇▇▇▇▇▇,
▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ as issued by Statistics
Canada or its successors, provided that if such
consumer price index is no longer available from
Statistics Canada or its successors, Winsire may
utilize, for the purposes of this section, any
relevant measure of changes in consumer price levels
for the City of Vancouver, British Columbia, Canada.
By way of example, assume CPI for November 1st, 2002
is Y and CPI for November 1st, 2000 is X.
Accordingly, the Unit Royalty for the period November
9th, 2002 to November 8th, 2003 would be the greater
of US$0.30; or US$0.30 x Y/X.
(f) The Minimum Royalty amounts stipulated in paragraph
(c) hereof shall be adjusted on the 9th day of
November, 2001 and on each subsequent November 9th
during the term of this Agreement by multiplying the
Minimum Royalty amount by the CPI on the 1st day of
November, in each such year (commencing with the 9th
day of November, 2001) and dividing the product
thereof by the CPI for November 1, 2000; provided that
under no circumstances shall the foregoing adjustment
have the effect of lowering the Minimum Royalty amount
in question below the Minimum Royalty amount for the
relevant twelve month period as set out in paragraph
(c) hereof. In this paragraph (f) "ACPI" means the
consumer price (monthly all-items) index for the ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ as issued by
Statistics Canada or its successors, provided that if
such consumer price index is no longer available from
Statistics Canada or its successors, Winsire may
utilize, for the purposes of this section, any
relevant measure of changes in consumer price levels
for the City of Vancouver, British Columbia, Canada.
By way of example, assume CPI for November 1st, 2002
is Y and CPI for November 1st, 2000 is X. Accordingly,
the Minimum Royalty for the period November 9th, 2002
to November 8th, 2003 would be the greater of
US$150,000; or US$150,000 x Y/X.
(g) Mega Tools shall keep separate records and sufficient
detail to permit the determination of royalties
payable hereunder and will, together with each royalty
payment, deliver to Winsire a written account,
certified by a senior officer of Mega Tools, showing
the number of units of Apparatus in respect of which
royalties are payable to Winsire and showing in detail
the calculations upon which the royalties payable to
Winsire in respect thereof were determined.
(h) Any and all units of Apparatus manufactured, sold,
shipped or otherwise disposed of by or on behalf of
any authorised sub-licensee or distributor of Mega
Tools shall, for royalty computation purposes, be
deemed to have been manufactured, sold, shipped or
otherwise disposed of, as the case may be, by Mega
Tools.
(i) Royalties paid by Mega Tools to Winsire under this
Agreement shall not be refundable for any purpose
except for amounts paid due to computational errors,
and in such case, any overpayment shall be taken as a
credit against future royalties payable under this
Agreement, except at termination.
(j) All payments made to Winsire hereunder shall be made
in United States dollars, without any set-offs or
deductions other than withholdings at source for taxes
which Mega Tools is required by law to withhold. Mega
Tools shall furnish Winsire with pertinent
documentation respecting any withholding tax payments
made by Mega Tools with respect to any payments made
to Winsire. Payment shall be made at Winsire's
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address for receipt of notices hereunder or at such
other address or deposited in such bank account as
Winsire may from time to time designate by notice to
Mega Tools.
(k) Winsire and Mega Tools shall equally share all costs
incurred in negotiating and settling the terms of any
authorised sub-licensing or distributorship agreement
entered into hereunder, including without restriction,
all legal, accounting, and travel costs.
(l) Winsire and Mega Tools shall equally share all
costs incurred by Winsire in overseeing,
managing, servicing or otherwise assisting any
authorised sub-licensee or distributor of Mega
Tools, including without restriction, all legal,
accounting, audit, quality assurance, general
administrative, long distance telecommunication,
travel and lodging costs incurred by Winsire.
WARRANTIES AND REPRESENTATIONS
------------------------------
7.
(a) Winsire warrants and represents to Mega Tools that, to
the best of Winsire's knowledge:
(i) Winsire owns the Licensed Patents and Trademark
and has the power to grant licences thereunder;
(ii) Winsire has not made, granted or entered into any
encumbrance, license or other agreement affecting
the Licensed Patents or Trademark, inconsistent
with this Agreement;
(iii) The use of the Apparatus by Winsire has never
given rise to any complaint alleging infringement
of any patent, trademark or other intellectual
property right; and,
(iv) Winsire is the owner of the Know-how and has not
made, granted or entered into any encumbrance,
licence or other agreement affecting the Know-
how, inconsistent with this Agreement.
(b) Mega Tools warrants and represents to Winsire that
Mega Tools has the skill, expertise, facilities,
equipment and manpower necessary to energetically
exploit the Licensed Patents, Trademark and Know-how
within the Territory in compliance with Winsire's
standards so as to derive maximum revenue for both
Winsire and Mega Tools.
(c) Notwithstanding anything to the contrary, Winsire
makes no warranty as to the validity or enforceability
of the Licensed Patents, or any of them; or, as to the
validity or enforceability of the Trademark.
(d) This Agreement is not subject to any warranties or
representations, express or implied, except as
specifically set forth.
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FURTHER COVENANTS
-----------------
8. Mega Tools acknowledges and agrees that:
(a) Winsire shall not knowingly permit any third party
(other than Mega Tools authorised sub-licensees or
distributors) to sell Apparatus to any National
Account Customer in the Territory;
(b) Winsire can not guarantee that there will be no third
party parallel importation or grey marketing of
Apparatus within the Territory, but if Mega Tools
provides Winsire with samples evidencing such
activity, then Winsire shall exert its best efforts to
identify the source of such parallel importation or
grey marketing and, to the extent permissible by law
(and without the requirement to incur expenses or
liabilities in excess of U.S. Two Thousand Five
Hundred Dollars (U.S. $2,500) in doing so), to stop
further parallel importation or grey marketing of
Apparatus within the Territory from such source.
(c) Mega Tools shall not knowingly permit any party to
distribute Apparatus outside the Territory, without
the express written consent of Winsire.
(d) If Mega Tools is advised by Winsire that Apparatus
acquired from Mega Tools or from any of Mega Tools
authorised sub-licensees or distributors has been
distributed outside the Territory, then Mega Tools
shall, to the extent permissible by law:
(i) exert its best efforts to identify the party
responsible for such distribution;
(ii) make no further sales of Apparatus to such party,
or to any other party who Mega Tools knows or
reasonably should know is acting as an agent for
such party until such party reasonably satisfies
Mega Tools that it has remedied its out-of-
Territory sales and has agreed in writing not to
sell Apparatus outside of the Territory in
future; and,
(iii) require Mega Tools authorised sub-licensees and
distributors to make no sales of Apparatus to
such party, or to any other party who Mega Tools
authorised sub-licensees and distributors know or
reasonably should know is acting as an agent for
such party.
(e) If Mega Tools is advised by Winsire that Apparatus
acquired from Mega Tools or from any of Mega Tools
authorised sub-licensees or distributors has been
distributed outside the Territory by a particular
party, then Mega Tools shall, to the extent
permissible by law:
(i) make no sales of Apparatus to such party, or to
any other party who Mega Tools knows or
reasonably should know is acting as an agent for
such party until such party reasonably satisfies
Mega Tools that it has remedied its out-of-
Territory sales and has agreed in writing not to
sell Apparatus outside of the Territory in
future; and,
(ii) require Mega Tools authorised sub-licensees and
distributors to make no sales of Apparatus to
such party, or to any other party who Mega Tools
authorised
11
sub-licensees and distributors know or
reasonably should know is acting as an agent for
such party.
(f) During the term of this Agreement and the Renewal Term
(as defined in section 34) if any, Mega Tools will not
directly or indirectly nor will it allow any Affiliate
of Mega Tools to directly or indirectly:
(i) anywhere in the Territory, represent, sell,
promote or manufacture (or have a financial
interest in any entity doing any of the
foregoing) any screwdriver that is competitive
with the Apparatus; or
(ii) anywhere outside the Territory, represent, sell,
promote or manufacture (or have a financial
interest in any entity doing any of the forego-
ing) the Apparatus.
(g) Mega Tools covenants and agrees with Winsire that,
during the term of this Agreement (and, for greater
certainty, including any Renewal Term as hereinafter
defined) it will not directly or indirectly, nor will
it allow any Affiliate or assist any third party to
directly or indirectly, anywhere in the world outside
the Territory, represent, sell, promote or manufacture
(or have a financial interest in any entity doing any
of the foregoing) the Apparatus, without the express
written consent of Winsire;
(h) It will at all times during the term of this Agreement
(and, for greater certainty, including any Renewal
Term as hereinafter defined) be the licensee under the
Regular Accounts License Agreement - Canada and during
such time will maintain such agreement in good
standing and will perform all its obligations
thereunder;
(i) Mega Tools will ensure that at all times during the
term of this Agreement (and, for greater certainty,
including any Renewal Term as hereinafter defined)
that it remains under the control of the same parent
corporation that also controls the licensee under both
the National Accounts License Agreement - USA and the
Regular Accounts License Agreement - USA and that such
other licensees maintain such agreements in good
standing and perform all their obligations thereunder.
COMPLIANCE WITH WINSIRE'S STANDARDS
-----------------------------------
9.
(a) Mega Tools may select materials to be used to
manufacture the Apparatus, but such materials shall be
subject to Winsire's reasonable approval. Mega Tools
shall otherwise be solely responsible for
manufacturing the Apparatus, provided however that:
(i) Mega Tools shall not commence production of
Apparatus until after Winsire has approved, in
writing, the quality of the moulds used by Mega
Tools to produce the Apparatus, such approval to
be granted or withheld by Winsire within fifteen
(15) days of the first to occur of Winsire's
receipt or inspection of products produced by
such moulds;
12
(ii) In order to obtain Winsire's written approval of
the moulds, Mega Tools shall supply Winsire with
samples of apparatus produced by the moulds, such
samples to be of a quality equal to or greater
than the quality of any samples previously
supplied to Winsire by Mega Tools;
(iii) If Winsire does not approve the moulds after
inspecting two different samples of Apparatus
produced by the moulds, then Winsire shall
attend, at Mega Tools expense, and within fifteen
(15) days of its rejection of such moulds, at the
site of the moulds to provide technical
assistance in remedying deficiencies in the
moulds and thereby expedite Winsire's approval of
the quality of the moulds;
(iv) Notwithstanding the cost sharing provisions of
Article 6 hereof, Mega Tools shall pay Winsire
U.S. Two Hundred Dollars (U.S. $200) per day for
each man-day of assistance provided by Winsire
under this Article, plus all travel, lodging,
meal and incidental expenses arising from the
implementation of this Article.
(v) Payments owed by Mega Tools to Winsire in respect
of assistance provided by Winsire under this
Article, including reimbursement of any expenses
incurred by Winsire for which Mega Tools is
responsible, shall be paid by Mega Tools within
thirty (30) days of being invoiced therefore by
Winsire.
(b) Mega Tools will consistently devote commercially
reasonable efforts, at its own expense, to ensure that
the Apparatus is produced in accordance with Winsire's
quality standards. During any calendar quarter
throughout the term of this Agreement, Winsire may
request that Mega Tools provide Winsire, without
charge, with six (6) samples of Apparatus. Forthwith
upon receipt of any such request Mega Tools shall
provide such samples to Winsire, which samples shall
be identical to Apparatus being produced by or for
Mega Tools at the time such request is made. If
Winsire determines that such samples are of a quality
which does not meet or exceed Winsire's standards then
Winsire shall promptly so inform Mega Tools and Mega
Tools shall thereupon cease all manufacture of
Apparatus and shall take corrective action to ensure
that all Apparatus manufactured by Mega Tools meets or
exceeds Winsire's standards. Mega Tools shall not
resume production scale manufacture of Apparatus until
after Winsire has certified, in writing, that
Apparatus manufactured by Mega Tools meets or exceeds
Winsire's standards. Winsire's inspection of
Apparatus for any such re-certification shall take
place within fifteen (15) days of a request for re-
certification by Mega Tools.
(c) Mega Tools shall be solely responsible for all after
sales servicing of Apparatus, and for all returns or
exchanges of defective or damaged units of Apparatus.
(d) Winsire shall furnish to Mega Tools all commercial and
marketing information and contacts which it has
heretofore obtained or developed in connection with
the exploitation of the Apparatus in the Territory,
and Mega Tools agrees to furnish to Winsire all
commercial and marketing information and contacts
which it shall obtain or develop in connection with
the exploitation of the Apparatus within the
Territory.
13
(e) Mega Tools shall use commercially reasonable efforts
to diligently and continuously promote the sale of
Apparatus throughout the Territory, at Mega Tools
expense, so as to create and sustain marketplace
demand for the Apparatus.
(f) At Mega Tools expense, Mega Tools shall stock
assembled, packaged, ready-for-sale Apparatus in
sufficient quantity in warehouse facilities which Mega
Tools shall maintain at such locations within the
Territory as may be required to enable Mega Tools to
deliver Apparatus ordered from Mega Tools within a
period not to exceed two weeks from the date of each
such order.
(g) Mega Tools shall comply with all laws and regulations
relating or pertaining to the manufacture, sale,
advertising or use of the Apparatus and shall maintain
the high quality and standards of Winsire and shall
comply with the regulations, orders and directives or
all regulatory agencies which shall have jurisdiction
over the Apparatus. Mega Tools shall maintain records
of all tests and reports as necessary to demonstrate
such compliance.
MARKETING
---------
10.
(a) Subject to any sub-licenses permitted by Winsire, Mega
Tools shall be solely responsible for exploiting the
Licensed Patents, Trademark and Know-how within the
Territory so as to derive maximum revenue for both
Winsire and Mega Tools.
(b) Winsire will, upon request, render marketing
assistance to Mega Tools in respect of the Apparatus,
including attendance of a representative of Winsire at
the premises of Mega Tools prospective purchasers
within fifteen (15) days of a request by Mega Tools.
(c) Notwithstanding the cost sharing provisions of Article
6 hereof, Mega Tools shall pay Winsire U.S. Two
Hundred Dollars (U.S. $200) per day for each man-day
of assistance provided by Winsire under this Article,
plus all travel, lodging, meal and incidental expenses
arising from the implementation of this Article.
(d) Winsire shall not be obligated to provide more than
three (3) man-days of assistance per month pursuant to
this Article. The identity and number of Winsire's
personnel rendering such assistance shall be in
Winsire's reasonable discretion.
(e) Payments owed by Mega Tools to Winsire in respect of
assistance provided by Winsire under this Article,
including reimbursement of any expenses incurred by
Winsire for which Mega Tools is responsible, shall be
paid by Mega Tools within thirty (30) days of being
invoiced therefore by Winsire.
14
TECHNICAL ASSISTANCE
--------------------
11.
(a) Winsire shall, at Mega Tools request and expense,
provide technical assistance to Mega Tools within
fifteen (15) days of a request by Mega Tools to
provide such assistance.
(b) Notwithstanding the cost sharing provisions of Article
6 hereof, Mega Tools shall pay Winsire U.S. Two
Hundred Dollars (U.S. $200) per day for each man-day
of assistance provided pursuant to this Article; and,
Mega Tools shall be solely responsible for all travel,
lodging, meal and incidental expenses arising from the
implementation of this Article.
(c) Winsire shall not be obligated to provide more than
three (3) man-days of assistance per month pursuant to
this Article. The identity and number of Winsire's
personnel rendering such assistance shall be in
Winsire's discretion.
(d) Payments owed by Mega Tools to Winsire in respect of
assistance provided by Winsire under this Article,
including reimbursement of any expenses incurred by
Winsire for which Mega Tools is responsible, shall be
paid by Mega Tools within thirty (30) days of being
invoiced therefore by Winsire.
AUDIT
-----
12.
(a) Mega Tools shall keep and maintain for a period of at
least six (6) years, at its executive offices, such
full and accurate records (including books of account)
as are necessary to determine the amounts payable
hereunder and shall permit Winsire or its authorised
representative during normal business hours and upon
reasonable notice to have full access to such records,
to audit them, and to make copies of them solely for
the purpose of verifying the accuracy thereof.
Winsire shall bear all costs of such examination
unless such examination reveals a material
misstatement or mispayment of the amount owing by Mega
Tools to Winsire of 5% or more, in which event Mega
Tools shall bear all costs of such examination, and
Mega Tools agrees to promptly reimburse Winsire for
such costs.
(b) If any such inspection reveals a shortfall in the
royalties payable to Winsire hereunder then Mega Tools
shall forthwith pay the full amount of such shortfall,
plus interest as herein provided, to Winsire.
(c) For each of Mega Tools fiscal years occurring wholly
or partly during term of this Agreement, Mega Tools
shall within six months after the end of each such
fiscal year, deliver to Winsire a copy of Mega Tools
financial statements for such fiscal year.
(d) On Winsire's reasonable request, Mega Tools shall
require any authorised sub-licensee of Mega Tools' to
provide such full and accurate records (including
books of account) as are necessary to determine the
amounts payable hereunder and shall permit Winsire
15
or its authorised representative during normal business
hours and upon reasonable notice to have full access
to such records and to make copies of them solely for
the purpose of verifying the accuracy thereof.
TERM AND TERMINATION
--------------------
13.
(a) Unless extended pursuant to the operation of section
34 hereof, this Agreement shall remain in force until
and shall expire on the 8th day of November, 2005.
(b) Winsire may terminate this Agreement without prior
notice:
(i) if Mega Tools ceases to function as a going
concern; or,
(ii) if Mega Tools makes an assignment or arrangement
for the benefit of creditors; or,
(iii) if any proceedings under any bankruptcy or
insolvency laws are instituted by or against Mega
Tools; or,
(iv) upon the liquidation, dissolution, merger, or
consolidation of Mega Tools, excepting a merger
or consolidation in accordance with section 14(a)
of this Agreement; or,
(v) if a receiver or trustee for Mega Tools, or any
of its assets or properties is appointed or
applied for; or,
(vi) if any of the foregoing events or circumstances
occur with respect to a sub-licensee under an
authorised sub-license agreement created pursuant
hereto or pursuant to any of the other Head
License Agreements or if such sub-licensee
breaches such sub-license agreement, unless or in
any such case Mega Tools or the licensee under
the other Head License Agreements, as the case
may be, proceeds expeditiously to terminate such
sub-license pursuant to the terms thereof; or,
(vii) if the licensee or licensor under any of the
other Head License Agreements has terminated such
agreement.
(c) If Mega Tools or another licensee under any of the
other Head License Agreements on the one hand or
Winsire on the other is in breach of any term or
condition of any of the Head License Agreements, or is
in breach of any term or condition of any sub-license
agreement created pursuant to any of the Head License
Agreements and fails to remedy such breach within
thirty days of having been notified in writing thereof
by the other party to this Agreement, then the other
party may, at its option, terminate this Agreement,
without prejudice to any other rights or remedies
which such other party may have.
16
(d) If this Agreement is terminated by Winsire at a time
when Mega Tools is under a contractual obligation to
provide Apparatus to a third party, then this
Agreement shall be deemed to remain in effect for the
time and to the extent necessary to enable Mega Tools
to fulfil such contract, and payments and royalties
shall be payable in respect of the fulfilment of such
contract, to the same extent as if this Agreement
remained in full force and effect; provided that in no
case shall the period of any such deemed extension
exceed one year.
(e) The obligations of confidentiality imposed by this
Agreement shall not terminate by reason of the
termination of this Agreement, but shall remain in
effect unless and until terminated as herein set
forth.
(f) Termination of this Agreement for any cause shall not
relieve Mega Tools of its obligations and liabilities:
(i) existing at or accruing to the time of
termination; or,
(ii) related to covenants which by their terms are
explicitly or reasonably intended to survive
termination all of which shall survive any such termination.
Without limiting the generality of the foregoing, all
indemnification obligations of Mega Tools contained
herein shall survive any such termination.
(g) Winsire's rights to terminate this Agreement for any
reason (whether or not exercised by Winsire) shall not
preclude Winsire from alternatively seeking any other
remedy provided by law.
(h) Forthwith upon termination of this Agreement for any
reason, Mega Tools shall cease all use of the
Trademark and, for greater certainty, shall forthwith
change its corporate and trade name(s) by removing the
Trademark therefrom and shall not thereafter adopt any
substitute trademark, corporate name or trade name
including any word or combination of words confusing
with the Trademark.
SUCCESSORS AND ASSIGNS
----------------------
14.
(a) Neither this Agreement nor any interest herein is
assignable by Mega Tools to any party (whether by way
of assignment, operation of law, reorganization of
Mega Tools' business, or otherwise) without Winsire's
prior written consent, which consent shall not be
withheld by Winsire except on a reasonable commercial
basis.
(b) Mega Tools shall, at the time Mega Tools requests the
consent of Winsire to an assignment, deliver to
Winsire such information in writing as Winsire may
reasonably require respecting the proposed assignee
including the name, address, nature of business,
financial responsibility and standing of such proposed
assignee, and a copy of the form of assignment
agreement proposed to be used. Without limiting the
generality
17
of section (a) above, Winsire may refuse to
give its consent if it is unsatisfied with the
financial, ethical or business reputation of the
proposed assignee or if the proposed assignee's
business is not perceived by Winsire as being
conducive to the effective distribution and sale of
Apparatus by assignee.
(c) In no event shall any assignment to which Winsire may
have consented release or relieve Mega Tools from its
obligations to fully perform all the terms, covenants
and conditions of this Agreement on its part to be
performed and Mega Tools shall be liable for Winsire's
reasonable costs incurred in connection with Mega
Tools' request for consent; provided however, in the
event of an authorized assignment under this section
14 the assignor shall only remain liable to perform
all the aforesaid terms, covenants and conditions
which have arisen or accrued up to that date one year
following the date of assignment and which have not
been satisfied and discharged.
(d) No assignment shall be made to any person, firm or
company carrying on business, either in the Territory
or outside the Territory, whose business activities,
directly or indirectly, would constitute a breach
under this Agreement, or whose business activities
would, in the reasonable opinion of Winsire, be
injurious to the business or reputation of Winsire.
(e) Winsire's consent as aforesaid shall be conditional
upon the assignee entering into an agreement in form
and content satisfactory to Winsire whereby it agrees
to perform, observe and keep each and every covenant
and agreement of Mega Tools hereunder in the manner
herein specified and, as well, shall be conditional
upon Mega Tools entering into an agreement in form and
content satisfactory to Winsire confirming its
agreement to remain responsible for the licensee's
obligations hereunder as more particularly described
in subparagraph (c) above.
(f) Any attempt at assignment or transfer by Mega Tools,
without Winsire's prior written consent, shall be null
and void and shall, at Winsire's option, forthwith
terminate this Agreement and all Mega Tools' rights
hereunder.
(g) If there is any change in the control of a corporate
licensee , the same shall be deemed for the purposes
hereof to be an assignment of this Agreement and
subject, mutatis mutandis, in all respects to the
foregoing provisions of this paragraph 14; (except for
sub-paragraph 14(e) hereof, and except for the proviso
contained in sub-paragraph 14(c) hereof),provided that
if Mega Tools is a company whose shares are listed on
a recognized North American Security exchange, or is a
company where effective voting control of such company
is exercised by a company whose shares are listed on
such a recognized security exchange, the provisions of
this section (g) shall not apply;
(h) Notwithstanding anything herein to the contrary,
Winsire shall be entitled to withhold its consent to
assignment as contemplated above if the result of such
assignment would be to place Mega Tools in breach of
section 8(h) or 8(i) hereof.
18
ADDRESSES FOR NOTICES
---------------------
15. Notices required or permitted to be sent to a party to this
Agreement, may be sent by prepaid registered mail to the
address of such party appearing in the style of this
Agreement, or to such more recent address as such party has
made known in writing to the other party to this Agreement.
ENTIRE AGREEMENT
----------------
16. The Head License Agreements constitute the entire agreement
between the parties, relating to the subject matter hereof
and supersedes every previous agreement, communication,
expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or
otherwise. Without restricting the generality of the
foregoing, the parties acknowledge that the following are
superseded:
(a) the license agreement between Winsire and Mega Tools
Ltd. made effective the 8th day of November, 1995;
(b) the addendum agreement between Winsire and Mega Tools
Ltd. made effective as of the 7th day of October,
1996;
(c) the addendum agreement between Winsire and Mega Tools
Ltd. made effective as of the 1st day of January,
1998;
(d) the license agreement between Winsire and Mega Tools
Ltd. made effective the 8th day of November, 1995 and
executed at Chicago, Illinois on the 15th day of
September, 1998.
(e) the Regular Accounts License Agreement between Winsire
and Mega Tools Ltd. made effective the 8th day of
November, 1999; and
(f) the National Accounts License Agreement between
Winsire and Mega Tools Ltd. made effective the 8th day
of November, 1999
NO PARTNERSHIP OR JOINT VENTURE
-------------------------------
17. The parties to this Agreement recognize and agree that each
is operating as an independent contractor and not as an
agent of the other. This Agreement will not constitute a
partnership or joint venture and no party can be bound by
the other to any contract, arrangement or understanding
except as specifically stated herein.
INFRINGEMENT OF THIRD PARTY PATENTS OR TRADEMARKS
-------------------------------------------------
18.
(a) Subject to Section 20, if any complaint alleging
infringement or violation of any patent, trademark or
other proprietary rights is made against Mega Tools or
its customers,
19
licensees or sublicensees in respect of
the manufacture, use or sale of units of the Apparatus
in any country, then the following procedure shall be
adopted. Mega Tools shall promptly upon receipt of
any such complaint notify Winsire of same, and shall
throughout the pendency of such complaint keep Winsire
fully informed of the actions and positions taken by
the complainant and taken and proposed to be taken by
Mega Tools. Subject to this paragraph, one-half of
all costs and expenses properly incurred by Mega Tools
in investigating, resisting, litigating and settling
such complaint, including the payment of any award of
damages and/or costs to any third party, shall be paid
by Mega Tools and the remaining one-half of such costs
shall be paid by Winsire; provided, however, that the
maximum liability of Winsire to the licensee hereunder
and to any other licensees under any of the other Head
License Agreements shall, in the aggregate, be U.S.
Thirty-Five Thousand Dollars (U.S. $35,000). If a
recovery that is in excess of this amount is achieved
by the licensee hereunder or thereunder, the amount in
excess shall be promptly refunded. No decision or
action concerning or governing any final disposition
of the complaint shall be taken without full
consultation with and approval by Winsire. Winsire
may elect to participate formally in any litigation
involving the complaint, to the extent that the court
permits, but any additional expenses generated by such
formal participation shall be borne entirely by
Winsire (subject to the possibility of recovery of
some or all of such additional expenses from the
complainant).
(b) In no event shall Winsire be liable to Mega Tools or
any authorised sub-licensee(s) under or in connection
with this Agreement or any sub-license or otherwise
for any amount in respect of any complaint alleging
infringement or violation of any patent, trademark or
other proprietary rights pertaining to any device not
of Winsire's design or manufacture with which the
Apparatus may be equipped or adapted to operate.
THIRD PARTY PRODUCT LIABILITY
-----------------------------
19.
(a) If a product liability claim is made in respect of
Apparatus equipped or adapted with a device which is
not of Winsire's design or manufacture then Mega Tools
shall cease all further manufacture, sale or
distribution of Apparatus equipped or adapted with
such device forthwith upon receipt of Winsire's
written request to do so.
(b) If, in Winsire's sole opinion, Apparatus equipped or
adapted with a device which is not of Winsire's design
or manufacture is of an overall inferior quality, or
is having a negative impact on marketplace acceptance
or demand for Apparatus not equipped or adapted with
such device, then Mega Tools shall cease all further
manufacture, sale or distribution of Apparatus
equipped or adapted with such device forthwith upon
receipt of Winsire's written request to do so.
(c) In no event shall Winsire be liable to Mega Tools or
any authorised sub-licensee for any amount in respect
of a product liability claim made in respect of
Apparatus equipped or adapted with a device which is
not of Winsire's design or manufacture.
20
(d) Mega Tools shall indemnify and hold Winsire harmless
in respect of any and all existing and future:
(i) costs, expenses, fees and any other amounts
(including, without limitation, expenses,
including legal expenses, of investigating or
contesting or otherwise occasioned by, any
demand, claim, action, liability or judgement
referred to below) that Winsire may sustain, pay,
incur or be liable for in respect of or in any
way relating to:
(A) Apparatus equipped or adapted with a device
which is not of Winsire's design or
manufacture; and,
(B) the breach of any term of this Agreement or
any other Head License Agreement by Mega
Tools or by any other licensee thereunder.
(ii) demands, claims, actions, liabilities, and
judgements (including, without limitation, those
for punitive or exemplary damages, and those in
respect of direct, indirect and consequential
losses and damages), that Winsire may sustain,
pay, incur or be liable for or which may be
threatened or brought by any other person against
Winsire in respect of or in any way relating to:
(A) Apparatus equipped or adapted with a device
which is not of Winsire's design or
manufacture; and,
(B) the breach of any term of this Agreement or
any other Head License Agreement by Mega
Tools or by any other licensee thereunder.
Mega Tools agrees that the demands, claims, actions,
causes of action, liabilities and judgements referred
to herein include those arising from any alleged or
actual intentional act, wilful, negligence or any
other type of liability of Winsire whatsoever or
arising from any non-performance, shortcoming,
limitation or defect in or other failure of whatsoever
of a device which is not of Winsire's design or
manufacture.
MAXIMUM LIABILITY OF WINSIRE
----------------------------
20. Notwithstanding any other term of this Agreement, in no
event shall Winsire be liable (whether in contract, tort or
on the basis of any other legal principle) to Mega Tools or
any other licensee under or in connection with the Head
License Agreements or any of them (including, without
limitation, this Agreement) or in connection with their
performance, for any amount, in the aggregate, in excess of
U.S. One Hundred and Fifty Thousand Dollars (U.S.$150,000)
and if a recovery that is in excess of this amount is
achieved by the licensee hereunder, or by a licensee under
any of the other Head License Agreements, the amount in
excess shall be promptly refunded.
VALIDITY OF LICENSED PATENTS
----------------------------
21. Mega Tools covenants and agrees that it shall not,
throughout the remaining term or terms of the Licensed
Patents, challenge the validity of any of the claims of any
of the Licensed Patents or assist any third party in doing
the same.
21
PATENT MARKING; PROMOTIONAL MATERIALS
-------------------------------------
22.
(a) Mega Tools shall place in a conspicuous location on
each unit of Apparatus sold by it a permanent label or
plate bearing a patent notice conforming to the
statutes in force in the Territory relating to the
marking of patented articles.
(b) Mega Tools shall not adopt, publish or cause to be
published any packaging, advertising, display or other
promotional materials pertaining to the Apparatus
without first having obtained Winsire's written
approval of such materials, which shall not be
unreasonably withheld.
TRADEMARKS
----------
23.
(a) Mega Tools shall apply the Trademark conspicuously,
and dominantly with respect to all other trademarks,
to each and every unit of Apparatus sold by Mega Tools
and to the packaging in which each such unit is sold.
(b) Winsire owns and shall continue to own all right,
title and interest in and to the Trademark throughout
the Territory. Mega Tools shall do nothing inconsis-
tent with such ownership.
(c) All use of the Trademark by Mega Tools shall have the
same effect as use thereof by Winsire.
(d) At Winsire's request, Mega Tools shall cooperate with
Winsire in recording the trademark-related provisions
of this Agreement with any government authority
designated by Winsire.
(e) Mega Tools shall not, at any time, contest, or assist
others in contesting, Winsire's ownership of the
Trademark or the validity of the Trademark.
(f) The character and quality of Apparatus sold,
distributed and/or provided by Mega Tools in
connection with the Trademark shall conform to
standards set from time to time by and be under the
control of Winsire.
(g) Mega Tools shall use the Trademark only in the form
and manner and with the appropriate legends and/or
notices as prescribed from time to time by Winsire.
In the absence of any directions from Winsire to the
contrary, any use of the Trademark by Mega Tools shall
be accompanied by the following notice: "screwdriver,
excluding any attachments, manufactured under license
from the trademark owner Winsire Enterprises Corp.".
(h) Mega Tools shall not use any other trademark or trade-
name in combination with the Trademark without
Winsire's prior written approval.
22
(i) Mega Tools acknowledges the great value of the
publicity and goodwill associated with the Trademark
and Apparatus and agrees that such goodwill belongs
exclusively to Winsire.
(j) Winsire acknowledges that an authorised sub-licensee
of Mega Tools may sell Apparatus to Sears, to which
Apparatus the trademark READY-BIT may be applied,
instead of the Trademark.
INFRINGEMENT OF LICENSED PATENTS OR TRADEMARK
---------------------------------------------
24. Mega Tools shall keep a diligent watch over the Territory,
in order to detect any apparatus which infringes, or
possibly infringes the Licensed Patents or Trademark. Upon
detection of any such infringement, or possible
infringement, Mega Tools shall promptly notify Winsire
thereof. Winsire shall have the exclusive right, but shall
not be obligated, to take appropriate legal action to
restrain such infringement and/or recover damages in
respect thereof. If Winsire elects to take such action, it
shall do so at its own expense and the conduct of the
action shall be entirely directed by Winsire. Mega Tools
shall, at no cost to Winsire, assist Winsire in such action
by testifying in any legal proceedings, signing all
necessary papers, and rendering any other assistance
(except financial assistance) which may, in the opinion of
Winsire or its counsel, reasonably be required to prosecute
such action to a successful conclusion. If Winsire elects
not to pursue legal action or does not take reasonable
affirmative steps to pursue legal action within thirty (30)
days of receiving Mega Tools' notification of a potential
infringement by a third party, or if Winsire subsequently
abandons any such legal proceedings, then Mega Tools may
pursue legal action respecting any such third party
infringement without involvement by Winsire. In that
event, Mega Tools shall be entitled to retain any proceeds
from such action.
GOVERNING LAW
-------------
25. This Agreement shall be construed in accordance with, and
governed by, the laws of the Province of British Columbia,
Canada, and the applicable Federal laws of Canada, in
effect in the said Province.
ARBITRATION OF DISPUTES
-----------------------
26.
(a) All disputes arising out of or in connection with this
Agreement, or in respect of any defined legal
relationship associated therewith or derived therefrom
shall be referred to and finally resolved by
arbitration under the rules of the British Columbia
International Commercial Arbitration Centre.
(b) The appointing authority shall be the British Columbia
International Commercial Arbitration Centre.
23
(c) The case shall be administered by the British Columbia
International Commercial Arbitration Centre in
accordance with its "Procedures for Cases Under the
BCICAC Rules".
(d) The place of arbitration shall be ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
SEVERABILITY
------------
27. All provisions of this Agreement are, and shall be deemed
to be, severable, and if any provision of this Agreement is
determined to be void as contrary to law or public policy,
such provision shall be deemed to be severed from this
Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect.
MODIFICATION AND WAIVER
-----------------------
28. No cancellation, modification, amendment, deletion,
addition or other change in this Agreement or any provision
hereof, or waiver of any right or remedy hereby provided,
shall be effective for any purpose unless specifically set
forth in writing, signed by the party to be bound thereby.
No waiver of any right or remedy in respect of any
occurrence or event on one occasion shall be deemed a
waiver of such right or remedy in respect of such
occurrence or event on any other occasion.
FURTHER ASSURANCES
------------------
29. The Parties shall execute such further documents and do
such further things as may be necessary to give full effect
to the provisions of this Agreement and the intent embodied
herein.
WINSIRE'S NON-RESPONSIBILITY
----------------------------
30. Neither Winsire nor any of its employees or officers shall
have any responsibility for any of the acts or operation of
Mega Tools under this Agreement or for any decision made in
connection therewith, whether upon the recommendation of
Winsire or otherwise.
INTEREST ON OVERDUE PAYMENTS
----------------------------
31. Except as otherwise specified herein, interest shall accrue
on all overdue payments hereunder from the due date for
such payment until actual payment, such interest to be
computed at an effective annual interest rate of eighteen
percent (18%) per annum.
GENDER
------
32. Words importing the masculine gender include the feminine
or neuter, words in the singular include the plural, words
importing a corporate entity include individuals and vice
versa.
24
WINSIRE'S REMEDIES CUMULATIVE
-----------------------------
33. The rights, powers and remedies of Winsire provided in this
Agreement are cumulative and do not effect any right, power
or remedy otherwise available to Winsire at law or in
equity.
RENEWAL OPTION
--------------
34. Subject to the terms hereof and, in particular, subject to
sub-section (g) below, if Mega Tools and all other
licensees thereunder duly and regularly pay the sums due to
Winsire under the Head License Agreements (including,
without limitation, the Renewal Maintenance Fee, as herein
defined) and duly and regularly performs all and every
covenant, proviso and agreement herein contained on the
part of Mega Tools or such other licensees (if any) to be
performed, Winsire will, at the expiration of the original
term, namely the 8th day of November, 2005, upon the written
request of Mega Tools given to Winsire no later than the 8th
day of November, 2004, extend the term of this Agreement an
additional period of twenty-seven years and twenty-three
(23) days to and until the 1st day of December, 2032 (the
"Renewal Term", which the parties acknowledge extends
beyond the expiry date of any of the Licensed Patents) in
which case this Agreement will, without any further act or
formality, continue, mutatis mutandis, for and during the
Renewal Term on the same terms and conditions, save and
except that:
(a) section 6(c) shall be amended by deleting the "Period
Terminating" and "Minimum Royalty" columns and by
replacing same with the following:
"Period Terminating Minimum Royalty
------------------ ---------------
8 November, 2006 U.S. $150,000
8 November, 2007 U.S. $150,000
8 November, 2008 U.S. $150,000
8 November, 2009 U.S. $150,000
8 November, 2010 U.S. $150,000
8 November, 2011 U.S. $150,000
1 December, 2012 U.S. $150,000
1 December, 2013 U.S. $ 50,000
1 December, 2014 U.S. $ 50,000
1 December, 2015 U.S. $ 50,000
1 December, 2016 U.S. $ 50,000
1 December, 2017 U.S. $ 50,000
1 December, 2018 U.S. $ 50,000
1 December, 2019 U.S. $ 50,000
1 December, 2020 U.S. $ 50,000
1 December, 2021 U.S. $ 50,000
1 December, 2022 U.S. $ 50,000
1 December, 2023 U.S. $ 50,000
1 December, 2024 U.S. $ 50,000
1 December, 2025 U.S. $ 50,000
1 December, 2026 U.S. $ 50,000
1 December, 2027 U.S. $ 50,000
25
1 December, 2028 U.S. $ 50,000
1 December, 2029 U.S. $ 50,000
1 December, 2030 U.S. $ 50,000
1 December, 2031 U.S. $ 50,000
1 December, 2032 U.S. $ 50,000"
(b) the reference to US Two Hundred Dollars (US $200) in
sections 9(a)(iv), 10(c) and 11(b) will be replaced by
a reference to US Three Hundred Dollars (US $300).
(c) it shall be a condition precedent to Mega Tools
entitlement to request an extension of the original
term and Winsire's obligation to grant same, as
described above in this section 34, that Mega Tools
pay to Winsire a single annual fee (the "Renewal
Maintenance Fee) under any one of the Head License
Agreements in the amounts and at the times set out
below:
Date for Payment of Amount of Renewal
Renewal Maintenance Fee Maintenance Fee
----------------------- -----------------
8 November, 2000 Nil
8 November, ▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.▇. $ 25,000
8 November, 2003 U.S. $ 30,000
8 November, 2004 U.S. $ 35,000
Failure to pay the Renewal Maintenance Fees in the
manner and at the times set out above will result in
the disentitlement of Mega Tools to extend the
original term as provided in this section 34.
(d) The Unit Royalty amounts payable during the Renewal
Term for the period 9 November, 2005 through 8
November, 2006 shall be the same as the Unit Royalty
amounts payable during the pervious twelve month
period and thereafter shall be adjusted on the 9th day
of November, 2006 and on each subsequent November 9th
during the Renewal Term by multiplying U.S. thirty
cents (U.S. $0.30) by the CPI on the 1st day of
November, in each such year (commencing with the 9th
day of November, 2006) and dividing the product
thereof by the CPI for November 1, 2000; provided that
under no circumstances shall the foregoing adjustment
have the effect of lowering the Unit Royalty amount in
question below U.S. thirty cents (U.S. $0.30). In
this section 34(d) ACPI" means the consumer price
(monthly all-items) index for the ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ as issued by Statistics
Canada or its successors, provided that if such
consumer price index is no longer available from
Statistics Canada or its successors, Winsire may
utilize, for the purposes of this section, any
relevant measure of changes in consumer price levels
for the City of Vancouver, British Columbia, Canada.
By way of example, assume CPI for November 1st, 2008
is Y and CPI for November 1st, 2000 is X. Accord-
ingly, the Unit Royalty for the period November 9th,
2008 to November 8th, 2009 would be the greater of
US$0.30; or US$0.30 x Y/X.
(e) The Minimum Royalty amounts payable during the Renewal
Term (and described in section 34(a) above) shall be
adjusted on the 9th day of November, 2006 and on each
26
subsequent November 9th during the Renewal Term by
multiplying the royalty amount for the relevant twelve
month period as described in section 34(a) by the CPI
on the 1st day of November, in each such year
(commencing with the 9th day of November, 2006) and
dividing the product thereof by the CPI for November
1, 2000; provided that under no circumstances shall
the foregoing adjustment have the effect of lowering
the Minimum Royalty amount in question below the
Minimum Royalty amount for the relevant twelve month
period as set out in section 34(a). In this section
34(e) ACPI" means the consumer price (monthly all-
items) index for the ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ as issued by Statistics Canada or its
successors, provided that if such consumer price index
is no longer available from Statistics Canada or its
successors, Winsire may utilize, for the purposes of
this section, any relevant measure of changes in
consumer price levels for the City of Vancouver,
British Columbia, Canada. By way of example, assume
CPI for November 1st, 2008 is Y and CPI for November
1st, 2000 is X. Accordingly, the Minimum Royalty for
the period November 9th, 2008 to November 8th, 2009
would be the greater of US$150,000; or US$150,000 x
Y/X.
(f) Section 13 shall be amended by adding the following
sub-paragraph thereto:
"(i) Commencing with the first day of December, 2012
and on each subsequent first day of December
throughout the remaining portion of the Renewal
Term, Mega Tools shall have the right, once per
year on each such first day of December, to
terminate this Agreement by giving Winsire
written notice of termination (the "Termination
Notice"), which notice shall specify as the
effective termination date the first day of
December in the year next following the year in
which such notice is given. Provided that,
effective as of the first day of December in the
year in which such notice is given, all
exclusive rights granted hereunder to Mega Tools
shall immediately become non-exclusive rights.
For greater certainty, effective as of the first
day of December in the year in which such notice
is given, Winsire shall have the unfettered
right and discretion to exercise any and all of
the rights granted to Mega Tools pursuant to
paragraphs 2(a), 2(b) and 2(c) hereof, including
the right to grant one or more third parties a
non-exclusive license to exercise any and all of
the rights granted to Mega Tools pursuant to
paragraphs 2(a), 2(b) and 2(c) hereof. For
further certainty, effective as of the first day
of December in the year in which such notice is
given, Winsire, or any such non-exclusive
licensee of Winsire shall, in exercising such
rights, have the unfettered right and discretion
to deal with any and all customers and
distributors with which Mega Tools had dealt or
is dealing on or at any time prior to the
effective termination date. Notwithstanding
anything hereinbefore provided, it shall be a
condition precedent to Mega Tools' entitlement
to give the Termination Notice that all other
licensees under the other Head License
Agreements have likewise, concurrently given
notices of termination under the corresponding
termination clause contained in their respective
Head License Agreement."
(g) Notwithstanding anything herein contained to the
contrary it shall be a condition precedent to Mega
Tools' extension of the term of this Agreement that
the other licensees other the other Head License
Agreements concurrently extend the terms of their Head
License Agreements for a corresponding period.
EQUAL PARTICIPATION IN DRAFTING
-------------------------------
35. The parties have equally participated in the drafting of
the within Agreement, each having had the opportunity to be
independently represented by counsel.
TIME OF THE ESSENCE
-------------------
36. Time shall be of the essence of this Agreement and all
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
these presents to be executed under their corporate seals and
the hands of their proper officers duly authorised in that
behalf.
EXECUTED at Vancouver, British Columbia, Canada, this 28
day of April, 2000.
Winsire Enterprises Corporation
/s/ ▇▇▇▇▇▇ Fruhm
Per: ____________________________
By: Hermann Fruhm, President
EXECUTED at Langley, British Columbia, Canada, this 28
day of April, 2000.
Mega Tools Ltd.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
Per: __________________________
By: ▇▇▇▇ ▇▇▇▇▇▇, President
28
