PATENT AGREEMENT
This Agreement made as of the 10th day of August, 1988.
BETWEEN: XXXX X. XXXXXX and XXXXXX XXXXX XXXXXX, both of Michigan, U.S.A.
("Martins),
OF THE FIRST PART
- and -
TRACTOP INTERNATIONAL INC., a Corporation duly incorporated under the
laws of Barbados ("TTI"),
OF THE SECOND PART
WHEREAS:
1. Martins are the inventors of a new form of collapsible vehicle bed
enclosure (the "Invention"), as claimed in U.S. Patent No. 4,659,136 ("U.S.
Patent"), and are owners of rights in the Invention, including U.S. Patent
No. 4,659,136 and Patent Applications in Canada and Japan;
2. Martins have produced models, a series of engineering drawings, designs,
business plans, technical data, documents and other information in respect
of the Invention, and further improvements, modifications, applications and
embodiments related to the Invention, in respect of some of which patents
may be separately obtained (the "Technology"), and are willing to make the
same available to TTI pursuant to the provisions hereof;
3. The parties hereto enter into this Agreement for the purpose of allowing
practice by TTI (for the benefit of Martins and TTI, as hereinafter set
forth) of the said Invention, by manufacture and/or licensing of
manufacture, and sale, of products covered within the scope of the patented
Invention and/or pursuant to the Technology, as revised from time to time
("Products");
4. The parties acknowledge that TTI proposed to commence practice of the
Invention initially in the automotive market by manufacture and sale of a
collapsible pickup truck bed enclosure (the "Tractop"), and subsequently,
as deemed by it to be advisable, by manufacture of other Products for
different markets ("Subsequent Products");
5. The parties anticipate that, in order to facilitate manufacture and sales,
changes and modifications may from time to time be required in respect of
the Products;
6. The parties have fully complied with the provisions of a Patent and
Technology Transfer Agreement made the 21st day of July, 1988, and Martins
have accordingly assigned to themselves and TTI, jointly, subject to the
provisions herein set forth, the following:
(a) The U.S. Patent, and all rights derived thereunder;
(b) The Canadian and Japanese patent applications, all rights derived
thereunder, all rights to apply for other patents in respect of the
said Invention, and all rights to registered and unregistered
trademarks in respect of the same;
(c) The exclusive right to exploit the Technology, and all future
developments, changes, modifications, embodiments and applications in
respect of the same, including the right to the full benefit of all
future patents granted in respect of the same.
NOW, THEREFORE, in consideration of the mutual obligations, covenants
and agreements contained herein, the other good and valuable consideration (the
receipt and sufficiency of which is hereby by each party acknowledged), the
parties hereto covenant and agree as follows:
1. PRACTICE OF INVENTION, EXPLOITATION OF TECHNOLOGY
1.1 By assignment of the U.S. Patent, patent applications, Technology and
rights described above, it is the intention of all of the parties that
TTI shall have all rights heretofore vested in Martins in respect of
worldwide manufacturing, application, distribution and sales of
Products.
1.2 Martins acknowledge and agree that during the currency of this
Agreement, they shall forbear in favour of TTI from practice of any of
the Invention or exercise of any rights assigned by Martins to Martins
and TII jointly and that:
(a) TTI shall have sole and exclusive authority and responsibility to
make all decisions in respect of manufacturing, application,
distribution and sales of the Products, including:
(i) Whether the Products should be manufactured directly by TTI,
and if so, the location or locations of manufacturing
plants;
(ii) Whether TTI should manufacture the Products in a joint
venture or similar arrangement with another or other
parties, and if so, the territorial areas in which such
joint venture manufacturing shall be conducted;
(iii)Whether to enter into licensing, franchising or similar
arrangements in respect of manufacture, application,
distribution or sales of the Products, and if so, the
territorial areas in which such arrangements shall be
conducted;
(iv) The full details and terms and provisions of any and all of
the above arrangements;
(v) All matters relating to exploitation of the Technology,
including application of the patents and Technology to
various potential markets, research and development,
advertising, promotion, etc.;
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it being the intention of the parties that the role of Martins
shall be restricted to receipt of certain payments for the
forbearance identified above ("Royalty Payments"), and
enforcement of their rights as hereinafter set forth, and that
the role of TTI in respect of exploitation of the Technology
shall be as if it was the sole owner of the U.S. Patent and all
other rights assigned by Martins pursuant to sub-paragraph 1.1
above;
(b) Martins shall execute all documents reasonably required by TTI
for the exercise of its powers outlined above, and for such
purpose they appoint the properly authorized officers of TTI as
their duly appointed attorney in that behalf.
2. ROYALTY PAYMENT STRUCTURE
2.1 For the purposes hereof, "First Sale" shall mean the first occasion on
which a Product is sold by a manufacturer, whether such sale is at
wholesale or retail;
2.2 TTI agrees that:
(a) If it shall directly manufacture Tractops, or manufacture the
same in joint venture or similar arrangement with any other party
("Direct Sale"), it shall pay to Martins, in the manner and on
the dates hereinafter set forth, a Royalty Payment of $U.S. 15.00
multiplied by the number of Direct First Sales of Tractops (less
all Tractops which are returned or for which refunds are
provided) during the applicable period;
(b) If it shall license or franchise any other parties to manufacture
Tractops ("Sub-Sale"), it shall set aside as Royalty Payments the
sum of $U.S. 15.00 multiplied by the number of Sub-Sale First
Sales of Tractops (less all Tractops which are returned or for
which refunds are provided) for which it shall have received
royalties during the applicable period, and shall pay the same to
Martins on the dates and in the manner hereinafter described;
(c) If it has paid to Martins, from the date hereof to December 30,
1990, Royalty Payments totaling less than $U.S. 150,000.00, TTI
shall pay to Martins such deficiency on or prior to December 31,
1990.
2.3 Martins and TTI agree that, if TTI shall in future decide to
manufacture or cause to be manufactured Subsequent Products, they will
negotiate in good faith the Royalty Payments that shall be made to
Martins (in consideration of its forbearance from practice of the
Invention or exercise of any rights referred to above), in respect of
sales of such Subsequent Products. If they shall be unable, prior to
commencement of the manufacture of Subsequent Products, to agree on
such Royalty Payments, TTI shall pay to Martins, on the dates and in
the manner hereinafter described, Royalty Payments based on the
aggregate First Sales (net of all returns and refunds) as set out
below:
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(a) For the first 15,000 First Sales of such Subsequent Product
during the applicable fiscal year of TTI: 4% of aggregate
wholesale prices;
(b) For the next 15,000 First Sales of such Subsequent Product during
the applicable fiscal year of TTI: 3% of aggregate wholesale
prices;
(c) For all First Sales in excess of 30,000 during the applicable
fiscal year of TTI: 2% of aggregate wholesale prices.
3. ROYALTY PAYMENTS AND REPORTS TO MARTINS
3.1 On the 25th day of each month TTI shall deliver to Martins:
(a) The applicable Royalty Payment on all Direct First Sales of
Tractops during the preceding full month, calculated in
accordance with 2.2(a) above;
(b) The applicable Royalty Payment on all Sub-Sale First Sales of
Tractops, during the preceding full month, calculated in
accordance with 2.2(b) above;
(c) The applicable Royalty Payment in respect of First Sales of
Subsequent Products calculated in accordance with 2.3 above.
3.2 TTI shall, every 3 months, on the 25th day of the applicable month,
deliver to Martins written reports of manufacture, distribution,
sales, other applications or developments of the Invention and
Technology, and applications (and progress on the same) for
patent/trademark/copyright/industrial design protection, during the
preceding full quarter:
(a) By TTI, whether directly or through joint venture or similar
arrangements, and
(b) By licensees and franchisees;
3.3 Within 3 months of the end of each fiscal year of TTI,
(a) TTI shall provide to Martins a final report (including an
accounting) on all Direct First Sales and Sub-Sale First Sales
during such fiscal year;
(b) TTI shall provide to Martins a written report (including an
accounting), in respect of activities undertaken and expenses
incurred in accordance with paragraph 4 below.
4. PROTECTION OF INVENTION AND TECHNOLOGY
4.1 TTI shall pay for prosecution of patent applications to allowance and
issuance (and, if TTI considers the same is required, trademark and/or
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copyright and/or industrial design registrations), and maintenance of
patents, trade marks, copyrights, and industrial designs, as
applicable in U.S., Canada and Japan;
4.2 TTI shall not sell any Products, or license or franchise any other
party to manufacture or sell Products, in any other country, without
first obtaining (if the same is available) reasonable
patent/trademark/copyright/industrial design protection.
4.3 If TTI considers that patent/trademark/copyright/industrial design
protection is required and available in any other country, or is
required and available in respect of improvements, modifications, or
other applications of the Invention, or in respect of other portions
of the Technology:
(a) Application for same shall be made by TTI in the joint name of
TTI and Martins, and for their joint benefit;
(b) Patents/trademarks/copyrights/industrial design protection
obtained shall be maintained by TTI for such period of time as it
considers appropriate, and shall be deemed to have always been
part of the Assignments by Martins herein;
(c) The expense of obtaining and maintaining such patent/trademark/
copyright/industrial design protection shall be paid by TTI
alone.
4.4 TTI agrees that, prior to declaration and payment of any dividends to
its shareholders, it shall reimburse Martins, to a maximum of $U.S.
50,000.00, all expenses (including patent attorneys' fees and
disbursements) incurred by them in filing or pursuing and maintaining
the U.S. Patent and the patent applications in Canada and Japan.
4.5 Validity of patents/trademarks/copyrights/industrial design:
(a) If any patents, trademarks, copyrights or industrial design
protection described above are impeached by other parties, TTI
may, in its discretion, defend and settle any such actions in the
joint name and on behalf of TTI and Martins; all expenses,
settlements and awards against TTI and Martins shall be paid by
TTI alone;
(b) If any patents, trademarks, copyright or industrial design
protection of TTI and Martins are infringed by other parties, TTI
may prosecute any such infringements in the joint name of and on
behalf of TTI and Martins, but at TTI's expense, and all funds
received by TTI on account of such infringement shall be owned by
TTI alone.
5. IMPROVEMENTS OR MODIFICATIONS TO INVENTION AND/OR TECHNOLOGY
5.1 If either of Martins or TTI shall identify or develop any improvement
or modification to the Invention and/or Technology:
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(a) It shall forthwith advise the other party, and provide all
technical information and written materials necessary to
implement such change;
(b) TTI shall reasonably consider all such improvements and
modifications, and may (but is not obliged to) implement such
change in manufacture of Products;
(c) Such change shall be deemed to have always been part of the
Technology and assigned pursuant to this Agreement;
5.2 If TTI shall identify or develop any major engineering improvement or
modification:
(a) Such change shall be subject to sub-paragraph 5.1 above; but
(b) TTI shall not implement such change without Martins written
approval, which shall not be unreasonably withheld;
(c) In any event, Xxxx X. Xxxxxx shall continue to be identified as
the Inventor.
6. ASSISTANCE AND DISCLOSURE BY MARTINS
6.1 Martins shall continue to make available to TTI all technical
information and written materials on its techniques, developments,
etc. in respect of the Invention and Technology.
6.2 Martins shall, as from time to time reasonably requested by TTI,
provide to TTI consulting advice in respect of the Invention and/or
Technology; if such consulting requires attendance by Martins'
personnel at TTI's premises for such purposes, TTI shall reimburse
Martins for all traveling expenses of such personnel, together with
reasonable compensation at U.S. going rate for time spent by such
personnel in consulting.
6.3 Neither Martins, nor any person on their behalf, shall during the term
of this Agreement, deliver, disclose or make available to any other
person any of the Technology; provided, however, that the obligation
contained herein shall not apply in respect of information that is, at
the date hereof, already in the public domain, or that shall be
disclosed on behalf of TTI as a necessary consequence of exploitation
of the Technology.
7. RECORDS
7.1 TTI shall keep, and require all joint venture parties, licensees and
franchisees to keep, complete and accurate books of account and
records of manufacture and sales;
7.2 Martins shall be entitled to inspect above records at all reasonable
times;
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7.3 Martins may conduct an independent audit of above records, at their
own expense unless such audit discloses a variance of more than 5%, in
which case such audit costs shall be borne by TTI or joint venture
party, license or franchisee, as the case may be.
8. TTI'S RESPONSIBILITIES
In addition to other responsibilities contained in this Agreement:
(a) TTI shall maintain, and cause its joint venture parties,
licensees and franchisees to maintain, reasonable standards of
quality in the licensees and franchisees to maintain, reasonable
standards of quality in the manufacture and distribution of the
Products;
(b) TTI shall use its best efforts to manufacture, sell, distribute,
promote and continue the sale of Products;
(c) TTI shall, in respect of all Direct Sales, apply, and shall, in
respect of licensed manufacturing, require its licensees and
franchisees to apply, on all Products, the legend "Patent
Pending" or, at such time as patent protection is obtained, the
applicable patent number as issued.
9. HOLD HARMLESS
9.1 TTI shall indemnify and save each of Martins harmless against all
claims, actions, suits and proceedings arising on account of the
faulty or improper manufacture of Products;
9.2 Martins shall indemnify and save TTI harmless against all claims,
actions, suits and proceedings arising on account of the faulty or
improper design of the Invention.
10. WARRANTY BY MARTINS
Martins represent and warrant to TTI that, as of the date hereof:
(a) They are collectively the owners of all rights in the Invention
and the Technology, assigned herein;
(b) The U.S. Patent is valid and in good standing;
(c) At the time of the assignments described in recital 6, they had
the right to make such assignments free from all encumbrances;
(d) No other licenses or other rights in respect of the Invention or
Technology have been granted, or any such licenses or other
rights are no longer in effect.
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11. TERMINATION
11.1 TTI agrees that, on the happening of any of the events set out below,
it shall forthwith release, assign and transfer over to Martins all
its rights and interests in all patents, copyrights, and trademarks
registered in their joint names and all rights hereunder, and
thereafter TTI shall not have any rights in respect of the Invention
or the Technology, and all such rights shall be vested in Martins
alone:
(a) Bankruptcy of TTI (except by action, direct or indirect, of
Martins);
(b) Appointment of a receiver of TTI's property (except by action,
direct or indirect, of Martins);
(c) Failure to pay to Martins the payments due to hereunder within 60
days of notice from Martins to TTI identifying such default.
11.2 TTI agrees that it shall execute all documents reasonably required by
Martins for the above purposes, and for such purposes it appoints the
properly authorized officers of TTI its duly appointed attorney in
that behalf.
12. NOTICES
Any notice or document required or permitted to be given shall be in
writing and may be:
(a) Delivered personally; or
(b) Given by mailing the same by prepaid certified post (in which
case it shall be deemed to have been received on the 3rd business
day following delivery to the Post Office during a period of
uninterrupted mail service); or
(c) Given by telegram (in which case it shall be deemed to have been
received on the next following business day); or
(d) Given by telex or telecopier (in which case it shall be deemed to
have been received on the next following business day)
to the parties hereto at the following addresses:
Xxxx and Xxxxxx Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx 00000
X.X.X.
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Tractop International Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Telecopier (000) 000-0000
13. GENERAL
13.1 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement and every part thereof.
13.2 ENTIRE AGREEMENT
This Agreement expresses the entire and final agreement between the
parties with respect to all matters herein and shall not be amended,
altered or qualified except by a memorandum in writing signed by the
parties and any amendment, alternation or qualification thereof shall
be null and void and of no effect unless both parties have given their
consent as aforesaid.
13.3 COUNTERPARTS
This Agreement may be simultaneously executed in several counterparts,
each of which when so executed shall be deemed to be an original and
such counterparts together shall constitute but one and the same
instrument.
13.4 FURTHER ASSURANCES
The parties agree to execute all instruments in writing which may be
necessary or proper for carrying out the purpose or intent of this
Agreement.
13.5 SEVERABILITY OF PROVISIONS
The invalidity of any provisions of the Agreement or any covenant
herein contained on the part of either party shall not affect the
validity of any other provision or covenant hereof.
13.6 BINDING EFFECT
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors and assigns. This Agreement shall not be assigned by either
party except with the consent in writing of the other party.
13.7 LAWS OF ONTARIO
This Agreement shall be governed by and construed in accordance with
the Laws of the Province of Ontario, Canada.
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IN WITNESS WHEREOF the parties have hereunto duly executed this
Agreement.
SIGNED, SEALED AND DELIVERED
In the Presence of:
/s/ Xxxx Xxxxxxxx /s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
/s/ Xxxx Xxxxxxxx /s/ Xxxxxx Xxxxx Xxxxxx
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XXXXXX XXXXX XXXXXX
TRACTOP INTERNATIONAL, INC.
By: Europe Services Limited for and
on behalf of Europe Services
Limited
/s/
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