AMENDED & RESTATED
OPTION AGREEMENT
THIS AGREEMENT is dated effective September 15, 2003.
AMONG:
XXXXX XXXXXXX, of X.X. Xxx 0000, Xxxxxxxx, Xxxxxxxxxx,
Xxxxxx Xxxxxx xx Xxxxxxx, Fax Number (000) 000-0000
(the "Vendor")
AND:
ROTOBLOCK INC., a corporation incorporated under the
Canada Business Corporations Act with an office address at Xxxxx
000, 0000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0,
Fax Number (000) 000-0000
(the "Purchaser")
AND:
XXXXXXX X. XXXXXXX, XXXXX XXXXXX and XXXXX
X. XXXXXX, all of Xxxxx 000, 0000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0, Fax Number (000) 000-0000
(the "Assignors")
WHEREAS
(A) The Vendor applied for and was granted a United States patent
on June 29, 1993 under Patent No. 5,222,463 named Oscillating Piston
Engine (hereinafter referred to as the "Rotablock Engine") and various
related patents more particularly described herein;
(B) The Vendor has constructed a Rotablock Engine and conducted a
number of successful test runs demonstrating that the Rotablock Engine
works in principle;
(C) During said test runs the Rotablock Engine developed a number
of flaws which rendered it inoperable and hence impossible to demonstrate
to potential investors;
(D) The Vendor approached the Assignors to purchase the Rotablock
Engine from him and develop the Rotablock Engine to the point where it
can successfully be sold to a larger company;
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(E) The Assignors agreed to accept the challenge provided that the
Vendor would assist them in putting the Rotablock Engine back into
operable condition in order for the operating principle to be demonstrated
to potential investors;
(F) The Vendor consented to bring the Rotablock Engine to Vancouver
and let the Assignors conduct the necessary repairs at their cost including
mounting the Rotablock Engine on a test stand suitable for demonstrating;
(G) The Purchaser wishes to purchase the said patents upon the terms
and conditions herein set out;
(H) The Vendor deems it advisable to grant to the Purchaser an option
to purchase the said patents on the same terms and conditions contained
herein;
(I) The Assignors, in contemplation of the incorporation of the
Purchaser, entered into an assignment agreement dated May 20, 2003 between
them and the Vendor which contemplated the incorporation of a British
Columbia corporation, although due to the potential expense of the pending
Business Corporations Act (British Columbia) which will effect a massive
change to the current Company Act (British Columbia), the Assignees have
instead incorporated the corporation under the Canada Business Corporations
Act; and
(J) The Assignors wish to clearly document the Purchaser's option to
acquire the patents;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements hereinafter contained, and of the sum of Two U.S.
Dollars paid by the Purchaser to the Vendor, the receipt of which is hereby
acknowledged, the parties hereto mutually covenant and agree as follows:
Option
1. The Vendor hereby grants to the Purchaser the right and option,
which option shall be exercised in accordance with the provisions of Sec.2
herein, to purchase the patents described in Schedule A attached hereto
(the "Patents") belonging to the Vendor at any time on or before 36 months
from the "Deposit Date" as defined in Sec.1(a) below, provided that the
Purchaser makes the following payments:
(a) on or before May 31, 2004 or such later date as determined by the
extension in Sec.6 herein (the "Deposit Date"), the Purchaser shall pay the
Vendor U.S.$100,000, together with interest thereon at the rate of 24% per
annum calculated from January 31, 2004 until the date of payment; and
(b) on or before 18 months from the Deposit Date, the Purchaser shall
pay the Vendor the additional sum of U.S.$1,000,000, or but if such latter
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payment is not made, the option shall continue in good standing provided
that
(c) on or before 36 months from the Deposit Date, the Vendor shall
pay the Purchaser U.S.$1,500,000.
Exercise of Option
2. The option granted in Sec. 1 herein shall be validly exercised
by the Purchaser upon the delivery by the Purchaser of the cheques and
of written notice of its exercise of the option in the form annexed hereto
as Schedule B.
Assignment of Patents
3. Immediately upon the payment of the sum set out in Sec.1(a) hereof,
the Vendor shall deliver to the Purchaser a duly executed assignment of
the Patents, in form satisfactory to counsel for the Purchaser and
sufficient to transfer all right, title and interest in and to the Patents
to the Purchaser.
Licence to Manufacture and Market
4. During the term of the Option, the Vendor grants the Purchaser the
exclusive right to manufacture and market all products covered by the
Patents.
Corporate Structure
5. The Purchaser represents and warrants to the Vendor that it is
duly incorporated and upon receipt of the nominal sum of $26.41, 264,151
of the 7,000,000 founders' shares will have been duly allotted and issued
to the Vendor and for the sum of $39.62, 396,226 to Xxxxxxx Xxxxxx, subject
to the Founder's Share Restriction Agreement Advisory Board
6. The Vendor agrees to serve on the Purchaser's advisory board and
to use his best efforts to cause his son Xxxx XxXxxx to also serve thereon.
Consulting
7. The Purchaser agrees to contract for the Vendor's services, his
health permitting and at his option, at the rate of US$250 per day plus
expenses for a minimum of 100 days within the first 18 months of operation
(starting from the Deposit Date) and 50 days during the second 18 months
of operation (expiring July 31, 2006).
Acknowledgement and Covenant of the Vendor
8. The Vendor expressly agrees and acknowledges that subsequent to
the date of execution herein, and prior to the exercise by the Purchaser
of the option granted in Sec.1 herein, the Purchaser shall seek the
following:
(a) an opinion of patent counsel on the degree of patent protection,
satisfactory in form and substance to the Purchaser;
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(b) financing for the Purchaser's purchase of the Patents upon terms
satisfactory to the Purchaser;
(c) execution by the Vendor of the forms for the assignment of the
Patents to the Purchaser on the form required by the US Patent Office;
(d) the registration in the US Patent Office of a notice of this
Agreement, the option granted in Sec.1 hereof and the licence granted in
Sec.4 hereof; and
(e) approval of the board of directors of the Purchaser with respect
to the exercise of the said option; and
The Vendor covenants that between the date of execution herein and the
exercise of the Option, he shall
(f) use his best efforts to comply with any reasonable requests by
the Purchaser, which requests are designed to assist the Purchaser with
respect to any of the matters enumerated in Sec.(a) to Sec.(d) of this
Sec.8;
(g) execute and deliver to the Purchaser all documents necessary to
effect such matters, which require execution by the Vendor; and
(h) not, without the prior written consent of the Purchaser:
(i) sell, lease, pledge, charge or otherwise dispose or
encumber of the Patents; or
(ii) release, surrender or abandon possession of the
Patents, except as herein provided.
Option Assignable
9. The parties hereto covenant and agree that the option granted in
Sec.1 may be assigned or transferred without the consent of the Vendor.
Representations & Warranties
10. The Vendor hereby represents and warrants to the Purchaser, and
acknowledges that the Purchaser is relying upon such representations and
warranties in entering into this Agreement, as follows:
(a) the Vendor has the capacity to enter into this Agreement,
and the execution of this Agreement and the completion of the transactions
contemplated hereby shall not be in violation of any agreement or other
obligation to which the Vendor is a party or is subject;
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(b) the Vendor has not sold, assigned or transferred the
Patents nor granted any security interest in or otherwise pledged or
charged any of the Patents and the option and licence granted hereunder
constitute a first charge and interest in the Patents ranking ahead of
any other person, firm, body corporate or other entity.
Canadian Dollars
11. All dollar amounts referred to in this agreement are in Canadian
funds unless otherwise indicated.
Headings
12. Section headings are not to be considered part of this Agreement
and are included solely for reference purposes and are not intended to be
full or accurate descriptions of the contents thereof.
Entire Agreement
13. This Agreement represents the entire agreement among the parties
with respect to the Patents and supersedes and replaces the assignment
agreement dated May 20, 2003 among the Assignors and the Vendor. This
agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations and other agreements between the parties in connection with
the subject matter hereof. No supplement, modification, waiver or
termination of this agreement shall be binding unless executed in writing
by the party to be bound thereby.
Governing Law
14. This Agreement is and will be deemed to be made in British Columbia,
for all purposes will be governed exclusively by and construed and enforced
in accordance with the domestic laws prevailing in British Columbia, other
than the International Sale of Goods Act (British Columbia), and the rights
and remedies of the parties will be determined in accordance with those
domestic laws.
Notice
15. A notice, statement or other written communication required to be
given to a party hereunder or in connection with this Agreement may be
delivered, faxed or mailed by prepaid registered post at that party's address
set out on the first page of this Agreement.
16. A party's address for delivery or mailing hereunder may be changed
by notice to that effect by that party to each other party given in
accordance with this clause.
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17. A notice given hereunder by registered mail will be deemed to be
received by the addressee 4 days after such mailing excluding Saturdays,
Sundays and Statutory holidays.
Further Assurances
18. Each party will execute and deliver such further agreements and
other documents and do such further acts and things as the other party
reasonably requests to evidence, carry out or give full force and effect
to the intent of this Agreement.
Schedules
19. The following schedules are annexed hereto and form an integral
part of this agreement:
Schedule A - Patents
Schedule B - Exercise of Option
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the day and year first above written.
XXXXX XXXXXXX
-------------
Signed, Sealed and Delivered by MONTI /s/ Xxxxx Xxxxxxx
XXXXXXX in the presence of: -----------------
/s/ J. Xxxxx Xxxxx, Barrister & Solicitor
Notary Public
#202 - 0000 Xxxx Xxxxxx
Xxx 000, Xxxxxxx XX X0X 0X0
------------------------------------------
Witness (Signature, Name and Address)
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ROTOBLOCK INC.
-------------
/s/ Xxxxxxx X. Xxxxxxx,
Authorized Signatory
Signed, Sealed and Delivered by XXXXXXX /s/ Xxxxxxx X. Xxxxxxx
X. XXXXXXX in the presence of:
/s/ J. Xxxxx Xxxxx, Barrister & Solicitor
Notary Public
#202 - 0000 Xxxx Xxxxxx
Xxx 000, Xxxxxxx XX X0X 0X0
------------------------------------------
Witness (Signature, Name and Address)
Signed, Sealed and Delivered by XXXXX /s/ Xxxxx Xxxxxx
XXXXXXX in the presence of:
/s/ Xxxxxxx Xxxxxx, Notary Public
Suite 206 - 0000 Xxxxxxxx
Xxxxxxxxx, XX, Xxxxxx X0X 0X0
------------------------------------------
Witness (Signature, Name and Address)
Signed, Sealed and Delivered by XXXXX X. /s/ Xxxxx X. Xxxxxx
XXXXXX in the presence of:
/s/ Xxxxxxx Xxxxxx, Notary Public
Suite 206 - 0000 Xxxxxxxx
Xxxxxxxxx, XX, Xxxxxx X0X 0X0
------------------------------------------
Witness (Signature, Name and Address)
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SCHEDULE A
PATENTS
-----------------------------------------------------------------------------
Name of Patent Patent Country Issue Date Lapse Date
Number
-----------------------------------------------------------------------------
Oscillating Piston
Engine 5,222,463 USA June 29, 1993 June 28, 2010
Oscillating Piston
Engine for
Driving a Ducted Fan 5,303,546 USA April 19, 1994 April 18, 2011
Oscillating Piston
Engine for an
Electrical Charging
System for an
Electric Vehicle 5,323,737 USA June 28, 1994 June 27, 2011
Oscillating Piston
Engine for
Pumping System 5,324,176 USA June 28, 1994 June 27, 2011
Oscillating Piston
Engine for
Helicopters 5,467,744 USA Nov. 21, 1995 Nov. 20, 2012
and all intellectual property pertaining to Rotablock technology including
trademarks, know-how, etc.
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SCHEDULE B
FORM OF EXERCISE OF OPTION
TO: XXXXX XXXXXXX
We hereby exercise the Option provided for in an agreement dated the 15th
day of September, 2003 (the "Option Agreement") to purchase the Patents
upon the terms and conditions contained therein.
DATED the __ day of ________, 200_.
ROTOBLOCK INC.
Per:----------------------------
Authorized Signatory
