ASSIGNMENT OF RIGHTS AND ROYALTY AGREEMENT
This Assignment of Rights and Royalty Agreement ("Agreement" is
made this 1st day of January, 1997 by and between Xxxxx-Xxxxxxx
Electronics Corporation, an Illinois corporation (the "Company"), and
Xxxxxxx X. Xxxxx, the Executive Vice President and General Manager of
the Company ("Xxxxx") and Xxxx Xxxxxxxxxx, Vice President of Business
Services of the Company ("Xxxxxxxxxx" and together with Xxxxx, the
"Employees").
WHEREAS, each Employee is currently an employee of the Company;
WHEREAS, on the date of this Agreement, the Employees are formally
transferring all of the rights to, title to and interest in the system
of manufacturing, marketing, distributing and selling video projection
systems known as the "Play Master Extreme" as is more fully described
in the attached Exhibit A (2 specification sheets) (the "System");
WHEREAS, in exchange for the rights to the System, the Company desires
to pay the Employees a royalty based on net profits derived from the
sales of System products; and
WHEREAS, The parties desire to enter into this Agreement to formalize
the terms of such assignment and agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
convenience and promises in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Originality of System. The Employees represent and warrant
that the System is original, and does not, to the best of their
knowledge, infringe or misappropriate the rights or properties of any
third parties. Nothing in this Agreement shall be construed as warranty
or representation that any manufacture, sale, lease, use or importation
will be free from infringement of patents, trademarks, copyrights, or
other forms of intellectual property.
Section 2. Assignment of Rights.
(a) The Employees hereby assign and agree to assign all of their rights
to, title and interest in the System and all Embodiments (as defined
below), whether such interest arises under patent law, trademark law,
copyright law, trade secret law, or otherwise, including the right to
use the System in any and all manner throughout the world in perpetuity
and the right to xxx and recover damages for any past, present and
future infringement or misappropriation of the System or Embodiments.
"Embodiments" means the Playmaster Extreme business plan, (attached
hereto as Exhibit C) the know-how to manufacture, market, use,
distribute and sell the System.
(b) Each Employee shall promptly disclose to the Company all
Embodiments.
(c) Each Employee hereby agrees that the Company may, in the Company's
sole discretion, make any desired changes to any part of the System or
any Embodiment, to combine it with other ideas in any manner desired.
(d) At the request of the Company, each Employee shall promptly and
without additional compensation execute any and all patent applications,
trademark registration applications, copyright registration
applications, assignments, or other instruments that the Company deems
necessary or appropriate to apply for or obtain Letters Patent of the
United States or any foreign country, trademark registrations, copyright
registrations or otherwise to protect the Company's interest in such
System and Embodiments, the expenses for which will be borne by the
Company. Each Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as his agents and
attorneys-in-fact to, if the Company is unable for any reason to secure
such Employee's signature to any lawful and necessary document required
or appropriate to apply for or execute any patent application,
trademark registration, application, copyright registration application,
or other similar document with respect to the System and Embodiment
(including, without limitation, renewals, extensions, continuations,
divisions, or continuations in part), (i) act for and in his behalf,
(ii) execute and file any such document, and (iii) do all other lawfully
permitted acts to further the prosecution of the same legal force and
effect as if executed by him. This designation and appointment
constitutes an irrevocable power of attorney coupled with an interest
with respect to the System and Embodiments.
(e) The obligations of each Employee set forth in this Section
(including, without limitation, the assignment obligations) will
continue beyond the termination of this Agreement whether pursuant to
this Agreement or otherwise. Those obligations will be binding upon
each Employee, his assignees permitted under this Agreement, executors,
administrators, and other representatives. In the event of termination,
either voluntary or involuntary, of either or both Employee(s) by the
Company, this Agreement will remain in effect. Nothing herein shall be
construed as an employment agreement or the right to continue as an
employee of the Company. Each Employee shall be responsible for and
shall promptly discharge when and as due any taxes resulting from the
receipt of payments hereunder. Each Employee shall indemnify and hold
the Company harmless from and against any and all failures to pay taxes
earned on amounts received hereunder.
Section 3. Royalty.
(a)(i) In consideration of the rights granted by the Employees to the
Company hereunder, the Company shall pay the Employees a royalty (the
"Royalty") equal to 20% of Net Profit (as defined) made by the Company
for products from the System (the "Products") per Exhibit A, equivalents
and any future improvements thereof for the Royalty Period (as defined).
The Company will pay the Employees the total sum of $5,000 ($2,500 to
each Employee) (each, an "Advance") per year of the Agreement. The
payment shall be paid by January 31 of each year of the Agreement. This
amount will be deducted from the Royalty due the Employees as is
outlined in this Section. The Company shall use its best efforts, as
determined solely by its chief executive officer, to market and sell the
System.
(a)(ii) At any time during the Royalty Period, if the Company decides
to sell the System and the Embodiments and any other related equipment
or inventory (Collectively, the "System Assets") and the Company
receives an offer for the System Assets (the "Offer"), the Employees
shall have the right, but not the obligation, to purchase the System
Assets for the same price as the Offer and on the same terms and
conditions. The Company shall promptly notify the Employees of any such
Offer. The Employees shall promptly notify the Company if they wish to
purchase the System Assets pursuant to this Section. Such purchase and
sale shall thereafter by promptly consummated.
(b) "Net Profit" means net sales (minus any allowance for returns)
minus the cost of goods sold, minus any administrative, sales,
advertising, trade show, warranty, research and development, direct
inventory write-off, and other costs to be mutually agreed upon by the
Employee(s) and the Company, all as is more fully described in the
attached Exhibit B. Expenses to be allocated to the Net Profit
calculation are based on expenses incurred during each year of the
"Royalty Period". The "Royalty Period" shall commence on January 1, 1997
and end on December 31, 1998.
(c) The Royalty shall be accounted for and paid within 60 days after
the end of each semi-annual period during the term of the Royalty
Period. All payments shall be made in US dollars and shall be made in
accordance with the Employees reasonable instructions.
(d) At the end of each year, the Company shall reconcile Net Profit
with its final audited financial statements to the extent the Company
has paid the Employees an amount in excess of 20% of the actual Net
Profit for that year, such Employees shall promptly repay any amounts
due to the Company. To the extent the Company has paid the Employees an
amount which is less than 20% of the actual Net Profit for that year,
the Company shall promptly pay such amounts due to the Employees. To
the extent the Advances exceed the Royalties due to the Employees at the
end of the Royalty Period, the Employees shall promptly repay such
amounts to the Company.
(e) The Employee(s) reserve the right to audit the net profit
calculation and supporting documentation on a semi-annual basis related
to the Royalty payment in Section 3.
Section 4. Restrictive Covenant.
(a) Restrictive Covenant. Each Employee hereby covenants and agrees
that, during the term of this Agreement, and for a period of one year
thereafter, each Employee will not, directly or indirectly, for himself
or as an agent on behalf of, or in conjunction with any person, firm,
association or corporation, compete with the Company or attempt to sell
or sell any Company or equivalent products or service to any present or
former (within the last 24 months) customer of the Company in the World.
(b) Modification By Court. The parties hereto agree that if for any
reason, the covenants or any portion of the covenants provided for in
this Section shall be deemed too expensive and therefore unreasonable,
they hereby expressly authorize the court to modify those covenants or
offending portions of the covenants so as to create limitations which
are reasonable and enforceable.
(c) Other than for acts or omissions which violate the representations,
terms or conditions of this Agreement or are illegal, the Company shall
indemnify and hold the Employees harmless from any and all losses,
damages, or claims (including reasonable attorney's fees) resulting from
any acts of the Company's agents, employees, dealers, subcontractors, or
end users or relating in any way to the content, completeness, or
performance of any products covered herein including but not limited to
any third party claims of patent, trademark, or copyright infringement.
(d) Each party shall be responsible for their own litigation expenses.
Section 5. Effect of Prior Agreements. This Agreement contains the
entire understanding between the Company and the Employees relating to
the subject matter hereof and supersedes any prior agreement,
communication, or understanding relating to the subject matter hereof
between the Company and the Employees.
Section 6. Modification and Waiver. This Agreement may not be
modified or amended except by an instrument in writing signed by the
parties. No term or condition of this Agreement will be deemed to have
been waived, except by written instrument of the party charged with such
waiver. No such written waiver will be deemed to be a continuing wives
unless specifically stated therein, and each such waiver will operate
only as to the specific term or condition waived and will not constitute
a waiver of such term or condition for the future or as to any act other
than that specifically waived.
Section 7. Severability. If, for any reason, any provision of this
Agreement is held invalid, such invalidity will not affect any other
provision of this Agreement, and each provision will to the full extent
consistent with law continue in full force and effect. If any provision
of this Agreement is held invalid in part, such invalidity will in no
way affect the rest of such provision, and the rest of such provision,
together with all other provisions of this Agreement, will, to the full
extent consistent with law, continue in full force and effect. The
Employees are jointly and severally liable for any breach of this
Agreement by either Employee.
