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Exhibit 2
TECHNOLOGY LICENSE AGREEMENT
[For Non-Pneumatic Tire]
THIS TECHNOLOGY LICENSE AGREEMENT (this "Agreement") is entered into the
19th day of August, 1997, between XXXXXX X. XXXXXXX, an individual, and
XXXXXXX X. XXXXXXX, an individual (hereinafter "Licensors") and AMERICAN TIRE
CORPORATION, a Nevada corporation (hereinafter "Licensee").
It is expressly and mutually warranted and agreed that Xxxxxx X. Xxxxxxx
(hereinafter "Xxxxxxx") and Xxxxxxx X. Xxxxxxx (hereinafter "Xxxxxxx"),
individually and/or collectively are the inventors of an apparatus and method
for manufacturing an item from polyurethane foam (the "Technology" as defined
in section 2(f) below), and are the direct beneficiaries to this Agreement in
its totality and to all material provisions hereof with full legal rights to
protect and enforce any expressed or implied rights or interests herein.
It is expressly and mutually warranted and agreed that this Agreement
supercedes that prior Technology License Agreement entered into the 27th day
of October, 1995, between AMERICAN MOBILITY SYSTEMS, INC., a Nevada
corporation, of which Xxxxxxx and Xxxxxxx were third-party beneficiaries.
Premises
A. Licensors are the owner of certain technology, proprietary data, and
know-how relating, in general, to a certain new and useful invention relating
to an apparatus and method for molding items formed from a resinous material
(i.e., polyurethane) known as "non-pneumatic tire technology," for which an
application for United States Letters Patent has been filed.
B. Licensee desires to utilize such technology on the terms and
conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, based on the foregoing premises and for and in
consideration of the covenants and agreements hereinafter set forth and the
mutual benefits to the parties to be derived therefrom, it is hereby agreed as
follows:
1. Incorporation of Premises. The foregoing premises are incorporated
herein by this reference.
2. Certain Definitions. The following defined terms have the stated
meaning as used herein:
(a) Confidential Information. "Confidential Information" as used herein
shall mean information in the possession of a party which is held and treated
by such party as proprietary or trade secret information and not disclosed to
the trade or public by such party. Confidential Information shall not include
information (i) which is known to the receiving party at the time of
disclosure by the disclosing party, (ii) which after disclosure by the
disclosing party to the receiving party is received by the receiving party
from another who, with respect to the disclosing party, has the right to
disclose such information, or (iii) which is available to the public or
subsequently becomes available to the public through no breach of obligations
of confidence and trust by the receiving party to the disclosing party.
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(b) Improvements. The term "Improvements" means any material,
composition, organism, process, data, or information which is developed from,
utilizing, or based upon the Technology, which modifies, enhances, or improves
any Product(s) or Process(es), as hereinafter defined, which is part of the
Technology.
(c) Patent Rights. The term "Patent Rights" shall mean all United
States patents and foreign patents and applications for patent, including
continuing and divisional and other patent applications derived therefrom, in
this or any country in the world which have been filed or granted or which
may be filed or granted which describe and claim or are based upon all or part
of the Technology, including such Improvements as become subject to this
Agreement, including, but not limited to, any and all patents granted on or
respecting the application for United States Letters Patent, Serial No.
08/562,838 "Apparatus and Method for Manufacturing an item from a Polyurethane
Foam" filed with the United States Office of Patents and Trademarks,
respecting an invention by Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, and Xxxxxxx
Xxxxxxxx for the Technology (the "Patent Application").
(d) Process(es). The term "Process(es)" shall mean any formulation(s),
composition(s), or combination(s) of compositions based upon or manufactured
or used in accordance with the Technology.
(f) Technology. The term "Technology" shall mean all scientific and
technical data and all information and know-how related to the inventions and
developments relating to an apparatus and method for molding items formed
from a resinous material (i.e., polyurethane) known as "non-pneumatic tire
technology," including, but not limited to, all information and know-how
relating to the Patent Application, whether or not any such inventions or
developments are patentable, including, but not limited to, the formulas,
methods, processes, procedures, experimental data, disclosures, reports,
findings, ideas, and trade secrets. Technology includes all Improvements,
Patent Rights, Products, Processes, and Confidential Information as described
herein.
3. License. Licensor hereby grants, and Licensee hereby accepts, an
exclusive license to use, sell, license, or otherwise exploit the Technology,
and any and all Improvements, Processes, Products, and Confidential
Information related thereto, in the World-wide territory and on the conditions
herein set forth, subject to the obligation of Licensee to pay a Royalty as
provided below, including specifically, but without limitation, the right to
sublicense others under the rights granted hereunder, to likewise xxx, sell,
sublicense, or otherwise exploit the Technology and any and all Improvements,
Processes, Products, and Confidential Information related thereto and to
disclose Confidential Information to sublicensees to the extent sublicenses
requires to effectively enjoy the rights of such sublicenses.
4. Territory of Licensee. As used herein, the term "World-wide
Territory" of the Licensee shall refer to all territories, countries,
principalities, and kingdoms collectively referred to as the "Earth."
5. Marketing by Licensee. Licensee shall devote its time and best
efforts to market, promote, and exploit the Technology in a effort to xxxxxx
its commercialization and use.
6. Term. Unless earlier terminated by the mutual agreement of the
parties or pursuant to another provision of this Agreement, this Agreement
shall continue in full force and effect and shall have a term expiring on the
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last date of expiration of any patent included in the Patent Rights. If
however, the Licensee fails to market, promote, and otherwise exploit the
Technology so that Xxxxxxx has not received any royalty payment as provided
under paragraph 9 of this Agreement within 24 months of the date hereof, this
Agreement shall automatically terminate, without further notice from Licensor
to the Licensee.
7. Additional Technology. It is anticipated that Licensors may from
time to time develop additional technology. In the event Licensors desires to
market, distribute, or otherwise exploit any additional technology relating to
the manufacture of a non-pneumatic tire that is not included within the above
defined Technology (the "Additional Technology") in the World-wide Territory
of Licensee, Licensors shall provide Licensee with a written notice (the
"Initial Notice") setting forth full details concerning the Additional
Technology, and Licensee shall have the exclusive right and option to have the
Additional Technology made subject to this Agreement at any time during a
period of 90 days following the date such Initial Notice is given. Licensee
can exercise such option by delivery of a notice of its intent to do so within
the option period. If Licensee does not exercise its option within the
prescribed period, Licensor shall be entitled to enter into any agreement
respecting the Additional Technology within the World-wide Territory of
Licensee with any other entity. If Licensee is granted rights to Additional
Technology, such rights shall be subject to all the terms and provisions of
this Agreement and the Additional Technology shall be treated as Technology
under this Agreement.
8. Testing. Either party may from time to time undertake testing and
development in the World-wide Territory of the Technology or Additional
Technology, and either party undertaking such testing shall make the results
of such testing and development fully available to the other.
9. Royalty. During the term of this Agreement, Licensee shall pay to
Xxxxxxx a Royalty (the "Royalty") in the amount of twelve and one-half cents
($0.125) for each unit sold by Licensee (or its sublicensees'), which was
produced utilizing the Technology. Such Royalty shall be due and payable 45
days after the close of each calendar quarter. Licensee shall provide to
Xxxxxxx a written statement of production, presented in sufficient detail to
permit verification of the Royalty due. Such written statement shall be
certified as accurate by an officer or authorized agent of Licensee. Licensee
shall maintain accurate books and records for the same which shall be made
available to Licensors, on reasonable notice, for inspection and audit by
Licensor or its representative. In the event that Licensors cause such books
and records to be audited and such audit establishes that Licensee did not pay
Xxxxxxx the full amount of Royalty actually due Xxxxxxx, Licensee shall pay
Xxxxxxx the additional amount owned within 30 days after demand. In addition,
if such audit establishes that Licensee has underpaid Licensor for Royalty
owed by 5% or more, Licensee shall reimburse Licensors for the full cost of
such audit. The amount of Royalty not paid Xxxxxxx when due shall bear
interest at an annual rate of interest equal to two percentage points above
the prime rate quoted for international money center banks in the Wall Street
Journal on the day the payment was due. As used herein "Units Sold" shall not
include (a) any Units returned (b) any Units utilized for testing purposes;
and (c) any Units used for promotional purposes. As used herein, "Royalty"
shall be applicable to any Unit sold for cash or cash equivalent. Xxxxxxx
shall not receive a Royalty under this Agreement.
10. Documentation and Technical Assistance. Licensors shall at their
own cost provide Licensee with available written technical information and
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know-how in its possession, and shall stand ready, at the request and expense
of Licensee, to disclose know-how and technology known to Licensors respecting
the Technology and, at the request and expense of Licensee, and within
reasonable time and resource constraints, provide technical and scientific aid
and assistance to assist Licensee in the development of the Licensed
Technology. Licensors' charges to Licensee for such technical assistance
shall not exceed Licensors' cost of providing the same.
11. Documentation and Confirmation of Rights. Licensors shall, upon
request of and at the expense of Licensee, execute such documents and take
such actions as are necessary and proper to evidence the rights granted
hereunder to Licensee.
12. Authority and Reservation of Rights to Licensor
(a) Authority. Licensors represent and warrant to Licensee that they
owns the Technology free and clear of any and all liens, claims, encumbrances,
royalty interests, or other charges; that they has full legal power to grant
the rights to Licensee as set forth in this Agreement; that they have not made
and covenants that they will not make any commitment to others inconsistent
with such grant; that they are not aware of any third party (including without
limitation any university, research foundation, or institute) who holds from
or under Licensors directly or indirectly any rights to or under the
Technology which would preclude Licensors from granting to Licensee all rights
purportedly granted to Licensee hereunder.
(b) Reservation of Rights. Licensors reserve the right to use the
Technology in the course of its research, but shall not have the right to
exploit the same commercially or to license others to make, use, or sell the
same with the World-wide Territory of Licensee. Further provided that in the
event the territorial exclusivity or period of exclusivity of the license
granted hereunder is limited by applicable laws and regulations concerning
government rights pertaining to the subject matter hereof, or by the action,
laws, or regulations of any government, the license granted hereunder shall
not terminate, but shall remain exclusive to the extent permitted by such
government action and shall become nonexclusive to the extent necessary to
conform to applicable laws and regulations.
13. Patent Applications and Prosecution. Licensors shall, at their own
cost and expense, apply for and prosecute applications for United States and
foreign patents as the Licensee may from time in writing designate to
Licensors. Licensors shall control and direct the filing and prosecution of
such applications for patent and maintenance of such patents through a
registered patent lawyer of Licensor's choosing who shall (unless Licensors
and Licensee agree otherwise) be instructed to obtain the maximum available
valid patent protection. Licensors shall seek prompt examination of all such
applications for patent in all countries in which application for patent is
made, keep Licensee, or such patent attorney as Licensee may designate,
informed as to all activities respecting such applications for patents and
regularly provide copies of all documents and correspondence respecting such
applications for patent to Licensee, or its designee, and give full weight and
due consideration to information and requests from Licensee respecting such
patents and applications. Licensee shall have the right to authorize the
abandonment of such patents or applications, provided, however, that Licensors
shall have the right, but no obligation, to assume prosecution and/or
maintenance of the same. Licensors may, but shall not be required to, file,
prosecute, or maintain applications of patent and patents in countries in
which Licensee does not elect for filing. Licensors do not represent or
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warrant (i) that any patent applications will issue into a patent, (ii) that
should a patent issue and be licensed hereunder that such patent will be
valid, or (iii) that the sale of the Technology will not infringe the patent
rights of third parties.
14. Disclosure of Improvements. Licensors shall keep Licensee fully
informed as to Improvements made by Licensors and shall promptly comply with
the obligations of section 10 in providing technical assistance respecting the
same.
15. Litigation.
(a) Licensee shall have the first right to xxx any infringer of any
patent licensed hereunder, at its own expense in the name of Licensors, if
necessary, and Licensors agree to join in such suit at Licensee's expense and
to execute any necessary papers for such suit. If Licensee fails within a
reasonable time to xxx such infringer, Licensors shall have the right to file
and maintain, at their own expense, such suits for infringement; however,
nothing in this Agreement shall obligate Licensors to assume any
responsibility or liability respecting any action or possible action for
infringement.
(b) Any sum recovered in such suit or in settlement thereof shall be
used first to reimburse Licensee and Licensors, pro rata, for all direct
out-of-pocket costs and expenses of every kind and character, including
attorneys' fees, expert witness fees, court costs, and the like incurred in
the prosecution of any suit. For this purpose, cost and expenses paid from
Royalty withheld by Licensee pursuant to this section of this Agreement shall
be considered to have been incurred by Licensors pursuant to this paragraph of
this Agreement. If, after such reimbursement, any funds shall remain from
such recovery, such funds shall, at the option of Licensee, be divided with
Licensors, pro tanto in lieu of Royalty on infringing sales at one-half the
rates specified in section 9 of this Agreement.
(c) During any time Licensee is engaged in an infringement action
involving an allegation that any patents licensed hereunder are infringed,
Licensee shall be entitled to withhold up to one-half of all Royalty otherwise
payable to Xxxxxxx under section 9 of this Agreement as may be necessary to
offset expenses of such action. Upon termination of the litigation, any
balance of the withheld one-half remaining after payment of Licensee's
expenses shall be paid promptly to Xxxxxxx.
16. Defense of Licensed Rights. Licensors shall not be obligated to
defend or save harmless Licensee against any suit, damage, claim, or demand
based on actual or alleged infringement of any patent or trademark or any
unfair trade practice resulting from the use or exercise of the rights or
license granted hereunder; but shall cooperate fully with Licensee, at
Licensee's cost and expense, in the defense of any such suit, claim, or demand
and shall provide expert testimony at reasonable times and for reasonable
periods without cost, except that Licensee shall pay travel, lodging, and
related expenses actually incurred in providing such testimony.
17. Product Liability. Licensee and Licensors recognize that the
Technology is not developed to the point of practical application and that
safety and efficacy have not been established; accordingly, it shall be the
responsibility of Licensee to assure that environmentally and legally
acceptable standards respecting safety and efficacy are complied with
respecting the Technology, and Licensee shall hold, and require in all
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sublicenses that sublicensees hold, Licensor harmless from all liability,
costs, and fees relating to any claim, demand, or suit and the defense thereof
arising from the use, sale, or license of the Technology. Licensors shall use
their best efforts to verify the accuracy of the information furnished to
Licensee, but Licensors shall not be liable for damages arising out of or
resulting from any information or substance(s) made available to Licensee
hereunder or the use or application thereof nor, shall Licensor be liable to
Licensee for consequential damages under any circumstances, other than breach
of its warranty that it has the full right to enter this Agreement.
18. Default. Upon the occurrence and during the continuance of any one
or more of the events hereinafter enumerated, Licensors may forthwith or at
any time thereafter during the continuance of any such event, by notice in
writing to Licensee, terminate this Agreement, such events being as follows:
(a) Default in the payment of any Royalty or other amount due hereunder
when the same shall become due and payable, unless cured with 30 days after
the notice thereof by Xxxxxxx to Licensee;
(b) Default in the due observance or performance of any other covenant
or obligation contained in this Agreement, unless observed or performed with
30 days after notice thereof by Licensors to Licensee; provided, that if
compliance is not reasonably practicable within 30 days, default shall occur
upon failure within said 30 days to take steps that will produce compliance as
soon as is reasonably practicable;
(c) Licensee shall file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization, or shall file an answer admitting
the jurisdiction of the court and any material allegations of any involuntary
petition filed pursuant to any act of Congress relating to bankruptcy or to
any act purporting to be amendatory thereof, or shall be adjudicated bankrupt,
or shall make an assignment for the benefit of creditors, or shall apply for
or consent to the appointment of any receiver or trustee for Licensee, or of
all or any substantial portion of its property; or Licensee shall make an
assignment to an agent authorized to liquidate any substantial part of its
assets; or
(d) An order shall be entered pursuant to any act of Congress relating
to bankruptcy or to any act purporting to be amendatory thereof approving an
involuntary petition seeking reorganization of Licensee, or an order of any
court shall be entered appointing any receiver or trustee of or for Licensee,
or any receiver or trustee of all or any substantial portion of the property
of Licensee, or a writ or warrant of attachment or any similar process shall
be issued by any court against all or any substantial portion of the property
of Licensee, and such order approving a petition seeking reorganization or
appointing a receiver or trustee is not vacated or stayed, or such writ,
warrant of attachment, or similar process is not released or bonded within 60
days after its first entry or levy.
19. Termination. In the event of termination of the license rights
granted hereunder for any reason(s) whatsoever, all options granted Licensee
hereunder shall also automatically terminate; and:
(a) All obligations of confidentiality shall remain in full force and
effect for the full term of this Agreement;
(b) Licensee shall return, deliver, and assign to Licensors all written
records containing know-how, notebooks, reports, data, applications for
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approval, approvals and all writings, including magnetically recorded writings
or legible and readable copies thereof which relate to or describe the
manufacture, use, sale, or characteristics of the Technology which are in its
possession, custody, or control;
(c) Licensee shall not grant any third-party any right to the Technology
after termination of the license hereunder;
(d) All sublicenses granted hereunder shall inure to the benefit of
Licensors and Licensor shall become the licensor with respect to the same.
Such sublicenses shall continue according to the terms thereof and Licensors
shall be entitled to all consideration and Royalty from the sublicensee
therein. Licensee shall make such assignment of such sublicenses and execute
all documents necessary and proper to substitute Licensors as the licensors
therein.
20. Patent Marking. Licensee agrees that it shall provide the necessary
legal patent marking required for the country for which the Technology covered
by Patent Rights are made or sold, provided that Licensors shall have advised
Licensee regarding the same.
21. Confidentiality. Each party agrees that any Confidential
Information disclosed to it by the other in writing and marked confidential
(or in the case of any oral disclosure, subsequently confirmed in writing and
marked confidential) shall be held in confidence for five years after
disclosure, notwithstanding any prior termination of this Agreement, and shall
not use the same other than as to the extent permitted under this Agreement.
22. Non-warranted Matters. Nothing contained in this Agreement shall be
construed as a warranty or representation by Licensor (i) as to the validity
or scope of Licensors' Patent Rights, (ii) as to whether any manufacture, use,
or sale hereunder will be free from infringement of any patents owned or
controlled by any third party, or (iii) as to efficiency or efficacy of the
Technology.
23. Notices. All notices, demands, requests, or other communications
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and
postage prepaid; or if sent by overnight express delivery:
If to Licensor, to: Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
If to Licensee, to: American Tire Corporation
Attn.: Xxxxxxx X. Xxxxxxx, C.E.O.
0000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
or such other addresses and facsimile numbers as shall be furnished in writing
by any party in the manner for giving notices hereunder, and such notice,
demand, request, or other communication shall be deemed to have been given as
of the date so delivered or sent by facsimile transmission, three days after
the date so mailed, or one day after the date so sent by overnight delivery.
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24. Attorneys' Fees. In the event that any party institutes any action
or suit to enforce this Agreement or secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
25. Specific Performance. The parties acknowledge that the rights in
this Agreement are extraordinary and unique, and that remedies at law may be
inadequate to compensate the parties for the breach or threatened breach of
the terms and conditions of this Agreement. The parties consent to the
granting of equitable relief, including specific performance or injunction,
whether temporary, preliminary, or final, in favor of the other party without
proof of actual damages.
26. Third-Party Beneficiaries. Licensors and Licensee are intended
beneficiaries of this Agreement and the consummation of the transactions in
accordance with this Agreement. No director, officer, stockholder, employee,
agent, independent contractor, or any other person or entity shall be deemed
to be a third-party beneficiary of this Agreement.
27. Entire Agreement. This Agreement and the exhibits hereto represent
the entire agreement between the parties relating to the subject matter
hereof. All negotiations and all other previous agreements between the
parties, whether written or oral, have been merged into this Agreement, and
this Agreement and the documents delivered in connection with the consummation
hereof fully and completely express the agreement of the parties relating to
the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
28. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which take
together shall be but a single instrument.
29. No Assignment. This Agreement cannot be assigned in whole or in
part by one of the parties without the prior written consent of all parties to
this Agreement.
30. Amendment or Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law, or in equity, and such remedies may be enforced concurrently, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the terms contained
herein, and any term or condition of this Agreement may be waived or the time
for performance thereof may be extended by a writing signed by all parties to
be charged therewith.
Dated as of the year and date first above written.
LICENSORS:
/S/Xxxxxx X. Xxxxxxx
/S/Xxxxxxx X. Xxxxxxx
LICENSEE:
AMERICAN TIRE CORPORATION,
a Nevada corporation
By:/S/Xxxxxxx X. Xxxxxxx
Its Duly Authorized Officer
