ASSIGNMENT AND ROYALTY AGREEMENT
This Assignment and Royalty Agreement, effective as of March 23, 1999
(hereinafter referred to as the "Agreement"), is entered into among DOW CREDIT
CORPORATION, a Delaware corporation with offices located at 0000 Xxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 ("DCC"), THE DOW CHEMICAL COMPANY, a Delaware
corporation with offices located at 0000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
("Dow"), XXXXXXXX HOLDING COMPANY, a Delaware corporation with offices located
at 000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and all of its subsidiaries and
affiliates (including, but not limited to INTERNATIONAL PLASTICS INC. ("IPI"), a
Kentucky corporation with offices located at 0000 Xxx Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx 40505) and all of its successors and assigns (collectively
"Xxxxxxxx").
R E C I T A L S:
WHEREAS, DCC has a security interest in certain patents and patent
applications (hereinafter referred to collectively as the "Patents") and
drawings, specifications and other technology, know-how, trade secrets and
techniques and trademarks (hereinafter referred to collectively as the
"Technology") with respect to the manufacture of Rebar and Beam High Chair, and
the Rebar and Beam Bolster, Slab and Beam Bolster Upper further described and
specified on Schedule A to this Agreement, attached hereto (hereinafter the
Rebar and Beam High Chair
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and the Rebar and Beam Bolster, Slab and Beam Bolster Upper are referred to
collectively as "Beam Bolsters"); and
WHEREAS, Dow has a security interest in certain assets of IPI as specified
on Schedule B to this Agreement, attached hereto (hereinafter referred to as the
"Other Assets"); and
WHEREAS, DCC's rights in the Patents and Technology are set forth in an
Agreed Order entered April 27, 1994 in the IPI Chapter 11 Bankruptcy proceeding
in Case Xx. 00-00000, Xxxxxxx Xxxxxxxx of Kentucky, Lexington Division ("Agreed
Order 1"), a copy of which is attached hereto as Ex. "1" and made a part hereof;
and
WHEREAS, Dow's rights in the Other Assets are set forth in an Agreed Order
entered May 3, 1995 in the IPI Chapter 11 Bankruptcy proceeding in Xxxx Xx. 00-
00000, Xxxxxxx Xxxxxxxx of Kentucky, Lexington Division ("Agreed Order 2"), a
copy of which is attached hereto as Ex. "2" and made a part hereof (Agreed Order
1 and Agreed Order 2 may collectively hereinafter referred to as"Agreed
Orders"); and
WHEREAS, IPI is in default under the terms of the Agreed Orders and,
pursuant to the terms of the Agreed Orders, DCC and Dow are entitled to
immediate possession of the Patents and Technology and the Other Assets; and
WHEREAS, IPI is currently manufacturing Beam Bolsters using the Patents and
Technology and the Other Assets and is in possession of certain engineering,
manufacturing, marketing, distribution, and service facilities, personnel and
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expertise, and any necessary molds, related to and required to produce and
market the Beam Bolsters; and
WHEREAS, pursuant to this document related to this transaction, DCC and Dow
are assigning their respective rights under the Agreed Orders and all of their
rights in the Patents and Technology and Other Assets, as well as a Term Loan
Promissory Note from IPI to DCC dated December 14, 1990 in the original
principal amount of $1,245,000.00 and a Revolver Promissory Note from IPI to DCC
dated December 14, 1990 in the original principal amount of $595,000.00 (copies
of which are attached hereto as Ex. "3", collectively, the "Notes"), to Xxxxxxxx
in consideration of and exchange for the receipt of the following: (1) a cash
payment in the amount of $625,000.00, in the manner described in paragraph 1
(a), below; (2) a Promissory Note in the amount of $175,000.00 in the manner
described in paragraph 1(b), below; and (3) the payments required under this
Agreement.
W I T N E S S E T H:
-------------------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties to this
Agreement, the parties agree as follows:
1. General Undertakings. Subject to the terms and conditions of this
Agreement, DCC and Dow will transfer and assign to Xxxxxxxx, all of their
respective right, title and interest in their claims, notes and collateral as
documented in the Agreed Orders against IPI, the collateral consisting of all of
the collateral described in paragraphs 6(a) through 6(j) of the April 27, 1994
Agreed
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Order and in paragraph 1 of the May 3, 1995 Agreed Order (collectively,the
"Collateral"), as well as the Notes, subject to the following terms and
conditions:
(a) Xxxxxxxx will pay DCC the sum of $625,000.00, to be paid in five
equal monthly installments of $125,000.00 each, commencing March 23, 1999 and
continuing on or before the 1st day of the months of May, June, July and August
1999. Upon receipt of the final installment of the $625,000.00 cash payment, DCC
and Dow will provide Xxxxxxxx with a complete set of originals of the documents
(or copies of court documents) evidencing DCC's and Dow's rights in the claims,
notes and collateral being assigned and transferred hereunder, along with the
original letters patent comprising part of the Collateral (which are currently
being held by the Clerk of the Bankruptcy Court) and the original Notes.
(b) Xxxxxxxx shall execute a Promissory Note in the amount of
$175,000.00 payable to DCC, in the form attached hereto as Exhibit "4".
(c) This Agreement shall not determine ownership of the Collateral as
between Xxxxxxxx and IPI.
(d) Upon receipt of the final installment of the $625,000.00 cash
payment, DCC will dismiss the Fayette County Civil Action No. 92-CI-3602 against
IPI and Xxxxx X. Xxxxx (the "Lawsuit"), with prejudice, and the personal
guarantee of Xxxxx X. Xxxxx in the amount of $1,840,000.00 (the "Guarantee")
will be discharged in writing.
(e) Upon the transfer of DCC's and Dow's rights in the Collateral to
Xxxxxxxx, DCC's and Dow's rights under this Agreement, and DCC's rights under
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the $175,000.00 Promissory Note executed concurrently herewith, shall be
unsecured.
(f) Provided, however, DCC will retain and not assign to Xxxxxxxx its
rights under the Guaranty and will retain and not assign to Xxxxxxxx its rights
in the Lawsuit. These rights will be retained and not assigned so that DCC may
dismiss the Lawsuit and discharge the Guaranty as required by subparagraph (d),
above.
2. Royalty Fees.
(a) Commencing July 1, 2001, DCC shall receive a royalty equal to 5% of
the gross dollars resulting from sales of the Beam Bolsters (after deducting
sales returns and any sales taxes), whether such sale is made by Xxxxxxxx (or
any successor or assign) or any licensee of the Patents or Technology, subject
to the minimum royalty payment provided for in subsection (b), below.
(b) The royalty payment will be calculated on a quarterly basis and the
payment will be due on or before the last day of the month following the end of
each calendar quarter. The first royalty payment for the calendar quarter ending
September 30, 2001 will be due on or before October 31, 2001. The minimum
quarterly royalty payment shall be in the amount of $12,500.00, regardless of
the actual dollar amount of the gross sales in any calendar quarter.
(c) Accompanying each royalty payment shall be a statement showing gross
sales, deductions for returns and sales taxes. Xxxxxxxx agrees that DCC shall be
entitled at any time, on reasonable notice, to inspect its books and records
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to confirm that the royalty payments being remitted are correct. Xxxxxxxx
agrees that any licensing agreement that it enters into with respect to the
Patents and/or Technology shall include a provision enabling DCC to inspect the
books and records of the licensee to confirm that the royalty payments being
remitted are correct.
(d) Royalty payments shall continue on a quarterly basis until such time
as DCC has received a total of $400,000.00. Upon receipt of such an amount in
royalty payments, the obligation for royalty payments to DCC under this
Agreement shall cease, although all other obligations hereunder shall remain in
effect.
(e) If any royalty payment is not received or accounted for in a timely
manner, DCC, in its sole discretion, may give a written notice of default to
Xxxxxxxx, by regular mail at the addresses set forth below. If payment is not
received or an accounting not provided within 30 (thirty) days of the date on
which DCC gives written notice of default to Xxxxxxxx, DCC may, at its option,
accelerate the remaining unpaid balance of the royalty payments ($400,000.00
minus payments previously received). The accelerated balance shall then
commence to bear interest at the rate of 8.5% per annum and DCC may immediately
bring suit thereon. A default hereunder shall also constitute an event of
default under the $175,000.00 Promissory Note being executed contemporaneously
herewith. Provided, that if Xxxxxxxx has reduced the principal balance of the
Promissory Note at the time of such default, the accelerated balance owed on the
Promissory Note shall be the then existing balance of principal and accrued
interest, credit having been given for all payments received.
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3. DCC's and Dow's Representations and Warranties. DCC and Dow
represent and warrant to Xxxxxxxx as of the date of this Agreement, as follows:
(a) DCC and Dow are corporations validly existing and in good standing
under the laws of Delaware.
(b) DCC and Dow have full corporate power and authority to execute and
deliver this Agreement and to perform their respective obligations under this
Agreement. The execution, delivery and performance of this Agreement by DCC and
Dow has been duly authorized by all necessary corporate actions.
(c) The execution, delivery and performance of this Agreement by DCC and
Dow does not conflict with any provision of the Articles of Incorporation or
Bylaws of DCC or Dow or any contract, agreement, or commitment to which DCC or
Dow is a party.
4. Disclaimers: Limitation of Liability.
(A) XXXXXXXX HEREBY ACKNOWLEDGES THAT DCC AND DOW MAKE NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER WITH RESPECT TO THE PATENTS AND TECHNOLOGY OR THE BEAM
BOLSTERS, THE OTHER ASSETS OR THE NOTES EXCEPT FOR THE WARRANTIES SET FORTH IN
PARAGRAPH 3, ABOVE. DCC AND DOW EXPRESSLY DISCLAIM ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN ADDITION, DCC AND DOW
MAKE NO REPRESENTATION OR WARRANTY REGARDING THEIR RESPECTIVE RIGHT, TITLE OR
INTEREST IN OR TO ANY OF THE PATENTS,
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TECHNOLOGY OR BEAM BOLSTERS, THE OTHER ASSETS, THE NOTES OR TO ANY OF THE
COLLATERAL SET OUT IN THE AGREED ORDERS.
(b) DCC and/or Dow shall not liable to Xxxxxxxx, or any party claiming
through Xxxxxxxx, or any third party customer, for any direct damages, or
indirect, special or consequential damages, including lost profits, or any
exemplary or punitive damages, allegedly incurred in connection with a Beam
Bolsters or the Patents or the Technology, the Other Assets or the Notes.
6. Xxxxxxxx'x Representations and Warranties. Xxxxxxxx represents and
warrants to DCC and Dow as of the date of this Agreement as follows:
(a) Xxxxxxxx is a corporation validly existing, and in good standing
under the laws of Delaware.
(b) Xxxxxxxx has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Xxxxxxxx does not
conflict with any provision of the Articles of Incorporation or Bylaws of
Xxxxxxxx or any contract, agreement, or commitment to which Xxxxxxxx is a party.
7. Successors and Assigns. This Agreement shall be binding on, and
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns.
8. Schedules. The Schedules and Exhibits attached hereto constitute a
part of this Agreement and are incorporated herein by referenced in their
entirety as if fully set forth herein at the point where first mentioned.
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9. Recitals. The recitals to this Agreement are substantive and
represent binding obligations, commitments, warranties and covenants of the
parties.
10. Notices. All notices, mailings and communications relative to this
Agreement shall be in writing and shall be personally delivered or delivered by
registered U.S. mail, postage prepaid, return receipt requested, or delivered by
telecopy and regular mail, in any event delivered and addressed to the parties
as follows:
If to DCC and Dow:
Dow Credit Corporation
Senior Credit Manager
0000 Xxx Xxxxxx
Xxxxxxx, XX 00000
(Telecopy No. 517-638-9852)
The Dow Chemical Company
Customer Financial Services Manager
0000 Xxx Xxxxxx
Xxxxxxx, XX 00000
(Telecopy No. 517-638-9852)
With copy to:
Xxxxx, Xxxx & Xxxxxxx, PLLC
Attn: Xxxxx X. Xxxx
0000 Xxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(Telecopy No. 606-231-0011)
If to Xxxxxxxx:
Xxxxxxxx Holding Company
0000 Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
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(Telecopy No. 606-225-1042)
With copy to:
Xxxxx Xxx DelCotto
Xxxxx, Xxxxxx & Park
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Telecopy No. 606-253-1027)
and to:
Xxxxxxxxx Xxxxx, Xx.
Kitsch, Drutchas, Xxxxxx & Xxxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(Telecopy No. (000) 000-0000)
Any party may change its address for receiving notices and communications
by giving the other appropriate written notice thereof.
11. Entire Agreement. This Agreement, and the letter from DCC to Xxxx
Xxxxx dated April 29, 1998 and attached hereto as Exhibit "5", along with all
schedules and attachments thereto (except where modified herein) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations, and understandings
of the parties and their principals and affiliates with respect thereto.
Provided, however, in the event that any conflict exists between the terms of
this Agreement and the April 29, 1998 letter agreement, the terms of this
Agreement shall be controlling. No amendment to or modification of this
Agreement shall be valid or effective unless agreed to in writing by all of the
parties hereto. No waiver of any
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of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver.
12. Execution in Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
13. Expenses. All parties agree that, in all events, each will pay all
of their own expenses incurred in connection with the negotiation and
preparation of this Agreement and the performance of their obligations
undertaken pursuant to this Agreement.
14. Further Assurances. Each party hereby agrees to execute and deliver
such additional instruments and documents and to take such additional actions as
may reasonably be required from time to time in order to effectuate the
transactions contemplated by this Agreement whether prior to, at or after the
closing.
15. Captions. The captions appearing in this Agreement are inserted only
as a matter of convenience and in no way define, limit or describe the scope and
intent of this Agreement or any of the provisions thereof.
16. Severability of Provisions. If any one or more of the provisions of
this Agreement shall be held invalid or unenforceable by a court of competent
jurisdiction, such provision shall be modified to the minimum extent necessary
to make it enforceable, and the enforceability of the remaining terms of this
Agreement shall not be affected thereby. In the event such provision(s) cannot
be
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modified to make it enforceable, this Agreement shall be continued in all
respects as if such invalid or unenforceable provision(s) was omitted.
17. Facsimile Signatures. Facsimile signatures shall be considered
original signatures for the purpose of execution and enforcement of the rights
delineated in this Agreement.
18. Term. The term of this Agreement shall be until such time as the
maximum amount owed DCC hereunder shall have been paid in full. However, once
DCC has been paid in full, the remaining provisions of this Agreement shall
remain in full force and effect as long as the Patents and Technology remain in
use by any person or entity.
IN WITNESS WHEREOF, the parties have executed the foregoing instrument on
the date first above written.
DOW CREDIT CORPORATION
BY:______________________________
TITLE:___________________________
THE DOW CHEMICAL COMPANY
BY:______________________________
TITLE:___________________________
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XXXXXXXX HOLDING COMPANY
BY:_____________________________
XXXXX X. XXXXX, PRESIDENT
STATE OF MICHIGAN
COUNTY OF __________________
Subscribed, sworn to and acknowledged before me on this the __ day of
_________, 1999, by ______________________, ____________________ of Dow Credit
Corporation, on behalf of the corporation.
My Commission Expires:____________________________________
______________________________________
NOTARY PUBLIC
STATE OF MICHIGAN
COUNTY OF __________________
Subscribed, sworn to and acknowledged before me on this the __ day of
_________, 1999, by ______________________, ____________________ of Dow Credit
Corporation, on behalf of the corporation.
My Commission Expires:____________________________________
______________________________________
NOTARY PUBLIC
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COMMONWEALTH OF KENTUCKY
COUNTY OF FAYETTE
Subscribed, sworn to and acknowledged before me on this the 00xx.xxx of
March, 1999, by Xxxxx X. Xxxxx, President of Xxxxxxxx Holding Company, on
behalf of the corporation.
My Commission Expires: 7/28/2002
-----------------------------
/s/ Xxxx X. Price
______________________________________
NOTARY PUBLIC
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