AMENDMENT AND TERMINATION AGREEMENT
This Amendment and Termination Agreement (hereafter, the
"Agreement") is dated and effective as of the 28th day of December,
1998 and is entered into by and between Xxxxxx X. Xxxxx, an
individual residing at 0000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxx
00000 ("Xxxxx") and Control Devices, Inc., an Indiana corporation
headquartered on Xxxxx 00, Xxxxxxxx, Xxxxx 00000 ("CDI").
RECITALS:
A. In April, 1995, CDI and Xxxxx entered into several agreements,
including a License Agreement, Rain Sensor and Fog Sensor (the
"Rain/Fog Sensor Agreement") and an Agreement to Grant License
(the "Agreement to Grant License").
B. CDI and Xxxxx now wish also to enter into a License Agreement
with respect to a Quadrant Sensor pursuant to the Agreement to
Grant License.
C. CDI and Xxxxx also wish to amend the Rain/Fog Sensor
Agreement, to terminate the Agreement to Grant License and to
evidence their understanding in connection therewith.
NOW, THEREFORE, based on these premises and in consideration
of the mutual covenants contained herein, and each act done
pursuant thereto, the parties hereby agree as follows:
1. Elimination of Payments and Decrease in Royalty Rates
under Rain/Fog Sensor Agreement. In consideration of the payment
set forth in Section 3 below, effective on the date hereof, the
Rain/Fog Sensor Agreement is hereby modified and amended as
follows:
(a) The words "six percent (6%)" in Section 3.1 and 3.2(a)(i)
shall be deleted and in lieu thereof, the words "three
percent (3%)" shall be added.
(b) Sections 3.5, 3.6 and Section 1.11(a) and (b) shall be
deleted in their entirety.
2. Termination of the Agreement to Grant License. Effective
on the date hereof, the Agreement to Grant License is hereby
terminated and shall hereafter be null and void and of no further
force or effect. Xxxxx hereby represents and warrants to CDI that
he has not, as of the date hereof, discovered any "New Invention"
(as defined in the "Agreement to Grant License") that he has not
disclosed in writing to CDI other than inventions described in the
quadrant sensor patent application which is the subject of the
License Agreement identified in Recital B above.
3. Payment to Xxxxx. In consideration of the agreements of
Xxxxx set forth in Section 1 above, on the fourth (4th) business
day after the date hereof, CDI shall pay Xxxxx Six Hundred
Thirty-five Thousand Five Hundred Fifty-Three Dollars
($635,553.00).
4. Rain Sensor License. In the event CDI terminates the
rain sensor license set forth in the Rain/Fog Sensor Agreement, CDI
shall xxxxx Xxxxx an irrevocable royalty-free license to, without
duty of accounting, make, use, sell, offer for sale and have made,
including the right to sublicense, any product or process which
utilizes any claim contained in any patent which (a) Xxxxx and CDI
jointly hold on the rain sensor, and/or (b) can be licensed,
sublicensed or assigned by CDI (without CDI having to pay any
royalty) for a rain sensor or a combined rain and fog sensor.
5. Non-competition Agreement. The parties acknowledge that
there are currently four License Areements between Xxxxx and CDI:
(1) the License Agreement dated November 6, 1989 originally
executed between Xxxxx, as licensor, and GTE Products Corporation,
as licensee, subsequently assigned by licensee to GTE Control
Devices Incorporated in July 1992 and subsequently assigned to CDI
in July 1994 which provides for the license of a solar sensor
invention (the "Solar Sensor Agreement"); (2) the Rain/Fog Sensor
Agreement, which provides for the license of a rain sensor
invention and a fog sensor invention; (3) the License Agreement
(Twilight Sensor) between CDI and Xxxxx dated April 3, 1995, which
provides for the license of a twilight sensor invention (the
"Twilight Sensor Agreement"); and (4) the License Agreement
(Quadrant Sensor) between CDI and Xxxxx dated the date of this
Agreement, which provides for the license of a quadrant sensor
invention (the "Quadrant Sensor Agreement"). (These four License
Agreements shall be collectively referred to as the "License
Agreements".)
Until March 31, 2001, or until all of the License Agreements
between Xxxxx and CDI shall have been terminated, whichever shall
first occur, Xxxxx shall not (individually, or as any employer,
proprietor, partner, stockholder, director, consultant, agent or
otherwise) own, manage, operate, participate in, perform services
for or otherwise carry on a business which is engaged in the
design, manufacture or sale of any Royalty Product, as defined in
each such License Agreement, in the United States, Canada, Mexico,
Europe, Japan or anywhere else in the world; provided, however,
that the restrictions set forth in this Section 5 shall not apply
with respect to any product, know-how or invention discovered by
Xxxxx and either offered to CDI for license, but declined by CDI or
for which CDI's license rights are validly terminated in accordance
with the provisions of such License Agreements.
Without limiting the right of CDI to pursue all other legal
and equitable rights available to it for violation of this Section
5 by Xxxxx, it is agreed that monetary damages cannot fully
compensate CDI for such a violation or continuing violation
thereof. It is the intent and understanding of each party hereto
that if, in any action before any court or agency legally empowered
to enforce this Section 5, any term, restriction, covenant or
promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise
shall be deemed modified to the extent necessary to make it
enforceable by such court or agent.
6. Registration of Option Shares. The parties acknowledge
that Xxxxx and his children currently hold an option to purchase
333,333 common shares of CDI granted under the Agreement to Grant
License, at a purchase price per share of $5.40 (the "Option
Shares").
(a) Upon the written request of Xxxxx, CDI shall, as soon as
practicable, use its diligent best efforts to effect all
such registrations, qualifications and compliances
(including, without limitations, the execution of an
undertaking to file post-effective amendments,
appropriate qualifications under the applicable blue sky
or other state securities laws and appropriate compliance
with exemptive regulations issued under the Securities
Act of 1933, as amended (the "Act"), or any other
governmental requirements or regulations including,
without limitation, Rule 415 promulgated thereunder,) as
may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such
Option Shares as are specified in such request. CDI
shall be obligated to file a registration statement
covering the Option Shares on Form S-8, and if Form S-8
is not available, on Form S-3, or a successor form to one
of those, if available to CDI, as soon as practicable,
and on any other form if such forms, or their successors
are not available, but in any event within ninety days,
after receipt of the request of Xxxxx; provided, however,
that if CDI shall furnish to Xxxxx a certificate signed
by the CEO of CDI stating that in the good faith judgment
of the Board of Directors it would be materially
detrimental to CDI and its stockholders for such
registration statement to be filed at the date filing
would be required and it is therefore essential to defer
the filing of such registration statement, CDI shall have
an additional period of not more than ninety days within
which to file such registration statement; and
(b) All expenses incurred in connection with any
registration, qualification or compliance pursuant to
this Section 6, including without limitation, all
registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for CDI shall
be borne by CDI; provided, however, that CDI shall not be
required to pay fees of legal counsel of Xxxxx or
underwriters' fees, discounts or commission relating to
the Option Shares included in the registration statement.
(c) In the case of a registration, qualification or
compliance effected by CDI pursuant to this Section 6,
CDI will keep Xxxxx advised in writing as to the
initiation of each registration, qualification and
compliance and as to the completion thereof. At its
expense, CDI will:
(i) Keep such registration, qualification or compliance
effective (with a prospectus at all times meeting
the requirements of the Act) for a period of at
least 26 months or until Xxxxx has completed the
distribution described in the registration
statement relating thereof, whichever first occurs;
(ii) Furnish such number of prospectuses and other
documents incident thereto as Xxxxx from time to
time may reasonably request; and
(iii) Amend or supplement the prospectus whenever
necessary.
(d) Xxxxx agrees to stop trading the Option Shares in any
period whenever Xxxxx obtains possession of material
non-public information not disclosed in or incorporated
by reference in the prospectus.
(e) If the Option Shares issuable and deliverable upon the
exercise of options are listed on any national securities
exchange, CDI shall use its reasonable best efforts to
cause, from and after such time as the option becomes
exercisable, all Option Shares reserved for issuance to
be listed on such exchange upon official notice of
issuance of such exercise.
(f) The grant of such option for the Option Shares and the
sale of the Option Shares contemplated hereunder is in
consideration of the license granted pursuant to the
Agreement to Grant License, as set forth in the Quadrant
Sensor License Agreement, and the royalty rate reduction
pursuant to this Agreement.
(g) Upon Xxxxx making deliveries to CDI pursuant to Section
7 of the "Option to Purchase 200,000 Class A Common
Shares of Control Devices" dated April 1, 1995 reflecting
such option to purchase Option Shares, CDI shall issue
and deliver to Xxxxx, the certificate or certificates
pursuant to such section within one business day, if
possible, but in any case not more than three business
days of receipt of such deliverables.
7. Successors and Assigns. This Agreement is intended to be
binding upon the successors and assigns of CDI and Xxxxx, and their
respective Affiliates. Neither CDI nor Xxxxx may assign this
Agreement without the consent of the other, except that CDI may
assign this Agreement together with a sale of business
transaction. This Agreement shall inure to the benefit of Xxxxx'x
heirs, beneficiaries and permitted assigns.
8. Applicable Law. This Agreement shall be construed,
interpreted and governed by the laws of Michigan.
9. Waiver of Breach. The failure by either party to
exercise a right or enforce an obligation hereunder shall not be
construed to be waiver of same by either party with respect to
future performance.
10. Severability. If any portion of this Agreement shall be
declared void or unenforceable by any court or administrative body
of competent jurisdiction, to the extent such portion is not
material to the underlying intent of the agreement, such portion
shall be deemed severable from the remainder of this Agreement,
which remainder shall continue in all respects valid and
enforceable. The parties mutually agree to cooperate in any
revision of this contract which may be necessary to meet the
requirements of the law.
11. Force Majeure. Neither party shall be under any
liability hereunder to the other party on account of any loss,
damage or delay caused by the elements, embargoes, failures of
carriers, acts of God or the public enemy or compliance with any
law, regulation or other governmental order, whether or not valid,
as long as the delay in performance under this Agreement is not
greater than the period that the above-mentioned actions or events
cause disruption.
12. Notices. Any notice, request, report or payment required
or permitted to be given or made under this Agreement by either
party shall be given by sending such notice by registered or
certified United States mail, return receipt requested, postage
prepaid, or by a national overnight courier service to the address
set forth below or such other address as such party shall have
specified by written notice given in conformity herewith. Any
notice given in accordance with the provisions of this Section
shall be effective on the date received, as indicated on the postal
service's return receipt, or the overnight courier's records and
any notice not so given shall not be valid unless and until
actually received as evidenced by competent, written records kept
in the normal course of business.
To Xxxxx: Xx. Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
To CDI: Control Devices, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, CEO
13. Valid Authorization. CDI represents and warrants that it
has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, and that
this Agreement will not conflict with any agreement or instrument
to which CDI is a party. Further, CDI acknowledges and agrees that
with respect to performance of its obligations under Section 6
above, time is of the essence.
IN WITNESS WHEREOF, the parties have duly and properly
executed and delivered this Agreement as of the date first written
above.
CONTROL DEVICES, INC.
______________________________ By: _________________________
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxxxx, CEO
Date:_______________, 1998 Date: ________________, 0000
XXXXXXXXXXXXXX
XXXXX XX XXXXX )
)
COUNTY OF )
Before me, _____________________ a notary public, the
______________________ day of ___________________, 199___,
appeared Xxxxx X. Xxxxxxxx, the chief executive officer of
Control Devices, Inc., who acknowledged the execution of the
foregoing agreement on behalf of such corporation.
______________________________
Signature
______________________________
Printed Name
My County of Residence:
_______________________
My Commission Expires:
_______________________
ACKNOWLEDGMENT
STATE OF MICHIGAN )
)
COUNTY OF )
Before me, _____________________ a notary public, the _____
day of _________________, 199___, appeared Xxxxxx X. Xxxxx, who
acknowledged the execution of the foregoing agreement in his
individual capacity.
______________________________
Signature
______________________________
Printed Name
My County of Residence:
_______________________
My Commission Expires:
_______________________
