Exhibit 10.3
DEVELOPMENT AND MARKETING AGREEMENT
THIS DEVELOPMENT AND MARKETING AGREEMENT ("Agreement") is made as of
this 15th date of December, 1995, (the "Effective Date") by and between M.C.D.
Limited, a corporation formed under the laws of the United Kingdom ("MCD") and
March Motors Limited, a corporation formed under the laws of the United Kingdom
(the "Company").
WHEREAS, MCD is engaged in the business of designing, developing and
selling high performance engines for performance motor vehicles including
motorcycles.
WHEREAS, the Company is interested in producing, marketing and
selling superbikes for sale to the general public;
WHEREAS, the Company is also interested in producing, marketing and
selling engines for use in Indy race cars; and
WHEREAS, MCD and the Company are desirous of working together
cooperatively to design and develop piston engines for use in the Company's
superbike and for sale for use in Indy race cars.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties hereto agree as follows:
1. Definitions.
As used herein, the following terms shall have the following
meanings:
a. "Affiliates" means corporations or other business
organizations that, either directly or through one or more intermediaries,
control, are controlled by, or are under common control with, a party hereto.
b. "Control" means ownership of 50% or more of the voting
securities of an entity.
c. :Development Program" means MCD's efforts to design and
develop and produce working prototypes of the following engines: (i) a 750cc, 4
cylinder, twin-cam engine, drivetrain and gearbox for use with the Company's
superbike motorcycle, and (ii) an Indianapolis PPG regulation race engine.
d. "Engine(s)" means, individually or collectively, that
certain 750cc, 4 cylinder, twin-cam engine, drivetrain and gearbox for use with
the Company's superbike motorcycle and that certain Indianapolis PPG regulation
race engine, such as developed by MCD pursuant to the Development Program set
forth in this Agreement.
e. "Intellectual Property" means copyrights, patents,
trademarks and trade secrets, whether or not registered,. filed, applied for or
the like, and all related rights.
f. "MCD Technology" means the proprietary technology and
related Intellectual Property of MCD, and improvements and modifications to such
technology, necessary to develop and produce the Engines.
g. "Specifications" means the drawings, specifications and
vendor lists for the design, performance and manufacturability of the Engines,
which are to be developed by MCD hereunder.
2. Development Program
MCD agrees to use all commercially reasonable efforts to
complete the Development Program with ten (10) months of the Effective Date. The
parties agree that the target cost to produce each motorcycle Engine shall be
Four Thousand Pounds (4,000), and the target cost to produce each Indy race car
Engine shall be Thirty-three Thousand Pounds (33,000). The parties agree that
the estimated cost of designing the Engines is approximately One Hundred
Thousand Pounds (100,000). The Company hereby agrees to pay MCD the sum of One
Hundred Thousand Pounds (100,000) in consideration of MCD's continuing
compliance with the Development Program. Such amount will be payable in ten (10)
equal installments of Ten Thousand Pounds (10,000) each, with the first such
installment being due and payable on December 15, 1995, and the remaining
installments being due and payable on the first day of each succeeding month,
such installment payments shall be contingent upon and subject to MCD's
continued compliance with the Development Program. Upon each installment payment
made by the Company pursuant to this Section 2, the Company shall obtain and
retain all right, title and interest in and to the Specifications, the Engines
and all Intellectual Property therein. Except as otherwise provided for in the
Agreement, MCD shall be responsible for all costs and expenses incurred in
carrying out the Development Program. MCD agrees to consult with the Company on
a regular basis regarding the progress of the Development Program, and will give
the Company the opportunity to review and approve the functional specifications
prior to commencing the engineering design phase of the Development Program. In
connection with the Development Program, MCD agrees to assist in creating an
operating manual for the Engines which the Company will distribute to purchasers
and end-users of the vehicles which the Engines are to be a part. If MCD fails
to develop the Engines within ten (10) months of the Effective Date, the Company
shall have the right to terminate this Agreement pursuant to Section 12
hereunder.
3. Ownership of Technology.
a. MCD Technology. MCD owns and possesses all right, title and
interest in the MCD Technology. MCD has not licensed any of the MCD Technology
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to any third party. MCD has taken all necessary action to protect the MCD
Technology. MCD has not received any notice of, nor are there any facts known to
MCD which indicate a likelihood of, any infringement or misappropriation by, or
conflict from, any third party with respect to the MCD Technology; no claim by
any third party contesting the validity of the MCD Technology has been made, is
currently outstanding or, to the best knowledge of MCD, is threatened; MCD has
not received any notice of any infringement, misappropriation or violation by it
of any intellectual property rights of any third parties and MCD has not
infringed, misappropriated or otherwise violated any such intellectual property
rights; and no infringement, illicit copying, misappropriation or violation has
occurred or will occur with respect to the products currently under development
(in their present state of development), including the Engines, or with respect
to the conduct of the MCD's business as now conducted. The parties agree that
MCD shall retain all right, title and interest in and to the MCD Technology and
all Intellectual Property therein, subject only to the license granted
hereunder.
b. Company Technology. The parties agree that the Company
shall retain all right, title and interest in and to the Specifications, the
Engines, all Intellectual Property therein, and after the third anniversary of
this Agreement, all molds, tooling, casts and equipment used to manufacture the
Engines, subject only to the royalty obligation.
c. Technical Assistance. MCD will provide knowledgeable and
competent personnel as reasonably necessary (at its own expense) to complete the
development of the Engines and to ensure that the Engines operate in accordance
with the Specifications. MCD hereby agrees to attend bi-weekly progress meetings
with March Group PLC to discuss the integration of the motorcycle Engine into
the specifications for the motorcycle which shall utilize such Engine. MCD also
agrees to provide, at no additional cost, knowledgeable and competent personnel
as reasonably necessary, to assist the Company in all phases of assembly and
manufacture of the Engines.
4. License and Royalty.
a. License to the Company. Subject to the terms and conditions
of this Agreement, MCD hereby grants to the Company, and the Company hereby
accepts from MCD, a royalty-free, perpetual, irrevocable, exclusive and
worldwide license to use the MCD Technology in connection with the manufacture,
marketing and sale of the Engines.
b. The Company agrees to pay to MCD royalties at the rate of
two and one-half percent (2.5%) of the net selling price of motorcycles
utilizing the motorcycle Engine sold by the Company. For this purpose, "net
selling price" shall mean the dealer invoice price for each motorcycle sold by
the Company utilizing the Engine, less returns, allowances and shipping charges.
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c. The Company agrees to pay to MCD royalties at the rate of
two and one-half percent (2.5%) of the net selling price of Indy race car
Engines sold by the Company. For this purpose, "net selling price" shall mean
the dealer invoice price for each Indy race car Engine sold by the Company, less
returns, allowances and shipping charges.
d. All royalties calculated pursuant to Sections 4(b) and 4(c)
shall be paid to MCD net of any tax or charge imposed by and United Kingdom
government or political subdivision thereof except for income tax or tax in lieu
of income tax imposed thereon and required to be withheld by the Company
pursuant to valid governmental authority. With respect to any such tax properly
withheld, the Company shall furnish MCD with receipts showing the withheld taxes
to have been duly deposited with the taxing authority. The Company shall be
solely responsible for payment of any value added tax on this Agreement or any
payments made pursuant to this Agreement.
e. Royalties are to be paid in monthly installments (less
taxes as provided in Section 4(d) within thirty (30) days after the Company's
receipt of final payment for any Indy race car Engine or motorcycle utilizing
the motorcycle Engine developed pursuant to this Agreement. Each installment
will be payable in British Pounds by wire transfer to a bank account designated
by MCD.
f. For as long as royalties are due under this Agreement, the
Company will keep true and accurate records adequate to permit royalties due to
MCD to be computed and verified. The records will be open at all reasonable
times during business hours for inspection by a duly authorized representative
of MCD to the extent necessary for the determination of the accuracy of the
reports made hereunder. MCD's representative will have the right to make copies
of the relevant records.
5. Production Equipment. MCD shall provide the Company with a list
of vendors who will develop the molds, tooling, dies and casts to produce
component parts for the manufacture of the Engines. All such molds, tooling,
dies and casts shall be referred to in this Agreement as the "Production
Equipment." From the Effective Time until the third anniversary of this
Agreement, the Production Equipment shall be used by the Company, MCD, any
affiliate of the Company or MCD and their respective subcontractors for the sole
and exclusive benefit of the Company. After the third anniversary of this
Agreement, the Production Equipment shall become the property of the Company and
shall be used by the Company or its subcontractors exclusively for the
development and manufacture of the Engines pursuant to the Company's purchase
orders.
6. Marketing Obligations
a. Best Efforts to Promote Marketing. At all times during the
term of this Agreement, both parties will use best efforts to promote the
manufacture, sale, marketing and distribution of the motorcycles utilizing the
Engines.
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b., Marketing Practices. Both parties agree to (i) conduct
business in a manner that reflects favorably at all times on the good name,
goodwill and reputation of the other party, (ii) not engage in deceptive,
misleading or unethical practices that are or might be detrimental to the other
party, (iii) not make any false or misleading representation with regard to the
other party or its products, (iv) not publish or utilize or cooperate in the
publication or utilization of any misleading or deceptive advertising material
that relates in any way to the other party and its products, (v) not make any
representation or warranty to anyone with respect to the specifications,
features or capabilities of the other party's products that are inconsistent
with the literature distributed by the other party, including all disclaimers
contained in such literature, and (vi) not make any warranty or representation
to anyone that would give the recipient any claim or right of action against the
other party.
7. Additional Covenants of MCD
a. Agreement not to Compete
(i) Except for MCD's existing relationship with MotorradUnd
Zweiradwerk GmbH, and as otherwise contemplated by this Agreement, MCD agrees
that during the term of this Agreement and for a period of five (5) years after
the termination of this Agreement, it will not, directly or indirectly, engage
in competition with the Company in any manner or capacity (e.g. as an advisor,
principal, agent, partner, officer, director, stockholder, employee, member of
any association or otherwise) in any phase of the business which the Company is
conducting during the term of this Agreement.
(ii) The obligations of MCD under Section 7(a)(i) shall
apply to any geographic area in which the Company (y) has engaged in business
during the term of this Agreement through production, promotional, sales or
marketing activity, or otherwise, or (z) has otherwise established its goodwill,
business reputation, or any customer relations.
(iii) Ownership by MCD as a passive investment, of less
than 1% of the outstanding shares of capital stock of any corporation listed on
a securities exchange or publicly traded on any recognized market shall not
constitute a breach of this Section 7.
(iv) MCD further agrees that during the term of this
Agreement it will not, directly or indirectly, assist or encourage any other
person in carrying out, directly or indirectly, any activity that would be
prohibited by the foregoing provisions of this Section 7 if such activity were
carried out by MCD, either directly or indirectly. In particular, MCD agrees
that it will not, directly or indirectly, induce any employee of MCD to carry
out, directly or indirectly, any such activity.
8. Confidentiality
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a. Obligation. Each party shall keep confidential and not
disclose to any third party or use for its own benefit, except as expressly
permitted herein, or for the benefit of any third party, any of the following
information disclosed by the other party to it (collectively "Confidential
Information"): (I) any information provided to it by the other party marked with
a proprietary, confidential or other similar notice, or orally disclosed to it
by the other party and followed by a writing within thirty (30) days of such
oral disclosure indicating said information was confidential, and (ii) even if
not so marked, information that is reasonably understood by it to be
confidential, including the MCD Technology, on the one hand, and the
Specifications and the Company Technology, on the other hand.
b. Exclusions. The term "Confidential Information" shall not
include information which (i) is or becomes generally known or available through
no act or failure to act by the receiving party, (ii) is already known by the
receiving party at the time of receipt as evidenced by its records, (iii) is
hereafter furnished to the receiving party by a third party, as a matter of
right and without restriction on disclosure, (iv) is disclosed by written
permission of the party disclosing the Confidential Information, or (v) is
required to be disclosed by court order or law, but in such event notice shall
be provided at least ten (10) days in advance of such disclosure.
c. Access to Information. Each party shall limit access to
Confidential Information to those of its employees or agents (including
subcontractors) who have a need for such Confidential Information, or to its
sublicensees to the extent necessary to allow such sublicensee to fully use
their sublicenses, and who are under a written obligation to keep such
information confidential. Such written obligation shall be at least as
restrictive as those obligations specified in Section 8(a) above.
d. Injunctive Relief. The parties acknowledge that a breach or
threatened breach of this Section 8 by any of the parties may cause the
nonbreaching party to suffer irreparable harm and injury such that no remedy at
law will adequately compensate the other party. Thus, the nonbreaching party
shall have the right to obtain injunctive relief with respect to such breach or
threatened breach, in addition to any other available remedy or relief.
9. Warranties
a. Warranties by MCD. MCD warrants that, for a period of five
(5) years from the date of delivery of the prototype Engines, such prototypes
shall conform to the Specifications and shall be free from defects in materials
and workmanship.
b. Warranty Pass-Through. The Company is permitted to provide
to its end-users the warranty granted to it hereunder. The Company hereby agrees
to indemnify and hold harmless MCD for any warranty or representation made by
the Company that exceeds or that is otherwise inconsistent with such warranty.
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c. Survival. The provisions of this Section 9 shall survive
the expiration or termination of this Agreement for any reason.
10. Intellectual Property Indemnification
MCD shall indemnify the Company for any damages finally awarded
or settlement amounts paid in respect of any loss, liability or expense suffered
or incurred by the Company or any of its customers for any patent, copyright,
trade secret or similar infringement claim brought against the Company or any of
its customers in respect of the Company's use or such customer's use of the
Engines or any of the MCD Technology (but only to the extent that such
infringement claim is related to the Engines), or any material supplied by MCD
to the Company pursuant to this Agreement. The Company shall notify MCD as soon
as practicable of any such infringement claim brought against either the Company
or any of its customers. If the Company defends such a claim, then, if requested
by the Company, MCD shall provide the Company with full documentation and
cooperation to assist the Company in defending such claim. If any item furnished
hereunder, including without limitation the Specification or the Engines
supplied hereunder, is in MCD's opinion likely to or does become the subject of
a claim for infringement of any patent, copyright or other proprietary right,
MCD may, at its option and expense, procure for the Company or any affected
customer, the right to continue using the same, or modify it so that it becomes
non-infringing, but without diminishing MCD's obligations hereunder.
11. Term, Termination and Effect of Termination
a. Term. This Agreement shall commence on the Effective Date
and, subject to earlier termination as provided herein, shall continue until the
date which is five (5) years after the Effective Date. The Agreement shall be
renewable for additional one (1) year periods upon mutual written agreement by
the parties at least ninety (90) days prior to the expiration of the
then-current term.
b. Termination on Bankruptcy. Either party may terminate this
Agreement upon written notice if a petition for relief under any bankruptcy law
or legislation is filed by or against the other party, the other party makes an
assignment for the benefit of creditors, or a receiver is appointed for an or a
substantial portion of any of the other party's assets, and such petition,
assignment or appointment is not dismissed or vacated within thirty (30) days.
c. Termination for Failure to Develop Specifications. If the
Company terminates this Agreement for failure by MCD to develop the
Specifications or the Engines as provided herein, this Agreement shall be
terminated and the Company shall be entitled to all rights in and to the
Specifications, the Engines, all molds, tooling, dies, casts, and all
Intellectual Property therein, developed to date.
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d. Effect of Material Breach by MCD. If MCD materially
breaches this Agreement, the Company shall have the right to terminate this
Agreement and the Company shall be entitled to all rights in and to the
Specifications, the Engines, all molds, tooling, dies, casts and all
Intellectual Property therein, developed to date, and the continuing right to
the license granted to the Company in Section 4(a) relating to the MCD
Technology.
e. Effect of Material Breach by the Company. If the Company
materially breaches this Agreement and fails to correct such default within
sixty (60) days after written notice of such default if provided to the Company
by MCD, MCD shall have the right, at its sole option, to terminate this
Agreement and the Company shall be entitled to all rights in and to the
Specifications, the Engines, all molds, tooling, dies, casts and all
Intellectual Property therein, developed to date, and the continuing right to
the license granted to the Company in Section 4(a) relating to the MCD
Technology.
f. Surviving Rights. Termination or expiration of this
Agreement shall not affect any other rights of the parties which may have
accrued up to the date of such termination or expiration and, in addition, (I)
no party shall be relieved of any obligation for any sums due to the other
party, (ii) the Company shall be entitled to take physical possession of and
ownership of all Specifications, the Engines, all molds, tooling, dies, casts
and all Intellectual Property therein, developed to date, and the continuing
right to the license granted to the Company in Section 4(a) relating to the MCD
Technology, and (iv) no party shall be relieved of its obligations under
Sections 9 (Confidentiality), 10 (Warranties), 11 (Intellectual Property
Indemnification), 13 (Limitation of Liability, and 14(k) (Choice of Governing
Law).
13. Compliance With Laws
In connection with and in furtherance of its marketing and
manufacturing activities hereunder, each party shall be responsible for
obtaining, and shall use all reasonable commercial efforts to obtain, any and
all required governmental authorizations, including without limitation any
import licenses and foreign exchange permits, and, if applicable, shall be
responsible for filing and registering this Agreement with the appropriate
authorities.
14. Miscellaneous.
a. Relationship of Parties. The parties are not employees or
legal representatives of the other party for any purpose. Neither party shall
have the authority to enter into any contracts in the name of or on behalf of
the other party.
b. Further Assurances. The parties agree that each party has the
exclusive right to enjoin any infringement by a third party of any Intellectual
Property of the party related to such party's technology. In the event that any
unlawful copying of the Specifications or the
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Engines, infringement of a party's rights in the Specifications or the Engines,
or infringement or registration by a third party of the rights of MCD or the
Company comes to the attention of either party, such party shall immediately
inform the other in writing, stating the full facts of the infringement or
registration known to it, including the identity of the suspected infringer or
registrant, the place of the asserted infringement or registration and evidence
thereof. Each of the parties agree to cooperate fully with the other party at
the expense of such other party if such other party sues to enjoin such
infringements or to oppose or invalidate any such registration.
d. Nonassignability; Binding on Successors. Either party may
assign or otherwise transfer this Agreement to an Affiliate or in connection
with a sale of all or substantially all of its assets, or of its business,
whether via merger or otherwise. Except as permitted in the preceding sentence,
neither party shall assign any of its rights or obligations under this Agreement
without the express written consent of the other party, which consent shall not
unreasonably be withheld. Any attempted assignment under this Agreement without
such consent shall be void. In the case of any permitted assignment or transfer
of or under this Agreement, this Agreement or the relevant provisions shall be
binding upon the executors, heirs, representatives, administrators and assigns
of the parties hereto.
e. Severability. In the event any provision of this Agreement is
held to be invalid or unenforceable, the valid or enforceable portion thereof
and the remaining provisions of this Agreement will remain in full force and
effect.
f. Force Majeure. Neither party shall be liable to the other for
its failure to perform any of its obligations under this Agreement, except for
payment obligations, during any period in which such performance is delayed
because rendered impracticable or impossible due to circumstances beyond its
reasonable control, including without limitation earthquakes, governmental
regulation, fire, flood, labor difficulties, civil disorder, and acts of God,
provided that the party experiencing the delay promptly notifies the other party
of the delay.
g. Waiver. Any waiver (express or implied) by either party of
any breach of this Agreement shall be in writing and shall not constitute a
waiver of any other of subsequent breach.
h. Entire Agreement Amendment. This Agreement and the exhibits
attached hereto constitute the entire, final, complete and exclusive agreement
between the parties and supersede an previous agreements or representations,
written or oral, with respect to the subject matter of this Agreement. This
Agreement may not be modified or amended except in a writing signed by a duly
authorized representative of each party.
i. Counterparts. This agreement may be executed in counterparts
with the same force and effect as if each of the signatories had executed the
same instrument.
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j. Notice. All notices, communications, requests, demands,
consents and the like required or permitted under this Agreement will be in
writing and will be deemed given and received (I) when delivered personally,
(ii) when sent by confirmed telecopy, (iii) ten (10) days after having been duly
mailed by first class, registered or certified mail, postage prepaid, or (iv)
three (3) business days after deposit with a commercial overnight carrier, with
written verification of receipt. All notices will be addressed as follows:
If to MCD:
Attention:
Telephone"
Telecopy:
With a copy to:
Attention:
Telephone:
Telecopy:
If to the Company:
Attention:
Telephone:
Telecopy:
With a copy to:
Xxxxxx & Xxxxxxx P.L.L.P.
Pillsbury Center South
000 X. Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
XXX
Attention: Xxxxxx X. Xxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as the person to whom notice is to be given may have
furnished to the other in writing in accordance herewith, except that notices of
change of address will be effective only upon receipt. A notice given by any
means other than as specified herein will be deemed duly given when actually
received by the addressee.
k. Choice of Governing Law, Arbitration. This Agreement is made
in accordance with and shall be governed and construed under the laws of the
United Kingdom, as applied to agreements executed and performed entirely in the
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United Kingdom. The official text of this Agreement and any Exhibit or any
notice given or accounts or statements required by this Agreement shall be in
English. In the event of any dispute concerning the construction or meaning of
this Agreement, reference shall be made only to this Agreement as written in
English and not to any other translation into any other language. Any dispute or
difference arising between the parties hereto will be referred to binding
arbitration to be conducted in London, England in accordance with the
International Chamber of Commerce. The aware of the arbitrator(s) shall be
enforceable in any court having jurisdiction over the party (or over the
property of the party) against whom enforcement is sought.
l. Rights and Remedies Cumulative. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any other
rights and remedies provided by law or otherwise.
m. Captions and Section References. The section headings
appearing in this Agreement are inserted only as a matter of convenience and in
no way define, limit, construe or describe the scope or extent of such section
or in any way affect such section..
n. Authority to Enter Into and Execute Agreement; Prior Grants.
Each party represents and warrants to the other that it has the right, full
power and lawful authority to enter into this Agreement for the purposes herein
(including the granting of licenses under this Agreement) and to carry out its
obligations hereunder. Each party further warrants to the other that it has no
other outstanding agreements or obligations inconsistent with the terms and
provisions hereof and that it has not made any prior grants of rights in or to
the MCD Technology, the Specifications and the Engines, on the one hand, or the
Company Technology, on the other hand, to any third party which are inconsistent
or would interfere in the performance of this Agreement.
o. Publicity. All notices to third parties and an other
publicity concerning this Agreement or its subject matter shall be jointly
planned and coordinated between the parties. Neither party shall act
unilaterally in this regard without the prior written approval of the other
party, which approval shall not be unreasonably withheld, and which shall be
deemed to be given when disclosure is specifically required by law. All related
communications within each party's organization shall be of a confidential
nature.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
M.C.D. Limited
By: /s/ Xx Xxxxxxx
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Its: Principle
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March Motors Limited
By: /s/ Xxxxxx Xxxxxxxxx
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Its: Managing Director
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