LICENCING AGREEMENT
This Licensing Agreement (the "Agreement") is made and effective this 15th day
of August, 1998 by and between Adriatic Holdings Limited, a corporation duly
organized under the laws of Nevada and doing its principal place of business at
114 W. Magnolia Street, Suite 446, Bellingham, WA. (the "Buyer"), and J.A.
Industries (Canada) Inc., a corporation duly organized under the laws of British
Columbia and having its principal place of business at 2755 Lougheed Highway,
Suite 179, Port Coquitlam, B.C. (the "Seller") and is made with reference to the
following facts.
Seller has developed and owns all rights including the copyright, Industrial
Design and Patents, to certain Multiple Tiered Underground Electrical Junction
Boxes and related documents (the "Boxes"). Seller has developed substantial
goodwill and reputation associated with the Boxes.
Buyer wishes to purchase, and Seller wishes to sell, such Boxes and
documentation, the related goodwill and all other associated property rights,
including all copyrights, industrial design and patent and all rights to
enhanced, modified and updated versions and derivative works related thereto.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Transfer.
A. Boxes. Seller hereby sells, assigns, conveys and transfers to Buyer all
of Seller's right, title and interest in and to the following described Boxes:
The Multiple Tier Junction Box represented by United States Patent #5,142,102
filed on August 25, 1992. The Boxes shall include, but not limited to:
(i) The Boxes in all versions and all forms of expression thereof,
including but not limited to the Boxes diagrams, documentation, previous
versions, notes, other information relating to the Boxes; and all
copyrights, trade secrets, patentable inventions, proprietary rights and
intellectual property contained therein or connected therewith, including
without limitation Seller's copyright in the Boxes;
(ii) All existing copies of the Boxes in Seller's possession or
control; and
(iii) All of Seller's interest in the license(s) of the Boxes
including original copies of all outstanding license agents granted to the
following, if any: None.
B Delivery. The Boxes shall be delivered to Buyer within 7 days following
execution of this Agreement. Seller shall from time to time, but without further
consideration than that amount agreed upon in paragraph 2.A. of this Agreement,
execute and deliver such
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instruments or documents and take such other action as is reasonably necessary
which Buyer may request in order to more effectively carry out this Agreement
and to vest in Buyer the Boxes and title thereto and the United States Patent.
2. Royalties.
In consideration of the rights granted to Buyer in paragraph 1 above, Buyer
shall pay Seller a licensing fee of Five United States Dollars ($5.00 USD) for
every Junction Box sold by Buyer. Buyer shall provide Seller with a Minimum
Annual Licensing of $2,000 USD per year for 1998 and $10,000 USD per year for
the life of the Agreement ("Minimum Licensing Fee"), payable annually. Such
Minimum Licensing Fee is equal to the sale of four hundred (400) Boxes in 1998
and two thousand (2,000) Boxes each subsequent year. However, in the event that
Buyer is unable to sell the required number of Boxes in any particular year, the
Minimum Licensing Fee shall be deemed fully earned when paid. Furthermore,
within 10 days from the date of Buyer's failure to pay the Minimum Licensing
Fee, Seller may demand that Buyer return to Seller any Boxes in Buyer's or its
agent's possession and reassign all patents, trademarks and other rights
associated, either directly or indirectly, with the Boxes. In accordance with
Seller's demand, Buyer hereby agrees to return any such Boxes and reassign all
patents, trademarks and other rights associated, either directly or indirectly,
with the Boxes.
3. Representations and Warranties of Seller.
Seller represents the following:
A. Seller has good and marketable title to the Boxes, including the Patent
to the Boxes, and has all necessary rights to enter into this Agreement without
violating any other agreement or commitment of any sort. Seller does not have my
outstanding agreements, understandings, written or oral, concerning the Boxes or
the patent, except as identified in Section 1.A. (iii) above. The Boxes do not
in fringe or constitute a misappropriation of any trademark, patent, copyright,
trade secret, proprietary right or similar property right. Seller agrees to
defend, indemnify and hold Buyer, its subsidiaries, affiliates and licensees
harmless against any action, suit, expense, claim, loss, liability or damage
based on a claim that the Boxes infringes or constitutes a misappropriation of
any trademark. patent, copyright, trade secret, proprietary right or similar
property right. Buyer shall give Seller prompt written notice of any such claim.
Seller shall assume responsibility for defending any suit or proceeding brought
against Buyer based on any claim that the Boxes infringes or constitutes a
misappropriation of any trademark, patent copyright, trade secret, proprietary
right or similar property right; provided, however, that Buyer shall give Seller
prompt notice in writing of the assertion of any such claim and of the threat or
institution of any such suit or proceeding, and all authority, information and
assistance required for the defense of the same. Seller shall pay all damages
and costs awarded against Buyer, but shall not be responsible for any costs,
expense or compromise incurred without Seller's consent. All written
correspondence between Buyer and Seller shall be made at the addresses found in
paragraph 13. of this Agreement.
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B. No Liens. The Boxes are not subject to any lien, encumbrance, mortgage
or security interest of any kind. Seller's conveyance of the Boxes shall be free
of any such interest, excepting only the interests of the third party licenses
identified in Section l.A. (iii) above, if any.
C. Authority Relative to this Agreement. This Agreement is a legal, valid
and binding obligation of Seller. The execution and delivery of this Agreement
by Seller and the performance of and compliance by Seller with the terms and
conditions of this Agreement will not result in the imposition of any lien or
encumbrance on any of the Assets, and will not conflict with or result in a
breach by Seller of any of the terms, conditions or provisions of any order,
injunction, judgment, decree, statute, rule, or regulation applicable to Seller,
the Boxes, or any note, indenture, or other agreement, contract, license or
instrument by which any of the Boxes may be bound or affected. No consent or
approval by any person or public authority is required to authorize or is
required in connection with, the execution, delivery or performance of this
Agreement by Seller.
D. No Default. There is no outstanding default by Seller or any third party
license of the Boxes of any material obligation in the licenses identified in
Section l.A.(iii) above, if any.
E. Litigation. Seller is currently the defendant in a lawsuit with regards
to the patent of its product. The statement of claims, among other things,
alleges that the Canadian patent issued on the electrical junction boxes is
invalid. The Seller feels that the suit is without merit but at this time does
not have the necessary funds to adequately defend itself though it has entered a
statement of defence. If the plaintiffs were successful in this action the
validity of the patent on the underground junction boxes would be declared
invalid and not provide the Buyer with protection from competition. If the
patent is declared invalid, the Buyer has the option to cancel the licensing
agreement unconditionally.
4. No Brokers.
All negotiations relative to this Agreement have been carried on by Buyer
directly with Seller, without the intervention of any person as the result of
any act of Buyer or Seller (and, soft as known to either party, without the
intervention of any such person) in such manner as to give rise to any valid
claim against the parties hereto for brokerage commissions, finder's fees or
other like payment.
5. Consents, Further Instruments and Cooperation.
Buyer and Seller shall each use their respective best efforts to obtain the
consent or approval of each person or party, if any, whose consent or approval
shall be required to permit it to consummate the transactions contemplated
hereby, and to execute and deliver such instruments and to take such other
action as may be required to carry out any transaction contemplated by this
Agreement. Seller shall execute, or cause its employees and agents to execute,
any patent or
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copyright application or other similar document or instrument, following Buyer's
reasonable request.
6. Limitation of Liability.
OTHER THAN AS SET FORTH IN SECTION 3.A. OR UPON THE BREACH OF ANY WARRANTY,
NEITHER BUYER NOR SELLER SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR ANY PERFORMANCE HEREUNDER, EVEN IF SUCH PARTY HAS ADVANCE NOTICE OF THE
POSSIBILITY OF SUCH
DAMAGES, WHETHER BASED ON A THEORY OF CONTRACT, TORT, STRICT LIABILITY OR
OTHERWISE.
7. Buyer's Use of Boxes.
Buyer may, at its sole discretion, market, license and sell the Boxes under
names and trade names of its own choosing, and may develop updated and modified
versions and derivative works of the Boxes without attribution of authorship to
Seller. Buyer shall own all rights and title, including copyrights and patents,
in and to may updated and modified versions and derivative works of the Boxes
without requiring permission from Seller and without incurring payment
obligations in addition to those provided herein. Buyer may market or use the
Boxes in whatever manner and at whatever prices it sees fit. Except in the event
of a breach of this Agreement by either party, seller shall have no rights in
any updated or modified versions (including on any patents) relating to the
Boxes.
8. Seller's Non-Use of the Assets.
Seller retains no rights whatsoever in the Boxes and does not retain the right
to use the Boxes or any material relating to the Boxes for any purpose,
personal, commercial, or otherwise, Seller furthermore shall maintain all
information relating to the Boxes or use of the Boxes in confidence and shall
not disclose any aspect of the Boxes to any third party without the prior
written consent of Buyer. Seller agrees not to participate in any activities
relating to development, marketing or sale of Boxes or other material that would
compete, directly or indirectly, with Buyer's marketing or distribution of the
Boxes for a period of twenty-four (24) months.
9. Term. The term of this licensing agreement shall be for a period of ten years
from the date first written above subject to Paragraph 2. Royalties.
10. Governing Law.
This Agreement shall be construed and enforced in accordance with the laws of
the State of
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Nevada.
11. Assignment.
Seller may not assign this Agreement or any obligation herein without the prior
written consent of Buyer. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective permitted heirs,
executors, personal representatives, successors and assigns.
12. Entire Agreement.
This Agreement contains the entire understanding of the parties, and supersedes
any and all other agreements presently existing or previously made, written or
oral, between Buyer and Seller concerning its subject matter. This Agreement may
not be modified except in writing executed by both parties.
13. Severability.
If any provision of this Agreement is declared by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions of
this Agreement nevertheless will continue in full force and effect without being
impaired or invalidated in any way.
14. Notices.
Any notices required or permitted to be given under this Agreement shall be
denied sufficiently given if mailed by registered mail, postage prepaid,
addressed to the party to be notified at the addresses shown below, or at such
other address as may be furnished in writing by such party to the notifying
party.
If to Buyer:
Adriatic Holdings Limited
114 W. magnolia Street
Suite 446
Bellingham, WA 98225
If to Seller:
J.A. Industries (Canada) Inc.
34A-2755 Lougheed Highway,
Suite 179
Port Coquitlam B.C.
V3B 5Y9 Canada
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15. Relationship of the Parties.
The relationship between Buyer and Seller under this Agreement is intended to be
that of buyer and seller, and nothing in this Agreement is intended to be
construed so as to suggest that the parties hereto are partners or joint
ventures, or either party or its employees are the employee or agent of the
other. Except as expressly set forth herein, neither Buyer nor Seller has any
express obligation on behalf of or in the name of the other to bind the other in
any contract, agreement or undertaking with any third party.
16. Headings.
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Adriatic Holdings Limited J.A.. Industries (Canada) Inc.
By: /s/ Robert Knight By: /s/ Richard Klassen
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Robert Knight Richard Klassen
President President