EXHIBIT 10.29
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT is by and between Libertyville Saddle Shop, Inc.
(hereinafter "Libertyville"), an Illinois corporation having its principal place
of business at 306 Peterson Road, P.O. Box M, Libertyville, Illinois 60048-4913
and Dover Saddlery, Inc. (hereinafter "Dover"), a Delaware corporation having
its principal place of business at P.O. Box 1100, 525 Great Road, Littleton,
Massachusetts 01460.
WHEREAS, Libertyville is the owner by assignment of United States Patent
No. 5,125,220 (the '220 patent) entitled "Horse Blanket" which was granted on
June 30, 1992 and is currently in force.
WHEREAS, on December 18, 2002, Libertyville filed a Complaint against
Dover in the United States District Court for the Northern District of Illinois,
Eastern Division (Civil Action No. 02 C 9193) alleging that Dover is
manufacturing, selling, offering to sell, and/or importing into the United
States, horse blankets which infringe one or more of the seventeen claims of
the '220 patent and seeking, inter alia, an Order permanently enjoining Dover
from further acts of infringement of the '220 patent and award of damages
adequate to compensate Libertyville for Dover's past infringement of the '220
patent.
WHEREAS, on January 28, 2003, Dover filed an Answer, Affirmative Defenses
and a counterclaim seeking, inter alia, Declaratory Judgments that the '220
patent is not infringed by Dover and that the '220 patent is invalid and
unenforceable.
WHEREAS, Libertyville and Dover now desire to hereby settle the pending
litigation.
NOW THEREFOR, in consideration of the mutual undertakings set out and
under good and valuable consideration, the parties agree as follows:
1. DISMISSAL: Within seven (7) days of the execution of this
Agreement, the parties agree to jointly seek an Order of Dismissal
of all claims and counterclaims in Civil Action No. 02 C 9193, with
prejudice, from the United States District Court for the Northern
District of Illinois in order to terminate the pending litigation.
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2. PAYMENT: Dover may make, have made for it, use, lease or sell any
Dover blankets covered by the '220 patent and Dover agrees to pay
Libertyville an initial sum of $50,000 by December 15, 2003.
3. MINIMUM PAYMENT PERIOD: For the first four years of this
Agreement, i.e.: (1) December 1, 2003 to November 30, 2004; (2)
December 1, 2004 to November 30, 2005; (3) December 1, 2005 to
November 30, 2006; and (4) December 1, 2006 to November 30, 2007,
Dover (and any of its affiliates or subsidiaries, including Smith
Brothers) agrees to pay Libertyville further consideration of $1.50
per unit sold and shipped in each said period for any and all Dover
blankets which incorporate a dual front closure system for the front
flaps of the blanket having an inner Velcro(R) type fabric fastener
in combination with an outer adjustable strap fastener as covered by
the '220 patent.
4. MINIMUM PAYMENT: The minimum payment by Dover to Libertyville
during the four years specified in Paragraph 3, per year, shall be
$15,000.00 if the pertinent claims of the '220 patent remain valid
and enforceable.
5. NO MINIMUM PAYMENT AFTER FOUR (4) YEAR PERIOD: For the fifth
through eighth years of the life of the '220 patent, namely: (5)
December 1, 2007 to November 30, 2008; (6) December 1, 2008 to
November 30, 2009; (7) December 1, 2009 to November 30, 2010; and
(8) December 1, 2010 to August 30, 2011 (the expiration date of the
'220 patent), Dover may continue to make, have made for it, use,
lease or sell blankets which incorporate a dual front closure system
as described above and, in the event Dover so elects to continue
making, having made for it, using, leasing or selling, Dover will
continue to pay Libertyville a consideration of $1.50 per unit sold
and shipped. No minimum payment will apply during the fifth and
subsequent years.
6. DUE DATES OF PAYMENTS: Payments under Paragraphs 3, 4 and 5 above
shall be submitted to Libertyville no later than ninety (90) days
following the end of each yearly period specified.
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7. FINANCIAL RECORDS AND INSPECTIONS: Dover agrees to keep suitable
financial records for the purpose of furnishing Libertyville with an
accountant-certified, confidential annual report of (a) the Model
Numbers for the blankets which Dover sold and shipped in the prior
yearly period that incorporate a dual front closure system for the
front flaps of the blanket having an inner Velcro(R) type fabric
fastener in combination with an outer adjustable strap fastener as
covered by the '220 patent; and (b) the total number of such
blankets sold and shipped in the prior yearly period. This
accountant-certified confidential annual report will also be
provided to Libertyville no later than ninety (90) days following
the end of each yearly period specified.
To enable Libertyville to verify the accuracy of such financial
reports, if deemed appropriate, Dover agrees that an independent
certified public accountant of Libertyville and Dover's selection,
and at Libertyville's expense, may inspect all reports of Dover's
which relate to blanket sales and shipments during one or more prior
annual periods upon three (3) days advance notice to Dover and
during reasonable business hours; provided, however, that in order
to protect Dover's confidential business information, the report of
such accountant to Libertyville will be confidential and confined to
a statement of the accuracy of the financial reports provided to
Libertyville by Dover.
8. ATTEMPT TO INVALIDATE: Dover agrees not to participate in any
attempt to invalidate the '220 patent or have it rendered
unenforceable, itself or with any third party, except as required by
rule, law or court order.
9. TERMS CONFIDENTIAL: The Parties agree to keep the financial and
other substantive terms of the settlement confidential, and shall
not use the settlement to impugn or to diminish either of the
parties' or their principals' reputation in the industry. Any breach
of this provision by either party may be subject to a commercially
reasonable penalty imposed at an Arbitration pursuant to paragraph
11.
10. PAYMENT OBLIGATION CEASES IF PATENT BECOMES INVALID: Dover's
obligation to pay any consideration, or any minimum annual
consideration, hereunder will cease if and when any third party
obtains a final adjudication or ruling or decision from any Court or
Government authority of proper jurisdiction declaring the claims of
the '220 patent invalid or unenforceable against all third parties.
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11. ARBITRATION: Any controversy or claim arising out of or relating
to this Agreement or the breach thereof, will be settled by
arbitration and in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The award rendered in that
arbitration will be binding on the parties hereto, and judgment upon
the award can be entered by any court having jurisdiction thereof.
Each party to pay one half (1/2) the cost of arbitration and the
proceedings will be held by a panel of three (3) arbitrators, each
Party having the right to select one of such arbitrators and the
third arbitrator shall be selected by the two arbitrators. Both
parties agree to be subject to a commercially reasonable penalty for
any frivolous claims brought under this paragraph.
12. RELEASE FROM PAST INFRINGEMENT: Libertyville hereby releases
Dover and its customers from any and all liability resulting from
the manufacture, use or sale of the blankets allegedly infringing
the '220 patent prior to the execution of this Agreement.
13. TRADEMARK: Dover shall have the right to use any of Dover's
trademarks and trade names on and in connection with any blankets
made, used or sold under the provisions of this Agreement.
14. INFRINGEMENT BY OTHERS: Libertyville intends in good faith to
make reasonable efforts to enforce the '220 patent against known
infringers.
If Dover notifies Libertyville that, in Dover's opinion, a third
party is infringing the '220 patent, then, after three (3) months,
if Dover determines that Libertyville has not exercised a good faith
intent to enforce the '220 patent against any infringer identified
by Dover, Dover may seek, and Libertyville may be subject to, a
commercially reasonable penalty imposed at an Arbitration pursuant
to paragraph 11.
Libertyville will have the exclusive right, but no obligation to
bring any suit against any infringer or alleged infringer of the
'220 patent, it being understood that all matters relating to the
enforcement of the patent by suit or otherwise are to be determined
and/or undertaken in the sole and complete discretion of
Libertyville.
15. MOST FAVORED STATUS: If Libertyville hereafter agrees to a
payment of lower than $ 1.50/blanket from any third party to make,
have made for it, use, lease or sell any blankets covered by the
'220 patent, Dover will be entitled to the benefit of that lower
payment and Libertyville agrees to notify Dover in writing of the
same within thirty (30) days of such agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Settlement Agreement as
of the last date signed below.
LIBERTYVILLE SADDLE SHOP, INC. DOVER SADDLERY, INC.
By: By:
/s/ Jack L. Martin /s/ Stephen L. Day
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Jack L. Martin Stephen L. Day
President President
Date: 12-11-03 Date: 12-22-03
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