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he may hereafter devise or which may hereafter become known to him relating to the manufacture, manipulation and preparation of..... and kindred products; and in the use and practical application thereof; and will, from time to time, hereafter devote to the completion and improvement of such .and kindred products, such further time and attention as may be necessary, and at his convenience and as he may find it consistent and convenient with his other business so to devote. The Owner covenants and warrants that at no time heretofore has he imparted to any one any of the said processes, secrets, formulæ or inventions, or in any manner suffered or allowed any person to become acquainted therewith, and that no person now has any knowledge obtained of or through him in regard thereto, and that he will at all times hereafter preserve the secrecy of the same so that neither by his intention, sufferance, negligence or in any manner whatever, shall any person become acquainted therewith or with any portion thereof.

2. In consideration therefor the manufacturer will pay to the Owner moneys and royalties not exceeding in all. . . . to be computed as follows: For all sales of goods manufactured by use of the said processes, formulæ, secrets and inventions, there shall be paid to the Owner a royalty which on all goods listed on the price list of the party of the first part at..

or over, shall be.

such price list at less than

and on all goods listed on shall be ...

until the whole amount paid to the Owner for and on account of said royalties shall aggregate...

3. In all cases of the sale of mixtures, wherein any goods made by use of said inventions, etc., are included, the royalties shall be calculated on the basis of the amount and value of the ingredients entering into such mixtures.

The manufacturer covenants with and guarantees to the Owner that at least.... ...dollars per annum in any

event shall be paid upon the said royalties for the first. . . . years after the date of this agreement, and that the same shall be paid by the manufacturer as follows:.

.on

the execution and delivery of these presents and of said full and complete statement of said processes, inventions, secrets

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anteed shall be on account of the maximum sum of.

hereinbefore mentioned.

4. The Manufacturer will also, so soon as and whenever the total amount of royalties credited to the Owner shall exceed the aggregate of all payments so charged against him..

as aforesaid, pay him each..

.such excess as the same

may from time to time exist, to the end that the minimum payment received by said Owner on account of said royalties shall be said cash payment of.....

.. per..

charged as afore....for.....

said, and said sum of.... years, and that the maximum shall be the total amount of royalties credited, from time to time, until the same are the said sum of... Such royalties are to be credited to said Owner on the books of the Manufacturer on or before... and shall be paid on... The Manufacturer is not to pay any royalties to the Owner upon the goods which are given away as samples to solicit trade, nor upon goods returned for any cause, but only upon goods sold, delivered and finally accepted and retained.

5. In case at the end of... .

the royalties credited

to the Owner do not equal the payments made to him up to that time, there shall thereafter be no further payments made to said Owner, except for such balance of royalties in excess of all payments made, as may thereafter accrue, from time to time, in his favor, which said payments are to continue until the said Owner has received the full sum first above mentioned of ...and whatever said sum of . . .

shall be fully paid, all said inventions, formulæ, secrets and processes, both those originally communicated upon the execution of this agreement and those thereafter discovered shall be the full and sole property of the Manufacturer free from any obligation, claim or royalty. In any event, unless the option provided for in paragraph fourth be exercised, this contract shall not terminate, nor the manufacturer cease to manufacture

and sell said goods, nor cease to pay said royalties, until the full royalties of... shall have been paid to the Owner.

6. The Manufacturer agrees immediately to enter upon and by all reasonable endeavors to push the manufacture and sale of all grades of said goods, and at all times to actively continue such manufacture and sale to any and all extent that the market will warrant, until the said royalties of.. shall

have been so paid. The Manufacturer agrees, also, to push the sale of the higher priced goods, made under such processes, etc., with the same efforts which it shall use for the lower priced goods made under such processes.

7. The Manufacturer agrees to keep full account of all its transactions relative to the said goods and to render statements to the Owner whenever desired, not exceeding....

as

aforesaid, and that for the purpose of verifying said statements he may, not oftener than.. examine its books and

vouchers in relation to the said transactions, or require the said statements to be verified by the oath of one of the officers of the Manufacturer.

8. The Manufacturer may at its option at any time within ..from the date of this agreement, which option should be exercised by the giving of written notice thereof to the Owner, purchase from the Owner all his rights in and under this agreement, all said processes, inventions, secrets and formulæ, as the same shall exist at the time of said purchase, and the factory and property of said Owner in... sisting of.... both real and personal, used upon or about the said premises in the manufacture of. .in consideration and upon the payment of ...

con

It is,

which sum shall be paid as follows:... however, provided that, for the purpose of said purchase, said factory, real estate and plant are valued at..

and that the Owner may at any time, prior to the exercise of said option by the party of the first part, or notice thereof, sell, lease or otherwise dispose of the same, and thereupon the price to be paid under said option shall be.. being

the value of all other considerations in said option included. In case of loss or damage by fire or otherwise to said factory, property and plant, said Owner shall restore the same at his

expense and said option shall not be affected. If this option is exercised, this contract shall thereupon terminate, except as to the obligation of the Owner to preserve the secrecy of said inventions, formulas, secrets and processes.

9. Owing to the fact that the Owner, by the act of disclosing his aforesaid inventions, processes and formulæ, thereby loses control of his property therein, it is therefore covenanted and agreed by the Manufacturer, that in case the Owner shall become insolvent, or shall fail in any way to keep and perform all the terms of this agreement, on its part to be kept and performed, there shall forthwith become and be due and payable, as liquidated damages to the Manufacturer, and not as penalty, the sum, if the same shall become due within.... years after the date thereof, of.... and if the same shall become due after the term of.... years the sum of.. which respective sums said damages are hereby appraised, assessed and fixed, but at any and every time such liquidated damages shall be reduced by crediting thereon all the payments theretofore made, as provided by paragraph "4" hereof.

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10. The Owner will not, at any time hereafter so long as this agreement shall continue or after the same has been fulfilled, engage in any manner, by use of his name or influence, in or about the manufacture of.. or like products, which might in any manner compete with the business of the Manufacturer, or reduce the value of the processes, inventions, secrets and formulas which are the subject of this agreement.

11. For the purpose of securing the secrecy of said inventions, the Owner will place in a sealed envelope all manuscripts, memoranda and information now or hereafter in his possession, relative to the said inventions, etc., which said envelope shall be placed in the hands of a trustee to be selected and shall be delivered up or opened only on the consent of both parties thereon.

12. To the end that the secrecy of all such processes, inventions, secrets and formulæ may be preserved it is especially covenanted and agreed that any dispute between the parties hereto shall be referred to and decided by three arbitrators who shall be suitable, disinterested and competent; one arbitrator being appointed by the said Manufacturer, one arbitrator by the

Owner, and the third arbitrator by joint and mutual agreement of the parties hereto, or in case of their failure to agree upon such remaining arbitrator, then of the two first appointed, and no suit, action or legal proceeding of any nature shall be brought by either party except to enforce a decision of such arbitrators or to compel their appointment.

13. During the continuance of this agreement the Manufacturer shall not impart knowledge of the aforesaid processes, inventions, secrets and formulas to any other other than its own employees, nor at any time transfer or assign this contract except upon the written consent of the Owner, which consent the Owner agrees to give to a transfer or assignment to any responsible person or corporation, and in no event to demand a money consideration therefor.

14. This agreement shall extend to and bind the successors, executors, administrators and assigns of the parties.

Contract for Purchase of Secret Process

Williston-Sections 1643 and 1646

See:

Grant v. Pratt, 52 App. Div. 540, 65 N. Y. Supp. 486, 87 App. Div. 490, 84 N. Y. Supp. 983, 110 App. Div. 149, 97 N. Y. Supp. 38, 110 App. Div. 867, 97 N. Y. Supp. 29, aff'd without opinion, 186 N. Y. 611, 47 L. R. A. (N. S.) 413.

AGREEMENT made...

. between.

hereinafter referred to as the Seller, and.

hereinafter referred to as the Purchaser, in consideration of the mutual covenants herein contained, WITNESSETH:

1. The Seller represents that he has invented and discovered a secret process for.. The said process is hereinafter referred to as the secret process. The Seller further represents and warrants that he has not at any time divulged or imparted the said secret process or any part thereof to any person or corporation whatsoever and that he is the absolute owner thereof, free and clear of any and all lien, charge, claim and demand.

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