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EXHIBIT 10.6
PATENT LICENSE AGREEMENT
THIS AGREEMENT, made and entered into by and between Nippon Conlux Co., Ltd.,
(hereinafter referred to as "Conlux"), a corporation organized and existing
under the laws of Japan, with its principal place of business at 0-0,
Xxxxxxxxxx-xxx 0-xxxxx, Xxxxxxx-xx, Xxxxx, Xxxxx, and Xxxxxxx Technology
Corporation (hereinafter referred to as "DTC"), a corporation organized and
existing under the laws of the State of Delaware, the United States of America,
with its principal place of business at 0000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxx,
XX 00000, U.S.A.,
WITNESSETH:
WHEREAS, Conlux possesses a number of patents with regard to an optical
information recording and/or reproducing apparatus for optical cards; and
WHEREAS, DTC desires to have a licensing agreement with regard to the patents
which Conlux possesses. Conlux is prepared to grant that license to DTC under
the following conditions;
NOW, THEREFORE, in consideration of the forgoing and the obligations hereunder,
the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1. The term "Patent Rights" shall mean patents and pending patent
applications, except for Japanese patents and pending Japanese patent
applications, which Conlux possesses and has control over, as listed on the
Patent List attached hereto.
2. The term "Product" shall mean an optical information recording
and/or reproducing apparatus for optical cards.
3. The term "Component Parts" shall mean the individual parts which
constitute the Product and the parts for assembly of individual parts.
4. The term "Net Selling Price" shall mean the price at which DTC
sells the Product to its customers, from which has been deducted, (a) all taxes
imposed at the time of sales; (b) returned Products; (c) discounts; (d) volume
discounts; (e) shipping costs; (f) insurance fees; (g) packaging costs; and (h)
in the event that Component Parts imported from Conlux are used, the FOB price
of the imported Component Parts plus import taxes.
5. The term "Subsidiaries" shall mean companies which DTC controls
through ownership of a majority of the issued voting stock.
ARTICLE 2. GRANT OF LICENSE
1. Conlux hereby grants to DTC the non-exclusive patent license
under the Patent Rights to make, have made, use and sell the Product all over
the world excluding Japan.
The license hereof includes the right for DTC to subcontract Component
Parts.
2. Upon the above license, DTC shall have a right to grant
sublicenses to DTC's Subsidiaries; provided, however, that in such case, DTC
causes the Subsidiaries to have the same obligations which DTC has under this
Agreement, and DTC also will have joint liability.
3. DTC may not sublicense the non-exclusive patent license under
Paragraph 1 to a third party without Conlux's prior written consent.
In the event that DTC grants sublicense to a third party with Conlux's
prior written consent, DTC shall cause the third party granted sublicense with
Conlux's prior written consent (hereinafter referred to as "DTC's
sublicensee(s)") to have the same obligations which DTC has under this
Agreement, and DTC also shall have joint liability.
4. In the event that DTC sublicenses under Paragraph 2 or Paragraph
3 of this Article, DTC shall make and enter into a sublicense agreement with its
Subsidiary or the DTC's sublicensee(s), and shall submit a copy of the
sublicense agreement to Conlux.
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ARTICLE 3. ROYALTY
1. DTC shall pay to Conlux the running royalty on the Products
which DTC, its Subsidiaries or DTC's sublicensee(s) manufactures and sells in
the exercise of the Patent Rights granted to DTC hereunder.
This running royalty of DTC or its Subsidiaries shall be calculated to
be in the amount of 3.5% of the Net Selling Price on the sales of all Products
during the six month periods ending on June 30 and December 31 each year, or
fifty US Dollars ($50) per each Product unit, whichever is lower, and the due
date shall be the last days of June and December.
The running royalty of DTC's sublicensee(s) shall be calculated to be in
the amount of 3.5% of the Net Selling Price on the sales of all Products during
the six month periods ending on June 30 and December 31 each year, and the due
date shall be the last days of June and December.
This running royalty shall be paid within forty (40) days of each due
date.
2. Products which DTC delivers directly to Conlux shall have no
running royalty charge on them.
3. All payments hereunder, with the exception provided for in
Article 11, Paragraph 4, shall not be returned to DTC for any reason whatsoever.
ARTICLE 4. PAYMENT AND TAX
1. DTC shall pay the running royalty under Article 3 in U.S.
Dollars to a bank account designated by Conlux. Sales in currencies other than
U. S. Dollars shall be converted at the rate published in the Wall Street
Journal for the last business day of the reporting period.
2. In the event that taxes are imposed on the running royalty
payment of Paragraph 1 of this Article according to the regulations of the laws
of the United States of America, DTC shall deduct the tax when making payments
to Conlux. When DTC deducts and pays to the taxing authority such taxes, DTC
shall submit to Conlux an original tax payment certification properly issued by
the taxing authority evidencing such tax payment.
3. The running royalty payments of Paragraph 1 of this Article do
not include value added tax, and in the event that DTC pays a value added tax as
agent with regard to such payment, the payment of such value added tax shall be
the burden of DTC.
ARTICLE 5. REPORTING
DTC shall submit to Conlux for each six month period which ends on June
30 and December 31 every year, a statement of calculation of all Products
manufactured and sold during such six month period within thirty (30) days after
the last day of June and December. The statements must include detailed data on
gross sales, sales quantities, Net Selling Prices and other pertinent data so
that Conlux may be able to calculate the running royalty.
ARTICLE 6. BOOKS AND INSPECTION
1. DTC shall prepare and keep books in sufficient detail to permit
the determination of the running royalty payable under Article 3.
2. Conlux may, if it deems necessary, request an explanation of the
statement which DTC submits to Conlux under Article 5, and, if requested by
Conlux, DTC must permit a certified public accountant which Conlux designates as
its representative, to enter into DTC's factory, office or other facilities
during reasonable business hours, and to inspect records such as the statements,
account books and etc. DTC must also permit the person(s) performing the
inspection to make copies of such records. The certified public accountant must
keep this information confidential and may use this information only for
determining the running royalty amount. If any such information is obtained by
Conlux, then Conlux agrees to keep this information confidential and may use
this information only for determining the running royalty amount.
ARTICLE 7. MODIFICATION OF RUNNING ROYALTY
The running royalty as provided in Article 3 shall be reviewed every
three years, and may be modified if Conlux and DTC have agreed thereon.
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ARTICLE 8. PROHIBITION OF ASSIGNMENT
DTC may not assign to any third party this Agreement or any right or
obligation under this Agreement without the prior written consent from Conlux.
ARTICLE 9. NOTICE
All correspondence or notices required to be served under the terms and
conditions hereof shall be in writing in the English language. Such written
correspondence or notices to be sent to Conlux shall be sent to the following
address by Federal Express or other international overnight courier:
Nippon Conlux Co., Ltd.
0-0 Xxxxxxxxxx-xxx, 0-xxxxx, Xxxxxxx-xx, Xxxxx, Xxxxx
Attention: Xxxxxxxx Xxxxxxx
Managing Director, General Manager of Sales and Marketing Division
Such written correspondence or notices to be sent to DTC shall be sent
to the following address by Federal Express or other international overnight
courier:
Xxxxxxx Technology Corporation
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000, X.X.X.
Attention: Xxxxxx X. Xxxxxx, Vice President, Finance
ARTICLE 10. NO WARRANTY
Conlux makes no warranty or guarantee that any of the Patent Rights
licensed to DTC herein have been and will be valid, any patents will be granted
on the pending patent applications of the Patent Rights or that the Products
manufactured, sold or used in the implementation of the Patent Rights licensed
to DTC hereunder will not infringe any intellectual property rights of third
parties. Conlux shall also have no liability whatsoever with regard to any loss,
damages and/or expenses which DTC may incur from the Products manufactured, sold
or used in the implementation of the Patent Rights licensed to DTC.
ARTICLE 11. TERMINATION OF AGREEMENT
1. In the event that either party commits any breach of this
Agreement and have not cured such breach within sixty (60) days after the
written notice is given by the other party, the other party may immediately
terminate this Agreement by giving written notice to the breaching party and may
cause all of the breaching party's rights hereunder to lapse, and may demand
compensation for damages against the breaching party.
2. In the event that a party is liquidated, or has been adjudged
bankrupt, the other party has the right to immediately terminate this Agreement.
In the event that a party has fallen into insolvency, or has entered into the
proceedings of arrangement or composition involving an assignment of assets for
the benefit of creditors, the other party has the right to terminate this
Agreement upon thirty (30) days written notice. During the thirty-day period
after the written notice, the first party has the right to cure the insolvency
or proceedings of arrangement. If such is cured, then this Agreement will not be
terminated. If such is not cured after thirty (30) days has elapsed, this
Agreement will be terminated according to the written notice.
3. In the event that DTC disputes the validity of the Patent
Rights, regardless of whether it is done directly or indirectly, Conlux may
terminate this Agreement.
4. In the event that this Agreement has been terminated, DTC may
not demand that Conlux return the costs that have already been paid to Conlux
under Article 4, except in the event that the termination hereof is for reasons
attributable to the fault of Conlux.
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ARTICLE 12. TERM
This Agreement shall be effective on the date it becomes effective and
continue until the expiration of the Patent Rights as stated on the attached
Patent List.
ARTICLE 13. FORCE MAJEURE
Neither party shall be liable for delay or failure to perform any of its
obligations hereunder if such delay is due to fire, acts of God, strike, labor
dispute, governmental order, riot, revolution, war, or any other cause beyond
the reasonable control of the parties; provided, however, that such party shall
submit a written explanation of the reason for the delay or failure to the other
party and written proof of the force majeure issued by a competent government
agency, and shall obtain the confirmation of the other party. Also, upon
resolution of the force majeure situation, the party must promptly fulfill all
of its duties.
ARTICLE 14. APPLICABLE LAW
The effect, interpretation and implementation of this Agreement shall be
governed by the laws of Japan.
ARTICLE 15. LANGUAGE
This Agreement shall be executed in the Japanese and English languages,
and the English version shall be original. In the event of any difference
between the two versions, the English version shall prevail.
ARTICLE 16. SETTLEMENT OF DISPUTE
Both parties shall make sincere efforts to fulfill the terms hereof. If
any questions arise with regard to the interpretation or implementation hereof,
both parties shall settle such questions upon full consultation.
Any dispute which cannot be settled amicably by such consultation shall
be finally settled by arbitration. If arbitration is instituted by DTC, it shall
be carried out in Tokyo, Japan, according to the commercial arbitration rules of
the Japan Commercial Arbitration Association, and it shall be conducted in the
Japanese language by a single arbitrator who is a Japanese lawyer. If it is
instituted by Conlux, it shall be carried out in San Jose, California, according
to the arbitration rules of the American Arbitration Association, and it shall
be conducted in the English language by a single arbitrator who is an U.S.
lawyer.
ARTICLE 17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto with regard to the subject matter hereof and supersedes all prior
agreements or understandings, expressed or implied, between the parties hereto.
ARTICLE 18. EFFECTIVENESS
This Agreement shall become effective on the last day on which the
authorized representatives of the parties ultimately sign it.
IN WITNESS WHEREOF the parties have caused their authorized
representatives to execute this Agreement in duplicate, both in Japanese and in
English, and retain one copy each.
Conlux: Nippon Conlux Co., Ltd.
Address: 0-0 Xxxxxxxxxx-xxx 0-xxxxx
Xxxxxxx-xx, Xxxxx, Xxxxx
Signature: /s/Kazuyuki Akai
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Name: Kazuyuki Akai
Position: President
Date: May 26, 1999
DTC: Xxxxxxx Technology Corporation
Address: 0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000, X.X.X.
Signature: /s/Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Position: President
Date: May 28, 1999
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