EXHIBIT 10.10
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PATENTS PURCHASE, ASSIGNMENT AND LICENSE AGREEMENT
This Patents Purchase, Assignment and License Agreement, entered into on
November 18, 2003 ("Effective Date"), is by and between MERLOT COMMUNICATIONS,
INC., with a principal place of business at 0 Xxxxxxxxx Xxxxxxxxx, Xxxxxx,
Xxxxxxxxxxx ("Seller"), and NETWORK-1 SECURITY SOLUTIONS, INC., with a principal
place of business at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, its
successors and assigns ("Buyer").
WHEREAS, Seller represents that it owns all right, title, and interest to,
and wishes to sell and assign to Buyer all right, title and interest in and to,
the inventions, patents and patent applications specified on Exhibit A annexed
hereto and incorporated herein by reference (each of which shall individually be
referred to as a "Patent" and collectively as the "Patents"), under the terms
and conditions set forth herein; and
WHEREAS, Buyer wishes to purchase the Patents and accept such assignment.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Assignment of Patents
a. Seller hereby assigns to Buyer, and Buyer hereby accepts, all of
Seller's right, title and interest in and to, the Patents (including any
reissues, continuations-in-part, revisions, extensions, and reexaminations
thereof), all related documentation, including, without limitation, all related
copyrights, if any, and the exclusive right to enforce the Patents in the United
States and throughout the world in the sole name of Buyer, its successors or
assigns, including all rights to profits and damages
by reason of past infringement by any party or parties, including the right to
xxx and collect same for Buyer's and Buyer's successors and assigns own use and
benefit, free and clear of any and all liens, encumbrances, or third party
claims. Seller shall execute the form of Assignment for each of the Patents
annexed hereto as Exhibit B simultaneously with Seller's execution hereof.
b. Other than the rights expressly set forth herein, Seller shall
hereinafter have no further or continuing interest in the Patents. In addition,
Seller represents that it has no interest in any other patent or technology
related to the Patents.
c. Upon the closing hereof, Seller shall provide to Buyer the original
certificates reflecting the registrations of the Patents, as well as all files
in Seller's possession or under its control regarding the technology embodied in
the Patents including, without limitation, its work, design, engineering and
search files for each Patent, all of Seller's files regarding the prosecution of
the Patents, and all documentation, including without limitation, instruction
manuals, relating to the Patents.
d. Seller appoints Buyer and Buyer's successors and assigns as its
attorney-in-fact to act in Seller's name and place to execute, deliver and
record any document or instrument of assignment or conveyance necessary to
perfect, grant and confirm the rights granted in paragraph 1(a) hereof, and
Seller conveys to the Buyer the right to make application in, prosecute, receive
and enforce in its own behalf and name the Patents.
e. Seller further agrees at any time to execute and to deliver upon
request of the Buyer, at Buyer's expense, such additional documents, if any, as
are necessary or desirable to secure patent protection on said inventions,
discoveries and
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applications throughout all countries of the world (including, without
limitation, all documents relating to any reexaminations or reissuances), and
otherwise to do the necessary to give full effect to and to perfect the rights
of the Buyer to the Patents under this Agreement, including the execution,
delivery and procurement of any and all further documents evidencing this
assignment, transfer and sale as reasonably may be necessary or desirable.
f. Seller hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into by Seller which would
conflict with this assignment.
g. Seller further covenants that Buyer will, upon its request and at
its expense, be provided promptly with all pertinent facts and documents
relating to said invention and said Patents and legal equivalents as may be
known and accessible to Seller and will testify at Buyer's expense as to the
same in any interference, litigation or proceeding related thereto.
2. Payments to Seller
a. Upon the execution hereof, Buyer shall pay or cause to be paid to
Seller the sum of One Hundred Thousand ($100,000) Dollars.
b. In addition to the sum set forth is paragraph 2(a) above, for the
term of each Patent Buyer shall pay Seller [THIS MATERIAL HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.] of the Net Income (as defined
below) realized by Buyer from the sale or licensing of the Patent, which shall
be separately calculated for each Patent which comprises the Patents, [THIS
MATERIAL HAS BEEN OMITTED
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PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.] realized by Buyer from the sale or
licensing of each Patent.
c. For purposes of this Agreement, "Net Income" shall be defined as
gross income received from the licensing or sale of any Patent, less the costs
and expenses incurred by Buyer in licensing, selling, developing, enforcing, and
protecting said Patent. Buyer may not include its general overhead in the
calculation of "Net Income."
d. For the avoidance of doubt, there shall be no minimum amounts due
to Seller, nor is Buyer obligated to invest in, develop, or make any use of the
Patents. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
e. Buyer shall make payment of Net Income to Seller on a quarterly
basis as follows: No later than forty five (45) days after the end of each
calendar quarter in which any payment is due to Seller, Buyer shall submit to
Seller a written report which shall include a written statement of Buyer's Net
Income during such quarterly period for each Patent, and showing a calculation
of the payment due based thereon. Each Quarterly Report shall be accompanied by
the remittance to Seller of the payment shown to be due on the report.
f. Seller shall have the right to audit the books and records of Buyer
relating to Seller's Net Income upon reasonable advance notice to Buyer at the
place such books and records are normally maintained during normal business
hours not
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more than one time per year. Seller shall keep all information to which it has
access in any such audit strictly confidential.
g. Subject to the notice requirements set forth in paragraph 3 below,
Seller may sell, transfer or assign its right to receive payments as set forth
in this paragraph 2 to any third party.
3. Notice of Intention To Transfer Rights. Each of the parties hereto
shall provide the other with no less then 30 days advance notice prior to
entering into any binding agreement for the sale, transfer, or assignment of any
of its rights hereunder which may be sold, transferred, or assigned. This shall
not apply to Buyer's licensing of any Patent rights on a nonexclusive basis.
4. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
a. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
b. Unless agreed to otherwise in writing by the Buyer and the Seller,
upon the sale of all or substantially all of the assets of Seller or upon the
acquisition of at least a controlling interest in Seller by any third party
which would itself or which has any affiliated entity which would, but for the
investment, require a license from the Buyer, [THIS MATERIAL HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.]
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c. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
5. Buyer's Right To Terminate Payments To Seller . Commencing with January
1, 2007 through March 31, 2007, and from each January 1 through March 31
thereafter, Buyer shall have the option to terminate Seller's right to receive
payments on Net Income for each Patent as set forth in section 2(b) above by
notifying Seller that it wishes to do so in writing by no later than March 31
each year (the "Notice"), and agreeing to pay Seller the greater of: (i) [THIS
MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.], such
payment to be made in four (4) quarterly installments together with the
regularly scheduled payments under section 2 hereof during such twelve (12)
month period; and (ii) [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.] after the closing hereof for each Patent. For
clarification, payments will continue during the notice year, but will be
credited against the final purchase price and the cash alternative referred to
in (ii) above shall be the applicable amount for the year in which the Notice is
given by the Buyer. After the payment of all amounts owed hereunder, Buyer will
have no further obligation to make payments as set forth in paragraph 2(b)
above, to provide reports as set forth in paragraph
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2(e) above, to provide the notice required by paragraph 3 above, or to meet with
Seller as required by paragraph 7 below.
6. Support By Seller. Seller shall provide Buyer reasonable access to and
assistance from Seller's employees and independent contractors as requested by
Buyer at the sole cost and expense of Buyer to assist Buyer in creating or
filing enhancements to the Patents or any Patent, or in licensing or enforcing
the Patents or any Patent.
7. Regular Updates. The parties agree that they shall regularly meet,
either in person or telephonically, on dates and at times to be mutually agreed
upon but no less then at one time per calendar quarter to discuss the status of
the Patents, and Buyer's licensing and enforcement efforts.
8. Confidential Information. The parties hereto shall regard and preserve
as confidential all Confidential Information (defined below) related to the
business of the other party, except that information which is public knowledge,
which may be obtained by it from any source as a result of this Agreement, or
otherwise. The parties agree that they shall not and they shall cause their
employees, representatives, agents and licensees not to divulge, furnish or make
accessible to anyone such Confidential Information, except as may be necessary
from time to time in performance of their duties hereunder on a limited "need to
know" basis. This provision shall survive the termination of this Agreement.
"Confidential Information" shall be written information marked confidential and
oral information designated confidential and confirmed as such in writing
delivered not later than ten (10) days after such disclosure,
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and shall include this Agreement, customer/account lists, and marketing plans,
whether or not marked as confidential or confirmed as such in writing.
9. Choice of Law and Jurisdiction. This Agreement shall be deemed to have
been made and delivered in New York City and will be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
laws of the State of New York without giving effect the conflict of laws.
10. Arbitration. Any controversy or claim arising under or in relation to
this Agreement, or the breach thereof, or the relations between Buyer and Seller
shall be submitted to arbitration by a panel of three arbitrators (unless the
amount in dispute is less than Twenty-Five Thousand Dollars ($25,000) in which
case there shall be only one arbitrator) in the City of New York, New York,
administered by the American Arbitration Association under the then applicable
Commercial Rules, and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof; provided however, that the
arbitrator(s) shall be bound by the laws of the State of New York and, regarding
any questions related thereto, the trademark statutes of the United States of
America, and shall have no power to extend this Agreement beyond its termination
date, nor to order reinstatement or other continuation of the parties'
relationship after termination, nor to award punitive, consequential, multiple,
incidental or any other damages in excess of the economic damages actually
sustained by the claimant. If, and only if, the arbitrator(s) shall determine
that either party's position in arbitration was not maintained in good faith,
then the arbitrators shall award the other party a reasonable attorney's fee.
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11. Notices. Notices to either party shall be in writing and shall be
deemed delivered when served in person or within three (3) business days after
being deposited in the mail, first class certified mail, postage prepaid return
receipt requested or one (1) business day after being dispatched by a one day
express courier service addressed as follows:
to: Seller
Xxxxxx Xxxxxx
Chief Executive Officer
Merlot Communications, Inc.
0 Xxxxxxxxx Xxxx., Xxxxxxxxx Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
to: Buyer
Xxx Xxxxxxxx, Esq.
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
12. Miscellaneous
a. Waiver of Rights. The failure of a party to insist upon strict adherence
to any provision of this Agreement on any occasion shall not be considered or
deemed to be a waiver nor considered or deemed to deprive that party of the
right thereafter to insist upon strict adherence to that provision or any other
provision of this Agreement. Any waiver must be in writing.
b. Currency. All calculations and payments required under this Agreement
shall be in United States Dollars.
c. Complete Agreement & No Oral Modification. This Agreement is a complete
statement of all agreements among the parties with respect to
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the subject matter hereof. Any amendment, modification, alteration or change
must be in writing signed by the parties.
d. Warranties of Fitness. The parties each warrant the following: (1) that
the delivery of this Agreement has been duly authorized; (2) that the execution
and delivery of this Agreement does not contravene any contract or commitment to
which it is a party or by which it is bound; and (3) that it is not a party to
any suit, action, administrative proceeding, or investigation which, if
successful, would have a material, adverse effect on its properties, financial
conditions or business.
e. Construction and Headings. This Agreement's terms and conditions were
freely negotiated. The language shall be interpreted without regard to any rule,
law or presumption requiring the language to be construed, interpreted or
applied for or against either party. The headings contained in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
any of the terms or provisions of this Agreement.
f. Independent Parties. The parties hereto acknowledge that the
relationship created between them by this Agreement is that of independent
contractors. As a result of this Agreement, no agency relationship or
association or partnership is created between them. Neither party is authorized
to and shall not incur any liability for the other. Neither party may become
directly, indirectly or contingently liable for nor shall it hold itself out as
having authority to represent or act for the other in any capacity whatsoever.
The relationship between the parties shall not be construed as a co-partnership
or joint venture or that of agent and principal.
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g. Severability. In the event that any part of this Agreement should be
declared illegal for any reason by any legally constituted court or government
authority, the remaining portions shall not be invalidated on account thereof
and shall remain in full force and effect provided, however, that if as a result
of a declaration of illegality of a party of this Agreement the essential
purposes of this Agreement cannot be fulfilled, the Agreement shall terminate
forthwith, and all provisions of this Agreement relating to or governing
termination thereof shall come into effect.
h. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between Buyer and Seller, and supersedes and cancels any and all
previous negotiations, representations, undertakings, understanding and
agreements heretofore made between them with respect to the subject matter
hereof.
i. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
j. Use of Counsel. The parties hereto represent that they have each
consulted with counsel of their own choosing in connection with the negotiation
and execution of this Agreement or have knowingly chosen not to do so.
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IN WITNESS WHEREOF, the parties hereto are duly authorized to and do hereby
execute this Agreement as of the Effective Date.
MERLOT COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: President & CEO
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Date: November 18, 2003
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NETWORK-1 SECURITY SOLUTIONS, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
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Title: Interim CEO & CFO
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Date: November 18, 2003
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EXHIBIT A
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1. 6,577,631: Communication switching module for the transmission and control of
audio, video, and computer data over a single network fabric
2. 6,574,242: Method for the transmission and control of audio, video, and
computer data over a single network fabric
3. 6,570,890: Method for the transmission and control of audio, video, and
computer data over a single network fabric using Ethernet packets
4. 6,539,011: Method for initializing and allocating bandwidth in a permanent
virtual connection for the transmission and control of audio, video, and
computer data over a single network fabric
5. 6,218,930: Apparatus and method for remotely powering access equipment over a
10/100 switched Ethernet network
6. 6,215,789: Local area network for the transmission and control of audio,
video, and computer data
EXHIBIT B
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ASSIGNMENT
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WHEREAS, Merlot Communications Inc. ("Assignor"), a Delaware corporation with an
office at 0 Xxxxxxxxx, Xxxx., Xxxxxxxxx Xxxxxxxxx Xxxx, Xxxxxx, XX 00000, owns
or has rights to United Status Patent No. [ ], issued [ ].
WHEREAS, Network-1 Security Solutions, Inc. ("Assignee"), a Delaware
corporation with a headquarters mailing address at 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, X.X. 00000, wishes to acquire full rights and ownership of United
Status Patent No. [ ], issued [ ]
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor grants, conveys, assigns
and transfers to the Assignee and the Assignee's successors and assigns,
Assignor's entire right, title and interest in and to United States Patent No.
[ ], including all corresponding applications such as continuations,
continuations-in-part, divisionals, provisionals, renewals, revivals, reissues,
reexaminations, extensions, and foreign counterparts thereof, along with the
subject matter of any and all claims which may be obtained in the
aforementioned, in the United States and every foreign country, including all
rights to profits and damages by reason of past infringement by any party or
parties, either the right to xxx and collect same for Assignee's, and Assignee's
successors and assigns own use and benefit.
UPON SAID CONSIDERATION, Assignor appoints Assignee and Assignee's
successors and assigns as its attorney-in-fact to act in Assignor's name and
place to execute, deliver and record any document or instrument of assignment or
conveyance necessary to perfect, grant and confirm the rights granted herein,
and Assignor conveys to the Assignee the right to make application in,
prosecute, receive and enforce in its own behalf and name United States Patent
No.[ ] , Issued [ ].
IN WITNESS WHEREOF, Assignor has caused its Assignment to be duly
executed by one of its officers on the date shown below.
MERLOT COMMUNICATIONS INC. NETWORK- 1 SECURITY
SOLUTIONS, INC.
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BY BY
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XXXXXX XXXXXX XXXXX X. XXXXXXXX
PRESIDENT AND CEO
DATE: __________________ DATE: ___________________
