Exhibit 10.8
LICENSE AGREEMENT EFFECTIVE JANUARY 1, 1998 BETWEEN
THE COMPANY AND OUTLAST TECHNOLOGIES, INC.
INFORMATION PLACED IN BRACKETS [ ] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406 AND
HAS BEEN FILED SEPARATELY WITH THE COMMISSION
LICENSE AGREEMENT
This agreement ("Agreement"), which shall be effective as of January 1, 1998
("Effective Date"), is between: Outlast Technologies, Inc., a Colorado
corporation, with its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxx,
XX 00000 X.X.X. ("Outlast"); and Xxxxxx Technologies, Inc., a North Carolina
corporation, with its principal place of business at 000 Xxxxx Xxxx Xxxxxx,
Xxxxxxxx, XX 00000 ("Xxxxxx").
RECITALS
WHEREAS, Outlast has rights to make, have made, use, and sell certain technology
relating to certain products utilizing reversible thermal storage properties,
and
WHEREAS, Xxxxxx is desirous of securing, and Outlast is willing to grant,
license rights to manufacture, sublicense and sell certain products utilizing
the Technology as defined below in Section 1.16,
NOW, THEREFORE, in consideration of the mutual covenants herein and for good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto agree to the following terms and conditions:
ARTICLE 1
DEFINITIONS
1.1 "Affiliate" of Xxxxxx shall mean an organization of which more than fifty
percent (50%), if a U.S. organization, or more than forty percent (40%), if a
foreign organization, of the voting stock or ownership is controlled directly or
indirectly by Xxxxxx.
1.2 "Customer" shall mean a manufacturer of End-Use Products or an
intermediate product manufacturer, converter, combiner, distributor, or agent
who sells to a manufacturer of End-Use Products.
1.3 "End-Use Products" shall mean finished products which are intended to be
sold to consumers and are made in whole or in part from Licensed Products.
1.4 "Foam" shall mean any cellular material formed by the dispersion of gas
bubbles (whether internally chemically generated, externally incorporated, as by
chemical blowing agents, or physically incorporated, as by mechanical whipping
or frothing action) within a polymeric base material. Exemplary base material
polymers include, but are not limited to, polyurethane, ethylene/vinyl acetate
(EVA) copolymer, latex, polyethylene, polypropylene, butyl, silicone, cellulose
acetate, neoprene, epoxy, polystyrene, phenolic, and polyvinyl chloride (PVC).
As used herein "Foam" includes not only a single, continuous foam layer but also
multiple foam layers, if they are substantially continuously attached to one
another.
1.5 "Xxxxxx'x Proprietary Information" shall mean any and all of Xxxxxx'x
confidential information, including without limitation data, know-how and
experience, whether scientific, technical, engineering, operational, marketing,
or of a business or economic nature, whether in writing, verbal, recorded, or in
some other physical form.
1.6 "Licensed Products" shall mean the following products: (i) MicroPCMs
intended for use in MicroPCM Foam, and (ii) MicroPCM Foam; wherein the MicroPCM
Foam standing alone, in either case, has thickness greater than two (2)
millimeters and is intended to be attached or joined by any means to fibers,
fiber products or fabric when used in the construction of an End-Use Product.
1.7 "Licensed Territory" shall mean worldwide.
1.8 "MicroPCM" shall mean microencapsulated phase change material.
1.9 "MicroPCM Foam" shall mean any Foam wherein MicroPCMs are combined with
the polymeric base material of the Foam prior to curing, resulting in a Foam
containing a plurality of MicroPCMs integral with and dispersed throughout at
least a longitudinal section of said Foam, and wherein substantially all of said
MicroPCMs are individually surroundingly encapsulated and embedded within said
Foam. "MicroPCM Foam" shall also mean any Foam with a thickness greater than two
(2) millimeters having applied thereto a polymeric coating, which coating (i)
contains a plurality of MicroPCMs integral with and dispersed throughout said
coating, (ii) has thickness greater than two (2) millimeters, (iii) is
substantially entirely on the surface of the Foam, and (iv) has been cured prior
to being attached or joined to any fibers, fiber products or fabric. For
purposes of clarity, the "MicroPCM Foam" as defined by the second sentence of
this Section 1.9 must have a total thickness greater than four (4) millimeters.
1.10 "Net Selling Price" shall mean money or any other consideration, exclusive
of sales taxes, custom duties, value added taxes, transportation, insurance and
reasonable allowances for returns, if any, charged for the sale or other
disposition of Licensed Products.
1.11 "Party" shall mean Xxxxxx or Outlast.
1.12 "Parties" shall mean Xxxxxx and Outlast.
1.13 "PCM" shall mean phase change material.
1.14 "Outlast's Proprietary Information" shall mean any and all of Outlast's
confidential information including without limitation data, know-how and
experience, whether scientific, technical, engineering, operational, marketing,
or of a business or economic nature, whether in writing, verbal, recorded, or in
some other physical form.
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1.15 "Recipients" shall mean the Parties and their respective directors,
officers, partners, employees, consultants, agents or representatives, and any
or all of them, to the extent such persons receive a Party's Proprietary
Information.
1.16 "Technology" shall mean the intellectual property licensed by Outlast from
Triangle Research and Development Corporation of Raleigh, NC, ("TRDC") pursuant
to the TRDC License. "Technology" shall also mean non-patented and
non-copyrighted Outlast Proprietary Information within the same scope and field
as the intellectual property licensed by Outlast from TRDC. "Technology" does
not include any patent which Outlast owns or in which Outlast has rights other
than patents licensed under the TRDC License.
1.17 "TRDC License" shall mean that certain License Agreement executed January
22, 1991 between TRDC and Gateway Technologies, Inc. (the former name of
Outlast).
1.18 "Valid Claim" shall mean the claim of a patent or a pending patent
application within the Technology which has not been held invalid or
unenforceable by a final unappealed or unappealable decision of a court of
competent jurisdiction or the appropriate administrative agency.
ARTICLE 2
GRANT OF LICENSE
2.1 Grant. Subject to the terms and conditions in this Agreement, Outlast
grants to Xxxxxx a license under the Technology and within the Licensed
Territory to make, have made, use, and sell Licensed Products to Customers for
incorporation into End-Use Products. Xxxxxx'x rights under this Section 2.1
shall include the right to sublicense Customers and those who purchase from
Customers, either by sale of Licensed Products or by separate contract. The
license granted hereunder shall be exclusive, even to Outlast, through calendar
year 2002, but only so long as Xxxxxx continues to make the minimum annual
payments set forth in Section 3.4. Subject to the terms and conditions in this
Agreement, Xxxxxx may extend the period of exclusivity hereunder through
calendar year 2007, but only so long as Xxxxxx continues to make the minimum
annual payments set forth in Section 3.4. Subject to the terms and conditions in
this Agreement, the Parties may, by mutual agreement, extend the period of
exclusivity hereunder for an additional five year period beginning with calendar
year 2008. Following the period(s) of exclusivity hereunder, the license granted
to Xxxxxx shall be non-exclusive. Xxxxxx may exercise the rights granted
hereunder itself or through (i) an organization of which more than eighty
percent (80%) of the voting stock or ownership is controlled directly or
indirectly by Xxxxxx, or (ii) an Affiliate, provided that no owner (including
any direct owner and any person or entity which controls, is controlled by or is
under common control with a direct owner) of the voting stock or ownership of
such Affiliate competes with Outlast in providing fibers, fiber products or
fabrics with reversible thermal storage properties or products which incorporate
fibers, fiber products or fabrics with reversible thermal storage properties,
other than Licensed Products. In either such case, Xxxxxx shall be primarily
responsible for the payment of royalties generated by any such organization or
Affiliate.
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2.2 Reservation of Rights. The Parties agree that Outlast is the sole and
exclusive owner or exclusive licensee of, and shall retain all right, title and
interest in and to the Technology, and Xxxxxx shall have rights therein only as
provided for in accordance with this Agreement. Nothing in this Agreement shall
be deemed to convey to Xxxxxx an interest in the Technology other than as stated
in Section 2.1 of this Agreement. Furthermore, nothing in this Agreement shall
be construed to limit Outlast's ability to make, have made, use, and sell
products incorporating the Technology, except as specifically provided herein.
Xxxxxx acknowledges that, as respects the Technology, Outlast may sell any
product it owns or to which it has rights, except for the rights to Licensed
Products granted to Xxxxxx during the exclusive periods, to any Customer.
Neither Xxxxxx nor its Affiliates will challenge the validity of the Technology,
the validity of Outlast's license under the Technology, or the validity of
licenses granted under this Agreement with respect to any period during which
this Agreement is in effect. However, an agreement by Outlast affecting any of
the foregoing, or an award or court judgment that is binding on Outlast and
affects any of these matters, in a challenge by any person or entity other than
Xxxxxx or its Affiliates, will inure to Xxxxxx'x benefit to the extent
applicable.
2.3 Trademark on Products. Unless otherwise agreed to in writing by Outlast,
Licensed Products, as defined in clause (ii) of Section 1.6, and End-Use
Products must be Branded (as defined herein) with a trademark which is wholly
owned by Xxxxxx. Such Licensed Products and End-Use Products may not be Branded
with a third party trademark which relates to foams, fibers or fabrics with
reversible enhanced thermal storage properties. Such Licensed Products and
End-Use Products may also be Branded with one or more third party trademarks
which do not relate to foams, fibers or fabrics with reversible enhanced thermal
storage properties. For purposes of this Section 2.3, "Branded" means that
Licensed Products and End-Use Products must contain visible identification of a
solely-owned Xxxxxx trademark on the product, or on the hangtag, or on the
packaging of a single product and must include the corresponding patent numbers
in accordance with Section 6.1. If Outlast no longer requires its trademark to
be used on any of its branded products, to include end-use products, then Xxxxxx
shall no longer be obligated to the provisions of this Section 2.3.
2.4 Specific Products/Markets Reserved. Outlast has granted certain rights to
third party manufacturers and/or distributors in the products described below.
No Licensed Product may be sold for use in any of the following products until
the rights granted by Outlast expire without extension or become non-exclusive.
Once the rights granted by Outlast in a product described below expire without
extension or become non-exclusive, Xxxxxx shall have the right to exercise the
license granted in Section 2.1 with respect to such product on a non-exclusive
basis. Outlast shall be entitled to extend the term of any rights granted to any
such parties upon such terms as Outlast may determine; provided, however, that
such extension must be granted to the same party that received the original
grant or a successor to all or substantially all of such party's business with
respect to such product. The products to which this Section 2.4 applies are as
follows:
a. Alpine ski boots,
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b. Hard shell touring ski boots,
c. Fire safety products, and
d. Reflective heat Shield products.
2.5 Scope of TRDC License. The Parties agree that MicroPCM Foam that is
attached or joined by any means to fibers, fiber products or fabric is within
the scope and field of the TRDC License and, therefore, is within that portion
of the Technology received from TRDC. The Parties further agree that, except as
it is attached or joined by any means to fibers, fiber products or fabric,
MicroPCM Foam is not within the scope and field of the TRDC license and,
therefore, is not within that portion of the Technology received from TRDC.
Neither Xxxxxx nor its Affiliates will challenge the meaning of Technology as
set forth above in this Section with respect to any period during which this
Agreement is in effect. However, an agreement by Outlast that restricts the
scope of Outlast's license under the TRDC License, or an award or court judgment
that is binding on Outlast and restricts the scope of Outlast's license under
the TRDC License, in a challenge by any person or entity other than Xxxxxx or
its Affiliates, will inure to Xxxxxx'x benefit hereunder by restricting the
definition and scope of "Licensed Products" to those within the so restricted
scope of the TRDC License, to the extent applicable. Xxxxxx and its Affiliates
will not encourage or support (other than any support which is required to be
given under law) any third party in making any such challenge.
ARTICLE 3
FEES AND ROYALTIES
In consideration of the grant of license to Xxxxxx as provided in Article 2,
Xxxxxx shall make the following payments under this Article 3 to Outlast.
3.1 License Fees.
a. Patent License. Xxxxxx shall pay to Outlast a patent use license fee
of One-Hundred Thousand Dollars ($100,000) to be paid upon execution of this
Agreement. By payment of this fee, Xxxxxx and its Customers shall be deemed
licensed hereunder for all sales by Xxxxxx of Licensed Products prior to January
1, 1998.
3.2 Patent Use Royalties. Commencing as of January 1, 1998, Xxxxxx shall pay
the following patent use royalties for sales by Xxxxxx and its Affiliates of
Licensed Products intended for incorporation into End-Use Products, where either
the Licensed Products or the End-Use Products are covered by at least one Valid
Claim:
a. Exclusive Rights. [This information has been omitted in accordance
with a Confidential Treatment Request and has been filed separately with the
Commission.] of Licensed Products sold during the period of time of this
Agreement in which Xxxxxx'x rights as provided in Section 2.1 are exclusive with
respect to such Licensed Products.
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b. Non-Exclusive Rights. [This information has been omitted in accordance
with a Confidential Treatment Request and has been filed separately with the
Commission.] of Licensed Products sold during the period of time of this
Agreement in which Xxxxxx'x rights are non-exclusive with respect to such
Licensed Products.
3.3 Sublicensee Royalty. In addition to the provisions of Section 3.2, Xxxxxx
shall pay to Outlast sublicense royalties based on any and all remuneration,
other than as consideration for the sale of Licensed Products, received by
Xxxxxx and its Affiliates with respect to Licensed Products or End-Use Products.
Without limiting the generality of the foregoing, such remuneration may come
from Customers of Licensed Products or their customers who manufacture End-Use
Products. Such remuneration may include, without limitation, any remuneration
relating to the use of any trademark in which Xxxxxx has rights, but shall not
include remuneration paid to Xxxxxx by its Customers for research, development,
or technical support services. The sublicense royalties shall be (i) [This
information has been omitted in accordance with a Confidential Treatment Request
and has been filed separately with the Commission.] while Xxxxxx'x rights under
this Agreement are exclusive; or (ii) [This information has been omitted in
accordance with a Confidential Treatment Request and has been filed separately
with the Commission.] while Xxxxxx'x rights under this Agreement are
non-exclusive (which exclusivity or non-exclusivity shall be determined without
regard to Section 2.4).
3.4 Minimum Annual Payments. In order to maintain the exclusivity of the rights
granted in Section 2.1, Xxxxxx must pay, within the time period specified in
Section 3.6, the minimum annual payments as set forth below for each particular
year:
1998 $150,000
1999 $250,000
2000 $400,000
2001 $500,000
2002 $600,000
a. Subsequent Years. If prior to the expiration of the initial
exclusivity period in 2002, Xxxxxx elects in writing to extend the exclusive
period of Section 2.1 through calendar year 2007, the minimum annual payment for
each of the years 2003 through 2007 shall be $1,000,000. If the Parties mutually
agree in writing to extend the exclusive period of Section 2.1 for an additional
five-year term beginning with calendar year 2008, the minimum annual payment for
each of such additional years shall be determined by mutual agreement. This
Agreement shall automatically become non-exclusive on the later of January 1,
2003 or the first day of January following any extension(s) specified in the
preceding two sentences, and once the Agreement becomes non-exclusive, Xxxxxx
shall no longer be obligated to make minimum annual payments as set forth above.
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b. Offsets. Minimum annual payments, otherwise required to be paid by
Xxxxxx to Outlast, shall be offset by one-hundred percent (100%) of all
royalties paid to Outlast with respect to any given calendar year of this
Agreement as specified in Sections 3.2 and 3.3 only.
c. Failure to Make Minimum Annual Payments. If Xxxxxx fails to pay
Outlast minimum annual payments, as set forth in this Section 3.4 in any year,
then the exclusive rights granted to Xxxxxx pursuant to this Agreement shall
immediately become non-exclusive, and Xxxxxx shall no longer be obligated to
make minimum annual payments as set forth above. Notwithstanding anything herein
to the contrary, once Xxxxxx'x rights have become non-exclusive due to a failure
to make minimum annual payments, Xxxxxx shall not be entitled to elect to
restore exclusivity as provided in Section 3.4(a).
3.5 Payment for Use of Proprietary Information. The patent use royalty rate as
set forth in Section 3.2 above shall not be reduced so long as there is
worldwide at least one patent or one pending patent application with a Valid
Claim covering any Licensed Product or End-Use Product. The Parties acknowledge
that Outlast has provided Proprietary Information to Xxxxxx in order to assist
in the sales of Licensed Products and End-Use Products. Therefore, in the event
that there is no patent or pending patent application worldwide with a Valid
Claim covering any Licensed Product or End-Use Product, Xxxxxx shall pay to
Outlast [This information has been omitted in accordance with a Confidential
Treatment Request and has been filed separately with the Commission.] of that
amount specified in Section 3.2 for Licensed Products as a payment for the value
of above-referenced information provided by Outlast to Xxxxxx. Notwithstanding
anything herein to the contrary, this Section 3.5 shall not apply with respect
to a sale in any country if it is in conflict with the laws of such country as
of the date in conflict.
3.6 Payments. Payments of monies owed under this Agreement shall be made within
forty-five (45) days following the close of each calendar quarter or when
otherwise due hereunder. Minimum annual payments, net of offsets, will be paid
within forty-five (45) days following the close of the 4th Quarter of each
calendar year.
3.7 Interest on Late Payments. If for any reason any payments owing to Outlast
are not paid when due, interest shall be payable on the unpaid balance at a rate
of one and one-half percent (1.5%) per month.
3.8 Allocation of Consideration. For purposes of determining its Net Selling
Price or the amount of remuneration received other than as consideration for the
sale of Licensed Products, Xxxxxx shall fairly allocate revenues derived from a
single transaction or a series of related transactions with the same party
between (i) revenues which relate to the Licensed Products and (ii) revenues
which relate to the license or transfer of unrelated products of the provision
of services. Without limiting the generality of the foregoing, it is the
intention of the Parties that while Xxxxxx shall be free to determine its
pricing, for purposes of determining its Net Selling Price or the amount of
remuneration received other than as consideration for the sale of Licensed
Products, Xxxxxx shall allocate the aggregate revenues derived from a single
transaction or a
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series of related transactions with the same party in proportion to the
respective reasonable fair market value of the Licensed Products or the rights
relating thereto and the unrelated products or services in the transaction(s).
For purposes of determining royalties, transactions between Xxxxxx and its
Affiliates shall be ignored and the final transaction by Xxxxxx or one of its
Affiliates with a Customer which is not an Affiliate of Xxxxxx, or their
customers who manufacture End-Use Products, shall be controlling.
ARTICLE 4
RECORD KEEPING AND REPORTING
4.1 Records. Xxxxxx shall keep, at its principal place of business, complete
and accurate records and books of account showing quantities of each Licensed
Product maintained as inventory, sold or otherwise disposed of, the Net Selling
Price of each such Licensed Product, and the date of each such sale or
disposition. Xxxxxx shall also keep, at its principal place of business,
complete and accurate records and books of account showing all other
remuneration received by Xxxxxx, if any, from Customers of Licensed Products, or
their customers who manufacture End-Use Products, other than as consideration
for the sale of Licensed Products, with respect to Licensed Products or End-Use
Products, including without limitation any remuneration relating to the use of
any trademark in which Xxxxxx has rights.
4.2 Quarterly Reports. Starting with first quarter of 1998, and not later than
forty-five (45) days after the close of each calendar quarter thereafter, Xxxxxx
shall render written reports to Outlast, signed by a duly authorized officer of
Xxxxxx and certified by such officer as accurate, to the best of his knowledge,
for each month in the preceding quarter of the following: (a) the quantity of
each Licensed Product sold or otherwise disposed of, (b) the Net Selling Price
of each Licensed Product sold or otherwise disposed of, (c) all other
remuneration received by Xxxxxx, if any, from Customers of Licensed Products, or
their customers who manufacture End-Use Products, other than as consideration
for the sale of Licensed Products, with respect to Licensed Products or End-Use
Products, including without limitation any remuneration relating to the use of
any trademark in which Xxxxxx has rights, and (d) the calculation of the
royalties owed to Outlast under Article 3 of this Agreement.
4.3 Annual Report. Xxxxxx shall deliver to Outlast not later than ninety (90)
days after the close of each calendar year during the term of this Agreement (or
portion thereof in the event of prior termination for any reason), a statement
signed and certified by a duly authorized officer relating to said entire year,
setting forth the same information required to be submitted by Xxxxxx in
accordance with Section 4.2 above.
4.4 Inspection. All of Xxxxxx'x records pertaining to this Agreement shall be
available for annual inspection and audit by an independent auditor selected
solely by Outlast during the term of this Agreement and for two years
thereafter. At Outlast's sole discretion, Outlast may cause an independent audit
to be made of such books and records in order to verify payments rendered
pursuant to this Agreement. Such inspections or audits shall be conducted during
normal
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business hours at Xxxxxx'x place of business upon reasonable advance notice and
not more than once per calendar year. Outlast shall pay the cost of such
independent audit unless the payments made to Outlast are found to be less than
ninety-five percent (95%) of those due to Outlast, in which event Xxxxxx shall
pay the cost of such audit.
4.5 Invoices. For the purpose of facilitating inspection of Xxxxxx'x books and
records by Outlast's independent auditor, all invoices, xxxx, and bills of
lading and similar documents relating to sales and shipments of Licensed
Products shall bear a legend devised by Xxxxxx to identify such Licensed
Products.
ARTICLE 5
DISCOVERIES AND INVENTIONS
5.1 Discoveries and Inventions. Xxxxxx shall be entitled to develop
enhancements, modifications or improvements to the Licensed Products
("Improvement"). For Improvements that are conceived or reduced to practice
during the term of this Agreement, and to the extent they would be owned by
Xxxxxx but for this Agreement, Xxxxxx hereby assigns to Outlast its right, title
and interest in the field of the TRDC License in and to any such Improvements,
including proprietary information, inventions and know-how engendering the same.
To the extent that under applicable law, assignment by Xxxxxx is invalid or
unenforceable, or to the extent the parties may agree that assignment should not
be made, Xxxxxx grants to Outlast a worldwide, exclusive license to make, have
made, use and sell under so much of its rights in the Improvements. Upon
conception of each Improvement, Xxxxxx shall, as soon as practicable, notify
Outlast in writing about the Improvement in accordance with Section 11.3,
including therein a complete description of the Improvement. For three (3)
months following disclosure by Xxxxxx to Outlast, each Improvement shall not be
publicly disclosed, published, demonstrated, offered for sale or otherwise
divulged by Xxxxxx without Outlast's written consent. During the term of this
Agreement, Xxxxxx'x license to make, use and sell Licensed Products shall
include non-exclusive rights under Improvements, which rights with respect to
the Improvements shall not require any royalty in addition to that set forth in
Sections 3.2 and 3.3.
5.2 Prosecution of Patent Applications. At the request of Outlast, and through
Outlast's attorneys, Xxxxxx shall file and prosecute patent applications on
Improvements and shall assign or license rights thereto to Outlast, as and to
the extent specified in Section 5.1, all at Outlast's expense.
ARTICLE 6
PATENT MARKINGS
6.1 Patent Marking. Except for MicroPCMs sold by Xxxxxx, Xxxxxx shall xxxx all
Licensed Products and End-Use Products or their containers sold by Xxxxxx under
this Agreement with the words "Patent No." and the numbers of the patent(s)
applicable to each Licensed Product. If no patent has been issued at the time of
sale or other disposal of Licensed Products by Xxxxxx and the
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Licensed Product is the subject of patent(s) pending, Xxxxxx shall xxxx all
Licensed Products or their containers with the words "Patent(s) Pending" or
"Patent(s) Applied For". Outlast shall inform Xxxxxx as to the appropriate
patent numbers or patent application numbers for each specific Licensed Product.
Outlast shall be responsible for any mismarkings or false markings by Xxxxxx
based upon the most current information supplied by Outlast at the time of sale
by Xxxxxx. At Outlast's request, and at Outlast's expense, Xxxxxx shall
undertake reasonable efforts to correct any such mismarkings or false markings
by Xxxxxx which were based upon the most current information supplied by Outlast
at the time of sale by Xxxxxx.
ARTICLE 7
TERM & TERMINATION
7.1 Term. Unless this Agreement is extended by mutual written agreement, it
shall automatically terminate on the later of (i) ten years after the date on
which Xxxxxx'x license rights become nonexclusive, or (ii) upon expiration of
the last to expire of the patents within the Technology.
7.2 Termination by Xxxxxx. Xxxxxx shall have the right to terminate this
Agreement on ninety (90) days written notice to Outlast.
7.3 Termination by Outlast. Outlast shall have the right to terminate this
Agreement by written notice to Xxxxxx if Xxxxxx fails to cure any breach or
default hereof provided: (i) Outlast gives Xxxxxx notice specifying such breach
or default(s); and (ii) Xxxxxx fails to cure or resolve the breach or default(s)
within ninety (90) days after such notice has been given. Failure of Xxxxxx to
make a minimum annual payment shall give Outlast rights under Section 3.4c, not
rights under this Section 7.3.
7.4 Termination of Rights. Unless otherwise expressly provided, all rights
granted to Xxxxxx by this Agreement shall terminate immediately upon expiration
or termination of this Agreement pursuant to this Article 7. Xxxxxx and its
Affiliates and sublicensees shall immediately cease manufacture of Licensed
Products. Xxxxxx and its Affiliates and sublicensees shall have six months to
use or dispose of their then-existing inventory of Licensed Products in
accordance with the terms of this Agreement, which disposition shall be reported
to Outlast in accordance with Article 4, accompanied by remittance in full of
royalties under Section 3.2 and sublicense royalties under Section 3.3 based
upon the royalty rate in effect as of the date of expiration or termination of
this Agreement. At the end of the six-month period, sales by Xxxxxx and its
Affiliates and sublicensees of Licensed Products shall cease.
7.5 Submission of Report and Payment upon Termination. Upon expiration or
termination of this Agreement for any reason, Xxxxxx shall render a written
report to Outlast stating the quantities and Net Selling Prices of all Licensed
Products sold or otherwise disposed of by Xxxxxx during the period from the time
of the last report as set forth in Article 4 herein to the effective date of the
expiration or termination. The report from Xxxxxx shall be accompanied by a
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remittance in full covering any payments due Outlast as of the effective date of
expiration or termination.
ARTICLE 8
ENFORCEMENT OR DEFENSE OF RIGHTS
AGAINST THIRD PARTIES
8.1 Third Party Infringement. Outlast and Xxxxxx shall notify each other in
writing not more than thirty (30) days after learning of a possible infringement
of the Technology or of any imitation, unauthorized possession, knowledge, or
use of the Technology or of any claim by a third party that the Technology may
be infringing on the rights of a third party.
8.2 Joint Enforcement and Defense.
x. Xxxxxx and Outlast, as party plaintiffs, shall jointly institute
legal proceedings against any third party that is reasonably believed to be
infringing the Technology with respect to a Licensed Product to which Xxxxxx has
exclusive rights under this Agreement to eliminate such infringement.
Furthermore, Outlast and Frisby, as party defendants, shall jointly defend any
action brought by a third party against either Outlast or Frisby or both with
respect to the validity of either Parties' rights in the Technology as they
relate to a Licensed Product marketed by Frisby or its Affiliates, sublicensees
or Customers of Licensed Products, or their customers who manufacture End-Use
Products. Outlast and Frisby shall share equally all costs related to bringing
or defending any such action and shall share equally in any and all settlement
amounts, damages, license fees, and costs recovered or required to be paid
relating to any such action; provided, however, that if a third party's alleged
infringement relates both to a Licensed Product to which Frisby has exclusive
rights under this Agreement and one or more other products for which Frisby has
non-exclusive rights pursuant to Section 2.4 or no rights, Xxxxxx'x share of any
costs and any settlement amounts, damages, license fees, and costs recovered or
required to be paid in such action shall be 50% multiplied by the ratio of the
dollar amount of infringement with respect to the Licensed Product to which
Frisby has exclusive rights to the total dollar amount of the infringement.
b. Unless otherwise agreed by the Parties, Outlast shall have the sole
right to institute legal proceedings against any third party that is reasonably
believed to be infringing the Technology with respect to a Licensed Product to
which Frisby has non-exclusive rights under this Agreement to eliminate such
infringement. Outlast shall pay all costs related to bringing any such action.
Frisby, at Outlast's sole expense, shall reasonably cooperate in the prosecution
of any such action. Outlast shall be entitled to receive and retain the full
amount of any and all settlement amounts, damages, license fees, and costs
recovered or required to be paid relating to any such action.
c. With the exception of litigation that already has commenced by the
filing of appropriate pleadings in a court of law, or with respect to claims
which arise during the term of
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this Agreement relating to Xxxxxx'x use of the Technology as provided in Section
8.2a, upon expiration or termination of the term of this Agreement, any and all
rights of Frisby in resolving any claims hereunder will revert to Outlast. In
the event litigation has been commenced by Frisby and/or Outlast against a third
party infringer or against Frisby and/or Outlast as provided above within the
term of this Agreement but is not finally resolved by judgment or settlement
within said term, Frisby shall bear the same burden of expense for the
litigation or settlement thereof and will share in the recovery of such
litigation or settlement thereof, as if such litigation had been finally
resolved within the term of this Agreement.
8.3 Xxxxxx'x Failure to Enforce or Defend. In the event that Frisby fails to
jointly enforce or defend the Technology in breach of Section 8.2, Outlast may
institute legal proceedings against a third party infringer and shall defend
legal proceedings filed against it at its sole cost and expense and shall retain
all amounts received in costs, settlement or damages. Furthermore, if Frisby
fails to jointly enforce or defend the Technology and/or fails to pay its share
of the costs related to such defense or enforcement in breach of Section 8.2,
then the rights granted to Frisby pursuant to this Agreement shall immediately
become non-exclusive, which shall be Outlast's sole remedy with respect to such
failure by Frisby.
8.4 Joint Representation. Outlast and Frisby shall make every effort to agree
on representation by one lead counsel who is the most knowledgeable about the
Technology, as well as the claims involved in order to promote efficiency and to
reduce expenses incurred in the enforcement or defense of rights against third
parties. If the parties involved can not reach a decision on lead counsel,
Outlast shall make the final selection. Any party may choose to be separately
represented, however, in that instance, such party shall pay its own legal fees
and costs for such separate representation in addition to its share of the costs
related to joint representation.
8.5 Cooperation. The Parties shall cooperate fully in the enforcement or
defense of rights pursuant to this Article 8 including without limitation,
releasing information and documents relevant thereto and participation in any
litigation brought hereunder, to the extent specified.
8.6 Payment Obligations During Litigation. Xxxxxx'x obligation to pay royalties
and other sums due under this Agreement shall remain in full force and effect
during any litigation instituted pursuant to this Article 8 or during any
litigation or other dispute between the Parties.
ARTICLE 9
WARRANTY, LIABILITY, AND INDEMNIFICATION
9.1 Proprietary Rights Warranty. Outlast warrants that as of the date it
executes this Agreement, it knows of no claim of any third party relating to the
infringement by Outlast of such third party's rights in any patent or other
proprietary right relating to the use of the Technology. Frisby warrants that as
of the date it executes this Agreement, it knows of no claim of any third party
relating to the infringement by Frisby of such third party's rights in any
patent or other proprietary right relating to the use of Xxxxxx'x intellectual
property or Proprietary Information. In
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addition, each Party warrants that this Agreement does not contravene any other
agreement to which it is a party or it certificate of incorporation or by-laws.
9.2 TRDC License. Outlast warrants that to the best of its knowledge, (i) the
TRDC License is valid and binding upon TRDC and Outlast and is in full force and
effect, and (ii) Outlast has the right under the TRDC License to grant the
rights granted to Frisby pursuant to this Agreement.
9.3 Limitation of Liability. OTHER THAN AS EXPRESSLY SET FORTH IN SECTIONS 9.1
AND 9.2 ABOVE, FRISBY ACKNOWLEDGES AND AGREES THAT OUTLAST HAS NOT MADE, DOES
NOT MAKE, AND HEREBY DISCLAIMS, ANY REPRESENTATION, GUARANTY, CONDITION,
COVENANT OR WARRANTY OF ANY KIND WITH RESPECT TO ITS TECHNOLOGY, WHETHER WRITTEN
OR VERBAL, EXPRESS OR IMPLIED, IN FACT OR AT LAW, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR USE.
EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS UNDER SECTION 9.4 OR BREACHES
OF ARTICLE 10, NEITHER PARTY SHALL, UNDER ANY CIRCUMSTANCE, BE LIABLE TO THE
OTHER FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREIN, EVEN IF SUCH PARTY WAS APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES
OCCURRING.
9.4 Indemnification.
a. Use of Technology: Frisby. Frisby shall indemnify, defend, and hold
harmless Outlast from any and all claims, liabilities, losses, damages, costs,
and expenses (including reasonable attorneys fees and costs) which Outlast or
Frisby may sustain, whether for personal injury or otherwise, by reason of or as
a result of Xxxxxx'x (or its employees, officers, agents, or any person
connected with its business) design, operation of its business, marketing,
manufacture, or distribution of Licensed Products, including but not limited to:
(i) unfair or fraudulent advertising claims, warranty claims, and claims for
unauthorized use of any intellectual property right owned by a third party; (ii)
product defect or liability claims pertaining to the Licensed Products; and
(iii) failure to comply with any laws or regulations, including all of the
United States import/export laws and regulations.
b. Use of Technology: Outlast. Outlast shall indemnify, defend, and
hold harmless Frisby from any and all claims, liabilities, losses, damages,
costs, and expenses (including reasonable attorneys' fees and costs) which
Outlast or Frisby may sustain, whether for personal injury or otherwise, by
reason of or as a result of Outlast's (or its employees, officers, agents, or
any person connected with its business) design, operation of its business,
marketing, manufacture, or distribution of products made with or containing
Improvements, including but not limited to: (i) unfair or fraudulent advertising
claims, warranty claims, and claims for
13
unauthorized use of any intellectual property right owned by a third party; (ii)
product defect or liability claims pertaining to such products; and (iii)
failure to comply with any laws or regulations, including all of the United
States import/export laws and regulations.
9.5 Insurance.
x. Xxxxxx shall maintain, at its own expense in full force and effect
at all times during which Licensed Products are sold, product liability
insurance providing coverage against product liability claims relating to the
Licensed Products in an amount not less than $2,000,000.
b. Outlast shall maintain, at its own expense in full force and effect
at all times during which products made with or containing Improvements are
sold, product liability insurance providing coverage against product liability
claims relating to products made with or containing Improvements in an amount
not less than $2,000,000.
ARTICLE 10
CONFIDENTIALITY
10.1 Protection of Proprietary Information. Neither Party shall disclose or
permit any of their respective Recipients to disclose any of the other Party's
Proprietary Information. Neither Party shall use or permit any of their
respective Recipients to use any of the other Party's Proprietary Information
for any purpose other than the purposes of this Agreement. Neither party shall
photocopy, transcribe, or otherwise reproduce any of the other Party's
Proprietary Information, except as may be necessary for its use of a Party's
Proprietary Information for the purposes of this Agreement. Each of the Parties
shall (i) notify the other Party immediately of any unauthorized possession,
use, or knowledge of the other Party's Proprietary information; (ii) promptly
furnish full details of such possession, use, or knowledge to the other Party;
and (iii) reasonably cooperate with the other Party in any litigation against
third parties as may be deemed necessary by the other Party to protect its
proprietary rights in that Party's Proprietary Information. Each of the Parties
shall return, and shall cause their Recipients to return, all copies,
transcriptions, or other reproductions of, and any notes relating to, the other
Party's Proprietary Information to the other Party upon either: (a) the
accomplishment of the purpose for which the Proprietary Information was
provided, or (b) the expiration or termination of this Agreement. The Parties
acknowledge and agree that the other Party would be irreparably harmed if any of
a Party's Proprietary Information were to be disclosed to third parties, and
further agree that each Party shall have the right to seek and obtain injunctive
relief upon any violation of this Section 10.1, in addition to all of the rights
and remedies available at law or in equity. This Section shall not apply to
technical information regarding MicroPCMs per se or MicroPCM Foam per se or the
manufacturing of either.
10.2 Permitted Disclosures. Notwithstanding anything herein to the contrary, the
obligations of this Article 10 shall not apply with respect to any of a Party's
Proprietary Information that (i) was in the public domain at the time of
disclosure or subsequently entered the public domain other
14
than through a breach of this Article 10, (ii) was in the possession of the
Recipient free of any obligation of confidentiality at the time of communication
to the Recipient, (iii) was rightfully communicated to the Recipient free of any
obligation of confidentiality subsequent to the time of communication to the
Recipient, or (iv) was independently developed by the Recipient or its employees
or agents. Frisby shall be permitted to disclose the introductory paragraph,
Article 1 (to the extent the terms used therein are used in Sections 2.1, 2.2,
2.3, 2.4 and 7.1), and Sections 2.1, 2.2, 2.3, 2.4, 5.1, 7.1, 7.2, 7.3 and 7.4
of this Agreement to sublicensees and potential sublicensees and Customers and
potential Customers who agree to hold the terms thereof in confidence. Outlast
and Frisby shall be permitted to disclose this Agreement to investors and
potential investors (i) who agree to hold its terms in confidence or (ii) as
required by law, regulation or order.
10.3 Term. The Parties agree that the obligations of each Party with respect to
any portion of the other party's Proprietary Information under this Agreement
shall extend until the earlier of (i) such time as the portion of the
Proprietary Information in question falls within one of the exceptions set forth
in Section 10.2 of this Agreement, and (ii) ten (10) years from the date on
which such Proprietary Information was first disclosed to the other Party.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Status of Parties. Nothing contained in this Agreement shall be deemed or
construed as creating a joint venture or partnership between the Parties.
Neither Party shall have the power to control the activities and operations of
the other and their status is, and at all times will continue to be, that of
independent contractors with respect to each other. Neither Party shall hold
itself out as having any authority or relationship in contravention of this
Section 11.1, and neither Party shall act on behalf of the other Party or enter
into any contracts, warranty, or representation as to any other matter on the
behalf of the other Party.
11.2 Effect of Waiver. No waiver whether express or implied, of any breach of
any term, condition, or obligation of this Agreement shall be construed as a
waiver of any subsequent breach of that term, condition, or obligation, or any
other term, condition, or obligation of this Agreement of the same or different
nature.
11.3 Notices. All notices or other communications which are required to be given
or may be given to Parties pursuant to the terms of this Agreement shall be
given in writing and delivered personally or by registered or certified mail,
postage prepaid. Notice shall be deemed given on the date of delivery in the
case of personal delivery or on the delivery date as specified in the return
receipt in the case of registered or certified mail. Notices to be given to
Outlast shall be addressed to Xx. Xxxxxxxx X. Xxx, President, Outlast
Technologies, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000, with a copy to Holland
& Xxxx LLP, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxxxx. If given to Frisby, it shall be addressed to Xx.
Xxxx Xxxxxx, CEO, Xxxxxx Technologies, Inc., 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, XX
00000,
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with a copy to Fish & Xxxxxxxxxx P.C., 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxx. Either Party hereto may at any
time, by thirty (30) days written notice to the other, designate any other
person or address in place of those provided in this Section 11.3.
11.4 Severability. The Parties acknowledge and agree that, should any provision
of this Agreement be determined to violate or contravene any law, such provision
shall be severed or modified to the extent necessary to comply with the
applicable law, and such modified provision and the remainder of the provisions
hereof shall continue in full force and effect.
11.5 Successors and Assigns. This Agreement shall inure to the benefit of the
successors, or assigns of the Parties. The license granted by this Agreement
shall be binding on any successor to ownership or control of the Licensed
Products. Frisby shall not have any right to assign or, except as provided under
this Agreement, sublicense its rights under this Agreement without the sole
written consent of Outlast, which shall not be unreasonably withheld. Name
changes and changes of the state of incorporation shall not require approval.
Outlast shall be able to assign its rights under this Agreement freely and
without constraint. In the event of a merger or consolidation between Outlast
and a surviving corporation, or if an entity purchases or otherwise acquires
all, or substantially all, of the assets of that segment of Outlast's business
relating to the subject matter of this Agreement, Outlast shall be able to
assign this Agreement as a whole to the surviving corporation or purchasing or
acquiring entity and, thereafter, Outlast shall have no further liability to
Frisby pursuant to this Agreement; provided, however, that such surviving or
acquiring entity first agrees in writing to be bound by the terms and conditions
of this Agreement.
11.6 Modification. Except as specifically provided otherwise herein, this
Agreement shall only be modified by written agreement of both Parties.
11.7 Binding Arbitration. Any disputes between the Parties relating to or
arising out of the interpretation or performance of this Agreement, shall be
finally settled in Denver, Colorado, by arbitration under the rules then in
effect of the American Arbitration Association by three arbitrators appointed in
accordance with such rules. The arbitrators shall decide the issues presented
applying the substantive laws of the State of Colorado, without regard to the
conflicts of laws principles of such state, except as to the patentability,
validity, enforceability, scope or infringement of patents and patent
applications, which shall be governed by the law of the granting jurisdiction.
The award of the arbitrators shall be in writing, shall be final and binding
upon the Parties and shall not be appealed from or contested in any court. The
arbitrators shall have the authority to award any remedy or relief that a court
of the State of Colorado could order or grant, including, without limitation,
specific performance of any obligation created under this Agreement, the
issuance of an injunction, or the imposition of sanctions for abuse or
frustration of the arbitration process. No Party shall, in connection with any
proceedings held pursuant to this Section 11.7, be required to furnish any bond.
Should either Party fail to appear or be represented at the arbitration
proceedings after due notice in accordance with the rules, then the arbitrators
may nevertheless render a decision in the absence of said Party and such
decision shall
16
have the same force and effect as if the absent Party had been present, whether
or not it shall be adverse to the interests of said Party. Any award rendered
hereunder may be entered for enforcement, if necessary, in any court of
competent jurisdiction, and the Party against whom enforcement is sought shall
bear the expenses, including attorneys' fees, of enforcement. The prevailing
party in any arbitration brought pursuant to this Section 11.7 or other suit
relating to this Agreement shall be entitled to its costs and reasonable
attorneys' fees.
11.8 Injunctive Relief. The Parties acknowledge that the Technology possesses a
special, unique, and extraordinary character which makes difficult the
assessment of the monetary damage which would be sustained by Outlast as a
result of Xxxxxx'x breach of this Agreement, and that irreparable injury would
be caused to Outlast by such breach. Accordingly, Outlast shall have the right
to seek and obtain immediate and permanent injunctive and other equitable
relief, without the necessity of posting a bond, cash or otherwise, in the event
of a breach of this Agreement by Frisby, in addition to any and all rights or
remedies otherwise available to Outlast at law or in equity.
11.9 Authorization. The Parties acknowledge that this Agreement is valid,
legal, and binding upon such Party. Outlast represents and warrants that the
person signing this Agreement on behalf of Outlast is duly authorized to bind
Outlast to the terms and conditions of this Agreement. Frisby represents and
warrants that the person signing this Agreement on behalf of Frisby is duly
authorized to bind Frisby to the terms and conditions of this Agreement.
11.10 Headings and Captions. The headings or captions in this Agreement are
inserted for convenience and identification only and are in no way intended to
describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provisions hereof.
11.11 Entire Agreement. The Parties agree that this Agreement contains the
entire understanding and Agreement between the Parties and supersedes all
previous communications, proposals, representations, and agreements, whether
oral or written, and whether related in any way to the purpose of this Agreement
or not. This Agreement is binding upon the Parties and neither Party shall
challenge its validity. This Agreement shall not be construed against the
drafting Party solely because of the submission of the Agreement to the other
Party. Each Party has had an opportunity to consult with its own legal counsel
and has not relied upon representations or warranties of the other Party except
as set forth in this Agreement.
11.12 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
11.13 Choice of Law and Jurisdiction. This Agreement shall be interpreted in
accordance with the laws of the State of Colorado, without regard to the
conflicts of laws principles of such State, except as to the patentability,
validity, enforceability, scope or infringement of patents and patent
applications, which shall be governed by the law of the granting jurisdiction
and Frisby submits itself to personal jurisdiction in the state of Colorado.
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11.14 Survival. Except as otherwise provided herein, the provisions of this
Agreement that by their sense and context are intended to survive performance by
either or both parties shall also survive the expiration or termination of this
Agreement.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE DULY
EXECUTED, IN DUPLICATE, AS OF THE EFFECTIVE DATE.
OUTLAST TECHNOLOGIES, INC.
BY: \s\Xxxxxxxx Xxx
------------------------------------------
NAME: Xxxxxxxx Xxx
------------------------------------------
TITLE: President/CEO DATE: 1/9/98
XXXXXX TECHNOLOGIES, INC.
BY: \s\Xxxx Xxxxxx
------------------------------------------
NAME: Xxxx Xxxxxx
------------------------------------------
TITLE: Chairman and CEO DATE: 1/9/98
---------------- ------
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