SETTLEMENT AGREEMENT
This
SETTLEMENT
AGREEMENT is
entered into as of the latest of the dated signatures below ("Effective Date")
by and among Technology
Research Corporation ("TRC"), and
Tower
Manufacturing Corporation ("Tower").
IN
CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED HEREIN, THE
SUFFICIENCY OF WHICH THE PARTIES IRREVOCABLY ACKNOWLEDGE, THE PARTIES AGREE
AS
FOLLOWS:
ARTICLE
1
DEFINITIONS
The
following terms shall have the meaning set forth below when used in this
Agreement:
1.1 "337
Patent" means U.S. Patent No. 6,292,337 entitled "Electrical System with Arc
Protection", including all foreign counterparts, divisional, continuation,
reissued, reexamined and continuation in-part patents.
1.2 “199
Patent" means U.S. Patent No. 5,943,199 entitled "Mini Appliance Leakage Current
Interrupter," including all foreign counterparts, divisional, continuation,
reissued, reexamined and continuation in-part patents.
1.3 "LCDI
Products" means Leakage Current Detector Interruptor products.
1.4 "Agreement"
means this Settlement Agreement.
1.5 "Party"
or "Parties" means any party or parties to this Agreement, including affiliate
companies and parent companies, as the case may be.
1.6 "Stipulation
of Dismissal with Prejudice" means the two Stipulation of Dismissal with
Prejudice documents attached as Appendix A.
ARTICLE
2
BACKGROUND
2.1 TRC
is
the owner of the entire right, title and interest in and to the `337
Patent.
2.2 TRC
has
filed suit against Tower and Fedders Corporation ("Fedders") in the U.S.
District Court for the Middle District of Florida, No. 8:05-cv-1455-RAL-TGW,
("the Florida Action"),
alleging infringement of the `337 patent. Tower asserted several affirmative
defenses and counterclaims, alleging, among other things, that it did not
infringe the `337 Patent, that the `337 Patent is invalid, and that TRC
committed tort and antitrust violations.
2.3 Tower
is
the owner of the entire right, title and interest in and to the '199
Patent.
**The
appearance of a double asterisk denotes confidential information that
has been
omitted from the exhibit and filed separately, accompanied by a confidential
treatment request, with the Securities and Exchange Commission pursuant
to Rule
24b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
417747.04
2.4 Tower
has
filed suit against TRC in the U.S. District Court for the District of Rhode
Island, No. 1:06-cv-212-T-DLM ("xxx Xxxxx Xxxxxx Action"), alleging infringement
of the '199 Patent. TRC asserted several affirmative defenses and counterclaims,
alleging, among other things, that it did not infringe the `199 Patent, that
the
`199 Patent is invalid, and that Tower committed tort and antitrust
violations.
2.5 The
parties to this Agreement now desire to settle the Florida Action and the Rhode
Island Action, and to settle and resolve all issues which they may have against
each other arising out of or in connection with the `337 and '199
Patents.
ARTICLE
3
PAYMENTS
AND ROYALTIES TO TRC
3.1 Tower
shall pay TRC Three Million Two Hundred Thousand and No/100 Dollars
($3,200,000.00) in full settlement regarding all products made, used, sold,
imported or offered for sale by either Tower or Fedders prior to July 1, 2007.
One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) of this
sum
shall be payable within thirty days of the dismissal of the Florida Action
and
the balance shall be paid in two (2) annual and equal installments over a period
of two (2) years, each installment being due within thirty days of the
anniversary of the dismissal of the Florida Action. The amount outstanding
shall
be guaranteed personally by Xxxxx Xxxxxxx. The amount of the outstanding payment
owed by Tower to TRC shall accrue interest, compounded quarterly, at the prime
interest rate in effect as of the last day of the previous quarter.
3.2 Going
forward after June 30, 2007, for so long as the `337 Patent is valid and
enforceable, the royalty for any Tower LCDI Product made, used, sold, imported
or offered for sale by or for Tower or its subsidiaries after June 30, 2007
that
utilizes the inventions claimed by the `337 Patent is **.
3.3 Going
forward after June 30, 2007, for so long as the `199 Patent is valid and
enforceable, the royalty for any TRC LCDI Product made, used, sold, imported
or
offered for sale by or for TRC or its subsidiaries after June 30, 2007 that
utilizes the inventions claimed by the `199 Patent is **.
3.4 Royalty
payments will be paid quarterly, will be due for the previous quarter on the
15th
of the
month following the end of that quarter, and will include a statement of the
number of units ** made, used, sold, imported or offered for sale utilizing
the
patented technology. TRC and Tower shall have the right to audit the other's
statements under reasonable conditions.
3.5 The
payments required to be made pursuant to section 3.1 of this Agreement shall
be
made in United States dollars by wire transfer of immediately available funds
as
follows:
Technology
Research Corporation
0000
000xx
Xxxxxx
Xxxxx
Xxxxxxxxxx,
XX 00000-0000
Bank
Name: **
City/State: **
Account
No.: **
ABA
No.: **
Swift
Code: **
Account
Name:
ARTICLE
4
LICENSE
AGREEMENT
4.1 For
so
long as Tower remains in compliance with the payment obligations specified
in
section 3.1 of this Settlement Agreement, TRC hereby grants to Tower and its
parent companies, existing contract manufacturers, and subsidiaries and Tower
Switches Limited a perpetual, worldwide, non-transferable (except as set forth
in Section 10.1), non-exclusive license, limited to the room air conditioner
(RAC) market, to make, have made, use, offer-to-sell, sell, export, and import,
or otherwise dispose of products and services, the making, having made, use,
offering to sell, selling, exporting or importing of which would in the absence
of this license infringe any valid and enforceable claim of the `337 Patent.
This license shall apply to Tower Switches Limited, and to Tower's customers,
manufacturers, partners, distributors, re-sellers, vendors, and their respective
end users, regarding all products and services made by, made for, provided
by,
or purchased from Tower. This license shall not be interpreted or construed
as
granting Tower any right to sub-license any third party or Non-Subsidiary to
use
any invention claimed in the `337 Patent, except as such invention is or was
embodied in materials, equipment, or products provided directly or indirectly
by
Tower. "Non-subsidiary" shall mean any corporation of which Tower does not
own
or control more than 50% of the U.S. or foreign corporation, company or other
legal entity. Further, this license shall not be interpreted or construed to
include any products or services of any third party that acquires Tower or
any
of Tower's subsidiaries or affiliates, where such products or services (i)
were
in existence at the time of the acquisition or (ii) are new products or services
developed by said third party subsequent to said acquisition.
4.2 The
term
of the license granted to Tower shall be for the life of the `337
Patent.
4.3 Tower
hereby grants to TRC and its parent companies, existing contract manufacturers,
and subsidiaries a perpetual, worldwide, non-transferable (except as set forth
in Section 10.1), non-exclusive license, limited to the room air conditioner
(RAC) market, to make, have made, use, offer-to-sell, sell, export, and import,
or otherwise dispose of products and services, the making, having made, use,
offering to sell, selling, exporting or importing of which would in the absence
of this license infringe any valid and enforceable claim of the '199 Patent.
This license shall apply to TRC's customers, manufacturers, partners,
distributors, re-sellers, vendors, and their respective end users, regarding
all
products and services made by, made for, provided by, or purchased from TRC.
This license shall not be interpreted or construed as granting TRC any right
to
sub-license any third party or Non-Subsidiary to use any invention claimed
in
the '199 Patent, except as such invention is or was embodied in materials,
equipment, or products provided directly or indirectly by TRC. "Non-subsidiary"
shall mean any corporation of which TRC does not own or control more than 50%
of
the U.S. or foreign corporation, company or other legal entity. Further, this
license shall not be interpreted or construed to include any products or
services of any third party that acquires TRC or any of TRC’s subsidiaries or
affiliates, where such products or services (i) were in existence at the time
of
the acquisition or (ii) are new products or services developed by said third
party subsequent to said acquisition.
4.4 The
term
of the license granted to TRC shall be for the life of the '199
Patent.
4.5 Other
than this license and the release of Article 6, no license, right, or immunity
is granted by TRC or by Tower to
any
third party, either expressly or by implication, or by estoppel, or otherwise,
to any patents, inventions, or other property right.
ARTICLE
5
DISMISSAL
OF THE ACTIONS
5.1 Within
five business days after the complete execution and delivery of this Agreement,
TRC and Tower shall cause their respective counsel to endorse and file the
Stipulations of Dismissal with Prejudice attached as Appendix A to cause all
of
their claims and counterclaims in the Actions with respect to each other and
Fedders to be dismissed with prejudice. The Stipulations may be amended to
the
extent necessary to comply with local rules.
ARTICLE
6
MUTUAL
RELEASES
6.1 TRC
hereby releases and forever discharges Tower, and all of its respective
directors, officers, stockholders, affiliate companies, subsidiaries, acquired
companies, employees, attorneys, agents, and Tower Switches Limited
(collectively, "Tower
Entities"), and their permitted successors and assigns, from any and all claims,
demands, obligations, losses, causes of action, damages, penalties, costs,
expenses, attorney fees, liabilities, compensation, and indemnities of any
nature, whether based on contract, tort, statute or other legal or equitable
theory of recovery, whether known or unknown, which as of the Effective Date
of
this Agreement TRC had or claims to have had against Tower, including but not
limited to any arising out of or in connection with claims that were made or
that could have been made in any form with respect to the `337 or '199 patents
or other patents, and except for any breach of this Agreement. This release
shall apply to Tower's customers (including Fedders), manufacturers, partners,
distributors, re-sellers, vendors, their respective end users, and to Tower
Switches Limited, regarding all products and services at any time made by,
provided by, purchased from, or licensed from Tower Entities.
6.2 Tower
hereby releases and forever discharges TRC, and all of its respective directors,
officers, stockholders, members, affiliate companies, subsidiaries, acquired
companies, acquirers, parent companies, employees, attorneys, and agents
(collectively, "TRC Entities"), and their permitted successors and assigns,
from
any and all claims, demands, obligations, losses, causes of action, damages,
penalties, costs, expenses, attorney fees, liabilities, compensation, and
indemnities of any nature, whether based on contract, tort, statute or other
legal or equitable theory of recovery, whether known or unknown, which as of
the
Effective Date of this Agreement Tower. Tower Switches Limited, and their
respective affiliate and parent companies, had or claims to have had against
TRC, including but not limited to any arising out of or in connection with
claims that were made or that could have been made in any form with respect
to
the `337 or `199 patents or other patents, and except for any breach of this
Agreement. This release shall apply to TRC's customers, manufacturers, partners,
distributors, re-sellers, vendors, and their respective end-users, regarding
all
products and services at any time made by, provided by, purchased from, or
licensed from TRC Entities.
6.3 TRC
hereby represents that it has no present intent to enforce any patent held
by
TRC against Tower.
6.4 Tower
hereby represents that it has no present intent to enforce any patent held
by
Tower against TRC.
6.5 The
mutual releases granted above are not to be construed as releasing the parties
from any obligations arising and unfulfilled under this agreement.
ARTICLE
7
FEES
AND COSTS
7.1 The
Parties shall pay all of their own fees and expenses, including court costs,
legal fees and expert fees, incurred in the prosecution or defense of the
Florida Action and the Rhode Island Action, and in the preparation of this
Agreement.
ARTICLE
8
REPRESENTATIONS
AND WARRANTIES
8.1 Each
Party represents and warrants that it has the right to enter into this
Agreement.
8.2
The
Parties' representatives, by their signatures below, represent and warrant
that
they are duly authorized to execute and deliver this Agreement on behalf of
the
respective Party.
8.3 TRC
hereby represents, covenants, and warrants that it will not assert against
Tower
Entities or their permitted successors and assigns, or any of Tower's customers
(including Fedders), manufacturers, partners, distributors, re-sellers, vendors,
or any other permitted user of Tower LCDI Products (whether such permission
is
granted directly by Tower or another licensee of Tower) (collectively together
with Tower Entities, "Tower Users") any claim of infringement based upon the
`337 Patent arising out of or in connection with the use, sale, or distribution
of the Tower LCDI Products.
8.4 Tower
hereby represents, covenants, and warrants that it will not assert against
TRC
Entities or their permitted successors and assigns, or any of TRC's customers,
manufacturers, partners, distributors, re-sellers, vendors, or any other
permitted user of TRC LCDI Products (whether such permission is granted directly
by TRC or another licensee of TRC) (collectively together with TRC Entities,
"TRC Users") any claim of infringement based upon the '199 Patent arising out
of
or in connection with the use, sale, or distribution of the TRC LCDI
Products.
8.5 **
8.6 **
ARTICLE
9
CONFIDENTIALITY
9.1 The
Parties
shall
keep the terms of this Agreement confidential and shall not now or hereafter
divulge these terms to any third party except:
9.1.1
with the prior written consent of the other Party; or
9.1.2
to
any governmental body having jurisdiction to call for such terms;
or
9.1.3
as
otherwise may be required by law or legal process, including to legal and
financial advisors in their capacity of advising a Party in such matters;
or
9.1.4
during the course of litigation so long as the disclosure of such terms and
conditions are restricted in the same manner as is the confidential information
of other litigating parties and so long as (a) the restrictions are embodied
in
a court-entered Protective Order and (b) the disclosing Party informs the other
Party in writing at least ten (10) days in advance of the disclosure;
or
9.1.5
in
confidence to legal counsel, accountants, banks, financing sources and their
advisors solely in connection with complying with financial transactions or
legal reporting requirements; or
9.1.6
any
disclosure pursuant to any applicable securities regulations, including TRC's
disclosure in public SEC filings of the existence, amount, terms and copies
of
this Agreement; or
9.1.7
the
Parties may disclose the terms of this Agreement and the settlement of the
Florida Action and the Rhode Island Action to the extent provided, or in the
form provided, in Appendix B to this Agreement.
ARTICLE
10
GENERAL
PROVISIONS
10.1 Assignment.
This
Agreement and any rights, licenses or privileges under this Agreement including,
but not limited to, the license and release or any rights under them, shall
be
freely assignable to (i) any parent, or subsidiary of a Party or (ii) an
acquirer of a Party or of any portion of a Party's business to which this
Agreement applies (whether by way of an asset or stock transaction). TRC and
Tower represent that they are not currently engaged in any active negotiations
in connection with their acquisition by any third party.
10.2
Waiver.
The
waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or any subsequent breach of
the
same or a different kind.
10.3
Amendments.
Any
changes to this Agreement must be in writing specifically stating an intention
to modify this Agreement signed by the Party or Parties to be
bound.
10.4
Survival
of Representations, Covenant and Warranties.
The representations,
covenants and warranties contained in this Agreement shall survive the execution
and delivery of this Agreement.
10.5
Relationship
of Parties.
Nothing
in this Agreement shall create or be deemed to create any relationship of
agency, partnership, or joint venture between TRC, on the one hand, and Tower,
on the other.
10.6
No
Third Party Beneficiaries.
Except
with respect to the Tower and TRC Users, this Agreement is made and entered
into
for the sole protection and benefit of the Parties, and no other person or
entity shall be a direct or indirect beneficiary of or shall have any direct
or
indirect cause of action or claim in connection with this
Agreement.
10.7
Notices Any
notice or other communication required or permitted under this Agreement shall
be given in writing and shall be conclusively deemed to have been
duly
given on the date delivered if delivered personally, or five (5) days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed as follows:
10.7.1
Notices
to TRC shall be addressed to:
Xxxxxxx
X. Xxxxxxxx, Esq.
Xxxxx
& Xxxxxxxxx LLP
Xxxxxxxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
X.X. 00000-0000
10.7.2
Notices
to Tower shall be addressed to:
Xxxx
X.
Xxxxxx, Esq.
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
Xxx
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 021 1 1-2950
10.8
Headings.
All
headings in this Agreement are used for convenience only and shall not affect
the interpretation of this Agreement.
10.9
Applicable
Law; Choice of Forum: Jurisdiction_
This
Agreement shall be governed by and construed under the laws of the State of
Delaware, without regard to its conflict of laws provisions. It is further
agreed that all disputes and matters whatsoever arising under, in connection
with or incident to this Agreement shall be litigated, if at all, in and before
the United States District Court for the District of Delaware, to the exclusion
of the Courts of any other state, locality or country. The Parties irrevocably
consent to personal jurisdiction in such court for such purposes.
10.10
No
Strict Construction.
Each
Party and counsel for each Party have reviewed this Agreement, and, accordingly,
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
10.11
Entire
Agreement.
This
Agreement contains the entire understanding among TRC, on the one hand, and
Tower, on the other, superseding all prior or contemporaneous communications,
negotiations, discussions, agreements, and understandings among the Parties
with
respect to the subject matter of this Agreement.
10.12
Counterparts.
This
Agreement may be executed in any number of counterparts, including those
transmitted to and among the Parties via facsimile, with the same effect as
if
the signatures on each counterpart were upon a single instrument. All
counterparts, taken together, shall constitute this Agreement.
10.13
Partial
Invalidity.
If any
of the provisions herein shall be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without the term or provision so
that
this Agreement will remain binding on the Parties,
10.14
Non-Disparagement.
Each
Party will instruct its executive officers and board members not to disparage
any other Party with respect to the matters at issue in the Florida Action
and
the Rhode Island Action.
IN
WITNESS WHEREOF, intending to be legally bound, the Parties have caused this
Agreement to be executed by their duly authorized representatives as of the
dates set forth below.
On
this
______ day of December, 2006
Xxxxx
X.
Xxxxxxx
President
Tower
Manufacturing Corporation
On
this
_______ day of December, 2006
Xxxxxx
X.
Xxxxxxx
President
and Chief Executive Officer
Technology
Research Corporation
GUARANTY
OF PERFORMANCE AND INDEMNITY
In
consideration of the execution of the above Settlement Agreement between Tower
and TRC,
I
hereby
personally guaranty the due performance by Tower of all the covenants and
agreements on its part contained in section 3.1 of the Settlement Agreement,
and
the payment of all damages, costs, and expenses which by virtue of the
Settlement Agreement may become recoverable from Tower by TRC
On
this
_______ day of December, 2006
Xxxxx
X.
Xxxxxxx
**Confidential
treatment requested pursuant to Rule 24b-2 of the Exchange Act.
417747.04
APPENDIX
A
STIPULATION
OF DISMISSAL WITH PREJUDICE
UNITED
STATES DISTRICT COURT
FOR
THE
MIDDLE DISTRICT OF FLORIDA
TAMPA
DIVISION
Case
No.
8:05-cv-01455-RAL-TGW
Plaintiff,
v.
TOWER
MANUFACTURING CORP. and
FEDDERS
CORP.,
Defendants.
/
STIPULATION
OF DISMISSAL WITH PREJUDICE
The
parties, pursuant to Rules 41(a)(1)(ii) and 41(c), hereby stipulate to the
dismissal of this action with prejudice, including all claims and counterclaims,
each party to bear its own costs and expenses.
**Confidential
treatment requested pursuant to Rule 24b-2 of the Exchange Act.
417747.04
XXXXX
& XXXXXXXXX LLP
By:
/s/
Xxxxxxx
X. Xxxxxxxx
Email:
xxxxxxxxx@xxxxxxxx.xxx
Xxxxx
& Xxxxxxxxx LLP
Washington
Square, Suite 1100
0000
Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000-0000
Phone:
000.000.0000
Fax:
000.000.0000
XXXXXXXXXXX
& XXXXXXXX XXXXXXXXX
XXXXXX LLP
By:
/s/
Xxxx
X.
Xxxxxx
Email:
xxxxxxx@xxxx.xxx
Xxxxxxxxxxx
& Xxxxxxxx
Xxxxxxxxx
Xxxxxx LLP
State
Street Financial Center
Xxx
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000-0000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
**Confidential
treatment requested pursuant to Rule 24b-2 of the Exchange Act.
417747.04
IN
THE
UNITED STATES DISTRICT
COURT
FOR
THE
DISTRICT OF RHODE ISLAND
Civil
Action
No. 06-212-T-DLM
TOWER
MANUFACTURING CORPORATION,
Plaintiff,
v.
TECHNOLOGY
RESEARCH CORPORATION,
Defendant.
/
STIPULATION
OF DISMISSAL WITH PREJUDICE
The
parties, pursuant to Rules 41(a)(1)(ii) and 41(c), hereby stipulate to the
dismissal of this action with prejudice, including all claims and counterclaims,
each party to bear its own costs and expenses.
**Confidential
treatment requested pursuant to Rule 24b-2 of the Exchange Act.
417747.04
XXXXX
& XXXXXXXXX LLP
By:
/s/
Xxxxxxx
X. Xxxxxxxx
Email:
xxxxxxxxx@xxxxxxxx.xxx
Xxxxx
& Xxxxxxxxx LLP
Washington
Square, Suite 1100
0000
Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000-0000
Phone:
000.000.0000
Fax:
000.000.0000
XXXXXXXXXXX
& XXXXXXXX XXXXXXXXX
XXXXXX LLP
By:
/s/
Xxxx
X.
Xxxxxx
Email:
xxxxxxx@xxxx.xxx
Xxxxxxxxxxx
& Xxxxxxxx
Xxxxxxxxx
Xxxxxx LLP
State
Street Financial Center
Xxx
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000-0000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
APPENDIX
B
PRESS
RELEASE
