PATENT TRANSFER AND LICENSE AGREEMENT
This PATENT TRANSFER AND LICENSE AGREEMENT (the "Agreement") is dated as of
April 10, 1997, by and between NetObjects, Inc., a Delaware corporation
("Transferor"), and Rae Technology LLC, a California limited liability company
("Transferee").
RECITALS
WHEREAS, Transferor and Rae Technology, Inc., a California corporation
("Rae Inc."), have entered into that certain Technology License Agreement, dated
as of December 21, 1995 and amended as of February 2, 1996, pursuant to which
Transferor granted to Rae Inc. an exclusive license of certain proprietary
computer software commonly referred to by Transferor as the "Solo Technology"
for a limited field of use, in exchange for the issuance of 10,000,000 shares of
Series A Preferred Stock of Transferor to Rae Inc.;
WHEREAS, Transferor and Rae Inc. have further amended their respective
rights and obligations with respect to the Solo Technology pursuant to an
Amendment to Technology Transfer Agreement, dated as of March 18, 1997, to be
effective upon the closing of a merger (the "Merger") with Transferor and a
wholly owned subsidiary of International Business Machines Corporation ("IBM")
pursuant to the terms of an Agreement and Plan of Merger dated as of March 18,
1997 (the "Merger Agreement"); and
WHEREAS, in connection with the Amendment to Technology Transfer Agreement,
Transferor and Transferee wish to establish Transferee as the holder and
exclusive licensing representative for certain pending utility patents of
Transferor.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
AGREEMENT
1. TRANSFER OF PATENTS
(a) Subject to the terms and conditions herein and subject to any licenses
existing as of the date hereof granted by Transferor, Transferor hereby assigns,
conveys, and otherwise transfers to Transferee all of Transferor's rights, title
and interests in and to the inventions embodied in the U.S. patent applications
identified in the Assignment of Inventions attached hereto as Exhibit A (the
"NetObjects Patents").
(b) Transferor further affirms the right of Transferee to prevent any
unauthorized use and disclosure of the NetObjects Patents and any confidential
information of Transferor pertaining thereto (as identified by Transferor, in
its sole discretion) ("Confidential Information"); PROVIDED, HOWEVER, that
Transferee shall have no right to sell, assign or transfer any Confidential
Information and may use Confidential Information for the sole purpose of
continuing to prosecute the NetObjects Patents.
(c) From and after the effective date of this Agreement (as described in
Section 11 hereof (the "Effective Date"), Transferee shall obtain the written
consent of Transferor before assigning, or granting or agreeing to grant any
exclusive license with respect to, any NetObjects Patent, any patent issuing
thereon, or any continuation or amendment thereof (the "Transferred Rights").
In addition, Transferee shall obtain the prior written consent of Transferor
before granting or agreeing to grant any nonexclusive license under any of the
Transferred Rights for a royalty rate or other form of compensation which is
less than the higher of (i) five percent (5%) of the licensee's per copy revenue
from the licensed software product or (ii) $20 for each transferred copy of the
licensed software product. Transferor may withhold any such consent in its sole
and absolute discretion.
(d) From and after the Effective Date, any Change of Control Transaction
involving Transferee shall require the prior written consent of Transferor. For
this purpose, a "Change of Control Transaction" shall mean (A) any transaction
or series of transactions pursuant to which shares representing more than 50% of
Transferee's outstanding voting securities are purchased by a person not
controlled by, in control of or under common control with any holder of
Transferee's outstanding voting securities, (B) the merger or consolidation of
Transferee with another entity (other than a merger or consolidation in which
the holders of voting securities of Transferee immediately before the merger or
consolidation own, immediately after the merger or consolidation, voting
securities of the surviving or acquiring corporation or of a parent party of
such surviving or acquiring corporation, possessing more than 50% of the voting
power of the surviving or acquiring corporation or parent party) resulting in
the exchange of outstanding shares of capital stock of Transferee for cash,
securities or other property or (C) any merger, sale, lease, license, exchange
or other disposition (whether in one transaction or a series of related
transactions) or more than 50% of the assets of Transferee.
(e) The Transferee shall not pledge any of the Transferred Rights to
secure any loan or other obligation.
(f) Except as otherwise expressly provided herein, neither Transferee nor
any Transferee Affiliate (as defined in Section 3(a)) shall make, have made,
use, offer for sale, sell, import or otherwise transfer any product, the use or
sale of which would infringe any of the Transferred Rights, or practice any
method thereunder.
2
2. CONFIDENTIAL INFORMATION
(a) Transferor understands that all Confidential Information received by
Transferee from Transferor is and will remain confidential to Transferor, and
Transferee and Transferor shall be obligated to protect and maintain the
confidentiality of the same. Transferee shall take all necessary and proper
action to preserve the secrecy and prevent disclosure of the Confidential
Information. Transferee shall establish a reasonable security procedure to
prevent unauthorized access to the Confidential Information.
(b) The obligation imposed by this Section 2 to protect and not to
disclose Confidential Information shall be perpetual, except with respect to
Confidential Information that becomes lawfully within the public domain.
3. PAYMENTS
(a) Transferee shall pay to Transferor eighty-five percent (85%) of all
revenues derived by Transferee and any Transferee Affiliate (as defined herein)
from any license or other transaction effected by Transferee or any Transferee
Affiliate with respect to any of the Transferred Rights; PROVIDED THAT
Transferor and Transferee acknowledge and agree that no such transaction shall
occur or be permitted to occur other than with respect to an actual patent
issued on any NetObjects Patent. For this purpose a "Transferee Affiliate" is
any person, directly or indirectly, controlled by, in control of, or under
common control with Transferee.
(b) Payments hereunder shall be made by Transferee within thirty (30) days
after the end of each calendar quarter. Payment shall be accomplished by a
report of the revenues derived from the Transferred Rights and the computation
thereof during the preceding calendar quarter. Transferee shall be entitled to
offset all amounts paid or incurred to prosecute patents, defend infringement
suits, indemnify Transferor, or pursue infringement actions under applicable
provisions of this Agreement from the amounts payable to Transferor pursuant to
this Section 3.
(c) All payments due hereunder on revenues derived in countries other than
the United States shall accrue in the currency of the country in which the sales
are made. Transferee shall apply its best efforts to secure U.S. dollar
transfers in respect of such payments. In the event U.S. dollars are for any
reason legally not available for transfer, Transferee may discharge the payment
obligations hereunder by depositing said payments to the credit of Transferor,
or its nominee, in any recognized banking institution to be designated by
Transferor in the country in which the sales are made and in the currency of
that country. In the event that currency regulations of a country in which such
revenues are earned prohibit payment or deposits of payments owed to Transferor
or its nominee, no payments hereunder shall accrue or be due and payable for the
period during which such currency restrictions prevail.
3
(d) Transferee shall keep accurate records of all revenues for a period
not to exceed five (5) years, unless in dispute, in which event they shall be
kept until said dispute is settled, and such records shall be open during
reasonable business hours at the place where such records are customarily kept,
for examination by an independent accountant selected by Transferor and
acceptable to Transferee, for the purpose of verifying the accuracy of such
revenues reported to Transferor and payments due thereon. Said accountant shall
not disclose any information that he may thereby obtain other than that
necessary for the purpose of enabling Transferor to determine the accuracy of
such reports and payments made in connection therewith.
4. RESERVED NON-EXCLUSIVE LICENSE FOR TRANSFEROR
(a) DEFINITIONS.
(i) "Licensed Products" shall mean all software products that are
made, used, imported, offered for sale, sold, licensed or otherwise transferred
now or hereafter by Transferor.
(ii) "Licensed Subsidiaries" shall mean those entities which are
Subsidiaries of Transferor.
(iii) "Subsidiary" shall mean a corporation, company or other
entity:
(A) more than fifty percent (50%) of whose outstanding
shares or securities representing the right to vote for the election of
directors or other managing authority are, now or hereafter, owned or
controlled, directly or indirectly, by a party hereto or,
(B) which does not have outstanding shares or securities,
as may be the case in a partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of whose ownership interest
representing the right to make the decisions for such corporation, company or
other entity is, now or hereafter, owned or controlled, directly or indirectly,
by a party hereto, but such corporation, company or other entity shall be deemed
to be a Subsidiary only so long as such ownership or control exists.
(b) Transferor hereby reserves for itself and its Licensed Subsidiaries a
royalty-free, paid-up, perpetual, irrevocable, worldwide, nonexclusive license
(without right to sublicense) under the Transferred Rights to make, have made,
use, import, offer for sale, sell and otherwise transfer Licensed Products. In
the event that Transferor acquires Subsidiaries after the Effective Date,
Transferee agrees that such Subsidiaries shall be Licensed Subsidiaries.
4
(c) Transferor shall be responsible for the compliance by Licensed
Subsidiaries with the provisions of this Agreement. A license granted to a
Licensed Subsidiary shall terminate automatically on the earlier of: (i) the
date such Licensed Subsidiary ceases to be a Subsidiary of Transferor; and (ii)
the date this Agreement or the license granted hereunder expires or is
terminated.
(d) No license, immunity or other right is granted under this Agreement,
either directly or by implication, estoppel, or otherwise other than under the
Transferred Rights or with respect to any item other than a Licensed Product.
5. WARRANTIES AND DISCLAIMERS OF TRANSFEROR
(a) Transferor sells, assigns and transfers the NetObjects Patents to
Transferee "AS IS" and "WHERE IS," without any warranty of any kind whatsoever.
(b) TRANSFEROR DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE WITH RESPECT TO THE NETOBJECTS PATENTS, INCLUDING ANY WARRANTY OF
MANUFACTURABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
TRANSFEROR DOES NOT ASSUME OR AUTHORIZE ANY OTHER PERSON TO ASSUME FOR IT ANY
LIABILITY IN CONNECTION WITH THE USE OF THE NETOBJECTS PATENTS, OR THE SALE, USE
OR OPERATION OF ANY PRODUCT UTILIZING THE NETOBJECTS PATENTS.
(c) TRANSFEROR SHALL NOT BE LIABLE FOR ANY INJURY OR DAMAGE TO TRANSFEREE,
OR TO ANY OTHER PERSON CAUSED DIRECTLY OR INDIRECTLY BY THE USE OF ANY WORKS
USING THE NETOBJECTS PATENTS. IN NO EVENT SHALL TRANSFEROR BE LIABLE TO ANY
THIRD PARTY FOR ANY LOSS OR INJURY TO EARNINGS, PROFITS, OR GOODWILL, OR FOR ANY
DIRECT, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES ARISING OUT OF TRANSFEREE'S
USE OF THE NETOBJECTS PATENTS.
6. LIMITATION OF LIABILITY AND INDEMNIFICATION
(a) Transferee agrees that Transferor will not be liable for defense or
indemnity with respect to any claim against Transferee by any third party
arising from Transferee's possession, use or license of the NetObjects Patents,
or of products incorporating the same.
(b) Transferee agrees to indemnify and hold harmless Transferor from and
against any and all liability, loss, suit, damages, claims and proceedings,
including reasonable attorneys' fees, expenses and costs, arising out of or
connected with the sale, sublicense, commercialization or use of any of the
NetObjects Patents by Transferee, its customers, its licensees or other third
parties.
5
7. CERTAIN DUTIES AND RESPONSIBILITIES OF TRANSFEREE AND TRANSFEROR
(a) Transferee agrees that it will comply with all laws and regulations,
the violation of which would materially affect Transferee, relating to the
NetObjects Patents.
(b) Following the Effective Date, Transferee shall be responsible for
continuing to prosecute the NetObjects Patents in the U.S. and in such other
countries as Transferor may designate. The continuing prosecution of the
NetObjects Patents shall be at Transferee's expense; PROVIDED THAT to the extent
revenues from the licensing of Transferred Rights from time to time are
inadequate to offset all attorneys' fees, filing fees, and other costs and
expenses associated with the prosecution of the NetObjects Patents, Transferor
agrees to fully reimburse Transferee for them, upon receipt of invoices and
reasonable supporting documentation therefor.
(c) Transferee will promptly notify Transferor of any and all
infringements or violations by third parties or attempted infringements or
violations of any of the Transferred Rights. Transferor will provide reasonable
assistance to Transferee in taking such action to enforce Transferee's rights
against the parties infringing or violating such rights. Transferee shall be
required to initiate and prosecute any and all lawful suits, actions and
proceedings, whether by way of claim or cross-claim, to enforce any patents
issued on the NetObjects Patents, including, but not limited to, suits for
damages, injunctive relief, actions for interferences, petitions before the
International Trade Commission, U.S. Customs actions, and available suits,
proceedings and actions in foreign countries (an "Action" or "Actions"), and
will pursue diligently and in good faith any such Action until its conclusion
through settlement or final nonappealable judgment by a court of competent
jurisdiction unless it becomes impractical or too costly for Transferee to
continue the litigation. In this event, Transferee will so notify Transferor
and, upon Transferor's exercise of an applicable right to pursuant to Section
12(a), will permit Transferor to join the action and assume control of,
responsibility for, and all expenses related to such action. Transferee agrees
further, at the request of Transferor, to initiate and prosecute any and all
Actions and to pay all costs, expenses and attorneys' fees and otherwise hold
Transferor harmless in any such Actions. The settlement of any Action shall be
subject to the reasonable consent and good faith consideration of both parties.
Transferee will be entitled to any damages or royalties resulting from the
enforcement of any patents issued on any of the NetObjects Patents, so long as
Transferee refunds to Transferor all legal expenses and other costs associated
with the collection of said damages and/or royalties that were advanced by
Transferor or withheld from payment otherwise owed to Transferor pursuant to
Section 3. The foregoing provisions of this Section 7 shall apply with the same
force and effect with respect to any common law patent claims within the
NetObjects Patents.
6
8. SEVERABILITY
The provisions of this Agreement are severable, and if any one or more such
provisions are judicially determined to be illegal or otherwise unenforceable,
in whole or in part, the remaining provisions or portions of this Agreement
shall nevertheless be binding on and enforceable by and between the parties
hereto.
9. ASSIGNMENT; SUCCESSORS AND ASSIGNS
This Agreement and all of the terms hereof shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except as such assignment may be restricted under Section 1 and except
that Transferee shall not have the right to assign or otherwise transfer any of
the Transferred Rights to any third party without the prior written consent of
Transferor (and any assignment or transfer that occurs without such consent of
Transferor shall be null and void).
10. EXPORT CONTROL LAWS
Transferee agrees to comply with all laws, rules and regulations applicable
to the export of the NetObjects Patents. Specifically, Transferee shall not
export, re-export, transfer, or license the NetObjects Patents, or any
Confidential Information, in violation of any United States laws and regulations
as may from time to time be applicable.
11. EFFECTIVE DATE
Upon execution this Agreement shall be effective as of the date immediately
preceding the effective time of the Merger for all purposes, and only as of such
date.
12. REACQUISITION OF THE NETOBJECTS PATENTS
(a) Transferor shall have the right to reacquire the Transferred Rights,
upon the following events and conditions:
(i) Automatically, on each anniversary of the Effective Date for
the first three years after the Effective Date, unless within the thirty
(30)-day period preceding such anniversary date, Transferor notifies Transferee
that Transferor will not reacquire the Transferred Rights. This provision
cannot be waived other than by written agreement of the parties.;
(ii) Upon thirty (30) days' written notice by Transferor to
Transferee in the event of any default by Transferee in the performance of
Transferee's obligations under this Agreement, unless such default is cured
within the thirty (30)-day notice period;
(iii) At Transferor's option, and upon payment of $25,000 to
Transferee, within ninety (90) days after the end of the first calendar year
following the first year in which Transferee receives any revenue from the
license of any of the
7
(iv) Transferred Rights, if the total revenue derived by Transferee
and all Transferee Affiliates with respect to such Transferred Rights during
such first calendar year does not exceed $750,000, or within ninety (90) days
after the end of any calendar year thereafter in which such revenue threshold
has not been met;
(v) Upon thirty (30) days' written notice by Transferor to
Transferee, if Transferee has failed to diligently prosecute any of the
NetObjects Patents in any country designated by Transferor (as long as such
failure is not attributable to Transferor's failure to fund prosecution of the
same, unless such failure is cured within the thirty (30)-day notice period);
(vi) Upon ten (10) days' written notice by Transferor to Transferee
of any failure by Transferee to bring suit or initiate another available form of
action, or continue such suit or other action, against any person that
Transferor deems to be infringing or violating any of the Transferred Rights
pursuant to Section 7(c) hereof, unless such failure is cured within the ten
(10)-day notice period; or
(vii) Upon thirty (30) days' written notice by Transferor to
Transferee of any failure by Transferee to indemnify Transferor pursuant to the
provisions of Section 5 hereof, unless such failure is cured within such thirty
(30)-day notice period.
(b) Upon any automatic reacquisition of, or exercise of any right of
Transferor to reacquire the Transferred Rights, Transferee shall execute or
cause to be executed all instruments of assignment and other documents, and
shall take all other actions requested by Transferor to effect the transfer and
assignment of the same to Transferor, including the payment of a transfer fee of
$5,000 immediately after Transferor has made such request.
13. GENERAL
(a) All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal delivery
or on the day sent by facsimile transmission if a true and correct copy is sent
the same day by first class mail, postage prepaid, or by dispatch by an
internationally recognized express courier service, and in each case addressed
to the address of the parties as set forth below, unless such party first
notifies the other parties hereto in writing of any change in its address:
If addressed to Transferor: NetObjects, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attention: President
If addressed to Transferee: Rae Technology LLC
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attention: President
8
(b) Neither party has the authority to assume or create any obligation for
or on behalf of the other party, express or implied.
(c) The validity, performance and interpretation of this Agreement shall
be governed by the laws of the State of California, without regard to any rules
thereof pertaining to conflicts of laws.
IN WITNESS WHEREOF, this Agreement is hereby executed by the parties to be
effective as of the date described in Section 11, hereof.
NETOBJECTS, INC. RAE TECHNOLOGY LLC
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx Xxxxx
------------------------------- ----------------------------------
Its: CEO Its: CEO
------------------------------ ----------------------------------
ACKNOWLEDGEMENT AND ESTOPPEL CERTIFICATE:
Rae Technology, Inc., a California corporation, hereby certifies that it
has reviewed the terms of the foregoing Patent Transfer and License Agreement,
and agrees that it and all of its assets and properties shall be bound by the
terms thereof.
RAE TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Its: CEO
----------------------------------
9
Rae Technology, Inc.
Rae Technology LLC
Rae Technology LLC II
RE: PATENT TRANSFER AND LICENSE AGREEMENT
Ladies and Gentlemen:
This is to confirm that NetObjects, Inc. agrees that the Patent Transfer
and License Agreement dated as of April 10, 1997, is amended and reformed as of
said date to correct the following errors and reflect the parties' original
intention as of that date:
1. Section 12(a)(iii) should read in its entirety as follows and
subparagraphs (v), (vi), and (vii) should be renumbered as subparagraphs (iv),
(v) and (vi):
(iii) At Transferor's option, and upon payment of $25,000 to
Transferee, within ninety (90) days after the end of the first
calendar year following the first year in which Transferee
receives any revenue from the license of any of the Transferred
Rights, if the total revenue derived by Transferee and all
Transferee Affiliates with respect to such Transferred Rights
during such first calendar year does not exceed $750,000, or
within ninety (90) days after the end of any calendar year
thereafter in which such revenue threshold has not been met;
2. In Section 12(b), the words "by Transferor to Transferee" shall be
inserted after "$5,000," so that the subsection is correctly restated to read in
its entirety as follows:
(b) Upon any automatic reacquisition of, or exercise of any
right of Transferor to reacquire the Transferred Rights,
Transferee shall execute or cause to be executed all instruments
of assignment and other documents, and shall take all other
actions requested by Transferor to effect the transfer and
assignment of the same to Transferor, including the payment of a
transfer fee of $5,000 by
Rae Technology, Inc.
Page 2
Transferor to Transferee immediately after Transferor has made such
request.
This acknowledgment and agreement of NetObjects, Inc. is effective for all
purposes as of April 10, 1997.
NetObjects, Inc.
By: /s/ Xxxxx Xxxxx
----------------------
Xxxxx Xxxxx, CEO
ACKNOWLEDGMENT
Rae Technology, Inc. hereby agrees to the amendment and reformation of the
Patent Transfer and License Agreement as set forth above on behalf of itself,
Rae Technology LLC and Rae Technology LLC II.
Rae Technology, Inc.
By: /s/ Xxxxx Xxxxx
---------------------
Xxxxx Xxxxx, CEO
CONSENT TO ASSIGNMENT
AND
SUBSTITUTION OF PARTIES
This AGREEMENT (the "Agreement") is dated as of July 16, 1997 by and among
NetObjects, Inc. a Delaware corporation ("NetObjects"), Rae Technology LLC, a
California limited liability company ("Rae LLC"), and Rae Technology, Inc., a
California corporation ("RTI").
RECITALS
WHEREAS, effective as of April 10, 1997, NetObjects and Rae LLC entered
into a Patent Transfer and License Agreement (the "Patent Agreement")
pertaining to the transfer and assignment of certain pending U.S. patent
applications (the "NetObjects Patents") from NetObjects to Rae LLC and the
license of rights thereunder from Rae LLC to NetObjects;
WHEREAS, the members of Rae LLC have elected to wind up and dissolve Rae
LLC, which intends to assign the NetObjects Patents to RTI; and
WHEREAS, Rae LLC and RTI would like NetObjects to consent to the assignment
of the NetObjects Patents to RTI and the substitution of RTI for Rae LLC for all
purposes under the Patent Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
AGREEMENT
Pursuant to Sections 1 and 9 of the Patent Agreement, NetObjects hereby
consents to the assignment of all of the Transferred Rights, including, but not
limited to the NetObjects Patents, from Rae LLC to RTI.
NetObjects, Rae LLC and RTI agree that the Patent Agreement shall be
amended hereby to substitute RTI for Rae LLC as of the date hereof with respect
to all executory obligations and continuing covenants and conditions applicable
to NetObjects and Rae LLC thereunder.
All capitalized terms used in this Agreement shall have the meanings
ascribed to them in the Patent Agreement unless otherwise stated expressly
herein.
Each of the parties to this Agreement agrees to execute such other
documents and instruments and to take such other actions as may be necessary or
reasonable to implement the terms of this Agreement.
This Agreement shall be subject to all of the provisions of Section 13 of
the Patent Agreement.
IN WITNESS WHEREOF, this Agreement is hereby executed by the parties to be
effective as of the date first set forth above.
NETOBJECTS, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Its: CEO
-----------------------------------------
RAE TECHNOLOGY LLC
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Its: CEO
-----------------------------------------
RAE TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Its: CEO
-----------------------------------------
