EXHIBIT 10.3
RADIO LOCATION SYSTEM
LICENSE AGREEMENT
DATED December 16, 1993
BETWEEN
PACTEL TELETRAC
AND
TADIRAN LTD.
TABLE OF CONTENTS
Page
1. Definitions 1
1.1 "Contract Administrator" 1
1.2 "Contract Technical Coordinator" 2
1.3 "Effective Date" 2
1.4 "LIBOR" 2
1.5 "Location Xxxx" 0
1.6 "Performance Commencement Date" 2
1.7 "PacTel Teletrac High Capacity System" 2
1.8 "Radio Location System" 2
1.9 "RLS Commercial Operation Date" 2
1.10 "RLS Components" 2
1.11 "RLS Coverage Area" 2
1.12 "RLS Customer" 2
1.13 "RLS Customer Equipment" 2
1.14 "RLS Customer Equipment Net Revenue" 3
1.15 "RLS Customer Maintenance" 3
1.16 "RLS Customer Maintenance Net Revenue" 3
1.17 "RLS Customer Services" 4
1.18 "RLS Customer Services Net Revenue" 4
1.19 "RLS Customer Workstation" 4
1.20 "RLS Data Transmission Network" 4
1.21 "RLS -Licensed Software" 4
(a) RLS Customer Workstation Licensed Software 5
i
(b) RLS Network Control Center Licensed Software 5
(c) RLS Transmission and RLS Receiver Sites Licensed Software 5
1.22 "RLS Licensed Software Upgrades" 5
1.23 "RLS Licensed Technical Information" 6
1.24 "RLS Licensed Technical Information Modifications" 6
1.25 "RLS Map" 6
1.26 "RLS Network Control Center" 6
1.27 "RLS Receiver Sites" 6
1.28 "RLS Transmission Sites" 6
1.29 "Spectrum License" 6
1.30 "Tadiran Basestation Agreement" 7
1.31 "Tadiran Basestations" 7
1.32 "Tadiran Location Unit Agreement" 7
1.33 "Territory" 7
1.34 "U.S. CPI" 7
2. Grant of Rights 7
2.1 Radio Location System 7
2.2 RLS Licensed Software Executable Format and RLS Licensed
Technical Information 7
2.3 RLS Customer Workstation Licensed Software Source Code 8
3. Reservation of Rights 8
4. Consideration 9
4.1 Fees 9
4.1.1 Lump Sum 9
4.1.2 Royalty Interests 9
(a) Equipment Royalty Interest 9
ii
(b) Maintenance Royalty Interest 9
(c) Services Royalty Interest 10
(d) Accrual of Royalty Interests 10
4.2 Records and Adjustments 10
4.3 Reports, Forecasts and Payments 11
4.3.1 Reports 11
4.3.2 Payments 11
4.3.3 Late Payments 12
4.4 Circumstances for Reduction of Royalty Interests 12
5. Term 12
6. Termination 13
7. Restrictions on Business Activities 14
8. Effect of Termination or Cancellation 15
8.1 Circumstances Where Operations Continue--Continued Rights 15
8.2 Circumstances Where Operations End--Return of Materials and Non-Compete 15
8.3 No Damages 16
8.4 Payment Obligations 16
8.5 Survival 16
9. RLS Licensed Software Upgrades and RLS Licensed Technical Information
Modifications 17
9.1 RLS Licensed Software Upgrades 17
9.2 RLS Licensed Technical Information Modifications Developed
by PacTel Teletrac 17
9.3 Upgrades and Modifications to the Radio Location System Developed by
Tadiran 17
9.3.1 RLS Licensed Customer Workstation Software 17
(a) Authority to Make Upgrades 17
(b) Ownership and License of Upgrades 18
iii
(i) Derivative Upgrades 18
(ii) Stand-alone Upgrades 18
9.3.2 RLS Licensed Software Other Than RLS Licensed Customer
Workstation Software 19
(a) Authority to Make Upgrades 19
(b) Ownership and License of Upgrades 19
(i) Derivative Upgrades 19
(ii) Stand-alone Upgrades 20
9.3.3 RLS Licensed Technical Information 20
(a) Authority to Make Modifications 20
(b) Ownership and License of Tadiran Technical Modifications 20
(i) Derivative Upgrades 20
(ii) Stand-alone Upgrades 21
9.3.4 Tadiran Basestations and Location Units 22
(a) Authority to Make Modifications 22
(b) Sale of Basestation and Location Unit Modifications 22
9.4 PacTel Teletrac Obligations With Respect to Tadiran Upgrades and
Tadiran Modifications 22
9.5 Delivery and Protection of Tadiran Upgrades and Tadiran Modifications 22
10. PacTel Teletrac Indemnity 23
11. Tadiran Indemnity 25
12. PacTel Teletrac Representations, Limited Warranty and Disclaimer 26
12.1 Exhibits 26
12.2 Final Version RLS Licensed Warranty 26
12.2.1 Performance Warranty 26
12.2.2 Warranty Period 26
12.2.3 Limitations on Performance Warranty 27
iv
13. Limitation of Liability 28
14. Obligations and Responsibilities of PacTel Teletrac 28
14.1 Delivery of RLS Licensed Technical Information 28
14.2 Delivery of RLS Licensed Software 28
14.2.1 Current Version Software 29
14.2.2 Final Version Licensed Software 29
(a) Development 29
(b) Delivery 29
14.3 RLS Licensed Software Source Code 30
14.4 Training and Support 30
14.4.1 Training 30
14.4.2 Telephone Support After the RLS Commercial Operation Date 31
14.4.3 On-Site Support After the RLS Commercial Operation Date 32
14.4.4 Payments for Training and Support 32
15. Obligations and Responsibilities of Tadiran 32
15.1 Spectrum License 32
15.2 Reasonable Diligence 32
15.3 RLS Commercial Operation Date 33
15.4 Location Unit Transactions 33
15.4.1 Location Units 33
15.4.2 Location Unit Installation 33
15.5 Confidentiality and Proprietary Protection 33
15.6 Insurance 34
15.7 PacTel Teletrac Marks 34
15.8 Other Marks 34
v
15.9 Infringement by Others 34
16. Relationship of the Parties 35
17. Force Majeure 35
18. Governing Law 35
19. Dispute Resolution 35
20. General 38
20.1 Notices 38
20.1.1 Contract Administrators and Contract Technical Coordinators 38
20.1.2 Other Notices 38
20.2 English Language 38
20.3 No Publicity 39
20.4 Scope and Amendment of License Agreement 39
20.5 Assignment 39
20.6 Binding Effect 39
20.7 Authority 40
20.8 Severability 40
20.9 Headings 40
20.10 Expenses of Litigation 40
20.11 Waiver 40
20.12 Entire Agreement 40
20.13 Re-Export Assurances 41
20.14 Exhibits 41
20.15 Construction of Agreement 41
20.16 Counterparts 42
vi
CONFIDENTIAL
------------
RADIO LOCATION SYSTEM LICENSE AGREEMENT
---------------------------------------
THIS RADIO LOCATION SYSTEM LICENSE AGREEMENT (this "License Agreement"), dated
this 16th day of December 1993, is made by and between PACTEL TELETRAC, a
general partnership organized under the laws of California and having its
principal offices at 0000 Xx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx
00000 ("PacTel Teletrac"), and TADIRAN LIMITED, a company organized under the
laws of the State of Israel and having its principal offices at 00 Xxxxxxxxx
Xxxxxx, Xxxxx, Xxxxxx ("Tadiran"). PacTel Teletrac and Tadiran are sometimes
individually referred to as "Party" and collectively as "Parties."
WITNESSETH:
WHEREAS, PacTel Teletrac owns or possesses rights to proprietary information,
technology and software necessary for the operation of a Radio Location System,
as defined below; and
WHEREAS, Tadiran has obtained a Spectrum License for operation of a land-based
radio location system in the Territory as defined below; and
WHEREAS, Tadiran desires to establish and operate within the Territory a Radio
Location System; and
WHEREAS, subject to the terms and conditions of this License Agreement, and only
for purposes within the Territory, PacTel Teletrac desires to grant to Tadiran:
(i) an exclusive nontransferable right to use, construct, maintain and provide
support for a Radio Location System and to market, sell, promote, maintain and
provide support for RLS Customer Equipment and RLS Customer Services, as defined
below; and (ii) an exclusive nontransferable license to use RLS Licensed
Software and RLS Licensed Technical Information, as defined below, to construct,
maintain, operate and provide support for a Radio Location System in the
Territory, and Tadiran desires to acquire such right and licenses:
NOW THEREFORE, in consideration of the foregoing and the mutual premises set
forth in this License Agreement, the Parties agree as follows:
1. Definitions.
1.1 "Contract Administrator" shall mean the person designated by each Party as
the contact person at such Party for matters, other than engineering matters,
concerning the administration of this License Agreement.
1.2 "Contract Technical Coordinator" shall mean the person designated by each
Party as the contact person at such Party for engineering matters related to
this License Agreement.
1.3 "Effective Date" shall mean the date on which both Parties have executed and
delivered this License Agreement, as evidenced by the last date set forth on the
signature date below.
1
1.4 "LIBOR" shall mean the three (3) month London Interbank Offer Rate as it
appears on the Reuters RMEW screen at noon London time on the due date.
1.5 "Location Unit" shall mean a radio transceiver and its antenna that is
capable of receiving and sending radio signals. Location Units enable a Radio
Location System to locate objects to which such Location Units are attached.
Location Units manufactured by Tadiran or by entities that Tadiran controls or
has the ability to control are referred to in this License Agreement as "Tadiran
Location Units."
1.6 "Performance Commencement Date" shall mean the earliest date when one of the
following events occurs: (a) Tadiran obtains a forward-link spectrum allocation
outside the eight (8) megahertz ("MHZ") range for return-link; (b) Tadiran and
PacTel Teletrac decide by mutual agreement on the Radio Location System in the
Territory that will operate without a forward-link spectrum; (c) PacTel Teletrac
has completed successful field testing on the PacTel Teletrac High Capacity
System, as defined in Section 1.7 below; or (d) July 1, 1995.
1.7 "PacTel Teletrac High Capacity System" shall mean the high capacity radio
location and data communication system to be developed by PacTel Teletrac for
use in the United States.
1.8 "Radio Location System" shall mean a land-based radio location system that
uses the RLS Licensed Software and RLS Licensed Technical Information for
purposes of locating animate or inanimate objects, including people, and, and
when and if the technology is developed, for ancillary activities such as data
messaging or voice messages, or both.
1.9 "RLS Commercial Operation Date" shall mean the date when Tadiran obtains its
first paying RLS Customer.
1.10 "RLS Components" shall mean all components of the Radio Location System in
the Territory and RLS Customer Equipment and RLS Customer Services, other than
the Tadiran Basestations, as defined below, and the Tadiran Location Units. In
general, the major components are: the RLS Customer Workstation; the RLS Network
Control Center and network; the RLS Transmission Sites; and the RLS Receiver
Sites. Each of these major components, in turn, has a number of constituent
parts, all of which, other than the Tadiran Location Units and Tadiran
Basestations, are considered "RLS Components" for purposes of this License
Agreement.
1.11 "RLS Coverage Area" shall mean the geographic area of designed coverage of
the Radio Location System in the Territory.
1.12 "RLS Customer" shall mean a purchaser, renter, lessee or other end user of
any RLS Customer Equipment, RLS Customer Maintenance, RLS Customer Services or
RLS Component, that is provided with respect to the Radio Location System in the
Territory.
1.13 "RLS Customer Equipment" shall mean the equipment, including, but not
limited to, Location Units, that enables an RLS Customer to receive RLS Customer
Services.
1.14 "RLS Customer Equipment Net Revenue" shall mean the gross amount invoiced
to any RLS Customer or other third party for RLS Customer Equipment less the
following amounts:
2
(a) the cost to Tadiran of such RLS Customer Equipment, subject to the
limitations set forth in Section 15.4.1 below concerning purchases of Location
Units from Tadiran and from entities that Tadiran controls or has the ability to
control; (b) the cost to Tadiran of installation of Location Units, which shall
be determined as set forth in Section 15.4.2 below; and (c) any value added tax,
sales tax or other tax or levy actually imposed in the Territory on the RLS
Customer with respect to sales of RLS Customer Equipment and paid by Tadiran
(not including any tax on Tadiran's income with respect to such sales). If
Tadiran receives compensation for RLS Customer Equipment in the form of goods or
services, then the fair market value of such goods or services shall be included
as RLS Customer Equipment Net Revenue.
1.15 "RLS Customer Maintenance" shall mean maintenance and support provided for
software, hardware or other equipment with respect to Location Units, RLS
Customer Workstations and other RLS Customer Equipment.
1.16 "RLS Customer Maintenance Net Revenue" shall mean twenty-five percent (25%)
of the gross amount invoiced to RLS Customers and other third parties for RLS
Customer Maintenance.
1.17 "RLS Customer Services" shall mean the services provided by means of the
Radio Location System, including but not limited to radio location, data
messaging and voice messages. RLS Customer Services do not include RLS Customer
Maintenance.
1.18 "RLS Customer Services Net Revenue" shall mean the gross amount invoiced to
any RLS Customer or other third party for RLS Customer Services, together with
all other income, other than income attributable to RLS Customer Equipment and
RLS Customer Maintenance, received by Tadiran by reason of the rights and
licenses granted under this License Agreement, less any value added tax, sales
tax or other tax or levy actually imposed in the Territory on the RLS Customer
with respect to such Services and paid by Tadiran (not including any tax on
Tadiran's income with respect to such Services). If Tadiran is compensated in
the form of goods or services, then the fair market value of such goods or
services shall be treated as income for the purpose of calculating RLS Customer
Services Net Revenue.
1.19 "RLS Customer Workstation" shall mean a workstation installed at an RLS
Customer site that enables an RLS Customer to forward requests for locations to
the RLS Network Control Center, that receives location information from the RLS
Network Control Center, and displays locations on an RLS Map. The RLS Customer
Workstation consists of hardware and software components.
1.20 "RLS Data Transmission Network" shall mean the data transmission equipment
that transports data between RLS Transmission Sites, RLS Receiver Sites and the
RLS Network Control Center.
1.21 "RLS Licensed Software" shall mean the executable format versions of the
operational computer software or firmware programs, or both, that are listed in
Exhibit A to this License Agreement, as such programs exist and, to the extent
applicable, may be sublicensed by PacTel Teletrac to Tadiran, at the time of
delivery in accordance with this License Agreement, and the available
documentation relating to the use of such software or firmware. With respect to
the
3
RLS Customer Workstation Licensed Software only, RLS Licensed Software also
shall include the source code of such software to the extent that PacTel
Teletrac is entitled to disclose such source code. The RLS Licensed Software
does not include management information software, including, but not limited to,
for purposes such as customer activation, billing and accounting, and Tadiran
will be responsible for supplying any such software. PacTel Teletrac will,
however, provide all of its available interface specifications or software
hooks, for Tadiran's use in designing management information software to be used
with the RLS Licensed Software. In summary, the RLS Licensed Software programs
are the programs designed to perform the following functions for a Radio
Location System:
(a) RLS Customer Workstation Licensed Software: These software programs enable
the RLS Customer to send and receive information to and from the RLS Network
Control Center and to display the location data on the RLS Map when such Map is
provided as part of the RLS Customer Workstation.
(b) RLS Network Control Center Licensed Software: These software programs
consist of the following three categories:
(i) Real Time Operating Software that communicates and synchronizes information
received from Location Unit radio signals to calculate locations in real time.
(ii) Systems Support and Maintenance Software that enables RLS Customers to
access a Radio Location System, that forwards requests for locations to RLS
Transmission Sites and diagnoses Radio Location System malfunctions.
(iii) Database Services Software that performs customer validation functions,
tracks or records use of the Radio Location System and performs message
management functions.
(c) RLS Transmission and RLS Receiver Sites Licensed Software: This software
performs calculations and acts as an interface for signals from RLS Receiver
Sites and RLS Transmission Sites and the RLS Data Transmission Network.
1.22 "RLS Licensed Software Upgrades" shall mean any and all technical,
functional, or other enhancements, improvements, additions, upgrades or
modifications to and new versions of the RLS Licensed Software that PacTel
Teletrac has released to at least fifty percent (50%) of PacTel Teletrac's Radio
Location Systems operating in the United States. RLS Licensed Software Upgrades
shall not include any software or other proprietary data that a third party owns
and that PacTel Teletrac is not authorized to disclose. RLS Licensed Software
Upgrades that PacTel Teletrac provides to Tadiran during the term of this
License Agreement shall be treated as RLS Licensed Software for all purposes
under this License Agreement.
1.23 "RLS Licensed Technical Information" shall mean the manuals, blue prints
and other tangible data listed in Exhibit B to this License Agreement together
with intangible information that is proprietary to PacTel Teletrac and that may
assist Tadiran to use the information listed in Exhibit B for the purpose of
designing, constructing and operating and maintaining the Radio Location System
in the Territory.
4
1.24 "RLS Licensed Technical Information Modifications" shall mean any and all
technical, functional, operational or other enhancements, improvements,
additions, updates or modifications to, or any new versions of, the RLS Licensed
Technical Information, that PacTel Teletrac has released to at least fifty
percent (50%) of PacTel Teletrac's Radio Location Systems operating in the
United States, provided that RLS Licensed Software Upgrades are not included in
this definition. RLS Licensed Technical Information Modifications shall not
include any software or other proprietary data that a third party owns and that
PacTel Teletrac is not authorized to disclose. RLS Licensed Technical
Information Modifications that PacTel Teletrac provides to Tadiran during the
term of this License Agreement, shall be treated as RLS Licensed Technical
Information for all purposes under this License Agreement.
1.25 "RLS Map" shall mean the digitized map of the RLS Coverage Area that
Tadiran will provide and use.
1.26 "RLS Network Control Center" shall mean the master station that serves a
RLS Coverage Area. The RLS Network Control Center consists of a group of
networked or interconnected computers, or both, that constitute the information
processing hub of the Radio Location System.
1.27 "RLS Receiver Sites" shall mean the receivers that gather Location Unit
radio signals. Each RLS Receiver Site consists of equipment and software
components that capture and convert transmitter and Location Unit radio signals
to a computer usable level, and calculate and transmit to the RLS Network
Control Center information about the signals received.
1.28 "RLS Transmission Sites" shall mean the sites that receive location
requests from the RLS Network Control Center and transmit forward link signals
that prompt Location Units located in the RLS Coverage Area to send a response
radio signal to RLS Receiver Sites.
1.29 "Spectrum License" shall mean a permit granted by the Israel Ministry of
Telecommunications to Tadiran to use a radio spectrum of eight (8) MHZ.
1.30 "Tadiran Basestation Agreement" shall mean the Amended Advanced Base
Station Agreement between Tadiran and PacTel Teletrac, as the assignee of
International Teletrac Systems, dated February 15, 1991, together with its
Amendments.
1.31 "Tadiran Basestations" shall mean the basestations that Tadiran
manufactures and sells to PacTel Teletrac pursuant to the Tadiran Basestation
Agreement.
1.32 "Tadiran Location Unit Agreement" shall mean the restated CVLU production
agreement dated July 30, 1991, between PacTel Teletrac, as the assignee of
International Teletrac Systems, and Tadiran.
1.33 "Territory" shall mean the State of Israel and the territories administered
by it.
1.34 "U.S. CPI" shall mean the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the U.S. Department of Labor, Bureau of Labor
Statistics, U.S. City Average, "All Items," base year 1982-1984 = 100. If for
any reason the U.S. CPI is discontinued or does not exist, "U.S. CPI" shall mean
the official or replacement index published by the U.S.
5
Department of Labor, Bureau of Labor Statistics, or successor or similar
governmental agency which is most similar to the U.S. CPI. U.S. CPI dates shall
mean the latest published U.S. CPI.
2. Grant of Rights.
2.1 Radio Location System. As of the Effective Date and subject to the terms and
conditions of this License Agreement, PacTel Teletrac grants to Tadiran an
exclusive nontransferable right, solely within the Territory, to construct, use,
maintain and provide support for a Radio Location System and to market, sell,
promote, maintain and provide support for RLS Customer Equipment and RLS
Customer Services and to provide RLS Customer Maintenance.
2.2 RLS Licensed Software Executable Format and RLS Licensed Technical
Information. As of the Effective Date and subject to the terms and conditions of
this License Agreement, PacTel Teletrac grants to Tadiran an exclusive
nontransferable license to use RLS Licensed Software in executable format and
RLS Licensed Technical Information solely for the purpose of operating,
maintaining and providing support for a Radio Location System in the Territory.
Tadiran may sublicense to RLS Customers the right to use RLS Customer
Workstation Licensed Software only in executable format and only on such RLS
Customers' designated computer processing unit(s). Tadiran agrees that neither
it nor its employees will use or copy RLS Licensed Software except as authorized
in this License Agreement. Other than the RLS Customer Workstation Licensed
Software in executable format, which Tadiran may copy for its sublicensees,
Tadiran may copy the RLS Licensed Software solely for its own use and solely in
connection with the performance of its obligations under this License Agreement.
2.3 RLS Customer Workstation Licensed Software Source Code. As of the Effective
Date and subject to the terms and conditions of this License Agreement, PacTel
Teletrac grants to Tadiran an exclusive nontransferable license to use the RLS
Customer Workstation Licensed Software that PacTel Teletrac delivers to Tadiran
in source code format solely for the purpose of translating such software to
Hebrew and otherwise adapting such software for purposes of operating the Radio
Location System in the Territory. Tadiran may copy the source code for the RLS
Customer Workstation Licensed Software solely for its own internal use for the
purposes set forth in this Section 2.3 and for the use of independent
contractors that Tadiran has engaged to make the translations or adaptations
authorized under this Section 2.3, provided that such independent contractors
shall execute a confidentiality agreement in substantially the same form as the
Nondisclosure Agreement referred to in Section 15.5 below, and shall execute an
agreement to assign to Tadiran all inventions made and work performed by the
contractor in connection with the RLS Customer Workstation Licensed Software. In
addition, such contractors shall not have any direct or indirect ownership
interest in a land-based radio location system or be in the business of
providing software for any such system, other than the Radio Location System.
Any other use or disclosure of the RLS Customer Workstation Licensed Software
source code or modification of the RLS Customer Workstation Licensed Software
shall be subject to PacTel Teletrac's prior written consent, which consent
PacTel Teletrac may withhold in its sole discretion. PacTel Teletrac shall have
no obligation to provide RLS Licensed Software Upgrades or RLS Licensed
Technical Information Modifications that are compatible with Tadiran's
modifications to the RLS Customer Workstation Licensed Software.
6
3. Reservation of Rights.
Except as to those certain rights and licenses expressly granted to Tadiran
under this License Agreement, PacTel Teletrac reserves all proprietary rights,
title and interest, including all ownership and proprietary rights, in and to
the Radio Location System, RLS Licensed Software, RLS Licensed Technical
Information and the "PacTel" and "Teletrac" marks, including all designs,
inventions, patents, copyrights, trademarks, service marks, trade secrets,
know-how, techniques, engineering details, enhancements, improvements,
additions, upgrades, modifications, derivative works, RLS Licensed Technical
Information Modifications and RLS Licensed Software Upgrades. PacTel Teletrac
acknowledges that this reservation of rights does not apply to Tadiran Location
Units or to Tadiran Basestations, and, subject to the rights and licenses
granted by Tadiran to PacTel Teletrac under this License Agreement, Tadiran
reserves all proprietary rights, title and interest, including all ownership and
proprietary rights in and to Tadiran Location Units and Tadiran Basestations,
including all designs, inventions, patents, copyrights, trademarks, engineering
details, enhancements, additions, improvements, modifications, and derivative
works of such Tadiran Location Units and Tadiran Basestations. Tadiran
acknowledges that no title to the "PacTel" or Teletrac" marks, RLS Licensed
Software or RLS Licensed Technical Information, or any part thereof, has been or
will be transferred to Tadiran. Neither Tadiran nor any Tadiran affiliate will
disassemble or recompile any RLS Licensed Software, other than the RLS Customer
Workstation Licensed Software solely for the purposes set forth in Section 2.3
above.
4. Consideration.
4.1 Fees. In consideration for the grant of rights set forth in Section 2 above,
Tadiran will perform the obligations set forth in this License Agreement and
will pay to PacTel Teletrac:
4.1.1 Lump Sum. Upon delivery of the Current Version Software, as set forth in
Section 14.2.1 below, the sum of five hundred thousand U.S. dollars
(U.S.$500,000) in partial consideration for the RLS Licensed Software;
4.1.2 Royalty Interests.
(a) Equipment Royalty Interest. A fee equal to four percent (4%) of RLS Customer
Equipment Net Revenue, which fee shall increase to six percent (6%) of RLS
Customer Equipment Net Revenue once there are sixty thousand (60,000) RLS
Customers, and shall thereafter increase at the rate of one-half percent (.5%)
for each additional ten thousand (10,000) RLS Customers up to a maximum rate of
eight percent (8%). Once the fee is equal to or greater than six and one-half
percent (6.5%), then such fee shall be subject to decrease at the rate of
one-half percent (.5%) for each decrease of ten thousand (10,000) RLS Customers,
with a minimum rate of six percent (6%). The fees set forth in this subsection
are referred to collectively as the "Equipment Royalty Interest"; and
(b) Maintenance Royalty Interest. A fee equal to four percent (4%) of RLS
Customer Maintenance Net Revenue, which fee shall increase to six percent (6%)
of RLS Customer Maintenance Net Revenue once there are sixty thousand (60,000)
RLS Customers, and shall
7
thereafter increase at the rate of one-half percent (.5%) for each additional
ten thousand (10,000) RLS Customers up to a maximum rate of eight percent (8%).
Once the fee is equal to or greater than six and one-half percent (6.5%), then
such fee shall be subject to decrease at the rate of one-half percent (.5%) for
each decrease of ten thousand (10,000) RLS Customers, with a minimum rate of six
percent (6%). The fees set forth in this subsection are referred to collectively
as the "Maintenance Royalty Interest"; and
(c) Services Royalty Interest. A fee equal to four percent (4%) of RLS Customer
Services Net Revenue, which fee shall increase to six percent (6%) of RLS
Customer Services Net Revenue once there are sixty thousand (60,000) RLS
Customers, and shall thereafter increase at the rate of one-half percent (.5%)
for each additional ten thousand (10,000) RLS Customers up to a maximum rate of
eight percent (8%). Once the fee is equal to or greater than six and one-half
percent (6.5%), then such fee shall be subject to decrease at the rate of
one-half percent (.5%) for each decrease of ten thousand (10,000) RLS Customers,
with a minimum rate of six percent (6%). The fees set forth in this subsection
are referred to collectively as the "Services Royalty Interest."
(d) Accrual of Royalty Interests. The Equipment Royalty Interest, Maintenance
Royalty Interest and Services Royalty Interest are referred to collectively in
this License Agreement as the "Royalty Interests." PacTel Teletrac shall
commence earning its Royalty Interests immediately upon Tadiran's receipt of
revenues with respect to the Radio Location System in the Territory; however, no
payments shall be due on the Royalty Interests until two (2) years after the RLS
Commercial Operation Date. On the day that is two (2) years after the RLS
Commercial Operation Date, Tadiran shall pay all accrued but unpaid amounts, due
on the Royalty Interests and shall commence quarterly payments of the Royalty
Interests in accordance with subsection 4.3 below.
4.2 Records and Adjustments. Tadiran shall keep full, clear, separate and
accurate records, accounts and working papers with respect to RLS Customer
Equipment Net Revenue, RLS Maintenance Net Revenue, and RLS Customer Services
Net Revenue and calculation of Royalty Interests for at least four (4) years
after the termination of the calendar year to which they relate. Tadiran shall
use the same accounting methods as it uses for its own financial statements, for
so long as Tadiran is listed on the New York Stock Exchange. If and when Tadiran
ceases to be listed on the New York Stock Exchange, then it shall use accounting
principles generally accepted in Israel ("Israeli GAAP") for all records and
accounts required under this License Agreement. Tadiran shall engage an
independent accountant to conduct an annual audit of such records and accounts.
In addition, upon two (2) days' notice to Tadiran, PacTel Teletrac or its agent
shall have the right to examine during normal business hours all records and
accounts relating to its Royalty Interests and Tadiran's performance under this
License Agreement, including, but not limited to, any auditors' work records.
Prompt adjustment shall be made by the proper party to compensate for any errors
or omissions disclosed by any such examination. If a special examination or
special audit requested by PacTel Teletrac discloses an under calculation in
excess of five percent (5%) of the amount payable to PacTel Teletrac, then
Tadiran shall bear the cost of such examination, and shall promptly correct the
calculation of amounts payable and pay any underpaid amount, plus all late
payment charges due and owing. If such an examination or audit discloses an
overpayment to PacTel Teletrac, then PacTel Teletrac shall
8
promptly repay to Tadiran the overpaid amount. Disagreements about accounting
matters shall be resolved as set forth in Section 19.4 below.
4.3 Reports, Forecasts and Payments.
4.3.1 Reports. Commencing on the date that Royalty Interests first begin to
accrue, Tadiran shall provide to PacTel Teletrac within thirty (30) days after
the end of each calendar quarter ending on March 31, June 30, September 30 and
December 31, financial information for the quarter that just ended and
year-to-date financial information (in accordance with the accounting
requirements set forth in Section 4.2 above), together with all working papers
used to compile such statements, that show the amount of and the basis for the
calculation of the RLS Customer Equipment Net Revenue, RLS Maintenance Net
Revenue, RLS Customer Services Net Revenue, and Royalty Interests and the number
of activated Location Units and RLS Customers. All such information and working
papers shall be in English and shall be accompanied by a letter from the
independent accountant that Tadiran has engaged as required under Section 4.2
above confirming that such accountant has reviewed and agrees that the method of
computing the Royalty Interests complies with the requirements of this License
Agreement. Tadiran also shall provide with its quarterly financial statements
its forecast of RLS Customer Equipment Net Revenue, RLS Maintenance Net Revenue
and RLS Customer Services Net Revenue for the next four (4) quarters. Such
statements, working papers and forecasts, together with all fees due to PacTel
Teletrac, shall be sent to PacTel Teletrac at its address specified in
accordance with Section 20.1.2 below.
4.3.2 Payments. All payments of Royalty Interests stall be made quarterly and
audited and adjusted annually. The audit shall be conducted by Tadiran's
independent accountant as set forth in Section 4.2 above. All payments shall be
due and payable thirty (30) days after the end of each calendar quarter in U.S.
dollars and any conversion to U.S. dollars shall be made as often as Tadiran
makes such conversions for its own purposes and, in all cases, at least on the
last day, Monday through Friday, excluding Bank of Israel holidays, before the
payment is due, at the Representative Rate of Exchange determined by the Bank of
Israel. Payments of Royalty Interests shall be subject to deduction for Israeli
withholding taxes that apply to payments from Tadiran to PacTel Teletrac.
Tadiran shall cooperate with PacTel Teletrac in providing documentation that
will assist PacTel Teletrac to obtain tax credits with respect to such
withholding. If for any payment period the RLS Equipment Net Revenue is a
negative amount because the allowable cost deductions exceed the invoiced
amounts, then Tadiran shall be entitled to carry forward and deduct such
negative amount (the "Equipment Loss Carry Forward") from future RLS Equipment
Net Revenues. No amount shall be due with respect to the Equipment Royalty
Interest until RLS Equipment Net Revenues exceed the cumulative Equipment Loss
Carry Forward.
4.3.3 Late Payments. Late payments of Royalty Interests or of any other payments
due under this License Agreement shall be subject to a late payment charge
calculated at an annual rate of two percent (2%) over the LIBOR rate during
delinquency. If the amount of such charge exceeds the maximum charge permitted
by law, such charge shall be reduced to such maximum.
4.4 Circumstances for Reduction of Royalty Interest. If seven (7) years after
the RLS Commercial Operation Date, the Parties determine that the Radio Location
System in the
9
Territory requires system level technology that is not available from PacTel
Teletrac in order to be able to compete in the radio location business in the
Territory, then the Parties will meet to discuss in good faith a reduction in
PacTel Teletrac's Royalty Interests to reflect the value and expense of such new
technology. If the Parties are unable to agree on an adjustment to PacTel
Teletrac's Royalty Interests, the matter shall be referred to arbitration
pursuant to Section 19.2 below. In no event shall PacTel Teletrac's Royalty
Interests be reduced to an amount that is less than twenty-five percent (25%) of
the Royalty Interests that would otherwise apply under Section 4.1.2 above.
5. Term.
This License Agreement shall commence on the Effective Date and shall remain in
effect until it is terminated in accordance with Section 6 below.
6. Termination.
Neither Party shall be in breach of this License Agreement if the License
Agreement is terminated under Sections 6.1, 6.2, 6.3, 6.4, 6.5 or 6.6 below, and
the terminating party shall not be in breach of this License Agreement if it
terminates this License Agreement under Section 6.7 below.
6.1 This License Agreement may be terminated by mutual written agreement.
6.2 If the RLS Commercial Operation Date has not occurred within seven (7) years
after the Effective Date, then at any time upon ninety (90) days' notice after
such seven (7) year date, PacTel Teletrac may elect to terminate this License
Agreement by providing notice of such termination to Tadiran.
6.3 If either Party (a) is dissolved or liquidated or otherwise ceases to
operate as a going concern or ceases to operate a Radio Location System, and (b)
does not have a successor to its rights and obligations under this License
Agreement (the "Non-operational Party"), then, at any time within ninety (90)
days from the date that the other Party (the "Operational Party") learns of the
facts referred to in subsections (a) and (b) above, the Operational Party may
elect to terminate this License Agreement upon thirty (30) days' written notice
to the Non-operational Party. If Tadiran elects to terminate this License
Agreement pursuant to this Section 6.3, then Tadiran also may elect to continue
to operate the Radio Location System in the Territory pursuant to Section 8.1
below.
6.4 Tadiran may elect to cease operation of the Radio Location System at any
time and to terminate this License Agreement provided that it complies with the
provisions of Section 8.2 below.
6.5 PacTel Teletrac may elect to cease its Radio Location System business at any
time and to terminate this License Agreement provided that Tadiran is allowed to
continue to operate its Radio Location System as set forth in Section 8.1 and
that PacTel Teletrac delivers source code to Tadiran pursuant to the agreement
referred to in Section 14.3 below.
10
6.6 If either Party files or is the subject of an application or petition or
order in bankruptcy, seeks or suffers the appointment of a receiver or trustee,
or otherwise seeks, submits to or is made subject to any other debtor's relief
law or procedure (a "Party's Insolvency"), then the other Party may terminate
this License Agreement immediately upon notice in writing, provided, however,
that neither Party may terminate this License Agreement solely because of a
Party's Insolvency if the insolvent Party is continuing to perform all of its
obligations under this License Agreement, which shall include, in the case of
Tadiran, timely payment of all amounts due with respect to PacTel Teletrac's
Royalty Interests.
6.7 Either Party may terminate this License Agreement by written notice to the
defaulting Party if any of the following occurs and the defaulting Party has
received written notice of the default and has failed to cure the default during
the cure period specified below:
6.7.1 A Party's failure to timely make any payment as required by this License
Agreement and failure to cure such default within ninety (90) days of its
receipt of written notice of such default during the first two such defaults, or
within thirty (30) days of its receipt of written notice of any late payment
default after the first two events of late payment;
6.7.2 A Party's breach of one or more of its material obligations under this
License Agreement, and the breaching Party's failure to cure such breach within
ninety (90) days of its receipt of written notice of such breach; or
6.7.3 An attempt to sell, transfer or assign a Party's rights or delegate its
duties under this License Agreement in violation of Section 20.5 of this License
Agreement, and failure to cure such default within ninety (90) days of the
defaulting Party's receipt of written notice of such default.
7. Restrictions on Business Activities.
7.1 Except as specifically set forth in Sections 8.1 and 10.2 of this License
Agreement with respect to Tadiran's ability to operate a Radio Location System
in the Territory after termination of this License Agreement, during the term of
this License Agreement and for a period equal to the earlier of (a) five (5)
years after termination of this License Agreement, or (b) the maximum period
allowed by law, neither Tadiran nor any entities that Tadiran controls or has
the ability to control:
7.1.1 Shall construct or operate or invest in any land based radio location
service designed to service the mass consumer or commercial market anywhere in
the world, other than the Radio Location System in the Territory. For purposes
of this Section 7, radio location service shall mean any service which, within a
defined geographic region, a) uses time of arrival radio measurements to locate
an object and b) has been designed primarily for the purpose of determining an
object's location. For purposes of clarification of this Section 7.1.1, PacTel
Teletrac acknowledges that Tadiran and the entities that Tadiran controls or has
the ability to control may in the future develop, operate or acquire an interest
in businesses that may as an incidental service provide radio location service
offerings, such as personal communications networks, cellular radio services,
paging and video transmission services, and that such activities will not be a
violation of the provisions of this Section 7.
11
7.1.2 Shall operate, invest in or acquire a direct or indirect ownership
interest in any company that Tadiran controls or has or will have the ability to
control and that operates a business that competes or will compete with the
radio location service portion of the Radio Location System operated by Tadiran
in the Territory.
7.2 PacTel Teletrac acknowledges that Tadiran and the entities that Tadiran
controls or has the ability to control:
7.2.1 Sell GPS systems;
7.2.2 Manufacture and sell a pilot rescue system and other military equipment
and systems that are used to locate animate and inanimate objects;
7.2.3 Manufacture, sell and operate automatic identification devices and smart
cards;
and that these businesses do not violate the provisions of Section 7.1.2.
8. Effect of Termination or Cancellation.
8.1. Circumstances Where Operations Continue--Continued Rights. If, as set forth
in Sections 6.3 or 10.2, Tadiran elects to terminate this License Agreement, or
as set forth in Section 6.5, PacTel Teletrac elects to terminate this License
Agreement, and Tadiran elects to continue to operate the Radio Location System,
then, solely for the purpose of such operations in the Territory, Tadiran may
continue to use the RLS Licensed Software and RLS Licensed Technical Information
and may also request source code for the RLS Licensed Software pursuant to the
agreement referred to in Section 14.3 below.
8.2 Circumstances Where Operations End--Return of Materials and Non-Compete. In
all cases of termination or cancellation of this License Agreement (other than
where Tadiran elects to terminate this License Agreement under Sections 6.3 or
10.2, or PacTel Teletrac elects to terminate this License Agreement under
Section 6.5, and Tadiran elects to continue operation of the Radio Location
System in the Territory pursuant to Section 8.1 above), within one hundred
eighty (180) days after termination or cancellation of this License Agreement,
Tadiran shall cease all use of RLS Licensed Software and RLS Licensed Technical
Information. In addition, Tadiran shall, at PacTel Teletrac's request, return to
PacTel Teletrac, or to PacTel Teletrac's designee, all RLS Licensed Technical
Information, RLS Licensed Software, and all other data, software, warranty and
maintenance information, and other materials related to Radio Location Systems
other than Tadiran Location Units and Tadiran Basestations, and shall
permanently erase, including low-level re-format of fixed disk storage devices,
and remove from all computer, electronic or other storage devices in its
possession or under its control, or otherwise destroy, all images, copies or
documents that incorporate the RLS Licensed Software or RLS Licensed Technical
Information, or both. Notwithstanding anything to the contrary in this License
Agreement, Tadiran shall not be required to return RLS Customer Equipment that
Tadiran has provided to RLS Customers, or executable format RLS Customer
Workstation Licensed Software that Tadiran has licensed to third parties, in
accordance with the terms and conditions of this License Agreement.
12
8.3 No Damages. Neither Tadiran nor PacTel Teletrac shall, by reason of the
termination or cancellation of this License Agreement in accordance with the
terms of this License Agreement, be liable to the other for compensation,
reimbursement or any damages, either actual, consequential, incidental, special
or punitive, arising out of such termination or cancellation, including, but not
limited to, the loss of prospective profits on anticipated sales, or on account
of expenditures, investments, leases or commitments in connection with the
business or goodwill of PacTel Teletrac or Tadiran or otherwise anticipated
under this License Agreement.
8.4 Payment Obligations. Termination or cancellation of this License Agreement
shall not relieve Tadiran of any obligation to pay PacTel Teletrac any amounts
due and owing to PacTel Teletrac.
8.5 Survival. After the termination or cancellation of this License Agreement by
its terms, operation of law or otherwise, all rights, privileges and obligations
arising from this License Agreement shall cease to exist; provided, however, the
confidentiality requirement in Section 15.5, the obligations and limitations in
Sections 3, 4, 7, 8, 9.3, 9.5, 10, 11, 12.3, 13, 15.7, 16, 18, 19 and 20 and
such other obligations which, from the context hereof, are intended to survive
the termination of this Agreement shall remain.
9. RLS Licensed Software Upgrades and RLS Licensed Technical Information
Modifications.
9.1 RLS Licensed Software Upgrades. After delivery of the RLS Current Version
Software as set forth in Section 14.2.1 below, then within thirty (30) days of
release to at least fifty percent (50%) of PacTel Teletrac's Radio Location
Systems operating in the United States, PacTel Teletrac will deliver to Tadiran,
at no charge, copies in executable format of all RLS Licensed Software Upgrades
created during the term of this License Agreement. PacTel Teletrac shall have no
obligation to create RLS Licensed Software Upgrades or to provide upgrades
requested by Tadiran. PacTel Teletrac shall deliver all such Upgrades to
Tadiran's Contract Technical Coordinator, together with a list of the Upgrades
that PacTel Teletrac is providing.
9.2 RLS Licensed Technical Information Modifications Developed by PacTel
Teletrac. After delivery of the RLS Licensed Technical Information, as set forth
in Section 14.1 below, then within thirty (30) days of release to at least fifty
percent (50%) of PacTel Teletrac's Radio Location Systems operating in the
United States, PacTel Teletrac will deliver to Tadiran, at no charge, copies of
any substantial RLS Licensed Technical Information Modifications during the term
of this License Agreement. PacTel Teletrac shall have no obligation to make RLS
Licensed Technical Information Modifications or to design or implement RLS
Licensed Technical Information Modifications requested by Tadiran. PacTel
Teletrac shall deliver all such Modifications to Tadiran's Contract Technical
Coordinator, together with a list of the Modifications that PacTel Teletrac is
providing. If PacTel Teletrac develops equipment related to the Radio Location
System, PacTel Teletrac shall not be required to disclose to Tadiran the
engineering and manufacturing specifications for the equipment, but PacTel
Teletrac shall notify and provide to the Tadiran Technical Coordinator the
performance specification and Radio Location System interface information for
such equipment, and shall offer to Tadiran the opportunity to purchase such
equipment at a reasonable price.
9.3 Upgrades and Modifications to the Radio Location System Developed by Tadiran
13
9.3.1 RLS Licensed Customer Workstation Software.
(a) Authority to Make Upgrades. Tadiran may make and will notify the PacTel
Teletrac Technical Coordinator of upgrades, improvements, additions,
enhancements or modifications to RLS Licensed Customer Workstation Software
("Tadiran Workstation Software Upgrades"). If such Tadiran Workstation Software
Upgrades consist of a complete re-write of the RLS Licensed Customer Workstation
Software as delivered by PacTel Teletrac to Tadiran, then such Upgrades shall be
compatible with the Microsoft Windows operating system. For all other Tadiran
Workstation Software Upgrades Tadiran may use either the Microsoft Windows
operating system or the language and operating system used for the Software as
delivered by PacTel Teletrac to Tadiran. Tadiran acknowledges and assumes all
risks that Tadiran Workstation Software Upgrades may affect the functionality or
operation of the RLS Licensed Software or Radio Location System, or both.
(b) Ownership and License of Upgrades. Tadiran will be the sole owner of Tadiran
Workstation Software Upgrades.
(i) Derivative Upgrades. As to those Tadiran Workstation Software Upgrades that
are derived from or include any part the RLS Workstation Software or RLS
Licensed Technical Information, Tadiran hereby grants to PacTel Teletrac a
world-wide, exclusive (except in the Territory, where such license shall be
nonexclusive) perpetual, royalty free, license to use, market, distribute,
sublicense, reproduce and have reproduced such Tadiran Workstation Software
Upgrades solely for purposes of land-based radio location systems that locate
animate or inanimate objects, including people, and for ancillary activities
such as data messaging or voice messages. Such licenses shall not include any
portion of the Tadiran Workstation Software Upgrades that is owned by a third
party other than any entity that Tadiran controls or has the ability to control,
and that Tadiran is not authorized to disclose. Tadiran shall have no right,
either during or after the term of this License Agreement, to sell or disclose
to third parties, or make any use of other than as part of the Radio Location
System in the Territory, Tadiran Workstation Software Upgrades that are derived
from or include any part of the RLS Licensed Software or RLS Licensed Technical
Information. Tadiran shall have no obligation to deliver Tadiran Workstation
Software Upgrades to PacTel Teletrac until test versions of such Upgrades are
available.
(ii) Stand-alone Upgrades. As to those Tadiran Workstation Software Upgrades
that are neither derived from nor include any part of the RLS Workstation
Software or RLS Licensed Technical Information, Tadiran hereby grants to PacTel
Teletrac a world-wide, nonexclusive, perpetual, royalty free, license to use,
market, distribute, sublicense, reproduce and have reproduced such Tadiran
Workstation Software Upgrades solely for purposes of land-based radio location
systems that locate animate or inanimate objects, including people, and for
ancillary activities such as data messaging or voice messages. Such licenses
shall not include any portion of the Tadiran Workstation Software Upgrades that
is owned by a third party other than any entity that Tadiran controls or has the
ability to control, and that Tadiran is not authorized to disclose. PacTel
Teletrac shall have no right to sell or disclose stand-alone Tadiran Workstation
Software Upgrades as a product independent from its provision of a radio
location service. Other than the limitations on business activities set forth in
Section 7 above, there shall be no restrictions on Tadiran's rights with respect
to Tadiran Workstation Software Upgrades that do not include and
14
are not derived from any of the RLS Licensed Software or RLS Licensed Technical
Information. Tadiran shall have no obligation to deliver Tadiran Workstation
Software Upgrades to PacTel Teletrac until test versions of such Upgrades are
available.
9.3.2 RLS Licensed Software Other Than RLS Licensed Customer Workstation
Software.
(a) Authority to Make Upgrades. Tadiran may make and will notify the PacTel
Teletrac Technical Coordinator of upgrades, improvements, additions,
enhancements or modifications to RLS Licensed Software other than the RLS
Licensed Customer Workstation Software ("Tadiran Executable Software Upgrades").
Tadiran acknowledges and assumes all risks that Tadiran Executable Software
Upgrades may affect the functionality or operation of the RLS Licensed Software
or Radio Location System, or both.
(b) Ownership and License of Upgrades. Tadiran will be the sole owner of Tadiran
Executable Software Upgrades.
(i) Derivative Upgrades. As to those Tadiran Executable Software Upgrades that
are derived from or include any part the RLS Licensed Software or RLS. Licensed
Technical Information, Tadiran hereby grants to PacTel Teletrac a world-wide,
exclusive (except in the Territory, where such license shall be nonexclusive)
perpetual, royalty free, license to use, market, distribute, sublicense,
reproduce and have reproduced such Tadiran Executable Software Upgrades solely
for purposes of land-based radio location systems that locate animate or
inanimate objects, including people, and for ancillary such as data messaging or
voice messages. Such licenses shall not include any portion of the Tadiran
Executable Software Upgrades that is owned by a third party other than any
entity that Tadiran controls or has the ability to control, and that Tadiran is
not authorized to disclose. Tadiran shall have no right, either during or after
the term of this License Agreement, to sell or disclose to third parties, or
make any use of other than as part of the Radio Location System in the
Territory, Tadiran Executable Software Upgrades that are derived from or include
any part of the RLS Licensed Software. Tadiran shall have no obligation to
deliver Tadiran Executable Software Upgrades to PacTel Teletrac until test
versions of such Upgrades are available.
(ii) Stand-alone Upgrades. As to those Tadiran Executable Software Upgrades that
are neither derived from nor include any part of the RLS Licensed Software or
RLS Licensed Technical Information, Tadiran hereby grants to PacTel Teletrac a
world-wide, non-exclusive, perpetual royalty free, license to use, market,
distribute, sublicense, reproduce and have reproduced such Tadiran Executable
Software Upgrades solely for purposes of land-based radio location systems that
locate animate or inanimate objects, including people, and for ancillary
activities such as data messaging or voice messages. Such licenses shall not
include any portion of the Tadiran Executable Software Upgrades that is owned by
a third party other than any entity that Tadiran controls or has the ability to
control, and that Tadiran is not authorized to disclose. PacTel Teletrac shall
have no right to sell or disclose stand-alone Tadiran Executable Software
Upgrades as a product independent from its provision of a radio location
service. Other than the limitations on business activities set forth in Section
7 above, there shall be no restrictions on Tadiran's rights with respect to
Tadiran Executable Software Upgrades that do not include and are not derived
from any of the RLS Licensed Software or RLS Licensed Technical Information.
15
Tadiran shall have no obligation to deliver Tadiran Executable Software Upgrades
to PacTel Teletrac until test versions of such Upgrades are available.
9.3.3 RLS Licensed Technical Information.
(a) Authority to Make Modifications. Tadiran may make and will notify the PacTel
Teletrac Technical Coordinator of modification, upgrades, additions,
enhancements and improvements to the RLS Licensed Technical Information
("Tadiran Technical Modifications"). Tadiran acknowledges and assumes all risks
that Tadiran Technical Modifications may affect the functionality or operation
of the RLS Licensed Software or Radio Location System, or both.
(b) Ownership and License of Tadiran Technical Modifications. Tadiran will be
the sole owner of Tadiran Technical Modifications.
(i) Derivative Upgrades. As to those Tadiran Technical Modifications that are
derived from or include any part of the RLS Licensed Technical Information,
Tadiran hereby grants to PacTel Teletrac a world-wide, exclusive (except in the
Territory, where such license shall be nonexclusive), perpetual, royalty free,
license to use, market, distribute, sublicense, reproduce and have reproduced
such Tadiran Technical Modifications solely for purposes of land-based radio
location systems that locate animate or inanimate objects, including people, and
for ancillary activities such as data messaging or voice messages. Such licenses
shall not include any portion of the Tadiran Technical Modifications that is
owned by a third party other than any entity that Tadiran controls or has the
ability to control, and that Tadiran is not authorized to disclose. Tadiran
shall have no right, either during or after the term of this License Agreement
to sell or disclose to third parties, or make any use of other than as part of
the Radio Location System in the Territory, Tadiran Technical Modifications that
are derived from or include any part of the RLS Licensed Technical Information.
Tadiran shall have no obligation to deliver Tadiran Technical Modifications to
PacTel Teletrac until test versions of such Modifications are available.
(ii) Stand-alone Upgrades. As to those Tadiran Technical Modifications that are
neither derived from nor include any part of the RLS Licensed Technical
Information, Tadiran hereby grants to PacTel Teletrac a world-wide,
nonexclusive, perpetual, royalty free, license to use, market, distribute,
sublicense, reproduce and have reproduced such Tadiran Technical Modifications
solely for purposes of land-based radio location systems that locate animate or
inanimate objects, including people, and for ancillary activities such as data
messaging or voice messages. Such licenses shall not include any portion of the
Tadiran Technical Modifications that is owned by a third party other than any
entity that Tadiran controls or has the ability to control, and that Tadiran is
not authorized to disclose. In addition, if Tadiran develops equipment related
to the Radio Location System, other than as set forth in Section 9.3.4, Tadiran
shall not be required to disclose to PacTel Teletrac the engineering and
manufacturing specifications for the equipment, but Tadiran shall notify and
provide to the PacTel Teletrac Technical Coordinator the performance
specification and Radio Location System interface information for such
equipment, and shall offer to PacTel Teletrac the opportunity to purchase such
equipment at a reasonable price. PacTel Teletrac shall have no right to sell or
disclose stand-alone Tadiran Technical Modifications as a product independent
from its provision of a radio location service. Other than the limitations on
competition set forth in Section 7 above, there shall be no restrictions on
16
Tadiran's rights with respect to Tadiran Technical Modifications that do not
include and are not derived from any of the RLS Licensed Technical Information.
Tadiran shall have no obligation to deliver Tadiran Technical Modifications to
PacTel Teletrac until test versions of such Modifications are available.
9.3.4 Tadiran Basestations and Location Units.
(a) Authority to Make Modifications. Tadiran and any entities that Tadiran owns
or controls may make and will notify the PacTel Teletrac Technical Coordinator
of modifications, upgrades, additions, enhancements and improvements to the
Tadiran Basestations and Location Units ("Tadiran Basestation Modifications" and
"Location Unit Modifications"). This Agreement does not impose any obligations
on Tadiran to make such Modifications. Tadiran acknowledges and assumes all
risks that Tadiran Basestation Modifications and Tadiran Location Unit
Modifications may affect the functionality or operation of the RLS Licensed
Software Radio Location System, or both.
(b) Sale of Basestation and Location Unit Modifications. Provided that Tadiran
is engaged in, or controls or has the ability to control an entity that is
engaged in, the business of manufacturing Tadiran Basestations or Location
Unit,s then Tadiran shall offer, or cause to be offered, for sale to PacTel
Teletrac each Tadiran Basestation Modification and Location Unit Modification
pursuant to the applicable Tadiran Basestation Agreement or Tadiran Location
Unit Agreement in effect as of the time of such offer provided, however, that in
no case shall the price be greater than the lowest price charged to other radio
location service providers for such modified Tadiran Basestation or Location
Unit.
9.4 PacTel Teletrac Obligations With Respect to Tadiran Upgrades and Tadiran
Modifications. Tadiran's implementation of Upgrades and Modifications authorized
under Section 9.3 will not relieve PacTel Teletrac of its obligations under this
License Agreement. However, the Parties acknowledge and agree that PacTel
Teletrac will have no obligation to provide RLS Licensed Software or RLS
Licensed Technical Information or to modify the training, support and warranty
services that it is obligated to provide under this License Agreement, to make
them compatible with the Tadiran Workstation Software Upgrades, Tadiran
Executable Software Upgrades, Tadiran Technical Modifications or Tadiran
Basestation Modifications or Location Unit Modifications.
9.5 Delivery and Protection of Tadiran Upgrades and Tadiran Modifications. As to
all Tadiran Workstation Software Upgrades, Tadiran Executable Software Upgrades
and Tadiran Technical Modifications that Tadiran delivers to PacTel Teletrac
under this Agreement, Tadiran will deliver to PacTel Teletrac the software
source code and information concerning the source and authorship of delivered
material and inventions. In addition, Tadiran will cooperate with PacTel
Teletrac, at PacTel Teletrac's expense, in taking such actions as PacTel
Teletrac reasonably requests for the purposes of filing, any where in the world,
patent, copyright and other intellectual property registration applications with
respect to the Tadiran Workstation Software Upgrades, Tadiran Executable
Software Upgrades and Tadiran Technical Modifications. Such applications, shall,
where applicable, list Tadiran as the author, owner or inventor. PacTel Teletrac
shall have the right, at its expense, but, except as set forth in Section 10
below, no obligation, to bring, defend and maintain any appropriate suit, action
or proceeding involving
17
the infringement or misappropriation of the Tadiran Workstation Software
Upgrades, Tadiran Executable Software Upgrades or Tadiran Technical
Modifications. If PacTel Teletrac finds it necessary to join Tadiran in such
suit, action or proceeding, Tadiran shall execute all papers and perform such
other acts as may reasonably be required and may, at its option and expense, be
represented by counsel of its choice. Should PacTel Teletrac lack standing to
bring any such suit, action or proceeding, then Tadiran, at the request of
PacTel Teletrac, shall do so, or, at PacTel Teletrac's request, Tadiran shall
assign such rights and interest to PacTel Teletrac as will enable PacTel
Teletrac to gain such standing.
10. PacTel Teletrac Indemnity.
10.1 Subject to Section 13 below, PacTel Teletrac will defend, indemnify and
hold Tadiran harmless from and against any and all claims, demands, liabilities,
actions, suits or proceedings, and PacTel Teletrac agrees to undertake the cost
of defending the same, including reasonable attorneys' fees, asserting that the
RLS Licensed Technical Information, RLS Licensed Software, RLS Licensed Software
Upgrades, or RLS Licensed Technical Information Modifications was created in
violation of the protected trade secret or proprietary right or interest of
another or infringes a patent within the Territory, or arising out of PacTel
Teletrac's use of the Tadiran Workstation Software Upgrades, Tadiran Executable
Software Upgrades or Tadiran Technical Modifications, including a claim of
infringement with respect to such Tadiran Upgrades and Modifications, and will
pay resulting costs and damages finally awarded, provided that:
(a) Tadiran promptly notifies PacTel Teletrac of the claim;
(b) Tadiran cooperates with PacTel Teletrac in the defense, provided that PacTel
Teletrac reimburses Tadiran for its reasonable out-of-pocket expenses (including
reasonable outside counsel legal fees) associated with such cooperation;
(c) PacTel Teletrac has sole control of the defense and all related settlement
negotiations, using counsel satisfactory to Tadiran; and
(d) If the claim is an infringement claim alleging infringement by Tadiran
Workstation Software Upgrades, Tadiran Executable Software Upgrades or Tadiran
Technical Modifications, Tadiran has performed its obligations under Section 9.5
above.
10.2 If an infringement claim occurs with respect to one or more elements of the
RLS Licensed Technical Information, RLS Licensed Software, RLS Licensed Software
Upgrades or RLS Licensed Technical Information Modifications, or in PacTel
Teletrac's opinion is likely to occur, PacTel Teletrac will use reasonable
commercial efforts, at its option and expense, either to procure for Tadiran the
right to continue to use, maintain and provide support for the Radio Location
System, or to replace or modify the alleged infringing element so that such
element becomes noninfringing, provided that such replacement or modification
does not materially affect performance of the Radio Location System. If PacTel
Teletrac has spent or anticipates that it will be required to spend more than
U.S. $500,000 for such efforts, then PacTel Teletrac may give Tadiran a ninety
(90) day option to pursue such efforts on its own and at its own expense. If
Tadiran elects to pursue such efforts on its own, then Tadiran may elect either
to terminate this License Agreement, in which case it will have the rights set
forth in Section 8.1
18
above, or to keep this License Agreement in effect, in which case Tadiran may
deduct from amounts due on PacTel Teletrac's Royalty Interests, the reasonable
expenses Tadiran has incurred in obtaining non-infringing elements. If Tadiran
has not elected to pursue such efforts on its own within such ninety (90) day
option period, then Tadiran must return to PacTel Teletrac and cease all use of
the infringing elements, in which case Tadiran may deduct from amounts due on
PacTel Teletrac's Royalty Interests, the reasonable expenses Tadiran incurs in
obtaining the non-infringing elements. If the use of any RLS Licensed Software
or RLS Licensed Technical Information is enjoined and the foregoing remedies
cannot reasonably be accomplished, or if Tadiran has elected to terminate this
License Agreement but fails to procure the right to use the infringing element
or to replace or modify the infringing element so that it becomes
non-infringing, then PacTel Teletrac may require the return of the infringing
RLS Licensed Software or RLS Licensed Technical Information. Tadiran's right to
use such RLS Licensed Software or RLS Licensed Technical Information shall
thereupon terminate.
10.3 PacTel Teletrac shall have no obligations under this License Agreement, or
otherwise, to defend Tadiran or pay costs, damages or attorneys' fees for any
claim, demand, liability, action, suit or proceeding based upon use of the Radio
Location System, or any part thereof, including but not limited to RLS
Components, RLS Licensed Software and RLS Licensed Technical Information, if
such claim, demand, liability, action, suit or proceeding: (a) could have been
avoided by Tadiran's use of the current, unaltered release of RLS Licensed
Software or RLS Licensed Technical Information; or (b) resulted, in whole or in
part, from a modification to the Radio Location System made or owned by Tadiran
or by one or more of its affiliates; or (c) resulted, in whole or in part, from
Tadiran's use, sale or modification, enhancement or improvement of Location
Units or Tadiran Basestations, or both; or (d) resulted, in whole or in part,
from Tadiran's combination of the RLS Licensed Software or RLS Licensed
Technical Information with any other software, equipment or technology; or (e)
resulted, in whole or in part, from Tadiran's upgrades, enhancements or
modifications to the RLS Licensed Customer Workstation Software or to any other
RLS Licensed Software or RLS Licensed Technical Information; or (f) resulted, in
whole or in part, from Tadiran's breach of its obligations under this License
Agreement.
10.4 The foregoing states the entire obligation of PacTel Teletrac, and the sole
remedies of Tadiran, with respect to infringement of patents, copyrights, trade
secrets and other proprietary rights or interests.
11. Tadiran Indemnity.
Tadiran shall defend, indemnify and hold PacTel Teletrac and each entity that
controls or has the ability to control PacTel Teletrac, and their respective
successors and assigns, directors, officers, employees and agents harmless from
and against any and all claims, demands, liabilities, actions, suits or
proceedings asserted or claimed by any third party: (a) arising out of or
relating to Tadiran's marketing, sale, use, design, construction, manufacture,
maintenance, repair, modification, upgrade, enhancement, improvement or support
of the Radio Location System, or any part thereof, including Tadiran Workstation
Software Upgrades, Tadiran Executable Software Upgrades or Technical
Modifications, Location Units, or Tadiran Basestations, or any combination
thereof, to the extent that such claim arises in the Territory; or (b) arising
out of or relating to Tadiran's performance under or breach of this License
Agreement, or both, provided
19
that any such claims, demands, liabilities, actions, suits or proceedings are
not solely the result of an infringement as to which PacTel Teletrac shall
indemnify Tadiran under Section 10 above. Tadiran agrees to undertake the cost
of defending the above, including reasonable attorneys' fees and to pay all
resulting costs and damages finally awarded therein. Tadiran shall be given
timely notice of and shall have the option to undertake and conduct the defense
of any such claim, demand, liability, action, suit or proceeding, using counsel
satisfactory to PacTel Teletrac.
12. PacTel Teletrac Representations, Limited Warranty and Disclaimer.
12.1 Exhibits. PacTel Teletrac represents that to the best of its knowledge the
RLS Licensed Software listed on Exhibit A and the RLS Licensed Technical
Information listed on Exhibit B to this License Agreement is all of the RLS
Licensed Software and all of the tangible RLS Licensed Technical Information
that has been released to at least fifty percent (50%) of PacTel Teletrac's U.S.
Radio Location Systems as of the date of this License Agreement. If PacTel
Teletrac has omitted any such Software or Information, upon discovery of such
omissions, it will amend Exhibits A and B and deliver such Software or
Information to Tadiran. PacTel Teletrac further represents that, as of the date
of this License Agreement, it has all licenses required under the U.S. Export
Administration Act for purposes of exporting the RLS Licensed Software and RLS
Licensed Technical Information to the Territory.
12.2 Final Version RLS Licensed Warranty.
12.2.1 Performance Warranty. PacTel Teletrac warrants that during the Warranty
Period, as defined below, the Final Version RLS Licensed Software delivered
under Section 14.2.2 below, will enable PacTel Teletrac to operate 103 Tadiran
Basestations from a single RLS Network Control Center in PacTel Teletrac's U.S.
Radio Location Systems (the "Performance Warranty"). PacTel Teletrac will be
responsible for conducting testing in the United States to determine compliance
with the Performance Warranty.
12.2.2 Warranty Period. The Warranty Period will commence on the later of: (a)
the RLS Commercial Operation Date, or (b) the date when Tadiran has 65 Tadiran
Basestations operating as part of the Radio Location System from a single RLS
Network Control Center in the Territory and 1000 Location Units activated in the
Territory (the "Warranty Commencement Date") and will terminate on the date that
is the sooner of: (a) twelve (12) months after the Warranty Commencement Date,
or (b) twenty-four (24) months after the RLS Commercial Operation Date.
12.2.3 Limitations on Performance Warranty. PacTel Teletrac shall have no
responsibility for the design, construction, operation or maintenance of the
Radio Location System. Tadiran acknowledges that the current version of the RLS
Licensed Software is designed to operate no more than 64 Tadiran Basestations
from a single RLS Network Control Center and further acknowledges that the Final
Version RLS Licensed Software will not be error-free and that the Parties will
need to work together prior to and during the one-year period after delivery of
the Final Version RLS Licensed Software to test and de-bug such Software at
PacTel Teletrac's principal place of business in Los Angeles. PacTel Teletrac
makes no warranties or representations as to the number of Tadiran Basestations
that will be necessary to operate a Radio Location System in the Territory, as
to the modifications necessary for the Tadiran Basestations, Location Units or
paging transmitters, or as to any RLS Licensed Software
20
Upgrades, whether provided before, during or after the Warranty Period. If the
Final Version RLS Licensed Software does not operate in the United States in
accordance with the Performance Warranty during the Warranty Period (a "Material
Defect"), then PacTel Teletrac will repair or replace, at PacTel Teletrac's
option, such defective Final Version RLS Licensed Software without charge. Such
repair or replacement is Tadiran's sole remedy with respect to such Material
Defect(s). If the Final Version RLS Licensed Software has defects, errors or
bugs other than Material Defects, then PacTel Teletrac's sole obligation will be
to provide corrections or "bug fixes" to Tadiran when and if such corrections or
"bug fixes" become available for PacTel Teletrac's U.S. Radio Location Systems.
Such corrections or "bug fixes" will be Tadiran's sole remedy with respect to
such defects, errors or bugs. There shall be no hourly charge for support
provided under Sections 14.4.2 or 14.4.3 where such support is required as part
of the remedy available under the Performance Warranty.
12.3 EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 12, PACTEL TELETRAC MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RADIO LOCATION SYSTEM OR ANY
PART THEREOF, INCLUDING, BUT NOT LIMITED TO, THE RLS COMPONENTS, RLS LICENSED
SOFTWARE AND RLS LICENSED TECHNICAL INFORMATION. BY WAY OF EXAMPLE, BUT NOT OF
LIMITATION, PACTEL TELETRAC MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR WARRANTY THAT THE RADIO LOCATION SYSTEM, OR ANY PART
THEREOF, IS ERROR-FREE OR THAT ITS USE WILL BE UNINTERRUPTED, OR THAT ITS SALE
OR USE WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADE SECRET, TRADEMARK, SERVICE
XXXX OR OTHER PROPRIETARY RIGHT OR THAT THE RADIO LOCATION SYSTEM WILL BE A
PROFITABLE ENTERPRISE FOR TADIRAN. Tadiran acknowledges that it has made an
independent investigation of the Radio Location System business that it will
conduct under this License Agreement. PacTel Teletrac and each of its affiliates
expressly disclaim the making of, and Tadiran acknowledges that it has not
received or relied upon, any guarantee or representation, express or implied, as
to the feasibility of operating a Radio Location System in the Territory, as to
Tadiran's ability to design, construct, operate or maintain a Radio Location
System in the Territory or as to the costs Tadiran may incur or the revenues it
may receive with respect to a Radio Location System in the Territory. Tadiran
further acknowledges that it has no knowledge of any representations by any
officer, employee, or agent of PacTel Teletrac that are contrary to this
subsection 12.3.
13. Limitation of Liability.
OTHER THAN WITH RESPECT TO THIRD-PARTY DAMAGE CLAIMS FOR WHICH THE PARTIES MAY
BE OBLIGATED TO INDEMNIFY EACH OTHER AS SET FORTH IN SECTIONS 10 AND 11 ABOVE,
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY DAMAGES OR FOR ANY
LOST REVENUES, LOST PROFITS, OR OTHER, INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES CAUSED, IN WHOLE OR IN PART, BY THE LICENSING,
USE OR SALE OF THE RADIO LOCATION SYSTEM OR ANY PART THEREOF, INCLUDING, BUT NOT
LIMITED TO, RLS LICENSED SOFTWARE AND RLS LICENSED TECHNICAL INFORMATION, OR
OTHERWISE ARISING OUT OF OR RELATING TO THIS LICENSE AGREEMENT. NOTHING IN THIS
SECTION 13 SHALL RELIEVE TADIRAN OF ANY
21
OBLIGATION TO PAY TO PACTEL TELETRAC AMOUNTS DUE AND OWING AS FEES UNDER SECTION
4.1 AND DEVELOPMENT, TRAINING AND SUPPORT CHARGES UNDER SECTIONS 14.2.2 AND
14.4.
14. Obligations and Responsibilities of PacTel Teletrac.
PacTel Teletrac will have the following obligations and responsibilities in
addition to those specified elsewhere in this License Agreement:
14.1 Delivery of RLS Licensed Technical Information. PacTel Teletrac will
deliver the RLS Licensed Technical Information to Tadiran as applicable, during
the training sessions available pursuant to Section 14.4.1(b) below; provided,
however that all deliveries of RLS Licensed Technical Information shall be
subject to PacTel Teletrac's receipt of all necessary export licenses, and any
required consents from third parties with proprietary rights in the RLS Licensed
Technical Information.
14.2 Delivery of RLS Licensed Software. Notwithstanding anything to the contrary
in this License Agreement, all deliveries of RLS Licensed Software shall be
subject to PacTel Teletrac's receipt of all necessary export licenses and all
required consents from third parties with proprietary rights in such Software,
which PacTel Teletrac shall use reasonable efforts to acquire. If there are
delays in obtaining any such licenses or consents, PacTel Teletrac will make
partial deliveries of RLS Licensed Software, in accordance with the terms and
conditions of this License Agreement, to the extent feasible.
14.2.1 Current Version Software. Within thirty (30) days after the Performance
Commencement Date, PacTel Teletrac will deliver the then current version of the
RLS Licensed Software to Tadiran (the "Current Version Software").
14.2.2 Final Version Licensed Software.
(a) Development. Tadiran acknowledges that the current version of the RLS
Licensed Software is designed to enable PacTel Teletrac's United States Radio
Location Systems to operate up to 64 Tadiran Basestations from a single RLS
Network Control Center and uses a separate spectrum frequency range for purposes
of receiving "forward-link" signals from Tadiran Basestations. PacTel Teletrac
will modify the RLS Licensed Software so that it is capable of operating 103,
rather than 64, Tadiran Basestations from a single RLS Network Control Center
located in the United States or as the Parties otherwise may agree in advance of
the Performance Commencement Date (the "Final Version RLS Licensed Software").
The allocation of the costs of such modifications between PacTel Teletrac and
Tadiran will depend on the timing of the modifications. The Parties will share
on an equal basis the costs of all modifications that PacTel Teletrac makes as
of and subsequent to the Performance Commencement Date. Such costs shall include
charges of U.S. $100.00 per person hour for work on such modifications during
the first year of this License Agreement, with adjustments to such rate to be
made annually thereafter in accordance with percentage changes in the U.S. CPI.
Payments shall be due in U.S. dollars within 30 days of receipt of invoice. If
Tadiran requests modifications before the Performance Commencement Date, then
the Parties also will share such costs on an equal basis.
22
(b) Delivery. PacTel Teletrac will deliver the Final Version RLS Licensed
Software to Tadiran upon Tadiran's request, which request shall be no sooner
than two (2) months before the date when at least 65 Tadiran Basestations are in
operation and capable of operating a Radio Location System in the Territory and
at least 1000 Location Units are in operation in the Territory, and upon receipt
of final payment for Tadiran's share of the Final Version RLS Licensed Software
Development Costs.
14.3 RLS Licensed Software Source Code. The Parties agree to complete and
execute, on or before delivery of the Current Version Software, the Escrow
Agreement that is attached as Exhibit C and incorporated by reference in this
License Agreement.
14.4 Training and Support. PacTel Teletrac shall provide training and support to
Tadiran as set forth in sections 14.4.1 and 14.4.2 below. Notwithstanding its
obligation to provide such training and support, PacTel Teletrac shall have no
responsibility or liability for the design, construction, operation or
maintenance of the Radio Location System.
14.4.1 Training. PacTel Teletrac shall provide, at Tadiran's request, the
training courses set forth in section 14.4.1.1 below. The scope and subject
matter to be covered by each training course shall be determined by the mutual
agreement of the parties at least thirty (30) days in advance of the scheduled
date for the training course. The Parties agree that none of the training
courses shall exceed sixty (60) hours in duration, and all training courses
shall be conducted at PacTel Teletrac's principal place of business, or at such
other location within the United States as PacTel Teletrac may specify. PacTel
Teletrac and Tadiran also agree as follows:
14.4.1.1 The training courses available to Tadiran shall be as set forth below.
Training courses may be offered more than once, subject to the parties' mutual
agreement.
(a) General Manager Training Course;
(b) Technical Manager Training Course;
(c) Technician Training Courses;
(d) Master Control Center Operator Training Course;
(e) RLS Customer Support Training Course;
(f) RLS Customer Service Training Course;
(g) Sales Manager Training Course; and
(h) Trainer Training Course.
14.4.1.2 Training shall not begin prior to the Performance Commencement Date.
Tadiran shall provide PacTel Teletrac with at least ninety (90) days advance
notice of a requested date for a training course. If PacTel Teletrac is not able
to provide the training course on such date, then PacTel Teletrac shall so
notify Tadiran and the Parties will cooperate in selecting an alternative
23
date. PacTel Teletrac also may request a delay of not more than thirty (30) days
for the commencement date of any training course.
14.4.1.3 At Tadiran's request, PacTel Teletrac will prepare a nonbinding
estimate of the cost for a particular training course each time it is to be
provided.
14.4.1.4 PacTel Teletrac will xxxx Tadiran monthly for the costs that PacTel
Teletrac incurs in preparing and providing each training course, each time it is
provided. Such costs shall include all of the out-of-pocket costs and expenses
that PacTel Teletrac incurs in preparing and providing such course, plus a rate
of U.S. $100.00 per person hour for time PacTel Teletrac employees or
consultants spend preparing and providing such course. Such rate shall be
adjusted annually after the first year of this Agreement to reflect percentage
changes in the U.S. CPI. during the preceding year.
14.4.1.5 Tadiran shall be responsible for all travel arrangements, including
obtaining all visas that may be required, and shall pay all travel costs and
expenses, including transportation, meals, lodging and any per diem pay and
other salary and benefits arrangements, for Tadiran's personnel in connection
with the training courses provided under this Section 14.4. As to training
courses provided at PacTel Teletrac facilities, Tadiran acknowledges that its
employees participating in such training are not employees of PacTel Teletrac,
and Tadiran will obtain such insurance coverage as PacTel Teletrac may
reasonably request for such Tadiran employees, including, but not limited to,
Workers' Compensation Insurance. Tadiran shall provide PacTel Teletrac with a
certificate of such insurance that names PacTel Teletrac as an additional
insured.
14.4.2 Telephone Support After the RLS Commercial Operation Date. After the RLS
Commercial Operation Date PacTel Teletrac will provide reasonable telephone
support to Tadiran, provided that PacTel Teletrac shall have no obligation to
provide in excess of 50 hours of telephone support per month to Tadiran during
the first two years after the RLS Commercial Operation Date, or in excess of 25
hours of telephone support per month thereafter. Tadiran shall pay for such
telephone support at a rate of U.S. $100.00 per person hour, with such rate to
be adjusted annually after the first year of this Agreement to reflect
percentage changes in the U.S. CPI during the preceding year. In addition,
Tadiran shall be responsible for placing and paying for all telephone calls made
in connection with telephone support to be provided under this section.
14.4.3 On-Site Support After the RLS Commercial Operation Date. After the RLS
Commercial Operation Date, if the Parties are unable to answer Tadiran's
questions or to resolve problems concerning operation of the Radio Location
System by means of telephone support, then at Tadiran's request, and subject to
the availability of PacTel Teletrac's personnel, PacTel Teletrac will provide
engineers to make on-site visits to the Radio Location System in the Territory,
to consult with Tadiran on matters relating to the design, construction and
operation of such Radio Location System. Tadiran and PacTel Teletrac shall
agree, in advance, on the type and scope of consultation to be provided during,
and the duration of, any such on-site visit. During the first year of this
License Agreement, the hourly rate for such on-site supports shall be $100.00
per person hour, with adjustments to such rate to be made annually thereafter in
accordance with percentage changes in the U.S. CPI. In addition, Tadiran shall
pay all expenses of on-site support, including travel, lodging and meals.
24
14.4.4 Payments for Training and Support. PacTel Teletrac will xxxx Tadiran
monthly for training and support provided under this section 14.4, and Tadiran's
payments will be due and payable in U.S. dollars within thirty (30) days of
receipt of the invoice. Solely for budgetary purposes, PacTel Teletrac
reasonably believes that the cost for all of the training courses will be
approximately U.S. $250,000. The actual cost of training may be higher or lower
than $250,000, and Tadiran acknowledges that the actual cost will be highly
dependent upon the timing of Tadiran's request and the scope and subject matter
to be covered by each training course that Tadiran requests from PacTel
Teletrac.
15. Obligations and Responsibilities of Tadiran
Tadiran will have the following obligations and responsibilities in addition to
those specified elsewhere in this License Agreement:
15.1 Spectrum License. The Spectrum License shall be held by Tadiran, and
Tadiran will use reasonable efforts to expand the Spectrum License to obtain
approval for paging, data messaging and other activities via a land-based radio
location system.
15.2 Reasonable Diligence. Tadiran shall use reasonable diligence, at its own
expense, to build, operate and maintain a Radio Location System in the Territory
and to promote, market, sell and support RLS Customer Equipment and RLS Customer
Services in the Territory. Tadiran shall have no obligation to commence
construction of the Radio Location System until the Performance Commencement
Date.
15.3 RLS Commercial Operation Date. Within ten (10) days of the RLS Commercial
Operation Date, an authorized officer of Tadiran, shall certify and send written
notice of such Date to PacTel Teletrac.
15.4 Location Unit Transactions. For purposes of calculating RLS Customer
Equipment Net Revenues:
15.4.1 Location Units. The cost of Location Units that Tadiran manufactures or
purchases from entities that Tadiran controls or has the ability to control
shall be the price calculated under the Tadiran Basestation Agreement and
Location Unit Agreement, provided that in no case shall the price be greater
than the lowest price charged to other service providers for similar quantities.
15.4.2 Location Unit Installation. For purposes of determining the cost to
Tadiran of installation of Location Units ("Location Unit Installation Costs"),
Tadiran shall establish and provide to PacTel Teletrac at the beginning of each
calendar year, a price list for Location Unit Installation Costs. PacTel
Teletrac may either approve such Costs in advance, in which case for purposes of
this License Agreement Location Unit Installation Costs charged during such year
shall not exceed the price list, or PacTel Teletrac may reserve its right to
review Location Unit Installation Costs. In such cases, PacTel Teletrac may
request adjustments in the Location Unit Installation Costs. All disputes
concerning such adjustment shall be resolved by the Neutral Accountant as set
forth in Section 19.4 below.
15.5 Confidentiality and Proprietary Protection. PacTel Teletrac and Tadiran
have executed and delivered a Nondisclosure Agreement, effective January 19,
1993 (the "Nondisclosure
25
Agreement"), which remains in full force and effect. In addition, the Parties
will execute and deliver, as part of this License Agreement, the Nondisclosure
Agreement that is attached as Exhibit D and incorporated by reference in this
License Agreement.
It is expressly agreed that neither title to the Radio Location System, nor
title to any part thereof, including, but not limited to the RLS Licensed
Software and RLS Licensed Technical Information, passes to Tadiran. Tadiran's
license and right to use any part of the Radio Location System is as set forth
in this License Agreement, and PacTel Teletrac reserves all proprietary rights
in the Radio Location System. This reservation of proprietary rights survives
any termination of this License Agreement.
Tadiran and Tadiran's affiliates will cooperate with PacTel Teletrac in taking
such actions as PacTel Teletrac reasonably requests for the purposes of filing
and obtaining copyright registrations, patents and other suitable forms of
protection on the processes, machines, codes, designs and works of authorship of
the Radio Location System, including the RLS Licensed Software and RLS Licensed
Technical Information, RLS Technical Information Modifications and RLS Licensed
Software Upgrades. Tadiran agrees not to remove from view any copyright,
trademark, confidentiality or other proprietary notice, xxxx, or legend
appearing on any of the RLS Licensed Software, on output generated by such
software or on RLS Licensed Technical Information, and agrees to reproduce and
include the same on each copy of the RLS Licensed Technical Information and RLS
Licensed Software.
15.6 Insurance. Tadiran agrees that at all times during the term of this License
Agreement it will maintain property and liability insurance in an amount
adequate to cover the value of and risks associated with the Radio Location
System in the Territory.
15.7 PacTel Teletrac Marks. The rights and licenses granted under this License
Agreement do not constitute a grant of any right or license to use PacTel
Teletrac's marks, including but not limited to the "PacTel" and "Teletrac"
service marks and trademarks. Upon PacTel Teletrac's request, Tadiran will
cooperate with and, if necessary, consent to, any registration by PacTel
Teletrac or any of its affiliates of the "Teletrac" xxxx in the Territory.
Tadiran and Tadiran's affiliates are estopped from challenging the validity of
the Teletrac xxxx or from setting up any claim adverse to PacTel Teletrac with
respect to the Teletrac xxxx.
15.8 Other Marks. Other than as set forth in Section 15.7 above, Tadiran shall
be the sole owner of valid marks that Tadiran uses to identify the Radio
Location System, or any part thereof. PacTel Teletrac hereby consents to
Tadiran's use of the "Peletrac" xxxx for the purpose of identifying the Radio
Location System in the Territory.
15.9 Infringement by Others. Tadiran agrees to inform PacTel Teletrac promptly
of any possible infringement of, or unfair competition affecting, the Radio
Location System in the Territory, including the RLS Licensed Software and RLS
Licensed Technical Information, that comes to the attention of Tadiran. If
PacTel Teletrac decides to take action against any such possible Infringement or
act of unfair competition, Tadiran agrees to assist PacTel Teletrac, in whatever
manner PacTel Teletrac may direct, and, provided that neither Tadiran nor one or
more of its affiliates is responsible for such infringement, at the expense of
PacTel Teletrac.
26
16. Relationship of the Parties.
The relationship of the parties established by this License Agreement shall be
that of independent contractors. Nothing in this License Agreement shall be
construed to create an agency, partnership, joint venture or employment
relationship between Tadiran and PacTel Teletrac, nor to make Tadiran the agent
of PacTel Teletrac, or PacTel Teletrac the agent of Tadiran, for any purpose.
Neither party is granted authority by the other to undertake commitments,
transact business, create or assume any obligation (express or implied) or
otherwise act (or represent that it can act) in the other's name or on the
other's behalf.
17. Force Majeure.
If the performance of either Party required by this License Agreement (other
than payment of amounts due under this License Agreement) is prevented,
restricted or delayed by fire, other casualty or accident, war or violence or
serious threat of the same, arrest or restraint of government, requisition of
vessel or aircraft, explosion, governmental request, guidance, order or
regulation, or any other circumstance beyond the reasonable control of the Party
and without such Party's fault or negligence, the affected Party, upon giving
due notice to the other Party, shall be excused from such performance, but only
to the extent directly attributable to the circumstance and the excused party
shall not be liable for loss or damage or failure of or delay in such
performance.
18. Governing Law.
The governing law of this License Agreement shall be that of the State of
California, U.S.A., as if both parties hereto were resident and doing business
in such state.
19. Dispute Resolution.
19.1 The parties intend to carry out the provisions of this License Agreement in
accordance with principles of good faith and fair dealing and to respect and
observe the spirit as well as the letter of this License Agreement. The parties
shall exercise their best efforts to settle between themselves in an amicable
way any dispute which may arise out of or in connection with this License
Agreement.
19.2 Except as set forth in Sections 19.3 and 19.4 below, any controversy or
claim arising out of or relating to this License Agreement, or the breach,
termination or invalidity thereof, shall be settled by arbitration in accordance
with the California Code of Civil Procedure sections 1297.11 et seq.,
Arbitration and Conciliation of International Commercial Disputes, as modified
by this Section 19. The number of arbitrators shall be three (3). The place of
arbitration shall be Los Angeles, California, and the arbitration shall be
conducted in English. The arbitrators shall be bound by stare decisis, and the
arbitral award shall be final and binding, shall be rendered in writing and
shall state the reasons for the award. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The costs
of arbitration, including the cost of legal counsel, shall be awarded in the
discretion of the arbitrators. The arbitrators shall have the ability to grant
all relief available at law and in equity, to the extent permitted under this
License Agreement.
27
19.3 Either Party may elect to initiate litigation, rather than arbitration, in
claims for nonpayment of amounts it is owed by the other Party or for specific
performance or injunctive relief. In particular, Tadiran acknowledges that its
failure to comply with the provisions of this License Agreement concerning use
of the RLS Licensed Software, RLS Licensed Technical Information or the PacTel
Teletrac's marks will result in immediate and irreparable harm to PacTel
Teletrac for which there is no adequate remedy at law. PacTel Teletrac shall be
entitled to bring an action or proceeding for specific performance, injunctive
relief, declaratory relief or other equitable relief to compel Tadiran to cease
and desist all unauthorized use of the RLS Licensed Software, RLS Licensed
Technical Information or Teletrac Xxxx, to require Tadiran to perform its
obligations with respect to such software, technology and xxxx, and to obtain
such other relief as may be necessary and proper. PacTel shall not be required
to post a bond in connection with any such proceeding. The Parties' consent to
the nonexclusive venue and jurisdiction of the state and federal courts serving
San Francisco, California in any proceeding commenced pursuant to this Section
19.3.
19.4 If the sole subject of a dispute under this License Agreement concerns the
manner of accounting for PacTel Teletrac's Royalty Interests and the amount of
royalties due to PacTel Teletrac, then such dispute shall be settled by a
mutually agreeable independent accountant (the "Neutral Accountant"). Either
Party may initiate resolution of an accounting dispute by the Neutral Accountant
by requesting a meeting with the Neutral Accountant, and by sending at least
forty-five (45) days' notice of such meeting to the other Party. If the Parties
are unable to agree on a Neutral Accountant within ten (10) days of the date of
such notice, then, within ten (10) days each Party shall select one accountant
(the "Party Accountant"). The Party Accountants shall then select a Neutral
Accountant within a further ten (10) days and schedule the first meeting with
the Neutral Accountant. If a Party fails to select a Party Accountant, then the
Neutral Accountant shall be the other Party's Party Accountant. At least thirty
(30) days prior to the first meeting with the Neutral Accountant each Party may
submit to the Neutral Accountant a written explanation of the dispute. Within
thirty (30) days after the meeting, the Neutral Accountant shall conduct an
audit of Tadiran, if in the opinion of the Neutral Accountant such an audit is
necessary. Within sixty (60) days after the meeting, the Neutral Accountant
shall issue a decision on the accounting matter. The Neutral Accountant's
decision shall be final and binding, shall be rendered in writing and shall
state the reasons for the decision. Judgment upon the decision rendered by the
Neutral Accountant, and any costs to be awarded as set forth below, may be
entered in any court having jurisdiction thereof. Each Party shall bear its own
costs of the proceeding and the Parties shall share equally the costs of the
Neutral Accountant; provided, however, that if the Neutral Accountant decides
that Tadiran's position has resulted or would result in an under calculation or
underpayment in excess of five (5) percent of the amount owed, paid or to be
paid to PacTel Teletrac, then Tadiran shall be responsible for PacTel Teletrac's
costs of the proceeding, including reasonable legal fees, and for the entire
cost of the Neutral Accountant, and if the Neutral Accountant decides that
PacTel Teletrac's position has resulted or would result in an underpayment to
PacTel Teletrac that is less than five percent (5%) or in any overpayment of the
amount paid or to be paid to PacTel Teletrac, then PacTel Teletrac shall be
responsible for Tadiran's costs of the proceeding, including reasonable legal
fees, and for the entire cost of the Neutral Accountant. During all proceedings
under this Section 19.4, each Party shall continue timely payment of all amounts
owed to the other Party under this License Agreement.
28
20. General.
20.1 Notices.
20.1.1 Contract Administrators and Contract Technical Coordinators. Each party
shall designate a Contract Administrator and Contract Technical Coordinator
within ten (10) business days of the Effective Date. If a Party fails to make
such designation, then that Party's Contract Administrator and Technical
Coordinator shall be the person designated by such Party in Section 20.1.2
below, or such other person as either Party may notify to the other from time to
time.
20.1.2 Other Notices. All notices under this License Agreement shall be in
writing and may be given by delivering the same by hand, or by sending the same
by an overnight courier that maintains verification of delivery, or by
facsimile, to the relevant person and address set out below or such other person
and address as either Party may notify to the other from time to time. Any such
notice given as set forth above shall be deemed to have been given or received
at the time of delivery (if delivered by hand) and upon verified receipt (if
sent by post, facsimile or overnight courier). In the case of facsimile, the
transmission report shall constitute the verified receipt. Each Party may, at
any time, change the persons or address to which its notices are to be sent by
notifying the other Party of such change in accordance with this Section 20.1.2.
PacTel Teletrac Tadiran
--------------- -------
CEO General Manager
PacTel Teletrac of Tadiran Communication
0000 Xx Xxxxxxx Xxxx. Systems Division
Suite 800 00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000 Holon, Israel
Facsimile: (000) 000-0000 Facsimile:
With a copy to: With a copy to:
Xxx Xxxxxxx, Esq. Xxxxx Xxxxxxx, Adv.
PacTel Legal Department Tadiran Xxxxx Xxxxxxxxxx
0 Xxxx Xxxxx, 0xx Xxxxx 00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000 Holon, Israel
Facsimile: (000) 000-0000 Facsimile: 000-0-0000000
20.2 English Language. All communications, notices and records required to be
kept under and materials provided pursuant to this License Agreement shall be in
English.
20.3 No Publicity. Each Party agrees not to disclose the contents of this
License Agreement to anyone other than its employees and affiliates with a need
to know, without the prior written consent of the other Party. Consistent with
the requirements of law and any legal process, neither Party will issue any
press or news release, make any public disclosure with respect to the substance
of this License Agreement or the relationship of the Parties, or make any such
general
29
disclosure to either Party's customers, or potential customers, without the
prior written approval of the other Party.
20.4 Scope and Amendment of License Agreement. The parties acknowledge that each
has read this License Agreement, understands it and agrees to be bound by its
terms. This License Agreement may be amended only by a subsequent writing that
specifically refers to this License Agreement and that is signed by both
Parties, and no other act, document, usage or custom shall be deemed to amend
this License Agreement.
20.5 Assignment. Neither Party may assign or delegate any of its rights, duties
or obligations under this License Agreement in whole or in part without the
other Party's written consent. Any attempt by either Party to assign or delegate
any rights, duties or obligations which arise under this License Agreement,
without the other Party's written consent, shall be void. PacTel Teletrac may,
however, upon notice to Tadiran, assign or delegate, or both, its rights, duties
and obligations under this License Agreement to an entity: (a) that PacTel
Teletrac controls or has the ability to control, or that controls or has the
ability to control PacTel Teletrac and that receives and assumes all of PacTel
Teletrac's rights and obligations under this License Agreement; or (b) that
receives and assumes all of PacTel Tetetrac's rights and obligations under this
License Agreement, provided that, in either case, the same entity that is
providing engineering support to Radio Location Systems located in the United
States, also will be available to provide to Tadiran the engineering support
that PacTel Teletrac is required to provide under this License Agreement.
Tadiran may transfer its interest in the Radio Location System to a wholly owned
subsidiary of Tadiran, or, in the case of a publicly held subsidiary, to a
subsidiary in which Tadiran owns at least fifty-one percent (51%) of the
controlling interest, provided that Tadiran remains obligated to perform under
this License Agreement and guarantees the performance of such subsidiary under
this License Agreement.
20.6. Binding Effect. This License Agreement shall be binding on and inure to
the benefit of the respective successors and permitted assigns of the parties.
20.7 Authority. Each of the respective persons executing this License Agreement
hereby covenants and warrants that such person has full legal power; right and
authority to bind the entity on whose behalf such person is signing to each and
every term and provision herein.
20.8 Severability. If any provision of this License Agreement shall be held
illegal or invalid by any court, this License Agreement shall be construed and
enforced as if such illegal or invalid provision had not been contained herein
and this License Agreement shall be deemed an agreement of the Parties to the
full extent permitted by law. If any provision shall be declared invalid or
unenforceable because of its breadth, scope or duration, such provisions shall
be deemed modified to the extent necessary to make it valid and enforceable and
shall remain in full force and effect as so modified, or if not so modified,
shall be severable from the rest of this License Agreement.
20.9 Headings. All headings are for reference only and shall not be considered
in construing this License Agreement.
30
20.10 Expenses of Litigation. In case of litigation arising out of or in
connection with this License Agreement, the prevailing Party shall be entitled
to recover its reasonable attorneys' fees, costs and expenses from the other
Party. In case of arbitration or Neutral Accountant proceedings, such fees,
costs and expenses shall be recovered as set forth in Sections 19.2 and 19.4
above.
20.11 Waiver. The failure of either Party at any time to require performance by
the other Party of any provision hereof shall in no way affect the full right to
require such performance at any time thereafter. Nor shall the waiver by either
party of a breach of any provision hereof be a waiver of any succeeding breach
of the same or any other such provisions or be a waiver of the provision itself.
20.12 Entire Agreement. This License Agreement together with its Exhibits and
the Nondisclosure Agreements constitute the entire agreement of the parties with
respect to the license of RLS Licensed Software and RLS Licensed Technical
Information to Tadiran and supersede any and all prior negotiations,
correspondence, understandings and agreements between the parties respecting the
subject matter of this License Agreement, and the full understanding of the
Parties is embraced herein.
20.13 Re-Export Assurances.
20.13.1 Tadiran agrees to comply with the terms of the Export Administration Act
of 1979 (the "Act") of the United States of America, as amended, and the rules
and regulations promulgated thereunder, now or hereafter in effect, including,
without limitation, restrictions established by the Act and such rules and
regulations upon the export and re-export of any of the RLS Licensed Software
and RLS Licensed Technical Information; or any other technical data relating to
the Radio Location System. Tadiran agrees that it will not knowingly, either
directly or indirectly, export or re-export such technology or products without
the prior authorization of PacTel Teletrac and the United States Office of
Export Administration to Country Group P, Q, W, Y or Z, as defined in the
regulations, or to Afghanistan, or otherwise in violation of any requirement or
prohibition contained in the Act or such rules and regulations.
20.13.2 PacTel Teletrac agrees that it will comply with the terms of any export
laws, rules or regulations in the Territory with respect to the export of
software and technical data and components licensed to PacTel Teletrac under
Section 9.3 above.
20.14 Exhibits. The following exhibits are a part of this License Agreement:
Exhibit A - List of RLS Licensed Software
Exhibit B - List of RLS Licensed Technical Information
Exhibit C - Escrow Agreement
Exhibit D - Nondisclosure Agreement
31
20.15 Construction of Agreement. This License Agreement has been negotiated by
the Parties and their respective attorneys and the language of this License
Agreement shall not be construed for or against either Party.
20.16 Counterparts. This License Agreement may be executed in counterparts, each
of which shall be an original as against any Party whose signature appears on
such counterpart and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties executed and delivered this License Agreement as
of the day and year first above written.
TADIRAN LTD
By /s/ Gurion Xxxxxx Xxxxx Xxxxxx
----------------------------------
Print Name Gurion Xxxxxx Xxxxx Xxxxxx
---------------------------
Its President & CEO, General Manager [Illegible]
Division
-----------------------------------
Date: December 16, 1993
-----------------
PACTEL TELETRAC
By [Signature] [Signature]
---------------------------------
JRL Print Name Illegible Xxxx X. Xxxxxx
----------------------------
1/7-94 Its Co-CEO President Co-CEO
-------------------------
Date: 1-7-94
------
32
