Exhibit 10.2
AMENDED AND RESTATED
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LEGAL REPRESENTATION AGREEMENT
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THIS AMENDED AND RESTATED LEGAL REPRESENTATION AGREEMENT (the "Agreement")
is made and entered into this 10th day of July, 2006 (hereinafter "Effective
Date"), by and between Affinity Technology Group, Inc., a Delaware corporation
("Affinity"), and xxxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"),
on the one hand, and Xxxxxxx & Xxxxxxxxx, PLLC, a North Carolina professional
limited liability company (the "Law Firm"), on the other.
WITNESSETH:
WHEREAS, all the issued and outstanding capital stock of the Company
currently is owned by Affinity; and
WHEREAS, the Company and the Law Firm are parties to the Legal
Representation Agreement, dated May 27, 2003 (the "Initial Agreement"), pursuant
to which the Company has engaged the Law Firm on an exclusive basis to represent
the Company in connection with licensing and enforcing patents owned by the
Company; and
WHEREAS, the Company and the Law Firm desire to mutually amend and
restate the Initial Agreement, among other things, to acknowledge that the
Company has engaged XxXxxxx Law, PC (the "XxXxxxx Firm") to assist the Company
and the Law Firm in connection with the solicitation, negotiation and execution
of Patent Agreements with third parties and related patent litigation;
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
SECTION I
DEFINITIONS
1.1 "Patents" shall mean the U.S. patents listed in Appendix A and their
corresponding non-U.S. counterparts, and all reissuances, re-examinations,
continuations, continuations-in-part, and divisionals, of all of the
aforementioned, if any.
1.2 "Patent Agreement" shall mean an agreement entered into after the date
hereof under which the Company grants a license to all or a subset of the
Patents to any third party, whether with or without patent litigation; provided,
however, that the term Patent Agreement shall not mean any agreement between the
Company and any party with whom the Company currently has an Existing Licensing
Agreement.
1.3 "Litigation" shall mean (1) the filing and prosecution of a lawsuit for
patent infringement against a third party for infringement of one or more of the
Patents (including, but not limited to, defending any counterclaims brought by
such third party in connection therewith); (2) the defense of any of the Patents
in an action against the Company in respect to any of the Patents, including a
declaratory judgment; (3) the filing and prosecution of a patent infringement
counterclaim against a third party that brings an action against the Company in
respect to any of the Patents, including a declaratory judgment against any of
the Patents; or (4) a patent interference proceeding at the U.S. Patent &
Trademark Office (USPTO). If a counterclaim of patent infringement is made by
the Company in a legal action filed by a third party against the Company in
respect to any of the Patents, the defense of such action and counterclaim shall
count as a single Litigation. A Litigation is deemed to have ended when such
Litigation is dismissed from the tribunal in which the Litigation was filed, the
Company decides not to appeal a judgment within the prescribed time under
applicable law, or a judgment is rendered by a tribunal from which no appeal can
be taken. A Litigation instigated by the Company that names multiple independent
parties is considered to be multiple Litigations where the total number of
Litigations is the same as the number of independent parties named in such
Litigation.
SECTION II
APPOINTMENT OF THE LAW FIRM
2.1 The Company hereby appoints the Law Firm as the Company's exclusive
representative for the solicitation, negotiation and execution of Patent
Agreements with third parties unless otherwise agreed by the Company and the Law
Firm. The Company shall have control of any material decisions in connection
with such representation. Notwithstanding the foregoing, without the consent of
the Law Firm, at no time shall the Company require the Law Firm, and the Law
Firm shall not be obligated, to represent the Company in more than seven (7)
Litigations at any one time (provided that such number shall be reduced to five
(5) if the engagement by the Company of the XxXxxxx Firm shall terminate and the
Company shall not have replaced such firm with substitute counsel that provides
substantially the same or similar services as the XxXxxxx Firm). The Company
shall have control of all material decisions involving any Litigation, including
selection of which third parties legal action shall be brought against, and
settlement of any Litigation. The Law Firm hereby represents and warrants to the
Company that the primary members of the Law Firm responsible for the Law Firm's
duties and obligations under this Agreement shall be Xxxxxx X. Xxxxxxxxx and
Xxxxxxxx X. Xxxxxxx (the "Members").
2.2 Notwithstanding the foregoing, the Law Firm acknowledges that the
Company has concurrently herewith entered into an Engagement Agreement, dated as
of July 10, 2006, between the Company and the XxXxxxx Firm (the "Engagement
Agreement"), pursuant to which the Company has engaged the XxXxxxx Firm to
assist the Company and the Law Firm in connection with the solicitation,
negotiation and execution of Patent Agreements with third parties and related
Litigation, and the Law Firm hereby consents to the actions contemplated by the
Engagement Agreement. The Company and the Law Firm agree that the XxXxxxx Firm
shall be added as counsel of record to all pending Litigation as of the date of
this Agreement.
2.3 Nothing contained in this Agreement shall be construed as granting or
conveying to the Law Firm any rights to use the Patents, by implication or
otherwise. The Law Firm hereby acknowledges the Company's proprietary interest
in the Patents and all materials related thereto, and the Law Firm hereby agrees
not to take, or authorize the taking of, any action that would compromise,
damage or dilute the interest of the Company in the Patents or any related
materials. The Law Firm hereby agrees that it shall not challenge or otherwise
take any action to impair the Company's rights in the Patents.
SECTION III
DUTIES OF THE LAW FIRM
3.1 The Law Firm hereby agrees in connection with its legal representation
of the Company under this Agreement to use its best efforts to perform its
duties under this Agreement, including without limitation to:
A. Identify prospective licensees based on market analysis;
B. Contact such prospective licensees and discuss possible Patent
licenses;
C. Negotiate, draft and obtain a definitive Patent Agreement with
each such prospective licensee;
D. If requested by the Company, represent the Company as legal
counsel in connection with any Litigation commenced by the
Company during the term of this Agreement provided that if the
Law Firm is not licensed to practice law in the jurisdiction
where such Litigation is brought or defended, as the case may be,
the Law Firm shall be allowed by the Company to hire local
counsel licensed to practice law in the jurisdiction where such
Litigation is brought or defended, as the case may be. The Law
Firm is only required to commence a Litigation against a third
party if such third party infringes at least one valid claim in
the Patents and the requirements of Rule 11 of the Federal Rules
of Civil Procedure are met and satisfied;
E. Provide legal services related to the continued prosecution of
the Company's Patents with the USPTO, to include, but not limited
to, filing of continuation applications in respect of the
Patents, prosecuting and defending re-examinations of the
Patents, and prosecuting any reissue applications of the Patents;
and
F. Obtain and supervise foreign counsel related to the continued
prosecution of the Company's Patents outside the United States,
to include, but not limited to defense of oppositions against the
Patents.
3.2 The Law Firm, under the direction of the Company, shall solicit, draft
and negotiate (subject to Section 3.3 below) Patent Agreements with third
parties.
3.3 Notwithstanding anything in this Agreement to the contrary, all Patent
Agreements shall be in such form and have such terms and conditions, including
pricing terms, as are established and approved by the Company.
3.4 The Company may engage persons and/or other counsel to assist the Law
Firm to perform its duties hereunder. The Law Firm may engage persons and/or
other counsel to assist the Law Firm to perform its duties hereunder subject to
final approval by the Company; provided, however, that (a) one of the Members
shall directly supervise the activities of any such persons or other counsel;
and (b) the Law Firm shall obtain the Company's approval prior to engaging any
such persons or other counsel, and, if requested by the Company, the Law Firm
shall cause such persons to enter into a non-disclosure agreement and in an
attorney-client relationship (if counsel) with the Company on terms and
conditions reasonably acceptable to the Company. The Law Firm shall at all times
use its best efforts to work cooperatively and diligently with the XxXxxxx Firm
in connection with their joint representation of the Company under this
Agreement and the Engagement Agreement, dated as of the date hereof, between the
Company and the XxXxxxx Firm.
3.5 The Law Firm shall not be required to take any action with respect to
the Company or the Patents that is prohibited by law.
3.6 All material decisions that arise out of the Law Firm performing its
duties provided in Section 3 of this Agreement shall be made under the direction
of the Company.
SECTION IV
COVENANTS OF THE COMPANY
4.1 If:
(a) the Company identifies a prospective licensee that, in the
Company's reasonable opinion, infringes all or a subset of valid
claims in any of the Patents; and
(b) after reasonable time and effort by the Law Firm, such
prospective licensee refuses to enter into a Patent Agreement
with the Company,
then, upon the Company's reasonable request, the Law Firm shall promptly
commence a legal action against such prospective licensee for patent
infringement of the Patents in which all or a subset of valid claims of the
Patents are infringed. Notwithstanding the foregoing, without the consent of the
Law Firm, at no time will the Company require the Law Firm to represent the
Company in more than seven (7) Litigations at any one time (provided that such
number shall be reduced to five (5) if the engagement of the XxXxxxx Firm shall
terminate and the Company shall not have replaced such firm with substitute
counsel that provides substantially the same or similar services as the XxXxxxx
Firm).
4.2 The Company shall promptly advise the Law Firm regarding all inquiries
received by the Company relating to the licensing of any or all of the Patents.
The Law Firm shall promptly advise the Company regarding all inquiries received
by the Law Firm relating to the licensing of any or all of the Patents.
4.3 In consideration of the Law Firm's legal representation services
hereunder, the Company shall pay to the Law Firm the amounts established
pursuant to Sections 5.1 and 5.3 of this Agreement below.
SECTION V
COMPENSATION
5.1 (a) As compensation for its services hereunder, the Law Firm shall
receive a compensation payment equal to: (i) a percentage equal to the
Litigation Revenue Percentage set forth on Appendix C to this Agreement (the
"Litigation Revenue Percentage") of all amounts paid to the Company as damages,
in settlement, or licensing by any parties against whom Litigation has been
commenced by the Company during the Term of this Agreement (the "Litigation
Revenues"); (ii) a percentage equal to the Licensing Revenue Percentage set
forth on Appendix C to this Agreement (the "Licensing Revenue Percentage") of
all other revenues received by the Company pursuant to any Patent Agreements
with any third parties other than those resulting from Litigation (the
"Licensing Revenues"); and (iii) 50% of the Law Firm's billing rates, as set
forth on Appendix C to this Agreement, for services rendered by the Law Firm
during the Term of this Agreement to perform its obligations under this
Agreement, subject to the Company's right generally to approve work to be
performed and subject to the maximum amount of monthly billable hours for each
level of professional set forth in Appendix C to this Agreement. Such
compensation shall be payable by the Company to the Law Firm within thirty (30)
days after the Company has received such Litigation Revenues or Licensing
Revenues or an invoice from the Law Firm for billed services rendered, as the
case may be. Notwithstanding the foregoing, the Law Firm shall not be entitled
to receive any compensation with respect to revenues generated under any
agreement between the Company and any of the parties identified on Appendix B
(the "Existing License Agreements").
(b) In addition to the foregoing, if the Company shall sell, directly
or indirectly through the sale of Affinity or the Company, one or more of the
Patents (the "Sold Patents") to a third party (the "Purchaser"), the Law Firm
will be entitled to receive a payment in an amount equal to the Licensing
Revenue Percentage (the "Sales Commission") of the total purchase price paid by
the Purchaser to the Company or Affinity, as the case may be (reduced by all
ordinary and customary expenses incurred in connection with such sale) (the
"Sales Price"). The amount of such Licensing Revenue Percentage shall be
determined as if the Sales Price were Licensing Revenues in accordance with
Appendix C to this Agreement.
If the Sold Patents are sold as a result of the Purchaser purchasing
Affinity, and Affinity is engaged in another business or owns other assets not
related to the licensing or sale of the Sold Patents that are also being sold to
the Purchaser as part of the same sale with the Sold Patents (the "Other
Assets"), the Sales Price to which the Sales Commission shall be applied shall
be the percentage of the Sales Price that is equal to (1) the fair market value
of Sold Patents divided by (2) the fair market value of the Sold Patents plus
the fair market value of the Other Assets (the "Pro-Rata Sales Price"). If there
is any dispute between the parties about the Pro-Rata Sales Price to which the
Sales Commission shall be applied, both parties shall work cooperatively
together in good faith to select an independent appraiser at a cost to be shared
equally between the Company and the Law Firm that is qualified to evaluate the
fair market value of the Sold Patents and the fair market value of the Other
Assets, and the results of such analysis shall be used by the parties to
calculate the Pro-Rata Sales Price.
In addition, the Sales Commission shall not exceed nine and one-half
million dollars ($9,500,000.00) (the "Sales Commission Limit") if such sale
occurs within one year after the Effective Date of this Agreement. On the first
anniversary date of this Agreement, the Sales Commission Limit will be increased
to eleven million four hundred thousand dollars ($11,400,000.00), and commencing
on the second anniversary of this Agreement, there shall be no Sales Commission
Limit to limit the Law Firm receiving the full Sales Commission. Such Sales
Commission discussed above in this Section 5.1(b), and subject to the provisions
set forth in Section 5.2 below, shall be payable by the Company to the Law Firm
within thirty (30) days after the Company has received the Sales Price from the
Purchaser and shall consist of the same proportionate cash and non-cash
consideration as paid by the Purchaser to the Company. Upon payment of the Sales
Commission, this Agreement shall terminate, and neither the Company nor the
Purchaser(s) shall be obligated to make any further payments to the Law Firm
under or in connection with this Agreement except as provided in Section 5.3 of
this Agreement.
5.2 In the event the Company executes a sales transaction as contemplated
by Section 5.1(b) above and the Purchaser or Purchasers desire to retain the
services of the Law Firm in a professional capacity, the retention of such
services shall be disclosed to the Company in writing within fifteen (15) days
after the closing of the sales transaction and shall be subject to the Company's
written approval. In the event the retention of the Law Firm's services are not
disclosed to the Company within fifteen (15) days of the closing of the sales
transaction or Company withholds its approval, the Law Firm agrees that neither
the Law Firm nor any one of its Members will, for a period of five (5) years
after such sales transaction, provide any professional services to any Purchaser
or Purchasers if such professional services have a bearing directly or
indirectly on the Patents.
5.3 The Company shall be responsible for and shall pay for all
out-of-pocket costs and expenses incurred or to be incurred by the Law Firm in
connection with its services hereunder on a periodic and ongoing basis,
including but not limited to production services, travel and lodging required,
consultants, and other experts, but excluding costs and expenses incurred in
connection with the operations of the Law Firm. All such out-of-pocket expenses
must be pre-approved by the Company.
5.4 The Law Firm may, at its cost and expense, audit the Company's and/or
Affinity's books and records for the purpose of determining the amount of
Revenues received by the Company from the Patent Agreements. Any such audit
shall be no more frequent than once each calendar year.
5.5 The Company and the Law Firm hereby agree that if the engagement by the
Company of the XxXxxxx Firm shall terminate for any reason and the Company shall
not replace such firm in a timely fashion with substitute counsel that provides
substantially the same or similar services as the XxXxxxx Firm, then the
Litigation Revenue Percentage and the Licensing Revenue Percentage payable by
the Company to the Law Firm hereunder shall be increased by the amounts that
would otherwise have been payable by the Company to the XxXxxxx Firm if the
engagement of XxXxxxx Firm had not been terminated.
SECTION VI
TERM AND TERMINATION
6.1 The term of this Agreement shall commence upon the Effective Date of
this Agreement and shall continue until the last to expire of the Patents,
unless earlier terminated by any party in accordance herewith. Either party may
terminate this Agreement for any reason, with or without cause, by providing the
other party with no less than thirty (30) days advance written notice, and
subject to the foregoing, this Agreement shall terminate at such time as set
forth in such notice. In addition, either party may terminate this Agreement for
cause (as specified below) at any time by delivering notice to the other party,
and this Agreement shall thereupon terminate immediately.
6.2 The Company may terminate this Agreement at any time for cause. With
respect to any such termination, "cause" shall mean (i) the Law Firm shall have
materially breached any term of this Agreement or any other agreement between
the Company or any of its affiliates and the Law Firm and, if such breach can be
cured, the Law Firm shall have failed to cure such breach within thirty (30)
days after receiving notice from the Company of such breach; provided, however,
that the Company shall not be required to give notice of any specific type of
breach more than once; (ii) the employment of one of the Members with the Law
Firm shall terminate, or the Law Firm shall re-assign, without the Company's
prior written consent, primary responsibility for the Law Firm's obligations
under this Agreement to any person other than one of the Members; (iii) the Law
Firm shall have committed an act of financial dishonesty against the Company;
(iv) the Law Firm shall have committed an act involving a felony or involving
moral turpitude that brings the Company or any of its affiliates into public
disrepute; or (v) the Law Firm shall have demonstrated repeated inattentiveness
with respect to its obligations under this Agreement as evidenced by, without
limitation, failure by the Law Firm to devote the time and attention required to
fulfill its obligations under this Agreement, repeated failure by the Law Firm
to return telephone calls from the Company, repeated failure by the Law Firm to
participate in any meetings reasonable arranged by the Company, or any other
acts or failures to act that evidence the Law Firm's repeated inattentiveness
provided that the Law Firm shall have failed to cure such inattentiveness within
thirty (30) days after receiving notice from the Company of such
inattentiveness; and provided, however, that the Company shall not be required
to give notice of any specific type of inattentiveness more than once.
6.3 The Law Firm may terminate this Agreement at any time for cause. With
respect to any such termination, "cause" shall mean (i) the Company shall have
materially breached any term of this Agreement or any other agreement between
the Company and the Law Firm and, if such breach can be cured, the Company shall
have failed to cure such breach within thirty (30) days after receiving notice
from the Law Firm of such breach; provided, however, that the Law Firm shall not
be required to give notice of any specific type of breach more than once; (ii)
the Company shall have committed an act of financial dishonesty against the Law
Firm; (iii) the Company shall have committed an act involving a felony or
involving moral turpitude that brings the Law Firm or any of its affiliates into
public disrepute; or (iv) the Company shall have demonstrated repeated
inattentiveness with respect to its obligations under this Agreement as
evidenced by, without limitation, failure by the Company to devote the time and
attention required to perform its obligations under this Agreement, repeated
failure by the Company to return telephone calls from the Law Firm, repeated
failure by the Company to participate in any meetings reasonably arranged by the
Law Firm, or any other acts or failures to act that evidence the Company's
repeated inattentiveness provided that the Company shall have failed to cure
such inattentiveness within thirty (30) days after receiving notice from the Law
Firm of such inattentiveness; provided, however, that the Law Firm shall not be
required to give notice of any specific type of inattentiveness more than once.
6.4 If this Agreement is terminated, the Law Firm shall be entitled to the
following:
(a) If the Company terminates this Agreement for "cause" as defined
in Section 6.2 of this Agreement, the Law Firm shall be entitled
to receive the Litigation Revenue Percentage of any Litigation
Revenues, and the Licensing Revenue Percentage of any Licensing
Revenues, as the case may be, thereafter received by the Company
attributable to any Litigation settled and Patent Agreements
entered into prior to such termination. In the event that
litigation is in process at the time the Company terminates this
agreement for cause, the Law Firm shall share pro rata in any
settlement with such law firm as may be named by the Company to
continue the litigation; however, in no event will the Law Firm
receive more than fifty percent (50%) of the Litigation Revenue
Percentage of the Litigation Revenues received by the Company in
settlement of such litigation. The Company shall allow and give
permission to the Law Firm to withdraw as counsel from all
pending and anticipated Litigation and prosecution of the Patents
provided that Law Firm shall work cooperatively with the Company
to transition such Litigation and prosecution of the Patents to
counsel of the Company's choosing and the Company shall
diligently work to obtain new counsel to become counsel of record
for such Litigation and Patents.
(b) If this Agreement is terminated by the Company without "cause" as
defined in Section 6.2 of this Agreement, or this Agreement is
terminated by the Law Firm "with cause" as defined in Section 6.3
of this Agreement, the Law Firm shall be entitled to receive (i)
the Litigation Revenue Percentage of any Litigation Revenues, and
the Licensing Revenue Percentage of any Licensing Revenues, as
the case may be, thereafter received by the Company attributable
to (A) any Patent Agreements entered into prior to such
termination and (B) any Patent Agreements entered into after such
termination with any licensee with whom the Law Firm, upon the
Company's approval, was engaged in substantive discussions or
substantive negotiations, or to whom, upon the Company's
approval, the Law Firm has sent a communication notifying such
third party of infringement or possible infringement of any of
the Patents prior to notice of termination, or to whom, upon the
Company's approval, the Law Firm has sent a written inquiry about
whether such third party desires to obtain a license to any of
the Patents prior to notice of termination, or against whom, upon
the Company's approval, the Law Firm arranged for and/or
initiated the commencement of Litigation prior to the time of
termination; and (ii) one-half of the Litigation Revenue
Percentage of any Litigation Revenues, and one-half of the
Licensing Revenue Percentage of any Licensing Revenues, as the
case may be, thereafter received by the Company attributable to
any Patent Agreements entered into subsequent to such termination
(to the extent not covered by clause 6.4(b)(i) above); and the
Company shall allow and give permission to the Law Firm to
withdraw as counsel from all pending and anticipated Litigation
and prosecution of the Patents provided that Law Firm shall work
cooperatively with the Company to transition such Litigation and
prosecution of the Patents to counsel of the Company's choosing
and the Company shall diligently work to obtain new counsel to
become counsel of record for such Litigation and Patents.
(c) If this Agreement is terminated by the Law Firm without cause,
the Company shall not be obligated to make any further payments
to the Law Firm except as provided in this Section 6.4(c). The
Law Firm shall be required to continue representation of the
Company in any pending Litigations at the time of such
termination until such time that the Company can obtain new
counsel of its choosing. The Company shall pay the Law Firm a
pro-rata payment based on a full payment in an amount equal to
the Litigation Revenue Percentage of all Litigation Revenues
received by the Company under any Patent Agreements or judgments
that result from such Litigations wherein the amount of
pro-ration shall be one hundred percent (100%) if no new counsel
works on such Litigations as attorney of record before such
Litigations result in a Patent Agreement or a judgment, and the
amount of pro-ration shall be a percentage in proportion to the
amount of work performed by the Law Firm in relation to new
counsel if new counsel is obtained by the Company to be counsel
for the Litigations.
(d) In addition to the payments set forth above, if this Agreement is
terminated by any party, the Company shall remain obligated to
pay and/or reimburse the Law Firm for all outstanding invoices
and work in progress for billed time (in accordance with Appendix
C) and/or out-of-pocket costs and expenses incurred or to be
incurred by the Law Firm in connection with its services
hereunder, including but not limited to production services,
travel and lodging required, consultants, and other experts, but
excluding any costs and expenses incurred in connection with the
operations of the Law Firm.
(e) The payments required to be made by the Company to the Law Firm
pursuant to this Section 6.4 shall be the only payments that the
Company shall be obligated to make to the Law Firm following the
termination of this Agreement.
6.5 The provisions of Sections 5.2, 5.3, 5.4, VI (all sections), VII (all
sections), VIII (all sections), and XI (all sections), shall survive any
termination of this Agreement.
SECTION VII
LIMITATION OF LIABILITY
7.1 In no event shall either party be entitled to special, indirect or
consequential damages, including lost profits, for breach of this Agreement by
the other party.
SECTION VIII
INDEMNITIES
8.1 The Company hereby agrees to indemnify the Law Firm from and against
any loss, liability, claim, damage or expense (including reasonable attorneys'
fees and expenses), whether or not involving a third-party claim, arising out of
any material breach by the Company of any of the terms of this Agreement or any
Patent Agreement, or against any action brought by a shareholder of Affinity
against the Law Firm related to this Agreement or Law Firm's services hereunder
if the Law Firm has not breached this Agreement or its duties to the Company,
and the Law Firm has not otherwise violated any law or regulation that is the
cause of such action brought by such shareholder of Affinity.
8.2 Promptly after receipt by the Law Firm of any notice of the
commencement of any action in Section 8.1 of this Agreement, the Law Firm shall
notify the Company in writing of the commencement thereof, but the failure to
give such notice shall not relieve the Company from its obligations hereunder
except to the extent that the Company demonstrates that the defense of such
claim or demand is materially prejudiced by the failure to give such notice. In
case any such action shall be brought by a third party against the Law Firm and
it shall notify the Company of the commencement thereof, the Company shall be
entitled to participate therein and, to the extent that it shall wish, to assume
the defense thereof, with counsel reasonably satisfactory to the Law Firm, and,
after notice from the Company of its election so to assume the defense thereof,
the Company shall not be liable to the Law Firm for any attorneys' fees and
expenses subsequently incurred by the Law Firm. In any such action, each party
hereby agrees to cooperate with the other party in the defense thereof.
SECTION IX
REPRESENTATIONS AND WARRANTIES
9.1 The Company hereby represents and warrants that it is the sole owner of
the Patents and has the right to grant licenses under the Patents to third
parties, the Company has the right to enter into this Agreement and enter into
the commitments provided in this Agreement, and that set forth on Appendix B are
all parties with whom the Company has entered into Existing License Agreements.
9.2. Each party understands and acknowledges that even though it will exert
its best efforts to perform in accordance with this Agreement and to obtain
Patent Agreements between third parties and the Company through negotiations
and/or enforcement of the Patents, such party does not guarantee or warrant that
a third party will execute a Patent Agreement with the Company. Each party
acknowledges that the decision as to whether a third party executes a Patent
Agreement with the Company may be based on a variety of factors and other
reasons that may be beyond the control of both the Company and the Law Firm.
SECTION X
NOTICES
10. All notices, demands, or other communications required or permitted by
this Agreement shall be in writing and shall be sent or given to the following
address:
If to Affinity or the Company, to:
0000 X Xxx Xxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: President
If to the Law Firm, to:
Xxxxxxx & Xxxxxxxxx, PLLC
000 Xxxxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
with an additional copy to:
Xxxxxxx & Xxxxxxxxx, PLLC
X.X. Xxx 0000
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Managing Member
Such notice shall be deemed to have been duly sent or given when (i) delivered
by hand, (ii) sent by facsimile transmission (with written confirmation of
receipt), provided a copy is mailed by registered mail, return receipt
requested, or (iii) mailed by registered or certified mail, postage prepaid
(return receipt requested), or nationally recognized overnight delivery service.
Either party may change its address or telecopy number for purposes of notices
hereunder upon notice to the other party, provided that such change shall be
effective only upon receipt thereof by the other party.
SECTION XI
CHOICE OF LAW AND ARBITRATION
11.1 This Agreement shall be governed and construed in accordance with the
laws of the State of North Carolina without regard to conflict of laws
principles. Except as otherwise provided in Section 11.2 of this Agreement, any
arbitration proceeding initiated by the Company shall take place in Raleigh,
North Carolina, and any arbitration proceeding initiated by the Law Firm shall
take place in Columbia, South Carolina.
11.2 Any controversy, dispute, or question arising out of, or in connection
with, or relating to the compensation to be paid by the Company to the Law Firm
under this Agreement, including under Sections V, VI, and VIII, shall first be
handled under the North Carolina State Bar's fee dispute resolution in Raleigh,
North Carolina under Rule 1.5(f) of the North Carolina Rules of Professional
Conduct, which includes the requirement of the Law Firm to (1) make reasonable
efforts to advise the Company of the existence of the North Carolina State Bar's
program of fee dispute resolution at least thirty (30) days prior to initiating
legal proceedings against the Company to collect the disputed compensation; and
(2) participate in good faith in the fee dispute resolution process if the
client submits a proper request.
11.3 Subject to Section 11.2 of this Agreement, any controversy, dispute or
question arising out of, or in connection with, or in relation to this Agreement
or its interpretation, performance or non-performance or any breach thereof
shall be determined by arbitration conducted in accordance with then-existing
rules of the American Arbitration Association. Each party to such dispute shall
select one arbitrator and the two arbitrators shall select a third with
substantially similar qualifications. Any decision rendered shall be binding
upon the parties thereto and may be enforced in any jurisdiction. However, the
arbitrators shall have no authority to grant any relief that is inconsistent
with the Agreement. The expense of arbitration shall be borne equally by the
parties thereto.
SECTION XII
ASSIGNMENT AND SEVERABILITY
12.1 This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by the Law Firm without the prior
written consent of the Company, and any such attempted assignment shall be null
and void. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by the Company without the prior written consent of
the Law Firm, and any such attempted assignment shall be null and void. Affinity
and the Company shall be jointly and severally liable for their obligations set
forth in this Agreement.
12.2 The parties intend that this Agreement shall be a valid legal
instrument, and no provision of this Agreement which is later deemed invalid or
unenforceable shall in any way invalidate any other provisions of this
Agreement. In such case, this Agreement shall be reformed to the minimum extent
necessary to correct any invalidity or unenforceability.
SECTION XIII
COMPLETE AGREEMENT
13.1 The Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. No amendment, waiver or discharge
hereof shall be valid unless it is in writing and executed by the party against
whom such amendment, waiver or discharge is sought to be enforced.
13.2 The parties agree that this Agreement is the complete and exclusive
statement thereof between the parties with respect to the subject matter hereof
and that it supercedes and merges all prior proposals and understandings and all
other agreements, whether written or oral, between the parties relating to the
subject matter hereof. This Agreement may not be modified or altered except by a
written instrument duly executed by the parties hereof.
SECTION XIV
INDEPENDENT LEGAL ADVICE AND REVIEW
14.1 The Company agrees and hereby acknowledges that it has been advised by
the Law Firm to seek independent legal advice regarding this Agreement, and that
the Company has sought and received independent legal advice from an attorney of
law regarding this Agreement, and the Company is entering into this Agreement of
its own volition after receiving such independent legal advice.
(signatures are on the next page)
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as set forth below.
XXXXXXX & XXXXXXXXX, PLLC AFFINITY TECHNOLOGY GROUP, INC.
Signature: /s/ Xxxxxx X. Xxxxxxxxx Signature: /s/ Xxxxxx X. Xxxxx
----------------------- -------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxx X. Xxxxx
Title: Member Title: President and Chief Executive
Officer
Date: July 10, 2006
Date: July 10, 2006
XXXXXXXXXXX.XXX, INC.
Signature: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President
Date: July 10, 2006
APPENDIX A
Patents
U.S. Patent No. 6,105,007 C1
U.S. Patent No. 5,870,721 C1
U.S. Patent No. 5,940,811 C1
U.S. Patent No. 5,537,315
APPENDIX B
(NOT USED)
APPENDIX C
Contingency Schedule for Revenue Percentages
"Litigation Revenue Percentage"
19%
"Licensing Revenue Percentage"
Total Licensing Revenues (cumulative) Percentage
------------------------------------------------------------------------
Up to $99,999,999.99 19%
$100,000,000 - $199,999,999.99 15%
$200,000,000 - $299,999,999.99 11%
$300,000,000 - $399,999,999.99 7%
$400,000,000 - $499,999,999.99 4.5%
$500,000,000 and above 2.5%
Billable Attorneys, Paralegals, Staff, Xxxx Rates and Maximum Hours Billable
Per Month
Attorneys Billing Rate Max. Hrs./Month
--------------------------------------------------------------------------------
Partner #1 $162.50 200
Associate #1 $125 200
Associate #2 $125 200
Paralegals $65 200
* Billing rates listed above are subject to a maximum of 5% increase per
calendar year starting with calendar year 2007
