LICENSE AGREEMENT
THIS AGREEMENT is made as of August 23, 1996 between REP INVESTMENT LIMITED
LIABILITY COMPANY, a Michigan limited liability company with its principal place
of business at 0000 00xx Xxxxxx, X.X., Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxx 00000
(the "Licensor") and XXXXXXX RADIO CORP., a Delaware corporation with its
principal place of business at 0 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
(the "Licensee").
W I T N E S S E T H:
WHEREAS, the Licensor is the owner, by assignment or otherwise, of all
right, title and interest in and to the "Invention" (which term shall have the
meaning set forth in subparagraph 1(d) hereof) regarding a sound reproduction
speaker system having application in electronics sound reproduction and
enhancement systems, including (but not limited to) "home-theater" and "stereo
surround sound" systems; and
WHEREAS, the Licensor desires to have such invention manufactured, sold,
distributed and marketed through the granting of an exclusive license; and
WHEREAS, the Licensee desires to acquire an exclusive license to use, make,
have made, sell, market and distribute such invention in accordance with the
terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto do hereby agree as follows:
1. DEFINITIONS. As used herein, the following
capitalized terms shall have the following meanings:
(a) "Affiliate," shall mean any corporation, partnership or other
entity which is controlled by, under common control with, or in control of, the
applicable party to this Agreement.
(b) "Confidential Information" shall mean all information which in
any way is related to a party to this Agreement or its Affiliates, their
business or the Invention which is set forth in any material or devices
furnished to one party to this Agreement by the other or which is orally
disclosed to a party to this Agreement by or at the direction of the other (all
of which shall be deemed "furnished" by such other party). Information
pertaining to the Invention which is discovered, learned or compiled by the
Licensee, as a result of carrying out its obligations under this Agreement shall
be deemed Confidential Information furnished to Licensee by Licensor. By way of
example and not of limitation, Confidential Information includes financial
statements and information, cost and expense data, production data, trade
secrets, secret processes and formulas (whether or not patentable), patents and
other properties, technology, marketing and customer data, product samples,
manufacturing processes and other information not generally ascertainable from
public or published information or trade sources, and any analyses,
compilations, studies or other documents which may be prepared for internal use
by or on behalf of a party to this Agreement or its Affiliate or Representative.
Notwithstanding the foregoing, Confidential Information does not include
information which a party to this Agreement can demonstrate by written
documentation or other credible evidence: (a) prior to the date of this
Agreement, (i) was generally publicly available, or (ii) was in such party's
possession from a source other than the other party or its attorneys,
accountants, advisors, directors, officers, partners, members, agents or
Affiliates (collectively, the "Representatives"), provided that the source of
such information was not known by such party or any Representatives of such
party, after reasonable investigation, to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, the other party or any of its Affiliates with respect to
such information; or (b) after such party's receipt of such information,
(i) becomes generally publicly available without fault of such party, or (ii) is
acquired by such party from a third party on a non-confidential basis, provided
that the source of such information was not known by such party or any
Representatives of such party, after reasonable investigation, to be bound by
any confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, the other party or any of its Affiliates with
respect to such information. Notwithstanding anything to the contrary set forth
in this Agreement, if any component of the Confidential Information shall be or
become publicly available, or otherwise within an exception set forth above to
Confidential Information, the manner in which such component is combined with
all, or any portion, of the components of such Confidential Information, and the
function performed by such component when combined with all, or any portion, of
the components of such Confidential Information, shall not be deemed to be
"generally publicly available" for purposes of this Agreement and shall not be
deemed to come within any other exception set forth above to Confidential
Information. All patent applications relating to the Invention constitute
Confidential Information furnished by Licensor and at this time shall not be
deemed (i) to be "generally publicly available", or (ii) not to constitute
Confidential Information hereunder, regardless of whether the Invention is
determined to be patentable.
(c) "Controlled" or "Control" means with respect to, (i) a
corporation, the ownership, directly or indirectly, of more than 10% of the
securities (as defined in Section 2(1) of the Securities Act of 1933, as
amended) of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of such corporation's
directors (or persons performing similar functions); (ii) a partnership, being
the sole general partner or being in Control (as defined herein) of a majority
of the general partners if there is more than one; or (iii) any other entity,
having the power to direct the management of such entity.
(d) "Invention" shall mean the speaker system [redacted]
and all technology embodied therein, all modifications,
enhancements and improvements thereto conceived or reduced to practice by or for
Licensor or Licensee during the term of this Agreement and all embodiments of
the Invention as claimed in Licensor's Patent Rights. Embodiments of the
Invention include the following:
[redacted]
All patented embodiments of the Invention or any
modifications, enhancements, and improvements thereto conceived or
reduced to practice by or for Licensor or Licensee.
[redacted]
(e) "Patent Rights" shall mean all the subject matter rights claimed
in [redacted] (ii) all patent
applications, including any divisional, continuation, or continuation-in-part
patent applications [redacted]; (iii) all patent applications filed in
any countries other than the United States based on the aforesaid U.S.
patent applications filed by or on behalf of Licensor or Licensee
pursuant to Subparagraph 5(c) below; (iv) all patent
applications based on modifications, enhancements, and improvements of the
Invention and any divisional, continuation, continuation-in-part, or reissue or
foreign counterpart based on said modifications, enhancements, and improvements;
and (v) all patents and reissues resulting from the foregoing patent
applications.
(f) "Trademarks" shall mean the trademarks identified below for which
registration with the U.S. Patent and Trademark Office has been sought by
Licensor, as well as such other names, marks, insignias, symbols, and other
identifications for which Licensor may obtain appropriate registration, or other
legal protection or title.
[redacted]
(g) "Unit" means each assemblage of the Invention which is covered by
the Patent Rights or any subcomponent thereof which is sold for use in an
assemblage of the Invention which is covered by the Patent Rights. By way of
example, and not of limitation, each of the following shall constitute a Unit:
[redacted]
Where an element of the Invention may include, but is not limited to the
following:
[redacted]
It is expressly understood that nothing herein contained shall be
interpreted to mean that a Unit includes, for purposes of calculating royalties
under this Agreement, any of the products or models presently or traditionally
sold by Licensee which do not incorporate the Invention. It is also expressly
understood that nothing contained herein shall be construed to mean that
royalties shall be paid more than once on a single item sold which incorporates
the Invention.
2. INITIAL ADVANCE. In consideration of the initial grant of the license
set forth in Paragraph 3 below, concurrently with the execution of this
Agreement, Licensee has paid to Licensor the sum of [redacted] becoming
due under Paragraph 6 but shall otherwise be non-refundable, and to the extent
that the royalty payments aggregate less than such amount the Initial Advance
may be retained by Licensor. The Initial Advance shall not be credited against
any Maintenance Payment made pursuant to Paragraph 11.
3. GRANT OF LICENSE. In consideration of the Initial Advance and the
royalties pursuant to Paragraph 6 below, Licensor hereby grants to Licensee,
which the parties understand shall include any wholly-owned subsidiary of
Licensee (whether direct or indirect), effective on the date hereof (the
"Commencement Date"), the exclusive worldwide and non-transferable, except as
set forth in Paragraph 4, right and license to manufacture, have manufactured,
market, distribute, advertise, use, sell, offer to sell and import the Invention
and utilize Licensor's Patent Rights and any Confidential Information relating
thereto, for the term of this Agreement but subject to the terms and conditions
set forth in this Agreement.
4. SUBLICENSE. Licensee shall have the right to grant sublicenses
hereunder, provided that (i) the sublicensee agrees to be bound by all the
provisions of this Agreement and agrees that such obligation shall be
enforceable against such sublicensee by Licensor, and (ii) Licensee gives
Licensor written notice of such sublicensing and furnishes Licensor with a true
and complete copy of the sublicensing agreement. In calculating royalties due
to Licensor pursuant to Paragraph 6 below, any sales of Units made by
sublicensees shall be considered to be sales made by the Licensee whether or not
such sublicense was properly made. Any breach of any provision of this
Agreement by a sublicensee shall constitute a breach of this Agreement by
Licensee, and Licensee shall be liable to Licensor as if Licensee had committed
such breach.
5. APPLICATION FOR PATENTS AND OWNERSHIP OF PATENT RIGHTS.
(a) [redacted] Licensor filed at its own expense,
and, subject to the provisions of subparagraph 5(b) below, under its sole
control, in the name of Licensor, an application for United States Letters
Patent with the United States Patent and Trademark Office on the Invention,
[redacted] Licensor shall use diligent efforts to pursue, and to cause not to
be abandoned, such application and any subsequent applications required to
obtain Letters Patent on the Invention, at its sole expense. However, nothing
set forth herein, or in this Agreement, shall be deemed to be a representation
or warranty by Licensor that Letters Patent of the United States or any other
country will be issued on the Invention. Licensor shall promptly provide copies
to Licensee of all applications worldwide and all relevant documents, including
correspondence from any applicable Patent and Trademark Offices, pertaining to
all patent applications.
(b) Licensor shall file an International Patent Application under the
Patent Cooperation Treaty based on [redacted]
the Invention, at its expense, within the time required by law. Upon execution
of this Agreement, the parties shall consult with each other in good faith and
mutually determine those countries other than the United States from which it is
desirable to obtain Letters Patent. Licensor shall file for patent protection
within the time required by applicable law in those countries agreed upon in
writing by the parties and diligently pursue such applications and any
subsequent applications required to obtain Letters Patent pursuant thereto and
not cause same to be abandoned. Excluding the PCT patent application, Licensee
shall pay the reasonable expenses incurred in connection therewith within sixty
(60) days following receipt of written documentation of same from Licensor.
One-half (1/2) of each such payment shall be non-reimbursable. The other
one-half (1/2) of each such payment shall constitute a non-interest-bearing
nonrecourse advance to Licensor which shall be creditable against
royalties payable to Licensor pursuant to subparagraph 6(b) in respect of
Units sold outside the United States or Canada.
(c) In the event that after the Commencement Date the Licensee shall
believe that any component or element of the Invention is patentable and has not
been covered by an application or applications for Letters Patent of the United
States or any other country submitted by the Licensor, Licensee shall notify
Licensor of its belief and request that Licensor prepare for filing and
processing an application or applications for Letters Patent of the United
States on such component or element of the Invention. In the event that within
ninety (90) days of such request, Licensor has not filed such application or
applications, then Licensee shall have the right to cause to be prepared, filed
and prosecuted, in the name of Licensor, an application or applications for
Letters Patent of the United States or such other country on such component or
element of the Invention. In connection with such application or applications,
the Licensor shall, without further consideration therefor, at the request of
the Licensee, do all acts necessary for obtaining, sustaining, reissuing or
extending such Letters Patent on such patent application or applications.
Licensee shall pay the reasonable expenses incurred in connection with any such
applications, whether filed by Licensor or Licensee, and in the case of
applications filed by Licensor shall pay such expenses within sixty (60) days
after receipt of written documentation of same from Licensor. One-half (1/2) of
the reasonable expenses paid by Licensee pursuant to this subparagraph 5(c)
shall be reimbursable from royalties payable pursuant to subparagraph 6(b) in
the same manner as expenses paid by Licensee pursuant to subparagraph 5(b);
provided, that expenses relating to applications filed in the United States or
Canada shall be credited against royalties in respect of Units sold within the
United States or Canada, and expenses relating to applications filed in
countries other than the United States or Canada shall be credited against
royalties in respect of Units sold outside the United States or Canada.
(d) All Patent Rights shall be the sole and exclusive property of the
Licensor, subject to the exclusive license hereby granted.
6. ROYALTIES. Licensee shall pay to Licensor the following royalties:
(a) Subject to subparagraph 6(c), for Units sold by Licensee or a
sublicensee for ultimate sale to consumers in the United States or Canada, the
royalty shall be:
[redacted]
(b) Subject to subparagraph 6(c), for all other Units sold by
Licensee or a sublicensee, the royalty shall be [redacted].
Sales covered by this subparagraph 6(b) shall not be counted in calculating
either of the 500,000 Units referred to in subparagraph 6(a).
(c) The royalties provided for in subparagraphs 6(a) and 6(b) shall
be subject to reduction, as follows:
(1) For purposes of this subparagraph 6(c):
(A) Patent Rights shall be deemed "terminated" in a
given country if and when, after a patent application has been filed
in that country, (i) such patent application and all divisional patent
applications, continuation patent applications and continuation-in-
part patent applications, all of which shall have been filed in good
faith, are abandoned without further action on the part of Licensor
(or Licensee if the application was filed by Licensee pursuant to
subparagraph 5(c)), or (ii) Letters Patent expire after having been
issued pursuant to any such patent applications;
(B) Patent Rights shall be deemed to "exist" in a
country if a patent application has been filed in that country, until
patent protection has been terminated in that country within the
meaning of clause (A) above; and
(C) Sales shall be deemed to have been made "in" a
given country if the sold Unit is intended for ultimate sale to
consumers in that country.
(2) If and when Patent Rights are terminated in the United
States or any foreign country, the royalties in respect of sales in that
country shall be reduced as provided in subparagraph 6(c)(4), effective as
of the date of termination.
(3) If and when Patent Rights have been terminated in both the
United States and China, the royalties in respect of sales occurring in all
countries other than those in which Patent Rights continue to exist shall
be reduced as provided in subparagraph 6(c)(4), effective as of the date of
termination.
[redacted]
(d) Royalties shall accrue at the time of sale, which shall be deemed
to have occurred when the Unit is shipped to a customer, but Units returned by a
customer shall be deducted from sales, so that the royalties shall be calculated
with reference to sales net of returns. For the purpose of this Paragraph 6,
the term "Licensee" and "sublicensee" shall include any Affiliate of the
Licensee or a sublicensee, respectively.
(e) Royalties shall be paid on or before the thirtieth (30th) day
following the end of each calendar quarter based on sales of Units made during
the immediately preceding calendar quarter. Licensee may withhold royalties
payable in respect of sales of Units, to the extent necessary to repay the
portion of the expense of patent registration which was paid by Licensee and
which constitutes an advance as provided in subparagraphs 5(b) and 5(c).
(f) On or before the thirtieth (30th) day following the end of each
calendar quarter Licensee shall provide Licensor with a statement, in
substantially the form attached hereto as Exhibit A (the "Statement") detailing
the sales of Units made by Licensee and any sublicensee during the immediately
preceding calendar quarter. Licensor shall have the right from time to time for
a period ending two (2) years after the termination of this Agreement, not more
often than once each calendar year, upon reasonable advance written notice
during normal business hours, to have an independent certified public accountant
examine the books and records of Licensee to verify the Statements and the
royalties due Licensor pursuant to this Agreement. The cost of such examination
shall be borne by Licensor, unless such examination determines that the Licensee
has underpaid the royalties due hereunder by more than five (5%) percent in
which event Licensee shall pay the reasonable cost of such examination.
Licensee shall maintain adequate books and records so that the Statements may be
verified. The Statement shall be delivered to Licensor as set forth in
Paragraph 18.
(g) If, at the time this Agreement is terminated, Licensee has on-
hand, an inventory of manufactured Units, Licensee shall be permitted to sell
such Units after the termination, provided it pays Licensor the royalties due
hereunder and continues to comply with the provisions of this Agreement, as if
this Agreement were still in effect. Notwithstanding the foregoing, if Licensee
terminates this Agreement on account of the abandonment of Licensor's patent
application as provided in subparagraph 11(b), and if Licensee sells its on-hand
inventory of manufactured Units at a discount from the average price charged for
the same Units prior to such termination, the royalties payable upon the sale of
such Units shall be correspondingly reduced.
(h) Licensee acknowledges that this Agreement, and the royalties
provided for herein, will continue if a patent covering the Invention is not
issued, and will continue beyond the term of the patent if a patent is issued,
subject to the provisions of subparagraph 6(d), and that if this Agreement is
terminated Licensee has agreed to cease use of the Invention notwithstanding the
fact that Licensee might have had the right to continue use of the Invention
absent this Agreement. Licensee has agreed to such provisions in consideration
of its obtaining access to the Confidential Information and the know-how
subsumed in the Invention, which it believes will be of significant value to it
even if a patent does not issue and after the expiration of any applicable
patents.
7. TRADEMARKS.
(a) Licensor agrees that during the term of this Agreement Licensee
shall have the exclusive right to use those Trademarks which, after the date
hereof and at or prior to November 1, 1996 (the "Election Period"), Licensee
elects to use in connection with marketing the Invention (the "Designated
Trademarks"). By the end of the Election Period, Licensee shall give written
notice to Licensor as to which, if any, of the Trademarks shall be Designated
Trademarks, and thereafter Licensee shall have no right to use, or any rights
in, any of the Trademarks other than Designated Trademarks unless the parties
otherwise agree in writing. The Designated Trademarks may be used by Licensee
on and in connection with the sale of the Invention or products utilizing or
used in the Invention (but no other products manufactured by it) in accordance
with the grant clause of Article 3 of this Agreement as long as the Invention is
manufactured by or for Licensee or a sublicensee or an Affiliate of Licensee or
a sublicensee in accordance with this Agreement and in accordance with the
standards, specifications, and instructions approved by Licensor and is of a
quality, form, and nature that is acceptable to Licensor. Items manufactured to
the same standards of quality as currently employed by Licensee at the time this
Agreement is made shall be deemed acceptable to Licensor and shall not require
Licensor's approval, although Licensee shall advise Licensor of each application
of the Invention and each product and model proposed to be manufactured
utilizing the Invention, and shall furnish Licensor such information pertaining
thereto as Licensor may reasonably request in writing, in order that Licensor
can verify Licensee's compliance with this Paragraph 7. Licensor shall not
unreasonably withhold its approval of the matters set forth in this subparagraph
(a) and shall respond to any written request for approval within fourteen (14)
days after receipt of the same, either granting or denying such approval or
requesting additional information (in which event Licensor shall similarly
respond within fourteen (14) days after such information is provided.)
(b) Subject to subparagraph 7(a) it is expressly understood that
Licensor has the right to approve the products with which Licensee uses the
Designated Trademarks, the quality of Licensee's products with which the
Designated Trademarks are used and of any services associated therewith, as well
as the manner and form in which the Designated Trademarks are to be used.
Licensee agrees that it will use the Designated Trademarks only in a manner and
form approved by Licensor. To facilitate such approval, Licensee agrees at
Licensor's written request to send to Licensor a sample, specimen, photograph,
or finalized layout of any label, tag, package, container, and advertising
matter relating to each different use of each Designated Trademark, and shall
refrain from such use until written approval is given by Licensor. Unless
advised to the contrary by Licensor, any material suggested or furnished by
Licensor shall be considered approved for use. Licensee agrees to promptly and
fully follow all reasonable, written directions and instructions of Licensor as
to use of each of the Designated Trademarks. In addition, at the request of
Licensor, Licensee agrees to use appropriate marking, such as "Trademark",
"Reg." or "Reg.Xxxx", or "Reg." if appropriate, with the Designated
Trademarks. Licensor shall not unreasonably withhold or delay beyond fourteen
(14) days its approval of the matters set forth in this subparagraph (b).
(c) Licensee agrees that it is permitted to use the Designated
Trademarks, but not any of the other Trademarks, and the Designated Trademarks
shall be used only in connection with products or services complying with
standards and/or specifications prescribed or approved by Licensor, and that
designated representatives of Licensor shall have the right to inspect at any
reasonable time upon advance written notice during normal business hours on the
premises of Licensee all manufacturing processes, all finished products, all
printed materials and advertising, and all other matters relating to any of the
Designated Trademarks. Licensee also agrees upon written request to furnish
Licensor with a true sample of each product sold by it under any of the
Designated Trademarks. In addition, Licensee agrees to, as part of its record
keeping and reporting duties set forth in Paragraph 6, keep track of and report
to Licensor at least once each year what Designated Trademarks Licensee has used
during the reporting period as well as which products such Designated Trademarks
have been used upon and in what countries the Designated Trademarks have been
used. Licensor shall not unreasonably withhold or delay its approval of the
matters set forth in this subparagraph (c).
(d) Licensee acknowledges the validity of the Trademarks and the
prior rights and title of Licensor in and to the Trademarks, whether registered
or not, in the United States and elsewhere. Licensee agrees that all use by it
of any of the Trademarks, and the goodwill created thereby, shall without
further consideration at any time accrue and inure exclusively to the benefit
and remain the sole property of Licensor. Licensee agrees that it will not do
anything, directly or indirectly, or by omission, to diminish the value thereof
or to impair or injure Licensor's rights therein.
(e) It is understood that nothing contained in this Agreement or done
by Licensee during or prior to this Agreement shall confer or be construed to
confer upon Licensee any rights in or to use any of the Trademarks whether
registered or unregistered or, in any way that might be prejudicial to the
rights of Licensor therein except that Licensee shall have the right to use the
Designated Trademarks during the term of this Agreement provided such use is in
accordance with the provisions of this Article. Licensee agrees that it does
not have and shall not have as a result of its use of rights granted to it by
Licensor any right at any time to register any of the Trademarks either alone or
in combination with any other word, symbol, slogan, sign, device, or design or
to use or register any trademark, service xxxx, tradename, or business name that
is confusingly similar to or any of the Trademarks, and agrees that all use by
it and by those in privity with it of the Designated Trademarks shall be
discontinued upon expiration or termination of this Agreement for any reason
subject to the provisions of subparagraph 6(g). Licensee agrees that it will
not at any time do or acquiesce in anything, or aid or assist any other party to
do anything, or permit any distributor or other party in its marketing or
distribution system to do anything which might infringe upon, harm, dilute, or
challenge the rights of Licensor in the Trademarks or impair the validity,
value, integrity or scope thereof or create a likelihood of confusion therewith
or be prejudicial in any way to the rights of Licensor therein.
(f) Licensee agrees that it will promptly execute and deliver all
documents and do all things with respect to the Designated Trademarks that are
requested by Licensor in writing to facilitate compliance with the laws and
regulations of any country or regional organization or with any applicable
Convention or Treaty or to otherwise carry out the provisions and intent of this
Paragraph 7 in those countries in which Licensee, sublicensees or affiliates of
Licensee or sublicensees market, use, distribute or sell the Invention or any
Units. Licensee agrees to enter into any formal license or registered user
agreement and to execute any other document at any time and without any further
consideration from Licensor which Licensor may be advised is necessary to
preserve the validity of any of the Designated Trademarks, or registrations
thereof, or the rights of Licensor therein in those countries in which Licensee,
sublicensees or affiliates of Licensee or sublicensees market, use, distribute
or sell the Invention or any Units. All filings in respect of all Designated
Trademarks shall be made by Licensor at its expense.
(g) In the event of noncompliance by Licensee with any of the
provisions of this Paragraph 7 or use by Licensee of any of the Trademarks
outside the terms of this Agreement which is not cured within thirty (30) days
after receipt of written demand, Licensor shall have the right to terminate this
entire Agreement, or, at its option, subparagraph (a) of this Paragraph 7, upon
written notice to Licensee, such termination to be effective one (1) month after
the mailing of the notice.
(h) It is expressly understood that the provisions of this
Xxxxxxxxx 0, xxx xx xxxxxxxxxx xxxxxxxxxxxxx 0(x), (x), (x), (x) and (i), shall
survive the termination of this Agreement without the payment of any
consideration to Licensee either during or upon termination of this Agreement or
thereafter, and are not a limitation on any other rights or remedies of
Licensor.
(i) Licensor acknowledges the validity and value of the Xxxxxxx Xxxx
as defined below to Licensee, and Licensee's prior right and title to same, and
nothing herein is meant to convey any rights to Licensor with respect to same,
or to infringe upon the rights of Licensee to same. It is also expressly
understood that Licensee may use its own xxxx as defined below, in conjunction
with the sale, marketing, use, manufacture and distribution of the products
which are the subject of this agreement. Accordingly, nothing contained in this
agreement shall be construed as a grant to Licensor of any right, title or
interest in the Xxxxxxx and G-Clef design as set forth on the attached Exhibit B
(the "Xxxxxxx xxxx"), or any future forms of same, nor does this agreement
authorize Licensor to use the Xxxxxxx xxxx for the purpose of using,
manufacturing, selling, marketing or distributing any products, and neither
Licensor nor any affiliate shall directly or indirectly sell, use, manufacture,
market or distribute any goods whatsoever with the Xxxxxxx Xxxx. Licensor
further represents that it shall not register or attempt to register the Xxxxxxx
xxxx either alone or in combination with any other word, symbol, slogan, sign,
device, or design or to use or register any trademark, service xxxx, tradename,
or business name that is confusingly similar to the Xxxxxxx xxxx in its name or
in the name of any third party. Licensor further agrees that it will not at any
time aid or assist any other party to do anything which would infringe upon or
challenge the rights of Licensee to the Xxxxxxx xxxx, or create a likelihood of
confusion therewith. Nothing herein contained shall prevent Licensee from using
marks other than the Designated Trademarks in conjunction with the sale,
marketing, use, manufacture and distribution of the Invention or Units sold
incorporating same.
8. Term. The term of this Agreement shall commence on the Commencement
Date and shall continue unless and until terminated pursuant to Paragraph 10 or
11 below.
9. Confidentiality. While this Agreement remains in effect and at all
times thereafter:
(a) Each party to this Agreement shall utilize Confidential
Information furnished by the other party only to fulfill its obligations under
this Agreement. Each party to this Agreement shall use the Confidential
Information furnished by the other party for no other purpose whatsoever,
whether or not in connection with such party's own business or the business of
any of its Affiliates, and each party to this Agreement shall institute such
safeguards so as to prevent non-authorized use of any Confidential Information
furnished by the other party, including without limitation, restricting access
to such Confidential Information within such party's own organization, as are
set forth in subparagraph (b) below of this Paragraph 9.
(b) Each party to this Agreement may disclose the Confidential
Information furnished by the other party only to such professional advisors,
potential manufacturers and suppliers, accountants, or employees of or retained
by such party for the purposes of carrying out such party's duties under this
Agreement or as may be required by law; provided, however, that (i) such
disclosure is limited only to those individuals whose duties to such party
justify their need to review such Confidential Information; (ii) such party
informs such persons of the confidentiality of the Confidential Information, and
they agree to maintain such confidentiality, limit disclosure as provided in
this Agreement, and to restrict their use thereof solely for the above purpose;
and (iii) such party remains liable for any breach of any such agreement by such
person;
(c) Upon the termination of this Agreement for any cause whatsoever,
each party to this Agreement, upon written demand, shall immediately return all
Confidential Information in its possession to the other, all materials or
devices in the possession of such party or its Affiliates or Representatives
embodying or setting forth any Confidential Information furnished by the other
party, and all copies, notes or extracts of any Confidential Information
furnished by such other party;
(d) Any analyses, compilations, studies or other documents which may
be prepared for internal use by or on behalf of a party to this Agreement or
third parties to which disclosure may be authorized, and which reflect any
Confidential Information furnished by the other party, will be used and kept
confidential by such party and such third parties in accordance with
subparagraphs (a) and (b) above of this Paragraph 9, shall not be used by such
party or third party in any way detrimental to the other party, and shall be
delivered to the other party pursuant to the provisions of subparagraph (c)
above of this Paragraph 9;
(e) Licensee agrees that neither it nor any of its Affiliates will,
without the prior written consent of Licensor, employ, or attempt to employ, or
contract for services, Xxx Xxxxxxxxx or Xxxxxxx Xxxxx, who have a relationship
with Licensor in connection with the development of the Invention;
(f) In the event either party to this Agreement shall breach any of
its obligations set forth in this Paragraph 9, the parties hereby agree that in
addition to any other legal and equitable remedies available to the other party,
including the right, if any, to seek damages and the right to seek
indemnification pursuant to the provisions of Paragraph 12 below, the other
party shall be entitled to injunctive relief to prevent any such breach by such
party.
(g) Disclosure of Confidential Information by Licensor in a patent
application or by Licensee in a patent application which Licensee is entitled to
file as provided in subparagraph 5(b) or 5(c) shall not constitute a violation
of this Paragraph 9.
10. TERMINATION UPON DEFAULT.
(a) Licensor shall be entitled to terminate this Agreement and the
license granted hereunder: (i) upon any failure of Licensee (A) to pay any
royalties or provide a Statement as and when due and (B) to cure such default
within fifteen (15) days after receipt of written notice thereof from Licensor;
(ii) upon any material breach by Licensee of the provisions of Paragraphs 7 and
9 above and the failure to cure such breach within thirty (30) days of receipt
of written notice; (iii) upon the failure by Licensee to perform any other
material term or condition of this Agreement and the failure by Licensee, after
having received written notice of such failure from Licensor, to cure such
default within thirty (30) days after receipt of such notice; or (iv) if
Licensee becomes insolvent, makes an assignment for the benefit of creditors, or
seeks the protection of any bankruptcy or similar statute governing creditors'
rights, or a supervisory agent, conservator, liquidator or receiver is appointed
for Licensee, or for any significant portion of the assets of Licensee.
(b) Licensee shall be entitled to terminate this Agreement and the
license granted hereunder upon the failure by Licensor to perform any material
term or condition of this Agreement and the failure by Licensor, after having
received written notice of such failure from Licensee, to cure such default
within thirty (30) days after receipt of such notice.
11. OTHER TERMINATION.
(a) Subject to the following provisions of this subparagraph (a),
Licensor may terminate this Agreement by written notice to Licensee within sixty
(60) days after receipt of the last quarterly statement due for the calendar
year in question, if the royalties timely paid to Licensor pursuant to Paragraph
6 for any of the calendar years 1997, 1998 and 1999 are less than a minimum
royalty amount of [redacted], or if the royalties
timely paid to Licensor pursuant to Paragraph 6 for any subsequent calendar year
are less than a minimum royalty amount of[redacted]. For
purposes of the preceding sentence, any royalties paid for 1996 shall be treated
as if paid in 1997. Such termination shall not be effective if Licensee pays to
Licensor the amount of the deficiency in royalties ("Maintenance Payment")
within fifteen (15) days after such notice of termination is given. The
Maintenance Payment shall constitute compensation to Licensor for continuation
of this Agreement and shall not be credited against any royalties subsequently
becoming due hereunder. The Initial Advance shall not be credited against any
Maintenance Payment.
(b) Licensee may terminate this Agreement by written notice to
Licensor within sixty (60) days after the occurrence of either of the following
events: (i) failure of Licensee to achieve a level of sales in any calendar
year sufficient to meet the minimum royalty amount for that year as set forth in
subparagraph 11(a), or (ii) the abandonment of the patent application referred
to in the first sentence of subparagraph 5(a) and all divisional patent
applications, continuation patent applications and continuation-in-part patent
applications, all of which shall have been filed in good faith, without further
action on the part of Licensor, or (iii) a material misrepresentation or willful
omission by Licensor which has a material adverse financial impact upon
Licensee.
(c) Termination pursuant to this Paragraph 11 shall be effective
sixty (60) days after notice of termination is given.
12. INDEMNIFICATION, INTEREST, TERMINATION AND SURVIVAL.
(a) INDEMNIFICATION. Each of the parties (the "Indemnitor") does
hereby agree to indemnify and hold harmless the other party (the "Indemnitee")
against all damages, costs and expenses (including without limitation reasonable
attorney fees) incurred by the Indemnitee as a result of the Indemnitor's breach
of any of its obligations under this Agreement.
(b) INTEREST. In the event that Licensee shall fail to make any
payment hereunder when due, or in the event that an audit conducted pursuant to
Paragraph 6 shows that royalties have been underpaid, Licensee shall pay
Licensor, in addition to the payments and royalties which are due, interest on
such amounts which are due hereunder, from the date such payment or royalties
came due hereunder, equal to the lesser of: the prime rate as announced in the
Wall Street Journal from time to time (or if such rate is no longer published,
at a corresponding index rate), plus four per cent (4%) per annum; or the
highest interest rate which may lawfully be charged.
(c) TERMINATION. Upon termination of this Agreement, Licensee shall
cease all use of any Designated Trademarks, the Invention, the Patent Rights and
all Confidential Information subsumed therein, except to the limited extent
provided in subparagraph 6(g).
(d) SURVIVAL. All obligations of the parties under this
Paragraph 12, and Paragraphs 6, 7 and 9 shall survive the termination of this
Agreement.
13. NEW PRODUCT NOTICE AND APPROVAL. Licensee shall notify Licensor of
each new product using the Invention, the Patent Rights and any Confidential
Information subsumed therein and provide the Licensor with a production sample
of each such product. Licensor reserves the right to evaluate and approve each
such product, which approval shall not be unreasonably withheld. The evaluation
shall be of function, design (other than cosmetic), durability, sonic
performance and other factors considered necessary to maintain product
differentiation and quality. Licensor agrees to complete its evaluation of each
new product and advise Licensee in writing of its conclusion relating to
acceptability for distribution within 14 days of receipt of each new product
sample.
14. WARRANTIES, REPRESENTATIONS AND COVENANTS.
(a) Licensor warrants and represents that: (i) it is a limited
liability company organized under the laws of the State of Michigan; (ii) it has
the requisite power and authority to enter into this Agreement and carry out the
transactions contemplated herein; (iii) this Agreement constitutes a valid and
binding obligation of the Licensor; and (iv) it believes that the Invention is
novel or contains novel elements, (v) to the best of its knowledge it is the
sole owner of the Invention, and (vi) it is the sole owner of all right, title
and interest in and to the patent application referred to in the first sentence
of subparagraph 5(a); provided, however, nothing set forth herein or in this
Agreement shall be deemed to constitute a warranty or representation by the
Licensor that the Invention is patentable or that the manufacture, use or sale
of the Invention or any device incorporating any Confidential Information does
not infringe upon the patent rights or other rights of any other party;
(b) Licensee warrants, represents and covenants: (i) that it is a
corporation duly organized under the laws of the State of Delaware, and is duly
qualified and in good standing in every jurisdiction in which its business so
requires and will continue to be so qualified during the term of this Agreement;
(ii) that the execution, delivery and performance of this Agreement are within
its corporate powers; (iii) that this Agreement constitutes a valid and binding
obligation of the Licensee; (iv) that while this Agreement remains in effect it
will use all reasonable efforts to advertise, promote and market the Invention,
although nothing contained herein shall prevent Licensee from dealing in
products competitive with the Invention; (v) and that it will assume full
responsibility for all expenses associated with claims, damages and recalls of
any and all kinds arising from any defect, or alleged defect, with respect to
the manufacturer of the Invention or any Unit or any defect, or alleged defect,
in materials or workmanship relating to the Invention or any Unit.
15. INFRINGEMENT. Either party shall have the right, but not the
obligation, while this Agreement remains in effect, to institute and prosecute
actions, at its sole cost and expense, for the infringement of Patent Rights, of
rights in the Designated Trademarks or of other Proprietorship rights with
respect to the Invention or any Confidential Information; provided, however, the
other party shall fully cooperate, at no cost to it, in the prosecution of any
such infringement action. If both parties wish to pursue an infringement claim
they will jointly prosecute such claim and each shall bear its own costs with
respect thereto. Any recovery from an infringement action, or settlement
thereof, shall be applied first to reimburse the parties for the costs they have
incurred in prosecuting such action, and then shall be allocated between the
parties in proportion to the losses suffered by them by reason of such
infringement.
16. PATENT MARKINGS. Upon the filing of one or more applications for
United States or foreign Letters Patents covering some aspect of the Invention
or the Confidential Information, and upon the issuance of any Letters Patents
therefrom, Licensee agrees to xxxx all Units manufactured or sold by it under
this Agreement with appropriate patent markings as permitted or required by the
countries in which such Units are sold, or as specified in writing by Licensor.
17. TECHNICAL SUPPORT. Until December 31, 1996, Licensor shall make
Xxxxxx X. Xxxxxxx available to Licensee to consult with Licensee and answer
questions relating to the Invention. Such consultation shall be for reasonable
periods of time during regular business hours. Such consultation shall be
without charge to Licensee if performed through telephone and facsimile
communication. Such individual shall also be available for limited periods of
on-site consultation at locations within the United States designated by
Licensee. Licensee shall reimburse Licensor and such individual all their
reasonable out-of-pocket expenses incurred in connection with such services,
including (but not limited to) the reasonable cost of travel and lodging and
meals while traveling or providing on-site consultation. Such individual shall
not be required to consult for more than thirty (30) hours per month for August
and September, 1996, or for more than twenty (20) hours per month thereafter.
This Paragraph does not obligate Licensor to furnish the services of any
individual other than Xxxxxx X. Xxxxxxx or to provide the services of any third
party.
18. NOTICE. Any notice or demand required or authorized to be given under
the terms of this Agreement shall be sent by facsimile transmission, courier or
certified mail, return receipt requested and postage prepaid, to the other party
at its address set forth below. Notice or demand shall be deemed received on
the date received in the case of a facsimile transmission, on the date delivered
in the case of a courier, or if by mail, on the date indicated on the return
receipt or, in the absence of any such date, on the date such notice was
actually received. Receipt by the sender of electronic confirmation of
transmission shall be conclusive evidence that a facsimile transmission was
received. Any notice or demand required in this Agreement shall be addressed as
follows:
(a) To the Licensor: REP Investment Limited Liability Company
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax No. (000) 000-0000
With a copy to: Jaffe, Raitt, Heuer & Xxxxx Professional
Corporation
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax No. (000) 000-0000
(b) To the Licensee: Xxxxxxx Radio Corp.
0 Xxxxx Xxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Legal Department
Fax No. (000) 000-0000
With a copy to: Xxxxx & Samson
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax No. (000) 000-0000
The foregoing addresses and telephone numbers may be changed by written
notice.
19. GOVERNING LAW AND ARBITRATION. This Agreement shall be governed by
the laws of the State of Delaware. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by binding
arbitration in Wilmington, Delaware in accordance with the commercial
arbitration rules of the American Arbitration Association, and a judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
20. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(b) HEADINGS. The headings in the Paragraphs and subparagraphs of
this Agreement are inserted for convenience only and shall not constitute a part
hereof.
(c) INVALIDITY OF ANY PROVISION. If any provision of this Agreement
is declared illegal, invalid or unenforceable, the other provisions of this
Agreement shall not be affected but shall remain in full force and effect.
(d) AMENDMENT. No provision of this Agreement may be amended,
modified, supplemented, changed, waived, discharged or terminated unless each
party hereto consents in writing.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns. Licensor may assign any of its rights or obligations
hereunder without the consent or approval of Licensee. Licensee may not assign
any of its rights or obligations under this Agreement, whether by contract,
consolidation, sale of all or substantially all of its assets, or other
corporate reorganization of such party, without the prior written consent of
Licensor, which will not be unreasonably withheld, and any attempted assignment
without such consent shall be null and void and without any effect whatsoever.
(f) NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole and
exclusive benefit of the parties hereto. Nothing in this Agreement shall be
construed to grant to any person other than the parties hereto and their
respective permitted successors and permitted assigns any right, remedy or claim
hereunder.
(g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties, supersedes all prior agreements and understandings related
to the subject matter of this Agreement. There are no understandings,
agreements, representations or warranties, express or implied, oral or written,
other than those set forth in this Agreement.
(h) NO WAIVER. No failure or delay on the part of any party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. No course of dealing a party
shall prevent such party from exercising any of the rights provided for it under
this Agreement or by applicable law. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies provided by
law.
(i) RELATIONSHIP OF PARTIES. The parties hereto are independent
contractors and neither party shall be deemed to act as agent, representative or
partner of the other party in any manner or for any purpose. The obligations of
the entities comprising Licensee shall be joint and several.
(j) FORCE MAJEURE. Neither party to this Agreement shall have any
liability to the other by reason of any failure or delay in performance of any
provision of this Agreement if and to the extent that such failure or delay is
due to acts of God or a public enemy, war, civil unrest sabotage, labor
disputes, natural disasters such as storms, cyclones, earthquakes, tidal waves
floods, destruction by lightning, explosions, fires, breakdowns in factories, or
the acts, rules regulations, orders or directives of any governmental body
(including any agency or subdivision thereof), or any similar occurrence (other
than financial) beyond the reasonable control of the party failing or delaying
to perform. A party seeking relief under this subparagraph shall, as soon as
practicable after the impediment and its effects upon its ability to perform
become known to it, give notice to the other party of such impediment and its
effects on its ability to perform. Notice shall also be given when the ground
for relief ceases. Upon the giving of such notice, and during the continuance
of such impediment and for a reasonable period thereafter, this subparagraph
shall relieve the failing party from damages, penalties and other contractual
sanctions (other than interest on delayed payments, if any). If the impediment
continues for a period in excess of one hundred twenty (120) days, either party
may terminate this Agreement in whole and not in part, by written notice to the
other.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
REP INVESTMENT LIMITED LIABILITY COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Its: Manager
XXXXXXX RADIO CORP.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Its: President
EXHIBIT A
Form of Statement
[To be mutually agreed upon]
EXHIBIT B
Xxxxxxx Xxxx
