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EXHIBIT 10.11
SETTLEMENT AGREEMENT
THIS AGREEMENT is made this 27 day of May, 1997, as of January 1,
1996 (the "Effective Date") by and between MIKRON INSTRUMENT CO., INC., a
corporation of the State of New Jersey (hereafter referred to as "Mikron"), and
Raytek Corporation a corporation of the State of California (hereafter referred
to as "Raytek").
BACKGROUND OF THIS AGREEMENT
Mikron is the owner of United States Patent No. 4,527,896 (hereafter
referred to as the "`896 Patent"), issued July 9, 1985, in the names of Irani et
al, and directed to a remote reading infrared thermometer with a built in
two-wire transmitter;
Raytek is in the business of manufacturing and selling thermometers
and has been manufacturing and selling, among other products, an infrared
two-wire temperature transmitter with linear 4-20 milliamp output, which have
been alleged by Mikron to be covered by claims of the `896 Patent; and
Mikron and Raytek wish to resolve any differences there may be between
them and to state by this Agreement the terms of the resolution, without thereby
admitting any infringement or any violation of any rights of any kind.
NOW, THEREFORE, intending that they be legally bound, Mikron and
Raytek agree as follows:
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1. Definitions.
As used in this Agreement:
(a) "Licensed Patent" means the `896 Patent and any and
all continuations, divisionals, continuations-in-part, reexaminations and
reissues.
(b) "Licensed Product" (or "Licensed Products") means:
(i) the infrared two-wire temperature transmitter
with linear 4-20 milliamp output made or sold by
Raytek as the Thermalert TX Series and listed on the
Schedule attached to this Agreement (and made a part
hereof); and (ii) without limiting the above, any and
all new or products introduced by Raytek after the
Effective Date, which, as made, used, sold, or
otherwise disposed of (as hereinafter defined), are
covered by any claim of the Licensed Patent while
such claim subsists.
(c) "Raytek" means Raytek Corporation, its divisions and
any subsidiary in which Raytek Corporation, directly
or indirectly holds a controlling interest. For the
purposes of this definition, a controlling interest
shall be one sufficient to allow appointment of the
majority of the Board of Directors or other
controlling body.
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2. Grant of License.
Mikron grants to Raytek, in and for the whole of the United
States, its territories and possessions, and throughout the world a
non-exclusive license under the Licensed Patent, to make, use, have made, sell
and offer for sale the Licensed Products.
3. Royalties.
In consideration of the license granted to Raytek with respect
to the Licensed Patent, Raytek shall pay to Mikron the following:
(a) the sum of ten thousand dollars ($10,000); and
(b) for Licensed Products manufactured, sold or otherwise disposed
of within the United States, its territories and possessions on or after January
1, 1996, six percent (6%) of the aggregate Net Sales by Raytek of Licensed
Products.
"Net Sales" with respect to Licensed Products sold means the invoice
price to Raytek's customers, F.O.B. factory, less cash discounts actually given
thereon, and credits actually allowed for returns of Licensed Products in the
ordinary course of business, but without any other deductions. Where Licensed
Products are not sold, but are otherwise disposed of by rental or lease, "Net
Sales" for the purpose of computing royalties shall be the fees actually
received by Raytek in relation to such rental or lease. Where Licensed Products
are not sold or otherwise disposed of separately, but are sold or otherwise
disposed of in combination with or as parts of other products, the "Net Sales"
of the Licensed Products sold or otherwise disposed of shall be calculated for
the purpose of computing royalties due by applying to the total "Net Sales"
price (as hereinafter defined)
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of the combined or composite products, a fractional multiplier having as its
denominator the total manufacturing cost of the combined or composite products
(determined in accordance with Raytek's customary accounting procedures) and as
its numerator the manufacturing cost of the included Licensed Products
(similarly determined). Licensed Products other than those rented or leased by
Raytek to others shall be considered to have been "sold" when billed out, or
when paid for, whichever shall occur first, provided, however, that upon
expiration of the Licensed Patent, or upon any termination of this Agreement,
Licensed Products made on or prior to the date of such expiration or termination
but which have not been billed out prior thereto shall be considered to have
been "sold," and shall therefore be subject to royalty. Licensed Products rented
or leased by Raytek to others shall be considered to have been "sold," and the
fees actually received thereon subject to royalty, when such fees have been
received by Raytek. As used herein, Licensed Products "otherwise disposed of"
means (i) Licensed Products not sold, but delivered by Raytek to others in the
expectation that they will be sold (including, by way of illustration, and no
limitation, deliveries on consignment, or memorandum, or for export), regardless
of the basis for compensation, if any; (ii) Licensed Products not sold as such,
but sold by Raytek as components or constituents of other products or of any
systems sold as such; (iii) Licensed Products put into use by Raytek for any
purpose other than routine testing; and (iv) Licensed Products not sold, but
rented or leased by Raytek to
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another. Where Licensed Products are not sold, but are manufactured and put into
use by Raytek for any purpose other than routine testing, the Net Sales" of such
Licensed Products shall be the price at which Raytek, at the time such Licensed
Products are put into use, would invoice such Licensed Products to purchasers
dealing at arms length with Raytek. Such Licensed Products shall be considered
to have been "otherwise disposed of" at the date on which they are put into use
by Raytek.
(c) Anything in this Agreement to the contrary notwithstanding,
royalties with respect to all Licensed Products sold or otherwise disposed of by
Raytek to an :Affiliate" (as hereafter defined) of Raytek or to any purchaser
which otherwise does not deal at arms length with Raytek, shall be computed for
the purpose of determining "Net Sales" on the basis of an amount equal to the
price at which Raytek, at the time of such sales or other disposals, would
invoice such Licensed Products to purchaser dealing at arms length with Raytek.
As used herein, "Affiliate" means (i) any entity in which Raytek or any of its
stockholders, directors or officers has a direct or indirect ownership interest
(other than insubstantial interests in publicly held companies) or (ii) any
entity which directly or indirectly controls, is controlled by or is under
common control with, Raytek. Only one royalty payment shall be due Mikron for
each Licensed Product, regardless of the number of times that Licensed Product
is sold.
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4. Payments to Mikron
Raytek shall make payments to Mikron as follows:
(a) The payment pursuant to subparagraph 3 (a) above
shall be made by Raytek upon execution of this Agreement by the parties;
(b) Raytek shall make quarterly written statements to
Mikron within thirty (30) days after the end of each calendar quarter ending the
last day of September, December, March and June of each year during the Term of
this Agreement (as hereafter defined), and as of such dates, setting forth in
each such statement the number and description of Licensed Products sold or
otherwise disposed of during the period to which the statement relates and upon
which royalties are payable as provided in subparagraph 3 (b) above, the Net
Sales amount of the invoice prices and description of deductions from the
invoice prices of Licensed Products, and the amount of the royalty due. The
first such statement shall include Licensed Products sold or otherwise disposed
of between January 1, 1996 and the end of the quarter to which such statement
relates. Raytek shall also make such a written statement to Mikron within thirty
(30) days after the date of expiration or any termination of this Agreement, in
relation to Licensed Products sold or otherwise disposed of and upon which
royalties not previously reported and paid to Mikron are payable.
Payment of the royalty due shall accompany each statement provided for herein.
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5. Late Payments.
Raytek shall pay interest to Mikron upon any and all amounts of
royalties or other payments that are at any time overdue. Such interest shall be
payable to Mikron computed using an annual rate of seven and one-half percent
(7 1/2%) from the date when such royalties or other payments are due and payable
to the date of payment.
6. Records and Books of Account.
Raytek shall keep true and accurate records and books of
account showing the quantity of all Licensed Products sold or otherwise disposed
of under this Agreement, and such records shall be in sufficient detail to
enable the royalties payable to Mikron to be ascertained. Within sixty (60) days
after the end of each fiscal year of Raytek, currently December 31, during the
term of this Agreement, and within sixty (60) days after expiration or any
termination of this Agreement, Raytek shall furnish to Mikron a statement of the
aggregate amount of royalties due to Mikron for such fiscal year (or, as the
case may be, part thereof), which statement shall be certified by a certified
public accountant to be an accurate reflection of the records of Raytek for such
period. Mikron shall have the option and right at any reasonable time to
commission an independent third party agreeable to Raytek to examine and audit
such records and books of account to the extent necessary to verify the
statements provided for in this Paragraph 6, such examination to be made at the
expense of Mikron. Raytek's agreement to such independent third party auditor
shall not be unreasonably held.
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7. Term.
The term (the "Term") of this Agreement shall begin on the
Effective Date and continue for the life of the Licensed Patent unless sooner
terminated in accordance with the provisions of this Agreement.
8. Termination.
This Agreement may be terminated prior to expiration of the
Term as follows:
(a) If Raytek shall fail to make payment or to provide
any statement in regard to royalties when due, Mikron may give notice to Raytek
of such default and of Mikron's intention to terminate this Agreement if payment
is not made or such statement provided within fifteen (15) days, and if payment
is not made or such statement provided within ten (10) days after the giving of
such notice, this Agreement may then be terminated by Mikron by giving notice to
Raytek, termination to be effective upon the giving of such notice.
(b) If Raytek shall commit a default other than of the
kind referred to in subparagraph (a) of this paragraph 8, Mikron may give notice
to Raytek of such default and of its intention to terminate this Agreement.
Raytek shall then have a period of thirty (30) days within which to remedy the
default and if such default is not remedied within such thirty (30) days period,
this Agreement may be terminated by Mikron by signing notice to Raytek,
termination to be effective upon the giving of such notice.
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(c) This Agreement shall not preclude Licensee from contesting the
validity of the Licensed Patent, but in the event that Raytek shall assert
invalidity of any claim of the Licensed Patent and shall couple with or follow
such assertion by:
(i) withholding, or notice of intention to withhold, or
denial of obligation to pay, royalties otherwise payable under this Agreement
with respect to Raytek's operations under such claim, or
(ii) initiation or participation in a suit challenging or
denying the validity of such claim with respect to Raytek's operations under
this agreement, Mikron shall have the right to terminate the license as to such
claim by giving notice to Raytek, termination to be effective upon the giving of
such notice.
The remedies provided in subparagraphs (a), (b) and (c) of this
paragraph 8 shall be in addition to, and not exclusive of, any and all other
remedies available to either party under the law, and the pursuit of one or more
remedies shall not be construed as a waiver of any right to pursue any other
remedy or remedies. No failure on the part of either party to exercise any right
of termination hereunder shall be construed to prejudice such right or any
subsequent right of termination.
9. Effect of Termination.
The word "termination" and cognate words, such as "Term" and
"terminate", used in paragraph 8 above and elsewhere in this Agreement are to be
read, except where the contrary is specifically indicated, as omitting from
their effect the following rights and obligations, all of which shall survive
termination to the degree necessary to permit their complete fulfillment or
discharge;
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(a) The obligation of Raytek to supply a statement upon
termination as provided in paragraph 4 (b) above of this Agreement;
(b) Mikron's right to receive or recover and the
obligation of Raytek to pay royalties accrued or accruable for payment at the
time of any termination;
(c) The obligation of Raytek to maintain records and
books of account, and Mikron's right to examine and audit them as provided in
paragraph 6 above;
(d) Any cause of action of claim of either party, accrued
or to accrue, because of any breach or default by the other party.
10. Assignment; No Sublicensing.
This Agreement and the rights hereunder shall not be
assignable by Raytek without the written consent of Mikron first obtained nor
shall Raytek have the right to grant any sublicenses hereunder. Except as
provided in the preceding sentence of this Paragraph 10, this Agreement shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
In the event that Mikron shall grant a license under the Licensed
Patent on more favorable terms than those set forth in this Agreement, Mikron
shall give Raytek notice of such terms within ninety (90) days and allow Raytek
the benefit of the more favorable terms if Raytek elects to adopt such more
favorable terms.
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11. Representation and Warranty of Raytek.
Raytek represents and warrants that the models of infrared
two-wire temperature transmitters with linear 4-20 milliamp output listed in the
Schedule which is a part of this Agreement are all of the models of such
products which have been introduced by Raytek prior to the Effective Date of
this Agreement.
12. Entire Agreement.
This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter of this Agreement and
merges all prior discussions and writings between them, and neither of the
parties shall be bound by any conditions, definitions, warranties or
representations with respect to the subject matter of this Agreement, other than
as expressly provided in this Agreement, or as duly set forth on or subsequent
to the date hereof in writing and signed by a proper and duly authorized officer
of the party to be bound thereby.
13. Patent Marking.
Raytek shall xxxx permanently and legibly all Licensed
Products sold or otherwise disposed of by Raytek under this Agreement with the
statutory patent notice: "Patent No. 4,527,896" or its equivalent.
14. Relationship of the Parties.
Nothing in this Agreement shall be construed to make either
party the agent, servant, employee or other representative of, or a joint
venturer or partner with the other, and each party hereto is an independent
contractor, operating for his or its own profit and receiving full
responsibility for the financing, management and operation of its
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business. Neither party shall identify or hold himself or itself out in
connection with the performance of any part of this Agreement as other than an
independent contractor, and neither party shall have the power to enter into on
behalf of, or to bind the other, to any contract or agreement, or to commit or
otherwise subject the other to any liability or responsibility of any kind
whatsoever.
15. Applicable Law.
This Agreement shall be governed and construed in accordance
with the laws of the State of New Jersey.
16. Notices.
All notices and communications of any nature referred to in
this Agreement shall be in writing and shall be sent by registered or certified
mail, postage prepaid, addressed in the case of Mikron to:
Mikron Instrument Co., Inc.
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxxxx Xxxxx, President
with a copy to:
Xxxxx X. Xxxxxxxxxxxx, Esquire
Xxxxx X. Xxxxxxxx, Esquire
Xxxx Xxxxx Xxxx & XxXxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
And in the case of Raytek to:
Xx. Xxxxxxx X. Xxxxxxx
Raytek, Inc. Corporation
0000 Xxxxxxx Xxxx, Xxx 0000
Xxxxx Xxxx, XX 00000-0000
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unless in either case the address is change by like notice to the other party.
Any notice given as above provided shall be deemed to have been given on the
date of receipt by the party for which it is intended.
17. Release.
For and in consideration of the obligations set forth in this
Agreement and conditional upon Raytek's compliance with the terms of Paragraph 3
and Paragraph 4 above, Mikron hereby releases and forever discharges Raytek of
and from any and all demands, actions and causes of action, and any claims for
attorneys' fees in connection therewith, for infringement of the Licensed Patent
which may arise prior to the Effective Date of this Agreement, provided however
that nothing in this release shall apply in any way to the obligations set forth
in Agreement, and Raytek hereby forever releases Mikron of and from any and all
demands, actions and causes of action, damages and any and all claims, demands
and liabilities whatsoever including any claims for attorneys' fees in
connection therewith, provided however that nothing in this release shall apply
in any way to the obligations set forth in this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed in their names by their duly authorized representatives and their
corporate seals to be affixed on the date first above written.
[Corporate Seal] MIKRON INSTRUMENT CO., INC.
Attest: By
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Alex X. X. Xx Xxxxxxxxxx Xxxxx
[Corporate Seal] RAYTEK CORPORATION
Attest: By
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Xxxxx Xxxxxxx Xxxxxxx X. Xxxxxxx
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SCHEDULE
Raytek "Licensed Products" as of January 1, 1996;
Thermalert TX Series: Smart and Basic Xxxxxx xx XXX, XXX, XX, X0, X0, XX
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