A-15,331
LICENSE AGREEMENT BETWEEN POLAROID CORPORATION AND
LILT CANADA INC., A SUBSIDIARY OF LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
This Agreement, having an "Effective Date" of July 21, 2000, is made
between POLAROID CORPORATION, a Delaware corporation, having a place of business
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. (hereinafter
called "POLAROID") and LILT CANADA INC., A SUBSIDIARY OF LUMENON INNOVATIVE
LIGHTWAVE TECHNOLOGY, INC., having a place of business ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, (hereinafter called "LUMENON").
WHEREAS, LUMENON and POLAROID have entered into discussions
regarding the licensing of certain of POLAROID's Star Coupler patents and are
now in agreement with respect to the terms and conditions under which such
patents can be licensed.
NOW, THEREFORE, in consideration of the promises, licenses and
mutual covenants, agreements, releases, and conditions set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, each intending to be legally bound hereby, do
promise and agree as follows:
1. DEFINITIONS
-----------
1.1 "POLAROID Licensed Patents" shall mean U.S. Patent: 4,786,131
and all divisions, continuations, reissues, substitutes and
extensions thereof; and all counterpart patents thereof in Canada,
the European Community, and Japan.
1.2 (a) "AWG Device" shall mean an arrayed waveguide grating
including integrated optical circuits, temperature compensation
apparatus and control circuitry, if any, and input and output
optical fibers of connection to all optical network.
(b) "AWG Chip" shall mean an arrayed waveguide grating
including only the integrated optical circuits.
(c) "OC Chip" shall mean an integrated optical coupler
1.3 "LUMENON Licensed Product" shall mean any AWG Device, any AWG
Chip, Any OC Chip (hereinafter collectively called Licensed Core
Products) and any other integrated optical products having a greater
functionality than the Core Licensed Products, but incorporating one
or more Licensed Core Products as a part thereof, which incorporate
an optical coupler that falls within the scope of any Valid Claim of
the POLAROID Licensed Patents.
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1.4 "Net Product Selling Price" shall mean the gross invoice price
of each LUMENON Licensed Product sold by either LUMENON or a LUMENON
Affiliate to any non-affiliated third party; or the fair market
value of each LUMENON Licensed Product where such LUMENON Licensed
Product is sold or otherwise disposed of by LUMENON at a gross
invoice price that is below the price of similar products sold in
the open market. The parties recognize that LUMENON has a contract
with Molex for sale of LUMENON Licensed Products at a gross invoice
price that is below the price of similar products sold in the open
market, but at least equal to the fully loaded cost to LUMENON of
producing such LUMENON Licensed Product. However, POLAROID agrees
that for a period of one year from the Effective Date of this
Agreement, LUMENON may report the Net Product Selling Price of
LUMENON Licensed Product sold to Molex under such contract or equal
to the contract invoice price. After the expiration of one year from
the Effective Date of this Agreement, LUMENON agrees to report the
Net Product Selling Price of LUMENON Licensed Product sold to Molex
under such contract as equal to the fair market value of similar
products sold in the open market, and not the contract invoice price
with Molex. Net Product Selling Price of LUMENON Licensed Products
will be exclusive of the following items:
(a) discounts and allowances actually shown on the invoice;
(b) transportation and insurance costs on shipment to customers;
and
(c) import, export, excise, sales, value added taxes based on the
sale of LUMENON Licensed Products only and consumer tax, and
customs duties; and
(d) credit on LUMENON Licensed Products returned.
1.5 "Net Selling Price Ratio" shall mean:
(A) a ratio equal to one (1) for all LUMENON AWG products
and all future LUMENON Licensed Products similar
thereto; or
(B) for all other future LUMENON Licensed Products having
substantially greater functionality than the AWG
products;
(a) a ratio equal to LUMENON's Net Product Selling
Price of the AWG products portion of the LUMENON
Licensed Product in the case where LUMENON sells
such AWG products, or the Net Product Selling
Price that like or similar AWG products are sold
in the open market in the case where LUMENON
does not sell such AWG products, divided by the
Net Product Selling Price of that
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LUMENON Licensed Product, unless the ratio is
greater than .8; or
(b) a ratio equal to the estimated fair market value
of the AWG products portion of the LUMENON
Licensed Product if the AWG products are not
currently being sold in the open market, divided
by the Net Product Selling Price of that LUMENON
Licensed Product, unless the ratio is greater
than .8; or
(c) a ratio equal to one (1) in those cases in which
the ratio according to (a) or (b) above is
greater than .8.
1.6 "Net Selling Price" shall mean the Net Product Selling Price
times the Net Selling Price Ratio.
1.7 "Affiliates" means individually and collectively any corporation
or other legal entity, present or future, in which LUMENON or
POLAROID owns or controls, directly or indirectly, fifty percent
(50%) or more of the shares of common stock or of the power to vote
for the election of directors or persons performing similar
functions, but any such company or other legal entity shall be
deemed an Affiliate only as long as such ownership or control by
LUMENON or Polaroid exists.
1.8 "Valid Claim" shall mean and include an issued, unexpired claim
of the POLAROID Licensed Patents that POLAROID has not expressly
admitted in writing to be invalid or that has not been held invalid
or unenforceable by a court, tribunal or governmental agency of
competent jurisdiction, or as a result of an opposition proceeding,
reissue, reexamination, dedication, disclaimer or otherwise and, in
the case of a holding or decision, cannot be appealed or has not
been appealed within the time for appeal.
2. LICENSE GRANT
-------------
2.1 Subject to POLAROID receiving the payments set forth in Article
4 herein, POLAROID hereby grants to LUMENON and its Affiliates an
irrevocable, royalty bearing, nontransferable (except as such is
authorized or not prohibited by Article 12), nonexclusive, worldwide
license, without the right to sublicense, under POLAROID Licensed
Patents to make, have made, import, export, operate, use, lease,
offer to sell, sell or otherwise transfer LUMENON Licensed Products.
3. NONASSERTION
------------
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3.1 In addition to the license granted hereabove in Article 2,
POLAROID agrees that it shall not assert, nor cause or permit any of
its Affiliates to assert any POLAROID Licensed Patents against
LUMENON or its Affiliates, suppliers, or customers based on
LUMENON's, its Affiliates, or its supplier's past manufacture, past,
present or future import, export, use, operation, lease, offer to
sell, sale or other disposition of any past manufactured LUMENON
Licensed Products for or on behalf of LUMENON, or any LUMENON
Affiliate, or based on any LUMENON, or its customer's or LUMENON
Affiliate customers' past, present or future import, export, use,
operation, lease, offer to sell, sale or other disposition of any
past manufactured LUMENON Licensed Products purchased or acquired
from LUMENON and/or its Affiliates.
4. PAYMENT
-------
4.1 In consideration of the license granted by POLAROID herein,
LUMENON agrees to pay to POLAROID an initial licensing fee of three
hundred ninety five thousand U.S. dollars ($395,000) which shall be
paid in two payments. The first payment of two hundred thousand U.S.
dollars ($200,000) shall be paid within thirty (30) days of the date
of execution by LUMENON. The second payment of one hundred ninety
five thousand U.S. dollars ($195,000) shall be paid on or before
December 15, 2000. The initial licensing fee payments shall be made
by electronic funds transfer in U.S. currency.
4.2 In addition, LUMENON shall pay POLAROID earned royalties on the
Net Selling Price of each LUMENON Licensed Product sold, or
otherwise gainfully disposed of by LUMENON. The Net Selling Price
for LUMENON Licensed Product(s) otherwise disposed of will be the
same as the Net Selling Price that like LUMENON Licensed Products
are sold in the open market. The annual earned royalty rate shall be
five percent (5.00%) of the Net Selling Price of the LUMENON
Licensed Product(s) sold for aggregate Net Selling Prices up to five
million dollars ($5,000,000), three and one-half percent (3.50%) of
the Net Selling Price of the LUMENON Licensed Product(s) sold for
aggregate Net Selling Prices over five and up to forty million
dollars ($5,000,000 and $40,000,000) and one and three quarters
percent (1.75%) of the Net Selling Price of the LUMENON Licensed
Product(s) sold for aggregate Net Selling Prices over forty million
dollars ($40,000,000) for each year of this Agreement. The initial
licensing fee is not a credit against earned royalties. All other
royalty payments shall be credited against earned royalties. Earned
royalty payments to POLAROID shall be made by electronic funds
transfer in U.S. currency.
4.3 No part of any amount paid to POLAROID hereunder shall be
refundable for any reason whatsoever, including a finding of
invalidity or unenforceability as to any or all of the POLAROID
Licensed Patents.
4.4 The electronic funds transfer shall be transferred to:
First National Bank of Chicago
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Chicago, Illinois
ABA No. ▇▇▇▇▇▇▇▇▇
Account of Polaroid Corporation
Account No. ▇▇▇▇▇▇▇
or to any other bank account designated by Polaroid and shall clearly
state this License Agreement number (#A-15,331). For each payment, a
facsimile notification containing this License Agreement number, the
amount paid in U.S. currency, the account number from which the
electronic funds transfer is made, and the date of such transfer
shall be sent to the POLAROID addressee and at the address set forth
in Article 16.
5. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
-----------------------------------------
5.1 Earned Royalty Payment and Report-- LUMENON shall make written
reports (even if there are no sales) and earned royalty payments
every six months to POLAROID in accordance with the following
schedule:
(a) The first earned royalty report on all Net Sales accrued from
the Effective Date shall be due and payable on or before
January 30, 2001 for the period of June 21, 2000 to December
31, 2000.
(b) Reports and payments after the first shall be due and payable
semiannually within thirty (30) days following the six month
period ending on June 30 and December 31 of each year
thereafter during the term of this Agreement.
The royalty report shall be in the format set forth in
Appendix A and in accordance with standard business practice
stating the number, description, and aggregate Net Selling
Price of LUMENON Licensed Product(s) sold or otherwise
disposed of during such completed payment period, and the
resulting calculation pursuant to Article 4 of earned royalty
payment due POLAROID for such completed payment period.
5.2 Accounting -- LUMENON agrees to keep and maintain records for a
period of five (5) years showing the manufacture, sale, use, and
other disposition of products sold or otherwise disposed of under
the license herein granted. Such records will include general ledger
records showing cash receipts and expenses, and records which
include production records, customers (unless LUMENON is
contractually prohibited from disclosing a customer's purchases),
serial numbers and related information in sufficient detail to
enable the royalties payable hereunder by LUMENON to be determined.
LUMENON further agrees to permit its books and records to be
examined by POLAROID from time to time to the extent necessary to
verify reports provided for in Article 5.1. Such examination is to
be made by POLAROID or its designee, at the expense of POLAROID,
except in the event that the results of the audit reveal an
underreporting of royalties due POLAROID of five percent (5%) or
more, then the audit costs shall be paid by
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LUMENON. If such examination reveals that LUMENON owes POLAROID any
additional royalties, then the additional royalties shall be paid
within thirty (30) days following completion of the respective
examination. LUMENON shall also pay interest on late royalties at
the rate of two percent (2%) plus the prime rate on the date payment
was due for the period from the due date to the date payment is
actually made. Notwithstanding the above, LUMENON shall furnish
whatever additional information as POLAROID may reasonably request
from time to time to enable POLAROID to ascertain which products
sold, leased or put into use by LUMENON, are subject to the payment
of royalty to POLAROID.
6. CONFIDENTIALITY
---------------
Either party may publicly disclose the existence of this Agreement
and the terms of Article 3, the nonassertion provision. However, the
parties agree to maintain the contents of this Agreement and
information obtained thereto (including, for greater certainty,
under Article 5) in confidence, and shall not disclose the terms
thereof to any third party, except as may be required by operation
of law or an order of a court of competent jurisdiction. A party
will provide prompt written notice to the other party, if ordered or
compelled to disclose the terms of this Agreement. However, Polaroid
may disclose the terms of this agreement without identifying LUMENON
as the licensee, on a confidential basis to its licensees under the
`131 patent, if contractually obligated to disclose such terms to
these entities and these entities agree to hold the information in
confidence.
7. WARRANTIES
----------
7.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty, acknowledgment, representation or
admission by POLAROID as to the validity, enforceability or scope of
any POLAROID Licensed Patents or an acknowledgment, representation,
or admission by LUMENON as to infringement validity, enforceability,
or scope of any POLAROID Licensed Patents;
(b) A warranty or representation by POLAROID that
anything made, used, sold or otherwise disposed of under the license
granted in this Agreement is or will be free from infringement of
patents, copyrights, and other rights of third parties;
(c) An obligation by POLAROID to bring or prosecute
actions or suits against third parties for infringement or defend
any suit or action brought by a third party which challenges or
concerns the validity of any of the POLAROID Licensed Patents;
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(d) Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of POLAROID or
other persons other than those expressly recited in Articles 2 and
3, regardless of whether such patents or other rights are dominant
or subordinate to any of the POLAROID Licensed Patents; or
(e) An obligation on POLAROID to furnish any technology
or technological information or to file any patent application or to
secure any patent or maintain any patent in force.
7.2 POLAROID represents and warrants that it has the right and power
to grant the license granted herein and both parties represent and
warrant that they have the right and power to execute and deliver
the Agreement and bind their respective Affiliates, and that there
are no other agreements with any other party in conflict herewith.
7.3 LUMENON shall be solely responsible for the manufacture,
production, sale and distribution of the LUMENON Licensed Products
and will bear all related costs associated therewith.
7.4 Except as expressly set forth in this Agreement, POLAROID MAKES
NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE
OF THE LUMENONLICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR
IMPLIED WARRANTIES.
8. INDEMNITY
---------
8.1 POLAROID shall not indemnify, hold harmless, nor defend LUMENON,
its Affiliates, suppliers, customers, trustees, officers, employees,
students, and agents against any and all claims for death, illness,
personal injury, property damage, and improper business practices
arising out of the manufacture, use, sale, or other disposition of
POLAROID Licensed Patents and LUMENON Licensed Product(s).
8.2 POLAROID shall not be liable for any indirect, special,
consequential, or other similar damages, whether grounded in tort
(including negligence), strict liability, contract or otherwise.
POLAROID shall not have any responsibilities or liabilities
whatsoever with respect to LUMENON Licensed Product(s).
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9. TERM AND TERMINATION
--------------------
9.1 Term. Unless sooner terminated as provided herein, the terms of
the license granted under this License Agreement shall continue
until the expiration date of the last to expire patent of the
POLAROID Licensed Patents either in the U.S., in Canada, in the
European Community, or in Japan.
9.2 In the event LUMENON fails or becomes unable to substantially
perform the obligations or undertakings to be performed hereunder
and such default or inability is not cured within sixty (60) days
after written notice from POLAROID specifying with reasonable detail
the alleged nonperformance, then POLAROID may terminate this License
Agreement forthwith by giving written notice of such termination.
9.3 Immediate Right of Termination. POLAROID shall have the right to
immediately terminate the license and nonassertion rights, granted
to LUMENON under this Agreement by giving written notice to LUMENON
in the event that LUMENON files a petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or makes an assignment for the
benefit of creditors, or an arrangement pursuant to any bankruptcy
law, or if LUMENON discontinues its business or a receiver is
appointed for LUMENON or for LUMENON's business and such receiver is
not discharged within sixty (60) days.
9.4 Upon termination or expiration of this License Agreement, all
rights granted to LUMENON shall terminate forthwith, except that the
provisions of ARTICLES 6, 7, and 8 shall survive any termination of
this License Agreement.
10. POLAROID NAMES AND MARKS
------------------------
LUMENON agrees not to identify POLAROID in any promotional
advertising or other promotional materials to be disseminated to the
public or any portion thereof or to use the name of any POLAROID
employee or any trademark, service ▇▇▇▇, trade name, or symbol of
POLAROID, without POLAROID's prior written consent.
11. ASSIGNABILITY
-------------
The license granted hereunder extend to LUMENON and their Affiliates
and are personal to LUMENON and their Affiliates and shall not be
assigned by any act of LUMENON, by operation of law or otherwise
unless in connection with a transfer of substantially all of the
assets of LUMENON or with the consent of POLAROID. The license
agreement may be assigned by POLAROID.
12. AGREEMENT BINDING ON SUCCESSORS
-------------------------------
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The provisions of this Agreement shall be binding upon the parties
hereto, their respective Affiliates, and the respective heirs,
administrators, legal representatives, successors, and assigns of
each of them.
13. SEVERABILITY
------------
If any term, clause, or provision hereof is held invalid or
unenforceable by a court of competent jurisdiction, such invalidity
shall not affect the validity or operation of any other term,
clause, or provision and such invalid term, clause, or provision
shall be deemed to be severed from the Agreement.
14. NO JOINT VENTURE
----------------
Nothing contained herein shall constitute this arrangement to be
employment, a joint venture, or a partnership.
15. INTEGRATION
-----------
This Agreement constitutes the entire understanding of the parties,
and revokes and supersedes all prior agreements between the parties,
which may have been entered into between the parties, and is
intended as a final expression of their Agreement. It shall not be
modified or amended except in writing signed by a duly authorized
officer of each of the parties hereto and specifically referring to
this Agreement. This Agreement shall take precedence over any other
documents which may be in conflict with said Agreement.
16. NOTICES
-------
All notices under this Agreement shall be deemed to have been fully
given when done in writing and deposited in the United States mail,
registered or certified, or sent by facsimile with confirmation
thereof sent by courier, and addressed as follows:
To POLAROID: Associate General Counsel, Licensing
Polaroid Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To LUMENON: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CA
Chief Financial Officer
LILT CANADA INC., A SUBSIDIARY OF
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
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▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇-▇▇▇▇▇▇▇ (▇▇▇▇▇▇), ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Either party may change its addressee and address upon written
notice to the other party.
17. MARKING
-------
LUMENON may place in a conspicuous location, on any LUMENON Licensed
Products a patent notice as follows: "Manufactured under patent
license from Polaroid Corporation U.S. Patent 4,786,131."
18. DISPUTE RESOLUTION
------------------
Except as provided herein, no civil action with respect to any
dispute, claim or controversy arising out of or relating to this
Agreement may be commenced unless the Parties have first attempted
in good faith to resolve such disputed claim or controversy through
non-binding mediation. Either Party may initiate the mediation
process by providing written notice in letter form to the other
party (the "Dispute Notice"). The Dispute Notice shall (i) signal
the formal commencement of this dispute resolution provision and the
dates, deadlines and time frames set forth herein; (ii) make
specific reference to this Article and (iii) set forth the subject
of the dispute and the specific relief requested. The recipient of
such notice will respond in writing within ten (10) days with a
statement of its position and recommended solution to the dispute.
If the dispute is not resolved by this exchange of correspondence,
then each Party shall designate one or more senior executives with
full settlement authority to meet at a mutually agreeable time and
place within forty (40) days of the Dispute Notice in order to
exchange relevant information and perspectives, and to attempt to
resolve the dispute. If the dispute is not resolved within two (2)
days of the commencement of such meeting, unless otherwise mutually
extended, each Party shall have the right to institute legal action,
provided however that if each party agrees, the Parties may proceed
to non-binding mediation with a mediator to be picked through the
American Arbitration Association and with mediation to occur in the
Commonwealth of Massachusetts. Each Party will bear its own costs
relevant to the mediation process. All offers, promises, conduct and
statements, whether oral or written, made in the course of the
mediation process by either of the Parties, their agents, employees,
experts or attorneys, are confidential, privileged and inadmissible
for any purpose, including impeachment, in any litigation or other
proceeding involving the Parties, provided that evidence that is
otherwise admissible or discoverable shall not be rendered
inadmissible or non-discoverable as a result of its use in the
mediation. Anything to the contrary notwithstanding either Party
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may, at any time, seek equitable or injunctive relief with respect
to any emergent matter or to preserve the status quo. In the event
of the institution of any civil proceeding at any time the
prevailing Party shall be entitled to recover its reasonable
attorney fees and costs in such civil litigation.
19. WAIVER
------
None of the terms of this Agreement can be waived except by the
written consent of the party waiving compliance.
20. APPLICABLE LAW
--------------
This Agreement shall be governed by and construed according to the
laws of the Commonwealth of Massachusetts, applicable to agreements
negotiated, executed and performed wholly within New York.
POLAROID CORPORATION LILT CANADA INC., A SUBSIDIARY
OF LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- ----------------------------
(Authorized Signature)
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- --------------------------
(Typed or Printed)
Title: Associate General Counsel Title: Chief Financial Officer
-------------------------- --------------------------
Date: July 15, 2000 Date: July 21, 2000
--------------------------- -------------------------
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APPENDIX A
EARNED ROYALTY PAYMENT AND REPORT
Name of Licensee: LILT Canada Inc., a subsidiary of Lumenon Innovative Lightwave
Technology, Inc.
Agreement Number: 15,331
Payment Period April 1 - September 30,________ / /
(Check the October 1 - March 31, _________ / /
Applicable Box)
Note: In this Payment Report:
o NPSP stands for "Net Product Selling Price", as defined in Article 1.3 of the
License Agreement
o NSPR stands for "Net Selling Price Ratio" as defined in Article 1.4 of the
License Agreement
o NSP stands for "Net Selling Price" as defined in Article 1.5 of the License
Agreement
Certified by Authorized Representative of Lumenon
Signature:
------------------------------
Name:
-----------------------------------
(Printed or Typed)
Title:
----------------------------------
Date:
-----------------------------------
APPENDIX A
Table 1: EARNED ROYALTY ON LUMENON LICENSED PRODUCT
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LUMENON LICENSED PRODUCT ROYALTY
Model No. Country of Country of Number Customer Total NPSP NSPR TOTAL NSP Applicable Calculated Amount Due
Sale Make of Units (US $) Ratio (US$) Rate (%) Due (US$)
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