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LICENSE AGREEMENT
THIS LICENSE AGREEMENT entered into as of the Effective Date set out
below by and between ALLIEDSIGNAL TECHNOLOGIES INC., an Arizona corporation,
with offices at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx, XX 00000 (hereinafter referred
to as Licensor), and EFTC CORPORATION, a Colorado corporation with offices at
0000 Xxxx 0xx Xxxxxx, Xxxxxxx, XX 00000, (hereinafter referred to as Licensee).
RECITALS
WHEREAS, the Licensee and AlliedSignal Inc., acting through its
Aerospace Equipment Systems business ("AES") and AlliedSignal Avionics Inc.
("Avionics") have entered into a certain Master Agreement Regarding Asset
Purchase and Related Transactions dated July 15, 1997 (the "Master Agreement")
whereby AES and Avionics agreed to transfer certain assets and employees
relating to the manufacture of electronic assemblies to Licensee; and
WHEREAS, in connection with the Master Agreement, Licensee agreed to
manufacture electronic assemblies for AES, Avionics and their affiliated
entities; and
WHEREAS, Licensor is the owner of certain intellectual property rights
relating to the manufacture of electronic assemblies by AES and Avionics, which
rights Licensor has licensed to AES and Avionics; and
WHEREAS, Licensee desires to acquire a license to this intellectual
property under the terms and conditions that follow for the purpose of
manufacturing electronic assemblies for AES, Avionics, their affiliated
entities, and others.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Definitions
1.1 The term "AlliedSignal" as used herein means
AlliedSignal Inc., any division or subsidiary thereof, including but not
limited to AES and Avionics, and any company directly or indirectly owned or
controlled by any one or more of the foregoing.
1.2 The term "AlliedSignal Gross Revenue" as used herein
means Gross Revenue from Licensed Product and parts therefor made for
AlliedSignal by Licensee, but does not include Licensed Product made by
Licensee at AES's facility located at 00000 X. Xxxxxx Xxxx, Xxxxxx, Xxxxxxx
00000-0000 pursuant to Section 7.2 of the Master Agreement.
1.3 The term "AES Asset Transfer Date" as used herein
means the Asset Transfer Date as set forth in Section 9.1.3 of the "Master
Agreement".
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1.4 The term "Closing Date" as used herein means the
Closing Date, for Avionics and AES as applicable, as set forth in Sections
9.1.1 and 9.1.2 of the "Master Agreement".
1.5 The term "Gross Revenue" as used herein means all
invoice amounts received by Licensee on all sales and leases of product and
parts therefor, provided, however, that with respect to product and parts
therefor which are (a) sold or leased by Licensee to any customer other than
AlliedSignal, having a special relationship with or enjoying a favored position
for dealing with Licensee as a result of which invoice prices billed by
Licensee are less than the invoice prices billed to ordinary customers, (b)
sold or leased by Licensee for other than monetary payments, (c) used rather
than sold or leased by Licensee, or (d) shipped or delivered by Licensee to a
party and Licensee does not xxxx such party, the term "Gross Revenue" means an
amount equal to the most recent invoice price billed by Licensee for such
product and parts therefor to ordinary customers.
1.6 The term "Licensed Product" as used herein means an
electronic assembly made or manufactured for AlliedSignal using Technical Data
or Technical Information.
1.7 The term "Licensee Subleased Facility" as used herein
means the facility subleased by Licensee from Avionics as set forth in Section
7.1 of the "Master Agreement".
1.8 The term "Licensee Tucson Facility" as used herein
means the Licensee operated facility as set forth in Section 7.2 of the "Master
Agreement".
1.9 The term "Technical Data" as used herein means
information and data in written, graphic, or machine readable form and source
code and supporting documentation to the extent available received from
Licensor, AES or Avionics including such information and data contained in the
documents and software listed on Schedule A for AES and Schedule B for
Avionics.
1.10 The term "Technical Information" means all know-how
that Licensee receives through transferred AES and Avionics employees or
through technical assistance provided by Licensor, AES or Avionics.
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2. Licenses Granted
2.1 Licensor grants to Licensee, under all applicable
intellectual property rights held by Licensor, a nonexclusive, irrevocable,
worldwide license to use Technical Data and Technical Information to
manufacture, have manufactured, use and sell electronic assemblies and parts
therefor.
2.2 All right, title and interest in and to Technical
Data and Technical Information shall remain in Licensor.
2.3 Licensee may copy, alter, modify, and merge with its
own technology Technical Data and Technical Information, subject to the other
terms and conditions of this License Agreement including the obligation to pay
the compensation of Section 5.
2.4 If any copyright or proprietary rights notice appears
on Technical Data, Licensee agrees to the extent reasonably practical to
include such notice on any modifications of Technical Data made by Licensee
under Section 2.3 of this License Agreement.
2.5 No license, either express or implied, is granted by
Licensor to Licensee hereunder with respect to any patent or information except
as specifically stated above.
2.6 No license, either express or implied, is granted
hereunder to use any trademark, or logo, or trade or product name of Licensor
or AlliedSignal Inc., or Avionics, or any word or xxxx similar thereto.
2.7 Licensee may indicate that Licensed Products and
parts therefor are made under license from Licensor by a suitable legend, if
the form of such legend and the extent of Licensee's use thereof have received
prior written approval of Licensor. Licensor may amend or revoke prior
approvals to use such legends at any time during the term of this License
Agreement, and all rights to use such legends shall terminate with this License
Agreement.
2.8 Nothing contained in this License Agreement shall
constitute, or be construed to be, a limitation or restriction upon any right
otherwise possessed by Licensee or Licensor, or AlliedSignal, or Avionics to
make, use or sell any product, or part therefor, in any country, provided,
however, that the payments required by this License Agreement to be made by
Licensee to Licensor with respect to sales and other dispositions of Licensed
Product and parts therefor shall not be deemed to constitute such a limitation
or restriction.
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3. Delivery of Technical Data
3.1 Within thirty (30) days of the Avionic's Closing
Date, Licensor shall cause Avionics to deliver to Licensee one copy each of the
documents and software, in machine readable form and source code and supporting
documentation to the extent available, listed on Schedule B.
3.2 On or before the AES Asset Transfer Date, Licensor
shall cause AES to deliver to Licensee one copy each of the documents and
software, in machine readable form and source code and supporting documentation
to the extent available, listed on Schedule A.
3.3 Licensor agrees to provide such additional
information as may be reasonably necessary or desirable for Licensee to
continue the business of manufacturing electronic assemblies as previously
conducted by AES and Avionics, provided such additional information is in
existence and in a tangible medium as of the Effective Date.
4. Warranty
4.1 Licensor warrants that the Technical Information and
Technical Data provided to Licensee hereunder is the same as that which is used
by AES and Avionics respectfully as of the Effective Date in their manufacture
of electronic assemblies, and that to the best of Licensor's knowledge
Licensee's use of Technical Data and Technical Information in a manner
previously utilized by AES and Avionics prior to the Effective Date hereof will
not violate any third party rights in existence as of the Effective Date, but
Licensor does not make any other warranty, either expressed or implied,
including warranties of merchantability and fitness for a particular purpose
and shall have no liability with respect to the Technical Information or
Technical Data, or the use thereof; nor does Licensor assume any responsibility
or make any warranty with respect to electronic assemblies or Licensed Product,
or parts therefor, manufactured, sold or used under this License Agreement.
4.2 With respect to electronic assemblies manufactured,
sold, or used under this License Agreement that are not Licensed Product,
Licensee shall hold Licensor harmless from any patent infringement liability
and product liability arising from such electronic assemblies and shall
maintain appropriate product liability insurance to cover such electronic
assemblies.
4.3 With respect to Licensed Product, all indemnity shall
be governed by the purchase order under which the Licensed Product was ordered
from Licensee.
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4.4 If a part of the data delivered hereunder does not
meet the warranty specified above, Licensor will, upon discovery of such
discrepancy or upon notification thereof by Licensee correct the discrepancy in
that part of the data by supplying amended or additional data.
4.5 All Technical Information and Technical Data is
supplied in confidence solely for the use of Licensee under this License
Agreement and Licensee agrees to handle the Technical Information and Technical
Data in the same manner that it handles its own proprietary information, but
shall use at least reasonable care in keeping the Technical Information and
Technical Data confidential. Licensee agrees: (a) not to use or permit use of
any Technical Data or Technical Information except in accordance with the
licenses herein granted; and (b) not to disclose any Technical Data or
Technical Information to others (including affiliates of Licensee) except to
the extent such disclosure is reasonably necessary in connection with
Licensee's operations under this License Agreement and only then if such
disclosure is subject to the same limitations on the recipient as on Licensee
hereunder; and except as required by law or legal process. The obligations
under this Section 4.5 shall not apply to (i) information already known to
Licensee prior to receipt from Licensor; (ii) information in the public domain
including information that can be reversed engineered from a Licensed Product;
(iii) information received from a third-party without similar restrictions; or
(iv) information developed independently by or for Licensee.
5. Compensation
5.1. Licensee shall pay to Licensor a nonrefundable,
noncreditable down payment of one million two hundred fifty thousand dollars
($1,250,000.00) to be paid on the Closing Date.
5.2 For the period starting with the Effective Date and
ending on December 31, 2001, Licensee shall pay to Licensor a running royalty
of one percent (1.0%) of AlliedSignal Gross Revenue for Licensed Product
delivered to AlliedSignal and Avionics. Such running royalty shall be paid as
follows: Licensee shall pay an installment payment of thirty two thousand
dollars ($32,000.00) for each calendar month in which Licensed Product is
delivered to AlliedSignal to be paid on or before the twentieth (20th) day of
the month following the calendar month covered thereby, except that the royalty
payment due on January 20th hereunder shall be calculated by multiplying the
AlliedSignal Gross Revenue for the preceding calendar year by one percent
(1.0%) and then subtracting all installment payments made to Licensor for the
calendar months of February through December of the preceding calendar year.
If this calculation results in an amount which is less than zero, then Licensee
may credit this amount against future installment payments. During January of
each calendar year, the parties shall mutually agree to a projected
AlliedSignal Gross Revenue for that calendar year and the monthly installment
payment due in February through December of that calendar year shall be one
twelfth (1/12) of the product of the agreed to projected AlliedSignal Gross
Revenue multiplied by one percent (1.0%).
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5.3 For a period starting with the Effective Date and
ending on December 31, 2001, for all electronic assemblies and parts therefor
made for a customer other than AlliedSignal at the Licensee Subleased Facility
or the Licensee Tucson Facility, or at any successor Licensee facility within
fifty (50) miles of either of these Facilities, Licensee shall pay to Licensor
a running royalty of one percent (1.0%) of Gross Revenue for all such
electronic assemblies to be paid on or before the twentieth (20th) day of the
month following the calendar quarter covered thereby.
5.4 Along with January 20th payment under Section 5.2 and
the quarterly running royalty payments under Sections 5.3, Licensee shall
provide to Licensor a report showing for the period covered by the payment: (a)
a list of all separately identifiable types (i.e., by model numbers or
equivalent) of Licensed Product and electronic assemblies delivered, leased or
otherwise utilized, (b) the quantity of such Licensed Product and electronic
assemblies of each type sold, leased, or otherwise disposed of, (c) the Gross
Revenue and AlliedSignal Gross Revenue for Licensed Product and electronic
assemblies of each type, (d) the quantities of, and Gross Revenue and
AlliedSignal Gross Revenue for, parts sold, leased or otherwise utilized,
identified by the Licensed Product types and electronic assembly type, and (e)
the derivation of the amount payable to Licensor from the foregoing
information. Licensor agrees to keep such reports confidential even as to
other AlliedSignal businesses, unless otherwise requested by Licensee.
5.5 In addition to the obligation to pay royalties under
Sections 5.2, and 5.3, Licensee shall pay such royalties for all Licensed
Product and electronic assemblies shipped by December 31, 2001 for which
payment has not been received by Licensor. This payment shall be made on
January 20, 2002. The parties agree that the licenses granted by Licensor to
Licensee hereunder will be fully-paid upon receipt and acceptance by Licensor
of all royalty payments due by January 20, 2002 under this License Agreement,
and a final corresponding report.
5.6. Licensee shall pay interest to Licensor at a rate of
two percent (2%) over the prime per annum interest rate quoted by Chase
Manhattan Bank on any and all amounts that are at any time overdue and payable
to Licensor under this License Agreement, such interest being calculated on
each such overdue amount from the date when such amount became due to the date
of actual payment thereof. The payment of such interest shall not replace any
of Licensor's other rights under this License Agreement resulting from
Licensee's default by failure to pay any amounts due hereunder.
5.7 All amounts payable to Licensor under this License
Agreement are to be paid in U.S.A. currency.
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5.8 Licensee shall keep such records that will enable,
under generally accepted accounting principles, the royalties due hereunder to
be accurately determined. Licensor shall have the right to select an
independent representative or accountant to inspect Licensee's records once a
year on reasonable notice and during regular business hours to verify
Licensee's reports and payments. Such inspections shall be at the expense of
Licensor unless a variation or error exceeding Ten Thousand U.S. Dollars (U.S.
$10,000.00) of royalty due, is discovered in the course of the inspection,
whereupon, Licensee shall reimburse Licensor for the expense.
5.9 All payments to be made to Licensor shall be made by
wire transfer to:
Mellon Bank
Pittsburgh, PA
ABA 000000000
AlliedSignal Technologies Inc.
Account Number 009-7594
Advice-AE-O-144
5.10 In the event that Licensee is terminated for default
under the Long Term Agreement, or any purchase order thereunder, between
AlliedSignal and Licensee relating to Licensed Product and upon written request
by Licensor, Licensee shall provide to Licensor any and all improvements and
modifications Licensee has made to Technical Information and Technical Data
relating to Licensee's manufacture of Licensed Product for AES and Avionics and
Licensor shall have a royalty free, irrevocable license, with right to
sublicense to AlliedSignal and to AlliedSignal Avionics Inc., to use all of
these improvements and modifications strictly to make or have made Licensed
Product for AlliedSignal. In the event Licensor exercises rights pursuant to
this Section 5.10, any remaining obligations of Licensee under Section 5 shall
automatically terminate. Licensor agrees that its obligations with respect to
all information provided under this Section 5.10 shall be commensurate with
Licensee's obligations under Section 4.5 hereof.
6. Term and Termination
6.1 This License Agreement is effective as of the
Effective Date and shall expire on December 31, 2003.
6.2 Neither party can terminate this License Agreement.
Each party's sole and exclusive remedy for any alleged breach of this License
Agreement shall be an action for monetary damages and/or specific performance,
except that a party may seek injunctive relief for breach of Section 4.3 of
this License Agreement. Failure on the part of either party to notify the
other party of any violation of this License Agreement shall not constitute a
waiver of that party's right to pursue the stipulated remedies hereof because
of such violation or any like or different subsequent violation.
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6.3 Expiration of this License Agreement shall not excuse
Licensee from paying Licensor all royalties earned pursuant to Article 5 of
this License Agreement prior to expiration, and all royalties thus earned, but
unpaid, shall immediately become due and payable.
6.4 Licensor agrees that the licenses granted to Licensee
hereunder shall not, under any circumstances, be subject to revocation or
termination for any reason by Licensor.
7. Notices
7.1 Any notice or report under this License Agreement
shall be deemed given when sent registered mail, telex, facsimile, or telegram
to the parties hereto at the following addresses:
To Licensor: To Licensee:
Xxxxxxx X. Xxxx, Xx. August Bruehlman
Vice President Chief Administrative Officer
AlliedSignal Technologies Inc. EFTC Corporation
0000 Xxxxx Xxxxx Xxxxx 0000 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Either party may, at any time, substitute for its previous record address any
other address by giving written notice of the substitution.
8. Assignment
8.1 This License Agreement may not be assigned by
Licensee and the Technical Data and Technical Information may not be
sublicensed, in either case without the prior written consent of Licensor which
shall not be unreasonably withheld; provided however, that Licensee may assign
this License Agreement without prior consent to a wholly owned subsidiary of
Licensee, to a purchaser of all or substantially all assets to which this
License Agreement relates or to a corporation surviving Licensee in the event
of a merger.
9. Entire Agreement
9.1 This License Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors to substantially
the entire assets and business of the parties hereto, to which this License
Agreement relates. This License Agreement is not for the benefit of any third
person, firm, government, or corporation, and nothing herein contained shall be
construed to create any rights to any third parties hereunder as a result of,
or in connection with this License Agreement. This License Agreement contains
the entire and only agreement between the parties, and supersedes all
pre-existing agreements between such parties pertaining to the subject
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matter hereof; and any representation, promise, or condition in connection
therewith not incorporated herein shall not be binding upon the party. No
modification, renewal, extension or waiver of this License Agreement or any of
the provisions herein contained shall be binding upon the party against whom
enforcement of such modification, renewal, extension or waiver is sought,
unless it is made in writing and signed on behalf of Licensor and Licensee by
their respective representatives who have been delegated such authority.
10. Governing Law
10.1 This License Agreement shall be construed and
interpreted in accordance with the laws of the State of Arizona, United States
of America without regard to its provisions as to choice of law.
11. Severability of Provisions
11.1 If any of the provisions of this License Agreement
shall be declared to be invalid or unenforceable by judicial or administrative
decisions, any such provision shall be modified by negotiation to the extent
necessary to avoid such violation and in a manner that does not affect the
validity or enforceability of any other provisions of this License Agreement,
which shall be valid and enforceable to the fullest extent of the law.
12. Waiver
12.1 Failure of either party to insist upon the strict
performance of any provisions hereof or to exercise any right or remedy shall
not be deemed a waiver of any right or remedy with respect to any existing or
subsequent breach or default; the election by either party of any particular
right or remedy shall not be deemed to exclude any other; and all rights and
remedies of either party shall be cumulative.
13. Headings
13.1 The headings to the Sections of this License
Agreement are inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any provision.
14. Survivability
14.1 Sections 4.1, 4.3, 6.4 and Articles 2., 5., 7., 8.,
10., 11., 12., and this Article 14. will survive the expiration of this License
Agreement
IN WITNESS HEREOF Licensor and Licensee have executed this License
Agreement as of this 4th day of August, 1997 ("Effective Date").
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ALLIEDSIGNAL TECHNOLOGIES INC. EFTC Corporation
By: /s/ Xxxxxxx X. Xxxx, Xx. By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxx, Xx. Name: Xxxxxx Xxxxxxxxxx
Title: Vice President Title: Chief Financial Officer
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Schedule A
Technical Data - AES
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Schedule B
Technical Data - Avionics
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