LICENSE AGREEMENT
BETWEEN
XXXXXXXX-XXXXX CORPORATION
AND
PARAGON TRADE BRANDS, INC.
LICENSE AGREEMENT
This License Agreement is made and entered into as of this 15th day of
March, 1999, between Xxxxxxxx-Xxxxx Corporation, a Delaware corporation having
offices at 000 Xxxxxx Xxxxx, Xxxxxx, Xxxxx 00000 ("LICENSOR") and Paragon Trade
Brands, Inc., a Delaware Corporation having a principal place of business at 000
Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxx 00000 (including any entity which it
controls or as to which it is under
common control, "LICENSEE").
WITNESSETH
WHEREAS, LICENSEE has requested a license from LICENSOR under certain
patents in order to manufacture disposable absorbent products with containment
flaps; and
WHEREAS, the parties desire to enter into this License Agreement under the
terms and conditions hereinafter recited.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS
As used throughout this Agreement, each term shall have the meaning set
forth in this Article I:
1.01 "ABSORBENT PANT(S)" shall mean absorbent articles which are intended
to be pulled on to fit about the waist of the wearer, whether infant or child,
and includes training pants.
1.02 "CALENDAR YEAR" shall mean the twelve (12) month period commencing on
the Effective Date and ending on the last day of the twelfth month thereafter,
and each subsequent twelve (12) month period thereafter.
1.03. "CONVERSION DATE" shall mean the earlier of (a) August 1, 1999, if
the Effective Date has not yet occurred; or (b) 90 days after the Court Order
has been stayed or modified in any manner not approved by LICENSOR in writing,
unless the Court Order has been reinstated or
modified in a manner approved by LICENSOR in writing prior to the expiration of
such 90 day period. In further clarification of the foregoing, no Conversion
Date shall occur if the Court Order has been entered prior to August 1, 1999 and
remains in full force and effect.
1.04 "COURT ORDER" shall mean an order of the Bankruptcy Court in
Bankruptcy Case No. 98-60390 (U.S. Bankruptcy Court, Northern District of
Georgia, Atlanta Division) approving the Settlement Agreement between the
LICENSEE and the LICENSOR.
1.05 "DALLAS LITIGATION" shall mean the action captioned XXXXXXXX-XXXXX
CORPORATION V. PARAGON TRADE BRANDS, INC., pending before the U.S. District
Court, Northern District of Texas, Dallas Division (Civil Action
3:95-CV-2574-T).
1.06 "EFFECTIVE DATE" shall mean the first day of the month following the
entry of the Court Order.
1.07 "XXXXX PATENTS" shall mean U.S. Patent 4,704,116, U.S. Patent
4,846,823, U.S. Patent 5,413,570, U.S. Patent 5,415,644 and U.S. Patent
5,599,338 and/or any U.S. continuations, continuations-in-part, divisions,
extensions, reissues and reexaminations thereof; and any U.S. patent issued
pursuant to U.S. Patent Application Serial No. 437,358 dated 05/09/1995, and/or
any U.S. continuations, divisions, continuations in-part, extensions, reissues,
and reexaminations of the Serial No. 437,358 application; and any counterpart
patent applications and patents issued in Canada.
1.08 "INFANT DISPOSABLE DIAPER(S)" shall mean absorbent articles which are
intended to be manually fastened about an infant or a child and are not intended
to be pulled on to fit about the waist of the wearer.
1.09 "NET SALES" shall mean the gross amount of sales invoiced to
independent third parties by LICENSEE, less Reductions in Sales, for Infant
Disposable Diapers or Absorbent Pants which (a) are made, used, or sold by
LICENSEE and (b), but for this license, would infringe a Valid Claim in the
place where such products are made, used or sold by LICENSEE. For the purpose of
this Agreement, products which have been accused of infringement in the Dallas
Litigation shall be deemed to infringe a Valid Claim. Net Sales for the purpose
of calculating royalties hereunder shall reflect a selling price which results
from a bona fide, arm's length
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transaction between LICENSEE and an independent, unrelated third party customer.
If the selling price is reduced in light of other consideration from the buyer,
or is a sale to a related third party, such selling price shall not be deemed a
selling price derived from a bona fide, arm's length transaction, and a selling
price for the same product resulting from a bona fide, arm's length transaction
between LICENSEE and an independent, unrelated third party customer shall be
substituted for purposes of calculating "Net Sales" under this Agreement, or, at
LICENSOR's option, in the event the sale by LICENSEE is not to an independent
third party, Net Sales shall be measured on the basis of the highest price in
any of the succession of sales or other transfers of the applicable products
until such products come into an independent third party's hands. "Net Sales"
shall not include bulk sales of defective product not sold or resold for use as
Infant Disposable Diapers or Absorbent Pants.
1.10 "REDUCTIONS IN SALES" shall mean,
(a) transportation charges or allowances actually paid or granted;
(b) credits or allowances actually given or made on account of
rejects, returns, or retroactive price reductions;
(c) any tax or other governmental charge directly on sale,
transportation, use or delivery of products included in the invoice, paid by
LICENSEE and not recovered from the purchaser; and
(d) rebates, discounts and broker commissions.
"Reductions in Sales" do not include (a) slotting fees or other payments made to
a retailer to induce it to stock a manufacturer's product(s), or (b) any
reimbursement, credit or payment for retailer advertising or retailer promotion
expenses; and no deduction of such fees, payments, reimbursements or credits
shall be made in calculating Net Sales.
1.11 "Safe Harbor Absorbent Pants" shall mean Absorbent Pants that:
(a) employ no superabsorbent material having an Absorbency Under
Load value of 27 grams per gram or greater as described in and determined by the
teachings of U.S. Patent B1 5,147, 343 issued March 17, 1998 to Xxxxxxxxxxxx
("Xxxxxxxxxxxx Patent"); and
(b) employ no superabsorbent material having a Pressure Absorbency
Index of 100 or greater as described in and determined by the teachings of U.S.
Patent 5, 601,542, issued February 11, 1997 to Xxxxxx ("Xxxxxx Patent"); and
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(c) employ a liquid impermeable, vapor permeable film which has a
basis weight of not less than 22 grams per square meter in any backsheet that
employs a substantially liquid impermeable, vapor permeable film as a component
of the backsheet; and
(d) employ a containment means ("ULG") as illustrated in the drawing
attached hereto as Exhibit A and as described (substituting "training pant" for
"diaper"), both as to physical structure and as to performance, in the letter
attached hereto as Exhibit B; and
(e) which are otherwise of the same construction, configuration and
formed from the same materials as the training pant attached hereto as Exhibit
C.
1.12 "Safe Harbor Infant Disposable Diapers" shall mean Infant Disposable
Diapers that:
(a) employ no superabsorbent material having an Absorbency Under
Load value of 27 grams per gram or greater as described in and determined by the
teachings of U.S. Patent B1 5,147, 343 issued March 17, 1998 to Xxxxxxxxxxxx;
and
(b) employ no superabsorbent material having a Pressure Absorbency
Index of 100 or greater as described in and determined by the teachings of U.S.
Patent 5, 601,542, issued February 11, 1997 to Xxxxxx; and
(c) employ a liquid impermeable, vapor permeable film which has a
basis weight of not less than 22 grams per square meter in any backsheet that
employs a substantially liquid impermeable, vapor permeable film as a component
of the backsheet; and
(d) employ a containment means ("ULG") as illustrated in the drawing
attached hereto as Exhibit A and as described, both as to physical structure and
as to performance, in the letter attached hereto as Exhibit B; and
(e) which are otherwise of the same construction, configuration and
formed from the same materials as the Infant Disposable Diaper attached hereto
as Exhibit D.
1.13 "SETTLEMENT AGREEMENT" shall mean the settlement agreement between
LICENSEE and LICENSOR settling LICENSOR'S claims as defined therein.
1.14 "TERRITORY" shall mean the United States of America, its territories
and possessions and Canada, its territories and possessions.
1.15 "VALID CLAIM" shall mean a claim of an unexpired Xxxxx Patent which
has not been found invalid or unenforceable by a U.S. or Canadian governmental
tribunal or a U.S. or
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Canadian court of competent jurisdiction in a decision from which no appeal has
or may be taken.
ARTICLE II
LICENSE
2.01 LICENSE GRANT: LICENSOR grants to LICENSEE, subject to the terms and
conditions of this Agreement, a non-exclusive right and license under the Xxxxx
Patents to make, have made, use and sell Infant Disposable Diapers and Absorbent
Pants in the Territory. LICENSEE has no right to grant sublicenses under the
Xxxxx Patents. The term for the license grant under this Section 2.01 shall
commence on January 1, 1999 and, unless terminated in accordance with any other
provision hereof, shall remain in full force and effect until the expiration of
the last to expire of the Xxxxx Patents. No implied license is granted to
LICENSEE other than under the Xxxxx Patents.
2.02 COVENANT NOT TO XXX:
(a) So long as LICENSEE is in compliance with the material terms of
this Agreement, LICENSOR covenants not to xxx LICENSEE for infringement, if any,
of the Xxxxx Patents arising from the manufacture, use or sale of Infant
Disposable Diapers or Absorbent Pants by LICENSEE occurring on or after January
1, 1999.
(b) So long as LICENSEE is in compliance with the material terms of
this Agreement, LICENSOR covenants not to xxx LICENSEE for infringement, if any,
of the Xxxxxxxxxxxx Patent (as defined in Section 1.11(a)), the Xxxxxx Patent
(as defined in Section 1.11(b)) or U.S. Patent 5,843,056 issued December 1, 1998
to Good ("Good Patent") or any counterpart patent issued in Canada to the
Xxxxxxxxxxxx Patent, Xxxxxx Patent or Good Patent, arising from the manufacture,
use or sale by LICENSEE on or after January 1, 1999, of Infant Disposable
Diapers which conform with Section 1.12(a), (b) and (c) or of Absorbent Pants
which conform with Section 1.11(a), (b) and (c).
2.03 CONVERSION DATE: The license and covenant not to xxx set forth in
Sections 2.01 and 2.02, respectively, shall, except with respect to products
manufactured prior to the Conversion Date and sold pursuant to Article III and
Section 4.05, terminate and be of no further force and effect on and after the
Conversion Date.
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ARTICLE III
CONVERSION DATE
On or before the Conversion Date, LICENSEE shall cease manufacture of any
Infant Disposable Diapers and any Absorbent Pants which infringe a Valid Claim.
LICENSOR may continue to sell Infant Disposable Diapers and Absorbent Pants
manufactured prior to the Conversion Date subject to payment of the royalties
set forth in Section 4.05.
ARTICLE IV
ROYALTIES
4.01 ROYALTIES: Royalties shall be payable at different rates for
different products.
(a) INFANT DISPOSABLE DIAPERS
From the Effective Date through the term of this Agreement, LICENSEE
shall pay LICENSOR a royalty of two and one-half percent (2.5%) for the first
two hundred million dollars of Net Sales of Infant Disposable Diapers in each
Calendar Year and shall pay LICENSOR a royalty of one and one-half percent
(1.5%) of Net Sales of Infant Disposable Diapers in excess of two hundred
million dollars in each Calendar Year if such royalties are paid voluntarily by
LICENSEE provided, however, that for the term of this Agreement, royalties shall
be payable at the higher rate of two and one-half percent (2.5%) as to any
product design as to which LICENSOR is required to enforce its rights hereunder
through litigation or arbitration; and provided further, however, that no
percentage royalty under the Xxxxx Patents shall be due on Safe Harbor Infant
Disposable Diapers.
(b) ABSORBENT PANTS:
From the Effective Date through the term of this Agreement, LICENSEE
shall pay LICENSOR a royalty of 5.0 percent (5.0%) of Net Sales of Absorbent
Pants; provided, however, that no percentage royalty under the Xxxxx Patents
shall be due on Safe Harbor Absorbent Pants.
4.02 MINIMUM ANNUAL ROYALTY: In each Calendar Year during which this
Agreement is in effect, LICENSEE shall pay to LICENSOR a minimum annual royalty
for Infant Disposable Diapers of five million dollars ($5,000,000.00). Royalties
on Infant Disposable Diapers paid pursuant to Section 4.01(a) shall count
towards the minimum annual royalty.
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4.03 ONE ROYALTY: Royalties shall be payable only once on each unit of
product and shall accrue upon sale by LICENSEE.
4.04 ROYALTY BEFORE EFFECTIVE DATE. Commencing as of January 1, 1999 and
until the Effective Date, LICENSEE shall pay LICENSOR a royalty of two and
one-half percent (2.5%) of Net Sales of Infant Disposable Diapers and a royalty
of 5.0 percent (5.0%) of Net Sales of Absorbent Pants; provided, however, that
no percentage royalty under the Xxxxx Patents shall be due on Safe Harbor Infant
Disposable Diapers or Safe Harbor Absorbent Pants; and provided further that
anything to the foregoing notwithstanding, the minimum payment to LICENSOR under
this Section 4.04 with respect to the month of January, 1999 shall be $250,000,
and with respect to any month thereafter shall not be less than $500,000.
4.05 ROYALTY AFTER CONVERSION DATE. Sales of product manufactured before
the Conversion Date but sold after the Conversion Date will be subject to a
royalty at the same rates as set forth in Section 4.04, which shall be
calculated by applying such royalty rates to LICENSEE's inventory on hand as of
the Conversion Date, except that the royalty payable under this Section 4.05
with respect to such inventory shall not be less than $500,000.
ARTICLE V
PAYMENT AND ACCOUNTING
5.01 MINIMUM PAYMENTS: Except as otherwise provided in Section 5.02, the
minimum annual royalty for Infant Disposable Diapers set forth in Section 4.02
shall be paid by LICENSEE to LICENSOR in quarterly installments of one million
two hundred-fifty thousand dollars ($1,250,000.00) on the last day of each
quarter of the Calendar Year until such time as the minimum annual royalty for
Infant Disposable Diapers for that Calendar Year has been paid to LICENSOR. The
minimum payment of $500,000 per month under Sections 4.04 and 4.05 shall be paid
on the 15th of each month, and any additional percentage royalties shall be paid
on or before the 30th of the following month. The royalty payment under Section
4.05 shall be paid 15 days after the Conversion Date.
5.02 ONGOING ROYALTIES AND ACCOUNTINGS: Within sixty (60) days after the
close of each quarter of the Calendar Year during the term of this Agreement,
and within thirty (30) days after each month during the time prior to the
Effective Date, LICENSEE shall render an accounting to
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LICENSOR with respect to all royalty payments due under the provisions of
Article IV. Such accounting shall be accompanied by payment from LICENSEE of the
amounts by which the cumulative royalties due to the end of the period which is
the subject of the accounting for Infant Disposable Diapers and Absorbent Pants,
respectively, exceed the amount of royalties as to such products theretofore
paid for such period. Such accounting shall indicate, for such period, the
monetary amount of Net Sales with respect to which royalty payments are due.
LICENSEE shall keep accurate records in sufficient detail to enable royalties to
be determined and shall maintain such records at its principal place of business
in the United States. Each such accounting shall be treated as confidential and
proprietary information of Paragon to the extent the information therein is not
substantially available elsewhere, and shall only be used for the purposes set
forth herein, PROVIDED, HOWEVER, that the dollar amount of the royalties paid or
payable to LICENSOR hereunder shall not be deemed confidential. LICENSOR's
in-house patent counsel shall maintain the confidentiality of each such
accounting and the information contained therein, and shall only share such
accounting and the information contained therein with such persons at LICENSOR
or its outside counsel or auditors who need to know such information for
purposes of verifying such accounting.
5.03 ROYALTIES UPON TERMINATION: Within sixty (60) days of the Conversion
Date or of termination of this Agreement according to the provisions of Article
VII or Article VIII, LICENSEE shall render an accounting to LICENSOR with
respect to all royalty payments which it is obligated to pay under the
provisions of Article IV and shall pay such royalties to LICENSEE. Such
accounting shall be subject to the confidentiality treatment set forth in
Section 5.02.
5.04 AUDIT: At LICENSOR's request and expense, LICENSEE shall permit an
independent certified public accountant selected by LICENSOR, except one to whom
there shall be some reasonable objection by LICENSEE, to have access, once in
each Calendar Year during regular business hours and upon reasonable notice to
LICENSEE, to such of the records of LICENSEE as may be necessary to verify the
accuracy of the reports and payments made under this Agreement, but said
accountant shall not disclose to LICENSOR any information except that which
relates to the information which should properly have been contained in such
reports as provided for in Sections 5.02 and 5.03. The right to review
LICENSEE's records as to any given time period shall terminate two (2) years
after LICENSOR's receipt of royalties in respect to such time periods.
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5.05 INCOME TAX: Any income or other tax that LICENSEE is required to
withhold and pay on behalf of LICENSOR with respect to the royalties payable to
LICENSOR under the Agreement shall be deducted from said royalties prior to
remittance to LICENSOR; provided, however, that in regard to any tax so
deducted, LICENSEE shall give or cause to be given to LICENSOR such assistance
as may reasonably be necessary to enable LICENSOR to claim exemption therefrom
or credit therefor, and in each case shall furnish LICENSOR proper evidence of
the taxes paid on its behalf. Notwithstanding the foregoing, LICENSEE shall not
withhold any income or other tax, if LICENSOR provides its tax number to
LICENSEE, unless a change in law requires withholding notwithstanding the
furnishing of such number.
ARTICLE VI
ARBITRATION
Any dispute between LICENSOR and LICENSEE as to whether or not a given
Infant Disposable Diaper or Absorbent Pant is subject to payment of a percentage
royalty under the terms of this Agreement or the amount of any royalty hereunder
shall be subject to mandatory binding arbitration by a panel of three
arbitrators, one of which will be selected by each of LICENSOR and LICENSEE and
the third of which shall be selected by the other two arbitrators. Any party
which fails to select an arbitrator within 45 days of a written demand for
arbitration hereunder shall be deemed to have waived its right to designate an
arbitrator, and such arbitrator may be selected by such office of JAMS/Endispute
or the American Arbitration Association as the other party shall designate. Any
such arbitration shall be limited in scope to the question of whether or not a
given Infant Disposable Diaper or Absorbent Pant is subject to payment of a
percentage royalty under the terms of this Agreement (including the proper
construction of the Valid Claim(s) of the Xxxxx Patent asserted to be infringed)
or the required amount of such payment and shall not address any aspect or issue
concerning the validity of any of the Xxxxx Patents, which validity shall be
presumed. The party losing any such arbitration shall bear the costs of the
three arbitrators, and, in the event the arbitrators conclude that the losing
party was acting in bad faith, the winner's reasonable attorneys' fees, as
determined by the arbitrators. The arbitration shall be conducted pursuant to
such rules and proceedings as the parties shall agree at that time; in the event
of any disagreement between the parties about the terms, conditions or timing of
the arbitration, the arbitrators shall have the authority to resolve the
dispute. The arbitration and any decision rendered shall be confidential to the
parties and shall not be
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disclosed to third parties except to the extent required by law, by rules
governing litigation, or by court order.
ARTICLE VII
EFFECTIVE DATE AND TERM
Except as otherwise provided herein, this Agreement will become effective
on the day first written above, and, unless previously terminated in accordance
with any of the provisions hereof, shall remain in effect until the last of the
Xxxxx Patents to expire, except that the provisions of Section 2.02(b) shall
remain in effect until the last of the Xxxxxxxxxxxx Patent, Xxxxxx Patent and
Good Patent and any counterpart patents issued in Canada has expired.
ARTICLE VIII
TERMINATION
8.01 BREACH: Failure by LICENSEE or LICENSOR to comply with any of its
obligations and covenants contained in this Agreement shall entitle the other
party to give to the party in default a written notice requiring it to cure such
default(s). If a default is not cured within thirty (30) days after receipt of
notice, the notifying party shall be entitled, without prejudice to any other
rights conferred by this Agreement or by law, to terminate this Agreement by
giving written notice to take effect immediately. The right of each party to
terminate this Agreement shall not be affected by waiver of, or failure to
terminate for any previous default.
8.02 INSOLVENCY: LICENSOR may, at its election, terminate this Agreement
upon the bankruptcy or insolvency of LICENSEE. In such event, termination shall
be deemed effective as of the date of LICENSEE's insolvency but in no event
later than a time prior to LICENSEE's filing of a petition in bankruptcy. This
Section 8.02 shall not apply to LICENSEE'S Chapter 00 Xxxxxxxxxx Xxxx Xx.
00-00000 (Xxxxxx Xxxxxx Bankruptcy Court, Northern District of Georgia, Atlanta
Division).
8.03 SURVIVAL: Termination of this Agreement under Section 8.01 or Section
8.02 shall not terminate the parties' obligations to one another for the period
prior to termination. Without limiting the generality of the foregoing, the
provisions of Article VI shall survive termination of this Agreement under
Section 8.01 or Section 8.02, but the arbitration described in such Article
shall
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be limited to Infant Disposable Diapers and Absorbent Pants manufactured, used
or sold by LICENSEE prior to the date of termination.
ARTICLE IX
ASSIGNMENT
9.01 GENERAL: Subject to the provisions of this Article IX, this Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
all or substantially all of LICENSEE'S Infant Disposable Diaper business and the
successors and assigns of all or substantially all of LICENSEE'S Absorbent Pants
business; provided, however, that a successor or assign of only one of such
Infant Disposable Diaper business or Absorbent Pants business shall have the
benefit and burdens of this Agreement only with respect to such line of
business. This Agreement shall not create a license for or otherwise apply to
the activities of successors or assigns prior to the date of any such succession
or assignment.
9.02 EXISTING DIAPER ENTITIES: Notwithstanding Section 9.01 hereof, in the
event of assignment hereunder to or any combination of LICENSEE and an existing
business which sells Infant Disposable Diapers, then (a) the phrase "two hundred
million dollars" in Section 4.01(a) shall be increased by an amount equal to the
sales by such existing business of Infant Disposable Diapers for the twelve
months preceding the date of such assignment or combination ("Existing Business
Diaper Sales"); (b) the figure $5,000,000 in Section 4.02 shall be increased by
an amount equal to two and one half percent (2.5%) of Existing Business Diaper
Sales; (c) the figure $1,250,000 in Section 5.01 shall be increased by an amount
equal to five-eighths of one percent (0.625%) of Existing Business Diaper Sales;
and (d) the royalty rate under Section 4.01(a) shall be two and one-half percent
(2.5%) with respect to such amount of all annual sales by LICENSEE, in excess of
the sum ("Combined Twelve Month Diaper Sales") of Existing Business Diaper Sales
and the sales of Infant Disposable Diapers by LICENSEE in the twelve months
preceding the date of such assignment or combination ("Prior LICENSEE Diaper
Sales"), as shall equal the ratio (i) Existing Business Diaper Sales to (ii)
Combined Twelve Month Diaper Sales (the amount of incremental sales so
determined under this subsection 9.02(d), "Existing Business Attributable Diaper
Increase").
9.03 SUCCESSIVE COMBINATIONS: In the event of more than one assignment or
combination of LICENSEE and an existing business which sells Infant Disposable
Diapers, then the
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provisions of Section 9.02 shall continue be applied to each such successive
assignment and thereafter, except that (a) "Existing Business Diaper Sales"
shall equal the sum of (i) all Existing Business Diaper Sales as previously
determined under Section 9.02 (without regard to this Section 9.03), (ii) the
Existing Business Attributable Diaper Increase for the twelve months preceding
such successive assignment or combination (the sum of (i) and (ii), "Old
Existing Business Diaper Sales"); and (iii) the sales of Infant Disposable
Diapers by the existing business which is the subject of such successive
assignment or combination for the twelve months preceding such successive
assignment or combination; and (b) "Prior LICENSEE Diaper Sales" shall equal the
sales by LICENSEE for the twelve months preceding such successive assignment or
combination, less Old Existing Business Diaper Sales.
9.04 CONSENT TO ASSIGNMENT: The license grant hereunder shall be personal
to Paragon and shall be nontransferable and nonassignable to third parties
without the prior written consent of K-C, which consent K-C shall not
unreasonably withhold or unreasonably delay. It shall not be unreasonable for
K-C to withhold or delay its consent if the effect of the proposed transfer or
assignment would be to allow a transferee or assignee to obtain the prospective
right to make, import, use, offer for sale or sell Infant Disposable Diapers or
Absorbent Pants in the Territory without entering into a mutually agreeable
settlement agreement with K-C for any past infringing activity by the transferee
or assignee with respect to the K-C patents identified in this License
Agreement. In addition, the license grant hereunder shall not apply to the
manufacture, import, use or sale of Infant Disposable Diapers or Absorbent Pants
by any other business entity acquired by Paragon, by which Paragon is acquired,
merged with Paragon, consolidated with Paragon, partnered with Paragon or in any
other business arrangement with Paragon after the effective date of this
Settlement Agreement without the prior written consent of K-C, which consent K-C
shall not unreasonably withhold or unreasonably delay. It shall not be
unreasonable for K-C to withhold or delay its consent if the effect of the
proposed transaction would be to allow an acquiring, merging or consolidating
entity or partner to obtain the prospective right to make, import, use, offer
for sale or sell Infant Disposable Diapers or Absorbent Pants in the Territory
without entering into a mutually agreeable settlement agreement with K-C for any
past infringing activity by the acquiring, merging or consolidating entity or
partner with respect to the K-C patents identified in this License Agreement.
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ARTICLE X
GOVERNING LAW
This Agreement shall be construed and all questions relating hereto shall
be determined in accordance with the laws of the State of Delaware.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES; LIMITATIONS
11.01 REPRESENTATIONS AND WARRANTIES OF LICENSOR: LICENSOR hereby
represents and warrants the following:
(a) LICENSOR has the full right, power and authority to enter
into this Agreement and perform in accordance with its terms.
(b) LICENSOR has good and complete title in and to (or beneficial
interest to) the Xxxxx Patents and has the right to license them to LICENSEE in
accordance with the terms of this Agreement.
(c) LICENSOR has good and complete title in and to (or beneficial
interest to) the Xxxxxxxxxxxx Patent, Xxxxxx Patent and Good Patent (including
any Canadian counterpart patents) and has the right to grant a covenant not to
xxx LICENSEE in accordance with the terms of Section 2.02(b) of this Agreement.
11.02 REPRESENTATION AND WARRANTIES OF LICENSEE:
(a) LICENSEE has the full right, power and authority to enter into
this Agreement and perform in accordance with its terms.
(b) LICENSEE has no knowledge of any existing or contingent
impediment, including the effect of its pending bankruptcy proceeding or any
lack of liquidity, to its performing in accordance with the terms of this
Agreement.
11.03 LIMITATIONS:
(a) Except as set forth above, neither party has made, or intends
to make, any express or implied warranty to the other. In particular, LICENSOR
has made no express or implied warranty in this Agreement that LICENSEE's
making, using, or selling of products will not infringe another patent held by
LICENSOR or held by a third party.
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(b) Nothing in this Agreement shall be construed as granting by
implication, estoppel, or otherwise, any licenses or rights under patents of
LICENSOR other than the Xxxxx Patents.
ARTICLE XII
NOTICES
Any notice required or permitted to be given under this Agreement by one
of the parties to the other shall be in writing and shall be deemed to have been
sufficiently given for all purposes hereunder if personally delivered or mailed
by registered or certified mail, postage prepaid, addressed to such party at its
address below or as from time to time may be directed otherwise by such party by
notice to the other party. Any such mailed notice shall be deemed to have been
given three (3) business days after mailing.
All notices to LICENSOR shall be addressed as follows:
Xxxxxxxx-Xxxxx Corporation
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President, Law and Government Affairs
All notices to LICENSEE shall be addressed as follows:
Paragon Trade Brands, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
ARTICLE XIII
PATENT MARKING
LICENSEE shall xxxx each package containing Infant Disposable Diapers or
Absorbent Pants (as the case may be) which, but for this license, would infringe
a Valid Claim with a statement substantially equivalent to
"The products are made under one or more of the following U.S.
Patents: 4,704,116, 4,846,823, 5,413,570, 5,415,644 and 5,599,338."
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LICENSEE shall modify such statement upon request of LICENSOR to add a
reference to Xxxxx Patents which cover LICENSEE's product and that issue after
the date of this Agreement.
LICENSEE shall commence the marking program upon exhaustion of LICENSEE's
current supply of packaging materials.
ARTICLE XIV
WAIVER
The waiver by either of the parties to this Agreement of any breach of any
provision hereof by the other party shall not be construed to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself.
ARTICLE XV
ENFORCEABILITY
If and to the extent that any court or governmental tribunal of competent
jurisdiction holds any of the terms, provisions or conditions or part thereof of
this Agreement, or the application hereof to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the remainder of this Agreement
and the application of such term, provision or condition or part thereof to
circumstances other than those as to which it is held invalid or enforceable
shall not be affected thereby and each of the other terms, provisions and
conditions of this Agreement shall be valid and enforceable to the extent it is
consonant with the intention of the parties upon entering into this Agreement.
ARTICLE XVI
HEADINGS
The headings appearing herein have been inserted solely for the
convenience of the parties hereto and shall not affect the construction, meaning
or interpretation of this Agreement.
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ARTICLE XVII
ENTIRE AGREEMENT
This Agreement is entered into as part of a Settlement Agreement. The
terms and provisions contained in this Agreement and the Settlement Agreement
(including its attachments) attached hereto as Exhibit E constitute the entire
agreement and understanding between the parties to this Agreement. Neither party
has relied or will rely on any representation or agreement of the other except
to the extent set forth herein or in the Settlement Agreement (including its
attachments), and neither party shall be bound by or charged with any oral,
written or implied agreements, representations, warranties, understandings,
commitments or obligations not specifically set forth herein or in the
Settlement Agreement (including its attachments). These Agreements may not be
released, discharged, abandoned, changed or modified in any manner except by an
instrument in writing signed by a duly authorized officer of each of the parties
hereto.
Each of the parties hereto has caused this instrument to be executed by
its respective duly authorized representative as of the day and year first above
written.
XXXXXXXX-XXXXX CORPORATION PARAGON TRADE BRANDS, INC.
BY: /s/ O. Xxxxxx Xxxxxxxx BY: /s/ B. V. Xxxxxxx
-------------------------- ------------------------
O. Xxxxxx Xxxxxxxx B. V. Xxxxxxx
-------------------------- ------------------------
(print) (print)
TITLE: Senior Vice President - TITLE: Chairman and CEO
Law and Government Affairs
-------------------------- ------------------------
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