CERTAIN MATERIAL DEEMED CONFIDENTIAL BY THE COMPANY HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE COMMISSION.
PATENT LICENSE AGREEMENT
Agreement made and entered into this 20th day of August, 1997, by and between
COUPCO, INC., a corporation of the State of Delaware, having offices at 00
Xxxxxxx Xxxxx, Xxx Xxxxxxxx, Xxx Xxxx 00000 (hereinafter 'LICENSOR') and
INTER*ACT SYSTEMS, INC., a corporation of the State of North Carolina, having
offices at 00 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (hereinafter
'LICENSEE').
WITNESSETH:
WHEREAS, LICENSOR warrants and represents that it is the sole owner of all
rights, title and interest in and to U.S. Patent No. 4,882,675 issued on
November 21, 1989 and reissued as U.S. Reissue Patent No. Re. 34,915 on April
25, 1995 for a 'Paperless System for Distributing, Redeeming and Clearing
Merchandise Coupons,' and Canadian Patent No. 1,276,724 issued on November 20,
1990, and the inventions described therein (hereinafter the 'PATENTS');
WHEREAS, LICENSEE is currently in the business of developing, owning and
operating proprietary electronic marketing systems which include interactive
'touch screen' terminals that issue individually targeted coupons and other
promotional incentives (the 'Promotional System')'
WHEREAS, LICENSOR is desirous of granting certain exclusive and nonexclusive
rights to LICENSEE under the PATENTS and any and all inventions, patents, patent
rights, know-how and trade secrets relating to or based on said PATENTS
throughout the world in exchange for valuable consideration;
WHEREAS, LICENSEE is desirous of acquiring certain exclusive and nonexclusive
rights under the PATENTS and any and all inventions, patents, patent rights,
know-how and trade secrets relating to or based on said PATENTS throughout the
world; and
WHEREAS, LICENSOR warrants and represents that the PATENTS are in full force and
effect, that it knows of no reason why the PATENTS would be invalid or
unenforceable and that there are no other counterpart patents or pending patent
applications to the PATENTS in any country.
NOW, THEREFORE, for and in consideration of the promises and covenants herein
contained and other good and valuable consideration as set forth herein, the
receipt of which is hereby acknowledged, it is hereby agreed as follows:
1. LICENSOR hereby grants to LICENSEE a worldwide, unrestricted right and
license under the PATENTS, and any and all inventions, patents, patent rights,
know-how and trade secrets relating to or based on said PATENTS, to manufacture,
have manufactured, use, offer for sale, sell and import electronic systems
and/or methods *
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2. The worldwide, unrestricted right and license granted in paragraph 1 above
shall be exclusive, with the exclusive right to grant sublicenses subject to
paragraph 8 hereof, with respect to * . LICENSOR warrants and represents that it
has not granted, and agrees that it will not grant, any rights to any other
party which would conflict or otherwise interfere with the Exclusive License
granted herein.
3. The worldwide, unrestricted right and license granted in paragraph 1 above
shall be nonexclusive (with the right to grant sublicenses subject to paragraph
8 hereof to parent companies, sister companies or other entities in which
LICENSEE has (i) a greater than 50% ownership interest as a shareholder,
affiliate, subsidiary, partner, joint venturer or other such
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participant, or (ii) in which LICENSEE has a 50% or less ownership interest
subject to the prior written approval of LICENSOR, which approval shall not be
unreasonably withheld or delayed in cases where LICENSEE has an active role in
the management of said sublicensee's business) * . LICENSOR warrants and
represents that it has not granted any rights to any other party which would
conflict or otherwise interfere with the Nonexclusive License granted herein.
4. As * consideration for the licenses granted herein, LICENSEE hereby agrees
to pay to LICENSOR *
5. *
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. * LICENSOR shall provide at Closing such investment representations and other
documentation executed by LICENSOR and its designated recipients of the Shares,
if any, as may be necessary to assure LICENSEE that the Shares may be issued
pursuant to Rule 506 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the 'Act') or other
exemptions acceptable to LICENSEE from the registration and qualification
requirements of the Act and applicable state securities laws.
6. As further consideration for the license granted herein during the term of
this Agreement as set forth below, LICENSEE agrees to pay to LICENSOR the
following *
The term 'Gross Revenue' shall mean revenue received by LICENSEE directly from
activities covered by the PATENTS in the United States and Canada under the
Exclusive and Nonexclusive Licenses granted herein (except sublicense fees
pursuant to paragraph 8 hereof) *
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7. Notwithstanding the * formulas set forth in paragraph 6 above, if the
actual amount paid by LICENSEE to LICENSOR does not total * for calendar year
1998 (without regard to the payments provided by Paragraph 4 hereof), * for
calendar year 1999 and * for each calendar year thereafter, then and only in
that event shall LICENSOR have the right to notify LICENSEE at any time within
two months after receipt of the written report for the last quarter of each
year, on twenty (20) days written notice to LICENSEE, that unless the noted
deficiency in the minimum amount for that calendar year as specified in this
paragraph 7 is paid by LICENSEE, the Exclusive License granted in paragraph 2
above will be converted into a nonexclusive license, with all other terms and
conditions herein remaining the same. Within twenty (20) days after receipt of
such written notice by
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LICENSEE, LICENSEE shall have the right to pay an additional amount to LICENSOR
to meet the noted deficiency in the minimum payument for the calendar year as
specified in this paragraph 7, in which event the Exclusive License shall remain
exclusive to LICENSEE.
8. The rights granted to LICENSEE in this Agreement to sublicense rights to
third parties under the Exclusive License and/or the Nonexclusive License may be
exercised under the following respective arrangements:
(i) In connection with any sublicense granted by LICENSEE under the
Exclusive License pursuant to paragraph 2 hereof, LICENSOR shall receive * of
income received by LICENSEE directly as a result of the granting of a sublicense
to a sublicensee which is not a parent company, sister company or other entity
in which LICENSEE has a greater than 50% ownership interest as a shareholder,
affiliate, subsidiary, partner, joint venturer or other such participant, and
(b) * the terms of a sublicense agreement by each sublicensee not covered by
subpart (a) of this paragraph 8(i) above. In the event that a sublicense is
granted by LICENSEE under '(b)' of the immediately preceding sentence, then such
sublicense agreement shall contain language naming LICENSOR as a third-party
beneficiary and using the term Net Revenue as defined herein to define the net
revenue of such sublicense, and LICENSOR shall look solely to such sublicensee,
and not to LICENSEE, for payment of the aforementioned * . In no event shall
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LICENSOR be entitled to twice collect a royalty on or percentage of any
income or revenue generated as a result of any sublicense granted by LICENSEE.
(ii) In connection with any sublicense granted by LICENSEE under the
Nonexclusive License pursuant to paragraphs 3 or 7 hereof, LICENSOR shall
receive from such sublicensee * except that 'LICENSEE' is replaced by the
respective sublicensee). In such event, such sublicense agreement shall contain
language naming LICENSOR as a third-party beneficiary and using the term Net
Revenue as defined herein, and LICENSOR shall look solely to such sublicensee,
and not to LICENSEE, for payment of the aforementioned * . Any such sublicense
agreement shall contain substantially the same recordkeeping, termination,
reporting and inspection requirements as set forth herein. In no event shall
LICENSOR be entitled to twice collect a royalty on or percentage of any income
or revenue generated or received as a result of any sublicense granted by
LICENSEE.
(iii) LICENSEE hereby agrees that it shall not attempt to sublicense rights
granted herein to wholly owned subsidiaries or affiliates for the purpose of
avoiding the payment of royalties required hereunder.
(iv) LICENSEE agrees to provide a copy of each such sublicense agreement to
LICENSOR under the terms and conditions set forth herein.
-8-
9. LICENSEE agrees to keep complete and accurate books reflecting Gross
Revenue and Net Revenue received for activities by LICENSEE for which royalties
are due under this Agreement. Said books shall be open to inspection once each
year by an independent auditor selected by LICENSOR at all reasonable times
during business hours upon fifteen (15) days prior written notice for the
purpose of verifying the accuracy of the reports rendered to LICENSOR as
hereinafter required. Such inspection shall be conducted at LICENSOR'S expense
on a confidential basis, and confidential business information reviewed by the
independent auditor shall not be disclosed to LICENSOR.
10. No later than thirty (30) days after the end of each calendar quarter,
LICENSEE shall transmit to LICENSOR a written report covering the immediately
preceding calendar quarter. [Example: Report for third calendar quarter of 1997
(July through September) is due no later than October 30, 1997.] The report
shall set forth the information required to allow a royalty calculation to be
made in acordance with paragraph 6. The report shall be accompanied by a payment
to LICENSOR of the payment due for the calendar quarter just ended calculated
in accordance with paragraphs 6 and 8. The report shall include information
reasonably calculated to inform LICENSOR of the approximate number of
installations of the Promotional System which involve the use of rights granted
to LICENSEE hereunder during the applicable quarter. LICENSOR shall have the
right to inspect the quarterly financial statements of LICENSEE, in addition to
any audited financial statements of LICENSEE.
-9-
11. LICENSEE shall have the first right but not the obligation, in the
event of suspected infringement of any of the PATENTS by a third party
involving the rights granted by the Exclusive License herein, to institute
an infringement suit against such infringer and in connection therewith.
LICENSOR agrees that it will join in such suit and shall have
the right to participate as a party in such suit, and
agrees to otherwise cooperate in the enforcement of the PATENTS.
When commenced by LICENSEE, such litigation shall be under the control of
LICENSEE (including selection of counsel). LICENSOR will have the right to
select its own counsel in such litigation provided that LICENSOR shall be
solely responsible for all legal fees and expenses of its own counsel.
All recoveries of any nature whatsover resulting therefrom will first be
used to cover and reimburse LICENSOR and LICENSEE, on a pro rata basis,
for all expenses, costs and attorney fees incurred by them in connection
with such suit. Any remaining recovery amount shall be deemed part of
the Net Revenue against which royalties are calculated herein.
12. (a) LICENSOR will upon the execution of this Agreement and from
time-to-time thereafter when requested by LICENSEE, during the term of this
Agreement, transmit or otherwise disclose to LICENSEE data, designs, drawings,
specifications, plans and prototypes relating to the inventions covered by the
PATENTS, to the extent such materials are available and accessible.
(b) LICENSOR agrees to act as a consultant to LICENSEE for the first two
(2) years of this Agreement for all technical,
-10-
legal and business issues involving the PATENTS. There shall be no additional
payment for such consulting services except that LICENSOR will be reimbursed
for any actual disbursements incurred in connection with the rendering of
consulting services pursuant to the foregoing.
13. LICENSOR and LICENSEE may terminate this Agreement only as set forth in
this paragraph 13. In the event of a material breach of this Agreement, the
non-breaching party may notify the allegedly breaching party of such breach in
writing, specifying the nature of the alleged breach, in which event the
allegedly breaching party shall have sixty (60) days from receipt of such
written notice to cure such alleged material breach. In the event that the
alleged material breach is not cured within said sixty (60) day period, then,
subject to the limitations of this paragraph 13, the non-breaching party may
terminate this Agreement by providing a written notice of termination to the
allegedly breaching party. In the case of LICENSOR, notice of termination may
issue following said sixty (60) day cure period only in the event that LICENSEE
has materially failed to issue royalty statements, or has materially failed to
pay royalties, if any, specified in such statements as due and owing pursuant to
paragraphs 4, 6, 8, and 10 hereof. In the event LICENSOR alleges any material
breach on the part of LICENSEE other than as set forth in the immediately
preceding sentence, then LICENSOR may not terminate this Agreement except by
demanding binding arbitration before a three-member panel of the American
Arbitration Association ('AAA'), pursuant to AAA rules, on the
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issue of the alleged material breach, and LICENSOR may terminate this Agreement
in such event only if said arbitration panel determines that LICENSEE has
materially breached the Agreement. LICENSOR may terminate this Agreement upon
written notice to LICENSEE at least sixty (60) days after LICENSEE permanently
ceases all operations in the business of promotional marketing. LICENSEE may
terminate this Agreement at any time upon a finding that the PATENTS or any
claims therein are invalid or unenforceable.
14. In the event that LICENSOR or its officers or employees shall make any
improvements, in, concerning or relating to the inventions disclosed in the
PATENTS, such improvements shall be and are hereby made a part hereof upon the
same terms and conditions as the license granted herein, and LICENSEE shall not
be obligated to pay LICENSOR any additional royalty or other consideration for
the use of any such improvement, whether or not a patent or patents issue
thereon.
15. The term of this Agreement shall be from the date first written above
for so long as the PATENTS or any patent covering any improvements as referenced
in paragraph 14 remains valid and enforceable, subject to the right to terminate
as set forth in paragraph 13 above.
16. LICENSOR warrants and represents that it is the sole owner of all
right, title and interest in and to U.S. Patent No. 4,882,675 issued on November
21, 1989 and reissued as U.S. Reissue Patent No. Re. 34,915 on April 25, 1995
for a Paperless System for Distributing, Reedeeming and Clearing Merchandise
Coupons, and
-12-
Canadian Patent No. 1,276,724 issued on November 20, 1990, and the inventions
described therein. LICENSOR warrants and represents that the PATENTS are in full
force and effect, that it knows of no reason why the PATENTS would be invalid or
unenforceable,that there are no actions, threatened actions or third party
assertions (other than the Home Shopping Network litigation) challenging the
validity or enforceability of the PATENTS, that LICENSOR has the requisite power
and authority to enter into and abide by this Agreement, and that there are no
other counterpart patents or pending patent applications to the PATENTS in any
country.
17. In the event that an action is brought against LICENSEE, related
entities in which LICENSEE is a joint venturer, sublicensor or other such
participant, or any of its suppliers or customers, which, if successful, would
prevent any of such parties from performing in any way licensed activities
covered by the PATENTS, then and in that event, LICENSEE may withhold and use
future payments due to LICENSOR hereunder sufficient to reimburse LICENSEE for
costs, expenses, attorney fees, damages, judgments or other such payments
incurred in connection with such action. LICENSOR agrees to participate in the
defense of any such action.
18. All confidential information relating to or obtained from a party to
this Agreement shall be held in confidence by the other party to the same extent
and in at least the same manner as such party protects its own confidential
information, but in any event in a manner which requires the party receiving
such information to use no less than reasonable care. Neither party
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shall disclose, publish, release, transfer or otherwise make available
confidential information of, or obtained from, the other party in any form to,
or for the use or benefit of, any person or entity without the other party's
written consent. Each party shall, however, be permitted to disclose relevant
aspects of the other party's confidential information to its officers, agents,
professional advisors, contractors, subcontractors and employees on a
need-to-know basis in connection with the performance of its duties and
obligations and the exercise and preservation of its rights under this
Agreement; provided, however, that such party shall take all reasonable measures
so that confidential information of the other party is not disclosed or
duplicated in contravention of the provisions of this Agreement by such
officers, agents, professional advisors, contractors, subcontractors and
employees.
19. In the event that LICENSOR grants another non-exclusive license * with
more favorable payment, * or indemnity terms (considered as a whole) than those
set forth herein, then within ten (10) days of the execution of such license,
LICENSOR shall provide LICENSEE with a copy of such license, and LICENSEE shall
then have thirty (30) days after receipt of such copy in which to determine
whether LICENSEE desires to adopt all of such terms in lieu of the corresponding
terms herein, in which event such more favorable terms shall be automatically
incorporated herein. In no event shall this or any other paragraph authorize
LICENSOR to
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grant any rights in conflict with the exclusive right and license set forth in
paragraph 2 hereof.
20. LICENSOR hereby releases LICENSEE and its officers, agents, employees,
suppliers and customers from any and all claims which LICENSOR may have
involving the PATENTS prior to the date of this Agreement, as such claims relate
to activities involving or relating to LICENSEE. 21.
This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter contained herein
and merges all prior discussions between them, and neither
party shall be bound by any definition, condition, warranty or
representation other than as expressly stated in this Agreement or subsequently
set forth in writing and signed by the parties to be bound thereby.
22. This Agreement and the rights, licenses, duties and obligations
hereunder may be transferred or assigned by LICENSEE to any
successor-in-interest of the business of LICENSEE.
23. Any notice to be given under this Agreement shall be in writing and
shall for all purposes be deemed to be fully given by a party (i) if sent by
facsimile communication and by certified U.S. Mail, postage prepaid, or (ii) by
Federal Express courier, to the other party at the addresses set forth below.
The date of facsimile transmission or delivery by Federal Express courier shall
be deemed to be the date on which such notice was given. Either party may change
its address for the purposes of this Agreement by giving the other party written
notice of its new address.
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IF TO LICENSOR:
Xx. Xxxxxx Xxxxxxxxxxx
Coupco, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
[FAX #: 000-000-0000]
WITH COPIES TO:
Xxxxxxx Seedler, Esq.
Xxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
[FAX #: 000-000-0000
&
Xxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
[FAX #: 000-000-0000]
IF TO LICENSEE:
Xxxxxxx Xxxxxxxx
Inter*Act Systems, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
[FAX #: 000-000-0000]
WITH COPIES TO:
Xxxxx Xxxxxxx, Esq.
Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
[FAX # 000-000-0000]
&
Xxxxxxx X. Xxxxxxx
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
[FAX # 000-000-0000]
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24. This Agreement shall be governed under and by the laws of the State of
Connecticut.
COUPCO, INC.
August 20th, 1997 By: XXXXXX XXXXXXXXXXX
--------------------------------------------------
Name: XXXXXX XXXXXXXXXXX
-------------------------------------------------
Title: President
------------------------------------------------
INTER*ACT SYSTEMS, INC.
August 20th, 1997 By: XXXXXX X. XXXXXXX
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------------------------
Title: Chairman, CEO
------------------------------------------------
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