1
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(b)(4), 200.83
AND 230.406. * INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST THAT IS FILED SEPARATELY WITH THE COMMISSION.
Exhibit 10.13
COOPERATIVE DEVELOPMENT
AND
LICENSE AGREEMENT
BETWEEN
PROXIMA CORPORATION
AND
LASER POWER CORPORATION
2
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS
1.1 Affiliate 1
1.2 Products 2
1.3 Proxima Components 2
1.4 LPC Components 2
1.5 Joint Components 2
1.6 Proxima Technology 2
1.7 LPC Technology 2
1.8 Joint Technology 2
1.9 Field 3
1.10 Multimedia 3
1.11 Development Program 3
1.12 Stock Purchase Agreement 3
1.13 Net Revenues 3
1.14 LPC Competitive Product 3
1.15 Proxima Competitive Product 3
1.16 Aggressive Marketing 3
1.17 Designated Product 3
SECTION 2 - DEVELOPMENT PROGRAM 4
2.1 General 4
2.2 Budget 4
2.3 Steering Committee 4
2.3.1 Establishment of Committee 4
2.3.2 Responsibilities of Committee 4
2.3.3 Meetings 5
2.3.4 Product Planning 5
2.3.5 Reports and Information 5
2.4 Funding of Development Program by LPC 5
2.4.1 Accounting for LPC Expenditures 5
2.4.2 Accounting for Funding in Excess of Initial Budget 6
2.4.3 Allocation of Funding in Excess of Warrant Shares 6
2.4.4 Excess Funding For Equity Investment 6
2.4.5 Pass-Through Funding 6
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SECTION 3 MARKETING AND DISTRIBUTION RIGHTS 7
3.1 General 7
3.2 Grant of Rights 7
3.3 Meeting Room and Classroom Products 7
3.4 Right of First Refusal 7
3.5 Special Projection and Display Products 8
3.6 Mutual Representations 9
3.7 Aggressive Marketing 9
3.7.1 Marketing and Sales 9
3.7.2 Staffing and Training 9
3.7.3 Sales Emphasis 9
3.7.4 Print and Promotional Materials 9
3.7.5 Trade Shows and Exhibitions 9
3.7.6 Dispute Resolution 9
SECTION 4 - MANUFACTURING AND ROYALTIES 10
4.1 Manufacturing of Components and Subsystems 10
4.2 Manufacturing Licenses 10
4.3 Royalties 11
4.3.1 Royalties on Distribution 11
4.3.2 Royalties on Sublicense 11
4.4 Accounting and Payment 12
4.5 Penalty for Late Payment of Royalties 12
4.6 Manufacturing Escrow 12
4.6.1 Escrow 12
4.6.2 Technical Assistance 13
4.6.3 Access 13
4.6.4 Release of Escrow Materials 13
4.6.5 Licenses 14
SECTION 5 - MOST FAVORED CUSTOMER 14
SECTION 6 - INTELLECTUAL PROPERTY RIGHTS 15
6.1 Separate Ownership 15
6.1.1 LPC Ownership 15
6.1.2 Proxima Ownership 15
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6.1.3 Patents 15
6.1.4 Abandonment of Separately Owned Patents 15
6.1.5 Enforcement of Separately Owned Rights 16
6.2 Joint Ownership 16
6.2.1 Notification 17
6.2.2 Protection of Joint Technology 17
6.2.3 Trade Secret Protection 17
6.2.4 No Protection 18
6.2.5 Abandonment of Jointly Owned Patents 18
6.2.6 Enforcement of Rights 18
SECTION 7 - INDEMNIFICATION 19
7.1 LPC Components 19
7.1.1 LPC Obligation 19
7.1.2 Limitation 19
7.1.3 Entire Liability 19
7.2 Proxima Components 19
7.2.1 Proxima Obligation 19
7.2.2 Limitation 20
7.2.3 Entire Liability 20
7.3 Joint Components 20
7.3.1 Joint Indemnification 20
7.3.2 Limitation 21
SECTION 8 - GENERAL INDEMNITIES 21
8.1 Indemnification by Proxima 21
8.2 Indemnification by LPC 21
SECTION 9 - CONFIDENTIAL INFORMATION 22
9.1 Definition 22
9.2 Obligation 22
9.3 Exceptions 22
9.4 Enforcement 23
9.5 Duration 23
9.6 Remedies 23
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SECTION 10 - TERM AND TERMINATION 23
10.1 Term 23
10.2 Termination for Material Default 23
10.3 Termination by Proxima 23
10.4 Termination by LPC 24
10.5 Rights Upon Termination 24
10.5.1 Proxima's Rights 24
10.5.2 LPC's Rights 26
10.6 Survival of Certain Terms 27
SECTION 11 - COMPLIANCE WITH LAWS 27
11.1 Governmental Requirements 27
11.1.1 Registration, Notification and Recordation of Agreement 27
11.1.2 Export Regulation 27
SECTION 12 - LIMITATION OF LIABILITY 28
SECTION 13 - THIRD PARTY LICENSES 28
13.1 General Obligation 28
13.2 LPC Components 28
13.2.1 LPC Components to be Sold to Proxima and 3rd Parties 28
13.2.2 LPC Components to be Sold Only to Proxima 28
13.3 Joint Components 29
13.4 Proxima Technology 29
SECTION 14 - WARRANTIES 30
14.1 LPC Warranty 30
14.1.1 Express Warranty 30
14.1.2 LPC Warranty Disclaimer 30
14.2 Proxima Warranty Disclaimer 30
SECTION 15 - GENERAL PROVISIONS 30
15. 1 Governing Law and Dispute Resolution 30
15.2 Entire Agreement 30
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15.3 Confidentiality of Agreement and Activities 31
15.4 Waiver 31
15.5 Notices 31
15.6 Force Majeure 32
15.7 No Assignment 32
15.8 Expenses 32
15.9 Counterparts 32
15.10 Independent Contractors 32
15.11 Public Announcement 33
EXHIBITS
Exhibit A - PRODUCTS
Exhibit B - PROXIMA COMPONENTS
Exhibit C - DEVELOPMENT PROGRAM
Exhibit D - SPECIFICATIONS
Exhibit E - INITIAL STEERING COMMITTEE MEMBERSHIP
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COOPERATIVE DEVELOPMENT AND LICENSE AGREEMENT
This Cooperative Development and License Agreement (the "Agreement") is made and
entered into this 11th day of January, 1994 (the "Effective Date") by and
between Proxima Corporation, a Delaware corporation, having its principal place
of business at 0000 Xxxxx Xxxxx Xxxxx, Xxx Xxxxx, XX 00000-0000 ('Proxima') and
Laser Power Corporation, a Delaware corporation, having its principal place of
business at 00000 Xxxx Xxxxx Xxxxx, Xxx Xxxxx, XX 00000 ("LPC").
RECITALS
WHEREAS, Proxima is engaged in the business of designing, developing,
manufacturing, marketing and selling desktop display products generally known as
projection panels; and
WHEREAS, LPC is engaged in the business of designing, developing, manufacturing,
marketing and selling microlaser engines and microlaser components; and
WHEREAS, the parties believe that it is in their mutual best interests to
combine their development and engineering skills as part of a collaborative
program in the area of Multimedia (as hereinafter defined) imaging applications
with the goal of producing a series of Products (as hereinafter defined)
directed to the Field (as hereinafter defined); and
WHEREAS, pursuant to this collaborative program, the parties desire to enter
into various development, licensing, manufacturing, sales and supply
arrangements, all as more fully described herein; and
WHEREAS, Xxxxxxx will make an investment in LPC pursuant to that certain Stock
Purchase Agreement executed between the parties of even date herewith, in
reliance in part on the promises contained in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL PROMISES
CONTAINED HEREIN, IT IS AGREED AS FOLLOWS:
SECTION 1
DEFINITIONS
1.1 Affiliate. "Affiliate" means any entity (whether organized under
the laws of the United States or the laws of any other country) which, either
directly or indirectly, (a) controls a party to this Agreement, (b) is
controlled by such party or (c) is under the common control with such party. In
the event that the parties disagree as to whether an entity constitutes an
Affiliate of a party pursuant to this definition, then the parties agree to
proceed to dispute resolution in accordance with Section 15.1 below.
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1.2 Products. "Products" means those Multimedia imaging application
products set forth on Exhibit A hereto which are intended for use within the
Field and which are intended to be developed by the parties pursuant to this
Agreement. Products shall be made up of Proxima Components, LPC Components and
Joint Components. Products may be added, deleted or modified from time to time
by mutual agreement of the parties.
1.3 Proxima Components. "Proxima Components" means those certain
components of the Products which are set forth on Exhibit B hereto and which are
developed or are intended to be developed solely by Proxima. Proxima Components
may be added, deleted or modified from time to time by mutual agreement of the
parties.
1.4 LPC Components. "LPC Components" means those certain components of
the Products which are set forth on Exhibit B hereto and which are developed or
are intended to be developed solely by LPC. LPC Components may be added, deleted
or modified from time to time by mutual agreement of the parties.
1.5 Joint Components. "Joint Components" means those certain components
of the Products which are set forth on Exhibit B hereto and (i) which are
jointly developed or are intended to be jointly developed by Proxima and LPC
pursuant to the terms and conditions of this Agreement or (ii) which are
developed using LPC Technology by third parties other than Proxima or LPC
through the use of funds provided to such third parties directly by Proxima
outside of the scope of Section 2.4 below. Joint Components may be added,
deleted or modified from time to time by mutual agreement of the parties.
1.6 Proxima Technology. "Proxima Technology" means the technical data,
designs, concepts, algorithms, processes, formulae, know-how and information
pertaining to the design, development, manufacture, sale and use of Proxima
Components, including without limitation any patent or other intellectual
property rights related thereto, that are owned, licensed to, or developed by
Proxima without the participation of LPC before, during or after the term of
this Agreement.
1.7 LPC Technology. "LPC Technology" means the technical data, designs,
concepts, algorithms, processes, formulae, know-how and information pertaining
to the design, development, manufacture, sale and use of LPC Components,
including without limitation any patent or other intellectual property rights
related thereto, that are owned, licensed to, or developed by LPC without the
participation of Proxima, before, during or after the term of this Agreement.
1.8 Joint Technology. "Joint Technology" means the technical data,
designs, concepts, algorithms, processes, formulae, know-how and information,
and all intellectual property rights related thereto, (i) developed jointly by
the parties pursuant to the development program contemplated by this Agreement
or (ii) developed using LPC Technology by third parties other than Proxima or
LPC through the use of funds provided to such third parties by Proxima outside
of the scope of Section 2.4 below. The final determination as to whether
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particular information constitutes Joint Technology shall be governed by the
provisions of Section 6.2. Joint Technology shall exclude all Proxima Technology
and LPC Technology.
1.9 Field. "Field" means any and all markets for microlaser-based
Proxima Components which are directed to commercial, business and educational
applications, including without limitation meeting room, classroom, museum,
theater and stadium/arena applications, but specifically excluding (i)
applications intended for the home entertainment market where viewing of
projected images is not primarily for commerce, business or educational
purposes, (ii) applications intended for the headset market where there is only
one viewer of an image at any one time and (iii) any other applications
excluded from the Field pursuant to Section 3.5 below. Except as specified in
this Section 1.9 or in Section 3.5 below, the Field shall include markets for
small projectors that are currently being exploited by Proxima as well as
markets for large projectors that Proxima intends to exploit in the future.
1. 10 Multimedia. "Multimedia" means the combination or interaction of
video, audio, computer generated text, graphics, and/or other inputs.
1.11 Development Program. "Development Program" means the collaborative
program for the development of Products, referred to as the Memphis Project, as
defined in Section 2 below and as further described in Exhibit C hereto.
1. 12 Stock Purchase Agreement. "Stock Purchase Agreement" shall mean
that certain Stock Purchase Agreement between LPC and Proxima of even date
herewith, pursuant to which Proxima has agreed to invest in LPC by exercising
warrants to purchase or by otherwise purchasing shares of LPC Series A
Convertible Preferred Stock.
1. 13 Net Revenues. "Net Revenues" means either (i) gross revenues
actually received by a party from the sale of a particular product to a
non-Affiliate or (H) such party's reasonable estimate, based on list prices and
sales of similar products to non-Affiliates, of gross revenues applicable to the
sale of a particular product by such party to an Affiliate, in each case less
discounts, price adjustments, returns, freight charges and allowances, all as
reflected in the seller's financial records.
1. 14 LPC Competitive Product. "LPC Competitive Product" has the
meaning set forth in Section 3.3.
1. 15 Proxima Competitive Product. "Proxima Competitive Product" has
the meaning set forth in Section 3.4.
1.16 Aggressive Marketing. "Aggressive Marketing" has the meaning set
forth in Section 3.7.
1.17 Designated Product. "Designated Product" has the meaning set forth
in Section 3.7.
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SECTION 2
DEVELOPMENT PROGRAM
2.1 General. This Agreement has been entered into by the parties in
order to create a business arrangement for the development, marketing and
distribution of the Products within the Field. Pursuant to this Agreement, the
parties shall undertake a Development Program to develop LPC Components, Proxima
Components and Joint Components for the Products according to the schedule and
milestones set forth in Exhibit C hereto. The Development Program shall
specifically include the development of an RGB microlaser engine or microlaser
components and subsystems for high resolution Multimedia projection systems
designed to Proxima's specifications. Although development work for LPC
Components and Proxima Components shall be accomplished through the independent
efforts of the parties according to the guidelines set forth in this Agreement,
each party intends that the development work for Joint Components shall be
accomplished through the cooperative efforts of the parties as contemplated by
this Agreement.
2.2 Budget. Within thirty (30) days after the Effective Date, the
parties shall prepare a mutually acceptable budget, which may be amended from
time to time by the Steering Committee, for all proposed expenditures pursuant
to the Development Program.
2.3 Steering Committee.
2.3.1 Establishment of Committee. The parties shall establish
and maintain a Steering Committee which shall be primarily responsible for
overseeing the Development Program and all other aspects of the mutual
relationship contemplated herein. Each party shall have the right to appoint and
replace two (2) members of the Steering Committee and the total membership of
the Steering Committee shall be four (4) members. During the first year of this
Agreement a representative of Proxima shall chair such committee. Thereafter,
chairmanship shall be rotated between the parties on an annual basis, commencing
with the first anniversary of the Effective Date. Actions of the Steering
Committee shall be taken by a unanimous vote of its members. Any disputes shall
be referred to successively higher-level management representatives from each
party until, if necessary, such disputes reach the chief executive of each
party. The initial members of the Steering Committee are set forth in Exhibit D
hereto.
2.3.2 Responsibilities of Committee. The Steering Committee
shall be responsible for reviewing and approving the Development Program and the
milestones and budgets combined therein. In addition, the Steering Committee
shall provide a mechanism for the exchange of information and review of
activities and, if desirable, shall add, delete or modify Products, Proxima
Components, LPC Components or Joint Components. Without limitation, some of the
other specific activities of the Steering Committee shall be to (i) appoint a
manager for the Development Program who shall be replaced by the Steering
Committee from time to time as appropriate; (ii) monitor progress on each
particular research and development
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project contemplated herein; (iii) review specific research and development
reports by each party; (iv) review and approve proposed expenditures; (v) review
actual spending as compared to budget at least once during each calendar quarter
during the term of this Agreement; (vi) review and approve beta site testing
proposals for products resulting from the Development Program; (vii) review and
approve the appointment of project managers; (viii) review Joint Technology and
decide on the method of protecting it; (ix) review all uses of Joint Technology
and determine whether the user is required to pay royalties in accordance with
Section 4.3; and (x) review and resolve intellectual property disagreements. 'Me
Steering Committee shall assume any other responsibilities that are mutually
agreed to by the parties.
2.3.3 Meetings. The Steering Committee shall meet regularly as
necessary to fully perform its duties under Section 2.3.2 above, but in any
event not less than once each calendar quarter throughout the duration of the
Development Program described in Section 2.1 above.
2.3.4 Product Planning. Except as otherwise prohibited by this
Agreement, each party shall have the right to continue to do its own product
planning and development independently of the Development Program and the
Steering Committee established hereby.
2.3.5 Reports and Information. Each party shall use its best
efforts to provide complete and accurate reports and information to the Steering
Committee as necessary for such committee to fully perform its duties.
2.4 Funding of Development Program by LPC. Throughout the term of this
Agreement and the Development Program contemplated herein, LPC agrees to apply
all proceeds received from Proxima pursuant to the Stock Purchase Agreement (the
"Proxima Funds") in furtherance of the Development Program contemplated herein.
Pursuant to the Stock Purchase Agreement, Xxxxxxx agrees to initially provide
LPC with a minimum of $500,000 of Proxima Funds. The application of all Proxima
Funds shall be governed by the provisions of this Section 2.4.
2.4.1 Accounting for LPC Expenditures. Expenditures by LPC in
furtherance of the Development Program shall be accounted for in the same
manner as if Proxima had granted LPC a research and development contract
similar to those granted to LPC by various United States governmental
agencies. Except as contemplated by Section 2.4.2 below, total charges to the
Development Program shall include [ *** ]
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* CONFIDENTIAL TREATMENT REQUESTED
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2.4.2 Accounting for Funding in Excess of Initial Budget. Each
time that LPC delivers to Proxima a Funding Request as contemplated in Section
1.3 of the Stock Purchase Agreement, LPC shall include with such Funding Request
a calculation by LPC showing the work performed by LPC up to the date of the
Funding Request (including the extent to which the milestones set forth on
Exhibit C have been accomplished) and the application of all Proxima Funds
received up to such date and a statement as to whether the Development Program
is proceeding with the expenditure levels contemplated by the original budget
prepared in accordance with Section 2.2. To the extent that the Development
Program has exceeded such budgeted expenditures, all Proxima Funds thereafter
provided to LPC which are in excess of such budgeted expenditures shall be
accounted for as contemplated by Section 2.4.1, except that the fee ("Revised
Fee") applied to remaining expenditures shall be calculated as follows:
[ *** ] [ *** ] [ *** ]
[ *** ]
------------------------------------------- ------------------
[ *** ]
Notwithstanding the above, funds provided (i) for excess expenditures
due to a change in the scope of work authorized by the Steering Committee or
(ii) for excess expenditures used to develop Proxima Technology ('Committee
Authorized Expenditures") will not be included in the above calculation and will
continue to be accounted for with a [ *** ] provided however, that LPC shall not
be permitted to account for any funds as Committee Authorized Expenditures
unless, prior to the provision of such funds to LPC by Proxima, the Steering
Committee has issued a written notice to both parties indicating that such funds
shall be treated as Committee Authorized Expenditures.
2.4.3 Allocation of Funding in Excess of Warrant Shares. In
the event Proxima chooses to provide funds to LPC beyond the funds provided by
full exercise of the Warrant, Proxima, at its sole option, may either (i) choose
to receive additional shares of series A preferred stock of LPC as contemplated
by Section 1.4 of the Stock Purchase Agreement or (ii) choose to account for
such additional funding as an expense associated with product development and
receive no stock from LPC.
2.4.4 Excess Funding For Equity Investment. In the event that
the Development Program contemplated herein is completed prior to the time that
all Proxima Funds have been allocated by LPC, LPC shall be entitled to use the
remaining Proxima Funds in any manner and for any purposes whatsoever.
2.4.5 Pass-Through Funding. In the event that Proxima desires
that any Proxima funds be passed through by LPC to third party companies who
shall perform research and development in furtherance of the Development
Program, LPC shall be required to allocate only [ *** ] of such funds to the
work performed by such third party in accordance with the provisions of this
Section 2.4. [ *** ] Proxima and LPC each agree that "pass-through" situations
shall be avoided in the event any
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alternative means to accomplish a given research and development goal can be
found, and each party agrees to use its best efforts to seek out such
alternative means.
SECTION 3
MARKETING AND DISTRIBUTION RIGHTS
3.1 General. Pursuant to the terms of this Agreement, and in
consideration of the joint development efforts and Proxima Funds provided by
Proxima pursuant to Section 2 above, LPC desires to grant to Proxima certain
exclusive (including with respect to LPC) marketing and distribution rights
within the Field with respect to LPC Components, Joint Components and Products.
LPC further agrees to grant Proxima all rights necessary to accomplish these
objectives.
3.2 Grant of Rights. Subject to the terms and conditions of this
Agreement, including without limitation Section 3.3 below, LPC hereby grants to
Proxima the exclusive (including with respect to LPC) right throughout the term
of this Agreement to market and distribute LPC Components and Joint Components
within the Field.
3.3 Meeting Room and Classroom Products. For as long as Proxima either
(i) continues to comply with its Development Program funding obligations
pursuant to Section 2 above or (ii) continues to Aggressively Market (as defined
in Section 3.7 below) any of the Products, LPC agrees that it shall not (a) sell
any microlaser-based engines or components for use in laser projectors,
including without limitation LPC Components (collectively "LPC Competitive
Products"), to any third party within the meeting room and classroom market
segments of the Field or (b) otherwise collaborate with any Proxima competitors
within the meeting room and classroom market segments of the Field for the
purpose of producing LPC Competitive Products without the prior written consent
of Proxima. If LPC suspects or should reasonably suspect that an entity may be
competitive with Proxima within the Field, LPC shall obtain approval from
Proxima in writing prior to undertaking any such collaboration. In the event
that a dispute arises between the parties as to whether a particular entity is
or is not competitive with Proxima, and the Steering Committee can not resolve
the dispute in accordance with Section 2.3.1 above, the parties agree to proceed
to dispute resolution in accordance with Section 15.1 below. Notwithstanding the
foregoing, nothing in this Agreement shall prevent LPC from selling or
otherwise distributing its standard catalog red, green and blue microlasers
within the Field without restriction.
3.4 Right of First Refusal. In the event that LPC intends to develop,
by itself or in conjunction with third parties, any products other than LPC
Components for any market segments within the Field other than the meeting room
or classroom segments, LPC agrees to promptly notify Proxima of its intentions
with respect to such products and to provide Proxima with a period of sixty (60)
days to notify LPC whether it wishes to participate in the development phase of
such products pursuant to material terms and conditions (including without
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limitation price and product performance specifications) at least as favorable
as those offered to any third party or, if LPC has decided to develop such
products itself, pursuant to reasonable terms and conditions negotiated between
the parties in good faith. In the event that Proxima declines to exercise its
right of first refusal with respect to the development phase of any such LPC
product during the sixty (60) day period provided herein, LPC agrees (i) to
again notify Proxima approximately six (6) months prior to the time such LPC
product is intended to be made available for commercial distribution and (H) to
provide Proxima with a period of sixty (60) days to notify LPC whether it wishes
to market or distribute such product pursuant to material terms and conditions
(including without limitation price and product performance specifications) at
least as favorable as those offered to any third party or, if LPC intends to
distribute such product itself, pursuant to reasonable terms and conditions
negotiated between the parties in good faith. Notwithstanding the above, if
Proxima is currently marketing a laser projection product that would compete
directly with such LPC product (a "Proxima Competitive Product"), Proxima's
right to develop, market or distribute such LPC product shall be conditioned
upon (i) Proxima's ceasing marketing its Proxima Competitive Product at least
sixty (60) days prior to the time such LPC product is intended to be made
available for commercial distribution and (ii) Proxima agreeing to Aggressively
Market (as defined in Section 3.7 below) the LPC product. In the event that
Proxima declines to exercise its rights of first refusal with respect to both
(x) the development of and (y) the marketing and distribution of any particular
LPC product during each of the sixty (60) day periods provided for herein, or if
Proxima refuses to cease marketing any Proxima Competitive Product in accordance
with this Section 3.4, LPC shall have full rights to market the LPC product
within any market segments of the Field other than the meeting room or classroom
segments, including through other companies who may be competitors of Proxima;
provided, however, that LPC agrees that it shall refrain from entering into any
agreement with any third party with respect to the marketing and distribution of
such LPC product, or any other product (i) substantially similar thereto in
functionality or (ii) without significant differentiation therefrom, on material
terms and conditions more favorable than those offered to Proxima with respect
to such LPC product. LPC further agrees that it shall refrain from developing,
marketing or distributing any product (i) substantially similar in functionality
to, or (H) without significant differentiation from, any product for which
Proxima has already exercised its right of first refusal pursuant to this
Section 3.4.
3.5 Special Projection and Display Products. Notwithstanding Sections
3.3 and 3.4 above, the parties agree that projection and display products
intended for commercial, government, or military applications other than meeting
room, classroom, museum, theater and stadium/arena applications ("Special
Projection/Display Products") are not part of the Field. Examples, without
limitation, of Special Projection/Display Products are flight simulators and
displays on ships, airplanes, and vehicles. The parties agree that,
notwithstanding anything to the contrary contained in this Agreement, either
party may independently seek out and/or accept research, development, or
production orders or contracts for Special Projection/Display Products, and each
party may use its own technology and Joint Technology pursuant thereto;
provided, however, that if Joint Technology is used, the parties agree that,
subject to the exclusions contained in Section 4.3 below, they shall negotiate
in good faith, in light of the specific nature of the Special Projection/Display
Products project and the contribution and
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importance of the Joint Technology to said project, to determine (i) whether a
royalty with respect to such Joint technology is appropriate (ii) if so, the
appropriate amount of such royalty. The parties agree to inform each other, on a
regular basis and subject to the restrictions on confidentiality contained in
Section 9 below, of the status of any contemplated or in-process Special
Project/Display Products projects which employ microlaser technology to the
extent allowed by third party confidentiality agreements and/or government
secrecy requirements. Each party will use its best efforts to obtain the freedom
to inform the other party.
The parties agree that when one party (the "Lead Party") decides to
submit a quotation or proposal for research, development or production orders or
contract Special Projection/Display Products, the Lead Party will offer the
other party the right of first refusal to participate in said order or contract
to the extent that the other party is capable of providing services and/or
products which otherwise would be provided by a third party. The other party
shall have fifteen (15) days to exercise the right of first refusal after
notification and will be required to pay for its own proposal preparation costs.
The Lead Party will use its best efforts to notify the other party of its intent
to submit a quotation and proposal on a timely basis so as to permit the other
party a reasonable amount of time to prepare a responsive proposal.
3.6 Mutual Representation. Each party represents and warrants that the
execution and performance of this Agreement and the transactions contemplated
hereby will not result in a violation or breach of, or conflict with, any term
or provision of, or constitute a default under, any agreement, instrument or
other obligation to which such party is subject. Each party hereby agrees to
indemnify, defend and hold the other party harmless from and against any claim,
suit or proceeding arising out of any breach or alleged breach of the forgoing
representation and warranty. These representations, warranties and
indemnification's shall continue throughout the term of this Agreement.
3.7 Aggressive Marketing. As used in this Agreement, the term
"Aggressive Marketing" or "Aggressively Market" with respect
to any Product, Joint Component, LPC Component or other product (a
"Designated Product") shall be defined as follows:
3.7.1 Marketing and Sales. Proxima's marketing and sales
programs which support the Designated Product shall receive an allocation of the
marketing and sales budgets appropriate to the reasonably expected return on
investment for products similarly situated with respect to the Designated
Product's market maturity and level of revenues.
3.7.2 Staffing and Training. Proxima shall train its sales,
marketing and distribution organization for the Designated Product in the same
or similar manner, and with the same or similar thoroughness, as it does for its
other current and future projector products. Proxima shall maintain a Designated
Product marketing manager.
3.7.3 Sales Emphasis. Proxima shall not utilize the Designated
Product solely as a promotional vehicle for selling Proxima's other projector
products.
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3.7.4 Print and Promotional Materials. Proxima shall prepare
product literature, advertising and promotional materials for the Designated
Product of the same quality as it does for Proxima's other projector products.
Proxima shall disseminate the promotional materials to its distributors and
potential customers in a timely manner utilizing the same or similar methods as
Proxima does for its other projector products. Proxima shall maintain sufficient
stocks of print materials for the Designated Product to stimulate and satisfy
market interest in a timely manner.
3.7.5 Trade Shows and Exhibitions. Where Proxima participates
in trade shows and exhibitions which require the display and promotion of its
projector products, the Designated Product shall be provided appropriate display
space and prominence.
3.7.6 Dispute Resolution. In the event a dispute arises
between the parties as to whether or not Proxima is conducting Aggressive
Marketing, and such dispute can not be resolved by the Steering Committee
pursuant to Section 2.3.1 above, the parties agree to proceed to dispute
resolution in accordance with Section 15.1 below.
SECTION 4
MANUFACTURING AND ROYALTIES
4.1 Manufacturing of Components and Subsystems. Throughout the term of
this Agreement, Proxima shall retain the exclusive right to manufacture or have
manufactured Proxima Components. However, with respect to LPC Components and
Joint Components, the Steering Committee established pursuant to Section 2 above
shall decide, based upon a review of cost estimates and manufacturing plan
alternatives, which of such components shall be initially supplied by Proxima,
LPC or third parties.
4.2 Manufacturing Licenses. LPC hereby grants to Proxima a
non-exclusive license under the LPC Technology and the Joint Technology, to
make, have made, use and sell LPC Components and any other products which use or
incorporate LPC Technology or Joint Technology within the Field; provided,
however, that throughout the term of this Agreement, Proxima's exercise of its
license under the Joint Technology and LPC Technology to make, have made, use or
sell LPC Components shall be governed by the manufacturing decisions of the
Steering Committee pursuant to Section 4.1 above. The Steering Committee shall
supervise (i) the transfer to Proxima, or its third party manufacturers, of all
LPC Technology required for Proxima to exercise the manufacturing licenses
contemplated herein as well as (ii) the return or destruction, at any time
deemed appropriate by the Steering Committee during the term of this Agreement,
of any such embodiments of LPC Technology in the possession of Proxima or its
third party manufacturers. Proxima agrees to hold all such embodiments of the
LPC Technology in confidence pursuant to the provisions contained in Section 9
below and not to use such LPC Technology for any other purpose other than the
manufacture and maintenance of products
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pursuant to the licenses granted by this Section 4.1 or contemplated upon
termination of this Agreement under certain circumstances.
4.3 Royalties.
4.3.1 Royalties on Distribution. In consideration of the
development services provided by LPC hereunder and the licenses granted by LPC
to Proxima herein, Proxima shall pay to LPC a royalty [ *** ] of
the Net Revenues received by Proxima for any product, including without
limitation the Products, distributed by Proxima which uses or incorporates any
LPC Technology or any Joint Technology; provided, however, that (a) Proxima
shall have no obligation to pay royalties to LPC for the use of LPC-manufactured
standard catalog red, green and blue microlasers with respect to any particular
product and (b) Proxima shall have no obligation to pay royalties to LPC for the
use of Joint Technology with respect to any particular product (i) if such
product is a non-laser-based product and such product was not developed through
the joint efforts of the parties pursuant to this Agreement; or (ii) in the
event all of the Joint Technology incorporated in such product relates solely to
circuitry, firmware or the like; or (iii) in the event none of the Joint
Technology incorporated in such product would reasonably be deemed to be
essential to the operation of such product. LPC further agrees that, during and
after the term of this Agreement, the royalty rate being paid by Proxima to LPC
for the use of LPC Technology or Joint Technology shall be equal to or lower
than the royalty rate charged by LPC to any third party for use of such
technology and LPC shall have the obligation to inform Proxima immediately if
LPC licenses LPC Technology or Joint Technology to any other party at a royalty
rate lower than the royalty rate then applicable to Proxima. For purposes of
royalty calculation pursuant to this Section 4.3. 1, the applicable "product"
upon which the percentage royalty shall be based shall be restricted to the
smallest component or set of components which include LPC Technology or
royalty-bearing Joint Technology and which are reflected as separate
revenue-bearing items in Proxima's financing records.
4.3.2 Royalties on Sublicense. In the event that, during or
after the term of this Agreement, either party (a "Licensing Party") sublicenses
Joint Technology, as permitted pursuant to Section 6.2 of this Agreement, the
Licensing Party shall pay the non-Licensing Party fifty percent (50%) of any
royalties or license fees paid by the licensee to the Licensing Party in respect
of such license. For purposes of computing the amount of royalties or licensee
fees charged and/or collected by a Licensing Party for sublicenses of Joint
Technology pursuant to this Section 4.3.2, each of Proxima and LPC agrees that
(i) all such royalties or license fees charged to sublicenses shall be at least
equivalent, in all cases, to royalties and license fees that would be charged by
the Licensing Party to a licensee in an arms length transaction and (ii) all
royalties and licensee fees received by a Licensing Party pursuant to a
sublicensing transaction that includes Joint Technology as well as other
technology licensed by the Licensing Party shall be presumed to be solely
associated with the Joint Technology, unless the associated sublicensing
agreement clearly states otherwise. Each party agrees to account to and pay the
other party its share of sublicense fees and royalties received from Joint
Technology in a manner substantially similar to that described in Section 4.4
below.
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* CONFIDENTIAL TREATMENT REQUESTED
18
4.4 Accounting and Payment. Proxima shall keep, at all times, an
accurate account of all products distributed by Proxima which use or incorporate
LPC Technology. Proxima shall render to LPC a written statement of the revenues
from such products sold, distributed or otherwise disposed of by Proxima during
each calendar quarter within thirty (30) days after the end of such calendar
quarter. Proxima shall pay LPC the amount of all royalties described in such
written statement simultaneously with the rendering of the written statement.
LPC shall have the right, at reasonable times during normal business hours of
Proxima, and on reasonable notice to Proxima, to have Proxima's accounts with
respect to sale and distribution of products examined by an independent
chartered or certified accountant selected and paid by LPC for the purpose of
verifying such royalty statements. If such examination accurately discloses that
Proxima underpaid royalties due to LPC hereunder, then Xxxxxxx shall immediately
remit to LPC the amount of such underpayment. The cost of such examination shall
be borne by LPC, unless the examination establishes that LPC was underpaid by
three percent (3%) (but at least $10,000) with respect to products sold or
distributed by Proxima in any quarter which use or incorporate the LPC
Technology, in which event the cost of such examination shall be promptly be
reimbursed to LPC by Proxima. In the event such examination establishes that LPC
was overpaid, LPC shall promptly issue a credit to Proxima in the amount of the
overpayment which shall be applied against future payments due by Proxima to
LPC. Proxima shall not be required to maintain such account information
statements for a period of more than three (3) years after the end of the
respective calendar quarter in which such statements are made. In the event that
LPC obtains any rights to Proxima Technology following termination of this
Agreement pursuant to Section 10.5.2 below, LPC shall thereafter be required to
fulfill obligations consistent with those required from Proxima pursuant to this
Section 4.4 and Proxima shall thereafter hold rights consistent with those held
by LPC pursuant to this Section 4.4.
4.5 Penalty for Late Payment of Royalties. In the event that any
payment of royalties hereunder shall remain unpaid (the "Late Payment") for more
than ten (10) days following the date such payment is due, then the amount of
such Late Payment shall bear interest at one and one-half percent (1.5 %) per
month, calculated from the due date until said Late Payment and all interest
accrued thereon shall have been paid.
4.6 Manufacturing Escrow.
4.6.1 Escrow. In order to facilitate each party's exercise of
(i) the manufacturing licenses granted pursuant to Section 4.2 above during the
term of this Agreement and (ii) the manufacturing licenses contemplated
following termination of this Agreement, and to ensure uninterrupted
availability of the LPC Components, Proxima Components, Joint Components and/or
the Products and their ongoing manufacturing, maintenance and support, each
party shall, within thirty (30) days of the Effective Date, enter into an escrow
agreement ("Escrow Agreement") with a mutually agreeable escrow agent ("Escrow
Agent"). The Escrow Agreement shall be in a form and content reasonably
acceptable to the parties hereto and shall contain, as a minimum and without
limitation, the terms and conditions set forth in this Section 4.6. The Escrow
Agreement shall provide, among other things, for the deposit into escrow with
the Escrow Agent, within thirty (30) calendar days of its execution, for storage
at
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such Escrow Agent's premises, of all the Proxima Technology, LPC Technology and
Joint Technology defined in Sections 1.6, 1.7 and 1.8 above which is available,
which is used by Proxima or LPC for the manufacturing of the Proxima Components,
LPC Components, Joint Components or the Products, and which is reasonably
acceptable in form and content to the Steering Committee (the "Escrow
Materials"). Each party shall update the Escrow Materials with relevant designs,
drawings, and other helpful materials as modifications or new releases of
Proxima components, LPC Components, Joint Components or Products are created.
Costs for such filing, updating and management of the Escrow Materials shall be
shared equally by the parties. Each party will use due care in ensuring the
completeness and accuracy of the Escrow Materials provided. If the Escrow Agent
provides the Escrow Materials to either party under the Escrow Agreement, such
party agrees to hold these materials and information in confidence pursuant to
the provisions contained in Section 9 below, and not to use them for any purpose
other than the manufacture and maintenance of products pursuant to the licenses
contemplated upon termination of this Agreement under certain circumstances.
4.6.2 Technical Assistance. Each party will provide to the
other, prior to the deposit of the relevant Escrow Materials pursuant to Section
4.6.1 above, such technical assistance, at an agreed-upon location, as is
reasonably required to allow competent technical employee(s) of the
non-depositing party to understand the Escrow Materials and to establish the
sufficiency of its content. All documentation and other material created in the
course of such technical assistance shall form a part of the Escrow Materials.
Each party, at its option and expense, may request that the completeness and
accuracy of any Escrow Materials deposited by the other party be verified by the
Escrow Agent or another party reasonably acceptable to the non-depositing party.
Such verification may be requested by either party once per deposit of Escrow
Materials to the Escrow Agent. Each party may in its discretion and at its
expense designate a representative to be present at any particular verification.
4.6.3 Access. Escrow Materials shall remain under seal and
unopened unless and until a Release Condition (as defined below) occurs;
provided, however, that nothing in this Section 4.6 shall be read to restrict or
limit either party's ownership of, and correspondent right of access to, the
Joint Technology. Either party shall be entitled to examine the Escrow Materials
at the Escrow Agent's location at any time during normal business hours.
4.6.4 Release of Escrow Materials. Upon the occurrence of any
of the following events ("Release Conditions"), in addition to any other rights
available to either party under this Agreement or by law, each party will be
entitled to possession of the relevant Escrow Materials deposited by the other
party (the "Depositing Party") for the purposes set forth in Section 4.6.5
below:
(i) The institution by the Depositing Party of
insolvency, receivership or bankruptcy proceedings or any other material
proceedings for the settlement of its debts, including without limitation, a
reorganization, a compromise, an arrangement or assignment for the benefit of
its creditors; the institution of such proceedings against the Depositing Party;
the
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Depositing Party making a general assignment for the benefit of creditors; or
the Depositing Party's dissolution or ceasing to do business in the normal
course; or
(ii) Upon a termination of this Agreement for any
reason other than the receiving party's material default in accordance with the
terms of Section 10 below.
(iii) In addition, Proxima shall be entitled to
possession of the relevant Escrow Materials in the event that (a) the Steering
Committee has determined that LPC should be the exclusive manufacturer of an LPC
component or Joint Component and (b) LPC has persistently and materially failed
during (i) any sixty (60) consecutive day period or (ii) any two (2) thirty (30)
consecutive day periods within any twelve (12) month period to manufacture and
ship any such LPC Component or Joint Component to Proxima in accordance with the
directions of the Steering Committee.
The Escrow Agreement shall provide that, subject to the right of either
party to contest a release, the Escrow Agent will release the Escrow Materials
to the receiving party within ten (10) calendar days from the date of the
receiving party's written request for the release of the required Escrow
Materials accompanied by a declaration from a senior officer of the receiving
party stating the particulars of the reasons for its request and confirming that
a copy of such request and declaration have been delivered to the Depositing
Party.
4.6.5 Licenses. Upon release of the Escrow Materials to a
receiving party pursuant to Release Conditions (i) and (ii) set forth in Section
4.6.4 above, the receiving party's right to exploit such Escrow Materials shall
be governed by Section 10.5 of this Agreement, as applicable. Upon release of
the relevant Escrow materials to Proxima pursuant to Release Condition (iii) set
forth in Section 4.6.4 above, Proxima shall be thereafter permitted to exercise
its non-exclusive manufacturing license with respect to the affected LPC
Component or Joint Component pursuant to Section 4.2 above, and Proxima's
ability to exercise such license shall no longer be governed by the
manufacturing decisions of the Steering Committee.
SECTION 5
MOST FAVORED CUSTOMER
LPC agrees that, with respect to the distribution of LPC Components and
Joint Components by LPC pursuant to Section 3 above, LPC shall offer such LPC
Components and Joint Components to Proxima on price, payment and other material
terms which are at least as favorable as the price, payment and other material
terms offered, as permitted by this Agreement, to any of LPC's other
distributors, OEMs or end-user customers of such components. In the event LPC
offers such LPC Components and Joint Components to any other distributor, OEM or
end-user customer at such more favorable terms, LPC shall give Proxima the
opportunity to substitute such other terms and conditions for the price, payment
and other
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material provisions contained in this Agreement with respect to those
LPC Components and Joint Components.
SECTION 6
INTELLECTUAL PROPERTY RIGHTS
6.1 Separate Ownership.
6.1.1 LPC Ownership. Proxima agrees that, except for the
licenses and other rights granted pursuant hereto, LPC or its licensors owns all
right, title and interest in LPC Technology and LPC Components, and in all
patents, trademarks, trade names, inventions, copyrights, know-how, mask work
rights and trade secrets in and to LPC Technology and LPC Components.
6.1.2 Proxima Ownership. LPC agrees that, except for the
licenses and other rights granted pursuant hereto, Proxima or its licensors own
all right, title and interest in Proxima Technology and Proxima Components, and
in all patents, trademarks, trade names, inventions, copyrights, know-how, mask
work rights and trade secrets in and to Proxima Technology and Proxima
Components.
6.1.3 Patents. Proxima and LPC may, in their discretion, elect
to pursue statutory protection, including without limitation United States and
foreign patent and copyright protection or trade secret protection, for their
respective Proxima Technology or LPC Technology, but shall not be required to
pursue any such protection; provided, however, that during the term of this
Agreement, to the extent such Proxima Technology or LPC Technology relates to
the Field (a "Field Invention"), Proxima-and LPC shall at their own cost
diligently file, prosecute and maintain patents and patent applications covering
any such Field Invention, including without limitation Field Inventions made by
either party's respective employees or consultants, if such Field Invention is
determined, in the reasonable estimation of the developing party, to be
patentable. Each party shall discuss and evaluate with the other such Field
Inventions and shall confer with the other regarding the advisability of filing
patent applications, and in which countries, with respect to Field Inventions.
Subject to the confidentiality provisions set forth in Section 9 below, each
party shall submit to the other a substantially complete draft of each patent
application embodying a Field Invention for review and comment prior to filing.
6.1.4 Abandonment of Separately Owned Patents. In the event
that either Proxima or LPC wishes to discontinue its maintenance or prosecution
of any patents or patent applications owned by it and embodying any part of the
Proxima Technology or the LPC Technology respectively, such discontinuing party
shall (i) notify the other in writing at least sixty (60) days prior to any
deadline for action required for maintenance or prosecution, which notice shall
offer to assign to the other party such patent or patent application at no cost;
and (ii)
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furnish complete and original information regarding the patent or
application, including without limitation filings and communications with patent
authorities, to the other party promptly upon the other party's request. 'Me
other party may, in its sole discretion, elect to either (a) refuse the offer of
assignment, in which case the patent or application shall be abandoned by the
parties, or (b) accept the assignment, including without limitation the right to
exploit or license such patent or application in its sole discretion and without
accounting to the discontinuing party for any compensation or royalties
therefrom, and assume the maintenance or prosecution of the patent or
application at its own expense; provided, however, that the discontinuing party
shall have a nonexclusive, nontransferable, paid-up, worldwide license,
including the right to sublicense, to make, have made, use and sell products
covered by the patent or application (except that if the discontinuing party is
LPC, such license shall be limited by the exclusive rights to LPC Technology
granted to Proxima in this Agreement).
6.1.5 Enforcement of Separately Owned Rights. Each party shall
notify the other in the event it becomes aware of any unauthorized third party
manufacture, use or sale of a product covered by any patents or patent
applications owned by the other party. Such notice shall (i) be in writing, (H)
identify the third party, and (iii) be given to the other party within thirty
(30) days of the party's notice of such manufacture, use or sale. Upon either
party becoming aware that a third party is manufacturing, using or selling,
without authorization, products covered by its patents or patent applications,
the party owning such patent or patent application shall have the exclusive
right, at it sole expense, and in its sole control, to take action against the
third party or to settle the matter, and to retain any money judgments or
settlements resulting therefrom; provided, however, that any consent judgment or
settlement made by the party shall not diminish the rights of the other party
hereto. In the event such party brings such an action or proceeding, the other
party shall have the obligation and duty to cooperate and provide full i and
assistance to such party and its counsel in connection with any such action or
proceeding. The party initiating such action shall promptly reimburse the other
party for costs incurred as a result of such cooperation.
In the event that either party does not desire to exercise its
exclusive right to bring any given infringement action or proceeding with
respect to its solely-owned technology, the parties shall negotiate, in good
faith, to reallocate the right to bring such an action or proceeding. If the
parties have not resolved such an allocation of rights within sixty (60) days
following the date when the party owning the technology has declined to
institute a given infringement action or proceeding with respect thereto, the
non-owning party shall then be given the exclusive right to institute and
control such an action. The party owning the technology shall have the
obligation to cooperate and provide full information and assistance to the
non-owning party, at the non-owning party's expense, with respect to any such
action and any recovery from such action, after the payment of all costs
associated therewith, shall belong solely to the non-owning party.
6.2 Joint Ownership. Although, as set forth in Sections 6.1.1 and
6.1.2 above, each party shall retain all intellectual property rights in and to
proprietary technology that it has previously developed or hereafter develops
independently of any joint development arrangement
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hereunder, all intellectual property rights in and to Joint Technology shall be
allocated in accordance with this Section 6.2. Subject to the royalty provisions
set forth in Section 4.3 above, each of Proxima and LPC shall be permitted to
use, sublicense and otherwise exploit Joint Technology without restriction in
accordance with this Section 6.2; provided, however, that prior to the
termination or expiration of this Agreement, neither party shall be permitted to
sublicense any Joint Technology without the prior written approval of the
Steering Committee. 'Me determination whether or not any jointly developed
invention is considered to be Joint Technology shall be governed by general
principles of inventorship and authorship under U.S. copyright and patent law.
In the event that any dispute arises between the parties as to whether or not a
particular invention is to be considered Joint Technology and the Steering
Committee can not resolve the dispute in accordance with Section 2.3.1 above,
the parties agree to proceed to dispute resolution in accordance with Section
15.1 below.
6.2.1 Notification. Each party shall notify the other in
writing, within thirty (30) days of the conception thereof, of any Joint
Technology developed pursuant to this Agreement.
6.2.2 Protection of Joint Technology. Within ninety (90) days
of the giving of a notice under Section 6.2. 1. above, the Steering Committee
shall decide whether to pursue patent protection for the Joint Technology. (i)
If the parties (through their representatives on the Steering Committee)
mutually agree to pursue patent protection for the Joint Technology, the parties
will mutually control and share equally the cost of the prosecution of United
States and/or foreign patent applications. The parties shall retain joint
ownership of any and all patents arising from the applications, and neither
party shall grant any licenses with respect to any such jointly owned patents
without the prior written consent of the other except to the extent necessary to
have made products which use or incorporate such technology; provided, however,
that upon termination of this Agreement, each party shall have the right to
license rights under such jointly owned patents without the consent of the other
party (subject to the limitations and exclusive rights, if any, of Proxima
following such termination as set forth in Section 10). (ii) If only one party
(the "Pursuing Party") desires to pursue patent protection for Joint Technology,
that party will solely control and bear the entire cost of the prosecution of
United States and/or foreign patent applications. The Pursuing Party shall
retain sole ownership of any patent arising from any such patent application,
including without limitation the right to exploit or license such patent in its
sole discretion and without accounting to the other party for any compensation
or royalties therefrom; provided, however, that the other party shall have a
nonexclusive, nontransferable, paid-up, worldwide license, including the right
to sublicense, to make, have made, use and sell products covered by the patent
(subject, in each case, to the exclusive rights granted to Proxima hereunder).
6.2.3 Trade Secret Protection. If both parties do not wish to
seek patent protection for a certain element of Joint Technology, and either or
both parties desire to maintain Joint Technology as a trade secret both during
and/or after termination of this Agreement, (i) either party may exploit the
Joint Technology for its internal purposes without accounting to the other party
therefor, (ii) either party may license the Joint Technology to a third party
solely for the third party's internal purposes, provided that the third party
has entered into an appropriate
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confidentiality agreement containing substantially the same protections as those
contained in Section 9 below; and (iii) the Joint Technology shall be deemed the
Confidential Information (as defined in Section 9 below) of each party hereto,
and both parties shall be subject to the obligations of confidentiality set
forth in Section 9.
6.2.4 No Protection. If both parties agree in writing that
neither patent protection nor trade secret status is desired for any Joint
Technology, (i) either party may make, have made, use or sell the Joint
Technology or products covered by the Joint Technology and (ii) either party may
license the Joint Technology to a third party, without accounting to the other
therefor (subject, in each case, to the exclusive rights granted to Proxima
hereunder).
6.2.5 Abandonment of Jointly Owned Patents. In the event that
either party wishes to discontinue its obligations relating to any jointly owned
patent or patent application under Section 6.2.2 (i) hereto (an "Abandoning
Party"), such party shall (a) notify the other in writing at least sixty (60)
days prior to any deadline for action required for maintenance or prosecution of
the patent or patent application, which notice shall offer to assign the
Abandoning Party's interest in the patent or patent application to the other
party at no cost. Such other party may, in its sole discretion, elect to either
(a) refuse the offer of assignment, in which case the patent or application
shall be abandoned by the parties; or (b) accept the assignment, including
without limitation the right to exploit or license such patent or application in
its sole discretion and without accounting to the discontinuing party for any
compensation or royalties therefrom, and assume the maintenance or prosecution
of the patent or application at its own expense; provided, however, that the
Abandoning Party shall have a nonexclusive, nontransferable, paidup, worldwide
license, including the right to sublicense, to make, have made, use and sell
products covered by the patent or application (except that if the Abandoning
Party is LPC, such license shall be limited by the exclusive rights to Joint
Technology granted to Proxima in this Agreement). Any abandonment of Joint
Technology that has become separately owned technology pursuant to Section 6.2.2
(H) above shall be governed by the provisions of Section 6.1.4.
6.2.6 Enforcement of Rights. In the event either party becomes
aware of any unauthorized third party manufacture, use or sale of a product
covered by any jointly owned intellectual property rights, it shall promptly
notify the other party. Such notice shall (i) be in writing, (ii) identify the
third party, and (iii) be given to the other party within thirty (30) days of
the party's notice of such manufacture, use or sale. If the parties mutually
agree to take action against the third party, they shall mutually control and
share the expenses of an action against the third party, and shall share equally
any money judgments or settlements resulting therefrom. If only one party
desires to take action against the third party, the action shall be under the
sole control of and at the sole expense of that party, and that party shall
retain any money judgments or settlements resulting therefrom.
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SECTION 7
INDEMNIFICATION
7.1 LPC Components.
7. 1.1 LPC Obligation. In the event any claim, suit or
proceeding (a "Claim") is brought against Proxima or its customers on the issue
of infringement of any patent, copyright, trademark, mask work or other
intellectual property right in any part of the world by any LPC Component
manufactured or distributed by or for Proxima or LPC, LPC shall bear the costs
of the defense of any such Claim, including any settlement or final judgment of
such Claim plus costs and attorneys' fees awarded with respect to such Claim.
Proxima agrees to provide LPC with control over the defense and/or settlement
negotiations related to any such Claim and LPC shall be released from its
obligations under this Section 7.1.1 unless (i) Proxima promptly notifies LPC in
writing of any known Claim; (ii) Proxima gives LPC authority to proceed as
contemplated herein; and (iii) Proxima gives LPC proper and full information and
assistance in settling and/or defending any such Claim.
7.1.2 Limitation. Notwithstanding the provisions of Section
7.1.1 above, LPC assumes no liability to Proxima for:
7.1.2.1 any Claim with respect to any LPC Component
used in combination with other products or services which would not cover the
LPC Component standing alone;
7.11.2 any Claim with respect to any LPC Component
that has been modified in any manner by Proxima or any third party licensed by
Proxima to manufacture the LPC Components and such claim would riot have
occurred but for such modification; or
7.1.2.3 any trademark infringements involving any
marking or branding applied to any LPC Component by or at the request of
Proxima.
7.1.3 Entire Liability. THE FOREGOING PROVISIONS OF THIS
SECTION 7.1 STATE THE ENTIRE LIABILITY OF LPC, AND THE EXCLUSIVE REMEDY OF
PROXIMA, WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
TRADEMARKS, MASK WORK RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY LPC
COMPONENTS MANUFACTURED OR DISTRIBUTED BY OR FOR EITHER PARTY DURING OR AFTER
THE TERM OF THIS AGREEMENT.
7.2 Proxima COMPONENTS.
7.2.1 Proxima Obligation. In the event any claim, suit or
proceeding (a 'Claim') is brought against LPC or its customers on the issue of
infringement of any patent,
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copyright, trademark, mask work or other intellectual property right in any part
of the world by any Proxima Component manufactured or distributed by or for LPC
or Proxima, Proxima shall bear the costs of the defense of any such Claim,
including any settlement or final judgment of such Claim plus costs and
attorneys" fees awarded with respect to such Claim. LPC agrees to provide
Proxima with control over the defense and/or settlement negotiations related to
any such Claim and Proxima shall be released from its obligations under this
Section 7. 1. 1 unless (i) LPC promptly notifies Proxima in writing of any known
Claim; (ii) LPC gives Proxima authority to proceed as contemplated herein; and
(iii) LPC gives Proxima proper and full information and assistance in settling
and/or defending any such Claim.
7.2.2 Limitation. Notwithstanding the provisions of Section
7.2.1 above, Proxima assumes no liability to LPC for:
7.2.2.1 any Claim with respect to any Proxima
Component used in combination with other products or services which would not
cover the Proxima Component standing alone,
7.2.2.2 any Claim with respect to any Proxima
Component that has been modified in any manner by LPC or any third party
licensed by LPC to manufacture the Proxima Components and such claim would not
have occurred but for such modification; or
7.2.2.3 any trademark infringements involving any
marking or branding applied to any Proxima Component by or at the request of
LPC.
7.2.3 Entire Liability. THE FOREGOING PROVISIONS OF THIS
SECTION 7.2 STATE THE ENTIRE LIABILITY OF PROXIMA, AND THE EXCLUSIVE REMEDY OF
LPC, WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
TRADEMARKS, MASK WORK RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY PROXIMA
COMPONENTS MANUFACTURED OR DISTRIBUTED BY OR FOR EITHER PARTY DURING OR AFTER
THE TERM OF THIS AGREEMENT.
7.3 Joint Components.
7.3.1 Joint Indemnification. In the event any claim, suit or
proceeding (a "Claim") is brought against either party on the issue of
infringement of any patent, copyright, trademark, mask work or other
intellectual property right in any party of the world by any Joint Component
manufactured or distributed by either party, both parties shall have the
obligation and duty to share equally in the costs of the defense any such Claim,
including any settlement or final judgment of such Claim plus costs and
attorneys' fees awarded with respect to such Claim. The parties agree to share
joint control over the defense and/or settlement negotiations related to any
such Claim and each party (each an "Indemnifying Party") shall be released from
its obligations under this Section 7.3.1 unless (i) the other party promptly
notifies the Indemnifying Party in writing of any known Claim; (ii) the other
party gives the Indemnifying Party authority
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to proceed as contemplated herein; and (iii) the other party gives the
Indemnifying Party proper and full information and assistance to settle and/or
defend any such Claim.
7.3.2 Limitation. Notwithstanding the provisions of Section
7.3.1 above, each party assumes no liability to the other for:
7.3.2.1 any Claim with respect to any Joint Component
used in combination with other products or services which would not cover the
Joint Component standing alone;
7.3.2.2 any Claim with respect to any Joint Component
that has been modified in any manner by the other party or any third party
licensed by the other party to manufacture the Joint Components and such Claim
would not have occurred but for such modification; or
7.3.2.3 any trademark infringements involving any
marking or branding applied to a Joint Component by or at the request of the
other party.
SECTION 8
GENERAL INDEMNITIES
8.1 Indemnification by Proxima. All financial obligations associated
with Xxxxxxx's business are the sole responsibility of Proxima. All sales and
other agreements between Proxima and its customers are Proxima's exclusive
responsibility and shall have no effect on Proxima's obligations under this
Agreement. Proxima shall be solely responsible for, and shall indemnify and hold
LPC and its directors, officers, employees and agents free and harmless from,
any and all losses, claims, damages, proceedings, lawsuits and expenses
(including LPC's attorneys' fees) arising out of the acts of Proxima, its
employees or its agents.
8.2 Indemnification by LPC. All financial obligations associated with
LPC's business are the sole responsibility of LPC. All sales and other
agreements between LPC and its customers are LPC's exclusive responsibility and
shall have no effect on LPC's obligations under this Agreement. LPC shall be
solely responsible for, and shall indemnify and hold Proxima and its directors,
officers, employees and agents free and harmless from, any and all losses,
claims, damages, proceedings or lawsuits and expenses (including Xxxxxxx's
attorneys" fees) arising out of the acts of LPC, its employees or its agents.
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SECTION 9
CONFIDENTIAL INFORMATION
9.1 Definition. The term "Confidential Information" shall mean any
information disclosed by one party to the other in connection with this
Agreement which is in written, graphic, machine-readable or other tangible form
and is marked "Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Confidential Information may also include information
that is disclosed orally or visually, provided that such information is
designated as confidential at the time of disclosure and confirmed in writing as
confidential within a reasonable time after its oral or visual disclosure.
9.2 Obligation. Each party shall treat as confidential all Confidential
Information received from the other party, shall not use such Confidential
Information except as expressly permitted under this Agreement, and shall not
disclose such Confidential Information to any third party without the other
party's prior written consent, except to employees or contractors of a party who
are similarly bound by a written agreement to keep such information confidential
or to entities to whom the receiving party is permitted to license or sublicense
such Confidential Information. Without limiting the foregoing, each party shall
use at least the same degree of care which it uses to prevent the disclosure of
its own confidential information of like importance to prevent the disclosure of
the other party's Confidential Information.
9.3 Exceptions. Notwithstanding the above, the restrictions of this
Section 9 shall not apply to information that:
9.3.1 was independently developed by the receiving party
without any use of the Confidential Information of the other party and by
employees or other agents of (or independent contractors hired by) the receiving
party who had not been exposed to such Confidential Information at the time of
development, as shown by the files and records of the receiving party;
9.3.2 becomes known to the receiving party, without
restriction, from a source other than the other party hereto without the
receiving party's knowledge of any breach of this Agreement and otherwise not in
knowing violation of the other party's rights;
9.3.3 was in the public domain at the time it was disclosed or
hereafter becomes in the public domain through no act or omission of the
receiving party;
9.3.4 was known to the receiving party, without restriction,
at the time of disclosure; or
9.3.5 is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided, however,
that the receiving party shall provide prompt notice of any such order or
requirement to the other party and shall use all reasonable
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efforts to cooperate with the other party to obtain a protective order or
otherwise prevent public disclosure of such information.
9.4 Enforcement. Each party shall exert all reasonable efforts,
including, but not limited to, the execution of proprietary non-disclosure
agreements with employees and consultants, and legal action, to enforce
compliance with the provisions of this Section 9 by its directors, officers,
employees, and any third party to whom it provides access to Confidential
Information of the other party.
9.5 Duration. Each party's obligation of non-disclosure of Confidential
Information shall continue throughout the term of this Agreement and for a
period of five (5) years thereafter in the event such party no longer retains a
continuing license to use the other party's technology and Confidential
Information following termination of this Agreement; otherwise, after
termination of this Agreement, each party shall be bound by the terms of Section
9.2 (as limited by Section 9.3) for so long as such party has a continuing
license to access and/or use the technology and Confidential Information of the
other party.
9.6 Remedies. If either party breaches any of its obligations under
this Section 9, the other party shall be entitled to equitable relief to protect
its interest therein, including but not limited to injunctive relief, as well as
money damages.
SECTION 10
TERM AND TERMINATION
10.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect unless and until it is terminated as
provided below.
10.2 Termination for Material Default. If either party defaults in the
performance of any material provision of this Agreement, then the nondefaulting
party may give written notice to the defaulting party that if the default is not
cured within sixty (60) days the Agreement will be terminated. If the
nondefaulting party gives such notice and the default is not cured during the
sixty (60) day period, then the nondefaulting party shall have the right to
terminate this Agreement at the end of that period immediately upon giving
notice to the defaulting party.
10.3 Termination by Proxima. Proxima may terminate this Agreement (i)
at any time following the four (4) month period beginning on the Effective Date
upon ninety (90) days' prior written notice to LPC, (ii) at any time following
the Effective Date if LPC is acquired by any entity which could reasonably be
deemed to be a competitor of Proxima or (iii) at any time if LPC shall have
breached the representation set forth in Section 2.9(c) of the Stock Purchase
Agreement or shall be unable to confirm such representation at the time of a
subsequent Closing under the Stock Purchase Agreement pursuant to Section 4.2.1
thereof, provided, however, that with respect to termination by Proxima pursuant
to clause (iii) herein, (a) Proxima shall have
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previously given notice to LPC that it believes LPC to be in breach of the
representation set forth in Section 2.9 of the Stock Purchase Agreement, (b)
Proxima shall have allowed LPC a thirty (30) day period to present a
satisfactory program to remedy the breach hereunder and such period shall have
elapsed without LPC presenting such a satisfactory program, (c) Proxima shall
not be required by this Agreement to provide any additional funding to LPC until
such time as LPC has presented such a satisfactory program, and (d) upon
presentation of such a satisfactory program, Proxima will immediately purchase,
with no fifteen (15) day delay, Warrant Shares or Additional Shares as specified
in any Funding Request theretofore received by Proxima. In the event that,
following such thirty-day remedy period, LPC has not presented such a
satisfactory program and Proxima terminates this Agreement pursuant to clause
(iii) above, (a) the parties agree to wind down the Development Program during a
period beginning on the date of termination and continuing for a maximum of
thirty (30) days therefrom and (b) following the "wind down" period, Xxxxxxx
agrees, to the extent that Proxima has not already provided such funding, to
reimburse LPC for up to fifty percent (50%) of the costs incurred by LPC during
the "wind down" period.
10.4 Termination by LPC. LPC may terminate this Agreement (i)
immediately and without notice (a) in the event Proxima fails to purchase
Additional Shares or otherwise provide additional funds pursuant to Section 1.4
of the Stock Purchase Agreement following receipt of a Funding Request after the
Warrant has been fully exercised or (b) in the event Proxima fails to purchase
Warrant Shares following Proxima's receipt of a Funding Request and the
fulfillment of the closing conditions set forth in Section 4.2 of the Stock
Purchase Agreement, or (ii) at any time following the two (2) year period
beginning on the Effective Date in the event Proxima is Aggressively Marketing
(as defined in Section 3.7 above) no Designated Products; provided, however,
that (a) LPC shall have previously given notice to Proxima that it is
Aggressively Marketing no Designated Product and (b) LPC shall have allowed
Proxima a thirty (30) day period to present a satisfactory program to begin
Aggressively Marketing at least one Designated Product. and such period shall
have elapsed without Proxima presenting such a satisfactory program.
10.5 Rights Upon Termination. Upon termination of this Agreement
pursuant to Sections 10.2, 10.3 or 10.4 above, the rights of the parties shall
be governed by the provisions of this Section 10.5:
10.5.1 Proxima's Rights.
a. Upon Material Default by Proxima. If termination
of this Agreement occurs as a result of Proxima's material default pursuant to
Section 10.2 above, Proxima shall have no rights to the LPC Technology;
provided, however, that Proxima's rights to the Proxima Technology and the Joint
Technology shall remain unaffected by any such termination. For purposes of this
Section 10.5.1, the occurrences set forth in Section 10.4 above shall not
constitute a material default of the Agreement by Proxima.
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b. Termination for Failure to Provide Additional
Funding or Upon Material Default by LPC. If termination of this Agreement occurs
(x) as a result of Proxima's failure to provide additional funding requested by
LPC as set forth in Sections 10.4(i) above, (y) as a result of LPC's material
default pursuant to Section 10.2 above, or (z) pursuant to Section 10.3 above,
Xxxxxxx's continuing rights under the LPC Technology shall be determined as
follows:
(i) In the event Proxima's total funding to
LPC under the Development Program contemplated by this Agreement has not reached
$2 million at the time of termination of this Agreement, Proxima shall retain no
rights under the LPC Technology unless the termination is pursuant to Section
10.3, (ii); or Section 10.3 (iii).
(ii) In the event that Proxima's total
funding to LPC under the Development Program contemplated by this Agreement has
equaled or exceeded $2 million, but has not yet reached $2.9 million, at the
time of termination of this Agreement, or if the termination is pursuant to
Section 10.3 (ii) or Section 10.3 (iii) (regardless of the amount of Proxima's
total funding to LPC under the Development Program), (x) LPC shall grant to
Proxima an exclusive, nontransferable, perpetual license under the LPC
Technology to make, have made, use and sell any laser-based product, including
without limitation Products incorporating LPC Components, within the meeting
room and classroom market segments of the Field and (y) LPC shall grant to
Proxima a nonexclusive, nontransferable, perpetual license under the LPC
Technology to make, have made, use and sell any laser-based product, including
without limitation products incorporating LPC Components, in all market segments
of the Field other than the meeting room and classroom market segments;
(iii) In the event that Proxima's total
funding to LPC under the Development Program contemplated by this Agreement has
exceeded $2.9 million at the time of termination of this Agreement, LPC shall
grant to Proxima an exclusive (subject to any rights already declined by Proxima
pursuant to Section 3.4 above), nontransferable, perpetual license under the LPC
Technology to make, have made, use and sell any laser-based products, including
without limitation Products incorporating LPC Components, within the entire
Field.
(iv) For purposes of any licenses that may
be granted by LPC to Proxima pursuant to Subsections (ii) or (iii) above, (x)
the nature of any exclusive license granted to Proxima shall be subject to the
exceptions contained in Sections 3.3 and 3.4 of this Agreement which shall
survive termination of this Agreement; and (y) Proxima shall pay a fixed royalty
to LPC for such license in accordance with the provisions of Sections 4.3, 4.4
and 4.5 above which shall survive termination of this Agreement; provided,
however, that if termination of this Agreement occurs as a result of LPC having
been acquired by a competitor of Proxima, the maximum royalty rate payable by
Proxima shall be [ *** ].
c. Termination for Failure to Aggressively Market. In
the event of termination of this Agreement as a result of Xxxxxxx's Aggressively
Marketing no Designated Products as set forth in Section 10.4(ii) above, or in
the event of Proxima similarly is
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32
Aggressively Marketing no Designated Products after termination of this
Agreement, all of the rights and licenses granted by LPC to Proxima pursuant to
this Agreement shall continue according to their same terms; provided, however,
that all such licenses shall immediately become nonexclusive to the extent they
are not already nonexclusive.
10.5.2 LPC's Rights.
a. Upon Material Default by LPC. If termination of
this Agreement occurs as a result of LPC's material default pursuant to Section
10.2 above, LPC shall have no rights to the Proxima Technology; provided,
however, that LPC's rights to the LPC Technology and the Joint Technology shall
remain unaffected by any such termination, which rights shall be subject only to
limitations imposed as a result of rights granted to Proxima upon such
termination. For purposes of this Section 10.5.2, the occurrence set forth in
Section 10.3(ii) above shall constitute a material default of the Agreement by
LPC.
b. For Any Reason Other Than LPC's Material Default.
If termination of this Agreement occurs for any reason other than LPC's material
default, then LPC shall have the following rights:
(i) with respect to LPC Technology and Joint
Technology, LPC shall have the right to use such technology without limitation,
except as imposed as a result of rights granted to Proxima upon such
termination;
(ii) with respect to Proxima Technology
developed by LPC with funds provided to LPC by Proxima pursuant to the terms of
this Agreement, which technology is unique to laser based projectors and is not
essential to the operation of any projector (including, without limitation,
projection optics and laser diode drivers), LPC shall have a
non-exclusive, nontransferable, perpetual royalty-free license under such
Proxima Technology to make, have made, use and sell any laser-based products,
including without limitation Products, but subject to limitations imposed as a
result of any rights granted to Proxima upon termination of this Agreement;
(iii) with respect to Proxima Technology not
developed by LPC, which technology is unique to laser based projectors and is
not essential to the operation of any projector (including, without
limitation, projection optics and laser diode drives), LPC shall be
entitled to receive from Proxima a non-exclusive, nontransferable, perpetual,
license under such Proxima Technology to make, have made, use and sell any
laser-based products, including without limitation Products, but subject to any
limitations imposed as a result of rights granted to Proxima upon termination of
this Agreement; provided, however, that at Proxima's sole option, the
consideration from LPC to Proxima for the grant of the aforementioned license
shall include either (i) the reimbursement of Proxima by LPC for the development
costs expended by Proxima in the Development of such technology (in a manner
similar to LPC's accounting for the use of proceeds pursuant to Section 2.4.1
above) or (ii) the payment by LPC to Proxima of a
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reasonable royalty for use of such technology, such royalty to be determined
through the good faith negotiation of the parties following termination of this
Agreement.
(iv) Notwithstanding anything hereunder to
the contrary, in no event shall LPC obtain, following the termination or
expiration of this Agreement, any rights in and to Xxxxxxx's Cyclops technology
and the 'look and feel' of Proxima's projector products.
10.6 Survival of Certain Terms. The provisions of Sections 4.3, 4.4,
4.5, 4.6 (to the extent it addresses Release Conditions which may occur after
such termination or expiration), 6.1.4, 6.1.5 (but only with respect to a party
that has a continuing license in and to the other parry's solely-owned
technology pursuant to Section 10.5 above), 6.2, 7, 8, 9, 10, 11, 12, and 15
shall survive the termination of this Agreement for any reason.
SECTION 11
COMPLIANCE WITH LAWS
11.1 Governmental Requirements.
11.11 Registration, Notification and Recordation of Agreement.
If the terms of this Agreement are such as to require or make it appropriate
that the Agreement or any part of it be registered with or reported to a
national or supra-national agency of any area in which a party will do business
under the Agreement, then such party will, at least fifteen (15) days prior to
commencing to do any business under this Agreement in any such area, and at the
sole expense of such party, undertake such registration or report. Notice and
appropriate verification of the act of registration or report of any agency
ruling resulting from such registration will be provided immediately to the
other party by such party. Any formal recordation of this Agreement required by
the laws of any national or supra-national agency of any area in which a party
will do business shall also be carried out by such party, at its sole expense,
and appropriately verified proof of such recordation shall be furnished
immediately to the other party.
11.1.2 Export Regulation. The Export Regulations of the United
States Department of Commerce prohibit, except under a special validated
license, the exportation from the United States of technical data relating to
certain commodities (listed in the Export Administration Regulations), unless
the exporter has received certain written assurances from the foreign importer.
Each party hereby covenants and agrees, at all times during the term of this
Agreement, to comply with the Export Administration Regulations of the United
States Department of Commerce, as currently in effect and as in effect in the
future, and hereby gives to the other party assurances called for in Part 379.4
of the Export Administration Regulations. 'Me requirement on the part of any
party to supply technology to the other party shall be subject, at all times
during the term of this Agreement, to all laws and regulations of the United
States now or hereafter applicable to the exportation of technical data.
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SECTION 12
LIMITATION OF LIABILITY
NEITHER PROXIMA NOR LPC SHALL UNDER ANY CIRCUMSTANCES BE LIABLE TO THE OTHER FOR
ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT
LIMITED TO, LOSS OF PROFITS, REVENUE, OR BUSINESS OR THE COST OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES) RESULTING FROM OR IN ANY WAY RELATED TO THIS
AGREEMENT, OR THE TERMINATION OF THIS AGREEMENT, OR ARISING OUT OF OR ALLEGED TO
HAVE ARISEN OUT OF A BREACH OF THIS AGREEMENT. THIS LIMITATION APPLIES
REGARDLESS OF WHETHER SUCH DAMAGES ARE SOUGHT BASED ON BREACH OF CONTRACT,
NEGLIGENCE, OR ANY OTHER LEGAL THEORY. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
SECTION 13
THIRD PARTY LICENSES
13.1 General Obligation. Either Proxima or LPC may determine that it is
desirable to license technology from a third party in connection with their
respective separately owned technologies or the Joint Technology. In the event
that such third party licenses are obtained by a party, such party will use
commercially reasonable efforts to obtain sublicensing rights under such third
party licenses for the benefit of the other party. 'Me responsibility for
obtaining such third party licenses and the payment of license fees and
royalties thereunder shall be governed by Sections 13.2, 13.3 and 13.4 below:
13.2 LPC Components.
13.2.1 LPC Components to be Sold to Proxima and Third Parties.
Except as provided by Section 14.1.1 below, if a license from a third party is
required, currently or in the future, for the manufacture and sale of an LPC
Component, which LPC Component LPC intends to sell to third parties as well as
to Proxima, then LPC solely shall be responsible for obtaining such third party
license and for paying all fees and expenses associated with such third party
license, including (without limitation) all legal fees, lump-sum and minimum
payments and royalties; provided, however, LPC shall be entitled to include such
royalties as a cost of manufacture of such LPC Components in determining the
sales price payable by Proxima for such LPC Components manufactured by LPC and
sold to Proxima.
13.2.2 LPC Components to be Sold Only to Proxima. If a license
from a third party is required, currently or in the future, for the manufacture
and sale of an LPC Component,
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which LPC Component LPC does not intend to sell to any party other than Proxima,
then, at Proxima's option, either LPC or Proxima shall be responsible for
obtaining such third party license and Proxima shall be solely responsible for
paying all fees and expenses associated with such third party license, including
(without limitation) all legal fees, lump-sum and minimum payments and
royalties, except for royalties payable by LPC as a result of the manufacture
and sale of such LPC Component by LPC to Proxima; provided, however, LPC shall
cooperate with Proxima if Proxima elects to pay for such fees and costs
(excluding royalties) as costs of the Development Program and such amounts shall
be considered to be Committee Authorized Expenditures (as defined in Section
2.4.2 above); provided further, however, that any royalties payable by LPC as a
result of the manufacture and sale of such LPC Component may be included by LPC
as a cost of manufacture of such LPC Component in determining the sales price
payable by Proxima for such LPC Component manufactured by LPC and sold to
Proxima.
13.3 Joint Components. If a license from a third party is required,
currently or in the future, for the manufacture and sale of a Joint Component or
a Product incorporating a Joint Component, then the Steering Committee shall be
responsible for determining which party shall be obligated to negotiate and
obtain such third party license. If LPC intends to sell Joint Components or
products incorporating Joint Components to parties other than Proxima, then LPC
shall share equally with Proxima in the fees and costs associated with obtaining
such third party license, except that each party shall be responsible for all
royalties payable on Joint Components or products incorporating Joint Components
sold by such party. If LPC does not intend to sell Joint Components or products
incorporating Joint Components to parties other than Proxima, then Proxima shall
be solely responsible for paying all fees and costs associated with such third
party license, except for royalties payable on a sale of a Joint Component or a
product incorporating a Joint Component by LPC to Proxima, which shall be
payable by LPC; provided, however, LPC shall be entitled to include such
royalties as a cost of manufacture of such Joint Components in determining the
sales price payable by Proxima for such Joint Components.
13.4 Proxima Technology. In the event that a license is required from a
third party for the manufacture and sale of products incorporating Proxima
Technology, then Proxima shall be solely responsible for obtaining such third
party license and for paying all fees and costs associated with such third party
license, including (without limitation) all legal fees, lump-sum and minimum
payments and royalties; provided, however, Proxima shall be entitled to include
such royalties as a cost of manufacture of such products incorporating Proxima
Technology in determining the sales price payable by LPC for the purchase by LPC
of such products incorporating Proxima Technology.
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SECTION 14
WARRANTIES
14.1 LPC Warranty.
14.1.1 Express Warranty. LPC represents and warrants to
Proxima that it has entered into the Patlex License (as that term is defined in
Section 2.9 of the Stock Purchase Agreement).
14.1.2 LPC Warranty Disclaimer. EXCEPT AS SET FORTH IN
SECTION 14.1.1 ABOVE AND THE STOCK PURCHASE AGREEMENT, LPC MAKES
AND PROXIMA RECEIVES NO WARRANTIES WITH RESPECT TO THE LPC TECHNOLOGY OR JOINT
TECHNOLOGY, EXPRESS, IMPLIED, STATUTORY OR IN ANY PROVISION OF THIS AGREEMENT OR
COMMUNICATION WITH PROXIMA, AND LPC SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
14.2 Proxima Warranty Disclaimer. EXCEPT AS SET FORTH IN THE STOCK
PURCHASE AGREEMENT, PROXIMA MAKES AND LPC RECEIVES NO WARRANTIES WITH RESPECT TO
THE PROXIMA TECHNOLOGY OR JOINT TECHNOLOGY, EXPRESS, IMPLIED, STATUTORY OR IN
ANY PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH LPC, AND PROXIMA
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
SECTION 15
GENERAL PROVISIONS
15.1 Governing Law and Dispute Resolution. The rights and obligations
of the parties under this Agreement shall be governed by and construed under the
laws of the State of California, including its Uniform Commercial Code, without
reference to conflict of laws principles. Subject to the provisions of Section
2.3.1, any dispute or claim arising out of this Agreement shall be referred to
non-binding mediation pursuant to which two (2) senior executives from each of
Proxima and LPC shall meet with each other and an independent mediator mutually
acceptable to the parties and familiar with the technology covered by this
Agreement in order to resolve their differences. If the parties are unable to
resolve their dispute or claim through mediation, such dispute or claim shall be
finally settled by binding arbitration in San Diego, California by one (1)
arbitrator, which arbitration shall be administered by and in accordance with
the then existing Rules of Practice and Procedure of Judicial Arbitration and
Mediation Services, Inc. ("JAMS"). Such a shall be governed by the substantive
laws of the State of California, without reference to conflict of law
principles. Judgment on the
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award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, in the event of breach by either party
of Section 9, either party may apply to any court of competent jurisdiction for
injunctive relief without breach of this arbitration provision.
15.2 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter herein and
supersedes all previous agreements and understandings, whether oral or written,
between the parties hereto with respect to the subject matter herein. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless set forth in a writing signed by
the party to be bound thereby. Capitalized terms not defined herein but defined
in the Stock Purchase Agreement shall have the meanings ascribed to them in the
Stock Purchase Agreement.
15.3 Confidentiality of Agreement and Activities. Each party agrees
that the terms and conditions of this Agreement shall be treated as the
Confidential Information of each party and that, following the Effective Date,
no reference to the terms and conditions of this Agreement or to activities
pertaining hereto shall be made in any form of public or commercial advertising
without the prior written consent of the other party; provided, however, that
each party may disclose the terms and conditions of this Agreement:
15.3.1 as required by any court, administrative agency or
other governmental body;
15.3.2 as otherwise required by law, including without
limitation any disclosures required by the Securities and Exchange Commission,
15.3.3 to legal counsel of the parties;
15.3.4 in confidence, to accountants, banks, and financing
sources and their advisors;
15.3.5 in confidence, in connection with the enforcement of
this Agreement or rights under this Agreement; or
15.3.6 in confidence, in connection with a merger or
acquisition or proposed merger or acquisition, or the like.
15.4 Waiver. No delay, omission, or failure to exercise any right or
remedy provided for in this Agreement shall be deemed to be a waiver thereof or
an acquiescence in the event giving rise to such remedy, but every such right or
remedy may be exercised, from time to time, as may be deemed expedient by the
party having such right or remedy.
15.5 Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent by courier or facsimile confirmed in writing and
addressed to each party at the
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address shown for such party at the beginning of this Agreement or at such other
address for which such party gives notice hereunder. Such notice shall be deemed
to have been given when delivered or, if delivery is not accomplished by reason
of some fault of the addressee, when tendered.
15.6 Force Majeure. Nonperformance of either party, except for the
making of payments, shall be excused to the extent that performance is rendered
impossible by strike, fire, flood, earthquake, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where the failure to
perform is beyond the control and not caused by the negligence of the
nonperforming party.
15.7 No Assignment. Neither party shall be permitted to assign its
rights or obligations under this Agreement without the prior written consent of
the other party, which consent shall not be unreasonably withheld, and any
purported assignment without such consent shall have no force or effect;
provided, however, that either party may assign this Agreement without consent
to a successor to all or substantially all of its assets to which this Agreement
relates. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and assigns.
15.8 Expenses. All expenses incurred in connection with the preparation
and execution of this Agreement shall be borne by the party incurring such
expenses. The prevailing party in any legal action brought by one party against
the other arising out of this Agreement shall be entitled, in addition to any
other rights and remedies it may have, to reimbursement for its expenses,
including court costs and reasonable attorneys' fees.
15.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
15.10 Independent Contractors. The relationship of Proxima and LPC
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other party, (H)
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other party for any purpose
whatsoever.
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39
15.11 Public Announcement. At a mutually agreed time, but not later
than five (5) business days following the Effective Date, Proxima and LPC shall
issue a joint press release announcing the relationship contemplated by this
Agreement in such a manner as is mutually agreed upon in writing by the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
in duplicate by duly authorized officers or representatives as of the date first
above written.
PROXIMA CORPORATION LASER POWER CORPORATION
By: /s/ X. XXXXX By: /s/ XXXXX X. XXXXXXX
---------------------------- ---------------------------
Name: X.X. Xxxxx Name: Xxxxx X. Xxxxxxx
------------------------- ------------------------
Title: CEO Title: Chairman, CEO
------------------------- ------------------------
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Exhibit A
PRODUCTS
PROJECTORS
41
Exhibit B
PROXIMA COMPONENTS
1. Electronic Circuitry
2. Mechanical Packaging
3. Projection Optic
4. Software
5. Firmware
6. User Controls
7. User Interface
8. Look and Feel
LPC COMPONENTS
1. Microlasers
2. Rotating Scanning Systems
3. Laser Optics
4. Individually Addressable Microlaser Arrays consisting of individually
addressable arrays of laser diodes optically coupled to laser and/or
nonlinear crystals, provided that the diode arrays are not developed by
a third party with funds provided to such third party directly by
Xxxxxxx (i.e., funds other than those funds provided to LPC and `passed
through' to the third party).
JOINT COMPONENTS
1. Individually Addressable Laser Arrays consisting of individually
addressable arrays of laser diodes optically coupled to laser and/or
nonlinear crystals that may employ LPC Technology and that are developed
by a third party with funds provided to such third party directly by
Xxxxxxx (i.e., funds other than those funds provided to LPC and `passed
through' to the third party).
2. Mathematical Algorithms
42
Exhibit C page 1
[***]
* Confidential Treatment Requested
43
Exhibit C page 2
MEMPHIS-MILESTONE DEFINITIONS:
[***]
* Confidential Treatment Requested
44
Exhibit C page 3
[***]
* Confidential Treatment Requested
45
Exhibit C page 4
Memphis Development Plan
This page depicts in PERT chart format 14 summary tasks along with start/stop
dates and major milestones.
46
Exhibit C page 5
Memphis Development Plan
This page depicts in PERT chart format subtasks under the 14 summary tasks with
start/stop dates, fixed delays and major milestones.
47
Exhibit C page 6
Memphis Development Plan
This page depicts in PERT chart format subtasks under the 14 summary tasks with
start/stop dates, fixed delays and major milestones.
48
Exhibit C page 7
Memphis Development Plan
This page depicts in PERT chart format subtasks under the 14 summary tasks with
start/stop dates, fixed delays and major milestones.
49
Exhibit C page 8
[***]
* Confidential Treatment Requested
50
Exhibit C page 9
[***]
* Confidential Treatment Requested
51
Exhibit C page 10
[***]
* Confidential Treatment Requested
52
Exhibit C page 11
[***]
* Confidential Treatment Requested
53
Exhibit C page 12
[***]
* Confidential Treatment Requested
54
Exhibit C page 13
[***]
* Confidential Treatment Requested
55
Exhibit C page 14
[***]
* Confidential Treatment Requested
56
Exhibit C page 15
[***]
* Confidential Treatment Requested
57
Exhibit D
INITIAL STEERING COMMITTEE MEMBERSHIP
1. Art Xxxxxx
Xxx Xxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxx
