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Exhibit 10.17
LICENSE AGREEMENT
THIS AGREEMENT made as of the 1st day of March 1994, between XXXXXX
INDUSTRIES, INC., a corporation organized and existing under the laws of the
State of Delaware, having a place of business at 00 Xxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000, ("Xxxxxx"), and XXXX XXXXXXXXXX, d/b/a ALLIED CONSULTING AND
ENGINEERING SERVICES, having its principal place of business at 0000 Xxxxx Xxxx
Xxxxxx, Xxxxxx, Xxxx 00000 ("ACES").
W I T N E S S E T H:
WHEREAS, ACES owns or controls exclusive rights to certain
inventions, methods, processes, elements, techniques, and manufacturing
technology pertaining to a "Licensed Product," as that term is hereinafter
defined; and
WHEREAS, Xxxxxx wishes to enter into an agreement for ACES's grant
of an exclusive license, as hereinafter described, for the manufacture,
marketing and sale of the Licensed Product,
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and ACES is willing to grant the same, subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants and agreements herein contained, it is agreed by and between
the parties hereto, as follows:
1. DEFINITIONS.
(a) The preamble to this Agreement shall form an integral part
hereof.
(b) Unless otherwise specified by subject and context, the
words appearing in the first column of the following table whenever used in this
Agreement, should bear the meaning set opposite them respectively, in the second
column thereof:
WORDS MEANINGS
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Manufacturing Technology (a) Parts list; (b) Manufacturing Drawings; (c)
Process Documentation; (d) Schematics; (e) all
drawings required for fabrication to source
control drawing and (f) all other technical data,
designs, plans, specifications, methods,
processes, systems, and any other information and
documentation, whether patentable or not, relating
to the Licensed Product and owned or controlled by
ACES which will, when properly utilized by one
skilled in the art, enable Xxxxxx to manufacture
the Licensed Product.
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Peripheral Equipment Equipment including test fixtures, prototypes,
test equipment, tooling and software specified on
Schedule 1 annexed hereto.
Licensed Product UHF Command & Control System known as "MOTHR",
including all future product enhancements and
modifications.
2. GRANT.
ACES grants to Xxxxxx, upon the terms and conditions hereinafter set
forth, the exclusive worldwide right and privilege to manufacture and sell the
Licensed Product in all industries and for all applications, and to sublicense
others with the same rights and privileges.
3. WARRANTIES OF ACES.
ACES warrants, represents and covenants as follows:
(a) Except for completing its backlog of orders set forth on
Schedule 2, during the term of this Agreement it will not manufacture or sell
the Licensed Product or grant or assign to any other person, firm or entity any
license right or privilege to manufacture, sell, or license the Licensed
Product.
(b) The Licensed Product have undergone and successfully
completed Qualification Testing and Acceptance by applicable governmental
agencies, and ACES shall provide to Xxxxxx such certificates or other
documentation as Xxxxxx reasonably requests to confirm the foregoing.
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(c) ACES has the corporate authority to execute, deliver and
perform this Agreement and to convey the License. The execution, delivery and
performance of this Agreement by ACES and the consummation of the transactions
contemplated hereby do not and will not conflict with, result in any breach of
any of the provisions of, constitute a default under, or violate ACES's Articles
of Incorporation or By-laws or any indenture, mortgage, lease, loan agreement
or other agreement or instrument to which ACES is party, or any law, statute,
rule or regulation to which ACES is subject. This agreement constitutes a valid
and binding obligation of ACES and is enforceable in accordance with its terms.
(d) All representations and warranties of ACES set forth
herein are complete, accurate and true statements of all material facts stated
therein and do not omit to state any material facts necessary to make the
statements contained therein not misleading.
(e) The representations and warranties made herein by ACES
shall survive the term of this Agreement.
4. DISCLOSURE TO XXXXXX.
(a) Within ten (10) days after the commencement of the term
hereof, ACES shall provide to Xxxxxx the Manufacturing
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Technology and Peripheral Property in the manner determined mutually by the
parties.
(b) During the term of this Agreement, ACES will make
available to Xxxxxx, without additional charge, data relating to the use and
application of the Licensed Product if and whenever the same is obtained or
becomes available to ACES.
5. WARRANTIES OF XXXXXX.
Xxxxxx accepts the license, rights and privileges granted to it as
set forth in this Agreement and covenants and warrants as follows:
(a) Xxxxxx will keep full, true and accurate books of account
regarding the amounts payable to ACES from time to time by way of
royalties or consulting fees, as hereinafter set forth. Such books
of account and memoranda and other records relating to the aforesaid
shall be kept at Xxxxxx'x place of business and shall, throughout
the term of this Agreement, and for a period of one (1) year
thereafter, be made available as reasonably requested to the
inspection of ACES and its representatives, insofar as it may be
necessary to determine the nature and extent of Xxxxxx'x operations
under the License herein granted.
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(b) Xxxxxx has the corporate authority to execute, deliver and
perform this Agreement and the License conveyed hereunder. The
execution, delivery and performance of this Agreement by Xxxxxx and
the consummation of the transactions contemplated hereby do not and
will not conflict with, result in any breach of any of the
provisions of, constitute a default under, or violate Xxxxxx'x
Articles of Incorporation or By-laws of any indenture, mortgage,
lease, loan agreement or other agreement or instrument to which
Xxxxxx is party, or any law, statute, rule or regulation to which
Xxxxxx is subject. This agreement constitutes a valid and binding
obligation of Xxxxxx and is enforceable in accordance with its
terms.
(c) All representations and warranties of Xxxxxx set forth
herein are complete, accurate and true statements of all material
facts stated therein and do not omit to state any material facts
necessary to make the statements contained therein not misleading.
(d) The representations and warranties made herein by Xxxxxx
shall survive the term of this Agreement.
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6. TERM.
Unless sooner terminated, as hereinafter provided, this
exclusive License and Xxxxxx'x exclusive right to grant sublicenses hereunder
shall be effective for a period of ten (10) years from the date hereof and shall
terminate on 28 Feb., 2004 ("Termination Date"). Thereafter, Xxxxxx and ACES
each will have the non-exclusive right to manufacture and/or sell the Licensed
Product without payment of any kind by Xxxxxx or ACES to the other.
7. CONSIDERATION FOR GRANT OF LICENSE HEREUNDER.
(a) Xxxxxx shall pay to ACES an initial fee of $100,000 (the
"Initial Fee") on signing of contract. ACES promises to promptly furnish to
Xxxxxx the Manufacturing Technology pursuant to section 4 hereof.
(b) Xxxxxx shall purchase the inventory of finished products
set forth on Schedule 3 at the prices set forth thereon, such purchase subject
to products being usable to complete purchase order requirements that have been
received from customers, even if such products are obtainable elsewhere at lower
prices.
(c) During the first eighteen (18) months of this agreement
(the "Transition Period"), Xxxxxx will pay to ACES a
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royalty for the manufacture and sale of the Licensed Product, which royalty
shall be limited to 10% of the purchase order prices for the first $3,500,000 of
purchase orders on those prospective contracts set forth on Schedule 4. Payments
shall be made thirty (30) days after an executed purchase order is received by
Xxxxxx.
(d) In addition to the payment referenced in (c) above, Xxxxxx
shall pay ACES a royalty for the manufacture and sale of the Licensed Product
from those prospective contracts not Bet forth on Schedule 4 at the rate of 5%
for all domestic sales and 10% for all foreign sales. For purposes of this
agreement, an order received from a domestic company for delivery to a foreign
customer shall be considered a foreign sale.
(e) With respect to the payment of the royalties set forth in
(d) above:
(i) Licensed Product shall be considered to be "sold"
when payment in full of the purchase price is actually
received by Xxxxxx. If an order is reduced in quantity or
canceled, ACES shall receive the royalty only on the quantity
actually delivered to the customer.
(ii) The term "Net Selling Price" shall mean the price
of the Licensed Product as billed to the customer, less all
customs and sales taxes, transportation costs.
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(iii) If any of the Licensed Product is included or
incorporated in some apparatus, device or piece of equipment,
which is sold by way of a total price for the entire
apparatus, device or piece of equipment, Xxxxxx shall account
to ACES separately for the same Net Selling Price as would be
charged by Xxxxxx for the Licensed Product sold separately.
(f) Xxxxxx shall advance $40,000 to ACES, within ten (10) days
after the Manufacturing Technology is furnished to Xxxxxx pursuant to Section 4
hereof, against any payments required under Sections 7 and 10 hereof.
8. MANNER OF PAYMENT.
Except as set forth in Section 7(c), the prescribed royalties
earned hereunder shall become due and payable by Xxxxxx to ACES thirty (30) days
after each Licensed Product is "sold" by Xxxxxx, as that term is defined in
Section 7(c)(i) hereof. Semi-annually, on the last day of every six (6) month
period during the Term of this Agreement, Xxxxxx shall furnish to ACES
statements showing (i) the total number of Licensed Product manufactured by
Xxxxxx during the preceding semi-annual or six-month period; and (ii) the total
number of Licensed Product sold by Xxxxxx during the preceding semi-annual or
six-month
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period. With respect to the royalties paid pursuant to Section 7(c), Xxxxxx
shall be entitled to a credit for royalties paid to the extent the Net Selling
Price for a purchase order is less than the purchase order price. Xxxxxx also
shall be entitled to deduct from future payments any adjustments to the Net
Selling Price or Purchase Order Price for returns, credits or allowances.
9. INSPECTION VISITS OF ACES TO XXXXXX.
Once every year during the term of this Agreement, but subject to
Section 13, a designated, authorized representative of ACES, at ACES's own cost,
shall have the right, upon ten (10) days prior written notice to Xxxxxx, to
inspect Xxxxxx'x facility during reasonable business hours for the purpose of
observing that Xxxxxx has developed and is maintaining sufficient manufacturing
capacity to produce the Licensed Product.
10. VISITS OF XXXXXX to ACES & TECHNICAL ASSISTANCE; CONSULTING
FEES.
(a) During the term of this Agreement, Xxxxxx'x authorized
representatives, at Xxxxxx'x cost, shall have the right, from time to time, upon
reasonable notice to ACES, to visit ACES' facilities during reasonable business
hours for the purpose of acquiring any and all information relative to Licensed
Product that Xxxxxx xxxxx necessary.
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(b) ACES will make available its President, Xxxx Xxxxxxxxxx
and other representatives of ACES, to consult with and provide to Xxxxxx
technical expertise and information and sales assistance at such times, places
and in the manner requested reasonably by Xxxxxx.
(c) In consideration for the services in (b) above, Xxxxxx
shall pay ACES:
(i) a consulting fee of $10,000 per month for the first
twelve months of this Agreement, and
(ii) an additional consulting fee ("Additional
Consulting Fee") equal to 20% of the first $3,500,000 of
Licensed Products sold during the Transition Period to those
prospective customers set forth on Schedule 4. This Additional
Consulting Fee, if earned, will extend the $10,000 monthly fee
for up to an additional twenty-four (24) months. For example,
if there is $1,000,000 in Licensed Products sold during the
Transitional Period from Schedule 4, then $200,000 Additional
Consulting Fees will be "earned", which will result in a
twenty (20) month extension of the consulting agreement,
resulting in a total consulting payment
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of $10,000 per month for thirty-two (32) months. As another
example, if $2,000,000 of Licensed Products are sold during
the Transitional Period from Schedule 4, then $400,000
Additional Consulting Fees will be "earned". In this event,
since this payment would exceed thirty-six (36) months if paid
at the rate of $10,000 per month, the consulting fee will be
increased for twenty-four (24) equal payments, so that the
total consulting period is thirty-six (36) months. In this
case, since $400,000 will have been earned, payments in the
thirteenth (13th) through the thirty-sixth (36th) month will
be $16,666.67.
(d) Xxxxxx agrees to advance ACES up to $100,000 against any
consulting fees earned under Section 10(c) hereof but for which payment is not
yet due. Such advance will bear interest at the then prevailing prime rate of
interest until such time as the payment is due and owing by Xxxxxx.
11. IMPROVEMENTS.
During the term of this Agreement, any improvements relating to the
Licensed Product which may be conceived or discovered by either party shall be
communicated to the other party without any undue delay, and Xxxxxx shall have
the right to use the same without any charge.
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12. GOVERNMENT PROHIBITION.
If any department or agency of the United States Government shall
prohibit ACES from communicating certain data or information to Xxxxxx, then the
failure to communicate such data or information because of such refusal or
prohibition shall not constitute a breach of any obligation of ACES under this
Agreement. Correspondingly, if Xxxxxx shall fail either to communicate any
inventions or improvements subject to this License Agreement or otherwise permit
ACES access to its facility as provided herein because of the interdiction or
prohibition thereof by any governmental department or agency having jurisdiction
thereof, then, such refusal or failure shall not constitute a breach by Xxxxxx
of its incumbent obligations hereunder.
13. INFRINGEMENT.
(a) Each party hereto shall promptly notify and give full
information to the other party concerning any and all legal proceedings, suits,
actions, controversies and claims which may be brought or made, affecting or
regarding the Licensed Product or any patent, trademark, invention or
improvement relative to the Licensed Product. In such event, the parties will
consult with each other as to the action to be taken and each party will give
the other party its full assistance and cooperation as reasonably required.p
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(b) ACES covenants and represents that the rights granted to
Xxxxxx under this Agreement are free from infringement of patents and/or other
proprietary rights of others.
14. EVENTS OF DEFAULT BY XXXXXX.
(a) In the event that (i) Xxxxxx fails to pay to ACES
royalties when due in accordance with the provisions of this Agreement and for a
period of thirty (30) days after written notice by ACES to Xxxxxx thereof
specifying the amount claimed to be due; and/or (ii) Xxxxxx breaches any of the
material terms of this Agreement and fails to remedy the same within thirty (30)
days after written notice from ACES specifying the breach, then ACES may, at its
option, terminate this Agreement by notice in writing to Xxxxxx.
(b) Should this Agreement be terminated as provided above,
Xxxxxx shall be obligated to pay to ACES all accrued royalties and such other
sums then due under this Agreement.
15. EVENTS OF DEFAULT BY ACES.
(a) Subject to (b) below, in the event that ACES shall breach
or fail to perform any of the terms and conditions, covenants or representations
in this Agreement and fails to remedy the same for a period of thirty (30) days
after written
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notice from Xxxxxx specifying such breach or non-performance, Xxxxxx may elect
to terminate this Agreement by written notice to ACES and/or to avail itself of
any and all rights it may have to redress the same, at law or in equity, on a
non-mutually exclusive basis.
(b) In the event that Xxxxxx'x rights to manufacture and/or
sell the Licensed Product hereunder are impaired, restricted or enjoined and/or
Xxxxxx becomes liable for damages as the result of any interlocutory or final
determination that the manufacture or sale by Xxxxxx of the Licensed Product
infringes upon a patent or violates the superior proprietary rights of a third
party; that ACES does not have paramount title to the Licensed Product; and/or
that ACES did not have the right to grant a License to Xxxxxx to manufacture and
sell the Licensed Product, then Xxxxxx shall have the right to terminate this
Agreement immediately by written Notice to ACES and shall be entitled to recover
damages from ACES in an amount equal to one-half of all damages which Xxxxxx is
required to pay to any third party, including legal fees, whether by judgment or
settlement, but not to exceed the sum of the Initial Fee and all royalties paid
by Xxxxxx to ACES hereunder.
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16. CONFIDENTIALITY.
During the term and after the termination of this Agreement for any
reason whatsoever, Xxxxxx will not reveal or disclose to any third party,
without the written authorization of ACES, any confidential information or data
relating to the Licensed Product, processes and methods of production of same,
or the Manufacturing Technology, provided, however, that Xxxxxx may employ
subcontractors for the manufacture of parts, which subcontractors shall have the
same obligations of nondisclosure as Xxxxxx. Xxxxxx agrees to refrain from
publishing articles containing any confidential information relating to the
Licensed Product without consulting ACES prior to such publication and obtaining
the written consent of ACES, which shall not be unreasonably withheld.
17. PROCEDURE UPON TERMINATION.
(a) Should this Agreement be terminated by reasons of Xxxxxx
default as provided for in Section 15 hereof, Xxxxxx agrees that it will not
manufacture or sell for a period of two (2) years after the effective date of
such termination, any device which is the same as, similar to, or in competition
with, the Licensed Product.
(b) Should notice of termination of this Agreement be given by
either party under any of its provisions, ACES, from
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the date of such notice, shall not be under any obligation to supply or make
available to Xxxxxx, the Manufacturing Technology, or any other data or
information whatsoever relating to the Licensed Product, nor shall Xxxxxx, in
such event, be authorized to visit the facilities of ACES.
18. PARTNERSHIP, JOINT VENTURE OR AGENCY.
Nothing contained in this Agreement shall be deemed or construed to
constitute or create between the parties hereto a partnership, association,
joint venture or agency.
19. NOTICES.
All notices required to be sent by either party to this Agreement to
the other shall be sent by air mail, registered to the respective addresses of
the parties hereto, as above set forth, or to such other addresses as may
hereafter be designated in writing by one party to the other.
20. CONTROLLING LAW.
This Agreement shall be construed and interpreted according to the
laws of the State of New York without regard to its conflicts of laws
provisions. Any suit, action or proceeding arising out of this Agreement shall
be instituted in the state or federal courts in the State of New York.
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21. WAIVER
The failure of either party to exercise any right hereunder or to
take any action permitted on a breach by the other party shall not be deemed a
waiver of such right or of any other rights for any prior or subsequent breaches
of a like or different nature.
22. ENTIRE UNDERSTANDING.
This Agreement contains the entire understanding of the parties and
supersedes all oral or written representations or written agreements of license,
rights, and privileges or understandings between the parties; it shall not be
modified except by an agreement in writing signed by both of the parties hereto.
23. ASSIGNMENT.
This Agreement and/or the rights, entitlements or obligations
hereunder shall not be assigned by either party without the written consent of
the other except that Xxxxxx shall be entitled to assign this Agreement to any
of Xxxxxx'x subsidiaries on prior notice to, but without obtaining the consent
of ACES. Any assignment in violation of this section shall be void and of no
legal effect.
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24. BINDING EFFECT.
This Agreement shall be binding upon and enure to the benefit of the
successors and assigns of the respective parties hereto.
25. DUPLICATE ORIGINALS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned parties have caused this
Agreement to be executed by their respective duly authorized officers the day
and year first above written.
Attest: XXXXXX INDUSTRIES, INC.
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
----------------------- ----------------------------
Asst. Secretary
Title: CHMN
-------------------------
XXXX XXXXXXXXXX
d/b/a ALLIED CONSULTING AND
ENGINEERING SERVICES
Witnessed by:
/s/ Xxxxx X. Xxxxx /s/ XXXX XXXXXXXXXX
----------------------- ----------------------------
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SCHEDULE 1
Peripheral Equipment
1. ACES Acceptance Test Set, Part Number TS001
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SCHEDULE 2
ACES Existing Backlog
1. Northrop Corporation
Point Of Contact: Xx Xxxxxxx
P0 # 110-28 1026AK, Two (2) Airborne Transponders, $40,000
P0 # 1 10-281025AK, Flight Test, $7,500
2. Teledyne Xxxx Aeronautical
Point Of Contact: Xxxxxx Xxxxx
Description of Purchase Order: Ground Station and two (2)
Airborne Transponders. Engineering and consulting hours.
P0 # 90534002F, $195,400 ($83,318.09 total invoiced as of 1/1/94)
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SCHEDULE 3
Inventory of Finished Products
1. Components- Duplexers, Mixers, Amplifiers, Oscillators, Connectors, etc.
2. WIP (work in process) assemblies, such as Enclosures, Printed Circuit
Boards, etc.
Total of items I and 2 are approximately $21,000.
3. Ground RF Module, part number 30100, $30,000
4. Relay, part number XX0000X00, $25,000
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SCHEDULE 4
Prospective Contracts
1. Northrop Corp./NAVSEA (AEGIS Program)
Chukar, BQM-74E
POC: Xx Xxxxxxx (000) 000-0000
2. PMTC
AQM-34L/M and BQM-34A/S Retrofit
Chukar
NAVSEA/NAVAIR
POC: Xxxxx Xxx, (000) 000-0000
3. PMRF, Ballistic Re-Entry
BQM-345, BQM-74E, etc.
POC: Xxxx Xxxx, (000) 000-0000
4. Teledyne Xxxx Aeronautical
410/435, BQM-345/Commercial version
POC: Xxxx Xxxxxxxx, (000) 000-0000, est 4366
5. Gamma International/XXXX-J
MQM 107
POC: Xxx Xxxxx, (000) 000-0000
6. Moller International
AMGSS Program
POC: Xx Xxxxx, (000) 000-0000
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XXXXXX
INDUSTRIES
INC
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July 27, 1995
Xx. Xxxx Xxxxxxxxxx
0000 X. Xxxx
Xxxxx #0
Xxxxxx, XX 00000
Dear Xxxx:
This letter will serve as an amendment to the agreement between yourself and
Xxxxxx Industries, Inc. of March 1,1994.
As we have agreed, the Technical Assistance/Consulting portion of the agreement
will be extended, so that Paragraph 10(c) (i) should be changed to read:
(i) "a consulting fee of $10,000 per month for the first 18 months of
this Agreement, and"
Paragraph 1. (b), the "licensed Product" description, should be updated and
read:
"Licensed Product MAGIC(2) (Multiple Aircraft GPS Integrated Command and
Control), previously referred to as MOTHR. The MAGIC(2)
product includes all software for both Ground and Airborne
System for all vehicles. This includes all future product
enhancements and modifications. Future product enhancements
include, but are not limited to:
o New Frequency Bands
o New vehicle types
- Different Drones
- UAVs
- Land Vehicles
- Tanks
- Surveillance
- Water Vehicles
- Boats
- Ships
o New data link formats
- Different Data Rates
- Different Message formats
o Telemetry only systems, providing GPS position
information
o Range Instrumentation"
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Xx. Xxxx Xxxxxxxxxx July 27, 1995
Page 2 of 2
All other terms and conditions of the agreement will remain in effect.
If you are in agreement with this arrangement, please so indicate by signing one
copy of this letter and returning it to Xxxxxx Industries, Inc. If you have any
questions or comments, please do not hesitate to contact me.
Sincerely,
XXXXXX INDUSTRIES, INC.
By:
/s/ Xxxxx Svoy President
--------------------------------
/csb
Enclosure
Accepted:
/s/ Xxxx Xxxxxxxxxx 7-27-95
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Xxxx Xxxxxxxxxx Date
