Duane Morris Letterhead)
(Xxxxx
Xxxxxx Letterhead)
Exhibit
99.1
*** Confidential
portions of this document have been redacted and separately filed with
Commission.
March
23,
2007
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Xxxxxx
Xxxxxx
Senior
Vice President
x.Xxxxxxx
Corporation
00000
Xxxx Xxxxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
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Re:
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We
are
pleased that x.Xxxxxxx Corporation (the “Company” or “x.Xxxxxxx”) has selected
Xxxxx Xxxxxx to act as its exclusive
legal
counsel in connection with the assertion of its patents - U.S. Patent Nos.
5,491,774; 5,742,737; 5,787,445; 5,839,108; and 5,842,170 (collectively, the
“Xxxxxx patents”) against any infringers
infringing in the past or in the future (“Patent
Enforcement Matters”). It
is
understood the Company will work with Xxxxx Xxxxxx on all Patent Enforcement
Matters.
The
first
target is contemplated at this time to be ***. The scope of this engagement
specifically includes the filing of litigation, if necessary, against any other
third party infringer. Before agreeing to represent x.Xxxxxxx in connection
with
any litigation, Xxxxx Xxxxxx reserves the right to review each case on its
own
merits to make a determination of the merits of the case, and resolve any
conflict issues. In the event that Xxxxx Xxxxxx is unable or unwilling to
represent the Company in connection with any individual piece of litigation,
the
parties agree that that engagement shall be excluded from Xxxxx Xxxxxx’
contingent fee, and the Company shall be free to retain separate counsel for
that individual piece of litigation.
Fees.
Xxxxx
Xxxxxx will agree to handle
x.Xxxxxxx’s Patent
Enforcement
Matters
on a
contingent fee basis. In other words, our fee will depend upon whether or not
we
are able to recover any sums on x.Xxxxxxx’s behalf, including
but not limited to by way of settlements, judgments, licensing transactions,
or
the completion
of any other transaction (the “Resolution”). We have
advised you that our fees are normally based on the time spent and the regular
hourly rates of each attorney and legal assistant performing services on
x.Xxxxxxx’s behalf regardless of the outcome. However, given the nature of
x.Xxxxxxx’s cases, you have chosen to accept our offer to handle the matter on a
contingency fee basis and you have rejected hourly rate representation.
Accordingly, our fees will be based upon any Resolution as follows:
Xxxxxx
Xxxxxx
March
23,
2007
Page
2
Contingent
Fees Without Litigation.
In the
event that the Company licenses the Xxxxxx Patents without filing litigation,
Xxxxx Xxxxxx’ fee will be 40% of the licensing fee.
Contingent
Fee in the Event of Litigation.
In the
event that a party refuses or is not asked to license the Xxxxxx Patents or
any
element thereof, and litigation is filed, Xxxxx Xxxxxx shall be entitled to
the
following contingent fees of the total recovery (“Total Contingency Amount”) in
each individual case upon the Resolution of the matter:
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Upon
filing of complaint or counterclaim
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40%
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in
declaratory judgment action
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Upon
appeal of trial
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50%
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In
the
event of any appeal of a judgment in favor of the Company, Xxxxx Xxxxxx agrees
to handle such appeal. In the event of a judgment entered against the Company
that results in no payment to the Company, then Xxxxx Xxxxxx has the right
in
its sole discretion to determine whether it will handle the appeal from such
adverse judgment.
In
the
event that the settlement of any litigation involves any cross-license of
technology or the acquisition of any assets, the parties agree that Xxxxx Xxxxxx
shall be entitled to its contingent fee based on a good faith estimate of the
overall value of the cross-license or acquisition of assets.
Contingent
Fee in the Event of Other Events (“Alternate
Transaction”).
In the
event that during the term of this Agreement, there is an acquisition of
x.Xxxxxxx’s stock or assets by a third party, including but not limited to, an
acquisition of the Xxxxxx Patents such that there is a change in control, or
if
the Company files or is involuntarily placed in a bankruptcy or other insolvency
proceeding, or in the event the Company terminates this Agreement for any
reason, the parties agree that Xxxxx Xxxxxx shall be entitled to collect accrued
costs and a fee equal to three times its overall time and expenses accrued
in connection with this Agreement
through
the date of such transaction, plus a fee of fifteen percent (15%) of a good
faith estimate of the overall value of the Xxxxxx Patents as of the date of
the
Alternative Transaction.
Xxxxxx
Xxxxxx
March
23,
2007
Page
3
Xxxxx
Xxxxxx agrees that any amounts that x.Xxxxxxx pays for expenses pursuant to
the
first paragraph of ¶2 below will be deducted from the recovery before
calculating its contingent fee.
2. Expenses
and Costs.
(a) In
the
handling of any matter, there will be certain expenses incurred on behalf of
x.Xxxxxxx, such as filing fees, expert fees, photocopying, messenger service,
overnight mail, fax, long distance phone charges, and local and out of town
travel, if necessary. Subject to Paragraphs 2(c) and 2(d), Xxxxx Xxxxxx has
agreed to advance sufficient funds to cover all expenses and costs incurred
by
Xxxxx Xxxxxx (but not by others) in connection with said matter. As a result,
Xxxxx Xxxxxx will have the right to control, after consultation with x.Xxxxxxx,
the selection of experts for each matter and any other outside vendors that
may
provide services to x.Xxxxxxx in connection with each matter.
(b) x.Xxxxxxx
agrees to be solely responsible for payment of any other attorneys’ fees and
expenses, including but not limited to, attorneys fees and expenses of any
lawyers that may have previously represented x.Xxxxxxx, or any party with any
interest in any of the Patents, any lawyers that may work together as co-counsel
with Xxxxx Xxxxxx in the representation of x.Xxxxxxx, and any lawyers that
may
succeed Xxxxx Xxxxxx in any representation of x.Xxxxxxx. Any payments required
to be made by x.Xxxxxxx pursuant to this Paragraph 2(b) shall not reduce the
Total Contingency Amount.
(c) x.Xxxxxxx
agrees to promptly reimburse all expenses and costs incurred by Xxxxx Xxxxxx
in
each matter upon receipt of gross proceeds of any recovery or upon consummation
of an Alternate Transaction. Any payments required to be made by x.Xxxxxxx
pursuant to this Paragraph 2(c) shall reduce the Total Contingency
Amount.
(d) Notwithstanding
paragraph 2(a), above, if the Company terminates the services of Xxxxx Xxxxxx
with respect to a matter prior to the conclusion of the matter, x.Xxxxxxx agrees
to promptly reimburse all expenses and costs incurred by Xxxxx Xxxxxx in each
matter. Any payments required to be made by x.Xxxxxxx pursuant to this Paragraph
2(d) shall not reduce the amounts due under the Alternative Transaction
provision.
3. Settlement/Closing.
We
shall keep you advised of all significant developments in the course of our
representation of you in this matter, and will promptly communicate to you
any
settlement proposals.
Xxxxxx
Xxxxxx
March
23,
2007
Page
4
4. Waiver.
Given
the scope of our business and the scope of our client representations through
our various offices in the United States and abroad, it is possible that some
of
our present or future clients will have matters adverse to you or your
organization while we are representing you. We understand that you have no
objection to our representation of parties with interests adverse to yours,
and
waive any actual or potential conflict of interest as long as those other
engagements are not substantially related to our services for you.
We
agree,
however, that your consent to, and waiver of, such representation shall not
apply in any instance where, as a result of our representation of you, we have
obtained proprietary or other confidential information of a non-public nature,
that, if known to such other client, could be used in any such other matter
by
such client to your material disadvantage or potential material disadvantage.
By
agreeing to this waiver of any claim of conflicts as to matters unrelated to
the
subject matter of our services to you, you also agree that we are not obliged
to
notify you when we undertake such a matter that may be adverse to
you.
Similarly,
new lawyers frequently join our firm. These lawyers may have represented parties
adverse to you while employed by other law firms or organizations. We assume,
consistent with ethical standards, that you have no objection to our continuing
representation of you notwithstanding our lawyers’ prior professional
relationships.
This
will
also confirm our understanding that, unless we reach an explicit understanding
to the contrary, we are being engaged by, and will represent x.Xxxxxxx, and
not
any parent, subsidiary or affiliated entities of x.Xxxxxxx, and that we are
not
being engaged to represent any officers, directors, members, partners,
shareholders or employees of x.Xxxxxxx.
Occasionally,
it is either necessary or desirable to disclose a client’s name. Furtherance of
the interests of the client may require disclosure. As to those matters, by
signing this agreement x.Xxxxxxx
authorizes
such disclosure. The Firm would also like to be able to identify x.Xxxxxxx
on its
list of representative clients. Please
initial below to authorize the disclosure of x.Xxxxxxx’s name on our client
list.
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/s/RP
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Initial
for Authorization
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5. Miscellaneous.
a. The
Company hereby grants Xxxxx Xxxxxx a lien which attaches to all claims, causes
of action, and recoveries by the Company, which lien shall secure all amounts
payable to Xxxxx Xxxxxx pursuant to this Agreement or otherwise. Subject to
any
outstanding liens for financing, the Company also grants a security interest
to
Xxxxx Xxxxxx in the Xxxxxx Patents to secure the Company’s obligations under the
terms of this Agreement, including but not limited to, Xxxxx Xxxxxx’ right to
15% of the reasonable value of the Xxxxxx Patents in the event of an Alternative
Transaction. The Company will cooperate in signing such documents as Xxxxx
Xxxxxx reasonably believes to be necessary to perfect its security interest
in
the Xxxxxx Patents.
Xxxxxx
Xxxxxx
March
23,
2007
Page
5
b. Xxxxx
Xxxxxx and the Company recognize that a potential remedy in patent litigation
is
an award of attorneys’ fees for or against the Company. We have discussed this
possibility and the Company understands that the Company would be solely
responsible for the payment of such fees and costs, in the event a Court were
to
make such an award in favor of any defendant. By the same token, in the event
that the Company were awarded its fees and costs in connection any Patent
Enforcement Matter, the amount of such an award would be added to the remainder
of the judgment for purposes of calculating the gross amount of the Company’s
recovery.
c. The
Company acknowledges that it understands that (i) it could be required to pay
compensation to Xxxxx Xxxxxx for services with respect to matters other than
Patent Enforcement Matters and (ii) the fee set forth herein is not set by
law,
but is negotiable between Xxxxx Xxxxxx and the Company.
d. The
parties agree that any disputes relating to the determination of any valuations
to be conducted pursuant to this Agreement (but not any disputes relating to
the
quality or propriety of Xxxxx Xxxxxx’ services), shall be submitted to a
mutually acceptable expert whose determination shall be final and binding on
the
parties absent manifest error. If the parties are unable to agree on an expert,
a national accounting firm which does not have a material relationship with
either party shall be chosen by lot. The fees and expenses of such expert shall
be borne equally by the parties.
e. At
its
own cost, the Company shall provide technical services to support Xxxxx Xxxxxx’
prosecution of the Patent Enforcement Matters.
f. The
Company will remain in close contact with Xxxxx Xxxxxx, and the Company will
be
available to consult with Xxxxx Xxxxxx as developments occur. The Company will
advise Xxxxx Xxxxxx immediately of any problems or developments that the Company
becomes aware of relating to this Agreement.
Xxxxx
Xxxxxx encourages the Company to take a reasonable opportunity to review the
terms of this Agreement with independent counsel of its choice in order to
confirm its satisfaction with the terms contained herein. California Rule of
Professional Conduct Section 3-300 requires that a client be afforded this
notice. If this Agreement
meets with your approval, please indicate so by signing the enclosed copy of
this letter and returning it to me in the enclosed self-addressed, stamped
envelope. We appreciate very much the opportunity to represent
you.
Xxxxxx
Xxxxxx
March
23,
2007
Page
6
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Xxxxx
X. X. Xxx
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AGREED
AND ACCEPTED
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x.Xxxxxxx
Corporation
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Signature:
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By:
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/s/
XXXXXX
XXXXXX
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Title:
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Senior
Vice President
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