Exhibit No. 10.1
Patent License and Technical Information Agreement Relating to Fiber Optic
Sensing Systems dated as of January 15, 1997 between Lucent Technologies Inc.
and Electronic Control Security Inc.
PATENT LICENSE AND TECHNICAL INFORMATION AGREEMENT
between
LUCENT TECHNOLOGIES INC.
and
ELECTRONIC CONTROL SECURITY iNC.
Effective as of January 15, 1997
Relating to Fiber Optic Sensing Systems
PATENT LICENSE AND TECHNICAL INFORMATION AGREEMENT TABLE OF CONTENTS
ARTICLE I - GRANTS OF LICENSES
1.01 Grant
1.02 Duration
1.03 Scope
1.04 Ability to Provide Licenses
1.05 Warranty
ARTICLE II - TRANSFER AND USE OF TECHNICAL INFORMATION
2.01 Furnishing of Information
2.02 Non-Transmission
2.03 U.S. Export Control
2.04 Grant
2.05 Procurement
2.06 Accuracy
2.07 Nothing Construed
2.08 ECSI's Duties
ARTICLE III ROYALTY AND PAYMENTS
3.01 Royalty Calculation
3.02 Accrual
3.03 Exclusions
3.04 Records and Adjustments
3.05 Reports and Payments
ARTICLE IV - TERMINATION
4.01 Termination for Breach
4.02 Voluntary Termination
4.03 Survival
ARTICLE V - MISCELLANEOUS PROVISIONS
5.01 Disclaimer
5.02 Publicity
5.03 Nonassignability
5.04 Address
5.05 Taxes
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5.06 Choice of Law
5.07 Integration
5.08 Agreement Prevails
5.09 No Patent License
5.10 Dispute Resolution
DEFINITIONS APPENDIX
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PATENT LICENSE AND TECHNICAL INFORMATION AGREEMENT
This Patent License and Technical Information Agreement ("Agreement"), effective
as of January 15, 1997, is between the following Parties: LUCENT TECHNOLOGIES
INC., a Delaware corporation ("LUCENT"), having an office at 000 Xxxxxxxx
Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000, and ELECTRONIC CONTROL SECURITY INC., a
New Jersey corporation ("ECSI"), having an office at 00 Xxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000. The Parties agree as follows:
ARTICLE I
GRANTS OF LICENSES
1.01 Grant
LUCENT grants to ECSI under LUCENT's PATENT personal, nonexclusive and
nontransferable licenses to make, have made, use, lease, sell offer for sale and
import OPTICAL FIBER SENSING SYSTEMs.
1.02 Duration
All licenses granted herein shall continue for the entire unexpired term of
LUCENT's PATENT.
1.03 Scope
(a) Licenses granted under this Article I are not to be construed either (i) as
consent by LUCENT to any act which may be performed by ECSI, except to the
extent impacted by LUCENT's PATENT, or (ii) to include licenses to
contributorily infringe or induce infringement under U.S. law.
(b) The grant of each license under this Article I includes the right of ECSI
to grant sublicenses within the scope of such license to ECSI's SUBSIDIARIES
for so long as they remain its SUBSIDIARIES. Any such sublicense may be made
effective retroactively, but not prior to the effective date hereof, nor prior
to the sublicensee's becoming a SUBSIDIARY of ECSI.
---------------------------
*Any term in capital letters which is defined in the Definitions Appendix shall
have the meaning specified therein.
1.04 AbIlity to Provide Licenses
LUCENT's failure to meet any obligation hereunder, due to the assignment of
title to any invention or patent, or the granting of any licenses, to the United
States Government or any agency or designee thereof pursuant to a statute or
regulation of, or contract with, such Government or agency, shall not constitute
a breach of this Agreement.
1.05 Warranty
LUCENT warrants to ECSI that LUCENT is the owner of LUCENTs PATENT and that it
has the right to grant to ECSI the license described herein.
ARTICLE II
TRANSFER AND USE OF TECHNICAL INFORMATION
2.01 Furnishing of Information
(a) LUCENT agrees to allow ECSI to obtain TECHNICAL INFORMATION.
(b) Section 2.01(a) does not apply to any TECHNICAL INFORMATION previously
furnished for limited use to ECSI. Any and all such previously furnished
information shall be deemed also furnished hereunder to ECSI as of the effective
date hereof.
(c) ECSI shall, without charge to LUCENT, disclose and furnish promptly to
LUCENT any and all information derived from the TECHNICAL INFORMATION relating
to OPTICAL FIBER SENSING SYSTEMs, and developed by ECSI's personnel solely or
jointly with anyone prior to the expiration of five (5) years following the last
furnishing of any TECHNICAL INFORMATION to ECSI under this Agreement.
(d) LUCENT and/or its SUBSIDIARlES shall have unrestricted, nonexclusive,
fee-free rights (including nonexclusive, fee-free license rights for any
patentable inventions) for all purposes to reproduce, use, and have used, in
whole or in part, such information disclosed and furnished pursuant to Section
2.01(c), as well as articles made therewith or incorporating the inventive
concepts thereof, (and to disclose any such information in connection with the
reproduction, sale, use, making or the having made, of such article) without
accounting to ECSI or any assignee or beneficiary thereof.
(e) ECSI shall use its best efforts to acquire rights to such information
disclosed and furnished pursuant to Section 2.01(c), so that LUCENT and its
SUBSIDIARIES shall receive the rights provided in this Section 2.01.
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2.02 Non-Transmission
ECSI agrees that it will not, without the prior written consent of LUCENT,
transmit, directly or indirectly, TECHNICAL INFORMATION or any portion thereof
to any country outside of the United States.
2.03 U.S. Export Control
ECSI hereby assures LUCENT that it does not intend to and will not knowingly,
without the prior written consent, if required, of the Office of Export
Licensing of the U.S. Department of Commerce, X.X. Xxx 000, Xxxxxxxxxx, X.X.
00000, transmit directly or indirectly:
(i) any TECHNICAL INFORMATION; or
(ii) any immediate product (including processes and services) produced
directly by the use of TECHNICAL INFORMATION; or
(iii) any commodity produced by such immediate product if the immediate
product of TECHNICAL INFORMATION is a plant or a major component of
a plant;
to (1) Haiti, Iran, Iraq, the People's Republic of China, Syria, those areas of
the Republic of Bosnia and Herzegovina that continue under the control of
Bosnian-Serb military forces, or to any Group Q, S, Y or Z country specified in
Supplement No. 1 to Part 770 of the Export Administration Regulations issued by
the U.S. Department of Commerce or (2) any national or resident of the foregoing
countries.
In addition, if the immediate product of any of TECHNICAL INFORMATION is a plant
or a major component of a plant, ECSI hereby assures LUCENT that any and all
requirements of the Export Administration Regulations (including obtaining
necessary assurances or licenses) will be satisfied with respect to any
controlled commodity produced by such plant.
2.04 Grant
(a) LUCENT grants to ECSI a personal and nonexclusive right to use the TECHNICAL
INFORMATION solely in the United States and solely for the manufacture in ECSI's
factories of OPTICAL FIBER SENSING SYSTEMs and of maintenance parts therefor.
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(b) ECSI may grant to ECSI's SUBSIDIARIES, for so long as they remain its
SUBSIDIARIES, rights within the scope of the rights granted to ECSI by LUCENT
under this Article II. The grant of any such rights may be made effective
retroactively, but not prior to the effective date of this Agreement, nor prior
to the date of the grantee's becoming a SUBSIDIARY of ECSI.
2.05 Procurement
(a) LUCENT grants to ECSI a personal and nonexclusive right, as an attribute of
the right granted in Section 2.04, to disclose to any supplier or prospective
supplier in the United States only those portions of TECHNICAL INFORMATION which
are necessary for the procurement by ECSI of parts and subassemblies for OPTICAL
FIBER SENSING SYSTEMs.
(b) ECSI agrees that it will not make any part of TECHNICAL INFORMATlON
available to any such supplier or prospective supplier except on the agreement
in writing (of which a copy will be furnished to LUCENT promptly upon its
request) of such supplier or prospective supplier that it accepts as its own
ECSI's commitments under Sections 2.02 and 2.03 and the confidentiality
obligations of Section 2.08, that it will use all information received from ECSI
only for the purpose of supplying to ECSI items of the type to be procured by
ECSI pursuant to Section 2.05(a) and that it will promptly return or destroy
each and every part of TECHNICAL INFORMATION as directed by ECSI.
2.06 Accuracy
LUCENT believes that the TECHNICAL INFORMATION is true and accurate, but LUCENT
and its SUBSIDIARIES shall not be held to any liability for errors or omissions
therein. LUCENT warrants to ECSI that LUCENT is the owner of the TECHNICAL
INFORMATION and it has the right to grant to ECSI the licenses described herein.
2.07 Nothing Construed
Neither the execution of this Agreement nor anything in it or in the TECHNlCAL
INFORMATION shall be construed as:
(i) an obligation upon LUCENT or its SUBSIDIARIES to furnish any person
or entity, including ECSI, any assistance of any kind whatsoever, or
any information other than the TECHNICAL INFORMATION, or to revise,
supplement or elaborate upon the TECHNICAL INFORMATION; or
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(ii) providing or implying any arrangement or understanding that LUCENT
or its SUBSIDIARIES will make any purchase, lease, examination or
test or give any approval.
2.08 ECSI's Duties
ECSI agrees:
(i) that ECSI will not use any TECHNICAL INFORMATION except as
authorized herein;
(ii) that ECSI shall hold all of the TECHNICAL INFORMATION in confidence
for LUCENT, shall not make any disclosure of any or all of such
TECHNICAL INFORMATION to anyone, except to employees of ECSI who
have a need to know and to any others to whom such disclosure may be
expressly authorized hereunder and is necessary to implement the use
for which rights are granted hereunder, and that ECSI shall
appropriately notify each person to whom any such disclosure is made
that such disclosure is made in confidence and shall be kept in
confidence by such person; provided that ECSI shall not be required
so to do in respect of portions of the TECHNICAL INFORMATION, if
any, (a) which LUCENT agrees in writing were previously known to
ECSI free of any obligations to keep confidential, or (b) which ECSI
demonstrates to LUCENT's satisfaction have become generally known to
the public, provided that such public knowledge was not the result
of any act attributable to ECSI, or (c) which LUCENT otherwise
explicitly agrees in writing need not be kept confidential;
(iii) that, unless otherwise agreed to in writing by LUCENT, ECSI will
continue to pay fees and perform recordkeeping and reporting
obligations, in accordance with the provisions of this Agreement,
with respect to OPTICAL FIBER SENSING SYSTEMs, notwithstanding any
applicability of any exception of Section 2.08(ii) to any or all of
the TECHNICAL INFORMATION;
(iv) that ECSI will not, without LUCENT's, express written permission,
make or have made, or permit to be made, more copies of any of the
furnished TECHNICAL INFORMATION than are necessary for its use
hereunder, and that each such copy shall contain the same
proprietary notices or legends which appear on the furnished
TECHNICAL INFORMATION; and
(v) that all TECHNICAL INFORMATION shall be deemed the property of
LUCENT, and upon any termination of all rights granted to ECSI
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hereunder pursuant to Article IV of this Agreement, ECSI shall
immediately cease all use of TECHNICAL INFORMATION and shall, as
directed by LUCENT, promptly destroy or deliver to LUCENT each and
every part specified by LUCENT of TECHNICAL INFORMATION then under
ECSI's control.
ARTICLE III
ROYALTY AND PAYMENTS
3.01 Royalty Calculation
(a) ECSI shall pay to LUCENT the sum of fifty thousand United States dollars
(U.S. $ 50,000.00). Such sum shall be paid to LUCENT in three installments as
follows: a first installment of twenty thousand United States dollars (U.S.
$20,000.00) shall be paid within ninety (90) days after the execution of this
Agreement by both Parties; a second installment of fifteen thousand United
States dollars (U.S. $15,000.00) shall be paid within thirty (30) days of July
1, 1997; and a third installment of fifteen thousand United States dollars (U.S.
$15,000.00) shall be paid within thirty (30) days of November 1,1997.
(b) Thereafter, ECSI shall make minimum annual royalty payments of ten thousand
United States dollars (U.S. $ 10,000.00) within sixty (60) days after each
annual period beginning on January 1st, commencing with the annual period
beginning on January 1, 1998. Each such minimum annual royalty payment shall be
credited with respect to royalties that may become payable pursuant to Section
3.01(c) for each respective annual period ending on the following December 31st.
In no event shall any minimum annual royalty payments made under this Section
3.01(b) or any portion thereof be refunded to ECSI.
(c) Royalty shall be payable to LUCENT at the rate of four and four-tenths
percent (4.4%) on each REPORTABLE PRODUCT which is sold, leased or put into use
by ECSI, or any of its SUBSIDIARIES. Such royalty rate shall be applied, except
as otherwise provided in this Article III, to the FAIR MARKET VALUE of such
REPORTABLE PRODUCT.
3.02 Accrual
(a) Royalty shall accrue on any OPTICAL FIBER SENSING SYSTEM upon its first
becoming a REPORTABLE PRODUCT and shall become payable upon the first sale,
lease or putting into use of such REPORTABLE PRODUCT. (Rebuilding or enlarging
any product shall be deemed to be a first putting into use of such product).
Obligations to pay accrued royalties shall survive
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termination of licenses and rights pursuant to Article IV and the expiration of
LUCENT's PATENT.
(b) When a company ceases to be a SUBSIDIARY of ECSI, royalties which have
accrued with respect to any products of such company, but which have not been
paid, shall become payable with ECSI's next scheduled royalty payment.
(c) Notwithstanding any other provisions hereunder, royalty shall accrue and be
payable only to the extent that enforcement of ECSI's obligation to pay such
royalty would not be prohibited by applicable law.
3.03 Exclusions
An OPTICAL FIBER SENSING SYSTEM, which is a REPORTABLE PRODUCT, may be treated
by ECSI as not licensed and not subject to royalty with respect to sales of such
OPTICAL FIBER SENSING SYSTEM if the purchaser is licensed under the same patent
to have said OPTICAL FIBER SENSING SYSTEM made and/or imported and if purchaser
has the same rights as ECSI to use TECHNICAL INFORMATION, and the purchaser
advises ECSI, in writing at or prior to the time of such sale, that it is
exercising its own license under such patent and its own rights under TECHNICAL
INFORMATION with respect to such manufacture and/or importation.
3.04 Records and Adjustments
(a) ECSI shall keep full, clear and accurate records with respect to all
REPORTABLE PRODUCTs and shall furnish any relevant information which LUCENT may
reasonably prescribe from time to time to enable LUCENT to ascertain the proper
royalty due hereunder on account of OPTICAL FIBER SENSING SYSTEMs sold, leased
and put into use by ECSI or any of its SUBSIDIARIES. ECSI shall retain such
records with respect to each REPORTABLE PRODUCT for at least seven (7) years
from the sale, lease or putting into use of such OPTICAL FIBER SENSING SYSTEM.
LUCENT shall have the right through its accredited auditors to make an
examination, during normal business hours, of all records and accounts bearing
upon the amount of royalty payable to it hereunder. Prompt adjustment shall be
made to compensate for any errors or omissions disclosed by such examination.
(b) Independent of any such examination, LUCENT will credit to ECSI the amount
of any overpayment of royalties made in error which is identified and fully
explained in a written notice to LUCENT delivered within twelve (12) months
after the due date of the payment which included such alleged overpayment,
provided that LUCENT is able to verify, to its own satisfaction, the existence
and extent of the overpayment.
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(c) No refund, credit or other adjustment of royalty payments shall be made by
LUCENT except as provided in this Section 3.04. Rights conferred by this Section
3.04 shall not be affected by any statement appearing on any check or other
document, except to the extent that any such right is expressly waived or
surrendered by a Party having such right and signing such statement.
3.05 Reports and Payments
(a) Within sixty (60) days after the end of each semiannual period ending on
June 30th or December 31st, commencing with the semiannual period during which
this Agreement becomes effective, ECSI shall furnish to LUCENT at the address
specified in Section 5.04 a statement certified by a responsible official of
ECSI or its SUBSIDIARIES showing in a manner acceptable to LUCENT:
(i) all REPORTABLE PRODUCTs which were sold, leased or put into use
during such semiannual period;
(ii) the FAIR MARKET VALUEs of such REPORTABLE PRODUCTs;
(iii) the amount of royalty payable thereon without regard to any credit
available pursuant to Section 3.01 and the net amount payable after
application of such credit; and
(iv) all exclusions from royalty pursuant to Section 3.03.
If no REPORTABLE PRODUCT has been so sold, leased or put into use, the statement
shall show that fact.
(b) Within such sixty (60) days ECSI shall pay in United States dollars to
LUCENT at the address specified in Section 5.04 the royalties payable in
accordance with such statement. Any conversion to United States dollars shall be
at the prevailing rate for bank cable transfers as quoted for the last day of
such semiannual period by leading United States banks in New York City dealing
in the foreign exchange market.
(c) Overdue payments hereunder shall be subject to a late payment charge
calculated at an annual rate of three percentage points (3%) over the prime rate
or successive prime rates (as posted in New York City) during delinquency. If
the amount of such charge exceeds the maximum permitted by law, such charge
shall be reduced to such maximum.
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ARTICLE IV
TERMINATION
4.01 TerminatIon for Breach
In the event of a breach of this Agreement by ECSI, LUCENT may, in addition to
any other remedies that it may have, at any time terminate all licenses and
rights granted by it hereunder by not less than two (2) months' written notice
specifying such breach, unless within the period of such notice all breaches
specified therein shall have been remedied.
4.02 Voluntary Termination
By written notice to LUCENT, ECSI may voluntarily terminate all or a specified
portion of the licenses and rights granted to it hereunder. Such notice shall
specify the effective date (not more than six (6) months prior to the giving of
said notice) of such termination and shall clearly specify any affected
invention or product. In the event LUCENT's PATENT expires or becomes
unenforceable or if ECSI surrenders one or more rights granted to it under
Article I, LUCENT agrees to consider renegotiating royalties and payments due
under Article III.
4.03 Survival
Any termination of licenses and rights of ECSI under the provisions of this
Article IV shall not affect ECSI's licenses, rights and obligations with respect
to any OPTICAL FIBER SENSING SYSTEM made prior to such termination. The rights,
licenses and obligations which, by their nature would continue beyond
termination of this Agreement, including but not limited to ECSI's obligations
under Sections 2.01, 2.02, 2.03 and 2.08, shall survive and continue after any
such termination of this Agreement.
ARTICLE V
M1SCELLANEOUS PROVISIONS
5.01 Disclaimer
Neither LUCENT nor any of its SUBSIDIARIES, expressly or impliedly, makes any
representations, extends any warranties of any kind (except as provided in
Section 1.05), assumes any responsibility or obligations whatever, or confers
any right by implication, estoppel or otherwise, other than the licenses and
rights herein expressly granted.
By way of example but not of limitation, LUCENT and its SUBSIDIARIES make no
representations or warranties of merchantability or fitness for any
9
particular purpose, or that the use of the TECHNICAL INFORMATION or any of it
will not infringe any patent or other intellectual property right. LUCENT and
its SUBSIDIARIES shall not be held to any liability with respect to any claim by
ECSI or any third party on account of, or arising from, the use of the TECHNICAL
INFORMATION or any of it. LUCENT represents that as of execution of this
Agreement, it has no knowledge of any claims against it for infringement related
to use of the TECHNICAL INFORMATION to make OPTICAL FIBER SENSING SYSTEMs.
5.02 Publicity
ECSI agrees that no right is granted to ECSI in this Agreement to use any
identification (such as, but not limited to, trade names, trademarks, trade
devices, service marks or symbols, and abbreviations, contractions or
simulations thereof) owned by or used to identify LUCENT or any or its
SUBSIDIARIES or any of its or their products, services or organizations, and
that ECSI agrees it will not, without the prior written permission of LUCENT,
(i) use any such identification in advertising, publicity, packaging, labeling
or in any other manner to identify itself or any of its products (including
OPTICAL FIBER SENSING SYSTEMs), services or organizations or (ii) represent
directly or indirectly that any product, service or organization of ECSI is a
product, service or organization of LUCENT or any of its SUBSIDIARIES, or that
any product or service of ECSI is made in accordance with or utilizes any
information of LUCENT or any of its SUBSIDIARIES,
5.03 Nonassignability
(a) LUCENT has entered into this Agreement in contemplation of personal
performance by ECSI and it is LUCENT's intention that a transfer of ECSI's
licenses or rights not occur without LUCENT's express written consent.
(b) Neither this Agreement nor any licenses or rights hereunder, in whole or in
part, shall be assignable or transferable by ECSI (by operation of law or
otherwise) without LUCENT's express written consent.
(c) Any purported assignment or transfer of this Agreement or licenses or rights
hereunder by ECSI without LUCENT's necessary consent shall be void (without
affecting any other licenses or rights hereunder).
5.04 Address
(a) Any notice or other communication hereunder shall be sufficiently given to
ECSI when sent by certified mail addressed to the office specified above or to
LUCENT when sent by certified mail addressed to Contract Administrator,
Intellectual Property Division, Lucent Technologies lnc., 2333 Xxxxx de Xxxx
00
Xxxxxxxxx - Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx 00000, Xxxxxx Xxxxxx of America.
Changes in such addresses may be specified by written notice.
(b) Payments by ECSI shall be made to LUCENT at Sun Trust, X.X. Xxx 000000,
Xxxxxxx, Xxxxxxx, 00000-0000, Xxxxxx Xxxxxx of America. Alternatively, payments
to LUCENT may be made by bank wire transfers to LUCENT's account: Lucent
Technologies Licensing, Account No. 000-0-000000, at Chase Manhattan Bank, N.A.,
Four Chase Metrotech Center, Brooklyn, New York 11245, United States of America.
Changes in such address or account may be specified by written notice.
5.05 Taxes
ECSI shall pay any tax, duty, levy, customs fee, or similar charge ("taxes"),
including interest and penalties thereon, however designated, imposed as a
result of the operation or existence of this Agreement, including taxes which
ECSI is required to withhold or deduct from payments to LUCENT, except (i) net
income taxes imposed upon LUCENT by any governmental entity within the United
States (the fifty (50) states and the District of Columbia), and (ii) net income
taxes imposed upon LUCENT by jurisdictions outside the United States which are
allowable as a credit against the United States Federal income tax of LUCENT or
any of its SUBSIDIARIES. In order for the exception in (ii) to be effective,
ECSI must furnish to LUCENT evidence sufficient to satisfy the United States
taxing authorities that such taxes have been paid. Such evidence must be
furnished to LUCENT within thirty (30) days of issuance by the local taxing
authority.
5.06 Choice of Law
The Parties are familiar with the principles of New York commercial law, and
desire and agree that the law of New York, exclusive of its conflict of laws
provisions, shall apply in any dispute arising with respect to this Agreement.
5.07 Integration
This Agreement sets forth the entire agreement and understanding between the
Parties as to the subject matter hereof and merges all prior discussions between
them. Neither of the Parties shall be bound by any warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or in a writing signed with or subsequent to execution hereof by
an authorized representative of the Party to be bound thereby.
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5.08 Agreement Prevails
This Agreement shall prevail in the event of any conflicting terms or legends
which may appear on the TECHNICAL INFORMATION.
5.09 No Patent License
Except as explicitly provided in Article I, nothing contained herein shall be
construed as conferring by implication, estoppel or otherwise any license or
right under any patent, whether or not the exercise of any right herein granted
necessarily employs an invention of any existing or later issued patent.
5.10 Dispute Resolution
(a) If a dispute arises out of or relates to this Agreement, or the breach,
termination or validity thereof, the Parties agree to submit the dispute to a
sole mediator selected by the Parties or, at any time at the option of a Party,
to mediation by the American Arbitration Association ("AAA"). If not thus
resolved, it shall be referred to a sole arbitrator selected by the Parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration which shall be governed by the United States Arbitration Act.
(b) Any award made (i) shall be a bare award limited to a holding for or against
a Party and affording such remedy as is deemed equitable, just and within the
scope of the Agreement; (ii) shall be without findings as to issues (including
but not limited to patent validity and/or infringement) or a statement of the
reasoning on which the award rests; (iii) may in appropriate circumstances
(other than patent disputes) include injunctive relief; (iv) shall be made
within four (4) months of the appointment of the arbitrator; and (v) may be
entered in any court.
(c) The requirement for mediation and arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the arbitrator is not
empowered to act or make any award other than based solely on the rights and
obligations of the Parties prior to any such termination.
(d) The arbitrator shall determine issues of arbitrability but may not limit,
expand or otherwise modify the terms of the Agreement.
(e) The place of mediation and arbitration shall be New York City.
(f) Each Party shall bear its own expenses but those related to the compensation
and expenses of the mediator and arbitrator shall be borne equally.
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(g) A request by a Party to a court for interim measures shall not be deemed a
waiver of the obligation to mediate and arbitrate.
(h) The arbitrator shall not have authority to award punitive or other damages
in excess of compensatory damages and each Party irrevocably waives any claim
thereto.
(i) The Parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.
LUCENT TECHNOLOGIES
By /s/ X. X. Xxxxxx
----------------------------
X. X. Xxxxxx
Vice President - Intellectual Property
Date: 1-22-97
-------------------------
ELECTRONIC CONTROL SECURITY INC.
By /s/ XXXXXX XXXXX
----------------------------
Title Pres.
-------------------------
Date Jan. 14, 1997
--------------------------
THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES
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DEFINITIONS APPENDIX
FAIR MARKET VALUE means, with respect to any item sold, leased or put into use,
the greater of (1) the selling price which a seller would realize from an
unaffiliated buyer in an arm's length sale of an identical item in the same
quantity and at the same time and place as such sale, lease or putting into use,
or (ii) the selling price actually obtained for such product in the form in
which it is sold, whether or not assembled (and without excluding therefrom any
components or subassemblies thereof which arc included in such selling price).
In determining 'selling price' the following shall be excluded:
(a) usual trade discounts actually allowed to unaffiliated persons or
entities;
(b) packing costs;
(c) costs of insurance and transportation; and
(d) import, export, excise, sales and value added taxes, and customs
duties.
LUCENT's PATENT means U.S. Patent 4,904,050 and any reissue thereof.
OPTICAL FIBER means a filamentary body of optical transmission material of a
design primarily adapted for transmitting electromagnetic WAVES having a
frequency in excess of three hundred (300) GHz, along a desired path extending
longitudinally therethrough and to which such WAVES are substantially confined
by the refraction of reflection (or both) of such WAVES.
OPTICAL FIBER SENSING SYSTEM means any instrumentality or aggregate of
instrumentalities of a type for sensing any intrusion into an OPTICAL FIBER or a
network of OPTICAL FIBER and includes all auxiliary apparatus associated
therewith and involved in performing the function thereof.
REPORTABLE PRODUCT means any OPTICAL FIBER SENSING SYSTEM, or replacement part
therefor,
(a) the manufacture, importation, sale, lease or use of which by ECSI or
any of its SUBSIDIARIES would but for licenses or rights under this
Agreement, constitute (i) infringement of LUCENT's PATENT by ECSI or
its SUBSIDIARIES, or (ii) any other violation of applicable law by
ECSI or its SUBSIDIARIES for which LUCENT or any of its SUBSIDIARIES
would be entitled to compensation or other remedy on account of such
patent, or
15
(b) which is manufactured with the use of any of the TECHNICAL
INFORMATION (including any such article, and any maintenance part
therefor, manufactured with manufacturing facilities made with the
use of any of the TECHNICAL INFORMATION), other than (i)
demonstration models and articles and maintenance parts produced in
the course of, or intended for use in connection with, research,
development and or experimental undertakings controlled by ECSI, and
(ii) articles and maintenance, parts therefor furnished to LUCENT or
any of its SUBSIDIARIES.
SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of the equity interest in which is now or
hereafter owned and controlled by such company either directly or indirectly,
but any such corporation or other legal entity shall be deemed to be a
SUBSIDIARY of such company only as long as such control or ownership and control
exists.
TECHNICAL INFORMATION means certain informative material (including all copies
derived from material furnished hereunder) relating to OPTICAL FIBER SENSING
SYSTEMs and the term also means the information available from such material,
such material including but not limited to information previously supplied under
license to Xxxxx and Hanger National, Inc.
WAVES means all impulses, alternations or other variation with time, of
electric, magnetic, electromagnetic (including light), acoustic or mechanical
magnitudes or combinations thereof.
16
Agreement
This agreement is made and entered into this 5th day of March, 1997 by
and among Xxxxx & Hanger National, Inc., a Delaware corporation with offices at
000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 (MHN) and ECSI-FOIDS, Inc. a New Jersey
corporation with offices at 00 Xxxx Xxxx, Xxxxxxxxx, XX 00000 (ECSl) and Xxxxxx
Xxxxx whose address is 00 Xxxx Xxxx Xxxxxxxxx, XX 00000 (Birch).
Recitals
The shareholders and Board of Directors of MHN have authorized the
closure and wind up of MHN;
ECSI, a sales representative of MHN, desires to continue the manufacture
of MHN's FOlDs product line and has offered to purchase certain of MHN's
inventory and secure the necessary licenses from MHN and its licenser Lucent;
MHN is willing to sell certain of its inventory, license its patents and
agree to other related matters on the following terms and conditions;
For and in consideration of the promises set out below, the parties agree
as follows:
1. License. MHN and ECSI agree to enter into the license agreement
attached and made a part hereof as Attachment A. MHN also agrees to grant to
ECSI source code, PCB drawings, schematics, and trade secrets as described in
Attachment E. In return for the use of the MHN trade secrets as described in
attachment E, ECSI agrees that any patent that is applied for based upon these
trade secrets will be a patent jointly owned by ECSI and MHN or MHN's successor
in interest. In addition, the source codes provided are considered trade secrets
by MHN. ECSI agrees that if this source code or any code based upon this source
code is copyrighted it will be a copyright jointly owned by ECSI and MHN or
MHN's successor in interest
2. Lucent License. MHN agrees to assist ECSI in securing the necessary
related license from Lucent by responding to reasonable requests related to
Lucent's license. Should MHN no longer employ anyone who can respond to the
request at the time ECSI or Lucent makes an inquiry, MHN shall not be obligated
to assist further.
3. Sale of Materials. MHN agrees to sell and ECSI agrees to purchase the
assets described in enclosures 1, 2 and 3 to Attachment B attached and made a
part hereof for a total purchase price of $151,500 in seven lots. The first lot
shall be purchased for $25,000. After the initial purchase of the first lot on
the effective date of this agreement, ECSI shall purchase one lot each thirty
(30) days thereafter for a purchase price of $21,083.33 per lot, with the first
thirty day period beginning thirty days after the effective date of this
Agreement. Fifty percent (50%) of the purchase price for each lot must be paid
by cashier's or certified check delivered at the time of receipt of the lot and
the balance must be paid by cashier's or certified check within 30 days of
receipt of the lot.
1
If ECSI does not pay for a lot in full during a thirty (30) day period, MHN
shall have the right to increase the price of said lot by 20%, if the lot is
sold to ECSI within 15 days of lot procurement date. ECSI's obligation to
purchase the lots shall not be contingent on the making of any potential sales
and MHN's identification of the above shall not constitute a representation or
guarantee of future sales. MHN MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND
REGARDING THE ITEMS TRANSFERRED ABOVE (INCLUDING BUT NOT LIMITED TO ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE). THE ITEMS ARE
TRANSFERRED TO ECSI "AS IS."
4. Other Items Purchased by ECSI. MHN agrees to sell and ECSI agrees to
purchase the assets described in enclosures 4 and 5 to Attachment B as described
below and attached and made a part hereof for the consideration set forth next
to each enclosure item, with the consideration to be paid in full at closing by
certified or cashier's check:
a) Enclosure 4 to attachment B - Marketing and Production items -
$9,500; and
b) Enclosure 5 to Attachment B - Research and Development equipment,
tools and files - $16,000
MHN MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE ITEMS
TRANSFERRED ABOVE (INCLUDING BUT NOT LIMITED TO ANY REPRESENTATION OR WARRANTY
OF MERCHANTABILITY OR FITNESS FOR USE). THE ITEMS ARE TRANSFERRED TO ECSI "AS
IS."
5. Sublease. MHN agrees to sublease the portion of its premises located at
000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 described on Attachment C, attached and
made a part hereof to ECSI for a period of 90 days after the effective date of
this Agreement. ECSI shall pay MHN at the beginning of each 30 day period
$1,400. ECSI shall pay all expenses as described on Attachment C within 10 days
of receiving the xxxx. Prior to taking possession of the designated premises,
ECSI shall provide MHN with evidence of premises liability coverage (naming MHN
as an additional insured). ECSI's possession of the premises shall be subject to
the same terms and conditions as set forth in MHN's lease attached and made a
part hereof as Attachment D except as modified by this paragraph or Attachment
C.
6. Notices. No sooner than the effective date as hereinafter defined, MHN
shall provide ECSI with names and addresses of its customers, sales
representatives distributors, end users and key suppliers for ECSI to prepare a
joint letter advising them of ECSI's license. MHN shall approve the terms of the
letter and ECSI shall bear all costs related to the mailing.
7. Effective Date. This agreement shall not be effective until the
happening of all of the following which must occur by December 6, 1996 for the
obligations of the parties to remain in effect:
2
a) ECSI's payment in full of its open account with MHN in the
amount of $18,307.31 (invoices number 1579, 1580, and 1625).
b) ECSI's payment of $25,000 good faith money which shall also be
consideration for the first lot of inventory, as described in
enclosure 1 to Attachment B.
c) ECSI's payment of $25,500 for the items described in
enclosures 4 and 5 of Attachment B.
d) ECSI's payment of the first 30 days rent in the amount of $
1,400.
e) Birch's guarantee of ECSI's performance under this agreement
as evidenced by his signature to this agreement under the
statement, "I fully guarantee the performance of ECSI."
f) ECSI's securing of a necessary license from Lucent and
delivery of evidence of such license to MHN in form
satisfactory to MHN.
g) MHN's securing of its landlord's permission to sublease a
portion of the premises to ECSI.
h) ECSI's delivery of the required evidence of insurance naming
MHN as an additional insured, including product liability
insurance as required in the License included as Attachment A.
i) ECSI's delivery of the required evidence that it has entered
into a nondisclosure agreement with Scientific Approaches
relating to the Graphic Link protocol, in a form satisfactory
to MHN.
j) ECSI's delivery of an executed License Agreement substantially
in the form of Attachment A.
8. Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
a) The failure of ECSI to pay, promptly when due, any payment due under
this Agreement or under any Attachment hereto if such failure shall
continue unremedied for ten (10) days after receipt of written
notice of such failure; or
b) MHN reasonably determines that the books and records of ECSI or
the sales reports required by the License Agreement attached as
Attachment A are not accurate and such inaccuracy is not cured
within ten (10) days of receipt of written notice of such
inaccuracy.
c) ECSI defaults, breaches or fails to perform, observe or meet any
covenant, statement, agreement, stipulation, term or condition made
in the Agreement or
3
any Attachment to the Agreement hereunder, with no prior demand
therefor or notice by MHN necessary except to the extent, if any,
required under the express terms of the Agreement or Attachment to
the Agreement governing such default; or
d) The happening of any of the following (a) insolvency of ECSI or the
Guarantor, (b) filing of a voluntary petition in bankruptcy by ECSI
or Guarantor, (c) filing of a involuntary petition in bankruptcy
against ECSI or Guarantor, (d) appointment of a receiver or trustee
for ECSI or Guarantor, (e) execution of an assignment for the
benefit of creditor by ECSI or Guarantor, provided that such
petition, appointment, assignment is not vacated or nullified within
fifteen (15) days of such event; or
e) ECSI fails to maintain and keep in force the insurance required
under this Agreement or any Attachment to the Agreement, with no
prior demand therefor or notice by MHN necessary after notice to
cure.
9. Remedies upon Default. Notwithstanding any contrary provision or
inference herein or elsewhere:
a) MHN's Right to Declare a Default in its Sole Discretion. If any
Event of Default referred to in Article 8 of this Agreement shall
occur or begin to exist, MHN may, declare a default hereunder in
its sole discretion, after any requisite cure period has expired.
b) Termination and Reversion. Immediately upon a declaration of a
default pursuant to this Agreement, MHN is entitled to become the
sole owner of all of the assets described in paragraph 1 of this
Agreement and the License Agreement shall be deemed to be
terminated. MHN may also terminate other provisions of this
Agreement and the Attachments hereto as it sees fit, in its sole
discretion. The Items listed in Attachment E of this Agreement shall
revert back to MHN or MHN's successor in interest with MHN (or its
successor in interest) being the sole owner. Any patents or
copyrights jointly owned by ECSI and MHN or MHN's successor in
interest shall revert to be owned solely by MHN or MHN's successor
in interest; and
c) Rights Cumulative. All of the rights and remedies of MHN upon
occurrence of an Event of Default hereunder shall be cumulative to
the greatest extent permitted by law and shall be in addition to all
those rights and remedies afforded MHN at law or in equity or
bankruptcy.
10. Miscellaneous.
a) Birch shall be the point of contact for ECSI. Xxxxx Xxxxx, 0000
Xxxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (phone 000-000-0000) shall be
the point of contact for MHN.
4
b) Kentucky law shall govern this agreement and the parties by their
execution hereto submit to the personal jurisdiction of the Fayette
Circuit Court located in Lexington, KY.
c) Should litigation arise from this agreement, the prevailing party
shall be entitled to recover costs and reasonable attorneys fees
from the losing party.
d) No party may assign its/his interests under this agreement without
the prior written consent of the other parties. Approval of an
assignment by ECSI shall be contingent on, among other things,
Birch's guarantee of the assignee's performance.
e) In the event that any one or more provisions contained in this
Agreement or any Attachment hereto shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this agreement the day and
year above written.
XXXXX & HANGER NATIONAL, INC.
By: /s/ [ILLEGIBLE] Date 3-7-97
------------------------------------------------ -----------------------
Title: Treasurer
ECSI-FOIDS, INC.
By: /s/ Xxxxxx Xxxxx Date 11-29-96
------------------------------------------------ -----------------------
Title: Pres.
I fully guarantee the performance of ECSI-Foids, Inc. under this agreement.
/s/ Xxxxxx Xxxxx Date 11-29-96
--------------------------------------------------- ----------------------
Xxxxxx Xxxxx
5
ATTACHMENT A
The License agreement between MHN and ECSI is attached.
LICENSE AGREEMENT
This LICENSE AGREEMENT is made and entered into by and between XXXXX &
HANGER NATIONAL, Inc., a Delaware corporation, having its principal office and
place of business at 000 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, (hereinafter
the Licensor), and ECSI International, Inc., a New Jersey company, having its
principal office and place of business at 00 Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx
00000, (hereinafter the Licensee).
WITNESSTH
WHEREAS, Licensor is the owner by Assignments recorded in the United
States Patent Office of the Licensed Patents listed in Section 1 below; and
WHEREAS, the parties hereto desire that Licensor grant Licensee a License
to manufacture, use and sell products, hereinafter referred to as "Licensed
Products", and to practice the inventions described and claimed within the
Licensed Patents.
NOW THEREFORE, in consideration of the promises and mutual covenants cited
herein, and other good and valuable consideration, the receipt thereof which is
hereby acknowledged, and subject to Licensee obtaining a Licensing agreement
from Lucent, the parties do hereby agree as follows:
1. LICENSED PATENTS:
As used in this Agreement, the phrase "Licensed Patents" shall mean and
include:
A) U.S. Patent 5,355,208, entitled: "DISTRIBUTED FIBER OPTIC SENSOR FOR
LOCATING AND IDENTIFYING REMOTE DISTURBANCES", inventors: Xxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxx and Xxxx X. Xxxxxxxx and any reissues,
reexaminations or extensions thereof;
B) U.S. Patent 5,373,487, entitled: "DISTRIBUTED ACOUSTIC SENSOR",
inventors: Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxx X. Xxxxxx, Xxxx X.
Xxxxxxxx and Axis Tanone and any reissues, reexaminations or extensions thereof;
and
C) U.S. Patent 5,567,933 (issuing 10/22/96) entitled: "OPTICAL FIBER
DETECTION SYSTEM WITH DISTURBANCE AND POSITIVE CUT-LOOP DETECTION CAPABILITIES",
inventors: Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx and any reissues,
reexaminations or extensions thereof.
2. LICENSED PRODUCTS
As used in this Agreement, the phrase "Licensed Products"
1
shall mean goods, systems, structures and/or installations and components
thereof, the manufacture, use, or sale of which would constitute an infringement
or a contributory infringement with respect to one or more of the claims of the
Licensed Patents and including equivalents thereof and improvements thereon.
3. GRANT OF LICENSE:
Licensor agrees to and does hereby grant to Licensee, upon and subject to
the terms and conditions hereinafter set forth, including Section 7, an
Exclusive License to make, use and sell Licensed Products covered by the
Licensed Patents within the geographic area described in Section 5 hereof.
Licensor specifically retains the right to make, use and sell the License
Products covered by the Licensed Patents within the geographic area described in
Section 5 hereof.
4. TERM:
This Agreement and the License granted under it shall expire ten (10)
years from the effective date of this Agreement which shall be March 5, 1997
unless sooner terminated under the provisions hereof.
5. GEOGRAPHIC AREA.
The rights granted to Licensee hereunder shall be exercised by Licensee
world wide.
6. DEFINITION OF "NET SALES PRICE":
As used herein the term "Net Sales Price" shall mean the invoice price
charged by Licensee for Licensed Products sold by Licensee less:
A) Refunds, credits and allowances actually made or allowed to customers
for returned Licensed Products;
B) Any sales, or similar, taxes set forth as part of the invoice price;
C) Trade discounts and allowances that would normally be incurred in
Licensee's business exclusive of anticipations afforded to and actually taken by
customers in payment of Licensed Products; and
D) Any freight charges.
If Licensee sells Licensed Products to a related marketing organization or
any individual or company in whole or in part controlled or owned by Licensee,
the invoice price used to determine the "Net Sales Price" hereunder shall be, if
greater than Licensee's "Net Sales Price", the invoice price at which the
2
Licensed Products are sold by such related entity to any unrelated customer in
an arms length transaction.
7. ROYALTIES:
For the License herein granted with respect to the Licensed Patents,
Licensee shall pay to Licensor royalties in the sum equal to five percent (5%)
of the "Net Sales Price" for Licensed Products sold.
Should Licensor not be paid royalties of at least $25,000.00 for a full
license year, beginning the first license year of this agreement, Licensor shall
have the right at any time during the succeeding license year to declare this
exclusive license to be a non-exclusive license or to terminate the license, at
Licensor's option. In such event Licensor may grant licenses to any other
persons or entities on terms and conditions as Licensor deems appropriate.
Licensee may retain the exclusive license by paying to Licensor, in addition to
the royalties actually paid for any full license year, the difference between
the sum of $25,000.00 and such royalties. Such payments must be made within
thirty (30) days of the end of the license year. Licensor must notify Licensee,
in writing, within ninety (90) days of the end of such license year of any
termination or change in the status of the license to a non-exclusion license
for failure to pay Licensee the minimum royalties recited herein.
8. LICENSEE'S RECORDS:
Licensee shall keep and maintain at its regular place of business complete
books and records of business transactions by Licensee in connection with the
Licensed Products covered by the Licensed Patents, including, but not limited
to, books and records relating to the "Net Sales Price" and orders for such
products. Licensee's accounting records of sales, shipments, installations and
returns of Licensed Products shall be maintained separately from accounting
records relating to other items manufactured or sold by Licensee. Such books and
records shall be maintained in accordance with generally accepted accounting
procedures. Licensor, or its duly authorized agents or representatives, shall
have the right to inspect such books and records at Licensee's premise during
regular business hours, provided that Licensor shall give Licensee at least ten
(10) days advance written notice of its intention to do so and provided that
such inspections will be limited to one inspection per calendar year. In the
event that Licensee has understated "Net Sales Price" or underpaid royalties in
excess of ten percent (10%) of said net shipments for the calendar year,
Licensee shall forthwith and upon written demand also pay Licensor's costs, fees
3
and expenses incurred in conducting an audit with respect to books and
records kept with respect to the Licensed Products. Should any audit disclose
that the royalties paid exceed the actual royalties due, Licensee shall be
entitled to a credit equal to such excess royalties against the royalties next
accruing under this Agreement. In the event no further royalties will be
accruing under this Agreement, then to the extent such audit discloses that the
royalties paid exceeded the actual royalties due, the excess shall be paid to
Licensee.
9. LICENSEE'S MONTHLY REPORTS OF SALES AND ROYALTY PAYMENTS:
On or before the first day of each month during the term hereof, Licensee
shall deliver to Licensor written statements certified to be true and correct by
the Chief Financial Officer of Licensee, setting forth the sales and "Net Sales
Prices" of Licensed Products for the proceeding month together with a check
payable to Licensor in full payment of the earned royalties shown on such
statement to be due under Section 7 hereof.
10. BEST EFFORTS OF LICENSEE:
Licensee shall use its best efforts and skills to make, use and sell the
Licensed Products. In the event Licensee fails to sell Licensed Products using
such best efforts and skills, Licensor shall have the right to cancel and
terminate this Agreement by giving written, notice of such termination to
Licensee.
11. RESTRICTIONS UPON SUBCONTRACTS:
Licensee shall only have the right to enter into subcontracts including
imports for the manufacture, use and sale of Licensed Products upon written
consent of Licensor. Any subcontracts by Licensee shall be governed and
condition on the same rights, privileges, restrictions and requirements
including payment of royalties, right to inspect, and to take accountings as
provided elsewhere in this Agreement.
12. ASSIGNMENT AND TRANSFERS:
No assignment, transfer, sale, sub-license, or conveyance of any of
Licensee's rights, duties or interest in this Agreement shall be made without
Licensor's prior written consent and shall be subject to the provisions of this
Agreement, including royalties, right to inspect, accountings, termination and
rights of Licensor unless otherwise agreed to in writing between the parties.
4
13. PRESERVATION OF THE PATENTS:
Licensee shall cause to appear on all Licensed Products and/or on all
materials used in connection with the sale thereof such legends, markings and
notices as may be required by laws governing the geographic area in order to
give appropriate notice of all patent rights granted and pertaining to the
Licensed Patents. Such products or materials associated with the Licensed
Product should bear the xxxx "Patented" and the Patent Number(s) of the Licensed
Patent(s).
14. INFRINGEMENT AND OTHER LITIGATION:
Licensor represents that it is the sole owner of all rights to the
Licensed Patents exclusive of the rights of all others. The Licensor has no
present knowledge or belief that any of the claims of the Licensed Patents are
not valid and enforceable and that Licensor has the absolute right to grant this
License.
In order to protect rights of each party under this Agreement, each party
will keep the other fully informed of the infringement of any Licensed Patent by
third parties. The Licensor shall have the right to be represented by counsel at
Licensor's expense in any legal action taken to enforce any patent rights with
respect to the Licensed Patents against a third party infringer. Responsibility
for the cost and expenses of such legal action shall be mutually agreed upon in
writing between the Licensor and Licensee prior to the institution of any such
legal action. In any action by Licensor or Licensee whether by original
petition, complaint, or by counterclaim against a third party for violation of
patent rights in the Licensed Patents, each party shall be entitled to retain
any settlement, recovery, and/or awarded damages in proportion to the agreed
upon percentage of the cost and expenses of such action. Absent any agreement
for maintaining such a legal matter to enforce the Patent Rights, Licensor
shall, in its own judgment, take whatever action it deems necessary at its own
expense.
With respect to any third party suit or action against Licensee whether by
original petition, complaint, or by counterclaim, seeking to declare invalid
and/or unenforceable all or any of the claims of any of the Licensed Patents,
the defense fees, cost, and expenses shall be agreed upon by the parties hereto
as soon as reasonably practical after the commencement of such third party suit
or action. If Licensor refuses to participate in any such third party suit or
action, the Licensee may defend and prosecute such action and, in such event,
shall be entitled to the entire amount of any award of damages, settlement or
recover,
5
exclusive of royalties otherwise due to the Licensor.
15. DEFAULTS BY LICENSEE:
Except as otherwise expressly provided for in this Agreement, in the event
Licensee shall default in the performance of any of the terms and conditions to
be performed hereunder, including the payment of royalties, and the same shall
not be cured within ten days (10) after written notice to Licensee, Licensor
may, at its option, or any time thereafter, cancel and terminate this Agreement.
16. LICENSOR'S RIGHT UPON TERMINATION:
In the event this Agreement is cancelled or terminated, Licensee shall
assign and transfer any and all rights of Licensee to all Licensed Patents and
Licensed Products to Licensor and shall not thereafter use the same in any
manner. Upon cancellation or termination, all Licensee's stock of Licensed
Products on hand may be purchased at cost by Licensor.
17. INSURANCE
Licensee does indemnify and hold harmless Licensor for any liability or
claim thereof based upon the manufacture, use and sale by Licensee of the
Licensed Products. To this end, Licensee and its Sub-Licensees, if any, agree to
carry product liability insurance with respect to License Products. Such
insurance may be obtained in conjunction with product liability insurance which
covers products other than the Licensed Products. Licensee shall deliver to
Licensor, at Licensor's request, a certificate evidencing the existence of such
insurance policies promptly upon written request by Licensor.
18. ATTORNEY'S FEES AND APPLICABLE LAW:
In the event Licensor or Licensee shall commence any action or proceeding
against the other by reason of any breach or claimed breach of the performance
of any of the terms or conditions of this Agreement, or to seek a judicial
declaration or rights hereunder, the prevailing party of such action or
proceeding shall be entitled to reasonable attorney's fees to be fixed by the
court or the applicable hearing officer(s). In any legal action or proceeding
brought in which any right or obligation arising from this Agreement is at
issue, the law applicable hereunder shall be the law of the State of Kentucky.
6
19. NO AGENCY OF PARTIES:
This Agreement does not make Licensee the agent or legal representative of
Licensor nor Licensor the agent or legal representative of Licensee for any
purpose whatsoever. Except as otherwise provided herein, Licensee is not granted
any right or authority to assume or to create any obligation or responsibility,
express or implied, on behalf of, or in the name of, Licensor or to bind
Licensor in any manner or thing whatsoever; nor, except as otherwise provided
herein, is Licensor granted any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of, or in the name
of, Licensee or to bind Licensee in any manner or thing whatsoever. No joint
venture or partnership between Licensor and Licensee is intended nor shall be
inferred.
20. ADDRESS FOR NOTICE:
All notices between the Licensor and Licensee shall be in writing
addressed to Licensee or Licensor at the respect address set forth below and
shall be effective upon receipt if mailed by first class mail.
Licensor: Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Licensee: c/o Xxxxxx Xxxxx, President and COO
ECSI International, Inc.
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If any of the parties hereto shall during the term of this Agreement
change address, then, upon given written notice to the other party of the new
address, the new address shall be the address for notice hereunder.
21. WAIVER BY LICENSOR:
In the event Licensor shall at any time waive any of its rights hereunder
this Agreement or the performance by Licensee of any of its obligations
hereunder, such waiver shall not be construed as a continuous waiver of the same
rights or obligations or a waiver of any other rights or obligations.
22. SEPARABILITY:
Any provision of this Agreement which shall be, or is
7
determined to be, invalid, shall be effective, but such invalidity shall not
affect the remaining provisions hereof.
23. BINDING UPON SUCCESSOR:
This Agreement shall be binding upon and shall enure in order to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
FOR LICENSOR:
XXXXX & HANGER NATIONAL, INC.
By: [ILLEGIBLE] its Treasurer
--------------------------------
3/7/97
--------------------------------
Date
FOR LICENSEE:
ECSI INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxx its Pres.
--------------------------------
11-26-96
--------------------------------
Date
8
