Confidential | Execution Version |
License AGREEMENT*
ThisLicense Agreement (this “Agreement”) is made and entered into effective as ofAugust31, 2013 (the “Effective Date”) by and betweenLazare Kaplan International Inc., aNew Yorkcorporation (“Licensor”), andGemological Institute of America, Inc., aCalifornianon-profit corporation (“Licensee”).LicensorandLicenseeare individually referred to herein as a “Party” and collectively as the “Parties.”
A. The Parties, simultaneously with the execution of this Agreement, have executed a settlement agreement (the “Settlement Agreement”) to settle pending litigation with respect to Licensor’s allegation that Licensee has, prior to the Effective Date, infringed the Licensed Patents and this Agreement is entered into in connection with the compromise of disputed claims between the Parties.
B. The Parties wish to enter into this licensing relationship on the terms and conditions set forth herein.
Therefore, in consideration of the license, covenants, and agreements set forth herein, the Parties agree as follows:
Article I
DEFINITIONS
As used in this Agreement, capitalized terms shall have the meaning ascribed thereto in this Article I or elsewhere in this Agreement:
“’351 Ex-U.S. Family Patents” means any and all foreign counterparts of the’351 U.S. Family Patents.
“’351 U.S. Family Patents”means(a) U.S. Patent 6,476,351;(b) any and all existing and future continuations in whole or continuations in partofU.S. Patent 6,476,351orany application that claims priority to U.S. Patent 6,476,351 and any and all patents and patent applications that claim priority to any patent application to which U.S. Patent 6,476,351claims priority; and(c) any and all existing or future reissues, reexaminations, extensions, divisions, renewals, revivals,and substitutions of or to any of the foregoing patents or patent applications described in (a)–(b)above.
* Certain portions of this Agreement have been omitted pursuant to a request for confidential treatment.
“Affiliate” means with respect to a Party, any Person, now or hereafter during theTerm, directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with such Party, where for purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or by contract or otherwise; provided that such Person shall be deemed an “Affiliate” only for so long as such control exists. A “Subsidiary” of a Party is an Affiliate that is controlled, directly or indirectly, by such Party in accordance with the foregoing. Notwithstanding the foregoing, in no event will Photoscribe be considered an Affiliate of Licensee.
“Challenge of the Licensed Patents” means the challenge of, or material and knowing encouragement, direction, support, or other material and knowing aid or assistance to any Person in any challenge to, the validity, scope, or enforceability of any Licensed Patent, whether in any court, patent office, or other forum, including, by way of opposition, reexamination, supplemental examination, and other review procedures (including, ex parte reexamination, inter partes review, post grant review, and covered business method (CBM) review). For the avoidance of doubt and without limitation, a “Challenge of the Licensed Patents” shall not include (i) responding to subpoenas or other court or government requests for information or (ii) providing information to any Person about Licensed Services or the operation of the Equipment to the extent such information does not address the validity, scope, or enforceability of any Licensed Patent. For the avoidance of doubt, the facts that (1) Licensee was a co-defendant with Photoscribe in the Litigation, (2) Licensee and Photoscribe were represented by the same counsel for part of the Litigation, and (3) Licensee took positions in the Litigation that may be identical or similar to positions taken by any subsequent challenger of a Licensed Patent, shall not, individually or collectively, in and of themselves constitute a basis for any allegation that Licensee has made a Challenge of the Licensed Patents.
“Change of Control Transaction” shall mean, with respect to a Party or a Subsidiary of a Party any of: (i) a merger of such Party or Subsidiary with or into a Third Party (regardless of which entity is the surviving entity), (ii) a transaction as a result of which a Third Party acquires control (as such term is used in the definition of “Affiliate”) of such Party or Subsidiary, (iii) a consolidation of such Party or Subsidiary and a Third Party, or (iv) a sale of all or substantially all of such Party’s or Subsidiaries’ business assets to a Third Party. For purposes of this Agreement, “Acquiror” shall mean the Third Party referenced in clauses (i) - (iv) above.
“Equipment” means any and all equipment that can be used to perform Inscriptions on gemstones. For clarity, as used in this Agreement, the term “gemstones” includes, without limitation, diamonds, synthetic diamonds and other synthetic gemstones.
“Inscription” means an etching of characters (e.g., text, logos or other items) on a gemstone. Inscriptions may include any number of characters, provided that each set of up to fifteen (15) characters shall be deemed one (1) Inscription for purposes of the royalty calculation under this Agreement.
“Internal Inscriptions” means Inscriptions done by Licensee and its Subsidiaries for Licensee’s and its Subsidiaries’ internal, non-commercial training, testing, evaluation, educational and research purposes.
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“Large Stones” means gemstones which are [*].
“Licensed Patents” means(a) U.S. Patent 6,476,351;(b) any and all existing and future continuations in whole or continuations in partofU.S. Patent 6,476,351orany application that claims priority to U.S. Patent 6,476,351 and any and all patents and patent applications that claim priority to any patent application to which U.S. Patent 6,476,351claims priority;(c)any and all other patents and patent applications claiming inventions owned as of theEffective DatebyLicensoror any of its current Subsidiaries that have a first effective filing date or priority date that is prior to theEffective Dateand that claim inventions related to theinscriptionof diamonds or othergemstones;(d) any and all existing or future reissues, reexaminations, extensions, divisions, renewals, revivals,and substitutions of or to any of the foregoing patents or patent applications described in (a) – (c)above; and(e) any and allforeign counterparts of any of the foregoing patents or patent applications described in (a) – (d)above. Notwithstanding the foregoing, “Licensed Patents” excludes(i) U.S. Patent 8,319,145;(ii) any and all existing and future continuations in whole or continuations in partofany application that claims priority to U.S. Patent 8,319,145 and any and all patents and patent applications that claim priority to any patent application to which U.S. Patent 8,319,145claims priority;(iii) any and all existing or future reissues, reexaminations, extensions, divisions, renewals,and substitutions of or to any of the foregoing patents or patent applications described in (i)and(ii)above; and(iv) any and all foreign counterpartsof any of the foregoing patents or patent applications described in (i) – (iii)above.
“Licensed Services” means any Inscription services provided by Licensee or any Subsidiary of Licensee.
“Litigation” shall have the meaning given to such term in the Settlement Agreement.
“Medium Stones” means gemstones which are [*].
“Person” means an individual, trust, corporation, partnership, joint venture, limited liability company, association, unincorporated organization, or other legal or governmental entity.
“Photoscribe” means Photoscribe Technologies, Inc.
“Royalty Term” means the period of time fromSeptember1, 2013 untilJuly31, 2016.
“Small Stones” means gemstones which are [*].
* Certain portions of this Agreement have been omitted pursuant to a request for confidential treatment.
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“Third Party” means aPersonother than aPartyto thisAgreementor suchParty’s Subsidiaries.
Article II
License
2.1. License Grant. Subject toLicensor’s receipt of payment under Section 3.1 (Payment Amounts and Dates) of the Settlement Agreement and Licensee’s compliance with the terms and conditions of this Agreement, specifically including the payment of Royalties pursuant to Section 3.1 (Royalties) of this Agreement,Licensor,on behalf of itself and its Subsidiaries, hereby grants toLicenseeand its Subsidiaries a personal, perpetual (unless terminated pursuant to Section6.2(Termination)), worldwide, non-exclusive, non-transferable (except pursuant to Section5.1(Assignment) and subject to Section2.5(Divested Subsidiaries)), royalty-bearing during theRoyalty Term, non-sublicensable license, solely under theLicensed Patents, to (i) sell, offer to sell, perform and provide the Licensed Services and import and export gemstones that include an Inscription resulting from the performance of such Licensed Services, and (ii) use (including maintaining, modifying, improving and repairing) any Equipment used by Licensee or its Subsidiaries in connection with the performance of the Licensed Services. Notwithstanding the rights of modification and improvement granted above, no license is granted by Licensor or its Subsidiaries under the Licensed Patents to modify or improve Equipment that does not practice any invention in the Licensed Patents prior to such modification or improvement such that, after the modification or improvement, the Equipment does practice an invention in the Licensed Patents.
2.2. Clarification of Rights Under the Licensed Patents. For the avoidance of doubt, nothing in this Agreement grants Licensee or its Subsidiaries any right or license under the Licensed Patents to (a) sell or offer for sale (including renting, leasing or making available for use) any Equipment to a Third Party, provided that Licensee may return (but not resell) defective Equipment to the supplier of the Equipment, (b) transfer(except pursuant to Section 5.1(Assignment) and subject to Section2.5(Divested Subsidiaries))or sublicense any rights granted under Section 2.1 (License Grant) to any Third Party, or (c) use the Equipment to perform Inscriptions for the purpose of permitting Third Party gem grading laboratories to benefit in a commercial manner from the license granted under Section 2.1 (License Grant) (i.e., no patent “laundering”). For the avoidance of doubt, Licensor agrees, on behalf of itself and its Subsidiaries, that Licensee and Licensee’s Subsidiaries shall be treated as a single licensee for purposes of this sentence and Licensee and its Subsidiaries may move and transfer Equipment solely between and among Licensee and Licensee’s Subsidiaries, provided that Licensee, on behalf of itself and its Subsidiaries acknowledges and agrees that neither Licensee nor its Subsidiaries are licensed under the Licensed Patents to sell or offer for sale Equipment to a Third Party.
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2.3. No Implied License; Personal License.
2.3.1. ThisAgreementdoes not grant any right or license toLicenseeor any otherPersonunder any intellectual property rights ofLicensorexcept as specifically granted inSection 2.1 (License Grant)and no other right or license is to be implied or inferred from any provision of thisAgreementor by the conduct of theParties, whether by implication, by reason of estoppel, or otherwise.
2.3.2. Nothing in thisAgreementgrants a license or other authority toLicenseeor any otherPersonunder theLicensed Patentsor any other patents ofLicensorto make, have made, sell, or offer to sell anyequipment(includinganyEquipment), whether express, by implication, by reason of estoppel, or otherwise. The foregoing does not limitLicensee’s and its Subsidiaries’ right to (i) maintain, modify, improve and repair theEquipmentused byLicenseeor its Subsidiaries in connection with the performance of theLicensed Services, or (ii) move and transferEquipmentsolely between and amongLicenseeand its Subsidiaries, as expressly permitted in, and subject to the limitations on such rights as set forth in,Section 2.1 (License Grant)and Section2.2(Clarification of Rights UndertheLicensed Patents), respectively.
2.4. Subsidiaries.Licenseeshall cause its Subsidiaries to comply with the applicable terms and conditions in thisAgreementandLicenseeremains liable (jointly with its Subsidiaries) for its Subsidiaries’ compliance with the applicable terms and conditions of thisAgreement.
2.5. Divested Subsidiaries. In the event of aChange of Control Transactionwith respect to a Subsidiary of Licensee (a “Divested Subsidiary”), subject to the modifications set forth below in this Section2.5,and subject toLicensor’s termination right pursuant to Section 5.1ifPhotoscribeis theAcquiror, the licenses granted hereunder will continue to extend to suchDivested Subsidiary(in the event of a transaction contemplated in subsection (ii) in the definition of “Change of Control Transaction”) or to theAcquiror(in the event of a transaction contemplated in subsections (i), (iii), and (iv) in the definition of “Change of Control Transaction”), provided that suchDivested SubsidiaryorAcquiror(as applicable) agrees in writing to be bound by the terms and conditions of thisAgreement(includingthe payment obligations hereunder, as applicable), but, for the avoidance of doubt, such licenses shall not extend to any business or activities of theAcquirorprior to the consummation of theChange of Control Transaction. Upon the satisfaction of the conditions in the prior sentence, the terms of thisAgreementwill apply to suchDivested SubsidiaryorAcquiror(as applicable) as if thisAgreementwas a separate identicalagreementbetweenLicensorand suchDivested SubsidiaryorAcquiror(as applicable) as “Licensee,” except that,notwithstanding anything to the contraryin thisAgreement, as betweenLicensorand suchDivested SubsidiaryorAcquiror(as applicable)(a)suchDivested SubsidiaryorAcquiror(as applicable) may not assign or further extend any rights pursuant hereto without the expressprior written consentofLicensor(including, for clarity to itsAffiliates),(b)this Section2.5shall be deemed omitted from thisAgreementwith respect to suchDivested SubsidiaryorAcquiror(as applicable),(c)in lieu of Section6.2,Licensormay terminate suchDivested Subsidiary’s orAcquiror’s (as applicable) license and other rights under thisAgreementupon written notice in the event of any material breach by suchDivested SubsidiaryorAcquiror(as applicable) of the terms of thisAgreementor anyChallengeof theLicensed Patentsby suchDivested SubsidiaryorAcquiror(as applicable) or itsAffiliateswhich breach is not cured, or whichChallenge of the Licensed Patentsis not fully and finally withdrawn,within thirty (30) days after Licensorprovides written notice thereof to theDivested SubsidiaryorAcquiror(as applicable),(d)Section8.1shall be updated to reflect theDivested Subsidiary’s orAcquiror’s (as applicable) contact information, and(e)Section8.2shall be deemed omitted from thisAgreement.
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Article III
Royalties
3.1. Royalties.During the Royalty Term,Licensee shall, subject to the terms in this Article III (Royalties), pay to Licensor non-refundable (except as expressly provided in Section 3.6 (Audits)), non-creditable royalties (“Royalties”) equal to the sum of:
3.1.1. the Small Stone Rate (as defined below) multiplied by [*];
3.1.2. the Medium Stone Rate (as defined below) multiplied by [*]; and
3.1.3. the Large Stone Rate (as defined below) multiplied by [*].
For the purposes of this Section, the following applies:
“Small Stone Rate” means: | [*] |
“Medium Stone Rate” means: | [*] |
“Large Stone Rate” means: | [*] |
For clarity and by way of example, if a Medium Stone is Inscribed [*].
3.2. Exceptions to Royalty Obligation. For the avoidance of doubt, [*].
3.3. Royalty Reports and Payments.Within [*] days following [*] periodduring theRoyalty Term(the firstsuch [*] periodcommencing on[*]and the secondsuch [*]),Licenseeshall provideLicensorwith a written report containing the following information for eachsuch [*] period:(i) [*];(ii) [*] (b) [*] (c) [*], and(iii) an itemized calculation ofRoyaltiesdue for the applicable[*] period. Concurrent with the delivery of the applicable report,Licenseeshall pay inUnited States Dollars all Royaltyamounts due toLicensorpursuant to Section 3.1(Royalties) forsuch [*] period. During theRoyalty Term,Licenseewill provide the above report for each[*] period, regardless of the amount ofRoyaltiesand/or the number ofInscriptionsin a particular[*] period. All such royalty reports and the information in such reports areLicensee’s confidential information and(x)may only be used byLicensorin connection with the exercise or enforcement of rights under thisAgreement, and(y)may not be distributed or provided byLicensorto any otherPersonother than (1) toLicensor’s attorneys and accountants and the auditor conducting the audit under Section3.6(Audits), subject to written obligations of confidentiality by such attorneys, accountants and the auditor,(2)to any governmental body having jurisdiction and specifically requiring such disclosure in writing;(3) to the extent required in response to a valid subpoena or as otherwise may be required by law; and(4)as required during the course of litigation or other legal proceeding, provided that with respect to subsections(2),(3)and(4), the requirements set forth in the proviso in Section7.1shall apply with respect to such disclosures.
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3.4. Payment Method; Late Payments.
3.4.1. AllRoyaltypayments due toLicensorshall be made inU.S. Dollarsby wire transfer of immediately available funds to the following account:
Bank Name: | [*] |
Bank Address: | [*] |
ABA No.: | [*] |
Account No.: | [*] |
Swift Code: | [*] |
Account Name: | Lazare Kaplan International Inc. |
3.4.2. IfLicensordoes not receive payment of anyRoyaltydue to it on or before the due date,Licensorshall send written notice toLicenseeand simple interest shall thereafter accrue on the sum due from the original due date until the date of payment at the per annum rate of two percent (2%) over the then-current prime rate reported inThe Wall Street Journalor the maximum rate allowable by applicable laws, whichever is lower.
3.5. Records. Licensee shall maintain complete and accurate records in sufficient detail to permit Licensor to confirm the accuracy of the Royalty reports and the calculation of Royalty payments. Licensor shall have the right to audit such records in accordance with Section 3.6 (Audits).
3.6. Audits. From the date a Royalty payment was due hereunder until the time that is two (2) years from the end of the applicable [*] period in which a Royalty payment was due hereunder (subject to the terms set forth below regarding a final audit), upon thirty (30) days prior written notice, Licensee shall make such records relating to applicable Royalty reports and payments available in Licensee’s Carlsbad, CA and New York, NY offices, during regular business hours and not more often than once in any twelve (12) month period (unless a prior audit revealed a discrepancy of more than [*] percent, in which case Licensor may conduct audits not more than once in any six (6) month period), for examination by a nationally recognized and independent certified public accountant selected by Licensor and reasonably acceptable to Licensee, for the purposes of verifying the accuracy of the Royalty reports furnished pursuant to this Agreement. Licensee may require the auditor sign a customary confidentiality agreement reasonably acceptable to each Party prior to undertaking an audit. All written audit results prepared by the auditor, audit reports prepared by the auditor, and the final results of any such audit prepared by the auditor shall be shared by the auditor with both Parties at the same time and such results shall be considered confidential information of Licensee and Licensor may not use such results except in connection with the enforcement of the terms of this Agreement and may not disclose such results to any Person other than its lawyers and accountants or as is otherwise necessary to enforce the terms of this Agreement or as would be permitted with respect to reports pursuant to Section 3.3, but subject to the terms in Section 3.3 (including the protections in Section 7.1). Any amounts shown to be owed by Licensee to Licensor as a result of any such audit shall be paid within [*] days from the auditor’s final audit report, plus interest (as set forth in Section 3.4.2 but without requirement for Licensor to provide written notice under Section 3.4.2) from the original due date. Licensor shall bear the costs of such audits, unless such audit discloses a deficiency in Licensee’s payments of greater than [*], in which case Licensee shall bear all of the reasonable and documented cost of the auditor. If such audit reveals an overpayment of Royalties, then Licensor shall refund to Licensee the overpayment within [*] days from the auditor’s report. Notwithstanding anything to the contrary in this Section, Licensor’s right to request an audit under this Section shall expire on [*]. [*] Licensee represents and warrants that this method (or any other method Licensee may adopt) for calculating the number of Inscriptions will accurately reflect the actual number of all Inscriptions (other than Internal Inscriptions) made by Licensee or its Subsidiaries.
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3.7. Taxes. All taxes shall be the financial responsibility of the Party obligated to pay such taxes as determined by applicable law, and neither Party is or shall be liable at any time for any of the other Party’s taxes incurred in connection with or related to amounts paid under this Agreement. If Licensee is required by [*] law to withhold any taxes from the Royalty payments due under this Agreement, Licensee shall (i) withhold such taxes, (ii) pay such withheld taxes to the applicable taxing authority, (iii) provide to Licensor evidence of such payment to the taxing authority, and (iv) reasonably cooperate with Licensor in Licensor’s efforts to obtain a refund or credit of such withheld taxes.
Article IV
Representations and Warranties
4.1. Licensor’s Representations.
4.1.1. Licensorrepresents and warrants that (i) it has all requisite legal right, power, and authority to execute, deliver, and perform thisAgreement, (ii) it is duly incorporated or organized, validly existing and in good standing, (iii) the execution, delivery and performance of thisAgreementhave been duly authorized by all requisite corporate action on the part ofLicensorand its Subsidiaries, (iv) thisAgreementconstitutes the legal, valid and bindingagreementofLicensorand its Subsidiaries and is enforceable againstLicensorand its Subsidiaries in accordance with its terms, and (v)Licensorhas the right,on behalf of itself and its Subsidiaries, to grant toLicenseeand its Subsidiaries the licenses granted in thisAgreementand to grant such licenseson behalf of its Subsidiaries.
4.1.2. Licensor further represents and warrants, on behalf of itself and its Subsidiaries, that as of the Effective Date (a) Licensor or its Subsidiaries are the sole owners of all rights, title and interest in and to the ’351 U.S. Family Patents and, subject to mandatory rights of inventors under applicable law that may not be assigned by the inventors under applicable law, the ’351 Ex-U.S. Family Patents, and (b) Licensor and its Subsidiaries have not heretofore assigned or transferred to any Person any right, title or interest in, or the right to enforce, any of the ’351 U.S. Family Patents or the ’351 Ex-U.S. Family Patents.
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4.2. Licensee’s Representations.Licensee represents and warrants that(i)it hasall requisite legal right, power, and authority to execute, deliver, and perform this Agreement, (ii) it is duly incorporated or organized, validly existing and in good standing, (iii) the execution, delivery and performance of this Agreement have been duly authorized by all requisite corporate action on the part of Licensee, and (iv) this Agreement constitutes the legal, valid and binding agreement of Licensee and is enforceable against Licensee in accordance with its terms.
4.3. No Other Representations. Nothing contained in this Agreement shall be construed as (a) an agreement by any Party to bring or prosecute actions or suits against Third Parties for infringement, (b) conferring any right on the other Party to bring or prosecute actions or suits against Third Parties for infringement, (c) an obligation to maintain, enforce, defend, or prosecute any patent; (d) a warranty or representation that the practice of any Licensed Patent is free of infringement of any other patent; or (e) conferring any right to use in advertising, publicity, or otherwise, any trademark, trade name or names of anyParty, or any contraction, abbreviation or simulation thereof.
Article V
ASSIGNMENT
5.1. Assignment. NeitherPartymay assign thisAgreementor any of its rights or obligations under thisAgreementwithout the expressprior written consentof the otherParty, provided that aPartymay assign thisAgreementwithout such consent to theAcquirorin the event of aChange of Control Transactioninvolving suchParty, provided that suchAcquirorassumes and agrees to be bound by thisAgreement, but, for the avoidance of doubt, no licenses or other rights hereunder shall extend to any business or activities of theAcquirorprior to the consummation of theChange of Control Transaction. Nothing herein shall restrictLicensor’s right to sell, assign, or otherwise transfer any right, title, or interest in or to theLicensed Patents, subject toLicensee’s and its Subsidiaries’ licenses granted hereunder.Notwithstanding anything to the contraryin thisAgreement,Licenseemay not assign or otherwise transfer thisAgreementor any of its rights under thisAgreementtoPhotoscribewithout the expressprior written consentofLicensor.Licensormay immediately terminate thisAgreementas toLicenseeor the applicable Subsidiary ofLicensee, as the case may be, ifPhotoscribeis theAcquirorin anyChange of Control TransactioninvolvingLicenseeor such Subsidiary, respectively.In the event this Agreement is assigned, consistent with this Section 5.1 (Assignment), to an Acquiror, the terms of this Agreement will apply to such Acquiror as if it were the assignor Party. Any purported or attempted assignment, delegation or other transfer of any rights or obligations under this Agreement in contravention of the foregoing shall be null and void.
5.2. Successors and Assigns. Subject to the foregoing, thisAgreementshall be binding upon and inure to the benefit of thePartiesand their permitted successors and assigns.
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Article VI
Term and Termination
6.1. Term. Thetermof thisAgreementshall commence on theEffective Dateand, unless earlier terminated pursuant to this ArticleVI(Term and Termination), shall continue until the expiration of the last-to-expire of the Licensed Patents(the “Term”).
6.2. Termination.
6.2.1. Subject to the terms in this Section6.2,Licensorshall have the right in its sole option to terminate thisAgreementin its entirety upon written notice to theLicenseeif (i)Licenseematerially breaches its payment obligations under thisAgreementand fails to cure such material breachwithin thirty (30) days fromthe date of such notice;(ii) Licenseeor itsAffiliatesmake aChallenge of the Licensed Patents, after fifteen (15) days of such notice ifLicenseedoes not disputeLicensor’s claim pursuant to Section 6.2.2, or whichChallenge of the Licensed Patentsis not fully and finally withdrawn,within thirty (30) days after Licensorprovides written notice thereof toLicenseeor immediately if thearbitratordetermines pursuant to Section 6.2.2 thatLicenseeor itsAffiliateshave made aChallenge of the Licensed Patentsand suchChallenge of the Licensed Patentshas not been so withdrawn within the cure period set forth above; or (iii) as provided in Section5.1(Assignment) if Photoscribe is theAcquirorin anyChange of Control TransactioninvolvingLicenseeor any Subsidiary ofLicensee. IfLicensoror any of itsAffiliatesbrings a lawsuit or other action or proceeding againstLicenseeor any of its Subsidiaries for infringement of aLicensed Patentin violation of the license granted in Section2.1, then the foregoing termination right under clause(ii)above relating to aChallenge of the Licensed Patentsshall not apply with respect to suchLicensed Patent.
6.2.2. If theLicenseedisputes in good faith the existence or materiality of a breach of its payment obligations orChallenge of the Licensed Patentsspecified in a notice provided by theLicensorin accordance with Section 6.2.1, andLicenseeprovidesLicensornotice of and the basis for such good faith dispute within the applicable cure period, thenLicensorshall not have the right to terminate thisAgreementunder Section 6.2.1 unless and until anarbitratorpursuant to Section8.2(Dispute Resolution) has determined that (i)Licenseehas materially breached its payment obligations or (ii) made aChallenge of the Licensed Patentsand in either case,Licenseefails to cure such breach, as applicable, within the applicable cure period (measured as commencing after thearbitrator’s decision pursuant to Section8.2(Dispute Resolution)). It is understood and agreed that during the pendency of such dispute and the cure period, all of the terms and conditions of thisAgreementshall remain in effect and thePartiesshall continue to perform all of their respective obligations hereunder.
6.3. Effect of Termination. Upon the termination of this Agreement:
6.3.1. All licenses hereunder will terminate andLicenseewill have no further right to practice theLicensed Patents.
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6.3.2. AllRoyaltiesaccrued as of the time of termination shall be immediately due and payable.
6.4. Survival. Termination or expiration of this Agreement shall not affect any payment rights or obligations of the Parties under this Agreement that have accrued prior to the date of termination or expiration. Notwithstanding anything to the contrary, the following provisions shall survive any expiration or termination of this Agreement: Sections 3.3 (Royalty Reports and Payments) (to the extent the Royalties accrued prior to the termination or expiration of this Agreement), 3.4 (Payment Method; Late Payments), 3.5 (Records), 3.6 (Audits), 3.7 (Taxes), and Article VI (Term and Termination), Article VII (Confidentiality and Publicity), and Article VIII (Miscellaneous Provisions).
Article VII
Confidentiality and Publicity
7.1. Confidentiality. From and after theEffective Date, noPartyshall disclose the existence or terms of thisAgreement(other than to itsAffiliatesin confidence) except:
(a) to any governmental body having jurisdiction and specifically requiring such disclosure;
(b) to the extent required in response to a valid subpoena or as otherwise may be required by law;
(c) to the extent required to satisfy disclosure requirements in connection with theSecurities and Exchange Act of 1934, as amended, theSecurities Act of 1933, as amended, and any other reports required to be filed with theSecurities and Exchange Commission, or any other filings, reports or disclosures that may be required under applicable laws or regulations;
(d) in confidence, to aParty’s accountants, legal counsel, tax advisors and other financial and legal advisors, subject to obligations of confidentiality at least as stringent as those contained herein;
(e) as required during the course of litigation or other legal proceeding and, to the extent granted by the applicable authority, subject to a protective order; provided, however, that to the extent granted by the applicable authority, any production under a protective order would be protected under an “Outside Attorneys’ Eyes Only” or higher confidentiality designation;
(f) with obligations of confidentiality at least as stringent as those contained herein, to a counterparty in connection with a proposedChange of Control Transactionof suchPartyinvolving suchPersonor a proposed license, sale, or transfer of rights involving theLicensed Patents; and
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(g) with theprior written consentof an authorized representative of the otherParty;
provided, however, that(i) the Party making or seeking any disclosure shall take commercially reasonable actions to minimize the nature and extent of such disclosure; and (ii) prior to any disclosure pursuant to paragraphs (a), (b), or (e) above, the Party seeking to make any such disclosure shall (1) provide reasonable advance written notice to the other Party, (2) permit such other Party the opportunity to object, to seek a court-entered protective order or comparable court-ordered restriction, and (3) shall take commercially reasonable actions to minimize the nature and extent of such disclosure by, among other things, as applicable, seeking confidential treatment of the Agreement and seeking a protective order that limits disclosure to“Outside Attorneys’ Eyes Only.” Where a disclosure is nevertheless made, thePartywill furthertake commercially reasonable actionsnot to disclose, if possible, the amount of the payment(s) required to be made hereunder.
In the case of Section 7.1(c)above, any disclosures pursuant to any such disclosure requirement referenced in such Section (i) shall redact theSmall Stone Rate,Medium Stone Rateand theLarge Stone Ratein Section3.1(Royalties), provided such redaction is consistent with applicable law (includingrules and regulations of the Securities and Exchange Commission), and(ii)shall not redact all or any part ofSection 2.1 (License Grant), Section 8.10(Not An Admission), or the definition of the defined terms used in such Sections.
7.2. Publicity. Notwithstanding Section 7.1(Confidentiality), eachPartymay state, in individual discussions with attorneys and accountants (who arebound by obligations of confidentiality no less restrictive than the confidentiality provisions under this Agreement), that theLicensorandLicenseehave entered into thisAgreement, provided that, except as permitted by Section 7.1(Confidentiality) and in accordance with such Section 7.1 (Confidentiality), neitherPartywill(i)disclose any terms of thisAgreement, or(ii)issue any press release, make any public statement, engage in any communications with the press, bloggers, or other public conduits for information, or otherwise make any statement regarding thisAgreementor the entering into of thisAgreement.Licenseemay disclose thisAgreementto anyPersonthat suppliesEquipmenttoLicenseeor itsAffiliatesand that isbound by obligations of confidentiality no less restrictive than the confidentiality provisions under this Agreement, provided that the following shall be redacted from any such disclosures: Section 3.1(Payment AmountandDates) and Section 3.2(Exceptions toRoyalty Obligation). In addition,Licenseemay disclose thisAgreementto any other defendants named at any time in the Litigation to the extent necessary to comply with any contractual obligations related to defense and indemnity ofLicenseeforthird partyinfringement claims, provided that any such defendants arebound by obligations of confidentiality no less restrictive than the confidentiality provisions under this Agreement.
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Article VIII
MISCELLANEOUS PROVISIONS
8.1. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be delivered by hand, or if dispatched by prepaid air courier with package tracing capabilities or by registered or certified airmail, postage prepaid, addressed as follows:
If toLicensor:
Lazare Kaplan International Inc.
19 West 44th St.
New York,New York, 10036
Attn:Leon Tempelsman
Copy to:
Morrison & Foerster LLP
425Market Street
San Francisco,CA 94105-2482
Attn:Harold J. McElhinny
If toLicensee:
Gemological Institute of America, Inc.
The Robert Mouawad Campus
5345 Armada Drive
Carlsbad, California 92008
Attn: President
Copy to:
DLA Piper LLP(US)
401 BStreet
Suite 1700
San Diego,CA 92101-4297
Attn:John Allcock
Such notices shall be deemed to have been served when received by the addressee. AnyPartymay give written notice of a change of address and, after notice of such change has been received, any notice or request shall thereafter be given to suchPartyas above provided at such changed address.
8.2. Dispute Resolution.
8.2.1. Agreement to Arbitrate Disputes Relating to Termination Right. Any dispute relating tothe existence or materiality of a breach of Licensee’s payment obligations or whether Licensee or its Affiliates have made a Challenge of the Licensed Patentsshall be determined by arbitration. The arbitration shall be administered by JAMS pursuant to JAMS’ Streamlined Arbitration Rules and Procedures. Judgment on theAwardmay be entered in any court having jurisdiction.
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8.2.2. Venue, Language, and Number ofArbitrators. All arbitration proceedings shall take place inSan Francisco, California,USA, shall be conducted in English, and shall be presided over by onearbitrator.
8.2.3. Arbitrator Selection. ThePartiesagree to appoint[*] to serve as the sole arbitrator (the “Arbitrator”). If, for any reason, [*] is unable to fulfill the Arbitrator’s duties, a successor arbitrator shall be chosen in accordance with Rule 12 of JAMS’ Streamlined Arbitration Rules and Procedures.
8.3. Governing Law. This Agreement and matters connected with the performance thereof shall be construed, interpreted, andgoverned in all respects in accordance with the laws of the State of New York and the federal laws of the United States of America, without reference to conflict of laws principles.
8.4. Jurisdiction and Venue. The Parties agree (a) that any disputes (including any litigation) regarding this Agreement or the subject matter hereof shall be subject to the exclusive jurisdiction of the U.S. District Court for the Southern District of New York (or, if there is no federal jurisdiction of such dispute, the courts of the State of New York sitting in Manhattan, New York), and (b) to submit any disputes, including matters of interpretation orenforcement actions, relating to this Agreement or the subject matter hereof exclusively to such court. The Parties hereby waive any challenge to the jurisdiction or venue of such courts over these matters.
8.5. Severability. If any provision of thisAgreementis held to be illegal or unenforceable, such provision shall be limited or eliminated to the minimum extent necessary so that the remainder of thisAgreementwill continue in full force and effect and be enforceable. ThePartiesagree to negotiate in good faith an enforceable substitute provision for any invalid or unenforceable provision that most nearly achieves the intent of such provision.
8.6. EntireAgreement. Together with theSettlement Agreement, thisAgreementembodies the entire understanding of thePartieswith respect tothe subject matter hereof, and merges all prior discussions among them, and none of thePartiesshall be bound by any conditions, definitions, warranties, understandings, or representations with respect tothe subject matter hereofother than as expressly provided herein or in theSettlement Agreement. No oral explanation or oral information by anyPartyhereto shall alter the meaning or interpretation of thisAgreement.
8.7. Modification; Waiver. No modification or amendment to thisAgreement, nor any waiver of any rights, will be effective unless assented to in writing by thePartyto be charged, and the waiver of any breach or default will not constitute a waiver of any other right hereunder or any subsequent breach or default.
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8.8. Construction; Language. Any rule of construction to the effect that ambiguities are to be resolved against the draftingPartywill not be applied in the construction or interpretation of thisAgreement. As used in thisAgreement, the words “include” and “including” and variations thereof will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation.” The headings in thisAgreementwill not be referred to in connection with the construction or interpretation of thisAgreement. ThisAgreementis in the English language only, which language shall be controlling in all respects, and all notices under thisAgreementshall be in the English language.
8.9. Counterparts. ThisAgreementmay be executed in counterparts or duplicate originals, all of which shall be regarded as one and the same instrument, and which shall be the official and governing version in the interpretation of thisAgreement. ThisAgreementmay be executed by facsimile signatures or other electronic transmission of signature pages (e.g., email exchange of PDF signature pages) and such signatures shall be deemed to bind eachPartyas if they were original signatures.
8.10. Attorneys’ Fees. EachPartywill bear its own attorneys’ fees and related expenses incurred by or on behalf of thatPartyin connection with the Litigation and the preparation, review and negotiation of thisAgreement. In the event of any litigation or arbitration in connection with thisAgreement(includingunder Section8.2(Dispute Resolution)), the prevailingPartyis entitled to receive its costs, expert witness fees and reasonable attorneys’ fees,includingcosts and fees on appeal.
8.11. Not an Admission. It is understood that thisAgreementdoes not constitute an admission by eitherPartyof any infringement or non-infringement of theLicensed Patents, but is a compromise of disputed claims.
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IN WITNESS WHEREOF, thePartieshereto have caused this License Agreement to be signed below by their respective duly authorized officers.
Lazare Kaplan International Inc. | GEMOLOGICAL INSTITUTE OF AMERICA, INC. | |||
By: | By: | |||
Name: | Name: | |||
Title: | Title: | |||