EXHIBIT NO. 10(a)
NEW CROSS LICENCE AGREEMENT
New Cross Licence Agreement made this 27th day of September 1997 by and between
(1) Verity Group plc, a public company incorporated in England and Wales under
number 514718 with its registered office at Stonehill, Huntingdon PE18 6ED,
England ("Verity"); (2) New Transducers Limited, a private company limited by
shares incorporated in England and Wales under number 3135528 with its
registered office at Stonehill, Huntingdon PE18 6ED, England ("NXT"); (3) Noise
Cancellation Technologies, Inc., a Delaware corporation with offices at 1025
West Nursery Road, Linthicum, Maryland 21090, USA, ("NCTI"); and (4) NCT Audio
Products, Inc, a Delaware corporation with offices at 1025 West Nursery Road,
Linthicum, Maryland 21090, USA ("NAPI").
WHEREAS NXT is engaged in the development and commercial exploitation of flat
panel speakers including distributed mode loudspeakers and ancillary panel and
transducer technology; and
WHEREAS NCTI was engaged in the development and commercial exploitation of
active wave management technology including flat panel speakers but has now
exclusively licensed the NCTI Rights (as defined below) to NAPI (which has taken
over such development and exploitation) subject to certain rights already
granted to NXT, OnActive LLC and Electrolux; and
WHEREAS NXT, NCTI and Verity entered into a Cross Licence on 15 April 1997 under
which Verity paid US$3 million to NCTI by way of shares for exclusive rights to
certain fields and NXT granted exclusive rights to certain other fields to NCTI
in order to prevent controversies over their separate and parallel development
of panel loudspeaker technology, to accelerate the process of bringing products
which benefit from both technologies to market, and to broaden access to both
technologies for potential licensees ; and
WHEREAS by a novation agreement of 15 April 1997, NXT, NCTI and Verity agreed
that Verity be released and discharged from the Cross Licence and that NXT be
bound by the terms of the Cross Licence in the place of Verity; and
WHEREAS NXT, NCTI and Verity have now agreed to terminate the previous Cross
Licence and certain of the related agreements and enter into a New Cross Licence
in order to better exploit the panel loudspeaker technologies; and
WHEREAS this Agreement sets out the terms of the New Cross Licence which shall
come into effect as from the date of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein, as
well as other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Definitions
As used herein, the terms described below have the following meanings.
1.1 "Affiliate" shall mean:
(A) any legal entity in which a party has an Interest;
(B) any legal entity which directly or indirectly Controls a
party ("Parent");
(C) any legal entity in which a Parent has an Interest; or
(D) any company listed in Schedule D so long as the percentage of
shares held by a party or an Affiliate as defined in (A) - (C)
does not fall below the percentage stated for that company in
Schedule C.
For purposes of this Agreement "Control" of an entity shall be deemed to
exist by virtue of having the right to influence the operation and
affairs thereof by holding directly 51% or more of each of the equity
interests and voting rights in such entity. "Interest" in an entity
shall be deemed to exist by virtue of owning voting rights equal to or
greater than 50% of all voting rights in such entity.
1.2 "Commencement Date" shall mean the date of this Agreement.
1.3 "Cross Licence" shall mean the Cross Licence Agreement of 15 April 1997
between Verity, NXT and NCTI.
1.4 "DERA Technology" shall mean the patents, associated know-how and other
intellectual property rights relating to flat panel loudspeakers
licensed to Verity and/or NXT by the Defence and Evaluation Research
Agency or by any other similar emanation of the Secretary of State for
Defence.
1.5 "Excluded Rights" shall mean both of:
(A) certain rights granted exclusively by NCTI to Electrolux prior
to 31 December 1996 (to the extent that such rights have been
disclosed in writing to NXT); and
(B) certain rights granted exclusively by NCTI to OnActive LLC prior
to 31 December 1996 (to the extent that such rights have been
disclosed in writing to NXT).
1.6 "Horton Opinion" shall mean the letter addressed to NXT from John Horton
(in-house legal counsel to NCTI and NAPI) under which an opinion is
given in relation to, inter alia, the due execution, authorisation and
enforceability of, inter alia, this Agreement, the Master Licence and
the Subscription Agreement.
1.7 "IPR" shall mean rights (whether registered or unregistered) in any
designs, applications for any of the foregoing, copyright, topography
rights and database rights.
1.8 "JIP Rights" shall mean the DERA Technology, the NCTI Rights and the
NXT Rights.
1.9 "Licensed Products" shall mean any product or component which
incorporates, embodies, is covered by, is claimed by, or is based upon
any of the NCTI Rights licensed under clause 3.1 or the NXT Rights
licensed under clause 4.
1.10 "Master Licence" shall mean a licence on agreed terms between NXT and
NAPI which, for the avoidance of doubt, shall not include any right to
sub-license.
1.11 "NCTI Fields" shall mean the following fields only:
(A) hearing aids, hearing assistance devices and other devices to
assist impaired hearing;
(B) headsets, headphones, earplugs. earbuds, earmuffs, and all
forms of "on the ear" and "in the ear" sound generating
devices (for the avoidance of doubt, this field shall not
include communications handsets such as telephones, cellular
telephones, speaker telephones, telephone conferencing,
two-way radios, mobile radios, ham radios, CB radios, public
telephones, wireless telephones, SMR telephones, answering
machines, pagers); and
(C) aircraft including, but not limited to, all civil and military
fixed and rotary wing aircraft of any nature and any other craft
capable of sustained flight.
1.12 "NCTI Patents" shall mean all published or unpublished patents and
patent applications and filed disclosures (including any continuations,
continuations-in-part, divisions, extensions, reissues, re-examinations,
renewals or equivalent applications whenever and wherever filed) which:
(A) have been filed or made prior to 31 December 1996; and
(B) relate to flat panel speakers, acoustic objects, transducers
or related acoustic technology; and
(C) are owned by or licensed (with the right to sub-license) to
NCTI, NAPI or their Affiliates (other than under the Master
Licence) now or at any time
including, without limitation, those listed in Schedule A.
1.13 "NCTI Technology" shall mean all confidential information and know-how
in existence prior to 31 December 1996 within the power, possession,
custody and control of NCTI, NAPI or their Affiliates which supports,
amplifies, explains or enables the design or manufacture of any product
in the NXT Fields embodying any of the specifications or claims of the
NCTI Patents or otherwise making use of the NCTI IPR, but excluding such
confidential information and know-how which NCTI, NAPI or their
Affiliates are not entitled to disclose where NXT has been given full
written details of the reasons why such information may not be
disclosed.
1.14 "NCTI IPR" shall mean all IPR in existence prior to 31 December 1996
owned by or licensed to NCTI, NAPI or their Affiliates which relates to
panel loudspeakers acoustic objects, transducers or related acoustic
technology but excluding such other IPR which NCTI, NAPI or their
Affiliates are not entitled to license where NXT has been given full
written details of the reasons why such IPR may not be licensed.
1.15 "NCTI Rights" shall mean all of the NCTI Patents, the NCTI IPR and the
NCTI Technology subject only to the Excluded Rights.
1.16 "Net Licensing Revenues" shall mean the gross revenues received by a
party from its respective licensing of third parties including
Affiliates to make or produce Licensed Products less:
(A) royalties payable to third parties; and
(B) taxes not based upon income.
1.17 "Net Sales Revenues" shall mean the revenues received from the sale,
lease or other transfer by a party of Licensed Products less:
(A) costs of packing, transportation and insurance;
(B) sales, value added and other taxes not based on income;
(C) ordinary trade discounts and commissions;
(D) customs duties and expenses; and
(E) royalties payable to third parties.
1.18 "Novation Agreement" shall mean the novation agreement of 15 April 1997
between NXT, NCTI and Verity.
1.19 "NXT Fields" shall mean all fields of use excluding all devices and
systems whose sole purpose is reducing, isolating, controlling or
alternating noise or vibration.
1.20 "NXT IPR" shall mean all IPR in existence prior to 31 December 1996
owned by or licensed to NXT which relates to panel loudspeakers acoustic
objects, transducers or related acoustic technology but excluding the
DERA Technology and such other IPR which NXT is not entitled to license
where NAPI has been given full written details of the reasons why such
IPR may not be licensed
1.21 "NXT Patents" shall mean all published or unpublished patents and patent
applications and filed disclosures (including any continuations,
continuations-in-part, divisions, extensions, reissues, re-examinations,
renewals or equivalent applications whenever and wherever filed) which:
(A) have been filed or made prior to 31 December 1996; and
(B) relate to flat panel speakers, acoustic objects, transducers
or related acoustic technology; and
(C) are owned by or licensed (with the right to sub-license) to
NXT or its Affiliates (other than the NCTI Patents and the
DERA Technology)
including, without limitation, those listed in Schedule B.
1.22 "NXT Rights" shall mean all of the NXT Patents, the NXT IPR and the NXT
Technology.
1.23 "NXT Technology" shall mean all confidential information and know-how in
existence prior to 31 December 1996 within the power, possession,
custody and control of NXT which supports, amplifies, explains or
enables the design or manufacture of any product in the NCTI Fields
embodying any of the specifications or claims of the NXT Patents or
otherwise making use of the NXT IPR, but excluding the DERA Technology
and such confidential information and know-how which NXT or its
Affiliates are not entitled to disclose where NAPI has been given full
written details of the reasons why such information may not be
disclosed.
1.24 "Simmons & Simmons Opinion" shall mean the letter addressed to NAPI from
Simmons & Simmons (solicitors to Verity and NXT) under which an opinion
is given in relation to, inter alia, the due execution, authorisation
and enforceability of, inter alia, this Agreement, the Master Licence
and the Subscription Agreement.
1.25 "Subscription Agreement" shall mean the private placement offering
subscription agreement and questionnaire in agreed form between NCTI,
NAPI and Verity.
In this Agreement where the context admits:
1.26 words and phrases the definitions of which are contained or referred to
in Part XXIV Companies Act 1985 shall be construed as having the
meanings so attributed to them.
1.27 references to any document being in agreed terms are to that document in
the form signed on behalf of the parties for identification.
2._Termination of the Cross Licence
2.1 With effect from the Commencement Date, the parties hereby agree to that
the following agreements shall be terminated:
(A) the Cross Licence, without application of article 10 of the
Cross Licence;
(B) the Security Deed of 14 April 1997 between NCTI and Verity, in
respect of which the parties hereby agree to lend all reasonable
assistance as may be necessary in order to cancel any relevant
registrations;
(C) the confirmatory Patent Licence of 15 April 1997 between NCTI,
Verity and NXT, in respect of which the parties hereby agree to
lend all reasonable assistance as may be necessary in order to
cancel any relevant registrations;
(D) the further confirmatory Patent Licence of 15 April 1997 between
NCTI, Verity and NXT, in respect of which the parties hereby
agree to lend all reasonable assistance as may be necessary in
order to cancel any relevant registrations; and
(E) the two comfort letters of 15 April 1997 from NXT to NCTI.
2.2 The terminations in clause 2.1 shall be without prejudice to the accrued
rights of the parties. Further, article 19.2 of the Cross Licence shall
survive termination.
3.NCTI Licence
3.1 Subject to the terms and conditions of this Agreement and in
consideration of:
(A) the grant of the licences under clause 4;
(B) the grant of the Master Licence under clause 5.1;
(C) the royalties payable under clause 6.1;
(D) the release of the obligations of NCTI under the Cross
Licence, in particular the conditional obligation to repay
US$3 million;
(E) the cancellation of the security deed over the Licensed NCTI
Patents (as defined in the Cross Licence); and
(F) the payment of (pound)1 (receipt of which is hereby
acknowledged by NCTI)
NCTI and NAPI hereby grant to NXT an exclusive worldwide licence to use
the NCTI Rights to develop, make, have made, use, distribute, sell and
have sold Licensed Products in the NXT Fields together with the right to
grant sub-licences therefor.
3.2 NCTI and NAPI hereby jointly and severally undertake to use their best
endeavours to discharge the restrictions which prevent it from including
the rights described in clause 1.5(B) within the licence under clause
3.1.
3.3 NXT shall use reasonable endeavours to exploit the rights licensed
under this Agreement.
4._NXT Licence
4.1 Subject to the terms and conditions of this Agreement and in
consideration of:
(A) the grant of the licence under clause 3.1;
(B) the royalties payable under clause 6.2;
(C) the release of the obligations of NXT under the Cross
Licence; and
(D) the payment of (pound)1 (receipt of which is hereby acknowledged)
NXT hereby grants to NAPI an exclusive worldwide licence to use the JIP
Rights to develop, make, have made, use, distribute, sell and have sold
Licensed Products in the NCTI Fields together with the right to grant
sub-licences therefor but with respect to the DERA Technology such
licence shall be non-exclusive and without the right to sub-license.
4.2 NXT also hereby grants to NCTI and NAPI a licence of such of the JIP
Rights (excluding any rights to the DERA Technology) as are strictly
necessary for NCTI and NAPI to maintain those licences of the JIP Rights
which were automatically granted to OnActive LLC and Electrolux upon the
commencement of the Cross Licence and for so long as those arrangements
with OnActive LLC and Electrolux remain in force.
5._Master Licence
5.1 Subject to the terms and conditions of this Agreement and in
consideration for the rights granted under clauses 3.1 and 3.2, NXT
shall promptly grant NAPI the Master Licence for all fields of use;
5.2 Upon commencement of the Master Licence in clause 5.1, those terms in
this Agreement which are directly covered by the terms of the Master
Licence shall cease to be of further effect.
6._Royalties
6.1 Royalties from NXT
As part of the consideration for the rights granted by NCTI and NAPI to
NXT under clause 3.1, NXT shall pay royalties to NAPI in accordance with
Schedule C.
6.2 Royalties from NAPI under this Agreement
As part of the consideration for the rights granted by NXT under clause
4, NAPI shall pay royalties to NXT in accordance with Schedule C.
6.3 Payment
Royalties payable to NAPI under clause 6.1 or to NXT under clause 6.2
shall be due and payable in U.S. dollars in immediately available New
York, New York funds within forty-five (45) days after the last business
day of each March, June, September and December of each calendar year
during the term of this Agreement. All such royalty payments shall be
exclusive of VAT or any other sales tax.
6.4 Verification
If requested by NAPI in respect of payments under clause 6.1 or by NXT
in respect of payments under clause 6.2, NXT and NAPI respectively shall
direct their chartered accountants at their own expense to provide the
other party with a certified written royalty report (the "Royalty
Report") for each calendar year of this Agreement within sixty (60) days
of the end of each calendar year of this Agreement. Such Royalty Reports
shall be prepared in accordance with the standard reporting procedures
of such chartered accountants applied in a consistent manner. A similar
Royalty Report shall be rendered and royalty payment shall be made
within sixty (60) days after termination of this Agreement. Further,
both NAPI and NXT agree that the other party may inspect their
royalty/revenue records once a year upon thirty (30) days written
notice, at the other party's own expense.
6.5 Late Payment
Any payment not made on its due date under clause 6.1 or 6.2 will
require NXT or NAPI respectively to pay interest in order to cover the
default at the rate of the then current prime rate at The Chase
Manhattan Bank NA.
7._Disclosure of Information, Data and Know-How
7.1 NCTI and NAPI shall jointly and severally disclose to NXT all the NCTI
Technology licensed under clause 3.1 within 30 days of the date of this
Agreement. NXT shall disclose to NAPI all the NXT Technology licensed
under clause 4.1 within 30 days of this Agreement.
7.2 For the purposes of this Agreement and the Master Licence, NAPI shall
not be at liberty to disclose the NXT Technology solely by virtue of the
fact that NAPI may have come into possession of the NXT Technology as a
result of disclosure by NCTI to NAPI under the terms of the Cross
Licence.
8._Confidentiality
8.1 Treatment
The NCTI Technology licensed under clause 3.1, the NXT Technology
licensed under clause 4.1 and any information of one party relating to
marketing plans, strategies, forecasts, new products, software
documentation, unpublished financial statements, budgets, projections,
licences, prices, costs, customer lists, supplier lists and any other
material marked in some reasonable manner to indicate it is confidential
which is disclosed to the other party and also the terms and conditions
of this Agreement (the "Confidential Information") shall be held in
confidence and not disclosed by the other party, and shall be subject to
the following terms:
(A) any Confidential Information disclosed between the parties
hereto orally or visually, in order to be subject to this
Agreement, shall be so identified to the receiving party at the
time of disclosure and, if not identified in writing at the
time, confirmed in writing within ten (10) days after such oral
or visual disclosure;
(B) only those of its officers, employees, consultants,
sub-contractors and licensees who need to receive the
Confidential Information in order to carry out the purposes
of this Agreement shall have access to such information and
such access shall be limited to only so much of such
information as is necessary for the particular officer,
employee, consultant, sub-contractor and licensee to properly
perform his or her functions;
(C) all officers, employees, consultants, sub-contractors and
licensees who shall have access to the Confidential Information
shall be under written obligation:
(1) to hold in confidence and not disclose all the
Confidential Information made available to them; and
(2) to use the Confidential Information only as permitted
by the party retaining them;
(D) all documents, drawings, writings and other embodiments which
contain the Confidential Information shall be maintained in a
prudent manner in a secure fashion separate and apart from other
information in its possession and shall be removed therefrom
only as needed to carry out the purposes of this Agreement; and
(E) all documents, drawings, writings and other embodiments of the
Confidential information the security or safekeeping of which
are subject to governmental regulations shall be kept in
accordance with those regulations.
8.2 Exclusions
Confidential Information shall not include information that:
(A) was at the time of disclosure in the public domain through no
fault of the party receiving it;
(B) becomes part of the public domain after disclosure to the
party receiving it through no fault of such party;
(C) was in the possession of the party receiving it (as evidenced by
written records) at the time of disclosure and was not acquired
directly or indirectly from the other party, or a third party,
as the case may be, under a continuing obligation of confidence
of which the party receiving it was aware;
(D) was received by the party receiving it (as evidenced by written
records) after the time of disclosure hereunder from a third
party who did not require it to be held in confidence and who
did not acquire it directly or indirectly from the disclosing
party under a continuing obligation of confidence of which the
party receiving it was aware;
(E) is required by law or the rules of any relevant Court or
securities exchange to be disclosed, but only to the extent
of such required disclosure; provided, that a party required
so to disclose Confidential Information shall use all
reasonable endeavours to notify the disclosing party of such
potential disclosure so that such party may seek a protective
order or other remedies to maintain in confidence any such
Confidential Information;
(F) was developed independently by the receiving party and without
the use of any Confidential Information received from the
disclosing party under this Agreement; or
(G) was or is disclosed by the disclosing party to third parties
without restrictions on use or disclosure comparable to those
contained herein.
9._Term
9.1 This Agreement shall commence upon the Commencement Date and shall
remain in force until terminated under this clause 9 or clause 10.
9.2 This Agreement shall cease to have effect against the other party upon
the last to expire of the patents licensed to the other party under this
Agreement (but without prejudice to the terms of the Master Licence).
9.3 The Agreement shall automatically terminate upon clause 9.2 being
satisfied for both parties.
10._Termination
10.1 NXT may at its sole option terminate this Agreement, without prejudice
to the continuation of the licence granted to NXT under clause 3.1,
immediately where either of NCTI or NAPI becomes insolvent, is
adjudicated bankrupt or compounds with or makes any arrangement with or
makes any general assignment for the benefit of its creditors or enters
into liquidation, whether compulsorily or voluntarily (except for the
purposes of a bona fide reconstruction or amalgamation) or has a
receiver, administrative receiver or administrator (or the equivalent
under United States or other relevant local bankruptcy law) appointed
over the whole or any part of its undertaking or assets or a similar
occurrence under any jurisdiction affects NCTI or NAPI or if NCTI or
NAPI ceases or threatens to cease or makes any material change in its
business.
10.2 NAPI may at its sole option terminate this Agreement, without prejudice
to the continuation of the licence granted to NAPI under clause 4.1,
where the events or matters described in clause 10.1 apply to NXT.
11._Effect of Termination
11.1 Except as otherwise expressly provided herein, on termination of this
Agreement:
(A) all rights and licences granted pursuant to clauses 3 and 4
shall immediately terminate; and
(B) all documents, drawings, writings and other embodiments of the
Confidential Information, as well as those produced, created or
derived from the Confidential Information which incorporate the
Confidential Information and all copies thereof shall be
returned promptly to the disclosing party of this Agreement
without prejudice to the continuation of the obligations under
clause 8.
11.2 After termination of this Agreement, NAPI, NXT and all their licensees
may continue to sell Licensed Products manufactured before the date of
termination. If their stock of Licensed Products is insufficient to
fulfil orders accepted before the date of termination, then they may
manufacture sufficient quantities of Licensed Products to fulfil such
order, provided that:
(A) such products are manufactured within 6 months of termination
of this Agreement; and
(B) any applicable royalties are paid in accordance with clause 6.
11.3 Notwithstanding the termination of this Agreement, the terms and
conditions of clauses 6 and 8 and the accrued rights of the parties
shall survive termination of this Agreement and shall continue to be
applicable and govern the parties with respect to the subject matter
thereof.
12._Force Majeure
12.1 In the event of enforced delay in the performance by any party of
obligations under this Agreement due to unforeseeable causes beyond its
reasonable control and without its fault or negligence, including, but
not limited to, acts of God, acts of the government, acts of the other
party, fires, floods, strikes, freight embargoes, unusually severe
weather, or delays of subcontractors or licensees due to such causes (an
"Event of Force Majeure"), the time for performance of such obligations
shall be extended for the period of the enforced delay; provided that
the party seeking the benefit of the provisions of this paragraph shall,
within ten (10) days after the beginning of any such enforced delay,
have first notified the party to whom the obligation is owed in writing
of the causes and requested an extension for the period of the enforced
delay and shall use all reasonable endeavours to minimize the effects of
any Event of Force Majeure.
13._Applicable Law
13.1 The terms and conditions of this Agreement and the performance thereof
shall be governed by and construed in accordance with English law.
14._Conduct
14.1 None of the parties nor their Affiliates shall publicly do or say
anything which is detrimental to or otherwise diminishes the reputation
or goodwill of the other parties. Further, neither of the parties nor
their Affiliates shall assist other persons to do the same.
15._Dispute Resolution
15.1 The parties shall meet as soon as possible to discuss and to attempt to
resolve all matters not specifically provided for in the Agreement and
which requires a decision including all differences, disputes or
disagreements which may arise out of or in connection with this
Agreement. If the parties are unable to resolve any such matter or
dispute then it shall be referred to the Chairman of NXT and the
Chairman (or equivalent officer) of NAPI, who shall meet within five
days of being requested to do so and in good faith attempt to resolve
the matter of dispute.
15.2 The parties agree to refer any matter or dispute which is not able to be
resolved pursuant to clause 15.1 to the Centre for Dispute Resolution
("CEDR") in London, England in an attempt to settle the same in good
faith by Alternate Dispute Resolution ("ADR").
15.3 None of the parties shall be deemed to be precluded from taking such
interim formal steps as may be considered necessary to protect such
party's position while the procedures referred to in clauses 15.1 and
15.2 are pursued.
15.4 In the event that the matter remains unresolved by such ADR procedure
within thirty days of commencement of such procedure, then the parties
shall be at liberty to take such other Proceedings (as defined below) as
they think fit.
15.5 Except as provided for in clauses 15.1, 15.2, and 15.3, in relation to
any legal action or proceedings to enforce this Agreement (including the
licences granted herein) or arising out of or in connection this
Agreement ("Proceedings"), NCTI and NAPI irrevocably submit to the
exclusive jurisdiction of the English Courts and waive any objection to
Proceedings in such Courts on the grounds of venue or on the grounds
that Proceedings have been brought in an inappropriate forum. This
clause operates for the sole benefit of Verity and NXT who shall retain
the right to take Proceedings in any other jurisdiction.
16._Announcements
16.1 Except for any disclosure which may be required by law or by any
securities exchange or regulatory or governmental body having
jurisdiction over it, wherever situated (and including, without
limitation, the London Stock Exchange, the Panel on Takeovers and
Mergers, the Serious Fraud Office and the Securities Exchange
Commission), and whether or not the requirement has the force of law,
none of the parties may use any of the others' names or disclose the
terms of this Agreement without the consent of all the others, which
consent shall not be unreasonably withheld or delayed.
17._Severability
17.1 If any part of this Agreement for any reason shall be declared invalid
or unenforceable, such decision shall not affect the validity or
enforceability of any remaining portion, which shall remain in full
force and effect; provided, however, that in the event a part of this
Agreement is declared invalid and the invalidity or enforceability of
such part has the effect of materially altering the obligations of any
party under this Agreement, the parties agree, promptly upon such
declaration being made, to negotiate in good faith to amend this
Agreement so as to put such party in a position substantially similar to
the position such party was in prior to such declaration.
18._Rights of Assignment; Successors and Assigns
18.1 None of the parties may assign any of their rights under this Agreement
without the prior written consent of the other parties (not to be
unreasonably withheld or delayed). However, NAPI may assign its rights
and obligations under this Agreement to an Affiliate (which for the
purpose of this clause shall not include OnActive) upon giving NXT 30
days' written notice. Further, NXT may assign its rights and obligations
under this Agreement to an Affiliate upon giving NAPI 30 days' written
notice.
19._Notices
19.1 Any notices under this Agreement shall be in writing and shall be deemed
delivered if delivered by personal service, or sent by fax or by first
class registered or certified mail, or same day or overnight courier
service with postage or charges prepaid. Unless subsequently notified in
writing in accordance with this clause by the other party, any notice or
communication hereunder shall be addressed to NCTI o NAPI as follows:
Michael J. Parrella, President
Noise Cancellation Technologies, Inc./NAPI
1025 West Nursery Road
Linthicum, Maryland 21090
Fax No: 001 - (410) 636-5989
to Verity or NXT as follows:
Farad Azima, Chairman
Verity Group plc/New Transducers Limited
Stonehill
Huntingdon PE18 6ED England
Fax No: (011-44) 1480-432777
20._Taxes
20.1 Each of the parties shall be responsible for any sales, use,
occupational or privilege taxes, duties, fees or other similar charges
imposed by any governmental authority in connection with the
manufacture, sale, lease, distribution, use or other disposition by it
of products or the exercise of any other rights under the licence
granted to it under this Agreement. Any other taxes, including income or
withholding taxes based on royalties and other payments received by a
party hereto, shall be the responsibility of that party.
21._Maintenance and Defence of Licensed Patents
NCTI Obligations
21.1 During the term of this Agreement, NCTI and NAPI shall jointly and
severally maintain in force the NCTI Patents. In this connection, NCTI
and NAPI shall promptly pay all costs of any and all continuations,
continuations-in-part, divisions, extensions, reissues, re-examinations,
or renewals of the NCTI Patents, including, without limitation, the
costs and expenses of any and all attorneys, experts or other
professionals engaged in connection with any of the foregoing. At NCTI's
expense, NXT shall comply with all reasonable requests of NCTI aimed at
maintaining in force the NCTI Patents.
21.2 Neither NCTI nor NAPI shall assign to any person any of the NCTI Patents
without the prior written consent of NXT which shall be given on such
terms as NXT reasonably believes are necessary to protect its position
under this Agreement.
21.3 Neither NCTI nor NAPI shall abandon or withdraw any of the NCTI Patents
nor permit any of them to lapse without giving NXT no less than two
months' written notice of its intention to do so. If during this two
month period NXT informs NCTI (or ,where relevant, NAPI) that it wishes
to maintain the relevant patent, then NCTI (or ,where relevant, NAPI)
shall assign it to NXT for nominal consideration.
21.4 Where an actual or threatened infringement of the NCTI Patents or
unauthorised disclosure or use of the NCTI Technology (collectively the
"Infringement") falls or appears to fall wholly or partly within the NXT
Fields, then the party who becomes aware of the Infringement shall
promptly report the same to the others. If the Infringement appears to
NCTI (or ,where relevant, NAPI) to fall within the NXT Fields (whether
entirely or partly), then NCTI and NAPI shall assist NXT in any action
which NXT wishes to take in relation to the Infringement, but only by
lending its name to such action (subject to NXT fully indemnifying NCTI
and NAPI against all costs, damages and other liabilities arising out of
or in connection with such action) and by providing copies of all
relevant files in its custody, power, possession or control. Any further
assistance required by NXT shall be subject to agreement between the
parties. NXT shall, subject to such indemnity, be entitled as against
NCTI and NAPI to retain all costs, damages and sums awarded or agreed to
be paid to it in connection with such action and shall have sole conduct
of such action. NXT shall however regularly inform NCTI and NAPI of any
significant developments of such action and shall not consent to any
order as to the amendment or validity of the NCTI Patents without the
prior written consent of NCTI (or, where relevant, NAPI).
NXT Obligations
21.5 Throughout the term of this Agreement, NXT shall maintain in force the
NXT Patents. In this connection, NXT shall promptly pay all costs of any
and all continuations, continuations-in-part, divisions, extensions,
reissues, re-examinations, or renewals of the NXT Patents, including,
without limitation, the costs and expenses of any and all attorneys,
experts or other professionals engaged in connection with any of the
foregoing. At NXT's expense, NCTI and NAPI shall comply with all
reasonable requests of NXT aimed at maintaining in force the NXT
Patents.
21.6 NXT shall not assign to any person any of the NXT Patents without the
prior written consent of NAPI which shall be given on such terms as NAPI
reasonably believes are necessary to protect its position under this
Agreement.
21.7 NXT shall not abandon or withdraw any of the NXT Patents nor permit any
of them to lapse without giving NAPI no less than two months' written
notice of its intention to do so. If during this two month period NAPI
informs NXT that it wishes to maintain the relevant patent, then NXT
shall assign it to NAPI for nominal consideration.
21.8 Where an actual or threatened infringement of the NXT Patents or
unauthorised disclosure or use of the NXT Technology (collectively the
"Infringement") falls or appears to fall wholly or partly within the
NCTI Fields, then the party who becomes aware of the Infringement shall
promptly report the same to the others. If the Infringement appears to
NXT to fall solely within the NCTI Fields, then NXT shall assist NCTI
and NAPI in any action which NCTI and NAPI wish to take in relation to
the Infringement, but only by lending its name to such action (subject
to NCTI and NAPI fully indemnifying NXT on a joint and several basis
against all costs, damages and other liabilities arising out of or in
connection with such action) and by providing copies of all relevant
files in its custody, power, possession or control. Any further
assistance required by NCTI and NAPI shall be subject to agreement
between the parties. NCTI and NAPI shall, subject to such indemnity, be
entitled as against NXT to retain all costs, damages and sums awarded or
agreed to be paid to it in connection with such action and shall have
sole conduct of such action. NCTI and NAPI shall however regularly
inform NXT of any significant developments of such action and shall not
consent to any order as to the amendment or validity of the NXT Patents
without NXT's prior written consent.
22._Warranties
22.1 NCTI and NAPI jointly and severally represent and warrant to NXT that:
(A) each of them has the right, power and authority to enter into
this Agreement and to grant the licenses and other rights
contained herein;
(B) neither of them will breach or be in violation of any agreement,
licence, or grant made with or to any other party by virtue of
entering into this Agreement;
(C) so far as each of them are aware, use of the NCTI Rights as
permitted by this Agreement will not infringe the rights of
any other person; and
(D) the patents listed in Schedule A constitute all the NCTI
Patents.
22.2 NXT represents and warrants to NAPI that:
(A) it has the right, power and authority to enter into this
Agreement and to grant the licenses and other rights
contained herein;
(B) it will not breach or be in violation of any agreement, licence,
or grant made with or to any other party by virtue of entering
into this Agreement; and
(C) so far as NXT is aware, use of the NXT Rights as permitted by
this Agreement will not infringe the rights of any other person.
(D) the patents listed in Schedule B constitute all the NXT Patents.
23._Disclaimer
23.1 Except as specifically set forth in this Agreement, NCTI and NAPI hereby
disclaim:
(A) any express or implied warranty of the accuracy, reliability,
technological or commercial value, comprehensiveness or
merchantability of the NCTI Rights or Licensed Products, or
their suitability or fitness for any purpose whatsoever; and
(C) all liability for any loss or damage resulting, directly or
indirectly, from the use of the NCTI Rights or Licensed Products
including consequential damages, loss of profits or good will,
expenses for downtime or for making up downtime, damages for
which licensee may be liable to other persons, damages to
property.
23.2 Except as specifically set forth in this Agreement, Verity and NXT
hereby disclaims:
(A) any express or implied warranty of the accuracy, reliability,
technological or commercial value, comprehensiveness or
merchantability of the NXT Rights or Licensed Products, or their
suitability or fitness for any purpose whatsoever; and
(C) all liability for any loss or damage resulting, directly or
indirectly, from the use of the NXT Rights or Licensed Products
including consequential damages, loss of profits or good will,
expenses for downtime or for making up downtime, damages for
which licensee may be liable to other persons, damages to
property.
24._Trade Marks and IP Notices
24.1 Nothing in this Agreement shall entitle any of the parties to use any
trade or service mark (including logos, devices and signs) which is used
by another party or its Affiliates (the "Marks"). Further, none of the
parties shall use or apply for registration as a trade mark or business
name of any word or words, device, logo or sign which is identical or
confusingly similar to any of the Marks.
24.2 Each party shall comply with the other party's reasonable requests
regarding the marking of Licensed Products (including any packaging and
promotional materials) with such notices regarding the intellectual
property rights relevant to such Licensed Products as may be appropriate
in each jurisdiction.
25._No Agency and No Partnership
25.1 Save as otherwise expressly provided for in this Agreement or unless
otherwise agreed between the parties in writing, none of the parties
shall:
(A) make purchases or sales or incur any liabilities whatsoever
on behalf of any of the others; or
(B) pledge a credit of any of the others; or
(C) hold itself out as acting as agent for any of the others.
25.2 Nothing in this Agreement is intended to or shall give rise to any
relationship of partnership or profit sharing in the nature of
partnership between the parties.
26._Scope of the Agreement and General Obligations
26.1 This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior oral or
written agreements or understandings of the parties with regard to the
subject matter hereof including, without limitation, the Cross Licence.
No interpretation, change, termination or waiver of any provision hereof
shall be binding upon a party unless in writing and executed by the
other party. No modification, waiver, termination, recession, discharge
or cancellation of any right or claim under this Agreement shall affect
the right of any party hereto to enforce any other claim or right
hereunder.
27._Recording of Formal Licence
27.1 Following commencement of this Agreement, each party shall render all
assistance as may be reasonably required (including, without limitation,
the signing of short form licences) in order to register any party with
a licence under this Agreement with any relevant Patent Office. For the
avoidance of doubt, such short form licences shall not alter the meaning
or effect of this Agreement.
28._Stamp Duty and Legal Costs
28.1 All stamp duty payable in relation to this Agreement and any other
agreement executed pursuant to it shall be paid by NAPI.
29._Guarantee
29.1 NCTI hereby agrees to guarantee performance of all the obligations of
NAPI under this Agreement until the later of:
(A) NAPI achieving a net worth of US$10 million or more; or
(B) two years elapsing from the date of this Agreement.
30._Opinions
30.1 As soon as practicable after the Commencement Date:
(A) NCTI and NAPI shall deliver the Horton Opinion to NXT in a
form satisfactory to NXT; and
(B) Verity and NXT shall deliver the Simmons & Simmons Opinion to
NAPI in a form satisfactory to NAPI.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed the day
and year first before written.
VERITY GROUP plc
/s/ FARAD AZIMA
By: Farad Azima
Title: Director
Date: September 27, 1997
NEW TRANSDUCERS LIMITED
/s/ PETER THOMS
By: Peter Thoms
Title: Director
Date: September 27, 1997
NOISE CANCELLATION TECHNOLOGIES, INC.
/s/ MICHAEL J. PARRELLA
By: Michael J. Parrella
Title: President
Date: September 27, 1997
NCT AUDIO PRODUCTS, INC
/s/ MICHAEL J. PARRELLA
By: Michael J. Parrella
Title: President
Date: September 27, 1997
Schedule A
NCTI INTELLECTUAL PROPERTY
VIRGINIA POLYTECHNIC INSTITUTE
Patents
US 4,715,559 Issued December 29, 1987, entitled "Apparatus and
Method for Global Noise Reduction". Describes a method for
quieting within an enclosed space by anti-vibrating the walls
with piezo-electric devices. It formed the basis for NCTI's work
on active panels.
US 5,335,417 Issued October 11, 1992, entitled "Active Control of Aircraft
Engine Inlet Noise Using Compact Sound Sources and
Distributed Error Sensors". Part of this patent describes
the use of piezo actuators bonded to curved panels as a means
of generating sound. The panel geometry is chosen to
emphasize particular frequencies. This technique is used in
transformer quieting.
US 5,515,444 Issued May 7, 1996. Continuation of US 5,335,417, in
which the curved panel is dynamically tuned to maintain optimal
performance.
Schedule A
NCTI INTELLECTUAL PROPERTY
PIEZO TECHNOLOGY
Patents
US 5,473,214 Issued December 5, 1995, entitled "Low Voltage Bender
Piezo Actuators". The use of a stack of piezo electric layers to
produce a vibration actuator. Multiple layers reduce the voltage
levels required to drive the actuator. This makes packaging
easier and allows cheaper amplifiers to be used.1
Patents Pending
PCT/US94/04553 (filed May 04, 1994) Publication No. W004/27331
Low Voltage Bender Piezo Actuators. The use of a stack of piezo
electric layers to produce a vibration actuator. Multiple layers
reduce the voltage levels required to drive the actuator. This
makes packaging easier and allows cheaper amplifications to be
used.
EPO 94914908.2 (filed May 04, 1994) Publication No. 0698298 Low
Voltage Bender Piezo Actuators. The use of a stack of piezo
electric layers to produce a vibration actuator. Multiple layers
reduce the voltage levels required to drive the actuator. This
makes packaging easier and allows cheaper amplifications to be
used.
Schedule A
NCTI INTELLECTUAL PROPERTY
PIEZO TECHNOLOGY
Patents pending
(253) No. PCT/US95/05720 (filed 09/05/95) Publication No. W095/31805
Multimedia Personal Computer with Active Noise Reduction and
Piezo Speakers: US filed May 11, 1994. A piezo patch is bonded
to the case of a PC so that the whole case acts as loudspeaker.
Active Noise Reduction and microphones are included to fully
equip the PC for multimedia applications.
EPO 95918420.1 (filed May 09, 1995) Publication No. 0760996
Multimedia Personal Computer with Active Noise Reduction and
Piezo Speakers: A piezo patch is bonded to the case of a PC so
that the whole case acts as loudspeaker. Active Noise Reduction
and microphones are included to fully equip the PC for
multimedia applications.
US 08/241440
Multimedia Personal Computer with Active Noise Reduction and
Piezo Speakers: US filed May 11, 1994. A piezo patch is bonded
to the case of a PC so that the whole case acts as loudspeaker.
Active Noise Reduction and microphones are included to fully
equip the PC for multimedia applications.
(256) No. PCT/US95/08131 (filed 29/06/95) Publication No. W096/01547
Piezo Speaker and Installation Method for Laptop Personal
Computer and other Multimedia Applications: US filed July 6,
1994. A piezo patch is bonded to the case of a PC to act as a
loudspeaker. Dampening materials and stiffeners to improve
the performance of a piezo loudspeaker. (U.S. application
approved for issue).
EPO 95924733.9 (filed June 29, 1995) Publication No. 0772953
Piezo Speaker and Installation Method for Laptop Personal
Computer and other Multimedia Applications: A piezo patch is
bonded to the case of a PC to act as a loudspeaker. Dampening
materials and stiffeners to improve the performance of a piezo
loudspeaker.
US 08/267218
Piezo Speaker and Installation Method for Laptop Personal
Computer and other Multimedia Applications: US filed July 6,
1994. A piezo patch is bonded to the case of a PC to act as a
loudspeaker. Dampening materials and stiffeners to improve
the performance of a piezo loudspeaker. (U.S. application
approved for issue).
(260) US 08/533048
Piezo Speaker for Improved Passenger Cabin Audio Systems: US
filed September 25, 1995. Improvements include the addition of
combined constrained damping/insulation layer, integrated
electronics and the inclusion of intermediate coupling plates to
enhance performance. This technique is applied to all flat
interior surfaces of a car interior.
PCT to be advised
Piezo Speaker for Improved Passenger Cabin Audio Systems: US
filed September 25, 1995. Improvements include the addition of
combined constrained damping/insulation layer, integrated
electronics and the inclusion of intermediate coupling plates to
enhance performance. This technique is applied to all flat
interior surfaces of a car interior.
(269) US 08/554049
Piezoelectric Transducers: US filed November 6, 1995. An
extension of (260). Improved transducer coupling systems that
significantly improves piezo performance.
PCT to be advised
Piezoelectric Transducers: US filed November 6, 1995. An
extension of (260). Improved transducer coupling systems that
significantly improves piezo performance.
Schedule A
NCTI INTELLECTUAL PROPERTY
FLAT PANEL TRANSDUCERS
Patents Pending
(277) US 08/720163 Vehicular Loudspeaker System: US filed September
25, 1996. An improved loudspeaker system for a passenger vehicle
such as an automobile. The system comprises a transducer capable
of being excited by applied electric potential and electronic
means that is electrically connected to the transducer to apply
electric potential thereto. The diaphragm driven by the excited
transducer is comprised of the headliner of the vehicle or other
flat surfaces.
(400) No. GB 961 9835.3 (filed 23/09/96)
Audio System Using Flat Panel Loudspeakers: UK filed September
23, 1996. A home entertainment system consisting of a plurality
of flat panel loudspeakers and electroacoustics transducer
apparatus having a flatter frequency response than previously
possible.
(401) No. GB 961 9967.4 (filed 25/09/96)
Electroacoustics Transducer Arrangement: UK filed September 25,
1996. An electroacoustics transducer consisting of two panel
membranes. The phase of the sound wave produced at the rear
panel is set so that if that wave is reflected, it will
constructively interfere with the wave produced at the forward
panel.
(402) No. GB 962 1523.1 (filed 16/10/96)
A Flat Panel Loudspeaker Arrangement and Hands Free Telephone
System Using the Same: UK filed October 16, 1996. A flat panel
loudspeaker arrangement which can be attached to the roof or
headlining of a vehicle to position the loudspeaker of a hands
free telephone more conveniently.
(403) No. GB 962 5315.8 (filed 05/12/96)
Electroacoustics Transducer Arrangement: UK filed December 5,
1996. (An extension of 401). An electroacoustics transducer
consisting of two panel membranes. The phase of the sound wave
produced at the rear panel is set so that if that wave is
reflected, it will constructively interfere with the wave
produced at the forward panel. The constructive interference
effect can also be used to flatten or equalise the frequency
response of the system.
(404) No. GB 962 4302.7 (filed 22/11/96)
Flat Panel Loudspeaker Arrangement: UK filed November 22, 1996.
Involves the selection and arrangement of piezoelectric elements
so that the piezoelectric elements provide the flat panel
loudspeaker with an equalised frequency response.
(405) No. GB 962 6439.5 (filed 20/12/96)
A Multiple Panel Electroacoustic Transducer: UK filed December
20, 1996. An improved electroacoustic transducer comprising
multiple parallel panel members with an actuator arrangement for
driving the panel members in phase.
(406) No. GB 970 0336.2 (filed 09/01/97)
Panel Mounting Arrangement for Electroacoustic Transducer: UK
filed January 9, 1997. An improved electroacoustic transducer
that isolates acoustic vibrations generated by the front and
rear faces of a panel so that they do not interfere.
Schedule A
NCTI INTELLECTUAL TECHNOLOGY
LOUDSPEAKER TECHNOLOGY
Patents Pending
(121) PCT/US91/02731 Publication No. W092/19080
Improvements in and relating to Transmission Line Loudspeakers
Filed April 19, 1991. The sound wave radiated from the front
surface of a loudspeaker driver diaphragm is of opposite
polarity with respect to that radiated from the back surface. If
the two signals are directly combined, they will tend to cancel
one another. An acoustic phase inversion network is used to
insure that the back wave is in phase with the front wave, and
the combined signals are used to drive the inlet of a
loudspeaker transmission line.
EPO 91920600.3 Publication No. 0580579
Improvements in and relating to Transmission Line Loudspeakers
Filed April 19, 1991. The sound wave radiated from the front
surface of a loudspeaker driver diaphragm is of opposite
polarity with respect to that radiated from the back surface. If
the two signals are directly combined, they will tend to cancel
one another. An acoustic phase inversion network is used to
insure that the back wave is in phase with the front wave, and
the combined signals are used to drive the inlet of a
loudspeaker transmission line.
(149) No. PCT/US91/07324 Publication No. W093/07729
Vacuum Speaker
Filed October 2, 1991. A speaker enclosure with a partial
vacuum behind the speaker. A spring is used to offset the
static forces. The result is a smaller enclosed volume while
maintaining low frequency performance.
(???) No. PCT/US92/05771 Publication No. WO94/01979
Hydraulic Powered Loudspeaker
A hydraulic powered low-damped loudspeaker including a
hydraulic cylinder (21) attached to the cone (22) of a
speaker which can be used in a bandpass loudspeaker.
Patent
UK 2,858,759 Issued March 11, 1981, entitled "Depressing the
Resonant Frequency of a Suspended Mass". Described the use of
active control to reduce the spring force constant of a
suspended mass (e.g. a loudspeaker cone) so as to reduce the
effective resonant frequency of the structure.
US 3,247,925 Issued April 26, 1966, entitled "Loudspeaker".
Described the improvement of the efficiency of low frequency
loudspeakers by exciting bending waves in a light weight, stiff
panel which remains essentially stationary, except for the
bending waves.
confidential Schedule B
Appn. No. Date Filed Short Title
1. PCT/GB96/02145 02/09/96 Acoustic Device
2. U.S. 08/707.012 03/09/96 Acoustic Device
3. PCT/GB96/02140 02/09/96 Baffle Loaded Loudspeakers
4. PCT/GB96/02166 02/09/96 Mixed Technology Loudspeaker
5. PCT/GB96/02167 02/09/96 Inertial Transducer (electro-magnetic)
6. PCT/GB96/02160 02/09/96 Inertial Transducer (piezo)
7. PCT/GB96/02148 02/09/96 Bender Transducers
8. PCT/GB96/02162 02/09/96 Loudspeaker with Separate Transducers
9. PCT/GB96/02163 02/09/96 Loudspeaker/Microphone Combination
10. PCT/GB96/02158 02/09/96 Mixed Technology Loudspeakers
11. PCT/GB96/02155 02/09/96 Microphone
12. PCT/GB96/02153 02/09/96 Ceiling Tile
13. PCT/GB96/02151 02/09/96 Visual Display Unit
14. PCT/GB96/02142 02/09/96 Laptop Computer
15. PCT/GB96/02147 02/09/96 Portable CD Player
16. PCT/GB96/02157 02/09/96 Automotive etc. Applications including
Seat Shell Loudspeaker and Door
Mounted and Parcel Shelf
Loudspeakers
17. PCT/GB96/02164 02/09/96 Keyboard Musical Instrument
18. PCT/GB96/02159 02/09/96 Vending Machine
19. PCT/GB96/02165 02/09/96 Notice Board
20. PCT/GB96/02146 02/09/96 Packaging
21. PCT/GB96/02144 02/09/96 Greetings Card
22. PCT/GB96/02137 02/09/96 Projection Screen Loudspeaker
Schedule C
Royalties
1.1 Royalties payable by NAPI to NXT:
(A) 2% of Net Sales Revenue but not less than $0.10 per Licensed
Product; and
(B) 6% of Net Licensing Revenue*.
1.2 Royalties payable by NXT to NAPI:
(A) 2% of Net Sales Revenue but not less than $0.10 per Licensed
Product; and
(B) 6% of Net Licensing Revenue.
- -----------
* NAPI shall treat profits of OnActive LLC attributable to NAPI/NCTI as Net
Licensing Revenues in calculating royalties payable to NXT.
Schedule D
Affiliates
OnActive L.L.C. - 42.5%