LICENSING AND ROYALTY AGREEMENT
This Agreement is made and entered into this 26th day of
June, 1997 by and between XEROGRAPHIC LASER IMAGES CORPORATION, a Delaware
corporation, ("XLI") with its principal place of business at 101 Billerica
Avenue, 5 Billerica Park, North Billerica, Massachusetts 01862 and PCPI
Technologies Inc., a Delaware corporation, ("PCPI") with its principal place
of business at 11031 Via Frontera, San Diego, CA 92127.
1.0 Definitions
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1.1 "XLI Technology" means the current XLI laser printing technology
specified in Exhibit A1(Features) attached hereto.
1.2 "PCPI Products " means PCPI ASICs or chip set product offerings which
incorporate XLI Technology that are part of a controller or raster
image processor for scan, print, fax, copy or related imaging
applications.
1.3 "OEM" means Original Equipment Manufacturer.
1.4 "VHDL" ( Virtual Hardware Description Language) means the design
description language that defines XLI Technology and that will be
used to transfer XLI Technology from XLI to PCPI.
1.5 "Superchip ASIC" means XLI's stand-alone integrated circuit that
incorporates essentially only the XLI Technology specified in
Exhibit A1(Features).
2.0 License and Royalty Fee
-----------------------
2.1 PCPI will pay XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to XLI in
consideration for a XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXX of PCPI Products (which ever occurs first) non-exclusive license
for XLI Technology to be incorporated into PCPI Products. At the end
of the term, PCPI may continue to use the XLI Technology only in
products designed prior to the termination date of this contract and
shall not design or build any new products which incorporate the XLI
technology. This contract may be renewed under terms agreed to by
both XLI and PCPI. The XLI Technology will be provided by XLI to
PCPI using the VHDL format, or such other format as may be reasonably
required, schematics and other information necessary for PCPI to
design, manufacturer and market ASICs for its PCPI Products. The
technology licensed in this Agreement is for existing XLI Technology
as defined by the features in Exhibit A1 and the VHDL delivered to
PCPI in the second quarter of 1997. PCPI shall not design, fabricate
or market PCPI Products predominantly based on XLI Technology. XLI
Technology does not include rights for any new features, upgrades,
improvements, or modifications, that XLI may develop in the future
other than the bug-fix maintenance and support provided in Section
3.3. XLI will offer PCPI new technology developed by XLI, on terms
determined only by XLI, for a period of two (2) years from the
signing of this contract.
2.2 PCPI shall identify XLI as the source of its image enhancement
technology in its sales and product literature on all PCPI Products
containing XLI Technology or Superchip ASIC. This provision may be
canceled by written notice from either party to this contract.
2.3 Royalties
2.4.1 PCPI will pay to XLI royalties based upon PCPI Product units
shipped to PCPI OEM customers with adjustments made for any returned
units, in which one or more of the XLI Technology features setforth
in Exhibit A1 has been enabled, per the following schedule:
------------------------------------------------------------------------
| | | Monochrome Engine XXXX |
| Cumulative Volume | Monochrome Engine Speed | XXXXXXXXXXXXXXXXXXXXXX |
| | XXXXXXXXXXX | Engines |
-----------------------------------------------------------------------|
| 1 to 50,000 | XXXXX | XXXXX |
|-------------------|-------------------------|------------------------|
| 50,000 to 100,000 | XXXXX | XXXXX |
|-------------------|-------------------------|------------------------|
| >100,000 | XXXXX | XXXXX |
------------------------------------------------------------------------
Royalties shall accrue at the time PCPI Products are shipped to PCPI's
OEM customers. It is specifically understood that not all controller
boards or PCPI ASIC products shipped will make use of the XLI
Technology features set forth in Exhibit A1 and PCPI shall not pay
royalties to XLI for PCPI Product units in which no part of the XLI
Technology is enabled. In accordance with Section 7 hereof, PCPI will
pay royalties on all PCPI Product units shipped in which one or more
of the XLI Technology features is enabled at time of shipment to the
OEM customer as well as on all PCPI Product units configured such
that the XLI Technology features are not permanently disabled and
can be enabled as an upgrade in the field at a later date.
3.0 Obligations of XLI
------------------
3.1 XLI shall provide the XLI Technology to PCPI for the PCPI Products
in accordance with the schedule included on attached Exhibit A2.
Said XLI Technology shall incorporate the functional design modules
set forth in Exhibit A1.
3.2 In partial consideration for the XXXXXXXXXXXXXXXXXXXXXXXXXXX XLI
shall provide two man-weeks of XLI consulting time during the first
year of the Agreement for transfer/integration of the VHDL and for
the training of a PCPI employee(s) in engine calibration. Any direct
expenses incurred for equipment and materials, or travel expenses
will be paid for by PCPI. Additional XLI consulting and engineering
development time requested by PCPI will be quoted at XLI's then
standard rates (currently $800 per day) plus materials and other
direct expenses.
3.3 XLI shall, during the first year of this Agreement, provide to PCPI
necessary bug-fix maintenance and support for the XLI Technology
licensed hereunder. Maintenance and support shall include, but shall
not be limited to, phone, fax and e-mail support, all error and bug
corrections, technical information and documentation reasonably
necessary for PCPI to integrate the XLI Technology into the PCPI
Products. This maintenance and support obligation does not entitle
PCPI to any new technology outside the XLI Technology defined in this
Agreement.
3.4 XLI shall, at PCPI's option, provide engine calibration services for
PCPI's customers at the cost of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
for monochrome engines and XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for
color engines.
4.0 Grant of License Rights
-----------------------
4.1 XLI grants to PCPI a non-exclusive, worldwide license to use, copy,
reconfigure , reproduce, and translate the XLI Technology for the
purpose of embedding, integrating and incorporating the XLI
Technology into PCPI Products for distribution and sale to PCPI OEM
customers for use in such OEM's electronic goods. PCPI OEM customers
or PCPI licensed customers shall not be required to pay XLI any
future license fees for the license granted to PCPI herein.
4.2 PCPI shall not sub-license or otherwise transfer, convey or assign
any of the rights to use the XLI Technology granted hereunder except
as part of PCPI Products as permitted herein, provided however, that
PCPI shall have the right to have a third party manufacture PCPI
Products that incorporates XLI Technology. PCPI shall have no
rights to incorporate the XLI Technology into a stand-alone
integrated circuits essentially containing only XLI Technology and
competing with XLI Superchip ASICs or other XLI products containing
XLI Technology.
4.3 This Agreement does not grant to XLI by implication, estoppel, or
otherwise, a license to any patents, know-how, or any other
intellectual property now or hereafter owned or developed by PCPI.
5.0 Discoveries and Inventions
--------------------------
5.1 PCPI shall have no rights to the intellectual property of XLI or to
any improvements, modifications or changes made thereto during the
design process, by either party. All discoveries, developments,
improvements, modifications, and inventions made or conceived in
the performance of the design and development of the XLI Technology
pursuant to this Agreement, shall be the sole and exclusive
property of XLI.
6.0 Other Products
--------------
6.1 XLI's Superchip ASIC shall be available to PCPI to be offered to
OEMs as part of a PCPI controller proprietary chip set solution.
Pricing of Superchip ASIC (FOB, North Billerica MA) provided by
XLI to PCPI shall be as follows:
------------------------------------------------------------------------------
| | Monochrome Engine | Monochrome Engine | Monochrome Engine |
| Annual Volume | Speed | Speed | XXXXXXXXXXXXXXXXX |
| | XXXXXXXXXXX | XXXXXXXXXXXX |& All Color Engines|
|----------------|-------------------|-------------------|-------------------|
|1,000 to 50,000 | XXXXX | XXXXX | XXXXX |
|----------------|-------------------|-------------------|-------------------|
7.0 Payment Terms
-------------
7.1 PCPI will pay XLI a fee of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
for an initial license which amount shall be due as follows: XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX upon the signing of this Agreement and
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX upon delivery of the VHDL code.
7.2 Royalties as provided in Section 2.3 will be paid quarterly within
30 days of the end of each quarter. During the term of the Agreement
XLI or XLI's agent, upon thirty (30) days written notice shall have
the right to inspect and audit any and all records relating to
licenses and sales of PCPI Products for the sole purpose of verifying
PCPI's compliance with the terms and conditions of this Agreement,
provided that XLI shall make no more than one (1) such audit per
calendar year. Any such audit shall be conducted at PCPI's place
of business during regular business hours or other mutually agreed
upon time and location. XLI shall bear the cost of such audit
unless it is determined that PCPI has underpaid the royalty amount
due to XLI by One Thousand Dollars ($1,000), in which case PCPI
shall bear the costs of such audit. XLI or XLI's agent shall sign
a nondisclosure agreement obligating the auditor not to disclose
PCPI proprietary information obtained during such audit which does
not pertain to the XLI Technology. Royalty payments not made timely
shall be subject to a late payment fee of one percent per month.
7.3 The purchase price of Superchip ASICs, provided by XLI, will be due
and payable to the terms stated in purchase orders issued by PCPI
and accepted by XLI.
7.4 The payments to XLI hereunder shall be effected in U.S. dollars and
shall be transmitted by telegraphic transfer remittance to the
following bank account or to such other bank account as XLI may
notify PCPI in writing:
BAYBANK , 7 N. E. Executive Park, BURLINGTON, MA.
ABA Routing No. 0110-0174-2
Account No. 259-39719
8.0 Confidentiality
---------------
8.1 XLI and PCPI agree that any proprietary information, technical
data, trade secrets or know how, which is furnished to the other
in written or tangible form by either party under or in connection
with this Agreement and marked as "Proprietary Information" or
"Confidential", will be maintained by the receiving party in
confidence during the term of this Agreement and for a period of
five (5) years thereafter and will not be used by the receiving
party except to fulfill the purposes of this Agreement. Oral
disclosure will be covered by this Agreement only if such
disclosures are reduced to writing within 10 business days of
disclosure and marked as provided above. Neither party shall be
under any obligation to maintain in confidence any portion of the
Proprietary Information received which is: (i) already in the
possession of the receiving party or its subsidiaries from other
sources; (ii) independently developed by the receiving party or its
subsidiaries; (iii) publicly disclosed by the disclosing party;
(iv) received by the receiving party or its subsidiaries from a
third party with the right to disclose; or (v) approved for release
by written agreement with the disclosing party, or (vi) required
to be disclosed by law.
9.0 Indemnification
---------------
9.1 The indemnification provisions of this Section 9.1shall survive
termination of this Agreement for any reason.
(a) XLI warrants that it has sufficient right, title and interest in
and to the XLI Technology to enter into and to perform its
obligations under this Agreement free from rights of third parties.
Subject to the limitations of this Section 9.1, XLI agrees to
indemnify PCPI against infringement or violation of copyright,
patent, trade secret, or other form of intellectual property rights
as described below.
(b) XLI shall, at its expense, defend PCPI and hold PCPI harmless from
and against any suit, claim or proceeding brought against PCPI
alleging that any use of the XLI Technology (in whole or in part),
as delivered by XLI, infringes any patent, copyright, trade secret,
or other form of intellectual property rights of any third party to
the extent such patent, copyright, trade secret or other form of
intellectual property rights relates to the XLI Technology provided
by XLI. Such indemnification shall include any and all damages
arising out of any such claim, including any court costs, attorneys
fees, and reasonably related litigation expenses, provided that PCPI
(i) promptly notifies XLI in writing of any such suit, claim, or
proceeding and tenders the defense thereof to XLI; (ii) allows XLI
to direct the defense of and/or handle such suit, claim or
proceeding at XLI's expense; (iii) gives XLI all information and
assistance reasonably necessary to defend the same at XLI's sole
expense, and (iv) does not enter into any settlement of the suit,
claim or proceeding without XLI's prior written consent (which shall
not be unreasonably withheld). Following notice of any such suit,
claim, or proceeding described in this section, XLI shall have the
option to procure for PCPI at XLI's expense the right or license to
use the XLI Technology as furnished hereunder, or to replace or
modify the XLI Technology to render same non-infringing.
(c) Except in the case of liability resulting from willful infringement
of another's rights by PCPI, the maximum aggregate amount or amounts
PCPI shall be obligated to pay to indemnify all indemnified parties
under this Agreement or otherwise shall in no event exceed an amount
equal to the aggregate amount of payments made by PCPI to XLI
pursuant to this Agreement.
9.2 Notwithstanding the provisions of 9.1 above, XLI shall not be liable
to PCPI in the event that the alleged infringement by the XLI
Technology is due to modifications made to the XLI Technology by
PCPI and not approved by XLI.
10.0 XLI Warranties
--------------
10.1 XLI warrants that: (1) it has the legally enforceable right to
grant PCPI the license set forth in this Agreement; (2) to its
knowledge the XLI Technology does not incorporate or infringe
upon any intellectual property not owned or licensed by XLI;
(3) XLI has not been notified by a third party that the XLI
Technology might infringe any intellectual property rights or
other proprietary rights of a third party; (4) the XLI Technology
shall conform in all material respects to the specifications
contained in Exhibit A of this Agreement.
11.0 Limitation of Remedies
----------------------
11.1 THE FOREGOING WARRANTIES STATED WITHIN THIS PARAGRAPH HEREUNDER
ARE IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
USE OR PURPOSE, WHETHER OR NOT MADE KNOWN TO EACH PARTY, WHETHER
IN TORT, CONTRACT STRICT LIABILITY, OR OTHERWISE, EXCEPT TO THE
EXTENT OF THE INDEMNIFICATION PROVISIONS CONTAINED IN SECTION 9.1
OF THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
EACH PARTY, OR ANY SUBLICENSEE OR ANY OTHER PERSON, FIRM OR
CORPORATION, OR OTHER ENTITY FOR ANY OTHER DAMAGES, INCLUDING,
BUT NOT LIMITED TO, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING
OUT OF THIS AGREEMENT OR IN CONNECTION WITH THE USE OF THE XLI
TECHNOLOGY OR ANY PART THEREOF, OR ANY DAMAGES WHATSOEVER
RESULTING FROM LOSS OF USE, LOSS OF PROFITS, LOSS OF GOODWILL OR
REPUTATION, LOSS OF DATA, OR OTHERWISE ARISING IN ANY MANNER OUT
OF THIS AGREEMENT OR THE USE OR PERFORMANCE OF THE XLI TECHNOLOGY,
OR ANY PART THEREOF, WHETHER IN A CONTRACT, TORT OR OTHER FORM OF
ACTION. THE WARRANTIES GIVEN ABOVE CONSTITUTE THE ONLY WARRANTIES
MADE BY EACH PARTY WITH RESPECT TO THIS AGREEMENT. SUCH WARRANTIES
ARE IN LIEU OF, AND EACH PARTY HEREBY WAIVES, ALL OTHER WARRANTIES
OR GUARANTEES OF EACH PARTY WHETHER EXPRESS OR IMPLIED.
11.2 IN NO EVENT WILL XLI BE LIABLE TO PCPI FOR DAMAGES EXCEEDING THE
AMOUNT PAID TO XLI BY PCPI UNDER THE TERMS OF THIS AGREEMENT, AND
PCPI SHALL NOT BE LIABLE FOR MORE THAN THE XXXXXXXXX LICENSE FEE
WHEN AND AS PAID TO XLI.
12.0 Termination
-----------
12.1 This Agreement may be terminated by either party in the event the
other party breaches a material item of this Agreement and fails
to cure such breach to the reasonable satisfaction of the
complaining party within thirty (30) days after written notice
thereof from the non-breaching party, or if such breach cannot
reasonably be cured within said thirty (30) days, the breaching
party fails to commence to cure such breach within thirty (30)
days after written notice and fails to complete such cure within
ninety (90) days of the date of such notice.
12.2 The license granted to PCPI by this Agreement shall survive the
bankruptcy or insolvency or direct or indirect taking over or
assumption of control of XLI or PCPI, and PCPI shall continue to
have the right to use the XLI Technology as permitted in this
Agreement and subject to the terms of this Agreement. However,
in the event of bankruptcy or insolvency of either party, the
parties shall have the right to mutually agree to terminate this
Agreement by written agreement.
12.3 If termination is due to a PCPI material breach of its obligations
under this Agreement, the rights granted to PCPI herein shall be
terminated and PCPI shall have no further right to continue to use
the XLI Technology. If this Agreement is terminated due to XLI's
breach of its obligations hereunder, the rights granted to PCPI
shall survive termination and PCPI shall continue to have the
right to use the XLI Technology as permitted by this Agreement and
subject to the royalty payments. Notwithstanding the foregoing,
termination of this Agreement for any reason shall not affect the
right of existing PCPI OEM's and such existing OEM's end users to
continue to use and have access to the PCPI ASIC(s) or chip set
products containing the Superchip ASIC, provided such OEM's were
granted access to the XLI Technology as permitted by this
Agreement.
13.0 Notices
-------
13.1 Written notices hereunder shall be made to the respective CEO's of
PCPI and XLI, and are deemed to be given when received if telexed
or faxed and within five days of mailing if mailed by air courier,
postage prepaid, return receipt, to the address of the other party
as set forth herein, or such other address as shall be furnished
in writing, by either party.
14.0 Non-assignability
-----------------
14.1 This Agreement is not assignable by either party without the prior
written consent of the other party. Any attempt to assign this
Agreement without the prior written consent of the other party
shall be void.
15.0 No Joint Venture
----------------
15.1 This Agreement creates no agency, partnership, employment, joint
relationship or joint venture between the parties or mutual
responsibility on behalf of one party for the debts or liabilities
of the other. The parties agree that each is acting as an
independent contractor and that any employees of PCPI are in no
way employees of XLI. Neither party shall have the power or
authority to bind or obligate the other except as expressly set
forth in this Agreement.
16.0 Other Agreements
----------------
16.1 This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes all
prior agreements relating thereto, written or oral, between the
parties. Amendments to this Agreement must be in writing and
signed by the duly authorized officers of the parties.
17.0 Force Majeure
-------------
17.1 Neither party shall be liable for delay in performance or failure
to perform in whole or in part the terms of this Agreement due to
strike, labor dispute, act of war, riot or civil commotion, act of
public enemy, fire, flood or other cause beyond the control of
such party.
18.0 Arbitration
-----------
18.1 All disputes that may arise in connection with this Agreement that
cannot be settled by the parties themselves shall be submitted to
a panel of three arbitrators in Delaware proceeding under the
rules and regulations of the American Arbitration Association.
The panel shall be required to provide a written decision with
full explanation of its findings. All costs of arbitration shall
be divided equally between the parties, and the parties agree to
be bound by the decision of such panel.
19.0 Governing Law
-------------
19.1 The construction, validity and the performance of this Agreement
shall be governed by the laws of the Commonwealth of Massachusetts.
20.0 Disclosure
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20.1 Both parties to this Agreement will not disclose the existence of
this Agreement unless disclosure is required by law. XLI or PCPI
will not use the logo of the other party in advertising or
marketing materials or disclose the existence of this Agreement or
the terms of this Agreement to a third party without the written
consent of the other party to this contract.
IN WITNESS WHEREOF the duly authorized representatives of the parties have
executed this Agreement as of the Effective Date.
PCPI Technologies, Inc. Xerographic Laser Images Corporation
By: /s/Edward W. Savarese By: /s/Anthony D. D'Amelio
-------------------------- ---------------------------
Title: President & CEO Title: President & CEO
-------------------------- ---------------------------
EXHIBIT A: Licensed Features & Schedule
A1: Licensed Features
- ----------------------
Current Superchip VHDL Core Modules for printer, copier, fax, and
multi-function applications in color and monochrome laser print
engines with the following feature sets:
200x100, 200, 300, and 600 DPI Edge Enhancement
XXXXXXXXXXXXXXXXXXXXX
Multi-bit gray scale data @ 300 or 600 DPI
1 bit Photo Enhancement
Toner Saver Mode
Digital Modulator for sub-pixel modulation
Maximum Video Rate: XXXXXXXXXXXXXXXXXX
Minimum Video Rate: XXXXXXXXXXXXXXXXXX
A2: Schedule
- -------------
Delivery of the XLI VHDL design database to PCPI for the above
Superchip features XXXXXXXXXX