EXHIBIT 10.10
LICENSE AGREEMENT
(Rain Sensor
and Fog Sensor)
between
CONTROL DEVICES, INC.
and
DENNIS J. HEGYI
This License Agreement, made and entered into this 3rd day of April, 1995 by and
between DENNIS J. HEGYI (HEGYI), an individual having a residence at 1708 Morton
Avenue, Ann Arbor, Michigan 48104, and CONTROL DEVICES, INC. (CONTROL DEVICES),
an Indiana corporation, having a place of business at Route 35, Standish,
Maine 04084.
Whereas HEGYI represents that he has the sole right to grant licenses under
the Invention (as hereinafter defined) and under patents that might issue
thereon; and
Whereas HEGYI is willing to grant an exclusive license of the Invention to
CONTROL DEVICES based on the conditions hereinafter set forth; and
Whereas CONTROL DEVICES is willing to acquire an exclusive worldwide
license to commercialize such Invention;
Now, therefore, in consideration of the foregoing and the rights and
obligations hereinafter set forth, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I. DEFINITIONS
Section 1. When used in this License Agreement, the following terms shall
have the following meanings for all purposes of this License Agreement.
Section 1.1 "Invention" means the method and/or apparatus which (i) was
discovered by HEGYI, (ii) pertains to a sensor capable of detecting the presence
of: (a) water droplets on exterior glass or other transparent or translucent
surfaces due to rain or other forms of precipitation (all hereinafter referred
to as "Rain"), and/or (b) water droplets on glass or other transparent or
translucent surfaces due to condensed moisture (hereinafter referred to as
"Fog"), and/or (c) smoke particles, and (iii) consists of a modulated light
sources, a light sensor which receives light scattered from the water
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droplets, condensed moisture, and/or smoke particles and which may also have a
phase sensitive detector connected to the light sensor, the output of which is
sensitive to water droplets, condensed moisture and/or smoke particles.
Invention further includes any methods, processes, electrical circuits, devices,
apparatuses, designs, equipment, and/or structures for such a system or for use
in connection therewith.
Section 1.2 "Improvements" mean any modification, amendment, or
enhancement of the Invention.
Section 1.3 "Licensed Patent(s)" means any and all letters patent owned by
HEGYI claiming the Invention or Improvements that may issue or have been issued
including any and all renewals, divisions, continuations, continuations-in-part,
reissues, substitutions, confirmations, registrations, revalidations, revisions,
extensions, or additions of or to any of the aforesaid patents and patent
applications.
Section 1.4 "Valid Claim(s)" means any claim(s) in an unexpired patent
included within the applicable Licensed Patents which claim has not been held
unenforceable, unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer. If in any country there should be
two or more such decisions conflicting with respect to the validity of the same
claim, the decision of the higher or highest tribunal shall thereafter control;
however, should the tribunals be of equal rank, then the decision or decisions
upholding the claim shall prevail.
Section 1.5 "Know-How" means and includes all discoveries, inventions,
improvements, technical information, trade secrets, prototypes, models,
experience, work products, documentation, reports and data, and all results from
experiments, testing development and demonstrations, and any other data, written
or unwritten, including all such information and knowledge derived from work and
services performed prior to the date of this License Agreement by HEGYI, all of
which relate to the Invention and/or Improvements, at least some of such Know-
How having been disclosed to CONTROL DEVICES and/or its predecessor GTE Control
Devices pursuant to written agreements of confidentiality.
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Section 1.6 "Affiliate(s)" of CONTROL DEVICES means any partnership,
organization, association, company, corporation, individual or other entity
which is controlled, directly or indirectly, by CONTROL DEVICES or wherein
CONTROL DEVICES, directly or indirectly, owns more than fifty percent (50%) of
the equity or voting stock. Except as the context may otherwise require, for
the purposes of this License Agreement, the term CONTROL DEVICES shall mean and
include the Affiliates of CONTROL DEVICES.
Section 1.7 "Royalty Product(s)" includes any process, method, substance,
equipment, mechanism, device or other property, or combination thereof, the
manufacture, use or Sale of which would, but for this License Agreement,
infringe one or more Valid Claims, or any process, method, substance, equipment,
mechanism, device or other property, or combination thereof which incorporates,
or the manufacture, use or Sale of which utilizes, Know-How.
Section 1.8 "Net Selling Price" means CONTROL DEVICES' invoice price,
being the price billed exclusive of taxes, such as sales, use, or other added
taxes less a documented deduction under normal business practices for
transportation, freight, insurance, promotions, discounts, and duty if such
deductions are applicable. If in any transaction a Royalty Product is Sold
without a separately identifiable Net Selling Price (either because such sale is
part of a larger transaction including additional equipment and/or services, or
for any other reason), then for purposes of this License Agreement, the Selling
Price shall mean the established current Net Selling Price for equivalent
quantities of Royalty Products when Sold and invoiced separately, but if no Net
Selling Price has been established, the Net Selling Price shall be deemed to be
the fair market price.
Section 1.9 "Sold" (together with conjugate terms "Sell," "Sale," "Sales,"
"Selling," etc.) means generally transferred by CONTROL DEVICES or any Affiliate
or sublicensee of CONTROL DEVICES for value in an arm's length transaction to a
transferee other than an Affiliate or sublicensee of CONTROL DEVICES, and shall
include without limitation, Royalty Products which are rented, leased, consigned
or given, except salesperson samples provided without charge. Royalty Products
shall be considered Sold when billed out; or, if not billed out, then when
shipped, mailed, or otherwise
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delivered, or when paid for before delivery. However, upon expiration or
termination of this License Agreement, all Royalty Products shipped or otherwise
delivered on or prior to the date of such expiration or termination, which have
not been billed out or otherwise disposed of, shall be considered Sold and
therefore subject to royalties hereunder. A lease, a consignment, a transfer to
a place of use or a delivery to another, regardless of the basis of
compensation, if any, is an example of a disposition to be treated as a Sale and
subject to royalties. The scrapping as junk so as not to be used for the normal
contemplated or intended purpose thereof, or the mere routine manufacturing and
testing thereof, is an example of a disposition which, in itself, is not subject
to royalties. Royalties paid hereunder on License Products returned to CONTROL
DEVICES for which credit is allowed by CONTROL DEVICES shall be entitled to be
deducted from royalties due for the period in which credit is allowed.
Section 1.10 "Consultant's Agreement" means the six (6) year agreement
between the parties hereto which covers HEGYI's consulting services on behalf of
CONTROL DEVICES, effective April 1, 1995.
Section 1.11 (a) "Rain Sensor Purchase Order Milestone" means any purchase
order or similar agreement or combination of such agreements from automotive
OEMs and/or supplier(s) thereto covering Royalty Product(s), wherein the effect
of such agreement or combination of agreements is to cause the cumulative,
projected volume of Sales, over the life of this Agreement, of Royalty
Product(s) intended or used for the detection of Rain (or actual volume of such
Sales, whichever comes first), as computed on the basis of the purchasers'
projected volumes contained in such agreement or combination of agreements, to
equal or exceed one million United States dollars (US $1,000,000).
(b) "Fog Sensor Purchase Order Milestone" means any purchase order or
similar agreement or combination of such agreements from automotive OEMs and/or
supplier(s) thereto covering Royalty Product(s), wherein the effect of such
agreement or combination of agreements is to cause the cumulative, projected
volume of Sales, over the life of this Agreement, of Royalty Product(s) intended
or used for the detection of Fog (or actual volume of such Sales, whichever
comes first), as computed on the basis of the purchasers' projected volumes
contained in such agreement or combination of agreements, to equal or exceed one
million United States dollars (US $1,000,000).
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ARTICLE II. LICENSE GRANT
Section 2.1 HEGYI grants CONTROL DEVICES a worldwide exclusive license under
the Licensed Patents and/or Know-How to make, use, Sell or otherwise dispose of
Royalty Product(s).
Section 2.2 The exclusive license granted herein includes the right to
sublicense provided that CONTROL DEVICES notifies HEGYI regarding any
sublicense, reports to HEGYI regarding any sublicense, reports to HEGYI the
Sales made under such sublicense, accounts for royalties on such Sales and pays
royalties thereon to HEGYI in the same manner as provided herein for Sales by
CONTROL DEVICES, as though such Sales were made by CONTROL DEVICES itself.
Section 2.3 Except as provided in Article VII herein, the exclusive license
granted to CONTROL DEVICES precludes HEGYI from making, having made, using,
selling or otherwise disposing of Royalty Products.
ARTICLE III. PAYMENTS
Section 3.1 CONTROL DEVICES agrees to pay HEGYI royalties on Sales by
CONTROL DEVICES, Affiliates and sublicensees anywhere in the world at a rate
equal to six percent (6%) of the Net Selling Price of Royalty Products covered
by one or more Valid Claims; and
Section 3.2 (a) As to Royalty Products not covered by one or more Valid
Claims, CONTROL DEVICES agrees to pay HEGYI royalties on Sales by CONTROL
DEVICES, Affiliates, and sublicensees in accordance with the following schedule,
except as described in Paragraph (b) below:
(i) Six percent (6%) of the Net Selling Price for the three years beginning
January 1, following the first Sale of such Royalty Products in commercial
quantities (e.g., for Royalty Products incorporating Rain sensors, beginning the
January 1 following the first Sale of Rain sensor Royalty Products in commercial
quantities, and for Royalty Products incorporating Fog sensors, beginning the
January 1 following the first Sale of Fog sensor Royalty Products in commercial
quantities);
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(ii) Three percent (3%) of the Net Selling Price for next three years
beginning January 1; and
(iii) One percent (1%) of the Net Selling Price for the final three years
beginning January 1, after which CONTROL DEVICES shall have a paid-up royalty-
free license on such Royalty Products not covered by one or more Valid Claims.
Such paid-up license shall become non-exclusive if and at such time as any
license to CONTROL DEVICES under Licensed Patents is terminated.
(b) As to Royalty Products not covered by one or more Valid Claims, if
CONTROL DEVICES, including its Affiliates and sublicenses, is the sole source
supplier for any particular model product, then for the portion of Sales of
Royalty Products for which CONTROL DEVICES, including its Affiliates and
sublicenses, is the sole source supplier of Rain and/or Fog sensors used on a
particular model product, CONTROL DEVICES will extend its obligations to HEGYI
under Paragraph (a) above for an additional three (3) years by replacing the
three (3) year term contained in Subparagraph (ii) of said Paragraph (a) with a
six (6) year term.
Section 3.3 For Royalty Product(s) intended or used for the detection of
Rain, CONTROL DEVICES agrees to pay HEGYI an annual minimum royalty of five
thousand dollars ($5,000) in calendar year 1996, ten thousand dollars ($10,000)
in calendar year 1997, thirty-five thousand dollars ($35,000) in calendar year
1998, forty-five thousand dollars ($45,000) in calendar year 1999, fifty-five
thousand dollars ($55,000) in calendar year 2000, and sixty-five thousand
dollars ($65,000) in calendar year 2001 and each year thereafter during the
life of this License Agreement. These monies are to be paid on or before
January 3rd of each year, with the monies so paid acting as an advance against
royalties based on the Sale of Royalty Product(s) intended or used for the
detection of Rain and which royalties are otherwise to be paid to HEGYI under
Sections 3.1 and 3.2 above during that calendar year only in which said minimum
royalty payment is paid and applicable; so that CONTROL DEVICES shall be allowed
to credit the full amount of each such minimum royalty payment against the
royalties which are based on the Sale of Royalty Product(s) intended or used for
the detection of Rain and which would otherwise be paid to HEGYI under Sections
3.1 and 3.2 of this License Agreement during the calendar year in which such
minimum royalty payment is made, with no carryforward of excess credit against
royalties to be paid in other years; and any royalties to be paid to HEGYI
during any calendar year which are in excess of that year's minimum royalty
payment shall be paid as otherwise required under
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this License Agreement.
Section 3.4 In addition to the minimum royalties described above, for
Royalty Product(s) intended or used for the detection of Fog, CONTROL DEVICES
agrees to pay HEGYI an annual minimum royalty of five thousand dollars ($5,000)
in calendar year 1997, ten thousand dollars ($10,000) in calendar year 1998,
thirty-five thousand dollars ($35,000) in calendar year 1999, forty-five
thousand dollars ($45,000) in calendar year 2000, fifty-five thousand dollars
($55,000) in calendar year 2001, and sixty-five thousand dollars ($65,000) in
calendar year 2002 and each year thereafter during the life of this License
Agreement. These monies are to be paid on or before January 3rd of each year,
with the monies so paid acting as an advance against royalties based on the Sale
of Royalty Product(s) intended or used for the detection of Fog and which
royalties are otherwise to be paid to HEGYI under Sections 3.1 and 3.2 above
during that calendar year only in which said minimum royalty payment is paid and
applicable; so that CONTROL DEVICES shall be allowed to credit the full amount
of each such minimum royalty payment against the royalties which are based on
the Sale of Royalty Product(s) intended or used for the detection of Fog and
which would otherwise be paid to HEGYI under Sections 3.1 and 3.2 of this
License Agreement during the calendar year in which such minimum royalty payment
is made, with no carryforward of excess credit against royalties to be paid in
other years; and any royalties to be paid to HEGYI during any calendar year
which are in excess of that year's minimum royalty payment shall be paid as
otherwise required under this License Agreement. It is understood that
royalties credited against the minimum payments of Section 3.3 above cannot also
be credited against the minimum payments of this Section 3.4.
Section 3.5 CONTROL DEVICES shall pay HEGYI two hundred and twenty-five
thousand dollars ($225,000) within fifteen (15) business days of the reaching of
any agreement (or the completion of any Sale, whichever comes first) resulting
in initial achievement of the milestone defined above as the Rain Sensor
Purchase Order Milestone.
Section 3.6 In addition to the payment described in Section 3.5 above,
CONTROL DEVICES shall pay HEGYI two hundred and twenty-five thousand dollars
($225,000) within fifteen (15) business days of the reaching of any agreement
(or the completion of any Sale, whichever comes first) resulting in initial
achievement of the milestone defined above as the Fog Sensor Purchase Order
Milestone. It is
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understood that any payment made in satisfaction of CONTROL DEVICES' obligation
under Section 3.5 above cannot also be used in satisfaction of the payment
required under this Section 3.6.
Section 3.7 As partial consideration for HEGYI's entering into this License
Agreement, CONTROL DEVICES shall enter into the Consultant's Agreement and shall
perform and maintain all of its obligations contained therein for the full term
of said agreement.
Section 3.8 The obligation to pay HEGYI a royalty under this Article III is
imposed only once with respect to the Net Selling Price of any individual unit
of Royalty Product regardless of the number of Valid Claims or Licensed Patents
or the amount of Know-How covering the same or the number of sensors included in
the same; however, for purposes of determination of payments due hereunder,
whenever the term "Royalty Product" may apply to a property for which more than
one royalty rate under this Article III may apply, then the highest applicable
rate shall be utilized.
ARTICLE IV. RECORDS AND ACCOUNTING
Section 4.1 CONTROL DEVICES shall maintain accurate records in sufficient
detail and form to enable the royalties hereunder to be determined. CONTROL
DEVICES shall require all Affiliates and sublicensees, regardless of tier, to
keep true and accurate records and books of account containing data reasonably
required for the computation and verification of royalty payments. Such records
shall include such other accounting and business documents as may, under
recognized accounting practices, contain information bearing on the amount of
royalties payable hereunder, and shall show all Royalty Products manufactured,
sold, put into use, or otherwise disposed of by CONTROL DEVICES on which
royalties are payable under Article III hereof. CONTROL DEVICES shall be
required to keep such records for a period of six (6) years after each
respective quarterly reporting period referred to in Section 4.2.
Section 4.2 CONTROL DEVICES shall render to HEGYI quarterly reports or
abstracts from such records (in detail showing products Sold, prices at which
Sold and royalty due) together with copies of customer invoices sent during each
quarter within forty-five (45) days after each March 31, June 30, September 30,
and December 31 of each calendar year, irrespective of whether any Royalty
Products are
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manufactured, Sold, put into use, or otherwise disposed of by CONTROL DEVICES,
or any of its Affiliates, or sublicensees. Each quarterly report shall state
the amount of royalties due. Such quarterly reports shall specifically identify
all taxes or other deductions which are excluded from said Net Selling Price and
which are not itemized in an invoice. HEGYI shall keep information from such
reports or abstracts confidential and shall disclose such information only to
the extent required for tax or other similar purposes or as may be required by
law.
Section 4.3 Simultaneously with the making of each such report, CONTROL
DEVICES agrees to pay HEGYI the royalty or minimum payments specified under
Article III hereof, which is shown to be due and payable by such report.
Section 4.4 Payments for any and all royalties and fees described in this
License Agreement shall be in United States currency and shall be made by check
payable to "Dennis J. Hegyi" and forwarded to the following address:
Dennis J. Hegyi
1708 Morton Avenue
Ann Arbor, MI 48104
or to such other address that HEGYI may designate by notice in writing in
conformity with Article XIX below. Quarterly reports shall be mailed to the
same address. It is contemplated hereby that payments due under this License
Agreement for Sales in foreign countries may be treated differently (pursuant to
notice to CONTROL DEVICES by HEGYI) than payments for Sales in the United
States. Monetary conversions, from a currency in which a Sale is made into
another currency, shall be made at the official exchange rate for royalty
remittances in force in the country involved on the last business date of the
quarterly period. If there is no official exchange rate, the conversion shall
be made at the rate for such remittance on that date as certified by Citibank
N.A. of New York.
Section 4.5 In the event that no Royalty Products are Sold during any period
for which a report is required hereunder, a report to that effect shall
nevertheless be rendered to HEGYI for such period.
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Section 4.6 CONTROL DEVICES covenants that it will employ a system of
product identification that will permit royalty calculations to be verified upon
subsequent review by HEGYI or his auditors.
Section 4.7 CONTROL DEVICES agrees to permit its relevant records to be
examined upon reasonable notice during business hours by an independent
certified public accountant at HEGYI's expense, provided that (i) such
accountant agrees to maintain the confidentiality of such information and to
sign an agreement with CONTROL DEVICES to that effect if so requested by CONTROL
DEVICES, and (ii) CONTROL DEVICES has agreed to the auditor or auditors in
advance of the audit. If the audit reveals that CONTROL DEVICES payments to
HEGYI have been less than ninety-seven percent (97%) of the amount owed to HEGYI
during the period of audit, CONTROL DEVICES shall pay the costs of the audit up
to a maximum limit of five thousand dollars ($5,000).
ARTICLE V. COMMERCIALIZATION
Section 5.1 CONTROL DEVICES agrees to use reasonable efforts to
commercialize the Invention. In the event that CONTROL DEVICES fails to use
such reasonable efforts, the liquidated damages for such failure shall be
limited to forty-seven thousand five hundred dollars ($47,500). CONTROL DEVICES
shall not be liable for any other damages, consequential or otherwise, related
to its obligation to commercialize the Invention.
ARTICLE VI. CONSTRUCTION
Section 6.1 Nothing in this License Agreement shall be construed as:
(a) A warranty or representation by HEGYI as to the validity or scope of
any patent rights;
(b) An agreement to bring or prosecute actions or suit against third
parties for patent infringements; or
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(c) An agreement by HEGYI to indemnify CONTROL DEVICES or otherwise hold
CONTROL DEVICES harmless, for any liability incurred regarding the manufacture,
use, or sale of the Royalty Products, including, without limitation, attorneys'
fees and costs incurred in defending claims based on warranty, product
liability, infringement of the proprietary or intellectual property rights of
others, or any other claim.
ARTICLE VII. TERMINATION
Section 7.1 In the event CONTROL DEVICES fails to perform any of its
obligations hereunder, including but not limited to its obligations under the
Consultant's Agreement, and such failure to perform constitutes a material
breach of its obligations, HEGYI may notify CONTROL DEVICES in writing of such
default and HEGYI shall have the option of treating this License Agreement as in
full force and effect and of taking proper steps to enforce compliance and to
recover any royalties and other sums due and payable hereunder and/or under the
Consultant's Agreement, or of terminating this License Agreement and the license
granted hereunder; provided, that in the case where HEGYI elects to terminate
this License Agreement, he shall first send CONTROL DEVICES notice of his
election to terminate this License Agreement together with a statement as to the
grounds upon which the termination is based. If within a period of thirty (30)
days after such notice CONTROL DEVICES shall have cured such failure to perform
in accordance with the provisions of this License Agreement, then the notice
shall become null and void and of no effect; otherwise, the notice shall remain
effective and this License Agreement shall cease and terminate at the expiration
of such period.
Section 7.2 Unless otherwise terminated as herein provided, CONTROL DEVICES'
obligation to pay royalties on Royalty Products shall end when the last such
obligation under Article III herein expires.
Section 7.3 In the event of any termination of this License Agreement, and
except as provided herein to the contrary, all rights and obligations of the
parties hereunder shall cease with respect thereto, and (i) CONTROL DEVICES
shall continue to be liable for all royalties and other sums accruing hereunder
up to the day of such termination; and (ii) CONTROL DEVICES shall render a final
report
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and royalty payment and permit a final audit in accordance with Sections 4.6 and
4.7.
Section 7.4 Upon early termination in accordance with Section 7.1 of this
License Agreement for any cause, (i) HEGYI may purchase, with CONTROL DEVICES'
consent, any CONTROL DEVICE'S rights related to the Invention that were
developed in the commercialization of the Invention up to the date of such
termination, (ii) upon HEGYI's request, CONTROL DEVICES shall transfer to HEGYI
all HEGYI owned drawings, plans, models, prototypes and other material related
to the Invention, and (iii) CONTROL DEVICES shall be permitted to complete any
contractual or other legal obligations to third parties regarding the supply of
product or spare parts until such time as HEGYI or another person has
effectively assumed such obligations.
Section 7.5 In the event HEGYI fails to perform any of his obligations
hereunder, CONTROL DEVICES may notify HEGYI in writing of such default,
including a notice of termination and a statement of reasons for such
termination. The notice of termination shall be served upon HEGYI at least
thirty (30) days before a termination date established by CONTROL DEVICES.
Immediately upon service of such notice of termination, HEGYI shall have the
right to begin negotiations with others for the manufacture, sale, and use of
the Royalty Products. If within a period of thirty (30) days after such notice,
HEGYI shall have cured such failure to perform in accordance with the provisions
of this License Agreement, then the notice shall become null and void and of no
effect; otherwise, the notice shall remain effective and this License Agreement
shall cease and terminate at the expiration of such period.
Section 7.6 CONTROL DEVICES may terminate the License Agreement for any
reason by providing HEGYI with thirty (30) days advanced written notice and a
payment of forty-seven thousand five hundred dollars ($47,500) at the time of
termination; provided however, such termination payment shall be reduced in
amount as set forth hereafter. If Sales for the twelve-month period immediately
preceding the date of the termination notice total less than $1.1 million
dollars ("Actual Sales"), the payment to HEGYI shall be reduced to an amount
computed as follows:
(1) $1.1 million minus Actual Sales = X
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(2) X/$1 million times $47,500 = Y
(3) $47,500 minus Y = termination pay.
Section 7.7 CONTROL DEVICES may effect a partial termination of the License
Agreement for any reason by otherwise terminating in accordance with Section 7.6
above, except that the thirty (30) day advance written notice of Section 7.6
shall contain an election by CONTROL DEVICES to retain all rights and all
obligations under the License Agreement with respect to Royalty Products
intended or used for the detection of one or the other of either Rain or Fog,
but not both. In this event: (i) the grant of rights otherwise contained in
the License Agreement shall become limited either to the making, using, Selling
or otherwise disposing of and sublicensing of Rain sensors or to the making,
using, Selling or otherwise disposing of and sublicensing of Fog sensors, in
accordance with CONTROL DEVICES' written election, but not to both, and (ii)
CONTROL DEVICES, including Affiliates and sublicensees, shall cease making,
using, Selling or otherwise disposing of or sublicensing any non-elected sensors
(i.e., sensors other than either the elected Rain sensor or Fog sensor) which
include or are themselves Royalty Products under this License Agreement, and
(iii) CONTROL DEVICES' obligations to pay minimum royalties under the License
Agreement shall be limited, pursuant to CONTROL DEVICES' election, to payment of
said minimum royalties applicable to either Rain sensors or Fog sensors, but not
both, and (iv) in effecting the partial termination under this Section 7.7, the
computation of Sales used to arrive at "Actual Sales" for the twelve month
period described in Section 7.6 above shall not include Sales of Royalty
Products which include only the elected sensors (i.e., either Rain sensors or
Fog sensors as elected by CONTROL DEVICES for its continuing license rights
under this Section 7.7), and (v) all other terms and conditions of the License
Agreement shall remain in effect but shall be limited as necessary to effect the
intentions of the parties hereunder to restrict the field of use under the
License Agreement to either Rain sensors or Fog sensors, but not both.
ARTICLE VIII. PROSECUTION OF PATENT APPLICATIONS
Section 8.1 HEGYI shall diligently prosecute any and all patent applications
claiming Inventions and/or Improvements which he elects to file and shall pay
all fees due to prevent such applications or
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any issued patents from being abandoned or forfeited. Within thirty (30) days
of its receipt of an invoice from HEGYI, CONTROL DEVICES shall reimburse HEGYI
for all such reasonable costs incurred prior to the date of this License
Agreement for prosecuting patent applications in Japan, South Korea, West
Germany, the United States, France, Great Britain, and Italy. Within thirty
(30) days of its receipt of an invoice from HEGYI, CONTROL DEVICES shall pay for
all such reasonable future costs in such countries, provided that CONTROL
DEVICES has approved them in advance of being incurred. CONTROL DEVICES shall
not unreasonably withhold such approval.
Section 8.2 In the event CONTROL DEVICES requests that HEGYI file any patent
application claiming Inventions and/or Improvements in any country and HEGYI
elects not to file, HEGYI agrees to do so at CONTROL DEVICES' expense. Should
HEGYI decide he wishes to terminate prosecution or otherwise intends to abandon
any patent applications claiming Inventions and/or Improvements, HEGYI shall
notify CONTROL DEVICES of such intention to abandon or forfeit at least sixty
(60) days prior to the time at which the application or patent would become
abandoned or forfeited. In such event, CONTROL DEVICES shall have the option to
continue prosecution or take whatever action is necessary to prevent the
application or patent from becoming abandoned or forfeited, and CONTROL DEVICES
shall have all rights of ownership to such application or patent.
ARTICLE IX. INFRINGEMENT
Section 9.1 CONTROL DEVICES is empowered, at its sole option:
(a) To bring suit in its own name or, if required by law, jointly with HEGYI,
at CONTROL DEVICES' own expense and on CONTROL DEVICES' own behalf, for
infringement of the Licensed Patents;
(b) In any such suit, to enjoin infringement and to collect for CONTROL
DEVICES' benefit all damages, profits, and awards of whatever nature recoverable
for such infringement; and
(c) To settle any claim or suit for infringement of the Licensed Patents.
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Notwithstanding any other provision of this License Agreement, in any such
suit CONTROL DEVICES is entitled to recover CONTROL DEVICES' expenses before
HEGYI is entitled to any royalty payments. HEGYI shall be entitled to royalty
payments for such infringement but such payments shall be limited to twenty-five
percent (25%) of any excess of CONTROL DEVICES' recoveries over CONTROL DEVICES'
expenses.
Section 9.2 In the event HEGYI shall bring to the attention of CONTROL
DEVICES any unlicensed infringement of the Licensed Patents and shall furnish
CONTROL DEVICES with a written opinion by a registered patent attorney that such
infringement exists, and CONTROL DEVICES shall not, within three (3) months:
(a) secure cessation of the infringement; or
(b) enter suit against the infringer; or
(c) provide evidence of the pendency of a bona fide negotiation for the
acceptance by the infringer of a sublicense under the Licensed Patents;
then HEGYI shall thereafter have the right, at his sole option, to terminate the
exclusive license granted herein by notifying CONTROL DEVICES of such
termination in writing. Upon termination of CONTROL DEVICES' exclusive license,
CONTROL DEVICES shall retain a license on the same terms as set forth in this
License Agreement except that (1) the license shall be non-exclusive and HEGYI
shall have the right to license third parties under the Licensed Patents, (2)
CONTROL DEVICES' license shall be limited to making and selling Royalty Products
for customers to whom CONTROL DEVICES is contractually obligated to sell Royalty
Products as of the date of termination or to whom CONTROL DEVICES has previously
Sold commercial quantities of Royalty Products, and (3) CONTROL DEVICES shall
not thereafter be able to grant any further sublicenses.
Upon such termination, HEGYI may at his option file suit for the infringement,
and any such suit shall be at HEGYI's own expense, and HEGYI shall collect for
his benefit all damages, profits, and awards of whatever nature which are
recoverable for such infringement. Provided that CONTROL
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DEVICES has no legitimate reason to refrain from cooperation, CONTROL DEVICES
agrees to cooperate with HEGYI in such suit by (1) assigning to HEGYI CONTROL
DEVICES' damage claim for past damages incurred up to the time of termination,
(2) providing HEGYI with information and documents reasonably needed by HEGYI to
prosecute such lawsuit, and (3) making CONTROL DEVICES employees reasonably
available to HEGYI as witnesses (or other similar uses) up to a maximum of
fifteen (15) workdays. CONTROL DEVICES shall participate in any settlement,
verdict, or finding in favor of HEGYI as follows:
(1) actual costs other than legal fees incurred by HEGYI and CONTROL DEVICES
shall be returned to both parties in full, or prorated equally if costs cannot
be reimbursed in full, then
(2) the remainder shall de divided in proportion to the time spent by each
party, except that HEGYI's time shall be multiplied by two (2) to reflect the
higher cost for his time.
ARTICLE X. SUCCESSORS AND ASSIGNS
Section 10.1 This License Agreement is intended to be binding upon the
successors and assigns of CONTROL DEVICES and HEGYI, and their respective
Affiliates. Neither CONTROL DEVICES nor HEGYI may assign this License Agreement
without the consent of the other, except that CONTROL DEVICES may assign this
License Agreement together with the sale or transfer of the business to which
this License Agreement relates.
ARTICLE XI. APPLICABLE LAW
Section 11.1 This License Agreement shall be constructed, interpreted, and
governed by the laws of Michigan.
ARTICLE XII. EFFECT OF PRIOR AGREEMENTS
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Section 12.1 This License Agreement embodies all understandings and
agreements between the parties concerning the subject matter hereof and the
license granted, and supersedes and takes precedence over any previous or
contemporaneous understandings or agreements, oral or written, between the
parties hereto, but shall not supersede the Secrecy and Non-Disclosure Agreement
covering the Invention and previously executed between the parties hereto,
except that CONTROL DEVICES may disclose information as may be necessary to
effect the purposes of this License Agreement.
ARTICLE XIII. WAIVER OF BREACH
Section 13.1 The failure by either party to exercise a right or enforce an
obligation hereunder shall not be construed to be a waiver of same by either
party with respect to future performance.
ARTICLE XIV. SEVERABILITY
Section 14.1 If any portion of this License Agreement shall be declared void
or unenforceable by any court or administrative body of competent jurisdiction,
to the extent that such portion is not material to the underlying intent of the
agreement, such portion shall be deemed severable from the remainder of this
License Agreement, which remainder shall continue in all respects valid and
enforceable. The parties mutually agree to cooperate in any revision of this
contract which may be necessary to meet the requirements of the law.
ARTICLE XV. FORCE MAJEURE
Section 15.1 Neither party shall be under any liability hereunder to the
other party on account of any loss, damage, or delay caused by the elements,
embargoes, failures of carriers, acts of God or the public enemy, or compliance
with any law, regulation or other governmental order, whether
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or not valid, as long as the delay in performance under this License Agreement
is not greater than the period that the above-mentioned actions or events cause
disruption.
ARTICLE XVI. INDEMNITY
Section 16.1 CONTROL DEVICES hereby indemnifies and agrees to require all
Affiliates and sublicensees to indemnify HEGYI against any and all claims in the
nature of product liability, warranty, and infringement of proprietary or
intellectual property rights of others, related to Royalty Products Sold, used
or disposed of by CONTROL DEVICES, its Affiliates or sublicensees. Said
indemnification includes, but is not limited to, claims for damages, attorneys'
fees, or costs. Said indemnification shall not include claims based on any
warranty provided by HEGYI. If any claim within the scope of CONTROL DEVICES'
indemnification obligation shall be made against HEGYI involving Royalty
Products, HEGYI shall inform CONTROL DEVICES thereof and HEGYI shall cooperate
with CONTROL DEVICES and its attorneys or insurer in a disposition of any such
matters whenever reasonably requested to do so. CONTROL DEVICES shall assume
full responsibility for defense of any such action for the benefit of itself and
HEGYI.
ARTICLE XVII. PRODUCT MARKING
Section 17.1 CONTROL DEVICES agrees to mark its products with appropriate
patent notice.
ARTICLE XVIII. ENTIRE AGREEMENT AND AMENDMENTS
Section 18.1 This License Agreement contains the entire understanding of the
parties with respect to the matter contained herein. The parties hereto may,
from time to time during the continuance of this License Agreement, modify, vary
or alter any of the provisions of this License Agreement, but only by an
instrument duly executed by both parties hereto.
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ARTICLE XIX. NOTICES
Section 19.1 Any notice, request, report or payment required or permitted to
be given or made under this License Agreement by either Party shall be given by
sending such notice by registered or certified United States mail, return
receipt requested, postage prepaid, to the address set forth below or such other
address as such Party shall have specified by written notice given in conformity
herewith. Any notice given in accordance with the provisions of this Section
shall be effective on the date received, as indicated on the postal service's
return receipt, and any notice not so given shall not be valid unless and until
actually received as evidenced by competent, written records kept in the normal
course of business.
To HEGYI: Dr. Dennis J. Hegyi
1708 Morton Avenue
Ann Arbor, Michigan 48104
To CONTROL DEVICES: Control Devices, Inc.
228 Northeast Road
Standish, Maine 04084
ATTN: Bruce Atkinson, President
ARTICLE XX. BANKRUPTCY
Section 20.1 If during the term of this Agreement, CONTROL DEVICES shall
make an assignment for the benefit of creditors, or if proceedings in voluntary
or involuntary bankruptcy shall be instituted on behalf of or against CONTROL
DEVICES, or if a receiver or trustee shall be appointed for the property of
CONTROL DEVICES, HEGYI may, at his option, terminate this Agreement and revoke
the license herein granted by written notice to CONTROL DEVICES.
IN WITNESS WHEREOF, the parties, by their duly authorized representatives, have
executed and delivered this Agreement as of the date first written above.
____________________________ ______________________________
Dennis J. Hegyi Bruce D. Atkinson, President,
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Control Devices, Inc.
Date________________________ Date___________________________
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