1
EXHIBIT 10.24
Portions of this document have been omitted subject to an
application for confidential treatment submitted to the Securities
and Exchange Commission on November 9, 1995.
PATENT LICENSE AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th day of October, 1995 (the
"Effective Date") between SQUARE D COMPANY, a Delaware corporation (hereinafter
"SQUARE D"), and MEDAR, INC., a Michigan corporation (hereinafter "MEDAR");
WITNESSETH:
WHEREAS SQUARE D is the present owner of patents and patent application(s)
directed to single phase resistance weld controller TECHNOLOGY (hereinafter
called "TECHNOLOGY"), each of which is listed in Group I of Appendix A hereof
and MEDAR is the present owner of the patents and patent application(s)
directed to the TECHNOLOGY, each of which is listed in Group II of Appendix A;
and
WHEREAS SQUARE D has filed two lawsuits (hereinafter called "the
litigation") against MEDAR alleging patent infringement of certain patents
listed in Group I of Appendix A hereof as the result of MEDAR's manufacture and
sale of certain weld control units ("WCU") and MEDAR filed a counterclaim in
one lawsuit for patent infringement of a patent in Group II of Appendix A; and
WHEREAS SQUARE D AND MEDAR desire and wish to receive a non-exclusive,
paid up license under all the patents listed in Groups I and II, respectively,
in Appendix A hereof to manufacture, have made, use and sell, WCUs as well as
provide services and replacements parts therefore worldwide; and
WHEREAS SQUARE D AND MEDAR further desire and wish to receive a
non-exclusive paid up license to enhance its commercial opportunities by being
able to utilize TECHNOLOGY covered by the patents and patent applications
listed in Groups I and II of Appendix A hereof to manufacture, have made, use
and sell, complete or partial WCUs and replacement parts therefore worldwide;
and
WHEREAS SQUARE D AND MEDAR are desirous of granting the paid up license
under each others patents which both parties acknowledge are valid by neither
party acquiesces on the issue of infringement; and
WHEREAS SQUARE D AND MEDAR are not desirous of granting each other a paid
up license which would allow the other to sublicense that TECHNOLOGY or to in
any other way grant the TECHNOLOGY to a third party which allows that third
party to manufacture or have made WCUs that involves the licensed TECHNOLOGY.
3
2
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Definitions: As utilized herein, the term "Licensed Patents" is
defined as all patents listed in Appendix A hereof and all patents issuing from
patent applications listed in Appendix A hereof, including all continuations,
continuation-in-part, reissues or extensions thereof, together with all
counterpart patent rights thereof throughout the world.
2. Subject only to the provisions of paragraph 6, each party hereby grants
and agrees to grant to the other party a worldwide non-exclusive, fully
paid-up, non-cancelable right and license under the Licensed Patents to
manufacture, have made, use and sell products covered by one or more claims of
the Licensed Patents. Neither party grants the other party a right to
sublicense or in any other way to grant to another party the right to
manufacture or have made WCUs containing the TECHNOLOGY under any of the
Licensed Patents. In order to fully and completely resolve the current dispute
between the parties and to attempt to avoid new disputes over the Licensed
Patents, it is agreed: a.) that a parties purchase, acquisition or exercise of
control over the products of another entity, which are covered by claims of the
Licensed Patents, for the purpose of resale or other distribution under any
name or name(s) other than a name wholly owned by the party is not included
within the scope of the above license; b.) that the sale or distribution by a
party of a weld control unit or component parts thereof covered by claims of
the Licensed Patents for the use by another entity in or toward the manufacture
of a complete or partial weld control unit is not included within the scope of
the above license unless such product is sold under a name wholly owned by the
party to this AGREEMENT sell the product.
3. The term of this AGREEMENT shall extend from the Effective Date until
the expiration of the last to expire of the Licensed Patents.
4. SQUARE D, upon receipt of the payment specified in paragraph 5 below,
releases MEDAR, all purchasers and users of products acquired previously from
MEDAR, MEDAR's shareholders, directors, officers, employees, agents, successors
and assigns from all claims, demands, and rights of action which SQUARE D may
have on account of any alleged infringement of the Licensed Patents and on
account of the manufacture, use, sale or other disposition by MEDAR of products
allegedly covered by one or more claims thereof prior to the Effective Date of
this AGREEMENT. MEDAR as part of the Agreement to settle this dispute with
SQUARE D releases SQUARE D, all purchasers and users of products acquired
previously from SQUARE D, SQUARE D's stockholder, directors, officers,
employees, agents, successors and assigns from all claims, demands, and rights
of action which MEDAR may have on account of the manufacture, use, sale or
other disposition by SQUARE D of products allegedly covered by one or more
claims thereof prior to the Effective Date of this AGREEMENT.
5. As consideration for entry of SQUARE D into this AGREEMENT, MEDAR
irrevocably promises to pay Square D the nonrefundable, lump sum of
U.S. Dollars (US $ ) as follows:
(a) contemporaneously with the execution and delivery of this
AGREEMENT to SQUARE D, MEDAR shall pay to SQUARE D
Dollars ($ ),
4
3
representing the total amount due for any alleged past infringement of
the Licensed Patents; and
(b) the remaining amount of U.S. dollars (US $ )
which MEDAR has promised to pay SQUARE D shall be payable and
actually delivered to SQUARE D in installment payments of
U.S. Dollars (US $ ) on or before each anniversary date
of this AGREEMENT for next ten (10) years, representing the
consideration for the paid up license and other rights granted
herein.
Material omitted subject to an application for
confidential treatment submitted to the Securities and
Exchange Commission on November 9, 1995.
6. Notwithstanding the fact that any or all of the claims for the patents
listed in Group I are held invalid subsequent to this Agreement, in the event
that MEDAR fails to make an installment payment due under the provision of the
preceding paragraph of this AGREEMENT, which has not been cured within ten (10)
days from the date of notice thereof given to MEDAR, the license granted by
SQUARE D to MEDAR may be terminated by SQUARE D in its sole discretion. In the
event that MEDAR's failure to make an installment payment is not cured within
ten (10) day notice period, all payments due and to become due in the future
under the provisions of the preceding paragraph if this AGREEMENT shall become
immediately due and payable to SQUARE D including reasonable attorney fees
associated therewith.
7. Overdue payments to SQUARE D payable pursuant to this AGREEMENT shall
bear interest at an annual rate of five percent (5%) above the average prime
lending rate in effect for corporations of comparable size to MEDAR offered by
Citibank N.A. and Chemical Bank N.A. of New York, New York during default.
8. Any delay, waiver or omission by SQUARE D in the exercise by it of any
right or power arising from any breach or default in payment by MEDAR under the
terms of this AGREEMENT shall not be construed to be a waiver by it of any
subsequent breach or default of payment by MEDAR.
9. The litigation shall be dismissed with prejudice, but without costs.
Within three business days after the date of execution of this AGREEMENT and
the payment by MEDAR to SQUARE D of the consideration call for in Section 5a of
this AGREEMENT, the parties shall cause their respective attorneys to execute
and present to the courts Stipulation of Dismissal with Prejudice in the form
attached hereto as Appendix B and C.
10. Both parties represents and warrant that the patents and patent
application(s) listed in Groups I and II, respectively, in Appendix A hereof
are each and every issued United States patent, foreign counterpart thereof and
pending United States patent application directed to the TECHNOLOGY owned by
each party.
11. Both parties represent and warrant that they have good title to the
Licensed Patents and the right to grant the rights, license and release granted
by them hereunder but DO NOT
5
4
warrant in any way that the manufacture, use and/or sale of products
hereunder will not infringe the intellectual property rights of any third
party, nor do they make any warranty or representation as to the validity,
enforceability or scope of any of the Licensed Patents. However, with regard to
the foregoing, both parties have no knowledge that any of their products
covered by the claims of the Licensed Patents infringe the intellectual
property rights of any third party as of the Effective Date of this AGREEMENT.
Neither party warrants in any way that apparatus covered by the claims of the
Licensed Patents has commercial utility.
12. No rights are granted or implied by this AGREEMENT by either party
under any patents other than the Licensed Patents.
13. This AGREEMENT shall be governed by and construed in accordance with
the laws of the State of Delaware.
14. This AGREEMENT shall inure to the benefit of and be binding upon any
successor in title of the Licensed Patents and may be assigned, only in its
entirety, to the successor of the entire business of either party to which this
AGREEMENT pertains providing such successor expressly agrees in writing to be
bound by the terms hereof. The grant that any such successor receives under
paragraph 2 hereof shall be limited to products of either party in existence at
the time of assignment to the first such successor of either party or
previously in existence. In the event this AGREEMENT is so assigned, any
successor's license is understood to apply only to the activity of those
portions of the successor's business originally acquired from either party and
not to any prior activity of such successor or activity engaged in by the
successor's other business. This AGREEMENT may not be otherwise assigned,
either in whole or in part, by either party without the written consent of the
other party which consent shall not be unreasonable withheld. Further, should
either party, its successors or assigns desire in the future to obtain rights
under any future patent issued by either party in addition to those granted by
this AGREEMENT, both parties will consider in good faith meeting with the
other, its successors or assigns to discuss the terms under which such rights
might be granted.
15. The parties agree that specific terms of this AGREEMENT will not be
disclosed to third parties. However, the specific terms of this AGREEMENT may
be disclosed to others for the purpose of informing stockholders and the like
or potential future licensees and both parties in so doing will advise the
others of the confidential nature of this AGREEMENT. The specific terms of
this AGREEMENT may also be disclosed pursuant to the order or requirement of a
Court, to the Exchange Commission with the specific proviso that
confidentiality will be requested or upon written consent of the other party.
16. Both parties shall exercise their best efforts to notify the other
promptly of any actual or suspected infringement of Licensed Patents. Both
parties will consider the elimination of the infringement of the Licensed
Patents, taking into account such matters as the likelihood of success, the
expected costs, and the potential adverse effect of pursuing the matter. If
either party has failed to eliminate such infringement and is not diligently
taking steps to do so after one year has expired from the time either party has
notified the other party of the existence of an actual or suspected
infringement, and if either party notifies the other party again, in writing,
of a desire to pursue the actual or alleged infringers, then either party shall
in good faith consider
6
5
granting the other party the right to pursue such infringer in the
other party's name, provided that pursuing party shall indemnify the other
party against the outside costs and expenses incurred by other party in
connection therewith. The other party shall cooperate with the pursuing party
in such matters and shall share with pursuing party any damages, award or
license fees in equal proportion after first subtracting therefrom and
reimbursing the pursuing party for its and other party's outside expenses in
connection with such action.
17. Each party agrees to defend, indemnify and hold the other party, its
officers, agents and employees, harmless from any injury, loss, damage, claim
or cause of action to the extent caused by any act or omission on the part of
the party granting the license in connection with a third party claiming injury
against the licensor with regard to any licensed product made by licensee under
this AGREEMENT.
18. SQUARE D and MEDAR shall destroy all documents and deposition
transcripts and other materials of the other party designated or marked by the
other as confidential in the litigation.
19. Payments and any notices to SQUARE D hereunder are to be sent to:
SQUARE D COMPANY
Law Department, Intellectual Property Section
1415 South Roselle Road
Palatine, Illinois 60067
Any notices to MEDAR hereunder are to be sent to:
MEDAR, INC.
38700 Grand River Avenue
Farmington Hills, Michigan 48835-1563
Attention: Charles Drake
Chairman of Board, CEO and President
20. Each party will notify the other of the granting of any type of
license to a third party on any of the Licensed Patents.
21. All taxes imposed as a result of the existence of this AGREEMENT or
the performance of the parties hereunder shall be borne and paid by the party
required to do so by applicable law.
22. Should any clause, sentence, or paragraph of this AGREEMENT judicially
be declared to be invalid, unenforceable, or void, such decision shall not have
the effect of invalidating or voiding the remainder of this AGREEMENT, and the
parties hereto hereby agree that the part or parts of this AGREEMENT so held to
be invalid, unenforceable, or void shall be deemed to have been stricken, and
the remainder shall have the same force and effect as if such part or parts had
never been included herein.
7
6
23. This AGREEMENT sets forth the entire AGREEMENT and understanding
between the parties as to the subject matter of this AGREEMENT and merges all
prior discussions between them, and neither of the parties shall be bound by
any modification of this AGREEMENT, other than as expressly provided in this
AGREEMENT or as duly set forth on or subsequent to the date hereof in writing
and signed by a duly authorized representative of the party to be bound
thereby.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
properly executed and effective as of the day and year first above indicated,
and the persons signing warrant that they are duly authorized to sign for and
on behalf of their respective parties.
SQUARE D COMPANY
By: ______________________________________
Name: Walter W. Kurczeaski
Title: Corporate Vice President.
General Counsel & Secretary
Date: October 4, 1995
WITNESS:
________________________
MEDAR, INC.
By: ______________________________________
Name: Charles J. Drake
Title: Chairman of Board, Chief
Executive Officer & President
Date: October 12, 1995
WITNESS:
________________________
8
7
APPENDIX A
Material omitted subject to an application for
confidential treatment submitted to the Securities and
Exchange Commission on November 9, 1995.
9