License Agreement - Rockwell International Corp. and Xybernaut Corp.
LICENSE AGREEMENT
This License Agreement (the "Agreement") having an Effective Date of
March 29, 1996, and is made by and between ROCKWELL INTERNATIONAL CORPORATION,
a corporation organized and existing under the laws of the State of Delaware,
having a place of business at 350 Collins Road NE, Cedar Rapids, Iowa 52498
(hereinafter referred to as "Rockwell") and XYBERNAUT CORPORATION, a
corporation organized and existing under the laws of the Commonwealth of
Virginia, having a place of business at 12701 Fair Lakes Circle, Fairfax,
Virginia 22033 (hereinafter referred to as "Xybernaut").
WHEREAS, Xybernaut has developed and acquired certain proprietary know
how relating to a voice-activated portable computer system, which includes a
specific hardware configuration in combination with specified operating system
software; and
WHEREAS Rockwell desires to design, make, use and sell products using
certain portions of said Xybernaut proprietary know-how.
NOW THEREFORE, in consideration for the mutual promises contained herein,
Xybernaut and Rockwell agree as follows:
ARTICLE 1 - DEFINITIONS
-----------------------
For the purposes of this Agreement, the following terms shall have the
following indicated meanings:
1.1 "Portable PC" shall mean a personal computer, as generally described in
U.S. Patent No. 5,305,244.
1.2 "Technical Information" shall mean all data, experience, documents,
plans, designs, drawings, reports, manuals, methods, processes,
specifications guidelines, test reports, instructions, procedures, and
other information, related to the design, manufacture, use, or marketing
of Portable PC's, provided or disclosed by Xybernaut in oral, written, or
other form to Rockwell prior to the Effective Date of this Agreement.
1.3 "Intellectual Property Rights" shall mean all rights in Technical
Information and other information provided by Xybernaut to Rockwell prior
to the Effective Date of this Agreement under Patents, the laws of
copyright, mask works, trade secret, trademark, unfair competition, and
similar rights.
1.4 "Patents" shall mean U.S. Patent 5,305,244, and any other patents now or
later owned by Xybernaut based on Technical Information as embodied in
the claims of 5,305,244, and any patents whose claims are within the
scope of the claims of U.S.
--1--
<PAGE> 2
Patent 5,305,244 and any patent whose claims cover a Unit; and shall
specifically include any continuations, divisions, or
continuations-in-part, provisionals, reexaminations, or reissues thereof,
and any patent or patents issuing thereon and any counterpart foreign
patent applications and patents heretofore or hereafter filed
corresponding to said patents and applications.
1.5 "Net Selling Price" shall mean Rockwell's selling price or the price used
to determine lease payments to its customers, F.O.B. Rockwell's factory,
after deduction of shipping, related insurance, packing, sales and excise
taxes, export duties or fees, and sales commissions to third parties as
shall be paid and enumerated on Rockwell invoices. For purposes of Units
not directly sold by the Collins Avionics and Communication Division of
Rockwell to the general public, the Net Selling Price shall be the
then-prevailing lowest price of the Unit offered to any party.
1.6 "Unit" of licensed product shall mean a Portable PC designed primarily
for use in voice-activated, body-worn, mobile information applications
comprising either a Processing Unit or the combination of a Processing
Unit, a head-mounted display and a battery cell. "Unit" shall not
include any other peripheral or attached elements or devices.
1.7 "Processing Unit" shall mean a portion of a Portable PC comprising the
logic function, power supply board, case, memory, and input-output ports.
1.8 "Rockwell Unit" shall mean a Ruggedized Unit made by or for Rockwell and
sold under the Rockwell name by Rockwell or its sales agents.
1.9 "Ruggedized" shall mean to possess the following characteristics:
(a) Start and operate within a temperature range of 0 degrees to 45
degrees Centigrade;
(b) Operate after a a single 2 foot drop onto a hard surface with
the unit landing on a single face. If a hard disk drive is
installed, the hard disk drive head will be locked or retracted.
(c) Rain resistant.
--2--
<PAGE> 3
ARTICLE 2 - LICENSES GRANTED
----------------------------
2.1 For the term of this Agreement, Xybernaut hereby grants to Rockwell and
its subsidiaries under its Intellectual Property Rights, a non-exclusive
license that consists of:
2.1.1 The world-wide right, with the exception of the countries of
Germany and Japan, to manufacture, make, and have made,
Rockwell Units.
2.1.2 The world-wide right to develop, repair use, sell, distribute,
lease or otherwise dispose of Rockwell Units.
2.1.3 The world-wide right to establish distributors and sales
agents, authorized to market, support, integrate hardware and
software, and to modify, Rockwell Units to meet specific
customer desires.
2.2 Xybernaut represents that it is the sole owner of all rights, title and
interest in the Intellectual Property Rights covered by the grants set
forth in Article 2.1 above and/or is empowered to enter this Agreement.
2.3 The rights contained in this Article 2 are conditioned upon adherence to
the terms of this Agreement, including payments set forth in Article 3.
2.4 Xybernaut shall own the design and the intellectual property rights
therein for the Processing Unit initially presented to Rockwell. In
addition, Xybernaut shall own the design and intellectual property rights
associated with the subsequent design alterations made to the Processing
Unit by Rockwell and used for manufacture of the first 200 units
("Initial Design") under the purchase order agreement entered into
between Rockwell and Xybernaut dated June 10, 1994, as amended February
14, 1995 (together the "Purchase Order"). For other intellectual property
rights that have been developed by either party prior to the Effective
Date that are in the Rockwell Unit, each party will be given immunity
from suit, or claim, by the developing party for use of such intellectual
property rights in adherence to the terms of this Agreement. Intellectual
property rights developed subsequent to the date of this Agreement shall
be owned by the party that developed such intellectual property.
2.5 It is specifically agreed that Rockwell shall not have the right to
sublicense third parties for the manufacture and/or sale of Units, except
to the extent that such sublicense is required for subcontracting the
manufacturing of Rockwell Units or the sale of Rockwell Units through
Rockwell's sales agents.
--3--
<PAGE> 4
ARTICLE 3 PAYMENTS
------------------
3.1 In consideration for the licenses granted in this Agreement, Rockwell
shall pay Xybernaut:
a.) A one time, non-refundable, lump sum payment of $300,000 that is due
on the Effective Date of this Agreement. In consideration for the royalty
rates stated below, Rockwell shall completely and immediately release
Xybernaut from payment of the $1,395,000 under the above referenced
Purchase Order.
b.) A royalty for each Rockwell Unit of licensed product produced and
sold or transferred by Rockwell, or its agents, in accordance with the
following:
4% of the Net Selling Price of the Rockwell Unit from the Effective
Date through August 31, 1998;
3% of the Net Selling Price of the Rockwell Unit from September 1,
1998 through August 31, 1999;
2% of the Net Selling Price of the Rockwell Unit from September 1,
1999 through August 31, 2000; and
1% of the Net Selling Price of the Rockwell Unit from September 1,
2000 through August 31, 2001.
c.) No royalty shall be payable on any Rockwell Unit leased or consigned
to Xybernaut.
3.2 Rockwell agrees that it will make Rockwell Units available to Xybernaut
on terms no less favorable than the pricing, performance and delivery
schedule of Rockwell Units Rockwell offers to any other customer,
including any and all discounts, rebates and the like. Payment terms for
Rockwell Units sold to Xybernaut shall be 75 days after invoice date
during the term of this Agreement.
3.3 Rockwell shall maintain accurate and written records adequate to determine
calculation of the royalties due hereunder for 3 years after the period
for which royalty payments are made.
3.4 Within 75 days after the last day of March, June, September and December
of each year, Rockwell shall provide Xybernaut a written report showing
the number of Rockwell Units distributed during the previous calendar
quarter and the calculation of royalties in the manner provided herein.
Along with its report, Rockwell shall tender payment in the amount of the
royalty owed.
--4--
<PAGE> 5
3.5 An independent auditor, acceptable to both parties, shall be allowed to
make independent verification of Rockwell's adherence to the terms of
Article 2 and Article 3 of this agreement and the accuracy of Rockwell's
submitted royalty payment and report. This right to inspection and audit
shall not occur more than once a calendar year unless discrepancies in
excess of 10% are found to exist. Overall costs of this audit shall be
born by Xybernaut, unless a payment shortage discrepancy in excess of 10%
is determined to exist.
3.6 Xybernaut and Rockwell hereby release each other from any and all claims
they may now have against each other, based on circumstances prevailing
prior to the Effective Date, relating to Portable PC's, and components
thereof, except for any claims related to delivery and payment for
equipment delivered, or to be delivered from the first 200 Units, under
the Purchase Order.
ARTICLE 4 - TERM AND TERMINATION/PAID-UP LICENSE
------------------------------------------------
4.1 This Agreement will commence on the Effective Date and will continue
until September 1, 2001. After the term, or any earlier termination in
accordance with this Agreement, in which Rockwell is not in default or
un-cured breach, Rockwell shall receive a fully paid-up, irrevocable,
worldwide, unrestricted, perpetual license under the Intellectual
Property Rights, as delineated in Article 2, as specifically modified to
substitute "Units" for "Rockwell Units" in each instance of use in
Articles 2.1.1; 2.1.2; and 2.1.3. Such license shall survive termination
of this Agreement.
4.2 In the event of an early termination in which Rockwell is in default of
this Agreement, this Agreement is terminated and the license granted
hereunder to Rockwell will be revoked in full.
4.3 Either party shall have the right to terminate this Agreement upon
written notice to the other, if it is determined that the other party is
in material breach of any term, condition or covenant of this Agreement
and fails to cure that breach within sixty (60) days of receipt of
written notice of such alleged breach, provided such cure can reasonably
be effected within 60 days. If such cure cannot be reasonably effected
within 60 days, then one additional 30 day period will be allowed to
effect such cure. If cure is not affected in such period, the party in
breach shall be considered in default.
4.4 Any termination of this Agreement shall be without prejudice to any rights
and remedies either party may have to performance under this Agreement,
specifically including rights contractually extended to third parties
based upon mobile information system Unit sales.
--5--
<PAGE> 6
ARTICLE 5 - CONFIDENTIALITY
---------------------------
5.1 In the course of carrying out their respective responsibilities under
this Agreement, it is anticipated that each party may consult the other
party's personnel about, or receive, certain of the other party's
confidential business and technical information ("Confidential
Information"), including Technical Information disclosed prior to the
date of this Agreement. Each party will keep confidential, and without
the other party's prior written consent, will not use, and will not
disclose to any person or entity any Confidential Information except as
expressly permitted by this Agreement. Each party will take reasonable
precautions to ensure that the Confidential Information of the other
party is made known in, and used by, personnel, agents, and
representatives, only insofar as is necessary for the proper performance
under this Agreement. Nothing in this Agreement shall require the party
receiving Confidential Information of the other party to exercise any
greater degree of care for such Confidential Information than such party
normally exercises for its own information of like material.
5.2 "Confidential Information" relates only to information which is not
generally available to others and which is disclosed to the receiving
party in writing and marked by stamp or legend as proprietary, or if
given orally, is identified as proprietary at the time of disclosure and
subsequently restated in full in written form, within thirty (30) days
after the oral or visual disclosure and marked by stamp or legend
accordingly. In addition, the foregoing obligations of this Article 5
will not apply to any information or data that (i) is known or available
to the general public by publication or otherwise through no act or
failure to act on the part of the recipient or its personnel, agents or
representatives; (ii) is made public by the disclosing party; (iii) is
furnished to the recipient by a third-party as a matter of right; (iv) is
already known to the recipient on a non-confidential basis; (v) is
independently developed by the recipient; (vi) is disclosed outside of
the recipient in accordance with the terms of a prior written
authorization from the supplying party; or (vii) is required to be
disclosed by applicable law or laws. The obligations not to use or
disclose information shall not apply to any information exempted by the
foregoing exceptions (i)-(vii).
5.3 The obligations of the parties under this confidentiality provision shall
continue in effect for a period of five years from the date first
disclosed above and shall survive termination of this Agreement.
ARTICLE 6 - LIMITATION OF LIABILITIES
-------------------------------------
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.
--6--
<PAGE> 7
ARTICLE 7 - MISCELLANEOUS
-------------------------
7.1 This Agreement constitutes the entire and only Agreement between the
parties relating to the subject matter hereof, and all prior
negotiations, representations, agreements and understandings are
superseded hereby. No Agreement altering or supplementing the terms
hereof shall be effective, unless made by means of written document,
signed by an authorized representative of the parties.
7.2 Any notice required by this Agreement shall be effective when given by
prepaid first-class certified mail, return receipt request, addressed to
Xybernaut or Rockwell to the address first written above, or to such
other addresses as may be given from time to time under the terms of this
Notice provision.
7.3 This Agreement does not constitute a partnership, joint venture, or
agency relationship between the parties hereto. Neither party shall hold
itself out as such, contrary to the terms hereof, by advertising or
otherwise, nor shall either party be bound or become liable because of
any representation, misrepresentation, action, or omission by the other
party. In the event that any provision or part of any provision of this
Agreement is found to be invalid, then such provision, or the invalid
part thereof shall be stricken from the Agreement, and the remaining
provisions shall remain in full force and effect.
7.4 Wavier by the party of any default hereunder shall not deprive such party
of any rights arising by reason of any subsequent default.
7.5 This Agreement shall be construed and enforced in accordance with the laws
of the Commonwealth of Virginia.
7.6 Neither party shall be responsible for any delays in delivery which are
due to causes beyond its control including, but not limited to, acts of
God or of a public enemy, acts of the United States or the United States
Government, or any preference priority, or any order of any of said
Governments, or to fires, floods, epidemics, quarantine, restrictions,
strikes, embargoes, unduly severe weather, incidents of war, or delays of
suppliers due to such causes.
7.7 If any claim or controversy arises out of, or relates to, this Agreement,
the Parties shall make a good faith attempt to resolve the matter through
their management representatives. The managers of the division having
cognizance of the subject matter of the Agreement of the party shall
first meet in person and make a good faith attempt to resolve such
controversy or claim. If after such good faith attempt, such managers
cannot otherwise settle or resolve the claim or controversy, or if the
subject matter of the Agreement is not under the cognizance of such
division of the Parties, the senior management representatives of each
Party shall meet in person and make a good faith attempt to resolve the
matter.
In the event that the claim or controversy cannot otherwise be
settled by such managers or senior management of the corporation after
good faith attempt,
--7--
<PAGE> 8
the Parties agree, prior to litigation, to attempt in good faith to
resolve such claim or controversy. Any dispute, controversy or claim
arising under, out of, or relating to this Agreement, including without
limitation, its formation, validity, binding effect, interpretation,
performance, breach or termination, as well as non-contractual claims,
shall be submitted to arbitration in accordance with the World
Intellectual Property Organization (WIPO) Arbitration Rules. The place
of arbitration shall be within the continental United States of America.
7.8 Either Party to this Agreement shall have the right to publicize the
existence of the agreement, but not the material terms, subject to the
prior written approval of the other party, such approval not to be
unreasonably withheld.
7.9 This Agreement is binding upon and shall inure to the benefit of any
successors or assigns of the respective Parties, if such successor or
assign is a corporation owned by either party, or if such succession or
assignment is related to a merger or sale of that Party with/to another
entity. Neither Rockwell nor Xybernaut shall unreasonably object to a
transfer or assignment of this Agreement by the other Party to a successor
or assignee under this Article 7.9.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement.
ROCKWELL INTERNATIONAL CORP. XYBERNAUT CORPORATION
/s/ R. P. MAROVICH /s/ EDWARD G. NEWMAN
----------------------------------- ---------------------------------
Signature Signature
R. P. Marovich Edward G. Newman
----------------------------------- ---------------------------------
Printed Name Printed Name
Executive Vice President
Collins Avionics & Communications Div President
----------------------------------- ---------------------------------
Title Title
March 29, 1996 March 29, 1996
----------------------------------- ---------------------------------
Date Date
--8--
<PAGE> 9
Interim 90-Day Agreement Between Kopin Corporation and Xybernaut Corporation
Both parties agree that the intent of this interim agreement is to fashion the
basis for an effective working relationship between the two companies to cover
the next 90-Day period. Also, during this 90-Day period both companies should
focus on defining the terms and conditions under which the two companies will
deal with each other on a long term basis. During this time, the following
guidelines will govern the relationship.
1. During the 90-Day period following signature of this Agreement, Kopin
will extend to Xybernaut the right to purchase all of the prototype
monochrome monocular HMDs that Kopin manufactures for the belt worn voice
and/or thought activated computer or terminal systems for the maintenance
markets. Every two weeks, Kopin will provide Xybernaut with a
manufacturing forecast for the following two week period. Xybernaut, at
that time, will have the option of purchasing for delivery within a
30-Day period, any or all such units. If, for any reason, Xybernaut fails
to purchase any, or all, of these HMDs, Kopin retains the right to sell
the excess units to any third party other than the InterVision
Corporation or Phoenix Corporation.
2. During this 90-Day period, Xybernaut agrees to purchase a minimum of 130
units from Kopin. Kopin agrees to deliver a minimum of 30 units during
the first 30-Day period of this agreement. Units delivered to Xybernaut
during this period but which (a) fail to pass quality inspection (b) are
returned to Kopin, and (c) are not returned by Kopin prior to the end of
this 90-Day period will count toward the minimum purchase.
3. Unit pricing for this 90-Day period will be $1,550. A new agreement with
quantity pricing and other terms will be negotiated in good faith by both
parties during the period of this interim agreement.
4. Xybernaut will have 5-Days to inspect and reject any units delivered to
it by Kopin. Kopin retains the right to resell any rejected units to any
third party other than InterVision Corporation or Phoenix Corporation. In
all cases, the first business day of acceptance is the business day
(Monday) after the units have been received by Xybernaut and all
shipments of units should be arranged by Kopin for delivery to Xybernaut
on Fridays.
5. Pricing for the first 25 units will be COD. After that period, Kopin will
begin to extend credit to Xybernaut on a net 15-Day period for a sum not
to exceed $38,750 until Kopin believes that further relaxation of its
credit restrictions are warranted.
6. Kopin will have unique part numbers and serial numbers for each HMD unit
of the type to Xybernaut.
Agreed and accepted on May 13, 1996 by Agreed and accepted on May 10, 1996 by
Kopin Corporation Xybernaut Corporation
By: /s/ JOHN C. C. FAN By: /s/ EDWARD G. NEWMAN
--------------------------- -----------------------------
John C. C. Fan, CEO/President Edward G. Newman, President