License Agreement - DistributedMedia.com Inc. and NCT Group Inc.
LICENSE AGREEMENT
License Agreement made this 25th day of January, 1999 by and between
DistributedMedia.com, Inc., a Delaware corporation with offices at One Dock
Street, Suite 300, Stamford, Connecticut, 06902 USA, hereinafter referred to as
("Licensee" or "DMC") and NCT Group, Inc., a Delaware corporation with offices
at 1025 West Nursery Road, Linthicum, Maryland 21090, USA, ("NCT").
WHEREAS Licensee is engaged in the design, development, manufacture and
marketing of audio and video digital broadcasting systems together with
programming for such systems for various markets around the world; and
WHEREAS NCT is engaged in the development of Active Wave Management and related
technologies including but not limited to, flat panel transducer based audio
speaker technologies that have been applied to various fields and industries,
and is the owner of certain United States and foreign patents covering various
aspects of such technologies, which both parties believe can be applied to
digital broadcasting systems; and
WHEREAS Licensee is desirous of obtaining a license from NCT to develop, make,
use, and sell digital broadcasting systems incorporating NCT technology;
NOW THEREFORE, in consideration of the mutual covenants contained herein, as
well as other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. DEFINITIONS
As used herein, the terms described below have the following meanings.
1.1 "Affiliate" shall mean any legal entity which directly or indirectly, is
controlled by, is in control of, or under common control with the legal
entity with reference to which the term "Affiliate" is used.
1.2 "Confidential Information" shall mean the information described in Article
5 below and shall include any and all samples, models, prototypes,
drawings, specifications, formulas, algorithms, software, operating
techniques, processes, data, technical and other information, including
any information relating to the status of research or other investigations
being conducted, whether given in writing, orally, or in magnetic or other
electronic processing form to the extent that such information is not in
the public domain through other than a breach of this Agreement.
1.3 "DMC Product" shall mean a DMC designed audio and/or video digital
broadcasting system including DMC designed subsystems, components and
programming therefor.
1.4 "Improvement" shall mean any improvement, further invention, enhancement,
derivative product, technology, software, firmware, mask work, trade
secret, know-how, patent, patent application or other intellectual
property making use of, extending, based upon or relating to: (a) the
Licensed Patents or other NCT patents, the Licensed Technology or other
NCT technology or any combination thereof (hereinafter "NCT Improvements")
or (b) Licensee Technology (hereinafter "Licensee Improvements") provided
however, that no Sponsor Technology shall be deemed an Improvement.
1.5 The uncapitalized term "know-how", in general, shall have its usual and
accepted meaning, that is, inter alia, all factual knowledge and
information not capable of precise, separate description but which, in an
accumulated form, after being acquired as the result of trial and error,
gives to the one acquiring it an ability to produce and market something
which one otherwise would not have known how to produce and market with
the same accuracy or precision necessary for commercial success.
1.6 "Licensed Patents" shall mean all those patents and patent applications
owned by or licensed to NCT described in Exhibit A hereto and licensed to
Licensee under Article 2 below including any continuations,
continuations-in-part, divisions, extensions, reissues, re-examinations or
renewals of any of the foregoing.
1.7 "Licensed Product" shall mean a specific DMC Product embodying, employing,
based on or derived from all or part of the Licensed Patents and/or the
Licensed Technology.
1.8 "Licensed Technology" shall mean that unpatented technology owned by or
licensed to NCT described in Exhibit B hereto and licensed to Licensee
under Article 2 below.
1.9 "Licensee Technology" shall mean any and all existing and future
technology, now or hereinafter owned or licensed by or to Licensee and/or
its Affiliates (other than Licensed Patents and Licensed Technology),
including without limitation all know-how, trade secrets, methods,
operating techniques, processes, software, materials, technical data,
engineering information, formulas, specifications, drawings, machinery and
apparatus, patents, patent applications, copyrights and other intellectual
property relating thereto.
1.10 "Market" shall mean the worldwide market for DMC Products but excluding
those markets, if any, licensed to others on an exclusive basis by NCT
prior to the date hereof.
1.11 "NCT Technology License" shall mean the license to the Licensed Patents
and the Licensed Technology granted by NCT to Licensee under Article 2 of
this Agreement.
1.12 "Net Revenues" means the actual revenues received by Licensee from its
sale, lease or distribution of Licensed Products minus allowances for
commissions and trade discounts.
1.13 "Sponsor Technology" shall mean with respect to a party hereto (i) all
existing and future technology owned or licensed by or to a party and/or
its Affiliates which, by virtue of contract restrictions binding on such
party, cannot be disclosed or transferred to the other party hereto on the
same terms and conditions as Licensed Technology or Licensee Technology,
as the case may be; and (ii) all existing and future technology which
results from the combination of a party's technology and a third party's
technology, and which by virtue of contract restrictions binding on the
party in question, cannot be disclosed or transferred to the other party
hereto on the same terms and conditions as Licensed Technology or Licensee
Technology, as the case may be.
1.14 "Technical Information" shall mean technical, design, engineering, and
manufacturing information and data pertaining to the design, manufacture,
commercial production and distribution of Licensed Products and components
and parts thereof in the form of designs, prints, plans, material lists,
drawings, specifications, instructions, reports, records, manuals, other
written materials, computer programs and software and other forms or media
relating thereto.
1.15 The uncapitalized term "technology", in general, shall have its usual and
accepted meaning and shall include without limitation all know-how, trade
secrets, methods, operating techniques, processes, software, materials,
technical data, engineering information, formulas, specifications,
drawings, machinery and apparatus, patents, patent applications,
copyrights and other intellectual property relating thereto.
1.16 "Third Party Rights" shall mean rights in, to or under the Licensed
Patents and the Licensed Technology heretofore granted by NCT to third
parties and the rights thereto of their respective permitted sublicensees,
assigns and successors.
ARTICLE 2. The NCT Technology LICENSE
2.1 License to NCT Patents and NCT Technology. Subject to the terms and
conditions of this Agreement, NCT hereby grants to Licensee a license to
make, have made, use, sell and/or have sold Licensed Products which
incorporate or embody, or are covered or claimed by, or are based on one
or more of the Licensed Patents and/or Licensed Technology.
2.2 Limitations. The NCT Technology License shall be exclusive as against all
others for the manufacture, use and sale of Licensed Products in the
Market throughout the World subject to the Third Party Rights. Said
License is limited to: (a) the manufacture, use and sale of Licensed
Products and (b) the Market and NCT retains the unrestricted right to
manufacture, use and sell Licensed Products and to license others to do so
provided, that neither NCT nor any such licensee shall have any right to
sell Licensed Products in the Market. NCT also retains the right to
manufacture, use and sell products other than Licensed Products in the
Market and to license others to do so.
2.3 Sublicensing. The rights and licenses granted hereunder may be
sublicensed, by Licensee to any third party provided any such sublicense
prohibits further sublicensing without NCT's prior written consent in each
instance. Licensee also shall have the right to have Licensed Products
manufactured for it by others but only under nondisclosure agreements
implemented in accordance with the provisions of Articles 4 and 5 hereof.
2.4 Acceptance. Licensee hereby (i) accepts the rights under the NCT
Technology License granted to it by NCT under this Article 2, and (ii)
acknowledges that the rights that NCT has granted to Licensee hereunder
are limited to the manufacture, use and sale of Licensed Products in the
Market and are subject to the further limitations that may be described
elsewhere in this Agreement.
2.5 Patent and Copyright Notices. Licensee shall mark each Licensed Product
sold, leased, distributed or otherwise transferred and shall cause all
licenses, contracts and agreements with other parties for the sale, lease,
distribution, use or other disposition of Licensed Products to contain a
provision requiring, if feasible, such other parties to mark each Licensed
Product with a suitable legend identifying the Licensed Patents and
Licensed Technology with the appropriate patent or copyright notice, as
the case may be. If the Licensed Product is too small to have a legend
placed on it, Licensee will use all reasonable efforts to have a legend
placed on the software and/or packaging.
2.6 Product Marking. Licensee shall prominently mark each Licensed Product
sold, leased, distributed or otherwise transferred and shall cause all
licenses, contracts and agreements with other parties for the sale, lease,
distribution, use or other disposition of Licensed Products to contain a
provision requiring, if feasible, such other parties to prominently mark
each Licensed Product with a suitable legend identifying the Licensed
Product as being a product which incorporates NCT's technology and
including such words and logos as NCT may reasonably request. If the
Licensed Product is too small to have such a legend placed on it, Licensee
will use all reasonable efforts to have such a legend placed on the
software and/or packaging.
ARTICLE 3. LICENSE FEE AND ROYALTIES
3.1 License Fee. Upon the execution of this Agreement, Licensee shall pay NCT
$3,000,000 as a non-refundable license fee in partial consideration of the
rights granted hereunder.
3.2 Unit Royalties. Licensee shall pay NCT the royalties listed on Schedule C
with respect to Licensee's sale, lease, distribution or other transfer of
Licensed Products.
3.3 Sublicensing Royalties. Licensee shall pay NCT the royalties listed on
Schedule C with respect to sublicenses granted by Licensee for the
manufacture, use, sale, lease or other disposition or distribution of
Licensed Products.
3.4 Payment. Royalties payable under Sections 3.2 and 3.3 above shall be paid
to NCT within thirty (30) days from the end of the quarter of each
calendar year as provided in Article 7. Licensee agrees that NCT may
inspect its royalty/revenue records once a year upon thirty (30) days
notice, at NCT's own expense.
ARTICLE 4. DISCLOSURE OF INFORMATION, DATA AND KNOW-HOW
4.1 Disclosure. The parties shall disclose to each other such appropriate
Technical Information as may be reasonably required to accomplish the
purposes of this Agreement. It is agreed, however, that neither party
shall be obligated to disclose information, the disclosure of which has
been restricted by a third party, provided, however, if such information
is required in order to achieve the purposes of this Agreement, the party
which holds such information shall inform the other and use its best
efforts to obtain permission, which may consist of a license, from the
applicable third party to use such information for such purposes.
4.2 Treatment. All disclosed Technical Information which is Confidential
Information (as defined in Article 5 below) shall be kept confidential by
the receiving party in accordance with the further provisions of Article 5
below and will remain the property of the disclosing party.
ARTICLE 5. CONFIDENTIALITY
5.1 Definitions. Each party possesses and will continue to possess
confidential information relating to its business and technology which it
believes has substantial commercial and scientific value in the business
in which it is engaged ("Confidential Information"). Subject to Section
5.4, Confidential Information includes, but is not limited to, Technical
Information, trade secrets, processes, formulas, data, know-how,
discoveries, developments, designs, improvements, inventions, techniques,
marketing plans, strategies, forecasts, new products, software
documentation, unpublished financial statements, budgets, projections,
licenses, prices, costs, customer lists, supplier lists and any other
material regarded by the party possessing it to be confidential,
proprietary or a trade secret. In order to be afforded protection under
this Article 5 tangible forms of Confidential Information must be
identified as such at the time of disclosure and marked "Confidential
Information", "Proprietary Information" or in some other reasonable manner
to indicate it is confidential. Any Confidential Information disclosed
between the parties hereto orally or visually, in order to be subject to
this Agreement, shall be so identified to the receiving party at the time
of disclosure and confirmed in a written summary appropriately marked as
herein provided within ten (10) days after such oral or visual disclosure.
5.2 Treatment. Each party shall during the term of this Agreement and for a
period of five (5) years thereafter, hold in confidence and not disclose
to third parties except as specifically permitted under this Section 5.2
and Section 5.4 below any and all Confidential Information of the other
party disclosed directly or indirectly to it by the other party.
Each party shall take the following minimum safeguards with respect to the
Confidential Information of the other party:
(a) only those of its employees who need to receive the other party's
Confidential Information in order to carry out the purposes of this
Agreement shall have access to such information and such access shall
be limited to only so much of such information as is necessary for the
particular employee to properly perform his or her functions;
(b) all documents, drawings, writings and other embodiments which contain
Confidential Information of the other party shall be maintained in a
prudent manner in a secure fashion separate and apart from other
information in its possession and shall be removed therefrom only as
needed to carry out the purposes of this Agreement;
(c) all documents, drawings, writings and other embodiments of information
the security or safekeeping of which are subject to governmental
regulations shall be kept in accordance with those regulations;
(d) in no event shall a party receiving Confidential Information of the
other party disassemble, reverse engineer, re-engineer, redesign,
modify or alter any Confidential Information which it has received
from the other party or attempt any of the foregoing without first
obtaining the written consent of such other party in each instance.
(e) all employees and contractors who shall have access to Confidential
Information of the other party shall be under written obligation to
it; (i) to hold in confidence and not disclose all Confidential
Information made available to them in the course of their employment
in a manner equivalent to that set forth herein; (ii) to use such
Confidential Information only in the course of performing their
employment duties; and (iii) to assign to their employer or the party
retaining them all inventions or improvements relating to their
employer's business and conceived while in their employer's employ
unless such assignment is prohibited by applicable law.
Notwithstanding the foregoing, a party receiving Confidential Information
of the other party may disclose to its subcontractors and material and
component suppliers so much of such Confidential Information as is
necessary to enable such party to perform its duties and obligations
related to the accomplishment of the purposes of this Agreement provided
that such subcontractors and suppliers are obligated to such party in
writing; (i) to hold in confidence and not disclose such information in a
manner equivalent to that set forth herein; and (ii) not to use such
information except as authorized by such party.
In no event shall the party receiving Confidential Information of the
other party disassemble, reverse engineer, re-engineer, redesign, decrypt,
decipher, reconstruct, re-orient, modify or alter any Confidential
Information of the disclosing party or any circuit design, algorithm,
logic or program code in any of the disclosing party's products, models or
prototypes which contain Confidential Information or attempt any of the
foregoing without first obtaining written consent of the disclosing party
in each instance.
5.3 Return. All documents, drawings, writings and other embodiments of a
party's Confidential Information, as well as those produced, created or
derived from the disclosing party's Confidential Information which
incorporate the disclosing party's Confidential Information and all copies
thereof shall be returned promptly to it by the other party upon the
termination of this Agreement provided that the parties shall continue to
be bound by the provisions of Section 5.2 above.
5.4 Exclusions. Confidential Information shall not include information that;
(a) was at the time of disclosure in the public domain through no fault of
the party receiving it;
(b) becomes part of the public domain after disclosure to the party
receiving it through no fault of such party;
(c) was in the possession of the party receiving it (as evidenced by
written records) at the time of disclosure and was not acquired
directly or indirectly from the other party, or a third party, as the
case may be, under a continuing obligation of confidence of which the
party receiving it was aware;
(d) was received by the party receiving it (as evidenced by written
records) after the time of disclosure hereunder from a third party who
did not require it to be held in confidence and who did not acquire it
directly or indirectly from the other party under a continuing
obligation of confidence of which the party receiving it was aware;
(e) required by law or the rules of any relevant securities exchange to be
disclosed, but only to the extent of such required disclosure;
provided, that a party required to so disclose Confidential
Information shall use best efforts to notify the other party of such
potential disclosure so that such party may seek a protective order or
other remedies to maintain in confidence any such Confidential
Information; or
(f) was developed independently by the receiving party and without the use
of any Confidential Information received from the disclosing party
under this Agreement.
(g) is Confidential Information of the disclosing party which the
disclosing party has disclosed to third parties without restrictions
on use and disclosure comparable to those contained in this Article 5.
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ARTICLE 6. IMPROVEMENTS
6.1 NCT Improvements. In the event that Licensee individually or together with
NCT discovers, develops or creates any NCT Improvements during the term of
this Agreement, Licensee promptly shall grant and assign, on a quitclaim
basis, all of its rights of ownership in such NCT Improvements to NCT,
whether such NCT Improvements are patentable or non-patentable under the
laws of any country, subject to any governmental approvals that may be
required for such grant back and assignment, it being understood that any
such NCT Improvements that are not made the subject of a patent shall
constitute part of the Licensed Technology licensed to Licensee hereunder
and that any such NCT Improvements that are made the subject of a patent
shall constitute one of the Licensed Patents licensed to Licensee
hereunder.
In the event that NCT individually discovers, develops or creates any NCT
Improvements during the term of this Agreement which make use of, extend,
are based upon or relate to the Licensed Patents or the Licensed
Technology, then any such NCT Improvement that is not made subject of a
patent shall constitute part of the Licensed Technology licensed hereunder
and any such NCT Improvement that is made the subject of a patent shall
constitute a Licensed Patent licensed hereunder.
6.2 Licensee Improvements. In the event that NCT individually or together with
Licensee discovers, develops or creates any Licensee Improvements during
the term of this Agreement, NCT promptly shall grant and assign, on a
quitclaim basis, a fifty (50%) percent interest in and to all of its
rights of ownership in such Licensee Improvements to Licensee, whether
such Licensee Improvements are patentable or non-patentable under the laws
of any country, subject to any governmental approvals that may be required
for such grant back and assignment and thereafter all rights and interests
in and to such Licensee Improvement shall be owned equally by Licensee and
NCT and each party hereby grants to the other a royalty free, perpetual,
irrevocable license to use and exploit such Licensee Improvement.
In the event Licensee individually discovers, develops or creates any
Licensee Improvements during the term of this Agreement, Licensee shall be
the sole owner thereof. However, Licensee will promptly inform NCT of the
nature and scope of all such Improvements.
6.3 Joint Discoveries. In the event that Licensee and NCT jointly discover,
develop or create any intellectual property whether patentable or
non-patentable that is not an Improvement or is an Improvement not covered
by either Section 6.1 or 6.2 above, all rights and interest in and to such
intellectual property shall be owned equally by Licensee and NCT and each
party hereby grants to the other a royalty free, perpetual, irrevocable
license to use and exploit any such intellectual property.
6.4 Dual Improvements. In the event Licensee and NCT jointly discover, develop
or create any intellectual property whether patentable or non-patentable
that is or could be an Improvement under both Sections 6.1 and 6.2 above,
all rights and interest in and to such intellectual property shall be
owned equally by Licensee and NCT and each party hereby grants to the
other a royalty free, perpetual, irrevocable license to use and exploit
any such intellectual property.
6.4 Individual Discoveries. In the event that either Licensee or NCT
individually discover, develop or create any intellectual property whether
patentable or non-patentable, that is not an Improvement or is an
Improvement not covered by either Section 6.1 or 6.2 above, all rights and
interest in and to such intellectual property shall be owned by the party
discovering, developing or creating the same.
6.5 Further Assurances. The parties shall take all action legally permitted
that may be necessary or appropriate to assure full compliance with the
provisions of this Article 6 notwithstanding the fact that intellectual
property covered by this Article 6 may be discovered, developed or created
by an employee of one of the parties hereto.
ARTICLE 7. PAYMENTS, REPORTS AND RECORDS
Royalties shall be due and payable in U.S. dollars in immediately available New
York, New York funds within thirty (30) days after the last business day of each
March, June, September and December of each calendar year during the term of
this Agreement. If requested by NCT, Licensee shall direct its independent
certified public accountants at Licensee's expense to provide NCT with a
certified written royalty report (the "Royalty Report") for each calendar year
of this Agreement within sixty (60) days of the end of each calendar year of
this Agreement. Such Royalty Reports shall be prepared in accordance with the
standard reporting procedures of such independent certified public accountants
applied in a consistent manner. A similar Royalty Report shall be rendered and
royalty payment shall be made within sixty (60) days after termination of this
Agreement.
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ARTICLE 8. TERM
The term of this Agreement shall begin on the date hereof and, unless extended
or earlier terminated by the written agreement of the parties or the provisions
of Article 9 below, shall expire immediately upon either: (i) with respect to
rights granted under any patent hereunder, the expiration of that patent under
applicable law; or (ii) with respect to the other rights granted hereunder, upon
the expiration of the last to expire of the patents licensed hereunder.
ARTICLE 9. TERMINATION
9.1 General. This Agreement may be terminated prior to the end of the term
provided in Article 8 above under any of the following provisions of this
Article.
9.2 Breach. In the event of a material breach of this Agreement, if the
defaulting party fails to cure the breach within thirty (30) days, in the
case of a breach involving non-payment of amounts to be paid hereunder, or
sixty (60) days, in the case of any other kind of breach following its
receipt of written notice from the non-defaulting party specifying the
nature of the breach and the corrective action to be taken, then the
non-defaulting party may terminate this Agreement forthwith by delivering
its written declaration to the defaulting party that this Agreement is
terminated; provided any payment default will require the defaulting party
to pay interest in order to cover the default at the rate of the then
current prime rate at The Chase Manhattan Bank N.A.
9.3 Insolvency. If one of the parties becomes bankrupt or insolvent, or files
a petition therefor, or makes a general assignment for the benefit of
creditors, or otherwise seeks protection under any bankruptcy or
insolvency law, or upon the appointment of a receiver of the assets of a
party ("defaulting party") then the other party shall have the right to
immediately terminate this Agreement upon written notice to the defaulting
party provided, in any such instance, that said right of termination shall
be postponed for as long as the defaulting party continues to conduct its
business in the ordinary course.
9.4 Survival. Notwithstanding the termination of this Agreement under any of
the provisions of this Article 9, the terms and conditions of Articles 4
and 5, and those pertaining to the ownership of rights acquired under
Article 6 shall survive termination of this Agreement and shall continue
to be applicable and govern the parties with respect to the subject matter
thereof.
9.5 Document Return. Each party shall return to the other party within thirty
(30) days of the date of termination under either Article 8 or this
Article 9 all of the Technical Information and other Confidential
Information, received pursuant to this Agreement together with all other
tangible property received for the implementation of this Agreement.
ARTICLE 10. FORCE MAJEURE
In the event of enforced delay in the performance by either party of obligations
under this Agreement due to unforeseeable causes beyond its reasonable control
and without its fault or negligence, including, but not limited to, acts of God,
acts of the government, acts of the other party, fires, floods, strikes, freight
embargoes, unusually severe weather, or delays of subcontractors due to such
causes (an "Event of Force Majeure"), the time for performance of such
obligations shall be extended for the period of the enforced delay; provided
that the party seeking the benefit of the provisions of this paragraph shall,
within ten (10) days after the beginning of any such enforced delay, have first
notified the other party in writing of the causes and requested an extension for
the period of the enforced delay and shall use all reasonable endeavors to
minimize the effects of any Event of Force Majeure.
ARTICLE 11. APPLICABLE LAW
The terms and conditions of this Agreement and the performance thereof shall be
interpreted in accordance with and governed by the laws of the State of Delaware
and the United States of America.
ARTICLE 12. DISPUTE RESOLUTION
The parties agree to attempt in good faith to resolve any dispute arising out of
or in connection with the performance, operation or interpretation of this
Agreement promptly by negotiation between the authorized contacts of the
parties. If a dispute should arise, the authorized contacts will meet at least
once and will attempt to resolve the matter. Either authorized contact may
request the other to meet within fourteen (14) days, at a mutually agreed time
and place. If the matter has not been resolved within thirty (30) days of a
request being made for such a meeting, the authorized contacts shall refer the
matter to the representatives of the parties who are responsible for matters at
the policy or strategic level who shall meet within fourteen (14) days of the
end of the thirty (30) day period referred to above, at a mutually agreed time
and place.
<PAGE>
If the matter has not been resolved within thirty (30) days of a request being
made for this meeting, the parties shall proceed as follows:
(a) Any action, suit or proceeding where the amount in controversy as to
at least one party, exclusive of the interest and costs, exceeds one
million dollars (a "Summary Proceeding"), arising out of or relating
to this Agreement or the breach, termination or validity thereof,
shall be litigated exclusively in the Superior Court of the State of
Delaware (the "Delaware Superior Court") as a summary proceeding
pursuant to Rules 124-131 of the Delaware Superior Court, or any
successor rules (the "Summary Proceeding Rules"). Each of the parties
hereto hereby irrevocably and unconditionally (i) submits to the
jurisdiction of the Delaware Superior Court for any Summary
Proceeding, (ii) agrees not to commence any Summary Proceeding except
in the Delaware Superior Court, (iii) waives, and agrees not to plead
or to make, any objection to the venue of any Summary Proceeding in
the Delaware Superior Court, (iv) waives, and agrees not to plead or
to make, any claim that any Summary Proceeding brought in the Delaware
Superior Court has been brought in an improper or otherwise
inconvenient forum, (v) waives, and agrees not to plead or to make,
any claim that the Delaware Superior Court lacks personal jurisdiction
over it, (vi) waives its right to remove any Summary Proceeding to the
federal courts except where such courts are vested with sole and
exclusive jurisdiction by statute and (vii) understands and agrees
that it shall not seek a jury trial or punitive damages in any Summary
Proceeding based upon or arising out of or otherwise related to this
Agreement and waives any and all rights to any such jury trial or to
seek punitive damages.
(b) In the event any action, suit or proceeding where the amount in
controversy as to at least one party, exclusive of interest and
costs, does not exceed One Million Dollars (a "Proceeding"),
arising out of or relating to this Agreement or the breach,
termination or validity thereof is brought, the parties to such
Proceeding agree to make application to the Delaware Superior
Court to proceed under the Summary Proceeding Rules. Until such
time as such application is rejected, such Proceeding shall be
treated as a Summary Proceeding and all of the foregoing
provisions of this Section relating to Summary Proceedings shall
apply to such Proceeding.
(c) In the event a Summary Proceeding is not available to resolve any
dispute hereunder, the controversy or claim shall be settled by
arbitration conducted on a confidential basis, under the U.S.
Arbitration Act, if applicable, and the then current Commercial
Arbitration Rules of the American Arbitration Association
("Association") strictly in accordance with the terms of this
Agreement and the substantive law of the State of Delaware. The
arbitration shall be conducted at the Association's regional
office located closest to Licensee's principal place of business
by three arbitrators, at least one of whom shall be knowledgeable
in Active Technology and one of whom shall be an attorney.
Judgment upon the arbitrators' award may be entered and enforced
in any court of competent jurisdiction. Neither party shall
institute a proceeding hereunder unless at least sixty (60) days
prior thereto such party shall have given written notice to the
other party of its intent to do so. Neither party shall be
precluded hereby from securing equitable remedies in courts of
any jurisdiction, including, but not limited to, temporary
restraining orders and preliminary injunctions to protect its
rights and interests but such shall not be sought as a means to
avoid or stay arbitration.
(d) Licensee hereby designates and appoints The Corporation Trust
Company with offices on the date hereof at 1209 Orange Street,
Wilmington, DE 19801, as its agent to receive service of process
in any Proceeding or Summary Proceeding. NCT hereby designates
and appoints Corporation Service Company with offices on the date
hereof at 1013 Centre Road, Wilmington, DE 19805, as its agent to
receive such service. Each of the parties hereto further
covenants and agrees that, so long as this Agreement shall be in
effect, each such party shall maintain a duly appointed agent for
the service of summonses and other legal processes in the State
of Delaware and will notify the other parties hereto of the name
and address of such agent if it is no longer the entity
identified in this article.
ARTICLE 13. ANNOUNCEMENTS AND PUBLICITY; INDEPENDENT CONTRACTORS
Except for any disclosure which may be required by law, including appropriate
filings with the Securities Exchange Commission, neither party may use the
other's name or disclose the terms of this Agreement without the consent of the
other, which consent shall not be unreasonably withheld.
Each party to this Agreement is an independent contractor and neither shall be
considered the partner, employer, agent or representative of the other.
<PAGE>
ARTICLE 14. SEVERABILITY
If any part of this Agreement for any reason shall be declared invalid or
unenforceable, such decision shall not affect the validity or enforceability of
any remaining portion, which shall remain in full force and effect; provided,
however, that in the event a part of this Agreement is declared invalid and the
invalidity or enforceability of such part has the effect of materially altering
the obligations of any party under this Agreement, the parties agree, promptly
upon such declaration being made, to negotiate in good faith to amend this
Agreement so as to put such party in a position substantially similar to the
position such party was in prior to such declaration.
ARTICLE 15. RIGHTS OF ASSIGNMENT; SUCCESSORS AND ASSIGNS
Neither NCT nor Licensee shall have any right to assign this Agreement or any of
their respective rights or obligations under this Agreement to any third party
except by operation of law or with the prior written consent of the other party.
In the event Licensee wishes to assign any of its rights or obligations under
this Agreement to an Affiliate of Licensee, NCT's consent will not be
unreasonably withheld. In the event NCT wishes to assign any of its rights or
obligations under this Agreement to an Affiliate of NCT, Licensee's consent will
not be unreasonably withheld. The provisions of this Agreement shall inure to
the benefit of, or be binding upon, the successors and assigns of each party
hereto.
ARTICLE 16. NOTICES
Any notices under this Agreement shall be in writing and shall be deemed
delivered if delivered by personal service, or sent by telecopy or by first
class registered or certified mail, or same day or overnight courier service
with postage or charges prepaid. Unless subsequently notified in writing in
accordance with this Section by the other party, any notice or communication
hereunder shall be addressed to NCT as follows:
Noise Cancellation Technologies, Inc.
1025 West Nursery Road
Linthicum, Maryland 21090
Attention: President
Telecopy No: (410) 636-5989
to Licensee as follows:
DistributedMedia.com, Inc.
One Dock Street
Suite 300
Stamford, CT 06902
Attn: President
Telecopy no. (203) 348-4106
ARTICLE 17. TAXES
Licensee shall be solely responsible for any sales, use, occupational or
privilege taxes, duties, fees or other similar charges imposed by any
governmental authority in connection with the manufacture, sale, lease,
distribution, use or other disposition by Licensee of Licensed Products or the
Licenses granted hereunder. Any other taxes, including income taxes based on
royalties and other payments to NCT, shall be the responsibility of NCT.
ARTICLE 18. INDEMNIFICATION
Each of NCT and Licensee agrees to indemnify, defend, and hold harmless the
other party and each of its officers, directors, employees, agents, successors
and assigns (hereinafter referred to in the aggregate in this section as "the
Indemnified Party") against any and all losses, claims, damages, liabilities,
costs and expenses (including without limitation, reasonable attorneys' fees and
other costs of defense of every kind whatsoever and the aggregate amount of
reasonable settlement of any suit, claim or proceeding) which the Indemnified
Party may incur or for which the Indemnified Party may become liable on account
of any suit, claim or proceeding purporting to be based upon a failure to
perform obligations under this Agreement to be performed by the other party
(hereafter the "Indemnifying Party") and its employees or agents. The
Indemnified Party shall promptly advise the Indemnifying Party of any such suit,
claim or proceeding and shall cooperate with the Indemnifying Party in the
defense or settlement of such suit, claim or proceedings providing no settlement
shall be made without the consent of the Indemnified Party, which consent shall
not be unreasonably withheld. In any event, the Indemnified Party shall furnish
to the Indemnifying Party such information relating to such suit, claim or
proceeding as the Indemnifying Party shall reasonably request for use in
defending the same.
<PAGE>
ARTICLE 19. MAINTENANCE AND DEFENSE OF LICENSED PATENTS
Throughout the term of this Agreement, NCT shall maintain in force the Licensed
Patents. In this connection, NCT shall promptly pay all costs of any and all
continuations, continuations-in-part, divisions, extensions, reissues,
re-examinations, or renewals of the Licensed Patents, including, without
limitation, the costs and expenses of any and all attorneys, experts or other
professionals engaged in connection with any of the foregoing. In addition, NCT
shall actively protect the Licensed Patents and shall institute all such suits,
actions or proceedings for infringement of any of the Licensed Patents as may be
necessary in this regard and shall defend and save harmless Licensee against any
suit, damage claim or demand, and any loss, cost or expense suffered as a result
thereof (including reasonable attorneys fees), based on actual or alleged
infringement of any patent or trademark or any unfair trade practice resulting
from the exercise or use of any right or license granted under this Agreement.
Unless NCT shall have received the advice of counsel that success on the merits
is reasonably certain, NCT shall be excused from its duty to commence and/or may
withdraw from any enforcement action under the Licensed Patents and Licensee
shall then be free to pursue enforcement of the Licensed Patents in its own name
and at its sole expense and risk, but only to the extent such infringement
occurs in the Market. In the event NCT fails to protect the Licensed Patents as
aforesaid after notice of possible infringement from Licensee, Licensee shall be
entitled by itself to take proceedings in the name of and with the cooperation
of NCT to restrain any such infringement at Licensee's expense and for
Licensee's benefit. In the event NCT fails to defend and save harmless Licensee
as herein provided, Licensee shall be entitled by itself to take all action
necessary or advisable for its defense and shall be entitled to deduct all costs
and expenses incurred in such defense from the amount of any royalties payable
under this Agreement to the extent the same have not been covered by any amounts
awarded to Licensee under a settlement of or judgment rendered in such
proceeding. NCT shall take all such action as may be reasonably requested by
Licensee to assist Licensee in the proper prosecution of its defense. Where
Licensee proceeds alone and achieves an award from the official enforcement
forum in such an action brought by it, Licensee shall be entitled to retain such
award. However, any compromise of such enforcement action or concession of
invalidity or priority of invention of any patent whether in connection with an
enforcement action or any other proceeding shall require NCT's participation and
express prior written approval. If NCT has elected to participate in and share
in the expense of any such enforcement action, any award shall be shared equally
by NCT and Licensee.
Notwithstanding the foregoing, NCT shall have no liability to defend or pay
damages or costs to Licensee with respect to any claim of infringement which is
based on an implementation not designed by NCT or that is modified by others, or
used or combined in a manner not contemplated by the transfer of NCT Technology.
ARTICLE 20. WARRANTIES
NCT represents and warrants that it has the right, power and authority to enter
into this Agreement and to grant the licenses and other rights contained herein
to Licensee as herein provided and that none of the same will breach or be in
violation of any agreement, license, or grant made with or to any other party by
NCT and that to the best of NCT's knowledge and belief the Licensed Patents are
valid and do not infringe any other patent issued prior to the date hereof.
ARTICLE 21. DISCLAIMER
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, NCT HEREBY DISCLAIMS ANY
EXPRESS OR IMPLIED WARRANTY OF THE ACCURACY, RELIABILITY, TITLE, TECHNOLOGICAL
OR COMMERCIAL VALUE, COMPREHENSIVENESS OR MERCHANTABILITY OF THE LICENSED
PATENTS, THE LICENSED TECHNOLOGY, OR THE LICENSED PRODUCTS, OR THEIR SUITABILITY
OR FITNESS FOR ANY PURPOSE WHATSOEVER. NCT DISCLAIMS ALL OTHER WARRANTIES OR
WHATEVER NATURE, EXPRESS OR IMPLIED. NCT DISCLAIMS ALL LIABILITY FOR ANY LOSS OR
DAMAGE RESULTING, DIRECTLY OR INDIRECTLY, FROM THE USE OF THE LICENSED PATENTS,
THE LICENSED TECHNOLOGY, OR THE LICENSED PRODUCTS, OTHER THAN THOSE ARISING FROM
CLAIMS OF INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES; WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THIS DISCLAIMER EMBRACES CONSEQUENTIAL
DAMAGES, LOSS OF PROFITS OR GOOD WILL, EXPENSES FOR DOWNTIME OR FOR MAKING UP
DOWNTIME, DAMAGES FOR WHICH LICENSEE MAY BE LIABLE TO OTHER PERSONS, DAMAGES TO
PROPERTY, AND INJURY TO OR DEATH OF ANY PERSONS.
ARTICLE 22. SCOPE OF THE AGREEMENT
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior oral or written agreements
or understandings of the parties with regard to the subject matter hereof. No
interpretation, change, termination or waiver of any provision hereof shall be
binding upon a party unless in writing and executed by the other party. No
modification, waiver, termination, recession, discharge or cancellation of any
right or claim under this Agreement shall affect the right of any party hereto
to enforce any other claim or right hereunder.
<PAGE>
IN WITNESS THEREOF, Licensee and NCT have executed this Agreement effective as
of the date first written above.
DISTRIBUTEDMEDIA.COM, INC.
By: /s/ JAMES McMANUS
-----------------------
Title: President
Date: January 25, 1999
NCT GROUP, INC.
By: /s/ MICHAEL J. PARRELLA
-----------------------
Title: President
Date: January 25, 1999
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Exhibit A
NCT Patents
Licensed Patents
Patents
[To be added by supplement]
Patents Pending Under Filed Applications
Patents Pending [To be added by supplement]
[Page Break]
Exhibit B
Licensed Technology
1. The unpatented technology contained in the patent applications filed or to
be filed and listed on Schedule A hereto.
2. The unpatented technology contained in the following disclosures for which
patent applications are to be field:
1. Multimedia Broadcast Network;
2. Multimedia Broadcast Station; and
3. Method for Administering a Multimedia Broadcast Station.
3. The unpatented technology in NCT's possession which NCT is free to
disclose and which supports, amplifies, explains or enables the design or
manufacture of products embodying any of the claims of the Licensed
Patents.
[Page Break]
Exhibit C
Royalties
Unit Royalties (Article 3.2) shall be at the rate of 6%.
Sublicensing Royalties (Article 3.3) shall be at the rate of 20%.