EXHIBIT 10.42
PATENT LICENSE AGREEMENT
This Patent License Agreement (this "AGREEMENT") is made as of October
18, 2002 (the "EFFECTIVE DATE"), between Kinetech Inc., a Delaware corporation
having its principal place of business at 0000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 ("KINETECH") and Brilliant Digital Entertainment, Inc., a
Delaware corporation having its principal place of business at 0000 Xxxxxxx
Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("BRILLIANT") and
Altnet, Inc., a Delaware corporation having its principal place of business at
0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
("ALTNET") (Brilliant and Altnet together shall be referred to herein as the
"LICENSEE").
R E C I T A L S
A. Kinetech is the co-owner of United States Patent No. 5,978,791 and all
related intellectual property. The term "PATENT" will include U.S. Patent No.
5,978,791 and all improvements, modifications, continuations,
continuations-in-part, divisions, re-issues and re-examinations thereof.
B. Licensee desires to obtain a license to use the Patent (as defined
herein) in connection with exploiting various opportunities within the Permitted
Use (as defined in Section 1.1 below) in the Territory (as defined in Section
1.1 below) ("BUSINESS"). Kinetech is willing to provide Licensee with a license
to use the Patent in connection with Licensee's Business upon the terms of this
Agreement.
A G R E E M E N T
In consideration of the foregoing and the various obligations and rights
set forth below, the parties agree as follows:
ARTICLE 1
LICENSE
1.1 LICENSE GRANT. Subject to the terms and conditions set forth in this
Agreement, Kinetech grants Licensee only in the United States of America, its
territories, and its possessions, as well as any other country or geographic
region for which a patent application has been filed by Kinetech or a patent has
been issued to Kinetech that is, in all material respects, substantially similar
to the Patent ("TERRITORY,") a limited, non-exclusive (subject, however, to the
exclusivity terms set forth in Section 1.1.1 below), non-transferable,
revocable, sublicensable (subject to the terms set forth in Section 1.1.2 below)
right (the "LICENSE") under and to the Patent for the sole purpose of
developing, marketing, renting and/or selling products and/or services which,
without this License, would infringe or contribute to the infringement of any
claim of the Patent (as defined in this Section below) only within the
constraints of the permitted uses set forth in SCHEDULE 1.1 attached hereto and
by this reference incorporated herein (the "PERMITTED USE") and in connection
therewith, to use any method the practice of which, without this License, would
infringe or contribute to the infringement of any claim of the Patent. For
purposes of this Agreement, the term, "PATENT" includes any other United States
or foreign patent filed by, or issued or assigned to Kinetech or Xxxxxx Xxxxxxx
(or for which Kinetech otherwise has a right or ability to grant a license
under) that would be necessary for Licensee to conduct the Business or to
develop, market, and/or sell products and/or services embodying patent no.
5,978,791 within the scope of the Permitted Use, including without limitation,
any Improvements (as defined in Section 2.2 below), all additional applications
for, corresponding to and claiming the benefit of, and continuations, divisions,
reissues and foreign counterparts of same.
1.1.1 EXCLUSIVITY. Notwithstanding anything to the contrary contained
in Section 1.1 above and subject to the conditions contained in this Section
1.1.1, Kinetech agrees that Kinetech will not itself develop, market, lease
and/or sell, and will not offer or grant any license of the Patent to any third
party for the purpose of developing, marketing, leasing and/or selling, products
and/or services within the scope of the Permitted Use in the Territory that
would without a License of the Patent infringe the Patent for as long as the
rights under the Patent remain enforceable ("EXCLUSIVITY PERIOD"), and to this
extent, the License shall be deemed to be exclusive to Licensee. The Exclusivity
Period granted in this Section 1.1.1 shall, at Kinetech's sole reasonable
discretion, become void and the rights granted Licensee in this Section 1.1.1
shall be revoked and terminated upon the occurrence of any of the following
events, at which point the only rights of Licensee shall be the License as
granted in Section 1.1 above:
(a) If Licensee voluntarily ceases its substantial efforts as a
core business focus of Licensee to market and sell products and/or services
which embody the Patent within the Permitted Use to third parties that are not
Licensee Affiliated Companies (as defined in Section 1.1.2 below) in the
Territory; or
(b) If Licensee voluntarily ceases its substantial efforts to
facilitate the market expansion and exploitation of business opportunities for
the Business; or
(c) If Licensee involuntarily ceases exploitation of the
Business, due to legal enforcement or otherwise, for a period of six (6) months
or more, except if such involuntary cessation is caused by a third party claim
that the Patent infringes on such third parties' patent rights.
1.1.2 SUBLICENSING. Subject to the additional terms and conditions
set forth on SCHEDULE 1.1.2 attached hereto and by this reference incorporated
herein, Licensee may sublicense the rights granted to Licensee in the License
hereunder only to third parties that are not "Licensee Affiliated Companies" (as
defined below) and only for the purpose of (i) developing, marketing, renting
and/or selling products and/or services utilizing the invention embodied in the
Patent for the Permitted Use in the Territory, or (ii) a bona fide litigation
settlement or cross-licensing transaction; in each case on the condition that
Licensee delivers an execution copy of any such proposed sublicensing agreement
to Kinetech no later than ten (10) days prior to executing such sublicensing
agreement with a sublicensee pursuant to the notice provisions set forth in
Section 9.2 of this Agreement. Kinetech's failure to provide written notice of
objection pursuant to the notice provisions set forth in Section 9.2 of this
Agreement to any of the terms of such proposed sublicensing agreement within the
ten (10) day period referred to above shall constitute its agreement that the
rights to any the Patent granted in such sublicense agreement do not exceed the
rights granted by Kinetech to Licensee pursuant to this Agreement. Licensee
specifically agrees that the rights to the Patent granted in such sublicense
agreement may not exceed the rights granted by Kinetech to Licensee pursuant to
this Agreement as such may be determined by Kinetech in its sole reasonable
judgment. Furthermore, Licensee specifically agrees that Licensee may not grant
such sublicensees the right to further sublicense the Patent to related parties
or third parties. "LICENSEE AFFILIATED COMPANIES" shall mean any entity which is
directly or indirectly majority owned or controlled by either Licensee or in
which either Licensee directly or indirectly owns 5% or more of such entity's
outstanding equity securities.
1.2 CERTAIN LICENSE RESTRICTIONS. Licensee shall keep its rights to the
Patent hereunder free of any liens, claims or encumbrances of any type other
than liens that may be granted from time to time to lenders in connection with
senior and subordinated debt financing. Licensee is authorized to use the Patent
solely in accordance with the Permitted Use in the Territory. Licensee must
obtain Kinetech's prior written permission (which may be withheld by Kinetech in
Kinetech's sole discretion) before utilizing the Patent for any purpose not
specifically authorized as a Permitted Use or for any use, without exception,
outside the Territory.
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1.3 RETENTION OF RIGHTS. Subject to Section 1.1.1 only, Kinetech reserves
the right to use the Patent in any manner, or grant licenses, assign, convey,
transfer, sell or otherwise alienate the Patent to any third party for use
outside the field and scope of the Permitted Use, whether or not such use by
Kinetech or such third party is in direct competition with the business of
Licensee.
1.4 CONSIDERATION. As soon as practicable following the execution of this
Agreement, as consideration for the License, Licensee will issue to Kinetech a
warrant to purchase five million (5,000,000) shares of Licensee common stock
exercisable for a period of seven years following the Effective Date at an
exercise price of $0.001 per share ("WARRANT") pursuant to the Warrant Agreement
attached as EXHIBIT A ("CONSIDERATION"). Licensee specifically acknowledges and
agrees that the shares underlying the Warrant shall be included as part of the
next registration of Licensee's common stock filed by the Licensee under the
Securities Act of 1933, as amended (other than registrations on Form S-8
covering compensatory option plans), and that such registration shall be filed
no later than November 29, 2002. Licensee shall use all reasonable efforts to
complete such registration process before January 23, 2003.
1.5 STATUS. The status of Licensee under this Agreement is that of an
independent contractor and not an agent or employee of Kinetech for all
purposes, including without limitation payment of all taxes and assessments
which any state, federal, municipal or other taxing authority may impose.
1.6 MAINTENANCE. During the term of this Agreement, Kinetech shall take
all actions reasonably necessary to maintain the Patent. Licensee agrees to pay
Kinetech one third (1/3) of all expenses and/or fees (including attorneys fees
and filing costs) Kinetech incurs in maintaining the Patent, including without
limitation, all filings and other requirements regarding all improvements,
modifications, continuations, continuations-in-part, divisions, re-issues and
re-examinations thereof including all U.S. Patent and Trademark Office or Patent
Trial and Appeal Board administrative proceedings challenging the validity of
the Patent or any of the claims of the Patent. Licensee shall make such payments
to Kinetech within thirty (30) days of receiving an invoice from Kinetech.
ARTICLE 2
OWNERSHIP RIGHTS
2.1 EXCLUSIVE RIGHTS IN KINETECH. Licensee acknowledges that as between
Licensee and Kinetech, Kinetech has the exclusive, proprietary ownership and,
except for the License granted hereunder, use rights to the Patent. No title to
or ownership of the Patent in any form (except for the License) is transferred
to Licensee. All rights not expressly granted to Licensee are expressly reserved
by Kinetech.
2.2 IMPROVEMENTS.
2.2.1 IMPROVEMENTS TO THE PATENT. Licensee agrees that Kinetech will
have the sole and exclusive right, title, and interest (both legal and
equitable) to all of the intellectual property rights in all developments,
adoptions, enhancements or modifications that constitute improvements in or to
the Patent or otherwise fall within the scope of the Patent claims
("IMPROVEMENTS") made by either Licensee or Kinetech. Kinetech agrees that the
Improvements will be deemed (without the payment of additional royalties) part
of the License granted hereunder to Licensee. Neither Kinetech nor Licensee are,
however, obligated to make any Improvements. Furthermore, Licensee hereby
acknowledges and agrees that any Improvements made by Licensee, in any way, will
be deemed to be done under Kinetech's approval, direction and control and that
all such Improvements shall be considered a work made for hire and Kinetech
shall own all right, title and interest therein. Kinetech shall be considered
the author of the Improvements for
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purposes of copyright and thus shall own all the rights in and to the copyright
of the Improvements and only Kinetech shall have the right to copyright the
same, which Kinetech may do in its name or in such name as Kinetech may choose.
To the extent that the Improvements or the copyrights therein do not
automatically vest in Kinetech, Licensee hereby grants, assigns and transfers to
Kinetech all right, title and interest in and to the Improvements to the extent
that Licensee has had or will have any right, title or interest therein.
Kinetech shall have the sole and exclusive rights to all the Improvements and
any additions and modifications thereto throughout the world, whether such
rights currently exist or are recognized in the future, and in all media and
languages, whether now or subsequently existing. Licensee shall execute such
further instruments as Kinetech may request to evidence, establish, maintain or
protect Kinetech's rights in and ownership of the Improvements.
2.2.2 IMPROVEMENTS TO PROCESSES AND KNOW-HOW ANCILLARY TO THE PATENT.
Subject to the terms and conditions contained herein and notwithstanding any
provisions of this Agreement to the contrary, the parties agree that Licensee
shall own any improvement in, modification to or development of any method or
apparatus used for manufacturing and/or using products or services embodying the
Patents as well as any improvement in, modification to or development of any
know-how used for manufacturing and/or using products or services embodying the
Patents (collectively, "RELATED DEVELOPMENT"). The definition of "Related
Development" specifically excludes the Patent. Notwithstanding any other
provision of this Agreement, the parties acknowledge and agree that the Altnet
P2P software stack does not contain any protectible element of the Patent and
that, as between Licensee and Kinetech, Licensee has the exclusive, proprietary
ownership and use rights to the Altnet P2P software stack, together with all
code and other components thereof, whether developed by or for, or licensed to,
Licensee and any improvements or modifications thereto, including all know-how,
techniques, inventions and code relating thereto (collectively, the "ALTNET P2P
STACK").
2.3 ACKNOWLEDGMENTS. Each party acknowledges and agrees that they may
receive certain proprietary information of the other party marked as
confidential. All such information, specifically marked as confidential by a
disclosing party, shall constitute trade secrets of the disclosing party within
the meaning of the Uniform Trade Secrets Act ("TRADE SECRETS"). The confidential
obligations of a receiving party herein will cease as to Trade Secrets that: (1)
have become publicly known through no fault of the receiving party; (2) are
received by the receiving party properly and lawfully from a third party without
restriction on disclosure and without knowledge or reasonable suspicion that the
third party's disclosure is in breach of any obligations to the disclosing
party; (3) have been developed by the receiving party completely independent of
the delivery of Trade Secrets by the disclosing party hereunder; or (4) have
been approved for public release by written authorization of the disclosing
party, or (5) are required by judicial, legislative or regulatory process to be
disclosed (provided, that if any Trade Secrets are required by judicial,
legislative or regulatory process to be disclosed, the receiving party shall
provide the disclosing party with prompt written notice of any such request or
requirement so that the disclosing party may seek an appropriate protective
order or other appropriate remedy and/or waive compliance with the terms of this
agreement.)
2.4 PATENT MARKINGS. Licensee agrees to cause any products made by or for
Licensee which are covered by one or more claims of the Patent to have clearly
marked thereon, in a manner that is commercially reasonable and customary for
such category of products a patent notice listing the number(s) of the Patent.
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ARTICLE 3
CONFIDENTIALITY
3.1 DUTIES.
3.1.1 Due to the importance and sensitivity of the Trade Secrets
disclosed by Kinetech, Licensee agrees that during the Agreement Period and for
three years following the termination of this Agreement or the License for any
reason, Licensee shall (i) hold such Trade Secrets in confidence, (ii) not use
such Trade Secrets except for the purposes contemplated by this Agreement, (iii)
not publish or disclose such Trade Secrets to third parties unless authorized in
writing by Kinetech; and (iv) not permit any individual who is not in Licensee's
employment to use, publish, disseminate, disclose or have access to the Trade
Secrets, except for those third parties who have a need to know and who have
agreed in writing to maintain the confidentiality thereof.
3.1.2 Due to the importance and sensitivity of the Trade Secrets
disclosed by Licensee, Kinetech agrees that during the Agreement Period and for
three years following the termination of this Agreement or the License for any
reason, Kinetech shall (i) hold such Trade Secrets in confidence, (ii) not use
such Trade Secrets except for the purposes contemplated by this Agreement, (iii)
not publish or disclose such Trade Secrets to third parties unless authorized in
writing by Kinetech; and (iv) not permit any individual who is not in Kinetech's
employment to use, publish, disseminate, disclose or have access to the Trade
Secrets, except for those third parties who have a need to know and who have
agreed in writing to maintain the confidentiality thereof.
3.2 DUTY TO DISCLOSE. A receiving party shall with reasonable promptness
notify the disclosing party of any information which comes to the receiving
party's attention which does or might indicate that there has been any loss of
confidentiality arising from the receiving party's act or omissions concerning
the disclosing party's Trade Secrets, it being understood, however, that a party
that is required to provide such notice shall have no liability for any delay in
providing such notice if the party required to be notified is not materially
prejudiced by such delay. In such event, the receiving party will take all
commercially reasonable steps within its power to limit the spread of such
information, including but not limited to taking whatever legal action necessary
to terminate such spread. The disclosing party, in its sole discretion, will
have the right to take over and assume control of any such litigation, by
providing receiving party with written notice of its decision to do so, and the
receiving party will cooperate fully with the disclosing party in such
litigation.
3.3 TITLE PROTECTION. Licensee covenants that it shall not attack,
compromise, file suit against or in any manner attempt to vitiate or commit or
fail to take any action which could vitiate any of the rights, titles or
interests of Kinetech in the Patents.
3.4 SURVIVAL OF COVENANTS. Licensee's obligations under this Article 3
will survive the termination of this Agreement or any of this Agreement's
provisions, for any reason.
ARTICLE 4
WARRANTIES
4.1 KINETECH'S WARRANTIES. Kinetech warrants that, to the best of
Kinetech's actual knowledge on the Effective Date,: (i) Kinetech has sufficient
rights in the Patent, to grant the License; (ii) the Patent is valid and
enforceable, (iii) the 13 page document entitled "Claims Allowed in TrueNames
Continuation Application" provided to Licensee by Kinetech is an accurate and
complete description of a continuation of the Patent that has been granted by
the United States Patent and Trademark Office; (iv) no other person has the
right to grant any license or to practice or use the data processing system
described in the Patent within the scope of the Permitted Use and within the
Territory; and (v) Kinetech's license of the
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Patent pursuant to this Agreement does not, to the best of Kinetech's actual
knowledge on the Effective Date, infringe any rights of any third party under
any United States patent law.
4.2 WARRANTY EXCLUSION AND WAIVER. THE WARRANTIES SET FORTH IN SECTION 4.1
AND 4.3 ARE THE SOLE AND EXCLUSIVE WARRANTIES OF KINETECH UNDER THIS AGREEMENT.
KINETECH SPECIFICALLY DISCLAIMS AND LICENSEE SPECIFICALLY WAIVES ALL WARRANTIES
WHICH ARE NOT CONTAINED IN SECTION 4.1 ABOVE, WHETHER EXPRESS OR IMPLIED, ORAL
OR WRITTEN OR ARISING BY TRADE USAGE OR OTHERWISE, INCLUDING BUT NOT LIMITED TO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
4.3 MUTUAL REPRESENTATIONS AND WARRANTIES. Licensee and Kinetech hereby
each, with respect to itself, represents and warrants to the other as follows:
4.3.1 It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation;
4.3.2 It has all requisite corporate power and authority to own and
operate its properties and assets, to execute and deliver this Agreement and to
carry out the provisions of this Agreement;
4.3.3 The execution, delivery and performance of this Agreement by it
and the consummation by the it of the transactions contemplated hereby do not
and will not conflict with, or constitute a material default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, indenture or instrument to which the it is a party;
4.3.4 All corporate action on its part and on the part of its
officers, directors and stockholders necessary for the authorization of this
Agreement and the performance of all of its obligations hereunder has been
taken; and
4.3.5 This Agreement, when executed and delivered, shall be, valid and
binding upon it and enforceable in accordance with its terms, except: (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights;
and (ii) general principles of equity that restrict the availability of
equitable remedies.
ARTICLE 5
INDEMNIFICATION
5.1 KINETECH'S OBLIGATIONS. Subject to the limitations set forth in
Article 6 below, Kinetech shall defend, indemnify and hold harmless Licensee
from all liabilities and reasonable expenses (including but not limited to
attorneys' fees) judgments, fines or penalties which Licensee incurs that result
from any breach of Kinetech's representations, warranties or obligations under
this Agreement, whether such actions are civil, criminal, administrative or
investigative, including any associated appeals, provided that Licensee both (i)
notifies Kinetech in writing within thirty (30) days of receipt of notice of
such claim, action, suit or proceeding; and (ii) provides Kinetech with all
information within Licensee's possession that is required for the defense of
such suit. In the matter of a third party patent infringement claim, in lieu of
indemnification, Kinetech, at its sole option, may obtain for Licensee rights
equivalent to the License.
5.2 LICENSEE'S OBLIGATIONS. Subject to the limitations set forth in
Article 6 below, Licensee shall defend, indemnify and hold harmless Kinetech
from all liabilities and reasonable expenses (including but not limited to
attorneys' fees) judgments, fines or penalties which Kinetech may incur that
result from any claims, actions, suits or proceedings which arise due to actions
of Licensee which
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constitute a breach of Licensee's representations, warranties or obligations
under this Agreement, whether such actions are civil, criminal, administrative
or investigative, including any associated appeals, provided that Kinetech both
(i) notifies Licensee in writing within thirty (30) days of receipt of notice of
such claim, action, suit or proceeding; and (ii) provides Licensee with all
information within Kinetech's possession that is required for the defense of
such suit.
5.3 NOTICE OF CLAIMS. No later than ten (10) business days from receipt of
written notice of a suit or claim which involves the indemnification obligations
of the other party, each party to this Agreement will provide written notice to
the other party of the indemnifiable suit or claim in question. The party with
the indemnification obligation (the "INDEMNIFYING PARTY"), will select a
representative and/or counsel to assume primary responsibility for such claim or
suit, at its sole cost and expense.
5.4 SETTLEMENT OFFERS. The Indemnifying Party, at its sole expense, will
assume control of the negotiation of any settlement offer to or from a third
party, if such settlement is due to a claim or suit which involves the
Indemnifying Party's indemnification obligations under this Agreement. The party
being indemnified reasonably will assist the Indemnifying Party in any such
settlement, suit or proceeding, provided that such assistance will be at the
sole cost and expense of the Indemnifying Party. Unless Licensee and Kinetech
otherwise agree, no settlement shall limit, restrict or otherwise affect the
right of Kinetech or Licensee to carry on or conduct their business (then or in
the future) or require any payment to be made or license to be granted by
Kinetech or Licensee, or limit, restrict, make more expensive or less profitable
or otherwise adversely affect the manner in which Kinetech or Licensee carries
on or conducts its business (then or in the future).
ARTICLE 6
REMEDY LIMITATIONS
6.1 LICENSEE WAIVER OF DAMAGES AND REMEDIES. WITH THE EXCEPTION OF ANY
DAMAGES ARISING OUT OF THE PERFORMANCE OR FAILURE OF PERFORMANCE BY KINETECH
UNDER SECTION 3.1.2 OF THIS AGREEMENT, KINETECH DISCLAIMS AND WILL NOT BE LIABLE
FOR, AND LICENSEE WAIVES ANY CLAIMS OR REMEDIES LICENSEE MAY HAVE AGAINST
KINETECH FOR INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES
INCLUDING BUT NOT LIMITED TO DAMAGES ARISING FROM LOST PROFITS OR LACK OR LOSS
OF PRODUCTIVITY OF LICENSEE OR ANY OTHER INDIVIDUAL OR ENTITY WHICH ARISE OUT OF
ANY BREACH OF THIS AGREEMENT BY KINETECH OR ANY OBLIGATIONS KINETECH OWED TO
LICENSEE OR KINETECH'S BREACH OF WARRANTY, OR WHICH ARISE PURSUANT TO ANY TORT
(INCLUDING NEGLIGENCE AND STRICT LIABILITY, BUT EXCLUDING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OR OTHER CLAIM, OR FOR ANY CLAIM MADE AGAINST LICENSEE BY
ANY OTHER PARTY, EVEN IF KINETECH HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
CLAIM IN ADVANCE.
6.2 KINETECH WAIVER OF DAMAGES AND REMEDIES. WITH THE EXCEPTION OF ANY
DAMAGES ARISING OUT OF THE PERFORMANCE OR FAILURE OF PERFORMANCE BY LICENSEE
UNDER SECTION 3.1.1 OF THIS AGREEMENT, LICENSEE DISCLAIMS AND WILL NOT BE LIABLE
FOR, AND KINETECH WAIVES ANY CLAIMS OR REMEDIES LICENSEE MAY HAVE AGAINST
LICENSEE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES
INCLUDING BUT NOT LIMITED TO DAMAGES ARISING FROM LOST PROFITS OR LACK OR LOSS
OF PRODUCTIVITY OF LICENSEE OR ANY OTHER INDIVIDUAL OR ENTITY WHICH ARISE OUT OF
ANY BREACH OF THIS AGREEMENT BY LICENSEE OR ANY OBLIGATIONS LICENSEE OWED TO
KINETECH OR LICENSEE'S BREACH OF WARRANTY, OR WHICH ARISE PURSUANT TO ANY TORT
(INCLUDING NEGLIGENCE AND STRICT LIABILITY, BUT EXCLUDING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OR OTHER CLAIM, OR FOR ANY CLAIM MADE AGAINST
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KINETECH BY ANY OTHER PARTY, EVEN IF LICENSEE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH CLAIM IN ADVANCE.
6.3 EQUITABLE REMEDIES. Nothing in this Agreement, however, limits the
ability of Kinetech or Licensee to seek injunctive relief and other non-monetary
equitable remedies in matters involving breaches of obligations under this
Agreement including, without limitation, the provisions of Section 1, 3 and 4,
it being acknowledged that such breaches may cause a party to suffer irreparable
harm and may not be adequately compensated in damages. Nothing in this Agreement
prevents either Kinetech or Licensee from bringing such an action for injunctive
relief in lieu of exercising termination rights or in addition to seeking
damages under this Agreement.
ARTICLE 7
CERTAIN OBLIGATIONS OF LICENSEE AND KINETECH
7.1 BOOKS AND RECORDS. Licensee will keep accurate records concerning its
use of the Patent for three (3) concurrent year periods during the Agreement
Period and for a period of three (3) years following the Agreement Period, and
shall provide copies of such records to Kinetech upon Kinetech's request, and/or
shall allow Kinetech to examine Licensee's records at its premises and to copy
or make abstracts of such records, upon Kinetech providing five (5) days advance
notice of its intention to do so. Notwithstanding anything to the contrary
stated above, Licensee shall keep copies of all sublicensing agreements of the
License granted Licensee herein during the entire Agreement Period and for a
period of three (3) years following the Agreement Period.
7.2 INFRINGEMENT. Licensee shall notify Kinetech, in writing pursuant to
the notice provisions contained herein, of any reasonably suspected infringement
of the Patent in the Territory that is within the scope of the Permitted Use,
and shall inform Kinetech of any evidence of such infringement. In the event of
such infringement under the Permitted Use, when commercially reasonable under
the circumstances based on a reasonable expectation that recoverable damages
materially exceed expected litigation costs, Licensee shall have the obligation,
at Licensee's sole expense, to take whatever action necessary to enforce
Kinetech's and Licensee's rights in the Patent in the Territory. Kinetech shall
fully cooperate with the Licensee, at Licensee's sole expense, to deal with the
suspected infringement. With respect to any such claim and suits, Licensee shall
employ counsel as mutually agreed to by Licensee and Kinetech to direct the
litigation and any settlement thereof. Damages or other receipts received in
connection with such claims, whether settled or litigated, with regard to the
Patent as used in accordance with the Permitted Use in the Territory, less all
out-of-pocket expenses associated with such settlement or litigation ("NET
RECOVERY"), shall be paid upon receipt as follows: Kinetech shall be paid
twenty-five percent (25%) of the Net Recovery and Licensee shall be paid
seventy-five percent (75%) of the Net Recovery. If Licensee fails to take all
necessary action within twenty (20) days of receiving notice from Kinetech of
Kinetech's intent to take action on an infringement and if Kinetech reasonably
elects to take such action itself after such twenty (20) day notice, Licensee
agrees to pay, or reimburse Kinetech, for all costs (including attorney fees)
associated with such action.
7.3 ENFORCEMENT OF RIGHTS. Kinetech shall, during the Agreement Period,
enforce its contractual rights in its agreement with Cable and Wireless Co.
(formerly, Digital Island, Inc.) as such rights may affect the License of the
Patent herein to Licensee.
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ARTICLE 8
TERM AND TERMINATION
8.1 TERM AND TERMINATION. The term of the License granted to Licensee
hereunder will commence on the Effective Date and continue for the life of the
Patent ("AGREEMENT PERIOD"), as said Patent will be modified, improved and
updated from time to time, unless terminated earlier as provided for in this
Agreement.
8.2 OTHER CAUSES. This Agreement will terminate, at Kinetech's sole
reasonable discretion, prior to the expiration of the Agreement Period, upon the
occurrence of any of the following: (i) Licensee commits a material default
under this Agreement (including but not limited to its failure to make a payment
of any reasonably undisputed amounts owing to Kinetech when and as the same
become due) and such default remains uncured 30 days following delivery by
Kinetech to Licensee of written notice of default; (ii) Licensee attempts to
sell, mortgage, lease, license, assign, convey, transfer or sublicense the
Patent in contravention of the terms herein; or (iii) Licensee dissolves or
liquidates.
8.3 EFFECT OF TERMINATION. Immediately upon a termination of this
Agreement as identified in Section 8.2 above, all rights of Licensee hereunder
will terminate in their entirety. The termination of this Agreement or the
License, however, will not affect or impair any obligations or rights which
arose prior to the date of such termination or out of the facts or occurrences
which cause such termination. In addition to the survival provisions which may
be contained elsewhere herein, the provisions of Articles 2, 3, 5, 6, 7, 8 and 9
herein will survive the termination of this Agreement or the License for any
reason.
ARTICLE 9
GENERAL
9.1 NO AGENCY OR PARTNERSHIP. This Agreement does not make Licensee the
agent, legal representative, partner or joint venturer of Kinetech for any
purpose whatsoever. Licensee has no right to create any obligation or
responsibility, express or implied, on behalf of or in the name of Kinetech, or
to bind Kinetech in any manner or concerning any matter.
9.2 NOTICES. All notices which concern this Agreement shall be given in
writing, as follows: (i) by actual delivery of the notice into the hands of the
party entitled to receive it, in which case such notice shall be deemed given on
the date of delivery; (ii) by mailing such notice by registered or certified
mail, return receipt requested, in which case such notice shall be deemed given
five (5) days from the date of its mailing; (iii) by Federal Express, UPS, DHL
or any other overnight carrier, in which case such notice shall be deemed given
two (2) days from the date of its transmission; or (iv) by Facsimile or
telecopy, in which case such notice shall be deemed given on the date it is
sent. All notices which concern this Agreement shall be addressed as follows:
If to Licensee: with a copy to:
Brilliant Digital Entertainment, Inc. Business & Technology Law Group, LLP
0000 Xxxxxxx Xxxxxx Xxxxxxxxx 00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 Xxxxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer Attn: Xxxxxx Xxxxxxxx, Esq
9
If to Kinetech: with a copy to:
Kinetech Inc. Much Shelist Freed Xxxxxxxxx
0000 Xxxxxxxxxxxx Xxxxx Xxxxx & Xxxxxxxxxx, P.C.
Xxxxxxxxxx, Xxxxxxxx 00000 000 X. XxXxxxx Xx., Xxxxx 0000
Attn: Xxxx Xxxxxxx and Xxxxxxx, XX 00000-0000
Xxxxxx Xxxxxxx Attn: Xxxxx X. Xxxxx, Esq. and
L. Xxxxxx Xxxxxxxx, Esq.
9.3 USE OF LICENSEE'S NAME. Licensee agrees that Kinetech may use
Licensee's name and may disclose that Licensee is a licensee of the Patent in
Kinetech advertising, promotion and similar public disclosures, provided
however, that such advertising, promotion or similar public disclosures shall
not indicate, without Licensee's written consent, that Licensee in any way
endorses any Kinetech products.
9.4 APPLICABLE LAW. The laws of the State of Illinois will govern the
interpretation of this Agreement, irrespective of the fact that the one of the
parties now is or may become a resident of a different state. The parties will
submit all disputes which arise under this Agreement to state or federal courts
located in the City of Chicago, Illinois for resolution. The parties acknowledge
that the aforesaid courts will have exclusive jurisdiction over this Agreement,
and specifically waive any claims they may have which involve jurisdiction or
venue, including but not limited to forum non conveniens. Service of process for
any claim which arises under this Agreement shall be valid if made in accordance
with the notice provisions set forth in Section 9.2 of this Agreement. If
service of process is made as aforesaid, the party served agrees that such
service will constitute valid service, and specifically waives any objections
the party served may have under any state or federal law or rule concerning
service of process. Service of process in accordance with this Section will be
in addition to and not to the exclusion of any other service of process method
legally available.
9.5 CONSTRUCTION. This Agreement has been prepared and negotiations have
occurred in connection with such preparation pursuant to the joint efforts of
the parties to this Agreement. This Agreement therefore will be construed simply
and fairly and not strictly for or against any party to this Agreement.
9.6 COMPLIANCE WITH LAWS. Each party to this Agreement will comply with
all applicable laws and regulations.
9.7 NO ASSIGNMENT. Subject to the other provisions of this Agreement,
Licensee will not have the right to assign, transfer, sublicense, lease, or in
any manner convey all or any of its rights under this Agreement to unrelated
third parties without the express written consent of Kinetech, which consent
shall not be unreasonably denied. Notwithstanding, Licensee may assign all of
its rights under this Agreement to a purchaser of all or substantially all of
its assets without consent of Kinetech on the condition that such assignee of
this Agreement in such sale expressly agrees, in writing, to fulfill the terms
of this Agreement. In no event shall any assignment to a third party of the
License granted under this Agreement remove any liability of that third party
for any infringement of the Licensed Material which infringement occurred prior
to the date of such assignment.
9.8 BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of Kinetech and Licensee as well as their respective successors and
permitted assigns (in the case of Kinetech).
9.9 COMPLETE UNDERSTANDING. This Agreement constitutes the complete
understanding between the parties. No modification of any of this Agreement's
provisions will be valid unless made in a written instrument which both parties
sign.
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9.10 DESCRIPTIVE HEADINGS. All section headings, titles and subtitles are
in this Agreement for convenience of reference only, and are to be ignored in
any construction of this Agreement's provisions.
9.11 SEVERABILITY. If a court of competent jurisdiction rules that any one
or more of this Agreement's provisions are invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any of this Agreement's other provisions, and this Agreement will be construed
as if it had never contained such invalid, illegal or unenforceable provision.
Without limiting other provisions of this Agreement, the parties expressly
intend and agree that each and every limitation of liability, disclaimer of
warranties or exclusion of damages in this Agreement be severable and
independent of any other provision and be enforced as such. Further, the parties
expressly intend and agree that if any remedy in this Agreement is determined to
have failed of its essential purpose, all limitations of liability and
exclusions of damages set forth in this Agreement will continue to remain in
effect.
9.12 PRIOR AGREEMENTS SUPERSEDED AND PRIORITY OF THIS AGREEMENT. This
Agreement supersedes any prior understandings, written agreements, or oral
arrangements between the parties respecting the subject matter which this
Agreement addresses. The terms of this Agreement will govern if there is any
conflict between this Agreement and: (i) any purchase order of Licensee; and
(ii) any other written instrument which concerns or affects the subject matter
of this Agreement including but not limited to correspondence and promotional
materials. Each of the parties has relied specifically on the preceding as a
material condition to entering into this Agreement.
9.13 WAIVER. A party's attempted waiver, consent, or authorization of any
kind whatsoever, whether required under this Agreement, or granted pursuant to
any breach or default of any term of this Agreement, will not be effective or
binding upon such party unless the same is in writing and signed by such party.
Any such waiver, consent or authorization will be valid only to the extent
specifically set forth in such writing. No failure or delay on the part of
either party to this Agreement to exercise any right, remedy, power or privilege
in connection with this Agreement will preclude or limit any other or further
exercise of such right or the exercise of any other right, remedy, power or
privilege.
9.14 COOPERATION. Each party shall execute any instruments reasonably
believed by the other party to be necessary to implement the provisions of this
Agreement.
KINETECH INC., BRILLIANT DIGITAL ENTERTAINMENT, INC.,
a Delaware corporation a Delaware corporation
By: /S/ XXXXXX XXXXXXX By: /S/ XXXXX XXXXXXXXXX
----------------------------- --------------------------------
Its: PRESIDENT Its: CHIEF EXECUTIVE OFFICER
----------------------------- --------------------------------
ALTNET, INC.,
a Delaware corporation
By: /S/ XXXXX XXXXXXXXXX
------------------------------
Its: CHIEF EXECUTIVE OFFICER
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SCHEDULE 1.1
PERMITTED USE
The "Permitted Use" shall mean:
Identifying peer PC's with resident shareable copies of digital music, video,
images, files and/or games and facilitating a user's previewing, purchase,
performance or use of same, implemented as an Internet-wide public access
peer-to-peer network created through contributions of unrelated persons'
residual background computing resources on widely distributed, substantially all
non-ISP based, PCs.
Only to the extent of the above stated Permitted Use examples of Permitted Uses
include:
1) The peer-to-peer network transport system operated as of the Effective Date
by Altnet, Inc.
2) The software applications available as of the Effective Date from Blue
Falcon, Kontiki, Sharman Networks, Ltd., Grokster, Ltd, Imesh, Music City
Networks, LimeWire, and Bearshare
Permitted Use specifically excludes, without limitation:
1) The infrastructure services of one or more managed global content delivery
networks ("CDN") in which a customer's content is served faster, on
average, than if served from the customer's origin server or the CDN can
typically serve more users than a customer's origin server alone; where at
least some customer content on origin servers is replicated to possibly
many alternate servers of the CDN, many of said CDN servers being at ISP
sites, and where users' requests for origin content are satisfied by
directing them to CDN servers.
2) A peer-to-peer data storage system using devices that (i) are all commonly
owned or controlled, and (ii) are dedicated to enterprise class storage
(i.e., storage behind firewalls on dedicated storage devices).
Without limitation, examples of products and services outside the scope of the
Permitted Use include:
1) Cable and Wireless' (formerly Digital Island's) FootprintTM Service
2) Akamai's FreeFlowTM Service
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SCHEDULE 1.1.2
ADDITIONAL SUBLICENSING TERMS AND CONDITIONS
In addition to the terms and conditions set forth in this Agreement, the
following additional terms and conditions shall apply to Section 1.1.2:
1) All terms in this Agreement and any other agreements between the parties
relating to preserving and protecting the rights of Kinetech in and to the
Patent as well as all the obligations of Licensee to Kinetech set forth in
this Agreement and any other agreements between the parties, including
without limitation the provisions contained in Articles Two and Three of
this Agreement, shall be set forth with specificity in any such
sublicensing agreement; and
2) Any such sublicensing agreement shall specifically prohibit sublicensee
from enforcing the rights of Kinetech or Licensee in the Patent and
recovering damages from such enforcement.
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