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LEITCH TECHNOLOGY CORPORATION
- AND -
PATH 1 NETWORK TECHNOLOGIES INC.
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TECHNOLOGY LICENSE AGREEMENT
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MADE AS OF APRIL 10, 2000
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TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT is made on this 10th day of April, 2000.
B E T W E E N:
LEITCH TECHNOLOGY CORPORATION, a corporation incorporated
under the laws of Ontario
(hereinafter referred to as "Leitch")
- and -
PATH 1 NETWORK TECHNOLOGIES INC., a corporation incorporated
under the laws of Delaware
(hereinafter referred to as "Path 1")
RECITALS:
WHEREAS Leitch is engaged in the business of designing, manufacturing
and selling analog and digital electronic equipment that is used to receive,
distribute, process and switch high-quality video and audio signals through
broadcast networks;
AND WHEREAS Path 1 is engaged in the business of designing,
constructing and licensing systems which facilitate the delivery of video and
audio signals over an Internet Protocol network with negligible latency and
jitter;
AND WHEREAS Leitch wishes to license from Path 1 the Path 1
Intellectual Property (as defined below) and the Network Operating System (as
defined below) in accordance with the terms and conditions set out herein;
AND WHEREAS Leitch and Path 1 wish to set out their respective rights
to exploit the Path 1 Intellectual Property and the Network Operating System and
their agreement with respect to the payment of royalties and other terms and
conditions relating to the licensing of intellectual property contemplated
hereunder;
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the Parties agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
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1.1.1 "AFFILIATE" means, in respect of a Person, another
Person that Controls the first Person, is Controlled
by the first Person or is Controlled by the same
Person that Controls the first Person;
1.1.2 "AGGREGATE ANNUAL FEES" means the sum of all monies
or other consideration paid by Leitch or any of its
Affiliates to Path 1 or any of its Affiliates in the
applicable Exclusive Year, whether paid in accordance
with this Agreement or otherwise, including, without
limitation, all payments made by Leitch to Path 1
pursuant to Section 3.1, all payments made by Leitch
or any of its Affiliates to Path 1 or any of its
Affiliates relating directly or indirectly to the
Network Operating System, and any other consideration
paid by Leitch or any of its Affiliates to Path 1 or
any of its Affiliates in respect of products,
services or other benefits provided by Path 1 to
Leitch or any of its Affiliates or customers.
Notwithstanding the foregoing, however, Aggregate
Annual Fees shall not include any consideration paid
by Leitch and/or any of its Affiliates in exchange
for equity of Path 1 or any of its Affiliates;
1.1.3 "AGREEMENT" means this agreement, and all schedules
attached to this agreement, in each case as they may
be amended or supplemented from time to time, and the
expressions "HEREOF", "HEREIN", "HERETO",
"HEREUNDER", "HEREBY" and similar expressions refer
to this Agreement. Unless otherwise indicated,
references to "ARTICLES" and "SECTIONS" are to
articles and sections in this Agreement;
1.1.4 "ARM'S LENGTH LICENSEE" means any Person in which
neither Path 1 nor any Path 1 Affiliate directly or
indirectly owns any equity interest;
1.1.5 "BUSINESS DAY" means any day, other than Saturday,
Sunday or any statutory holiday in the Province of
Ontario or the State of California;
1.1.6 "CALENDAR DAY" means any day, including weekdays,
Saturdays, Sundays and statutory holidays in the
Province of Ontario or the State of California;
1.1.7 "CONFIDENTIAL INFORMATION" of a Party means any and
all information of a Party or any of its Affiliates
(in this definition called the "DISCLOSING PARTY")
which has or shall come into the possession or
knowledge of the other Party or any of its Affiliates
(in this definition called the "Recipient Party") in
connection with or as a result of entering into this
Agreement including information concerning the
Disclosing Party's past, present and future
customers, suppliers, Technology, and business,
provided that such information and material that a
Party discloses in a tangible form shall be labelled
as confidential or proprietary or, if disclosed
orally or in another intangible form, shall be
identified as confidential or proprietary prior to
disclosure, and shall be reduced to a writing
designated as confidential or proprietary and sent to
the Recipient Party within thirty (30) Calendar Days
after its initial disclosure. For the purposes of
this definition,
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"information" includes Know-How, data, patents,
copyrights, trade secrets, processes, techniques,
programs, designs, formulae, marketing,
advertising, financial, commercial, sales or
programming materials, written materials,
compositions, drawings, diagrams, computer
programs, studies, work in progress, visual
demonstrations, ideas, concepts, and other data,
in oral, written, graphic, electronic, or any
other form or medium whatsoever. Notwithstanding
the foregoing, "Confidential Information" does not
include the following information:
1.1.7.1 information disclosed in a tangible form
that is not labelled as confidential or
proprietary;
1.1.7.2 information disclosed orally or in another
intangible form that is not thereafter
reduced to writing, designated as
confidential or proprietary, and provided to
the Recipient Party within thirty (30)
Calendar Days after its initial disclosure;
1.1.7.3 information which is in the public domain
when it is received by or becomes known to
the Recipient Party or which subsequently
enters the public domain through no fault of
the Recipient Party (but only after it
enters the public domain);
1.1.7.4 information which is already known to the
Recipient Party at the time of its
disclosure to the Recipient Party by the
Disclosing Party and is not known by the
Recipient Party to be the subject of an
obligation of confidence of any kind;
1.1.7.5 information which is independently developed
by the Recipient Party without any use of or
reference to the Confidential Information of
the Disclosing Party and which such
independent development can be established
by evidence that would be acceptable to a
Court of competent jurisdiction; and
1.1.7.6 information which is received by the
Recipient Party in good faith without an
obligation of confidence of any kind from a
third party who the Recipient Party had no
reason to believe was not lawfully in
possession of such information free of any
obligation of confidence of any kind, but
only until the Recipient Party subsequently
comes to have reason to believe that such
information was subject to an obligation of
confidence of any kind when originally
received;
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1.1.8 "CONTROL" means the deemed control by one Person of
another in accordance with the following rules. A
Person (a "First Person") controls:
1.1.8.1 a body corporate if securities of the body
corporate to which are attached fifty
percent (50%) or more of the votes that may
be cast to elect directors of the body
corporate are beneficially owned by the
First Person;
1.1.8.2 an unincorporated Person, other than a
limited partnership, if fifty percent (50%)
or more of the ownership interests, however
designated, into which the unincorporated
Person is divided are beneficially owned by
the First Person and the First Person is
able to direct the business and affairs of
the unincorporated Person;
1.1.8.3 a limited partnership if that First Person
is the general partner of the limited
partnership;
1.1.8.4 any Person that is controlled, or deemed to
be controlled, by any of the Persons
specified in Sections 1.1.8.1, 1.1.8.2, or
1.1.8.3 above other than the First Person;
or
1.1.8.5 a Person (a "Second Person") where the
aggregate of:
1.1.8.5.1 any securities of the Second
Person that are beneficially owned
by the First Person; and
1.1.8.5.2 any securities of the Second
Person that are beneficially owned
by any Person controlled by the
First Person;
is such that, if the First Person and all of the
Persons, other than the First Person, referred to
in Sections 1.1.8.1, 1.1.8.2, or 1.1.8.3 above
that beneficially own securities of the Second
Person were one owner, that owner would control
the Second Person;
1.1.9 "CORE USE" means the general transport or switching
of data within a network (including, without
limitation, a consumer network, local area network,
metropolitan area network or wide area network), such
as that performed by network operating systems,
switches, routers, hubs, firewalls, gateways,
repeaters, bridges, general purpose NIC cards,
backbones and trunks;
1.1.10 "EFFECTIVE DATE" means April 10, 2000;
1.1.11 "ENHANCEMENTS" means repairs, corrections,
improvements, modifications, refinements, upgrades,
updates, enhancements, new
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features, new functions, new versions, and new
applications, in any form or medium whatsoever,
and all Intellectual Property Rights therein;
1.1.12 "EXCLUSIVE MARKET USE" means: the conversion of
Professional Material from video, audio and/or
associated data to packet data and the conversion of
Professional Material from packet data to video,
audio and/or associated data. Without limiting the
generality of the foregoing, "EXCLUSIVE MARKET USE"
includes, without limitation, the conversion of
Professional Material from Internet Protocol data
packets to video, audio and/or associated data, and
the conversion of Professional Material from video,
audio and/or associated data to Internet Protocol
data packets. For greater certainty, use in
connection with: consumer applications; corporate,
industrial, medical and scientific video; industrial
automation and control; still imaging;
teleconferencing; audio or video telephony;
videoconferencing; transaction processing; or any
Core Use shall not constitute "EXCLUSIVE MARKET USE";
1.1.13 "EXCLUSIVE TERM" means the Initial Exclusive Term and
any period during which the Initial Exclusive Term or
any renewal thereof is extended pursuant to Section
6.2;
1.1.14 "EXCLUSIVE YEAR" means:
1.1.14.1 the period commencing on the [****]
[****] and ending one (1) year
thereafter; and
1.1.14.2 each subsequent contiguous one (1) year
period during the Exclusive Term following
the previous Exclusive Year;
1.1.15 "FORCE MAJEURE" means: acts of God and the public
enemy; the elements; fire; accidents; vandalism;
sabotage; power failure; failure, delay or disruption
of transportation or telecommunications facilities;
civil or public disturbances; any laws, orders,
rules, regulations, acts or restraints of any
government or governmental body or authority, civil
or military, including the orders and judgments of
courts; third party non-performance caused by an
event of Force Majeure; and any other similar cause;
1.1.16 "INITIAL EXCLUSIVE TERM" shall have the meaning
ascribed to that term in Section 6.2;
1.1.17 "INITIAL TERM" shall have the meaning ascribed to
that term in Section 6.1;
1.1.18 "INTELLECTUAL PROPERTY RIGHTS" means:
1.1.18.1 any and all proprietary rights provided
under:
1.1.18.1.1 patent law;
***CONFIDENTIAL TREATMENT REQUESTED
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1.1.18.1.2 copyright law (including moral
rights);
1.1.18.1.3 trade-mark law;
1.1.18.1.4 design patent or industrial
design law;
1.1.18.1.5 semi-conductor chip, integrated
circuit topography or mask work
law; or
1.1.18.1.6 any other statutory provision or
common law principle applicable
to this Agreement, including
trade secret law,
which may provide a right in either ideas,
formulae, algorithms, concepts, inventions
or know-how generally, or the expression or
use of such ideas, formulae, algorithms,
concepts, inventions or know-how generally,
or the expression or use of such ideas,
formulae, algorithms, concepts, inventions
or know-how generally, or the expression or
use of such ideas, formulae, algorithms,
concepts, inventions or know-how; and
1.1.18.2 any and all applications, registrations,
licenses, sub-licenses, franchises,
agreements or any other evidence of a right
in any of the foregoing; and
1.1.18.3 all licenses and waivers and benefits of
waivers of the intellectual property rights
set out in Sections 1.1.18.1 and 1.1.18.2
above, all future income and proceeds from
the intellectual property rights set out in
Sections 1.1.18.1 and 1.1.18.2 above, and
all rights to damages and profits by reason
of the infringement of any of the
intellectual property rights set out in
Sections 1.1.18.1 and 1.1.18.2 above;
1.1.19 "INTERNET PROTOCOL" means the network layer protocol
used by computers to transmit, receive and process
data over the Internet;
1.1.20 "KNOW-HOW" means experience, skills and expertise in
non-tangible form relating to Technology and
consulting and advisory services relating to such
experience, skills and expertise;
1.1.21 [****]
***CONFIDENTIAL TREATMENT REQUESTED
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[****]
1.1.22 "NET TRUECIRCUIT PRODUCT REVENUE" means, in respect
of each TrueCircuit Product sold by Leitch or any
Leitch sublicensee, all monies or other consideration
collected by Leitch or such Leitch sublicensee, as
applicable, in connection with the sale of such
TrueCircuit Product, net of all: (i) taxes collected
by Leitch or such Leitch sublicensee, as applicable,
on such revenue (including, without limitation,
sales, use, goods and services, and other similar
taxes imposed by any federal, provincial, municipal
or other governmental body), credits (including
shipping and restocking costs, if applicable) and bad
debts; (ii) agency commissions; and (iii) shipping
costs, credit card transaction fees paid to or
deducted by third parties, and duties or brokerage
costs incurred by Leitch or such Leitch sublicensee,
as applicable, in each case calculated in accordance
with Canadian GAAP;
1.1.23 "NETWORK OPERATING SYSTEM" means a software kernel
including TrueCircuit Technology which, like a
computer operating system, allocates, manages and
controls the network resources including, without
limitation, [****], bandwidth, [****] and [****],
and collects statistics relating to these resources
and to the users thereof;
1.1.24 "NON-EXCLUSIVE MARKET USE" means any and all uses
other than Exclusive Market Uses;
1.1.25 "OFFER" shall have the meaning ascribed to that term
in Section 2.4;
1.1.26 "PARTIES" means Leitch and Path 1 and "PARTY" means
any one of them (as the context indicates);
1.1.27 "PATH 1 INTELLECTUAL PROPERTY" means:
1.1.27.1 all Technology, Technology Documentation,
Know-How and other Confidential Information
relating to the TrueCircuit Technology owned
or licensed by Path 1 as of the Effective
Date;
1.1.27.2 Enhancements to any of the Technology,
Technology Documentation, Know-How or other
Confidential Information identified in
Section 1.1.27.1;
1.1.27.3 any new Technology, Technology
Documentation, Know-How or other
Confidential Information relating to the
TrueCircuit Technology;
1.1.27.4 the Network Operating System; and
***CONFIDENTIAL TREATMENT REQUESTED
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1.1.27.5 any trade-marks, trade names, service marks,
logos or other distinguishing features of
Path 1 which Leitch is required to display
pursuant to Section 4.1 hereof;
1.1.28 "PERSON" means any individual, partnership, limited
partnership, joint venture, syndicate, sole
proprietorship, company or corporation with or
without share capital, unincorporated association,
trust, trustee, executor, administrator or other
legal personal representative, regulatory body or
agency, government or governmental agency, authority
or entity however designated or constituted;
1.1.29 "PROFESSIONAL MATERIAL" means:
1.1.29.1 audio or video signals created or
distributed by commercial Persons
(including, without limitation, producers
and broadcasters) for ultimate receipt or
use by non-commercial Persons; and
1.1.29.2 data relating to, describing or otherwise
used in connection with the signals
described in Section 1.1.29.1, including,
without limitation: specification, control
and monitoring data; closed captioning
information; teletext; and teleprompting
information.
Without limiting the generality of the foregoing,
"PROFESSIONAL MATERIAL" includes, without limitation,
audio or video signals created or distributed by
motion picture studios, television and cable networks
(including, without limitation, networks such as ABC,
NBC, CBS and FOX), radio stations and networks, and
entities licensed by the U.S. Federal Communications
Commission or any equivalent foreign regulatory
authority;
1.1.30 "PROPOSED LICENSEE" shall have the meaning ascribed
to that term in Section 2.2(ii)(A);
1.1.31 "ROYALTY-FREE PERIOD" means the period beginning on
the Effective Date and continuing for a period of
sixty (60) months from the [****];
1.1.32 "SUBLICENSE" means granting end-user licenses to
executable code to use, but not to modify, executable
versions of software provided in connection with
TrueCircuit Products;
1.1.33 "TECHNOLOGY" means computer programs, applications,
application programming and other interfaces,
integrations, applets, software, firmware, hardware,
mainframes, personal computers, servers,
client/server stations, network equipment,
semi-conductor chips, embedded software, routers,
communication lines and other equipment
***CONFIDENTIAL TREATMENT REQUESTED
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technology products, trade secrets, processes,
other intellectual property and technology, and
any services related to any of the foregoing
(including all Intellectual Property Rights
therein);
1.1.34 "TECHNOLOGY DOCUMENTATION" means all information,
instructions, manuals, designs, drawings, models,
samples, schematics, experimental or test data,
notes, charts, reports, specifications, prototypes
and other information:
1.1.34.1 relating to the development, use,
installation, implementation, integration,
set-up, configuration, operation, updating,
enhancement, modification, maintenance or
support of Technology; or
1.1.34.2 used in connection with the instruction and
training of individuals in the development,
use, installation, implementation,
integration, set-up, configuration,
operation, updating, enhancement,
modification, maintenance or support of
Technology,
in any form or medium whatsoever and whether or not
copyrightable, and all Intellectual Property Rights
therein;
1.1.35 "TERM" means the Initial Term and any period during
which the Initial Term or any extension thereof is
extended pursuant to Section 6.1;
1.1.36 "TRUECIRCUIT TECHNOLOGY" means Technology which is
designed to facilitate the real-time transport of
data over Internet Protocol networking
infrastructures and includes, without limitation, all
Enhancements to such Technology developed by Path 1
during the Term hereof; and
1.1.37 "TRUECIRCUIT PRODUCTS" shall have the meaning
ascribed to that term in Section 2.1.
1.2 HEADINGS AND TABLE OF CONTENTS
The inclusion of headings and a table of contents in this Agreement are
for convenience of reference only and shall not affect the construction
or interpretation hereof.
1.3 TECHNICAL TERMS
Each word and abbreviation which has a technical or trade meaning is
used in this Agreement in accordance with such recognized meaning.
1.4 CURRENCY
Except where otherwise expressly provided, all amounts in this
Agreement are stated and shall be paid in the lawful currency of the
United States.
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1.5 EXTENDED MEANINGS
Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing gender include
all genders. The terms "including" and "include" shall mean "including
without limitation" and "include without limitation", respectively.
1.6 LEGAL COUNSEL
The Parties acknowledge that their respective legal counsel have
reviewed and participated in settling the terms of this Agreement, and
that any rule of construction to the effect that any ambiguity is to be
resolved against the drafting Party shall not be applicable in the
interpretation of this Agreement.
1.7 AGREEMENT AND SCHEDULES AMENDMENTS AND SUPPLEMENTS
This Agreement, including each Schedule to this Agreement, may not be
amended or supplemented except by mutual written agreement of
authorized representatives of the Parties. Any such agreement shall
expressly state that it is intended to amend or supplement, as the case
may be, this Agreement.
ARTICLE 2
RIGHTS GRANTED
2.1 LICENSE OF PATH 1 INTELLECTUAL PROPERTY
During the Term, and subject to the following sentence, Path 1 grants
to Leitch a non-exclusive, worldwide license to use, copy, modify,
enhance, sell, distribute, support, maintain, and create derivative
works from the Path 1 Intellectual Property in connection with the
development, use and exploitation by Leitch of commercial products
which incorporate or exploit Path 1 Intellectual Property (each, a
"TRUECIRCUIT PRODUCT"). The license granted in this Section 2.1 shall
not include any rights to the source code of the Network Operating
System.
2.2 EXPLOITATION RIGHTS IN TRUECIRCUIT PRODUCTS
(i) During the Exclusive Term, Leitch shall have the
exclusive, worldwide right to make, have made, sell,
offer for sale, Sublicense, support, maintain and
otherwise exploit the TrueCircuit Products in
connection with commercial activities directed to the
Exclusive Market Use.
(ii) During the Exclusive Term, Leitch shall have the
exclusive, worldwide right to grant to any Person the
non-exclusive right to make, have made, sell, offer
for sale, Sublicense, support, maintain and otherwise
exploit the TrueCircuit Products in connection with
commercial activities directed to the Exclusive
Market Use, subject to the following:
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(A) prior to granting any rights to any Person
pursuant to this Section 2.2(ii), Leitch
shall provide written notice to Path 1
identifying the Person to whom Leitch
proposes to grant such rights (the "PROPOSED
LICENSEE");
(B) Path 1 may, within thirty (30) Calendar Days
following the receipt of such notice, notify
Leitch in writing that Leitch may not grant
any rights to the Proposed Licensee,
provided that Path 1 may only provide such
notice to Leitch if, in Path 1's reasonable
determination, there is a material and
foreseeable likelihood that the Proposed
Licensee's exercise of such rights shall
have a material adverse effect on Path 1's
commercial activities relating to the
Non-Exclusive Market Use;
(C) if Path 1 provides the notice referred to in
Section 2.2(ii)(B) within thirty (30)
Calendar Days following the receipt by Path
1 of the notice provided by Leitch pursuant
to Section 2.2(ii)(A), Leitch shall not be
entitled to grant the rights to such Person
pursuant to this Section 2.2(ii); and
(D) if Path 1 does not provide the notice
referred to in Section 2.2(ii)(B) within
thirty (30) Calendar Days following the
receipt by Path 1 of the notice provided by
Leitch pursuant to Section 2.2(ii)(A),
Leitch shall be entitled to grant the rights
to such Person pursuant to this Section
2.2(ii).
(iii) During the period commencing on the first Calendar
Day following the expiry of the Exclusive Term and
continuing for the duration of the Term, Leitch shall
have the non-exclusive, worldwide right to make, have
made, sell, offer for sale, Sublicense, support,
maintain and otherwise exploit the TrueCircuit
Products in connection with commercial activities
directed to the Exclusive Market Use.
(iv) During the Term, subject to any exclusive rights
granted by Path 1 in accordance with Section 2.4 and
the limitations thereon set forth in Section 2.4,
Leitch shall have the non-exclusive, worldwide right
to make, have made, sell, offer for sale, Sublicense,
support, maintain and otherwise exploit the
TrueCircuit Products in connection with commercial
activities relating to the Non-Exclusive Market Use.
The terms and conditions of this Agreement shall
apply to the exercise by Leitch of this right;
provided, however, the Parties agree to negotiate in
good faith such different or additional terms and
conditions governing the exercise by Leitch of this
right as may be commercially reasonable and
consistent with industry standard and which shall be
at least as favourable in all respects as the terms
and conditions extended to any other customer or
licensee of Path 1.
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(v) Leitch shall have no right to grant sublicenses under
this Agreement other than the rights specifically set
forth in Section 2.2 (ii) and the right to grant
Sublicenses specifically set forth in this Section
2.2.
2.3 QUALITY AND PERFORMANCE
Leitch shall design and manufacture TrueCircuit Products in accordance
with any reasonable quality and performance criteria provided by Path 1
to Leitch in writing. Leitch shall, upon request, provide on a loan
basis to Path 1 a reasonable number of samples of TrueCircuit Products
for testing, together with instruction and service manuals. In the
event that Path 1 shall provide Leitch with written notice that any
TrueCircuit Product offered for sale by Leitch does not comply with
such reasonable quality and performance criteria, Leitch shall, within
one hundred twenty (120) days of receipt of such notice from Path 1,
either a) remedy the noncompliance or b) suspend the sale of the same.
In addition, Leitch shall include in its agreements with its Proposed
Licensees requirements comparable to those contained in this Section
2.3.
2.4 RIGHT OF FIRST OFFER IN RESPECT OF PATH 1 INTELLECTUAL
PROPERTY
Path 1 shall have the right to grant to an Arm's Length Licensee the
exclusive right to use the Path 1 Intellectual Property to manufacture
products and to sell such products in connection with commercial
activities relating to any Non-Exclusive Market Use, provided that Path
1 shall not grant any such exclusive right without first providing
Leitch with the option to acquire that exclusive right in accordance
with the following procedure:
(i) Path 1 shall provide written notice to Leitch
specifying the major terms and conditions pursuant to
which Path 1 proposes to grant to Leitch the
exclusive right to use the Path 1 Intellectual
Property to manufacture products and to sell such
products in connection with commercial activities
relating to a Non-Exclusive Market Use (the "OFFER").
The terms and conditions proposed by Path 1 in the
Offer shall be reasonable, consistent with this
Agreement and consistent with industry standards;
(ii) Leitch shall provide written notice to Path 1
indicating whether it rejects the Offer or whether it
wishes to negotiate the terms of the Offer with Path
1 within fourteen (14) Calendar Days of the date
Leitch receives such notice. If Leitch does not
respond to Path 1 within such fourteen (14) Calendar
Day period, Leitch shall be deemed to have rejected
the Offer and Path 1 shall be governed by the
provisions of Section 2.4(vi);
(iii) if Leitch provides written notice to Path 1 that it
wishes to negotiate the terms of the Offer with Path
1 in accordance with Section 2.4(ii), then, for a
period of up to thirty (30) Calendar Days following
the date upon which Leitch received the Offer from
Path 1, Leitch and Path 1 shall negotiate exclusively
the terms upon which Leitch shall be exclusively
entitled to use the Path 1 Intellectual Property to
manufacture products and to sell
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such products in connection with commercial
activities relating to such Non-Exclusive Market
Use based upon the terms and conditions set out in
the Offer. The Parties may extend this thirty (30)
Calendar Day exclusive negotiating period upon
mutual written agreement;
(iv) if Leitch and Path 1 agree in writing to the terms
and conditions pursuant to which Leitch shall be
exclusively entitled to use the Path 1 Intellectual
Property to manufacture products and to sell such
products in connection with commercial activities
relating to such Non-Exclusive Market Use, then Path
1 shall grant such exclusive rights to Leitch;
(v) if Leitch and Path 1 fail to agree in writing to the
terms and conditions pursuant to which Leitch shall
be exclusively entitled to use the Path 1
Intellectual Property to manufacture products and to
sell such products in connection with commercial
activities relating to such Non-Exclusive Market Use
or if Leitch notifies Path 1 in writing that it
rejects the Offer, then Leitch shall be deemed to
have rejected the Offer;
(vi) if Leitch is deemed to have rejected the Offer
pursuant to Section 2.4(ii) or Section 2.4(v), then
Path 1 may grant the exclusive right to use the Path
1 Intellectual Property to manufacture products and
to sell such products in connection with commercial
activities relating to such Non-Exclusive Market Use
to any Arm's Length Licensee upon terms and
conditions which, taken as a whole, are not
materially more favourable than those offered to
Leitch, provided that Path 1 may not grant such
rights to any such Arm's Length Licensee later than
one hundred and eighty (180) Calendar Days after the
date that Leitch is deemed to have rejected the Offer
without Leitch's prior written consent. If Path 1
wishes to grant to any Arm's Length Licensee the
exclusive right to use the Path 1 Intellectual
Property to manufacture products and to sell such
products in connection with commercial activities
relating to a Non-Exclusive Market Use on terms and
conditions which, taken as a whole, are materially
more favourable than those offered to Leitch, Path 1
must first offer such more favourable terms to Leitch
on an exclusive basis, and the Parties shall attempt
to negotiate the exclusive right to use the Path 1
Intellectual Property to manufacture products and to
sell such products in connection with commercial
activities relating to such Non-Exclusive Market Use
in accordance with the provisions of this Section
2.4;
(vii) if Path 1 enters into an agreement with an Arm's
Length Licensee pursuant to which it grants to such
Arm's Length Licensee the exclusive right to use the
Path 1 Intellectual Property to manufacture products
and to sell such products in connection with
commercial activities relating to a Non-Exclusive
Market Use after complying with the requirements of
this Section 2.4, then Path 1 shall provide a copy of
such agreement to Leitch, and Leitch shall agree
that, subject to Section 2.4(viii), it shall not
knowingly sell any TrueCircuit Products within the
exclusive market
14
<PAGE>
segment granted by Path 1 to such Arm's Length
Licensee for so long as the Arm's Length Licensee
is granted exclusive rights in such market
segment. Notwithstanding anything else in this
Agreement, Leitch shall have no liability to Path
1, any Arm's Length Licensee, or any other Person
in the event that any TrueCircuit Products sold by
Leitch to Persons who are not within the exclusive
market segment granted by Path 1 to an Arm's
Length Licensee are sold within the exclusive
market segment granted to such Arm's Length
Licensee without Leitch's knowledge;
(viii) Notwithstanding Section 2.4(vii), Leitch shall have
the following rights with respect to any exclusive
market segment granted by Path 1 to an Arm's Length
Licensee:
(A) during the period commencing on the date
that Path 1 provides to Leitch a copy of the
agreement between Path 1 and the applicable
Arm's Length Licensee relating to such
exclusive market segment and continuing
until the earlier of: (a) [****]; or
(b) until inventory of TrueCircuit Products
and parts existing or ordered as of the
commencement of such period have been
exhausted, Leitch shall have the right to
sell and offer for sale TrueCircuit Products
to, and support and maintain TrueCircuit
Products sold by Leitch for, any Person in
the exclusive market segment granted to such
Arm's Length Licensee;
(B) during the period commencing on the date
that Path 1 provides to Leitch a copy of the
agreement between Path 1 and the applicable
Arm's Length Licensee relating to such
exclusive market segment and continuing for
a period of [****], Leitch shall
have the right to sell and offer for sale
TrueCircuit Products to, and support and
maintain TrueCircuit Products sold by Leitch
for, any Person in the exclusive market
segment granted to such Arm's Length
Licensee who purchased any TrueCircuit
Product from Leitch prior to the effective
date of the exclusivity granted by Path 1 to
such Arm's Length Licensee; and
(C) during the period commencing on the date
that Path 1 provides to Leitch a copy of the
agreement between Path 1 and the applicable
Arm's Length Licensee relating to such
exclusive market segment and continuing for
a period of [****], Leitch shall
have the right to provide support and
maintenance services relating to the
TrueCircuit Products sold by Leitch for any
Person in the exclusive market segment
granted to such Arm's Length Licensee who
purchased any TrueCircuit Product from
Leitch.
(ix) Path 1 shall not enter into an agreement with an
Arm's Length Licensee pursuant to which Path 1 grants
to such Arm's Length Licensee the
***CONFIDENTIAL TREATMENT REQUESTED
15
<PAGE>
exclusive right to use the Path 1 Intellectual
Property to manufacture products and to sell such
products in connection with commercial activities
relating to any Core Use unless such agreement
contains a provision requiring such Arm's Length
Licensee to sell such products to Leitch under
terms and conditions at least as favourable in all
respects as those extended to any other customer
or licensee of the Arm's Length Licensee.
2.5 NETWORK OPERATING SYSTEM
Path 1 shall develop a Network Operating System and shall enter into a
license agreement with Leitch pursuant to which Path 1 grants to Leitch
a license to use, and sell and distribute sublicenses to use, the
Network Operating System in connection with the development, use and
exploitation by Leitch of TrueCircuit Products in accordance with the
terms of this Agreement. The Network Operating System shall be supplied
in object code format only; however, Path 1 shall enter into a separate
source code escrow agreement with Leitch and an escrow agent acceptable
to both Leitch and Path 1. Such license agreement shall provide that
Leitch shall pay to Path 1 a license fee in respect of the Network
Operating System to be mutually agreed to by the Parties, which such
license fee shall:
(i) be consistent with similar license fees charged for
the right to use and exploit similar Technology in
the market segment in respect of which Leitch has the
right to use and exploit the Network Operating System
and be commercially reasonable based upon the value
of the market segment in respect of which Leitch has
the right to use and exploit the Network Operating
System, taking into account the market's size,
potential, competitive pressures and other
characteristics which affect its value;
(ii) be at least as favourable to Leitch as the most
favourable license fee paid by any Person to Path 1
for similar license rights to use and exploit similar
Technology in a market segment similar to the market
segment in respect of which Leitch has the right to
use and exploit the Network Operating System; and
(iii) subject to applicable competition or anti-trust laws,
be in an amount which, based on the characteristics
of the market in respect of which Leitch has the
right to use and exploit the Network Operating
System, enables Leitch to charge a price to its
customers for the Network Operating System which
includes a margin of no less than [****].
ARTICLE 3
ROYALTIES, FEES AND RELATED MATTERS
3.1 ROYALTY FOR PATH 1 INTELLECTUAL PROPERTY
***CONFIDENTIAL TREATMENT REQUESTED
16
<PAGE>
In consideration of the rights granted by Path 1 to Leitch pursuant to
Article 2, commencing on the first Business Day following the expiry of
the Royalty-Free Period and continuing in respect of each consecutive
three (3) month period thereafter, Leitch shall pay Path 1 a royalty in
respect of each individual TrueCircuit Product sold by Leitch or any
Leitch sublicensee for which Leitch or such Leitch sublicensee has
received full payment during such three-month period which is equal to
the lesser of:
3.1.1 [****]; and
3.1.2 [****] of the Net TrueCircuit Product
Revenue for such TrueCircuit Product.
3.2 PAYMENT PROCESS AND REPORTING
Within thirty (30) Calendar Days after the end of each three-month
period in respect of which a royalty payment is due, Leitch shall
provide to Path 1 a written report containing all relevant information
upon which Leitch's calculation of the royalty due and payable is
based. Within ten (10) Business Days after delivery of the report, Path
1 shall render to Leitch an invoice indicating the amount of the
royalty due for such period. All such royalty payments shall be due and
payable by Leitch within thirty (30) Calendar Days following the
receipt by Leitch of such invoice.
3.3 TAXES
Each Party shall be responsible for the payment of those taxes, duties,
and levies levied on that Party from time to time in relation to such
Party's performance pursuant to this Agreement. Where one Party is
required to collect and remit taxes payable by the other Party, that
Party shall so collect and remit such taxes. Without limiting the
generality of the foregoing, Leitch shall be entitled to withhold from
all fees payable to Path 1 hereunder all applicable withholding taxes
and to remit same to all applicable taxing authorities as required by
law.
3.4 AUDIT
Leitch will keep complete and accurate books and records containing
information reasonably necessary for the purpose of determining the
amount of royalties payable to Path 1 hereunder. At the request of Path
1, such books and supporting data will be made available, upon
reasonable notice during the Term of this Agreement and for a period of
two (2) years after its termination or expiration, for inspection by an
independent third party auditor selected by the Party requesting the
audit and reasonably acceptable to Leitch. In the event any such audit
reveals an error in the books and records relating to the royalties
payable to Path 1, the overpayment or deficiency will be paid by the
appropriate Party within thirty (30) calendar days after completion of
the audit. The cost of such audit will be paid by the Party requesting
the audit, provided that if such audit reveals an error adverse to the
auditing Party in excess of ten percent (10%), Leitch will pay, in
addition to the deficiency, the reasonable, documented fees and
expenses of such auditor.
***CONFIDENTIAL TREATMENT REQUESTED
17
<PAGE>
ARTICLE 4
TRADE-MARKS; STANDARDIZATION; PUBLIC ANNOUNCEMENTS
4.1 USE OF PATH 1 TRADE-MARK
Leitch agrees that it shall include, in all user manuals provided to
its customers in relation to any products or services which include
Path 1 Intellectual Property, an acknowledgement specifying that such
product or service includes Path 1 Intellectual Property, which
acknowledgement shall include a reference to the applicable trade-mark
of Path 1. The form of such acknowledgement shall be mutually agreed to
by the Parties. In addition, Leitch shall include in its agreements
with its Proposed Licensees a requirement that the Proposed Licensee
shall comply with provisions substantially similar to this Section 4.1.
4.2 STANDARDIZATION
Leitch and Path 1 each agree to market and promote the products and
services sold by the Parties hereunder in a manner designed to
encourage the widespread and universal adoption of such products and
services as the industry standard.
4.3 PUBLIC ANNOUNCEMENTS
Neither Party shall disclose or permit the disclosure to any other
person of the existence of this Agreement or any of the transactions
contemplated hereby unless such disclosure is approved in writing in
advance by the other Party or is required by any applicable law,
regulation (including, but not limited to, stock exchange regulations)
or legal process. Any public announcement or similar publicity with
respect to this Agreement or the transactions contemplated hereby shall
be issued, if at all, at such time and in such manner as is agreed by
the Parties.
ARTICLE 5
CONFIDENTIALITY, OWNERSHIP AND PROTECTION
5.1 CONFIDENTIALITY COVENANT
5.1.1 Each Party shall at all times, both during the term
of this Agreement and thereafter, keep and hold all
Confidential Information of the other Party in the
strictest confidence, and shall not use such
Confidential Information for any purpose, other than
as may be reasonably necessary for the performance of
its duties pursuant to this Agreement or as otherwise
expressly permitted by this Agreement, without the
other Party's prior written consent.
5.1.2 Each Party agrees:
(A) that it shall not disclose to any third
party or use any Confidential Information
disclosed to it by the other except as
expressly permitted in this Agreement; and
18
<PAGE>
(B) that it shall take all reasonable measures
to maintain the confidentiality of all
Confidential Information of the other Party
in its possession or control, which shall in
no event be less than the measures it uses
to maintain the confidentiality of its own
information of similar importance.
5.1.3 Notwithstanding any other provision of this Section
5.1, each Party may disclose Confidential
Information:
(A) to the extent required by a court of
competent jurisdiction or other governmental
authority or otherwise as required by law;
or
(B) on a "need-to-know" basis under an
obligation of confidentiality to its
Affiliates and to its and its Affiliates'
authorized agents, contractors, legal
counsel, accountants, banks and other
financing sources and their advisors.
5.1.4 The terms and conditions of this Agreement constitute
Confidential Information of each Party and shall not
be disclosed without the written consent of the other
Party which consent shall not be unreasonably
withheld or delayed.
5.1.5 Each Party acknowledges that its failure to comply
with the provisions of this Section 5.1 shall cause
irreparable harm to the other Party which cannot be
adequately compensated for in damages, and
accordingly acknowledges that the other Party shall
be entitled to obtain, in addition to any other
remedies available to it, interlocutory and permanent
injunctive relief to restrain any anticipated,
present or continuing breach of this Section 5.1.
5.2 RETURN OF CONFIDENTIAL INFORMATION
Upon the termination of this Agreement, each Party shall return to the
other Party or destroy, upon the other Party's request to that effect,
all Confidential Information of the other which is then in its
possession or control, and shall remove all digital representations
thereof in any form from all electronic storage media in its possession
or under its control.
5.3 PATH 1 INTELLECTUAL PROPERTY
Leitch acknowledges and agrees that, except as expressly provided
hereunder, Path 1 shall own all Intellectual Property Rights in all
Path 1 Intellectual Property including, without limitation, the Network
Operating System. Without limiting the generality of the foregoing,
Path 1 shall have the exclusive, worldwide right, at its own expense,
to pursue the registration of Intellectual Property Rights in the Path
1 Intellectual Property and to enforce its Intellectual Property Rights
therein. Leitch shall co-operate with Path 1, at Path 1's expense, in
the pursuit of registration of Intellectual Property Rights in the Path
1 Intellectual Property. Leitch further agrees that it shall promptly
notify Path 1 in
19
<PAGE>
writing of any infringement of any Intellectual Property Rights in any
Path 1 Intellectual Property of which it becomes aware and that it
shall co-operate with Path 1, at Path 1's expense, in enforcing Path
1's Intellectual Property Rights against third parties.
ARTICLE 6
AGREEMENT TERM, EXCLUSIVE TERM AND TERMINATION
6.1 DURATION OF AGREEMENT TERM
This Agreement shall begin on the Effective Date and shall continue for
a period of five (5) years (the "INITIAL TERM") unless terminated
earlier in accordance with Section 6.3. This Agreement shall
automatically renew for consecutive additional periods of five (5)
years unless:
6.1.1 terminated earlier in accordance with Section 6.3; or
6.1.2 either Party provides written notice to the other
Party on or prior to the Calendar Day which is ninety
(90) Calendar Days prior to the end of the
then-current Initial Term or renewal thereof
indicating that it wishes to terminate the Agreement
at the end of the then-current Initial Term or
renewal thereof; provided that Path 1 may only
provide such a notice of termination if the Exclusive
Term has expired as of the Calendar Day that Path 1
wishes to provide such notice of termination.
6.2 DURATION OF EXCLUSIVE TERM
6.2.1 The initial duration of the Exclusive Term shall be
the period beginning on the Effective Date and
continuing until the end of the first Exclusive Year
as described in Section 1.1.14.1 (the "INITIAL
EXCLUSIVE TERM"). The Exclusive Term shall thereafter
automatically renew for consecutive additional
periods of one (1) year (each of which, for greater
certainty, shall constitute an Exclusive Year) if, in
respect of the then-current Exclusive Year, Path 1
has received Aggregate Annual Fees equal to or
greater than the minimum Aggregate Annual Fees
requirement applicable to each such Exclusive Year.
The minimum Aggregate Annual Fees requirements
applicable to each of the first five (5) Exclusive
Year Periods are set out in Section 6.2.2 below. The
minimum Aggregate Annual Fees requirement applicable
to each Exclusive Year after the fifth (5th)
Exclusive Year shall be determined in accordance with
Section 6.2.3.
6.2.2 The Parties agree that the minimum Aggregate Annual
Fees requirement applicable to each of the first five
(5) Exclusive Years shall be as indicated in the
table below:
<TABLE>
<CAPTION>
-------------------------------------------------- -------------------------------------------------
EXCLUSIVE YEAR AGGREGATE ANNUAL FEES
-------------------------------------------------- -------------------------------------------------
<S> <C>
First $ 0
-------------------------------------------------- -------------------------------------------------
Second $2,000,000
-------------------------------------------------- -------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED
20
<PAGE>
-------------------------------------------------- -------------------------------------------------
Third $ 5,000,000
-------------------------------------------------- -------------------------------------------------
Fourth $10,000,000
-------------------------------------------------- -------------------------------------------------
Fifth $15,000,000
-------------------------------------------------- -------------------------------------------------
</TABLE>
6.2.3 The Parties agree to follow the process set out in
this Section 6.2.3 in order to determine the minimum
Aggregate Annual Fees requirement applicable to the
sixth (6th) and each subsequent Exclusive Year. No
later than ninety (90) Calendar Days prior to the end
of the then-current Exclusive Year, the Parties shall
meet and negotiate in good faith the Aggregate Annual
Fees requirement applicable to the following
Exclusive Year. The Parties agree that each such
Aggregate Annual Fees requirement shall be no less
than the Aggregate Annual Fees requirement applicable
to the preceding Exclusive Year and no greater than
one and one half (1.5) times the Aggregate Annual
Fees requirement applicable to the preceding
Exclusive Year.
6.2.4 Path 1 may reduce the Aggregate Annual Fees
requirement in any Exclusive Year or extend the
period of time in respect of which Leitch must
achieve such Aggregate Annual Fees requirement beyond
the Exclusive Year in the event that the actual
market conditions during such Exclusive Year are less
favourable than the forecasted market conditions for
such Exclusive Year.
6.3 TERMINATION
6.3.1 Either Party may terminate this Agreement by
providing written notice to the other Party if the
other Party commits a material breach of a material
term of this Agreement and fails to cure such breach
within thirty (30) Calendar Days of receipt of
written notice of such breach from the non-breaching
Party.
6.3.2 Either Party may terminate this Agreement if the
other Party: (i) becomes the subject of a voluntary
or involuntary petition in bankruptcy or any
proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of
creditors, if that petition or proceeding is not
dismissed within sixty (60) Calendar Days after
filing; (ii) suspends the operation of its present
business or liquidates its business assets; or (iii)
generally fails to pay its debts as such debts become
due or admits in writing its inability to pay its
debts.
6.4 EFFECTS OF TERMINATION OR EXPIRATION
Upon the termination or expiration of this Agreement, Leitch shall have
the following rights:
6.4.1 during the period commencing on the effective date of
such termination or expiration and continuing for the
earlier of: (a) [****]; or (b) until
***CONFIDENTIAL TREATMENT REQUESTED
21
<PAGE>
inventory of TrueCircuit Products and parts existing
or ordered as of the date of termination or
expiration have been exhausted;or expiration. Leitch
shall have the non-exclusive, worldwide right to sell
and offer for sale TrueCircuit Product to, and
support and maintain the TrueCircuit Products sold by
Leitch for, any Person in connection with commercial
activities relating to the Exclusive Market Use and
the Non-Exclusive Market Use;
6.4.2 during the period commencing on the effective date of
such termination or expiration and continuing for a
period of [****], Leitch shall have the
non-exclusive, worldwide right to sell and offer for
sale TrueCircuit Products to, and support and
maintain TrueCircuit Products sold by Leitch for, any
Person who purchased any TrueCircuit Product from
Leitch prior to the effective date of termination or
expiration of this Agreement;
6.4.3 during the period commencing on the effective date of
such termination or expiration and continuing for a
period of [****], Leitch shall have the right
to provide support and maintenance services relating
to the TrueCircuit Products sold by Leitch for any
Person who purchased any TrueCircuit Product from
Leitch; and
6.4.4 during the periods referred to in Sections 6.4.1 to
6.4.3, Leitch shall have a non-exclusive, worldwide
license to use, copy, modify, enhance, sell,
distribute, support, maintain, and create derivative
works from the Path 1 Intellectual Property as
required in order to exercise the rights set out in
each of Sections 6.4.1, 6.4.2, and 6.4.3,
respectively.
6.5 SURVIVAL
The provisions of Articles 5 and 7 and Sections 6.4, 6.5, 9.5 and
9.7 shall survive any termination or expiration of this Agreement.
ARTICLE 7
WARRANTY, INDEMNITY AND LIMITATION OF LIABILITY
7.1 LEITCH REPRESENTATIONS, WARRANTIES AND COVENANTS
Leitch represents, warrants and covenants to Path 1 as follows and
acknowledges that Path 1 has relied upon the completeness and accuracy
of such representations, warranties and covenants in entering into this
Agreement:
7.1.1 it has the corporate capacity to enter into this
Agreement and to perform each of its obligations
hereunder;
7.1.2 it has duly authorized, executed and delivered this
Agreement and this Agreement constitutes a legally
valid and binding obligation of it enforceable
against it in accordance with its terms except as
such enforcement may be limited by applicable
bankruptcy, insolvency and
***CONFIDENTIAL TREATMENT REQUESTED
22
<PAGE>
other laws of general application affecting the
enforcement of creditors' rights and subject to
general equitable principles; and
7.1.3 Leitch's performance of the obligations in this
Agreement shall comply with and shall neither
contravene, breach nor infringe any laws or
regulations applicable in Canada.
7.2 PATH 1 REPRESENTATIONS, WARRANTIES AND COVENANTS
Path 1 represents, warrants and covenants to Leitch as follows and
acknowledges that Leitch has relied upon the completeness and accuracy
of such representations, warranties and covenants in entering into this
Agreement:
7.2.1 it has the corporate capacity to enter into this
Agreement and to perform each of its obligations
hereunder;
7.2.2 it has duly authorized, executed and delivered this
Agreement and this Agreement constitutes a legally
valid and binding obligation of it enforceable
against it in accordance with its terms except as
such enforcement may be limited by applicable
bankruptcy, insolvency and other laws of general
application affecting the enforcement of creditors'
rights and subject to general equitable principles;
7.2.3 it is and shall be the legal and beneficial owner or
authorized licensor of all Intellectual Property
Rights in the Path 1 Intellectual Property free and
clear of all liens, charges and encumbrances to the
extent that the same may restrict or limit the
ability of Path 1 to perform its obligations or of
Leitch to exercise its rights under this Agreement
and Path 1 has the full power and authority to grant
the rights in the Path 1 Intellectual Property herein
contemplated without the consent of any other person;
7.2.4 Path 1 has not and shall not grant any rights or
licenses to the whole or any part of the Path 1
Intellectual Property or enter into any agreement or
understanding that would conflict with Path 1's
obligations or Leitch's rights under this Agreement;
7.2.5 no portion of the Path 1 Intellectual Property
contains or shall contain any disabling mechanism or
protection feature designed to prevent its use
including any clock, timer, counter, computer virus,
worm, software lock, drop dead device, Trojan horse
routine, trap door, time bomb or any other codes,
designs, routines or instructions that may be used to
access, modify, replicate, distort, delete, damage or
disable the Path 1 Intellectual Property or any
Technology on which the Path 1 Intellectual Property
is used or displayed except as specifically designed
into the Path 1 Intellectual Property of which Leitch
has actual knowledge; and
23
<PAGE>
7.2.6 Path 1's performance of the obligations in this
Agreement shall comply with and shall neither
contravene, breach nor infringe any laws or
regulations applicable in the United States of
America.
7.3 LIMITATION OF WARRANTY
THE WARRANTIES SET FORTH IN THIS ARTICLE 7 ARE THE ONLY WARRANTIES
PROVIDED BY EITHER PARTY HERETO. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
EACH PARTY HEREBY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT
LIMITATION, ALL WARRANTIES OF MERCHANTABLE QUALITY, NON-INFRINGEMENT OF
THIRD PARTY RIGHTS AND FITNESS FOR A PARTICULAR PURPOSE.
7.4 INDEMNITIES
7.4.1 Notwithstanding any other provision hereof, Leitch
agrees to defend, indemnify and hold Path 1 and its
Affiliates and their respective directors, officers
and employees harmless from and against all losses,
costs, damages, expenses and liabilities (including
reasonable legal fees) which they may suffer or incur
arising out of or as a result of or relating in any
manner whatsoever to any breach by Leitch of Section
7.1 or Section 5.1 of this Agreement.
7.4.2 Notwithstanding any other provision hereof, Path 1
agrees to defend, indemnify and hold Leitch and its
Affiliates and their respective directors, officers
and employees harmless from and against all losses,
costs, damages, expenses and liabilities (including
reasonable legal fees) which they may suffer or incur
arising out of or as a result of or relating in any
manner whatsoever to any breach by Path 1 of Section
7.2 or Section 5.1 of this Agreement.
7.5 INFRINGEMENT CLAIMS
7.5.1 If all or any portion of the Path 1 Intellectual
Property is, in Path 1's opinion, likely to or
otherwise does become the subject of a claim for
infringement of any Intellectual Property Rights,
Path 1 shall, at its option and its sole cost and
expense, either:
7.5.1.1 procure in favour of Leitch the right to use
the same as contemplated herein;
7.5.1.2 modify the same to become non infringing
provided that any such modification does not
impair the ability of such Path 1
Intellectual Property to conform to and
perform in accordance with the
specifications therefor or the intended use
of such Path 1 Intellectual Property; or
24
<PAGE>
7.5.1.3 replace the infringing portion of such Path
1 Intellectual Property with compatible,
equivalent and non-infringing Technology,
Technology Documentation, Know-How or
Confidential Information, as applicable.
7.6 LIMITATIONS ON LIABILITY
EXCEPT FOR EACH PARTY'S LIABILITY FOR BREACHES OF SECTIONS 5.1 AND 7.4
AND PATH 1'S OBLIGATIONS PURSUANT TO SECTION 7.5, WHICH SHALL INCLUDE,
WITHOUT LIMITATION, LIABILITY FOR SPECIAL, CONSEQUENTIAL, INDIRECT,
INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES AND LOSS OF PROFIT, THE
LIABILITY OF EACH PARTY TO THE OTHER PARTY IN RELATION TO THIS
AGREEMENT SHALL IN ALL CIRCUMSTANCES BE LIMITED TO DIRECT DAMAGES AND
NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT,
INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES OR LOSS OF PROFIT, WHETHER IN
CONTRACT, TORT OR OTHERWISE RESULTING FROM ANY CAUSE OF ACTION
WHATSOEVER, INCLUDING NEGLIGENCE, GROSS NEGLIGENCE, NEGLIGENT
MISREPRESENTATION AND/OR FUNDAMENTAL BREACH OR OTHER THEORY OF LAW.
ARTICLE 8
CONTRACT MANAGEMENT AND DISPUTE RESOLUTION
8.1 CONTRACT GOVERNANCE
The Parties agree to utilize the process set out in this Article 8 to
consult and render decisions relating to the interpretation and
implementation of this Agreement.
8.2 CONTACTS AND CONTACT MEETINGS
The Parties agree that each shall designate no more than two (2)
principal contacts for day-to-day liaison and management of their
relationship under this Agreement during the Term (the "Contacts").
Unless otherwise mutually agreed, the Contacts shall meet on a regular
basis in person or by telephone, but in any event no less than once a
month, in order to review the Parties' respective performance under
this Agreement, discuss relevant issues, and resolve or, upon mutual
agreement, escalate issues as necessary. The Contacts shall not have
any authority or right to either amend or revise this Agreement, nor to
waive any obligations, duties or responsibilities of either Party under
this Agreement. Each Party shall pay its own costs associated with its
respective Contacts.
8.3 JOINT MANAGEMENT COMMITTEE
Leitch and Path 1 shall form a management committee (the "Committee")
composed of two or more senior representatives of Leitch and two or
more senior representatives of Path 1 who shall, from time to time,
meet to review and discuss matters related to this Agreement. The
number of representatives of Leitch and Path 1 on the Committee shall
at all times be equal. The Committee in its discretion may invite the
participation of the
25
<PAGE>
Contacts or others in its deliberations. The Committee shall have
the right to implement the Agreement and make decisions of an
interpretive nature (including without limitation decisions
regarding issues to be put before the Committee as set forth
herein), but the Committee shall not have the authority or right to
either amend or revise this Agreement, or to waive any obligations,
duties or responsibilities of either Party under this Agreement.
Each Party shall pay its own costs associated with its respective
Committee representatives.
8.4 DISPUTE RESOLUTION AND APPLICABLE LAW
Leitch and Path 1 expressly agree to the following exclusive internal
dispute escalation provisions governing all performance and disputes
under this Agreement:
8.4.1 In the event that Leitch and Path 1 cannot resolve a
dispute under the Agreement in the normal course of
performance (including through recourse to the
Contacts), then each Party's designated Committee
members shall confer immediately and use reasonable
efforts to resolve the dispute within fifteen (15)
Calendar Days of their initial conference. No dispute
shall be considered resolved until both Parties have
agreed to the resolution in writing. The designated
Committee members shall mutually agree on the methods
by which they attempt to resolve any dispute such as,
for example, telephone and/or video conferences,
e-mail and fax communications, and/or face to face
meetings. The costs under this Subsection 8.4.1 shall
be shared equally by the Parties.
8.4.2 In the event that each Party's designated Committee
members cannot resolve a dispute under the Agreement
as specified in Section 8.4.1 above, then each
Party's respective Presidents (or an equivalent or
higher position) having responsibility for this
Agreement shall confer immediately and use reasonable
efforts to resolve the dispute within fifteen (15)
Calendar Days of their initial conference. No dispute
shall be considered resolved until both Parties have
agreed to the resolution in writing. The respective
Presidents (or equivalents) shall mutually agree on
the methods by which they attempt to resolve any
dispute such as, for example, telephone and/or video
conferences, e-mail and fax communications, and/or
face to face meetings. The costs under this
Subsection 8.4.2 shall be shared equally by the
Parties.
8.4.3 In the event that each Party's respective Presidents
(or equivalents) cannot resolve a dispute under the
Agreement as specified in Subsection 8.4.2 above,
then the Parties shall resolve such dispute by
arbitration administered by the American Arbitration
Association under its Commercial Arbitration Rules,
and judgment on the award rendered by the
arbitrator(s) may be entered in any court of
competent jurisdiction.
ARTICLE 9
GENERAL
26
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9.1 EXPENSES
Each of Leitch and Path 1 shall be responsible for the expenses
(including fees and expenses of legal advisers, accountants and other
professional advisers) incurred by it, respectively, in connection with
the negotiation and settlement of this Agreement and the completion of
the transactions contemplated hereby.
9.2 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid first-class
mail, by facsimile or other means of electronic communication or by
delivery as hereafter provided. Any such notice or other communication,
if mailed by prepaid first-class mail at any time other than during a
general discontinuance of postal service due to strike, lockout or
otherwise, shall be deemed to have been received on the fourth Business
Day after the post-marked date thereof, or if sent by facsimile or
other means of electronic communication, shall be deemed to have been
received on the Business Day following the sending, or if delivered by
hand shall be deemed to have been received at the time it is delivered
to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent
authority to accept deliveries on behalf of the addressee. Notice of
change of address shall also be governed by this Section. In the event
of a general discontinuance of postal service due to strike, lock-out
or otherwise, notices or other communications shall be delivered by
hand or sent by facsimile or other means of electronic communication
and shall be deemed to have been received in accordance with this
Section. Notices and other communications shall be addressed as
follows:
9.2.1 if to Path 1:
Path 1 Network Technologies Inc.
3636 Nobel Drive, Suite 275
San Diego, California
USA 92122
Attention: Douglas A. Palmer
Telecopier No.: (858) 450-4203
9.2.2 if to Leitch:
Leitch Technology Corporation
25 Dyas Road
North York, Ontario
Canada M3B 1V7
Attention: Reg Tiessen
Telecopier No.: (416) 445-4308
Copy to:
Attention: James J. Sterling
Telecopier No.: (416) 445-0125
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Notwithstanding the foregoing, any notice or other communication
required or permitted to be given by any Party pursuant to or in
connection with any arbitration procedures contained in any Schedule
hereto may only be delivered by hand or by facsimile or other means of
electronic communication.
9.3 TIME IS OF THE ESSENCE
Time is of the essence of this Agreement.
9.4 RELATIONSHIP OF PARTIES
This Agreement is not intended to, and none of the provisions of this
Agreement shall:
9.4.1 create a partnership between Leitch and Path 1;
9.4.2 create a fiduciary relationship between Leitch and
Path 1;
9.4.3 create a relationship of principal and agent between
Leitch and Path 1;
9.4.4 grant either Leitch or Path 1 any authority to bind
the other to perform any obligations to any third
party, or to hold itself out as having such authority
to third parties; or
9.4.5 create any joint or several liability between Leitch
and Path 1.
9.5 FURTHER ASSURANCES
Each of the Parties hereto shall promptly do, make, execute or deliver,
or cause to be done, made, executed or delivered, all such further
acts, documents and things as the other Party hereto may reasonably
require from time to time for the purpose of giving effect to this
Agreement and shall use commercially reasonable efforts and take all
such steps as may be reasonably within its power to implement to their
full extent the provisions of this Agreement.
9.6 SEVERABILITY
Any provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability and shall be severed from
the balance of this Agreement, all without affecting the remaining
provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction and
appropriate amendments shall be made to this Agreement to put the Party
who is disadvantaged by such invalidity or unenforceability in the same
financial position as if no provision hereof were invalid or
unenforceable. In the event that any portion of this Agreement shall
have been so determined to be or become invalid or unenforceable (the
"Offending Portion"), the Parties shall negotiate in good faith such
changes to this Agreement as shall best preserve for the Parties the
benefits and obligations of such Offending Portion.
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9.7 GOVERNING LAW
This Agreement shall be exclusively governed by, and construed in
accordance with, the laws applicable in the State of New York, United
States of America. Any state or Federal courts situated within the
State of New York shall have the exclusive jurisdiction to adjudicate
any dispute arising out of this Agreement. Each Party hereby:
9.7.1 submits and attorns to the exclusive jurisdiction of
the federal or state courts located in New York;
9.7.2 consents to service of process being effected upon
the other Party by registered mail sent to the
address set forth in Section 9.2 hereof;
9.7.3 waives the right to a trial by jury in any dispute
arising out of this Agreement.
9.8 REMEDIES CUMULATIVE
Unless otherwise expressly stated herein, all rights and remedies of
each Party under this Agreement are in addition to that Party's other
rights and remedies and are cumulative, not alternative.
9.9 FORCE MAJEURE
Any delay in or failure of performance by either Party under this
Agreement shall not be considered a breach of this Agreement and shall
be excused to the extent caused by an event of Force Majeure.
9.10 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by each of the Parties, their respective successors
and permitted assigns. Neither Party shall assign or subcontract all or
any portion of this Agreement without the other Party's prior written
consent. Notwithstanding the foregoing, either Party may assign this
Agreement or any of its rights or obligations hereunder to an Affiliate
or to a purchaser of all or substantially all of that Party's assets
without the other Party's prior consent. For the purposes of this
Section 9.10 a change in Control of a Party shall not constitute an
assignment.
9.11 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter of this Agreement. There are no
warranties, conditions, or representations (including any that may be
implied by statute) and there are no agreements in connection with such
subject matter except as specifically set forth or referred to in this
Agreement. No reliance is placed on any warranty, representation,
opinion, advice or assertion of fact made either prior to,
contemporaneous with, or after entering into this Agreement, or any
amendment or supplement thereto, by any Party to this Agreement or its
directors,
29
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officers, employees or agents, to any other Party to this Agreement
or its directors, officers, employees or agents, except to the
extent that the same has been reduced to writing and included as a
term of this Agreement, and none of the Parties to this Agreement
has been induced to enter into this Agreement or any amendment or
supplement by reason of any such warranty, representation, opinion,
advice or assertion of fact. Accordingly, there shall be no
liability, either in tort or in contract, assessed in relation to
any such warranty, representation, opinion, advice or assertion of
fact, except to the extent contemplated above.
9.12 WAIVER
A waiver of any default, breach or non-compliance under this Agreement
is not effective unless in writing and signed by the Party to be bound
by the waiver. No waiver shall be inferred from or implied by any
failure to act or delay in acting by a Party in respect of any default,
breach, non-observance or by anything done or omitted to be done by
another Party. The waiver by a Party of any default, breach or
non-compliance under this Agreement shall not operate as a waiver of
that Party's rights under this Agreement in respect of any continuing
or subsequent default, breach or non-compliance (whether of the same or
any other nature).
9.13 AGREEMENT DRAWN IN ENGLISH
The Parties confirm that it is their wish that this Agreement, as well
as all other documents relating hereto, including all notices, have
been and shall be drawn up in the English language only. Les parties
aux presentes confirment leur volonte que cette convention, de meme que
tous les documents, y compris tout avis, qui s'y rattachent, soient
rediges en langue anglaise.
9.14 COUNTERPARTS
This Agreement may be signed in counterparts (including counterparts
signed by facsimile transmission) and each of such counterparts shall
constitute an original document and such counterparts, taken together,
shall constitute one and the same instrument.
30
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IN WITNESS WHEREOF the Parties have executed this Agreement.
LEITCH TECHNOLOGY CORPORATION
By: /s/ J. A. MacDonald
-----------------------------
Name:
Title:
By: /s/ Reg J. Tiessen
-----------------------------
Name:
Title:
PATH 1 NETWORK TECHNOLOGIES INC.
By: /s/ Vera Moldt
-----------------------------
Name:
Title:
By: /s/ Michael Elliott
-----------------------------
Name:
Title:
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