SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 25, 1999
NESTOR, INC.
(Exact name of registrant as specified in charter)
Delaware 0-12-965 13-3163744
(State of other jurisdiction (Commission IRS employer
of incorporation) file number) identification no.
One Richmond Square, Providence, Rhode Island 02906
(Address of principal executive offices)
Registrant's telephone number, including area code: 401-331-9640
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
As of March 25, 1999, Nestor Traffic Systems, Inc. ("NTS"),
a wholly-owned subsidiary of the Corporation, sold an aggregate
of 135,000 initial shares of its common stock in a private
transaction to six accredited investors in consideration of the
payment of the aggregate sum of $2,350,000 and granted options to
purchase in whole, on or before January 31, 2000, 140,000
additional shares of common stock in consideration of the payment
of the aggregate sum of $1,750,000. The investor group includes
three officers of the Registrant and the subsidiary who in the
aggregate contributed $600,000 of the initial cash invested on the
same basis as third-party investors. Prior to the exercise of the
options, the Corporation will own 62.5% of the then issued and
outstanding shares of common stock of NTS and the investors will
own 37.5%. Subsequent to the exercise in whole of the Options,
the investors will own 55% and the Corporation will own 45% of
the issued and outstanding shares of NTS. The transaction is
described in the Subscription Agreement, which is annexed as an
exhibit hereto and in the License Agreement between the
Corporation and NTS dated January 1, 1999, which is annexed as an
exhibit hereto.
NTS is engaged in the business of developing various traffic
systems based upon the technology licensed to it by the
Corporation. One of these systems is known as CrossingGuard,
which offers to municipalities a new system of red light
enforcement and safety to road intersections. In addition, it
offers a system known as TrafficVision that uses video cameras to
monitor and analyze traffic flow and to send traffic data to a
central operations center.
EXHIBITS
The following exhibit is filed herewith:
Exhibit No. Description
4 Form of Subscription Agreement
10 License Agreement between Nestor, Inc.
and Nestor Traffic Systems, Inc. dated
January 1, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dated: April 23, 1999 NESTOR, INC.
(Registrant)
By:/s/ Herbert S. Meeker
Secretary
NESTOR TRAFFIC SYSTEMS, INC.
SUBSCRIPTION AGREEMENT
Nestor Traffic Systems, Inc.
One Richmond Square
Providence, Rhode Island 02906
Attn: Mr. David Fox, Chief Executive Officer
Gentlemen:
The undersigned subscriber (the "Subscriber") is a
member of the Carroll-Wiener Group Voting Trust (the "CWG") and
acknowledges having been advised by Nestor Traffic Systems, Inc.,
a Delaware company (the "Company"), that:
(a) The Company was organized on January 1, 1997, for the
principal purpose of utilizing the licensed neural network and
image-processing technology of Nestor, Inc. ("Nestor") of which
the Company is presently a wholly-owned subsidiary, to develop
products that use video cameras or other sensors to monitor
traffic flow, to send traffic data to a central traffic
operations center and for the purpose of completing the
development of the Company's CrossingGuardr products and funding
the rollout of such products. The business of the Company is
described in a business plan of the Company dated February 1,
1999 ("Business Plan"), receipt of which is hereby acknowledged
by the Subscriber.
(b) In order to finance the transactions contemplated by the
Business Plan, and to create available working capital for the
Company, the Company has offered for sale (the "Private
Placement") to members of the CWG security interests in the
Company (the "Shares"), such Shares to be issued in consideration
for the payment by the Subscriber.
(c) The sale of the Shares will be consummated no later than
March 25, 1999 (the "Closing Date").
(d) The Shares are being offered and sold in the Private
Placement pursuant to an exemption from the registration
requirements of Section 5 of the Securities Act of 1933, as
amended (the "Act"), by reason of the provisions of Section 4 (2)
of the Act and Rule 506 of Regulation D promulgated thereunder
and only to "accredited investors" as defined in Section 501 of
Regulation D.
(e) Upon Closing, but prior to the exercise of the Option
(described in paragraph 1 below) in full by the Subscribers, the
Board of Directors of the Company shall consist of a maximum of
seven members: three members designated by Nestor, three members
designated by CWG, and David Fox serving as the seventh member,
and the Chairman of the Board will be designated by CWG during
this period. After exercise or expiration of the Option the
seven member limitation shall be terminated.
Accordingly, the Subscriber is writing to advise you of the
following terms and conditions under which the Subscriber hereby
offers to subscribe (the "Offer") to participate in the Private
Placement and thereby acquire the Shares in (and become a
Stockholder of) the Company.
1. Subscription Payment
(a) Subject to the terms and conditions set forth in this
Agreement (the "Subscription Agreement"), the Subscriber hereby
tenders this Offer to purchase the Shares in the Company in the
amount set forth in this paragraph 1 and on the signature page
hereto (the "Subscription Amount"). Subject to the provisions of
this Subscription Agreement, the Subscriber agrees as follows:
(i) to purchase, and the Company will sell, (Shares) shares of
common stock, $.01 par value, of the Company (the "Initial
Shares") on or before March 25, 1999 (the "Closing"), and such
Initial Shares will represent an aggregate of approximately
(Percentage)% of the then issued and outstanding 360,000 shares
of common stock of the Company (Nestor holds 225,000 shares
(62.5%)), in consideration of payment to the Company of the sum
of (Amount); (ii) for valuable consideration, the receipt of
which is hereby acknowledged, on or before January 31, 2000 the
CWG has the right to purchase in whole, but not in part
("Option"), 87,500 additional shares of common stock, $.01 par
value, of the Company ("Additional Shares") in consideration of
the payment to the Company of an aggregate sum of $1,750,000, a
copy of such Option is attached as Schedule A; (iii) upon
exercise in whole of the Option and payment in full of the
Additional Shares, the Subscriber will be issued an additional
(Initial_Shars) Initial Shares such that the total Initial Shares
held by the Subscriber will represent approximately (Percentage)%
of the issued and outstanding 500,000 shares of Common Stock as
of the date of Option exercise. Upon exercise of the Option in
full by CWG, the Subscriber has the right to purchase, for $20
per Additional Share, (Addl_Shares) Additional Shares in the
Option in whole or in part, provided that: (a) if Subscriber
elects not to purchase the (Addl_Shares) Additional Shares in
full, any unpurchased Additional Shares will be offered to the
CWG pro-rata to those CWG members who exercised their options in
full, or (b) if Subscriber elects to purchase his Additional
Shares in full, Subscriber will be offered any unpurchased shares
of other CWG members pro-rata with all other CWG members who
subscribed to Additional Shares in full. Subscriber hereby
acknowledges that if the CWG fails to exercise the Option in
whole, no additional Initial Shares and no Additional Shares will
be issued, leaving 360,000 shares outstanding with Nestor holding
225,000 and the CWG holding 135,000. If the CWG exercises its
full Option, total outstanding shares will be 500,000; giving
effect to the issuance of such Initial and Additional Shares,
Nestor will hold 225,000 shares (45%), and the CWG, including the
Subscriber, will hold 187,500 Initial Shares (37.5%) and 87,500
Additional Shares (17.5%).
(b) The Company will pay and reimburse to Nestor for the direct
and indirect expenditures incurred by Nestor in support of the
Company for the period from January 1, 1999 to the date of the
Closing, such reimbursement (including amounts due for facility
and general administrative services defined below) will not
exceed $550,000, with $275,000 paid to Nestor on March 30,1999
and the balance due on December 31, 1999. In order to facilitate
the business of the Company, the Company will pay Nestor for
providing certain facility and general administration services to
the Company at a cost per month as determined in accordance with
the annexed Schedule B from the date of Closing and for so long
as such services are requested by the Company and provided by
Nestor, or until otherwise mutually agreed to by the Company and
Nestor.
(c) Payment of the Subscription Amount shall be made by delivery
to the Company at the address set forth above. In the
alternative, payment may be made by means of a wire transfer in
accordance with the wire transfer instructions furnished to the
Subscriber.
(d) Payment of the amount of the Subscriber's portion of the
Option set forth on the annexed Subscription Agreement Signature
Page with respect to the purchase of the Subscriber's Additional
Shares shall be made to the Company as provided in (c) above.
(e) Subject to the terms contained herein, this Subscription
Agreement shall be effective when it has been executed by the
Subscriber and accepted by Nestor and the Company.
THE SUBSCRIBER ACKNOWLEDGES THAT THE PURCHASE OF THE SHARES IN
THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK,
THE SUBSCRIBER CAN AFFORD A LOSS OF ITS ENTIRE INVESTMENT IN THE
COMPANY AND IT IS SUBSCRIBING TO AND THE SUBSCRIBER HAS AGREED TO
PURCHASE THE SHARES AFTER ADEQUATE INVESTIGATION OF THE PROPOSED
BUSINESS OF THE COMPANY.
2. Acceptance of Offer
It is understood and agreed that this Offer is made subject
to the following terms and conditions:
(a) The Company shall have the right to accept or reject this
Offer, in whole but not in part, for any reason or no reason,
including, but not limited to, ineligibility of the Subscriber
under the applicable federal, state or foreign securities laws.
If this Subscription Agreement is rejected, the Subscription
Amount of the Subscriber previously delivered will be returned to
the Subscriber at the address indicated on the Signature Page.
(b) Two copies of this Subscription Agreement will be executed
by the Subscriber on the Signature Page. If accepted, one copy
of the executed Subscription Agreement will be retained by the
Company and one copy of the executed Subscription Agreement,
after execution by the Company and Nestor, will be delivered to
the Subscriber.
3. Representations, Warranties and Agreements of the Subscriber
The Subscriber hereby represents and warrants to the Company
as follows:
(a) The address set forth at the bottom of this Subscription
Agreement is the Subscriber's true and correct residence, and the
Subscriber has no present intention of becoming a resident of any
other state or jurisdiction.
(b) The Subscriber understands that the Shares subscribed for
hereby have not been registered under the Act in reliance on the
exemption provided in Section 4(2) of the Act, and that there can
be no assurance that the Shares will ever be so registered.
Accordingly, the Subscriber acknowledges and agrees that it
cannot and will not sell, transfer, assign, hypothecate or pledge
the Subscriber's Shares being subscribed for hereby unless such
Shares either have been registered under the Act or, in the
opinion of counsel satisfactory to the Company and its counsel,
an exemption from such registration is available. In addition,
the Subscriber understands that there is no public market for the
Shares and that, in any event, any transfer of Shares is
restricted by this Subscription Agreement, including, without
limitation, the requirement that any such transfer be consented
to by the Company. The Subscriber further understands that the
Company is under no obligation to register under the Act the
Interest being subscribed for hereby on the Subscriber's behalf
or to assist the Subscriber in complying with any exemption from
registration or in registering the Shares under the Act.
Accordingly, the Subscriber may have to hold the Shares
indefinitely and that it may not be possible for the Subscriber
to liquidate the Subscriber's investment in the Company.
(c) The Shares hereby subscribed for are being acquired solely
for the Subscriber's own account, for investment purposes only,
and is not being purchased with a view to or for the resale,
distribution, subdivision or fractionalization thereof, and the
Subscriber has no present plans to enter into any contract,
undertaking, agreement or arrangement relating thereto other than
as provided in this Subscription Agreement.
(d) The Subscriber is not subscribing for the Shares as a result
of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any
seminar or meeting, or any solicitation of a subscription by any
person other than a representative of the Company.
(e) The Subscriber has such knowledge and experience in
financial, tax and business matters so as to enable the
Subscriber to utilize the information made available to the
Subscriber in connection with the Private Placement to evaluate
the merits and risks of an investment in the Shares, and to make
an informed investment decision with respect thereto.
(f) The Subscriber is not relying on the Company or any officer,
director of the Company or Nestor, or any agent thereof with
respect to the tax and other economic considerations of an
investment in the Shares.
(g) The Subscriber's overall commitment to investments which are
not readily marketable is reasonable in relation to the
Subscriber's net worth.
(h) The Subscriber acknowledges and is aware of the following:
(i) That the Company is a development stage company with limited
operating history;
(ii) That the Shares represent a speculative investment involving
a high degree of risk, and could result in the loss of the
Subscriber's entire investment in the Company;
(iii) That there is no guarantee that the Subscriber will
realize any gain from the Subscriber's investment in the Company
and may lose the Subscriber's entire investment; and
(iv) That it never has been represented, guaranteed or warranted
to the Subscriber by any broker, the Company or Nestor, their
respective officers, directors, its agents or employees, or any
other person, expressly or by implication, as to:
(A) The approximate or exact length of time the
Subscriber will be required to remain as a stockholder of the
Company; and
(B) The past performance or experience on the part of
the Company and Nestor or of any other person, that will in any
way indicate the predictable results or the ownership of the
Shares of the Company.
(i) The Subscriber and its attorney, accountants or advisers
have had the opportunity to ask questions of and receive answers
from the Company and Nestor as to all matters related to the
Company, the Business Plan and the Private Placement and have had
a reasonable opportunity to inspect all documents, records and
books pertaining to the purchase of the Shares.
(j) The Subscriber has received a complete copy of the Business
Plan (dated February 1, 1999), and the Subscriber agrees to be
bound by all of the terms of this Subscription Agreement.
(k) The Subscriber has not authorized any person or institution
to act as his "purchaser representative" (as such term is defined
in Rule 501 promulgated under the Act) in connection with the
Private Placement and/or this Offer.
(l) The Subscriber is an "accredited investor" as that term is
defined in Section 501 of Regulation D under the Act inasmuch as
the Subscriber meets the requirements of one or more of the
subparagraphs listed below as of the date of this Subscription
Agreement, and if there is any material change in such status
prior to the sale of the Shares or the exercise of the Option
described above, the Subscriber will immediately furnish such
revised or corrected information to the Company.
Please insert your initials in the appropriate box next to
the description applicable to you as the Subscriber.
(i) A natural person who had individual income of
more than $200,000 in each of the most recent two
years, or joint income with that person's spouse
in excess of $300,000 in each of the most recent
two years and who reasonably expects to reach that
same income level for the current year. For this
purpose, "individual income" means adjusted gross
income, as reported for federal income tax
purposes, less any income attributable to a spouse
or to property owned by a spouse, (A) increased by
the individual's share (and not a spouse's share)
of: (i) the amount of any tax exempt interest
income received, (ii) amounts contributed to an
IRA or Keogh retirement plan, (iii) alimony paid,
and (iv) the excluded portion of any long-term
capital gains, and (B) adjusted, plus or minus,
for any non-cash loss or gain, respectively,
reported for federal income;
(ii) A natural person whose individual net worth
is in excess of $1,000,000. For this purpose,
"net worth" means the excess of total assets at
fair market value, including home and personal
property, over total liabilities, provided,
however, for the purpose of determining a person's
net worth, the principal residence owned by an
individual shall be valued at cost, including the
cost of improvements, net of current encumbrances
upon the property or valued on the basis of a
written appraisal used by an institutional lender
making a loan secured by the property. For the
purposes of this provision, "institutional lender"
means a bank, savings and loan company, industrial
loan company, credit union, personal property
broker or a company whose principal business is as
a lender upon loans secured by real property and
which has such loans receivable in the amount of
$2,000,000 or more.
(iii) A trust, with total assets in excess of
$5,000,000, which is not formed for the purpose of
acquiring the LP Interests and whose purchase is
directed by a person who has such knowledge and
experience in financial business matters that such
person is capable of evaluating the risks and
merits of an investment in the LP Interests;
(iv) A corporation, a partnership, an
organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, or a
Massachusetts or similar business trust, not
formed for the specific purpose of acquiring the
LP Interests, with total assets in excess of
$5,000,000; or
(v) An entity in which all of the equity owners
meet the requirements of at least one of the above
subparagraphs for accredited investors.
(vi) Any director or executive officer of the
Company.
(m) The Subscriber hereby confirms its obligation to the Company
and Nestor to comply with the terms of the Company's right and
option to sell to the Subscriber its pro rata share of the
Private Placement in accordance with the provisions of paragraph
1.(a) at page 2 hereof; and the existence of technology license
and trademark agreements between Nestor and the Company. The
technology license agreement provides a royalty of from 0% to 10%
to Nestor calculated on the gross margin (gross revenues less
direct third-party costs of goods sold) the Company receives from
subject product sale, license, or other related services. Until
such time as there is a public offering of the securities of the
Company or Nestor's primary equity position in the Company is
less than 20%, the Subscriber agrees and understands that (i) no
merger, consolidation or sale of substantially all of the assets
of the Company can be consummated without the prior written
consent of Nestor, such consent not to be unreasonably withheld,
(ii) neither Nestor nor this Subscriber will sell or transfer any
of the Shares of the Company without first offering the Shares to
CWG Subscribers and Nestor on the same basis as being offered by
a bona fide third party purchaser, and (iii) no new
authorization, issuance, sale, retirement or other capital stock
transaction will be authorized by the Company without the express
written consent of Nestor.
(n) The foregoing representations, warranties and agreements are
true and accurate as of the date hereof and shall be true and
accurate as of the date of delivery of the Subscription Amount to
the Company (i.e., the Closing Date) and shall survive such
delivery. If in any respect such representations and warranties
shall not be true and accurate prior to acceptance of this
Subscription Agreement pursuant to Section 2 hereof, the
Subscriber shall give written notice of such fact to the Company,
specifying which representations, warranties and agreements are
not true and accurate and the reasons therefor.
4. Indemnification
The Subscriber acknowledges that the Subscriber understands
the meaning and legal consequences of the representations,
warranties and agreements contained in Section 4 hereof, and the
Subscriber hereby agrees to indemnify and hold harmless the
Company, Nestor, the officers and directors thereof and employees
and agents thereof and any person or entity controlling the
Company from and against any and all loss, damage, or liability
due to or arising out of a breach of any representation, warranty
or agreement of the Subscriber contained in this Subscription
Agreement.
5. No Waiver
Notwithstanding any of the representations, warranties,
acknowledgments or agreements made hereby by the Subscriber, the
Subscriber does not thereby or in any other manner waive any
rights granted to him under federal and state securities laws.
6. Transferability
The Subscriber agrees not to transfer or assign this
Subscription Agreement, or any of his interest herein, and
further agrees that any assignment or transfer of the Shares and
Additional Shares acquired pursuant hereto shall be made only in
accordance with this Subscription Agreement and all applicable
Federal and State securities laws.
7. Revocation
The Subscriber agrees that it shall not cancel, terminate,
or revoke this Subscription Agreement or any agreement of the
Subscriber made hereunder and that this Subscription Agreement
shall survive the death, incapacity or disability of the
Subscriber.
8. Truth and Survival of Representations, Warranties and
Agreements
Each of the representations, warranties and agreements made
or to be made by any party hereto pursuant to the terms of this
Subscription Agreement (a) shall be true and complete as of the
date made or to be made pursuant to the terms of this
Subscription Agreement, (b) shall be deemed to have been made
again by such party as of the acceptance of this Offer, (c) shall
be deemed material, and (d) shall survive the acceptance of this
Offer on the Closing Date as contemplated by this Subscription
Agreement and any investigation at any time made by or on behalf
or either party thereto.
9. Miscellaneous
(a) All notices or other communications given or made hereunder
shall be in writing and shall be delivered or mailed by
registered or certified mail, return receipt requested, postage
prepaid, to the Subscriber at the address of the Subscriber set
forth below or to the Company at its address set forth at the
outset of this Subscription Agreement.
(b) This Subscription Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware without
giving effect to conflict of law principles applied in such
state.
(c) The term "its" shall be applicable regardless of the gender
or form of the entity of the Subscriber.
(d) This Subscription Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by all
parties, and supercedes any previous agreements (written or oral)
and discussions among the parties.
10. Power of Attorney
The Subscriber hereby appoints Robert Carroll as its lawful
attorney-in-fact in its name, place and stead, in any way the
Subscriber could do or act if personally present, with full
authority and power to do and perform any and all acts necessary
or incident to its performance and implementation of the terms,
conditions and obligations arising under this Subscription
Agreement and its power shall be revocable by the Subscriber by
giving notice thereof to Robert Carroll, Nestor and the Company.
11. Representations of the Company
(a) The Company hereby represents that there are no material
outstanding claims, actions, suits, or other liabilities not
incurred in the ordinary course of business which are not
disclosed in this Subscription Agreement, the Business Plan, or
the financial statements of the Company which constitute part of
the Business Plan.
(b) The Certificate of Incorporation and Bylaws of the
Company, as amended, as of the date of Closing shall not be
further amended prior to the exercise or expiration of the Option
without the prior written consent of the Subscriber, such consent
not to be unreasonably withheld.
12. Special Securities Laws Legends
The Subscriber also acknowledges that he has reviewed
and understands the following:
THE SUBSCRIBER ACKNOWLEDGES THAT THE SHARES IN THE COMPANY
OFFERED IN THE PRIVATE PLACEMENT HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
REGULATORY AUTHORITY, IN RELIANCE UPON ONE OR MORE EXEMPTIONS
FROM REGISTRATION RELATING TO, AMONG OTHER THINGS, TRANSACTIONS
NOT INVOLVING A PUBLIC OFFERING.
THE SUBSCRIBER ACKNOWLEDGES THAT THE SHARES IN THE COMPANY
WILL BE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS REGISTERED UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE, AND THEN ONLY IN ACCORDANCE WITH
THIS SUBSCRIPTION AGREEMENT. THE SUBSCRIBER HAS PROCEEDED WITH
THIS OFFER FOR SUCH SHARES ON THE ASSUMPTION THAT THE SUBSCRIBER
MUST BEAR THE ECONOMIC RISK OF THE INVESTMENT IN SUCH SHARES FOR
AN INDEFINITE PERIOD.
THE SUBSCRIBER ACKNOWLEDGES THAT SHARES IN THE COMPANY HAVE
NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION. IN
MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF THE SHARES; AND IT
IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SHARES, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDFERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSION RULES.
COMPLIANCE WITH THE PROVISIONS WHERE APPLICABLE OF THE RHODE
ISLAND UNFORM SECURITIES ACT
OPERATOR: SECTIONS 11 ONLY IS IN PARALLEL COLUMNS MODE; (a), (b)
and (c) in one column and (d), (e) and (f) in second column.
13. Nature of Subscriber
The Subscriber is (check one):
(a) One or more (d) A trust
individuals
(e) A limited liability
(b) A corporation company
(c) A partnership (f) Another entity or
organization, namely
(please specify):
(g) A director or
executive of the
Company
14. Type of Individual Ownership, if Joint
If ownership of the Shares is to be held by two or more
individuals, such ownership is to be held as follows (check one):
(a) Joint Tenants (with rights of survivorship)
(b) Tenants in Common (no rights of survivorship)
(c) Community Property
15. Addresses
All correspondence and payments relating to the Subscriber's
investment should be sent (check one):
(a) to the address of the Subscriber set
forth on the signature page hereof; or
(b) to the following address:
__________________________________
__________________________________
__________________________________
__________________________________
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
NESTOR TRAFFIC SYSTEMS, INC.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has hereby executed this
Subscription Agreement as of the 25th day of March, 1999.
THE AMOUNT OF SUBSCRIPTION,
payable to the order of
Nestor Traffic Systems, Inc. is (Amount) for the purchase of
(Shares) Initial Shares, and
rights under an Option to an
additional (Initial_Shars)
Initial Shares and to purchase
(Addl_Shares) Additional Shares
for (Option).
________________________ _______________________________
(Name of Corporation, Signature: (Name)
Partnership or other Subscriber
Entity)
By:________________________ _________(Name)________________
Signature Name (Please Print)
___________________________ ________________________________
Name of above Signatory Social Security Number
(Please Print)
___________________________ _______________________________
Title of Signatory Signature of Co-Investor
(If Applicable)
___________________________ ________________________________
Taxpayer Identification Name of Co-Investor
Number (If Applicable)
________________________________
Social Security Number of
Co-Investor (If Applicable)
The foregoing Subscription Agreement is hereby accepted
subject to the terms and conditions hereof, as of March 25, 1999.
NESTOR, INC.
By:
/s/David Fox
Chief Executive Officer
NESTOR TRAFFIC SYSTEMS, INC.
By:
/s/Nigel Hebborn
Chief Financial Officer
SCHEDULE B
Allocation to Company for facility and general administration
costs is as follows:
1. Up to 15 Traffic employees:
Facility Cost allocation per month $ 13,125
G&A allocation per month $ 26,788
Total allocation per month $ 39,913
2. Greater than 15 employees:
Facility Cost allocation per month $ 15,550
G&A allocation per month $ 31,717
Total allocation per month $ 47,267
_______________________________
Nestor does not warrant or represent that it can accommodate
more than 20 employees of the Company.
TECHNOLOGY LICENSE AGREEMENT
AGREEMENT (the "Agreement") made this first day of January, 1999,
by and between Nestor, Inc., a Delaware corporation having a
place of business at One Richmond Square, Providence, RI 02906
("Licensor"), and Nestor Traffic Systems, Inc., a Delaware
corporation having a place of business at One Richmond Square,
Providence, RI 02906 ("Licensee" and together with Licensor, the
"Parties" and each singularly a "Party").
W I T N E S S E T H:
WHEREAS Licensor is, or may become, the owner of certain
technology (the "Subject Technology") consisting of certain know-
how and trade secrets (the "Subject Know-How"), certain software
and other copyrighted or copyrighteable material (the "Subject
Software") and certain patents and patent rights (the "Subject
Patents"), all of which are more fully described in the schedule
to this Agreement (the "Schedule"); and
WHEREAS Licensee wishes to acquire an exclusive limited
license to use the Subject Technology but only in connection with
the development and manufacture by Licensee of the products (the
"Subject Products") described in the Schedule and to sublicense
the Subject Technology as part of its sale and/or license to
others of the Subject Products;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements herein contained and other good and
valuable consideration, the receipt, adequacy and sufficiency of
which is hereby acknowledged, the Parties hereby agree as
follows:
I. Grant of License.
A. Subject to the provisions of this Agreement, Licensor
hereby grants to Licensee, and Licensee accepts, a personal,
nontransferable (except as set forth in paragraph VIII B) license
(the "License"), but only (i) to use internally to Licensee the
Subject Technology in connection with the development and
manufacture by Licensee of the Subject Products and (ii) to
sublicense the use of Subject Software and the Subject Patents to
others but only if each such sublicense is for, and a part of,
such third party's use or distribution of Subject Products and is
in full compliance with all of the terms and conditions of this
Agreement. Licensee shall not otherwise have any right to use,
modify, create derivative works from, sublicense, rent, lease,
assign or transfer any part of the Subject Technology and,
without limiting the foregoing, shall have no right to use the
Subject Technology to develop, manufacture and/or sell any
product other than a Subject Product. All rights not expressly
granted to Licensee in this paragraph I are reserved by the
Licensor.
B. Provided that the Licensee is in full compliance with all
of its duties and obligations under this Agreement and subject to
the minimum royalty provided in the next sentence, the License
shall be exclusive within the field-of-use of the development,
manufacture and sublicense of the Subject Products. If the total
royalty payment (including any voluntary payments made by
Licensee pursuant to the next sentence) for any Year of this
Agreement (as hereinafter defined), is less than applicable
Minimum Royalty (as hereinafter defined), the License shall
thereupon become and thereafter be non-exclusive. In any Year of
the Agreement in which the actual royalty paid is less than the
applicable Minimum Royalty, Licensee may on or before the last
day of such Year of this Agreement, but is not required to, pay
to Licensor an additional amount for the purpose of meeting the
applicable Minimum Royalty requirement.
C. Any sublicense of the License granted by Licensee must:
(i) comply with all the applicable terms and conditions
of this Agreement;
(ii) not involve, entail or require a disclosure of the
Subject Know-How and/or an assignment or transfer of any
right, title or interest in or to the Subject Technology,
provided, however, that Group B Subject Know-How (as defined
in Exhibit 1 to the Schedule) may be disclosed if and only
if such disclosure is (a) reasonable and for purposes within
the License, (b) not to a competitor of Licensor, (c)
subject to a confidentiality agreement no less protective
than the terms of paragraph VI of this Agreement and (d)
otherwise complies with all of the terms and conditions of
this Agreement;
(iii) be granted only within the scope and term of the
grant of the License and, unless permitted by paragraph VIII
B, be only for the use or distribution by the sublicensee of
Subject Products;
(iv) contain terms and conditions necessary to
effectuate the rights of the Licensor contained in
paragraphs V and VIII of this Agreement;
(v) be in a form, a copy of which has been previously
supplied to Licensor by the License;
(vi) must allow for a direct right of action by the
Licensor against the sublicensee for any breaches of the
sublicense effecting the Licensor or the Subject Technology;
(vii) comply with all applicable laws, rules and
regulations; and
(viii) be at the Licensee's sole risk and expense.
Licensee shall indemnify and hold harmless Licensor against and
in respect of any and all claims, suits, actions, proceedings
(formal and informal), losses investigations, judgments, defi
ciencies, damages, settlements, liabilities, and legal and other
expenses (including reasonable legal fees and expenses of
attorneys chosen by Licensor) as and when incurred arising out of
or based upon any sublicense or attempted or alleged sublicense
of the Subject Technology granted or allegedly granted by
Licensee.
D. Notwithstanding anything in this Agreement that could be
interpreted to the contrary, nothing herein is intended to or
shall restrict the royalty which Licensee may impose on a
sublicense or the price it may charge for a Subject Product.
E. The term "Minimum Royalty" shall mean (i) no dollars
($0.00) for the first two Years of this Agreement, (ii) one
hundred twenty-five thousand dollars ($125,000) for the third
Year of this Agreement (calendar year 2001), (iii) two hundred
fifty thousand dollars ($250,000) for the fourth Year of this
Agreement (calendar year 2002), (iv) five hundred thousand
($500,000) for the fifth Year of this Agreement (calendar year
2003), (v) seventh hundred fifty thousand dollars ($750,000) for
sixth Year of this Agreement (calendar year 2004) and (vi) one
million dollars ($1,000,000) for each year after the seventh Year
of this Agreement, adjusted as set forth in the remainder of this
paragraph in proportion to increases in the Consumer Price Index
from year to year during the term of this Agreement. For any Year
of this Agreement after the seventh Year in which the Consumer
Price Index (as measured on the first day of such Year) has
increased over that for the preceding Year of this Agreement (as
measured on the first day of such Year), the increase in the
Minimum Royalty shall be calculated by multiplying the Minimum
Royalty in effect for such preceding Year by the most recently
published Consumer Price Index as at such anniversary date and
dividing the resulting product by the Consumer Price Index as at
the preceding anniversary date of execution of this Agreement.
The Consumer Price Index shall be that Index as published by the
United States Government, or, if such Index is no longer
published by the United States Government, the index then
published which is most closely analogous to such Index. The term
"Year of this Agreement" shall mean the year starting on the date
hereof or any subsequent year starting on any anniversary date of
the date hereof.
II. New Technology, Patents, Know-how and Copyrights; Ownership,
Prosecution and Grant of Licenses.
A. If during the term of this Agreement either Party
develops any technology other than New Subject Technology (as
hereinafter defined), such technology shall be owned by the Party
developing it and such Party shall have no obligation to the
other Party arising therefrom. "New Subject Technology" is any
technology in the form of an invention, discovery, improvement or
otherwise made by the Licensee and arises out of the Group A
Subject Know-How (as defined in Exhibit 1 to the Schedule), Group
A Subject Software (as defined in Exhibit 2 to the Schedule)
and/or Group A Subject Patents (as defined in Exhibit 3 to the
Schedule).
B. The Licensee agrees to use its best efforts to keep the
Licensor regularly and fully informed (which shall include
sufficient information for the Licensor to be able to enjoy all
of the rights granted by this paragraph II), in writing with
respect to any New Subject Technology developed or discovered by
it.
C. All New Subject Technology shall belong exclusively to
the Licensor and to the maximum extent permitted by law be deemed
works for hire. Without limiting the foregoing, the Licensee
will, upon request by the Licensor but without cost or expense to
the Licensee, execute, or cause its employees to execute, all
instruments and documents necessary to secure for the Licensor
any form of protection or property right with respect to such New
Subject Technology, and the Licensee agrees to assign and
transfer to the Licensor upon request, the entire right, title
and interest therein and thereto.
D. All New Subject Technology shall during the term of this
Agreement be deemed licensed to Licensee under the License
subject to the terms and conditions of this Agreement.
E. The provisions of this paragraph II shall survive the
termination or expiration of this Agreement.
III. Royalties, Payment and Related Matters.
A. Licensee shall pay to Licensor during the term of this
Agreement the royalties as set forth in the Schedule. Royalties
or other payments hereunder shall be due and payable (i) thirty
(30) days after the end of the calendar quarter in which the
Subject Product in question was licensed, sold or otherwise
transferred or distributed by the Licensee or (ii) the royalty or
payment is otherwise due.
B. Licensee shall be liable and responsible for the
reporting of payment of all taxes and duties (except income taxes
accrued against Licensor) arising from this Agreement.
C. Licensee will keep such records as will enable the
royalties payable hereunder to be accurately determined by
Licensor. Such records will be retained by Licensee and made
available to Licensor or independent auditors selected by
Licensor for examination at the request and at the expense of
Licensor during reasonable business hours (but not more than once
in any Year of this Agreement) at that the offices of Licensee
set forth in the preamble to this Agreement for a period of at
least five (5) years after the date of the transactions to which
the records relate. Within thirty (30) days after the end of each
calendar quarter during the term of this Agreement, Licensee
shall deliver to Licensor a certificate of a duly authorized
officer of Licensee setting forth sufficient information to
calculate the royalty due for that quarter, including without
limitation, the gross revenues (as defined in the Schedule) for
Subject Products licensed during such calendar quarter. Licensee
shall pay the costs of any audit which determines that any such
certificate is understated by more than five per cent (5%).
IV. Infringement and Unauthorized Use.
A. Licensee shall notify Licensor as soon as possible(with
full particulars) of any infringement action threatened or
commenced by any third party relating to the use of the Subject
Technology by Licensee. Provided that (i) Licensee is and always
has been in full compliance with all of the terms and conditions
of this Agreement, (ii) Licensee has notified Licensor in writing
of any claim or action in which it is alleged that its use of the
Subject Technology infringes any United States patent, copyright
or trademark promptly after the date on which Licensee received
notice and/or knowledge thereof (but in any event sufficiently
before the first answer or other response therein is due to
provide Licensor with a reasonable amount of time to prepare and
file such answer or response) and (iii) Licensee shall fully
cooperate with Licensor in such settlement or defense, Licensor
shall immediately take control of the settlement of such claim
and the defense of any litigation resulting solely therefrom and
shall indemnify and hold Licensee harmless from the costs of such
settlement or defense and any judgement in such litigation. So
long as Licensee's right under and granted by this Agreement to
make and sublicense Subject Products is not thereby materially
diminished, Licensee shall permit Licensor at any time and from
time to time to (i) replace any part or parts of the Subject
Technology, or (ii) procure a license for Licensee to use same.
If, as a final result of any such litigation of which Licensor is
hereinbefore obligated to take control, the use by Licensee of
the Subject Technology is prevented by an injunction, Licensor
shall, at its sole option either (i) replace such parts of the
Subject Technology as have been enjoined, or (ii) procure a
license for Licensee to use same, or (iii) reimburse to Licensee
such part of the royalties Licensee previously paid pursuant to
this Agreement to Licensor therefor as may be fair and equitable
under the circumstances. Notwithstanding the foregoing, Licensor
assumes no obligation or liability for, and Licensee shall
indemnify and hold harmless Licensor against and in respect of
any and all claims, suits, actions, proceedings (formal and
informal), losses investigations, judgments, deficiencies,
damages, settlements, liabilities, and legal and other expenses
(including reasonable legal fees and expenses of attorneys chosen
by Licensor) as and when incurred arising out of or based upon,
(i) any actions or claims of infringement not relating
solely and exclusively to only the Subject Technology
standing alone, or
(ii) any actions or claims of trademark infringement
involving any marking or branding other than the Trademarks
(as that term is defined in a certain Trademark License
Agreement between the parties of even date herewith, the
"Trademark License Agreement"), or
(iii) any actions or claims arising out of or relating to
any modification of the Subject Technology, unless made by
Licensor, or
(iv) any actions or claims, in whole or in part, arising out
of or relating in any way to the Subject Products (excluding
those relating solely and exclusively to only the Subject
Technology standing alone) and/or any New Subject
Technology, or
(v) for any actions or claims involving the infringement of
any process patent other than those whose claims read on the
manufacture or use of the Subject Products.
This paragraph IV A. states the entire liability and obligation
of Licensor and the exclusive remedy of Licensee with respect to
any actions or claims of alleged infringement relating to or
arising out of the subject matter of this Agreement.
B. Licensee agrees to inform Licensor promptly of any
possible infringers or unauthorized users of the Subject
Technology of which Licensee obtains knowledge. Subject to the
provisions of paragraph IV C., Licensor, in its sole discretion,
shall determine what steps, if any, are to be taken with respect
to any infringement or unauthorized use of the Subject Technology
and any damages recovered shall be payable solely to Licensor.
Licensee agrees to fully cooperate with Licensor in all stages of
any such action. In no event shall Licensor be obligated
hereunder to commence legal proceedings. Licensee shall not
undertake any legal action or other steps of any kind to prevent
or restrain any such infringement or unauthorized use, or to
collect damages resulting therefrom, without the advance written
permission of Licensor.
C. If Licensee notifies Licensor of a possible infringer or
unauthorized user of the Group B Subject Technology, but then
only if such infringement or unauthorized use is for the making
using or selling of Subject Products using the Group B Subject
Technology (and does not include any Group A Subject Technology)
at a time when the License is exclusive, and Licensor fails to
take reasonable steps in response thereto, Licensee may, upon
fifteen (15) days advance written notice to Licensor, take such
action as is reasonable and lawful to prevent or restrain such
infringement or unauthorized use and to collect damages resulting
therefrom. In such an event, (i) Licensee shall be responsible
for the costs and expenses of such action and shall indemnify and
hold harmless Licensor against and in respect of any and all
claims, suits, actions, proceedings (formal and informal), losses
investigations, judgments, deficiencies, damages, settlements,
liabilities, and legal and other expenses (including reasonable
legal fees and expenses of attorneys chosen by Licensor) as and
when incurred arising out of or based upon any such action and
(ii) any damages recovered by Licensee shall be divided between
Licensee and Licensor as may be fair and equitable.
D. All of the provisions of this paragraph IV shall survive
any termination or expiration of this Agreement or License.
V. Warranties and Covenants.
A. Each Party does hereby warrant that it has full and sole
power, right and authority to enter into this Agreement, that
this Agreement has been duly and validly authorized and executed
by it and that this Agreement is the valid and binding obligation
of such Party.
B. Licensor warrants that, to the best of its knowledge, the
Subject Technology existing on the date hereof does not infringe
any United States patent, copyright or trademark of any third
party.
C. THE SUBJECT TECHNOLOGY IS LICENSED AS-IS. LICENSOR DOES
NOT WARRANT THAT THE SUBJECT TECHNOLOGY IS CAPABLE OF INDUSTRIAL
REALIZATION OR COMMERCIAL EXPLOITATION, THE RISKS OF WHICH ARE
BEING ASSUMED SOLELY BY LICENSEE, AND LICENSOR SHALL HAVE NO
RESPONSIBILITY FOR THE CONSEQUENCES OF ANY SUCH FAILURE OF
INDUSTRIAL REALIZATION OR COMMERCIAL EXPLOITATION. IT IS
UNDERSTOOD THAT LICENSOR IS NOT MAKING AND EXPRESSLY DISCLAIMS
ANY REPRESENTATIONS OR WARRANTIES THAT THE MANUFACTURE, USE, OR
SALE OF THE SUBJECT PRODUCTS WILL NOT INFRINGE THE PATENTS,
COPYRIGHTS, TRADEMARKS OR OTHER PROPRIETARY PROPERTY RIGHTS OF
ANY THIRD PARTY. LICENSOR MAKES NO WARRANTY OR GUARANTEE OF ANY
KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT WILL LICENSOR BE LIABLE FOR ANY
INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
RELATING IN ANY WAY TO THIS AGREEMENT, THE SUBJECT TECHNOLOGY OR
THE USE OF THE SAME (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR
LOST INFORMATION, LOST SAVINGS, LOST PROFITS OR BUSINESS
INTERRUPTION), EVEN IF LICENSOR HAS BEEN INFORMED, IS AWARE, OR
SHOULD BE OR HAVE BEEN AWARE, OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT WILL LICENSOR BE LIABLE IN DAMAGES OR OTHERWISE IN
EXCESS OF THE ROYALTIES RECEIVED BY LICENSOR FROM LICENSEE
HEREUNDER.
D. Licensee further understands, agrees and/or warrants
that:
(i) it does not intend to and will not make any use or
license of or involving the Subject Technology or any
Subject Product containing the Subject Technology in
violation of any applicable law, rule or regulation of the
United States, or any State of the United States or any
foreign country of applicable jurisdiction, including but
not limited to any United States law relating to exporting
or transfer of technology or of any regulation relating
thereto promulgated by an agency of the United States
Government;
(ii) it will not accept any purchase order or contract,
including without limitation any United States or foreign
government contract for sale or development of Subject
Products, that by its terms or by the operation of law will
abridge Licensor's rights in and/or to the Subject
Technology and all such orders or contracts will include
appropriate "restricted rights" and/or "limited rights"
legends in such form and substance as Licensor shall have
previously approved in writing;
(iii) it will obtain at its own cost any required export
licenses and it will not, without the advance written
permission of Licensor, use, transmit or transfer any
Subject Products, directly or indirectly, to any location
outside of the country shown in its address on the first
page of this Agreement, which permission will not be
unreasonably withheld in the event that Licensee
demonstrates to Licensor that it has obtained all required
export licenses;
(iv) it has all legal right to conduct its activities as
contemplated by this Agreement, including but not limited to
all necessary rights to develop, make and license the
Subject Products;
(v) Licensee assumes all responsibility and liability for
the selection of the Subject Technology to achieve the
results intended and for the installation of, use of and
results obtained by Licensee or any of its customers from
the Subject Technology or any Subject Product. In particular
but without limitation, Licensee shall indemnify and hold
harmless Licensor against and in respect of any and all
claims, suits, actions, proceedings (formal and informal),
investigations, judgments, deficiencies, damages, losses
settlements, liabilities, and legal and other expenses
(including reasonable legal fees and expenses of attorneys
chosen by Licensor) as and when incurred arising out of or
based upon any act or omission or alleged act or alleged
omission by Licensee in connection with the acceptance of,
or the performance or non-performance by Licensee of, any of
its warranties or duties under this Agreement.
E. All of the provisions of this paragraph V shall survive
any termination or expiration of this Agreement or License.
VI. Confidentiality.
A. Licensee agrees, acknowledges and covenants that the
Subject Know-How (whether oral, written or in machine-readable
form) disclosed to Licensee by Licensor pursuant to the
provisions of this Agreement contains valuable trade secrets and
other confidential and proprietary information, that unauthorized
use or disclosure of such Subject Know-how would irreparably
injure Licensor, which injury can not be remedied solely by the
payment of money damages (and Licensor shall thus be entitled to
an injunction to restrain such use or disclosure), and that
Licensee shall hold in strict confidence and not disclose,
reproduce or use the Subject Know-how with the exception of
information which: (i) is already in the public domain at the
time of disclosure; or (ii) after disclosure becomes a part of
the public domain by publication through action other than by
Licensee in violation of this Agreement or any other
confidentiality agreement between Licensee and Licensor (a
"Confidentiality Agreement"); or (iii) is received by Licensee
after the time of disclosure from a third-party who did not
require such information to be held in confidence and who did not
acquire, directly or indirectly through one or more
intermediaries, such information from Licensor under any
obligation of confidence; or (iv) is specifically agreed to by
Licensor in writing in advance of such publication, reproduction
or use. Licensee further agrees to disclose Subject Know-how only
to those of its employees who have a need to know same as
contemplated by the purposes of this Agreement and who are bound
to Licensee by confidentiality and proprietary property
agreements no less favorable to Licensee than this paragraph VI
is to Licensor.
B. Licensee agrees to inform Licensor promptly of any
possible unauthorized uses or disclosures of the Subject Know-how
of which Licensee obtains knowledge. Licensor, in its sole
discretion, shall determine what steps, if any, are to be taken
with respect to any such uses or disclosures and any damages
recovered shall be payable solely to Licensor. Licensee agrees to
fully cooperate with Licensor, at no cost to Licensor, in all
stages of any such action. In no event shall Licensor be
obligated hereunder to commence legal proceedings. Licensee
shall not undertake any legal action or other steps of any kind
to prevent or restrain any such use or disclosure, or to collect
damages resulting therefrom, without the advance written
permission of Licensor. Licensee shall indemnify and hold
harmless Licensor against and in respect of any and all claims,
suits, actions, proceedings (formal and informal), losses
investigations, judgments, deficiencies, damages, settlements,
liabilities, and legal and other expenses (including reasonable
legal fees and expenses of attorneys chosen by Licensor) as and
when incurred arising out of or based upon any such use or
disclosure if made by any employee of Licensee to whom Licensee
has made the Subject Know-how available.
C. The provisions of this Agreement shall not limit any
rights which Licensor may have under any Confidentiality
Agreement, whether in force before or after this Agreement. All
of the provisions of this paragraph VI shall survive any
termination or expiration of this Agreement or License.
VII. Expiration or Termination.
A. This Agreement and the License shall expire on the later
of (i) the last date of expiration of any patent or copyright
licensed under the License or (ii) the date all Subject Know-How
becomes part of the public domain. This Agreement and the License
shall immediately terminate if Licensee liquidates, dissolves,
shall be adjudicated insolvent, files a petition in bankruptcy or
for reorganization, has filed against it a petition in bankruptcy
or for reorganization and such petition is not dismissed within
one hundred and twenty (120) days of the date of filing, takes
advantage of any insolvency act or proceeding, including an
assignment for the benefit of creditors, or commits any other act
of bankruptcy.
B. Either Party may terminate this Agreement and the
License by written notice to the other Party, if such other Party
shall default in the payment or performance of any of its
obligations hereunder and such default continues for at least
thirty (30) days after notice thereof. Licensor may terminate
this Agreement and the License upon written notice to License
delivered within one hundred twenty (120) days after the end of
any Year of This Agreement, if the amount of royalties paid by
Licensee to Licensor hereunder for such Year of This Agreement is
less than ten per cent (10%) of the applicable Minimum Royalty
for such Year of This Agreement.
C. Provided it is then not in breach of this Agreement,
Licensee may terminate this Agreement and the License on any
anniversary date of the date hereof by delivering to Licensor
ninety (90) days advance written notice of such termination.
D. Notwithstanding any termination or expiration of this
Agreement, the License shall continue in effect with respect to
any Subject Products manufactured and sold by Licensee prior to
termination; and Licensee shall remain liable to Licensor for
royalties accruing with respect to deliveries of, or sales or
contracts entered into with respect to, such Subject Products.
E. Termination or expiration of this Agreement and the
License shall not release Licensee from any of its obligations or
liabilities accrued or incurred hereunder, or rescind or give
rise to any right to rescind any payment made or other
consideration given to either hereunder. Upon termination or
expiration of this Agreement and the License, Licensee shall
cease all marketing and other activities under the License and
shall (at Licensor's election) immediately deliver to Licensor or
irretrievably destroy, or cause to be so delivered or destroyed,
any and all copies of the Subject Technology in whatever form,
any Subject Products containing any Subject Technology and any
written, machine readable or other materials relating to any of
the foregoing or containing any Subject Technology in Licensee's
possession, custody or control (other than those Subject Products
on which the royalty has been previously paid).
VIII. Miscellaneous.
A. Subject to Licensor's advance written permission (which
permission shall not be unreasonably withheld) Licensee may, and
at Licensor's request, Licensee shall, cause all Subject
Products, related software, documentation, packaging,
advertisements of any kind and other material of any kind which
relate to, or include the Subject Technology or products
containing the Subject Technology, as the case may be, to be
marked and labeled with and/or include appropriate reference to
the Licensor's patent rights, copyrights, trademarks, service
marks and/or trade names in the form and style furnished by
Licensor to Licensee. Licensee shall permit Licensor to make, at
any time and from time to time, reasonable inspections of
Licensee's facilities and Subject Products, but Licensor shall
not be liable to Licensee or others for its failure to do so or
for any defects which it discovers or would or could have
discovered by so doing. Licensee shall not otherwise use or make
reference to such patent rights, mask rights, copyrights,
trademarks, service marks or trade names of Licensor without the
advance written permission of Licensor. Licensor may, at any time
and from time to time, in its sole discretion, alter or revoke
its instructions to Licensee pursuant to this paragraph.
B. Neither this Agreement, the License or other interest
hereunder shall be assignable by Licensee, nor may Licensee
sublicense the right to make Subject Products with the Group A
Subject Technology, without the prior written consent of the
Licensor, which consent may be withheld in Licensor's sole
discretion if such proposed assignment or sublicense is to a then
competitor of Licensor (exclusive of third-parties whose only
competitive product(s) is the same as, or substantially the same
as, a Subject Product) but shall not otherwise be unreasonable
withheld, conditioned or delayed. For the purpose of the
foregoing sentence a change in economic or voting control of
Licensee (other than one which is agreed to by Licensee at a time
when Licensor had economic and voting control of Licensee) shall
be deemed to be an assignment of this Agreement and the Licensee.
Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding upon the Parties' successors.
C. The headings and captions used in this Agreement are for
convenience only and are not to be used in the interpretation of
this Agreement.
D. The failure of either Party to require performance of any
provision of this Agreement shall not affect the right to
subsequently require the performance of such or any other
provision of this Agreement. The waiver of either Party of a
breach of any provision shall not be taken or held to be a waiver
of any subsequent breach of that provision or any subsequent
breach of any other provision of this Agreement.
E. The Parties are independent contractors and engage in the
operation of their own respective businesses. Neither Party is
the agent or employee of the other Party for any purpose
whatsoever. Nothing in this Agreement shall be construed to
establish a relationship of co-partners or joint venturers
between the two Parties. Neither Party has the authority to enter
into any contracts or assume any obligations for the other Party
or to make any warranties or representations on behalf of the
other Party.
F. If any provision of this Agreement is, or is determined
to be, invalid, illegal or unenforceable, all remaining
provisions of this Agreement shall nevertheless remain in full
force and effect, and no provision of this Agreement shall be
deemed to be dependent upon any provision so determined to be
invalid, illegal or unenforceable unless otherwise expressly
provided for herein. Should any provision of this Agreement be
found or held to be invalid, illegal or unenforceable, in whole
or in part, such provision shall be deemed amended to render it
enforceable in accordance with the spirit and intent of this
Agreement.
G. This Agreement has been entered into, delivered and is to
be governed by, construed, interpreted and enforced in accordance
with the laws of the State of New York (without giving reference
to choice-of-law provisions) from time to time in effect.
H. If a dispute arises out of or relates to this Agreement,
the License, a breach thereof or Licensee's use of the Subject
Technology, and if said dispute cannot be settled through direct
discussions, such dispute shall be settled by arbitration before
three neutral arbitrators (selected from a panel of persons
having experience with and knowledge of the electronics business,
at least one of which three arbitrators shall be an attorney) in
New York City and administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules.
Any provisional or equitable remedy which would be available from
a court of law shall be available from the arbitrators to the
Parties. In any such proceeding limited civil discovery shall be
permitted for the production of documents, which shall be
governed by the Federal Rules of Civil Procedure (without
reference to any local rules of a particular court). All issues
regarding discovery requests shall be decided by the arbitrators.
Judgment upon the award of the arbitrators may be enforced in any
court having jurisdiction thereof. In that regard the Parties
hereby consent to (a) the jurisdiction of the courts of the State
of New York or to any Federal Court located within the State of
New York for any action (i) to compel arbitration, (ii) to
enforce the award of the arbitrators or (iii) at any time prior
to the qualification and appointment of the arbitrators, for
temporary, interim or provisional equitable remedies and (b)
service of process in any such action by registered mail, return
receipt requested, or by any other means provided by law.
I. With the exception of the Trademark License Agreement,
this Agreement contains the entire and exclusive agreement of the
Parties with respect to its subject matter. This Agreement
supersedes any agreements and understandings, whether written or
oral, entered into by the Parties hereto prior to the effective
date of this Agreement and relating to the subject matter hereof.
J. No modification or amendment of this Agreement shall be
effective unless it is stated in writing, specifically refers to
this Agreement and is executed on behalf of each Party.
K. Except as otherwise specified, all notices, payments,
certificates and reports hereunder shall be deemed given and in
effect as of the date of mailing, when sent by express mail (or
other overnight delivery service), postage prepaid, addressed to
the Parties as set forth in the preamble to this Agreement
directed in each case to the President of the Party receiving the
notice or to such other addresses as the Parties may from time to
time give written notice of as herein provided.
L. Neither Party hereto shall be liable to the other for
failure or delay in meeting any obligations hereunder as the
result of strikes, lockouts, war, Acts of God, fire, flood,
embargo or acts of government, if beyond the control of such
Party.
M. Licensor hereby agrees to sell to Licensee at Licensee's
request such amount of semiconductor chips know as the Ni1000
(the "Chips") as Licensee may request and Licensor may then have
available for delivery. All such sales shall be "AS IS", at
Licensor's fully allocated direct costs for the Chips in question
(except as provided in the remainder of this paragraph) and
subject to such other terms and conditions as the Parties may
then agree. For and during the first five (5) Years of this
Agreement, Licensor shall notify Licensee in writing at least
fifteen (15) days prior to the date it proposes to sell any Chips
to any third party, which notice shall contain the price at which
such sale is to be made; provided, however, that Licensor may
after the date of this Agreement make sales of Chips to any third
party or parties without so notifying Licensee so long as such
sales are for less than one hundred one (101) Chips in the
aggregate. For any sale which Licensor has so notified Licensee,
Licensee shall have fifteen (15) days from the date of such
notice to notify Licensor in writing the it desires to purchase
such Chips at such price, in which case Licensor shall sell such
Chips to Licensee. If Licensee does not so elect to purchase such
Chips, Licensor may sell such Chips to such third party.
IN WITNESS WHEREOF, the Parties hereto have set their
hands by their duly authorized representatives as of the day and
year first above written.
NESTOR, INC. NESTOR TRAFFIC SYSTEMS, INC.
By: By:
Name: Name:
Title: Title:
SCHEDULE
TO
TECHNOLOGY LICENSE AGREEMENT
The following technology is hereby defined as the Subject
Technology:
The Subject Know-How:
Certain know-how and trade secrets owned by Licensor relating to
RCE and PRCE neural networks and/or object identification and
tracking in video and other data streams, which includes but is
limited to (i) the source code for the Subject Software and (ii)
the know-how and trade secrets listed in Exhibit 1 to this
Schedule.
The Subject Software:
Certain software owned by Licensor for RCE and PRCE neural
networks and/or object identification and tracking in video and
other data streams which is listed in Exhibit 2 to this
Schedule.
The Subject Patents:
Certain patents, patent applications owned by Licensor relating
to RCE and PRCE neural networks and/or object identification and
tracking in video and other data streams which are listed in
Exhibit 3 to this Schedule.
The Subject Technology shall include know-how, software and
patents developed by Licensor after the date hereof if and only
if (i) such know-how, software or patents are improvements,
modifications and/or extensions of the Subject Technology
(including any New Subject Technology) and (ii) Licensor is not
legally prohibited from licensing such know-how, software and/or
patents to Licensee.
The following products are hereby defined as the Subject
Products:
Any product whose function is materially and principally (i) the
analysis of video and other sensors to analyze, monitor and
respond to movement and patterns of persons or objects in
vehicular, rail, air or other modes of transportation or (ii) the
support of the foregoing.
The following is the schedule of royalties as provided in
paragraph III of the Agreement:
All royalties shall be calculated on the gross margin (gross
revenue less direct third-party costs of goods sold) Licensee in
any way receives from, in connection with, relating to or arising
out of, in whole or in part, Subject Products (or other products
or services marketed or sold with or in connection with Subject
Products) so long as such Subject Products contain, incorporate,
use or arise out of or in connection with the Subject Technology.
The Royalty Rate for calendar year 1999 is zero percent (0%).
The Royalty Rate for calendar year 2000 is five percent (5%).
The Royalty Rate for calendar year 2001 and thereafter is ten
percent (10%).
