SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Under to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 30, 1995
Commission File Number: 1-10013
Larson Davis Incorporated
(Exact Name of Registrant as Specified in its Charter)
Nevada 87-0429944
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1681 West 820 North, Provo, Utah 84601
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(801) 375-0177
N/A
(Former name, former address, and formal fiscal year, if changed
since last report)
Page 1 of 26 consecutively numbered pages, including exhibits.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Larson Davis Incorporated (the "Company") has entered into a
definitive agreement with Harris Miller Miller & Hanson, Inc.
("HMMH"), an established consulting firm, based on the agreement in
principle previously described in the Company's report on form 8-K
dated June 30, 1995. Under the terms of the agreement, the Company
has licensed its proprietary Airport Noise and Operations Monitoring
Software ("ANOMS") and transferred management and implementation of
substantially all of its airport noise monitoring contracts to HMMH.
Included in these contracts is one recently awarded to the Company by
the City of Chicago for the installation of an approximately
$3,600,000 noise monitoring system.
The Company was paid a one-time fee of $125,000, will receive
$150,000 in guaranteed annual royalties for the lessor of a ten-year
period or the term of the agreement, and will be paid a varying
royalty of 2.5% to 4% on the gross revenues of HMMH from the sale,
installation, upgrade, and maintenance of airport noise and
operations monitoring systems. HMMH will use its best efforts to
include the Company's hardware in its future proposals for airport
noise monitoring systems and the Company will provide such equipment
at a 25% discount from its regular pricing structure. HMMH has the
right to purchase all of the Company's rights to the ANOMS software
at a predetermined price of $3,000,000, $2,200,000, $1,700,000, and
$875,000, respectively, on the three, five, seven, and ten year
anniversaries of the agreement. HMMH has the right to terminate the
agreement after an initial three-year period and, at the end of the
ten year term, can elect to extend the agreement for an additional
five years during which it would be obligated to pay a royalty of 3%
on its gross revenues from airport systems.
The Company does not anticipate that the transaction will have a
material effect on its balance sheet, although it will impact its
results of operations. Installing and maintaining airport noise
monitoring systems provided approximately $1,700,000 in gross
revenues to the Company for the nine months ended March 31, 1995,
with associated expenses of approximately $1,775,000 or a loss of
approximately $75,000. If the proposed transaction had been
completed at the beginning of the nine month period and HMMH had
been awarded and completed the same work as the Company during this
period, of which there can be no assurance, the Company would have
had revenues of approximately $620,000 (excluding the one-time
payment of the $125,000 royalty fee) from the sale of its hardware
included in the airport noise monitoring systems, with associated
expenses of approximately $490,000, for a profit of approximately
$130,000.
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HMMH is a consulting firm established in 1981 by experienced
acoustical engineers that has focused its business on consulting in
the noise and vibration market in the transportation industry,
including interpreting airport noise regulations and establishing
specifications for the hardware and software airports needed to
monitor sound levels and other environmental occurrences at the
airport and in surrounding communities. HMMH established the
specifications for a number of airports at which the Company's
systems are installed and provides consulting work to the Federal
Aviation Administration (the "FAA"). The Company believes that HMMH
has a strong marketing advantage in the airport industry because of
its established reputation, experience, and long association with
airport administrators.
The Company acquired the ANOMS Software from Technology Integration
Incorporated ("TII") during the year ended June 30, 1994. Certain
former key employees of TII that became employees of the Company
at the time of the TII transaction are now employees of HMMH.
HMMH also agreed to temporarily sublease the Company's facility in
Boston, Massachusetts, which had served as the headquarters for the
Company's airport systems operations.
ITEM 7. EXHIBITS
<TABLE>
<CAPTION>
Exhibit SEC
No. Reference No. Description Location
<S> <C> <C> <C>
1 (10) Technology License, Assumption, This
and Maintenance Agreement Filing
between Larson Davis Incorporated Page 5
and Harris Miller Miller & Hanson,
Inc., dated August 15, 1995
</TABLE>
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SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the
Securities Exchange of 1934, as amended, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: August 31, 1995 LARSON DAVIS INCORPORATED
By /s/ Dan J. Johnson
Dan J. Johnson, Vice-President
Secretary/Treasurer
(Principal Financial and
Accounting Officer)
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TECHNOLOGY LICENSE, ASSUMPTION AND MAINTENANCE AGREEMENT
THIS TECHNOLOGY LICENSE, ASSUMPTION, AND MAINTENANCE AGREEMENT (this
"Agreement" is made and entered into this 15th day of August, 1995,
by and between LARSON-DAVIS INCORPORATED, a Nevada corporation
("Larson-Davis"), and HARRIS MILLER MILLER & HANSON INC., a
Massachusetts corporation ("HMMH"), based on the following:
Premises
A. Larson-Davis, through its operating division Larson-Davis
Systems, is engaged in the design, sale, installation, and
maintenance of integrated noise and operations monitoring systems
for airports. Larson-Davis is the owner of proprietary software
known as Airport Noise and Operations Monitoring System ("ANOMS")
that is included in the airport installations and Larson-Davis
designs, manufactures, and markets certain hardware that is
included in such installations.
B. HMMH is engaged in the business of providing consulting
services in the noise and vibration control industry. HMMH is
experienced in noise and operations monitoring and database
management for airports and has provided consulting services to
several airports concerning the design and bid specifications for
proposed noise monitoring systems.
C. The parties have agreed that Larson-Davis will provide an
exclusive license to the ANOMS software to HMMH for use in the
airport noise and operations monitoring industry on the terms and
conditions set forth in this Agreement. In addition, HMMH will
assume the obligations of Larson-Davis under the terms of certain
existing contracts with airports and the pending proposals to
airports from Larson-Davis for airport noise and operations
monitoring systems to airports.
Agreement
NOW THEREFORE, based on the foregoing premises and for and in
consideration of the mutual promises and covenants contained herein,
the adequacy of which are hereby acknowledged, it is hereby agreed
as follows:
1. Certain Definitions. The following defined terms have the stated
meanings as used herein:
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(a) ANOMS. The term "ANOMS" or "ANOMS Software" shall mean the
proprietary software owned by Larson-Davis and known as the "Airport
Noise and Operations Monitoring System" as more specifically
identified on Exhibits "A" and "A1" attached hereto and incorporated
herein by this reference. It shall include without limitation any
and all software acquired by Larson-Davis from TII but shall
specifically exclude any other software developed independently
by Larson-Davis prior to acquiring software from TII and used in
the Business, or developed by them for such use. "ANOMS" or "ANOMS
Software" shall also include any modified versions of the ANOMS
Software which may be developed by Larson-Davis or HMMH during the
term of this Agreement. Neither the ANOMS Software nor any of its
components shall be identified by Larson-Davis as a catalog item
for sale to the general public at any time during the term of this
Agreement.
(b) Airport Authorities. The term "Airport Authorities" shall mean
airport owners, operators, or agencies responsible for the operation
and maintenance of airports.
(c) Airport Noise and Operations Monitoring Industry. The term
"Airport Noise and Operations Monitoring Industry" shall mean the
business of providing equipment and systems for the purpose of
collecting, storing, analyzing, manipulating, or interpreting
acoustical and operations information in connection with the
operation of airports.
(d) Airport Noise and Operations Monitoring System. The term
"Airport Noise and Operations Monitoring System" shall mean a system
designed for use by a customer to assist in the collection, storage,
analysis, manipulation, or interpretation of acoustical and
operations information in connection with the operation of airports.
(e) Airport Related Noise and Operations Monitoring System. The
term "Related Noise and Operations Monitoring System" shall mean a
system designed for use by a customer to assist in the collection,
storage, analysis, manipulation, or interpretation of operations or
acoustical information in connection with the operation of
transportation facilities (other than airports), or transportation-
related construction projects.
(f) Business. The "Business" shall mean the business of designing,
developing, marketing, selling, installing, and maintaining Airport
Noise and Operations Monitoring Systems as heretofore carried out by
Larson-Davis, and as may be subsequently developed by HMMH.
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(g) Collateral. The "Collateral" shall mean the collateral subject
to the security interest granted by HMMH to Larson-Davis in Section 24
(h) Collateral Rights. The term "Collateral Rights" shall have the
meaning set forth in Section 8.
(i) Confidential Information. "Confidential Information" as used
herein shall mean information in the possession of a party which is
held and treated by such party as proprietary or trade secret
information and not disclosed to the trade or public by such party.
Confidential Information shall not include information (i) which is
known to the receiving party at the time of disclosure by the
disclosing party, (ii) which after disclosure by the disclosing
party to the receiving party is received by the receiving party
from another person or entity who, with respect to the disclosing
party, has the right to disclose such information, or (iii) which is
available to the public or subsequently becomes available to the
public through no breach of obligations of confidence and trust by
the receiving party to the disclosing party.
(j) Effective Date. The term "Effective Date" shall mean August 10,
1995.
(k) End User. The term "End User" shall mean the customer that
acquires software or hardware for use in its business or operations
rather than for resale, relicensing, or distribution to others.
(l) Term Year. "Term Year" shall mean a period of four consecutive
Quarters, the first Term Year commencing on the Effective Date and
ending on September 30, 1996 (the "Term Year End Date"), and each
successive Term Year being a period of four Quarters ending on an
anniversary of the Term Year End Date.
(m) HMMH Affiliate. "HMMH Affiliate" shall mean any parent
corporation of or other person or entity that holds at least a 10%
equity interest in HMMH, any subsidiary or other entity in which
HMMH holds at least a 10% equity interest, or any subsidiary or
other entity in which a parent or the shareholders of HMMH hold at
least a 10% equity interest.
(n) Improvements. The term "Improvements" means any modification,
enhancement, or subsequent release of ANOMS or any software, process,
or information which is developed from, utilizes, or is based on the
Licensed Technology.
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(o) Licensed Technology. The term "Licensed Technology" shall mean
the ANOMS Software, all the computer software, tools, utilities,
technical information, and know-how related to the ANOMS Software
owned by Larson-Davis as of the date of this Agreement, all of the
software owned by Larson-Davis and used in the Business, all
Improvements, and the right to use all proprietary rights with
respect thereto including without limitation any and all copyrights,
patent rights, trademarks, or trade secret rights in or to any of
the foregoing, as identified on Exhibits "A" and "A1" of this
Agreement.
(p) Quarter. "Quarter" shall mean any calendar quarter, subject to
adjustment in the case of the first and last Quarters under this
Agreement. The first Quarter under this Agreement shall be a
prorated period beginning on the Effective Date and ending on
September 30, 1996.
(q) Total ANOMS Revenues. "Total ANOMS Revenues" as used in this
Agreement shall mean the gross payment or consideration actually
received by HMMH or an HMMH Affiliate from the design, sale,
installation, upgrade, modification, or maintenance of any Airport
Noise and Operations Monitoring System or any Related Noise and
Operations Monitoring System, which incorporates the Licensed
Technology, net of any amounts charged to customers representing
payment or reimbursement for sales or use taxes and shipping and
related charges, if invoiced separately.
2. Grant of License. Subject to the performance by HMMH of its
obligations under the terms of this Agreement and the provisions of
paragraph 4 of this Agreement, effective as of the Effective Date
Larson-Davis hereby grants HMMH the exclusive license to use and
practice the Licensed Technology in the Airport Noise and
Operations Monitoring Industry, including: (i) the production,
marketing, licensing, or sale to End Users of the ANOMS Software;
(ii) the design and development of Improvements; (iii) the
production, marketing, licensing, or sale of any Improvements;
(iv) the right to reproduce, distribute, perform, display and
prepare derivative works of any works of authorship included in
the Licensed Technology; and (v) the right to manufacture, market
and sell any products or systems and to practice any methods covered
by any claim of any patent included in the Licensed Technology. Such
exclusive license shall include complete access to the source code
of the ANOMS Software and the right to modify or amend such source
code as HMMH may deem appropriate. HMMH shall also have a non-
exclusive license to use and practice the Licensed Technology in
Related Noise and Operations Monitoring Industries.
<PAGE>
3. Documentation of Licensed Technology. Larson-Davis shall
provide HMMH with all available written technical information and
know-how in its possession concerning the Licensed Technology.
Larson-Davis shall provide such additional technical assistance
with respect to the Licensed Technology and any Improvements as
may be requested by HMMH. When such technical assistance is required
from individuals who have remained as employees of Larson-Davis,
such technical assistance shall be provided, within reasonable time
and resource constraints, at LarsonDavis' preferred customer
standard rate which is currently $40 per hour, plus expenses
(travel, meals, etc.).
4. Reservation of Rights; exclusivity. Larson-Davis reserves the
right to make use of the Licensed Technology, including the ANOMS
Software but excluding any and all Improvements made by HMMH, in
applications other than in the Airport Noise and Operations
Monitoring Industry, subject to the following provisions of this
Section 4. In addition, Larson Davis reserves the right to use the
Licensed Technology, including the ANOMS Software, in the Airport
Noise and Operations Monitoring Industry, but only to the extent
necessary for Larson-Davis to meet obligations in existence at the
time of the Effective Date that are not assumed by HMMH for any
reason. During the term of this Agreement, Larson-Davis shall not
use or practice the Licensed Technology in any manner in the Airport
Noise and Operations Monitoring Industry, or license or otherwise
authorize any other person to do so. In particular, but without
limitation of the foregoing, Larson-Davis shall not, and shall not
license or otherwise authorize any other person to: (i) produce,
market, license or sell the ANOMS Software to any End User in the
Airport Noise and Operations Monitoring Industry; or (ii) produce,
market, license or sell to any person any Improvements which are
specifically and primarily used in the Airport Noise and Operations
Monitoring Industry.
5. Existing Contracts. Larson-Davis is party to a number of
agreements with Airport Authorities. Larson-Davis wishes to assign,
and HMMH wishes to assume, all of Larson-Davis' rights, duties, and
obligations under the terms of the contracts listed on Exhibit "B"
attached hereto and incorporated herein by this reference (the
"Assigned Contracts"). Such assignment may require the prior
approval of the relevant Airport Authority. Subsequent to the
execution and delivery of this Agreement, the parties agree to
cooperate in informing the relevant Airport Authorities of the
intention of the parties and in seeking the approval of the
assignment and assumption of the Assigned Contracts from the
Airport Authorities. Until obtaining such approval with respect t
<PAGE>
any particular contract (a "Deferred Approval Contract"), HMMH shall
be retained by Larson-Davis under subcontract to perform the work
required under such contract, and Larson-Davis shall, as
consideration for such subcontract services by HMMH, direct to be
paid to HMMH all accounts receivable and payments with respect to work
in progress identified in Exhibits "D" and "II" of this Agreement
under such Deferred Approval Contract and shall provide to HMMH all
other benefits received by Larson-Davis in consideration for work
performed by HMMH. Any such subcontract between Larson-Davis and
HMMH shall be subject to the terms of the Assigned Contracts.
6. Assignment of Existing Contracts. Subject only to obtaining any
necessary approval of the Airport Authorities as set forth in
paragraph 5 of this Agreement, Larson-Davis hereby sells, assigns,
transfers, and sets over to HMMH all of Larson-Davis' right, title,
and interest in and to the Assigned Contracts. Larson-Davis
represents and warrants that it has full right, title, and authority
to sell, assign, transfer, and set over to HMMH all such right,
title, and interest in and to the Assigned Contracts, subject only
to any required approval of the relevant Airport Authority.
7. Assumption of Existing Contracts. Subject only to obtaining
any necessary approval from the relevant Airport Authority as set
forth in paragraph 5 of this Agreement, on the Effective Date HMMH
agrees to accept the assignment of the Assigned Contracts and to
assume, perform, fulfill, and observe all of Larson-Davis' duties
and obligations of performance of scope under such Assigned
Contracts. Larson-Davis also agrees to retain certain performance
obligations under the Assigned Contracts as identified in Exhibit "C."
8. Assignment of Collateral Rights. Larson-Davis hereby assigns to
HMMH all of its right, title, and interest in and to (i) the accounts
receivable with respect to the Assigned Contracts specifically
identified on Exhibit "D" attached hereto and incorporated herein by
this reference; (ii) the work in progress and pending airport
proposals specifically identified on Exhibit "E" attached hereto
and incorporated herein by this reference; (iii) the rights of
Larson-Davis under the lease agreement for the Sun computer
equipment identified on Exhibit "F' attached hereto and incorporated
herein by this reference, including the use of such equipment;
(iv) the rights of Larson-Davis under the terms of the vendor
agreements to supply materials and services in support of the
Assigned Contracts as identified on Exhibit "G" attached hereto
and incorporated herein by this reference; and (v) the INTERNET
address of Larson-Davis Systems and the hardware and service contract
associated with such INTERNET connection. The contracts and other
rights referred to in the preceding clauses (i) through (v) ar
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referred to herein as the "Collateral Rights." Larson-Davis
represents and warrants that it has full right, title, and
authority to sell, assign, transfer, and set over to HMMH all such
right, title, and interest in and to the Collateral Rights, subject
only to the requirements for consent to such transfer or assignment
as are contained in the Assigned Contracts.
9. Assumption of Collateral Obligations. In addition to the
assumption of the duties, obligations, and liabilities of
Larson-Davis under the terms of the Assigned Contracts, HMMH will
assume all of Larson-Davis' future duties, obligations, and
liabilities under the terms of the following:
(a) The lease agreement for the Sun computer equipment identified
on Exhibit "F";
(b) The agreement with respect to Larson-Davis Systems' INTERNET
connection, including the hardware and service provided with respect
thereto;
(c) The obligations, if any, of, Larson-Davis Systems under the
terms of the vendor agreements identified on Exhibit "G";
(d) The accounts payable identified on Exhibit "H" attached hereto
and incorporated herein by this reference;
(e) The pending bids and proposals identified on Exhibit "E" hereto.
HMMH shall not be obligated to assume any obligation, commitment, or
duty of Larson-Davis not specifically identified under the terms of
this Agreement.
10. Bonding. HMMH agrees to use reasonable efforts to obtain
replacement bonding with respect to the Assigned Contracts. HMMH
shall be so obligated with respect to the bonds scheduled on
Exhibit "I". HMMH shall use reasonable efforts to provide the
necessary bonding in the full amount required under the terms of
the Assigned Contracts so as to obtain the release of Larson-Davis
from the bonding currently in place with respect to such contracts.
HMMH agrees to indemnify Larson-Davis for any losses suffered by it
with respect to bonds for Assigned Contracts which are not replaced,
and agrees to become co-obligor only if required by bonding companies
with respect to existing bonds in order to preclude Larson-Davis'
default on such existing bonds.
<PAGE>
11. Payment. In connection with the transactions set forth in this
Agreement, HMMH agrees to pay the following to Larson-Davis:
(a) $125,000 in cash to be paid on the date of execution;
(b) A license fee, to be paid during the Term of this Agreement and
paid monthly in advance commencing on the first day of the first
month following the month in which the Effective Date occurs, of
$12,500 per month for the shorter of the Term of this Agreement or
ten years. In the event payment by HMMH becomes overdue by 30 days,
Larson-Davis shall give HMMH 30 days' notice that it is in breach
of this provision and HMMH shall have 60 days in which to cure such
breach. Upon the expiration of the cure period, Larson-Davis shall
be entitled to take such action as it deems necessary to enforce its
rights under this Agreement, pursuant to the terms hereof.
(c) An ongoing royalty for the shorter of the Term of this Agreement
or ten years based on the Total ANOMS Revenues received by HMMH
during each Term Year as set forth below:
(i) 4% of the first $2,000,000 in Total ANOMS Revenues during any
Term Year;
(ii) 3% of Total Revenue, over $2,000,000 and up to $5,000,000
during any Term Year; and
(iii) 2.5% of Total ANOMS Revenues in excess of $5,000,000 in any
Term Year.
Notwithstanding the foregoing provisions of this subparagraph (c),
HMMH shall be entitled to a credit of up to $12,500 against the
royalty due on Total ANOMS Revenues in excess of $1,000,000 during
each of the first five Term Years of this Agreement and an
additional credit of up to $12,500 against the royalty due on
Total ANOMS Revenues in excess of $2,000,000 during each of the
first five Term Years of this Agreement; so that during the first
five Term Years of this Agreement, HMMH shall have a credit of
$12,500 against royalties due on Total ANOMS Revenues for such Term
Year in excess of $1,000,000 that will be fully earned when Total
ANOMS Revenues for such year exceed $1,312,500 and shall have an
additional credit of up to $12,500 against royalties due on Total
ANOMS Revenues for such Term Year in excess of $2,000,000 that will
be fully earned when Total ANOMS Revenues for such year exceed
$2,416,667. Such credits can only be taken on a year-to-year basis
and do not carry over to subsequent Term Years if not earned during
any Term Year.
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The royalty shall be based on Total ANOMS Revenues as defined above,
and shall not be limited to the cost of the ANOMS Software and
Licensed Technology included in such systems.
12. Purchase Option. HMMH shall have the right, by giving written
notice to Larson-Davis at least 30 days in advance of the relevant
date, to purchase all of Larson-Davis' rights to the ANOMS Software
and to obtain a perpetual, royalty-free, non-exclusive right to all
other rights in the Licensed Technology. The purchase price shall
be shall be paid to Larson-Davis by wire transfer or delivery of a
certified or official bank check on or before the purchase option
date, and Larson-Davis shall deliver to HMMH an instrument of
assignment in form satisfactory to HMMH under which Larson-Davis
shall assign, convey and deliver to HMMH all of Larson-Davis' right,
title and interest in and to the ANOMS Software and shall grant to
HMMH a perpetual license to all of the additional rights included
in the Licensed Technology. On completion of any such purchase all
of the parties' rights and obligations under the terms of this
Agreement shall cease other than the obligation of HMMH to pay any
accrued license fee or royalty payment unpaid as of the date of
termination, and those rights and obligations contained in
paragraphs 21, 25 and 26. The purchase option dates and the
purchase prices are as set forth below.
Date Purchase
August 1, 1998 $3,000,000
August 1, 2000 $2,200,000
August 1, 2002 $1,700,000
August 1, 2005 $ 875,000
If HMMH has not previously exercised its option to purchase the
Licensed Technology under the terms of paragraph 12 of this
Agreement and exercises its option to extend the term of this
Agreement under paragraph 34, the royalty on Total ANOMS Revenues
for all periods subsequent to August 1, 2005, and prior to the
end of the extended term of this Agreement shall be 3%.
13. Support Obligations of HMMH. From and after the Effective
Date, HMMH shall be solely responsible for providing support
services under the terms of the Assigned Contracts and to all
subsequent End Users with respect to the Licensed Technology.
Larson-Davis shall, when and as requested by HMMH and within
reasonable time and resource constraints, assist in providing
such services with respect to the Business at Larson-Davis' then
current preferred customer standard rate which is presently $40
per hour.
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14. Hardware. HMMH agrees to use its reasonable commercial efforts
to include the hardware products of Larson-Davis in its bid proposals
in the Airport Noise and Operations Monitoring Industry during the
term of this Agreement. Larson-Davis agrees to provide all such
hardware to HMMH for use in the Airport Noise and Operations
Monitoring Industry or for HMMH internal use at a price equal to
its standard price for similar equipment and orders, less 25%.
Other than price, such hardware shall be provided by Larson-Davis
on the same terms as it offers to other purchasers of its hardware
equipment from time to time. HMMH shall provide Larson-Davis with
information it receives from End Users in the Airport Noise and
Operations Monitoring Industry concerning the performance of the
Larson-Davis hardware, desired enhancements to the Larson-Davis
hardware, and new product requests.
15. Reporting. During the term of this Agreement, HMMH shall
provide Larson-Davis within 45 days following the close of any
Quarter, and whether or not a payment is due in such Quarter,
with a written statement certified as accurate by a duly authorized
representative of HMMH, identifying: (i) the Total ANOMS Revenues
during the Quarter; (ii) the credit amount available to HMMH under
subparagraph ll(c); and (iii) the calculation of the royalty due
to Larson-Davis under this Agreement for the Quarter. The written
statement shall be accompanied by a check for the amount of the
royalty, if any, shown due for the Quarter, and by a list
identifying any bids submitted in the quarter for Airport Noise
and Operations Monitoring Systems. Within 90 days following the
end of the fiscal year of HMMH, HMMH shall provide to Larson-Davis a
copy of its financial statements for such year certified by its chief
financial officer as a fair and accurate presentation of the
financial condition of HMMH as of the end of the fiscal year and
the results of operations for the period(s) presented. All
information provided to Larson-Davis under the terms of this
paragraph shall be treated as HMMH Confidential Information.
16. Books and Records. HMMH shall keep and retain, for a period of
at least six years, during the term of this Agreement, true and
accurate books and records containing all the data reasonably
required for the full computation and verification of the Total
ANOMS Revenues and the royalties to be paid to Larson-Davis under
the terms of this Agreement. Such records shall be maintained in
accordance with good and prudent business practices and in
sufficient detail to show all factors used in the calculation of
Total ANOMS Revenues and the royalties due to Larson-Davis and to
permit the audit of Total ANOMS Revenues and the royalties due and
paid in accordance with generally accepted accounting principles
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HMMH shall permit the reasonable inspection and audit of such
records by an independent certified public accountant selected by
Larson-Davis during regular business hours on 15 days' prior
written notice to HMMH; provided that, as a condition of being
permitted to perform such inspection and audit such independent
public accountants shall be required to execute a confidentiality
agreement under which they shall agree to maintain in confidence
all information of HMMH learned in the course of such inspection and
audit, disclosing to Larson-Davis only the Total ANOMS Revenues,
the calculation of any royalty due, and the aggregate amount of
any underpayment, if any. All costs of such inspection and audit
shall be paid by Larson-Davis; provided that, if any inspection or
audit discloses a deficiency in the royalties paid to Larson-Davis
in excess of 5% of the royalties determined due, HMMH shall bear
all reasonable costs and expenses of such inspection or audit.
17. Disclosure of Improvements. Larson-Davis shall keep HMMH fully
informed as to Improvements made by Larson-Davis with respect to
the Licensed Technology. All improvements shall be included in
the Licensed Technology without additional consideration and shall
be subject to all provisions of this Agreement.
18. Infringement of Proprietary Rights.
(a) HMMH shall have the first right to sue any infringer of the
Licensed Technology, at its own expense and in the name of Larson-
Davis, if necessary, and Larson-Davis agrees to join in such suit
at HMMH's expense and to execute any necessary papers for such suit.
Larson-Davis shall give HMMH prompt written notice of any such
infringement of which it has knowledge. If HMMH fails within 90
days from notice by Larson-Davis to commence reasonable enforcement
actions against any such infringer, Larson-Davis shall have the
right to file and maintain, at its own expense, such suits for
infringement; however, nothing in this Agreement shall obligate
Larson-Davis to assume any responsibility or liability respecting
any action or possible action for infringement.
(b) Any sum recovered in such suit or in settlement thereof shall be
used first to reimburse HMMH and Larson-Davis for any and all direct
out-of-pocket costs and expenses of every kind and character,
including attorneys' fees, expert witness fees, court costs, and
the like incurred by each of them, respectively, in the prosecution
of any suit; provided that, any substantial costs incurred by the
party which does not have primary responsibility for prosecuting the
suit shall have been incurred at the request or with the approval of
the party which has such primary responsibility. If, after suc
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reimbursement, any funds shall remain from such recovery, such funds
shall be paid to the party which assumed primary responsibility for
prosecuting such suit.
19. Defense of Licensed Technology. Subject to the provisions of
paragraph 26, Larson-Davis shall be obligated to indemnify, defend,
and hold HMMH harmless from any suit, damage claim, or demand based
on actual or alleged infringement of any patent, copyright or
trademark or any unfair trade practice resulting from the use of the
Licensed Technology in accordance with the terms of this Agreement.
HMMH shall cooperate fully with Larson-Davis, at Larson-Davis' cost
and expense, in the defense of any such suit, claim, or demand and
the employees of HMMH shall provide testimony at reasonable times and
for reasonable periods without cost, except that Larson-Davis shall
pay travel, lodging, and related expenses actually incurred in
providing such testimony. HMMH shall be entitled to participate at
its own expense in the defense and settlement of any such suit,
claim, or demand through counsel of its own choosing. HMMH shall
not be subject to any liability or restriction under any settlement
agreement entered into by Larson-Davis without the prior written
consent of HMMH.
20. Product Liability. HMMH shall indemnify, defend, and hold
Larson-Davis harmless from all liability, costs, and fees relating
to any claim, demand, or suit, and the defense thereof, arising
from the manufacture, use, sale, or distribution by HMMH of Airport
Noise and Operations Monitoring Systems under the license conferred
hereby, except to the extent that such claim, demand, or suit is
based upon negligence or other wrongful conduct of Larson-Davis.
21. Confidential Information. Larson-Davis and HMMH acknowledge
that in the performance of this Agreement or in the contemplation
thereof, each party and its employees and agents may have access
to proprietary and confidential information or trade secrets of the
other party, including, but not limited to, trade secrets, source
code, object code, source documents, flow diagrams, logic charts,
methodologies, record layouts, written instructions related to the
performance by the parties under the terms of this Agreement, and
information relating to either party's past, present, or future
research, development, or business affairs, including, but not
limited to, all financial statements, records and information,
business plans, bid and proposal information, and names of
customers which either party does not disclose to the public in
the ordinary course of its business. For purposes of the
application of this Section 21, the ANOMS Software shall be
deemed to be proprietary to both Larson-Davis and HMMH. The
parties agree:
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(a) that all Confidential Information accessed or acquired from
the other party by it or its employees or agents under this
Agreement or in contemplation thereof, shall be and remain the
exclusive property of the other, except as otherwise provided
hereunder;
(b) to keep, and have its employees and agents keep, confidential
any and all such Confidential Information belonging to the other in
the same manner as it protects its own confidential information of
like kind, but in no event shall it exercise less than reasonably
prudent due diligence and care;
(c) not to reproduce, publish, use, or otherwise disclose to others,
or permit its employees or agents or anyone else to reproduce,
publish, use, or disclose to others, any Confidential Information
belonging to the other without the other's written approval;
provided, however, if either party is required (by oral questions,
interrogatories, request for information or documents, subpoena,
civil investigative demand, similar process, or otherwise) to
disclose any Confidential Information, such party will provide
prompt notice to the other party of such request(s) so that such
other party may seek any appropriate protective order and/or waive
compliance with the provisions of this Agreement. Failing the entry
of a protective order or the receipt of a waiver hereunder, if a
party is in the written opinion of its attorneys compelled to
disclose any Confidential Information under pain of liability for
contempt or other material censure or material penalty, such party
may disclose such Confidential Information without liability
hereunder upon written notice to the other party;
(d) not to make use, or permit its employees or agents or anyone
else to make use, of any Confidential Information belonging to the
other in any fashion not otherwise authorized by the other pursuant
to this Agreement; and
(e) that they and their employees and agents will at all times
comply with all reasonable security regulations in effect from time
to time at the premises of the other.
22. Survival of Confidentiality Obligations. The confidentiality
obligations of the parties under the terms of this Agreement shall
continue throughout the term of this Agreement and for a period of
five years following any termination or expiration thereof. Within
30 days following any termination or expiration of this Agreement,
each party shall retain or deliver to the other party the
Confidential Information belonging to the other party.
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22A. Non-competition. Larson-Davis agrees that for the term of
this Agreement, Larson-Davis will not, without the prior written
consent of HMMH, directly or indirectly, engage or participate in,
be employed by or assist in any manner or in any capacity, or have
any interest in or make any loan to any person, film, corporation
or business which engages in the design, manufacture, development,
distribution, marketing, licensing, or sale of any product, data
or services in the Airport Noise and Operations Monitoring Industry,
provided that Larson-Davis shall not be prohibited from selling any
of its regularly-scheduled catalog items at its then-current list
price to any entity, regardless of whether that entity is engaged
in the Airport Noise and Operations Monitoring Industry.
23. Remedy. The parties acknowledge that the rights in the
Confidential Information are extraordinary and unique, and that
remedies at law may be inadequate to protect against the
unauthorized disclosure or other breach of the provisions governing
such information. The parties consent to the granting of equitable
relief, including an injunction, whether temporary, preliminary,
or final, in favor of the other party without proof of actual
damages. The party found to have breached the confidentiality
provisions shall pay the amount of any final judgment plus costs
and expenses, including reasonable attorneys' fees, incurred by the
prevailing party in connection with such action.
24. Security.
(a) As security for its obligations under this Agreement, HMMH
shall pledge all of its interest in the Business, including all of
the assets, contractual rights, accounts receivable, and intangible
rights directly and primarily associated with the Business. HMMH
hereby acknowledges ownership of the Licensed Technology by Larson-
Davis for the duration of this Agreement, including, unless and
until HMMH exercises its purchase option under Section 12, the ANOMS
Software. Larson-Davis' security interest in such pledged assets
shall be evidenced by financing statements acceptable in form and
content to Larson-Davis and filed with the appropriate states. HMMH
further hereby pledges as additional security all enhancements and
improvements to the Licensed Technology which may be developed by
HMMH, to be placed in escrow as provided in Section 25 and released
to Larson-Davis upon termination of this Agreement under Section 35(b)
or 36. HMMH shall not pledge the Licensed Technology or any
enhancements or improvements thereto made by HMMH as collateral for
any other indebtedness during the term of this Agreement. Larson-
Davis agrees that its sole security interest in the Business shall
be as above.
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(b) In the event of any termination of this Agreement under
Section 35(b) or 36, (i) Larson-Davis shall be entitled to obtain
the release of the escrowed materials under Section 25, (ii) HMMH
shall provide reasonable assistance, at HMMH expense, to Larson-
Davis in transferring to Larson-Davis personnel any special
technology or know-how of personnel retained by HMMH relating to
the ANOMS Software, and (iii) HMMH and Larson-Davis will cooperate
and exert their respective best efforts in arranging for the
assignment by HMMH of HMMH's rights under any contracts for which
successful completion is dependent upon the ongoing use of the
Licensed Technology and the assumption by Larson-Davis of HMMH's
obligations under such contracts, and HMMH shall reimburse Larson-
Davis for its reasonable expenses incurred in effecting such
assignment and assumption.
25. Source Code. In the event of an event or circumstance under
which Larson-Davis may exercise its rights against the Collateral
as described in Section 24 of this Agreement, Larson-Davis shall
have the right to utilize the Licensed Technology, including the
ANOMS Software and Improvements, for all purposes. During the term
of this Agreement, HMMH agrees that at any time that it issues a new
release of the ANOMS Software containing substantial modifications,
but not less frequently than every six months whether or not any
changes have been made, it will deposit an update of the source code
of the ANOMS Software, including all changes, modifications, or
Improvements, in both machine readable and human readable form, in
escrow with an escrow agent pursuant to an escrow agreement in
mutually acceptable form providing for the release of such source
code to Larson-Davis in the circumstances referred to in the first
sentence of this paragraph 25. In addition, HMMH shall deposit in
escrow, at any time that it deposits a source code update, a summary
of all changes, modifications, and improvements made to the ANOMS
Software sufficient to permit Larson-Davis to utilize, modify, and
change the ANOMS Software source code without additional
instruction or information from HMMH in the event of release of the
escrowed materials to Larson-Davis. In addition, upon the writen
request of Larson-Davis, HMMH will provide to Larson-Davis an
abstract summary describing the improvement(s) so deposited, as well
as a copy of the object code. Such abstract and object code shall be
considered confidential and proprietary to HMMH and shall be treated
in accordance with the terms of paragraph 21 hereunder. HMMH will
permit Larson-Davis to hire a third-party to inspect, at Larson-
Davis' expense, the materials deposited in escrow upon 15 days'
notice to HMMH. Such third party shall sign a non-disclosure and
confidentiality agreement with respect to the escrowed material
<PAGE>
which shall (i) prohibit disclosure to any party other than Larson-
Davis or HMMH any information whatsoever about the escrowed
materials, and (ii) limit its disclosure to Larson-Davis to a
statement of opinion that the software meets or does not meet
industry standards for adequate documentation.
26. Indemnification by HMMH. HMMH shall defend, indemnify, and
hold harmless Larson-Davis and its officers, directors, employees,
and agents from and against any and all damages and liabilities
("Loss") and reasonable expenses ("Expenses") resulting from any
claim, action, suit, or other proceeding against Larson-Davis
arising out of: (i) the manufacture, use, sale, or distribution by
HMMH of Airport Noise and Operations Monitoring Systems under the
license conferred hereby, except to the extent that such claim,
demand or suit is based upon negligence or other wrongful conduct of
Larson-Davis; (ii) the performance or failure to perform by HMMH of
the obligations assumed by it under the terms of the Assumed
Contracts; (iii) any wrongful act or omission of HMMH or any of
its officers, directors, employees, or agents in connection with
the use of the Licensed Technology; (iv) any material breach by
HMMH of any covenant, representation, or warranty contained in this
Agreement, or (v) any breach by HMMH of its agreement to indemnify
and hold Larson-Davis harmless under Section 10 of this Agreement.
HMMH shall only be liable for the portion of any such Loss or
Expense which exceeds $15,000. The foregoing indemnity shall
exclude any Loss or Expense resulting from or relating to any
wrongful act or omission of Larson-Davis which is subject to Larson-
Davis' indemnity under paragraph 27.
27. Indemnification by Larson-Davis. Larson-Davis shall defend,
indemnify, and hold harmless HMMH and its officers, directors,
employees, and agents from and against any and all damages and
liabilities ("Loss") and reasonable expenses ("Expense") resulting
from any claim, action, suit, or other proceeding against HMMH
arising out of (i) the manufacture, use, sale, or distribution by
Larson-Davis of Airport Noise and Operations Monitoring Systems,
except to the extent that such claim, demand or suit is based upon
negligence or other wrongful conduct of HMMH occurring after the
date of this Agreement; (ii) the performance by Larson-Davis of its
obligations under the terms of the Assumed Contracts, with respect
to the period prior to the Effective Date or otherwise with respect
to obligations not assumed by HMMH; (iii) any wrongful act or
omission of Larson-Davis or any of its officers, directors,
employees, or agents in connection with the use of the Licensed
Technology; (iv) any claim by a third party of infringement based
on the use of the Licensed Technology by HMMH in accordance wit
<PAGE>
the terms of this Agreement; or (v) any material breach by Larson-
Davis of any covenant, representation, or warranty contained in this
Agreement. Larson-Davis shall only be liable for the portion of any
such Loss or Expense in excess of $15,000. The foregoing indemnity
shall exclude any Loss or Expense resulting from or relating to any
wrongful act or omission of HMMH which is subject to HMMH's
indemnity under paragraph 26.
28. Notice of Claims. If either party claiming an indemnity under
this Agreement has suffered or incurred a Loss or Expense, or if any
claim, action, suit, or other proceeding is threatened or instituted
by or against a third party with respect to which an indemnified
party may claim any damage or expense as a Loss or Expense under
this Agreement, the indemnified party shall promptly notify the
indemnifying party thereof in writing. The indemnifying party
shall employ counsel and have the right to control the defense of
any claim, action, suit, or other proceeding to which the indemnity
relates, as well as the settlement thereof. The indemnifying party
shall pay any final judgment or settlement amount with respect
thereto. The indemnified party shall cooperate in the defense of
any claim, action, suit, or other proceeding upon the request of
the indemnifying party. The indemnified party shall have the right
to employ counsel and to participate in the defense thereof, but the
fees and expenses of such counsel shall be borne by the indemnified
party. If the indemnifying party fails to defend a claim within a
reasonable time after the receipt of notice thereof, the indemnified
party shall have the right, but not the obligation, to undertake the
defense of and to compromise or settle (exercising reasonable
business judgment) the claim, action, suit, or other proceeding on
behalf, for the account and at the risk of the indemnifying party.
In the event of the settlement of any claim, action, suit, or
proceeding, the parties shall not, except as may be required by law,
disclose any terms of such settlement or consent to the disclosure
thereof by any other party to such settlement, without first
notifying the other and providing the opportunity for the other
party to this Agreement to review such disclosure. Neither party
shall have any obligation or liability under any settlement entered
into by the other party without the written consent of the first
party, which consent shall not be unreasonably withheld.
29. Third Party Infringement Claims. If the Licensed Technology
or any part thereof is, or in the reasonable opinion of Larson-Davis
may become, the subject of any infringement claim by a third party,
then Larson-Davis may, at its sole option and expense, take the
following actions: (i) procure for HMMH the ability to exercis
<PAGE>
the rights granted pursuant to this Agreement with respect to the
Licensed Technology (or such part thereof); (ii) replace the
Licensed Technology (or such part thereof) with other suitable
products; or (iii) modify the Licensed Technology (or such part
thereof) to avoid such infringement; provided that, in the case of
any such replacement or modification (a) the replacement or
modification supplied by Larson-Davis shall be substantially
equivalent to the Licensed Technology in functionality and
performance; (b) Larson-Davis shall hold HMMH harmless from any
damage or expense incurred by it resulting from such replacement
or modification (including, by way of example and not by way of
limitation, customer conversion or re-training costs); and
(c) HMMH shall be entitled to an equitable adjustment in payments
required to be paid by it under this Agreement if the replacement
or modification lacks any of the functionality or performance
qualities of the original Licensed Technology.
30. Limitation on Larson-Davis' Indemnification. In no event
shall Larson-Davis be liable to, or be obligated to indemnify HMMH
for a third-party claim of infringement arising out of the use by
HMMH of the Licensed Technology if such infringement or alleged
infringement results from alterations or modifications to the
Licensed Technology made by HMMH or from the combination by HMMH of
the Licensed Technology with other programs, data, or equipment.
31. Ownership of Licensed Technology. The Licensed Technology and
any Improvements developed by Larson-Davis shall remain the
exclusive property of Larson-Davis. Any Improvements made by HMMH
shall be the exclusive property of HMMH, subject to Larson-Davis'
security rights.
32. Documentation of Ownership. The parties shall execute any and
all documents necessary to document ownership of original materials
or to register any patents or copyrights or other property rights
in such materials.
33. Non-Hire. HMMH may, at its election, hire any or all of the
employees of Larson-Davis Systems currently based in Boston,
Massachusetts as identified in Exhibit "J" attached hereto, but
shall be under no obligation to do so. Except for such individuals,
during the term of this Agreement and for one year following its
termination or expiration, neither party shall, without the prior
written consent of the other, hire or solicit for employment any
personnel of the other party who has access to the Licensed
Technology. Any consent requested by a party shall not be
unreasonably withheld.
<PAGE>
34. Term. Unless earlier terminated pursuant to Section 35 or
36, this Agreement shall be effective from the date first above
written and shall expire in ten years. On expiration of the term
(unless this Agreement has been earlier terminated as a result of a
breach of the obligations of HMMH), HMMH shall have the option to
extend the term for five years or to exercise its purchase option
under Section 12. If HMMH exercises its option to extend the term,
then upon expiration of the extension term HMMH shall have a
perpetual, paid-up, royalty free, exclusive license to the
Licensed Technology for application in the Airport Noise and
Operations Monitoring Industry.
35. Termination by HMMH.
(a) This Agreement may be terminated by HMMH if Larson-Davis
materially breaches any representation, warranty, or other
obligation hereunder and Larson-Davis fails to cure such breach
within 60 days after it receives written notice of such breach from
HMMH. In the event of such termination, HMMH shall be entitled to
a limited perpetual, royalty free non-exclusive license to the
Licensed Technology to the extent necessary to meet its contractual
obligations to its customers in existence as of the date of
termination.
(b) In addition, HMMH shall have the right to terminate this
Agreement upon 90 days' written notice to Larson-Davis at any time
after three years from the Effective Date, without cause, subject
to Larson-Davis' rights under Section 24. In the event of any
termination by HMMH under this Section 35(b), Larson-Davis shall
have the right and shall be required to resume control of the
Business pursuant to the provisions of Section 24. In such event,
HMMH shall be required to maintain the ongoing Business up to the
effective date of termination in a professional and businesslike
manner, and shall use its best efforts to effect a clean transition
of the Business to Larson-Davis subject to the terms of Section 24.
Larson-Davis shall be specifically precluded from claiming as
damages any lost income from license fees or royalty payments due
pursuant to Section ll that would have accrued to it after the
date of termination, to which it would otherwise have been entitled
had such termination not taken place.
36. Termination by Larson-Davis. This Agreement may be terminated
by Larson-Davis if (i) HMMH fails to pay the royalties or license
fees (after giving effect to HMMH's right of notice under
Section 1l(b)) due hereunder and fails to cure such breach withi
<PAGE>
60 days after Larson-Davis gives written notice to HMMH;(ii) if HMMH
materially breaches any representation, warranty, or other
obligation under this Agreement and fails to cure such breach
within 60 days after Larson-Davis gives written notice to HMMH;
or (iii) upon written notice from Larson-Davis to HMMH if at any
time HMMH becomes insolvent, makes a general assignment for the
benefit of creditors, files a voluntary petition for bankruptcy,
suffers or permits the appointment of a receiver for its business
or assets, becomes subject to any proceedings under any bankruptcy
or insolvency law, or winds up or liquidates, voluntary or otherwise.
36A. Certain Duties in the Event of Termination. In the event
this Agreement is terminated pursuant to Section 35(b) or 36, HMMH
agrees to fully and completely cooperate with Larson-Davis to
reassign the Business to Larson-Davis, including all accounts
payable, accounts receivable, any payments made in error to HMMH
by customers subsequent to the date of termination, and other
contract rights as of the effective date of any termination
hereunder.
37. Late Payments. In the event that any amount due under the
terms of this Agreement is not paid when due, such amount shall bear
interest from the date due until paid at a fixed rate of 1% per
month on the unpaid balance. This provision for interest or the
payment of such interest shall not act as a waiver of the parties
of their respective rights to terminate this Agreement on specified
breaches, including late payment, by the other party.
37A. Representations and Warranties of Larson-Davis. As a
material inducement to HMMH to enter into this Agreement and
consummate the transactions contemplated hereby, Larson-Davis
hereby makes to HMMH the representations and warranties contained
in this Section 37A.
(a) Organization and Qualifications of Larson-Davis. Larson-Davis
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada with full corporate
power and authority to own or lease its properties, to conduct its
business in the places where such properties are owned or leased
or such business is currently conducted, and to enter into and
perform this Agreement.
(b) Authority of Larson-Davis. Larson-Davis has full corporate
authority and power to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by Larson-Davis
pursuant to this Agreement and to perform its obligations hereunder.
<PAGE>
The execution, delivery and due performance by Larson-Davis of this
Agreement and each such other agreement, document and instrument
have been duly authorized by all necessary corporate action of
Larson-Davis. This Agreement and each agreement, document and
instrument executed and delivered by Larson-Davis pursuant to this
Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of Larson-Davis
enforceable in accordance with their terms. The execution,
delivery and performance by Larson-Davis of this Agreement and of
each such agreement, document and instrument (i) does not and will
not violate any provision of the Articles of Incorporation or
by-laws of Larson-Davis; (ii) does not and will not violate any
laws of the United States, or any state or other jurisdiction
applicable to Larson-Davis or require Larson-Davis to obtain any
approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) that has not been obtained or
made; and (c) subject to obtaining any necessary consent of Summit
Enterprises, Inc., and the commercial financial lenders of Larson-
Davis, does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a
right of termination of any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which Larson-Davis is a party
or by which the property of Larson-Davis is bound or affected, or
result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the
Licensed Technology.
(c) Accounts Receivable. To the best knowledge of Larson-Davis
and except as may be set forth on Exhibit "D", all accounts
receivable to be acquired by HMMH hereunder are valid and
enforceable claims, subject to no setoff or counterclaim, and
shall be fully collectible by HMMH after the Effective Date.
(d) Intellectual Property. Larson-Davis has exclusive ownership of
all of the Licensed Technology. Larson-Davis' rights in the
Licensed Technology are freely transferable, subject to obtaining
any necessary consent of Summit Enterprises, Inc. and the
commercial financial lenders of Larson-Davis. There are no
claims or demands of any other person pertaining to any of the
Licensed Technology and no proceedings have been instituted, or
are pending or threatened, which challenge the rights of
Larson-Davis in respect thereof. The Licensed Technology
comprises all intellectual property rights owned by Larson-Davi
<PAGE>
in, and required for the operation of, the Business. Except for
end-user licenses granted in the ordinary course of business,
Larson-Davis has not granted any licenses with respect to the
Licensed Technology or any part thereof to any person. Larson-Davis
has taken reasonable steps in accordance with sound business
practices to establish, protect and preserve its ownership of all
material copyright, trade secret and other proprietary rights with
respect to the ANOMS Software and the Licensed Technology. Larson-
Davis has no knowledge of any infringement by others of any of its
rights in the Licensed Technology. The present operation of the
Business by Larson-Davis does not infringe any intellectual property
rights of any other person. No proceeding charging Larson-Davis
with infringement of any adversely held intellectual property rights
in connection with its operation of the Business has been filed or
is threatened to be filed. To the best knowledge of Larson-Davis,
there exists no unexpired patent or patent application which
includes claims that would be infringed by or otherwise adversely
affect the operation of the Business. Larson-Davis is not making
unauthorized use of any confidential information or trade secrets
of any person, including without limitation any former employer of
any past or present employee of Larson-Davis, in connection with its
operation of the Business.
(e) Contracts. All of the Assigned Contracts and Collateral Rights
are valid and enforceable contracts and are in full force and effect
in accordance with their terms. True and correct copies of all
written agreements and other documents pertaining to the Assigned
Contracts and Collateral Rights will be delivered to HMMH within
30 days of the Effective Date of this Agreement. Larson-Davis is
not in default under any of the Assigned Contracts and Collateral
Rights and has no knowledge of conditions or facts which with notice
or passage of time, or both, would constitute a material default.
To the best knowledge of Larson-Davis, no other party to any of the
Assigned Contracts and Collateral Rights is in default or threatens
to be in default thereunder.
(f) Litigation. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the best
knowledge of Larson-Davis, threatened against Larson-Davis or any
affiliate of Larson-Davis which relates in any way to the Business.
(g) Compliance with Laws. To the best of Larson-Davis' knowledge,
except where failure to comply would not have a material adverse
effect, Larson-Davis is in compliance with all applicable statutes,
ordinances, orders, rules and regulations promulgated by an
<PAGE>
federal, state, municipal or other governmental authority which
apply to the conduct of the Business. Larson-Davis has not
received notice of a violation or alleged violation of any such
statute, ordinance, order, rule or regulation.
(h) Warranty or Other Claims. To the best of Larson-Davis'
knowledge, there are and have been no citations or decisions by
any governmental or regulatory body that any software or other
Airport Noise and Operations Monitoring System manufactured,
marketed, licensed or distributed at any time by Larson-Davis is
defective or fails to meet any standards promulgated by any such
governmental or regulatory body. Except as may be set forth on
Exhibit "K", there are no pending or, to the best of Larson-Davis'
knowledge, threatened proceedings which may result in such a
citation or decision. There are no pending or, to the best of
Larson-Davis' knowledge, threatened product liability, warranty
or other similar claims, or any facts upon which a material claim
of such nature could be based, against Larson-Davis relating to
the Business. There are no pending or, to the best of Larson-Davis
knowledge, threatened claims against Larson-Davis for renegotiation
or price redetermination of any business transaction relating to the
Business, and, to the best of Larson-Davis' knowledge, there are no
facts upon which any such claim could be based.
(i) Employee Matters. Larson-Davis is not delinquent in payments
to any of its employees in the Business for any wages, salaries,
vested vacation, commissions, bonuses or other direct compensation
for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. No collective
bargaining agreement is in effect or is currently being or is
about to be negotiated by Larson-Davis relating to the Business.
(j) Disclosure. The representations, warranties and statements
contained in this Agreement do not contain any untrue statement of
a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order
to make such representations, warranties or statements not
misleading in light of the circumstances under which they were made.
To the best knowledge of Larson-Davis, there are no facts which are
likely to have a material adverse effect on the Business that have
not been disclosed to HMMH in writing.
(k) Customers. No customer of Larson-Davis has, to the best
knowledge of Larson-Davis, any plan or intention to terminate its
agreement or order for services in the Business, except for Orange
County, California, which has expressed its intention to terminate
its order for services.
<PAGE>
37B. Representations and Warranties of HMMH. As a material
inducement to Larson-Davis to enter into this Agreement and
consummate the transactions contemplated hereby, HMMH hereby
makes to Larson-Davis the representations and warranties contained
in this section 37B.
(a) Organization and Qualifications of HMMH. HMMH is a corporation
duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts with full corporate power
and authority to own or lease its properties, to conduct its
business in the places where such properties are owned or leased
or such business is currently conducted, and to enter into and
perform this Agreement.
(b) Authority of HMMH. HMMH has full corporate authority and
power to enter into this agreement and each agreement, document and
instrument to be executed and delivered by HMMH pursuant to this
Agreement and to perform its obligations hereunder. The execution,
delivery, and due performance by HMMH of this Agreement and each
such other agreement, document, and instrument have been duly
authorized by all necessary corporate action of HMMH. This
Agreement and each agreement, document, and instrument executed
and delivered by HMMH pursuant to this Agreement constitutes, or
when executed and delivered will constitute, valid and binding
obligations of HMMH enforceable in accordance with their terms.
The execution, delivery, and performance by HMMH of this Agreement
and of each such agreement, document, and instrument (i) does not
and will not violate any provision of the articles of incorporation
or bylaws of HMMH; (ii) does not and will not violate any laws of
the United States, or any state or other jurisdiction applicable to
HMMH or require HMMH to obtain any approval, consent, or waiver of,
or make any filing with, any person or entity (governmental or
otherwise) that has not been obtained or made; and (iii) does not
and will not, subject to obtaining the consent of the commercial
financial lenders of HMMH, result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a
right of termination of any indenture or loan or credit agreement
or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction,
decree, determination, or arbitration award to which HMMH is a
party or by which the property of HMMH is bound or affected, or
result in the creation or imposition of any mortgage, pledge, lien,
security interest, or other charge or encumbrance on any of the
Licensed Technology.
<PAGE>
(c) Litigation. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the best
knowledge of HMMH, threatened against HMMH or any affiliate of HMMH
which relates in any way to the Business.
(d) Compliance with Laws. To the best of HMMH's knowledge, except
where failure to comply would not have a material adverse effect,
HMMH is in compliance with all applicable statutes, ordinances,
orders, rules, and regulations promulgated by any federal, state,
municipal, or other governmental authority which apply to the
conduct of the Business. HMMH has not received notice of a
violation or alleged violation of any such statute, ordinance,
order, rule, or regulation.
(e) Employee Matters. No collective bargaining agreement is in
effect or is currently being or is about to be negotiated by HMMH
and its employees.
(f) Disclosure. The representations, warranties, and statements
contained in this Agreement do not contain any untrue statement of
a material fact and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order
to make such representations, warranties, or statements not
misleading in light of the circumstances under which they were made.
To the best knowledge of HMMH, there are no facts which are likely
to have a material adverse effect on the Business that have not been
disclosed to Larson-Davis in writing as of the Effective Date of this
Agreement.
(g) Customers. To the best knowledge of HMMH, no customer of the
Business has any plan or intention to terminate its agreement or
order for services in the Business as a result of this Agreement
or the consummation of the transactions contemplated hereby.
38. Brokers. Larson-Davis and HMMH agree that there were no
finders or brokers involved in bringing the parties together or who
were instrumental in the negotiation, execution, or consummation of
this Agreement. Further, Larson-Davis and HMMH each agree to
indemnify the other against any claim by any third person for any
commission, brokerage, or finder's fee or other payment with respect
to this Agreement or the transactions contemplated hereby based on
any alleged agreement or understanding between such party and such
third person, whether express or implied, resulting from the
actions of such party. The covenants set forth in this section
shall survive the Closing and the consummation of the transactions
herein contemplated.
<PAGE>
39. Governing Law. This Agreement shall be governed by, enforced,
and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with
the laws of the State of Utah.
40. Notices. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed
sufficiently given if personally delivered, if sent by facsimile
or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by
prepaid overnight courier addressed as follows:
If to Larson-Davis, to: Larson-Davis Incorporated
Attn: Dan J. Johnson
1681 West 820 North
Provo, Utah 84601
Fax No. (801) 375-0182
Confirmation (801) 375-0177
With copies to: Howard S. Landa, Esq.
Kruse, Landa & Maycock, L.L.C.
Eighth Floor, Bank One Tower
50 West Broadway
Salt Lake City, Utah 84101
Fax No. (801) 359-3954
Confirmation (801) 531-7090
If to HMMH, to: Harris Miller Miller & Hanson Inc.
Attn: Robert L. Miller,
Senior Vice-President
15 New England Executive Park
Burlington, Massachusetts 01803
Fax No. (617) 229-7939
Confirmation (617) 229-0707
With copies to: Thomas P. Storer, P.C.
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Fax No. (617) 523-1231
Confirmation (617) 570-1145
<PAGE>
or such other addresses as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered or sent by facsimile or telecopy transmission
or other electronic communication, or one day after the date so
sent by overnight courier.
41. Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the breaching party or
parties shall reimburse the nonbreaching party or parties for all
costs, including reasonable attorneys' fees, incurred in connection
therewith and in enforcing or collecting any judgment rendered
therein.
42. Costs. Each of the parties shall bear its respective costs
associated with this Agreement and the transactions contemplated
hereby, including legal fees, accounting fees, and other costs
and expenses.
43. Third-Party Beneficiaries. This Agreement is solely between
Larson-Davis and HMMH and no director, officer, stockholder,
employee, agent, independent contractor, or any other person or
entity shall be deemed to be a third party beneficiary of this
Agreement.
44. Entire Agreement. This Agreement, together with the other
agreements, exhibits and documents referenced herein, represent the
entire agreement between the parties relating to the subject matter
hereof. All previous agreements between the parties, whether
written or oral, have been merged into this Agreement. This
Agreement fully and completely expresses the agreement of the
parties relating to the subject matter hereof. There are no other
courses of dealing, understandings, agreements, representations,
or warranties, written or oral.
45. Survival. The representations, warranties, and covenants of
the respective parties shall survive the Closing of the
transactions contemplated hereby.
46. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
<PAGE>
47. Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement shall only be
amended by a writing signed by all parties hereto, with respect to
any of the terms contained herein, and any term or condition of
this Agreement may be waived or the time for performance thereof
may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
48. Severability. If and to the extent that any court of
competent jurisdiction holds any provision, or any part thereof,
of this Agreement to be invalid or unenforceable, such holding
shall in no way affect the validity of the remainder of this
Agreement which shall continue in full force and effect.
49. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding on the parties and their successors,
assigns, heirs, executors, and administrators. Neither party may
assign its rights or obligations under the terms of this Agreement
without the prior written consent of the other, which consent shall
not be unreasonably withheld.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
Larson-Davis:
LARSON-DAVIS INCORPORATED
By /s/ Dan J. Johnson
Duly authorized Officer
Typed Name & Title: Dan J. Johnson, Vice-President
HMMH:
HARRIS MILLER MILLER & HANSON INC.
By /s/ Robert L. Miller
Duly Authorized Officer
Typed Name & Title: Robert L. Miller, Sr. Vice-President/Treasurer
