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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A No. 1
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 15, 1995
FIBERCHEM, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 0-17569 84-1063897
- ------------------------------ ----------- ------------------
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1181 Grier Drive, Suite B, Las Vegas, Nevada 89119
--------------------------------------------- ---------
(Address of principal executive offices) Zip code)
Registrant's telephone number, including area code: (702) 361-9873
N/A
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
FiberChem, Inc. (the "Company") entered into an
intellectual property License Agreement and a
cooperative Development Agreement as of June 15, 1995,
with Texas Instruments Incorporated ("TI"). Under the
License Agreement, TI licensed the Company's patented
fiber optic chemical sensor technology (FOCS) for use
with TI's optoelectronic technology. The Company
granted TI an exclusive worldwide royalty-bearing
license to develop, produce and market chemical sensors
for specific applications. The Company was granted by
TI a non-exclusive worldwide royalty-bearing license to
certain TI technology. The term of the License
Agreement is until the last Company or TI patent
expires concerning the technology under the agreement.
The Company and TI also entered into a cooperative
Development Agreement to design and develop certain
custom FOCS based sensors for TI's exclusive field of
use.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) EXHIBITS
* 1. License Agreement dated as of June 15, 1995,
by and between the Company and Texas Instruments
Incorporated.
2. Product Development Agreement dated as of June 15, 1995,
by and between the Company and Texas Instruments Incorporated.
* Certain information in this Exhibit has been
omitted and filed separately with the S.E.C. pursuant
to a request for confidential treatment.
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S I G N A T U R E S
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
hereunto duly authorized.
FIBERCHEM, INC.
Date: August 29, 1995 BY: /s/ MELVIN P. PELLEY
--------------------------
Melvin W. Pelley, Secretary
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LICENSE AGREEMENT
THIS AGREEMENT effective as of the 15 day of June, 1995,
by and between FIBERCHEM, INC., a Delaware corporation
(hereinafter called "FCI"), having a place of business at
1181 Grier Drive, Suite B, Las Vegas, Nevada 89119, and
TEXAS INSTRUMENTS INCORPORATED, a Delaware corporation,
acting by and through its Materials & Controls Group
(hereinafter called "TI" ), having a place of business at 34
Forest Street, Attleboro, Massachusetts 02703.
W I T N E S S E T H
WHEREAS, TI is engaged in the design, development,
engineering and manufacture of controls and sensors using
solid state (and electro-mechanical) technology and
processes.
WHEREAS, TI markets products to a variety of
applications, including appliance, automotive, consumer and
HVAC customers.
WHEREAS, FCI is engaged in the design, development,
engineering, manufacturing, marketing and sale of fiber
optic chemical sensors ("FOCS").
WHEREAS, TI and FCI (collectively, the "Parties" and
individually, as each "Party") entered into an agreement
("Initial Agreement") for designing and developing FOCS
effective December 17, 1991, that was amended by the Parties
on May 18, 1994.
WHEREAS, the Initial Agreement, as amended and extended
by the May 31, 1995 minutes of the Managing Committee, which
extended the applicable milestones, terminates on June 15,
1995.
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WHEREAS, FCI has the right to grant and is willing to
grant licenses under patents as set forth on Schedule A
attached hereto ("FCI Patent Rights") concerning FOCS.
WHEREAS, TI wishes to obtain an exclusive license under
the FCI Patent Rights upon the terms and conditions
hereinafter set forth.
WHEREAS, TI has the right to grant and is willing to
grant licenses under patents as set forth on Schedule B attached
hereto ("TI Patent Rights") concerning FOCS. Further, TI is
willing to sell products to FCI.
WHEREAS, FCI wishes to obtain a non-exclusive license
under the TI Patent Rights and to purchase products upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and
the faithful performance of the covenants herein contained,
it is agreed:
1.0 DEFINITIONS
1.1 "Licensed Product" shall mean fiber optic chemical
sensors including waveguide sensors incorporating a
chemically active material (collectively "FOCS").
1.2 "TI Field of Use" shall mean (OMITTED AND FILED
SEPARATELY WITH THE S.E.C. PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.) FOCS for all applications and
(OMITTED AND FILED SEPARATELY WITH THE S.E.C. PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT.) FOCS solely for
automotive and HVAC applications. Other products
or applications may be added by the Parties as
mutually agreed upon, on a product by product
and/or amendment of "Field of Use" basis.
1.3 "FCI Field of Use" shall mean any FOCS not now or
in the future included in TI Field of Use.
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1.4 "Improvement Patents" shall mean any and all developments
made during the term and arising from the Product
Development Agreement between the parties hereto
dated June 15, 1995 and any developments based
upon either FCI Patent Rights or TI Patent Rights
(collectively the "Parties Patents Rights")
including, but not limited to, any and all patent
applications, patents, or continuations,
continuations-in-part or divisionals and reissues
thereof, relating to Licensed Products .
1.5 "TEXAS INSTRUMENTS" shall include any individual,
partnership, joint venture association, trust,
unincorporated organization (subsidiary, division,
etc.), or corporation that directly or indirectly
controls or is controlled by or is under common
control with TI, whether such control is exercised
through the ownership of equity securities, by
contract, or otherwise.
1.6 "FIBERCHEM" shall include any individual, partnership,
joint venture association, trust, unincorporated organization
(subsidiary, division, etc.), or corporation that directly
or indirectly controls or is controlled by or is under
common control with FCI, whether such control is exercised
through the ownership of equity securities, by contract, or otherwise.
1.7 "FCI Patent Rights" shall mean all of the following
intellectual property as of the date of this Agreement
related to the Licensed Products:
a. Patents and applications as set forth in Schedule A.
b. Disclosures and patent applications filed and patents
issued from such applications including divisionals,
continuations, continuations-in-part and reissues.
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c. Foreign patent applications filed and foreign patents
issued or registered.
1.8 "TI Patent Rights" shall mean all of the following intellectual
property as of the date of this Agreement related to the
Licensed Products:
a. Patents and applications as set forth in Schedule B.
b. Disclosures and patent applications filed and patents issued
from such applications including divisionals, continuations,
continuations-in-part and reissues.
c. Foreign patent applications filed and foreign patents issued
or registered.
1.9 "Technical Information" shall mean any information relevant
to the development and production of Licensed Product(s)
including but not limited to patents, know-know, feasibility
study information testing and reliability information, designs,
specifications, documentation, drawings, computer programs,
prototypes and all other confidential information whether in
written or oral form.
1.10 "Licensee" shall mean the Party who is granted the (any) license
pursuant to Section 3.
1.11 "Licensor" shall mean the Party who grants the (any) license
pursuant to Section 3.
1.12 "Party" or "Parties" shall mean either FCI and/or TI.
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2.0 WARRANTIES
2.1 FCI and TI warrant that they have full power and
authority to execute, deliver and perform this Agreement and
that the provisions of this Agreement do not conflict with any
other agreements to which FCI or TI is a party or is bound.
2.2 FCI and TI make no warranty as to the Patent Rights,
Improvement Patents and Technical Information provided
hereunder other than each warrants that:
a. It owned, now owns and will own, free and clear from
contractual and any other restrictions that will not allow it
to perform as provided under this Agreement, all of its
Patent Rights, Improvement Patents, and Technical
Information licensed hereunder; and
b. Nothing has come to their attention that any
of their Patent Rights, Improvement Patents or Technical
Information furnished to the other prior to the signing of
this Agreement by both parties infringes upon any third
party rights or that there is pending or threatened claim or
litigation contesting the rights with respect to any of their
Patent Rights, Improvement Patents or Technical Information.
3.0 LICENSE GRANT
3.1 FCI hereby grants to TI and TI hereby accepts from
FCI, upon the terms and conditions hereinafter specified, an
exclusive license to practice the inventions set forth in the FCI
Patent Rights (including Improvement Patents and needed
Technical Information) in the United States and the rest of the
world for the TI Field of Use to make, have made, use and
sell Licensed Products to the full end of the terms for which
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the Patent Rights are issued, unless sooner terminated as
hereinafter provided.
3.2 The license granted hereunder is personal to TI (as defined in
Section 1.5) and does not include any right to license others
except that TI may license unrelated third parties to make or
manufacture Licensed Products for subsequent distribution
and/or sale by TI, provided that any such third party agrees
to preserve and maintain the confidentiality of the Technical
Information provided to it for such purposes. Further, in the
event TI has not paid royalties to FCI as provided herein
within two years after the termination of the Development
Agreement between the Parties effective June 15, 1995, FCI
shall have the right to convert TI's exclusive license set forth
above to a nonexclusive license.
3.3. TI hereby grants to FCI and FCI hereby accepts from TI upon
the terms and conditions hereinafter specified a nonexclusive
license to practice the inventions set forth in the TI Patent
Rights (including Improvement Patents and needed Technical
Information) in the United States and the rest of the world for
FCI Field of Use to make, have made, use and sell Licensed Product
to the full end of the terms for which the TI Patent Rights
are issued unless sooner terminated as hereinafter provided.
3.4 The license granted hereunder is personal to FCI (as defined
in Section 1.6) and does not include any right to license others
except that FCI may license unrelated third parties to make or
manufacture Licensed Products for subsequent distribution
and/or sale by FCI provided that any such third party agrees
to preserve and maintain the confidentiality of the Technical
Information provided to it for such purposes.
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4.0 IMPROVEMENTS PATENTS
4.1 FCI agrees to promptly notify TI of any FCI Improvement
Patents and FCI shall have the right to include any
Improvement Patents as an integral part of the FCI Patent
Rights to the extent that FCI has assignable rights therein.
4.2 TI agrees to promptly notify FCI of any TI Improvement
Patents and TI shall have the right to include any
Improvement Patents as an integral part of the TI Patent
Rights to the extent that TI has assignable rights therein.
5.0 ROYALTIES, RECORDS AND REPORTS
5.1 For the rights and privileges granted under the license from
FCI to TI, TI shall pay FCI in the manner hereinafter
provided, to the end of term of the FCI Patent Rights or as
earlier terminated as provided herein:
A royalty of five percent (5%) of Net Sales of Licensed
Products (hereinafter called "Royalties") made, used or sold
by TI in the United States and the rest of the world (where
appropriate patents have been filed) which come within the
scope of an unexpired, valid claim in the FCI Patent
Rights.
Royalties shall be due and payable only when such Licensed
Products are sold and invoiced by TI and shall be paid as
provided in Section 5.4 of this License Agreement. No
multiple royalties shall be payable to FCI because any
Licensed Product, its manufacture, use, lease or sale are or
shall be covered by more than one FCI Patent Rights patent
under this Agreement.
No royalties shall be payable on TI sales of electronics,
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housings or anything else as part of a composite unit in
addition to the FOCS component. Royalties are only payable
on the FOCS component.
5.2 For the rights and privileges granted under the License from
TI to FCI, FCI shall pay TI in the manner hereinafter
provided, to the end of term of the TI Patent Rights or as
earlier terminated as provided herein:
A royalty of two percent (2%) of Net Sales of Licensed
Products (hereinafter called "Royalties") made, used or sold
by FCI in the United States and the rest of the world
(where appropriate patents have been filed) which come
within the scope of an unexpired, valid claim in the TI
Patent Rights.
Royalties shall be due and payable only when such Licensed
Products are sold and invoiced by FCI and shall be paid as
provided in Section 5.4 of this License Agreement. No
multiple royalties shall be payable to TI because any Licensed
Product, its manufacture, use, lease or sale are or shall be
covered by more than one TI Patent Rights patent under this
Agreement.
No royalties shall be payable on FCI sales of electronics,
housings or anything else as part of a composite unit in
addition to the FOCS component. Royalties are only payable
on the FOCS component. Additionally, Royalties shall only
be paid by FCI to TI if TI provides a "volume base" or has
paid for the tooling for Licensed Product or the Licensed
Product is not purchased from TI.
5.3 Licensee shall keep full, true and accurate information which
may be necessary for the purpose of showing the amount
payable to Licensor by way of Royalties as set forth in
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Section 5.1 and 5.2 above. Said books of accounts shall be
kept by Licensee at the usual places where its like books are
kept. Said books shall be open at all reasonable times, for
three (3) years following the end of the calendar year to
which they pertain for the inspection of an independent
certified public accountant, to whom Licensee shall have no
reasonable objection, retained by Licensor at Licensor cost
for the purpose of verifying Licensee's royalty statement.
5.4 Licensee, within sixty (60) days after the end of each calendar
quarter during the term of this Agreement shall deliver to
Licensor a true and accurate report, at the address set forth in
Section 12.2 hereof, stating the quantities of Licensed Products
sold by Licensee under the license for the preceding three
(3) months, and the computation of Royalties thereon. The
computation and report shall indicate the number of Licensed
Products sold and the Net Sales of Licensed Products.
Simultaneously with the delivery of each such report, Licensee
shall pay to Licensor the Royalties, due in US dollars for the
period covered by such report. If no Royalties are due, it
shall be so reported.
5.5 The term "Net Sales" shall mean the gross invoice value of
Licensed Products less returns, sales taxes, cost of shipping
insurance, cost of freight, cost of packing, or other
transportation charges and quantity discounts given to
customers, but only if such returns, taxes, costs, charges and
discounts are expressly stated and separately invoiced as may
be readily determined by generally acceptable accounting
practices: provided; however, that the Licensed Products sold
by any Party shall not be regarded as sold for computation of
Net Sales until sold by such Party to a third Party. In the
event that a Licensed Product is sold as a part of a composite
unit for which a Party is not otherwise obligated to pay
Royalties to the other Party, and if, as a composite unit, the
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Licensed Product does not have a separate invoiced selling
price, then for the purposes of computing Royalties, Net Sales
of such Licensed Product shall be equal to the established
current Net Sales for such Licensed Product when sold or
invoiced as a separate unit. If an established current Net Sales
or an individual basis is unavailable , then the Net Sales shall
be based on the pro rata share of Licensed Product cost as
compared to composite unit cost.
5.6 It is expressly understood and agreed by the parties hereto that
all computations relating to determination of the amounts of
Royalties due and payable pursuant to this Agreement shall be
made in accordance with recognized and generally accepted
accounting principles as reflected in the practice of certified
independent public accountants.
6.0 TERM
6.1 This agreement shall become effective on the date of signing by
both Parties and unless terminated as provided in Section 7
below, shall remain in effect until the expiration of the last
patent of TI Patent Rights or FCI Patent Rights.
7.0 TERMINATION AND EFFECT OF TERMINATION
7.1 This Agreement may be terminated as follows:
(a) By mutual consent of FCI and TI properly authorized by
an officer of the respective company.
(b) By one Party giving written notice to the other Party of its
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intent to terminate, while stating with specificity the
grounds therefor, in the event that the other party fails to
perform or otherwise breaches any material obligations
hereunder. The Party so notified shall have sixty (60) days
after receipt of the notice to cure the breach or seek
legal redress. In no event shall such notice of intention to
terminate be deemed to waive any right to damages or
any other remedy which the Party giving the notice may
have as a consequence of such failure of such breach.
7.2 In the event that this Agreement is finally terminated (i.e.,
by operation of the present terms or legal decree):
a. "Licensee" shall have the right to dispose of all the
Licensed Products coming under the terms of this
Agreement, to utilize all inventory then on hand to produce
such Licensed Products, and to complete all orders for
Licensed Products then on hand. Royalties shall be paid
with respect to said Licensed Products as though this
Agreement had not been terminated.
b. Both Parties hereto shall be released from all obligations
and duties imposed or assumed hereunder except as
expressly provided to the contrary in this Agreement.
8.0 INFRINGEMENT BY THIRD PARTIES
8.1 Each party shall promptly advise the other of any infringement
of the Patent Rights or any other rights granted under this
Agreement of which it becomes aware.
8.2 Licensor shall have the right, but shall not be obligated,
to institute and prosecute at its own expense, suits for
infringement of its Patent Rights. In such event, all recoveries
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obtained by such suit by Licensor shall accrue to and shall be
the property of Licensor.
8.3 If within six (6) months after having been notified of any
alleged infringement, Licensor shall have been unsuccessful in
persuading the alleged infringer to desist and shall not have
brought and shall not be diligently prosecuting an infringement
action, or if Licensor shall notify Licensee at any time
prior thereto of its intention not to bring suit against any alleged
infringer for the Field of Use, then, and in those events only,
Licensee shall have the right, but shall not be obligated, to
prosecute at its own expense any infringement of the Patent
Rights for the Field of Use, and Licensee may, for such
purposes, use the name of Licensor as party plaintiff. In the
event that Licensee does initiate prosecution of said infringement
suit, Licensee shall be entitled to offset any and all future
Royalties against fees associated with the suit. No settlement,
consent judgment or other voluntary final disposition of the suit
may be entered into without the consent of Licensor, which consent
shall not unreasonably be withheld. In such event, all recoveries
obtained by such suit shall be applied in the below listed order
of priority:
a. First, to reimburse Licensee any costs or expense paid to
third parties that have not been previously offset against
Royalties owing to Licensor;
b. Next, to Licensor, to the extent of any Royalties previously
offset as set forth above;
c. Thereafter, divided between Licensee and Licensor.
8.4 In the event that a declaratory judgment action alleging
invalidity or noninfringement of any of the Patent Rights shall
be brought against Licensee, Licensor, at its option, shall have
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the right, within thirty (30) days after commencement of such
action, to intervene and take over the sole defense of the
action at its own expense.
8.5 In any infringement suit that either party may institute to
enforce the respective Patent Rights pursuant to the
Agreement, the other party hereto shall, at the request and
expense of the party initiating such suit, cooperate in all
respects and, to the extent possible, have its employees testify
when requested and make available relevant records, papers,
information, samples, specimens, and the like.
9.0 INFRINGEMENT CLAIMS BY THIRD PARTIES
9.1 In the event of any threatened or actual suits against Licensee in
consequence of the exercise of the licenses granted herein,
Licensee shall promptly inform Licensor and the parties shall
jointly decide on steps to be taken under the circumstances. If
the parties are unable to agree on a mutually acceptable course
of action with respect to the defense of any such claim within
sixty (60) days after it is first brought to the attention of
Licensor, then
9.1.1 Licensor shall be responsible for the defense of such
action and shall bear the cost and expense thereof to
the extent that the alleged infringement is based on
allegations that the Patent Rights owned solely by
Licensor are invalid or infringe on the rights of the
claimant, but Licensee shall be entitled to be
represented in any such proceeding by independent
counsel of its choosing at its own cost and expense;
otherwise, each party shall bear its own costs, expenses,
and attorney's fees incurred in appearing in and
defending any such action or proceeding.
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9.1.2 In the event that Licensor takes no action as set forth in 9.1.1
above, Licensee shall be entitled to suspend (but shall continue
to accrue) Royalties that accrue with respect to Net Sales of
Licensed Products made from and after the date on which a civil
action is commenced by the claimant in a court of competent
jurisdiction seeking to prevent alleged infringement based on
allegations that the Patent Rights owned solely by Licensor are
invalid or infringe on the rights of the claimant, or to recover
damages on account of such alleged infringement, until such
litigation has been dismissed or otherwise resolved by a
judgment, order or agreement that is no longer subject to any
rights of appeal. All expenses and damages arising out of such
civil action paid by Licensee shall be credited against accrued
and future Royalties.
9.1.3 If the settlement or satisfaction of any such infringement claim
requires the payment by Licensee to any third party of royalties
for the manufacture, use or sale of any of the Licensed Products
by reason of the invalidity of the Patent Rights owned solely by
Licensor or the infringement of such Patent Rights on the rights
of the claimant, then Licensee shall be entitled to deduct those
royalties paid to any such third party from the Royalties due
Licensor under this Agreement.
10.0 PRODUCT LIABILITY
10.1 Licensee, for in consideration of and as a condition to granting of
this License, hereby agrees to indemnify and hold harmless and
release and forever discharge Licensor, and its agents, directors,
officers, and employees, either in their individual
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capacities or by reason of their relationship to Licensor and its
successors, from any and all claims and demands whatsoever which any
or all other persons may assert against Licensor, or any or all of
the above-mentioned persons or their successors, arising out of the
death or injury to any person or persons or out of any damage to
property, or other consequences arising or resulting directly from
the license herein and hereby granted concerning Licensee's
production, manufacture, sale, use, lease, consumption, or
advertisement of the Licensed Product, and occurring at any time
subsequent to the grant of the license.
11.0 TERMS OF SALE
11.1 As further consideration for the Rights granted hereunder, during
the term of this Agreement, FCI shall have the right to purchase
any non-licensed TI product and /or any improvements of such
products, or extensions of Licensed Products (collectively,
"Additional Products") from the Semiconductor Group of TI ("SCG")
for any given specific volume level on terms no less favorable than
to any other customer of SCG would receive including TI's Materials
and Control Group ("MCG") under SCG's standard terms of sale with
SCG's standard product warranty. For any Additional Products produced
in the future on an "open tooling" basis, namely tooling owned by TI,
FCI shall be able to purchase such products on terms no less
favorable than to any other customer of SCG on the same conditions.
If the terms of sale by SCG to any other party are more favorable
than those being offered to FCI, such more favorable terms may be
substituted in their entirety, at FCI's option, provided comparable
consideration has been or is provided for in the new terms.
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12.0 MISCELLANEOUS PROVISIONS
12.1 Neither Party may assign, pledge, hypothecate or in any manner
transfer, convey, alienate or encumber any right or interest in this
Agreement, without the written permission of the other party, which
permission shall not be unreasonable withheld, and any such
non-permitted, purported assignment, pledge, hypothecation, transfer,
conveyance, alienation, or encumbrance shall be void.
12.2 Notice
Any notice, request or statement hereunder shall be deemed to be
sufficiently given or rendered upon the date mailed when sent by
registered airmail, postage prepaid, and if given or rendered
to TI addressed to:
Texas Instruments Incorporated
Materials & Controls Group
34 Forest Street, MS 20-21
Attleboro, Massachusetts 02703
Attn.: Patent Counsel
or, if given or rendered to FCI, addressed to
FiberChem, Inc.
1181 Grier Drive, Suite B
Las Vegas, Nevada 89119
Attn.: President
or, in any case, to such changed address or person as a party hereto
shall have specified to the other party hereto by written notice.
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12.3 The laws of the State of Delaware shall govern the construction and
interpretation of this Agreement in all disputes between the parties.
12.4 The Parties hereto acknowledges that this Agreement sets forth the
entire Agreement and understanding of the parties hereto as to the
subject matter hereof, and shall not be subject to any change or
modification except by the execution of a written instrument
subscribed to by the parties hereto.
12.5 The provisions of this Agreement are severable, and in the event that
any provisions of this Agreement shall be determined to be invalid or
unenforceable under controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or
enforceability of the remaining provisions hereof.
12.6 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall
not constitute a waiver of that right or excuse a similar subsequent
failure to perform any such term or condition by the other party.
12.7 Nothing herein contained shall be construed to place TI and FCI in
the relationship of legal representatives, partners, joint ventures,
or agency and TI and FCI shall have no power to obligate or bind the
other in any manner whatsoever.
12.8 If at any time any Party hereto shall deem or be advised that any
further assignments, licenses, assurances in law or other acts or
instruments, including lawful oaths, are necessary or desirable to
vest in it the rights provided for herein, the parties hereto agree
to do all acts and execute all documents as may
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reasonably be necessary or proper for that purpose or otherwise to
carry out the intent of this Agreement.
12.9 The Parties hereto represent and warrant that they are under no legal
impediment which would prevent their signing this Agreement.
FIBERCHEM, INC.
By: _________________________________
Date: _______________________________
TEXAS INSTRUMENTS INCORPORATED
By: _________________________________
Date: _______________________________
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SCHEDULE A
----------
Patent/
Serial No. Title
- ---------- -----
OMITTED AND FILED SEPARATELY WITH
THE S.E.C. PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
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SCHEDULE B
----------
Patent/Serial
Disclosure No. Title
- -------------- -----
OMITTED AND FILED SEPARATELY WITH
THE S.E.C. PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
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AGREEMENT
between
TEXAS INSTRUMENTS INCORPORATED
and
FIBERCHEM, INC.
This Agreement, by and between Texas Instruments Incorporated, a
Delaware corporation, acting by and through its Materials &
Controls Group ("TI"), with a place of business at 34 Forest
Street, Attleboro, MA, and FiberChem, Inc., a Delaware
corporation ("FCI") with a place of business at 1181 Grier Drive,
Suite B, Las Vegas, Nevada 89119, shall have an Effective Date of
Agreement of June 15, 1995.
RECITALS
WHEREAS, TI is engaged in the design, development,
engineering and manufacture of controls and sensors using solid
state (and electro-mechanical) technologies and processes.
WHEREAS, TI markets products to a variety of applications,
including appliance, automotive, consumer, and HVAC customers.
WHEREAS, FCI is engaged in the design, development,
engineering, manufacturing, marketing and sale of fiber-optic
chemical sensors.
WHEREAS, TI and FCI (collectively "the Parties" and
individually as each "Party") entered an agreement for designing
and developing fiberoptic chemical sensors ("FOCS") effective
December 17, 1991, that was amended by the parties on May 18,
1994.
WHEREAS, that agreement, as amended and extended by the May
31, 1995 minutes of the Managing Committee, which extended the
applicable milestones, terminates on June 15, 1995,
Whereas, TI and FCI are entering into a License Agreement as
of the date hereof ("The License Agreement"),
WHEREAS, TI and FCI are desirous of entering into a new
agreement establishing a cooperative relationship with the goal
of designing and developing certain custom FOCS.
NOW THEREFORE, the parties agree as follows:
PART I - DEFINITIONS
1. "Background Technical Information" means any information
relevant to the development and production of the Product(s),
including, but not limited to, patents, know-how, feasibility
study information, design, testing and reliability information,
specifications, documentation, drawings,
<PAGE>
computer programs, prototypes, and the like, which have been developed
by either party prior to this Agreement. A non-exhaustive list of written
materials containing such information is attached as Exhibit "A"
to this Agreement.
2. "Effective Date of Agreement" means the period beginning
with signing this Agreement by both Parties.
3. "Managing Committee" means a group of individuals consisting
of each Party's Team Members.
4. "Product(s)" means the custom fiberoptic chemical sensor(s)
to be developed in accordance with this Agreement.
5. "Project" means the joint effort to be undertaken by the
Parties hereto pursuant to this Agreement to develop and produce
in production quantities the Product(s).
6. "Team Leader" means the Team Member of each Party's Team
designated by the Party as leader.
7. "Team Member(s)" means one or more of the two individuals
designated by each Party as its authorized representatives
(collectively, the "Party's Team").
8. "Technology" means any invention, improvement or feature,
whether or not patentable or registerable, made by or on behalf
of either or both of the parties, and/or any information relevant
to the development and production of the invention, improvement
or feature, including, but not limited to, patents, know-how,
feasibility study information, design, testing and reliability
information, specifications, documentation, drawings, computer
programs, prototypes, and the like, which is developed in the
course of the performance of this Agreement and which directly
results from or directly arises out of the work pursuant to the
Project.
PART II - PRODUCT DEVELOPMENT
1.0 MILESTONES
1.1 Development will proceed in accordance with agreed
milestones. The Parties will adopt mutually agreeable
milestones, documented in a writing signed by both Parties. The
Managing Committee shall manage the milestone process in its own
discretion.
1.2. The failure of the Managing Committee to reach
agreement on a milestone after due consideration has been given
to each side's position shall be documented in the minutes of the
Managing Committee meeting. The failure of a party to reach a
milestone shall be documented in the minutes of the Managing
Committee meeting.
<PAGE>
2.0 MANAGING COMMITTEE
2.1. A Managing Committee will supervise and manage the
conduct of the development activities under this Agreement. Each
Party will designate one of its Team Members to be Team Leader.
2.2. Effective immediately, TI selects Youn Ting and
Christopher C. Chaloux (Team Leader), and FCI selects Devinder
Saini and Dale Conrad (Team Leader) to serve on the initial
Managing Committee.
2.3. The presence of at least one member of each Team shall
be required to constitute a quorum for the transaction of
business by the Managing Committee. The two Parties shall each
have one vote on the Managing Committee regardless of whether one
or two representatives of each Party are present at a meeting.
To be adopted, each proposal requires unanimous consent of the
two Parties.
2.4. The Managing Committee will meet at least every other
month unless in advance of the scheduled meeting date both Team
Leaders agree that there are no issues for discussion. The
location of the meetings will alternate between the Parties,
unless otherwise agreed by the Managing Committee. The Managing
Committee may decide to conduct their progress reviews by
telephone.
2.5. No action by the Managing Committee shall be considered
a modification or interpretation of this Agreement unless the
action is reduced to writing and signed by an authorized officer
of each Party.
2.6. The host Team Leader will coordinate and issue draft
minutes of the meeting within one (1) week after each meeting.
Minutes will be delivered in draft form to all members of the
Managing Committee. It will be the responsibility of the team
leaders to consolidate the parties revisions to the draft minutes
within one week from receipt of the draft minutes. The meeting
minutes will become final when approved by the Team Leaders. The
Team Leaders will indicate their approval of the draft minutes by
initialing or signing an original or a copy of the minutes and
returning same to the host Team Leader who may not execute the
minutes until after receipt of the other team's executed minutes.
2.7. Upon execution of this Agreement, each Party agrees to
provide to the other Party a complete copy of all existing
drawings, designs, and other Background Technical Information.
During the life of the Project, at each Managing Committee
meeting each Party shall provide to the other a complete copy of
all drawings, designs, and other Technology which that Party has
generated since the last Managing Committee meeting pertaining to
the Project. Each Party will own all copies of all information
provided by the other Party unless and until this Agreement is
terminated.
3.0 PROGRESS REPORTS
<PAGE>
3.1. The Managing Committee may require progress reports, by
providing reasonable notice to the Team Leader. A progress
report may be oral or in writing, as the Managing Committee may
decide.
3.2. Progress reports and meeting minutes shall be deemed
confidential, marked as "Proprietary Information" or a similar
designation to that effect, and treated in accordance with the
non-disclosure provisions of the confidentiality agreement
entered into by the Parties dated June 15, 1995.
4.0 RESEARCH AND DEVELOPMENT EXPENSES
4.1. Each Party shall bear its own expenses for efforts
pursuant to this Agreement, except that TI will pay FCI $10,000
per month to fund, in part, FCI's research and development
efforts.
4.1.1. The first payment shall be due January 31,
1995 and thereafter on the last day of each subsequent month of
1995 as long as the Agreement remains in effect. All amounts
accrued as of the date of this Agreement shall be paid to FCI
within one week of the execution of this Agreement. The total
payment shall not exceed $120,000.
4.1.2. TI may cancel future monthly payments
immediately upon the beginning of TI's payment of royalties due
under the License Agreement between the parties hereto dated June
15, 1995, or upon termination of this Agreement. Should TI
terminate this Agreement, then TI shall be obligated to pay FCI
one half (1/2) of the remaining unpaid balance of the $120,000.00
as liquidated damages. TI's liability shall be limited to said
unpaid balance and continuing royalty obligations and shall
specifically not include consequential damages.
PART III - INTELLECTUAL PROPERTY RIGHTS
1.0 PATENTS AND INVENTIONS
1.1. Each of the Parties hereby represents to the other that
it has, or will have, prior to commencement of the Project, valid
and sufficient arrangements and agreements with its respective
employees and/or nonemployee consultants, such that the ownership
of any and all inventions made by an employee and/or consultant
vests in the Party hereto employing said employee and/or
consultant, subject to the provisions of the applicable law
governing ownership of such inventions.
1.2. All inventions, copyrightable material, or proprietary
information made or developed solely by employees of one of the
Parties in performance under this Agreement shall be the sole
property of that Party and that Party shall retain any and all
rights to file applications for and obtain patents and copyrights
thereon.
1.3. All inventions, copyrightable material, or proprietary
information made or developed jointly by employees of TI and FCI
in performance under this Agreement shall be jointly owned by TI
and FCI with each Party having the undivided right to exploit and
grant licenses in respect to such inventions, copyrightable
material, or proprietary information and any patents and
copyrights arising therefrom. The Parties shall mutually agree:
(i) on which Party shall have the responsibility for preparing
and filing in the United States and foreign countries: (a) any
patent applications on a joint invention, and/or (b) any
copyright applications on Technology; and (ii) that each will
bear one-half of the actual out-of-pocket expenses associated
with obtaining and maintaining such intellectual property rights.
In the event one Party elects
<PAGE>
not to file application for or maintain intellectual property protection
for any joint invention, copyrightable material, or other intellectual property
in any particular country or not to share equally in the expenses thereof
with the other Party, that other Party shall have the right to apply for
and maintain such intellectual property protection in such country at its
own expense (the said one Party undertaking to execute all such documents
as may be necessary) and shall have full control over the prosecution and
maintenance thereof, and shall have title to such patent, copyright, or other
intellectual property rights resulting therefrom in its sole name with the
other Party having a non-exclusive royalty-free license.
2.0. INDEPENDENT DEVELOPMENT
2.1. Nothing in this Agreement shall prevent either Party
from continuing its independent development of its own
technologies, including technology that is the subject of this
Agreement, provided the Party continuing development is not in
breach of this Agreement.
PART IV - NON-DISCLOSURE PROVISIONS
1.0. The terms and conditions of the Confidentiality Agreement
dated June 15, 1995 by and between TI and FCI shall govern this
Agreement and are incorporated herein by reference
PART V GENERAL TERMS AND CONDITIONS
1.0. TERM AND TERMINATION
1.1. This Agreement shall commence on the Effective Date of
Agreement, and shall continue until terminated as provided
herein.
1.2. This Agreement may be terminated at any time by mutual
agreement of the Parties.
1.3. This Agreement may be terminated for cause by one of
the Parties in the event of material breach by the other Party,
which default remains uncured as of 60 days following receipt of
written notice and demand for reasonable assurance of performance
by the Party not in default.
1.4. This Agreement may be terminated at any time at TI's
convenience subject to the liquidated damages provisions of
Paragraph 4.1.2 of Part II of this Agreement.
1.5. The Terminating Party must provide a 60-day written
notice of its intent to terminate.
1.6. Upon termination of this Agreement, the Terminating
Party must certify the return of all copies of proprietary or
other information that was provided by the non-terminating Party
during the course of this Agreement. Notwithstanding the
foregoing, either Party may retain proprietary or other
information necessary to practice any licenses obtained from the
other Party.
2.0. DISCLAIMER OF SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
2.1. NEITHER PARTY SHALL BE RESPONSIBLE TO THE OTHER PARTY,
IN CONTRACT, TORT OR OTHERWISE, FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES WHETHER OR NOT CAUSED BY SUCH PARTY'S
NEGLIGENCE.
<PAGE>
3.0 REPRESENTATIONS AND WARRANTIES
3.1. Each Party represents and warrants that it has good and
exclusive title to and ownership of its Background Technical
Information, except as specifically indicated otherwise by such
Party in writing in conjunction with the tender of the Background
Technical Information.
3.2 Each Party represents and warrants that the information
provided as part of the Background Technical Information is the
most recent version of such information and if the most recent
information is non-operable, is inclusive of the latest version
of operable information as of the date of execution of this
Agreement.
4.0. MISCELLANEOUS PROVISIONS
4.1. The laws of the State of Delaware shall govern the
construction and interpretation of this Agreement and all
disputes between the Parties.
4.2. Neither Party may assign, pledge, hypothecate or in any
manner transfer, convey, alienate or encumber any right or
interest in this Agreement, without the written permission of the
other Party, which permission shall not be unreasonably withheld,
and any such non-permitted, purported assignment, pledge,
hypothecation, transfer, conveyance, alienation, or encumbrance
shall be void.
4.2.1. In the event that there is a substantial
change in control or ownership, as defined below, of either
Party, the other Party may elect: (1) to rescind this Agreement;
or (2) treat it as terminated in accordance and continue as the
Continuing Party; or (3) continue with the provisions of this
Agreement. Notwithstanding the termination of this Agreement,
the terms and conditions of Part III and Part IV shall survive
the termination of this Agreement. The obligations of the
Parties under this Agreement shall survive a change in control of
sale of the respective business.
4.2.2. A substantial change in control or ownership
shall be deemed to have occurred in the event of: (a) A Party's
sale or other disposition of the assets of its business unit or
division that is conducting FOCS business hereunder; (b) or a
sale, transfer or other disposition of a 50% or greater interest
in the Party's stock.
4.3. All notices required or permitted to be given by the
Parties to each other pursuant to this Agreement shall be
effective if in writing and hand delivered; mailed in a manner
designed to effect delivery the next day; or transmitted by
telex, facsimile, or cable and confirmed by postage-prepaid
letter, delivered or addressed as follows:
Dale Conrad Christopher C. Chaloux
FIBERCHEM, INC. TEXAS INSTRUMENTS INCORPORATED
1181 Grier Drive, Suite B 300 N. Main St., MS 6000
Las Vegas, Nevada 89119 Versailles, KY 02703
or to such other person(s) as either Party may specify by notice
to the other Party in accordance with this Section 4.3. Any
notice given to a Party by telex or cable shall be effective on
the date of its receipt.
4.4. This Agreement may be signed in two or more identical
counterparts, either of which shall constitute the fully signed
Agreement.
4.5. Neither Party shall disclose the existence or terms of
this Agreement without the prior consent of the other, which
consent will not be unreasonably withheld. Any press release or
other similar announcement relating to this Agreement requires
approval by both Parties.
<PAGE>
4.6. This Agreement is the entire Agreement between the
Parties with respect to the subject matter hereof and supersedes
all prior Agreements, understandings or representations between
the Parties with respect to the subject matter hereof. No
alteration, modification, interpretation or amendment of this
Agreement shall be binding on the Parties unless in writing,
designated as an amendment hereto and signed by each of the
Parties.
4.7. Neither Party in connection with the performance of
this Agreement shall either directly or indirectly make, give or
promise any payment or other thing of value to any person for any
purpose, or commit any other act which is unlawful under the laws
of the United States, including, but not limited to the Foreign
Corrupt Practices Act, the Export Administration Act, the Sherman
Antitrust Act, the Internal Revenue Code, and, to the extent not
inconsistent with the laws of the United States, the laws of any
other applicable Jurisdiction.
4.8. Neither Party is liable, either wholly or in part, for
nonperformance or a delay in performance due to force majeure or
contingencies or causes beyond the reasonable control of either
Party, including but not limited to, shortage of labor, fuel, raw
material or machinery or technical or yield failure where either
Party has exercised ordinary care in the prevention thereof.
Production and deliveries may be allocated by either Party in a
reasonable manner in the event of shortage of goods.
4.9. Each Party is independently responsible for the timely
and proper performance of that part of the scope of work as is
from time to time assigned to it. Neither Party is, directly or
indirectly, authorized expressly or by inference to hold itself
out as the agent, servant or employee of the other or having any
other status by which to bind the other contractually or
otherwise to any third party.
4.10. Certain technology used by the Parties in the
performance of their independent research activities may be
subject to security classifications by the United States
Government. In no event will this Agreement be construed as
requiring the Parties to divulge such classified information to
each other, for so long as such information remains classified.
IN WITNESS WHEREOF, both Parties have caused this Agreement to be
duly executed effective as of the Effective Date stated above.
FIBERCHEM, INC. TEXAS INSTRUMENTS INCORPORATED
Materials & Controls Group
By: By:
- ----------------------- ------------------------------------
Name: Scott J. Loomis Name: Wayne S. Dogan
Title: President Title: General Manager of
Commercial Sensors & Controls
Date: Date:
