[EXHIBIT 10.31- Certain portions of this
document have been
omitted in the publicly filed
version of this document pursuant to
the Registrant's request for
confidential treatment and filed
separately with the Securities and
Exchange Commission.]
SPD FILM AND EMULSION LICENSE AGREEMENT
BETWEEN
RESEARCH FRONTIERS INCORPORATED
AND
AIR PRODUCTS AND CHEMICALS, INC.
This License
Agreement ("Agreement") effective as of May 2,
2003 by and between RESEARCH FRONTIERS
INCORPORATED,
a Delaware corporation ("LICENSOR") and AIR
PRODUCTS AND
CHEMICALS, INC., a Delaware corporation
(hereinafter called
"LICENSEE"). The "Effective Date" of this
Agreement shall be the
date which is the last date of formal
execution of this Agreement by
duly authorized representatives of the
parties to this Agreement as
indicated on the signature page of this
Agreement.
RECITALS
WHEREAS,
LICENSOR has been engaged in research and
development in the application of
physicochemical concepts to Light
Valves, Light Valve Film, and SPD Emulsions
(all as hereinafter
defined) and of methods and apparatus
relating to products
incorporating such concepts (which
products, can include, without
limitation thereto, windows for buildings
and vehicles, sunvisors,
sunroofs, flat panel displays, eyewear and
rear-view mirrors); and is
possessed of and can convey information and
know-how for such
products and rights to manufacture, use and
sell such products; and
WHEREAS,
LICENSEE is interested in manufacturing and
selling Light Valve Film and SPD Emulsions
used to make Light
Valve Film (both as hereinafter defined);
and
WHEREAS,
LICENSEE desires to acquire from LICENSOR, and
LICENSOR desires to grant to LICENSEE,
certain rights and licenses
with respect to such technology of
LICENSOR;
NOW, THEREFORE,
in consideration of the promises and the
mutual covenants herein and for other good
and valuable consideration,
the receipt and sufficiency of which are
hereby acknowledged, the
parties agree as follows.
1 DEFINITIONS.
The following terms when used herein shall have the respective
meanings set forth in this Article 1.
"Authorized User" means LICENSOR and/or any
other person or entity
listed by LICENSOR on Schedule B hereof who
has been granted
permission by LICENSOR to receive SPD
Emulsions or Light Valve
Film from LICENSEE under this Agreement.
LICENSEE agrees
that
LICENSOR in its sole judgment may amend
Schedule B hereof at any
time during the term of this Agreement for
any reason by sending
LICENSEE a written notice of such amendment
and specifying the
reason for such change. The persons or entities now or
hereafter listed
on Schedule B may not include all of
LICENSOR's current licensees
and may include prospective licensees of
LICENSOR, and for legal or
practical reasons, LICENSOR may restrict
whether or not SPD
Emulsions and Light Valve Film may be sold,
leased or transferred to
such person or entity, and/or the
application that such SPD Emulsions
or Light Valve Film may be used for by the
recipient.
LICENSEE
agrees that it and its permitted
sublicensees hereunder shall cease all
sales, leases, or other dispositions of SPD
Emulsions and Light Valve
Film to any person or entity whose name is
deleted from Schedule B by
LICENSOR, unless and until LICENSOR
consents in writing to the
resumption of such sales, leases or other
dispositions (a) immediately
upon receipt of any written notice from
LICENSOR that any person or
entity is no longer included on Schedule B,
or (b) if either LICENSEE
or its permitted sublicensees becomes aware
that any such person or
entity listed on Schedule B or otherwise
receiving SPD Emulsions or
Light Valve Film is making any improper use
of SPD Emulsions or
Light Valve Film, in which case LICENSEE
shall promptly notify
LICENSOR of such improper use.
"Licensed Territory " means all countries
of the world.
"Light Valve" means a variable light
transmission device that uses SPD
Technology (as defined in Section 12.1(a))
comprising: a cell including
cell walls, containing or adapted to
contain an activatable material,
described hereinafter, such that a change
in the optical characteristics
of the activatable material affects the
characteristics of light absorbed
by, transmitted through and/or reflected
from the cell; means
incorporated in or on the cell, or separate
therefrom for applying an
electric or magnetic field to the
activatable material within the cell; and
coatings, (including, but not limited to,
electrodes), spacers, seals,
electrical and/or electronic components,
and other elements
incorporated in or on the cell.
The activatable
material, which the cell
contains or is adapted to contain, includes
in it solid suspended
particles, which when subjected to a
suitable electric or magnetic field,
orient to produce a change in the optical
characteristics of the device,
and may be either in the form of a liquid
suspension, gel, film or other
material.
"Light Valve Film" means a film or sheet or
more than one thereof
comprising a suspension of particles used
or intended for use solely in
or as a Light Valve that uses SPD
Technology (as defined in Section
12.1(a)). The Light Valve Film shall
comprise either (a) a suspension
of particles dispersed throughout a
continuous liquid phase enclosed
within one or more rigid or flexible solid
films or sheets, or (b) a
discontinuous phase of a liquid comprising
dispersed particles, said
discontinuous phase being dispersed
throughout a continuous phase of
a rigid or flexible solid film or sheet.
The Light Valve Film
may also
comprise one or more other layers such as,
without limitation, a film,
coating or sheet or combination thereof,
which may provide the Light
Valve Film with (1) scratch resistance, (2)
protection from ultraviolet
radiation, (3) reflection of infrared
energy, and/or (4) electrical
conductivity for transmitting an applied
electric or magnetic field to the
activatable material.
"SPD Emulsions" means any component or
components used or usable
in or used or usable to make a Light Valve Film, including, but
not
limited to, particles, particle precursors,
coatings, polymers, liquid
suspensions and suspending liquids, or any
combination thereof.
"Technical Information" means all useful
information relating to
apparatus, methods, processes, practices,
formulas, techniques,
procedures, patterns, ingredients, designs
and the like including (by
way of example) drawings, written
recitations of data, specifications,
parts, lists, assembly procedures,
operating and maintenance manuals,
test and other technical reports, know-how
of LICENSOR, and the like
owned or controlled by LICENSOR, to the
extent they exist, that relate
to SPD Emulsions and/or to the suspensions
used or usable for SPD
Emulsions or Light Valve Film and that
consist of concepts invented or
developed by LICENSOR and which are deemed
significant by
LICENSOR. Know-how of LICENSOR's suppliers
and of
LICENSOR's other licensees and their
sublicensees under licenses
from LICENSOR shall not be considered
Technical Information owned
or controlled by LICENSOR.
2 GRANT OF LICENSE.
2.1 License. During the term of this Agreement,
LICENSOR
hereby grants LICENSEE a non-exclusive
right and license to use (a)
all of the Technical Information, if any,
(subject to Section 8.1 hereof),
furnished by LICENSOR pursuant to this
Agreement, and (b) any
invention claimed in (i) any of the
unexpired patents now or hereafter
listed on Schedule A attached hereto or
(ii) unexpired patents which
issue from pending patent applications now
or hereafter listed in
Schedule A, and any continuations,
continuations-in-part, divisions,
reissues, reexaminations, or extensions
thereof to make, and to lease,
sell, or otherwise dispose of SPD Emulsions
and Light Valve Film
manufactured by LICENSEE pursuant to this
Agreement solely to an
Authorized User in the Authorized User's
permitted territory and for
the applications specified and purpose
permitted on Schedule B hereof.
The license granted pursuant to this
Section 2.1 shall be royalty-free to
LICENSEE and its permitted sublicensees
hereunder. By virtue
of the
disclosure of Technical Information and
training provided by
LICENSOR under this Agreement, all SPD
Emulsions and Light Valve
Film sold, leased or otherwise disposed of
by or for LICENSEE
hereunder shall be deemed to have been
manufactured at least in part
using the Technical Information provided by
LICENSOR. The
foregoing license is only a license with
respect to SPD Emulsions and
Light Valve Film and nothing contained in
this Agreement shall permit
LICENSEE to make, sell, use or otherwise
dispose of other Light Valve
products.
2.2 No Other Rights.
LICENSEE agrees that,
except for the
specific licenses granted to it under
Section 2.1 hereof, LICENSEE has
not acquired any rights or licenses under
this Agreement to use SPD
Emulsions or Light Valve Film or any
components thereof made by or
for LICENSEE pursuant to this Agreement
except for the purposes of
research and development pursuant to
Section 4.1 hereof and as
specifically licensed in Section 2.1
hereof.
2.3 Sublicenses. LICENSEE shall have the right to
grant non-
exclusive sublicenses to any wholly-owned
and controlled subsidiary
of LICENSEE, whose obligations to LICENSOR
hereunder LICENSEE
hereby guarantees, and which acknowledges
to LICENSOR in writing
that it wishes to become a sublicensee
hereunder prior to doing so and
agrees to be bound by the terms and
conditions of this Agreement. All
sublicenses shall (i) be non-exclusive,
(ii) shall terminate with the
termination of the rights and licenses
granted to LICENSEE under
Section 2.1 hereof, and be otherwise
limited in accordance with the
limitations and restrictions which are
imposed on the rights and
licenses granted to LICENSEE hereunder,
(iii) contain confidentiality
provisions no less protective than those
contained in Section 12.1
hereof, and (iv) shall contain such other
terms, conditions, and licenses
as are necessary to enable LICENSEE to
fulfill its obligations
hereunder. LICENSEE shall send LICENSOR a
copy of every
sublicense agreement or other agreement
entered into by LICENSEE in
connection with a sublicense hereunder
within thirty (30) days of the
execution thereof. LICENSOR may terminate
any such sublicense if
there is any change in the ownership or
control of a sublicensee.
3 REPORTS AND
RECORD-KEEPING.
3.1 Reports. Within 45 days after the end of
each fiscal quarter,
LICENSEE shall send to LICENSOR a quarterly
report setting forth in
reasonable detail the quantity of SPD
Emulsions and Light Valve Film
manufactured each quarter and the amount of
SPD Emulsions and Light
Valve Film sold, leased, disposed of, or
delivered by or for LICENSEE
and its sublicensees during such quarter to
Authorized Users and
samples provided to third parties, with the
amounts sold or otherwise
provided to each Authorized User, including
sample recipients, and
their identity clearly broken down. The
first report submitted under this
Agreement shall cover the period from the
Effective Date of the
Agreement to the end of the first quarter
in which SPD Emulsions or
Light Valve Film are produced hereunder.
LICENSEE shall
also
furnish to LICENSOR at the same time it
becomes available to any
third party, a copy of each brochure,
standard price list, advertisement
or other marketing and promotional
materials prepared, published or
distributed by LICENSEE or its sublicensees
relating to SPD
Emulsions or Light Valve Film.
3.2 Recordkeeping. LICENSEE shall keep and shall
cause each
sublicensee to keep for six (6) years after
the date of submission of
each report supported thereby, true and
accurate records, files, data and
books of accounts that relate to the
manufacture, sale or other
disposition of SPD Emulsions or Light Valve Film,
reasonably
required for the full computation and
verification of the information to
be given in the statements herein provided
for. LICENSOR and
LICENSEE agree that an independent
certified public accounting firm
(selected by LICENSOR from the largest ten
certified public
accounting firms in the United States of
America) may audit such
records, files and books of accounts to
determine the accuracy of the
statements given by LICENSEE pursuant to
Section 3.1 hereof.
Such
an audit shall be made upon reasonable
advance notice to LICENSEE
and during usual business hours.
The cost of the audit
shall be borne
by LICENSOR, unless the audit shall disclose a
material breach by
LICENSEE of any term of this Agreement, or
an inaccuracy greater
than 2% in any report provided to LICENSOR
by LICENSEE, during
the audited period, in which case LICENSEE
shall bear the full cost of
such audit. The results of the audit shall be
kept confidential pursuant
to the provisions of Section 12.1 except to
the extent required by a
party hereto to enforce its rights
hereunder, or which is otherwise
required to be disclosed by law or under
generally accepted accounting
principles.
4 OBLIGATIONS OF
LICENSOR AND LICENSEE.
4.1 Development of SPD Emulsions and
Light Valve Film.
LICENSOR and LICENSEE may cooperate to
develop initial
specifications for SPD Emulsions and Light
Valve Film.
LICENSEE
shall then use its reasonable efforts to
produce SPD Emulsions and
Light Valve Film meeting such
specifications for the evaluation and use
of LICENSOR and licensees and prospective
licensees of LICENSOR,
and for use by LICENSEE but only for
internal research and
development. After consultation with
LICENSEE, LICENSOR may at
any time propose additional size or other
specifications of the SPD
Emulsions and Light Valve Film to be
produced under this Agreement
with the disclosure of additional Technical
Information to LICENSEE
with respect to such size or other
specifications of SPD Emulsions or
Light Valve Film. LICENSEE may use all
commercially reasonable
efforts throughout the term of this
Agreement to improve the quality of
SPD Emulsions and Light Valve Film.
However, LICENSEE
shall be
solely responsible for determining the
specifications for all SPD
Emulsions and Light Valve Film, and for any
improvements therein.
4.2 LICENSOR Purchases. If LICENSEE is able to develop
and
manufacture SPD Emulsions and Light Valve
Film suitable for use by
Authorized Users, upon request of LICENSOR
and with reasonable
prior notice, LICENSEE shall sell and
deliver to LICENSOR, SPD
Emulsions, Light Valve Film or components
thereof at LICENSEE's
prevailing market prices and in quantities
mutually agreed upon by
LICENSOR and LICENSEE. LICENSEE acknowledges that
LICENSOR and its present and/or future
licensees (or entities who
have been granted the option of entering
into license agreements with
LICENSOR) may independently manufacture (or
have third parties
manufacture for them) and sell Light Valve
Film or SPD Emulsions
under the terms of agreements between them
and LICENSOR, or may
independently manufacture and sell Light
Valve Film or SPD
Emulsions which LICENSOR produces, or has
produced on its behalf.
Nothing contained in this Agreement shall
impose any obligation on
LICENSOR or any other parties to purchase
any SPD Emulsions or
Light Valve Film from LICENSEE, nor require
LICENSEE to
manufacture and deliver, SPD Emulsions and
Light Valve Film to any
Authorized User or to any other party.
Notwithstanding
anything
contained herein to the contrary, during
the term of this Agreement
LICENSOR may provide SPD Emulsions and
Light Valve Film
obtained by LICENSOR pursuant to this
Section 4.2 to third parties so
long as LICENSOR does not receive from the
recipient for the
provision of such SPD Emulsions or Light
Valve Film any monetary
payment in excess of LICENSOR's purchase
price plus shipping,
administrative, overhead and related costs
to such recipient.
4.3 Compliance.
LICENSEE agrees that,
without limitation, any
manufacture, sale, lease, use or other
disposition of SPD Emulsions or
Light Valve Film that is not in strict
accordance with (1) the provisions
of this Agreement, (2) restrictions on the
type of product, or the
territory in which such product may be,
made, used, sold or otherwise
disposed of by or for an Authorized User,
or other provisions or
restrictions, which are contained in any
other agreement in force
between LICENSOR and an Authorized User
which is known to
LICENSEE which relates to Light Valves, SPD
Emulsions or Light
Valve Film, or (3) with the provisions of
any other agreement then in
force to which LICENSEE is a party and
which relates to Light Valves,
SPD Emulsions or Light Valve Film, shall be
deemed a material breach
of this Agreement.
4.4 End Users. LICENSEE agrees to require all
direct recipients
of SPD Emulsions and Light Valve Film to
whom SPD Emulsions or
Light Valve Film is sold, leased, or
otherwise disposed of by
LICENSEE or its sublicensees, to look only
to LICENSEE and not to
LICENSOR or its affiliates for any claims,
warranties, or liability
relating to such SPD Emulsions or Light
Valve Film.
LICENSEE
agrees to take all steps to reasonably
assure itself that SPD Emulsions
and Light Valve Film sold, leased or
otherwise disposed of by or for
LICENSEE is being used for permitted
application and territory only.
If a party which is not then listed on
Schedule B hereto wishes to obtain
samples of SPD Emulsions or Light Valve
Film or to purchase SPD
Emulsions or Light Valve Film from
LICENSEE, LICENSEE shall
notify LICENSOR and shall refer such party
to LICENSOR. If
such
party enters into a suitable agreement with
LICENSOR, LICENSOR
shall inform LICENSEE whether such party
may then obtain samples
or purchase SPD Emulsions or Light Valve
Film from LICENSEE.
4.5 Laws and
Regulations. LICENSEE
agrees that it shall be
solely responsible for complying with all
laws and regulations affecting
the manufacture, use and sale or other
disposition of SPD Emulsions
and Light Valve Film by LICENSEE and its
sublicensees, and for
obtaining all approvals necessary from
governmental agencies and
other entities. LICENSEE agrees to maintain a file
of all such
approvals and to send LICENSOR a copy of
all such approvals
(including English translations thereof in
the case of approvals required
by any foreign country) within 10 business
days of any written request
for such copies by LICENSOR. LICENSEE represents and
warrants
to LICENSOR that no approval from any
governmental agency or
ministry, or from any third party, is
required to effectuate the terms of
this Agreement or the transactions
contemplated hereby.
4.6 Purchase of Components from
Others. By
virtue of the
disclosure of Technical Information, other
information, and training, if
any, provided from time to time by LICENSOR
to LICENSEE and to
its other licensees, and each of their
sublicensees and affiliates, any
component of a Light Valve, including,
without limitation, materials,
suspensions, films, polymers, coatings,
particle precursors, and
particles (each, a "Component"), which
LICENSEE or its sublicensees
makes, has made for it, or purchases from
any third party for use in
SPD Emulsions or Light Valve Film shall be
deemed to have been
manufactured at least in part using the
Technical Information provided
by LICENSOR if LICENSEE or any supplier of
a Component to
LICENSEE has had access to Technical
Information of any kind of
LICENSOR or its licensees and their
sublicensees, consultants,
subcontractors, agents or representatives.
LICENSEE and its
sublicensees each hereby agrees that (i)
all Components shall be used
only in strict accordance with the
provisions of this Agreement, and
that such Components may not be used for
any other purpose or resold
by LICENSEE or its sublicensees except as
specifically permitted by
the license granted in Section 2.1 hereof,
and (ii) LICENSEE and its
sublicensees will only look to the
manufacturer or supplier of such
Component or other item used by LICENSEE or
its sublicensees and
not to LICENSOR or its affiliates for any
claims, warranties, or
liability relating to such Component or
other item. LICENSEE
acknowledges that LICENSOR has not made any
representations or
warranties regarding the availability of
any Component, or the price
thereof, and that in all respects LICENSEE
shall deal directly with the
suppliers of such Components and will
obtain from them information
regarding availability, pricing, and/or
other terms relating to such
Components.
4.7 No
Warranties by LICENSOR. LICENSOR does not
represent or warrant the performance of any
material, Component, or
information provided hereunder, and
LICENSEE expressly
acknowledges and agrees that any such
material, Component or
information provided by LICENSOR hereunder
is provided "AS IS"
and that LICENSOR makes no warranty with
respect thereto and
DISCLAIMS ALL WARRANTIES, EXPRESS OR
IMPLIED,
INCLUDING BUT NOT LIMITED TO THE
IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A
PARTICULAR PURPOSE, WITH RESPECT THERETO,
ITS USE
OR ANY INABILITY TO USE IT, OR THE RESULTS
OF ITS USE.
Except for any breach of the terms of this
Agreement, in no event shall
any party to this Agreement be liable for
any damages, whether in
contract or tort (including negligence),
including but not limited to
direct, consequential, special, exemplary,
incidental and indirect
damages, arising out of or in connection
with this Agreement or the
use, the results of use, or the inability
to use any material, Component
or information provided hereunder.
4.8 Analysis.
LICENSEE represents
and agrees that it will only
incorporate Components received from
authorized suppliers into SPD
Emulsions and Light Valve Film and
for no other purpose,
and that
LICENSEE will not directly or indirectly
attempt to reverse-engineer
any material provided to it hereunder by
LICENSEE or any supplier of
any Component.
4.9 Personnel. LICENSEE agrees to
assign personnel from its
technical staff who shall work on the development
of SPD Emulsions
and Light Valve Film during the term of
this Agreement.
4.10
No other obligations.
LICENSEE and LICENSOR
have no
other obligations to each other except as
expressly provided in this
Agreement.
5 TRADEMARKS.
5.1 Trademarks. All trademarks or service marks
that either
party may adopt and use for SPD Emulsions,
Light Valve Film, or other
products incorporating Light Valves are and
shall remain the exclusive
property of the adopting party, and the
other party shall not obtain any
rights and license to such marks under this
Agreement, but may inform
others that the adopting party has licensed
or produced SPD Emulsions,
Light Valve Film, or products incorporating
Light Valves under such
mark or marks, and, during the term of this
Agreement, may use the
adopting party's logo in connection
therewith. LICENSOR
may
require LICENSEE or its permitted
sublicensees to indicate on
packaging that such product is licensed
from Research Frontiers
Incorporated or to otherwise include
language and/or designations
approved by LICENSOR indicating an
affiliation with Research
Frontiers Incorporated.
6 INSURANCE AND
INDEMNIFICATION.
6.1 Insurance. LICENSEE shall maintain at all
times ample
product liability and other liability
insurance covering its operations
relating to the subject matter of this
Agreement.
6.2 Indemnification. LICENSEE, and its affiliates,
successors
and assigns and sublicensees (each, an
"Indemnifying Party"), each
hereby indemnify and agree to hold harmless
LICENSOR and its
shareholders, officers, directors, agents
and employees (each, an
"Indemnified Party"), against any
liability, damage, loss, fine, penalty,
claim, cost or expense (including
reasonable costs of investigation and
settlement and attorneys', accountants' and
other experts' fees and
expenses) arising out of any action or
inaction by any Indemnifying
Party relating to this Agreement including
an Indemnifying Party's
manufacture, sale, use, lease or other
disposition of SPD Emulsions and
Light Valve Film, and related materials (other than
sales by
LICENSEE to LICENSOR pursuant to Section
4.2 hereof), or other use
of the information and rights granted
hereunder. Any knowledge of
LICENSEE's or its sublicensee's activities
by LICENSOR or its
representatives shall in no way impose any
liability on LICENSOR or
reduce the responsibilities of LICENSEE
hereunder or relieve it from
any of its obligations and warranties under
this Agreement.
7 FUTURE PATENTS.
7.1 Future Patents. Each party, at its cost, shall
have the right to
file patent applications in the United
States and in foreign countries
covering any invention made by such
party.
7.2 Improvements and Modifications.
(a) If during the term of
this Agreement, LICENSOR makes any
improvements or modifications
which are invented or developed by or on
behalf of LICENSOR after
the Effective Date of this Agreement and on
or before December 31,
2004, and which relate in any way to or are
useful in the design,
operation, manufacture and assembly of SPD
Emulsions and/or Light
Valve Film, such improvements and
modifications shall from time to
time be disclosed to LICENSEE and be
automatically included, on a
non-exclusive basis, in the rights and
licenses granted pursuant to
Section 2.1 hereof, and any patents and/or
patent applications relating
thereto shall automatically be added to
Schedule A hereof.
(b) Any future
improvements or modifications invented or
developed by or on behalf of LICENSEE,
LICENSEE's sublicensees
and LICENSOR (other than improvements
jointly developed by
LICENSOR and LICENSEE or as specifically
described in Sections
7.2(a)) after the Effective Date of this
Agreement, if any, which relate
in any way to or are useful in the design,
operation, manufacture and
assembly of SPD Emulsions, Light Valve Film
and/or to the
suspensions or other components used or
usable in SPD Emulsions
and/or Light Valve Film shall not be
included in this Agreement. Upon
written request by the non-inventing party,
LICENSOR and LICENSEE
shall negotiate with each other regarding
the grant of nonexclusive
rights and licenses to use such
improvements and modifications, but
neither party shall be obligated to grant
such rights and licenses to one
another.
(c) During the term of this Agreement
each of the parties hereto
agrees to in
