[EXHIBIT 10.50 - 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.
Omitted confidential information is indicated in brackets
in this Exhibit.]
SPD-SMART
WINDOW LICENSE AGREEMENT
BETWEEN
RESEARCH FRONTIERS INCORPORATED
AND
PPG INDUSTRIES INC.
This License Agreement ("Agreement") effective as of
September 29, 2008 by and between RESEARCH FRONTIERS
INCORPORATED, a Delaware corporation ("LICENSOR")
and PPG INDUSTRIES INC., a Pennsylvania corporation,
acting through its Automotive OEM Glass SBU
("LICENSEE").
RECITALS
WHEREAS, LICENSOR has been engaged in research
and development in the application of physicochemical concepts
to Light Valves and Licensed Products (both as hereinafter
defined) and of methods and apparatus relating to products
incorporating such concepts; 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 Licensed Products; 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 premises
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.
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.
"Licensed Product" means only a Light Valve Transportation
Vehicle Window Product incorporating a Light Valve. The term
"Licensed Product" shall not include Light Valves used or
intended for use in any product other than as specifically
defined herein, such as but not limited to, other window
products not specifically defined herein, such as, but not
limited
to, Light Valve Architectural Window Products, window
products for vehicles not specifically included in the
definition
of Light Valve Transportation Vehicle Window Product, and
non-window products such as but not limited to displays,
eyewear, sunvisors, toys, mirrors or filters for scientific
instruments, lamps or contrast enhancement of displays. The
term "display" means any device for displaying letters,
numbers, images or other indicia or patterns. Nothing contained
herein shall permit LICENSEE to sell, lease, or otherwise
dispose of a Light Valve which is not incorporated or intended
to be incorporated as described above into a Light Valve
Transportation Vehicle Window Product.
"Licensed Territory" means all countries of the world.
"Light Valve" means a variable light transmission device
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 or combined with 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 in the form of a liquid suspension, gel, film or other
material.
"Light Valve Architectural Window Product" means a Light
Valve used or intended for use solely as a window integrally
incorporated in, or attached as a fixture to the external
structure
or internal structure of any building, whether permanent or
temporary, and whether above or below ground.
"Light Valve Transportation Vehicle Window Product" means a
Light Valve used or intended for use as a window (including
sunroofs, windshields, and side and rear window panes which
are an integral part of the internal or external structure)
integrally incorporated in a military or civilian
transportation
vehicle. The term "Light Valve Transportation Vehicle Window
Product" shall not include a Light Valve used or intended for
use as a sunvisor, but may include Light Valves which are used
or intended for use in a military or civilian transportation
vehicle as, or as part of, or are laminated to, or the surface
area
of which is primarily attached to, a window, sunroof or
windshield. The term "transportation vehicle" shall mean
passenger cars, recreational vehicles, trucks, mobile cranes,
buses, heavy trucks and trains, but shall not include other
types
of vehicles such as aircraft, boats, spacecraft and space
stations.
The "Net Selling Price" of Licensed Products on which royalties
are payable shall be the genuine selling price of LICENSEE and
its sublicensees hereunder f.o.b. factory at which
nonaffiliated
customers are billed in the usual course of business for
Licensed
Products, as packed for shipment to the customer, reduced only
by the applicable proportions of the following if, and to the
extent that, amounts in respect thereof are reflected in such
selling price: (i) normal trade discounts actually allowed;
(ii)
sales, use or excise and added value taxes and custom duties
paid; (iii) if the genuine selling price is other than f.o.b.
factory,
amounts paid for f.o.b. transportation of Licensed Products to
the customer's premises or place of installation or delivery;
(iv)
the cost to LICENSEE or its sublicensees hereunder of any part
or component included in Licensed Products which is purchased
directly from LICENSOR; (v) insurance costs and the costs of
packing material, boxes, cartons and crates required for
shipping; provided, however, that the Net Selling Price of a
Licensed Product may not be less than 90% of the gross selling
price of said Licensed Product after all deductions therefrom
excluding materials purchased by LICENSEE from LICENSOR
pursuant to subsection (iv) hereof, if any. If a Licensed Product
is leased, sold, used or to otherwise disposed of on terms not
involving a bona fide arm's length sale to an unaffiliated
third
party, then the Net Selling Price for such transactions shall
be
deemed to be the Net Selling Price as defined above for
identical products sold to a nonaffiliated customer nearest to
the
date of such lease, sale, use, or other disposition. If a Licensed
Product is sold in combination with other products or as a part
or component of another product and a single selling price is
billed for such combination product, the Net Selling Price for
the computation of royalties payable hereunder on such
Licensed Product shall be equal to the product of the single
selling price for such combination product (reduced as may be
permitted by subsections (i-v) above) times the actual cost of
manufacturing such Licensed Product divided by the actual cost
of manufacturing such combination product. The calculation of
the Net Selling Price of a Licensed Product when the
LICENSEE is not a Tier 1 supplier (i.e. a direct supplier to
the
manufacturer of a final product in a supply chain) shall be
based
upon the selling price received by the Tier 1 supplier
incorporating glazing provided by the LICENSEE (reduced as
may be permitted by subsections (i-v) above). The method for
reporting the Net Selling Price in such instances when
LICENSEE is not a Tier 1 supplier will be either agreed to
between LICENSOR and LICENSEE on a case by case basis or
set forth in each
commercial contract between LICENSEE and
such Tier 1 supplier, and shall include either (A) the Tier 1
supplier providing LICENSEE with documentation of the Net
Selling Price for purposes of the royalty calculation made
pursuant to Section 3.1 hereof and payment by LICENSEE, or
(B) the Tier 1 supplier calculating the Net Selling Price and
paying the royalty calculated pursuant to Section 3.1 hereof
directly to LICENSOR. For purposes of calculation of Net
Selling Price by a Tier 1 supplier who is not a licensee of
LICENSOR, such Tier 1 supplier may provide an aggregate
amount of the total Net Selling Price of Licensed Products sold
within a reporting period. In cases where the Tier 1 supplier
is
not a licensee of LICENSOR, payments made directly to
LICENSOR from the Tier 1 supplier pursuant to clause (B)
above shall be considered the same as payments made by
LICENSEE pursuant to Section 3.1 hereof. In cases where the
Tier 1 supplier is also a licensee of LICENSOR, no royalty
shall
be due from LICENSEE if such Tier 1 supplier is licensed by
LICENSOR to sell a Licensed Product.. When LICENSEE is a
Tier 1 supplier, the calculation of the Net Selling Price shall
be
based upon the selling price received by LICENSEE.
"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 Light
Valves,
Licensed Products and/or to the suspensions or other
components used or usable for Licensed Products or Light
Valves including, but not limited to, particles, particle
precursors, coatings, polymers, liquid suspensions and
suspending liquids, electronics and electronic systems,
lamination procedures or any combination thereof, and that
consist of concepts invented or developed 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, and all
foreign
counterparts thereof to make, have made, and to lease, sell, or
otherwise dispose of Licensed Products in the Licensed
Territory. Notwithstanding anything contained herein or in
Schedule A hereto to the contrary, no rights or licenses shall
be
granted hereunder with respect to any new particle (other than
LICENSOR's current polyiodide crystal) now or hereafter under
development or invented by or for LICENSOR or comprising
part of the activatable material of a Light Valve emulsion or
film sold or for sale by any other licensee of LICENSOR.
2.2 No Other
Rights. LICENSEE
agrees that, except
for the specific licenses granted to it under Section 2.1
hereof
for use in Licensed Products, LICENSEE has not acquired any
rights or licenses under this Agreement to use Light Valves or
any components thereof made by or for LICENSEE or its
sublicensees pursuant to this Agreement.
2.3 Sublicenses.
LICENSEE shall have
the right to
grant non-exclusive sublicenses to any of its wholly-owned and
controlled subsidiaries, whose obligations to LICENSOR
hereunder LICENSEE hereby guarantees, and each of which
acknowledges to LICENSOR in writing for each sublicense 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 and shall also notify
LICENSOR prior to any change in ownership in a sublicensee.
LICENSOR may terminate any such sublicense if there is any
change in the ownership or control of a sublicensee.
3 ROYALTY PAYMENTS,
REPORTS AND RECORD-KEEPING.
3.1 Royalties and Reports on Net Sales. During the term
of this Agreement, LICENSEE agrees to pay LICENSOR an
earned royalty which shall be ten percent (10%) of the Net
Selling Price of Licensed Products which embody, or the
manufacture of which utilizes, any of the rights granted under
Section 2.1 hereof, and which are manufactured by or for
LICENSEE and sold, leased, used or otherwise disposed of by
or for LICENSEE or a permitted sublicensee. Payments under
this Section 3.1 shall be made on a quarterly basis and made
within 30 days after the end of the calendar quarter in which
such Licensed Products were sold, leased, used or otherwise
disposed of by or for LICENSEE or a permitted sublicensee
hereunder. Each
royalty payment shall be in U.S. dollars and
shall be accompanied by a statement by LICENSEE showing in
reasonable detail the amount of Licensed Products sold, used,
leased or otherwise disposed of by or for LICENSEE and its
sublicensees during the preceding quarter, any deductions taken
or credits applied, and the currency exchange rate used to
report
sales made in currencies other than U.S. dollars. LICENSEE
shall use an average quarterly exchange rate for buying U.S.
dollars , as downloaded from Bloomberg and shall provide
LICENSOR with the data and calculation used to calculate such
average quarterly exchange rate. The first such statement shall
cover the period from the Effective Date of this Agreement to
the end of the first calendar quarter in which a Licensed
Product
is sold, used, leased or otherwise disposed of by or for
LICENSEE or its sublicensees. In addition, LICENSEE shall
provide LICENSOR with quarterly updates of its activities
involving the development of Licensed Products. LICENSEE
shall also furnish to LICENSOR upon release, a copy of each
brochure, price list (to the extent publicly disclosed),
advertisement or other marketing and promotional materials
prepared, published or distributed by LICENSEE or its
sublicensees relating to Licensed Products. LICENSOR shall
have the right, but not the obligation, to approve any use by
LICENSEE of LICENSOR's name, logo, or other information
about Licensed Products, and to require the correction of any
inaccurate information. Upon written notice to LICENSEE,
LICENSOR may change the above-referenced quarterly periods
to become calendar monthly periods at any time after the
royalties payable under this Section 3.1 exceed the Minimum
Royalties specified in Section 3.2 hereof, in which case
LICENSEE shall have the option to either provide sales reports
and payments monthly as aforesaid, or to make monthly
estimated sales reports and payments of royalties thereon, with
a
final reconciliation being done for the third month in each
calendar quarter.
3.2 Minimum Royalties
- Regardless of whether
LICENSEE is selling any Licensed Products, during the term of
this Agreement LICENSEE agrees to pay LICENSOR an initial
fee of [Confidential Information Omitted and filed separately
with the Securities and Exchange Commission] upon signing of
this License Agreement and the non-refundable minimum royalties
(in U.S. Dollars) specified below for each of the stated
periods:
Period
Minimum Royalty
[Confidential Information Omitted and filed separately with the
Securities and Exchange Commission]
3.3 Time and Method of Payment. The initial fee and
payment for the first minimum annual royalty payment under
Section 3.2 shall be paid to LICENSOR within 10 days of the
Effective Date of this Agreement, and each subsequent payment
under Section 3.2 to LICENSOR shall be made on or before
January 31 of each license year commencing January 1, 2009.
All other payments shall be due on the date specified in this
Agreement, or if no date is specified, within 60 days of
invoice.
All payments that remain unpaid past their due date shall bear
interest at an annual rate equal to the lesser of 25% or the
maximum interest rate permitted by law. All payments made to
LICENSOR shall be paid by wire transfer of immediately
available funds to the account of Research Frontiers
Incorporated at Chase Manhattan Bank, 6040 Tarbell Road,
Syracuse, New York 13206, Account No.: 825-624-290, ABA
Wire Code No.: 021 000 021, or to such other account or place,
as LICENSOR may specify in a notice to LICENSEE.
3.4 Sales, Use and Returns. Licensed Products shall be
considered as sold, leased or used and royalties shall accrue
on
the earlier of when such Licensed Products are billed out, or
when delivered, shipped or mailed to the customer. If as a result
of a price reduction or a return of Licensed Products
previously
sold, a credit or refund to a customer is given on part or all
of
the sale price of such Licensed Products, a credit shall be
allowed against royalties accruing thereafter under this
Agreement equal to the royalty paid on that part of the sales
price so credited or refunded.
3.5 Recordkeeping.
LICENSEE
shall keep and shall
cause each sublicensee to keep for six (6) years after the date
of
submission of each statement supported thereby, true and
accurate records, files and books of accounts that relate to
Licensed Products, all data reasonably required for the full
computation and verification of the Net Selling Price of
Licensed Products, deductions therefrom and royalties to be
paid, as well as the other information to be given in the
statements herein provided for, and shall permit LICENSOR or
its duly authorized representatives, upon reasonable notice,
adequately to inspect the same at any time during usual
business
hours. 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, or any country in the Licensed Territory
where books, records, or information relating to this Agreement
are kept) 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 no more frequently than annually. The cost of
the audit shall be borne by LICENSOR, unless the audit shall
disclose a breach by LICENSEE of any term of this Agreement,
or an underpayment error in excess of two percent of the total
monies paid to LICENSOR by LICENSEE during the audited
period, in which case LICENSEE shall bear the full cost of such
audit. LICENSEE agrees
to pay LICENSOR all additional
monies that are disclosed by the audit to be due and owing to
LICENSOR within thirty days of the receipt of the report.
3.6 Customer Referrals. Although LICENSOR is under
no obligation to do so, LICENSOR may from time to time refer
customers to LICENSEE. In the event that such customer
purchases, leases or rents products or services from LICENSEE
other than a Licensed Product upon which a royalty is paid by
LICENSEE to LICENSOR, LICENSEE shall include the details
of such transaction in its next quarterly report under Section
3.5
hereof, and shall pay LICENSOR a sales commission equal to
ten percent (10%) of the amount received from such customer
for which a royalty under Section 3.1 hereof is not paid. No
such payment shall be due from LICENSEE to LICENSOR if
the referred customer was already a customer of LICENSEE (or
LICENSEE can provide written evidence that it was already in
discussions with such person or entity about becoming a
customer of LICENSEE) prior to the date of referral by
LICENSOR and LICENSEE informs LICENSOR of such fact at
the time that the referral by LICENSOR is made. In addition, if
a sale to a customer would otherwise require a payment by
LICENSEE to LICENSOR pursuant to this Section 3.6 above,
and the product or service sold, leased or rented to such
customer does not involve a product or service involving the
variable, dynamic (i.e. control that is provided by a response
after the change of certain parameters) or adaptive control of
light or glare, or privacy, then in such case the applicable
percentage sales commission shall be 5% instead of 10%, and
such payments referred to in this sentence shall only be due
for
sales, leases or rentals of products or services not involving
the
variable, dynamic (i.e. control that is provided by a response
after the change of certain parameters) or adaptive control of
light, or glare, or privacy, invoiced or sold to such referred
customer within one year of the date of the first invoice by
LICENSEE to such referred customer. Notwithstanding
anything contained in this Section 3.6 to the contrary, no
payment shall be due to LICENSOR under this Section 3.6
unless LICENSEE has sent LICENSOR a written notice via
email, fax or overnight courier indicating that it wishes to
have
the provisions this Section 3.6 apply to a referral or
prospective
referral of a customer by LICENSOR to LICENSEE.
4
OBLIGATIONS OF LICENSEE.
4.1 Compliance.
LICENSEE agrees that, without
limitation, any manufacture, sale, lease, use or other
disposition
of Licensed Products that is not in strict accordance with the
provisions of this Agreement shall be deemed a material breach
of this Agreement.
4.2 End Users.
LICENSEE agrees to
require all direct
recipients of Licensed Products to whom Licensed Products are
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 Licensed Products. LICENSEE agrees to take
reasonable
steps to assure itself that Licensed Products sold, leased or
otherwise disposed of by or for LICENSEE is being used for
permitted purposes only.
4.3 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 Licensed Products 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
is unaware of any approval from
any governmental agency or ministry, or from any third party,
required to effectuate the terms of this Agreement or the
transactions contemplated hereby.
4.4 Purchase of
Components from Others. By virtue of
the disclosure of Technical Information and information, 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 Licensed Products
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.
4.5 No Warranties by LICENSOR. LICENSOR does
not represent or warrant the performance of any Licensed
Product or 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. In no event shall LICENSOR 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 Licensed Product, material,
Component or information provided hereunder.
4.6 Analysis. LICENSEE
represents and agrees that it
will only incorporate Components received from authorized
suppliers into Licensed Products and for no other purpose, and
that LICENSEE will not directly or indirectly attempt to
reverse-engineer the production of any material provided to it
hereunder by LICENSOR or any supplier of any Component.
4.7 Personnel.
LICENSEE agrees to assign personnel
from its technical staff who shall be responsible for the
development of Licensed Products during the term of this
Agreement.
4.8 Promotional Activities. LICENSEE agrees that it
shall maintain, either at its own facilities or that of any
laminating subcontractor selected by LICENSEE, adequate
inventories of SPD light control film purchased from any
authorized supplier of Light Valve film to meet on a timely
basis the anticipated requirements of LICENSEE for
incorporation into Licensed Products during the term of this
Agreement. In addition, to the extent commercially reasonable
and consistent with LICENSEE's current practices, LICENSEE
shall promptly develop and maintain a web site relating to its
business
