Exhibit
10.1
SETTLEMENT
AGREEMENT
This
SETTLEMENT AGREEMENT is entered into as of the latest of the
dated signatures below (“Effective Date”) by and among
Technology Research Corporation (“ TRC
”), and Shanghai ELE Manufacturing Corporation
(“ ELE ”).
IN
CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED
HEREIN, THE SUFFICIENCY OF WHICH THE PARTIES IRREVOCABLY
ACKNOWLEDGE, THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS
The following
terms shall have the meaning set forth below when used in this
Agreement:
1.1 “’337
Patent” means U.S. Patent No. 6,292,337 entitled
“Electrical System with Arc Protection”, including all
foreign counterparts, divisional, continuation, reissued,
reexamined, continuation in-part patents and any patents or pending
applications claiming priority from them or any of their parent
applications.
1.2 “Chinese
Patents” means Chinese Patent Nos. ZL200420096315.2,
ZL200520118736.5 and ZL200520118737.X, including all foreign
counterparts, divisional, continuation, reissued, reexamined,
continuation in-part patents and any patents or pending
applications claiming priority from them or any of their parent
applications.
1.3
“Sold” means ELE has shipped its
products and invoiced its customer for such products.
1.4 “Agreement”
means this Settlement Agreement.
1.5 “Party”
or “Parties” means any party to this
Agreement.
1.6 “Stipulation
of Dismissal With Prejudice” means the Stipulation of
Dismissal with Prejudice document attached as Appendix
A.
ARTICLE 2
BACKGROUND
2.1 TRC
is the owner of the entire right, title and interest in and to the
’337 Patent. ELE is the owner of the entire right,
title and interest in and to the Chinese Patents.
2.2 ELE
filed suit against TRC in the U.S. District Court for the Central
District of California, No. 2:07-cv-1102-RGK-VBK. The
suit was transferred to the U.S. District Court for the Middle
District of Florida, No. 8:07-cv-1007-JDW-MSS (“the
Action”). In the Action, ELE sought declaratory
judgment of non-infringement of the ’337 patent and
invalidity of the ’337 patent. TRC asserted
affirmative defenses and counterclaims, alleging, among other
things, that ELE infringes the ’337 Patent and that the
’337 patent is valid and enforceable.
2.3 The
parties to this Agreement now desire to settle the Action, and to
settle and resolve all issues which they may have against each
other arising out of or in connection with the ’337 patent
and the Chinese Patents.
ARTICLE 3
PAYMENTS AND
ROYALTIES
3.1 ELE
shall pay TRC [request for confidential treatment] in full
settlement regarding all products made, used, sold, imported or
offered for sale by ELE prior to July 1, 2008 (“Past
Products”). This amount is to be offset by the
[request for confidential treatment] owed to ELE by TRC
pursuant to Section 3.2 of this agreement. The remaining
[request for confidential treatment] shall be payable within
thirty days of the dismissal of the Action.
3.2 TRC
shall pay ELE [request for confidential treatment] in full
settlement regarding all products made, used, sold, imported or
offered for sale by TRC prior to July 1, 2008 and in partial
consideration for the license granted to it by ELE pursuant to
Section 4.3 of this Agreement. This amount shall be
credited as an offset to the amount owed to TRC pursuant to Section
3.1 of this agreement and shall be credited upon execution of the
Agreement.
3.3 For
so long as the ’337 Patent is valid and enforceable, the
royalty for the license granted to ELE under this Agreement on any
of ELE’s Leakage Current Detector Interrupter Products other
than Past Products (“ELE LCDI Products”) Sold is
[request for confidential treatment] on ELE LCDI Products
having a voltage rating of 125 volts or less, and is [request
for confidential treatment] on all other ELE LCDI
Products.
3.4 Royalty
payments will be paid quarterly, will be due for the previous
quarter on the 15 th of
the month following the end of that quarter, and will be
accompanied by a statement of the number of ELE LCDI Products (by
voltage rating when appropriate) Sold during that
quarter.
3.5 ELE
guarantees a minimum royalty payment of [request for
confidential treatment] for Fiscal year 2009 (7/08-6/09) and
[request for confidential treatment] for Fiscal year 2010
(7/09-6/10), payable at [request for confidential treatment]
per quarter. If in any quarter, the amount of actual
royalties paid exceeds [request for confidential treatment]
, the amount in excess of [request for confidential
treatment] will be carried over and credited toward the next
quarters’ minimum royalty payment within the same Fiscal
year.
3.6 The
payments required to be made pursuant to section 3.1 of this
Agreement shall be made in United States dollars by wire transfer
of immediately available funds as follows:
Technology Research Corporation
5250 140 th Avenue North
Clearwater, FL 33760-3728
Bank
Name: Wachovia
Bank
City/State: Winston-Salem,
NC
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[request for
confidential treatment]
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[request for
confidential treatment]
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[request for
confidential treatment]
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3.7 ELE
agrees to keep records showing the sales or other disposition of
ELE LCDI Products sold or otherwise disposed of under the license
herein granted in sufficient detail to enable the royalties payable
by ELE to be determined. Upon notice from TRC as
described herein, which may be given no more than once every twelve
(12) months, ELE shall provide access to those Auditors (defined
below) whom TRC may request in writing as needing access to the
ELE’s statements, for the purpose of performing an audit of
ELE’s compliance with the terms and conditions set forth in
the Agreement. ELE shall provide such Auditors with reasonable
assistance as they may require, at TRC’s sole cost and
expense. If any audit by an Auditor results in ELE being
notified that it is not in compliance with provisions under this
Agreement, ELE shall take actions to comply with the
recommendations contained in such notification. All audits
will be paid for exclusively by TRC, shall require reasonable
advanced written notice to ELE (but in no event less than thirty
(30) business days), and will be conducted in a manner so as not to
disrupt ELE’s business. All information accessed by
Auditors as part of an audit shall be deemed the Confidential
Information of ELE and treated in accordance with the provisions
contained in Section(s) 3, 5 and 6 of the Stipulated Protective
Order filed in connection with the Action on or about August 27,
2007 and approved by the Court on or about August 29, 2007.
In the event an audit concludes that ELE’s payments are not
in full compliance with this Agreement, then TRC's sole remedy
shall be to require ELE to pay such additional amounts as necessary
to bring ELE into compliance, including accrued interest at the
rate of 1.5% per month or the maximum lesser rate allowed by
applicable law. For purposes of this Section 3.7,
"Auditor" shall mean those independent third party individuals
unaffiliated with TRC and engaged at TRC's sole cost and expense to
audit ELE's compliance with the terms and conditions set forth in
this Agreement, and who: (a) are reasonably acceptable to ELE as
indicated by ELE in writing; and (b) have signed confidentiality
agreements with terms at least as strict as those contained herein
and in the above-referenced Stipulated Protective Order.
ARTICLE 4
LICENSE
AGREEMENT
4.1 Conditioned
upon ELE complying with the payment obligations specified in
section 3.1 of this Settlement Agreement, TRC hereby grants to ELE,
its subsidiaries, and its existing contract manufacturers, a
perpetual, worldwide, non-transferable (except as set forth in
Section 10.1), non-exclusive license, limited to the room air
conditioner (RAC) market, to make, have made, use, offer-to-sell,
sell, export, and import, or otherwise dispose of products and
services, the making, having made, use, offering to sell, selling,
exporting or importing of which would in the absence of this
license infringe any valid and enforceable claim of the ’337
Patent. This license shall apply to ELE’s
customers, manufacturers, partners, distributors, re-sellers,
vendors, and their respective end users, but only with respect to
products and services made by, provided by, or purchased
from ELE. This license shall not be interpreted or
construed as granting ELE any right to sub-license any third party
or Non-Subsidiary rights to use any invention claimed in the
’337 Patent, except as such invention is or was embodied in
materials, equipment, or products provided directly by
ELE. “Non-subsidiary” shall mean any
corporation of which ELE does not own or control more than 50% of
the U.S. or foreign corporation, company or other legal
entity. Further, this license shall not be interpreted
or construed to include any products or services of any third party
that acquires ELE or any of ELE’s subsidiaries or affiliates,
where such products or services (i) were in existence at the time
of the acquisition or (ii) are new products or services developed
by said third party subsequent to said acquisition.
4.2 The
term of the license granted to ELE shall be for the life of the
’337 Patent.
4.3 Conditioned
upon TRC complying with the payment obligations specified in
section 3.2 of this Settlement Agreement, ELE hereby grants to TRC,
its subsidiaries, and its existing contract manufacturers, a
perpetual, worldwide, non-transferable (except as set forth in
Section 10.1), non-exclusive license, limited to the room air
conditioner (RAC) market, to make, have made, use, offer-to-sell,
sell, export, and import, or otherwise dispose of products and
services, the making, having made, use, offering to sell, selling,
exporting or importing of which would in the absence of this
license infringe any valid and enforceable claim o
