Exhibit
10.1
Settlement
Agreement
This Settlement Agreement (“Settlement
Agreement”) is made and entered effective as of the 22
nd day of May, 2009 (the “Effective
Date”) by and between Network-1 Security Solutions, Inc.
(“Network-1”) and NETGEAR, Inc.
(“NETGEAR”).
In this Settlement Agreement Network-1 and
NETGEAR are sometimes referred to, respectively, as “the
Party” or, collectively, as “the Parties.
Background
(a) Network-1
and NETGEAR are currently engaged in a dispute and are litigants in
a civil action pending in the United States District Court for the
Eastern District of Texas entitled Network-1 Security Solutions,
Inc. v. Cisco Systems, Inc., et. al , Case No. 6-08 CV-030
(“the Pending Litigation”);
(b) The
Parties to this Settlement Agreement recognize the uncertainty of
outcome of disputed, complex litigation such as the Pending
Litigation as well as the extended period of time that it could
take to resolve matters through litigation, and independently
concluded that their respective interests would be best served by
compromising and thereby terminating and concluding the Pending
Litigation and all disputes between them;
Now, therefore , the Parties to this Settlement Agreement
mutually agree and contract with each other, for good and
reciprocal consideration given and received, as follows:
Within five business days of the timely payment
made pursuant to Section 4.1 of the Nonexclusive Patent License
Agreement in the form attached to this Settlement Agreement as
Exhibit B (“License Agreement”), Network-1 will file a
Notice of Dismissal with Prejudice of NETGEAR with the United
States District Court for the Eastern District of Texas in the form
attached to this Settlement Agreement as Exhibit A.
(a) Effective
upon the timely payment made pursuant to Section 4.1 of the License
Agreement, Network-1 hereby releases and discharges (i) NETGEAR,
(ii) NETGEAR’s Subsidiaries (as defined in the License
Agreement), (iii) (but only insofar as they were or are acting in
their capacities as such) its attorneys, employees, stockholders,
directors, officers, and agents, and (iv), NETGEAR’s
customers and distributors, but only to the extent that they are
using or distributing NETGEAR’s Licensed Products (as defined
in the License Agreement), from any and all manner of action or
actions, cause or causes of action, in law or in equity, known or
unknown, from the beginning of time to the date of this Settlement
Agreement, which arises out of the Pending Litigation, PROVIDED,
however, that this release and discharge shall not apply to the
obligations, rights, and privileges created by this Settlement
Agreement.
(b) Effective
upon the execution of this Agreement, NETGEAR hereby releases and
discharges (i) Network-1, and (ii) (but only insofar as they were
or are acting in their capacities as such) its attorneys,
employees, shareholders, directors, officers, and agents from any
and all manner of action or actions, cause or causes of action, in
law or
in equity,
known or unknown, from the beginning of time to the date of this
Settlement Agreement, which arises out of the Pending Litigation,
PROVIDED, however, that this release and discharge shall not apply
to the obligations, rights, and privileges created by this
Settlement Agreement.
Upon the execution of this Settlement Agreement,
Network-1 and NETGEAR will execute a Nonexclusive Patent License
Agreement in the form attached to this Settlement Agreement as
Exhibit B.
(a) This
Settlement Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) Any
action, suit, or proceeding brought by a party to this Settlement
Agreement shall be brought only in New York courts in New York
County or in California Courts in Santa Clara County, at
complainant’s option. Network-1 and NETGEAR hereby
irrevocably submit to the exclusive jurisdiction of the United
States District Court for the Southern District of New York or any
court of the State of New York located in the County of
New York, and to the United States District Court for the
Northern District of California or any court of the State of
California located in County of Santa Clara, in respect of any
action, suit or proceeding brought by Network-1 or NETGEAR to
enforce this Settlement Agreement (and waive any objection based on
forum non convenience or any other objection to venue); provided,
however, that such
consent to
jurisdiction is solely for the purpose referred to in this Section
and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the State of New York or
California other than for such purpose and shall not apply with
respect to, or be deemed to indicate the intent of any party to
this Settlement Agreement with respect to, any action brought by or
against any person(s) each of whom is not a party to this
Settlement Agreement.
(c) The
invalidity or unenforceability of any provision of this Settlement
Agreement shall not affect the validity or enforceability of any
other provision.
(d) Network-1
and NETGEAR have had all desired counsel, legal and otherwise, in
entering into this Settlement Agreement, and do so in accordance
with their own free acts and deeds.
(e) Any
and all notices, consents, or demands permitted or required to be
made or given under this Settlement Agreement shall be in writing,
signed by the individual giving such notice, consent, or demand and
shall be delivered personally, sent by facsimile, or sent by
registered or certified mail, return receipt requested, to the
other party at its address set forth below:
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Network-1
Security Solutions, Inc.
445 Park
Avenue, Suite 1018
New York, NY
10022
Attention: Corey M. Horowitz,
Chairman and CEO
Telephone: (212) 829-5770
Facsimile: (212) 829-5771
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Baker Hostetler
LLP
45 Rockefeller
Plaza
New York, NY
10111
Attention: Victor Siber
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Telephone: (212) 589-4696
Facsimile: (212) 589-4201
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NETGEAR
Inc.
350 East
Plumeria Drive
San Jose,
California 95134-1911
Attention: Andrew Kim, V.P. of Legal
& Corporate
Development and
Company Secretary
Telephone:
(408) 907-8000
Facsimile:
(408) 907-8097
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Wilson Sonsini
Goodrich & Rosati
650 Page Mill
Road
Palo Alto,
CA 94304
Attention: Jamie DiBoise
Telephone:
(650) 493-9300
Facsimile:
(650) 493-6811
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(f) Unless
otherwise set forth in this Settlement Agreement or as provided in
the attached Exhibits, the provisions of this Settlement Agreement
including all Exhibits shall be binding on, and inure to the
benefit of, the respective successors and assigns or partial
assigns of the Parties, and, in any event, shall continue to be
binding on the Parties.
(g) Each
Party warrants and represents that it has not assigned,
transferred, hypothecated, or purported to assign, transfer, or
hypothecate to any person or entity not a party hereto, the whole
or any part or portion of its claims or rights which constitute
matters released or discharged pursuant to this Settlement
Agreement.
(h) This
Settlement Agreement may be executed in separate counterparts, each
of which shall be considered an original but all of which shall
constitute one agreement.
(i) This
Settlement Agreement and the corresponding Exhibits, including the
dismissal (Exhibit A) and Nonexclusive Patent License Agreement
(Exhibit B) constitute
the entire
agreement between the parties with respect to the subject matter of
this Agreement and supersede any prior or contemporaneous
negotiations, understandings, agreements, commitments, or
representations by or between the Parties, written or oral, with
respect to the subject matter of this Settlement
Agreement.
(j) Each
party acknowledges that it has cooperated fully in the drafting and
preparation of this Settlement Agreement (including all Exhibits),
and that no rule of construction may be used to construe this
Settlement Agreement against any party by virtue of that
party’s role in the drafting of this Settlement
Agreement.
(k) No
amendment of any provision of this Settlement Agreement shall be
valid unless the same shall be in writing and signed by each of the
Parties.
(l) This
Settlement Agreement is not confidential.
IN WITNESS WHEREOF , each of the Parties has caused two original
copies of this Settlement Agreement to be executed on its behalf by
its duly authorized officer.
Network-1
Security Solutions, Inc.
By: /s/ Corey M. Horowitz
Duly
Authorized
Title: Chairman & CEO
Date: May 27, 2009
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Title: VP, Legal & Corp.
Div.
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NONEXCLUSIVE PATENT LICENSE
AGREEMENT
THIS agreement
(“Agreement”) made and entered into and effective as of
April 1, 2009, is by and between Network-1 Security Solutions,
Inc., a Delaware corporation (the “ Licensor ”),
and NETGEAR, Inc., a Delaware corporation, (the “
Licensee ”).
WHEREAS,
Licensor is the beneficial owner of United States Patent No.
6,218,930 (the “ ‘930 Patent
”);
WHEREAS, on
June 18, 2008, Licensor commenced an industry-wide “Special
Licensing Program” for the ‘930 Patent to vendors of
Power over Ethernet equipment. The Special Licensing
Program was of limited duration and was being implemented on an
industry-wide basis to offer discounted running royalty rates and
exceptions to Licensor’s standard current licensing terms and
conditions relating to the ‘930 Patent to PoE vendors who are
“early adopters” and enter into license agreements
without delay and to avoid litigation and higher
royalties;
WHEREAS,
Licensor agreed to offer, for a limited time, the terms of the
Special Licensing Program to defendants, including Licensee, in the
litigation Network-1 Security Solutions, Inc. v. Cisco, Inc. et.
al , Case No. 6:08-cv-00030, pending in the United States
District Court for the Eastern District of Texas, Tyler
Division;
WHEREAS,
Licensee and its Subsidiaries desire to obtain a royalty-bearing,
non-exclusive, license under the ‘930 Patent, and Licensor is
willing to grant Licensee and its Subsidiaries such license subject
to the terms and conditions of this Agreement;
NOW, THEREFORE,
in consideration of the promises and covenants in this agreement,
the parties agree as follows:
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1.1
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“
Adverse Ruling ” means a holding, by a final judgment
of a court of competent jurisdiction (including the International
Trade Commission), that (a) none of the claims of the Licensed
Patent adjudicated by the court are valid, or (b) the Licensed
Patent is unenforceable such that it could not be enforced against
Licensee, or (c) the Licensor is estopped or enjoined from
asserting the Licensed Patent against Licensee. The term
“Adverse Ruling” shall also encompass a final order by
the U.S. Patent & Trademark Office that at least claims 1, 2,
6, and 9 of the Licensed Patent are invalid.
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1.2
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“
Effective Date ” of this Agreement shall mean the date
first written above.
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1.3
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“
Expiration Date ” means the date on which the Licensed
Patent shall expire.
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1.4
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“ Have
Made ” means the right to purchase a Licensed Product
from a third party ( e.g. , suppliers and vendors) and/or
have a third party make a Licensed Product in whole or in part for
the use by and/or sale or transfer by Licensee or its Subsidiaries,
where the third party operates under the license grant to Licensee
and its Subsidiaries for providing Licensed Products to Licensee
and/or a Subsidiary of Licensee and for no other
purpose.
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1.5
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“
Licensed Patent ” means the ‘930 Patent and any
continuations, continuations-in-part, re-issues, re-examinations,
and divisionals of the ‘930 Patent, and all patents and
applications claiming priority from the ‘930 Patent, or from
which priority is claimed.
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1.6
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“
Licensed PSE ” refers to a PSE product made, used,
offered for sale, or sold within the United States or imported into
the United States prior to the Expiration Date. As used
in this Agreement, “Licensed PSE” shall not encompass
any apparatus, device, equipment or product that exclusively uses
Spare Pairs to transmit operating power.
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1.7
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“
Licensed PD ” refers to a PD product made, used,
offered for sale, or sold within the United States or imported into
the United States prior to the Expiration Date. As used
in this Agreement, “Licensed PD” shall not encompass
any apparatus, device, equipment or product that exclusively uses
Spare Pairs to receive operating power.
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1.8
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“
Licensed Product ” means any Licensed PSE product or
any Licensed PD product. A list of current Licensed
Products as of the Effective Date includes the products set forth
in Exhibit 1.
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1.9
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“
Power over Ethernet ” or “ PoE ”
means the technology used to deliver electrical power over Ethernet
network cabling for the purpose of supplying operating power to
devices connected to an Ethernet network.
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1.10
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“
Powered Device ” or “ PD ” means
any apparatus, device, equipment, or product that receives or is
capable of receiving (but not sending) power from PSEs in a PoE
system.
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1.11
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“
Power Sourcing Equipment ” or “ PSE
” means any fixed configuration ( i.e. , stand alone
and non-expandable) product that supplies power to PDs in a PoE
system, including, but not limited to, products complying with IEEE
Standards 802.3af and 802.3at.
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1.12
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“
Sales Price ” in any quarter, means, with respect to
any Licensed Product sold by Licensee (or any of its Subsidiaries)
on an arms-length basis to a party that is not a Subsidiary of
Licensee, the “Average Sales Price” (which is
calculated as the total sum of the “Extended Prices”
actually invoiced during a quarter, substantially in the form of
the representative invoice attached to this Agreement as Exhibit 3,
for such product divided by the number of units of such product
sold during such quarter).
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1.13
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“
Spare Pairs ” means the set of wires in a twisted pair
cable not used for transporting data in an Ethernet network
segment.
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1.14
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“
Subsidiary ” means as to Licensee (Licensor has no
Subsidiaries) an entity of which shares of stock having voting
power to elect a majority of the Board of Directors or other
managers of such entity are at the time owned, or the management of
which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by the Licensee.
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1.15
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“
Third Party Licensed Products ” means any PD or PSE
product of a third party that is made, used, offered for sale, or
sold within the United States or imported into the United States
that is licensed by Licensor and covered under a license between
Licensor and the third party.
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2.1
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Upon the timely
payment of the initial licensing fee set forth in Section 4.1,
Licensor grants to the Licensee and its Subsidiaries a personal,
non-exclusive, non-transferable, royalty bearing license under the
Licensed Patent (i) to make, use, lease, sell, offer for sale,
import, design, Have Made, and otherwise transfer Licensed
Products, including the right to procure or produce components for
Licensed Products, (ii) to practice any method or process involved
in the manufacture of Licensed Products, and (iii) to practice any
method or process involved in the use or other integration into a
system or network of Licensed Products. To the extent
that any Licensed Product is sold or otherwise transferred by
Licensee or its Subsidiaries to distributors, resellers, channel
partners, retailers, customers, and other “arm’s
length” customers and/or end users, and any other third
parties involved in distributing, selling, or using
Licensee’s Licensed Products, the license granted under this
Section shall encompass such parties for such Licensed
Products
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