PRIVILEGED AND CONFIDENTIAL — DRAFT — SUBJECT TO FURTHER NEGOTIATION
TECHNOLOGY LICENSE AGREEMENT
Draft 3 — Revised August 14, 2023
Prepared by Calderwood & Harkness LLP on behalf of Brightfield Cloud Services Inc.
Delivered to Whitmore & Falk LLP (counsel to Nexilis Innovations Ltd.)
DRAFT — SUBJECT TO FURTHER NEGOTIATION — PRIVILEGED AND CONFIDENTIAL
Calderwood & Harkness LLP 700 Louisiana Street, Suite 3400 Houston, TX 77002
Contact: Catherine Bloom, Partner Wendy Schultz, Senior Associate
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TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement (this "Agreement") is entered into as of ___, 2023 (the "Effective Date"), by and between:
NEXILIS INNOVATIONS LTD., a corporation organized and existing under the laws of the State of Delaware, with its principal offices located at 77 Kendall Square, Suite 400, Cambridge, MA 02139 (hereinafter referred to as "Licensor" or "Nexilis");
and
BRIGHTFIELD CLOUD SERVICES INC., a corporation organized and existing under the laws of the State of Delaware, with its principal offices located at 4200 Bluebonnet Parkway, Suite 1100, Austin, TX 78745 (hereinafter referred to as "Licensee" or "Brightfield").
Each of Licensor and Licensee is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Licensor is the owner of certain patented and proprietary distributed-cache orchestration technology marketed as the "DeltaSync Platform," including fourteen (14) issued U.S. utility patents (U.S. Patent Nos. 11,234,567 through 11,234,580) and six (6) pending U.S. patent applications (Application Nos. 17/901,201 through 17/901,206), together with related know-how, trade secrets, technical data, source code, algorithms, documentation, and other proprietary information;
WHEREAS, Licensee develops and markets the "Stratos" enterprise cloud-management platform and hybrid-cloud hardware appliances to mid-market and enterprise customers across multiple industry verticals throughout the United States and internationally;
WHEREAS, Licensee desires to obtain an exclusive license to the DeltaSync Platform technology and patents for integration into the Stratos platform for the purpose of enabling real-time cache coherence for multi-region customer deployments, thereby enhancing the performance, scalability, and reliability of Licensee's cloud-management offerings;
WHEREAS, the Parties entered into that certain Mutual Nondisclosure Agreement, effective June 19, 2023 (the "NDA"), governing the exchange of confidential and proprietary information between the Parties in connection with the evaluation and negotiation of the transactions contemplated hereby, and each Party has provided certain confidential information to the other Party pursuant to the terms of the NDA;
WHEREAS, Licensor desires to grant, and Licensee desires to obtain, such license on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, the Parties hereby agree as follows:
ARTICLE 1: DEFINITIONS
As used in this Agreement, the following terms shall have the meanings ascribed to them below. Capitalized terms used but not defined in this Article 1 shall have the meanings ascribed to them elsewhere in this Agreement.
1.1 "Affiliate" shall mean, with respect to any Party, any entity that directly or indirectly controls, is controlled by, or is under common control with such Party. For purposes of this definition, "control" means the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of, or the equivalent ownership interest in, such entity, or the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract, or otherwise.
1.2 "Confidential Information" shall have the meaning ascribed to such term in the Mutual Nondisclosure Agreement between the Parties dated June 19, 2023, which is incorporated herein by reference and made a part hereof. To the extent of any conflict between the confidentiality provisions of the NDA and the provisions of Article 9 of this Agreement, the more protective provisions shall control.
1.3 "DeltaSync Patents" shall mean, collectively, U.S. Patent Nos. 11,234,567 through 11,234,580, inclusive, as more particularly described on Schedule A attached hereto, together with any and all continuations, continuations-in-part, divisionals, reissues, reexaminations, supplemental examinations, and extensions thereof, and any foreign counterparts of the foregoing.
1.4 "DeltaSync Pending Applications" shall mean, collectively, U.S. Patent Application Nos. 17/901,201 through 17/901,206, inclusive, as more particularly described on Schedule A attached hereto, and any patents issuing therefrom, together with any continuations, continuations-in-part, divisionals, reissues, reexaminations, supplemental examinations, and extensions of any patents issuing therefrom, and any foreign counterparts of the foregoing.
1.5 "DeltaSync Technology" shall mean the DeltaSync distributed-cache orchestration engine, including all DeltaSync Patents, DeltaSync Pending Applications, related Technical Information, and all associated documentation, specifications, training materials, and other proprietary materials related thereto, as more particularly described on Schedule A and Schedule B attached hereto.
1.6 "Derivative Works" shall mean any and all modifications, enhancements, improvements, adaptations, translations, compilations, or derivative works of the DeltaSync Technology or any portion thereof, created by or on behalf of Licensee or its Affiliates during the Term, whether or not independently patentable or copyrightable.
1.7 "Effective Date" shall mean the date first set forth in the preamble of this Agreement.
1.8 "Enterprise SaaS Verticals" shall mean all industry sectors and verticals in which enterprise software-as-a-service solutions are deployed, offered, marketed, distributed, or otherwise made available to end-customers, without restriction by Standard Industrial Classification (SIC) code, North American Industry Classification System (NAICS) code, Global Industry Classification Standard (GICS) code, or any other industry classification system, framework, or taxonomy, whether currently existing or hereafter developed.
1.9 "Field of Use" shall mean the development, deployment, commercialization, marketing, distribution, maintenance, support, and hosting of the Licensed Products within the Enterprise SaaS Verticals, as more particularly described on Schedule C attached hereto.
1.10 "Improvement Patents" shall mean any patents or patent applications filed by either Party or its Affiliates covering improvements to the DeltaSync Technology that are developed, conceived, or reduced to practice during the Term, whether by either Party independently or by the Parties jointly.
1.11 "Licensed Patents" shall mean, collectively, the DeltaSync Patents and the DeltaSync Pending Applications, as set forth on Schedule A.
1.12 "Licensed Products" shall mean the Stratos Platform and any successor, replacement, companion, or ancillary products or services of Licensee or its Affiliates into which the DeltaSync Technology or any portion thereof is integrated, incorporated, embedded, or otherwise utilized.
1.13 "Licensee Existing IP" shall mean all intellectual property owned by or licensed to Licensee or its Affiliates as of the Effective Date, including without limitation the Stratos Platform technology, all related patents, copyrights, trademarks, trade secrets, know-how, and other proprietary rights, but excluding the DeltaSync Technology.
1.14 "Party" / "Parties" shall have the meanings ascribed to such terms in the preamble of this Agreement.
1.15 "Person" shall mean any individual, corporation, partnership, limited partnership, limited liability company, joint venture, trust, unincorporated organization, association, governmental authority, agency, or instrumentality, or any other entity of any kind or nature.
1.16 "Stratos Platform" shall mean Licensee's proprietary enterprise cloud-management platform, including all software, firmware, and related hardware appliances, together with all updates, upgrades, new versions, and releases thereof.
1.17 "Sublicensee" shall mean a Third Party to whom Licensee grants a sublicense of any portion of the rights granted to Licensee hereunder, in accordance with and subject to the requirements of Section 2.3.
1.18 "Technical Information" shall mean all non-patented trade secrets, know-how, technical data, algorithms, source code, object code, documentation, specifications, system architecture diagrams, integration guides, API specifications, training materials, and other proprietary technical information related to the DeltaSync Platform, as more particularly described on Schedule B attached hereto.
1.19 "Term" shall have the meaning ascribed to such term in Section 8.1.
1.20 "Territory" shall mean worldwide, without geographic limitation.
1.21 "Third Party" shall mean any Person that is not a Party to this Agreement or an Affiliate of a Party to this Agreement.
ARTICLE 2: GRANT OF LICENSE
2.1 License Grant
Subject to the terms and conditions of this Agreement, including the payment of the License Fee as set forth in Article 3, Licensor hereby grants to Licensee an exclusive (even as to Licensor within the Field of Use), royalty-free (subject to payment of the License Fee in accordance with Article 3), non-transferable (except as expressly provided in Section 13.5) license, under the Licensed Patents and to the Technical Information, to make, have made, use, import, offer for sale, sell, and otherwise commercialize Licensed Products within the Field of Use in the Territory during the Term.
The exclusivity of the license granted in this Section 2.1 shall apply solely within the Field of Use. Licensor retains all rights in and to the DeltaSync Technology outside the Field of Use, and nothing in this Agreement shall be construed to restrict Licensor's ability to practice, license, or otherwise exploit the DeltaSync Technology outside the Field of Use.
For the avoidance of doubt, the license granted hereunder extends to Licensee's Affiliates solely to the extent that such Affiliates are acting on behalf of Licensee in the exercise of Licensee's rights under this Agreement, and provided that Licensee remains fully responsible and liable for the acts and omissions of its Affiliates as if such acts and omissions were those of Licensee.
2.2 Scope of Exclusivity
During the Term, Licensor shall not itself, nor shall Licensor license, authorize, or permit any Third Party to, practice the Licensed Patents or use the Technical Information within the Field of Use in the Territory. Licensor's obligations under this Section 2.2 shall be subject to and conditioned upon Licensee's timely payment of all amounts due under Article 3 and Licensee's material compliance with the other terms and conditions of this Agreement.
Notwithstanding the foregoing, Licensor expressly retains the right to practice the Licensed Patents and to license the Technical Information outside the Field of Use, including without limitation for the following purposes: (a) Licensor's own internal research and development activities; (b) sponsored research conducted by or on behalf of Licensor with academic institutions, governmental agencies, or other research organizations; and (c) the licensing of the DeltaSync Technology to Third Parties for applications, products, and services that fall outside the scope of the Field of Use. In the event of any dispute regarding whether a particular application, product, or service falls within or outside the Field of Use, the Parties shall resolve such dispute in accordance with the procedures set forth in Section 13.2.
2.3 Sublicensing. Licensee may grant sublicenses to Third Parties solely in connection with and as necessary for the distribution, deployment, implementation, and support of Licensed Products to end-customers, subject to each of the following conditions:
(a) Each sublicense granted by Licensee shall be consistent with and no broader in scope than the license granted to Licensee under Section 2.1, and shall be subject to all of the terms and conditions of this Agreement, including the Field of Use restrictions and the confidentiality obligations set forth herein;
(b) Licensee shall provide Licensor with written notice within thirty (30) days of the grant of any sublicense, which notice shall include the identity of the Sublicensee, a description of the sublicense scope, and such other information as Licensor may reasonably request;
(c) Licensee shall remain primarily liable to Licensor for the acts and omissions of each Sublicensee as if such acts and omissions were those of Licensee, and Licensee shall use commercially reasonable efforts to ensure that each Sublicensee complies with all applicable terms and conditions of this Agreement;
(d) Each sublicense granted by Licensee shall terminate automatically and without further action upon the expiration or termination of this Agreement, and each sublicense agreement shall contain provisions reflecting such automatic termination; and
(e) Each sublicense agreement shall include confidentiality provisions that are at least as protective of Licensor's Confidential Information as those set forth in Article 9 of this Agreement.
Licensee shall not sublicense, authorize, or otherwise grant to any Third Party the right to access, view, copy, modify, or create derivative works of the source code of the DeltaSync Technology without the prior written consent of Licensor, which consent shall not be unreasonably withheld, conditioned, or delayed. Any request for such consent shall be submitted in writing and shall include a detailed description of the proposed source code access, the identity of the proposed Sublicensee, and the safeguards that Licensee proposes to implement to protect the confidentiality and integrity of the source code.
2.4 Reservation of Rights
All rights in and to the DeltaSync Technology not expressly granted to Licensee under this Agreement are hereby reserved by Licensor. Nothing in this Agreement shall be construed as granting Licensee, whether by implication, estoppel, or otherwise, any rights or licenses to the DeltaSync Technology outside the Field of Use or beyond the scope of the express license grants set forth in this Article 2.
Licensee retains all right, title, and interest in and to the Licensee Existing IP, and nothing in this Agreement shall be construed as granting Licensor any rights or licenses to the Licensee Existing IP except as expressly set forth in Section 5.3.
2.5 No Implied Licenses
No licenses, covenants, or rights are granted by either Party under this Agreement, whether by implication, estoppel, exhaustion, or otherwise, other than the express licenses and rights set forth in this Article 2. All licenses under this Agreement are limited to the express grants contained in this Article 2 and are subject to the terms, conditions, limitations, and restrictions set forth herein.
ARTICLE 3: LICENSE FEES AND PAYMENT
3.1 License Fee
In consideration of the exclusive license and other rights granted to Licensee under this Agreement, Licensee shall pay to Licensor an aggregate license fee of Eight Million Dollars ($8,000,000) (the "License Fee"), payable in accordance with the payment schedule set forth on Schedule D attached hereto, as follows:
(a) Upfront Payment. Three Million Two Hundred Thousand Dollars ($3,200,000), representing forty percent (40%) of the aggregate License Fee, shall be due and payable within ten (10) business days following the Effective Date. This upfront payment shall constitute the initial consideration for the license grant and the delivery of the Technical Information pursuant to Article 4.
(b) Annual Maintenance and Support Payments. One Million Six Hundred Thousand Dollars ($1,600,000) shall be due and payable on each of the first three (3) anniversaries of the Effective Date, for an aggregate total of Four Million Eight Hundred Thousand Dollars ($4,800,000) in annual maintenance and support payments. These annual payments shall constitute consideration for the ongoing maintenance, support, and update obligations of Licensor under Article 4, as well as the continued exclusivity of the license during the applicable periods.
3.2 Fully Paid-Up License
Upon Licensee's payment in full of the aggregate License Fee of Eight Million Dollars ($8,000,000), the license granted under Section 2.1 shall be deemed a fully paid-up license within the Field of Use for the remainder of the Term. The License Fee constitutes full and complete consideration for the license granted hereunder within the Field of Use, and no additional royalties, milestone payments, per-unit fees, revenue-sharing obligations, or other fees or charges of any kind shall be due or payable by Licensee to Licensor in connection with the exercise of the license rights granted hereunder.
All payments made by Licensee to Licensor under this Agreement are non-refundable except as expressly provided in Section 8.4 with respect to certain termination scenarios.
3.3 Payment Terms
All payments due under this Agreement shall be made in United States Dollars by wire transfer of immediately available funds to such bank account or accounts as Licensor shall designate in writing to Licensee from time to time, with such designation to be provided at least ten (10) business days prior to the applicable payment due date.
Any payment not received by Licensor on or before the applicable due date shall bear interest from the due date until paid at a rate equal to the lesser of (i) one and one-half percent (1.5%) per month, compounded monthly, or (ii) the maximum rate of interest permitted under applicable law.
3.4 Taxes. The License Fee and all other amounts payable under this Agreement are exclusive of, and Licensee shall be responsible for, all sales, use, value-added, goods and services, withholding, and other taxes, duties, levies, and governmental charges of any kind (collectively, "Taxes") imposed on or in connection with the transactions contemplated by this Agreement, other than taxes imposed on or measured by the net income of Licensor. If Licensee is required by applicable law to deduct or withhold any Taxes from any payment due hereunder, Licensee shall (i) promptly notify Licensor, (ii) pay to the appropriate governmental authority the full amount required to be deducted or withheld, and (iii) promptly furnish Licensor with a copy of any tax certificate, receipt, or other documentation evidencing such payment. The Parties shall cooperate in good faith to minimize any applicable Taxes and to obtain any available exemptions, refunds, or credits.
ARTICLE 4: DELIVERY OF TECHNOLOGY AND SUPPORT
4.1 Delivery of Technical Information
Within thirty (30) days following the Effective Date, Licensor shall deliver to Licensee complete and accurate copies of all Technical Information, as described on Schedule B attached hereto, including without limitation: (a) all source code and object code for the DeltaSync Platform, delivered via a secure code repository designated by Licensee; (b) comprehensive API documentation and specifications; (c) system architecture diagrams and design documents; (d) integration guides, implementation manuals, and best-practices documentation; (e) training materials, including slide decks, recorded presentations, and written guides; and (f) all other non-patented know-how, technical data, and proprietary information relating to the DeltaSync Platform that is reasonably necessary for Licensee to integrate the DeltaSync Technology into the Stratos Platform.
Licensor shall deliver such Technical Information in an organized, accessible, and industry-standard format, and shall cooperate with Licensee's technical team in connection with any reasonable requests for clarification, supplementation, or additional documentation related to the Technical Information.
4.2 Technical Support
During the Term, Licensor shall provide Licensee with reasonable technical support in connection with Licensee's integration and use of the DeltaSync Technology, including the following:
(a) Engineering Consultation. Up to two hundred (200) hours per contract year (measured from each anniversary of the Effective Date) of engineering consultation services, to be provided by qualified engineers and scientists of Licensor who possess expertise in the DeltaSync Technology. Such consultation services shall be made available during Licensor's normal business hours (9:00 a.m. to 6:00 p.m. Eastern Time, Monday through Friday, excluding federal holidays) via telephone, video conference, electronic mail, or in person at mutually agreed locations. Unused consultation hours in any contract year shall not carry over to subsequent contract years.
(b) Technical Support Portal. Access to Licensor's technical support portal, including a searchable knowledge base, bug-tracking system, and community forum, for use by designated members of Licensee's technical team.
(c) Integration Cooperation. Reasonable cooperation and assistance in connection with Licensee's efforts to integrate the DeltaSync Technology into the Stratos Platform, including the provision of technical guidance, troubleshooting assistance, and responses to reasonable technical inquiries.
4.3 Updates and Enhancements
During the Term, Licensor shall provide Licensee with all updates, patches, bug fixes, security updates, and enhancements to the DeltaSync Technology that Licensor develops and makes generally available to its other licensees (collectively, "Updates"), promptly following such general availability and at no additional cost to Licensee within the Field of Use. Licensor shall deliver such Updates in a manner consistent with the delivery requirements of Section 4.1 and shall provide reasonable documentation describing the nature and scope of each Update.
For the avoidance of doubt, nothing in this Section 4.3 shall require Licensor to develop any specific Update or enhancement, and Licensor retains full discretion with respect to its product development roadmap and priorities.
4.4 Integration Cooperation
In furtherance of the technical support obligations set forth in this Article 4, Licensor shall make available Dr. Eoin Callahan, Co-Founder and Chief Scientist of Nexilis, or a comparably qualified engineer designated by Licensor and reasonably acceptable to Licensee, to participate in integration planning sessions, design reviews, and technical workshops with Licensee's technical team, including Marcus Vail, Chief Technology Officer of Brightfield, and such other members of Licensee's engineering staff as Licensee may designate from time to time. Such sessions shall be scheduled at mutually agreed times, with each Party acting in good faith to accommodate the other Party's scheduling requirements and constraints. Licensor shall use commercially reasonable efforts to make Dr. Callahan available for the initial integration planning phase, which the Parties anticipate will occur during the first ninety (90) days following delivery of the Technical Information.
ARTICLE 5: INTELLECTUAL PROPERTY OWNERSHIP
5.1 Licensor IP
As between the Parties, Licensor retains and shall retain all right, title, and interest in and to the DeltaSync Technology, including without limitation all Licensed Patents, Technical Information, and any improvements, modifications, or enhancements thereto made by or on behalf of Licensor, whether developed before, during, or after the Term. Nothing in this Agreement shall be construed as an assignment or transfer of any ownership interest in the DeltaSync Technology from Licensor to Licensee. Licensee acknowledges that the license granted hereunder does not constitute a sale of, and does not convey any ownership interest in, the DeltaSync Technology or any portion thereof.
5.2 Licensee IP
As between the Parties, Licensee retains and shall retain all right, title, and interest in and to the Licensee Existing IP and the Stratos Platform, including without limitation all patents, copyrights, trademarks, trade secrets, know-how, and other intellectual property rights therein. Licensor acknowledges that the Stratos Platform and all Licensee Existing IP are the exclusive property of Licensee, and nothing in this Agreement shall be construed as granting Licensor any ownership interest, license, or other right in the Licensee Existing IP, except as expressly set forth in Section 5.3.
5.3 Derivative Works and Improvements
Licensee shall own all right, title, and interest in and to all Derivative Works created by or on behalf of Licensee during the Term, provided, however, that the underlying DeltaSync Technology incorporated in, embodied by, or utilized in connection with any such Derivative Work shall remain the exclusive property of Licensor and shall continue to be subject to the license grants and restrictions set forth in this Agreement. Licensee's ownership of Derivative Works shall not be construed as conferring upon Licensee any ownership interest in the underlying DeltaSync Technology.
To the extent that any Derivative Work constitutes an improvement to the DeltaSync Technology that is separately patentable or otherwise protectable as intellectual property, Licensee hereby grants to Licensor a non-exclusive, perpetual, irrevocable, worldwide, royalty-free, fully paid-up license to make, have made, use, import, offer for sale, sell, and otherwise practice and exploit such improvement outside the Field of Use, including the right to sublicense such rights to Third Parties. The foregoing license grant shall survive expiration or termination of this Agreement. Licensee shall provide Licensor with reasonable notice and documentation regarding any such separately patentable improvements.
5.4 Joint Inventions
Any inventions, discoveries, or improvements that are jointly conceived or jointly reduced to practice by employees, agents, or contractors of both Parties during the Term in the course of activities conducted under or in connection with this Agreement ("Joint Inventions") shall be jointly owned by the Parties. Each Party shall have an undivided one-half (1/2) interest in all Joint Inventions. Neither Party may license, assign, encumber, or otherwise transfer its interest in any Joint Invention to any Third Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. The Parties shall cooperate in good faith to determine the appropriate strategy for the filing, prosecution, and maintenance of any patent applications covering Joint Inventions, and shall share equally in the costs thereof unless otherwise agreed in writing.
5.5 Patent Prosecution and Maintenance
Licensor shall be responsible, at its own cost and expense, for the prosecution, maintenance, and defense of all Licensed Patents during the Term, including the timely payment of all maintenance fees, annuities, and other charges required to maintain the Licensed Patents in force. Licensor shall keep Licensee reasonably informed of the status of all Licensed Patents and DeltaSync Pending Applications, including the issuance of any new patents from the DeltaSync Pending Applications and any material developments in prosecution proceedings.
Licensor shall not abandon, disclaim, or allow to lapse any Licensed Patent without first providing Licensee with at least sixty (60) days' prior written notice and a reasonable opportunity to assume, at Licensee's sole cost and expense, the prosecution and maintenance of such Licensed Patent. If Licensee elects to assume prosecution and maintenance of any such Licensed Patent, Licensor shall execute and deliver all documents and instruments, and take all actions, reasonably necessary to effectuate such assumption, and Licensor shall cooperate with Licensee's patent counsel in connection therewith.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES
6.1 Mutual Representations and Warranties
Each Party hereby represents and warrants to the other Party, as of the Effective Date, that:
(a) Such Party is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted;
(b) Such Party has full corporate power and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary corporate action on the part of such Party;
(c) The execution and delivery of this Agreement by such Party, and the performance by such Party of its obligations hereunder, do not and will not (i) violate, conflict with, or result in a breach of any provision of such Party's certificate of incorporation, bylaws, or other organizational documents, (ii) violate, conflict with, or result in a breach of, or constitute a default under, any material agreement, contract, or instrument to which such Party is a party or by which such Party or any of its properties or assets are bound, or (iii) violate any applicable law, rule, regulation, order, judgment, or decree of any governmental authority having jurisdiction over such Party; and
(d) This Agreement constitutes a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
6.2 Licensor Representations and Warranties
Licensor hereby represents and warrants to Licensee, as of the Effective Date, that:
(a) Licensor is the sole and exclusive owner of the entire right, title, and interest in and to the DeltaSync Technology, including all Licensed Patents and Technical Information, free and clear of all liens, security interests, encumbrances, charges, pledges, mortgages, and claims of any kind, except as set forth on Schedule 6.2(a) attached hereto. Licensor has the full right and authority to grant the licenses and rights granted hereunder.
(b) Each of the DeltaSync Patents listed on Schedule A has been duly and properly issued by the United States Patent and Trademark Office, is currently subsisting and in full force and effect, and has not been adjudicated invalid, unenforceable, or unpatentable by any court of competent jurisdiction, patent office, or administrative tribunal. To Licensor's knowledge, all maintenance fees and annuities due with respect to the DeltaSync Patents have been timely paid.
(c) Each of the DeltaSync Pending Applications (Application Nos. 17/901,201 through 17/901,206) is currently pending before the United States Patent and Trademark Office, has not been abandoned, withdrawn, or finally rejected, and, to Licensor's knowledge, is being diligently prosecuted in the ordinary course.
(d) To Licensor's knowledge, after reasonable inquiry, the practice of the Licensed Patents in the Field of Use as contemplated by this Agreement does not infringe, misappropriate, or otherwise violate any patent, copyright, trade secret, trademark, or other intellectual property right of any Third Party.
(e) There is no pending or, to Licensor's knowledge, threatened litigation, arbitration, interference, reexamination, inter partes review, post-grant review, or other legal, administrative, or regulatory proceeding challenging the validity, enforceability, patentability, or ownership of any Licensed Patent or seeking to limit or restrict Licensor's right to license, practice, or enforce any Licensed Patent.
(f) Licensor has not previously granted any exclusive license to, or otherwise encumbered, the Licensed Patents or the Technical Information within the Field of Use, and no Third Party holds any right, license, or interest that would conflict with or limit the exclusive rights granted to Licensee under this Agreement.
(g) All inventors named on the Licensed Patents and the DeltaSync Pending Applications have executed and delivered valid written assignment agreements assigning to Licensor all right, title, and interest in and to their respective inventions and discoveries relating to the DeltaSync Technology, and all such assignments have been duly recorded with the United States Patent and Trademark Office.
(h) Licensor has disclosed to Licensee, in writing and prior to the Effective Date, all material agreements, licenses, covenants, options, rights of first refusal, and other arrangements under which any Third Party has or may have any rights, interests, or obligations relating to the DeltaSync Technology, including any agreements under which Licensor has received any Third Party intellectual property that has been incorporated into the DeltaSync Technology.
6.3 Licensee Representations and Warranties
Licensee hereby represents and warrants to Licensor, as of the Effective Date, that:
(a) Licensee shall use the DeltaSync Technology solely within the Field of Use as defined herein, and shall not use, practice, or exploit the DeltaSync Technology or any portion thereof for any purpose outside the Field of Use without the prior written consent of Licensor;
(b) Licensee has the technical capability, personnel, infrastructure, and financial resources reasonably necessary to integrate the DeltaSync Technology into the Stratos Platform and to perform its obligations under this Agreement; and
(c) Licensee's use, practice, and exploitation of the DeltaSync Technology under this Agreement shall comply with all applicable federal, state, local, and international laws, rules, regulations, orders, and decrees, including without limitation all applicable export control laws and regulations.
6.4 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 6, NEITHER PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, ACCURACY, COMPLETENESS, RELIABILITY, CURRENTNESS, OR QUALITY, AND ANY WARRANTIES ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LICENSOR DOES NOT WARRANT THAT THE DELTASYNC TECHNOLOGY WILL OPERATE WITHOUT ERROR OR INTERRUPTION, THAT DEFECTS WILL BE CORRECTED, OR THAT THE DELTASYNC TECHNOLOGY WILL MEET LICENSEE'S SPECIFIC REQUIREMENTS OR ACHIEVE ANY PARTICULAR RESULTS.
ARTICLE 7: INDEMNIFICATION
7.1 Indemnification by Licensor
Licensor shall defend, indemnify, and hold harmless Licensee, its Affiliates, and their respective officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Licensee Indemnitees") from and against any and all losses, damages, liabilities, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and expert witness fees) (collectively, "Losses") arising out of or relating to any Third Party claim, action, suit, or proceeding (each, a "Claim") alleging that the DeltaSync Technology, as delivered by Licensor to Licensee under this Agreement, infringes, misappropriates, or otherwise violates any United States patent, copyright, or trade secret of such Third Party.
Licensor's indemnification obligations under this Section 7.1 shall be subject to each of the following conditions: (a) Licensee providing Licensor with prompt written notice of such Claim (provided that any delay in providing such notice shall not relieve Licensor of its indemnification obligations except to the extent that Licensor is actually and materially prejudiced by such delay); (b) Licensor having sole control and authority over the defense and settlement of such Claim, including the selection of counsel; and (c) Licensee providing reasonable cooperation and assistance in the defense of such Claim, at Licensor's expense.
Licensor's aggregate indemnification liability under this Section 7.1 shall not exceed two (2) times the aggregate License Fee actually paid by Licensee to Licensor as of the date of the Claim giving rise to the indemnification obligation (i.e., up to a maximum of Sixteen Million Dollars ($16,000,000) if all payments under Article 3 have been made at the time of the Claim).
If the DeltaSync Technology, or any portion thereof, becomes, or in Licensor's reasonable opinion is likely to become, the subject of an injunction, temporary restraining order, or other court order prohibiting or restricting Licensee's use thereof, Licensor shall, at its sole option and expense, promptly take one of the following remedial actions: (i) procure for Licensee the right to continue using the DeltaSync Technology in accordance with this Agreement; (ii) modify or replace the DeltaSync Technology, or the infringing portion thereof, so that it becomes non-infringing while maintaining substantially equivalent functionality; or (iii) if neither clause (i) nor clause (ii) is commercially practicable after Licensor's good-faith efforts, terminate this Agreement and refund to Licensee all License Fees actually paid by Licensee to Licensor, on a pro-rata basis calculated from the effective date of such termination through the end of the then-current term.
Notwithstanding the foregoing, Licensor shall have no obligation to indemnify Licensee under this Section 7.1 to the extent that a Claim arises from or is attributable to: (w) any modification of the DeltaSync Technology made by or on behalf of Licensee without Licensor's prior written approval; (x) Licensee's combination of the DeltaSync Technology with any product, service, data, or technology not provided by Licensor, to the extent such Claim would not have arisen but for such combination; (y) Licensee's use of the DeltaSync Technology in a manner not authorized by or contemplated under this Agreement; or (z) Licensee's continued use of a version of the DeltaSync Technology after Licensor has provided a non-infringing replacement version.
7.2 Indemnification by Licensee
Licensee shall defend, indemnify, and hold harmless Licensor, its Affiliates, and their respective officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Licensor Indemnitees") from and against any and all Losses arising out of or relating to any Third Party Claim based upon or arising from: (a) Licensee's use of the DeltaSync Technology outside the Field of Use or otherwise in breach of the terms and conditions of this Agreement; (b) Licensee's Derivative Works, to the extent that such Claim does not arise solely from the underlying DeltaSync Technology as delivered by Licensor; (c) the Licensed Products, to the extent such Claim arises from components of the Licensed Products other than the DeltaSync Technology; and (d) any negligence, recklessness, or willful misconduct by Licensee or any of its employees, agents, contractors, or Sublicensees in connection with the exercise of the rights granted hereunder.
7.3 Indemnification Procedures
In the event that any Licensee Indemnitee or Licensor Indemnitee (each, an "Indemnitee") becomes aware of any Claim for which indemnification may be sought under this Article 7, such Indemnitee shall promptly provide written notice to the indemnifying Party, describing in reasonable detail the nature of the Claim, the basis for the indemnification obligation, and copies of all relevant documents and correspondence. The failure to provide prompt notice shall not relieve the indemnifying Party of its obligations except to the extent the indemnifying Party is actually and materially prejudiced by such failure.
The indemnifying Party shall have the right to assume and control the defense of any such Claim, using counsel of its choice that is reasonably acceptable to the Indemnitee. The Indemnitee shall have the right to participate in the defense at its own expense with counsel of its choosing, provided that such participation shall not interfere with the indemnifying Party's control of the defense.
Neither Party may settle, compromise, or consent to the entry of any judgment with respect to any Claim for which the other Party has indemnification obligations hereunder in a manner that (i) imposes any obligation, liability, or restriction on the other Party, (ii) admits fault or liability on behalf of the other Party, or (iii) requires any payment by the other Party, in each case without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned, or delayed.
ARTICLE 8: TERM AND TERMINATION
8.1 Term. This Agreement shall commence on the Effective Date and shall continue in full force and effect for a period of five (5) years from the Effective Date (the "Initial Term"), unless earlier terminated in accordance with the provisions of this Article 8.
Upon expiration of the Initial Term, this Agreement shall automatically renew for successive periods of two (2) years each (each, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least one hundred eighty (180) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable.
As used in this Agreement, the "Term" shall mean the Initial Term together with any and all Renewal Terms.
8.2 Termination for Cause
Either Party may terminate this Agreement upon written notice to the other Party if:
(a) The other Party materially breaches any provision of this Agreement and fails to cure such breach within sixty (60) days after receipt of written notice from the non-breaching Party specifying the nature of the breach in reasonable detail and demanding cure thereof. For the avoidance of doubt, the failure by Licensee to make any payment when due under Article 3 shall constitute a material breach of this Agreement; or
(b) The other Party (i) becomes the subject of a petition in bankruptcy or any other proceeding relating to insolvency, receivership, liquidation, or assignment for the benefit of creditors, whether voluntary or involuntary, and such petition or proceeding is not dismissed within ninety (90) days of filing; (ii) makes an assignment for the benefit of creditors; or (iii) has a receiver, trustee, or similar official appointed for a substantial part of its property or business.
8.3 Termination for Convenience
Neither Party shall have the right to terminate this Agreement for convenience during the Initial Term. The Parties acknowledge that the Initial Term is essential to the commercial expectations of both Parties, including Licensee's expectation of exclusivity and the recovery of the License Fee investment, and Licensor's expectation of receiving the full License Fee.
During any Renewal Term, either Party may terminate this Agreement for convenience upon not less than one hundred eighty (180) days' prior written notice to the other Party, with such termination to be effective upon the expiration of such notice period.
8.4 Effects of Termination
Upon the expiration or termination of this Agreement for any reason:
(a) All license rights granted to Licensee under Article 2 shall immediately cease, and Licensee shall have no further right to make, have made, use, import, offer for sale, sell, or otherwise commercialize Licensed Products incorporating the DeltaSync Technology;
(b) Within thirty (30) days following the effective date of expiration or termination, Licensee shall cease all use of the DeltaSync Technology, and shall remove all DeltaSync Technology from the Licensed Products and all of Licensee's systems, servers, networks, and environments;
(c) Within forty-five (45) days following the effective date of expiration or termination, Licensee shall return to Licensor, or at Licensor's election destroy, all copies of the Technical Information and all other Confidential Information of Licensor in Licensee's possession or control, and shall provide Licensor with a written certification, signed by an authorized officer of Licensee, confirming the completion of such return or destruction;
(d) All sublicenses granted by Licensee to Sublicensees under Section 2.3 shall terminate automatically and without further action upon the effective date of expiration or termination of this Agreement;
(e) All payment obligations that have accrued prior to the effective date of termination shall survive and remain due and payable in accordance with their terms; and
(f) Each Party shall promptly return to the other Party, or destroy at the disclosing Party's election, all Confidential Information of the other Party in its possession or control, subject to the retention rights set forth in Section 9.1.
If Licensor terminates this Agreement pursuant to Section 8.2 due to Licensee's uncured material breach, no refund of any portion of the License Fee previously paid by Licensee shall be due or payable, and all remaining unpaid installments of the License Fee shall be immediately due and payable as liquidated damages.
If Licensee terminates this Agreement pursuant to Section 8.2 due to Licensor's uncured material breach, Licensor shall refund to Licensee the pro-rata unused portion of the upfront License Fee, calculated on a straight-line basis over the Initial Term from the effective date of termination through the end of the Initial Term, together with any prepaid annual maintenance and support fees allocable to periods following the effective date of termination. Such refund shall be paid by Licensor within sixty (60) days following the effective date of termination.
8.5 Survival. The provisions of Articles 1 (Definitions), 5 (Intellectual Property Ownership), 6 (Representations and Warranties), 7 (Indemnification), 9 (Confidentiality), 10 (Limitation of Liability), 11 (Patent Enforcement), 12 (Audit Rights), and 13 (General Provisions), together with Sections 8.4 (Effects of Termination) and 8.5 (Survival), and any other provisions that by their nature are intended to survive, shall survive the expiration or termination of this Agreement and shall continue in full force and effect in accordance with their respective terms.
ARTICLE 9: CONFIDENTIALITY
9.1 Incorporation of NDA
The Mutual Nondisclosure Agreement between the Parties dated June 19, 2023 (the "NDA") is hereby incorporated into this Agreement by reference and shall continue in full force and effect during the Term and for a period of three (3) years following the expiration or termination of this Agreement. In the event of any conflict between the provisions of the NDA and the provisions of this Article 9, the more protective provision shall control. Notwithstanding the foregoing, each Party may retain one (1) archival copy of the other Party's Confidential Information solely for legal compliance and record-keeping purposes, subject to the ongoing confidentiality obligations set forth herein and in the NDA.
9.2 Additional Confidentiality Obligations
In addition to the confidentiality obligations set forth in the NDA:
(a) All Technical Information delivered by Licensor to Licensee pursuant to Article 4, including without limitation all source code, object code, API specifications, system architecture diagrams, integration guides, and training materials, shall be treated as Confidential Information of Licensor and shall be subject to the most stringent protections afforded to Confidential Information under the NDA and this Agreement;
(b) All information regarding Licensee's integration architecture, the Stratos Platform, Licensee's product roadmap, customer information, and Licensee's technical infrastructure shall be treated as Confidential Information of Licensee; and
(c) The terms and conditions of this Agreement, including the License Fee and all other financial terms, shall be treated as Confidential Information of both Parties and shall not be disclosed to any Third Party without the prior written consent of the other Party, except as may be required by applicable law, regulation, or the rules of any applicable stock exchange.
9.3 Permitted Disclosures
Notwithstanding the confidentiality obligations set forth in this Article 9 and the NDA, either Party may disclose Confidential Information of the other Party:
(a) To the extent required by applicable law, regulation, governmental order, subpoena, or court order, or by the rules of any applicable stock exchange or securities regulatory authority, provided that the disclosing Party shall (to the extent permitted by law) provide the other Party with prompt written notice of such required disclosure and shall use commercially reasonable efforts to obtain confidential treatment or a protective order with respect to such disclosure; and
(b) To its Affiliates, directors, officers, employees, accountants, financial advisors, legal counsel, and other professional advisors, in each case on a need-to-know basis and subject to obligations of confidentiality that are at least as restrictive as those set forth in this Article 9 and the NDA.
ARTICLE 10: LIMITATION OF LIABILITY
10.1 Limitation on Consequential Damages
EXCEPT FOR (A) A PARTY'S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 9 (CONFIDENTIALITY), (B) A PARTY'S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 7 (INDEMNIFICATION), AND (C) A PARTY'S WILLFUL MISCONDUCT, GROSS NEGLIGENCE, OR FRAUD, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF DATA, LOSS OF BUSINESS, LOSS OF GOODWILL, INTERRUPTION OF BUSINESS, OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, REGARDLESS OF THE FORM OF ACTION AND WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL OR EQUITABLE THEORY, AND EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR COULD HAVE FORESEEN SUCH DAMAGES.
10.2 Aggregate Liability Cap
EXCEPT FOR (A) A PARTY'S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 7 (INDEMNIFICATION), (B) A PARTY'S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 9 (CONFIDENTIALITY), AND (C) A PARTY'S WILLFUL MISCONDUCT, GROSS NEGLIGENCE, OR FRAUD, EACH PARTY'S TOTAL AGGREGATE LIABILITY TO THE OTHER PARTY UNDER THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL OR EQUITABLE THEORY, SHALL NOT EXCEED THE AGGREGATE LICENSE FEE PAID OR PAYABLE BY LICENSEE UNDER THIS AGREEMENT (I.E., EIGHT MILLION DOLLARS ($8,000,000)). THE FOREGOING LIMITATION SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
ARTICLE 11: PATENT ENFORCEMENT
11.1 Notice of Infringement
Each Party shall promptly notify the other Party in writing of any known or suspected infringement, misappropriation, or unauthorized use of any Licensed Patent by any Third Party within the Field of Use that comes to such Party's attention. Such notice shall include, to the extent reasonably available, a description of the suspected infringement, the identity of the suspected infringer, and copies of any relevant evidence or documentation.
11.2 Enforcement Rights
Licensor shall have the first right, but not the obligation, to initiate and control any legal action or proceeding to enforce the Licensed Patents against Third Party infringers within the Field of Use, at Licensor's sole cost and expense. If Licensor elects to pursue enforcement, Licensee shall provide reasonable cooperation and assistance, including making its employees and records available as reasonably requested, at Licensor's expense.
If Licensor declines to initiate enforcement proceedings or fails to commence such proceedings within ninety (90) days after receipt of written notice from Licensee identifying the suspected infringement in reasonable detail, Licensee shall have the right, but not the obligation, to bring enforcement proceedings in its own name, or jointly with Licensor if required by applicable law, at Licensee's sole cost and expense. In such event, Licensor shall cooperate with Licensee and shall join as a party to such proceedings if necessary for standing purposes.
Any damages, settlement proceeds, royalties, or other monetary recovery obtained in connection with enforcement actions brought under this Section 11.2 shall be applied and distributed as follows: first, to reimburse the enforcing Party for all costs and expenses (including reasonable attorneys' fees) incurred in connection with such enforcement action; and second, any remaining recovery shall be shared equally between the Parties.
Neither Party shall settle or compromise any enforcement action under this Section 11.2 in a manner that would adversely affect the other Party's rights under this Agreement or the validity, enforceability, or scope of any Licensed Patent, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed.
ARTICLE 12: AUDIT RIGHTS
12.1 Licensee Audit Rights
During the Term and for a period of one (1) year following the expiration or termination of this Agreement, Licensee shall have the right, at Licensee's expense, to audit Licensor's books, records, and accounts relating to the Licensed Patents and the DeltaSync Technology to verify Licensor's compliance with the exclusivity provisions of Section 2.2. Such audit shall be conducted upon not less than thirty (30) days' prior written notice to Licensor, no more than once per calendar year, and shall be conducted during Licensor's normal business hours by an independent third-party auditor selected by Licensee and reasonably acceptable to Licensor. The auditor shall execute a confidentiality agreement reasonably acceptable to Licensor prior to commencing the audit. The auditor shall report to Licensee only whether Licensor is in compliance with the exclusivity provisions and shall not disclose any other information obtained during the audit except as necessary to support its findings.
12.2 Licensor Audit Rights
During the Term and for a period of one (1) year following the expiration or termination of this Agreement, Licensor shall have the right, at Licensor's expense, to audit Licensee's books, records, and accounts to verify Licensee's compliance with the Field of Use restrictions set forth in Section 2.1 and the sublicensing provisions set forth in Section 2.3. Such audit shall be conducted upon not less than thirty (30) days' prior written notice to Licensee, no more than once per calendar year, and shall be conducted during Licensee's normal business hours by an independent third-party auditor selected by Licensor and reasonably acceptable to Licensee. The auditor shall execute a confidentiality agreement reasonably acceptable to Licensee prior to commencing the audit. The auditor shall report to Licensor only whether Licensee is in compliance with the applicable restrictions and shall not disclose any other information obtained during the audit except as necessary to support its findings.
If any audit conducted under Section 12.1 or this Section 12.2 reveals a material non-compliance by the audited Party, the audited Party shall promptly take all actions necessary to cure such non-compliance and shall reimburse the auditing Party for all reasonable costs and expenses incurred in connection with such audit.
ARTICLE 13: GENERAL PROVISIONS
13.1 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Party hereby irrevocably and unconditionally consents to the application of Delaware law to all matters arising out of or relating to this Agreement.
13.2 Dispute Resolution
Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or invalidity thereof (each, a "Dispute"), shall first be submitted to good-faith negotiation between senior executives of each Party (at the level of Chief Executive Officer or General Counsel) for a period of thirty (30) days following the date on which either Party provides written notice to the other Party of the existence of such Dispute (the "Negotiation Period"). During the Negotiation Period, the designated senior executives shall meet (in person or by video conference) at least once and shall use good-faith efforts to resolve the Dispute.
If the Dispute is not resolved during the Negotiation Period, either Party may submit the Dispute to final and binding arbitration administered by the American Arbitration Association ("AAA") in Wilmington, Delaware, in accordance with the AAA Commercial Arbitration Rules then in effect. The arbitration shall be conducted by a panel of three (3) arbitrators, with one arbitrator selected by each Party and the third arbitrator selected by the two Party-appointed arbitrators. The arbitrators shall be experienced in technology licensing disputes. The language of the arbitration shall be English. The arbitrators shall have the authority to award any remedy or relief that a court of competent jurisdiction could award, including specific performance, injunctive relief, and monetary damages, but shall not have the authority to award punitive or exemplary damages except to the extent expressly authorized by applicable law. The decision of the arbitrators shall be final and binding upon the Parties and may be entered and enforced in any court of competent jurisdiction.
Notwithstanding the foregoing, either Party may, at any time, seek temporary, preliminary, or permanent injunctive relief, specific performance, or other equitable relief in any court of competent jurisdiction, without first submitting to the negotiation or arbitration procedures set forth above, to prevent irreparable harm or to preserve the status quo pending resolution of the Dispute.