Support, Research And Development Agreement

SUPPORT, RESEARCH AND DEVELOPMENT AGREEMENT


DATED NOVEMBER 15, 1995


AMONG


WALKER ELECTRONIC MUFFLERS, INC.,
A DELAWARE CORPORATION ("WEM"),


NOISE CANCELLATION TECHNOLOGIES, INC.,
A DELAWARE CORPORATION ("NCT"),


NCT MUFFLER, INC., A DELAWARE CORPORATION,


AND


CHAPLIN PATENTS HOLDING CO., INC.,
A DELAWARE CORPORATION


TABLE OF CONTENTS


INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


1.01 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Current Development Activities . . . . . . . . . . . . . . . . . . . . . . 2 1.03 Development Activities . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.04 Development Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.05 Development Technology . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.06 Future Development Activities . . . . . . . . . . . . . . . . . . . . . . . 2 1.07 License Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.08 Licensed Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.09 NCT Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.10 Support Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.11 WEM Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


ARTICLE II SPECIFIC DEVELOPMENT AND SUPPORT SERVICE . . . . . . . . . . . . . . . . . 3


2.01 Current Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.02 Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.03 Speaker Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.04 Computer Access and Option . . . . . . . . . . . . . . . . . . . . . . . . 3


ARTICLE III FUTURE RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . 5


3.01 Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.02 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.03 Amendment or Termination of Future
Development Services . . . . . . . . . . . . . . . . . . . . . . . 6 2 ARTICLE IV GENERAL DEVELOPMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . . 6


4.01 Inspection and Participation . . . . . . . . . . . . . . . . . . . . . . . 6 4.02 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.03 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


4.04 Patent Application Activities . . . . . . . . . . . . . . . . . . . . . . . 7


ARTICLE V CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


5.01 Confidentiality Covenants . . . . . . . . . . . . . . . . . . . . . . . . 7 5.02 Return and Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . 8 5.03 Designation 8 5.04 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


ARTICLE VI FUTURE EMPLOYEE ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . 9


6.01 Employment Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . 9 6.02 Use of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 6.03 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


ARTICLE VII CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10


7.01 Indemnification by NCT Parties . . . . . . . . . . . . . . . . . . . . . 10 7.02 Indemnification by WEM . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.03 Control of Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.04 Notice and Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.05 Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . 10


ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12


8.01 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 8.02 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 8.03 Non-Exclusive Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 8.04 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 8.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 8.06 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 8.07 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 8.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.09 Assignment Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.10 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.11 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14


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LIST OF SCHEDULES


Schedule 1.02 Description of Current
Development Activities


Schedule 3.01 Description of Future
Development Activities


Schedule 3.02 NCT Hourly Rates


Exhbit 4.05 S. A. Boet Release


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SUPPORT, RESEARCH AND DEVELOPMENT AGREEMENT


This Agreement is made and entered into this 15th day of November, 1995, by and among Walker Electronic Mufflers, Inc., a Delaware corporation ("WEM"), on the one hand, and Noise Cancellation Technologies, Inc., a Delaware corporation ("NCT"), NCT Muffler, Inc., a Delaware corporation ("NCT-M"), and Chaplin Patents Holding Co., Inc., a Delaware corporation ("CPH" and together with NCT and NCT-M, collectively the "NCT Parties" and singly an "NCT Party").


INTRODUCTION


WEM, Walker Manufacturing Company and the NCT Parties entered into a Transfer Agreement of even date (the "Transfer Agreement") pursuant to which WEM and the NCT Parties agreed to enter into an agreement relating to certain support, research and development activities. This Agreement sets forth the agreements and understandings of the parties concerning such support, research and development activities and has been entered into pursuant to the aforementioned Transfer Agreement.


NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and understandings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


ARTICLE I -- DEFINITIONS


Except to the extent of any inconsistency with any definition expressly set forth in this Agreement, capitalized terms used in this Agreement shall have the same meaning as is ascribed to them in the Transfer Agreement. As used herein, the following terms shall have the meanings ascribed to them:


1.01 Confidential Information. The term "Confidential Information" means information, including but not limited to all technical and non-technical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data and lists of actual and potential customers or suppliers, that (i) is sufficiently secret as to derive actual or potential economic value from not being generally known to others who could obtain economic value from its disclosure or use, and (ii) is and has been the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. Notwithstanding the foregoing, the term "Confidential Information" shall not include information that the recipient thereof can show (i) was known or becomes known to the general public without disclosure by such recipient (or any Affiliate of such recipient), (ii) was already known by the


-1- 5 recipient thereof before its disclosure by another party hereto, or (iii) was legally acquired by the recipient thereof from another party and in good faith, provided that such disclosure by the other party was not in breach of any agreement or in derogation of any confidential relationship between such other party and any other party hereto.


1.02 Current Development Activities. The term "Current Development Activities" means collectively the research and other activities needed to complete the development of the software algorithms described in the attached SCHEDULE 1.02 and to undertake and complete the other tasks described in the attached SCHEDULE 1.02.


1.03 Development Activities. The term "Development Activities" refers to any of the research and other activities comprising any of the Current Development Activities and any of the Future Development Activities.


1.04 Development Period. The term "Development Period" means the period commencing on (and including) the date of this Agreement and ending on (and including) the second anniversary of this Agreement.


1.05 Development Technology. The term "Development Technology" refers to any of the intellectual property or other forms of technology resulting from any of the Development Activities, including without limitation all data (whether printed or unprinted, and whether tangible or intangible), expertise, trade secrets, patentable and unpatentable inventions, patents, applications for patents, copyrights (whether registered or unregistered), designs, models, prototypes, specifications, and methods of production or manufacture.


1.06 Future Development Activities. The term "Future Development Activities" has the meaning ascribed to it in Section 3.01 below; provided, notwithstanding anything provided herein to the contrary, the Future Development Activities shall not include any of the Current Development Activities or any of the Support Services.


1.07 License Agreements. The term "License Agreements" means collectively the License Agreement of even date between WEM and CPH and the License Agreement of even date between WEM and NCT.


1.08 Licensed Technology. The term "Licensed Technology" refers collectively to the intellectual property and other items comprising the CPH Technology and the NCT Technology as defined in the respective License Agreements.


1.09 NCT Indemnitees. The term "NCT Indemnitees" shall have the meaning ascribed to it in Section 7.02 below.


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1.10 Support Period. The term "Support Period" means the period commencing on (and including) the date of this Agreement and ending on (and including) the first anniversary of this Agreement.


1.11 WEM Indemnitees. The term "WEM Indemnitees" shall have the meaning ascribed to it in Section 7.01 below.


ARTICLE II -- SPECIFIC DEVELOPMENT AND SUPPORT SERVICES


2.01 Current Undertaking. Subject to the terms and conditions of this Agreement, the NCT Parties shall at their own expense efficiently and diligently carry out and perform the Current Development Activities for the benefit of WEM. The NCT Parties shall complete, or cause to be completed, each of the Current Development Activities not later than the completion deadline assigned to each such task as more particularly described in the attached SCHEDULE 1.02. Notwithstanding the foregoing, WEM shall advance to NCT in response to and on the basis of invoices and detailed supporting documents reasonably satisfactory to WEM, issued monthly in arrears by NCT, the amount of the expenses incurred by NCT to accomplish such of the Current Development Activities comprising the completion of the software (including without limitation the algorithms thereof) commonly referred to by the parties hereto as the CSH Code and the CSID Code (including without limitation such modifications thereto as are necessary to permit the same to fulfill its function in connection with Electronic Mufflers attached to a dual exhaust system). WEM shall have the right at all times to terminate any or all of the Current Development Activities. The NCT Parties hereby agree that an amount equal to one half of all royalties payable by WEM (or any Affiliate thereof) under each of the License Agreements shall be credited to the amount of the expenses advanced by WEM pursuant to this Section 2.01, and that WEM shall accordingly be obligated to pay to the licensor under the License Agreement to which the royalties in question are due only one half of the applicable royalties, until the aggregate amount of such advances has been recouped by WEM.


2.02 Support. During the Support Period, the NCT Parties shall at no additional expense to WEM make available, or cause to be made available, to WEM for advisory and consulting services the employees of any of the NCT Parties who possess any knowledge or professional capabilities concerning the Development Technology or the Licensed Technology. The advisory and consulting services described in this Section 2.02, which shall include without limitation consultation to explain various aspects of the Development Technology and the Licensed Technology or to otherwise address problems encountered by WEM in using the Development Technology or the Licensed Technology, are hereinafter referred to as the "Support Services." The Support Services


-3- 7 shall not exceed 20 hours in the aggregate during each calendar month (or portion thereof) during the Support Period) and shall not exceed 240 hours in the aggregate during the Support Period. The time devoted by each person furnishing any Support Services shall be taken into account in determining the hours of Support Services provided. The Support Services shall be provided promptly in response to each request by WEM and shall be rendered on normal business days between the hours of 9:00 a.m. (EDT) and 5:00 p.m. (EDT). To the extent reasonably practicable, the Support Services may be provided by telephone, telecopier, mail or courier service; provided, that the Support Services shall be provided in person at the offices of the NCT Party providing the Support Services in question upon a request by WEM for the same submitted not less than 72 hours in advance.


2.03 ** Upon request from time to time by WEM, NCT shall accept deliveries from WEM, F.O.B. NCT's facility in Linthicum, Maryland, of ** comprising part of the Inventory acquired by WEM pursuant to the Transfer Agreement and shall, not later than 20 business days following each such delivery and at the expense of NCT, ** to WEM, F.O.B. NCT's facility in Linthicum, Maryland. For purposes of this Section 2.03, the obligation to **


2.04 Computer Access and Option. For a period of four (4) years from and ...