Exclusive License And Distributor Agreement

EXHIBIT 10.7


EXCLUSIVE LICENSE AND DISTRIBUTOR AGREEMENT


Between


INTERLINK ELECTRONICS


and


INTERLINK ELECTRONICS EUROPE S.a r.l.


Amended and Restated
as of September 7, 1994


EXCLUSIVE LICENSE AND DISTRIBUTOR AGREEMENT


This Exclusive License and Distributor Agreement (this "Agreement") dated as of September 7, 1994 by and between Interlink Electronics, a California corporation ("Licensor"), and Interlink Electronics Europe S.a r.l., a Luxembourg private limited liability corporation ("Licensee") is an amendment and restatement of the Exclusive License and Distributor Agreement between Licensor and Licensee dated as of November 7, 1989 (the "1989 License Agreement").


Recitals


WHEREAS, Licensor, Licensee, InvestAR S.a r.l., a Luxembourg private limited liability corporation, and IEE Finance S.a r.l., a Luxembourg private limited liability corporation, have entered into a restructuring agreement of even date herewith (the "Restructuring Agreement");


WHEREAS, the purpose of the Restructuring Agreement is to restructure previous agreements between and among the parties, including amending and restating the 1989 License Agreement;


WHEREAS, Licensor is the owner of certain patents, trade secrets, technological know-how and other proprietary information relating to force sensing resistors ("FSRs");


WHEREAS, as contemplated by the Restructuring Agreement, Licensor desires to continue the grant to Licensee, and Licensee desires to continue to receive from Licensor, certain rights in the Core Technology, the Product and the Applications (all as hereinafter defined) pursuant to the terms and conditions of this Agreement;


NOW, THEREFORE, in consideration of the above recitals and the premises and mutual covenants and agreements herein contained, the parties hereby agree as follows:


TERMS AND CONDITIONS


1. DEFINITIONS.


1.1 "Application" means a use of FSR technology to address a specific category of needs, e.g., passenger seat sensors constitute one Application, horn door sensors constitute one Application, etc.


1.2 "Automotive" means only automobiles, trucks, vans and buses.


1.3 "Automotive Safety Applications" means Automotive Applications of the Product pertaining to safety and security, including but not limited to seat sensors and strip sensors.


1.4 "Automotive Horn and Horn Door Applications" means Automotive Applications of the Product pertaining to horn and horn door sensors.


1.5 "Core Technology" means (a) the patents and patent applications owned by Licensor listed on Exhibit 1.5 hereto, any continuations, continuations-in-part, divisionals, reexaminations and reissues of such patents and patent applications and any patents and patent applications owned or acquired by Licensor in the future relating to the Product (as hereinafter defined) and any Applications; (b) all trade secrets, processes, formulae, know-how and technical information relating to the manufacture of the Product (as hereinafter defined) and any Applications manufactured by Licensor, including those trade secrets, processes, formulae, know-how and technical information utilized in the manufacture of the ink used in the production process to manufacture the Product; and (c) all Licensor Improvements (as hereinafter defined). "Core Technology" does not include the "VersaPoint Technology" (as hereinafter defined).


1.6 "Improvements" means any modification or enhancement of the Core Technology which affects the Product or the Applications in one or more of the following ways: (a) reduces production costs, (b) improves performance, (c) increases service life, (d) broadens applicability or (e) increases marketability. If an Improvement is substantially made by or caused to be made by Licensee at its expense and without any involvement of Licensor, it is referred to herein as "Licensee Improvements." All other Improvements shall be "Licensor Improvements." "Improvements" do not include the "VersaPoint Technology" (as hereinafter defined).


1.7 . "Product" means, those FSRs covered by one or more valid claims under patents or patent applications listed on Exhibit 1.5 hereto. A FSR is described scientifically as a polymer thick film device that exhibits decreasing electrical resistance with increasing force applied to the device surface. FSR sensors consist of two or more layers of plastic film, one or more layers supporting interdigitating electrodes (conductor patterns) and one or more layers supporting the proprietary, semiconductive polymer. The two types of substrate layers are arranged in opposition, and the surface contact between them creates an electrical connection. "Product" does not include the "VersaPoint Technology" (as hereinafter defined).


1.8 "Territory" means, depending on the Product or Applications, as applicable, the geographical areas described on Exhibit 1.8.


1.9 "Trademarks" means any and all trademarks, tradenames, and service marks associated with the Product and/or the Applications, including but not limited to "FSR," "Force Sensing Resistors," and "TuffPad," and, until Licensee's name is changed pursuant to


Section 2.6 of the Restructuring Agreement, "Interlink" and the six dot design registered as a trademark by Licensor, but expressly excluding any trademarks, tradenames, and service marks relating to the VersaPoint Technology (as hereinafter defined).


1.10 "Unit" means each and every time one or more Products or Applications are (as hereinafter defined) in single component or.device. Consequently, a single "Unit" may contain several FSRs.


1.11 "Used" shall mean actually, installed in, or included or bundled as an integral portion of, a final assembly or subassembly.


1.12 "VersaPoint Technology" means the "Purchased Rights" as such term is defined in Section 1 of the Technology Purchase Agreement entered-"into between the parties hereto dated as of December 6, 1993 (the "Technology Purchase Agreement"). VersaPoint Technology specifically excludes those rights retained by Licensee pursuant to Section 2 of the Technology Purchase Agreement.


2. GRANT OF LICENSE.


2.1 Subject to the terms and conditons of this Agreement, Licensor hereby grants to Licensee a non-transferable right within the Territory, as applicable, depending on Product or Applications as described on Exhibit 1.8 attached hereto, on an exclusive or non-exclusive basis as described on such Exhibit 1.8, (a) to use the Core Technology to manufacture the Product and all Applications thereof as described on Exhibit 1.8, (b) to market and distribute the Product and the Applications to (i) Licensee's end-user customers that are located in, and that receive shipments in, the Territory, pursuant to an agreement between Licensee and such end-user customers and (ii) original equipment manufacturers ("OEMs") or value added resellers ("VARs") that are located in the Territory and that enter into an OEM or VAR agreement with Licensee, and (c) subject to Section 5.2 hereof, to improve the Core Technology, the Product and the Applications.


2.2 Licensor hereby grants to Licensee the exclusive or non-exclusive, as applicable based on Exhibit 1.8, rights within the Territory (except as otherwise contemplated by Section 2.1 above) to use the Trademarks in connection with the promotion, marketing, licensing, distribution and use of the Product and the Applications, including, in each case, any Licensor Improvements, in the Territory. To the extent deemed appropriate by Licensor, Licensee may use such Trademarks in advertising, in consumer and trade collateral material and in press material relating to the Product and the Applications. Neither Licensee nor any Licensee or agent of Licensee shall remove or alter any legends contained in or on the Product or the Applications. Upon the termination of this Agreement, Licensee will discontinue use of the Trademarks in any marketing, advertising, business or other material and thereafter will not use, either directly or indirectly, such Trademarks or any other name, title or expression so


nearly resembling the same as would be likely to lead to confusion or uncertainty or to deceive the public.


2.3 Licensee shall not enter into any agreement with an OEM or a VAR for the marketing, selling or distribution of the Product or the. Applications except with' respect to the Territory in which Licensee has been granted the right to market, sell and distribute as stated on Exhibit 1.8 hereto. (Nothing herein, however, shall restrict any such OEM or VAR from selling any of their products outside the applicable Territory which products incorporate a Product or Application as a component thereof).


2.4 Nothing in this Agreement shall in any way limit Licensor's rights to license or market the Product or the Applications outside of the Territories in which Licensee has an exclusive right as described on Exhibit 1.8. The exclusive license within the Territory granted in Section 2.1 above is subject only to the right of Licensor's OEMs and VARs to distribute their products (which may incorporate Licensor's products) anywhere throughout the world, except Territories in which Licensee has an exclusive right as described on Exhibit 1.8, and to that certain non-exclusive license granted to Toshiba Silicone Co., Ltd., a Japanese corporation ("Toshiba"), pursuant to that certain license agreement effective as of July 1, 1988 between Licensor and Toshiba.


3. LICENSEE'S OBLIGATIONS.


3.1 Licensee agrees to use its best efforts, in good faith, to manufacture, introduce, promote, market and distribute the Product and the Applications in the Territory.


3.2 Subject to the terms and conditions in this Agreement, Licensee agrees, as a condition of the rights granted hereunder and except as otherwise expressly authorized hereunder, (i) not to create or attempt to create, by reverse engineering or otherwise, the Product, the Licensor Improvements or the Applications developed or manufactured by Licensor or in any other fashion attempt to ascertain Licensor's trade secrets, (ii) not to modify, enhance, or alter or attempt to modify, enhance or alter the Product, the Licenser Improvements or the Applications developed or manufactured by Licensor, and (iii) prior to disposing of any media or apparatus to destroy completely any Proprietary Information (as hereinafter defined) contained therein..


3.3 Licensee will represent to its customers only such facts about the Product, the Licensor Improvements and the Applications developed or manufactured by Licensor as Licensor states in its Product, Licensor Improvements and Application descriptions, advertising and promo Tonal materials or as may be stated in other nonconfidential written material furnished by Licensor expressly for this purpose Prior to going to print with final versions of its technical and sales materials for public use, Licensee will provide L censor with review copies thereof which will be deemed acceptable to Licensor if Licensor fails to respond in writing to Licensee within three business days of receipt of such review copies.


3.4 During the term of this Agreement, Licensee will not engage in the promotion, marketing, distribution, sale or licensing of, or act as a sales agent, representative or distributor of, any product which competes with the Product, the Applications developed or manufactured by Licensor or the Licensor Improvements, or authorize any other person or organization to engage in any such acts.


3.5 With respect to Lice sec's manufacture, sale or distribution (or Licensee's VARs' or OEMs' manufacture, sale or distribution) of the Product and Applicant's Used outside of Expanded Europe, as define on Exhibit 1.8, Licensee shall pay Licensor royalties as follows: (a) For Product and each Application manufactured in Expanded Europe, on a cumulative, sliding scale basis, 8% of the gross sales price for each of the first 200,000 Units sold, 6% of the gross sales price for each of the next 200,000 Units sold, and 4% of the gross sales price for all other Units sold: (b) For Product and each Application manufactured outside of Expanded Europe as permitted under Section 1.8 hereof, on a cumulative, sliding scale basis for each plant, 5% of the gross sales price for each of the first 300,000 Units sold, 4% of the gross sales price for each of the next 300,000 Units sold, and 30 of the gross sales price for all other Units sold. It is understood that all plants within 300 miles of each other shall be considered one plant for the purposes of this Section 3.5. Licensee shall pay to Licensor accrued royalties, net of any withholding taxes , quarterly. The parties recognize that there will be occasions were it shall be desirable to reduce the royalty on a mutually agreeable basis to take advantage of specific opportunities. Licensee shall use its best efforts to assist Licensor in obtaining any refunds of withholding or value added taxes that Licensor is lawfully entitled to.


3.6 Licensor shall be afforded a reasonable opportunity, upon at least one weeks notice, at its own expense and during regular business hours, to conduct an audit of Licensee's pertinent books and records as to its compliance with the provisions of Section 3.5.


4. LICENSOR'S OBLIGATIONS.


4.1 Licensor will work with Licensee to promote the Product and the Applications by providing Licensee with technical, marketing, and sales support as reasonably requested by Licensee to support Licensee's efforts to market and license the Product and the Applications.


4.2 During the term of this Agreement, Licensor will not, in the Territories in which Licensee has exclusive rights as described on Exhibit 1.8 hereto, (a) engage in the distribution, sale or licensing of, or act as a sales agent or distributor for, (i) the Product, the Applications or the Improvements, except as contemplated by Section 2.1 hereof or (ii) any product which directly or indirectly competes with the Product, or directly or indirectly authorize any other person to engage in such acts in the Territories in which Licensee has exclusive rights as described on Exhibit 1.8 hereto, or (b) license to any person any rights granted to Licensee on an exclusive basis hereunder and, in this regard, Licensor shall include


as a contractual provision in all agreements entered into by it and parties who intend to manufacture Product in other than the Territories in which Licensee has exclusive rights as described on Exhibit 1.8 hereto, the requirement that such parties not distribute Product in the Territories in which Licensee has exclusive rights as described on Exhibit 1.8 hereto. Nothing contained in this Section 4.2 is intended, or shall be construed as in any way limiting, Licensor's exclusive and absolute right to manufacture, distribute, appoint distributors, and agents for, sell, license, sublicense or otherwise use or transfer the right to use the VersaPoint Technology on a worldwide basis.


5. ONGOING RELATIONSHIP AND COOPERATION.


5.1 The parties hereby agree that all orders or direct or indirect inquiries received by Licensor respecting the sale of the Product, Applications or Improvements in the Territories in which Licensee has exclusive rights as described on Exhibit 1.8 hereto will be referred to Licensee, and all orders or direct or indirect inquiries received by Licensee respecting the sale of the Product, App ...