EXHIBIT 10.14

 

SETTLEMENT AND LICENSE AGREEMENT

 

This Settlement and License Agreement (“Agreement”) is entered into by and
between on the one hand Brookhill-Wilk 1, LLC, a New York corporation having a
principal place of business at 501 Madison Avenue, New York, NY 10022
(“Brookhill-Wilk”), Wilk Patent Development Corporation, a New York corporation
having a principal place of business at 475 East 72nd Street, Suite L1, New
York, NY 10021 (referred to as “WPDC”), and Peter J. Wilk, an individual (“Wilk”
and collectively with Brookhill-Wilk and WPDC, “Licensors”), and on the other
hand Intuitive Surgical, Inc., a Delaware corporation, having a principal place
of business at 950 Kifer Road, Sunnyvale, CA 94086. Brookhill-Wilk, WPDC,
Licensors, and Intuitive Surgical, Inc. may be referred to singly and jointly as
“Party,” or “Parties,” respectively.

 

WHEREAS, Brookhill-Wilk claims to have exclusive licenses to and the exclusive
right to protect and enforce and to bring any legal and equitable actions based
on United States Patent Nos. 5,217,003 (the “003 Patent”), and 5,368,015 (the
“015 Patent”) both entitled “Automated Surgical System and Apparatus,”
(collectively, the “Brookhill-Wilk Patents”);

 

WHEREAS, Wilk is a joint owner as co-inventor of U.S. Patent No. 5,776,126,
entitled “Laparoscopic Surgical Apparatus and Associated Method” (“the “126
Patent”);

 

WHEREAS, Wilk claims to own the entire right, title and interest in U.S. Patent
No. 5,217,453, entitled “Automated Surgical System and Apparatus” and additional
issued United States patents and patent applications and issued foreign patents
and patent applications on which Wilk is named as a sole or co-inventor and/or
which are assigned to entities owned in whole or part by Wilk, and which relate
to surgical robotic systems, procedures, products, accessories, and methods for
their use that may be alleged to have been, currently be, or may in the future
be practiced by Intuitive (as the term “Intuitive” is specifically defined
below) (collectively, the “Wilk Patents”);

 

WHEREAS, Brookhill-Wilk brought in the United States District Court for the
Southern District of New York, a civil action asserting infringement by
Intuitive Surgical, Inc. of the ‘003 and ‘015 Patents entitled Brookhill Wilk 1,
LLC v. Intuitive Surgical, Inc., Civil Action No. 00-CV-6599;

 

WHEREAS, Brookhill-Wilk brought in the United States District Court for the
Southern District of New York, a civil action asserting infringement by Computer
Motion, Inc. (“CMI”) of the ‘003 and ‘015 Patents entitled Brookhill Wilk 1, LLC
v. Computer Motion, Inc., Civil Action No. 0l-CV-1300, which action was
dismissed without prejudice;

 

WHEREAS, Brookhill-Wilk brought in the United States District Court for the
Southern District of New York, a civil action asserting infringement by
Intuitive Surgical, Inc.’s customers of the ‘003 Patent entitled Brookhill Wilk
1, LLC v. The Mount Sinai Hospital, New York Presbyterian Healthcare System,
Inc., and Lenox Hill Hospital, Civil Action No. 03-CV-4977;

 

WHEREAS, on or about June 30, 2003, Intuitive Surgical, Inc. and CMI entered
into a merger agreement under which CMI became a wholly owned subsidiary of
Intuitive Surgical, Inc.;

 

WHEREAS, Brookhill-Wilk, on remand of its suit against Intuitive Surgical, Inc.
by the United States Court of Appeals for the Federal Circuit amended its
complaint against Intuitive Surgical, Inc. to assert in addition to its claims
against Intuitive Surgical, Inc., the claims it had previously brought against
CMI in Civil Action No, 0l-CV-1300 in a lawsuit entitled Brookhill Wilk 1, LLC
v. Intuitive Surgical, Inc. and Computer Motion, Inc., Civil Action No,
00-CV-6599;

 

WHEREAS, on the terms and conditions set forth below, Brookhill-Wilk and
Intuitive Surgical, Inc. want to resolve all pending litigation between the
Parties, and between Brookhill-Wilk and Intuitive Surgical, Inc.’s

 

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customers, and seek an amicable and final business resolution and settlement of
other possible claims relating to the past, present, and future use,
manufacture, offer for sale, sale and importation of surgical robotic systems,
procedures, methods, products, and accessories by or on behalf of Intuitive
Surgical, Inc., CMI, and their subsidiaries and customers which claims were,
could have been, or can in the future be asserted by Licensors;

 

WHEREAS, Licensors represent that this Agreement is dispositive of all
infringement claims that were or that could have been brought by Licensors
against Intuitive Surgical, Inc., CMI, their subsidiaries and its (and their)
respective direct and indirect customers, other transferees, manufacturers,
distributors and resellers related to their alleged infringement of the ‘003 and
‘015 Patents;

 

WHEREAS, Licensors represent that this Agreement is dispositive of all
infringement claims that can be brought by Licensors against Intuitive Surgical,
Inc., CMI, their subsidiaries and its (and their) respective direct and indirect
customers, other transferees, manufacturers, distributors and resellers relating
to any claim of infringement by them of the Wilk Patents;

 

NOW, THEREFORE, in accordance with the above recitals and in consideration of
the mutual covenants contained in this Agreement, Licensors and Intuitive
Surgical, Inc. agree as follows:

 

SECTION 1

DEFINITIONS

 

As used in this Agreement, the following terms shall be deemed to have the
following meanings:

 

1.1 “Effective Date” shall mean January 13, 2004.

 

1.2 “Intuitive” shall mean Intuitive Surgical, Inc., any of its subsidiaries,
and its (and their) respective direct and indirect customers and users of its
products, other transferees, manufacturers, distributors and resellers of the
Licensed Products, and each of their officers, directors, employees,
stockholders, cooperative members, affiliates, subsidiaries, predecessors,
successors and successors in interest, and assigns.

 

1.3 “Licensed Patents” shall mean the Brookhill-Wilk Patents, the ‘126 Patent,
and the Wilk Patents and each issued patent and all patent applications pending
as of the Effective Date related thereto, including:

 

1.3.1 reissued and reexamined patents and their applications,

 

1.3.2 divisional, continuation and continuation-in-part applications,

 

1.3.3 each patent issuing from each of said applications, and

 

1.3.4 the foreign counterparts of each of said patents and applications.

 

1.3.5 Licensed Patents does not include any patent or patent applications that
are filed after the Effective Date except as to those identified in Paragraphs
1.3.1. 1.3.2, 1.3.3, and 1.3.4 of this Agreement.

 

1.4 “Licensed Product,” singular or plural, shall mean any surgical robotic
system, procedure, product, or accessory made by or for Intuitive and/or the
method by which any or all are used, where the use, offer for sale, sale,
manufacture, importation or other disposition of such procedure, product, or
accessory would, whether directly or indirectly (e.g., through contribution or
inducement), constitute an infringement of any claim of the Licensed Patents,
but for the rights and licenses granted in this Agreement.

 

SECTION 2

SETTLEMENT UNDERSTANDING

 

The Parties understand and agree that this Agreement, any consideration given or
accepted in connection with it, and the covenants made in it are all made, given
and accepted in settlement and compromise of disputed claims.

 

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SECTION 3

GRANT OF LICENSES, COVENANTS AND RELEASE

 

3.1 Subject only to the timely payment by Intuitive of the one-time license fee
referenced in Section 4 (“LICENSE FEE, TERMINATION”) of this Agreement,
Brookhill-Wilk hereby grants to Intuitive, under the Brookhill-Wilk Patents, a
perpetual, exclusive, fully paid-up, royalty-free transferable, license to use,
supply, make (and have made), sell, offer to sell, import, and export any
surgical robotic system, product, or accessory and to practice any methods and
procedures with those systems, products, and accessories, and to otherwise
practice any of the Brookhill-Wilk Patent rights as Intuitive sees fit in its
sole discretion without limitation as to field.

 

3.2 Subject only to the timely payment by Intuitive of the one-time license fee
referenced in Section 4 (“LICENSE FEE, TERMINATION”) of this Agreement, Wilk and
WPDC on behalf of themselves and their successors, hereby grant to Intuitive a
perpetual, fully paid-up, royalty-free covenant not to sue Intuitive on the Wilk
Patents. This covenant not to sue applies to past, current and future Licensed
Products.

 

3.3 Subject only to the timely payment by Intuitive of the one-time license fee
referenced in Section 4 (“LICENSE FEE, TERMINATION”) of this Agreement, Wilk and
WPDC hereby grant to Intuitive, a perpetual, fully paid-up, royalty-free
non-exclusive license on the ‘126 Patent to use, supply, make (and have made),
sell, offer to sell, import, and export any surgical robotic system, product, or
accessory and to practice any methods and procedures with those systems,
products, and accessories, and to otherwise practice the ‘126 Patent rights as
Intuitive sees fit in its sole discretion without limitation as to field.

 

3.4 Subject only to the timely payment by Intuitive of the one-time license fee
referenced in Section 4 (“LICENSE FEE, TERMINATION”) of this Agreement,
Intuitive, Brookhill-Wilk, Wilk and WPDC agree that they shall within five (5)
business days after the Effective Date:

 

3.4.1 dismiss with prejudice all claims, demands, and causes of action that
Licensors have asserted or could have asserted against Intuitive and/or Computer
Motion, Inc. in Civil Action No. 00-CV-6599. Concurrently with said dismissal by
Brookhill-Wilk, Intuitive shall also dismiss with prejudice all counterclaims,
demands and causes of actions it asserted or could have asserted against
Brookhill-Wilk, Wilk and WPDC in Civil Action Nos. 00-CV-6599;

 

3.4.2 dismiss with prejudice all claims, demands, and causes of action that
Licensors have asserted or could have asserted against The Mount Sinai Hospital,
New York Presbyterian Healthcare System, Inc., and Lenox Hill Hospital in Civil
Action No. 03-CV-4977.

 

3.4.3 Intuitive and Licensors, for themselves and for each of their
subsidiaries, related companies, predecessors, successors, heirs, assigns, and
agents irrevocably release and forever discharge each other from and for any and
all claims, causes of action, suits, damages, demands, duties, rights,
obligations, liabilities, adjustments, responsibilities, judgments, trespasses
and liabilities of any nature whatsoever, at law or in equity, whether asserted
or unasserted, whether known or unknown, whether suspected or unsuspected to
exist, and Licensors further covenant not to sue Intuitive directly or
indirectly based on activities, that relate in any way to any of the Licensed
Patents or any claims which were, could have been, or could be brought or made
in any lawsuit relating to infringement of any of the Licensed Patents which it
has the rights to;

 

3.5 LICENSORS RECOGNIZE THAT A GENERAL RELEASE MAY NOT EXTEND TO CLAIMS WHICH
THE LICENSORS DO NOT KNOW OR SUSPECT TO EXIST IN HIS OR THEIR FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY ANY OR ALL OF THE LICENSORS WOULD
HAVE MATERIALLY AFFECTED HIS OR THEIR ENTRY INTO THIS AGREEMENT WITH INTUITIVE.
IN GRANTING THE LICENSES AND COVENANTS CONTAINED IN THIS AGREEMENT, LICENSORS
EXPRESSLY INTEND THAT THIS AGREEMENT SHALL INCLUDE ALL CLAIMS

 

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KNOWN, UNKNOWN, AND UNSUSPECTED, AND LICENSORS EXPRESSLY WAIVE THEIR RIGHTS
UNDER ANY APPLICABLE STATUTE REGARDING THE UNENFORCEABILITY OF GENERAL RELEASES.

 

SECTION 4

LICENSE FEE, TERMINATION

 

4.1 In full consideration of the value received under this Agreement from
Licensors, Intuitive agrees to pay a one-time license fee in the amount of Two
Million Six Hundred Thousand U.S. Dollars ($2,600,000.00). This license fee is
non-refundable. Payment of this license fee shall be made within five (5)
business days of the Effective Date.

 

4.2 The $2,600,000.00 license fee shall be paid as follows, via wire-transfer
from Intuitive to the following accounts:

 

4.2.1 Recipient’s name: Wilk Patent Development Corp.

Recipient’s address: 475 East 72nd Street, New York, NY 10021

Bank name: Citibank N.A.

Address: 162 Amsterdam Avenue, New York, NY 10021

Recipient’s account number: 47589078

Routing number: 021000089

Amount: $1,075,000.00

 

4.2.2 Recipient’s name: Brookhill Management Corp.

Bank name: United States Trust Co. of NY

Bank address: 11 West 54th Street, New York, NY 10019

Recipient’s account number: 20-2602-3

ABA#: 021001318

Amount: $1,525,000.00

 

4.3 Upon payment of the one-time license fee of Section 4.1 in accordance with
the payment instructions of Section 4.2, this Agreement, the payment, and the
license grants and releases contained in it become non-terminable and
non-revocable.

 

SECTION 5

TERM

 

5.1 The rights, licenses and covenants not to sue or assert and the releases
granted under this Agreement shall commence on the Effective Date.

 

5.2 This Agreement shall remain in full force and effect during the pendency and
life of, and until the expiration of the last to expire of, the Licensed
Patents.

 

5.3 All rights and licenses granted under or pursuant to this Agreement by
Licensors to Intuitive are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of Title 11, U.S. Code (the “Bankruptcy Code”), licenses and
rights to “intellectual property” as defined under Section 101 of the Bankruptcy
Code. The Parties agree that Intuitive, as licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code.

 

SECTION 6

NOTICE

 

6.1 Any notice required or permitted to be given under this Agreement shall be
given to each other Party in writing and delivered by overnight courier,
signature of receipt required, and shall be deemed delivered upon

 

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written confirmation of delivery by the courier, if sent to the following
respective addresses or such new addresses as may from time to time be supplied
by the Parties.

 

To Brookhill-Wilk, LLC:   

Brookhill-Wilk, LLC

501 Madison Avenue,

New York, NY 10022

Attention: Ronald B. Bruder

With a copy to:

  

Levisohn, Berger & Langsam, LLP

805 Third Avenue, 19th Floor

New York, New York 10022

Attention: Peter L. Berger

Telephone: (212) 486-7272

Facsimile: (212) 486-0323

To Peter J. Wilk:

  

475 East 72nd Street, Suite L1

New York, NY 10021

Telephone: (212) 744-5122

Facsimile: (212) 982-3202

With a copy to:

  

Donald G. Leka, Esq.

140 Sewall Avenue

Brookline, MA 02446

Telephone: (617) 359-3664

Facsimile: (617) 734-0745

To Wilk Patent Development Corp.

  

475 East 72nd Street, Suite L1

New York, NY 10021

Attention: Peter J. Wilk

Telephone: (212) 744-5122

Facsimile: (212) 982-3202

With a copy to:

  

Sol V. Slotnik, Esq.

11 East 44th Street, 17th Floor

New York, New York 10017

Telephone: (212) 687-1222

Facsimile: (212) 986-2399

With a copy to:

  

Donald G. Leka, Esq.

140 Sewall Avenue

Brookline, MA 02446

Telephone: (617) 359-3664

Facsimile: (617) 734-0745

To Intuitive:

  

Intuitive Surgical, Inc.

950 Kifer Road

Sunnyvale, CA 94086

Attention: Lonnie Smith

Telephone: (408) 523-2100

Facsimile: (408) 5231390

With a copy to:

  

Fish & Richardson, P.C.

500 Arguello Street, Suite 500

Redwood City, CA 94063

Attention: David M. Barkan

Telephone: (650) 839-5070

Facsimile: (650) 839-5071

 

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SECTION 7

WARRANTIES AND INDEMNIFICATION

 

7.1 Brookhill-Wilk represents and warrants that:

 

7.1.1 it is a company in good standing under the laws of the State of New York;

 

7.1.2 it has the authority to enter into this Agreement;

 

7.1.3 this Agreement is valid, binding and enforceable in accordance with its
terms;

 

7.1.4 it has all necessary right, title, and interest in the Brookhill-Wilk
Patents to grant the rights, licenses, covenants not to sue or assert, and
releases contained in paragraphs 3.1 and 3.4 of this Agreement;

 

7.1.5 Mr. Bruder has full right and authority to execute this Agreement on
behalf of Brookhill-Wilk;

 

7.1.6 there are no licenses, liens, conveyances, mortgages, assignments and/or
other agreements that would prevent or impair the full and complete exercise by
Intuitive of any or all of the rights and licenses, or the full and complete
enjoyment by Intuitive of any or all of the covenants not to sue, or the
release, granted in paragraphs 3.1 and 3.4 of this Agreement; and

 

7.1.7 no person or entity other than Brookhill-Wilk, Wilk and WPDC has a right
to enforce any of the Licensed Patents or to collect damages for past, present
or future infringement of any of them except as noted for US Patent 5,776,126.

 

7.2 Wilk represents and warrants that:

 

7.2.1 he has the authority to enter into this Agreement;

 

7.2.2 this Agreement is valid, binding and enforceable in accordance with its
terms;

 

7.2.3 he has all necessary right, title, and interest in the Wilk Patents, and
the ‘126 Patent to grant the rights, licenses, covenants not to sue or assert,
and releases contained in paragraphs 3.2, 3.3, and 3.4 of this Agreement;

 

7.2.4 he has sought the advice of independent counsel and enters into this
Agreement freely, willingly, and without reservation;

 

7.2.5 there are no licenses, liens, conveyances, mortgages, assignments and/or
other agreements that would prevent or impair the full and complete exercise by
Intuitive of any or all of the rights and licenses, or the full and complete
enjoyment by Intuitive of any or all of the covenants not to sue, or the
release, granted in this Agreement; and

 

7.2.6 no person or entity other than Brookhill-Wilk, Wilk and WPDC has a right
to enforce any of the Licensed Patents and the ‘126 Patent or to collect damages
for past, present or future infringement of any of them except as noted for US
Patent 5,776,126.

 

7.3 WPDC represents and warrants that:

 

7.3.1 it is a company in good standing under the laws of the State of New York;

 

7.3.2 it has the authority to enter into this Agreement;

 

7.3.3 this Agreement is valid, binding and enforceable in accordance with its
terms;

 

7.3.4 it has all necessary right, title, and interest in the Wilk Patents, and
the ‘126 Patent to grant the rights, licenses, covenants not to sue or assert,
and releases contained in paragraphs 3.2, 3.3, and 3.4, of this Agreement;

 

7.3.5 it has sought the advice of independent counsel and enters into this
Agreement freely, willingly, and without reservation;

 

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7.3.6 Dr. Wilk has full right and authority to execute this Agreement on behalf
of WPDC;

 

7.3.7 there are no licenses, liens, conveyances, mortgages, assignments and/or
other agreements that would prevent or impair the full and complete exercise by
Intuitive of any or all of the rights and licenses, or the full and complete
enjoyment by Intuitive of any or all of the covenants not to sue, or the
release, granted in this Agreement; and

 

7.3.8 no person or entity other than Brookhill-Wilk, Wilk and WPDC has a right
to enforce any of the Licensed Patents or to collect damages for past, present
or future infringement of any of them except as noted for US Patent 5,776,126.

 

7.4 Licensors agree to indemnify Intuitive and pay all associated costs of
defense, including attorney fees attributable to any specific claim, in the
event that any such specific claim is brought by any third party against
Intuitive, where the third party claims rights that Brookhill-Wilk, WPDC, and
Wilk have conveyed to Intuitive by this Agreement.

 

SECTION 8

RELATIONSHIP OF THE PARTIES

 

Nothing in this Agreement shall be construed to make Licensors and Intuitive
partners, joint venturers, or create a fiduciary status or relationship between
them or make either Licensors or Intuitive an agent of the other; nor will any
similar relationship be deemed to exist between them. Neither Licensors nor
Intuitive shall make representations contrary to the terms of this Paragraph,
nor shall either become liable by reason of any representation, act, or omission
of the other contrary to the provisions of this Paragraph. This agreement is not
for the benefit of any third party (except to the extent of the dismissal of the
suit brought by Brookhill-Wilk against Intuitive Surgical, Inc.’s customers) and
shall not be deemed to give any right or remedy to such party.

 

SECTION 9

ASSIGNABILITY

 

A Party may assign its rights and obligations under this Agreement only to an
entity or entities that acquire(s) all or substantially all of the Party’s
business or assets related to this Agreement, whether through purchase, merger,
reorganization or otherwise. In the case of such assignment, the assignee shall
have the rights and obligations of the assignor under this Agreement to the same
extent as if the assignee had been named as a Party to the agreement.

 

SECTION 10

MISCELLANEOUS

 

10.1 Counterparts: This Agreement may be executed in counterparts, which taken
together shall constitute one document.

 

10.2 Entire Agreement: This Agreement constitutes the entire agreement among the
Parties concerning its subject matter and supersedes all written or oral prior
or contemporaneous agreements and understandings with respect to the subject
matter of this Agreement. No Party shall be bound by any condition, definition,
warrantee, understanding, or representation with respect to the subject matter
of this Agreement except as expressly provided in this Agreement. No variation
or modification of the terms or conditions of this Agreement shall be valid
unless in writing and signed by the authorized representatives of Licensors and
Intuitive.

 

10.3 Severability. If any provision of this Agreement is declared by a court of
competent jurisdiction or by operation of law to be invalid, illegal,
unenforceable, or void, then Licensors and Intuitive shall be relieved of all
obligations arising under such provision, but only to the extent that such
provision is invalid, illegal,

 

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unenforceable, or void. If the remainder of this Agreement is capable of
substantial performance, then each provision not so affected shall be enforced
to the extent permitted by law, and the invalid term or provision shall be
replaced by such valid term or provision as comes closest to the intentions of
the Licensors and Intuitive underlying the invalid term or provision.

 

10.4 Mutual Drafting. This Agreement is the joint product of the Parties and
their respective counsel, and each provision of this Agreement has been subject
to the mutual consultation, negotiation and agreement of the Parties and
counsel, and shall not be construed for or against any Party on the basis of
authorship.

 

10.5 No Other Agreement. Licensors and Intuitive each represent that in entering
into this Agreement, they rely on no promise, inducement, or other agreement not
expressly contained in this Agreement; that they have read this Agreement and
discussed it thoroughly with their respective legal counsel; that they
understand all of the provisions of this Agreement and intend to be bound by
them; and that they enter into this Agreement voluntarily.

 

10.6 Governing Law/Venue. This Agreement is made and entered into in the State
of New York and shall be construed, governed, interpreted, and enforced in
accordance with the laws of the State of New York, except that questions
affecting the construction and effect of the Licensed Patents shall be
determined by the law of the United States. Except as provided otherwise in this
Agreement, any dispute, claim or controversy arising out of or relating to this
Agreement, or the breach, or validity of this Agreement shall be adjudicated
only by a court of competent jurisdiction in the County of New York, State of
New York, and all parties hereby consent to jurisdiction and venue in such
County.

 

10.7 Attorneys Fees. The prevailing Party shall be entitled to recover from the
losing Party or Parties its reasonable attorneys’ fees and costs incurred in any
lawsuit or other action with respect to any claim arising from the facts or
obligations set forth in this Agreement.

 

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IN WITNESS WHEREOF, the duly authorized representatives of Licensors and
Intuitive have executed this Agreement.

 

BROOKHILL-WILK 1, LLC

    

INTUITIVE SURGICAL, INC.

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RONALD B. BrUDER

CHAIRMAN

    

LONNIE SMITH

CHAIRMAN

DATE: 1/8/04

    

DATE: 1/13/04

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PETER J. WILK

PRESIDENT

      

DATE: 1/8/04

      

WILK PATENT DEVELOPMENT CORP.

    

PETER J. WILK

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PETER J. WILK

CHAIRMAN

    

PETER J. WILK

DATE: 1/8/04

    

DATE: 1/8/04

 

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