Exhibit 10.41

 

Patent License Agreement between

APPLIED ELASTOMERICS, INC. and SSL AMERICAS, INC.

 

THIS AMENDMENT ONE TO

 

AGREEMENT effective November 30, 2001 between APPLIED ELASTOMERICS, INC. and SSL
AMERICAS, INC.

 

NOW, THEREFORE, this Agreement is amended as follows:

 

                Revise Paragraphs §1.3(b)., §4.3., §4.3(b)., §4.3(c)., and
§4.3(d) by changing the word "Schedules" to read: "Schedule".

                Revise Paragraph §1.3(b) by changes in italics and strikeout to
read:

                "1.3. (b) Company may… shall be first reviewed and determined by
AEI for a determination… and §4.3."

                Revise Paragraphs §4.1(b) by adding the word "is" before
"otherwise", and at §4.1(c) change the number "15" to read "30".

                Revise Paragraph §4.1(d) to read:

                "4.1. (d) Additionally… SSL shall paid pay to AEI… its
distributors, which products shall not be used by AEI for purpose of resale."

                Revise Paragraph §4.2(a)(ii) by changing the year in parenthesis
"2002" to read "2003".

                Revise Paragraphs §4.3(a) by changing the word "initially" to
"initial" and 4.3(c) to read:

                "4.3. (c) AEI shall notify… Schedule B, unless it is added
pursuant to §4.2 and §4.3 on or before the end of the three year time period."

                Revise Paragraph 7.3(b) to read:

                "7.3. (b) Material Breach. In the event… §4.1. (except with
respect to the $66,000 product credit), §4.3., §6.1(b)., or… under §3.1., §4.1.
(except with respect to the $66,000 product credit), §4.3., §6.1(b)., or §9.5(b)
of… with §8.2(a) and (b)."

                Revise Paragraph 9.5(a) to read:

                "9.5. (a) a third… than Company's full obligation… shall
terminate this Agreement not be effective on the date of such assignment to said
third party;"

 

                ALL other provisions of the Agreement are unchanged.

 

                IN WITNESS WHEREOF, the parties have entered into this amendment
effective even date with said Agreement.

 

 

APPLIED ELASTOMERICS, INC.

SSL AMERICAS, INC.

 

 

By:

/s/  John Y. Chen

 

By:

/s/ Robert Kaiser

 

 

 

Name:

John Y. Chen

 

Name:

Robert Kaiser

 

 

 

Title:

President

 

Title:

Vice President

 

 

 

 

 

Date:

April 29, 2002

 

Date:

April 30, 2002

 

 

 

 

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APPLIED ELASTOMERICS, INCORPORATED

PATENT LICENSE AGREEMENT

 

This Agreement, effective as of November 30, 2001 (the “Effective Date”) is
between Applied Elastomerics, Incorporated (“AEI”), a California corporation,
with a principal place of business at 163 West Harris Avenue, South San
Francisco, CA 94080 and SSL Americas, Incorporated (“Company”), a New Jersey
corporation with a principal place of business at 3585 Engineering Drive., Suite
200, Norcross, GA, 30092.

 

R E C I T A L S

 

WHEREAS AEI owns and has rights to license certain Patent Rights (as defined
herein), covering certain compositions and articles including articles set forth
on Schedule B;

 

WHEREAS, Company has acquired (within the past three years) a company and former
AEI licensee (“Silipos, Inc.,”) and is presently involved in the marketing of
certain health care products set forth on Schedule B;

 

WHEREAS, AEI claims certain Patent Rights set forth on Schedule A; and Company
seeks to obtain any required non-exclusive Patent License for the products
specified on Schedule B under all relevant AEI Patent Rights including any
future Patent Rights;

 

WHEREAS, it is recognized that AEI Patent Rights are accorded the statutory
presumption of validity under 35 U.S.C. 282, however, Company, in entering into
this Patent License Agreement makes no admission that by payment of any royalty
with respect to AEI’s Patent Rights, the existence of any claims of such Patent
Rights are valid, and Company makes no admission that any Licensed Products
included on Schedule B are covered by, or in the absence of this Patent License
would infringe, one or more claims of the Patent Rights;

 

WHEREAS, except for the patent dispute, Company represents and warrants that
prior to its acquiring Silipos, Inc., it is not a past or present party in
breach of any agreements with AEI;

 

WHEREAS, as a compromise between the parties and pursuant to the preliminary
understand of April 4, 2002, AEI is prepared to grant and Company is prepared to
accept a paid-up license for the Patent Rights in the specified products Field
in order to avoid patent litigation;

 

NOW, THEREFORE, for the good and valuable consideration as herein provided and
the sufficiency of which is hereby acknowledged by both parties, AEI and Company
hereby agrees as follows:

 

1.                                      Definitions.

 

1.1.                              “Affiliate”  shall mean any legal entity (such
as a corporation, partnership, or limited liability company) that is related to
Company as a parent company, a subsidiary or a sister company, including, but
not limited to, SSL International plc or Silipos, Inc.

 

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1.2.                              “Field” shall mean the general health care
field of products listed on Schedule B including (i) consumer health care
products, (ii) medical products, (iii) cosmetics products, (iv) dermal products,
(v) skin care products, (vi) sports medical products, (vii) orthotic products,
and (viii) prosthetic products.

 

1.3.                              “Licensed Product(s)” shall mean one or more
health care products in the Field (not an Excepted Product) which are developed,
made or have made, used, offered for sale or sold, exported or imported by
Company as described and listed by Company item number or optionally listed by a
pre-marketing Company identification number referenced by an accompanying
drawing (so as to adequately identify such Licensed Product as to its use,
function, design or configuration adequate for purposes of comparison as to its
similarity or dissimilarity to other Licensed Products) on Schedule B which is
incorporated herein by reference as of the Effective Data or later added as a
New Licensed Product (defined in §1.4 and in accordance with §4.2, §4.3, or
becomes available at a later time as provided for under §4.1(b)(c) below), that
cannot be made or have made, used, offered for sale, or sold, imported or
exported in whole or in part, without infringing one or more Valid Claims of the
Patent Rights.

 

(a)                                  Licensed Product(s) in Schedule B shall be
described and listed by item or pre-marketing number(s) including any Excepted
Product(s) defined below.

 

(b)                                 Company may from time to time add additional
Licensed Products to Schedule B in accordance with §4.1(b) and (c), §4.2 and
§4.3. For a Licensed Product to be maintained and included in Schedules B, a
license for such product must be requested by Company and at the time available
pursuant to §4.1(b) and (c), §4.2 and §4.3; and any product for which a license
is requested by Company for inclusion in Schedule B shall be first reviewed and
determined by AEI for a determination as to whether it is available or inclusion
on Schedules B in accordance with §4.2 and §4.3.

 

1.4.                              “Excepted Product(s)” shall mean any
product(s) licensed to a Third Party Licensee exclusively prior to the Effective
Date or a Licensed Product for other specific uses which are not available as of
the Effective Date for reasons (i) such product was already exclusively licensed
for a specific use or otherwise to another prior to the Effective Date, (ii) not
included by Company on Schedule B as of the Effective Data and subsequently
licensed exclusively to a third party after the Effective Date, or (iii)
included on Schedule B, then dropped by Company from Schedule B for failure to
use commercially reasonable efforts to market such Licensed Products (which
commercial efforts can be shown by inclusion of such Licensed Product
continuously in its regularly published sales catalogue within three year from
the date of inclusion of such Licensed product on Schedule B with written notice
under §4.3(c)) and subsequently requested by and exclusively licensed to a third
party. The notation (“*”) followed by the description of use shall identify any
Licensed Product on Schedule B which for reasons provided is not available for a
specific use and qualifies as an Excepted Product.

 

1.5.                              “New Licensed Product” shall mean one or more
different Licensed Product (other than a difference on size, minor improvement
or modification of an existing Licensed Product) which is not an Excepted
Product added to Schedule B in accordance with §4.2, and §4.3 after the
Effective Date of this Agreement.

 

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1.6.                              “Licensed Product Date”  shall mean the
Effective Date of this Agreement for Licensed Product(s) listed on Schedule B on
the Effective Date of this Agreement or the date a New Licensed Product is
approved and added to Schedule B.

 

1.7.                              “AEI Technical Information”  shall mean any
technical information of AEI (then currently available) in the Field relevant to
Licensed Product(s) in accordance with §2.1(b) requested by Company in writing
which shall be transferred, communicated, or otherwise provided under the
Confidentiality Agreement of even date to Company on or after the Effective
Date.  Company agrees to reimburses AEI promptly for any costs and expenses
incurred by AEI in connection with providing such AEI Technical Information to
Company which shall include costs of reproduction, copying, shipping,
transmitting, facsimile costs, and telecommunication costs, and any appropriate
Federal, state, or local taxes on such technical information in printed form. 
AEI Technical Information shall not be interpreted to involve any “Consulting
Services” as provided in §1.7(b) below.

 

(a)                                  Additionally, any AEI Technical Information
which is provided by AEI to Company or by Company to AEI shall be considered
“Confidential Information” as defined in the Confidentiality Agreement and shall
be maintained in confidence by Company and AEI in accordance with said
Confidentiality Agreement.

 

(b)                                 In the event, Company may require and
request “Consulting Services” (involving any work including any performance of
scientific or technical activities, any technical assistance, any show how, any
demonstrations, any work-ups, any wet or physical chemistry, any experiments,
any R & D involving the generation of any work products, and the like other than
available AEI Technical Information) that relates to a specific Licensed Product
listed on Schedule B during the Term, Company shall make its request known in
writing.  Based on such written request and the identified scope of work
involved, AEI will inform Company if AEI has the expertise and capability to
provide such services or if such services can or can not be performed by AEI
with its existing facilities and if AEI has the expertise and is able to assist
in providing such services of the scope request by Company, then AEI will
present a written estimate of time and cost for such services to be billed at a
current hourly rate of $2,500 per research man hour, $1,500 per technician man
hour, and $500 per administrative man hour plus any costs of any materials,
phone charges, copying services, and related costs of equipment set up and usage
time including any applicable taxes.  Such hourly rates are subject to change
without notice and the established rates current at the time of the request
shall be charged.

 

1.8.                              “Patent Rights”  shall mean:

 

(a)                                  the United States and international patents
listed on Schedule A including any other United States and international patents
in which the claims of such patents read on the Licensed Products and are
acquired or otherwise owned by AEI during the Term of this Agreement in which
the Valid Claims of said patents read on the Licensed Products;

 

(b)                                 any divisionals, continuations, and
continuation-in-part patents and patent application (and their relevant
international equivalents) of any patent noted in §1.8(a) which are directed

 

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to subject matter of Licensed Products listed on Schedule B and in the Field and
disclosed in the patents listed on Schedule A, and resulting patents;

 

(c)                                  any patents resulting from reissues,
reexaminations, or extensions (and their relevant international equivalents) of
the patents described in (a) and (b) above; and

 

(d)                                 any patents which AEI has acquired the right
to license, or owned by AEI during the Term of this Agreement, whether issued
before or after the Effective Date, that would be infringed by any Licensed
Product or new Licensed Product.

 

1.9.                              “Term” shall mean the Term of this Agreement
as further defined in §7.1.

 

1.10.                        “Territory” shall mean worldwide.

 

1.11.                        “Third Party Licensees” shall mean third parties
who are licensed by AEI in the Field to make, use or sell Licensed Products in
the Field.

 

1.12.                        “Valid Claims” shall mean a claim of any patent
that issues on a pending patent application, and any claim in an un-expired
patent or patent whose expiration date has been extended by law, contained in
the Patent Rights, so long as such claim has not been (i) disclaimed, withdrawn,
canceled or abandoned by AEI, or (ii) finally rejected or held invalid by a
decision of a patent granting authority in a reexamination or reissue procedure,
or (iii) held invalid or unenforceable in a decision of a court or competent
body having jurisdiction.

 

2.                                      Grant of Rights.

 

2.1.                              License Grants.  Subject to the terms of this
Agreement, AEI hereby grants to Company:

 

(a)                                  a non-exclusive, paid-up license under its
rights in the Patent Rights, to the extent not prohibited by third party
patents, to develop, make or have made, use, offer to sell or sell, export or
import Licensed Products in the Field and throughout the Territory;

 

(b)                                 a non-exclusive, paid-up license to use AEI
Technical Information in the Field provided in connection with the manufacture,
use, or sale of Licensed Products in the Territory.

 

(c)                                  a non-exclusive, paid-up license under its
rights in the Patent Rights, to the extent not prohibited by third party
patents, to develop, make or have made, use, offer to sell or sell, export or
import Licensed Products Nos.: 1786 and 1788 for cosmetic use in the Field and
throughout the Territory shall take effect:

 

(i)                                     on the date an exclusive license for
Third Party Licensed Products to Borghese Trademarks, Incorporated (a qualified
§1.11 and §2.5 Third Party Licensee) reverts to a non-exclusive license or is
otherwise canceled as evidenced by an availability notice issued by AEI,

 

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(ii)                                  subject to payments under §4.1(a)-(d)
within 15 days from AEI’s notice of availability which payments upon receipt by
AEI shall automatically remove the “*” mark from the affected Licensed Products
on Schedule B.

 

2.2.                              Authority.  AEI represents and warrants that
in respect to the Patent Rights that it has legal power to extend the rights
granted to Company in this Agreement.

 

2.3.                              Regarding Third Party Licensees.  It is
understood that with respect to Licensed Products listed on attached Schedule B,
AEI may have already licensed such Licensed Products to Third Party Licensees on
an non-exclusive basis and that with regards to products not listed on
Schedule B; AEI may have already granted other Third Party Licensees medical or
related products on an exclusive (an Excepted Product) product basis or on a
different use product basis.

 

2.4.                              No Additional Rights.  Nothing in this
Agreement shall be construed no confer any rights upon Company by implication,
estoppel, or otherwise as to any technology or patent rights of AEI or any other
entity other than the Patent Rights related to Licensed Products, regardless of
whether such rights shall be dominant or subordinate to any Patent Rights.

 

2.5.                              Right to Additional Products of Third Party
Licensees.  Company shall at any time during the Term have the right to add any
available (non-conflicting) Third Party licensed product including Expected
Products (which later becomes available) in the Field as a New License Product
in accordance with §4.1(b)(c), §4.2 and §4.3.

 

(a)                                  With respect to this Agreement, no license
for Licensed Products listed on Schedule B is granted herein by AEI which is
known to conflicts with one or more products of any Third Party Licensees
identified by the notation “*” to be an Excepted Product on Schedule B as of the
Effective Date.

 

(b)                                 AEI shall notify Company in writing of the
availability of the Excepted Products pursuant to §4.1(b)(c) and of any Excepted
Product that becomes available which have been previously requested to writing
by Company and will give Company thirty (30) days notice for Company to accept
or decline such previously Excepted Products for inclusion on Schedule B prior
to licensing such products to another.

 

3.                                      Company Obligations Relating to
Commercialization.

 

3.1.                              Indemnification.

 

(a)                                  By Company.  Company shall indemnify,
defend, and hold harmless AEI and its trustees, officers, employees, and agents
and their respective successors, heirs and assigns (the “Indemnitees”), against
any liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with
any claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions

 

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in the form of tort, warranty, or strict liability and regardless of whether
such action has any factual basis) concerning any Licensed Product.

 

(b)                                 Procedures.  The Indemnitees agree to
provide Company with prompt written notice of any claim, suit, action, demand,
or judgment for which indemnification is sought under this Agreement.  Company
agrees, at its own expense, to provide attorneys reasonably acceptable to AEI to
defend against any such claim.  The Indemnitees shall cooperate fully with
Company in such defense and will permit Company to conduct and control such
defense and the disposition of such claim, suit, or action (including all
decisions relative to litigation, appeal, and settlement); provided, however,
that any Indemnitee shall have the right to retain its own counsel, at the
expense of Company, if representation of such Indemnitee by the counsel retained
by Company would be inappropriate because of actual or potential differences in
the interests of such Indemnitee and any other party represented by such
counsel.  Company agrees to keep AEI informed of the progress in the defense and
disposition of such claim and to consult with AEI with regard to any proposed
settlement.

 

(c)                                  Insurance.  Company shall maintain
commercial general liability insurance, including product liability and errors
and omissions insurance which shall protect Company and Indemnitees with respect
to events covered by §3.1(a) above.  The limits of such insurance shall not be
less than One Million Dollars ($1,000,000) per occurrence with an aggregate of
Three Million Dollars ($3,000,000) for bodily injury including death; One
Million Dollars ($1,000,000) per occurrence with an aggregate of Three Million
Dollars ($3,000,000) for property damage; and One Million Dollars ($1,000,000)
per occurrence with an aggregate of Three Million Dollars ($3,000,000) for
errors and omissions.  Company shall continue to maintain such insurance or self
insurance after expiration or termination of this Agreement during any period in
which Company or any Affiliate continues (i) to make, use, or sell a product
that was Licensed Product under this Agreement and thereafter for a period of
two (2) years.

 

3.2.                              Use of AEI or Company Name.  Neither Company
nor AEI shall use any of the other’s name, trademark or service mark, or any
variation, adaptation, abbreviation thereof, nor discloses any terms of this
Agreement in any promotional material or other public announcement without the
prior written consent of the other.  The foregoing notwithstanding, without the
consent of the other AEI and Company may state that it is licensor or licensee
respectively of one or more of the patents comprising the Patent Rights and may
disclose such information in any prospectus, offering memorandum, or other
document or filing required by applicable securities laws or other applicable
law or regulation.

 

3.3.                              Marking of Licensed Products.  To the extent
commercially feasible and consistent with prevailing business practices, Company
shall mark, and shall cause its Affiliates to mark, all Licensed Products that
are manufactured or sold under this Agreement with the number of each issued
patent under the Patent Rights that applies to such Licensed Product in which
the Valid Claims of said patents read on the Licensed Products as determined by
Company.

 

3.4.                              Compliance with Law.  Each of AEI and Company
shall use reasonable commercial efforts to comply with, and shall ensure that
its Affiliates use reasonable commercial efforts to comply

 

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with, all commercially material local, state, federal, and international laws
and regulations relating to the development, manufacture, safety, use, and sale
of Licensed Products.

 

4.                                      Consideration for Grant of Rights.

 

4.1.                              Paid-Up License Fee. In partial consideration
of the rights granted Company under this Agreement, Company shall pay to AEI by
April 30, 2002 a paid-up license fee:

 

(a)                                  of Three Million One Hundred Thousand
($3,100,000.00) dollars.

 

(b)                                 of which amount Company shall retain Six
Hundred Thousand ($600,000.00) Dollars to be paid in the event the exclusive
license for cosmetic use of glove and sock (Expected Products similar to medical
use Licensed Products Nos.: 786 and 788 of Schedule B) to Borghese Trademarks,
Incorporated (a qualified §1.11 and §2.5 Third Party Licensee) reverts to a
non-exclusive license or otherwise canceled; and upon such reversion or
cancellation, AEI’s grant of non-exclusive cosmetic use license to Company shall
then be effective under §2.1(c), (i) and (ii).

 

(c)                                  Company shall pay AEI the retained §4.1(b)
amount of Six Hundred Thousand ($600,000.00) dollars within 15 days from the
date of AEI’s written notice of the availability of a license for cosmetic use
of Licensed Products Nos.: 786 and 788 which availability shall remain open for
30 days from the date of notice.  In the event of non-payment by Company by the
end of the 15 day period from the date of AEI’s notice of availability, this
Agreement shall automatically terminate without recourse.

 

(d)                                 Additionally, in the event, the Licensed
Product (Nos.: 786 and 788) availability notice for the cosmetic use of gel
glove and sock is issued by AEI within thirty (30) days from the last date of
execution of this Agreement, SSL shall paid AEI an additional sum of Sixty Six
Thousand ($66,000.00) Dollars and a credit of Sixty Six Thousand ($66,000.00)
Dollars to AEI to use on or before April 30, 2004 to purchase Silipos products
pursuant to Silipos’ price list less normal discounts to its distributors.

 

(e)                                  The Paid-up license fee or fees (under
§4.1) is non-refundable and not creditable against any other payments due to AEI
under this Agreement.

 

4.2.                              Product Fee Payment.  For each additional New
Licensed Product(s) added to Schedule B after the Effective Date, Company shall
pay AEI a non-refundable administrative Product Fee of One Thousand Dollars
($1,000.00) for each New Licensed Product(s) so added under §4.3 with the
following exceptions:

 

(a)                                  Company shall have the right to add any New
Licensed Product to Schedule B without the payment of the Product Fee Payment
provided:

 

(i)                                     such New Licensed Product is determined
by AEI to be a non-conflicting, existing, non-exclusive Licensed Product
licensed to a Third Party Licensee prior to the Effective Date, or

 

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(ii)                                  any New Licensed Product not listed on
Schedule B as of April 30, 2002, but is later included in the next published
catalogue (by April 30, 2002) of Silipos may be added to Schedule B as a New
Licensed Product with the condition that such New Licensed Product (as
determined in accordance with §4.3) is not an Excepted Product and not an
exclusively licensed product to a Third Party Licensee prior to the Effective
Date.

 

(b)                                 In the event a Licensed Product is dropped
for at least one year by Company from Schedule B for failure to use commercially
reasonable efforts to market such Licensed Products as described in §1.4 (iii) 
and §4.3, Company shall have the right to add the previous listed Schedule B
Licensed Product as a New Licensed Product without the payment of the Product
Fee, provided said Licensed Product had not been licensed exclusively to a third
party during the one year hiatus.

 

4.3.                              New Licensed Product Notices and Samples. 
Prior to marketing of any New Licensed Product, Company shall notify AEI in
writing of its desire to market any New Licensed Product stating in such notice
the description and proposed item number of the New Licensed Product it wishes
to add to Schedules B and the marketing date(s), if any.  Company shall, as
provided for in §4.2, include with such notice the appropriate Product Fee
Payment.

 

(a)                                  AEI will have an initially two weeks from
the date of such notice to determine if company’s notification to develop and
market such New Licensed Product is any Excepted Product or conflicts with any
product already licensed to any Third Party Licensees.  If AEI needs additional
time to review or evaluate whether a conflict exists, AEI shall have an
additional, automatic one-month period of time to respond to Company and
thereafter AEI can request an additional amount of time in writing notifying
Company of the additional time needed to make its determination and such request
for any additional reasonable amount of time shall not be denied by Company.

 

(b)                                 AEI will add the New Licensed Product in
Schedules B provided such New Licensed Product is not in conflict with any
product licensed to Third Party Licensees.  Any failure by AEI to respond to
such notification within the two-week period shall be deemed a confirmation by
AEI that it will add the applicable New Licensed Product to Schedule B hereto. 
In the event of conflict, AEI will notify Company in writing and refund to
Company the Product Fee payment.  If there is no conflict, Company shall exert
commercially reasonable efforts to begin marketing such New Licensed product (as
evidenced by inclusion of such Licensed Product in its regularly published sales
catalogue within three years from the date of inclusion of such Licensed product
on Schedule B).

 

(c)                                  AEI shall notify Company in writing at
least Thirty (30) days prior to the end of the three year time period for
marketing the affected New License Product(s) and should Company fail to market
the New Licensed Product by the end of the time period, the New Licensed Product
will automatically be dropped (without recourse) from Schedules B.

 

(d)                                 Regarding Licensed Products listed on
Schedule B, and before commencing the sale of any New Licensed Product, Company
shall send to AEI without charge six (6) samples of all Licensed Products and a
up-to-date description and definition of any New Licensed Product identified by

 

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trademark and item number.  Upon receipt of the samples of New Licensed
Products, AEI will examine and compare the samples and its up-to-date
description and definition with the corresponding New Licensed Product as
defined, described and listed on Schedules B to determine if the sample is
substantially the same as the New Licensed Product listed on the Schedule.  In
the event that the sample is materially different from the listed new Licensed
product, then the description and definition of the New licensed product listed
on Schedule B will be amended to conform to the corresponding sample and its
up-to-date description and definition submitted by Company.  In the event AEI
determines that the function of the submitted samples of any Licensed Product on
Schedule B are different or the samples are materially different from the
description and definition listed on Schedule B, or any samples qualify as
Excepted Products, or any samples conflict with any products already licensed to
any Third Party Licensees, AEI will notify Company in writing of its
determination and Company agrees to abide by such determination and abandon
marketing any conflicting products (as represented by the sample product
submitted by Company to be conflicting).

 

5.                                      Payments.

 

5.1.                              Payments in U.S. Dollars.  All payments due
under this Agreement shall be payable in United States dollars.  Conversion of
foreign currency to U.S. dollars shall be made at the conversion rate existing
in the United States (as reported in the Wall Street Journal) on the last
working day of the calendar quarter preceding the applicable payment date.  Such
payments shall be without deduction of exchange, collection, or other charges,
and, specifically, without deduction of withholding or similar taxes or other
government imposed fees or taxes.

 

5.2.                              Late Payments.  Any payments by Company that
are not paid on or before the date such payments are due under this Agreement
shall bear interest, to the extent permitted by law, at ten (10%) percent annual
interest rate compounded daily, which interest shall be calculated based on the
number of days that payment is delinquent.

 

5.3.                              Method of Payment.  All payments under this
Agreement should be made payable to “Applied Elastomerics, Incorporated” and
sent to the address identified below.  Each payment should reference this
Agreement and identify the obligation under this Agreement that the payment
satisfied.

 

6.                                      Past Sales and Infringement.

 

6.0.                              Company’s Past Sales.  Company agrees to pay
AEI 6% royalty on all past sales of all gel products sold by company in
accordance with §6.2 which payment will be held in abeyance without interest
until the 3rd anniversary date from the Effective Date. Of Company’s past sales,
AEI shall forgive a fraction of (1/3) of the total past sales on the anniversary
date of each year during the Term of this Agreement.  The (1/3) forgiveness is
granted to Company each year provided Company fully and faithfully discharges
all obligations undertaken by it in this Agreement for at least three (3)
years.  Failure by Company to so discharge its obligations shall constitute a
waiver of the benefits of this paragraph and shall forthwith restore to AEI its
full rights as they existed on the date of this Agreement.  In the event, this
Agreement is terminated by Company for whatever reasons before November 30,
2004, Company

 

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shall pay AEI 6% on all past sales remaining on the date of Termination less the
(1/3) fraction of royalties due for each year Company performed under this
Agreement.

 

6.1.                              Notification of Infringement and Infringement
Activities.  Company agrees to provide written notice to AEI promptly after
becoming aware of any infringement of the Patent Rights.  During the Term of
this Agreement, while Company enjoys the use of the rights granted under the
Patent Rights, Company agrees not to intentionally or unintentionally, directly
or indirectly frustrate AEI’s enforcement of any Valid Claims of the Patent
Rights.

 

(a)                                  In partial consideration of the rights
granted Company under this Agreement, Company shall not knowingly or upon being
notified by AEI of infringement by any third party, purchase directly or
indirectly any License Products listed on Schedule B from any supplier or from a
party which has been notify by AEI of infringement;

 

(b)                                 In partial consideration of the rights
granted Company under this Agreement, Company shall not make, use offer to sell,
or sell under this Agreement any products covered by Patent Rights other than
License Products of Schedule B.

 

(c)                                  In partial consideration of the rights
granted Company under this Agreement, Company shall not participate directly or
indirectly in the infringement of or involved in activities having the purpose
or intent to frustrate AEI’s enforcement of its Patent Rights or to frustrate
the enjoyment of Patent Rights by qualified Third Party Licensees.  In the event
AEI notifies Company of such infringement or infringing activity and should
Company fail to cease such infringement or terminate its involvement in such
infringing activity within thirty (30) days after receiving written notice
thereof, AEI may terminate this Agreement upon written notice to Company which
termination shall be effective on the post mark date of such notice.

 

6.2.                              AEI Right to Prosecute.  AEI shall have the
right, at its sole discretion, to prosecute any infringement or answer and
declaratory judgment action, under its sole control and at its sole expense, and
any recovery obtained shall be given to AEI.

 

6.3.                              Cooperation.  Company agree to cooperate fully
in any action under this Section which is controlled by AEI, provided that AEI
reimburses the Company promptly for any costs and expenses incurred by Company
in connection with providing such assistance.

 

7.                                      Term and Termination.

 

7.1.                              Term. This Agreement shall commence on the
Effective Date and shall remain in effect until the expiration, invalidation or
abandonment of all issued patents within the Patent Rights, unless earlier
terminated in accordance with the provisions of this Agreement.

 

7.2.                              Voluntary Termination by Company.  Company
shall have the right to terminate this Agreement, for any reason, (i) upon at
least six (6) months prior written notice to AEI, such notice to

 

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state the date at least six (6) months in the future upon which termination is
to be effective, and (ii) upon complying with all terms and obligations of the
Agreement, including payment of all amounts due to AEI through such effective
date under the Agreement.

 

7.3.                              Termination for Default.

 

(a)                                  Nonpayment. In the event Company fails to
pay any amounts due and payable to AEI hereunder (except for payment under
§4.1(c)), and fails to make such payments within thirty (30) days after
receiving written notice thereof, AEI may terminate this Agreement upon written
notice to Company.

 

(b)                                 Material Breach. In the event Company
commits a material breach under §3.1., §4.1., §4.3., §6.1(b)., §9.5(b) of its
obligations under this Agreement and fails to cure that breach within thirty
(30) days after receiving written notice from AEI, AEI may terminate this
Agreement upon written notice to Company. In the event Company or AEI commits a
material breach other than under §3.1., §4.1., §4.3., or §6.1(b) of its
obligations under this Agreement and fails to cure that breach within thirty
(30) days after receiving written notice thereof, the non-breaching party may
pursue whatever remedies are available at law. Prior to instituting legal
proceedings, the parties shall seek to resolve any dispute in accordance with
§8.2(a) and (b).

 

(c)                                  Cease Make, Use and Sell. Company agrees
that upon the termination of this Agreement as herein provided, it will
forthwith cease to manufacture and/or sell Licensed Products that are covered by
the Patent Rights and will not for the period of time during which AEI remains
assignee and has legal power of the patents specified in the Patent Rights and
that such patents are enforceable and valid, engage either directly or
indirectly in the manufacture or sale of Licensed Products. Notwithstanding the
above, Company shall have the right to sell-off its inventory as of the date of
Termination.

 

7.4.                              Force Majeure. Neither party will be
responsible for delays resulting from causes beyond the reasonable control of
such party, including without limitation fire, explosion, flood, war, strike, or
not, provided that the non performing party uses commercially reasonable efforts
to avoid or remove such causes of nonperformance and continues performance under
this Agreement with reasonable dispatch whenever such causes are removed.

 

7.5.                              Effect of Termination. The following
provisions shall survive the expiration or termination of this Agreement:
Sections §1, §7, §8, and §9, including §2.4., §3.1., §3.2., §3.3., §3.4., §4.1.,
§4.2., §4.3., §5.1., §5.2., §5.3., §6.0., §6.1., §6.2., §6.3., §7.1., §7.2.,
§7.3., §7.4., §7.5., §8.1., §8.2., §8.3., §9.4., §9.5., §9.6., §9.7., §9.8.,
§9.9., §9.10., and §9.11. Upon the early termination of this Agreement, Company
and its Affiliates may complete and sell any work-in-progress and inventory of
Licensed Products that exist as of the effective date of termination, provided
that (i) Company is current in payment of all amounts due AEI under this
Agreement, and (ii) Company and its Affiliates shall complete and sell all
work-in-progress and inventory of Licensed Products.

 

11

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8.                                      Dispute Resolution.

 

8.1.                              Mandatory Procedures. The parties agree that
any dispute arising out of or relating to this Agreement shall be resolved
solely by means of the procedures set forth in this Section, and that such
procedures constitute legally binding obligations that are an essential
provision of this Agreement; provided, however, that all procedures and
deadlines specified in this Section may be modified by written agreement of the
parties. If either party fails to observe the procedures of this Section, as may
be modified by their written agreement, the other party may bring an action for
specific performance of these procedures in any court of competent jurisdiction.

 

8.2.                              Dispute Resolution Procedures.

 

(a)                                  Negotiation. In the event of any dispute
arising out of or relating to this Agreement, the affected party shall notify
the other party, and the parties shall attempt in good faith to resolve the
matter within ten (10) days after the date of such notice (the “Notice Date”).
Any disputes not resolved by good faith discussions shall be referred to the
Technology Licensing Office at AEI and to a senior executive for the Company
(collectively, the “Executives”), who shall meet at a mutually acceptable time
in San Mateo County, California within thirty (30) days after the Notice Date
and attempt to negotiate a settlement.

 

(b)                                 Mediation. At the earlier of: (a) the matter
remains unresolved within sixty (60) days after the Notice Date, or if the
Executives fail to meet within thirty (30) days after the Notice Date, either
party may initiate mediation upon written notice to the other party, whereupon
both parties shall engage in a mediation proceeding under the then current
Center for Public Resources (“CPR”) Model Procedure for Mediation of Business
Disputes, except that specific provisions of this Section 9 shall override
inconsistent provisions of the CPR Model Procedure. The mediator will be
selected from the CPR Panels of Neutrals. If the parties cannot agree upon the
selection of a mediator within ninety (90) days after the Notice Date, then upon
the request of either party, the CPR shall appoint the mediator. The parties
shall attempt to resolve the dispute through mediation until one of the
following occurs; (i) the parties reach a written settlement; (ii) the mediator
notifies the parties in writing that they have reached an impasse; (iii) the
parties agree in writing that they have reached an impasse; or (iv) the parties
have not reached a settlement within one hundred and twenty (120) days after the
Notice Date.

 

(c)                                  Trial Without Jury. If the parties fail to
resolve the dispute through mediation, or if neither party elects to initiate
mediation, each party shall have the right to pursue any other remedies legally
available to resolve the dispute, provided, however, that the parties expressly
waive any right to a jury trial in any legal proceeding under this Section 9.

 

8.3.                              Preservation of Rights Pending Resolution.

 

(a)                                  Performance to Continue. Each party shall
continue to perform its obligations under this Agreement pending final
resolution of any dispute arising out of or relating to this Agreement;
provided, however, that a party may suspend performance of its obligations
during any period in which

 

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the other party fails or refuses to perform its obligations. Nothing in this
Section is intended to relieve Company from its obligation to make payments
pursuant to Section 4 of this Agreement.

 

(b)                                 Provisional Remedies. Although the
procedures specified in this Section 8 are the sole and exclusive procedures for
the resolution of disputes arising out of or relating to this Agreement, either
party may seek a preliminary injunction or other provisional equitable relief
if, in its reasonable judgment, such action is necessary to avoid irreparable
harm to itself or to preserve its rights under this Agreement.

 

(c)                                  Statute of Limitations. The parties agree
that all applicable statutes of limitation and time based defenses (such as
estoppel and laches) shall be tolled while the procedures set fourth in §8.3.(a)
and §8.3(b) are pending.  The parties shall cooperate in taking any actions
necessary to effectuate this result.

 

9.                                      Miscellaneous.

 

9.1.                              No Representations or Warranties.  EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER COMPANY NOR AEI MAKES
ANY REPRESENTATIONS OR WARRANTIES OF ANY ;KIND CONCERNING THE PATENT RIGHTS,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON INFRINGEMENT, VALIDITY OF PATENT RIGHTS
CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER, OR NOT DISCOVERABLE.  Specifically, and not to limit the foregoing, AEI
makes no warranty or representation (i) regarding the validity or scope of the
Patent Rights, (ii) that the exploitation of the Patent Rights or any Licensed
Product will not infringe any patents or other intellectual property rights of
AEI or of a third party, and (iii) that AEI or a third party is not currently
infringing or will not infringe the Patent Rights.

 

N NO EVENT SHALL COMPANY, ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND
AFFILIATES OR AEI, ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES
BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER
COMPANY OR AEI SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT
SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

9.2.                              Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, and all
of which together shall be deemed to be one and the same instrument.

 

9.3.                              Headings.  All headings are for convenience
only and shall not affect the meaning of any provision of this Agreement.

 

9.4.                              Binding Effects.  This Agreement shall be
binding upon and insure to the benefit of the parties and their respective
permitted successors and assigns.

 

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9.5.          Assignment. This Agreement may be assigned by the Company to:

 

(a)           a third party without the written consent of AEI provided said
third party states in writing that it accepts the provisions of this Agreement
and agree to become in all respects bound thereby in the place and stead of
Company.  An assignment by Company involving less than all the provisions of
this Agreement or less than company’s full obligation and responsibility under
the Agreement shall terminate this Agreement effective on the date of such
assignment to said third party;

 

(b)           with the proviso, Company agrees that for a period of three (3)
years from the Effective Date, Company shall not assign this Agreement to a
member or related member of the management of Silipos, Inc., as it existed prior
to the acquisition of Silipos, Inc., by SSL International plc.

 

9.6.          Amendment and Waiver.  This Agreement may be amended,
supplemented, or otherwise modified only by means of a written instrument signed
by both parties.  Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance of whether or
not similar.

 

9.7.          Governing Law.  This Agreement and all disputes arising out of or
related to this Agreement, or the performance, enforcement breach or termination
hereof, and any remedies relating thereto, shall be construed, governed,
interpreted and applied in accordance with the laws of the State of California,
U.S.A., without regard to conflict of laws principles, except that questions
affecting the construction and effect of any patent shall be determined by the
law of the country in which the patent shall have been granted.

 

9.8.          Notice.  Any notices required or permitted under this Agreement
shall be in writing, shall specifically refer to this Agreement, and shall be
sent by hand, recognized national overnight courier, confirmed facsimile
transmission, confirmed electronic mail, or registered or certified mail,
postage prepaid, return receipt requested, to the following addresses or
facsimile numbers of the parties:

 

If to AEI:

 

Applied Elastomerics, Inc.,

 

 

163 West Harris Avenue

 

 

South San Francisco, CA 94080

 

 

 

Attention:

 

John Y. Chen, President

 

 

Tel: 650-827-1388  Fax: 650-827-1389

 

 

 

If to Company:

 

SSL- Americas Inc.,

 

 

3585 Engineering Drive, Second Floor

 

 

Norcross, GA 30092-9214

 

 

 

Attention:

 

Stuart Heap, President and CEO

 

 

Copy to: Robert Kaiser, General Counsel

 

 

Tel: 770 582-2170  Fax: 770 582-2232

 

All notices under this Agreement shall be deemed effective upon receipt.  A
party may change its contact information immediately upon written notice to the
other party in the manner provided in this Paragraph.

 

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9.9.                              Severability.  In the event that any provision
of this Agreement shall be held invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect any other provisions of this
Agreement, and the parties shall negotiate in good faith to modify the Agreement
to preserve (to the extent possible) their original intent.  If the parties fail
to reach a modified agreement within sixty (60) days after the relevant
provision is held invalid or unenforceable, then the dispute shall be resolved
in accordance with the procedures set forth in Section 9.  While the dispute is
pending resolution, this Agreement shall be construed as if such provision were
deleted by agreement of the parties.

 

9.10.                        Excuse of Performance.  In the event that lawful
performance of this Agreement or any part hereof by either party shall be
delayed, prevented or impossible by any circumstance reasonably beyond its
control such as acts of God, fire, explosion, mechanical breakdown, strikes,
other labor trouble, plant shutdown, unavailability of or shortage of any
material necessary for manufacturing Licensed Product From any sources, or as a
consequence of any law, regulation, order, rule, direction, priority, seizure,
allocation, requisition, or any other official action by any department, bureau,
board, administration or other instrumentality or agency or any government or
political subdivisions thereof having jurisdiction over such party, such party
shall not be considered in default hereunder by reason of any failure to perform
occasioned thereby.

 

9.11.                        Entire Agreement.  Except for the Confidential
Agreement referred to in §1.7, this Agreement constitutes the entire agreement
between the parties with respect to its subject matter and supersedes all prior
agreements or understandings between the parties relating to its subject matter.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by the
duly authorized representatives on the date(s) set forth below.

 

APPLIED ELASTOMERICS, INC.(“AEI”)

SSL AMERICAS, INC. (“Company”)

 

 

By:

  /s/  John Y. Chen

 

By:

  /s/ Robert Kaiser

 

 

 

Name:

   John Y. Chen

 

Name:

  Robert Kaiser

 

 

 

Title:

   President

 

Title:

   Vice President

 

 

 

 

 

Date:

   April 25, 2002

 

Date:

  April 30, 2002

 

 

 

ATTEST:

/s/ [ILLEGIBLE]

 

ATTEST:

/s/ [ILLEGIBLE]

 

 

 

Secretary

Secretary

 

 

(Seal)

(Seal)

 

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