Exhibit 10.3

PATENT LICENSE AGREEMENT

 

This Patent License Agreement (the “Agreement”) is entered into as of the 10th
day of July, 2007 (the “Effective Date”) by and between PCP Acquisition, Inc., a
Colorado corporation (“Licensor”), and Perfect Circle Projectiles, LLC, an
Illinois limited liability company (“PCP”).

 

RECITALS

 

WHEREAS, Licensor is the owner of all right, title and interest in and to the
patents set forth on Exhibit A attached hereto (the “Licensed Patents”);

 

WHEREAS, PCP desires to secure the exclusive rights to manufacture, have
manufactured, use and sell products embodying any claim of the Licensed Patents
anywhere in the world (“Spherical Projectiles”) solely in the Field of Use
(defined below);

 

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth
herein, the payment of $1 by PCP to Licensor, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

AGREEMENT

 

1.

LICENSE

Subject to the terms and conditions of this Agreement, Licensor hereby grants to
PCP, during the Term (defined below), an exclusive license of the Licensed
Patents, in the Field of Use, to manufacture, have manufactured, use, offer for
sale, sell, distribute and otherwise commercialize, on a worldwide basis,
Spherical Projectiles (“Licensed Products”). This grant is to the exclusion of
all others including Licensor, however, Licensor retains all rights under the
Licensed Patents outside the Field of Use and Licensor retains the non-exclusive
right (along with PCP) to use the Licensed Patents for “Animal Deterrent Use”
(as such term is defined in the Asset Purchase Agreement between Licensor, PCP,
Gary E. Gibson and Security With Advanced Technology, Inc. of even date herewith
(the “Purchase Agreement”)). “Field of Use” shall mean any market in which
Spherical Projectiles are used for a purpose other than a “Tactical Use” (as
such term is defined in the Purchase Agreement). In addition, Licensor hereby
grants to PCP a limited, non-exclusive, revocable license of the Licensed
Patents to manufacture, have manufactured, use, offer for sale, sell and
distribute the Licensed Products solely in connection with the PTI Agreement (as
such term is defined in the Purchase Agreement) and solely in order to enable
PCP to comply with its obligations with respect to the PTI Agreement under
Section 6.10 of the Purchase Agreement.

2.

IMPROVEMENTS

PCP shall promptly notify Licensor of all improvements to the technology
embodied in the Licensed Patents conceived of by employees or contractors acting
on behalf of PCP. The term “conceived” as used in this Agreement shall have the
meaning ascribed to it under United States patent law. Upon such notification,
Licensor and PCP shall enter into discussions in good faith regarding the
ownership and licensing of such improvements.

 

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3.

PROSECUTION AND MAINTENANCE OF PATENTS

Licensor shall have the sole right and responsibility to prosecute and maintain
the Licensed Patents (subject to Licensor’s obligations under the Security
Agreement). PCP hereby consents to cooperate fully with Licensor in any such
prosecution or maintenance activity. Licensor agrees to reimburse PCP for all
reasonable expenses necessarily incurred by PCP in providing such Licensor
requested cooperation.

4.

PROTECTION AND ENFORCEMENT OF PATENTS

Licensor shall have the right, but shall not be obligated, to prosecute at its
own expense all infringements of the Licensed Patents. With respect to the
infringements of the Licensed Patents in the Field of Use, if within three (3)
months after having been notified of an infringement of the Licensed Patents in
the Field of Use, the infringer has not ceased and desisted from the infringing
activities and Licensor has not brought and is not diligently prosecuting an
infringement action or otherwise attempting an alternative resolution of the
infringement with the infringer, or if Licensor shall notify PCP at any time
prior thereto of its intention not to bring suit against or to take other action
to resolve the infringement in the Field of Use, then, and in those events only,
PCP shall have the right, but shall not be obligated, to prosecute at its own
expense any infringement of the Licensed Patents in the Field of Use, and PCP
may, for such purposes, include Licensor as party plaintiff without expense to
Licensor. No settlement, compromise, consent judgment or any voluntary final
disposition of the suit may be entered into by PCP without the prior written
consent of Licensor, such consent which shall not be unreasonably withheld.

In the event either Licensor or PCP shall undertake the enforcement and/or
defense of the Licensed Patents by litigation, any recovery of damages by the
party undertaking such enforcement or defense for each such suit shall be
applied first to reimburse each party for expenses and reasonable attorney’s
fees incurred by such party in connection with such suit, and the portion of the
damages remaining, if any, that are attributable to infringement of the Licensed
Patents within the Field of Use shall be shared by the parties in proportion
with their respective shares of the litigation expenses in such infringement
action.

In any infringement or misappropriation action that either party may institute
to enforce the Licensed Patents pursuant to this Agreement, the other party
hereto shall, at the request and expense of the party initiation, such suit,
cooperate in all reasonable respects and, to the extent possible, have its
employees testify when requested and make available relevant records, papers,
information, samples, specimens, and the like.

If Licensor initiates a suit to enforce or defend the Licensed Patents, and PCP
is requested to provide assistance to Licensor, Licensor agrees to reimburse PCP
for all reasonable expenses necessarily incurred by PCP in providing such
cooperation. Likewise, if PCP initiates a suit to enforce or defend the Licensed
Patents, and Licensor is requested to provide assistance to PCP, PCP agrees to
reimburse Licensor for all reasonable expenses necessarily incurred by Licensor
in providing such cooperation.

 

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5.

INTELLECTUAL PROPERTY OWNERSHIP

PCP acknowledges and agrees that Licensor owns all right, title and interest in
and to the Licensed Rights and the Proprietary Rights (as such term is defined
in the Purchase Agreement). PCP agrees that it will take no action inconsistent
with Licensor’s ownership of the Licensed Rights or the Proprietary Rights and
will not challenge the validity of the Licensed Rights or the Proprietary
Rights. PCP agrees not to use the Product Rights and Patents for any purpose not
authorized by this Agreement.

6.

PATENT MARKING

PCP agrees to comply with the marking provisions of 35 U.S.C. § 287 with respect
to all Licensed Products which are manufactured and/or sold by PCP and its
distributors and which are covered by any claim contained in the Licensed
Patents. The proper statutory notice shall likewise be conspicuously marked on
all packages and containers containing and on all advertisements, literature and
promotional material describing or mentioning all such Licensed Products which
are manufactured and/or sold by PCP and its distributors and which are covered
by any claim contained in the Licensed Patents.

7.

FIELD OF USE DETERMINATION

If PCP intends to sell any new product or enter into any new market (other than
the non-competing Spherical Projectiles listed in Schedule D to the Purchase
Agreement), PCP will promptly notify Licensor of its intentions (in any event
such notice shall be prior to PCP’s entering into any agreements with third
parties to distribute or any direct offers to sell to end users). Upon such
notification, Licensor and PCP shall discuss in good faith whether the new
product or proposed market falls within the Field of Use. If Licensor and PCP
are unable to reach agreement on such a determination then the parties shall
submit the issue to binding arbitration. The parties will arbitrate any dispute
arising from this Agreement pursuant to the terms of Section 9.12 of the
Purchase Agreement.

8.

TERM AND TERMINATION

8.1          Term. This Agreement shall begin on the Effective Date and continue
in full force and effect until the expiration of the last patent licensed
hereunder, unless the Agreement is sooner terminated pursuant to the termination
provision below (“Term”).

8.2          Termination by Licensor. Licensor may terminate this Agreement if
PCP (a) materially breaches its obligations hereunder, which breach is not
remedied within thirty days following written notice by Licensor of such breach.

8.3          Effect of Termination. Upon termination of this Agreement for any
reason whatsoever, PCP agrees to immediately cease using, manufacturing, having
manufactured, offering for sale or selling any Licensed Product that is covered
by any claim in any Licensed Patents then in force and effect and deliver to
Licensor a certification, in writing signed by an authorized person on behalf of
PCP that the Licensed Patents, confirming the same; provided, however, that PCP
may offer for sale and sell, for a period of six (6) months following the date
of termination, any Licensed Product PCP has in its inventory as of the date of
termination.

 

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9.

DISCLAIMER OF WARRANTIES

Licensor DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING
THE LICENSED PATENTS OR THE TECHNOLOGY ASSOCIATED THEREWITH WHICH IS PROVIDED TO
PCP “AS IS” AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE DISCLAIMED.

10.

INDEMNIFICATION

PCP hereby agrees to indemnify and hold Licensor, its directors, officers,
agents, and employees harmless from and against any and all claims, actions,
suits, damages, awards, costs (including reasonable attorney fees), expenses and
liabilities incurred in connection with any third party claim (i) arising from
defects attributable to PCP’s materials, manufacturing or workmanship; (ii)
arising from defective designs, or (iii) that PCP’s manufacture, distribution or
sale of Licensed Products violates any foreign or United States federal, state
or local law, regulation or statute. Licensor will promptly notify PCP of any
and all such claims and will reasonably cooperate with PCP with the defense
and/or settlement thereof, which defense and/or settlement shall be controlled
by PCP, provided that, if any settlement requires an affirmative obligation of,
results in any ongoing liability to or prejudices or detrimentally impacts
Licensor in any way and such obligation, liability, prejudice or impact can
reasonably be expected to be material, then such settlement shall require
Licensor’s written consent (not to be unreasonably withheld or delayed) and
Licensor may have its own counsel in attendance at all proceedings and
substantive negotiations relating to such claim, at Licensor’s expense. PCP
agrees to name Licensor as an insured on its product liability insurance with
respect to Licensed Products manufactured and sold by PCP.

11.

LIMITATIONS OF LIABILITY

EXCEPT FOR OBLIGATIONS ARISING UNDER SECTION 10 OF THIS AGREEMENT, NEITHER PARTY
WILL BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY, UNDER ANY LEGAL OR
EQUITABLE THEORY, FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES
OF ANY KIND, SUFFERED BY OR OTHERWISE COMPENSABLE TO THE OTHER, ARISING OUT OF,
UNDER OR RELATING TO THIS AGREEMENT, WHETHER OR NOT ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.

12.

NOTICES

Any notice, demand, or communication required or permitted to be given by any
provision of this Agreement shall be deemed to have been sufficiently given or
served for all purposes if (a) personally delivered, (b) sent by a nationally
recognized overnight courier service for next business day delivery (c) sent by
first-class U.S. mail, prepaid, certified and return receipt requested, or (d)
delivered by facsimile which is confirmed in writing by sending a copy of such
facsimile to the recipient thereof pursuant to clause (a), (b) or (c) above, to
the address set forth below:

 

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PCP Acquisition, Inc.

With a copy to:

 

 

10855 Dover Street, Suite 1100

Westminster, Colorado 80021

Attention: Scott Sutton

Fax: (303) 439-0414

 

Adam J. Agron

Brownstein Hyatt Farber Schreck, P.C.

410 Seventeenth Street

Suite 2200

Denver, Colorado 80202-4437

Fax: 303.223.0934

 

 

 

Perfect Circle Projectiles, LLC

 

 

With a copy to:

 

 

28101 Ballard Drive, Unit C

Lake Forest, Illinois 60045

Attention: Gary E. Gibson

Fax: (847) 367-8980

 

Shadle & Associates, Ltd.

1019 W. Wise Road, Suite 200

Schaumburg, Illinois 60193

Attention: Ronald E. Shadle

Fax: (847) 891-3176

 

 

or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.

Except as otherwise provided herein, any notice under this Agreement will be
deemed to have been given (x) on the date such notice is delivered pursuant to
clause (a) or (d) above, (y) the next succeeding business day after the date
such notice is delivered pursuant to clause (b) above, or (z) three business
days after such notice is delivered pursuant to clause (c) above.

13.

JOINT WORK PRODUCT

In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if jointly drafted by the parties and no
presumption, inference or burden of proof shall arise favoring or disfavoring a
party by virtue of authorship of any or all of the Agreement provisions. Each
party represents and agrees that it has had the opportunity to seek the advice
and counsel of appropriate professionals, including legal and accounting.

14.

HEADINGS

The headings appearing at the beginning of the several sections contained in
this Agreement have been inserted for identification and reference purposes only
and shall not be used in the construction and interpretation of this Agreement.
The word “including” will be ascribed a non-exclusive meaning unless followed by
the word “only.”

15.

INDEPENDENT CONTRACTOR

The parties hereto are independent of each other and this Agreement does not
create the relationship of partnership, principal-agent, employer-employee or
joint venture between them. The parties agree and acknowledge that this
Agreement is not a “work made for hire” and that

 

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neither party has been “hired to invent”.

16.

ENTIRE AGREEMENT

This Agreement, the Purchase Agreement and Exhibit A hereto constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

17.

SEVERABILITY

In the event that any provision of this Agreement shall be unenforceable or
invalid, in whole or in part, under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall not render
this Agreement, the remaining clauses and provisions, or portions thereof,
unenforceable or invalid as a whole, and, in such event, such provisions shall
be changed and interpreted so as to best accomplish the objectives of such
unenforceable or invalid provision within the limits of applicable law or
applicable court decisions.

18.

WAIVER

The failure of either party to enforce any of the provisions in this Agreement
shall not be construed to be a waiver of the right of such party thereafter to
enforce such provisions.

19.

AMENDMENT; ASSIGNMENT; BINDING EFFECT

This Agreement may be amended or modified only by a written instrument signed by
the parties hereto. PCP may not assign or otherwise transfer (including by
operation of law) this Agreement or any of its rights or obligations hereunder
without the prior written consent of Licensor (which consent will not be
unreasonably withheld, delayed or conditioned). Licensor’s consent shall not be
deemed to have been unreasonably withheld if Licensor objects to the assignment
or other transfer (including by operation of law) of this Agreement by PCP to a
competitor of Licensor. A sale of all or substantially all of the assets of
Licensor or a majority of the outstanding equity interests in Licensor shall
constitute an assignment of this Agreement that requires Licensor’s prior
written consent. This Agreement may be assigned or otherwise transferred by
Licensor without the consent of PCP so long as the assignee agrees to be bound
all of the terms of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

20.

GOVERNING LAW

This Agreement shall be construed, interpreted and the rights of the parties
determined in accordance with the laws of the state of Delaware, without regard
to the conflicts of laws principles thereof. Service of process in any such
proceeding may be made by certified mail, return receipt requested, or its
international equivalent, directed to the respective party at the address at
which it is to receive notice as provided herein. Each of the parties to this
Agreement irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
proceeding brought in any such court or any

 

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claim that a legal proceeding commenced in such court has been brought in an
inconvenient forum.

21.

SURVIVAL

The provisions of Sections 5, 9, 10, 11, 12, 13, 16, 17, 19, and 20 shall
survive a termination or expiration of this Agreement for any reason whatsoever.

22.

COUNTERPARTS/FACSIMILE

This Agreement may be executed in two counterparts, each of which shall be
deemed to be an original but both of which shall constitute one and the same
instrument. This Agreement may be executed by facsimile, and each such facsimile
signature shall be deemed to be an original.

****remainder of page intentionally left blank****

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.

 

PCP ACQUISITION, INC.

PERFECT CIRCLE PROJECTILES, LLC

 

By:       /s/ Jeffrey G. McGonegal
             Jeffrey G. McGonegal
             Chief Financial Officer

By:       /s/ Gary E. Gibson
             Gary E. Gibson
             Manager

 

****signature page to Patent License Agreement****

 

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EXHIBIT A

LICENSED PATENTS

 

US Patent

5,254,379

US Patent

5,639,526

 

France

0609298

Germany

69212332.6

Great Britain

0609298

Hong Kong

1015867

Japan

35-79065

 

 

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