Business cooperation agreement




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BUSINESS COOPERATION AGREEMENT



This Business Cooperation Agreement (the “Agreement”) is made on October 1, 2010 (“Effective Date”) by and between the following Parties:
1) Northrop Grumman Information Systems, an entity formed and existing under laws of State of Virginia, having an office and place of business at 7575 Colshire Drive, McLean, VA 22102, USA (hereinafter referred to as “NGIS”);
2) CIFF Technology Corporation, an entity formed and existing under laws of British Virgin Islands, having an office and place of business at Mill Mall Tower, 2nd Floor, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands (hereinafter referred to as “CIFF TC”); and
3) CIFF Business Enterprises LLC., an entity formed and existing under laws of the State of Maryland, having an office and place of business at 270 C St., Solomons, MD 20688, USA (hereinafter referred to as “CIFF BE”).
NGIS, CIFF TC and CIFF BE are sometimes referred to herein collectively or separately as the “Parties” or a “Party”.


RECITALS



A. NGIS’ core business relate to providing advanced solutions that deliver timely information to where it is needed most for its military, intelligence, civilian, state and local and commercial customers (hereinafter referred to as “NGIS Products”).
B. CIFF TC’s core technologies relate to image, video and audio handling: capturing; ingestion; compression (encoding); multiple video, audio, metadata and subtitle multiplexing to the container format; video, audio, metadata and subtitle synchronization; transcoding from state-of-the-art video and audio codecs to internal codecs of the container format; encryption; forward error correction; digital video recording; multicast and unicast streaming; decryption; multiple video, audio, metadata and subtitle demultiplexing from the container format; decompression (decoding) and multiple video, audio, metadata and subtitle playing, which enable video, audio, metadata and subtitle streaming and storage applications.
C. CIFF BE’s core competency relate to marketing of CIFF TC’s core technologies.
D. The Parties intend to integrate NGIS’ advanced solutions with CIFF TC’s core technology and market them with the help of CIFF BE.
E. The Parties believe that combining NGIS products with CIFF TC’s core technologies and CIFF BE’s core competencies will enable faster introduction of robust video/image products with features unattainable by the competitive technologies to the worldwide market.


AGREEMENT



The Parties agree as follows:

1.GENERAL DEFINITIONS

As used in this Agreement, the following general terms shall have the following meanings:



1.1.“Affiliate” shall mean, with respect to a Person, a Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by, or is Under Common Control with, such Person, including any Subsidiary of such Person.




1.2.The terms “comprise”, “for example” and “like” can cover more elements than those recited.




1.3.The term “consisting of” limits and covers only the elements expressly recited.




1.4.“Control” (including derivative forms such as “Controlling”, “Controlled by” and “Under Common Control with”) shall mean the ownership or possession, directly or indirectly by the controlling Person of: (i) voting shares or other securities, representing more than fifty percent (50%) of the outstanding shares or securities entitled to vote for the election of the board of directors or similar managing authority of such controlled Person; or (ii) if such controlling Person does not have voting shares or other securities, more than fifty percent (50%) of the ownership interest that represents the right to make decisions, including the election of directors, for such controlled Person.




1.5.“Day” shall mean a calendar day.




1.6.“Governmental Entity” shall mean any court, administrative agency or commission or other federal, state, provincial, county, local or other governmental authority, instrumentality, agency or commission in any country worldwide.




1.7.“Indemnified Party” shall mean any Party hereto, including that Party’s owners, directors, officers, employees, agents, advisors, counselors, independent contractors and its Affiliates and any person claiming by and through any of them.




1.8.“Person” shall mean an individual, partnership, corporation, limited liability company, association, joint venture, trust, unincorporated organization or Governmental Entity.




1.9.“Reasonable Out of Pocket Expenses” means expenses actually incurred relating to travel including, for example, commercial air travel, taxi and public transportation expenses, lodging and meal expenses and the like, wherein written authorization for such reasonable out of pocket expenses is provided prior to such expenses being incurred.




1.10.“Subsidiary” shall mean, with respect to a Person, a Person that directly, or indirectly through one or more intermediaries, is Controlled by such Person.

2.TECHNICAL DEFINITIONS

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



2.1.“IP” shall mean the intellectual property.




2.2.“CIFF Codec” shall mean novel single-pass encoder and decoder which performs: capturing; ingestion; compression (encoding); multiple video, audio, metadata and subtitle multiplexing to the container format; video, audio, metadata and subtitle synchronization; transcoding from state-of-the-art video and audio codecs to internal codecs of the container format; encryption; forward error correction; digital video recording; multicast and unicast streaming; decryption; multiple video, audio, metadata and subtitle demultiplexing from the container format; decompression (decoding) and multiple video, audio, metadata and subtitle playing, which enables video, audio, metadata and subtitle streaming and storage applications.




2.3.“CIFF Patents” shall mean: (i) the patents claiming the CIFF Codec, already granted in China and Serbia, as listed and identified in “Exhibit A,” attached hereto and, by the foregoing reference, incorporated into and made a part hereof; (ii) the patent applications claiming the CIFF Codec, pending in the USA, Canada, Europe, Japan and South Korea, as listed and identified in “Exhibit A,” attached hereto and, by the foregoing reference, incorporated into and made a part hereof; (iii) any and all divisional and continuing applications thereof; (iv) any and all patents issued on such applications; and (v) any and all reissues of any such patents.




2.4.“CIFF Software” shall mean software embodiment(s) of the CIFF Codec consisting of a software library in the form of an object code or a source code, and a demonstration application in the form of an object code or a source code, using one of the following arithmetic for selected functions: integer, floating-point or enhanced instructions, like MMX, SSE, SSE2, etc.




2.5.“Software upgrade” shall mean an upgrade of the CIFF Software.




2.6.“CIFF Hardware” shall mean hardware embodiment(s) of the CIFF Codec in the form of an RTL core, Verilog or VHDL hardware design, for the application in ASIC technology or programmable logic devices, like FPGA, EPLD and the like.




2.7.“Hardware upgrade” shall mean an upgrade of the CIFF Hardware.




2.8.“CIFF System” shall mean at least one of CIFF Software and CIFF Hardware.




2.9.NGIS Product” is any product used by NGIS or sold by NGIS to a Client.




2.10.“Product Agreement” shall mean NGIS Product with the CIFF System development, testing and marketing agreement between NGIS, CIFF TC and CIFF BE.




2.11.“Client” shall mean a third party willing to buy or a buyer of the NGIS Product with the CIFF System.




2.12.“Client Agreement” shall mean NGIS Product with the CIFF System purchasing agreement between NGIS and a Client.




2.13.“Exclusivity Fee” shall mean a fee for the exclusive use of the CIFF System in a particular NGIS Product. The exclusivity can be: unlimited, time limited, Client limited or territory limited exclusivity, as well as non-exclusivity (for which Exclusivity Fee is void), according to the governing Product Agreement.




2.14.“NRE (Non-Recurring Engineering) Fee” shall mean a fee for the customization of the CIFF System for a particular NGIS Product.




2.15.“Product fee” shall mean a fee paid per each CIFF System product.




2.16.“Upgrade Fee” shall mean a fee for a Software Upgrade or a Hardware Upgrade.




2.17.“Support Fee” shall mean a fee for a technical, commercial or general consulting support.




2.18.“All Fees” shall mean Exclusivity Fee, NRE Fee, Product Fee, Upgrade Fee and Support Fee.




2.19.“Fiduciary” shall mean a trusted fiduciary for the distribution and accounting of All Fees to CIFF TC and CIFF BE.




2.20.“Third Party Software” means any software not owned and controlled by Parties, which requires obtaining rights from such third party.




2.21.“Trade Secrets” shall mean any information of either Party without regard to form, marked as “Trade Secrets” or any technical or non-technical data, designs, prototypes, devices, methods, techniques, drawings, processes, procedures, programs, codes, plans, studies, compilations, patterns, formulas, financial data, financial plans, product plans, specifications regarding current or proposed products or services, list of actual or potential customers or suppliers that: (i) derives independent economic value, actual or potential, from not being generally known or readily ascertainable by other Persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.




2.22.“Confidential Information” shall mean any information of either Party without regard to form, marked as “Confidential” or any data or information, other than Trade Secrets, that is of value to a Party hereto and is not generally known to competitors of such Party, comprising: scientific, technical, engineering, concept, strategy, financial, business, economic, marketing, pricing, sales, client, agreement, investor or employment information.




2.23.“Proprietary Information” shall mean Confidential Information and Trade Secrets.




2.24.“Disclosing Party” shall mean the Party disclosing Proprietary Information.




2.25.“Receiving Party” shall mean the Party receiving Proprietary Information.

3.NGIS’ OBLIGATIONS

NGIS will perform the following tasks during the term of this Agreement:



3.1.Financing of marketing to NGIS Clients of the CIFF System that will be integrated with NGIS Products, covering Sections 4.4. and 5.1. and including Reasonable Out of Pocket Expenses.




3.2.Marketing to NGIS Clients of the CIFF System that will be integrated with NGIS Products.




3.3.Drafting and negotiating of Product Agreements with CIFF TC and CIFF BE.




3.4.Cooperating with CIFF TC and CIFF BE in the integration of NGIS Products with the CIFF System.




3.5.Financing of the development, testing, production, marketing, sale and distribution of NGIS Products with the CIFF System, covering Sections 4.7. and 5.4. and including Reasonable Out of Pocket Expenses.




3.6.Marketing of NGIS Products with the CIFF System.




3.7.Drafting and negotiating of Client Agreements.




3.8.Providing invitation letter(s) for obtaining US Visa for director(s) and employee(s) of CIFF TC, necessary for drafting and negotiation of this Agreement and Product Agreements, marketing to NGIS Clients of the CIFF System that will be integrated with NGIS Products, the integration of NGIS Products with the CIFF System and marketing of NGIS Products with the CIFF System.




4.CIFF TC’S OBLIGATIONS

CIFF TC will perform the following tasks during the term of this Agreement:



4.1.Designing or having designed of the CIFF System.




4.2.Making or having made of the CIFF System.




4.3.Financing of designing and making of the CIFF System.




4.4.Cooperating with NGIS and CIFF BE in marketing of the CIFF System that will be integrated with NGIS Products.




4.5.Drafting and negotiating of Product Agreements with NGIS and CIFF BE.




4.6.Cooperating with NGIS and CIFF BE in the integration of NGIS Products with the CIFF System.




4.7.Cooperating with NGIS and CIFF BE in testing and marketing of NGIS Products with the CIFF System.




5.CIFF BE’S OBLIGATIONS

CIFF BE will perform the following tasks during the term of this Agreement:



5.1.Cooperating with NGIS and CIFF TC in marketing of the CIFF System that will be integrated with NGIS Products.




5.2.Drafting and negotiating of Product Agreements with NGIS and CIFF TC.




5.3.Cooperating with NGIS and CIFF TC in the integration of NGIS Products with the CIFF System.




5.4.Cooperating with NGIS and CIFF TC in testing and marketing of NGIS Products with the CIFF System.




6.FEES




6.1.NGIS will pay All Fees to CIFF TC and CIFF BE, negotiated in the governing Product Agreement.




6.2.All Fees will be based on implemented features of the CIFF System and a type and quantity of produced, used, sold, leased or distributed NGIS Products with the CIFF System.




6.3.NGIS will not be required to pay the following fees:




6.3.1. A Software Upgrade Fee for fixing a problem.




6.3.2. A Hardware Upgrade Fee for fixing a problem.




6.4.NGIS will cover expenses of CIFF TC and CIFF BE from Sections 4.4, 4.7, 5.1. and 5.4., including Reasonable Out of Pocket Expenses.




6.5.NGIS shall be entitled to an initial free-of-charge support from CIFF TC and/or CIFF BE via personal presence in NGIS’ premises, not to exceed defined number of hours per day and not to exceed defined number of business days per calendar month or per calendar year, provided that the Exclusivity Fee (if exists) and NRE Fee have been paid and any Reasonable Out of Pocket Expenses have been, or will be, reimbursed, according to the governing Product Agreement.




6.6.NGIS will be entitled to an additional support from CIFF TC and/or CIFF BE via personal presence in NGIS’ premises, at a defined Support Fee rate per hour, not to exceed defined number of hours per day and not to exceed defined number of business days per calendar month or calendar year, plus any Reasonable Out of Pocket Expenses, according to the governing Product Agreement.




6.7.NGIS shall be entitled to an initial free-of-charge support from CIFF TC and/or CIFF BE via E-mail, telephone, video conferencing or any other medium of communication mutually agreed between Parties, not to exceed defined number of hours per day and not to exceed defined number of business days per calendar month or per calendar year, provided that the Exclusivity Fee (if exists) and NRE Fee have been paid according to the governing Product Agreement.




6.8.NGIS will be entitled to an additional support from CIFF TC and/or CIFF BE via E-mail, telephone, video conferencing or any other medium to communication mutually agreed between Parties, at a defined Support Fee rate per hour, not to exceed defined number of hours per day and not to exceed defined number of business days per calendar month or calendar year, according to the governing Product Agreement.




7.SHARING OF ALL FEES




7.1.All Fees received from a Client pursuant to the Client Agreement will be shared between NGIS, CIFF TC and CIFF BE, according to the governing Product Agreement.




7.2.All Fees received from NGIS pursuant to the Product Agreement will be shared between CIFF TC and CIFF BE, as follows:

7.2.1. 60% to CIFF TC

7.2.2. 40% to CIFF BE




7.3.NGIS will pay All Fees to CIFF TC and CIFF BE by wire transfer, in immediately available funds in U.S. dollars, Euros or other currencies, to the bank account of the Fiduciary designated in writing by CIFF TC and CIFF BE.




7.4.NGIS will pay funds covering expenses of CIFF TC and CIFF BE from Sections 4.4, 4.7, 5.1. and 5.4., including Reasonable Out of Pocket Expenses, to CIFF TC and CIFF BE by wire transfer, in immediately available funds in U.S. dollars, Euros or other currencies, to the bank account of the Fiduciary designated in writing by CIFF TC and CIFF BE.




7.5.CIFF TC and CIFF BE may, at any time, change the accounts to which payments are to be made, by providing to NGIS a written notice of the new account and revised wire instructions, executed by persons duly authorized by both CIFF TC and CIFF BE to provide such notice.




7.6.The Fiduciary will distribute and account for All Fees and funds to CIFF TC and CIFF BE according to this Article.




7.7.Each Party will be responsible for its own costs in carrying out its obligations under this Agreement.




8.INTELLECTUAL PROPERTY




All IP in the CIFF Codec, CIFF Patents and the CIFF System is and shall remain the sole and exclusive property of CIFF TC. If CIFF TC hereafter makes any improvements or upgrades of the CIFF Codec, CIFF Patents and the CIFF System and obtain granted patents claiming such improvements or upgrades, such patents shall be automatically added to the list of CIFF Patents set forth in Exhibit A.




All IP in the NGIS Products without the CIFF System is and shall remain the sole and exclusive property of NGIS.




All IP in the NGIS Product with the CIFF System resulting from the combination and integration of the NGIS Product with the CIFF System including, without limitation, any and all technological means and methods used for implementing such integration, and the resulting interface between the NGIS Product and the CIFF System (hereinafter referred to collectively as the “Integration Technology”) shall be and shall remain the intellectual property of NGIS, CIFF TC and CIFF BE, according to the governing Product Agreement.




All decisions that may be required relating to the Integration Technology, will be made by NGIS, CIFF TC and CIFF BE, such as by way of illustration and not limitation: (i) whether to file applications for patents claiming any or all of the Integration Technology, and if so, in which countries; (ii) the prosecution of any such patent applications filed including, without limitation, the selection of patent counsel and the arguments that may need to be made in connection with such patent prosecution; (iii) the maintenance of any patents granted on such patent applications and (iv) the enforcement of any patents granted against infringers thereof. All fees and costs incurred in connection with any of the foregoing activities undertaken by the joint decision of NGIS, CIFF TC and CIFF BE shall be shared according to the governing Product Agreement.




If NGIS, CIFF TC and CIFF BE hereafter makes any improvements or upgrades of the Integration Technology, and if NGIS, CIFF TC and CIFF BE obtain any patents claiming such improvements or upgrades, such patents, any new Proprietary Information relating to such improvements and upgrades shall be jointly owned by NGIS, CIFF TC and CIFF BE, each holding an individual interest according to the governing Product Agreement. Furthermore, such patents shall be automatically added to the list of patents set forth in the appropriate Exhibit B of this Agreement, with the understanding that such patents are jointly owned by NGIS, CIFF TC and CIFF BE.




In the spirit of cooperation and collaboration, (i) CIFF TC shall disclose to NGIS, in a timely manner, any and all improvements and upgrades of the CIFF System and make a reasonable effort to effectuate an integration with respect thereto; and (ii) NGIS, CIFF TC and CIFF BE shall disclose to each other the design and configuration of the Integration Technology embodied in the NGIS Product with the CIFF System; and (iii) NGIS, CIFF TC and CIFF BE shall disclose to each other, in a timely manner, any and all improvements and upgrades of the Integration Technology.




9.TERM; TERMINATION




This Agreement shall commence on the Effective Date and continue indefinitely for so long as Parties are willing to cooperate (the “Term”), unless terminated earlier in accordance with the provisions of this Article.




Any Party’s material breach of this Agreement shall entitle any of the other Parties to notify the breaching Party of such other Party’s intention to terminate this Agreement before the expiration of the Term. If the breaching Party has failed to cure its breach within one hundred twenty (120) days after such notice, then the other Party may terminate this Agreement by written notice to take effect immediately.




This Agreement shall terminate automatically, without any notice or other action being required of Parties, if at least one Party files or has filed against it a petition under an applicable Bankruptcy Act, or if at least one Party makes an assignment for the benefit of creditors, has a receiver appointed for it or any of its assets, or otherwise takes advantage of any statute or law designed for relief of debtors.




Upon early termination of this Agreement, all obligations, duties and covenants of the Parties, except those specifically designated as surviving such termination in this Article shall be fully discharged. Notwithstanding early termination of this Agreement, the Product Agreements shall continue in full force and effect in accordance with its own terms, conditions and provisions. However, by virtue of the termination of this Agreement, Parties will not enter into any new Product Agreements thereafter.




Following early termination of this Agreement, the Parties shall jointly undertake, by all reasonable means and manner, and with mutual cooperation, to wind up in an orderly manner any and all transactions and activities of any kind undertaken pursuant to this Agreement which are still pending on the effective date of expiration or early termination, as the case may be.




Sections 1, 2, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 shall survive the termination of this Agreement.




10.ASSIGNMENTS

No purported assignment of this Agreement or the delegation of any duties hereunder by any Party to a third party, except an assignment or delegation of duties to a direct or indirect wholly-owned subsidiary of such Party, shall have any force or validity whatsoever, except, unless and until approved in writing by the other Party.



11.COVENANTS, REPRESENTATIONS AND WARRANTIES

As of the Effective Date, each Party represents and warrants to the other Party as follows:



That it (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated; (ii) has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and is contemplated in this Agreement; (iii) has sufficient legal rights necessary for it to fulfill its obligations under this Agreement; and (iv) there are no liens, conveyances, mortgages, assignments, encumbrances or other agreements to which either Party is bound, which would prevent or impair the full exercise of this Agreement.




That all necessary consents, approvals and authorizations of all governmental authorities and other persons or entities required to be obtained by such Party in connection with entry into this Agreement have been obtained.




That it is not presently the subject of a voluntary or involuntary petition in bankruptcy or the equivalent thereof, does not presently contemplate filing any such voluntary petition, and does not presently have reason to believe that such an involuntary petition will be filed against it. Notwithstanding the foregoing, Parties agree to use their commercially reasonable efforts to guarantee each other the option to maintain the obligations requested in the Product Agreements hereunder in the event any Party become the subject of a voluntary or involuntary petition in bankruptcy or the equivalent thereof during the term hereunder, including, without limitation, taking all reasonable steps requested by other Parties to support the protections afforded to other Parties pursuant to 11 U.S.C. sec 365(n) of the U.S. Federal Bankruptcy Code or equivalents thereof.




11.1.The CIFF System is provided to NGIS “as is” basis and CIFF TC disclaim all warranties including, but not limited to, merchantability, fitness for a particular purpose and non-infringement of any third party’s IP rights, or the absence of any defects, latent or otherwise, in the CIFF System.




11.2.NGIS and CIFF BE will acknowledge that CIFF TC has made no representations or warranties of any kind regarding technology used in the CIFF System; more specifically, without limitation, CIFF TC has made no representations or warranties that the CIFF System is free from defects, latent or otherwise; or that CIFF TC’s services hereunder will be adequate or sufficient.




11.3.Any Third Party Software, if incorporated into the CIFF System and provided to NGIS will be provided with an explanation of any terms, conditions or restrictions imposed by the vendor of the Third Party Software. If necessary, CIFF TC will obtain and assign to NGIS any releases, permissions or rights to any Third Party Software, if incorporated into the CIFF System, and if such releases, permissions or rights exist.




11.4.NGIS and CIFF TC will acknowledge that CIFF BE has made no representations or warranties of any kind regarding marketing of the CIFF System; more specifically, without limitation, CIFF BE has made no representations or warranties that marketing of the CIFF System if free from defects, latent or otherwise; or that CIFF BE’s services hereunder will be adequate or sufficient.




11.5.CIFF TC and CIFF BE will acknowledge that NGIS has made no representations or warranties of any kind regarding financing, development, production, testing, marketing, sale, distribution and operation of NGIS Products with the CIFF System; more specifically, without limitation, NGIS has made no representations or warranties that financing, development, production, testing, marketing, sale, distribution and operation of NGIS Products with the CIFF System if free from defects, latent or otherwise; or that NGIS’ services hereunder will be adequate or sufficient.




11.6.Other than the express warranties of this Article, there are no other warranties, express or implied.




12.PROPRIETARY INFORMATION




12.1.During the Term of this Agreement, Parties desire to disclose to each other Proprietary Information relating to the uses, capabilities, technical performance, applications and integration of the CIFF System in NGIS Products, for the sole Purpose of fulfilling the obligations under this Agreement and governing Product Agreements.




12.2.Parties each agree to employ reasonable efforts to keep in confidence and prevent the disclosure to any person not having a “need to know” the Proprietary Information to carry out the defined Purpose. The Parties shall not disclose the Proprietary Information outside their legal entity. The Receiving Party shall not use the Proprietary Information for purposes other than the defined Purpose.




12.3.The Receiving Party shall protect the Proprietary Information of the Disclosing Party using the same degree of care used to protect its own Proprietary Information of comparable importance, but in no event less than a reasonable care, in order to prevent the unauthorized use, dissemination or publication of the Proprietary Information.




12.4.Neither Party will be liable for disclosure or use of such information if the same is:




12.4.1.in the public domain at the time of disclosure, or is subsequently made available to the general public without restrictions by the Disclosing Party;




12.4.2.known to the Receiving Party at the time of disclosure without restrictions on its use or independently developed by the Receiving Party without the breach of this Agreement, and there is adequate documentation to demonstrate either condition;




12.4.3.disclosed without restrictions to the Receiving Party from a source other than the Disclosing Party who is not under any obligation of confidentiality with respect to such information;




12.4.4.used or disclosed with the prior written approval of the Disclosing Party; or




12.4.5.used or disclosed after a period of five (5) years after the date of receipt.




12.5.The Receiving Party is obligated to inform the Disclosing Party within fifteen (15) days from the moment of notice of any of the conditions defined in Section 12.4.1 to 12.4.3.




12.6.In the event any governmental or judicial order requires the disclosure of Proprietary Information, the Receiving Party shall promptly but in any event prior to such disclosure notify the Disclosing Party of the requirement and provide reasonable aid and assistance if the Disclosing Party decides to oppose such government or judicial order. The Receiving Party shall not be liable for any disclosure of Proprietary Information made pursuant to such government or judicial order if it has complied with the provisions of this Section.




12.7.No sheet or page of any written material will be labeled Proprietary Information which is not, in good faith, believed to contain Proprietary Information. A Receiving Party hereunder will have no obligation with respect to any portion of any written material which is not so labeled, or any information received orally or visually unless it is identified by the Disclosing Party at time of disclosure as being Proprietary Information and a written summary of such oral or visual communication, specifically identifying the items of Proprietary Information, is furnished to the Receiving Party within thirty (30) business days after the initial disclosure.




12.8.If any portion of Proprietary Information falls within any one of the above exceptions, the remainder will continue to be subject to the foregoing prohibitions and restrictions.




12.9.Prior to disclosure of Proprietary Information to any employee, each Party shall fully advise such employee that he or she is required to hold in confidence all information and that such information is not to be disclosed to persons outside his or her organization or to any co-employee not directly concerned with furthering the purpose. The Parties shall maintain between themselves and their officers, employees and consultants duly binding agreements by such persons as may be necessary to fulfill their obligations under this Agreement.




12.10.All documents, drawings and writings disclosing Proprietary Information and all copies thereof shall be returned promptly by a Receiving Party to the Disclosing Party upon receipt of a request therefore or following termination of this Agreement, except that the Receiving Party may keep one archival copy for evidentiary purposes only.




12.11.The Receiving Party will comply with all applicable United States and foreign laws and regulations concerning export control. Neither Party shall export directly or indirectly any technical data or products received or the direct product of such technical data acquired from the other Party under this Agreement except in compliance with the applicable export control laws and regulations of the United States and any foreign country, including obtaining any necessary licenses or approvals. In the event disclosure of Proprietary Information is made to the Receiving Party by the Disclosing Party pursuant to any export authorization, license, permit or exemption, the Receiving Party shall comply strictly with any and all applicable provisos, restrictions, conditions, limitation, and obligations imposed by any such applicable authorization, licenses, permit or exemption, and will not export or re-export, transfer or disclose any Proprietary Information of the Disclosing Party received, or the direct product of such Proprietary Information, in any manner to any foreign national, foreign company, foreign entity or foreign country except in compliance with all such applicable export control license, laws, regulations, provisos, restrictions, conditions, limitations or other obligations of the United States of America and any other country.




12.12.The Receiving Party represents, warrants and certifies that the information received from the Disclosing Party under this Agreement will in no event be, shipped, transferred or re-exported, directly or indirectly, to proscribed, embargoed, or prohibited countries or their nationals, denied destinations, nor be used for nuclear activities, chemical biological weapons or missile project. Proscribed countries, destinations, and people are set forth in the United States Export Administration Regulations, and the Office of Foreign Asset Control’s Specially Designated Nationals list, and are subject to change without further notice.




13.INDEMNIFICATION AND LIMITATION OF LIABILITY




13.1.Each Party shall indemnify, defend and hold the other Party harmless from and against any and all damages arising out of or resulting from any breach of any of the representations or warranties made by the Indemnifying Party.




13.2.Clients will be required to agree to defend and indemnify Parties, and otherwise to hold them harmless, against any claims, demands, actions, or suits (hereinafter “Claims”) which may be made or brought against either or both of them by third parties, or liabilities which may be imposed upon either or both of them anywhere, for any acts, omissions, defaults or negligence on the part of a Client, its principals, employees, agents or others relating to: (i) the manufacture of the products which incorporate the NGIS Product with the CIFF System, hereunder including, without limitation, defects in the workmanship and/or materials used for or in connection with of such NGIS Product with the CIFF Systems; (ii) alleged or actual defects in the design of products which incorporate NGIS Products with the CIFF System manufactured by utilization of, and in accordance with, the deliverables; (iii) the operation and conduct of Client’s business including, without limitation, any representations and/or warranties made or given by a Client to its customers with respect to the NGIS Product with the CIFF System, Client’s employment practices, its trade and sales practices, its advertising, promotion and marketing of products which incorporate the NGIS Product with the CIFF System; and (iv) any services rendered by a Client in connection with the NGIS Product with the CIFF System.




13.3.Promptly after receipt by an Indemnified Party of notice of any Claim, which could give rise to a right to indemnification pursuant to Section 13.1, the Indemnified Party shall give the Indemnifying Party written notice describing the Claim in reasonable detail. The failure of an Indemnified Party to give notice in the manner provided herein shall not relieve the Indemnifying Party of its obligations under this Article, except to the extent that such failure to give notice materially prejudices the Indemnifying Party’s ability to defend such Claim. The Indemnifying Party shall have the right, at its option, either to compromise or defend, at its own expense and by its own counsel, any such matter involving the asserted liability of the Party seeking such indemnification, except as provided below. The Indemnifying Party shall promptly notify the Indemnified Party in writing of its intention to either compromise or defend such matter, and the Indemnified Party agrees to cooperate fully with the Indemnifying Party and its counsel in the compromise or defense against any such asserted liability. All costs and expenses incurred in connection with such cooperation shall be borne by the Indemnifying Party.




13.4.The amount of any damages for which indemnification is provided under this Article shall be increased or reduced, as the case may be, by any insurance proceeds received and any other amount recovered by the Indemnified Party with respect to the Claim for which indemnification is provided.




13.5.In no event shall any Party be liable for any consequential, special, or indirect damages or lost profits sustained by reason of, or in connection with this Agreement, whatever shall be the cause, and the cause, and regardless of whether a Party has been advised of the possibility of such damages. This limitation of liability shall apply regardless of the form of action, whether in contract, tort, warranty, strict liability, or negligence (including without limitation active and passive negligence).




13.6.Clients will be required to procure from a financially sound and reputable insurance carrier a products liability insurance policy with a policy limit of no less than a minimum single incident amount, set forth in the Client Agreement for any single incident, and a minimum aggregate amount, set forth in the Client Agreement for all incidents, with a deductible no greater than a maximum deductible amount, set forth in the Client Agreement. The Client will be required to alone pay the premiums for such insurance. A Client will be required to cause its insurance carrier to name Parties as “additional insurers” under such policy using the certificate of liability insurance. As soon as practical following the execution of this Agreement, Clients will be required to submit to Parties a Certificate of Insurance issued by such insurance carrier, certifying that the above-required insurance is in force. Thereafter, Clients will be required to maintain such insurance in full force and effect by paying the premium due for its annual renewal during the Term of this Agreement. Further, Clients will be required to cause such insurance carrier to provide to Parties a copy of each and every communication sent to a Client relating to such insurance, such as, by way of illustrations only, any notice of: (i) a premium being due; or (ii) the imminent or actual lapse or cancellation of the policy for any reason.




13.7.The provisions of this Article shall survive any termination of this Agreement with respect to actions of the Parties during the term of this Agreement. The Indemnified Party’s rights under this Article shall not be deemed to have been waived or otherwise affected by such Indemnified Party’s waiver of the breach of any representation, warranty, agreement or covenant contained in or made pursuant this Agreement, unless such waiver expressly and in writing also waives any or all of the Indemnified Party’s right under this Article.




14.DISPUTE RESOLUTION




14.1.Negotiation of Disputes; Mediation. Any Party, at any time, may notify another Party of the existence of a dispute arising out of or related to this Agreement, including any claims or disputes with respect to performance, interpretation, construction, or breach of any terms or conditions hereunder, or with respect to joint decision required of Parties. Parties will try to resolve any claim or dispute by phone, fax and E-mail, as soon as reasonably possible (and in any event no later than one hundred twenty (120) days after such notice.




14.2.Meeting. In the event the Parties fail for any reason to resolve any claim or dispute within one hundred twenty (120) days of commencing the negotiations contemplated by Section 14.1, senior executives of the Parties with decision making authority will meet in Washington DC, USA or Solomons, MD, USA or Belgrade, Serbia, or such other city as may be agreeable to the Parties and will enter into good faith negotiations aimed at resolving the dispute. The Parties, either at the outset of their negotiations under this Article or at any time thereafter, may agree to submit any unresolved dispute to a sole mediator selected by the Parties. Any such mediation shall be non-binding.




14.3.Arbitration. In the event the Parties fail for any reason to resolve any claim or dispute within one hundred twenty (120) days of commencing the negotiations contemplated by Section 14.2, such claim or dispute shall be resolved by binding arbitration in accordance with the then prevailing rules for commercial arbitration of the International Chamber of Commerce (Paris) (hereinafter “ICC”), subject to the following:




14.3.1.Any Party may submit the same to arbitration by delivery of written notice of demand for binding arbitration to the other Party, describing the claim or dispute. Upon the delivery of such notice of demand for binding arbitration, arbitration shall be commenced and conducted as follows:




14.3.2.The Parties shall request that the arbitrators conduct any such arbitration in an expedited fashion in order to complete the arbitration proceeding within one (1) year of the submission of the dispute to arbitration. The Parties shall use their commercially reasonable efforts to cooperate with the arbitrators to complete the arbitration in accordance with the aforestated one (1) year time period.




14.3.3.The claim or dispute shall be resolved by a panel of three impartial arbitrators; one arbitrator shall be selected by one Party. Any vacancy existing thirty (30) days after the notice of a demand (or at any time during the proceedings which is not filled within thirty days) shall be filled by the ICC subject to the consent of the Parties, such consent not to be unreasonably withheld (with the ICC promptly deciding whether consent is unreasonably withheld). By way of example, any person who (or whose spouse or relative) is a present or past employee, officer, director, partner, shareholder, investor, legal counsel, consultant or agent of either Party, shall be deemed to be partial and to have a conflict of interest and may not be appointed an arbitrator. All arbitrators shall be admitted to the practice of law in the jurisdiction in which the arbitration is held (unless the arbitration relates primarily to rights under specific foreign laws, in which case the independently selected arbitrator must be admitted to practice in such jurisdiction), and at least one of the arbitrators shall have substantial experience in the field of telecommunications law.




14.3.4.All arbitration proceedings shall be conducted in English and at a neutral site as the Parties may otherwise agree.




14.3.5.The arbitrators are empowered to render an award of general compensatory damages and equitable relief but shall not have the power to: (i) modify the terms of this Agreement or any agreement entered into pursuant to this Agreement, (ii) enjoin any Party at any time from manufacturing, using, or marketing any product, providing any services, or performing its obligations to third parties, (iii) increase any compensation, prices and payments specified and agreed to under this Agreement, (iv) invalidate any patent, or (v) award any exemplary or punitive damages or penalties.




14.3.6.The decision of a majority of the three arbitrators shall be final, binding and enforceable in any court of competent jurisdiction.




14.3.7.The cost of the arbitration proceedings, including without limitation the arbitrators’ compensation and expenses, hearing room charges, and court reporter transcript charges, shall be borne by the Parties to the dispute equally or otherwise as the arbitrators may determine. The arbitrators may award the substantially prevailing Party part or all of its reasonable attorney’s fees and costs incurred in connection with the arbitration.




14.3.8.The hearing shall be conducted to preserve its privacy and to allow reasonable due process. The arbitrators shall establish the procedural rules in accordance with the rules of the ICC.




14.3.9.No arbitration shall include, by consolidation, joinder, or in any manner, any additional person not a party to this Agreement (other than Affiliates of such Party, which Affiliates may be included in the arbitration), except by written consent of the Parties.




14.3.10.In the event that, for any reason, any of the provisions of this Section 14.3 is held by a court of last resort to be inapplicable to a claim or dispute relating to this Agreement, any such claim or dispute will be presented only in a court in the State of Virginia, USA, State of Maryland, USA or Belgrade, Serbia or as the Parties may otherwise agree.




14.3.11.Notwithstanding the foregoing, either Party may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration agreement and without any abridgment of the powers of the arbitrators.




15.MUTUAL INTENT




15.1.The Parties might make decision to establish various Application companies, which will develop, produce, test, market, sell and/or distribute various applications by combining NGIS Products and the CIFF System with other technologies in order to provide faster introduction of applications to the worldwide market, and secure the integrity and performance of developed systems and products.




15.2.In case that the decision from Section 15.1. is made, the Parties will identify in the US and internationally, preferred hardware and software engineers, network and data communications engineers, and design teams, to develop, test, and integrate application products. The Parties with the technology team specialists shall coordinate the installation of these systems and may provide follow-up maintenance and training when required by our clients.




15.3.In case that the decision from Section 15.1. is made, the Parties are willing to sell any of the Application companies developed, to a prospective buyer under favorable market conditions, i.e. after successful development of its business.




16.GENERAL PROVISIONS




16.1.All notices to, demands, consents, communications or written Proprietary Information which any Party may desire or may be required to give to the other must be in writing, shall be effective upon receipt after having been sent by registered or certified mail or sent by facsimile transmission, and shall be effective upon receipt after having been delivered prepaid to a reputable international delivery service or courier or sent by facsimile transmission; and addressed to the address of the Party designated below. Receipt shall be presumed on the date of proper transmission as to facsimile transmission and otherwise on the date of actual delivery. The advance copy must be sent to the E-mail address of the Party designated below.

For notice to NGIS:

James B. Godwin III

Northrop Grumman

2340 Dulles Corner Blvd

Herndon, VA 20171, USA

E-mail: james.godwin@ngc.com

Fax: +1-703-561-4610 (?)


For notice to CIFF TC:

Dr. Milan Prokin

Dr. Agostina Neta 76/64

11070 Belgrade, Serbia

E-mail: proka@el.etf.rs

Fax: +381-11-7188-749


For notice to CIFF BE:

Michael Collins

P.O.Box 521

Solomons, MD 20688, USA

E-mail: mc@ciffbe.com

Fax: +1-410-414-8496



16.2.No failure or delay to act upon any default or to exercise any right, power or remedy hereunder will operate as a waiver of any such default, right, power or remedy.




16.3.This Agreement constitutes the entire understanding of the Parties with respect to its subject matter and supersedes all prior oral or written negotiations, agreements and understandings. This Agreement may not be modified or amended except in writing duly signed by authorized persons on behalf of the Parties hereto.




16.4.If any provision of this Agreement is or becomes or is deemed invalid, illegal or unenforceable under the applicable laws or regulations of any other jurisdiction, such provision will be deemed amended to the extent necessary to conform to applicable laws or regulations or, if it cannot be so amended without materially altering the intention of the Parties, it will be stricken, and the remainder of this Agreement will remain in full force and effect.




16.5.This Agreement does not constitute either Party hereto the agent of the other Party for any purpose whatsoever, nor does either Party hereto have the right or authority to assume, create or incur any liability of any kind, express or implied, against or in the name or on behalf of the other Party. Nothing contained in this Agreement shall be construed to create a partnership or joint venture between the Parties.




16.6.The English language form of this Agreement shall control and determine its interpretation.




16.7.The captions used in this Agreement are for convenience and reference only, and shall not affect the construction or interpretation of this Agreement. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. All references to any period of days shall be deemed to be a reference to calendar days unless otherwise specified.




16.8.This Agreement shall be governed by and construed in accordance with the substantive law of the State of Virginia without regard to its conflict of law rules.




16.9.This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, legal representatives, assigns and trustees.




16.10.This Agreement will be executed in six (6) counterparts, one third of which will belong to each Party, while each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same instrument. The exchange of a fully executed Agreement by fax or e-mail, whether by separately executed counterparts or otherwise, shall be binding on the Parties.




16.11.Any and all legal and equitable remedies to which either Party may be entitled shall be cumulative.




16.12.The Parties, and each of them, hereby represent and warrant that they: (i) have read this Agreement; (ii) have had the advice of counsel of their own choosing with respect to the terms and conditions hereof; and (iii) fully understand the legal significance of such terms and conditions.




17.FORCE MAJEURE




17.1.Except for the organization of sharing of All Fees defined herein, neither Party shall be held liable for failure to fulfill its obligations under this Agreement, if such failure arises out of cause beyond the control and without the negligence of the Party otherwise chargeable with failure, delay or default, including without limitation action or inaction of governmental, civil, or military authority; fire; strike, lockout, or other labor dispute; flood; war; riot; earthquake; natural disaster; breakdown of public or common carrier communication facilities.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the Effective Date.


Northrop Grumman Information Systems

Date: October 1, 2010 By ____________________________________________

JB Godwin III, VP, Cybersecurity and Systems Integration, Defense Division

CIFF Technology Corporation

Date: October 1, 2010 By ____________________________________________

Dr. Milan Prokin, Director


CIFF Business Enterprises LLC

Date: October 1, 2010 By: ____________________________________________



Michael Collins, President

EXHIBIT A



LIST OF GRANTED CIFF PATENTS

Country

Filing date

Application No.

Publication No.

Granted

Serbia

17.09.2002.

P-696/02

49934

11.03.2008.

CHINA

16.05.2005.

ZL 03825219.8

CN 100401778C

9.07.2008.


LIST OF PENDING CIFF PATENT APPLICATIONS

Country

Filing date

Application No.

Publication No.

Comment

PCT

05.09.2003.

PCT/YU2003/000027

WO2004028142 A3

International

USA

16.03.2005.

US App. No. 10/527,963

US2006/0053004 A1

National phase

CANADA

16.03.2005.

CA App. No. 2,499,212

CA2499212

National phase

JAPAN

12.05.2005.

JP App. No. 2004-568967

JP100106448

National phase

KOREA

16.03.2005.

KR App. No. 10-2005-7004631

KR20050052505

National phase

EU

16.04.2005.

EU App. No. 03 819 106.0.

EP1604528 A3

National phase



EXHIBIT B



Initials _________ __________ __________ /




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