-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/ujM7Hcwlc9poatrXTQRebt8pLo/IguF4GZTPYot860BZpcLZG4iMyqwS1iD3L1 bYO361d4uZPMhX24+D0HWg== 0000950134-02-002976.txt : 20020415 0000950134-02-002976.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950134-02-002976 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020318 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED SECURITY SYSTEMS INC CENTRAL INDEX KEY: 0000741114 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 752422983 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11900 FILM NUMBER: 02594047 BUSINESS ADDRESS: STREET 1: 8200 SPRINGWOOD DR STE 230 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9724448280 MAIL ADDRESS: STREET 1: 8200 SPRINGWOOD DR SUITE 230 STREET 2: 8200 SPRINGWOOD DR SUITE 230 CITY: IRVING STATE: TX ZIP: 75063 8-K 1 d95591e8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) March 18, 2002 INTEGRATED SECURITY SYSTEMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 1-11900 75-2422983 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 8200 SPRINGWOOD DRIVE, SUITE 230, IRVING, TX 75063 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (972) 444-8280 (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On March 18, 2002, B&B Electromatic, Inc. ("B&B"), a wholly owned subsidiary of Integrated Security Systems, Inc. ("ISSI"), entered into a Patent Assignment and Technology Transfer Agreement (the "Agreement") with Quixote Corporation ("Quixote"). The Agreement transfers two patents and certain technology related to B&B's VT 6802 railroad barrier to Quixote for $350,000 in cash. Sales of this product since its inception have been insignificant to B&B. B&B anticipates a gain on the sale of the patents and technology of approximately $200,000, after fees and expenses related to the transaction, as well as future obligations under the Agreement. B&B also entered into a Non-Exclusive Patent License Agreement ("License Agreement") with Quixote on March 18, 2002, whereby B&B may utilize this technology for certain roadway and bridge applications. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of business acquired. Not applicable (b) Pro forma financial information. Not required to be disclosed. (c) Exhibits. 10.1 Patent Assignment and Technology Transfer Agreement, dated March 18, 2002 10.2 Non-Exclusive Patent License Agreement, dated March 18, 2002 -2- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Integrated Security Systems, Inc. ----------------------------------------- (Registrant) March 29, 2002 /s/ C. A. RUNDELL, JR.. - ------------------- ------------------------------------------ (Date) C. A. Rundell, Jr. Director, Chairman of the Board and Chief Executive Officer (Principal Executive and Financial Officer) -3- Exhibit Index
Exhibit Number Description - ------- ----------- 10.1 Patent Assignment and Technology Transfer Agreement, dated March 18, 2002 10.2 Non-Exclusive Patent License Agreement, dated March 18, 2002
EX-10.1 3 d95591ex10-1.txt PATENT ASSIGNMENT & TECHNOLOGY TRANSFER AGREEMENT EXHIBIT 10.1 PATENT ASSIGNMENT AND TECHNOLOGY TRANSFER AGREEMENT This Patent Assignment and Technology Transfer Agreement ("Agreement") is entered as of March 18, 2002 between Quixote Corporation ("Quixote"), a Delaware corporation with offices at One East Wacker Drive, 30th Floor, Chicago, Illinois and B&B Electromatic, Inc. ("B&B") a Delaware corporation with offices at 14113 Main Street, Norwood, Louisiana. WHEREAS, B&B through beneficial ownership of various intellectual property rights including patent rights, copyrights and various other arrangements has the right to assign the rights in certain assets including Patents, Documentation, Technology and Improvement rights (as hereinafter defined). WHEREAS, Quixote wishes to obtain full right, title and interest to the various Patent, Documentation, Technology and Improvement rights of B&B and B&B wishes to assign and transfer to Quixote all such rights under the terms and conditions hereinafter appearing. NOW, THEREFORE, for and in consideration of the mutual promises herein made, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions In this Agreement the following terms shall have the following meanings unless the context otherwise requires: 1.1 "Affiliate" means, with respect to a specified Person, any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person. 1.2 "Documentation" means all manuals, models, drawings, designs, diagrams, bills of material, manufacturing routers, vendor lists, computer programs and all other tangible technical information relating to the nature or operation of the Technology, including but not limited to 120 Volts single phase and 12 Volt technology, which might reasonably be of interest to either party. 1.3 "Licensed Territory" means the world. 1.4 "Patents" means: (a) any of the patents and patent applications listed on Exhibit A; (b) any additional patent issuing in any jurisdiction on any patent application listed on Exhibit A; (c) -1- any patents issuing as a result of a re-examination or reissue proceeding of any of the foregoing patents; (d) renewals, extensions and certificates of corrections of any of the foregoing patents; and (e) continuations, continuations-in-part, divisional or other applications claiming filing priority of the foregoing applications. 1.5 "Person" means any individual, partnership, corporation, limited liability company or other entity. 1.6 "Technology" means the Patents, the Documentation and trade secrets and know-how, skill and knowledge for thoroughfare-crossing guards as more particularly described and embodied in the Patents. 2. Transfer 2.1 Assignment of Patents. B&B hereby irrevocably assigns to Quixote exclusively throughout the Licensed Territory, all right, title and interest (choate or inchoate) in (i) the Patents, (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools and fixtures specifically acquired or designed for use with products embodying the Patents or to the development, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights and all other intellectual and industrial property rights of any sort and all business, contract rights, causes of action, and goodwill in, incorporated or embodied in, used to develop, or related to any of the foregoing, all as specified in Schedule A, attached hereto and made a part hereof B&B agrees to assist Quixote in every legal way to evidence, record and perfect the Section 2 transfer including executing the Patent Assignment attached hereto as Exhibit B and to apply for and obtain recordation of and from time to time enforce, maintain, and defend the assigned rights, all at Quixote's expense. 2.2 Technology, Documentation and Models. B&B hereby transfers or otherwise provides to Quixote, free and clear of all security interests, including any conditional sale or other title retention agreements, liens, changes, claims, pledges, exceptions, defects of title and other encumbrances of any kind, all Technology in its possession that has not previously been disclosed or transferred and which is necessary and desirable to Quixote to exploit the Technology to a standard at least equivalent to those being operated by B&B at the date hereof. Upon execution of this Agreement, B&B will deliver Quixote all Documentation in possession of B&B and the demonstration or exhibition physical model, specified as serial number CN5277 (the "Model"); provided, however, that Quixote shall allow B&B to use the Model for purposes of demonstration or exhibition as long as (i) B&B provides Quixote with reasonable notice, (ii) the Model is not currently used by Quixote, and (iii) B&B agrees to pay any freight cost to move the Model to any demonstration or exhibition site. Without prejudice to the generality of the foregoing, the transfer of Technology shall also include the following obligations: -2- a. B&B will train or consult with such personnel of Quixote as selected by Quixote for up to a total of one hundred and twenty (120) B&B man days within the first two (2) years from the date hereof on all matters relating to the Technology at B&B facilities in Norwood, Louisiana at no charge Quixote. b. Thereafter, B&B undertakes to train or consult with such additional personnel of Quixote as selected by Quixote at Quixote request on all matters relating to the Technology in such manner, at such locations, and at such reasonable rates as agreed by the parties at Quixote' s expense. 3. Transition Activities 3.1 Orders, Leads. B&B hereby assigns and transfers all orders, marketing leads and related materials pertaining to the railroad and railroad bridge industry to Quixote. Quixote shall pursue said leads and accept orders on terms and conditions it believes reasonable. 3.2 Manufacturing. With respect to sales by Quixote of the first four (4) crossings or for a period of one (1) year from the date hereof, whichever is sooner, B&B will manufacture the products for such orders. For purposes of this Agreement, a crossing will consist of two complete B&B VT6802 safety barriers, including all electronics plus one spare VT6802 arm. If the sale is for demonstration purposes, Quixote will pay B&B $65,000 per crossing. If the sale is pursuant to a third party purchase, but not for demonstration purposes, Quixote will pay B&B 90% of the net proceeds but not less than $90,000 per crossing for those products. 4. Consideration In consideration of the rights granted hereunder, Quixote hereby pays to B&B a lump sum payment of $350,000 cash at closing. The consideration described in this Section 4, Section 3 and the license agreement between Quixote and B&B, attached hereto and made a part hereof, shall be the only consideration required of Quixote with respect to the subject matter of this Agreement. 5. Representations and Warranties B&B represents and warrants to Quixote that: A. B&B is the sole owner of all rights, title and interest in and to the Technology including the Patents; B. B&B has not assigned, transferred, licensed, pledged or otherwise encumbered any of the Technology , including the Patents, or agreed to do so; -3- C. B&B has full power and authority to enter into this Agreement and to make the assignments as provided for herein; D. To the best of B&B's knowledge, there are no violations, infringements or misappropriations of any third party's rights (or any claim thereof) by the Patents or the Technology; E. Neither B&B nor any of its agents was acting within the scope of employment by any third party when conceiving, creating or otherwise performing any activity with respect to anything purportedly transferred or assigned herein; F. To the best of B&B's knowledge, there are no current challenges with respect to the patentability or validity of any claims of any existing patents or patent applications relating to the Patents or Technology; and Quixote acknowledges that neither it nor any affiliate has any current challenges with respect to the patentability or validity of any claims of any existing patents relating to the Patents or Technology; and G. The B&B railroad safety barriers currently being offered for sale are known as VT6802 and VT6802HD products, and meet the requirements of the Federal Highway Administration NCHRP-350, Test Level II guidelines and have been accepted by the Federal Railroad Authority. 6. Other Assurances 6.1 Andy Davis. B&B assumes all obligations currently owed or owed in the future to Andy Davis or his Affiliates (together "Davis") under a certain contract dated as of January 1, 2000(the "Davis Contract"). B&B shall defend, indemnify and hold Quixote harmless from any such claims that might arise under the Davis Contract. 6.2 Sales and Installations. B&B does not transfer or assign, and Quixote does not assume, any obligations with respect to B&B sales and installations, including but not limited to the installations in Santa Clara, California and Madison, Wisconsin. B&B shall defend, indemnify and hold Quixote harmless from any such claims that might arise from any such sales and installations. The B&B obligations with respect to the installation in Santa Clara, California include but are not limited to those obligations evidenced in a certain letter dated March 12, 2002 to the Santa Clara Valley Transportation Authority, a copy of which is attached hereto as Exhibit C. 7. Confidential Information B&B will not disclose any Technology, know-how, trade secrets, information or materials assigned hereunder or materials provided by Quixote provided such is Confidential Information. -4- "Confidential Information" is any information which has value due to the fact that such information is not generally known to the public. Confidential Information does not include any information, which (i) is generally to the public or that becomes generally available to the public through no fault on B&B's part after the assignment herein; or (ii) is received from a third party not associated with Quixote and having no obligation of confidentiality to Quixote; or (iii) is required to be disclosed by law. B&B may use Confidential Information only for the purposes (i) of manufacturing crossing guards pursuant to a license from Quixote or as provided in Section 3 hereof, or (ii) of maintaining the installations in Santa Clara, California and Madison, Wisconsin as provided in Section 6.2 hereof. B&B may not use non-confidential Technology, know-how, trade secrets, information or materials assigned hereunder or non-confidential materials provided by Quixote where such is restricted by license, patent rights, copyright, or other intellectual property rights. B&B recognizes and agrees that there is no adequate remedy at law for a breach of this Section, that such breach would irreparably harm Quixote and that Quixote is entitled to equitable relief (including, without limitations, injunctions) with respect to any such breach or potential breach in addition to any other remedies. 8. Patent Prosecution. The parties agree that Quixote has the sole and exclusive right to prosecute any and all patent applications and foreign equivalents of the Patents in the U.S and foreign countries. B&B will cooperate with Quixote in obtaining such patent rights and Quixote will pay all reasonable expenses. 9. Legal Actions 9.1 Quixote shall, at its sole discretion, pursue or defend any legal action brought in connection with the subject matter of this Agreement. In any legal suit or dispute, B&B agrees to cooperate fully with Quixote. At the request and expense of Quixote, B&B will provide access to all relevant personnel, records, papers, information, samples, specimens, etc., during regular business hours. 9.2 B&B shall promptly report in writing to Quixote any: a. known infringement or suspected infringement of any of the Patents, or b. known unauthorized use, infringement, suspected infringement, duplication, distribution, unauthorized use or other misappropriation of the Patents by a third party of which it becomes aware, and shall provide Quixote with any available evidence supporting said infringement, suspected infringement, duplication, distribution, unauthorized use or other misappropriation. -5- 10. General 10.1 This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without reference to the choice of law principles thereof. Any dispute arising under this Agreement shall be definitively and finally resolved by arbitration and judgment upon any award of arbitration may be entered in any court having jurisdiction thereof. Such arbitration shall be held in Chicago, Illinois and be in accordance with the rules of the American Arbitration Association. Any fees and expenses payable to the American Arbitration Association shall be borne by the losing party. 10.2 This Agreement is not assignable or transferable by B&B (whether by contract, by sale of stock or assets of B&B, or by merger or consolidation or any other legal means) without the prior written consent of Quixote, such consent not to be unreasonably withheld; any attempt to do so shall be void. Any notice, report, approval or consent required or permitted hereunder shall be in writing and will be deemed to have been duly given if delivered personally or mailed by first-class, certified U.S. mail, postage prepaid to the respective addresses of the parties as set above (or such other address as a party may designate by ten (10) days notice) or by facsimile transmission with evidence of receipt and a paper copy mailed to the receiving party by regular mail. Subject to the above, this agreement is binding on all successor, assigns or transferees. 10.3 If Quixote is unable after reasonable efforts to secure B&B's signature to any document it is entitled to under this Agreement, B&B hereby irrevocably designates and appoints Quixote and its duly authorized officers and agents, as its agents and attorneys-in-fact with full power of substitution to act for and on its behalf and instead of B&B, to execute and file any such document or documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by B&B. 10.4 If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity, or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby, and the remainder of the provisions of this Agreement shall remain in full force and effect. The parties shall endeavor in good faith negotiations to replace any illegal, invalid or unenforceable provision with a valid, legal and enforceable provision, the economic effect of which comes as close as possible to the illegal, invalid or unenforceable provision. 10.5 The terms of this Agreement are confidential and no press release or other written or oral disclosure of any nature regarding the terms of this Agreement shall be made by B&B without Quixote's prior written approval; however, approval for such disclosure shall be deemed given to the extent such disclosure is required to comply with governmental regulation. -6- 10.6 This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party (or such party's duly authorized agent) against whom enforcement of any such modification or amendment is sought. Either party may, only by an instrument in writing, waive compliance by the other party regarding any term or provision of this Agreement. The waiver by a party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. 10.7 The parties are independent contractors. Nothing stated in this Agreement shall be deemed to create the relationship of partners, joint venturers, employee-employer or franchiser-franchisee between the parties hereto. 10.8 This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party and delivered to the other party. 10.9 This Agreement, and the Schedules thereto, contains the entire agreement between the parties with respect to the subject matter hereof, and there are no agreements or understandings between the parties as to this subject matter other than those set forth or referred to herein or therein. IN WITNESS WHEREOF, parties hereto have caused their duly authorized representatives to execute this Agreement on the date first above written. Quixote Corporation B&B Electromatic, Inc. By: /s/ LESLIE J. JEZUIT By: /s/ JACK CALDWELL ------------------------------------- -------------------------------- Name: Leslie J. Jezuit Name: Jack Caldwell ---------------------------------- ------------------------------ Title: President and Chief Executive Title: President Officer ----------------------------- ---------------------------------- Date: March 15, 2002 Date: March 18, 2002 ------------------------------ ----------------------------------- -7- EXHIBIT A Issued Patents: US PATENT NUMBER: 6,115,963 "CROSSING GUARD" 6,115,963 ABSTRACT: A crossing guard is disclosed which comprises an operator positioned on one side of a thoroughfare for raising and lowering an arm, a gate connected to the arm, a first lock positioned on the opposite side of the thoroughfare, a plurality of cables supported within the gate, joined together at fixed points intermediate the ends of the cables, and a first end assembly connectable with the cables and the gate at the end of the gate opposite the operator with the first end assembly engagable with the first lock. The device further comprises a second lock positioned on the side of the thoroughfare nearer said operator engagable with a second end assembly positioned on the end of the gate nearer said operator. US PATENT NUMBER: 6,289,634 "CROSSING GUARD" 6,289,634 ABSTRACT: A crossing guard is disclosed which comprises an operator positioned on one side of a thoroughfare for raising and lowering an arm, a gate connected to the arm, a first lock positioned on the opposite side of the thoroughfare, a plurality of cables supported within the gate, joined together at fixed points intermediate the ends of the cables, and a first end assembly connectable with the cables and the gate at the end of the gate opposite the operator with the first end assembly engagable with the first lock. The device further comprises a second lock positioned on the side of the thoroughfare nearer said operator engagable with a second end assembly positioned on the end of the gate nearer said operator. -8- EXHIBIT B PATENT ASSIGNMENT THIS ASSIGNMENT is made and entered into as of the March 18, 2002, by B&B Electromatic, Inc., a Delaware Corporation with offices at 14113 Main Street, Norwood, Louisiana ("B&B") in favor of Quixote Corporation, a Delaware corporation with offices at One East Wacker Drive, Chicago, Illinois ("Quixote"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, B&B hereby sells and assigns to Quixote all right, title and interest of every kind throughout the world in and to U.S. Patents No. 6,115,963 entitled "CROSSING GUARD" and No. 6,289,634 entitled "CROSSING GUARD" (the "Patents") and any reissues, renewals, or extensions thereof as may be granted, including the right to sue for past infringement of the Patent and recover for past damages. B&B agrees to execute such additional documents as may be reasonably requested by Quixote to further evidence, perfect, or protect the foregoing assignment. B&B Electromatic, Inc. /s/ JACK CALDWELL ------------------------------------------- By: Jack Caldwell Title: President STATE OF LOUISIANA ) ) ss PARISH OF EAST BATON ROUGE ) On this 15th day of March, 2002, before me appeared Jack Caldwell, the person who signed this instrument, who acknowledged that he signed it as a free act on behalf of B&B, Electromatic, Inc. with authority to do so. /s/ LISA R. PHILLIPS - -------------------------------- Notary Public My commission expires on: At Death Date: March 15, 2002 -9- EXHIBIT C March 12, 2002 Mr. Christof D. Eichin Maintenance Engineering Manager Santa Clara Valley Transportation Authority 3331 North First Street San Jose, CA 95134-1906 Dear Chris, Just a note to let you know that we have passed 66,000 cycles in the test on the unit here in Norwood. Jay Smith will be sending you further information in the next few day. I also wanted to summarize what we committed to do at our meeting on February 13, 2002. o I have already provided you with a copy of our standard warranty policy along with the statement that the two year warranty clock would start running on the date the "super gate" is put back in operation. o Update the IOM Manual to include modifications made to the gate, including maintenance/inspection steps for said modifications. The revised version will also include inspection steps in case of a crash at the gate. o Send formal test procedure being used on the test currently in process. o Give 4 week notice before traffic control is required to install the new arm. o Provide on-site lead person to install and commission the new arm after 200,000 cycle test is complete. VTA will provide all equipment and labor assistance required for said installation and commissioning. o Provide on-site training on maintenance and inspection procedures immediately after start up is achieved. o Provide a final test result report after 200,000 cycles have been accomplished. o Revise the Hazard Analysis to include all affected parts resulting from the redesign. We will also edit some of the objectionable language in the report. We look forward to completing the test and putting your gate back into operations. Sincerely, /s/ JACK CALDWELL - ------------------------------ Jack Caldwell -10- SCHEDULE A 1. "Documentation" to be transfered A) Manuals - one operating manual in electronic format: B) Models - one working model of model gate serial number CN5277 C) Drawings - all engineering drawings for B&B models VT6802 and VT6802HD in electronic format (AutoCAD 14.0 preferred). D) Designs - none, other than the designs shown showing in the engineering drawings E) Diagrams - none, other that contained in the engineering drawings F) Bills of material - for B&B models VT6802 and VT6802HD o Hard copy of Indented Bills o Electronic form of indented Bills compatible with Microsoft Access. G) Manufacturing routers - none H) Vendor lists - provided, but B&B will continue to use for other products. o Cut sheets listing vendor sources for individual components I) Computer programs - none J) Other tangible technical information - any test results of models VT6802 and VT6802HD K) Sample electrical schematics and suggested drive components (documentation) for potential sites with electrical power other than 12V DC (such as 120 V single phase). Documents could be from an existing B&B Gate system other than the VT 6802 or VT 6802HD. Documents shall be supplied in electronic format. 2. Assigned "Technology" A) Patents - patent numbers 6,115,963 and 6,289,634 and B&B's patent files for same B) Trade secrets - none C) Know- how - to be transferred by training D) Inventions - none other than as disclosed in the patent claims E) Works of authorship - all copyrights in the engineering drawings and operation manual F) Mask works - none G) Information - none, other than Know-How H) Materials - none I) Tools and fixtures - none J) Business - B&B will prepare a list of its leads K) Contract rights - none, B&B retains contract rights for product sold prior to the assignment L) Causes of action - any right to sue for infringement or infringement for all patent and copyrights assigned hereunder M) Goodwill - none other than associated with the VT6802 product itself, B&B is not assigning any trademark rights hereunder. B&B represents and warrants that, to the best of its knowledge, the above is all that is needed to make, use and sell the patented crossing gates to the standard at least equivalent to that currently employed by B&B. -11- EX-10.2 4 d95591ex10-2.txt NON-EXCLUSIVE PATENT LICENSE AGREEMENT EXHIBIT 10.2 NON-EXCLUSIVE PATENT LICENSE AGREEMENT THIS NON-EXCLUSIVE PATENT LICENSE AGREEMENT (this "License Agreement") is made and entered into as of March 18, 2002 ("Effective Date") Quixote Corporation, a Delaware corporation with offices at One East Wacker Drive, 30th Floor, Chicago, Illinois ("Quixote") and B&B Electromatic, Inc., ("B&B") a Delaware corporation with offices at 14113 Main Street, Norwood, Louisiana. B&B and Quixote are sometimes referred to as the "Parties" and individually as a "Party". WHEREAS, Quixote is the owner of the patents and patent applications listed on Schedule 1 hereto; WHEREAS, Quixote desires to grant and B&B desires to accept a non-license to practice in North America any patent listed on Schedule 1 in the Licensed Field on terms and conditions set forth in this License Agreement. NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual covenants and promises herein contained, the receipt and legal sufficiency of which are hereby acknowledged, the Parties have agreed as follows: ARTICLE I DEFINITIONS When used in this License Agreement, the terms listed below shall have the following meanings: 1.1 "Affiliate" shall mean, with respect to a specified Person, any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person. 1.2 "Licensed Field" means uses for all purposes in nonrailroad, nonbridge roadway applications and nonrailroad bridge access applications. 1.3 "Net Receipts" means the cash proceeds received by B&B or its Affiliate during the term of this Agreement for the sale of Royalty-Bearing Products less discounts and allowances actually granted, sales commissions, packing, insurance, freight and taxes imposed on the transaction (whether or not separately invoiced). -1- 1.4 "Patents" means: (a) any the patents and patent applications listed on Schedule 1; (b) any additional patent issuing in any jurisdiction on any patent application listed on Schedule 1; (c) any patent issuing as a result of a re-examination or reissue proceeding of any of the foregoing patents; (d) renewals, extensions and certificates of corrections of any of the foregoing patents, and (e) continuations, continuations-in-part, divisional or other applications claiming filing priority of any of the foregoing applications. 1.5 "Person" means any individual, partnership, corporation, limited liability company or other entity. 1.6 "Royalty-Bearing Product" means any product, used for all purposes in a nonrailroad, nonbridge roadway application, that is covered by any issued, unexpired claim of one or more Patents, and that is made, used or sold in the Territory. 1.7 "Royalty-Free Product" means any product, used for all purposes in a nonrailroad bridge access application, that is covered by any issued, unexpired claim of one or more Patents, and that is made, used or sold in the Territory. 1.8 "Territory" means North America. 1.9 "Technology" means the Patents, the Documentation and trade secrets and know-how, skill and knowledge for thoroughfare-crossing guards as more particularly described and embodied in the Patents. 1.10 "Documentation" means all manuals, drawings, designs, diagrams, bills of material, manufacturing routers, vendor lists, computer programs and all other tangible technical information relating to the nature or operation of the Technology, including but not limited to 120 Volts single phase and 120 Volt technology, which might reasonably be of interest to either party. ARTICLE II LICENSE GRANTED 2.1 License. Subject to the terms and conditions of this non-exclusive License Agreement, Quixote hereby grants to B&B a nonexclusive, nontransferable license only within the Territory under the Patents to make, have made, use and sell the Royalty-Bearing Products and Royalty-Free Products only within the Licensed Field. B&B is also hereby entitled to use any Technology, including Documentation, only for the purpose of manufacturing, using and selling and maintaining the Royalty-Bearing Products and Royalty-Free Products within the Licensed Field. -2- 2.2 Exclusions. Quixote retains all ownership and other rights with respect to the Patents. Except as provided herein, B&B may not sublicense any of its rights granted in Section 2.1. 2.3 Sublicenses to End-Users. B&B may grant nontransferable, personal, nonexclusive sublicenses (without further right to sublicense) to end-users for the sole purpose of using a Royalty-Bearing Product and a Royalty-Free Product that is manufactured, sold or otherwise provided by B&B to such end-user. 2.4 Incidental Sublicenses. B&B may grant nontransferable, personal, royalty-free, nonexclusive sublicenses (without any further right to sublicense) to any Person for the sole purpose of allowing that Person to provide to B&B any equipment or services to allow B&B to exercise its rights under this License Agreement. ARTICLE III ROYALTIES FOR THE ROYALTY-BEARING PRODUCT 3.1 Royalties. B&B shall pay Quixote a royalty on all Royalty-Bearing Products (the "Royalties") in U.S. dollars equal to the result obtained by multiplying: (x) ten percent (10%) by (y) Net Receipts. 3.2 Reporting and Payment. Within sixty (60) days after the beginning of each calendar quarter, B&B shall calculate and pay to Quixote the Royalties that are due on Net Receipts received during the just-concluded calendar quarter; provided, however, that upon termination of this Agreement for any reason, a final payment of Royalties accounting for Net Receipts through the date of termination shall be made within ninety (90) days after termination of this Agreement. Payments of Royalties shall be accompanied by a report showing in reasonable detail an accounting of the Royalties paid. 3.3 Confidentiality. The reports submitted by B&B to Quixote pursuant to this License Agreement and any information gathered pursuant to an audit under Section 3.4 shall be confidential information of B&B and shall be held by Quixote in confidence during the term of this License Agreement and for three (3) years after its termination for any reason. No other information exchanged between the parties pursuant to this License Agreement shall be deemed confidential; provided, however, that the foregoing shall not limit, restrict, amend, waive or otherwise modify either party's confidentiality obligations pursuant to any other written agreement between the parties. 3.4 Right to Audit. B&B shall, during the term of this License Agreement, and for a period of one (1) year thereafter, keep at its usual place of business, true, particular and adequate accounts and records of the Royalty-Bearing Products sold or provided by it or its Affiliates, its related accounts receivable and collections thereof. The duly authorized representatives of Quixote shall have the right, at any reasonable time, upon notice, during business hours, to inspect and audit the accounts -3- and records of B&B relating to the sale of Royalty-Bearing Products, and such representatives shall be entitled to take copies of and abstracts from any such records. Such records shall be treated as confidential information of B&B pursuant to Section 3.3. ARTICLE IV WARRANTY AND LIABILITY 4.1 Representations and Warranties. Quixote represents and warrants as of the Effective Date that it has not entered into any other agreement, license or understanding with another party that conflicts with the grant of the licenses in Article II. ARTICLE V VALIDITY, PRESERVATION AND ENFORCEMENT 5.1 Control of Actions. B&B shall promptly advise Quixote if it becomes aware of any infringement of any Patent by any other Person. Quixote shall have sole control (and bear all expense) over any action that it may choose to file to enforce its rights under the Patent. 5.2 Patent Marking. B&B agrees to mark (and require its sublicensees to mark) any product that it manufactures or sells with a patent notice pursuant to instructions from Quixote and in accordance with applicable patent law and to display such patent notice that it makes available. ARTICLE VI TERM AND TERMINATION 6.1 Term. The term of this License Agreement shall commence as of the Effective Date and shall continue until expiration of the last to expire of the Patents, unless earlier terminated in accordance with this Article VI ("Term"). 6.2 Termination by B&B. B&B shall have the right to terminate this License Agreement by giving sixty (60) days written notice to Quixote. 6.3 Termination by Quixote. If B&B materially breaches its obligations under this License Agreement, Quixote may terminate this License Agreement by giving B&B a notice of default ("Notice of Default") that specifies in reasonable detail the nature of the alleged material breach. B&B shall have a sixty (60) day grace period after its receipt of the Notice of Default ("Grace -4- Period") to correct or cure any material breach specified therein. If the breach is not corrected within the Grace Period, then this License Agreement shall automatically terminate upon conclusion of the Grace Period. 6.4 Bankruptcy, Insolvency. This Agreement will terminate automatically if B&B becomes bankrupt or insolvent and/or if the business of B&B is placed in the hands of a receiver, assignee, or trustee, whether by voluntary act or otherwise. 6.5 Effect of Termination. (a) Existing Users. Termination of this License Agreement shall not affect the rights of any Person who, in accordance with this License Agreement, has purchased or otherwise acquired Royalty-Bearing Products in good faith. (b) Survival. Sections 2.4, 3.1, 3.3, 4.2 and 5.1 and all of Article VII shall survive termination of this License Agreement for any reason. ARTICLE VII GENERAL 7.1 Governing Law; Arbitration. This License Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without reference to the choice of law principles thereof. Any dispute arising under this Agreement shall be definitively and finally resolved by arbitration and judgment upon any award of arbitration may be entered in any court having jurisdiction thereof. Such arbitration shall be held in Chicago, Illinois [and be in accordance with the rules of the American Arbitration Association. Any fees and expenses payable to the American Arbitration Association shall be borne by the losing party. 7.2 Assignment. This License Agreement is not assignable or transferable by B&B (whether by contract, by sale of stock or assets of B&B, or by merger or consolidation or any other legal means) without the prior written consent of Quixote, such consent not to be unreasonably withheld; any attempt to do so shall be void. Any notice, report, approval or consent required or permitted hereunder shall be in writing and will be deemed to have been duly given if delivered personally or mailed by first-class, certified U.S. mail, postage prepaid to the respective addresses of the parties as set above (or such other address as a party may designate by ten (10) days notice) or by facsimile transmission with evidence of receipt and a paper copy mailed to the receiving party by regular mail. Subject to the above, this agreement is binding on all successors, assigns or transferees. -5- 7.3 Power of Attorney. If Quixote is unable after reasonable efforts to secure B&B's signature to any document it is entitled to under this License Agreement, B&B hereby irrevocably designates and appoints Quixote and its duly authorized officers and agents, as its agents and attorneys-in-fact with full power of substitution to act for and on its behalf and instead of B&B, to execute and file any such document or documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by B&B. 7.4 Severability. If any provision of this License Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity, or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby, and the remainder of the provisions of this License Agreement shall remain in full force and effect. The parties shall endeavor in good faith negotiations to replace any illegal, invalid or unenforceable provision with a valid, legal and enforceable provision, the economic effect of which comes as close as possible to the illegal, invalid or unenforceable provision. 7.5 No Disclosure. The terms of this License Agreement are confidential and no press release or other written or oral disclosure of any nature regarding the terms of this License Agreement shall be made by B&B without Quixote's prior written approval; however, approval for such disclosure shall be deemed given to the extent such disclosure is required to comply with governmental regulation. 7.6 Modification. This License Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party (or such party's duly authorized agent) against whom enforcement of any such modification or amendment is sought. Either party may, only by an instrument in writing, waive compliance by the other party regarding any term or provision of this License Agreement. The waiver by a party of a breach of any term or provision of this License Agreement shall not be construed as a waiver of any subsequent breach. 7.7 Relationship of Parties. The parties are independent contractors. Nothing stated in this License Agreement shall be deemed to create the relationship of partners, joint venturers, employee-employer or franchiser-franchisee between the parties hereto. 7.8 Counterparts. This License Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party and delivered to the other party. 7.9 Entire License Agreement. This License Agreement and the Schedules thereto contain the entire agreement between the parties with respect to the subject matter hereof, and there are no agreements or understandings between the parties as to this subject matter other than those set forth or referred to herein or therein. -6- IN WITNESS WHEREOF, the parties have each duly executed and delivered this License Agreement as of the Effective Date. Quixote Corporation B&B Electromatic, Inc. By: /s/ LESLIE J. JEZUIT By: /s/ JACK CALDWELL ------------------------------------- -------------------------------- Name: Leslie J. Jezuit Name: Jack Caldwell ----------------------------------- -------------------------------- Title: President and Chief Executive Title: President Officer ----------------------------- ---------------------------------- Date: March 15, 2002 Date: March 18, 2002 ------------------------------ ----------------------------------- -7- SCHEDULE 1 Issued Patents: US PATENT NUMBER: 6,115,963 "CROSSING GUARD" 6,115,693 ABSTRACT: A crossing guard is disclosed which comprises an operator positioned on one side of a thoroughfare for raising and lowering an arm, a gate connected to the arm, a first lock positioned on the opposite side of the thoroughfare, a plurality of cables supported within the gate, joined together at fixed points intermediate the ends of the cables, and a first end assembly connectable with the cables and the gate at the end of the gate opposite the operator with the first end assembly engagable with the first lock. The device further comprises a second lock positioned on the side of the thoroughfare nearer said operator engagable with a second end assembly positioned on the end of the gate nearer said operator. US PATENT NUMBER: 6,289,634 "CROSSING GUARD" 6,289,634 ABSTRACT: A crossing guard is disclosed which comprises an operator positioned on one side of a thoroughfare for raising and lowering an arm, a gate connected to the arm, a first lock positioned on the opposite side of the thoroughfare, a plurality of cables supported within the gate, joined together at fixed points intermediate the ends of the cables, and a first end assembly connectable with the cables and the gate at the end of the gate opposite the operator with the first end assembly engagable with the first lock. The device further comprises a second lock positioned on the side of the thoroughfare nearer said operator engagable with a second end assembly positioned on the end of the gate nearer said operator. -8- -----END PRIVACY-ENHANCED MESSAGE-----