Chester, I thought you and Drakes might find the attached exerpt from the risk factors section of their latest SEC filing interesting reading.
10. DEPENDENCE ON THE CRANE-PANDA LICENSING AGREEMENT;
POTENTIAL CONFLICTS OF INTEREST. Pursuant to a license agreement entered
into in January 1996 between the Company and Mr. Crane (the "Crane-Panda
License"), Mr. Crane has granted the Company the nonexclusive right to
utilize the Compass Connector, a key component in the commercialization
of the Company's Archistrat Computers and the development and
commercialization of Compass PGA. The Crane-Panda License was executed
in connection with the conversion to a nonexclusive license of the 3M
License described below and supersedes an earlier license agreement
between Mr. Crane and the Company relating to the Compass Connector.
Under the Crane-Panda License, the Company is required to pay Mr. Crane
a royalty on any sales of Compass Connectors as discrete parts in the
amount of 5% of the net sales price for the first five years of the term
of the agreement, 2.5% of the net sales price for the next five years of
the term of the agreement and 2% of the net sales price thereafter,
provided that no royalty is payable until aggregate net sales of the
Compass Connector as discrete parts exceed $100,000. The royalty rate
will be reduced after the fifth anniversary of the agreement if no
patent remains in effect with respect to the Compass Connector. No
royalty is payable on sales of the Compass Connector as incorporated in
the Archistrat Computers or other computer system or assembly. The
Company may grant sublicenses under the Crane-Panda License, but only
for the use of products as incorporated in the Archistrat Computers or
other computer system or assembly. To date, there have been no sales
requiring the payment of royalties to Mr. Crane under the Crane-Panda
License. The Crane-Panda License obligates the Company to maintain
proprietary information relating to the Compass Connector on a
confidential basis, notify Mr. Crane of any evidence of infringement
with respect to the Compass Connector and related technology, and
cooperate with Mr. Crane to contest any such infringement. In the event
that the Company becomes bankrupt or insolvent or defaults in any of its
material obligations under the Crane-Panda License and fails to cure any
such defaults within specified cure periods, Mr. Crane may terminate the
Crane-Panda License. The Company is substantially dependent upon the
Crane-Panda License. The termination of the agreement under any
circumstances would have a material adverse effect on the Company.
Although actions of the Company with respect to the Crane Panda License
must be authorized by a majority of the Company's independent directors,
and the Company and Mr. Crane would be represented by separate counsel
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in the event of a dispute concerning the Crane Panda License, there can
be no assurance that conflicts of interest will not arise with respect
to the Crane-Panda License or that such conflicts will be resolved in a
manner favorable to the Company. In addition, Mr. Crane retains
ownership of the Compass Connector technology, and has the right to
grant licenses to or otherwise transfer rights to the Compass Connector
technology to third parties.
In September 1992, Mr. Crane granted an exclusive license (the "3M
License") to Minnesota Mining and Manufacturing Co. ("3M") to develop,
manufacture, use and sell the Compass Connector other than as part of a
computer system. In February 1996, Mr. Crane and 3M agreed to convert
the 3M License to a nonexclusive license. The 3M License provides in
certain circumstances for the payment of a royalty to Mr. Crane. As of
the date of this Prospectus, Mr. Crane had received no such payments.
There is much more that will bolster the shorts in the filing.
Best Regards
Ron |
