EXHIBIT 10.8
EXCLUSIVE WORLDWIDE LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is made and entered into as of the 1st
day of May, 2003 ("Effective Date"), by and between DYNECO CORPORATION, a
Minnesota corporation with an address at 000 Xxxxxxxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxxxx 00000 ("DynEco"); and XXXXXX-XXXXXXXX CORPORATION, an Ohio corporation
located at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxx 00000-0000 (together with
its subsidiaries "Parker").
R E C I T A L S:
Whereas, DynEco has developed air compressors and hydrogen circulators currently
referred to as "UniVane", for fuel cell air management systems, and is the owner
of certain intellectual property therein.
Whereas Xxxxxx desires to manufacture and sell such compressors and circulators,
under license from DynEco, pursuant to the terms and conditions specified
herein.
Now therefore, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this agreement, the following terms when written with initial capital
letters shall have the meanings set forth below:
1.1 Licensed Products: Shall mean air compressors and hydrogen circulators,
including but not limited to the products identified on Exhibit A
hereto. The products covered by the term "Licensed Products" may be
updated or modified by mutual written agreement between the parties.
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1.2 Licensed Technology: Shall mean all DynEco knowledge and information
(including but not limited to trade secrets and know-how) pertaining to
the Licensed Products, including all designs, specifications, drawings,
test procedures, prototypes, test results, manufacturing processes and
techniques, manufacturing equipment, sources of supply, packaging,
uses, applications, market studies, marketing data and customer
requirements of the Licensed Products.
1.3 Licensed Patent(s): Shall mean all patents now or later owned or
controlled by DynEco during the term of this Agreement which contain
claims that would be infringed by the manufacture, use and/or sale of
the Licensed Products, including without limitation, the patents listed
on Exhibit B hereto. Exhibit B shall be updated as appropriate during
the Term of this Agreement if any further patents are acquired by or
issued to DynEco.
1.4 Territory: Shall mean the World.
1.5 Net Selling Price shall mean:
a. the price at which a Licensed Product is invoiced in an arm's
length transaction less any discounts, commissions, refunds,
returns, sales taxes, shipping charges which are included and
listed on the applicable invoice, or
b. if no separate price is invoiced for a Licensed Product, the
Net Selling Price of such Licensed Product shall be deemed to
be:
(1) the lowest Net Selling Price of a similar Licensed
Product when sold or leased by Xxxxxx in a similar
transaction, or
(2) if such lowest Net Selling Price cannot be reasonably
be determined by Xxxxxx (for example, where a
Licensed Product is sold or leased as part of a
larger apparatus or system) the Net Selling Price
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shall be deemed to be that portion of the net
proceeds of the arm's length sale or lease of the
relevant larger apparatus or system which includes
said Licensed Product which bears the same relation
to such net proceeds as the production cost or the
Licensed Product bears to the production cost of the
relevant larger apparatus or system.
The term "Net Selling Price" shall i) only encompass the sale
of the Licensed Products actually shipped and invoiced by
Xxxxxx to an unrelated entity; ii) exclude the production cost
of the motor and motor controller designed by Xxxxxx for the
Licensed Products, as well as the cost of any peripheral
components, such as solenoid valves, air filters, etc.
incorporated into the Licensed Products by Xxxxxx . For
purpose of this Agreement, the phrase "unrelated entity" means
an entity which is not a subsidiary or affiliate of the
Xxxxxx-Xxxxxxxx Corporation. Any transfers between related
entities, that is, subsidiaries or affiliates of the
Xxxxxx-Xxxxxxxx Corporation, will not be considered a sale of
the Licensed Products, provided, however, that a sale or lease
of such Licensed Products by such subsidiary or affiliate
shall be subject to sublicense agreement under Article 2.3
hereof.
1.6 Xxxxxx Market: Shall mean all fields of use including, without
limitation, the fuel cell market.
1.7 Term: Shall mean the longer of: i) the last to expire Licensed Patent,
or ii) the final use by Xxxxxx or its customers of the Licensed
Technology, subject to Article 9.1 herein.
ARTICLE II
DYNECO LICENSE GRANTS
2.1 The grants by DynEco of this Article II shall become effective upon
execution of this Agreement by both parties.
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2.2 Subject to the provisions of Article 2.3 hereof, DynEco grants to
Xxxxxx:
a. an exclusive, worldwide royalty bearing license under Licensed
Patents to make, have made, use, have used, lease, sell and
have sold Licensed Products, including any subsystems and
components therefore, for the Xxxxxx Market, and
b. an exclusive, worldwide royalty bearing right to use Licensed
Technology in connection with the utilization by Xxxxxx of the
license granted in subparagraph 2.2 a of this Article II.
2.3 Subject to the requirements of this Agreement, DynEco agrees that
Xxxxxx shall have the right to grant sublicenses within the scope of
this Agreement to its subsidiaries and affiliates under the grants of
this Article II and to transmit Licensed Technology obtained by Xxxxxx
hereunder to such sublicensees. Xxxxxx shall require each of such
sublicensees to enter into an agreement with DynEco prior to such
transmittal of Licensed Technology so that such sublicensees are
directly liable and accountable to DynEco for acts and omissions in
violation of their sublicenses under this Agreement.
ARTICLE III
NONCOMPETE
DynEco will not directly or indirectly i) make, have made, use, import into, or
sell into the Territory and into the Xxxxxx Market any Licensed Products; or ii)
work with, license or otherwise develop Licensed Technology with third parties
for use in the Xxxxxx Market, unless prior authorization is received from
Xxxxxx.
ARTICLE IV
XXXXXX EFFORTS
Xxxxxx will use reasonable commercial efforts to promote the sale of the
Licensed Products in the Territory into the Xxxxxx Market, however the nature
and extent of Xxxxxx'x efforts will be entirely within its discretion.
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ARTICLE V
ROYALTIES
For Licensed Products manufactured by Xxxxxx under Article II above, Xxxxxx will
pay a royalty fee according to the following:
5.1 Royalty Fee. For the first three (3) years after the Effective Date,
the Royalty Fee will be calculated by multiplying the Royalty Rate
specified in Article 5.2 by the Net Selling Price of Licensed Products
sold or leased by Xxxxxx that include Licensed Technology. After the
first three (3) years, the Royalty Fee will be calculated by
multiplying the Royalty Rate specified in Article 5.2 by the Net
Selling Price of Licensed Products sold or leased by Xxxxxx that are
covered by at least one valid and enforceable claim of a Licensed
Patent in the relevant country of sale or which include Licensed
Technology incorporating Information of DynEco protected under the
Confidential Disclosure Agreement between DynEco and Xxxxxx dated
January 17 and 18, 2003.
5.2 Royalty Rate. The Royalty Rate will be: o Fifteen percent (15%) of Net
Selling Price for the first 50 Licensed Products in a calendar year o
Ten Percent (10%) of Net Selling Price for the next 51 to 250 Licensed
Products in a calendar year o Eight Percent (8%) of Net Selling Price
for the next 251-10000 Licensed Products in a calendar year o Six
Percent (6%) of Net Selling Price for 10001 or more Licensed Products
in a calendar year.
5.3 Minimum Royalty Fee. Beginning with the calendar year starting January
1, 2007, in the event the Royalty Fee payable by Xxxxxx under Article
5.1 above is less than $100,000 (the "Minimum Royalty Fee") per
calendar year, then Xxxxxx may, at Xxxxxx'x sole discretion, remit to
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DynEco the difference between the actual Royalty Fee paid for the
calendar year and the Minimum Royalty Fee for that particular calendar
year, or the license granted to Xxxxxx under Article II of this
Agreement will convert to a non-exclusive license and DynEco's
restrictions under Article III will terminate. The remainder of this
Agreement will be unchanged. The Minimum Royalty Fee will be due no
later than the December 31st quarterly Royalty Fee payment for the
particular calendar year as described in Article 5.5 below.
5.4 Reduction of Royalty Fee. In the event Xxxxxx becomes obligated to pay
intellectual property-based royalties to others in connection with the
manufacture, use or sale of the Licensed Products, Xxxxxx may deduct
from the Royalty Fee payments due to DynEco under this Agreement an
amount equal to fifty percent (50%) of the royalties paid by Xxxxxx to
such others.
5.5 Quarterly Payments and Reports. Xxxxxx will pay the Royalty Fee
quarterly based upon calendar quarters ending March 31, June 30,
September 30 and December 31. Within forty five (45) days after the end
of each such calendar period, Xxxxxx will deliver to DynEco its written
report of the Net Selling Price of the Licensed Products, the
applicable Royalty Rate, and the amount of the Royalty Fee earned
during the quarter being reported. Concurrently with the making of each
such report, Xxxxxx will pay DynEco the Royalty Fee shown as due on the
report. No more than once each calendar year, DynEco may have its
independent certified public accountants audit Xxxxxx'x records with
respect to the Royalty Fee calculations at reasonable times upon
reasonable advance notice, provided such accountants will maintain all
information of Xxxxxx in strict confidence and will only disclose to
DynEco the amount of the Net Selling Price of Licensed Products during
the time period covered by the audit.
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ARTICLE VI
TECHNOLOGY
6.1 Transfer of Information. Within thirty (30) days following the
Effective Date of this Agreement, DynEco shall fully disclose to
Xxxxxx, at no cost, all DynEco-possessed Licensed Technology not
previously disclosed to Xxxxxx, including any models and prototypes,
and shall provide at Xxxxxx'x request for a reasonable period of time
thereafter, such assistance at no cost to Xxxxxx, that is reasonable
and necessary to enable Xxxxxx to satisfactorily utilize the subject
matter to be licensed hereunder.
6.2 Consulting Services. DynEco shall provide a qualified individual(s),
acceptable to Xxxxxx, to provide consulting services to Xxxxxx for
developing and improving the Licensed Product. Such consulting services
shall continue for an initial period of twelve (12) months beginning
June 1, 2003, and thereafter on a month-to-month basis unless ninety
(90) day notice is given by one party to the other prior to the end of
the initial period or any subsequent period of its desire to terminate
the services. Such consulting services shall be performed pursuant to
the Consulting Agreement attached hereto as Exhibit C.
6.3 Maintenance Fees. DynEco will timely pay any maintenance fees and other
governmental fees due for the Licensed Patents such that the Licensed
Patents remain enforceable. In the event DynEco desires not to pay such
fees, DynEco will first notify Xxxxxx with sufficient time before such
fees are due, and will give Xxxxxx the right (but not the obligation)
to pay such fees to keep such Licensed Patents enforceable, in which
case Xxxxxx may deduct the fees from any royalty fees due DynEco under
Article V above.
6.4 Infringement. Xxxxxx and DynEco each shall promptly advise the other of
all relevant facts pertaining to any known, suspected, or threatened
infringement of the Licensed Patents. DynEco, at its sole cost and
expense shall have the first right, but not the obligation, to
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attempt to stop any such infringement by taking such action as DynEco,
in its sole judgment, deems appropriate, including prosecution of a
lawsuit. In the event DynEco fails to take any action against the
alleged infringer within six (6) months of becoming aware of such
infringement, or otherwise upon agreement with Xxxxxx, Xxxxxx
thereafter shall have the right but not the obligation, at its sole
cost and expense, to attempt to stop such alleged infringement by
taking such action as Xxxxxx, in its sole judgment, deems appropriate
including prosecution of a lawsuit. In the event that either Party
institutes suit against any such alleged infringer, the other Party
hereby agrees to be named as a nominal party thereto and to provide
reasonable assistance to the other party. The Parties hereby agree that
all recoveries and awards that may be obtained as a result of any
action taken by Xxxxxx or DynEco with respect to any such infringement,
including any settlement, shall be the sole and exclusive property of
the Party taking such action. All recoveries and awards that may be
obtained as a result of any mutual actions undertaken by mutual written
agreement of the Parties shall be allocated equally among the Parties
provided that each has contributed equally to the expenses, or
otherwise upon agreement by the parties.
ARTICLE VII
TRADEMARKS
Xxxxxx may use its own trademarks and tradenames with the Licensed Products,
which use will be entirely in Xxxxxx'x discretion. Any such use of the Parker
marks and names will inure to the benefit of Xxxxxx.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
DynEco represents and warrants to Xxxxxx and agrees that:
a. DynEco is the sole and exclusive owner of the Licensed
Patents, and of the Licensed Technology that will be delivered
to Xxxxxx.
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b. There are no liens, claims against or other encumbrances on
DynEco's title to, and DynEco has not previously conveyed any
rights to any other party with respect to, the Licensed
Patents and the Licensed Technology. DynEco will not encumber
such title or grant any rights to any other party under such
Licensed Patents and Licensed Technology during the term of
any licenses to Xxxxxx under this Agreement that would
interfere in any way with Xxxxxx'x rights under this
Agreement.
c. DynEco does not have any knowledge as to any patent rights,
trade dress rights, design rights or other intellectual
property rights of any other party that are infringed by or
that have been alleged to be infringed by the Licensed
Products, and/or the Licensed Technology.
d. Except as expressly provided above, DYNECO MAKES NO EXPRESS OR
IMPLIED REPRESENTATIONS OR WARRANTIES IN RESPECT OF THE
LICENSED PRODUCTS OR THEIR CONDITION, MERCHANTABILITY, FITNESS
FOR ANY PARTICULAR PURPOSE OR USE BY XXXXXX.
ARTICLE IX
MISCELLANEOUS
9.1 Termination.
This Agreement may be terminated at any time:
a. Upon written notice to the other Party by reason of any
material default or material breach of this Agreement,
provided that the defaulting Party shall have received prior
written notice of the specific default or breach and shall
have failed to cure the default within ninety (90) days after
a notice has been sent by the aggrieved party to the
defaulting party.
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b. By one party if the other party shall file a petition in
bankruptcy, shall be adjudicated as bankrupt, shall take
advantage of the insolvency laws of any state or country,
shall make an assignment for the benefit of creditors, shall
be voluntarily or involuntarily dissolved, or shall have a
receiver, trustee, or other court officer appointed for its
property.
c. With the written consent of the other Party.
9.2 Applicable Law. This Agreement will be governed and construed in
accordance with the laws of the State of Ohio, without regard to Ohio's
provisions regarding the conflicts of laws.
9.3 Independent Agency. Neither party to this Agreement will be deemed an
agent, employee, partner or joint venturer with any other party to this
Agreement.
9.4 Assignment. This Agreement shall not be assignable by either party
except with the written consent of the other, or except with the sale
of transfer with the portion of the business to which this Agreement
relates.
9.5 Notice. Any notification, reports or payment which is required to be
given pursuant to this Agreement will be deemed effective upon receipt
when delivered to the following address:
IF TO PARKER: Fuel Cell Business Unit
Fluid Control Division
00 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Fuel Cell Business Manager
With a Copy to: Xxxxxx-Xxxxxxxx Corporation
0000 Xxxxxxxx Xxxx.
Xxxxxxxxx, Xxxx 00000
Attention: President, Climate and
Industrial Controls Group
IF TO DynEco: DynEco Corporation
000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: President
With a copy to:
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9.6 Disputes. Any controversy or claim arising out of or relating to this
agreement, or to the Licensed Patents or to the Technical Information
or to the enforcement, breach, termination or validity of any of the
foregoing, will be settled by arbitration in accordance with the CPR
Institute for Dispute Resolution Rules for Non-Administered Arbitration
in effect on the date of this agreement by a sole arbitrator
(xxx.xxxxxx.xxx). Judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof. The place of
arbitration shall be Cleveland, Ohio. The arbitrator is not empowered
to award trebled, punitive or any other damages in excess of
compensatory damages, and each party irrevocably waives any claim to
recovery or to recover any such damages. The arbitrator shall make a
reasoned award.
9.7 Entire Agreement. This Agreement states the entire agreement between
DynEco and Xxxxxx and supersedes all proposals, communications or
agreements, whether oral or written between DynEco and Xxxxxx
concerning the subject matter hereof. No waiver, alteration or
modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by the duly authorized corporate
officers of Xxxxxx-Xxxxxxxx Corporation and by DynEco. No written
waiver, alteration or modification made in accordance with the
provisions hereof shall have effect unless it expressly references this
Agreement. Nothing in this Agreement will limit the right of either
party to develop, acquire, make, have made, use or sell products
outside the scope of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date set forth below.
DynEco CORPORATION XXXXXX-XXXXXXXX CORPORATION
By: Xxxxxx X. Xxxxxxx By Xxxxxxx X. Xxxxxxx
Signature: /s/ Xxxxxx X. Xxxxxxx Signature: /s/ Xxxxxxx X. Xxxxxxx
Title: President Title: Technology Team Leader
Date: May 13, 2003 Date: May 9, 2003
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