EXHIBIT 10.6
EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT made and entered into as of April 1st, 2006 ("Effective Date"),
by and between NI) FUSION, INC., a New York corporation, with offices at 000
Xxxxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000 ("FUSION") and ROSHAN JACHUK, an
individual with an address located at 0 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx
00000 ("INVENTOR") and NANODYNAMICS, INC., a Delaware corporation with offices
at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000 ("GUARANTOR").
WHEREAS, INVENTOR is the inventor and exclusive owner of all right, title,
and interest in and to Certain inventions and intellectual property associated
therewith pertaining to (i) the design of a rotating tube reactor and similar
systems useful for process intensification, (ii) the process of operating and
using such reactors and systems to synthesize complex organic and inorganic
molecules, and (iii) unique compositions of matter resulting from such process,
all as more particularly disclosed in Exhibit A to this Agreement ("Intellectual
Property");
WHEREAS, FUSION desires to obtain a license of the Intellectual Property
and a license of any Improvements (as defined below) upon the terms and
conditions hereinafter set forth; and
WHEREAS, INVENTOR desires that GUARANTOR guarantee FUUSION'S performance
under this Agreement.
NOW, THEREFORE, in consideration of the undertakings herein contained and
other goods and valuable consideration, the receipt of which is hereby
acknowledged by all parties hereto, FUSION, INVENTOR and GUARANTOR agree as
follows:
1. DEFINITIONS
1.1 AFFECTED MATERIALS - shall mean any and all materials whether powder,
liquid or solid, consisting of a composition of matter or utilizing in its
method of production one or more claims covered by the Intellectual Property,
Patent Rights or any Improvements.
1.2 AFFECTED PROCESSES - shall mean any and all processes or methods of use
covered by the Intellectual Property, Patent Rights or any Improvements.
1.3 AFFECTED PRODUCTS - shall mean any and all devices or components
covered by the intellectual Property, Patent Rights or any Improvements.
1.4 AFFILIATE - shall mean any person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified. The term control (including the terms
controlling, controlled by and under common control with) means the possession,
direct or indirect, of the power to direct or cause the
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xxxxxxxxx of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
1.5 LICENSED PATENTS - shall mean all of the following:
(a) any U.S. patent applications and patents incorporating the
Intellectual Property or Improvements, and any divisional, continuation,
continuation-in-part applications related thereto and the resulting patents
therefrom;
(b) any patents resulting from reissues or reexaminations of the
United States patents described in (a) above;
(c) any PCT patent application, foreign patent applications, and
patents incorporating the Intellectual Property or Improvements, and any
divisional, continuation, continuation-in-part applications related thereto and
the resulting patents therefrom; and
(d) any foreign patents resulting from foreign procedures equivalent
to U.S. reissues and reexaminations of the foreign patents described in (c)
above.
1.6 IMPROVEMENTS -- shall mean any and all new and useful processes,
compositions of matter, devices, or methods of use first conceived, reduced to
practice or developed during the term of this Agreement by INVENTOR that:
(i) constitute a new composition of matter resulting from the
operation or use of the Affected Products or Affected Processes,
(ii) constitute a new design of a device or component for process
intensification,
(iii) increase the performance, operation, efficacy or safety of the
Affected Materials, Affected Processes, or Affected Products,
(iv) reduce the cost of manufacture of the Affected Materials or
Affected Products, or
(v) otherwise relate to the manufacture or use of the Affected
Materials or Affected Products or the practice of any method claimed in any of
the patents and/or patent applications within the Licensed Patents.
1.7 NET SALES - shall mean the invoice price to customers of FUSION for
sales of the Affected Materials or Affected Products in the ordinary course of
business, as recorded as "net sales" for purposes of FUSION's audited financial
statements prepared in accordance with GAAP, less deductions from such invoice
price for:
(i) refunds actually allowed or taken for rejected or returned
Affected Materials or Affected Products,
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(ii) excise, use, value added and sales taxes to the extent included
in the amounts invoiced,
(iii) customs, duties and other imposts, to the extent included in the
amounts invoiced,
(iv) quantity discounts, actually allowed or taken,
(v) credits on account of retroactive price reductions, actually
allowed or taken,
(vi) promotional dollars and sales commissions that effectively reduce
the price paid by FUSION's customers for the Affected Materials or Affected
Products,
(vii) cost of insurance, billed to and paid by the customer,
(viii) cost of shipping and transportation, billed to and paid by the
customer, and
(ix) rebates required by government rule, regulation, program or fiat,
to the extent that any such rebates may be paid or allowed by FUSION
1.8 QUARTERLY PERIOD - shall mean a three (3) month period, the first of
which starts on the Effective Date.
1.9 THIRD PARTY - means any person or entity other than a party to this
Agreement.
2. GRANT
2.1 Subject to the terms and conditions of this Agreement, INVENTOR hereby
grants to FUSION for the Term of this Agreement, the right and worldwide
exclusive license to use or sublicense the Intellectual Property, Patent Rights
and Improvements with respect to the Affected Materials, Affected Process and
Affected Products, and to make, have made, use and sell the Affected Materials
and Affected Products and to practice under the Licensed Patents. FUSION may
sublicense some or all of its interest in the Intellectual Property, Patent
Rights or Improvements to any Affiliate but only if the Affiliate agrees to be
bound by the terms of this Agreement on the same terms and conditions as
applicable to FUSION.
2.2 INVENTOR shall from time to time promptly provide FUSION with detailed
information relative to Intellectual Property and Improvements. Any and all
Improvements shall be automatically included in the definition of Intellectual
Property and included in the license granted under this Agreement.
3. PAYMENTS AND ROYALTIES
3.1 In exchange for the rights conveyed by INVENTOR to FUSION under this
Agreement, and except as provided in Section 3.2 herein, FUSION shall pay to
INVENTOR:
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(i) an warrant issued by GUARANTOR providing rights for a period of
five (5) years to acquire up to TWENTY THOUSAND (20,000) shares of common stock
of GUARANTOR at an exercise price of $6.50;
(ii) a royalty on all sublicensing fees, payments and royalties
("Fees") received by FUSION with respect to any sublicense of any Affected
Products, Affected Processes or Affected Materials to independent third parties
equal to fifteen percent (15%) of cumulative Fees;
(iii) a royalty, on sales of Affected Materials equal to five percent
(5%) of Net Sales of Affected Materials; and
(iv) a royalty, on sales of Affected Products equal to seven and
five-tenths percent (7.5%) of Net Sales of Affected Products.
In any sale of an end product by FUSION incorporates Affected Materials or
Affected Products, Net Sales of Affected Materials or Affected Products shall be
the amount that FUSION would charge to a Third Party for the Affected Materials
or Affected Products incorporated into the end product if sold on a stand-alone
basis.
3.2 FUSION's obligation to pay under Section 3.1 shall commence on the
date hereof and ending on the tenth anniversary of this Agreement; provided,
however, that this Agreement shall continue thereafter until expiration of the
Licensed Patents in any and all countries (unless this Agreement is terminated
sooner as provided herein).
3.3 The Affected Materials or Affected Products shall be considered sold
when FUSION receives payment from its customer or sublicensee. Suitable
adjustments may be made to sales records when the Affected Materials or Affected
Products are returned and credit is given to the customer.
3.4 FUSION shall produce a report ("Royalty Report") setting forth in
reasonable detail the calculation of the royalties payable to INVENTOR for each
Quarterly Period.
3.5 FUSION shall deliver to INVENTOR on or before the last day of each
month following the end of each Quarterly Period in which the Affected Materials
or Affected Products are sold or sublicensed, a Royalty Report for such
Quarterly Period. Such Royalty Report shall be treated as confidential
information of FUSION subject to Section 9 of this Agreement.
3.6 Royalty payments due hereunder shall be paid and delivered to INVENTOR
on or before the last day of each month following the end of each Quarterly
Period.
3.7 Royalty payments shall be made in United States dollars. If any
currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
prevailing at the Citibank, New York, New York on the date of payment by the
customer or sublicensee to FUSION.
3.8 No royalty is due if the Affected Materials or Affected Products are
given away as samples to promote sales of the Affected Materials or Affected
Products.
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3.9 FUSION may offset against all royalty payments owing on Net Sales of
Affected Materials any and all amounts paid by FUSION or GUARANTOR to Clarkson
University with respect to such Affected Materials under the terms of
GUARANTOR'S license with Clarkson University relating to the synthesis of metal
powders and flakes.
3.10 FUSION shall have the option at any time during this Agreement to
purchase from INVENTOR all right, title and interest in and to the Intellectual
Property, Licensed Patents and Improvements for a purchase price of FIFTEEN
MILLION DOLLARS ($15, 000,000).
4. UNDERTAKINGS AND GUARANTEE
4.1 FUSION shall use commercially reasonable efforts to bring the
Intellectual Property to market as soon as practicable, consistent with sound
and reasonable business practice and judgment.
4.2 FUSION shall establish and maintain a research, development and
demonstration facility within twenty (20) miles of Clarkson University to
advance the Intellectual Property commencing within six (6) months after the
Effective Date and continuously thereafter for a minimum period of three (3)
years.
4.3 FUSION shall retain INVENTOR as a consultant pursuant to the form of
Consulting Agreement attached as Exhibit B for a minimum period of three (3)
years after the Effective Date.
4.4 GUARANTOR guarantees by way of continuing obligation to INVENTOR as
primary obligor, and not merely as surety, the due performance by FUSION of all
of its obligations under this Agreement.
4.5 During the term of this Agreement, provided INVENTOR is capable and
willing, INVENTOR shall be elected to serve as a member of the Board of
Directors of FUSION.
5. RECORDS AND INSPECTION
5.1 FUSION shall maintain accurate books and records that enable the
calculation of royalties payable hereunder to be verified. FUSION shall retain
the books and records for each Quarterly Period for three (3) years after the
submission of the corresponding Royalty Report.
5.2 INVENTOR or its agents, such as an independent royalty investigator or
accountant, shall have the right once per calendar year, upon reasonable notice,
to inspect FUSION's books and records during FUSION's normal business hours at
mutually agreed times for the sole purpose of verifying the accuracy of FUSION's
royalty payments and compliance with Section 3.1 of this Agreement. Any such
inspection shall be at INVENTOR's expense. In no event shall INVENTOR have the
right to inspect information with respect to FUSION's products other than the
Affected Materials and Affected Products, cost for materials, pricing formulae,
or percentages of xxxx-up.
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5.3 In the event that such inspection demonstrates an underpayment by
FUSION to INVENTOR, FUSION shall promptly pay to INVENTOR the underpayment plus
interest from the date such amount was due at the prime rate reported by the
Citibank, New York, New York.
6. REPRESENTATIONS AND WARRANTIES
INVENTOR represent and warrant that:
(i) INVENTOR is the sole inventor and exclusive owner of the entire
right, title and interest in and to the Intellectual Property and no other
party, including Clarkson University, has any right to practice, or ownership
interest in, the Intellectual Property;
(ii) there are no outstanding liens, encumbrances, Third Party rights,
agreements, understandings, or claims of any kind whatsoever, either written,
oral or implied, regarding the Intellectual Property that are inconsistent or in
conflict with any provision of this Agreement;
(iii) INVENTOR has the right and power to enter into this Agreement
and the authorization, execution or delivery of this Agreement does not require
any Third Party consent or approval;
(iv) INVENTOR is able, and has not admitted in writing its inability,
to pay its debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors, consented to
the appointment of a receiver for itself or for the whole or any substantial
part of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other laws of the United
States or any other jurisdiction; and
(v) there is no threatened or pending legal action against INVENTOR
with respect to the Intellectual Property.
7. PATENT PROSECUTION
7.1 FUSION shall apply for and shall diligently seek prompt issuance of and
maintain during the term of this Agreement the Licensed Patents in the United
States and in such foreign countries as may be designated by FUSION in a written
notice to INVENTOR within a reasonable time in advance of the required foreign
filing dates. FUSION shall have the right, in its sole discretion, to decide
what portion of the Intellectual Property to retain as trade secrets or to file
for patent protection. All patent applications shall list FUSION and INVENTOR as
co-owners. FUSION shall provide INVENTOR with copies of patent applications and
substantive responses to office actions prior to filing of the same in relevant
patent offices and shall advise INVENTOR regarding national and regional patent
filings and maintenance of the same. If FUSION elects not to pursue such patent
prosecution filing and maintenance as INVENTOR deems appropriate, then INVENTOR
may elect to do so at his own expense and FUSION agrees to cooperate with
INVENTOR in such undertakings.
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7.2 All fees and costs, including attorneys` fees, relating to the filing,
prosecution and maintenance of the Licensed Patents incurred after the date of
this Agreement shall be the responsibility of FUSION.
7.3 If FUSION elects to pursue a patent prosecution filing and maintenance
under Section 7.1, INVENTOR agrees to cooperate fully in the preparation,
filing, prosecution, defense, and maintenance of such patent, including but not
limited to executing all papers and instruments so as to enable FUSION to apply
for, to prosecute, to defend, and to maintain such patent and the applicable
patent application.
8. INFRINGEMENT
8.1 If either party shall determine that there is a probable infringement
of any of the Intellectual Property by a Third Party, that party shall promptly
notify the other party in writing of the infringement.
8.2 FUSION, on discovery or notification of such infringement, shall, with
reasonable promptness, refer the matter to its intellectual property counsel to
perform an infringement evaluation and determine the likelihood of success on
the merits of an infringement claim. At its option and its expense, INVENTOR may
retain its own intellectual property counsel to conduct an independent
evaluation or to consult with FUSION's intellectual property counsel regarding
the evaluation under a suitable joint privilege agreement.
8.3 If FUSION determines that the facts pertaining to infringement and the
likelihood of success of any action warrants taking legal action against an
infringer, FUSION shall advise INVENTOR in writing of such determination prior
to taking any legal action. If FUSION determines that the facts pertaining to
infringement and the likelihood of success of any action do not warrant taking
legal action, it shall so advise INVENTOR. If FUSION decides not to pursue legal
action, INVENTOR shall have the option to elect to bring an infringement action
at its own cost and expense. If FUSION decides not to bring litigation for
patent infringement, INVENTOR shall not hold FUSION liable for lack of
infringement litigation.
8.4 The parties agree to fully cooperate with and assist each other in any
infringement action under the Intellectual Property. If one party brings an
infringement action against a Third Party ("Litigating Party"), the other party,
in order to assist in bringing and maintaining the suit, shall: (i) join as a
party, if necessary to the maintenance of the infringement action; (ii) grant
all lawful permissions and sign all lawful documents necessary in the Litigating
Party's judgment to prosecute the action; and (iii) give all truthful testimony
requested by the litigating party.
8.5 If any infringement action taken shall prove successful and the
Litigating Party shall collect monies by judgment or settlement, and provided
the other party complies with Section 8.4, the Litigating Party shall: (i)
deduct its intellectual property counsel fees and other reasonable expenses
attendant to such action, including without limitation expert fees; and (ii)
then shall pay to the other party twenty-five (25%) percent of the balance of
monies collected by judgment or settlement.
8.6 Neither party may settle an infringement claim without the prior
approval of the other party if such settlement would affect the rights of the
other party in the Licensed Patents.
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9. TERM, BREACH, AND TERMINATION
9.1 Except as herein provided, this Agreement shall remain in full force
and effect until the last claim of any patent included in the Licensed Patents
expires.
9.2 If FUSION fails to perform any one or more of its material obligations
required by this Agreement and shall not remedy the same within ninety (90) days
after receipt of written notice by INVENTOR specifying the details of the
alleged breach, or if GUARANTOR shall discontinue business, become insolvent,
have a receiver appointed, go into liquidation, or be the subject of any
bankruptcy proceeding that is instituted and not dismissed within thirty (30)
days, then INVENTOR shall have the option to terminate this Agreement.
9.3 FUSION may terminate this Agreement at any time upon sixty (60) days
prior written notice.
9.4 No termination under Sections 9.2 or 9.3 shall relieve any party from
any existing obligation under this Agreement prior to termination, including
without limitation the obligation to pay royalties. No termination of this
Agreement shall result in a termination of any sublicense (other than a
sublicense to an Affiliate) if the sublicensee is not in default under the
sublicense agreement and agrees to perform all of the obligations of FUSION to
INVENTOR under this Agreement. Termination of this Agreement shall result in the
immediate termination of FUSION'S undertakings and obligations under Sections
4.1, 4.2 and 4.3.
10. CONFIDENTIAL INFORMATION
10.1 Unless agreed to in advance and in writing, INVENTOR agrees not to
disclose any confidential or proprietary information from FUSION or GUARANTOR
relating to the Intellectual Property or business information relating to the
Affected Materials, Affected Processes or Affected Products, including without
limitation information regarding the quantity or Net Sales of the Affected
Materials or Affected Products, sublicense terms or Fees, costs, pricing or
customer information ("the Confidential and Proprietary Information"). INVENTOR
hereby agrees to exert its best efforts, equivalent to the protection given to
his own confidential information, to prevent delivery or disclosure of the
Confidential and Proprietary Information to any Third Party without first
obtaining FUSION's written consent to the delivery or disclosure.
10.2 The obligations of nondisclosure as set forth in Section 10.1 of this
Agreement will not apply to any portion of the information that:
(i) becomes public or is received by the recipient from a Third Party
not bound by a similar obligation of secrecy; or
(ii) is required to be disclosed by law or applicable government
regulations.
10.3 In the event a court of competent jurisdiction orders INVENTOR to
disclose all or part of the Confidential and Proprietary Information, INVENTOR
shall promptly notify FUSION of same, and the parties shall cooperate in seeking
a protective order or other reasonable assurances that the confidentiality of
such information will be maintained. If FUSION is unable to obtain a protective
order or other appropriate remedy, INVENTOR will disclose only that portion of
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the Confidential and Proprietary Information as is necessary to be in compliance
with the court's order.
11. MISCELLANEOUS
11.1 Captions and section headings are used for convenience of reference
only and are not part of this Agreement and may not be used in construing it.
11.2 The WHEREAS clauses as set forth above are incorporated herein by
reference into and are part of this Agreement.
11.3 This Agreement may be executed in several counterparts, each of which
will be deemed an original and such counterparts will together constitute and be
one and the same instrument.
11.4 This Agreement shall be subject to and construed according to the laws
of the State of New York without regard to conflicts of laws with any other
jurisdiction. Any litigation arising out of or relating to this Agreement shall
be brought in the state or federal courts located in Buffalo, New York, as
appropriate, and the parties expressly consent and agree to personal
jurisdiction and venue in these courts.
11.5 This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties. This Agreement may not be assigned by
INVENTOR without the prior written consent of FUSION.
11.6 If any provision of this Agreement is or becomes or is deemed invalid,
illegal or unenforceable under the applicable laws or regulations of any
jurisdiction, such provision will be deemed amended to conform to such laws or
regulations without materially altering the intention of the parties or it will
be stricken and the remainder of this Agreement will remain in full force and
effect. In the event that any provision of this Agreement is declared by a court
of competent jurisdiction to be invalid, illegal, or otherwise unenforceable,
the validity, legality, and enforceability of the remaining provisions will not
in any way be affected or impaired thereby.
11.7 Each party further agrees that no failure or delay by the
non-breaching party, its agents or representatives, in exercising any right,
power or privilege under this Agreement shall operate as a waiver thereof unless
expressed in writing, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege under this Agreement.
11.8 This document constitutes the full understanding of the parties and a
complete and exclusive statement of the terms of their agreement, and no terms,
conditions, usage of trade, course of dealing, understanding or agreement
purporting to modify or vary the terms of this Agreement shall be binding unless
hereafter made in writing and signed by the party to be bound. This Agreement
supersedes all previous or contemporaneous dealings or agreements with respect
to the subject matters of this Agreement.
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11.9 No amendment, change or modification of any of the terms, provisions
or conditions of this Agreement shall be effective unless made in writing and
signed on behalf of the parties hereto by their duly authorized representatives.
11.10 All notices provided for in this Agreement shall be deemed
sufficiently given when sent by telefacsimilie and confirmed by U.S. mail or
overnight courier addressed to the party for whom intended at the following
address:
If to FUSION, to: ND Fusion, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
Attn: President
If to INVENTOR, to: Xxxxxx Xxxxxxx
If to GUARANTOR to: NanoDynamics, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
Attn: CEO
11.11 The parties mutually agree to execute, acknowledge, and deliver any
and all such other agreements, documents, instruments, and to perform any and
all such acts and things as may be reasonably necessary and proper to consummate
the transactions contemplated by this Agreement.
11.12 Each party understands the contents of this Agreement and has had an
opportunity to thoroughly review its terms with their own attorney. In addition,
the parties acknowledge that this Agreement has been executed freely and
voluntarily upon the best judgments of the parties. The parties further
acknowledge and agree that this Agreement shall not be construed in favor of, or
against, either party by reason of the extent to which either party or their
counsel participated in the drafting of this Agreement.
11.13 Each party represents and warrants that as of the date of the
execution of this Agreement, they have the exclusive right and authority to
execute this Agreement, and that they have not sold, assigned, transferred,
conveyed or otherwise disposed of any right referred to in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the Effective Date.
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ND FUSION, INC. XXXXXX XXXXXXX
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxxx
------------------------------- ----------------------------------
Title: President Title: DR
------------------------------ ---------------------------------
Date: 4/13/06 Date: 4/13/06
------------------------------- ----------------------------------
NANODYNAMICS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------
Title: CEO
------------------------------
Date: 4/13/06
-------------------------------
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AMENDMENT TO
EXCLUSIVE LICENSE AGREEMENT
THIS AMENDMENT, made and entered into as of the 1st day of February, 2007 amends
the Exclusive License Agreement executed as of April 1, 2006 (hereinafter
AGREEMENT) between XXXXXX XXXXXXX (hereinafter known as ROSHAN) and ND FUSION,
INC. (hereinafter known as FUSION),
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. Capitalized terms used in this Amendment that are not defined herein
shall have the meaning ascribed to them in the original license agreement.
2. The royalties provided for in Section 3.1 are reduced as follows:
(a) In Section 3.1 (ii), the royalty on Fees is reduced to 12.5 % from
15%;
(b) In Section 3.1 (iii), the royalty on sales of Affected Materials
is reduced to 3% from 5%; and
(c) In Section 3.1 (iv), the royalty on sales of Affected Products is
reduced to 4.5% from 7.5%.
3. All other terms and conditions of the original license agreement remain
unchanged and in effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
XXXXXX XXXXXXX ND FUSION, INC.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------------- ------------------------------------
Xxxxx X. Xxxxxxx, Pres
Date: March 23, 2007 Date: March 21, 2007
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