Exhibit 10.12
PREAMBLE
This Exclusive License (hereinafter called "LICENSE") is made and
entered into by and between the United States of America as represented by the
Secretary of the Navy (hereinafter called "LICENSOR") and Universal Guardian
Corporation incorporated in the State of Nevada, (hereinafter called "LICENSEE")
having an address at 0000 X.X. Xxxxxxx Xxxxx 000, Xxxxxxx Xxxxx, XX 00000.
WITNESSETH:
WHEREAS Title 35 of the United States Code, Section 207 authorizes
Federal agencies to license their patents; and
WHEREAS Title 37 of the Code of Federal Regulations, Chapter IV, Part
404 entitled "Licensing of Government Owned Inventions" sets forth the terms and
conditions under which licenses may be granted; and
WHEREAS the above-cited authorities provide that licensing of
Government inventions will best serve the interests of the Federal Government
and the Public when utilization of such inventions is promoted and such
inventions are brought to practical application; and
WHEREAS, LICENSOR has an assignment of title to the invention disclosed
and claimed in United States Patent No. 6,145,441 issued on 14 Nov. 2000, for
the Frangible Payload Dispensing Projectile; and
WHEREAS LICNSOR has published in the Federal Register of 6/12/02 the
availability of a LICENSE under U.S. Patent No. 6,145,441; and
WHEREAS LICENSEE has supplied LICENSOR with a plan for development and
marketing of this invention and has expressed its intention to carry out this
plan upon the granting of this LICENSE; and
WHEREAS LICENSEE has agreed that any products embodying this invention
or produced through the use of this invention for use or sale in the United
States will be manufactured substantially in the United States; and
WHEREAS LICENSOR has published in the Federal Register of 10/31/02,
notice of its intention to grant this LICENSE under U.S. Patent No. 6,145,441 to
LICENSEE and has provided the public with an opportunity for filing written
objections; and
WHEREAS LICENSOR has determined that:
(A) The interest of the Federal Government and the public will best be
served by the proposed LICENSE, in view of the LICENSEE'S intentions, plans, and
ability to bring the invention described and claimed in U.S. Patent No.
6,145,441 to practical application or otherwise promote the invention's
utilization by the public;
(B) The desired practical application has not been achieved, or is not
likely expeditiously to be achieved, under any nonexclusive LICENSE which has
been granted, or which may be granted on the invention;
(C) Exclusive licensing is a reasonable and necessary incentive to call
forth the investment of risk capital and expenditures to bring the invention to
practical application or otherwise promote the invention's utilization by the
public;
(D) The proposed terms and scope of exclusivity are not greater than
reasonably necessary to provide the incentive for bringing the invention to
practical application or otherwise promote the invention's utilization by the
public; and
WHEREAS LICENSOR has not determined that the grant of this LICENSE will
tend substantially to lessen competition or result in undue concentration in any
section of the country in any line of commerce to which the technology to be
licensed relates or to create or maintain other situations inconsistent with the
antitrust laws; and
WHEREAS LICENSOR has considered the capabilities of LICENSEE to bring
the invention to practical application and has found that the LICENSEE is a
responsible party for negotiating this LICENSE on terms and conditions most
favorable to the public interest and that to grant this exclusive LICENSE would
be in the public interest;
NOW THEREFORE, in accordance with and to the extent provided by the
aforementioned authorities and in consideration of the foregoing premises and of
the covenants and obligations hereinafter set forth to be well and truly
performed and other good and valuable consideration, the parties hereto agree to
the foregoing and as follows:
ARTICLE I
Definitions
The following definitions shall apply to the defined words where such
words are used in this LICENSE:
(a) The "licensed patent" means U.S. Patent 6,145,411 entitled
"Frangible Payload Dispensing Projectile" issued 14 Nov. 2000 issued to Xxxxxx
Xxxxxxx and Xxxxxx Xxxxxx.
(b) The "licensed invention" means an invention claimed in U.S. Patent
No. 6,145,441.
(c) To "practice the licensed invention" means to make, use, and sell
by or on behalf of LICENSEE or otherwise dispose of according to law any
machine, article of manufacture, or composition of matter physically embodying
or made according to the licensed invention;
(d) "Practical application" means to manufacture in the case of a
composition or product, to practice in the case of a process or method, or to
operate in the case of a machine system, and, in each case under such conditions
as to establish that a licensed invention is being utilized and that its
benefits are to the extent permitted by law and Government regulations available
to the public on reasonable terms;
(e) A "royalty-bearing product" means any product defined by any claim
of a licensed patent or made by a process or method claimed in the licensed
patent;
(f) "Gross sales" shall mean sales before expenses of the
royalty-bearing product.
(g) "United States" means the United States of America, its territories
and possessions, the District of Columbia, and the Commonwealth of Puerto Rico.
(h) A "grace period" is the period after October 1 of a calendar year
and before January 1 of the following calendar year.
ARTICLE II
License Grant
LICENSOR grants to LICENSEE an exclusive right and license to practice
the licensed invention in the fields of military, state, county, local law
enforcement, recreation and others where frangible payload dispensing technology
can be commercialized for the life of the LICENSE commencing on the date of
execution of this LICENSE by LICENSOR, which shall become the effective date of
the LICENSE, and continuing until the expiration of U.S. Patent No. 6,145,411
unless the LICENSE is sooner modified or terminated in whole or in part.
This LICENSE is nonassignable without written approval of LICENSOR
except to the successor of that part of LICENSEE'S business to which the
licensed invention pertains.
ARTICLE III
LICENSEE'S Performance
LICENSEE agrees to carry out the plan for development and marketing of
the licensed inventions submitted with LICENSEE'S Application for License dated
10/9/02 to bring the licensed invention to practical application by 8/03 and
LICENSEE will, thereafter, continue to make the benefits of the licensed
invention reasonably accessible to the public for the remainder to the period of
this LICENSE.
LICENSEE agrees that during the duration of this LICENSE any products
embodying a licensed invention for use or sale by LICENSEE or its sublicensees
in the United States will be manufactured substantially in the United States.
The LICENSEE shall pay to the LICENSOR a non-refundable licensing fee
in the amount of five thousand dollars ($5,000.00) payable upon the execution of
this LICENSE by LICENSEE. LICENSEE agrees to pay to LICENSOR one half of any
licensing fee collected from any sublicensee. Payment will be made in the manner
prescribed in Article IV.
LICENSEE agrees to promptly report to LICENSOR any changes in mailing
address, name or company affiliation during the period of this LICENSE and to
promptly report discontinuance of LICENSEE'S making the benefits of this
licensed invention reasonably accessible to the United States public.
ARTICLE IV
Royalties
LICENSEE shall pay a royalty to LICENSOR of 1.5 percent (1.5%) of gross
sales for each royalty-bearing product made, used, or sold by LICENSEE or its
sublicensees in the United States.
Royalties will not be paid on items sold directly to agencies of the
U.S. Government or for known U.S. Government end use.
Notwithstanding the provisions of the preceding paragraphs in this
Article IV, LICENSEE agrees to pay at least a minimum annual royalty of two
thousand five hundred dollars ($2,500.00) for calendar year 2004, seven thousand
five hundred dollars ($7,500.00) for calendar year 2005, fifteen thousand
dollars ($15,000.00) for calendar year 2006, and twenty thousand ($20,000.00)
for calendar year 2007 and for each calendar year thereafter throughout the
period of the LICENSE. The minimum annual royalty for each calendar year shall
be due and payable in advance on or before October 1 of the preceding year and
will be credited as advance payment of royalties to accrue during the calendar
year following payment. The minimum annual royalty payments will not be refunded
in whole or in part.
LICENSEE shall send to LICENSOR all royalties which accrue between 1
January and 31 December of each year by 1 March of the following year. A royalty
report shall be included with each payment setting forth, the quantity and net
selling price of each royalty-bearing product sold during the period covered by
the report, to whom sold and the date of such sale, and the total amount of
royalties being paid for that year. Royalty reports are due for each calendar
year. The last royalty report is due no later than sixty (60) days after the
expiration of this LICENSE.
All payments due LICENSOR under this LICENSE shall be made payable to
DFAS-CH DSSN 8347 and mailed to:
Deputy Counsel (Intellectual Property)
Office of Naval Research
ONR OOCCIP, ONR OOCC Room 207
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
LICENSEE agrees to make and keep full, accurate and complete books and
records, as are necessary to establish its compliance with this Article IV.
LICENSEE agrees that LICENSOR may, if LICENSOR so desires at a future
time or times, have a duly authorized agent of representative on LICENSOR'S
behalf, inspect, check or verify all such books and records either at LICENSEE'S
business premises or at a place mutually agreed upon by LICENSEE and LICENSOR.
ARTICLE V
Patent Marking and Nonendorsement
LICENSEE hereby agrees to xxxx each product manufactured or sold under
this LICENSE (or when the character of the product precludes marking, the
package containing any such product) with the notation "Licensed from U.S. Navy
under U.S. Patent No. 6,145,411." LICENSEE agrees not to create the appearance
that LICENSOR endorses LICENSEE'S business or products.
ARTICLE VI
Representations and Warranties
LICENSOR makes no representation or warranty as to validity of U.S.
Patent No. 6,145,411 or of the scope of any of the claims contained therein or
that the exercise of this LICENSE will result in the infringement of other
patents. Neither LICENSOR nor its employees assume any liability whatsoever
resulting from the exercise of this LICENSE.
Nothing relating to the grant of this LICENSE, nor the grant itself,
shall be construed to confer upon LICENSEE or any sublicensee hereunder or any
other person any immunity from or defenses under the antitrust laws or from a
charge of patent misuse, and the acquisition and use of rights pursuant to this
LICENSE shall not be immunized from the operation of State or Federal law by
reason of the source of the grant.
Nothing contained in this LICENSE shall be interpreted to grant to
LICENSEE any rights with respect
ARTICLE VII
Reports
LICENSEE agrees to submit periodic reports on its efforts to achieve
practical application of the licensed invention by 8/03 with particular
reference to LICENSEE'S plan for development and marketing of the licensed
invention submitted with LICENSEE'S application for license. These reports shall
contain information within LICENSEE'S knowledge, or which it may acquire under
normal business practices, pertaining to the commercial use being made of the
licensed invention and other information which LICENSOR may determine is
pertinent to Government licensing activities. LICENSEE agrees to submit such
reports to LICENSOR semiannually until such time that the invention has been
brought to the point of practical application.
ARTICLE VIII
Modification and Termination
This LICENSE may be terminated in whole or in part by LICENSOR, if:
(1) LICENSOR determines that LICENSEE is not executing the plan
submitted with the application for license dated 10/09/02 and LICENSEE cannot
otherwise demonstrate to the satisfaction of LICENSOR that it has taken or can
be expected to take within a reasonable time effective steps to achieve
practical application of this licensed invention;
(2) LICENSOR determines that such action is necessary to meet
requirements for public use specified by Federal regulations issued after the
date of this LICENSE and such requirements are not reasonably satisfied by
LICENSEE;
(3) LICENSEE willfully made a false statement of or willfully omitted a
material fact in its application for license or in any report required by this
LICENSE; or
(4) LICNESEE commits a substantial breach of a covenant or agreement
herein contained.
This LICENSE may be modified or terminated in whole or in part
consistent with the law and applicable regulations upon mutual agreement of
LICENSOR and LICENSEE evidenced in writing and signed by both parties.
This LICENSE may be restricted to the fields of use or geographic
areas, or both, in which the LICENSEE has brought the invention to practical
application and continues to make the benefits of the invention reasonably
accessible to the public. However, such restrictions may be made only after five
(5) years following the effective date of the LICENSE.
LICENSEE may request modification of this LICENSE in writing sent to
LICENSOR and stating the reasons therefore.
Before modifying or terminating in whole or in part this LICENSE, other
than by mutual agreement, LICENSOR shall furnish LICENSEE and each sublicensee a
written notice of intention to modify or terminate in whole or in part this
LICENSE, and LICENSEE and any sublicensee shall be allowed thirty (30) days
after such notice or other agreed-upon time period, whichever is greater, to
remedy any breach of any covenant or agreement set forth in this LICENSE or to
show cause why this LICENSE should not be modified or terminated in whole or in
part.
Notwithstanding the provisions of Article II, LICENSEE and LICENSOR
agree that this LICENSE shall automatically terminate on September 30 of any
year if the minimum annual royalty due for the following calendar year, as
expressed in Article IV of the LICENSE, is not timely paid. If however, the
minimum annual royalty payment together with a surcharge of five hundred dollars
($500.00) is paid during the grace period before the following calendar year,
then this LICENSE shall be considered as not having automatically terminated.
LICENSEE has a right to appeal, in accordance with procedures
prescribed by the Chief of Naval Research, any decision or determination
concerning the interpretation, modification or termination in whole or in part
of this LICENSE.
ARTICLE IX
Officials Not to Benefit
No member of or delegate to Congress, or resident commissioner, shall
be admitted to any share or part of this LICENSE or to any benefit to arise
thereupon.
ARTICLE X
Notice
All communications and notices required under this LICENSE shall be
considered duly given if timely mailed by U.S. Postal Service, first class,
postage prepaid and addressed as follows:
(a) if to LICENSOR:
Office of Counsel
Coastal Systems Station, Xxxxxxxx Division
0000 X. Xxx. 00
Xxxxxx Xxxx, XX 00000-0000
(b) if to LICENSEE:
Universal Guardian Corporation
0000 X.X. Xxxxxxx Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
ARTICLE XI
Sublicensing
During the first five (5) years of this LICENSE, LICENSEE may grant,
subject to the approval of LICENSOR, sublicenses under this LICENSE upon terms
and conditions that LICENSEE may arrange provided that:
a. Each sublicense shall be in writing and make reference to this
LICENSE including the rights retained by LICENSOR under this LICENSE; and
b. Each sublicense shall specify that it is granted pursuant to
this LICENSE, that no provision shall be in derogation of or diminish any rights
in this LICENSE and include the condition that the sublicense shall
automatically be modified or terminated in whole or in part upon the
modification or termination in whole or in part of this LICENSE; and
c. Before any sublicense is granted by LICENSEE, the written
approval of LICENSOR shall first be obtained for each sublicense; and
d. Within thirty (30) days after the issuance or modification of
any sublicense hereunder, LICENSEE shall furnish LICENSOR with a true and
complete copy of the sublicense or any modification therof;
e. The granting of any sublicense by LICENSEE shall in no way
relieve LICENSEE from any of the requirements of this LICENSE. Any sublicense
granted by LICENSEE that does not comply with the requirements of this Article
XI is void.
ARTICLE XII
Reservation of Rights
LICENSOR reserves the right to require LICENSEE to and LICENSEE agrees
to grant promptly sublicenses to responsible applicants on reasonable terms when
necessary to fulfill health and safety needs of the public to the extent such
needs are not being reasonably satisfied by LICENSEE and its sublicensees.
This LICENSE is subject to the irrevocable, royalty-free right of the
Government of the United States to practice and have practiced this licensed
invention throughout the world by or on behalf of the United States and by or on
behalf of any foreign government or intergovernmental or international
organization pursuant to any existing or future treaty or agreement with the
Government of the United States.
This LICENSE is subject to any licenses in force at the time of the
grant of this LICENSE.
ARTICLE XIII
Litigation
LICENSOR does not by entering into this LICENSE transfer the property
rights in the licensed invention, provided however, that during the period that
this LICENSE is exclusive, LICENSEE has the right of enforcement of the licensed
patent in the fields of use where exclusively licensed, at no cost to the
Government, pursuant to the provisions of Chapter 29 of Title 35, United States
Code, or other statutes.
LICENSEE shall pay LICENSOR the lesser of (I) an amount equal to the
royalty that would have been payable by LICENSEE in accordance with this LICENSE
had the unlicensed entity been licensed by LICENSEE, or (II) one-half of the
actual recovery after deduction of LICENSEE'S litigation costs and expenses.
sublicense: and
IN WITNES WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized representatives.
UNITED STATES OF AMERICA
For the Secretary of the Navy
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxx, CAPT, USN
Title:
--------------------------------
COM NSWCDD
Date: 12/19/02
--------------------------------
UNIVERSAL GUARDIAN CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Title: CEO
-------------------------------
Chief Executive Officer
Date: 29, November 2002
--------------------------------
ATTEST:
