NON-EXCLUSIVE MANUFACTURING
LICENSE AGREEMENT
by and between
ROTARY POWER INTERNATIONAL, INC. ("RPI")
and
ROTARY POWER ENTERPRISE, INC. ("RPE")
August 16, 2000
TABLE OF CONTENTS
ARTICLE SECTION TITLE PAGE
------- ------- ----- ----
I DEFINITIONS
1.1 Party 1
1.2 Parties 1
1.3 Affiliate 1
1.4 580 NGRE 1
1.5 Term of this Agreement 1
1.6 Licensed Technology 2
1.7 Licensed Patents 2
1.8 Licensee 2
1.9 Licensed Intellectual Property 2
1.10 Net Sales Value 3
1.11 Event of Default 3
II GRANT OF LICENSE
2.1 Licensed Technology and Licensed Patents 3
2.2 Royalty 4
III ROYALTY PAYMENTS AND REPORTS
3.1 Payments and Reports 4
3.2 Books and Records 4
IV PROTECTION OF INTELLECTUAL PROPERTY
4.1 Use and Protection of Licensed
Intellectual Property 5
4.2 Validity and Ownership 5
4.3 Infringement Actions and Claims 6
V ADDITIONAL ASSURANCES AND ASSISTANCE
5.1 Transmittal of Technology 7
5.2 Additional Technical Assistance 8
5.3 Disposition of Licensed
Intellectual Property 9
5.4 Improvements 9
5.5 Non-Disclosure 9
VI REPRESENTATIONS AND WARRANTIES
6.1 Authority 10
6.2 Disclaimer of Warranties 11
6.3 Survival 11
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TABLE OF CONTENTS
(Continued)
ARTICLE SECTION TITLE PAGE
------- ------- ----- ----
VII TERM AND TERMINATION
7.1 Term 11
7.2 Events of Default and Remedies 11
7.3 Compliance with Laws 13
VIII MISCELLANEOUS
8.1 Waiver 14
8.2 Amendment 14
8.3 Assignment 14
8.4 Notice 14
8.5 Third Party Rights 15
8.6 Governing Law 15
8.7 Headings 15
8.8 Integration 15
8.9 Severability 15
8.10 Counterparts 15
8.11 Language 15
8.12 Further Assurance 15
8.13 Reference to Agreement 16
8.14 Additional Agreements 16
SCHEDULE A - List of Patents A-1
SCHEDULE B - Copy of Purchase Agreement, as Amended,
Dated as of November, 15, 1991, Between
JDTI and Licensor B-1
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NON-EXCLUSIVE MANUFACTURING LICENSE AGREEMENT
THIS NON-EXCLUSIVE MANUFACTURING LICENSE AGREEMENT (hereinafter referred
to as this "Agreement"), dated as of the 16th day of August, 2000, by and
between Rotary Power International, Inc. ("RPI"), a Delaware corporation
(hereinafter referred to as "Licensor"), and Rotary Power Enterprise, Inc.
("RPE"), a Nevada corporation (hereinafter referred to as "Licensee").
WITNESSETH
WHEREAS, Licensor is the owner of the rights necessary to license the
Licensed Intellectual Property (as hereinafter defined) to the Licensee in
accordance with the terms and conditions of this Agreement, and
WHEREAS, the Licensor is granting to the Licensee a non-exclusive license
and right to use the Licensed Intellectual Property in order to manufacture,
install, service and warranty the Licensor's Carbureted Natural Gas Fueled 580
Series Rotary Engine, subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Terms used in this Agreement with initial capital letters shall have the
following meaning:
Section 1.1 Party. "Party" shall mean Licensor or Licensee.
Section 1.2 Parties. "Parties" shall mean Licensor and Licensee.
Section 1.3 Affiliate. "Affiliate" shall mean any corporation, company or
other entity that directly or indirectly controls, or is controlled by, or is
under common control with, either Party, as of the date hereof or thereafter
during the Term of this Agreement (as hereinafter defined), but such
corporation, company or other entity shall be deemed to be an "Affiliate" only
so long as such control exists. The term "control", as used in this Section
1.03, shall mean ownership of at least fifty percent (50%) of the voting shares
or interest of an entity.
Section 1.4 580 NGRE. "580 NGRE" shall mean the Licensor's Carbureted
Natural Gas Fueled 580 Series rotary engine.
Section 1.5 Term of this Agreement. "Term of this Agreement" shall mean
the period during which this Agreement is in effect, beginning as of the date
hereof and continuing until the termination of this Agreement as provided in
Section 7.2 of this Agreement.
Section 1.6 Licensed Technology. "Licensed Technology" shall mean any and
all technology, current and/or future enhancements thereto, know-how and
technical information needed to make and manufacture the 580 NGRE which are
owned or controlled by Licensor or any of its Affiliates at any time during the
Term of this Agreement, to the extent that Licensor or any of its Affiliates has
or may acquire during the Term of this Agreement the right to grant licenses of
the scope granted herein without the payment of royalties or other consideration
to third persons except for payment to third persons for inventions made by said
third persons while employed by Licensor or any of its Affiliates.
Notwithstanding the foregoing and any other provision contained in this
Agreement, including, without limitation, Section 2.2 hereof, as to technology,
know-how and/or technical information acquired by Licensor requiring payment to
third parties, to the extent that such technology, know-how and/or technical
information are licensable or sub-licensable to Licensee, such technology,
know-how and/or technical information shall be offered for license to Licensee,
subject to the same terms and conditions (including payment obligations) as
those to which Licensor is subject in respect of such third parties, and, if
Licensee accepts such offer, such technology, know-how and/or technical
information shall become "Licensed Technology" hereunder.
Section 1.7 Licensed Patents. "Licensed Patents" shall mean (i) the
patents listed on Schedule A attached hereto, together with any and all
renewals, reissues, reexaminations and extensions thereof and additions thereto,
and (ii) any and all patent applications, including divisionals, continuations
and continuations-in-part, which relate to the 580 NGRE and which are owned or
controlled by Licensor or any of its Affiliates at any time during the Term of
this Agreement, to the extent that Licensor or any of its Affiliates has or may
acquire during the Term of this Agreement the right to grant licenses of the
scope granted herein without the payment of royalties or other consideration to
third persons except for the payment to third persons for inventions made by
said third persons while employed by Licensor or any of its Affiliates.
Notwithstanding the foregoing and any other provision contained in this
Agreement, including, without limitation, Section 2.2 hereof: (i) as to any
patents listed on Schedule A attached hereto requiring payment to third parties,
to the extent that such patents are licensable or sub-licensable to Licensee,
such patents shall be offered for license to Licensee, subject to the same terms
and conditions (including payment obligations) as those to which Licensor is
subject in respect of such third parties, and, if Licensee accepts such offer,
such patents shall become "Licensed Patents" hereunder; and (ii) as to any
Licensed Patents coming into existence after the effective date of this
Agreement, the licensing of such Licensed Patents to Licensee shall be subject
to separate terms and conditions to be determined on a case-by-case basis with
respect to each such Licensed Patent, taking into consideration the commercial
value of each such Licensed Patent.
Section 1.8 Licensee. "Licensee" shall mean the Licensee and any entity to
which the Licensee sub-licenses the rights it has received under this Agreement
in accordance with the terms and conditions of this Agreement.
Section 1.9 Licensed Intellectual Property. "Licensed Intellectual
Property" shall mean any and all Licensed Technology and Licensed Patents,
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and all modifications, translations, enhancements, compilations and new versions
thereof.
Section 1.10 Net Sales Value. "Net Sales Value" shall mean the invoice
price for each 580 NGRE sold to customers by Licensee, less excise or sales
taxes which Licensee has to pay or absorb, customs duties and consular fees, if
any, insofar as these are included in the invoice price, and can be
substantiated through adequate documentation and less delivery freight cost to
customer; check, test and start cost if included in the invoice price; and any
spare parts if included in the invoice price. If a 580 NGRE is used but not
sold, or transferred to third parties who use the same, or sold other than in
normal arm's length transactions, then Net Sales Value shall mean the current
"Net Sales Value Price" of Licensee then existing for the 580 NGRE.
Section 1.11 Event of Default. "Event of Default" shall have the meaning
set forth in Section 7.2 of this Agreement.
ARTICLE II
GRANT OF LICENSE
Section 2.1 Licensed Technology and Licensed Patents. (a) Subject to the
terms and conditions of this Agreement, Licensor hereby grants to Licensee a
perpetual, worldwide, non-exclusive, non-transferable license and right to use
and/or sublicense the Licensed Intellectual Property in order to make,
manufacture, install, service and warranty the 580 NGRE during the Term of this
Agreement. The Licensee may sublicense the right to use the Licensed
Intellectual Property in order to make, manufacture, install, service and
warranty the 580 NGRE during the Term of this Agreement to third parties
provided that each such third party shall have executed a written sublicense
agreement with the Licensee that provides for the use of the Licensed
Intellectual Property by such third party for the same purpose and on
substantially the same terms and conditions, and provides substantially the same
protection for the Licensor's rights and interests, as are contained in this
Agreement.
(b) The Licensee agrees that the license described above is being
granted on the condition that: (i) the Licensee will market, manufacture, and
warranty its engines without any reference to, or any use of any trademark,
service xxxx or tradename of, the Licensor or Pegasus Technologies Incorporated
("PTI"), and (ii) following the initial technology transfer, the Licensee agrees
that it is solely responsible to market, manufacture, install, service and
warranty the 580 NGREs sold by the Licensee without any assistance from the
Licensor except as otherwise set forth in Section 5.2.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the license and right to use the Licensed Intellectual Property
granted to the Licensee in this Agreement is expressly conditioned upon
Licensee's agreement to market and sell the 580 NGREs which are made and
manufactured by or on behalf of the Licensee under a name which does not make
any reference to, or use any trademark, service xxxx or tradename of, the
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Licensor or PTI, or in any way use or contain the words "Rotary Power" or
"Pegasus" or any variations thereof.
[d] Licensee acknowledges that, as of the date of this Agreement,
only Licensed Intellectual Property which will permit a demonstration 580 NGRE
to be made is in existence and available to be transferred to Licensee and the
necessary Licensed Intellectual Property which will permit a final production
class 580 NGRE to be manufactured and produced has not yet been developed and is
not available and must be delivered as developed after the date of this
Agreement.
(e) Licensee acknowledges that, as of the date of this Agreement,
Licensor is in default in its obligation to make the minimum royalty payments
required to be paid to Xxxx Deere Technologies, Inc. ("JDTI") pursuant to the
Purchase Agreement, as amended, dated as of November 15, 1991, between JDTI and
Licensor (the "JDTI Purchase Agreement"), a copy of which is attached hereto as
Schedule B and incorporated herein by reference, and Licensor is currently in
negotiation with JDTI to enter into an amendment or modification to the JDTI
Purchase Agreement which will cure such default by Licensor.
Section 2.2 Royalty. In consideration of the license and rights granted
pursuant to Section 2.1 of this Agreement, Licensee shall pay to Licensor a
royalty of five percent (5%) of the Net Sales Value of each 580 NGRE sold or
otherwise disposed of by or on behalf of the Licensee. This royalty shall be
payable for the Term of this Agreement.
ARTICLE III
ROYALTY PAYMENTS AND REPORTS
Section 3.1 Payments and Reports. On or before the 60th day after each and
every calendar month during the Term of this Agreement and following termination
hereof, Licensee shall pay to Licensor in U.S. Dollars any royalties which are
payable to Licensor in accordance with Section 2.2 above as a result of sales of
580 NGREs during such month. There shall be accompanying such payment a
statement setting forth, in sufficient detail for verification, the basis upon
which the payment has been calculated and is being made.
Section 3.2 Books and Records. Licensee shall keep detailed and accurate
records and books of account in respect of all sales of 580 NGREs during the
Term of this Agreement. Licensor has the right, one time per year, during the
Term of this Agreement to have an independent public accounting firm reasonably
acceptable to Licensee audit and inspect, and Licensee shall make available to
such firm, books and records showing the total number of 580 NGRE's sold and Net
Sales Value thereof, in order to verify the payments made and statements
furnished by Licensee to Licensor pursuant to Section 3.1. The books and records
to be made available in accordance with the preceding sentence shall consist of
a consecutive serial number register of each 580 NGRE produced and records
relating to the date of shipment of each 580 NGRE and the amount invoiced to
each customer for each 580 NGRE. Licensor shall be responsible to pay the costs
and expenses of the audit described in this
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Section 3.2; provided, however, that if such audit reveals a shortfall of five
percent (5%) or more in any monthly payment as reported or paid to Licensor,
then Licensee shall be responsible for paying the costs and expenses of such
audit.
ARTICLE IV
PROTECTION OF INTELLECTUAL PROPERTY
Section 4.1 Use and Protection of Licensed Intellectual Property. Once any
patent application covered by Licensed Patents has been filed by Licensor,
Licensor agrees to consult with Licensee during prosecution and before any
withdrawal thereof; provided, however, that Licensor shall retain the sole
right, in its discretion, to make any and all decisions regarding the
prosecution and/or withdrawal thereof. Licensee shall take no action which in
any way may prejudice the validity of, or Licensor's title to, the Licensed
Intellectual Property or which threatens or infringes upon the copyright, patent
and other intellectual property rights of Licensor to the Licensed Intellectual
Property. Licensor shall take no action which in any way may prejudice the
validity of the license of the Licensed Intellectual Property granted to
Licensee pursuant to Section 2.1 of this Agreement.
Section 4.2 Validity and Ownership. (a) Licensee acknowledges that
Licensee's use of Licensed Intellectual Property arises only out of the licenses
granted under this Agreement and is subject to the superior rights of Licensor
to the extent not inconsistent with this Agreement. Except (i) for the
reversionary right held by JDTI pursuant to the JDTI Purchase Agreement, and
(ii) to the extent that Licensor's ownership of the Licensed Patents may be
affected by its failure to have paid any maintenance fees required to be paid to
the United States Patent and Trademark Office (the "USPTO") relating thereto,
Licensor has good and marketable title to all of the Licensed Intellectual
Property, free and clear of any pledge, lien, encumbrance, charge or other
security interest, claims of any third parties, or any other such restrictions
on transfer, and Licensee will acquire its license to the Licensed Intellectual
Property, free and clear of all such interests, claims or restrictions.
(b) Except for the royalty payments required to be paid to JDTI
under the JDTI Purchase Agreement and any maintenance fees required to be paid
to the USPTO in connection with the patents listed on Schedule A attached
hereto, no royalties or other amounts are payable by the Licensor to other
person or entity by reason of the ownership or use of such Licensed Intellectual
Property.
(c) To the knowledge of Licensor, no Licensed Intellectual Property
licensed to Licensee by the Licensor pursuant to this Agreement violates or will
violate any license or infringes or will infringe any intellectual property
rights of another person or entity, nor has the Licensor received any notice
that any of the Licensed Intellectual Property licensed to Licensee by the
Licensor pursuant to this Agreement conflicts or will conflict with the rights
of others.
(d) There are no claims pending or, to the Licensor's knowledge
threatened with respect to any Licensed Intellectual Property licensed to
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Licensee by the Licensor pursuant to this Agreement, nor does there exist any
basis therefor.
Section 4.3 Infringement Actions and Claims. (a) If a claim is asserted or
an action is commenced by a third party against a Party in which it is alleged
that the 580 NGRE or the use by Licensee of the Licensed Intellectual Property
in accordance with the terms of this Agreement infringes the property rights of
such third party, or an action is commenced by a third party in which the
revocation or declaration of invalidity of any Licensed Intellectual Property is
sought, then the Party against whom the claim is asserted or the action is
brought shall promptly notify the other Party in writing, stating the nature and
allegations of such claim.
(b) Except as otherwise set forth in Section 4.3(d), Licensor will
indemnify, defend at its own expense and hold Licensee harmless from and against
any claims or action against Licensee brought by a third party to the extent
that the action is based upon a claim that the 580 NGRE or the use by Licensee
of the Licensed Intellectual Property provided by Licensor to Licensee in
accordance with this Agreement infringes any copyrights, trademarks, patents or
other intellectual property rights of any third parties. Licensor will pay all
costs relating to the defense of any such claim, including those costs and
damages finally awarded against Licensee in any such action that are
specifically attributable to such claim or those costs and damages agreed to in
a monetary settlement of such action. The foregoing obligations are conditioned
on Licensee notifying Licensor promptly in writing of such action, Licensee
giving Licensor sole control of the defense thereof and any related settlement
negotiations, and Licensee cooperating and, at Licensor's request and expense,
assisting in such defense; provided that Licensor shall not enter into any
settlement which affects Licensee's continued usage of the 580 NGRE or the
Licensed Intellectual Property without Licensee's express prior written approval
thereof.
(c) If the Licensed Intellectual Property becomes, or in Licensor's
opinion is likely to become, the subject of an infringement claim, Licensor may,
at its option and expense, either (a) procure for Licensee the right to continue
using the Licensed Intellectual Property, or (b) replace or modify the Licensed
Intellectual Property so that it becomes non-infringing with substantially
similar functionality as the Licensed Intellectual Property.
(d) Notwithstanding the foregoing, Licensor will have no obligation
under this Section 4.3 or otherwise with respect to any infringement claim based
upon (i) any use of 580 NGRE or the Licensed Intellectual Property not in
accordance with this Agreement, (ii) any use of any version of the Licensed
Intellectual Property other than the most current version made available to
Licensee, or (iii) any modification or revision of the 580 NGRE or the Licensed
Intellectual Property by any person other than Licensor.
(e) If either Party learns of any infringement or other unauthorized
use by a third party of the 580 NGRE or the Licensed Intellectual Property, such
Party shall promptly notify the other Party. Licensor shall have the obligation
to institute proceedings at its own expense against such infringement or other
unauthorized use in its own name and/or in the name of Licensee. If Licensor
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fails to initiate such proceedings, Licensee shall have the right to institute
such proceedings in its own name. Any recovery in any such action shall be
divided equally between the Parties after reimbursement to the Parties of their
respective costs and expenses, including the Parties' respective attorneys'
fees, in connection with such action.
(f) In all actions brought or defended under this Section 4.3, each
Party shall, without charge, furnish to the other Party such relevant
information (including confidential information) as is in their respective
possession, shall execute all necessary or desirable papers and documents, and
shall furnish such other reasonable assistance as may be requested by the other
Party.
(g) THIS SECTION 4.3 STATES LICENSOR'S ENTIRE LIABILITY AND
LICENSEE'S SOLE AND EXCLUSIVE REMEDY FOR INFRINGEMENT CLAIMS AND ACTIONS.
[h] This Section 4.3 shall survive termination of this Agreement.
ARTICLE V
ADDITIONAL ASSURANCES AND ASSISTANCE
Section 5.1 Transmittal of Technology. (a) Licensor shall make available
to Licensee at the Licensor's and/or Affiliate's premises the Licensed
Technology existing as of the date hereof, to enable Licensee to exercise the
rights granted pursuant to this Agreement. To enable Licensee to carry out the
intent of this Agreement, upon three (3) days' prior written request from
Licensee, Licensor shall admit Licensee's representatives to its facilities at
any time during normal business hours, shall familiarize such representatives
with the manufacture by Licensor of 580 NGREs and shall make available to
Licensee all necessary Licensed Technology, including records of Licensor's
experience in manufacturing of 580 NGREs, to permit Licensee to exercise its
rights as granted under this Agreement. Existing Licensed Technology made
available to Licensee on a certain date in accordance with the preceding
sentence may be preliminary and not the final Licensed Technology required to
build a production class 580 NGRE; provided, however, that Licensor shall be
required to provide Licensee with the final Licensed Technology when it is
completed at a later date.
(b) Licensor shall make available to the Licensee at the Licensor's
and/or Affiliate's premises all production information and know how, as
available, needed to manufacture 580 NGREs, including, but not limited to,
production xxxx of materials, engineering drawings, CAD files, numeric control
programs, manufacturing instructions, production part numbers and descriptions
and estimated costs, and Q/A standards, procedures and controls of incoming
specifications and finishes, along with production assembly and test procedures,
field information for reprint, including, but not limited to, all specification
sheets, parts lists, engine operations instructions, maintenance and service
instructions, copyrighted materials and warranties, loan jigs, fixtures,
tombstones, drawings, etc. needed to permit reproduction of the 580 NGREs,
equipment descriptions, manufacturers' names and required specifications of
equipment currently used to facilitate the production and sale
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of 580 NGREs, and all computer programs necessary to operate 580 NGREs. In
addition, Licensor will loan to Licensee on request certain component parts in
rough casting/forging condition (prior to machining) to assist in developing
required molds, patterns, tooling, etc. as such are available to Licensor on a
best efforts basis, and, if requested by Licensee, Licensor will furnish test
reports, performance specifications and production test criteria. All of the
foregoing will be provided to Licensee by Licensor if in the possession of
Licensor or, on a best efforts basis, if in the possession of a manufacturer or
contractor of Licensor.
Section 5.2 Additional Technical Assistance. Licensor shall provide such
training and technical assistance to Licensee as may be reasonably required to
enable it to exercise its rights as granted under this Agreement. This training
and assistance shall be conducted at various times within a reasonable schedule
as may be agreed upon by Licensor and Licensee. Such technical assistance may
include, upon request of Licensee, the provision by Licensor of:
(i) Such initial instruction and assistance as Licensee deems
reasonably necessary or appropriate to enable Licensee to understand and
utilize the Licensed Intellectual Property and other information relating
to the 580 NGRE and thereby exercise its rights under this Agreement, and
(ii) Such periodic follow-up assistance and instruction as
Licensee deems reasonably necessary or appropriate to enable Licensee to
exercise its rights under this Agreement, and
(iii) At Licensor's premises, technical experts to provide
further training beyond 5.2 (a) and (b) above to Licensee's personnel in
respect of the 580 NGRE as Licensee shall reasonably request at Licensee
expense.
(iv) If the Licensee requests that Licensor perform any
research and development relating to the 580 NGRE which is beyond the
scope of the license granted to Licensee under this Agreement, such
research and development will be conducted on terms and conditions to be
hereafter negotiated and agreed upon by Licensor and Licensee.
Licensee shall be required to compensate Licensor for the training and
technical assistance and any other provision of staff provided by Licensor
pursuant to Sections 5.1 and 5.2 hereof at the rate $100.00 per hour plus
out-of-pocket costs and expenses; provided, however, that Licensor shall be
required to provide up to 120 man hours of training and technical assistance
described in Section 5.2(i) above and up to 120 man hours of training and
technical assistance described in Section 5.2(ii) above free of charge. Licensor
shall render monthly invoices to Licensee for such fees, costs and expenses and
Licensee shall render payment of each invoice to Licensor within thirty (30)
days after receiving such invoice.
Licensee will inform Licensor of any degradation or problems in the
manufacturing process or of manufacturing defects in operating the 580 NGREs.
Licensor will assist Licensee with the diagnosis and resolution of any defects
and design problems discovered in Licensed Intellectual Property.
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Section 5.3 Disposition of Licensed Intellectual Property. Neither
Licensor nor any Affiliate of Licensor shall directly or indirectly sell,
transfer, assign or otherwise dispose of any of its rights in the Licensed
Intellectual Property during the Term of this Agreement except as expressly
permitted by this Agreement or as otherwise agreed to in writing by Licensee.
Nothing contained herein shall be deemed to bar or otherwise restrict Licensor
from selling, transferring, assigning, licensing or otherwise disposing of the
Licensed Intellectual Property to any third party so long as it is done in a
manner which is consistent with, and does not diminish, deprive, impair or
frustrate the rights granted to Licensee in this Agreement.
Section 5.4 Improvements. In the event improvements in the Licensed
Intellectual Property and/or the 580 NGREs are developed by Licensee and/or a
third party, in conjunction with a third party or by such third party and
requiring payment by Licensee to such third party, to the extent and under the
terms such improvements are licensable or sub-licensable to Licensor and/or any
of its Affiliates, such improvements shall be offered for license to Licensor
and its Affiliates, subject to the same terms and conditions (including payment
obligations) as those to which Licensee is subject in respect of such third
party, and, if Licensor and/or any of its Affiliates accept such offer, such
improvements shall thereby become licensed to Licensor and/or any of its
Affiliates, as the case may be. Licensor understands and agrees that all right,
title and interest in and to any and all such improvements shall be the
exclusive property of the Licensee. Licensor shall not engage in any activity,
including reverse engineering of improvements, or any other activity which
threatens or infringes upon the copyright, patent and other intellectual
property rights of Licensee to the improvements.
For purposes of this Section 5.4, the term "improvement(s)" shall mean any
patentable device, design, apparatus, machine, composition of matter, process or
other development of any kind relating to the Licensed Intellectual Property
and/or 580 NGREs which is conceived and actually reduced to practice during the
Term of this Agreement.
This Section 5.4 shall survive the termination of this Agreement.
Section 5.5 Non-Disclosure. Each Party shall during the Term of this
Agreement and for a period of five (5) years thereafter, except as hereinafter
provided in this Section 5.5, keep confidential any and all confidential
information learned or received from or through the other Party, including,
without limitation, any Licensed Technology and improvements under Section 5.4,
confidential business information, information obtained pursuant to Section 3.2
or Section 4.3(f) of this Agreement, budgets, financial statements, operating
plans and books of account (hereinafter collectively called "Confidential
Information"). Each Party shall use its best efforts to ensure that only persons
who (i) are officers, directors, employees, associates, agents, consultants or
appointees of such Party, and (ii) are bound by the terms of an employment
agreement, or a non-disclosure agreement, imposing undertakings and obligations
as to secrecy and confidentiality in terms disclosed to and approved by the
other Party, shall be permitted access to such Confidential Information. The
obligations set forth in the Section 5.5 shall not apply to
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Confidential Information which: (a) appears in issued patents, published patent
applications or other publications which are generally available to the public,
(b) otherwise is or becomes generally known to the public through no fault of
the recipient, (c) is lawfully obtained by the recipient Party from a third
party under no duty of confidentiality to the other Party as to such
Confidential Information, (d) is otherwise known by the recipient Party prior to
disclosure by the other Party, as substantiated by documentary evidence, or (e)
is required to be disclosed by a Party by law or pursuant to any rule,
regulation or order of any court, governmental authority or other administrative
body, provided that the disclosing Party shall provide the other Party with
prompt notice of such law, rule, regulation or order, including copies of
subpoenas or order requesting such Confidential Information, shall reasonably
cooperate with the other Party in resisting the disclosure of such Confidential
Information through a protective order or other appropriate legal action, and
shall not make disclosure of such Confidential Information until the other Party
has had a reasonable opportunity to resist such disclosure unless the disclosing
Party is ordered otherwise. This Section 5.5 shall survive the termination of
this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Authority. (a) Licensor represents and warrants to the
Licensee that (i) it has full power and authority to enter into this Agreement
and this Agreement, when executed, will be a valid and legally binding
obligation of Licensor according to its provisions, (ii) the execution and
performance of this Agreement will not constitute a breach of or an event of
default under any agreement or commitment to which Licensor is a party, (iii)
the making and performance of this Agreement has been duly authorized by all
necessary corporate action on behalf of the Licensor; and (iv) Licensor has not
received from any third party any notice of patent or other intellectual
property rights infringement with respect to the Licensed Intellectual Property
or the 580 NGRE.
(b) Licensee represents and warrants to the Licensor that (i) it has
full power and authority to enter into this Agreement and this Agreement, when
executed, will be a valid and legally binding obligation of Licensee according
to its provisions, (ii) the execution and performance of this Agreement will not
constitute a breach of or an event of default under any agreement or commitment
to which Licensee is a party, (iii) the making and performance of this Agreement
has been duly authorized by all necessary corporate action on behalf of the
Licensee; and (iv) Licensee has not received from any third party any notice of
patent or other intellectual property rights infringement with respect to the
Licensed Intellectual Property or the 580 NGRE.
[c] Licensor represents and warrants to the Licensee that when the
necessary Licensed Intellectual Property which will permit a final production
class 580 NGRE to be manufactured and produced is available, such Licensed
Intellectual Property will be, to the best of Licensor's knowledge, free of all
errors or defects.
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Section 6.2 Disclaimer of Warranties. Licensor makes no representation or
warranties to Licensee except those specifically set forth in Section 6.1
hereof. Without limiting the generality of the foregoing, LICENSOR MAKES NO
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE WITH
RESPECT TO 580 NGRE RESULTING FROM USE OF ANY OF THE LICENSED INTELLECTUAL
PROPERTY. Nothing contained in this Agreement shall be construed as: (i) a
warranty or representation by Licensor as to the validity and/or scope of any
Licensed Patent except as herein granted; (ii) conferring any license or other
right by implication, estoppel or otherwise, under any patent application,
patent or patent right, except as herein expressly granted under the Licensed
Patents, (iii) conferring any license or right with respect to any trademark,
trade or brand name, or corporate name of Licensor or any of its Affiliates, or
any other name or xxxx or contraction, abbreviation or simulation thereof; or
(iv) imposing upon Licensor any obligation to file any patent application or to
secure, or obtain any license with respect to, any patent or to maintain any
patent in force, other than as may be necessary to license the Licensed
Intellectual Property to Licensee in accordance with the terms of this
Agreement.
Section 6.3 Survival. All representations and warranties made herein shall
survive the execution and delivery of this Agreement and any termination of this
Agreement.
ARTICLE VII
TERM AND TERMINATION
Section 7.1 Term. Except with respect to provisions contained herein
which, by their terms, are operative for a period other than the Term of this
Agreement and as otherwise set forth in the following sentence, this Agreement
shall be and remain effective until the termination of this Agreement as
provided in Section 7.2 of this Agreement. Notwithstanding anything in this
Agreement to the contrary, Sections 4.3 and 5.4 shall survive any termination of
this Agreement.
Section 7.2 Events of Default and Remedies. (a) The occurrence and
continuation of any one of the following shall constitute an Event of Default
hereunder:
(i) Failure by Licensee to make, manufacture and sell 580
NGREs by the later of: (a) May 31, 2007, or (b) the date which is five (5)
years after the date of the availability of the necessary Licensed
Intellectual Property which will permit a final production class 580 NGRE
to be manufactured and produced; or
(ii) Failure or refusal by either Party to make any payment
required to be made to the other Party in accordance with the provisions
of this Agreement and such failure or refusal shall remain uncured for a
period of seven (7) days after written notice thereof has been given to
the defaulting Party by the non-defaulting Party; or
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(iii) Failure or refusal by either Party to observe, perform
or comply with any other covenant, condition or agreement on its part to
be observed or performed in this Agreement and such failure or refusal
shall remain uncured for a period of fifteen (15) days after written
notice thereof has been given to such Party by the non-defaulting party;
provided, however, that if such default cannot by its nature be cured
within fifteen (15) days, such default shall not become an Event of
Default so long as the defaulting Party is diligently pursuing a cure and
delivers a report to the other party at least once every fifteen (15) days
setting forth the status of its attempts to cure such default; or
(iv) Any representation or warranty made by either Party
pursuant to or in connection with this Agreement shall prove to be false
or misleading in any material respect when made; or
(v) If either Party shall (A) commence a voluntary case or
similar proceeding under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or (B) authorize, apply for or
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or similar official for itself
and/or any of its properties, or (C) make any general assignment for the
benefit of creditors, or (D) make a written declaration or admission to
the effect that it is unable to meet its debts as such debts mature, or
(E) authorize or take any action in furtherance of any of the foregoing;
or
(vi) If a court having jurisdiction in the premises shall
enter a decree or order (A) for relief in respect of either Party in an
involuntary case or similar proceeding under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or (B)
appointing a receiver, liquidator, assignee, trustee, custodian or similar
official for either Party and/or any of their respective properties, or
(C) for the dissolution, liquidation or winding up of either Party and
their respective affairs, or (D) finding or determining that either Party
is unable to meet its debts as such debts mature; and any such decree or
order shall remain unstayed and in effect for a period of sixty (60)
consecutive days.
(b) Upon the occurrence of an Event of Default under paragraph (a)
of this Section 7.2, the non-defaulting Party may take one or more of the
following actions:
(i) Send written notice to the defaulting Party declaring this
Agreement to be immediately terminated, null and void and of no further
force or effect; or
(ii) Institute an action or proceeding to seek monetary
damages; or
(iii) Institute an action or proceeding to seek equitable
remedies including, but not limited to, injunctions or specific
performance of this Agreement.
-12-
(c) The Parties agree that monetary damages may be insufficient to
adequately compensate the non-defaulting Party and that equitable remedies shall
constitute appropriate remedies upon the occurrence of an Event of Default
hereunder.
(d) No remedy conferred upon or reserved to the Parties in this
Agreement is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle a Party to exercise any remedy reserved to it in this Agreement, it
shall not be necessary to give any notice to the other Party, other than such
notice as may be herein expressly required.
(e) The breach, default or nonperformance of any obligation,
covenant, representation, warranty, duty or agreement contained herein by either
Party may be waived only by a written instrument signed by the other Party;
provided, however, that no such waiver shall serve to waive any subsequent
breach, default or nonperformance, nor shall any such waiver serve to waive a
recurrence of the breach, default or nonperformance so waived, nor shall the
failure to enforce any remedy by a Party with respect to any breach, default or
nonperformance serve as a waiver thereof.
(f) No termination of this Agreement pursuant to this Section 7.2
shall relieve either Party of any obligation incurred up to the time of
termination and such obligation shall survive the termination of this Agreement.
Without limiting the generality of the foregoing, no termination of this
Agreement (unless by reason of Licensor's default) pursuant to this Section 7.2
shall relieve Licensee from its obligation to make the payments and provide the
statements to the Licensor required by Section 3.1 of this Agreement relating to
580 NGREs which were sold or otherwise disposed of by or on behalf of the
Licensee prior to the time of termination of this Agreement.
Section 7.3 Compliance with Laws. During the Term of this Agreement,
Licensee agrees to comply with all laws and regulations relating or pertaining
to the manufacture, sale, advertising or use of the 580 NGRE and shall maintain
commercially reasonable high quality and standards, and shall comply with all
rules, regulations and orders of any regulatory agencies which shall have
jurisdiction over the 580 NGRE. In the event it shall be finally determined by a
tribunal of last resort which shall have jurisdiction over the matter, the
Licensee is in violation of applicable statutory or regulatory laws and/or
regulations, Licensee shall have such time, and any granted extension of such
time, to correct such violation as shall be prescribed by such applicable law,
regulation or final determination. The failure by Licensee to comply with any
such laws and/or regulations within the aforesaid time, shall be deemed a
default hereunder, entitling Licensor to terminate this Agreement pursuant to
Section 7.2 above, unless Licensee's failure to comply is attributable in whole
or in part to the conduct of Licensor.
-13-
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Waiver. Either Party may specifically, but only in writing,
waive any breach of this Agreement by the other Party, but no such waiver shall
be deemed to constitute a waiver of similar or other breaches by such other
Party.
Section 8.2 Amendment. This Agreement may be modified only by an
instrument in writing signed by a duly authorized representative of each Party.
Section 8.3 Assignment. Except as otherwise expressly permitted by the
this Agreement, neither this Agreement nor any right or obligation hereunder may
be assigned or delegated in whole or in part by either Party without the prior
written consent of the other Party.
Section 8.4 Notice. In any case where any notice or other communication is
required or permitted to be given hereunder, including, without limitation, any
change in the information set forth in this Section 8.4, such notice or
communication shall be in writing and shall be deemed given when either (i)
personally delivered, (ii) sent by registered mail, (iii) sent by overnight
messenger or other package delivery service which requires the recipient to sign
and acknowledge delivery, or (iv) transmitted by facsimile, as follows:
If to Licensor, to:
Rotary Power International, Inc.
Xxx Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx-Xxxxx, Xxx Xxxxxx 00000-0000
Fax: (000) 000-0000
Attention: President
If to Licensee, to:
Rotary Power Enterprise, Inc.
00 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx-Xxxxx, Xxx Xxxxxx 00000-0000
Fax: (000) 000-0000
Attention: President
or to such other address as the receiving Party shall have previously designated
in writing.
All such notices or other communications shall be deemed to have been
given or received (i) upon receipt if personally delivered or if delivered by a
courier or other delivery service, (ii) on posting by registered mail, and (iii)
upon receipt of a printed confirmation report from the sending facsimile machine
when sent by facsimile.
-14-
Section 8.5 Third Party Rights. Nothing in this Agreement, whether express
or implied, is intended or shall be construed to confer, directly or indirectly,
upon or give to any third party any legal or equitable right, remedy or claim
under or in respect of this Agreement or any covenant, condition or other
provision contained herein, except as may be expressly provided for in this
Agreement.
Section 8.6 Governing Law. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of New Jersey, United
States of America, without giving effect to the principles of conflict of laws
of that State. Any disputes between Licensor and Licensee arising out of,
connected to, or relating to this Agreement and its formation, breach,
performance, interpretation and application shall be settled by arbitration in
accordance with the rules of the American Arbitration Association. In the event
of such a dispute, Licensor and Licensee shall each select an arbitrator, both
of whom shall then select a third arbitrator which shall constitute the three
person arbitration board. The decision of a majority of the board of
arbitrators, who shall render their decision within thirty (30) days of
appointment of the final arbitrator, shall be binding upon the parties. Judgment
on the award of the board of arbitrators may be entered in any court having
jurisdiction thereof in accordance with the provisions of New Jersey law.
Section 8.7 Headings. The headings of the Articles and Sections in this
Agreement are intended for ease of reference only and in no way define, limit or
describe the scope or intent of these terms and conditions.
Section 8.8 Integration. This Agreement, with attached Schedule A,
constitutes the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral and
written, between the Parties with respect to the subject matter hereof.
Section 8.9 Severability. In the event that any of the terms, covenants or
conditions of this Agreement or the application of any such term, covenant or
condition shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 8.10 Counterparts. This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Section 8.11 Language. All pronouns and variations thereof in this
Agreement shall be deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of any Party or Parties referred to may require.
Section 8.12 Further Assurance. The Parties shall execute such deeds,
assignments, endorsements, evidence of transfer and other instruments and
documents, and shall give such further assurances as shall be necessary to
perform their obligations hereunder. The obligations of the Parties set forth in
this Section 8.12 shall survive the termination of this Agreement.
-15-
Section 8.13 Reference to Agreement. Any reference herein to this
Agreement shall be deemed to be a reference to this Agreement as the same may be
modified, varied, amended or supplemented from time to time by Licensor and
Licensee in accordance with the provisions hereof. Unless the context otherwise
expressly requires, the words "herein", "hereof" and "thereunder" and other
words of similar importance refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision hereof.
Section 8.14 Additional Agreements. Licensor agrees to execute any further
documents and instruments as may be reasonably requested by the Licensee to
evidence and effectuate the license granted to Licensee under this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered by their respective officers and representatives
thereunto duly authorized as of the date hereof.
ROTARY POWER INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: President
ROTARY POWER ENTERPRISE, INC.
By: /s/ H. Xxxx Xxxxxx
---------------------------------
Name: H. Xxxx Xxxxxx
Title: President
-16-
SCHEDULE A
List of Patents
Gas,
Liquid
Patent Number Issue Date Title Description or Both
------------- ---------- ----- ----------- -------
4,463,718 08/07/84 Lubricating Metering Timed oil metering pump Both
System for Rotary operated by engine pressure
Internal Combustion differentials
Engine
4,477,240 10/16/84 Rotor Bearing High speed rotor bearing Both
Lubricating System capacity increase by partial
annulus feed in eccentric.
4,531,900 07/30/85 Rotary Engine Cooling Engine coolant circuit for Both
System enhanced nucleate boiling
heat transfer
4,664,607 05/12/87 Rotary Engine Cooling Engine Coolant circuit for Both
System with Flow balanced control of
Balancing individual channels within a
single pass
4,741,631 05/03/88 Rotary Engine Variation of wedge clamped Both
Intermediate Housing intermediate bearing w/o
Bearing Support Assembly separate cones
4,759,325 07/26/88 Rotary Engine Cooling Rotor housing cooling of Both
System high temp low heat rejection
engine
4,825,815 05/02/89 Pivotal Cooling Unit Military vehicle heat N/A
exchanger pkg. which can be
swung up for access
4,889,091 12/26/89 Rotary Valve for Natural Major axis rotary valve Gas
Gas Rotary Engine concept developed on GRI
contract
4,906,124 03/06/90 Multi-Piece Eccentric Multi-rotor (3+) concept Both
Assembly
4,931,001 06/05/90 Apex Seal with Filled Decreased dead volume Both
Aperature
4,967,796 11/06/90 Fuel Injection
Regulating Valve
4,969,429 11/13/90 Lube Oil Control System Oil metering quantity Liquid
for Turbocharged Rotary controlled by boost pressure
Piston Engine
A-1
Gas,
Liquid
Patent Number Issue Date Title Description or Both
------------- ---------- ----- ----------- -------
5,022,366 06/11/91 Rotary Engine with Dual Potential improved Liquid
Spark Plugs and Fuel efficiency, from NASA program
Injectors
5,049,051 09/17/91 Multi-piece Tilted Apex Possible reduced seal Both
Seal Assembly friction
5,123,387 06/23/92 Rotary Engine with Potential HC and smoke Liquid
Inserts in Rotor Faces reduction
5,123,820 06/23/92 Pressure Assisted Apex Potential Sealing Both
Seal with Stepped Slot Improvements
A-2
SCHEDULE B
Copy of Purchase Agreement, as Amended,
Dated as of November 15, 1991,
Between JDTI and Licensor
B-1
