EXHIBIT 10.5
EXCLUSIVE PATENT AND KNOW-HOW LICENSE AGREEMENT
THIS AGREEMENT is by and between Xxxxxx X. Xxxxxxx, Ph.D., residing at 0000
Xxxxxxxxxx Xxx, Xxxxxxxxx, XX 00000 (hereinafter sometimes "Xxxxxxx"); and
DynEco Corporation, a corporation of the State of Minnesota, having offices at
000 Xxxxxxxxxxxxx Xxxxx, Xxxxxxxxx, XX, 00000 (hereinafter sometimes "DynEco").
WITNESSETH THE FOLLOWING RECITALS:
Whereas Xxxxxxx has heretofore licensed certain intellectual property
to DynEco pursuant to a FIRST AMENDED PATENT AND KNOW-HOW LICENSE AGREEMENT
effective March 9, 1992, by and between Xxxxxxx and CNS Compressor Corporation,
a Minnesota corporation and which has been assigned to DynEco, said FIRST
AMENDED PATENT AND KNOW-HOW LICENSE AGREEMENT being hereinafter referred to as
the "1992 LICENSE AGREEMENT";
Whereas DynEco has heretofore licensed certain intellectual property to
Xxxxxx-Xxxxxxxx Corporation, an Ohio Corporation (hereinafter "Xxxxxx") pursuant
to an EXCLUSIVE WORLDWIDE LICENSE AGREEMENT effective May 1, 2003, and hereafter
referred to as the "2003 XXXXXX AGREEMENT"; and
Whereas Xxxxxxx and DynEco desire to (1) terminate and supercede the
1992 LICENSE AGREEMENT to provide a full and complete current listing of patents
licensed to DynEco (hereinafter defined as LICENSED PATENTS) and (2) validate
the licensing of intellectual property by DynEco to Xxxxxx in the 2003 XXXXXX
AGREEMENT;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto to hereby
agree as follows:
ARTICLE I - INCORPORATION OF RECITALS, ACKNOWLEDGEMENT OF 2003
XXXXXX AGREEMENT & TERMINATION OF 1992 LICENSE AGREEMENT
1.1 The parties hereto incorporate hereto by reference the above RECITALS
and affirm that such are true and correct.
1.2 Xxxxxxx agrees and confirms that (1) the 2003 XXXXXX AGREEMENT was
entered into by DynEco with his full consent and affirmative
participation, and (2) he will use his best efforts to facilitate full
compliance by DynEco of all DynEco obligations set forth in the 2003
XXXXXX AGREEMENT.
1.3 The parties hereto agree that this AGREEMENT terminates and supercedes
the 1992 LICENSE AGREEMENT.
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ARTICLE II - DEFINITIONS
Whenever used in this AGREEMENT the following terms shall have the following
meanings:
2.1 PRODUCTS shall mean all positive displacement fluid-moving devices
including, for example, multi-vane and single-vane-type compressors,
expanders and pumps.
2.2 LICENSED PRODUCTS shall mean all PRODUCTS which are covered by LICENSED
PATENTS.
2.3 LICENSED PATENTS shall mean all patents and patent applications (1)
listed in Exhibit AA hereto, and (2) based on new inventions of Xxxxxxx
which relate to PRODUCTS, which are conceived by Xxxxxxx during the
term of Xxxxxxx' employment with DynEco, and which are filed pursuant
to the provisions of ARTICLE VII.
2.4 XXXXXXX KNOW-HOW shall mean all technical information, in any and all
forms, created by or for Xxxxxxx which relate to LICENSED PRODUCTS and
which is created during the term of Xxxxxxx' employment with DynEco.
2.5 DYNECO SELLING PRICE shall mean the price at which a LICENSED PRODUCT
is invoiced by or for DYNECO in an arm's length transaction less any
sales taxes, freight charges, or shipping insurance which are included
in such invoice price.
ARTICLE III - XXXXXXX LICENSE GRANTS
3.1 The grants by Xxxxxxx of this ARTICLE III shall become effective on the
EFFECTIVE DATE. The continued effectiveness of said grants is
conditioned upon the receipt by Xxxxxxx of the payments required of
DynEco pursuant to the provisions of ARTICLE VI.
3.2 Xxxxxxx grants to DynEco an exclusive, worldwide, royalty bearing right
under LICENSED PATENTS to make, have made, use, have used, lease, sell
and have sold LICENSED PRODUCTS, the aforesaid grant including the
right to grant sublicenses.
3.3 Xxxxxxx further grants to DynEco the exclusive, worldwide, royalty
bearing right to use XXXXXXX KNOW-HOW in connection with the
utilization by DynEco of the license granted in Paragraph 3.2 of this
ARTICLE III.
ARTICLE IV - EFFECTIVE DATE
4.1 The EFFECTIVE DATE of this AGREEMENT is January 1, 2004.
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ARTICLE V - DURATION OF THE AGREEMENT
5.1 The mutual obligations hereunder of the parties hereto shall cease upon
the last to expire of the LICENSED PATENTS.
ARTICLE VI - PAYMENTS OF FEES TO XXXXXXX, REPORTS & RECORDS
6.1 DynEco agrees to pay Xxxxxxx for the duration of this AGREEMENT, as a
license fee in consideration for the license grants of ARTICLE II, a
royalty fee of one percent (1%) of the DYNECO SELLING PRICE of all
LICENSED PRODUCTS sold and/or leased by DynEco to third parties.
6.2 DynEco further agrees to pay Xxxxxxx for the duration of this
AGREEMENT, as consideration for the license grants of ARTICLE II, a fee
of ten percent (10%) of the gross royalty fees received by DynEco from
DynEco licensees having sublicenses from DynEco under Paragraph 3.2 of
ARTICLE III, provided, however, the first five hundred thousand dollars
($500,000) of such gross royalty fees each calendar year shall be
exempt from the fee paid to Xxxxxxx under this Paragraph 6.2.
6.3 DynEco agrees that the fees payable under this ARTICLE shall be paid
and reports provided to Xxxxxxx quarterly within sixty (60) days
following calendar quarters ending March 31, June 30, September 30 and
December 31. Reports for each quarter shall show (1) the total DYNECO
SELLING PRICE of LICENSED PRODUCTS sold and/or leased by DynEco and the
amount of the Royalty Fee earned thereon as computed pursuant to the
provisions of Paragraph 6.1 of this ARTICLE, and (2) the gross royalty
fees received by DynEco from DynEco licensees having sublicenses from
DynEco under Paragraph 3.2 of ARTICLE III and the amount of the fee
earned thereon as computed pursuant to the provisions of Paragraph 6.2
of this ARTICLE.
6.4 DynEco agrees, for a period of two (2) years after the relevant
activity, to keep true and accurate records of LICENSED PRODUCTS sold
or leased thereby and of royalty received by sublicensees hereunder.
6.5 DynEco further agrees to permit Xxxxxxx, or a Certified Public
Accounting entity appointed by him to have access to the records to be
kept by DynEco pursuant to the provisions of Paragraph 6.4 of this
ARTICLE to examine and inspect the same during business hours and not
more than once during each calendar year to determine the accuracy of
the reports and payments made to Xxxxxxx hereunder.
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ARTICLE VII - INVENTION DISCLOSURES & FILING OF NEW PATENT APPLICATIONS
7.1 Xxxxxxx agrees to provide timely written invention disclosures to
DynEco on all new concepts (patentable or unpatentable) relating to
PRODUCTS which are conceived by Xxxxxxx during his employment by
DynEco.
7.2 DynEco agrees to consider all disclosures provided by Xxxxxxx pursuant
to Paragraph 7.1 of this ARTICLE VII; it is agreed that DynEco has, on
a case-by-case basis, the right but not the obligation to arrange for
the filing of patent applications on such disclosures. All patent
applications filed by DynEco pursuant to this Paragraph 7.2 shall be
considered added to Exhibit AA hereto.
7.3 DynEco agrees to provide timely notifications to Xxxxxxx of its
decision concerning the filing of patent applications for each
invention disclosure provided by Xxxxxxx; it is agreed that Xxxxxxx has
the right but not the obligation to file, at his own expense, patent
applications on any of such disclosures with respect to which DynEco
waives its right to file.
ARTICLE VIII - PAYMENT OF PATENT AND PATENT APPLICATION RELATED EXPENSES
8.1 DynEco agrees to pay all reasonable legal services charges and
disbursements (including but not limited to patent application filing,
translation, prosecution, publication, and issuance fees; patent
maintenance fees; and foreign annuities) directly related to the
patents and applications listed on Exhibit AA and which may be added to
Exhibit AA pursuant to the provisions of Paragraph 7.2 of ARTICLE VII
hereof.
ARTICLE IX - INFRINGEMENT OF LICENSED PATENTS
9.1 DynEco and Xxxxxxx both agree to notify the other of any apparent
infringement of LICENSED PATENTS and to discuss and define appropriate
action(s). DynEco shall have the right, but not the obligation, to
elect to proceed with an infringement action, at its own expense, and
any recovery obtained will, after reimbursement of DynEco's expenses,
be shared equally with Xxxxxxx.
9.2 If DynEco decides not to pursue a specific apparent infringement, it
shall provide timely notice to Xxxxxxx and Xxxxxxx shall have the
right, but not the obligation, to elect to proceed, at his sole expense
with an infringement action and any recovery obtained will, after
reimbursement of Xxxxxxx' expenses, be shared equally with DynEco.
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ARTICLE X - EXPIRATION, TERMINATION AND ASSIGNMENT
10.1 Upon expiration of this AGREEMENT, DynEco shall have the right to use
XXXXXXX KNOW-HOW for any purpose without payment of any fee or royalty
to Xxxxxxx.
10.2 DynEco may terminate this AGREEMENT without cause as of the end of the
year 2009 or any year thereafter by giving Xxxxxxx at least six (6)
months written notice of its intention to terminate.
10.3 In the event that either party shall fail or be unable to perform its
obligations hereunder due to circumstances within such party's control,
and if such default or inability should continue for ninety (90) days
after receipt of written notice thereof to the defaulting party and the
defaulting party has not proposed a written plan acceptable to the
non-defaulting party, the non-defaulting party shall have the right to
terminate this AGREEMENT by written notice at any time after the
expiration of such ninety (90) day period.
10.4 Any right to terminate this AGREEMENT shall be in addition to, not in
lieu of, any other rights or remedies of the non-defaulting party. No
waiver of either party of any breach of any of the provisions of this
AGREEMENT shall be construed as a waiver of any succeeding breach of
the same or other provision hereof.
10.5 In the event of termination of this AGREEMENT by Xxxxxxx pursuant to
Paragraph 10.3 of this ARTICLE, the rights and licenses granted in
ARTICLE III hereof shall terminate and DynEco shall return XXXXXXX
KNOW-HOW and make no use thereof or of LICENSED PATENTS.
10.6 In the event of termination of this AGREEMENT by DynEco pursuant to
Paragraph 10.3 of this ARTICLE, DynEco shall have the right, at its
option, to continue being the licensee under the rights and licenses
granted in ARTICLE III, provided it honors its obligation under ARTICLE
VI hereof to pay fees to Xxxxxxx.
10.7 Neither Xxxxxxx' nor DynEco's rights under this AGREEMENT may be
assigned without the written consent of the other, except that Xxxxxxx
agrees that DynEco may assign this AGREEMENT in connection with the
sale of all of the business of DynEco with respect to which this
AGREEMENT relates, provided, however, this AGREEMENT shall be available
to legal representatives of Xxxxxxx.
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ARTICLE XI - ARBITRATION, GOVERNING LAW & NO IMPLIED CONTINUING WAIVER
11.1 In the event of any controversy arising out of this AGREEMENT, the
parties agree to try to settle all such controversies amicably among
themselves; should this not be deemed mutually satisfactory, each
unresolved controversy shall be settled in Rockledge, Florida by
binding arbitration pursuant to the rules of conciliation and
arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the rules.
11.2 The cost of each arbitration which may occur pursuant to the provisions
of Paragraph 11.1 hereof shall be divided equally between the parties
hereto, and judgment upon the award rendered may be entered in any
court having jurisdiction thereof, provided, however, the award of the
arbitrator(s) may include compensary damages against either party but
under no circumstances will the arbitrator(s) be authorized to, nor
shall the arbitrator(s) award, either punitive or consequential damages
against either party hereto.
11.3 The Laws of the State of Minnesota, United States of America, shall
govern with respect to this AGREEMENT and any question which may arise
under this AGREEMENT.
11.4 If at any time either DynEco or Xxxxxxx shall elect not to assert its
rights under any provision of this AGREEMENT, such action or lack of
action in that respect shall not be construed as a waiver of its rights
under such provision or under any other provision of this AGREEMENT.
ARTICLE XII - XXXXXXX REPRESENTATION & WARRANTY
12.1 Xxxxxxx represents and warrants that he has the right to grant the
licenses provided in this AGREEMENT and that he has the full power and
authority to enter into this AGREEMENT and to carry out the
transactions contemplated hereby.
ARTICLE XIII - BANKRUPCY
13.1 The parties hereto agree that if DynEco becomes bankrupt, this
AGREEMENT shall terminate, and the 2003 XXXXXX AGREEMENT shall be
honored by Xxxxxxx.
ARTICLE XIV - GENERAL PROVISIONS
14.1 Neither party appoints the other as its agent or legal representative,
and neither party shall have the right, power or authority to assume,
create or incur any expense, liability or obligation on behalf of the
other under this AGREEMENT.
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14.2 Notices hereunder to Xxxxxxx shall be addressed to Xxxxxx X. Xxxxxxx,
Ph.D., 0000 Xxxxxxxxxx Xxx, Xxxxxxxxx, XX 00000 and notices hereunder
to DynEco shall be addressed to DynEco Corporation, 000 Xxxxxxxxxxxxx
Xxxxx, Xxxxxxxxx XX, 00000 or to such other address as the parties
designate by notice in writing.
14.3 This AGREEMENT sets forth the entire agreement and understanding
between the parties relating to the subject matter hereof, and
supercedes and cancels all prior discussions and agreements between
them relating to such subject matter.
14.4 Any amendment to or modification of this AGREEMENT shall be effective
only if in writing and executed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT (consisting of seven
(7) pages and Exhibit AA) to be duly executed as of the dates indicated below.
DYNECO CORPORATION XXXXXX X. XXXXXXX, PhD
By (signature)________________________ ____________________________
X.X. Xxxxxx Date:_______________2004
Title: DIRECTOR & CHAIR, PATENT COMMITTEE
Date:__________________2004
ATTACHMENT: EXHIBIT AA
This Document Drafted by:
Xxxxx X. Xxxxxx, Attorney
Xxxxx X. Xxxxxx & Associates, Ltd.
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
000.000.0000
000.000.0000 (fax)
xxxxxxxx@xxx.xxx
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