LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as of the lst day of September, 2000, by and
between NOCOPI TECHNOLOGIES, INC., a corporation duly organized and existing
under the laws of Maryland with offices at 000 Xxxxx Xxxxxx, Xxxx Xxxxxxxxxxxx,
Xxxxxxxxxxxx, 00000-0000 (hereinafter "NOCOPI"), and WESTVACO BRAND SECURITY,
INC., a corporation duly organized and existing under the laws of Delaware,
with offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and its affiliates
as herein defined "hereinafter "LICENSEE").
WITNESSETH:
WHEREAS, NOCOPI is the sole owner of a series of patents and patent
applications dealing with and relating to, among other things: (1) a system
incorporating activating inks; (2) highlighter pens; (3) counterfeit deterrent
inks; and (4) information protection systems; AND
WHEREAS, NOCOPI wishes to enter into a contractual arrangement with
LICENSEE so as to provide LICENSEE with (i) the non-exclusive use of the NOCOPI
TECHNOLOGY for the specific range of products hereinafter defined in Clause 1.06
and (ii) the exclusive use of the NOCOPI TECHNOLOGY for the range of products
hereinafter defined in Clause 1.07.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto
hereby agree as follows:
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ARTICLE I - DEFINITIONS
1.01 As used herein, the term "AFFILIATES" shall mean any corporation which
is owned by or controlled to the extent of at least fifty percent
(50%) of the issued and voting stock of such corporation by either
Party.
1.02 For the purposes of this Agreement, "ADDITIONAL EARNINGS" shall mean
that portion of "LICENSEE'S" net earnings during a ROYALTY YEAR, net
of all costs as determined by standard accounting methods, derived
from the sale by LICENSEE of NON-EXCLUSIVE PRODUCTS and EXCLUSIVE
PRODUCTS which is attributed solely to incorporation of NOCOPI
TECHNOLOGY.
1.03 As used herein, the term "DESIGN RIGHTS" shall mean design rights
(whether registered or unregistered) which are owned or which may
hereafter be owned by NOCOPI and which relate to the NOCOPI
TECHNOLGY.
1.04 The "EFFECTIVE DATE" of this Agreement shall be the date first
hereinabove written.
1.05 As used herein, "EUROPE" shall mean all countries as are encompassed
within the area bounded by the Atlantic Ocean on the West, the Arctic
Ocean on the North, the Mediterranean and its annexes on the South and
the fifty (50) longitude on the East, and including also all countries
or territories comprised in the geographic territories of the area
previously occupied by the former Union of Soviet Socialist Republics,
as well as overseas territories and departments of any country in
Europe.
1.06 As used herein, the term "EXCLUSIVE PRODUCTS" shall mean only those
products which incorporate NOCOPI TECHNOLOGY during the manufacturing
of paperboard and paper products.
1.07 As used herein, the term "NOCOPI TECHNOLOGY" shall mean the technology
furnished by NOCOPI dealing with and relating to, among other
things: (1) a system
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incorporating activating inks; (2) highlighter pens; (3) counterfeit
deterrent inks; and (4) information protection systems; and (5) all
know-how, unpatented technology, inventions, methods, patents or
processes relating to the NOCOPI TECHNOLOGY now or which hereafter
during the term of this agreement may be in the possession, custody or
control of NOCOPI.
1.08 As used herein, the term "NOCOPI REPORT" shall mean a written report,
which shall list the sale price and customer (or customer code) rather
than actual name of all NON-EXCLUSIVE PRODUCTS and EXCLUSIVE PRODUCTS
sold by the LICENSEE during the preceding ROYALTY PERIOD.
1.09 As used herein, the term "NON-EXCLUSIVE PRODUCTS" shall mean and shall
be restricted to products derived from printing, coating or coding
applications and which incorporate NOCOPI TECHNOLOGY.
1.10 As used herein, the term "QUARTERLY ROYALTY PERIOD" shall mean the
period of three (3) calendar months commencing on the Effective Date,
and every three (3) month period thereafter during the term of this
Agreement.
1.11 As used herein, the term "ROYALTY PERIOD" shall mean a period of
twelve (12) calendar months commencing on the Effective Date, and
every twelve (12) month period thereafter as long as this Agreement
remains in effect.
1.12 As used herein, the term "TERM" shall mean the time period
contemplated by Article V1.
1.13. As used herein the term "TERRITORY" shall mean the world.
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ARTICLE II - LICENSE
2.01 NOCOPI hereby grants to the LICENSEE, the exclusive right to market,
promote, sell and manufacture EXCLUSIVE PRODUCTS in the TERRITORY.
2.02 NOCOPI also grants to the LICENSEE the non-exclusive right to market,
promote, sell and manufacture NON-EXCLUSIVE PRODUCTS in the TERRITORY.
2.03 The LICENSEE will within thirty (30) days of the Effective Date, and
on each anniversary date thereof during the term of this Agreement
provide NOCOPI in good faith with an estimate of the ADDITIONAL
EARNINGS that the LICENSEE expects will be realized from sales in
EUROPE during the ensuing twelve month period, it being understood
that such estimate shall not be deemed a representation and/or
warranty by the LICENSEE as to its attainment.
2.04 NOCOPI undertakes that it will make complete and full disclosure to
the LICENSEE of all of the NOCOPI TECHNOLOGY required to enable the
LICENSEE to market, sell and distribute EXCLUSIVE and NON-EXCLUSIVE
PRODUCTS in the TERRITORY.
2.04.1 the Licenses granted in, Articles 2.01 and 2.02 shall
specifically include the right to sub-license an unaffiliated
third party, provided:
(i) that all such sub-licensees have executed contracts
with NOCOPI which contain secrecy and
confidentiality provisions contemplated by
Article IX; and
(ii) that the LICENSEE shall have delivered to NOCOPI
within a period of ten (10) business days of
execution a copy of each contract.
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2.05 Notwithstanding the provisions of clauses 2.01 and 2.02 hereof but in
addition thereto, NOCOPI agrees and acknowledges that as long as this
Agreement remains in effect, that NOCOPI will treat as exclusive
customers of the LICENSEE all customers to whom the LICENSEE may have
sold NON-EXCLUSIVE PRODUCTS during the term of this Agreement. The
LICENSEE recognizes and agrees that it will include all such sales in
its report of ADDITIONAL EARNINGS.
ARTICLE III - SUPPLY OF RAW MATERIALS
3.01 NOCOPI agrees with the LICENSEE that NOCOPI shall provide all
necessary deterrent inks and dyes required by the LICENSEE for the
EXCLUSIVE PRODUCTS and NON-EXCLUSIVE PRODUCTS the whole at NOCOPI'S
cost plus fifteen percent(15%). LICENSEE will receive a schedule of
sort by the EFFECTIVE DATE. No change will be made except upon written
notice given to LICENSEE at least thirty (30) days prior to the
effective date of such change.
3.02 The LICENSEE shall pay NOCOPI for the costs of all such inks within a
period of forty-five (45) days following the date of invoice.
ARTICLE VI - CONSIDERATION
4.01 In consideration of the rights granted to LICENSEE under this
Agreement for the NOCOPI TECHNOLOGY, LICENSEE agrees to pay to NOCOPI
royalties in accordance with the clauses hereinafter following.
4.02 For each ROYALTY PERIOD commencing on September 1, 2000, LICENSEE
shall pay to NOCOPI at the times and in the manner set out in clauses
4.03 and 5.02 hereof a minimum annual royalty fee equal to the greater
of One Hundred Thousand Dollars ($100,000.00) or five percent (5%) of
the ADDITIONAL EARNINGS. In the event that one or more NOCOPI
TECHNOLOGIES are incorporated by the LICENSEE into NON-EXCLUSIVE
PRODUCTS and EXCLUSIVE PRODUCTS the Royalty Fee
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shall be reduced to two and one-half percent (2 1/2%) for all such
products utilizing NOCOPI TECHNOLOGY.
4.03 The minimum annual royalty fee of One Hundred Thousand Dollars
($100,000.00) shall be paid by the LICENSEE to NOCOPI by way of twelve
(12) equal and consecutive payments of Eight Thousand Three Hundred
and Thirty-Three Dollars ($8,333.00), each month commencing September
1, 2000 and thereafter continuing on the first day of each month
during the term of the Agreement. Each such payment shall reflect a
credit for any royalty payment due and paid at the same date or
previously paid on account of the same year.
ARTICLE V - RECORDS AND REPORTS
5.01 LICENSEE agrees to keep accurate and complete records in sufficient
detail to record the ADDITIONAL EARNINGS for each of EUROPE and the
rest of the TERRITORY during each QUARTERLY ROYALTY PERIOD or during
each ROYALTY PERIOD, as the case may be, so that the amount of royalty
payments due to NOCOPI may be ascertained.
5.02 LICENSEE shall deliver to NOCOPI.
(i) not later than forty-five (45) days after the close of each
ROYALTY PERIOD during the TERM; and
(ii) commencing with the QUARTERLY ROYALTY PERIOD beginning on
September 1, 2000, not later than forty-five (45) days after
the close of each QUARTERLY ROYALTY PERIOD; and
(iii) after the termination of this Agreement;
A statement specifying the information referred to in clause 5.01
hereof and in such form and containing such details as NOCOPI
reasonably requires substantiating LICENSEE'S ADDITIONAL EARNINGS in
each of EUROPE and the rest of the
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TERRITORY during the applicable period. LICENSEE shall, at the same
time as providing the said statement, also remit the amount of any
royalties due in accordance with the statement. The receipt or
acceptance by NOCOPI of any statements furnished pursuant to this
Agreement or any royalty payments paid hereunder (or the cashing of
any cheques paid hereunder) shall not preclude NOCOPI from questioning
the correctness thereof at any time and in the event that
inconsistencies or mistakes are discovered in such statements or
payments, they shall be rectified and appropriate payments shall
immediately by made by LICENEE or credit given to LICENSEE by NOCOPI,
as may be appropriate.
5.03 If LICENSEE fails to deliver such a statement to NOCOPI within
forty-five (45) days of the end of the particular period, NOCOPI, in
addition to any other rights and on not less than ten (10) days prior
notice to LICENSEE, may employ an independent auditor qualified to
practice and practicing in the United States, to examine such books
and records of LICENSEE as may be necessary to enable him to report
upon and certify the amount of ADDITIONAL EARNINGS and LICENSEE will
promptly pay to NOCOPI the cost thereof as additional royalty.
5.04 LICENSEE agrees, upon request by NOCOPI, to permit an auditor
qualified to practice and practicing in the United States, who may be
designated by either party, to have access during normal business
hours at least once annually on ten (10) business days' notice, to
audit such books and records as may be necessary to determine the
correctness of any report or payment made under this Agreement. On
request, with reasonable notice, LICENSEE will make available at its
offices, all relevant books of account and records.
5.05 If any audit reveals a discrepancy between the amount payable to
NOCOPI and the amounts actually paid to NOCOPI and if that discrepancy
exceeds five percent (5%) of the amounts payable as determined in the
audit, LICENSEE shall pay all of NOCOPI'S reasonable costs associated
with such audit. Otherwise, all costs associated with any audit shall
be the responsibility of NOCOPI.
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5.06 LICENSEE shall be entitled to receive copies of all audit reports
prepared pursuant to this Article V.
ARTICLE VI - MARKING AND USE OF NOCOPI'S TRADEMARK
6.01 If LICENSEE and/or any of its sublicensees utilize the trademark
"NOCOPI" or any other trademark owned by NOCOPI in association with
the NOCOPI TECHNOLOGY, they shall do so only in respect of products
the quality and specifications of which have been previously approved
of by NOCOPI, and LICENSEE shall provide NOCOPI with adequate
opportunity so that NOCOPI may satisfy itself that such quality and
specifications are maintained during continuance of such use. Before
using such trademark in any area, LICENSEE and/or its sublicensees
shall be responsible for acquainting themselves with and informing
NOCOPI of all licensing formalities, user registration and quality
control requirements applicable in such area, which are reasonably
necessary to the protection of NOCOPI'S interest in the trademark, and
NOCOPI shall co-operate with LICENSEE and/or its sublicensees at their
respective expense in fulfilling such requirements, it being
understood that in any area where NOCOPI takes no steps to register
the trademark, there shall be no such obligation on LICENSEE and/or
its sublicensees in respect of such requirements other than quality
control. In the event that any good will shall accrue to LICENSEE in
the trademark "NOCOPI" or any other trademark of NOCOPI in any area,
LICENSEE and/or its sublicensees will agree in writing to assign such
goodwill to NOCOPI on termination of this license or upon request by
NOCOPI to this extent that such can be accomplished under generally
accepted accounting principles. Nothing herein shall be deemed to
prevent Westvaco from selling NON-EXCLUSIVE and EXCLUSIVE PRODUCTS
under its own tradenames.
ARTICLE VII - TERM AND TERMINATION
7.01 This Agreement shall commence on September 1, 2000 and shall continue
until August 31, 2001 (unless terminated as hereinafter provided); and
thereafter from year to year, unless and until terminated as provided
for in Clause 7.02.1 hereof.
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7.02 LICENSEE and NOCOPI shall have the option of terminating this
Agreement in the following circumstances:
7.02.1 by not less than ninety (90) days' notice, in advance and in
writing, given by either Party to the other, prior to August
31, 2001 or, in the event that this Agreement continues after
the first 12-month period, by one hundred and twenty (120)
days' notice, in advance and in writing, given by either
Party to the other.
7.02.2 if a Party shall make any composition with creditors or go
into liquidation whether voluntary or compulsory (other than
for the purpose of solvent amalgamation or reconstruction) or
analogous proceedings shall be commenced, then the other
Party may, by notice in writing, forthwith terminate this
Agreement.
ARTICLE VIII - ADDITIONAL OBLIGATIONS
8.01 NOCOPI will provide, at the expense of the LICENSEE, such technical
training for personnel of the LICENSEE as may be required in order to
acquaint the LICENSEE with the NOCOPI TECHNOLOGY. For these purposes,
"expense" shall include travel costs only and not include salary or
other compensation or the cost of benefits for NOCOPI personnel
whether employed by NOCOPI or retained by NOCOPI on any other basis.
8.02 The LICENSEE shall immediately advise NOCOPI of any legal notices
served on the LICENSEE which might affect NOCOPI, handle promptly all
correspondence from NOCOPI, and assist and co-operate with NOCOPI's
officers, research and sales personnel during their trips to the
facilities of the LICENSEE and/or the suppliers of the LICENSEE.
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ARTICLE IX - LIMITATIONS OF LIABILITY AND HOLD HARMLESS
9.01 Each Party expressly saves and holds the other Party, and any
AFFILIATES, harmless from any and all liability of any kind or nature
whatsoever to customers and to other third parties which may arise
from its negligent acts or omissions.
9.02 NOCOPI warrants that the licenses and rights granted pursuant to this
Agreement, when used as intended and without unauthorized
modification, do not violate any right or infringe any patent,
copyright or other protection of intellectual property belonging to
any third party. NOCOPI agrees to defend, indemnify, and hold harmless
Westvaco and Westvaco's principals, directors, officers, employees,
and/or agents from and against any and all liabilities, penalties,
claims, demands, suits, and causes of action of any nature whatsoever,
whether groundless or otherwise, and any and all damages, costs and
expenses sustained or incurred (including cost of defense, settlement,
and reasonable attorneys' fees), asserted by or on behalf of any
person or entity arising out of any claim that any of the licenses or
rights granted by NOCOPI pursuant to this Agreement, or the NOCOPI
TECHNOLOGY applied pursuant to this Agreement, infringe any patent,
copyright or protection of intellectual property generally, whether
such claim is valid or baseless and wherever it may arise. This
undertaking shall expressly survive any termination of this Agreement
9.03 Except as herein expressly stated, there are no warranties, expressed
or implied, by operation of law or otherwise, for any item furnished
hereunder. NOCOPI disclaims any implied warranty or merchantability or
fitness for a particular purpose. In no event shall either Party, or
its AFFILIATES, be liable for any incidental, indirect or
consequential damages in connection with or arising out of this
Agreement.
ARTICLE X - CONFIDENTIALITY
10.01 The LICENSEE shall keep secret and confidential, the NOCOPI TECHNOLOGY
and/or DESIGN RIGHTS made available to it by NOCOPI and shall not
disclose the same other than to those Directors and employees of the
LICENSEE or any
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AFFILIATE of the LICENSEE who may be deemed to have a legitimate
reason to be party to the NOCOPI TECHNOLOGY and/or DESIGN RIGHTS.
10.02 NOCOPI shall keep secret and confidential, any information which the
LICENSEE passes to NOCOPI and not disclose the same except to its own
employees as necessary to carry out the purposes of this Agreement.
10.03 The obligations of secrecy undertaken by both Parties pursuant to this
Article X, shall not apply to information which:
10.03.1 is already, or which subsequently becomes generally
known to the public through no fault of the
recipient: or
10.03.2 the recipient can demonstrate was known to the
receipt prior to the date disclosed. For the purposes
hereof, that which the recipient can demonstrate was
known will be that which the receipt can establish by
written evidence was known to it at the date
disclosed; or
10.03.3 is received from a third party, provided that such
third party is lawfully entitled to disclose the
same; or
10.03.4 is disclosed in any patent or patent application
which may publish.
10.04 The obligations of secrecy pursuant to this Article (X) shall expire
on the tenth anniversary of the termination of this Agreement as
hereinabove provided.
10.05 The provisions of this Article (X) contain the entire understanding
and agreement between the Parties with respect to matters dealing with
confidentiality and cannot be
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amended, modified or supplanted in any respect except by a subsequent
written agreement entered into by both parities.
ARTICLE XI - IMPROVEMENTS
11.01 During the term of this Agreement, the LICENSEE shall disclose to
NOCOPI any improvements to the NOCOPI TECHNOLOPY and/or DESIGN RIGHTS
which the LICENSEE may discover or which comes into its possession.
Any such improvements shall, from the time of the LICENSEE's
knowledge, conception or development, be the property of NOCOPI. Upon
request by NOCOPI, the LICENSEE shall execute and deliver to NOCOPI
such instrument as NOCOPI may reasonably request in order to achieve
such industrial or intellectual property status as NOCOPI shall deem
appropriate to perfect the assignment of the rights so granted by the
LICENSEE to NOCOPI.
ARTICLE XII - MISCELLANEOUS
12.01 Neither the LICENSEE nor NOCOPI shall be in default under this
Agreement nor be liable for any failure to perform or for any delay in
performance resulting from any cause beyond its/their reasonable
control or due to compliance with any regulations, orders or act, of
any federal, provincial, state or municipal government, or any
department or agency thereof, civil or military authority, acts of
God, acts or omissions of the other party, fires, floods or weather,
strikes or lockouts, factory shutdowns, embargoes, wars, hostilities
or riots, delays or shortages in transportation or inability to obtain
labor, manufacturing facilities or material.
12.02 Each of the Parties shall bear all taxes imposed on each of them as a
result of the existence or operation of this Agreement including, but
not restricted to, any tax on or measured by any payment required to
be made by it hereunder, any registration tax, any tax imposed with
respect to the granting of, or transfer of, licenses or other rights
or payments hereunder.
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12.03 This Agreement may be varied or amended only by the written agreement
of the Parties hereto through their duly authorized officers or
representatives.
12.04 In any case where any notice or other communication is required or
permitted to be given hereunder, such notice or communication shall be
in writing and (I) personally delivered; (ii) sent by postage prepaid
registered mail, or (iii) transmitted by telex or facsimile to the
Parties at the addresses first hereinbefore listed or to such other
addresses as the Parties may notify each other.
12.05 The relationship between the Parties shall be governed by the terms of
this Agreement and shall not extend to other activities, transactions
or contracts. Neither Party is in any way the legal representative or
agent of, nor has nay authority to assume or create any obligation on
behalf of, the other Party. The LICENSEE shall make no guarantees,
warranty or representation with respect to the EXCLUSIVE PRODUCTS or
to the NON-EXCLUSIVE PRODUCTS.
12.06 If any provision of this Agreement is held illegal in a judicial
proceeding, such provision shall be severed from this Agreement and
shall be inoperative. The Parties shall use their best endeavors to
replace the severed provision with a new provision which is not
illegal and which follows the principles of the severed provision as
closely as is legally possible. The remainder of this Agreement shall
remain binding on the Parties hereto.
12.07 No waiver of breach of any of the provisions of this Agreement shall
be construed to be a waiver of any succeeding breach of the same or
any other provision.
12.08 This Agreement may be executed in any number of counterparts. Any
single counterpart or set of counterparts signed, in either case, by
the Parties hereto, shall constitute a full and original Agreement for
all purposes.
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12.09 The descriptive headings of the several articles of this Agreement are
inserted for convenience only and do not constitute a part of this
Agreement.
12.10. The preamble hereof shall be deemed to form part of this Agreement for
all purposes.
ARTICLE XIII - SUPPLY OF INK
13.01 NOCOPI agrees that during the tendency of this Agreement that it will
supply ink proprietary to NOCOPI at NOCOPI's cost plus fifteen percent
(15%). The obligation to supply such ink shall apply only for that
quantity of ink that is ordered by a purchase order emanating from the
LICENSEE and which is received by NOCOPI at least thirty (30) days
prior to the requested delivery date.
13.02 NOCOPI further agrees that upon request by the LICENSEE that it will
provide statements justifying its cost of production for the NOCOPI
ink.
ARTICLE XIV - GOVERNING LAW
14.01 This Agreement shall be governed by the laws of Pennsylvania. Any
action to enforce any provision of this Agreement shall be brought in
an appropriate court in Pennsylvania and both parties hereby consent
to the jurisdiction of Pennsylvania.
ARTICLE XV - BINDING EFFECT ASSIGNMENT
15.01 This Agreement may not be assigned by either Party without the written
consent of the other Party (such consent not to be unreasonably
withheld) except that the LICENSEE may assign this Agreement to an
AFFILIATE without consent. No assignment of this Agreement shall be
valid unless and until all of the obligations of the assigning party
have been assumed, in writing, by the assignee. When duly assigned in
accordance with the foregoing, this Agreement shall be binding upon
and inure to the benefit of the assignee. Any attempted assignment in
contravention of this Agreement shall be void.
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ARTICLE XVI - ARBITRATION
16.01 In the event of any dispute, difference or question arising between
the Parties in connection with this Agreement, or any clause or the
construction thereof, or the rights, duties or liabilities of either
Party, which cannot be amicably resolved by the Parties, then and in
every such case, unless the Parties concur in the appointment of a
single arbitrator, the matter of difference shall be referred to three
(3) arbitrators, one to be appointed by each Party, and the third to
be nominated by the two so selected by the Parties, or if they cannot
agree on a third, by a presiding judge of the Superior Court of the
State of Pennsylvania.
16.02 In the event that either Party, within thirty (30) days of any
notification made to it of the demand for arbitration by the other
Party, shall not have appointed its arbitrator, such arbitrator shall
be appointed by a presiding judge of the Superior Court of
Pennsylvania. Arbitration shall take place at Philadelphia. The
arbitrators must base their decision on this Agreement and their
decision shall be binding on both parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their respective representatives thereunto duly authorized as of
the date first hereinabove written.
NOCOPI TECHNOLOGIES, INC.
per:/s/
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Xxxxxxx Xxxxxxxxx, M.D.
Chairman
WESTVACO BRAND SECURITY, INC.
per:/s/
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Xxxxxxx Xxxx Xxxx
President
