LICENSE AGREEMENT
THIS LICENSE
AGREEMENT (the "Agreement")
is effective as of the12th day of June, 2006 (the "Effective
Date"), between CALIFORNIA
INSTITUTE OF TECHNOLOGY,
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, XX 00000 ("Caltech")
and Alchemy Enterprises, Ltd., a corporation having a place of business at 0000
X. 00xx Xxxxx, Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000 ("Licensee").
WHEREAS,
Caltech operates the Jet Propulsion Laboratory ("JPL"),
which is a Federally Funded Research and Development
Center sponsored by the National Aeronautics and Space Administration ("NASA");
WHEREAS,
NASA and Licensee, by assignment from Universal Power
Vehicle, Inc. ("UPV"), have
entered into JPL Task Plan No. 62-10777, entitled "Mechanically-Fed Metal-Air
Fuel Cell as a High Energy Power Source" and Caltech and Licensee, by assignment
from UPV, have entered into an "Intellectual Property Agreement with Caltech for
JPL Task Plan No. 62-10777" (collectively, the "JPL
Task Plan");
WHEREAS,
Caltech and Licensee have entered into an Option Agreement
executed on May 23, 2006 (the "Option Agreement") under which Licensee has the
option and right to acquire from Caltech an exclusive license under certain
Exclusively Licensed Patent Rights and Improvement Patent Rights, and a
nonexclusive license under certain Technology Rights, all relating to research
performed under the JPL Task Plan and as further defined below; and
WHEREAS,
Licensee is desirous of exercising its option under the Option Agreement
pursuant to the terms of this Agreement.
NOW, THEREFORE,
the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Affiliate"
means any corporation, limited liability company or other legal entity which
directly or indirectly controls, is controlled by, or is under common control
with Licensee. For the purpose of this Agreement, "control" shall mean the
direct or indirect ownership of
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greater than 50 percent (>50%) of the
outstanding shares on a fully diluted basis or other voting rights of the
subject entity to elect directors, or if not meeting the preceding, any entity
owned or controlled by or owning or controlling at the maximum control or
ownership right permitted in the country where such entity exists. In addition,
a party's status as an Affiliate of Licensee shall terminate if and when such
control ceases to exist.
1.2 "Exclusively
Licensed Patent Rights" means Caltech's rights under
any patents and/or patent applications based on any inventions that are: (a)
developed under the JPL Task Plan or any revisions, additions or modifications
thereto; or (b) related to electric power cell technology and developed in the
laboratory of Xxxxxx Xxxxxxx at JPL with the assistance, oversight or input from
a representative of Licensee, including, but not limited to, Xxxxxx Xxxxx; or
(c) funded in whole or in part by Licensee; or (d) specifically listed in
Exhibit A attached hereto (as may be revised from time to time); and any
continuations, continued prosecution applications, continuations-in-part,
divisionals, reissues, renewals, extensions, reexaminations, and patents issuing
on each of the preceding, and all foreign counterparts thereof.
1.3 "Technology
Rights" means Caltech's rights under any technology,
whether created prior to or after the Effective Date, including all proprietary
information, trade secrets, know-how, procedures, methods, products, devices,
systems, technical data, reports, prototypes, and designs, which is: (a)
developed under the JPL Task Plan or any revisions, additions or modifications
thereto; or (b) related to electric power cell technology and developed in the
laboratory of Xxxxxx Xxxxxxx with assistance, oversight or input from a
representative of Licensee, including, but not limited to, Xxxxxx Xxxxx; or (c)
funded in whole or in part by Licensee; or (d) specifically listed in Exhibit B
attached hereto (as revised from time to time); or (e) necessary for the
development or use of Licensed Products; or (f) disclosed in the patents and
patent applications that are specifically listed in Exhibit A attached hereto
(as may be revised from time to time); or (g) requested by Licensee and
consented to by Caltech, which consent shall not be unreasonably withheld.
"Technology Rights" shall not include any technology that is covered by a Valid
Claim of the Exclusively Licensed Patent Rights or Improvement Patent Rights.
1.4 "Caltech
Intellectual Property Rights" means the Exclusively
Licensed Patent Rights, the Improvement Patent Rights, and the Technology
Rights.
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1.6
"Effective Date" has the meaning set forth in the
preamble.
1.7
"Field" means all fields.
1.8 "Improvement
Patent Rights" means Caltech's rights under: (a) all
patents and patent applications with claims directed to Improvements; (b) any
patents issuing therefrom; and (c) any patents or patent applications claiming a
right of priority thereto (including reissues, reexaminations, renewals,
extensions, divisionals, continuations, continued prosecution applications,
continuations-in-part and foreign counterparts of any of the foregoing).
1.9 "Improvements"
means any future inventions conceived and reduced to practice or otherwise
developed solely in the laboratory of Xxxxxx Xxxxxxx at JPL, either solely or
jointly with Licensee in the Field for a period of three (3) years from the
Effective Date, and which are dominated by a Valid Claim of the Exclusively
Licensed Patent Rights.
1.10 "Licensed
Product" means any product, device, system, article of
manufacture, composition of matter, or process or service in the Field that is
covered by, or is made by a process covered by, any Valid Claim of the
Exclusively Licensed Patent Rights or Improvement Patent Rights or that utilizes
the Technology Rights.
1.12
"Valid Claim" means:
(a) a claim of an issued patent
within the Exclusively Licensed Patent Rights or Improvement Patent Rights that
has not: (i) expired or been canceled; (ii) been finally adjudicated to be
invalid or unenforceable by a decision of a court or other appropriate body of
competent jurisdiction (and from which no appeal is or can be taken); or (iii)
been admitted to be invalid or unenforceable through reissue, reexamination,
disclaimer or otherwise; or
(b) a claim included in a pending
patent application within the Exclusively Licensed Patent Rights or Improvement
Patent Rights, which claim is being actively prosecuted in accordance with this
Agreement and which has not been: (i) canceled; (ii) withdrawn from
consideration; or (iii) finally determined to be unallowable by the applicable
governmental authority (and from which no appeal is or can be taken).
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ARTICLE 2
LICENSE GRANT
2.1 Grant
of Rights. Caltech hereby grants to Licensee and
its Affiliates the following licenses:
(a) an exclusive license, with
the right to grant and authorize sublicenses, under the Exclusively Licensed
Patent Rights and the Improvement Patent Rights, to make, have made, import,
use, sell, and offer for sale Licensed Products in the Field throughout the
world; and
(b) a nonexclusive license, with
the right to grant and authorize sublicenses, under the Technology Rights, to
make, have made, import, use, sell, offer for sale, reproduce, distribute,
display, perform, create derivative works of, and otherwise exploit Licensed
Products in the Field throughout the world.
The licenses granted in this Section 2.1
are nontransferable, except as provided in Section 14.9. Rights not explicitly
granted herein are reserved by Caltech.
2.2 Reservation
of Rights; Government Rights. The licenses granted
in Section 2.1 are subject to: (a) the reservation of Caltech's right to make,
have made, import, use, sell and offer for sale Licensed Products for
noncommercial educational and research purposes, but not for commercial sale or
other commercial distribution to third parties; and (b) any existing right of
the U.S. Government under Xxxxx 00, Xxxxxx Xxxxxx Code, Section 200 et seq. and
under 37 Code of Federal Regulations, Section 401 et seq., including but not
limited to the grant to the U.S. Government of a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced any invention
conceived or first actually reduced to practice in the performance of work for
or on behalf of the U.S. Government throughout the world.
Licensed Products shall be substantially
manufactured in the United States to the extent (if at all) required by 35 U.S.C.
Section 204.
2.3 Sublicensing.
Licensee and its Affiliates have the right hereunder to grant sublicenses to
third parties. The sublicenses may be of no greater scope than the licenses
granted in Section 2.1. No sublicensing fees shall be due.
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Any sublicenses granted by Licensee and
its Affiliates, shall survive termination of the licenses granted in Section
2.1, or of this Agreement, provided that: (a) the sublicensing agreement
requires the sublicensee to thereafter pay Caltech any consideration that would
have been due to Licensee or its Affiliate under the sublicensing agreement, and
names Caltech as a third party beneficiary; (b) upon termination, Licensee or
its Affiliate informs the sublicensee of the foregoing obligations; and (c)
Licensee remains responsible for all other obligations.
2.4 No
Other Rights Granted. The parties agree that
neither this Agreement, nor any action of the parties related hereto, may be
interpreted as conferring by implication, estoppel or otherwise, any license or
rights under any intellectual property rights of Caltech other than as expressly
and specifically set forth in this Agreement, regardless of whether such other
intellectual property rights are dominant or subordinate to the Exclusively
Licensed Patent Rights or Improvement Patent Rights.
2.5 Preferential
Purchaser Status. Caltech shall be entitled to
purchase Licensed Products from Licensee for educational, research or other
noncommercial purposes on pricing terms that are at least as favorable as any
commercial pricing made available by Licensee to any third party.
ARTICLE 3
DISCLOSURE AND DELIVERY
3.1 Patent
Applications and Patents. Upon request of
Licensee, Caltech shall disclose and deliver to Licensee copies of all patent
applications and issued patents within the Exclusively Licensed Patent Rights
and Improvement Patent Rights.
3.2 Inventions
and Technology. Caltech shall promptly notify
Licensee of all inventions and technology within the Exclusively Licensed Patent
Rights, Improvement Patent Rights, and Technology Rights.
ARTICLE 4
PROSECUTION OF PATENT APPLICATIONS AND
PAYMENT OF PATENT COSTS
4.1 Prosecution
by Caltech. Caltech will, in accordance with its
customary practices: (a) prepare, file, prosecute and maintain any and all
patent applications and patents within the
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Exclusively Licensed Patent Rights; and
(b) prepare, file, prosecute and maintain patent applications and patents within
the Improvement Patent Rights for which Caltech or Licensee deems it beneficial
to obtain additional coverage. Licensee may recommend patent counsel for this
purpose. Caltech shall provide to Licensee for review and comment a copy of all
documents to be filed in connection with such patent applications and patents
(including, but not limited to, draft patent applications and draft responses to
Office Actions) at least thirty (30) days prior to any applicable time deadline
for filing such documents, and Caltech shall make reasonable efforts to
implement modifications thereto as may be requested by Licensee.
4.2 Prosecution
by Licensee. If Caltech declines to prepare, file,
prosecute or maintain patent applications or patents within the Exclusively
Licensed Patent Rights or Improvement Patent Rights, then Licensee may elect to
assume responsibility for such preparation, filing, prosecution or maintenance
at its expense in Caltech's name. Caltech agrees to fully cooperate with
Licensee in preparing, filing, prosecuting, and maintaining any such patent
applications and patents, and Caltech agrees to execute any documents as shall
be necessary for such purpose, and not to impair in any way the patentability of
any of the foregoing.
4.3 Past
Patent Costs. Licensee shall reimburse Caltech for
all reasonable expenses (including attorneys' fees) incurred by Caltech prior to
the Effective Date for the preparation, filing, prosecution and maintenance of
the Exclusively Licensed Patent Rights. All amounts owed under this Section 4.3
shall be due within two (2) years of the Effective Date of this Agreement.
4.4 Ongoing
Patent Costs. Licensee agrees to pay directly to
the law firm prosecuting the Exclusively Licensed Patent Rights and Improvement
Patent Rights any reasonable expenses (including attorneys' fees) incurred by
Caltech after the Effective Date for the preparation, filing, prosecution and
maintenance of the Exclusively Licensed Patent Rights and Improvement Patent
Rights. Caltech will instruct the law firm to invoice Licensee directly for such
patent costs. Licensee may offset up to fifty percent (50%) of the Annual
Maintenance Fee due Caltech under Section 5.1 for patent costs expended by
Licensee relating to foreign patent rights. It is understood that all patent
applications and patents in which Licensee has paid the foregoing patent costs
will be a part of the Exclusively Licensed Patent Rights or
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Improvement Patent Rights, as applicable.
Licensee may elect not to pay the patent
costs with respect to a particular patent application or patent. Upon such
election, Caltech may, at its option, prepare, file, prosecute and maintain such
patent application or patent; provided, however, that any patent or patent
application resulting therefrom will thereafter no longer be subject to the
licenses granted in Section 2.1 hereunder. Licensee is responsible for all
patent costs incurred up until the date of its election. At the sole discretion
of Caltech, Licensee and Caltech may enter into negotiations for a separate
agreement under which Licensee would have a nonexclusive license under any
patent or patent application in which the patent costs have been paid by
Caltech.
ARTICLE 5
ANNUAL LICENSE MAINTENANCE FEE
5.1 Annual
Maintenance Fee. An annual maintenance fee of
fifty thousand dollars ($50,000) is due Caltech on each anniversary of this
Agreement, beginning on the third anniversary of the Effective Date (the "Annual
Maintenance Fee"). Caltech shall have the right to terminate this Agreement
pursuant to Section 10.2 for failure to pay such Annual Maintenance Fee.
5.2 Third
Party Royalty Offset. If Licensee is required to
make any payment (including, but not limited to, royalties or other license
fees) to one or more third parties to obtain a patent license in the absence of
which it could not legally make, import, use, sell, or offer for sale Licensed
Products in any country, and Licensee provides Caltech with reasonably
satisfactory evidence of such third-party payments, Licensee may offset such
amounts against up to thirty percent (30%) of the Annual Maintenance Fee due
Caltech in any given year, with excess payments eligible for carryover to future
years.
ARTICLE
6
LICENSEE EQUITY INTEREST
6.1 Common
Stock Grant. Licensee agrees to issue to Caltech,
in partial consideration of Licensee's receipt of the licenses granted under
this Agreement, 5,869,565 shares of common stock, representing 8% of the
outstanding common stock of Licensee pursuant
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to an agreed upon stock purchase agreement
between Licensee and Caltech (the "Equity Interest"). In the event that Licensee
shall register its securities with the Securities and Exchange Commission under
any form of Registration Statement, other than Form S-8 or S-4, then Caltech may
require that its shares of common stock of the Licensee also be registered in
such Registration Statement.
6.2 Transfer
Restrictions. Caltech agrees that, in the event of
any underwritten or public offering of securities of Licensee or an Affiliate,
Caltech shall comply with and agree to any required restriction on the transfer
of its equity interest, or any part thereof, imposed by the underwriter, and
shall perform all acts and sign all necessary documents required with respect
thereto. Other than the foregoing, Caltech shall not be restricted from
transferring its equity interest to any entity in any manner not prohibited by
law.
ARTICLE 7
DUE DILIGENCE
7.1 Commercialization.
Licensee agrees to use its best efforts to commercially introduce Licensed
Products in the Field as soon as practicable. Licensee shall be deemed to have
satisfied its obligations under this Section 7.1 if Licensee has an ongoing and
active research, development or marketing program, directed primarily toward
commercial production and use of one or more Licensed Products. Any efforts of
Licensee's Affiliates or sublicensees shall be considered efforts of Licensee
for the sole purpose of determining Licensee's compliance with its obligation
under this Section 7.1.
7.2 Reporting.
On each yearly anniversary of the Effective Date, Licensee shall issue to
Caltech a detailed written report on its progress in introducing commercial
Licensed Product(s). Such report shall be considered confidential information of
Licensee subject to Article 11.
7.3 Failure
to Commercialize. If Licensee is not fulfilling
its obligations under Section 7.1 with respect to the Field in any country, and
Caltech so notifies Licensee in writing, Caltech and Licensee shall negotiate in
good faith any additional efforts to be taken by Licensee.
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ARTICLE 8
LITIGATION
8.1 Enforcement.
Both Caltech and Licensee agree to promptly notify the other in writing should
either party become aware of possible infringement by a third party of the
Caltech Intellectual Property Rights. If Licensee has supplied Caltech with
evidence of infringement of the Caltech Intellectual Property Rights, Licensee
may by notice request Caltech to take steps to enforce the Caltech Intellectual
Property Rights. If Caltech does not, within sixty (60) days of the receipt of
such notice, initiate an action against the alleged infringer in the Field,
Licensee may upon notice to Caltech initiate such an action, either in
Licensee's name or in Caltech's name if so required by law. The party
controlling any such action initiated by it shall bear all the costs thereof.
8.2 Other
Defensive Litigation. If a declaratory judgment
action alleging invalidity, unenforceability or noninfringement of any of the
Caltech Intellectual Property Rights is brought against Licensee and/or Caltech,
Licensee may by notice request Caltech to take steps to defend such action. If
Caltech does not defend such action, Licensee may upon notice to Caltech control
the defense of such action. The party controlling the defense of such action
shall bear all the costs thereof. Licensee may also undertake the defense of any
interference, reexamination, opposition or similar procedure with respect to the
Exclusively Licensed Patent Rights or Improvement Patent Rights, provided that
Licensee bears all the costs thereof.
8.3 Cooperation.
In the event either party takes control of a legal action or defense pursuant to
Sections 8.1 or 8.2 (thus becoming the "Controlling Party"), the other party
shall fully cooperate with and supply all assistance reasonably requested by the
Controlling Party, including by: (a) using commercially reasonable efforts to
have its employees consult and testify when requested; (b) making available
relevant records, papers, information, samples, specimens, and the like; and (c)
joining any such action in which it is an indispensable party. The Controlling
Party shall bear the reasonable expenses (including salary and travel costs)
incurred by the other party in providing such assistance and cooperation. The
Controlling Party shall keep the other party reasonably informed of the progress
of the action or defense, and the other party shall be entitled to participate
in such action or defense at its own expense and using counsel of its choice. As
a condition of controlling any action or defense involving the Caltech
Intellectual
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Property Rights pursuant to Sections 8.1
or 8.2, Licensee and Caltech shall use their best efforts to preserve the
validity and enforceability thereof.
8.4 Settlement.
The Controlling Party of any action or defense under Sections 8.1 or 8.2 shall
have the right to settle any claims thereunder, but only upon terms and
conditions that are reasonably acceptable to the other party. Should the
Controlling Party elect to abandon such an action or defense other than pursuant
to a settlement with the alleged infringer that is reasonably acceptable to the
other party, the Controlling Party shall give timely advance notice to the other
party who, if it so desires, may continue the action or defense.
8.5 Recoveries.
Any amounts paid by third parties as the result of an action or defense pursuant
to Sections 8.1 or 8.2 (including in satisfaction of a judgment or pursuant to a
settlement) shall first be applied to reimbursement of the unreimbursed expenses
(including attorneys' fees and expert fees) incurred by each party. Any
remainder shall be divided between the parties as follows:
(a) to the extent the amount
recovered reflects Licensee's lost profits or royalties, Licensee shall retain
the remainder; and
(b) to the extent the amount
recovered does not reflect Licensee's lost profits or royalties, sixty percent
(60%) shall be paid to the Controlling Party and forty percent (40%) shall be
paid to the other party.
8.6 Infringement
Defense. If Licensee or its Affiliates,
sublicensees, distributors or customers is sued by a third party charging
infringement of patent rights that cover a Licensed Product, Licensee will
promptly notify Caltech to the extent that Licensee is aware of such suit.
Licensee will be responsible for the expenses of, and will be entitled to
control the defense or settlement of, any such action(s) (unless Licensee's
Affiliates, sublicensees, distributors or customers are required to do so under
a separate agreement with Licensee).
8.7 Marking.
Licensee agrees to xxxx or cause to be marked the Licensed Products with the
numbers of applicable issued patents within the Exclusively Licensed Patent
Rights and Improvement Patent Rights, unless such marking is commercially
infeasible in accordance with normal commercial practices in the Field, in which
case the parties shall cooperate to devise a
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commercially reasonable alternative to
such marking.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
9.1 Representations
and Warranties of Caltech. Caltech hereby
represents and warrants to Licensee that as of the Effective Date:
(a) there are no outstanding
licenses, options or agreements of any kind relating to the Caltech Intellectual
Property Rights, other than pursuant to this Agreement; and
(b) Caltech has the power to
grant the rights, licenses and privileges granted herein and can perform as set
forth in this Agreement without violating the terms of any agreement that
Caltech has with any third party.
9.2 Exclusions.
THE PARTIES AGREE THAT NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS, AND
CALTECH HEREBY DISCLAIMS, ANY EXPRESS OR IMPLIED REPRESENTATION, WARRANTY,
COVENANT, OR OTHER OBLIGATION:
(a) THAT ANY PRACTICE BY OR ON
BEHALF OF LICENSEE OF ANY INTELLECTUAL PROPERTY LICENSED HEREUNDER IS OR WILL BE
FREE FROM INFRINGEMENT OF RIGHTS OF THIRD PARTIES;
(b) AS TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT OF THIRD
PARTY RIGHTS, WITH RESPECT TO ANY TECHNOLOGY PROVIDED BY CALTECH TO LICENSEE
HEREUNDER.
9.3 Indemnification
by Caltech. Caltech shall indemnify, defend and
hold harmless Licensee, its officers, agents and employees from and against any
and all losses, damages, costs and expenses (including attorneys' fees) arising
out of (i) a material breach by Caltech of its representations and warranties or
(ii) Caltech's or JPL's illegal conduct or wrongdoing in performing their duties
under this Agreement or the JPL Task Plan ("Indemnification
Claims"), provided that: (a) Caltech is notified
promptly of any Indemnification Claims; (b) Caltech has the sole right to
control and defend or settle any litigation within the scope of this indemnity;
and (c) all indemnified parties cooperate to the extent necessary in the defense
of any
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Indemnification Claims. The foregoing
shall be the sole and exclusive remedy of Licensee for breach of Section 9.1.
9.4 Indemnification
by Licensee. Licensee shall indemnify, defend and
hold harmless Caltech, its trustees, officers, agents and employees from and
against any and all losses, damages, costs and expenses (including reasonable
attorneys' fees) arising out of third party claims brought against Caltech
relating to the manufacture, sale, licensing, distribution or use of Licensed
Products by or on behalf of Licensee or its Affiliates, except to the extent
involving or relating to (i) a material breach by Caltech of its representations
and warranties or (ii) Caltech's or JPL's illegal conduct or wrongdoing in
performing their duties under this Agreement or the JPL Task Plan.
9.5 Certain
Damages. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING
OUT OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
ARTICLE 10
TERM AND TERMINATION
10.1 Term.
This Agreement and the rights and licenses hereunder shall take effect on the
Effective Date and continue until the expiration, revocation, invalidation, or
unenforceability of the last of the Exclusively Licensed Patent Rights or
Improvement Patent Rights.
10.2 Termination
for Monetary Breach. Caltech shall have the right
to terminate this Agreement and the rights and licenses hereunder if Licensee
fails to make any payment due, including patent costs or the Annual Maintenance
Fee hereunder, and Licensee continues to fail to make the payment (either to
Caltech directly or by placing any disputed amount into an interest-bearing
escrow account to be released when the dispute is resolved) for a period of
thirty (30) days after receiving written notice from Caltech specifying
Licensee's failure to make such payment. Upon any such termination: (a) Licensee
and its Affiliates shall have six (6) months to complete the manufacture of any
Licensed Products that are then works in progress for sale and to sell their
inventory of Licensed Products and (b) any sublicenses shall survive termination
in accordance with Section 2.3.
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10.3 Non-Monetary
Termination for Breach. Non-monetary breach shall
include, but is not limited to, failure to fulfill the obligations in Article 7
and pursuit of exploitation of Exclusively Licensed Patent Rights inside the
Field. If this Agreement is materially breached by either party, the
non-breaching party may elect to give the breaching party written notice
describing the alleged breach. If the breaching party has not cured such alleged
breach within thirty (30) days after receipt of such notice, the notifying party
will be entitled, in addition to any other rights it may have under this
Agreement, to terminate this Agreement and the rights and licenses hereunder.
10.5 Accrued
Liabilities. Termination of this Agreement for any
reason shall not release any party hereto from any liability which, at the time
of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination, nor preclude either party
from pursuing any rights and remedies it may have hereunder or at law or in
equity which accrued or are based upon any event occurring prior to such
termination.
10.6 Survival.
The following shall survive any expiration or termination (in whole or in xxx)
of this Agreement: (a) any provision plainly indicating that it should survive;
(b) any amount due and payable on account of activity prior to the termination;
and (c) Sections or Articles 6.2, 9.2, 9.3, 9.4, 9.5, 11, 12, 13.1 & 14.
ARTICLE 11
CONFIDENTIALITY
11.1 Nondisclosure.
Caltech agrees not to disclose any of the terms of this Agreement, or the
subject matter of any unpublished patent applications within the Exclusively
Licensed Patent Rights or Improvement Patent Right, to any third party without
the prior written consent of Licensee.
ARTICLE 12
DISPUTE RESOLUTION
12.1 No issue of the validity of any
of the Caltech Intellectual Property Rights, enforceability of any of the
Caltech Intellectual Property Rights, infringement of any of the Caltech
Intellectual Property Rights , the scope of any of the claims of the Caltech
Intellectual
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Property Rights and/or any dispute that
includes any such issues, shall be subject to arbitration under this Agreement
unless otherwise agreed by the parties in writing.
12.2 Except for those issues and/or
disputes described in Section 12.1, any dispute between the parties concerning
the interpretation, construction or application of any terms, covenants or
conditions of this Agreement shall be resolved by arbitration.
12.3 Arbitration shall be in
accordance with the CPR Institute For Dispute Resolution (CPR) Rules for
Non-Administered Arbitration of Patent and Trade Secret Disputes or Rules for
Non-Administered Arbitration, as appropriate, in effect on the Effective Date by
a sole arbitrator who shall be appointed in accordance with the applicable CPR
rules. Any other choice of law clause to the contrary in this Agreement
notwithstanding, the arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Section 1-16.
12.4 Any award made: (i) shall be a
bare award limited to a holding for or against a party and affording such remedy
as is within the scope of the Agreement; (ii) shall be accompanied by a brief
statement (not to exceed ten (10) pages) of the reasoning on which the award
rests; (iii) shall be made within four (4) months of the appointment of the
arbitrator; (iv) may be entered in any court of competent jurisdiction; and (v)
any award pertaining to a patent which is subsequently determined to be invalid
or unenforceable or otherwise precluded from being enforced, in a judgment
rendered by a court of competent jurisdiction from which no appeal can or has
been taken, may be modified as it relates to such patent by any court of
competent jurisdiction upon application by any party to the arbitration,
however, under no circumstances shall Caltech be required to refund any monies
paid, or forego any amounts accrued, under the terms of this Agreement.
12.5 The requirement for arbitration
shall not be deemed a waiver of any right of termination under this Agreement
and the arbitrator is not empowered to act or make any award other than based
solely on the rights and obligations of the parties prior to any such
termination.
12.6 Each party shall bear its own
expenses incurred in connection with any attempt to resolve disputes hereunder,
but the compensation and expenses of the arbitrator shall be borne equally.
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12.7 The arbitrator shall not have
authority to award punitive or other damages in excess of compensatory damages,
and each party irrevocably waives any claim thereto.
ARTICLE 13
PRODUCT LIABILITY
13.1 Indemnification.
Licensee agrees that Caltech (including its trustees,
officers, faculty and employees) shall have no liability to Licensee, its
Affiliates, their customers or any third party, for any claims, demands, losses,
costs, or other damages which may result from personal injury, death, or
property damage related to Licensed Products originating from Licensee or its
Affiliates ("Product Liability Claims").
Licensee agrees to defend, indemnify, and hold harmless Caltech, its trustees,
officers, faculty and employees from any such Product Liability Claims, provided
that: (a) Licensee is notified promptly of any Product Liability Claims; (b)
Licensee has the sole right to control and defend or settle any litigation
within the scope of this indemnity; and (c) all indemnified parties cooperate to
the extent necessary in the defense of any Product Liability Claims.
13.2 Insurance.
Prior to such time as Licensee begins to manufacture, sell, sublicense,
distribute or use Licensed Products, Licensee shall, at its sole expense,
procure and maintain policies of comprehensive general liability insurance in
amounts not less than $1,000,000 per incident and $3,000,000 in annual
aggregate, and naming those indemnified under Section 13.1 as additional
insureds. Such comprehensive general liability insurance shall provide:
(a) product liability coverage; and (b) broad form contractual liability
coverage for Licensee's indemnification of Caltech under Section 13.1. In the
event the aforesaid product liability coverage does not provide for occurrence
liability, Licensee shall maintain such comprehensive general liability
insurance for a reasonable period of not less than five (5) years after it has
ceased commercial distribution or use of any Licensed Product. Licensee shall
provide Caltech with written evidence of such insurance upon request of Caltech.
13.3 Loss
of Coverage. Licensee shall provide Caltech with
notice at least fifteen (15) days prior to any cancellation, non-renewal or
material change in such insurance, to the extent Licensee receives advance
notice of such matters from its insurer. If Licensee does not obtain replacement
insurance providing comparable coverage within sixty (60) days following the
date of such cancellation, non-renewal or material change, Caltech shall have
the right to terminate
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this Agreement effective at the end of
such sixty (60) day period without any additional waiting period; provided that
if Licensee provides credible written evidence that is has used reasonable
efforts, but is unable, to obtain the required insurance, Caltech shall not have
the right to terminate this Agreement, and Caltech instead shall cooperate with
Licensee to either (at Caltech's discretion) grant a limited waiver of
Licensee's obligations under this Article or assist Licensee in identifying a
carrier to provide such insurance or in developing a program for self-insurance
or other alternative measures.
ARTICLE 14
MISCELLANEOUS
14.1 Notices.
All notice, requests, demands and other communications hereunder shall be in
English and shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents with confirmation of receipt; or (c) sent to the
parties at their respective addresses indicated herein by registered or
certified mail, return receipt requested and postage prepaid, or by private
overnight mail courier services with confirmation of receipt. The respective
addresses to be used for all such notices, demands or requests are as follows:
(a)
If to CALTECH, to:
California Institute of Technology
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Mail Code 210-85
Xxxxxxxx, XX 00000
ATTN: Director, Technology Transfer
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
Or to such other person or address as
Caltech shall furnish to Licensee in writing.
(b)
If to LICENSEE, to:
Alchemy Enterprises, Inc.
0000 X. 00xx Xxxxx, Xxxxx 5________
ATTN: Xxxxxxxx Xxxx
Phone No.: _____________
Fax No.: _______________
Or to such other person or address as
Licensee shall furnish to Caltech in writing.
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If personally delivered pursuant to this
paragraph, such communication shall be deemed delivered upon actual receipt by
the "attention" addressee or a person authorized to accept for such addressee;
if transmitted by facsimile pursuant to this paragraph, such communication shall
be deemed delivered the next business day after transmission, provided that
sender has a transmission confirmation sheet indicating successful receipt at
the receiving facsimile machine; if sent by overnight courier pursuant to this
paragraph, such communication shall be deemed delivered upon receipt by the
"attention" addressee or a person authorized to accept for such addressee; and
if sent by mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. Any party to this Agreement
may change its address for the purposes of this Agreement by giving notice
thereof in accordance with this Section 14.1
14.2 Entire
Agreement. This Agreement sets forth the complete
agreement of the parties concerning the subject matter hereof. No claimed oral
agreement in respect thereto shall be considered as any part hereof. No
amendment or change in any of the terms hereof subsequent to the execution
hereof shall have any force or effect unless agreed to in writing by duly
authorized representatives of the parties. This Agreement shall supersede any
prior agreements between the parties concerning the subject matter hereof,
including, but not limited to, the Option Agreement.
14.3 Waiver.
No waiver of any provision of this Agreement shall be effective unless in
writing. No waiver shall be deemed to be, or shall constitute, a waiver of a
breach of any other provision of this Agreement, whether or not similar, nor
shall such waiver constitute a continuing waiver of such breach unless otherwise
expressly provided in such waiver.
14.4
Severability. Each
provision contained in this Agreement is declared to constitute
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a separate and distinct covenant and
provision and to be severable from all other separate, distinct covenants and
provisions. It is agreed that should any clause, condition or term, or any part
thereof, contained in this Agreement be unenforceable or prohibited by law or by
any present or future legislation then: (a) such clause, condition, term or part
thereof, shall be amended, and is hereby amended, so as to be in compliance
therewith the legislation or law; but (b) if such clause, condition or term, or
part thereof, cannot be amended so as to be in compliance with the legislation
or law, then such clause, condition, term or part thereof shall be severed from
this Agreement and all the rest of the clauses, terms and conditions or parts
thereof contained in this Agreement shall remain unimpaired.
14.5 Construction.
The headings in this Agreement are inserted for convenience only and shall not
constitute a part hereof. Unless expressly noted, the term "include" (including
all variations thereof) shall be construed as merely exemplary rather than as a
term of limitation.
14.6 Counterparts/Facsimiles.
This Agreement may be executed in one or more counterparts, all of which taken
together shall be deemed one original. Facsimile signatures shall be deemed
original.
14.7 Governing
Law. This Agreement, the legal relations between
the parties and any action, whether contractual or non-contractual, instituted
by any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
excluding any conflict of law or choice of law rules that may direct the
application of the laws of another jurisdiction.
14.8 No
Endorsement. Licensee agrees that it shall not
make any form of representation or statement which would constitute an express
or implied endorsement by Caltech of any Licensed Product, and that it shall not
authorize others to do so, without first having obtained written approval from
Caltech, except as may be required by governmental law, rule or regulation.
Notwithstanding the foregoing, Licensee may disclose that the Licensed Products
were developed by and in conjunction with JPL/NASA and that the patents rights
and technology rights related thereto are licensed by Caltech. Such statements
shall not be construed as an express or implied endorsement by Caltech of any
Licensed Product.
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14.9
Assignment and
Assignment Fee.
(a) Licensee may assign this
Agreement as part of a sale, regardless of whether such a sale occurs through an
asset sale, stock sale, merger or other combination, or any other transfer of:
(i)
Licensee's entire business; or
(ii)
that part of Licensee's business
that exercises all rights granted under this Agreement.
Any other attempt to assign this Agreement
by Licensee shall be null and void.
(b)
Prior to any assignment of this
Agreement, the following conditions must be met:
(i)
Licensee must give Caltech thirty
(30) days prior written notice of the assignment, including the new
assignee's contact information;
(ii)
the new assignee/licensee must
agree in writing to Caltech to be bound by this Agreement; and
(iii)
Caltech must have provided written
permission to assign the Agreement, which permission shall not be
unreasonably withheld.
(c) If at the time of the
assignment of this Agreement Caltech owns at least 25% of its Equity Interest
granted by Licensee under Section 6.1 of this Agreement, Caltech may, at its
option, receive from Licensee an assignment fee of the greater of:
(i)
the percentage of Licensee stock
owned by Caltech times the sales price at the time of change of control
(including the value of any non-cash consideration); or
(ii)
one million dollars ($1,000,000).
If Caltech exercises this option and
receives an assignment fee, it shall return to Licensee the Equity Interest of
Licensee.
(d) Upon a permitted assignment
of this Agreement pursuant to this Section 14.9, Licensee will be released of
liability under this Agreement and the term "Licensee" in this Agreement will
mean the new assignee.
14.10
Export Regulations.
This Agreement is subject in all respects to the laws and
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regulations of the United States of
America, including the Export Administration Act of 1979, as amended, and any
regulations thereunder. Licensee or its sublicensees will not in any form
export, re-export, resell, ship, divert, or cause to be exported, re-exported,
resold, shipped, or diverted, directly or indirectly, any product or technical
data or software of the other party, or the direct product of such technical
data or software, to any country for which the United States Government or any
agency thereof requires an export license or other governmental approval without
first obtaining such license or approval.
14.11 Force
Majeure. Neither party shall lose any rights
hereunder or be liable to the other party for damages or losses (except for
payment obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, Act of God, earthquake,
flood, lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the reasonable
control and not caused by the negligence or intentional conduct or misconduct of
the nonperforming party, and such party has exerted all reasonable efforts to
avoid or remedy such force majeure; provided, however, that in no event shall a
party be required to settle any labor dispute or disturbance.
IN WITNESS
WHEREOF, the parties have caused this Agreement to be
executed:
CALIFORNIA INSTITUTE OF
TECHNOLOGY
Date: _______
By: ______________________________
Name: Xxxxxxxx Xxxxxxx
Title: Sr. Director, Office of
Technology Transfer
Date: _______
ALCHEMY ENTERPRISES, LTD.
By: ______________________________
Name: ____________________________
Title:
_____________________________
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EXHIBIT A
Patents
Application
No.
Filing
Date
Patent
No.
Issue
Date
Inventor(s)
Title
60/757,037
01/09/2006
-
-
Xxxxxx X. Xxxxx
Power Generation Using
Metal-Oxygen
Electrochemical Reaction
60/764,360
02/02/2006
-
-
Xxxxxx X. Xxxxx
Power Cell Fueled by Hydrogen
Generated
From Recycled By-Product of a
Metal Reaction
60/765,720
02/07/2006
-
-
Xxxxxx X. Xxxxx
Power Cell Fueled by Magnesium
Generated
From Recycled Reaction
By-Product
EXHIBIT B
Trademarks
Trademark
Application No.
Filing Date
Registration No.
Registration
Date
EXHIBIT C
Copyright Works
Title of Work
Nature of Work
Registration No.
Authors
EXHIBIT D
JPL Contract
EXHIBIT E
OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made and entered this 22nd day of May, 2006 ("Effective Date")
by and between the California Institute of Technology, a not-for-profit
corporation duly organized and existing under the laws of the State of
California, having a principal place of business at 0000 X. Xxxxxxxxxx Xxxx.,
Xxxxxxxx, Xxxxxxxxxx 00000 (hereinafter called "Caltech") and Alchemy Enterprises, Ltd., having a principal place of business at 0000 X. 00xx
Xxxxx, Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000 (hereinafter called "Optionee").
WHEREAS, Caltech is the assignee of or has the
right to license under separate agreement the patent rights identified in
Exhibit A attached hereto (the "Patent Rights") and the technology rights
identified in Exhibit B attached hereto (the "Technology Rights");
WHEREAS, Caltech operates the Jet Propulsion Laboratory ("JPL"), which is a Federally Funded Research and Development Center sponsored by the National Aeronautics and Space Administration ("NASA");
WHEREAS, NASA and Optionee have entered into JPL Task Plan No. 82-10777, entitled
"Mechanically-Fed Metal-Air Fuel Cell As A High Energy Power Source" (the "JPL Task Plan"), and Caltech and Optionee have entered into an "Intellectual Property Agreement with Caltech for JPL Task Plan No. 82-10777" (the "Caltech IP Agreement"); and
WHEREAS, Caltech and Optionee are in the early stages of negotiating for an exclusive license under said Patent Rights and a nonexclusive license under said Technology Rights.
Alchemy .Excl. Opt.
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5/23/2006
ACCORDINGLY, the parties agree as follows:
a.
Option Grant.
1.
Exclusive. Caltech hereby grants Optionee an exclusive, irrevocable (except for breach of this Agreement) option and right to acquire an exclusive worldwide license under the Patent Rights and Improvements and any continuations, continued prosecution applications, continuations-in-part, divisionals, reissues, renewals, extensions, re-examinations, and patents issuing on each of the preceding, and all foreign counterparts thereof, on terms as defined in the attached LICENSE TERM SHEET. All other terms are to be negotiated during the period of paragraph (b) hereof.
2.
Nonexclusive. Caltech hereby grants Optionee a nonexclusive, irrevocable (except for breach of this Agreement) option and right to acquire a nonexclusive worldwide license under the Technology Rights on terms as defined in the attached LICENSE TERM SHEET. All other terms are to be negotiated during the period of paragraph (b) hereof.
b.
Option Period. The period within which the
option may be exercised shall expire twelve (12) months from the Effective Date
of this Agreement (the "Option Period").
c.
Exclusivity. During the periods of paragraphs (b) and (d), Caltech will not contact, negotiate with or enter into any agreement with a third party with respect to the rights optioned hereunder.
Alchemy .Excl. Opt.
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5/23/2006
d.
Exercise. The aforementioned option may be exercised by Optionee by providing written notice and proof that the requirements to exercise have been met to Caltech prior to expiration of the period in paragraph (b). The major terms of the license agreement are attached as LICENSE TERM SHEET and are hereby agreed to by both parties as the basis for the license agreement. Notwithstanding the foregoing, unless and until such license agreement is executed by both parties, Optionee acknowledges that it has no rights under the Patent Rights or the Technology Rights, whether under a theory of implied license, estoppel, or otherwise (except as provided under the Caltech IP Agreement). All negotiations for the license agreement and the execution of said license agreement shall be completed no later than ninety (90) days following the end of the period of paragraph (b), or such further period as may be agreed in writing by the parties. Optionee and Caltech shall each negotiate in good faith during such period and respond promptly to all written proposals which each shall receive from the other. If the parties fail to agree to terms and conditions of said license agreement within the said period, Caltech shall have no further obligations to Optionee with respect to the Patent Rights or the Technology Rights (except as provided under the Caltech IP Agreement), unless said option is extended by agreement of the parties.
e.
Consideration. The consideration for the option by Caltech is, in part, a non-refundable fee of three thousand dollars ($3,000.00), which shall be due and payable upon the Effective Date to California Institute of Technology, Office of Technology Transfer, M/C 210-85, 0000 X. Xxxxxxxxxx Xxxx., Xxxxxxxx, Xxxxxxxxxx 00000.
f.
Expiration. This Agreement shall be effective as of the Effective Date and remain in effect until the following dates: (i) if Optionee does not exercise its option, until the expiration of the Option Period, or (ii) if Optionee exercises its Option pursuant to paragraph (d), until the earlier of (x) the execution of a license agreement between Optionee and Caltech, or (y) ninety (90) days following the expiration of the Option Period.
Alchemy .Excl. Opt.
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5/23/2006
g.
Termination for Breach. This Agreement can be terminated by either party for material breach by the other party of any obligation arising hereunder, by giving a thirty (30) day prior written notice to the other party specifying the cause of the termination; provided, however, that if the breach is cured within the thirty (30) day period, the notice shall be withdrawn and shall be of no effect.
h.
Governing Law. This Agreement and any dispute arising out of or in connection herewith shall be governed by the laws of the State of California, U.S.A., without reference to conflicts of laws principles. The exclusive venue for any dispute arising out of or in connection with this Agreement shall be in the state courts located in Los Angeles County, California or the federal courts within the Central District of California, and the parties hereby consent to the personal jurisdiction of such courts.
i.
Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given for all purposes hereof if mailed by first class certified or registered mail, postage prepaid, or sent via overnight delivery service (e.g., FedEx, DHL, etc.) addressed to the party to be notified at its address shown above or such other address as may have been furnished in writing to the notifying party.
j.
Warranty. Caltech warrants that it has not previously granted and during the term of this Agreement will not grant to any third party any rights inconsistent with the rights and option granted herein.
k.
Assignment. This Agreement may not be assigned or transferred by either party without the prior written consent to the other party hereto; provided, however, either party may transfer or assign this Agreement without the prior written consent of the other party hereto in connection with the transfer or sale of all or substantially all of its equity or assets, whether by sale, merger, operation of law or otherwise.
Alchemy .Excl. Opt.
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5/23/2006
l.
Waiver. Failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of such rights nor shall a waiver by either party in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances.
m.
Confidentiality. Each party agrees not to disclose any terms of this Agreement to any third party without the consent of the other party, except (i) as required by securities or other applicable laws, (ii) to prospective investors or (iii) to such party’s accountants, attorneys and other professional advisors. Except with respect to the above third parties, Optionee agrees not to disclose the subject matter of the Patent Rights and the Technology Rights to any third party unless under an appropriate nondisclosure agreement.
n.
Entire Agreement. This Agreement, together
with the nondisclosure agreement(s) ("NDA") between the parties, constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all written and oral prior agreements and understandings with respect thereto. In case of any conflict between this Agreement and either the Caltech IP Agreement or any NDA, the terms of this Agreement shall prevail. This Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by both parties.
o.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be deemed the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first written above.
CALIFORNIA INSTITUTE OF TECHNOLOGY:
OPTIONEE:
By:___________________________________
By:_________________________________
Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx
Assistant VP, Office of Technology Transfer
President, Alchemy Enterprises, Ltd..
Date:_________________________________
Date:________________________________
Alchemy .Excl. Opt.
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5/23/2006
Exhibit A
Patent Rights
"Patent Rights" shall include rights in any patents and/or patent applications based on any inventions developed under the JPL Task Plan. "Patent Rights" shall include all Improvement Patent Rights (as defined in the License Term Sheet).
Alchemy .Excl. Opt.
5/23/2006
Exhibit B
Technology Rights
"Technology Rights" shall include rights in any technology that meet any of the following criteria: (a) such technology is developed under the JPL Task Plan and is not covered by any claim of the Patent Rights; or (b) such technology (whether created prior to or after the Effective Date) is necessary for the development or use of products, devices, systems, articles of manufacture, compositions, processes or services developed under the JPL Task Plan. "Technology Rights" includes all proprietary information, know-how, procedures, methods, prototypes, designs, technical data, and reports that are requested by Optionee and consented to by Caltech, which consent shall not be unreasonably withheld.
Alchemy .Excl. Opt.
5/23/2006
LICENSE TERM SHEET
Scope of Grant:
(a) An exclusive Field license, with the right to grant and authorize sublicenses, under the Exclusively Licensed Patent Rights and the Improvement Patent Rights, to make, have made, use, import, offer for sale and sell Licensed Products in the Territory.
(b) A nonexclusive Field license, with the right to grant and authorize sublicenses, under the Nonexclusively Licensed Technology Rights, to make, have made, use, import, offer for sale and sell Licensed Products in the Territory.
Field:
All fields.
Territory:
Worldwide.
Exclusively Licensed
Caltech’s rights under any patents and/or patent applications based on
Patent Rights:
any inventions developed under the JPL Task Plan and any continuations, continued prosecution applications, continuations-in-part, divisionals, reissues, renewals, extensions, re-examinations, and patents issuing on each of the preceding, and all foreign counterparts thereof. Exclusively Licensed Patent Rights shall include all Improvement Patent Rights.
Improvement Patent Rights:
Caltech’s rights under: (a) all patents and patent applications with claims directed to Improvements; (b) any patents issuing therefrom; and (c) any patents or patent applications claiming a right of priority thereto (including reissues, reexaminations, renewals, extensions, divisionals, continuations, continued prosecution applications, continuations-in-part and foreign counterparts of any of the foregoing).
Improvements:
Any future invention conceived and reduced to practice or otherwise developed in the laboratory of Xxxxxx Xxxxxxx at JPL, either solely or jointly with Licensee in the Field for a period of three (3) years from the Effective Date, and which are dominated by a Valid Claim under Exclusively Licensed Patent Rights.
Nonexclusively Licensed
Caltech’s rights under any technology meeting any of the following
Technology Rights:
criteria: (a) such technology is developed under the JPL Task Plan and is not covered by any claim of the Exclusively Licensed Patent Rights; or (b) such technology (whether created prior to or after the Effective Date) is necessary for the development or use of Licensed Products. "Technology Rights" includes all proprietary information, know-how, procedures, methods, prototypes, designs, technical data, and reports that are requested by Optionee and consented to by Caltech, which consent shall not be unreasonably withheld.
Alchemy .Excl. Opt.
5/23/2006
Upon exercise of the Option, a successful conversion of the Option to a license agreement pursuant to Paragraph (d) of the Option Agreement.
Licensed Products:
Products, devices, systems, articles of manufacture, compositions, processes or services in the Field which utilize the Technology in material part or are covered by, or made by a process covered by a Valid Claim of, any Exclusively Licensed Patent Right.
Valid Claim:
With respect to the Exclusively Licensed Patent Rights: (a) a claim in an issued patent which has not (i) expired, (ii) been finally adjudicated or admitted as invalid or unenforceable, or (iii) been abandoned; or (b) a claim in a pending application which is actively being prosecuted.
Sublicensing.
Optionee shall have the right to grant sublicenses to third parties, but sublicensees shall not have the right to grant further sublicenses, and the sublicenses may be of no greater scope than the License Agreement. No sublicensing fees shall be due.
Annual License Fee:
Fifty thousand dollars ($50,000.00) effective three (3) years after exercise of the option and each anniversary date thereof during the term of the License Agreement. Caltech may terminate for Optionee’s failure to pay the Annual License Fee.
Commercialization:
Optionee will use best efforts to commercialize Licensed Products and will report on such efforts to Caltech annually. If Optionee fails to commercialize and does not cure, Caltech may terminate the License Agreement.
R&D Supply:
Optionee will sell Licensed Products to Caltech for educational and other noncommercial purposes on a most favored customer basis.
Patent Prosecution:
Caltech will be responsible, in accordance with its customary patent prosecution practices, for preparing, filing, prosecuting and maintaining patent applications and patents within the Exclusively Licensed Patent Rights. Optionee will pay the reasonable patent costs and fees incurred in connection with such activities (except as specified in the next paragraph). Optionee may recommend patent counsel, and will have right of review and comment. Optionee may prosecute if Caltech declines. One hundred percent (100%) of the amounts expended by Optionee in connection with foreign patent costs shall be creditable against the Annual License Fee due Caltech. All patents and patent applications in which Optionee has paid the foregoing patent costs and fees will become a part of the Exclusively Licensed Patent Rights.
Alchemy .Excl. Opt.
5/23/2006
Optionee may elect not to pay the foregoing patent costs and fees with respect to a particular patent application or patent. In the event that Optionee elects not to pay any of the foregoing patent costs and fees with respect to a particular application or patent, Caltech may, at its option, continue such prosecution or maintenance. At the sole discretion of Caltech, Optionee and Caltech may enter into negotiations for a separate agreement under which Optionee would have a nonexclusive license under any patent resulting from such prosecution or maintenance paid by Caltech.
Patent Expenses:
Patent costs incurred prior to the effective date of the License Agreement ("License Date") will be paid by Optionee pursuant to submission of invoices detailing said costs, effective twenty-four (24) months from the License Date. Any patent costs incurred after the License Date will be paid by Optionee directly to the law firm prosecuting the Exclusively Licensed Patent Rights. Caltech will instruct the law firm to invoice Optionee directly for such costs.
Equity Financing:
Upon exercise of option, Optionee shall have obtained equity or debt financing in an amount not less than five hundred thousand dollars ($500,000.). Also, Optionee shall provide Caltech with a copy of its business plan.
Equity:
Upon execution of the License Agreement, Optionee will issue to Caltech that number of shares of Optionee’s common stock equal to eight percent (8%) of Optionee’s then outstanding common stock, on a fully diluted basis.
Board of Directors:
Caltech shall have Board observer rights.
Assignment and
Assignment Fee:
Optionee may assign the License Agreement as part of a sale, regardless of whether such a sale occurs through an asset sale, stock sale, merger or other combination, or any other transfer of:
(a) Optionee’s entire business; or
(b) that part of Optionee’s business that exercises all rights granted under the License Agreement.
Any other attempt to assign the License Agreement by Optionee shall be null and void.
Alchemy .Excl. Opt.
5/23/2006
Prior to any assignment of the License Agreement, the following conditions must be met:
(a) Optionee must give Caltech 30 days prior written notice of the assignment, including the new assignee's contact information; and
(b) the new assignee must agree in writing to Caltech to be bound by the license Agreement; and
(c) Caltech must have provided written permission to assign the License Agreement, which permission shall not be unreasonably withheld.
Caltech may, at its option, receive from Optionee an assignment fee of the greater of (i) the percentage of Optionee owned by Caltech times the sales price at the time of change of control (including the value of any non-cash consideration) or (ii) one million dollars ($1,000,000). If Caltech exercises this option and receives an assignment fee, it shall return to Optionee the Equity interest of Optionee.
Patent Enforcement:
Optionee shall xxxx Licensed Products with the patent numbers of the issued Exclusively Licensed Patent Rights which cover the Licensed Products. Optionee may request that Caltech enforce the Exclusively Licensed Patent Rights, and take on such enforcement if Caltech declines to do so. Any recovery obtained in such an action shall be used first to reimburse the costs of such action. To the extent the recovery represents Optionee’s lost profits, Optionee shall retain any remainder, after reimbursing Caltech for any royalties owed. To the extent the recovery does not represent Optionee’s lost profits, any remainder shall be split 60/40 in favor of the party controlling the action.
Royalties to Third Parties:
In the event that in connection with its manufacture, use or sale of Licensed Products, Optionee is required to pay a third party royalties or other amounts to avoid or settle a claim of infringement of the intellectual property rights of such third party, Optionee may offset such amounts against up to thirty percent (30%) of the amounts due Caltech in any given year, with excess payments eligible for carryover to future years.
Sublicenses:
Any sublicenses granted by Optionee under the Exclusively Licensed Patent Rights or the Nonexclusively Licensed Technology Rights shall remain in effect in the event this license terminates, provided that: (a) the sublicensing agreement requires the sublicensee to thereafter pay Caltech any consideration that would have been due to Optionee, and names Caltech as a third party beneficiary; (b) upon termination, Optionee informs the sublicensee of the foregoing obligations; and (c) Optionee remains responsible for all other obligations.
Alchemy .Excl. Opt.
5/23/2006
Term:
The license under the Exclusively Licensed Patent shall terminate upon the expiration of the last to expire patent under the Exclusively Licensed Patent Rights or the Improvement Patent Rights.
Notification:
Caltech shall promptly notify Optionee of inventions made in the performance of services under the JPL Task Plan.
Other:
The formal agreement will include other customary provisions to be agreed by the parties, including indemnification, representations and warranties, and the like.
Alchemy .Excl. Opt.
5/23/2006
