Exhibit 10.40
LICENSE AGREEMENT
THIS AGREEMENT, made and entered into as of the 23rd day of May, 1995, by
and between AMWAY CORPORATION , A Michigan corporation having offices at 0000
Xxxx Xxxxxx Xxxx, Xxx, Xxxxxxxx 00000 ("AMWAY") and POLAR MOLECULAR CORPORATION,
a Utah corporation having offices at 000 Xxxx Xxxx Xxxxxxx Xxxx, Xxxx Xxxxxxx,
Xxxxxxxx 00000 ("PMC").
WITNESSETH:
WHEREAS, PMC owns certain patent rights, know-how, and information relating
to the "Product" defined herein, including detergent technology related to the
Product, and PMC has the right and desire to grant AMWAY an exclusive license
for such patent rights, know-how, and information for AMWAY to make, use, and
sell the Product in the "Field" defined herein.
WHEREAS, AMWAY desires to obtain an exclusive license from PMC for such
patent rights, know-how, and information relating to the Product, including
detergent technology related to the Product so that AMWAY may make, use, or sell
the Product in the Field.
NOW THEREFORE, in consideration of the premises, the mutual covenants and
promises herein contained and other valuable considerations, the receipt and
legal sufficiency of which are hereby acknowledged, AMWAY and PMC agree as
follows:
1. DEFINITIONS.
1.1 "Actual Raw Material Cost" means the price charged the
manufacturer/supplier of the Product for the Raw Materials as invoiced from the
manufacturer/supplier of the Product, exclusive all freight charges,
manufacture/supplier profit, processing costs or other expenses.
1.2 "Additives" means all fuel and oil conditioners within the scope of
claims of PMC Patents, including but not limited to DurAlt(R).
1.3 "Direct Sales" means sales primarily through distributors, as
independent contractors, and primarily in merchandise intended ultimately to
reach the retail consumer through an in-person sales contract as distinguished
from sales in or from retail stores or other fixed establishments.
1.4 "Execution Date" means the date on which the last party to sign
executes this Agreement.
1.5 "Field" means Direct Sales worldwide.
1.6 "First License Period" means the time period extending from September
1, 1995 until AMWAY makes, uses, or sells three hundred thousand (300,000)
gallons of the Product.
1.7 "Improvements" means any modifications by PMC of PMC Information which
fall within the scope of PMC Patents, specified in Exhibit A including any
detergent formulas that may or may not be specified in Exhibit A.
1.8 "Licensed Technology" means all PMC Patents, PMC Know-How, and PMC
Information.
1.9 "PMC Information" means all PMC Know-How, PMC Patents, and business
information relating to the Product.
1.10 "PMC Know-How" means all PMC technology and all PMC technical and
marketing information and data including, but not limited to, research and test
results, scientific, technical and marketing knowledge, special research
techniques, methods, processes, laboratory designs and the like, of PMC, which
exists on the Execution Date and which pertains to the Product, its manufacture,
sale, and use.
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1.11 "PMC Patents" means all patent rights of PMC pertaining to Additives,
including the patents and patent applications listed in Exhibit A attached
hereto and made a part hereof, together with any patents issuing from the
applications listed in Exhibit A, and from any other applications corresponding
to any of the listed patents or patent applications including patents issuing
from any divisional, continuation or reissue applications corresponding to
rights claimed by PMC under any of the patents or patent applications listed in
Exhibit A.
1.12 "Practice" means the right of AMWAY to engage in all the activities
which PMC could engage in as the owner of PMC Patents, PMC Know-How, and PMC
Information.
1.13 "Product" means Additives made from blended Raw Materials.
1.14 "Raw Material" means those materials that are blended to form the
Product.
2. GRANT OF LICENSE
2.1 PMC hereby grants AMWAY the exclusive right and license to use and
Practice the Licensed Technology in the Field and to make, have made, use and
sell the Product in the Field.
2.2 PMC agrees that it will not grant the right to market and sell the
Product to any other Direct Sales entity, so long as this Agreement remains in
force.
3. ROYALTY TERMS
3.1 The parties agree that the Limited Time Agreement dated March 27, 1992
between the parties will expire and terminate on September 1, 1995. AMWAY will
continue to make purchases of Product pursuant to the Limited Time Amendment
until September 1, 1995. Within sixty (60) days after termination of the Limited
Time Amendment, AMWAY will provide PMC with an accounting of the actual
purchases of Product made by AMWAY during the term of the Limited Time Amendment
and the parties shall thereafter agree upon and adjust
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the fee paid to PMC by AMWAY for the license granted in the Limited Time
Amendment to properly reflect the actual purchases of Product thereunder. Any
final adjustment of the payment due under the Limited Time Amendment, if any,
shall be made within thirty (30) days of the date the parties reach agreement.
The number of gallons of Product purchased by AMWAY from the Execution Date to
September 1, 1995 shall not be counted under the First License Period.
3.2 On the Execution Date of this Agreement, AMWAY shall pay to PMC One
Million Two Hundred Seventy-Five Thousand Dollars ($1,275,000.00) by wire
transfer as an advanced payment of royalties for the First License Period. This
advanced payment of royalties shall permit AMWAY make, use, or sell three
hundred thousand (300,000) gallons of the Product at a royalty rate of Four and
25/100 Dollars ($4.25). If the Product is improved with detergent technology
during the First License Period the royalty rate of the Product containing
detergent technology shall be $4.25.
3.3 Upon completion of the First License Period, AMWAY will pay PMC from
time to time during the Term an amount equal to the Actual Raw Material Cost for
each gallon of Product subsequently purchased by AMWAY as the royalty rate. In
no event will the royalty rate be lower than $4.00 per gallon. If the Product is
improved with detergent technology during the Term of this Agreement following
the First License Period, the royalty rate shall be determined in the same
manner as stated in this Section 3.3.
AMWAY will endeavor to arrange with the manufacturer/supplier of the
Product to provide AMWAY with itemized statements for Product purchased
specifying the Actual Raw Material Cost of Product. AMWAY will provide PMC with
copies of actual invoices from the manufacturer/supplier of the Product
indicating the Actual Raw Material Cost of Product
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purchased by AMWAY. AMWAY will pay the royalty payment to PMC within thirty (30)
days of AMWAY's receipt of manufacturer/supplier invoices from time to time
throughout the Term.
3.4 At the request of PMC, but no more frequently than once per year, AMWAY
shall permit an independent certified accountant selected by PMC, except one to
whom AMWAY has some reasonable objection, to have access during ordinary
business hours to such records as may be necessary to verify the reports
provided herein. Such access shall require prior execution by such independent
certified accounts of a proper secrecy agreement protecting AMWAY. The
accountant shall report to PMC and provide AMWAY with a copy of such report.
4. TERM AND TERMINATION
4.1 This Agreement shall continue in full force and effect until the
expiration of last U.S. Patent covered by this Agreement.
4.2 AMWAY, in its sole discretion, may terminate this Agreement upon thirty
(30) days prior written notice to PMC in the event any of the following occurs:
(i) PMC becomes insolvent, bankrupt, or a receiver for it is
appointed;
(ii) PMC breaches any of the terms contained herein and said breach is
not corrected within thirty (30) days after receipt of written notice of the
breach from AMWAY;
(iii) AMWAY is restrained from selling the Product by any type of
administrative or court order, or.
4.3 If one or more claims of an issued PMC Patent are held invalid by a
court of law from which no appeal is or can be taken, the parties will negotiate
in good faith a mutually acceptable resolution of the matter based upon the
significance of the PMC Patent held invalid that may include termination of this
Agreement.
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4.4 PMC, in its sole discretion, may terminate this Agreement upon thirty
(30) days prior written notice to AMWAY. In the event any of the following
occurs:
(i) AMWAY becomes insolvent, bankrupt, or a receiver for it is
appointed; or
(ii) AMWAY breaches any of the terms and conditions hereof and said
breach is not corrected within thirty (30) days' after receipt of written notice
of the breach from PMC.
4.5 This Agreement shall automatically terminate in the event AMWAY fails
to purchase Product from its manufacturer/supplier for a period of one (1) full
year, except if AMWAY's failure to purchase Product is due to reasons beyond
AMWAY's control.
4.6 In the event this Agreement is terminated prior to the conclusion of
the First License Period pursuant to the provisions set forth in Sections 4.2,
4.3 or 4.4(i), then PMC shall immediately remit to AMWAY the unused portion of
the advanced payment of royalties paid by AMWAY pursuant to Section 3.2
5. CONFIDENTIALITY
AMWAY and PMC agree to maintain confidential information clearly labeled
"Confidential" or in the case of oral information which shall be reduced to
writing within thirty (30) days and clearly labeled "Confidential" received from
the other party in confidence, and not disclose the same to third parties except
third parties involved in the manufacture of the Product nor use it for any
purposes other than those specified herein for a period of three (3) years after
the expiration or termination date. Each party shall use the same degree of care
as it does with respect to its own confidential and proprietary information of
similar nature to assure against unauthorized disclosure thereof. Within its own
organization, each party shall limit internal dissemination of such information
to individuals whose duties justify the need for it for the purposes of this
Agreement and shall inform such individuals that the same information shall be
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kept secret and used only as provided in this Agreement. Such obligations of
confidence and non-use shall not apply to information which (a) as shown by
written records was known to recipient prior to disclosure hereunder, (b) is
now, or hereafter becomes, without fault of recipient, known to the general
public, (c) is rightfully disclosed to recipient by a third party without
obligation of confidence, (d) is independently developed by recipient, (e) is
information whose disclosure is reasonably considered by AMWAY to be necessary
to the conduct of business under the licenses granted herein, or (f) is required
to be disclosed by law or by order of a court of competent jurisdiction.
6. PATENT MAINTENANCE, INFRINGEMENT, VALIDITY
6.1 PMC shall continue to prosecute and maintain all PMC PATENTS listed in
Exhibit A. If PMC discontinues prosecution and maintenance of patents or pending
applications or payments, PMC shall notify AMWAY of such decision in sufficient
time to permit AMWAY's at its sole option, to assume such prosecution or payment
of fees. If AMWAY elects such assumption and, AMWAY, at its sole option, may
deduct such fees, costs and expenses from any royalty payments due and owing. If
AMWAY elects not to pursue assumption, no royalty payments shall be due which
relate to the Product made, used, or sold by AMWAY that are covered by such
patents or pending applications or payments.
6.2 PMC warrants that it is unaware of any third party patents which may be
infringed by practice of PMC Know-How or under the claims of PMC Patents. PMC
hereby agrees to indemnify AMWAY and hold it harmless from any damages,
including attorney fees and costs resulting from any claim of infringement, or
from the commencement of any suit or action for infringement of any such third
party's patent which is based on the practice of PMC Know-How or under the
claims of PMC Patents, provided that AMWAY promptly notifies PMC of any such
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claims and AMWAY does not retain counsel with out prior written consent of PMC
such consent shall not be unreasonably withheld or delayed, and PMC has sole
control of instructing such counsel and sole control of the defense and all
related settlement negotiations and that AMWAY give PMC, at PMC's request,
information and assistance for this defense.
6.3 PMC and AMWAY may mutually agree to institute action for infringement
of any PMC Patent by filing suit in the names of both parties and agreeing to
share equally in both the expense of, and recovery from, any such action. Each
party may be represented by counsel of its selection and at its expense. Absent
said agreement, either party hereto may institute such action, join the other as
a party complainant and receive the cooperation of said other party. The party
instituting the action shall, however, defray the entire expenses of such action
and be entitled to retain the entire amount of the recoveries, if any, by way of
judgment, award, decree or settlement resulting there from.
6.4 Nothing contained in this Agreement shall be construed to prohibit
AMWAY from using private labels on the Product. PMC shall advise AMWAY as to the
appropriate Patent numbers and markings to be placed on the Product for the
countries where AMWAY sells the Product. AMWAY agrees that upon receiving
sufficient notice from PMC as to the appropriate Patent numbers and markings for
the Product for the countries where AMWAY sells the Product that it shall place
on labeling of the Product or on packaging associated with the Product the
United States patent numbers and foreign patent numbers that cover the Product,
when the Product is sold in the United States or any foreign country for which
patent protection has been obtained. PMC agrees to indemnify AMWAY and hold it
harmless from all liability, claims, damages and expenses including attorney
fees and costs arising from or related to
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improper patent marking of the Product based upon the Patent marking information
received from PMC.
7. NEW FORMULATIONS AND PROCESSES
7.1 From time to time during the term of this Agreement, PMC shall inform
AMWAY of any new formulation (patentable or unpatentable) of the Product. AMWAY
may, at its option, elect to license such new formulation in the Field and
should AMWAY elect to license such new formulation, AMWAY and PMC shall
negotiate a mutually agreeable royalty rate per gallon for the Product based on
the new formulation which shall not include Improvements as defined in (S) 1.7.
Any patent that issues for the subject matter of the new formulation which AMWAY
elects to license shall be added to list of patents in Exhibit A and considered
part of the Agreement under (S) 2.1 and will apply in determining the term of
this Agreement pursuant to (S) 4.1.
7.2 AMWAY shall share AMWAY data on performance testing of the Product with
PMC from time to time during the term of the Agreement.
7.3 No license, either express or implied, is granted to AMWAY under any
future inventions or patentable discoveries made by PMC which relate to new,
useful, and unobvious advances in Additives and which are not within the
definition of Improvement.
8. WARRANTIES
8.1 PMC warrants that it has the right to grant the rights and license set
forth in (S) 2.1 of this Agreement.
8.2 PMC warrants that all laboratory and technical test data that it
supplies to AMWAY pursuant to this Agreement will have resulted from good
laboratory practices conducted and recorded professionally and shall be complete
with no material omission of fact.
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8.3 PMC warrants that all performance and related claims made for the
Product by PMC are documented and supported in sufficient detail to satisfy the
requirements for advertising claims by the Federal Trade Commission and any
other federal or state agency asserting jurisdiction, and PMC will defend any
investigation, charge, prosecution or litigation, formal or informal, that such
claims are not documented or supported as required by law.
8.4 PMC warrants that it will transfer the technology and instruct AMWAY
and its manufacturer/suppliers of the Product on the manufacture of the new
detergent formulation of the Product by September 1, 1995.
8.5 PMC warrants that it has disclosed or will disclose to AMWAY all of the
existing applicable technology (patentable or unpatentable) including without
limitation any detergent formulation, regarding the Product.
9. TECHNICAL ASSISTANCE
PMC shall provide AMWAY with technical assistance upon written request from
AMWAY, the expenses of which shall be mutually agreed upon by PMC and AMWAY.
10. ASSIGNMENT
10.1 Except for AMWAY's right to assign the rights and obligations of this
Agreement to its affiliates and subsidiaries without PMC's prior consent, AMWAY
shall not have the right to assign, delegate, sublicense, sell, transfer, or
otherwise dispose of, by operation of law or otherwise, any of its rights or
obligations hereunder without the prior written consent of PMC which consent may
be withheld in the sole and absolute discretion of PMC.
10.2 This Agreement shall be binding upon, and inure to the benefit of,
AMWAY and PMC, and their respective successors and assigns, to the extent such
assignments do not violate (S) 10.1.
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11. WORLDWIDE SALES OF THE PRODUCT
11.1 AMWAY has a worldwide Direct Sales network of affiliates and
subsidiaries that have been or will be offered the opportunity to market and
sell the Product through their distributors. PMC understands that the decision
on whether or not an affiliate or subsidiary of AMWAY markets any product
offered by AMWAY is within the sole discretion and control of the affiliate or
subsidiary. AMWAY agrees that it will use its reasonable efforts to offer the
Product to its affiliates and subsidiaries worldwide for their determination as
to the marketability of the Product in their country.
11.2 In the event AMWAY does not offer the Product within five (5) years of
the Execution Date to an affiliate or subsidiary of AMWAY responsible for
marketing AMWAY products in countries where AMWAY products are currently being
actively marketed, then AMWAY's exclusive right to market the Product in that
specific country only as granted by Section 2.1 shall terminate.
12. FORCE MAJEURE
Neither AMWAY or PMC hereto shall be liable to the other for any loss or
damage by reason of any failure lure to perform all or any part of this
Agreement where the same was the proximate result of any act of any sovereign
nation or political subdivision thereof, revolution, riot, civil disorder, act
of enemies, delay or default in transportation, strikes or labor disputes with
or between labor unions, fire, flood, act of God, inability to obtain materials
or services from normal sources of supply, or any other cause not within the
control of the parties, whether of the class of causes enumerated or otherwise.
13. APPLICABLE LAW
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This Agreement, and any disputes arising thereunder, shall be interpreted
pursuant to the laws of the State of Michigan.
14. MODIFICATONS
This Agreement may not be modified except by a written instrument, duly
executed by AMWAY and PMC.
15. NOTICES
All notices necessary or proper under this Agreement shall be in writing
delivered personally, by telecopy transmissions, or sent by registered or
certified mail to the following address, or to such other addresses as AMWAY or
PMC may furnish each other in writing, from time to time.
AMWAY Corporation
0000 Xxxx Xxxxxx Xxxx
Xxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Polar Molecular Corporation
000 Xxxx Xxxx Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
16. COMPLETE AGREEMENT
All prior agreements between the parties including without limitation the
Purchase Agreement dated October 10, 1988 and the Marketing Agreement dated June
27, 1990 and except for the LIMITED TIME AMENDMENT TO AGREEMENT which will
terminate on September 1, 1995, are hereby terminated and superseded by this
Agreement and are of no further force or effect. The terms, conditions and
provisions of this Agreement constitutes the
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entire understanding between AMWAY and PMC relating to the subject matter
hereof, whether written or oral.
17. MUTUAL RELEASE AND WAIVER
AMWAY releases and waives any and all past claims in law and in equity that
AMWAY may have against PMC. PMC releases and waives any and all past claims in
law and in equity that PMC may have against AMWAY.
18. GENERAL PROVISIONS
18.1 Unless required to do so by law or the Security and Exchange
Commission regulations, neither AMWAY nor PMC will disclose or announce the
contents of this Agreement without the other party's written approval. The
parties will confer and agree upon the content and timing of any announcement
before it is made.
18.2 Each party will, at its expense, cover any claim that may be made by
its employees alleging bodily injury or death sustained by them as a result of,
or in connection with, the performance of this Agreement and will hold the other
party harmless from any and all such claims brought by its employees.
18.3 If any provision of this Agreement is declared invalid or
unenforceable by a court of competent jurisdiction, it is mutually agreed that
this Agreement shall endure except for the part declared invalid or
unenforceable by order of the court.
18.4 A waiver of any breach of any provision of this Agreement shall not be
construed as a continuing waiver of other breaches of the same or other
provision of this Agreement.
18.5 Nothing herein contained shall be deemed to create an agency, joint
venture, or partnership relationship between AMWAY and PMC. Neither AMWAY nor
PMC shall have
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the power to enter into any contracts or commitments in the name of, or on
behalf of, the other party, or to bind the other party in any respect
whatsoever.
IN WITNESS WHEREOF, AMWAY and PMC have executed this Agreement by their
duly authorized officers as of the date first written above.
AMWAY CORPORATION
By: /s/ Xxxxxx XxxXxxxxx
-------------------------------
Xxxxxx XxxXxxxxx
Its: Vice President-Purchasing and
Facilities Engineering
POLAR MOLECULAR CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx
Its: Chairman and Chief Executive
Officer
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