EXHIBIT 6.7
EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT ("the Agreement") is effective as of the 15th day of May 1998
(the "Effective Date"),
BETWEEN:
XXXXX XXXXXX UNIVERSITY, a university duly continued under the University Act of
British Columbia with its principal offices at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X IS6
("Licensor") AND:
DCH TECHNOLOGY, INC., a California (USA) corporation, with its principal office
at 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxxxx, X.X.X. 00000
("Licensee")
WITNESSETH THAT WHEREAS,
A. Licensor has applied for certain Patent Rights (as later defined herein)
relating to an invention called the "Universal Gas Sensor" created by Xx. Xxxxx
Xxxxxxxx, as further described in Schedule A hereto, and has the right to grant
licenses under said Patent Rights;
B. Licensor desires to have the Patent Rights developed and commercialized to
benefit the public and is willing to grant a license thereunder;
C. Licensor and Licensee have entered into an Option Agreement dated March 31,
1998, under which Licensee paid a fee of [*] for an option to exclusively
license the Patent Rights;
D. Licensee has represented to Licensor, to induce Licensor to enter into this
Agreement, that Licensee shall commit itself to a thorough, vigorous, and
diligent program of exploiting the Patent Rights and exercising good business
judgment, so that public utilization shall result therefrom; and
E. Licensee desires to obtain a license to the Patent Rights on the terms and
conditions hereinafter set forth, and contribute funds to Licensor to support
further research and development pursuant to the Patent Rights.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
SECTION I - DEFINITIONS AND TERMS
For the purposes of this Agreement, the following words and phrases shall have
the following meanings.
[*] Omitted pursuant to request for confidentiality filed with the Securities
and Exchange Commission.
1.1 Agreement Term shall mean the period from the Effective Date hereof, until
the end of the term for which the Patent Rights are granted, unless this
Agreement shall be sooner terminated according to the terms hereof.
1.2 Field of Use shall mean any use.
1.3 Know-How shall mean all present and future technical and other information
and specifications relating to the development, implementation and use of the
technology pursuant to the Patent Rights, whether conveyed orally or in writing,
including without limitation any and all technical data encompassed by the
Patent Rights;
1.4 Licensed Product shall mean any product or part thereof which:
(a) is covered in whole or in part by an issued, unexpired claim or a pending
claim contained in the Patent Rights; or
(b) is manufactured by using a process or is employed to practice a process
which is covered in whole or in part by an issued, unexpired claim or a pending
claim contained in the Patent Rights.
1.5 Net Sales shall mean Licensee's and its sublicensees' xxxxxxxx for
Licensed Products produced hereunder less the sum of the following:
(a) discounts allowed in amounts customary in the trade- .1
(b) sales, tariff duties and/or use taxes directly imposed and with reference
to particular sales;
(c) outbound transportation prepaid or allowed; and
(d) amounts allowed or credited on returns.
No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by Licensee and on its
payroll, or for cost of collections. Licensed Products shall be considered
"sold" when billed out or invoiced.
1.6 Patent Rights shall mean all of the following Licensor intellectual
property:
(a) the United States provisional and/or non-provisional patent applications
listed in Schedule A;
(b) patents issued from the United States applications listed in Schedule A
and from divisionals and continuations of these applications;
(c) claims of continuation-in-part applications, and of the resulting
patents, which are directed to subject matter specifically described in the
applications listed in Schedule A;
(d) claims of Canadian or foreign patent applications, and of the resulting
patents, which are directed to subject matter specifically described in the
United States patents and/or patent applications described in (a), (b) or (c)
above;
(e) any reissues of United States patents described in (a), (b) or (c) above;
and
1.7 Territory shall be defined as the World.
SECTION 2 - GRANT OF LICENSE
2.1 Licensor hereby grants to Licensee the exclusive right and license in the
Territory for the Field of Use to practice under the Patent Rights and Know-How,
and to the extent not prohibited by other patents, to make, have made, use,
maintain, execute, copy, market, lease and sell Licensed Products during the
Agreement Term.
2.2 Licensor shall retain ownership of the Patent Rights and all other rights
in and to the Patent Rights and reserves the right to practice under the Patent
Rights for research, educational and other non-commercial purposes.
2.3 Each party and its respective employees shall have the right to publish
material about research relating to the Patent Rights.
2.4 Licensee shall have the right to enter into sublicensing agreements for the
rights, privileges and licenses granted hereunder " provided, however, that
Licensee shall not assign, transfer, sublicense, mortgage, charge, or otherwise
dispose of any of the rights granted to it under this Agreement without the
prior written consent of the Licensor, such consent not to be unreasonably
withheld.
2.5 Licensee agrees that any sublicenses granted by it shall provide that the
obligations to Licensor of Sections 2, 5, 7, 8, 10, 13, 14 and 16 of this
Agreement shall be binding upon the sublicensee as if it were a party to this
Agreement. Licensee further agrees to attach copies of these Sections to
sublicense agreements.
2.6 Licensee agrees to forward to Licensor a copy of any and all sublicense
agreements promptly upon execution by the parties.
2.7 The license granted hereunder shall not be construed to confer any rights
upon Licensee by implication, estoppel or otherwise as to any technology not
specifically set forth in Schedule A hereof.
SECTION 3 - ROYALTIES I COMPENSATION
3.1 In consideration for the rights, privileges and license granted
hereunder, Licensee shall pay to Licensor royalties in an amount equal to:
(a) [*] of Net Sales of the Licensed Products used, leased or sold by and/or
for Licensee and/or its sublicensees in Territory; and
(b) [*] of any additional payments, including but not limited to, sublicense
issue fees, received from sublicensees in consideration for the sublicense.
3.2 Licensee shall pay to Licensor a development grant of [*] to support the
performance of the work described in Schedule B hereto and the delivery of a
report on the results of the work. The work shall be undertaken by Western
Pacific Research Corporation on behalf of Licensor. The grant shall be paid
according the following schedule:
(a) [*] on or before execution of this Agreement; and (b) [*] on or before
August 15, 1998.
3.3 All payments due hereunder shall be paid in full, without deduction of
taxes or other fees which may be imposed by any government and which shall be
paid by Licensee.
[*] Omitted pursuant to request for confidentiality filed with the Securities
and Exchange Commission.
3.4 Royalty payments shall be paid in United States dollars to the Licensor
at its address designated at subsection 15.1 of this Agreement, or at such other
place as Licensor may reasonably designate consistent with the laws and
regulations controlling in any foreign country. If any currency conversion shall
be required in connection with the payment of royalties hereunder, such
conversion shall be made by using the exchange rate prevailing at the Bank of
Canada on the last business day of the reporting period to which such royalty
payments relate.
SECTION 4 - DUE DILIGENCE
4.1 Licensee shall use its best efforts and good business judgment to bring
Licensed Products to market through a thorough, vigorous and diligent program
for exploitation of the Patent Rights and to continue active, diligent marketing
efforts for one or more Licensed Products throughout the life of this Agreement.
4.2 Licensee's failure to perform in accordance with Paragraph 4.1 above, over
a period of three (3) years from the Effective Date, shall be grounds for
Licensor to terminate this Agreement pursuant to Paragraph 14.3 hereof, and in
case of such termination the parties shall use their best efforts to negotiate a
new non-exclusive license agreement with similar terms and conditions as are
contained herein.
SECTION 5 - REPORTS AND RECORDS
5.1 Licensee shall keep full, true and accurate books of account containing all
particulars that may be necessary for the purpose of showing the amounts payable
to Licensor hereunder. Said books of account shall be kept at Licensee's
principal place of business or the principal place of business of the
appropriate division of Licensee to which this Agreement relates. Said books and
the supporting data shall be open during normal working hours for five (5) years
following the end of the fiscal year to which they pertain, to the inspection of
Licensor or its agents for the purpose of verifying Licensee's royalty statement
or compliance in other respects with this Agreement. Should such inspection lead
to the discovery of a greater than ten percent (10%) discrepancy in reporting to
Licensor's detriment, Licensee agrees to pay the full cost of such inspection.
5.2 Within sixty (60) days after March 31 of each year, Licensee shall
deliver to Licensor true and accurate reports, giving such particulars of the
business conducted by Licensee and its sublicensees during the preceding twelve-
month period under this Agreement as shall be pertinent to a royalty accounting
hereunder. These reports shall include at least the following:
(a) number of Licensed Products manufactured and sold by Licensee and all
sublicensees in Territory;
(b) total xxxxxxxx for Licensed Products sold by Licensee and all
sublicensees;
(c) deductions applicable as provided in Paragraph 1.5;
(d) royalties due on additional payments from sublicensees under Paragraph
3.1(b);
(e) total royalties due; and
(f) names and addresses of all sublicensees of Licensee.
5.3 With each such report submitted, Licensee shall pay to Licensor the
royalties due and payable under this Agreement. If no royalties shall be due,
Licensee shall so report.
5.4 The royalty payments set forth in this Agreement and amounts due under
Section 6 shall, if overdue, bear interest until payment at a per annum rate two
percent (2%) above the prime rate in effect at the Bank of Canada on the due
date. The payment of such interest shall not foreclose Licensor from exercising
any other rights it may have as a consequence of the lateness of any payment.
SECTION 6 - PATENT PROSECUTION
6.1 Licensor shall apply for, prosecute and seek prompt issuance of the United
States non-provisional patent application listed in Schedule A.
6.2 The costs of filing, prosecution, and issuance of Patent Rights pursuant to
the United States non-provisional patent application listed in Schedule A shall
be the responsibility of Licensor.
6.3 Payment of all fees and costs relating to the maintenance of Patent Rights
pursuant to the United States non-provisional patent application listed in
Schedule A shall be the responsibility of Licensee.
6.4 Payment of all fees and costs relating to the filing, prosecution,
issuance and maintenance of additional patents which fall under Patent Rights
shall be the responsibility of Licensee.
SECTION 7 - INFRINGEMENT
7.1 Licensee or Licensor shall promptly inform the other in writing of any
patent infringement by a third party and provide available evidence of
infringement.
7.2 During the Agreement Term, Licensor shall have the right, but shall not
be obligated, to prosecute at its own expense all infringements of the Patent
Rights and, in furtherance of such right, Licensee hereby agrees that Licensor
may include Licensee as a party plaintiff in any such suit, without expense to
Licensee. The total cost of any such infringement action commenced or defended
solely by Licensor shall be borne by Licensor and Licensor shall keep any
recovery or damages for past infringement derived therefrom.
7.3 If within six (6) months after having been notified of any alleged
infringement, Licensor shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought an infringement action, or if
Licensor shall notify Licensee at any time prior thereto of its intention not to
bring suit against any alleged infringer, then, and in those events only,
Licensee shall have the right, but shall not be obligated, to prosecute at its
own expense any infringement of the Patent Rights, and Licensee may.. for such
purposes, use the name of Licensor as party plaintiff; provided 'however, that
such right to bring such an infringement action shall remain in effect only for
so long as the license granted herein remains exclusive. No settlement, consent
judgment or other voluntary final disposition of the suit may be entered into
without the consent of Licensor, which consent
shall not unreasonably be withheld. Licensee shall indemnify Licensor against
any order for costs that may be made against Licensor in such proceedings.
7.4 Any recovery of damages from any suit shall be retained by the party who
funded and prosecuted at its expense the infringement of the Patent Rights
pursuant to 7.2 or 7.3 herein.
7.5 In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the Patent Rights shall be brought against Licensee,
Licensor, at its option, shall have the right, within thirty (30) days after
commencement of such action, to intervene and take over the sole defense of the
action at its own expense.
7.6 In any infringement suit as either party may institute to enforce the
Patent Rights pursuant to this Agreement, the other party hereto shall, at the
request and expense of the party initiating such suit, cooperate in all respects
and, to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.
7.7 Licensee, during the period of this Agreement, shall have the sole right
in accordance with the terms and conditions herein to sublicense any alleged
infringer for future use of the Patent Rights. Any up-front fees as part of such
a sublicense shall be shared equally between Licensee and Licensor; other
royalties shall be treated per Section 3.
SECTION 8 - INDEMNIFICATION AND INSURANCE
8.1 Licensee shall at all times during the Agreement Term and thereafter,
indemnify, defend and hold Licensor, its trustees, directors, officers,
employees and affiliates, harmless against all claims, proceedings, demands and
liabilities of any kind whatsoever, including legal expenses and reasonable
attorneys' fees, arising out of the exercise by Licensee of any of its rights
under the license, and/or out of the death of or injury to any person or persons
or out of any damage to property resulting from the production, manufacture,
sale, use, lease, consumption or advertisement of the Licensed Product(s), or
arising from any obligation of Licensee hereunder.
8.2 Prior to execution of the first sublicense agreement or transfer in any way
of all or any part of the Licensed Product, the Licensee will give notice to the
Licensor of the terms and amount of the public liability, infringement and
product liability insurance which the Licensee has placed in respect of the
Licensed Product, which in no case shall be less comprehensive or lesser in
amount than the insurance which a reasonable and prudent business person
carrying on a similar type of business would acquire.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR, ITS
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. NOTHING IN THIS AGREEMENT SHALL
BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY
LICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL
NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY. IN NO EVENT SHALL LICENSOR,
ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR
INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER LICENSOR SHALL BE
ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE
POSSIBILITY.
SECTION 9 -FORCE MAJEURE
9.1 Neither party shall be held liable for failure to fulfill its obligations
hereunder due to a natural calamity, act of government, or similar cause beyond
the control of such party.
SECTION 10 - NON-USE OF NAMES
10.1 Licensee shall not use the names or trademarks of Xxxxx Xxxxxx University,
nor any adaptation thereof, nor the names of any of its employees, in any
advertising, promotional or sales literature without prior written consent
obtained from an authorized representative of Licensor, in each case, except
that Licensee may state that it is licensed by Licensor under one or more of the
patents and/or applications comprising the Patent Rights.
SECTION 11 - PUBLICATION AND CONFIDENTIALITY
11.1 For the purpose of this Agreement, each party will have the right to
disclose or publish material about the Patent Rights following the filing of a
United States patent application by Licensor.
11.2 Licensor agrees to maintain in confidence all proprietary and market
information provided by Licensee unless written permission is obtained from
Licensee or such information becomes part of the public domain without breach of
this Agreement.
SECTION 12 - ASSIGNMENT
12.1 This Agreement is not assignable by Licensee and any attempt to do so shall
be void, unless Licensee has obtained the prior written consent of an authorized
representative of Licensor.
12.2 This Agreement may be assigned by Licensor.
SECTION 13 - DISPUTE RESOLUTION
13.1 It is the intention of the parties to settle any dispute relating to this
Agreement among themselves, but if at any time during the term of this
Agreement, or after its termination, any dispute arises between the parties
respecting any matter which they cannot settle among themselves, then the
dispute will be settled by a single arbitrator appointed by agreement between
both parties, under the provisions of the Commercial Arbitration Act (British
Columbia) and the rules of the British Columbia International Commercial
Arbitration Centre, as from time to time
amended or substituted. If the parties cannot agree on an arbitrator within 10
days after referral of a matter to arbitration, then the single arbitrator shall
be appointed by the British Columbia International Commercial Arbitration
Centre. The decision of the arbitrator will be final and binding on the parties.
The costs of the arbitration will be apportioned between the parties, or against
any one or more of the parties, as the arbitrator may decide.
13.2 Notwithstanding the foregoing, nothing in this Section shall be construed
to waive any rights or timely performance of any obligations existing under this
Agreement.
SECTION 14 - TERMINATION
14.1 Licensee shall immediately notify Licensor if Licensee shall cease to carry
on its business, or goes into or is threatened with bankruptcy. On the
occurrence of any of these events, Licensor shall be entitled to terminate this
Agreement by giving five (5) days written notice to Licensee.
14.2 Should Licensee fail to make any payment whatsoever due and payable to
Licensor hereunder, Licensor shall have the right to terminate this Agreement
effective on thirty (30) days notice, unless Licensee shall make all such
payments to Licensor within said thirty (30) day period.
14.3 Upon any material breach or default of this Agreement by Licensee
(including, but not limited to, breach or default under Paragraph 4.2), other
than those occurrences set out in Paragraphs 14.1 and 14.2 herein above, which
shall always take precedence in that order over any material breach or default
referred to in this Paragraph 14.3, Licensor shall have the right to terminate
this Agreement and the rights, privileges and license granted hereunder
effective on ninety (90) days notice to Licensee. Such termination shall become
automatically effective unless Licensee shall have cured any such material
breach or default prior to the expiration of the ninety (90) day period.
14.4 Upon termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that matured prior to the
effective date of such termination; and Sections 1, 8, 10, 14.5, and 16 shall
survive any such termination. Licensee and any sublicensee thereof may, however,
after the effective date of such termination, sell all Licensed Products, and
complete Licensed Products in the process of manufacture at the time of such
termination and sell the same, provided that Licensee shall make the payments to
Licensor as required by Section 3 of this Agreement and shall submit the reports
required by Section 5 hereof.
14.5 Upon termination of this Agreement for any reason, any sublicensee not then
in default shall have the right to seek a license from Licensor. Licensor agrees
to negotiate such licenses in good faith under reasonable terms and conditions.
SECTION 15 - PAYMENTS. NOTICES AND OTHER COMMUNICATIONS
15.1 Any payment, notice or other communication pursuant to this Agreement shall
be sufficiently made or given on the date of mailing if sent to such party by
certified first class mail, postage prepaid, addressed to it at its address
below, or if sent by fax on the day after the date the communication was sent:
In the case of Licensor:
Director
University/Industry Liaison Office
0000 Xxxxx Xxxxxx Xxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X IS6
Fax No. (000) 000-0000
In the case of Licensee:
President
DCH Technology, Inc
00000 Xxxxxx Xxxxxxx, Xxxxx #0
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
SECTION 16 - MISCELLANEOUS PROVISIONS
16.1 This Agreement shall be construed, governed, interpreted and applied in
accordance with the laws of the Province of British Columbia, except that
questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted.
16.2 The parties hereto acknowledge that this Agreement sets forth the entire
Agreement and understanding of the parties hereto as to the subject matter
hereof, and shall not be subject to any change or modification except by the
execution of a written instrument subscribed to by the parties hereto.
16.3 The provisions of this Agreement are severable, and in the event that any
provisions of this Agreement shall be determined to be invalid or unenforceable
under any controlling body of the law, such invalidity or unenforceability shall
not in any way affect the validity or enforceability of the remaining provisions
hereof.
16.4 The failure of either party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement shall not constitute a
waiver of that right or excuse a similar subsequent failure to perform any such
term or condition by the other party.
16.5 Nothing contained herein shall be deemed to create between the parties a
partnership or joint venture. Except as provided specifically herein, neither
party shall have the authority to act on behalf of the other party, or to commit
the other party in any manner or cause whatsoever or to use the other party's
name in any way. Neither party shall be liable for any act, omission,
representation, obligation, or debt of the other party, even if informed of such
act, omission, representation, obligation, or debt.
16.6 Subject to the limitations expressed herein, this Agreement shall enure to
the benefit and be binding upon the parties and their respective successors.
IN WITNESS WHEREOF the parties have duly executed this Agreement on the day and
year set forth below.
XXXXX XXXXXX UNIVERSITY DCH TECHNOLOGY INC.
By /s/ M. VOUCER By /s/ X. X. XXXXXXXXX
Name M. Voucer Name Xxxxxxx X. Xxxxxxxxx
Title Director, UILO Title President
Date 98 05 27 Date 7/28/98
SCHEDULE A
Universal Gas Sensor: Patent Application Filed
Non-provisional United States patent application entitled A Universal Gas Sensor
for the Selective Detection of Toxic Chemicals and Combustable Gases filed March
27, 1998. Inventor: Xxxxx Xxxxxxxx.
Priority claimed by United States Provisional Application 60/041,653 of the same
title filed March 27,1997.
SCHEDULE B Grant Work Plan
[*]
[*] Omitted pursuant to request for confidentiality filed with the Securities
and Exchange Commission.
