OCEAN POWER CORPORATION
ELEKTRYON, INC.
LICENSING AGREEMENT
THIS AGREEMENT ("Agreement"), made on the Effective Date as defined
herein, is by and among Ocean Power Corporation, a Delaware corporation having a
principal place of business at 5000 Xxxxxx X. Xxxxxxx Xxxxxxx, Xx Xxxxxx Xxxxx,
Xxxxxxxxxx 00000, ("OPC"), and Elektryon, Inc., a Nevada corporation having a
principal place of business 0000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000
("Licensor") hereinafter referred to as "Party" and collectively as the
"Parties."
WHEREAS, Licensor own rights, title and interest in and to certain
patented and unpatented technology;
WHEREAS, OPC desires to obtain from Licensor and Licensor desires to
grant OPC certain exclusive and non-exclusive rights in and to their technology;
NOW, THEREFORE, in consideration of the terms, conditions, and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
Article 1
Definitions
As used in this Agreement, the following terms have the meanings set
out below and as further defined elsewhere in this Agreement.
1.1 "Affiliate(s)" means any entity:
a) in which Licensor or OPC controls, or is under common control,
or is directly or indirectly owned by or under common
ownership to the extent of over fifty (50%) or more of the
voting shares, including shares owned beneficially by a Party;
or
b) which owns or controls Licensor or OPC.
1.2 "Licensor Patent(s)" means all patents issued in the United States or
any foreign country, or any applications for patents, including any
patents of addition, utility models, utility patents, design patents,
re-issues, divisions, continuations, or the like: (i) owned by Licensor
on the Effective Date or during the term of this Agreement and (ii) to
which Licensor has rights during the term of this Agreement that may be
granted, transferred or otherwise conveyed to OPC without violating the
terms of any obligations with respect to third parties. A current list
of Licensor Patents is provided under separate cover and is
incorporated herein.
1.3 "Effective Date" of this Agreement is the date of complete execution by
the Parties of the signature page of this Agreement.
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1.4 "Improvements" means any Technical Information which:
a) reduces production costs, improves performance, increases
service life, increases marketability, or improves the
appearance of Licensed Products;
b) any modification to Licensed Products which comes within the
scope of one or more claims of any of the Patents;
c) any product, apparatus, or process which is similar to,
competitive to, a substitute or alternative for, or
supplements or complements Licensed Products;
d) any invention or discovery of any new apparatus or method for
producing Licensed Products, or
e) any new product which may be produced as Licensed Products.
1.5 "Licensed Product(s)" means any product(s) practicing the Patents
and/or Improvements as the case may be, pursuant to the terms and
conditions of this Agreement.
1.6 "Licensor" means Licensor.
1.7 "Patents" means the Licensor Patent(s).
1.8 "Technical Information" means inventions, trade secrets, confidential
information, and know-how applicable on the Effective Date or during
the term of this Agreement, which the Parties have the legal right to
convey. Technical Information includes, but is not limited to,
research, engineering and manufacturing information, information with
respect to environmental and safety requirements, analytical procedures
and techniques, operating procedures, maintenance practices, design
information on manufacturing facilities and equipment, machinery and
equipment specifications, product test methods, drawings, product
production processes, computer files, product information and other
general information related to Licensed Product(s).
Article 2
Grant of Rights
2.1 Principal Rights Licensed to OPC: Licensor hereby grants to OPC the
non-exclusive right and license within the United States and the
exclusive, worldwide right and license outside of the United States to
buy, make, have made, use, distribute, install, offer to sell and sell
Licensed Products for the term of this Agreement (including the right
to sub-license the rights granted to OPC herein). OPC shall not
sub-license any of the rights granted to OPC herein without the
approval of Licensor, which approval shall not be unreasonably
withheld. Any sub-license shall be conditioned upon agreement by
sub-licensee to the terms and conditions of this Licensing Agreement,
including, without limitation, Article 7 herein.
2.2 Loss of Exclusivity: If OPC does not buy or arrange for the sale of a
minimum of 200 units of the Licensed Product during the calendar year
2002, and a minimum of 200 such units in each calendar year thereafter,
OPC's exclusive worldwide right and license outside the United States
shall become, and thereafter remain, non-exclusive.
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Article 3
Parts
3.1 OPC, its Affiliates and licensees will have the right to purchase from
Licensor parts for the Licensed Products if available for delivery
anywhere in the world at prices to be negotiated between the Parties,
which price shall in no event exceed Licensor's current lowest quoted
sales prices. OPC will regard Licensor as a preferred supplier for
large commercial generators for so long as reasonable standards for
quality, delivery, and price are met by Licensor.
Article 4
Term of Agreement
4.1 This Agreement shall become effective as of the Effective Date and
shall continue for a period of five (5) years.
4.2 This Agreement may be terminated by OPC or Licensor for the other's
uncured default under Paragraph 5.1 of this Agreement.
4.3 Upon termination of this Agreement, by expiration or otherwise, all
licenses, rights, privileges and obligations hereunder shall cease and
terminate except that the licenses and rights granted under Article 2
hereof shall continue as to all Licensed Products manufactured, or
actually in manufacture, during the term of this Agreement by the
Parties or by any of their Affiliates or licensees, for the full term
of the Patent(s) and life of the Licensed Products. Termination of this
Agreement shall, at the option of Licensor, also terminate any
sub-licenses granted hereunder by OPC.
Article 5
Default
5.1 Default: A Party will be deemed in default under this Agreement if a)
the Party fails to pay any amount due and payable under this Agreement
within thirty (30) days after written notice that the same has become
due and payable; b) the Party becomes insolvent, bankrupt, or any of
its assets are seized or placed in trust for the benefit of creditors
and such insolvency, bankruptcy or seizure is not dissolved or cured in
sixty (60) days; or c) the Party fails to perform any other obligation
required to be performed by it under this Agreement or to cure, or
begin to effect a cure for any such failure, within thirty (30) days
after written notice from the other Party that the time herein provided
for such performance has passed. Notwithstanding Paragraph 5.1(b),
Licensor shall not be deemed to be in default by the filing of a
petition under Chapter 11 of the Bankruptcy Code in connection with
efforts by Licensor and OPC to combine or merge the parties pursuant to
a Merger Agreement or document of similar intent.
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5.2 Remedy for Default: OPC and Licensor may pursue any remedy under this
Agreement or otherwise available, based on the default of the other.
Article 6
Remuneration
6.1 In consideration for the licenses granted to OPC, OPC will pay to
Licensor the sum of One Hundred and Fifty Thousand Dollars US
($150,000) within thirty (30) days of the execution of this Agreement.
Pursuant to a Letter of Intent dated October 4, 2001 by and between OPC
and Licensor, the parties contemplate that OPC will obtain, by merger
or asset purchase, substantially all of the assets of Licensor. In the
event of such merger/asset purchase, the One Hundred and Fifty Thousand
Dollars ($150,000) payment provided for herein shall be applied to, and
shall reduce accordingly, the agreed upon purchase/merger price
6.2 As further consideration for the licenses granted to OPC, OPC will pay
to Licensor the price per licensed product agreed upon by the parties
from time to time, which will in no event exceed the lowest price
charged to any other third party purchaser of Licensor's licensed
products.
6.3 As further consideration for the licenses granted to OPC, OPC will pay
to Licensor five (5) percent of the raw cost of any licensed product,
on a per unit basis, which OPC makes or has made by any party other
than Licensor. Raw cost shall mean the sum of direct material cost and
direct labor cost per unit.
6.4 Wire Transfer: Payment shall be made by wire transfer after delivery of
a licensed product and within 15 days of receipt by OPC of any invoice
from Licensor payable to Licensor's account in the bank identified
below, or as otherwise requested by Licensor in writing:
Name of Bank:
Account No.:
Address of Bank:
Account Name:
Article 7
Confidentiality of Information
7.1 Licensor and OPC each acknowledge that, in the course of performing
their respective obligations hereunder, they will obtain or come in
contact with confidential information, including without limitation
Technical Information, of the other. Licensor and OPC shall:
a) use the other's confidential information only in connection
with fulfilling such Party's obligations under this Agreement.
Officers, employees, agents or independent contractors of OPC
or Licensor will be given access to the confidential
information on a need to know basis. Each shall obtain an
agreement in a form satisfactory to the other, from each such
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person to whom such disclosure is made pursuant to which such
person will agree to be bound by the provisions of this
Article 7, including, but not limited to, any third parties a
Party will have make any part for the Licensed Products. Each
hereto shall be responsible for any breach of these provisions
by it or any of its employees, officers, agents or independent
contractors. In the event that a Party hereto believes it is
compelled by law to disclose confidential information of
another Party, it shall immediately notify that Party and
shall cooperate with any effort by that Party to obtain a
protective order or otherwise limit the disclosure of any such
confidential information. These obligations shall extend for a
period three (3) years from the end of the term or termination
of this Agreement; and
b) hold all confidential information of a Party in strict
confidence and exercise due care with respect to its handling
and protection, consistent with such Party's own policies
concerning protection of its confidential information of like
importance, but in no event less than reasonable care.
7.2 The obligations set forth in Section 7.1 will not apply to a Party's
confidential information which:
a) now or later becomes generally known or available through no
act or omission by the receiving Party;
b) the receiving Party can demonstrate it independently developed
its confidential information without the use of, or access to,
the information furnished to it by the disclosing Party;
c) is or becomes publicly available through issued patents(s), or
other printed publications;
d) is hereafter disclosed to the disclosing Party by a third
party having no obligations of confidentiality to the
disclosing Party with respect to such information; or
e) was known to the receiving Party prior to its receipt from the
disclosing Party as established by written records of that
Party.
7.3 Licensor and OPC may disclose the contents of this Agreement to
lenders, other financing sources and potential financing sources or as
may be required in filings with federal and/or state securities
authorities provided that such lenders and the other financing sources
and potential persons have a need to know and agree to be bound by a
confidential agreement acceptable to the Parties. Nothing herein shall
prevent either party from disclosing the contents of this Agreement to
its shareholders or to the SEC or any other federal or state agency as
required by any state or federal laws.
7.4 The provisions of this Article 7 shall survive for three (3) years
after the end of the term or the termination of this Agreement.
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Article 8
Warranties and Representations
8.1 By Licensor: Licensor represents and warrants that (i) it own(s) all
right, title, and control(s) all interests in and to the Licensor
Patents and Improvements or has the right, power and authority to grant
all licensed rights thereto, (ii) it has the right, power and authority
to grant all licensed rights herein, (iii) it) has the right, power and
authority to enter into this Agreement, (iv) to the best of its(their)
knowledge the rights granted hereunder to OPC do not infringe any third
party's intellectual property rights, and (v) its performance of this
Agreement will not violate any agreement between Licensor and any third
party.
8.2 By OPC: OPC represents and warrants that it has the right, power and
authority to enter into this Agreement and that OPC's performance of
this Agreement will not violate any agreement between OPC and any third
party.
Article 9
Technical Assistance and Technology Transfer
9.1 The Parties contemplate that OPC may require technical assistance from
Licensor in order to achieve the objectives of this Agreement.
Accordingly, Licensor will make available to OPC, its Affiliates,
licensees and their employees and agents, technical consulting services
at the lowest quoted consulting rates for such services from Licensor
within the United States. Licensor will make good faith efforts to
provide needed consulting services or to arrange for competent
consulting services from qualified third parties outside of the United
States at the sole cost of OPC.
9.2 Licensor shall disclose to OPC the existing documentation and data
related to the technology disclosed in the Licensor Patents and
Improvements. OPC will bear the direct cost of the transfer of the
information, including technical assistance and time required for the
disclosure.
Article 10
Patent Maintenance
10.1 Licensor shall continue to maintain responsibility (and costs
associated therewith) for filing, prosecution, and maintenance of the
Licensor Patents. OPC agrees to cooperate with Licensor in any patent
defense as may be required under the circumstances. In the event that
Licensor desire(s) to discontinue such activity, Licensor shall give
OPC adequate written notice of its/their decision so that OPC may
decide whether to have Licensor assign ownership of such patents and
patent applications to OPC so that OPC may assume responsibility for
their continued maintenance or prosecution. Where, in OPC's sole
discretion, OPC decides to assume the responsibility for the continued
maintenance or prosecution of the applicable Licensor Patents pursuant
to this Section 10.1, Licensor shall assign ownership for such patents
and patent applications subject to Licensor royalty-free right to
continue to use such patents during the term of this Agreement and for
the duration of such applicable patent(s).
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Article 11
Assignment
11.1 Nonassignability: Except as otherwise provided in this Agreement, no
Party shall be entitled to transfer, assign, convey, sell, encumber, or
in any way alienate ("Transfer") all or any part of its rights or
obligations under this Agreement, except that a Party may at any time,
with the prior written consent of the other Parties (such consent not
to be unreasonably withheld or delayed) Transfer all, but not less than
all, of its rights and obligations under this Agreement to any entity
that owns or acquires a controlling portion of the stock or assets of
such Party, and such rights and obligations may only be Transferred by
any such assignee subject to the provisions of this Article 11.
Transfers in violation of this Article 11 or in violation of any other
provision of this Agreement shall be void ab initio and of no effect
whatsoever.
Article 12
Covenants
12.1 Licensor covenants to disclose to OPC on a reasonably prompt basis all
Improvements it or its Affiliates or licensees develop during the term
of this Agreement.
12.2 OPC covenants to disclose to Licensor on a reasonably prompt basis all
Improvements it or its Affiliates or licensees develop during the term
of this Agreement.
Article 13
Integration
13.1 This Agreement sets forth the entire agreement and understanding
between the Parties as to the subject matter hereof and merges all
prior discussions between them. No Party shall be bound by any
warranties, understanding or representations with respect to such
subject matter other than as expressly provided herein or in a writing
signed with or subsequent to execution hereof by an authorized
representative of the Party to be bound thereby.
Article 14
Severability
14.1 If at any time during the term of this Agreement any provision hereof
proves to be or becomes invalid or unenforceable under any applicable
law, then such provision shall be deemed modified to the extent
necessary in order to render such provision valid and enforceable; if
such provision may not be saved, it shall be severed and the remainder
of this Agreement shall remain in full force and effect.
Article 15
Headings
15.1 The captions in this Agreement are for convenience only and shall not
be considered a part of or affect the construction or interpretation of
any provision hereof.
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Article 16
Relationship of the Parties
16.1 Nothing in this Agreement shall be construed as making OPC and Licensor
the partner, joint venturer, agent, employer, or employee of the other.
Neither OPC nor Licensor shall have the authority to make any
statements, representations or commitments of any kind, or to take any
action which shall be binding on the other, except as provided for
herein or authorized in writing by the Party to be bound.
Article 17
Authority and Enforceability
17.1 The signature of a Party's representative constitutes an express
representation that said representative has the authority to bind that
Party to the terms of this Agreement and that the Agreement is a
binding obligation of that Party, enforceable according to its terms.
Article 18
Communications
18.1 For the purpose of all written communications and notices between the
Parties, their addresses shall be:
Licensor: ELEKTRYON, INC.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Xxxxxx Xxxxxx of America
Attn:
and
OCEAN POWER: Ocean Power Corporation
5000 Xxxxxx X. Xxxxxxx Xxxxxxx
Xx Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx of America
Attn: Xxxxxx X. Xxxxxx, President
or any other addresses of which a Party shall notify the others in
writing. All notices required or permitted to be given under this
Agreement shall be in writing and will be deemed effectively given upon
personal delivery or delivery by confirmed fax to the Party or Parties
to be notified or two (2) days after deposit with a recognized
overnight courier service with tracking capability to the above
address(es).
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Article 19
Force Majeure
19.1 No Party shall be held liable to another Party to perform its
obligations where such performance is prevented or interfered with by
riots, war or hostilities between any nation, acts of God, fire, storm,
flood, earthquake, strikes, labor disputes, shortage or curtailment of
raw materials, labor power or other utility services or any
governmental restrictions.
Article 20
Governing Law
20.1 All matters of construction, validity, and performance, shall be
governed by and construed and enforced in accordance with the laws of
the State of Delaware, as applied to contracts made, executed, and to
be fully performed in such state by citizens of such state, without
regard to its conflict or choice of law rules. All unresolved disputes
arising out of or related to this Agreement shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association. Arbitration proceedings shall be
conducted in the English language and take place in Sacramento,
California.
Article 21
Waiver
21.1 No waiver of any right or remedy in respect to any occurrence or event
on one occasion will be deemed a waiver of such right or remedy in
respect of such occurrence or event on any subsequent occasion.
Article 22
Publications
22.1 In the event that a Party desires to publish or disclose to a third
party the terms of this Agreement, a description of the nature of the
relationship created by this Agreement, data, costs, or performance
attributes of any Licensed Products, such intent will be communicated
to the other Party or Parties, and such publication shall be permitted
only upon prior agreement of the Parties. Notwithstanding any agreement
between the Parties to the contrary, OPC may publish that the Parties'
have entered into an exclusive licensing agreement for the Licensor
Patents and Improvements.
Article 23
Patent Marking
23.1 Each Party hereto agrees to xxxx or have marked all Licensed Products
sold, respectively, by it, or any of its respective Affiliates or
licensees, with the word "Patent" or "Patents," and the number or
numbers of the applicable OPC Patent(s) and/or Licensor Patent(s).
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Article 24
Miscellaneous
24.1 Patent, Trademarks and Tradenames: No Party to this Agreement grants to
another Party any rights in any patents, trademarks, service marks,
tradenames or any other intellectual property rights of such Party
other than those rights specifically set out in this Agreement.
THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date, and this Agreement will be deemed dated as of such date.
ELEKTRYON, INC.
By:_______________________________________
Name:_____________________________________
(typed or printed)
Title:____________________________________
Date: , 2001
-------------------------------------
OCEAN POWER CORPORATION
By:_______________________________________
Name XXXXXX X. XXXXXX,
------------------------------------------
Title: PRESIDENT
------------------------------------
Date: , 2001
-------------------------------------
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