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Exhibit 10.10
REMAINDER-EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT, effective as of the first day of April, 1996,
(hereinafter "Effective Date") by and between the CORNELL RESEARCH FOUNDATION,
INC., having offices at Cornell Business & Technology Park, 00 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxx Xxxx 00000, hereinafter referred to as "FOUNDATION" and
NANOPHASE TECHNOLOGIES CORPORATION, having offices at 000 Xxxxxxxx Xxxxxx, Xxxx
Xxxxx, Xxxxxxxx 00000, hereinafter referred to as "LICENSEE".
W I T N E S S E T H T H A T:
WHEREAS, United States Patent No. 4,732,719, (CRF D-638) entitled
"Superplastic Forging Nitride Ceramics," was issued on March 22, 1988, a copy
of which is appended as Exhibit A;
WHEREAS, United States Patent No. 4,849,142, (CRF D-643) entitled
"Superplastic Forging Zirconia Ceramics," was issued on July 18, 1989, a copy
of which is appended as Exhibit B;
WHEREAS, United States Patent No. 4,871,496, (CRF D-639A) entitled
"Composites Comprising Silicon Carbide Fibers Dispersed in Magnesia-Aluminate
Matrix and Fabrication Thereof and of Other Composites by Sinter Forging," was
issued on October 3, 1989, a copy of which is appended as Exhibit C;
WHEREAS, the inventions disclosed and claimed in Exhibits A, B, and C
are assigned to FOUNDATION and to Jupiter Technologies, Inc., hereinafter
referred to as "Jupiter," and FOUNDATION is a
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wholly owned subsidiary corporation of Cornell University and holds the
ownership interests of patents issued on inventions made by Cornell
University's staff and administers licenses in a manner consistent with the
patent policy of Cornell University, and FOUNDATION has the sole right to issue
licenses to the patents disclosed and claimed in Exhibits A, B, and C;
WHEREAS, FOUNDATION has previously granted a nonexclusive
license with no right to sublicense to Jupiter for the rights to the
patents disclosed and claimed in Exhibits A, B, and C in all fields
of use and an exclusive license in the field of sputtering and laser
ablation targets;
WHEREAS, Corning Incorporated has a nonexclusive license with
no right to sublicense to make and use products claimed in Exhibit
B;
WHEREAS, FOUNDATION represents that it is an assignee of the
above-identified patents and has the right to grant licenses under
said patents;
WHEREAS, the work leading to the inventions disclosed and claimed in
Exhibits A and C was supported in part by an agency of the U.S. Government,
FOUNDATION is obligated to comply with the U.S. Office of Management & Budgets
Circular No. A-124, or 37 CFR Part 401;
WHEREAS, LICENSEE is desirous of securing a license under the
discoveries and invention embodied in said patents to make, have made, use,
have used, import, sell and have sold Licensed Products throughout the world;
WHEREAS, FOUNDATION is willing to grant a license in said
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patents to LICENSEE upon the terms and conditions hereinafter set forth;
NOR, THEREFORE, in consideration of the covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
I
DEFINITIONS
The following definitions will apply throughout this agreement:
1. Licensed Patents shall mean U.S. Patent No. 4,732,719, U.S. Patent No.
4,849,142, and U.S. Patent No. 4,871,496, and all reissues and
extensions thereof.
2. Licensed Field of Use shall mean the field of net shape
formation of ceramic articles. Without limitation or expansion of the
foregoing, the parties agree that said field shall not include laser
ablation or sputtering targets.
3. Remainder-Exclusive shall mean that FOUNDATION has previously
granted nonexclusive licenses to Jupiter and Corning, and their
successors in interest, with no right to sublicense, and an exclusive
license to Jupiter in the field of sputtering and laser ablation
targets, and that from the Effective Date henceforth, FOUNDATION
shall not issue a license in the Licensed Field of Use to another
throughout the period of
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exclusivity defined hereinbelow.
4. Licensed Products shall mean any product or use claimed
in Licensed Patents within the Licensed Field of
Use.
5. License Year shall mean each twelve (12) month period beginning
on the Effective Date of this Agreement first written above and
thereafter on the anniversary date thereof.
6. LICENSEE shall mean the above named company and any of its
affiliates in which it owns or controls at least 50% of the voting
stock.
7. Net Sales shall mean the gross amount of money billed by
LICENSEE to its customers on sale or use of Licensed Products
subsequent to the Effective Date where the Licensed Products were
either made, used or sold in the United States less: (1) trade and/or
quantity discounts, rebates and other sales price reductions; (2)
returns and allowances and brokers' and agents commissions actually
paid; and (3) retroactive price reductions; and (4) freight and other
transportation costs, including insurance charges, and duties,
tariffs, sales and excise taxes and other governmental charges based
directly on sales, turnover or delivery of the specified Licensed
Products and actually paid or allowed by LICENSEE.
8. Profitability Date shall mean the thirtieth (30th) day
following the end of LICENSEE's first two consecutive
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profitable quarters in a License Year. A quarter shall be
deemed profitable for LICENSEE under this Agreement if LICENSEE
recognized revenues from Net Sales of Licensed Products in excess of
its costs associated with the production and Sale of Licensed
Products on a fully allocated basis as determined pursuant to
LICENSEE's normal and customary cost allocation system with respect
to the sales of LICENSEE's products generally.
II
GRANT
Subject only to the rights of and obligations to the U.S. Government as
set forth in U.S. Office of Management & Budget Circular A-124 or 37 CFR Part
401; FOUNDATION hereby grants to LICENSEE for the term set forth below, and
under the royalty basis set forth below, a Remainder-Exclusive license in the
Licensed Field of Use to make, have made, use have used, import, sell or have
sold Licensed Products in the United States; and said license rights shall
include the right to grant sublicenses thereunder.
III
TO HAVE MADE
The right of LICENSEE to make Licensed Products includes the right to
have made by contract with third parties. Such
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contractual arrangements with third parties shall be subject to and
conditioned upon appropriate supervision and quality assurance and control of
the third party by LICENSEE and the third party shall be bound in writing to
respect all rights of FOUNDATION and to supply all production of Licensed
Products exclusively to LICENSEE.
IV
PAYMENTS IN CONSIDERATION OF THE
EXECUTION OF THIS LICENSE AGREEMENT
FOUNDATION and LICENSEE hereby acknowledge and agree that LICENSEE
shall make a payment of ten thousand dollars ($10,000) to FOUNDATION, five
thousand dollars ($5,000) of which shall be paid upon signing of this Agreement
and five thousand dollars ($5,000) of which shall be paid on the earlier of the
Profitability Date or the second (2nd) anniversary of the Effective Date. Such
payments shall be made as a consideration for entering into this Agreement,
which sum is nonrefundable and will not be considered as an advance payment
on royalties due hereunder.
V
RIGHT OF FIRST NEGOTIATION
TO RIGHTS IN OTHER FIELDS OF USE.
The parties acknowledge a mutual interest in the broadest possible
commercial development of the technology described and claimed in the Licensed
Patents. In order to fulfill this
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intent, the parties agree that if, in the future, FOUNDATION desires to grant
any rights in the Licensed Patents in other than the Licensed Field of Use to
any third party, FOUNDATION shall promptly notify LICENSEE and provide
LICENSEE with details of the proposed license terms with such third party, and
shall further provide LICENSEE with the right of first negotiation,
exercisable by LICENSEE within thirty (30) days of receipt of such notice from
FOUNDATION. FOUNDATION retains the right to reject LICENSEE's offer and to
grant a license to the third party.
VI
ROYALTIES AND MINIMUM ROYALTIES TO BE
PAID DURING THE LICENSE AGREEMENT
LICENSEE will pay to FOUNDATION running royalties at the rate of four
percent (4%) of Net Sales of Licensed Products made, used or sold by LICENSEE
in the United States;
LICENSEE's obligation to pay royalties shall begin on the Effective
Date and shall be payable thereafter to FOUNDATION in accordance with the
payment schedule set forth in Section VII below.
LICENSEE'S obligation to pay royalty upon each such Licensed Product
shall cease:
(i) if the applicable claims covering such Licensed
Product in the Licensed Patents in any particular
country are held invalid by an unappealed or
unappealable decision of a court of competent
jurisdiction, in that particular country, or
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(ii) upon expiration of the last Licensed Patent that
claims or covers such Licensed Product.
Beginning with the fourth (4th) License Year, LICENSEE shall pay
FOUNDATION annual minimum royalties of fifteen thousand dollars ($15,000). The
amount of such annual minimum royalties shall be reduced to ten thousand
dollars ($10,000) for each License Year, including the prior License Years,
wherein LICENSEE has engaged in a vigorous development program as evidenced by
the existence and reporting of a reasonable number of documented experiments,
designs or prototypes as would be appropriate in said development program. The
minimum royalty payment, due at the beginning of the License Year, will be
considered as a credit for the royalties due for that License Year under this
Agreement and the royalty reports should reflect the use of such credit. Such
provision is to be construed as an annual minimum royalty payment requirement
and none of the minimum royalty payments are refundable or applicable to
succeeding License Years.
VII
ACCOUNTING AND PAYMENT SCHEDULE
Payment, reporting and financial accounting shall be on a semi-annual
basis and LICENSEE will deliver to FOUNDATION within sixty (60) days after the
end of each six (6) month period of a License Year a report in writing setting
forth: (i) summary reports of documented experiments, designs or prototypes
sufficient to show the progress being made toward the development
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of Licensed Products, and/or (ii) sales of Licensed Products (including
a negative report if appropriate). Such reports will be accompanied by an
appropriate payment of royalty due for such period. LICENSEE will keep accurate
records, certified by it, showing the information by which LICENSEE arrived at
a royalty determination and will permit an independent public accountant
appointed by FOUNDATION and acceptable to LICENSEE to make such reasonable
inspection during business hours of said records as may be necessary to verify
royalty reports made by LICENSEE; provided any such inspection shall take place
not more often than once every License Year, and provided further that
FOUNDATION's accountant shall examine only such information as is required to
verify LICENSEE's compliance under this Agreement and shall keep any such
information examined confidential and shall not disclose such information
except to FOUNDATION in accordance with the terms of this section.
Conversion from foreign currencies, if any, shall be based upon the
conversion rate on the date that payment is due.
Payments which are delayed beyond the sixty (60) days after the end of
the six month period in which they become due shall be subject to a fifteen
percent (15%) per annum interest charge.
VIII
TERM
This License Agreement shall continue as a Remainder-Exclusive license
for the full term of the last to expire
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Licensed Patent so long as LICENSEE'S covenants under the Agreement are
being performed and the LICENSEE is in good standing, and provided this
Agreement is not earlier terminated as provided for herein.
IX
DUTY OF DILIGENCE
LICENSEE shall exercise commercially reasonable due diligence to effect the
introduction of Licensed Product(s) into the commercial market as soon as
practical. LICENSEE agrees to develop and exploit Licensed Products with
commercially reasonable diligence by development, manufacture and sale of
Licensed Products for the duration of the term of this Agreement. LICENSEE
further agrees to maintain commercially reasonable quality control over
Licensed Products and generally attend to proper, safe, fair, lawful and
reasonable development and exploitation of the market for Licensed Products.
Upon written request of FOUNDATION, LICENSEE agrees to submit to
FOUNDATION within thirty (30) days a written report of progress made against
its goals for exploitation of the market and its plans and objectives for
future progress.
Failure of LICENSEE to comply with the provisions of this Duty of
Diligence section shall be considered a material breach of this Agreement.
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X
INFRINGEMENT OF LICENSED
PATENT RIGHTS BY THIRD PARTIES
In the event that any infringement of a Licensed Patent shall come to the
attention of FOUNDATION or LICENSEE, then FOUNDATION and LICENSEE shall duly
inform each other. FOUNDATION, shall, in its sole discretion, determine
whether or not to prosecute a patent infringement action. If FOUNDATION
determines and elects not to prosecute a patent infringement action, and such
patent infringement is in the Licensed Field of Use, then LICENSEE may cause
legal proceedings against the alleged infringer at its own expense.
LICENSEE may defray the expenses of any such lawsuit to the extent of 50%
of royalties payable by LICENSEE during the course of such legal proceedings.
Out of any damages or awards recovered by LICENSEE in such action conducted by
LICENSEE, FOUNDATION will first recover all royalties up to the 50% of
royalties payable by LICENSEE to FOUNDATION and withheld by LICENSEE to defray
costs of such lawsuit. LICENSEE will then recover its expenses for conducting
said litigation beyond the costs defrayed by withheld royalties. FOUNDATION
will also recover any reasonable expenses which it incurred on behalf of the
litigation. Any amount remaining belongs to LICENSEE, if LICENSEE conducts the
litigation, provided that on such amount LICENSEE shall pay FOUNDATION a
royalty as provided for in VII above. If FOUNDATION conducts the litigation
then any amount recovered belongs to FOUNDATION; provided that, to the extent
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that FOUNDATION's recoveries exceed FOUNDATION's reasonable expenses
with respect to such action or claim, FOUNDATION shall reimburse
LICENSEE for LICENSEE's reasonable costs in connection with
cooperating with FOUNDATION in the prosecution of such action or
claim.
In any proceeding initiated by LICENSEE, LICENSEE shall employ
counsel reasonably satisfactory to FOUNDATION and shall inform
FOUNDATION of all material developments in such proceedings. The
prosecution, settlement, or abandonment of any proceeding initiated by
LICENSEE shall be at LICENSEE's reasonable discretion, provided that
LICENSEE shall not have any right to surrender any of FOUNDATION's
rights to the Licensed Patents or to grant any infringer any rights to
the Licensed Patents other than a sublicense subject to the conditions
which would apply to the grant of any other sublicense.
In any proceedings, FOUNDATION shall be entitled to employ counsel and
control the course of litigation if, in FOUNDATION's sole discretion,
LICENSEE's defense of patent rights is insufficient, or if LICENSEE fails
to carry on vigorous prosecution of said patent rights.
In the event LICENSEE seeks, with justifiable cause, to prosecute more
than one lawsuit at a time, FOUNDATION will not unreasonably withhold
permission where such actions are conducted entirely at LICENSEE's expense
including reimbursement of FOUNDATION's expenses incurred on behalf of such
action.
In any action brought by LICENSEE, LICENSEE undertakes to
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indemnify for and hold FOUNDATION harmless from any damages, costs or
expenses incurred by reason of such litigation.
XI
ASSIGNMENT
The rights and obligations of LICENSEE are not assignable but with one
exception which is that those rights and obligations may be assigned to its
successor in business if such assignment is approved by FOUNDATION. Such
approval will not be unreasonably withheld.
XII
SUBLICENSING
LICENSEE may grant sublicenses, within the Licensed Field of Use
provided that FOUNDATION finds the sublicensee generally acceptable (such
acceptance will not be unreasonably withheld), that royalty payments as above
shall be made by sublicensee, that all sublicensees shall be obligated to all
the terms and conditions of this Agreement beneficial to or protective of
FOUNDATION and that LICENSEE shall guarantee compliance of the sublicensee on
all such provisions. LICENSEE and FOUNDATION shall share all sublicensing
consideration of any sort, other than royalty payments additive to the amount
payable to FOUNDATION, on the basis of fifty percent (50%) to FOUNDATION and
fifty percent (50%) to LICENSEE.
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XIII
TERMINATION
FOUNDATION may terminate this License Agreement for noncompliance by
LICENSEE with any of its provisions provided such noncompliance is unremedied
after ninety (90) days following written notice to LICENSEE from FOUNDATION
thereof, or if such noncompliance is of a nature not susceptible to remedy
within such ninety (90) day period, provided LICENSEE has taken all reasonable
action to commence remediation of such noncompliance by giving notice of its
intentions to do so six (6) months before termination.
LICENSEE may terminate this License Agreement by giving notice of its
intentions to do so six (6) months before termination.
XIV
ARBITRATION AND JURISDICTION
All disputes arising out of or relating to any provision of this
Agreement shall be resolved by conciliation and mediation and if mediation is
unsuccessful then disputes shall be finally settled by an Arbitrator selected
by FOUNDATION and LICENSEE. If FOUNDATION and LICENSEE cannot agree on an
Arbitrator, then disputes shall be resolved by an Arbitration Panel comprising
one arbitrator appointed by FOUNDATION, one arbitrator appointed by LICENSEE,
and a Chairman of the Arbitration Panel appointed by the first two
arbitrators. Any such arbitration proceeding shall
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be conducted in accordance with generally accepted arbitration rules;
shall be held in the State of New York, unless otherwise agreed by the parties;
and judgment upon the arbitration award may be entered in any court having
jurisdiction. Any arbitration hearing shall last no longer than two (2) days.
Each party shall pay its own attorneys' fees. The expense of the dispute
resolution (other than attorneys' fees) shall be shared equally.
In order to initiate procedures for dispute resolution by conciliation,
mediation and arbitration either party may give written notice to the other of
intention to resolve a dispute, and absent satisfactory resolution, then to
arbitrate. Such notice shall contain a statement setting forth the nature of
the dispute and the resolution sought. If, within thirty (30) days after such
notice a resolution by conciliation between the parties themselves or by
mediation has not been achieved to the satisfaction of both parties, and if
within sixty (60) days after said written notice an Arbitrator or Arbitration
Panel has not been appointed with an arbitration schedule satisfactory to both
parties, then either party may proceed with judicial remedies.
FOUNDATION reserves the right and power to proceed with direct judicial
remedies against LICENSEE without conciliation, mediation or arbitration for
breach of the royalty payment and sales reporting provisions of this Agreement
after giving written notice of such breach to LICENSEE followed by an
opportunity period of thirty (30) days in which to cure, or to proceed with
reasonable steps to cure, such breach. In collecting overdue
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royalty payments and securing compliance with reporting obligations,
FOUNDATION may use all judicial remedies available.
XV
OTHER
LICENSEE agrees that it will not use the indicia or names FOUNDATION or
of Cornell University or any of their personnel in advertising, promotion, or
labeling of Licensed Products without prior written approval of FOUNDATION.
FOUNDATION makes no representations other than those specified in the
WHEREAS clauses. FOUNDATION MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
FOUNDATION by this Agreement makes no representation as to the
patentability and/or breadth of the inventions and/or discoveries involved in
a Licensed Patent. FOUNDATION by this Agreement makes no representation as to
patents now held or which will be held by others in the field of the Licensed
Products for a particular purpose.
LICENSEE agrees to defend, indemnify and hold FOUNDATION harmless from
and against all liability, demands, damages, expenses or losses for death,
personal injury, illness or property damage (including reasonable attorney's
fees) arising (a) out of use by LICENSEE or its transferees of inventions
licensed or information furnished under this Agreement, or (b) out of any use,
sale or other disposition by LICENSEE or its
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transferees of products made by use of such inventions or information.
As used in this clause, FOUNDATION includes its Trustees, Officers, Agents and
Employees, and those of Cornell University, and "LICENSEE" includes its
Affiliates, Subsidiaries, Contractors and Sub-Contractors.
In discharge of the above LICENSEE will maintain general liability
insurance in mutually agreed to commercially reasonable amounts with sound
insurers and on such term as FOUNDATION approves in writing against damage to
or destruction of property and injury to or death of individuals and against
such other rinks as FOUNDATION may reasonably request arising out of or in
connection with any of the Licensed Products, FOUNDATION, Cornell University
and their respective officers, trustees, members of their governing boards,
and employees will be named additional insureds under all such insurance. Such
insurance will also provide that FOUNDATION will be given notice of any
modification thereof and at least thirty (30) days prior written notice of
cancellation or termination and the reason therefore. LICENSEE will furnish
FOUNDATION upon request, and in any event on execution of this Agreement and
on each anniversary of the effective date of this Agreement, written
confirmation issued by the insurer or an independent insurance agent
confirming that insurance is maintained in accordance with the above
requirements.
This Agreement shall be interpreted under the Laws of the State of New
York.
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Reports, notices and other communications to FOUNDATION shall be
addressed to:
H. Xxxxxx Xxxxxxxxx, President
CORNELL RESEARCH FOUNDATION, INC.
Cornell Business & Technology Park
00 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
and notices and other communications to LICENSEE to:
NANOPHASE TECHNOLOGIES CORPORATION
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
XXXXXXXXXXX XXXXXXXXX & XXXXXX
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the parties have caused this instrument to be
executed in duplicate as of the day and year first above written.
ATTEST: CORNELL RESEARCH FOUNDATION, INC.
By /s/ H. Xxxxxx Xxxxxxxxx
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H. Xxxxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx Title President
----------------- ------------------------------------
Date April 10, 1997
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ATTEST: NANOPHASE TECHNOLOGIES CORPORATION
By /s/ Xxxxxx Xxxxx
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Xxxxxxx X. Xxxx Title Vice President
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Date April 15, 1996
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