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EXHIBIT 10.2
LICENSE AGREEMENT
This Agreement is made by and between Temple University —
Of The Commonwealth System of Higher Education (hereinafter
referred to as "TEMPLE"), a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, having a
principal place of business at Broad Street and Montgomery Avenue,
Philadelphia, Pennsylvania and Save the World Air, Inc.
(hereinafter referred to as "COMPANY"), a corporation organised and
existing under the laws of the State of Nevada, having a principal
place of business at 5125 Lankershim Boulevard, North Hollywood,
California 91601.
WHEREAS, TEMPLE is the owner of the entire right and interest in
the United States patent applications and patents listed in
Exhibit A, attached hereto and incorporated herein by
reference, and technical information pertaining to the effect of
electrical fields on crude oil viscosity; and
WHEREAS, COMPANY desires to obtain an exclusive worldwide
license under patent applications and patents for the
aforementioned intellectual property;
NOW, THEREFORE, in consideration of the premises and of the
covenants and obligations hereinafter set forth, and intending to
be legally bound, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
The following definitions shall apply throughout this
Agreement:
1.1. "AFFILIATE" shall mean each and every business entity
controlling, controlled by or under common control with COMPANY for
the purposes of manufacture, use or sale of LICENSED PRODUCT. For
purposes of this definition "control" shall mean ownership,
directly or indirectly, of at least fifty percent (50%) of the
voting stock.
1.2. "CONFIDENTIAL INFORMATION" shall mean any information
disclosed or tangible property supplied by one party to the other
pursuant to this Agreement provided that information disclosed in
writing shall be deemed CONFIDENTIAL INFORMATION only if marked
"Confidential" and information disclosed orally shall be deemed
CONFIDENTIAL INFORMATION only if reduced to writing and a copy
marked "Confidential" is provided to the receiving party within
thirty (30) days of the date of oral disclosure. However,
CONFIDENTIAL INFORMATION shall not include information that:
(i) was known to the receiving party prior to the date of
disclosure by the disclosing party or is developed independently of
information received from the disclosing party by those who have
not had access to this information; or (ii) is lawfully
received in good faith at any time by the receiving party from
others lawfully in possession of the same and having the right to
disclose the same: or (iii) is, as of the date of receipt, in
the public domain or subsequently enters the public domain other
than by reason of acts or omissions of the receiving party; or
(iv) is required to be disclosed by law, rule of court or
regulation; or (v) is independently developed by the receiving
party, as evidenced by written records.
Page 1 of 14 pages
1.3. "EFFECTIVE DATE" shall mean the date this Agreement is
signed by the last to sign of the parties.
1.4. "INVENTOR" shall mean, singly or collectively,
Dr. Rongjia Tao and others of TEMPLE.
1.5. "LICENSED PRODUCT" shall mean any product the use, SALE,
offer for SALE, manufacture, or importation of which, if
unlicensed, would infringe one or more VALID CLAIMS of: (i) a
patent application within PATENT RIGHTS if such patent application
were issued as a patent or (ii) a patent within PATENT RIGHTS.
A product which is a LICENSED PRODUCT by virtue of its use, offer
for SALE, manufacture, or importation under at least one VALID
CLAIM within PATENT RIGHTS shall remain a LICENSED PRODUCT for all
purposes of this Agreement including but not limited to calculation
of NET SALES, notwithstanding such product’s subsequent
exportation to another country where its further disposition is not
covered by any VALID CLAIM within PATENT RIGHTS.
1.6. "LICENSEE" shall mean COMPANY and its AFFILIATES.
1.7. "NET SALES" shall mean the gross receipts from the SALE, in
any country, of LICENSED PRODUCT by LICENSEE or by its SUBLICENSEES
less deductions for: (i) transportation and insurance charges;
(ii) sales and excise taxes, and any other governmental
charges or duties paid; (ii) normal and customary trade,
quantity and cash discounts allowed; (iii) sales commissions;
and (iv) allowances on account of rejection or return by
customers. However, except where the SUBLICENSEE is the end-user of
LICENSED PRODUCT, any SALE to a SUBLICENSEE shall be excluded from
the computation of NET SALES, but any subsequent SALE by the
SUBLICENSEE shall be included in the computation of NET SALES.
1.8. "PATENT RIGHTS" shall mean the patent applications and
patents listed in Exhibit A and any foreign counterparts
thereof, or any continuations, continuations-in-part, divisions,
re-issues, additions, renewals or extensions thereof, and any
patents issuing therefrom.
1.9. "SALE" shall mean any transaction for which consideration
is received for the sale, lease, license, transfer or other
disposition of LICENSED PRODUCT by LICENSEE or by its
SUBLICENSEES.
1.10. "SUBLICENSEE" shall mean a third party which is granted a
sublicense under any of the rights granted by TEMPLE to LICENSEE
under this Agreement, including but not limited to any sublicensee
of LICENSEE, any sublicensee of a sublicensee of LICENSEE, and so
on.
1.11. "TECHNICAL INFORMATION" shall mean any CONFIDENTIAL
INFORMATION of a technical nature relating to LICENSED PRODUCT,
which is in the possession of TEMPLE as of the EFFECTIVE DATE, and
which is necessary or useful to LICENSEE in furtherance of the
development, manufacture or marketing of LICENSED PRODUCT.
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1.12. "VALID CLAIM" shall mean a claim of a patent application
or patent, which claim has not expired and has not been held
unenforceable, unpatentable or invalid by unappealable decision of
a court or other governmental agency of competent jurisdiction.
ARTICLE 2. CONFIDENTIALITY
2.1. The receiving party shall hold all CONFIDENTIAL INFORMATION
in strict confidence for a period of five (5) years from the
disclosure date; not use said CONFIDENTIAL INFORMATION except as
provided in this Agreement; and not disclose, directly or
indirectly, said CONFIDENTIAL INFORMATION to others except with the
prior written consent of the disclosing party. The receiving party
shall use at least the same degree of care to maintain CONFIDENTIAL
INFORMATION secret as the receiving party uses in maintaining
secret its own confidential information, but always at least a
reasonable degree of care. The receiving party shall restrict
disclosure of CONFIDENTIAL INFORMATION solely to those of its
employees and consultants having a need to know such CONFIDENTIAL
INFORMATION in order to accomplish the purposes of this Agreement.
The receiving party shall also advise its employees and
consultants, before they have access to CONFIDENTIAL INFORMATION,
of the obligations of the receiving party under this Agreement, and
require such employees and consultants to maintain those
obligations.
2.2. Notwithstanding any of the provisions of
Paragraph 2.1, LICENSEE shall be entitled, without
TEMPLE’S prior written approval, to disclose any CONFIDENTIAL
INFORMATION of TEMPLE: (i) to the EPA or any other
environmental authority in the world, but only to the extent
required by law or regulation to obtain approval to test or market
LICENSED PRODUCT and (ii) to agents, consultants or
independent contractors of LICENSEE for the sole purpose of
assisting LICENSEE in accomplishing the purposes of this Agreement
provided that, prior to any such disclosure, the recipient shall be
bound by written confidentiality obligations that are at least as
strict as those of LICENSEE under this Agreement.
2.3. The receiving party shall, upon written request by the
disclosing party, promptly return all written materials or samples
of tangible property received hereunder, with the exception that
one copy of said written materials may be retained by the receiving
party solely for archival purposes. In the alternative, the
receiving party shall destroy all materials and confirm such
destruction in writing.
2.4. Notwithstanding any other provision of this Agreement, it
is recognized by LICENSEE that TEMPLE, through the INVENTOR, shall
have the right to publish or present publicly the results of any
research concerning LICENSED PRODUCT. However, TEMPLE and the
INVENTOR agree to notify LICENSEE in writing of any such proposed
publication or presentation thirty (30) days before
submission. Should LICENSEE, within thirty (30) days of such
notification, advise TEMPLE and the INVENTOR in writing that it
wishes to file one or more patent applications pertaining to
information contained in the proposed publication or presentation,
TEMPLE shall delay submission until after LICENSEE has made such
filing. LICENSEE may also request deletion of sensitive information
from the proposed publication, and TEMPLE agrees to give good faith
consideration to such a request.
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ARTICLE 3. GRANT OF LICENSE
RIGHTS
3.1. TEMPLE hereby grants to LICENSEE, until the date on which
this Agreement is terminated, a world-wide exclusive license under
PATENT RIGHTS and TECHNICAL INFORMATION, with the right to grant
sublicenses, to make, have made, use, sell, offer for SALE and
import LICENSED PRODUCT.
3.2. Notwithstanding the preceding license grant, TEMPLE shall
retain rights to make, have made, use and import LICENSED PRODUCT
royalty-free for non-commercial educational and research purposes
only, and shall be free to grant these rights to other non-profit
educational and research institutions.
3.3. The parties acknowledge that inventions in PATENT RIGHTS
may have resulted from United States Government funding, and agree
that their rights and obligations under this Agreement shall be
subject to TEMPLE’S obligations to the United States
Government, if any, which arise out of the receipt by TEMPLE of
research funding from the United States Government, in which case
LICENSEE agrees that LICENSED PRODUCT sold in the United States
under this Agreement shall be manufactured substantially in the
United States.
3.4.LICENSEE shall at all times own all LICENSED PRODUCT as
tangible property.
ARTICLE 4. PAYMENTS
4.1. In consideration of the license granted to LICENSEE under
the terms of this Agreement, LICENSEE shall pay to TEMPLE a
quarterly basis commencing on the first day of each March, June,
September and December during the term of this Agreement a royalty
on account of NET SALES in the prior calendar quarter. Royalties
shall be payable at the following rates: (i) on the first
$20,000,000 of NET SALES during a calendar year of the term of this
Agreement, seven percent (7%) of NET SALES; (ii) on NET SALES
during a calendar year of the term of this Agreement in excess of
$20,000,000 and less than or equal to $40,000,000, six percent (6%)
of NET SALES; (iii),on NET SALES during a calendar year of the term
of this Agreement in excess of $40,000,000, five percent (5%) of
NET SALES.
4.2.In further consideration of the license granted to LICENSE
under the terms of this Agreement, LICENSEE shall pay to TEMPLE a
non-refundable license fee of one hundred thousand dollars
($100,000) within thirty (30) days of the EFFECTIVE DATE. In
the event that within thirty (30) days of the EFFECTIVE DATE
the parties enter into a written agreement to further develop
LICENSED PRODUCT at TEMPLE under the direction of the INVENTOR,
which agreement (the "R&D Agreement") pays TEMPLE five hundred
thousand dollars ($500,000) for two years, LICENSEE shall be
entitled to pay the license fee in three (3) installments, as
follows: (i) forty percent (40%) within thirty (30) days
of the EFECTIVE DATE and (ii) thirty percent (30%) on or
before each of the first and second anniversaries of the EFFECTIVE
DATE. However, if either this Agreement or the R&D Agreement is
terminated
Page 4 of 14 pages
before the second anniversary of the EFFECTIVE DATE, the entire
unpaid balance of the license fee is due immediately prior to
termination.
4.3 In further consideration of the license granted to LICENSEE
under the terms of this Agreement, LICENSEE shall pay to TEMPLE, on
the first day of January, 2008 and annually thereafter, a
non-refundable license maintenance fee of seventy five thousand
dollars ($50,000) regardless of or irrespective of actual NET
SALES. The license maintenance fee payment due in any calendar year
pursuant to this Paragraph 4.3 shall be offset and reduced by
payments actually made to TEMPLE in the prior calendar year
pursuant to Paragraph 4.1 and Paragraph 4.4.
4.4 In further consideration of the license granted to LICENSEE
under the terms of this Agreement, LICENSEE shall pay to TEMPLE
twenty-five percent (25%) of all consideration, whether in the form
of cash or equity, which LICENSEE receives from its SUBLICENSEES to
secure or maintain the sublicense or option thereto, including but
not limited to option or sublicense fees, option or sublicense
maintenance fees, milestone payments and minimum royalties.
However, the following types of consideration are excluded from the
calculation under this Paragraph 4.4: (i) research and
development funding and (ii) royalties on account of NET SALES
by SUBLICENSEE.
4.5 Royalty payments for sales in each country shall commence
with the first unit of each LICENSED PRODUCT sold by LICENSEE or by
its sublicenses in such country and will end coincident with the
expiration date of the last-to-cxpirc issued patent within PATENT
RIGHTS in such country covering such LICENSED PRODUCT.
ARTICLE 5. DUE DILIGENCE AND
REPORTING
5.1. LICENSEE shall use reasonable efforts to advance the
development of LICENSED PRODUCT and to effect its commercialization
as soon as practicable, consistent with prevailing sound business
practices relating to the commercialization of similar products;
thereafter, during the term of this Agreement, LICENSEE shall
endeavor to keep LICENSED PRODUCT reasonably available to the
public.
5.2. On or before March 31 of each year during the term of
this Agreement, LICENSEE shall provide to TEMPLE a written report
detailing LICENSEE’S efforts during the previous year and
plans for the current year, relating to the development, regulatory
approval, manufacturing and marketing of LICENSED PRODUCT.
ARTICLE 6. STATEMENTS AND
REMITTANCES
6.1. LICENSEE shall keep and maintain complete books and records
containing an accurate accounting in sufficient detail of all data
required to enable verification of earned royalties and other
payments due hereunder.
6.2. Within sixty (60) days after the end of each calendar
quarter, LICENSEE shall remit to TEMPLE a statement of NET SALES by
LICENS
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