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Exhibit 10.14
LICENSE AGREEMENT
THIS AGREEMENT is made the 8th day of November, 2004,
between:
ECOLOGY COATINGS, INC., a corporation organized and existing
under the laws of
the State of California, USA, with its principal place of
business at 1238
Brittain Road, Akron, Ohio 44310, USA (hereinafter referred to
as "Ecology"),
and
E. I. DU PONT DE NEMOURS AND COMPANY, a corporation organized
and existing under
the laws of the State of Delaware, USA, with its principal place
of business at
1007 Market Street, Wilmington, Delaware 19898, USA (hereinafter
referred to as
"DuPont").
WHEREAS:
A. Ecology has developed certain 100% solids UV curable
pigmented and clear
paint coating compositions for the automotive metal treatment
market and as
a result possesses certain technical information and patent
rights relating
to the manufacture and use of such coatings.
B. DuPont wishes to acquire a non-exclusive license to use such
patents and
technical information and Ecology is willing to grant such a
license on the
terms and conditions hereinafter appearing.
NOW, THEREFORE, in consideration of the mutual understandings
and obligations
herein set forth, the Parties agree as follows:
1. DEFINITIONS
As used in this Agreement:
"Effective Date" means the date on which this Agreement has been
signed by
both Parties hereto.
"Party" means DuPont or Ecology depending on the context, and
"Parties"
means DuPont and Ecology.
"Agreement Products" means only the exact formulations listed in
Appendix A
attached hereto, which may be amended from time to time by
mutual agreement
of the Parties, and any Improvements thereof which are (a)
conceived,
developed or made using any of the Ecology Technical Information
(including
any information derived from the Ecology Technical Information),
or (b)
covered by one or more claims of an Ecology Patent, subject,
however, to
the understanding that, for purposes of computing royalties,
Agreement
Products do not include any formulations or any improvements
thereof, that
are not covered by one or more claims of an Ecology Patent and
either (i)
were already known to DuPont or a DuPont Affiliate at the
Effective Date of
this Agreement from a
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source other than Ecology, as shown by DuPont's or the
Affiliate's prior
written records, or (ii) are developed by or for DuPont or a
DuPont
Affiliate without use of or reference to and independently of
any
information obtained from Ecology, by persons who have not had
access to
any information obtained from Ecology.
"Agreement Field" means the Automotive Metal Treatment
Market.
"Automotive Metal Treatment Market" means the application of
paint, resin
and other coating materials over metal substrates used as
components in the
manufacture of automotive vehicles, including but not limited
to
automobiles and trucks.
"Ecology Technical Information" means all know-how, trade
secrets, and
other information at Ecology's free disposal at the Effective
Date and up
to the fifth (5th) anniversary of the Effective Date relating to
the use
and manufacture of the Agreement Products set forth on Appendix
A and
Ecology's Improvements thereof, including detailed formulations
and
manufacturing specifications and testing instruments, as well
as
instructions for the application and final testing and approval
of such
Agreement Products and information relevant to any customer
approvals for
such Agreement Products.
"Ecology Patents" means any patents, including Improvement
Patents, in The
Territory, granted to or applied for by Ecology with respect to
Agreement
Products or the manufacture or use thereof. Current Ecology
Patents as of
the Effective Date are listed in Appendix B, which shall be kept
updated
during the term of this Agreement.
"The Territory" means North America, i.e., the U.S.A., Canada
and Mexico.
"Affiliate" means any company or other enterprise under the
direct or
indirect control of a Party hereto through direct or indirect
ownership of
(i) at least 40% of its shares provided that the Party also has
the right
to direct or control the technology and products of the company
or other
enterprise, or (ii) at least 50% of its shares, for so long as
such
ownership and (in the case of (i) above) control exists.
"Net Selling Price" for purposes of computing royalties, means
two hundred
percent (200%) of DuPont's raw material costs for the Agreement
Product.
"Improvement Patents" means any patents in The Territory granted
to or
applied for by Ecology with respect to Ecology's Improvements or
the use
and manufacture of Ecology's Improvements.
"Improvements" shall mean any of the following modifications
made to the
Agreement Products set forth on Appendix A: (a) use of isomeric
forms of
the monomers included in the Agreement Products set forth on
Exhibit A, (b)
use of chemical modifications to the monomers included in the
Agreement
Products set forth on Exhibit A that would be obvious to a
person
reasonably skilled in the art in order to improve properties
such as, by
way of example only, flow, leveling, anti-blocking, and defect
prevention,
(c) use of additives and fillers that would be obvious to a
person
reasonably skilled in the art in order to improve properties
such as, by
way of example only, flow, leveling, anti-blocking, and defect
prevention,
(d) use of acrylate as a substitute for methacrylate or
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vice versa, and/or (e) direct substitution of one oligomer for
another, or
one monomer for another, or a different form of photoinitiator,
while
leaving the rest of the formula intact; and any modifications to
the method
of manufacture or use of any of the foregoing that would be
obvious to a
person reasonably skilled in the art.
2. LICENSE GRANT
2.1 Ecology hereby grants to DuPont a non-exclusive
royalty-bearing right and
license, with the right to sublicense DuPont Affiliates, to use
the Ecology
Technical Information and Ecology Patents to make, have made,
use, offer
for sale, and sell Agreement Products in The Territory for use
solely
within the Agreement Field.
2.2 Ecology also grants DuPont or any sublicensed Affiliate the
right to grant
its customers, under the Ecology Patents, immunity from suit to
use such
Agreement Products solely within the Agreement Field.
3. HANDOVER OF ECOLOGY TECHNICAL INFORMATION
3.1 As soon as practical after the Effective Date of this
Agreement (the
Parties envision thirty (30) days for delivery), Ecology or its
designee
shall transmit to DuPont written copies, in the English
language, of all
Ecology Technical Information in the possession of Ecology that
is
necessary for the manufacture, use and sale of the Agreement
Products, and
shall transmit to DuPont, from time to time, any additional
Ecology
Technical Information that is necessary for the manufacture, use
and sale
of Agreement Products and Ecology's Improvements thereof, which
Ecology has
developed or which Ecology has acquired with a right to further
disclose,
up to the fifth (5th) anniversary of the Effective Date of this
Agreement.
DuPont is entitled to use any such Ecology Technical Information
that may
be provided, according to the terms of the license granted in
Article 2
above, without payment of an additional fee other than the
royalties set
forth in Article 5 below.
3.2 Ecology Technical Information for Agreement Products shall
at least include
all documents or information listed in Appendix C of this
Agreement.
3.3 Each disclosure of Ecology Technical Information shall be
documented by a
record of issue which is to be signed by both Ecology and
DuPont.
4. TECHNICAL ASSISTANCE
4.1 Up to the fifth (5th) anniversary of the Effective Date of
this Agreement,
Ecology shall receive into its facilities, members of DuPont's
technical
staff for the purpose of consultation on matters relating to
the
interpretation of the Ecology Technical Information. The timing
and
duration of such visits and the numbers of personnel to be
received shall
be reasonable and shall be mutually agreed. DuPont will be
responsible for
all out-of-pocket expenses of DuPont arising from such visits
including
travel and subsistence expense. DuPont will not be responsible
for expenses
of Ecology in connection with such visits.
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4.2 Ecology will, if so requested by DuPont and provided the
exigencies of its
own business permit and that staff is available, send suitably
qualified
members of its technical staff to advise DuPont on the
production of
Agreement Products at DuPont's factory or laboratories in The
Territory.
The number of Ecology personnel making such visits and the
timing and
duration of their visits shall be reasonable and shall be
mutually agreed
but shall not in any event exceed ten (10) man/days in any year
up to the
fifth (5th) anniversary of the Effective Date of this Agreement.
DuPont
shall be responsible for all out-of-pocket expenses in
connection with such
visits including reasonable travel and living expenses. In the
event that
DuPont requests additional assistance in the form of visits of
Ecology
personnel over and above ten (10) man/days then Ecology will
consider such
request and if such assistance is provided DuPont shall pay to
Ecology in
addition to all expenses in connection with such visits
including travel
and living expenses, a fee equivalent to Ecology's "charge-out"
rate to
third parties at the time for such personnel, the current rate
being One
Thousand Dollars ($1,000.00) per man/day. Such payment and
payments for
Ecology personnel's travel and living expenses which are to be
reimbursed
by DuPont according to the terms of this Article will be made
within thirty
(30) days after the date of Ecology's invoice therefor.
4.3 Any information conveyed during the provision of technical
assistance by
Ecology, whether verbally, in writing, by inspection of samples,
equipment,
or facilities, or otherwise, shall be considered to be Ecology
Technical
Information under this Agreement, provided that such information
if it is
presented in writing by Ecology is clearly marked as Ecology
Technical
Information and if it is disclosed verbally or visually is
identified as
confidential at the time of disclosure, and subsequently
outlined in
writing, confirmed as confidential, and provided to DuPont
within thirty
(30) days of the disclosure.
5. ROYALTIES
5.1 In consideration of the rights and licenses granted to it
hereunder, DuPont
agrees to pay Ecology, for a period of fifteen (15) years after
the
commercial sale of an Agreement Product, a running royalty of
(a) 5% of the
Net Selling Price of all Agreement Products manufactured and
used or sold
by DuPont or a licensed DuPont Affiliate for any products which
have
received at the Effective Date automotive manufacture approvals,
or (b) 3%
of the Net Selling Price of all Agreement Products manufactured
and used or
sold by DuPont or a licensed DuPont Affiliate for any products
which are
based on identical formulations as the approved products above
but which
require new approvals, or (c) 2 1/2% of the Net Selling Price of
all
Agreement Products manufactured and used or sold by DuPont or a
licensed
DuPont Affiliate for any modified products which require new
approvals.
Royalties shall cease beyond the fifteen (15) year period
specified above
unless DuPont is operating under any issued Ecology Patent(s) in
which case
royalties continue for the life of the last-to-expire of such
Ecology
Patent(s).
5.2 The running royalties payable hereunder shall be calculated
quarterly.
DuPont shall report in writing to Ecology within thirty (30)
days after the
end of each calendar quarter the quantities of each Agreement
Product
subject to royalties hereunder that were used, sold or
transferred by
DuPont or any sublicensee during said quarter and the
calculation
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of the royalties thereon. With each report DuPont shall pay to
Ecology the
total amount of the said royalties that are due. If no product
subject to
fee hereunder has been made, used, sold or transferred by DuPont
or any
sublicensee during any such period, DuPont shall so report in
writing to
Ecology within thirty (30) days after the end of such period.
All payments
shall be made in U.S. Dollars payable in cleared funds to such
bankers as
Ecology directs. If any currency conversion shall be required in
connection
with the calculation of royalties hereunder, such conversion
shall be made
by using the average exchange rates in effect for purchase of
U.S. Dollars
published by The Wall Street Journal on the last business day of
each
calendar month in the calendar quarter for which such royalties
are due. It
is understood that the amounts to be paid hereunder shall be
reduced by the
amount of any foreign withholding, value-added or other tax.
Ecology shall
accept the resulting net payment as due performance under this
Agreement.
Any amounts not paid when due shall bear interest at the rate of
one and
one-half percent (1 1/2%) per month or, if less, the maximum
amount
permitted by applicable law.
5.3 DuPont shall keep, and shall require each sublicensee, if
any, to keep,
adequate records in sufficient detail to enable the fees payable
to Ecology
hereunder to be determined. Said records shall be maintained for
a period
of three (3) years following submission of the report to which
such records
pertain. Upon thirty (30) days' prior written notice by Ecology,
DuPont
shall permit said records to be inspected, and employees of
DuPont
associated with performance under this Agreement to be
interviewed, at
Ecology's expense, at any time during regular business hours by
an
independent auditor appointed by Ecology, and reasonably
acceptable to
DuPont. The auditor shall determine and report to Ecology only
the amount
of the payments due and details concerning any underreporting,
as well as
adherence to any other requirements under the Agreement.
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