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Exhibit 10.6
LICENSE AGREEMENT
between
UNIVERSITY OF TENNESSEE RESEARCH FOUNDATION
and
ADVANCED PLASMA PRODUCTS, INC
This License Agreement ("Agreement") is made and entered into
this 10 th day of September, 2008 (" Effective
Date ") by and between the UNIVERSITY OF TENNESSEE RESEARCH
FOUNDATION, having an office at 1534 White Avenue, Knoxville, TN
37996 (" UTRF "), and Advanced Plasma Products, Inc, a
organized and existing under the laws of the State of Nevada as a
wholly-owned subsidiary of Flight Safety Technologies, Inc, and
having its principal place of business at 924
Corridor Park Blvd, Knoxville, TN 37932 (" LICENSEE
").
RECITALS:
WHEREAS, UT (defined below) has submitted the Invention
Disclosure(s) (defined below) to UTRF for administration;
WHEREAS, LICENSEE desires to utilize and commercialize the
Licensed Technology (defined below) in the Field of Use (defined
below) and is willing to expend its best efforts and resources to
do so if it can obtain a license to use the Licensed Technology
under the terms and conditions set forth herein; and
WHEREAS, UTRF desires to transfer the right to practice the
Licensed Technology in the Field of Use for the ultimate benefit of
the public and believes that such transfer will be facilitated by
the grant of a license to LICENSEE under the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the recitals, covenants,
conditions, and undertakings contained herein, the parties hereto
agree as follows:
ARTICLE 1. DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings set out below. The singular shall be interpreted as
including the plural and vice versa, unless the context clearly
indicates otherwise.
1.1 " Action " shall have the meaning set forth in
Article 8.1(a) hereof.
1.2 " Affiliate " means any corporation,
partnership, or other entity that at any time during the Term of
this Agreement, directly or indirectly Controls or is Controlled by
or is under common Control with a party to this Agreement, but only
for so long as the relationship exists. A corporation or other
entity shall no longer be an Affiliate when through loss,
divestment, dilution or other reduction of ownership, the requisite
Control no longer exists.
1.3 " Annual Maintenance Fee " shall have the
meaning set forth in Article 5.1(b) hereof.
1.4 " Control " or " Controls " or "
Controlled " means: (in the case of a corporation, ownership
or control, directly or indirectly, of at least fifty-one percent
(51%) of the shares of stock entitled to vote for the election of
directors: or (ii) in the case of an entity other than a
corporation, ownership or control, directly or indirectly, of at
least fifty-one percent (51%) of the assets of such entity.
1.5 " Co-Party " shall have the meaning set forth
in Article 8.2.
1.6 " Diligence Milestones " shall have the
meaning set forth in Article 4.2 hereof.
1.7 " Dispute " means any and all claims,
disputes, or controversies arising under, out of, or in connection
with this Agreement, including, without limitation, any dispute
relating to patent validity or infringement or to the
interpretation or scope of Article 15 (Dispute Resolution).
1.8 " Federal Policy " shall have the meaning set
forth in Article 2.2 hereof.
1.9 " Field of Use " means all fields except those
related to (1) electro-chemical energy storage systems, (2) food
processing, and (3) processing and treatment of fibers and fabrics
used in rugs and carpets.
1.10 " FST " means Flight Safety Technologies,
Inc., a corporation organized and existing under the laws of the
State of Nevada and having its principal place of business at 28
Cottrell St, Mystic, CT 06355.
1.11 " Indemnified Party " shall have the meaning
set forth in Article 9.1 hereof.
1.12 " Instituting Party " shall have the meaning
set forth in Article 8.2 hereof.
1.13 " Invention Disclosure " means UTRF PD 93083,
93084, 94004, 95032, and 98010.
1.14 " License Issue Fee " shall have the meaning
set forth in Article 5.1(a) hereof.
1.15 " Licensed Know-How " means, except to the
extent published or otherwise generally known to the public, any
technical data, information, knowledge, methods, or processes (i)
developed by a UT Contributor in the course of employment by UT;
(ii) owned or controlled during the Term by UTRF; (iii) disclosed
to LICENSEE by a UT Contributor or UTRF; and necessary or
reasonably useful for the practice of any of the Licensed
Patents.
(a) Any United States and foreign patents and/or patent
applications listed in Appendix A;
(b) Any divisionals and continuations of any United
States or foreign patent applications listed in Appendix A;
(c) Any United States and foreign patents issued from any
applications described in (a) or (b) above;
(d) Any claims of United States and foreign patent
applications (including, without limitation, continuations-in-part
of patent applications or patents described in (a) or (b) above),
and of the resulting patents (i) that are directed to subject
matter claimed in the patents or patent applications described in
(a), (b), or (c) above, and (ii) that UTRF has the right to license
hereunder, and (iii) that name a UT Contributor as an inventor;
and
(e) Any reissue or extension of any United States patent
described in (a), (b), (c), or (d) above or any patent resulting
from equivalent foreign procedures with respect to any foreign
patent described in (a), (b), (c), or (d) above.
1.17 " Licensed Product " means any product,
method, procedure, service, or process whose manufacture, use,
sale, lease, or import:
(a) Is covered by a Valid Claim of the Licensed Patents
in the country in which such product, method, procedure, service,
process, or part thereof is manufactured, used, sold, leased, or
imported; or
(b) Is derived from, made with, uses, or incorporates, in
whole or in part, Licensed Know-How or the inventions claimed in
the Licensed Patents.
1.18 " Licensed Technology " means Licensed
Patents and Licensed Know-How.
(a) The gross receipts received by LICENSEE and
Sublicensees from the use, sale, lease, or other transfer or
disposition (including, without limitation, the performance of
services utilizing the Licensed Technology) to or for third parties
(hereinafter "Sale") of a Licensed Product less the following
deductions, provided they actually pertain to the Sale of Licensed
Product and are separately invoiced:
1.20 " Patent Expenses " means all fees, costs and
expenses (including, without limitation, the professional fees of
US and foreign patent counsel) relating to the filing, prosecution
and maintenance of the Licensed Patents. For purposes of
clarification, included Patent Expenses are any and all fees,
costs, and expenses incurred before or after issuance of the
Licensed Patents, including, without limitation, fees, costs, and
expenses incurred in association with any reissue or reexamination
of a Licensed Patent, any interference or opposition proceeding
involving one or more Licensed Patents, or any extension or request
for extension of the term of one or more Licensed Patents.
1.21 " Publication " shall have the meaning set
forth in Article 17 hereof.
1.22 " Running Royalties " shall have the meaning
set forth in Article 5.1(d) hereof.
1.23 " Sublicense " means a direct grant of right,
license, or option to the Licensed Technology from LICENSEE to a
third party and any further sublicense at any tier.
1.24 " Sublicensee " means any recipient of a
Sublicense.
1.25 " Sublicense Revenue " means all payments
received by LICENSEE and its Affiliates pursuant to each
Sublicense, including, without limitation, up-front fees, milestone
payments, and license maintenance fees. Notwithstanding the
foregoing, running royalties received by LICENSEE or its Affiliates
that are calculated as a percentage of Sublicensee's Net Sales are
not included in Sublicense Revenue.
1.26 " Sublicense Royalties " shall have the
meaning set forth in Article 5.1(e) hereof.
1.27 " Term " shall have the meaning set forth in
Article 14.1 hereof.
1.28 " Territory " means the world, subject to the
provisions of Article 7.5.
1.30 " UT Contributo r" means any or all of the
following: John R. Roth, Peter P. Tsai, Larry C. Wadsworth, Chaoyu
Liu, Paul D. Spence, and Mounir Laroussi.
1.31 " Valid Claim " means (a) a claim of an
issued patent which (i) has not expired and which has not been held
revoked, invalid or unenforceable by decision of a court or other
governmental agency of competent jurisdiction, unappealable or
unappealed with the time allowed for appeal having expired, and
(ii) which has not been admitted to be invalid through reissue or
disclaimer or otherwise; or (b) a claim of a pending patent
application which (i) was filed in good faith; and (ii) has not
been pending for more than eight (8) years.
ARTICLE 2. GRANT
2.1 Grant of License . During the Term hereof, and
subject to the terms and conditions of this Agreement, UTRF hereby
grants to LICENSEE for the purpose of developing, making, having
made, using, marketing, selling, having sold, importing,
distributing, and offering for sale the Licensed Product in the
Field of Use in the Territory:
(a) an exclusive, commercial right and
license, with the right to grant Sublicenses, to practice under the
Licensed Patents; and
(b) an exclusive, commercial right and license, with the
right to grant Sublicenses, to utilize the Licensed Know-How for
the purpose of practicing under the Licensed Patents
(collectively, the " License "). Subject to the remaining
provisions of this Agreement, the Parties hereby agree that the
term "exclusive" means that, UTRF shall not grant any commercial
license to a third party or take any action inconsistent with the
rights in the Licensed Patents granted to LICENSEE under this
Agreement.
(a) Federal Government Rights: To the extent that any
invention included within the Licensed Technology has been or is in
the future funded in whole or in part by the United States
government, the United States government retains certain rights in
such inventions as set forth in 35 U.S.C. Sections 200-212 and all
regulations promulgated thereunder, as amended, and any successor
statutes and regulations (" Federal Policy "). As a
condition of the License granted hereby, LICENSEE acknowledges and
shall comply with all aspects of Federal Policy applicable to the
Licensed Technology, including the obligation that Licensed
Products used or sold in the United States be manufactured
substantially in the United States. Nothing contained in this
Agreement obligates UTRF to take any action that would conflict in
any respect with its or UT's past, current or future obligations to
the United States government under the Federal Policy.
(b) Reserved Rights: The License is expressly made
subject to UTRF's and UT's reserved right to practice under the
Licensed Patents in the Field of Use for its own academic research,
teaching, and other non-commercial purposes and to grant such
rights to other academic or non-profit institutions.
(c) Third Party Rights: The exclusive rights granted in
Article 2.1(a) are expressly made subject to any rights in a
Licensed Patent held by a third party resulting from
co-inventorship by an individual whose contribution to a Licensed
Patent is not made in the course of employment by UT.
(d) Licensed Know-How Limitation: UTRF shall have
no obligation to provide LICENSEE with Licensed Know-How or to
provide technical assistance in the exercise of the License. In the
event LICENSEE requires technical assistance with respect to the
activities conducted by LICENSEE pursuant to this Agreement,
obtaining such technical assistance (whether from the UT
Contributors or otherwise) shall be LICENSEE's responsibility and
at LICENSEE's expense.
2.3 Applicability: Nothing in this Agreement shall
be construed to confer any rights upon LICENSEE by implication,
estoppel, or otherwise as to any patent rights other than the
Licensed Patents, regardless of whether such other rights shall be
dominant or subordinate to any Licensed Patents.
ARTICLE 3. SUBLICENSES
3.1 Rights and Requirements: LICENSEE shall have the right to
sublicense the rights granted to LICENSEE under this Agreement,
provided that :
(a) The Sublicensee shall agree in writing to be bound,
to the extent practicable, by all the provisions of this Agreement
in the same manner as LICENSEE is bound;
(b) LICENSEE shall remain liable to UTRF for the full and
timely performance of this Agreement by any Sublicensee. No
Sublicense shall relieve LICENSEE of any of its obligations under
this Agreement.
(c) This Agreement is in effect and LICENSEE is not in
breach of its obligations under this Agreement;
(d) All Sublicenses granted by LICENSEE under this
Agreement shall conform to this Agreement in the following
respects:
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i . LICENSEE shall not grant any rights to a third party
that are inconsistent with LICENSEE's rights and obligations under
this Agreement;
ii . Any Sublicense granted by LICENSEE shall include
substantially the same definitions and provisions on royalties, due
diligence, confidentiality and publicity, reporting and audit
requirements, indemnification, insurance and warranties, patent
notices, and use of names as are agreed to in this Agreement;
iii. Any act or omission of a Sublicensee which would
constitute a breach of this Agreement if it were the act or
omission of LICENSEE shall be deemed to be an Event of Default of
this Agreement by LICENSEE, subject to the same cure provisions in
favor of LICENSEE as are otherwise provided herein for breach by
LICENSEE. Sublicenses shall include such other provisions as are
needed to enable LICENSEE to comply with this Agreement.
(e) LICENSEE shall provide UTRF with a copy of each
executed Sublicense Agreement within thirty (30) days of its
execution.
3.2 Special Termination Rules: Upon termination of this
Agreement, each Sublicense shall be governed by Article 14 of this
Agreement.
3.3 Failure to Conform to this Article: LICENSEE's
failure to conform any Sublicense to this Article will have the
following effects:
(a) The non-conforming Sublicense will be voidable at
UTRF's sole discretion provided that UTRF has provided written
notice to LICENSEE and within 60 days of such notice from UTRF,
LICENSEE fails to cure such non-conformance of the Sublicense;
and
(b) Said failure will constitute a material breach of
this Agreement subject to the termination provisions of Article 14
of this Agreement.
ARTICLE 4. DILIGENCE
4.1 Diligence : LICENSEE shall use its commercially reasonable
efforts to proceed diligently to acquire funding, staff, equipment,
and facilities sufficient to commercialize the Licensed Technology
in the Field of Use. Further, LICENSEE shall, throughout the Term
of this Agreement, conduct, organize or manage a diligent program
of research utilizing the Licensed Technology in the Field of Use
and employ active, diligent marketing efforts to achieve commercial
utilization of Licensed Technology.
4.2 Milestones : In particular, LICENSEE will use its
commercially reasonable efforts to meet the following milestones (
" Diligence Milestones " ):
(a) 1 st Diligence Milestone: On or before the
six month anniversary of the Effective Date, LICENSEE will have
completed assumed lease to prior AGT facilities or otherwise
acquired other facilities to continue development and
commercialization of the Licensed Technology.
(b) 2 nd Diligence Milestone: On or before the
six month anniversary of the Effective Date, LICENSEE will have
made itself available to Sentech, Inc, with a local office at 702
S. Illinois Avenue, Suite #B-204, Oak Ridge, TN 37830, for the
purpose of negotiating a sublicense of the Licensed Technology.
(c) 3 rd Diligence Milestone: On or before the
1 st anniversary of the Effective Date, LICENSEE will
have produced first prototype Licensed Product for evaluation.
(d) 4 th Diligence Milestone: On or before the
2 nd anniversary of the Effective Date, LICENSEE will
have made first commercial sale of a Licensed Product, including,
without limitation, a Licensed Product that constitutes the
provision of a service using Licensed Technology.
(e) 5 th Diligence Milestone: On or before the
3 rd anniversary of the Effective Date, LICENSEE will
have reached cumulative Net Sales of
____________________________.
4.3 Notification: LICENSEE will notify UTRF in writing of
the achievement of each Diligence Milestone within thirty (30) days
thereafter, including sufficient information for UTRF to determine
whether such Diligence Milestone has been fully accomplished, and
LICENSEE will provide UTRF with all relevant information requested
by UTRF pertaining to the achievement of each Diligence
Milestone.
ARTICLE 5. Royalties and other payments
5.1 Fees and Royalties: For the rights, privileges and license
granted hereunder, LICENSEE shall pay to UTRF the following fees
and royalties in the manner hereinafter provided until this
Agreement expires or is terminated.
(a) License Issue Fee: Within 120 (one hundred and
twenty) days of the Effective Date, LICENSEE shall cause FST to
complete all actions required to issue to UTRF the number of FST's
common shares equivalent to ____________________________ using a
share value based on the average of the closing price for the
twenty (20) trading days immediately preceding the Effective Date
of this Agreement, and LICENSEE shall notify or shall cause FST to
notify UTRF in writing of that action and provide UTRF copies of
FST's Articles of Incorporation and Bylaws, including any
amendments to the Articles of Incorporation and Bylaws as they
become effective in the future, and LICENSEE shall provide or cause
FST to provide UTRF copies of the FST shareholders' and Board's
documentation making UTRF a shareholder in FST (" License Issue
Fee ")
(b) Annual Maintenance Fee: LICENSEE shall pay UTRF, in
addition to all other amounts payable hereunder, a non-refundable
license maintenance fee in the amount of
____________________________ on January 31, 2010 and on January 31
of each year thereafter during the Term of this Agreement ("
Annual Maintenance Fee "), provided, however, that the
Annual Maintenance Fee due and owing in any given calendar year
shall be reduced by the combined amount of all Running Royalties
timely paid to UTRF in the prior calendar year. Using calendar year
2010 as an example, the combined amount of the Running Royalty
payments made under Article 5.1.(c) below on July 31, 2009 and
January 31, 2010 would be creditable against the Annual Maintenance
Fee due on January 31, 2010. For the avoidance of doubt, Running
Royalties paid in a given calendar year in excess of the
corresponding Annual Maintenance Fee for that year shall not be
creditable against the Annual Maintenance Fee in any other calendar
year.
(c) Running Royalties: In addition to all other amounts
payable hereunder, subject to the provisions of Article 5.1(d),
LICENSEE shall pay to UTRF an amount equal to ___________ of Net
Sales (" Running Royalties "). Payment of Running Royalties
shall be made on a semi-annual basis by the last day of July, and
January each year on Net Sales occurring during the immediately
preceding half year. For example, payment of Running Royalties will
be due by the last day of January on Net Sales occurring during the
last half (July through December) of the immediately preceding
calendar year. Notwithstanding the foregoing, LICENSEE shall owe no
Running Royalties on any Sale that does not take place during the
Term of this Agreement. For purposes of determining whether a Sale
takes place during the Term of this Agreement, a Sale shall be
deemed to occur upon the earlier of the shipment of a Licensed
Product or the performance of a service using Licensed Technology
or invoicing.
(d) Service Applications: Notwithstanding the
foregoing, LICENSEE shall pay to UTRF Running Royalties equal to
______________ of any Net Sales generated from the performance of
medical waste processing services that utilize Licensed Technology.
With respect to the potential performance of other service
applications that utilize the Licensed Technology, LICENSEE and
UTRF shall negotiate in good faith a Running Royalties rate that
shall not exceed _______ nor be less than ________, depending upon
the business aspects of the specific service application.
(e) Sublicense Royalties : In addition to all other
amounts payable hereunder, LICENSEE shall pay to UTRF the following
percentages of Sublicense Revenue according to the cumulative
amount of Sublicense Revenue received by LICENSEE during the Term
of this Agreement. (" Sublicense Royalties ") Payment of
Sublicense Royalties shall be made on a semi-annual basis by the
last day of January and July each year on Sublicense Revenue
generated during the immediately preceding calendar half-year. For
example, payment of Sublicense Royalties will be due by the last
day of July on Sublicense Revenue occurring during the first half
(January through June) of the same calendar year.
For example, if LICENSEE received Sublicense Revenue in the
amount of ________ during the period January through June of a
particular year, and as of June 30 of the same year the cumulative
Sublicense Revenue received by LICENSEE during the Term of this
Agreement is ________, LICENSEE would be required to pay, on or
before July 31 of the same year, Sublicensee Royalties in the
amount of ________ plus Sublicense Royalties in the amount of
________.
5.2 Maximum Royalties: In the event that any royalties
payable under this Agreement are higher than the maximum royalties
permitted by the law or regulations of a particular country:
(a) The Running Royalties payable for LICENSEE's Net
Sales in such country shall be equal to the maximum permitted
royalty under such law or regulations;
(b) Notice documenting that Running Royalties payable
under this Agreement are higher than a country's maximum royalties
shall be provided to UTRF;
(c) An authorized representative of LICENSEE shall notify
UTRF, in writing, within 30 days of discovering that such Running
Royalties are approaching or have reached the maximum amount;
and
(d) LICENSEE shall provide UTRF with written
documentation regarding the laws or regulations establishing any
such maximum.
5.3 Effect of Taxes on Royalties: In the event that any
taxes are levied by any foreign taxing authority on Running
Royalties payable by LICENSEE under this Agreement, and LICENSEE
determines in good faith that it must pay such taxes:
(a) LICENSEE shall have the right to pay such taxes
levied on Running Royalties to the local tax authorities on behalf
of UTRF;
(b) LICENSEE shall pay the net amount of Running
Royalties due after reduction by the amount of such taxes that are
actually owed and paid;
(c) LICENSEE shall provide UTRF with appropriate
documentation and receipts supporting such payment; and
(d) LICENSEE shall inform UTRF in writing within thirty
(30) days of being notified that taxes will or have been levied by
a taxing auth
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