LICENSE AND OPTION AGREEMENT
THIS
AGREEMENT
is made and entered into this 24
th
day of June 2008, by and between:
Carbon
Capture Technologies, Inc .
(CCTI *) (hereinafter referred to as the "LICENSEE") with its
principal place of business at 2109 E. Palm Avenue, Tampa,
Florida 33605 , and University of Ottawa, hereinafter referred
to as the "LICENSOR"), and with its principal place of
operation at 3042-800 King Edward Avenue, SITE, Ottawa,
Ontario K1N 6N5 Canada.
WHEREAS LICENSOR
is charged with management and licensing of intellectual properties
developed at University of Ottawa and, under University of Ottawa
intellectual property policy, inventions made by employees of
University of Ottawa or made using the facilities of University of
Ottawa are required to be assigned to University of Ottawa and
managed by LICENSOR, and
WHEREAS Dr.
Abdelhhamid Sayari, and Dr. Peter Harlick ("INVENTORS") have
developed novel adsorbents for the capture of carbon dioxide from a
gas stream ("TECHNOLOGY");
WHEREAS INVENTORS
of the TECHNOLOGY have assigned all intellectual property rights in
technology to
LICENSOR;
WHEREAS LICENSOR
is the owner of all right, title, and interest in intellectual
property, including, but not limited to, patent, and patent
applications, know how and improvements set forth in Schedule
“A” to this Agreement, and,
WHEREAS LICENSOR
understands and agrees that LICENSEE plans to be acquired in full
within 30 days by a third party company that is set up to
commercialize TECHNOLOGY
WHEREAS LICENSEE
and
LICENSOR desire to establish a
license to grant LICENSEE rights to use TECHNOLOGY to make, use and
sell products and services in the fields of use, as set forth
below ;
WHEREAS
LICENSOR desires to grant to LICENSEE, and LICENSEE wishes to
acquire, an option to obtain additional rights to subsequent
technology or disclosures described in Schedule A and to
certain patent rights and know-how of INVENTORS with respect
thereto, subject to the terms and conditions set forth herein,
with a view to developing and marketing products.
NOW, THEREFORE ,
in consideration of the promises and the covenants set forth
herein, LICENSOR and LICENSEE agree as follows:
I.
DEFINITIONS
The
following definitions shall apply in the interpretation of
this Agreement.
1.1
“AFFILIATE” of any company means any corporation
which, directly or indirectly, controls or is controlled by,
or is under direct or indirect common control with, such
company; and for the purposes of this definition "control"
(including "control by" and "under common control with") as
used with respect to any corporation or company, shall mean
the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such
corporation or company, through the ownership of more than 20%
of the voting shares.
1.2
“CALENDAR
QUARTER” means the three-month periods ending March 31,
June 30, September 30, or December 31 in any
year.
1.3
“LICENSED
INTELLECTUAL PROPERTY” shall mean all the intellectual
property and know how in the FIELD OF USE, including, but not
limited to, all patents, patent application(s), and all
continuations, divisions, reexaminations, reissues and
extensions thereof both foreign and domestic, controlled by
LICENSOR ,
all ideas, methods, inventions, characterization and
techniques, specialized knowledge or confidential information,
and experience, and improvements developed by the Inventor
which are unpublished/non-disclosed .
1.4
“LICENSED
PRODUCTS” shall mean any product in the FIELD OF USE
that incorporates, is covered by or is made, in whole or part,
by the use of the LICENSED INTELLECTUAL PROPERTY.
1.5
“FIELDS
OF USE” shall
mean a ll
fields of use for
CO2
adsorbents related to closed circuit breathing systems for
health, rescue, and recreation, industrial gas streams,
and all
confined spaces (buildings, vehicles, aerospace,
marine).
1.6
“EFFECTIVE
DATE” shall mean the date of the Agreement set forth
above.
1.7
“LICENSED
TERRITORY” shall mean worldwide.
1.8
“NET
SALES” shall mean the amounts received by LICENSEE and
its AFFILIATES and SUBLICENSEES from the use of
LICENSED
PRODUCTS ,
or the sale of LICENSED
PRODUCTS ,
less (i) discounts or rebates actually allowed from the billed
amount, (ii) credits or allowances actually allowed upon
claims or returns, and (iii) taxes or other government charges
included in the amounts billed. For non-cash and partial-cash
sales, NET SALES shall include the fair market value of
non-cash consideration received for such sale of the same
quantity of LICENSED
PRODUCTS .
For sales not at arms-length, NET SALES shall be equal to the
fair market price of such LICENSED
PRODUCTS as
when transferred in comparable arms-length transactions. In
the event that LICENSED
PRODUCTS are
used by LICENSOR rather than sold, the parties shall agree
upon an appropriate NET SALES price for each such use on which
to base a royalty calculation.
1.9
“SUBLICENSEE” shall mean any non-affiliated third
party to whom LICENSEE has granted a Sublicense.
“Sublicense” shall mean an agreement in which
LICENSEE (i) grants or otherwise transfers any of the rights
licensed to LICENSEE hereunder or other rights that are
relevant to designing, developing, testing, making, using, or
selling of LICENSED
PRODUCTS ,
(ii) agrees not to assert such rights or to sue, prevent or
seek a legal remedy for the practice of same, (iii) assigns or
otherwise transfers this Agreement and/or the rights acquired
by it, or (iv) is under an obligation to grant, assign or
transfer any such rights or non-assertion, or to forebear from
granting or transferring such rights to any other entity,
including licenses, option agreements, right of first refusal
agreements, or other agreements.
1.10
“SUBLICENSING
REVENUE” shall mean the fair market cash value of any
and all consideration received by LICENSOR from SUBLICENSEE
under its sublicense, including without limitation license
issue fees and other licensing fees, option fees, milestone
payments, minimum annual royalties, equity or other payments
of any kind whatsoever (but excluding running royalties paid
for NET SALES of LICENSED
PRODUCTS by
SUBLICENSEE), irrespective of whether such revenues are
received in the form of cash, barter, credit, stock, warrants,
release from debt, goods or services, licenses back, or any
other form whatever.
II.
GRANT
2.1
LICENSOR grants to
LICENSEE an exclusive, royalty bearing license, extending to
all of LICENSED TERRITORY, under LICENSED INTELLECTUAL
PROPERTY to make, use, offer to sell, sell, and import
LICENSED PRODUCTS throughout the term hereof in the FIELD OF
USE. This grant shall be subject to the payment by LICENSEE to
LICENSOR of all consideration as provided in this Agreement,
and shall be further subject to the rights retained by
LICENSOR to:
a.
Publish
the scientific findings from current or new research related
to LICENSED INTELLECTUAL PROPERTY; and
b.
To practice under
the LICENSED
INTELLECTUAL PROPERTY for
educational, research and other non-commercial internal
purposes. Such reservation shall include the right to extend
such right to practice under the LICENSED
INTELLECTUAL PROPERTY for
educational and research purposes (but not any other
non-commercial internal purpose) to subsequent employers of
any of the Inventors, but only to the extent that such
employers are research or educational institutions. Such
reservation shall further include the right to provide
technical information, and to grant licenses under the
LICENSED
INTELLECTUAL PROPERTY ,
to not-for-profit and governmental institutions for their
internal research and scholarly use only.
2.2
LICENSEE shall have
the right to seek sublicenses subject to the terms and
conditions of this agreement and as defined in Section VIII.
LICENSEE will attach and incorporate by reference the
provisions of this Agreement pertaining to payment
obligations, patent applications, warranties, reporting
requirements, and confidentiality, to any sub-license
agreements entered into by LICENSEE. LICENSEE will provide
LICENSOR with copies of the sub-license agreements evidencing
a third party or SUBLICENSEE’S commitment to be bound by
the terms and conditions of this Agreement and with sections
pertaining to NET SALES prior to the execution of any
sublicense agreement.
2.3
This
Agreement shall terminate on the later of 17 years from the
EFFECTIVE DATE, or the date of the last of the LICENSED
INTELLECTUAL PROPERTY to expire or to become publicly
available, or by the terms specified in this
Agreement.
2.4
LICENSOR
hereby grants to LICENSEE an option to obtain one or more
exclusive, worldwide, royalty bearing licenses, under all or
part of the LICENSOR Patent Rights (to the extent not
exclusively licensed to LICENSEE in section 2.1) to make, to
have made, to use, to sell, to import, to export and to have
sold products related to subsequent technology or disclosures
described in Schedule A and to certain patent rights and
know-how of INVENTORS other than CO2
adsorbents related to health care and industrial gas
streams and
a non-exclusive right to use the associated LICENSOR
Technology in or outside the Field, with the right to
sublicense. The period of time that LICENSEE may exercise said
option shall begin on the Effective Date of this Agreement and
shall expire 24 months following the Effective Date of this
Agreement, or 60 days prior to the expiration of priority
years related to provisional or regular patent filings,
whichever occurs first, (the "Option Period"). Upon receipt by
LICENSOR of LICENSEE' written notice of its exercise of this
option during the Option Period, the terms and conditions for
such licensees) shall be negotiated in good faith during the
following 90 days after exercise of the Option by the parties,
such terms and conditions being typical for a license
agreement between a university-licensor and an
industry-licensee and consistent with LICENSOR's objective of
having its technology productively used within a commercially
reasonable time period and LICENSEE’s ability to
productively use (or license for productive use) within a
commercially reasonable time period; such terms and conditions
shall include, for example, commercially reasonable terms and
conditions for minimum annual royalties, dates by which
various stages of commercial development are to have occurred,
and a specification of the field in which the license is to be
granted. All the option rights which LICENSEE has under this
paragraph shall terminate on the anniversary date of the
Effective Date of this Agreement unless included in the
contemplated license signed by the first anniversary date or
by a new extended date which is mutually agreed to and is
either 30 days or 60 days from the anniversary
date.
III. PAYMENT PROVISIONS
3.1
LICENSEE agrees to
pay LICENSOR a noncreditable, nonrefundable fee of $60,000
(the “License Fee”)due upon execution of the
Agreement and, provided that the LICENSEE is not in default of
this Agreement, such License Fee may be payable according to
the appended payment schedule set forth in "Schedule B",
provided that LICENSEE is not in default of the
agreement.
3.2
Licensee agrees to
pay LICENSOR for all documented patent prosecution costs for
LICENSED INTELLECTUAL PROPERTY within 30 days of
invoicing.
3.3
LICENSEE agrees to
pay to LICENSOR a running royalty of 3.0% based on the NET
SALES of the LICENSED PRODUCTS by LICENSEE,
AFILLIATES.
3.4
LICENSEE shall pay
minimum annual royalties according to the following
schedule:
|
Year
|
Minimum
Royalty Payment
|
|
1
st
|
$
0
|
|
2
nd
|
$
10,000
|
|
3
rd
|
$
25,000
|
|
4
th
|
$
50,000
|
|
5
th &
each year thereafter until the end of the license term
|
$
100,000
|
Minimum
annual royalties are fully creditable against earned royalties
paid during the previous twelve-month period.
3.5
LICENSEE
shall pay LICENSOR 50% of all sublicense revenues (royalties,
upfront fees, milestones, etc.) as described in Section 1.10,
received from sublicensees. The sublicense royalties are not
to fall below 1.5% (50% of 3%) of net sales that incorporate
the licensed technology.
3.6
In
the case of a buyout or other change in majority ownership of
LICENSEE, or a buyout of LICENSED PRODUCTS, all payment
provisions are passed through, non-negotiable, and remain in
effect for LICENSEE, sub-LICENSEE, or purchaser. LICENSEE
shall inform any potential purchaser of this clause and
present evidence to LICENSOR.
3.7
If LICENSED
INTELLECTUAL PROPERTY is not accepted as eligible or
invalidated by a court of law or a countries patent office,
LICENSEE shall pay only amounts accrued up until the date of
such determination of invalidity.
IV. DILIGENCE AND PATENT PROSECUTION
4.1
LICENSEE agrees to
use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale or lease of LICENSED
PRODUCTS and to diligently develop markets for the LICENSED
PRODUCTS. LICENSEE also agrees to pursue with reasonable
effort and diligence and is responsible for any future
technological developments and potential applications for
patents arising out of LICENSED INTELLECTUAL
PROPERTY.
4.2
LICENSOR agrees to
provide reasonable limited assistance to the LICENSEE in order
to ensure an efficient transfer and implementation of the
technology. LICENSEE may seek to retain the services of
LICENSOR under separate contracts to assist in the
technological developments and patent applications. LICENSEE
may also retain services from members of the research team in
separate personal services agreements subject to contractual
obligations to their primary employer and / or the
LICENSOR.
4.3
LICENSOR shall
retain ownership of any future technological developments it
funds, and of any patent and patent applications arising out
of LICENSED INTELLECTUAL PROPERTY. In such event the
development is funded and pursued jointly, LICENSOR and
LICENSEE may jointly pursue ownership.
4.4
LICENSEE shall be
responsible for the cost of prosecution and maintenance of
patents and copyrights during the term of this Agreement,
subject to the limitations of paragraph 4.6. The LICENSEE and
LICENSOR shall jointly select and retain patent counsel to
prosecute and maintain patents and copyrights during the term
of this agreement.. LICENSOR shall fully cooperate and assist
LICENSEE in all related matters.
4.5
All patents, patent
applications, and copyrights on the LICENSED INTELLECTUAL
PROPERTY shall be, assigned to LICENSOR, and LICENSOR's
interest therein shall be recorded in the Canadian and U.S.
Patent and Trademark Offices and appropriate corresponding
foreign patent offices.
4.6
LICENSOR shall
maintain direct authority to instruct retained patent agent in
the prosecution of any patent or patent application arising
out of the LICENSED INTELLECTUAL PROPERTY. LICENSOR will copy
LICENSEE on all correspondence directing the retained patent
agent relating to the LICENSED INTELLECTUAL PROPERTY using the
same method of communication as used to direct the patent
agent. LICENSEE shall not be responsible for patent costs
incurred in response to instructions provided by LICENSOR to
the patent agent after LICENSEE has provided a written
notification to the patent agent and LICENSOR that it is not
willing to incur the patent related expenses to be incurred in
response to the instructions. LICENSEE remains responsible for
costs incurred relating to the LICENSED INTELLECTUAL PROPERTY
normally incurred as a matter of normal procedural activities
carried out by the retained patent counsel, that are not a
direct result of specific instructions provided by
LICENSOR.
4.7
LICENSOR shall
provide LICENSEE with copies of all papers received from and
to be filed in the Canadian and U.S. Patent and Trademark
Offices, and appropriate corresponding foreign patent and
copyright offices.
4.8
LICENSEE shall be
entitled, in its discretion, to abandon any application or
granted patent or copyright if it considers that the ongoing
costs of the same are not justified, provided that LICENSEE
notifies LICENSOR prior to such abandonment and allows
LICENSOR opportunity to avoid such abandonment. In no event
shall such reasonable opportunity be less than three (3)
months prior to abandonment. If LICENSEE chooses to abandon an
application or granted patent or copyright under this
provision and LICENSOR, at its sole expense, continues
pursuing the application, granted patent or copyright,
LICENSEE shall retain no right to exclusively use or
exclusively exploit the LICENSED INTELLECTUAL PROPERTY or any
related copyright in the country, territory or jurisdiction
which granted the patent or copyright.
V. REPORTING OBLIGATIONS
5.1
LICENSEE, within
sixty (60) days after each CALENDAR QUARTER of each year,
shall deliver to
LICENSOR
true and accurate reports, pertaining to NET SALES of LICENSED
PRODUCTS, which shall include at least the following
information:
a)
The identity of each LICENSED PRODUCTS being developed,
manufactured, marketed and/or sold;
b)
The stage of development of each LICENSED PRODUCTS in each
country in the LICENSED TERRITORY;
c)
The number of each LICENSED PRODUCTS manufactured and/or sold
in each country in the LICENSED TERRITORY;
d)
NET SALES of LICENSED PRODUCTS sold by the LICENSEE and all
SUBLICENSEES, prepared in accordance with generally accepted
accounting principles, on a country by country basis, for each
LICENSED PRODUCTS;
e)
Any and all deductions from NET SALES made by
LICENSEE;
f)
Names and addresses of all SUBLICENSEES of
LICENSEE;
g)
Total royalties due.
5.2
Progress Report. On
or before December 1 of each year until LICENSEE markets
LICENSED PRODUCTS, LICENSEE shall make a written annual report
to LICENSOR covering the preceding year, regarding the
progress of LICENSEE toward commercial use of LICENSED
PRODUCTS. Such report shall include, as a minimum, information
sufficient to enable LICENSOR to ascertain pr
