Exhibit 10.01
18 September 2007
PARTIALLY EXCLUSIVE LICENSE
Between
NATURALNANO, INC.
And
UNITED STATES DEPARTMENT OF THE NAVY
At
NAVAL RESEARCH LABORATORY
NRL-LIC-06-06-200
Exhibit 10.01
TABLE OF CONTENTS
PREAMBLE
Article 1. DEFINITIONS
1.1 “AFFILIATE”
1.2 “COMMERCIAL DEVELOPMENT
PLAN”
1.3 “EFFECTIVE DATE”
1.4 “FIELDS OF USE”
1.5 “HALLOYSITE MICROTUBULES”
1.6 “LICENSED INVENTION”
1.7 “LICENSED PATENT(S)”
1.8 “LICENSED TERRITORY”
1.9 “LICENSEE”
1.10 “NET SALES”
1.11 “PARTIALLY EXCLUSIVE”
1.12 “PRACTICAL APPLICATION”
1.13 “REPORTING PERIOD”
1.14 “ROYALTY-BEARING
PRODUCT”
1.15 “SUBLICENSE”
1.16 “SUBLICENSEE”
1.17 “SUBLICENSE REVENUE”
1.18 “TO PRACTICE THE LICENSED
INVENTION”
1.19 “UNITED STATES”
Article 2. LICENSE GRANT
Article 3. LICENSEE'S PERFORMANCE
Article 4. ROYALTIES AND OTHER
CONSIDERATION
4.1 License Issue Fee
4.2 Running Royalties
4.3 Patent Recovery Costs
4.4 Annual License Fee
4.5 Sublicense Fees
4.6 Method of Payment
4.7 Late Payments
4.8 Retention of Records
4.9 Audits
Article 5. PATENT MARKING AND
NONENDORSEMENT
Article 6. REPRESENTATION, WARRANTIES, AND
ACKNOWLEDGMENTS
Exhibit 10.01
Article 7. REPORTS
7.1 Progress Reports
7.2 Sales and Sublicense Reports
7.3 Method of Reporting
Article 8. MODIFICATION AND TERMINATION
8.1 Termination or Modification by Mutual
Agreement
8.2 Termination by LICENSOR
8.3 Procedures for Termination by
LICENSOR
8.4 Termination by LICENSEE
Article 9. NOTICES
Article 10. SUBLICENSING
Article 11. RESERVATION OF RIGHTS
Article 12. PROSECUTION AND LITIGATION
Article 13. GENERAL PROVISIONS
13.1 Governing Law
13.2 Complete Agreement
13.3 Severability
13.4 Interpretation of Headings
13.5 Independent Parties/Entities
Article 14. SIGNATURES
14.1 For NaturalNano, Inc.
14.2 For the Department of the Navy
Appendix A: LISTING OF PATENTS AND PATENT
APPLICATIONS
Appendix B: COMMERCIAL DEVELOPMENT PLAN Submitted by
NaturalNano, Inc.
Appendix C: LICENSED TERRITORY
Appendix D: KEY MILESTONES
Exhibit 10.01
PREAMBLE
This partially exclusive patent license agreement
(hereinafter called "LICENSE") is made
and entered into by and between the United States
Department of the Navy as represented by the
Naval Research Laboratory (hereinafter called
"LICENSOR"), and NaturalNano, Inc. a
corporation of the state of Nevada (hereinafter
called "NATURALNANO") whose headquarters
are located at 15 Schoen Place, 2 floor, Pittsford,
NY 14534. nd
WITNESSETH:
(1) WHEREAS Title 35 of the United States Code,
section 207, authorizes Federal
agencies to license their patents; and
(2) WHEREAS Title 37 of the Code of Federal
Regulations, Chapter IV, Part 404
entitled “Licensing of Government Owned
Inventions” sets forth the terms and conditions
under
which licenses may be granted; and
(3) WHEREAS the above-cited authorities provide that
licensing of Federal
Government inventions will best serve the interests
of the Government and the public when
utilization of such inventions is promoted and such
inventions are brought to PRACTICAL
APPLICATION; and
(4) WHEREAS LICENSOR has an assignment of title or
sole licensing rights to the
inventions disclosed and claimed in the LICENSED
PATENTS; and
(5) WHEREAS LICENSOR has undivided joint ownership
rights with Science
Applications International Corporation (hereinafter
called SAIC) in certain of the LICENSED
PATENTS; and
(6) WHEREAS LICENSEE has supplied LICENSOR with a
plan for development and
Exhibit 10.01
marketing of this invention that is hereby
incorporated into this LICENSE as Appendix B, and
has expressed its intention to carry out this plan
upon the granting of this LICENSE; and
(7) WHEREAS LICENSEE has agreed that any products
embodying this invention or
produced through the use of this invention for use
or sale in the UNITED STATES will be
manufactured substantially in the UNITED STATES;
and
(8) WHEREAS LICENSOR has published in the Federal
Register of September 26,
2006 for U.S. Patent Nos. 5,492,696; 5,651,976;
5,705,191; 6,013,206; 6,250,759; 7,125,471;
U.S. Patent Application Nos. 10/863,848, and in the
Federal Register of June 18, 2007 for U.S.
Patent Nos. 6,913,828 and 6,936,215 and U.S. Patent
Application No. 11/229,433, notice of its
intention to grant this LICENSE under the LICENSED
PATENTS; and
(9) WHEREAS LICENSOR:
(a) has determined that the interest of the Federal
Government and the public
will best be served by the proposed license, in view
of LICENSEE's intentions, plans, and ability
Exhibit 10.01
to bring the inventions described and claimed in the
LICENSED PATENTS to PRACTICAL
APPLICATION or otherwise promote the
inventions’ utilization by the public;
(b) has determined that the desired PRACTICAL
APPLICATION has not
been achieved, or is not likely expeditiously to be
achieved, under any non-exclusive license that
has been granted, or which may be granted, on the
inventions;
(c) has determined that exclusive licensing is a
reasonable and necessary
incentive to call forth the investment of risk
capital and expenditures to bring the inventions to
PRACTICAL APPLICATION or otherwise promote the
inventions’ utilization by the public;
(d) has determined that the proposed terms and scope
of exclusivity are not
greater than reasonably necessary to provide the
incentive for bringing the inventions to
PRACTICAL APPLICATION or otherwise promote the
inventions’ utilization by the public;
and
(e) has not determined that the grant of this
LICENSE will tend substantially
to lessen competition or result in undue
concentration in any section of the country in any line
of
commerce to which the technology to be licensed
relates or to create or maintain other situations
inconsistent with the antitrust laws; and
(10) WHEREAS LICENSOR has considered the
capabilities of LICENSEE to bring
the inventions to PRACTICAL APPLICATION and has
found that LICENSEE is a responsible
party for negotiating this LICENSE on terms and
conditions most favorable to the public interest
and that to grant this exclusive LICENSE would be in
the public interest;
NOW, THEREFORE, in accordance with and to the extent
provided by the
aforementioned authorities and in consideration of
the foregoing premises and of the covenants
and obligations hereinafter set forth to be well and
truly performed, and other good and valuable
consideration, the parties hereto agree to the
foregoing and as follows.
Exhibit 10.01
Article 1. DEFINITIONS
The following definitions shall apply to the defined
words where such words are
used in this LICENSE.
1.1 “AFFILIATE” shall mean any company,
corporation, association or other
business entity in which LICENSEE owns directly or
indirectly a controlling interest or which
owns directly or indirectly a controlling interest
in LICENSEE.
1.2 “COMMERCIAL DEVELOPMENT PLAN” shall
mean the plan for development
and marketing submitted by LICENSEE in
LICENSEE’S Application for License, with all its
attachments and amendments.
1.3 “EFFECTIVE DATE” shall mean the date
of the last signature of the signatories
executing this LICENSE.
Exhibit 10.01
1.4 “FIELDS OF USE” shall
mean:
1.4.1 “Electromagnetic Shielding/Strength
Enhancement Field of Use” shall
mean the use of a LICENSED INVENTION in polymers,
plastics, composites, paints, sealers,
fillers, varnishes, shellac, polyurethane coatings
and any and all coatings applied in liquid form
to provide electromagnetic shielding and/or enhanced
material strength; and
1.4.2 “Cosmetic Field of Use” shall mean
the use of A LICENSED
INVENTION for the elution of drugs, pigments, oils,
tanning agents, tan suppression agents,
fragrances and/or all other substances from
cosmetics; and
1.4.3 “Odor Masking Field of Use” shall
mean the use of A LICENSED
INVENTION in absorbent materials for the elution of
substances that mask odors for the purpose
of masking odors; and
1.4.4 “Eluting Bandage Field of Use”
shall mean the use of a LICENSED
INVENTION in bandages or in polymer coatings on
bandages for the elution of any and all
substances for wound care on humans for the
elimination of infection, the enhancement of
healing or the promotion of clotting to reduce
bleeding; and
1.4.5 “Agricultural Field of Use” shall
mean the use of a LICENSED
INVENTION for the release of pesticides, herbicides,
fungicides, fertilizers, or any and all other
substances used to promote growth and/or for the
protection of plants; and
1.4.6 “Vertebrate Aversion Field of Use”
shall mean the use of a LICENSED
INVENTION for the elution of any substance to repel
birds and other vertebrates; and
Exhibit 10.01
1.4.7 “Ink and Paper Field of Use” shall
mean the use of a LICENSED
INVENTION for any and all purposes in inks, papers
or other printing substrates, or
combinations thereof; and
1.4.8 “Electronics Field of Use” shall
mean the use of the a LICENSED
INVENTION for display devices, field emitters,
capacitors, or any and all other electronic
component or device; and
1.4.9 “Fabrics and Textiles Field of
Use” shall mean the use of a LICENSED
INVENTION for the elution of any and all substances
and/or to provide enhanced strength in
fabrics and textiles used for clothing and other
covering materials, including but not limited to
upholstery materials and carpeting; and
1.4.10 “Other Fields of Use” shall mean
any and all applications, uses, and/or
processes covered by any claim of a LICENSED
INVENTION not specifically included in the
“Fields of Use” in Article 1.4.1 –
1.4.10. Other fields of use shall not include the
following:
(i) “Field of Use of Building
Materials”, which shall mean the use of
HALLOYSITE MICROTUBULES for the elution of any and
all
substances from them and/or the use of metal coated
microtubules as a
biocide in:
Exhibit 10.01
1.4.10.1 grouts, cements, parging materials,
stuccos, and mortars; and
1.4.10.2 wallboards, and cellulose-based materials
such as wallboard
papers, wallpapers, particleboard, paneling, medium
density
fiberboard (MDF) paneling, plywood, chipboard, and
ceiling
tile; and
1.4.10.3 caulks, sealants and adhesives;
and
1.4.10.4 high pressure laminates, including wall,
counter top and floor
coverings or components thereof; and
1.4.10.5 ceramics, cultured marbles, and tiles;
and
1.4.10.6 non-cellulose (i.e. polymer) based
wallpapers, paneling, and
other wall, counter top, and floor coverings or
components; and
1.4.10.7 insulations;
(ii) “Field of Use of Paint,” which
shall mean the use of a LICENSED
INVENTION for the elution of any and all substances
in paints, sealers,
fillers, varnishes, shellac, polyurethane coatings,
and any and all coatings
applied in liquid form for the beautification or
protection of structures or
components thereof, marine structures - including
boats, furniture, and
other normally “painted” materials;
and
(iii) “Field of Use of Petroleum
Applications,” which shall mean the use
of a LICENSED INVENTION for the elution of any and
all substances for
sub-surface chemical treatment in oil and gas wells
and the chemical
treatment of the interior surfaces of surface piping
used in the petroleum
industry.
Exhibit 10.01
1.5 “ HALLOYSITE MICROTUBULES” means
hollow tubule structures comprised
of halloysite clay.
1.6 “LICENSED INVENTION” means any
invention claimed in a LICENSED
PATENT.
1.7 “LICENSED PATENT(S)” means (i) the
patents and patent applications as
identified and listed in Appendix A, and (ii) any
patent issuing thereon and (iii) any re-
examination, re-issue, continuation, or division
thereof (to the extent that the inventions in those
applications are claimed in the parent applications
on the EFFECTIVE DATE) and any foreign
counterparts filed or issued in the LICENSED
TERRITORY.
1.8 “LICENSED TERRITORY” shall mean
those geographic locations listed in the
attached Appendix C.
Exhibit 10.01
1.9 “LICENSEE” means
NATURALNANO.
1.10 “NET SALES" shall mean the gross amount
billed by LICENSEE for the
ROYALTY-BEARING PRODUCT sold by LICENSEE or
AFFILIATES to non-LICENSEES
and not returned, that is manufactured, sold, or
used in the LICENSED TERRITORY. NET
SALES do not include (i) customary trade, quantity,
or cash discounts to the extent actually
allowed and taken; (ii) to the extent separately
stated on invoices, taxes levied on the production,
sale, transportation, delivery or use of a
ROYALTY-BEARING PRODUCT paid by
LICENSEE; and (iii) to the extent separately stated
on invoices, outbound transportation costs.
A ROYALTY-BEARING PRODUCT shall be considered to be
sold on the earlier date of receipt
of payment for a ROYALTY-BEARING PRODUCT or ninety
(90) days after billing.
1.11 “PARTIALLY EXCLUSIVE” means
exclusive within the FIELDS OF USE, as
set forth in Article 2, below.
1.12 “PRACTICAL APPLICATION” means to
manufacture, in the case of a
composition or product, to practice, in the case of
a process or method, or to operate, in the case
of a machine or system, and, in each case, under
such conditions as to establish that the
LICENSED INVENTIONS are being utilized and that
their benefits are, to the extent permitted
by law and Government regulations, available to the
public on reasonable terms.
1.13 "REPORTING PERIOD" shall begin on the first day
of each calendar year and
end on the last day of such calendar
year.
1.14 “ROYALTY-BEARING PRODUCT” means any
product that, in whole or in
part, is made or used according to, embodies, or is
produced through the application of an
invention covered by any claim of the LICENSED
PATENTS.
1.15 “SUBLICENSE” means a license
granted by LICENSEE to a third party to enable
such third party to exploit a LICENSED INVENTION
and/or LICENSED PATENT for its own
account.
Exhibit 10.01
1.16 “SUBLICENSEE” means the third party
to a SUBLICENSE.
1.17 “SUBLICENSE REVENUE” means all
license fees, milestone payments,
minimum royalties, running royalty revenues and
other sums including the fair market value of
any non-cash fees received by LICENSEE from
SUBLICENSES in the LICENSED
TERRITORY, but excluding (i) revenues contractually
specified for research and development
efforts in the FIELDS OF USE, (ii) loans to LICENSEE
and (iii) investments in the purchase of
stock of LICENSEE on a fair value basis.
1.18 “TO PRACTICE THE LICENSED INVENTION"
means to make, have made,
use, sell, offer to sell, import, lease, or
otherwise dispose of according to law any machine,
article of manufacture, composition of matter, or
process physically embodying or made
according to a LICENSED INVENTION by or on behalf of
LICENSEE.
1.19 “UNITED STATES” means the United
States of America, its territories and
possessions, the District of Columbia, and the
Commonwealth of Puerto Rico.
Exhibit 10.01
Article 2. LICENSE GRANT
2.1 Subject to the receipt of documentation of
assignment from SAIC and Dana
Leamann as hereinafter described, LICENSOR grants to
LICENSEE a PARTIALLY
EXCLUSIVE right and license TO PRACTICE THE LICENSED
INVENTIONS for each
LICENSED PATENT throughout the LICENSED TERRITORY in
the FIELDS OF USE until
each LICENSED PATENT expires commencing on the
EFFECTIVE DATE, unless the
LICENSE is sooner modified or terminated in whole or
in part. LICENSOR grants LICENSEE
the right to sublicense the LICENSED INVENTIONS
pursuant to Article 10. Except as
provided herein, the LICENSE is not transferable or
assignable.
If SAIC has not provided to the Naval Research
Laboratory (NRL) by the
EFFECTIVE DATE documentation of the assignment to
NRL of the rights of SAIC and Dana
Leamann to U.S. Patent No. 7,125,476, the rights
granted to LICENSEE hereunder to said patent
shall be non-exclusive from the EFFECTIVE DATE until
such time as documentation of the
assignment to said patent is received by
NRL.
2.1.1 LICENSEE shall, on the fifth (5th) anniversary
of the EFFECTIVE DATE,
notify LICENSOR of its intent to retain or its
intent to terminate the LICENSE herein granted to
each FIELD OF USE as specified in Article 1.4.1 to
1.4.10. Terminination as to any FIELD OF
USE shall relieve LICENSEE of the “per FIELD
OF USE” obligation of Aricles 4.3.
2.1.2 LICENSEE shall, on the fifth (5th) anniversary
of the EFFECTIVE DATE,
notify LICENSOR of any and all applications of the
LICENSED INVENTIONS for “Other
Fields of Use” for which LICENSEE wishes to
retain the LICENSE granted herein. Such
applications shall be defined and shall become
LICENSED FIELDS OF USE.
2.2 For purposes of Article 2.1, in the event of a
conflict between the definitions of (i)
Articles 1.4.1 to 1.4.9 and (ii) the definitions of
Articles 1.4.10 (i), (ii), (iii), or (iv), Articles
1.4.1
to 1.4.9 shall prevail.
Exhibit 10.01
2.3 LICENSOR grants to NATURALNANO the right to
extend the LICENSE
granted hereunder to one or more AFFILIATES, subject
to the terms and conditions hereof,
provided that the AFFILIATE is not directly or
indirectly controlled by a foreign company,
corporation, association, business or
government.
2.4 The LICENSE is nonassignable without written
approval of LICENSOR except
that assignment is permitted (i) in the event of a
merger or acquisition of NATURALNANO or
(ii) to the successor to that part of
NATURALNANO’s business to which the LICENSED
PATENTS pertain, provided that the merged company or
successor is not directly or indirectly
controlled by a foreign company, corporation,
association, business or government and
provided the successor shall carry out the
COMMERCIAL DEVLOPMENT PLAN to bring
the LICENSED INVENTIONS to PRACTICAL APPLICATION as
set forth in this
Agreement, or such other plan as may be mutually
agreed upon by the successor and
LICENSOR.
Exhibit 10.01
Article 3. LICENSEE’S PERFORMANCE
3.1 LICENSEE agrees to exercise commercially
reasonable diligence to carry out the
COMMERCIAL DEVELOPMENT PLAN to bring one or more
LICENSED INVENTION to
PRACTICAL APPLICATION by October 1, 2009. LICENSEE
will, thereafter, continue to
make the benefits of the LICENSED INVENTIONS
reasonably accessible to the public for the
remainder of the period of the LICENSE.
3.2 LICENSEE agrees to achieve the milestones as
identified and set forth in Appendix
D.
3.3 LICENSEE agrees that, during the period of the
LICENSE, all ROYALTY-
BEARING PRODUCTS will be manufactured substantially
in the UNITED STATES.
3.4 LICENSEE agrees to report promptly to LICENSOR
any changes in its mailing
address, name or company affiliation during the
period of the LICENSE.
3.5 LICENSEE agrees to report within thirty (30)
days discontinuance of
LICENSEE'S making the benefits of the LICENSED
INVENTION reasonably accessible to the
United States public.
Article 4. ROYALTIES AND OTHER
CONSIDERATION
4.1. License Issue Fee
NATURALNANO shall pay to LICENSOR a non-refundable
license issue fee in
the amount of five hundred thousand dollars
($500,000) payable as follows: Fifty thousand
dollars ($50,000) due upon the EFFECTIVE DATE; of
which ten thousand dollars ($10,000)
shall be allocated to the final minimum annual
license fee due and payable for NRL-LIC-04-26-
Exhibit 10.01
164; fifty thousand dollars ($50,000) due by April
1, 2008; one hundred thousand dollars
($100,000) due by June 30, 2008; one hundred
thousand dollars ($100,000) due by December 31,
2008; one hundred thousand dollars ($100,000) due by
June 30, 2009; and one hundred thousand
dollars ($100,000) due by December 31,
2009.
4.2 Running Royalties
LICENSEE shall pay royalties to LICENSOR of five
percent (5%) of
