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Exhibit 10.28
EXCLUSIVE PATENT LICENSE AGREEMENT
The Parties to this License Agreement (hereinafter
"Agreement"),
UT-Battelle, LLC (hereinafter "UT-Battelle"), a limited liability
company
organized and existing under the laws of the State of Tennessee and
having an
address for notices at Post Office Box 2008, Oak Ridge, Tennessee
37831-6196,
and Sense Holdings, Inc. (hereinafter "Sense"), a corporation
organized and
existing under the laws of the State of Florida and having an
address for
notices at 4503 NW 103 Avenue Suite 200, Sunrise, Florida 33351,
agree that this
Agreement shall be effective on August 1, 2005 (hereinafter
"Effective Date").
RECITALS:
A.
UT-Battelle manages and operates the Oak Ridge National
Laboratory
under authority of its Prime Contract No. DE-AC05-00OR22725
(hereinafter "Prime Contract") with the United States Government
as
represented by the Department of Energy (hereinafter "DOE");
B.
UT-Battelle obtained rights in Proprietary Rights;
C. The
Government has a nonexclusive, nontransferable, irrevocable,
paid-up license to practice or have practiced the Proprietary
Rights
for or on behalf of the United States throughout the world;
D. The
Proprietary Rights are also subject to certain march-in rights
of
the Government;
E.
Sense recognizes that its anticipated business activity will
encompass
the practice of technology that requires a license to
Proprietary
Rights;
F.
Sense wishes to acquire the right to practice the Proprietary
Rights;
G.
UT-Battelle and Microsensor Technologies, Inc (a wholly owned
subsidiary of Sense Holdings, Inc) entered into a patent
license
agreement with an effective date of March 26, 2001 (twice amended)
for
Group I of the Proprietary Rights listed in Exhibit A attached
hereto;
and
H.
UT-Battelle and Sense now desire to enter into a new patent
license
agreement incorporating, superseding and replacing the agreement
of
March 26, 2001 and adding Group II intellectual property of
UT-Battelle
to the Proprietary Rights.
TERMS & CONDITIONS:
THEREFORE, in
consideration of the foregoing premises, covenants and
agreements
contained herein,
the Parties agree to
be bound as follows:
1.
Definitions.
1.1. "Proprietary Rights" means UT-Battelle's patents and patent
applications,
if any, listed in the attached Exhibit A which is hereby
incorporated into this
Agreement by reference and any United States patents issuing from
the
applications in Exhibit A. Proprietary Rights shall also include
divisions,
continuations, reissues, substitutes, and extensions of the
patents, patent
applications, and patents issuing from such patent applications.
The Proprietary
Rights shall also include all corresponding foreign patents, if
any, in
jurisdictions where UT-Battelle has filed for patent protection and
such foreign
patents shall be added by amendment to this Agreement as they
issue.
1.2. "Net Sales" means the sum of all invoices Sense sends to
purchasers for
Products or Services sold during a particular accounting period
minus costs
Sense incurred due to returns of Products, freight, and excise or
other taxes on
Products. When Products or Services are used or transferred by
Sense, Net Sales
shall mean the fair market value of the Products or Services as if
they were
sold to an unrelated third party in similar quantities.
1.3. "Exclusive" means that Sense is the only entity that may
commercially
practice the Proprietary Rights in the Field of Use on a
non-experimental basis
subject to the Government's nonexclusive, nontransferable,
irrevocable, paid-up
license to practice or to have practiced for or on behalf of the
United States
the Proprietary Rights throughout the world.
1.4. "Government" shall mean the Federal Government of the United
States of
America.
1.5. "Product" means any composition of matter, machine, or article
of
manufacture encompassed within the scope of a claim in the
Proprietary Rights
and any composition of matter, machine, or article of manufacture
made by or
incorporating, at least in part, a process encompassed within the
scope of a
claim in the Proprietary Rights.
1.6 "Services"
shall mean all services provided by Sense that require the
use of Products.
1.7 "Sublicensee" shall mean a third party to whom Sense has
granted a
sublicense of the rights granted to Sense under Section 2.1.
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1.8
"Sublicensing Revenue" shall mean the sum of all amounts accruing
to
Sense under any Sublicense for the manufacture, use or sale of
Products,
including any license fees, royalties and milestone payments or the
value of
other consideration. (eg. debt forgiveness, inventory, rent,
etc.)
1.9 Fields of
Use.
1.9.1
"Field 1" shall mean chemical vapor detection for security
applications (for example, detection of explosives for
airport security).
1.9.2 "Field 2"
shall mean detection of unexploded ordnance
including bombs, grenades, shells, rockets and other
explosive devices either placed as mines or fallen as
projectiles whether buried or camouflaged.
1.9.3
"Field 3" shall mean detection of biological warfare
agents in security applications. Examples of such
biological agents are:
|X|
Anthrax
|X| Botulinum
Toxins
|X|
Brucellosis
|X|
Cholera
|X|
Clostridium Perfringes Toxins
|X|
Congo-Crimean Hemorrhagic Fever
|X| Ebola
Hemorrhagic Fever
|X| Plague
|X| Q
Fever
|X| Ricin
|X| Rift
Valley Fever
|X|
Saxitoxin
|X|
Smallpox
|X|
Staphylococcal Enterotoxin B
|X|
Trichothecene Mycotoxins
|X|
Tularemia
|X| Venezuelan
Equine Encephalitis
2.
Grants.
2.1 Subject to the terms and conditions of this Agreement,
UT-Battelle hereby
grants to Licensee the exclusive right and license to manufacture,
use, sell or
offer for sale Products in Fields 1 and 2 of Exhibit B of this
Agreement. This
grant includes the right to have manufactured for Licensee, and the
further
right to grant sublicenses to others of the same scope as the grant
by
UT-Battelle to Licensee.
2.2 For a period of twenty-four (24) months from the
Effective Date of this Agreement (Option Period), UT-Battelle
grants to Licensee
the first right of refusal to negotiate a patent license agreement
in Field 3.
In the event that UT-BATTELLE receives a request from a third party
during this
Option Period requesting the right to enter into negotiations for a
license to
the Proprietary Rights in Field 3, UT-BATTELLE shall notify
Licensee of such
request. Within thirty (30) days of such notification, Licensee may
exercise its
option by submitting to UT-BATTELLE a detailed technology
development and
commercialization plan for UT-BATTELLE's review and approval. Such
development
plan must set forth specific timelines and benchmarks for each
biological
warfare agent selected from Field 3, and the required approval
shall be at
UT-Battelle's sole discretion.
2.3 Unless otherwise required to grant a right
and license as required by Federal statutory or regulatory
enactments
conditioning the allocation of rights to UT-Battelle, particularly
as set forth
in 35 U.S.C. ss. 203, UT-Battelle agrees to not grant third parties
a right and
license to Proprietary Rights in Field 1 or Field 2 during the term
of this
Agreement as long as Sense abides by the terms and conditions of
this Agreement.
2.4 Sense agrees that any Products for use or sale in the United
States shall be
substantially manufactured in the United States.
2.5 If Sense fails to satisfy the requirements of Exhibits B or C
that are
attached to this Agreement and hereby incorporated by reference,
then
UT-Battelle shall have the right, to exercise at its sole
discretion with thirty
(30) days written notice to Sense, to terminate this Agreement in
accordance
with its early termination requirements.
2.6 Sense shall mark all Products in accordance with the statutes
of the United
States relating to marking of patented articles, see 35 U.S.C. ss.
287.
Additionally, Sense shall fix on the Product or when, from the
character of the
Product, this can not be done, fix to it, or to the package
containing one or
more Products, a label including the notation "Licensed from
UT-Battelle, LLC,
management and operating contractor of the Oak Ridge National
Laboratory, under
Patent License Agreement No. 605." Marking as required by this
Section shall
also be included in all literature and/or advertising materials
describing
Products. Sense shall include this marking requirement in all
sublicenses that
Sense grants consistent with this Agreement.
2.7 Sublicenses.
2.7.1. Sense shall have the right to sublicense in the Field of
Use.
2.7.2. Sublicenses must be transferable from Sense to
UT-Battelle,
solely at UT-Battelle's election or upon termination of this
Agreement.
Sense agrees to include in each sublicense the requirements for
substantial U.S. manufacture, Indemnification, Insurance and
Procedures
for Dispute Resolution which shall be binding upon such sublicensee
as
if it were a party to this Agreement.
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2.7.3. UT-Battelle shall have the right to approve any
sublicense
granted hereunder, including the terms and conditions of the
sublicenses. Sense shall not grant any rights inconsistent with
the
terms, scope, and Field of Use of this Agreement. Each
sublicense
agreement granted by the Licensee shall include an audit right
by
UT-Battelle of the same scope as provided herein below with respect
to
the Licensee. No such sublicense agreement shall contain any
provision
which would cause it to extend beyond the Term of this Agreement.
The
Licensee shall give UT-Battelle notification of the identity
and
address of each sublicensee with whom it desires to conclude a
sublicense agreement and shall supply UT-Battelle with a copy of
each
such proposed sublicense agreement.
2.7.4 Sense shall provide UT-Battelle with a signatory copy of
each
sublicense it executes within thirty (30) days after the sublicense
is
executed.
2.7.5 If this Agreement is terminated for any reason, except
breach of contract by UT-Battelle, Sense shall immediately
(upon
receipt of a written notice to do so from UT-Battelle) assign all
of
its right, title, and interest in all sublicenses to
UT-Battelle,
including the right to receive income and shall provide its
sub-licensees with written notice of the assignment.
2.7.6 Sublicensing Royalty paid by Sense based on Sublicensing
Revenue
shall not apply to satisfy the minimum royalty provisions or the
earned
royalty provisions of Exhibit B.
3. Financial Obligations And Commercialization Plan.
3.1. In consideration of the right and license granted herein,
Sense agrees to
the provisions of Exhibit B and Exhibit C.
3.2. Sense shall owe no royalties on any acquisitions involving
Government
funds, including funds derived through a Military Assistance
Program of the
Government or otherwise derived through the Government, because of
the
Government's license in the Proprietary Rights.
3.3. Sense shall report revenue received for acquisitions or use of
Products
involving Government funds under the Records, Reports, and Royalty
Payments
Section of this Agreement by providing: (a) a Government control
number; and (b)
identification of the Government agency.
3.4. Upon termination of this Agreement for any reason whatsoever,
Sense shall
report and pay to UT-Battelle, within thirty (30) days of such
termination, any
financial obligations including, but not limited to, fees,
payments, royalties,
reimbursements, interest, and other forms of consideration, due and
owing to
UT-Battelle.
4. Records, Reports, and Royalty Payments.
4.1. Sense agrees to: (a) keep adequate and sufficiently detailed
records to
enable Sense's financial obligations required under this Agreement
to be readily
determined; and (b) provide such records for inspection by
UT-Battelle's
authorized representatives at any time during Sense's regular
business hours.
4.1.1. Sense agrees that it shall also provide UT-Battelle with
any
additional records that UT-Battelle reasonably determines are
necessary
to verify any records that Sense is required to generate or
maintain
under the terms of this Agreement.
4.1.2. Sense agrees to make any records that it is required to
generate
or maintain under the terms of this Agreement available for
inspection
by UT-Battelle's authorized representatives for three (3) years
after
the last royalty period to which the records refer.
4.2. Sense shall provide UT-Battelle with a written report
consistent with the
requirements of the Notices and Payments Section of this Agreement
no later than
sixty (60) days after the end of each calendar half-year
(Accounting Period)
during the life of this Agreement that identifies the following
information for
the immediately preceding accounting period:
(a) all Net Sales made by Sense in U.S. Dollars itemized by
domestic and/or foreign rights that are subject to this
Agreement during the preceding accounting period including
acquisitions involving Government funds and all export Net
Sales, and if none so indicate; (b) all Net Sales in U.S.
Dollars made by sub-licensees, itemized by domestic and/or
foreign rights that are subject to this Agreement, during the
preceding Accounting Period including acquisitions involving
Government funds and all export Net Sales, and if none so
indicate; and (c) amount of royalties due in U.S. Dollars for
the preceding accounting period pursuant to the terms of this
Agreement.
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4.2.1. Sense shall, concurrent with the submittal of each
report, pay to the order of UT-Battelle, LLC all royalties due
and payable in accordance with Exhibit B. All payments shall
be made by electronic funds transfer in accordance with the
following wire instructions:
First Tennessee Bank, Memphis - ABA #084000026
For
further credit to First Tennessee, Knoxville - Account #4238028
Beneficiary UT-Battelle, LLC
S.W.I.F.T. Code is FTBMUS44
4.3. If Sense fails to make any payment to UT-Battelle that may be
required
under this Agreement within the time period prescribed for such
payment, then
the unpaid amount shall bear interest at the rate of one and one
half percent
(1.5%) per month from the date when the payment was due until
payment in full,
with interest, is made.
5. Infringement.
5.1. Sense shall give notice of any discovered third party
infringement of the
Proprietary Rights to UT-Battelle. If UT-Battelle does not take
appropriate
action to stop or prevent such infringement within ninety (90) days
after
receiving such notice and diligently pursue such action, Sense has
the right to
take appropriate action to stop and prevent the infringement,
including the
right to file suit.
5.2. If Sense files suit pursuant to this Section to stop
infringement of the
Proprietary Rights, Sense shall indemnify and hold UT-Battelle
harmless against
all liability, expense and costs, including reasonable attorneys'
fees, incurred
by UT-Battelle in support of the litigation or as a result of the
litigation,
whether or not UT-Battelle becomes a party to the litigation.
5.3. Pursuant to Sections 5.1 and 5.2 above, Sense may take action
to stop
alleged infringement of the Proprietary Rights by third parties or
challengers
to the validity of the Proprietary Rights, such actions including,
by way of
example and not limitation, litigation, arbitration, mediation,
negotiation or
other non-judicial dispute resolution activities (collectively
referred to
hereinafter as "Dispute Resolution"). During the term of the
Dispute Resolution,
Sense shall pay to UT-Battelle fifty percent (50%) of any royalties
that Sense
may owe under this Agreement and shall deposit the remaining fifty
(50%) of such
royalties in an interest-bearing escrow account and shall provide
UT-Battelle
with certified quarterly statements of said escrow account in
accordance with
the Records, Reports, and Royalty Payments Section of this
Agreement. Sense may
deduct costs and expenses for Dispute Resolution taken against
alleged
infringers of the Proprietary Rights or challengers to the validity
of the
Proprietary Rights from such escrow after Sense provides
UT-Battelle with
verified bills of said costs and expenses that are actually
incurred in
accordance with the Records, Reports, and Royalty Payments Section
of this
Agreement.
5.4. In the event that Sense is entitled to receive a settlement,
judgment, or
compensatory recovery in a Dispute Resolution, if any, that does
not exceed the
costs and expenses that Sense actually incurs for pursuing the
Dispute
Resolution, judgment, or entitlement to compensatory recovery, upon
conclusion
of the Dispute Resolution, the amount from the escrow that shall
immediately
become due and payable to UT-Battelle by Sense shall be calculated
as follows
(with the remainder of the escrow to be paid to Sense):
RUTB= EG - (CL -
J)
wherein: RUTB
= Amount owed to UT-Battelle
from the interest bearing escrow
account;
EG
= Gross funds remaining in
the interest bearing escrow
account , after deduction of
Sense's costs of litigation
as permitted in Section 5.3
above, at the time Dispute
Resolution is concluded, said
funds including royalties
deposited plus interest;
CL
= Sense's costs for Dispute
Resolution
as described
herein that have not
previously been paid from
escrow; and
J
= Amount of the compensatory
recovery, judgment,
settlement, or the like to
which Sense collects as
described herein.
5.5 In the event that Sense is entitled to receive a settlement,
judgment, or
compensatory recovery in a Dispute Resolution, if any, that exceeds
the costs
and expenses that Sense actually incurs for pursuing the Dispute
Resolution and
any actual or consequential damages that Sense pleads and proves
during such
Dispute Resolution and which are accounted for in such settlement,
judgment, or
entitlement to compensatory recovery, upon conclusion of the
Dispute Resolution,
the amount from the escrow that shall immediately become due and
payable to
UT-Battelle by Sense shall be calculated as follows (with the
remainder of the
escrow to be paid to Sense):
RUTB = EG + 0.5[J - (CL + DPP)]
wherein: RUTB = Amount
owed to UT-Battelle by
Sense;
EG
= Gross funds remaining in
the interest bearing escrow
account , after deduction of
Sense's costs of litigation
as permitted in Section 5.3
above, at the time Dispute
Resolution is concluded, said
funds including royalties
deposited plus interest;
J
= Amount of the compensatory
recovery, judgment,
settlement, or the like to
which Sense collects as
described herein;
CL
= Sense's costs for Dispute
Resolution as described
herein that have not
previously been
paid from
escrow; and
DPP
= Actual or consequential
Damages that Sense pleads and
proves during the course of
the dispute resolution
activity and which are not
accounted for in J, above.
5.6. The Parties hereby agree to cooperate with each other in the
prosecution of
any Dispute Resolution or settlement actions undertaken under this
Section and
each will provide to the other all pertinent data in its possession
which may be
helpful in the prosecution of such actions; provided, however, that
the Party in
control of such action shall reimburse the other Party for any and
all costs and
expenses in providing data and other information necessary to the
conduct of the
action.
5.7. The Party initiating Dispute Resolution shall be in control
and shall have
the right to dispose of such Dispute Resolution in whatever
reasonable manner it
determines to be the best interest of Partie
