Patent License Form

Patent License Agreement

In witness whereof, intending to be legally bound, the parties have signed below to enter the attached Patent License Agreement and Exhibits (this “ Agreement ”) as of the Effective Date with the terms and conditions that follow.  Capitalized terms not otherwise defined are set forth in Section 9 of this Agreement.

Effective Date:  May 1, 2009

 

 

PATENT LICENSE AGREEMENT

The parties to this Patent License Agreement listed on the previous page hereby agree as follows:

1.             Grant of Exclusive License

1.1           Exclusive Patent License

Licensor hereby grants to Licensee the exclusive, irrevocable, worldwide, transferable, sublicensable license of all rights of any kind conferred by the Patents, including, without limitation, the rights of any kind to, or conferred by, the Patents to (a) use or otherwise practice any art, methods, processes, and procedures covered by the Patents, (b) make, have made, use, offer to sell, sell, import, and otherwise distribute or dispose of any inventions, discoveries, products, services, or technologies covered by the Patents, (c) otherwise exploit any rights granted in the Patents and/or any invention or discovery described in the Patents, and (d) exclude other Persons from exercising any of such rights.

1.2           Sublicenses

The exclusive license rights granted Licensee under the Patents include the right to grant and authorize, from time to time and in Licensee's sole and absolute discretion, one or more sublicenses.  No sublicense granted to any Person pursuant to the terms of this Agreement will be terminable as a result of the termination of this Agreement.

1.3           Assignment of Causes of Action and Other Rights

Licensor hereby assigns, transfers and conveys to Licensee all right, title and interest in and to:

(a)           Rights to apply in any or all countries of the world for patents, certificates of invention, utility models, industrial design protections, design patent protections, or other governmental grants or issuances of any type related to any of the Patents and the inventions and discoveries therein;

(b)           All causes of action and enforcement rights of any kind (whether such claims, causes of action or enforcement rights are known or unknown; currently pending, filed, to be filed; or otherwise) under the Patents and/or under or on account of any of the Patents for past, current and future infringement of the Patents, including without limitation, all rights to (i) pursue and collect damages, profits and awards of whatever nature recoverable, (ii) injunctive relief, (iii) other remedies, and (iv) compromise and/or settle all such claims, causes of action and enforcement rights for such infringement by granting an infringing party a sublicense or otherwise; and

(c)           Rights to collect royalties or other payments under or on account of any of the Patents or any of the foregoing.

 

1.4           Right to Purchase

It is understood and agreed that the Licensee is also hereby granted the right, at its sole option and at such time as it may determine, to purchase the Patents.  Upon exercise of this right to purchase, Licensor shall assign all of its rights and interest in the Patents to Licensee in exchange for Four Million (4,000,000) shares of the Licensee’s common stock.

2.             Payment

2.1           Upfront Royalty Payment

At the Closing, Licensee will pay to Licensor an upfront royalty payment (the “ Upfront Royalty Payment ” ) in the amount set forth on the cover page of this Agreement.

2.2           Royalties

Licensee will pay to Licensor a royalty equal to the Royalty Percentage multiplied by Licensee’s Net Sales Revenues for Licensed Products.  Additionally, Licensee will pay to Licensor a royalty equal to the Royalty Percentage multiplied by any revenue received by Licensee for the sublicensing of the Patents.  (collectively, the “ Royalties ”). The royalty will be payable on the due dates for the reports required by paragraph 2.3 for royalties accrued during the respective Reporting Period.

2.3           Reports and Records

As of each December 15 during the Term of this Agreement, Licensee will provide to Licensor a report reasonably detailing its royalty producing activities with respect to the Patents for the preceding twelve (12) month period ending as of September 30   (each, a “ Reporting Period ” ) when there have been Royalties accrued under Section 2.2 with respect to the Patents in such Reporting Period.

2.4           Books of Account

Licensee will keep accurate books of account containing all particulars that may reasonably be deemed necessary for the purpose of showing the Amounts payable to Licensor hereunder.  Not more than once during every twenty-four (24) month period and upon Licensor’s advance request of at least thirty (30) days, Licensee will make said books and the supporting data available for inspection by Licensor or its agents during normal business hours for the two (2) most recent Reporting Periods for the sole purpose of verifying Licensee's calculations of the Royalties under this Agreement.  Should such inspection lead to the discovery of a greater than ten percent (10%) discrepancy in reporting to Licensor's detriment, Licensee agrees to pay the reasonable fees and expenses of Licensor’s agents who conducted the inspection.  Licensee will promptly pay to Licensor all amounts appropriately determined by any audit to be due to Licensor.  Any and all disputes with respect to the Royalties due under this Agreement or the calculation of Net Sales Revenue must be (a) raised within ninety (90) days after completion of the associated audit, and (b) resolved solely and exclusively pursuant to the provisions of paragraph 10.8.

 

3.             Closing

3.1             Deliverables

Within thirty (30) days following the later of Effective Date or the date Licensee receives a Transmitted Copy of this Agreement executed by the Licensor, to the extent that Licensor has control of such documents, Licensor will deliver to Licensee copies of the Assignment Agreements, the Prosecution History Files, the Docket, and copies of all files and original documents owned or controlled by Licensor, which include publicly available documents (including, without limitation, Assignment Agreements, copies of Letters Patent, and other documents necessary to establish that Licensor’s representations and warranties in Section 6 are true and correct) relating to the Patents and/or the Abandoned Assets (“ Initial Deliverables ” ).  Licensor acknowledges and agrees that Licensee may request, and Licensor will promptly deliver, additional documents based on Licensee’s review of the Initial Deliverables (such additional documents, related information and the Initial Deliverables, collectively, the “ Deliverables ”) and the Deliverables, and that as a result of Licensee’s review, the listing of assets in Exhibits A and B,   and the list of Abandoned Assets on Exhibit C, may be revised before and after the Closing to conform these lists to the definition of Patents (and these revisions may require the inclusion of additional provisional patent applications, patent applications, and patents on Exhibits A and B or both).  To the extent the listing of assets on Exhibits A and B is reduced, the amount payable under paragraph 2.1 and the Royalty Percentage may be reduced by the mutual agreement of the parties.  Licensor shall not be obligated to provide any attorney client confidential information or attorney work product.

3.2           Closing

Licensor and Licensee will use reasonable efforts to complete the review of the Deliverables and satisfy the conditions to closing described in paragraph 3.3 within thirty (30) calendar days following the later of the Effective Date or the date the last of the Deliverables was received by Licensee.  Licensee will thereafter pay Licensor the Upfront Royalty Payment on the closing (the “ Closing ”), and Licensee may then record Memoranda of Exclusive License/Rights.

The Closing will occur when Licensee determines that all the following conditions have been satisfied or waived:

The preceding conditions are conditions precedent to the Closing and to Licensee’s obligation to make the payments contemplated pursuant to this Agreement.

3.4           Further Cooperation

At the reasonable request of Licensee, Licensor will execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary for effecting completely the consummation of the transactions contemplated hereby, including, without limitation, execution, acknowledgment and recordation of other such papers, and using reasonable efforts to obtain the same from the respective inventors, as necessary for fully perfecting and conveying unto Licensee the benefit of the transactions contemplated hereby, including, without limitation, providing and assisting in obtaining execution of any assignments, confirmations, powers of attorney, inventor declarations, and other documents that Licensee may request for prosecuting, maintaining, filing, obtaining issuance of, registering, enforcing, defending, or bringing any proceeding relating to the Patents.  To the extent any attorney-client privilege or the attorney work-product doctrine applies to any portion of the Prosecution History Files, Licensor will ensure that, if any such portion of the Prosecution History File remains under Licensor’s possession or control after the Closing, it is not disclosed to any third party unless (a) disclosure is ordered by a court of competent jurisdiction, after all appropriate appeals to prevent disclosure have been exhausted, and (b) Licensor gave Licensee prompt notice upon learning that any third party sought or intended to seek a court order requiring the disclosure of any such portion of the Prosecution History File.  In addition, Licensor will continue to prosecute, maintain, and defend the Patents at its sole expense until the Closing.

4.             Filing, Prosecution and Maintenance of Patent Rights

4.1           Costs

After the Closing, Licensee will be solely entitled and responsible for the preparation, filing, prosecution, maintenance and defense of all Patents (except to the extent of any portion of the Patents abandoned pursuant to the terms of this Agreement).  Licensee may, but is not obliged to consult with Licensor regarding execution of its responsibility.

 

4.2           Copies of Prosecution Documents

Licensee will, upon Licensor’s reasonable written request, provide Licensor with a copy of documents received or filed by Licensee pertaining to the filing, prosecution, maintenance or defense of Patents, including, without limitation, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent issuing from such patent application.

4.3           Conduct of Prosecution

Licensor will execute and deliver to Licensee one or more memoranda in the form of the Memoranda of Exclusive License/Rights and will execute at least one such memorandum prior to the Closing.  The conduct of the preparation, filing, prosecution, maintenance, and defense of the Patents will be under Licensee’s exclusive control and discretion.  Licensee will consult with Licensor on such matters from time to time on Licensor’s reasonable request.  At the reasonable request of Licensee, Licensor will execute and deliver to Licensee such other instruments, and do and perform such other acts and things, as may be reasonably necessary or desirable for confirming in Licensee exclusive right to prosecute, maintain, defend, file, obtain issuance, register, enforce, defend, or bring any proceeding relating to the Patents including, without limitation, execution, acknowledgment and recordation of such papers necessary to convey to Licensee any right or power of attorney in the USPTO or other governmental patent office, in respect to prosecution, maintenance, defense, filing, issuance, or registration of the Patents.

4.4           Abandonment of License to Patents

Licensee will at any time be entitled to abandon its license and other rights to all or any part of the Patents by providing at least thirty (30) days’ advance written notice of such intention to Licensor; provided, Licensee will give such notice not less than sixty (60) days prior to the last allowable date for filing or taking any other action required with respect to such portion of the Patents.  From and after providing such notice of abandonment, Licensee will have no further obligation with respect to such abandoned portion of the Patents.  Any sublicense granted with respect to any Patents abandoned hereunder will not be terminated or altered as a result of such abandonment, provided that such sublicense was granted prior to the effectiveness of such abandonment.

4.5           Licensor’s Assistance

Licensor will provide Licensee with such advice and assistance as Licensee will reasonably request in connection with the filing, prosecution, maintenance, or defense of the Patents.  Licensee will not be responsible for any costs incurred by Licensor without Licensee’s prior written agreement to bear such costs.

5.             Enforcement of Patents

5.1           Enforcement

Licensee will have the exclusive right, but not the obligation, to institute, prosecute, and control any action or proceeding with respect to infringement of the Patents, using counsel of its choice, including any declaratory judgment action arising from such infringement.  In the event Licensee exercises its right to commence such action or proceeding, Licensee will use reasonable efforts to advise Licensor prior to such commencement.  Thereafter, on Licensor's written request no more frequently than every two (2) months, Licensee will report to Licensor reasonable, nonprivileged information on the status of the action or proceeding commenced by Licensee.  Licensor does not have and/or retain any right to, and will not, institute any case, action or other enforcement proceeding with respect to infringement of the Patents.

 

5.2           Joinder; Cooperation in Litigation

This Agreement transfers to Licensee all substantial rights under the Patents and, as a result, Licensee has the right to bring any future action or proceeding to enforce claims under the Patents in its own name, without naming Licensor as a party thereto.  However, if necessary or desirable in Licensee's sole discretion, Licensee may name Licensor as a party in any action or proceeding to enforce the Patents.  If Licensee finds it necessary or desirable, Licensor will execute all papers or perform any other acts or provide any assistance, at Licensee's expense, toward pursuing such action or proceeding, as reasonably required by Licensee.  Licensor will use its best efforts to ensure that any Licensor personnel will be available to cooperate, at Licensee's expense, toward pursuing such action.

5.3           Damages for Breach

In the event of a material breach of this Agreement by Licensee, subject to the terms and conditions of this Agreement, Licensor may seek exclusively money damages pursuant to the terms and conditions of this Agreement.  In no event, however, will Licensor be entitled to take any action or direct any proceeding with respect to the Patents without Licensee’s express consent and direction unless and until there has been a termination of the Term because of Licensee's proven, continuing and uncured breach.

6.             Representations and Warranties of Licensor

Licensor represents and warrants to Licensee as of the Effective Date and as of the Closing:

6.1           All Substantial Rights

Licensor intends by this Agreement to transfer to Licensee all substantial rights under the Patents.

6.2           Authority

Licensor has the full power and authority and has obtained all third party consents, approvals, and/or authorizations required to enter into this Agreement and to carry out its obligations hereunder, including, without limitation, the assignment to Licensee of all causes of action with respect to the Patents.

 

6.3           Title and Contest

Licensor owns, and as of the Closing Licensee will hold, all right, title and interest to each right conferred under this Agreement with respect to the Patents, including, without limitation, all rights, title, and interest in and to the causes of action assigned by this Agreement.  Licensor has obtained and properly recorded previously executed assignments for the Patents as necessary to fully perfect its rights and title therein in accordance with governing law and regulation in each jurisdiction.  Each right conferred under this Agreement with respect to the Patents is free and clear of all liens, mortgages, security interests, and restrictions on transfer.  There are no actions, suits, investigations, claims, or proceedings threatened, pending or in progress relating in any way to any right conferred under this Agreement with respect to the Patents.  There are no existing contracts, agreements, options, commitments, proposals, bids, offers, or rights with, to or in any Person to acquire any Patents.

6.4           Existing Licenses and Restrictions on Rights

No rights, interests, or licenses have been granted under any Patents or retained by prior owners or inventors.  Licensee will not be subject to any covenant not to sue or similar restrictions on its enforcement or enjoyment of any of Patents or the related causes of action as a result of the transactions contemplated in this Agreement or any prior transaction related to the Patents or the Abandoned Assets.

6.5           Validity and Enforceability

None of the Patents or the Abandoned Assets (other than Abandoned Assets for which abandonment resulted solely from unpaid fees and/or annuities) has been found invalid, unpatentable, or unenforceable for any reason in any administrative, arbitration, judicial or other proceeding; and Licensor does not know, has not received any notice or claim from any source suggesting that, the Patents are invalid, unpatentable, or unenforceable.  To the extent “small entity” fees were paid to the United States Patent and Trademark Office for any of the Patents, such reduced fees were then appropriate because the payor qualified to pay “small entity” fees at the time of such payment and specifically had not licensed rights in the any of the Patents to an entity that was not a “small entity.”

6.6           Conduct

Licensor and its representatives have not engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate any of the Patents or hinder its enforcement, including, without limitation, misrepresenting Licensor’s patent rights to a standard-setting organization.

6.7           Enforcement

Licensor has not (a) put a third party on notice of actual or potential infringement of any of the Patents or the Abandoned Assets or (b) initiated enforcement action(s) with respect to any of the Patents or the Abandoned Assets.

 

6.8           Patent Office Proceedings

None of the Patents or the Abandoned Assets has been or is currently involved in any re-examination, reissue, interference proceeding, or any similar proceeding, and no such proceedings are pending or threatened.

6.9           Fees

All maintenance fees, annuities and the like due or payable on each of the Patents have been timely paid.  For the avoidance of doubt, Licensor shall pay any maintenance fees for which the fee is payable (e.g., the fee payment window opens) on or prior to the Closing even if the surcharge date or final deadline for payment of such fee would be after the Closing.

6.10           Abandoned Patents

According to each applicable patent office, each of the Abandoned Assets has expired, lapsed, or been abandoned or deemed withdrawn.

7.      &