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Exhibit 10.1
LICENSE AND ROYALTY AGREEMENT
This agreement entered into the 15th day of June, 2003 by and
between
NanoDynamics, Inc., a corporation with principal offices in
Buffalo, NY,
hereinafter referred to as LICENSEE, and CLARKSON UNIVERSITY, a
corporation with
principal offices in Potsdam, New York, hereinafter called
CLARKSON,
Whereas, CLARKSON UNIVERSITY and LICENSEE have previously
undertaken research
and development in the field of micron and submicron powder milling
for the
synthesis of fine and/or ultra fine simple and composite metallic
powders and
flakes; and
Whereas, CLARKSON UNIVERSITY and LICENSEE seek to commercialize
processes,
techniques and products resulting from said field;
Witnesseth:
It is mutually agreed that CLARKSON will exert its best efforts in
performing a
research program in accordance with the following:
1.
EFFECTIVE
DATE
This Agreement is effective June 15, 2003 ("Effective Date").
2.
DEFINITIONS
As used in this Agreement, the following terms have the
meanings
indicated:
A. "Affiliate"
means any business entity more than 50% owned by
LICENSEE, any business entity which owns more than 50% of
LICENSEE, or any business entity that is more than 50% owned by
a
business entity that owns more than 60% of LICENSEE.
B. "Licensed
Field" means chemical and physical processes developed
by Dr. Dan V. Goia including synthesis techniques and milling
of
micron and submicron powders for the synthesis of
fine/ultrafine
simple and composite metallic powders and flakes.
C. "Licensed
Product" means any product Sold by LICENSEE comprising
Licensed Subject Matter pursuant to this Agreement.
D. "Licensed
Subject Matter" means inventions and discoveries
covered by Patent Rights or Technology Rights within the
Licensed
Field.
E. "Net Sales"
means the gross revenues received by LICENSEE from
the Sale of Licensed Products less sales and/or use taxes
actually paid, import and/or export duties actually paid,
outbound transportation prepaid or allowed, and amounts allowed
or credited due to returns (not to exceed the original billing
or
invoice amount).
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F. "Patent
Rights" means CLARKSON's rights in information or
discoveries covered by patents and/or patent applications,
whether domestic or foreign, and all divisions, continuations,
continuations-in-part, reissues, reexaminations or extensions
thereof and any letters patent that issue thereon, which name
Dan
V. Goia as either sole or joint inventor ("Inventor") and which
relate to the manufacture, use or sale of Licensed Field.
G. "Sale or
Sold" means the transfer or disposition of a Licensed
Product for value to a party other than LICENSEE.
H. "Technology
Rights" means CLARKSON's rights in technical
information, know-how, processes, procedures, compositions,
devices, methods, formulas, protocols, techniques, software,
designs, drawings or data created by Dan V. Goia (Inventor) at
CLARKSON before the Effective Date relating to chemical and
physical processes developed by Dr. Dan V. Goia including
synthesis techniques and milling of micron and submicron
powders
for the synthesis of fine/ultrafine simple and composite
metallic
powders and flakes.
3.
WARRANTY;
SUPERIOR RIGHTS
A. Except for
the rights, if any, of the Government of the United
States, as set forth below, CLARKSON represents and warrants
its
belief that (i) it is the owner of the entire right, title, and
interest in and to Licensed Subject Matter, (ii) it has the
sole
right to grant licenses thereunder, and (iii) it has not
knowingly granted licenses thereunder to any other entity that
would restrict rights granted to LICENSEE except as stated
herein.
B. LICENSEE
understands that the Licensed Subject Matter may have
been developed under a funding agreement with the Government of
the United States of America, and if so, that the Government
may
have certain rights relative thereto. This Agreement is
explicitly made subject to the Government's rights under any
agreement and any applicable law or regulation. If there is a
conflict between an agreement, applicable law or regulation and
this Agreement, the terms of the Government agreement,
applicable
law or regulation shall prevail.
C. LICENSEE
understands and acknowledges that CLARKSON, by this
Agreement, makes no representation as to the operability or
fitness of any use, safety, efficacy, ability to obtain
regulatory approval, patentability, and/or breadth of the
Licensed Subject Matter. CLARKSON, by this Agreement, also
makes
no representation as to whether there are any patents now held,
or which will be held, by others or by CLARKSON in the Licensed
Field, nor does CLARKSON make any representation that the
inventors contained in Patent Rights do
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not infringe any other patents now held or that will be held by
others or by CLARKSON.
D. LICENSEE, by
execution hereof, acknowledges, covenants and agrees
that it has not been induced in any way by CLARKSON or its
employees to enter into this Agreement, and further warrants
and
represents that (i) it has conducted sufficient due diligence
with respect to all items and issues pertaining to this Article
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and all other matters pertaining to this Agreement; and (ii)
Licensee has adequate knowledge and expertise, or has utilized
knowledgeable and expert consultants, to adequately conduct the
due diligence, and agrees to accept all risks inherent herein.
4.
LICENSE
A. CLARKSON
hereby grants to SPONSOR a royalty-bearing, exclusive
worldwide license under Licensed Subject Matter to manufacture,
have manufactured, and/or sell Licensed Products for use within
Licensed Field. This grant is subject to the payment by
LICENSEE
to CLARKSON of all consideration as provided herein, and is
further subject to rights retained by CLARKSON to:
a. Publish the
general scientific findings from research
related to Licensed Subject Matter subject to the terms of
Section 12, Confidential Information; and
b. Use Licensed
Subject Matter for research, teaching and other
educationally-related purposes,
B. LICENSEE may
extend the license granted herein to any Affiliate
if the Affiliate consents to be bound by this Agreement to the
same extent as LICENSEE.
5.
PAYMENT AND
REPORTS
A. In
consideration of the rights granted by CLARKSON to LICENSEE
under this Agreement, LICENSEE will pay CLARKSON the following;
a. A running
royalty equal to
5%
of net revenue for Licensed Products sales of first $500,000
4% of net revenue for Licensed Products sales of next $500,000
3% of net revenue for Licensed Products sales of next
$1,000,000
2% of net revenue for Licensed Products sales of next
$3,000,000
1% of net revenue for all Licensed Products sales in excess of
$5,000,000.
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B. In the event
that CLARKSON and LICENSEE, upon mutual agreement,
amend the license from exclusive to non-exclusive, the royalty
rates set herein shall be reduced by 50%.
C. During the
Term of this Agreement and for one year thereafter,
LICENSEE agrees to keep complete and accurate records of its
Sales and Net Sales of Licensed Products under the license
granted in this Agreement in sufficient detail to enable the
royalties payable hereunder to be determined. Licensee agrees
to
permit CLARKSON or its representatives, at CLARKSON's expense,
to
periodically examine its books, ledgers, and records during
regular business hours for the purpose of and to the extent
necessary to verify any report required under this Agreement.
If
the amounts due to CLARKSON are determined to have been
underpaid, LICENSEE will pay the cost of the examination and
accrued interest at the highest allowable rate.
D. Bi-annually,
beginning immediately after the Effective Date,
LICENSEE must deliver to CLARKSON a true and accurate written
report, even if no payments are due CLARKSON, giving the
particulars of the business conducted by LICENSEE during the
preceding 6 calendar months under this Agreement as are
pertinent
to calculating payments hereunder. This report will include at
least:
a. The
quantities of Licensed Subject Matter that it has
produced;
b. The total
Sales;
c. The
calculation of royalties thereon; and
d. The total
royalties computed and due CLARKSON.
Simultaneously with the delivery of each report, Licensee must pay
to
CLARKSON the amount, if any, due for the period of each report.
E. On or before
each anniversary of the Effective Date, irrespective
of having a first Sale or offer for Sale, LICENSEE must deliver
to CLARKSON a written progress report as to LICENSEE's efforts
and accomplishments during the preceding year in diligently
commercializing Licensed Subject Matter and the LICENSEE's
commercialization plans for the up
