LICENSE AGREEMENT
THIS AGREEMENT made and entered into at Columbus, Ohio, and effective
December 30, 1997 (the "Effective Date") by and between ThermoEnergy Corporation
having its principal place of business in Little Rock, Arkansas, herein called
"LICENSEE" and Battelle Memorial Institute, having its principal place of
business in Columbus, Ohio, herein called "BMI",
WITNESSETH THAT:
WHEREAS, BMI has certain rights in patents relating to recovery of ammonia
from fluid waste streams; and
WHEREAS, LICENSEE recognizes that BMI owns inventions and intellectual
property useful in the conduct of LICENSEE's business; and
WHEREAS, LICENSEE recognizes that its anticipated business activity will
encompass the practice of technology that requires a license under patents owned
or controlled by BMI; and
WHEREAS, LICENSEE wishes to acquire the right to practice the inventions of
such patents.
NOW THEREFORE in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
A. INVENTION or INVENTIONS means patented and unpatented BMI proprietary
technology related to apparatus and process for the recovery of ammonia from
fluid waste streams (hereinafter referred to as the ammonia recovery process or
"ARP Technology") as disclosed and claimed in the PATENTS.
B. IMPROVEMENTS shall mean only those technology advances in the ARP
Technology made by BMI's Columbus Laboratories that are within the scope of the
PATENT claims and the LICENSED FIELD. BMI shall be obligated to include herein
only those BMI IMPROVEMENTS which BMI determines to be necessary for LICENSEE's
practice of the INVENTIONS, without which such practice would constitute an
infringement of BMI's rights.
PATENT or PATENTS means the following patents and/or patent applications
covering the INVENTIONS, patents to be issued pursuant thereto, and all
divisions, continuations, reissues, substitutes, and extensions thereof:
Patent Applications
Title Country Serial No. Date Filed
Apparatus and Method for United States 60/042,175 31 March 1997
Ammonia Recovery (21988-1)
Ammonia Recovery by Formation, United States 60/060,079 25 September 1997
Recovery, and Decomposition of
Ammonium Zinc Sulfate Hexahydrate
Crystals (21988-2)
PATENTS will also include patents and patent applications covering
improvements (within the scope of the claims of the above PATENTS and the
LICENSED FIELD) made by BMI licensees in other fields where BMI has the right to
grant rights to such improvements to LICENSEE.
LICENSED TERRITORIES are defined as:
TERRITORY 1: the United States,
TERRITORY 2: the Americas outside of the United States,
TERRITORY 3: Europe, and
TERRITORY 4: Asia.
LICENSED FIELD means, and is limited to, the practice of the INVENTIONS as
applied to waste streams from municipal waste water treatment facilities and the
practice of the INVENTIONS applied to waste streams in commercial agricultural
livestock production facilities.
2. PATENT LICENSE
A. BMI hereby grants to LICENSEE, to the extent of the LICENSED FIELD and
in each of the LICENSED TERRITORIES 1, 2, 3 and 4, an exclusive license to
practice and have practiced the INVENTIONS under the PATENTS.
B. BMI reserves for itself the right to practice the INVENTIONS for
research, development, and demonstration purposes and to license the INVENTIONS
in fields and territories not exclusively licensed herein.
3. LICENSE FEE
LICENSEE shall pay to BMI the sum of Twenty-Five Thousand United States
Dollars ($25,000 US) at the time of execution of this Agreement and Twenty-Five
Thousand United States Dollars ($25,000 US) on the first anniversary of the
Effective Date.
4. ROYALTIES
A. For fluid treated by the process of the INVENTION as disclosed and
claimed in the PATENTS, LICENSEE shall pay to BMI a continuing royalty at the
rate of (1) five percent (5%) of all revenues received from customers of
LICENSEE or sublicensees for which LICENSEE or a sublicensee is processing fluid
or (2) One United States Dollar ($1 US) for each one thousand (1,000) gallons of
input to the process of the INVENTION, whichever is greater, except and unless
in cases where the provisions of Paragraph 4B apply. It is the intent of the
parties that the preferred mode of payment under this Agreement is pursuant to
this Paragraph 4A.
B. However, in the event LICENSEE or its sublicensee enters into an
agreement with a customer wherein the customer will design, and/or build, and/or
own, and/or operate a facility licensed hereunder, LICENSEE or its sublicensee
may grant a license for or authorize such activity in exchange for a sum of
money or other consideration which does not contemplate the payment of
continuing royalties. In such case, LICENSEE agrees to pay to BMI five percent
(5%) of the installed cost of a facility utilizing the INVENTIONS or Forty
Thousand United States Dollars ($40,000 US), whichever is greater, in a lump
sum, according to the payment schedule defined in Article 8. In the general
case, it is anticipated that the installed cost of a facility utilizing the
INVENTIONS shall be known and supported by invoice records. If costs for land,
building, yard improvements, service facilities, taxes, contingency fees and
working capital are incorporated into the invoice supported installed cost, then
these costs may be deducted prior to determination of the royalty due to BMI. It
is understood that in some circumstances, the total installed cost of a facility
used to implement the INVENTIONS may not be separately and specifically invoiced
apart from some larger facility in such cases, for purposes of this Agreement,
the installed cost of a facility shall be calculated as equal to 2.72 times the
total delivered cost of the major purchased equipment components. The 2.72
factor includes the cost of the major equipment components, equipment
installation, instrumentation, piping, electric wiring, engineering and
supervision, construction expenses and contractor's fee of five percent (5%) on
the above. It does not include land, building yard improvements, service
facilities, taxes, contingency fees or working capital.
C. BMI shall also receive five percent (5%) of all damages, royalties or
other consideration received by LICENSEE as a result of successful lawsuits
enforcing the rights licensed hereunder in accordance with the provisions of
Article 12.
D. If this Agreement is for any reason terminated before all of the earned
royalties herein provided for have been paid, LICENSEE shall immediately pay to
BMI any remaining unpaid balance of earned royalties even though the due date
provided in Article 8 has not been reached.
5. MINIMUM ROYALTIES
A. LICENSEE shall pay to BMI royalties as stated in Article 4, but in no
event shall royalties for a calendar year be less than the following minimum
royalties during each of the calendar years indicated: Minimum Royalties
Calendar Year U. S. $ per Calendar Year*
1998 $10,000
1999 $20,000
2000 $30,000
2001 and each calendar $40,000
year thereafter during
the term of this Agreement
-------------------------------------
*Net to BMI after taxes, if any, withheld at the source.
B. Separate from LICENSEE's obligation to pay minimum royalties as set
forth above, beginning in the calendar year 2001, and for each calendar year
thereafter, BMI may, in its sole discretion, elect to terminate this Agreement
with regard to a particular TERRITORY if LICENSEE has not made sales sufficient
to generate earned royalties in the amount of Twenty- Five Thousand United
States Dollars ($25,000 US) per calendar year in such TERRITORY.
In the event that the amounts due at the end of any calendar year exceed
the earned royalty requirement of the preceding paragraph but do not equal the
minimum royalties specified above for any calendar year, LICENSEE shall pay to
BMI on the last day of the following January, the amount required to satisfy the
minimum royalty obligation for the preceding calendar year.
D. If this Agreement is terminated for any reason, except for breach of
contract by BMI, during any year that minimum royalties are due to BMI, upon
termination, LICENSEE shall immediately pay to BMI the proportionate amount of
minimum royalties owed to BMI that represents that portion of the year elapsed
prior to termination. For example, if LICENSEE terminates without breach by BMI
after the expiration of three (3) months of the new year, LICENSEE shall pay to
BMI one-fourth (3) of the yearly minimum royalty due for that year.
6. SUBLICENSING
LICENSEE shall have the right to sublicense in the LICENSED FIELD and
LICENSED TERRITORIES. Sublicenses entered by LICENSEE shall be transferable and
assignable from LICENSEE only to BMI.
B. BMI shall have the right to approve any sublicense granted hereunder, as
regards to reasonable business practices, including the terms and conditions
therein. LICENSEE shallprovide BMI with a copy of each sublicense, and
shall not grant to its sublicensees any BMI rights not conveyed by this
Agreement. The royalty paid to BMI under sublicenses from LICENSEE shall be no
less than that set forth for LICENSEE in Article 4, above.
If this Agreement is terminated for any reason, except breach of contract
by BMI, LICENSEE shall immediately assign all of its right, title, and interest
to all sublicenses to BMI, including the right to receive income.
DILIGENCE
In each of the TERRITORIES 1, 2 and 3, if a contract is not in place to
build a commercial facility to practice the ARP Technology within three (3)
years of the Effective Date, BMI may, in its sole discretion, elect to terminate
the LICENSEE's rights hereunder for that particular TERRITORY and BMI will be
free to license the ARP Technology to others in the LICENSED FIELD for that
particular TERRITORY.
In TERRITORY 4 (Asia), if a contract is not in place to build a commercial
facility to practice the ARP Technology within five (5) years of the Effective
Date, BMI may, in its sole discretion, elect to terminate LICENSEE's rights
hereunder for TERRITORY 4 and will be free to license the ARP Technology to
others for TERRITORY 4 and in the LICENSED FIELD.
In such cases, improvement inventions made solely by LICENSEE shall be the
exclusive property of LICENSEE, but BMI shall be granted a nonexclusive,
royalty-free, paid-up license therein, including the right to sublicense within
the LICENSED FIELD.
8. REPORTS
A. Not later than the last day of each January and July, LICENSEE shall
furnish to BMI a written statement in a form provided by BMI (Attachment 1) to
determine the amounts due and the appropriateness of the royalties paid pursuant
to Articles 4 and 6 for the semiannual periods ended the last days of the
preceding December and June, respectively, and shall pay to BMI all amounts due
to BMI. Such amounts are due at the dates the statements are due. If no amount
is accrued during any semiannual period, a written statement to that effect
shall be furnished.
B. Payments provided for in this Agreement, shall, when overdue, bear
interest at a rate per annum equal to three percent (3%) in excess of the "Prime
Rate" published by The Wall Street Journal at the time such payment is due until
payment is received by BMI.
9. CONFIDENTIALITY
BMI may disclose confidential and proprietary information (Technical
Information) to LICENSEE, consisting of published or unpublished research or
development information, know how and technical data related to the ARP
Technology. As a result of LICENSEE's access to the confidential and proprietary
Technical Information disclosed by BMI hereunder, LICENSEE may generate
information which shall also be considered Technical Information. LICENSEE shall
not disclose any Technical Information to any third party without the express
written consent of BMI, until such Technical Information shall become publicly
available through no fault or action of LICENSEE. LICENSEE shall not use the
Technical Information for any use other than that expressly authorized herein.
10. REPRESENTATIONS
This Agreement is entered into by BMI in its private capacity.
B. Nothing in this Agreement shall be deemed to be a representation or
warranty by BMI of the validity of any of the PATENTS or the accuracy, safety or
usefulness for any purpose, of any Technical Information, techniques, or
practices at any time made available by BMI. Neither BMI nor any affiliated
company of BMI shall have any liability whatsoever to LICENSEE or any other
person for or on account of any injury, loss, or damage, of any kind or nature
sustained by, or any damage assessed or asserted against, or any other liability
incurred by or imposed upon LICENSEE or any other person, arising out of or in
connection with or resulting from (i) the production, use or sale of any
apparatus or product, or the practice of the INVENTIONS; (ii) the use of any
Technical Information, techniques, or practices disclosed by BMI; or (iii) any
advertising or other promotional activities with respect to any of the
foregoing, and LICENSEE shall hold BMI, and any affiliated company of BMI,
harmless in the event BMI, or any affiliated company of BMI, is held liable.
C. LICENSEE understands and acknowledges that the subject matter of this
Agreement has not yet been commercially demonstrated, and agrees to accept the
risks incident to designing, manufacturing and operating a nascent technology.
D. BMI represents that it has the right to grant all of the rights
herein, except as to such rights as the Government of The United States of
America may have or may assert.
E. BMI is unaware of any claims that have been, are, or could reasonably
be asserted against BMI by third parties with respect to patent infringement or
any other type of liability relevant to licensing of the INVENTIONS, which have
not been disclosed to LICENSEE as of the date of this Agreement.
11. TERMINATION
A. The PATENT License of Article 2 shall end upon the expiration of the
last to expire of the PATENTS included herein, or upon the abandonment of the
last to be abandoned of any patent applications if no PATENTS have issued, or a
final adjudication of invalidity of all patents included herein, whichever is
later, unless this Agreement is sooner terminated.
B. LICENSEE may terminate this Agreement at any time upon sixty (60)
days' written notice in advance to BMI, or at any time after the expiration of
all patents included herein, or a final adjudication of invalidity of all
patents included herein.
C. Except as provided below in Paragraph 11D, if either party shall be
in default of any obligation hereunder, the other party may terminate this
Agreement by giving Notice of Termination by Certified or Registered Mail to the
party at fault, specifying the basis for termination. If within sixty (60) days
after the receipt of such Notice of Termination, the party in default shall
remedy the condition forming the basis for termination, such Notice of
Termination shall cease to be operative, and this Agreement shall continue in
full force; provided that if Notice of Termination is given by BMI to LICENSEE
for the third time then this grace period shall not be available unless
permitted in such third Notice of Termination, and this Agreement shall be
finally terminated.
D. LICENSEE shall inform BMI of its intention to file a voluntary
petition in bankruptcy or of another's intention to file an involuntary petition
in bankruptcy to be received at least seventy-five (75) days prior to filing
such a petition. LICENSEE's filing without conforming to this requirement shall
be deemed a material, pre-petition incurable breach not subject to the notice
requirement of Paragraph 11C.
12. LITIGATION
A. LICENSEE shall notify BMI of any suspected infringement of the
PATENTS in the LICENSED FIELD and the LICENSED TERRITORIES, and each party shall
inform the other of any evidence of such infringement(s).
B. LICENSEE shall have the first right to institute suit for
infringement(s) in the LICENSED FIELD and the LICENSED TERRITORIES so long as
this Agreement remains exclusive. However, if BMI notifies LICENSEE of its
desire to institute suit for infringement(s) and LICENSEE fails to do so within
ninety (90) days of such notice, then BMI may, at its own expense, bring suit or
take any other appropriate action. Any amounts recovered pursuant to such
infringement suit shall be retained by and be the property of the party bringing
the suit. In the event LICENSEE receives any monies or other consideration from
a third party as a result of LICENSEE's rights under this Agreement, BMI shall
receive its royalty under Article 4 as applied to all such monies or other
consideration whether such monies or other consideration are denoted as
"royalties", "damages", "release" from prior acts, or any other designation.
13. PATENTS
A. BMI shall have the sole right to file, prosecute, and maintain all of
the PATENTS covering the INVENTIONS that are the property of BMI, and shall have
the right to determine whether or not, and where, to file a patent application,
to abandon the prosecution of any patent or patent application, or to
discontinue the maintenance of any patent or patent application. All reasonable
expenses incurred by BMI in the filing, prosecution or maintenance of PATENTS,
or patent applications and patents issued on IMPROVEMENTS, licensed hereunder
shall be reimbursed to BMI by LICENSEE within sixty (60) days of LICENSEE's
receipt of notice setting forth such expenses, if LICENSEE chooses to make use
of such IMPROVEMENTS.
B. All INVENTIONS conceived or reduced to practice for LICENSEE by BMI's
Columbus Laboratories and all Technical Information directly related to the
INVENTIONS developed for LICENSEE by BMI's Columbus Laboratories during the term
of this Agreement, shall be owned by BMI and shall be included in this
Agreement.
C. Improvement inventions made solely by LICENSEE shall be the exclusive
property of LICENSEE, but BMI shall be granted a nonexclusive, royalty-free,
paid-up license therein, including the right to sublicense outside the LICENSED
FIELD.
14. RECORDS
LICENSEE shall keep accurate records of all operations affecting
payments hereunder, and shall permit BMI or its duly authorized agent to inspect
all such records and to make copies of or extracts from such records during
regular business hours throughout the term of this Agreement and for a
reasonable period of not less than three (3) years thereafter.
15. ASSIGNABILITY
LICENSEE shall not assign any rights under this Agreement not
specifically transferable by its terms without the written consent of BMI. BMI
may assign its rights hereunder.
16. REFORM
A. The parties agree that if any part, term, or provision of this
Agreement shall be found illegal or in conflict with any valid controlling law,
the validity of the remaining provisions shall not be affected thereby.
B. In the event the legality of any provision of this Agreement is
brought into question because of a decision by a court of competent jurisdiction
of any country in which this Agreement applies, BMI, by written notice to
LICENSEE, may revise the provision in question or may delete it entirely so as
to comply with the decision of said court.
17. PUBLICITY
In publicizing anything made, used, or sold under this Agreement, LICENSEE
shall not use the name BMI or otherwise refer to any organization related to
BMI, except with the written approval of BMI.
18. WAIVER AND ALTERATION
A. The waiver of a breach hereunder may be effected only by a writing
signed by the waiving party and shall not constitute a waiver of any other
breach.
B. A provision of this Agreement may be altered only by a writing signed
by both parties, except as provided in Article 16, above.
19. IMPLEMENTATION
Each party shall execute any instruments reasonably believed by the
other party to be necessary to implement the provisions of this Agreement.
20. CONSTRUCTION
This Agreement shall be construed in accordance with the laws of the
State of Ohio of The United States of America and in the English language, and
any action brought to enforce any provision or obligation hereunder shall be
brought in a court of competent jurisdiction in the State of Ohio.
21. EXPORTATION OF TECHNICAL INFORMATION
LICENSEE agrees not to export from The United States of America,
directly or indirectly, any technical information (or the direct product
thereof) furnished to LICENSEE either directly or indirectly by BMI, except to
the extent and to the countries permitted by the laws of The United States of
America. LICENSEE agrees to indemnify, defend and hold harmless BMI, its
officers, agents and employees from all liability involving the violation of
such export regulations, either directly or indirectly, by LICENSEE.
22. ENTIRE UNDERSTANDING
This Agreement represents the entire understanding between the parties,
and supersedes all other agreements, express or implied, between the parties
concerning the INVENTIONS in the LICENSED FIELD and LICENSED TERRITORIES.
Specifically, no future representations made by BMI staff shall be effective to
alter any provision herein unless such representation shall be made by an
authorized representative of BMI having the power to do so.
23. ADDRESSES
For the purpose of all written communications between the parties, their
addresses shall be:
ThermoEnergy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Battelle Memorial Institute
Attention License Administrator
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or any other addresses of which either party shall notify the other party in
writing.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
THERMOENERGY CORPORATION
---------------------------------------------
Signature
ATTEST:
---------------------------------------------
Typed or Printed Name
-------------------------- ----------------------------------------------
Signature Title
-------------------------- ----------------------------------------------
Signed at Date
BATTELLE MEMORIAL INSTITUTE
---------------------------------------------
Signature
ATTEST: ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Typed or Printed Name
Assistant General Counsel
----------------------- ---------------------------------------------
Signature Title
January 5, 1998
----------------------- -------------------------------------------
Signed at Date
Attachment 1
ATTACHMENT 1
ROYALTY REPORT TO BMI
From:
---------------------------------------------------------------------
(Company Name)
Reporting Period:
From To ----------------- ------------------- (6 Month Period Ending June
30 and December 31, to be Reported by the Following July 31 and January 31).
Article 4A. ROYALTIES (5% of all revenues received or $1 for each
1,000 gallons of input, whichever is greater)
(i) (a) Revenues Received:
$------------ X 0.05
(b) Royalty Calculated:
$------------
(ii) (c) No. of 1,000 gallons of input: x $1.00= $
---------- ------------
(d) Twenty-five percent (25%) of Gross Profit =$
------------
(e) Royalty Calculated = lesser of amount
on line (c) or (d): $
------------
Royalty owed [greater of amount on line (b) or (e)]
$
------------
2. Article 4B. ROYALTIES (5% of installed cost of a facility or
$40,000 whichever is greater, per facility)
$ Installed cost of a facility $
------------
X 0.05
$ Amount Royalties Owed: $
------------
OR (whichever is greater)
$40,000
$ Amount Royalties Owed: $
------------
3. Article 6C. Royalties from sublicenses
$ Amount Royalties Owed: $
------------
TOTAL ROYALTIES DUE: $
------------
US
SIGNED BY
-------------------------------
PRINTED NAME
-----------------------------
TELEPHONE NO.
----------------------------
DATE
-------------------------------------
TELEFAX NO.
------------------------------
LICENSE AGREEMENT
BETWEEN
BATTELLE MEMORIAL INSTITUTE
AND
THERMOENERGY CORPORATION