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EXHIBIT 10.8
PATENT LICENSE AGREEMENT
This Agreement made and entered into this 12th day of October, 1994 by
and between Hitachi, Ltd., having a place of business at 6, Kanda-Surugadai,
4-chome, Chiyoda-ku, Tokyo 101, Japan (hereinafter "HITACHI"), and Nanophase
Technologies Corporation, having a principal place of business at 8205 S. Cass
Avenue, Suite 105, Darien, Illinois, 60561, U.S.A. (hereinafter "LICENSEE");
WHEREAS, HITACHI owns and controls United States Patent Nos. 4,610,718
and 4,732,369, and has the right to grant a license under said patents;
WHEREAS, LICENSEE desires to acquire a nonexclusive license to make,
use and sell LICENSED PRODUCT (hereinafter defined) under LICENSED
PATENTS (hereinafter defined);
NOW, THEREFORE, in consideration of the premises and covenants
herein set forth, the parties agree as follows:
1. DEFINITIONS
1.1 The term "LICENSED PRODUCT" shall mean any ultra-fine particles
of less than 1 micron in size produced or processed using methods,
processes or apparatus of the type claimed in LICENSED PATENTS.
1.2 The term "LICENSED PATENTS" shall mean United States Patent Nos.
4,610,718 and 4,732,369, and any divisional, continuation,
continuation-in-part, or reissue application for the foregoing patents,
and any renewals, foreign counterparts, substitutions or extensions
of any of the foregoing.
1.3 The term "EFFECTIVE DATE" shall mean the date, after the execution
of this Agreement by both parties hereto, on which HITACHI receives the
amount of Seventeen Thousand Five Hundred United States Dollars
(US$17,500) in accordance with Section 3.1(1) of this Agreement, less
any taxes withheld for payment to the Government of the United States in
accordance with Section 3.5.
1.4 "AFFILIATES" means corporations or other entities of which a
party hereto owns or controls directly or indirectly more than fifty
percent (50%) of the voting stock entitled to vote for the election
of the members of the board of directors or persons performing
similar functions, or, in the case of entities not having voting
stock, equivalent ownership or control thereof, provided that such
entity shall be considered an AFFILIATE for only so long as such
ownership or control exists.
2. GRANT OF LICENSE
HITACHI hereby grants to LICENSEE a world-wide, nonexclusive license
under the LICENSED PATENTS, without the right to sublicense, to
produce or "HAVE PRODUCED" LICENSED PRODUCT by a method or apparatus
in
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accordance with the LICENSED PATENTS, and to use, sell and otherwise
dispose of LICENSED PRODUCT so produced. LICENSEE shall have the right to
extend the licenses granted hereunder to LICENSEE's AFFILIATES, provided that
LICENSEE provide written notification to HITACHI identifying any such AFFILIATE
prior to extending the licenses granted hereunder to such AFFILIATE, and
provided further that LICENSEE report and submit royalties on behalf of such
AFFILIATES in accordance with Section 3.3 of this Agreement.
A license to "HAVE PRODUCED" as used herein shall mean a license granted
to LICENSEE to subcontract a third party to produce LICENSED PRODUCT only for
the account of, and for use or resale by, LICENSEE or, to the extent
appropriate, LICENSEE's AFFILIATES.
3. COMPENSATION, PAYMENT AND REPORT
3.1 In consideration of the licenses granted by HITACHI to LICENSEE
under LICENSED PATENTS, LICENSEE shall pay to HITACHI:
(1) a lump sum, non-refundable amount of Seventeen Thousand Five Hundred United
States Dollars (US$17,500) as an initial fee payable within ten (10)
days of the execution of this agreement by both parties hereto, which shall
be creditable against running royalties pursuant to Section 3.1(2) hereof,
and
(2) running royalties at the rate of one percent (1.0%) on NET SALES of
LICENSED PRODUCT used, sold or otherwise disposed of by LICENSEE and
its AFFILIATES prior to or during the term of this Agreement.
3.2 For the purpose of this section, NET SALES of LICENSED PRODUCT
shall be determined as follows:
(1) In respect of LICENSED PRODUCT sold or otherwise commercially
disposed of in normal, arm's length commercial transactions, NET SALES
shall be the total sales of LICENSED PRODUCT based on the actual selling
price at which customers are billed in the usual course of business for
such LICENSED PRODUCT, without any deductions other than sales or excise
taxes, if any, and except for rejections or returns. If billed separately,
the selling price of packing material, boxes, cartons and crates in which
LICENSED PRODUCT is packed, as well as freight, handling and insurance
charges and any duties or tariffs, shall not be included in determining NET
SALES.
(2) If LICENSED PRODUCT is not separately sold or otherwise commercially
disposed of as it is but instead is incorporated in another product which
is not itself a LICENSED PRODUCT that is sold or otherwise commercially
disposed of in a normal, arm's length commercial transaction, then the NET
SALES of LICENSED PRODUCT shall be determined by multiplying the total
sales of the product incorporating LICENSED PRODUCT based on the actual
selling price at
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which customers are billed in the usual course of business for
such product, times the ratio of the manufacturing cost of the
LICENSED PRODUCT to the overall manufacturing cost of the
product incorporating LICENSED PRODUCT.
(3) In the event of sale or other commercial disposition of
LICENSED PRODUCT other than in a normal arm's length commercial
transaction, or in the event of use or other commercial disposal
by LICENSEE or its AFFILIATES of LICENSED PRODUCT (except for
LICENSEE's research and development purposes and except for
incorporation of LICENSED PRODUCT into another product as set
forth in Section 3.2(2) above), then the NET SALES for such
LICENSED PRODUCT shall be calculated based on the average
selling price of such LICENSED PRODUCT sold in normal, arm's
length commercial transactions.
3.3 Royalty reports and payments shall be made in accordance with the
following provisions:
(1) Within Forty Five (45) days of each semi-annual period ending
on June 30 and December 31 (hereinafter "SEMI-ANNUAL PERIOD")
during the term of this Agreement, LICENSEE shall furnish to
HITACHI a statement of royalty specifying NET SALES and the
types of LICENSED PRODUCT sold or otherwise commercially
disposed of by LICENSEE or its AFFILIATES during such
SEMI-ANNUAL PERIOD and the total amount of royalties accrued
under Section 3.1(2) (including any such accrued royalties to be
credited against the initial fee pursuant to Section 3.1(1)
hereof). At the same time, LICENSEE shall make the payment to
HITACHI by telegraphic transfer of the amount of the accrued
royalties which exceeds the balance of the initial fee set forth
in Section 3.1(1) above, if any. If no royalty is payable or
accrued during the SEMI-ANNUAL PERIOD, LICENSEE shall report in
the statement that no royalty is due during such SEMI-ANNUAL
PERIOD.
(2) LICENSEE has conducted a good faith investigation with
respect to sales of LICENSED PRODUCT sold or otherwise
commercially disposed of prior to October 12, 1994, and
LICENSEE has determined based on such good faith investigation
that the NET SALES of LICENSED PRODUCT prior to such date is
$37,089. The accrued royalty of $370.89 shall not be paid in
the form of money to HITACHI, but instead shall reduce the
running royalty credit pursuant to Section 3.1(1) by this
amount.
(3) Within Forty Five (45) days after the date of expiration of
this Agreement or the date of the termination in the event of
early termination of this Agreement, LICENSEE shall furnish to
HITACHI a final statement of royalty and pay the royalty
accrued up to the date of such expiration or termination of
this Agreement.
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3.4 All payments to be made by LICENSEE to HITACHI hereunder
shall be remitted in U.S. dollars by telegraphic transfer to
the designated bank account of HITACHI. Any payment once made
by LICENSEE to HITACHI shall in no event be refundable. Any
bank charges accrued with respect to such payment by LICENSEE's
bank in this connection shall be borne and paid by LICENSEE.
3.5 All taxes imposed as a result of the existence of this
Agreement or the performance of the parties hereunder shall be
borne and paid by the party required to do so by applicable
law; provided, however, that If so required by applicable law
and relevant income tax treaty, LICENSEE shall withhold the
amount of income taxes levied by the Government of the United
States on each payment to be made by LICENSEE to HITACHI
pursuant to this Agreement, shall promptly effect payment of
the income taxes to the appropriate tax authorities of the
Government of the United States and shall submit to HITACHI
official tax receipts or other evidence issued by said tax
authorities to LICENSEE. The parties agree to cooperate in good
faith at HITACHI's request regarding any additional
documentation or the like that may be required to enable
HITACHI to support a claim for any national tax credit in
respect of any such taxes so withheld, provided that HITACHI
shall be responsible for any material, reasonable,
out-of-pocket expense incurred by LICENSEE as a result thereof.
3.6 LICENSEE shall keep complete and accurate records with
respect to LICENSED PRODUCT for which royalties are or may be
due and payable under this Agreement. Said records shall be
kept and available at all reasonable times for a period of (5)
years following the end of each SEMI-ANNUAL PERIOD for
inspection of an independent certified public accountant or
agent selected by HITACHI and reasonably acceptable to
LICENSEE for the sole purpose of verifying the statements of
royalty submitted by LICENSEE.
3.7 LICENSEE shall pay interest to HITACHI upon any and all
amounts overdue and payable under this Agreement at the rate of
ten percent (10%) per annum for the period from the due date
through the date of payment.
4. TERM AND TERMINATION
4.1 This Agreement shall become effective on the EFFECTIVE
DATE and shall remain in full force and effect until the
expiration date of the last-to-expire of the LICENSED PATENTS.
This Agreement may be terminated at any time by LICENSEE upon
sixty (60) days prior written notice to HITACHI, such
termination to be without prejudice to the rights and
obligations of the parties through the date of termination,
and provided that LICENSEE include in such written notice a
statement of LICENSEE's reasons for so terminating this
Agreement.
4.2 In the event of a material breach of this Agreement by
LICENSEE which is not cured within sixty (60) days after
written notice thereof is received by LICENSEE, this
Agreement may be terminated forthwith by further written
notice to that effect from HITACHI. For the purpose of
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this section, "material breach" includes, but is not limited to, a breach
the provisions of Article 3 or Article 5 of this Agreement.
4.3 Should LICENSEE become insolvent or be subject to bankruptcy or winding up
proceedings, or in the event of a sale or transfer by LICENSEE of all or
substantially all of the assets of LICENSEE, or in the event that LICENSEE is
merged into or with a third party, then HITACHI may, by written notice,
terminate this Agreement forthwith.
5. ASSIGNMENT
LICENSEE shall not assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of HITACHI.
6. MISCELLANEOUS PROVISIONS
6.1 HITACHI assumes no responsibility whatsoever for the performance,
operation, maintenance or manner of use of any products made, used or sold by
LICENSEE. HITACHI shall have no liability or obligation to defend, indemnify or
hold harmless LICENSEE from any suits, actions or claims by any person or
entity arising out of or relating to the performance, operation, maintenance or
manner of use of any products or otherwise. In no event shall HITACHI be liable
for indirect, Incidental, consequential or special damages of any kind
whatsoever.
6.2 HITACHI shall have no liability or obligation to take any action or bring
or prosecute any action or suit against any third party or parties even if said
third party or parties infringe or allegedly infringe, or illegally or without
proper authorization make use of, any of the LICENSED PATENTS. It is
specifically agreed between the parties that the existence of such infringing
third party, any, shall never be a ground for refusal to pay, or a request
for the reduction of, royalties to be paid by LICENSEE pursuant to Section 3.1
hereof. Licensee shall have no right to take any action or bring or prosecute
any action or suit against any third party or parties even if said third party
or parties infringe or allegedly infringe, or illegally or without proper
authorization make use of, any of the LICENSED PATENTS.
6.3 Nothing in this Agreement shall be construed as:
a) a warranty or representation by HITACHI as to the validity or scope
of any patent or patents;
b) a warranty or representation by HITACHI that any manufacture, use,
sale of LICENSED PRODUCT or the practice of any method covered
by LICENSED PATENTS will be free from infringement of patents,
utility models and/or any other rights owned or controlled by any
third party or parties;
c) an obligation to furnish any technical information or know-how;
or
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d) conferring a right with respect to any copyright, trademark,
tradename or maskwork rights.
6.4 The parties hereto shall not disclose any of the terms of this
Agreement to any third party except:
a) with the prior written consent of the other party;
b) to any governmental body having jurisdiction and calling therefor;
c) as otherwise may be required by law or legal process; or
d) to legal counsel representing either party.
6.5 This Agreement sets forth the entire understanding of the parties on the
subject matter herein, and no amendment to this Agreement shall be effective
unless set forth in writing in a document duly executed by both parties.
6.6 All notices required or permitted to be given hereunder shall be in
writing and sent by registered airmail, postage prepaid, or telefax, if
promptly confirmed by registered air mail as mentioned above, to the
address specified below:
IF to HITACHI, Hitachi, Ltd.
New Marunouchi Bldg.
5-1, Marunouchi 1 chome
Chiyoda-ku, Tokyo 100
Japan
Attention: Department Manager
Licensing Department I
Intellectual Property Office
If to LICENSEE, Nanophase Technologies Corporation
8205 S. Cass Avenue
Suite 105
Darien, Illinois 60561, U.S.A.
Attention: President
6.7 This Agreement and matters connected with the performance thereof shall be
construed, interpreted and governed in all respects in accordance with the
laws of the State of Illinois.
6.8 Upon written request of HITACHI, LICENSEE agrees to negotiate with HITACHI
in good faith with respect to a possible license to HITACHI or its AFFILIATES
under patents, patent applications or technology held by LICENSEE on mutually
agreeable terms and conditions; provided, however, that it is understood that
Licensee is not obligated to Grant such a license if mutually agreeable terms
and conditions cannot be obtained through good faith negotiations.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective corporate manner by their duly authorized
representatives on the date written below.
NANOPHASE TECHNOLOGIES HITACHI, LTD.
CORPORATION
By: [Signature] By: Ichiro Nagata
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Ichiro Nagata
Director
General Manager
Title: Pres/CEO Title: Industrial Processing Division
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Date: 13 Oct 94 Date: November 2, 1994
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