Exhibit 10.1
LICENSE AGREEMENT(1)
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THIS AGREEMENT made and entered into of this 13th day of July, 2001, by and
between Clean Diesel Technologies, Inc., a corporation organized and existing
under the laws of the State of Delaware, having its principal office at 300
Atlantic Street, Stanford, Connecticut, U.S.A. (hereinafter referred to as
"Licensor") and Mitsui & Co., Ltd., a corporation organized and existing under
the laws of Japan, having its principal office at 2-1, Ohtemachi 1-chome,
Chiyoda-ku, Tokyo, Japan (hereinafter referred to as "Licensee"),
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1. Portions of this exhibit denoted with three asterisks (***) have been
omitted pursuant to a request for confidential treatment.
WITNESSETH:
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WHEREAS, Licensor has developed and owns a certain patented system for urea
injection with the trademark "ARIS 2000" which reduces oxides of nitrogen from
the emissions of diesel engines (hereinafter referred to as the "System") and
has the exclusive right to grant a license with respect to the System;
WHEREAS, Licensee desires to manufacture and sell the Products as defined below
for the diesel engine market, excepting the mobile engine market, in Japan, and
WHEREAS, Licensee desires to obtain, and Licensor is willing to grant, an
exclusive license to manufacture, sub-license, use, sell and lease the Products
within such market in Japan.
NOW, THEREFORE, the parties hereto agree as follows:
Article I
Definitions
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1.01 Definitions
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As used in this Agreement, the following terms shall have the following
respective meanings:
(a) "Dollar" or the symbol "$" shall mean the currency of the United
States of America.
(b) "Effective Date" shall mean the date first written above.
(c) "Federal Rate" shall mean the monthly rate of interest as published by
the Internal Revenue Service of USA pursuant to Internal Revenue Code
Section 7520.
(d) "Field" shall mean the diesel engine market, excepting the mobile
engine market, in Japan.
(e) "Improvement" shall mean any new invention or change in the System
made or developed by Licensor, Licensee, or its sublicensees whether
patentable or not, provided that the System, after such invention or
change, is substantially similar to the System.
(f) "Intellectual Property" shall mean:
(i) All Patents, Improvements and patent applications and rights with
respect to the System; and
(ii) All trademarks with respect to the System as provided in Schedule
A.
(g) "Net Selling Price" shall mean, in relation to royalties under Section
5.01, the gross selling price of the Products as billed by Licensee or
its sublicensees, less the following items to the extent that they are
included in the gross selling price of the Products;
(i) sales, excise and added value taxes;
(ii) customs duties;
(iii) packaging, transportation, insurance and warehouse charges;
(iv) trade and quantity discounts; and
(v) credits for returned Products.
(h) "Patents" shall mean all Japanese patents or patent applications with
respect to the System as provided in Schedule A.
(i) "Products" shall mean the manufactured device of the System including
injector, sensors, pump, valves, controls and software but excluding
tankage, catalyst, engineering and installation. -
(j) "Proprietary Information" shall mean all confidential information or
other material including trade secrets, business and technical
information and data regardless of its form, which is designated by
the party disclosing such information as confidential or proprietary.
Provided, however, Proprietary Information shall not include such
information if such information;
(i) was known to party receiving the information (hereinafter
referred to as the "receiving party") at the time of disclosure;
(ii) is now or becomes hereafter available to the public through no
fault of the receiving party;
(iii) may be hereafter acquired by the receiving party from a third
party without any obligation of secrecy;
(iv) is ndependently developed by the receiving party without making
use of any confidential information as shown by documentation.
(k) "Technical Information" shall include Intellectual Property and all
data, designs, software and information in any form with respect to
the System.
(l) "Term" shall mean the period from the Effective Date to the latest
date of expiry of the Patents unless sooner terminated pursuant to
this Agreement.
Article II
Grant of License
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2.01 Grant of License
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(a) Licensor hereby grants Licensee an exclusive license of the System and
Technical Information to manufacture, sub-license, use, sell and lease
the Products within the Field for the Term.
(b) Licensee and its sublicensees may not solicit or procure sales from
locations outside of Japan and Licensee and its sublicensees shall not
knowingly sell to any third party who intends directly or indirectly
to export Products out of Japan unless such third party is a licensee
or permitted sublicensee of Licensor in the territory out of Japan to
which such Products are to be exported.
2.02 Option for Mobile License
----------------------------
(a) Subject to execution and delivery of this License by both parties and
payment by Licensee to Licensor on the Effective Date of the
additional sum of $***, Licensee shall have an option until *** to
enter into a License from Licensor for the additional field of use of
mobile diesel engines in Japan. "Mobile" shall mean diesel engines
mounted on vehicles, including on-road, off-road, marine and railroad
uses. Licensee shall exercise this option by notice to Licensor on or
before *** stating its intention to exercise the option. The terms and
conditions of the mobile license shall provide for a mandatory
up-front license fee to Licensor in the amount of $*** and the payment
of unit royalties to be mutually agreed. The License shall also
contain other terms and conditions substantially similar to those of
this License. The License shall be executed and delivered within ***
days of Licensee's notice of exercise or this option shall expire.
2.03 Sub-License
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Subject to payment by Licensee to Lincensor of the sub-license condition
provided in Schedule B, Licensee may grant a non-exclusive sublicense of the
System to any third party to the extent of the license granted hereunder in
Japan, provided that Licensee shall ensure that the sublicense agreement to be
entered into between Licensee and sublicensee and shall require sublicensee to
report sales of the Product, and to be subject to audit by Licensee, under the
same terms ad provided in this Agreement and to pay to Licensee the same
royalties and fees otherwise payable hereunder by Licensee to Licensor as
provided in Schedule B. Licensee shall notify the Licensor of such sublicensing
within ten (10) days of entering into a sublicense agreement. Sublicensees may
not sub-license. Sublicensees may not assign their sublicensees or any rights
thereunder.
2.04 Non-Exclusivity
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2.04 Licensee is obligated to fulfill target royalty amounts of $***, $*** and
$*** in, respectively, the years ending on the ***, ***, and ***
anniversaries of this License and Licensor shall have the right to render
the License non-exclusive when the royalty amount in each such year does
not reach to the target royalty amount. However, Licensor shall first grant
the Licensee the opportunity to make voluntary payments in order to
maintain exclusivity. Licensor and Licensee will review the target amount
for each year within *** days after the *** anniversary of this agreement
and may make adjustments subject to mutual agreement.
Article III
Transfer of Technical Information and Technical Assistance
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3.01 Transfer
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Within ninety (90) days of the Effective Date, Licensor shall, at its own cost
and expense, furnish Licensee with Technical Information by providing copies of
Technical Information by mail and other methods agreed upon by the parties.
Licensor shall notify Licensee writing or e-mail when such transfer has been
made, and Licensee shall confirm such transfer by written notice upon receipt of
Technical Information.
3.02 Technical Assistance
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(a) Upon reasonable request of Licensee, Licensor shall send to Licensee
qualified personnel of Licensor in order to render technical
assistance and services to Licensee for a period to be agreed upon by
the parties hereto. All expenses with respect to the dispatch of such
personnel, including but not limited to traveling expenses and
reasonable living expenses but excluding salary and head office
overhead expenses, shall be paid by Licensee. Such assistance shall
not involve more than two visits per year or involve more than 10
Mandays per year only for the first two years of the Agreement and
only if other methods of assistance are not practical.
(b) Upon request of Licensee, Licensor shall permit a reasonable number of
employees of the Licensee and/or its sublicensees to visit the
facilities of Licensor where products with respect to the System are
manufactured, in order to observe the procedures of Licensor. All
expenses with respect to such visits shall be paid by Licensee.
3.03 Marketing Assistance
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Licensor and Licensee shall discuss methods of marketing the System and/or the
Products within Japan, and Licensor shall inform Licensee of potential customers
of the Products in Japan.
Article IV
Royalties
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4.01 Royalties
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(a) In consideration of all licenses and other rights granted by Licensor
hereunder, Licensee shall pay to Licensor the following fees:
(1) an upfront license fee of ($495,000) four hundred and ninety five
thousand dollars including $***,which has paid to Licensor under
the Letter of Intent on 5th June, 2000, shall be regarded a part
of upfront license fee. The reminder, $***, shall be paid as
follows; $*** shall be paid on the Effective date and $*** shall
be paid *** days after the Effective Date; and
(2) Running royalties, exhibited in Schedule B, shall be paid by
Licensee and sublicensee to Licensor *** within *** days after
each *** of Licensee's fiscal year.
(b) Licensor and Licensee shall review Running Royalties set out in
Schedule B two years from the Effective Date and every year on said
date thereafter in order to adjust such amounts based on current
market conditions subject to mutual agreement. Any increase or
decrease of the Running Royalty shall not cause any adjustment of the
minimum royalty payments as stipulated in 2.04 above.
(c) In the event Licensee fails to pay Licensor the royalty provided in
this Section 4.01(a)(2) above, Licensor may terminate this Agreement
or render the license granted to Licensee hereunder as non-exclusive
after giving Licensee written notice of such measure. Provided,
however, that when Licensee disburses to Licensor the balance of
royalty due within ***
days of such notice, Licensee shall maintain the exclusive license and
other rights granted to Licensee herein.
(d) All payments set forth in this Section 4.01 shall be carried out by
wire transfer to such bank account of Licensor as designated by
Licensor.
4.02 No Withholding
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Licensee shall pay the full amount of Royalties due hereunder regardless of a
withholding tax, if any, which may from time to time be levied, assessed or
required to be withheld and paid for the account of Licensor and Licensee shall
itself bear the cost of such withholding tax. Licensee shall at the time of
royalty payments to Licensor provide to Licensor appropriate documentary
evidence of the payment by it of such withholding tax, if any, applicable to
such royalty payment; provided, however, royalties due from Licensee shall be
increased by the amount of any withholding tax lawfully levied by the Japanese
tax authorities on any amount due to Licensor above those provided in Schedule
B. When Licensee deducts and pays any such tax, it shall without delay send to
Licensor the official certificate of such tax payment.
4.03 Delinquency Charges
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In event that payment of royalties as defined in Section 4.01 above is not made
within thirty (30) days of the due date of payment, Licensee shall pay Licensor
delinquency charges at the Federal Rate until such payment is made in full.
4.04 Non-Payment and Termination
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*** days after notice to Licensee of Licensee's failure to pay Licensor amounts
due hereunder, Licensor may by notice to Licensee terminate this License,
whereupon this License shall be of no further force and effect except for the
obligation of Licensee to pay to Licensor such amounts as are due to Licensor
through such termination.
Article V
Accounting and Reports
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5.01 Books and Records
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Licensee shall, at its principal place of business as defined above, keep full
and accurate records of the Products sold hereunder and other sufficient details
in accordance with generally accepted accounting principles in Japan to enable
the calculation of the amount of royalties payable to Licensor in accordance
with generally accepted accounting principles. Licensor shall, upon notice,
permit the said records to be examined from time to time by an independent
accountant or accounting firm appointed by Licensor during reasonable business
hours with prior written notice to the extent necessary to calculate the amount
of royalties to be paid to Licensor, provided that such examination shall be
made at the expense of the Licensor.
5.02 Reports
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Each quarterly payment of royalties made by Licensee to Licensor as provided in
Section 4.01 shall be accompanied by a written report containing information of
each sale made by Licensee or
sublicensee during such quarter, including names of customers, date of sales,
invoice numbers, quantity of the Products, sales prices.
5.03 Examination
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Licensee shall, upon reasonable notice, make the books and records as referred
to in clause 4.01 above available for inspection by duly authorized
representatives of Licensor. Moreover, Licensor may, not more than once in
twelve months, have such books and records audited by a certified independent
public accountant or accounting firm selected by Licensor and approved in
writing by Licensee which approval shall not unreasonably be withheld, at the
expense of Licensor. Nothing herein shall be interpreted to mean that Licensor
shall have access to or the right to examine other business records of Licensee.
Licensor shall treat any information obtained pursuant to this clause as
confidential and its accountant or accounting firm shall undertake to do the
same.
Article VI
Improvement
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6.01 Title and License of Improvement
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The party hereto whose employees or agents have invented or developed such
Improvement shall possess all rights including but not limited to applying for
patents, trade marks, granting licenses and other titles related to such
Improvement. Where Licensor shall have developed and shall be the owner of an
Improvement, Licensee shall have a royalty-free right and license in Japan to
make, use and sell such Improvement according to the terms and conditions of
this License. Where Licensee shall have developed and be the owner of an
Improvement, Licensor shall have a perpetual, royalty-free, world-wide right and
license to such Improvement.
6.02 Improvement With Other Party
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An Improvement, if any, developed jointly or developed individually and without
the participation of the other party but with respect to the Patent shall be
owned by Licensor but Licensee shall have a royalty free right and license to
make use and sell such Improvement in Japan according to the terms and
conditions of this License.
6.03 No License Implied to Other Technology
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The title and License to Improvements provided in Section 6.02 above to the
parties shall in itself imply no right or license whatsoever in any party to any
other Technology after termination of the Term if required to practice an
Improvement in a particular territory even though the lack of such right or
license may render the Improvement valueless in the hands of a party.
Article VII
Representations and Warranties
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7.01 General Representations and Warranties
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Each party represents and warrants to the other that it is a corporation
established and existing under the laws of incorporation and possesses corporate
power and authority to execute, deliver and perform this Agreement.
7.02 Representations With Respect to Intellectual Property
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Licensor hereby makes the following representations, warranties and covenants,
and acknowledges that Licensee has relied thereon upon entering this Agreement
that:
(a) Licensor is the sole and exclusive owner of the Patents excepting as
identified in Schedule A and Technical Information, and possesses the
exclusive right to grant the license granted hereunder and has
executed no agreement or taken any action in conflict herewith or in
derogation of the license and other rights granted to Licensee
hereunder;
(b) to the best of Licensor's knowledge and belief, the System and/or
Technical Information does not infringe any patents or rights of any
third party;
(c) to the best of Licensor's knowledge and belief, the patent
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applications are valid under the relative laws of Japan, and there are
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no actions, suits or proceedings pending or threatened against
Licensor with respect to the Patents or patent applications before any
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court or in any jurisdiction; and
Licensor has and shall not enter into any agreement or commitment which prevents
Licensor from entering into and performing any obligations under this Agreement.
ARTICLE VIII
Intellectual Property
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8.01 Maintenance Expense
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Licensor shall be responsible for all fees, annuities and legal expense
(excepting legal expense which is or may be associated with any litigation,
including but not limited to, juridical, arbitral, administrative or
investigation) required to obtain and maintain Japanese patent applications,
patents and trademarks as set forth in Schedule A.
8.02 Registry of License
---------------------
Licensee may, at its own expense, register exclusive licenses relevant to the
Patents in Japan and Licensor shall cooperate with Licensee in such
registration.
8.03 Patent Applications
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In the event that either party with respect to Improvements as to which it shall
have the right to acquire title, seeks patent protection for such Improvements,
it will do so at its own expense (including any annuities or other maintenance
fees) and it will receive the cooperation of the other party in the prosecution
of such patent applications. When granted, the applicant shall have title to
such patent, subject to the rights, if any, of the other party hereunder.
8.04 Trademarks
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Licensor does not intend to obtain any trademark with respect to the System
other than the trademark set forth in Schedule A. If Licensee desires to obtain
a mark or marks with respect to its products in association with the Technology
it shall consult Licensor prior to application at the expense of Licensee. When
granted such Trademark, Licensee shall possess all rights related to said mark.
8.05 Pending Applications
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The parties shall take no action to jeopardize ongoing prosecutions or the final
issuance of pending applications of the Intellectual Property of the other
party.
8.06 Infringement
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(a) In the event that either party becomes aware of any infringement
within Japan of the
Products, such party shall immediately inform the other party of the
fact and discuss measures to remove such infringement. Licensor shall
cooperate with Licensee in removing such infringement.
(b) All expenses incurred and all damages awarded or otherwise payable to
such third party shall be borne equally by the parties hereto but in no
event shall Licensor be liable for expenses or damages in excess in any
year of ***% of running royalties paid to Licensor in such year under this
Agreement.
Article IX
TERM AND TERMINATION
9.01 Term
----
This Agreement shall become effective on the date first above written and
continue in full force and be binding on each party until the latest date of
expiry of the Patents.
9.02 Termination
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(a) Licensee may, at any time after the *** anniversary from the Effective
Date and at its sole discretion, terminate this Agreement by giving
Licensor *** days prior written notice, provided that Licensee shall
have made all payments due before such termination date with respect
to the license herein.
(b) In the event that Licensee fails to pay to Licensor any payment with
respect to the license hereunder within *** days after written notice
is made by Licensor to Licensee of such failure of payment, Licensor
may terminate this Agreement by giving Licensor *** days prior written
notice.
(c) In the event that either party hereto files a petition in bankruptcy
or a petition in bankruptcy is filed against it, becomes insolvent or
bankrupt, makes an arrangement for the benefit of creditors, or goes
into liquidation, the other party may terminate this Agreement by
giving such party a written notice.
9.03 Licensees right After Termination
----------------------------------
After expiration or termination of this Agreement, all licenses and other rights
granted to Licensee hereunder shall cease to exist; provided, however, that
Licensee shall retain the license and rights hereunder to the extent of selling
or otherwise disposing of any inventory Products and to fulfill all contracts
with respect to the System and/or Products. In this case, Licensor and Licensee
shall discuss and determine the royalty payments to be made by Licnesee with
respect to such remaining rights, provided that the royalty amount provided in
Section 4.01 shall be the upper limit.
Article X
Confidentiality
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10.01 Nondisclosure Obligations
--------------------------
(a) The parties understand that the Proprietary Information of the other party
constitutes valuable property rights. Therefore, the party receiving Proprietary
Information agrees not to provide or otherwise make available any portion of the
Proprietary Information in any form to anyone other than employees and outside
consultants solely for purposes of carrying out the rights, duties and
obligations of such party pursuant to this Agreement. Each party agrees to
notify its employees
permitted access to the Proprietary Information, of the obligations under this
Agreement. The parties shall also cause such employees thereto to execute
written nondisclosure and confidentiality agreements with the receiving party,
prohibiting such employees from further disclosure of the other party's
Proprietary Information or use of such Proprietary Information for the benefit
of any person other than Licensor or Licensee.
(b) Each party shall safeguard appropriately all documents, items of work in
process and work products that embody Proprietary Information of the other
party. A party having knowledge of loss or theft of the other party's
Intellectual Property or Proprietary Information shall immediately notify the
other party thereof.
10.02 Survival of Confidentiality Obligations
------------------------------------------
The non-disclosure obligations set forth in clause 10.01 above shall continue
for *** years after the termination of this Agreement.
10.03 Exceptions to Non-Disclosure Obligations
-------------------------------------------
The confidentiality and non-disclosure obligations set forth in clause 10.01
above shall not apply to such information if: (a) any such Proprietary
Information is in public knowledge at the time of disclosure (b) any such
Proprietary Information that subsequently becomes public through no fault of the
receiving party; or (c) any such Proprietary Information that is subsequently
disclosed to the receiving party by third parties that have no confidential
obligations. With respect to public use, however, the parties understand and
agree that Proprietary Information of a party shall not be deemed to be in
public use or publicly available merely because it may be derived from
combinations of public information.
Article XI
Government Approvals
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11.01 Approvals
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Licensee shall, at its own expense, apply for all government approvals which may
be required for the execution of the transactions contemplated in this
Agreement, and shall furnish written Licensor with evidence of such approvals.
11.02 Export Controls
----------------
Licensee acknowledges that the further transfer of the Technical Information or
the sale of Products by Licensor to persons outside of the United States and the
further transfer by Licensee of the Technical Information may from time to time
be governed by specific regulations related to the Technical Information or
Products and Licensee agrees to comply with such specific regulations and at its
own expense and from time to time to obtain such consents, if any, as may be
required to so comply.
Article XII
Miscellaneous
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12.01 Non-Assignment
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Neither this Agreement nor any right or obligation hereunder may be assigned or
transferred to any third party by either party in whole or in part, without the
prior written consent of the other party.
12.02 No Joint Venture
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This Agreement shall not imply any establishment of partnership or joint venture
between the parties. Neither party hereto shall act or attempt to act or
represent itself, directly or by implication, as having the power to bind the
other party or in any manner to create any obligation on behalf of the other
party.
12.03 Notices
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Any notice or other communication shall be given or sent hereunder in writing
and delivered personally, sent by prepaid registered post, fax, or e-mail (with
electronic confirmation of delivery) to either party at the following address,
fax number or such other address or fax number as either party shall have
provided to the other party pursuant to this Section.
if to Licensor: Airmail: Clean Diesel Technologies, Inc.
300 Atlantic Street,
Stanford, CT, U.S.A.
Attention: James M. Valentine
Chief Operating Officer
Fax: +1-203-323-0461
E-mail: jvalentine@cdti.com
if to Licensee: Airmail: Mitsui & Co., Ltd.
2-1, Ohtemachi 1-chome,
Chiyoda-ku, Tokyo, Japan
Attention: Yuji Shiro
General Manager
Research & Development Group
Inorganic Raw Materials Division
Fax: +81-3-3285-9149
E-mail: Y.Shiro@xm.mitsui.co.jp
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12.04 Successors
----------
This Agreement shall be binding upon the parties and their successors and
permitted assignees.
12.05 Entire Agreement
-----------------
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior communications,
understandings and agreements relating thereto except as expressly otherwise
herein provided.
12.06 Amendments
----------
No amendment to or modification of this Agreement shall be effective for any
purpose whatsoever, if not confirmed in writing by the duly authorized
representative of each of the parties.
12.07 No Waiver
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The failure of one party at any time to require performance by the other party
of any provision hereof, shall in no way affect such party's right to require
full performance thereof at any time thereafter, nor shall the waiver by one
party of a breach of any provision hereof be taken or held to
be a waiver by such party of any succeeding breach of such provision or as a
waiver of the provision itself.
12.08 Section Headings
-----------------
Section headings as used in this Agreement are for convenience only and shall
not effect the construction or interpretation of this Agreement.
Article XIII
ARBITRATION AND GOVERNING LAW
13.01 Arbitration
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Any controversy or claim arising out of or relating to this Agreement shall be
determined by arbitration under the International Arbitration Rules of the
American Arbitration Association. The arbitration shall take place in New York,
U.S.A., and shall be conducted in the English language. The award of the
arbitrator(s) shall be final and binding on both parties.
13.02 Governing Law
-------------
This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by, construed and interpreted in accordance with the
laws of the State of New York provided however, that issues related to the
validity and enforcement of the Patents shall be governed by Japanese law.
Article IX
Former License Agreement
------------------------
14.01 Former License Agreement
--------------------------
The parties hereby agree that the former license agreement entered into between
the parties on the 5th day of June 2000 with respect to the System shall be
automatically terminated and superseded by this Agreement in its entirety upon
execution of this Agreement.
14.02 Notices
-------
All notices hereunder shall be deemed effective when made in writing when (a)
upon receipt when delivered by hand or by facsimile transmission and
acknowledged electronically or by air courier and the courier records delivery
or (b) three days after deposit in the U.S.A mail when transmitted by postage
pre-paid certified or registered mail return receipt requested, in either case
to the addresses for the parties set out herein and to the attention of the
person signing below for such party or to such other address and person as may
by such notice be given.
14.03 Counterparts
------------
This License may be executed in any number of counterparts and each counterpart
shall be considered for all purposes as an original agreement but all such
counterparts shall in the aggregate constitute a single agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
Effective Date.
CLEAN DIESEL TECHNOLOGIES, INC. MITSUI & CO., LTD
/s/ James M. Valentine /s/ Jiro Tamagawa
- -------------------------------- -----------------------------------
James M. Valentine Jiro Tamagawa
Chief Operating Officer General Manager
Inorganic Row Material Division
SCHEDULE A
PATENTS
JP App. No. 542874/1998 Tarabulski Reducing NOx emissions from an
engine while maximizing fuel
economy, EGR/SCR.
WO 00/18491 (P1030A) CDTI and AMBAC Nozzle design (Injector).
PCT/US00/40111 (P7001A) FT and CDTI Urea supply controlled with the
aid of SCR fluorescence.
JP App. No. 541923/1998 Peter-Hoblyn Heat and pressure applied to NOx
(P1021C) Balles reducing material prior to
Hofmann Introduction into exhaust by
Return flow injection system.
(Fundamental return-flow concept)
WO 00/21881 (P1021D) Tarabulski In-tank module for urea solution
Knapper control and feed.
Peter-Hoblyn
Valentine
SCHEDULE B
Royalties & Fees
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(Stationary Diesel Engines)
Standard ARIS 2000 stationary unit (1 Injector) $***
2 Injector ARIS 2000 stationary unit $***
3 Injector ARIS 2000 stationary unit $***
(Includes required control upgrade)
4 Injector ARIS 2000 stationary unit $***
Spare Injector $***
Royalties on field-engineered systems will be
$*** per Injector plus ***% of Net Sales on all
other ARIS 2000 components including controls,
sensors, pumps and valves. Field engineered
-----------------
systems shall be those systems using other than
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standard modular ARIS units.
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Upfront Sublicense Fees
-----------------------
Licensor shall receive ***% of any Upfront
Sublicense Fee charged by Licensee to
Sublicensees.
AMENDMENT NO. 1 TO THE LICENSE AGREEMENT OF
JULY 13, 2001 BETWEEN MITSUI AND CDT
DATED DECEMBER 18, 2002
1) Under the Agreement of July 13, 2001 (the "Agreement") between the parties,
Mitsui acquired an option on a license for the mobile ARIS technology for
Japan. Subject to the following specific terms and conditions including
up-front license fees, royalties and minimums for the continuation of the
mobile license, CDT and Mitsui do hereby agree to amend the License
Agreement of July 13, 2001 to incorporate the previously excluded Mobile
Engine Market as a licensed Field in Japan consistent with the Terms and
Conditions of the Agreement.
2) Royalties for Mobile ARIS
a. Up Front License Fees: Mitsui will pay to CDT the amount of $250,000
as an upfront license payment on or before ***. Mitsui will further
undertake design, engineering, development and demonstration programs
in Japan of at least $*** in cost to further the commercialization of
the ARIS mobile technology over the *** month period commencing on
***. Mitsui will report to CDT on such expenditures on a mutually
agreed basis no later than ***.
b. Running Royalties shall be paid by License and sublicensees at the
following rates for ARIS mobile urea SCR Systems manufactured or
caused to be manufactured by Licensee or sublicensee or purchased from
CDT licensed manufacturers as below:
Cumulative Injectors Unit Royalty
-------------------- ------------
1 - 1,000 $***
1,001 - 100,000 $***
100,001 + $***
c. Licensee and each sublicensee shall pay a separate royalty of $*** per
application for each use of EGR/SCR combination following issuance of
a Japanese patent to CDT or its assignee if such combination is not
used in conjunction with the ARIS System covered by royalties under
2b.
d. In addition to targeted royalty amounts specified in 2.04 of the
Agreement, Licensee shall pay to Licensor additional targeted royalty
amounts of $***, $*** and $*** on the ***, *** and *** anniversaries
of this Amendment and Licensor shall have the right to render this
mobile License non exclusive if Licensee shall not make such payments
within *** days of each of such anniversary dates.
e. License shall pay to Licensor ***% of any sublicensee fees, if any,
collected by Licensee from sublicensees of the ARIS technology.
/s/ James M. Valentine /s/ Yuji Shiro
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CLEAN DIESEL TECHNOLOGIES, INC. MITSUI AND CO.