EXCLUSIVE PATENT AND KNOW-HOW LICENSE AGREEMENT
THIS AGREEMENT is by and between Thomas C. Edwards, Ph.D., residing at 1426 Gleneagles Way,
Rockledge, FL 32955 (hereinafter sometimes "Edwards"); and DynEco Corporation, a corporation of the State
of Minnesota, having offices at 564 International Place, Rockledge, FL, 32955 (hereinafter sometimes
WITNESSETH THE FOLLOWING RECITALS:
Whereas Edwards has heretofore licensed certain intellectual property to DynEco pursuant to a FIRST
AMENDED PATENT AND KNOW-HOW LICENSE AGREEMENT effective March 9, 1992, by and
between Edwards and CNS Compressor Corporation, a Minnesota corporation and which has been assigned to
DynEco, said FIRST AMENDED PATENT AND KNOW-HOW LICENSE AGREEMENT being hereinafter
referred to as the "1992 LICENSE AGREEMENT";
Whereas DynEco has heretofore licensed certain intellectual property to Parker-Hannifin Corporation, an Ohio
Corporation (hereinafter "Parker") pursuant to an EXCLUSIVE WORLDWIDE LICENSE AGREEMENT
effective May 1, 2003, and hereafter referred to as the "2003 PARKER AGREEMENT"; and
Whereas Edwards and DynEco desire to (1) terminate and supercede the 1992 LICENSE AGREEMENT to
provide a full and complete current listing of patents licensed to DynEco (hereinafter defined as LICENSED
PATENTS) and (2) validate the licensing of intellectual property by DynEco to Parker in the 2003 PARKER
NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter
contained, the parties hereto to hereby agree as follows:
ARTICLE I - INCORPORATION OF RECITALS, ACKNOWLEDGEMENT OF 2003 PARKER
AGREEMENT & TERMINATION OF 1992 LICENSE AGREEMENT
1.1 The parties hereto incorporate hereto by reference the above RECITALS and affirm that such are true and
1.2 Edwards agrees and confirms that (1) the 2003 PARKER AGREEMENT was entered into by DynEco with
his full consent and affirmative participation, and (2) he will use his best efforts to facilitate full compliance by
DynEco of all DynEco obligations set forth in the 2003 PARKER AGREEMENT.
1.3 The parties hereto agree that this AGREEMENT terminates and supercedes the 1992 LICENSE
ARTICLE II - DEFINITIONS
Whenever used in this AGREEMENT the following terms shall have the following meanings:
2.1 PRODUCTS shall mean all positive displacement fluid-moving devices including, for example, multi-vane and
single-vane-type compressors, expanders and pumps.
2.2 LICENSED PRODUCTS shall mean all PRODUCTS which are covered by LICENSED PATENTS.
2.3 LICENSED PATENTS shall mean all patents and patent applications (1) listed in Exhibit AA hereto, and (2)
based on new inventions of Edwards which relate to PRODUCTS, which are conceived by Edwards during the
term of Edwards' employment with DynEco, and which are filed pursuant to the provisions of ARTICLE VII.
2.4 EDWARDS KNOW-HOW shall mean all technical information, in any and all forms, created by or for
Edwards which relate to LICENSED PRODUCTS and which is created during the term of Edwards'
employment with DynEco.
2.5 DYNECO SELLING PRICE shall mean the price at which a LICENSED PRODUCT is invoiced by or for
DYNECO in an arm's length transaction less any sales taxes, freight charges, or shipping insurance which are
included in such invoice price.
ARTICLE III - EDWARDS LICENSE GRANTS
3.1 The grants by Edwards of this ARTICLE III shall become effective on the EFFECTIVE DATE. The
continued effectiveness of said grants is conditioned upon the receipt by Edwards of the payments required of
DynEco pursuant to the provisions of ARTICLE VI.
3.2 Edwards grants to DynEco an exclusive, worldwide, royalty bearing right under LICENSED PATENTS to
make, have made, use, have used, lease, sell and have sold LICENSED PRODUCTS, the aforesaid grant
including the right to grant sublicenses.
3.3 Edwards further grants to DynEco the exclusive, worldwide, royalty bearing right to use EDWARDS
KNOW-HOW in connection with the utilization by DynEco of the license granted in Paragraph 3.2 of this
ARTICLE IV - EFFECTIVE DATE
4.1 The EFFECTIVE DATE of this AGREEMENT is January 1, 2004.
ARTICLE V - DURATION OF THE AGREEMENT
5.1 The mutual obligations hereunder of the parties hereto shall cease upon the last to expire of the LICENSED
ARTICLE VI - PAYMENTS OF FEES TO EDWARDS, REPORTS & RECORDS
6.1 DynEco agrees to pay Edwards for the duration of this AGREEMENT, as a license fee in consideration for
the license grants of ARTICLE II, a royalty fee of one percent (1%) of the DYNECO SELLING PRICE of all
LICENSED PRODUCTS sold and/or leased by DynEco to third parties.
6.2 DynEco further agrees to pay Edwards for the duration of this AGREEMENT, as consideration for the
license grants of ARTICLE II, a fee of ten percent (10%) of the gross royalty fees received by DynEco from
DynEco licensees having sublicenses from DynEco under Paragraph 3.2 of ARTICLE III, provided, however,
the first five hundred thousand dollars ($500,000) of such gross royalty fees each calendar year shall be exempt
from the fee paid to Edwards under this Paragraph 6.2.
6.3 DynEco agrees that the fees payable under this ARTICLE shall be paid and reports provided to Edwards
quarterly within sixty (60) days following calendar quarters ending March 31, June 30, September 30 and
December 31. Reports for each quarter shall show (1) the total DYNECO SELLING PRICE of LICENSED
PRODUCTS sold and/or leased by DynEco and the amount of the Royalty Fee earned thereon as computed
pursuant to the provisions of Paragraph 6.1 of this ARTICLE, and (2) the gross royalty fees received by DynEco
from DynEco licensees having sublicenses from DynEco under Paragraph 3.2 of ARTICLE III and the amount of
the fee earned thereon as computed pursuant to the provisions of Paragraph 6.2 of this ARTICLE.
6.4 DynEco agrees, for a period of two (2) years after the relevant activity, to keep true and accurate records of
LICENSED PRODUCTS sold or leased thereby and of royalty received by sublicensees hereunder.
6.5 DynEco further agrees to permit Edwards, or a Certified Public Accounting entity appointed by him to have
access to the records to be kept by DynEco pursuant to the provisions of Paragraph 6.4 of this ARTICLE to
examine and inspect the same during business hours and not more than once during each calendar year to
determine the accuracy of the reports and payments made to Edwards hereunder.
ARTICLE VII - INVENTION DISCLOSURES & FILING OF NEW PATENT APPLICATIONS
7.1 Edwards agrees to provide timely written invention disclosures to DynEco on all new concepts (patentable or
unpatentable) relating to PRODUCTS which are conceived by Edwards during his employment by DynEco.
7.2 DynEco agrees to consider all disclosures provided by Edwards pursuant to Paragraph 7.1 of this ARTICLE
VII; it is agreed that DynEco has, on a case-by-case basis, the right but not the obligation to arrange for the filing
of patent applications on such disclosures. All patent applications filed by DynEco pursuant to this Paragraph 7.2
shall be considered added to Exhibit AA hereto.
7.3 DynEco agrees to provide timely notifications to Edwards of its decision concerning the filing of patent
applications for each invention disclosure provided by Edwards; it is agreed that Edwards has the right but not
the obligation to file, at his own expense, patent applications on any of such disclosures with respect to which
DynEco waives its right to file.
ARTICLE VIII - PAYMENT OF PATENT AND PATENT APPLICATION RELATED EXPENSES
8.1 DynEco agrees to pay all reasonable legal services charges and disbursements (including but not limited to
patent application filing, translation, prosecution, publication, and issuance fees; patent maintenance fees; and
foreign annuities) directly related to the patents and applications listed on Exhibit AA and which may be added to
Exhibit AA pursuant to the provisions of Paragraph 7.2 of ARTICLE VII hereof.
ARTICLE IX - INFRINGEMENT OF LICENSED PATENTS
9.1 DynEco and Edwards both agree to notify the other of any apparent infringement of LICENSED PATENTS
and to discuss and define appropriate action(s). DynEco shall have the right, but not the obligation, to elect to
proceed with an infringement action, at its own expense, and any recovery obtained will, after reimbursement of
DynEco's expenses, be shared equally with Edwards.
9.2 If DynEco decides not to pursue a specific apparent infringement, it shall provide timely notice to Edwards
and Edwards shall have the right, but not the obligation, to elect to proceed, at his sole expense with an
infringement action and any recovery obtained will, after reimbursement of Edwards' expenses, be shared equally
ARTICLE X - EXPIRATION, TERMINATION AND ASSIGNMENT
10.1 Upon expiration of this AGREEMENT, DynEco shall have the right to use
EDWARDS KNOW-HOW for any purpose without payment of any fee or royalty
10.2 DynEco may terminate this AGREEMENT without cause as of the end of the
year 2009 or any year thereafter by giving Edwards at least six (6)
months written notice of its intention to terminate.
10.3 In the event that either party shall fail or be unable to perform its
obligations hereunder due to circumstances within such party's control,
and if such default or inability should continue for ninety (90) days
after receipt of written notice thereof to the defaulting party and the
defaulting party has not proposed a written plan acceptable to the
non-defaulting party, the non-defaulting party shall have the right to
terminate this AGREEMENT by written notice at any time after the
expiration of such ninety (90) day period.
10.4 Any right to terminate this AGREEMENT shall be in addition to, not in
lieu of, any other rights or remedies of the non-defaulting party. No
waiver of either party of any breach of any of the provisions of this
AGREEMENT shall be construed as a waiver of any succeeding breach of
the same or other provision hereof.
10.5 In the event of termination of this AGREEMENT by Edwards pursuant to
Paragraph 10.3 of this ARTICLE, the rights and licenses granted in
ARTICLE III hereof shall terminate and DynEco shall return EDWARDS
KNOW-HOW and make no use thereof or of LICENSED PATENTS.
10.6 In the event of termination of this AGREEMENT by DynEco pursuant to
Paragraph 10.3 of this ARTICLE, DynEco shall have the right, at its
option, to continue being the licensee under the rights and licenses
granted in ARTICLE III, provided it honors its obligation under ARTICLE
VI hereof to pay fees to Edwards.
10.7 Neither Edwards' nor DynEco's rights under this AGREEMENT may be
assigned without the written consent of the other, except that Edwards
agrees that DynEco may assign this AGREEMENT in connection with the
sale of all of the business of DynEco with respect to which this
AGREEMENT relates, provided, however, this AGREEMENT shall be available
to legal representatives of Edwards.
ARTICLE XI - ARBITRATION, GOVERNING LAW & NO IMPLIED CONTINUING WAIVER
11.1 In the event of any controversy arising out of this AGREEMENT, the
parties agree to try to settle all such controversies amicably among
themselves; should this not be deemed mutually satisfactory, each
unresolved controversy shall be settled in Rockledge, Florida by
binding arbitration pursuant to the rules of conciliation and
arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the rules.
11.2 The cost of each arbitration which may occur pursuant to the provisions
of Paragraph 11.1 hereof shall be divided equally between the parties
hereto, and judgment upon the award rendered may be entered in any
court having jurisdiction thereof, provided, however, the award of the
arbitrator(s) may include compensary damages against either party but
under no circumstances will the arbitrator(s) be authorized to, nor
shall the arbitrator(s) award, either punitive or consequential damages
against either party hereto.
11.3 The Laws of the State of Minnesota, United States of America, shall
govern with respect to this AGREEMENT and any question which may arise
under this AGREEMENT.
11.4 If at any time either DynEco or Edwards shall elect not to assert its
rights under any provision of this AGREEMENT, such action or lack of
action in that respect shall not be construed as a waiver of its rights
under such provision or under any other provision of this AGREEMENT.
ARTICLE XII - EDWARDS REPRESENTATION & WARRANTY
12.1 Edwards represents and warrants that he has the right to grant the
licenses provided in this AGREEMENT and that he has the full power and
authority to enter into this AGREEMENT and to carry out the
transactions contemplated hereby.
ARTICLE XIII - BANKRUPCY
13.1 The parties hereto agree that if DynEco becomes bankrupt, this
AGREEMENT shall terminate, and the 2003 PARKER AGREEMENT shall be
honored by Edwards.
ARTICLE XIV - GENERAL PROVISIONS
14.1 Neither party appoints the other as its agent or legal representative,
and neither party shall have the right, power or authority to assume,
create or incur any expense, liability or obligation on behalf of the
other under this AGREEMENT.
14.2 Notices hereunder to Edwards shall be addressed to Thomas C. Edwards,
Ph.D., 1426 Gleneagles Way, Rockledge, FL 32955 and notices hereunder
to DynEco shall be addressed to DynEco Corporation, 564 International
Place, Rockledge FL, 32955 or to such other address as the parties
designate by notice in writing.
14.3 This AGREEMENT sets forth the entire agreement and understanding
between the parties relating to the subject matter hereof, and
supercedes and cancels all prior discussions and agreements between
them relating to such subject matter.
14.4 Any amendment to or modification of this AGREEMENT shall be effective
only if in writing and executed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT (consisting of seven
(7) pages and Exhibit AA) to be duly executed as of the dates indicated below.
DYNECO CORPORATION THOMAS C. EDWARDS, PhD
By (signature)________________________ ____________________________
G.R. Schell Date:_______________2004
Title: DIRECTOR & CHAIR, PATENT COMMITTEE
ATTACHMENT: EXHIBIT AA
This Document Drafted by:
Roger W. Jensen, Attorney
Roger W. Jensen & Associates, Ltd.
8127 Pennsylvania Circle
Bloomington, MN 55438
952.943.0118 (fax) firstname.lastname@example.org
TECHNOLOGICAL RESEARCH AND DEVELOPMENT AUTHORITY
STATE OF FLORIDA
INVESTMENT INITIATIVE FOR ENERGY TECHNOLOGIES
TRDA FUNDING AGREEMENT
This Agreement, dated November 20, 2002, ("Effective Date"), is made between the Technological Research
and Development Authority of the State of Florida, having its principal place of business at 5195 South US
Highway 1, Titusville, Florida 32780 ("TRDA") and DynEco Corporation, having its principal place of business
at 564 International Place, Rockledge, FL 32955 ("DynEco").
WHEREAS under a special agreement with the Florida Department of Community Affairs ("Department"),
TRDA operates a program titled "Investment Initiative for Energy Technologies" pursuant to which TRDA may
provide funding to Florida for-profit companies;
WHEREAS the purposes of the program are to benefit Florida's economy and promote energy conservation and
efficiency by assisting Florida companies with the commercialization of energy-related technologies and related
new or advanced products and services, the creation of new jobs, and the replenishment of program funds;
WHEREAS DynEco has applied for funding by TRDA to develop and commercialize the UniVane compressor,
WHEREAS DynEco has obtained the required matching funds as indicated in their proposal.
NOW, THEREFORE, in consideration of the representations and mutual promises set forth herein, the parties
agree as follows:
A. INCORPORATION OF RECITALS. The parties represent and warrant that the above recitals are true and
correct and are hereby incorporated in the body of this Agreement by this reference.
B. PURPOSE. The purpose of this Agreement is to provide for the partial funding for the development and
commercialization of UniVane compressors and hydrogen circulators developed by DynEco for fuel cell
applications. Upon the completion of development, DynEco will develop the market for and engage in the
commercialization of new technology. In consideration of the funding to be supplied by TRDA, DynEco will
make royalty payments to TRDA from Gross Sales. Funding DynEco aims to bring about significant energy
savings, create high tech jobs and attract new capital investment, promote the State of Florida as a recognized
fuel cell industry center, and replenish the program's funds. This Agreement is intended to govern the performance
of the parties, including the use of TRDA funds, commercialization goals and compliance with the requirements of
the Investment Initiative for Energy Technologies.
C. DEFINITIONS. For purposes of this Agreement, the following words and terms shall have the meaning set
1. "Gross Sales" means all revenues recognized in accordance with generally accepted accounting principles from
the sale, distribution, lease or other disposal of the Product by DynEco or any subsidiary, affiliate or sublicensee
of DynEco in the Territory, less returns, allowances, prompt payment and volume discounts that are customarily
provided in the industry. Freight, packing, insurance, and sales and other taxes based on a sale of the Product
may be deducted from Gross Sales when included in the gross sales price, but not taxes assessed on income
derived from such sales. Gross Sales shall also include revenues generated from the licensing, sale or other
disposition, of Inventions.
2. "Inventions" means all inventions, discoveries, concepts, research, ideas and improvements conceived or
developed, individually or jointly, prior to or during the term of this Agreement, that relate directly or indirectly to
the Services regardless of whether a patent, copyright or another type of legal protection covers that subject
matter, and regardless of the tangible form in which the subject matter is embodied.
3. "Services" means the development, engineering, management, financial controls and production of UniVane
compressors and hydrogen circulators. For purposes of calculating royalties due TRDA hereunder, Services shall
also include all fees, sums and credits received from the sale, license, rental or other temporary or permanent
disposition of products, devices, software, technologies or Inventions relating to the Services.
4. "Product" means the manufacture or sale of UniVane compressors and hydrogen circulators. For purposes of
calculating royalties due TRDA, Product shall also include all other products, devices and technologies that (a)
result directly or indirectly from the development of the Product, and (b) as of the Effective Date are not in or
ready for production at DynEco or any facility under contract with DynEco, its subsidiaries or affiliates.
5. "Project" means all acts expressly contemplated by this Agreement, or which are otherwise necessary for the
performance of DynEco hereunder.
6. "Related Entities" means entities that are directly or indirectly involved with the development, technology,
licensing or manufacturing of the Product and which are under common control or ownership with DynEco.
7. "Territory" means all the countries of the world.
D. REPRESENTATIONS. DynEco represents and warrants that:
1. It is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida,
with its principal office located at 564 International Place, Rockledge, FL 32955, and, together with its
subsidiaries and affiliates, is in good standing under the laws of the jurisdictions in which it conducts its business.
2. It intends to maintain its principal location in the State of Florida for at least as long as any sums are due to
3. It lawfully possesses, whether through ownership, agreement or license, any and all rights to the technology
required for the completion of the Project and the provision of Services and, with the funding provided herein, it
can both complete the project development and provide Services.
4. The information supplied in the proposal and all other documents delivered to TRDA are true, accurate and
complete to the extent presented in the proposal.
5. There are no actions, suits or proceedings pending against DynEco, or to the knowledge of DynEco,
threatened against it, or orders, judgments, injunctions or decrees that would materially affect the Project or the
Services, including the ability of DynEco to make all payments required hereunder. DynEco's Notes to Financials
are incorporated here by Reference.
6. It is not in default with respect to any order of any court or governmental authority, or in violation of any
ordinances, governmental rules or regulations to which it is a party or to which it is subject.
7. Neither it, any member of its staff, or any subcontractor is debarred or suspended or is otherwise excluded
from or ineligible to participate on government funded programs.
E. CONDITIONS OF TRDA FUNDING. It is understood that DynEco shall:
1. Diligently perform the work in a manner that is consistent with its proposal to TRDA for the development and
commercialization of UniVane compressors and hydrogen circulators, set forth as Exhibit A, and the
Work/Payment Schedule and Statement of Work set forth as Exhibit B.
2. Provide the necessary personnel, material, services, technology, equipment and facilities to meet the milestones
and other critical dates required to complete the Project.
3. Assist TRDA and the Department in complying with the Stripper Well Settlement Agreement and guidance
issued by the US Department of Energy, the Financial Assistance Rules described in Title 10, Part 600, as well
as those regulations concerning the use of oil overcharge recovery funds.
4. Upon reasonable notice, allow representatives of TRDA, the Department, or other interested groups or
parties, reasonable visitation to the facilities and sites associated with the Project.
5. Make no future expenditures or take any action material to the Project that has not been approved by TRDA,
and immediately notify TRDA in the event of any changes relating to the scope or direction of the Project. No
funds provided hereunder, whether by TRDA or matching funds, shall be used to fund work performed, or
activities not directly related to the performance of this Agreement, such as basic research, seminars, training
programs, business plan development, market research, interest expense, claims or litigation. Funds provided
hereunder by TRDA shall be used to match funds obtained by DynEco.
6. Conduct a minimum of seventy-five percent (75%) of the work represented by this Agreement, including the
work funded by TRDA, the matching funds and by DynEco, within the State of Florida.
7. Require that all subcontractors agree to be bound by terms and conditions no less restrictive than those
contained herein, including such terms as they relate to the indemnification of TRDA. All subcontracts shall
require a prior notification to and approval by TRDA and copies of the executed agreements shall be provided to
TRDA within ten (10) days after their execution.
8. Complete the Project within twenty four (24) months of the Effective Date.
F. TRDA FUNDING/PAYMENT.
1. The funds to be disbursed by TRDA pursuant to this Agreement shall not exceed One Hundred Fifty
Thousand Dollars ($150,000.00). Funding shall be subject to the receipt by TRDA of sufficient funds from the
Department. TRDA will notify DynEco within ten (10) days of any reduction in funds provided hereunder.
2. TRDA payments shall be made to reimburse DynEco for 50% of its allowable costs pursuant to Paragraph E.
5. and in accordance with Exhibit B, the Work/Payment Schedule and Statement of Work. It is understood that
DynEco submit no more than one request for reimbursement within each calendar month and that any payment
with respect thereto is conditioned on (a) the completion of applicable tasks and subtasks and the receipt and
approval by TRDA of the deliverables contemplated by the Work/Payment Schedule and Statement of Work (as
described in Section H.), (b) receipt of allowable costs with including paid invoice(s) as required, (c) receipt of
monthly reports, and (d) such other documents, information and certifications required by this Agreement.
3. Payments will be issued within thirty (30) days from the receipt and approval of a DynEco reimbursement
claim containing an original signature of an authorized DynEco representative, specifying the payment requested
(not exceeding 50% of invoices as noted in Paragraph F. 2. above paid by DynEco on approved expenses), the
tasks and subtasks completed, the time period covered and the following certification:
"This is to certify that this invoice is for requesting payment only on those tasks that have been completed in
accordance with this Agreement. It is further certified that no portion of the funds received or to be received have
or will be used for lobbying in violation of Section 216.347 of the Florida Statutes."
4. To the extent that any tasks and/or subtasks have not been completed to the satisfaction of TRDA, TRDA
shall both notify DynEco of such event and withhold an amount equal to the amount requested for such tasks and
subtasks. Unless DynEco can complete the tasks and/or subtasks, which are the subject of the notification, to the
satisfaction of TRDA before the closing of TRDA's regular payment cycle, payment for such tasks and/or
subtasks shall occur upon receipt of the invoice in the following month.
5. Requests for revisions in the Work/Payment Schedule and the Statement of Work shall be submitted in writing
and promptly reviewed by the parties. Determinations on such requests will be rendered by the TRDA Board
within thirty (30) calendar days of receipt. Unapproved revisions will not be reimbursed by TRDA.
G. ROYALTY PAYMENTS.
1. DynEco shall pay, or cause to be paid, to TRDA royalty payments equal to five percent (5%) of the Gross
Sales in any calendar year. Such payments shall be made quarterly beginning with the calendar quarter after the
quarter during which Gross Receipts are first received by DynEco.
Unless this Agreement is terminated pursuant to Section O, below, in which case any amounts owed shall be
immediately due and payable, royalty payments shall continue until an amount equal to three (3) times the total
amount of the TRDA funding has been received by TRDA from DynEco. At its sole option, DynEco may make
advance payments or payments in excess of those required hereunder, and such payments shall be credited
against the total amount due.
2. Notwithstanding anything to the contrary herein, DynEco may, in its sole discretion, and at any time during the
term of this Agreement, pay an amount to TRDA equal to three (3) times the total amount of the TRDA funding
received by DynEco as of that date (less any unexpended funds returned to TRDA), and in doing so, DynEco is
thereafter relieved of any further obligations under this Agreement.
H. EVALUATION AND REPORTING REQUIREMENTS. The following reports, documents and
demonstrations are required for presentation and delivery to TRDA:
1. Bi-Monthly Reports. DynEco shall submit a copy of a written report on the status of the activities that are
being conducted pursuant to this Agreement. The reports will be submitted through the end of the agreement and
will address, but not be limited to the following:
(a) accomplishments relative to milestones and schedules
(b) financial status
(i) budget summary for the project period covered by the report
(ii) budget summary for the project overall to date
(iii) explanation for any requested budgetary changes
(iv) job cost detail report reflecting costs incurred for which all funds with respect to the Project were used
(c) activities of each contractor, subcontractor or other participants
(d) detail of any slippage or any difficulties encountered
(e) measures by DynEco to address items in (d) above
(f) explanation for any requested change in focus or timeline for the Project
(g) material changes in project personnel
(h) any other material changes that could affect the outcome or commercial potential of the Project
(i) anticipated date for first use or sale of the Services
(j) savings as a result of incorporation of the Product into DynEco production processes, if applicable
(k) results of any demonstrations and testing
(l) the intellectual property rights maintained by DynEco in the Products
(m) patent and copyright indemnities provided by DynEco to any person or entity in connection with the Project
2. Tasks/Deliverables Report. DynEco shall submit a Tasks/Deliverables Report, consistent with Exhibit B, the
Work/Payment Schedule and Statement of Work, with each reimbursement request. The Tasks/Deliverables
Report shall include all the designated designs, plans, results, etc., and provide specific detail describing and
verifying the achievement of the respective project tasks. The invoice accompanying the Tasks/Deliverables
Report shall be for an amount no greater than specified on the Work/Payment Plan.
3. Final Reports. Ten (10) copies of a final Project report must be submitted to TRDA not later than thirty (30)
calendar days after completion of the work specified in Exhibit B. A final
invoice/fiscal report must be submitted not later than sixty (60) calendar days after completion of the work
specified hereunder. The final project report will include a narrative that details and evaluates the
accomplishments and impacts of the Project, and the final Fiscal report will address each of the items referenced
in (a) through
4. Demonstrations. Upon request, DynEco shall demonstrate the capabilities of its UniVane compressor to
TRDA and the Department.
5. Annual Impact Surveys. DynEco will complete and return to TRDA Economic Impact Surveys on an annual
basis for ten (10) years after the First Use, or until such later date as DynEco has made full payment as defined in
paragraph G, ROYALTY PAYMENTS.
6. Financial Statements. DynEco shall provide to TRDA a project financial report on its UniVane compressor
operations, including balance sheet and income (P&L) statement. This report shall be submitted within ninety (90)
days from the end of each fiscal year, or portions thereof, on an annual basis for up to ten (10) years, or until
such time as DynEco has made full payment as defined in paragraph G, ROYALTY PAYMENTS. Project
Financial Report is subject to third party audit as defined hereafter in paragraph J, ROYALTY
I. PROJECT RECORDS.
1. DynEco shall retain all financial records, supporting documents, statistical records and any other documents
relating to this Agreement for a period of not less than three (3) years from the date of expiration of this
Agreement, or final payment to TRDA hereunder, whichever is later. In the event of any litigation, claim, or audit
involving such records and documents, this period shall be extended until such matters have been resolved.
2. DynEco understands and agrees that except for reports containing trade secrets as defined by Chapter
812.081 of the Florida Statutes, any records relating to this Agreement, whether in the possession of TRDA, the
Department or DynEco, may be a "public record" as defined in Chapter 119, Florida Statutes, and that such
records may have to be available for public inspection and copying at reasonable times and under reasonable
circumstances. Any requests for disclosure will be evaluated by legal counsel prior to such disclosure to insure
that TRDA is in full compliance with applicable state law.
J. ROYALTY REPORTS/AUDIT
1. Beginning as of the second calendar quarter of 2005, DynEco shall make written quarterly reports to TRDA
within thirty (30) days after the first day of each of the months of January, April, July and October during the life
of this Agreement. Such reports shall state in sufficient detail the usage and other components of Gross Revenues
during the preceding three (3) calendar months and upon which royalties are payable as well as the detail
requested in Section H.1 (d), (g),
(h), and (j).
2. Concurrent with the making of each such report, DynEco shall pay TRDA royalties at the rates specified.
3. DynEco shall keep full, clear and accurate books and records with respect to the Sales of Products subject to
royalties hereunder. Such books and records shall be kept at DynEco's Principal Florida Office and made in a
manner such that the royalty reports made pursuant to this section can be verified. TRDA, or authorized
representatives of TRDA, shall have the right to both examine and audit such records upon reasonable notice
during normal business hours, but not more than twice
per year. In case of any dispute as to the sufficiency or accuracy of such records, TRDA may have an
independent auditor examine and certify such records. Such inspections shall be at the expense of TRDA, unless
a variation or error to the prejudice of TRDA exceeding three percent (3%) is discovered. In such event,
DynEco shall be responsible for all costs relating to such audit. DynEco will promptly pay to TRDA the full
amount of any underpayment together with interest thereon at the current prime interest rate as reported in the
Wall Street Journal the week underpayments are reported.
K. INSURANCE. DynEco shall procure and thereafter maintain the following types of insurance in not less than
the stated minimum coverage with respect to its performance under this Agreement:
1. Worker's Compensation Insurance in accordance with statutory requirements for all States in which the
Project is performed.
2. Employer Liability Insurance with a limit of not less than $ 500,000 in the aggregate.
3. Comprehensive General Liability Insurance providing Operations Liability, Owners and Contractual Protective
Liability and Contractual Liability (specifically, but not by way of limitation, covering liability assumed under the
section below titled Indemnification). Coverage is to include the hazards of explosion, collapse and underground
damage. The policy shall provide a combined single limit of liability for personal injury (including death) and
property damage for not less than $1,000,000 for each occurrence.
L. INDEMNIFICATION. DynEco, at its sole expense, shall indemnify and hold the State of Florida, TRDA, the
Department, associated agencies of the State of Florida, and their directors, officers, employees, agents, affiliates,
designees and assignees, harmless from any loss, damage or liability or expense arising as the result of the
performance of this Agreement by DynEco or its subcontractors, or in the course of the development, testing and
use of the UniVane compressor, or with respect to its compliance with all laws and regulations, including those
specifically included herein. DynEco, at its sole expense, shall defend any suit or dispose of any claim or other
proceedings brought against said indemnities on account of such loss, damage, liability, or expense and shall pay
all costs and expenses, including attorneys' fees, and satisfy all judgments which may be incurred by or rendered
against said indemnities.
M. INDEPENDENT CONTRACTOR. Notwithstanding anything to the contrary in this Agreement, or any
other communications between the parties, DynEco shall be deemed an independent contractor and not an agent,
employee, joint venturer or partner of TRDA, the Department or the State of Florida. DynEco is not authorized
to represent itself as an agent or employee of TRDA, the Department, or the State of Florida before any person
or entity and TRDA shall not be bound by any acts or conduct of DynEco.
N. EXCUSABLE DELAY. Acts of God, or of the public enemy, acts of the Government in its sovereign
capacity, fires, floods, strikes, epidemics, quarantine restrictions, or freight which cause failure to perform
hereunder and, in every case, are beyond the reasonable control and without the fault or negligence of DynEco,
shall constitute an excusable delay, if written notice thereof is given to TRDA within ten (10) days after such event
shall have occurred. In the event of delay resulting from any of the above causes, only the applicable delivery
requirements will be extended accordingly.
O. TERM AND TERMINATION.
1. This Agreement shall be effective as of the date first specified above and shall remain in force for a period of
ten (10) years, unless otherwise terminated as provided herein or renegotiated, or agreed upon by the mutual
consent of TRDA and DynEco or its successor company.
2. This Agreement may be terminated as follows:
(a) By TRDA for cause immediately upon written notice to DynEco. Cause shall include, without limitation,
misuse of funds, fraud, DynEco's abandonment of the Project, a material change in the scope or focus of the
Project, refusal by DynEco to permit public access to any document or other material subject to disclosure under
Chapter 119 of the Florida Statutes, as amended, or the transfer or attempted transfer by DynEco to a third
party of its rights and obligations in connection with the Project.
(b) By TRDA immediately upon written notice in the event DynEco becomes insolvent or is the subject of
proceedings under any law relating to bankruptcy or the relief of debtors or admits its inability to pay its debts as
they become due.
(c) By TRDA or DynEco upon ten (10) days written notice in the event of any suspension or termination of funds
by the Department or any state or federal agency providing financial assistance to the Project. Should TRDA
disburse to DynEco an amount less than $150,000 as a result of receiving insufficient funds from the Department,
this agreement shall immediately terminate and the DynEco obligation to TRDA shall be limited to the return of all
(d) By TRDA upon thirty (30) days written notice in the event a default by DynEco of any of the provisions of
this Agreement, provided that DynEco shall have thirty (30) days in which to cure any such default.
(e) By mutual written consent of the parties.
3. If terminated by TRDA under (a), (b), or (d) above, notwithstanding any provisions herein to the contrary,
TRDA shall be entitled to recover in royalty payments three (3) times the amount of funding received by DynEco
from TRDA which shall become due and payable immediately upon receipt of written notice of termination.
4. If terminated by TRDA under (c) or by the parties pursuant to (e) above, DynEco shall pay to TRDA only that
amount of the funds actually provided by TRDA hereunder, payable pursuant to Section G, Royalty Payments,
5. In the event of any termination of this Agreement, all unexpended funds of TRDA shall be returned to TRDA
and all property costing in excess of five hundred dollars ($500.00) and purchased exclusively with TRDA funds
shall become the property of TRDA.
P. CONTINGENT FEES PROHIBITED. DynEco represents and warrants that no person, selling agency, or
other organization has been employed or retained to solicit or secure this Agreement upon a contract or
understanding for a commission, percentage, brokerage, or contingent fee. In the event of a violation of this
section, TRDA may, in its sole discretion, terminate the Agreement pursuant to
the Termination provision, below, or deduct the full amount of any such commission, percentage, brokerage, or
contingent fee from the funds it provides hereunder.
Q. LOBBYING AND POLITICAL ACTIVITY PROHIBITED.
1. DynEco represents and agrees that no federal, State of Florida, or TRDA funds have been paid or will be paid
by or on behalf of DynEco to any person for influencing or attempting to influence any officer or employee of any
federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of
any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal,
amendment or modification of any federal contract, grant, loan or cooperative agreement.
2. If any funds other than federally appropriated funds have been paid by DynEco to any person for influencing or
attempting to influence an officer or employee of any federal agency, a Member of Congress, an officer or
employee of Congress, or an employee of a Member of Congress in connection with this Agreement, DynEco
shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions. DynEco shall require that the language of this section be included in the award documents for all sub-
awards at all tiers (including subcontracts, subgrants, and contracts under grants, loans and cooperative
agreements) and that all recipients shall certify and disclose accordingly.
3. No funds received pursuant to this Agreement may be expended for lobbying the legislature or any state
R. COMPLIANCE WITH THE LAW. DynEco shall comply with all applicable federal, state and local laws and
regulations, including all United States export laws and regulations and the following:
1. Discrimination in Employment. DynEco shall comply with all federal and state employment laws and regulations
and, with respect to the operation of this Agreement, shall assure TRDA that no person shall be excluded from
participation in, be denied the benefits of, or be otherwise subjected to discrimination on the grounds of race,
color, national origin, sex, or handicap, under any program or activity in which TRDA, or the Department,
provides funds received from the federal or state government.
2. Clean Air and Water Act. DynEco shall comply with all applicable standards, orders, or requirements issued
pursuant to the following:
Section 306 of the Clean Air Act, Section 508 of the Clean Water Act, and Environmental Protection Agency
S. RELIGIOUS ACTIVITY PROHIBITED. DynEco shall use its best efforts to prohibit religious activity,
including religious instruction, missionizing or proselytizing at the project site or sites during the performance of
T. PUBLICATIONS AND PUBLICITY. Any publications which result from the Project, including without
limitation, follow-up studies, research papers, articles, patent applications, or student theses or dissertations, shall
be properly acknowledged and reported to TRDA in a timely manner. DynEco shall obtain the prior written
approval of TRDA concerning the content and timing of news releases, articles, brochures, advertisements,
speeches and other information releases concerning the performance of the Agreement. Notwithstanding the
above, all information that is disseminated as a result of this Agreement shall contain the following statement which
acknowledges support from the Department and TRDA:
"Funding for this project was provided in part by the Department of Community Affairs/Florida Energy Office
and the Technological Research and Developmental Authority."
U. NOTICES. Any notice(s) required or permitted to be given or made in this Agreement shall be in writing.
Such notice(s) shall be deemed to be duly given or made when it shall have been delivered by hand or registered
mail to the party to which it is required to be given or made at such party's address specified below:
If for DynEco: DynEco Corporation.
564 International Place
Rockledge, FL 32955
Attn: Dr. Thomas C. Edwards
If for TRDA: TRDA
5195 South Washington Ave
Titusville, Florida 32780
Attn: Ms. Bobbie Sirmons
V. LIMITATION OF LIABILITY. In no event shall TRDA be liable to DynEco for any damages whatever
resulting from (a) death or bodily injury, or (b) any special, exemplary, consequential, or incidental damages,
including but not limited to lost profits, whether arising out of contract, tort, strict liability, or otherwise, resulting
from or relating to this Agreement. This section will apply notwithstanding any other provisions of this Agreement.
1. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the
State of Florida. The courts of Brevard County, Florida, shall be the venue in the event of any action or
proceeding with respect to the operation or construction of this Agreement.
2. Attorney's Fees and Costs. In any dispute arising out of or related to this Agreement, the prevailing party in
such dispute shall be entitled, as part of the final award, to recover its reasonable attorney's fees and costs,
including costs of experts.
3. Conformance with Standards. Where any code, ordinance, or governmental regulation requires a material or
item to conform to a particular standard, DynEco shall, at the request of TRDA, deliver to TRDA a certificate
stating that the material or item furnished conforms to the standard prescribed.
4. Successors and Assigns. This Agreement shall be binding on the parties hereto, and their respective
subsidiaries, successors and assigns. DynEco may not delegate any of its duties or assign any of its rights without
the prior written consent of TRDA, which consent shall not unreasonably be withheld.
5. No Modification. This Agreement may not be modified or amended except in a written document signed by
authorized representatives of both parties.
6. Entire Agreement. The terms and conditions of this Agreement, including all referenced exhibits, constitute the
final and entire agreement between the parties, and no prior or contemporaneous representations, expressions or
agreements, either written or oral, shall vary or supplement the terms hereof. The terms of this Agreement shall
not be supplemented or contradicted by any course of dealing, usage of trade or course of performance under
this or other contracts or agreements.
EXHIBIT A DYNECO PROPOSAL
EXHIBIT B WORK/PAYMENT SCHEDULE AND STATEMENT OF WORK
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.
TECHNOLOGICAL RESEARCH AND DYNECO CORPORATION.
Mr. Frank Kinney, Executive Director Dr. Thomas C. Edwards, CEO
This Employment Agreement (this "Agreement") is made effective as of January 01, 2004, by and between
DynEco Corporation ("DYCO"), of 564 International Place, Rockledge, Florida, 32955 and Thomas C.
Edwards ("Edwards"), of 1426 Gleneagles Way, Rockledge, Florida, 32955.
A. DYCO is engaged in the business of Research and Design of air compressors and hydrogen circulators.
Edwards will primarily perform the job duties at the following location: 564 International Place, Rockledge,
B. DYCO desires to have the services of Edwards.
C. Edwards is willing to be employed by DYCO. Therefore, the parties agree as follows:
1. EMPLOYMENT. DYCO shall employ Edwards as Chief Technical Officer and Chief Executive Officer.
Edwards accepts and agrees to such employment.
2. BEST EFFORTS OF EMPLOYEE. Edwards agrees to perform to the best of Edwards's ability, experience,
and talents in the business of and technical field of positive displacement compressors, in addition to the duties
that may be required by the express and implicit terms of this Agreement, to the reasonable satisfaction of
DYCO. Such duties shall be provided at such place(s) as the needs, business, or opportunities of DYCO may
require from time to time. Herein the term "compressor(s)" means positive displacement fluid-moving devices.
3. COMPENSATION OF EMPLOYEE. As compensation for the services provided by Edwards under this
Agreement, DYCO will pay Edwards an annual salary of $60,000.00 in 2004, $70,000 in 2005, $80,000 IN
2006, $90,000 IN 2007 AND $100,000 IN 2008 and negotiable thereafter and payable in accordance with
DYCO's usual payroll procedures. Upon termination of this Agreement, payments under this paragraph shall
cease; provided, however, that Edwards shall be entitled to payments for periods or partial periods that occurred
prior to the date of termination and for which Edwards has not yet been paid. Accrued vacation will be paid in
accordance with state law and DYCO's customary procedures. This section of the Agreement is included only
for accounting and payroll purposes and should not be construed as establishing a minimum or definite term of
4. EXPENSE REIMBURSEMENT. DYCO will reimburse Edwards for "out-of-pocket" expenses incurred by
Edwards in accordance with DYCO's policies in effect from time to time.
5. EMPLOYEE INSURANCE. DYCO will pay Edwards' medical, dental and supplemental insurance in
accordance with DYCO's existing policies.
6. RECOMMENDATIONS FOR IMPROVING OPERATIONS. Edwards shall provide DYCO with all
information, suggestions, and recommendations FOR the term of the this agreement regarding DYCO's
compressor business, of which Edwards has knowledge that will be of benefit to DYCO.
7. CONFIDENTIALITY. Edwards recognizes that DYCO has and will have information regarding the following:
- compressor inventions
- product design
- technical matters
- trade secrets
and other vital information items (collectively, "Information") which are valuable, special and unique assets of
DYCO. Edwards agrees that Edwards will not at any time or in any manner, either directly or indirectly, divulge,
disclose, or communicate any Information to any third party without the prior written consent of DYCO.
Edwards will protect the Information and treat it as strictly confidential. A violation by Edwards of this paragraph
shall be a material violation of this Agreement and will justify legal and/or equitable relief.
8. CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. The confidentiality provisions of this
Agreement shall remain in full force and effect for a Five Years period after the termination of Edwards's
employment. During such Five Years period, neither party shall make or permit the making of any public
announcement or statement of any kind that Edwards was formerly employed by or connected with DYCO.
9. NON-COMPETE AGREEMENT. Edwards recognizes that the various items of Information are special and
unique assets of the company and need to be protected from improper disclosure. In consideration of the
disclosure of the Information to Edwards, Edwards agrees and covenants that for a period of Five Years
following the termination of this Agreement, whether such termination is voluntary or involuntary, Edwards will not
directly or indirectly engage in any business competitive with DYCO. Directly or indirectly engaging in any
competitive compressor business including: (i) engaging in a business as owner, partner, or agent, (ii) becoming an
employee of any third party that is engaged in such compressor business, (iii) becoming interested directly or
indirectly in any such compressor business, or (iv) soliciting any customer of DYCO for the benefit of a third
party that is engaged in such compressor business.
10. TERM/TERMINATION. Edwards's employment under this Agreement shall be for Five Years, beginning
on January 01, 2004. This Agreement and Edwards' employment by DYCO may be terminated by DYCO,
upon written notice to Edwards, in the event (a) Edwards is convicted of a felony, (b) of the death of Edwards,
(c) of Edwards' improper or personal use of DYCO's assets, (d) of the commission of acts of fraud, dishonesty,
malfeasance, criminal activity, wrongful conduct, breach of fiduciary duty Edwards against the Company or its
affiliates, or in connection with the performance of his duties hereunder; and (e) of Edwards' willful failure or
refusal to comply with the provisions of this Agreement, or his failure to perform his duties and obligations under
this Agreement in any material respect following written notice of such failure or refusal and Employee's failure to
cure same within 30 days following Edwards' receipt of such notice. Termination of this Agreement shall not
affect Edwards' entitlement to any compensation due to Edwards up to the date of termination. Termination of
this Agreement or Edwards' employment hereunder shall not, in and of itself, affect the validity or continued
effectiveness of a certain Exclusive Patent and Know-How License Agreement dated effective January 1, 2004.
11. TERMINATION FOR DISABILITY. DYCO shall have the option to terminate this Agreement, if Edwards
becomes permanently disabled and is no longer able to perform the essential functions of the position with
reasonable accommodation. DYCO shall exercise this option by giving 180 days written notice to Edwards.
12. COMPLIANCE WITH EMPLOYER'S RULES. Edwards agrees to comply with all of the rules and
regulations of DYCO.
13. RETURN OF PROPERTY. Upon termination of this Agreement, Edwards shall deliver to DYCO all
property which is DYCO's property or related to DYCO's business (including keys, records, notes, data,
memoranda, models, and equipment) that is in Edwards's possession or under Edwards's control. Such obligation
shall be governed by any separate confidentiality or proprietary rights agreement signed by Edwards.
14. NOTICES. All notices required or permitted under this Agreement shall be in writing and shall be deemed
delivered when delivered in person or on the third day after being deposited in the United States mail, postage
paid, addressed as follows:
564 International Place
Rockledge, Florida 32955
Thomas C. Edwards
1426 Gleneagles Way
Rockledge, Florida 32955
Such addresses may be changed from time to time by either party by providing written notice in the manner set
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties and there are no other
promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties.
16. AMENDMENT. This Agreement may be modified or amended, if the amendment is made in writing and is
signed by both parties.
17. SEVERABILITY. If any provisions of this Agreement shall be held to be invalid or unenforceable for any
reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or
enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
18. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this
Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement.
19. APPLICABLE LAW. This Agreement shall be governed by the laws of the State of Florida.
By: ____________________________ Date: ______________________ G.R. Shell
AGREED TO AND ACCEPTED.
________________________________ Date: ______________________ Thomas C. Edwards
EXCLUSIVE WORLDWIDE LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is made and entered into as of the 1st day of May, 2003
("Effective Date"), by and between DYNECO CORPORATION, a Minnesota corporation with an address at
564 International Place, Rockledge Florida 32955 ("DynEco"); and PARKER-HANNIFIN CORPORATION,
an Ohio corporation located at 6035 Parkland Boulevard, Cleveland, Ohio 44124-4141 (together with its
R E C I T A L S:
Whereas, DynEco has developed air compressors and hydrogen circulators currently referred to as "UniVane",
for fuel cell air management systems, and is the owner of certain intellectual property therein.
Whereas Parker desires to manufacture and sell such compressors and circulators, under license from DynEco,
pursuant to the terms and conditions specified herein.
Now therefore, the parties hereto agree as follows:
As used in this agreement, the following terms when written with initial capital letters shall have the meanings set
1.1 Licensed Products: Shall mean air compressors and hydrogen circulators, including but not limited to the
products identified on Exhibit A hereto. The products covered by the term "Licensed Products" may be updated
or modified by mutual written agreement between the parties.
1.2 Licensed Technology: Shall mean all DynEco knowledge and information (including but not limited to trade
secrets and know-how) pertaining to the Licensed Products, including all designs, specifications, drawings, test
procedures, prototypes, test results, manufacturing processes and techniques, manufacturing equipment, sources
of supply, packaging, uses, applications, market studies, marketing data and customer requirements of the
1.3 Licensed Patent(s): Shall mean all patents now or later owned or controlled by DynEco during the term of
this Agreement which contain claims that would be infringed by the manufacture, use and/or sale of the Licensed
Products, including without limitation, the patents listed on Exhibit B hereto. Exhibit B shall be updated as
appropriate during the Term of this Agreement if any further patents are acquired by or issued to DynEco.
1.4 Territory: Shall mean the World.
1.5 Net Selling Price shall mean:
a. the price at which a Licensed Product is invoiced in an arm's length transaction less any discounts,
commissions, refunds, returns, sales taxes, shipping charges which are included and listed on the applicable
b. if no separate price is invoiced for a Licensed Product, the Net Selling Price of such Licensed Product shall be
deemed to be:
(1) the lowest Net Selling Price of a similar Licensed Product when sold or leased by Parker in a similar
(2) if such lowest Net Selling Price cannot be reasonably be determined by Parker (for example, where a
Licensed Product is sold or leased as part of a larger apparatus or system) the Net Selling Price
shall be deemed to be that portion of the net proceeds of the arm's length sale or lease of the relevant larger
apparatus or system which includes said Licensed Product which bears the same relation to such net proceeds as
the production cost or the Licensed Product bears to the production cost of the relevant larger apparatus or
The term "Net Selling Price" shall i) only encompass the sale of the Licensed Products actually shipped and
invoiced by Parker to an unrelated entity; ii) exclude the production cost of the motor and motor controller
designed by Parker for the Licensed Products, as well as the cost of any peripheral components, such as
solenoid valves, air filters, etc. incorporated into the Licensed Products by Parker . For purpose of this
Agreement, the phrase "unrelated entity" means an entity which is not a subsidiary or affiliate of the Parker-
Hannifin Corporation. Any transfers between related entities, that is, subsidiaries or affiliates of the Parker-
Hannifin Corporation, will not be considered a sale of the Licensed Products, provided, however, that a sale or
lease of such Licensed Products by such subsidiary or affiliate shall be subject to sublicense agreement under
Article 2.3 hereof.
1.6 Parker Market: Shall mean all fields of use including, without limitation, the fuel cell market.
1.7 Term: Shall mean the longer of: i) the last to expire Licensed Patent, or ii) the final use by Parker or its
customers of the Licensed Technology, subject to Article 9.1 herein.
DYNECO LICENSE GRANTS
2.1 The grants by DynEco of this Article II shall become effective upon execution of this Agreement by both
2.2 Subject to the provisions of Article 2.3 hereof, DynEco grants to Parker:
a. an exclusive, worldwide royalty bearing license under Licensed Patents to make, have made, use, have used,
lease, sell and have sold Licensed Products, including any subsystems and components therefore, for the Parker
b. an exclusive, worldwide royalty bearing right to use Licensed Technology in connection with the utilization by
Parker of the license granted in subparagraph 2.2 a of this Article II.
2.3 Subject to the requirements of this Agreement, DynEco agrees that Parker shall have the right to grant
sublicenses within the scope of this Agreement to its subsidiaries and affiliates under the grants of this Article II
and to transmit Licensed Technology obtained by Parker hereunder to such sublicensees. Parker shall require
each of such sublicensees to enter into an agreement with DynEco prior to such transmittal of Licensed
Technology so that such sublicensees are directly liable and accountable to DynEco for acts and omissions in
violation of their sublicenses under this Agreement.
DynEco will not directly or indirectly i) make, have made, use, import into, or sell into the Territory and into the
Parker Market any Licensed Products; or ii) work with, license or otherwise develop Licensed Technology with
third parties for use in the Parker Market, unless prior authorization is received from Parker.
ARTICLE IV PARKER EFFORTS
Parker will use reasonable commercial efforts to promote the sale of the Licensed Products in the Territory into
the Parker Market, however the nature and extent of Parker's efforts will be entirely within its discretion.
For Licensed Products manufactured by Parker under Article II above, Parker will pay a royalty fee according to
5.1 Royalty Fee. For the first three (3) years after the Effective Date, the Royalty Fee will be calculated by
multiplying the Royalty Rate specified in Article 5.2 by the Net Selling Price of Licensed Products sold or leased
by Parker that include Licensed Technology. After the first three (3) years, the Royalty Fee will be calculated by
multiplying the Royalty Rate specified in Article 5.2 by the Net Selling Price of Licensed Products sold or leased
by Parker that are covered by at least one valid and enforceable claim of a Licensed Patent in the relevant
country of sale or which include Licensed Technology incorporating Information of DynEco protected under the
Confidential Disclosure Agreement between DynEco and Parker dated January 17 and 18, 2003.
5.2 Royalty Rate. The Royalty Rate will be: o Fifteen percent (15%) of Net Selling Price for the first 50 Licensed
Products in a calendar year o Ten Percent (10%) of Net Selling Price for the next 51 to 250 Licensed Products
in a calendar year o Eight Percent (8%) of Net Selling Price for the next 251-10000 Licensed Products in a
calendar year o Six Percent (6%) of Net Selling Price for 10001 or more Licensed Products in a calendar year.
5.3 Minimum Royalty Fee. Beginning with the calendar year starting January 1, 2007, in the event the Royalty
Fee payable by Parker under Article 5.1 above is less than $100,000 (the "Minimum Royalty Fee") per calendar
year, then Parker may, at Parker's sole discretion, remit to
DynEco the difference between the actual Royalty Fee paid for the calendar year and the Minimum Royalty Fee
for that particular calendar year, or the license granted to Parker under Article II of this Agreement will convert to
a non-exclusive license and DynEco's restrictions under Article III will terminate. The remainder of this
Agreement will be unchanged. The Minimum Royalty Fee will be due no later than the December 31st quarterly
Royalty Fee payment for the particular calendar year as described in Article 5.5 below.
5.4 Reduction of Royalty Fee. In the event Parker becomes obligated to pay intellectual property-based royalties
to others in connection with the manufacture, use or sale of the Licensed Products, Parker may deduct from the
Royalty Fee payments due to DynEco under this Agreement an amount equal to fifty percent (50%) of the
royalties paid by Parker to such others.
5.5 Quarterly Payments and Reports. Parker will pay the Royalty Fee quarterly based upon calendar quarters
ending March 31, June 30, September 30 and December 31. Within forty five (45) days after the end of each
such calendar period, Parker will deliver to DynEco its written report of the Net Selling Price of the Licensed
Products, the applicable Royalty Rate, and the amount of the Royalty Fee earned during the quarter being
reported. Concurrently with the making of each such report, Parker will pay DynEco the Royalty Fee shown as
due on the report. No more than once each calendar year, DynEco may have its independent certified public
accountants audit Parker's records with respect to the Royalty Fee calculations at reasonable times upon
reasonable advance notice, provided such accountants will maintain all information of Parker in strict confidence
and will only disclose to DynEco the amount of the Net Selling Price of Licensed Products during the time period
covered by the audit.
6.1 Transfer of Information. Within thirty (30) days following the Effective Date of this Agreement, DynEco shall
fully disclose to Parker, at no cost, all DynEco-possessed Licensed Technology not previously disclosed to
Parker, including any models and prototypes, and shall provide at Parker's request for a reasonable period of
time thereafter, such assistance at no cost to Parker, that is reasonable and necessary to enable Parker to
satisfactorily utilize the subject matter to be licensed hereunder.
6.2 Consulting Services. DynEco shall provide a qualified individual(s), acceptable to Parker, to provide
consulting services to Parker for developing and improving the Licensed Product. Such consulting services shall
continue for an initial period of twelve (12) months beginning June 1, 2003, and thereafter on a month-to-month
basis unless ninety
(90) day notice is given by one party to the other prior to the end of the initial period or any subsequent period of
its desire to terminate the services. Such consulting services shall be performed pursuant to the Consulting
Agreement attached hereto as Exhibit C.
6.3 Maintenance Fees. DynEco will timely pay any maintenance fees and other governmental fees due for the
Licensed Patents such that the Licensed Patents remain enforceable. In the event DynEco desires not to pay such
fees, DynEco will first notify Parker with sufficient time before such fees are due, and will give Parker the right
(but not the obligation) to pay such fees to keep such Licensed Patents enforceable, in which case Parker may
deduct the fees from any royalty fees due DynEco under Article V above.
6.4 Infringement. Parker and DynEco each shall promptly advise the other of all relevant facts pertaining to any
known, suspected, or threatened infringement of the Licensed Patents. DynEco, at its sole cost and expense shall
have the first right, but not the obligation, to
attempt to stop any such infringement by taking such action as DynEco, in its sole judgment, deems appropriate,
including prosecution of a lawsuit. In the event DynEco fails to take any action against the alleged infringer within
six (6) months of becoming aware of such infringement, or otherwise upon agreement with Parker, Parker
thereafter shall have the right but not the obligation, at its sole cost and expense, to attempt to stop such alleged
infringement by taking such action as Parker, in its sole judgment, deems appropriate including prosecution of a
lawsuit. In the event that either Party institutes suit against any such alleged infringer, the other Party hereby
agrees to be named as a nominal party thereto and to provide reasonable assistance to the other party. The
Parties hereby agree that all recoveries and awards that may be obtained as a result of any action taken by
Parker or DynEco with respect to any such infringement, including any settlement, shall be the sole and exclusive
property of the Party taking such action. All recoveries and awards that may be obtained as a result of any mutual
actions undertaken by mutual written agreement of the Parties shall be allocated equally among the Parties
provided that each has contributed equally to the expenses, or otherwise upon agreement by the parties.
Parker may use its own trademarks and tradenames with the Licensed Products, which use will be entirely in
Parker's discretion. Any such use of the Parker marks and names will inure to the benefit of Parker.
REPRESENTATIONS AND WARRANTIES
DynEco represents and warrants to Parker and agrees that:
a. DynEco is the sole and exclusive owner of the Licensed Patents, and of the Licensed Technology that will be
delivered to Parker.
b. There are no liens, claims against or other encumbrances on DynEco's title to, and DynEco has not previously
conveyed any rights to any other party with respect to, the Licensed Patents and the Licensed Technology.
DynEco will not encumber such title or grant any rights to any other party under such Licensed Patents and
Licensed Technology during the term of any licenses to Parker under this Agreement that would interfere in any
way with Parker's rights under this Agreement.
c. DynEco does not have any knowledge as to any patent rights, trade dress rights, design rights or other
intellectual property rights of any other party that are infringed by or that have been alleged to be infringed by the
Licensed Products, and/or the Licensed Technology.
d. Except as expressly provided above, DYNECO MAKES NO EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES IN RESPECT OF THE LICENSED PRODUCTS OR THEIR
CONDITION, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR USE BY
This Agreement may be terminated at any time:
a. Upon written notice to the other Party by reason of any material default or material breach of this Agreement,
provided that the defaulting Party shall have received prior written notice of the specific default or breach and
shall have failed to cure the default within ninety (90) days after a notice has been sent by the aggrieved party to
the defaulting party.
b. By one party if the other party shall file a petition in bankruptcy, shall be adjudicated as bankrupt, shall take
advantage of the insolvency laws of any state or country, shall make an assignment for the benefit of creditors,
shall be voluntarily or involuntarily dissolved, or shall have a receiver, trustee, or other court officer appointed for
c. With the written consent of the other Party.
9.2 Applicable Law. This Agreement will be governed and construed in accordance with the laws of the State of
Ohio, without regard to Ohio's provisions regarding the conflicts of laws.
9.3 Independent Agency. Neither party to this Agreement will be deemed an agent, employee, partner or joint
venturer with any other party to this Agreement.
9.4 Assignment. This Agreement shall not be assignable by either party except with the written consent of the
other, or except with the sale of transfer with the portion of the business to which this Agreement relates.
9.5 Notice. Any notification, reports or payment which is required to be given pursuant to this Agreement will be
deemed effective upon receipt when delivered to the following address:
IF TO PARKER: Fuel Cell Business Unit
Fluid Control Division
95 Edgewood Avenue
New Britain, Connecticut 06051
Attention: Fuel Cell Business Manager
With a Copy to: Parker-Hannifin Corporation
6035 Parkland Blvd.
Cleveland, Ohio 44124
Attention: President, Climate and
Industrial Controls Group
IF TO DynEco: DynEco Corporation
564 International Place
Rockledge, Florida 32955
With a copy to:
9.6 Disputes. Any controversy or claim arising out of or relating to this agreement, or to the Licensed Patents or
to the Technical Information or to the enforcement, breach, termination or validity of any of the foregoing, will be
settled by arbitration in accordance with the CPR Institute for Dispute Resolution Rules for Non-Administered
Arbitration in effect on the date of this agreement by a sole arbitrator (www.cpradr.org). Judgment upon the
award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The place of arbitration
shall be Cleveland, Ohio. The arbitrator is not empowered to award trebled, punitive or any other damages in
excess of compensatory damages, and each party irrevocably waives any claim to recovery or to recover any
such damages. The arbitrator shall make a reasoned award.
9.7 Entire Agreement. This Agreement states the entire agreement between DynEco and Parker and supersedes
all proposals, communications or agreements, whether oral or written between DynEco and Parker concerning
the subject matter hereof. No waiver, alteration or modification of any of the provisions of this Agreement shall
be binding unless in writing and signed by the duly authorized corporate officers of Parker-Hannifin Corporation
and by DynEco. No written waiver, alteration or modification made in accordance with the provisions hereof
shall have effect unless it expressly references this Agreement. Nothing in this Agreement will limit the right of
either party to develop, acquire, make, have made, use or sell products outside the scope of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set
DynEco CORPORATION PARKER-HANNIFIN CORPORATION
By: Thomas C. Edwards By Stephen F. Burgess
Signature: /s/ Thomas C. Edwards Signature: /s/ Stephen F. Burgess
Title: President Title: Technology Team Leader
Date: May 13, 2003 Date: May 9, 2003
Independent Auditors' Consent
We consent to the use of our report dated October 15, 2003 on the consolidated financial statements of DynEco
Corporation and Subsidiary as of December 31, 2002 and 2001 included herein on the registration statement of
DynEco Corporation on Form SB-2, and to the reference to our firm under the heading "Experts" in the
SALBERG & COMPANY, P.A.
Boca Raton, Florida
February 5, 2004