AMENDED AND RESTATED LICENSING AGREEMENT
Exhibit 10.9
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EXHIBIT
A
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This
Amended and Restated Licensing
Agreement (“Agreement”) is effective on the 1st day of
July, 2007,
by and between Xxxxx X. Xxxxxxxx ("GRANTOR"), a natural person residing in
Houston, Xxxxxx County Texas, and Coil Tubing Technology Holdings, Inc.
(“GRANTEE”), a Nevada corporation with a mailing address of 00000 Xxxx Xxxx,
Xxxxx X, Xxxxxx, Xxxxx 00000 (collectively “the Parties”).
Whereas,
the parties
previously entered into a Licensing Agreement on or around July 1, 2007 (the
“Prior Licensing Agreement”), which Prior Licensing Agreement is replaced and
superseded in its entirety by this Agreement.
Whereas,
GRANTOR has
invented, designed, and built a device and method for inducing relative rotation
in a remote location of an upper portion and a lower portion in response to
relative axial movement (the Subterranean Rotation-Inducing Device and
Method). GRANTOR has invented and designed various devices and
methods which utilize similar techniques and are intended to serve similar
or
related functions. Furthermore, GRANTOR has invested and designed
various other devices and methods, and anticipates inventing and designing
various other devices and methods, which can be utilized by GRANTEE or its
subsidiaries, but which may or may not utilize techniques similar to the
Subterranean Rotation-Inducing Device and Method. Some, but not all,
of such devices have been built (as prototypes) and have or will be
tested. The Parties intend for all such devises and methods,
including devises and methods developed, invented or designed while GRANTOR
is
employed by GRANTEE or its subsidiaries, to be provided for an governed by
this
Licensing Agreement. Thus, collectively, all such devices and methods
described above are referred to herein as the “Invention.”
Whereas,
GRANTOR filed
a United States Patent Application, Serial Number 08/471,774, for the device
and
method known as "Subterranean Rotation-Inducing Device and Method" on June
6,
1995. The United State Patent and Trademark Office granted a Patent
on such Application by issuance of Patent Number 5,584,342. GRANTOR
has also filed provisional patent application 60/787,906 and and a
non-provisional patent application filing 11/693,568 for certain jet powered
down hold driven tools. GRANTOR anticipates that such additional
devices and methods referred to above, will require prosecution of U.S. and/or
international Patent Applications. Collectively, Patent Number
5,584,342 and provisional patent application 60/787,906 and patent application
11/693,568 and any and all additional Patent Applications or Letters of Patent
are referred to herein as the “Application.”
Whereas,
GRANTEE is
desirous of obtaining and GRANTOR is willing to grant an exclusive license
to
manufacture, use, sell, rent, and otherwise similarly exploit GRANTOR'S interest
in the Invention, the Application, and any and all Letters Patent of the
United
States or other jurisdiction which may be granted therefor.
NOW,
THEREFORE, in consideration of the
payment by each party to the other of the sum of One Dollar ($1.00) and other
good and valuable consideration, the receipt of which is hereby acknowledged,
and in consideration of the covenants and obligations hereinafter set forth
to
be well and truly performed, the Parties hereby agree as
follows:
I.
DEFINITIONS
1.01 "Sold,"
"sales," and
"sell" shall include sales, rentals, leases, transfers, consignments, and the
like as well as any other commercial exploitation of the subject Invention
Property Products. One example of such other commercial exploitation
is the use of the Invention Property Products without directly charging for
the
Invention Property Products, but charging for services or other equipment
related to the same job or the same customer.
1.02 The
"Invention
Property" is the Invention, the Application, and any and all Letters Patent
of
the United States or other jurisdiction which may be granted therefor as well
as
all reissues, divisionals, continuations, extensions and renewals
thereof.
1.03 "Invention
Property
Products" shall mean the devices, methods, improvements to known devices, or
improvements to known methods that incorporate the Invention.
1.04 An
"Affiliate" is (1)
any entity in which GRANTEE or any of its stockholders, directors, or officers
has a direct or indirect ownership interest (other than insubstantial interests
in publicly held companies) or (2) any entity which directly or indirectly
through one or more intermediaries, control, is controlled by, or is under
common control with GRANTEE.
II.
LICENSE GRANT
2.01 GRANTOR
hereby grants
to GRANTEE the sole and exclusive right and license to manufacture, use, sell,
and otherwise similarly exploit the Invention Property until the expiration
of
the Invention Property or any reissue thereof unless sooner terminated in
accordance with any provision hereof.
III.
ROYALTIES
3.01 As
compensation and as
royalties for the transfer of rights in the Invention Property including the
disclosure of information not currently available to the public, and the
know-how and trade secrets associated with the Invention, GRANTEE agrees to
pay
GRANTOR as follows:
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a.
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A
Royalty of ten percent (10%) of the gross receipts derived by GRANTEE
from
all sales of Invention Property
Products.
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b.
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In
no event shall the amount of the Royalty referred to in paragraph
“a” be
less than $100,000 per year for each devise or method invented, designed
or built for which no Letter of Patent has been issued by the United
States or other jurisdiction.
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c.
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In
no event shall the amount of the Royalty referred to in paragraph
“a” be
less than $200,000 per year for each devise or method invented, designed
or built for which a Letter of Patent has been issued by the United
States or other jurisdiction.
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d.
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The
minimum annual royalties described in paragraphs “b” and “c” above are
measured at the end of each year, the year beginning on the anniversary
of
the Effective Date of this
Agreement.
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e.
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Furthermore,
the minimum annual royalties described in paragraphs “b” and “c” shall be
prorated in any year in which Letters of Patent
issue.
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3.02 GRANTEE
shall pay
interest to GRANTOR upon any and all amounts of royalties that are at any time
overdue and payable to GRANTOR at the maximum legal interest rate permitted
under Texas law. This provision does not constitute a waiver or
authorization for late payment or, in any way, negate GRANTOR's right to
terminate the agreement for non-performance by GRANTEE.
3.03 Anything
herein to the
contrary notwithstanding, royalties with respect to all sales, transfers or
consignments made by GRANTEE to an Affiliate (as herein defined) or to any
purchaser which does not otherwise deal at arms-length with it, shall be
computed on an amount equal to the price at which GRANTEE, at the time of such
sales, transfers or consignments, would invoice the same or similar items to
purchasers dealing at arms-length with GRANTEE.
3.04 Anything
herein to the
contrary notwithstanding, royalties with respect to all sales, transfers or
consignments made by GRANTEE that amounts to other commercial exploitation
of
the Invention Property Products wherein the gross receipts or any portion
thereof are not directly attributable to the Invention Property Products shall
be computed on an amount equal to the price at which GRANTEE, at the time of
such sales, transfers or consignments, would invoice the same or similar
items.
3.05 GRANTEE
shall have the
right to conduct sales and services through a subsidiary or related entity
provided that each of GRANTEE and such subsidiary or related entity shall be
jointly and severally responsible for the payment of royalties and for other
obligations under this Agreement, and the gross selling price subject to royalty
shall be deemed the price at which Invention Property Products are sold or
resold by GRANTEE or by its subsidiary or related company, whichever be the
highest.
3.06 GRANTEE
agrees to pay
GRANTOR the full royalty set forth in paragraph 3.01 for as long as the license
is in effect.
3.07 GRANTEE
agrees to use
good faith and fair dealing in all dealings with GRANTOR. This good
faith requirement includes the covenant to use fair market value in all sales
and in calculating all royalties.
3.08 On
Invention Property
Products sold by another (not including Affiliates of GRANTEE), royalties are
calculated and reported on Invention Property Products with the same conditions
as if sold by GRANTEE.
IV.
TIME FOR ROYALTY PAYMENTS; ACCOUNTING RECORDS;
EXAMINATION
4.01 GRANTEE
agrees to keep
complete and correct account of the number of Invention Property Products which
have been sold, and the number of Invention Property Products which have been
ordered and manufactured, and also showing invoice number, customer name and
address, gross selling price for each Invention Property Products sold, the
total Gross Sales, and the amount of royalty due.
4.02 Where
GRANTEE contracts
with another for the manufacture of Invention Property Products, GRANTEE agrees
to require the manufacturer to keep complete and correct account of the number
of Invention Property Products which have been ordered and manufactured, and
also showing the date and destination of each shipment of Invention Property
Products.
4.03 Within
twenty (20) days
after the end of each month, reports shall be made by the GRANTEE to the GRANTOR
setting forth the number of Invention Property Products which have been sold,
and the number of Invention Property Products which have been ordered and
manufactured, and also showing the invoice number, customer name and address,
gross selling price for each Invention Property Product sold, the total Gross
Sales, and the amount of royalty due.
4.04 GRANTEE's
remittance
for the full amount of royalties due for such month, with interest from the
end
of the month to the date of payment, shall accompany such reports.
4.05 GRANTOR
or its
representative shall have the right, not more often than once each quarter,
to
examine GRANTEE's books of account at all reasonable times, during normal
business hours, to the extent and insofar as is necessary to verify the accuracy
of the above-mentioned reports. It is agreed that GRANTOR shall have
the privilege of having a certified public accountant audit all statements
of
account, reports, etc. provided for in this Agreement to be made by GRANTEE
to
GRANTOR and that GRANTEE shall place at the disposal of said certified public
accountant for the purposes of this paragraph any and all records essential
to
the verification of such reports. The expense of such audits and
verifications shall be borne by GRANTOR, except that if any audit shows a
deficiency of more than five percent (5%) in the royalties reported and paid,
then GRANTEE shall bear the cost of the audit.
4.06 GRANTOR
agrees to hold
strictly confidential all information concerning royalty payments and reports
and all information learned in the course of any audit hereunder, except when
it
is necessary for GRANTOR to reveal such information in order to enforce its
rights under this Agreement.
4.07 In
the event of
termination of this Agreement for any reason whatsoever, GRANTEE agrees to
permit GRANTOR, its auditors, accountants or agents to inspect all said records
and books of GRANTEE and to investigate generally all transactions of business
carried on by GRANTEE pursuant to this Agreement and the license hereby granted,
for a period of six (6) months after such termination.
V.
WARRANTIES BY GRANTOR
5.01 GRANTOR
represents and
warrants that it is the owner of the entire right, title and interest in the
licensed Invention Property, and that it has the sole right to grant the
licenses under the licensed Invention Property of the scope herein
granted.
5.02 GRANTOR
represents and
warrants that it has the right to enter into this Agreement, and that there
are
no outstanding assignments, grants, licenses, encumbrances, obligations or
agreements, whether written, oral or implied, inconsistent with this
Agreement.
VI.
ENFORCEMENT OF LICENSED PATENTS
6.01 The
Parties hereto agree to keep a diligent watch for infringement of the Invention
Property and notify the other Party of any such
infringement. The Parties will use reasonable attempts to halt any
such infringement. However, neither Party shall be required to pursue
an infringement action that the Party believes is frivolous or without merit
under the circumstances. Thus, the parties will, by agreement based
upon the circumstances at the time, pursue legal action against alleged
infringers of the Invention Property against whom both of the Parties have
a
good faith, reasonable belief they will prevail. Based upon these
guidelines, should one of the Parties elect not to pursue the alleged infringer,
the other Party may pursue the alleged infringer at their own expense and for
their own benefit and shall have the right to retain the benefit of any and
all
judgments for themselves. If the Parties pursue an alleged infringer
together, the Parties will share in any expense and recovery from such lawsuit
as agreed in advance of commencing any legal action and based on the
circumstances of the particular infringement. In the event that
GRANTEE commences litigation on its own, without GRANTOR, GRANTEE has the right
to join GRANTOR as a necessary party and to gain his cooperation in exchange
for
reasonable compensation of GRANTOR’S costs. GRANTOR shall be entitled
to be represented at any such proceedings, commenced solely by GRANTEE, by
GRANTOR’S own counsel, at GRANTOR’S own expense. Should all patent(s)
on the Invention be invalidated during an infringement suit, the royalty rate
shall be reduced as provided for herein. GRANTEE is obligated to
continue to make reports, payments, and accountings through this
period. A reduced rate, if appropriate, begins on the date any
judgment invalidating the patent(s) becomes final.
6.02 GRANTOR
shall not be
obligated to defend or save harmless GRANTEE in any suit, damage claim, or
demand based on actual or alleged infringement of any patent or any unfair
trade
practice resulting from the exercise or use of any right or license granted
hereunder. In the event that the GRANTEE’S right to use the devices,
methods, processes, and techniques shall be challenged by any person or company
claiming patent infringement by use thereof, GRANTOR shall provide such
information as GRANTOR may possess which GRANTOR deem necessary to show the
date
or dates of discovery of the devices, methods, processes, and techniques,
provided that GRANTOR will be compensated for any expense incurred in connection
therewith.
VII.
ASSUMPTION OF THE RISK BY GRANTEE
7.01 GRANTEE
agrees to
assume full responsibility for product liability claims resulting from the
sale
or use of the Invention Property Products and hold GRANTOR harmless from any
liability therefor, to indemnify GRANTOR, and to obtain sufficient liability
insurance to cover any such claims.
VIII.
PATENT MARKING
8.01 GRANTEE agrees to xxxx permanently and legibly all Invention
Property Products sold by it under this Agreement with the notation "Patent
Pending" or “International Patent Pending” during the prosecution of any Patent
application.
8.02 Upon
issuance of a
patent and thereafter during the patent term, GRANTEE agrees to xxxx permanently
and legibly all Invention Property Products sold by it under this Agreement
with
the notation "U.S. Patent No." or similar xxxx for patents issued by another
jurisdiction, followed by the patent number.
IX.
TERMINATION RIGHTS
9.01 The
rights granted to
GRANTEE shall remain with GRANTEE throughout the life of the Invention Property
or during the period of GRANTEE’S exploitation of any devise or method of the
Invention Property whichever is longer. At the end of the term, all
rights immediately and automatically revert to GRANTOR, regardless of any
outstanding sublicenses. The obligation on the part of GRANTEE to
make the payments required shall continue regardless of the issuance,
non-issuance, or invalidation of a patent for the Invention in accordance with
the compensation terms of this Agreement.
9.02 In
the event of any
adjudication of bankruptcy, appointment of receiver by a court of competent
jurisdiction, assignment for the benefit of creditors, or levy of execution
directly involving GRANTEE, GRANTOR may, at his option, terminate this Agreement
upon not less than twenty (20) days notice to GRANTEE, provided, however, that
such termination shall not impair or prejudice any right or remedy that GRANTOR
might otherwise have under this Agreement.
9.03 GRANTOR
may terminate
this Agreement on ninety (90) days written notice to GRANTEE if the quality
of
the Inventory Property Products is substandard as reasonably determined by
GRANTOR.
9.04 If
GRANTEE shall at any
time commit any breach of any covenant, warranty or agreement herein contained,
including the obligation to pay royalties, or shall misrepresent the product
or
misrepresent the applications of the product and shall fail to remedy any such
breach or misrepresentation of the product or the applications of the product
within thirty (30) days after written notice thereof by the GRANTOR, then
GRANTOR may at his option, and in addition to any
other
remedies that he may be entitled to, cancel this Agreement by notice in writing
to such effect or, alternatively, convert this license to a non-exclusive
license. If an initiated program does not remedy the breach within
three (3) months after the aforementioned written notice by the GRANTOR, then
GRANTOR may at his option, and in addition to any other remedies that he may
be
entitled to, cancel this Agreement by notice in writing to such effect or,
alternatively, convert this license to a non-exclusive
license.
9.05 If
GRANTEE is not doing
its best to satisfy demands for the devices incorporating the Invention Property
as determined by the good faith belief of GRANTOR, GRANTOR may elect to convert
the license to a non-exclusive license with sixty (60) day written notice given
to GRANTEE. If GRANTOR does subsequently grant any other licenses,
GRANTEE may terminate this Agreement by ninety (90) day written notice to
GRANTOR.
9.06 If
GRANTEE does not
meet the minimum royalties requirement, GRANTOR may elect to terminate this
Agreement or, alternatively, convert the license to a non-exclusive license
with
sixty (60) day written notice given to GRANTEE, unless GRANTEE shall pay to
GRANTOR by the end of that time the amount required to meet the minimum
royalties. If GRANTOR does subsequently grant any other licenses,
GRANTEE may terminate this Agreement by ninety (90) day written notice to
GRANTOR.
9.07 In
the event of
termination of this Agreement for any reason, GRANTEE shall not thereby be
discharged from any liability or obligation to GRANTOR that accrued on or prior
to the date of the termination. All unpaid sums shall become due and
payable immediately.
9.08 On
the termination of
this Agreement for any reason, GRANTEE shall deliver to GRANTOR all books,
notes, drawings, writings, and other documents, samples and models relating
to
any improvements, trade secrets, or inventions that are the subject of this
Agreement. On termination of this Agreement, if any patents on the
Invention have not expired, then GRANTEE shall cease to exploit, use,
manufacture, or sell the Invention in any way. All confidential
material shall remain confidential.
X.
PAYMENT OF COSTS ASSOCIATED WITH THE INVENTION
PROPERTY
10.01 GRANTEE agrees to pay all costs, including attorney’s fees and
governmental fees, associated with the prosecution, issuance, and maintenance
of
the Invention Property.
10.02 GRANTEE
shall pay the
costs to GRANTOR or to an agent designated by GRANTOR within twenty (20) days
from written request by GRANTOR.
10.03 The
request for
payment of costs shall include sufficient information to allow GRANTEE to verify
the cost. Information such as invoices and citations of statutory
provisions along with an explanation of why the statute applies are examples
of
sufficient information but other information may suffice.
XI.
FORCE MAJEURE
11.01 Neither
of the parties
hereto shall be liable in damages or have the right to cancel this Agreement
for
any delay or default in performing hereunder (other than the non-payment of
royalties or other payments due under the Agreement) if such delay or default
is
caused by conditions beyond its control including, but not limited to acts
of
God, government restrictions, wars or insurrections, strikes, fires, floods,
work stoppages, and/or lack of materials.
XII.
SEVERABILITY
12.01 Should
any part or
provision of the Agreement be held unenforceable or in conflict with the law
of
any jurisdiction, the validity of the remaining parts or provisions shall not
be
affected by such holding.
12.02 In
any litigation
involving this Agreement, any court having jurisdiction thereof is authorized
to
reform the agreement to conform as closely as possible to the original intent
of
the parties with respect to any subject matter found to be unenforceable or
in
conflict with any law.
XIII.
LIMITATION ON EFFECT OF WAIVER
13.01 A
waiver of any breach
of any provision of this Agreement shall not be construed as a continuing waiver
of other breaches of the same or other provisions of this
Agreement.
XIV.
NEGATION OF AGENCY
14.01 Nothing
herein
contained shall be deemed to create an agency, joint venture or partnership
relation between the parties hereto. It is understood and agreed that
GRANTEE is not, by this Agreement or anything herein contained, constituted
or
appointed the agent or representative of GRANTOR for any purpose whatsoever,
nor
shall anything herein contained be deemed or construed as granting to GRANTEE
any right or authority to assume or to create any obligation or responsibility,
express or implied, for or on behalf of or in the name of GRANTOR, or to bind
GRANTOR in any way or manner whatsoever.
XV.
ENTIRE AGREEMENT
15.01 This
Agreement sets
forth the entire agreement and understanding of the parties relating to subject
matter contained herein and merges all prior discussions between them, and
neither party shall be bound by a definition, condition, warranty, or
representation other than as expressly stated in this Agreement or as
subsequently set forth in a writing signed by the party to be bound
thereby.
XVI.
NEGATION OF CERTAIN WARRANTIES
16.01 No
warranty or
representation is given or made by GRANTOR (a) that Licensed Devices are free
from infringement of the patent rights of third parties; or (b) as to scope
or
validity of the Licensed Patent, other than the that described in Section V
of
this Agreement.
XVII.
ASSIGNABILITY
17.01 GRANTEE
agrees not to
assign or transfer, by operation of law or otherwise, its interest in the
Invention Property or its interest in this agreement to any person, firm, or
corporation without the written consent of the GRANTOR so to
do. GRANTOR may require submission of any relevant information from
GRANTEE in making such evaluation.
17.02 GRANTOR
may assign or
transfer, by operation of law or otherwise, its interest his the Invention
Property or its interest in this agreement to any person, firm, or corporation
without the associated obligations contained in this Agreement.
XVIII.
SUBLICENSING
18.01 Should
GRANTEE desire
to sublicense all or any portion of the Invention Property, GRANTEE shall submit
to GRANTOR the name of the proposed sublicensee financial, historical, and
other
information concerning the proposed sublicense sufficient to allow GRANTOR
to
determine the business, financial, technological, and other capabilities and
stability of the proposed sublicensee, and true copies of the agreement or
agreements to be entered into with the sublicensee.
18.02
GRANTOR shall within a reasonable
time after submission of all of the foregoing, approve or disapprove the
proposed sublicensee. GRANTOR is under no obligation to approve of
any proposed sublicensee. GRANTOR may unreasonably withhold approval
of any sublicensee and his approval or disapproval shall be subject to his
complete discretion and fiat.
18.03 Any
sublicense
agreement shall incorporate the terms of this Agreement and shall, inter
alia, require that the sublicensee acknowledge the primacy and validity of
this Agreement, require the sublicensee upon written notice from GRANTOR to
make
payments required hereunder directly to GRANTOR, and provide for audit rights
of
the sublicensee by GRANTOR equivalent to those provided in this
Agreement.
XIX.
GOVERNING LAW
19.01 This
Agreement shall
be interpreted and construed, and the legal relations created herein shall
be
determined, in accordance with the laws of the State of Texas.
XX.
NOTICES
20.01 Notices,
reports,
statements, payments, etc. required or permitted under this Agreement shall
be
in writing and shall for all purposes deemed to be fully given and received
upon
deposit with the United States Post Office if sent by certified mail, postage
prepaid, to the respective parties at the following addresses:
to
GRANTEE: Coil
Tubing Technology Holdings, Inc.
00000
Xxxx Xxxx, Xxxxx X
Xxxxxx,
Xxxxx 00000
to
GRANTOR: Xxxxx
X. Xxxxxxxx
00000 Xxxx Xxxx, Xxxxx X
Xxxxxx,
Xxxxx 00000
20.02 Either
party hereto
may change its address for the purposes of this Agreement by giving to the
other
party written notice of its new address.
XXI.
GENERAL ASSURANCES
21.01 The
parties agree to
execute, acknowledge and deliver all such further instruments, and do all such
other acts, as may be necessary or appropriate in order to carry out the intent
and purposes of this Agreement.
XXII.
COUNTERPARTS
22.01 This
Agreement may be
executed in one or more counterparts, each of which shall be treated and deemed
an original, but all of which together shall constitute one and the same
document.
XXIII.
EFFECTIVE DATE
23.01 This
Agreement,
regardless of the date of its execution shall be effective as of July 1,
2007. Such date is referred to herein as the “Effective
Date.”
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement this 7th
day of September, 2007.
GRANTEE:
/S/
Xxxxx Xxxxxxxx
Xxxxx
X. Xxxxxxxx,
President
GRANTOR:
/S/
Xxxxx Xxxxxxxx
Xxxxx
X. Xxxxxxxx
