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EXHIBIT 10.12
LICENSE AGREEMENT --
VANETIK & ASSOCIATES, INC.
PREAMBLE
The parties to this Agreement are A-55, L.P., a Nevada limited
partnership ("A-55"), and VANETIK & ASSOCIATES ("Grantee").
This Agreement shall become effective on the date it is executed by the
last party to execute same, as set forth on the signature page hereof.
This Agreement is made with reference to the following facts:
A. A-55 owns the rights to transfer to others the rights to certain
worldwide patent applications, issued patents and trademarks, and
valuable technology, know-how, trade secrets and prototypes which relate
to and/or use an aqueous fuel comprising a mixture of water and
carbonaceous material for combustion, in internal combustion engines,
and open flame applications, and the use thereof, including technologies
as set forth in the patent applications and issued patents as more fully
defined below ("A-55 Technology").
B. Grantee desires to be licensed to use such rights
and information from A-55 within a geographical
territory.
Now therefore, in consideration of the mutual promises and covenants,
and upon the conditions herein contained, the parties agree as follows:
1. DEFINITIONS:
As used herein, the following terms shall have the following meanings:
1.1 "A-55 Patent" means any product claim of (a) A-55 U.S. Patent No.
5,156,114, issued December 10, 1992; (b) pending patent applications
related to the A-55 Technology; and patents and patents pending relating
to the A-55 Technology.
1.2 "A-55 Clean Fuels" means fuel covered by any product claim of the
A-55 Patent.
1.3 "A-55 Processes" means any process or procedure to produce the A-55
Clean Fuels or any other product claim of the A-55 Patent.
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1.4 "A-55 Know-how" means proprietary information of a confidential
nature owned by A-55 relating to the techniques available for commercial
exploitation of A-55 Patent and any A-55 Processes, including the
subject matter of any A-55 Patent, if no patent should issue thereon.
1.5 "A-55 Product" means any product sold or service rendered by Grantee
associated with the grant of this License or the A-55 Technology. It is
intended by the parties that this term shall have the broadest meaning
and not in any way be limited to products which are capable of patent or
contractual protection. By way of example but not limitation, the term
would include any product bearing, utilizing or referring to the A-55
Trademark, clothing, pens, souvenirs, and the like.
1.6 "A-55 Technology" means all know-how, trade secrets, confidential
information, and expertise including, but not limited to, designs,
plans, specifications and all other information and documentation,
whether patentable or not, relating to A-55 Patent. Unless the context
requires otherwise, the term "A-55 Technology" shall include all rights
and claims under the A-55 Patent, the A-55 Clean Fuels, the A-55
Processes, the A-55 Know-how, and A-55 Products but shall not under any
circumstances be deemed to include or refer to the A-55 Additive or its
manufacture.
1.7 "A-55 Trademark" means (a) United States registered trademark number
1,848,044; (b) United States Registered Service Xxxx No. 74/510,26
("Powered With Water"); and (c) any identical or substantially similar
trademarks or service marks which may be obtained by A-55.
1.8 "A-55 Additive" means the proprietary combination of certain
chemicals or compounds, including but not limited to certain
combinations of surfactants, anti-corrosive agents, lubricity agents,
anti-freezing agents, anti-foaming agents, biocides, cetaine enhancers,
and other similar or related compounds added to the base cabonaceous
material, water, and alcohol to form A-55 Clean Fuels.
1.9 "Net Sales" means the gross Selling Price of A-55 Clean Fuels and/or
all other A-55 Products for which an invoice or like sales record has
been prepared by Grantee, or any sublicensee of or party or entity
related to or affiliated with Grantee, less any trade, or quantity (but
not cash) discounts actually allowed, transportation charges, sales or
use taxes, if any,
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included in the invoice price, and the price of any Fuel
or other A-55 Product returned.
1.10 "Territory" means the Kaliningrad Region of the Russian Federation.
In addition, the Grantee shall have the exclusive negotiation rights and
the exclusive right of first refusal to those countries as defined in
Appendix "A".
1.11 "Effective Date" shall mean the date stated in the Preamble.
2. GRANT OF PATENT AND KNOW-HOW RIGHTS TO GRANTEE
2.1 Grant. A-55 hereby grants to Grantee:
2.1.1 The fight under the A-55 Patent to manufacture, sell,
distribute and use A-55 Clean Fuels and, A-55 Products in the
Territory and the right to practice any A-55 Process necessary
for such manufacture or sale in the Territory.
2.1.2 The fight to use A-55 Know-how in the
Territory.
2.1.3 The right to practice any and all A-55 Technology in the
Territory, and the right to allow its purchasers to practice any
and all A-55 Technology and patent rights in the Territory.
2.2 Patent Marking. Grantee shall, where possible, xxxx any A-55 Product
produced under any patent licensed hereunder with the number of the
applicable patent.
2.3 Excluded Applications. All aviation applications, including
supplying fuel for such applications, are excluded from this License and
specifically reserved to A-55.
2.4 Licenses to OEMs.
2.4.1 A-55 reserves the sole and exclusive right to negotiate
license agreements with original equipment manufacturers (OEMs).
Grantee acknowledges that such licenses may be worldwide and may
include the right to utilize and practice the A-55 Technology in
the Territory. The grant of any such license to an OEM shall not
infringe on the grant of this License; provided, however, that
royalties for the use and practice of the X- 00 Technology
within the Territory under such a license shall inure to
Grantee.
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2.4.2 Any license granted to an OEM as contemplated in
subparagraph 2.4.1 must not permit it to manufacture A-55 Clean
Fuels in the Territory, whether for distribution or sale or for
its own consumption.
2.4.3 A-55 shall, upon the grant of any license to an OEM, give
notice thereof to Grantee.
2.5 Nature of Grant.
2.5.1 Grantee acknowledges that, incident to the dissolution of
Advanced Fuels, L.L.C., Caterpillar Inc. retained certain
licensed rights to the A-55 Technology for use in products of
the kind it produces or will produce in the Territory. Pursuant
to retained the license rights, Caterpillar Inc. may sell, but
not license until October 24, 2001, a diesel emulsion based
aqueous fuel emulsion and may make, but not license, a naphtha
fuel emulsion for Caterpillar engines only.
2.5.2 Except as otherwise provided in paragraphs 2.3, 2.4, and
2.5.1, A-55 shall grant no other license to the A-55 Technology
in the Territory while this Agreement is in force and not in
default.
2.6 Sublicenses. Subject to the express approval of A-55, first had and
obtained on each occasion, Grantee shall have the right to grant
sublicenses under this Agreement. Unless waived by A-55, each such
sublicense that relates to the manufacture of A-55 Clean Fuels by the
sublicensee shall, in addition to other pertinent provisions, contain
provisions for the payment of royalties of an amount not less than that
specified in paragraph 3.1 below to Grantee, who shall hold the same in
trust for payment to A-55 or make some other stipulation which is
acceptable to A-55 to compensate fully A-55 for such royalties as if the
sale had been made directly by Grantee and for the preservation of A-
55's equity interest in Grantee specified in paragraph 3.3 below.
2.7 Purchase and Sale of A-55 Additive.
2.7.1 A-55 shall sell and deliver in a timely manner to the
Grantee or the Grantee's order such quantities of the A-55
Additive as the Grantee shall order from time to time.
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2.7.2 The initial price of the A-55 Additive (which shall
exclude for these purposes any cetane enhancer or methanol) to
Grantee will be US$14.50 per gallon for boiler applications and
$18.50 for internal combustion engine applications, F.O.B. port
of embarkation in the United States, or US$14.00 per gallon and
$18.00 per gallon, F.O.B. additive factory. That price is fixed
for 12 months from the date of this agreement. The price of the
A-55 Additive may be reviewed and adjusted by A-55 from time to
time after the initial period of 12 months. Any increase in
price must be fixed by A-55 in good faith by reference only to
increases in raw material costs of the A-55 Additive. Any
increase in price will operate on orders placed after
notification. Payment shall be made within 14 days of SGS
acceptance of additive at port of embarkation or factory
whichever may be the case.
2.7.3 The Grantee shall pay to A-55 L.P. the price for the A-55
Additive sold within 14 days of SGS inspection at the United
States port of embarkation through an Irrevocable Line of Credit
in United States Dollars from a Top 10 Western Bank.
2.7.4 The A-55 Additive must be of a merchantable quality and
fit for their intended purpose.
2.7.5 Property and risk in the A-55 Additive pass
to Grantee after SGS inspection at U.S. port of
embarkation.
3. PAYMENTS FOR RIGHTS GRANTED UNDER PARAGRAPH 2.
3.1 Continuing Annual Royalty. For the rights granted under paragraph 2
above, Grantee shall pay to A-55 a royalty of two percent (2%) of the
Net Sales from all X- 00 Clean Fuels A-55 Products in the Territory. The
royalty shall reduce to one percent (1%) 18 months after all moneys due
to A-55 under paragraph 3.2 below have been paid in full
3.2 Technical Transfer Fee. In consideration of the
rights granted herein, Grantee shall pay to A-55,
Technical Transfer Fees as follows:
(a) US$ 1,500,000.00 for the Kaliningrad Region, or 10% of the
Technical Transfer Fees as outlined in Appendix A, in accordance
with the terms and
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conditions of paragraph 4 of the Heads of
Agreement, and
(b) The remainder of the Technical Transfer Fees, not to exceed
the Technical Transfer Fees, less the initial payment, as
outlined in Appendix A, to be paid 24 months after the date of
the initial payment for each additional territory listed in
Appendix A.
3.3 Equity Interest in Grantee. In consideration of the grant of this
License and incident to the formation of Grantee, Grantee shall deliver
to A-55 a share certificate evidencing the allotment to it of thirty
percent (30%) of the issued shares in Grantee deemed fully paid. A-55's
equity interest shall be of the same quality and rights, including
rights to dividends and distributions, as all other owners of Grantee.
The constituent documents of Grantee shall provide that A-55 shall have
no obligation to make any contribution to the capital of Grantee for the
issuance of such interest other than the grant of this License, and
shall further provide that such interests shall not be subject to
dilution upon the first or second offerings only, but shall be subject
to dilution by subsequent offerings but then only upon the sole
discretion of A-55.
4. DISCLOSURE AND CONFIDENTIALITY OF KNOW-HOW
4.1 Disclosure. Within thirty (30) days after the effective date of this
Agreement, A-55 shall use its best efforts to disclose to Grantee all of
the technology it possesses relating to the manufacture, use or sale of
A-55 Technology, which is required by Grantee to exercise and exploit
its rights hereunder. Such disclosure shall include design, engineering
and manufacturing information and specifications, including without
limitation: identification of commercially- available equipment (and the
name of the manufacturers thereof), engineering drawings of special
equipment designed by or for A-55, and process operations and quality
control tests. It is understood by Grantee that the foregoing obligation
of disclosure shall not include any obligation to disclose composition
of the A-55 Additive, which will be made and distributed solely and
exclusively by A-55 but which will be sold, within the Territory, to
Grantee for its use in the manufacture of the A-55 Clean Fuels.
4.2 Confidentiality. Grantee agrees to use reasonable
efforts to maintain as confidential A-55 Know-how
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disclosed to it pursuant to paragraph 4.1, provided
that:
4.2.1 All information, in whatever form transmitted to Grantee
from A-55, shall be presumed to be confidential know-how unless
expressly identified to the contrary.
4.2.2 Grantee shall not be required to treat as confidential any
A-55 Know-how which is:
(a) publicly disclosed by A-55, or disclosed to another
party by A-55 without a confidential restriction,
including disclosure by A-55 in any patent, published
patent application, any other writing or verbally
disclosed by A-55; or
(b) publicly available prior to its disclosure by A-55,
or which becomes publicly available after disclosure by
A-55 through no fault of Grantee; or
(c) known to Grantee prior to its disclosure by
A-55; or
(d) disclosed to Grantee by a third party who did not
acquire the information, directly or indirectly, from
A-55; or
(e) independently developed by an employee or consultant
of Grantee subsequent to disclosure by A-55 but who did
not have knowledge of the disclosure made by A-55; or
(f) required to be disclosed to any local, state or
federal agency in connection with a proper and lawful
request, law or regulation; provided, however, that
prior to any such disclosure, Grantee shall give notice
of such request to A-55, which shall have a reasonable
opportunity to apply for such orders as it may deem
appropriate to protect its interests.
4.2.3 Grantee will maintain internal procedures to protect any
A-55 Know-how that is to be treated as confidential within
paragraph 4.2 in the same manner in which it protects its own
confidential technical information.
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4.2.4 A-55 represents and warrants that the information it
identifies in accordance with paragraph 4.2.1 is confidential
information and that it treats it as such.
5. GRANT OF RIGHTS UNDER TRADEMARKS
5.1 Grant. Subject to the due execution and registration of a user
agreement in a form approved by X-00, X-00 hereby grants to Grantee, and
its sublicensees and distributors, the right to use the A-55 Trademark,
together with any other trademark that A-55 may acquire in connection
with its sale of A-55 Clean Fuels to third parties, and to use the name
"A-55" in a corporate name, division name, or other name of any entity
it may establish for the manufacture or distribution of A-55 Clean
Fuels. Should "A-55" not be trademarked in any jurisdiction of the
Territory, Grantee shall have the obligation to do all things necessary
to obtain such trademark and register any related designs or logos at
its cost and to hold the same for the sole and exclusive benefit of
A-55. As used herein, the term "A-55 Trademark" shall refer to any
trademark or related design obtained by Grantee hereunder.
5.2 Marking. Grantee shall xxxx any A-55 Product which it produces or
sells pursuant to this License with the A-55 Trademark, which, when
used, shall bear an (R) to denote its federal registration.
5.3 Use of Trademark. Grantee acknowledges that any use by it of the
A-55 Trademark shall inure to the exclusive benefit of A-55. Grantee
shall use the A-55 Trademark only in a manner approved and directed from
time to time by A-55. In connection with such use, Grantee shall comply
with all trademark notice, registered user, and other requirements to
maintain the validity of the A-55 Trademark registration in the
Territory. Grantee shall not make any use of the A-55 Trademark that
would misrepresent to the public that Grantee rather than A-55 is the
owner of such xxxx or the registration thereof.
5.4 Quality Standards. A-55 shall establish product specifications or
quality standards of any A-55 Product, including A-55 Clean Fuels, to be
sold under the A-55 Trademarks, and Grantee agrees that its products
using the Trademark shall comply therewith to ensure that the A-55
Trademark is being properly protected.
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In order to ensure high and consistent quality of the X- 00 Clean Fuels,
Grantee shall manufacture and blend all A-55 Clean Fuels which it
distributes pursuant to this License with standard blending equipment
sold to it by A-55 unless the use of other equipment is approved in
advance by A-55. A-55 may from time to time require Grantee to ship
actual production samples of A-55 Clean Fuel to A-55 for inspection and
testing to ascertain compliance with such product specifications or
quality standards.
5.5 Price. There shall be no additional royalty for the license under
the A-55 Trademarks.
6. TIME AND MANNER OF PAYMENTS.
6.1 Time for Payments. Payments required under subparagraph 3.1 shall be
made within fifteen (15) days following the last day of each calendar
Quarter in which there are Net Sales of A-55 Clean Fuels or A-55
Products by Grantee during the preceding Quarter.
6.2 Manner of Payments. Payments shall be made in immediately available
funds (United States dollars) by certified or registered mail or wire
transfer to A-55's address as specified herein and accompanied by a
written report signed by an authorized representative of Grantee setting
forth the dollar amount of the Net Sales of A-55 Clean Fuels or A-55
Products as to which a royalty is payable for each half year.
6.3 Overdue Payments. Payments shall, when overdue, bear interest at an
annual rate of one percent (1%) above the prime rate of Citibank in
effect in New York City on the last day payment was due. In no event
shall the interest so charged exceed the legal limit that may be charged
for interest.
7. RECORDS, INSPECTION, AUDITS AND REPORTS
7.1 Records and Reports. Grantee shall keep true and accurate records
and books of account showing the use and/or practice of the A-55
Technology by Grantee, the manufacture, marketing and sale of A-55 Clean
Fuels and A-55 Products by Grantee, and all other information necessary
for the accurate determination of the payments to be made to A-55
hereunder. In addition, Grantee shall provide A-55 with internally
prepared monthly, quarterly, and annual financial statements, prepared
in accordance with generally accepted accounting principles and
practices for public companies in the United States
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of America, within thirty (30) days of the end of the calendar month,
quarter, or year, respectively.
7.2 Inspection. It is a condition of this license, and Grantee
represents and guarantees, that it will permit A-55 or its designated
auditors to inspect and audit, at reasonable times during Grantee's
usual business hours, any and all parts of the records kept by Grantee
pursuant to this paragraph 7 which are required to be rendered by
Grantee herein, and to make excerpts from such records. In the event
that Grantee and A-55 are unable to agree on a mutually acceptable firm
of certified public accountants it is hereby agreed that such inspection
and audit may be performed by the certified public accounting firm of
Price Waterhouse, whose principal offices are now at New York City, New
York.
All fees of any such firm for such inspection and audit shall be paid by
A-55 except in the event of a discrepancy described in paragraph 7.3
below, in which case Grantee shall pay such fees.
7.3 Discrepancy Expenses. In the event any audit performed by A-55 or
its designee results in a finding that there is a discrepancy in excess
of five percent (5%) between the amounts paid to A-55 and the amounts
which should have been paid to A-55, the cost of such audit shall be
borne entirely by Grantee.
7.4 Retention of Records. Grantee's obligation to retain records and
A-55's right to inspect and audit and make excerpts with respect to the
records for each year in which royalty payments are due, in the absence
of a charge of fraud or intentional misrepresentations, shall terminate
three (3) years after the end of each such year to which such records
pertain.
7.5 Audit. The Grantee shall at its cost cause an audit of its financial
affairs to be conducted each year during the term of this Agreement to
coincide with the financial year of A-55. Such audit will be conducted
by an auditor selected by A-55 and the Grantee shall deliver such
audited financial statements prepared in accordance with generally
accepted accounting principles and practices for public companies in the
United States of America to A-55 within three (3) months of the end of
the financial year to which they relate.
7.6 Sublicensees. All obligations of the Grantee contained herein to
retain records and provide reports shall apply equally to all
sublicensees. All sublicense
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agreements submitted to A-55 for its approval shall
specifically include such provisions.
8. REPRESENTATIONS AND WARRANTIES
8.1 Grantee represents and warrants that:
8.1.1 Organization, Standing, etc. Grantee is a [INSERT TYPE OF
LEGAL ENTITY] duly organized, validly existing, and in good
standing under the laws of [INSERT COUNTRY OR TERRITORY] and has
all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted, and
as proposed to be conducted, to enter into this Agreement, and
to carry out the provisions hereof.
8.1.2 Qualification. Grantee is duly qualified
to do business in the Territory.
8.1.3 Challenged Validity. If Grantee should challenge the
validity or enforceability of the X- 00 Patent licensed under
this Agreement, in whole or in part, A-55 shall have the option,
by notice in writing, to immediately terminate this License.
8.1.4 Business Plan. Grantee shall within six months of the date
of this Agreement prepare and submit for approval to A-55 a
business and financing plan for the use and exploitation of the
A-55 Technology in the Territory. The approval of this plan by
A-55 shall not be unreasonably withheld.
Grantee shall expend its best efforts to implement or exceed the
business plan and, during the term of this Agreement o exploit and
commercialize the A-55 Technology within the Territory to the fullest
extent commercially possible.
8.2 A-55 represents and warrants that:
8.2.1 Organization, Standing, etc. A-55 is a limited partnership
duly organized, validly existing, and in good standing under the
laws of the State of Nevada and has all requisite power and
authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to
enter into this Agreement, and to carry out the provisions
hereof.
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8.2.2 Qualification. There is no jurisdiction wherein the
character of the properties owned by A-55 or the nature of the
activities conducted by A-55 makes necessary the licensing or
qualification of A-55 as a foreign partnership therein, in which
it is not so licensed.
8.2.3 Disclosure. Neither this Agreement nor any document,
certificate, or statement referred to herein or furnished to
Grantee pursuant hereto contains any untrue statement known to
A-55 of a material fact or omits to state a material fact
necessary to make the statements contained herein and therein
not misleading.
8.2.4 Ownership of Patent, etc. A-55 warrants and represents
that Xxxxxx X. Xxxxxxxxx is the sole and exclusive owner of the
entire right, title and interest in and to the A-55 Patent, and
any reissues or extensions of such Patent, and will be the sole
and exclusive owner of all patent improvements thereto which it
makes, in each case free and clear of all liens, claims,
charges, pledges, mortgages, security interests and other
encumbrances, and that, pursuant to exclusive license from Mr.
Gunnerman, it has the full and sole right, power and authority
to enter into, consummate and perform the transactions and
obligations contemplated by this Agreement.
8.2.5 No Conflicting Agreements. A-55 has not entered into any
agreement or understanding, written or oral, regarding the A-55
Technology, any patent improvement thereof, or any know-how
licensed hereunder, which is in conflict or inconsistent with
any of the terms and conditions of this Agreement.
8.2.6 Validity. A-55 warrants and represents that it is not
aware of any law or facts which would permit any person or
entity to challenge the validity or enforceability of the patent
rights granted herein.
8.2.7 Infringement. The A-55 Patent, all patent improvements,
and know-how as now practiced by X- 00 and all of its current
licensees do not, to A- 55's knowledge, violate, infringe or
conflict with the rights of any person, firm or government.
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9. EXCHANGE OF TECHNICAL INFORMATION, MUTUAL TRANSFER
OF MODIFICATIONS, VARIATIONS, IMPROVEMENTS AND
PATENT PROTECTION.
9.1 Exchange of Technical Information. Each party hereto shall exchange
with the other all technical information acquired during the term of
this Agreement relating to the A-55 Technology and developments with
respect to same and will communicate to the other all information and
data obtained therefrom. Each party further agrees that designated
representatives of the other may, at reasonable times, visit the
laboratory, plants, and other installations of the other in which
research and operations relating to the A-55 Technology are being
conducted.
9.2 Disclosure of Modifications. The parties shall promptly inform each
other in writing of any modifications, variations, or improvements
relating to the A-55 Technology, and the know-how licensed hereunder,
which are developed by them or otherwise come to their attention. It is
expressly agreed that modifications, variations or improvements
disclosed to A-55 by any other licensee, grantee, joint venturer, or any
other party having the right to practice any rights licensed hereunder,
shall, subject to any contractual obligations imposed upon A-55, be
disclosed to Grantee under the scope of this subparagraph.
9.3 Rights to Modifications. Notwithstanding which party hereunder shall
have discovered any modification, variation or improvement to the A-55
Technology, all such modifications, variations or improvements shall be
owned solely by A-55; provided, however, that Grantee shall have the
right to use all modifications, variations and improvements, whether
patented or unpatented, made or acquired by A-55 during the term of this
Agreement without further compensation to A-55. The parties shall
cooperate with each other in connection with the filing of any patent
applications relating to any such modifications, variations or
improvements.
9.4 Intellectual Property Protection. A-55 and Grantee agree to
diligently seek patent protection for all inventions, modifications and
improvements to the X- 00 Technology in the Territory at Grantee's
expense. X- 00 may, at its own option, apply for patent protection which
is not pursued by Grantee, in which case the cost thereof shall be borne
solely by A-55 and all benefits therefrom shall be solely owned by A-55
and not subject to the terms of this license; provided, however, that
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Grantee may, within three (3) months of the issuance of a patent to
A-55, give A-55 notice of its election to take rights under such patent
by paying all costs and expenses of A-55, together with interest thereon
at one percent (1%) over the prime rate charged by Citibank New York
from time to time. Any annual fees with respect to maintenance of
patents or trademarks within the Territory shall be paid by Grantee or,
at the option of A-55, paid by A-55 and reimbursed upon invoice.
10. INFRINGEMENT.
10.1 Notification of Infringement. Grantee and A-55 shall each notify
the other promptly in writing of any known infringement of the A-55
Patent, unauthorized use of any confidential know-how licensed
hereunder, or any infringement or unfair competition relating to a
trademark licensed hereunder, which either party learns of during the
term of this Agreement.
10.2 Litigation by A-55. A-55 shall have no obligation to xxx any such
infringers or competitors, but shall have the right to do so at its own
expense and the right to join Grantee and obtain Grantee's full
cooperation, if necessary, at no legal expense to Grantee. If A-55
brings suit against an infringer or competitor, A-55 shall have the sole
right to control such lawsuit and to settle the same on terms and
conditions approved by X- 00. All monetary and other recoveries
resulting from such a lawsuit or any settlement thereof shall belong to
A-55. A-55 shall not be required to have pending more than one (1) suit
for infringement of any patent licensed under this Agreement.
10.3 Litigation by Grantee. If, after notice of any infringement of the
A-55 Patent or any other patent licensed hereunder, unauthorized use of
any confidential know-how licensed hereunder, or infringement or unfair
competition relating to a trademark licensed hereunder, A-55 (a) is
unable to bring any such infringement or unfair competition to a halt,
or (b) fails to file and commence diligent prosecution of a suit against
such third party for patent infringement or unfair competition, within
six (6) months after A-55 learns thereof, then Grantee may take any
action it deems necessary to stop the infringement or unfair
competition, joining A-55 therein if necessary but at no expense to
A-55. Any recoveries made upon any such suit shall belong solely to
Grantee except for any award made by the court in favor of A-55
(provided that from such award A-55 shall pay to the Grantee its
reasonable legal
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expenses not recovered from the other party or parties
to the suit).
10.4 Actions by Third Parties. If during the term of this Agreement one
(1) or more third parties file suit in the Territory against Grantee or
any of its purchasers for patent infringement due to Grantee's or any
purchaser's manufacture, marketing, use, export or sale of A-55 Products
in the best modes contemplated by A-55 or in modes approved by A-55,
Grantee shall notify A-55 of such suit and tender defense thereof to
A-55. If A-55 refuses the defense of same, Grantee may at its option
elect to defend said suit. A-55 shall indemnify and hold Grantee
harmless from damages assessed against Grantee in any third party
infringement suit, but said indemnification shall be limited to an
amount equal to the payments made to A-55 by Grantee under the terms of
this Agreement.
10.5 Conduct of Defense. In the event that an action described in
subparagraph 10.4 is commenced against Grantee in any jurisdiction, A-55
hereby authorizes Grantee to join A-55 in said action as either an
additional original defendant or third party defendant.
10.6 Declaratory Judgment. Grantee may elect to file a declaratory
judgment action against any third party referred to in subparagraph
10.4, in which event it will notify A-55 of its intention and tender the
filing of any such suit to A-55. If A-55 refuses to institute such
declaratory judgment action against a third party, Grantee shall have
the option to institute such action. Further, A-55 hereby authorizes
Grantee to join A-55 as a plaintiff in any such declaratory action.
11. CONSULTATION SERVICES
11.1 Consultation Services. As mutually agreed upon in advance, A-55
shall provide to Grantee such qualified technical personnel to assist
Grantee in the exercise of the rights granted pursuant to this License
Agreement. Grantee shall pay for the cost of such assistance, including
all necessary travel, food, lodging and other expenses, and the pro rata
pay (plus 20%) of the persons rendering such technical assistance. If
travel is required, technical personnel shall fly coach, management
personnel shall fly business class, and the President or Chairman shall
fly first class.
11.2 Manner of Payment. As mutually agreed upon in paragraph 11.1, upon
a request from Grantee of technical assistance from A-55 pursuant to
this paragraph, A-55
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shall prepare and render to Grantee an estimate of the cost thereof,
together with an approximate time frame within which such assistance may
be rendered. Grantee shall, upon receipt and review of the same, forward
the amount to A-55 whereupon such assistance shall be rendered within
the agreed upon time. Any differences in the estimated and actual
expenses shall be accounted for and paid or refunded upon termination of
such services.
12. TERMINATION AND CONSEQUENCES OF DEFAULT
12.1 Termination or Invalidity.
12.1.1 This Agreement shall terminate in twenty-five (25) years,
or upon the expiration of the last A-55 Patent to expire,
whichever is later, in which event Grantee shall be entitled to
continue to exploit the rights granted under this Agreement
without the payment of any additional royalties to A-55.
12.1.2 Upon a judgment of invalidity or unenforceability of the
A-55 Patent, Grantee shall be entitled to continue to exploit
the rights granted under this Agreement by payment of the
royalties specified in paragraph 3 if Grantee continues to
practice A-55 Know-how; provided such payments shall be payable
by Grantee until twenty-five (25) years after the effective date
of this Agreement and Grantee shall then be entitled to exploit
the rights granted under this Agreement without payment of any
royalties to A-55.
12.2 Consequences of Default by Grantee. In the event of a default by
Grantee which is not cured in a timely manner as provided herein:
12.2.1 A-55 may, by written notice, terminate this License.
12.2.2 At its option, A-55 may, in its unfettered discretion,
elect to continue this license but convert it to a non-exclusive
license, as to any third party or entity, within the Territory.
12.2.3 All unpaid sums due A-55 under paragraph 3.1 herein to
and including the effective date of any such default shall be
due and payable within thirty (30) days thereafter.
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12.3 Consequences of Default by A-55: In the event of a default by A-55
Grantee shall be entitled to exploit the rights granted under the terms
of this Agreement and shall pay all royalties which accrue hereunder to
an independent trust account until such default is resolved or cured,
whereupon the funds so held shall be dispersed in accordance with such
resolution.
12.4 General Consequences
12.4.1 Termination pursuant to subparagraph 12.1 or the
consequences of default as specified in subparagraphs 12.2 or
12.3 shall not relieve either party of any obligations due to
the other under the terms of this Agreement to and including the
date of termination or the effective date of any such default.
12.4.2 In no event will default operate to release Grantee or
A-55 from any damages, costs and expenses that may be due as a
result of such default.
12.4.3 Either of the parties hereto shall have the right to give
public notice of any termination or default in such manner and
at such times and places as it may deem advisable.
12.5 Delivery of A-55 Technology In the event of termination of this
License for whatever reason, Grantee shall at the request of A-55,
deliver to A-55 all papers, drawings and other documents samples and
models relating to any matters that are the subject of this Agreement,
shall execute such documents as are reasonably requested by A-55 and
shall cease to exploit the rights granted under the terms of this
Agreement. Without limiting the activities that shall cease upon such
termination, Grantee shall remove all trademark designation from A-55
Products; transfer any trademarks to A-55 which it has acquired, change
its name to delete reference to A-55; and transfer to A-55 any related
business names which it has used in the practice of the A-55 Technology.
13. EVENTS OF DEFAULT, NOTICE OF DEFAULT, AND CURING
THEREOF
13.1 Events of Default. A default shall occur hereunder if any one of
the following events shall occur:
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13.1.1 Grantee fails to pay any sum due hereunder and such
failure continues for thirty (30) days; or
13.1.2 Grantee fails to materially implement the business plan
or the financial plan approved by X- 00 or fails to exercise
reasonable efforts to commercialize the A-55 Technology; or
13.1.3 A party fails to perform or comply with any term hereof
which materially affects this Agreement; or
13.1.4 Without the prior written approval of A-55 first had and
obtained, there is a change in control of the Grantee; or
13.1.5 Without the prior written approval of A-55 first had and
obtained, by virtue of any issue of shares, capital reduction or
any means whatsoever, A-55's shareholding (representing voting
shares or entitlement to equity) in Grantee falls below 30%; or
13.1.6 A party files a voluntary petition for bankruptcy or any
similar relief under laws for the benefit of creditors; a party
is adjudged bankrupt or a receiver is appointed by a court of
competent jurisdiction, and such adjudication is not vacated
within thirty (30) days; or an involuntary petition is filed for
reorganization or similar relief and is not dismissed or stayed
within sixty (60) days; or
13.1.7 Any representation or warranty made in this Agreement
proves to have been incorrect in any material respect which
significantly affects this Agreement; or,
13.1.8 Grantee defaults in the timely performance of any of its
obligations under that certain Heads of Agreement between A-55
and Grantee dated DECEMBER 2, 1997.
13.2 Notice of Default. Before any default is effective herein, the
party declaring the default shall provide the defaulting party with a
written notice specifying the claimed default. Such notice shall provide
a period of thirty (30) days from the date of the notice within which
the defaulting party may cure such default.
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13.3 Failure to Cure. In the event the defaulting party fails to cure
any default to the reasonable satisfaction of the other party within the
thirty (30) day period described in paragraph 13.2, the default will,
unless the other party specifies otherwise, become effective on the last
day of the thirty (30) day period, provided that if either party in good
faith denies there is a breach or default (other than a breach or
default for the nonpayment of money), such party may within such thirty
(30) day period submit the matter to binding arbitration and in the
event it is finally determined that a breach or default has occurred,
such party shall have thirty (30) days from the date of determination to
cure the same.
14. INDEMNITY AND DISCLAIMER
14.1 Indemnification by Grantee. Grantee shall defend, indemnify and
hold A-55 L.P., its Corporate officers, mangers, and staff harmless from
and against any action, claim, liability, expense (including reasonable
attorneys' fees and costs) or damage (including consequential damages)
to persons or property resulting from any acts or omissions of Grantee
and its employees and agents in connection with the performance of this
Agreement or the manufacture, use and sale of A-55 Technology hereunder.
14.2 Indemnification by A-55. A-55 shall defend, indemnify and hold
Grantee harmless from and against any action, claim, liability, expense
(including reasonable attorneys' fees and costs) or damage (including
consequential damages) to persons or property resulting from any breach
or untruth of any representation or warranty hereunder or failure to
perform any covenant hereunder).
15. GENERAL PROVISIONS
15.1 Notices. Any notice required to be given under this Agreement shall
be in writing and shall be sent by certified or registered mail, or its
equivalent, postage prepaid, to each party at the address below or at
such other address of which one party shall notify the other in the same
manner:
To: A-55: A-55, L.P.
0000 Xxxx Xxxx
Xxxx, XX 00000
XXX
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To Grantee: Vanetik & Associates
0000 X. Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
XXX
15.2 Governing Law. This Agreement shall be governed
by the law of Nevada for performance in the Territory.
15.3 Arbitration. All disputes, differences, or questions between the
parties concerning the construction, interpretation, and effect of this
Agreement or of any clause herein contained or the rights and
liabilities of the parties, shall be settled by arbitration in
accordance with the Rules of Arbitration of the American Arbitration
Association by arbitrators appointed in accordance with such rules;
provided that either party shall have the right to appeal the result of
any such arbitration; and provided further that arbitration under this
subparagraph shall not apply to disputes, differences or questions
between the parties concerning violations of United States AntiTrust
laws or regarding the validity of the A-55 Patent or regarding the
confidentiality of any know-how licensed hereunder. Unless the parties
otherwise agree, the site for arbitration shall be Reno, Nevada.
15.4 No Affiliations. Nothing in this Agreement shall be construed to
create between the parties a partnership, association, joint venture, or
agency.
15.5 Prior Agreements, Amendments. This Agreement cancels and supersedes
all prior oral or written representations, agreements and understandings
between the parties with respect to the subject matter hereof, and
embodies all of the understandings and obligations between the parties
with respect to the subject matter hereof.
This Agreement may be modified and amended at any time, including the
addition of new or deletion of existing know-how and technology
pertinent to the rights transferred under this Agreement, provided that
no agreement or modification or extension of this Agreement shall be
binding upon any of the parties hereto unless made in writing and signed
by both parties.
15.6 Waivers. Failure of either party to require strict performance of
any term of this Agreement shall not affect that party's right to fully
enforce the same, nor shall any waiver of a default be construed to be a
waiver of any succeeding default.
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15.7 Provisions Severable. If any term or provision of this Agreement
shall be held or adjudged illegal, invalid, or unenforceable by any
court having jurisdiction, such shall not affect the validity of any
other term or provision hereof, and any such illegal, invalid, or
unenforceable term or provision shall be deemed to be severable and
shall be deleted from this Agreement. A-55 agrees to send Grantee notice
within thirty (30) days after the date any term or provision of this
Agreement is adjudged illegal, invalid or unenforceable.
15.8 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties, their successors and signs to the extent
this Agreement is assignable by its terms.
15.9 Authority to Contract; Counterparts. Each of the parties covenants
that this Agreement is executed under authority duly granted by its
board of directors. The Agreement has been signed in two (2)
counterparts, one for each party, each of which shall be deemed to be an
original.
15.10 Costs of Litigation. In the event of any dispute arising as the
result of the breach or alleged breach of any term of this Agreement, if
such dispute is taken by either party to arbitration or to any court,
the successful party in any such arbitration or court action shall be
entitled, in addition to any damages suffered, to receive its actual
costs of arbitration or suit including, without limiting the generality
of the foregoing, attorneys' fees, experts' fees, the cost of exhibits
and the preparation thereof, and all other costs reasonably incident to
such arbitration or court action.
15.11 Injunction. The parties hereto acknowledge that the damages for
any breach of this Agreement by either party relating to any matter
other than the payment of money would be incapable of precise
determination and would cause the nondefaulting party irreparable harm.
Accordingly, each party accepts the other party's right to obtain an
injunction to prevent any further breach of the Agreement should the
nondefaulting party deem it necessary to do so.
15.12 No Assignment. Grantee shall have no right to assign or otherwise
transfer this License or any of the rights granted to or obligations
imposed upon Grantee without the express prior written consent of A-55.
A-55 may transfer this License or any of the rights granted
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hereunder to it, without the prior consent of Grantee; provided, however
that A-55 shall not be relieved of any obligations hereunder unless such
transfer is consented to in writing by Grantee.
15.13 Headings. Caption headings are for convenience of reference only.
In witness whereof, the parties have signed this Agreement as of the
date appearing above their respective signatures.
DATED: Dec. 2 , 1997. DATED: 12-02 , 1997.
A-55, L.P., a Nevada limited Vanetik & Associates
partnership
By RWG, Inc., a Nevada By/s/
corporation ------------------------------------
President, Vanetik &
Associates
By/s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxx,
Chairman, X-00 XX
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Xxxxxxx A
Territories for Exclusive Rights of Technical Transfer
Negotiation Fees
Russian Federation US $22,420,000.00
Republic of Ukraine US $ 3,330,000.00
Republic of Kaszakhstan US $ 2,100,000.00
Territories for Rights of First Refusal
Belarus
Georgia
Armenia
Moldova
Lithuania
Uzbekistan
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