1
EXHIBIT 10.1
AGREEMENT
THIS is an AGREEMENT, effective this 6th day of October 1999
("Agreement Date"), between Mobil Technology Company ("MTC"), a Delaware
corporation having offices at 000 Xxxxxxxxxxxx Xx., Xxxxxxxxx XX 00000, and
Imperial Petroleum Recovery Corporation ("Imperial"), a Nevada corporation
having offices at 00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000.
1. BACKGROUND
1.1 Imperial has developed certain Microwave Separation Technology
(MST) for breaking or separating Emulsions based on microwave energy and has the
capabilities, as hereinafter defined, to make or have made Microwave Separation
Technology Equipment for leasing or licensing to MST Customers, and to provide
MST Technical Support and MST Maintenance Support to MST Customers leasing or
licensing the Microwave Separation Technology Equipment;
1.2 MTC has developed certain Acoustic Separation Technology (AST) for
breaking or separating Emulsions based on acoustic energy and may choose, at its
own discretion, as hereinafter defined, to make or have made and market Acoustic
Separation Technology Equipment for leasing or licensing to AST Customers;
1.3 MTC has the capabilities, as hereinafter defined, to market
Microwave Separation Technology Equipment and Acoustic Separation Equipment
Technology to MST and AST Customers in the Field of Use;
1.4 Imperial desires MTC to be its exclusive worldwide marketer of
Microwave Separation Technology Equipment in the Field of Use, except as noted
in Paragraph 3.2 herein;
NOW, THEREFORE, intending to be legally bound, Imperial and MTC agree
as follows:
2. DEFINITIONS
2.1 Microwave Separation Technology means equipment, processes, trade
secrets, and know how, pertaining to Imperial Intellectual Property Rights, for
separating or breaking emulsions using microwave energy where the Microwave
Separation Technology Equipment is capable of processing up to and including
15,000
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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barrels per day of Emulsion. Microwave Separation Technology shall not mean any
application in which processing exceeds 15,000 barrels per day of Emulsion.
2.2 Microwave Separation Technology Equipment means equipment for
separating or breaking emulsions using microwave energy where the Microwave
Separation Technology Equipment is capable of processing up to 15,000 barrels
per day of Emulsion. The Microwave Separation Technology Unit will generally
include a system for exposing an Emulsion to microwave energy such as a
microwave generator, wave guides, an applicator chamber, pump, piping and
electrical that may be connected to at least one holding tank and/or a
separation device for processing organic liquids, aqueous liquids and/or solids.
2.3 Microwave Separation Technology Unit means Microwave Separation
Technology Equipment that contains one or more microwave transmitters having a
total power output of up to seventy-five (75) kilowatts (designated MST-1000).
Microwave Separation Technology Equipment having two or more Microwave
Separation Technology Units would contain one or more microwave transmitters
having total power output up to 75 kilowatts multiplied by the number of units.
For example:
Microwave Separation Technology Equipment having two (2) Microwave
Separation Technology Units (designated MST-2000) would contain one or more
microwave transmitters having a total power output from 76 kilowatts up to 150
kilowatts.
Microwave Separation Technology Equipment having three (3)
Microwave Separation Technology Units (designated MST-3000) would contain one or
more microwave transmitters having a total power output from 151 kilowatts up to
225 kilowatts.
Microwave Separation Technology Equipment having four (4) Microwave
Separation Technology Units (designated MST-4000) would contain one or more
microwave transmitters having a total power output from 226 kilowatts up to 300
kilowatts.
2.4 Acoustic Separation Technology means equipment, processes, trade
secrets, and know how, pertaining to Mobil Intellectual Property Rights, for
separating or breaking emulsions using acoustic energy where the equipment is
capable of processing up to 15,000 barrels per day of Emulsion.
2.5 Acoustic Separation Technology Equipment means equipment for
separating or breaking emulsions using acoustic energy where the equipment is
capable of processing up to 15,000 barrels per day of Emulsion. The equipment
will
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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include a system for exposing an Emulsion to acoustic energy that may be
connected to at least one holding tank and/or a separation device for processing
organic liquids, aqueous liquids and/or solids.
2.6 Field of Use is limited and means any process or operation related
to: producing hydrocarbons from a naturally occurring reservoir or similar
natural source; refining of such hydrocarbons into intermediates, such as a gas
oil, or final products, such as gasoline; and/or manufacturing of petrochemicals
and/or petrochemical feedstocks. Field of use excludes the clean up of raw or
refined hydrocarbons due to spills, ruptures or similar events occurring outside
of petrochemical or refining facilities.
2.7 Emulsion means a material fed into the Microwave Separation
Technology Equipment and/or Acoustic Separation Technology Equipment containing
a suspension of immiscible liquid phases, and/or a suspension of one or more
solids and one or more liquid phases.
2.8 Imperial Intellectual Property Rights mean all patents (including
patent applications), copyrights and trademarks for Microwave Separation
Technology owned by Imperial and listed in Appendix A, Exhibit 1. Imperial
Intellectual Property Rights include the associated know how for making, using,
sublicensing, leasing, marketing, and selling Microwave Separation Technology.
The patents listed in Appendix A, Exhibit 1 include all continuations,
continuations - in - part, divisionals, or foreign counterparts thereof
(including patent applications), even though not explicitly listed in Appendix
A.
2.9 Mobil Intellectual Property Rights mean all patents (including
patent applications), copyrights and trademarks for Acoustic Separation
Technology owned by Mobil and listed in Appendix A, Exhibit 2. Appendix A,
Exhibit 2 will be amended to include all improvements of Mobil Intellectual
Property Rights for Acoustic Separation Technology in the Field of Use. Mobil
Intellectual Property Rights include the associated know how for making, using,
sublicensing, leasing, marketing, and selling Acoustic Separation Technology.
The patents listed in Appendix A, Exhibit 2 include all continuations,
continuations-in-part, divisionals, or foreign counterparts thereof (including
patent applications) even though not explicitly listed in Appendix A.
2.10 Joint Intellectual Property Rights mean all patents (including
patent applications), copyrights and trademarks for Improvements developed
during the Term of this Agreement owned in accordance with Article 10 of this
Agreement. Joint
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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Intellectual Property Rights include the associated know how for making, using,
licensing, leasing, marketing, and selling such Improvements. Joint Intellectual
Property Rights in patents will be listed in Appendix A, Exhibit 3 and will
include all continuations, continuations - in - part, divisionals, or foreign
counterparts thereof (including patent applications), even though not explicitly
listed in Appendix A.
2.11 MST Maintenance Support means all routine, preventive, and/or
emergency maintenance or service performed on Microwave Separation Technology
Equipment, as addressed in the maintenance and service provisions included in
the Project Summary and Terms and Conditions, in any Equipment Lease Agreement
executed with MST Customers; and all routine, preventive, and/or emergency
maintenance or service performed on the MST Demonstration Unit.
2.12 MST Demonstration Unit means the current Imperial portable
Microwave Separation Technology Equipment capable of processing up to 1000
barrels per day of Emulsion. The MST Demonstration Unit can be transported to
actual or potential MST Customer sites for demonstration of Microwave Separation
Technology.
2.13 MST Customer means the lessee, licensee, or purchaser of Microwave
Separation Technology Equipment, except for those listed in Appendix C per
Paragraph 3.2 and the first initial installation of a Microwave Separation
Technology Unit at Mobil's Torrance refinery. Each site where Microwave
Separation Technology Equipment is installed for licensing or leasing will be
considered a different MST Customer.
2.14 Imperial Customer means the lessee, licensee, or purchaser of
Microwave Separation Technology Equipment listed in Appendix C per Paragraph
3.2.
2.15 AST Customer means the lessee, licensee, or purchaser of Acoustic
Separation Technology Equipment.
2.16 Trial Period means the period beginning on the Agreement Date and
ending twenty four (24) months from the Agreement Date.
2.17 Gross Periodic MST Leasing Fee means the recurring total periodic
fee (such as in a monthly or quarterly billing period as specified in an
Equipment Lease Agreement) charged and collected by Imperial for a MST Customer
to use Microwave Separation Technology at its site. This fee does not include
transportation, mobilization, de-mobilization, or maintenance fees related to
MST Equipment.
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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2.18 Gross MST Technology Fee means the total one time charge for the
purchase of Microwave Separation Technology Equipment and one time (fully paid
up) or recurring (running) operating royalties charged and collected by Imperial
to an MST Customer. This fee does not include transportation, mobilization,
de-mobilization, or maintenance fees related to MST Equipment.
2.19 Gross Periodic AST Leasing Fee means the recurring total periodic
fee (such as in a monthly or quarterly billing period as specified in an
Equipment Lease Agreement) charged and collected by MTC for an AST Customer to
use Acoustic Separation Technology at its site. This fee does not include
transportation, mobilization, de-mobilization, or maintenance fees related to
AST Equipment.
2.20 Gross AST Technology Fee means the total one time charge for the
purchase of Acoustic Separation Technology Equipment and one time (fully paid
up) or recurring (running) operating royalties charged and collected by MTC to
an AST Customer. This fee does not include transportation, mobilization,
de-mobilization, or maintenance related to AST Equipment.
2.21 Improvement means all process, hardware, and/or operational
developments, whether patentable or not, that when applied individually or in
combination to either Microwave Separation Technology or Acoustic Separation
Technology in the Field of Use, results in an advantage when compared to the
First Commercial Design for MST or AST Equipment.
2.22 Mobil means Mobil Oil Corporation and its Affiliates. The term
"Affiliate" shall mean any company, partnership or joint venture controlled by,
controlling or under common control with Mobil Oil Corporation. For the purposes
of this definition, "control" means the direct or indirect beneficial ownership
of fifty percent (50%) or more of the stock entitled to vote in the election of
directors or, if there is no such stock, fifty percent (50%) or more of the
ownership interest in such company, partnership or joint venture.
2.23 MST Technical Support means all support provided by Imperial to
MST Customers and potential MST Customers for MST Equipment or the MST
Demonstration Unit that includes, but is not limited to, training of MST
Customer personnel, assistance during the start-up and testing of MST Equipment,
troubleshooting technical problems in an MST application that is not performing
to a MST Customer's satisfaction, response to a MST Customer's request for
technical assistance to optimize the MST Equipment, and technical support
services described in the Equipment Lease Agreement including all accompanying
documents listed in
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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Appendix B.
2.24 First Commercial Design of MST Equipment means MST Equipment which
utilizes equipment and process design as described, or similar to that described
in Appendix F.
2.25 First Commercial Design of AST Equipment means AST Equipment as
described in Mobil's patents listed in Appendix A, Exhibit 2.
2.26 Equipment Lease Agreement means any agreement executed between MST
Customers and Imperial, following the template as attached hereto in Appendix B.
To meet the needs of individual MST Customers an Equipment Lease Agreement may
be modified by Imperial with MTC's consent, which may not unreasonably be
withheld. MTC may not withhold its consent in order to limit the use of the
Microwave Separation Technology by competitors of Mobil or any affiliate of
Mobil.
2.27 Equipment Cost means the sum of the invoiced costs of major
purchased equipment necessary to construct MST Equipment consisting of any
combination of items listed in Appendix G that are specifically required for a
particular MST application. Equipment Cost specifically excludes the labor cost
to assemble MST Equipment. The total cost of the Equipment Cost plus the
Construction Allowance is subject to a cap per Paragraph 7.4.
2.28 Periodic Equipment Cost means the Equipment Cost divided by the
Amortization Period times the numbers of months in a given billing period (the
billing period will typically be specified in the Equipment Lease Agreement).
2.29 Construction Allowance means an amount equal to [*] percent of the
Equipment Cost and is associated with the labor cost to assemble MST Equipment.
The total cost of the Equipment Cost plus the Construction Allowance is subject
to a cap per Paragraph 7.4.
2.30 Periodic Construction Allowance means the Construction Allowance
Cost divided by the Amortization Period times the number of months in a given
billing period (the billing period will typically be specified in the Equipment
Lease Agreement).
2.31 Amortization Period means the total number of months used to
amortize the Equipment Cost plus associated Construction Allowance, as specified
in Paragraph 7.3.
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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2.32 Net Periodic MST Leasing Fee means the amount equal to the Gross
Periodic MST Leasing Fee minus the Periodic Equipment Cost minus the Periodic
Construction Allowance.
2.33 Net MST Technology Fee means the amount equal to the Gross MST
Technology Fee minus the Equipment Cost minus the Construction Allowance.
2.34 Total Cumulative Net Mobil Share means the running sum of all
Imperial payments to MTC for MST Equipment related to the revenue sharing
provisions described in Article 7.
3. RIGHTS GRANTED
3.1 Imperial grants MTC, and MTC hereby accepts, subject to the terms
and conditions set forth elsewhere herein, including Paragraph 3.2, a worldwide
exclusive right to market Microwave Separation Technology under Imperial's
Intellectual Property Rights within the Field of Use.
3.2 Imperial may continue to solely market Microwave Separation
Technology to the Imperial Customer sites listed in Appendix C of this
Agreement. No Customer sites will be added to Appendix C after this Agreement is
fully executed. The Imperial Customer sites listed in Appendix C must fully
execute with Imperial an equipment lease agreement or license for Microwave
Separation Technology Equipment within twelve (12) months from the Agreement
Date to remain an Imperial Customer. If after 12 months from the Agreement Date,
an Imperial Customer has not fully executed an equipment lease agreement or
license then that customer will no longer to be eligible to be an Imperial
Customer. Imperial shall consult with MTC on any offer or proposal to license,
lease, or sell Microwave Separation Technology Equipment that Imperial plans to
make to an Imperial Customer. Such consultation is for informational purposes
only and to allow MTC to provide technical input to Imperial on such an offer or
proposal but MTC's approval is not required and the final terms shall be
pursuant to Imperial's sole and absolute discretion.
3.3 Except as permitted in this Agreement or as permitted in Paragraph
3.4, neither party may enter into a relationship, directly or indirectly, with a
third party, to market, sell, license, or lease technology for the separation of
Emulsions in the Field of Use, unless consented to in writing by both parties.
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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3.4 MTC is still developing Acoustic Separation Technology.
Commercialization of Acoustic Separation Technology is at the sole discretion of
MTC. However, if MTC decides to commercialize Acoustic Separation Technology by
licensing to third parties which are not affiliates of MTC, MTC will give
Imperial the first right to refuse entering into a relationship with MTC to
jointly make, have made, market, sell, license, and/or lease Acoustic Separation
Technology in the Field of Use, provided that no agreement executed by Mobil or
an affiliate of Mobil prohibits entering into such a relationship. If Imperial
agrees to enter into such a relationship, the relationship, in the Field of Use,
will be similar to that described in Paragraph 3.3 for Microwave Separation
Technology. It is expected that the services provided by Imperial and MTC, where
appropriate and as described in Articles 4 and 5 for MST Technology, will be
similar for AST. It is also expected that the revenue sharing from such a
relationship as per this Paragraph 3.4 will be at least as favorable to MTC in
comparison to the percentage of revenue sharing received by Imperial in
Paragraph 7.5, and will depend upon the strength of Mobil Intellectual Property
Rights. However, as Acoustic Separation Technology is not sufficiently developed
for commercialization as of the Agreement Date, the final terms of this
Agreement with respect to AST will be negotiated in good faith between MTC and
Imperial at a later date.
4. SERVICES PROVIDED BY IMPERIAL
4.1 Imperial will obtain the necessary financing to make or have made
Microwave Separation Technology Equipment and will be responsible for making or
having made the Microwave Separation Technology Equipment. Imperial will oversee
the manufacturing, delivery, and installation of Microwave Separation Technology
Equipment. However, this Paragraph 4.1 is not intended to modify or diminish the
provisions of Paragraph 5.6.
4.2 Imperial will provide, in a form that complies with industry
standards, an operating manual, safety manual, process flow diagrams, piping and
instrumentation diagrams, and wiring diagrams and will provide at least 20 hours
of training for each MST Customer. Imperial will also provide MST Technical
Support, as defined herein, to each MST Customer.
4.3 Imperial will provide MST Maintenance Support, as defined herein,
to each MST Customer.
4.4 Imperial will provide all other services to MST Customers as set
forth in
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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the Equipment Lease Agreement.
4.5 At MTC's request, Imperial will prepare a proposal for installation
of Microwave Separation Technology Equipment at each potential MST Customer's
site. Such proposal will include a description of the scope of work that
Imperial will perform including design specifications, description of work,
layout of site, description of installation, maintenance, and technical services
that Imperial will provide, and a timeline for installation. All proposals sent
to MST Customers, if practical, will include, based on the properties of the
Emulsion specified by the MST Customer, an estimate of the performance of the
MST Equipment, including expected properties of the materials exiting the MST
Equipment, separation yields, and production capacities. Imperial and MTC will
also mutually agree in writing to ALL proposals prior to being provided to the
MST Customer. Neither party will unreasonably withhold its consent to any
proposal. MTC will not withhold its consent to any proposal in order to limit
the use of the Microwave Separation Technology by competitors of Mobil or any
affiliate of Mobil.
4.6 Imperial will reasonably make available the MST Demonstration Unit
that will be ready for use at the sites of potential MST Customers. Imperial
will provide all staff necessary to safely operate the MST Demonstration Unit
and provide MST Technical Service necessary to reasonably demonstrate the
successful application of Microwave Separation Technology for the MST Customer
or potential MST Customer. Imperial will be responsible for all aspects of the
MST Demonstration Unit including, but not limited to, MST Maintenance Support,
MST Technical Support, and site to site transportation of the MST Demonstration
Unit. Imperial's obligation as set forth in this paragraph is contingent upon an
actual or potential MST Customer agreeing in writing to pay the fee negotiated
as per Paragraph 9.1, which fee is not subject to Paragraph 7.5. If Imperial
obtains a fee that is greater than the actual cost of providing the
Demonstration Unit to a potential MST Customer, then Imperial alone will retain
the resulting income from this service. If Imperial obtains a fee that is less
than the actual cost of providing the Demonstration Unit to a potential MST
Customer, then Imperial alone bears the cost associated with this service.
4.7 Imperial will complete all necessary technology software and
hardware specifications needed to lease or license Microwave Separation
Technology Equipment to MST Customers. This requirement shall be satisfied once
the MST Unit to be installed at Mobil's Torrance refinery has completed the
Performance Target Period as defined in the Torrance Equipment Lease Agreement.
4.8 Imperial will provide and maintain bench unit test facilities and
personnel
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 9
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for testing Emulsions from potential MST Customers or contract for like
services. Imperial will purchase or obtain access to the equipment listed in
Appendix H.
4.9 Imperial will cooperate in good faith with MTC to allow MTC to
provide the services in Paragraph 5.8 and 5.9, including for example executing
new powers of attorney for the prosecution and maintenance of Imperial's patents
listed in Appendix A, Exhibit 1. Should MTC decide, at its own discretion, to
enforce any patent rights assigned to Imperial or jointly assigned to Imperial
and MTC (or an affiliate of MTC) pursuant to the terms of this Agreement,
Imperial will cooperate in all matters with respect to any suit, action or
claim, such cooperation to include, but not be limited to consent to being
joined as a named party to the suit, action or claim, if requested by MTC.
Imperial will also cooperate with MTC in good faith to permit MTC to file and
record its security interest in accordance with Paragraph 6.1, and to permit MTC
to perform its evaluation in Article 27.
4.10 Imperial shall be solely responsible for all costs associated with
the services provided in this Article 4. However, Imperial is entitled to
receive reimbursement from MST Customers for some services as set forth in the
Equipment Lease Agreement. This Paragraph 4.10 shall not obligate Imperial to
pay the sums which MTC is obligated to pay in Paragraphs 5.8 and 5.9.
5. SERVICES PROVIDED BY MTC
5.1 MTC will use reasonable efforts in marketing Microwave Separation
Technology to MST Customers or potential MST Customers in the Field of Use with
the object of providing to Imperial MST Customers for leasing or licensing
Microwave Separation Technology Equipment.
5.2 Marketing services provided by MTC include developing a technology
fact sheet, including Microwave Separation Technology on the Mobil Technologies
Web site, disseminating information related to Microwave Separation Technology
to sites partially or fully owned or operated by Mobil. MTC will also use
reasonable efforts, at its own discretion, to publicize Microwave Separation
Technology, including presenting papers and publications, and advertising.
5.3 MTC will provide the following staff to support the marketing of
Microwave Separation Technology: a Licensing Manager and approximately 50% of a
full time professional MTC technical employee. The MTC Licensing Manager will be
responsible for developing and implementing a marketing plan for Microwave
Separation
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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Technology Equipment, and for promoting Microwave Separation Technology. The 50%
full time professional employee will promote Microwave Separation Technology
Equipment within sites that are partially or fully owned or operated by Mobil
and support the Licensing Manager in MST Customer licensing, leasing and sales.
MTC will consult with Imperial on the selection of staff to be provided by MTC;
however, MTC will make the final determination as to the selection of MTC
staffing.
5.4 In addition to the resources provided in Paragraph 5.3, MTC, where
appropriate, will provide research and development resources of up to 50% of a
full time professional MTC technical employee to identify and implement
improvements and to expand potential applications of Microwave Separation
Technology.
5.5 MTC will use reasonable efforts to disseminate Microwave Separation
Technology to sites fully or partially owned or operated by Mobil. Imperial
recognizes however, that the decision to implement Microwave Separation
Technology is at the discretion of each site or operation unit within Mobil, and
MTC has no control over the decisions relating to implementation of Microwave
Separation Technology at sites fully or partially owned or operated by Mobil.
5.6 MTC will provide a one time, $[*] security deposit to Imperial upon
full execution of this Agreement and upon fulfilling the terms and conditions in
Articles 6 and 27 of this Agreement. This security deposit is subject to the
terms and conditions set forth in Article 6.
5.7 Where requested by Imperial in a purchase order, and if MTC in its
own discretion can reasonably respond to the request, MTC will assist in
providing technical support to Imperial to supplement the MST Technical Support
provided by Imperial. To compensate MTC for such technical support, MTC will
xxxx to Imperial, and Imperial will pay to Mobil, a technical support service
charge. The technical support service charge will be Mobil's standard charge on
the day the services are provided for providing a professional technical person
and will also include travel, lodging, and food expenses (Mobil's standard
charge as of August 1999 is $1200.00 per day per professional technical person
plus expenses).
5.8 During the Term of this Agreement, MTC will prosecute and maintain
Imperial's patents listed in Appendix A, Exhibit 1. Decisions regarding the
prosecution and maintenance strategy of Imperial's patents listed in Appendix A,
Exhibit 1 will be mutually agreed to by both Imperial and MTC during the Term of
this Agreement. However, MTC shall have sole discretion in selecting inside or
outside patent counsel
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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for prosecuting Imperial's patents. MTC at its sole discretion and if
appropriate will also during the Term of this Agreement prepare, file,
prosecute, and maintain any patents related to Improvements in accordance with
Paragraph 10.5.
5.9 MTC, at its sole discretion, and if appropriate, will enforce,
during the Term of this Agreement, Imperial's patents (listed in Appendix A,
Exhibit 1) falling under Imperial's Intellectual Property Rights, Mobil's
patents (listed in Appendix A, Exhibit 2) falling under Mobil's Intellectual
Property Rights and patents (listed in Appendix A, Exhibit 3) falling under
Joint Intellectual Property Rights. MTC shall have sole discretion and control
over any action, claim, or suit financially supported by MTC. In the event of an
action, claim, or suit financially supported by MTC to enforce Imperial's
patents and/or the patents falling under the Joint Intellectual Property Rights,
the total proceeds awarded in any such action, claim, or suit shall first be
used to fully reimburse MTC of its expenses in bringing the action, claim, or
suit, with the remaining proceeds, if any, shared equally between MTC and
Imperial. All awarded proceeds shall be excluded explicitly from calculating the
Total Cumulative Net Mobil Share.
5.10 If within the nine (9) month evaluation period of Article 27, an
Equipment Lease Agreement is fully executed between an MST Customer and
Imperial, and if MTC has not provided to Imperial the security deposit of
Paragraph 5.6, MTC will pay to Imperial, a one time payment in the amount of
$[*], said fee to be used to assist Imperial in financing the first MST
Equipment to be constructed. This fee will be due to Imperial after full
execution of the first Equipment Lease Agreement (excluding the Torrance
Equipment Lease Agreement already executed), and paid to Imperial within thirty
(30) days upon receipt of an invoice from Imperial. However, MTC will make
reasonable efforts to provide this fee to Imperial within ten (10) days of
receipt of an invoice, but Imperial recognizes that MTC may not be able to make
payment in ten (10) days based on MTC's accounting system. This fee is
nonrefundable, but will be fully refundable if the first Equipment Lease
Agreement is cancelled, and the equipment falling under the first Equipment
Lease Agreement is deployed for use in applications outside the Field of Use or
to a non MST Customer.
5.11 MTC will use reasonable efforts to facilitate the use of the first
installation of MST Equipment at the Mobil Torrance California Refinery for
purposes of marketing MST Technology to potential MST Customers. Imperial
recognizes however, that the decision to use the first Torrance MST Equipment
for marketing will need to be approved by the Torrance California Refinery Site,
and MTC does not have sole control over such approval.
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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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5.12 Except for the services described in Paragraph 5.7, and Imperial's
obligations under Article 6, MTC shall be solely responsible for all costs
associated with the services provided in this Article 5.
6. SECURITY DEPOSIT
6.1 For the $[*] security deposit ("security deposit") paid by MTC to
Imperial, Imperial will execute all necessary documents (such as a UCC-1
financing statement) to transfer to MTC and to perfect, a 100% security interest
in the first Microwave Separation Technology Equipment that is to be installed
at the Torrance, California Mobil Refinery ("Torrance MST Equipment"). The
transfer of the security deposit by MTC to Imperial will occur either at or
after the time (a) a 100% perfected security interest in the Torrance MST
Equipment is transferred to MTC, and (b) all other security interests, liens,
and other encumbrances that are present on the Torrance MST Equipment are fully
released. To carry out the transfer in this Paragraph, MTC will select, at its
own discretion and expense, an escrow agent, and the transfer will occur at a
place selected by MTC. If for any reason, MTC is not fully satisfied that all
security interests, liens, or other encumbrances currently placed on the
Torrance MST Equipment have not been or will not be fully released at or before
the time of transfer, MTC has no obligation to transfer the security deposit to
Imperial. Prior to or at the time of transfer, Imperial will also execute all
necessary documents (such as a UCC-1 financing statement), at its own expense,
for MTC, or its designee, to file and record MTC's security interest in
California, Texas, and Nevada. Imperial will assume all costs associated with
filing and recording MTC's security interest in these states. Prior to or at the
time of transfer, Imperial will also provide to MTC, a certificate or letter,
signed and dated by an authorized officer of Imperial, representing and
acknowledging that the Torrance Microwave Separation Technology Equipment is
free of all liens and encumbrances. Prior to the transfer of the security
deposit by MTC, Imperial will not transfer a security interest in the Torrance
Microwave Separation Technology Equipment to any third party without informing
MTC of such transfer in writing. Any time after transfer of the security deposit
by MTC to Imperial, Imperial will not transfer any security interest in the
Torrance Microwave Separation Technology Equipment to any third party.
6.2 MTC has no obligation to pay the security deposit to Imperial under
Paragraph 5.6 until (a) the terms and conditions of Paragraph 6.1 are fully met
to MTC's satisfaction, and (b) the Microwave Separation Technology Equipment is
delivered to Mobil's Torrance facility and has been Inspected and Accepted (with
no rejections) in
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 13
14
accordance with the Torrance Equipment Lease Agreement, including Exhibit D.
Additionally, MTC has no obligation to pay the security deposit to Imperial
under Paragraph 5.6, if MTC terminates the Agreement pursuant Article 17 prior
to transfer of the security deposit.
6.3 Subject to the provisions of Paragraph 6.4, the security deposit
will be refunded unconditionally to MTC in full, without interest, either
(whichever is applicable) (a) on or before three (3) years from the date of
receipt of the security deposit by Imperial, if MTC has not paid the fee in
Paragraph 5.10 to Imperial, or (b) on or before three (3) years from the
Agreement Date, if MTC has paid the fee in Paragraph 5.10 to Imperial.
6.4 If this Agreement is terminated prior to the three year payment
date in Paragraph 6.3, the following provisions in this Paragraph 6.4 shall
apply:
a) If the Agreement, prior to the three year payment date in
Paragraph 6.4, is terminated by Imperial for any reason, is terminated by MTC
under the provisions of Paragraphs 17.2 or 17.3, or is terminated under
Paragraph 17.6, Imperial shall have sixty (60) days from the date of termination
to return the security deposit unconditionally and without interest to MTC in
full.
(b) If the Agreement is terminated for any other reason other than
those listed in Paragraph 6.4(a), Imperial shall return the security deposit
unconditionally and with interest as specified in this Subparagraph 6.4(b) on or
before three (3) years from the date of receipt of the security deposit by
Imperial. Interest will begin accruing on the first day after twelve (12) months
from the date the Agreement is terminated and will be due to MTC at the time of
the return of the security deposit. The interest will be charged on a daily
basis based on the security deposit plus any accrued interest at a rate equal to
the daily Federal prime interest rate plus two (2) percent. The interest will be
compounded daily.
6.5 Should Imperial default in repaying the security deposit within the
timing of Paragraphs 6.3 or 6.4 (whichever is applicable), Imperial shall
promptly execute all necessary documents to assign full title and 100% ownership
interest in the Torrance Microwave Separation Technology Equipment to MTC.
Imperial will grant to MTC under Imperial's patents or other intellectual
property rights, all licenses need by MTC to enjoy full ownership rights to the
Torrance Microwave Separation Technology Equipment, including but not limited to
licenses for using, selling, leasing, and/or sublicensing the Torrance Microwave
Separation Technology Equipment. Such rights granted by
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 14
15
Imperial in this Paragraph 6.5 shall be fully assignable to any subsequent
purchaser of the Torrance Microwave Separation Technology Equipment. This
Paragraph shall not in any way limit MTC's right in law or equity to seek
additional compensation to obtain full compensation for Imperial's default in
repaying the security deposit.
6.6 The security deposit payment to Imperial under this Article shall
initially be paid by wire transfer to the following Imperial account:
First Security Bank
Routing #: 000000000
Account #: [*]
6.7 The return of the security deposit payment to MTC shall initially
be paid by wire transfer to the following MTC account:
Citibank - New Castle Delaware
Routing #: 000000000
Account #: [*]
7. REVENUE SHARING
7.1 Each MST Customer will pay to Imperial a Gross Periodic MST Leasing
Fee or Gross MST Technology Fee, as per the terms of the Equipment Lease
Agreement. Imperial and MTC shall share this revenue as per the terms outlined
in this Article 7.
7.2 The Gross Periodic MST Leasing Fee will be collected by Imperial at
each billing period (e.g., monthly or quarterly) as per the terms of the
Equipment Lease Agreement. The Net Periodic MST Leasing Fee is calculated as the
Gross Periodic MST Leasing Fee minus the Periodic Equipment Cost minus the
Periodic Construction Allowance.
7.3 Except as otherwise specified in this Paragraph, the following
schedule in Table 7.1 will be used for the purpose of calculating the Periodic
Equipment Cost and Periodic Construction Allowance. MST Customer number, as
shown below, is independent of the size of the MST Equipment leased.
--------------------------------------------------------------------------------
MST Customer Amortization Period (months)
--------------------------------------------------------------------------------
1 - 10 72
--------------------------------------------------------------------------------
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 15
16
--------------------------------------------------------------------------------
11+ 36
--------------------------------------------------------------------------------
Table 7.1- Amortization schedule
If the security deposit of Paragraph 5.6 has not been provided to
Imperial at the time that an Equipment Lease Agreement is fully executed for an
MST Equipment, that MST Equipment will be amortized over the term of the
applicable Equipment Lease Agreement, or seventy two (72) months, whichever is
less, for the purposes of calculating the Periodic Equipment Cost and Periodic
Construction Allowance. This revised amortization period shall only be
applicable to the first three MST Equipment leased and only if the security
deposit was not provided at the time of execution of the applicable Equipment
Lease Agreement. All other MST Equipment shall be amortized in accordance with
Table 7.1.
7.4 The total cost of the Equipment Cost and Construction Allowance for
MST Units, for the purpose of calculating the Net Periodic MST Leasing Fee and
the Net MST Technology Fee is capped. For a MST-1000 the maximum total is [*] US
dollars ($[*]); for a MST-2000 the maximum total is [*] US dollars ($[*]); for a
MST-3000 the maximum total is [*] US dollars ($[*]); for a MST-4000 the maximum
total is [*] US dollars ($[*]). The maximum Equipment Cost and Construction
Allowance for MST Equipment greater than a MST-4000 will be negotiated in good
faith by the parties, but in no case shall this total cost be greater than the
lowest cost of any combination of MST Equipment which could be used to make said
MST Equipment. The caps in this Paragraph 7.4 will be adjusted annually for cost
of living by multiplying the caps set forth in this Paragraph 7.4 by a fraction
represented by the BLS Index for the month of December of the calendar year
immediately preceding that calendar year in which the cap is used divided by the
average of the Twelve (12) monthly BLS Indexes for the calendar year 1999. For
the purposes of this Agreement, the fraction shall not at any time be less than
one (1). The BLS Index shall mean the index for Total Industrial Commodities as
stated in the Producer Price Indexes For Selected Commodity Groupings, published
by the Bureau of Labor Statistics of the United States Department of Labor using
the year 1982 as the base index equal to 100. If at any time during the term of
this Agreement, the Bureau of Labor Statistics should cease to publish the BLS
Index, another suitable index generally recognized by the trade as being
authoritative with respect to changes in the United States of equivalent
commodity costs shall be used.
7.5 In consideration for the services provided by MTC, Imperial will
pay to MTC, a percentage of the Net Periodic MST Leasing Fee and/or Net MST
Technology Fee for all Microwave Separation Technology Equipment leased,
licensed, and/or sold
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 16
17
by Imperial to MST Customers. MTC will receive no percentage for those leases,
licenses, or sales to Imperial Customers pursuant to Paragraph 3.2. The
following revenue sharing schedule will be used:
--------------------------------------------------------------------------------
Percentage of Net Periodic MST Total Cumulative Net Mobil Share
Leasing Fee/Net MST Technology Fee
Payable to MTC
--------------------------------------------------------------------------------
[*]% 0 up to [*] dollars
--------------------------------------------------------------------------------
[*]% Greater than [*] dollars
--------------------------------------------------------------------------------
Table 7.2 - Revenue sharing schedule
The first MST Unit installed at Mobil's Torrance California Refinery is
excluded from this Paragraph 7.5; however, the provisions of Paragraph 7.7 shall
fully apply to this first Torrance MST Unit. This revenue sharing schedule is
subject to the following terms and conditions in Paragraphs 7.6, 7.8 and 7.9.
7.6 The revenue sharing in Paragraph 7.5 is due to MTC for the duration
of each Microwave Separation Technology Equipment licensed or leased and
includes all license or lease renewals or extensions, except that the duration
of revenue sharing will not exceed ten (10) years beginning from the initial
payment date (such as the initial rent or licensing payment) of the Microwave
Separation Technology Equipment. If an Improvement which results in a [*]% or
greater economic benefit is made to an installed Microwave Separation Technology
Equipment, then the ten (10) year period will be reset to zero years beginning
from the installation date of the Improvement for that Microwave Separation
Technology Equipment. Additionally, all Equipment Lease Agreements with MST
Customers in effect at the time of termination of this Agreement or executed
within twelve (12) months from the termination of this Agreement shall be
subject to the revenue sharing provisions of Paragraph 7.5 after termination of
this Agreement.
7.7 For the first three years of the lease or license for the first MST
Unit installed at Mobil's Torrance California Refinery, MTC will receive [*]
percentage of the Net Periodic MST Leasing Fee. After the first three years of
the lease or license for the first MST Unit at Torrance, MTC will receive [*]
percent ([*]%) of the Gross Periodic MST Leasing Fee or Gross MST Technology
Fee. MTC will receive a percentage in accordance with Paragraph 7.5 for all
other Microwave Separation Technology Equipment installations at sites fully or
partially owned or operated by Mobil.
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 17
18
7.8 Unless otherwise agreed to in writing, Imperial will collect the
Gross Periodic MST Leasing Fee and/or Gross MST Technology Fee for all leasing,
licensing, and/or sales agreements (even those at sites fully owned or partially
owned by Mobil). Imperial will pay to MTC, MTC's percentage of all Net Periodic
MST Leasing Fees and Net MST Technology Fees, in arrears on a quarterly basis,
in accordance with Paragraphs 7.5 and 7.7. Quarterly payments to MTC will be due
to MTC on the last day of the month in April, July, October, and January and
will include MTC's percentage of all Net Periodic MST Leasing Fees and Net MST
Technology Fees received by Imperial from MST Customers. If mutually agreed to,
MTC and/or Imperial, at each party's option may pursue an action to collect
delinquent fees defined in Paragraphs 2.17, 2.18, 2.19 or 2.20. If either MTC or
Imperial incur any legal or other fees or costs to pursue an agreed upon
collection action, then, prior to any quarterly payment, MTC or Imperial shall
be reimbursed for such fees or costs.
7.9 In the event it is mutually agreed by MTC and Imperial that
Microwave Separation Technology Equipment in the Field of Use should be sold to
third parties (with either paid up or running process royalties), MTC shall
receive a percentage of the Net MST Technology Fee for each Microwave Separation
Technology Equipment sold in the Field of Use, except where Imperial is the sole
marketer in accordance with Paragraph 3.2. The percentage of the Net MST
Technology Fee received shall be the percentages shown in Paragraphs 7.5 or 7.7,
whichever is applicable, and shall be paid to MTC in accordance with Paragraph
7.8.
7.10 For the purpose of construction of new Microwave Separation
Technology Equipment, Imperial will use, whenever possible, before purchasing
new equipment, any equipment previously purchased for MST Equipment, that has
become available, for example, as a consequence of customer's cancellations,
equipment upgrades or modifications. For the purposes of calculating the Net
Periodic MST Leasing Fee and Net MST Technology Fee, if equipment used in the
construction of new MST Equipment has already been amortized fully or partially,
then (a) the Equipment Cost for that equipment shall be either zero (if fully
amortized or already paid in one lump sum), or be the Equipment Cost not yet
amortized, and (b) the Construction Allowance shall be mutually agreed to, in
good faith, by the parties, but in no event shall exceed the Construction
Allowance of the original equipment. The unamortized Equipment Cost and
Construction Allowance for the new MST Equipment shall be amortized for the
applicable Amortization Period in Paragraph 7.3. In the event that Microwave
Separation Technology Equipment that is already fully (including being paid in
one lump sum) or partially amortized is deployed for use in applications outside
the Field of Use
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 18
19
or is sold to third parties (with either paid up or running process royalties),
MTC shall receive a prorated portion of the fair market value of the equipment.
This prorated portion to be received by MTC shall be equal to the fair market
value of the equipment multiplied by one half (1/2) and further multiplied by
the fraction of the sum of Equipment Cost and Construction Allowance that has
been amortized for that equipment. The provisions of this Paragraph 7.10 shall
not apply to MST Equipment at Imperial Customers in accordance with Paragraph
3.2.
7.11 Examples of calculations for revenue sharing between MTC and
Imperial are given in Appendix I.
7.12 All payments to MTC under this Article 7 shall be paid by wire
transfer to the following MTC account:
Citibank - New Castle Delaware
Routing #: 000000000
Account #: [*]
8. LEASING AGREEMENTS
8.1 Unless otherwise agreed to in writing, all agreements licensing,
leasing, and/or purchasing Microwave Separation Technology Equipment to MST
Customers will be between the MST Customer and Imperial. MTC will have no
obligations, nor make any representations or warranties in the MST Customer
licensing, leasing, and/or purchasing agreements.
8.2 A template Equipment Lease Agreement (including all documents
incorporated therein) as shown in Appendix B will be used for leasing or
licensing Microwave Separation Technology Equipment to MST Customers in the
Field of Use. Any material modifications made to the Equipment Lease Agreement
must be agreed to in advance by both MTC and Imperial in writing.
8.3 Imperial will notify MTC of list prices for leasing MST Equipment
to a MST Customer and will provide MTC thirty (30) days written notice of any
change in list prices. The list prices are attached hereto in Appendix D.
Imperial will periodically review competitive information and reasonably adjust
the list prices if needed to remain competitive. Additionally, in view of
equipment and processing requirement variations at each potential or existing
MST Customer site, Imperial and MTC will discuss appropriate deviations in the
list prices to adjust for the various equipment and
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 19
20
processing needs of a potential or existing MST Customer. However, the final
fees for MST Equipment will be at the sole discretion of Imperial.
8.4 When a site that is fully or partially owned or operated by Mobil
(Mobil Site) is an MST Customer, Imperial agrees to charge the Mobil Site the
same leasing fee and/or sales price for MST Equipment that it charges to the
general market, and Imperial agrees that it will not increase these prices for
Mobil Sites to compensate for payments made to MTC for said MST Equipment under
Paragraph 7.5.
9. ACCESS TO MST DEMONSTRATION UNIT
9.1 MTC will use reasonable efforts to obtain a fee of [*] dollars
($[*]) per month for use of the MST Demonstration Unit at any MST Customer site.
This fee can be waived or reduced if mutually agreed to by both MTC and
Imperial. Imperial recognizes that a monthly fee of $[*] per month may be
difficult to obtain given current market conditions.
9.2 The scheduling of the MST Demonstration Unit at MST Customer sites
will be mutually agreed to by Imperial and MTC. However, scheduling requests
made by sites partially or fully owned or operated by Mobil for using the MST
Demonstration Unit will be given priority over other MST Customers.
10. INTELLECTUAL PROPERTY
10.1 Imperial will disclose to MTC all patents, including,
applications, continuations, continuations-in-parts, divisionals, issued
patents, and foreign counterparts fully or partially owned by Imperial related
to treatment of Emulsions using microwave energy. All Imperial patents are
listed in Appendix A, Exhibit 1. In the event that an application has not issued
as a patent, Imperial will provide the prosecution history for that application.
Imperial will retain ownership in these Imperial patents and ensure that all
Imperial patents listed in Appendix A, Exhibit 1 are solely owned by Imperial,
and all documents establishing such ownership in Imperial patents are recorded
in the appropriate patent offices.
10.2 MTC will disclose to Imperial all Mobil patents, including,
applications, continuations, continuation in parts, divisionals, issued patents,
and foreign counterparts fully or partially owned by Mobil related to treatment
of Emulsions using acoustic energy. All Mobil patents are listed in Appendix A,
Exhibit 2. In the event that an application has not issued as a patent, MTC will
provide the prosecution history for
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 20
21
that application. Mobil will retain ownership in these Mobil patents and ensure
that all Mobil patents listed in Appendix A, Exhibit 2 are solely owned by
Mobil, and all documents establishing such ownership in Mobil patents are
recorded in the appropriate patent offices.
10.3 Each party shall disclose in writing within sixty (60) days to the
other party any Improvement made to Microwave Separation Technology in the Field
of Use, whether patentable or not, during the term of this Agreement.
10.4 In the event Improvements are made to Microwave Separation
Technology in the Field of Use during the Term of this Agreement, whether
patentable or not, all Improvements, whether developed 100% by MTC (including a
party working on behalf of MTC or any of MTC's affiliates), 100% by Imperial, or
jointly by MTC (including a party working on behalf of MTC or any of MTC's
affiliates) and Imperial, will be owned jointly by MTC and Imperial subject to
the obligations of Paragraph 10.6. Additionally, if Imperial obtains partial or
full ownership to any Improvement pursuant to an Equipment Lease Agreement with
an MST Customer, such Improvement, to the extent owned by Imperial, shall be
jointly owned by Imperial and MTC, and will be subject to the obligations of
Paragraph 10.6. If patents are acquired related to such Improvements the patents
will be added to Appendix A, Exhibit 3.
10.5 MTC, at its sole discretion, will assume complete responsibility
(including costs) for acquiring and maintaining any patents related to
Improvements during the Term of this Agreement, and in such circumstances, MTC
shall have sole discretion in the prosecution strategy of any such patent.
Should MTC decide not to acquire and/or maintain any patent related to an
Improvement, Imperial, may, at its own expense and discretion, acquire and
maintain any such patent and shall be the sole owner of any such patent.
Additionally, at MTC's sole discretion, MTC will assume complete responsibility
(including costs) for enforcing any patent related to an Improvement during the
Term of this Agreement, and MTC shall have sole discretion and control in the
enforcement of any such patent. Should MTC decide not to enforce any patent
related to an Improvement, Imperial, may, at its own expense and discretion,
enforce such a patent. Any proceeds awarded from the enforcement of an
Improvement shall first be used to compensate legal expenses, with the remaining
proceeds, if any, shared equally between MTC and Imperial. All awarded proceeds
shall be excluded explicitly from calculating the Total Cumulative Net Mobil
Share.
10.6 Improvements under this Agreement are subject to the terms and
conditions of this Agreement, including but not limited to all provisions under
Articles 3,
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 21
22
4, 5, and 7. Moreover, during the Term of this Agreement and any extensions
thereof, except as permitted in this Agreement, neither Party may enter into a
relationship, directly or indirectly, with a third party to market, sell,
license, or lease Improvements for Microwave Separation Technology in the Field
of Use unless consented to in writing by both parties.
10.7 MTC and Imperial will cooperate in good faith to implement the
allocation of ownership and provisions provided for in Paragraphs 10.4 and 10.5,
including the execution of such further documents as may be necessary for the
assignment and prosecution of patents.
10.8 Imperial and MTC shall be given thirty (30) days to review any
patent application prepared by the other party prior to the application being
filed. Should Imperial or MTC have concerns regarding the disclosure of its
technology, both parties will cooperate in good faith to resolve such disputes.
10.9 Except for termination of this Agreement at the end of the Trial
Period or termination of this Agreement under Paragraphs 17.4 or 17.5, upon
termination of this Agreement, Mobil shall be granted by Imperial, at MTC's
option, a nonexclusive royalty free worldwide license to make, have made, and
use Microwave Separation Technology in the Field of Use under Imperial's
Intellectual Property Rights for the sole purpose of using Microwave Separation
Technology within Mobil and its affiliates. The duration of this grant by
Imperial will continue beyond termination of this Agreement only for as long as
MTC continues to assume all costs for prosecuting and maintaining (a) Imperial's
patents under Imperial's Intellectual Property Rights and (b) any pending
applications or patents related to Improvements that MTC assumed responsibility
for acquiring and maintaining under Paragraph 10.5. This Paragraph 10.9 shall
not affect, or in any way alter, the revenue sharing due to either party after
termination of this Agreement for any MST Customer (including Mobil or an
Affiliate of Mobil) obligated by an Equipment Lease Agreement that is in effect
at termination of this Agreement, or obligated by an Equipment Lease Agreement
executed within twelve (12) months of termination of this Agreement.
11. LICENSE OPTION
11.1 Within thirty (30) days after the conclusion of the Trial Period,
and provided that MTC has delivered MST Customers for eight (8) or more
Microwave Separation Technology Units during the Trial Period, as evidenced by
obtaining executed licensing or leasing agreements, Imperial will grant to MTC,
at MTC's option
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 22
23
only, an exclusive worldwide license for the duration Imperial Patent Rights are
enforceable or until termination of this Agreement, whichever occurs first, to
use, lease, sub-license the Microwave Separation Technology and/or sell
Microwave Separation Technology Equipment under Imperial Intellectual Property
Rights in the Field of Use. MTC shall also have the right to assign, and enforce
such rights granted to MTC by Imperial. The grant of these rights under this
Paragraph 11.1 is subject to the terms and conditions of this Agreement,
including Paragraph 28.2, and shall not alter or modify the benefits, rights,
obligations or liabilities of the parties to this Agreement.
11.2 Should Imperial be unable to supply, either directly or
indirectly, Microwave Separation Technology Equipment to MTC as required in
Paragraph 4.1, MTC shall also be granted, at MTC's option only, the right to
make or have made Microwave Separation Technology Equipment under Imperial
Intellectual Property Rights in the Field of Use for the duration Imperial
Patent Rights are enforceable or until termination of this Agreement, whichever
occurs first. In compensation for such a grant of rights, Imperial shall receive
[*]% of the Gross Periodic MST Leasing Fee or Gross MST Technology Fee received
for any sale, lease or license to an MST Customer minus all costs, amortized
over a 3 year period, incurred by MTC to make or have made MST Equipment
including: (a) all Equipment Costs, (b) all manufacturing, labor, assembly, and
other overhead costs, and (c) start-up costs. MTC may only procure MST Equipment
to fill demand in excess of Imperial's ability to deliver. If Imperial is able
to partially satisfy the total demand for MST Units, Imperial shall be entitled
to supply such units. Similarly, if Imperial's inability to satisfy the total
demand for MST Units is due to production limitations, if and when Imperial has
resolved such production limitations it shall be entitled to supply all MST
Units demanded and which Imperial has capability to supply. If MTC agrees to
make or have made MST Equipment pursuant to this Paragraph 11.2, Imperial's
inability to produce an adequate number of MST Equipment as set forth above
shall not be a material breach under Paragraph 17.2.
12. INFRINGEMENT
12.1 If either Imperial or MTC receives or becomes aware of a claim or
assertion that the use of Microwave Separation Technology and/or Acoustic
Separation Technology in the Field of Use infringes or otherwise violates the
intellectual or industrial property rights of any third party, then the party so
informed shall notify the other party in writing within thirty (30) days of
receiving or becoming aware of the third party claim or assertion. The written
notice shall include all details known at that time relating to the third party
claim or assertion.
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 23
24
12.2 In the event Imperial or MTC receives or becomes aware of a
material claim or assertion that the use of Microwave Separation Technology in
the Field of Use infringes or otherwise violates the intellectual or industrial
property rights of any third party, MTC reserves the right to stop marketing the
accused technology in the Field of Use after consulting with Imperial. In the
event MTC stops marketing the accused technology in the Field of Use, and it is
later determined by MTC that the third party's claim is invalid, MTC shall
resume marketing the accused technology in the Field of Use, and Imperial will
consider extending, if applicable, the Trial Period. If such claim or assertion
is adjudged in good faith by either party to be valid, and only after providing
the other party adequate opportunity to present evidence and/or argument to
refute or rebut a claim of infringement or other violation of a third party's
intellectual property rights, either party may terminate this Agreement in
accordance with the provisions of Article 17.
12.3 In the event Imperial or MTC receives or becomes aware of a
material claim or assertion that the use of Acoustic Separation Technology in
the Field of Use infringes or otherwise violates the intellectual or industrial
property rights of any third party, MTC reserves the right to stop marketing the
accused technology in the Field of Use after consulting with Imperial. In the
event MTC stops marketing the accused technology in the Field of Use, and it is
later determined by MTC that the third party's claim is invalid, MTC shall
resume marketing the accused technology in the Field of Use. If such claim or
assertion is adjudged in good faith by either party to be valid, and only after
providing the other party adequate opportunity to present evidence and/or
argument to refute or rebut a claim of infringement or other violation of a
third party's intellectual property rights, either party may terminate this
Agreement in accordance with the provisions of Article 17.
13. SAFETY STANDARDS
13.1 Imperial and MTC will follow all applicable OSHA Process Safety
Management regulations and all other health and safety policies applicable to
each MST Customer site.
13.2 Imperial will provide all warning devices and precautionary
measures, including emergency shutdown systems, that are required by law or in
following accepted engineering practices to protect persons and property while
installing and operating Microwave Separation Technology Equipment and will meet
all Performance and Safety Requirements in Exhibit C of the Equipment Lease
Agreement in Appendix B of this Agreement.
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 24
25
13.3 Imperial will provide or retain a qualified professional to
periodically inspect the MST Equipment at MST Customer sites to determine that
the MST Equipment is in compliance with OSHA PSM Standards. Summary reports will
be provided by Imperial to MTC to document compliance, and for informational and
marketing purposes.
14. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF IMPERIAL
Imperial hereby represents, warrants, and covenants to MTC during the
Term of this Agreement and any extensions thereof that:
14.1 Imperial will provide all services in accordance with this
Agreement and all Microwave Separation Technology Equipment installed at MST
Customer sites will meet the specifications agreed to for that MST Customer.
14.2 Imperial will make reasonable efforts to assist MST Customers or
potential MST Customers in obtaining all necessary permits and licenses that
Imperial is aware of, including environmental licenses and permits, which such
MST Customers are required to obtain to install and use the MST Equipment. If
Imperial receives written notice of any permit violation, otherwise becomes
aware of any permit violation, or if any such permits and licenses are
suspended, denied, revoked, or not renewed, Imperial shall immediately advise
MTC.
14.3 Imperial will meet all safety standards in accordance with this
Agreement; will disclose to MST Customers all hazards known to Imperial for
operating the Microwave Separation Technology Equipment; and will exercise due
care in the construction, installation, and maintenance of Microwave Separation
Technology Equipment and training of personnel so as to avoid injuries to
persons, harm to the environment and damage to property
14.4 Imperial will and has complied with all laws, decrees, rules,
regulations, orders, ordinances, actions, and requests of national, state and/or
local courts and governmental units in the performance of its obligation under
this Agreement.
14.5 Imperial will represent and warrant to MTC in accordance with the
---------------------------
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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provisions of Paragraph 6.1 that the Torrance Microwave Separation Technology
Equipment are free and clear of all liens and other encumbrances such as
mechanic liens and supplier liens.
14.6 Imperial is and will remain the sole owner of Imperial
Intellectual Property Rights and Microwave Separation Technology, and has not
and will not grant any rights under its Imperial Intellectual Property Rights in
the Field of Use to third parties, except as permitted in this Agreement.
14.7 Microwave Separation Technology does not infringe the intellectual
property rights or other proprietary rights of any third party of which Imperial
is aware as of this Agreement Date, and further that Microwave Separation
Technology is not a misappropriation of any third party's intellectual property
rights or other proprietary rights of which Imperial is aware as of this
Agreement Date.
14.8 Except for Paragraphs 14.1 to 14.7, IMPERIAL MAKES NO
REPRESENTATIONS OR WARRANTIES TO MTC OF ANY KIND, EXPRESS OR IMPLIED.
15. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MTC
MTC represents, warrants, and covenants to Imperial during the Term of
this Agreement and any extensions thereof that:
15.1 MTC will provide all services in accordance with this Agreement.
15.2 MTC will exercise due care in providing the services in accordance
with this Agreement so as to avoid injuries to persons, harm to the environment,
and damage to property.
15.3 MTC will and has complied with all laws, decrees, rules,
regulations, orders, ordinances, actions, and requests of national, state and/or
local courts and governmental units in the performance of its obligation under
this Agreement.
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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15.4 MTC or an affiliate of MTC is and will remain the sole owner of
Mobil Intellectual Property Rights, and will not grant any rights under its
Mobil Intellectual Property Rights in the Field of Use to third parties
subsequent to the Agreement Date that would deprive Imperial of its full rights
under this Agreement.
15.5 Except for Paragraphs 15.1 to 15.4, MTC MAKES NO REPRESENTATIONS
OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED.
16. LIABILITY
16.1 Unless otherwise provided in this Agreement, each party shall be
obligated to defend, indemnify, and hold the other party harmless, against any
liability, loss, cost, penalty, damage or expense (including attorney fees)
sustained by the indemnified party arising out of a breach of its obligations
under this Agreement, including without limitation any breach of any
representation, warranty, or covenant made by the indemnifying party in this
Agreement or Exhibit thereto, or by reason of any claim, action or proceeding
asserted or instituted arising out of any matter or thing covered by such
representation, warranty or covenant. This Article shall not apply if such
liability, loss, damage, penalty or expense is due solely to the negligence of
the party seeking to be indemnified. The party seeking indemnification shall
notify the other party promptly in writing of any claim subject to
indemnification under this Agreement.
16.2 MTC shall not be liable for, and Imperial assumes responsibility
for, any liability, loss, cost, penalty, damage or expense (including attorney
fees), whether direct or indirect, which are or may be suffered or incurred by
any third party resulting from any matter arising from Microwave Separation
Technology, such as the design, construction, transportation, installation,
training, information provided to MTC by Imperial, laboratory testing
facilities, or operation of Microwave Separation Technology, whether the same is
used alone or in combination with other technology, except to the extent any
such costs, expenses or damages result from the gross negligence of MTC.
Accordingly, Imperial shall be obligated to defend, indemnify and hold MTC, its
affiliates, successors, and assigns harmless against any claim or liability
arising from any matter arising from Microwave Separation Technology, except to
the extent caused directly by MTC's own gross negligence. Imperial shall have
the right to reduce, eliminate, mitigate or otherwise limit such damages or the
potential for such damages by making or requesting that MTC alter or modify its
marketing of Microwave Separation Technology and MTC agrees to comply with all
such reasonable requests. This paragraph shall not negate the obligations of MTC
under Paragraph 16.4.
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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16.3 Imperial shall be obligated to defend, indemnify and hold harmless
MTC, its affiliates, successors and assigns from, against and with respect to,
any liability, obligation, loss, claim, action, judgment, damage, cost, expense
or fines (including reasonable attorneys fees) arising out of, or resulting
from, any claim by a third party or governmental agency (including but not
limited to remedial measures reasonably necessary to avoid any such claim)
attributable to any environmental hazard or condition arising from any act or
omission (whether or not such acts or omissions were negligent) by any of
Imperial's agents (MTC is not an agent of Imperial), servants or employees in
connection with any matter arising from Microwave Separation Technology.
16.4 In the event MTC or Imperial receives any notice or claim that
Imperial or MTC's manufacture, sale, lease, or use of Microwave Separation
Technology and/or Acoustic Separation Technology, directly or indirectly,
infringes or otherwise violates the intellectual or industrial property rights
of any third party, then the liability of Imperial and MTC with respect to any
such notice or claim shall be as follows:
(a) If the technology accused of infringement is solely owned by
Mobil, then MTC or its affiliates, successors and assigns shall be obligated to
undertake the defense of such suit or action to the extent that the alleged
infringement is based upon the manufacture, sale or use of Mobil technology that
is authorized under this Agreement. MTC or its affiliates, successors and
assigns shall have sole charge and direction of said defense and Imperial agrees
to provide MTC or its affiliates, successors and assigns, without charge, all
reasonable assistance that may be required in the defense of such suit or
action. Imperial shall have the right to be represented therein by advisory
counsel of its own selection and at its own expense. Provided that Imperial is
not in default of its obligations under this Agreement and is in compliance with
this subparagraph (a), MTC will hold Imperial free and harmless from damages or
other sums that may be assessed against Imperial in a final and unappealable or
unappealed judgement rendered by a court of competent jurisdiction for
infringement in accordance with this subparagraph (a). MTC shall have the right
to reduce, eliminate, mitigate or otherwise limit such damages or the potential
for such damages by making or requesting that Imperial make appropriate changes
to Acoustic Separation Technology and Imperial agrees to comply with all such
reasonable requests.
(b) If the technology accused of infringement is solely owned by
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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29
Imperial, then Imperial shall be obligated to undertake the defense of such suit
or action to the extent that the alleged infringement is based upon the
manufacture, sale or use of Imperial technology that is authorized under this
Agreement. Imperial shall have sole charge and direction of said defense and MTC
agrees to provide to Imperial, without charge, all reasonable assistance that
may be required in the defense of such suit or action. MTC shall have the right
to be represented therein by advisory counsel of its own selection and at its
own expense. Provided that MTC is not in default of its obligations under this
Agreement and is in compliance with this subparagraph (b), Imperial will hold
MTC and its affiliates, successors and assigns free and harmless from damages or
other sums that may be assessed against MTC or its affiliates, successors and
assigns in a final and unappealable or unappealed judgement rendered by a court
of competent jurisdiction for infringement in accordance with this subparagraph
(b). Imperial shall have the right to reduce, eliminate, mitigate or otherwise
limit such damages or the potential for such damages by making or requesting
that MTC alter or modify its marketing of Microwave Separation Technology and
MTC agrees to comply with all such reasonable requests.
(c) If the technology accused of infringement is jointly owned by
Imperial and Mobil, then MTC or its affiliates, successors and assigns shall be
obligated to undertake the defense of such suit or action to the extent that the
alleged infringement is based upon the manufacture, sale or use of joint Mobil
and Imperial technology that is authorized under this Agreement. MTC or its
affiliates, successors and assigns shall have sole charge and direction of said
defense and Imperial agrees to provide to MTC or its affiliates, successors and
assigns without charge, all reasonable assistance that may be required in the
defense of such suit or action. Imperial shall have the right to be represented
therein by advisory counsel of its own selection and at its own expense. The
parties will equally share the costs of damages or other sums that may be
assessed against MTC and its affiliates, successors and assigns or Imperial in a
final and unappealable or unappealed judgement rendered by a court of competent
jurisdiction for infringement in accordance with this subparagraph (c).
16.5 Should MTC's or Imperial's promotion, sale, lease, manufacture, or
use of Microwave Separation Technology and/or Acoustic Separation Technology in
the Field of Use be finally held to constitute infringement of the intellectual
or industrial property rights of a third party, then from and after the date of
such final judgment MTC's and Imperial's indemnification obligations under
Paragraph 16.4 shall be discontinued with respect to the promotion, sale, lease,
manufacture, or use on and after the date of such
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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final judgment of Microwave Separation Technology and/or Acoustic Separation
Technology (whichever applies).
16.6 Either party may, at its option and at its own expense, settle any
litigation or claim of alleged infringement of third party patent rights against
itself, whether direct or indirect, in which event the other party shall be
relieved of all obligations of defense and indemnification under this Article
16; provided, however, that the party settling such litigation or claim shall
not make any statements, concessions or admissions as a part of such settlement
which may be adverse to the other party's interest without first obtaining the
other party's written consent thereto. Neither Party shall settle or compromise
any claim, suit or action without the consent of the other if the settlement or
compromise by one party obligates the other to make any payment or assume any
obligations by reason of such settlement or compromise.
17. TERM AND TERMINATION
17.1 The Term of this Agreement shall be for the Trial Period, except
that the Term may be extended, at MTC's option only, for a period of eight (8)
years beginning from the end of the Trial Period, provided that MTC has
delivered to Imperial, as evidenced by obtaining executed licensing or lease
agreements, MST Customers for at least eight (8) Microwave Separation Technology
Units (not including the first Microwave Separation Technology Unit installed at
Mobil's Torrance California Refinery), and MTC notifies Imperial in writing of
its desire to extend this Agreement at least thirty (30) days prior to the
expiration of the Trial Period. The Term may be extended further if mutually
agreed to by both parties.
17.2 If either party is in material breach of this Agreement, then the
nonbreaching party may give written notice to the breaching party specifying the
breach. After receipt of such notice, the breaching party shall have thirty (30)
days to cure the breach. If such breach is not cured within said thirty (30)
days, then the non-breaching party may terminate this Agreement without
liability. However, if the breach cannot be reasonably cured within the thirty
day period and efforts to cure the breach have been initiated within the thirty
day period, then the parties shall agree in writing to a reasonable period of
time to cure the breach. If such breach is not cured within the agreed to period
of time, the non-breaching party may terminate this Agreement without liability.
Any such termination shall be without prejudice to any other rights which the
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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non-breaching party may have (either in equity or law) as a result of any breach
of this Agreement. Notwithstanding the above, after a party has been notified
twice of the same breach, upon the occurrence of a third such notification, the
nonbreaching party may, at its discretion terminate this Agreement without
giving any additional opportunity to cure such third breach. If a breach is a
result of a design, mechanical, or engineering problem and even if it exists in
multiple MST Units, it shall constitute only one (1) breach.
17.3 Either party may terminate this Agreement by written notice to the
other party at any time if it is reasonably determined by either party that any
aspect of Microwave Separation Technology, such as the construction,
transportation, installation or operation hereunder violates, in whole or part
any law, decree, order, rule, regulation, ordinance, action or request of any
court or governmental unit after every reasonable effort having been made by
Imperial to cure any violation; or (ii) it is reasonably determined that it is
necessary to discontinue such Microwave Separation Technology in order to
prevent hazard to humans, animals, aquatic life or the environment after every
reasonable effort having been made by Imperial to cure any such hazard within
thirty (30) days. Termination under this Article shall be without liability,
except under Article 6 for return of the security deposit to MTC and Article 7
for outstanding revenue sharing fees due to MTC.
17.4 MTC may terminate this Agreement anytime after nine (9) months
from the Agreement Date if (a) MTC determines that the marketing of Microwave
Separation Technology will not be profitable, (b) that the installation or
operation of Microwave Separation Technology Equipment at MST Customer sites has
encountered substantial technical difficulties, or (c) the evaluation conducted
in accordance with Article 27 is unsatisfactory to MTC. MTC shall give Imperial
thirty (30) days written notice of its desire to terminate this Agreement under
this Paragraph 17.4.
17.5 MTC may terminate this Agreement if the first Microwave Separation
Technology Unit installed at Mobil's Torrance California Refinery does not meet
the Specifications set forth in Exhibit C of the Imperial-Torrance Equipment
Lease and License Agreement by the end of the Performance Target Period as
defined by the Terms and Conditions of the Imperial-Torrance Equipment Lease and
License Agreement.
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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17.6 This Agreement shall terminate immediately and without notice upon
the institution of insolvency, bankruptcy or similar proceeding by or against
either party.
17.7 Termination of this Agreement, under any circumstances, by either
party shall not terminate Imperial's obligation to pay MTC revenue sharing fees
under Article 7 for the duration of all MST Customer lease or license agreements
in effect at the time of termination or executed within twelve (12) months of
termination of this Agreement, and to refund the security deposit pursuant to
Paragraphs 6.4 and 6.5 of this Agreement. Additionally, termination of this
Agreement, by either party, under any circumstances shall not terminate any
continuing obligations of Imperial or MTC under this Agreement with respect to
Articles 10, 14, 15, 16 and 20. Imperial and MTC will also after termination of
this Agreement continue to provide the required services in Articles 4 and 5,
respectively, and abide by the revenue sharing provisions of Article 7 for the
remaining duration of all MST Customer lease or license agreements in effect at
the time of termination, or fully executed within twelve months (12) after
termination of this Agreement.
17.8 Upon termination of this Agreement, Imperial shall return all
copies of MTC Proprietary Information, and MTC shall return all copies of
Imperial Proprietary Information related to Microwave Separation Technology and
Improvements thereof, except that Imperial and MTC may retain one copy for the
purpose of determining its legal obligations under Article 20.
18. INDEPENDENT CONTRACTOR
18.1 In performing their obligations under this Agreement, Imperial and
MTC are both independent contractors. Imperial and MTC shall use their own
discretion and shall have complete control over services that each provide and
shall assume the rights, obligations, and liabilities, applicable to each as an
independent contractor. Nothing contained in this Agreement or the Exhibits
shall be construed to constitute Imperial or any of its employees or officers as
an employee, agent, joint venturer, or partner of MTC or its affiliates,
successors, or assignees.
18.2 Imperial is not, and shall not represent itself to be, an agent or
representative of MTC.
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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19. FORCE MAJEURE
19.1 The failure of either Imperial or MTC to perform its obligations,
other than those requiring money payments to the other party, under this
Agreement, if caused by "Force Majeure" as hereinafter defined, shall not
constitute a default hereunder nor subject the party so failing to any liability
to the other; provided, however, the party affected by such Force Majeure shall
promptly notify the other of (i) the existence of such Force Majeure, (ii) its
expected duration, (iii) the estimated effect such Force Majeure will have on
the affected party's ability to perform its obligations hereunder, and (iv) when
such Force Majeure circumstance has ceased to affect its ability to perform its
obligations hereunder.
19.2 As used herein, the term "Force Majeure" shall mean and include
any circumstance beyond the reasonable control of the affected party, including
without limitation, the following: any act of God or the public enemy, accident,
explosion, fire, storm, earthquake, flood, drought, perils of the sea, the
elements, casualty, riots, sabotage, embargo, military aggression or conflict,
war (whether or not declared and whether or not the United States is a
participant), or labor strike.
19.3 In the event that any circumstance of Force Majeure has or will
materially prevent Imperial or MTC from carrying out its obligations under this
Agreement for any consecutive one hundred twenty (120) day period, then the
other party may elect to terminate this Agreement by giving written notice to
that effect. This Agreement shall terminate, without any further liability or
obligation on the part of either party as a result of such termination, except
that Imperial and MTC will fully comply with the obligations under Paragraphs
17.7 and 17.8.
19.4 Imperial and MTC shall use their best efforts to eliminate any
circumstance of Force Majeure which affects its ability to carry out its
responsibilities under this Agreement.
20. CONFIDENTIALITY
20.1 Imperial and MTC have executed a Non-Disclosure and
Confidentiality Secrecy Agreement effective December 15, 1998, attached in
Appendix E. The term of this Non-Disclosure and Confidentiality Secrecy
Agreement in Paragraph 5 shall be
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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extended to remain in effect during the Term of this Agreement and all
extensions thereof. All obligations undertaken by the parties with respect to
confidentiality and restrictions of use of Proprietary Information disclosed
under the Non-Disclosure and Confidentiality Secrecy Agreement will be extended
to terminate ten (10) years from the date of termination of this Agreement
including all extensions thereof. Proprietary Information which may be disclosed
under this Non-Disclosure and Confidentiality Secrecy Agreement is amended to
include improvements of emulsion breaking and separations technology.
20.2 Except for the provisions of Articles 3, 10 and 11 of this
Agreement, nothing contained herein shall be construed as granting either party
any right or license under any copyright, patent, trade secret, or other
intellectual property rights of the other party, nor as obligating either party
to make such grants to the other party.
20.3 Any public announcements concerning this Agreement, the
relationship between Imperial and MTC, or any matter related to Microwave
Separation Technology or Acoustic Separation Technology within the Field of Use
shall be mutually agreed to by both parties in writing prior to release to the
public.
20.4 Without the written consent of MTC, Imperial shall not disclose
the terms of this Agreement to MST Customers, including MST Customer sites fully
or partially owned or operated by Mobil.
21. NOTICES
All notices and other communications will be in writing and will be
deemed given when delivered if given in person, when deposited in the mail if
sent by certified or registered mail, return receipt requested, postage prepaid
and properly addressed, or when transmitted if sent by facsimile to the parties
as follows.
For Imperial Technical, Legal, and Business Matters:
Imperial Petroleum Recovery Corporation
00000 Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx00000
Attention: Xxxxx Xxxxxxxxx
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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For MTC Technical and Business Matters:
Mobil Technology Company
000 Xxxxxxxxxxxx Xx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
For MTC Legal Matters:
Mobil Oil Corporation
Office of Legal Counsel
0000 Xxxxxxx Xx
Xxxxxxx XX 00000
Attention: Xxxxxxx Xxxx
22. RIGHT OF AUDIT
22.1 MTC shall have the right, exercisable by delivery of written
notice to Imperial within 90 days after the close of each year under this
Agreement and after any termination of this Agreement, to have the pertinent
records of Imperial examined by an independent accountant mutually agreed to by
MTC and Imperial for the purpose of verifying the payments in Article 7. All
fees requested by such accountant for carrying out this examination will be paid
by MTC. Such examination shall be conducted during normal business hours. To the
extent possible, examinations shall be scheduled at a time most convenient to
Imperial. Except as required by law, the accountant employed by MTC shall not
disclose to anyone except Imperial and MTC the result of, or any of the data
discovered in, any such examination, and shall not disclose to MTC any
proprietary information of Imperial except to the extent necessary for the
verification permitted by this Article. After completion of the examination,
inaccuracies which the examination shall have disclosed, if any, shall be
promptly adjusted. The determination of such independent public accountant shall
be final.
22.2 Imperial shall have the right, exercisable by delivery of written
notice to MTC within 90 days after the close of each year under this Agreement
and after any termination of this Agreement, to have the pertinent records of
MTC examined by an independent accountant mutually agreed to by MTC and Imperial
for the purpose of verifying payments in Article 7 related to Acoustic
Separation Equipment. All fees requested by such accountant for carrying out
this examination will be paid by Imperial. Such examination shall be conducted
during normal business hours. To the extent possible, examinations shall be
scheduled at a time most convenient to MTC. Except as required by law, the
accountant employed by Imperial shall not disclose to anyone
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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except MTC and Imperial the result of, or any of the data discovered in, any
such examination, and shall not disclose to Imperial any proprietary information
of Imperial except to the extent necessary for the verification permitted by
this Article. After completion of the examination, inaccuracies which the
examination shall have disclosed, if any, shall be promptly adjusted. The
determination of such independent public accountant shall be final.
22.3. If either Imperial or MTC subcontracts or otherwise enters into
a relationship with another company or entity to provide the services in
Articles 4 and 5 as permitted in this Agreement, or to provide services agreed
to for AST, Imperial and MTC shall obtain from such other company or entity the
right for the other party to obtain pertinent records as permitted in Paragraph
22.1 and 22.2.
23. ASSIGNMENT
23.1 This Agreement may not be assigned by either party without the
prior written consent of the other party, except, however, in the event all or
substantially all of a party's assets, business or stock is purchased by an
acquirer or transferred to an Affiliate, this Agreement may be assigned to the
acquirer or Affiliate provided that any rights and/or obligations under this
Agreement are binding and inure to the benefit of the assignee.
23.2 Imperial recognizes that Mobil is currently contemplating merging
with Exxon and that this Agreement may be assigned in accordance with the
provisions of Paragraph 23.1 to an entity formed by the merging of Mobil and
Exxon, or to an affiliate of such an entity.
24. DISPUTE SETTLEMENT
24.1 The Parties will endeavor to resolve by negotiation any dispute,
controversy or claim arising out of or relating to or in connection with this
Agreement, or its breach, termination or invalidity, ("Dispute") that may arise
between them. In addition, if either Party requests that a Dispute be submitted
to mediation, both Parties will participate in mediation in good faith.
24.2 If both parties have participated in negotiations in any requested
mediation pursuant to Paragraph 24.1, any Dispute that has not been resolved by
negotiation or mediation within ninety (90) days of a request for mediation by
either Party will be settled by arbitration in accordance with Rules of the
United Nations
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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Commission on International Trade Law (UNCITRAL) as are at present in force (the
"Rules"). The number of arbitrators will be Three (3). The place of arbitration
will be Washington, D.C., U.S.A. Witnesses at arbitration hearings will testify
under oath or, if the other party agrees, on affirmation.
24.3 One (1) arbitrator will be appointed by each Party and the Two (2)
arbitrators appointed by the Parties will, within no more than thirty (30) days
following the date of their appointment, appoint a third arbitrator to act as
the Presiding Arbitrator of the arbitration panel. The third arbitrator (the
Presiding Arbitrator) will (a) be a legal practitioner having at least ten (10)
years experience in commercial legal matters, including international licensing
of technology and intellectual property, (b) have no prior involvement,
employment, or affiliation with either party, and (c) not have been an
arbitrator in any arbitration involving either party. The arbitrators shall have
no power to reform or vary the terms of the agreement (i.e. will not have nor
exercise the powers of amiable compositeur).
24.4 In arriving at their decision, the arbitrators will consider the
pertinent facts and circumstances and will be governed by the terms and
conditions of this Agreement. After commencement of an arbitration proceeding
hereunder, each Party will make available to the other Party in a timely fashion
true copies of all non-privileged documents, including but not limited to data
compilations and data stored in computer software form, relevant to disputed
facts. The Parties' representatives will consult together and will attempt to
agree on document production procedures that are fair, efficient and not
unnecessarily burdensome. If, following such consultation, the Parties have not
agreed on document production, either Party may apply to the arbitrators, to any
court having jurisdiction, or to both for an order compelling the production of
documents as provided in this Paragraph 24.4. The Parties will comply with any
such order by the arbitrators or by a court.
24.5 Either Party may apply, at any time, to any court having
jurisdiction for an order providing interim measures of protection, including
measures for the protection of property; for any injunction, restraining order,
or order of specific performance; or for other available relief. Alternatively
or in addition, after the arbitrators have been appointed, either Party may
apply to the arbitrators for an order providing interim measures of protection
pursuant to the Rules. The Parties will comply with any such order by the
arbitrators or by a court.
24.6 Any monetary award will be made in U.S. Dollars. The arbitrators
are not authorized to award punitive damages. The arbitrators are authorized to
award post-
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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award and pre-award interest from the date of damage or loss, and are
also authorized to award specific performance. In fixing the costs of the
arbitration, the arbitrators may take into consideration the extent to which the
respective positions of the Parties have been upheld in the award, and the
extent to which either Party, through its conduct in the arbitration or in
discovery, may have caused costs to be unnecessarily or unreasonably incurred.
24.7 The award of the arbitrators will be final and binding on the
Parties and judgment upon the award may be entered and enforced by any court
having jurisdiction thereof. All expenses incurred in enforcing an award
hereunder will be paid by the Party resisting the enforcement of the award.
24.8 No Party, witness or arbitrator may disclose the contents or
results of any arbitration hereunder without the prior written consent of both
Parties, except to the extent that such disclosure may be required to enforce
the award, or as may be required by law, or as may be normal and necessary for
financial, Security Exchange Commission (SEC), and tax reports and audits.
25. APPLICABLE LAW
25.1 This Agreement will be construed and interpreted in accordance
with the plain meaning of its terms and, subject thereto, in accordance with the
substantive laws of the Commonwealth of Virginia, USA, without giving effect to
the Commonwealth's principles of conflict of laws. Where U.S. Federal subject
matter or diversity exists in respect of a dispute which the parties cannot
themselves amicably resolve, the parties designate the United States District
Court for the Eastern District of Virginia, Alexandra Division, as the exclusive
forum for the resolution of that dispute and agree to submit themselves and the
dispute exclusively to the jurisdiction of that Court. Where U.S. Federal
subject matter or diversity jurisdiction in respect of the dispute does not
exist, the parties designate the Circuit Court of the County of Fairfax,
Virginia as the exclusive forum for the resolution of that dispute and agree to
submit themselves and the dispute exclusively to the jurisdiction of that Court.
The rights and obligations of the parties regarding resolution of disputes, as
set forth in this Paragraph 25.1, shall survive any termination of this
Agreement.
26. INSURANCE
26.1 Without limiting or qualifying any liability otherwise assumed by
Imperial
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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
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under this Agreement, Imperial shall, during the term of this Agreement
provide and carry at its own expense, at least the insurance below to protect
itself and MTC, with MTC named as an additional insured. Additionally, the
insurance obtained below shall be sufficient to cover claims made after
termination of the Agreement relating to events that occurred during the term of
this Agreement.
(i) Statutory Workmen's compensation and employer's Liability
Insurance in compliance with the laws of the states where Imperial performs its
services.
(ii) Comprehensive General Liability Insurance with limits of not
less than $5,000,000 per occurrence for bodily injury and property damage; said
Comprehensive General Liability Insurance to include within sixty (60) days
after the Effective Date of this Agreement coverage for claims of patent
infringement or other violations of a third party's proprietary rights. If any
company or entity is excluded from coverage for claims related to patent
infringement or other violations of a third party's proprietary rights, Imperial
shall have nine (9) months from the Agreement Date to remedy such an exclusion.
(iii) Automotive Public Liability Insurance upon each and every
unit of automotive equipment operated or used by Imperial in the performance of
this Agreement with combined single limits of not less than $1,000,000 per
accident.
26.2 No contract of insurance required in Paragraph 26.1 shall be
terminated, reduced, or substantially altered without i) the insurance carrier
first giving notice to MTC at least thirty (30) days and ii) Imperial making
necessary arrangements so that no termination, reduction, or substantial
alteration of the insurance becomes effective until thirty (30) days after MTC
receives such notice.
26.3 Certificates of Insurance or certified copies of all insurance
policies required in Paragraph 26.1 will be sent to MTC at MTC's request.
27. CONTINGENCY
27.1 During the time period of nine (9) months beginning from the
Agreement Date, MTC at its own expense, shall evaluate the MST Technology.
Imperial shall cooperate in good faith with MTC to provide MTC with any
information needed for MTC to complete its evaluation. Any confidential
information exchanged during this evaluation will be subject to the
confidentiality provisions of Article 20.
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 39
40
27.2 Prior to the expiration of the nine (9) month evaluation period,
MTC will consider its own evaluation in Paragraph 27.1, and shall consult in
good faith with Imperial with respect to MTC's evaluation. At the end of the
nine (9) month evaluation period, should MTC deem, at its own discretion, that
MTC is not free to practice the MST Technology, MTC shall have the unilateral
right under Paragraph 17.4 to terminate this Agreement within thirty (30) days
after the end of the nine (9) month evaluation period.
27.3 Provided that MTC has not terminated the Agreement pursuant to the
provisions herein, MTC shall be obligated within sixty (60) days of the
expiration of the nine (9) month evaluation period to pay the security deposit
to Imperial under Paragraph 5.6, provided that all obligations of Imperial as
set forth in Article 6 are met.
28. MISCELLANEOUS
28.1 This Agreement and all Appendices A through J, including the
Non-Disclosure and Confidentiality Secrecy Agreement in Appendix E and the
Laboratory Agreement in Appendix J constitutes the full understanding of the
parties and a complete and exclusive statement of its terms and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof.
28.2 MTC will draft all legal documents between MTC and Imperial,
except that lease or license agreements between a MST Customer and Imperial or
MTC may be drafted by either party, but must be mutually agreed to in writing by
both parties. All MST Customer Equipment Lease Agreements are to be executed
between Imperial and the MST Customer.
28.3 No modification of this Agreement or waiver of any of its terms
and conditions will be of any force or effect unless made in writing and signed
by a duly authorized officer of each of the parties.
28.4 All terms of this Agreement are severable, and any term which may
be prohibited or unenforceable by law shall be ineffective only to the extent of
such prohibition or unenforceability without affecting the enforceability of the
remainder of this Agreement.
28.5 If any intellectual property rights granted by MTC in this
Agreement are
---------------------------
[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Page 40
41
rights owned by Mobil Oil Corporation (MOC), MTC agrees to cause MOC to grant
any intellectual property rights to Imperial that are required by this
Agreement.
28.6 Imperial and MTC recognize that there may be presently, or in the
future, conflicts between this Agreement and any Equipment Lease Agreement
executed between Imperial and any affiliate of MTC. In the event that such a
conflict arises, Imperial will not assert any conflicting rights Imperial may
have in the Equipment Lease Agreement in favor of any rights that MTC may have
under this Agreement, such as, but not limited to, ownership rights in the MST
or AST Equipment. Additionally, Imperial will not agree to any terms of an
Equipment Lease Agreement with an affiliate of MTC that is in conflict with this
Agreement, unless consented to in writing by MTC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officials as of the dates below.
IMPERIAL PETROLEUM MOBIL TECHNOLOGY
RECOVERY CORPORATION COMPANY
By: /s/ C. Xxxxx Xxxxxxxxx By: /s/ Xxxx X. Xxxxx
---------------------------- ------------------------
Name: C. Xxxxx Xxxxxxxxx Name: J. R. Green
---------------------------- ------------------------
Title: President Title: Vice President
--------------------------- -----------------------
Date: Oct. 8, 1999 Date: October 11, 1999
---------------------------- -----------------------
42
OMITTED APPENDICES
APPENDIX A: EXHIBIT 1: IMPERIAL INTELLECTUAL PROPERTY RIGHTS
APPENDIX A: EXHIBIT 2: MOBIL INTELLECTUAL PROPERTY RIGHTS
APPENDIX A: EXHIBIT 3: JOINT INTELLECTUAL PROPERTY RIGHTS
APPENDIX B: EQUIPMENT LEASE AGREEMENT
APPENDIX C: IMPERIAL CUSTOMER SITES
APPENDIX D: LIST PRICES FOR MST EQUIPMENT
APPENDIX E: NONDISCLOSURE AND SECRECY AGREEMENT
APPENDIX F: DESCRIPTION OF MST1000 FIRST COMMERCIAL DESIGN
APPENDIX G: MAJOR MST EQUIPMENT LIST
APPENDIX H: LABORATORY EQUIPMENT AND REQUIREMENTS FOR MST TESTING
APPENDIX I: SAMPLE OF REVENUE SHARING CALCULATIONS
APPENDIX J: LABORATORY AGREEMENT
