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EXHIBIT 10.13
LICENSE AGREEMENT --
VANETIK & ASSOCIATES, INC.
PREAMBLE
The parties to this Agreement are A-55, L.P., a Nevada limited
partnership ("A-55"), and VANETIK & ASSOCIATES ("Grantee").
This Agreement shall become effective on the date it is executed by
the last party to execute same, as set forth on the signature page
hereof.
This Agreement is made with reference to the following facts:
A. A-55 owns the rights to transfer to others the rights to certain
worldwide patent applications, issued patents and trademarks, and
valuable technology, know-how, trade secrets and prototypes which
relate to and/or use an aqueous fuel comprising a mixture of water
and carbonaceous material for combustion, in internal combustion
engines, and open flame applications, and the use thereof, including
technologies as set forth in the patent applications and issued
patents as more fully defined below ("A-55 Technology").
B. Grantee desires to be licensed to use such rights and information
from A-55 within a geographical territory.
Now, therefore, in consideration of the mutual promises and
covenants, and upon the conditions herein contained, the parties
agree as follows:
1. DEFINITIONS:
As used herein, the following terms shall have the following
meanings:
1.1 "A-55 Patent" means any product claim of (a) A-55 U.S. Patent No.
5,156,114, issued December 10, 1992; (b) pending patent applications
related to the A-55 Technology; and (c) patents and patents pending
relating to the A-55 Technology within the Territory.
1.2 "A-55 Clean Fuels" means fuel covered by any product claim of the
A-55 Patent.
1.3 "A-55 Processes" means any process or procedure to produce the
A-55 Clean Fuels or any other product claim of the A-55 Patent.
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1.4 "A-55 Know-how" means proprietary information of a confidential
nature owned by A-55 relating to the techniques available for
commercial exploitation of A-55 Patent and any A-55 Processes,
including the subject matter of any A-55 Patent, if no patent should
issue thereon.
1.5 "A-55 Product" means any product sold or service rendered by
Grantee associated with the grant of this License or the A-55
Technology. It is intended by the parties that this term shall have
the broadest meaning and not in any way be limited to products which
are capable of patent or contractual protection. By way of example
but not limitation, the term would include any product bearing,
utilizing or referring to the A-55 Trademark, clothing, pens,
souvenirs, and the like.
1.6 "A-55 Technology" means all know-how, trade secrets, confidential
information, and expertise including, but not limited to, designs,
plans, specifications and all other information and documentation,
whether patentable or not, relating to A-55 Patent. Unless the
context requires otherwise, the term "A-55 Technology" shall include
all rights and claims under the A-55 Patent, the A-55 Clean Fuels,
the A-55 Processes, the A-55 Know-how, and A-55 Products but shall
not under any circumstances be deemed to include or refer to the A-55
Additive or its manufacture.
1.7 "A-55 Trademark" means (a) United States registered trademark
number 1,848,044; (b) United States Registered Service Xxxx No.
74/510,26 ("Powered With Water"); and (c) any identical or
substantially similar trademarks or service marks which may be
obtained by A-55.
1.8 "A-55 Additive" means the proprietary combination of certain
chemicals or compounds, including but not limited to certain
combinations of surfactants, anti-corrosive agents, lubricity agents,
anti-freezing agents, anti-foaming agents, biocides, cetaine
enhancers, and other similar or related compounds added to the base
cabonaceous material, water, and alcohol to form A-55 Clean Fuels.
1.9 "Net Sales" means the gross Selling Price of A-55 Clean Fuels
and/or all other A-55 Products for which an invoice or like sales
record has been prepared by Grantee, or any sublicensee of or party
or entity related to or affiliated with Grantee, less any trade, or
quantity (but not cash) discounts actually allowed, transportation
charges, sales or use taxes, if any, included in the invoice price,
and the price of any Fuel or other A-55 Product returned.
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1.10 "Grantee" means VANETIK & ASSOCIATES which shall be the
exclusive licensee of A-55 within the Territory during the currency
of this agreement.
1.11 "Territory" means the the Russian Federation.
1.12 "Effective Date" shall mean the date this agreement is executed
by them last party to execute the same.
2. GRANT OF PATENT AND KNOW-HOW RIGHTS TO GRANTEE
2.1 Grant. A-55 hereby grants to Grantee:
2.1.1 The right under the A-55 Patent to manufacture, sell,
distribute and use A-55 Clean Fuels and, A-55 Products in
the Territory and the right to practice any A-55 Process
necessary for such manufacture or sale in the Territory.
2.1.2 The right to use A-55 Know-how in the
Territory.
2.1.3 The right to practice any and all A-55 Technology in
the Territory, and the right to allow its purchasers to
practice any and all A-55 Technology and patent rights in
the Territory.
2.2 Patent Marking. Grantee shall, where possible, xxxx any A-55
Product produced under any patent licensed hereunder with the number
of the applicable patent.
2.3 Excluded Applications. All aviation applications, including
supplying fuel for such applications, are excluded from this License
and specifically reserved to A-55.
2.4 Licenses to OEMs.
2.4.1 A-55 reserves the sole and exclusive right to
negotiate license agreements with original equipment
manufacturers (OEMs). Grantee acknowledges that such
licenses may be worldwide and may include the right to
utilize and practice the A-55 Technology in the Territory.
The grant of any such license to an OEM shall not infringe
on the grant of this License; provided, however, that
royalties for the use and practice of the A-55 Technology
within the Territory under such a license shall inure to
Grantee.
2.4.2 Any license granted to an OEM as
contemplated in subparagraph 2.4.1 must not permit
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it to manufacture A-55 Clean Fuels in the
Territory, whether for distribution or sale or for
its own consumption.
2.4.3 A-55 shall, upon the grant of any license to an OEM,
give notice thereof to Grantee.
2.5 Nature of Grant.
2.5.1 Grantee acknowledges that, incident to the
dissolution of Advanced Fuels, L.L.C., Caterpillar Inc.
retained certain licensed rights to the A-55 Technology for
use in products of the kind it produces or will produce in
the Territory. Pursuant to retained the license rights,
Caterpillar Inc. may sell, but not license until October
24, 2001, a diesel emulsion based aqueous fuel emulsion and
may make but not license, a naphtha fuel emulsion for
Caterpillar engines only.
2.5.2 Except as otherwise provided in paragraphs 2.3, 2.4,
and 2.5.1, A-55 shall grant no other license to the A-55
Technology in the Territory while this Agreement is in
force and not in default.
2.6 Sublicenses. Subject to the express approval of A-55, first had
and obtained on each occasion, Grantee shall have the right to grant
sublicenses under this Agreement. Unless waived by A-55, each such
sublicense that relates to the manufacture of A-55 Clean Fuels by the
sublicensee shall, in addition to other pertinent provisions, contain
provisions for the payment of royalties of an amount not less than
that specified in paragraph 3.1 below to Grantee, who shall hold the
same in trust for payment to A-55 or make some other stipulation
which is acceptable to A-55 to compensate fully A-55 for such
royalties as if the sale had been made directly by Grantee and for
the preservation of A-55's equity interest in Grantee specified in
paragraph 3.3 below.
2.7 Purchase and Sale of A-55 Additive.
2.7.1 The Grantee shall purchase and pay for 210,000
gallons of A-55 Additive during the period January 1, 1999
and June 30, 1999; 601,000 gallons of A-55 Additive during
the period July 1, 1999 and December 31, 1999 and a minimum
monthly quantity of A-55 Additive of 150,000 gallons
thereafter. A-55 shall sell and use its best efforts to
deliver in a timely manner to the Grantee or the Grantee's
order such purchased quantities of the A-55 Additive.
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2.7.2 The initial price of the A-55 Additive (which shall
exclude for these purposes any cetane enhancer or methanol)
to Grantee will be US$18.00 per gallon for boiler
applications and $22.00 per gallon for internal combustion
engine applications, F.O.B. factory gate. That price is
fixed for 12 months from the date of this agreement. The
price of the A-55 Additive may be reviewed and adjusted by
A-55 from time to time after the initial period of 12
months. Any increase in price must be fixed by A-55 in good
faith by reference only to increases in raw material costs
of the A-55 Additive. Any increase in price will operate on
orders placed after notification.
2.7.3 Payment for all A-55 Additive ordered by the Grantee
shall be made in the currency of the United States. Until
otherwise advised in writing by A-55 (at its sole and
unfettered discretion), payment shall be effected by A-55
making a request for funds transfer to a top ten US bank
selected by Grantee that has issued a confirmed irrevocable
revolving letter of credit guaranteeing payment of
Grantee's obligation to A-55. The letter of credit shall
contain such terms as are acceptable to A-55 including an
obligation upon the bank to make full payment to A-55 upon
sighting a copy of a xxxx of lading (FOB factory gate)
signed by Grantee's freight forwarding agent. Payment shall
not be deemed to have been made until all funds have been
cleared in A-55's account
2.7.4 The A-55 Additive must be of a merchantable quality
and fit for their intended purpose.
2.7.5 Property and risk in the A-55 Additive pass to
Grantee at factory gate.
3. PAYMENTS FOR RIGHTS GRANTED UNDER PARAGRAPH 2.
3.1 Continuing Annual Royalty. For the rights granted under
paragraph 2 above, Grantee shall pay to A-55 a royalty of two percent
(2%) of the Net Sales from all A-55 Clean Fuels and A-55 Products in
the Territory. The royalty shall reduce to one percent (1%) 18 months
after all moneys due to A-55 under paragraph 3.2 below have been paid
in full
3.2 Technical Transfer Fee. In consideration of the rights
granted herein, Grantee shall pay to A-55 a Technical Transfer Fees
of TWENTY MILLION DOLLARS (US$20,000,000) as follows:
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(a) December 31, 1998: US One million dollars
(US$ 1,000,000)
(b) June 30, 1999: US Five million dollars
(US$5,000,000)
(c) December 31, 1999: US Seven million dollars
(US$7,000,000)
(d) June 30, 2000: US Seven million dollars
(US$7,000,000)
3.3 Equity Interest in Grantee. In consideration of the grant
of this License and incident to the formation of Grantee, Grantee
shall deliver to A-55 a share certificate evidencing the allotment to
it of thirty percent (30%) of the issued shares in Grantee deemed
fully paid. A-55's equity interest shall be of the same quality and
rights, including rights to dividends and distributions, as all other
owners of Grantee. The constituent documents of Grantee shall provide
that A-55 shall have no obligation to make any contribution to the
capital of Grantee for the issuance of such interest other than the
grant of this License, and shall further provide that such interests
shall not be subject to dilution without the prior written approval
of A-55 first had and obtained, which approval may be withheld by
A-55 at its sole discretion.
4. DISCLOSURE AND CONFIDENTIALITY OF KNOW-HOW
4.1 Disclosure. Within thirty (30) days after the effective
date of this Agreement, A-55 shall use its best efforts to disclose
to Grantee all of the technology it possesses relating to the
manufacture, use or sale of A-55 Technology, which is required by
Grantee to exercise and exploit its rights hereunder. Such disclosure
shall include design, engineering and manufacturing information and
specifications, including without limitation: identification of
commercially-available equipment (and the name of the manufacturers
thereof), engineering drawings of special equipment designed by or
for A-55, and process operations and quality control tests. It is
understood by Grantee that the foregoing obligation of disclosure
shall not include any obligation to disclose composition of the A-55
Additive, which will be made and distributed solely and exclusively
by A-55 but which will be sold, within the Territory, to Grantee for
its use in the manufacture of the A-55 Clean Fuels.
4.2 Confidentiality. Grantee agrees to use reasonable efforts
to maintain as confidential A-55 Know-how disclosed to it pursuant to
paragraph 4.1, provided that:
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4.2.1 All information, in whatever form transmitted to Grantee
from A-55, shall be presumed to be confidential know-how unless
expressly identified to the contrary.
4.2.2 Grantee shall not be required to treat as confidential any
A-55 Know-how which is:
(a) publicly disclosed by A-55, or disclosed to another
party by A-55 without a confidential restriction,
including disclosure by A-55 in any patent, published
patent application, any other writing or verbally
disclosed by A-55; or
(b) publicly available prior to its disclosure by A-55, or
which becomes publicly available after disclosure by A-55
through no fault of Grantee; or
(c) known to Grantee prior to its disclosure by A-55; or
(d) disclosed to Grantee by a third party who did not
acquire the information, directly or indirectly, from
A-55; or
(e) independently developed by an employee or consultant
of Grantee subsequent to disclosure by A-55 but who did
not have knowledge of the disclosure made by A-55; or
(f) required to be disclosed to any local, state or
federal agency in connection with a proper and lawful
request, law or regulation; provided, however, that prior
to any such disclosure, Grantee shall give notice of such
request to A-55, which shall have a reasonable opportunity
to apply for such orders as it may deem appropriate to
protect its interests.
4.2.3 Grantee will maintain internal procedures to protect any
A-55 Know-how that is to be treated as confidential within paragraph
4.2 in the same manner in which it protects its own confidential
technical information.
4.2.4 A-55 represents and warrants that the information it
identifies in accordance with
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paragraph 4.2.1 is confidential information and that it treats it as
such.
5. GRANT OF RIGHTS UNDER TRADEMARKS
5.1 Grant. Subject to the due execution and registration of a
user agreement in a form approved by X-00, X-00 hereby grants to
Grantee, and its sublicensees and distributors, the right to use the
A-55 Trademark, together with any other trademark that A-55 may
acquire in connection with its sale of A-55 Clean Fuels to third
parties, and to use the name "A-55" in a corporate name, division
name, or other name of any entity it may establish for the
manufacture or distribution of A-55 Clean Fuels. Should "A-55" not be
trademarked in any jurisdiction of the Territory, Grantee shall have
the obligation to do all things necessary to obtain such trademark
and register any related designs or logos at its cost and to hold the
same for the sole and exclusive benefit of A-55. As used herein, the
term "A-55 Trademark" shall refer to any trademark or related design
obtained by Grantee hereunder.
5.2 Marking. Grantee shall xxxx any A-55 Product which it
produces or sells pursuant to this License with the A-55 Trademark,
which, when used, shall bear an (R) to denote its federal
registration.
5.3 Use of Trademark. Grantee acknowledges that any use by it
of the A-55 Trademark shall inure to the exclusive benefit of A-55.
Grantee shall use the A-55 Trademark only in a manner approved and
directed from time to time by A-55. In connection with such use,
Grantee shall comply with all trademark notice, registered user, and
other requirements to maintain the validity of the A-55 Trademark
registration in the Territory. Grantee shall not make any use of the
A-55 Trademark that would misrepresent to the public that Grantee
rather than A-55 is the owner of such xxxx or the registration
thereof.
5.4 Quality Standards. A-55 shall establish product
specifications or quality standards of any A-55 Product, including
A-55 Clean Fuels, to be sold under the A-55 Trademarks, and Grantee
agrees that its products using the Trademark shall comply therewith
to ensure that the A-55 Trademark is being properly protected. In
order to ensure high and consistent quality of the A-55 Clean Fuels,
Grantee shall manufacture and blend all A-55 Clean Fuels which it
distributes pursuant to this License with standard blending equipment
sold to it by A-55 unless the use of other equipment is approved in
advance by A-55. A-55 may from time to time require Grantee to ship
actual
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production samples of A-55 Clean Fuel to A-55 for inspection and
testing to ascertain compliance with such product specifications or
quality standards.
5.5 Price. There shall be no additional royalty for the
license under the A-55 Trademarks.
6. TIME AND MANNER OF PAYMENTS.
6.1 Time for Payments. Payments required under subparagraph
3.1 shall be made within fifteen (15) days following the last day of
each calendar Quarter in which there are Net Sales of A-55 Clean
Fuels or A-55 Products by Grantee during the preceding Quarter.
6.2 Manner of Payments. Payments shall be made in immediately
available funds (United States dollars) by certified or registered
mail or wire transfer to A-55's address as specified herein and
accompanied by a written report signed by an authorized
representative of Grantee setting forth the dollar amount of the Net
Sales of A-55 Clean Fuels or A-55 Products as to which a royalty is
payable for each half year.
6.3 Overdue Payments. Payments shall, when overdue, bear
interest at an annual rate of one percent (1%) above the prime rate
of Citibank in effect in New York City on the last day payment was
due. In no event shall the interest so charged exceed the legal limit
that may be charged for interest.
7. RECORDS, INSPECTION, AUDITS AND REPORTS
7.1 Records and Reports. Grantee shall keep true and accurate
records and books of account showing the use and/or practice of the
A-55 Technology by Grantee, the manufacture, marketing and sale of
A-55 Clean Fuels and A-55 Products by Grantee, and all other
information necessary for the accurate determination of the payments
to be made to A-55 hereunder. In addition, Grantee shall provide A-55
with internally prepared monthly, quarterly, and annual financial
statements, prepared in accordance with generally accepted accounting
principles and practices for public companies in the United States of
America, within thirty (30) days of the end of the calendar month,
quarter, or year, respectively.
7.2 Inspection. It is a condition of this license, and Grantee
represents and guarantees, that it will permit A-55 or its
designated auditors to inspect and audit, at reasonable
times during Grantee's usual business hours, any and all
parts of the
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records kept by Grantee pursuant to this paragraph 7 which
are required to be rendered by Grantee herein, and to make
excerpts from such records. In the event that Grantee and
A-55 are unable to agree on a mutually acceptable firm of
certified public accountants it is hereby agreed that such
inspection and audit may be performed by the certified
public accounting firm of Price Waterhouse, whose principal
offices are now at New York City, New York.
All fees of any such firm for such inspection and audit shall be paid
by A-55 except in the event of a discrepancy described in paragraph
7.3 below, in which case Grantee shall pay such fees.
7.3 Discrepancy Expenses. In the event any audit performed by
A-55 or its designee results in a finding that there is a discrepancy
in excess of five percent (5%) between the amounts paid to A-55 and
the amounts which should have been paid to A-55, the cost of such
audit shall be borne entirely by Grantee.
7.4 Retention of Records. Grantee's obligation to retain
records and A-55's right to inspect and audit and make excerpts with
respect to the records for each year in which royalty payments are
due, in the absence of a charge of fraud or intentional
misrepresentations, shall terminate three (3) years after the end of
each such year to which such records pertain.
7.5 Audit. The Grantee shall at its cost cause an audit of its
financial affairs to be conducted each year during the term of this
Agreement to coincide with the financial year of A-55. Such audit
will be conducted by an auditor selected by A-55 and the Grantee
shall deliver such audited financial statements prepared in
accordance with generally accepted accounting principles and
practices for public companies in the United States of America to
A-55 within three (3) months of the end of the financial year to
which they relate.
7.6 Sublicensees. All obligations of the Grantee contained
herein to retain records and provide reports shall apply equally to
all sublicensees. All sublicense agreements submitted to A-55 for its
approval shall specifically include such provisions.
8. REPRESENTATIONS AND WARRANTIES
8.1 Grantee represents and warrants that:
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8.1.1 Organization, Standing, etc. Grantee is a duly
organized, validly existing, and in good standing under
the laws of the territory in which it is established and
has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now
conducted, and as proposed to be conducted, to enter into
this Agreement, and to carry out the provisions hereof.
8.1.2 Qualification. Grantee is duly qualified to do
business in the Territory.
8.1.3 Challenged Validity. If Grantee should
challenge the validity or enforceability of the A-55
Patent licensed under this Agreement, in whole or in part,
A-55 shall have the option, by notice in writing, to
immediately terminate this License.
8.1.4 Business Plan. Grantee shall within six months
of the date of this Agreement prepare and submit for
approval to A-55 a business and financing plan for the use
and exploitation of the A-55 Technology in the Territory.
This plan shall identify the capital necessary to fund
Grantee's operations and identify the confirmed source of
such capital The approval of this plan by A-55 shall not
be unreasonably withheld. Grantee shall expend its best
efforts to implement or exceed the business plan and,
during the term of this Agreement to exploit and
commercialize the A-55 Technology within the Territory to
the fullest extent commercially possible.
8.2 A-55 represents and warrants that:
8.2.1 Organization, Standing, etc. A-55 is a limited
partnership duly organized, validly existing, and in good
standing under the laws of the State of Nevada and has all
requisite power and authority to own and operate its
properties, to carry on its business as now conducted and
as proposed to be conducted, to enter into this Agreement,
and to carry out the provisions hereof.
8.2.2 Qualification. There is no jurisdiction wherein
the character of the properties owned by A-55 or the
nature of the activities conducted by A-55 makes necessary
the licensing or qualification of A-55 as a foreign
partnership therein, in which it is not so licensed.
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8.2.3 Disclosure. Neither this Agreement nor any
document, certificate, or statement referred to
herein or furnished to Grantee pursuant hereto
contains any untrue statement known to A-55 of
a material fact or omits to state a material
fact necessary to make the statements contained
herein and therein not misleading.
8.2.4 Ownership of Patent, etc. A-55 warrants and
represents that Xxxxxx X. Xxxxxxxxx is the sole
and exclusive owner of the entire right, title
and interest in and to the A-55 Patent, and any
reissues or extensions of such Patent, and will
be the sole and exclusive owner of all patent
improvements thereto which it makes, in each
case free and clear of all liens, claims,
charges, pledges, mortgages, security interests
and other encumbrances, and that, pursuant to
exclusive license from Mr. Gunnerman, it has
the full and sole right, power and authority to
enter into, consummate and perform the
transactions and obligations contemplated by
this Agreement.
8.2.5 No Conflicting Agreements. A-55 has not entered
into any agreement or understanding, written or
oral, regarding the A-55 Technology, any patent
improvement thereof, or any know-how licensed
hereunder, which is in conflict or inconsistent
with any of the terms and conditions of this
Agreement.
8.2.6 Validity. A-55 warrants and represents that it
is not aware of any law or facts which would
permit any person or entity to challenge the
validity or enforceability of the patent rights
granted herein.
8.2.7 Infringement. The A-55 Patent, all patent
improvements, and know-how as now practiced by
A-55 and all of its current licensees do not,
to A-55's knowledge, violate, infringe or
conflict with the rights of any person, firm or
government.
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9. EXCHANGE OF TECHNICAL INFORMATION MUTUAL TRANSFER OF
MODIFICATIONS, VARIATIONS, IMPROVEMENTS AND PATENT PROTECTION.
9.1 Exchange of Technical Information. Each party hereto shall
exchange with the other all technical information acquired during the
term of this Agreement relating to the A-55 Technology and
developments with respect to same and will communicate to the other
all information and data obtained therefrom. Each party further
agrees that designated representatives of the other may, at
reasonable times, visit the laboratory, plants, and other
installations of the other in which research and operations relating
to the A-55 Technology are being conducted.
9.2 Disclosure of Modifications. The parties shall promptly
inform each other in writing of any modifications, variations, or
improvements relating to the A-55 Technology, and the know-how
licensed hereunder, which are developed by them or otherwise come to
their attention. It is expressly agreed that modifications,
variations or improvements disclosed to A-55 by any other licensee,
grantee, joint venturer, or any other party having the right to
practice any rights licensed hereunder, shall, subject to any
contractual obligations imposed upon A-55, be disclosed to Grantee
under the scope of this subparagraph.
9.3 Rights to Modifications. Notwithstanding which party
hereunder shall have discovered any modification, variation or
improvement to the A-55 Technology, all such modifications,
variations or improvements shall be owned solely by A-55; provided,
however, that Grantee shall have the right to use all modifications,
variations and improvements, whether patented or unpatented, made or
acquired by A-55 during the term of this Agreement without further
compensation to A-55. The parties shall cooperate with each other in
connection with the filing of any patent applications relating to any
such modifications, variations or improvements.
9.4 Intellectual Property Protection. A-55 and Grantee agree
to diligently seek patent protection for all inventions,
modifications and improvements to the A-55 Technology in the
Territory at Grantee's expense. A-55 may, at its own option, apply
for patent protection which is not pursued by Grantee, in which case
the cost thereof shall be borne solely by A-55 and all benefits
therefrom shall be solely owned by A-55 and not subject to the terms
of this license; provided, however, that Grantee may, within three
(3) month of the issuance of a patent to
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A-55, give A-55 notice of its election to take rights under such
patent by paying all costs and expenses of A-55, together with
interest thereon at one percent (1%) over the prime rate charged by
Citibank New York from time to time. Any annual fees with respect to
maintenance of patents or trademarks within the Territory shall be
paid by Grantee or, at the option of A-55, paid by A-55 and
reimbursed upon invoice.
10. INFRINGEMENT.
10.1 Notification of Infringement. Grantee and A-55 shall each
notify the other promptly in writing of any known infringement of the
A-55 Patent, unauthorized use of any confidential know-how licensed
hereunder, or any infringement or unfair competition relating to a
trademark licensed hereunder, which either party learns of during the
term of this Agreement.
10.2 Litigation by A-55. A-55 shall have no obligation to xxx
any such infringers or competitors, but shall have the right to do so
at its own expense and the right to join Grantee and obtain Grantee's
full cooperation, if necessary, at no legal expense to Grantee. If
A-55 brings suit against an infringer or competitor, A-55 shall have
the sole right to control such lawsuit and to settle the same on
terms and conditions approved by A-55. All monetary and other
recoveries resulting from such a lawsuit or any settlement thereof
shall belong to A-55. A-55 shall not be required to have pending more
than one (1) suit for infringement of any patent licensed under this
Agreement.
10.3 Litigation by Grantee. If, after notice of any
infringement of the A-55 Patent or any other patent licensed
hereunder, unauthorized use of any confidential know-how licensed
hereunder, or infringement or unfair competition relating to a
trademark licensed hereunder, A-55 (a) is unable to bring any such
infringement or unfair competition to a halt, or (b) fails to file
and commence diligent prosecution of a suit against such third party
for patent infringement or unfair competition, within six (6) months
after A-55 learns thereof, then Grantee may take any action it deems
necessary to stop the infringement or unfair competition, joining
A-55 therein if necessary but at no expense to A-55. Any recoveries
made upon any such suit shall belong solely to Grantee except for any
award made by the court in favor of A-55 (provided that from such
award A-55 shall pay to the Grantee its reasonable legal expenses not
recovered from the other party or parties to the suit).
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10.4 Actions by Third Parties. If during the term of this
Agreement one (1) or more third parties file suit in the Territory
against Grantee or any of its purchasers for patent infringement due
to Grantee's or any purchaser's manufacture, marketing, use, export
or sale of A-55 Products in the best modes contemplated by A-55 or in
modes approved by A-55, Grantee shall notify A-55 of such suit and
tender defense thereof to A-55. If A-55 refuses the defense of same,
Grantee may at its option elect to defend said suit. A-55 shall
indemnify and hold Grantee harmless from damages assessed against
Grantee in an third party infringement suit, but said indemnification
shall be limited to an amount equal to the payments made to A-55 by
Grantee under the terms of this Agreement.
10.5 Conduct of Defense. In the event that an action described
in subparagraph 10.4 is commenced against Grantee in any
jurisdiction, A-55 hereby authorizes Grantee to join A-55 in said
action as either an additional original defendant or third party
defendant.
10.6 Declaratory Judgment. Grantee may elect to file a
declaratory judgment action against any third party referred to in
subparagraph 10.4, in which event it will notify A-55 of its
intention and tender the filing of any such suit to A-55. If A-55
refuses to institute such declaratory judgment action against a third
party, Grantee shall have the option to institute such action.
Further, A-55 hereby authorizes Grantee to join A-55 as a plaintiff
in any such declaratory action.
11. CONSULTATION SERVICES
11.1 Consultation Services. As mutually agreed upon in advance,
A-55 shall provide to Grantee such qualified technical personnel to
assist Grantee in the exercise of the rights granted pursuant to this
License Agreement. Grantee shall pay for the cost of such assistance,
including all necessary travel, food, lodging and other expenses, and
the pro rata pay (plus 20%) of the persons rendering such technical
assistance. If travel is required, technical personnel shall fly
coach, management personnel shall fly business class, and the
President or Chairman shall fly first class.
11.2 Manner of Payment. As mutually agreed upon in paragraph
11.1, upon a request from Grantee of technical assistance from A-55
pursuant to this paragraph, A-55 shall prepare and render to Grantee
an estimate of the cost thereof, together with an approximate time
frame within which such assistance may be rendered. Grantee shall,
upon receipt and review of the same, forward the
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amount to A-55 whereupon such assistance shall be rendered within the
agreed upon time. Any differences in the estimated and actual
expenses shall be accounted for and paid or refunded upon termination
of such services.
12. TERMINATION AND CONSEQUENCES OF DEFAULT
12.1 Termination or Invalidity.
12.1.1 This Agreement shall terminate in twenty-five
(25) years, or upon the expiration of the last A-55 Patent
to expire, whichever is later, in which event Grantee
shall be entitled to continue to exploit the rights
granted under this Agreement without the payment of any
additional royalties to A-55.
12.1.2 Upon a judgment of invalidity or
unenforceability of the A-55 Patent, Grantee shall be
entitled to continue to exploit the rights granted under
this Agreement by payment of the royalties specified in
paragraph 3 if Grantee continues to practice A-55
Know-how; provided such payments shall be payable by
Grantee until twenty-five (25) years after the effective
date of this Agreement and Grantee shall then be entitled
to exploit the rights granted under this Agreement without
payment of any royalties to A-55.
12.2 Consequences of Default by Grantee. In the event of a
default by Grantee which is not cured in a timely manner as provided
herein:
12.2.1 A-55 may, by written notice, terminate this
License.
12.2.2 At its option, A-55 may, in its unfettered
discretion, elect to continue this license but convert it
to a non-exclusive license, as to any third party or
entity, within the Territory.
12.2.3 All unpaid sums due A-55 under paragraph 3.1
herein to and including the effective date of any such
default shall be due and payable within thirty (30) days
thereafter.
12.3 Consequences of Default by A-55: In the event of a default
by A-55 Grantee shall be entitled to exploit the rights granted under
the terms of this Agreement and shall pay all royalties which accrue
hereunder to an independent trust account until such default is
resolved or cured,
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whereupon the funds so held shall be dispersed in accordance with
such resolution.
12.4 General Consequences
12.4.1 Termination pursuant to subparagraph 12.1 or
the consequences of default as specified in subparagraphs
12.2 or 12.3 shall not relieve either party of any
obligations due to the other under the terms of this
Agreement to and including the date of termination or the
effective date of any such default.
12.4.2 In no event will default operate to release
Grantee or A-55 from any damages, costs and expenses that
may be due as a result of such default.
12.4.3 Either of the parties hereto shall have the
right to give public notice of any termination or default
in such manner and at such times and places as it may deem
advisable.
12.5 Delivery of A-55 Technology In the event of termination of
this License for whatever reason, Grantee shall at the request of
A-55, deliver to A-55 all papers, drawings and other documents
samples and models relating to any matters that are the subject of
this Agreement, shall execute such documents as are reasonably
requested by A-55 and shall cease to exploit the rights granted under
the terms of this Agreement. Without limiting the activities that
shall cease upon such termination, Grantee shall remove all trademark
designation from A-55 Products; transfer any trademarks to A-55 which
it has acquired, change its name to delete reference to A-55; and
transfer to A-55 any related business names which it has used in the
practice of the A-55 Technology.
13. EVENTS OF DEFAULT, NOTICE OF DEFAULT, AND CURING
THEREOF
13.1 Events of Default. A default shall occur hereunder if any
one of the Following events shall occur:
13.1.1 Grantee falls to pay any sum due hereunder and such
failure continues for thirty (30) days; or
13.1.2 Grantee fails to purchase the minimum monthly
quantity of A-55 Additive as set forth in subparagraph
2.7.1.
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13.1.3 Grantee fails to materially implement the business
plan or the financial plan approved by A-55 or fails to
exercise reasonable efforts to commercialize the A-55
Technology; or
13.1.4 A party fails to perform or comply with any term
hereof which materially affects this Agreement; or
13.1.5 Without the prior written approval of A-55 first
had and obtained, there is a change in control of the
Grantee; or
13.1.6 Without the prior written approval of A-55 first had
and obtained, by virtue of any issue of shares, capital
reduction or any means whatsoever, A-55's shareholding
(representing voting shares or entitlement to equity) in
Grantee falls below 30%; or
13.1.7 A party files a voluntary petition for bankruptcy or
any similar relief under laws for the benefit of creditors;
a party is adjudged bankrupt or a receiver is appointed by
a court of competent jurisdiction, and such adjudication is
not vacated within thirty (30) days; or an involuntary
petition is filed for reorganization or similar relief and
is not dismissed or stayed within sixty (60) days; or
13.1.8 Any representation or warranty made in this
Agreement proves to have been incorrect in any material
respect which significantly affects this Agreement; or,
13.1.9 Grantee defaults in the timely performance of any of
its obligations under that certain Heads of Agreement
between A-55 and Grantee dated December 2, 1997.
13.2 Notice of Default. Before any default is effective herein,
the party declaring the default shall provide the defaulting party
with a written notice specifying the claimed default. Such notice
shall provide a period of thirty (30) days from the date of the
notice within which the defaulting party may cure such default.
13.3 Failure to Cure. In the event the defaulting party fails
to cure any default to the reasonable satisfaction of the other party
within the thirty (30) day period described in paragraph 13.2, the
default will, unless the other party specifies otherwise, become
effective on the
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last day of the thirty (30) day period, provided that if either party
in good faith denies there is a breach or default (other than a
breach or default for the nonpayment of money), such party may within
such thirty (30) day period submit the matter to binding arbitration
and in the event it is finally determined that a breach or default
has occurred, such party shall have thirty (30) days from the date of
determination to cure the same.
14. INDEMNITY AND DISCLAIMER
14.1 Indemnification by Grantee. Grantee shall
defend, indemnify and hold A-55 L.P., its Corporate officers, mangers, and staff
harmless from and against any action, claim, liability, expense (including
reasonable attorneys' fees and costs) or damage (including consequential
damages) to persons or property resulting from any acts or omissions of Grantee
and its employees and agents in connection with the performance of this
Agreement or the manufacture, use and sale of A-55 Technology hereunder.
14.2 Indemnification by A-55. A-55 shall
defend, indemnify and hold Grantee harmless from and against any action, claim,
liability, expense (including reasonable attorneys' fees and costs) or damage
(including consequential damages) to persons or property resulting from any
breach or untruth of any representation or warranty hereunder or failure to
perform any covenant hereunder).
15 GENERAL PROVISIONS.
15.1 Notices. Any notice required to be given under this
Agreement shall be in writing and shall be sent by certified or registered mail,
or its equivalent, postage prepaid, to each party at the address below or at
such other address of which one party shall notify the other in the same manner:
To A-55: A-55, L.P.
0000 Xxxx Xxxx
Xxxx, XX 00000
XXX
To Grantee: Vanetik & Associates
0000 X. Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
XXX
15.2 Governing Law. This Agreement shall be governed by
the law of Nevada for performance in the Territory.
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15.3 Arbitration. All disputes, differences, or questions
between the parties concerning the construction, interpretation, and
effect of this Agreement or of any clause herein contained or the
rights and liabilities of the parties, shall be settled by
arbitration in accordance with the Rules of Arbitration of the
American Arbitration Association by arbitrators appointed in
accordance with such rules; provided that either party shall have the
right to appeal the result of any such arbitration; and provided
further that arbitration under this subparagraph shall not apply to
disputes, differences or questions between the parties concerning
violations of United States Anti-Trust laws or regarding the validity
of the A-55 Patent or regarding the confidentiality of any know-how
licensed hereunder. Unless the parties otherwise agree, the site for
arbitration shall be Reno, Nevada.
15.4 No Affiliations. Nothing in this Agreement shall be
construed to create between the parties a partnership, association,
joint venture, or agency.
15.5 Prior Agreements; Amendments. This Agreement cancels and
supersedes all prior oral or written representations, agreements and
understandings between the parties with respect to the subject matter
hereof, and embodies all of the understandings and obligations
between the parties with respect to the subject matter hereof. This
Agreement may be modified and amended at any time, including the
addition of new or deletion of existing know-how and technology
pertinent to the rights transferred under this Agreement, provided
that no agreement or modification or extension of this Agreement
shall be binding upon any of the parties hereto unless made in
writing and signed by both parties.
15.6 Waivers. Failure of either party to require strict
performance of any term of this Agreement shall not affect that
party's right to fully enforce the same, nor shall any waiver of a
default be construed to be a waiver of any succeeding default.
15.7 Provisions Severable. If any term or provision of this
Agreement shall be held or adjudged illegal, invalid, or
unenforceable by any court having jurisdiction, such shall not affect
the validity of any other term or provision hereof, and any such
illegal, invalid, or unenforceable term or provision shall be deemed
to be severable and shall be deleted from this Agreement. A-55 agrees
to send Grantee notice within thirty (30) days after the date any
term or provision of this Agreement is adjudged illegal, invalid or
unenforceable.
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15.8 Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties, their successors and signs
to the extent this Agreement is assignable by its terms.
15.9 Authority to Contract; Counterparts. Each of the parties
covenants that this Agreement is executed under authority duly
granted by its board of directors. The Agreement has been signed in
two (2) counterparts, one for each party, each of which shall be
deemed to be an original.
15.10 Costs of Litigation. In the event of any dispute arising
as the result of the breach or alleged breach of any term of this
Agreement, if such dispute is taken by either party to arbitration or
to any court, the successful party in any such arbitration or court
action shall be entitled, in addition to any damages suffered, to
receive its actual costs of arbitration or suit including, without
limiting the generality of the foregoing, attorneys' fees, experts'
fees, the cost of exhibits and the preparation thereof, and all other
costs reasonably incident to such arbitration or court action.
15.11 Injunction. The parties hereto acknowledge that the
damages for any breach of this Agreement by either party relating to
any matter other than the payment of money would be incapable of
precise determination and would cause the nondefaulting party
irreparable harm. Accordingly, each party accepts the other party's
right to obtain an injunction to prevent any further breach of the
Agreement should the nondefaulting party deem it necessary to do so.
15.12 No Assignment. Grantee shall have no right to assign or
otherwise transfer this License or any of the rights granted to or
obligations imposed upon Grantee without the express prior written
consent of A-55. A-55 may transfer this License or any of the rights
granted hereunder to it without the prior consent of Grantee;
provided, however that A-55 shall not be relieved of any obligations
hereunder unless such transfer is consented to in writing by Grantee.
15.13 Headings. Caption headings are for convenience of
reference only.
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In witness whereof, the parties have signed this Agreement as of the date
appearing above their respective signatures.
DATED: June 22, 1998. DATED: 6/22, 1998.
------------------------------ ---------------------------------
A-55, L.P., a Nevada limited Vanetik & Associates
partnership
By RWG, Inc., a Nevada By /s/
corporation -------------------------------------
President, Vanetik &
Associates
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx,
Chairman, A-55 LP
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