EXHIBIT 10(d)
CPC EXCLUSIVE LICENSE AGREEMENT
-------------------------------
DATED SEPTEMBER 1, 2000
-----------------------
This Exclusive License Agreement dated September 1, 2000,
effective as of September 1, 2000, is between Calliope
Technology, L.P. ("the Partnership") and CREDO Petroleum
Corporation ("CREDO") and Xxx X. XxXxx ("XxXxx"). CREDO and
XxXxx are hereinafter collectively referred to as "CPC". Unless
otherwise defined herein, terms with initial capital letters are
defined terms as used in the Agreement of Limited Partnership of
Calliope Technology, L.P. dated February 1, 1997.
WHEREAS, the Partnership owns an Indefinite Term Exclusive
License dated February 1, 1997 ("Calliope License") covering the
Technology and the System; and
WHEREAS, the Technology is patented in the U.S. and the
Patent is held by the inventor, Xxxxxx Xxxxx ("Xxxxx"), and there
is the possibly of Xxxxx making patent applications in certain
foreign countries; and
WHEREAS, CPC wishes to obtain an exclusive, non-cancelable
license to the Technology and the Systems from the Partnership
for a term of 10 years together with an option to extend this
Agreement to a term to run concurrent with the term of the
Patent.
"Exclusive" shall mean (with respect to the License granted
pursuant to this Agreement) that the Partnership shall not grant,
convey or sell any other license(s) related in any way to the
Technology or Systems or Licensed Material. It is the intent of
the parties hereto that the Partnership will not grant any other
licenses or rights related to the Technology or the Systems or
Licensed Material other than those created by this Agreement.
"Licensed Material" as related to the Technology and
Systems, and without regard to whether subject to Patents, shall
mean all Patents, copyrights, trade marks, trade secrets, trade
names, proprietary information, drawings, blue prints, design
sheets, bills of material, material specifications, computer
files, photographs, photostats and similar data known as
engineering, manufacturing and operating information, and designs
and specifications relating to manufacturing, installing or
operating the Technology or Systems, including but not limited
to, such information as (i) is, or may in the future be,
available in the records of the Partnership, (ii) is, or may in
the future be, subject to Engineering Development, (iii) is, or
may in the future be, applicable in any way to the Technology and
Systems. It is the intent of this Agreement that Licensed
Material shall include all information (without limitation)
related to the Technology and Systems which is known to the
Partnership, whether documented or undocumented and whether
presently known to the Partnership or to be known in the future
and whether or not related to oil and gas operations.
"Engineering Development" shall mean preparing and supplying
to CPC such manufacturing, assembly, engineering, or other
information, including information relating to manufacturing
equipment, tools, dies, jigs, and fixtures, as is known to the
Partnership but not available in the records of the Partnership
and is specially prepared at the request of CPC.
The term "License" shall include all aspects of modifying,
improving, testing, using, manufacturing, applying, selling,
licensing, leasing, installing, and operating the Technology and
Systems and Licensed Material both in the United States and in
all foreign countries, including but not limited to, improvements
and applications and uses which are not presently known but which
may be determined or discovered (whether or not related to oil
and gas activities) in the future and which may be subject to
patent applications and Patents.
NOW THEREFORE, for good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the
parties enter into this Agreement (hereafter the "Agreement" or
the "CPC Exclusive License Agreement").
1. Exclusive License Period
A. The Partnership hereby grants to CPC the Exclusive
right and License to the Technology and Systems for a
period of ten years from the effective date of this
Agreement (the "CPC Exclusive License Period"). During
the CPC Exclusive License Period:
(1) CPC shall have an Exclusive License to the
Technology and the Systems (hereinafter the "CPC
Exclusive License").
(2) Xxxxx' technical expertise and knowledge is
integral and vital to the future success of the
Technology and the Systems and therefore, the
Partnership and/or Xxxxx shall provide consulting
services of Xxxxx for business purposes related to
the Technology and Systems including, but not
limited to (i) reviewing each CPC well candidate
recommendation, (ii) continuing to work with CPC
to develop, enhance, design and build the
Technology and Systems, (iii) directly or
indirectly overseeing and lining-out each
System installation, (iv) supervising and training
of CPC personnel on matters related above, and (v)
generally being available to consult with CPC on
Technology and System related matters. Xxxxx
shall not perform work related to the Technology
or Systems except pursuant to this CPC Exclusive
License. Compensation to the Partnership and\or
Xxxxx, as the Partnership may deem appropriate,
shall be paid a daily rate as agreed between the
parties and such payment shall be made in a manner
acceptable to the Partnership and\or Xxxxx.
(3) The Partnership and CPC agree that neither will
attempt to develop, manufacture or use any
equipment, apparatus, or knowledge which may be
reasonably regarded as competitive with the
Technology or Systems. It is the intent of this
Agreement that any expansion, modification,
division, spin-off or improvement, or use of the
Technology or Systems by CPC or related entities
(whether now existing or formed in the future)
which may be reasonably regarded as competitive
shall be owned by the Partnership and shall be
covered by this Agreement. The parties hereto
agree to disclose to the other any developments or
improvements which one may make in the Technology
or Systems and CPC agrees to cooperate with the
Partnership in obtaining Patents on any such
improvements or developments which may be
patentable, and agrees that title to the said
Patents shall belong to Xxxxx.
2. Consideration for the CPC Exclusive License
A. CPC shall be irrevocably obligated to pay the
Partnership a total of $1,000,000. Said amount shall
be payable in 10 equal payments of $100,000 beginning
on the date this Agreement is signed by all parties and
then on each succeeding anniversary date of this
Agreement. This obligation is not cancelable unless
agreed in writing by all parties. In order to secure
future payment of this obligation, CPC shall maintain
working capital equal to 150% of the amount of the net
remaining obligation at any fiscal quarter end. Should
CPC's working capital drop below said amount, the
Partnership may, but is not obligated to, require CPC
to either (i) enter into an agreement with the
Partnership which will provide 100% security for the
remaining balance in the form of discounted value of
reserves generating cash flow adequate to service the
payment requirements (or some other security acceptable
to the Partnership) or (ii) to place the remaining
amount of the obligation into an escrow account from
which interest will be paid annually to CPC and any
amounts payable to the Partnership hereunder will be
disbursed as set forth above. Such payments to the
Partnership and CPC will be made concurrently.
B. CPC shall assign the Partnership a 12.5% working
interest, proportionately reduced to CPC's interest in
the well(s), in any well on which CPC installs a
System. CPC shall pay the Partnership's costs on any
well on which a System is installed (hereinafter "12.5%
Carried Working Interest") through and including all
costs up to the point where the System is installed on
any well (hereinafter the "System Installation Point").
In standard oil field terminology, the intent is for
the Partnership to have a 12.5% Carried Working
Interest, proportionately reduced to CPC's Working
Interest, through System Installation Point on a well
by well basis. Subsequent to System Installation
Point, the Partnership shall pay all costs properly
chargeable to the well pursuant to the applicable
Operating Agreement as defined in paragraph 1.8 of the
Agreement of Limited Partnership of Calliope, L.P.
C. If there are owners in any well on which a System is
installed by CPC other than owners which are subject to
the 12.5% Carried Working Interest ("Outside Owners"),
CPC shall include in its AFE for installation of the
System an estimated cost of the System plus $12,500
representing cash compensation to the Partnership by
such Outside Owners in lieu of the 12.5% Carried
Working Interest. If such Outside Owners elect to
participate, CPC shall xxxx them (their proportionate
share) of the actual cost of the System plus $12,500
which represents a license fee. When said bills are
paid, CPC shall remit said amount to the Partnership.
If said xxxx is not paid, the owner shall be considered
in non-consent status under the JOA and its interest
shall be reallocated to the consenting owners.
D. CPC will purchase a single engine (preferably fixed
gear) used airplane to be selected by Xxxxx and not to
exceed $130,000 in price.
1. Title will initially be held 100% in the name of
CPC.
2. Xxxxx shall be responsible for all costs of
maintenance, repairs and insurance including, but
not limited to, all fuel, repairs, maintenance,
upkeep, reserves, storage breakage, and insurance.
CPC business related to the Technology and System
shall have first priority for full use of said
plane at the discretion of CPC. Xxxxx shall have
second priority for his personal use of said
plane, and CPC shall have third priority for use
of said plane. In the event the plane is used for
CPC business related to the Technology and System
or by CPC for another purpose, Xxxxx shall invoice
CPC a reasonable hourly fee (as derived by a Xxxxx
meter). The hourly fee shall be based on actual
historical costs of maintaining, storing, reserve
allowances, etc. plus fuel costs. Said fee shall
be payable after each use of the plane and, if the
plane is used for Technology or System business
related to a specific well(s), the invoice shall
allocate the charges by well.
3. Beginning on the date this Agreement is signed by
all parties and then on each succeeding
anniversary date of this Agreement, CPC shall
assign to Xxxxx, or any entity designated by
Xxxxx, a net 10% ownership in the plane. At the
time Xxxxx has been conveyed full 100% ownership
of the plane, CPC shall have no further rights
related to the plane.
4. In the event all parties to this Agreement
collectively wish to sell, trade or upgrade the
plane prior to the 10th anniversary date of this
Agreement, said plane shall be sold, traded or
upgraded and the proceeds or costs shall be
allocated to each of the parties based on actual
ownership at the time of sale.
E. CPC will undertake to expand efforts to gain
access to well candidates for application of the
Technology and Systems to include farmins and
joint ventures including, but not limited to,
adding additional technical staff as warranted.
F. Patent applications have been filed by Xxxxx in
the European Union, Canada and Australia. If
patents are issued in any, or all, of those
countries, Xxxxx shall notify the Partnership and
CPC, and CPC shall have the option to establish
agents to exploit the patents in such country. If
CPC so elects, it shall, during the first 12
months after a patent issues, pursue agents to
exploit the patents. If within 24 months after a
patent issues, CPC has not established an agent(s)
to exploit the patents in any country, it shall
release that country from this Agreement. In that
event, the right to exploit the released patent
shall revert to the Partnership.
3. Option to Extend This Agreement Beyond Initial 10 Year Term
A. CPC shall have the Option, but not the obligation, to
extend the term of this Agreement beyond the end of the
initial ten-year term of this Agreement to the latest
Patent expiration date. If the Option is exercised,
the provisions of this Agreement shall apply (except
those related to the airplane) including the provision
for annual $100,000 payments to the Partnership. The
Option is exercisable in writing by CPC at any time up
to the expiration of the initial 10-year term of this
Agreement. For said Option, CPC shall pay the
Partnership a lump sum payment of $70,000
contemporaneous with the first $100,000 payment due
under the terms of this agreement.
4. Technical Documentation of the Technology and System
A. The Partnership will make its blueprints and other
technical information, including current updates
thereof, available to CPC for the purpose of CPC using
such information to build, maintain and operate Systems
on its xxxxx. If necessary, the Partnership will
obtain such data from its General Partner that is 100%
owned by the Technology inventor and patent holder,
Xxxxx. The purpose of this provision is to insure that
CPC has ready access to all information related to the
Technology and the Systems. CPC may develop is own
blueprints and other technical information as it deems
appropriate. Any such blueprints and other technical
information developed by CPC shall be conveyed to the
Partnership.
5. Partnership Assignment of Previously Existing Agreement
A. The Partnership shall assign 100% of its interest in a
non-exclusive agreement dated November 30, 1999 between
the Partnership and Xxxxxx-Xxxxx Oil Company to CPC
effective as of the effective date of this Agreement.
The Partnership represents and affirms that it has no
other agreements with third parties other than the
aforesaid agreement and the CPC Non-Exclusive License
Agreement. CPC shall conduct business related to said
agreement on the same basis as has previously been
established by the Partnership. Because said agreement
pre-dated this Agreement, any benefits derived by CPC
from said agreement shall be passed directly by CPC to
the Partnership.
6. Suspension of CPC Non-Exclusive License Agreement
A. During the term this Agreement is in full force and
effect, including any extensions, the CPC Non-Exclusive
License Agreement dated February 1, 1997 shall be
suspended. As such time as this Agreement is no longer
in full force and effect, the CPC Non-Exclusive License
Agreement shall become effective and shall be in full
force and effect.
7. Accountability
A. CPC and the Partnership shall keep and maintain
complete and accurate books and records pertaining to
the Technology and their respective obligations
hereunder, and shall allow inspection of such books and
records by the other party for the purpose of verifying
compliance with this Agreement.
8. Not Used
9. Notices
All notices and other correspondence concerning the parties
and provisions of this Agreement shall be in writing and
deemed to be conclusively give if delivered personally, or
mailed in the U.S. mail by certified mail as follows:
To Partnership: Calliope Technology, L.P.
0000 X. Xxxxx Xxxxxx
Xxxxxx, XX 00000
To CREDO: CREDO Petroleum Corporation
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
To XxXxx: Xxx X. XxXxx
00000 Xxxxx Xxxx
Xxxxxx, XX 00000
To Xxx Xxxxx: Xxx Xxxxx
0000 X. Xxxxx Xxxxxx
Xxxxxx, XX 00000
10. Xxxxx Right to Participate in System Instalations.
X. Xxxxx shall have the option on any well on which a
System is to be installed by CPC to purchase a 7.5%
interest, proportionately reduced to CPC's interest, by
paying 7.5% of all costs incurred by CPC including, but
not limited to, all costs of identification and
acquisition of any well (including an allocable portion
of net costs of unsuccessful attempts) and costs
related to oil and gas leases, wellbores, equipment,
etc.
11. Disclaimer
A. Except as expressly set forth herein or in a separate
agreement by the parties after the date
hereof, EACH PARTY DISCLAIMS ANY AND ALL WARRANTIES
INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
12. Not Used
13. Governing Law
A. This Agreement shall be governed by and construed under
the laws of the State of Colorado.
14. Transfer/Conveyance of Interests
A. Either party shall deliver notice to the other party of
its intent to sell its interest in oil and gas xxxxx on
which the Technology or Systems is installed to a third
party not qualifying as a Permitted Transferee during
any period in which this CPC Exclusive License
Agreement is in force. The other party may, at its sole
option, purchase said interest within 30 days after
receipt of such notice at a value based on an
independent engineering evaluation by McCartney
Engineering using the following parameters:
(1) the average product price(s) for the preceding 24
months unescalated;
(2) the average monthly operating costs, including
gathering, transportation and compression, for the
preceding 24 months unescalated or such shorter
period as this Technology has been installed on
the applicable well; and
(3) the present value of estimated net future cash
flows discounted at 20%
If the other party elects not to so purchase such
interest on the above basis, the sale may be made
to a third party.
15. Modification of This CPC Exclusive License Agreement Dated
September 1, 2000
A. This Agreement can be modified only by written
amendment properly executed by all parties. This
Agreement contains the entire agreement and
understanding of the parties pertaining to the subject
hereof.
16. Conflict Between Agreements
A. In the event of conflict between this Agreement and any
other agreements between the parties, the provisions of
this Agreement shall prevail.
17. Termination or Dissolution of the Partnership
A. The Partnership shall not be terminated or dissolved
during the term of this Agreement nor shall any action
be taken by the Partnership or Xxxxx which shall alter
the Indefinite Term Exclusive License Agreement dated
February 1, 1997 between the Partnership and Xxxxx.
18. Amendment of Agreement of Limited Partnership of Calliope
Technology, L.P.
A. The Agreement of Limited Partnership of Calliope
Technology, L.P. shall be amended to provide that the
payments made to the Partnership pursuant to Item 2.A.
above shall be treated by the Partners as "guaranteed
payments" to RTC.
19. Termination of This CPC Exclusive License Agreement
A. This Agreement will be terminated upon (i) expiration
or termination of the CPC Exclusive License Period and
any extensions thereof, or (ii) upon mutual written
agreement of all parties hereto to terminate the CPC
Exclusive License.
B. Termination By The Partnership
(1) Except as provided in 19.A. above, the CPC
Exclusive License shall not be terminated except
for a material breach of this Agreement by CPC
which CPC fails to remedy within 30 days after
receiving written notice thereof from the
Partnership.
(2) If this Agreement is terminated by the
Partnership:
(a) CPC shall retain the Systems installed on its
xxxxx and the ownership in said xxxxx and the
Operating Agreement covering said xxxxx shall
not be affected.
(b) CPC shall be relieved of any further payments
hereunder.
(c) The CPC Non-Exclusive License Agreement dated
February 1, 1997 shall again become effective
and shall be in full force and effect.
(d) The airplane will be 100% assigned to Xxxxx
or his designee.
20. Benefit and Binding Effect
This Agreement represents the entire agreement and shall
bind and benefit the parties hereto and their respective
legal representatives, successors and authorized assigns.
21. Sharing of Rights and Obligations Under This Agreement
As between CREDO Petroleum Corporation and XxXxx all rights,
obligations and benefits under this Agreement shall accrue
93.75% to CREDO and 6.25% to XxXxx.
22. Enforcing Rights in the Technology Against Third Parties
If any party to this Agreement becomes aware of an
infringement by any third party of their rights in and to
the Technology, such party shall promptly inform the other
parties. In such event, the Partnership shall be obligated
to diligently prosecute enforcement action against said
infringement ("Partnership's Enforcement Obligation"), and
shall receive any damages or other monetary recovery
resulting from the Partnership's Enforceable Obligation.
The Partnership shall indemnify and hold CPC harmless from
and against any damages, liability, costs and expenses
(including attorney fees) related to Partnership's
enforcement actions. If at any time the Partnership elects
to discontinue its enforcement action, CPC may elect to
diligently prosecute enforcement action against said
infringement at its sole cost and expense and, if
successful, shall receive any damages or other monetary
recovery therefrom. In such event, CPC shall indemnify and
hold the Partnership harmless from and against any
incremental damages, liability, costs and expenses
(including attorney fees) related to CPC's enforcement
actions. If prior to a successful outcome of the
Partnership's enforcement action, the Partnership elects to
discontinue said enforcement action, and if CPC does not
elect to further prosecute enforcement action on its own
behalf, then CPC shall be bound by the Partnership's
settlement terms. As used herein the term diligently
prosecute shall mean filing a lawsuit(s) alleging
infringement of the Technology and in good faith and a
timely manner pursuing a favorable settlement acceptable to
both Licensor and Licensee or a judgment. Any settlement of
any such proceeding involving a license to the Technology
shall be subject to the provisions of this Agreement.
23. Defending Rights in the Technology from Third Parties
With respect to any claim(s) made by an third party that the
Partnership's or CPC's use of the Technology or Systems
infringes any patent, copyright, trade secret, trademark or
other right of said third party, except as otherwise provide
in this paragraph, the Partnership agrees to indemnify and
hold harmless CPC from and against any damages, liability,
cost and expense (including attorney fees). Unless
otherwise agreed in writing by CPC, the Partnership shall be
obligated to defend its Exclusive License and any underlying
patent(s), copyright(s), trade secret(s), trademark(s) or
other rights related to the Technology ("Partnership's
Defense Obligation"). If at any time the Partnership ceases
to diligently defend against such infringement claim, CPC
may elect to continue to diligently defend against such
infringement claim at its sole cost and expense and, if
successful, shall receive any damages or other monetary
recovery therefrom. If prior to a successful outcome of the
Partnership's defense action, the Partnership ceases said
defense action, and if CPC does not elect to further defend
the matter to prosecute on its own behalf, then CPC shall be
bound by the Partnership's settlement terms. As used herein
the term diligently defend shall mean hiring legal counsel
in a timely manner and defending against and any legal
action brought against the Partnership or CPC related to
their use of the Technology or the Systems.
24. Disputes and Arbitration
Each party hereby agrees to seek to resolve any disputes or
claims arising between any parties in connection with this
Exclusive License Agreement through amicable discussions
between the parties. No breach shall be deemed to occur
hereunder until the party alleged to be in breach is given
at least forty-five-(45) days prior written notice
describing such dispute or claim. A party's judgment or
exercise or non-exercise of its right to approve or to
consent to matters shall not be subject to any dispute or
claim. If any such dispute or claim is not settled by the
parties or cured within the forty-five (45) day period, the
parties may submit the dispute to final and binding
arbitration by notice to the other parties. Except as
otherwise agreed by the parties, the arbitration shall be
administered by and held in accordance with the rules of
procedure, including any expedited procedures, of the
American Arbitration Association ("AAA"). A single
arbitrator shall be jointly selected by the parties
according to the rules of the AAA as promptly as
practicable. If the parties cannot agree on a single
arbitrator, then each party shall select an arbitrator and
the two arbitrators shall select a third arbitrator. The
parties shall be bound by the arbitration award issued. The
parties may settle any dispute at any time prior to the
arbitrator rendering its decision.
All parties stipulate that they had the opportunity to
thoroughly consider each of the provisions of this Agreement
including its impact on their rights and obligations, and
that they have carefully considered the possible employment
of independent counsel and have voluntarily decided whether
or not to do so. Any party to this Agreement who has not
obtained or employed independent counsel, will not, at any
time, claim this Agreement, or any provision thereof, is
void or unenforceable in any respect by reason of their not
being represented by counsel.
25. Invalidity of Provisions
If any provision of this Agreement as applied to either
party or to any circumstance, shall be adjudged by a court
to be void and unenforceable, the same shall in no way
affect any other provision in this Agreement, the
application of such provision in any other circumstances, or
the validity or enforceability of the Agreement as a whole.
26. Miscellaneous Provisions
A. In the event that any provision, term, condition, or
object of this Agreement may be in conflict with any
law, measure, ruling, court judgement (by consent or
otherwise), or regulation of the government of the
United States of America, or any department thereof,
and the legal counsel of either party shall advise that
in their considered opinion such conflict (or a
reasonable possibility of such conflict exists) then
either party may propose to the other appropriate
modifications of this Agreement to avoid such conflict.
B. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject
matter of this Agreement and merges all prior
discussions between them, and neither of the parties
shall be bound by any conditions, definitions,
warranties, or representations with respect to the
subject matter of this Agreement, other than as
expressly provided in this Agreement or as duly set
forth on or subsequent to the date hereof in writing
and signed by a proper and duly authorized
representative of the Partnership and CPC and Licensor.
Agreed and accepted this 18th day of September, 2000 but
effective as of the date set forth in paragraph one of this
Agreement.
CALLIOPE TECHNOLOGY, L.P.
ATTEST:
/s/ Xxx X. XxXxx By: /s/ Xxxxxx Xxxxx
-------------------- --------------------------
Secretary Xxxxxx Xxxxx, President
Resource Technology Corporation
General Partner
CREDO PETROLEUM CORPORATION
ATTEST:
/s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------- --------------------------
Asst. Secretary Xxxxx X. Xxxxxxx, President
WITNESS: XXX X. XXXXX
/s/ Xxxxx X. Xxxxxx By: /s/ Xxx X. XxXxx
-------------------- --------------------------
Xxx X. XxXxx, Individually
WITNESS: XXX XXXXX
/s/ Xxxxx X. Xxxxxx By: /s/ Xxx Xxxxx
-------------------- --------------------------
Xxx Xxxxx, Individually
As to Item 1.A.(2) and (3) only
STATE OF COLORADO )
) SS
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 18th day
of September by Xxxxxx Xxxxx, as President of Resource Technology
Corporation, the General Partner of Calliope Technology, L.P.
Witness my hand and official seal. /s/ Xxxxx X. Xxxxxx
-------------------------
Notary Public
My Commission Expires: 05/27/02
------------
STATE OF COLORADO )
) SS
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 18th day
of September by Xxxxx X. Xxxxxxx, as President of CREDO Petroleum
Corporation.
Witness my hand and official seal. /s/ Xxxxx X. Xxxxxx
-------------------------
Notary Public
My Commission Expires: 05/27/02
------------
STATE OF COLORADO )
) SS
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 18th day
of September by Xxx X. XxXxx.
Witness my hand and official seal. /s/ Xxxxx X. Xxxxxx
-------------------------
Notary Public
My Commission Expires: 05/27/02
------------
STATE OF COLORADO )
) SS
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 18th day
of September by Xxx Xxxxx, individually.
Witness my hand and official seal. /s/ Xxxxx X. Xxxxxx
-------------------------
Notary Public
My Commission Expires: 05/27/02
------------
