EXHIBIT 10.23
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is made as of August 6,
2004 (the "Effective Date") by and between SULPHCO, INC., a Nevada corporation,
("SULPHCO") and CHEVRONTEXACO ENERGY TECHNOLOGY COMPANY ("ETC"), an operating
division of Chevron U.S.A. Inc., a corporation organized under the laws of the
Commonwealth of Pennsylvania, ("CUSA").
RECITALS
WHEREAS, SULPHCO and ETC have completed a laboratory test of Sulphco's
sulfur extraction technology pursuant to a Laboratory Test Agreement between
SULPHCO and ETC executed November 14, 2002;
WHEREAS, SULPHCO pursuant to such laboratory tests, performed certain
supplementary tests of SULPHCO's technology at SULPHCO's demonstration
facilities in Reno, Nevada ("Supplementary Tests"), which were observed by ETC
and which generated sample materials for analysis by ETC;
WHEREAS, SULPHCO and CUSA are planning to conduct further testing of
SULPHCO's technology for the removal of sulfur from petroleum products, for an
increase in API gravity, and for residuum reduction in pre-production scale
equipment provided by SULPHCO and operated by CUSA at its refinery in El
Segundo, California ("Refinery Test") pursuant to a Refinery Test Agreement
between CUSA and SULPHCO executed May 9, 2003;
WHEREAS, the Supplementary Tests gave positive indication that there is
potentially sufficient sulfur removal, API gravity increase, and/or residuum
reduction to justify an effort to further develop SULPHCO's technology
("Technology"), ETC and SULPHCO desire to bring the Technology to a stage of
development suitable for the Refinery Test and for eventual large scale
commercial use;
WHEREAS, ETC and SULPHCO wish to work together to develop the full
capability of the Technology;
WHEREAS, ETC and SULPHCO recognize that ETC, as a result of the further
development contemplated herein, is expected to create valuable new technology
related to the Technology and also new technology related to integration of the
Technology into a refinery configuration;
WHEREAS, ETC and SULPHCO recognize that further development of the
Technology is necessary to develop a commercial technology and involves a
considerable degree of technical and business risk and uncertainty;
WHEREAS, ETC and SULPHCO agree that the terms of this Agreement reflect
the fact that both parties are sharing such risk; and
WHEREAS, SULPHCO and ETC wish to enter into a collaboration to develop
to the extent consistent with reasonable business judgment the capability of the
Technology on the terms and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "AFFILIATE" means any corporation or other entity which controls,
is controlled by, or is under common control with, a party. A corporation or
other entity will be regarded as in control of another corporation or entity if
it owns or directly or indirectly controls more than forty percent (40%) of the
voting securities or other ownership interest of the other corporation or
entity, or if it possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of the corporation or other entity.
Affiliates of ETC include ChevronTexaco Corporation, a Delaware corporation, and
any company or other entity of which ChevronTexaco Corporation or a wholly-owned
subsidiary of ChevronTexaco Corporation owns or directly or indirectly controls
more than forty percent (40%) of the voting securities or other ownership
interest, or any company or other entity with respect to which ChevronTexaco
Corporation or a wholly-owned subsidiary of ChevronTexaco Corporation possesses,
directly or indirectly, the power to direct or cause the direction of management
and policies.
1.2 "COLLABORATION" means the activities of the parties carried out in
performance of, and the relationship between the parties established, and
governed by, this Agreement.
1.3 "TECHNOLOGY INVENTIONS" has the meaning set forth in Section 5.1.
1.4 "CONFIDENTIAL INFORMATION" means any proprietary information of a
party, including information relating to SULPHCO Technology (as hereinafter
defined), and any information relating to any catalyst, material, research
project, work in process, future development, scientific, engineering,
manufacturing, marketing, business plan, financial or personnel matter relating
to such party, its present or future products, sales, suppliers, customers,
employees, investors or business, whether in oral, written, graphic or
electronic form. Notwithstanding the foregoing, Confidential Information will
not include any information which the receiving party can prove by competent
written evidence:
(a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving party, generally known or available;
(b) is known to, and may be used without restriction by, the
receiving party at the time of receiving such information, as evidenced by its
records;
(c) is hereafter furnished to the receiving party by a Third
Party, as a matter of right and without restriction on disclosure;
(d) is independently developed by the receiving party without
the aid, application or use of proprietary information of the other party then
subject to the confidentiality or use restrictions of this Agreement; or
(e) is the subject of a written permission to disclose
provided by the disclosing party.
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1.5 "CONTROL" in the context of Know-How and Patent Rights means
possession of the ability to grant a license or sublicense as provided for
herein without violating the terms of any agreement or other arrangement with
any Third Party.
1.6 "DESIGNEE" means a company or other entity, other than an Affiliate
of ETC, in which ETC has a bona fide substantial business interest, whether by
ownership or contract, and which ETC designates in writing to SULPHCO as a
Designee hereunder.
1.7 "EXCLUSIVITY PERIOD" has the meaning set forth in Section 3.8.
1.8 "EXTENSION PERIOD" has the meaning set forth in Section 3.5(b).
1.9 "FIELD OF COLLABORATION" means the use of Ultrasound
Desulfurization and Upgrading Process in the Field of Application. The field of
Collaboration shall not include (a) the processing of emulsions of water and
petroleum feeds, fractions or products without prior separation of aqueous-rich
and oil-rich phases, and (b) the underground or underwater processing of
petroleum in underground reservoirs or other petroleum or fractions prior to
production at the wellhead.
1.10 "FIELD OF APPLICATION" means petroleum feed, fraction, and product
upgrading desulfurization processes which occur after petroleum is produced at
the wellhead.
1.11 "ULTRASOUND DESULFURIZATION AND UPGRADING PROCESS" means a
desulfurization process using Ultrasound Technology to extract sulfur and
optionally also nitrogen and/or metal from petroleum feeds, fractions, or
products, and optionally to increase API gravity, and/or to reduce residuum,
such process occurring after petroleum is produced at the wellhead.
1.12 "ULTRASOUND REACTOR" means a reactor vessel for subjecting
petroleum feeds, fractions, or products to the effects of Ultrasound Technology.
1.13 "ULTRASOUND TECHNOLOGY" means the use of electromagnetic apparatus
for generating sound having an energy distribution predominantly in frequencies
between ten thousand (10,000) and fifty thousand cycles per second wherein the
predominant energy input into the apparatus is used to produce sound waves
having frequencies between ten thousand (10,000) and fifty thousand (50,000)
cycles per second.
1.14 "SULPHCO KNOW-HOW" means all knowledge, trade secrets, inventions,
data, processes, techniques, procedures, compositions, devices, methods,
formulas, protocols and information, including, without limitation, all research
information, whether or not patentable, which are not generally publicly known,
relating to the Field of Collaboration, and which are not covered by SULPHCO
Patent Rights, but which are necessary or useful in the Field of Collaboration,
and which are under the Control of SULPHCO as of the Effective Date or developed
by, and under the Control of, SULPHCO or ETC or their respective Affiliates in
the course of performing activities under this Agreement.
1.15 "SULPHCO PATENT RIGHTS" means all rights under patents and patent
applications, and any and all patents issuing therefrom (including utility,
model and design patents and certificates of invention), together with any and
all substitutions, extensions (including supplemental protection certificates),
registrations, confirmations, reissues, divisionals, continuations,
continuations-in-part, re-examinations, renewals and foreign counterparts of the
foregoing, that claim any invention relating to the Field of Collaboration,
which are necessary or useful in the Field of Collaboration, and which are under
the Control of SULPHCO as of the Effective Date or developed by, and under the
Control of, SULPHCO or its Affiliates in the course of performing activities
under this Agreement.
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1.16 "SULPHCO TECHNOLOGY" means all information embodied in the SULPHCO
Know-How and inventions claimed in the SULPHCO Patent Rights, but not including
Other Related Technology or other Technology.
1.17 "INDEMNIFIED PARTY" has the meaning set forth in Section 7.6.
1.18 "INDEMNIFYING PARTY" has the meaning set forth in Section 7.6.
1.19 "LOSSES" has the meaning set forth in Section 7.6.
1.20 "MANAGEMENT COMMITTEE" has the meaning set forth in Section 2.1.
1.21 "OTHER INVENTIONS" has the meaning set forth in Section 5.3.
1.22 "OTHER RELATED TECHNOLOGY" means all technical information and
know-how, patentable or unpatentable, which relate to (i) treatment,
pre-treatment or selection of feeds for an Ultrasound Reactor in an Ultrasound
Desulfurization and Upgrading Process; (ii) treatment and post-treatment of
effluent from an Ultrasound Reactor in an Ultrasound Desulfurization and
Upgrading Process; or (iii) integration of the SULPHCO Technology into a
commercial refinery, oil field, petrochemical facility or other similar
configuration. Other Related Technology shall not include Other Technology
defined in Section 1.23 below.
1.23 "OTHER TECHNOLOGY" means all technical information and know-how,
patentable or unpatentable, which have application to the processing of
petroleum feeds, fractions and products, without regard to whether or not an
Ultrasound Desulfurization and Upgrading Process is employed.
1.24 "PHASE I" means the first phase of the Collaboration commencing on
the Effective Date and continuing until bench scale demonstration of the Proof
of Commercialization and completion of all negotiations of the license and
sublicensing agreement contemplated in Section 3.7, or bench scale demonstration
of failure of such Proof of Commercialization, but no later than six (6) months
after the Effective Date, unless extended by mutual written agreement of the
parties pursuant to Section 3.5(b).
1.25 "PHASE 2" means the second phase of the Collaboration commencing
on the expiration of Phase 1 and continuing to a date twenty-four (24) months
after the Effective Date, unless extended by mutual written agreement of the
parties.
1.26 "PROOF OF COMMERCIALIZATION" means the following general
characteristics used to determine that the SULPHCO Technology is useful as a
desulfurization and upgrading process in the Field of Collaboration, based on
its suitability for integration into the refining environment of a large scale
commercial facility: (i) accommodating feeds, testing conditions and equipment;
(ii) distinguishing between known good and bad operating conditions; (iii)
achieving suitable rates of sustained sulfur removal of at least twenty weight
percent (20 wt%) from the feed; and (iv) achieving suitable integration between
other refining operations, and control and automation requirements. It is
understood that the Management Committee will establish detailed criteria for
demonstration of such characteristics.
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1.27 "THIRD PARTY" means any entity other than SULPHCO or ETC or an
Affiliate of either SULPHCO or ETC.
ARTICLE 2
MANAGEMENT COMMITTEE
2.1 MANAGEMENT COMMITTEE. The parties will establish a management
committee (the "Management Committee") within thirty (30) days following the
Effective Date to (a) direct the Collaboration between the parties and ensure
the open exchange of information between the parties, (b) establish and provide
guidance to those carrying out work under this Collaboration Agreement, and (c)
approve budgets for the programs carried out under this Collaboration Agreement
(including, without limitation, any capital expenditures or other expenses
necessary to conduct work under this Collaboration Agreement). The Management
Committee will consist of one representative from each party, with each party's
representative being selected by that party. Either party may replace their
respective Management Committee member at any time, upon notification to the
other party. The Management Committee will meet at least once each calendar
quarter at locations to be agreed by the representatives. Either party may, with
the consent of the other party, invite non-voting observers to attend Management
Committee meetings provided that such observers are bound by the obligations of
confidentiality set forth herein. Each party will be responsible for the
expenses incurred by its representative and observers attending Management
Committee meetings. Attendance at such meeting may be in person, by telephone or
by televideo conference. The Management Committee will appoint a secretary to
prepare and distribute minutes of each meeting, which will be approved and
signed by the representative of each party.
2.2 DECISION-MAKING PROCESS. Decisions of the Management Committee will
be made by unanimous approval. Any disagreement among members of the Management
Committee will be resolved within the Management Committee based on the
efficient achievement of the objectives of this Agreement. Any disagreement
which cannot be resolved by the Management Committee will be referred to the
Chief Executive Officer or President or an individual with equivalent
decision-making authority of each of SULPHCO and ETC for resolution under
Article 9. It is the intent of the parties to resolve issues through the
Management Committee whenever possible and to refer issues to the Chief
Executive Officer or President or an individual with equivalent decision-making
authority of each of SULPHCO and ETC only when resolution through the Management
Committee cannot be achieved.
ARTICLE 3
COLLABORATION; COMMERCIALIZATION; EXCLUSIVITY
3.1 OBJECTIVES. SULPHCO and ETC will conduct the Collaboration in two
phases under this Agreement. In Phase 1, the parties will agree on specific
process variables to examine and improve to demonstrate the Proof of
Commercialization in the Field of Application on a bench scale for an Ultrasound
Desulfurization and Upgrading Process and to negotiate the License Agreement
contemplated in Section 3.7 to the complete satisfaction of both ETC and
SULPHCO. The primary objective of Phase 1 is to demonstrate the Proof of
Commercialization in the Field of Application, and to properly prepare for and
support a Refinery Test. Subject to Section 3.5, following Phase 1, the parties
will enter Phase 2 to conduct projects focused on bringing an Ultrasound
Desulfurization and Upgrading Process in the Field of Application to a stage of
development suitable for large scale commercial use, as agreed by the parties.
In Phase 2, SULPHCO may also endeavor to develop the SULPHCO Technology and
SULPHCO Patent Rights to a stage suitable for transfer or licensing to Third
Parties. During the Collaboration, SULPHCO will have primary responsibility for
the activities described in Section 3.2, and ETC will have primary
responsibility for the activities described in Section 3.3. These activities
will be carried out during both Phases of the Collaboration.
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3.2 SULPHCO RESPONSIBILITIES.
(a) During Phase 1, SULPHCO will develop the SULPHCO
Technology for bench scale testing of one or more specific Ultrasound
Desulfurization and Upgrading Processes with the goal of demonstrating the Proof
of Commercialization. SULPHCO and ETC will work together to establish optimum
process evaluations. SULPHCO will provide the bench scale testing equipment to
ETC, if so requested, for testing at ETC at ETC's sole discretion.
(b) During Phase 2, SULPHCO will utilize the SULPHCO
Technology to optimize the Ultrasound Desulfurization and Upgrading Process from
Phase 1 as directed by the Management Committee in projects designed to bring
the Phase 1 Process to a stage of development suitable for commercial use in the
Field of Application, as agreed by the parties.
3.3 ETC RESPONSIBILITIES.
(a) During Phase 1, ETC will review the process and equipment
design for SULPHCO's bench unit and 1000 BPD units to be used at El Segundo. The
review will be funded up to one man-month of effort and a cost of no more than
Thirty-five Thousand Dollars ($35,000). This work may entail some on-site visits
to SULPHCO's office in Sparks, Nevada. On successful conclusion of such review,
ETC agrees to explore additional research and testing, using the bench scale
testing equipment supplied by SULPHCO, at Richmond, California, and operation by
SULPHCO of its process equipment at its Sparks facility, to help support and
prepare for a Refinery Test and commercialization and market deployment efforts.
The program at Richmond will focus on developing necessary process information,
allowing testing of a wider range of feedstocks and conditions, and providing an
additional site for testing of feedstocks provided by potential licensing
customers. The total of all expenditures by ETC for equipment construction,
manpower, and analytical services for all of these efforts in Phase 1 shall not
exceed Two Hundred Fifty Thousand Dollars ($250,000). Any additional
expenditures shall be at ETC's sole discretion.
(b) During Phase 2, ETC agrees to help coordinate and fund
efforts to promote the technology to agreed on industry segments. These efforts
could include developing the overall marketing strategy, the preparation of
journal articles for major industry publications and participation in major
industry conferences. It is also anticipated that ETC will arrange for the
Technology Marketing Unit of ChevronTexaco Products Company to participate in
presentations to prospective licensing customers in private sessions. The total
of all expenditures by ETC for this effort shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000). Any additional expenditures shall be at ETC's sole
discretion.
3.4 CONTRACT REPRESENTATIVES. Each party's member on the Management
Committee will serve as such party's Contract Representative. During Phase 1,
all decisions that affect ETC will require the consent of the ETC Contract
Representative and all decisions that affect SULPHCO will require the consent of
the SULPHCO Contract Representative.
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3.5 PHASE 1; EARLY TERMINATION.
(a) If, by the end of Phase 1 (or the end of any Extension
Period agreed to under Section 3.5(b)), it has been determined to the reasonable
satisfaction of both parties that the Proof of Commercialization has not been
demonstrated, this Agreement shall terminate as of the end of Phase 1.
(b) If, by the end of Phase 1 (or the end of any Extension
Period agreed to under this Section 3.5(b)), it has not been determined to the
reasonable satisfaction of both parties whether the Proof of Commercialization
has been demonstrated, then the Contract Representatives will meet and discuss
whether to continue Phase 1 for one or more additional periods, not to exceed a
total of twelve (12) months (the "Extension Period"). If the Contract
Representatives agree upon an Extension Period, then the provisions of Section
3.5(a), (b), (c) and/or (d) shall apply at the end of such Extension Period, as
applicable.
(c) If, by the end of Phase 1 (or the end of any Extension
Period agreed to under Section 3.5(b)), it has not been determined to the
reasonable satisfaction of both parties whether the Proof of Commercialization
has been demonstrated, and one of the parties, in its sole discretion, elects
not to extend Phase 1, then that party may elect to terminate this Agreement as
of the end of Phase 1 subject to the following provisions:
(i) If ETC unilaterally terminates this Agreement,
then SULPHCO will be free to enter into any relationship with any Third Party
relating to the use of the SULPHCO Technology in the Field of Collaboration.
(ii) If SULPHCO unilaterally terminates the
Collaboration, then SULPHCO will grant to ETC and its Affiliates, a
non-exclusive, irrevocable, royalty-free, worldwide license under the SULPHCO
Patent Rights and SULPHCO Know-How to use the SULPHCO Technology and use, sell,
import or export the product thereof. This license shall also include the right
to make or have made any equipment or other material useful to practice the
SULPHCO Technology.
(d) If, by the end of Phase 1 (or the end of any Extension
Period agreed to under Section 3.5(b)), it has been determined to the reasonable
satisfaction of both parties that the Proof of Commercialization has been
demonstrated, then the parties may at any time after the end of Phase 1
terminate this Agreement by mutual written agreement. Upon such termination,
SULPHCO will offer to grant ETC and its Affiliates a non-exclusive royalty-free,
irrevocable, worldwide license under the SULPHCO Patent Rights and SULPHCO
Know-How to use the SULPHCO Technology in facilities owned or operated by any
such Affiliate and to use, sell, import and export the products such license to
be on terms and conditions to be established at the sole discretion of ETC. This
license shall also include the right to make or have made any equipment or other
material useful to practice the SULPHCO Technology. Such license will include
rights to improvements to the SULPHCO Technology Controlled by SULPHCO or any of
its Affiliates and a grant back from ETC to SULPHCO of any improvements to the
SULPHCO Technology Controlled by ETC or any of its Affiliates.
3.6 AVAILABILITY OF RESOURCES; COOPERATION; AND INFORMATION. Subject to
the limitation of this Agreement, each party will maintain laboratories, offices
and/or other facilities reasonably necessary to carry out the activities to be
performed by such party under the Collaboration. Upon reasonable advance notice,
each party agrees to make its employees and non-employee consultants reasonably
available at their respective places of employment to consult with the other
party on issues arising during the Collaboration.
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3.7 LICENSE TO PRACTICE AND RIGHT TO LICENSE OTHERS TO PRACTICE THE
SULPHCO TECHNOLOGY. During the term of this Agreement, the parties will endeavor
to develop the SULPHCO Technology and SULPHCO Patent Rights to a stage where
they are suitable for licensing to Third Parties. At such time as the parties,
by mutual agreement, determine that the SULPHCO Know-How and SULPHCO Patent
Rights are suitable for licensing to Third Parties, SULPHCO and ETC will enter
into the license agreement to be negotiated during Phase 1 ("License Agreement")
pursuant to which SULPHCO will grant ETC and its Affiliates a non-exclusive,
irrevocable, worldwide license under the SULPHCO Patent Rights and SULPHCO
Know-How to use the SULPHCO Technology to use, sell, import or export the
products thereof, and (subject to a reservation for SULPHCO to license others to
practice the SULPHCO Technology under the SULPHCO Patent Rights and, to the
extent permitted under the License Agreement under SULPHCO Know-How or other
proprietary data, such reservation not to include the right for SULPHCO to grant
to others a right to sublicense) the exclusive right to sub-license on terms and
conditions mutually acceptable to the parties, but which provide more favorable
economic/financial terms than those which will be offered to any Third Party
other than those which have executed research collaborations with SULPHCO. This
non-exclusive license and exclusive right to sublicense shall also include the
right to make or have made any equipment or other material useful to practice
the SULPHCO Technology. Such license and right to sublicense will include rights
to improvements to the SULPHCO Technology Controlled by SULPHCO or any of its
Affiliates that are at a stage of development suitable for licensing, and a
grant back from ETC to SULPHCO of any improvements to the SULPHCO Technology
Controlled by ETC or any of its Affiliates that are at a stage of development
suitable for licensing. The terms and conditions of the License Agreement shall
also include joint licensing and royalty sharing provisions, and provisions
relating to the use and licensing of Other Related Technology and patents based
on Other Related Inventions. Negotiation of all of the terms and conditions of
the License Agreement shall be carried out during Phase 1, and shall be
concluded to the complete satisfaction of both ETC and SULPHCO prior to the
commencement of Phase 2.
3.8 EXCLUSIVITY. Subject to Section 3.5, during Phase 1 and for six (6)
months thereafter, but in no event less than one year or greater than three (3)
years (the "Exclusivity Period"), SULPHCO will not enter into any arrangement
with any Third Party, other than any government not-for-profit agency or
academic institution, to license the SULPHCO Technology or otherwise identify
potential processes within the Field of Collaboration. Any such effort by
SULPHCO to arrange with any Third Party to license the SULPHCO Technology or
otherwise identify potential processes within the Field of Collaboration will be
done, if at all, jointly with ETC. The Exclusivity Period may be extended upon
mutual written agreement of the parties.
3.9 LIMITATIONS ON THE COLLABORATION. Except as specifically provided
herein, all activities of the parties outside of the Field of Collaboration are
outside of the scope of this Agreement, and nothing herein is intended to limit
SULPHCO or its Affiliates from using the SULPHCO Technology for any purpose
outside of the Field of Collaboration or to limit ETC or its Affiliates from
using its technology for any purpose outside of the Field of Collaboration.
ARTICLE 4
PAYMENT OBLIGATIONS
4.1 COSTS AND EXPENSES. Each party shall bear its own expenses and
costs associated with work conducted hereunder. Subject to the satisfaction of
the requirements of Article 3 of this Agreement, each party shall be solely
responsible for determining what costs and expenses shall be incurred by it and
at what point no further costs or expenses shall be incurred.
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4.2 PAYMENTS AND REIMBURSEMENTS. Neither party shall have any
obligation to make payments to the other, or reimburse the other for costs or
expenses incurred in the performance of its obligations under this Agreement.
ARTICLE 5
OWNERSHIP OF INTELLECTUAL PROPERTY
5.1 SULPHCO TECHNOLOGY. SULPHCO will own all right, title and interest
in and to all inventions, discoveries, improvements and developments, whether or
not patentable, made by employees or agents of either party or their Affiliates
or jointly by any of them in the course of the Collaboration directed
specifically to the SULPHCO Technology (the "Technology Inventions"), and ETC
hereby assigns to SULPHCO all right, title and interest of ETC and its
Affiliates to such Technology Inventions. SULPHCO will determine, in its sole
discretion, which, if any, of such Technology Inventions will be the subject of
patent filings and which, if any, will be maintained as trade secrets or
dedicated to the public. SULPHCO will be responsible, at its own expense, for
the filing, prosecution, maintenance and defense of all patent applications and
patents claiming the SULPHCO Technology or any Technology Inventions. ETC agrees
to cooperate reasonably in the preparation, filing, prosecution, maintenance and
defense of all patent applications and patents claiming the SULPHCO Technology
or any Technology Inventions; including, when requested by SULPHCO, the use of
its best efforts to promptly obtain assignments to SULPHCO of all such patent
applications directed to Technology Inventions from all inventors thereof who
are employees of agents of ETC and/or its Affiliates. SULPHCO's rights, title
and interest in all inventions, discoveries, improvements and developments set
forth in this Section 5.1 shall be subject to the following exceptions and
conditions:
(a) If SULPHCO's Contract Representative decides not to make
any patent filing with respect to any Technology Inventions and wishes to
maintain any such Technology Inventions as a trade secret or dedicate it to the
public and ETC's Contract Representative wishes to file a patent application
claiming such Technology Inventions or any use of such Technology Inventions
outside the Field of Application, then the conflict of interests will be subject
to resolution in accordance with Article 9.
(b) If SULPHCO decides to abandon any patent application or
patent claiming any Technology Inventions or any use of such Technology
Inventions outside the Field of Application, it will use reasonable efforts to
promptly notify ETC. Upon receipt of such notice ETC may, by written notice to
SULPHCO, inform SULPHCO that ETC desires to prosecute, maintain and defend such
patent application or patent, and, upon such notice, the conflict of interests
will be subject to resolution in accordance with Article 9.
(c) If it is determined pursuant to Article 9 that ETC shall
have the right to file, prosecute, maintain and defend any such patent
application or patent pursuant to Paragraph 5.1 (a) or 5.1 (b) above, then all
costs and expenses associated with such patent application or patent will
thereafter be borne solely by ETC, and SULPHCO will reasonably cooperate with
ETC in this regard and promptly release or assign to ETC all right, title and
interest in any such patent application or patent; provided, however, that in
the event of such release or assignment SULPHCO shall retain the exclusive
irrevocable right to license and sublicense others under the claims of any
patent application or patent within such Technology Inventions to the extent
that such claims cover the use within the Field of Application.
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5.2 OTHER RELATED INVENTIONS. All inventions, discoveries, improvements
and developments, whether or not patentable, made by employees or agents of
either party in the course of the Collaboration, other than those described in
Section 5.1, which are directed to Other Related Technology (the "Other Related
Inventions"), will be owned by such party. That party will determine, in its
sole discretion, which, if any, of such Other Related Inventions will be the
subject of patent filings and which, if any, will be maintained as trade secrets
or dedicated to the public. That party will be responsible, at its own expense,
for the filing, prosecution and maintenance of all patent applications and
patents claiming such Other Related Inventions. The other party agrees to
cooperate reasonably in the preparation, filing, prosecution and maintenance of
all patent applications and patents claiming such Other Related Inventions. In
the event Other Related Inventions are jointly made by the parties, such joint
inventions will be owned by the parties jointly, and the parties will share
equally in the cost and responsibility for filing, prosecution and maintenance
of all patent applications and patents claiming such joint Other Related
Inventions. The parties' respective rights, title and interest in jointly owned
Other Inventions shall be subject to the following exceptions and conditions:
(a) If a party's Contract Representative decides not to make
any patent filing with respect to any jointly owned Other Related Inventions and
wishes to maintain any such Other Related Inventions as a trade secret or
dedicate it to the public and the other party's Contract Representative wishes
to file a patent application claiming such jointly owned Other Related
Inventions or any use of such jointly Other Related Inventions, that party shall
have the right to do so at its own expense; however, the other party's rights
and other attributes of joint ownership shall be maintained.
(b) If a party decides to abandon any patent application or
patent claiming any jointly owned Other Related Inventions or any use of such
jointly owned Other Related Inventions, it will promptly notify the other party.
Upon receipt of such notice, the other party may elect to prosecute, maintain
and defend such patent application or patent at its own expense; however, the
other party's rights and other attributes of joint ownership shall be
maintained.
The rights of the parties to use and license Other Related Technology and Other
Related Inventions will be established in the License Agreement as provided in
Section 3.7 above. In the event the parties do not establish the License
Agreement during the term of this Agreement, SULPHCO shall have an irrevocable
worldwide royalty-free license and sublicensing right under Other Related
Technology and any patents owned by ETC based on Other Related Inventions,
without the obligation to account to ETC, for all uses and applications, and ETC
shall have an irrevocable worldwide royalty-free license and sublicensing right
under any Other Related Technology and any patents owned by SULPHCO based on
Other Related Inventions, without the obligation to account to SULPHCO, for all
uses and applications. Each party shall treat the Other Related Technology of
the other party with the same degree of protection with regard to use and
disclosure as it treats its own technology of similar character.
5.3 OTHER INVENTIONS. All inventions, discoveries, improvements and
developments, whether or not patentable, made by employees or agents of either
party in the course of the Collaboration, other than those described in Section
5.1 and Section 5.2, which are directed to Other Technology (the "Other
Inventions"), will be owned by such party. That party will determine, in its
sole discretion, which, if any, of such Other Related Inventions will be the
subject of patent filings and which, if any, will be maintained as trade secrets
or dedicated to the public. Neither party shall have any license or other rights
to use, or disclose the other party's Other Technology or Other Inventions.
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ARTICLE 6
CONFIDENTIALITY
During the term of this Agreement and for a period of 10 years
thereafter, each party will not disclose any Confidential Information of the
other party to any Third Party or use any such Confidential Information for any
purpose, except (a) as expressly authorized by this Agreement, (b) as required
by law, rule, regulation or court order (provided that the disclosing party will
use commercially reasonable efforts to obtain confidential treatment of any such
information required to be disclosed), or (c) to its Affiliates, employees,
agents, consultants, permitted sublicensees and other representatives to
accomplish the purposes of this Agreement, so long as such persons are under an
obligation to confidentiality no less stringent than as set forth herein. Each
party may use such Confidential Information only to the extent required to
accomplish the purposes of this Agreement. Each party will use at least the same
standard of care as it uses to protect its own Confidential Information to
ensure that its Affiliates, employees, agents, consultants, permitted
sublicensees and other representatives do not disclose or make any unauthorized
use of the other party's Confidential Information. Each party will promptly
notify the other party upon discovery of any unauthorized use or disclosure of
the other party's Confidential Information.
Information that SULPHCO is required by the securities laws to be disclosed is
intended to be an exception to confidentiality within subsection (b) of the
previous paragraph of this Agreement. Should SulphCo need to disclose
information defined in these provisions, such disclosure shall only be made
after notifying ETC and affording ETC a reasonable opportunity to take
appropriate steps to protect the confidentiality of such information.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 CORPORATE POWER. Each party hereby represents and warrants that
such party is duly organized and validly existing under the laws of the place of
its organization and has full power and authority to enter into this Agreement
and to carry out the provisions hereof.
7.2 DUE AUTHORIZATION. Each party hereby represents and warrants that
such party is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder.
7.3 BINDING AGREEMENT. Each party hereby represents and warrants that
this Agreement is a legal and valid obligation binding upon it and is
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it.
7.4 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR
PATENT VALIDITY. NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED,
CONCERNING THE SUCCESS OF THE COLLABORATION OR THE COMMERCIAL UTILITY OF ANY
PROCESS WHICH RESULTS FROM THE COLLABORATION.
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7.5 LIMITATION OF LIABILITY. NEITHER PARTY WILL BE ENTITLED TO RECOVER
FROM THE OTHER PARTY ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL
OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT.
7.6 MUTUAL INDEMNIFICATION. Each party (the "Indemnifying Party")
hereby agrees to save, defend, indemnify and hold harmless the other party and
its officers, directors, employees, consultants and agents (the "Indemnified
Parties") from and against any and all losses, damages, liabilities, expenses
and costs, including reasonable legal expense and attorneys' fees ("Losses"), to
which any Indemnified Party may become subject as a result of (a) any claim,
demand, action or other proceeding by any Third Party to the extent such Losses
arise out of or result from the Indemnifying Party's performance of its
activities under this Agreement or the development, manufacture, use, handling,
storage, sale or other disposition by the Indemnifying Party or any Affiliate or
permitted sublicensee of any product or service resulting from the
Collaboration, or (b) personal injury or property damage suffered by an
Indemnified Party that results from the acts or omissions of the Indemnifying
Party or its officers, directors, employees, consultants or agents in the course
of performance of activities under this Agreement, whether or not such
Indemnified Party is found to be concurrently negligent, except in the case and
to the extent such Losses result from the sole negligence or willful misconduct
of the Indemnified Party. In the event either party seeks indemnification under
this Section 7.6, it will inform the Indemnifying Party of a claim as soon as
reasonably practicable after it receives notice of the claim, will permit the
Indemnifying Party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary consideration), and
will cooperate as requested (at the expense of the Indemnifying Party) in the
defense of the claim. In no event will any Indemnified Party settle any such
claim, demand, action or other proceeding without the Indemnifying Party's prior
written consent. Notwithstanding the foregoing, in the event that the parties
are held jointly and severally liable for Losses resulting from the matters
described in clause (a) of this Section 7.6, the parties shall cooperate in the
defense of all litigation relating thereto and use all reasonable efforts to
resolve the relative responsibility of each other to such Third Party amicably
by negotiation with each other. In the event that the parties are unable to
resolve such relative responsibility in accordance with the preceding sentence,
such matter shall be subject to resolution in accordance with Article 9.
ARTICLE 8
TERM AND TERMINATION
8.1 TERM. This Agreement will commence as of the Effective Date and
will continue until the end of Phase 2, but in no event later than a date five
years after the Effective Date (or such later date as agreed by both Parties),
unless terminated earlier as provided herein.
8.2 TERMINATION FOR CAUSE. Either party may terminate this Agreement
and the Collaboration prior to the expiration of the term of this Agreement upon
the occurrence of any of the following:
(a) Upon or after the bankruptcy, insolvency, dissolution or
winding up of the other party (other than dissolution or winding up for the
purposes of reconstruction or amalgamation); or
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(b) Upon or after the breach of any material provision of this
Agreement by the other party if the breaching party has not cured such breach
within 60 days after written notice thereof by the non-breaching party.
8.3 TERMINATION OF COLLABORATION. This Agreement will terminate upon
termination in accordance with Section 3.5.
8.4 EFFECT OF TERMINATION.
(a) Within 30 days following the expiration or termination of
this Agreement, each party will return to the other party, or destroy, upon the
written request of the other party, any and all Confidential Information of the
other party in its possession, with the exception of a single copy to be
retained by the receiving party in a confidential file for the purpose of
administering its obligations under this Agreement.
(b) Expiration or termination of this Agreement will not
relieve the parties of any obligation accruing prior to such expiration or
termination. The provisions of Sections 7.4, 7.5, 7.6, 8.4 and 8.5 and Articles
1, 5, 6, 9 and 10 will survive any termination or expiration of this Agreement.
If the Agreement is terminated under Section 8.3, the provisions of Section 3.5,
as applicable, will also survive such termination.
8.5 RIGHTS IN BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by ETC or SULPHCO are, and will otherwise be deemed
to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
right to "intellectual property" as defined under Section 101 of the U.S.
Bankruptcy Code. The parties, as licensees of such rights under this Agreement,
will retain and may fully exercise all of their rights and elections under the
U.S. Bankruptcy Code. The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against either party under the
U.S. Bankruptcy Code, the party hereto which is not a party to such proceeding
will be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in their possession, will be
promptly delivered to them (i) upon any such commencement of a bankruptcy
proceeding upon their written request therefor, unless the party subject to such
proceeding elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, following the rejection of
this Agreement by or on behalf of the party subject to such proceeding upon
written request therefor by the non-subject party.
ARTICLE 9
DISPUTE RESOLUTION
If any dispute arises between the parties relating to the
interpretation, breach or performance of this Agreement or the grounds for the
termination thereof, and the parties cannot resolve the dispute within 30 days
of a written request by either party to the other party, the parties agree to
hold a meeting, attended by the Chief Executive Officer or President or an
individual with equivalent decision-making authority of each party, to attempt
in good faith to negotiate a resolution of the dispute prior to pursuing other
available remedies. If, within 60 days after such written request, the parties
have not succeeded in negotiating a resolution of the dispute, such dispute will
be submitted to final and binding arbitration under the then current commercial
rules and regulations of the American Arbitration Association ("AAA") relating
to voluntary arbitrations. The arbitration proceedings will be held in San
Ramon, California. The arbitration will be conducted by one arbitrator who is
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knowledgeable in the subject matter at issue in the dispute and who will be
selected by mutual agreement of the parties or, failing such agreement, will be
selected in accordance with the AAA rules. In such arbitration, each party will
submit in writing to the arbitrator and the other party its detailed proposed
resolution of dispute (and such clarifications as the arbitrator may request).
In making its decision, the arbitrator will be required to choose, without
material modification, one of the two resolutions proposed by the parties,
together with an award of reasonable attorneys' fees to the prevailing party, as
appropriate. The arbitrator will have no authority to award punitive, indirect,
incidental or consequential damages. The arbitrator will prepare and deliver to
the parties a written, reasoned opinion conferring its decision. The decision of
the arbitrator will be final and binding on the parties. Judgment on the award
so rendered may be entered in any court having competent jurisdiction thereof.
Each party will bear its own costs and will share equally the arbitrator's fees
and expenses.
ARTICLE 10
MISCELLANEOUS
10.1 ASSIGNMENT. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by either party without the prior written consent of the other party
(which consent will not be unreasonably withheld); PROVIDED, HOWEVER, that
either party may assign this Agreement and its rights and obligations hereunder
without the other party's consent (a) in connection with the transfer or sale of
all or substantially all of the business of such party to which this Agreement
relates to another party, whether by merger, sale of stock, sale of assets or
otherwise, or (b) to any Affiliate. In the event of such transaction, however,
intellectual property rights (including trade secrets and know-how) of a party
to such transaction other than one of the parties to this Agreement, will not be
included in any technology licensed hereunder. Notwithstanding the foregoing,
any such assignment to an Affiliate will not relieve the assigning party of its
responsibilities for performance of its obligations under this Agreement. The
rights and obligations of the parties under this Agreement will be binding upon
and inure to the benefit of the successors and permitted assigns of the parties.
Any assignment not in accordance with this Agreement will be void.
10.2 FORCE MAJEURE. Neither party will be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement
(other than non-payment) when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party, including, but not
limited to, fire, floods, embargoes, war, acts of war (whether war be declared
or not), insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party.
10.3 GOVERNING LAW. This Agreement will be governed by, and construed
and enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles.
10.4 NOTICES. All notices and other communications provided for
hereunder will be in English in writing and will be mailed by first-class,
registered or certified mail, postage paid, or delivered personally, by
overnight delivery service or by facsimile, with confirmation of receipt,
addressed as follows:
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IF TO SULPHCO: SULPHCO INC.
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
IF TO ETC: CHEVRONTEXACO ENERGY
TECHNOLOGY COMPANY
Attention: Technology Marketing
000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000-0000
Either party may, by like notice, specify or change an address to which
notices and communications will thereafter be sent. Notices sent by facsimile
will be effective upon confirmation of receipt, notices sent by mail or
overnight delivery service will be effective upon receipt, and notices given
personally will be effective when delivered.
10.5 WAIVER. Except as specifically provided for herein, the waiver
from time to time by either party of any right or failure to exercise any remedy
will not operate or be construed as a continuing waiver of the same right or
remedy or of any other of such party's rights or remedies provided under this
Agreement.
10.6 SEVERABILITY. In case any provision of this Agreement will be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not in any way be affected or impaired thereby.
10.7 INDEPENDENT CONTRACTORS. It is expressly agreed that ETC and
SULPHCO will be independent contractors and that the relationship between the
two parties will not constitute a partnership, joint venture or agency of any
kind. Neither ETC nor SULPHCO will have the authority to make any statements,
representations or commitments of any kind, or to take any action, which will be
binding on the other party, without the prior written consent of the other
party.
10.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Secrecy/Confidentiality Agreement, executed October 7/9, 2002; the Laboratory
Test Agreement, executed November 14, 2002; and the Refinery Test Agreement,
executed by SULPHCO on May 9, 2003, sets forth all of the agreements and
understandings between the parties hereto with respect to the subject matter
hereof and supersedes and terminates all prior agreements and understandings
between the parties. There are no agreements or understandings, either oral or
written, between the parties other than as set forth herein. No subsequent
amendment, modification or addition to this Agreement will be binding upon the
parties hereto unless reduced to writing and signed by the respective authorized
officers of the parties.
10.9 HEADINGS. The captions contained in this Agreement are not a part
of this Agreement, but are merely guides or labels to assist in locating and
reading the several articles hereof.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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10.11 DISCLOSURE OF AGREEMENT AND TRADEMARKS. Unless required by law,
neither party shall unilaterally disclose or otherwise publicize the existence
of or the terms of this Agreement without the express written consent of the
other party. If required by law, such disclosure shall be made only after an
opportunity for the other party to thoroughly review the nature of the legal
requirement and the scope and content of the proposed disclosure. Neither party
shall, without the prior informed consent of the other, make any use of any
trade name or trademark held by the other party. The parties shall use their
best efforts to develop a joint public announcement of their collaboration as
established by the execution of this Agreement which shall be the sole
announcement made by either party of their collaboration to the public or to
governmental authorities or agencies.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first set forth above.
SULPHCO, INC. CHEVRONTEXACO ENERGY
TECHNOLOGY COMPANY,
AN OPERATING DIVISION OF
CHEVRON U.S.A. INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxx Xxxxxxxx
------------------------ -----------------------------
Title: CEO Title: G.M. PROCESS TECHNOLOGY
----------------------- ----------------------------
Date: Aug 6, 2004 Date: Aug 6, 2004
------------------------ -----------------------------
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