Syntroleum Corporation
Site License Agreement
CONFIDENTIAL INFORMATION:
Use and distribution of this document is limited to the terms and conditions
of the Confidentiality Agreement dated January 5, 1998 between Syntroleum
Corporation and Syntroleum/Sweetwater Company, L.L.C.
SITE LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and entered into effective as of the 12th
day of January, 1998, by and between Syntroleum Corporation, an Oklahoma
corporation ("Licensor"), and Syntroleum/Sweetwater Company, L.L.C., a
Delaware limited liability company ("Licensee").
RECITALS
A. WHEREAS, Licensor has developed and owns certain patent rights and
technical information relating to the Conversion Process; and
B. WHEREAS, Licensee desires to enter into a non-exclusive limited license
with Licensor to use Licensor Patent Rights and Licensor Technical Information
in practicing the Conversion Process at the Licensed Plant to make and sell
Products.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, the Parties agree as follows:
1. DEFINITIONS
The following terms (whether or not underscored) when used in this
Agreement, including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof).
1.01 "AFFILIATE" means, with respect to each Party, any person in which the
Party or its parent company(ies) (one or more parent companies in an upward
series) shall at the time in question directly or indirectly own a fifty percent
(50%) or more interest in such person. It is understood that: (i) a Party or
its parent company(ies) directly owns a fifty percent (50%) or more interest in
a person if that Party or its parent company(ies)
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individually or collectively hold(s) shares carrying fifty percent (50%) or
more of the voting power to elect directors or other managers of such person,
and (ii) a Party or its parent company(ies) indirectly owns a fifty percent
(50%) or more interest in a person if a series of companies can be specified
beginning with a Party or its parent company(ies), individually or
collectively, and ending with such person so related that each company of the
series, except such person, directly owns a fifty percent (50%) or more
interest in a later company in the series.
1.02 "AGREEMENT" means this Site License Agreement.
1.03 "BARREL" means forty-two (42) gallons of two hundred thirty-one (231)
cubic inches each, measured at sixty degrees Fahrenheit (60DEG.F) and one (1)
atmosphere pressure.
1.04 "CHAIN-LIMITING CATALYST" means a type of catalyst for use in a
Xxxxxxx-Tropsch Reaction the primary products of which are predominately
hydrocarbon molecules of twenty (20) or fewer carbon atoms which remain
liquid at ambient temperature and pressure.
1.05 "CONFIDENTIAL INFORMATION" means information of Licensor or Licensee
disclosed to the other Party under this Agreement, including any formula,
pattern, compilation, program, apparatus, device, drawing, schematic, method,
technique, know-how, process or pilot plant data, and other non-public
information such as business plans or other technology that: (a) derives
economic value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy,
which information shall be disclosed in writing and labeled as "Confidential"
or the equivalent, or if disclosed verbally or in other non-written form,
identified as such at the time of disclosure and thereafter summarized in
writing by the disclosing Party within thirty (30) days of such initial
disclosure. Confidential Information includes, without limit, Licensor
Catalyst Information, Licensor Technical Information, and Licensee Technical
Information.
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1.06 "CONFIDENTIALITY AGREEMENT" means the agreement between Licensee and
Licensor, dated January 5, 1998.
1.07 "CONTRACTOR" shall mean any engineering company approved by Licensor,
to perform the detailed engineering, construction or construction management
in connection with the Licensed Plant from a list of approved companies.
Licensor may, from time to time, modify the list of companies.
1.08 "CONVERSION PROCESS" means any process for the conversion of normally
gaseous hydrocarbons into a mixture of hydrocarbons which may be a
combination of normally gaseous, liquid, or solid hydrocarbons at ambient
temperatures and pressures and comprised of (a) autothermal reforming of a
feed stream consisting substantially of gaseous hydrocarbons in the presence
of air, or oxygen-enriched air to create an intermediate feed stream
containing carbon monoxide and molecular hydrogen, and (b) reacting the
intermediate stream in the presence of a Xxxxxxx-Tropsch catalyst to produce
a product stream consisting of any combination of gaseous, liquid or solid
hydrocarbons at ambient temperature and pressure. The Conversion Process
includes all associated internal processes and technologies such as heat
integration, separation, or the recycle, use, or consumption of hydrocarbons
or other products. The Conversion Process does not include any technology
related to (i) pre-treatment of the natural gas feedstock or (ii)
post-processing the Xxxxxxx-Tropsch product stream for a purpose other than
that defined above.
1.09 "EFFECTIVE DATE" means the date set forth in the first paragraph of
this Agreement.
1.10 "XXXXXXX-TROPSCH CATALYST" means any catalyst for use in a
Xxxxxxx-Tropsch Reaction including, but not limited to, Chain Limiting
Catalyst and High Alpha Catalyst.
1.11 "XXXXXXX-TROPSCH REACTION" means the catalytic reaction of carbon
monoxide and hydrogen, the primary products of which are hydrocarbons.
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1.12 "HIGH ALPHA CATALYST" means a type of Xxxxxxx-Tropsch Catalyst, whose
alpha number, as calculated by the Xxxxxx-Xxxxx distribution equation, is
0.85 or higher.
1.13 "INVENTIONS OR IMPROVEMENTS" means any process, formula, composition,
device, catalyst (including both autothermal reforming catalysts and
Xxxxxxx-Tropsch Catalysts), apparatus, technology, know-how, operating
technique, improvement, modification, or enhancement relating to the use,
operation, or commercialization of the Conversion Process, which is
discovered, made, designed, developed or acquired by Licensee, solely or with
others, since the date of the Confidentiality Agreement, or used in a
Licensed Plant, in each instance whether patentable or not, including,
without limitation, patents, copyrights, and Confidential Information and
further including the full scope and content of the intellectual and tangible
property included therein and produced therefrom, e.g., drawings, prints,
chemical formulae, prototypes, data, computer programs and software, and the
like. Inventions or Improvements shall not include any information relating
to methods of manufacturing catalysts for use in the Conversion Process.
1.14 "LICENSE FEE" means the fees paid by Licensee to Licensor under this
Agreement, as consideration for granting this Site License Agreement to use
Licensor Technology at the Licensed Plant, as calculated in accordance with
SECTION 5.01 of this Agreement, and does not include fees related to the
purchase of the associated Process Design Package for the Licensed Plant, any
catalyst or any catalyst markup.
1.15 "LICENSED PLANT" means the plant with an initial nominal daily design
capacity of 8,000 Barrels of Synthetic Product per day licensed under this
Agreement to use Licensor Technology to practice the Conversion Process to
produce Products located in Section 16, T18N, R109W, Sweetwater County,
Wyoming.
1.16 "LICENSEE PATENT RIGHTS" means all rights with respect to patents and
patent applications of all relevant countries to the extent that the claims
cover features or aspects of Inventions or Improvements practiced in a
Licensed Plant, in each case to the extent that,
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and subject to the terms and conditions under which, Licensee has the right
to grant licenses, immunities or licensing rights without having to make
payment to others.
1.17 "LICENSEE TECHNICAL INFORMATION" means all unpatented Inventions or
Improvements practiced in a Licensed Plant, in each case to the extent that,
and subject to the terms and conditions under which, Licensee has the right
to grant licenses, immunities or licensing rights without having to make
payment to others.
1.18 "LICENSOR CATALYST INFORMATION" means, without limit, information
relating to any catalyst, catalyst formulation, conditioning procedure,
start-up procedure, regeneration procedure, or performance considered to be
proprietary by and to Licensor or acquired by Licensor which is useful in the
practice of the Conversion Process and which has been used commercially or is
ready for commercial use. Licensor Catalyst Information shall not include any
information relating to methods for manufacturing catalysts for use in the
Conversion Process.
1.19 "LICENSOR CATALYST PATENT RIGHTS" means all rights with respect to
patents and patent applications of all relevant countries to the extent that
the claims cover features or aspects of catalysts useable in the Conversion
Process (including, without limitation, autothermal reforming catalysts and
Xxxxxxx-Tropsch Catalysts) and expressly excluding any process operating
techniques or apparatus or methods for manufacturing such catalysts, which
are acquired by Licensor (with right to sublicense) or are based on
inventions conceived by Licensor prior to termination of this Agreement; in
each case to the extent that, and subject to the terms and conditions,
including the obligation to account to and/or make payments to others, under
which Licensor has the right to grant licenses, sublicenses, immunities or
licensing rights.
1.20 "LICENSOR PATENT RIGHTS" means all rights with respect to patents and
patent applications of all relevant countries to the extent that the claims
cover features or aspects of the Conversion Process (including, without
limitation, any operating techniques and apparatus and expressly excluding
Licensor Catalyst Patent Rights) which are acquired by
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Licensor (with right to sublicense) or are based on inventions conceived by
Licensor prior to termination of this Agreement; in each case to the extent
that, and subject to the terms and conditions, including the obligation to
account to and/or make payments to others, Licensor has the right to grant
licenses, sublicenses, immunities or licensing rights.
1.21 "LICENSOR TECHNICAL INFORMATION" means all unpatented information
relating to the Conversion Process (including, without limitation, operating
techniques and apparatus for carrying out the Conversion Process and
expressly excluding Licensor Catalyst Information and Reactor Information)
which (a) either (i) has been commercially used or (ii) is in a stage of
development suitable for commercial use, and (b) has been made or acquired by
Licensor (with right to sublicense) prior to the termination of this
Agreement; in each case to the extent that, and subject to, the terms and
conditions, including the obligation to account to and/or make payments to
others, under which Licensor has the right to disclose and grant rights to
others.
1.22 "LICENSOR TECHNOLOGY" includes Licensor Technical Information and
Licensor Patent Rights related to the practice of the Conversion Process and
Licensor Catalyst Information and Licensor Catalyst Patent Rights related to
the use of Licensor catalysts in the practice of the Conversion Process but
expressly excluding the right to make, have made, or sell Licensor Catalysts.
1.23 "PARTICIPATING INTEREST" means at least a ten percent (10%) working,
net profits, equity, or other economic interest (an economic interest shall
include an interest in a production sharing contract where the parties to
such contract construct the Licensed Plant), owned directly or indirectly
through another entity, in the Licensed Plant or Person owning or controlling
the Licensed Plant, but excluding a contract for operation of the Licensed
Plant.
1.24 "PARTIES" means Licensor and Licensee.
1.25 "PARTY" means Licensor or Licensee.
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1.26 "PERSON" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency
or any other entity, other than the Parties.
1.27 "PROCESS DESIGN PACKAGE" means a compilation of text, figures,
drawings and documentation, relating to the design and construction of the
Licensed Plant, in the form set forth in EXHIBIT A to this Agreement and
expressly excluding Reactor Information.
1.28 "PRODUCTS" means hydrocarbon products manufactured from Synthetic
Product produced at the Licensed Plant including, without limitation, fuels,
fuel blending stocks (including diesel, kerosene, naphtha and gasoline), base
oils which can be made into, or blended with other base oils to be made into,
without limit (a) automotive lubricating oils such as PCMO, HDD, transmission
and hydraulic fluids, and gear oils; (b) industrial lubricants such as
metalworking lubricants, process oils, white oils, agricultural spray oils,
de-foamers, cutting and quenching oils, and rubber processing oils; (c)
greases; or (d) drilling fluids; and any other products, including
electricity, agreed to by the Parties. Hydrocarbons produced and consumed as
fuel at the Licensed Plant are Products.
1.29 "REACTOR INFORMATION" means all information, including but not limited
to data, processes, plans, specifications, flow sheets, designs, and
drawings, relating to the internal design or functions, including, without
limitation, tube count, tube size and configuration and catalyst volume,
relating to any Licensor autothermal reformer or Xxxxxxx-Tropsch reactor,
which, at any time during the term of this Agreement, Licensor discloses to
Licensee.
1.30 "REACTOR VENDOR" shall mean those fabricators approved by Licensor to
perform the fabrication and/or maintenance and repair of autothermal reformer
or Xxxxxxx-Tropsch reactors for installation and use in the Licensed Plant.
Licensor may, from time to time, add or remove any vendor from being a
Reactor Vendor.
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1.31 "START-UP DATE" means the first full calendar day following a five
(5) day period, after completion of catalyst pre-treatment and other
preliminary operations, during which the applicable Licensed Plant produces
quantities of Synthetic Product in an amount equal to at least 75% of the
per-day design production capacity of such Licensed Plant averaged over such
5 day period.
1.32 "SYNTHETIC PRODUCT" means those hydrocarbons, having a chemical
composition substantially consisting of molecules with five (5) or more
carbon atoms each, produced using Licensor Technology in the practice of the
Conversion Process at the Licensed Plant.
2. LICENSOR GRANTS TO LICENSEE
2.01 Subject to the terms and conditions of this Agreement, Licensor grants
to Licensee a limited, non-exclusive, non-transferable (except as provided in
ARTICLE 8) right and license to use Licensor Patent Rights and Licensor
Technical Information to design, construct, operate and maintain (including
modify or replace) the Licensed Plant to practice the Conversion Process to
manufacture Synthetic Product solely for the purpose of producing Products
and using and selling such Products anywhere in the world.
2.02 Subject to the terms and conditions of this Agreement, Licensor grants
to Licensee a limited, non-exclusive, non-transferable (except as provided in
ARTICLE 8) right to purchase from Reactor Vendors the appropriate
Xxxxxxx-Tropsch and autothermal reforming reactors for use in the practice of
the Conversion Process at the Licensed Plant. Licensee shall have no right
to make, have made, or sell any reactor based on Reactor Information except
as expressly provided in this SECTION 2.02.
2.03 Subject to the terms and conditions of this Agreement, Licensor grants
to Licensee (a) the right to purchase from Licensor the appropriate
Xxxxxxx-Tropsch Catalyst and, from either Licensor or a catalyst vendor
designated by Licensor, the appropriate autothermal reforming catalyst for
use in the practice of the Conversion Process at the Licensed Plant to
manufacture Synthetic Product solely for the purpose of producing,
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using, and selling Products anywhere in the world and (b) a limited
non-exclusive, non-transferable (except as provided in ARTICLE 8) right and
license under Licensor Catalyst Patent Rights and Licensor Catalyst
Information to use such catalysts in the practice of the Conversion Process
at the Licensed Plant to manufacture Synthetic Product solely for the purpose
of producing Products and using and selling such Products anywhere in the
world. The purchase price for any catalyst purchased by Licensee from
Licensor shall be equal to the lowest of (a) Licensor's cost to produce or
have produced such catalysts, plus a markup of twenty five percent (25%), or
(b) if, during the twelve (12) month period prior to a catalyst purchase by
Licensee, the same catalyst (at comparable quantities) was sold by Licensor
to a third party at a markup less than twenty five percent (25%), Licensee
shall be entitled to the lower markup for its current catalyst purchase.
Licensor will, no more than once per year, provide Licensee reasonable access
to the relevant books of Licensor to verify the lowest markup for such
catalyst. Licensee shall have no rights to make, have made, or sell any
Licensor Xxxxxxx-Tropsch Catalyst or autothermal reforming catalyst, which is
proprietary to Licensor. Beyond the initial catalyst fill for the Licensed
Plant, Licensee will have the right to buy replacement catalyst from other
catalyst suppliers. If Licensor specifies in the Process Design Package an
autothermal reforming catalyst commercially available from a third party,
Licensee shall have the right to purchase such catalyst directly from a third
party.
2.04 In the event Licensor for any reason is unable to supply Licensee with
such amounts of Xxxxxxx-Tropsch Catalyst as may be reasonably necessary for
the operation of the Licensed Plant, Licensor shall provide to one or more
catalyst vendors designated by Licensor the necessary catalyst recipe,
together with a non-exclusive limited license to make and sell such
Xxxxxxx-Tropsch Catalyst to Licensee for use in the Licensed Plant, and
Licensee shall have the right to purchase such Xxxxxxx-Tropsch Catalyst from
such vendor for use in the Licensed Plant on the same terms (including price)
as set forth in SECTION 2.03.
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3. TECHNICAL ASSISTANCE
3.01 Licensee shall purchase and Licensor agrees to furnish to Licensee, or
to a contractor designated by Licensee, a Process Design Package for the
Licensed Plant according to the terms specified in SECTION 5.02 of this
Agreement. At the request of Licensee, Licensor agrees to enter into a
Technical Services Agreement, attached as EXHIBIT D, to provide technical
support to Licensee related to Licensor Technology.
3.02 Reactor Information necessary for the Licensed Plant shall be excluded
from the Process Design Package. However, those elements of Reactor
Information which are necessary to fabricate such reactors will be provided
by Licensor directly to the Reactor Vendors selected by Licensee to
manufacture the autothermal reformer and Xxxxxxx-Tropsch reactors from
Licensor's then current list of Reactor Vendors. Licensor may, from time to
time, add or remove any Reactor Vendor.
3.03 Except as may be set forth in the Process Design Package, the
obligations of Licensor under this Agreement do not include the performing of
any basic or detailed design, engineering, training, consulting, start-up,
operating or maintenance services with respect to the Licensed Plant.
Licensor's responsibilities for any such services in the design, construction
and operation (including maintenance) of the Licensed Plant shall be as set
forth in one or more separate written engineering services agreement(s) (if
any) between Licensor and Licensee specifically applicable to the Licensed
Plant.
3.04 Licensor agrees to disclose to Licensee, upon reasonable request but
at least once a year, (a) additions to Licensor Technology and (b)
improvements or inventions developed by Licensor or its Affiliates relating
to Licensor Technology which have been commercially used or which Licensor
determines are in a stage of development suitable for commercial use.
Licensor shall permit Licensee to reasonably inspect, at mutually convenient
times, the operating procedures, process conditions, material balances,
energy consumption, catalyst performance, and analyses of internal streams
and/or Synthetic Product at Licensor's pilot plant which are applicable to
such improvements or inventions.
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3.05 Licensee shall provide Licensor 90 days advance written notice of the
anticipated Start-up Date. Licensee agrees to permit Licensor and/or its
representatives access to the Licensed Plant at reasonable and convenient
times for inspection and, if requested by Licensee, training, by
representatives of Licensor. Licensor shall have the right to charge
Licensee a reasonable fee for any training as may be agreed with the Licensee
on a case by case basis.
4. LICENSEE GRANTS TO LICENSOR
4.01 Licensor may, no more than one (1) time per year, request and Licensee
agrees to disclose to Licensor in writing any Inventions or Improvements
related to the Conversion Process provided that information disclosed to
Licensee by third parties under a written confidentiality agreement, without
the Licensee acquiring the right to use or otherwise exploit such information
in any way, need not be disclosed to Licensor pursuant to this SECTION 4.01
if such disclosure would result in a violation of such confidentiality
agreement.
4.02 Subject to the terms and conditions of this Agreement, Licensee grants
to Licensor a limited, non-exclusive, irrevocable, royalty free, worldwide
(i) right and license under Licensee Patent Rights and (ii) right and license
to use Licensee Technical Information for the design, construction, operation
and maintenance (including modify, expand and replace) of plants practicing
the Conversion Process, together with the right to grant corresponding
sublicenses of the Licensee Patent Rights and the use of Licensee Technical
Information to other licensees of Licensor Technology for use at licensed
plants practicing the Conversion Process, provided that any such licensee to
whom a sublicense is to be granted shall have granted reciprocal rights to
Licensor to use and grant sublicenses under such licensee's patent rights and
technical information for the benefit of Licensee. Licensee shall have the
right to charge Licensor a reasonable fee for any training with respect to
Licensee Patent Rights and Licensee Technical Information as may be agreed
with the Licensor on a case by case basis.
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4.03 Should Licensee, during the term of this Agreement, make any
patentable Inventions or Improvements, Licensee may, at its sole discretion,
file patent applications with respect to such Inventions or Improvements in
its own name and at its own expense, and take such other steps as are
necessary, in the sole judgment of Licensee, to protect its rights in such
Inventions or Improvements. In the event Licensee declines to file any patent
application with respect to any Inventions or Improvements, it shall promptly
notify Licensor in a timely manner to allow Licensor, at its sole discretion,
to file such patent application at its sole expense, and to take such other
steps as are necessary, in its judgment, to protect the Parties' rights in
such Inventions or Improvements, subject to Licensee's obligation to account
to third parties therefore and provided that title to such Inventions or
Improvements shall remain in Licensee.
4.04 Licensor and Licensee each agree that they will take all actions and
execute all documents and shall cause their employees, agents and contractors
to take all actions and execute all documents as are necessary or appropriate
to carry out the provisions of this ARTICLE 4 or to assist each other in the
preparation, filing and prosecution of patent applications or securing such
protection referenced in this ARTICLE 4 when so requested.
4.05 Licensee shall permit Licensor and/or its representatives to
reasonably inspect, at mutually convenient times, the operating procedures,
process conditions, material balances, energy consumption, catalyst
performance, and analyses of internal streams and/or Synthetic Product which
are applicable to Licensee's Inventions or Improvements used at the Licensed
Plant incorporating such Inventions or Improvements.
4.06 Licensee agrees to provide, from time to time and upon request by
Licensor, samples of Products as they are produced at the Licensed Plant to
verify compliance with this Agreement. Licensor agrees to limit its analysis
of samples of Products to those analyses necessary to determine compliance
with the definition of Products.
5. LICENSE AND OTHER FEES
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5.01 In consideration for the rights granted to Licensee by Licensor under
this Agreement, the Licensee shall pay License Fees for the Licensed Plant
calculated and paid as follows:
(a) For a period of fifteen (15) years from the Start-up Date of
the Licensed Plant, on or before thirty (30) days after the end of each
calendar quarter, Licensee agrees to pay Licensor a quarterly running royalty
fee based on the operation of the Licensed Plant calculated in accordance
with the following formula:
(b) All payments required hereunder shall be made within 30 days of
the end of each calendar quarter and, regardless if a royalty payment is due
or not, shall include a statement showing the details supporting the
calculation of the royalty fees being paid. Licensee shall keep accurate and
complete records of all natural gas feedstock processed (volume and
composition) and all Synthetic Product produced at and either used internally
within or removed from the Licensed Plant to enable verification of
statements and payments rendered to Licensor hereunder. Licensee agrees to
permit Licensor or an independent certified public accountant selected by
Licensor to inspect such records on reasonable notice and at reasonable
intervals during normal business hours to verify the fees paid and payable
under this Agreement. The entire cost of such inspection shall be borne by
Licensor unless the inspection reveals Licensee's statements to be in error
by five percent (5%) or more, in which case such cost shall be borne and paid
by Licensee.
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5.02 In addition to the amounts to be paid by Licensee to Licensor under
SECTION 5.01, Licensee agrees to pay Licensor for the Process Design Package,
a fee equal to the reasonable costs actually incurred by Licensor in
preparing the Process Design Package, plus 10% of the total of such actual
cost. Such fee shall be invoiced by Licensor to Licensee after delivery of a
Process Design Package and payment shall be due within 30 days from receipt
of invoice by Licensee.
5.03 All amounts payable under this Agreement shall be paid by Licensee to
Licensor at Licensor's address specified in SECTION 9.09, or to an account at
a bank specified by Licensor, in dollars of the United States of America.
5.04 In the event Licensee is required to withhold any taxes from amounts
payable to Licensor under this Agreement, Licensee agrees to provide Licensor
at the time of such withholding with a receipt or other evidence reflecting
the deposit of such taxes with the appropriate governmental agency.
6. WARRANTIES AND INDEMNITIES
6.01 Licensor represents and warrants that:
(a) Licensor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Oklahoma, United States of
America, and has full power and authority to enter into and perform its
obligations under this Agreement;
(b) the execution, delivery and performance of this Agreement and
all documents relating hereto by Licensor have been duly and validly
authorized by all requisite corporation action and constitute valid and
binding obligations of Licensor enforceable in accordance with their
respective terms;
(c) Licensor is the sole owner or authorized licensee (with the
right to sublicense) of the Licensor Technology and has the right to grant
the licenses granted in this Agreement; and
(d) As of the Effective Date, Licensor has not granted and is not
engaged in negotiations to grant a license to a Person to the Licensor
Technology to practice the
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Conversion Process to produce Synthetic Product for processing into non-fuel
or non-fuel blending stock Products in North America except negotiations
between Licensor and a Person with respect to the grant by Licensor of such a
license for the construction and operation of a facility to be located in the
state of Alaska.
6.02 Licensee represents and warrants that it is a limited liability
company duly organized, validly existing, and in good standing under the laws
of Delaware and has full power and authority to enter into and perform its
obligations under this Agreement including the right to grant the rights and
licenses as set forth in ARTICLE 4. The execution, delivery and performance
of this Agreement and all documents relating hereto by Licensee have been
duly and validly authorized by all requisite corporate action and constitute
valid and binding obligations of Licensee enforceable in accordance with
their respective terms.
6.03 Except as otherwise expressly set forth in this Agreement or other
written agreement between the Parties, LICENSOR MAKES NO AND HEREBY DISCLAIMS
ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND, INCLUDING
ANY WARRENTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ANY
OTHER WARRANTIES OR REPRESENTATIONS OF ANY KIND TO LICENSEE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OR REPRESENTATION WITH RESPECT TO USE OF
LICENSOR TECHNOLOGY AS AUTHORIZED HEREUNDER.
6.04 EXCEPT FOR UNAUTHORIZED DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION
OR UNAUTHORIZED USE OF PATENT RIGHTS UNDER THIS AGREEMENT, IN NO EVENT SHALL
A PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS OR
SAVINGS, REGARDLESS OF THE FORM OF ACTION GIVING RISE TO SUCH A CLAIM FOR
SUCH DAMAGES, WHETHER IN CONTRACT OR TORT INCLUDING NEGLIGENCE, EVEN IF
LICENSOR OR LICENSEE HAS BEEN ADVISED OF THE POSSIBILITY OF
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SUCH DAMAGES. IN THE EVENT A PARTY IS FOUND LIABLE, DESPITE THE ABOVE
LANGUAGE, TO THE OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, OR EXEMPLARY DAMAGES THEN THE MAXIMUM LIMIT OF SUCH
DAMAGES IS AGREED TO BE $5,000.
6.05 A Party will promptly advise the other Party in writing of any claim
made or lawsuit alleging infringement of any patent or copyright or
misappropriation of Confidential Information based on the design,
construction and/or operation of the Licensed Plant (including the Synthetic
Product or Products produced from the Licensed Plant).
(a) If Licensee has made a modification to the Process Design
Package, with respect to the Licensed Plant, and infringement or
misappropriation by such Licensed Plant would not exist in the absence of
Licensee's modification, Licensee will be solely responsible for any claim or
lawsuit. Licensee will (i) promptly undertake at its own expense the defense
of the claim or lawsuit, and (ii) hold Licensor, its Affiliates, and their
officers, directors, and employees harmless from any liability, damages and
other sums that may be assessed in or become payable under any decree or
judgment by any court or other tribunal which results from such claim or
lawsuit and from any attorneys fees, costs of litigation and other out of
pocket expenses incurred in the defense of such claim or lawsuit.
(b) If the design, construction and/or operation of the Licensed
Plant which is the basis for alleged infringement or misappropriation, is in
accordance with the designs, specifications and operating conditions
(including, but not limited to, catalysts) embodied in the Process Design
Package for the Licensed Plant, Licensor will (i) promptly undertake at its
own expense the defense of the claim or lawsuit, and (ii) hold Licensee, its
Affiliates, and their officers, directors, and employees harmless from any
liability, damages and other sums that may be assessed in or become payable
under any decree or judgment by any court or other tribunal which results
from such claim or lawsuit and from any attorneys fees, costs of litigation
and other out of pocket expenses incurred in the defense of such claim or
lawsuit.
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(c) A Party will render all reasonable assistance that may be
required by the other Party in the defense of claim or lawsuit alleging
infringement or misappropriation and such Party shall have the right to be
represented therein by advisory counsel of its selection and at its expense.
(d) In the event a court or other tribunal finds that infringement
and/or misappropriation has occurred not as a result of Licensee's
modifications, Licensor shall have the option, at its sole expense, to either
(i) provide designs, specifications and/or operating conditions (including,
but not limited to, catalysts) and make modifications to the Licensed Plant
which avoid such infringement and/or misappropriation without degrading the
economics or performance of the Licensed Plant, or (ii) acquire the right to
continue using the design, construction and operating conditions (including,
but not limited to, catalysts), which were the subject of such infringement
and/or misappropriation.
(e) Except as provided in (d) above, a Party shall not settle or
compromise any claim or lawsuit alleging infringement or misappropriation
without the written consent of the other Party if such settlement or
compromise obligates the other Party to make any payment or part with any
property, to assume any obligation or grant any licenses or other rights, or
to be subject to any injunction by reason of such settlement or compromise.
6.06 Licensor agrees to indemnify and hold harmless Licensee, its
Affiliates, and their officers, directors, and employees from and against the
full amount of any and all claims, demands, actions, damages, losses, costs,
expenses, or liability whatsoever (including without limitation the costs of
litigation, including reasonable attorneys' fees), for infringement of any
patent, copyright, trademark, trade secret or other intellectual property
right, property (real and personal) damage, personal injury or death, fines,
or penalties arising in whole or in part out of the use of Licensee Patent
Rights and Licensee Technical Information in a plant operated by Licensor or
Person under license from Licensor.
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6.07 Licensor agrees to indemnify and hold harmless Licensee, its
Affiliates, their officers, directors, and employees from and against the
full amount of any and all claims, demands, actions, damages, losses, costs,
expenses, or liability whatsoever (including without limitation the costs of
litigation, including reasonable attorneys' fees), for property (real and
personal) damage, personal injury or death, fines, or penalties arising in
whole or in part out of acts or omissions in the preparation and content
(including design, engineering, and specifications) of the Process Design
Package for the Licensed Plant.
6.08 Licensee agrees to indemnify and hold harmless Licensor, its
Affiliates, their officers, directors, and employees from and against the
full amount of any and all claims, demands, actions, damages, losses, costs,
expenses, or liability whatsoever (including without limitation the costs of
litigation, including reasonable attorneys' fees), for property (real and
personal) damage, personal injury or death, fines, or penalties arising in
whole or in part out of acts or omissions outside the scope of or any
modification to the content (including design, engineering, and
specifications) of the Process Design Package for the Licensed Plant.
6.09 Licensor's total obligation and liability to indemnify and hold
Licensee harmless for any and all claims (i) under this ARTICLE 6, including
but not limited to all expenses incurred by Licensor in assuming Licensee's
defense, making modifications to the Licensed Plant and for paying any
judgments or settlements on Licensee's behalf, or for any other reason
contemplated by this ARTICLE 6, (ii) for failure to meet any process
guarantees that may have been provided under a separate agreement, or (iii)
for any other indemnification made by Licensor pursuant to this Agreement,
shall in no event exceed 50% of the total License Fees received from the
Licensee for the Licensed Plant that is subject to the above claims.
6.10 Licensee's total obligation and liability to indemnify and hold
Licensor harmless for any and all claims (i) under this ARTICLE 6 including
but not limited to all expenses incurred by Licensee in assuming Licensor's
defense and for paying any judgments or settlements on Licensor's behalf, or
for any other reason contemplated by this ARTICLE 6, or
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(ii) for any other indemnification made by Licensee pursuant to this
Agreement, shall in no event exceed 50% of the total License Fees received by
Licensor from Licensee for the Licensed Plant that is subject to the above
claims.
7. CONFIDENTIALITY AND LIMITATIONS
7.01 Licensee agrees that any Confidential Information disclosed by
Licensor or an Affiliate directly or indirectly to Licensee during the period
from the date of Licensee's execution of the Confidentiality Agreement
through the term of this Agreement, will be kept confidential by Licensee for
a period of fifteen (15) years after the date of each disclosure, but not to
exceed five (5) years after the termination of this Agreement or fifteen (15)
years from the Effective Date, whichever last occurs, with the same standard
of care Licensee uses to protect its own similar confidential information
and, except as otherwise provided in this Agreement, will not be disclosed to
others or copied or duplicated (except for internal use), and will be used by
Licensee solely as it relates to this Agreement, and for no other purpose,
including Licensee's research, development or commercial activities related
to the Conversion Process for its own account. To the extent reasonably
necessary to carry out the purposes of this Agreement, Licensee may disclose
any of the foregoing information to an Affiliate or owner of an equity
interest in the Plant, provided that the Affiliate or equity owner has
entered into a secrecy agreement with Licensor containing confidentiality
terms no less restrictive than those set forth in this SECTION 7.01.
7.02 Licensor agrees that any Confidential Information disclosed by Licensee
or an Affiliate directly or indirectly to Licensor during the term of this
Agreement will be kept confidential by Licensor for a period of fifteen (15)
years after the date of each disclosure, but not to exceed five (5) years after
the termination of this Agreement or fifteen (15) years from the Effective Date,
whichever last occurs, with the same standard of care Licensor uses to protect
its own similar confidential information, and except as otherwise provided in
this Agreement, will not be disclosed to others or copied or duplicated, and
will be used by Licensor solely in the development, marketing and licensing of
the
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Conversion Process, and for no other purpose. Licensor may disclose such
Confidential Information to (a) third parties who have executed a secrecy
agreement with confidentiality terms no less restrictive than those set forth
in this SECTION 7.02, or (b) with the consent of Licensee, to third parties
without a secrecy agreement. To the extent reasonably necessary to carry out
the purposes of this Agreement, Licensor may disclose any of the foregoing
information to an Affiliate, provided that the Affiliate has agreed in
writing to be bound by the relevant provisions of this Agreement.
7.03 A Party shall not be subject to the restrictions set forth in SECTIONS
7.01 AND 7.02 as to the disclosure, duplication or use of disclosed
Confidential Information, which the receiving Party can prove by competent
evidence (a) was already known to the receiving Party or an Affiliate prior
to the disclosure thereof by the disclosing Party; (b) is or becomes part of
the public knowledge or literature without breach of this Agreement by the
receiving Party but only after it becomes part of the public knowledge or
literature; (c) shall otherwise lawfully become available to the receiving
Party or an Affiliate from a third party but only after it becomes so
available and provided the third party is not under obligation of
confidentiality to disclosing Party; or (d) is developed by the receiving
Party or an Affiliate independently of any disclosure by the disclosing Party
to the receiving Party or an Affiliate under this Agreement or independently
of any joint research and development activities of Licensee and Licensor
which may occur under a separate agreement. Any Confidential Information
disclosed shall not be deemed to fall within the confidentiality exceptions
of this SECTION 7.03 merely because it is embraced by more general
information. In any such case set forth in SECTION 7.03(a), (b), (c), AND
(d), the receiving Party shall not disclose to any third party that any such
information was also made available to or acquired by the receiving Party or
an Affiliate from the disclosing Party, and such release from the secrecy
obligation shall not be considered as a license to make, sell, use or operate
under any of the disclosing Party's proprietary rights.
7.04 The receiving Party shall limit access to the Confidential Information
disclosed to it to those employees of the receiving Party or an Affiliate who
reasonably require the same and who are under a legal obligation of
confidentiality on the terms set forth in
20
SECTION 7.01 and SECTION 7.03. The receiving Party shall be responsible to
the disclosing Party for the performance by its employees of their
confidentiality obligations. The receiving Party shall keep a record of any
Confidential Information marked "Limited Access" and the identity of each
employee who has access to Confidential Information so marked. The receiving
Party shall inform the other Party of the identity of each such employee
within 30 days of disclosure.
7.05 In the event that a Party which is recipient of Confidential
Information from the other Party is requested or required by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process to disclose any such Confidential Information, the receiving
Party shall provide the disclosing Party with prompt written notice of such
request or requirement prior to making the requested disclosure, and shall
cooperate with the disclosing Party so that the disclosing Party may seek a
protective order or other appropriate remedy or, if the disclosing Party so
elects, waive compliance with the terms of this Agreement. In the event that
such protective order or other remedy is not obtained, the receiving Party
may disclose only that portion of the Confidential Information which the
disclosing Party is advised by counsel is legally required to be disclosed.
7.06 The Parties agree that they will each take all actions and execute all
documents, and shall cause their employees, agents and contractors to take
all actions and execute all documents as are necessary or appropriate to
carry out the provisions of this ARTICLE 7 or to assist each other in
securing protection of intellectual property and Confidential Information
referenced in this ARTICLE 7.
7.07 With respect to any catalyst furnished by Licensor to Licensee for use by
Licensee at the Licensed Plant, Licensee will not, and Licensee will not allow
any other person to, analyze, break down, reverse engineer or otherwise seek to
determine the chemical composition, except for loss on ignition and bulk
density, of any such catalyst, except that Licensee shall be entitled to (a)
perform analyses that Licensor may from time to time specifically authorize in
writing, to the extent required for monitoring the
21
performance of the Licensed Plant and for regeneration, reclamation or
disposal of spent catalysts, such authorization not to be unreasonably
withheld, and (b) provide results of the aforementioned analyses to other
parties to the extent required for regeneration, reclamation or disposal of
spent catalysts, but only after such other parties have entered into a
confidentiality agreement with Licensor containing terms no less restrictive
than those set forth in this ARTICLE 7. Licensor will be provided with a copy
of all such analyses which have been approved in writing prior to release to
other parties.
8. TERM AND TERMINATION
8.01 This Agreement shall extend for the life of the Licensed Plant.
8.02 If a material default shall occur by Licensee under this Agreement,
Licensor shall provide written notice of such default to Licensee. If a
material default under this Agreement shall continue for a period of 120 days
following written notice of such default to Licensee from Licensor without
being cured by Licensee, then Licensor shall have the right to terminate this
Agreement upon written notice to Licensee. The actions by Licensor under
this Article shall not prejudice Licensor from enforcing any claim which it
may have for damages or otherwise on account of the default.
8.03 In the event of a Change of control of Licensee, Licensor shall have
the right to terminate this Agreement upon 60 days written notice. As used
in this SECTION 8.03, "Change of Control" means (i) the holders of Licensee's
voting securities (including holders of securities which are convertible,
exerciseable or exchangeable for voting securities and which securities, for
the purpose of this Agreement, shall be deemed voting securities) on the
Effective Date cease to possess 90% of the combined voting power of Licensee
or (ii) the business of Licensee is disposed of pursuant to a voluntary
liquidation, merger, consolidation, sale of assets or otherwise.
8.04 Termination of this Agreement shall not:
22
(a) relieve Licensee of its obligations to account for and pay all
amounts due Licensor under this Agreement;
(b) affect any rights granted under ARTICLE 4 with respect to Licensee
Patent Rights and Licensee Technical Information, which shall survive
termination in accordance with its terms; or
(c) affect the obligations of Licensor and Licensee under ARTICLES 6
AND 7 and SECTION 9.03 which shall survive termination in accordance with
their terms.
8.05 No Party to this Agreement shall be in default in performing its
obligations under this Agreement to the extent that performing such
obligations, or any of them, is delayed or prevented by revolution, civil
unrest, strike, labor disturbances, epidemic, accident, fire, lightening,
flood, storm, earthquake, explosion, blockage or embargo, or any law,
proclamation, regulation or ordinance, or any other cause that is beyond the
control and without the fault or negligence of the Party asserting the
benefit of this SECTION 8.05. Each Party shall do all things reasonably
possible to remove the cause of such default.
8.06 Licensee shall have the right to terminate this Agreement in its sole
discretion, with or without cause, upon the delivery of written notice of
termination to Licensor no less than ninety (90) days prior to the date of
such termination.
9. MISCELLANEOUS
9.01 This Agreement embodies the entire intent of the Parties and merges
all prior oral and written agreements between the Parties hereto with respect
to the Licensed Plant. No stipulation, agreement, representation or
understanding of the Parties hereto with respect to the Licensed Plant shall
be valid or enforceable unless contained in this Agreement or in a subsequent
written agreement signed by the Parties hereto.
23
9.02 Except for assignment to an Affiliate or the successor in interest, by
purchase or otherwise, of Licensee (but specifically excluding Exxon
Corporation, Royal Dutch Shell, Sasol Limited or any entity in which any of
the referenced companies has an equity interest), which may be made without
written consent of Licensor, this Agreement shall not be assignable by
Licensee without the prior written consent of the Licensor, which consent
will not be unreasonably withheld. Licensee will promptly notify Licensor in
writing of any assignment to an Affiliate, or such successor in interest.
Except for assignment to an Affiliate, or such successor in interest, any
attempted assignment of this Agreement by Licensee without consent of
Licensor shall be void.
9.03 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REGARD
TO CONFLICT OF LAW PROVISIONS THEREOF. The Parties expressly and irrevocably
consent and submit to the jurisdiction of any federal or state court sitting
in Wilmington, Delaware and agree that, to the fullest extent allowed by law,
such Delaware federal and state courts shall have jurisdiction over any
action, suit or proceeding arising out of or relating to this Agreement. The
Parties each irrevocably waive, to the fullest extent allowed by law, any
objection either of them may have to the laying of venue of any such suit,
action or proceeding brought in any state or federal court sitting in
Wilmington, Delaware based upon a claim that such court is inconvenient or
otherwise an objectionable forum. Any process in any action, suit or
proceeding arising out of or relating to this Agreement may, among other
methods, be served upon any Party by delivering it or mailing it to their
respective addresses set forth herein. Any such delivery or mail service
shall be deemed to have the same force and effect as personal service in
Wilmington, Delaware. The parties agree that the provisions of this SECTION
9.03 relating to jurisdiction and venue shall not be deemed to be the consent
by any party to the exclusive jurisdiction or venue of any federal or state
court sitting in Wilmington, Delaware.
9.04 This Agreement does not grant and shall not be construed as granting
any license, authorization or consent, to either Party by the other Party
hereto, to use any name,
24
trademark, service xxxx or slogan of the other Party. A Party shall not use
the other Party's name without written consent, except for the identification
of the other Party as a Licensee or Licensor of Licensor Technology. The
terms of this Agreement will be maintained in confidence by each Party
subject to the same standard of care each Party uses to protect its
confidential information, except as required by law. A press release which
includes the name of the other Party must have prior written approval of the
other Party, except as required by law.
9.05 Failure of either Licensor or Licensee at any time or from time to
time to exercise any of its rights under this Agreement or to insist upon
strict performance of the other Party's obligations hereunder shall not be
deemed a waiver of or to limit any of such rights or obligations with respect
to such rights or obligations or any subsequent occurrence.
9.06 Licensee may publish the existence of this Agreement but agrees not to
disclose, without the written consent of the Licensor, any of the terms of
this Agreement or any portion thereof, or any amendment concerning the same,
except to Persons directly involved with design, financing, construction, or
operation of the Licensed Plant on a need-to-know basis or as required by law.
9.07 Licensee agrees that all Licensor information, technology, patents,
and the product produced directly by the use thereof, when used outside the
United States of America, shall be used by Licensee subject to and in
accordance with regulations of any department or agency of the United States
of America and shall not be re-exported or trans-shipped to any destination
requiring the approval of the United States government for such
re-exportation or trans-shipment until a request to do so has been submitted
to and approved by the United States government and notice of such approval
has been provided to Licensor.
9.08 Should any part or provision of this Agreement be held unenforceable
or in conflict with the law of any state or of the United States of America
or of any foreign country, the validity of the remaining parts or provisions
shall not be affected by such holding.
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9.09 All notices hereunder shall be addressed to the Parties as follows:
(a) If to Licensor:
Syntroleum Corporation
0000 X. Xxxxxxx, Xxx. 0000
Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
ATTN: Office of the President
with copy to:
Syntroleum Corporation
0000 X. Xxxxxxx, Xxx. 0000
Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
ATTN: Office of the General Counsel
(b) If to Licensee:
Syntroleum/Sweetwater Company L.L.C.
0000 X. Xxxxxxx, Xxx. 0000
Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
Any notice required or permitted to be given under this Agreement by one of
the Parties to the other shall be deemed to have been sufficiently given for
all purposes hereof if mailed by registered or certified mail, postage
prepaid, addressed to such Party at its address indicated above,
electronically transmitted and acknowledged by the other Party or by actual
delivery of written notice to the other Party.
26
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date set forth above.
Licensor
SYNTROLEUM CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Chairman and Chief Executive Officer
Licensee
SYNTROLEUM/SWEETWATER COMPANY, L.L.C.
By: Syntroleum Corporation, Manager
By: /s/ Xxxx X. Xxxx
-------------------------------------
Xxxx X. Xxxx, President/COO
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