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EXHIBIT 10.7
LICENSE AGREEMENT
This Agreement, effective December 15,1997, is made between Xxxxxx Xxxx
("Xxxx"), whose address is Xxxxx 0, Xxx 000, Xxxxxxxx, Xxxxxxxxxxx, and Turbeco
Inc., an affiliate of Flotek Industries Inc. ("Turbeco"), having a principal
place of business and mailing address at 0000 Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx,
Xxxxx 00000. King holds patent rights and other technology rights regarding a
downhole apparatus and method for cleaning the exterior surface of a pipe, and
Turbeco desires a license to use such patent and technology rights.
Accordingly, the parties have agreed as follows:
1. The term "King Technology" means all patent, trademark, copyright, and
trade secrets pertaining to downhole apparatus and methods for the exterior
surface cleaning of pipe. King Technology specifically includes rights under
United States Patent No.5,641,018 (1997), attached as Exhibit A, and all other
patent applications filed by King in the United States and other countries.
King Technology also includes all rights in trademarks and copyrights
associated with the subject matter of apparatus and methods disclosed in the
referenced patent rights. King Technology also includes all business and
technical information known or developed by King and disclosed to Turbeco.
2. King grants Turbeco an exclusive, worldwide license to develop,
commercialize, and to make, use and sell products covered by King Technology
("Products"). Turbeco may authorize other parties to make, sell, and use
Products incorporating King Technology, and to otherwise commercialize King
Technology subject to the terms of this Agreement. Turbeco will inform King of
all agreements between Turbeco and third parties, or between Turbeco and
Turbeco Affiliates, related to the manufacture, sale and use of Products
incorporating King Technology, and will deliver to King copies of all such
agreements. Consistent with the license granted hereunder, Turbeco will have
the right to use all copyright and trademark rights comprising King Technology.
3. Following execution of this Agreement, Turbeco will immediately
pay King a nonrefundable $1,000.00 for a ninety day test period for an
exclusive option to evaluate the King Technology. On or before the end of such
ninety day test period, Turbeco may elect to terminate this Agreement, and to
reject the license granted in Paragraph 2, provided that all Products covered
by United States Patent No.5,641,018 are delivered to King free of charge or
are rendered non- infringing. If Turbeco elects to accept the license granted
in Paragraph 2, Turbeco will pay King an additional nonrefundable fee of
$9,000.00, before the expiration of the ninety day test period, as partial
consideration for the license granted in Paragraph 2.
4. In addition to the fee stated above, Turbeco will pay King a royalty
of $2.00 for each single Product made, sold or used by Turbeco or other parties
authorized by Turbeco, which incorporates King Technology. Royalty payments for
each Product will be due upon the sale of the Product. Multiple seals within a
single centralizer will be treated as one Product for the
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calculation of royalty payments. Turbeco's obligation to make royalty payments
for making, selling or using a Product in each country will cease upon the
expiration of the last patent in a country, or upon the expiration of twenty
years from the date of first commercialization in a country which has not
issued a patent for the King Technology.
5. Turbeco will account for all royalties due at the end of each calendar
year quarter, and will pay King or his designee all royalties due within thirty
days following the end of each calendar year quarter. Turbeco will maintain
accurate records to support all royalties due, will require third parties
authorized to commercialize King Technology to keep accurate records, and will
make such records available to King at all reasonable times for the purpose of
verifying royalty payments due and paid.
6. King and Turbeco will maintain in confidence and will not disclose to
other persons information held confidential by the other party.
7. King will own all trademark and copyrights associated with the
commercialization of King Technology. Turbeco will execute all documents
reasonably necessary to confer and to record such technology rights.
8. Turbeco will xxxxx Xxxx a royalty free, perpetual license to practice
all improvements to King Technology developed by Turbeco. Such license grant
will survive any termination of this Agreement.
9. The exclusive license under this Agreement will terminate upon any of
the following events:
(a) Turbeco elects to cease activity during the ninety day test period;
(b) Turbeco fails to properly account for royalty payments due, or does
not mail such royalty payments within the specified periods;
(c) Turbeco breaches the confidentiality obligations in this Agreement;
(d) Turbeco does not promptly notify King of other persons authorized by
Turbeco to make, sell and use Products covered by King Technology; or
(e) the total royalty paid King for each calendar year, including calendar
year 1998, does not equal or exceed $10,000.00. Beginning July 1,1998,
Turbeco will pay King a minimum royalty payment of $2,500.O0 for each
calendar year quarter. If the royalty payments due from the sale of
Products in a particular calendar year quarter do not meet or exceed
$2,500.00, Turbeco may take credit for previous quarterly royalty
payments in excess of $2,500.00 per quarter and paid in the same
calendar year period, provided that the average royalty payment
through the applicable calendar year meets or exceeds $2,500.00 per
quarter.
Following any breach of sections (b-e) above, King will provide written
notice to Turbeco of King's intent to terminate the license granted under this
Agreement, and Turbeco will have thirty days following receipt of such notice
to cure Turbeco's breach of this Agreement.
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10. King and Turbeco will cooperatively work to secure intellectual
property rights for the King Technology, and will negotiate in good faith
regarding responsibility for the development of such rights and the obligation
to pay costs associated with such rights.
11. THIS AGREEMENT WILL BE INTERPRETED AND GOVERNED PURSUANT TO THE
LAWS OF THE STATE OF TEXAS, AND VENUE FOR ANY DISPUTE WILL BE IN XXXXXX COUNTY,
TEXAS.
12. This Agreement comprises the complete understanding between the
parties regarding the subject matter herein, and expressly supersedes and
cancels all prior agreements or understandings, whether oral or written.
The parties have executed this Agreement to be effective the date first
written above.
XXXXXX XXXX TURBECO INC.
/s/ XXXXXX XXXX By /s/ XXXXXXX X. XXXXXXX
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Date 12-17-97 Title DIV OPS MGR
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Date 12-17-97
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