EXCLUSIVE OPTION AGREEMENT
THIS EXCLUSIVE OPTION AGREEMENT (this "Option Agreement") is entered
into effective this 1st day of February, 2001, between CYNTECH TECHNOLOGIES,
INC., a Nevada corporation ("Cyntech"), and WINDSTAR RESEARCH AND ENGINEERING,
LTD., a Cayman Islands corporation ("Windstar"), on the following:
Premises
A. Cyntech entered into a Hydrocarbon Technology Licensing Agreement
with Cyntech Research and Engineering, Inc. ("Cyntech Research"), on or about
November 30, 1998 (the "1998 Agreement"). Under the 1998 Agreement, Cyntech
Research agreed to license to Cyntech certain technical information, skills,
data, and understanding relating to the design, manufacture, and operation of
facilities to recover petrochemical feedstock from waste rubber and plastics.
The primary technology was called "Thermal Reduction Technology," while the
entirety of the knowledge and technology licensed to Cyntech under the 1998
Agreement was referred to therein as the "Cyntech Technology," and included the
related right to use the trademark name "ThermReTec."
B. Windstar is a successor in interest to the technical information,
skills, data, and understanding relating to the design, manufacture, and
operation of facilities to recover petrochemical feedstock from waste rubber and
plastics licensed under the 1998 Agreement, as Cyntech Research assigned all
such rights to Windstar on August 15, 2000. A copy of that Assignment is
attached hereto as Exhibit A and is incorporated herein by this reference.
Cyntech Research has certified that it transferred all rights to the entirety of
the Cyntech Technology to Windstar and that Cyntech Research retained no rights
whatsoever to any of the knowledge and technology it licensed to Cyntech under
the agreement. A copy of that certification is attached hereto as Exhibit B and
is incorporated herein by this reference.
C. Cyntech and Windstar desire to enter into a new Option Agreement
between Cyntech and Windstar for the United States and Canada and through the
use of license agreements, substantially similar to that license agreement
attached hereto as Exhibit C, for the use of the Windstar Technology, as
hereinafter defined, in individual plants or facilities.
D. Cyntech and Windstar acknowledge that the right to use the Windstar
Technology is essential to the success of Cyntech's business plan and that
Cyntech has reasonably relied on the grant of the license to use the "Cyntech
Technology" under the 1998 Agreement in its development and presentation of
itself to potential investors, and the parties expressly intend that Cyntech's
shareholders are to be third-party beneficiaries of this Option Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations herein, Cyntech and Windstar hereby agree, covenant, and promise
as follows:
1. Certain Definitions. The following defined terms have the stated
meanings as used herein:
(a) Confidential Information. "Confidential Information" as
used herein shall mean information in the possession of Windstar that
is held and treated by Windstar as proprietary or trade secret
information and not disclosed to the trade or public by Windstar or
Cyntech. Confidential Information shall not include information which
is available to the public or subsequently becomes available to the
public through no breach of obligation of confidence and trust by
Cyntech to Windstar.
(b) Gross Income. The term "Gross Income" shall mean all
income from sources and uses of the Windstar Technology, including all
upstream and downstream applications, FOB at the plant or facility
site. Except as herein provided, Gross Income shall be determined using
generally accepted accounting principles consistently applied and shall
be reduced only by actual credits, discounts, allowances, or returns
granted to any purchaser or vendor by Cyntech. Gross Income shall not
include amounts billed by Cyntech for shipping or packing charges,
insurance, or federal, state, or local sales, use, or excise taxes.
(c) Improvements. The term "Improvements" shall mean any and
all information which is developed from, utilized, or based upon the
Windstar Technology, and which modifies, enhances, or improves any
product or process which is part of the Windstar Technology.
(d) Patent Rights. The term "Patent Rights" shall mean all
United States patents, foreign patents, and applications for patent,
including continuing and provisional and other patent applications
derived therefrom, in this or any country in the world, which have been
filed or granted or which may be filed or granted which describe and
claim or are based upon all or part of the Windstar Technology.
(e) Windstar Technology. The term "Windstar Technology" shall
mean all scientific, technical, and methodological data and all
information, skills, data, understanding, and other know-how related to
the inventions and developments that Windstar has acquired, including
the entirety of the "Cyntech Technology" under the 1998 Agreement, and
developed as of the date of this Option Agreement, whether or not any
such inventions or developments are patentable, including, but not
limited to, related engineering, blueprints, explanations, manuals,
methods, processes, procedures, experimental data, disclosures,
reports, findings, ideas, trade secrets, and any and all other
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expressions or manifestations of the foregoing. The Windstar Technology
shall be expanded to include such Improvements as become subject to
this Option Agreement.
2. Grant of Exclusive Option for the United States and Canada. Windstar
hereby grants to Cyntech the exclusive option to license the Windstar Technology
and Improvements, including any Patent Rights, for use in individual plants in
the United States and Canada. Each Cyntech plant or facility using the Windstar
Technology must obtain a separate license agreement, which shall not be
unreasonably denied by Windstar.
3. Right of First Refusal for Territories Outside the United States and
Canada. Windstar hereby grants to Cyntech the right of first refusal to an
option to license the Windstar Technology and Improvements, including any Patent
Rights, for use in individual plants outside the United States and Canada.
4. Term of Exclusive Option. The option granted hereunder shall expire
10 years from the effective date of this Option Agreement, subject to Windstar's
option to renew this Option Agreement for up to two additional ten-year periods.
If Cyntech desires to exercise an option to extend this Option Agreement, it
must do so by giving Windstar written notice of its intent at least 180 days
before the expiration of the then-current term.
5. Request for License Agreement. In order to obtain a license
agreement for an individual plant or facility, Cyntech shall provide Windstar
with a written request for a license agreement for the proposed facility. That
written request shall include, in reasonable detail, sufficient information for
Windstar's evaluation of the proposed plant or facility's suitability for use of
the Windstar Technology, including a feasibility study of the location of the
proposed plant or facility, a business plan for the proposed plant or facility,
the type of feedstock proposed to be used and the sources from which it may be
acquired, the products to be produced by the proposed plant or facility, the
expected availability of markets for sale of those products, and all other
reasonable information requested by Windstar.
6. Action upon Request for License. Windstar shall have a period of 90
days to review a request for a license agreement, during which time Cyntech
shall respond to all reasonable requests for additional information from
Windstar. If Windstar fails to respond within that 90-day period, the request
for license agreement shall be deemed accepted on terms substantially similar to
those found in the license agreement attached hereto as Exhibit C. Windstar may
deny Cyntech a license agreement only on the basis that the proposed plant or
facility's use of the Windstar Technology would not be economically viable or
security of the Windstar technology cannot be satisfactorily guaranteed to
Windstar. If Windstar makes such a determination, it must provide Cyntech with:
(a) A statement of reasons for that denial;
(b) A specific description of what changes, if any, could be
made to the proposed plant or facility that would result in Windstar's
grant of the license agreement; and to protect the Windstar technology
to be licensed.
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(c) A period of no less than 90 days within which Cyntech may
make the changes identified as necessary for approval.
Under no circumstances shall Windstar unreasonably deny Cyntech a license
agreement as long as the Windstar technology will not be compromised by third
parties or governmental agencies through mandated disclosure requirements.
7. Documentation, Technical, and Permitting Assistance. Upon execution
of this Option Agreement and payment of the license agreement fee, Windstar
shall complete, at Windstar's expense, all drawings, flow charts, technical and
schematic drawings, blueprints, diagrams, and other material in human and
machine readable formats necessary to obtain all necessary permits, construct
the facility, and deliver the facility in a fully operational condition. These
materials may be made available to contractors and others as necessary, but
Windstar shall retain ownership of all materials discussed herein. Windstar
shall, within reasonable time and resource constraints, provide technical aid
and assistance to assist Cyntech in the use of the Windstar Technology. Upon
granting a license agreement for an individual plant or facility, Windstar shall
provide Cyntech with all necessary assistance to obtain required permits from
local, state, and federal agencies.
8. Documentation and Confirmation of Rights. Windstar shall, upon
request of and at the expense of Cyntech, execute such documents and take such
actions as are necessary and proper to evidence the rights granted hereunder to
Cyntech.
9. Representations and Warranties of Windstar. Windstar represents and
warrants to Cyntech that:
(a) Windstar has good and marketable title to the
Windstar Technology, including all patents, patent
applications and continuations, copyrights,
trademarks, trade names, brand names, proprietary and
other technical information, technology, and
software, free from any liens and free from any
requirement of any past, present, or future royalty
payments, license fees, charges or other payments,
conditions, or restrictions whatsoever.
(b) To the best of its knowledge, Windstar has not
infringed upon and is not infringing upon, and has
not engaged in and is not engaging in, any
unauthorized use or misappropriation of any patents,
copyrights, trademarks, trade names, brand names,
proprietary and other technical information,
technology, and software owned by or belonging to any
other person. There are no claims or proceedings
pending or, to Windstar's knowledge, threatened
against Windstar asserting that Windstar is
infringing or engaging in the unauthorized use or
misappropriation of any intellectual property of any
other person or entity.
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(c) Windstar is not aware of prior art with respect to
any of the patents owned or licensed by it that was
not disclosed to the US Patent and Trademark Office
(or to any comparable foreign authority, if
necessary) in connection with applications for such
patents. Windstar is not aware of any fact or event
making any one or more claims of any of such patents
invalid or unenforceable, and Windstar has not
engaged in any conduct or omitted to perform any
necessary act, the result of which would be to
invalidate any of such patents or adversely affect
any of their enforceability.
(d) There are no royalties, license fees, charges, or
other amounts payable by or on behalf of Windstar in
respect of any of the Windstar Technology.
10. Payments by Cyntech.
(a) Cyntech hereby assumes and agrees to pay Windstar a
$1,000,000 license agreement fee for Phase I for each
plant or facility Cyntech constructs to use the
Windstar Technology, whether that plant or facility
proposes to use rubber or plastic feedstock. An
additional license agreement fee of $500,000 shall be
required for each additional development phase, such
as a plant or facility that will use both rubber and
plastic feedstocks. This license agreement fee shall
be due and payable prior to the commencement of
engineering drawings for each plant or facility. If a
plant or facility that has paid a $1,000,000 license
agreement fee proposes to add another phase, Cyntech
shall submit a new written request for a license
agreement with all necessary information. If that
request is granted by Windstar, the additional
$500,000 license agreement fee shall be due and
payable upon Windstar's approval of that request.
There are no limits to the number of phases to each
Cyntech plant facility.
(b) Cyntech shall pay Windstar a monthly operational
licensing fee of seven percent (7%) of the Gross
Income for each plant or facility that uses the
Windstar Technology.
(c) Cyntech shall be required to commence building the
following numbers of new plants within the first five
years as follows:
Year 2001 - One plant.
Year 2002 - Two plants.
Year 2003 - Three plants.
Year 2004 - Four plants.
Year 2005 - Five plants.
Year 2006 and thereafter - Six plants per year.
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(d) Upon signing of this Agreement, Cyntech shall have 90
days to deposit $100,000 of the licensing fee for
Phase I to Windstar to commence engineering drawings
for the first United States plant facility.
(e) Cyntech shall pay the next installment of the
licensing fee for the first United States plant of
$250,000 within 150 days of signing of this
agreement. This funding is required to continue
engineering services by Windstar.
(f) The remaining sum of $500,000 of the licensing fee
for the first plant facility in the United States
shall be paid no later than 180 days from the signing
of this Agreement.
(g) Windstar, at its sole discretion, may extend
licensing payments due dates for the first United
States plant upon written request by Cyntech. Any
extensions approved by Windstar shall be on a
month-to-month basis. Each monthly extension
requested must be submitted in writing to Windstar's
North American representative.
11. Reporting and Payment of Operational Licensing Fees. Within
forty-five (45) days after the first day of January, April, July and October of
each Contract Year after the first year, during the term of this Agreement,
Cyntech shall deliver to Windstar a true and accurate report, giving such
particulars of the business conducted by Cyntech during the preceding twelve
(12) months as are pertinent to an accounting for royalties. This report shall
include the Gross Income and the total royalties computed. The correctness and
completeness in each such report shall be attested to in writing annually by a
responsible financial manager or auditor of Cyntech.
Cyntech shall keep proper records and books of accounts sufficient to
accurately calculate all payments due under this Agreement. Windstar may request
that an audit be performed, up to a maximum of one time per year, but such audit
shall be performed exclusively by independent auditors of Windstar and Windstar
shall presumably bear all costs and expenses associated with such additional
audit. All such audit, royalty payment, sales volume and price records shall be
treated as confidential by each such independent auditor pursuant to an executed
confidentiality agreement with Cyntech, and shall not be disclosed to Windstar
or to any other party except as authorized by Cyntech or as necessary to verify
the accuracy of payments made under this Agreement. Cyntech shall be obligated
to reimburse Windstar for twice the cost of the audit in the event such audit
reveals a discrepancy in excess of five percent (5%) of the royalty payments due
pursuant to this Agreement for the time period audited.
12. Adjustment for Inflation. At the mid-point of the ten-year term of
this Option Agreement, upon Cyntech's exercise of its option to extend this
Option Agreement, if any, and at each five-year interval thereafter, there shall
be a fee review and adjustment. The license agreement fee may be increased at
such review and adjustment by no more than the rate of inflation. The index used
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shall be the Consumer Price Index -- U. S. City Average -- All Urban Consumers
-- All Items -- (1982 through 1984 = 100), hereinafter called the Index,
published by the Bureau of Labor Statistics of the United States Department of
Labor.
(a) The Index number indicated in the column "Avg." (average)
or, if that column is not published, the average of the months of 1999
shall be the base Index number and the corresponding Index number for
each year in which a fee review and adjustment is permitted shall be
the current Index number.
(b) The current Index number shall be divided by the base
Index number. The integer 1 shall be subtracted from the quotient
thereof and any resulting number shall be deemed to be the percentage
of increase allowed for the license agreement fee. The license
agreement fee at each fee review and adjustment shall be determined by
multiplying the percentage of increase by the previous license
agreement fee. The resulting sum of the license agreement fee plus the
increase on Consumer Price Index shall be the license agreement fee
until the next scheduled fee review and adjustment. For each fee review
and adjustment, the percentage increase shall be determined in a
similar manner.
(c) Windstar shall, within a reasonable time after obtaining
the appropriate data necessary for computing such increase, give the
Cyntech notice of any change so determined. The increased license
agreement fee shall be reflected in any license agreements executed
after that notice is provided to Cyntech by Windstar.
(d) If publication of the Consumer Price Index is
discontinued, the parties shall thereafter accept comparable statistics
on the cost of living as they shall be computed and published by an
agency of the United States government or by a responsible financial
periodical of recognized authority then to be selected by the parties.
In the event of either (a) use of comparable statistics in place of the
Consumer Price Index as above mentioned, or (b) publication of the
Index figure at other than monthly intervals, there shall be made in
the method of computation herein provided such revisions as the
circumstances may require to carry out the intent of this paragraph.
13. Patent Applications and Prosecution. Windstar shall, at its own
cost and expense, apply for and prosecute applications for United States and
foreign patents covering such of the Windstar Technology and Improvements as
Windstar deems necessary. Windstar shall control and direct the filing and
prosecution of such applications for patent and maintenance of such patents
through a registered patent lawyer of Windstar's choosing who shall (unless
Windstar and Cyntech agree otherwise) be instructed to obtain the maximum
available valid patent protection. Windstar shall seek prompt examination of all
such applications for patent in all countries in which application for patent is
made, keep Cyntech, or such patent attorney as Cyntech may designate, informed
as to all activities respecting such applications for patents, and regularly
provide copies of all documents and correspondence respecting such applications
for patents to Cyntech or its designee, and give full weight and due
consideration to information and requests from Cyntech respecting such patents
and applications.
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Cyntech shall have the right, but no obligation, to assume
prosecution and/or maintenance of the same. Windstar does not
represent or warrant that any patent applications will issue
into a patent.
14. Disclosure of Improvements-Grantback. Windstar shall keep Cyntech
fully informed as to Improvements made by Windstar and shall promptly comply
with the obligations of section 7 in providing Technical Assistance respecting
the same. In like manner, Cyntech shall keep Windstar informed as to
Improvements made by Cyntech and shall assign the same to Windstar, upon which
all such Improvements shall be included in the Windstar Technology without
additional consideration, and shall be subject to all provisions of this Option
Agreement and any license agreements that have been issued for individual plants
or facilities.
15. Litigation.
(a) Windstar shall have the first right to xxx any party for
any unfair trade practices involving the Windstar Technology or
Improvements or any infringement of any patent licensed hereunder, at
its own expense, and shall keep Cyntech fully informed of any
threatened or initiated litigation. Cyntech agrees to permit the use of
its name in all such suits, to execute any necessary documents, and to
do whatever necessary to assist Windstar in such suits, but at
Windstar's expense. Any recoveries from such suit initiated by Windstar
shall belong to Windstar, with the provision that if damages are
specifically allocated to Cyntech by a finder of fact or a settlement
agreement, such damages shall belong to Cyntech.
(b) If Windstar fails within a reasonable time to xxx any
person for any unfair trade practice or infringement, Cyntech shall
have the right to file and maintain, at its own expense, such suits;
however, nothing in this agreement shall obligate Cyntech to assume any
responsibility or liability respecting any action or possible action
for any unfair trade practices or infringement. Cyntech shall keep
Windstar fully informed of any such suit. Windstar agrees to permit the
use of its name in all such suits, to execute any necessary documents,
and to do whatever necessary to assist Cyntech in such suits, but at
Cyntech's expense. Any recoveries from such suit initiated by Cyntech
shall belong to Cyntech, with the provision that if damages are
specifically allocated to Windstar by a finder of fact or a settlement
agreement, such damages shall belong to Windstar.
16. Defense of Licensed Rights. Windstar represents and warrants to
Cyntech that Windstar has good and indefeasible title to and has all right and
interest to and in all of the technology licensed to Cyntech, and has acquired
sufficient intellectual property rights protecting the Technology such that the
technology may be practiced without violating or infringing any patent,
trademark or other intellectual property rights of any third party. Windstar
represents and warrants to Cyntech that, with respect to the Windstar
Technology, neither it nor any of its Affiliates has received any notice or is
otherwise aware of any infringement by Windstar or any of its Affiliates of any
8
third party's patent, trademark or other intellectual property rights. None of
Windstar or any of its Affiliates has received any notice of infringement,
misappropriation or conflict from any person with respect to the Technology and
the conduct of business of Windstar and its Affiliates. Windstar covenants and
agrees to indemnify, defend and hold harmless Cyntech from and against any
claims of infringement or violation of intellectual property rights of any
person with respect to the Windstar Technology, provided that the technology
licensed to Cyntech necessarily violates or infringes such rights. The
consummation of the transactions contemplated by this Agreement will not result
in the loss of any Technology and will not conflict with, or constitute a breach
or violation of, any agreement or understanding, whether written or oral,
relating to any Technology.
17. Confidentiality. Confidential Information received by Cyntech from
Windstar, and which is identified by Windstar as being confidential or
proprietary, shall be held in trust and confidence by Cyntech. The Windstar
Technology and Improvements shall be, and remain, the property of Windstar, and
shall be presumed to be Confidential Information to the extent not disclosed in
printed publications or patents. The existence of some information respecting
the Windstar Technology and Improvements in the public domain shall not be
considered or offered to establish the presence in the public domain of all of
the Windstar Technology and Improvements. Nothing herein shall preclude Cyntech
from disclosing information required by governmental action, law, or regulation;
however, in the event Cyntech is so required, Cyntech shall provide Windstar
with a copy of the request, or demand, for such information, and a statement of
its intended response at least thirty days before the information is to be
disclosed. Windstar may, at its option, disallow the disclosure of nonpublic
information if it feels such disclosure will harm Windstar financially, or that
the disclosure cannot be guaranteed to be kept confidential and not reveled to
third parties. Windstar retains the exclusive right to allow or disallow any
information requested by third parties from Cyntech. The duties and obligations
to maintain Confidential Information in this paragraph shall survive any
termination of this Option Agreement.
18. Notices. All notices, demands, requests, or other communications
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery:
If to Windstar, to: X. X. Xxxxxxxx, Xx.
North America Managing Director
Windstar Research and Engineering, Ltd.
X.X. Xxx 0000
Xxxxxxxx, XX 00000
If to Cyntech, to: Cyntech Technologies, Inc.
Attn: R. Xxxxx Xxxxx, President
0000 Xxxxxxxxxx Xxxxx, XX
Xxxxxxx, XX 00000-0000
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or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder, and any such notice, demand,
request, or other communication shall be deemed to have been given as of the
date so delivered or sent by facsimile transmission, three days after the date
so mailed, or one day after the date so sent by overnight delivery.
19. Termination.
(a) Windstar shall have the right to terminate all rights and
all options granted to Cyntech hereunder if Cyntech defaults upon any
of its obligations hereunder by giving 180 days' written notice of
termination to Cyntech specifying the default(s) for which termination
is noticed and the date (not less than 180 days distant) on which
termination shall be effective; provided, however, that if Cyntech
shall have cured the specified default(s) within 90 days of said
notice, such notice shall be of no force or effect.
(b) All rights and all options granted hereunder shall
terminate automatically in the event Cyntech should (i) voluntarily
seek, consent to, or acquiesce in the benefit or benefits of any Debtor
Relief Law (defined hereinafter), or (ii) become a party to (or be made
the subject of) any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights (defined hereinafter) of Windstar granted
herein (unless, in the event such proceeding is involuntary, the
petition instituting same is dismissed within 60 days of the filing of
same). "Debtor Relief Law" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar Laws
from time to time in effect affecting the Rights of creditors
generally. "Rights" means rights, remedies, powers, and privileges.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth,
nation, territory, possession, county, parish, municipality, or
Tribunal. "Tribunal" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of the United
States or of any state, commonwealth, nation, territory, possession,
county, parish, or municipality, whether now or hereafter constituted
and/or existing.
(d) In the event of termination of this Option Agreement:
(i) All obligations of confidentiality shall remain
in full force and effect; and
(ii) Cyntech shall return, deliver, and assign to
Windstar all written records containing know-how, notebooks,
reports, data, applications for approval, approvals, and all
writings, including magnetically recorded writings or legible
and readable copies thereof, which relate to or describe the
use or characteristics of the Windstar Technology or
Improvements which are in its possession, custody, or control,
except as retained by individual plants and facilities that
continue to operate using the Windstar Technology under
individual license agreements.
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20. General Provisions.
(a) This Option Agreement is not assignable by Cyntech except
upon the written consent of Windstar, which consent shall not be
unreasonably withheld when such assignment is in connection with the
assignment of substantially all of the business and assets associated
therewith to an entity which is legally qualified to carry on such
business and effect the provisions of this Option Agreement. Upon
assignment in accordance with the foregoing, this Option Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
(b) This Option Agreement (together with any license
agreements entered into hereunder) constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral. This Option
Agreement shall not be modified except by in writing signed by both
parties.
(c) This Option Agreement shall be governed by and construed
in accordance with the laws of the state of Georgia.
(d) The headings of this Option Agreement are for convenience
only and shall not alter or otherwise affect the meaning hereof, nor be
referred to in construing this Option Agreement.
(e) No waiver of any of the provisions contained in this
Option Agreement shall be valid unless made in writing and executed by
the waiving party. It is expressly understood that in the event either
party shall on any occasion fail to perform any terms of this Option
Agreement and the other party shall not enforce that term, the failure
to enforce on that occasion shall not prevent enforcement on any other
occasion.
(f) If any section of this Option Agreement is held invalid by
any law, rule, order, regulation, or promulgation of any government or
by the final determination of any court having competent jurisdiction,
such law, rule, order, regulation, promulgation, or determination shall
have no effect outside the jurisdiction of such government or court and
shall not affect the enforceability of any other sections not held to
be invalid, and this Option Agreement shall be and remain in full force
and effect as to all provisions not held to be invalid.
(g) Cyntech waives any claim or right of action arising out of
or respecting this Option Agreement against the officers and the
members of the board of directors of Windstar respecting actions taken
in their capacity as directors.
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IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the date first above written.
WINDSTAR RESEARCH AND ENGINEERING, LTD.
By:/s/ X. X. Xxxxxxxx, Xx.
-----------------------
X. X. Xxxxxxxx, Xx.
Managing Director - North America
CYNTECH TECHNOLOGIES, INC.
By: /s/ R. Xxxxx Xxxxx
-----------------------
R. Xxxxx Xxxxx, President
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FORM OF LICENSE AGREEMENT
LICENSE AGREEMENT -- ______________ FACILITY
THIS LICENSE AGREEMENT (this "License Agreement") is entered into
effective this _____ day of _____________, 20___, between _____________________,
a wholly-owned subsidiary of CYNTECH TECHNOLOGIES, INC., a Utah corporation
("Cyntech"), and WINDSTAR RESEARCH AND ENGINEERING, LTD., a Cayman Islands
corporation ("Windstar"), pursuant to and subject to all the provisions of the
Exclusive Option Agreement (the "Option Agreement") between Cyntech and Windstar
dated February 1, 2001.
Premises
A. Cyntech has provided Windstar with a written request for a license
agreement, as required by the Option Agreement.
B. Windstar has reviewed the written request for a license agreement
and is satisfied that the facility and operations proposed by Cyntech for the
use of the Windstar Technology are economically viable and that the proposed
facility and operations do not endanger the viability or security of the
Windstar Technology, as defined herein.
C. The parties desire to enter into a license agreement under which
Cyntech may use the Windstar Technology in the __________________________
facility for the purposes described in this License Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations herein, Cyntech and Windstar hereby agree, covenant, and promise
as follows:
1. Certain Definitions. The following defined terms have the stated
meanings as used herein:
(a) Confidential Information. "Confidential Information" as
used herein shall mean information in the possession of Windstar that
is held and treated by Windstar as proprietary or trade secret
information and not disclosed to the trade or public by Windstar or
Cyntech. Confidential Information shall not include information that is
available to the public or subsequently becomes available to the public
through no breach of obligation of confidence and trust by Cyntech to
Windstar.
(b) Gross Income. The term "Gross Income" shall mean all
income from sources and uses of the Windstar Technology, including all
upstream and downstream applications, FOB at the plant or facility
site. Except as herein provided, Gross Income
shall be determined using generally accepted accounting principles
consistently applied and shall be reduced only by actual credits,
discounts, allowances, or returns granted to any purchaser or vendor by
Cyntech. Gross Income shall not include amounts billed by Cyntech for
shipping or packing charges, insurance, or federal, state, or local
sales, use, or excise taxes.
(c) Improvements. The term "Improvements" shall mean any and
all information which is developed from, utilized, or based upon the
Windstar Technology, and which modifies, enhances, or improves any
product or process which is part of the Windstar Technology.
(d) Patent Rights. The term "Patent Rights" shall mean all
United States patents, foreign patents, and applications for patent,
including continuing and provisional and other patent applications
derived therefrom, in this or any country in the world, which have been
filed or granted or which may be filed or granted which describe and
claim or are based upon all or part of the Windstar Technology.
(e) Windstar Technology. The term "Windstar Technology" shall
mean all scientific, technical, and methodological data and all
information, skills, data, understanding, and other know-how related to
the inventions and developments that Windstar has acquired, whether or
not any such inventions or developments are patentable, including, but
not limited to, related engineering, blueprints, explanations, manuals,
methods, processes, procedures, experimental data, disclosures,
reports, findings, ideas, trade secrets, and any and all other
expressions or manifestations of the foregoing. The Windstar Technology
shall be expanded to include such Improvements as become subject to
this License Agreement.
2. Grant of License; Term of Grant. Windstar hereby grants to Cyntech a
license to use the Windstar Technology in its plant located at
____________________________. This license shall run and shall be in full force
and effect from the date of this grant until the facility for which it is
granted permanently ceases operations or this License Agreement is terminated as
described in section 16 herein.
3. Technology Licensed. Under this License Agreement, Cyntech shall be
permitted to process [identify feedstock] at the __________________________
facility and to produce
4. Representations and Warranties of Cyntech. Cyntech represents and
warrants to Windstar that, so far as Cyntech was reasonably able to determine,
all information provided by Cyntech to Windstar in and related to the request
for a license agreement was accurate and complete and that Cyntech will use the
Windstar Technology only as specifically permitted by this License Agreement.
5. Documentation, Technical, and Permitting Assistance. Upon execution
of this License Agreement and payment of the License Agreement fee, Windstar
shall complete, at Cyntech's expense, all drawings, flow charts, technical and
schematic drawings, blueprints,
diagrams, and other material in human and machine readable formats necessary to
obtain all necessary permits, construct the facility, and deliver the facility
in a fully operational condition. These materials may be made available to
contractors and others as necessary, but Windstar shall retain ownership of all
materials discussed herein. Windstar shall, within reasonable time and resource
constraints, provide technical aid and assistance to assist Cyntech in the use
of the Windstar Technology. Windstar shall provide Cyntech with all necessary
assistance to obtain required permits from local, state, and federal agencies.
6. Documentation and Confirmation of Rights. Windstar shall, upon
request of and at the expense of Cyntech, execute such documents and take such
actions as are necessary and proper to evidence the rights granted hereunder to
Cyntech.
7. Representations and Warranties of Windstar. Windstar represents and
warrants to Cyntech that:
(a) Windstar has good and marketable title to the Windstar
Technology, including all patents, copyrights, trademarks, trade names,
brand names, proprietary and other technical information, technology
and software, free from any liens and free from any requirement of any
past, present, or future royalty payments, license fees, charges or
other payments, conditions, or restrictions whatsoever.
(b) To the best of its knowledge, Windstar has not infringed
upon and is not infringing upon, and has not engaged in, and is not
engaging in, any unauthorized use or misappropriation of any patents,
patent applications and continuations, copyrights, trademarks, trade
names, brand names, proprietary and other technical information,
technology, and software owned by or belonging to any other person.
There are no claims or proceedings pending or, to Windstar's knowledge,
threatened, against Windstar asserting that Windstar is infringing or
engaging in the unauthorized use or misappropriation of any
intellectual property of any other person or entity.
(c) Windstar is not aware of prior art with respect to any of
the patents owned or licensed by it that was not disclosed to the US
Patent and Trademark Office (or to any comparable foreign authority, if
necessary) in connection with applications for such patents. Windstar
is not aware of any fact or event making any one or more claims of any
of such patents invalid or unenforceable, and Windstar has not engaged
in any conduct, or omitted to perform any necessary act, the result of
which would be to invalidate any of such patents or adversely affect
any of their enforceability.
(d) There are no royalties, license fees, charges, or other
amounts payable by or on behalf of Windstar in respect of any of the
Windstar Technology.
8. Payments by Cyntech.
(a) Cyntech hereby assumes and agrees to pay Windstar a
[$__________] License Agreement fee for the __________________________
facility. This License Agreement fee shall be due and payable prior to
the commencement of engineering
drawings for the _________________ facility. If the _______________
facility proposes to add the processing of additional feedstock,
Cyntech shall submit a new written request for a license agreement with
all necessary information. If that request is granted by Windstar, the
additional $500,000 license agreement fee shall be due and payable upon
Windstar's approval of the request.]
(b) Cyntech shall pay Windstar a monthly operational licensing
fee of seven percent (7%) of the Gross Income for the ________________
facility so long as the ________________ facility continues to use the
Windstar Technology.
9. Reporting and Payment of Operational Licensing Fees. Within
forty-five (45) days after the first day of January, April, July and October of
each Contract Year after the first year, during the term of this Agreement,
Cyntech shall deliver to Windstar a true and accurate report, giving such
particulars of the business conducted by Cyntech during the preceding twelve
(12) months as are pertinent to an accounting for royalties. This report shall
include the Gross Income and the total royalties computed. The correctness and
completeness in each such report shall be attested to in writing annually by a
responsible financial manager or auditor of Cyntech.
Cyntech shall keep proper records and books of accounts sufficient to
accurately calculate all payments due under this Agreement. Windstar may request
that an audit be performed, up to a maximum of one time per year, but such audit
shall be performed exclusively by independent auditors of Windstar and Windstar
shall presumably bear all costs and expenses associated with such additional
audit. All such audit, royalty payment, sales volume and price records shall be
treated as confidential by each such independent auditor pursuant to an executed
confidentiality agreement with Cyntech, and shall not be disclosed to Windstar
or to any other party except as authorized by Cyntech or as necessary to verify
the accuracy of payments made under this Agreement. Cyntech shall be obligated
to reimburse Windstar for twice the cost of the audit in the event such audit
reveals a discrepancy in excess of five percent (5%) of the royalty payments due
pursuant to this Agreement for the time period audited.
10. Patent Applications and Prosecution. Windstar shall, at its own
cost and expense, apply for and prosecute applications for United States and
foreign patents covering such of the Windstar Technology and Improvements as
Windstar deems necessary. Windstar shall control and direct the filing and
prosecution of such applications for patent and maintenance of such patents
through a registered patent lawyer of Windstar's choosing, who shall (unless
Windstar and Cyntech agree otherwise) be instructed to obtain the maximum
available valid patent protection. Windstar shall seek prompt examination of all
such applications for patent in all countries in which application for patent is
made, keep Cyntech, or such patent attorney as Cyntech may designate, informed
as to all activities respecting such applications for patents, and regularly
provide copies of all documents and correspondence respecting such applications
for patents to Cyntech or its designee, and give full weight and due
consideration to information and requests from Cyntech respecting such patents
and applications. Cyntech shall have the right, but no obligation, to assume
prosecution and/or maintenance of the same. Windstar does not represent or
warrant that any patent applications will issue into a patent.
11. Disclosure of Improvements-Grantback. Windstar shall keep Cyntech
fully informed as to Improvements made by Windstar and shall promptly comply
with the obligations of section 5 in providing Technical Assistance respecting
the same. In like manner, Cyntech shall keep Windstar informed as to
Improvements made by Cyntech and shall assign the same to Windstar, upon which
all such Improvements shall be included in the Windstar Technology without
additional consideration and shall be subject to all provisions of this License
Agreement.
12. Litigation.
(a) Windstar shall have the first right to xxx any party for
any unfair trade practices involving the Windstar Technology or
Improvements or any infringement of any patent licensed hereunder, at
its own expense, and shall keep Cyntech fully informed of any
threatened or initiated litigation. Cyntech agrees to permit the use of
its name in any such suits, to execute any necessary documents, and to
do whatever necessary to assist Windstar in such suits, but at
Windstar's expense. Any recoveries from such suits initiated by
Windstar shall belong to Windstar, with the provision that if damages
are specifically allocated to Cyntech by a finder of fact or settlement
agreement, such damages shall belong to Cyntech.
(b) If Windstar fails within a reasonable time to xxx any
person for any unfair trade practice or infringement, Cyntech shall
have the right to file and maintain, at its own expense, such suits;
however, nothing in this License Agreement shall obligate Cyntech to
assume any responsibility or liability respecting any action or
possible action for any unfair trade practices or infringement. Cyntech
shall keep Windstar fully informed of any such suit. Windstar agrees to
permit the use of its name in all such suits, to execute any necessary
documents, and to do whatever necessary to assist Cyntech in such
suits, but at Cyntech's expense. Any recoveries from such suit
initiated by Cyntech shall belong to Cyntech, with the provision that
if damages are specifically allocated to Windstar by a finder of fact
or a settlement agreement, such damages shall belong to Windstar.
13. Defense of Licensed Rights. Windstar represents and warrants to
Cyntech that Windstar has good and indefeasible title to and has all right and
interest to and in all of the technology licensed to Cyntech, and has acquired
sufficient intellectual property rights protecting the Technology such that the
technology may be practiced without violating or infringing any patent,
trademark or other intellectual property rights of any third party. Windstar
represents and warrants to Cyntech that, with respect to the Windstar
Technology, neither it nor any of its Affiliates has received any notice or is
otherwise aware of any infringement by Windstar or any of its Affiliates of any
third party's patent, trademark or other intellectual property rights. None of
Windstar or any of its Affiliates has received any notice of infringement,
misappropriation or conflict from any person with respect to the Technology and
the conduct of business of Windstar and its Affiliates. Windstar covenants and
agrees to indemnify, defend and hold harmless Cyntech from and against any
claims of infringement or violation of intellectual property rights of any
person with respect to the Windstar Technology, provided that the technology
licensed to Cyntech necessarily violates or infringes such rights. The
consummation of the transactions contemplated by this Agreement will not result
in the loss of any Technology
and will not conflict with, or constitute a breach or violation of, any
agreement or understanding, whether written or oral, relating to any Technology.
14. Confidentiality. Confidential Information received by Cyntech from
Windstar, and which is identified by Windstar as being confidential or
proprietary, shall be held in trust and confidence by Cyntech. The Windstar
Technology and Improvements shall be, and remain, the property of Windstar, and
shall be presumed to be Confidential Information to the extent not disclosed in
printed publications or patents. The existence of some information respecting
the Windstar Technology and Improvements in the public domain shall not be
considered or offered to establish the presence in the public domain of all of
the Windstar Technology and Improvements. Nothing herein shall preclude Cyntech
from disclosing information required by governmental action, law, or regulation;
however, in the event Cyntech is so required, Cyntech shall provide Windstar
with a copy of the request, or demand, for such information, and a statement of
its intended response at least thirty days before the information is to be
disclosed. Windstar may, at its option, disallow the disclosure of nonpublic
information if it feels such disclosure will harm Windstar financially, or that
the disclosure cannot be guaranteed to be kept confidential and not reveled to
third parties. Windstar retains the exclusive right to allow or disallow any
information requested by third parties from Cyntech. The duties and obligations
to maintain Confidential Information in this paragraph shall survive any
termination of this Option Agreement.
15. Notices. All notices, demands, requests, or other communications
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery:
If to Windstar, to: X.X. Xxxxxxxx, Xx.
North American Managing Director
Windstar Research and Engineering, Ltd.
X.X. Xxx 0000
Xxxxxxxx, XX 00000
If to Cyntech, to: Cyntech Technologies, Inc.
Attn: R. Xxxxx Xxxxx, President
0000 Xxxxxxxxxx Xxxxx, XX
Xxxxxxx, XX 00000-0000
or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder, and any such notice, demand,
request, or other communication shall be deemed to have been given as of the
date so delivered or sent by facsimile transmission, three days after the date
so mailed, or one day after the date so sent by overnight delivery.
16. Termination.
(a) Windstar shall have the right to terminate this License
Agreement if Cyntech defaults upon any of its obligations hereunder by
giving 180 days' written notice of termination to Cyntech specifying
the default(s) for which termination is noticed and the date (not less
than 180 days distant) on which termination shall be effective;
provided, however, that if Cyntech shall have cured the specified
default(s) within 90 days of said notice, such notice shall be of no
force or effect.
(b) All rights and all options granted hereunder shall
terminate automatically in the event Cyntech should (i) voluntarily
seek, consent to, or acquiesce in the benefit or benefits of any Debtor
Relief Law (defined hereinafter), or (ii) become a party to (or be made
the subject of) any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights (defined hereinafter) of Windstar granted
herein (unless, in the event such proceeding is involuntary, the
petition instituting same is dismissed within 60 days of the filing of
same). "Debtor Relief Law" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar Laws
from time to time in effect affecting the Rights of creditors
generally. "Rights" means rights, remedies, powers, and privileges.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth,
nation, territory, possession, county, parish, municipality, or
Tribunal. "Tribunal" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of the United
States or of any state, commonwealth, nation, territory, possession,
county, parish, or municipality, whether now or hereafter constituted
and/or existing.
(c) In the event this License Agreement is terminated:
(i) All obligations of confidentiality shall remain
in full force and effect;
(ii) Cyntech shall return, deliver, and assign to
Windstar all written records relating to the
__________________________ facility that are in its
possession, custody, or control, including notebooks, reports,
data, applications for approval, approvals, and all writings,
including magnetically recorded writings or legible and
readable copies thereof, which relate to or describe the use
or characteristics of the Windstar Technology or Improvements;
(iii) Cyntech shall not use the Windstar Technology
at the __________________________ facility; and
(iv) Cyntech shall surrender the
__________________________ facility to Windstar, with the
value of the __________________________ facility to be offset
against the amount owed to Windstar by Cyntech.
17. Arbitration. All issues, questions, disagreements, breaches, and
disputes respecting the monthly operational license fees due under this License
Agreement shall be determined by arbitration conducted in Columbus, Georgia, in
accordance with the rules of the American Arbitration Association, under the
laws of the state of Georgia, and any arbitration award may be enforced by
judgment of any court of competent jurisdiction. The prevailing party's costs,
expenses, and reasonable attorneys' fees shall be paid by the nonprevailing
party.
18. General Provisions.
(a) This License Agreement is not assignable by Cyntech,
except upon the written consent of Windstar, which consent shall not be
unreasonably withheld when such assignment is in connection with the
assignment of substantially all of the business and assets associated
therewith to an entity which is legally qualified to carry on such
business and effect the provisions of this License Agreement. Upon
assignment in accordance with the foregoing, this License Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
(b) This License Agreement (together with the Option
Agreement) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
agreements, whether written or oral. This License Agreement shall not
be modified except by in writing signed by both parties.
(c) This License Agreement shall be governed by and construed
in accordance with the laws of the state of Georgia.
(d) The headings of this License Agreement are for convenience
only and shall not alter or otherwise affect the meaning hereof, nor be
referred to in construing this License Agreement.
(e) No waiver of any of the provisions contained in this
License Agreement shall be valid unless made in writing and executed by
the waiving party. It is expressly understood that in the event either
party shall on any occasion fail to perform any terms of this License
Agreement and the other party shall not enforce that term, the failure
to enforce on that occasion shall not prevent enforcement on any other
occasion.
(f) If any section of this License Agreement is held invalid
by any law, rule, order, regulation, or promulgation of any government
or by the final determination of any court having competent
jurisdiction, such law, rule, order, regulation, promulgation, or
determination shall have no effect outside the jurisdiction of such
government or court and shall not affect the enforceability of any
other sections not held to be invalid, and this License Agreement shall
be and remain in full force and effect as to all provisions not held to
be invalid.
(g) Cyntech waives any claim or right of action arising out of
or respecting this License Agreement against the officers and the
members of the board of directors of Windstar respecting actions taken
in their capacity as directors.
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the date first above written.
WINDSTAR RESEARCH AND ENGINEERING, LTD.
By: __________________________________
X.X. Xxxxxxxx, Xx.
North American Managing Director
CYNTECH TECHNOLOGIES, INC.
By: __________________________________
R. Xxxxx Xxxxx, President
