SUBLICENSE AGREEMENT AMONG SRS ENERGY, INC., CLEANTECH BIOFUELS, INC AND HFTA FOR METHODS AND APPARATUS FOR TREATING BIOMASS MATERIAL
AMONG
SRS
ENERGY, INC.,
CLEANTECH
BIOFUELS, INC
AND
HFTA
FOR
METHODS
AND APPARATUS FOR TREATING BIOMASS MATERIAL
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U.S.
Patent Nos.: 5,221,357, 5,366,558,
5,536,325,
5,628,830, and 6,019,900
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HFTA
LIVERMORE,
CALIFORNIA
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METHODS
AND APPARATUS FOR TREATING BIOMASS MATERIAL
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U.S.
Patent Nos.: 5,221,357, 5,366,558,
5,536,325,
5,628,830, and 6,019,900
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This
sublicense agreement (“Agreement”) is effective March 20, 2008 (“Effective
Date”), by and between HFTA, a California corporation, having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (“HFTA”), CleanTech Biofuels
Inc., a Delaware corporation having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“CTB”), and SRS Energy, Inc., a
wholly-owned subsidiary of CTB (“SUBLICENSEE”) (collectively, the
“Parties”). The parties agree as follows:
1. BACKGROUND
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1.1
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Regents
of the University of California (“REGENTS”) has an assignment of the
technology invented by Inventors ▇▇▇▇▇ ▇▇▇▇▇, Ph.D., and ▇▇▇▇▇▇ ▇▇▇▇▇,
Ph.D., employed by the University of California, Berkeley (the
"INVENTION"), as described in United States Patent Nos. 5,221,357,
5,366,558, 5,536,325, 5,628,830, and 6,019,900 under REGENTS' PATENT
RIGHTS as defined below, which are directed to the
INVENTION.
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1.2
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REGENTS
and HFTA have executed an exclusive license agreement for REGENTS’ PATENT
RIGHTS to the INVENTION that allows HFTA to grant sublicenses to the
INVENTION.
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1.3
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CTB
and SUBLICENSEE have provided HFTA with a commercialization plan for the
INVENTION and business strategy in order to evaluate its capabilities as a
SUBLICENSEE.
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1.4
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HFTA
and SUBLICENSEE wish to have the INVENTION perfected and marketed as soon
as possible so that products resulting there from may be available for
public use and benefit.
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1.5
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SUBLICENSEE
wishes to acquire a sublicense under REGENTS' PATENT RIGHTS for the
purpose of undertaking development and to manufacture, use, sell, and
offer for sale LICENSED PRODUCTS as defined
below.
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2. DEFINITIONS
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2.1
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"REGENTS'
PATENT RIGHTS" means REGENTS' rights in U.S. Patent Numbers 5,221,357;
5,366,558; 5,536,325; and 5,628,830, entitled "Method of Treating Biomass
Material" issued on June 22, 1993; November 22, 1994; July 16, 1996; and
May 13, 1997, respectively, to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, and U.S. Patent Number
6,019,900, entitled “Single Stage Denitrification Anaerobic Digestion”
issued on February 1, 2000, to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇,
and assigned to REGENTS; and continuing applications thereof including
divisions, substitutions, extensions and continuation-in-part applications
(only to the extent, however, that claims in the continuation-in-part
applications are entitled to the priority filing date of the parent patent
application), any patents issuing on said application or continuing
applications including reissues; and any corresponding foreign patents or
applications.
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2.2
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"LICENSED
PRODUCTS" means all kits, compositions of matter, articles of manufacture,
materials, and products, the manufacture, use, SALE, offer for SALE, or
import of which: a) would require the performance of the LICENSED METHOD;
or b) but for the license granted pursuant to this Agreement, would
infringe, or contribute to or induce the infringement of, a valid claim of
any issued, unexpired patent under REGENTS' PATENT RIGHTS or a claim being
prosecuted in a pending patent application under REGENTS’ PATENT
RIGHTS. A claim in an issued patent under REGENTS’ PATENT
RIGHTS will be presumed valid unless and until it has been held to be
invalid by a final judgment of a court of competent jurisdiction from
which no appeal can be or is taken.
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2.3
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“ETHANOL
PRODUCT” means a Licensed Product comprised of ethanol or ethyl alcohol
and any form thereof, including, but not limited to, all blended,
reprocessed, denatured, hydrated, dehydrated, or reformulated
forms.
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2.4
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“GENERATED
PRODUCT” means all kits, compositions of matter, materials, products, and
co-products and all derivations, modifications, improvements, and
developments thereon, including secondary products, derivatives, and
byproducts thereof that have been generated, collected, identified, made,
produced, or co-produced through the use of a Licensed Product or Licensed
Service or the practice of the Licensed Method and the manufacture, use,
Sale, offer for Sale, or import of which in a particular country does not
infringe the Patent Rights.
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2.5
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"LICENSED
METHOD" means any process or method the use or practice of which, but for
the license pursuant to this Agreement, would infringe, or contribute to
or induce the infringement of, any issued or pending claim under REGENTS'
PATENT RIGHTS in that country in which the LICENSED METHOD is used or
practiced.
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2.6
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"NET
SALES" means the gross invoice price charged and the
value of non-cash consideration owed to, LICENSEE, or a
SUBLICENSEE, for SALES of LICENSED
PRODUCTS, LICENSED
SERVICES, and LICENSED
METHODS, less the
sum of the following actual and customary deductions where
applicable: cash, trade or quantity discounts; sales, use,
tariff, import/export duties or other excise taxes when included in gross
sales, but not value-added taxes assessed or income taxes derived from
such sales; transportation charges; and allowances or credits to customers
because of rejections or returns.
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2.7
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"PROOF
OF CONCEPT VALIDATION" means the use of the Licensed Method via equipment
purchased pursuant to the ▇▇▇▇ of Sale dated January 24, 2008 and attached
to this Agreement to produce Pentose and Hexose sugars from biomass
generated from municipal solid waste ("MSW") and other sources at
efficiencies that SUBLICENSEE determines is sufficient to proceed with
utilizing the LICENSED METHOD in a larger scale demonstration plant, which
SUBLICENSEE shall be required to pursue consistent with its obligations
under Article 6hereof. SUBLICENSEE shall provide written notice
of PROOF OF CONCEPT VALIDATION as soon as practicable
after completing the foregoing analysis and
testing.
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2.8
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"COMMERCIAL
DEMONSTRATION" means the use of the Licensed Method in a continuous flow
reactor to produce Pentose and Hexose sugars from biomass generated from
municipal solid waste and other sources at efficiencies that SUBLICENSEE
determines are sufficient to proceed with utilizing the LICENSED METHOD in
a commercial plant, which SUBLICENSEE shall be required to pursue
consistent with its obligations under Article
6hereof. SUBLICENSEE shall provide written notice of COMMERCIAL
DEMONSTRATION as soon as practicable after completing the
foregoing analysis and testing.
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2.9
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“SALE"
means, for LICENSED PRODUCTS and LICENSED SERVICES, the act of selling,
leasing or otherwise transferring, providing, or furnishing such product
or service, and for LICENSED METHOD the act of performing such method, for
any use or for any consideration. Correspondingly, "SELL" means
to make or cause to be made a SALE, and "SOLD" means to have made or caused to be
made a SALE. A "COMMERCIAL SALE" is a SALE for more than Fifty
Thousand Dollars ($50,000) or a series of SALES within a three month
period for sums which exceed said
amount.
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2.10
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"LICENSED
SERVICE" means a service provided using LICENSED PRODUCTS or LICENSED
METHOD.
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3. GRANT
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3.1
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Subject
to the limitations set forth in this Agreement, including the license
granted to the U.S. Government and the rights reserved in Paragraph 3.3,
HFTA hereby grants and SUBLICENSEE hereby accepts an exclusive worldwide
license under REGENTS' PATENT RIGHTS to make, use, offer for SALE, import,
and SELL LICENSED PRODUCTS and LICENSED SERVICES, and to practice LICENSED
METHOD, when the feedstock is cellulosic or lignocellulosic material
derived from MSWand no other party shall be entitled to use the REGENT’S
PATENT RIGHTS for such purposes except as specifically set forth to the
contrary in Paragraph 3.3 hereof. In addition,
subject to the foregoing limitations, HFTA hereby grants and SUBLICENSEE
hereby accepts a non-exclusive worldwide license under REGENTS' PATENT
RIGHTS to make, use, offer for SALE, import, and SELL LICENSED PRODUCTS
and LICENSED SERVICES, and to practice LICENSED METHOD, when the feedstock
is cellulosic or lignocellulosic material not derived from
MSW
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3.2
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The
license under Paragraph 3.1 commences on the Effective Date and ends on
the date of the last-to-expire patent under REGENTS' PATENT
RIGHTS.
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3.3
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Nothing
in this Agreement will be deemed to limit the right of REGENTS to publish
any and all technical data resulting from any research performed by
REGENTS relating to the INVENTION, and to make and use the INVENTION,
LICENSED PRODUCTS, and LICENSED SERVICES and practice LICENSED METHOD and
associated technology and to allow other educational and non-profit
institutions to do so for educational and research purposes; provided no
such use shall be for any purpose that would result in the SALE of any
LICENSED PRODUCT, LICENSED SERVICE, or LICENSED
METHOD.
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3.4
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This
Agreement will terminate immediately if SUBLICENSEE files a claim
including in any way the assertion that any portion of the REGENTS' PATENT
RIGHTS is invalid or unenforceable, where the filing is by the
SUBLICENSEE, a third party on behalf of the SUBLICENSEE, or a third party
at the written urging of the
SUBLICENSEE.
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3.5
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SUBLICENSEE
will have a continuing responsibility to keep HFTA informed of its status
as a large/small entity, as defined in 15 U.S.C.
632.
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3.6
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The
INVENTION was funded in part by the U.S. Government. In
accordance with PL 96-517 as amended by PL 98-620, to the extent required
by law or regulation, any products covered by patent applications or
patents claiming the INVENTION and sold in the United States will be
substantially manufactured in the United
States.
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3.7
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SUBLICENSEE
is prohibited from granting any sublicenses without written agreement of
HFTA and payment of such additional license fees and royalties as may be
specified by HFTA in such agreement and as may be required by
REGENTS.
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3.8
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The
Parties expect that in proving the concept, scaling up to commercial
production, and building and operating plants, and otherwise, they will
make new discoveries, inventions and refinements of the subject
technology. All future innovations, processes,
enhancements, inventions and patents relating to the use of hydrolysis to
extract useful compounds from biomass, other than inventions included in
REGENTS’ PATENT RIGHTS, (“NEW TECHNOLOGY”) shall be owned in equal share
by HFTA and SUBLICENSEE. If these parties agree that any NEW TECHNOLOGY
merits a patent, then they shall share equally in the cost of applying for
such patent. If only one party supports the patent application
for NEW TECHNOLOGY, and the other does not, then that party may proceed to
apply for the patent and if it issues, may recoup its unshared patent cost
from the other party by collecting all license fees and royalties for that
patent until it has recouped two hundred percent (200%) of the unshared
patent costs, after which the license fees and royalties shall be shared
equally. HFTA hereby grants to SUBLICENSEE an exclusive license to utilize
NEW TECHNOLOGY at no additional royalty other than royalty stated in
Article 5 of this Agreement, except that the term of this Agreement shall
be extended automatically to the expiration date of any subsequently
issued patent.
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4. LICENSE ISSUE
FEE
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a)
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4.1 SUBLICENSEE
will pay to HFTA a non-creditable, non-refundable license issue fee as
follows:Twenty Five Thousand United States Dollars ($25,000) within three
(3) days following the Effective Date of this Agreement
and;
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b)
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▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars ($150,000) on or before
September 1, 2009;
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c)
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Stock
Issuance. Upon Execution of this Agreement, CTB shall deposit 2,887,687
shares of its common stock, $0.001 par value per share, (the “Shares”)
into an escrow account with an escrow agent mutually satisfactory to the
parties. Upon the earlier to occur of the date six months from
the date of this Agreement, or date of PROOF OF CONCEPT VALIDATION,
962,682 of such Shares shall be released from escrow and become the
property of HFTA. Upon the earlier to occur of the date 450
days from the date of this Agreement or date of COMMERCIAL VALIDATION,
1,925,005 of such shares shall be released from escrow to
HFTA. Notwithstanding the foregoing, if at any time CTB sells
substantially all of its assets or capital stock, the Shares shall be
released from escrow simultaneous with the closing of such transaction and
become the property of HFTA. In the event that the Agreement is legally
terminated prior to any such release date, those shares not yet released
from escrow shall be cancelled.
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5. ROYALTIES
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5.1
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As
further consideration for all the rights and licenses granted to
SUBLICENSEE, SUBLICENSEE will pay to HFTA an earned royalty at
a rate based on the NET SALES of Products as set forth below (“Earned
Royalty”):
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(a)
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Four
percent (4.0%) of the NET SALES of any ETHANOL PRODUCTS to the extent that
the price paid per gallon is in excess of $1.50, three percent (3.0%) of
the NET SALES of any ETHANOL PRODUCTS if the price paid per gallon is
between $1.30 to $1.50, and two percent (2.0%) of any ETHANOL PRODUCTS if
the price paid per gallon is less the $1.30;
and
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(b)
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SUBLICENSEE
shall pay to HFTA an Earned Royalty at the rate of seven and one half
percent (7.5%) based on the NET SALES of all non-ethanol products
including, LICENSED PRODUCTS, GENERATED PRODUCTS, LICENSED METHOD, OR
LICENSED SERVICES.
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5.2
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Royalties
accruing to HFTA during any calendar quarter will be paid to
HFTA within sixty (60) days after the end of such calendar
quarter.
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5.3
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SUBLICENSEE
shall pay HFTA minimum annual royalties as
follows:
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(a)
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Twenty
Five Thousand Dollars ($25,000) on or before the earlier of one year after
the first SALE or sixty (60) days following the end of the year
2010;
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(b)
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Twenty
Five Thousand Dollars ($25,000) sixty (60) days following the end of the
year 2011;
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(c)
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Sixty
Thousand Dollars ($60,000) sixty (60) days following the end of the year
2012;
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(d)
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Such
sum increasing annually by Twenty Thousand Dollars ($20,000) for each year
thereafter, but not to exceed the sum of One Hundred Twenty Thousand
($120,000) per year.
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(e)
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Minimum
annual royalties for each year will be offset by royalties paid by
SUBLICENSEE for NET SALES in that calendar year. In the
event the royalties paid exceed the specified minimum for that year, then
no minimum royalty shall be due for that
year.
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5.4
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All
payments due HFTA will be payable in United States
dollars. When LICENSED PRODUCTS, LICENSED SERVICES, or LICENSED
METHOD are SOLD for monies other than United States dollars, earned
royalties will first be determined in the foreign currency of the country
in which the SALE was made and then converted into equivalent United
States dollars. The exchange rate will be that rate quoted in
the Wall Street
Journal on the last business day of the reporting
period.
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5.5
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Payments
due for SALES occurring in any country outside the United States will not
be reduced by any taxes, fees, or other charges imposed by the government
of such country on the remittance of royalty
income. SUBLICENSEE will also be responsible for all bank
transfer charges.
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5.6
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SUBLICENSEE
will make all payments under this Agreement by check payable to "HFTA" and
forward it to HFTA at the address shown in Article 19 (Notices) or by wire
transfer if instructed to do so by
HFTA.
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6. DUE
DILIGENCE
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6.1
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SUBLICENSEE,
upon execution of this Agreement, will diligently proceed with the
development, manufacture, and SALE of LICENSED PRODUCTS, LICENSED
SERVICES, and LICENSED METHOD, and will diligently market them in
quantities sufficient to meet the market demand. The parties
acknowledge that in the process of commercializing new technology,
frequently unforeseen challenges and/or opportunities arise that were not
initially envisioned by the parties. In the event that
SUBLICEENSE encounters any such challenges or opportunities that could
delay or enhance the development contemplated in this Agreement,
SUBLICENSEE shall include such matters in its regular reports due
hereunder.
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6.2
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The
SUBLICENSEE will obtain all necessary governmental approvals in each
jurisdiction where LICENSED PRODUCTS are manufactured, used, SOLD,
imported, or offered for SALE. In addition to its obligations under
Paragraph 6.1, SUBLICENSEE specifically commits to achieving the following
objectives in its due diligence activities under this
Agreement:
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(a)
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On
or before February 1, 2009, secure sufficient funding to build a small
(greater than 25 dry tons of biomass per operating day) commercial
plant;
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(b)
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On
or before March 1, 2009, operate a continuous flow demonstration (greater
than one dry ton of biomass per operating day)
plant;
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(c)
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On
or before January 1, 2010, secure sufficient funding to build a large
(greater than 250 dry tons of biomass per operating day) commercial
plant;
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(d)
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On
or before September 1, 2010, start the COMMERCIAL SALE of ETHANOL PRODUCT
at one or more commercial plants;
and
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(e)
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On
or before June 1, 2012, start COMMERCIAL SALE of ETHANOL PRODUCT at one or
more large commercial plants;
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7. PROGRESS AND
ROYALTY REPORTS
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7.1
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For
the period beginning March 31, 2008 SUBLICENSEE will submit to HFTA a
semi-annual progress report covering SUBLICENSEE's activities related to
the development and testing of all LICENSED PRODUCTS, LICENSED SERVICES
and LICENSED METHOD and the obtaining of necessary governmental approvals,
if any, for marketing in the United States. These progress
reports will be made for all development activities until the first SALE
occurs in the United States.
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7.2
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Each
progress report will be a sufficiently detailed summary of activities of
SUBLICENSEE so that HFTA may evaluate and determine SUBLICENSEE’s progress
in development of LICENSED PRODUCTS, LICENSED SERVICES, and LICENSED
METHOD, and in meeting its diligence obligations under Article 6, and will
include (but not be limited to) the following: summary of work completed
and in progress; current schedule of anticipated events and milestones,
including diligence milestones under Paragraph 6.2; and anticipated market
introduction dates..
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7.3
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SUBLICENSEE
also will report to HFTA in its next progress and royalty reports, the
date of first SALE.
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7.4
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After
the first COMMERCIAL SALE anywhere in the world, SUBLICENSEE will make
quarterly royalty reports to HFTA within sixty (60) days after quarters
ending March 31, June 30, September 30, and December 31, of each
year. Each such royalty report will include at least the
following:
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(a)
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The
quantities of LICENSED PRODUCTS manufactured and
SOLD;
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(b)
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Gross
revenue from SALE of LICENSED PRODUCTS, LICENSED SERVICES and LICENSED
METHOD;
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(c)
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NET
SALES pursuant to Paragraph 2.6;
and
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(d)
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Total
royalties due HFTA.
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7.5
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If
no SALES have occurred during the report period, a statement to this
effect is required in the royalty report for that
period.
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8. BOOKS AND RECORDS
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8.1
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SUBLICENSEE
will keep full, true, and accurate books and records containing all
particulars that may be necessary for the purpose of showing the amount of
royalties payable to HFTA and SUBLICENSEE’s compliance with other
obligations under this Agreement. Said books and records will
be kept at SUBLICENSEE's principal place of business or the principal
place of business of the appropriate division of SUBLICENSEE to which this
Agreement relates. Said books and records and the supporting
data will be open at all reasonable times during normal business hours
upon reasonable notice, for five (5) years following the end of the
calendar year to which they pertain, to the inspection and audit by
representatives of HFTA for the purpose of verifying SUBLICENSEE's royalty
statement or compliance in other respects with this
Agreement. Such representatives will be bound to hold all
information in confidence except as necessary to communicate SUBLICENSEE's
non-compliance with this Agreement to HFTA, or to pursue claims for unpaid
royalties and license fees or for breach or default of this
Agreement.
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8.2
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The
fees and expenses of HFTA’S representatives performing such an examination
will be borne by HFTA. However, if an error in underpaid
royalties to HFTA of more than five percent (5%) of the total royalties
due for any calendar quarter is discovered, then the fees and expenses of
these representatives will be borne by
SUBLICENSEE.
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9. LIFE OF THE
AGREEMENT
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9.1
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Unless
otherwise terminated by the operation of law, or extended or by acts of
the parties in accordance with the terms of this Agreement, this Agreement
will be in force from the Effective Date and will remain in effect for the
life of the last-to-expire patent or last-to-be-abandoned patent
application licensed under this Agreement, whichever is
later.
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9.2
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Any
termination of this Agreement shall not affect the rights and obligations
set forth in the following
articles:
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Article
2
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Definitions
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Article
4
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Sublicenses
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Article
8
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Books
and Records
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Article
9
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Life
of the Agreement
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Article
12
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Disposition
of Licensed Products Upon Termination
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Article
13
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Use
of Names and Trademarks
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Article
14
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Limited
Warranties
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Article
16
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Indemnification
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Article
19
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Notices
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Article
20
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Late
Payments
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Article
22
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Confidentiality
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Article
25
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Applicable
Law; Venue; Attorney’s Fees
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9.2
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Any
termination of this Agreement will not relieve SUBLICENSEE of its
obligation to pay any monies due or owing at the time of such termination
and will not relieve any obligations, of either party to the other party,
established prior to termination.
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10. TERMINATION BY HFTA
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10.1
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If
SUBLICENSEE should violate or fail to perform any term of this Agreement,
then HFTA may give written notice of such default ("Notice of Default") to
SUBLICENSEE. If SUBLICENSEE should fail to repair such default
within sixty (60) days of the effective date of such notice, HFTA will
have the right to terminate this Agreement and the licenses herein by a
second written notice ("Notice of Termination") to SUBLICENSEE; provided
that if the default is not curable in sixty days but SUBLICENSEE is
working in good faith to cure the default, SUBLICENSEE may extend the
period for curing such default by an additional ninety days by making a
payment of $25,000 to HFTA together with written notice setting forth its
plan for curing such default, provided such payment and plan are delivered
to HFTA within the foregoing sixty day periodthis extended cure period
does not apply to failure of SUBLICENSEE to make timely payments to HFTA.
If a Notice of Termination is sent to SUBLICENSEE, this Agreement will
automatically terminate on the effective date of such
notice. Such termination will not impair any accrued rights of
HFTA. These notices will be subject to Article 19
(Notices).
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11. TERMINATION BY SUBLICENSEE
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11.1
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SUBLICENSEE
will have the right at any time to terminate this Agreement in whole by
giving notice in writing to HFTA. Such notice of termination
will be subject to Article 19 (Notices) and termination of this Agreement
will be effective ninety (90) days after the effective date of such
notice.
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11.2
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Any
termination pursuant to Paragraph 11.1 will not relieve SUBLICENSEE of any
obligation or liability accrued hereunder prior to such termination or
rescind anything done by SUBLICENSEE or any payments made to HFTA
hereunder prior to the time such termination becomes effective, and such
termination will not affect in any manner any rights of HFTA arising under
this Agreement prior to such
termination.
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12. DISPOSITION OF LICENSED PRODUCTS UPON
TERMINATION
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12.1
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Upon
termination of this Agreement, for a period of one hundred twenty (120)
days after the date of termination SUBLICENSEE may complete and SELL any
partially made LICENSED PRODUCTS and continue to render any previously
commenced LICENSED SERVICES, and continue the practice of LICENSED METHOD
only to the extent necessary to do so; provided, however, that all such
SALES will be subject to the terms of this Agreement including, but not
limited to, the payment of royalties at the rate and at the time provided
herein and the rendering of reports
thereon.
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13. USE OF NAMES AND
TRADEMARKS
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13.1
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Nothing
contained in this Agreement will be construed as conferring any right to
use in advertising, publicity or other promotional activities any name,
trademark, trade name, or other designation of any party hereto by the
other (including any contraction, abbreviation, or simulation of any of
the foregoing). Unless required by law or consented to in
writing by HFTA and REGENTS, the use by SUBLICENSEE of the name “HFTA”,
"The Regents of the University of California" or the name of any
University of California campus in advertising, publicity or other
promotional activities is expressly
prohibited.
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14. LIMITED
WARRANTIES
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14.1
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HFTA
warrants to SUBLICENSEE that it has the lawful right to grant this
license. HFTA has not received any notice that REGENTS PATENT RIGHTS
infringe on the rights of any other
person.
|
|
14.2
|
This
license and the associated INVENTION are provided WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
EXPRESSED OR IMPLIED. EXCEPT AS SET FORTH IN PARGRAPH
14.1. HFTA MAKES NO REPRESENTATION OR WARRANTY THAT THE
INVENTION, REGENTS’ PATENT RIGHTS, LICENSED PRODUCTS, LICENSED SERVICES OR
LICENSED METHOD WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY
RIGHT.
|
|
14.3
|
IN
NO EVENT WILL HFTA BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES RESULTING FROM EXERCISE OF THIS SUBLICENSE OR THE USE OF THE
INVENTION, REGENTS’ PATENT RIGHTS, LICENSED METHOD, LICENSED SERVICES OR
LICENSED PRODUCTS.
|
|
14.4
|
Nothing
in this Agreement is or will be construed
as:
|
|
(a)
|
A
warranty or representation by HFTA or REGENTS as to the validity,
enforceability or scope of any REGENTS' PATENT RIGHTS;
or
|
|
(b)
|
A
warranty or representation that anything made, used, or SOLD under any
license granted in this Agreement is or will be free from infringement of
patents of third parties; or
|
|
(c)
|
An
obligation to bring or prosecute actions or suits against third parties
for patent infringement, except as provided in Article 15;
or
|
|
(d)
|
Conferring
by implication, estoppel, or otherwise any license or rights under any
patents of HFTA or REGENTS other than REGENTS' PATENT RIGHTS as defined
herein, regardless of whether such patents are dominant or subordinate to
REGENTS’ PATENT RIGHTS; or
|
|
(e)
|
An
obligation to furnish any know-how not provided in the patents and patent
applications under REGENTS' PATENT
RIGHTS.
|
15. PATENT INFRINGEMENT
|
15.1
|
In
the event that SUBLICENSEE learns of the substantial infringement of any
REGENTS' PATENT RIGHTS under this Agreement, SUBLICENSEE will promptly
provide HFTA with notice and reasonable evidence of such infringement
(“Infringement Notice”). During the period and in a
jurisdiction where SUBLICENSEE has exclusive rights under this Agreement,
neither party will notify a third party, including the infringer, of the
infringement without first obtaining consent of the other party, which
consent will not be unreasonably withheld. If
SUBLICENSEE puts such infringer on notice of the existence of
any REGENTS PATENT RIGHTS with respect to such infringement without first
obtaining the written consent of HFTA and if a declaratory judgment action
is filed by such infringer against HFTA or REGENTS, then SUBLICENSEE’s
right to initiate a suit against such infringer for infringement under
Paragraph 15.2 below will terminate immediately without the obligation of
HFTA to provide notice to the SUBLICENSEE. Both parties will use diligent
efforts, in cooperation with each other, to terminate such infringement
without litigation.
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|
15.2
|
If
the infringing activity of potential commercial significance has not been
abated within ninety (90) days following the effective date of the
Infringement Notice, SUBLICENSEE may institute suit for patent
infringement against the infringer. HFTA or REGENTS may
voluntarily join such suit at its own expense, but may not thereafter
commence suit against the infringer for the acts of infringement that are
the subject of SUBLICENSEE’s suit or any judgment rendered in that
suit. SUBLICENSEE may not join HFTA or REGENTS in a suit
initiated by SUBLICENSEE without HFTA or REGENTS’ prior written
consent. If, in a suit initiated by SUBLICENSEE, HFTA and/or
REGENTS are involuntarily joined other than by SUBLICENSEE, SUBLICENSEE
will pay any costs incurred by HFTA and REGENTS arising out of such suit,
including but not limited to, any legal fees of counsel that HFTA or
REGENTS select and retain to represent them in the
suit.
|
If,
within one hundred and twenty (120) days following the effective date of the
Infringement Notice, the infringing activity of potential commercial
significance has not been abated and if SUBLICENSEE has not brought suit against
the infringer, HFTA or REGENTS may institute suit for patent infringement
against the infringer. If HFTA or REGENTS institutes such suit,
SUBLICENSEE may not join such suit without HFTA and REGENTS’ consent and may not
thereafter commence suit against the infringer for the acts of infringement that
are the subject of HFTA or REGENTS’ suit or any judgment rendered in that
suit.
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15.3
|
Such
legal action as is decided upon will be at the expense of the party on
account of whom suit is brought and all recoveries recovered thereby will
belong to such party, provided that legal action brought jointly by HFTA
or REGENTS and SUBLICENSEE and participated in by both or all, will be at
the joint expense of the parties and all recoveries will be allocated in
the following order: a) to each party reimbursement in equal
amounts of the attorney's costs, fees, and other related expenses to the
extent each party paid for such costs, fees, and expenses until all such
costs, fees, and expenses are consumed for each party; and b) any
remaining amount shared jointly by them in proportion to the share of
expenses paid by each party, but in no event will HFTA’S OR REGENTS’ share
be less than ten percent (10%) each of such remaining amount if each is a
party.
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|
15.4
|
Each
party will cooperate with the other in litigation instituted hereunder but
at the expense of the party on account of whom suit is
brought. Such litigation will be controlled by the party
bringing the action, except that HFTA and REGENTS may be represented by
counsel of their choice in any suit brought by
SUBLICENSEE.
|
|
15.5
|
Any
agreement made by SUBLICENSEE for the purposes of settling litigation or
other dispute shall comply with the requirements of this
Agreement.
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16. INDEMNIFICATION AND
GUARANTEES
|
16.1
|
SUBLICENSEE
will be required to indemnify, hold harmless, and
defend: HFTA and REGENTS and their officers, employees,
and agents; sponsor(s) of the research that led to the INVENTION; and the
inventors of any patents and patent applications under REGENTS' PATENT
RIGHTS and their employers against any and all claims, suits, losses,
damages, costs, fees, and expenses resulting from or arising out of
exercise of this sublicense. This indemnification will include, but not be
limited to, any product liability.
|
|
16.2
|
SUBLICENSEE,
at its sole cost and expense, shall insure its activities in connection
with any work performed hereunder and shall obtain, keep in force, and
maintain the following insurance:
|
|
(a)
|
Commercial
Form General Liability Insurance (contractual liability included) with
limits as follows:
|
Each
Occurrence
......................................................$2,000,000
Products/Completed
Operations Aggregate…. $5,000,000
Personal
and Advertising Injury ......................$2,000,000
General
Aggregate ..............................................$5,000,000
If the
above insurance is written on a claims-made form, it shall continue for no less
than three (3) years following termination or expiration of this Agreement. The
insurance shall have a retroactive date of placement prior to or coinciding with
the Effective Date of this Agreement; and
|
(b)
|
Worker's
Compensation as legally required in the jurisdiction in which SUBLICENSEE
is doing business.
|
|
16.3
|
The
coverage and limits referred to in Paragraph 16.2 above will not in
any way limit the liability of SUBLICENSEE under this Article. Upon the
execution of this Agreement, SUBLICENSEE will furnish HFTA with
certificates of insurance evidencing compliance with all requirements. Such
certificates will:
|
|
(a)
|
provide
for thirty (30) days (ten (10) days for non-payment of premium) advance
written notice to HFTA of any cancellation of insurance coverage;
SUBLICENSEE will promptly notify HFTA of any material modification of the
insurance coverage;
|
|
(b)
|
indicate
that HFTA and REGENTS have been endorsed as additional insureds under the
coverage described above in Subparagraph l6.2;
and
|
|
(c)
|
include
a provision that the coverage will be primary and will not participate
with, nor will be excess over, any valid and collectable insurance or
program of self-insurance maintained by HFTA or
REGENTS.
|
|
16.4
|
HFTA
will promptly notify SUBLICENSEE in writing of any claim or suit brought
against HFTA for which HFTA intends to invoke the provisions of this
Article 16,
and vice versa with respect to SUBLICENSEE or CTB. SUBLICENSEE will
keep HFTA informed of its defense of any claims pursuant to this Article
16.
|
|
16.5
|
CTB
expressly indemnifies and guarantees to HFTA the faithful performance of
all of the obligations of SUBLICENSEE under this agreement and any
modifications thereto. CTB waives notice of acceptance hereof; notice of
the existence, creation or acquisition of any of said obligations; notice
of an event of default by SUBLICENSEE; notice of the amount of the
obligations outstanding at any time; notice of any adverse change in the
financial condition of SUBLICENSEE or of any other fact that might
increase CTB’s risk; presentment for payment; demand; protest and notice
thereof as to any instrument; default; and all other notices and demands
to which CTB would otherwise be entitled except as expressly provided
herein. CTB waives any defense arising from any defense of SUBLICENSEE, or
by reason of the cessation from any cause whatsoever of the liability of
SUBLICENSEE. HFTA’s failure at any time to require performance
by SUBLICENSEE of any provision of this agreement shall not waive, alter
or diminish any right of HFTA thereafter to demand strict compliance and
performance therewith. CTB also waives any defense arising from any act or
omission of HFTA that changes the scope of CTB’s risk
hereunder. CTB waives any right to assert against HFTA any
defense (legal or equitable), setoff, counterclaim, or claims that CTB may
now or hereafter have against SUBLICENSEE or any other person liable to
HFTA with respect to the obligations in any manner or whatsoever. This is
a primary obligation of CTB.
|
17. COMPLIANCE WITH
LAWS
|
17.1
|
SUBLICENSEE
will comply with all applicable international, national, state, regional,
and local laws and regulations in performing its obligations hereunder and
in its use, manufacture, SALE or import of the LICENSED PRODUCTS, LICENSED
SERVICES, or practice of the LICENSED METHOD. SUBLICENSEE
understands that HFTA is subject to United States laws and regulations
(including the Arms Export Control Act, as amended, and the Export
Administration Act of 1979), controlling the export of technical data,
computer software, laboratory prototypes and other commodities, and HFTA’S
obligations under this Agreement are contingent on compliance with such
laws and regulations. The transfer of certain technical data
and commodities may require a license from the cognizant agency of the
United States Government and/or written assurances by SUBLICENSEE that
SUBLICENSEE will not export such technical data and/or commodities to
certain foreign countries without prior approval of such
agency. HFTA neither represents that a license will not be
required nor that, if required, it will be
issued.
|
18. GOVERNMENT APPROVAL OR
REGISTRATION
|
18.1
|
If
this Agreement or any associated transaction is required by the law of any
nation to be either approved or registered with any governmental agency,
SUBLICENSEE will assume all legal obligations to do
so. SUBLICENSEE will notify HFTA if it becomes aware that this
Agreement is subject to a United States or foreign government reporting or
approval requirement. SUBLICENSEE will make all necessary
filings and pay all costs including fees, penalties, and all other
out-of-pocket costs associated with such reporting or approval
process.
|
19. NOTICES
|
19.1
|
All
notices under this Agreement will be deemed to have been fully given and
effective when done in writing and delivered in person, or mailed by
registered or certified U.S. mail, or deposited with a carrier service
requiring signature by recipient, and addressed as
follows:
|
|
To
HFTA:
|
HFTA
|
|
|
Attn.:
▇▇▇ ▇. ▇▇▇▇▇▇▇
|
||
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇
|
||
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
|
||
|
Ph.
▇▇▇-▇▇▇-▇▇▇▇
|
Fax
▇▇▇-▇▇▇-▇▇▇▇
|
|
To
CTB and SUBLICENSEE:
|
||
|
Attn.: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
|
||
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
||
|
Ph.
314-802-8670
|
Fax314-802-8675
|
Either
party may change its address upon written notice to the other
party.
20. LATE PAYMENTS
|
20.1
|
If
monies owed to HFTA under this Agreement are not paid when due,
SUBLICENSEE will pay to HFTA a late fee in the amount of five percent (5%)
of the sum not timely paid as well as interest charges at a rate of ten
percent (10%) per annum on the sum not timely paid. Such
interest will be calculated from the date payment was due until actually
received by HFTA. Such late fees and accrual of interest will
be in addition to, and not in lieu of, enforcement of any other rights of
HFTA related to such late payment. Acceptance of any late
payment will not constitute a waiver under Article 21 (Waiver) of this
Agreement.
|
21. WAIVER
|
21.1
|
The
failure of either party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement will not
constitute a waiver of that right or excuse a similar subsequent failure
to perform any such term or condition by the other party. None
of the terms and conditions of this Agreement can be waived except by the
written consent of the party waiving
compliance.
|
22. CONFIDENTIALTY
|
22.1
|
This
Article governs the conditions of disclosure by the Parties to one another
of Confidential Information, including, but not limited to methods and
apparatus for treating biomass material using mineral acid and other
catalysts, methods and organisms for fermentation, industrial process
technology, licensing and other contractual agreements, and business
plans.
|
|
22.2
|
During
the course of this Agreement one Party may disclose to the other
information and data which the Discloser considers proprietary and treats
as secret and confidential (“Confidential Information”). In
this Article, the Party who discloses Confidential Information will be
called the “Discloser,” and the Party to whom Confidential Information is
disclosed will be called the
“Recipient.”
|
|
22.3
|
Documents
containing Confidential Information shall be marked by the Discloser with
an appropriate, stamp, legend or other appropriate written notice thereon
when transmitted in writing or other tangible or retainable
form. Oral or visual disclosures of Confidential Information
are to be reduced to writing within ten (10) working days from the time of
such disclosures. During that interim period, such information
shall be protected as Confidential
Information.
|
|
22.4
|
Each
Party agrees that it and its employees will use the Confidential
Information of the other Party only in connection with its discussions
with the Discloser and in the performance of this Agreement, and for no
other purpose whatsoever.
|
|
22.5
|
The
Recipient shall maintain all Confidential Information secret and
confidential. All Confidential Information delivered pursuant
to this Agreement shall be maintained in confidence with the same level of
care as the Discloser maintains its own Confidential Information, but in
no event maintained with any less than a reasonable standard of
care.
|
|
22.6
|
The
Recipient shall not transmit or otherwise disclose Confidential
Information of the Discloser to any third party, including affiliates,
subsidiaries, consultants or subcontractors of the Recipient, without
obtaining prior written approval of the Discloser. In the event the
Discloser approves of such disclosure or transmittal, the Recipient shall,
prior to making such disclosure or transmittal, obtain a written
commitment from such third party making the terms of this Agreement
applicable to such third party and shall deliver such written commitment
to Discloser in a form acceptable to Discloser, and thereafter shall
disclose and transmit such Confidential Information to such third party
only on a proprietary and confidential
basis.
|
|
22.7
|
The
Recipient shall not make any copy or in any way reproduce or excerpt
Confidential Information of the Discloser, except where necessary for the
performance of this Agreement, hereof, or as authorized by the Discloser
in writing. Any such copies or excerpts shall include the
Discloser’s written proprietary
notice.
|
|
22.8
|
Nothing
herein shall apply to any
information:
|
|
a)
|
which
is now known or readily available to the trade or public, or which becomes
so known or readily available without fault of the
Recipient;
|
|
b)
|
which
is possessed by the Recipient prior to its disclosure hereunder by the
Discloser;
|
|
c)
|
which
is legally acquired from a third party without restriction, which third
party did not acquire the information under an obligation of
confidentiality; or,
|
|
d)
|
which
is developed independently by the Recipient without benefit of
Confidential Information furnished hereunder by the
Discloser.
|
|
|
Confidential
Information, as a whole, shall not be deemed to be in the public domain
merely because any part of said information is embodied in general
disclosures or because individual features, components or combinations
thereof are now or become known to the
public.
|
|
22.9
|
Nothing
herein shall be construed as granting or implying any right other than
REGENT’S PATENT RIGHTS, or as permitting the Recipient to unfairly obtain
the right to use Confidential Information which becomes publicly known
through an improper act or omission on its
part.
|
|
22.10
|
Upon
termination of this Agreement, each Recipient shall return to the
Discloser all documents containing Confidential Information within twenty
(20) days from such termination, and further, each Recipient shall destroy
all compilations of Confidential Information which it created or
possesses.
|
|
22.11
|
Termination
or expiration of this Agreement for any reason shall not relieve the
Recipient of the obligation not to disclose Confidential Information in
any manner received hereunder, as provided in this
Agreement.
|
|
22.12
|
This
Agreement contains the entire understanding between the Parties,
superseding all prior or contemporaneous communications, agreements and
understandings between the Parties with respect to the disclosure of
Confidential Information described herein. The rights and obligations
provided by this Agreement shall take precedence over any statements made
concurrently with the receipt of Confidential Information, in the event of
an inconsistency between such statements and this
Agreement.
|
|
22.13
|
If
it appears that either Party has unlawfully disclosed or has threatened to
disclose Confidential Information in violation of this Agreement, the
other Party shall be entitled to an injunction to restrain the disclosure,
in whole or in part, of Confidential Information. In any action
between the Parties to enforce or interpret the provisions of this
Agreement, venue shall be proper in the State of California, and the
prevailing Party shall be entitled to recover from the other Party its
costs of arbitration or suit, including reasonable attorneys’ fees and
expert’s fees.
|
23. FORCE MAJEURE
|
23.1
|
Except
for the obligations of SUBLICENSEE and CTB to make any payments
to HFTA hereunder, the parties to this Agreement shall be excused from any
performance required hereunder if such performance is rendered impossible
or unfeasible due to any catastrophes or other major events beyond their
reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations;
strikes, lockouts, or other serious labor disputes; and floods, fires,
explosions, or other natural disasters. When such events have
abated, the parties' respective obligations hereunder will
resume.
|
24. SEVERABILITY
|
24.1
|
The
provisions of this Agreement are severable, and in the event that any
provision of this Agreement will be determined to be invalid or
unenforceable under any controlling body of law, such invalidity or
enforceability will not in any way affect the validity or enforceability
of the remaining provisions hereof.
|
25. APPLICABLE LAW; VENUE; ATTORNEYS’
FEES
|
25.1
|
THIS
AGREEMENT WILL BE CONSTRUED, INTERPRETED, AND APPLIED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules
that would direct the application of the laws of another jurisdiction, but
the scope and validity of any patent or patent application under REGENTS’
PATENT RIGHTS will be determined by the applicable law of the country of
such patent or patent application. Any legal action brought by
the parties relating to this Agreement will be conducted in San Francisco,
California. The prevailing party in any legal action under this Agreement
will be entitled to recover its reasonable attorneys’ fees in addition to
its costs and necessary
disbursements.
|
26. SCOPE OF
AGREEMENT
|
26.1
|
This
Agreement incorporates the entire agreement between the parties with
respect to the subject matter hereof, and this Agreement may be altered or
modified only by written amendment duly executed by the parties
hereto.
|
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
originals by their duly authorized officers or representatives.
|
HFTA
|
||||||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. |
By:
|
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
|
▇▇▇
▇. ▇▇▇▇▇▇▇
|
|||||
|
President
and CEO
|
President
|
|||||
|
Date
|
March 20, 2008 |
Date
|
March 20, 2008 | |||