EXHIBIT 10.6
PARTICIPATION AGREEMENT
THIS AGREEMENT is made and entered into on the 8th day of May 2002 being
effective as of the 10th day of January 2001 by and between MARATHON OIL
COMPANY, an Ohio corporation ("Marathon"), and SYNTROLEUM CORPORATION, a
Delaware corporation ("Syntroleum").
WHEREAS, Marathon and Syntroleum are parties to the Master Preferred
License Agreement under which Marathon was granted certain license rights in and
to the Syntroleum Process;
WHEREAS, Marathon and Syntroleum are parties to the Intellectual Property
Agreement dated March 7, 1997 under which the Parties agreed to certain
additional matters relating to the Syntroleum Process;
WHEREAS, Marathon and Syntroleum are parties to the Intellectual Property
Agreement dated March 21, 2001 under which the Parties agreed to certain matters
relating to Syntroleum's Product Refining Process;
WHEREAS, Syntroleum is developing the Project under which Syntroleum will
build a small-footprint gas-to-liquids ("GTL") production facility and produce
GTL fuels using funds provided by the DOE, third parties, and Syntroleum; and
WHEREAS, the Parties desire to enter into this Agreement under which
Marathon will participate in the Project on the terms and conditions set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows.
ARTICLE I
DEFINITIONS
The following terms when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have the
following meanings which shall be equally applicable to the singular and plural
forms thereof.
1.01. "AFE" means an authorization for expenditure of funds as provided for in
Article IV.
1.02. "Affiliate" means, with respect to a specified Person, any other person
that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
specified Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management
or policies of a Person, whether through ownership of securities, or the
ability to exercise voting power, by contract or otherwise.
1.03. "Agreement" means this Participation Agreement.
1.04. "Background Technology" means:
(a) Marathon Background Technology. None.
(b) Syntroleum Background Technology. As to Syntroleum, all information,
catalysts, data, techniques, developments, improvements, and the like
relating to processes, methods, operating techniques, and apparatus
useful in supporting or conducting Project activities to practice the
Syntroleum Process and Product Refining Process, whether patentable
or not, and which are disclosed in writing or other tangible form by
Syntroleum to the Project and used in the Project during the Term of
this Agreement and that were owned or otherwise available to
Syntroleum on or before the Effective Date of this Agreement or
developed independently or otherwise
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acquired by Syntroleum after the Effective Date and during the Term
of this Agreement, subject to the exclusions as set forth in Section
9.08 hereinafter. Syntroleum Background Technology shall include only
that Syntroleum Confidential Information and Syntroleum Patent
Rights, which are disclosed in writing or other tangible form by
Syntroleum to the Project and used in the Project during the term of
this Agreement and owned by Syntroleum on or before the Effective
Date of this Agreement or developed independently or otherwise
acquired by Syntroleum after the Effective Date of this Agreement,
subject to the exclusions as set forth in Section 9.08 hereinafter;
(c) Information Disclosed By Third Parties Associated With Syntroleum.
All information arising from, or subject to, separate agreements
between Syntroleum and third parties which is disclosed to Marathon
in writing or other tangible form by Syntroleum or such third parties
will be deemed Background Technology to the extent and only to the
extent that Syntroleum owns and/or has the right to license the
information under such agreements and such information is used to
support or conduct Project activities. All Syntroleum Background
Technology shall, if disclosed by Syntroleum, be disclosed in writing
and labeled "Syntroleum Background Technology"; and
(d) Patents/Copyrights Deemed Within Background Technology.
Notwithstanding anything to the contrary within this Agreement, any
patent or copyright owned or controlled (to the extent of being able
to grant licenses thereunder without accounting to a third party
which is not an Affiliate) by either Party that, absent this
Agreement, would be infringed by the practice of Project Technology
developed under this Agreement, shall be deemed to be the Background
Technology of the Party which owns or controls such patent or
copyright, and the other Party shall have the right to utilize and
practice such Background Technology to the extent provided in Article
VIII of this Agreement.
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1.05. "Barrel" means a volume of forty-two (42) U.S. standard gallons of two
hundred thirty-one (231) cubic inches each, measured at sixty degrees
Fahrenheit (60(degree)F) and one (1) atmosphere pressure.
1.06. "Cherry Point Pilot Plant" means the GTL pilot facility located at
Atlantic Richfield's Cherry Point Refinery in Blaine, Washington
constructed and operated by Syntroleum and Atlantic Richfield under a
Joint Development Agreement between Syntroleum and Atlantic Richfield
dated January 1, 1998.
1.07. "Confidential Information" means the respective information of a Party
hereto concerning its Background Technology which is disclosed to the
other Party under this Agreement in furtherance of the Project, together
with any formula, pattern, compilation, program, apparatus, device,
drawing, schematic, method, technique, know-how, process or pilot plant
data, and other non-public information relating to the Project, such as
business plans or other technology, that: derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by other persons who can obtain economic
value from its disclosure or use; and is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Confidential
Information shall be disclosed in writing and labeled as "Confidential"
or the equivalent, or if disclosed verbally or in other non-written form,
it shall be summarized and transmitted in writing or other tangible form
and the summary labeled "Confidential" or the equivalent by the
disclosing Party within the later of sixty (60) days from the date of the
last signature to this Agreement or thirty (30) days of such disclosure.
Any information deemed confidential by a Party and disclosed to the other
Party during the term of this Agreement, but not applicable to or
otherwise used in the Project, shall be subject to the applicable
confidentiality provisions of the other written agreements between the
Parties.
1.08. "Contractor" means any Person hereunder approved and chosen to carry out
any portion of the work associated with the Project described in Article
II.
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1.09. "Conversion Process" means any process for the conversion of hydrocarbons
which are normally gaseous at ambient temperature and pressure into a
mixture of hydrocarbons which may be a combination of normally gaseous,
liquid, or solid hydrocarbons at ambient temperatures and pressures and
comprised of (a) autothermal reforming, partial oxidation, steam
reforming or any combination thereof, of a feed stream consisting
substantially of gaseous hydrocarbons in the presence of air or oxygen
enriched air to create an intermediate feed stream containing carbon
monoxide and molecular hydrogen, and (b) reacting the intermediate feed
stream in the presence of a Xxxxxxx-Tropsch catalyst to produce a product
stream consisting of any combination of gaseous, liquid or solid
hydrocarbons at ambient temperature and pressure. The Conversion Process
includes all associated internal processes and technologies such as
pre-heating and conditioning of the feedstock, heat integration,
separation or the recycle, use, or consumption of hydrocarbons or other
products and post-processing the Xxxxxxx-Tropsch product stream into
finished synthetic hydrocarbon products. The Conversion Process does not
include any technology related to the pretreatment of the natural gas
feedstock for a purpose other than that defined above.
1.10. "Cooperative Agreement" means the Cooperative Agreement Xx.
XX-XX00-00XX00000, dated July 20, 2001, between the DOE and Integrated
Concepts & Research Corporation relating to the Project.
1.11. "Cooperative Agreement Subcontract" means the subcontract between
Syntroleum and Integrated Concepts & Research Corporation, dated October
1, 2001, attached hereto as Exhibit B, relating to certain tasks under
the Cooperative Agreement which are subcontracted to Syntroleum.
1.12. "DOE" means the United States Department of Energy.
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1.13. "Effective Date" means the effective date of this Agreement as set forth
in the first paragraph on page one of this Agreement.
1.14. "Executive Committee" means the committee to provide overall direction
and management to the Project as provided in Section 3.02.
1.15. "Executive Director" means the representative designated by a Party to
serve on the Executive Committee and entitled to cast that Party's vote
on matters coming before the Executive Committee as provided in Article
III.
1.16. "Xxxxxxx-Tropsch Reaction" means the catalytic reaction of carbon
monoxide and hydrogen, the primary commercial products of which are
hydrocarbons.
1.17. "Fuel Products" means finished hydrocarbon fuels, hydrocarbons consumed
as fuel, or fuel blending stocks including, but not limited to, diesel,
kerosene, gasoline, and naphtha produced primarily from Synthetic
Products which have a carbon range of C2 to C25, and are liquid at 60
degrees F and one atmosphere of pressure, and expressly excluding waxes,
chemicals, chemical feedstocks, lubricants (including, without
limitation, automotive lubricating oils such as PCMO, HDD, transmission
and hydraulic fluids, gear oils, industrial lubricants such as
metalworking lubricants, process oils, white oils, agricultural spray
oils, defoamers, cutting and quenching oils, rubber processing oils,
greases, and drilling fluids, or any other specialty hydrocarbon
products).
1.18. "Inventions" shall have the meanings provided in Section 8.04
hereinafter.
1.19. "Licensed Plant" means a plant as licensed to operate pursuant to a Site
License Agreement issued under the terms of the Master Preferred License
Agreement.
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1.20. "Master Preferred License Agreement" means the Master Preferred License
Agreement dated March 7, 1997 between the Parties referenced in the
recitals on page one of this Agreement.
1.21. "Net License Fees" means all fees and royalties received by Syntroleum,
when collected and unencumbered, from licenses issued by Syntroleum to
Marathon or its Affiliates, reduced by all licensing commissions paid to
others and the cost of all process guarantees provided through others
which Syntroleum is otherwise contractually committed to make. Net
License Fees shall not include fees paid to Syntroleum for the purchase
of catalysts, catalyst xxxx-ups, or for services rendered by Syntroleum
directly or through third parties in connection with any process design
package, plant design, start-up, commissioning, or training. In no case
shall Net License Fees be less than US $0.25 per Barrel of Synthetic
Product.
1.22. "Party" means Syntroleum or Marathon and "Parties" means Syntroleum and
Marathon
1.23. "Person" means any natural person, corporation, partnership, limited
liability company, joint venture, firm, unincorporated organization,
association, trust, government, governmental agency or any other entity,
other than the Parties.
1.24. "Product Refining IP Agreement" means the Intellectual Property Agreement
between the Parties dated March 21, 2001.
1.25. "Product Refining Process" means any chemical and mechanical processes
and related catalysts, technology and apparatus for the processing of
Synthetic Products to Fuel Products.
1.26. "Project" means the activities associated with this Agreement as set
forth in Article II.
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1.27. "Project Copyrights" means all copyrights based upon writings, computer
programs, drawings or other copyrightable works produced by or on behalf
of the Parties and/or Contractors and resulting directly from the
Project, subject to the exclusions as set forth in Section 9.08.
1.28. "Project Xxxxxxx-Tropsch Catalysts" means any Xxxxxxx-Tropsch Catalysts
utilized or developed in connection with the Project.
1.29. "Project Xxxxxxx-Tropsch Catalyst Information" means any information
relating to the composition, manufacture, and chemical treatment of
Project Xxxxxxx-Tropsch Catalysts, such as catalyst formulations,
activation procedures, conditioning procedures, start-up procedures, or
regeneration procedures, disclosed to the Project by Syntroleum for
Project Xxxxxxx-Tropsch Catalysts.
1.30. "Project Patent Rights" means the claims or equivalent of claims of all
U.S. and foreign patents and published patent applications to the extent
that said claims or claim equivalents are based on Inventions conceived,
developed or reduced to practice by or on behalf of the Parties and/or
Contractors and resulting directly from the Project.
1.31. "Project Technology" means all intellectual property and intellectual
property rights therein, including, without limitation, research work,
research results, data, information, Inventions, discoveries,
improvements, know-how, trade secrets, copyrights and software (source
and machine-readable code), whether or not patentable, which are
developed, acquired or conceived pursuant to the work performed for or as
a direct consequence of the Project, notwithstanding any contrary label
or marking placed thereon by a Party. Project Technology shall include,
but not be limited to, Project Patent Rights and Project Copyrights.
1.32. "SFP" means the small footprint gas-to-liquids production facility to be
designed, constructed, and operated as part of the Project.
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1.33. "SFP Information" means any SFP design, test or operating information
concerning the Syntroleum Process or the Product Refining Process which
is generated by activities conducted for the Project during the Term of
this Agreement by or at the SFP, subject to the exclusions as set forth
in Section 9.08.
1.34. "Site License Agreement" means an agreement which grants the right to
build and operate a single Licensed Plant under the terms of the Master
Preferred License Agreement, specifying in each case the fixed site and
the nominal design capacity, in Barrels of Synthetic Products produced
per day.
1.35. "Synthetic Products" means those hydrocarbons, having a chemical
composition substantially consisting of molecules with five or more
carbon atoms each, produced using the Syntroleum Process at a Licensed
Plant.
1.36. "Syntroleum Catalyst Information" means Syntroleum information and
know-how relating to any catalyst, catalyst formulation, conditioning
procedure, reduction procedure, activation procedure, start-up procedure,
regeneration procedure, or performance which is considered to be
proprietary by and to Syntroleum or which is acquired by Syntroleum and
which is useful in the practice of the Syntroleum Process (including,
without limitation, autothermal reforming catalysts, Xxxxxxx-Tropsch
catalysts and hydrocarbon product upgrading catalysts).
1.37. "Syntroleum Catalyst Patent Rights" means all Syntroleum patents and
patent applications of all relevant countries to the extent that the
claims cover features or aspects of catalysts useable in the Syntroleum
Process, including, without limitation, autothermal reforming catalysts,
Xxxxxxx-Tropsch catalysts, and hydrocarbon product upgrading catalysts,
and expressly excluding any process operating techniques or apparatus or
methods for manufacturing such catalysts.
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1.38. "Syntroleum Patent Rights" means Syntroleum patents and patent
applications of all relevant countries to the extent that the claims
cover features or aspects of the Syntroleum Process including, without
limitation, any operating techniques and apparatus and expressly
excluding Syntroleum Catalyst Patent Rights.
1.39. "Syntroleum Process" means Syntroleum Technical Information and
Syntroleum Patent Rights related to the practice of the Conversion
Process and Syntroleum Catalyst Information and Syntroleum Catalyst
Patent Rights related to the use of Syntroleum catalysts in the practice
of the Conversion Process.
1.40. "Syntroleum Process IP Agreement" means the Intellectual Property
Agreement between the Parties dated March 7, 1997.
1.41. "Synthetic Products" means those products produced by a process utilizing
a Xxxxxxx-Tropsch reaction.
1.42. "Syntroleum Technical Information" means Syntroleum information and
know-how relating to the Syntroleum Process including, without
limitation, operating techniques and apparatus for carrying out the
Syntroleum Process and expressly excluding Syntroleum Catalyst
Information and information relating to process reactors.
1.43. "Term" shall have the meaning as set forth in Article V.
ARTICLE II
PROJECT SCOPE
2.01. Project Scope. Subject to the terms and conditions of this Agreement, the
Project shall consist of the following activities:
(a) Design. The Parties shall design the SFP based on the design of the
Cherry Point
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Pilot Plant and using the Syntroleum Process to produce approximately
70 barrels per day of Fuel Products and to otherwise meet the
requirements of the Cooperative Agreement Subcontract. The SFP will
also include the following components that are outside the scope of,
but in no way inconsistent with, the Cooperative Agreement
Subcontract: (i) an on-site Xxxxxxx-Tropsch catalyst regeneration
unit sized to enable continuous SFP operation; and (ii) a gas turbine
that powers plant air compression and combusts plant tail gas.
(b) Relocation and Construction. The Parties shall (i) choose a site for
the SFP in or near Tulsa, Oklahoma, (ii) obtain all necessary permits
for construction and operation of the SFP, (iii) dismantle and
transport agreed upon components from the Cherry Point Pilot Plant to
the identified SFP site, and (iv) construct the SFP.
(c) Start-up and Operation. Upon completion of construction of the SFP,
Syntroleum shall conduct full SFP start-up and operating activities,
demonstrating sustained steady-state operations, operational safety,
and continuous production of Fuel Products meeting the specifications
required by the Cooperative Agreement Subcontract. After SFP
start-up, Syntroleum shall operate the SFP to provide the types and
volumes of Fuel Products required by the Cooperative Agreement
Subcontract.
ARTICLE III
PROJECT MANAGEMENT AND REPORTS
3.01. General. Except as may otherwise be expressly set forth to the contrary
in this Agreement, the Project shall be governed by a committee (the
"Executive Committee") that will provide overall direction, supervision
and decision-making authority for the Project as described in Article II.
3.02. Executive Committee
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(a) Powers. Except as may otherwise be expressly set forth to the
contrary in this Agreement, the Executive Committee shall have
authority and power to make all decisions and do all things necessary
or appropriate to carry out the Project, including, without
limitation, the power to delegate authority to make such decisions
and do such things as the Executive Committee shall, from time to
time and in its sole discretion, deem appropriate; provided, however,
that the actions of the Executive Committee shall not be contrary to
this Agreement, shall not be inconsistent with the Cooperative
Agreement or the Cooperative Agreement Subcontract, and shall not
intentionally violate any applicable laws which govern the subject
matter of this Agreement. Notwithstanding any provision of this
Agreement to the contrary, the Executive Committee shall have
exclusive and non-delegable responsibility for the following matters
in connection with the Project: material changes to the Project, or
amendments to this Agreement, none of which shall have any effect
unless reduced to writing executed by authorized representatives of
the Parties as provided under Section 3.02(b); preparation and
approval of the Project budget, approval of which shall require the
unanimous consent of all Project participants; all policy matters,
including policies concerning communications or publications in any
medium pursuant to Article XII and policies concerning other external
matters that might affect the Project; legal matters; ultimate
oversight respecting organization and staffing matters; approval of
any changes to the scope of the Project and Project budget; and
approval of or amendment to any AFE.
(b) Composition. Pending the addition of any other participants in the
Project, the Executive Committee shall consist of two representatives
from Syntroleum and one representative from Marathon (each an
"Executive Director") who shall each be entitled to one (1) vote on
all matters considered by the Executive Committee. Decisions by the
Executive Committee shall be by majority vote of the respective
Executive Directors, except as otherwise provided in this Agreement.
Unless changed after the Effective Date on written notice to the
other Party, the following
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persons are designated Executive Directors for each Party:
Marathon: Xxxx Xxxxxx
Syntroleum: Branch Xxxxxxx
Xxxx Bigger
Membership of the Executive Committee will be expanded to include
representatives from additional participants who join the Project
after the Effective Date, provided that Marathon shall at all times
have at least one Executive Director on the Executive Committee and
Syntroleum shall at all times have the right to appoint a majority of
the Executive Directors, provided, that in the event (1) Syntroleum
undergoes a Change in Control, or (2) Syntroleum's current assets
minus current liabilities as set forth on its most recent audited or
unaudited balance sheet filed with the Securities and Exchange
Commission with Form 10-K or Form 10-Q falls below $10.0 million
(excluding any liabilities associated with prepaid license fees), or
(3) Syntroleum suffers an Event of Default under the Promissory Note
attached hereto as Exhibit C, Marathon shall be immediately entitled
to appoint the minimum additional number of Executive Directors
necessary to constitute a majority of the Executive Committee. For
purposes of this Agreement, "Change in Control" has the meaning
defined in the attached Promissory Note. In the event that Marathon
appoints a majority of the Executive Committee pursuant to this
Section 3.02(b), Syntroleum agrees to provide continued access to the
SFP and provide or make available to the Project all services and
utilities at Syntroleum's cost, which shall include, without
limitation, any water, electricity, gas and other utilities and
services necessary to operate the SFP and complete the Project.
Syntroleum shall further assist in obtaining all necessary licensing
rights, catalysts and other facilities and services necessary to
operate the SFP and complete the Project.
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(c) Meetings. The Executive Committee shall meet on a regular basis as
mutually agreed on by the Parties' Executive Directors, but not less
than one (1) time during each calendar quarter that ends in the
months of March, June, September and December, respectively, of a
given calendar year during the Term of this Agreement, to coordinate
Project activities, adjust Project goals and timetables, exchange
information, and consider Project patent and other intellectual
property matters. Emergency meetings of the Executive Committee may
be convened at the request of any Executive Director. Each meeting
shall be convened by mutual agreement of the Parties' Executive
Directors as to the date, location, and agenda of the meeting, and as
to whether the meeting will be in person or by telephone conference
or similar device. The proceedings of each meeting of the Executive
Committee shall be recorded and written minutes of such meeting
circulated to each Party and approved by the Executive Committee.
3.03. Financial Reporting. Syntroleum shall prepare financial reports depicting
the actual and accrued costs and expenses incurred by the Project, which
reports shall be submitted to the Executive Committee on a quarterly
basis by the end of the month following the end of each calendar quarter
during the Term of this Agreement, beginning with the calendar quarter
ending December 31, 2001.
3.04. Access to Information. Each Party agrees that the other Party's
representatives hereto shall have access to and the right to be present
at all Project activities conducted by the Party. Subject to the terms
and conditions of this Agreement, each Party agrees that all relevant
information and data generated by a Party under this Agreement shall be
shared with the other Party.
3.05. Training. The parties anticipate that the SFP will be available for
training of Marathon operator personnel and, subject to appropriate
confidentiality agreements with Syntroleum, Marathon's partners. Such
training shall be at no expense to the Project or
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Syntroleum and, during the term of this Agreement, shall not be
inconsistent with the Cooperative Agreement Subcontract and shall be
subject to the approval to the Executive Committee. The Parties agree
that, after the expiration of this Agreement, the SFP will continue to be
available to Marathon for training purposes at Marathon's own expense.
Marathon will provide 60 days notice prior to any training requested
pursuant to this section 3.05.
ARTICLE IV
FUNDING AND PARTICIPATION
4.01. Project Costs. Syntroleum shall: (a) pay the Project costs as such costs
are incurred; (b) obtain reimbursement of Project costs from the DOE
pursuant to the Cooperative Agreement Subcontract; and (c) obtain
reimbursement from other Project participants, including Marathon, as set
forth in Section 4.02.
4.02. Marathon Cash Contributions. Marathon shall pay Syntroleum up to a
maximum of $5,000,000 in Project costs, payable as follows:
(a) $ 3,000,000 by December 31, 2001
(b) $ 1,000,000 by March 31, 2002
(c) $ 1,000,000 by March 31, 2003.
4.03. Marathon Personnel Contributions. Marathon shall provide to the Project
up to $3 million worth of personnel time, which shall consist of no more
than five (5) full time equivalent professionals dedicated to the
Project. Such personnel shall perform such tasks as are assigned by the
Executive Committee. Marathon shall, at any time during the Project, have
the option to contribute additional personnel to the Project at no cost
to the Project. Marathon shall prepare and provide to Syntroleum on a
quarterly basis by the end of the month following the end of each
calendar quarter financial reports depicting the actual personnel time
and associated costs and expenses incurred by
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Marathon in connection with the Project under this Section 4.03.
4.04. Exclusions to Project Budget. All costs or expenses incurred by a Party
in monitoring the progress of the Project or in conducting any activity
which is not specifically provided in the Project budget as approved by
the Executive Committee shall be the sole responsibility of the Party
which incurs such costs and expenses. Unless specifically provided in the
Project budget, all costs and expenses incurred by the employees or other
representatives of a Party for travel to or from activities associated
with the Project shall be the sole responsibility of the Party that
employs or retains them. The Parties further acknowledge and agree that
each Party shall be solely responsible for the costs and expenses
associated with the attendance by that Party's Executive Directors at any
Executive Committee meetings.
4.05. Credit to Marathon.
(a) Under the conditions described below, Syntroleum agrees to allow
Marathon a credit on current or future Net License Fees payable by
Marathon to Syntroleum for Marathon's expenditures of up to:
(i) $375,000 for process design and engineering for the SFP and
associated personnel time;
(ii) $814,000 for costs to disassemble the Cherry Point Pilot Plant and
transport it to Tulsa, Oklahoma; and
(iii) the value of any outstanding loan balance, including accrued
interest, under the attached Promissory Note converted by Marathon
to license fee credits pursuant to Sections 4(c)(ii) or
4(d)(ii)(y) of the Promissory Note.
The work for which such credit is granted is described in more detail
in the July 6, 2001 letter agreement between Marathon and Syntroleum
attached as Exhibit B. This credit shall be applied at a rate of
US$.50 per US$1.00 of Net License Fees payable to Syntroleum under
Site Licenses executed by Marathon under the Master Preferred
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License Agreement.
(b) Any remaining expenditures made by Marathon in the SFP pursuant to
Sections 4.02 and 4.03 of this Agreement shall also be eligible for
credit against Net License Fees (at the same rate set forth in
Section 4.05(a) above), but shall be subject to the following
additional limitations:
(i) the credit is applicable only to Site Licenses or any Product
Refining Process license executed by Marathon within five years of
SFP startup;
(ii) for Site Licenses or any Product Refining Process license executed
within three years of SFP startup, one-hundred percent (100%) of
Marathon's expenditures in the SFP shall be eligible for credit;
and
(iii) for Site Licenses or any Product Refining Process license executed
in years four (4) and five (5) after SFP startup, seventy-five
(75%) of Marathon's expenditures in the SFP shall be eligible for
credit; and
(iv) no credit shall be allowed for Site Licenses executed by Marathon
after five years from SFP start-up.
Credited Marathon expenditures shall not include Marathon's internal
administrative, project management, technical/management committee
representation costs, or costs incurred by Marathon to have additional
personnel involved in the SFP beyond those being contributed to the
project under Section 4.03 above, but shall include cash contributions
as well as salaries and direct burden of manpower contributed to the SFP
integrated Project team by Marathon under Section 4.03 above.
4.06. Additional Marathon Funding.
(a) In the event that, at any time during the term of this Agreement,
Project capital contributions from Marathon under Section 4.02 of
this Agreement and Project
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capital contributions from other participants are inadequate to meet
the ongoing cash requirements of the Project, Marathon agrees to make
one or more loans (collectively, the "Loan") to the Project in an
aggregate amount not to exceed $19,000,000 as requested by Syntroleum
and approved by the Executive Committee and in accordance with the
terms and conditions set forth in the Promissory Note, attached
hereto as Exhibit C.
ARTICLE V
TERM
The term of this Agreement shall begin with the Effective Date and
continue thereafter until Syntroleum has satisfied its fuel delivery obligations
under the Cooperative Agreement Subcontract, unless terminated earlier in
accordance with Article VI hereof or extended by mutual written agreement of the
Parties. If Marathon desires to continue its participation in the operation of
the SFP beyond the termination date, then Marathon shall provide written notice
to Syntroleum prior to the termination date and the Parties shall negotiate in
good faith to continue their joint activities related to the SFP.
ARTICLE VI
TERMINATION
6.01. Termination for Cause. In the event that either Party to this Agreement
is deemed by the other Party to be in material default of any term of
this Agreement, the non-defaulting Party may give the defaulting Party
written notice of such default and specify the particulars of such
default. If the defaulting Party fails to remedy such default within 30
days of such notice, then the non-defaulting Party may terminate this
Agreement on written notice to the defaulting Party prior to the
remedying of the default. Termination under this Section 6.01 shall be
without prejudice to any claim or remedy which the non-defaulting Party
may have on account of the default.
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6.02. Early Termination of Cooperative Agreement Subcontract. In the event that
the Cooperative Agreement Subcontract is terminated before Syntroleum
satisfies its fuel delivery obligations under that agreement, then this
Agreement shall terminate within ten days after termination of the
Cooperative Agreement Subcontract unless Marathon and Syntroleum mutually
agree in writing to extend this Agreement for an additional period.
6.03. Obligations Following Termination. In the event of termination,
Syntroleum shall be entitled to continue all work related to the Project.
Marathon's only obligation to Syntroleum as a result of such termination
shall be the payment to Syntroleum for amounts due by Marathon for work
performed by Syntroleum prior to the date of termination, including
amounts for non-cancelable orders for materials and equipment.
6.04. Survival of Rights and Obligations. The rights and obligations as set
forth in Sections 4.05 and 4.06 and Articles VIII, IX, X, XI, XII, XIII,
XIV, and XVI shall be irrevocable and shall survive the expiration or
earlier termination of this Agreement.
ARTICLE VII
PARTICIPANTS
Participation in the Project shall be open to other licensees of the
Syntroleum Process under terms and conditions no more favorable than the terms
granted to Marathon under this Agreement.
ARTICLE VIII
INTELLECTUAL PROPERTY
8.01. Ownership of Project Technology. All right, title and interest throughout
the world in and to Project Technology shall be owned by Syntroleum,
subject to the obligation of Syntroleum to grant the rights and licenses
in such Project Technology to Marathon as set forth hereinafter. Marathon
agrees to and does hereby assign, convey, and transfer all
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right, title, and interest in Project Technology to Syntroleum, subject
to the grant of rights and licenses in such Project Technology as
provided for in this Agreement.
8.02. License Grants of Project Technology. In exchange for Marathon's funding
of the Project as set forth in Article IV, Syntroleum grants to Marathon
the following rights:
(a) Fields Outside of the Syntroleum Process and Product Refining
Process. Syntroleum shall grant and hereby does grant to Marathon a
non-exclusive, irrevocable, royalty-free, non-transferable (except as
otherwise provided in Section 16.10), and world-wide right (without
rights to sublicense third parties except as provided in Section
8.02(b)) to make, have made, use, and have used Project Technology,
and to copy, display, perform, use, prepare derivative works based on
or distributed under any and all Project Copyrights, for any fields
of use other than the Syntroleum Process or Product Refining Process,
except the foregoing grant shall be subject to the exclusions as
provided by Section 9.08 hereinafter.
(b) Field of the Syntroleum Process. Within the field of the Syntroleum
Process, such Project Technology shall be included within the
technology defined as "Licensor Technology" as provided in the Master
Preferred License Agreement and Syntroleum shall grant and does
hereby grant to Marathon rights to use said Project Technology
consistent with and according to all of the rights, licenses, and
obligations as provided in the Master Preferred License Agreement and
the Syntroleum Process Intellectual Property Agreement, the terms and
conditions of which are incorporated herein by this reference.
(c) Field of the Product Refining Process. Syntroleum grants no rights to
Marathon under this Agreement to practice or utilize Project
Technology in the field of the Product Refining Process.
8.03. Syntroleum Background Technology. Syntroleum Background Technology shall
remain
20
the property of Syntroleum; provided, however, that (i) within the field
of the Syntroleum Process, such Syntroleum Background Technology
(specifically excluding the Product Refining Process) shall be included
within the technology identified as "Licensor Technology" as provided in
the Master Preferred License Agreement and Syntroleum shall grant and
does hereby grant to Marathon rights to use the Syntroleum Background
Technology consistent with and according to all of the rights, licenses,
and obligations as provided in the Master Preferred License Agreement and
the Syntroleum Process IP Agreement, the terms and conditions of which
are incorporated herein by this reference, and (ii) only to the extent
necessary to practice the grants in Section 8.02(a) and (b), Syntroleum
shall grant and hereby does grant to Marathon a non-exclusive,
irrevocable, royalty-free, non-transferable (except as otherwise provided
in Section 16.10), and world-wide right to, in the case of Section
8.02(a), make, have made, use, and have used such Syntroleum Background
Technology.
8.04. Patenting of Project Technology
(a) Disclosure of Inventions. Each Party hereto agrees to promptly
disclose to the other Party all inventions, whether patentable or
unpatentable, which are conceived, developed, or reduced to practice
by or on behalf of the Parties and/or Contractors and resulting
directly from the Project (hereafter "Inventions"), except that
Syntroleum shall have the sole discretion as to disclosure of
information in its possession or control concerning Inventions
relating to the composition of Syntroleum and/or Project
Xxxxxxx-Tropsch Catalysts and Project Xxxxxxx-Tropsch Catalyst
Information.
(b) Patent Application. Subject to any obligations of the Parties under
the Cooperative Agreement regarding intellectual property rights, the
Executive Committee shall meet and discuss whether to file patent
applications for an Invention, and, if so, the respective countries
in which to file such applications. With respect to:
21
(i) Inventions which concern the composition, manufacture, physical
properties and treatment of Syntroleum and/or Project
Xxxxxxx-Tropsch Catalysts, Syntroleum shall have the sole
responsibility and authority for deciding whether to prepare,
file, and prosecute patent applications to obtain Project Patent
Rights for such Inventions and to maintain and enforce the Project
Patent Rights that issue thereon.
(ii) As to all other Inventions not covered by Section 8.04(b)(i)
above, if Syntroleum agrees that patent applications should be
filed, then Syntroleum shall have the sole responsibility and
authority to prepare, file, and prosecute such patent applications
to obtain Project Patent Rights for such Inventions and to
maintain and enforce the Project Patent Rights that issue thereon.
However, if Syntroleum does not agree with Marathon that patent
applications should be filed in any one or more countries for
Inventions subject to this subparagraph (ii), then Marathon may
file such patent applications in those countries and,
notwithstanding Section 8.01 above, such applications and any
Project Patent Rights issuing thereon shall be owned by Marathon.
As to such patent applications, Marathon shall have sole
responsibility and authority to prepare, file, and prosecute such
patent applications to obtain Project Patent Rights for such
Inventions and to maintain and enforce the Project Patent Rights
that issue thereon. As to such Project Patent Rights obtained by
Marathon, Marathon shall grant and hereby does grant to Syntroleum
a nonexclusive, irrevocable, royalty-free, non-transferable
(except as provided in Section 16.10), and worldwide license to
make, have made, use, have used, and sub-license to third parties
such Marathon owned Project Patent Rights.
(c) Patent Application Costs. The cost to prepare, file, and prosecute
patent applications to obtain Project Patent Rights for Inventions
and to maintain and enforce the Project Patent Rights that issue
thereon shall be at the sole expense of the Party which owns such
patent applications and Project Patent Rights. None of
22
the costs associated with patent applications or maintaining or
enforcing Project Patent Rights for an Invention shall be paid for
out of the Project budget.
(d) Cooperation on Patent Matters. Each Party agrees that it will
cooperate and take all reasonable actions and execute legally
required documents, and shall cause their respective employees,
agents and contractors to cooperate and take all reasonable actions
and execute all legally required documents as are necessary or
appropriate to carry out the provisions of this Article VIII or to
assist each other in the preparation, filing and prosecution of
patent applications or securing such protection as referenced in this
Article VIII when so requested. With respect to any patent
applications filed under this Article VIII, each Party agrees to keep
the other Party informed as to the status of applications and patents
from time to time and upon written request by the other Party.
8.05. Licensing. Syntroleum shall have the right to grant royalty-bearing
licenses under Project Technology to third parties which undertake in
writing with Syntroleum an obligation (a) limiting such third party's
disclosure and use of the Project Technology, which obligation shall be
at least as restrictive as the obligations undertaken by Marathon
hereunder; and (b) to defend, indemnify and hold Marathon, its
Affiliates, and the respective officers, directors, employees, and agents
of all of them, harmless from any and all claims, actual or threatened,
relating to such third party's use of the Project Technology, including,
but not limited to, patent, copyright, or other proprietary right
infringement and misappropriation of trade secrets. Syntroleum further
agrees that it will make no warranty or other representation on behalf of
Marathon in any such third party license agreement, and that Syntroleum
shall ensure that (a) any liability limitation placed by Syntroleum in
such third party license agreements shall also apply to Marathon and (b)
a disclaimer will be added to disclaim and release Marathon from any and
all liability associated with the third party's use of the Project
Technology.
8.06. No Implied License Intended. Unless expressly provided for in this
Agreement, there is
23
no implied license intended or granted by either Party under any of its
existing or future patents or intellectual property rights to the other
Party as a result of this Agreement.
8.07. Pre-existing Patent Rights. If either Party that discloses Background
Technology which is used in the Project pursuant to the provisions of
this Agreement becomes aware of information that causes it to believe
that use of such Background Technology has a significant possibility of
infringing one or more patents or copyrights, or constitute trade secret
misappropriation, then such Party shall promptly notify the other Party,
as applicable, provided, however, that no failure to give such notice, by
itself, shall (i) impose any liability on such Party as a consequence of
such failure or (ii) have the effect of creating an implied license
respecting any such patent, but only in the event that such failure shall
not have been due to such Party's bad faith, fraud, willful misconduct,
or gross negligence.
8.08. Third Party Technology. To the extent that Syntroleum desires to
incorporate proprietary technology or equipment from third parties
("Third Party Technology") which (a) is available from only one third
party provider; or (b) requires a license agreement with such third party
provider in order to use said Third Party Technology to carry out the
Project or continued exploitation of Project Technology, then prior to
incorporating such Third Party Technology into the Project Syntroleum
will notify Marathon of its desire to use such technology. Nothing in
this Agreement shall be construed as otherwise restricting the ability of
Syntroleum to use Third Party Technology in connection with activities
under the Project, provided that Syntroleum obtains a written statement
from the Third Party Technology provider that states said technology is
presently or will be offered commercially to the oil and gas industry,
including Marathon, Syntroleum, and any licensees of Syntroleum. The
Parties agree to work together, where possible, to enable Syntroleum to
secure sublicense rights for any such technology for the benefit of
Syntroleum's licensees.
24
ARTICLE IX
CONFIDENTIALITY
9.01. Confidential Information. All Confidential Information of a Party
disclosed in furtherance of this Agreement shall be maintained in
confidence by the other Party as follows:
(a) Marathon Obligations. Marathon agrees that Syntroleum Confidential
Information shall be kept confidential by Marathon for a period of
fifteen (15) years after the Effective Date and, except as otherwise
provided in this Agreement, will not be disclosed to others and shall
be used by Marathon: solely (i) for purposes of the Project, (ii) in
determining whether Marathon desires to enter into a Site License
Agreement under the Master Preferred License Agreement relating to
licensing of Syntroleum Confidential Information and related patents
for practicing the Syntroleum Process or Product Refining Process (to
the extent such Product Refining Process has been licensed by
Marathon from Syntroleum), and for no other purpose, or (iii)
consistent with the license rights granted to Marathon by Syntroleum
with respect to Syntroleum Background Technology under Section 8.03;
and
(b) Syntroleum Obligations. Syntroleum agrees that any Marathon
Confidential Information shall be kept confidential by Syntroleum for
a period of fifteen (15) years after the Effective Date, and except
as otherwise provided in this Agreement, will not be disclosed to
others and shall be used by Syntroleum solely for purposes of the
Project, and for no other purpose. If such Marathon Confidential
Information is practiced in the Syntroleum Process or Product
Refining Process as licensed by Syntroleum, then Syntroleum may
disclose such Marathon Confidential Information to third parties who
have executed a secrecy agreement or a licensing agreement with
Syntroleum having confidentiality terms applicable to the Marathon
Confidential Information which are no less restrictive than those
assumed by
25
Marathon under this Agreement and having the liability limitations
and disclaimer as provided under Section 8.05 of this Agreement.
9.02. Project Technology. All Project Technology generated or otherwise
obtained by a Party under this Agreement shall be maintained in
confidence by the Parties as follows:
(a) Marathon Obligations. Marathon agrees that Project Technology shall
be kept confidential by Marathon for a period of fifteen (15) years
after the Effective Date and except as otherwise provided in this
Agreement, will not be disclosed to others and shall be used by
Marathon: solely (i) for purposes of the Project, (ii) in determining
whether Marathon desires to enter into a Site License Agreement under
the Master Preferred License Agreement relating to licensing of
Syntroleum Confidential Information and related patents for
practicing the Syntroleum Process or Product Refining Process (to the
extent such Product Refining Process has been licensed by Marathon
from Syntroleum) and for no other purpose; or (iii) for all other
fields of use outside of the Syntroleum Process or Product Refining
Process consistent with the rights granted under Section 8.02 (a) and
(b).
(b) Syntroleum Obligations. Syntroleum agrees that any Project Technology
shall be kept confidential by Syntroleum for a period of fifteen (15)
years after the Effective Date, and except as otherwise provided in
this Agreement, will not be disclosed to others, except to third
parties who have executed a secrecy agreement or a licensing
agreement with Syntroleum having confidentiality terms applicable to
the Project Technology which are no less restrictive than those
assumed by Marathon under this Agreement and having the liability
limitations and disclaimer as provided under Section 8.05 of this
Agreement.
(c) Marking. Each Party agrees that, after the date on which this
Agreement is executed by both Parties, it will use reasonable effort
to xxxx, in a conspicuous manner, all tangible forms of Project
Technology as "Confidential."
26
9.03. Exceptions. A Party which receives Confidential Information or Project
Technology (hereinafter a "receiving Party") shall not be subject to the
restrictions on disclosure and use as set forth in this Article IX where
the receiving Party can prove by competent evidence that the information
at issue:
(a) was already known to the receiving Party prior to any disclosure
under this Agreement; or
(b) is part of the public knowledge or literature at the time of
disclosure, or subsequently becomes part of the public knowledge or
literature without breach of this Agreement by the receiving Party or
its Affiliate; or
(c) is lawfully disclosed to the receiving Party from a third party
entitled to disclose the same as a matter of right and who is not
under obligation of confidentiality to the Party which discloses such
information (hereinafter a "disclosing Party") under this Agreement;
or
(d) is developed by or for the receiving Party independent of any
disclosure under this Agreement; or
(e) is provided to a bank or other lending institution financing or
proposing to finance a Party's business or a project undertaken by
such Party; provided, however, that prior to making Confidential
Information or Project Technology available to a bank or other
lending institution pursuant to this Section 9.03, the Party shall
obtain written agreement from the bank or lending institution to
maintain the confidentiality of the Confidential Information and/or
Project Technology pursuant to terms at least as demanding as the
confidentiality obligations imposed by this Agreement on such Party,
and provide a copy of such written agreement to the other Party.
27
Any information subject to the confidentiality provisions of this
Article IX shall not be deemed to fall within the confidentiality
exceptions of this Section 9.03 merely because such information may
be embraced by more general information which does fall within one or
more of the exceptions, and no combination of features of such
information shall be deemed to be within the foregoing exceptions
merely because the individual features are within the foregoing
exceptions, unless the combination itself and its principle of
operation fall within the exceptions. In the event any of the
exceptions in this Section 9.03 apply, the receiving Party shall not
disclose to any third party that any such information was made
available to or acquired by the receiving Party from the disclosing
Party hereunder, and such release from the secrecy obligation of this
Agreement shall not by itself be considered as a license to make,
use, sell, or otherwise practice under any of the disclosing Party's
other proprietary rights.
9.04. Access to Confidential Information. A Party which receives Confidential
Information of the other Party under this Agreement shall limit access to
such information to those of its employees who reasonably require the
same and who are under a legal obligation of confidentiality which is the
same as or more restrictive than the obligations assumed by the Party as
set forth in this Article IX. The receiving Party shall keep a record of
any Confidential Information of the other Party which is marked "Limited
Access" (which designation shall only be placed on Confidential
Information pertaining to Syntroleum or Project Xxxxxxx-Tropsch
Catalysts, Syntroleum Xxxxxxx-Tropsch Catalyst Information, and Project
Xxxxxxx-Tropsch Catalyst Information) and the identity of each employee
who has access to the Confidential Information so marked. Upon request,
the receiving Party of such "Limited Access" Confidential Information
shall inform the disclosing Party of the identity of each such employee
receiving access to such "Limited Access" Confidential Information within
thirty (30) days of such request.
9.05. Third Party Disclosure. Notwithstanding the restrictions on disclosure
and use contained in Sections 9.01 and 9.02, a Party may disclose the
other Party's Confidential Information and Project Technology to its
Affiliates, third party contractors, consultants,
28
suppliers, vendors and other agents as necessary to conduct the Project
and/or to permit the use of such Confidential Information and Project
Technology as provided in this Agreement; provided, however, that such
third parties shall have first executed a written obligation of
confidentiality and restricted use which is at least as restrictive as
the obligations imposed on such Party by this Agreement.
9.06. Standard of Care. A Party shall satisfy its confidentiality obligations
under this Article IX by using the same degree of care as that Party uses
to protect its own confidential and proprietary information of like
nature.
9.07. Required Disclosure. If disclosure of Confidential Information or Project
Technology is required by a governmental authority or court of competent
jurisdiction pursuant to statutory, regulatory, or judicial requirements,
disclosure of such information may be made, provided the Party which owns
the information at issue is promptly notified in writing prior to the
disclosure and given a reasonable opportunity to protect the proprietary
nature of the information through available procedures or a suitable
protective order. Any information so disclosed shall not be construed as
being in the public domain, provided that a protective order or other
protection is obtained for maintaining confidentiality.
9.08. Xxxxxxx Tropsch Catalysts. Notwithstanding any other provision of this
Agreement, including without limitation, the provisions of Sections 8.02
and 8.03, except as expressly set forth in this Section 9.08, nothing in
this Agreement grants to Marathon and Marathon shall have no right to
make, have made, sell or use any Syntroleum Xxxxxxx-Tropsch Catalyst,
Project Xxxxxxx-Tropsch Catalyst, or any Syntroleum Xxxxxxx-Tropsch
Catalyst Information or Project Xxxxxxx-Tropsch Catalyst Information,
except that Marathon shall continue to have the right to purchase and use
Syntroleum Xxxxxxx-Tropsch Catalysts and Project Xxxxxxx-Tropsch
Catalysts under the Master Preferred License Agreement. Marathon will
not, nor will it allow any other person, to analyze, break down, reverse
engineer, or otherwise seek to determine or copy the chemical
29
composition of any Syntroleum or Project Xxxxxxx-Tropsch Catalysts,
except as provided in Section 9.09.
9.09. Permitted Analysis. Marathon agrees that any analysis of Syntroleum or
Project Xxxxxxx-Tropsch Catalysts performed by Marathon under the Project
will be with Syntroleum's prior written consent and all results will be
provided to Syntroleum and will remain Syntroleum Confidential
Information.
9.10. Third Party Restrictions. Nothing in this Agreement shall obligate either
Party to disclose any information which it is not free to disclose due to
obligations to a third party.
ARTICLE X
TITLE
10.01. SFP Plant Equipment. Syntroleum shall own all right, title and interest
in and to all of the equipment, materials, and supplies purchased for the
Project and used at the SFP.
10.02. SFP Plant Product. Syntroleum shall own all right, title and interest in
and to the hydrocarbon products produced by the SFP. Syntroleum will
provide Marathon up to 500 bbls of product from the SFP at a schedule to
be agreed upon by the Executive Committee, provided that (a) the SFP is
operating at steady state conditions at the time of the request and
continues to operate at such conditions during efforts to collect such
volume of products and (b) Marathon pays the costs of any modifications
necessary to be made to the SFP to obtain such products and costs of
transportation from the SFP. Any such purchase shall be the subject of a
separate written agreement between the Parties.
30
ARTICLE XI
DISCLAIMER AND LIABILITY
11.01. NO WARRANTY AS TO PROJECT TECHNOLOGY OR BACKGROUND TECHNOLOGY. IT IS
UNDERSTOOD AND AGREED BY THE PARTIES THAT THERE SHALL BE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR
UTILITY OF THE PROJECT TECHNOLOGY DEVELOPED HEREUNDER OR BACKGROUND
TECHNOLOGY DISCLOSED AND USED HEREUNDER, OR AS TO FREEDOM FROM
INFRINGEMENT OF ANY PATENTS AND/OR COPYRIGHTS, OR FROM MISAPPROPRIATION
OF TRADE SECRETS BY THE USE OF THE SAME. THE PROJECT TECHNOLOGY AND
BACKGROUND TECHNOLOGY ARE MADE AVAILABLE HEREUNDER TO THE PARTIES ON AN
"AS IS" BASIS WITHOUT WARRANTY OF ANY KIND. ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY, USAGE OF TRADE, AND FITNESS FOR A PARTICULAR USE ARE
EXPRESSLY DISCLAIMED AND EXCLUDED UNDER THE TERMS AND CONDITIONS OF THIS
AGREEMENT. ALL RISK INCIDENT TO, AND ALL LIABILITIES ARISING FROM, A
PARTY'S USE OF THE PROJECT TECHNOLOGY, BACKGROUND TECHNOLOGY OR OTHER
ITEMS DELIVERED UNDER THIS AGREEMENT SHALL BE BORNE BY SUCH PARTY.
11.02. NO SPECIAL DAMAGES. NO PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, OR INCIDENTAL
DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO
THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT OR USE OF
ANY PROJECT TECHNOLOGY OR BACKGROUND TECHNOLOGY, WHETHER SUCH CLAIM IS
BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT
LIABILITY), OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH
PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF THE SAME.
31
11.03. Responsibility For Acts/Omissions. To the extent permitted by law, each
Party agrees to be responsible and assume responsibility for its own
wrongful or negligent acts or omissions, or those of its officers, agents
or employees hereunder, including, without limitation, those serving as
representatives on the Executive Committee or performing research and
development activities under the Project. Accordingly, to the extent
permitted by law:
(a) each Party agrees to protect, defend, indemnify and hold the other
Party, its Affiliates, and their respective officers, directors,
agents and employees harmless from and against all claims, demands,
and causes of action of every kind or character, to the extent of the
Party's respective negligence arising in connection herewith in favor
of any third party, including a Party's own employees (except as
identified in Section 11.03 (b)) on account of bodily injury
(including death), loss or damage to third party property resulting
directly or indirectly from, and occurring in the course of the
performance of activities under the Project; and
(b) each Party agrees to protect, defend, indemnify and hold the other
Party, its Affiliates, and their respective officers, directors,
agents and employees harmless from and against all claims, demands,
and causes of action of every kind or character, without regard to
the cause or causes thereof or the active or passive negligence of
either party, arising in connection with the performance of
activities under the Project on account of loss of or damage to the
indemnifying Party's real and/or personal property.
11.04. Indemnification For Use of Project Technology and Background Technology.
With respect to use of the Project Technology and Background Technology
of the other Party for activities outside of the Project as provided by
this Agreement and to the extent permitted by law, each Party agrees to
release, defend, indemnify and hold harmless the other Party, its
Affiliates, and their respective officers, directors, employees, and
agents, against any or all claims, loss and/or liability of every kind
and character (including, but
32
not limited to, attorney's fees and litigation costs and expenses) and
regardless of whether such claims, loss and/or liability is based on
contract, tort, or otherwise, that arises out the indemnifying Party's
use and/or license of Project Technology and the other Party's Background
Technology.
11.05. No Modification of MPLA Provisions. Notwithstanding any other provision
in this Article XI to the contrary, nothing in this Agreement shall amend
or is intended by the Parties to amend, modify, change or alter the
allocation of risks and liabilities expressed by the Parties in the
Master Preferred License Agreement, and in particular, the allocation of
risks and liabilities as set forth in "Article 6 - Warranties and
Indemnities" of the Master Preferred License Agreement as may be
applicable to a Licensed Plant.
11.06. Indemnification for Site. Notwithstanding any other provision in this
Article XI to the contrary, Syntroleum shall be solely responsible for
the decommissioning and abandonment of the SFP and any and all
environmental remediation attendant thereto. Syntroleum agrees to
protect, defend, indemnify and hold Marathon, its Affiliates, and their
respective officers, directors, agents and employees harmless from and
against all claims, demands, and causes of action of every kind or
character, without regard to the cause or causes thereof or the active or
passive negligence of Marathon, arising in connection with the
decommissioning, abandonment and environmental remediation of the SFP and
any post-Project liability attributable to the ownership of the SFP.
11.07. Indemnification for Infringement. Syntroleum agrees to protect, defend,
indemnify and hold Marathon, its Affiliates, and their respective
officers, directors, agents and employees harmless from and against all
claims, demands, and causes of action of every kind or character arising
from Syntroleum's infringement of any patents and/or copyrights and from
misappropriation of trade secrets by use of the same.
33
ARTICLE XII
COMMUNICATIONS; USE OF NAMES
12.01. Communications. Ongoing communication between the Parties about the
progress of and developments in the Project is understood by the Parties
to be critical to the success of the Project. Communication among the
Parties shall be in accordance with the needs of the Project as
determined by the Executive Committee. It is the responsibility of each
Party to xxxx its respective information with appropriate legends as
required by this Agreement so as to protect the confidentiality of such
information in accordance with Article IX.
12.02. Restrictions on Use of Names/Marks. This Agreement does not grant and
shall not be construed as granting any license, authorization or consent,
to either Party by the other Party hereto, to use any name, trademark,
service xxxx or slogan of the other Party. Except as required for
notifications under the National Cooperative Research and Production Act,
no Party shall make any press release or other written statements in
connection with the Project intended for use in the public media having
or containing any reference to any other Party without the prior written
approval of such other Party.
ARTICLE XIII
ETHICS; CONFLICTS OF INTEREST
Each Party acknowledges the need to maintain the highest ethical
standards in the conduct of activities under this Agreement. The business ethics
and conflicts of interest policies of each Party shall govern the actions of the
employees and representatives of that Party under this Agreement.
Notwithstanding the foregoing sentence, the employees and representatives of
each Party shall conduct the Project's business with integrity, in compliance
with applicable laws and in a manner that excludes considerations of personal
advantage, in any form, and avoidance of any situation which may involve a
conflict between the interests of the employee, representative or Party, on one
hand, and of the Project, on the other. Each Party hereby represents that in
pursuing activities under this Agreement, no action inconsistent with this
Article XIII shall be taken by its respective employees or representatives.
34
ARTICLE XIV
NO EMPLOYER/EMPLOYEE CROSSOVER
It is the intent of both Parties hereto that no employer/employee
relationship shall be created between any Party and any individual by reason of
this Agreement. Each Party also expressly agrees, acknowledges and stipulates
that neither this Agreement nor the performance of a Party's obligations or
duties hereunder shall ever result in anyone employed by that Party being: (i)
an employee, agent, servant or representative of the other Party or; (ii)
entitled to any benefits from the other Party, including without limitation,
pension, profit sharing or accident insurance, or health, medical, life or
disability insurance benefits or coverage, to which employees of the other Party
may be entitled.
ARTICLE XV
SUSPENSION OF PERFORMANCE
15.01. Force Majeure. Neither Party hereto shall be liable to the other Party
for failure of performance under this Agreement if the failure to perform
is due to war, declared or undeclared; fire; flood; interruption of
transportation; embargo; accident; explosion; inability to procure or
short supply of goods, materials, feed streams, equipment, supplies or
production facilities; prohibition of imports and exports; governmental
or court orders, regulations, restrictions, priorities, or rationing;
strike, lockout, or other labor problems interfering with transportation
of goods, raw materials, feed streams, or supplies; or by any other cause
beyond the reasonable control of the Party affected. Performance under
this Agreement shall be resumed promptly as soon as the reason for
nonperformance is removed; provided, however, if nonperformance by virtue
of the application of this Article XV remains in effect for a period of
one hundred eighty (180) days, then notwithstanding any other term in
this Agreement, this Agreement may be terminated by either Party without
penalty upon written notice to the other Party prior to the conclusion of
the Force Majeure event. During the period of nonperformance by one
35
Party under the terms of this Article XV, the other Party is excused from
performance as well.
15.02. Suspension Due to Litigation. In the event either Party hereto is
charged, in a docketed court action, with infringing a third party patent
or copyright, and/or of misappropriation of a third party trade secret
because of the performance by such Party under this Agreement, then the
Party alleged to infringe or misappropriate such third party patent,
copyright, or trade secret rights may suspend performance under this
Agreement without penalty until the charge is resolved; provided,
however, that if performance is suspended pursuant to this Section 15.02
and such charge is not resolved within a period of one hundred eighty
(180) days from the start of the period of non-performance, then
notwithstanding any other term in this Agreement, this Agreement may be
terminated by either Party without penalty upon written notice to the
other Party prior to such resolution. In the event of a charge, the
Parties will meet and discuss an appropriate course of action to respond
to such charge, and neither Party shall settle or compromise such charge
without the other Party's written consent, which consent shall not be
unreasonably withheld.
ARTICLE XVI
MISCELLANEOUS
16.01. Notices. Unless otherwise provided herein, any notice or other
communication under this Agreement shall be deemed to have been duly
delivered on the earlier of (i) the date of receipt; if delivered by
hand, telex or facsimile, or (ii) three (3) business days after the date
when the same shall have been posted by certified or registered mail,
return receipt requested, in any post office in the United States of
America, postage prepaid and addressed to the Party to whom such notice
or other communication is to be given or made at such Party's address set
forth below, or to such other address as such Party shall designate by
written notice to the other Party after the Effective Date, as follows:
36
(a) If to Syntroleum:
Syntroleum Corporation
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
Attn: Office of President
with copy to:
Syntroleum Corporation
Legal Department
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
(b) If to Marathon:
Marathon Oil Company
T. N. Xxxxxx
X. X. Technology
0000 Xxx Xxxxxx, Xxxx 0000
Xxxxxxx, XX 00000
Fax No.: (713) 000- 0000
Phone No.: (000) 000-0000
with copy to:
Marathon Oil Company
L L Xxxxxx
Manager - Gas Utilization
0000 Xxx Xxxxxx, Xxxx 0000
Xxxxxxx, XX 00000
Fax No.: (713) 000- 0000
Phone No.: (000) 000-0000
37
16.02. Headings. The headings used herein are for convenience only, are not a
part of this Agreement, and do not in any way limit or amplify the terms
and provisions hereof.
16.03. Interpretation. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
16.04. Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Oklahoma, without regard to the
conflict of law provisions thereof. The Parties expressly and irrevocably
consent and submit to the jurisdiction of any state or federal court
sitting in Tulsa County, Oklahoma and agree that, to the fullest extent
allowed by law, only such Oklahoma courts, to the exclusion of all
others, shall have jurisdiction over any action, suit or proceeding
arising out of or relating to this Agreement. The Parties each
irrevocably waive, to the fullest extent allowed by law, any objection
either of them may have to the laying of venue of any such suit, action
or proceeding brought in any state or federal court sitting in Tulsa
County, Oklahoma based upon a claim that such court is inconvenient or
otherwise an objectionable forum. Any process in any action, suit or
proceeding arising out of or relating to this Agreement may, among other
methods, be served upon any Party by delivering it or mailing it to their
respective addresses as set forth herein. Any such delivery or mail
service shall be deemed to have the same force and effect as personal
service in the State of Texas or Oklahoma.
16.05. Entire Agreement. This Agreement, together with Exhibits A and B hereto,
the Master Preferred License Agreement, the Syntroleum Process IP
Agreement, and the Product Refining IP Agreement contain all the
covenants, terms, provisions and agreements between the Parties relating
to the Project to be conducted pursuant to this Agreement.
38
In the event of any conflict or inconsistency between this Agreement and
the Master Preferred License Agreement, the Master Preferred License
Agreement shall control, and in the event of any conflict or
inconsistency between this Agreement and the Syntroleum Process IP
Agreement or Product Refining IP Agreement, the terms of this Agreement
shall control. In the event of any conflict or inconsistency between this
Agreement and Exhibits A and B, the terms and conditions of this
Agreement shall control. No prior agreement or understanding with respect
to the same shall be valid or have any force or effect, and no covenant,
term, provision or agreement of this Agreement may be altered, changed,
modified, waived or added to, except in writing by authorized
representatives of both Parties as provided herein. No representation,
inducement, understanding or anything of any nature whatsoever made,
stated or represented on behalf of either Party hereto, either orally or
in writing, has induced the other Party to enter into this Agreement,
except as expressly set forth in this Agreement.
16.06. Severability. If any clause, sentence, or other portion of this Agreement
shall become illegal, null, or void for any reason, or shall be held by
any court of competent jurisdiction to be so, the remaining portions
thereof shall remain in full force and effect.
16.07. Relationship of Parties. Nothing contained in this Agreement shall be
deemed or construed by the Parties or by any third person to create the
relationship of principal and agent, or of partnership or of joint
venture (except as defined in Section 2(b) of the National Cooperative
Research and Production Act of 1993) among the Parties, nor shall this
Agreement be construed to authorize either Party to act as agent for or
to bind or obligate the other Party. The execution and delivery of this
Agreement shall not be deemed to confer any rights upon, nor obligate
either of the Parties to any person or entity other than the other Party
hereto.
16.08. Tax Election. It is the intention of the Parties that the Project not be
treated as a partnership for federal income tax or any other purpose.
Nevertheless, in the event that the Internal Revenue Service determines
that the Project is a partnership for federal
39
income tax purposes, each Party hereby elects to be excluded from the
provisions of Chapter I, Subchapter K of the Internal Revenue Code of
1986, as amended, such election being intended to meet the requirements
of Section 1.761-2(b)(2)(ii)(a) of the Treasury Regulations.
16.09. Waiver. The waiver or failure to enforce any provision of this Agreement
shall not operate as a waiver of any future breach of any such provision
or any other provision hereof.
16.10. Assignment. Neither this Agreement nor the rights and obligations under
this Agreement shall be transferable or assignable by either Party hereto
without the written consent of the other Party, which consent shall not
be unreasonably withheld; except that such consent shall not be necessary
in the event of an assignment by a Party to an Affiliate of such Party or
to the successor of a Party in connection with the sale of all or
substantially all of that Party's business assets.
16.11. Binding Effect. The provisions of this Agreement shall bind or benefit
the successors and permitted assigns of the Parties.
16.12. Records and/Audits
(a) Maintenance of Records. Each Party hereto shall maintain, in
accordance with generally accepted accounting principles consistently
applied, true and complete records of all costs, invoices and
payments associated with the Project and shall retain all such
records for a period of not less than twenty-four (24) months after
the expiration or earlier termination of this Agreement under
Articles V and VI hereof.
(b) Right to Copies of Records. Upon written request of the other Party,
at any time until twenty-four (24) months after the expiration or
termination of this Agreement, a Party shall provide such other Party
with a copy of all documents for which
40
payments have been made or expenses incurred under this Agreement
respecting the Project and chargeable to the Project budget. The
Party making this request shall reimburse the other Party for its
actual costs in providing such documents.
(c) Audit. Each Party shall have the right to audit, during normal
business hours and within the period in which the other Party is
obligated to preserve such records, upon written notice of at least
ten (10) business days, for the purpose of verifying the other
Party's charges, receipts, and expenses.
16.13. Accident Reports. Each Party shall report to the other Party, as soon as
practicable, all accidents or occurrences resulting in personal injury
(including bodily injury or death) or property damage arising out of or
during the performance of the Project, and shall furnish the other Party
with written documents, including copies of all reports made by a Party
to its insurer or to others, concerning such accidents and occurrences.
16.14. Laws, Rules, Regulations, and Permits. Each Party agrees that its
activities under this Agreement shall conform to all applicable
governmental laws, rules, codes, or regulations and all applicable
industry codes and standards. Each Party agrees to comply, and to cause
its employees, agents, Contractors and other agents engaged in carrying
out that Party's activities under the Agreement, to comply with all
applicable laws, ordinances and requirements of federal, state, district,
county, city or town departments, bureaus, and authorities as now or
hereinafter in effect during the term of this Agreement, including, but
not limited to, the Occupational Safety and Health Act of 1970 and the
Contract Work Hours and Safety Standards Act, and the rules and
regulations imposed by a Party for its respective business facilities, to
the extent a Party's rules and regulations do not conflict with any
governmental rules and regulations. Each Party shall also comply with all
applicable laws, executive orders and regulations concerning
non-discrimination in employment, including but not limited to the equal
opportunity clause of Section 202 of Executive Order 11246, dated
September 24, 1965, which is incorporated herein by reference.
41
16.15. Most Favored Nations Clause. If Syntroleum enters into one or more
agreements with third parties for participation in the Project, then
Syntroleum agrees, if requested by Marathon to do so, to amend this
Agreement to incorporate any terms in such third-party agreement(s) which
are more favorable to such third party(ies) than this Agreement is to
Marathon.
IN WITNESS WHEREOF, this Agreement shall be effective as of the Effective Date.
SYNTROLEUM CORPORATION MARATHON OIL COMPANY
By: By:
------------------------------- --------------------------------------
Name: Name: T. N. Xxxxxx
----------------------------- ------------------------------------
Title: Title: Vice President Technology
---------------------------- -----------------------------------
Date: Date:
----------------------------- ------------------------------------
42
LIST OF EXHIBITS
Exhibit A Cooperative Agreement Subcontract
Exhibit B Two letter agreements dated July 6, 2001 between Syntroleum
Corporation and Marathon Oil Company, one of which is re: "Cherry
Point Relocation Cost Agreement" and the other of which is re:
"Term Sheet dated November 8, 2000 between Syntroleum Corporation
and Marathon Oil Company."
Exhibit C Syntroleum Corporation Secured Promissory Note
43
