LICENSE AGREEMENT
AGREEMENT MADE this 9th day of April, 2002 between Xxxxxxx
X. Xxxxxxx, an individual residing at Xxxxx 0, Xxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, herein referred to as "Licensor", and
Emission Controls Corp., a corporation organized under the laws
of the State of Delaware, having its principal place of business
at 0000 Xxxxxxxxxx Xxxx, Xxxxxx, XX 00000, herein referred to as
"Licensee".
RECITALS
A. Licensor is the inventor of certain technology disclosed in
U.S. Patent 5,336,396, now abandoned, for an invention
entitled Waste Oil Management System. The invention is
described generally as a Fuel Management System for blending
of an alternative fuel such as waste oil with a conventional
fuel and the continuous filtration thereof before delivery
to fuel injection system of a conventional diesel engine.
(hereafter, "FMS").
B. Licensee is a development stage company engaged in the
business of manufacturing and marketing fuel related devices
for internal combustion engines of the nature described in
Licensor's FMS invention.
C. Licensor is willing to grant, and Licensee desires to
secure, an exclusive license to use, manufacture, sell, and
otherwise practice the know-how, technology, trade secrets
and improvement snot otherwise disclosed to the public,
including the right to any patent that issues to the
Licensor that embodies said know-how, technology, trade
secrets or improvements to FMS.
IN CONSIDERATION of the covenants and obligations hereinafter set
forth, the parties agree as follows:
SECTION ONE: DEFINITIONS
In the interpretation of this Agreement, the following
definitions shall apply:
1.1 "Licensed Technology" means the specific know-how,
technology, trade secrets and improvements owned or licensed
to Licensor which is related to FMS which Licensor has the
right to grant licenses of the scope granted hereunder.
1.2 "Hydrocarbon-based Fuels" means any fossil fuel
normally termed as from petroleum, in any sense of the word,
and which is or may be used in internal combustion engines,
whether in a natural, or crude, state, a refined state, a
derivative of either - but not gaseous - or an exotic
mixture of any derivative thereof.
1.3 "Units" and "Device" means each manufactured apparatus
which requires, to be created, certain know-how,
technology and trade secrets now possessed exclusively
by Xxxxxxx Xxxxxxx.
SECTION TWO: DISCLOSURE AND GRANT OF LICENSE
2.1 Licensor hereby grants to Licensee a license to manufacture,
use, or sell and otherwise practice the Licensed Technology,
in the geographic territory of Mexico.
2.2 The scope of the grant includes the cited Licensed
Technology for a fuel management system.
2.3 The Licensor specifically grants license to Licensee as
to the use of the Licensed Technology. Licensee has
the right to procure the manufacture of any products by
others using the Licensed Technology.
2.4 Licensor will provide to Licensee all documentation, test
results, patent information, know-how, trade secrets, road
test results and any other information that will assist
Licensee in the marketing of a product using the Licensed
Technology.
2.5 Licensor will provide a working prototype of a fuel
management system to the requirements and specifications of
Licensee upon payment noted in 3.1a of this Agreement.
2.6 Breach of the restricted use may infringe upon the rights
granted to others and may, at the sole discretion of
Licensor, cause Licensee's rights under this Agreement to be
terminated.
SECTION THREE: COMPENSATION FOR LICENSE
As consideration for the granting of license under this Agreement
Licensee shall pay both a License Fee and Royalty therefor:
3.1 Licensee will pay a Licensing Fee to Licensor within sixty
(60) days of execution of this Agreement in the following
manner:
a. One Hundred Thousand ($100,000) dollars upon the
execution of this Agreement; and
b. Fifty Thousand ($50,000) dollars within thirty (30)
days from the execution of this Agreement; and
c. Fifty Thousand ($50,000) dollars within sixty (60) days
from the execution of this Agreement.
3.2 Option is hereby granted to Licensee to obtain
worldwide licensing rights to the technology within
twelve (12) months of execution of this Agreement for
the total sum of Two Million Eight Hundred Thousand
Dollars ($1,800,000.00). Said option will modify
geographics of this Agreement.
3.3 Licensee will pay licensor a Royalty of Ten Percent (10%) of
total gross receipts from sales of all products manufactured
by Licensee using the Licensed Technology.
3.4 Licensee will pay Licensor a Royalty of Three Percent (3%)
on all replacement parts sold by Licensee and all Sub-
Licensee to their respective customers irrespective of
whether Licensor manufactures the replacement parts of
whether a Sub-Licensee manufactures the replacement parts.
In the event that Licensor manufactures the replacement
parts, the Royalty shall be in addition to the actual
wholesale cost of the parts, paid by Licensee.
3.5 Royalties will be paid to Licensor for the term of this
Agreement at his address listed in Section 12.6.
3.6 Licensee will pay Royalty payments on the last day of each
March, June, September, and December. Said payment shall
accompany a detailed report prepared by Licensee pursuant to
Section Six herein.
SECTION FOUR: USE OF LICENSED TECHNOLOGY
4.1 With the prior written approval of Licensor, Licensee has
the right to sub-license the right to manufacture, use,
practice or sell products using the Licensed technology in
Mexico. Exercising its right to sub-license shall not
affect Licencee's right and conditions granted pursuant to
this Agreement.
4.2 All sub-licenses will be in writing and on such terms and
conditions as Licensee in Licensee's discretion may
determine. However, each sub-license must include language
consistent with the rights and obligations set forth herein,
and may not grant any rights to Sub-Licensee greater than
that which is granted to Licensee herein. All sub-licenses
shall include a provision to require that Sub-Licensees keep
accurate and separate books and records with regard to
products produced or sold which use the Licensed Technology
and allow Licensor access to inspect Sub-Licensee's books
and records. Executed copies of all sub-licenses must be
presented to Licensor within 10 days of execution.
4.3 Production of any products under a sub-license will be
numbered in reporting as Licensee's own production
regardless of the Licensee's relationship with any Sub-
Licensee.
SECTION FIVE: COOPERATION
5.1 Licensor will make available to Licensee all information,
tests, data, and other material in the possession of the
Licensor concerning the subject matter of the Licensed
Technology and all inventions derived using the Licensed
Technology, and Licensor will assist Licensee in the
technical and commercial development of any products based
on the Licensed Technology as is within the scope and
capability of the Licensor.
5.2 Licensor will require Licensee and Sub-Licensee(s) to
execute a Secrecy and Non-Disclosure Agreement document
which is attached to this Agreement as Exhibit A.
5.3 Any improvements relating to the Licensed Technology are
hereby included within the scope of this license Agreement.
SECTION SIX: REPORTING AND INSPECTION
6.1 Licensee shall submit to Licensor detailed reports to
include the number of units manufactured at each
manufacturing location; the number of units shipped to any
assembler, installer, distributor, vendee or end user of
every nature; the invoiced shipping price of each shipment;
and the name and address to whom shipped or released for
payment. Said report will be prepared to include each three
(3) month period ending on the last day of March, June,
September and December, subsequent to the date of execution
of this Agreement and then continuing through the life of
the Agreement. Said report shall be furnished to Licensor
with all Royalty payments pursuant to Section Three herein.
6.2 Licensee, and all Sub-Licensees, are required to keep
accurate books and records reflecting all transactions
relating to manufacturing and sales of products based on the
Licensed Technology. Said books and records shall be
available for inspection by the Licensor, or any
representative of the Licensor, during normal business hours
when reasonable written notice is given.
6.3 It is agreed that production numbers by Licensee and any
Sub-Licensee will be aggregated as if the total were
Licensee's own for purposes of determining fees payable to
Licensor.
SECTION SEVEN: LICENSOR'S RESERVATION OF RIGHTS
7.1 Licensor reserves all rights to himself for any future non-
related patent applications and patents which may issue.
Licensee shall receive the benefit of any patents issued
during the term of the Agreement that are related to FMS
without additional compensation. Nothing in this License
Agreement shall be deemed to grant any ownership rights to
License Technology.
SECTION EIGHT: WARRANTIES AND DEFAULT
8.1 Neither party makes any representation, extends any
warranties, or assumes any responsibilities whatever with
respect to the manufacture, use, sale or other disposition
by the other party or its vendees, transferees, or Sub-
Licensees of products using the Licensed Technology. Each
party hereby agrees that the LICENSED TECHNOLOGY IS PROVIDED
TO LICENSEE "AS IS". LICENSOR SHALL NOT BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR A
LOSS OF PROFITS OR OTHER BENEFITS ARISING OUT OF THIS
AGREEMENT, OR OUT OF ANY BREACH HEREOF. LICENSOR MAKES NO
WARRANTIES BEYOND THOSE EXPRESSLY CONTAINED HEREIN. ALL
OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING THOSE OF
FITNESS FOR A PARTICULAR PURP0SE AND MERCHANTABILITY ARE
EXCLUDED.
8.2 Any suspected breach or default with respect to any of the
provisions of this Agreement will be noticed in writing to
the offending party within thirty (30) days of suspected
breach of default . Should the offender not cure such
suspected breach or default within thirty (30) days after
notice, the offender shall be deemed in breach or default
and this Agreement may be terminated by the injured party.
8.3 Licensor warrants that Licensor owns all rights to the
Licensed Technology cited, and has the right to grant
licenses for manufacture thereunder.
SECTION NINE: TRANSFERABILITY
9.1 The license granted to Licensee in this Agreement shall be
binding on any successor to ownership or control of the
licensed marketing rights. The obligation shall run in
favor of any successor of Licensee. Neither party shall
have any right to assign its rights hereunder without the
written approval of the other party.
SECTION TEN: TERMINATION
10.1 In the event of any adjudication of bankruptcy,
appointment of a receiver, assignment for the benefit
of creditors, or levy of execution directly involving
Licensee, this Agreement, at the sole discretion of
Licensor, may thereupon be terminated.
10.2 In the event of any act cited in above Section 11.1 be
initiated, Licensee shall notify Licensor immediately and by
the most expeditious.
10.3 After Licensee has paid the total amount of Licensing Fees
as set forth in Section 3.1 above, Licensee shall have the
right to cancel this Agreement on ninety (90) days written
notice to Licensor. Licensee shall assist Licensor with
respect to direct licensing of existing Sub-Licensees. In
the event of such cancellation, Licensee shall pay to
Licensor all Royalties and License Fees due and payable up
to the effective date of such cancellation.
10.4 Should the License Agreement be terminated for any purpose,
all documents relative to the Licensed Technology, the
intellectual property rights relative thereto, all documents
relative to any and all development or refinement of the
apparatus and/or its uses, and all original and prototype
equipment appertaining thereto, shall all and immediately be
handed over to Licensor and no claim shall thereafter be
laid thereto by Licensee and Sub-Licensees.
SECTION ELEVEN: MISCELLANEOUS
11.1 The term of this Agreement shall be for a period of one
year.
11.2 This Agreement shall automatically re-new for subsequent
one-year terms unless otherwise terminated pursuant to
Section Ten above at no additional cost to Licensee.
11.3 This Agreement shall be interpreted and construed under the
laws of the State of Florida. Any suit related to this
matter shall be filed in the State of Florida, Southern
District.
11.4 This Agreement is the whole agreement and supercedes any
previous intent or statement, written or oral.
11.5 This Agreement may be amended in a writing executed by both
parties.
11.6 Notice given and payment of fees and royalties under this
Agreement shall be mailed to the parties at the addresses
herein given.
Emission Controls Corp. Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx Xxxxx 0, Xxx 000
Xxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000
11.7 Facsimile signatures are considered valid and lawful for the
execution of this Agreement and are binding upon the parties
hereto.
11.8 This Agreement may be signed in whole or in part, each part
representing the whole.
IN WITNESS WHEREOF, the parties are deemed to have executed this
Agreement in Blaine, Washington, whether in whole or in part, the
day and year first above written.
EMISSION CONTROLS CORP. XXXXXXX X. XXXXXXX
By: Xxx X. Xxxxx, President By: Xxxxxxx Xxxxxxx