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EXHIBIT 10.5
AGREEMENT OF
DISSOLUTION OF ADVANCED FUELS, L.L.C.,
BETWEEN
A-55, L.P. AND CATERPILLAR INC.
1. A-55 SHALL PAY CATERPILLAR FIVE MILLION SIX HUNDRED SIXTY-EIGHT THOUSAND, ONE
HUNDRED FORTY ONE DOLLARS AND SIXTY CENTS ($5,668,141.60 ON OCTOBER 28, 1996) BY
ELECTRONIC WIRE TRANSFER TO CATERPILLAR'S BANK ACCOUNT NO. 50-24390 AT FIRST
NATIONAL BANK OF CHICAGO, ABA 000000000. SUCH PAYMENT REPRESENTS AN EQUITABLE
ADJUSTMENT TO CATERPILLAR BASED ON THE VALUE OF THE ADVANCED FUEL'S ASSETS
DISTRIBUTED TO A-55 AND CATERPILLAR UPON DISSOLUTION AND REFLECTS SATISFACTION
OF EACH PARTIES' RESPONSIBILITY FOR ADVANCED FUELS' INDEBTEDNESS.
2. CATERPILLAR SHALL HAVE NONEXCLUSIVE RIGHTS TO ALL ADVANCED FUELS' TECHNOLOGY
(E.G., ENGINE AND FUEL TECHNOLOGY TO WHICH ADVANCED FUELS OWNS OR HAS RIGHTS) AS
OF DATE OF DISSOLUTION (INCLUDING TECHNOLOGY IN PROCESS AS OF DATE OF
DISSOLUTION) IN ALL APPLICATIONS FOR PRODUCTS OF THE KIND SOLD BY CATERPILLAR,
NOW AND IN THE FUTURE, SUBJECT TO THE FOLLOWING:
A. A-55 SHALL HAVE EXCLUSIVE RIGHTS TO PROVIDE ADVANCED
FUELS' ENGINE TECHNOLOGY TO CONVERT NON-CATERPILLAR
ENGINES TO BURN AQUEOUS FUEL AND TO PROVIDE SUCH ENGINE
TECHNOLOGY TO NONCATERPILLAR ENGINE MANUFACTURERS TO
PRODUCE ENGINES TO BURN AQUEOUS FUEL, EXCEPT:
1. DURING THE FIRST THREE (3) YEARS AFTER
DISSOLUTION, IF A-55, WITHOUT ANY
PROPRIETARY INFORMATION FROM CATERPILLAR,
CANNOT CONVERT NON-CATERPILLAR ENGINES TO
BURN A CATERPILLAR AQUEOUS FUEL WITHIN
THE TIME PERIOD REQUESTED BY CATERPILLAR,
AND MEET ACCEPTABLE COST AND PERFORMANCE
CRITERIA DETERMINED BY CATERPILLAR, THEN
CATERPILLAR HAS THE RIGHT TO PROVIDE
RETROFIT KITS FOR, OR TECHNOLOGY FOR
CONVERTING, NON-CATERPILLAR ENGINES IN
THE FIELD. AFTER SUCH THREE (3) YEAR
PERIOD, CATERPILLAR HAS A NONEXCLUSIVE
RIGHT TO SERVE CUSTOMERS BY PROVIDING
KITS TO BURN CATERPILLAR AQUEOUS FUEL IN
THEIR CATERPILLAR OR NON-CATERPILLAR
ENGINES. CATERPILLAR IS NOT GIVEN THE
RIGHT TO LICENSE OEMS.
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B. CATERPILLAR SHALL HAVE EXCLUSIVE RIGHTS TO
PROVIDE ADVANCED FUELS' ENGINE TECHNOLOGY TO
CONVERT CATERPILLAR ENGINES;
C. CATERPILLAR SHALL NOT MAKE, HAVE MADE, USE, OR
SELL GASOLINE OR NAPHTHA BASED AQUEOUS FUEL
OTHER THAN FOR CATERPILLAR DIESEL AND NATURAL
GAS ENGINES; AND
D. CATERPILLAR WILL SELL BUT NOT LICENSE DIESEL BASED AQUEOUS
FUEL TECHNOLOGY FOR A PERIOD OF FIVE (5) YEARS.
CATERPILLAR SHALL HAVE NO RIGHT TO LICENSE GASOLINE OR
NAPHTHA BASED AQUEOUS FUEL TECHNOLOGY.
3. RECIPROCAL ROYALTY WHEREBY EACH COMPANY WILL PAY TO THE OTHER COMPANY A
ROYALTY OF $0.005 PER GALLON OF AQUEOUS FUEL SOLD DIRECTLY, THROUGH LICENSE, BY
SALE OF TECHNOLOGY OR BY OTHER ACTION OF THAT COMPANY (OR THE EQUIVALENT IN
SURFACTANT), BUT THE FIRST PAYMENT SHALL NOT BE DUE UNTIL A COMPANY AND ITS
LICENSEES HAVE CUMULATIVELY SOLD 2,000,000,000 GALLONS OF AQUEOUS FUEL (OR THE
EQUIVALENT IN SURFACTANT). ROYALTY PAYMENTS WILL BE PAID ANNUALLY. A COMPANY'S
ROYALTY OBLIGATIONS WILL TERMINATE TEN (10) YEARS FROM THE DATE THE FIRST
ROYALTY PAYMENT IS DUE, I.E., INCLUDING THE FIRST PAYMENT, A MAXIMUM OF ELEVEN
(11) ROYALTY PAYMENTS WILL BE MADE BY A COMPANY.
4. JOINT PRESS RELEASE TO BE ISSUED ON DAY DISSOLUTION AGREEMENT IS SIGNED, AS
FOLLOWS--"A-55, L.P. AND CATERPILLAR INC. HAVE DECIDED TO DISSOLVE THEIR JOINT
VENTURE, ADVANCED FUELS, L.L.C. THE PURPOSE OF THE DISSOLUTION IS TO ENABLE THE
COMPANIES TO PURSUE DIFFERENT PROGRAMS WITH THE LOW EMISSION AQUEOUS FUEL
TECHNOLOGY TO CAPITALIZE ON BUSINESS OPPORTUNITIES. CATERPILLAR WILL FOCUS ITS
AQUEOUS FUEL ACTIVITIES IN THE KINDS OF PRODUCTS IT PRODUCES OR WILL PRODUCE,
AND A-55 WILL PURSUE ALL OTHER POTENTIAL AQUEOUS FUEL APPLICATIONS FOR THE
TECHNOLOGY."
5. NEITHER CATERPILLAR NOR A-55 SHALL USE THE NAME "ADVANCED FUELS" OR ANY NAME
SIMILAR TO OR CONFUSINGLY SIMILAR TO IN THE MARKET PLACE, FOR ANY BUSINESS IN
WHICH CATERPILLAR OR X- 00 HAS AN INTEREST. A-55 WILL KEEP THE NAME A-21 AND THE
TRADEMARK SYMBOL OF ADVANCED FUELS.
6. ADVANCED FUEL'S INVENTIONS UPON DISSOLUTION WILL BE ASSIGNED TO A-55, SUBJECT
TO CATERPILLAR'S RIGHTS HEREUNDER.
7. A-55 AND XXXXXX X. XXXXXXXXX HEREBY WITHDRAWS AND RELEASES ANY AND ALL
NOTICES OR CLAIMS THAT ADVANCED FUELS, L.L.C. OR CATERPILLAR IS IN DEFAULT UNDER
THE LIMITED
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LIABILITY COMPANY AGREEMENT OF ADVANCED FUELS, L.L.C. OR RELATED AGREEMENTS.
8. SUBSEQUENT TO THE EFFECTIVE DATE AND FOR A PERIOD OF ONE YEAR CATERPILLAR AND
A-55 AGREE TO REFER ALL INQUIRIES ABOUT THE JOINT VENTURE AND ITS TECHNOLOGY TO
THEIR RESPECTIVE PUBLIC RELATIONS GROUPS FOR RESPONSE ALONG THE LINES OF THE
ABOVE PUBLISHED PRESS RELEASE.
9. PRIOR TO THE DATE OF DISSOLUTION, ADVANCED FUELS SHALL GIVE ACCESS TO A-55
AND CATERPILLAR ALL ADVANCED FUELS' INFORMATION IT OWNS OR TO WHICH IT HAS
RIGHTS. A-55 AND CATERPILLAR AGREE TO PROTECT AS CONFIDENTIAL INFORMATION ALL
PROPRIETARY INFORMATION OF THE OTHER PARTY (A-55 OR CATERPILLAR) RECEIVED BY OR
IN THE POSSESSION OF ADVANCED FUELS.
10. IF A-55 AND/OR XXXXXX XXXXXXXXX OR CATERPILLAR INC. ENTER INTO AN
ARRANGEMENT WITH AN OIL COMPANY FOR THE MANUFACTURE OR DISTRIBUTION OF DIESEL
BASED AQUEOUS FUEL AND RECEIVES A LUMP SUM, THE PARTY ENTERING THE ARRANGEMENT
WILL PROVIDE THE OTHER PARTY TWENTY PERCENT (20%) OF ANY LUMP SUM PAYMENT.
11. IF CATERPILLAR INC. DOES NOT RECEIVE FIVE MILLION SIX HUNDRED SIXTY-EIGHT
THOUSAND, ONE HUNDRED FORTY-ONE DOLLARS AND SIXTH-EIGHT CENTS ($5,668,141.68) BY
WIRE TRANSFER IN ACCOUNT #50-24390 AT THE FIRST NATIONAL BANK OF CHICAGO--ABA
000000000-BY THE CLOSE OF THE BUSINESS DAY MONDAY, OCTOBER 28, 1996, A-55 AND
XXXXXX XXXXXXXXX BY THIS AGREEMENT HEREBY TRANSFERS AND ASSIGNS ALL RIGHT, TITLE
AND INTEREST OF XXXXXX XXXXXXXXX AND A-55 IN ADVANCED FUELS TO CATERPILLAR INC.
INCLUDING ALL INTELLECTUAL PROPERTY OF ADVANCED FUELS INCLUDING LICENSES, TRADE
SECRETS, PATENTS, AND PATENT APPLICATIONS (INCLUDING THE FIVE PATENT
APPLICATIONS PREPARED BY FISH & XXXXXXXXXX FOR ADVANCED FUELS AND THE
APPLICATION FILED BY XXXXXX XXXXXXXXX FOR SIMILAR SUBJECT MATTER IN 1996).
12. CATERPILLAR INC. ASSUMES RESPONSIBILITY FOR ANY OUTSTANDING THIRD PARTY
INDEBTEDNESS OF ADVANCED FUELS.
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Agree to this Agreement, on this 24th day of October 1996.
A-55, L.P. CATERPILLAR INC.
BY: RWG, Inc., General Partner
BY:/s/ Xxxxxx X. Xxxxxxxxx
----------------------------- BY:/s/ Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXXX, PRESIDENT -------------------------
XXXXXX X. XXXXXXX, VICE
PRESIDENT
BY:/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
XXXXXX X. XXXXXXXXX, AS AN
INDIVIDUAL
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