Exhibit 10.20
SUBLICENSE AGREEMENT
This Sublicense Agreement (the "Agreement") made and entered in to as
of _____________, 1997, is by and between Crown Asphalt Corporation, a Utah
corporation ("Crown") and Crown Asphalt Ridge, L.L.C., a Utah limited liability
company ("Crown Asphalt").
Recitals
A. Crown, formerly known as BuenaVentura Resources Corporation,
possesses an exclusive license with Park Xxxxxx Enterprise, Inc., a Utah
corporation ("PGEI"), dated January 29, 1989 in Utah, as amended on July 1,
1993, and July 1, 1996 (the "License"), to a process, the practice of which is
within the scope of the claims of United States Patent No. 4,968,417, dated
November 6, 1990, relating to a process for recovering bitumen from tar sands,
and more particularly, to a solvent extraction/water process for recovering
bitumen from tar sands contaminated with clay (the "Invention").
B. Crown is a member of Crown Asphalt and is required by its Operating
Agreement (the "Operating Agreement") to contribute a sublicense (the
"Sublicense") under the License for use of the Invention by Crown Asphalt and by
LLC-2 and LLC-3 in the Project Area and possible use outside of the Project Area
for AMI Opportunities (which fall solely within the boundaries of the State of
Utah).
C. Accordingly, Crown now grants Crown Asphalt a Sublicense for use of
the Invention as provided in the Operating Agreement, subject to the terms,
conditions and covenants set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
undertakings expressed herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Crown Asphalt, and
subject to the conditions hereinafter set forth, the parties agree as follows:
1. Definitions. The following terms shall have the meanings specified
below:
1.1 Technology. The Invention was developed by E. Park
Xxxxxx and is exclusively owned by PGEI. The Invention separates clay
contaminated bitumen from tar sands with a solvent. The bitumen is dissolved
with an organic solvent such as condensate from a natural gas well. The clay is
separated from the dissolved bitumen and the solvent is recovered and recycled.
The sand is washed with water containing a surface active agent to remove
residual bitumen and solvent. The term "Technology" shall refer to the Invention
and any knowledge or information developed by PGEI or E. Park Xxxxxx ("Xxxxxx")
at any time during the terms of either this Agreement or the License, or prior
thereto, which relates to the Invention, and processes, equipment, instructions,
and any other information, materials or data necessary for use of the Invention.
In addition, the term "Technology" shall also refer to any change, improvement
or addition to the Invention, and to any modification or addition to any
processes, equipment, instructions, and any other information, materials or data
developed or designated by PGEI or Xxxxxx, for use in connection with the
separation of bitumen from sand during the terms of either this Agreement or the
License.
1.2 Product. The term "Product" shall refer to asphalt,
bitumen, maltha, and all other hydrocarbon minerals contained in tar sands.
1.3 Extraction Taxes. The term "Extraction Taxes" shall refer
to sales, use, gross receipts, ad valorem, severance and other taxes due and
payable in respect to severance, production, removal, sale or disposition of the
tar sands and Product, but excluding any taxes on net income.
1.4 Processing Costs. The term "Processing Costs" shall refer
to the amounts actually incurred by Crown Asphalt for processing or other
beneficiation of tar sands and Product.
1.5 Transportation Costs. The term "Transportation Costs"
shall refer to the expenses and charges actually incurred by Crown Asphalt in
transporting tar sands and Product from the mine to the refinery or other place
of processing and/or sale. Such costs shall include, but not be limited to,
wages, rent, freight, shipment insurance, handling, port, delay, demurrage,
lighterage, tug, forwarding costs, and transportation and other applicable
taxes.
1.5 Production Royalty on Net Returns. The term "Production
Royalty on Net Returns" shall refer to the amount of money actually received by
Crown Asphalt for the sale of Product produced by use of the Technology, less,
to the extent borne by Crown Asphalt, sales and brokerage costs, Transportation
Costs, Processing Costs, and Extraction Taxes.
1.6 Territory. The term "Territory" shall refer to all lands
within the exterior boundaries of the State of Utah.
2. Term. The term of this Agreement shall commence on the date hereof
and shall continue in perpetuity unless terminated earlier by either party.
3. Sublicense Rights.
3.1 Grant of Sublicense. Crown hereby grants to Crown
Asphalt, an exclusive sublicense (the "Sublicense"), within the limitations and
requirements set forth below, to use the Technology for all purposes incidental
to separating Product and other minerals from tar sands deposits located within
the Territory including a right to further sublicense the Technology to others
involved with the exploitation of a business opportunity involving the
Technology licensed by this Agreement; provided, that such further sublicenses
may not violate the terms of this Agreement or the License.
4. Provision of Services by PGEI, Related Matters and Disclaimer.
4.1 Training. Crown will require PGEI, pursuant to the
License, to provide to Crown Asphalt, their employees and consultants, training
in the use of the Technology as they shall request.
4.2 Improvements in Technology. During the term of the
License, PGEI is required to promptly notify Crown of any improvements in, or
modifications, changes or additions to, the Technology (the "Enhancements") and
to make any and all Enhancements available to Crown within a reasonable time
after the development and documentation of such Enhancements. Crown shall, in
turn, promptly make any such Enhancements available to Crown Asphalt. In the
event that the License is terminated, other than as a result of any actions or
lack thereof, of Crown Asphalt, then PGEI shall make such Enhancements available
to Crown Asphalt.
Crown has agreed within the License to submit promptly to PGEI all
available information on any Enhancements to the Technology, now or hereafter
found, discovered, or learned by Crown. Accordingly, Crown Asphalt shall also
inform PGEI of such Enhancements. Crown Asphalt acknowledges that such
information will be the sole property of PGEI.
4.3 Patent, Trademark and Infringement Protection. Crown
Asphalt shall have no right to pursue or obtain any patents, copyrights or
trademarks with respect to the Technology. In the event that Crown Asphalt
receives notice that intangible property rights with respect to the Technology
are being infringed upon, Crown Asphalt shall promptly notify Crown of such
infringement and Crown shall notify PGEI of the same.
4.4 Authority and Covenants of Crown. Crown warrants and
represents to Crown Asphalt that (a) Crown is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah, with
the corporate power and authority to own property and carry on its business as
it is now being conducted and to perform its obligations under this Agreement,
and (b) the execution, delivery and performance of this Agreement have been duly
authorized by Crown's Board of Directors and do not conflict
with or violate the Articles of Incorporation or By-Laws of Crown or
any material agreement to which Crown is a party or by which Crown is
bound, any order, decree or judgment of any court or other tribunal
having competent jurisdiction or any applicable law, ordinances, rule,
regulation or order of any administrative or regulatory authority.
4.5 Disclaimer of Warranties. Crown Asphalt acknowledges that
the Technology has never been used commercially nor has it been demonstrated to
meet any governmental regulatory, safety, environmental or other standards.
Therefore, Crown EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY AND (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE. ALL RISKS ASSOCIATED WITH THE TECHNOLOGY ARE ASSUMED
BY CROWN ASPHALT. NO REPRESENTATION IS EXPRESSED OR IMPLIED AND NOTHING HEREIN
SHALL BE CONSTRUED AS PERMISSION OR RECOMMENDATION TO PRACTICE A PATENTED
INVENTION WITHOUT A LICENSE.
5. Covenants of Crown Asphalt. Crown Asphalt makes the following
additional covenants to Crown.
5.1 Reasonable Business Efforts, and Minimum Production
Standards to Maintain Exclusive Territory. Crown Asphalt shall use its
reasonable business efforts to maximize use of the Technology in the Territory
by, as soon as reasonably practical, constructing and putting into operation the
Initial Plant as defined in the Operating Agreement.
Within three years after the Initial Plant has processed
7,500 tons of raw tar sands (agreed by the parties to equate to the production
of 5,000 barrels of Product), Crown Asphalt and any of its lower-tier
sublicensees will be cumulatively processing not less than 500,000 tons of raw
tar sands (agreed by the parties to equate to the production of 333,333 barrels
of Product) per year or PGEI shall have the right to license the Technology to
others within the Territory.
Within five years after the Initial Plant has processed 7,500 tons of
raw tar sands (agreed by the parties to equate to the production of 5,000
barrels of Product) or seven years from the date for the License, as extended
per amendment, whichever first occurs, Crown Asphalt and any of the lower-tier
sublicensees will be cumulatively processing 1.5 million tons of raw tar sands
(agreed by the parties to equate to the production of 1,000,000 barrels of
Product) per year or PGEI shall have the right to license the Technology to
others within the Territory.
Performance of the above events set forth in this Section 5.1 is
expressly made subject to the occurrence of Force Majeure as provided below.
PGEI agrees that any licensing agreement it grants to another, whether
within or outside of the Territory, will not contain a royalty more favorable to
the licensee than the Production Royalty on the Net Returns contained herein.
5.2 Production Royalty on Net Returns.
A. Crown Asphalt agrees to pay directly to PGEI a two percent (2%)
Production Royalty on Net Returns for all Product produced and sold using the
Technology. The Product shall be deemed sold at the time the money is actually
received by Crown Asphalt.
B. Production Royalty Payments. All payments of Production
Royalties are due forty-five (45) days after the end of each calendar quarter
(being 45 days after March 31, June 30, September 30, and December 31) and will
be accompanied by a royalty settlement statement which will show the
mathematical calculation of how the payment amount was calculated and will be
accompanied with other appropriate documentation showing attributable cost
deductions and sales records. Pursuant to the License, if PGEI has not issued
written notice objecting to the payment amount within one (1) year, it shall be
conclusively deemed correct.
In case of any dispute or question concerning the ownership of the
royalty under this Agreement, or any part thereof, Crown Asphalt may, at its
election, deposit any disputed amounts into an interest bearing escrow account
until the dispute is finally and conclusively resolved. Crown Asphalt may deduct
from the escrow deposits and from amounts otherwise due the owner of the royalty
which is disputed or in question, all costs and expenses, including attorneys'
fees, it actually incurs by reason of such dispute or question.
C. Depository. All moneys which may become due and payable
under the terms of this Agreement shall be made to Xxxxx State Credit Union
Account #9263, which PGEI has appointed as PGEI's agent for the receipt of such
payment or to such other organization as PGEI may from time to time designate by
written notice given to Crown or Crown Asphalt. All payments made to such Agent
designated by PGEI shall be considered to have been made to PGEI, and having
made payment to such Agent, Crown Asphalt (and Crown) shall be relieved of all
responsibility or liability for the disbursement thereof.
5.3 Crown Asphalt's Costs, Liabilities. Crown Asphalt shall
be responsible for the costs of Crown Asphalt's business, including, without
limitation, all costs incurred by Crown Asphalt in connection with this
Agreement, in using the Technology, in generating revenues, and any and all
losses, claims, damages, liabilities and other costs incurred by Crown Asphalt
in connection therewith. Crown Asphalt shall hold Crown harmless in connection
with any of the foregoing. In no event shall Crown or PGEI be liable for any
incidental or consequential damages such as lost profits, expenses or damages
incurred by Crown Asphalt for use of the Technology.
5.4 Use of Technology; Business. During the term of this
Agreement, Crown Asphalt shall use the Technology only in connection with
applications and purposes that are approved in writing by PGEI for Crown
Asphalt's or any sublicensee's use, and only within the Territory.
5.5 Ethical and Lawful Conduct; Authority. Crown Asphalt
shall conduct its operations at all times in an ethical and lawful manner. Crown
Asphalt shall abide by all applicable federal, state, and local laws and
regulations. Crown Asphalt shall not enter into any agreement, grant any
licenses or sublicense rights or take any other action which conflicts with,
violates or interferes with PGEI's full rights under the License. Crown Asphalt
shall obtain all permits, qualifications to do business, licenses, permits or
other governmental approval required in order to conduct its business as
contemplated by the parties.
5.6 Insurance. Prior to putting the Initial Plant into
operation, Crown Asphalt shall obtain, and maintain in full force and effect
during the entire term of this Agreement, at Crown Asphalt's sole expense, an
insurance policy or policies for itself, and Crown and PGEI, as co-insureds,
against any loss, liability or expense whatsoever from fire, personal injury,
theft, death, property damage, or otherwise arising or occurring upon or in
connection with Crown Asphalt's use of or other exercises of its rights to the
Technology. Such policy or policies shall include general liability coverage
covering property damage and bodily injury sufficient to cover any incident or
occurrence as generally practiced in the industry and other such additional
coverage as shall be required by local law in the Territory. The policies of
insurance obtained by Crown Asphalt shall not be subject to cancellation except
on ten days' written notice to Crown and PGEI, and Crown Asphalt shall cause
certificates of insurance, with copies of all original policies attached,
showing compliance with all the requirements of this Section 5.6, to be
delivered to Crown and PGEI.
5.7 Referrals; Other Technology. Crown Asphalt shall promptly
refer to PGEI any and all opportunities of which Crown Asphalt becomes aware to
use the Technology for any purpose outside the Territory or to use the
Technology within the Territory for any purpose other than granted to Crown
Asphalt under this Agreement.
6. Indemnification. Each party shall indemnify and hold harmless the
other party, its directors, officers, employees and agents, from and against any
and all losses, claims, damages, liabilities, litigation and costs (including,
without limitation, fees and expenses of counsel and any costs incurred in
investigating, preparing for, defending against, providing evidence, producing
documents or taking any other action in respect of any such claims or
litigation) arising out of or based upon the failure or such indemnifying party
to perform its obligations under this Agreement or any material inaccuracy made
by such indemnifying party in this Agreement.
7. Agency. Nothing in this Agreement shall be construed as causing
Crown Asphalt to be Crown's or PGEI's agent, representative or a division of
Crown with respect to the Technology or otherwise. During the term of this
Agreement, Crown Asphalt shall be entirely responsible for use of the
Technology, and shall not act in any manner as Crown's or PGEI's agent,
representative or as a division of Crown.
8. Breach; Termination.
8.1 Breach. In the event that either party commits a material
breach of any of such party's obligations under this Agreement, the other party
shall have a right to recover damages from and to obtain injunctive or other
equitable relief with respect to such breach.
8.2 Termination. This Agreement may be terminated by either
party ("Notifying Party") in the event the other party ("Defaulting Party")
shall have committed a material breach not cured within thirty (30) days after
the Notifying party shall have given the Defaulting Party written notice
identifying the material breach and specifying the conduct believed by the
Notifying Party to constitute such material breach. However, should there be an
issue as to whether a material breach has occurred, then the provisions of
Section 8.3 below are applicable.
8.3 Disputes. It is specifically agreed that should there
arise any dispute between the parties hereto, such disputes shall not interrupt
the performance of this Agreement by either Crown or Crown Asphalt, nor will
operations hereunder be interrupted, delayed or impaired during the pendency of
and until the final settlement of such dispute.
9. Force Majeure. In the event that further lawful performance of this
Agreement or any part thereof, by any party hereto, shall be rendered impossible
by or as a consequence of any law or any act of any government or political
subdivision thereof having jurisdiction over such party, such party shall not be
considered in material breach hereunder by reason of any failure to perform
occasioned thereby. Any delays in or failure by either party hereto in the
performance of any obligations hereunder shall be excused if, and to the extent
caused by occurrences beyond such party's reasonable control, including but not
limited to, inability to obtain permits or insurance, chemical supply shortages,
transportation interruptions, inability or delay in obtaining equipment, unusual
equipment breakdowns, commercial frustration, acts of God, strikes or other
labor disturbances, war, whether declared or not, sabotage, fire, explosion,
earthquake, flood or any other cause or causes, whether or not similar to those
specifically enumerated herein, which cannot be reasonably controlled by such
party.
10. Miscellaneous.
10.1 Assignability. Crown Asphalt may not assign all or any
part of its right, title or interest in this Agreement without the prior written
consent of Crown. Any assignment in violation of this Section 10.1 shall be null
and void.
10.2 Notices. All notices required or permitted to be given
hereunder shall be given by letter, sent by certified mail, return receipt
requested, to the addresses as shown on the signature page to this Agreement.
Any party, by written notice to the other party, may change the address for
notices to be sent to it.
10.3 Governing Law; Forum. All questions with respect to the
formation, validity and construction of this Agreement, and the rights, and
liabilities of the parties hereto, shall be governed by the laws of the State of
Utah. Any suit to enforce any provision of this Agreement or to obtain any
remedy with respect hereto shall be brought within the Federal or State Courts
of Utah and for this purpose each party expressly and irrevocably consents to
the jurisdiction of said Courts.
10.4 Inurement. This Agreement shall inure to the benefit of,
and shall be binding upon, the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties hereto.
10.5 Litigation Costs. In the event of any controversy, claim
or dispute between the parties hereto, arising out of or related to this
Agreement or the breach thereof, the prevailing party shall be entitled to
recover from the losing party reasonable expenses, attorney and witness fees,
and costs.
10.6 Subrogation. Throughout the term of this Agreement,
Crown Asphalt shall be entitled to the benefit of, and be entitled to assert,
the covenants and obligations of PGEI to Crown set forth within the License as
though such had been tendered to Crown Asphalt directly.
10.7 Entire Agreement. This Agreement contains the entire
agreement of the parties hereto relating to the subject matter of this
Agreement, and supersedes any prior agreement or oral agreements between them
concerning the subject matter contained herein. There are no representations,
agreements, arrangements or understandings, oral or written, between and among
the parties hereto, relating to the subject matter contained in this Agreement,
which are not fully expressed herein.
10.8 Modifications. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties.
10.9 Severability. Both parties agree that in the event it is
determined that any provision contained in this Agreement is illegal, or legally
unenforceable (or becomes so), the remainder of the Agreement shall not be
affected thereby, and the remaining lawful provisions hereof shall remain in
full force and effect, and be binding on the parties.
10.10 Acknowledgments. Crown Asphalt acknowledges that it has
made an independent review and has not relied upon any representations made by
Crown. Crown Asphalt's decision to enter into this Agreement was entered with
full opportunity to review the business, legal and technical aspects of the
arrangement and independent of any warranties or representations made by Crown,
except as expressly stated herein.
10.11 Further Assurances. Whenever reasonably necessary and
so often as reasonably requested by one party, the other party shall promptly
execute and deliver or cause to be executed and delivered all such other and
further instruments, documents or assurances, and promptly do or cause to be
done all such other and further things, as may be necessary or reasonably
required in order to further and more fully to vest in the requesting party all
rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred upon it by this Agreement.
Dated this day and year first above written.
CROWN ASPHALT CORPORATION, a
Utah corporation
By: Xxx Xxxxxx
Its: President
Address:
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
CROWN ASPHALT RIDGE, L.L.C., a
Utah limited liability company
By: Xxxxxx X. Churust
Its: Vice President
Address:
000 Xxxx Xxxxxxxxx Xxxxxx, #0000
Xxxxxxx, Xxxxxxxx 00000
Read and Consented to:
PARK XXXXXX ENTERPRISES, INC.
By: E. Park Xxxxxx, President
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
