Exhibit 10.21
LICENSE AGREEMENT
THIS LICENSE
AGREEMENT (the "License Agreement" or this "Agreement"), dated
as of the Effective Date (as hereinafter
defined), by and between Titan
Technologies Incorporated, having its
principal place of business at 3206
Candelaria N.E., Albuquerque, New Mexico
("Titan" or "Licensor"), and Randall
Gideon, Jim Samis, and Patrick Teagarden
(collectively "Principals" or
"Licensee"), with principal executive
offices at 500 West 7th Street, Suite
1400, Fort Worth, Texas 76102.
RECITALS
A. Titan is the owner of all
right, title and interest in the
intellectual property described more completely below (the
"Technology");
B. Licensee is desirous of
acquiring the right to use the Technology in
construction and operation of facilities within the Territory
(as
defined below), including sale of facilities constructed by
Licensee;
C. This License Agreement
provides for construction of one or more
commercial Plants (the "Plants") to be owned by Licensee or an
Operating Entity (as hereinafter defined), which will develop,
construct, own, maintain and operate a series of Projects (as
hereinafter defined) within the Territory using the Technology
to
recycle and convert tires and other rubber products into
reusable
products.
D. Titan is willing to grant to
Licensee an exclusive license within the
Territory to use the Technology in connection with the
manufacture,
sale and operation of the Projects using the Technology to recycle
and
convert tires and other rubber products into reusable products, all
on
the terms and subject to the conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises, the mutual
promises
set forth below and for other good and
valuable consideration, the receipt and
sufficiency of which is hereby
acknowledged, Titan and Licensee hereby agree as
follows: 1. Definitions. The following
definitions shall be applicable
throughout this Agreement:
1.1 The term "Affiliate" of any person
or entity shall mean and include
any person, corporation or other entity controlling, controlled by
or
under common control with, such person or entity.
1.2 "Calendar Quarter" or "Quarterly"
means each three-month period, or
any
portion thereof, beginning on January 1, April 1, July 1, and
October 1.
1.3 "Construction Commencement" shall
have occurred with respect to a
Project at such time as the contractor under the construction
contract
for
such Project receives the Notice to Proceed as defined in the
construction documents for the Project and Licensee has delivered
a
written certification to Licensor that Licensee has arranged
for
financing which Licensee in good faith reasonably believes to
be
sufficient to complete the Project.
1.4 "Field of Use" shall mean use of
the Invention or Technology or Patent
Rights for recycle of tires and other rubber products of
whatsoever
origin into
reusable products.
1.5 "First Project" shall mean the
first Project commenced by the
Licensee. Each succeeding Project commenced thereafter shall be
similarly referred to in chronological order.
1.6 "Gross Sales" shall mean the cash
amount actually collected on sales
of Licensed Products, including but not limited to carbon
black,
whether activated or not, oil, gas, liquid hydrocarbons, and all
other
hydrocarbon products, steel, power, and energy. If Licensed
Products
are sold in transactions which are not bona fide arm's-length
transactions (including transactions between entities which are
affiliated or have related interests), Gross Sales shall be
determined
by the most recent commercial sale to an independent party.
1.7 "Invention" or "Inventions" means
the Titan process and processes for
recycle of tires, together with equipment, reagents and
proprietary
knowledge utilized to employ the Technology and the products
and
processes related to or included therein.
1.8 "Licensed Marks" means all service
marks and trademarks (but not
tradenames) of Licensor relating to the Invention, Licensed
Processes
or Licensed Products, including any and all service marks and
trademarks which may be established from and after the date of
this
License Agreement.
1.9 "Licensed Processes" shall mean
the processes claimed in or utilizing
Patent Rights or some portion thereof, together with all
proprietary
knowledge related to use of the Invention or Inventions and any
licenses or sublicenses which Licensor has acquired or develops
the
right to use in connection with the Technology.
1.10 "Licensed
Products" shall mean products which are:
(a) made in accordance
with or by means of Licensed Processes; or
(b) made utilizing any
substance, device, apparatus, method, or
process which embodies or uses the Technology or Invention,
including improvements.
1.11 "Patent
Rights" shall mean United States Patent Numbers 5,714,043 and
5,871,619 issued by the U.S. Patent and Trademark Office on
February
3, 1998 and February 16, 1999, respectively, and applications
which
may be filed in the United States and all foreign countries, and
any
provisional, divisional, continuation, continuation-in-part,
and
substitute applications thereof, and any patents issuing thereon
and
reissues, reexaminations, and extensions thereof, which relate to
the
Invention or Technology.
1.12 "Project"
shall mean one production train capable of handling up to
150 tons per day of tires and other rubber products.
1.13 The term
"Technology" shall mean any and all information, patent
applications, know-how, show-how, substances, recipes,
formulas,
compositions, devices, apparatuses, techniques, notes, books,
writings
or other documents, samples, prototypes, models, trade secrets,
methods, practices, procedures, processes, process parameters,
research and development information, software, algorithms,
flow
charts, data flow diagrams, state transition diagrams, contact
diagrams, technical plans and designs, data, blueprints,
inventions,
customer and supplier lists, price lists, marketing plans, and
other
business and financial information, including improvements,
changes,
developments, and modifications thereto, which relate to the
Invention
or Inventions. Without limitation, the term "Technology" includes
the
inventions described in and covered by U.S. Patents Nos. 5,714,043
and
5,871,619.
1.14 The term
"Territory" shall be defined under this License Agreement as
follows: the entire geographical area comprising North America,
Central America and South America.
2. Grant of License: Term.
2.1 Titan hereby grants to Licensee,
and Licensee accepts, the exclusive
right, license and privilege to use the Technology within the
Territory in connection with the design, manufacture,
construction,
maintenance and operation of the Projects, and operation thereof
to
recycle and convert rubber products into reusable product,
including
the right to sell and distribute Licensed Products and to
practice
Licensed Processes. If a third party ("Interested Third Party")
approaches a party to this Agreement and such Interested Third
Party
expresses a desire to construct and/or operate a Project in the
Territory, the contacted party will promptly notify the other
parties
to this Agreement thereof; provided, however, in no event shall
any
license or sub-license be granted to such third party without
the
unanimous consent of all parties to this Agreement, which consent
may
be withheld by any party in such party's sole and absolute
discretion.
Licensee may, if it desires to do so in its sole and absolute
discretion, license the use of its plans for the design and
construction of its prior Projects and provide consulting services
to
prospective licensees outside the Territory on terms and for fees
as
may be mutually agreed upon between Licensee and the
prospective
licensee.
2.2 The term of this Agreement shall
commence as of the date hereof and
shall terminate, as to each Project, upon the permanent cessation
of
operations of the Project, unless this License Agreement shall
have
been sooner terminated by Licensor or Licensee pursuant to the
provisions of Articles 10, 11 or 28 below.
2.3 The Licensee may not assign,
transfer, sublicense or otherwise convey
any of the rights granted to Licensee hereunder or any interest
therein, by operation of law or otherwise, to any person, firm,
corporation, or entity without the express prior written consent
of
Titan; provided, however, the License rights hereunder may be
assigned
to an entity to be formed by the Principals and/or to any
subsidiary
of such new entity (such entity and/or its subsidiaries being
referred
to herein as the "Operating Entities" or an "Operating Entity") if
the
Operating Entity(ies) agree(s) to be bound to the terms of this
Agreement; provided further, however, if Principals and Titan
reach
mutual agreement as to the terms of a modified agreement to
control
with respect to the assigned interest, then the terms of such
modified
agreement shall govern with respect thereto.
2.4 Licensee shall use the Technology
only in the manner set forth in the
Agreement and shall use the Technology only in connection with
the
design, manufacture, construction, maintenance and operation of
the
Projects to recycle and convert tires and other rubber
products.
Licensee covenants that the Projects will be designed, constructed
and
operated in accordance with all applicable environmental standards
of
the jurisdiction where the applicable Project is located.
2.5 Except upon expiration of
exclusive right, title and license as
provided in Sections 10.1, 10.2, 10.3, 26, 27 and 28 below, the
Licensor shall not license or otherwise grant any other party
any
right to use the Patent Rights, Licensed Marks, Licensed Processes
or
Technology within the Territory for any purpose, unless it
first
notifies Licensee of any such proposed license or use and obtains
the
written approval thereof by Licensee which approval may be withheld
in
Licensee's sole and absolute discretion. Except upon expiration
of
exclusive right, title and license as provided in Sections 10.1,
10.2,
10.3, 26, 27 and 28 below, the Licensor agrees that Licensor shall
not
in any way use the Patent Rights, Licensed Marks, Licensed
Processes
or Technology itself within the Territory or permit any Affiliate
of
Licensor to use same, without first obtaining written consent to
such
license from Principals, during the term of this Agreement.
3. Samples: Products
3.1 Licensor may request, not more
often than once each Calendar Quarter,
that Licensee present to Licensor at its principal place of
business
in Albuquerque, New Mexico, at Licensee's sole cost and expense,
a
sample of each Licensed Product being manufactured or sold by or
on
behalf of Licensee and Licensee's analysis of each such
product.
4. Inspection
4.1 The duly authorized
representatives of Licensor and its guests shall
have the right, upon reasonable advance notice to Licensee and
during
normal business hours, to inspect all facilities utilized by
Licensee,
its contractors and suppliers, in connection with the design
and
construction of Projects using the Technology and the
manufacture,
sale, storage or distribution of products pursuant hereto.
4.2 Licensee shall market and sell
Licensed Products produced at each
Project in accordance with and in observance of all applicable
laws.
4.3 Any data reported to Titan by
Licensee may be shared by Titan with
prospective licensees so long as Licensor obtains a written
agreement
from the prospective licensee to keep such information
confidential.
5. Consideration for
License
5.1 Licensor shall receive an equity
interest (expected to be in the form
of limited partnership interests) in the Operating Entity which
owns
each Project as follows:
(a) First Project:
10%
(b) Second Project:
12%
(c) Third Project:
14%
(d) Fourth Project:
16%
(e) Fifth Project:
18%
(f) Sixth Project and
each Project thereafter: 20%
Titan's ownership interest in each such Operating Entity shall
consist
of a percentage interest equal to the applicable percentage
listed
above for the Project owned by such Operating Entity, in the
capital,
profit and loss allocations, deductions, distributions and the
right
to share the proceeds upon sale or liquidation of assets of the
Operating Entity, which interest will not be diminished by any
recapitalization without its consent (other than the effect of
capital
calls among owners of the Operating Entity for cash deficits),
subject
to the
terms and conditions of the partnership agreement, limited
liability company agreement or other applicable constituent
document
for such entity which are applicable to all owners; provided,
however,
that if one Operating Entity owns more than one Project, and if
the
percentage interests which are applicable to such Projects under
the
above schedule are not the same, then the Operating Entity shall
keep
separate production records for each Project owned by it, and
the
interest in profits and losses and deductions, the distribution
of
cash and the right to share the proceeds upon sale or liquidation
of
assets of the Operating Entity shall be determined separately for
each
Project and specially allocated to Licensee separately for each
Project in accordance with the percentages provided above with
respect
to each such Project.
5.2 All payments required hereunder
shall be made in United States
dollars.
5.3 Subject to Paragraph 28 below, a
one time license fee ("First Project
License Fee") of $1,000,000.00 for the First Project shall be paid
to
Licensor by Licensee in 40 equal monthly installments of $25,000
each
("Monthly Installments"), with the first Monthly Installment
due
within 2 business days after the date the First Project has
achieved
Construction Commencement, and with such Monthly Installments
to
continue
on the same day of each month thereafter until the 40th
Monthly Installment has been paid.
5.4 A one time license fee
("Subsequent Project License Fee") of
$1,000,000.00 for the Second and each subsequent Project shall be
paid
to Licensor by Licensee, with each such Subsequent Project License
Fee
to be paid in 40 equal monthly installments of $25,000 each
("SP
Monthly Installments"), with the first SP Monthly Installment
due
within 2 business days after the date the applicable Project
has
achieved Construction Commencement, and with such SP Monthly
Installments for such Project to continue on the same day of
each
month thereafter until the 40th SP Monthly Installment has been
paid
with respect to such Project. The Subsequent License Fee for
the
Second and each subsequent Project shall not be earned or
assessed
unless and until Construction Commencement has actually occurred
with
respect to the applicable Project. The First Project License Fee
and
each Subsequent Project License Fee for all subsequent Projects may
be
collectively or generically referred to herein as the "License
Fees"
or a "License Fee".
5.5 In addition to the License Fee,
Licensee agrees to pay Licensor a
production royalty ("Production Royalty") for the Licensed
Product
produced from each Project as follows:
(a) The Production
Royalty shall be equal to one and 70/100 percent
(1.7%) of Gross Sales, to be paid in arrears on a Quarterly
basis
within thirty (30) days following the end of each Calendar
Quarter and shall be accompanied by copies of settlement sheets
or other appropriate documentation in sufficient detail to
verify
quantity of product sold and Gross Sales Price therefore and
shall be based solely on actual Gross Sales.
6. Infringement. Licensee shall
promptly notify Licensor of any infringement
of the
Technology whenever such infringement shall come to the
Licensee's
actual
attention. After receipt of such notice from Licensee, Licensor
shall advise
Licensee of its decision either:
6.1 to elect to take such action to
stop such infringement or act as
Licensor may deem necessary in which event: (a) Licensee shall
cooperate fully with Licensor in connection therewith, and, if
so
requested by Licensor, shall join with Licensor as a party to
any
action brought by Licensor for such purpose; (b) Licensor shall
have
full control over any action taken, including without limitation
the
right to select counsel, to settle on any terms it deems advisable
in
its discretion, to appeal any adverse decision rendered in any
court,
to discontinue any action taken by it, and otherwise to make
any
decision in respect thereto as it in its discretion deems
advisable,
and (c) Licensor shall bear all expenses connected with the
foregoing;
or
6.2 to elect to have Licensee take
control over the action, in which
event: (a) Licensor shall cooperate fully with Licensee in
connection
therewith, and, if so requested by Licensee, shall join with
Licensee
as a party to any action brought by Licensee for such purpose;
(b)
Licensee shall have control over any action taken, provided
that
Licensor shall not be
liable for any settlement effected without its
express prior consent; and (c) Licensee shall bear all expenses
in
connection therewith and shall reimburse any payments,
including,
without limitation, any settlement payments, made by Licensor
in
connection therewith promptly upon request. (d) Any recovery as
a
result of any such action shall belong solely to Licensor, except
to
the extent that such recovery represents damage specifically
allocated
to Licensee, in which event such specified recovery shall be paid
to
Licensee.
7. Additional Covenants and
Agreements
7.1 Licensee shall have no right to
terminate this License Agreement or to
be released, relieved, or discharged from its obligations hereunder
in
the case of the following:
(a) any default,
misrepresentation, negligence, gross negligence,
misconduct, willful misconduct or other action or inaction of
any
kind by Licensee;
(b) the insolvency,
bankruptcy, reorganization or cessation of
existence, or discharge or forgiveness of indebtedness of
Licensee;
(c) any defect in the
title to, or any lien or other restriction of
any kind upon the use of, any of the Licensed Marks for any
reason whatsoever to the extent such defect, lien, or other
restriction is the result of any actions taken or not taken by
Licensee;
(d) any restriction,
prevention or curtailment of or interference
with the use of any of the Licensed Marks for any reason
whatsoever to the extent such restriction, prevention,
curtailment or interference is the result of any actions taken
or
not taken by Licensee; and
(e) any law now or
hereafter in force.
7.2 Licensor shall have no right to
terminate this License Agreement or to
be released, relieved, or discharged from its obligations hereunder
in
the case of the following:
(a) any default,
misrepresentation, negligence, gross negligence,
misconduct, willful misconduct or other action or inaction of
any
kind by Licensor;
(b) the insolvency,
bankruptcy, reorganization or cessation of
existence, or discharge or forgiveness of indebtedness of
Licensor;
(c) any defect in the
title to, or any lien or other restriction of
any kind upon the use of, any of the Licensed Marks for any
reason whatsoever;
(d) any restriction,
prevention or curtailment of or interference
with the use of any of the Licensed Marks for any reason
whatsoever; and
(e) any law now or
hereafter in force.
8. Patents
8.1 Without otherwise restricting
Licensor from filing and prosecuting, at
its own expense and cost, further domestic and foreign patent
applications corresponding to the Licensed Products and
Licensed
Processes and maintaining any patents resulting therefrom,
Licensor,
from time to time when so requested by Licensee, shall (to the
extent
permitted by the patent law of the country in question) file, or
do
all things reasonably necessary to enable Licensee to file in the
name
of Licensor, patent applications in such country or countries
covering
the Invention, Technology, Licensed Products, and Licensed
Processes
as shall be designated by Licensee. The filing, prosecution,
and
maintenance of any such patent applications or patents, the filing
of
which shall be so requested by Licensee, shall be at the sole
expense
of Licensee.
8.2 Licensee shall have the right, at
any time and upon notice to Licensor
of not less than one (1) month, to terminate the rights and
obligations conferred on it under Article 8.1 above with respect
to
the prosecution and/or maintenance of any patent applications
or
patents specified in such notice, provided that any such
termination
shall not terminate Licensee's obligation to pay any and all
fees,
costs, or expenses theretofore incurred by Licensee in connection
with
such prosecution and/or maintenance. In any such event, Licensor
shall
have the right, at its option and at its sole expense, to
continue
such prosecution or maintenance through patent attorneys of its
own
choice.
9. Grant Back and
Cross-License
9.1 If Licensee develops improvements
to the Licensed Products, Licensed
Processes, or Technology, (i) Licensee shall be required to
license
such improvements to Licensor, (ii) such improvements shall be
licensed back to Licensee as a part of the rights licensed
hereunder
in accordance with all the terms and provisions hereof, (iii)
Licensor
shall be entitled to sublicense such improvements to other
licensees
or sub-licensees not covered by this License Agreement to the
extent
such license to other parties would not be a violation of
exclusive
license within the Territory of the Technology hereunder or
otherwise
in violation of the provisions of this License Agreement. The
rights
of Licensor with respect to such improvements shall be on a
royalty-free basis, and Licensee shall execute such documents as
may
be reasonably required to perfect Licensor's rights hereunder,
including confirmation that Licensor is the owner of any such
improvements.
10. Events of Default: Termination
10.1 Each of the
following shall constitute an event of default by Licensee
("Licensee Event of Default") under this License Agreement: (a)
If
Licensee shall breach in any material respect any of its
monetary
obligations under this License Agreement, and such breach is
not
remedied within fifteen (15) days after written notice thereof
from
Licensor (b) If Licensee shall breach in any material respect any
of
its non-monetary obligations under this License Agreement, and
such
breach is not remedied within thirty (30) days after written
notice
thereof from Licensor; provided, however, if such default is not
for
the payment of money and is not reasonably capable of being
cured
through Licensee's diligent and continuous effort within thirty
(30)
days after written notice thereof, then there shall not exist a
Licensee Event of Default so long as Licensee commences to cure
such
default within 30 days after such notice, and thereafter applies
its
reasonable best efforts to cure such default, and does in fact
cure
such default within 120 days of the initial notice of default; or
(c)
If Licensee shall cease doing business as a going concern; or (d)
If
Licensee shall fail to perform or observe the Confidentiality
and
Non-Circumvention Agreement executed in connection herewith and
attached thereto as Schedule "A" ("Confidentiality and
Non-Circumvention Agreement"), and such failure is not remedied
within
thirty (30) days after written notice thereof from Licensor;
provided,
however, if such failure is not for the payment of money and is
not
reasonably capable of being cured through Licensee's diligent
and
continuous effort within thirty (30) days after written notice
thereof, then there shall not exist a Licensee Event of Default
so
long as Licensee commences to cure such default within 30 days
after
such notice, and thereafter applies its reasonable best efforts
to
cure such default, and does in fact cure such default within 120
days
of the initial notice of default.
10.2 As used in
this Agreement, the term "default" shall mean any
condition, event or state of facts which, after notice or lapse
of
time, or both, would be an event of default.
10.3 If a
Licensee Event of Default shall occur and be continuing,
Licensor
shall be entitled to do any one or more of the following remedies:
(i)
bring an action for specific performance of Licensee's
obligations
hereunder or seek injunctive relief to enjoin Licensee from
violating
the terms of this License Agreement or otherwise seek such
equitable
relief as may be appropriate with respect to such Licensee Event
of
Default, and/or (ii) bring an action for damages against
Licensee
resulting from such Licensee Event of Default, and/or (iii)
Licensor,
at Licensor's option may pay or perform the underlying obligation
for
the account of Licensee which is the subject of the default, in
which
case Licensee shall reimburse Licensor upon demand for all
expenses
incurred by Licensor in paying or performing the underlying
obligation
for the account of Licensee, and/or (iv) terminate this License
Agreement by delivering written notice thereof to Licensee and/or
(v)
seek such other relief as may be available at law or in equity;
provided, however, (x) in no event shall Licensor have the right
to
terminate this License Agreement with respect to any Project
("Unaffected Project") existing at the time of the Licensee Event
of
Default if the default giving rise to the Licensee Event of
Default
does not directly relate to such Unaffected Project, and
notwithstanding the termination of this License Agreement as to
any
Project or Projects, Licensee shall continue to enjoy all
license
rights hereunder as they relate to the Unaffected Project and (xx)
in
the event of a failure to the meet the Construction
Commencement
Requirements of Paragraph 27 below, Licensor's sole and
exclusive
remedies with respect to such failure s
