Exhibit 10.2 License Agreement
LICENSE AGREEMENT FOR
USE OF PATENT NO. US 6,709,573 B2
This is a License
Agreement effective this 8 th day of February 2006
(“Effective Date”), by and between The Anthon Leon
Smith and Rosalie Joyce Johnson Smith Revocable Living Trust
hereafter known as “Smith Trust”, and EnShale, Inc. a
Wyoming Corporation.
BACKGROUND
RECITALS
A.
“Smith Trust” is the owner of United States Patent
#U.S. 6,709,573 B2 and foreign patents as represented in Exhibit A
attached hereto, which cover a process for extracting hydrocarbon
products and related products from oil shale and tar sands (the
“Patented Process”). “Smith Trust”
has invested substantial amounts of time and funding to
develop proprietary technical and business information relating to
the Patented Process and related applications.
B.
EnShale, Inc. has attained substantial expertise and know how in
mining and the marketing of minerals and related
products.
C.
EnShale, Inc. will obtain a nonexclusive license from “Smith
Trust” to develop, manufacture, use and sell products that
use the Patented Process and “Smith Trust” is willing
to grant such a license to them on the terms and subject to the
conditions of this Agreement.
D.
EnShale, Inc. will purchase a non-exclusive license from
“Smith Trust” for a payment of $500,000 dollars and an
ongoing royalty as defined in 4.1.
WHEREFORE, THE
PARTIES AGREE AS FOLLOWS :
1.
Definitions.
For the purpose of
this Agreement, and solely for that purpose, the terms set forth in
this Section 1 shall be defined as follows:
1.1
“Licensed Patent Rights”
Licensed Patent
Rights shall mean that aforementioned grant of rights to certain
United States Patent and or its foreign counterparts which has been
registered with the United States Patent Office developed by Leon
Smith, used in the production of oil from shale or tar sands, and
any reissues, reexaminations, or improvements that may be based
upon the aforementioned such patent which “Smith Trust”
has the right to grant a license hereunder (See Exhibit
“B”).
1.1
“ Licensed Patents or Patent”
As attached hereto
and made part of this agreement as Exhibit
“A”.
1.1
“Licensed Products”
Licensed products
shall mean any hydrocarbon or oil produced from oil shale or tar
sands in an extraction process utilizing the Licensed Patent Rights
or any Licensed Equipment. For purposes of this Agreement,
the term Licensed Products shall also include any electricity
produced, chemical by-products or waste shale products which can be
sold and are therefore included within the definition of Licensed
Products.
1.4 “Gross
Revenue”
Gross
Revenue is based upon the sale price of all hydrocarbon products,
electricity, other by-products and waste shale products.
1.5
“Operating Costs”
Operating
costs exclude interest, tax, depreciation, and amortization and
includes all other costs.
1.6
“Net Gross Margin”
Net gross margin is
defined as “gross revenue” per barrel less
“operating costs” per barrel of finished oil
products.
2. Non-exclusive
License Grant.
2.1 Grant .
Upon the terms and subject to the conditions of this
Agreement, “Smith Trust” hereby grants to EnShale,
Inc., and the EnShale, Inc. hereby accepts from “Smith
Trust”, a non-exclusive, worldwide license for the term of
this agreement hereof to practice, use, develop, commercialize and
otherwise utilize the Licensed Patent Rights to make, use and sell
Licensed Products under any terms or at any price EnShale, Inc.
deems appropriate (Attached as Exhibit “C”).
2.2 Grant
Restriction. “Smith Trust” expressly
acknowledges and agrees that EnShale, Inc. shall have no right to
sell or grant to independent parties any rights under the foregoing
license grant. “Smith Trust” also agrees to not
sell or offer to sell the same or similar Licensed Patent Rights at
a price or value of less than the terms of this
agreement.
3. Representations
and Warranties of “Smith Trust”.
“Smith
Trust” hereby represents and warranties that it is the owner
of the Licensed Patent Rights of the patent described above.
“Smith Trust” warrants that it has no knowledge
of any claim of infringement pertaining to the Licensed Patent
Rights, and it knows of no litigation or claim, which if
successful, would interfere with or preclude the grant of the
license made in this Agreement.
4. Records and
Reports
4.1 Records .
EnShale, Inc. shall keep full, true and accurate books of
accounts containing all particulars which may be necessary for the
purpose of showing the amounts payable to “Smith
Trust”. Such books and the supporting data shall be
open at all reasonable times upon reasonable advance notice, for
three (3) years following the end of the calendar year to which
they pertain to the inspection of “Smith Trust”.
The inspection of records shall be at “Smith
Trust’s” sole cost and expense unless a deficit in
payment is found which exceeds $10,000. EnShale Inc. will
then be responsible for all inspection and audit
expenses.
4.2 Reports .
EnShale, Inc., within forty five (45) days after the first
day of January, April, July and October of each year, shall deliver
to “Smith Trust” a true and accurate report, giving
such particulars of the business conducted by the new company
during the preceding three (3) calendar months under this Agreement
as are
