VERTIGRO ALGAE TECHNOLOGIES LLC TECHNOLOGY LICENSE AGREEMENT

Vertigro Algae Technologies LLC

TECHNOLOGY LICENSE AGREEMENT

      This TECHNOLOGY LICENSE AGREEMENT (hereinafter referred to as the “License Agreement”), by and among PAGIC LP, (“PG”), a company incorporated in the State of Texas, United States and having an office at 1057 Doniphan Park Circle, Suite H, El Paso Texas and WEST PEAK VENTURES of CANADA LTD. (“WPV”), a company incorporated Federally in Canada and having its registered office at 789 West Pender Street, Vancouver, BC, Canada, (collectively hereinafter referred to as the “Licensor”) and VERTIGRO ALGAE TECHNOLOGIES, LLC., a company incorporated in the State of Texas, United States and having a place of business at 401 West Vinton Road, Anthony, Texas 79821 (hereinafter referred to as the “Licensee”).
 

RECITALS

WHEREAS, Licensor is the exclusive licensee of certain Algae Biomass Technology and Intellectual Property, owned by Malcolm Glen Kertz and developed by Licensor.

WHEREAS, Licensee desires to license the Algae Biomass Technology and Intellectual Property to commercialize and exploit the Algae Biomass Technology for all industrial, commercial, and retail applications, including but not limited to, bio-fuel, food and health, pharmaceutical and agricultural applications and Licensee desires to be the exclusive world-wide licensed business developer, marketer, manufacturer, seller and operator of the Licensed Products produced by the Algae Biomass Technology throughout the Territory, all as set forth in this License Agreement; and;

WHEREAS, Licensor desires to grant to the Licensee such rights and licenses, all as set forth in this License Agreement;

NOW, THEREFORE, in consideration of the promises, mutual covenants and obligations hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
 

ARTICLE I

DEFINITIONS

Each of the following terms shall, whenever found in this License Agreement, be used and understood in accordance with the definition below:

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1.1      “Algae Biomass Technology” shall mean any technologies for the commercial production of a high yield algae based biomass for industrial, commercial and retail applications, as more fully described on Exhibit “A”, including but not limited to, bio-fuel, food, health, pharmaceutical, and agricultural feedstock.

1.2      “Territory” shall mean the entire world and each and every country, sovereign nation, and all jurisdictions therein, with the exception of the State of Nevada, USA.

1.3      “Licensed Product” shall mean any goods and/or services sold, transferred, exchanged, or otherwise disposed by Licensee or Sublicensees, whether by gift or otherwise, that embody, employ, include or incorporate the Intellectual Property or Elected Improvements of the Algae Biomass Technology or are produced by apparatus or methods that embody, employ, include or incorporate the Intellectual Property or Elected Improvements of the Algae Biomass Technology. Licensed Products shall not include goods and/or services sold, transferred, exchanged, or otherwise disposed by Licensee to a Sublicensee that are not produced by Licensee using an apparatus or methods that embody, employ, include or incorporate the Intellectual Property or Elected Improvements of the Algae Biomass Technology. The Licensed Product may also be referred to in the plural and termed Licensed Products.

1.4      “Patent Rights” shall mean and include patents and patent applications, including the existing patents and patent applications and the patent applications to be filed set forth on Exhibit “B”, attached hereto and made a part hereof, relating to the Algae Biomass Technology and/or any divisional application, continuation application, continued prosecution application, continuation-in-part application, substitute application, renewal application, reissue application, reexamination, extension, cautionary notices and any other patent application that have been or shall be filed in the United States and all foreign countries on the Algae Biomass Technology and any patent application, filed anywhere, that claims the benefit of a filing date of any of the Algae Biomass Technology patents and applications. The term Patent Rights shall further include any United States and foreign patents and patent applications covering the Elected Improvements.

1.5      “Know-How” shall mean all of the technical know-how, trade secrets, technical information, and knowledge, directly or indirectly, relating to the Algae Biomass Technology and/or the manufacture and use of the Licensed Products, including, without limitation, production processes, production equipment, configurations, formulas, engineering, materials, scientific and practical information and the disclosure in the Patent Rights, whether patentable or unpatentable, and all physical manifestations or embodiments of the Licensed Products including without limitation all data specifications, prototypes, drawings, schematics, notes, records and other writings; all such Know-How to be used or practiced or capable of being used or practiced in the manufacture and use of the Licensed Product.

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1.6      “Improvements” shall mean and include any improvements or new technology relating to the Algae Biomass Technology and any improvements and modifications to the Licensed Products, including, without limitation, the materials and configuration of the Licensed Products; and any machinery or equipment for the manufacture or use of the Licensed Products, together with any improvements and modifications thereof, developed by Licensor during the term of this License Agreement.

1.7      “Elected Improvements” shall mean those Improvements elected by Licensee pursuant to Paragraph 4.3 hereof.

1.8      “Net Sales” of the Licensed Products for any given period shall mean the gross amount from the sale, transfer, exchange, or other disposition, whether by gift or otherwise, by Licensee or Licensee’s Sublicensees during the said period in consideration for the Licensed Products, adjusted for exchanges and returns of the Licensed Products sold, transferred, exchanged, or otherwise disposed or delivered during a previous period and excluding monies received by Licensee from Sublicensees for project and operating licenses, including but not limited to hardware and software, and for project and operating services charged by Licensee to Sublicensees. Net Sales of Licensed Products transferred, exchanged, or otherwise disposed, whether by gift or otherwise, shall be the market value of such Licensed Products. Net Sales shall not include any charges for freight, packing, or insurance if such charges are identified and billed separately and in addition to the list price for the Licensed Products; nor shall Net Sales include charges for tax or duty on sales or delivery of the Licensed Products.

1.9      “License Year” shall mean each successive twelve months commencing on April 1 in which the License Agreement is effective.

1.10     “Effective Date” shall mean March 4, 2008, which is the day on which this License Agreement shall begin effect.

1.11     “Affiliate” shall mean, with respect to any company, sole proprietorship, partnership, joint venture, corporation or other legal entity (“Entity”), (i) any company, sole proprietorship, partnership, joint venture, corporation or other legal entity directly or indirectly controlling, controlled by, or under common control with such Entity, (ii) any officer, director, manager, or general partner of such Entity, or (iii) any person, company, sole proprietorship, partnership, joint venture, corporation or other legal entity who is an officer, director, manager, general partner, or trustee of any Entity described in clauses (i) and (ii) of this sentence. For purposes of this definition, the term “controls,” “is controlled by,” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an Entity, whether through the ownership of voting securities, by contract or otherwise.

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1.12     "Trademark Rights" shall mean and include the trademarks set forth on Exhibit "C".

1.13     "Intellectual Property" shall mean and include all propri8etary or other rights throughout the world provided under (i) patent law, including patents and patent applications therefore pending before any relevant authority worldwide, including, without limitation, the Patent Rights, (ii) know-how and trade secret law, including, without limitation, the Know-How, (iii) trademark law, including, without limitation, the Trademark Rights, (iv) copyright law, (v) design patent or industrial design law, and (vi) any equivalent right granted under the laws of any jurisdiction in the world which provides protective or other intellectual property rights and relating to the Algae Biomass Technology and Elected Improvements.

1.14     “Adjustment Royalties” shall mean and include the 2009 Adjustment Royalty of Paragraph 3.7, the 2010 Adjustment Royalty of Paragraph 3.8, and the Adjusted Royalty of Paragraph 3.9.

1.15     “Sublicensee” shall mean any entity granted a sublicense by Licensee pursuant to Paragraph 2.2 under this License Agreement.

1.16     “Royalties” shall mean and include Advance Royalties, Running Royalties and Adjustment Royalties.

1.17     “Gross Receipts” for any given period shall mean all revenues received by the Licensee during the said period, adjusted for exchanges and returns of goods sold, transferred, exchanged, or otherwise disposed or delivered during a previous period. Gross Receipts of goods and services transferred, exchanged, or otherwise disposed, whether by gift or otherwise, shall be the market value of such goods and services. Gross Receipts shall not include any Running Royalties paid to Licensee by Sublicensees; any charges for freight, packing, or insurance if such charges are identified and billed separately and in addition to the list price for the goods; or any charges for tax or duty on sales or delivery of the goods and services.

1.18     “Advance Royalty” shall mean four and one-half percent (4.5%) of the Gross Receipts of Licensee for a given period from an individual Sublicensee or an individual entity other than a Sublicensee.

1.19     “Cumulative Advance Royalty” shall mean Advance Royalties paid by Licensee for prior periods for Gross Receipts from an individual Sublicensee or an individual entity other than a Sublicensee less the amount of Running Royalties credited toward said Advanced Royalties for said individual Sublicensee or individual entity other than a Sublicensee during previous periods pursuant to Paragraph 3.4

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ARTICLE II

GRANT OF LICENSES

2.1      Licensor grants to Licensee the exclusive right and license throughout the Territory to use and employ the Intellectual Property to manufacture, use, operate, offer to sell, and sell, directly or through sublicensees, the Licensed Products for the term hereof and subject to the provisions of this License Agreement.

2.2      The rights and licenses granted pursuant to Paragraph 2.1 above shall specifically include the right of Licensee to grant sublicenses throughout the Territory. Any sublicense granted by Licensee shall be consistent with the terms of this License Agreement and shall grant to Licensor rights parallel to those contained herein including, but not limited to, the right to receive Royalties from Licensee and Sublicensees in accordance with Article III and Paragraph 8.8 hereof. Any sublicense granted pursuant to this Paragraph 2.2 that varies the terms of this License Agreement shall require the prior written approval of Licensor. Licensee shall provide Licensor with copies of all documents or contracts regarding any sublicense hereunder.

2.3      Within ten (10) days after execution of this License Agreement, Licensor shall supply to Licensee, at a mutually agreeable location, without expense to Licensee, all Know-How, including materials and written information related to the Licensed Technology not previously delivered.

ARTICLE III

CONSIDERATION - PAYMENT - REPORTING - RECORDS

3.1      In consideration of the rights and licenses granted herein, Licensee agrees to pay, upon the execution of this License Agreement, a one-time, non-refundable license fee and to have Valcent Products, Inc. and Global Green Solutions Inc., as equity holders of Licensee, each issue to PG Three Hundred Thousand shares of their stock in full payment of the one-time, non-refundable license fee (“License Fee”).

3.2      In further consideration of the rights and licenses granted herein, Licensee agrees to pay a one-time, non-refundable commercialization fee (“Commercialization Fee”) to PG in the amount of Fifty Thousand Dollars ($50,000) upon the Algae Biomass Technology reaching commercial viability as determined by the Board of the Licensee and Licensee agrees to pay the Licensor the Royalties set forth below in this Article III.

3.3      Licensee agrees to pay an Advance Royalty to Licensor for the term of this License Agreement in the amount of Four and One Half Percent (4.5%) of the Gross Receipts from each of the Licensee’s individual Sublicensees or individual entities other than a Sublicensee. Advance Royalties shall be cumulative and without recourse to Licensor except for the

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Licensor’s agreement pursuant to Paragraph 3.4 to credit Seventy Percent (70%) of the Running Royalties due and payable from an individual Sublicensee or an individual entity other than a Sublicensee to offset and reduce any Advance Royalty for a given period and any Cumulative Advance Royalties for prior periods based upon the Gross Receipts from each of Licensee’s individual Sublicensees or individual entities other than a Sublicensee.

3.4      Licensee agrees to pay a Running Royalty to Licensor for the term of this License Agreement in the amount of Four and One Half Percent (4.5%) of the Net Sales of the Licensed Product(s) as defined (hereafter “Running Royalty”); provided however that Seventy Percent (70%) of the Running Royalty to be paid on the Net Sales of a Sublicensee or entity other than a Sublicensee for a given period shall be credited against any Advance Royalty and Cumulative Advance Royalty paid to Licensor based upon Grosse Receipts from such Sublicensee or entity other than a Sublicensee and not previously credited, thereby reducing the Running Royalty to be paid to Licensor for said given period. In no case will the Cumulative Advance Royalty be less than zero.

3.5      In the event the amount of the Advance Royalty and Running Royalty causes a project opportunity with the Licensee or a Sublicensee to be un-economic or non-competitive or noncommercial, then Licensor agrees to negotiate with Licensee in good faith, other reasonable terms in an attempt to cause the project opportunity to be economic or competitive or commercial; provided, however, that Licensor shall make the final determination of the amount of the Advance Royalty and Running Royalty and any adjustment in the amount of the Advance Royalty and Running Royalty set forth in Paragraph 3.4 for such Sublicensee shall not adversely affect the amount of the Advance Royalty and Running Royalty paid by other Sublicensees.

3.6      The amount of the Royalties payable according to Paragraph 3.3 has been negotiated to include payment of the license for the Intellectual Property without regard to the patentability of the Patent Rights.

3.7      In the event that the total Advance Royalty and Running Royalty paid by Licensee to Licensor according to Paragraphs 3.3 and 3.4 in the Initial License Year ended March 31, 2009 for the Licensed Product(s), does not exceed Fifty Thousand Dollars ($50,000) for such Initial License Year for the Licensed Product(s), then Licensee shall pay to Licensor a minimum royalty amount equal to Fifty Thousand Dollars ($50,000) less the total Running Royalty actually paid for the Licensed Product(s) during such License Year (the “2009 Adjustment Royalty”).

3.8      In the event that the total Advance Royalty and Running Royalty paid by Licensee to the Licensor according to Paragraphs 3.3 and 3.4 in the License Year ended March 31, 2010 for the Licensed Product(s), does not exceed an amount of One Hundred Thousand Dollars ($100,000) for such License Year for the Licensed Product(s), then Licensee shall pay to the Licensor a

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minimum royalty amount equal to One Hundred Thousand Dollars ($100,000) less the total Running Royalty actually paid for the Licensed Product during such License Year (the “2010 Adjustment Royalty”).

3.9      Beginning in the License Year Ending March 31, 2011 and each License Year thereafter, in the event that the total Advance Royalty and Running Royalty paid by Licensee to the Licensor according to Paragraphs 3.3 and 3.4 in a License Year for the Licensed Product(s) does not exceed a minimum royalty in the amount Two Hundred and Fifty Thousand Dollars ($250,000) (the “Minimum Royalty”) for such License Year for the Licensed Product(s), then Licensee shall pay to the Licensor an Adjusted Royalty amount equal to the Minimum Royalty for such License Year for the Licensed Product(s) less the total Running Royalty actually paid for the Licensed Product(s) during such License Year (hereafter “Adjusted Royalty”).

3.10     Notwithstanding anything to the contrary contained in this License Agreement and particularly Article IX, Licensee shall pay thirty three and thirty three one hundredths percent (33.33%) of all Royalties to WPV or its assigns pursuant to a Royalty Agreement executed concurrently herewith between PG and WPV and shall pay the remaining sixty six and sixty seven one hundredths percent (66.67%) of all Royalties to PG or its assigns. Rights to Royalties shall be governed by and be subject to this License Agreement.

3.11     In the event that Licensee fails to pay any Royalties when due, Licensor shall give Licensee written notice of such failure and request confirmation of Licensee's intent not to pay such Royalties. If Licensee responds that such failure was not intentional, then Licensee shall have 30 days after receiving said notice to pay such Royalties.

3.12     In the event Licensee intentionally fails to pay the Royalties within the agreed payment terms period as defined in Paragraph 3.13(d), then Licensor shall have the right to terminate this License Agreement pursuant to the terms and conditions as stated in Article VIII. In the event of a dispute between the parties as to the Royalties, the parties agree to submit the matter to binding mediation and arbitration pursuant to Article XII. If the matter is submitted to binding mediation and arbitration pursuant to Article XII, then this License Agreement shall not be terminated while the arbitration is pending and the arbitrator's decision has not yet been rendered.

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Product(s) or on the date that Licensed Products were transferred, exchanged, or otherwise disposed by Licensee or Sublicensees, whether by gift or otherwise, and the Running Royalty shall be due as set out in Paragraphs (c) and (d) below.

               (b)      Payment of the Royalties shall be in U.S. Dollars by certified check or wire transfer to bank accounts of WPV and PG as specified by the Licensor. For purposes of computations of such Royalties, the amount of Royalties due shall be converted to U.S. Dollars, when necessary, as of the average over the three (3) month period when the Licensed Product(s) was deemed sold.

               (c)      Payment of the Running Royalty shall be due and paid to the Licensor within sixty (60) days of the close of each three (3) month period during each Initial License Year and License Year of the term of this License Agreement.

               (d)      Payment of the Adjustment Royalty shall be due and paid to WPV and PG within sixty (60) days of the close of each License Year.

               (e)      The Royalties due hereunder shall be calculated using U.S. Generally Accepted Accounting Principles.

3.14      Together with each three (3) month period payment, Licensee shall render to the Licensor a written report stating, for the preceding three-month period covered by such payment, the volume and Net Sales of Licensed Product(s) sold, transferred, exchanged, or otherwise disposed, whether by gift or otherwise, by the Licensee and each Sublicensee, the Royalties received from the Net Sales of the Licensed Product(s), the Running Royalty and any Adjustment Royalty due to Licensor, and the Running Royalty paid by Licensee for said three (3) month period.

3.15      Licensee and each Sublicense agree to keep records of the Net Sales of Licensed Product(s) in sufficient detail to enable the Running Royalty payable by it to Licensor to be determined and further agrees to permit its books and records pertinent to the Net Sales of Licensed Product(s) to be examined from time to time by Licensor, but not more often than twice a year, during normal business hours by providing at least five business days written notice, to the extent necessary to verify the amount of Royalties payable hereunder.

3.16      Pursuant to Paragraph 3.15, Licensor shall have the right to appoint an independent certified public accountant (“CPA”) at its own expense to determine that the correct amount of Royalties has been paid by Licensee or a Sublicense. If the Licensor determines there are discrepancies requiring adjustment in the amount of Royalties paid by a Sublicensee for the Net Sales of the Sublicensee, then the Sublicensee shall pay the amount of any underpayment of Royalties within 30 days unless the Licensor, Licensee, and Sublicensee cannot reach agreement

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whereby the Licensor, Licensee, and Sublicensee shall subject themselves to binding mediation and arbitration pursuant to Article XII forthwith. Licensor shall have the right to terminate the sublicense of the Sublicensee in the event the Sublicensee fails to pay the amount of the underpayment. If the Licensor determines there are discrepancies requiring adjustment in the amount of Royalties paid by the Licensee for the Net Sales of the Licensee or in the Royalties collected by the Licensee from a Sublicensee, then the Licensee shall pay the amount of any underpayment of Royalties within 30 days unless the Licensor and Licensee cannot reach agreement whereby the Licensor and Licensee shall subject themselves to binding mediation and arbitration pursuant to Article XII forthwith. Licensor shall have the right to terminate this License Agreement in the event the Licensee fails to pay the amount of the underpayment. Any overpayment of Royalties by the Licensee or a Sublicensee shall be deducted from the next reporting period Royalty payments without recourse to the Licensor.

3.17      If the results of the examination pursuant to Paragraphs 3.15 and 3.16 determine that the Royalties were underpaid by an amount greater than or equal to 5% of the actual Royalties calculated over the last four quarters covering Licensee's fiscal year resulting from matters within Licensee’s control, then Licensee agrees to pay the cost of the examination plus a penalty equal to 10% of the amount of the underpayment in Royalties, the amount of the underpayment and the reimbursement of the costs of examination to be paid within thirty days of written notice of the underpayment. Further Licensor shall have the right to examine the calculation of Running Royalties over the succeeding two quarters at Licensor cost.
 

ARTICLE IV

IMPROVEMENTS

4.1      Licensor and Licensee agree that they shall keep each other mutually informed of any Improvements to any Algae Biomass Technology for producing Licensed Products of which they become aware during the term hereof, whether they become aware of such Improvements through their own efforts or efforts of Sublicensees (“Improvements”). Licensor and Licensee shall inform one another of the nature and substance thereof within thirty (30)