LICENSE AGREEMENT
This agreement ("Agreement") is between GAS RESEARCH INSTITUTE, an
Illinois Not-For Profit Corporation having an office at 8600 West Bryn Mawr
Avenue, Chicago, Illinois 60631 ("GRI"), and FUEL TECH, INC., a Massachusetts
corporation, having a principal place of business at 1001 Frontenac Road,
Naperville, Illinois 60563-1746 ("LICENSEE").
1 Background of Agreement.
1.1 Whereas, GRI is the owner, assignee, or licensee of certain
intellectual property rights related to the FLGR(TM) Technology;
1.2 Whereas, LICENSEE desires to acquire a license for the FLGR(TM)
Technology pursuant to the terms and conditions of this Agreement;
1.3 Whereas, GRI desires commercial exploitation of such intellectual
property rights and is willing to grant a co-exclusive license to
LICENSEE pursuant to the terms and conditions of this Agreement.
Now, therefore, in consideration of the promises and covenants set
forth below, GRI and LICENSEE (collectively the "Parties") agree as
follows:
2 Definitions.
For the purpose of this Agreement, the following terms shall have the
meanings set forth below:
2.1 "GRI Patents" means those patent registrations and licensable patent
applications, identified in Schedule A to which all right, title and
interest has been assigned to GRI, including, where appropriate, all
divisions, continuations, continuations-in-part, reissues,
reexaminations, renewals and extensions thereof.
2.2 "GRI Technical Information" means the unpublished research and
development information, unpatented manufacturing processes,
specifications, operating procedures, unpatented commercial or
industrial techniques, know-how and technical data, related to the
FLGR(TM) Technology which are in GRI's possession and which are
currently being evaluated for patentability.
2.3 "FLGR Technology" means a system of controlling Nitrogen Oxide
emissions from coal fired boilers by the injection of natural gas in
fuel-lean conditions as described in or that would infringe a claim of
the GRI Patents and/or which embodies or incorporates GRI Technical
Information.
2.4 "Effective Date" means the last date of signature of this Agreement by
the Parties.
2.5 "Commercial Sale" means any sale, lease, or other transfer of a
FLGR(TM) Technology system to an unaffiliated third party but excludes
Demonstration Sales by LICENSEE.
2.6 "Demonstration Sale" means any sale, lease, or other transfer of a
FLGR(TM) Technology system to an unaffiliated third party which is
intended by joint agreement between GRI and LICENSEE to demonstrate the
commercial capability of FLGR(TM) Technology on different types of
combustion units.
2.7 "Improvements" means all improvements, enhancements, and modifications
of the GRI Patents, GRI Technical Information, and/or FLGR
Technology made or conceived by LICENSEE during the life of this
Agreement.
2.8 "Customer/Sublicense" means any sublicense which includes the right to
perform and use FLGR(TM) Technology, including the GRI Patents and GRI
Technical Information, but which grants no rights to sublicense or
further distribute, copy, or create derivative works. A
"Customer/Sublicensee" is any entity to whom LICENSEE grants a
sublicense pursuant to this Agreement.
2.9 "Site License" means a Customer/Sublicense granted by LICENSEE to a
Customer/Sublicensee which grants the right to use FLGR(TM) Technology
only on the boiler specifically identified in the sublicense and which
cannot be assigned or transferred to any other boiler.
2.10 "AEFLGR" means a systems of controlling Nitrogen Oxide emissions
from coal fired boilers by the injection of natural gas in fuel-lean
conditions in combination with amine as described in or that would
infringe a claim of the GRI patents and patent applications and/or
which embodies or incorporates GRI trade secrets or proprietary
information, the licensing of which is subject to a separate agreement.
3 License Grant.
3.1 License. For the Term of this Agreement, GRI grants to LICENSEE a
worldwide, royalty-bearing, revocable, co-exclusive license under GRI
Patents and GRI Technical Information to make, use, offer to sell,
sell, lease, otherwise dispose of, or import FLGR(TM) Technology and to
grant Site Licenses to their Customer/Sublicensees.
3.2 This license shall be co-exclusive to FUEL TECH, INC. and one other
Licensee. GRI agrees that it will not grant any other license for the
GRI Patents, the GRI Technical Information, or the FLGR(TM) Technology
to any entity other than FUEL TECH, INC. and one other Licensee unless
LICENSEE fails to meet the minimum Royalty requirements set out in
Schedule B to this Agreement or this Agreement is terminated by
Licensee or terminated for cause by GRI. GRI may require, however, that
LICENSEE or the other Licensee grant a sublicense under the GRI Patents
and GRI Technical Information to at most one other entity.
3.3 LICENSEE may implement the sale and installation of the FLGR(TM)
Technology through sublicensees under sublicense agreements which shall
give sublicensees the right to license the FLGR(TM) Technology under
the same terms and conditions, except for the Minimum Cumulative
Megawatt requirement, as LICENSEE has agreed to with GRI in this
Agreement. LICENSEE shall ensure that all sublicense agreements granted
under this Agreement do not contain provisions which would conflict
with any of the other provisions of this Agreement and do include a
provision requiring the sublicensee to indemnify GRI to the same extent
as required of LICENSEE in this Agreement.
3.4 Any sublicense granted under Paragraph 3.3 above will require prior GRI
approval. LICENSEE shall send the request for approval, including the
proposed sublicense agreement, directly to GRI's Manager of Contract
and License Management. Notwithstanding any such consent or
concurrence, (1) GRI shall not bear any liability to LICENSEE or to any
Sublicensee arising out of any act or omission of LICENSEE or any
Sublicensee, and (2) any sublicensing by LICENSEE shall not relieve
LICENSEE of any responsibility for the performance of the terms of this
Agreement. Notwithstanding this Paragraph 3.4, LICENSEE does not need
GRI approval to grant a Site License to a Customer/Sublicensee.
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3.5 GRI agrees that the license granted to the other co-exclusive Licensee
will be on the same terms as are specified in this Agreement. GRI
agrees that it will not enter into another agreement granting a license
to another party for the GRI Patents, the GRI Technical Information, or
the FLGR(TM) Technology on more favorable terms than those specified in
this Agreement. If, at any time during the Term of this Agreement, GRI
enters into another agreement granting a license to another party for
the GRI Patents, the GRI Technical Information, or the FLGR(TM)
Technology on more favorable terms than those specified in this
Agreement, then GRI shall promptly notify LICENSEE of the grant of such
other license in writing, and LICENSEE shall have the option,
exercisable by written election to GRI within sixty (60) days of such
written notice, to adopt the more favorable terms of such other
Agreement; provided, however, that such new terms shall be effective
only after LICENSEE's written election to adopt such new agreement
terms.
3.6 LICENSEE agrees that this license is limited to the rights expressly
granted herein, and any rights not expressly granted herein are
expressly reserved to GRI. Nothing contained within this section or
elsewhere in this Agreement shall be construed as granting by
implication, estoppel, or otherwise, any licenses or rights under
patents of GRI other than GRI Patents and GRI Technical Information,
except as expressly granted in this Agreement.
4 Confidentiality.
4.1 LICENSEE agrees that all GRI Patents and GRI Technical Information
shall remain the property of GRI. LICENSEE agrees to keep all GRI
patent applications and GRI Technical Information confidential.
LICENSEE will advise each employee to whom it discloses GRI patent
applications and GRI Technical Information as to the confidential
nature of the GRI patent applications and GRI Technical Information.
4.2 LICENSEE agrees that all GRI Patents and GRI Technical Information
shall not be disclosed to anyone outside of LICENSEE without the prior
written consent of GRI, except to the extent necessary to
Customer/Sublicensees of LICENSEE and/or third parties under written
obligations of confidentiality. Upon a reasonable request by LICENSEE,
GRI will not unreasonably withhold its consent to such disclosure.
4.3 The obligations of Paragraphs 4.1 and 4.2 above shall not apply to GRI
Patents and GRI Technical Information which:
(a) otherwise is or becomes publicly known through no fault of
LICENSEE; or
(b) was in LICENSEE's possession prior to its disclosure by GRI and not
subject to an obligation of confidentiality; or
(c) comes into LICENSEE's possession, without covenants of secrecy,
from another party who is under no confidentiality obligation to
GRI;
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(d) is independently developed by LICENSEE, including application
research data owned by FUEL TECH, INC.;
(e) is furnished to a third party by GRI without any obligation of
confidentiality;
(f) is explicitly approved for release by written authorization of GRI;
or
(g) is ordered to be disclosed by a court, government agency, or other
entity of competent jurisdiction, provided LICENSEE gives timely
written notice to GRI of such order.
4.4 GRI Patents or GRI Technical Information shall not be deemed to be
within the foregoing exceptions merely because (1) it is specific and
embraced by more general information in the public domain or in
LICENSEE's possession; or (2) it is a combination which can be pieced
together to reconstruct the GRI Patents or GRI Technical Information
from multiple sources of information in the public domain, none of
which shows the whole combination, its principle of operation, or its
method of use.
5 Royalties.
5.1 In consideration for the license rights granted to LICENSEE by GRI
pursuant to this Agreement, LICENSEE shall pay GRI a Royalty on all
Commercial Sales (but not on Demonstration Sales) in accordance with
Schedule B of this Agreement.
5.2 It is in the best interests of the Parties to maximize the commercial
exploitation of the GRI Patents and GRI Technical Information licensed
to LICENSEE pursuant to Section 3 of this Agreement. GRI agrees to
cooperate with LICENSEE in the promotion of FLGR(TM) Technology at
industry meetings, conventions, and individual customer visits, as well
as in the preparation of brochures, pamphlets and other advertising
materials, including web site references. In particular, GRI agrees
that it will assist LICENSEE in the identification and choosing of
sites suitable for implementation of the FLGR(TM) Technology and that
it will share with LICENSEE its expertise in projecting fuel prices.
GRI further agrees that it will designate John Pratapas to provide
technical assistance to LICENSEE for so long as John Pratapas works for
GRI and that if John Pratapas ceases to work for GRI, then GRI will
designate a person with equivalent credentials to provide technical
assistance to LICENSEE.
6 Patent Procurement, Maintenance and Improvements.
6.1 GRI shall have the initial right, with respect to domestic patent
filings, to file, prosecute, control and maintain all of the GRI
Patents and shall have the initial right to determine whether or not,
and where, to file a patent application, to abandon the prosecution of
any patent or patent application, file reissue or reexamination
applications or to discontinue the maintenance of any patent or patent
applications. GRI agrees that it will advise and consult with LICENSEE
on and keep LICENSEE fully informed of the status of all of the GRI
Patents and any and all patent applications filed by GRI on the GRI
Technical Information and that it will give LICENSEE reasonable
opportunity to make suggestions with regard to the filing, prosecution,
and maintenance of patents and patent applications. If GRI elects not
to file, prosecute, or maintain any patent or patent application, then
GRI will give timely written notice to LICENSEE of its decision;
LICENSEE and the other co-exclusive Licensee will then consult with one
another and agree between themselves on which one will have the right
to file, prosecute, and maintain any such patent or patent application
or whether they will jointly file, prosecute, and maintain any such
patent or patent application. If LICENSEE and the other co-exclusive
Licensee cannot agree as to which one will have the right to file,
prosecute, and maintain any such patent or patent application, then
they shall have the right to jointly file, prosecute and maintain any
such patent or patent application. GRI will cooperate with LICENSEE in
the filing, prosecution, and maintenance of any such patents or patent
applications.
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6.2 LICENSEE and the other co-exclusive Licensee have the right to file
patent applications in the European Patent Office for select countries
within NATO Europe. LICENSEE and the other co-exclusive Licensee will
consult with one another and agree between themselves as to which one
will have the right to file, prosecute, maintain, and control those
foreign patent applications. If LICENSEE and the other co-exclusive
Licensee cannot agree as to which one will have the right to file,
prosecute, maintain, and control any such foreign patent application,
then they shall have the right to jointly file, prosecute, maintain,
and control any such foreign patent application. LICENSEE will advise
GRI within ninety days of the Effective Date of this Agreement for
which countries it will file patent applications.
6.3 GRI agrees that any improvements, enhancements, and modifications of
the GRI Patents, GRI Technical information, and/or FLGR(TM) Technology
that it makes after the Effective Date of this Agreement, whether
patented or unpatented, will be deemed automatically included within
the license granted to LICENSEE by this Agreement. GRI and LICENSEE
agree to consider an additional royalty to provide GRI a commercially
reasonable return on its additional investment in any such improvement,
enhancement, or modification to the extent that the same demonstrably
adds commercial value to the rights licensed under this Agreement.
6.4 LICENSEE shall retain all of the right and title in and interest to any
Improvements made by LICENSEE, and LICENSEE shall have the sole right
to file, prosecute, maintain, and control any patent or patent
applications on such Improvements. LICENSEE hereby grants a
non-exclusive license to GRI and the other co-exclusive Licensee under
any Improvements made by LICENSEE. The co-exclusive Licensee shall have
the right to sublicense any Improvements licensed to it under this
provision to its Customer/Sublicensees in its Site Licenses for a
royalty that would provide LICENSEE a reasonable return on its
additional investment in such Improvement to the extent that the same
demonstrably adds commercial value to the rights licensed under this
Agreement. GRI shall have the right to sublicense any Improvements
licensed to GRI under this provision for a royalty that would provide
LICENSEE a reasonable return on its additional investment in such
Improvement to the extent that the same demonstrably adds commercial
value to the rights licensed under this Agreement. As long as this
License Agreement remains co-exclusive or exclusive, GRI shall not
sublicense any such LICENSEE Improvements.
7 Acknowledgment of GRI, Patent Marking, Publicity.
7.1 Acknowledgement. LICENSEE shall include the following acknowledgment,
or its functional equivalent, in its FLGR(TM)Technology literature,
and/or marketing , and/or specification sheets: "This (insert name of
product and/or process, etc.) was developed with the assistance of Gas
Research Institute."
7.2 Patent Marking. LICENSEE shall identify the applicable patent number(s)
of all GRI Patents on all FLGR(TM) Technology literature and
specification sheets immediately upon issuance of the patent. If any
patent applications are pending, LICENSEE shall place "Patent Pending"
on all FLGR(TM) Technology literature and specification sheets until
the last currently pending GRI patent applications have issued or are
abandoned.
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7.3 Publicity. LICENSEE may use the term "GRI LICENSEE" to describe or
refer to its activities under this Agreement. LICENSEE shall use the
term "GRI LICENSEE" only to designate or indicate to its
Customer/Sublicensees that it is a LICENSEE of GRI Patents and GRI
Technical Information and for no other purpose.
8 Warranty, Guarantee, and Limitation of Liability.
8.1 GRI warrants that it has title to the GRI Patents, that it has the
requisite authority to convey the rights granted in the Agreement, and
that, through the Effective Date of the Agreement, it has not abandoned
any of the GRI Patents.
8.2 GRI warrants that a FLGR(TM) Technology system designed and installed
in accordance with GRI Patents and/or GRI Technical Information will be
free from claims of infringement of the United States and Canadian
patents of any third party. GRI MAKES NO OTHER WARRANTIES, WHETHER
EXPRESSED OR IMPLIED, AS TO THE MERCHANTABILITY OR FITNESS FOR PURPOSE
OF FLGR(TM) TECHNOLOGY OR A FLGR(TM) TECHNOLOGY SYSTEM.
8.3 LICENSEE shall immediately notify GRI in writing of all infringement
claims made and infringement suits commenced against LICENSEE because
of its exercising any rights granted under this Agreement. So long as
LICENSEE timely tenders to GRI the defense of any such claim or suit,
GRI shall defend any such claim or suit that may be instituted for the
alleged infringement, provided that LICENSEE cooperates fully with GRI
in such defense. GRI agrees to indemnify LICENSEE against all costs of
suit, attorneys' fees, or judgments that may be incurred by or entered
against LICENSEE as a result of any such claim or suit. GRI shall have
the right to control the defense and resolution of any such claim or
suit. GRI shall not be bound by any compromise or settlement made in
such claims or suits without its written consent. The indemnification
and defense rights granted in this subparagraph are strictly limited to
the rights granted in this Agreement and shall not apply to
intellectual property developed by LICENSEE or a third party or
controlled by LICENSEE through license with a third party.
8.4 Subject to the indemnification provision of Paragraph 8.3 above,
LICENSEE's sole remedy for the breach by GRI of the above warranty
shall be, at GRI's sole discretion, either: (i) the redesign of the
FLGR(TM) Technology system to avoid any patent infringement claims;
(ii) the purchase of any rights from a third party necessary for
LICENSEE to continue to practice FLGR(TM) Technology; (iii) the
bringing of an action to invalidate any patent claims of third parties
upon which an infringement by FLGR(TM) Technology is alleged; or (iv)
the return of any royalties paid to GRI by LICENSEE for FLGR(TM)
Technology.
8.5 Performance Guarantee. If LICENSEE finds it necessary to guarantee the
performance of FLGR(TM) Technology when applied to a
Customer/Sublicensee's boiler of a type which has had limited FLGR(TM)
Technology application experience, then, upon review by GRI of
LICENSEE's proposal to the Customer/Sublicensee and GRI's agreement to
the level of performance guaranteed, GRI will share equally with
LICENSEE the cost of any such performance guarantee, including any
payments LICENSEE is required to make on a letter of credit, a
performance bond, and/or contract damages owed to a
Customer/Sublicensee, up to a maximum commitment by GRI of eighty
percent (80%) of GRI's portion of the Site License Fee for such boiler.
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8.6 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY
THIRD PARTY FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE, OR INCIDENTAL
DAMAGES, INCLUDING BUT NOT LIMITED TO, LOST PROFITS OR OTHER ECONOMIC
LOSS, WHETHER ARISING FROM BREACH OF CONTRACT, TORT, NEGLIGENCE, STRICT
LIABILITY, OR OTHERWISE.
9 Indemnification.
9.1. LICENSEE agrees to indemnify and save GRI harmless from and against any
and all claims of any kind, including but not limited to liability for
injury to persons and/or damage to property (including without
limitation, environmental damage) and/or violations of law, arising out
of or in connection with LICENSEE's manufacture, use, sale or other
transfer of any FLGR(TM) Technology, including any and all expenses,
costs, attorneys' fees, settlement, judgments, or awards incurred by
GRI in the defense of any such claim or lawsuit, except as otherwise
affirmatively assumed by GRI hereunder.
9.2 LICENSEE shall maintain appropriate liability insurance policies in an
amount and for such time period as are required to fully satisfy the
foregoing obligations of indemnification.
10 Infringement by Third Parties.
10.1 Notification. Each Party shall immediately notify the other Party in
writing of suspected infringement(s) or misappropriation(s) of the GRI
Patents and/or GRI Technical Information and shall inform the other
Party of any evidence of such infringement(s) or misappropriation(s).
10.2 GRI shall have the first option and right to bring an action to enjoin
the infringement and to recover damages against any third party against
whom GRI has evidence of patent infringement. LICENSEE shall cooperate
as necessary with GRI. All costs and expenses for such suit shall be
borne by GRI, and GRI shall be entitled to retain all damages or other
relief recovered in such litigation.
10.3 If GRI chooses not to bring such an action, GRI shall notify LICENSEE
of its decision within thirty (30) days of receiving evidence of an
infringement, after which LICENSEE and the other co-exclusive Licensee
shall have the second option to bring an action to enjoin the
infringement and to recover damages. GRI shall cooperate as necessary
with LICENSEE. All costs and expenses for such suit shall be borne by
LICENSEE, and LICENSEE shall be entitled to retain all damages or other
relief recovered in such litigation.
10.4 No Party may compromise or settle with an infringer or misappropriator
without prior notice to and prior written consent of the other Party,
which consent shall not be unreasonbly withheld.
11 Term and Termination.
11.1 The Term of this Agreement shall begin from the Effective Date of this
Agreement and shall continue for a period of five (5) years. LICENSEE
has the option to extend the Term of this Agreement for an additional
seven (7) years upon the negotiation of an additional minimum Royalty
agreeable to both Parties.
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11.2 LICENSEE may terminate this Agreement at any time upon sixty (60) days
prior written notice to GRI.
11.3 If LICENSEE fails to pay the minimum Royalties required by Schedule B
of this Agreement, then, upon written notice to LICENSEE, GRI has the
option either to terminate this Agreement in its entirety or to convert
the license granted in Section 3 of this Agreement from a co-exclusive
license to a non-exclusive license.
11.4 If any Party shall be adjudged bankrupt, or become insolvent, or make
an assignment for the benefit of creditors, or be placed in the hands
of a receiver or a trustee in bankruptcy, the other Party may terminate
this Agreement by giving sixty (60) days prior written notice to the
other Party specifying the basis for termination. If within sixty (60)
days after receipt of such notice, the Party who received notice shall
remedy the condition forming the basis for termination, such notice
shall cease to be operative, and this Agreement shall continue in full
force.
11.5 Upon termination of this Agreement, LICENSEE agree: (1) that it will
not use or sell FLGR(TM) Technology systems until expiration of the
last of the GRI Patents, except that LICENSEE may sublicense the
FLGR(TM) Technology from others, and (2) that it will promptly transfer
to GRI all documents containing unpublished GRI Technical Information
in its possession (including but not limited to videotapes, computer
media, printed documents, and prototypes).
11.6 Effect of Termination. Termination of this Agreement shall not release
LICENSEE from its obligation to pay GRI any unpaid Royalties which have
accrued prior to the termination or which may accrue to GRI after the
effective date of the termination from Commercial Sales made prior to
the date of the termination.
12 Compliance with Export Restrictions.
12.1 LICENSEE acknowledges that the FLGR(TM) Technology system, and
non-patented items and all related GRI Technical Information and
materials referenced in this Agreement may be subject to export control
under U. S. Export Administration Regulations. LICENSEE accepts and
assumes all responsibility for compliance with United State and
Territory export regulations with respect to their exportation.
LICENSEE covenants and agrees to comply strictly with these
regulations, to cooperate fully with GRI in any official or unofficial
audit or inspection that relates to said regulations, and not to
export, re-export, divert, transfer or disclose directly or indirectly,
or permit the export of any item, component, or combination of an
FLGR(TM) Technology system and/or non-patented items and/or GRI
Technical Information and/or derivative products of non-patented items
to any country for which the United States Export Administration Act of
1979 and the regulations issued thereunder, or any other United States
law or regulation, requires export or re-export authorization or
approval under a validated export license. LICENSEE will bear the
expense of its compliance with all applicable United States laws and
regulations in this connection without reimbursement or offset.
13 Taxes and Customs Duties, Storage and Transportation Charges.
13.1 LICENSEE acknowledges and agrees that GRI has no responsibility or
liability for taxes or customs duties, harbor fees or storage or
transportation charges, related in any way to FLGR(TM) Technology,
non-patented items, or GRI's services or revenue, except that GRI shall
bear all income taxes imposed on it with respect to the Royalty
payments to be made pursuant to this Agreement. LICENSEE agrees to
assume all responsibility for collection and/or payment of other taxes,
including, without limitation, for value added taxes, sales taxes, use
taxes, excise taxes, service taxes, customs duties, customs storage
fees, without reimbursement by GRI or offset against Royalty payments
to GRI, but excluding income taxes imposed on GRI with respect to the
Royalty payments to be made pursuant to this Agreement.
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14 General Provisions.
14.1 Force Majeure. Anything contained in this Agreement to the contrary
notwithstanding, the obligations of the Parties shall be subject to all
laws, both present and future, of any Government having jurisdiction
over either Party, and to orders or regulations of any such Government,
or any department, agency, or court thereof, and acts of war, acts of
public enemies, strikes, or other labor disturbances, fires, floods,
acts of God, or any causes of like kind beyond the control of the
Parties, and the Parties shall be excused from any failure to perform
any obligation under this Agreement to the extent such failure is
caused by any such law, order, regulation, or contingency, but only so
long as said law, order, regulation, or contingency continues.
14.2 Assignment. This Agreement may not be assigned in whole or in part by
either Party without the prior written consent of the other Party,
except that this Agreement may be assigned to a wholly-owned subsidiary
of a Party. Any assignment made without such consent, other than an
assignment to a wholly-owned subsidiary of a Party, shall be considered
void ab initio.
14.3 Notices. All notices and demands required or permitted to be given
under this Agreement shall be in writing and shall be served by
facsimile, personal service, or by mail at the address of the receiving
Party set forth below (or at such different address as may be
designated by such Party by written notice to the other Party). All
notices or demands by mail shall be by first class, certified or
registered mail, return receipt requested, or by nationally-recognized
private express courier, and shall be deemed received within five (5)
days of mailing by the other Party.
(a) Gas Research Institute
8600 West Bryn Mawr Avenue
Chicago, IL 60631
Attn: Janice E. Pastryk
Contract and License Management
(b) Fuel Tech, Inc.,
1001 Frontenac Road
Naperville, Illinois 60563-1746
Attn: Roy A. Johnson
Vice President of Business Development
14.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, EXCLUDING ITS
CONFLICT OF LAW PRINCIPLES. GRI and LICENSEE shall attempt to settle
any claim or controversy arising out of this Agreement through
consultation and negotiation in the spirit of mutual friendship and
cooperation. If such attempts fail, then the dispute shall first be
submitted to a mutually acceptable neutral advisor for mediation,
fact-finding, or other form of alternate dispute resolution (ADR)
selected by the Parties. No Party may unreasonably withhold acceptance
of such an advisor, and his or her selection must be made within 45
days after written notice by one Party demanding the use of ADR. The
cost of such mediation or other ADR procedure shall be shared equally
among GRI and LICENSEE. Any dispute which the Parties cannot resolve
within six months of the date of the initial demand by any Party for
mediation or another ADR procedure shall be finally determined by a
court of competent jurisdiction located within the State of Illinois.
The use of an ADR procedure under this section shall not be construed
(under such doctrines as laches, waiver, or estoppel) to have affected
adversely any Party's ability to pursue its legal remedies, and nothing
in this section shall prevent any Party from resorting to judicial
proceedings if (1) good faith efforts to resolve a dispute under these
procedures have been unsuccessful or (2) interim resort to a court is
necessary to prevent serious and irreparable injury to any Party or to
others.
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14.5 No Waiver For Failure to Enforce Other Rights, Cumulative Remedies. The
failure of either Party to give notice of nonperformance or to enforce
or exercise any covenant, right or remedy at law or equity, will not
constitute a waiver of the covenant, right or remedy, or preclude
either Party from exercising same thereafter.
14.6 Schedule. All schedules to this Agreement, previously designated as
Schedule A and B respectively, are incorporated herein and expressly
made a part of this Agreement.
14.7 Severability. If any provision or part of any provision of this
Agreement is adjudged by a court to be invalid, void, or unenforceable,
it shall be deemed omitted and the Parties agree that the remainder of
the Agreement shall not be affected and shall remain in force and
effect.
14.8 Rule of Construction. The Parties acknowledge that both have
contributed to this Agreement's contents and they agree that no
provision of this Agreement should be construed against either Party as
the drafter.
14.9 Survival of Certain Provisions. The warranties, indemnification,
confidentiality, obligation to pay accrued Royalties, limitation of
liability, and choice of law obligations set forth in this Agreement
shall survive the termination of the Agreement by either Party for any
reason.
14.10 Headings. The titles and headings of the various sections and
paragraphs in this Agreement are intended solely for convenience of
reference and are not intended for any other purpose to explain, modify
or place any construction upon any of the provisions of this Agreement.
14.11 Relationship of the Parties. Nothing herein shall be deemed to create a
joint venture or partnership or agency relationship between the
Parties. No Party shall have the authority to make any statements,
representations, or commitments of any kind, or to take any action,
which shall be binding on the other, except as provided for in this
Agreement or as authorized in writing by a duly authorized agent of the
Party to be bound.
14.12 All Amendments in Writing. It is agreed that no supplement,
modification, or amendment of this Agreement shall be binding unless
executed in writing by duly authorized representatives of both Parties
to this Agreement.
14.13 Entire Agreement. The Parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete
and entire agreement of the Parties and supersedes all previous
communications, oral or written, express or implied and all other
communications between them relating to the license and to the subject
matter. No representatives or statements of any kind made by either
Party, which are not expressly stated, shall be binding on such Party.
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IN WITNESS WHEREOF, the Parties have executed the foregoing Agreement.
FUEL TECH, INC. GAS RESEARCH INSTITUTE
By: /s/ Steven C. Argabriight By: /s/ W. H. Kockenmeister
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Steven C. Argabright Willian H. Kockenmeister
President Vice President and
General Counsel
November 16, 1998 11/18/98
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Date Signed Date Signed
(66382/pgc)
11
SCHEDULE A
GRI PATENTS
GRI Patents include the following list of U.S. and Canadian Patents and
Pending Patent applications, as follows:
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Patents and Patent Applications (7/23/98)
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Patent/application # Title and Description
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1 US 4,779,545 (1988) Apparatus and Method of Reducing Nitrogen Oxide Emission
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CA 1,316,329 Pulse Injection of fuel to form fuel-rich eddies where NO is reduced.
Injection 2100-2400F. No OFA. This is the earliest patent establishing a
basis for the FLGR approach.
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2 US 5,078,064 (1992) Apparatus and Method of Lower NOx Emission Using Diffusion Process
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CA 2,038,796 Pulses of 4,779,545 patent not required. Effect can be achieved through
diffusion processes. Recently reexamined at GRI's request. CIP filed
to modify language.
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3 US 5,181,475 (1993) Apparatus and Process for Control of Nitric Oxide Emission from
Combustion Devices Using Vortex Rings and the Like
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CA appl Describes the use of vortex rings to control mixing in process described
2,088,659 in 064 patent
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4 US appl 07/608,718 and CIP Apparatus and Method for Reducing NOx Emissions
appls
08/697,338 and 09/087,074
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CA appl 2,036,612 Various nozzles and gas injection methods for affecting diffusion of the
natural gas for FLGR process
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5 US 5,655,899 (1997) Apparatus and Method for NOx Reduction By Controlled Mixing of Fuel Rich
Jets in Flue Gas
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Device for introducing gas and controlling jet momentum
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6 US appl 08/507,928 Apparatus and Method for NOx Reduction by Selective Injection of Natural
Filed 7/95 Gas Jets in Flue Gas
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Beneficial NOx reduction by injecting hydrocarbon fuel in high NOx
regions of furnace. NOA 9/97. Was supposed to be transferred from CNG to
GRI originally. Unavoidably abandoned. CNG petitioned to revive 4/98.
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7 US appl 08/908,824 Filed Nitrogen Oxide Reduction by Gaseous Fuel Injection in Low Temperature,
8/8/97 Overall Fuel-Lean Flue Gas
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teaches application of FLGR process originally disclosed in US 5,078,064
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By jointly signed amendment to this Agreement the Parties may add or
delete patents to those initially listed above.
THIS INFORMATION IS CONFIDENTIAL AND SHOULD BE TREATED
ACCORDINGLY UNTIL THE RESPECTIVE PATENTS ISSUE.
SCHEDULE B
ROYALTIES
1. In consideration of the license grant set forth in Section 3 of this
Agreement, LICENSEE shall pay to GRI a royalty ("Royalty") from the
Commercial Sale of FLGR(TM) Technology equal to * percent ( * %) of the Site
License Fee calculated pursuant to the Site License Fee Schedule set forth
below. LICENSEE shall retain the remaining * percent ( * %) of the Site
License Fee.
Site License Fee Schedule
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Utility Boiler Site License Fees
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Boiler Size FLGR
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<= 100 MW $ * /KW
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101-200 MW $ * /KW
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201-300 MW $ * /KW
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301- 400 MW $ * /KW
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401-500 MW $ * /KW
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=> 501 MW $ * /KW
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Industrial Boiler Site License Fees
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Boiler Size FLGR
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Minimum Fee $ *
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<= 250 MMBTU/HR $ * /MMBTU/hr
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251 - 500 MMBTU/hr $ * /MMBTU/hr
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501 - 1000 MMBTU/hr $ * /MMBTU/hr
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1001 - 2000 MMBTU/hr $ * /MMBTU/hr
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2001 - 3000 MMBTU/hr $ * /MMBTU/hr
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3001 - 4000 MMBTU/hr $ * /MMBTU/hr
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4001 - 5000 MMBTU/hr $ * /MMBTU/hr
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5001 - 10000 MMBTU/hr $ * /MMBTU/hr
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* INFORMATION OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT: SUCH
INFORMATION HAS BEEN FILED SEPARATELY.
2. For the purposes of computing Site License Fees under the Site License Fee
Schedule, multiple boilers for the same Customer/Sublicensee may be grouped
together for purposes of sizing the applicable Site License Fee if the
Customer/Sublicensee contracts to buy more than one Site License and the
FLGR(TM) Technology systems are built and the applicable Site License Fees
paid within a period of three years. If, however, the Customer/Sublicensee
does not build or pay the applicable Site License fee within a period of
three years, then the Customer/Sublicensee will become obligated to pay the
difference between the discounted Site License Fee and the Site License Fee
that the Customer/Sublicensee would have paid had it committed only to the
number of FLGR(TM) Technology systems it actually built.
3. *
* INFORMATION OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT: SUCH
INFORMATION HAS BEEN FILED SEPARATELY.
4. Notwithstanding the Site License Fee Schedule set out above, LICENSEE may,
from time to time, recommend to GRI that a Customer/Sublicensee be offered
the option of paying for FLGR(TM) Technology pursuant to an alternate
Royalty calculation and not pursuant to the Site License Fee Schedule, and
GRI agrees to consider such alternate Royalty calculations. LICENSEE will
recommend an alternative Royalty calculation only when, in LICENSEE's
reasonable commercial judgment, the Customer/Sublicensee is unlikely to
consider buying FLGR(TM) Technology unless offered such an alternative.
5. GRI agrees that when a Customer/Sublicensee has already purchased and
installed as of the date of this Agreement Fuel Tech Inc.'s
NOxOUT(R)technology, GRI will receive a Royalty from a Commercial Sale of
FLGR(TM) Technology to that Customer/Sublicensee that is equal to fifty
percent (50%) of the Site License Fee calculated pursuant to the Site
License Fee Schedule and the Customer/Sublicensee will receive a Site
License to operate its system as either a FLGR(TM)Technology system or an
AEFLGR(TM)Technology system. After the effective date of this Agreement, if
a Customer/Sublicensee installs a NOxOUT(R)system from LICENSEE and installs
a FLGR(TM)Technology system within eighteen (18) months thereafter of
installing that NOxOUT(R)system, and if the Customer/Sublicensee intends to
operate the system as taught by GRI's AEFLGR(TM)patent(s), then GRI shall
receive a royalty for the sale of the FLGR(TM)Technology system to that
Customer/Sublicensee that is calculated on the basis of the Site License Fee
Schedule contained in the AEFLGR(TM)License Agreement, and the
Customer/Sublicensee will receive a Site License to operate its system as
either a FLGR(TM)Technology system or an AEFLGR(TM)Technology system. If a
Customer/Sublicensee installs a NOxOUT(R)system from LICENSEE and installs a
FLGR(TM)Technology system more than eighteen (18) months after installing
that NOxOUT(R)system, then GRI shall receive a royalty for the sale of the
FLGR(TM)Technology system to that Customer/Sublicensee that is calculated on
the basis of the Site License Fee Schedule contained in this License
Agreement, and the Customer/Sublicensee will receive a Site License to
operate its system as either a FLGR(TM)Technology system or an
AEFLGR(TM)Technology system.
6. For each calendar year indicated below, LICENSEE agrees to use its
reasonable best efforts to sell, lease, or otherwise transfer sufficient
FLGR(TM) Technology systems for the following Minimum Cumulative Megawatts
(based on the boiler nameplate megawatt capacity, excluding Demonstration
Sales, to which the FLGR(TM) Technology is applied):
Year Minimum Cumulative Megawatts
---- ----------------------------
1999 *
2000 *
2001 *
2002 *
2003 *
* INFORMATION OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT: SUCH
INFORMATION HAS BEEN FILED SEPARATELY.
2
The Minimum Cumulative Megawatts are a cumulative total, running from year
to year, of all boiler nameplate megawatt capacity to which the FLGR(TM)
Technology is applied, through sale, lease, or other transfer, excluding
Demonstration Sales, by LICENSEE. LICENSEE shall receive credit towards the
calculation of the Minimum Cumulative Megawatts required under the terms of
this Agreement for the boiler nameplate megawatt capacity of an AEFLGR(TM)
Technology system sold under FUEL TECH INC.'s AEFLGR(TM) Technology license
from GRI.
7. At the end of each calendar year during the term of this Agreement,
LICENSEE shall pay to GRI a minimum Royalty equivalent to the difference
between the Minimum Cumulative Megawatts indicated above and the actual
cumulative megawatts sold through the current year of the Agreement. If
LICENSEE fails to pay the minimum Royalty as required, then, upon written
notice to LICENSEE, the license granted in Section 3 of this Agreement
shall terminate.
8. It is in the best interests of the Parties to maximize the commercial
exploitation of the GRI Patents and the GRI Technical Information. To
achieve the most effective commercial exploitation of the FLGR(TM)
Technology, LICENSEE shall propose appropriate Demonstration Sales of the
FLGR(TM)Technology. GRI shall not unreasonably withhold its approval of the
proposed Demonstration Sales. No Royalty payments shall be due on such
Demonstration Sales. LICENSEE and GRI agree that such Demonstration Sales
shall include new and different applications of the FLGR(TM)Technology,
including but not limited to the application of the FLGR(TM) Technology to
the following types of boilers: a cyclone boiler with over-fire air, a
wet-bottom boiler, a wall-fired boiler, a tangentially-fired boiler, an
opposed-wall-fired boiler, and a boiler with a total megawatt capacity of
500 MW or above.
9. Notwithstanding anything to the contrary in this Agreement, if the GRI
Patents are invalidated, then LICENSEE's obligation to make Royalty
payments shall cease and this Agreement shall terminate.
10. Within forty-five (45) days of the close of each fiscal quarter of
LICENSEE, beginning with the first close of a fiscal quarter following the
Effective Date, LICENSEE shall make the Royalty payments due under this
Agreement to GRI for all Site License Fees received by LICENSEE during that
quarter on Commercial Sales of the FLGR(TM)Technology, or LICENSEE shall
certify to GRI that it has made no Commercial Sales of the FLGR(TM)
Technology. All Royalty payments shall be made in U.S. dollars. LICENSEE
shall attach a statement to its payment indicating the size and location of
the boiler to which each Customer/Sublicense applies, the applicable Site
License Fee per boiler, the total megawatts for the number of
FLGR(TM)Technology systems sold, leased, or otherwise transferred to date
by year, and such other information as GRI may reasonably request from time
to time.
11. Interest on Late Payments. Royalty payments provided for in this Agreement,
when overdue, shall bear interest at a rate per annum equal to two percent
(2%) in excess of the "Prime Rate" published by "The Wall Street Journal"
on the due date for such Royalty payment. This interest charge shall
commence on the day after the due date and shall continue until payment is
received by GRI. The foregoing notwithstanding, if a royalty payment is
more than sixty (60) days past due, GRI may, at its sole option, deem such
late payment to be a material breach of this Agreement.
12. Records, Audit. LICENSEE agrees to maintain adequate books and accounting
records relating to the Royalties due. Such books and records shall be
available for GRI to audit and analyze by GRI's internal accountants, or at
GRI's discretion by GRI's independent accounting firm. These audits will be
paid for by GRI. Any such audit shall be permitted during business hours
within thirty (30)days of receipt of GRI's written request. GRI may conduct
such an audit on an annual basis but not more than once a year. LICENSEE
must maintain such records during the term of this Agreement and for a
period of two (2) years thereafter. LICENSEE shall incorporate a similar
provision into all sublicense agreements, permitting GRI to conduct
reasonable and periodic audits of the sublicensee's books and records.
3