EXHIBIT 10.2
LICENSE AGREEMENT
BETWEEN
HYDRO ENVIRONMENTAL RESOURCES, INC.
AND
ALLIED ENERGY, INC.
THIS LICENSE AGREEMENT ("Agreement") is entered into by
and between HYDRO ENVIRONMENTAL RESOURCES, INC. ("HERI") and
ALLIED ENERGY, INC. ("ALLIED ").
WHEREAS, HERI owns all the rights, titles and interests
in and to those certain hydrogen generating technologies and
processes, together with all improvements, modifications,
and changes heretofore and hereafter made by HERI while this
Agreement remains in effect and any and all other
intellectual property rights therein, together with any and
all patents, patent applications and patent rights
("Invention"); and
WHEREAS, ALLIED desires to acquire, and HERI desires to
grant to ALLIED, a non-exclusive worldwide license to use,
exploit and practice the Invention, to design, develop and
manufacture products that incorporate the Invention and to
make, market, commercialize, sell, distribute and use the
License Products on a worldwide basis.
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged,
the parties agree as follows.
I. GRANT OF LICENSE
1.01 License. HERI hereby grants to ALLIED, and ALLIED
hereby accepts from HERI, a non-exclusive worldwide License
to do the following, upon the terms and conditions herein
specified.
(i) Use, exploit and practice the Invention; and
(ii) Design, develop, improve, and assist HERI in the
design, development and improvement of the
Invention; and
(iii) Make, market, commercialize, sell and use
products extracted, refined and produced as a
result of the use of the Invention; and
(iv) Sublicense and contract with others to provide services
in connection with the Invention.
1.02 Ownership of the Invention. The parties
acknowledge that HERI owns the exclusive rights in and to
the Invention. HERI grants, bargains, assigns, conveys and
delivers all of HERI's rights, titles and interest in the
Invention to ALLIED in the event HERI ceases operations or
is bankrupt. The parties intend that this assignment shall
be self-executing and shall take effect immediately at the
time HERI ceases operations or becomes bankrupt without any
further action on the part of anyone.
1.03 Requirements of HERI. HERI agrees to provide
consulting and other assistance to ALLIED in the design,
development and improvement of the Invention and to provide
consulting services for and cooperation with engineers,
consultants and other contractors and representatives of
ALLIED in an effort to maximize the efficiency and improve
the quality of the Invention as it relates to the production
of hydrogen using the Invention.
1.04 Sublicensing by ALLIED . ALLIED has the right, to
grant sublicense, distribution, manufacturing and marketing
rights to third parties upon terms and conditions acceptable
to HERI that has the right to accept or reject any
sublicense. In addition, a sublicense will not be validly
granted until that sublicense is signed by HERI.
1.05 Commercial Distribution of Licensed Products. The
License rights granted hereunder entitle ALLIED to make,
use, sell, practice, exploit and distribute the Invention
and to permit its affiliates, subsidiaries, permitted
assigns and authorized contractors to do the same, and to
sell products produced using the Invention through any and
all channels of commerce.
II. COMPENSATION
2.01 License Fee. ALLIED agrees to pay HERI $500,000 in
cash and 1,500,000 shares of ALLIED common stock (20% of
7,500,000 founder's shares) upon the successful completion
of the demonstration test using the HERI reactor to produce
fuel sufficient to power a 30kw generating device at a lower
cost than other types or fuel and at a lower cost than an
equivalent amount of electric power purchased from available
sources.
2.02 Royalty. HERI shall receive a royalty of five
percent (5%) of net sales if manufactured by ALLIED and
eight percent (8%) if manufactured by HERI, to be defined as
applicable percentage of any payment, less shipping taxes
and returns and allowances, received from any entity using
the Invention developed by HERI or from any derivation of
the Invention.
III. TERM AND TERMINATION
3.01 Term and Termination. This Agreement shall become
effective as of the date executed and shall continue in
effect in perpetuity or until the law requires termination.
It is the intention of the parties that the rights granted
hereby shall remain in effect for as long as the law
permits.
IV. PROTECTION OF THE INVENTION
4.01 Preservation of the Invention. The parties
understand and agree that HERI will pursue and maintain
patent protection to preserve and protect the ownership and
proprietary rights relating to the Invention. In the event
it shall become necessary or advisable to make application
for additional patent protection, the parties agree to
cooperate with each other to prosecute, pursue and maintain
the US Patent Applications and all other patent applications
relating to the Invention and to use their best, good faith,
diligent efforts to secure patents in the US and in such
other jurisdictions as the parties mutually agree and to
protect all the Patent Rights and intellectual property
rights relating thereto. ALLIED agrees to cooperate and
coordinate with HERI on such filings and provide copies of
material documents relevant to any such filings in
sufficient time to review and comment upon such documents
before filed. All attorneys' fees and expenses, filing fees
and other costs of preparing, filing and prosecuting such
patent applications issuance shall be the responsibility of
HERI.
V. CONFIDENTIALITY
5.01 Confidentiality Agreement. Except as provided in
Paragraph 5.02 below, ALLIED has entered into a
Confidentiality Agreement with HERI prior to the date
hereof. The obligation of confidentiality thereunder shall
continue in accordance therewith; provided however, the
obligation of confidentiality shall not apply to
information, which is:
(i) In the public domain or which becomes generally
available to the public through no fault of the receiving
party; or
(ii) Already known to or in the possession of the receiving
party prior to disclosure by the disclosing party; or
(iii)Disclosed on a non-confidential basis from a third
party having the right to make such a disclosure; or
(iv) Independently developed by the receiving party (by
activity not associated with the Patent Rights); or
(v) Not in fact confidential, proprietary or competitively
sensitive; or
(vi) Required to be disclosed by law or governmental order.
5.02 Authorized Disclosures. The terms of the
Confidentiality Agreement are hereby amended, so that HERI
hereby consents to the disclosure of any and all information
by ALLIED or its successors and permitted assigns as shall
be necessary for them to operate the business of producing
hydrogen and adapting that production to various uses.
VI. INFRINGEMENT
6.01 Third Party Infringement of Patent Rights. ALLIED and
HERI shall promptly provide written notice to the other
party of any alleged infringement by a third party of the
intellectual property rights relating to the Invention and
provide the other party with any available evidence of such
infringement. In the event there is good reason to believe
infringement of any of those rights is occurring, the
parties will jointly take prompt action to abate or settle
such infringement. Either party shall have the right to
institute an action in its own name in so far as permitted
by law to abate the infringement and may join the other as a
party plaintiff.
6.02 Enforcement and Defense. ALLIED shall have the
right to prosecute and defend, at its own expense and
utilizing counsel of its choice, any claim of infringement
of or challenge to the validity of the Invention. Each party
shall promptly provide the other party with copies of all
material documents in such proceedings. No settlement,
consent judgment or other voluntary final disposition of any
such suit may be entered into without the written consent of
both parties hereto, which consent shall not unreasonably be
withheld.
6.03 Cooperation. In any suit to enforce or defend the
Invention pursuant to this Agreement, each party shall
cooperate in all respects with the other and, to the extent
reasonably possible, have its employees testify when
requested and make available relevant records, papers,
information, samples, specimens, and the like.
6.04 Infringement Claims. Each party shall promptly
notify the other upon receipt of any information regarding
any proceedings commenced or threatened against either party
or any purchaser of a product produced using the Invention
on the ground that the manufacture, use, sale or possession
of the product is an infringement of any third party's
intellectual property rights.
VII. WARRANTIES AND INDEMNITIES
7.01 General Representations. Each party represents and
warrants to the other that:
(i) It has all requisite authority and power to enter into
and perform its obligations under this Agreement;
(ii) The person who has executed this Agreement for
such party has all requisite authority to do so
for and on behalf of that party; and
(iii) This Agreement is valid, binding and
enforceable in accordance with its terms.
7.02 Disclaimers. Nothing in this Agreement shall be
construed as:
(i) A warranty or representation by HERI as to the
validity or scope of the Invention, except that
HERI reasonably believes that the Invention does
not infringe the rights of others; or
(ii) A warranty or representation by HERI that
anything made, used, sold, or otherwise disposed
of through the License granted herein is or will
be free from infringement of patents, copyrights,
trademarks, or other proprietary rights of third
parties.
VIII. INDEMNIFICATION
8.01 Indemnification. Each party agrees to indemnify,
defend and hold harmless the other party and its directors,
officers, employees, agents and representatives, and their
respective successors, heirs and assigns ("Indemnities"),
against any liability, damage, loss or expenses (including
reasonable attorneys' fees and expense of litigation)
incurred by or imposed upon it in connection with any
claims, suits, actions, demands or judgments arising out of
any theory of law arising by reason of a breach of its
duties hereunder. With respect to infringement by the
Invention of third party intellectual property rights, each
party understands and agrees that each is entering into this
Agreement reasonably believing that the Invention does not
infringe the rights of others, but no assurance is given by
either party to that effect. Each party shall give prompt
written notice to the other of the commencement of any
action, suit, or proceeding for which indemnification may be
sought and shall cooperate reasonably with the other in the
defense and prosecution thereof. Neither party may settle
any such dispute where the settlement adversely affects the
rights of the other without the written consent of the
other.
8.02 Disclaimer. HERI MAKES NO REPRESENTATIONS AND EXTENDS
NO WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, EXCEPT TO
THE EXTENT THAT HERI OWNS THE INVENTION AND THE INTELLECTUAL
RIGHTS RELATING THERETO AND THAT HERI REASONABLY BELIEVES
THAT INVENTION AND THE INTELLECTUAL PROPERTY RIGHTS RELATED
THERETO DO NOT INFRINGE ANY RIGHTS OF ANY OTHER PERSON OR
ENTITY.
IX. MISCELLANEOUS
9.01 Provisions Contrary to Law. The parties agree to comply
with all laws, rules and regulations applicable to the
performance of their obligations hereunder.
9.02 Notices. Any notice may be initially given by
facsimile with confirmation by prepaid, first class,
registered or certified mail. Such notices properly
addressed shall be effective upon receipt by the party to
whom notice is sent.
9.03 Dispute Resolution. The parties agree to use good
faith reasonable diligence to seek to resolve all disputes
by mutual agreement. All disputes arising hereunder not
resolved by mutual agreement shall be resolved by binding
arbitration conducted in English in Tulsa, Oklahoma in
accordance with the Commercial Rules of Arbitration of the
American Arbitration Association. The parties' agree to be
fully and finally bound by a decision made in arbitration.
Each party agrees to submit to and not contest personal
jurisdiction or venue in Tulsa County, Oklahoma. The
prevailing party in any such proceeding shall be entitled to
be awarded its attorneys' fees and expenses, enforcement
costs and such other relief as the court of competent
jurisdiction shall award.
9.04 Force Majeure. Neither party to this Agreement
shall be liable for delay or failure in the performance of
any of its obligations hereunder, except for the payment of
money, if such delay or failure is due to causes beyond its
reasonable control. The party affected by a force majeure
event shall use its good faith diligent efforts to remedy
such event as soon as reasonably possible.
9.05 Assignments. This Agreement may not be assigned by
either party without the written prior consent of the other
party, which consent shall not be unreasonably withheld;
provided, however, ALLIED may assign this Agreement and all
its rights and obligations hereunder to any affiliate or to
a successor of all or substantially all of its business.
ALLIED shall provide HERI notice of any such assignment.
Assignees of this Agreement may also assign this Agreement
in the manner described above. Assignees are bound by all
the obligations of this Agreement. The parties hereto agree
that each is acting as an independent contractor and not as
an agent of the other or as joint venturers.
9.06 Waivers and Modifications. The failure of any
party to insist on the performance of any obligation
hereunder shall not act as a waiver of such obligation. No
waiver, modification, release, or amendment of any
obligation under this Agreement shall be valid or effective
unless in writing and signed by both parties hereto.
9.07 Successors in Interest. This Agreement shall inure
to the benefit of and be binding on the parties' permitted
assigns, successors in interest, and subsidiaries.
9.08 Choice of Law and Jurisdiction. This Agreement is
subject to and shall be construed and enforced in accordance
with the laws of Oklahoma.
9.09 Entire Agreement. This Agreement constitutes the
entire agreement between the parties as to the subject
matter hereof, and all prior negotiations, representations,
agreements and understandings are merged into, extinguished
by and completely expressed by this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement the 1st day of October 2001.
Allied Energy, Inc. Hydro Environmental Resources, Inc.
By:/s/ Mark Lindsey By:/s/ Jack Wynn
Mark Lindsey Jack Wynn
President President