Document:

ex10_2.htm

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (hereinafter referred to as the “Agreement”), dated April 6, 2011 by and between

USA Synthetic Fuel Corporation, a Delaware Corporation, Suite 1600, 312 Walnut Street, Cincinnati, OH 45202 (hereinafter referred to as the “Company”),

and

Kodiak Capital Group, LLC, a Delaware Limited Liability Company, with its principal office at One Columbus Place, 25th Floor, New York, NY 10019 (hereinafter referred to as the “Holder”).

 

WHEREAS, in connection with the Investment Agreement by and between the Company and the Investor of equal date as the Agreement hereto (the “Investment Agreement”), the Company has agreed to issue and sell to the Investor an indeterminate number of shares of the Company’s Common Stock without par value per share (the “Common Stock”), to be purchased pursuant to the terms and subject to the conditions set forth in the Investment Agreement, which is hereby incorporated by reference; and

WHEREAS, to induce the Investor to execute and deliver the Investment Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws, with respect to the shares of Common Stock issuable pursuant to the Investment Agreement.

NOW THEREFORE, in consideration of the foregoing promises and the mutual covenants contained hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

Section 1.  DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

“Execution Date” means the date of this Agreement set forth above.

“Investor” means Kodiak Capital Group, LLC, a Delaware Limited Liability Company.

“Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

 

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“Potential Material Event” means any of the following: (i) the possession by the Company of material information not ripe for disclosure in the Registration Statement, which shall be evidenced by determinations in good faith by the Board of Directors of the Company that disclosure of such information in the Registration Statement would be detrimental to the business and affairs of the Company, or (ii) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in the Registration Statement at such time, which determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the Registration Statement would be materially misleading absent the inclusion of such information.

“Principal Market” shall mean The American Stock Exchange, National Association of Securities Dealer’s, Inc., Over-the-Counter electronic bulletin board, OTCQB, the Nasdaq National Market or The Nasdaq SmallCap Market whichever is the principal market on which the Common Stock of the Company is listed.

 

“Register,” “Registered,” and “Registration” refer to the Registration effected by preparing and filing one (1) or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis (hereinafter referred to as “Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (hereinafter referred to as the “SEC”).

“Registrable Securities” means (i) the shares of Common Stock issued or issuable pursuant to the Investment Agreement, and (ii) any shares of capital stock issued or issuable with respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the 1933 Act.

“Registration Statement” means the registration statement of the Company filed under the 1933 Act covering the Registrable Securities.

All capitalized terms used in this Agreement and not otherwise defined herein shall have the same meaning ascribed to them as in the Investment Agreement.

  

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Section 2.  REGISTRATION.

(a)  The Company shall use all commercially reasonable efforts, within thirty (30) days of the date of this Agreement, file with the SEC the Registration Statement or Registration Statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions.  The Company shall initially register for resale 10,000,000 shares of Common Stock which would be issuable on the date preceding the filing of the Registration Statement based on the closing bid price of the Company’s Common Stock on such date and the amount reasonably calculated that represents Common Stock issuable to other parties as set forth in the Investment Agreement except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness.

(b)  The Company shall use all commercially reasonable efforts to have the Registration Statement(s) declared effective by the SEC within sixty (60) calendar days after the Filing Date.

(c)  The Company agrees not to include any other securities in the Registration Statement covering the Registrable Securities without Investor’s prior written consent which Investor may withhold in its sole discretion. Furthermore, the Company agrees that it will not file any other Registration Statement for other securities, until thirty calendar days after the Registration Statement for the Registrable Securities is declared effective by the SEC.

Section 3.  RELATED OBLIGATIONS.

At such time as the Company is obligated to prepare and file the Registration Statement with the SEC pursuant to Section 2(a), the Company will effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, with respect thereto, the Company shall have the following obligations:

(a)  The Company shall use all commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective within ninety (90) days after the Execution Date and shall keep such Registration Statement effective until the earlier to occur of  the date on which (A) the Investor shall have sold all the Registrable Securities; or (B) the Investor has no right to acquire any additional shares of Common Stock under the Investment Agreement (hereinafter referred to as the “Registration Period”).  The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall use all commercially reasonable efforts to respond to all SEC comments within seven (7) business days from receipt of such comments by the Company or within the timeframe requested by the SEC. The Company shall use all commercially reasonable efforts to cause the Registration Statement relating to the Registrable Securities to become effective no later than five (5) business days after notice from the SEC that the Registration Statement may be declared effective.  The Investor agrees to provide all information which it is required by law to provide to the Company, including the intended method of disposition of the Registrable Securities, and the Company’s obligations set forth above shall be conditioned on the receipt of such information.

 

  

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(b)  The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor thereof as set forth in such Registration Statement.  In the event the number of shares of Common Stock covered by the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover all of the Registrable Securities, the Company shall amend such Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase Price of the Common Stock and other relevant factors on which the Company reasonably elects to rely), assuming the Company has sufficient authorized shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized.  The Company shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.

(c)  The Company shall make available to the Investor whose Registrable Securities are included in any Registration Statement counsel without charge:

	
  

	
(i)

	
promptly after the same is prepared and filed with the SEC at least one (1) copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, the prospectus included in such Registration Statement (including each preliminary prospectus);

	
  

	
(ii)

	
upon the effectiveness of any Registration Statement, the Company shall make available copies of the prospectus, via EDGAR, included in such Registration Statement and all amendments and supplements thereto; and

(d)  The Company shall use commercially reasonable efforts to:

register and qualify the Registrable Securities covered by the Registration Statement under such other securities or “blue sky” laws of such states in the United States as the Investor reasonably requests;

 

  

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prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period;

take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and

take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to:

qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or

subject itself to general taxation in any such jurisdiction.  

The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(e)  As promptly as practicable after becoming aware of such event, the Company shall notify Investor in writing of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (hereinafter referred to as “Registration Default”) and use all diligent efforts to promptly prepare a supplement or amendment to such Registration Statement and take any other necessary steps to cure the Registration Default (which, if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and make available copies of such supplement or amendment to the Investor. The Company shall also promptly notify the Investor:

When a prospectus or any prospectus supplement or post-effective amendment has been filed, and when the Registration Statement or any post-effective amendment has become effective (the Company will prepare notification of such effectiveness which shall be delivered to the Investor on the same day of such effectiveness and by overnight mail), additionally, the Company will promptly provide to the Investor, a copy of the effectiveness order prepared by the SEC once it is received by the Company;

Of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or related information;

 

  

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Of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate;

In the event the Registration Statement is no longer effective; and / or

If the Registration Statement is stale as a result of the Company’s failure to timely file its financials or otherwise.

The Company acknowledges that its failure to cure the Registration Default within ten (10) business days will cause the Investor to suffer damages in an amount that will be difficult to ascertain.  Accordingly, the parties agree that it is appropriate to include a provision for liquidated damages.  The parties acknowledge and agree that the liquidated damages provision set forth in this section represents the parties’ good faith effort to quantify such damages and, as such, agree that the form and amount of such liquidated damages are reasonable and will not constitute a penalty.  It is the intention of the parties that interest payable under any of the terms of this Agreement shall not exceed the maximum amount permitted under any applicable law. If a law, which applies to this Agreement, which sets the maximum interest amount, is finally interpreted so that the interest in connection with this Agreement exceeds the permitted limits, then: (1) any such interest shall be reduced by the amount necessary to reduce the interest to the permitted limit; and (2) any sums already collected (if any) from the Company which exceed the permitted limits will be refunded to the Company.  The Investor may choose to make this refund by reducing the amount that the Company owes under this Agreement or by making a direct payment to the Company.  If a refund reduces the amount that the Company owes the Investor, the reduction will be treated as a partial payment.  

(f)  The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other  suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued,  to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor holding Registrable Securities being sold of the issuance of such order and the  resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding concerning the effectiveness of the registration statement.

(g)  The Company shall permit the Investor and one (1) legal counsel, designated by the Investor, to review and comment upon the Registration Statement and all amendments and supplements thereto at least one (1) calendar day prior to their filing with the SEC.  However, any postponement of a filing of a Registration Statement or any postponement of a request for acceleration or any postponement of the effective date or effectiveness of a Registration Statement by written request of the Investor (collectively, the "Investor's Delay") shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due the Investor from the Company under any and all agreements of any nature or kind between the Company and the Investor.  The event(s) of an Investor's Delay shall act to suspend all obligations of any kind or nature of the Company under any and all agreements of any nature or kind between the Company and the Investor.   

 

  

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(h)  At the request of the Investor, the Company's counsel shall furnish to the Investor an opinion letter confirming the effectiveness of the registration statement.  Such opinion letter shall be issued as of the date of the effectiveness of the registration statement and be in a form suitable to the Investor. 

(i)  The Company shall hold in confidence and not make any disclosure of information concerning the Investor unless:

	
  

	
(i)

	
Disclosure of such information is necessary to comply with federal or state securities laws;

	
  

	
(ii)

	
The disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement;

	
  

	
(iii)

	
The release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction; or

	
  

	
(iv)

	
Such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.

The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order covering such information.

(j)  The Company shall use all commercially reasonable efforts to maintain designation and quotation of all the Registrable Securities covered by any Registration Statement on the Principal Market.  If, despite the Company’s commercially reasonable efforts, the Company is unsuccessful in satisfying the preceding sentence, it shall use commercially reasonable efforts to cause all the Registrable Securities covered by any Registration Statement to be listed on each other national securities exchange and automated quotation system, if any, on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or system.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(j).

(k)  The Company shall cooperate with the Investor to facilitate the prompt preparation and delivery of certificates (or direct registration) representing the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may reasonably request (and after any sales of such Registrable Securities by the Investor, such certificates not bearing any restrictive legend).

 

  

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(l)  The Company shall provide a transfer agent for all the Registrable Securities not later than the effective date of the first Registration Statement filed pursuant hereto.

(m)  If requested by the Investor, the Company shall:

	
  

	
(i)

	
As soon as reasonably practical incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably determines should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the offering of the Registrable Securities to be sold in such offering;

	
  

	
(ii)

	
Make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably possible after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and

	
  

	
(iii)

	
Supplement or make amendments to any Registration Statement if reasonably requested by the Investor.

(n)  The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to facilitate the disposition of such Registrable Securities.

(o)  The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

(p)  Within three (3) business day after the Registration Statement which includes Registrable Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities, with copies to the Investor, confirmation that such Registration Statement has been declared effective by the SEC.

(q)  The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to the Registration Statement.

Section 4.  OBLIGATIONS OF THE INVESTOR.

(a)  At least five (5) calendar days prior to the first anticipated filing date of the Registration Statement  the Company shall notify the Investor in writing of the information the Company requires from the Investor for the Registration Statement.  It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the Company that information regarding itself, the Registrable Securities and the intended method of disposition of the Registrable Securities as shall reasonably be required to effect the registration of such Registrable Securities and the Investor shall execute such documents in connection with such registration as the Company may reasonably request.  The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant to the Registration Statement, it shall comply with the “Plan of Distribution” section of the then current prospectus relating to such Registration Statement.

 

  

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(b)  The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless the Investor has notified the Company in writing of an election to exclude all of the Investor’s Registrable Securities from such Registration Statement.

(c)  The Investor agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of 3(e).

Section 5.  EXPENSES OF REGISTRATION.

All expenses, other than underwriting discounts and commissions and other than as set forth in the Investment Agreement, incurred in connection with or in any way related to registrations including comments, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printing and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.

Section 6.  INDEMNIFICATION.

In the event any Registrable Securities are included in the Registration Statement under this Agreement:

(a)  To the fullest extent permitted by law, the Company, under this Agreement, will, and hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities, the directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (hereinafter referred to as the “1934 Act”) (each, hereinafter referred to as an “Indemnified Person”), against any and all losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, hereinafter referred to as “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (hereinafter referred to as “Indemnification Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon:

 

  

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(i)

	
Any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which the Investor has requested in writing that the Company register or qualify the Shares (hereinafter referred to as “Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading;

	
  

	
(ii)

	
Any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or

	
  

	
(iii)

	
Any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, hereinafter referred to as “Violations”).  

Subject to the restrictions set forth in Section 6(c) the Company shall reimburse the Investor and each such controlling person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a):

	
  

	
1)

	
Shall not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the Registration Statement of the information furnished to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto;

	
  

	
2)

	
Shall not be available to the extent such Claim is based on:

	
  

	
a.

	
A failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company; or

	
  

	
b.

	
The Indemnified Person’s use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus; or 

 

  

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c.

	
Any claims based on the manner of sale of the Registrable Securities by the Investor or of the Investor’s failure to register as a dealer under applicable securities laws; or

	
  

	
d.

	
Any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; or

	
  

	
e.

	
Any amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. 

(b)  In connection with any Registration Statement in which Investor is participating, the Investor agrees to severally and jointly indemnify, hold harmless and defend, to the  same extent and in the same manner as is set forth in Section 6(a), the Company, each of its  directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s agents (collectively and together with an Indemnified Person, hereinafter referred to as an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation is due to the inclusion in the Registration Statement of the written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall only be liable under this Section 6(b) for  that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus were corrected on a timely basis in the prospectus, as then amended or supplemented.  This indemnification provision shall apply separately to each Investor and liability hereunder shall not be joint and several. 

 

  

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(c)  Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  The indemnifying party shall pay for only one (1) separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel shall be selected by the Investor, if the Investor is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable.  The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding affected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

(d)  The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

  

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Section 7.  CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

Section 8.  REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”), provided that the Investor holds any Registrable Securities are eligible for resale under Rule 144 (k), the Company agrees to:

	
  

	
(a)

	
Make and keep public information available, as those terms are understood and defined in Rule 144; and

	
  

	
(b)

	
File with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company’s obligations under Section 5(c) of the Investment Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

	
  

	
(c)

	
Furnish to the Investor, promptly upon request:

	
  

	
a.

	
A written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act,

	
  

	
b.

	
A copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

Section 9.  NO ASSIGNMENT OF REGISTRATION RIGHTS.

The rights and obligations under this Agreement shall not be assignable.

 

Section 10.  AMENDMENT OF REGISTRATION RIGHTS.

The provisions of this Agreement may be amended only with the written consent of the Company and Investor.  

 

  

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Section 11.  MISCELLANEOUS.

(a)  Any notices or other communications required or permitted to be given under the terms of this Agreement that must be in writing will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided a confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:   

USA Synthetic Fuel Corporation

312 Walnut Street, Suite 1600

Cincinnati, OH 45202

513.762.7870 Telephone

513.621.5947 Facsimile

      

If to the Investor:

Kodiak Capital Group, LLC

One Columbus Place

25th Floor

New York, NY 10019

212.262.2600 Telephone:

212.262.2601 Facsimile

Each party shall provide five (5) business days prior notice to the other party of any change in address, phone number or facsimile number.

(b)  Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

 

(c)   This Agreement and the Transaction Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.

(d)  This Agreement and the Transaction Documents supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

 

  

14

  

 

(e)  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.  Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.  This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all the parties had prepared the same.

(f)  This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

(g)  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(h) In case any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby. The normal rule of construction and contractual interpretation that ambiguities should be held against the drafting party is not operative under this agreement.

Section 12.  DISPUTES SUBJECT TO ARBITRATION GOVERNED BY NEW YORK LAW

All disputes arising under this agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to principles of conflict of laws.  The parties to this agreement will submit all disputes arising under this agreement to arbitration in New York City, State of New York before a single arbitrator of the American Arbitration Association (“AAA”).  The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in New York, New York.  No party to this agreement will challenge the jurisdiction or venue provisions as provided in this section.  Nothing contained herein shall prevent the party from obtaining an order to compel arbitration under NY CPLR Article 75. Nothing contained herein shall prevent the party from obtaining injunctive relief.

  

15

  

 

SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT

 

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement and the Registration Rights Agreement as of the date first written above.  The undersigned signatory hereby certifies that he has read and understands the Registration Rights Agreement, and the representations made by the undersigned in this Registration Rights Agreement are true and accurate, and agrees to be bound by its terms.

 

	  	  	  
	
KODIAK CAPITAL GROUP, LLC

	  	  
	
By:

	  	
/s/ Ryan C. Hodson

	
Name:

	  	

Ryan C. Hodson

	
Title:

	  	

Managing Director

	  	  	  
	
USA SYNTHETIC FUEL CORPORATION

	  	  
	
By:

	  	
/s/ Dr. Steven  C. Vick

	
Name:

	  	

Steven C. Vick

	
Title:

	  	

President & CEO

 

16ex10-4.htm

EARLY ADOPTER LICENSE AGREEMENT

 

THIS AGREEMENT (“Agreement”) is entered into as of this 15th day of May, 2009 (the “Effective Date”).

 

AMONG:

 

GS CLEANTECH CORPORATION (“Licensor”), a company formed pursuant to the laws of the State of Delaware and having an office for business located at One  Penn Plaza, Suite 1612, New York, New York 10119

 

AND:

 

ECOSYSTEM TECHNOLOGIES, LLC (“Licensee”), a limited liability company formed pursuant to the laws of the State of Minnesota and having an office for business located at One  Penn Plaza, Suite 1612, New York, New York 10119 (Licensor and Licensee collectively referred to herein as the “Parties”).

 

WHEREAS:

 

	
A.

	
Licensor develops and uses innovative new clean technologies designed to harness balanced applications of biological, chemical and mechanical processes to produce value-added carbon-negative products in unconventional but sustainable ways (the “Business”);

 

	
B.

	
Licensor owns the rights to novel technologies for the conditioning of biomass-derived feedstock, the production, extraction and refining of lipids from biomass, and the reformation of carbonaceous gases into value-added products (each, a “Technology” and, collectively, the “Technologies”); and,

 

	
C.

	
Licensor wishes to provide Licensee with certain usage and other rights to the Technologies and related intellectual properties on the basis of the terms and conditions hereof.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants, agreements, representations and warranties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as follows:

 

Section 1                      The Technology

 

As used herein, the terms “Technology” and “Technologies” shall refer to Licensor’s intellectual properties as provided for in the patents and patent-applications itemized in Exhibit A, and any United States Patents that issue therefrom; any United States Letters Patent now owned or controlled by Licensor under which Licensor has the right to grant licenses that are related to the Technology described in the Letters Patent or that incorporate or improve upon such United States Letters Patent; and any division, reissues, continuations-in-part, and extensions of the foregoing now owned, or which may be owned, by Licensor or under which they now have, or may in the future have, the right to grant licenses (collectively, the “Patent Rights”) and shall include Foreign Patent Rights. “Foreign Patent Rights” shall mean all letters patent claiming priority from or based upon the Patent Rights and recognized in jurisdictions where the Patent Rights are not, without further action, recognized, and which provide the protection and benefits to the holder thereof substantially the same as the holder of the Patent Rights enjoys in the United States.

 

Section 2                      The License

 

Under the terms and conditions hereof, and except as otherwise limited herein, Licensor grants to Licensee a NON-EXCLUSIVE license to use the Technologies and any Licensor Patent Rights and Foreign Patent Rights now held or hereafter acquired pertaining to the Technology in the Field of Use in the Territory (the “Licensed Activities”). The foregoing license grant shall be hereinafter be referred to as the “License.”

 

	
(a)  

	
Field of Use

 

As used herein, the term “Field of Use” shall mean any application involving the use of the Technology in applications co-located with ethanol production facilities that are either majority-owned or managed by Licensee within the Territory. The Licensor and Licensee agree and acknowledge that the Field of Use definitions above shall be construed broadly in favor of permitting Licensee activity within the Field of Use.

 

	
(b)  

	
Territory

 

The Territory to which this exclusive License applies is the maximum territory possible in North America (the “Territory”); the Licensor and Licensee agree and acknowledge that the term “Territory” shall, regardless of context, be construed as broadly as possible.

 

  

  

  

	
(c)  

	
Most Favored Licensee; Early Adopter Status

 

The Licensor has designated the Licensee its “Early Adopter” for the Technologies. As such, the Licensor agrees that the terms afforded to the Licensee hereunder shall be the most favorable terms granted by Licensor to any new third-party licensee.

 

Section 3                      Fees and Performance

 

	
(a)  

	
Bench Testing Phase

 

The Licensee shall complete bench testing with each of the Technologies on or before the FOURTH (4th)  anniversary of the Effective Date (the “Testing”) for two technologies. The Testing is intended to define the assumptions for design assumptions for the construction and operation of a demonstration scale pilot facility.

 

	
(b)  

	
Pilot Testing Phase

 

The Licensee shall complete pilot testing and build a demonstration scale pilot facility (each, a “Demonstration Facility”) no later than the FOURTH (4th) anniversary of the Effective Date for two technologies. The Demonstration Facility shall be designed to collect mass and energy balance data in selected applications in order to define with greater precision the capital and operating costs and performance of the Technology at commercial scale, and also to refine the scale-up design parameters for commercial scale deployments of the Technology.

 

	
(c)  

	
Commercial Scale Pilot Facility

 

The Licensee shall complete construction of a commercial scale pilot facility (the “Pilot Facility”) based on each Technology no later than the FOURTH (4th) anniversary of the Effective Date for one technology.

 

	
(d)  

	
Commercial Sales; Minimum Annual Royalties

 

The Licensee shall have begun to generate revenues with at least two Technologies on or before the FOURTH (4th) anniversary of the Effective Date. The Licensee shall pay the Licensor royalties equal to TEN PERCENT (10%) of the Licensee’s Pre-tax Net Income deriving from any use of the Technology (the “Royalties”); provided, however, that such  Royalties shall not be payable for use of any of the Technologies at Licensee’s facilities equal to ONE HUNDRED MILLION (100,000,000) gallons per year of corn ethanol production. As used herein, the definition of “Pre-tax Net Income” shall have that meaning ascribed to in under generally accepted accounting principles (GAAP) and shall not include any allocation of sales, general and administrative expenses other than those directly incurred by Licensee relating to the commercialization of the Technology.

 

	
(i)  

	
Payment of Royalties; Right of Audit

 

The Licensee shall keep an accurate account of all sales activities involving the Technology and shall pay to Licensor in cash Royalties on a quarterly basis. Within THIRTY (30) DAYS after the end of each calendar quarter, Licensee shall render to Licensor a quarterly statement showing (x) Pre-tax Net Income and (y) Royalties due Licensor. Licensee shall pay to the Licensor in cash the amount of Royalties no later than FORTY-FIVE (45) DAYS following each calendar quarter. The Licensor shall have the right, at Licensor’s own expense and not more often than once in any calendar year, to have an independent certified public accountant reasonably acceptable to Licensee examine the books of the Licensee in relation to the applicable projects to verify the Pre-tax Net Income and/or Royalty statements and/or the Royalties due Licensor pursuant to this License Agreement.

 

	
(e)  

	
Commercialization Milestones; Loss of Most Favored Status

 

The Licensee shall forfeit its most favored status granted hereunder in the event that the Licensee fails to meet any of the deadlines specified in Section 3 for any Technology.

 

	
(f)  

	
Developments and Improvements

 

	
(i)  

	
If the Licensor makes any further improvements or enhancements any Technology, or becomes the owner of any new improvements or enhancements to any relevant Technology, then Licensor shall communicate such improvements to Licensee, and such improvements shall be automatically included within the definition of Technology herein and subject to the License grant hereof.

 

	
(ii)  

	
If the Licensee makes any improvements or enhancements to any Technology, or becomes the owner of any new improvements or enhancements to the Technology, then Licensee shall communicate such improvements to Licensor, and such improvements shall be automatically included within the definition of Technology herein and subject to the License grant hereof; provided, however, that Licensor shall retain sole ownership of all such developments and improvements.

 

	
(g)  

	
Best Efforts Support

 

The Licensor shall use its Best Efforts to support the performance of the Licensee hereunder. The Licensor shall provide the Licensee with access to all documentation relating to the Technology including copies of all patents and patent applications, engineering data, detailed drawings, all results of testing and use of the Technology (historical and any produced on an ongoing basis), and any and all other technical and other materials reasonably requested by the Licensee. As used herein, the term “Best Efforts” shall mean the maximum effort possible under the circumstances, taking into account the degree to which the Licensee is relying on and is dependent upon the Licensor’s provision of technical and other support in order for Licensee to finance and perform its obligations hereunder.

 

	
(i)  

	
Testing Support

 

The Licensor shall provide commercialization support services at no cost, including the provision of all bench and other testing data, all documentation relative to each Technology (including copies of all patents and patent applications), specifications for Licensor’s current bench scale testing apparatus, and other reasonably requested technical and other materials.

 

	
(h)  

	
Fats and Oils Offtake

 

The Licensor shall have the right to purchase any fats and/or oils produced by the Licensee that are not directly refined by the Licensee into biofuel, at a rate equal to SIXTY PERCENT (60%) of the Diesel Spot price for the day of each shipment, as indicated by the federal government found on the “Energy Information Administration” website (http://tonto.eia.doe.gov/dnav/pet/pet_ pri_spt_s1_d.htm) (the spot price for diesel fuel will be based on the average of the daily closing New York Harbor and U.S. Gulf Coast spot prices for diesel fuel for the day of each shipment and shall be referred to herein as the “Diesel Spot”).

 

Section 4                      Term

 

This Agreement shall commence on the Effective Date and shall continue for an initial term of TWENTY (20) YEARS. This Agreement and the License shall automatically renew for an additional one-year period, which additional one year period provided that the Licensee is and remains in compliance with the terms hereof. Similarly, this Agreement and the License shall renew for successive ONE (1) YEAR periods in perpetuity for so long as the Licensee continues to remain in compliance with the terms hereof for the previous ONE (1) YEAR period.  If the Licensee at any time defaults in fulfilling any material obligations hereunder and such default is not cured within NINETY (90) DAYS after written notice thereof is given by Licensor to Licensee, Licensor shall have the right to terminate this Agreement and the License by giving written notice of termination to the Licensee.

 

	
(a)  

	
If the Licensee at any time defaults in fulfilling any material obligations hereunder, and such default is not cured within NINETY (90) days after Licensor thereof gives written notice to Licensee, Licensor shall have the right to terminate this Agreement by giving written notice of termination to the Licensee.

 

	
(b)  

	
Licensor shall have the right to terminate this Agreement by giving written notice of termination to the Licensee, such termination being effective upon receipt of such notice or FIVE (5) days after such notice is mailed, whichever is earlier, in the event of the dissolution or bankruptcy of the Licensee.

 

	
(c)  

	
If this Agreement is terminated for any reason, the Licensee shall retain the right to use the Technology in any then-current use or in any use that has been contracted with a third party or is otherwise in construction at the time of final termination.

 

  

  

  

Section 5                      Covenants

 

	
(a)  

	
Confidentiality

 

Each party acknowledges that during the term of this License Agreement and otherwise pursuant to the terms hereof, each party shall have access to certain written and non-written information of the other which the disclosing party considers confidential and proprietary ("Confidential Information"). In consideration for the non-disclosing party being granted access to such Confidential Information and for the other benefits hereunder, the non-disclosing party hereby agrees that, during the term(s) of this License Agreement and thereafter for a period of FIVE (5) years, the non-disclosing party shall keep secret and retain in strictest confidence, and shall not, without the prior written consent of the disclosing party obtained in each instance, furnish, make available or disclose to any third party, or use for the benefit of himself or any third party, any Confidential Information; provided, that the period of confidentiality and non-use with respect to trade secrets and know-how related to the Technology shall be the longer of (i) the duration or pendency of any patent or patent application included within the Patent Rights and (ii) FIVE (5) YEARS following termination of this License Agreement in the event that such restriction is enforceable. As used in this Paragraph, "Confidential Information" shall mean any information relating to the business or affairs of the disclosing party which is not generally known to the public, including, but not limited to, product or business plans, improvements and developments, the disclosing party financial statements; customer and potential customer identities; names and qualifications of the disclosing party employees, suppliers; pricing methodologies and profit margins, including information regarding competitive bids, business or acquisition strategies, internal company and product methodologies and analyses, inventions, copyrightable work or other proprietary information used or developed by the disclosing party in connection with its business, and the existence and terms of this Agreement. Notwithstanding the foregoing, Confidential Information shall not include any information, which is or becomes in the public domain through no wrongful act on the part of the non-disclosing party or its employees or agents.

 

	
(b)  

	
Licensor Obligations

 

	
(i)  

	
Patent Fees

 

Licensor shall either (x) pay all fees and annuities necessary to maintain the Patent Rights and the Foreign Patent Rights, or (y) notify Licensee on a timely basis of its intent not to pay such fees or annuities and to provide Licensee a reasonable opportunity to pay such maintenance fees or annuities. In order to support the License at all times during the term of this License Agreement, Licensor shall supply Licensee with copies of any and all documents indicating its rights to patents, patent applications, trademarks, copyrights, and any and all other related material that substantiates Licensor’s ability to grant the License to Licensee worldwide in any and all domestic and international markets. Licensor shall also provide to Licensee, subject to the covenants hereof,  any and all drawings, specifications, and any and all other then-existing material in Licensor’s possession necessary to enable and to support Licensee’s manufacturing of products within the Field of Use in the Territory.

 

(ii)           Infringement and Invalidation

 

Licensor or Licensee may take appropriate action to protect the integrity of the License and to stop infringement by any other person upon the rights of Licensor and Licensee under the Patent Rights and the rights of Licensee hereunder. Licensor shall have the primary right (but not obligation) to bring legal action against a perceived infringer of the Patent Rights within the Territory and within Advanced Applications at Licensor’s own expense; provided, however, that if Licensor fails to do so, Licensee may do so at Licensee’s own expense.  In the event either Licensee or Licensor takes any such action, Licensor and Licensee shall cooperate with each other on a Best Efforts basis, participating in any litigation initiated as reasonably requested and providing oral and written testimony in connection therewith. To the extent that Licensee takes any such action, it shall be entitled to the relevant portion of the damages awarded (or received in settlement) as a result of any such infringement, irrespective of field of use, territorial or other limitation, on a pro rated basis; thus, for example, Licensee shall be entitled to all of the damages awarded if Licensee prosecutes the infringement at its sole expense. In the event the Patent Rights are invalidated in whole by reexamination or reissue proceedings in the U.S. Patent and Trademark Office, or by judgment of a U.S. District Court (which judgment is not over-turned on appeal), then Licensee at its sole election shall be entitled to terminate this License Agreement without penalty. In the event Licensee is joined as a party to any action involving the Technology, Licensor agrees to indemnify and hold harmless Licensee for any and all costs, attorneys’ fees, or other sums incurred during such action, without limitation.

 

	
(c)  

	
Equitable Remedies

 

The Parties hereto recognize that any breach of the terms this Agreement may give rise to irreparable harm for which money damages would  not be an adequate remedy, and accordingly agree that any non-breaching party shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy as a remedy of money damages.  If specific performance is elected as a remedy hereunder, the electing Party shall be deemed to have waive any claim for other damages, except reasonable attorneys fees, costs of suit and expenses related to the enforcement of specific performance.

 

Section 6                      Representations and Warranties

 

Licensor hereby represents and warrants to, or as the case may be covenants with, the Licensee: (i) that it has full corporate authority and right to grant the License and to enter into and perform its obligations hereunder; (ii) that, to the best of its information, the Patent Rights are as they appear of official record, and are of a duration defined by national statutes relating thereto; (iii) that it has not sold, transferred or otherwise alienated or encumbered its right, title and interest in and to the Invention and Patent Rights in any way which would restrict the grant of license rights to Licensee herein; (iv) that neither the Invention, nor the Patent Rights, nor Licensee’s rights hereunder, are known to Licensor to infringe upon the patent, trademark, license, or other intellectual property rights of any person, and (v) that no person’s activities as of the date hereof are known to Licensor to infringe upon the Licensor’s rights under the Patent Rights. Each of Licensor and Licensee warrants in respect of itself that, upon its execution and delivery of this License Agreement, this License Agreement (assuming due execution and delivery by the other parties hereto) shall constitute a valid and legally binding obligation of itself enforceable in accordance with its terms, except as may be limited by laws affecting bankruptcy or insolvency or equitable principles. Licensor does not warrant and it will be the responsibility of Licensee to secure all required licenses, approvals, permits, and authorizations necessary, for Licensee to manufacture, sell or distribute equipment based on the Invention for the permitted applications contemplated by this License Agreement everywhere such equipment based on the Invention are intended to be manufactured, used, sold, or distributed as contemplated by this License Agreement.

 

Section 7                      Notices

 

All notices, requests, demands and other communications under this Agreement shall be given to or be made upon the respective parties as follows:

 

If to Licensor:                                GS CleanTech Corporation

One Penn Plaza, Suite 1612

New York, New York 10119

	
  

	
Attn:

	
Kevin Kreisler

 

If to Licensee:                                           EcoSystem Technologies, LLC

One Penn Plaza, Suite 1612

New York, New York 10119

Attn:           Glen Courtright

 

All notices, requests, demands and other communications given or made in accordance with the provisions of this Agreement (unless otherwise specifically provided for herein) shall be in writing, shall be sent by first class mailing, postage prepaid, Federal Express, United Parcel Service, or other recognized international third party delivery service, and shall be deemed to have been given three (3) days after deposited, postage prepaid, addressed to the parties as specified, with the postal service or permitted third party delivery service.

 

Section 8                      Notices

 

	
(a)  

	
Confidentiality

 

This License Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns, whether such successors be determined by operation of law, merger, or acquisition of substantially all assets and liabilities. This License is not assignable by Licensee without the written consent of the Licensor. All successors and permitted assigns must agree to be bound by the terms hereof.

 

	
(b)  

	
Governing Law

 

This License shall be considered made in New York, and it shall be governed by and construed under the laws of the United States of America and New York.  In the event of litigation between the parties pursuant to any term or provision of this Agreement, then the prevailing party in any such litigation shall be entitled to an additional award of its attorneys’ fees actually incurred in the course of such litigation.

 

	
(c)  

	
(c)           Insurance

 

During the term of this Agreement, and for so long thereafter the applicable statute of limitations would permit suit based upon products made and/or sold by as each relevant party based on the Technology, each relevant party shall maintain adequate products liability insurance covering its manufacture and sale of products based on the Invention providing coverage during the applicable period of the statute of limitations for damages (and legal defense), and the insuring party shall provide coverage for the non-insuring party as additional insureds under such insurance policy.

 

	
(d)  

	
Entire Agreement

 

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and communications relating to its terms. No amendment or modification of this Agreement shall be binding unless signed by the party against whom enforcement is sought.

 

	
(e)  

	
Indemnification

 

Each party shall indemnify and hold harmless the other party and its affiliates or other  related entities from and against any and all losses, damages, liabilities and claims (including legal fees and costs) arising out of any breach of any of the breaching party’s obligations contained in or made pursuant to this Agreement or arising out of claims by third parties alleging liability on any theory arising out of any usage of the Invention hereunder, including any product, process or service made, used, sold, transferred or performed by either party hereto. IN NO EVENT WILL LICENSEE’S LIABILITY UNDER THIS LICENSE AGREEMENT EXCEED THE AGGREGATE AMOUNT OF THE CUMULATIVE ROYALTY FEES PAID UNDER THIS AGREEMENT.

 

	
(f)  

	
Waiver

 

Either party’s waiver of any default under this Agreement by the other shall not constitute a waiver of any subsequent or like default or of its right to insist upon strict performance thereof.  All remedies of either party shall be cumulative and no choice or remedy shall be deemed an election to the exclusion of any other remedy.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

 

 

GS CLEANTECH CORPORATION

 

 

	
By:

	
/s/ David Winsness

David Winsness

Chief Technology Officer

 

 

ECOSYSTEM TECHNOLOGIES, LLC

 

 

	
By:

	
/s/ EcoSystem Technologies, LLC

Glen Courtright

Chief Executive Officer

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