Exhibit 10.1
Amended and Restated License Agreement
This Amended and Restated License Agreement (the “Agreement”) is made and entered into this 5th day
of November, 2009 by and between Synthesis Energy Systems, Inc., a Delaware corporation having its
principal place of business at Three Riverway, Suite 300, Houston, Texas 77056 and a representative
office at 777 Zhao Jia Bang Road, Unit 516 Pine City Center, Shanghai, 200032 P.R. China
(hereinafter referred to as “SES”) and Gas Technology Institute, an Illinois non-profit corporation
having its principal place of business at 1700 South Mount Prospect Road, Des Plaines, Illinois
60018 (hereinafter referred to as “GTI”) (SES and GTI hereinafter referred to collectively as the
“parties” and each of them as a “party”).
WITNESSETH
WHEREAS, GTI and Synthesis Energy Systems, LLC (the predecessor to SES) entered into a LICENSE
AGREEMENT dated January 22, 2004, which (together with the amendments thereto) was replaced and
superseded by an Amended and Restated License Agreement dated 31 August 2006 (together with
Amendment No. 1 thereto dated June 14, 2007) (the “2006 Agreement”); and
WHEREAS, GTI and SES wish to replace and supersede the 2006 Agreement in its entirety with this
Amended and Restated License Agreement.
NOW THEREFORE, in consideration of the mutual covenants and undertakings contained herein and other
good and valuable consideration, receipt of which is hereby acknowledged by both parties, the
parties do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 “2006 Agreement” has the meaning given to it in the first paragraph of the recitals above.
1.2 “Affiliate” shall mean any entity that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, a party.
1.3 “Biomass” shall mean organic material such as wood, municipal solid waste, manures and other
animal waste, agricultural residue and crops, and refuse derived fuel, that can be converted to
energy.
1.4 “Carried Interest” shall mean an equity ownership in an entity granted to SES or an SES
Affiliate whereby SES or its Affiliate does not pay cash consideration for such ownership interest.
1.5 “Coal” shall mean anthracite, bituminous, sub-bituminous, lignite, peat, cannel, waste from
coal cleaning/preparation facilities (including but not limited to middlings, coarse refuse, gob,
culm and gangue). Additionally, for the purposes of this Agreement, the term Coal would
additionally include oil shale, petroleum coke and other non-biomass solid and heavy liquid
hydrogen-carbon materials.
Certain information in this exhibit has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934,
as amended, and has been filed separately with the Securities and
Exchange Commission.
1.6 “Coal and Biomass Mixture” shall mean a feed stock for U-GAS that consists of no less than
sixty percent (60%) Coal and no more than forty percent (40%) Biomass.
1.7 “Control” means with respect to any entity, possession of the power, directly or indirectly, to
direct or cause the direction of the management policies of such entity, whether through the
ownership of voting securities, by contract or otherwise and “Controls” and “Controlled” shall be
construed accordingly.
1.8 “Effective Date” of this Agreement is defined as the date first written hereinabove.
1.9 “GTI’s Confidential Information” has the meaning given to it in Section 3.1.
1.10 “GTI’s Sublicense Royalty Share” has the meaning given to it in Section 4.3.
1.11 “Improvements” shall mean any improvements, modifications, further inventions and designs that
SES, its Affiliates, any Third Party or any SES Investee may discover, make or develop at any time
during the Term with respect to the Licensed Process, and the methods and apparatus used in the
operation of the Licensed Process.
1.12 “Initial Term” has the meaning given to it in Section 10.1.
1.13 “Know-How” shall mean all technical information, including trade secrets, pertaining to GTI’s
proprietary U-GAS system including, but not limited to, theses, designs, drawings, blueprints,
specifications, test data, charts, fabrication techniques, materials of construction, and
formulations, graphs, operating and test procedures, shop practices and instruction manuals.
1.14 “Licensed Process” shall mean any Coal, mixture of Coal and Biomass, or Biomass gasification
process that incorporates Know-How as defined hereinabove.
1.15 “March-In Payment” has the meaning given to it in Section 4.2.
1.16 “SES’ Confidential Information” has the meaning given to it in Section 3.8.
1.17 “SES Investee” means any entity in which SES or any of its Affiliates is proposing to invest
in, has a contractual option to invest in, has invested in, or has received a Carried Interest in,
when such investment, option, to invest, and Carried Interest in the aggregate exceeds * of the
entity’s equity, and which is not Controlled by SES nor by any of its Affiliates.
1.18 “Standard Royalty” has the meaning given to it in Section 4.5.
1.19 “Sublicense” has the meaning given to it in Section 2.2, and “Sublicensed” shall be construed
accordingly.
1.20 “Sublicense Royalties” has the meaning given to it in Section 4.3.
1.21 “Term” means the Initial Term and any extensions thereto pursuant to Section 10.1.
1.22 “Third Party” means any third party that sublicenses the Know-How during the Term,
specifically excluding any SES Investees and any Affiliates of SES.
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[*]
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This information has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934, as amended,
and has been filed separately with the Securities and Exchange
Commission.
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1.23 “U-GAS” shall mean a process involving conversion of Coal, a mixture of Coal and Biomass, or
Biomass to fuel gas by reaction of Coal, a mixture of Coal and Biomass, or Biomass with air,
enriched air, or oxygen with the addition of steam, carbon dioxide or other diluent gases in a
fluidized bed reactor system with a sloping grid and central nozzle in which high carbon conversion
is obtained by utilizing techniques with or without ash agglomeration with control of ash sintering
and the withdrawal of high ash material or agglomerates, wherein crushed Coal, a mixture of Coal
and Biomass, or Biomass is fed directly into the fluidized bed with recycle of Coal dust or char
fines entrained in effluent gas back into the fluidized bed.
ARTICLE 2. LICENSE GRANT
2.1
Scope of License
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(a)
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GTI hereby grants to SES, and SES hereby accepts, an irrevocable, world-wide,
exclusive license to manufacture, make, use and sell U-GAS systems for conversion of
Coal and/or Coal and Biomass Mixture incorporating or using the Know-How.
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(b)
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GTI also hereby grants to SES, and SES hereby accepts, an irrevocable,
world-wide, non-exclusive license to manufacture, make, use and sell U-GAS systems for
conversion of Biomass and/or mixtures of Coal and Biomass incorporating or using the
Know-How.
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(c)
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Affiliates of SES and subcontractors of SES (including but not limited to third
party manufacturers appointed by SES or any of its Affiliates) shall be permitted to
access and use the Know-How provided such access and use is (subject to the sublicense
and use rights granted pursuant to Section 2.2) only for the business purposes of SES
or the relevant Affiliate, is subject to written agreements of strict confidentiality
and is in accordance with the terms of this Agreement (in particular, paragraphs (i) to
(iii) of Section 2.2(d) below shall apply, subject to the appropriate language changes
having been made thereto, to the access and use of the Know-How by an Affiliate of
SES).
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(d)
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SES shall not sell products that use the Know-How of GTI other than as part of
a U-GAS system.
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2.2
Sublicense and Use Rights
. SES and its Affiliates shall have the right to grant
sublicenses of the Know-How to third parties for the purpose of enabling such third parties to
manufacture, make and use U-GAS Coal gasification systems incorporating or using the Know-How of
GTI (each a “Sublicense”), provided that each Sublicense is granted pursuant to a signed, written
sublicense agreement between SES or its Affiliate (as applicable) and the relevant third party and
subject to the following:
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(a)
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neither SES nor its Affiliates shall grant a Sublicense to any Third Party
unless such Sublicense has been previously approved in writing by GTI as follows:
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(i)
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SES may from time to time, during the initial stages of a
project, provide GTI with notice in writing setting out the name of the Third
Party to which
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it wishes to grant a Sublicense, and the initial terms thereof including the
preliminary licensed design capacity, unique planned application
considerations, and a minimum and maximum license fee range, and requesting
GTI’s approval for the purpose of this sub-Section 2.2(a);
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(ii)
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within 10 business days of the date of such notice from SES,
GTI shall notify SES in writing of the approval or non-approval of such Third
Party, and in the event of a non-approval such notification from GTI shall
specify the reasons for such non-approval, it being acknowledged and agreed by
the parties that such approval shall not be unreasonably withheld or
conditioned;
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(iii)
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in the event GTI fails to notify SES of the approval or
non-approval of the relevant Third Party as contemplated in paragraph (ii)
above, the Third Party will be deemed to have been approved by GTI for the
purposes of this sub-Section 2.2(a);
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(b)
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SES shall no less frequently than once every 3 months during the Term provide
GTI with a report on the status of its negotiations with any third party in respect of
any Sublicense;
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(c)
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any such Sublicense may be for a U-GAS system which uses as its feed stock
either entirely Coal, entirely Biomass or a mixture of Coal and Biomass in any
proportion as determined by SES or its Affiliate (as applicable) and the relevant third
party;
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(d)
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SES or its Affiliate (as applicable) may enter into Sublicense agreements with
third parties on such terms as SES reasonably considers appropriate, provided that such
agreements shall contain provisions substantially similar to the following:
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(i)
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each Sublicense may not be transferred from the Sublicensed
site, project or facility to another site, project or facility without the
prior written consent of SES or its Affiliate, and GTI;
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(ii)
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the process design package engineering services to be provided
in respect of the Sublicensed project shall be performed jointly by SES or its
Affiliate (as applicable) and its production engineering subcontractor; and
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(iii)
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the Third Party may construct a U-GAS system having a capacity in
excess of the syngas capacity expressly permitted in the Sublicense,
provided that (A) if the excess capacity is equal to or less than *% of the
Sublicensed syngas capacity, no additional Sublicense Royalties shall be
payable by the Third Party and (B) if the excess capacity is more than *% of
the Sublicensed syngas capacity, and such excess capacity is a result of the
Third Party exceeding the design limits set out in the process design
package, the Third Party shall pay additional Sublicense Royalties to
SES
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[*]
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This information has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934,
as amended, and has been filed separately with the Securities and
Exchange Commission.
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or its Affiliate (as applicable), such additional Sublicense Royalties to be
calculated based on the amount of excess syngas capacity.
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ARTICLE 3.
CONFIDENTIAL DISCLOSURE AND NON-USE
GTI’s Confidential Information
3.1 SES and GTI acknowledge and agree that GT1 owns and/or controls certain information and trade
secrets relating to the Know-How which are confidential and which afford GTI an advantage over its
competitors which do not have such information. For purposes of this Agreement, information
required to be maintained secret (hereinafter referred to as “GTI’s Confidential Information”) is
defined to be all information related to the Know-How which is disclosed by GTI to SES pursuant to
this Agreement, except that which:
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(a)
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was in the public domain prior to receipt under this Agreement or which
thereafter becomes part of the public domain through no fault or breach of duty to
maintain it confidential by SES; or
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(b)
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SES can show was in its possession at the time of receipt under this Agreement;
or
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(c)
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SES receives from a third party, which was not under an obligation of
confidentiality or non-use to GTI, either directly or indirectly.
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3.2 Confidential Information disclosed pursuant to this Agreement shall, where possible, be reduced
to writing, pictorial form, or electronic recording and marked “Confidential” or “Proprietary” or
with words of similar import. Neither party shall be deemed to have disclosed Confidential
Information due to the fact that such Confidential Information can be discerned from a U-GAS system
sold by such party, either through reverse engineering or observation or due to the nature of the
product itself.
3.3 All Confidential Information disclosed pursuant to this Agreement by GTI shall remain the
property of GTI and, except as otherwise licensed hereunder, no license or grant of rights in any
of the Confidential Information covered hereunder is conveyed by GTI solely by its disclosure
hereunder.
3.4 SES agrees that during the Term and for a period of ten (10) years thereafter, SES will hold
secret and confidential, will not disclose in any manner to any person or concern, except to any of
its or its Affiliates’ employees or contractors or Third Parties as are required to use such
information, and only then under an obligation of secrecy binding upon such employees or
contractors, and as otherwise permitted under the provisions of this Agreement, and will not use,
except pursuant to this Agreement, any of the Confidential Information.
3.5 SES hereby agrees to indemnify and hold harmless GTI and its Affiliates against any liability
or loss resulting from unauthorized disclosure or use of the Confidential Information by itself,
its agents, or its Affiliates, to whom the Confidential Information is disclosed pursuant to this
Agreement. No indemnity payments hereunder shall relieve the breaching party from liability under
applicable patent, copyright or trade secret laws, nor shall such payments
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constitute a grant or continuation of a grant of any express or implied license or covenant not to
sue under any patents, copyrights or trade secrets of GTI.
3.6 In the event that Confidential Information of GTI shall be required by law to be made available
to any government agency by SES, SES shall notify GTI in writing of the requirement of such
disclosure at least thirty (30) days prior to such disclosure, unless disclosure in less than
thirty (30) days is required, in which case SES shall immediately notify GTI of the requirement. A
copy of the disclosed Confidential Information shall be sent to GTI coincidental with the
transmission of the Confidential Information to the government.
3.7 Notwithstanding anything herein to the contrary, SES hereby provides GTI with the assurance
that no Confidential Information disclosed to SES pursuant to this Agreement shall be re-exported
or trans-shipped directly or indirectly to any destination requiring the approval of the United
States Government for such export or shipment until a request to do so has been submitted to and
approved by the United States Government.
SES’ Confidential Information
3.8 SES and GTI acknowledge and agree that, as between GTI and SES, SES owns and/or controls
certain information and trade secrets relating to the Improvements which are confidential and which
afford SES an advantage over its competitors which do not have such information. For purposes of
this Agreement, information required to be maintained secret (hereinafter referred to as “SES’
Confidential Information”) is defined to be all information related to the Improvements which is
disclosed by SES to GTI pursuant to this Agreement, except that which:
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(a)
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was in the public domain prior to receipt under this Agreement or which
thereafter becomes part of the public domain through no fault or breach of duty to
maintain it confidential by GTI; or
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(b)
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GTI can show was in its possession at the time of receipt under this Agreement;
or
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(c)
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GTI receives from a third party, which was not under an obligation of
confidentiality or non-use to SES, either directly or indirectly.
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3.9 SES’ Confidential Information disclosed pursuant to this Agreement shall, where possible, be
reduced to writing, pictorial form, or electronic recording and marked “Confidential” or
“Proprietary” or with words of similar import. Neither party shall be deemed to have disclosed SES’
Confidential Information due to the fact that such SES’ Confidential Information can be discerned
from a U-GAS system sold by such party, either through reverse engineering or observation or due to
the nature of the product itself.
3.10 All SES’ Confidential Information disclosed pursuant to this Agreement by SES shall remain the
property of SES and, except as otherwise licensed hereunder, no license or grant of rights in any
of the SES’ Confidential Information covered hereunder is conveyed by SES solely by its disclosure
hereunder, except for Improvements, in accordance with Section 5.1.
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3.11 GTI agrees that during the Term and for a period of ten (10) years thereafter, GTI will hold
secret and confidential, will not disclose in any manner to any person or concern, except to any of
its or its Affiliates’ employees or contractors as are required to use such information, or to any
licensee or prospective licensee of the Know-How as relates solely to Improvements, and only then
under an obligation of secrecy binding upon such employees, contractors, licensees, or prospective
licensees, and as otherwise permitted under the provisions of this Agreement, and will not use,
except pursuant to this Agreement, any of the SES’ Confidential Information.
3.12 GTI hereby agrees to indemnify and hold harmless SES and its Affiliates against any liability
or loss resulting from unauthorized disclosure or use of the SES’ Confidential Information by
itself, its agents, or its Affiliates, to whom the SES’ Confidential Information is disclosed
pursuant to this Agreement. No indemnity payments hereunder shall relieve the breaching party from
liability under applicable patent, copyright or trade secret laws, nor shall such payments
constitute a grant or continuation of a grant of any express or implied license or covenant not to
sue under any patents, copyrights or trade secrets of SES.
3.13 In the event that any SES’ Confidential Information shall be required by law to be made
available to any government agency by GTI, GTI shall notify SES in writing of the requirement of
such disclosure at least thirty (30) days prior to such disclosure, unless disclosure in less than
thirty (30) days is required, in which case GTI shall immediately notify SES of the requirement. A
copy of the disclosed SES’ Confidential Information shall be sent to SES coincidental with the
transmission of the SES’ Confidential Information to the government.
3.14 Notwithstanding anything herein to the contrary, GTI hereby provides SES with the assurance
that no SES’ Confidential Information disclosed to GTI pursuant to this Agreement shall be
re-exported or trans-shipped directly or indirectly to any destination requiring the approval of
the United States Government for such export or shipment until a request to do so has been
submitted to and approved by the United States Government.
ARTICLE 4. CONSIDERATION AND ROYALTIES
4.1 In consideration of the license grants from GTI to SES pursuant to this Agreement, SES (i)
shall not offer for sale any competing Coal or a Coal and Biomass Mixture gasification technology
during the Term; and (ii) shall pay to GTI the March-In Payment, the Royalties and GTI’s Sublicense
Royalty Share in accordance with the remainder of this ARTICLE 4. GTI acknowledges and agrees that
it has received from SES the one hundred ninety thousand five hundred shares (190,500) of SES
restricted Common Stock required to be delivered to GTI by SES pursuant to the 2006 Agreement.
4.2
March-In Payment
. SES agrees to pay to GTI the sum of * (the “March-In Payment”) during
each calendar year of the Term, subject to the following:
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(a)
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subject to paragraphs (b) and (c) below, for each calendar year during the Term
SES shall pay GTI the March-In Payment on or before January 31 in the immediately
following calendar year;
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(b)
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no March-In Payment shall be payable for the calendar year ending 31st December
2009;
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[*]
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This information has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934,
as amended, and has been filed separately with the Securities and
Exchange Commission.
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(c)
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SES shall be entitled to deduct from the March-In Payment due in any calendar
year any Royalties and Sublicense Royalties which are payable to GTI for the same
calendar year, it being acknowledged and agreed by the parties that if the total amount
of Royalties and Sublicense Royalties in any calendar year exceeds * then no March-In
Payment shall be due to GTI in respect of that calendar year.
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4.3
Sublicense Royalties
. All license fees and royalties payable by a Third Party under a
Sublicense agreement with SES or its Affiliate (as applicable) (the “Sublicense Royalties”, which
shall be deemed to include any additional license fees as contemplated in Section 2.2(d) (iii)
above) shall be shared between SES and GTI in the ratio of *% to SES and *% to GTI (GTI’s share of
such Sublicense Royalties being “GTI’s Sublicense Royalty Share”). SES shall pay to GTI GTI’s
Sublicense Royalty Share as and when the Sublicense Royalties are actually received by SES or its
Affiliate (as applicable) from the relevant Third Party and after deduction from GTI’s Sublicense
Royalty Share of all applicable withholdings, liabilities to taxation or other deductions or
set-offs which are required by law to be made by the Third Party (in which case the deduction from
GTI’s Sublicense Royalty Share shall be *% of the total deduction made by the Third Party), SES or
its Affiliate (as applicable). SES agrees to use all reasonable commercial endeavours to maximize
the amount of Sublicense Royalties under the Sublicenses, and to collect associated payments when
due in accordance with Sublicences.
4.4 If SES or an SES Affiliate invests in, or has an option to invest in, * percent or less of the
equity in a Third Party, and the Sublicense Royalty payable by such Third Party equals or exceeds
the Standard Royalty, then SES shall pay to GTI GTI’s Sublicense Royalty Share as contemplated
above. If SES or an SES Affiliate invests in, or has an option to invest, * percent or less of the
equity in a Third Party, and the Sublicense Royalty is less than the Standard Royalty, then in
addition to GTI’s Sublicense Royalty Share contemplated above, SES shall also pay to GTI a
percentage of its dividends and proceeds from liquidation of its equity position in said Third
Party (the “Dividend Share”) based on the amount of GTI’s Sublicense Royalty Share. The Dividend
Share shall be between * percent and * percent of the revenues actually received by SES from its
interest in the Third Party and shall be calculated as the Standard Royalty less GTI’s Sublicense
Royalty Share, the difference of which is divided by the Standard Royalty, and the resultant
dividend multiplied by * percent. For example, if SES or an Affiliate own * percent of the equity
of a Third Party, and the Sublicense Royalty is USD * /MMBtu/hour of dry syngas production, then
GTI shall receive GTI’s Sublicense Royalty Share plus a Dividend Share of *% [{(*/MMBtu/hour —
*/MMBtu/hour) ÷ */MMBtu/hour}X *%]; that is *% of the proceeds received by SES resulting from its
equity interest. Dividend Share payments shall be made to GTI when dividends or proceeds from
liquidation of its equity position are actually received by SES or its Affiliate (as applicable)
and shall be net of all applicable withholdings, liabilities to taxation or other deductions or
set-offs which are required by law to be made by the Third Party.
4.5
Equity Royalty
. SES agrees to pay to GTI for each U-GAS unit licensed, designed, built
and/or operated by or for SES, or any party other than a Third Party an upfront royalty of USD
*/MMBtu/hour of dry syngas production of rated design capacity of the U-GAS system using Coal, a
mixture of Coal and Biomass, or Biomass as the feed stock (the “Standard Royalty”). The Standard
Royalty shall be paid in two equal installments: the first installment shall be paid upon the
earlier of the securing of binding commitments for necessary debt financing for
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This information has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934,
as amended, and has been filed separately with the Securities and
Exchange Commission.
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construction of the associated U-GAS system and related facilities or SES (or its Affiliate)
transferring to the licensee the detailed U-GAS system gasifier production drawings or the complete
U-GAS system control logic; and the last installment shall be paid upon the completion of the build
of the U-GAS system. If the U-GAS system consists of more than one unit to be built over a period
of years, then the second installment of the Standard Royalty shall be paid proportionately at the
completion of each unit. Payments shall be made to GTI no earlier than the associated triggering
event, and no later than 30 days after the associated triggering event. As necessary, the amount of
the last installment shall be adjusted so that the total Standard Royalty corresponds to the rated
design capacity of the U-GAS system as per the U-GAS system production drawings and associated
calculations and models.
4.6
Carried Interest Royalty
. In the event that SES or an Affiliate of SES is granted a
Carried Interest in a Third Party, and such Carried Interest is equal to or less than * percent of
the equity in the Third Party, in such case SES shall have the option to:
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(a)
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Pay GTI the Standard Royalty contemplated in Section 4.5 above; or
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(b)
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Pay GTI the GTI’s Sublicense Royalty Share in accordance with Section 4.3
above, and also pay to GTI *% of SES’ proceeds resulting from its Carried Interest.
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4.7 SES shall provide GTI with a copy of each contract (including any Sublicense agreement entered
into with any Third Party) entered into by SES for the licensing, design, construction or operation
of a U-GAS system. SES shall report to GTI either in writing or by e-mail its progress in
commercializing the U-GAS system at least every six months beginning with the Effective Date.
4.8 Failure of SES to complete any of the requirements of Section 4.1 to 4.6 inclusive shall allow
GTI to terminate this Agreement pursuant to the provisions of Section 10.2 hereof.
ARTICLE 5. IMPROVEMENTS
5.1 SES hereby agrees to disclose to GTI each SES Improvement, and shall fully disclose the nature
and manner of applying and utilizing such Improvement within 6 months of conception. SES hereby
grants to GTI a royalty-free non-exclusive irrevocable license, with the right to grant
sublicenses, to make, have made, manufacture, have manufactured, use, market, import, offer for
sale, and sell systems incorporating said Improvements, but excluding therefrom any use for which
SES enjoys the exclusive U-GAS rights, such as the conversion of Coal or Coal and Biomass Mixture.
ARTICLE 6. INDEMNIFICATION
6.1 SES agrees to hold harmless, defend and indemnify GTI and its Affiliates against all damage,
expense and liability, including attorneys fees, resulting from injury to or death of any person or
damage to any property by reason of SES’s use of the Know-How and relating to U-GAS systems.
Notwithstanding, GTI reserves the right to be represented, at its own expense, by legal counsel of
its choice, in any proceedings arising under this Section 6.1.
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[*]
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This information has been omitted in reliance upon Rule 24b-2 under the Securities Exchange Act of 1934,
as amended, and has been filed separately with the Securities and
Exchange Commission.
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6.2 GTI shall promptly notify SES in writing of any claim asserted against GTI that SES has an
obligation to indemnify and defend GTI against pursuant to this Agreement;
provided
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however
, that a failure to so notify SES shall not relieve SES of its indemnity obligations
unless SES can demonstrate that it was substantially prejudiced by GTI’s failure to notify. SES
shall not settle such claim or cause of action prior to obtaining the consent of GTI. In the event
that there is an actual or potential conflict of interest between SES and GTI with respect to any
such claim or cause of action, such that counsel selected by SES cannot represent both SES and GTI
without waivers of such conflict, SES shall pay the reasonable costs and expenses of GTI’s separate
legal representation, in addition to the cost of counsel selected by SES.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.
7.1 GTI represents that at the time of execution hereof:
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(a)
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There are no agreements, assignments, encumbrances or licenses in existence
that are inconsistent with the provisions of this Agreement;
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(b)
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GTI owns or has a right to license all right, title and interest in and to
Know-How licensed to SES hereunder;
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(c)
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The Know-How licensed to SES hereunder are not known to infringe upon or
otherwise violate, nor to be inconsistent with, the rights of any other person or
entity;
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(d)
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There are no disputes, conflicts, claims (actual or threatened), actions,
litigation, arbitrations, suits, proceedings, judgments, or decrees existing, pending,
threatened by or against, or affecting or relating to the Know-How licensed to SES
hereunder (collectively, the “Claims”).
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7.2 It is understood and agreed that there shall be no warranty by GTI, express or implied, as to
the results to be obtained utilizing GTI’s Confidential Information and Know-How of GTI.
7.3 GTI states that:
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(a)
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GTI is aware of the provisions of Rule 144 promulgated under the Securities Act
of 1933 (“Rule 144”) which permit limited resale of securities purchased in a private
placement (a) by nonaffiliates of a company not less than two (2) years after such
nonaffiliate has purchased and paid for the security to be sold, or (b) subject to the
satisfaction of certain conditions, including among other things, the existence of a
public market for the securities, the availability of certain current public
information about SES, the resale occurring not less than one (1) years after the
securities to be sold have been purchased and paid for, the resale being effected
through a “broker’s transaction” or in transactions directly with a “market maker” (as
provided by Rule 144(f)) and the number of securities sold during any three (3) month
period not exceeding specified limitations. SES has no obligation to supply the
information required for sales under Rule 144.
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(b)
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GTI is acquiring the Common Stock for investment for its own account and not
with the view to, or for resale in connection with, any distribution thereof. It
understands that the Common Stock have not been registered under the Act by reason of a
specified exemption from the registration provisions of the Act, which requires, among
other things, the bona fide nature of GTI’s investment intent as expressed herein.
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(c)
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GTI is authorized and otherwise duly qualified to acquire and hold the Common
Stock and has not been formed or reorganized for the specific purpose of acquiring the
Common Stock.
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(d)
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GTI believes it is an “accredited investor” (as defined in. Section 501 of
Regulation D under the Securities Act of 1933), but, if it is not an “accredited
investor”, then it is by virtue of its business or financial experience or its
relationship to SES or SES’s management, capable of evaluating the merits and risks of
an investment in the Common Stock and GTI is capable of protecting its own interest
with respect to its investment in the Common Stock, and is financially capable of
bearing the risk of that investment.
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7.4
Sole Licensee
. GTI, for as long as this Agreement remains exclusive, hereby agrees that
it shall not license the Know-How to anyone else to manufacture, make, use, or sell U-GAS systems
for conversion of Coal and/or Coal and Biomass Mixture incorporating the Know-How.
ARTICLE 8. CONFIDENTIAL INFORMATION ENFORCEMENT
8.1 Upon learning of the possible misuse or misappropriation of GTI’s trade secrets or GTI’s
Confidential Information by a third party, SES shall inform GTI of that fact, and shall supply GTI
with any evidence available to it pertaining to the possible misuse or misappropriation. GTI shall
have the sole right to determine whether or not and how to proceed to protect such trade secrets
and GTI’s Confidential Information. SES agrees to cooperate with GTI in any enforcement action and
will join suit as a co-plaintiff at GTI’s request, if required for jurisdictional purposes. Any
damage recovery shall be shared by the parties in proportion to their contribution to the legal
expenses of any such lawsuit. GTI shall have the primary authority to settle any action or claim
brought hereunder.
8.2 Upon learning of the possible misuse or misappropriation of SES’ trade secrets or SES’
Confidential Information by a third party, GTI shall inform SES of that fact, and shall supply SES
with any evidence available to it pertaining to the possible misuse or misappropriation. SES shall
have the sole right to determine whether or not and how to proceed to protect such trade secrets
and SES’ Confidential Information. GTI agrees to cooperate with SES in any enforcement action and
will join suit as a co-plaintiff at SES’ request, if required for jurisdictional purposes. Any
damage recovery shall be shared by the parties in proportion to their contribution to the legal
expenses of any such lawsuit. SES shall have the primary authority to settle any action or claim
brought hereunder.
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8.3 When SES mentions the U-GAS system that is the subject matter of this Agreement in writing in
any press release or other promotional documentation, SES shall include the phrase “Licensed from
Gas Technology Institute.” in said release or promotional documentation.
ARTICLE 9. NOTICES
9.1 All important notices to be given in connection with this Agreement or its performance shall be
given to each head office in writing. Any urgent matters shall be informed by telex or telefax,
however, important notices in such matter shall be confirmed in writing thereafter. Such notices
shall he deemed to be duly given when they have reached the addressees. All correspondence and
reports under this Agreement should be sent to the following addresses:
For SES:
Synthesis Energy Systems, Inc.
Three Riverway, Suite 300
Houston, Texas 77056
Attn: Francis Lau
For GTI:
Gas Technology Institute
1700 South Mount Prospect Road
Des Plaines, IL 60018-1804
Attn: Licensing Manager
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or such other address to which either party shall give due written notice from time to time.
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ARTICLE 10. TERM AND TERMINATION
10.1 This Agreement shall continue in full force and effect from the Effective Date of this
Agreement until 30 August 2016 (the “Initial Term”), unless otherwise terminated earlier pursuant
to Section 10.2 or 10.3 herein. Notwithstanding the above, the term of this Agreement may be
extended for an additional ten (10) years beyond the Initial Term by SES giving GTI, no earlier
than 180 days and no later than 90 days prior to the end of the original Term, written notice of
its election to extend this Agreement under the same terms and conditions, provided that SES has
satisfied and is in compliance with all of its duties and obligations under this Agreement,
including, but not limited to, its obligations under ARTICLE 4 hereof. Prior to the end of the
second ten (10) year term, SES may extend the Term of this Agreement for an additional ten (10)
years by SES giving GTI, no earlier than 180 days and no later than 90 days prior to the end of the
second ten (10) year Term, written notice of its election to extend this Agreement under the same
terms and conditions, provided that SES has satisfied and is in compliance with all of its duties
and obligations under this Agreement, including, but not limited to, its obligations under ARTICLE
4 hereof.
10.2 In the event that either party shall default by failing or refusing to perform any of its
obligations hereunder, the other party, may, without waiving other rights, provide the defaulting
party with a written notice specifying the particulars of such default and stating the notifying
party’s intent to terminate this Agreement on a date not less than ninety (90) days after such
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notice is sent unless such default shall be fully remedied by such date, and this Agreement shall
terminate on such date.
10.3 This Agreement shall terminate immediately and automatically upon the act of SES admitting in
writing its inability to pay its debts generally as they become due, filing a petition in
bankruptcy or under any other insolvency act, making an assignment for the benefit of creditors, or
upon a petition in bankruptcy, or for the appointment of a receiver being filed against it, failing
to have the petition or appointment dismissed or vacated within sixty (60) days from the date
thereof.
10.4 Termination of this Agreement shall not relieve the parties of their obligations under ARTICLE
3 and ARTICLE 5 of this Agreement, said obligations to continue for ten (10) years after the date
of any such termination.
10.5 The waiver, express or implied, by either SES or GTI of any right hereunder or of any right to
seek remedies arising from any failure to perform or breach hereof by SES or GTI, shall not
constitute or be deemed a waiver of any other right hereunder, whether of a similar or dissimilar
nature thereto.
ARTICLE 11. GENERAL
11.1
Arbitration.
All disputes, controversies or differences arising between SES and GTI
out of, or in relation to, or in connection with, this Agreement or for the breach hereof, which
SES and GTI are unable to resolve between themselves shall be settled finally and bindingly by
arbitration under the Rules of Arbitration of the International Chamber of Commerce by one or more
arbitrators in accordance with the Rules. All costs of the said arbitration shall be borne equally
by SES and GTI. The language used in the arbitral proceedings shall be English. The arbitration
shall be held in Chicago, Illinois, USA. The decision of the arbitrator shall be enforceable by and
through any court that has jurisdiction over the subject matter hereof.
11.2 If any article, paragraph, section, term, condition or provision of this Agreement shall
finally be adjudged to be unlawful or unenforceable for any reason, such article, paragraph,
section, term, condition, or provision hereof shall be deemed to be severable here from and shall
be deemed thereby to be stricken here from and this Agreement shall thereafter otherwise remain in
full force and effect as amended by such adjudication.
11.3 This Agreement shall not be assignable by either party except that either party may assign all
of its rights hereunder together with all of its obligations hereunder to an Affiliate, any third
party with which it may merge or consolidate or to a purchaser of substantially all of the assets
of such party. The parties shall notify each other hereunder immediately of any assignment made
pursuant to this Section 11.3. This Agreement shall be binding upon and inure to the benefit of the
parties, and their respective heirs, assigns, successors, and legal representatives.
11.4 Time and diligence of the parties are of the essence to this Agreement, it being understood
that in the event of any act of God, war, insurrection, strike or wildcat labor disturbance, or act
or occurrence solely outside the direction or control of the parties, which occasions some delay,
the time periods set forth hereunder shall be extended for the duration of such act or occurrence.
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11.5 This Agreement, when executed by the parties, together with its exhibits, shall constitute the
entire Agreement between the parties with reference to the subject matter hereof and may only be
amended in a writing signed by the parties. There are no other understandings, agreements or
representations, express or implied, not specified herein.
11.6
Governing Law.
The parties agree that, in the event of a dispute regarding this
Agreement, this Agreement shall be governed in all respects by the laws of the State of Illinois,
excluding its conflict of laws principles.
11.7
Headings.
The headings used in this Agreement are intended for convenience only and
shall not be deemed to supersede or modify any provisions.
ARTICLE 12. EXPORT RESTRICTIONS, TAXES AND DUTIES.
12.1 SES acknowledges that the INDUSTRIAL PROPERTY RIGHTS referenced in this Agreement may be
subject to export control under U.S. Export Administration Regulations. SES accepts and assumes all
responsibility for compliance with United States export regulations with respect to their
exportation. SES covenants and agrees to comply strictly with these regulations, to cooperate fully
with GTI 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 the U-GAS system or Know-How 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. SES will bear the expense of its compliance with all applicable United
States laws and regulations in this connection without reimbursement or offset.
12.2 SES acknowledges and agrees that GTI has no responsibility or liability for taxes or customs
duties, harbor fees or storage or transportation charges, related in any way to the U-GAS system or
Know-How licensed hereunder. SES agrees to assume all responsibility for their collection and/or
payment including, without limitation, for value added taxes, sales taxes, use taxes, excise taxes,
service taxes, customs duties, customs storage fees, or withholding taxes, if any, all without
reimbursement by GTI.
IN WITNESS WHEREOF, the parties have caused this Agreement to he executed by their duly authorized
representatives as of the Effective Date.
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Synthesis Energy Systems, Inc.
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Gas Technology Institute
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By:
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/s/ Donald P. Bunnell
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By:
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/s/ Paul Chromek
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Title:
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President & CEO — Asia Pacific
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Title:
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Corporate Secretary
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