ASX Announcement
only24 November 2021
Melbourne, Australia: Diversified technology design and development growth company, Synertec Corporation Limited (ASX: SOP, "Synertec" or "the Company") is pleased to announce that it has entered into a perpetual and exclusive Intellectual Property ("IP") Licence Agreement for the use of Sichuan GreenTech Environmental Technology Co., Ltd's ("GreenTech") Composite Dry Power ("CDP") technology.
Key Highlights
use | • Synertec and GreenTech have entered into a perpetual and exclusive Intellectual Property | |
licence agreement ("Licence Agreement"), providing Synertec with the right to use | ||
GreenTech's Composite Dry Powder technology | ||
• GreenTech's CDP technology converts drilling mud into a useful non-pollutingby-product | ||
personal | starting material with many potential applications | |
• | Licence Agreement | |
With the Licence Agreement in place the Company will now look to commercialise CDP |
across some of the world's largest hydrocarbon markets including Australia, Canada, North America, Central America and South America
• The Licence Agreement replaces an existing licence agreement between the two parties that was due to expire in September 2022
• There are no ongoing royalty fees associated with the Licence Agreement and it is sub- licensable
• GreenTech has repaid the balance of the loan owed to Synertec upon signing of the
Synertec Managing Director, Michael Carroll, said:
"We are delighted to have entered into the perpetual and exclusive IP Licence Agreement with GreenTech. This agreement extends our existing arrangements into perpetuity, and positions Synertec to monetise the CDP technology across a range of large and long-term productive jurisdictions within the oil and gas drilling industry. The CDP technology provides the opportunity to convert an expensive-to-treat waste by-product into a useful starting material with many potential applications. We look forward to working with them on CDP technology well into the future.
For"Synertec's CDP technology is one of the Company's three exciting environmental technology solutions to help industry reduce its environmental footprint. We believe CDP, coupled with our Powerhouse Project and LNG Custody Transfer System (CTS) technology, which are all progressing as planned, has the potential to aid in the rapid reduction of emissions whilst supporting economic growth."
Key terms of the Licence Agreement
Further to the ASX Announcement on 4 August 2021, Synertec confirms that the condition to the extension of the secured loan funding provided by Synertec to GreenTech has been satisfied.
The condition to extension was the entry into the IP Licence Agreement between GreenTech and Synertec under which Synertec has the right to access, use, copy, modify, adapt, exploit, reproduce, publish and communicate (including the right to sub-license those rights) GreenTech's intellectual property rights and associated rights of any kind in respect of the drying and/or processing technology for the treatment (by the use of CDP) of water based sludge or sulphonated mud and/or the harmless treatment for oil based drilling rocks cuttings, and all related technologies, devices, processes or techniques and any improvements to any of the foregoing ("GreenTech IP").
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Synertec has undertaken extensive legal, financial, technical and operational due diligence into both GreenTech and its CDP technology since March 2020. The Board of Synertec is satisfied from the due diligence that it has undertaken that the
onlyCompany has conducted appropriate investigations for the licencing of CDP technology for commercialisation. A summary of the background to GreenTech is attached to this release in Appendix B.
Background to CDP and Addressable Market Opportunities
GreenTech's CDP technology enables the treatment of waste hydrocarbon drilling mud and cuttings. The process converts the mud into a non-pollutingby-product material with many potential applications including high strength construction materials such as bricks and road base.
useConversions of drilling mud via the CDP process removes the need to transport waste mud to treatment facilities and/or landfill, whilst additionally reducing the quarrying of raw materials to produce construction products.
The technology has wider applications, with potential use of CDP in mining tailings and sewage sludge to help further reduce the environmental impact of mining, tunnelling and waste treatment processes.
-ENDS-
personalFor more information and all media enquiries, please contact: Mr. David Harris
Executive Director, Corporate Development (& Company Secretary)
Phone: +61 (3) 9274 3000
Email:david.harris@synertec.com.au
This ASX announcement is authorised by the Directors of Synertec Corporation Limited (ASX: SOP).
About Synertec:
Synertec Corporation Ltd (ASX: SOP) is a diversified technology design and development growth company enabling a low carbon future through innovative technology solutions. Commercialising scalable, environmentally friendly and energy efficient technology for global markets in energy, critical infrastructure and advanced manufacturing through innovative partnerships with a portfolio of blue-chip customers, Synertec is proactively participating in the world's transition to a low carbon economy in a practical way for the benefit of future generations.
For
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Appendix A: Detailed summary of key elements of the Licence Agreement
only | ||
The key terms of the new Licence Agreement that was entered into on 23 November 2021 are as follows | ||
Grant of | GreenTech has granted Synertec a perpetual, irrevocable (other than in accordance with the terms of the | |
licence | Licence Agreement), royalty-free and, subject to any specific restrictions or terms set out in the IP Licence | |
Agreement, otherwise unconditional and transferable (where a transfer can only be to a Related Body | ||
Corporate of Synertec) licence (including the right to sub-license) in respect of the GreenTech IP within | ||
Australia, New Zealand, Canada, North America, Central America, South America and any of their related | ||
territories ("Territories"). | ||
The commencement date of the licence under the IP Licence Agreement will be the date of that agreement | ||
("Commencement Date"). | ||
use | Exclusivity | The licence is exclusive within the Territories. However, if: |
(conditional) | - on or before the date which is three years after the Commencement Date ("First Milestone Date"), Synertec | |
has not received an amount of revenue equal to more than $2,000,000 from services or sales associated with | ||
the GreenTech IP within the Territories (or with the consent of GreenTech, from outside the Territories) ("First | ||
Milestone"); or | ||
personal | - on or before the date which is five years after the Commencement Date ("Second Milestone Date"), the | |
licence is still an exclusive licence and SOP has not received an amount of revenue equal to more than | ||
$5,000,000 from services or sales associated with the GreenTech IP within the Territories (or with the consent | ||
of GreenTech, from outside the Territories) ("Second Milestone"), | ||
then GreenTech may convert the licence from an exclusive licence to a non-exclusive licence. | ||
Achievement of the First Milestone and Second Milestone will be determined by Synertec's auditor and, if | ||
applicable, confirmed via an independent accountant. | ||
Licence fees | Upfront licence fee | |
By way of upfront consideration for the new licence, Synertec will extinguish $0.6 million from its existing | ||
secured loan balance with GreenTech ($0.8 million plus interest), and GreenTech will repay the remaining | ||
loan balance before 3 January 2022, provided that GreenTech is not in breach of any of its obligations under | ||
the terms of the new IP Licence Agreement. | ||
Milestone licence fees | ||
To maximise the alignment of interests between GreenTech and Synertec through the upcoming period of | ||
anticipated commercialisation, subject to obtaining all necessary shareholder and regulatory approvals | ||
For | (including from ASX and in the PRC), as additional consideration for the grant of the licence, Synertec will | |
issue the following securities to GreenTech (or its nominee): | ||
- 2.5 million fully paid ordinary shares in SOP if the First Milestone is achieved by the First Milestone Date; | ||
and | ||
- 2.5 million fully paid ordinary shares if the Second Milestone is achieved by the Second Milestone Date. | ||
If a change of control of Synertec occurs or if the milestone fees are unable to be paid by way of issue of | ||
shares in Synertec when payable, the milestone fees will be paid in cash in the amount of $250,000 each. | ||
CDP supply | GreenTech agrees to supply Synertec with any CDP required by Synertec to use the GreenTech IP. The | |
parties will negotiate a more detailed supply agreement in respect of the supply of CDP over the next few | ||
months, however key commercial terms have been agreed. | ||
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Termination
rights onlyuse Working personalcapital target
Licence Agreement approval process in China
For
Synertec may terminate the Licence Agreement if Greentech breaches a material obligation of the IP Licence Agreement and it is not capable of remedy or if capable of remedy is not remedied within 20 business days of the breach occurring. Synertec can also terminate the Licence Agreement if there is an event of insolvency of Greentech.
If Synertec terminates the Licence Agreement Greentech must repay the upfront licence fee to Synertec and to the extent that the milestone licence fees have not already been paid, Greentech will immediately lose its right to obtain any amount of the milestone licence fees.
Greentech may terminate or suspend (in the sole discretion of Greentech) the Licence Agreement if Synertec breaches a material obligation of the IP Licence Agreement and it is not capable of remedy or if capable of remedy is not remedied within 20 business days of the breach occurring. Greentech can also terminate the Licence Agreement if there is an event of insolvency of Synertec.
If Greentech terminates the Licence Agreement where the upfront licence fee has been paid to Greentech, Greentech may retain it and to the extent that either the First Milestone fee or the Second Milestone fee has become due and payable by Synertec to Greentech but has not already been paid, Synertec must immediately pay any fee that is due and payable
Synertec and Greentech can also mutually agree to terminate the Licence Agreement.
Synertec must use its reasonable endeavours to exploit the GreenTech IP within the Territories to meet or exceed the First Milestone and the Second Milestone by the First Milestone Date and the Second Milestone Date respectively, including by allocating a total working capital of approximately $1,000,000 from the Commencement Date until the Second Milestone Date.
For the avoidance of doubt, if Synertec fails to allocate $1,000,000 from the Commencement Date until the Second Milestone Date in working capital, Synertec will not be in breach of the IP Licence Agreement.
The Licence Agreement requires approvals in China including:
-
GreenTech must complete the registration of the signed IP License Agreement with the Ministry of
Commerce of the PRC ("MOFCOM") or its local counterpart following its execution. - GreenTech holding of shares in SOP, assuming the relevant milestones are met are subject to:
-
GreenTech completing the approval and record-filing formalities in respect of the outbound investment project with the National Development and Reform Commission of the PRC
("NDRC") or its local counterpart. - GreenTech completing the approval and record-filing formalities in respect of the outbound investment with the MOFCOM or its local counterpart.
- GreenTech completing the foreign exchange registration in respect of the outbound investment with the local bank designated by the State Administration of Foreign Exchange of the PRC
("SAFE").
-
GreenTech completing the approval and record-filing formalities in respect of the outbound investment project with the National Development and Reform Commission of the PRC
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Synertec Corporation Ltd. published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 22:29:09 UTC.