Utah Jojoba I Research, William G. Kellen, Tax Matters Partner - Page 19

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          development period.  If any income were generated during the R&D             
          period, it would "be divided eighty-five percent (85%) to the                
          Partnership * * * [Utah I] and fifteen percent (15%) to the                  
          Contractor * * * [U.S. Agri]."                                               
               As part of the R&D agreement, Utah I also had the option of             
          requiring U.S. Agri to enter into a license agreement that would             
          include the commercial exploitation of the jojoba plantation                 
          assigned to it.  The option, which referred to U.S. Agri as the              
          contractor and Utah I as the partnership, was described as                   
          follows:                                                                     
               At such time as the Jojoba plantation on which the                      
               research and development is being conducted has reached                 
               a stage of commercial development, the Contractor * * *                 
               shall give the Partnership a written report to that                     
               effect and the Partnership will have the option to                      
               require the Contractor to enter into a License                          
               Agreement for the purpose of commercially exploiting                    
               the technology developed pursuant to this Agreement.  *                 
               * *  This option shall be solely at the discretion of                   
               the Partnership.                                                        
          Execution of the license agreement by Utah I, pursuant to this               
          option, would result in the automatic termination of the R&D                 
          agreement between Utah I and U.S. Agri according to the terms of             
          the R&D agreement.                                                           
               The R&D agreement gave Utah I the ownership of "any                     
          inventions, discoveries, improvements, devices, designs,                     
          apparatus, practices, processes, methods or products, * * *                  
          whether patentable or not, made, developed, perfected, devised,              
          conceived" in the course of U.S. Agri's work for Utah I.  U.S.               




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