EXHIBIT 10.3
WORLD-WIDE EXCLUSIVE
ASSIGNMENT, LICENSE AND ROYALTY AGREEMENT
THIS World-Wide Exclusive Assignment, License and Royalty Agreement
(the "Agreement") is made effective this 5th day of July, 2000 by, between and
among Hadronic Press, Inc., a Florida Corporation with principal offices at
35246 U. S. 00 Xxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxx 00000-0000 ("UPI") and
EarthFirst Technology, Inc., with principal offices at 0000 Xxxxx Xxxxx Xxxx,
Xxxxx 000, Xxxxx, Xxxxxxx 00000 ("EFT"). (EFT and HPI, collectively the
"Parties")
BE IT KNOWN
For a period commencing approximately 1978 through the date given
above, Xx. Xxxxxxx Xxxxx Xxxxxxxx ("Xx. Xxxxxxxx") has developed a technology
embodied in a number of scientific journals, reports and periodicals generally
under the heading of Hadronic Mechanics or similar identifiers. Over the course
of time, Xx. Xxxxxxxx granted all rights to the results of his research to HPI
in exchange for, among other things, partial financial support for a period from
approximately 1984 through January 1998. The Xxxxxxxx-HPI Agreement is annexed
hereto and made a part hereof as Exhibit 1.
Xxxxxx Xxxxxxxx, 0000, XXX (formerly Xxxxx Technology Licensing, Inc.)
was formed as a Florida corporation to, among other things, develop various
technologies in particular, a nonfossil, non-polluting alternative fuel. During
December, 1997, Xx. Xxxxxxxx and EFT memorialized their association in that
Scientific Consultant Agreement under which Xx. Xxxxxxxx would provide
scientific consultation relating to any EFT technology and EFT would provide the
financing and resources necessary to mature Xx. Xxxxxxxx'x theories to practical
application.
At January, 0000, XXX engaged Xx. Xxxxxxxx as the Company's Scientific
Advisor. At January, 1998, Xx. Xxxxxxxx was predominately engaged in the
theoretical practice of his research. At that time Xx. Xxxxxxxx sought to
acquire the funds and expertise to aid in developing equipment to substantiate
his Hadronic Mechanics theory as it relates to the production of a non-fossil,
non-polluting alternative fuel. During January, 1998 through June, 0000, XXX
expended approximately $500,000 and employed engineers, machinists and
significant managerial support such that on June 29, 1998, Xx. Xxxxxxxx
submitted a US Patent application for ELECTROMAGNETION, file number 09/106,170.
During June, 1998, EFT received the worldwide exclusive rights to
ELECTROMAGNETION by virtue of the ELECTROMAGNETION License Agreement, Between
June and August, 1998, EFT expended approximately $500,000 and employed
engineers, machinists and significant managerial support such that on August 13,
1998, Xx. Xxxxxxxx submitted a US Patent application for New CHEMICAL SPECIES
FOR GASES AND THEIR NEW TECHNOLOGIES, file number 09/133,348.
From September, 1998 through September, 0000, XXX expended in excess of
$1,500,000 and employed engineers, machinists outside consultants and
significant managerial support such that on September 11, 1999, Xx. Xxxxxxxx
submitted two US
Patent applications: MAGNEGAS, A NOVEL, HIGHLY EFFICIENT, NONPOLLUTANT, OXYGEN
RICH AND COST COMPETITIVE COMBUSTIBLE GAS AND ASSOCIATED METHOD file number
09/372,278 and DURABLE AND EFFICIENT EQUIPMENT FOR THE PRODUCTION OF A
COMBUSTIBLE AND NON-POLLUTANT GAS FROM UNDERWATER ARCS AND METHOD file number
09/372,277.
On February 3, 2000, HPI re-assigned its world-wide rights to the above
cited patent applications to EFT such assignments are annexed hereto as Exhibit
2. During the course of 1999, Xx. Xxxxxxxx and EFT developed initial commercial
uses based on the aforesaid patent applications for the production of a cutting
gas, irrigation water, and the destruction of certain liquid contaminants.
HPI and EFT now desire to amend their agreements so that all rights to
the aforesaid patent applications as well as all derivatives, improvements or
associated patents or inventions thereof become housed in one corporate entity.
Further, the Parties hereon desire to construct an operating means to
efficiently commercialize current and future applications which are based in
whole or in part on the foregoing intellectual property as well as all
derivatives, improvements or associated patents or inventions thereof.
NOW THEREFORE
In consideration of the mutual promises and performances set forth
herein and ten ($10.00) dollars and other good and valuable consideration, the
Parties hereto unequivocally agree to the following terms and conditions.
ESTABLISHMENT OF USMAGNEGAS, INC.
1. FORMATION.
a. As a part of this Agreement, HPI shall remit to EFT
80% of the capital stock in USMAGNEGAS, Inc., a Florida corporation formed June
15, 2000. Immediately following the execution of this Agreement, EFT shall
thereafter amend the Articles of Incorporation and By-Laws of USMAGNEGAS in the
form annexed hereto as Exhibit 3.
b. The Parties agree that, at no time, shall any party
take any action without the consent of EFT that would preclude or prevent
USMAGNEGAS from being considered a subsidiary of EFT which can be consolidated
with EFT for tax reporting purposes.
c. The Parties agree that, at no time, shall there be
more than three Directors of USMAGNEGAS. EFT shall at all times nominate two
Members and HPI shall at all times nominate one Member to serve on the
USMAGNEGAS Board of Directors. Any additional Directors created by amendment to
this Agreement may only be done such that EFT shall at all times nominate 66%
and HPI shall nominate 33% of the Members of the USMAGNEGAS Board of Directors.
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d. The Parties agree that should the then USMAGNEGAS
Board of Directors approve any funding program which includes the sale of
USMAGNEGAS equity in any form, such equity shall be deducted from EFT and not
from HPI at all. HPI may not sell any equity for a period of at least three
years from the date hereof unless EFT grants advance approval in writing.
e. Simultaneous with the execution of this Agreement,
Xxxx Xxxxxxx and Xxxx Xxxxx shall accept their nomination as Directors of
USMAGNEGAS on behalf of EFT and Xx. Xxxxxxxx shall accept his nomination as a
Director of USMAGNEGAS on behalf of HPI.
f. At the initial Meeting of Directors following the
execution of this Agreement, the USMAGNEGAS Board of Directors shall appoint Xx.
Xxxx Xxxxx to serve as President and Chief Executive Officer of USMAGNEGAS. No
other current employees or officers of EFT shall be employed by USMAGNEGAS for
any purpose whatever without the unanimous written consent of USMAGNEGAS Board
of Directors.
g. On or before three months following the effective
date of this Agreement, EFT shall cause the formation of EuroMagneGas, Ltd and
AsiaMagneGas, Ltd. in essentially the same manner as USMAGNEGAS, particularly
items 1.a through 1.c above, and according to that Letter of Intent for
EuroMagneGas and AsiaMagneGas attached hereon as Exhibit 4.
h. As a point in time when EuroMagneGas is formed and
without further action by either party, the Technology Exclusive License and
Royalty Agreement annexed hereto as Exhibit 5, shall be rendered automatically
non-exclusive as it pertains to the territory encompassing EuroMagneGas.
Thereafter, HPI shall enter a separate Technology License and Royalty Agreement
which shall be exclusively between HP[ and the then EuroMagneGas corporation.
The terms and conditions of such license shall be identical in all respects to
the Technology Exclusive License and Royalty Agreement annexed hereto as Exhibit
5 except the section marked "item 6 - Royalties" shall be amended as follows:
"6. ROYALTIES
a. The Royalty Rate for Licensed
Product, Licensed Services and Licensed Systems is three
percent (3%) of the gross proceeds of all that EuroMagneGas
receives in money or other things of value for leasing,
servicing, selling or otherwise commercializing the same, said
royalty to be payable on a quarterly calendar basis. The
advance Royalty schedule however, shall commence no sooner
than 24 months after the formation of EuroMagneGas according
to the following schedule:
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(i) During the twelve months
following the 24 month period of the EuroMagneGas License
Agreement, EuroMagneGas shall pay $3,333 per month;
(ii) During the second twelve
months following the 24 month period of the EuroMagneGas
License Agreement, EuroMagneGas shall pay $6,667 per month;
(iii) During the third twelve
months following the 24 month period of the EuroMagneGas
License Agreement, EuroMagneGas shall pay HPI $ 1 0,000 per
month;
(iv) Advance Royalties set
forth in item 6.a(i)-(iii) are recoverable by EuroMagneGas by
being creditable against whatever Royalty may become during
pursuant to any license agreement".
No other portion of the EuroMagneGas license shall be any different
than that as specified in Exhibit 5 hereto.
i. As a point in time when AsiaMagneGas is formed and
without further action by either party, the Technology Exclusive License and
Royalty Agreement annexed hereto as Exhibit 5, shall be rendered automatically
non-exclusive as it pertains to the territory encompassing AsiaMagneGas.
Thereafter, HPI shall enter a separate Technology License and Royalty Agreement
which shall be exclusively between HPI and the then AsiaMagneGas corporation.
The terms and conditions of such license shall be identical in all respects to
the Technology Exclusive License and Royalty Agreement annexed hereto as Exhibit
5 except the section marked "item 6 - Royalties" shall be amended as follows:
"6. ROYALTIES
a. The Royalty Rate for Licensed
Product, Licensed Services and Licensed Systems is three
percent (3%) of the gross proceeds of all that AsiaMagneGas
receives in money or other things of value for leasing,
servicing, selling or otherwise commercializing the same, said
royalty to be payable on a quarterly calendar basis. The
advance Royalty schedule however, shall commence no sooner
than 24 months after the formation of AsiaMagneGas according
to the following schedule:
(i) During the twelve months
following the 24 month period of the AsiaMagneGas License
Agreement, AsiaMagneGas shall pay $3,333 per month;
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(ii) During the second twelve
months following the 24 month period of the AsiaMagneGas
License Agreement, AsiaMagneGas shall pay $6,667 per month;
(iii) During, the third twelve
months following the 24 month period of the AsiaMagneGas
License Agreement, AsiaMagneGas shall pay HPI $10,000 per
month;
(iv) Advance Royalties set
forth in item 6.a(i)-(iii) are recoverable by AsiaMagneGas by
being creditable against whatever Royalty may become during
pursuant to any license agreement".
No other portion of the AsiaMagneGas license shall be any different
than that as specified in Exhibit 5 hereto.
DEFINING THE TECHNOLOGY AND PRE-AGREEMENT ASSIGNMENT THEREOF
2. TECHNOLOGY. At present, the Technology is defined and embodied
in five US Patents Pending as well as future rights to further improvements or
new inventions based on the existing US Patents Pending as well as a variety of
equipment, automobiles, prototypes and other things of value accumulated since
January 1998 as more fully described in items l(a) - l(f) below.
a. ELECTROMAGNETION - Serial Number 09/106,170 filed
June 29, 1998 - prior to this Agreement the property of EFT by virtue of the
Electromagnetion License Agreement;
b. NEW CHEMICALS AND THEIR NEW TECHNOLOGIES - Serial
Number 09/133,348 filed August 13, 1998 - prior to this Agreement, the property
of EFT by virtue of the assignment from HPI and Xx. Xxxxxxxx to EFT as recorded
by the US Patent Office June 6, 2000;
c. DURABLE AND EFFICIENT EQUIPMENT FOR THE PRODUCTION OF
A COMBUSTIBLE AND NON-POLLUTANT GAS FROM UNDERWATER ARCS AND METHODS THEREOF -
Serial Number 09/372,277 filed August 11, 1999 - prior to this Agreement, the
property of EFT by virtue of the assignment from HPI and Xx. Xxxxxxxx to EFT as
recorded by the US Patent Office June 6, 2000.
d. MAGNEGAS, A NONPOLLUTANT, OXYGEN RICH AND COST
COMPETITIVE, COMBUSTIBLE GAS, AND ASSOCIATED METHODS - Serial Number 09/372,278
filed August 11, 1998 - prior to this Agreement, the property of EFT by virtue
of the Xxxxxxxx Technology Exclusive Assignment and Royalty Agreement and as an
improvement to
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those inventions contained in the assignment from HPI and Xx. Xxxxxxxx to EFT
recorded by the US Patent Office June 6,2000
e. OVER-UNITY PRODUCTION OF CLEAN NEW ENERGIES BY
RECYCLING CONTAMINATED LIQUID WASTE - Serial Number 09/586,926 filed June 5,
2000 - prior to this Agreement, the property of EFT by virtue of the Xxxxxxxx
Technology Exclusive Assignment and Royalty Agreement and as an improvement to
those inventions contained in the assignment from HPI and Xx. Xxxxxxxx to EFT
recorded by the US Patent Office June 6, 2000.
f. All non-US Patents or patents-pending related to,
associated with or derived from the aforesaid US patents-pending.
g. All equipment, automobiles, prototypes, drawings,
designs and all other things of value related to the Technology which is owned
by EFT and is considered an integral part of the Technology.
h. In addition to the foregoing, the Technology shall
further include any and all things of value relating to the aforesaid patent
applications to include all applications, derivatives, improvements or
associated patents or inventions thereof.
3. For the purposes of this Agreement, the term "Technology"
shall refer to items 2(a) - 2(g) above.
REASSIGNMENT OF THE TECHNOLOGY
4. Immediately prior to this Agreement, EFT is the assignee of
the current Technology. At execution of this Agreement, EFT shall assign patent
applications 09/133,348, 09/372,277 and 09/372,278 to HPI.
5. Immediately prior to this Agreement, HPI is the assignee of
certain future Technology developments. As a part of this Agreement, HPI shall
license their interests in the Technology exclusively to USMAGNEGAS pursuant to
that certain License and Royalty Agreement annexed hereto as Exhibit 5.
6. At execution of this Agreement, EFT shall assign to HPI the
following internet domain "xxxxxxxx.xxx", "xxxxxxxxxxxxx.xxx",
'xxxxxxxxxxx.xxx", "xxxxxxxxxxxxxxx.xxx" and "xxxxxxxxxx.xxx".
LICENSING TO USMAGNEGAS, INC. AND ROYALTIES TO HPI
7. HPI shall License their interests in the Technology
exclusively to USMAGNEGAS, Inc. for such compensation and according to the terms
of that certain Technology Licensing and Royalty Agreement annexed hereto as
Exhibit 5.
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8. RESPONSIBILITIES OF THE PARTIES
a. EFT shall:
(i) Strictly abide by all the terms and
conditions set forth herein and in any associated agreement or understanding;
(ii) Provide financing, facilities and resources
to facilitate that certain Research and Development program annexed hereto as
Exhibit 6. Any financing provided pursuant to this item 8.a(ii) shall be
considered as partial payment for the rights granted EFT hereunder. Financing
shall be such that on the 15th of each month, USMAGNEGAS shall identify in
writing all cash requirements for the coming month. EFT shall thereafter deposit
such sums directly to USMAGNEGAS prior to the 30 of each month such that on the
first day of each month during the course of the Research and Development
program annexed hereto as Exhibit 6, USMAGNEGAS shall have on deposit all cash
requirements stipulated in writing according to the aforesaid formulae.
(iii) Provide USMAGNEGAS sufficient funds in
addition to those stipulated in items 8.a(ii) above so that all advance
Royalties are paid in strict accordance with the schedule included as a part of
that certain Licensing and Royalty Agreement annexed hereto as Exhibit 5.
(iv) Issue to HPI or their assigns, 1,500,000 EFT
par value $.001 unregistered common shares which thereafter would be eligible
for resale pursuant to the terms and conditions of Securities and Exchange
Commission Rule 144. The EFT common shares issued pursuant to this item 8.a(iv)
shall be issued as consideration for this Agreement and the procurement of
future patents by HPI which patents shall all be immediately a part of this
Agreement as if they had been FILED and issued as of this date and were made a
part hereof. EFT shall cooperate with HPI including executing any appropriate
amendment hereto as recommended to provide the most favorable tax treatment of
this transaction.
(v) Provide all expenses incurred in the
preparation of this Agreement and the formation of Euro- and AsiaMagneGas.
(vi) USM shall not enter any debt financing.
b. HPI shall
(i) Strictly abide by all the terms and
conditions set forth herein and in any associated agreement or understanding;
(ii) Take all steps necessary and provide all
financing required to complete the various patent applications which constitute
items 2(a) - 2(e) as indicated in writing are essential by competent patent
counsel. Such patent counsel may be selected solely by HPI. On the 15th of each
month, as a part of stipulating
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finance requirements stated in item 8.a(ii), HPI shall provide a report of such
patent prosecution activities including at a minimum, the status of each patent,
all patents anticipated in the next twelve months and a description of the funds
expensed thereto.
(iii) Take all steps necessary and provide all
financing required to complete the worldwide patent applications as indicated in
writing are essential by competent patent counsel. Such patent counsel may be
selected solely by HPI. On the 15th of each month, as a part of stipulating
finance requirements stated in item 8.a(ii), HPI shall provide a report of such
patent prosecution activities including at a minimum, the status of each patent,
all patents anticipated in the next twelve months and a description of the funds
expensed thereto.
9. USM shall engage the law firm of Johnson, Blakely, Pope,
Bokor, Xxxxxx & Xxxxx, P.A., attorney Revelini as corporate attorney.
TERMINATION OF THIS AGREEMENT
10. TERMINATION. The Parties hereon acknowledge that major
portions of this Agreement will compel either or both Parties to take actions
which, in the future, would be difficult to terminate. The reassignment of
intellectual property from EFT to HPI, the issuance of common shares from EFT to
HPI and the payment of patent prosecution fees by HPI are items which,
regardless of the termination of this Agreement, would irrevocably alter the
position of both Parties. Those factors which could give rise to the termination
of the license rights granted USMAGNEGAS by HPI are set forth in the annexed
License and Royalty Agreement. This Agreement therefore may only be terminated:
a. Becomes insolvent which insolvency is determined by
Certified Independent Public Accountants acceptable to both HPI and EFT;
b. Declares bankruptcy;
c. Fails to abide by any terms of this Agreement and
such default is not cured within 45 days following notice of such default.
Should either Party determine a default has occurred, notice shall be sent in
the manner described in item 19 hereon. Following the delivery of a default
notice, the receiving Party shall immediately set forth in writing (i) their
agreement/disagreement to such default and, if in agreement, specific steps to
cure such default within a 45 day period.
d. Should the forty-five day period following proper
deliver of a default notice pass without corrective action, then this Agreement
shall be null and void and there shall be no further obligation of either party.
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MISCELLANEOUS
11. CONFIDENTIALITY. The parties acknowledge their substantial
financial and developmental contributions, efforts and commitments to the
Technology. As such, the Parties and their Officers shall execute
Confidentiality and Non-Disclosure Agreements in the form annexed hereto as
Exhibit 7 and further agree and acknowledge that all key employees of EFT, HPI
and USMAGNEGAS and any potential business partners, licensees or other similar
persons or entities shall execute a confidentiality and non-disclosure agreement
in similar form.
12. WAIVERS. No waiver of any default shall be implied from any
delay or omission by the parties to take action on account of such default, and
no express waiver shall affect any default other than the default specified in
the waiver and it shall be operative only for the time and to the extent therein
stated.
13. BENEFIT. This Agreement is made and entered into for the sole
protection and benefit of EFT and HPI, their successors and assigns and no other
person or persons have any right to action hereon or rights as a third party
beneficiary as a result of the execution of this Agreement.
14. ASSIGNMENT. The rights and obligations of either Party hereto
are non-assignable.
15. TERMS. Whenever the context and construction so require, all
words used in the singular number herein shall be deemed to have been used in
the plural, and vice versa, and the masculine gender shall include the feminine
and neuter and the neuter shall include the masculine and feminine. This
Agreement is the product of intensive negotiations between the parties, and as
such, the identity of the drafter shall not be relevant in construction of this
Agreement.
16. GOVERNING LAW AND JURISDICTION. This Agreement and all matters
relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State of Florida. The Parties hereby submit to
the jurisdiction of the state and federal courts located in Pinellas County,
Florida.
17. SAVINGS CLAUSE. Invalidation of any one or more of the
provisions of this Agreement shall in no way affect any of the other provisions
hereof, which shall remain in full force and effect.
18. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument, and in making proof
of this Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
19. CAPTIONS. The captions herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Agreement nor the intent of any provision hereof.
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20. ENTIRE UNDERSTANDING. This Agreement constitutes the entire
understanding between the Parties and all prior or contemporaneous oral or
written agreements, understandings, representations and statements are merged
into this Agreement.
21. NOTICES. Any and all notices, designations, consents, offers,
acceptances or any other communication provided for herein shall be given in
writing by certified mail or by reputable overnight courier service which shall
be addressed as follows:
IF TO EARTHFIRST TECHNOLOGY WITH A COPY TO
Mr. Xxxx Xxxxxxx Xx. Xxxxxxx X. Xxxxxxx, III, Esq.
President and Chief Executive Officer 000 X. Xxxxxxx Xxxxxx
EarthFirst Technology Xxxxx, Xxxxxxx 00000
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
IF TO HADRONIC PRESS, INC. WITH A COPY TO
Xx. Xxxxx Xxxxxxxx Xxxxx and Associates
President and Chief Executive Officer Xxxxx Revelini, Esq.
Hadronic Press, Inc. Mangrove Bay
00000 XX Xxxxxxx 00 Xxxxx, #000 00000 Xxxxxxx 00 Xxxxx
Xxxx Xxxxxx, Xxxxxxx 00000-0000 Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
22. SURVIVAL. The representations and warranties and provisions of
this Agreement shall survive any closing hereunder.
23. ATTORNEY'S FEES. In the event that any party is required to
engage the services of legal counsel to enforce its rights under this Agreement,
the prevailing party shall be entitled to reasonable attorneys' fees and costs
from the other party, which in the event of litigation may include fees and
costs incurred at trial, on appeal and incident to any bankruptcy proceeding.
24. WAIVER OF JURY TRIAL. BY ACCEPTANCE HEREOF, THE PARTIES AGREE
THAT NONE OF THEM SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDINGS,
COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY INSTRUMENT EVIDENCING OR RELATING TO THIS AGREEMENT. NONE
OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL
HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN
WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
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NEGOTIATED BY THE PARTIES, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS.
25. CLOSING. The Closing shall take place on or before July -,
2000 at 1:00 P.M. at the offices of EFT. All funds, documents and exhibits
called for herein shall be delivered at or prior to Closing.
IN WITNESS WHEREOF, EFT and HPI have executed this Agreement as of the
date first given above.
For Hadronic Press, Inc. For EarthFirst Technology
/s/ XXXXX XXXXXXXX /s/ XXXX XXXXX
------------------------ -----------------------------------
Xxxxx Xxxxxxxx, President Xxxx Xxxxx, Executive Vice President
Ratified by its President
and Chief Executive Officer
/s/ XXXX XXXXXXX
-----------------------------------
Xxxx Xxxxxxx
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