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EXHIBIT 10.4
THIS SUBLICENSE, made this 15th day of February, 1996, by and between INTEGRAL
CONCEPTS, INC., a West Virginia corporation (hereinafter referred to as "ICI"),
Sublicensor; and Integral Technologies, Inc., a Nevada corporation (hereinafter
referred to as "ITI"), Sublicensee.
WITNESSETH
WHEREAS, ICI has a License Agreement from West Virginia University
Research Corporation of Morgantown, West Virginia (hereinafter referred to as
"WVURC"), for certain technologies related to the design, construction and
operation of a Plasma Ignition System,. U.S. Patent No. 5,361,737 and defined
herein to be embraced within the expression "The Technology"; and
WHEREAS, ITI understands and recognizes the terms and conditions of the
License Agreement between WVURC and ICI for The Technology and wishes to
incorporate said terms and conditions into this Sublicense, a copy of which is
attached hereto as Exhibit A; and, interest in and to all worldwide applications
and result in procurement interest in The Technology, subject to the terms and
conditions hereof;
NOW, THEREFORE, in consideration of the payment of moneys as
hereinafter required, and of the mutual exchange of promises recited herein, the
parties hereto intending to be legally bound hereby agree as follows:
I. DEFINITIONS
1.1 As used in this Sublicense, the following terms shall have the
following meanings:
(a) "The Technology" shall mean that process and equipment
related to the design, construction and operation of the Plasma Ignition System
as set forth and identified in Exhibit B and its attachments and amendments, if
any, all of which are, or if attachments of amendments shall be, attached hereto
and made a part hereof. The Technology specifically includes the, regardless of
the date of initiation or completion, modifications or enhancements to such
process or equipment developed or performed independently by ICI, its agents,
servants, employees, contractors, assigns or successors, which are subject to
patent or copyright protection in their own right, whether so protected or not.
The Technology also include modifications or enhancements to such process or
equipment developed or performed independently by ITI, its agents, servants,
employees, contractors, assigns or successors, which are subject to patent or
copyright protection in their own right, whether so protected or not.
(b) "Net Revenues" means any and all money or the monetary
value of other consideration received by ITI form the sale, leasing or
sublicensing of The Technology pursuant to which third parties are permitted to
use or market The Technology, less customer discounts and returns and less sales
commissions and royalty payments (other than royalty payments due under Article
III hereof) and less actual operational expenses incurred.
(c) "Gross Revenues" means any and all money or the monetary
value of other consideration received by ITI from the sale, leasing or
sublicensing of The Technology pursuant to which third parties are permitted to
use or market The Technology.
(d) "Royalty Statements" means a written statement made within
thirty (30) days of the end of each calendar quarter certified by a duly
authorized officer of ITI and setting forth a full enumeration of:
(i) model numbers, type designations, and trade or brand
names of all Items sold by ITI that incorporate The
Technology;
(ii) the total number of Items of each model or type
of equipment produced and the total number sold
during the preceding quarter;
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(iii) the Selling Price for each Item;
(iv) the Discounts and Shipping Charges for each Item;
(v) the Net Revenue from each Item; and
(vi) the amount of the royalties payable thereon as
provided in this Sublicense.
II. SUBLICENSE
2.1 ICI hereby grants to ITI the exclusive worldwide right and
sublicense (i) to manufacture, sell copies of, sublicense and distribute any and
all worldwide applications and resulting procurement interests in The
Technology; and (ii) to sublicense others to manufacture, sell copies of,
license and distribute any and all applications and resulting procurement
interests in The Technology.
2.2 ITI will assign any and all developments and enhancements made by
ITI, whether before or after execution of this Sublicense, to WVURC and WVURC
will grant the license to such developments and enhancements to ICI pursuant to
the conditions of the WVURC-ICI License, which in turn will grant back to ITI
the worldwide, exclusive sublicense, to use and license such developments and
enhancements pursuant to the terms of this Sublicense. The royalties to be paid
to WVURC provided in this Sublicense will also apply to such developments and
enhancements.
2.3 ICI reserves the nonterminable, royalty-free right to manufacture,
use and copy The Technology for research, development and noncommercial ICI
purposes.
2.4 WVURC reserves the nonterminable, royalty-free right to
manufacture, use and copy The Technology for research, development and
noncommercial WVURC purposes.
III. PAYMENTS
3.1 ITI shall pay to ICI as a nonrefundable, noncreditable sublicense
fee the sum of Eight Thousand Two Hundred Fifty Dollars ($8,250.00) due upon the
execution of this Sublicense.
3.2 ITI shall assume the responsibility for payments from ICI to WVURC
pursuant to ** 3.2 of the License Agreement between WVURC and ICI and pay to
WVURC as a minimum annual royalty on December 31, 1996 and each December 31
thereafter during the term of this Sublicense, or any renewals thereof, the sum
of Three Thousand Dollars ($3,000.00).
3.3 ITI shall pay to WVURC pursuant to ** 3.3 of the License Agreement
between WVURC and ICI as an earned royalty on sales, lease or sublicenses by ITI
as to The Technology a sum equal to ten percent (10%) of the Net Revenues as
above defined, less a credit for annual royalty. In any year which the earned
royalties exceed the minimum royalty, no additional payment of the annual
minimum shall be required.
3.4 In addition ITI shall pay to ICI an earned royalty on all sales,
leases or sublicenses by ITI as to The Technology a sum equal to one percent
(1%) of the Gross Revenues as above defined.
3.5 Royalties as set forth herein will be paid by ITI to ICI and WVURC
with a Royalty Statement within thirty (30) days of the end of each calendar
quarter.
3.6 ITI agrees that it will keep and maintain financial records showing
all sales, leases and subleases for a period of at least five (5) years. ITI
agrees to maintain its business transaction records, e.g., invoices, cost
documents, etc. needed to determine royalties as provided herein, for a period
of two (2) years or as long as required by applicable tax laws, whichever is
longer. All such records will be maintained in sufficient detail to enable
authorized representatives and/or certified public accountants of WVURC and ICI
to determine royalties payable to WVURC and ICI under this Sublicense. ITI will
permit WVURC and ICI such investigation of its operations and records as may be
necessary to verify ITI's compliance with
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this Sublicense and the accuracy of its records and of the Royalty Statements to
be furnished hereunder.
IV. MARKETING
4.1 It is understood by the parties that further work may be required
to complete The Technology and that ITI will, at its own expense, seek to effect
such completion using efforts and resources as it, in sole discretion,
determines appropriate under the then existing circumstances. The parties agree
that WVURC shall participate as an owner in any subsequent development work and
will own or have assigned all intellectual property resulting form this license
under the terms set forth in ** 2.2 herein.
4.2 ITI shall have the right to prepare, copy, edit, publish, sell,
distribute and license all government and military applications and resulting
procurement interests in The Technology throughout the world in any variety of
forms or applications. ITI shall provide WVURC and ICI with a written
comprehensive report providing details of the status of the work under this
Sublicense, including, but not limited to, documentation, support, packaging,
advertising and promotion concepts and designs related to The Technology and as
to sublicenses. Such written comprehensive reports are to be provided to WVURC
and ICI on an annual basis no later than thirty (30) days after the year end and
at such other times as WVURC and ICI may reasonably request. ITI agrees to
provide WVURC and ICI with at least two (2) copies of all material concerning
The Technology it provides to its shareholders.
V. CONFIDENTIALITY, INFRINGEMENT AND PROTECTION
5.1 ITI acknowledges that ICI has a proprietary interest in the
Technology and agrees to use all reasonable efforts to protect any and all trade
secrets disclosed to ITI from unauthorized disclosure, use or release,
including, without limitation, (i) providing reasonable physical security at
ITI's facilities and (ii) taking the same care to prevent unauthorized
disclosure that ITI takes to protect information, data or other tangible and
intangible property of its own that its regards as proprietary or confidential.
ITI agrees that it will not sell, disclose or otherwise make The Technology
available to others except: (i) as authorized by the license rights granted to
ITI under this Sublicense and (ii) to its employees, agents, contractors,
consultants or others with a need to have access to The Technology to reasonably
enable ITI to fully exercise its rights under this Sublicense. ITI will neither
knowingly nor negligently allow its employees, agents, consultants or
independent contractors to sell or disclose the trade secrets disclosed to ITI
except: (i) that ITI may provide the trade secrets of The Technology to third
parties in connection with exercising ITI's sublicense rights hereunder,
provided each such party executes a written agreement binding it to
confidentiality obligations similar to ITI's obligations under this Sublicense
and (ii) as otherwise permitted by this Sublicense. In execution of its
confidentiality obligation, ITI will indemnify and hold ICI harmless from any
and all damages caused by a breach of confidentiality by ITI or any of ITI's
employees, agents, contractors, officers or directors. Because damages may be
difficult to assess, ITI agrees to pay as liquidated damages (and not as a
penalty) the sum of $50,000.00 for each disclosure in breach of this
confidentiality obligation.
5.2 ITI will use reasonable efforts to enforce any patent or copyright,
if any is issued for The Technology, and to protect its trade secrets, but ITI
will be the sole judge in its absolute discretion of what efforts are reasonable
and appropriate. In this regard, ITI will exercise its best efforts to keep ICI
fully advised of any and all commercial threats to The Technology. If ITI is
unwilling or unable to protect The Technology, ICI may do so at its own expense
and cost.
5.3 During the term of the Sublicense, ITI will not directly or
indirectly contest the validity or ICI's ownership of any trade secret, know
how, copyright or any patent issued for The Technology to ICI or to WVURC.
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5.4 The obligations of this Section V shall survive the expiration or
termination of this Sublicense.
VI. PROPRIETARY RIGHTS
6.1 WVURC, ICI, and ITI acknowledge that The Technology is a character
which is or may be protectable by patent, trade secret and/or copyright under
the laws of the United States and other countries. WVURC and ICI have, at their
own expense, made applications to obtain patent and/or copyright or other
statutory protection of the original Technology described in Exhibit B.
It is explicitly recognized that developments and enhancements of The
Technology will be incorporated by amendment or attachment to Exhibit B of this
Sublicense pursuant to the procedure set forth in Article 2.2 of this
Sublicense. Neither WVURC nor ICI will be responsible for obtaining patent
and/or copyrights or other statutory protection shall name WVURC as the owner of
each so protected Technology, which will then be licensed through ICI to ITI
pursuant to the terms of the License Agreement between WVURC and ICI and this
Sublicense.
ITI shall treat documentation regarding The Technology, including
listings of source code for The Technology but not including instructions,
manuals or other elements of any publicly marketed material from The Technology,
as proprietary, confidential information. ITI shall use reasonable efforts to
obtain and maintain proprietary protection for The Technology consistent with
ITI's ability to effectively market The Technology in each country in which The
Technology is distributed. ICI agrees to cooperate with ITI, at ITI expense, and
where necessary ITI agrees to obtain patent, copyright or other statutory
protection for The Technology in each country in which the same are sold,
distributed or sublicensed; and ICI hereby authorizes ITI to execute and
prosecute in WVURC's name as authors or inventors an application for patent,
copyright or similar protection of The Technology; and WVURC and ICI shall
execute such other documents of registration and recordation as may be necessary
to perfect in ITI, or protect, the exclusive rights granted ITI hereunder in
each country in which such items are sold or distributed.
6.2 Any trademark used by ITI to identify The Technology shall be owned
by WVURC, ICI, and ITI to the same extent and in the same proportions as the
underlying technology.
6.3 ITI may identify WVURC and ICI as owners or participants in The
Technology and its development, provided that such use of the WVURC and ICI
identification is an accurate statement of WVURC's and ICI's role and notice
thereof has been given to WVURC and ICI at the address indicated herein not less
than thirty (30) days prior to the first such identification.
VII. TERM, TERMINATION AND CONVERSION
7.1 The term of this Sublicense shall commence on the date first set
forth above and shall continue until December 31, 1996, unless earlier
terminated as provided in this Sublicense or by the terms of the license by and
between ICI and WVURC.
7.2 This Sublicense shall bee renewed for one year periods after
December 31, 1996, so long as payments to ICI and WVURC equal or exceed the
minimum royalty payment specified in Articles 3.2, 3.3, 3.4 and those conditions
of ICI's license as renewed by its licensors are satisfied.
7.3 In the event of the bankruptcy of either party or a breach of a
material provision hereof, which breach is not cured within sixty (60) days
after written notice thereof by the nonbreaching party, then said party may,
effective sixty (60) days after written notice thereof to the other, terminate
this Sublicense, and the rights granted hereunder shall thereupon revert to the
appropriate party as provided in Section 7.5 hereof. In addition to or in lieu
of their rights to
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terminate this Sublicense upon material breach, the nonbreaching party shall
have the right to pursue any remedies available to them under the law.
7.4 Waiver of a particular instance of a breach shall not preclude a
party from objecting to future breaches of the same or any other type.
7.5 Upon any termination of this Sublicense: (1) all rights, title and
interest of ITI in and to The Technology as conveyed hereby, including, but not
limited to, design drawings and production materials relating thereto in ITI's
possession will terminate and revert to ICI; (2) all rights and sublicense
granted by ITI to third parties shall continue in full force an effect, and
monies due thereunder shall be received by ITI and royalties paid to WVURC and
ICI as provided herein; (3) WVURC and ICI shall in any event have the right to
retain copies of any version of The Technology for WVURC's and ICI's own use;
and (4) ITI's obligation to pay WVURC and ICI earned royalties then due shall
continue.
VIII. MISCELLANEOUS
8.1 Each party will notify the other of any infringements of rights in
The Technology that come to such party's attention and shall cooperate fully
with the other in determining what action, if any, should be taken.
8.2 This Sublicense states the entire agreement between parties with
respect to the subject matter hereof and supersedes all prior negotiations,
understandings and agreements between the parties hereto concerning the subject
matter hereof. No amendment or modification of this Sublicense shall be made
except by an instrument in writing signed by all parities.
8.3 ICI represents: (i) this Sublicense has been duly executed and
delivered and is a valid and binding agreement; and (ii) the execution and
delivery of this Sublicense, and the performance by ICI of its obligations
hereunder, are not to the best of the undersigned's belief in violation of and
will not conflict with any agreement, law, order or other restriction binding on
ICI concerning The Technology.
8.4 The parties' rights and obligations hereunder shall be binding upon
and inure to the benefit of their respective successors and assigns. Each party
hereto will notify the other party in writing of any transfer of its rights or
obligations hereunder within thirty (30) days of such transfer, provided,
however, that the ITI or its assignee will not be required to give notice of any
transfer made pursuant to a sublicense agreement or other transaction in the
ordinary course of its business and recognized in this Sublicense.
8.5 This Sublicense shall be governed by and interpreted in accordance
with the laws of the State of West Virginia.
8.6 Should any provision of this Sublicense be held to be void, invalid
or inoperative, the remaining provisions of this Sublicense shall not be
affected and shall continue in effect as though such provisions were deleted.
8.7 All payments to others, as required by WVURC's "Patent and
Trademark Policy," shall be the sole responsibility of WVURC, and such payments
shall be made from WVURC's royalties received under this Sublicense.
8.8 All royalty payments and other conditions as outlined in the
original WVURC/ICI License Agreement and this Sublicense due to WVURC will be
paid directly by ICI to WVURC.
8.9 ITI, with the execution of this Sublicense, assumes all financial
responsibilities for the development and protection of the worldwide, exclusive
applications of The Technology, agrees to pay all existing patent and license
fees now in effect for the worldwide, exclusive applications of The Technology,
and will continue with existing efforts to extend said protection.
8.10 ITI agrees to become licensed to do business in the State of West
Virginia.
8.11 Any notice required or permitted to be sent hereunder shall be
deemed given (a) if hand delivered when received, or (b) if mailed when mailed
by postage prepaid, by registered or
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certified mail, return receipt requested, to any party at the following address
or such other addresses which either party may from time to time identify:
Xx. Xxxxx X. Xxxxx Xxxxxxx Xxxxxx
Integral Concepts, Inc. West Virginia University Research Corp.
Xxxxx #0, Xxx 000 X.X. Xxx 0000
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000-0000
Xxxxxxx Xxxxxxxx
Integral Technologies
0000 Xxxx Xxxxxx Xx., Xxxxx 0
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
IN WITNESS WHEREOF, the parties hereto have executed this Sublicense on
the dates shown below but with the effect as of the date first above written.
INTEGRAL CONCEPTS, INC.,
a West Virginia corporation
(Corporate Seal)
by: Xxxxx X. Xxxxx /s/
-----------------------------------
XXXXX X. XXXXX
Its President
DATE: 4/24/96
---------------------------------
INTEGRAL TECHNOLOGIES INCORPORATED,
a Nevada Corporation
(Corporate Seal)
By: Xxxxxxx X. Xxxxxxxx
-----------------------------------
XXXXXXX XXXXXXXX
Its President
DATE: "96"
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