AMENDMENT ONE TO
AMENDMENT
ONE TO
This
is Amendment #1
(“Amendment”) to the Manufacturing
Agreement previously entered into by and between
INTEGRAL TECHNOLOGIES, INC., a Nevada corporation
(“Integral”) and JASPER RUBBER PRODUCTS, INC.
(“Jasper”) effective as of November 21, 2006 (the
“Agreement”). This Amendment is effective as of July
19, 2007 (“Amendment Effective Date”).
RECITALS
WHEREAS,
Integral and Jasper desire to amend the Agreement to provide for the sale of
Products by Jasper on Integral’s behalf; and
WHEREAS,
Jasper desires to sell the Products;
THEREFORE,
Integral and Xxxxxx xxxxx the Agreement as follows:
AMENDMENT
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A.
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Effect
of Amendment
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This
Amendment amends the Agreement. Except as provided in this Amendment,
all of the terms and conditions of the Agreement remain in full force and
effect. To the extent there is a conflict between the terms of this
Amendment and the Agreement, the terms of this Amendment shall
control. Capitalized terms not defined in this Amendment shall have
the meaning assigned to them in the Agreement.
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B.
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Amended
Terms
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I.
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The
following definition is added to Section 1 of the
Agreement:
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“Initial
Sales Period” means the period of time beginning on the Amendment
Effective Date and continuing until the last day of the month during which
the
cumulative gross sales of Products reach Seventy-Five Thousand U.S. Dollars
(US$75,000.00).
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II.
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The
following is hereby added as a new Section 2.9 of the
Agreement:
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“2.9
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Authorization
for Jasper to Sell Products.
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2.9.1
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Authorization. Subject
to the terms of this Agreement, Integral grants Jasper the right
to take
orders for and sell Products to customers on Integral’s
behalf. The parties acknowledge and agree that Integral’s
obligations under Sections 2.2, 2.3, 2.4, 2.5 and 2.8 shall not apply
to
Products sold by Jasper to customers on Integral’s behalf. Nothing in this
Section 2.9.1 shall limit Integral’s right to authorize other third
parties to sell the Products, provided that Jasper and Integral will
mutually agree on the payment terms for any manufacturing services
provided by Jasper in connection with the sale of Products by such
third
party.
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Page
1
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2.9.2
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Pricing. The
parties acknowledge and agree that Jasper will not sell Products
to
customers for less than Thirty U.S. Dollars (US$30.00) per pound
unless
otherwise mutually agreed to in
writing.
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2.9.3.
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Warranties. Jasper
may not make any warranty or representation about the Products except
as
specifically set forth in the materials provided by Integral to Jasper
or
otherwise mutually agreed to in
writing.”
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III.
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The
following is added as a new Section 3.6 of the
Agreement:
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“3.6
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Limited
Authorization to Sell Products. Notwithstanding anything to
the contrary in this Section 3, Jasper’s authorization to sell Products
pursuant to Section 2.9 shall continue until five (5) years after
the
Amendment Effective Date, and will extend automatically for successive
additional periods of five (5) years unless (a) either party provides
the
other with written notice of non-renewal at least ninety (90) days
prior
to the commencement of the applicable renewal period or (b) the Agreement
is otherwise terminated as provided
herein.”
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IV.
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Section
4 of the Agreement is deleted and replaced with the following new
Section
4:
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“4.
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PRICE,
INVOICING AND PAYMENT
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4.1 Hourly
Payment. During the Initial Sales Period,
Integral will pay Jasper an hourly fee of One Hundred Dollars (US$100.00) per
hour (“Hourly Rate”) for all manufacturing and sales services
requested by Integral and performed by Jasper in connection with this Agreement
(“Fulfillment Services”). Following the
Initial Sales Period, Integral shall not be required to pay
the
Hourly Rate for Fulfillment Services performed by
Jasper.
4.2 Sales
Royalty. During the Initial Sales Period, Jasper will pay
Integral one hundred percent (100%) of the Gross Margin (as defined below)
from
the sale of Products. Following the expiration of the Initial Sales
Period, Jasper will pay Integral a royalty equal to seventy-seven and one-half
percent (77.5%) of the Gross Margin from the sale of Products (the
“Royalty”).
4.3 Gross
Margin. For purposes of the Royalty calculation in Section 4.2,
“Gross Margin” means the actual amount paid by customers to Jasper for the
Product, less the sum of: (i) the materials cost, (ii) the direct labor
costs (iii) the overhead costs, and (iv) the selling, general
and administrative overhead costs, all as used in the manufacture of the
Products and as set forth in the attached Schedule A, which may be updated
from
time to time by mutual written agreement of the parties.
4.4 Jasper
Manufacturing Costs will be defined as (i) direct labor costs (ii) the
overhead costs, and (iii) the selling, general and administrative overhead
costs, all used in the manufacture of the Products and as set forth in the
attached Schedule A, which may be updated from time to time by mutual consent
of
the parties.
4.5 Payment
Terms.
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4.5.1
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Hourly
Rate. Within ten (10) days of the end of each calendar
month in the Initial Sales Period, Jasper will provide Integral with
an
invoice setting forth the number of hours worked by Jasper in connection
with each delivery of Products during the previous calendar month
identified by the applicable purchase order, product code, callout
numbers
or other applicable reference. Integral agrees to pay Jasper
the Hourly Rate (i) net ten (10) days from the date of the invoice
less a
one percent (1%) discount on the fee set forth in such invoice or
(ii) net
thirty (30) days from the date of the invoice with no
discount.
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Page
2
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4.5.2
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Royalties.
Within ten (10) days after the end of each calendar month Jasper
will
provide a Royalty Statement to Integral for approval. Such Royalty
Statement will indicate the
following:
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(i)
Sales
of the Product for the previous month.
(ii)
Material costs associated with the Product for the previous month.
(iii)
Jasper Manufacturing Costs associated with the Product Sales for the previous
month.
Integral
will provide approval of such Royalty Statement to Jasper within 3 days after
receipt of such.
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4.5.3
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Payment
of Royalties. Within ten (10) days after the end of each calendar
month Jasper will provide a Cash Receipt Statement to Integral for
approval. Such Cash Receipt Statement will show all cash receipts
for the
previous month relating to Product Sales. Such Cash Receipt Statement
will
show the proportionate share due to Jasper for Jasper Manufacturing
Costs
and the proportionate share due to Integral for Sales
Royalty.
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Integral
will provide approval of such Cash Receipt Statement to Jasper within 3 days
after receipt of such.
Within
2
days after receipt of Integral’s approval Jasper will issue payment to
Integral.
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4.5.3
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General. If
the date payment is due is a weekend or is a holiday recognized by
the
party sending the payment, the payment will be made on the immediately
following workday. The instruction for sending payments to
Jasper is:
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Jasper
Rubber Products, Inc.
X.X.
Xxx
000000
Xxxxxxxxxxxx,
Xxxxxxx 00000-0000
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All
invoices, reports and payments will be sent to Integral
at the
following address:
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Integral
Technologies, Inc.
000
Xxxx
Xxxxxxx Xxxxxx, #0
Xxxxxxxxxx,
Xxxxxxxxxx 00000
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4.6 Books
and Accounting. Jasper will maintain books of accounts relating
to the Royalties in sufficient detail so as to allow for verification of
the
Royalties actually paid. Integral may, at its expense, have a
certified public accountant, reasonably acceptable to Jasper, audit these
books
solely for the purpose of verifying the accuracy of Royalties paid and
accompanying royalty statements, and make photocopies of such records for
the
certified public accountant’s use, during normal business hours upon thirty (30)
days prior written notice to Jasper, but no more frequently than once a year
and
not later than three (3) years after the statement was rendered. Any
costs associated with an audit shall be borne by Integral unless there is
a
discrepancy of more than five percent (5%) between Royalties actually paid
and
Royalties actually owed in a given month, in which case Jasper will bear
the
actual and documented costs of such audit.
4.7 Taxes
and Law Changes. As between Jasper and Integral, Jasper shall be
responsible for any sales or use taxes relating to the transfer or sale of
the
Products to customers. If a change in law or regulation affecting the
price of Xxxxxx Xxx Materials or the production or sale of the Products after
the date hereof shall increase the cost to Jasper, Jasper and Integral shall
negotiate a mutually agreeable adjustment to the Hourly Rate and/or Royalties
to
offset such increased cost from a change in law or regulation.”
[Signature
Page to Follow]
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4
C. Entire
Amendment
This
Amendment and the Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and merge all prior and
contemporaneous communications. They shall not be further modified
except by a written agreement dated subsequent to the Amendment Effective Date
and signed on behalf of Integral and Jasper.
IN
WITNESS WHEREOF, this Amendment has been executed by the parties as of
the Amendment Effective Date.
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INTEGRAL
TECHNOLOGIES, INC.
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JASPER
RUBBER PRODUCTS, INC.
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BY:
/s/ W.A. Ince
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BY:
/s/Xxxxxxx X. Xxxxxxx
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ITS:
President
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ITS:
President & CEO
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Before
me, a Notary Public, in and for said County and State, personally appeared
the
within named Xxxxxxx X. Xxxx, President of INTEGRAL TECHNOLOGIES, INC., who
acknowledged the execution of the foregoing Amendment One to Manufacturing
Agreement to be their voluntary act and deed and to be the voluntary act and
deed of said corporation.
WITNESS
my hand and Notarial Seal this
19 day of July, 2007.
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/s/Xxxxxxx
X. Xxxxxx
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Notary
Public -
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My
Commission Expires: March 27, 2010. My County of Residence is:
Whatcom
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STATE
OF WASHINGTON
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)
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COUNTY
OF WHATCOM
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)
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Before
me, a Notary Public, in and for
said County and State, personally appeared the within named Xxxxxxx X. Xxxxxxx,
President & CEO of JASPER RUBBER PROUDUCTS, INC., who acknowledged the
execution of the foregoing Amendment One to Manufacturing Agreement to be their
voluntary act and deed and to be the voluntary act and deed of said
corporation.
WITNESS
my hand and Notarial Seal this
19th day of July, 2007.
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/s/
Xxxxxxx Xxxxxxxx
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Notary
Public -
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My
Commission Expires: October 19, 2007. My County of Residence is:
Xxxxxx
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STATE
OF INDIANA
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)
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)
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COUNTY
OF XXXXXX
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)
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