EXHIBIT 10.4
THE TECHNOLOGY EXCLUSIVE LICENSE AND ROYALTY AGREEMENT
ANNEXED AS EXHIBIT 5 AND MADE A PART OF THAT CERTAIN
WORLD WIDE EXCLUSIVE ASSIGNMENT, LICENSE AND ROYALTY AGREEMENT
BETWEEN HADRONIC PRESS, INC., AND EARTHFIRST TECHNOLOGY, INC.*
THIS AGREEMENT, effective this 5th day of July, 2000, made between:
Hadronic Press, Inc., 35246 XX 00 Xx., XXX 000, Xxxxx, Xxxxxxx 00000 ("HPI" or
"Licensor") and USMAGNEGAS, Inc, 35246 XX 00 Xx., XXX 000, Xxxxx, Xxxxxxx 00000
("USM" or "Licensee").
W I T N E S S E T H:
WHEREAS, the HPI is a Party to that certain Worldwide Exclusive
Assignment, License and Royalty Agreement of which this License and Royalty
Agreement is annexed thereto as Exhibit 5;
WHEREAS a major requirements of the Worldwide Exclusive Assignment,
License and Royalty Agreement mandates HPI license all their interests in the
Technology as that term is therein defined to USMAGNEGAS according to the terms
and conditions and for such compensation as is herein set forth.
WHEREAS the Licensor and Licensee are interested in undertaking
together a joint effort at designing, manufacturing, selling or otherwise
commercializing the Technology as by an Exclusive Assignment and Royalty
Agreement that provides for the Licensor to introduce USM to the technology and
to authorize USM to make and to commercialize the Technology at an agreed
royalty, so long as both parties perform in accordance with this Agreement;
NOW, THEREFORE, the Licensor and Licensee, intending to be legally
bound, agree to undertake designing, manufacturing, and selling or otherwise
commercializing the Technology upon the following terms and conditions:
1. DEFINITIONS
a. "Technology" shall have the same meaning as that set
forth in the Worldwide Exclusive Assignment, License and Royalty Agreement
executed simultaneous to the execution of this Agreement.
b. "Licensed Scientific Knowledge" means unpatented
proprietary scientific information disclosed to Licensee by the Licensor, and
useful in identifying and optimizing the basic physical and chemical effects
underlying the Licensed Products or performing Licensed Services.
c. " Licensed Know-how" means unpatented proprietary
technical, professional, or commercial information disclosed to Licensee by the
Licensor, and useful in designing, making, or using Licensed Products or
performing Licensed Services.
d. "Licensed Patent" means any patent or patent
application Licensed to USM herein and containing a claim defining the
composition, design, machine, process, product by process, manufacturing,
structure, operation, or use of the Technology subject matter, insofar as owned
or licensable by Licensor and so Licensed to USM in or for the Licensed
Territory.
e. "Licensed Product" means product or related
composition whose production, structure, or use embodies any Licensed Scientific
Knowledge and Know-how, is defined by a claim of a Licensed Patent or disclosed
patent application and/or would infringe a Licensed Patent in the absence of
this Agreement, or displays or is commercialized by a Licensed Trademark.
f. "Licensed Service" means any designing, making,
specifying, or any instruction, leasing, or performance of other services
relating to any Licensed Product for, to, or with a customer or other party,
whether for compensation or not.
g. "Licensed Specification" means any requirement or
standard identified by the Licensor to Licensee relating to composition, design,
manufacturing method, structure, workmanship and/or resulting appearance, form,
identity, quality, or presentation of an Licensed Product or a Licensed System,
h. "Licensed System" means any apparatus, assembly,
device, or structure for producing or using an Licensed Product, with or for use
with (or without) other accessories.
i. "Licensed Trademark" Magnetion, MagneGas,
PlasmaArcFlow, Magnecules, Magneliquids, or other word and/or design, used with
or without any other word and/or design, in or as a brand name for Licensed
Products or Licensed Services or Licensed Systems.
j. "Improvement" means any substantial change in any
foregoing defined item (a to h) during this Agreement, whether made by the
Licensor or by USM, or both, or otherwise owned and/or assignable by either of
them to the other.
k. "Licensed Term" means the duration of this Agreement
which shall be: the same as the duration of all patents, trademarks or other
similar devices plus a period of five years following the expiration of Licensed
Patents; or a period of then years following the final denial of a in a given
country, as more appropriately specified below.
l. "Licensed Territory" means worldwide.
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m. "Licensor" means Hadronic Press, Inc and any and all
other persons, entities or others who are now and who may become co-patent
owners, either through invention or assignment or otherwise, of the Technology.
n. "Licensee" shall means USMAGNEGAS, Inc. a Florida
Corporation which may also be abbreviated as "USM."
2. LICENSE AND SUBLICENSES
a. The Licensor hereby grants to the Licensee, for the
Assignment Term only, an indivisible, right and assignment to make, use, lease,
sell, and otherwise practice commercially the defined Licensed subject matter.
b. So long as Licensee is in good standing under this
License Agreement, this grant is to be exclusive on a world-wide basis, meaning
that the Licensor will not grant any third party a similar assignment in the
Licensed Territory.
c. USM shall have the right to apply any Licensed
Trademark to Licensed Products and other components sold by USM for construction
of Licensed Systems, but USM. shall use Licensed Trademarks only in accordance
with acceptable trademark practice and subject to the provisions of this
Agreement.
d. USM customers will have an implied sublicense to
assemble Licensed Products into Licensed Systems, with or without other
components.
e. USM may grant sublicenses under this Agreement. In
the event a sub-license is granted by USM, then in addition to any other
consideration due HPI under this Agreement, USM shall pay over to HPI: (i) 15%
of down payments to USM in cash; (ii) 5% of any stock issued in connection with
such sub-license and; (iii) three-percent (3%) of all gross income derived by
the sub-licensee relating to the Technology. All sublicenses are to be approved
by HPI,, All 3% Royalties paid pursuant to this item 2e shall be paid to HPI
directly.
3. LICENSE TERM
a. Unless sooner terminated as provided herein, this
Agreement will continue for a period equal to the expiration date of any and all
patents or other devices enumerated heretofore as a part of the Licensed subject
matter plus a period of five years.
b. The Term shall be until the Licensor gives USM notice
that USM is no longer in good standing because of a specified breach or default
of one or more of USM's obligations under this Agreement; USM shall have the
right to remedy any such breach or default within forty-five (45) days
thereafter to return to good standing as to such breach or default. Likewise, if
the Licensor should be in breach or default of one
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or more of Licensor's obligations under this Agreement, the Licensor shall have
the right to remedy any such breach or default within forty-five (45) days
thereafter to return to good standing as to such breach or default.
c. Obligations of this Agreement that are indicated as
surviving beyond the end of this Agreement shall continue for such time period
as may be lawful, despite notice by either party to the other of an election to
discontinue either party's participation in or under this Agreement.
4. CONFIDENTIALITY
a. To the extent that USM receives Licensed Scientific
Knowledge and Know-how, or either party becomes aware of other proprietary
information from the other party via their relationship pursuant to this
Agreement, each recipient of such information will hold it in confidence so long
as the other party effectively treats it as confidential, except as specific
information becomes public knowledge otherwise than by or from USM.
b. The foregoing obligation to keep proprietary
information confidential and to safeguard it within the organization of a party
will survive any termination of this Agreement to the extent that such
information is not common trade knowledge.
5. ASSIGNMENT ACTIVATION
a. USM shall make available facilities, equipment, and
resources for the Technology design, development, and marketing purposes during
the term of this Agreement in order to enable the equipment and resultant
products to be analyzed, tested, and (as soon as feasible) to be demonstrated to
prospective customers, investors, and other interested persons.
b. The Licensor will provide the Technology, Licensed
Scientific Knowledge and Know-how to USM from time to time as may be appropriate
and will participate regularly as a technical consultant relating to the
Technology design, development, testing, and marketing, as USM deems desirable.
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 USM 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. As an incentive to HPI to execute this Agreement, USM
further agrees to make advance Royalty payments according to the following
schedule:
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(i) During the first twelve months of this
Agreement, USM shall pay to HPI advance Royalties equal to $10,000 per month
with the first payment due and payable upon execution of this Agreement;
(ii) During the second twelve months of this
Agreement, USM shall pay to HPI advance Royalties equal to $20,000 per month;
(iii) During the third twelve months of this
Agreement, USM shall pay to HPI advance Royalties equal to $30,000 per month and
shall continue thereat for the 4th and 5th year.
(iv) Advanced Royalties set forth in item 6.a.(i)
- (iii) are recoverable by EFT by being creditable against whatever Royalty may
become due pursuant to this Agreement.
b. Royalty accrues upon invoice, lease, sale, or service
by USM but shall not be payable until USM's receipt of payment therefor and
shall be without any deduction from USM's actual total revenue therefrom, except
for customers' related costs (such as insurance, shipping, or taxes) and then
only if so itemized on USM's invoices to them.
c. Royalty payable for any given month becomes due at
the end of the then current calendar quarter, and shall be paid, according to
item 6b hereinabove, during the first month of the next calendar quarter, or
will become overdue on the first day of the next month.
d. USM and all its Licensees, or nominees shall
acknowledge the scientific paternity of Magnegas by Xxxxxxxx, and use the terms
"Xxxxxxxx'x Magnegas", in production labels of all equipment and related
manuals; headings of official communications, press releases, Web Sites; and
other documents, whenever appropriate.
7. MINIMAL SALES
As a part of this Agreement, USMAGNEGAS undertakes to achieve
the following minimum levels of sales for the period indicated:
First Year Sales $0
Second Year Sales $1,500,000
Minimal Sales $3,000,000
In addition to those provisions cited in section 13 hereon,
failure to achieve the above minimum sales relating to the Technology shall
render USMAGNEGAS in default under this Agreement. In such an event, USMAGNEGAS
shall have 45 days from the date of such default to cure or remedy minimum sales
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requirements or this Agreement shall become null and void and HPI shall
reacquire all rights hereunto granted.
8. PAYMENTS AND REPORTS
a. USM will report to Licensor, all Royalty for each
calendar quarter of the Assignment Term during the first month of the next
ensuing calendar quarter and may include with each such report full payment of
royalty due for (and reported for) the preceding quarter's operations.
b. Quarterly and annual royalty reports will be signed
and be certified as accurate and complete by an authorized officer of USM.
c. USM will keep accurate and complete records of all
business done pursuant to this Agreement and will make such records available to
Licensor, no more than two (2) persons at once-for inspection during regular
business hours, upon at least three (3) business days' advance notice, to
determine Royalties accrued and paid or unpaid, and any other information due
hereunder.
d. The Licensor may cause an audit to be made of the
applicable records in order to verify statement for Royalties made hereunder.
Any audits shall be conducted by an independent certified public accountant,
acceptable to both parties, and shall be conducted during regular business hours
at USM's offices.
e. The Licensor shall bear the expenses of any such
audit unless such audit reveals that the Royalties paid by USM under this
Agreement for the Period subject to the audit are less than ninety-five percent
(95%) of the amount owed by USM for such period. In such event, the costs of the
audit shall be borne by USM, in addition and without limitation to any right of
remedy Licensor may have, USM agrees to pay the balance of such royalties due
the Licensor within forty-five (45) days after written notice is delivered of
USM's understatement of Royalties due. Furthermore, USM shall pay interest on
all understated Royalties at a rate of 1.5% per month or lesser amount as
mandated by law, computed from the day on which said Royalties were due and
owing to the Licensor.
f. Refusal by USM to report or to pay Royalty, or to
maintain or make available records of business done hereunder, will forfeit
USM's good standing under this Agreement, if not remedies within forty-five(45)
days.
g. In addition to all other payments made to HPI,
USMAGNEGAS shall further pay $5,000 (five-thousand dollars) per month to Xx.
Xxxxxxx Xxxxxxxx who shall then be available for consultation, advise and
presentations provided such activities do not exceed 20 hours per month. Any
additional time required of Xx. Xxxxxxxx by USM shall be the subject of a
separate agreement and shall not in any manner be connected with nor construed
as a part of this Agreement as well as all related work
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needed to prosecute patents worldwide. When a Consulting Agreement is executed,
this item will be merged therewith.
9. IMPROVEMENTS
a. Any new composition, design, product, or service
conducive to third party competition with Licensed Product or Licensed Services
or Licensed Systems, invented or otherwise coming under the control of either
party during the Assignment Term, is deemed an "Improvement" and such party will
disclose the same to the other party promptly and in enough detail to enable the
other party to elect whether to have such Improvement included hereunder.
b. As to any such Improvement by either party, either
party may elect to have such Improvement included hereunder, within three (3)
months after first knowledge thereof, without change in Royalty, by promptly
notifying the other party of an election to do so; and the party that made or
acquired such Improvement need do no more if both parties fail to elect to
include the Improvement.
c. The originating party of an elected Improvement that
appears possibly patentable after a competent prior art search, will file and
prosecute a patent application thereon, and may discontinue prosecuting it or
maintaining any resulting patent, but only after giving the other party notice
of such intention plus ample opportunity to take such (or equivalent) action at
its own sole future discretion and expense.
d. If the parties have joint inventorship/ownership
patent rights in an issued Improvement patent, the parties, will share equally
the related ownership rights and expenses including any official patent
maintenance fees for any one Improvement patent. The parties need not exercise
improvement patent rights, except as this Agreement may provide, nor need either
party account to the other party for any lawful activity regarding such patent
rights outside this Agreement.
e. The parties recognize that well-based differences may
arise with regard to origination of any given Improvement and that as to U.S.
patents the determination of inventorship and of patent ability is exclusively
within the jurisdiction of the U.S. Patent and Trademark Office and the Federal
Courts. Unless the parties are/have joint inventors or successor(s) thereto and
hence are joint owners, they specifically agree that for any Improvement patent
application and for any resulting patent for an Improvement elected by either
party to be included hereunder, regardless of inventorship, the Improvement
originating or otherwise acquiring party will grant to the other party (if that
other party so elects) an unrestricted paid--up (free) license to practice the
Improvement for the Assignment term, if such practice of it would not violate
any non-elected prior patent of the grantor Licensor.
f. Each party's foregoing Improvement rights are
executory in nature, including the right to be informed of any Improvement by
the other party, and to elect an
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Improvement for inclusion hereunder (or not), and including rights to ongoing
prosecution of patent applications and maintenance of patents by an originating
party of an elected Improvement, and receipt of license or ownership rights
thereunder.
10. INFRINGEMENT RIGHTS
a. In the event that USM's commercialization of any
Licensed Product, Licensed Service, or Licensed System is accused of-infringing
a proprietary right of any third party, the parties will cooperate in attempting
to avoid such infringement or to prove lack of infringement, and so long as
USM's license hereunder is exclusive to the extent set forth above, USM will
have a right, but not an obligation, to defend or assist in defending against
any infringement action brought by a third party, and shall have also the
obligation to pay one-half (1/2) of the costs of doing so, except as either
party may voluntarily pay more thereof incidental to participation therein.
b. Neither party will be liable to the other party if
unable or unwilling to continue this Agreement because of such infringement of
third-party rights, and in that event USM will cease commercializing Licensed
Products, Licensed Services, and Licensed Systems, and USM will relinquish its
rights hereunder in that event, and thereby terminate its Royalty and attendant
obligations to the Licensor.
c. In the event that the activities of any third party
are asserted (or other-wise appear) to infringe an intellectual property right
Licensed to USM hereunder, the parties will cooperate in attempting to ascertain
and to xxxxx such infringement. So long as USM's Assignment hereunder is
exclusive to the extent set forth above, USM will have a prior right, but not
;in obligation, to xxxxx such infringement, whether by litigation or otherwise,
subject to paying all the costs of doing so other than such costs or expenses as
the Licensor may voluntarily pay incidental thereto or to participation therein.
Any moneys recovered from a third-party infringer will be retained by the
parties, pro-rated to their expenditures after determining what portion of
moneys recovered are due the Licensor as part of any Royalty, whose action(s)
had such result.
d. If third-party infringement is not abated, USM may
elect to continue as a non-exclusive Licensee under this Agreement as its sole
remedy, or alternatively USM may discontinue its license and cease royalty
payments as its sole remedy.
11. ASSURANCES
a. The Licensor assures USM of its origination of the
inventions and guarantee USM of the Licensor's invention priority to their best
knowledge.
b. The Licensor warrants ownership to their best
knowledge of the Licensed Products and Licensed Services, in the specific sense
that the Licensor has no reason to believe that any third party has any right to
prevent either the Licensor or Licensee from practicing any Licensed Invention,
or from using any Licensed
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Trademark, as provided in the Agreement, and Licensor warrant such practice or
usage as non-infringing of third-party rights.
c. On behalf of Licensor, Xx. Xxxxxxxx will instruct
and/or assist USM's personnel in design, manufacturing, quality standards,
testing, distribution, marketing, and sale, as well as proper marking, of
Licensed Product and Licensed Systems, and Licensor will provide Licensed
Know-how in doing so, as may be applicable as part of a separate Consulting
Agreement.
d. The Licensor will have no liability whatever to USM
for USM's actions or inactions under this Agreement, and USM will save the
Licensor harmless against any liability to third parties whether based upon
agency, contract, negligence, product liability, or other basis-for any claim
based on action or inaction of USM relating to Licensed Products, Services, or
Systems.
12. PRODUCT MARKING
a. USM will xxxx on Licensed Products (or containers)
each patent number applicable thereto upon being advised thereof by the
Licensor. In the absence of patents, USM shall be under no product marking
obligations relating to any use of the Technology, except for the identification
of paternity set forth in this Agreement, paragraph 6d.
b. USM will display a Licensed Trademark (if elected) on
all Licensed Products and in advertising copy, brochures, and publications by or
for USM about Licensed Product. USM will not use any Licensed Trademark in or as
a trade name (i) if not elected, or (ii) if elected, after USM discontinues (or
other termination of) USM's license under this Agreement.
c. USM will not make any material change in materials,
production methods, or otherwise that might affect the nature or quality of any
Technology product or service, without advance notice to the Licensor.
d. If USM elects to use one or more Licensed
Trademark(s), USM will display one thereof on each container of Licensed Product
made by or for it, and in all Licensed Product advertising copy, product
brochures, press releases, and publications by or for USM about Licensed Product
plus the generic name of the goods, together with occasional notice that such
Trademark is the property of the Licensor.
13. TERMINATION
a. This Agreement may only be terminated according to
law or in the event of a specific breach of the terms and conditions herein set
forth including but not limited to the payment of royalties. Any breach of this
Agreement shall require the party which asserts such breach to notify the other
party and allow for a period of forty-five
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days to effect a cure of any such breach. In the absence of any such cure, this
Agreement automatically terminates without need of further written notice.
b. Upon termination, USM will refrain from exercising
thereafter any right it had by license hereunder, such as practicing the
invention of any previously Licensed Patent, or using a licensed Trademark or
confusingly similar expression.
c. Whenever USM is not in good standing hereunder, the
Licensor may render USM's Assignment wholly non-exclusive, or if it is already
non-exclusive for a prior breach or default the Licensor may terminate USM's
rights hereunder, in the absence of specific curative provisions for USM's
breach or default, or if USM has had an opportunity to comply such a curative
provisions and failed or refused to do so.
d. If either party becomes, or would become, disabled-as
by the other party's choosing, or being subjected to, an act or a procedure for
relief of debtors from enforcing compliance with a given executory obligation of
the other party hereunder (e.g., compliance with standards, action with regard
to infringers, offer of Improvements) the thus disabled party may deem this
Agreement and the license and other rights under this Agreement terminated.
e. No inaction or overlooking by the Licensor or
Licensee of any condition or provision of this Agreement or of any breach or
default thereof either party shall be deemed to imply or to constitute a future
waiver of any similar breach or default of the same or other
condition/provision.
f. This Agreement is automatically terminated in the
event of USM financial insolvency and bankruptcy, in which case Licensor
re-acquires the complete rights granted hereunder.
g. This Agreement is also automatically terminated in
the event USM has no sales for the continuous duration of two years, in which
case Licensor re-acquires the entire rights granted hereunder.
14. NOTICES
a. If to Licensor
Hadronic Press, Inc. with a copy to
Xx. Xxxxx Xxxxxxxx Xxxxx and Associates
President and Xxxxx Revelini, Esquire
Chief Executive Officer Mangrove Bay
Hadronic Press, Inc. 00000 Xxxxxxx 00 Xxxxx
00000 XX Xxxxxxx 00 Xxxxx Xxxxx 000
Xxxxx 000
Xxxx Xxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000
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b. If to Licensee
If to USMagneGas Inc.: with a copy to
Xx. Xxxx Xxxxx Xx. Xxxxxxx X. Xxxxxxx, III, Esq.
President and 000 X. Xxxxxxx Xxxxxx
Chief Executive Officer Xxxxx, XX 00000
USMagneGas, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, XX 00000
15. MISCELLANEOUS
a. If any one or more provision(s) or effect(s) of this
Agreement should prove to be invalid or unenforceable, and the Agreement be
otherwise valid and enforceable, the invalid or unenforceable provision or
portion thereof will be severed, and the remainder of the Agreement be and
remain valid and enforceable to the fullest extent permitted by applicable law.
b. This Agreement is made for the benefit of the
parties, their heirs, successors, and assigns, and any other person or legal
entity named in any provision hereof, and not made to give any unnamed person or
legal entity any right of action whatever.
c. Each statement made in this Agreement is deemed
material, and each party is entitled to rely, and deemed to have relied, upon
the truth and correctness thereof in entering into this Agreement.
d. Each party acknowledges that he has received advice
of independent counsel of choice as to the inducements, provisions, and terms of
this Agreement, and their effect, whereupon entering into this Agreement is each
party's free and independent act.
e. This Agreement is to be governed by Federal law to
whatever extent a proprietary right granted by the United States is involved,
and otherwise by Florida law, except as activities of a party in any other State
render that other State's law applicable.
f. In the event that any action or proceeding is brought
to enforce any of the terms and conditions of this Agreement, then the party in
whose favor relief is granted and/or judgment is entered shall be entitled to
have and recover from the other party or parses all costs, prejudgment interest,
and reasonable attorney's fees incurred in connection with the enforcement
action.
g. Notice to be given under this Agreement will be in
writing and be addressed to the other party at the address of such party
hereinabove, unless such
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address has been superseded by like notice, whereupon the latest noticed address
thereof is to be used. Notice will be effective when delivered to the addressee,
or-if not a change of address-when sent by Express or Registered Mail so
addressed.
h. This Agreement sets forth the entire intent and
understanding of the parties with regard to the subject matter hereof, and
merges any prior negotiations or agreements by the parties as to such subject
matter, and no addition, deletion, or other modification of the wording hereof
may be made except in writing subsequent hereto and signed by the party or
parties to be bound thereby.
i. As per the Worldwide Assignment, License and Royalty
Agreement, upon the formation of Euro- and/or AsiaMagneGas, respectively, USM
shall amend this Agreement to render same exclusive to the North, Central and
South American possessions and territories only. This action will be taken as
each Euro- and AsiaMagneGas are formed.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed, sealed, and attested by persons duly authorized so to do, as of the date
first stated hereinabove.
For Hadronic Press, Inc. For USMAGNEGAS, Inc.
/s/ XXXXX XXXXXXXX /s/ XXXX XXXXX
------------------------ -------------------------------
Xxxxx Xxxxxxxx, President Xxxx Xxxxx, President
Ratified by its Chairman of the
Board of Directors
/s/ XXXX XXXXXXX
-------------------------------
Xxxx Xxxxxxx
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