EXHIBIT
10.4
LICENSE
AGREEMENT
BETWEEN
MSW
PATENTS, INC.
AND
FULL
CIRCLE INDUSTRIES, INC.
LICENSE
AGREEMENT
This
Agreement (“Agreement”) is made as of the 15th day
of May
, 2006
(“Effective Date”), between MSW Patents, Inc., a
company duly incorporated under the Jaws of the State of Alabama,
U.S.A., and having its principal place of business at 4502 Pine
Lake Drive, terry, Mississippi (“Licensor”), and Full
Circle Industries, Inc., a company duly incorporated under the laws
of the State of Nevada, U.S.A., and having its principal place of
business at 27368 Via Industria, Suite 113, Temecula, California,
and its Affiliates (hereinafter, collectively referred to as
“Licensee”)
WHEREAS,
Licensor is the owner of U.S. Patent No. 6,397,492 for an
apparatus and method for processing municipal solid waste;
and
WHEREAS,
Licensee wishes to license U.S. Patent No. 6,397,492 for the
processing of municipal solid waste.
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties agree as
follows:
1.
DEFINITONS
-
For
purposes of this Agreement, the following definitions shall
apply:
1.1
Affiliates .
The tern “Affiliates” means any corporation,
partnership, joint venture or other entity directly controlling,
controlled by or under common control with Licensee; as used
herein, the term “control” means possession of the
power to direct, or cause the direction of the management and
policies of a corporation or other entity whether through the
ownership of voting securities, by contract or
otherwise.
1.2
License Date .
“License Date” shall mean the date on which Licensor
grants to Licensee an exclusive License to the Patent, as defined
below, in a county pursuant to Section 2.3 or pursuant to Section
3.3. Upon the License Date, such county would thenceforth be
included in the Territory, as defined below.
1.3
Patent. “Patent”
shall mean U.S. Patent No. 6,397,492 issued June 4,2002 for an
apparatus and method
for
processing municipal solid waste, described in further detail
in
Exhibit A.
together with all applications for patent or 111cc protection on
said invention and all patents or like protection that may in the
future be granted on said invention in the United States of America
and all substitutions for and divisions, continuations,
continuations in part, renewals, reissues, extensions and the like
on said applications and patents. Patent shall include any
confidential information and/or know how relating to the invention
of the patent, including, but not limited to, Vessel drawings, as
defined below, technical schematics of Vessel operations, and any
improvements thereof for which Licenser gains a proprietary
interests by any means.
1.4
Sublicensing Revenue .
“Sublicensing Revenue” shall mean all cash,
sublicensing fees, royalties and all other payments and the cash
equivalent thereof paid to Licensee by any sublicensee of Licensee
of its rights hereunder.
1.5
Territory .
“Territory” shall mean each county, as defined by the
state in which the county is located, in the United States of
America to which Licensee has the exclusive right to use the Patent
pursuant to this Agreement.
1.6
Vessel .
“Vessel” shall mean the apparatus used for processing
municipal solid waste as identified in the Patent.
2.
GRANT OF EXCLUSIVE LICENSE
2.1
Grant of
Exclusive License .
Subject to the limitations, terms and conditions of this Agreement,
Licenser hereby grants to Licensee during the term of this
Agreement an exclusive license to use the Patent in the Territory.
During the term of this Agreement, Licensor agrees not to use the
Patent in any Territory in any way.
2.2
Vessel(s) .
The license shall include the right of Licensee to build and
operate as many Vessels as Licensee deems necessary for each county
in the territory.
2.3
Right
of
First Refusal .
In the event that Licensor receives a bona fide offer from a third
party (“Bona Fide Offer”) to license the Patent in any
county not already included in the Territory, Licensor shall
provide Licensee written notice of the Bona Fide Offer within ten
(10) days of receipt of such offer (“Notice of Offer”)
and Licensor shall provide Licensee the right to license on the
same terms as the Bona Fide Offer (“Right of First
Refusal”). The Notice of Offer shall specify the terms of the
Bona Fide Offer, including but not limited to, territory, licensing
fees, and term. Licensee shall have thirty (30) days from the date
Licensee receives the Notice of Offer to exercise the Right of
First Refusal to license the Patent on the same terms as the Bona
Fide Offer. In the event that Licensee exercises the Right of First
Refusal, Licensee shall provide written notice to Licenser stating
that it chooses to exercise the Right of First Refusal no later
than thirty (30) days from the date Licensee receives the Notice of
Offer. In the event that Licensee does not exercise the Right of
First Refusal within thirty (30) days from the date Licensee
receives the Notice of Offer, Licensor may license the Patent to a
third party on the same terms as the Bona Fide Offer within thirty
(30) days of the expiry of the Right of First Refusal. If Licenser
does not sign an agreement with a third party on the same terms as
the Bona Fide Offer within thirty (30) days of the expiry of the
Right of First Refusal, then any offer from a third party shall be
subject to this Section 2.3.
2.3.1
Licensor
agrees not to enter any direct license with any one of the
following: (1) World Waste International and all affiliates,
(2) Dr. Michael Eley, Don Malley and Die-Products
International and all affiliates, unless pursuant to Section
13.1 of this agreement.
2.4
Sublicense .
Licensee shall have the right to sublicense the Patent with the
written approval of the Licensor, which approval shall not be
unreasonably withheld.
3,
NOTICE
OF SITE SELECTION
3.1
Licensee
shall provide Licensor with written notice of a county which
Licensee desires to include in the Territory and the number of
Vessels Licensee would license for that county, Licensee shall
have the right to provide such notice for any county in the
United States not already subject to a license for the
Patent.
3.2
Upon
receipt of notice from Licensee pursuant to Section 3.1,
Licenser shall not enter an agreement to license the patent to
a third party for a period of ninety (90) days.
3.3
Licensee
shall have ninety (90) days from the receipt of notice
pursuant to Section 3.1 by Licensor to purchase a license for
the noticed county (ies) under the terms of this Agreement. In
the event that Licensee does not purchase a license for the
noticed county(ies) within ninety (90) days from receipt of
the notice pursuant to Section 3.1 by Licenser, Licenser may
grant a license for the Patent in the noticed county(ies) to a
third party. Any such license to a third party shall not be
subject to Section 2.3 if the license with a third party is
entered less than one hundred and eighty (180) days after
Licensor receives notice provided in Section 3.1. On or after
one hundred and eighty (180) days after Licensor receives
notice as provided in Section 3.1, any such license shall be
subject to Section 2.3.
4.
FEES,
ROYALTY, and PAYMENTS
4.1
Base Fee .
Licensee shall pay Licensor Twenty Five Thousand Dollars ($25,000)
as consideration for entering this Agreement. Such payment shall be
due at closing.
4.2
Vessel Fee .
Licensee agrees to pay to Licensor a fee of Twenty Five Thousand
Dollars ($25,000) for each Vessel built by Licensee pursuant to
this Agreement. Such payment shall be paid to Licensor as
follows:
(a)
Twelve
Thousand Five Hundred Dollars ($12,500) shall be paid upon the
License Date for such Vessel(s); and
(b)
Twelve
Thousand Five Hundred Dollars ($12,500) shall be paid upon the
later of (i) completion of construction of the Vessel(s) or
(ii) eighteen (18) months after the License Date.
4.3
Royalty .
Licensee agrees to pay to Licensor a royalty of Twenty Five Cents
($0.25) per ton of municipal solid waste processed using the
Vessel(s). Royalties shall be computed no later than thirty (30)
days from the last day of each month in which the Vessel(s) is/are
operated. Such royalties shall be paid to Licensor no later than
forty (40) days from the last day of each month in which the
Vessel(s) is/are operated. Such royalties shall be paid on a
monthly basis.
4.4
Sublicensing Revenue .
In the event that Licensee sublicenses its rights hereunder
pursuant to Section 2.4, Licensee shall continue to pay Licensor
the royalties that Licenser would be entitled to pursuant to
Section 43 if Licensee operated the sublicensed Vessel(s). Such
portion of the Sublicensing Revenue shall be computed no later than
thirty (30) days from the last day of each month in which the
sublicensed Vessel(s) is/are operated. Such share of the
Sublicensing Revenue shall be paid to Licensor no later than forty
(40) days from the last day of each month in which the sublicensed
Vessel(s) is/are operated. Such share of the Sublicensing Revenue
shall be paid on a monthly basis.
4.5
Payment .
All royalty and any other payments shall be made in United States
currency. The symbol $
shall
mean United States dollars. All royalty payments shall be made to
Licenser by the Licensee at such place as may be directed by
Licensor.
4.6
Penalty for
Late Payment .
In the event that Licensee’s payment is not postmarked within
ten (10) days of the date such payment is due pursuant to Section
4.2 and/or 4.3, Licensee shall pay Licensor a penalty of Thirty
Five Dollars ($35) for each day the first time that payment is
late. The penalty for Late payment shall increase by Five Dollars
($5) each time Licensee’s payment is late
thereafter.
4.7
Credit .
In the event Licensee purchases the Patent from Licensor, all
payments to Licensor pursuant to Sections 4.1 and 4.2 shall be
credited to the purchase price of the Patent.
5.
REPORTS/
AUDITS
5.1
Books, Records .
Licensee, during the term of this Agreement and for two (2) years
thereafter, shall keep at its usual place of business true and
particular accounts and records of the processing of municipal
solid waste and of all royalties paid or payable hereunder and
shall maintain its records in accordance with generally accepted
accounting principles.
5.2
Audit. Licensor
and its duly authorized representatives shall have the right, at
Licensor’s expense, to audit the books and records maintained
by Licensee pursuant to Section 5.1 semi-annually during business
hours and upon reasonable notice to Licensee. Such audit shall
include the right to inspect and audit the accounts and records of
Licensee relating to the processing of municipal solid waste using
the Vessel(s) and all other matters, directly or indirectly,
relevant to the calculation of the amount of royalty due, and such
representatives shall be entitled to take copies of or extracts
from any such records. Should the results of the audit discover an
underpayment of royalties, Licensee shall pay the amount of
underpayment to Licensor within ten (10) days. Should the results
of the audit discover an underpayment of royalties of three percent
(3%) or more, Licensee shall promptly pay all the costs of such
audit to Licensor provided, however, that Licensee’s
liability for such costs shall not exceed Five Thousand Dollars
($5,000.00) for any audit.
5.3
Right to Accounting .
In the event that there is a dispute as to the royalty amount due
pursuant to Section 4.3, Licensee shall provide a written
explanation and accounting of the amount due. In the event that the
accounting reveals that the amount due is more than the amount
paid, then Licensee shall pay Licensor the difference between the
amount paid and the amount due within ten (10) days following the
determination of the correct amount. In the event that the
accounting reveals that the amount due is less than the amount
paid, then Licensor shall credit against the following
month’s royalty payment at the election of the
Licensee.
5.4
Right to Copies .
Licensor shall have the right to make reasonable requests for
copies of reports and records relating to the calculation of the
amount of royalty due and Licensee shall have a reasonable amount
of time to comply with such request.
6.
NON-DISCLOSURE!/PATENT
6.1
Definition .
Licensee acknowledges that all information of any kind, and which
has commercial or economic value in the business in which Licensor
is engaged including, but not limited to, all know-how, patterns,
designs, sizing, specifications, production methods and techniques,
and directions and standards for manufacturing and packaging and
marketing information, if any, furnished by Licensor to Licensee
during the term of this Agreement is proprietary to Licensor and is
a trade secret of a highly confidential and secret nature
(“Licenser Confidential Information”). The term
Licenser Confidential Information does not include any of the items
identified in the preceding sentence which (i) were known to
Licensee at the time of their disclosure to Licensee by Licensor,
(ii) were or become publicly known or generally available through
no wrongful act of Licensee, its agents or employees, (iii)
Licensee can reasonably demonstrate was independently developed by
Licensee without use of the Patent, or (iv) Licensee shall be
compelled to disclose by law or legal process. Licensor
sh
