Exhibit 10.104
LICENSE AGREEMENT
This Agreement, effective as of this 9th
day of February, 2004, by and
between Universal Chemical Technologies,
Inc., a Florida Corporation, and
UCT Defense, LLC, a Delaware Limited
Liability Company, both doing business
at 7825 S.W. Ellipse Way, Stuart, Florida
34997 hereafter collectively
("UCT") and IGI with mailing address at 105
Lincoln Avenue, Buena, New
Jersey 08310-0687, hereinafter
("Licensee")
RECITALS
Whereas,
UCT has rights to certain confidential, patented and
proprietary technical knowledge to utilize
a new, proprietary electroless
nickel boride metal finishing process known
as Ultracem, and UCT is
actively seeking to have its plating
process utilized and implemented on a
wide scale by entering into Agreements with
qualified companies and
individuals; and
Whereas,
Licensee has the facilities and skilled personnel for
commercial application of electroless metal
coatings, and
Whereas,
Licensee desires to use UCT's proprietary plating process
and trademarks rights and purchase UCT's
proprietary chemistry to
commercially exploit the ULTRACEM Technology, and
Whereas
UCT desires to license its proprietary plating process and
the Marks ULTRACEM and CEMKOTE to
Licensee.
I. DEFINITIONS
As used
herein, the following terms shall have the given meanings:
1.1
"Proprietary
information" shall mean information developed by
UCT and pertinent to the preparation and operation of plating
baths for the deposition of the electroless nickel-boron
coating to the extent not disclosed in the UCT Patent or any
published applications for the patent in therewith.
1.2
"Licensed
Process" shall mean the process for depositing
ULTRACEM and related electroless nickel-boron coatings
described in UCT's Patents.
1.3
"Licensed Marks"
shall mean the Licensed Marks, ULTRACEM and
CEMKOTE used by UCT plus future trademarks owned and utilized
by UCT.
1.4
"License Year"
shall mean the 12-month period including and
immediately following the commencement of licensed operations
in Licensee's facility and each 12-month period thereafter.
1.5
"Licensee's
Facility" shall mean those premises located at
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II. LICENSE GRANT
2.1
UCT grants to
Licensee, subject to the terms of this Agreement:
a. A
non-exclusive license to use or perform the Licensed
Process, excluding UCT's diamond coating technology, for
commercial and military applications in Licensee's
Facility;
b. A
non-exclusive license to use the Licensed Marks in the
Territory in connection with Licensee's business of
applying metal coatings using the Licensed Process for
commercial and military applications in Licensee's
Facility.
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c. UCT
shall not grant licenses to other job shops within a
radius of 150 miles of Licensee's Facility, the
("Territory") unless they become approved sub-licensees
of Licensee herein.
d. Other
UCT licensee located outside of the Territory shall
have the right to service any of their customers located
in the Territory.
e. UCT
shall have the right to grant exclusive and non-
exclusive licenses to OEM's, described in Article V
hereinafter, within the Territory who wish to operate
captive plating facilities using the said Licensed
Process and Marks.
f.
Licensee shall actively assist UCT to identify
prospective sub-licensees in the Territory to utilize the
said Licensed Process and Marks. UCT shall pay to
Licensee five (5%) percent of all chemistry sales,
payable on a cash collected basis, to said sub-licensees
developed by Licensee in the Territory.
2.2
Licensee shall
not modify, copy, duplicate, reproduce, license
or sublicense ULTRACEM, the Licensed Process, UCT chemistry or
UCT confidential information, or transfer or convey any
interest therein to any third party without the express prior
written consent of UCT.
III. UCT'S OBLIGATIONS
3.1
Disclosure of
Proprietary Information. Within ten (10) business
days of the execution of this Agreement UCT shall provide
Licensee with a written description of plating bath preparation
and operating procedures for the Licensed Process. If not part
of UCT's Patent, it is understood that such information is
Proprietary Information and will be maintained by Licensee
subject to the confidentiality provisions of Paragraph 4.3
hereinbelow.
3.2
Plating Bath
Chemicals. UCT agrees to sell to Licensee, and
Licensee agrees to purchase from UCT all of Licensee's
requirements for coating bath chemicals mixture for the
Licensed Process. The initial price for bath chemical mixtures
("bath chemical
pre-mixes") are set forth in Exhibit A attached
hereto and made a part hereof. UCT shall give Licensee thirty
days notice of the effective date of any price increases. UCT's
prices for bath chemicals to Licensee, in each instance, shall
be no more than that charged by UCT in the U.S. to other
parties for comparable volume purchases.
Licensee shall keep UCT apprised of its existing and projected
inventories of the bath chemicals used in the Licensed Process,
and Licensee agrees to give UCT reasonable notice of needs for
supplementation of inventories of such chemical mixtures.
3.3
Training. UCT
shall consult with and provide training and
technical services to Licensee pertinent to preparation and
operation of the coating baths used to carry out the Licensed
Process. It is contemplated that all training provided by UCT
shall be by technical employees of UCT. Such consultation
shall involve no more than 40 man-hours during the first
calendar quarter of this Agreement. UCT shall provide such
training at no cost to Licensee except for reimbursement of
UCT's actual and reasonable expenses for travel, including
meals and lodging, necessary to provide consultation and advice
to Licensee. Payment of all undisputed amounts for travel
reimbursement invoiced by UCT shall be paid by Licensee not
later than thirty (30) days following the date of such invoice.
Required training in excess of the above stated quarterly
maximum man-hours shall be provided by UCT at a rate of $50.00
per man-hour plus travel expenses.
UCT shall provide up to 5 days of training in its Stuart
Florida facility at no charge but Licensee shall pay all of its
own out of pocket expenses.
3.4
UCT shall
deliver a complete UltraCem operations manual to
Licensee and all necessary technical data sheets and MSDS
sheets.
3.5
Waste Product
Management. It is acknowledged by both parties
that spent baths from the Licensed Process and solid wastes
derived therefrom could be analyzed by third parties to
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reveal valuable proprietary information regarding the Licensed
Process. UCT and Licensee shall collaborate to define an
acceptable waste treatment/by-product handling procedure for
disposal of spent baths from the Licensed Process, which is in
accordance with applicable EPA and State regulations, and, if
possible, which provides the necessary security against
unauthorized access to waste products from the Licensed
Process.
3.6
Licensed
Improvements. UCT shall promptly disclose to Licensee,
subject to the confidentiality provisions of this Agreement,
any improvements of the Licensed Process developed by UCT, and
such improvements shall become part of the Licensed Process
within the meaning of this Agreement. UCT agrees to
provide
any additional technical assistance (per paragraph 3.3 above)
reasonably necessary to assist Licensee with implementation of
improvements to the Licensed Process.
3.7
Plating Line
Design and Construction Assistance to Licensee
UCT shall provide:
a. Initial
site visit and consultation.
b. Plating
line and tank design assistance and consultation.
c.
Construction and setup oversight and consultation.
d. UCT and
Licensee hereby agree that UCT shall provide the
plating line design and construction consultation and
fabrication and parts for Licensee's Facility as provided
in
Proposal dated February 9, 2004 identified as Exhibit
B attached hereto.
3.8
Marketing
Assistance
UCT shall conduct sales training in Stuart, Florida at no cost
if requested by Licensee's marketing team.
UCT marketing personnel shall be available by phone or email
for marketing and sales consultation.
a.
Licensee shall be allowed to utilize existing UCT
marketing materials and new materials, as available.
b. UCT
shall agree to use its best efforts in supporting
Licensee's marketing efforts as well as referral of
customers who have either requested testing or have
completed testing of the efficacy of the Licensed
Process.
c. UCT
shall provide testing and plating capabilities for
Licensee's customers until Licensee's line is fully
operational. Test plating shall cost .20 per mil square
inch. Sample work shall be at no charge. Bridge plating
of production quantities shall be done on a quote-by-
quote basis.
d. UCT
shall provide market protection to Licensee for
Licensee's existing customers that make conversions to
the Licensed Process.
e. UCT
shall continually work on new applications and uses
for the Licensed Process and shall communicate successes
and recommendations for market penetration to Licensee on
a regular basis.
3.9
Quality Control
Assistance
a. UCT QC
personnel shall be available from 9:00 AM EST to
5:00 PM EST Monday through Friday for telephone and
online QC consultation at no charge.
b. UCT
shall provide on-site QC problem solving assistance
on difficult problems if telephone consultation
determines a) the Licensed Process is a good
technological application and the problem is expected to
be solved and b) the telephone
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consultation has failed to solve the problem, at the same
rate as provided in Paragraph 3.3 herein.
3.10
Chemistry Sales
a. Subject
to minimum order quantities and prices (based on
Purchase Order volumes) on UCT's standard job-shop price
list, UCT shall ship, within 72 hours of receipt of a
bona-fide Licensee purchase order, chemistry to Licensee
FOB UCT Plant, Stuart, Florida, with terms being net 30.
International customers may be required to post a letter
of credit before shipment.
b. UCT
shall not provide chemistry to any other licensee or
OEM customer with pricing better than that offered to
Licensee on comparable volumes.
c.
Licensee specifically agrees to purchase all bath makeup
and replenishment chemicals (except NaOH), Components A,
B, C and D, required utilizing the Licensed Process
directly from UCT.
d. The
initial Standard Job-Shop Price List is attached
hereto as Exhibit A. UCT specifically reserves the right
to change this price list at any time should UCT's COSES
materially change. Should Licensee develop long term
contracts or customer quotes for the Licensed Process,
consideration in pricing will be provided for specific
situations.
3.11
Co-Promotion
UCT shall (i) list Licensee in its marketing materials as a
Job-Shop Licensee, (ii) provide a link to Licensee's internet
website on UCT's website and (iii) refer customers to Licensee.
3.12
Referrals
UCT shall use its best efforts to refer to Licensee any metal
finishing job shop
quotes utilizing the Licensed Process
within the Territory which are developed by UCT or its OEM's.
Licensee shall pay EO UCT six (6%) percent of all revenues
received by Licensee from customers so referred by UCT to
Licensee.
IV. LICENSEE'S OBLIGATIONS
4.0
Equipment
Installation. Licensee shall install the equipment as
specified and designed by UCT and as fully described in Exhibit
B attached hereto and made a part hereof, in the time period
described therein.
4.1
Record
Keeping
a.
Licensee shall provide UCT with monthly reports
summarizing its use of the Licensed Process, its
inventory of bath and, to the extent known, projected
needs in terms of volumes and types of the bath chemicals
for the two (2) months next following. At UCT's option,
upon request of Licensee, UCT may accept oral
communications of the report required under this
subparagraph 4.1(a).
4.2
UCT Audit and
Review Rights: UCT
shall have the right to
periodic audits and reviews, at its own expense and at normal
business hours, of Licensee's operations, with the scope of
such
reviews limited to:
a. Quality
Control of the Licensed Process.
b.
Protection of UCT's intellectual property, trade secrets
and branding.
c.
Compliance with the OEM exclusive provisions of the
license contemplated by the term sheet.
d.
Licensee agrees to take remedial action to correct
material deficiencies noted by UCT and to maintain the
standards of quality referred to herein and prescribed by
UCT.
<PAGE>
4.3
Confidentiality
Obligations.
a.
Licensee shall maintain in confidence and not disclose to
any third party, except with the prior written approval
of UCT, (1) any Proprietary Information, (2) any
information derived from Proprietary Information or (3)
other business or technical information disclosed by UCT
and designated as confidential and subject to the
obligations of this Paragraph. The obligations of
confidentiality hereunder shall not apply to information
which:
i. Is, an
the time of disclosure in the public domain
or thereafter becomes part of the public domain by
publication or otherwise, through no fault of
Licensee; or
ii. As shown by
Licensee's written records was, at the
time of UCT's disclosure, in the possession of or
because of earlier disclosure to Licensee on a non-
confidential basis by a third party entitled to
disclose it to Licensee; or
b. Is
permitted by UCT to be disclosed by Licensee provided
such permission is first obtained in writing form an
officer of UCT.
c.
Any
document prepared by or for Licensee as a result of
or a part of its use of Proprietary Information and its
development of the Licensed Process shall be marked by
Licensee as "Confidential."
d.
Licensee agrees that it will not, without the permission
of UCT, analyze or have analyzed any pre-formulated
chemical mixtures provided by UCT in accordance with
Paragraph 3.2 above, or plating baths produced from such
chemical mixtures or the metal coatings deposited by said
bath.
e.
Licensee agrees to require all of Licensee's employees
having access to Proprietary Information to read this
Paragraph 4.3 or a copy thereof and to provide written
acknowledgement in form satisfactory to UCT, or an
agreement that is in all material respects similar, of
his/her agreement to be bound personally by the terms
thereof. Further, Licensee shall require its employees
involved in use and development of the Licensed Process
to agree to assign to Licensee any inventions, conceived
or discovered during his/her work with Proprietary
Information.
f. The
obligation of this Paragraph 4.3 shall survive any
termination of this Agreement.
4.4
Licensee
acknowledges that at the time of this Agreement it is
not producing commercially a nickel-boron coating. If Licensee
decides to produce a nickel-boron coating other than the
Licensed Process hereunder, Licensee agrees to provide UCT with
written notice of its decision at least three (3) months before
such production is initiated by Licensee. Such notice shall
include Licensee's certification that the new production
coating does not fall within the scope of any claim of the UCT
Patent, and said notice shall be accompanied by test plates
coated with Licensee's proposed new nickel-boron coating. UCT
shall have
the right to analyze the applied nickel-boron
coatings and UCT agrees that its use of the results of such
analysis shall be limited to its use and enforcement of UCT's
patent rights. UCT agrees that the confidentiality provisions
of Paragraph 4.3 shall apply to UCT as if fully set forth
herein in the event that Licensee's process is disclosed to
UCT.
4.5
Licensee agrees
that it will operate the processes contained in
Licensed Process in strict accordance with the UCT Operations
Manual in conjunction with the training provided by UCT.
4.6
Market
Penetration and Information
Market Penetration and Information:
a.
Licensee agrees, on a best efforts basis, to market
UltraCem technology, including but not limited to,
performing direct sales calls, telemarketing calls,
direct mail marketing of materials and test plating.
b.
Licensee agrees to provide to UCT, monthly, a list of
applications where the Licensed Process has been tested
and is being applied, including information regarding the
Licensed Process
<PAGE>
successes and failures on a case by case basis. UCT shall
have the option to visit customers with Licensee for
service reasons or to learn the specific details of the
Licensed Process applications. UCT agrees to hold this
information confidential as per the terms of the
confidentiality provisions in this Agreement and will not
take commercial actions to market directly to said
customers so long as this Agreement is in full force and
effect and no breach of its terms and conditions has
occurred.
c. Should
UCT refer new business to Licensee that is subject
to previously negotiated commissions, Licensee shall pay
the commissions if it decides to accept the business.
Should Licensee decide to decline the referred business,
UCT shall be free to refer the business to any other
licensed metal finisher.
4.7
License Fees to
UCT and Minimum Chemistry Purchases
Upon execution of this Agreement, Licensee shall pay to UCT a
one time license fee in the amount of $0.0 and to retain its
license rights, Licensee shall purchase all chemistry from UCT
at minimum quantities of $25,000 during the first License Year;
$75,000 during the second License Year and $150,000 during the
third and subsequent License Years. Licensee shall purchase all
plating bath chemicals required by the Licensed Process
directly from UCT.
4.8
Licensee
specifically agrees that it shall provide UCT with a
completed EDS sheet, identified as Exhibit C attached hereto,
on each and every new application and UCT shall then provide a
process for each specific new application.
V. ORIGINAL EQUIPMENT
MANUFACTURERS EXCLUSIVE RIGHTS
5.0
Licensee hereby
represents and warrants that it has been
informed of and understands UCT's technology penetration
strategy, including the exclusive licensing of its technology
to certain Original Equipment Manufacturers, ("OEM'S"), in
specific market segments or applications, that may hold a
dominant market position or distribution channel strength or
wish to establish greater market
