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INTEGRATED ENVIRONMENTAL TECHNOLOGIES
TECHNOLOGY LICENSING AGREEMENT NO. 9801
This Technology Licensing Agreement (hereinafter called the
"Agreement") is entered into between Integrated Environmental
Technologies, LLC, a New York limited liability company, registered tin
the State of Washington located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "IET", and Royal Silver Mines,
Inc., a Utah corporation having its principal place of business located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇"▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(hereinafter called "Royal") (IET and Royal hereinafter collectively
called the "parties").
WHEREAS, IET is in the business of manufacturing high temperatur3e
systems which utilize plasma technology for processing materials and
has developed certain intellectual property include trade secrets,
inventions, whether patented or unpatented, information, data, and
experience (hereinafter called "IET" Technology") which are
confidential, proprietary and a valuable commercial assets to IET;
WHEREAS, Royal is in the business of developing mining properties and
Royal represents that Royal is a publicly traded corporation having the
capability to acquire rights in mineral deposits which can be exploited
through the application of IET technology; and
WHEREAS, Royal desires to obtain a license to IET Technology to allow
Royal to acquire, develop and exploit such mineral deposits using IET
Technology;
NOW, THEREFORE, in consideration of the mutual covenants, terms and
conditions contained herein and intending to be legally bound thereby,
the parties agree as follows:
1. Conditions Precedent
A. The grant of rights hereunder shall not take effect until
Royal has funded at direct cost, and IET has performed, a one
tone test in IET's facilities to demonstrate the technical
efficacy of the IET Technology in the processing of suitable
ores.
B. The grant of rights hereunder shall not take effect until
Royal has purchase, and IET has sold, a ten ton per day
system for installation in ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ County,
Washington, or such other location as the parties may
mutually agree, and the parties have commenced a one hundred
ton test in this ten ton per day system to demonstrate the
efficacy of the IET Technology in the processing of suitable
ores. Such purchase and sale shall be completed within one
(1) year of the completion of the test set forth in paragraph
1.A. and that such shall be pursuant to IET's standard terms
and conditions. The parties agree that as a condition of
Royal's purchase, Royal shall be given the option to return
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the ten ton per day system for a refund of the purchase price
(exclusive of installation, transport, taxes and related
costs) within one year of such return, in the event that the
system is unable to process ores.
C. The grants of rights hereunder shall not take effect until
Royal has acquired the rights in patented mining claims,
unpatented mining claims, long term leases (10 years or more)
of patented and unpatented mining claims, or in such form as
shall be reasonably acceptable to IET, to extract, process
and sell mineral deposits and residual process streams from
milling and smelting operations containing copper, gold
and/or silver having a minimum fair market value of two
hundred fifty million dollars ($250,000,000) after
processing. As used in this agreement "fair market value"
shall mean the highest bid price of any commodity or security
on the date the commodity or security was acquired ro sold by
the parties as listed on the Chicago Mercantile Exchange, the
NYSE, the NASDAQ or, if not listed on those exchange making
markets in the commodity or security. Royal shall acquire
such rights within eighteen (18) months of the completion of
the test set forth in paragraph 1.A.
2. Grant of Rights
Under completion of the conditions precedent set forth in
paragraph 1, above, IET hereby grants to Royal a world wide exclusive
license to practice those IET technologies necessary for the extraction
and recovery of copper from enargite ores and gold and silver from
arsenic rich ores or residual process streams from milling and smelting
operations. This license shall not include properties in and around
the Yuma, Arizona region currently owned or controlled by ▇▇▇▇▇ Childs.
The license granted hereunder shall be strictly limited to the
operation of systems or equipment purchased from IET for the extraction
and recovery of copper from enargite ores and gold and silver from
arsenic rich ores. IET does not grant Royal the right to manufacture
or sell systems or equipment which utilize or practice IET technology
in systems manufactured or sold by persons or entities other than IET,
and Royal shall not endeavor to purchase or utilize systems
manufactured or sold by persons or entities other than IET which
practice the IET technology. IET does not grant Royal the right to
practice to IET technology in fields other than the extraction and
recovery of copper from enargite ores and gold and silver from arsenic
rich ores, and Royal shall not endeavor to utilize the IET technology
or systems sold by IET for purposes other than the extraction and
recovery of copper from enargite ores and gold and silver from arsenic
rich ores.
3. Payment
In consideration of the rights granted herein, Royal grants IET
irrevocable warrants to purchase nineteen million nine hundred thirty
two thousand five hundred sixty five (19,932,565) shares of the common
stock of Royal Silver Mines, Inc. (which Royal represents is a number
equivalent to the issued and outstanding shares of Royal as of the
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effective date of this agreement) at a price of fourteen and four tenth
cents ($0.144) per share. Royal further agrees that in the event of any
sale or offer for sale of any shares of any type of Royal Silver Mines,
Inc., IET shall be given a right of first refusal for a period of not
less than forty five (45 days) to purchase up to one half of any such
shares under the same terms and conditions of such sale or offer.
Royal further agrees that the warrants granted hereunder shall remain
fully exercisable at IET's sole discretion for a period of not less
than ten years beginning the effective date of this agreement. Royal
further agrees to take all actions necessary, including without
limitation the filing of any required forms, papers and reports, with
the SEC, IRS and any and all other stgate4 and federal agencies, which
may be required to maintain Royal's status as a fully reporting,
publicly traded company during the period that the warrants granted
hereunder shall remain exercisable.
In addition to the warrants granted hereunder, Royal agrees that
Royal shall pay IET royalties for any and all precious metals extracted
or processed by Royal utilizing either the IET Technology or IET
furnished equipment accordingly to the following schedule:
Zinc twenty five dollars ($25) per ton
Lead ten dollars ($10) per ton
Copper forty dollars ($40) per ton
Gold forty dollars ($40) per ounce
Silver ten cents ($0.10) per ounce
In the event that IET shall exercise any of the warrants granted
hereunder, Royal shall have no further obligation for the payment of
the royalties set forth within this paragraph 3.
4. Sublicensing
Royal shall have no right to sublicense the IET Technology until
and unless IET shall exercise the warrants granted in the preceding
paragraph 3. In the event that IET shall exercise the warrants shall
exercise the warrants granted in the preceding paragraph 3, Royal shall
have the right to sublicense the IET Technology provided that any such
license shall REQUIRE, in addition to any other payment contained
within such sublicense, direct payment to IET of royalties for any and
all precious metals extracted or processed by Royal's sublicensee
utilizing either the IET Technology or IET furnished equipment
according to the following schedule:
Zinc eight dollars ($8) per ton
Lead three dollars twenty five cents ($3.25) per ton
Copper fourteen dollars ($14) per ton
Gold fourteen dollars ($14) per ounce
Silver three cents ($0.03) per ounce
Additionally, any such sublicense by Royal shall name IET as a third
party beneficiary of such license and shall contain the provisions, and
provide IET with the benefits of, paragraphs 3, 6, 7, 8, 9, 10, 11, and
12 of this agreement.
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5. Diligence Requirements
Royal's license under this agreement shall remain exclusive
provided that the diligence requirements set forth in this paragraph 5,
are met. In the event the diligence requirements are not met, Royal's
license under this agreement shall become non-exclusive. In each year,
Royal shall utilize the IET Technology to process copper, gold or
silver, having a total fair market value according to the following
schedule
Calendar Year Total fair market value
2000 $ 1,000,000
2001 $ 2,000,000
2002, and each year thereafter $12,000,000
For purpose of this paragraph, the fair market value of copper, gold or
silver processed by Royal shall be calculated as the total weight of
copper, gold and silver recovered from ores owned or controlled by
Royal using the IET Technology each quarter of Royal's financial year,
multiplied by the respective closing bid spot price of copper, gold or
silver as reported in the Wall Street Journal on the closing date of
each quarter of Royal's fiscal year.
6. Confidential Information
A. The parties recognize that IET is the owner or licensee of
certain Proprietary Information (as defined herein-below)
regarding applications of plasma and related technologies,
the unauthorized disclosure of which could have material
adverse effects upon the business prospects and advantages of
IET.
B. The term "Proprietary Information" shall mean any and all
data and information furnished by IET to Royal or by Royal to
IET related to the IET Technology by any means, including but
not limited to orally, in writing, or by electronic
transmission, which IET deems to be confidential or
proprietary to IET. Proprietary Information thus includes,
but is not limited to, business plans, financial information,
product concepts, patent applications, trade secrets, know
how, computer software, documentation, manuals, models, mock-
ups, data, reports, drawings, diagrams, design specifications
and any reproductions, in any form whatsoever, including
verbal disclosure, made thereof.
C. Any Proprietary Information furnished under this agreement,
or which may otherwise come into the possession of Royal,
shall remain the exclusive property of IET and Royal shall
not use any Proprietary Information for any purpose except as
contemplated by this agreement.
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D. Royal shall keep all Proprietary Information in strictest
confidence and shall not disclose any Proprietary Information
to any party whomsoever without first obtaining the written
consent of IET. Royal understands and agrees that no such
consent is given or shall be deemed to be have been given
through the provisions of this Agreement.
E. Royal shall avoid any unnecessary copying or other
reproductions of any Proprietary Information and shall
protect the confidentiality of all such copies to the same
extent required hereunder of original information. All
copies made of Proprietary Information shall be labeled by
Royal to include any proprietary notice delivered by IET with
the Proprietary Information. Upon request by IET, Royal
shall promptly return to IET, without further demand or other
request therefor, all Proprietary Information and copies
thereof. Royal shall further deliver to IET its certificate
stating that all Proprietary Information (and copies thereof)
has been delivered in accordance with the requirements of
this agreement.
F. Notwithstanding anything to the contrary contained in this
Agreement, Royal shall have no liability for the use or
disclosure of Proprietary Information which was:
(i) in the public domain prior to the execution of
this agreement or which, after such execution,
became a part of the public domain by means other
than the disclosure thereof by Royal in violation
of this agreement; or
(ii) in Royal's possession at the time of disclosure to
Royal hereunder and was not acquired directly or
indirectly by Royal under an obligation of
secrecy; or
(iii) received by Royal from a third party without
obligation of secrecy and which Royal did not know
or have reason to know was obtained by such third
party under an obligation of secrecy; or
(iv) developed by Royal independent of this agreement
and independent of any Proprietary Information
furnished under this agreement, as evidenced by
written documentation of the development effects,
and without violation of this agreement.
G. No Proprietary Information shall be deemed to be within the
exceptions set forth in paragraph F above solely by virtue of
the fact that such Proprietary Information is contained in
more general information then in the public domain or in
Royal's possession. Furthermore, any combination of
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characteristics peculiar to the Proprietary Information shall
not be deemed to fall within the exceptions set forth in
paragraph F above unless such combination of characteristics
is itself in the public domain or in Royal's possession.
H. Nothing contained in this agreement shall be deemed to grant
any right or license to Royal except as explicitly set forth
herein.
I. If Royal shall fail to comply with any of the provisions of
this agreement or fail to remedy any such failure within ten
(10) business days after notice from IET, then IET shall be
entitled to pursue any and all legal and equitable remedies
available against Royal. In such event, IET shall have the
right to require the immediate return of any or all
Proprietary Information (and copies thereof) furnished to
Royal under the protection of this agreement.
J. The obligations set forth in this Section 6, of this
agreement shall survive the expiration of this agreement for
a period of five years after the date first written above.
7. Payments
A. Method of Payment
All payments required under this Agreement should be made
payable to "Integrated Environmental Technology, LLC" and
sent to:
Integrated Environmental Technology, LLC
Attn: Accounts Payable
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Each payment should reference this Agreement and identify the
obligation under this agreement that the payment satisfies.
B. Payments in U.S. Dollars
All payments due under this agreement shall be payable in
United States dollars within ten days of the receipt of the
quarterly report as set forth in paragraph.
C. Late Payments
Any payments by Royal that are not paid on or before the date
such payments are due under this agreement shall bear
interest, to the extent permitted by law, at two percentage
points above the Prime Rate of interest as reported in the
Wall Street Journal on the date payment is due.
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8. Report and Record-Keeping
8.1 Frequency of Reports
A. Before commercial use of the IET Technology
Prior to the first commercial use of the IET Technology for
the processing of any copper, gold or silver bearing ores,
Royal shall deliver reports to IET annually, within sixty
(60) days of the end of each calendar year, containing
information concerning the immediately preceding calendar
year, as further described in Section 8.2.
B. Upon first commercial use of the IET Technology for the
processing of any copper, gold, or silver bearing ores, at
any property owned or controlled by Royal, Royal shall report
to IET the date of such first commercial use of the IET
Technology for the processing of any copper, gold, or silver
bearing ores, within sixty (60) days of occurrence in each
property owned or controlled by Royal.
C. After commencing the commercial use of the IET Technology for
the processing of any copper, gold, or silver bearing ores,
at any property owned or controlled by Royal, Royal shall
deliver reports to IET within sixty (60) days of the end of
each quarter of Royal's fiscal year (hereinafter "Quarter"),
containing information concerning the immediately preceding
Quarter, as further described in Section 8.2.
8.2 Content of Reports and Payments
Each report delivered by Royal to IET shall contain at least the
following information for the immediately preceding quarter:
A. The weight of all copper, gold, or silver bearing ores
processed for each property owned or controlled by Royal,
together with the weight of copper, gold, or silver recovered
from such ores using the IET Technology, together with the
respective closing bid price of copper, gold or silver as
reported in the Wall Street Journal on the closing date of
each Quarter.
B. The total royalty payable in U.S. dollars, together with the
exchange rates used for conversion.
If no amounts are due to IET for any reporting period, the
report shall so state.
8.3 Financial Statements
On or before the ninetieth (90th) day following the close of
Royal's fiscal year, Royal shall provide IET with Royal's
financial statements for the preceding year including, at a
minimum, a balance sheet and an income statement, certified by
Royal's independent auditor.
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8.4 Record keeping
Royal shall maintain, and shall cause its sublicensees to
maintain, complete and accurate records relating to the rights and
obligations under this agreement and any amounts payable to IET in
relation to this agreement, which records shall contain sufficient
information to permit IET to confirm the accuracy of any reports
delivered to IET and compliance in other respects with this
agreement. The relevant party shall retain such records for at
least five (5) years following the end of the calendar year to
which they pertain, during which time IET, or IET's appointed
agents, shall have the right, at IET's expense, to inspect such
records during normal business hours to verify any reports and
payments made or compliance in other respects under this
Agreement. In the event that any audit performed under this
Section reveals an underpayment in excess of ten percent (10%),
Royal shall bear the full costs of such audit and shall remit any
amounts due to IET within thirty (30) days of receiving notice
thereof from IET.
9. Patent Prosecution
IET shall prepare, file, prosecute, and maintain all patent rights
contained within the IET Technology. Royal shall have reasonable
opportunities to advise IET and shall cooperate with IET in such
filing, prosecution and maintenance of such patent rights.
Payment of all fees and costs, including attorneys fees relating
to the filing, prosecution and maintenance of the patent rights
shall be the responsibility of IET.
10. Infringement
10.1 Notification of Infringement
Each party agrees to provide written notice to the other party
promptly after becoming aware of any infringement of the patent
rights.
10.2 Right to Prosecute Infringements
1. Royal Right to Prosecute. So long as Royal remains the
exclusive licensee of the patent rights for the extraction
and recovery of copper from enargite ores and gold and silver
form arsenic rich ores Royal, to the extent permitted by law,
shall have the right, under its own control and at its own
expense, to prosecute any third party infringement of the
patent rights in the field licensed exclusively to Royal. If
required by law, IET shall permit any action under this
paragraph to be brought in its name, including being joined
as a party-plaintiff, provided that Royal shall hold IET
harmless form, and indemnify IET against, any costs,
expenses, or liability that IET incurs in connection with
such action. Prior to commencing any such action, Royal
shall consult with IET and shall consider the views to IET
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regarding the advisability of the proposed action. Royal
shall not enter into nay settlement, consent, judgment, or
other voluntary final disposition of any infringement action
under this paragraph without the prior written consent of
IET.
2. IET Right to Prosecute. In the event that Royal is
unsuccessful in persuading the alleged infringer to desist or
fails to have initiated an infringement action within a
reasonable time after Royal first becomes aware of the basis
for such action, IET shall have the right, at its sole
discretion, to prosecute such infringement under its sold
control and at its sold expense, and any recovery obtained
shall belong to IET.
10.3 Declaratory Actions
In the event that a declaratory judgment action is brought against
IET or Royal by a third party alleging invalidity,
unenforceability, or non-infringement of the patent rights, IET,
at its option, shall have the right within twenty (20) days after
commencement of such action to take over the sole defense of the
action at its own expense. If IET does no exercise this right,
Royal may take over the sole defense of the action at Royal's sole
expense, subject to Section 10.4.
10.4 Recovery
An recovery obtained in an action brought by Royal under paragraph
10.2 or 10.3 shall be distributed as follows: (i) each party shall
be reimbursed for any expenses incurred in the action (including
the amount of any royalty or other payments withheld from IET as
described below), (ii) as to ordinary damages, Royal shall receive
an amount equal to its lost profits or a reasonable royalty on the
infringing sales, or whichever measure of damages the court shall
have applied, and Royal shall pay to IET based upon such amount a
reasonable approximation of the royalties and other amounts that
Royal would have paid to IET if Royal had sold the infringing
products, processes and services rather than the infringer, and
(iii) as to special or punitive damages, the parties shall shares
equally in any award. Royal may offset a total of fifty percent
(50%) of any expenses incurred under paragraph 10.2 and 10.3
against any payment due to IET under paragraph 3 and 4, provided
that in no event shall the such payments under paragraph 3 and 4,
when aggregated with any other offsets and credits allowed under
this Agreement, be reduced by more than fifty percent (50%) in any
reporting period.
10.5 Cooperation
Each party agrees to cooperate in any action under this paragraph
which is controlled by the other party, provided that the
controlling party reimburses the cooperating party promptly for
any costs and expenses incurred by the cooperating party in
connection with providing such assistance.
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11. No Representations of Warranties
EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT,
IET MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING
THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION WARRANTIES OR MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT, VALIDITY OR PATENT RIGHTS CLAIMS,
WHETHER ISSUED O0R PENDING, AND THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, IET makes no
warranty or representation (i) regarding the validity or scope of
any patent rights, and (ii) that the exploitation of the patent
rights or any licensed product or licensed process will not
infringe any patents or other intellectual property rights of a
third party.
IN NO EVENT SHALL IET, ITS TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO
PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER IET SHALL BE
ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF
THE POSSIBILITY OF THE FOREGOING.
12. Assignment
The agreement is personal to Royal and no rights or obligations
may be assigned by Royal without the prior written consent of IET.
A purchase of a majority of Royal's outstanding voting securities
by a third party without IET's prior written consent shall
terminate this agreement effective on the date of such purchase.
13. Remedies
The parties acknowledge that the damages suffered by the Company
for Royal's breach of certain covenants of this Agreement are not
ascertainable. Accordingly, if there is a breach or threatened
breach of the provisions of section 6 of this agreement, the
Company shall be entitled to injunctive relief restraining Royal
from such breach, or to specific performance. Nothing herein
shall be constructed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach.
14. Waiver of Breach
A waiver by IET or Royal of a breach of any provision of this
agreement by the other party shall not operate or be constructed
as a waiver of any subsequent breach by the other party.
15. Governing Law/Jurisdiction
The parties acknowledge that this Agreement is made in the State
of Washington. This agreement, including the validity hereof and
the rights and obligations of the parties hereunder and all
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amendments and supplements hereof shall be constructed in
accordance with and governed by the laws of the State of
Washington without giving effect to any choice of the law or
conflicts of law of any other jurisdiction. The ▇▇▇▇▇▇ County
Superior Court and ▇▇▇▇▇▇ County District Court of the State of
Washington and the United States District Court for the Eastern
District of Washington shall have exclusive jurisdiction of all
suits and proceedings arising out of or in connection with this
agreement. Each of IET and Royal hereby submits to the
jurisdiction of said courts for purposes of any such suit or
proceeding.
16. Integration
The Agreement contains the entire understanding between the
parties, and there are no understandings or representations not
set forth or incorporated by reference herein. No subsequent
modifications of this agreement shall be of any force or effect
unless in writing signed by the party claimed to be bound thereby.
No communications, written or oral, by other than a IET Contract
Representative shall be effective to modify or otherwise affect
the provision of the agreement.
Integrated Environmental Technologies Royal Silver Mines, Inc.
BY: /s/ ▇▇▇▇▇▇▇ ▇. S(illegible) BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President Title: President
Date: 1/7/99 Date: January 7, 1999.