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EXHIBIT NUMBER 10.11
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PACIFIC LITHIUM LIMITED
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
EXCLUSIVE PATENT LICENSE AGREEMENT
(rev. 1/8/98)
This Agreement, effective as of the date set forth above the signatures
of the parties below (the "Effective Date"), is between the Massachusetts
Institute of Technology ("M.I.T."), a Massachusetts corporation, with a
principal place of business at 00 Xxxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000
and Pacific Lithium ("COMPANY"), a New Zealand corporation, with the mailing
address of its principal place of business at 5th Floor, Gosling Xxxxxxx Centre,
00 Xxxxxx Xx., Xxxxxxxx Xxxx, Xxx Xxxxxxx.
WHEREAS, M.I.T. is the owner of certain PATENT RIGHTS (as later defined
herein) relating to:
M.I.T. Case No. 7960, "Glass Compositions for Anode Materials in
Rechargeable Lithium Batteries," by Xxxxxxxx Xxxxx and Yet-Xxxx Xxxxxx;
M.I.T. Case No. 7959, "Solid Polymer Electrolyte Lithium Battery and
Process of Manufacture," by Yet-Xxxx Xxxxxx and Xxxx X. Xxxxx;
M.I.T. Case No. 7799, "Mixed Ionic-Electronic Conducting Binder for Lithium
Battery Electrodes," by Yet-Xxxx Xxxxxx, Xxxx X. Xxxxx, and Xxxxxx X.
Xxxxxxx;
M.I.T. Case No. 7124, "High Voltage Cathode Materials For Li Batteries," by
Xxxxxx X. Xxxxxxx, Xxxxxxxx Xxxxx, Yet-Xxxx Xxxxxx, Xxxxxx Xxxxx, and
Young-il Jang;
X.X.X. Xxxx Xx. 0000, "Xxxxx Copolymer Electrolytes for Lithium Solid
Polymer Electrolyte Batteries," by Xxxx X. Xxxxx and Xxxxxx X. Soo; and
M.I.T. Case No. 6774, "Cathodes For Lithium Solid Polymer Electrolyte
Batteries," by Xxxx X. Xxxxx and Xxxxxx X. Xxxxxxx.
M.I.T. has the right to grant licenses under said PATENT RIGHTS, subject only to
a royalty-free, nonexclusive non-transferable license to practice the PATENT
RIGHTS reserved by the United States Government for M.I.T. Cases 7054 and 7799.
WHEREAS, M.I.T.'s Vice President for Research has approved that
Yet-Xxxx Xxxxxx, Xxxx X. Xxxxx, and Xxxxxxxx Xxxxx, inventors of the PATENT
RIGHTS, now hold or shall
February 10, 1998 Page-1-of-26-
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shortly acquire an equity position in COMPANY and that M.I.T. is accepting
equity as partial consideration for the rights and licenses granted under this
Agreement;
WHEREAS, the Conflict Avoidance Statement of Yet-Xxxx Xxxxxx, Xxxx X.
Xxxxx, and Xxxxxxxx Xxxxx is Exhibit A hereto; and a Waiver of M.I.T equity
sharing for Yet-Xxxx Xxxxxx, Xxxx X. Xxxxx, Xxxxxxxx Xxxxx, and Xxxxxx Xxxxxxx
is attached hereto as Exhibit B;
WHEREAS, M.I.T. desires to have the PATENT RIGHTS developed and
commercialized to benefit the public and is willing to grant a license
thereunder;
WHEREAS, COMPANY has represented to M.I.T., to induce M.I.T. to enter
into this Agreement, that COMPANY shall commit itself to a thorough, vigorous
and diligent progam of exploiting the PATENT RIGHTS so that public utilization
shall result therefrom; and
WHEREAS, COMPANY intends to form a majority owned subsidiary to be
incorporated under the laws of the United States and located in Massachusetts
(hereinafter referred to as "NEWCO"), for the exploitation of the PATENT RIGHTS;
and
WHEREAS promptly upon formation of NEWCO, COMPANY shall assign its
rights and obligations to NEWCO, and
NOW, THEREFORE, M.I.T. and COMPANY hereby agree as follows:
1. Definitions.
1.1. "AFFILIATE" shall mean any legal entity (such as a corporation,
partnership, or limited liability company) that is controlled by COMPANY. For
the purposes of this definition, the term "control" means (i) beneficial
ownership of at least fifty percent (50%) of the voting securities of a
corporation or other business organization with voting securities or (ii) a
fifty percent (50%) or greater interest in the net assets or profits of a
partnership or other business organization without voting securities.
1.2 "EXCLUDED FIELDS" shall mean "batteries for military applications,
and for aerospace applications such as satellites and space vehicles" but not
batteries that are essentially equivalent to those sold in commercial,
mass-markets.
1.3 "FIELD" shall mean all fields but EXCLUDED FIELDS, as Section 1.3
defines.
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1.4 "LICENSED PRODUCT" shall mean any product that cannot be
manufactured, used, leased, or sold, in whole or in part, without infringing one
or more claims under the PATENT RIGHTS.
1.5 "LICENSED PROCESS" shall mean any process that cannot be performed,
in whole or in part, without using at least one process that infringes one or
more claims under the PATENT RIGHTS.
1.6 "NET REVENUES" shall mean the gross amount billed or invoiced by
COMPANY and its AFFILIATES and SUBLICENSEES for sales and leases of LICENSED
PRODUCTS and LICENSED PROCESSES, less the following: (i) customary trade,
quantity, or cash discounts to the extent actually allowed and taken; (ii)
amounts repaid or credited by reason of rejection or return; (iii) to the extent
separately stated on purchase orders, invoices, or other documents of sale, any
taxes or other governmental charges levied on the production, sale,
transportation, delivery, or use of a LICENSED PRODUCT or LICENSED PROCESS which
is paid by or on behalf of COMPANY; and (iv) outbound transportation costs
prepaid or allowed and costs of insurance in transit.
No deductions shall be made for commissions paid to
individuals whether they be with independent sales agencies or regularly
employed by COMPANY and on its payroll, or for cost of collections. NET REVENUES
shall occur on the date of invoice or billing for a LICENSED PRODUCT or LICENSED
PROCESS. If a LICENSED PRODUCT or a LICENSED PROCESS is distributed, billed or
invoiced to AFFILIATES or others at a discounted price that is substantially
lower than the customary price charged by COMPANY to independent third parties,
NET REVENUES shall be calculated based on the invoice amount of the LICENSED
PRODUCT or LICENSED PROCESS to an independent third party during the same
REPORTING PERIOD or, in the absence of such invoice, on the fair market value of
the LICENSED PRODUCT or LICENSED PROCESS as mutually determined by the parties
in good faith.
COMPANY nor an AFFILIATE nor any SUBLICENSEE shall accept
non-monetary consideration for any LICENSED PRODUCTS or LICENSED PROCESSES
without the prior written consent of M.I.T.
1.7. "PATENT RIGHTS" shall mean:
(a) the United States and international patents listed on
Appendix A;
(b) the United States and international patent applications
listed on Appendix A and the resulting patents;
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(c) any divisionals, continuations, continuation-in-part
applications, and continued prosecution applications (and their relevant
international equivalents) of the patent applications listed on Appendix A to
the extent the claims are directed to subject matter specifically described in
the patent applications listed on Appendix A, and the resulting patents;
(d) any patents resulting from reissues, reexaminations, or
extensions (and their relevant international equivalents) of the patents
described in (a), (b), and (c) above; and
(e) international (non-United States) patent applications
filed after the Effective Date in the countries listed on Appendix B and the
relevant international equivalents to divisionals, continuations,
continuation-in-part applications and continued prosecution applications of such
patent applications to the extent the claims are directed to subject matter
specifically described in the patents or patent applications referred to in (a),
(b), (c), and (d) above, and the resulting patents.
1.8. "REPORTING PERIOD" shall begin on the first day of each calendar
quarter and end on the last day of such calendar quarter; except that the first
and last REPORTING PERIODS under this Agreement may be partial calendar quarters
in that the first REPORTING PERIOD shall begin on the Effective Date, and the
last REPORTING PERIOD shall end on the later of (i) the date of termination of
this Agreement or (ii) the date upon which COMPANY completes and sells its
remaining work-in-progress and inventory of LICENSED PRODUCTS pursuant to
Section 8.5.
1.9. "SUBLICENSE INCOME" shall mean any payments that COMPANY receives
from a SUBLICENSEE in consideration of the sublicense of the rights granted
COMPANY under Section 2.2, including, without limitation, license fees,
milestone payments, license maintenance fees, and other payments, but
specifically excluding running royalties.
1.10. "SUBLICENSEE" shall mean any permitted sublicensee of the rights
granted COMPANY under this Agreement, as further described in Section 2.3.
1.11. "TERM" shall mean the term of this Agreement as further defined
in Section 8.1. below.
1.12. "TERRITORY" shall mean worldwide.
1.13. "FINANCING EVENT DATE" shall mean each date on which the COMPANY
sells equity in the COMPANY.
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2. Grant of Rights.
2.1 COMPANY agrees that the following are preconditions to the
license being granted in this agreement:
(a) NEWCO shall be incorporated by June 30, 1998 with
an initial capitalization from COMPANY of at least $500,000.
(b) Promptly upon formation of NEWCO, COMPANY shall
assign all of its rights and obligations under this license
agreement to NEWCO, and M.I.T hereby consents and approves of
this assignment.
In the event either condition of this section 2.1 is not fulfilled, this
agreement will automatically terminate on June 30, 1998 without further notice.
Any amounts due to be paid or paid hereunder prior to June 30, 1998 are
nonrefundable.
2.2. License Grant. Subject to the terms of this Agreement, M.I.T. hereby grants
to COMPANY and its AFFILIATES a royalty-bearing license under its rights in the
PATENT RIGHTS, to the extent not prohibited by other patents, to develop, make,
have made, use, sell, lease, and import LICENSED PRODUCTS in the FIELD in the
TERRITORY and to develop and perform LICENSED PROCESSES in the FIELD in the
TERRITORY.
2.3 Exclusivity.
M.I.T. agrees that it shall not grant any other license to
make, have made, use, sell, lease and import LICENSED PRODUCTS in the FIELD in
the TERRITORY or to develop and perform LICENSED PROCESSES in the FIELD in the
TERRITORY during the period of time of commencing on the Effective Date to the
end of the TERM, unless sooner terminated as provided in this Agreement.
2.4. Sublicenses. COMPANY shall have the right to grant sublicenses of
its rights under Section 2.2. COMPANY shall incorporate terms and conditions
into its sublicense agreements sufficient to enable COMPANY to comply with this
Agreement. COMPANY shall promptly furnish M.I.T. with a fully executed copy of
any sublicense agreement. Upon termination of this Agreement for any reason, any
SUBLICENSEE not then in default shall have the right to seek a license from
M.I.T. M.I.T. agrees to negotiate such licenses in good faith under reasonable
terms and conditions.
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2.5. Retained Rights.
(a) M.I.T. M.I.T. retains the right to practice under the
PATENT RIGHTS for research, teaching, and educational purposes, without payment
of compensation to COMPANY.
(b) Federal Government. To the extent that any invention
claimed in the PATENT RIGHTS has been partially funded by the U.S. federal
government, COMPANY acknowledges that the federal government retains a
royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any PATENT RIGHTS. This Agreement and the
grant of any rights in such government funded inventions in the PATENT RIGHTS
are subject to and governed by federal law as set forth in 35 U.S.C.
Sections 201-211, and the regulations promulgated thereunder, as amended,
or any successor statutes or regulations. If any term of this Agreement fails to
conform with such laws and regulations, the relevant term shall be deemed an
invalid provision and modified in accordance with Section 10.10.
2.6 Access to lists of technologies available for license. M.I.T agrees
to answer periodic requests from COMPANY to provide under a nondisclosure
agreement descriptions of technologies available for licensing from M.I.T in the
battery area.
2.7 No Additional Rights. Nothing in this Agreement shall be construed
to confer any rights upon COMPANY by implication, estoppel, or otherwise as to
any technology or patent rights of M.I.T. or any other entity other than the
PATENT RIGHTS, regardless of whether such rights shall be dominant or
subordinate to any PATENT RIGHTS.
3. COMPANY Obligations Relating to Commercialization.
3.1. Diligence Requirements. COMPANY shall use diligent efforts, or
shall cause its AFFILIATES and SUBLICENSEES to use diligent efforts, to develop
LICENSED PRODUCTS or LICENSED PROCESSES and to introduce LICENSED PRODUCTS or
LICENSED PROCESSES into the commercial market; thereafter, COMPANY or its
AFFILIATES or SUBLICENSEES shall make LICENSED PRODUCTS or LICENSED PROCESSES
reasonably available to the public. Specifically, COMPANY or AFFILIATE or
SUBLICENSEE shall fulfill the following obligations:
(a) Within six (6) months after the Effective Date, Company
shall furnish M.I.T. with a written research and development plan
documenting the major tasks and dates to be achieved from inception
through first sale specifying the number of staff and
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other resources devoted to the commercialization of LICENSED PRODUCTS or
LICENSED PROCESSES in the FIELD.
(b) Consistent with Section 5.l(a) (Frequency of Reports), within
sixty (60) days after the end of each calendar year, COMPANY shall furnish
M.I.T. with a written report on the progress of its efforts during the
immediately preceding calendar year to develop and commercialize LICENSED
PRODUCTS or LICENSED PROCESSES, including without limitation research and
development efforts, efforts to obtain regulatory approval, marketing efforts,
and sales figures. The report shall also contain a discussion of intended
efforts and sales projections for the year in which the report is submitted.
(c) COMPANY shall raise at least Ten Million Dollars ($10,000,000) by
March 30, 1999 from the sale of COMPANY's equity securities for its own account.
(d) In the aggregate, COMPANY shall raise at least One Hundred Million
Dollars ($100,000,000) by December 31, 2000 from the sale of COMPANY's equity
securities for its own account or demonstrate that it owns the production
capacity to produce at least 5,000,000 batteries based on LICENSED PRODUCTS per
annum or that COMPANY has signed multi year contracts for the contract
manufacture of at least 5,000,000 batteries based on LICENSED PRODUCTS per
annum.
(e) By January 31, 1999, COMPANY shall start construction of pilot
plants each capable of producing at least 100 tons per year of lithium carbonate
and/or lithium hydroxide and by January 31, 2000 demonstrate that a
commercial-sized plant can produce such salts at costs commercially practical
for the use in producing at least 5,000,000 batteries based on LICENSED PRODUCTS
per annum; or shall demonstrate to the satisfaction of M.I.T. that it has
procured a long-term source of such salts at commercially practical prices to
produce at least 5,000,000 batteries based on LICENSED PRODUCTS per annum.
(f) COMPANY shall sponsor a minimum of Seven Hundred and Twenty Four
Thousand Dollars ($724,000) of research at M.I.T. starting no later than June
30, 1998 and continuing for the next twenty-four months, under the terms of
M.I.T.'s standard Research Agreement (as may be modified by mutual agreement
between the parties.) and further provided that:
any additional patent rights arising from such research sponsored by
COMPANY shall be added, at COMPANY'S election by amendment to the License
Agreement for a license issue fee to be negotiated but not to exceed $50,000 per
patent added, and otherwise under the royalty terms and other terms of the
License Agreement.
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(g) COMPANY shall develop working developmental prototypes
according to the following schedule:
YEAR DEVELOPMENTAL PROTOTYPE
---- -----------------------
January 1, 2000 Lithium batteries for laptop
computers and cellular telephones
January 1, 2004 Lithium batteries for electric vehicle
applications
January 1, 2008 Large energy storage systems and/or
large energy leveling systems
If COMPANY documents that the major reason for a delay in meeting the
requirements of paragraph (g) are directly attributable to equivalent delays in
achieving the results projected in the sponsored research described in paragraph
(f) then M.I.T. shall consider such impact in the making the determination of
whether COMPANY has met the requirements of paragraph (g).
(h) COMPANY shall permit an in-plant inspection by M.I.T. on or before
December, 1998, and thereafter permit in-plant inspections by M.I.T. at regular
intervals with at least six (6) months between each such inspection.
(i) COMPANY shall make a first commercial sale of a LICENSED PRODUCT on
or before December 31, 1999.
(j) COMPANY shall establish commercial relationships with one or more
potential customers for LICENSED PRODUCTS by selling Lithium containing products
which need not be LICENSED PRODUCTS with net revenues of at least $500,000 in
the year ending Dec. 31, 1999 to such customers.
(k) COMPANY shall make NET REVENUES according to the following
schedule:
in the year ending Dec. 31, 2000 $2,500,000;
in the year ending Dec. 31, and each year thereafter $15,000,000
In the event that M.I.T. determines that COMPANY (or an AFFILIATE or
SUBLICENSEE) has failed to fulfill its obligations under this Section 3.1 then
M.I.T. will treat such failure as a Material Breach as described in Section
8.3(b).
3.2 Indemnification.
(a) Indemnity. COMPANY shall indemnify, defend, and hold
harmless M.I.T. and its trustees, officers, faculty, students, employees and
agents and their respective successors,
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heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses) incurred by or
imposed upon any of the Indemnitees in connection with any claims, suits,
actions, demands or judgments arising out of any theory of liability (including
without limitation actions in the form of tort, warranty, or strict liability
and regardless of whether such action has any factual basis) concerning any
product, process, or service that is made, used, sold, or imported pursuant to
any right or license granted under this Agreement.
(b) Procedures. The Indemnitees agree to provide COMPANY with
prompt written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. COMPANY agrees, at its own
expense, to provide attorneys reasonably acceptable to M.I.T. to defend against
any such claim. The Indemnitees shall cooperate fully with COMPANY in such
defense and will permit COMPANY to conduct and control such defense and the
disposition of such claim, suit, or action (including all decisions relative to
litigation, appeal, and settlement); provided, however, that any Indemnitee
shall have the right to retain its own counsel, at the expense of COMPANY, if
representation of such Indemnitee by the counsel retained by COMPANY would be
inappropriate because of actual or potential differences in the interests of
such Indemnitee and any other party represented by such counsel. COMPANY agrees
to keep M.I.T. informed of the progress in the defense and disposition of such
claim and to consult with M.I.T. with regard to any proposed settlement.
(c) Insurance. COMPANY shall obtain and carry in full force
and effect commercial general liability insurance, including product liability
and errors and omissions insurance which shall protect COMPANY and Indemnitees
with respect to events covered by Section 3.2(a) above. Such insurance shall be
issued by an insurer pre-approved by M.I.T, such approval not to be unreasonably
withheld, shall list M.I.T. as an additional named insured thereunder, shall be
endorsed to include product liability coverage, and shall require thirty (30)
days written notice to be given to M.I.T. prior to any cancellation or material
change thereof. The limits of such insurance shall not be less than One Million
Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars
($3,000,000) for bodily injury including death; One Million Dollars ($1,000,000)
per occurrence with an aggregate of Three Million Dollars ($3,000,000) for
property damage; and One Million Dollars ($1,000,000) per occurrence with an
aggregate of Three Million Dollars ($3,000,000) for errors and omissions. In the
alternative, COMPANY may self-insure subject to prior approval of M.I.T. COMPANY
shall provide M.I.T. with Certificates of Insurance evidencing compliance with
this Section. COMPANY shall continue to maintain such insurance or self-
insurance after the expiration or termination of this Agreement during any
period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to
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make, use, or sell a product that was a LICENSED PRODUCT under this Agreement or
(ii) to perform a service that was a LICENSED PROCESS under this Agreement, and
thereafter for a period of five (5) years.
3.3. Use of M.I.T. Name. COMPANY and its AFFILIATES and SUBLICENSEES
shall not use the name of "Massachusetts Institute of Technology," "Lincoln
Laboratory" or any variation, adaptation, or abbreviation thereof, or of any of
its trustees, officers, faculty, students, employees, or agents, or any
trademark owned by M.I.T., or any terms of this Agreement in any promotional
material or other public announcement or disclosure without the prior written
consent of M.I.T. The foregoing notwithstanding, without the consent of M.I.T.,
COMPANY may state that it is licensed by M.I.T. under one or more of the patents
and/or patent applications comprising the PATENT RIGHTS and may disclose such
information in any prospectus, offering memorandum, or other document or filing
required by applicable securities laws or other applicable law or regulation.
3.4. Marking of LICENSED PRODUCTS. To the extent commercially feasible
and consistent with prevailing business practices, COMPANY shall xxxx, and shall
cause its AFFILIATES and SUBLICENSEES to xxxx, all LICENSED PRODUCTS that are
manufactured or sold under this Agreement with the number of each issued patent
under the PATENT RIGHTS that applies to such LICENSED PRODUCT.
3.5. Compliance with Law. COMPANY shall use reasonably commercial
efforts to comply with, and shall ensure that its AFFILIATES and SUBLICENSEES
use reasonably commercial efforts to comply with, all commercially material
local, state, federal, and international laws and regulations relating to the
development, manufacture, use, and sale of LICENSED PRODUCTS and LICENSED
PROCESSES. COMPANY expressly agrees to comply with the following:
(i) COMPANY and its AFFILIATES and SUBLICENSEES shall comply
with all United States laws and regulations controlling the export of
certain commodities and technical data, including without limitation
all Export Administration Regulations of the United States Department
of Commerce. Among other things, these laws and regulations prohibit or
require a license for the export of certain types of commodities and
technical data to specified countries. COMPANY hereby gives written
assurance that it will comply with, and will cause its AFFILIATES and
SUBLICENSEES to comply with, all United States export control laws and
regulations, that it bears sole responsibility for any violation of
such laws and regulations by itself or its AFFILIATES or SUBLICENSEES,
and that it
February 10, 1998 Page-10-of-26-
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will indemnify, defend, and hold M.I.T. harmless (in accordance with
Section 3.2.) for the consequences of any such violation.
(ii) COMPANY agrees that any LICENSED PRODUCTS used or sold in
the United States will be manufactured substantially in the United
States or its territories unless a waiver is obtained from the U.S.
government.
4. Consideration for Grant of Rights.
4.1. License Issue Considerations. In partial consideration of the
rights granted COMPANY under this Agreement, COMPANY shall pay to M.I.T.:
(i) a total license issue fee of Four Hundred and Fifty Thousand
dollars ($450,000) to be paid as follows:
(a) One Hundred Thousand Dollars ($100,000) to be due
within five working days of the Effective Date of
this Agreement plus
(b) Five (5) percent of the amount received by
COMPANY for equity provided on each FINANCING EVENT
DATE due fifteen days after receipt until a total of
Three Hundred and Fifty Thousand ($350,000) has been
paid to M.I.T with any balance remaining unpaid to be
paid by December 31, 1998;
(ii) shares of the COMPANY as set forth in Section 4.6 below; and
(iii) such amount as set forth in Section 6.3 to reimburse M.I.T.
for its actual expenses incurred as of the Effective Date in
connection with obtaining the PATENT RIGHTS. These fees and
payments are due on or before June 1, 1998 and are nonrefundable
and are not creditable against any other payments due to M.I.T.
under this Agreement. In the event that payment in full is not
made by June 1, 1998, this agreement will automatically terminate
on June 1, 1998 without further notice.
4.2. License Maintenance Fee. For each calendar year during the TERM,
COMPANY shall pay to M.I.T. the following license maintenance fees on the dates
set forth below:
January 1, 1999 and each January 1st thereafter $100,000
This annual license maintenance fee is nonrefundable; however, the license
maintenance fee may be credited to running royalties subsequently due on NET
REVENUES and SUBLICENSE INCOME
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earned during the same calendar year, if any. License maintenance fees' paid in
excess of running royalties and SUBLICENSE INCOME due in such calendar year
shall not be creditable to amounts due for future years.
4.3. Running Royalties. In partial consideration of the rights granted
COMPANY under this Agreement, COMPANY shall pay to M.I.T. a running royalty of
five percent (5%) of NET REVENUES. These milestone payments are nonrefundable.
4.4. Sharing of SUBLICENSE INCOME. COMPANY shall pay M.I.T. a total of
fifty (50%) of all SUBLICENSE INCOME.
4.5. No Multiple Royalties. If the manufacture, use, lease, or sale of
any LICENSED PRODUCT or the performance of any LICENSED PROCESS is covered by
more than one of the PATENT RIGHTS, multiple royalties shall not be due.
4.6. Equity.
(a) Initial Grant. In partial consideration of the license
granted COMPANY under this Agreement, COMPANY shall issue to M.I.T shares (the
"Shares") of Common Stock of COMPANY, for a total consideration of Three Dollars
and Fifty Cents ($3.50) to be paid by M.I.T to COMPANY.
COMPANY represents to M.I.T. that, as of the Effective Date,
the aggregate number of Shares issued to M.I.T equals at least three and one
half Percent (3.5%) of the COMPANY's issued and outstanding Common Stock
calculated on a "Fully Diluted Basis." For purposes of this Section 4.6, "Fully
Diluted Basis" shall mean that the total number of issued and outstanding shares
of the COMPANY's Common Stock shall be calculated to include conversion of all
issued and outstanding securities then convertible into common stock, the
exercise of all then outstanding options and warrants to purchase shares of
common stock, whether or not then exercisable, and shall assume the issuance or
grant of all securities reserved for issuance pursuant to any COMPANY stock or
stock option plan in effect on the date of the calculation.
(b) Anti-Dilution Protection. COMPANY shall issue additional
shares of Common Stock to M.I.T., such that M.I.T.'s ownership of outstanding
Common Stock shall not fall below three and on half Percent (3.5%) on a Fully
Diluted Basis, as calculated after giving effect to the anti-dilutive issuance.
Such issuances shall continue until and including the date upon which a total of
Ten Million Dollars ($10,000,000) in cash in exchange for COMPANY's capital
February 10, 1998 Page-12-of-26-
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stock (the "Funding Threshold") shall be received by COMPANY.
Thereafter, no additional shares shall be due to M.I.T.
(c) Participation in Future Private Equity Offerings.
After the date of the Funding Threshold, M.I.T. shall have the right to
purchase additional shares of the COMPANY's Common Stock in any private
offering by the COMPANY of its equity securities in exchange for cash,
to maintain its pro rata ownership as calculated immediately prior to
such offering on a Fully Diluted Basis, pursuant to the terms and
conditions at least as favorable as those granted to the other
offerees. All rights granted to M.I.T. pursuant to this Section 4.6(c)
shall terminate immediately prior to a firm commitment underwritten
public offering of the COMPANY's common stock resulting in gross
proceeds to the COMPANY of at least $10 million.
5. Reports; Payments; Records.
5.1. Frequency of Reports.
(a) Before First Commercial Sale.
(i) COMPANY must report FINANCING EVENT DATES
within five working days of their occurrence.
(ii) COMPANY must report the achievement of the
diligence provisions listed under Section 3.1
(c), (d), (e), (f), (g), (i), (j), and (k) by
fax to M.I.T at 000-000-0000 or the fax number
within 15 days of achievement.
(ii) Prior to the first commercial sale of any
LICENSED PRODUCT or first commercial performance
of any LICENSED PROCESS, COMPANY shall deliver
reports to M.I.T. 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 5.2 (to the extent
applicable).
(b) After First Commercial Sale.
After the first commercial sale of any LICENSED
PRODUCT or first commercial performance of any
LICENSED PROCESS, COMPANY shall deliver reports
to M.I.T. within sixty (60) days of the end of
each REPORTING PERIOD, containing information
concerning the immediately preceding REPORTING
PERIOD, as further described in Section 5.2.
(c) Upon First Commercial Sale of each LICENSED
PRODUCT or Commercial Performance of LICENSED PROCESS. COMPANY shall
report to M.I.T. the date
February 10, 1998 Page-13-of-26-
15
of first commercial sale of each LICENSED PRODUCT and the date of first
commercial performance of each LICENSED PROCESS within sixty (60) days of
occurrence in each country.
5.2. Content of Reports and Payments. Each report delivered by COMPANY
to M.I.T. shall contain at least the following information for the immediately
preceding REPORTING PERIOD:
(i) the number of LICENSED PRODUCTS sold, leased or
distributed by COMPANY, its AFFILIATES and SUBLICENSEES to independent
third parties in each country, and, if applicable, the number of
LICENSED PRODUCTS used by COMPANY, its AFFILIATES and SUBLICENSEES in
the provision of services in each country;
(ii) the number of LICENSED PROCESSES performed by COMPANY,
its AFFILIATES and SUBLICENSEES in each country;
(iii) the gross price charged by COMPANY, its AFFILIATES and
SUBLICENSEES for each LICENSED PRODUCT and, if applicable, the gross
price charged for each LICENSED PRODUCT used to provide services in
each country; and the gross price charged for each LICENSED PROCESS
performed by COMPANY, its AFFILIATES and SUBLICENSEES in each country;
(iv) calculation of NET REVENUES for the applicable REPORTING
PERIOD in each country, including a listing of applicable deductions;
(v) total royalty payable on NET REVENUES in U.S. dollars,
together with the exchange rates used for conversion;
(vi) the amount of SUBLICENSE INCOME received by COMPANY from
each SUBLICENSEE and the amount due to M.I.T. from such SUBLICENSE
INCOME, including an itemized breakdown of the sources of income
comprising the SUBLICENSE INCOME; and
(vii) the number of sublicenses entered into for the PATENT
RIGHTS, LICENSED PRODUCTS and/or LICENSED PROCESSES.
February 10, 1998 Page-14-of-26-
16
If no amounts are due to M.I.T. for any REPORTING PERIOD, the report shall so
state. Concurrent with each report, COMPANY shall remit to M.I.T. any payment
due for the applicable REPORTING PERIOD.
5.3. Financial Statements. On or before the ninetieth (90th) day
following the close of COMPANY's fiscal year, COMPANY shall provide M.I.T. with
COMPANY's financial statements for the preceding fiscal year including, at a
minimum, a balance sheet and an income statement, certified by COMPANY's chief
financial officer or by an independent auditor.
5.4. Payments in U.S. Dollars. All payments due under this Agreement
shall be payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the United States
(as reported in the Wall Street Journal) on the last working day of the calendar
quarter preceding the applicable REPORTING PERIOD. Such payments shall be
without deduction of exchange, collection, or other charges, and, specifically,
without deduction of withholding or similar taxes or other government imposed
fees or taxes, except as defined in NET REVENUES.
5.5. Payments in Other Currencies. If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to the United States is restricted or forbidden,
COMPANY shall give M.I.T. prompt written notice of such restriction, which
notice shall satisfy the sixty-day payment deadline described in Section 5.2.
COMPANY shall pay any amounts due M.I.T. through whatever lawful methods M.I.T.
reasonably designates; provided, however, that if M.I.T. fails to designate such
payment method within thirty (30) days after M.I.T. is notified of the
restriction, COMPANY may deposit such payment in local currency to the credit of
M.I.T. in a recognized banking institution selected by COMPANY and identified by
written notice to M.I.T., and such deposit shall fulfill all obligations of
COMPANY to M.I.T. with respect to such payment.
5.6. Records. COMPANY shall maintain, and shall cause its AFFILIATES
and SUBLICENSEES to maintain, complete and accurate records relating to the
rights and obligations under this Agreement and any amounts payable to M.I.T. in
relation to this Agreement, which records shall contain sufficient information
to permit M.I.T. to confirm the accuracy of any reports delivered to M.I.T.
under Section 5.2 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 M.I.T., or
M.I.T.'s appointed agents, shall have the right, at M.I.T.'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
February 10, 1998 Page-15-of-26-
17
any audit performed under this Section reveals an underpayment in excess of ten
percent (10%), COMPANY shall bear the full cost of such audit and shall remit
any amounts due to M.I.T. within thirty (30) days of receiving notice thereof
from M.I.T.
5.7. Late Payments. Any payments by COMPANY 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, with
interest calculated based on the number of days that payment is delinquent.
5.8. Method of Payment. All payments under this Agreement should be
made payable to "Massachusetts Institute of Technology" and sent to the address
identified below. Each payment should reference this Agreement and identify the
obligation under this Agreement that the payment satisfies.
6. Patent Prosecution.
6.1. Responsibility for PATENT RIGHTS. M.I.T. shall prepare, file,
prosecute, and maintain all of the PATENT RIGHTS. COMPANY shall have reasonable
opportunities to advise M.I.T. and shall cooperate with M.I.T. in such filing,
prosecution and maintenance. Such cooperation includes, without limitation, (i)
promptly executing all reasonable and appropriate papers and instruments to
enable M.I.T. to file, prosecute, and maintain such PATENT RIGHTS in any
country; and (ii) promptly informing M.I.T. of matters that may affect the
preparation, filing, prosecution, or maintenance of any such PATENT RIGHTS (such
as becoming aware of an additional inventor who is not listed as an inventor in
a patent application).
6.2. International (non-United States) Filings. Appendix B is a list of
countries in which patent applications corresponding to the United States patent
applications listed in Appendix A shall be filed. Appendix B may be amended by
mutual agreement of COMPANY and M.I.T.
6.3. Payment of Expenses. 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 COMPANY, whether such amounts were
incurred before or after the Effective Date. As of February 2, 1998, M.I.T. has
incurred approximately $44,000 for such patent-related fees and costs. COMPANY
shall reimburse all amounts due pursuant to this Section within thirty (30) days
of invoicing except as specified in Section 4.1 (iii) for expenses incurred
prior to the
February 10, 1998 Page-16-of-26-
18
Effective Date. Late payments shall accrue interest pursuant to Section 5.7. In
all instances, M.I.T. shall pay the fees prescribed for large entities to the
United States Patent and Trademark Office.
7. Infringement.
7.1. 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.
7.2. COMPANY Right to Prosecute. So long as COMPANY remains the only
licensee of the PATENT RIGHTS in the FIELD, COMPANY, 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 or to defend the
PATENT RIGHTS in any declaratory judgment action brought by a third party that
alleges invalidity, unenforceability, or non-infringement of the PATENT RIGHTS.
Prior to commencing any such action, COMPANY shall consult with M.I.T. and shall
consider the views of M.I.T. regarding the advisability of the proposed action
and its effect on the public interest. COMPANY shall not enter into any
settlement, consent judgment, or other voluntary final disposition of any
infringement action under this Section without the prior written consent of
M.I.T.
7.3. Recovery. Any recovery obtained in an action brought by COMPANY
under Section 7.2 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 M.I.T. as described below), (ii) as to
ordinary damages, COMPANY shall receive an amount equal to its lost profits or a
reasonable royalty on the infringing sales (whichever measure of damages the
court shall have applied), and COMPANY shall pay to M.I.T. based upon such
amount a reasonable approximation of the royalties and other amounts that
COMPANY would have paid to M.I.T. if COMPANY had sold the infringing products,
processes and services rather than the infringer, and (iii) as to special or
punitive damages, the parties shall share equally in any award. COMPANY may
offset a total of fifty percent (50%) of any expenses incurred under this
Section and Section 7.2 against any running royalty payments due to
M.I.T. under this Agreement, provided that in no event shall the running royalty
payments under Section 4.3., when aggregated with any other offsets and credits
allowed under this Agreement, be reduced by more than fifty percent (50%) in any
REPORTING PERIOD.
7.4. M.I.T. as Indispensable Party. M.I.T. shall permit any action
under Section 7.2 to be brought in its name, including being joined as a
party-plaintiff, if required by law, provided that
February 10, 1998 Page-17-of-26-
19
COMPANY shall hold M.I.T. harmless from, and if necessary indemnify M.I.T.
against, any costs, expenses, or liability that M.I.T. may incur in connection
with such action.
7.5. M.I.T. Right to Prosecute. In the event that COMPANY fails to
initiate an infringement action within a reasonable time after it first becomes
aware of the basis for such action, or to answer a declaratory judgment action
within a reasonable time after such action is filed, or if COMPANY does not have
standing to bring an action under this Article, M.I.T. shall have the right, at
its sole discretion, to prosecute such infringement or answer such declaratory
judgment action, under its sole control and at its sole expense, and any
recovery obtained shall be given to M.I.T.
7.6. Cooperation. Each party agrees to cooperate fully in any action
under this Article 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.
8. TERM and Termination.
8.1. TERM. This Agreement shall commence on the Effective Date and
shall remain in effect until the expiration or abandonment of all issued patents
and filed patent applications within the PATENT RIGHTS, unless earlier
terminated in accordance with the provisions of this Agreement.
8.2. Voluntary Termination by COMPANY. COMPANY shall have the right to
terminate this Agreement, for any reason, (i) upon at least six (6) months prior
written notice to M.I.T., such notice to state the date at least six (6) months
in the future upon which termination is to be effective, and (ii) upon payment
of all amounts due to M.I.T. through such effective date.
8.3. Termination for Default.
(a) Nonpayment. Except as provided in Section 4.1 (iii), in
the event COMPANY fails to pay any amounts due and payable to M.I.T. hereunder,
and fails to make such payments within thirty (30) days after receiving written
notice thereof, M.I.T. may terminate this Agreement immediately upon written
notice to COMPANY.
(b) Material Breach. Except as provided in Section 2.1 and 8.3
(a), in the event COMPANY commits a material breach of its obligations under
this Agreement, and fails to cure
February 10, 1998 Page-18-of-26-
20
that breach within sixty (60) days after receiving written notice thereof,
M.I.T. may terminate this Agreement immediately upon written notice to COMPANY.
8.4. Force Majeure. Neither party will be responsible for delays
resulting from causes beyond the reasonable control of such party, including
without limitation fire, explosion, flood, war, strike, or riot, provided that
the nonperforming party uses commercially reasonable efforts to avoid or remove
such causes of nonperformance and continues performance under this Agreement
with reasonable dispatch whenever such causes are removed.
8.5. Effect of Termination. The following provisions shall survive the
expiration or termination of this Agreement: Articles 1 and 9, and Sections
3.2., 3.5., 4.6, 5.2. (obligation to provide final report and payment), 5.6.,
8.5., and 10.8. Upon the early termination of this Agreement, COMPANY and its
AFFILIATES and SUBLICENSEES may complete and sell any work-in-progress and
inventory of LICENSED PRODUCTS that exist as of the effective date of
termination, provided that (i) COMPANY is current in payment of all amounts due
M.I.T. under this Agreement, (ii) COMPANY pays M.I.T. the applicable running
royalty or other amounts due on such sales of LICENSED PRODUCTS in accordance
with the terms and conditions of this Agreement, and (iii) COMPANY and its
AFFILIATES and SUBLICENSEES shall complete and sell all work-in-progress and
inventory of LICENSED PRODUCTS within six (6) months after the effective date of
termination.
9. Dispute Resolution.
9.1. Mandatory Procedures. The parties agree that any dispute arising
out of or relating to this Agreement shall be resolved solely by means of the
procedures set forth in this Article, and that such procedures constitute
legally binding obligations that are an essential provision of this Agreement;
provided, however, that all procedures and deadlines specified in this Article
may be modified by written agreement of the parties. If either party fails to
observe the procedures of this Article, as may be modified by their written
agreement, the other party may bring an action for specific performance of these
procedures in any court of competent jurisdiction.
9.2. Dispute Resolution Procedures.
(a) Negotiation. In the event of any dispute arising out of or
relating to this Agreement, the affected party shall notify the other party, and
the parties shall attempt in good faith to resolve the matter within ten (10)
days after the date of such notice (the "Notice Date"). Any disputes not
resolved by good faith discussions shall be referred to the Director or
Assistant
February 10, 1998 Page-19-of-26-
21
Director of the Technology Licensing Office for M.I.T. and to a senior executive
for the COMPANY (collectively, the "Executives"), who shall meet at a mutually
acceptable time and location within thirty (30) days after the Notice Date and
attempt to negotiate a settlement.
(b) Mediation. If the matter remains unresolved within sixty
(60) days after the Notice Date, or if the Executives fail to meet within thirty
(30) days after the Notice Date, either party may initiate mediation upon
written notice to the other party, whereupon both parties shall be obligated to
engage in a mediation proceeding under the then current Center for Public
Resources ("CPR") Model Procedure for Mediation of Business Disputes
(xxxx://xxx.xxxxxx.xxx/xxxxxxxx.xxx), except that specific provisions of this
Article 9 shall override inconsistent provisions of the CPR Model Procedure. The
mediator will be selected from the CPR Panels of Neutrals. If the parties cannot
agree upon the selection of a mediator within ninety (90) days after the Notice
Date, then upon the request of either party, the CPR shall appoint the mediator.
The parties shall attempt to resolve the dispute through mediation until one of
the following occurs: (i) the parties reach a written settlement; (ii) the
mediator notifies the parties in writing that they have reached an impasse;
(iii) the parties agree in writing that they have reached an impasse; or (iv)
the parties have not reached a settlement within one hundred and twenty (120)
days after the Notice Date.
(c) Trial Without Jury. If the parties fail to resolve the
dispute through mediation, or if neither party elects to initiate mediation,
each party shall have the right to pursue any other remedies legally available
to resolve the dispute, provided, however, that the parties expressly waive any
right to a jury trial in any legal proceeding under this Article 9.
9.3. Preservation of Rights Pending Resolution.
(a) Performance to Continue. Each party shall continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement; provided, however, that a
party may suspend performance of its obligations during any period in which the
other party fails or refuses to perform its obligations. Nothing in this Article
is intended to relieve COMPANY from its obligation to make payments pursuant to
Articles 4 and 6 of this Agreement.
(b) Provisional Remedies. Although the procedures specified in
this Article 9 are the sole and exclusive procedures for the resolution of
disputes arising out of or relating to this Agreement, either party may seek a
preliminary injunction or other provisional equitable relief if, in
February 10, 1998 Page-20-of-26-
22
its reasonable judgment, such action is necessary to avoid irreparable harm to
itself or to preserve its rights under this Agreement.
(c) Statute of Limitations. The parties agree that all
applicable statutes of limitation and time-based defenses (such as estoppel and
laches) shall be tolled while the procedures set forth in Sections 9.2.(a) and
9.2(b) are pending. The parties shall cooperate in taking any actions necessary
to effectuate this result.
10. Miscellaneous.
10.1. No Representations or Warranties. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, M.I.T. MAKES NO REPRESENTATIONS OR WARRANTIES OF
ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING,
AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, M.I.T. makes no warranty or
representation (i) regarding the validity or scope of the PATENT RIGHTS, (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
M.I.T. or of a third party, and (iii) that M.I.T. or a third party is not
currently infringing or will not infringe the PATENT RIGHTS.
IN NO EVENT SHALL M.I.T., 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 M.I.T. SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT
SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
10.2. Compliance with Law and Policies. COMPANY agrees to comply with
applicable law and the policies of M.I.T. in the area of technology transfer and
shall promptly notify M.I.T. of any violation that COMPANY knows or has reason
to believe has occurred or is likely to occur. The M.I.T. policies currently in
effect are available through the M.I.T. Technology Licensing Office and at the
following World Wide Web address: xxxx://xxx.xxx.xxx/xxx/xxx/xxxxx.xxx.xxxx.
February 10, 1998 Page-21-of-26-
23
10.3. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
10.4. Headings. All headings are for convenience only and shall not
affect the meaning of any provision of this Agreement.
10.5. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective permitted successors and
assigns.
10.6. Assignment. This Agreement is personal to COMPANY and no rights
or obligations may be assigned by COMPANY without the prior written consent of
M.I.T. A purchase of a majority of COMPANY's outstanding voting securities by a
third party without M.I.T.'s prior written consent shall terminate this
Agreement effective on the date of such purchase.
10.7. Amendment and Waiver. This Agreement may be amended,
supplemented, or otherwise modified only by means of a written instrument signed
by both parties. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.
10.8. Governing Law. This Agreement and all disputes arising out of or
related to this Agreement, or the performance, enforcement, breach or
termination hereof, and any remedies relating thereto, shall be construed,
governed, interpreted and applied in accordance with the laws of the
Commonwealth of Massachusetts, U.S.A., without regard to conflict of laws
principles, except that questions affecting the construction and effect of any
patent shall be determined by the law of the country in which the patent shall
have been granted.
10.9. Notice. Any notices required or permitted under this Agreement
shall be in writing, shall specifically refer to this Agreement, and shall be
sent by hand, recognized national overnight courier, confirmed facsimile
transmission, confirmed electronic mail, or registered or certified mail,
postage prepaid, return receipt requested, to the following addresses or
facsimile numbers of the parties:
If to M.I.T.: Technology Licensing Office, Room NE25-230
Massachusetts Institute of Technology
00 Xxxxxxxxxxxxx Xxxxxx
February 10, 0000 Xxxx-00-xx-00-
00
Xxxxxxxxx, XX 00000-0000
Attention: Director
Tel: 000-000-0000
Fax: 000-000-0000
If to COMPANY: Xxxxx X. Xxxxxxxxx, President/CEO
XX Xxx 00000
Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxxxx
Tel: 64-9-309 5221
Fax: 64-9-307 1740
All notices under this Agreement shall be deemed effective upon receipt. A party
may change its contact information immediately upon written notice to the other
party in the manner provided in this Section.
10.10. Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect any other provision of this Agreement, and the
parties shall negotiate in good faith to modify the Agreement to preserve (to
the extent possible) their original intent. If the parties fail to reach a
modified agreement within sixty (60) days after the relevant provision is held
invalid or unenforceable, then the dispute shall be resolved in accordance with
the procedures set forth in Article 9. While the dispute is pending resolution,
this Agreement shall be construed as if such provision were deleted by agreement
of the parties.
10.11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to its subject matter and supersedes
all prior agreements or understandings between the parties relating to its
subject matter.
February 10, 1998 Page-23-of-26-
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
THE EFFECTIVE DATE OF THIS AGREEMENT IS FEBRUARY 10, 1998.
MASSACHUSETTS INSTITUTE OF PACIFIC LITHIUM LIMITED
TECHNOLOGY
By: /s/ J. Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
Name: J. Xxxxx Xxxxxxx Name: Xxxxx Xxxxxxxxx Xxxxxxxxx
Title: Vice President for Research Title: Managing Director
MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By:
Name:
Title: Vice President for Research
February 10, 1998 Page-24-of-26-
26
APPENDIX A
List of Patent Applications and Patents
M.I.T. Case No. 7960
"Glass Compositions for Anode Materials in Rechargeable Lithium Batteries"
by Xxxxxxxx Xxxxx and Yet-Xxxx Xxxxxx;
disclosure filed with M.I.T. Technology Licensing Office on 2/2/98
M.I.T. Case No. 7959
"Solid Polymer Electrolyte Lithium Battery and Process of Manufacture"
by Yet-Xxxx Xxxxxx and Xxxx X. Xxxxx
disclosure filed with M.I.T. Technology Licensing Office on 2/1/98
M.I.T. Case No. 7799
"Mixed Ionic-Electronic Conducting Binder for Lithium Battery Electrodes,"
by Yet-Xxxx Xxxxxx, Xxxx X. Xxxxx, and Xxxxxx X. Xxxxxxx
disclosure filed with M.I.T. Technology Licensing Office on 7/2/97
M.I.T. Case 7124
"Polymer Electrolyte, Intercalation Compounds and Electrodes for Batteries"
by Xxxxxx X. Xxxxxxx, Xxxxxxxx Xxxxx, Yet-xxxx Xxxxxx, Xxxxxx Xxxxx, And
Young-il Jang
U.S. Patent Application filed 10/10/97
based on Provisional Patent Applications 60/028278 filed 10/11/96 and 60/053876
filed 7/28/97
M.I.T. Case 7054
"Polymer Electrolyte, Intercalation Compounds and Electrodes for Batteries"
by Xxxx X. Xxxxx And Xxxxxx X. Soo
U.S. Patent Application No. filed 10/10/97
based on Provisional Patent Application 60/028,341 filed 10/11/96
M.I.T. Case 6774
"Polymer Electrolyte, Intercalation Compounds and Electrodes for Batteries"
by Xxxx X. Xxxxx And Xxxxxx X. Xxxxxxx
U.S. Patent Application No. filed 10/10/97
based on Provisional Patent Application 60/08,342 filed 10/11/96
February 10, 1998 Page-25-of-26-
27
PCT application PCT/US97/18839 filed on 10/10/97 designating all PCT
contracting states for the following M.I.T. Cases:
M.I.T. Case 7124
"Polymer Electrolyte, Intercalation Compounds and Electrodes for
Batteries" by Xxxxxx X. Xxxxxxx, Xxxxxxxx Xxxxx, Yet-xxxx Xxxxxx,
Xxxxxx Xxxxx And Young-il Jang
M.I.T. Case 7054
"Polymer Electrolyte, Intercalation Compounds and Electrodes for
Batteries" by Xxxx X. Xxxxx And Xxxxxx X. Soo
M.I.T. Case 6774
"Polymer Electrolyte, Intercalation Compounds and Electrodes for
Batteries" by Xxxx X. Xxxxx And Xxxxxx X. Xxxxxxx
February 10, 1998 Page -26- of -26-
28
FIRST AMENDMENT
This is an Amendment with the effective date of to
the License Agreement dated February 10, 1998 between the Massachusetts
Institute of Technology ("M.I.T.") and PACIFIC LITHIUM, LTD.
("COMPANY"). The parties thereto now further agree as follows:
1. Paragraph 3.1 (f) shall be deleted, thereby deleting the
requirement for COMPANY to sponsor research at M.I.T. as a
condition of the License Agreement.
2. The remaining portion of the License Issue Fee of $350,000
due on December 31, 1998 under Paragraph 4.1 of the License
Agreement, and the License Maintenance Fee of $100,000 due on
January 1, 1999 under Paragraph 4.2 of the License Agreement
shall both be due on May 15, 1999. Furthermore, if such fees
are not received by June 15, 1999 then, paragraph 8.3(a)
notwithstanding, M.I.T. shall have the right to terminate the
License Agreement effective immediately upon notice to
COMPANY.
3. As a substitute for the equity shares to be provided by
COMPANY to M.I.T. under the provisions of Paragraph 4.6 (a)
and (b) of the License Agreement, COMPANY shall grant to
M.I.T. Two Hundred Thousand (200,000) shares of common stock
of Pacific Lithium Limited, such shares to be delivered to
M.I.T. within 15 days of the effective date of this Amendment.
Thereafter, no further shares shall be due to M.I.T. except as
provided in Paragraph 4.6 (c) as amended in Item 4 below.
4. The Participation provisions of Paragraph 4.6 of the
License Agreement shall pertain to shares of Pacific Lithium,
Limited.
Agreed to for:
MASSACHUSETTS INSTITUTE PACIFIC LITHIUM LIMITED
OF TECHNOLOGY
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Director
Technology Licensing Office Title: Managing Director
Date: December 10, 1998 Date: 14 December 1998
29
SECOND AMENDMENT
This is an Amendment with the effective date of 14 December 1998 to the
License Agreement dated February 10, 1998 between the Massachusetts Institute of
Technology ("M.I.T.") and PACIFIC LITHIUM, LTD. ("COMPANY"). The parties thereto
now further agree as follows:
1. The grant of Article II, as it pertains to anodes, shall be
nonexclusive, with full rights to sublicense.
2. M.I.T. further grants to COMPANY an option to add to the Patent
Rights of this Agreement by amendment, an exclusive license, only in the field
of use of "cathodes, "any new invention arising from the research laboratories
of Prof. Yet-Xxxx Xxxxxx or Xxxx. Xxxxxxxxx Xxxxx at M.I.T. which is:
(a) Dominated by the claims of the Patent Rights of the License
Agreement existing as of the Effective Date of the Agreement or as
shall be subsequently narrowed by the patent prosecution process of
these original Patent Rights by the time the new invention is
disclosed; and
(b) Invented within five years of the Effective Date of the License
Agreement.
Such option shall be exercisable in the following manner under the
following terms:
(i) COMPANY shall notify M.I.T. in writing within three months of
receipt of a description of the new invention that it wishes to add the
invention to the License Agreement.
(ii) COMPANY shall reimburse M.I.T. for the costs of filing,
prosecution and maintenance of the patent rights of the new invention,
but any such costs incurred shall be shared pro rata with any other
optionee(s) or licensee(s) to the patent rights at the time the costs
are incurred.
(iii) All other terms and conditions shall be as in the License
Agreement.
(iv) The exclusivity of COMPANY's license to the new invention shall be
subject to the nonexclusive license rights of the U.S. Government if
the Government was a sponsor in whole or in part to the research
leading to the invention.
Agreed to for:
MASSACHUSETTS INSTITUTE PACIFIC LITHIUM LIMITED
OF TECHNOLOGY
By: /s/Xxxx Xxxxxx By: /s/Xxxxx X. Xxxxxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Director Title: Managing Director
Technology Licensing Office
Date: December 10, 1998 Date: 14 December 1998
30
THIRD AMENDMENT
This is an Amendment with the effective date of ______________________
to the License Agreement dated February 10, 1998 between the Massachusetts
Institute of Technology ("M.I.T.") and PACIFIC LITHIUM, LTD. ("COMPANY") as
amended. The parties thereto now further agree as follows.
Paragraph 3.1 (c) shall be revised to read:
COMPANY shall raise at least Ten Million Dollars ($10,000,000) by June 15, 1999
from the sale of COMPANY's equity securities for its own account. Furthermore,
Paragraph 8.3(b) notwithstanding, if COMPANY has not provided notification and
evidence to M.I.T. by June 16, 1999 that such funds have been committed to the
COMPANY, M.I.T. shall have the right to terminate this Agreement effective
immediately upon notice to COMPANY.
Agreed to for:
MASSACHUSETTS INSTITUTE PACIFIC LITHIUM LIMITED
OF TECHNOLOGY
By: /s/Xxxx Xxxxxx By: /s/Xxxxx X. Xxxxxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Director Title: Managing Director
Technology Licensing Office
Date: February 2nd, 1999 Date: 26 February 1999
31
FOURTH AMENDMENT
This is an Amendment with the effective date of March 30, 1999 to the
License Agreement dated February 10, 1998, between the Massachusetts Institute
of Technology ("M.I.T.") and PACIFIC LITHIUM, LTD. ("COMPANY") as amended. The
parties now further agree as follows:
1. Paragraph 1.2 of the License Agreement shall be deleted.
2. Paragraph 1.3 of the License Agreement shall hereafter read:
"FIELD" shall mean all fields, without exception; provided
however that the field of "anodes" shall be nonexclusive as
provided in the Second Amendment dated December 14, 1998.
Agreed to for:
MASSACHUSETTS INSTITUTE PACIFIC LITHIUM LIMITED
OF TECHNOLOGY
By: /s/Xxxx Xxxxxx By: /s/Xxxxx X. Xxxxxxxxx
Name: Xxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Director Title: Managing Director
Technology Licensing Office
Date: March 30, 1999 Date: 10 April 1999
