EXHIBIT 10.37
E. KHASHOGGI INDUSTRIES, LLC
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
February 17, 1998
EarthShell Corporation
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Chief Executive Officer
Re: XXXX/BIOPAC TECHNOLOGY
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Dear Xx. Xxxxxx:
Reference is made to those certain Patent Purchase Agreements (the
"Agreements"), dated February 11, 1998, between E. Khashoggi Industries, LLC
("EKI") and Xxxxx Xxxx Waffelmaschinen Industrie Aktiengesellschaft ("Xxxx
Austria"), pursuant to which EKI has agreed to purchase certain patents,
patent applications and know-how owned by Xxxx Austria or its affiliates and
which relate to biodegradable, non-edible packaging composed primarily of raw
materials which have a high starch content, as well as their methods of
production (the "BIOPAC Technology"). Pursuant to the Agreements, EKI is
required to pay or deliver the following consideration:
a. $3 million in cash payable at the closing (the "Closing") of EKI's
purchase of the BIOPAC Technology (the "$3 Million Cash Consideration");
b. A $500,000 letter of credit to be delivered by EKI no later than
the Closing and which is payable to Xxxx Austria upon the termination of the
license agreement and representative agreement between Xxxx Austria's
predecessor and Sumitomo Corporation (the "$500,000 LC");
c. A $3.5 million letter of credit to be delivered by EKI at the
Closing and which is payable to Xxxx Austria on or about December 31, 2003
(the "Payment Date"), subject, however, to reduction in an amount equal to 5%
of the purchase price of the equipment and machinery purchased by EKI,
EarthShell Corporation ("EC") and their respective sublicencees from Xxxx
Austria or its affiliates prior to the Payment Date (the "$3.5 Million LC");
and
d. $3 million in cash payable by EKI to Xxxx Austria over a five-year
period following the Payment Date if EKI, EC or their sublicensees make
active use of the BIOPAC
EarthShell Corporation
February 17, 1998
Page 2
Technology and EC and/or EKI fail to purchase at least $3.5 million of Xxxx
Austria equipment by the Payment Date, (the "$3 Million Obligation"). The $3
Million Obligation is subject to reduction in an amount equal to 5% of the
purchase price of Xxxx Austria equipment or machinery ordered by EKI, EC or
their sublicensees during such extended five-year period.
This letter will confirm our mutual agreement with respect to the
following:
1. Immediately following the Closing, EKI will license the BIOPAC
Technology to EC, without additional cost, pursuant to the terms and
conditions of that certain Amended and Restated License Agreement, dated
February 28, 1995, between EKI and EC.
2. EKI will pay, and be solely responsible for, the $3 Million Cash
Consideration, the $500,000 LC and any related costs (e.g., the cost of the
$500,000 LC).
3. EC will pay, and be solely responsible for, the $3.5 Million LC,
the $3 Million Obligation and any related costs (e.g., the cost of the $3.5
Million LC). In that connection, EC shall be entitled to receive any credits
or offsets available for the purchase of equipment or machinery from Xxxx
Austria or its affiliates, including purchases by EKI and its licensees.
4. EKI shall pay, and be solely responsible for, all other costs and
expenses incurred by EKI in connection with the negotiation and execution of
the Agreements and the performance of EKI's obligations thereunder.
5. EKI shall indemnify EC, and hold it harmless against, any portion
of the $3 Million Obligation which is payable by EC solely as a result of
EKI's or its licensees' active use of the BIOPAC Technology (other than use
by EC or its sublicensees).
6. Pursuant to the Agreements, EC shall enter into a royalty-free,
irrevocable license agreement with Xxxx Austria pursuant to which EC shall
license to Xxxx Austria all proprietary technology necessary to optionize the
performance of Xxxx Austria's equipment and machinery.
EarthShell Corporation
February 17, 1998
Page 3
Please confirm your acceptance of the foregoing terms and conditions by
executing the bottom portion of this letter and returning it to the
undersigned.
Very truly yours,
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Chairman and Chief Executive Officer
Accepted and Agreed this 17th day of February, 1998.
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Chief Financial Officer
