AMENDED AND RESTATED TECHNOLOGY LICENSE AGREEMENT
EXHIBIT
99.11
AMENDED
AND RESTATED
This
Amended and Restated Agreement is made as of the 17th day of March,
2006,
Between:
Xx.
Xxxxxx X. Xxxxxxx, an individual residing at 000 Xxxxxxxx, Xxx Xxxxxx,
XX
00000,
his heirs and/or his assigns (the “Licensor”)
And:
Barnabus
Energy, Inc., a Nevada corporation, with offices at 000 Xxx xx xx Xxxxx, Xxxxx
000, Xxxxxx Xxxxx, XX 00000 (the “Licensee,”
and,
collectively, with Licensor, the “Parties”),
and
it
amends and restates the Technology License Agreement dated July 21, 2005 (the
“Original
Agreement”)
between the Parties.
ARTICLE
I. RECITALS
1.1 Licensor
has invented certain technology, which may be able to economically collect
solar
energy using a novel method of non-imaging optics. Among other uses, this
technology may be able to be used to produce steam to drive a generator to
produce electrical power or to produce desalinated water from seawater or
brackish water.
1.2 Patent
applications have been filed with Xxxxxx X. Xxxxxxx (161 Cascabel, Los Alamos,
NM 87544) named in each such application as the sole inventor. These
applications are (a) Provisional U.S. Patent Application Serial No. 60/648,865,
filed February 1, 2005, and (b) nonprovisional patent applications in the U.S.
and abroad claiming priority to that provisional patent application, namely,
(b.i) Nonprovisional U.S. Patent Application Serial No. 11/341,628, titled
“Concentrating Solar Power” and filed at the U.S. Patent and Trademark Office
(USPTO) on January 27, 2006, (b.ii) International Patent Application No.
PCT/US06/03071, titled “Concentrating Solar Power” and filed at the USPTO’s
Receiving Office pursuant to the Patent Cooperation Treaty (PCT) on January
27,
2006, and (b.iii) Gulf Cooperation Council (GCC) Patent Application No.
GCC/P/2006/5739, titled “Concentrating Solar Power” and filed at the GCC Patent
Office in the Middle East on January 31, 2006. These applications (a), (b.i),
(b.ii), and (b.iii) are hereinafter referred to as the “Patent
Applications”.
1.3 Licensor
and Licensee desire to enter into an exclusive license agreement for the
Licensed Technology (as defined below) to apply it to distributed energy
systems, electric power plants, saline water desalination systems, and other
applications. A separate Technology Consulting Agreement will provide for
technical support of this activity by the Licensor. Licensee also desires to
undertake to develop the Licensed Technology further and to maintain the
Licensed Technology. Licensee also agrees to organize a program for research,
sales, marketing, advertising, promotion, and distribution of products and
devices incorporating Licensed Technology, to arrange for manufacturing
facilities, expansion into foreign markets, and sublicenses, and to obtain
the
financing and business ability and to aggressively engage in every activity
needed to produce and sell those products and devices in a timely
manner.
-1-
1.4 The
responsibilities of the Licensor under this Agreement are solely limited to
providing a license to the technology, and under a separate Technology
Consulting Agreement to provide technology development and design support.
The
Licensee is responsible for all other necessary activities related to this
demonstration and commercialization effort, including but not limited to,
obtaining funds, obtaining necessary permits, design and construction
activities, facility testing and operations, materials acquisition,
marketing.
ARTICLE
II. DEFINITIONS
2.1 As
used
in this Agreement the following terms shall, unless the context otherwise
requires, have the following meanings:
2.2 “Commencement
Date”
means
the date of the Original Agreement which is July 21, 2005.
2.3 "Confidential
Information"
means
any information relating to or disclosed in the course of this Agreement which
is or should be reasonably understood to be confidential or proprietary.
"Confidential Information" does not include information: (a) already lawfully
known to the receiving party, (b) disclosed in published materials, (c)
generally known to the public, (d) independently developed without reference
to
the Confidential Information as demonstrated by written documentation, or (e)
lawfully obtained from any third party.
2.4 "Control"
(including
the terms "controlling," "controlled by," and "under common control with")
means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of Licensee or the power of the
Licensee to direct or cause the direction of the management and policies of
affiliates, subsidiaries, or sublicensees, whether through the ownership of
voting securities, by contract, or otherwise.
2.5 "Field
of Use"
means
the collecting of solar energy to generate electricity, desalinate water, and
all other industrial applications.
2.6 “Licensed
Commodity Product”
shall
mean generated electrical power or desalinated water or other pumped liquids
that are generated or purified, as applicable, using any product or device
which, or the manufacture, use or sale of which, is covered by a Valid Claim
of
the Patent Rights. For purposes of clarity, Licensed Commodity Products are
a
subset of Licensed Products.
2.7 "Licensed
Product"
means
any product or device which, or the manufacture, use, or sale of which, is
covered by a Valid Claim of the Patent Rights, including but not limited to
Licensed Commodity Products.
-2-
2.8 "License
Term" means
the
period from the Commencement Date to the earlier of: (a) the later of (a.i)
twenty years from January 27, 2006, and (a.ii) the date of expiration of the
last to expire of any issued patent within the Patent Rights; or (b) the date
this Agreement is terminated pursuant to Article VIII of this
Agreement.
2.9 "Licensed
Technology"
means
the Patent Rights and the Technology as defined herein and any future
modifications or improvements to the Technology.
2.10 “Net
Sales”
shall
mean the gross amount received by Licensee or a sublicensee of Licensee, as
applicable, for sales, distributions, leases, or other disposals of Licensed
Products to any third parties, which received gross amount may be the result
of
certain customary trade, quantity, or cash discounts to the extent actually
allowed and taken, less the following: (i) amounts repaid or credited by reason
of rejection or return; (ii) any taxes or other governmental charges levied
on
the production, sale, shipping, delivery, or use of a Licensed Product which
is
paid by or on behalf of Licensee; and (iii) transportation costs paid or allowed
and costs of insurance for a Licensed Product. Net Sales shall occur on the
date
Licensee receives payment. If a Licensed Product is sold, distributed, or
otherwise disposed of for non-cash consideration, then Net Sales shall be
calculated based on the amount of the Licensed Product charged to an independent
third party during the same calendar quarter or, in the absence of such sales,
on the fair market value of the Licensed Product, and in either case less the
deductions set forth above. In the case of a sale that contains a Licensed
Product as a component and at least one other active component (a “Combination
Product”),
Net
Sales shall mean the gross amount received by Licensee, as applicable, on sales
of the Combination Product less the deductions set forth above, multiplied
by a
proration factor that is determined as follows: (i) if all components of the
Combination Product were sold separately during the same or immediately
preceding calendar quarter, the proration factor shall be determined by the
formula (A / (A+B)), where A is the aggregate gross sales price of all Licensed
Product components during such period when sold separately from the other active
components, and B is the aggregate gross sales price of the other active
components during such period when sold separately from the Licensed Product
components; or (ii) if all components of the Combination Product were not sold
separately during the same or immediately preceding calendar quarter, the
proration factor shall be determined by the formula (C / (C+D)), where C is
the
mutually-agreed cost of the Licensed Product components during the prior
calendar quarter and D is the mutually-agreed cost of the other active
components during the prior calendar quarter, with such costs being determined
in accordance with generally accepted accounting principles.
2.11 “Patent
Rights”
shall
mean the Patent Applications and any divisionals, continuations, and
continuations-in-part thereof (in the U.S. and abroad) as well as any patents
issuing from any of the foregoing (in the U.S. and abroad), and including any
reexaminations, reissues, renewals, revivals, or extensions of such
patents.
2.12 “Technology”
shall
mean any know-how, substances, formulas, compositions, devices, apparatuses,
techniques, prototypes, models, trade secrets, methods, practices, processes,
technical plans and designs, data, blueprints, including improvements, changes,
developments, and modifications thereto, which specifically relate to the
technology described in Section 1.1 of this Agreement and/or the Patent Rights,
in the Field of Use, during the License Term.
-3-
2.13 “Territory”
shall
mean the entire world, for which Licensor grants to Licensee rights for Licensed
Technology.
2.14 “Valid
Claim”
shall
mean a claim of an unexpired patent, which shall not have been withdrawn,
cancelled, or disclaimed, nor found invalid or unenforceable by a court of
competent jurisdiction, or the claim pending in one of the Patent
Applications.
ARTICLE
III. LICENSES
3.1 Grant
of Licensed Technology.
Licensor
grants to Licensee during the License Term the exclusive right and license
in
the Field of Use throughout the Territory under the Licensed Technology to
manufacture, have manufactured, use, market, have marketed, sell, have sold,
import, and have imported Licensed Products. This granted exclusive right and
license is exclusive of Licensor, in that the Licensor does not retain any
right
to and shall not manufacture, have manufactured, use, market, have marketed,
sell, have sold, import, or have imported Licensed Products during the License
Term.
3.2 Sublicenses.
The
rights in Licensed Technology granted by Licensor to Licensee include the right
to grant sublicenses as Licensee deems prudent or necessary to carry out its
rights and obligations pursuant to this Agreement, provided, however, that
the
terms and conditions of any such sublicenses shall be consistent with the terms
and conditions of this Agreement. Licensee shall provide Licensor with prompt
notification of the identity and address of each Affiliate or permitted
sublicensee to which it grants a sublicense and Licensee shall in a timely
manner provide Licensor with a copy of each sublicense agreement.
3.3 Exploitation
of Licensed Rights.
Licensee
will use its commercially reasonable best efforts to develop and to commercially
exploit the rights granted by this Agreement, to generate the maximum royalties
for Licensor.
3.4 Access
to Know-How and Technology.
Licensor agrees to make available to Licensee all tangible embodiments of
Technology under its control (including without limitation all diagrams,
technical documentation and user manuals, charts, lab books, databases, test
results, drawings, relevant instruction sets, and other documentation) and
to
reasonably cooperate with Licensee with respect to the transfer to Licensee
of
the know-how related to the Licensed Technology.
3.5 Improvements.
For
any
improvements, changes, developments, and/or modifications in or of the Licensed
Technology that result from performance under this Agreement, Licensor and
Licensee hereby agree that Licensee shall be the sole owner of any such
improvements, changes, developments, and/or modifications, with the
understanding that Licensor and Licensee will negotiate in good faith regarding
a license to Licensor of any such improvements, changes, developments, and/or
modifications.
-4-
ARTICLE
IV. TRADEMARK PROVISIONS
4.1 Assignment.
Licensor
hereby
assigns to Licensee any and all of Licensor’s right, title, and interest in and
to the xxxx SUNCONE (the “Trademark”),
including all rights therein provided by international conventions and treaties,
as well as any and all rights derived from use of the Trademark, either by
Licensor or by any licensees of Licensor, as well as the right to xxx for past,
present and future infringement thereof.
4.2 Ownership. Licensee
shall own all right title and interest in and to the Trademark, and Licensee
shall have the exclusive right to seek and obtain U.S. and foreign registration
for the Trademark without the consent or approval of Licensor.
4.3 Further
Assurances.
Licensor
shall
timely execute and deliver any document(s) and perform any such act(s) deemed
necessary or desirable by Licensee, at Licensee’s expense, to record and/or
perfect the interest of Licensee in and to the Trademark. Licensor shall not
enter into, and has not entered into, any agreement in conflict with this
Article IV of this Agreement.
ARTICLE
V. REPRESENTATIONS
5.1 Representations
and Disclaimers by Licensor.
Licensor represents that the following representations are true with respect
to
Licensed Technology:
5.1.1 To
the
best of his knowledge, Licensor owns the exclusive right, free and clear of
all
liens, claims and restrictions of third parties, to use the Licensed Technology
without infringing upon or otherwise acting adversely to any right or claimed
right of others and to bring actions for the infringement of Licensed
Technology.
5.1.2 To
the
best knowledge of Licensor, there is no pending or threatened claim or
litigation against Licensor contesting Licensor's rights in and to the Licensed
Technology nor does there exist any basis for such claim or litigation, nor
has
Licensor received any notice that any right of Licensor to Licensed Technology
conflicts with the asserted rights of others.
5.1.3 Licensor
represents and warrants that (a) he is the sole and exclusive owner of all
right, title, and interest in and to the Patent Applications, (b) he has the
right to grant the licenses and rights granted herein, (c) he has not, and
will
not during the License Term except as allowed under Section 11.1, grant any
other license or any other right in or to the Patent Applications or the
know-how related to the Licensed Technology, and (d) he has not and will not
enter into any agreement that conflicts with any of the terms of this
Agreement.
5.1.4 Licensor
hereby disclaims and shall have no liability for any damages, refund of
royalties or any other sums received or for any other claims, damages, fees,
costs, attorneys fees or expenses resulting from the non-issuance or limited
issuance of the Patent Rights contemplated under this Agreement. Licensor does
not make any representation whatsoever regarding the probability or likelihood
of such issuance, non-issuance or limited issuance of the Patent Rights
contemplated under this Agreement.
-5-
5.1.5 Except
for the express representations and warranties made herein, Licensor makes
no
representation or warranty whatsoever and hereby disclaims the same, regarding
whether or not a commercially viable technology, system or device - or a
successful commercial enterprise—will ever be developed or occur based upon or
incorporating the Licensed Technology.
5.2 Representations
and Disclaimers by Licensee.
5.2.1 Licensee
hereby warrants and represents: (1) that it is capable of providing or obtaining
the funding required pursuant to this Agreement; (2) that it is duly authorized
to do business in the State of Nevada and in the other jurisdictions in the
United States and elsewhere in which it is presently doing business; (3) that
it
has no material outstanding lawsuits, liens or other claims pending against
it;
and (4) that only subject to Licensor’s prior written approval and in Licensor’s
sole discretion may Licensee, its affiliates, sublicensees, contractors,
employees or any entity or person controlled by Licensee allow, the Patent
Rights to be encumbered, used as collateral, or be subject to a security
interest. The Parties acknowledge and agree that any action by Licensee in
violation of 5.2.1(4) shall be void ab
initio
and may
result in termination of this Agreement by Licensor.
5.2.2 Except
for the express representations and warranties made herein, Licensee disclaims
all warranties, express or implied.
5.3 Limitation
of Liability.
Neither party shall be liable for any indirect, consequential, incidental,
special or punitive damages, including but not limited to loss of profits,
arising out of or in connection with this agreement or the operation of the
products, whether as a result of a breach of contract, warranty or tort
(including negligence, strict liability) or otherwise, even if the otherwise
liable party has been advised of the possibility of such
damages.
ARTICLE
VI. CONFIDENTIALITY
6.1 Confidentiality.
6.1.1 During
and after the License Term, Licensee and Licensor will keep confidential and
not
disclose to its employees, vendors, customers or others all Confidential
Information disclosed to Licensee by Licensor or to Licensor by Licensee under
this Agreement except that, on a need to know basis, Licensee and Licensor
may
disclose Confidential Information to employees, subcontractors, customers or
others who have executed confidentiality agreements obligating them to Licensee
or Licensor at least to the same extent that Licensee and Licensor are obligated
to Licensee or Licensor under this Article. The Licensee and Licensor shall
exercise every effort to monitor and enforce compliance of such confidentiality
agreements with employees and subcontractors, customers or others.
-6-
6.1.2 Licensee
will obtain from all prospective sublicensees confidentiality agreements
covering information disclosed to them by Licensee. The agreements shall
obligate the sublicensees to Licensee with respect to Confidential Information
at least to the same extent that Licensee is obligated to Licensor under this
Article. The obligation extends to Licensee's controlled, controlling,
affiliated or related companies, if any. Copies of all confidentiality
agreements will be kept on file at Licensee’s principal place of
business.
ARTICLE
VII. ROYALTIES AND PAYMENTS
7.1 Licensed
Technology.
For
the
grant of the license to the Licensed Technology set forth in Section 3.1 above,
Licensee will pay Licensor the following royalties (the “Royalties”):
(i) a
royalty
equal to the percentage of Net Sales received by Licensee from the sale or
lease
of Licensed Products (other than Licensed Commodity Products) according to
the
following table:
|
Royalty
Percentage
|
On
Net Sales for a Royalty Period up to
|
|
8%
|
$500,000
|
|
7%
|
$1,000,000
|
|
6%
|
$1,500,000
|
|
5%
|
All
values above $1,500,000
|
(ii)
a
royalty
equal to 2% of Net Sales received by Licensee from the sale or delivery of
Licensed Commodity Products (but not of other Licensed Products).
(iii) If
the
Licensee sublicenses the Licensed Technology to sublicensees, the sublicensees
shall pay the royalties set forth in this Section 7.1 on Net Sales received
by
such sublicensees directly to Licensor and, subject to such payment being made
by such sublicensees, Licensee shall owe no royalties on any sublicense fees
it
receives and receipt of such sublicense fees shall not be deemed Net Sales
hereunder.
(iv)
After
the
Licensee becomes well established in its production and marketing of the
Licensed Products, if there are markets in which the margin of profit is very
small, the above royalty percentages for those markets may reasonably be
renegotiated and modified upon mutual agreement of the Parties.
7.2 Form
of Lease and Sale.
Unless
the Parties agree, in writing, otherwise, royalties payable under this Article
will be paid for each Licensed Product that is leased or sold by or for Licensee
or its sublicensees, regardless of whether the Licensed Product is sold or
leased alone or incorporated into subassemblies or finished
products.
7.3
Royalty
Period.
The
accounting for Royalties under this Article shall be on the basis of three-month
periods beginning three months from the Commencement Date. Each three-month
period is called in this Agreement a “Royalty
Period”.
-7-
7.3.1 Audit. Upon
a
written request from Licensor, Licensee shall provide Licensor within a
reasonable period of time a Summary Audit of Licensee for the three years
immediately prior to the date of request for such Audit.
7.4 Minimum
Royalties.
If
the
Royalties accrued and to be paid for a Royalty Period are less than the
corresponding “Minimum Royalty” set forth below with respect to such Royalty
Period, then Licensee shall pay Licensor an amount equal to the Minimum Royalty
indicated below for such Royalty Period.
|
Royalty
Periods
|
Minimum
Royalty
|
|
1
through 4
|
$4,000
|
|
5
through 8
|
$8,000
|
|
9
through 12
|
$12,500
|
|
13
through 16
|
$25,000
|
|
All
Subsequent
|
$50,000
|
7.5 Statements
and Payments to Licensor.
Within
forty-five (45) days following the end of each Royalty Period, Licensee will
furnish Licensor with a written statement of the known royalties due to Licensor
hereunder for the Royalty Period, setting forth the computation of the
royalties. The statement will also include information reasonably necessary
to
facilitate verification of the royalty calculation and the identification of
Licensed Products for which royalties are due from Licensee. Payment by Licensee
will accompany each such statement.
7.6 Equity
Interest in Licensee.
Within
fifteen (15) days of execution by both Parties of this Agreement and of the
Warrant at Exhibit A, Licensee shall issue to Licensor One Hundred Thousand
(100,000) shares of Licensee’s common stock, all of which shares shall be
registered under the Securities Act of 1933, as amended, and subject only to
a
mutually agreeable lock-up agreement for not more than ninety (90) days and
to
the restrictions of Rule 144. Coincident with the execution of this Agreement,
Licensor shall issue Licensee a warrant in the form attached as Exhibit
A
hereto
(the “Warrant”)
to
purchase up to, when and if fully vested, Two Million Two Hundred Thirty Three
Thousand Four Hundred Thirty Eight (2,233,438) shares of Licensee’s Common Stock
(the “Common
Stock”).
The term of the Warrant shall be five (5) years and the vesting schedule of
the
Warrant shall be as set forth in Exhibit
B.
The per
share exercise price to purchase the Common Stock underlying the Warrant shall
be
$1.50,
subject to adjustment as provided in the Warrant. The
Warrant shall not be assignable without the consent of Licensee.
7.7 Licensee
Commercial Diligence.
Licensee
shall: (1) upon the Commencement Date, commence and fund a six-month Licensee
development project to develop a working prototype of a solar collector (which
may be branded using the “Suncone” xxxx) and expend or devote resources equal to
at least $300,000 during such time period; (2) within eight months of the
Commencement Date, commence and fund the development of a commercial solar
collector (which may be branded using the “Suncone” xxxx); (3) within 36 months
of the Commencement Date, fund the engineering of a solar power plant utilizing
an array of solar collectors (which may be branded using the “Suncone” xxxx);
and (4) provide the funding for the commercialization of the technology
generally described in Section 1.1 of this Agreement (which may be branded
using
the “Suncone” xxxx) on a global basis in a timely manner; in each case either
through internal Licensee programs or through external programs funded by
Licensee (or a combination of the two).
-8-
7.8 Further
Funding.
In
addition to timely funding the development of working prototypes and
construction of power plants, Licensee agrees to provide appropriate funding
for
continued research and development, as well as patent and trademark filings,
legal and accounting fees, and expenses related to the management and marketing
of the technology. For purposes of clarity, Licensor acknowledges that Licensee
shall own all rights to any results of such projects funded by it as required
under Sections 7.7 and 7.8, including any prototypes, products, or inventions
or
discoveries made by Licensee, subject to Licensor’s rights to the underlying
Licensed Technology as set forth herein.
7.9 Books
of Account Examination.
Licensee
will at all times keep complete, true and correct books of account containing
a
current record of leases, sales, sublicense royalties, and other data in
sufficient detail to enable the royalties payable under this Agreement to be
computed and verified. Subject to reasonable confidentiality restrictions and
undertakings, Licensee will permit Licensor, Licensor's duly authorized agent,
or an independent certified public accountant appointed by Licensor to have
access for inspection of pertinent books of account at reasonable times during
business hours, provided that Licensor shall not request to conduct such an
audit more than once in any twelve month period.
7.10 Currency.
All
royalties due hereunder will be paid in United States Dollars.
7.11 Taxes.
The
Parties to this Agreement shall be responsible for and shall pay all taxes
imposed on their respective pertinent portion of all revenues they
receive.
ARTICLE
VIII. TERM OF GRANTS AND TERMINATION
8.1 Termination
of Agreement.
Licensor
or Licensee may terminate this Agreement and the licenses and rights granted
pursuant to this Agreement upon the occurrence of any of the following
events:
8.1.1 Upon
written notice by either party to the other party that the other party has
committed a substantial breach of this Agreement, specifying such breach, if
such breach is not cured within a 30-day period following receipt of such
notice.
8.1.2 Either
Party may terminate if Licensee ceases to actively develop and market any
Licensed Products.
8.1.3 Licensor
may terminate upon Licensee’s failure to make royalty payments according to
Article VII of this Agreement and failure to cure such breach within thirty
days
of written notice from Licensor.
-9-
8.1.4 Licensor
may terminate upon commencement of proceedings by or against Licensee under
the
Bankruptcy Code or state insolvency laws which are not dismissed within sixty
days of such commencement.
8.2
License
Following Termination.
Following
any termination of this Agreement, other than as a result of breach by either
Party, Licensee shall retain a non-exclusive license under the Licensed
Technology solely for and limited to manufacturing, having manufactured, using,
selling, having sold, marketing, and having marketed all Licensed Products
(i)
then on hand (whether in the possession of Licensee or its sublicensees,
assignees, agents or distributors); (ii) that Licensee (or such sublicensees,
assignees, agents or distributors) can manufacture with materials then on hand
that were specifically purchased for the purpose of manufacturing Licensed
Products; and (iii) for which Licensee is obligated to fulfill bona fide orders
placed prior to the date of termination of this Agreement. Upon completion
of
the foregoing, Licensee’s non-exclusive license set forth in this Section 8.2 of
this Agreement shall automatically terminate.
8.2.1 Licensee
Owned Plants and Licensee Royalties.
In
addition to the foregoing, upon any termination of this Agreement, Licensee
and
its sublicensees shall retain a perpetual license under the Licensed Technology
to operate any desalination or power plants that Licensee or any sublicensee
owns or is actively constructing upon termination of this Agreement, and to
manufacture, repair, and replace any Licensed Products used in such desalination
or power plants as necessary to fully operate such plants, with the condition
that Licensee and its sublicensees continues to pay all royalties to Licensor
from such plants pursuant to Article VII. If Licensee is receiving royalties
from plants that Licensee has sold to other entities, Licensee may continue
to
receive such royalties with the condition that its sublicensees continue to
pay
Royalties to Licensor (pursuant to Section 7.1) on the Net Sales received by
such sublicensees as set forth in Section 7.1(iii).
8.3 Royalty
Payments.
Licensee
is obligated to pay royalties that are accrued up to the date of any termination
of this Agreement under Section 8.1. After termination under Section 8.1,
Licensee is obligated to pay any royalties that are accrued up to the date
of
the automatic termination of any non-exclusive license pursuant to Section
8.2.
After termination under Section 8.1, Licensee also is obligated to pay any
royalties on any Licensed Commodity Products but only until the last to expire
Valid Claim of the Patent Rights.
8.4 Sublicensees.
In the
event this Agreement is terminated, Licensor agrees to deal in good faith with
Licensee and/or any sublicensees, and not unreasonably refuse, to convert any
sublicense into a direct license with Licensor and thereby retain all rights
licensed to such sublicensee in its sublicense agreement with Licensee subject
to such sublicensee paying all royalties that would have been due to the
Licensee directly to the Licensor.
8.5 Intellectual
Property.
Upon
termination of this Agreement, except as otherwise expressly set forth herein,
all rights to the Patent Rights shall revert to Licensor, his heirs and/or
his
assigns. Additionally,
upon termination of this agreement, and subject to payment of royalty payments
to Licensee by Licensor as set forth in Section 8.6, below, Licensee shall
grant
to Licensor a non-exclusive license to use, incorporate or otherwise
commercialize improvements, changes, developments and/or modifications in or
of
the Licensed Technology resulting from the performance of this
Agreement.
-10-
8.6 Royalty
Payments to Licensee. Upon
termination of this Agreement, if Licensee has provided sufficient funds for
the
development of commercial models as set forth below, and if the Licensed
Technology is later licensed to another entity, Licensee shall receive a royalty
on Net Sales received by such other licensed entity or entities according to
the
following table:
|
Funds
Provided for
|
Royalty
|
|
Technical
Development by Licensee
|
|
|
of
the Licensed Technology
|
|
|
$
250,000
|
0.5%
|
|
$
500,000
|
1%
|
|
$
1,000,000
|
2%
|
|
$
3,000,000
|
3%
|
ARTICLE
IX. MARKING
9.1 Affixed
to Licensed Products.
If
any of
the Patent Applications issue as a patent, Licensee will affix (or require
any
sublicensee or assignee of Licensee to affix) to each Licensed Product or to
the
package containing such Licensed Product or to an insertion slip in the package
with each Licensed Product, a legible notice reading: "Licensed under one or
more of the following patents," followed by a list of patent numbers applicable
to such Licensed Product.
ARTICLE
X. INFRINGEMENT
10.1 Notice
of Infringement.
Each
party shall promptly report in writing to the other party during the License
Term any suspected infringement of the Patent Rights and any suspected
unauthorized use or misappropriation of any Technology in the Field of Use
of
which it becomes aware, and shall provide the other party with all available
evidence supporting such suspected infringement or unauthorized use or
misappropriation.
10.2. Primary
Right.
Licensee shall have the primary right, but not the obligation, to initiate
an
appropriate suit anywhere in the world against any third party who at any time
is suspected of infringing all or any portion of the Patent Rights or using
without proper authorization all or any portion of the Technology in the Field
of Use. Licensee shall give Licensor sufficient advance notice of its intent
to
file such suit and the reasons. Further, Licensee shall keep Licensor informed,
and shall from time to time consult with Licensor regarding the status of any
such suit.
-11-
10.3 Licensee
Participation.
Licensee shall have the sole and exclusive right to select counsel for any
suit
referred to in this Article X and shall, except as provided herein, pay all
expenses of the suit, including without limitation attorneys' fees and court
costs. Licensor shall have the right, but not the obligation, to contribute
fifty percent (50%) of the costs incurred in connection with such litigation
and, if it so elects, any damages, royalties, settlement fees or other
consideration received by Licensee for past infringement or misappropriation
as
a result of such litigation shall be shared by Licensee and Licensor pro rata
based on their respective sharing of the costs of such litigation. In the event
that Licensor elects not to contribute to the costs of such litigation, Licensee
shall be entitled to retain any damages, royalties, settlement fees or other
consideration resulting therefrom. If necessary, Licensor shall join as a party
to the suit but shall be under no obligation to participate except to the extent
that such participation is required as the result of being a named party to
the
suit. Licensor shall offer reasonable assistance to Licensee at no charge to
Licensee except for reimbursement of reasonable out-of-pocket expenses incurred
in rendering such assistance. Licensor shall have the right to participate
and
be represented in any such suit by its own counsel at its own expense. Licensee
shall not settle any such suit involving rights of Licensor without obtaining
the prior written consent of Licensor, which consent shall not be unreasonably
withheld.
10.4 Licensor’s
Right.
In the
event that Licensee elects not to initiate an infringement or other appropriate
suit pursuant to Article X of this Agreement, Licensee shall so advise Licensor,
and Licensor shall have the right, at the expense of Licensor, of initiating
an
appropriate suit anywhere in the world against any third party who at any time
is suspected of infringing all or any portion of the Patent Rights or using
without proper authorization all or any portion of the Technology in the Field
of Use. Licensor shall give Licensee sufficient advance notice of its intent
to
file such suit and the reasons, and shall provide Licensee with an opportunity
to make suggestions and comments regarding such suit. Furthermore, Licensor
shall keep Licensee informed, and shall from time to time consult with Licensee
regarding the status of any such suit.
10.5 Licensee’s
Participation.
In
exercising its rights pursuant to Section 10.4 of this Agreement, Licensor
shall
have the sole and exclusive right to select counsel and shall, except as
provided herein, pay all expenses of the suit including without limitation
attorneys' fees and court costs. Licensee, in its sole discretion, may elect,
within sixty (60) days after the commencement of such litigation, to contribute
fifty percent (50%) of the costs incurred by Licensor in connection with such
litigation and, if it so elects, any damages, royalties, settlement fees or
other consideration received by Licensor for past infringement or
misappropriation as a result of such litigation shall be shared by Licensee
and
Licensor pro rata based on their respective sharing of the costs of such
litigation. In the event that Licensee elects not to contribute to the costs
of
such litigation, Licensor shall be entitled to retain any damages, royalties,
settlement fees or other consideration resulting therefrom. If necessary,
Licensee shall join as a party to the suit but shall be under no obligation
to
participate except to the extent that such participation is required as a result
of being a named party to the suit. At Licensor's request, Licensee shall offer
reasonable assistance to Licensor in connection therewith at no charge to
Licensor except for reimbursement of reasonable out-of-pocket expenses incurred
in rendering such assistance. Licensee shall have the right to participate
and
be represented in any such suit by its own counsel at its own expense. Licensor
shall not settle any such suit involving rights of Licensee without obtaining
the prior written consent of Licensee, which consent shall not be unreasonably
withheld.
-12-
ARTICLE
XI. PATENT EXPENSES
11.1
During
the License Term, Licensee shall have the primary right, but not the obligation,
to prepare, file, prosecute and maintain all Patent Rights under Licensor’s name
at Licensee’s own expense, using patent counsel selected by Licensee. Licensor
agrees to cooperate with Licensee and counsel in such prosecution of U.S. and
foreign patent applications for the Patent Rights. In the event that Licensee
desires to abandon any Patent Rights or to decline responsibility for the
maintenance or prosecution of any Patent Rights, Licensee shall provide Licensor
with written notice of such desire within ninety (90) days of any applicable
final deadline. Licensor then shall have the right, but shall not be obligated,
to prepare, file, prosecute, and maintain at Licensor’s own expense any Patent
Rights that Licensee desires to abandon and in those countries that Licensee
chooses not to file patent applications, but, if Licensor intends to exercise
this right, Licensor shall provide Licensee with written notice of such intent
within forty-five (45) days of the applicable final deadline, and then Licensee
has up until twenty (20) days before the applicable final deadline to reconsider
and notify Licensor in writing of Licensees intent not to so abandon or decline.
If Licensee does so notify Licensor, then Licensee shall take appropriate action
to secure or maintain the Patent Rights and Licensor shall not. Licensee shall
have no rights in any such abandoned or not-filed Patent Rights.
ARTICLE
XII. INDEMNIFICATION
12.1 Indemnification
by Licensor.
Licensor agrees to indemnify, defend, and hold Licensee and its directors,
officers, employees, representatives and agents harmless from and against any
and all claims (including those for personal injury or death), losses, damages,
obligations, liabilities and costs (including attorneys’ and other professional
fees and other costs of litigation) arising out of or attributable to the gross
negligence, willful misconduct or violation of law of or by Licensor in
performance of its obligations under this Agreement.
12.2 Indemnification
by Licensee.
Licensee
agrees to indemnify, defend, and hold Licensor harmless from and against any
and
all claims (including those for personal injury or death), losses, damages,
obligations, liabilities and costs (including attorneys’ and other professional
fees and other costs of litigation) arising out of or attributable to the gross
negligence, willful misconduct or violation of law of or by Licensee in
performance of its obligations under this Agreement, and in particular the
manufacture or sale of the Licensed Products.
12.3 Indemnification
Procedures.
In the
event that any person intends to claim indemnification pursuant to Section
12
(an “Indemnitee”)
it
shall promptly notify the indemnifying party (the “Indemnitor”)
in
writing of such alleged liability, provided that the failure to promptly notify
the Indemnitor shall not relieve the Indemnitor of any obligation under this
Agreement except to the extent such failure to provide prompt notice adversely
impairs the Indemnitor’s ability to defend against the claim, suit or
proceeding. The Indemnitor shall have the sole right to control the defense
and
settlement thereof, provided that (a) the Indemnitor may not consent to
imposition of any obligation or restriction on the Indemnitee in any settlement
unless mutually agreed among the Parties, (b) Indemnitor shall keep Indemnitee
fully informed and permit the Indemnitee to participate (at Indemnitee’s
expense) as the Indemnitee may reasonably request and (c) Indemnitee may,
without affecting its right to indemnity hereunder, defend and settle any such
claim, suit or proceeding if Indemnitor declines to defend against such claim,
suit or proceeding or files for bankruptcy. The Indemnitees shall cooperate
with
the indemnifying party and its legal representatives in the investigation of
any
action, claim or liability covered by Section 12. The Indemnitee shall not,
except at its own cost, voluntarily make any payment or incur any expense with
respect to any claim or suit without the prior written consent of Indemnitor,
which Indemnitor shall not be required to give, provided that the Indemnitee
may, without affecting its right to indemnity hereunder, defend and settle
any
such claim, suit or proceeding if the Indemnitor declines to take responsibility
or files for bankruptcy.
-13-
ARTICLE
XIII. NOTICES
Notices.
All
notices or other communications required by this Agreement will be in writing
and will be hand delivered or sent by certified mail, or telecopy and will
be
regarded as properly given if sent to the parties or their representatives
at
the addresses located below:
If
to Licensee:
Xxxxx
X.
Xxxxxxx
Director,
President, and CEO
000
Xxx
xx xx Xxxxx, Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
If
to Licensor:
Xxxxxx
X.
Xxxxxxx
000
Xxxxxxxx
Xxx
Xxxxxx, XX 00000
From
time
to time during the License Term, the parties may, at their discretion, designate
other representatives, addresses or addressees.
ARTICLE
XIV. EXPORT COMPLIANCE
Compliance
With Law.
At
all
times during the License Term, Licensee and Licensor will comply in all respects
with the Export Administration Act of 1979, 50 U.S.C. § 2401, et seq., the Arms
Export Control Act, both as from time to time amended, with regulations
promulgated under either, and with administrative acts pursuant to either,
and
with other applicable statutes and regulations of the United States
-14-
ARTICLE
XV. BINDING EFFECT
Writing
Required.
This
Agreement constitutes the complete agreement of the parties and cannot be
modified except in writing signed by the parties. This Agreement shall bind,
and
inure to the benefit of, each of the parties and their personal representation,
successors in interest and any approved assigns of Licensee. This Agreement
and
all amendments hereto shall be governed by and construed and enforced in
accordance with the laws of the State of New Mexico as if between New Mexico
residents and without reference to New Mexico’s rules, caselaw or doctrines
concerning conflict of laws, except that questions affecting the construction
and effect of any patent shall be determined by the law of the country in which
the patent was granted.
ARTICLE
XVI. SURVIVAL
Survival.
The
provisions set forth in Article I, Article II, Section 3.2 (only with regard
to
Sublicensee obligations), Article IV, Article V, Article VI, Article VIII,
Article XIII, this Article XVI, Article XVII, Article XVIII, and Article XIX,
and any provisions which expressly state they shall survive termination, shall
survive the termination of any license granted hereunder and survive the
termination of this Agreement in accordance with their terms.
ARTICLE
XVII. COUNTERPARTS
This
Agreement may be executed by facsimile and in several counterparts, each of
which shall be deemed to be an original and all of which shall together
constitute one and the same instrument.
ARTICLE
XVIII. ARBITRATION
18.1 Agreement
to Arbitrate.
All
disputes between Licensee and Licensor arising under this Agreement shall be
resolved by binding arbitration in New Mexico, pursuant to the Commercial
Arbitration Rules of the American Arbitration Association and the then current
applicable New Mexico statutes and laws concerning arbitration , and judgment
upon the award may be entered in any court having jurisdiction. Notwithstanding
the foregoing, either party may seek injunctive relief in a New Mexico state
or
federal court of law to prevent irreparable harm to its interests or rights
under this Agreement; the parties hereby agree to the exclusive jurisdiction
and
venue of such courts.
18.2 Disclosure
of Possible Conflict.
Licensor
hereby declares that immediately upon the execution of this Agreement, that
Licensor shall be both the Licensor and an interest owner of Licensee, and
as
such, Licensor hereby declares his recognition that a conflict may exist if
a
disagreement or a dispute arises between the Licensor and the Licensee. If
such
a disagreement or dispute arises, then Licensor shall, in recognition of the
conflict agree to act solely as Licensor and thus forego any rights, other
than
rights to receive revenue or his obligations set forth in Section 7.6 above,
he
may have as a shareholder concerning such license dispute, until such time
that
disagreement or dispute is resolved.
-15-
ARTICLE
XIX. ASSIGNMENT BY LICENSOR AND BY LICENSEE
Licensor
may, in his sole discretion, assign his rights, obligations and interest in
and
under this Agreement and his intellectual property which is the subject of
this
Agreement, to a wholly owned corporation or limited liability company, and
the
Parties agree that upon such transfer or assignment of interest, then such
entity shall, for all intents, purposes, liability, and performance required
hereunder, supercede and replace Xx. Xxxxxx X. Xxxxxxx as the sole Licensor
and
as a Party under this Agreement. Licensee may assign and transfer all of its
rights and obligations hereunder to any third party who agrees to be bound
by
the terms of this Agreement.
ARTICLE
XX. Entire Agreement.
This
Agreement, in combination with the Technology Consulting Agreement and the
Warrant of Exhibit A and the Warrant’s vesting schedule in Exhibit B,
constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and the Technology Consulting Agreement and the Warrant
and the Warrant’s vesting schedule. This Agreement, in combination with the
Technology Consulting Agreement and the Warrant and the Warrant’s vesting
schedule, supersedes all prior agreements, understandings, and negotiations,
both written and oral, between the Parties with respect to the subject matter
of
this Agreement and the Technology Consulting Agreement and the Warrant and
the
Warrant’s vesting schedule, including without limitation the Original Agreement.
No representation, warranty, inducement, promise, or understanding not set
forth
in this Agreement or the Technology Consulting Agreement or the Warrant or
the
Warrant’s vesting schedule has been made or relied upon by either Party. Neither
this Agreement, the Technology Consulting Agreement, the Warrant, nor the
Warrant’s vesting schedule is intended to confer upon any person or entity,
other than the Parties, any rights or remedies hereunder. The Exhibits to this
Agreement (that is, Exhibit A and Exhibit B) are and shall be deemed to be
a
part of this Agreement.
-16-
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by
their duly empowered representatives as of the date of the Agreement first
written above.
LICENSOR:
/s/
Xx. Xxxxxx X. Xxxxxxx
Xx.
Xxxxxx X. Xxxxxxx
LICENSEE:
/s/
Xxxxx X. Xxxxxxx
Xxxxx
X.
Xxxxxxx, Director, President, and CEO
-17-
Exhibit
A
Warrant
THIS
WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT, SUCH SECURITIES NOR
ANY
INTEREST THEREIN MAY BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
APPLICABLE STATE SECURITIES LAWS.
_____________________________________________
COMMON
STOCK PURCHASE WARRANT
_____________________________________________
This
document (this “Warrant”)
certifies that, for good and valuable consideration, Barnabus Energy, Inc.,
a
Nevada corporation (the “Company”),
grants to Xxxxxx Xxxxxxx (the “Warrantholder”),
the
right to subscribe for and purchase from the Company, on or before the
Expiration Time (as defined below), up to Two Million Two Hundred Thirty-Three
Thousand Four Hundred Thirty-Eight (2,233,438) validly issued, fully paid and
nonassessable shares of Common Stock of the Company (as may be adjusted, the
“Warrant
Shares”)
at the
exercise price per share of $1.50 (the
“Exercise
Price”),
all
subject to the terms, provisions, conditions and adjustments (including
adjustments to number of shares and Exercise Price) herein set forth. This
Warrant is the Warrant issued in connection with the License Agreement.
Capitalized terms used herein which are not specifically defined in other
sections of this Warrant, shall have the meanings set forth in Section 9.
1. Warrant
Term.
The
purchase rights represented by this Warrant are subject to vesting as set forth
in Exhibit B attached hereto and are exercisable in whole at any time and from
time to time, from and after the date they are vested and on or prior to the
earlier of the fifth (5th)
anniversary of the date hereof. (such date being the “Expiration
Time”).
2. Exercise
of Warrant; Payment of Taxes.
2.1 Exercise
of Warrant.
The
purchase rights represented by this Warrant may be exercised by the
Warrantholder to the extent they have vested as provided in Exhibit B, in whole
and from time to time, by the surrender of this Warrant (with a duly executed
notice of exercise form, the “Exercise Form”, in the form attached hereto as
Attachment
A)
at the
principal office of the Company and by the payment to the Company of an amount
equal to the then applicable Exercise Price per share multiplied by the number
of Warrant Shares then being purchased. The Warrantholder shall be deemed to
have become the holder(s) of record of, and shall be treated for all purposes
as
the record holder(s) of, the Warrant Shares represented thereby (and such
Warrant Shares shall be deemed to have been issued) immediately prior to the
close of business on the date or dates upon which this Warrant is exercised.
-18-
(a)
Nothwithstanding anything to the contrary contained herein or in the License
Agreement, this Warrant shall be automatically cancelled and of no further
force
or effect with respect to all unexercised portions hereof (whether or not
vested) in the event there shall be a material breach by Warrantholder of any
of
his representations, warranties, covenants or obligations under the License
Agreement.
2.2 Net
Exercise.
(a) In
lieu
of payment in cash, the rights represented by this Warrant may also be exercised
at any time by a written notice of exercise in the form of Attachment
A
attached
hereto, providing for the net exercise of this Warrant for the Warrant Shares
equal to the value (as determined below) of this Warrant (or the portion thereof
being exercised), specifying that this net exercise election has been made,
and
the net number of Warrant Shares to be issued after giving effect to such net
exercise. In the event the Warrantholder makes such election, Company shall
issue to the Warrantholder a number of Warrant Shares computed using the
following formula:
X
=
Y(A-B)
A
Where:
X
= the
number of Warrant Shares to be issued to the Warrantholder
Y
= the
number of Warrant Shares purchasable under the Warrant or, if only a portion
of
the Warrant is being exercised, the portion of the Warrant being exercised
(as
of the date of such net exercise)
A
= the
Fair Market Value of one Share of Common Stock (as of the date of such net
exercise)
B
=
Exercise Price of one Share of Common Stock (as adjusted to the date of such
net
exercise)
(b) For
purposes of this Section
2.2,
“Fair
Market Value”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on the American Stock
Exchange, the New York Stock Exchange, the NASDAQ National Market or the NASDAQ
SmallCap Market (each a “Principal
Market”),
the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Principal Market on which the Common Stock is
then listed or quoted as reported by Bloomberg Financial L.P. (based on a
trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if
the
Common Stock is not then listed or quoted on a Principal Market and if prices
for the Common Stock are then quoted on the OTC Bulletin Board (or any successor
market), the volume weighted average price of the Common Stock for such date
(or
the nearest preceding date) on the OTC Bulletin Board (or any successor market);
(c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board
(or any successor market) and if prices for the Common Stock are then reported
in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or
a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported;
or
(d) in all other cases, the fair market value of a share of Common Stock as
determined by a nationally recognized-independent appraiser selected in good
faith by the Licensee.
-19-
2.3 Warrant
Shares Certificate.
A stock
certificate for the Warrant Shares specified in the Exercise Form shall be
delivered to the Warrantholder within five (5) Business Days after receipt
of
the Exercise Form by the Company and payment by the Warrantholder of the
aggregate Exercise Price (or net exercise in lieu of payment as permitted in
Section 2.2),
along
with a check from the Company in lieu of any fractional shares which the
Warrantholder would be entitled to purchase under this Warrant. If this Warrant
was exercised in part, the Company shall, at the time of delivery of the stock
certificate, deliver to the Warrantholder a new Warrant evidencing the right
to
purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant.
3. Restrictions
on Transfer; Restrictive Legends.
3.1 Restrictions
on Transfer.
This
Warrant and the Warrant Shares issuable upon exercise of all or part of this
Warrant are unregistered securities that are subject to the restrictions on
transfer imposed by the Securities Act and applicable state securities laws
and
may not be offered, sold, transferred, pledged or otherwise disposed of, in
whole or in part, to any Person other than in accordance with the Securities
Act
and applicable state securities laws.
3.2 Restrictive
Legends.
Until
such time as the restrictions on transfer imposed on this Warrant by the
Securities Act and applicable state securities laws shall no longer be
effective, this Warrant, any Warrant issued to the Warrantholder upon the
partial exercise of this Warrant pursuant to Section 2
shall be
stamped or otherwise imprinted with a legend in substantially the form as set
forth on the cover of this Warrant. Until such time as the restrictions on
transfer imposed on the Warrant Shares by the Securities Act, applicable state
securities laws and the Stockholders’ Agreement shall no longer be effective,
each stock certificate for Warrant Shares and
each
stock certificate issued upon the direct or indirect transfer of any such
Warrant Shares shall be stamped or otherwise imprinted with a legend in a form
generally used by the Company for unregistered issuances of Common
Stock.
4. Reservation
and Registration of Warrant Shares.
The
Company covenants and agrees as follows:
4.1 Validly
Issued and Free of Encumbrances.
All
Warrant Shares issued upon the exercise of all or any part of this Warrant
shall, upon issuance and payment of the Exercise Price therefore (or upon net
exercise as permitted herein), be validly issued, fully paid and nonassessable,
issued in compliance with all applicable federal and state securities laws,
and
free from all taxes, liens and charges with respect to the issue thereof, and
not subject to any preemptive rights.
-20-
4.2 Sufficient
Authorized Shares.
During
the period within which the rights represented by this Warrant may be exercised,
the Company shall at all times have authorized and reserved, for the purpose
of
issuance of Common Stock upon any exercise of the purchase rights evidenced
by
this Warrant, and shall keep available free from preemptive rights, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4.3 Noncontravention.
The
Company shall not, by amendment of its Charter or through any reorganization,
transfer of assets, spin-off, consolidation, merger, dissolution, issue or
sale
of securities or any other action or inaction, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant to be observed
or
performed hereunder, and shall at all times in good faith assist in performing,
carrying out, and giving effect to the terms hereof and in the taking of all
such actions as may be necessary or appropriate in order to protect the rights
of the Warrantholder against dilution or other impairment.
5. Anti-Dilution
Adjustments.
From and
after the date hereof and until the Expiration Date, notwithstanding the fact
that no Warrant Shares shall be issued and outstanding, the Exercise Price,
and
the number and type of Warrant Shares or other securities to be received upon
exercise of this Warrant, shall be subject to adjustment as
follows:
5.1 Issuances
of Common Stock Below Exercise Price.
(a) If
the
Company shall, at any time or from time to time after the Original
Issuance
Date, issue any shares of Common Stock (or be deemed to have issued shares
of
Common Stock as provided herein), other than Excluded Stock, without
consideration or for a consideration per share less than the Exercise Price
in
effect immediately prior to the issuance of such Common Stock, then the Exercise
Price, as in effect immediately prior to each such issuance, shall forthwith
be
lowered to:
(1) an
amount
equal to the sum of (X) the total number of shares of Common Stock Deemed
Outstanding immediately prior to such issuance, multiplied
by
the
Exercise Price in effect immediately prior to such issuance, and (Y) the
consideration received by the Company upon such issuance; by
(2) the
total
number of shares of Common Stock Deemed Outstanding immediately after the
issuance of such Common Stock.
(a) for
the purposes of any adjustment of the Exercise Price pursuant to paragraph
(a) above, the following provisions shall be applicable:
(1) In
the
case of the issuance of Common Stock for cash in a public offering or private
placement, the consideration shall be deemed to be the amount of cash paid
therefor after deducting therefrom any discounts, commissions or placement
fees
payable by the Company to any underwriter or placement agent in connection
with
the issuance and sale thereof.
(2) In
the
case of the issuance of Common Stock for a consideration in whole or in part
other than cash, the consideration other than cash shall be deemed to be the
fair value per share thereof, as reasonably determined in good faith by the
Board, irrespective of any accounting treatment.
-21-
(3) In
the
case of the issuance of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for such convertible or
exchangeable securities (except for options or rights to acquire or subscribe
for Excluded Stock):
(A) the
aggregate maximum number of shares of Common Stock deliverable upon exercise
of
such options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for
a
consideration equal to the consideration (determined in the manner provided
in
Sections 5.1(b)(1)
and
5.1(b)(2)
above),
if any, received by the Company upon the issuance of such options or rights
plus
the minimum purchase price provided in such options or rights for the Common
Stock covered thereby;
(B) the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable securities or upon
the exercise of options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange thereof shall
be deemed to have been issued at the time such securities, options or rights
were issued and for a consideration equal to the consideration received by
the
Company for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in Sections 5.1(b)(1)
and
5.1(b)(2)
above);
(C) on
any
change in the number of shares or exercise price of Common Stock deliverable
upon exercise of any such options or rights or conversions of or exchanges
for
such securities, other than a change resulting from the antidilution provisions
thereof, the Exercise Price shall forthwith be readjusted to the Exercise Price
as would have been obtained had the adjustment made upon the issuance of such
options, rights or securities not converted prior to such change or options
or
rights related to such securities not converted prior to such change been made
upon the basis of such change; and
(D) on
the
expiration of any such options or rights, the termination of any such rights
to
convert or exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Exercise Price shall forthwith
be
readjusted to the Exercise Price as would have been obtained had the adjustment
made upon the issuance of such options, rights, securities or options or rights
related to such securities been made upon the basis of the issuance of only
the
number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities, or upon
the exercise of the options or rights related to such securities and subsequent
conversion or exchange thereof.
(c) Whenever
the Exercise Price is adjusted under this Section 5.1,
the
number of Warrant Shares issuable on exercise hereof shall be multiplied by
a
fraction the numerator of which is the Exercise Price immediately before such
adjustment and the denominator is the Exercise Price as so
adjusted.
-22-
(a) If,
at
any time after the Original Issuance Date, the number of shares of Common Stock
outstanding is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split-up of shares of Common Stock, then, following
the
record date for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the Exercise Price shall be
decreased and the number of shares of Common Stock issuable on exercise of
this
Warrant shall be increased in proportion to such increase in outstanding
shares.
(b) If,
at
any time after the Original Issuance Date, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock, then, following the record date for such combination, the Exercise Price
shall be increased and the number of shares of Common Stock issuable on exercise
of this Warrant shall be decreased in proportion to such decrease in outstanding
shares.
5.3 Recapitalization,
Etc.
In
the
event of any capital reorganization of the Company, any reclassification of
the
stock of the Company (other than a change in par value or from par value to
no
par value or from no par value to par value or as a result of a stock dividend
or subdivision, split-up or combination of shares), or any consolidation or
merger of the Company, this Warrant shall after such reorganization,
reclassification, consolidation or merger be exercisable for the kind and number
of shares of stock or other securities or property of the Company or of the
company resulting from such consolidation or surviving such merger to which
the
holder of the number of shares of Common Stock deliverable (immediately prior
to
the time of such reorganization, reclassification, consolidation or merger)
upon
exercise of this Warrant would have been entitled upon such reorganization,
reclassification, consolidation or merger. The provisions of this clause shall
similarly apply to successive reorganizations, reclassifications, consolidations
and mergers.
5.4 De
Minimis Adjustments.
No
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 0.1% in the Exercise Price;
provided,
however
that
any
adjustments not required to be made by virtue of this sentence shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5
shall be
made to the nearest one hundredth (1/100) of a cent or the nearest one tenth
(1/10) of a share, as the case may be.
5.5 Dividends.
Without
duplication of any other adjustment provided for in this Section 5,
at any
time the Company makes or fixes a record date for the determination of holders
of Common Stock entitled to receive a dividend or other distribution payable
in
property or securities of the Company other than shares of Common Stock, then,
and in each such case,
(a) the
Exercise Price then in effect shall be adjusted (and any other appropriate
action shall be taken by the Company) by multiplying the Exercise Price in
effect immediately prior to the date of such dividend or distribution by a
fraction, (i) the numerator of which shall be the Fair Market Value (in all
such
cases under Section 5.5,
as
shall be determined pursuant to Section 2.2) of
Common
Stock immediately prior to the date of such dividend or distribution, less
the
Fair Market Value of the portion of the property or securities applicable to
one
share of Common Stock so dividend or distributed, and (ii) the denominator
of
which shall be the Fair Market Value of the Common Stock immediately prior
to
the date of such dividend or distribution (such fraction not to be greater
than
one); and
-23-
(b) the
number of Warrant Shares for which this Warrant is exercisable immediately
prior
to such dividend or distribution shall be adjusted (and any other appropriate
actions shall be taken by the Company) by multiplying the then-current number
of
Warrant Shares in effect immediately prior to the date of such dividend or
distribution by a fraction, (i) the numerator of which shall be the Exercise
Price in effect immediately prior to the date of such dividend or distribution,
and (ii) the denominator of which shall be the adjusted Exercise Price as
determined pursuant to Section 5.5(a)
above
(such fraction not to be less than one).
Such
adjustments shall be made whenever the Company makes or fixes a record date
for
the determination of holders of Common Stock entitled to receive a dividend
or
other distribution payable in property or securities of the Company (other
than
shares of Common Stock) and shall become effective retroactively to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such dividend or
distribution.
6. Loss
or Destruction of Warrant.
Subject
to the terms and conditions hereof, upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of
this Warrant and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of
such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver to the Warrantholder a new Warrant of like
tenor.
7. Ownership
of Warrant.
The
Company may deem and treat the Person in whose name this Warrant is registered
as the Warrantholder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
8. Amendments.
Any
provision of this Warrant may be amended and the observance thereof waived
only
with the written consent of the Company and the Warrantholder.
9. Definitions.
As used
herein, unless the context otherwise requires, the following terms have the
following respective meanings:
“Affiliate”
means,
(1) with respect to any Person, any of (a) a director, officer or stockholder
holding 5% or more of the capital stock (on a fully diluted basis) of such
Person, (b) a spouse, parent, sibling or descendant of such Person (or a spouse,
parent, sibling or descendant of any director or officer of such Person) and
(c)
any other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person or (2) in any event, any Person meeting the definition of
“Affiliate” set forth in Rule 405 under the Securities Act. The term “control”
includes, without limitation, the possession, directly or indirectly, of the
power to direct the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
-24-
“Board
of Directors”
or
“Board”
means
the Board of Directors of the Company.
“Business
Day”
means
any day other than a Saturday, Sunday or a day on which national banks are
authorized by law to close in the State of Nevada.
“Charter”
means
the Articles of Incorporation of the Company, as amended from time to
time.
“Common
Stock”
means
the Company’s presently authorized Common Stock, $.001 par value, and any stock
into or for which such Common Stock may hereafter be converted or exchanged
pursuant to the Charter of the Company as amended from time to time as provided
by law and in such Charter.
“Common
Stock Deemed Outstanding” means,
at
any given time, the sum of (i) the number of shares of Common Stock actually
outstanding at such time, (ii) the number of shares of Common Stock issuable
upon conversion of the Preferred Stock, and (iii) the number of shares of Common
Stock issuable upon the exercise in full of all Convertible Securities whether
or not the Convertible Securities are convertible into Common Stock at such
time, but shall exclude any shares of Common Stock or Convertible Securities
in
the treasury of the Company or held for the account of the Company or any of
its
subsidiaries.
“Convertible
Securities”
means
securities or obligations that are exercisable for, convertible into or
exchangeable for shares of Common Stock. The term includes options, warrants
or
other rights to subscribe for or purchase Common Stock or to subscribe for
or
purchase other securities that are convertible into, directly or indirectly,
or
exchangeable for Common Stock.
“Excluded
Stock” means
(i) all shares (as adjusted equitably for stock dividends, stock splits,
combinations and the like) of Common Stock issuable upon exercise of stock
options granted to directors, officers, consultants, advisors, employees or
former employees of the Company or its subsidiaries or Affiliates,
(ii) shares of Common Stock issued upon conversion of shares of Preferred
Stock, (iii) shares of Common Stock or securities convertible into or
exercisable for Common Stock issued in connection with any recapitalization,
reclassification, subdivision, stock split, stock dividend or combination of
shares of Preferred Stock or Common Stock, (iv) shares of Common Stock or
securities convertible into or exercisable for Common Stock issued in connection
with debt financing transactions, strategic transactions, mergers or
acquisitions approved in advance by a majority of the Board, (v) securities
offered to the public pursuant to a registered public offering, (vi) shares
of
Common Stock (as adjusted equitably for stock dividends, stock splits,
combinations and the like) issuable upon exercise of stock purchase warrants
outstanding on the Original Issuance Date, and (vii) shares of Common Stock
issued upon exercise, conversion or exchange of any Convertible Securities
not
previously described above.
-25-
“Original
Issuance Date” means
the
date and time that the first Warrant is issued by the Company.
“Person”
means
any individual, firm, corporation, partnership, limited liability company,
trust, incorporated or unincorporated association, joint venture, joint stock
company, governmental authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
“Preferred
Stock” means
any
Preferred Stock of the Company.
“License
Agreement”
means
the Amended and Restated Technology License Agreement of even date herewith
between the Warrantholder and the Company, and to which this Warrant is Exhibit
A.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
United States Securities and Exchange Commission thereunder.
10. Miscellaneous
Provisions.
10.1 Entire
Agreement.
This
Warrant and the License Agreement constitute the entire agreement between the
Company and the Warrantholder with respect to this Warrant.
10.2 Binding
Effect; Benefits.
This
Warrant shall inure to the benefit of and shall be binding upon the Company
and
the Warrantholder and their respective permitted successors and assigns. Nothing
in this Warrant, expressed or implied, is intended to or shall confer on any
person other than the Company and the Warrantholder, or their respective
permitted successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
10.3 Section
and Other Headings.
The
section and other headings contained in this Warrant are for reference purposes
only and shall not be deemed to be a part of this Warrant or to affect the
meaning or interpretation of this Warrant.
10.4 Notices.
All
notices, demands and other communications provided for or permitted hereunder
shall be made in writing and shall be by registered or certified first-class
mail, return receipt requested, telecopier, courier service, overnight mail
or
personal delivery:
If
to
the Company:
0000
Xxx
xx xx Xxxxx
Xxxxx
000
Xxxxxx
Xxxxx, XX 00000
Telephone: (000)
000-0000
Facsimile:
Attention:
Chief
Financial Officer
-26-
with
a
copy (which
shall not constitute notice) to:
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxx
X.
Xxxxx, Esq.
If
to
the Warrantholder:
to
the
addressees reflected on the Warrant
register
maintained by the Company
All
such
notices and communications shall be deemed to have been duly given when
delivered by hand, if personally delivered;
when delivered by courier or overnight mail, if delivered by commercial courier
service or overnight mail; five (5) Business Days after being deposited in
the
mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged,
if telecopied. Any party may, by notice given in accordance with this
Section 11.4,
designate another address or Person for receipt of notices
hereunder.
10.5 Issuance
Tax, Attorneys’ Fees, Notices, Successors
10.6 Severability.
Any term
or provision of this Warrant which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the terms and provisions of this Warrant or affecting the validity or
enforceability of any of the terms or provisions of this Warrant in any other
jurisdiction.
10.7 Governing
Law.
All
issues concerning this Warrant shall be governed by and construed in accordance
with the law of the State of Nevada, without regard to the conflicts of law
principles thereof.
10.8 Rights
as Shareholders.
No
Warrantholder, as such, shall be entitled to vote or receive dividends or be
deemed the holder of Common Stock or otherwise be entitled to any voting or
other rights as a shareholder of the Company, until this Warrant shall have
been
exercised and the Warrant Shares purchasable upon the exercise shall have become
deliverable, as provided herein.
11. Disposition
of Warrant or Shares of Common Stock.
This
Warrant may not be sold, transferred or subdivided by the Warrantholder except
in case of his death to his heirs and legatees. With respect to any offer,
sale
or other transfer or disposition of any Warrant Shares acquired pursuant to
the
exercise of this Warrant, the Warrantholder hereof agrees to give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of such holder’s counsel (if reasonably requested by the
Company and reasonably satisfactory to the Company) to the effect that (i)
such
offer, sale or other transfer or disposition may be effected without
registration or qualification of this Warrant or such shares of Common Stock
under the Securities Act as then in effect, and (ii) indicating whether or
not
under the Securities Act this Warrant or the certificates representing such
shares of Common Stock to be sold or otherwise transferred or disposed of
require any restrictive legend thereon in order to ensure compliance with the
Securities Act; provided,
however,
that a
written opinion of holder’s counsel shall not be required in connection with any
sale pursuant to Rule 144. This Warrant or the certificates representing the
shares of Common Stock thus transferred (except a transfer pursuant to Rule
144)
shall bear a legend as to the applicable restrictions on transferability in
order to insure compliance with the Securities Act, unless in the aforesaid
opinion of counsel for the holder, such legend is not required in order to
insure compliance with the Securities Act. The Company may issue stop transfer
instructions to its transfer agent in connection with the foregoing
restrictions.
-27-
12. Warrantholder’s
Representations.
The
Warrantholder acknowledges that it has had access to all material information
concerning the Company which it has requested. The Warrantholder also
acknowledges that it has had the opportunity to, and has to its satisfaction,
questioned the officers of the Company with respect to its investment hereunder.
The Warrantholder represents that it understands that the Warrant and the Common
Stock are speculative investments, that it is aware of the Company’s business
affairs and financial condition and that it has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire
the
Warrant. The Warrantholder is purchasing the Warrant and any Common Stock issued
upon exercise thereof for investment for its own account only and not with
a
view to, or for resale in connection with, any “distribution” thereof in
violation of the Securities Act or applicable state securities laws. The
Warrantholder further represents that it understands that the Warrant and Common
Stock have not been registered under the Securities Act or applicable state
securities laws by reason of specific exemptions therefrom, which exemptions
depend upon, among other things, the bona fide nature of the Warrantholder’s
investment intent as expressed herein. The Warrantholder is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act.
13. Company’s
Representations.
As
a
material inducement to the Warrantholder to purchase this Warralnt, the Company
hereby represents and warrants that:
(a) The
Company has made all filings under applicable federal and state securities
laws
necessary to consummate the issuance of this Warrant pursuant to this Agreement
in compliance with such laws, except for such filings as may be made properly
after the date hereof.
(b) The
execution, delivery and performance of this Warrant have been duly authorized
by
the Company. This Warrant constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms. The execution and delivery
by
the Company of this Warrant, the issuance of the Common Stock upon exercise
of
the Warrant, and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, or (ii) constitute
a default under, the charter or bylaws of the Company or any agreement,
instrument, order, judgment or decree to which the Company is subject, except
for any such filings required under applicable “blue sky” or state securities
laws or under the Securities Act.
-28-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of the ______ day of _____________ 2006.
|
Issued
By:
|
Accepted
By:
|
|
By:______________________________
Name:
Title:
|
______________________________
Xxxxxx
Xxxxxxx
Dated:
,
2006
|
-29-
Attachment
A:
Exercise Form
(To
be
executed upon exercise of this Warrant)
| To: |
0000
Xxx Xx Xx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000
Attention:
Chief Financial Officer
|
[1.
The
undersigned hereby elects to purchase __________________________ shares of
Common Stock of Company pursuant to the terms of the attached Warrants, and
tenders herewith payment of the purchase price of such shares in
full.]
[1.
The
undersigned hereby elects to purchase __________________________ shares of
Common Stock of Company pursuant
to a net exercise of the Warrant as provided in Section 2
of the
Warrant.]
2.
Check here if applicable: ___ The undersigned confirms that this exercise is
made in connec-tion with the occurrence of a public offering, sale or merger
of
the Company, and the undersigned further elects to condition this exercise
of
the Warrant upon the consummation of said public offering, sale or merger of
the
Company. This exercise shall not be deemed to be effective until the
consummation of such transaction. In the event that transaction is not
consummated within 45 days of the targeted date of the transaction, the
undersigned will advise Company whether or not this exercise should be deemed
rescinded.
2.
Please
issue a certificate or certificates representing said shares in the name of
the
undersigned or in such other name or names as are specified below:
[name]
[address]
3.
The
undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view to, or for resale
in connection with, the distribution thereof and that the undersigned has no
present intention of distributing such shares.
[name]
By:______________________________
(Signature)
Its:______________________________
Date:
_________________
-30-
Exhibit
B
Vesting
Schedule of Warrant
The
Warrant shall become exercisable only with respect to the following number
of
shares of Common Stock as follows:
|
Milestone
#
|
Milestone
|
Number
of underlying shares becoming exercisable
|
|
1
|
Successful
completion of a first working prototype of a solar energy collector
as
described in the License Agreement, as determined solely by
Licensee
|
333,438
|
|
2
|
first
commercial sale of a Licensed Product* to a third party by Licensee
or a
sublicense
|
400,000
|
|
3
|
Aggregate
of $4,000,000 in Net Sales of Licensed Products* to one or more third
parties by Licensee and its sublicensees
|
500,000
|
|
4
|
Aggregate
of $6,000,000 in Net Sales of Licensed Products* to one or more third
parties by Licensee and its sublicensees
|
500,000
|
|
5
|
Aggregate
of $10,000,000 in Net Sales of Licensed Products* to one or more
third
parties by Licensee and its sublicensees
|
500,000
|
*
The
term “Licensed Products” shall have the meaning as defined in the License
Agreement.
-31-
