EXECUTION COPY
AMENDED AND RESTATED LICENSE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AGREEMENT (the "Agreement") is made and
entered into effective as of this 31st day of August, 2005 (the "Effective
Date") by bio-tec Biologische Naturverpackungen GmbH & Co. KG, a German limited
liability company ("Biotec KG"), and bio-tec Biologische Naturverpackungen
Forschungs und Entwicklungs GmbH, a German limited liability company ("Biotec
F&E," and, together with Biotec KG, the "Biotec Group"), on the one hand, and
EarthShell Corporation, a Delaware corporation ("EC"), on the other hand, with
reference to the following facts:
RECITALS:
A. Biotec KG owns or licenses from a third party certain technology and
related intellectual property rights relating to thermoplastic starch/synthetic
bio-polymer blends.
B. Pursuant to the License and Information Transfer Agreement dated July
29, 2002 among the Biotec Group, an affiliate of the Biotec Group and EC (as
amended, the "Existing License Agreement"), the Biotec Group granted to EC ,
exclusive worldwide license to certain technology and related intellectual
property rights relating to the manufacture of food service disposable products
and EC is currently in the process of commercializing such technology through
the manufacturing and selling, either directly or through sublicensees, food
service disposable products.
C. In order to preserve its exclusive rights under the Existing License
Agreement, EC heretofore has paid to or for the benefit of the Biotec Group
payments or other consideration having an agreed value of $4.5 million in the
aggregate, which amount is creditable against future royalty payments in
accordance with the terms of the Existing License Agreement. The Biotec Group
and EC desire to provide for this accumulated prepaid royalty amount to be
applied to acquire a royalty-free exclusive license until June 30, 2008 and to
eliminate during such period any minimum payments that EC would be obligated to
make as a condition to maintaining its exclusivity and to otherwise amend and
restate the Existing License Agreement in its entirety on the terms and
conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals, and the mutual
promises and covenants set forth herein, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS. The capitalized terms used herein shall have the meanings set
forth below:
(a) The term "Biotec Technology" shall mean all of the technology now
owned or Controlled by Biotec KG (other than Trade Secrets), together with all
Improvements to such technology that are hereafter owned or Controlled by Biotec
KG. This includes the technology (other than Trade Secrets) now owned or
Controlled by Biotec KG relating to thermoplastically processable starch,
destructurized starch, converted starch or other forms of disoriented starch,
including the use of such starch alone or in combination with other materials.
The Biotec Technology includes all existing patent rights of Biotec KG relating
to the foregoing, including without limitation those patents and patent
applications listed on Exhibit A hereto, and any patents covering any such
Improvements that are hereafter owned or Controlled by Biotec KG or any
affiliate thereof (including Biotec F&E).
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(b) The term "Controlled" shall mean, with reference to Technology, the
right of Biotec KG to grant rights and sublicenses with respect thereto to EC
without incurring any obligation owing by Biotec KG to the entity that has
licensed or sublicensed such intellectual property to Biotec KG; provided that,
if Biotec KG elects to sublicense any such intellectual property notwithstanding
that Biotec KG will incur any such obligation, and if a payment of royalties or
other consideration to such entity would be required in connection with the
exercise of any rights sublicensed by Biotec KG to EC hereunder, such
intellectual property shall be deemed not to be controlled by Biotec KG and
sublicensed by Biotec KG hereunder unless EC agrees in writing to be responsible
for all such royalties and consideration payable to such other entity. If such
election is so made by Biotec KG and EC agrees to be so responsible, the
relevant technology will be included in the Technology licensed to EC hereunder.
(c) The term "Food Service Disposables" shall have the same meaning as is
assigned to that term as set forth in Exhibit "B" hereto.
(d) The term "Gross Sales" shall mean the gross invoice price of Products
made by EC that it sells during the relevant fiscal period.
(e) The term "Improvement" shall mean any improvement, refinement or
change, whether patentable or unpatentable and irrespective of whence derived,
relating in whole or in part to the composition, formulation or use of a Product
or the Technology, including any improvement, development or change relating to
a Product.
(f) The term "License Revenues" shall mean, with respect to the relevant
fiscal period, the aggregate amount of royalties, fees, or other payments or
consideration actually received by EC during such period from the sale or
disposition of Products by any of EC's sublicensees or any other commercial
exploitation by EC's sublicensees of the rights licensed to EC hereunder.
(g) The term "Modified Atmosphere Packaging Materials" shall mean products
incorporating Biotec materials that are intended to preserve and/or protect food
in circumstances where the atmosphere in contact with the food is contained
and/or altered to preserve and/or protect the food for a period greater than 24
hours.
(h) The term "Net Sales" shall mean, with respect to Products made by EC
that it sells during the relevant fiscal period, the Gross Sales for such fiscal
period, reduced by (i) cash, trade or quantity discounts actually given by EC;
and (ii) credits actually allowed by EC.
(i) The term "Novamont License Agreement" means the Patent Cross-License
Agreement dated August 2, 2001 between Biotec KG and E. Khashoggi Industries,
LLC, on the one hand, and Novamont S.p.A., on the other.
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(j) The term "Product" means any product that constitutes a Food Service
Disposable and that incorporates in whole or in part the Technology.
(k) The term "Retained Food Wrap Products" means products used to wrap
food that incorporate any Technology.
(l) The term "Retained Biotec Products" means films, products and
processes for producing films and sheets that incorporate, in whole or in part,
the Technology, and Products comprising said films such as bags, excluding any
Food Service Disposables.
(m) The term "Technology" shall refer collectively to the Biotec
Technology and the Trade Secrets.
(n) The term "Trade Secrets" shall mean all confidential and proprietary
information and know-how now owned or Controlled by Biotec KG, together with all
Improvements thereto that are hereafter owned or Controlled by Biotec KG. This
includes any such information and know-how that relates to thermoplastically
processable starch, destructurized starch, converted starch or other forms of
disoriented starch, including the use of such starch alone or in combination
with other materials.
2. DEVELOPMENT PROJECTS.
2.1 PROVISION OF SERVICES.
(a) EC may request the Biotec Group to provide services relating to
design formulation and product development, and research related to compositions
capable of use in Food Service Disposables, methods of using compositions as
Food Service Disposables, and methods of manufacturing Food Service Disposables
(collectively, "Requested Services "). The Biotec Group will use commercially
reasonable efforts to accommodate EarthShell's request for Requested Services
and will negotiate in good faith the terms and conditions thereof, subject to
the Biotec Group's available resources. The Requested Services will be provided
at such locations as the parties may from time to time designate; provided,
however, that Biotec in any case shall be entitled to travel, meal and lodging
expense reimbursement pursuant to Section 2.3 hereof with respect to technical,
scientific and administrative personnel who are required to provide the
Requested Services at locations that require an overnight stay or that are
otherwise sufficiently distant from the personnel's home base to warrant expense
reimbursement under EC's guidelines. (b) All requests for Requested Services
shall be made in a request form to be mutually agreed upon by the parties, which
form (the "Request Form"), at a minimum, shall contain a brief description of
the research and development project and its intended scope, a list of the
deliverables required, the names of any specific personnel requested to work on
the project (subject to their availability), and a proposed timeline and budget
estimating the fees and expenses to be incurred with respect to the project.
Biotec shall indicate its acceptance of the research and development project by
countersigning the Request Form (as the same may be modified by EC to take
account of any changes requested by Biotec and agreed to by EC), subject to
Biotec and EC agreeing to any fixed fee, timeline or other project-specific
requirements that may be applicable in connection with a particular project.
With respect to projects accepted by Biotec in accordance with the foregoing,
Biotec will use commercially reasonable efforts to complete the research and
development project and related Requested Services within the estimated budget
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and shall notify EC once it reasonably appears that the budget will be exceeded
by more than 10%. Upon such notification, EC may, at its option, redefine the
scope of the project (including the list of deliverables), terminate the project
or adjust the budget pursuant to a revised Request Form. All Request Forms (and
any modifications thereto) shall be approved by an officer of EC, and EC shall
not be obligated to pay for Requested Services (or related expenses) that are
not so approved (it being understood that such approval may be given in writing
before the rendering of the service or incurrence of the fees in question).
2.2 FEE FOR REQUESTED SERVICES.
(a) Following the close of each calendar month, Biotec shall deliver
to EC a written report (the "Report") identifying the Biotec technical or
scientific personnel who provided research and development services requested by
EC at any time during the preceding month, the number of hours spent by each
such person providing such services, together with a brief description of the
services provided, the pro forma hourly billing rate of such personnel (the "Pro
Forma Billing Rate"), and the total amount due Biotec from EC with respect to
all research and development services provided by Biotec personnel during such
month. The Report shall also contain, or Biotec shall otherwise timely provide
to EC, such additional technical information as EC may reasonably request to
determine and evaluate the research and development services provided by Biotec
and the amount due Biotec hereunder. The parties agree and acknowledge that the
Pro Forma Billing Rates are intended to reflect the parties' best estimate of
105% of the actual cost that will be incurred by Biotec in transferring
information or rendering research and development services to EC, which actual
cost shall include all direct expenses (including labor and materials) incurred
by Biotec and an allocable portion of Biotec's indirect expenses (including,
without limitation, an allocable share of overhead and the salaries and
compensation of administrative personnel), plus a 5% markup, but excluding the
direct, out-of-pocket expenses incurred by Biotec and paid to third parties
specifically in connection with Requested Services to EC hereto that are subject
to reimbursement pursuant to Section 2.3 hereof (such actual direct and indirect
costs so incurred by Biotec, increased by the 5% markup, are referred to herein
as the "Services Fee").
(b) The Pro Forma Billing Rates charged by Biotec to EC and the job
classifications of Biotec's personnel shall be reviewed by the parties on each
anniversary of this Agreement and shall be equitably adjusted to take account of
any increase in the Services Fee, including any increased salaries and/or
employee benefits paid by Biotec to its personnel who provide the Requested
Services (including any related research and development services) to EC
hereunder.
2.3 Expense Reimbursement. In addition to the Services Fee to be paid by
EC to Biotec pursuant to Section 2.2, EC, in accordance with the budget set
forth in the applicable Request Form, shall reimburse Biotec for all direct,
out-of-pocket expenses incurred by Biotec and paid to third parties specifically
in connection with the provision of Requested Services to EC. Such out-of-pocket
expenses paid to third parties in connection with the provision of Requested
Services shall not include overhead expenses of Biotec (such as general office
expenses of Biotec), and any expenses not specifically allocable to a EC project
or any other similar expenses (which expenses will be reflected in the Pro Forma
Billing Rates). Biotec shall provide EC with such receipts, invoices, other
evidence of out-of-pocket expenses incurred and additional information as EC may
reasonably request in connection with the expense reimbursement provided for
hereunder. Upon the submission of such documentation, EC shall promptly
reimburse Biotec for the items to which Biotec is entitled to reimbursement
hereunder; provided, however, that in no event shall EC be required to reimburse
such expenses more frequently than monthly.
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2.4 Third-Party Review. EC, at its expense, shall have the right, upon
reasonable advance notice and during normal business hours, to review and audit
the records of Biotec that pertain to the Requested Services provided to EC, and
any fees or expenses related thereto that have been invoiced to EC, including
the components of any Services Fees billed to EC pursuant to Section 2.2. Such
review or audit may be performed by EC personnel or by outside professionals
retained by EC for such purposes (provided such outside professionals are
subject to appropriate confidentiality obligations reasonably acceptable to
Biotec). In the event of any dispute between the parties hereto regarding
whether Biotec is entitled to payment hereunder or the amount thereof for any
Requested Services provided or expenses incurred, EC shall promptly remit to
Biotec the undisputed amount and the remaining disputed amount shall be
submitted for decision to a nationally recognized accounting firm mutually
agreeable to the parties (but which shall not then be engaged as the independent
auditors of either EC or Biotec), whose decision shall be final and shall be
binding upon the parties. In making such decision, the accounting firm shall
take into account any other information that it may deem relevant or
appropriate. In the event that such accounting firm is unable to reach a
decision with respect to any disputed matter within sixty days of the date such
matter is submitted, such matter shall be resolved by binding arbitration
pursuant to Section 26. In the event that any Requested Services previously
provided or expenses previously incurred are determined to have been improperly
classified, Biotec shall promptly reimburse EC for the costs of such items, with
interest computed at the prime rate, as published in the Wall Street Journal
(the "Prime Rate"), as adjusted at the end of each fiscal quarter, from the date
the improperly classified payment was made until the date of repayment. Such
reimbursement shall be the sole remedy for such improper classification. If it
is determined that the amount in dispute (or any portion thereof) was properly
charged by Biotec to EC, EC shall promptly reimburse Biotec for the amount
determined to have been properly charged, with interest computed at the Prime
Rate, as adjusted at the end of each fiscal quarter, from the first day of the
calendar month in which the invoice in question was delivered. The fees and
expenses of any accounting firm resolving a dispute under this Section 2.4 shall
be borne (i) by Biotec if the amount awarded to EC exceeds 10% of the total
invoice amount (even though the amount actually in dispute is less than the
total invoice amount), or (ii) by EC if the amount awarded to EC is 10% or less
of the total invoice amount.
2.5 Late Payments. Any amount payable to Biotec pursuant to this Section 2
which is not disputed in good faith pursuant to Section 2.4 and which is not
paid within thirty (30) days following the invoice date shall bear interest at
the Prime Rate, adjusted at the end of each fiscal quarter, commencing on the
first day of the calendar month during which the invoice is submitted. Under no
circumstance shall Biotec be obligated to transfer any technical information to,
or otherwise perform research and development services for, EC, or to incur any
cost on EC's behalf, if EC is in material default with respect to the payment of
any undisputed amounts hereunder. EC shall not be considered in default under
this Agreement if EC disputes in good faith an amount charged to it by Biotec,
subject to the terms of Section 2.4 hereof.
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3. THE LICENSE.
(a) Subject to the terms and conditions set forth in this Agreement,
Biotec KG hereby grants to EC an exclusive (even as to Biotec KG, but subject to
(i) the non-exclusive rights heretofore granted by Biotec KG to Novamont S.p.A.
under the Novamont License Agreement and (ii) the rights that are exclusively
reserved to Biotec KG as described in sub-clause (c) below), worldwide license
(the "License") to make, have made, use, sell, offer to sell, export and import
and otherwise commercialize the Products.
(b) During the period from the Effective Date until June 30, 2008 ("Fully-Paid
License Period"), the License shall be royalty-free and EC shall have no royalty
obligations to Biotec KG in connection with the manufacture and sale of Licensed
Products irrespective of the amount Net Sales earned by EC; provided that, after
the expiration of the Fully-Paid License Period, the License will become
royalty-bearing as provided in Section 4.
(c) No license is granted hereunder with respect to the sale of Retained Food
Wrap Products in Europe. For the avoidance of doubt, the License granted
hereunder does not include any rights to sell any Retained Biotec Product or
Retained Food Wrap Product that does not constitute a Food Service Disposable
nor any Modified Atmosphere Packaging Materials (it being agreed EC may not use
the Technology to make, have made, use, sell, offer to sell, export or import
anywhere in the world any Modified Atmosphere Packaging Materials). Subject to
the foregoing, the License is exclusive and is worldwide.
(d) Notwithstanding the foregoing, in the case of Technology that is
licensed to Biotec KG by a third party that owns such Technology, (i) the rights
granted to EC hereunder shall be exclusive only to the extent that the rights
granted by the owner of such Technology to Biotec KG are exclusive and otherwise
shall be non-exclusive, provided that Biotec KG hereby agrees not to exercise or
to sublicense to another person any such rights sublicensed to EC hereunder; and
(ii) such rights shall be sublicensed hereunder to EC only to the extent such
rights may be practiced or exploited without violating any obligation owed by
Biotec KG to the third party licensor or incurring any obligation to pay
royalties or other compensation to the third party licensor unless EC shall have
agreed to pay all such royalties or other compensation. The License includes the
right to utilize the Technology to make, use, sell or otherwise commercialize
thermoplastic starch/synthetic bio-polymer blends for conversion into the
Products. The License shall not be utilized by EC for any purpose other than to
implement and carry out the development, manufacture, marketing, distribution,
use and sale of the Products in accordance with the terms and conditions set
forth in this Agreement. The License shall be irrevocable except as specifically
provided in this Agreement. Biotec Group represents and warrants to EC that all
patents, patent applications, confidential and proprietary information and
know-how now or hereafter owned by Biotec Group relating to thermoplastically
processable starch, destructurized starch, converted starch or other forms of
disoriented starch, including the use of such starch alone or in combination
with other materials are owned exclusively by Biotec KG and are licensed to
EarthShell hereunder.
(e) Pursuant to the License, EC shall have the right to grant sublicenses
subject to the written approval of Biotec that shall not be unreasonably
withheld or delayed. No later than five (5) business days prior to entering into
a sublicense agreement, EC shall notify Biotec KG of the proposed sublicense
arrangement, provide Biotec KG with a copy of the proposed sublicense agreement
and provide such additional information as Biotec KG may reasonably request.
Each sublicense shall include provisions that protect Biotec KG's intellectual
property rights (including confidentiality undertakings with respect to the
Trade Secrets) to at least the same extent as the applicable provisions of this
Agreement. EC shall use its best efforts to cause the full and complete
performance by EC's sublicensees of all of such sublicensees' obligations under
sublicense agreements entered into as authorized by this Section.
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(f) Except as set forth herein, EC shall have no right to assign, pledge,
transfer or otherwise hypothecate in any fashion any interest in or rights under
the License, without the prior written consent of Biotec KG, which shall not be
unreasonably withheld or delayed; provided that; any party hereunder shall be
permitted to grant security interests in its rights under this License to secure
favorable loan financing.
(g) EC and the Biotec Group agree and acknowledge that the License
includes all of the Biotec Group's existing Technology, together with
Improvements thereto, and any other technology relating to thermoplastic
starch/synthetic bio-polymer blends that Biotec hereafter develops or acquires.
To the extent that the Biotec Group, alone or in cooperation with its parent
company, develops new breakthrough technology that is not based on or derived
from Biotec's existing Technology and does not relate to thermoplastic
starch/synthetic bio-polymer blends and that may be applied to Products, such
new breakthrough technology shall not constitute an "Improvement" for purposes
of this Agreement, but EC will be given a right of first refusal with respect to
an exclusive (including as to Biotec) and worldwide license to use such
technology in connection with the manufacture and sale of Products.
(h) Notwithstanding anything set forth herein to the contrary, commencing
on July 1, 2008, the exclusive rights granted by Biotec under this Agreement are
subject to the continuing payment by EC to Biotec KG, not later than the tenth
(10th) day of each month, of a Royalty pre-payment of One Hundred Thousand
Dollars ($100,000.00) each month (the "Monthly Exclusivity Payment") without
regard to the amount of Royalties thereafter payable by EC pursuant to Section
4. All Monthly Exclusivity Payments made by EC shall be applied against EC's
obligations to pay Royalties, as provided in Section 5(c). Except as provided in
this Section 3(h), the Monthly Exclusivity Payments shall be payable until the
expiration of the last-to-issue patent included in the Technology. If, within
forty-five (45) days following the date on which Biotec KG has provided written
notice to EC of a failure to timely pay the Monthly Exclusivity Payment, EC does
not pay such Monthly Exclusivity Payment, Biotec will have the right, upon
thirty (30) days' prior written notice to EC, to convert the License to a
non-exclusive license, with the effect that Biotec KG would have the right
thereafter to sublicense, license or otherwise grant any person the right to, or
itself, use the Technology or any part thereof to make, have made, use, sell,
offer to sell, import or otherwise commercialize any of the Products.
4. ROYALTIES.
In consideration for the grant of the License, commencing on July 1, 2008.
EC shall pay to Biotec KG a royalty (the "Royalty"), payable when and as
provided in Section 5 equal to (i) 25% of License Revenues and (ii) 5% of Net
Sales. Notwithstanding the provisions of this Section 4 hereof, EC shall have no
obligation to pay Royalties in respect of the sale of any Product made after the
date on which the last-to-issue patent included in the Biotec Technology
expires.
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5. PAYMENT OF THE ROYALTY.
(a) Within thirty (30) days of the last day of each calendar quarter
ending after the end of the Fully-Paid License Period, EC shall pay to Biotec KG
the Royalty payable in respect of all License Revenues and Net Sales received by
EC during such calendar quarter. Each Royalty payment shall be accompanied by a
written report (the "Royalty Report") prepared by EC that shall set forth, for
the period covered by the Royalty Report, the aggregate License Revenues and Net
Sales received by EC during such period.
(b) All Royalty payments called for by this Agreement shall be paid by EC
in United States dollars to Biotec KG.
(c) Notwithstanding any provision contained herein to the contrary, no
Royalty shall be payable by EC hereunder except to the extent that the total
accrued Royalties that are payable hereunder exceed the sum of all Monthly
Exclusivity Payments theretofore made by EC under Section 3(h) hereof.
6. RIGHT TO AUDIT.
(a) EC shall keep and maintain complete and accurate records concerning
the receipt of License Revenues and Net Sales. Biotec KG or its designated
representative (the "Representative") shall have the right to review those
records of EC that deal with receipt of License Revenues or Net Sales for
purposes of confirming the calculation of the Royalty paid by EC hereunder.
(b) If EC is ultimately determined to have failed to pay to Biotec KG the
full amount of a Royalty payment actually due hereunder, EC shall promptly pay
the full amount of such discrepancy to Biotec KG, with interest thereon, at the
Prime Rate in effect on the date on which the payment in question should have
been made, from such date until the payment is actually made.
7. IMPROVEMENTS TO TECHNOLOGY.
(a) (a) Biotec KG shall own all Improvements made by it and EC shall own
all Improvements made by it, subject to Biotec KG's ownership of the Technology
on which any Improvement is based or from which any Improvement is derived.
Subject to Biotec KG's right to do so, all such Improvements owned by Biotec KG
shall be included in the Biotec Technology licensed hereunder to EC without
additional royalty or other obligation being imposed on EC. .
(b) In the case of any Improvement that is made jointly by Biotec KG and
EC (a "Joint Improvement"), Biotec KG will own any such Improvements that relate
to materials compositions, EC will own any Joint Improvements that relate to
Food Service Disposable product applications, and Biotec KG and EC will jointly
own any other Joint Improvements., with each having the unrestricted right to
use and exploit such Joint Improvements without any duty to account to the
other.
(c) Nothing in this Section 7 affects any allocation of intellectual
property rights to which the parties agree in connection with services provided
by Biotec Group to EC under Section 2.
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8. PATENT MATTERS.
(a) Biotec KG, as to any patentable inventions included in that the Biotec
Technology, shall have the right, in its sole discretion, to (i) affirmatively
seek patent protection for any such invention at its sole cost and expense or
(ii) maintain such invention as a trade secret. Biotec KG, as to all
Improvements that it owns pursuant to the provisions of Section 7, shall have
the right, in its sole discretion, to (i) affirmatively seek patent protection
for any such Improvement at its sole cost and expense or (ii) maintain any
Improvement as a trade secret. The parties will reasonably cooperate in
determining whether to seek patent protection of any Joint Improvements that are
jointly owned.
(b) Each party shall provide each other party with such assistance as may
be reasonably requested, from time to time, in connection with efforts to seek
patent protection for any Improvement in accordance with Section 8(a), including
the execution of any documents necessary to obtain and maintain such patent
protection; provided, however, that the party responsible for seeking patent
protection shall reimburse such party for any out-of pocket fees and expenses
reasonably incurred by such party in providing such assistance. The Biotec Group
and EC shall conduct, no less frequently than quarterly, periodic technology
review meetings at which the Biotec Group shall provide EC with copies of any
new patents that have issued on any patent applications included in the patents
included in the Biotec Technology since the time of the prior technology review
meeting (if any) and the parties will review (i) the status of the prosecution
of then pending patent applications included in the patents included in the
Biotec Technology, (ii) any Improvements that have been made by either party
since the time of the prior technology review meeting (if applicable) and (iii)
other matters relating to the development of Improvements and the protection and
status of the Technology. I am not sure this is necessary given the constraints
(c) The Biotec Group shall have no obligation to pay any maintenance fees
and annuities as they become due in respect of any patents included in the
Biotec Technology; provided that, if the Biotec Group elects not to pay or cause
to be paid any such fees or annuities, Biotec KG shall use reasonable efforts to
give written notice of such election to EC before the due date therefor, and EC
shall have the right (but not the obligation) to pay such fees or annuities. If
EC, in its discretion, determines to pay such fees or annuities, the Biotec
Group agrees to assign to EC all of the Biotec Group's right, title and interest
in and to the patents to which such fees or annuities relate for no additional
consideration.
9. INFRINGEMENT MATTERS.
(a) The Biotec Group and EC will promptly, and in any event within thirty
(30) days of discovery, notify the other in writing of any apparent infringement
of the Technology which comes to its attention and that involves the Products.
The Biotec Group shall have the sole right, at its sole cost and expense, to
bring suit to enjoin such infringement to the extent it involves an infringing
use of the Technology in any country in which EC does not hold an exclusive
license to the Technology or an infringing use in Europe of the Technology with
respect to Retained Food Wraps Products and to recover damages therefor for its
sole account. EC shall have the sole right, at its sole cost and expense, to
bring suit to enjoin such infringement to the extent it involves an infringing
use of the Technology in any country in which EC holds an exclusive license to
the Technology (it being understood that any action brought in connection with
the infringing use of the Technology with respect to food wrap products in
Europe will be controlled solely by the Biotec Group) and to recover damages
therefor for its sole account..
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(b) In any action brought pursuant to Section 9(a) hereof, the party
initiating the suit (the "Initiating Party") shall select and control counsel
for the prosecution of such suit. The other party hereto (the "Non-Initiating
Party") shall (i) have the right to receive, from time to time, full and
complete information from the Initiating Party concerning the status of such
suit, (ii) have the right, at its own expense, to be represented therein by
counsel in advisory or consultative capacity, and (iii) cooperate fully with the
Initiating Party and provide whatever assistance is reasonably requested by the
Initiating Party in connection with such suit, including the preparation and
signing of documents. If EC is the Initiating Party, EC shall not have the right
to settle any infringement suit described in Section 9(a) hereof, without the
prior written consent of Biotec KG, which consent shall not be unreasonably
withheld or delayed. The costs and expenses, including attorneys' fees, of the
Initiating Party in any action alleging infringement will be borne by the
Initiating Party. In no event, however, will the Non-Initiating Party be
obligated to reimburse the costs and expenses, including attorneys' fees, of the
Initiating Party in an amount in excess of the damages awarded to the
Non-Initiating Party in such action.
(c) The parties shall promptly notify each other in writing of (i) any
claim by any Person that the use of the Biotec Technology by EC in connection
with the manufacture, use or sale of any Product infringes or violates the
patent, trade secret or other intellectual property rights of such Person in any
country in which Biotec KG holds an unexpired patent containing claims that
cover the Biotec Technology that is alleged to be infringing, and (ii) the
commencement of any lawsuit against either party, or any of their respective
customers, asserting any such claim (an "Infringement Action"). The Biotec Group
shall assume and control the defense of any Infringement Action, at its sole
cost and expense, irrespective of whether any member of the Biotec Group is
named as a defendant therein. If the Biotec Group fails to promptly assume the
defense of any Infringement Action and/or fails to provide EC with any
reasonable assurances that EC may have reasonably requested from the Biotec
Group with respect to the Biotec Group defending such Infringement Action and
performing its related obligations under this Section 9(c), EC may suspend
further Royalty payments to Biotec KG hereunder until such time as the Biotec
Group provides such reasonable assurances or such Infringement Action is
dismissed or otherwise finally resolved. . EC will assist the Biotec Group in
the defense of any infringement Action by providing such information, fact
witnesses and other cooperation as the Biotec Group may request from time to
time; provided that the Biotec Group shall reimburse EC for any out-of-pocket
expenses incurred by EC in connection therewith. EC shall have the right to be
represented in connection with an Infringement Action by its own legal counsel,
at its own expense, provided that such legal counsel will act only in an
advisory capacity. If the Biotec Group does not assume the defense of any
Infringement Action, EC shall have the right, but not the obligation, to assume
the defense of such lawsuit, utilizing legal counsel of its choice. If EC so
assumes the defense of an Infringement Action, (i) EC shall have no right to
settle such Infringement Action unless EC shall have received the prior written
consent of Biotec KG (which shall not be unreasonably withheld or delayed) and
(ii) Biotec KG shall be obligated to reimburse EC for the reasonable attorneys'
fees incurred by EC in connection with EC assuming the defense of an
Infringement Action in which EC ultimately is finally determined not to have
infringed any of the intellectual property rights that are the subject of the
Infringement Action ("Reimbursable Defense Costs"). EC shall offset any
suspended Royalty payments against the Reimbursable Defense Amounts incurred by
EC; provided that, upon the dismissal or other final resolution of any such
Infringement Action, any amount of suspended Royalty payments in excess of the
Reimbursable Defense Costs shall be promptly paid over by EC to Biotec KG. The
obligation of Biotec KG to reimburse EC the amount of any Reimbursable Defense
Costs shall be reduced by any Royalty payments otherwise due to Biotec KG that
were suspended by EC under this Section 9(c).
10
(d) If the court, in any Infringement Action, enters a final and
non-appealable order finding that the Technology infringes or violates the
intellectual property of another person and requiring EC (i) to obtain a license
under any third party's patent not licensed hereunder in order to continue with
EC's activities as contemplated by this Agreement, and to pay a royalty or fee
under such license, and the infringement of such patent cannot reasonably be
avoided by EC, or (ii) to pay damages on account of such infringement or
violation, the Biotec Group shall pay the amount of any such fee or royalty
payable and any such damages to the extent that the infringement or violation
found by such court resulted from EC's use of Technology within the scope of the
License granted hereunder.
(e) Notwithstanding the foregoing, the Biotec Group shall have no
liability under this Section 9 with respect to any third party infringement that
is brought against EC based on Improvements made by EC that are included in the
Technology licensed to EC hereunder.
10. DISCLAIMER OF WARRANTY; NO CONSEQUENTIAL DAMAGES.
(a) EXCEPT AS EXPRESSLY SET FORTH HEREIN, NO MEMBER OF THE BIOTEC GROUP
MAKES OR GIVES, AND HEREBY EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES, WHETHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING BUT NOT LIMITED TO THE WARRANTIES
OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE, IN REGARD TO ANY
PRODUCTS WHICH MAY BE MANUFACTURED, USED OR SOLD BY EC AND WHICH ARE BASED UPON
OR UTILIZE ANY OF THE TECHNOLOGY.
(b) IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTIES UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE OR CONSEQUENTIAL LOSSES, EXPENSES OR DAMAGE WHATSOEVER, INCLUDING, BUT
NOT LIMITED TO, LOSS OF REVENUE OR PROFITS, INCREASED COSTS OF PRODUCTION,
DAMAGES OR LOSSES AS A RESULT OF SUCH OTHER PARTY'S INABILITY TO OPERATE,
INABILITY TO FULFILL CONTRACTS WITH THIRD PARTIES, OR SIMILAR MATTERS OR EVENTS
ARISING FROM THE USE OR INABILITY TO SELL THE PRODUCTS OR ANY FAILURE TO FULFILL
A PURCHASE ORDER IN A TIMELY FASHION, NOR SHALL ANY PARTY BE LIABLE FOR ANY
LOSS, EXPENSE OR DAMAGE SUFFERED OR INCURRED BY ANY OTHER PARTY AS A RESULT OF
CLAIMS, DEMANDS, SUITS OR OTHER PROCEEDINGS BY ANY OTHER PARTY OR PERSONS,
WHETHER PRIVATE, PUBLIC OR GOVERNMENTAL IN NATURE. The limitations, exclusions
and disclaimers in this Agreement shall apply irrespective of the nature of the
cause of the action or demand, including but not limited to breach of contract,
negligence, tort or any other legal theory and shall survive any breach or
breaches and/or failure of the essential purpose of this Agreement, or any
remedy contained in this Agreement.
11
(c) Without limiting the generality of the foregoing provisions of this
Section 7, except as and to the extent otherwise specifically provided herein,
nothing in this Agreement shall be construed as.
(i) a warranty or representation by the Biotec Group as to the
validity or scope of any patent licensed hereunder; or
(ii) a requirement that the Biotec Group shall file any patent
application, secure any patent or maintain any patent in force; or
(iii)an obligation to bring or prosecute actions or suits against
third parties for infringement; or
(iv) conferring a right to use in advertising, publicity or otherwise
any trademark or trade name of the Biotec Group; or
(v) granting by implication, estoppel, or otherwise any license or
rights under patent or other intellectual property rights of the Biotec
Group other than the patents and other intellectual property rights
included in the Technology, to the extent licensed as provided in Section
3.
11. [RESERVED]
12. REPRESENTATIONS AND WARRANTIES OF THE BIOTEC GROUP. Each member of the
Biotec Group hereby represents and warrants to EC that:
(a) Such member is a limited liability company organized, validly existing
and in good standing under the laws Germany . Such member has all requisite
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted, and is duly qualified to do business in every
jurisdiction wherein the nature of the business conducted or the assets owned or
leased by it make such qualification material to the conduct of its business.
(b) Such member has all requisite power and authority to enter into this
Agreement and to perform its obligations hereunder, in the case of Biotec KG,
including but not limited to the right to license the Technology. This Agreement
has been duly and validly authorized, executed and delivered by such member and,
assuming the due authorization, execution and delivery by EC, is the legal,
valid and binding obligation of such member, enforceable against it in
accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity.
(c) To the best knowledge of such member, no person, firm or entity has
made any claims or threatened, in writing or otherwise, that such member is in
violation of or has infringed any patent, patent license, trade name, trademark,
service xxxx, brand xxxx, brand name, copyright, know-how, formula or other
proprietary or trade rights of such third party as they relate to the
Technology. To the best of such member's present knowledge and belief, the use
of the Technology in the manufacture of the Products pursuant to the terms of
this Agreement will not constitute infringement of the proprietary rights of any
third party. .
12
(d) To the best knowledge of such member, the execution, delivery and
performance of this Agreement by such member and the consummation by it of the
transactions contemplated hereby will not (i) constitute a violation (with or
without the giving of notice or lapse of time) of any provision of applicable
law, (ii) require any consent, approval or authorization of any person or
governmental authority, (iii) result in a default under, acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel any agreement, lease, franchise, permit, note or
other restriction, encumbrance, obligation or liability to which such member is
a party or by which it is bound or to which any of its assets are subject, (iv)
result in the creation of any lien or encumbrance upon such member's assets, (v)
conflict with, result in the breach of, or constitute a default under any
provision of such member's bylaws, operating agreement, partnership agreement or
other organizational documents, or (vi) conflict with, result in a tortious
interference as a result of such conflict with, or otherwise violate, any
material contract or arrangement between such member and any other person. The
representation and warranty given in this Section shall not be deemed or
construed to expand or modify the representation and warranty given by such
member in Section 12(c) hereof.
(e) Neither such member, nor anyone acting on its behalf, has taken any
action relating to any broker, finder, consultant or other expert which could
result in the imposition upon EC of any obligation to pay a fee to any broker,
finder, consultant or similar expert in connection with the transactions
contemplated hereby.
13. REPRESENTATIONS AND WARRANTIES OF EC. EC hereby represents and warrants to
the Biotec Group that:
(a) EC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. EC has all requisite corporate
power and authority to own, operate and lease the properties and to carry on its
business as now being conducted, and is duly qualified to do business in every
jurisdiction wherein the nature of the business conducted or the assets owned or
leased by it make such qualification material to the proper conduct of its
business.
(b) EC has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. This Agreement has been duly
and validly authorized, executed and delivered by EC and, assuming the due
authorization, execution and delivery by the members of the Biotec Group, is a
legal, valid and binding obligation of EC, enforceable against it in accordance
with its terms, subject only to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and to general principles of equity.
(c) To the best knowledge of EC, the execution, delivery and performance
of this Agreement by EC and the consummation by it of the transactions
contemplated hereby will not (i) constitute a violation (with or without the
giving of notice or lapse of time) of any provision of applicable law, (ii)
require any consent, approval or authorization of any person or governmental
authority, (iii) result in a default under, acceleration or termination of, or
the creation in any party of the right to accelerate, terminate, modify or
cancel, any agreement, lease, franchise, permit, note or other restriction,
encumbrance, obligation or liability to which EC is a party or by which it is
bound or to which any of its assets are subject, (iv) result in the creation of
any lien or encumbrance upon EC's assets, (v) conflict with, result in the
breach of, or constitute a default under any provision of EC's Certificate of
Incorporation or Bylaws, or (vi) conflict with, result in tortious interference
as a result of such conflict with, or otherwise violate, any contract or
arrangement between EC and any other person.
13
(d) Neither EC, nor anyone acting on its behalf, has taken any action
relating to any broker, finder, consultant or other expert which could result in
the imposition upon the Biotec Group of any obligation to pay a fee to any
broker, finder, consultant or similar expert in connection with the transactions
contemplated hereby.
14. CONFIDENTIALITY.
(a) EC acknowledges that the Technology and the Improvements owned by
Biotec, as they may exist from time-to-time, are and shall remain the valuable,
special, unique and proprietary assets of Biotec and shall constitute "Biotec
Confidential Information" hereunder. Any additional information disclosed by the
Biotec Group to EC shall also be deemed to be "Biotec Confidential Information"
hereunder, if (i) the information is in written form and appropriately marked
"Confidential" (or similar designation) at the time of disclosure to EC or
designated as "Confidential" (or similar designation) in writing, within thirty
(30) days of disclosure, (ii) the information is disclosed orally and designated
by a member of the Biotec Group as "Confidential" (or similar designation) at
the time of disclosure and confirmed to EC as "Confidential" (or similar
designation) in writing, by a member of the Biotec Group within thirty (30) days
of such disclosure, or (iii) such information is of a type, or disclosed in such
a manner, that would lead a reasonable person to conclude that the information
is proprietary and/or confidential. Notwithstanding the foregoing, Biotec
Confidential Information shall not include any information or data which EC can
show: (i) is in, or becomes generally known in, the public domain by any means
other than the failure by EC to fulfill its obligations hereunder; or (ii) is
rightfully known to EC at the time of disclosure by the Biotec Group ; or (iii)
is, at any time, disclosed to EC by a third party who has received and disclosed
such information without the breach of any obligation of confidentiality to the
Biotec Group or to any third party. For purposes of this Section 14, information
shall not be deemed to be part of the public domain or in EC's knowledge merely
because it may be embraced in a more general disclosure or simply because it may
be derived from combinations of disclosures or information generally available
to the public or within EC's knowledge. The parties acknowledge that the Biotec
Group's disclosure to EC of Biotec Confidential Information will be necessary in
order to enable EC to utilize the License in the manner contemplated by this
Agreement, and the Biotec Group shall make such disclosures of the Biotec
Confidential Information to EC as the Biotec Group reasonably determines are
necessary, required or appropriate in that regard. The parties acknowledge that
they have a confidential relationship with one another, and accordingly, EC
shall maintain all Biotec Confidential Information disclosed to it pursuant to
this Agreement in confidence and shall not disclose the same to any third party
(with the exception of its sublicensees, employees, accountants, attorneys and
other agents and professional advisors) either during or after the term of this
Agreement unless required to do so by court order or by law, in which case EC
shall notify the Biotec Group, in writing, prior to making such disclosure and
shall cooperate with Biotec to preserve and protect the confidentiality of the
Biotec Confidential Information in question to the fullest extent possible.
Additionally, except as specifically contemplated by this Agreement, EC shall
not utilize any Biotec Confidential Information for its own benefit or for the
benefit of any third party. Prior to making any permitted disclosure of any
Biotec Confidential Information to its sublicensees, employees, accountants,
attorneys and other agents and professional advisors, EC shall require such
persons, firms, or entities to execute and deliver written nondisclosure
agreements which shall obligate such persons, firms and entities to comply with
obligations of confidentiality and nonuse substantially equivalent to those set
forth in this Section.
14
(b) From time to time during the term of this Agreement, EC may disclose
to the Biotec Group certain information which XX xxxxx to be proprietary and
confidential, including but not limited to business plans, marketing plans and
financial information (the "EC Confidential Information"). The definition of "EC
Confidential Information," and the Biotec Group's use and disclosure thereof,
shall be governed by terms and conditions identical to those which govern Biotec
Confidential Information, as set forth in Section 14(a) hereof.
15. TERM AND TERMINATION.
(a) The term of this Agreement shall commence upon the effective date
hereof. Unless sooner terminated as hereinafter provided, this Agreement shall
continue in full force and effect in the United States until the later of (i)
expiration of the last-to-issue patent covering or included in the Technology or
(ii) the first date on which neither EC nor any of its sublicensees produces a
Product which incorporates any Biotec Confidential Information or any material
Trade Secret which are licensed hereby.
(b) If either party is in breach of any of its material obligations
hereunder, then the non-breaching party may give the breaching party written
notice of such breach. If such breach is not cured within forty-five (45) days
after the date such written notice is delivered or, if such default cannot be
cured within such forty-five day period but the breaching party has taken action
to cure such default, then if the default is not cured within one hundred eighty
(180) days from the date of the original notice, the non-breaching party shall
have the right immediately to terminate the License by written notice to the
breaching party. The parties agree and acknowledge that the availability of the
foregoing termination right under this Section 15(a) shall not affect any other
right or remedy that may that may be available to the non-breaching party under
this Agreement, at law or in equity.
(c) This Agreement will automatically terminate upon the occurrence of any
of the following events: (i) a receiver is appointed for EC or all or a
substantial part of its property; (ii) EC makes a general assignment for the
benefit of its creditors; (iii) EC commences, or has commenced against it, a
case under the U.S. Bankruptcy Code or any other case or proceedings under any
bankruptcy, insolvency or debtor's relief law is commenced by or against EC; or
(iv) EC becomes insolvent, is liquidated or dissolved or ceases to operate in
the ordinary course; provided, however, that Biotec KG acknowledges that the
Biotec Technology is "intellectual property" as defined in 11 U.S.C. section
101(35A), and that the License is entitled to the benefits of Bankruptcy Code
section 365(n).
(d) From and after the effective date of the expiration of the term of
this Agreement or the termination of the License pursuant to Section 15 hereof,
neither EC nor any of its sublicensees shall have any right, whatsoever, to
utilize the Technology or the Trade Secrets licensed to EC under this Agreement.
EC shall return to Biotec KG all copies of Biotec Confidential Information which
is then in the possession of EC, and shall have no right pertinent to this
Agreement to sell any Product which has theretofore been manufactured by EC or
its sublicensees.
15
(e) The right of termination under Section 15(b) hereof shall be in
addition to, and not in lieu of, all other rights and remedies the terminating
party may have under this Agreement, at law or in equity.
(f) The obligations concerning confidentiality set forth in Section 8
hereof and to pay any accrued but unpaid royalties and Services Fees any other
compensation or payments due to Biotec KG or the other members of the Biotec
Group shall survive the expiration and termination of the License. (g)
Notwithstanding any provision in this Agreement to the contrary, if this
Agreement is terminated pursuant to Section 15(b) or (c) other than a
termination pursuant to Section 15(b) by reason of a breach by EC of any of its
material obligations hereunder, then, following such termination, EC and any
sublicensee thereof shall be permitted to sell any remaining inventory of
Products on-hand at the time of such termination. (h) Notwithstanding any
provision in this Agreement to the contrary, EC shall have the right, upon
thirty (30) days prior written notice to Biotec KG to terminate this Agreement
for convenience.
16. MARKING AND UNITED STATES EXPORT CONTROL.
(a) Where technically feasible, EC shall xxxx, or shall cause its
sublicensees to xxxx, the Products and related documents with the applicable
United States patent numbers, as required by applicable law, or as reasonably
instructed by Biotec KG.
(b) EC shall comply with all applicable laws, rules and regulations of the
United States, including but not limited to the Export Regulations of the United
States Department of Commerce, in connection with the direct or indirect export
of any of the Technology or the Products. EC acknowledges that the Biotec Group
has not made and does not make any representation that any license is or is not
required in connection with such export or, if required, that such license will
be issued by the United States Department of Commerce.
17. SPECIAL TAX PROVISIONS. EC (or its sublicensees or customers) shall be
solely responsible for the payment and discharge of any taxes, duties, or
withholdings relating to any transaction of EC or its sublicensees in connection
with the manufacture, use, sale, license or commercialization in any country of
the Products; except that the Biotec Group shall be responsible for any taxes,
duties or withholding relating to any payment made to any member of the Biotec
Group under this Agreement and EC shall be permitted to make any withholding
with respect to such payments and fees required by law or regulation.
18. EQUITABLE RELIEF. A breach or default by EC of the provisions of Section 14
hereof shall cause the Biotec Group to suffer irreparable harm and, in such
event, the Biotec Group shall be entitled, as a matter of right, to a
restraining order and other injunctive relief from any court of competent
jurisdiction, restraining any further violation thereof by EC, its officers,
agents, servants, employees, and those persons in active concert or
participation with them. The right to a restraining order or other injunctive
relief shall be supplemental to any other right or remedy the Biotec Group may
have, including, without limitation, the recovery of additional damages for the
breach or default of any of the terms of this Agreement.
16
19. RELATIONSHIP OF THE PARTIES. This Agreement shall not create any
partnership, joint venture or similar relationship between the parties hereto
and no representations to the contrary shall be made by either party. No party
shall have any authority to act for or on behalf of or to bind any other party
in any fashion (except that Biotec KG may bind any member of the Biotec Group),
and no representations to the contrary shall be made by any party.
20. NOTICES. Any notice which is required or permitted to be given to a party to
this Agreement shall be deemed to have been given only if such notice is reduced
to writing and delivered personally, or by United States mail with postage
prepaid and return receipt requested, or by telecopier (FAX) transmission,
confirmed by letter, or by reputable overnight courier (pursuant to instructions
requiring next day delivery) to the party in question as set forth below:
The Biotec Group: Biotec XXXxxxxx-Xxxxxxxxxx-Xxx. 00
00000 Xxxxxxxx
Xxxxxxx
X.X. Xxx 00 00
00000 Xxxxxxxx
Xxxxxxx
Fax: x00 0000 00000
Attention: Xxxxxx Xxxxxxx, Managing Director
EC: EarthShell Corporation
0000 Xxxxx Xxxxxx #000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
Either party may change its address by giving notice of such change in the
manner set forth herein. If delivered personally, a notice shall be deemed
delivered when actually received at the address specified herein. Any notice
given to a party by mail shall be deemed delivered three (3) days following the
date upon which it is deposited in the mail, with postage prepaid and return
receipt requested. Any notice given to a party by FAX shall be deemed delivered
on the date it is actually transmitted to the party in question at the FAX
number specified above. Any notice given to a party by overnight courier shall
be deemed delivered on the first business day following the date it is placed in
the possession of such courier.
21. ASSIGNMENT. The Agreement may not be assigned by EC or any member of the
Biotec Group without the prior written consent of Biotec KG or EC, as
applicable; provided, however, that EC and each member of the Biotec Group shall
be permitted to assign, without the consent of any other party, all, but not
less than all, of its rights, duties and obligations under this Agreement in
connection with the sale of its entire or substantially its entire business,
whether by merger, consolidation, sale of stock or equity interest, sale of all
or substantially all assets or otherwise.
17
22. ENTIRE AGREEMENT. This Agreement supersedes any prior understandings or
agreements, whether written or oral, and any contemporaneous oral agreements,
between the parties hereto in regard to the subject matter hereof and contains
the entire agreement between the parties in regard to the subject matter hereof,
including the Existing License Agreement, which is terminated effective upon the
execution and delivery of this Agreement without further liability to any party
thereunder. This Agreement may not be changed or modified orally, but only by an
agreement, in writing, signed by both the parties hereto.
23. SAVINGS CLAUSE. Should any part or provision of this Agreement be rendered
or declared invalid by reason of any law or by decree of a court of competent
jurisdiction, the invalidation of such part or provision of this Agreement shall
not invalidate the remaining parts or provisions hereof, and the remaining parts
and provisions of this Agreement shall remain in full force and effect.
24. WAIVER. Neither the failure or delay on the part of either party to exercise
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or privilege preclude any
other or further exercise thereof or of any other right or privilege.
25. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the choice of law rules thereof.
26. RESOLUTION OF DISPUTES.
(a) In the event of a breach of this Agreement, or a dispute as to the
meaning of this Agreement, or any of its terms which the parties cannot resolve
by themselves amicably, the parties agree to submit such dispute to resolution
in the manner hereinafter described. First, the parties shall endeavor to
resolve the dispute through the use of an acceptable alternative dispute
resolution procedure. If, within thirty (30) days after one party notifies the
other in writing of the existence of a dispute which it desires to be resolved
under this Section, the parties have not agreed upon an acceptable alternative
dispute resolution procedure, then the matter shall be resolved by arbitration
as set forth below and according to the rules of the American Arbitration
Association, except as herein modified by the parties. Unless otherwise agreed
to in writing, all alternative dispute resolutions or arbitration hearings will
be held in Santa Barbara, California.
(b) The parties shall cooperate and use their respective best efforts to
encourage compliance with the following time periods: (i) within ten (10) days
after the failure to agree to an acceptable alternative dispute resolution
procedure, each party will select an arbitrator, and notify the other party of
its selection; (ii) within fifteen (15) days after such notice, the respective
arbitrators will select a third arbitrator as Chairman of the panel; (iii) a
hearing by the arbitration panel shall be held within thirty (30) days after the
selection of the Chairman; and (iv) a majority decision and resolution shall be
reached within thirty (30) days of such hearing. Decisions of the panel must be
in writing and will be final and binding on the parties, and judgment may be
entered thereon by any court having jurisdiction of the parties.
18
(c) Each party shall bear its own costs of presenting its case in an
alternative dispute resolution procedure, or arbitration, as the case may be.
27. FORCE MAJEURE.
(a) The failure of either party to perform its obligations under this
Agreement (except the obligation to make payments) shall not subject such party
to any liability to the other or subject this Agreement to termination if such
failure is caused by acts such as, but not limited to, acts of God, earthquake,
explosion, flood, drought, war, riot, sabotage, embargo, compliance with any
order or regulation of any governmental entity acting with color of right,
intervention or delays created by any regulatory authority, or by any other
similar cause beyond the reasonable control of the parties. The party so
affected shall promptly notify the other party of the event of force majeure,
and shall use all reasonable efforts to remove such event as soon as reasonably
practicable.
(b) Notwithstanding the provisions of Section 27(a) hereof, should either
party be prevented from performing its obligations hereunder for a period of six
(6) months as a result of an event of force majeure, then upon the expiration of
such six (6) month period, the other party may terminate this Agreement upon
thirty (30) days notice to the non-performing party, and both parties shall be
relived from all duties and obligations under this Agreement, except as
otherwise provided in Section 15 hereof.
28. TIME OF ESSENCE. The parties acknowledge that time is of the essence in
regard to every provision of this Agreement.
29. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
30. TERMINOLOGY. As used in this Agreement, the singular shall include the
plural and the plural shall include the singular. Titles of sections and
paragraphs in this Agreement are for convenience only, and neither limit nor
amplify the provisions of the Agreement, and all references in this Agreement to
a section or Section shall refer to the corresponding section or Section of this
Agreement unless specific reference is made to the sections of another document
or instrument.
31. EFFECT OF BANKRUPTCY PROCEEDINGS. EC agrees that, if for any reason it
becomes a debtor in a case under the U. S. Bankruptcy Code, this Agreement,
pursuant to Section 365(c)(1) of the U. S. Bankruptcy Code, is not, and shall
not be, assumable under Section 365 of the U.S. Bankruptcy Code, it being agreed
and acknowledged that applicable patent law would excuse Biotec from accepting
performance from or rendering performance to any entity other than EC, whether
or not this Agreement prohibited or restricted assignment of rights or
delegation of duties. Accordingly, as provided in Section 15(c) hereof, this
Agreement, pursuant to Section 365(e)(2) of the U. S. Bankruptcy Code, will
automatically terminate upon EC becoming a debtor in a case under the U. S.
Bankruptcy Code, notwithstanding the provisions of Section 365(e)(1) of the U.
S. Bankruptcy Code.
19
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
License Agreement dated August 31, 2005 to be executed and delivered by their
duly authorized representatives upon the date first herein written.
BIO-TEC BIOLOGISCHE NATURVERPACKUNGEN GMBH &
CO. KG
By:
-------------------------------------------
Title:
----------------------------------------
BIO-TEC BIOLOGISCHE NATURVERPACKUNGEN
FORSCHUNGS UND ENTWICKLUNGS GMBH
By:
-------------------------------------------
Title:
----------------------------------------
EARTHSHELL CORPORATION
By:
-------------------------------------------
Title:
----------------------------------------
20
EXHIBIT A
OF BIOTEC - EARTHSHELL LICENSE AGREEMENT
--------------------------------------------------------------------------------------------------------------
EUROPEAN US PATENT/ WNS FILE BIOTEC
PATENT NO. APPLICATION NO. TITLE FILE
--------------------------------------------------------------------------------------------------------------
0 397 819 5,362,777 Thermoplastically processable starch and a 11527.309 2 TSW
method of making it
--------------------------------------------------------------------------------------------------------------
0 479 964 6,242,102 Single or multilayer foil, having a layer 11527.321 6 TSW
containing thermoplastically processable starch
--------------------------------------------------------------------------------------------------------------
0 537 657 5,415,827 Process for improving the mechanical properties 11527.315 7 TSW
of single- or multi-ply sheets
--------------------------------------------------------------------------------------------------------------
0 539 544 5,314,934 Polymer mixture for producing films 11527.314 8 TSW
--------------------------------------------------------------------------------------------------------------
0 542 155 5,280,055 Biodegradable mould material 11527.313 9 TSW
--------------------------------------------------------------------------------------------------------------
0 596 437 5,844,023 Biologically degradable polymer mixture 11527.320 10 TSW
6,214,907 11527.310
--------------------------------------------------------------------------------------------------------------
0 711 322 5,705,536 Foamed starch polymer 11527.318 11 TSW
--------------------------------------------------------------------------------------------------------------
0 711 324 5,663,216 Reinforced biodegradable polymer 11527.317 12 TSW
--------------------------------------------------------------------------------------------------------------
96905977.3 6,096,809 Biologically degradable polymer mixture 11527.312 13 TSW
--------------------------------------------------------------------------------------------------------------
96905977.3 6,235,816 Compositions and methods for manufacturing 11527.312.1 13 TSW
thermoplastic starch blends
--------------------------------------------------------------------------------------------------------------
0 799 335 ? Technical and non-technical textile products and 11527.322 14 TSW
packaging materials
--------------------------------------------------------------------------------------------------------------
0 906 367 6,235,815 Biodegradable material essentially consisting 11527.323 15 TSW
of, or based on, thermoplastic starch
--------------------------------------------------------------------------------------------------------------
0 917 540 6,117,925 Thermoplastic processable starch or starch 11527.324 16 TSW
derivative polymer mixtures
--------------------------------------------------------------------------------------------------------------
99923786.0 09/719,951 Foamed thermoplastic film made from 11527.350 22 TSW
biodegradable materials
--------------------------------------------------------------------------------------------------------------
0 702 698 6,136,097 Process for producing thermoplastic starch 11527.325 1 V
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0 700 329 5,770,137 Method for preparing composite materials from 11527.319 13 V
renewable raw materials
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0 779 909 5,897,944 Molded part made of starch foamed material 11527.329 18 V
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0 781 199 5,910,350 Starch foam panel 11527.328 19 V
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./. 6,231,970 Thermoplastic starch compositions incorporating 11527.267.1 2 WNS
an inorganic filler component
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./. 09/648,471 Biodegradable polymer films and sheets suitable 11527.343 1 WNS
for use as laminate coatings as well as wraps
and other packaging materials
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./. ? Biodegradable polymer blends for use in making 11527.354 3 WNS
films, sheets and other articles of manufacture
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./. ? Biodegradable films and sheets for use as 11527.355 4 WNS
coatings, wraps and packaging materials
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21
EXHIBIT "B"
DEFINITION OF FOOD SERVICE DISPOSABLE
[EXCERPTS FROM AMENDED AND RESTATED LICENSE AGREEMENT,
DATED FEBRUARY 28, 1995, BETWEEN E. KHASHOGGI INDUSTRIES, LLC
AND EC, AS AMENDED]
1(a) The term "Food Service Disposables" shall mean any disposable, single use
product, container, apparatus, device or equipment for packaging, storing,
portioning, serving or dispensing food or beverages intended for consumption
within a short period of time (less than twenty four hours), which incorporate
in whole or in part any portion of the Technology and, to the extent not
otherwise excepted or excluded, are encompassed in those items included within
the scope of the Disposal Product Categories set forth in the Clinton Associates
1994 DISTRAK Five study of Disposables Utilization in Food Services Segments
(hereinafter referred to as the "DISTRAK V Study"), including all products
specifically set forth therein. Any product that has substantially the same
shape, composition, mixture and functional properties as a product within the
scope of the definition of Food Service Disposables shall be considered within
the scope of such definition no matter the manner in which that product is used,
unless expressly excepted below. Notwithstanding any other provision of this
Agreement, the parties agree that the following items shall not be within the
scope of the definition of "Food Service Disposables" or otherwise licensed
under this Agreement: (i) sealed containers for the long-term storage of liquids
whether for single or multiple portions (e.g., soft drink cans, milk cartons,
sealed juice or drink containers), except that single service (e.g., 16 ounces
or less) milk-containing cartons shall be within the scope of Food Service
Disposables; (ii) boxes or containers for the long-term storage of single or
multiple servings of foods or which are designed to extend the shelf life of
foods beyond same-day consumption (e.g., dry cereals boxes, egg cartons,
prepackaged frozen food containers and packaging, dairy product containers,
produce containers, condiment packaging, and meat and deli trays); (iii) aseptic
or sealed packaging; (iv) all secondary packaging (e.g., corrugated containers
and paper bags); and (v) wrapping products for consumer use. By way of
illustration, Exhibit "F" hereto provides a noncomprehensive, noninclusive list
of items within the definition of "Food Service Disposables" hereunder and also
a noncomprehensive, noninclusive list of items that fall outside the definition
of "Food Service Disposables" hereunder. Exhibit "F" hereto shall control in the
event of any conflict between it and the DISTRAK V Study. In the event of any
disagreement between the parties whether a particular item not listed in Exhibit
"F" hereto is within or without the definition of Food Service Disposables, the
parties may submit the matter to arbitration pursuant to the provisions of
paragraph 29. The parties hereby agree that, if available, Clinton Associates
shall act as arbiter in any arbitration proceeding involving a dispute as to the
definition of Food Service Disposable.
22
EXHIBIT "F"
ILLUSTRATIVE LIST OF DISPOSABLE, SINGLE USE FOOD SERVICE DISPOSABLES
Examples of Items within the Definition of "Food Service Disposables":
Bags o for carry out of food purchased in
food service disposable packages,
with or without handles
Beverage containers o Hot and/or cold beverage
o May or may not be insulating
o With or without handles. Includes
collectables that are disposable/
reusable
o Malt mixing collars
o Single service milk-containing cartons
(16 oz. or less)
Beverage Container Lids All types, including
o no spill
o domed
o sippers
Bowls All shapes, sizes
Cutlery (including o knife, fork, spoon
Sticks/Skewers) o large serving utensils
o chopsticks
o hors d'ouvers picks o
o popsicle sticks
o corndog sticks
o shish-kabob skewers
o tooth picks
o steak markers
Food Containers tubs used for:
o popcorn
o deli salads
o takeout anything
o ice cream
o chicken buckets
Portion cups (souffle cups) o sauces
o condiments
o butter
o candies
o side orders
o pills, medications
23
Trays used for: o french fries
o nachos
o tacos
o burritos
o snacks
o hot dogs
o meal service
o vending
o single or multi-compartments
Boxes as used for: o fry scoops
o popcorn
o chinese takeout
o kid's fun meal
o candy (vending)
o pie wedges
o bulky meals, pies, single compartment
o multi-compartment meals
Boats as used for: o egg rolls
o ice cream sundaes
o hot dogs, chili dogs
o hoagies, sub sandwiches
o chicken fingers
o baked potatoes
Cones o snow cones
o ice cream cone holders
o foods
Food Container Lids All kinds
Hinged Lid Containers Clamshells type boxes for
specialty or general food portion or meal
carryout such as:
o hamburgers
o chicken nuggets
o salads
o single or multi-portion meals
o with or without multiple compartments
Napkins All kinds
Plates/Platters o All shapes, including round
o oval
o rectangular
o deep
o with or without compartments
o individual portion or serving sized
o cake/pie plates
24
Plates/Platters Lids All types including domed, insulating, etc.
Placemats/Table Covers o placemats
o tray liners
o doilies
o menus
o table covers
Serving Dishes o pitchers
o catering trays
o casserole dishes
o chafing/steam table dishes
Straws/Stirrers o drinking straws
o puncture straws
o stirring straws/sticks
Wraps Wraps of all kinds, for all kinds of foods:
o burger/hot dog wraps
o pizza sheets
o doggie bags/wraps
o popcorn/snack bags
o french fry sleeves
o sandwich bags
25
Outside the Definition of "Food Service Disposables":
Baking o pie/cake tins
o muffin/eclair tins
o muffin/eclair cups
o fluted pan liners
o cake circles/squares
o loaf pans
o bundt pans
o casseroles
o cookie/cake sheets
o cake decorating triangles
Single or Multiple Portion o cereal boxes/bowls
Packaged Foods o sealed yogurt/desert cups
o sealed soups, stews, chili, pasta
o condiment packs (salt, pepper, catsup,
salsa, relish, etc.)
o sealed frozen food containers
o egg cartons
o dairy product containers
o produce containers
o meat & deli trays
Wraps o freezer papers
o bakery papers
o candy bar wrappers
Aeseptic or Sealed
Packaging
Secondary Packaging o corrugated containers
o paper bags
Sealed Containers for o soft drink cans
Long Term Storage o milk cartons
of Liquids o sealed juice or drink containers
26