EXHIBIT 10.4
REPAYMENT AGREEMENT BETWEEN TENSIODYNE SCIENTIFIC CORPORATION
AND
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
REPAYMENT AGREEMENT BETWEEN
TENSIODYNE SCIENTIFIC CORPORATION
AND
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
This Repayment Agreement is made between Material Technology, Inc. ("MATECH")
and the Trustees of the University of Pennsylvania ("PENN") in reference to the
Sponsored Research Agreement effective October 15, 1993 ("SRA") between
Tensiodyne Scientific Corporation ("SPONSOR") and PENN and is made effective as
of the date of the last signature executing this Repayment Agreement.
BACKGROUND
WHEREAS, pursuant to the terms and conditions of the SRA, SPONSOR agreed to
sponsor the research of Xx. Xxxxxxxx Xxxxx of PENN's School of Engineering in
fatigue properties of metals by payment of costs incurred in such research in an
amount of $200,000 ("OBLIGATION").
WHEREAS, SPONSOR has not made payments as required under the SRA.
WHEREAS, Material Technology, Inc. ("MATECH"), is a successor as of February
1994, to SPONSOR's business, and therefore, is obligated to perform the
obligations of SPONSOR under the SRA and this REPAYMENT AGREEMENT thereto.
WHEREAS, neither SPONSOR nor MATECH has made payments on OBLIGATION,
WHEREAS, PENN and MATECH wish to provide for the repayment of the OBLIGATION on
the following terms:
NOW, THEREFORE, the parties agree as follows:
1. Unless otherwise defined in the Repayment Agreement, all capitalized terms
shall have the same meaning as set forth in the SRA.
2. MATECH hereby represents and warrants that it is the lawful successor to
LICENSEE's rights and obligations under the AGREEMENT.
3. MATECH agrees that the amount outstanding and due to PENN under the SRA is
$200,000.00.
4. MATECH shall pay the OBLIGATION in accordance with the following terms:
5. The entire obligation with accrued interest shall be paid to PENN no later
than four (4) years from the date of the last signature executing this
AGREEMENT.
6. In the event that MATECH secures any proceeds in the form of an equity
investment, debt, or any other capital with the exception of funds provided
by any public sector entity ("FUNDING"), MATECH will immediately remit to
PENN 30% of such FUNDING until OBLIGATION is paid in full. However, such
remittance to PENN will be subsequent to the first $150,000.00 of such
FUNDING raised by SPONSOR after the date of the last signature executing this
AGREEMENT. The provisions of this paragraph 6 shall take precedence over the
provisions of Amendment 1, paragraph 5 of the SRA.
7. In the event that MATECH remits payment or other consideration to Xx.
Xxxxxx X. Xxxxxxxxx, currently President of Tensiodyne Scientific Corporation
("XXXXXXXXX") in partial or full satisfaction of any debt owed by MATECH to
XXXXXXXXX (a "XXXXXXXXX PAYMENT"), MATECH will remit to PENN, within five (5)
working days after such payment is made, an amount equal to such payment (each
such payment to PENN an "EQUIVALENT PAYMENT"), until the OBLIGATION is fully
repaid to PENN. Notwithstanding the foregoing, any monies which MATECH pays to
XXXXXXXXX which are used by MATECH in agreement with XXXXXXXXX as MATECH Working
Capital, shall not be considered a XXXXXXXXX PAYMENT. As used herein, the term
Working Capital shall mean "working capital" as defined by the Generally
Accepted Accounting Principles of the Federal Accounting Standards Board, except
that Working Capital shall not include any form of payment to XXXXXXXXX and/or
Xx. Xxxxxxxxx'x family other than the salary described in Section 6 of this
AGREEMENT. In addition to the foregoing, in the event that XXXXXXXXX provides
additional monies to MATECH in the form of Working Capital within ninety (90)
days after the date of the last signature executing this AGREEMENT, MATECH may
repay XXXXXXXXX up to one hundred thousand dollars ($100,000) of such additional
monies without being obligated to remit an EQUIVALENT PAYMENT to PENN.
8. MATECH will not remit to XXXXXXXXX an annual salary, or any other
consideration in lieu of a salary, exceeding $150,000 per annum until OBLIGATION
is paid in full.
9. Effective June 30, 1997, MATECH will owe to PENN, on an accrued basis,
interest amounting to 1.5% per month of the outstanding balance of the
OBLIGATION.
10. PENN will have the right to review or audit all the books and records of
MATECH. If in the course of such a review or audit, PENN determines in good
faith that it SPONSOR has not met any of the duties defined in paragraphs 3,
4, 5, and 6 above, PENN will, by written notice, notify MATECH that PENN has
determined that it determines that MATECH has not met a duty (duties). If
MATECH determines in good faith that MATECH has met all of the duties defined
in paragraphs 3, 4, 5, and 6 above then MATECH and PENN shall choose a
mutually agreeable independent auditor to review or audit all the books and
records of MATECH at MATECH's expense. If such an auditor determines that
MATECH has not met any of the duties defined in
paragraphs 3, 4, 5, and 6, the entire unpaid OBLIGATION together with the
accrued interest shall become immediately due and payable. Such payment will
not forgive MATECH of any of the duties as defined in paragraphs 3, 4, 5, and
6 above. If such an auditor determines that MATECH has met all of the duties
defined in paragraphs 3, 4, 5, and 6, PENN will reimburse MATECH for all
costs associated with such review or audit.
11. Notwithstanding anything to the contrary contained in this REPAYMENT
AGREEMENT, MATECH shall pay any balance remaining on the OBLIGATION no later
than four (4) years from last signature executing this AGREEMENT.
IN WITNESS THEREOF, the parties have executed this Repayment Agreement through
their duly authorized representatives as set forth below, and this Repayment
Agreement shall be attached to, and shall become a part of, the SRA between the
parties.
THE TRUSTEES OF THE
UNIVERSITY of PENNSYLVANIA MATERIAL TECHNOLOGY INC.
By: By:
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Name: Name:
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Title: Title:
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Date: Date:
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ACKNOWLEDGEMENT
I have read and agree to abide by the terms of the Agreement and this Amendment
(Amendment 1).
By:
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Name:
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Title:
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Date:
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