[CONFIDENTIAL TRATMENT REQUESTED. CERTAIN PORTIONS OF THIS AGREEMENT
HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION.]
RESEARCH AND DEVELOPMENT
AND LICENSE AGREEMENT
---------------------
THIS AGREEMENT, made as of this 24th day of June, 2000 by and between
MANHATTAN SCIENTIFICS, INC., a public Delaware corporation having offices
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, XXX ("MHTX"), Novint
Technologies, Inc., a private New Mexico Corporation having offices located at
0000 Xxxxxxx Xxxxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx 00000 ("NOVINT"), and Xx. Xxxxxx
X. Xxxxxxxx, residing at 0000 Xxxxxxx Xxxxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx 00000
("XXXXXXXX").
W I T N E S S E T H:
WHEREAS, MHTX is engaged in, among other things, research, development and
marketing of certain proprietary technologies, and products incorporating such
technologies; and
WHEREAS, Novint and Xxxxxxxx are engaged in the research and development
of certain proprietary technologies and products in the area of Haptics not
including the Sandia Haptics Technologies, as hereinafter defined (collectively,
the "Novint Technologies"); and
WHEREAS, as used in this agreement, "Haptics" refers to a developing
science of computer software and hardware1 technology that enables human users
to experience sensations having to do with the sense of touch in the form of (1)
force feedback (forces that are displayed to a user), (2) tactile feedback
(force sensations that are displayed to a user's skin), and (3) kinesthesia (the
sense of spatial location and internal physical sensation); and
WHEREAS, from January, 1996 through May, 2000, Xxxxxxxx was an employee of
Sandia Corporation and/or the Sandia National Laboratories through the United
States Department of Energy, located in Albuquerque, New Mexico ("Sandia"), and
has previously researched and developed certain Haptics technologies for Sandia
which are Sandia's property (the "Sandia Haptics Technologies"); and
WHEREAS, pursuant to agreement dated April 11, 2000, Novint licensed the
Sandia Haptics Technologies from Sandia under terms and conditions set forth in
such license;
WHEREAS, pursuant to agreement of even date herewith, MHTX exclusively
sublicensed the Sandia Haptics Technologies from Novint (the "Sandia
Sublicense") with respect to the Field of Use (as hereinafter defined); and
WHEREAS, Xxxxxxxx left the employ of Sandia in order to pursue the
continued research and development of the Novint Technologies exclusively
through Novint, and upon his departure from Sandia, Xxxxxxxx ceased to perform
research and development activities for Sandia with respect to the Sandia
Haptics Technologies; and
----------------
1
It is understood that Novint and Xxxxxxxx are not presently developing any
Haptics hardware.
1
WHEREAS, Xxxxxxxx controls Novint and owns a majority of Novint's common
stock; and
WHEREAS, MHTX desires to engage the services of Novint and Xxxxxxxx in
connection with the further research and development, and the bringing to
market, of the Novint Technologies within the Field of Use; and
WHEREAS, MHTX desires to acquire an exclusive worldwide license to the
existing and developing Novint Technologies in the Field of Use, it being
understood that such license may be used in conjunction with the Sandia
Sublicense; and
WHEREAS, MHTX desires to acquire an ownership interest in Novint, and to
assist Novint in becoming a public company, should that be desirable and
appropriate; and
WHEREAS, Xxxxxxxx desires to acquire an ownership interest in MHTX; and
WHEREAS, prior to the execution of this Agreement, on April 28, 2000, MHTX
paid $100,000 to Novint as an advance for scientific research and development
services to be performed hereunder, as well as to secure the services of Novint
pending consummation of this Agreement;
NOW, THEREFORE, upon good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Research and Development.
(a) MHTX hereby engages Novint and Xxxxxxxx to conduct all
reasonable and appropriate research, development, and product support and
upgrade efforts with respect to the Novint Technologies within the Field of Use
to (i) achieve and realize the Haptics products and milestones set forth in the
Milestone Timetable (as hereinafter defined, and as same may be amended from
time to time) as soon as reasonably possible, including without limitation the
First Major Milestone (as hereinafter defined); (ii) on a continuing basis, to
further develop, advance, evolve, upgrade and support the Novint Technologies
within the Field of Use, and products incorporating same, for MHTX on an
accelerated basis, pursuant to the Milestone Timetable; and (iii) on a
continuing basis, to reasonably collaborate with MHTX and its affiliates as
needed on other Haptics related products and projects (collectively, the
"Research and Development").
(b) MHTX shall fund (or procure the funding of) the Research and
Development in the amount of $1,500,000 or such other amount(s) to which the
parties may agree from time to time (the "Research and Development Fee"). At
execution of this agreement, MHTX has paid Novint the first $300,000 of the
Research and Development Fee (consisting of the first $100,000 paid on April 28,
2000 and an additional $200,000 paid contemporaneously with execution of this
Agreement), receipt of which is hereby acknowledged by Novint. MHTX shall pay
Novint the balance of the Research and Development Fee in accordance with the
Milestone Timetable (as hereinafter defined). Research and Development costs
include any supporting costs necessary to conduct normal business operations
supporting the Research and Development. These costs include, without
limitation, office and leasing, utilities, equipment, travel, phone,
consultants, printing, web development, legal and accounting fees, intellectual
property protection, bookkeeping, recruiters, market research, public relations,
technical staff, management staff, administrative staff, other staff, customer
support, and marketing.
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XXXX - CONFIDENTIAL TREATMENT REQUESTED
(c) Novint and Xxxxxxxx shall conduct and direct the Research and
Development, and shall do so in accordance with the milestone and budget
timetable annexed hereto as Schedule A, as same may be amended from time to time
by written agreement of the parties (the "Milestone Timetable"). Upon completion
of each milestone set forth in the Milestone Timetable, Novint shall render a
written report to MHTX detailing the particulars of the milestone completion,
including without limitation the technical particulars (each, a "Milestone
Report"). Receipt and acceptance by MHTX of each Milestone Report shall be a
condition of MHTX's obligation to continue to fund the Research and Development
pursuant to the Milestone Timetable, it being understood that MHTX shall not
unreasonably withhold its acceptance of any Milestone Report.
(d) (1) Until Novint and Xxxxxxxx deliver the Web Browser
Applications (as hereinafter defined) and Content Creation Applications (as
hereinafter defined) to MHTX in finished, professional, commercially appealing
and visually appealing form suitable for manufacture and public use, sale, and
license (the "First Major Milestone"), Novint and Xxxxxxxx personally shall use
their best and exclusive full-time efforts in conducting the Research and
Development, and shall use their best efforts to expedite the Research and
Development. After Novint has delivered the First Major Milestone to MHTX, and
for so long thereafter as Novint and Xxxxxxxx shall continue to perform the
Research and Development for MHTX pursuant to the Milestone Timetable, Novint
and Xxxxxxxx shall use their best efforts in conducting and expediting further
Research and Development. Xxxxxxxx personally will have primary responsibility
for performing, directing and overseeing all of the Research and Development. At
MHTX's reasonable request and expense, Novint and Xxxxxxxx shall also assist
MHTX generally in commercializing the Novint Technologies, including without
limitation by (i) assisting in raising capital; (ii) participating in public
relations events, press conferences, media interviews, technology
demonstrations, and similar events; and (iii) prototyping applications for
specific potential users of the Novint Technologies within the Field of Use on a
case-by-case basis, subject to agreement of the parties as to the particulars of
such applications. Novint and Xxxxxxxx shall disclose and introduce to MHTX all
third parties with whom they previously have or subsequently shall have
discussions regarding the Novint Technologies within the Field of Use.
(2) Notwithstanding the first sentence of paragraph 1(d)(1)
immediately above, MHTX acknowledges that Novint and Xxxxxxxx intend to use a
portion of the Research and Development Fee to conduct Haptics research and
development outside of the Field of Use, for purposes independent of this
Agreement which are intended to complement the Research and Development.
Additionally, notwithstanding the first sentence of paragraph 1(d)(1)
immediately above, MHTX acknowledges that Novint may receive additional funding
from third parties, with Novint's board approval, which may fund projects
complementary to this agreement. MHTX consents to such activity provided that
(i) such activity does not materially interfere with the performance of the
obligations of Novint and Xxxxxxxx under this Agreement (including without
limitation timely attainment of the milestones established under the Milestone
Timetable); (ii) Novint and Xxxxxxxx use a substantial portion of the Research
and Development Fee directly for the Research and Development; (iii) Novint and
Xxxxxxxx devote a substantial portion of their time to the Research and
Development; and (iv) MHTX has previously approved in writing Novint's written
budget for the proposed expenditure of portions of the Research and Development
Fee for matters other than the Research and Development, which approval shall
not be unreasonably withheld. The budget attached hereto as Schedule C is hereby
approved in principle by MHTX. It is intended that MHTX will indirectly benefit
from research and development outside the Field of Use by reason of, among other
things, MHTX's ownership interest in Novint (see paragraph 3(a), below).
XXXX - CONFIDENTIAL TREATMENT REQUESTED
3
(e) (1) After Novint and Xxxxxxxx deliver the First Major Milestone
to MHTX, Novint and Xxxxxxxx shall continue to perform the Research and
Development for MHTX in accordance with the Milestone Timetable as same may be
amended, or as otherwise agreed by the parties.
(2) Funding for the continuing Research and Development
described in the immediately preceding paragraph shall be provided to Novint by
MHTX in the form of a research and development royalty (the "R&D Royalty"),
which shall be their entire fee for all such continued Research and Development,
subject to the provisions of paragraph 1(e)(3) immediately below. The R&D
Royalty shall be separate and independent from, and shall be in addition to, the
License Royalty (as hereinafter defined). The R&D Royalty shall consist of the
following percentages of Net Revenue (as hereinafter defined):
Cumulative Net Revenue R&D Royalty
TO MHTX (millions) to Novint
------------------ ---------
$0 to $1 3%
$1 to $2 6%
$2 to $3 9%
$3 to $4 12%
$5 to $6 15%
$6 to $7 18%
$7 to $8 21%
$8 to $9 24%
$9 to $10 27%
Above $10mm 30%
(3) Until such time as the R&D Royalty is sufficient to pay
for the costs of Novint that are reasonably necessary to perform the continuing
Research and Development ("Costs"), MHTX will use its best efforts to fund (or
cause to be funded) the Research and Development, to the extent that the R&D
Royalty is insufficient to cover the costs of same, in amounts to be reasonably
agreed by the parties.
(4) Novint and Xxxxxxxx shall use the R&D Royalty (and other
amounts paid by MHTX) exclusively to fund the continuing Research and
Development for MHTX. Novint and MHTX will jointly determine how to expend such
funds up to the amount of Novint's Costs. Expenditure of such funds exceeding
Novint's Costs shall be determined in MHTX's sole reasonable discretion,
provided that such funds are expended in connection with the Novint Technologies
within the Field of Use.
(f) Novint shall be the exclusive company to perform all Research
and Development for MHTX with respect to the Novint Technologies, unless Novint
and/or Xxxxxxxx shall have committed a material breach ("Novint Breach") of this
Agreement or this Agreement shall have been terminated by the parties, in which
event MHTX shall be free to engage third parties to perform the Research and
Development with respect to the Novint Technologies if Novint fails to cure such
breach within 90 days after receiving written notice of same from MHTX. Novint
Breach includes, without limitation, failure to meet the Milestone Timetable,
failure of the Novint Technologies to work or to work as intended, failure to
provide adequate support for the Novint Technologies, failure of the First Major
Milestone to be delivered timely or in the commercially and visually appealing
configurations described in the Milestone Timetable, failure to pay MHTX any
royalties due, death disability or incapacity of Xxxxxxxx, and/or failure of any
of the representations and warranties by Novint and Xxxxxxxx to be true and
correct.
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XXXX - CONFIDENTIAL TREATMENT REQUESTED
2. Intellectual Property License to MHTX
(a) (1) Within the Field of Use, and subject to the terms of this
Agreement, Novint and Xxxxxxxx hereby grant to MHTX an exclusive, worldwide,
perpetual license (the "License") in and to all of the existing worldwide
intellectual property rights arising out of or relating to the Novint
Technologies, including without limitation patents, patent applications,
trademarks, trademark applications, copyrights, copyright applications,
software, computer programs, source code, computer hardware2, know-how, trade
secrets, discoveries, ideas, concepts, techniques, designs, specifications, and
the like. The Novint Technologies include, without limitation, the technologies
described on Schedule B attached hereto.
(2) Subject to paragraph 1(f) of this Agreement, the License
includes, without limitation, the right of MHTX to develop, upgrade,
manufacture, distribute and sell in all market segments, products incorporating
the Novint Technologies within the Field of Use, as well as the right to further
develop, upgrade, and make derivative works based upon the Novint Technologies
within the Field of Use, provided that MHTX shall pay Novint royalties upon same
in accordance with this Agreement and that all other rights of Novint under this
Agreement shall apply to same.
(3) The License includes, without limitation, the right of
MHTX to sublicense and to sub-sublicense all of its rights under this Agreement;
provided, however, that each such sub-licensee or sub-sub-licensee (together
"Sub-Licensees") agrees to be bound by all of the terms and conditions of
Novint's and Xxxxxxxx'x License to MHTX to the same extent as MHTX. Novint shall
be a third party beneficiary of any agreement between MHTX and any
Sub-Licensees.
(b) With respect to the Novint Technologies, and within the Field of
Use, all discoveries, improvements, derivative works, inventions, patents,
copyrightable expressions, trademarks, computer programs, software, upgrades,
source code, computer hardware3, Research and Development results, trade secrets
and the like, conceived or first reduced to practice or fixed, know-how, ideas,
concepts, techniques, designs, specifications, and the like, whether now known
or hereinafter created, conceived or otherwise developed by Novint, Xxxxxxxx,
and/or their employees, contractors or affiliates in the performance of the
Research and Development, are included (without limitation) for all purposes in
the License. Xxxxxxxx and Novint shall, on a monthly and continuing basis,
update Schedule B to identify and describe all new intellectual property and the
like developed by Xxxxxxxx and Novint that is covered by the License, and shall
provide copies of such updated Schedule B as and when it is updated.
(c) In consideration for the License, MHTX shall pay Novint a
perpetual license royalty of XXXX of Net Revenue (as hereinafter defined) from
the use, sublicensing or sub-sublicensing of the Novint Technologies within the
Field of Use, the granting of any rights in or with respect to the Novint
Technologies within the Field of Use, and/or from sales or lease of products
incorporating or using the Novint Technologies or the sale or lease of services
(the "License Royalty"). The License Royalty shall be separate and independent
from, and in addition to, the R&D Royalty. Any monies paid by MHTX to Novint
shall not be considered Net Revenue to Novint. Subject to paragraph 5(b), "Net
Revenue" means total revenue received from the aforesaid activities, less
shipping, returns, sales taxes, and duties for import or export.
--------------------
2
See footnote 1, above.
3
See footnote 1, above.
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XXXX - CONFIDENTIAL TREATMENT REQUESTED
(d) Novint and Xxxxxxxx agree to promptly execute any and all
documents and instruments necessary to effect, register, update and/or document
the License. Further, MHTX agrees that it will place, or will require others
with MHTX contracts, to place the trademark/service xxxx "e-Touch" on each
product manufactured or service provided incorporating Novint Technology.
(e) (1) As used herein, the "Field of Use" means XXXX.
(2) "Web Browser Applications" means any and all computer and
electronics applications, whether now known or hereafter developed, which permit
the user to view, access, browse, retrieve, utilize, navigate, interface with
and/or interact with Content (as hereinafter defined) on a Computer Network (as
hereinafter defined). Web Browser Applications only include computer
applications that can access varied Content that is placed on a Computer Network
by many Content creators. Web Browser Applications do not include any type of
computer program or application that can be used without a computer network. For
the sake of clarification, common examples of Web Browser Applications currently
in use by the public include, without limitation, Netscape Navigator and
Microsoft Internet Explorer. For the sake of further clarification, an example
of a program that would not constitute a Web Browser Application is a computer
game that can be run standalone on a personal computer but can also be played by
multiple players across a Computer Network. Although such a computer game would
not constitute a Web Browser Application, it would nevertheless constitute an
Overlapping Application (as hereinafter defined).
(3) "Content Creation Applications" means any and all computer
and electronics applications, tools, programming instructions, programs, and the
like, whether now known or hereafter developed, which permit the user to create
Content on a Computer Network for access using a Web Browser Application. For
the sake of clarification, common examples of Content Creation Applications
currently in use by the public include, without limitation, Microsoft Frontpage
and Adobe Pagemill.
(4) "Computer Network" means any and all computer and
electronics networks, whether now known or hereafter developed, of any size,
nature or location, whether public or private, wherein one or more users may
connect to the network via one or more connection points. The term "Computer
Networks" includes, without limitation, the Internet, the World Wide Web, the
National Technology Grid, cable television systems, satellite television
systems, intranets, public and private networks, and the like.
(5) "Content" means any and all types of data and information
that is capable of being placed on a Computer Network and accessed by others.
For the sake of clarification, examples of Content include, without limitation,
web pages, email systems, bulletin boards, chat rooms, search engines, applets,
games, visual images, sound recordings, interactive and other applications,
documents, words, numbers, and the like.
(f) MHTX shall not disclose source code or technical information
about the
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XXXX - CONFIDENTIAL TREATMENT REQUESTED
Novint Technologies to any third party without prior written approval of Novint.
Nothing in the preceding sentence shall be construed to (i) require MHTX to
obtain approval from Novint prior to licensing the Novint Technologies to
Sub-Licensees and providing such Sub-Licensees with copies of Web Browser
Applications and Content Creation Applications created by Novint and Xxxxxxxx
for replication; or (ii) preclude MHTX from exercising its rights under
paragraph 1(f) of this Agreement.
(g) MHTX will use its reasonable best efforts to actively
commercialize, and bring to market, products and services incorporating the
Novint Technologies within the Field of Use. Novint and Xxxxxxxx acknowledge
that MHTX is a technology incubator, that MHTX is and will continue to be
actively involved in the development and commercialization of several
technologies other than the Novint Technologies, and that MHTX will not be
devoting its exclusive attention to the Novint Technologies.
(h) If at any time MHTX is obligated and fails to pay Novint (i) any
portion of the Research and Development Fee that is due and payable, (ii) any
portion of the License Royalty that is due and payable, or (iii) any portion of
the R&D Royalty that is due and payable; or if MHTX fails to use its reasonable
best efforts to actively commercialize the Novint Technologies within the Field
of Use; or if MHTX otherwise commits a material breach of this Agreement (each,
a "MHTX Breach"), then in any such case Novint shall serve written notice of
same to MHTX. If, within 90 days of receipt of such notice, MHTX fails to (a)
cure such MHTX Breach, or (b) reasonably and in good faith, controvert such MHTX
Breach in writing, then MHTX's License shall become non-exclusive. If MHTX
controverts any MHTX Breach and it is finally determined that an MHTX Breach was
committed, then MHTX's License shall become non-exclusive if such breach is not
cured within 30 days of such final determination.
3. Ownership of Novint
(a) Contemporaneously with the execution of this Agreement, and as a
condition to the effectiveness of this agreement, Xxxxxxxx shall have taken such
actions as are necessary and appropriate to effectively apportion and transfer
ownership of Novint's issued and outstanding shares of common stock as follows:
Xxxxxxxx: 53.52% 44,739 shares
MHTX: 43.79% 36,606shares ("Novint Stock")
Other Shareholders 2.69% 2,250 shares
It is understood and agreed that, in addition to the foregoing, there will be
options to purchase 1405 shares of Novint Common Stock, 4,000 shares of Novint
Preferred Stock with certain rights, restrictions, preferences and limitations
set forth in Novint's organizing documents, and a number of shares subject to
the terms of an employee incentive stock option plan adopted by Novint's Board
of Directors.
(b) It is agreed that, other than the securities described in
paragraph 3(a) above, no other securities of Novint shall be issued or
authorized in the absence of formal approval of the board of directors of
Novint, except that MHTX shall consent and shall not object if Novint issues an
additional 24,272 shares (or options for shares) of common stock to Xxxxxxxx
upon Novint's realization of at least $10,000,000 in Net Revenue from
exploitation of the Novint Technologies outside the Field of Use.
(c) There shall be five (5) seats on the Novint board of directors
elected
7
XXXX - CONFIDENTIAL TREATMENT REQUESTED
by Novint's shareholders in accordance with its Bylaws. MHTX and
Xxxxxxxx agree to vote their shares to elect Xxxxxxxx and Xxxxxx Xxxxxx as
Directors and to elect Xxxxxxxx as Chairman of the Board. Initially MHTX shall
be entitled to specify two (2) directors, and Novint shall be entitled to
specify two (2) directors, it being understood that the fifth director shall be
selected by the other (4) directors. As of the date of this Agreement, Xxxxxx
Xxxxxxxx and Xxxxx X. Xxxxxx are the two directors specified by Novint. Xxxxxx
Xxxxxx and Xxxxx X. Xxxx are the two directors specified by MHTX.
(d) Novint is presently considering becoming a public company either
through an initial public offering or through a transaction by which Novint
(and/or its successors and assigns) are acquired by an existing public company
whose sole purpose subsequent to such acquisition shall be to carry on the
affairs of Novint ("Novint Public Co."). MHTX shall act as an uncompensated
facilitator and advisor to Novint in connection with the foregoing. Xxxxxxxx and
MHTX agree to vote their shares in Novint to maintain the ratio of ownership
percentages in Novint owned by Xxxxxxxx and MHTX.
(e) MHTX shall not sell, assign, transfer, pledge, hypothecate,
mortgage or dispose of, by gift or otherwise, or in any way encumber, all or any
part of the Novint Shares (as hereinafter defined) owned or to be owned by it
except in compliance with the terms of this Agreement. For purposes of this
Agreement, the term "Shares" shall mean and include any portion of the shares of
stock of Novint of any class or any other share or shares of capital stock (or
rights, options or warrants to acquire such shares) of Novint (or its
successors) owned by MHTX, whether presently held or hereafter acquired.
(f) Prior to the time that Novint becomes Novint Public Co., MHTX
may not sell, assign, transfer or otherwise dispose of any or all Shares owned
by it to a third party unless (i) MHTX shall have received a bona fide arm's
length offer to purchase such Shares from such third party, and (ii) MHTX first
submits a written offer (the "Offer") to Novint identifying the third party to
whom such Shares are proposed to be sold and the terms of the proposed sale and
offering to Novint the opportunity to purchase such Shares on terms and
conditions, including price, not less favorable to Novint than those on which
MHTX proposes to sell such Shares to any other purchaser.
Novint shall act upon the Offer as soon as practicable after receipt
thereof, and in no event later than thirty (30) days after receipt thereof. In
the event that Novint shall elect to purchase all or a part of the Shares
covered by the Offer, Novint shall, within such thirty (30) day period, (i)
communicate in writing such election to purchase to MHTX, which communication
shall be delivered by hand or mailed to MHTX at the address shown by Novint's
records or at such other address furnished to Novint and shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of the Shares covered thereby;
and (ii) pay (or cause to be paid) to MHTX the purchase price in full.
In the event that Novint does not purchase the Shares offered by
MHTX pursuant to the Offer, all of such Shares may be sold by MHTX at any time
following the thirtieth (30th) day after receipt of the Offer by Novint,
provided that the purchaser of the Shares shall agree in writing to abide by all
of the provisions hereof. Any such sale shall be to the person originally named
in the Offer as the proposed purchaser or transferee and shall be at not less
than the price and upon other terms and conditions, if any, not more favorable
to such purchaser than those specified in the Offer. Any Shares sold after such
30-day period, to a different purchaser, at a lower price or otherwise on more
favorable terms shall be subject to the requirements of a prior offer pursuant
to this Section.
The provisions of this Section 3(f) shall terminate immediately upon
the
8
XXXX - CONFIDENTIAL TREATMENT REQUESTED
effectiveness of an underwritten initial public offering on a firm commitment
basis pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), covering the offer and sale of
Voting Common Stock for the account of the Company, in which the aggregate gross
proceeds to Novint are acceptable to its Board of Directors, or upon the
occurrence of any other procedure whereby Novint becomes Novint Public Co.
(g) [Intentionally Omitted].
(h) If Novint becomes Novint Public Co., then upon expiration and
deletion of any restrictions upon the Novint Stock, and as a measure to protect
Novint Public Co.'s shareholders, MHTX agrees not to sell more than 3,000 of
such shares per trade upon the open market, nor more than 15,000 shares per day
upon the open market, without the prior written consent of Novint. MHTX may
privately transfer all or any portion of the Novint Stock, provided that the
transferee(s) agree to the aforesaid restrictions in writing. This covenant
shall survive termination of this Agreement.
(i) Prior to Novint becoming Novint Public Co., any transferee of
Novint stock originally issued to MHTX, whether through purchase or otherwise,
shall agree to abide by any voting restrictions described in this contract,
including but not limited to voting with respect to the board of directors and
its chairman, prior to transfer of said stock. This covenant shall survive
termination of this Agreement.
4. Consideration to Xxxxxxxx
(a) As consideration for Xxxxxxxx'x transfer to MHTX of all of
Xxxxxxxx'x shares of no par value common stock of Xxxxxxxx Technologies, Inc., a
New Mexico corporation ("Newco") pursuant to the terms of a plan of
reorganization adopted by Newco and as additional consideration for entering
into this Agreement, MHTX will issue to Xxxxxxxx 500,000 shares of MHTX
restricted common stock (the "MHTX Stock"). The transfer by Xxxxxxxx of his
Newco stock solely in exchange for the MHTX stock is intended by the parties to
be a tax-free reorganization under applicable federal and state income tax laws
and regulations. Xxxxxxxx and Novint (a) acknowledge that MHTX is consenting to
such tax-free reorganization at the request of Xxxxxxxx and Novint, (b)
represent and warrant that MHTX shall have no tax consequences as a result of
such reorganization (other than ordinary tax consequences as a result of
receiving Novint Stock), and (c) indemnify and agree to defend MHTX from and
against any tax liability resulting from such reorganization (other than
ordinary tax consequences as a result of receiving Novint Stock).
(b) At such time that MHTX realizes at least $10,000,000 in Net
Revenue from its exploitation of the License, MHTX shall provide to Xxxxxxxx an
additional 250,000 shares of MHTX restricted common stock (the "Bonus Stock").
(c) With respect to the MHTX Stock and the Bonus Stock, Xxxxxxxx
agrees that he shall ascertain and comply with all applicable laws, rules and
regulations, whether state or federal, including without limitation United
States securities laws, rules and regulations, pertaining to receiving
information such as the Information from publicly traded companies and/or the
improper trading of securities of such companies (the "Laws"). Xxxxxxxx
acknowledges that he may be deemed to be an "insider" according to the Laws, and
that he is aware of and shall ascertain and comply with all Laws that apply to
insiders. Investor acknowledges that the Laws provide both civil and criminal
penalties for violating the Laws. Investor has or immediately shall retain
counsel for the purpose of advising him as to how he is required to comply with
the Laws.
9
XXXX - CONFIDENTIAL TREATMENT REQUESTED
(d) Upon expiration and deletion of any restrictions upon the MHTX
Stock and the Bonus Stock, and as a measure to protect MHTX's shareholders,
Xxxxxxxx agrees not to sell more than 3,000 of such shares per trade upon the
open market, nor more than 15,000 shares per day, without the prior written
consent of MHTX. Xxxxxxxx may privately transfer all or any portion of the MHTX
Stock and/or the Bonus Stock, provided that the transferee(s) agree to the
aforesaid restrictions in writing. This covenant shall survive termination of
this Agreement.
5. Non-Competition; Overlapping Fields of Use; Royalties to MHTX
(a) For the sake of clarification, MHTX agrees that it shall not
compete with Novint and Xxxxxxxx with respect to the Novint Technologies outside
of the Field of Use; and Novint and Xxxxxxxx agree that they shall not compete
with MHTX with respect to the Novint Technologies within the Field of Use,
except as the parties may agree in a subsequent writing. The parties hereby
agree that Novint retains the right to use the Novint Technologies internally
for any purpose except competition with MHTX.
(b) MHTX acknowledges that Novint and Xxxxxxxx are reserving for
themselves all fields of use for the Novint Technologies other than the MHTX
Field of Use defined in this Agreement (collectively, the "Novint Reserved
Applications"). The parties acknowledge that certain of the Novint Reserved
Applications may, of necessity, contain elements that utilize a Computer Network
(the "Overlapping Applications"). Novint and Xxxxxxxx shall pay MHTX a royalty
of 5% (five percent) of the Net Revenue from any and all Overlapping
Applications. Any monies paid by Novint to MHTX shall not be considered Net
Revenue to MHTX.
(c) It is the intent of the parties to avoid Overlapping
Applications, and Novint and Xxxxxxxx will use their best efforts to avoid
creating Overlapping Applications, to create them only when absolutely necessary
with respect to a particular application, and to minimize the overlapping
elements as much as possible where Overlapping Applications are unavoidable.
Nothing in this Agreement shall be construed in any way to be authorization for
Novint and Xxxxxxxx to materially infringe on MHTX's Field of Use, or to
actively and intentionally compete within MHTX's Field of Use. For the sake of
clarification, and without limiting the foregoing, at the time of execution of
this Agreement, the only Overlapping Applications contemplated by the parties
are (i) standalone packaged software products of Novint ("Standalone Products")
that utilize the internet, where the use of the internet is not the primary
purpose of the application (for example, a computer game might run both with or
without the use of the internet. The added utilization of the internet would
make it more entertaining and more interactive, but the primary purpose of the
game is for entertainment rather than solely accessing the internet); and (ii)
Standalone Products that of necessity incorporate content creation applications
that could be adapted by the user to create content on a Computer Network. For
example, in a two-dimensional analogy, there can be some overlap in content
creation applications and imaging applications. To extend the analogy,
specifically, there is some overlap in usage with Microsoft Frontpage and Adobe
Photoshop. One can use Adobe Photoshop to create images that can be placed on
the Internet. In practice, Photoshop is not a competitive product with
Frontpage, however, because the primary purpose of Frontpage is to create web
sites rather than specific images (although Frontpage has some capabilities to
create images). These two applications can be used cooperatively to create a
xxxxxx and more robust web site. Novint shall not create any Standalone Products
which enable the user to create web pages or internet browsers.
6. Representations, Warranties and Covenants.
10
XXXX - CONFIDENTIAL TREATMENT REQUESTED
(a) Novint and Xxxxxxxx each covenant, represent and warrant that, to the
best of their knowledge, information and belief, without independent
investigation:
(i) that the Novint Technologies are and will be original, are
solely owned by Novint and Xxxxxxxx, are not subject to claims by any third
parties, and do not infringe upon the rights of any third parties;
(ii) that Novint and Xxxxxxxx believe in good faith (and are
aware of no contradictory facts) that the Novint Technologies are patentable,
copyrightable or otherwise protectable;
(iii) that entry into this agreement (and all related
documents) with MHTX, has been duly authorized and approved by the directors,
officers, and shareholders of Novint, and that Novint and Xxxxxxxx have all
requisite authority to make the License and enter into this agreement;
(iv) that Xxxxxxxx will devote his best efforts on a full-time
basis to the activities of Novint;
(v) that Novint has secured (or promptly shall secure) the
services of all key personnel to continue the Research and Development;
(vi) that the existing employees of Novint have executed
confidentiality and non-competition agreements in favor of Novint and MHTX (and
acceptable to MHTX), or will do so within a reasonable time after execution of
this Agreement, and that no employees will be hired in the future who have not
signed such an agreement in favor of Novint and MHTX;
(vii) that there are no claims, whether actual or threatened,
against Novint and Xxxxxxxx, and that Novint and Xxxxxxxx are in compliance with
all laws, rules, and regulations to which they are subject;
(viii) that there are no liens, judgments or security
interests of record to which Novint, Xxxxxxxx, and/or the Novint Technologies,
are subject, except those granted to MHTX;
(ix) that Novint and Xxxxxxxx have no agreements with any
third parties that would (a) prevent Novint and Xxxxxxxx from entering into this
agreement, granting the License, and conducting the Research and Development;
(b) be breached by this agreement becoming effective or the fulfillment of the
obligations of Novint and Xxxxxxxx; and/or (c) invalidate this agreement in any
respect;
(x) that Novint is a corporation duly organized, existing and
in good standing under the laws of New Mexico. It is acknowledged that Novint
intends to reincorporate in Delaware at an appropriate time;
(xi) that Novint and Xxxxxxxx shall employ all reasonable and
available means to invoke formal protection of the intellectual property arising
out of or relating to the Novint Technologies in all appropriate jurisdictions
to which the parties agree;
(xii) that Novint and Xxxxxxxx believe in good faith (and are
aware of no contradictory facts) that the inventions and products to be derived
from the Novint Technologies within the Field of Use will work, that they will
be commercially mass-producible at low cost, that they are practical and safe,
and that they will substantially perform to the standards set forth in the
Milestone Timetable; and
11
XXXX - CONFIDENTIAL TREATMENT REQUESTED
(xiii) that all Novint Stock, when issued to MHTX, will have
been validly issued, will be fully paid, and will be free of any liens or
encumbrances, other than those created by or imposed upon the holders thereof
voluntarily by agreement or otherwise through no action of Novint or Xxxxxxxx.
(b) MHTX covenants, represents and warrants that to the best of its
knowledge, information and belief, without independent investigation:
(i) that MHTX is a corporation duly organized, existing and in
good standing under the laws of the state of Delaware;
(ii) that entry into this Agreement (and all related
documents) with Novint and Xxxxxxxx has been duly authorized and approved by the
directors and officers of MHTX, and MHTX has the requisite authority to enter
into this Agreement;
(iii) that there are no claims, whether actual or threatened,
against MHTX, and that MHTX is in compliance with all laws, rules and
regulations to which it is subject;
(iv) that MHTX does not have any agreements with any third
parties that would (a) prevent MHTX from entering into and performing this
Agreement; (b) be breached by this Agreement becoming effective or the
fulfillment of the obligations of MHTX; and/or (c) invalidate this Agreement in
any respect;
(v) that MHTX shall use its best efforts to raise the monies
necessary to fund the Research and Development Fee; and
(vi) that all MHTX Stock, when issued to Xxxxxxxx, xxxx have
been validly issued, will be fully paid, and will be free of any liens or
encumbrances, other than those created by or imposed upon the holders thereof
voluntarily by agreement or otherwise through no action of MHTX; provided,
however, that the MHTX Stock will be subject to restrictions on transfer under
applicable state and/or federal securities laws and regulations.
7. Other Provisions.
(a) Within 30 days of the date this agreement becomes effective,
Novint and Xxxxxxxx shall provide MHTX with a key-man life insurance policy on
the life of Xxxxxxxx, at MHTX's expense, in the amount of US$2,000,000.00 (two
million dollars) listing MHTX as the owner and beneficiary of such policy. In
addition, as soon as reasonably practicable after this agreement becomes
effective, Novint shall obtain (at MHTX's expense), or shall assist MHTX in
obtaining, patent and copyright infringement insurance covering any and all
patents and copyrights related to the Novint Technologies.
(b) The initial term of this agreement shall be the sooner of (i) 3
(three) years from the date this agreement becomes effective; and (ii) the date
that Novint and Xxxxxxxx complete the Milestone Timetable. Thereafter, this
agreement shall automatically renew in perpetuity for successive terms of 1
(one) year each, unless terminated by agreement of the parties or by either
party upon not fewer than 6 (six) months' prior written notice. The termination
of this agreement shall not affect the obligation of any party to pay royalties
to any other party hereto, except as set forth in the next sentence. If Novint
and Xxxxxxxx terminate this Agreement in the absence of an MHTX Breach, then
MHTX shall have no further obligation to pay Novint and Xxxxxxxx the R&D
Royalty. If MHTX terminates this Agreement in the absence of a Novint Breach,
then the License shall become nonexclusive.
12
XXXX - CONFIDENTIAL TREATMENT REQUESTED
(c) It is understood and agreed that Novint and Xxxxxxxx are
independent contractors of MHTX and not employees, officers, or agents, nor will
they hold themselves out as such.
8. Indemnification.
(a) Novint and Xxxxxxxx hereby agree to indemnify, defend and hold
MHTX harmless from and against any and all liability, damage, claims (whether
actual or threatened) or expense (including without limitation reasonable legal
fees) arising out of or relating to the breach by Novint and/or the Xxxxxxxx or
either of them of any representation, warranty, covenant, or provision of this
agreement.
(b) MHTX hereby agrees to indemnify, defend and hold Novint and
Xxxxxxxx harmless from and against any and all liability, damage, claims
(whether actual or threatened) or expense (including without limitation
reasonable legal fees) arising out of or relating to the breach by MHTX of any
representation, warranty, covenant, or provision of this agreement.
9. Notices. Any notice or other communication in connection with this
agreement shall be in writing and delivered by overnight courier and facsimile
addressed to a party hereto at the addresses provided below (or to such person
or address as such party shall specify in writing to the other parties hereto):
If to Novint or Xxxxxxxx:
Xx. Xxxxxx Xxxxxxxx
Novint Technologies, Inc.
0000 Xxxxxxx Xxxxxx XX
Xxxxxxxxxxx, Xxx Xxxxxx 00000
If to MHTX:
Xxxxxx Xxxxxx, CEO
Manhattan Scientifics, Inc.
000 Xxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
And
Xxxx Xxxxxx, COO
Manhattan Scientifics, Inc.
000 Xxxxxxxx Xxxxx
Xxx Xxxxxx, Xxx Xxxxxx 00000
13
XXXX - CONFIDENTIAL TREATMENT REQUESTED
With a Copy to
Xxxxx X. Xxxx, Esq.
Bach & Associates
Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Each party may designate a change of address by notice to the other party,
given at least five (5) days before such change of address is to become
effective.
Any written notice shall be deemed to have been served forty-eight (48)
hours after the date it was transmitted in accordance with the foregoing
provisions.
10. Miscellaneous.
(a) MODIFICATION. This agreement contains the entire understanding
between the parties with respect to the subject matter hereof, and any promises,
representations, warranties or guarantees not herein contained shall have no
force or effect unless in writing, signed by all parties. Neither this agreement
nor any portion or provision hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged.
(b) GOVERNING LAW AND OTHER MATTERS. This agreement and the rights
and obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of New York. Novint, Xxxxxxxx and MHTX
hereby (i) waive any right to trial by jury in any legal proceeding related in
any way to this agreement; (ii) agree that venue of all disputes shall be in New
York County; and (iii) waive any objection and consent to personal jurisdiction,
subject matter jurisdiction and venue of and in the courts located in New York
County.
(c) INVALIDITY. If any part of this agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
(d) BENEFIT OF AGREEMENT. This agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns only and is not intended for the benefit of any other party.
Notwithstanding the foregoing, it is understood and agreed that the services of
Xxxxxxxx hereunder are personal and unique, are not assignable, and the loss
thereof would irreparably injure MHTX.
(e) CAPTIONS. The captions of the various sections and paragraphs of
this agreement have been inserted only for the purpose of convenience. Such
captions are not a part of this agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of the agreement.
(f) INCORPORATION BY REFERENCE. All of the "Whereas" clauses at the
beginning of this agreement, and all of the Schedules and Exhibits annexed
hereto, are hereby incorporated by reference and made a part hereof.
14
XXXX - CONFIDENTIAL TREATMENT REQUESTED
(g) COUNTERPARTS; WHEN EFFECTIVE. This agreement may be executed in
counterparts and/or via facsimile. This agreement shall become effective and
enforceable upon MHTX's receipt of a fully and properly executed original
notarized copy hereof bearing complete and mutually agreed copies of all
schedules referenced herein.
(h) PROHIBITION OF ASSIGNMENT. None of the parties may assign this
agreement to any third party without the prior written consent of all the
parties hereto. Notwithstanding the foregoing, nothing shall prohibit any party
from assigning its right to receive monies pursuant to this agreement to any
third party, provided that the third party agrees that its right to receive
monies is subject to the terms and conditions of this Agreement.
(i) RETURN OF STOCK. Prior to August 1, 2000, the parties shall
create and attach as Schedule D to this Agreement, a schedule of terms and
provisions regarding the return of certain portions of the Novint Stock and/or
the MHTX Stock in the event of an MHTX Breach or a Novint Breach, as
appropriate.
(j) NON-DISCLOSURE. None of the parties (or their respective
officers, directors and employees, as appropriate) shall disclose to third
parties the terms of this Agreement, or the fact that it has been entered into,
prior to August 1, 2000 or such other time to which the parties may agree.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
15
XXXX - CONFIDENTIAL TREATMENT REQUESTED
MANHATTAN SCIENTIFICS, INC.
By:
-------------------------------
Xxxxxx Xxxxxx, Chairman, President and CEO (on his 63rd Birthday)
NOVINT TECHNOLOGIES, INC.
By:
-------------------------------
Xxxxxx Xxxxxxxx, President
XXXXXX XXXXXXXX, Individually
NOTARIZATION OF PARTY SIGNATURES:
MHTX:
NOVINT:
XXXXXXXX:
16
XXXX - CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE A: MILESTONE TIMETABLE
MILESTONES: (THE MILESTONE WILL BE MET BY THE END OF THE MONTH GIVEN)
THIS DOCUMENT IS CONFIDENTIAL.
----------------------------------------------------------------------------- --------------- --------------
CONTRACTUAL MILESTONES FINANCING CUMULATIVE
(RECEIVED AT
END OF MONTH)
----------------------------------------------------------------------------- --------------- --------------
Start $300,000 $300,000
----------------------------------------------------------------------------- --------------- --------------
Month 2 - submit at least 2 more patents. $200,000 $500,000
----------------------------------------------------------------------------- --------------- --------------
Month 3 - beta release of e-Touch haptic programming tools. $200,000 $700,000
----------------------------------------------------------------------------- --------------- --------------
Month 6 - Have ability to demonstrate Web Browser Application. The Web $400,000 $1.1 m
Browser Application will have all the basic functionality needed including
reading in objects, intuitive user interface for mainstream markets, and a
working prototype web site.
----------------------------------------------------------------------------- --------------- --------------
Month 9 - Web Browser Application beta release. This will be a professional $400,000 $1.5 m
looking product that is easy to use. We will work with many beta testers
for feedback. The Web Browser Application will work through a virtual city
to demonstrate playing a game, email, saving files, interacting with others
online, e-commerce, and advertising.
----------------------------------------------------------------------------- --------------- --------------
Month 12 - Content Creation Application beta release. This will include a $TBD
standard set of modeling tools, a reader for a data format (to be likely will
determined), texture application tools, dynamics simulation tools, and be around
store development tools. Overall this will be the core base necessary to $2-4
million create content on the web. for year 2
----------------------------------------------------------------------------- --------------- --------------
Month 15 - Web Browser Application product release $TBD
----------------------------------------------------------------------------- --------------- --------------
Month 18 - Content Creation Application product release $TBD
----------------------------------------------------------------------------- --------------- --------------
----------------------------------------------------------------------------- --------------- --------------
Note: Continuing at month 12 (short term)- Additional Milestones will be $TBD
determined in good faith by Novint and MHTX. MHTX will pay for reasonably
necessary Novint costs (in amounts to be mutually agreed) that are used to
continue to grow and develop applications within MHTX's Field of Use while
royalties are not sufficient to support those costs.
----------------------------------------------------------------------------- --------------- --------------
Note: Continuing (long term) - Additional Milestones will be determined in $0
good faith by Novint and MHTX. MHTX will pay Novint a 30% R&D Royalty as
described in the contract, which will cover R&D and support costs.
----------------------------------------------------------------------------- --------------- --------------
INTERNAL DESCRIPTION OF MILESTONES FOR YEAR 1:
--------------------------------------------------------------------------------
EXPECTED MILESTONES
--------------------------------------------------------------------------------
Month 0: Hire Xxxx Xxxxxxxx, a student programmer. Research office space.
Trademark work. Obtain web domain names IP. Reimburse outstanding fees. Pay
Sandia up front Royalty. Travel to New York and Boston to do demos for MSI board
and SensAble Technologies. Finish setting up company - accounting and legal
documentation, payroll, etc. Begin to convert Sandia code to Novint code.
--------------------------------------------------------------------------------
Month 1: Continue interactions with AOL. Begin initial patent assessments with
Xxxxxx Xxxxx. Help MHTX with PR, marketing, and video work. Buy initial
equipment for programmers. Reincorporate in Delaware. Begin technical
exploration for new IP relevant to our business model. Hire Xxxx Xxxxx as a
graphics programmer. Travel to California for Sony demo and AOL demo. Work on
creating a mainstream user interface with a commercial feel and look. Finish
porting e-Touch to C++ classes. Hire Xxxx Xxxxxxx as VP of sales to help begin
to develop e-Touch as a standard in the haptics market. Travel to Siggraph 2000
at the end of July. Explore relationship with Sandia National Laboratories.
--------------------------------------------------------------------------------
Month 2: Fly Xxxxx Xxxxxx down from Washington State to visit New Mexico and
explore employment at Novint. Submit patent(s) which would be covered under the
Sandia license (i.e. was developed at Sandia,
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
but Novint will still own exclusively. There are over thirty potentially
patentable concepts described in the Sandia License to Novint). Continue
development on e-Touch, the haptic programming API. Develop technologies that
will be patentable and owned by Novint to help secure IP base. Hire
administrative assistant. Begin work to allow many programmers to use e-Touch
API utilizing a modular structure. Explore hiring additional programmers.
Contact Xxx Xxxxxxx at UNM to explore a relationship. Hire Xxxxx Xxxxxx if
appropriate.
--------------------------------------------------------------------------------
Month 3 - Submit several patents on Novint owned technologies (It is expected
that given Novint's technical expertise in the field of haptics and the fact
that we are working within a new mass market domain, the first three months will
produce patentable technologies. At the time of the contract signing, one of the
patents that we expect to file allows users to easily utilize buttons in a new
way and to use them in a 3D domain in a similar way to how toolbars are used in
a 2D domain). Find Beta testers for e-Touch API beta release. Finalize e-Touch
for both internal usage and for outside developers. Beta release of e-Touch API.
Fully move into office space. Have proof of concept demo ready for AOL or others
if needed to show off interface. Continue relationship with IBM, Sony, and AOL.
Possibly obtain funding for complementary technology to the Web Browser
Application.
--------------------------------------------------------------------------------
Month 4 - Begin Web Browser Application as primary development application.
Integrate e-Touch into the Web Browser Application. Begin to create networking
capabilities through sockets, CGI scripts, etc. after researching pros and cons.
Create proof of concept pool, chess, or 3D pong games to demonstrate networking
capabilities. Begin to create 3D city for use in Web Browser Application. Create
a reader for reading in 3D data sets. Do comprehensive research on existing 3D
sites that have no force feedback. Hire network programmer. Begin to try and
establish e-Touch as a standard programming interface in the haptics community.
Do a presentation at the Phantom Users Group workshop early October in Boston.
--------------------------------------------------------------------------------
Month 5 - Continue development of 3D city. Create easy to use connection to log
onto virtual city. Upload virtual city to a server for initial testing. Begin
Avatar development (an avatar is a representation of a person in a virtual
environment). Begin to develop specific buildings in the virtual city such as a
pool hall, a mall, and a post office. Create 3D analogies of common 2D
interactions such as moving back a page (in 3D this would be a teleporter
system, for example), hyperlinks, search engines, and downloading files.
Continue work on the user interface as it specifically relates to a Web Browser
Application. Begin relations with a potential partner for creating the first
real e-Touch web page (this will likely be a toy company, an automobile
manufacturer, or a similar company). Production release of e-Touch API.
--------------------------------------------------------------------------------
Month 6 - Finalize 3D city. Have initial avatars and a system for creating
artificial avatars. Finalize usable proof-of-concept buildings in primary areas
of interest such as gaming area, post office, and mall. Have available a
proof-of-concept demo to show off Web Browser Application. Meet with AOL again
and demonstrate a compelling use of the technology. Begin comprehensive research
on how companies can effectively incorporate large amounts of data (i.e. their
catalog) into this new type of web site and perhaps approach a potential partner
for this problem. Begin to interact with potential beta testers. Over the next
year, Xxxx Xxxxxxx travel to various companies to work on establishing e-Touch
as a standard API.
--------------------------------------------------------------------------------
Month 7 - Continue development of further buildings in virtual city and the Web
Browser Application's interactions with them such as meeting places like coffee
shops or lecture halls and buildings such as movie theatres. Begin to look into
2D capabilites such as mouse control and viewing of conventional 2D web sites.
Further develop networking capabilities. Also, do further research on existing
3D file formats and determine which formats should be able to be utilized with
the Web Browser Application. Submit further patents on Novint IP.
--------------------------------------------------------------------------------
Months 8,9 - Do market research on Web Browser Application usability. Based on
market research and our milestone history, determine which areas are the most
important to enhance in the Web Browser Application. Finalize the polished Web
Browser Application and make it publicly available off our web site for its Beta
release.
--------------------------------------------------------------------------------
Month 10 - Based on feedback from Beta testers continue to enhance the Web
Browser Application. Take existing software that was used in creating initial
content for the virtual city and begin to create Content Creation Application
for web masters. Begin interface for easily incorporating content from existing
3D packages and libraries, and adding haptic feedback to these objects. Begin
VAR sales from SensAble technologies. Begin work on initial modeling tools and
possibly integration with SensAble technology's Freeform product or a lighter
version. Begin to more actively seek a source for financing beyond year one,
given the Web Browser Application beta release.
--------------------------------------------------------------------------------
Months 11,12 - Continue to improve Web Browser Application based on customer
feedback. Beta release of Content Creation Application. Obtain financing for
beyond year one either from MSI or cooperatively with MSI from a 3rd party.
--------------------------------------------------------------------------------
SUMMARY OF TIMELINE.
Months 1-3: develop e-Touch haptic programming interface.
Months 4-6: develop Web Browser Application demo.
Months 7-9: develop Web Browser Application for beta release.
Months 10-12: develop Content Creation Application demo.
WEB BROWSER APPLICATION MINIMUM FEATURES AND CONFIGURATION:
o Mainstream, professional user interface that is easily used by an average
person and is polished, visually appealing, and commercially appealing.
o Compatability with existing interaction metaphors to maximize consumer's
familiarity with current interfaces and to minimize the learning curve
associated with moving to our 3D technology.
o Ability to easily log into a virtual web site that is supported through
standard internet domain names. Novint will create a virtual web site at
xxx.xxxxxxxxx.xxx that will be able to be accessed by the Web Browser
Application.
o Strong metaphor of a personal space including analogies to everyday
objects that people easily understand. Ability to tie a user's personal
space into a 3D environment.
o Compatibility with the Phantom haptic interface and a typical mouse.
o Ability to read in a 3D data format for virtual objects, textures,
dynamics, etc. The 3D format will allow the creation of virtual,
touch-enabled environments.
o Capabilities for interactions between many people. This includes avatar
support and personal interaction between avatars.
o Capability to read content for the purposes of e-commerce, gaming,
personal interaction, advertising, communication, and general content.
o Strong emphasis on utilization of Novint Patents.
o Foundation based on both the e-Touch API (Application Programming
Interface) and a large amount of consumer testing.
o Compatibility with existing 2D Internet sites and protocols. The level of
compatibility will in large part be determined by user testing.
CONTENT CREATION APPLICATION MINIMUM FEATURES AND CONFIGURATION:
o Mainstream, professional user interface that is easily used by a
professional web developer.
o Ability to create an entire web site that can be accessed by the Web
Browser Application. The Content Creation Application will have the
ability to create a finished, useful, commercially appealing, and visually
appealing web site.
o Ability to create a virtual web site that is supported through standard
internet domain names.
o Use of the same IP base, and general look and feel utilized in the Web
Browser Application.
o Compatibility with Phantom haptic interface and the mouse.
o Ability to read in virtual objects, create virtual objects, create
textures, create dynamics, etc., and save the data into a 3D format. The
3D format will represent virtual, touch-enabled environments.
o Capability to create content for the purposes of e-commerce, gaming,
personal interaction, advertising, communication, and general content.
EXPLANATION OF IP STRATEGY.
The general IP strategy is to create a base of patentable concepts that would
help to prevent a future competitor from copying our Web Browser Application and
haptic user interface. IP protection through patents is a core aspect to
Novint's strategy. Additionally, we will strongly market the e-Touch trademark
as a standard for all haptic user interfaces - the future of how people will use
computers. Currently there are two patents pending from Sandia National
Laboratories and the existing copyrighted FLIGHT source code, which were
licensed exclusively to Novint in the field of use, human-computer interfaces.
As part of the license, Novint will have the same exclusive rights to any
additional patents that are issued which were based on the initial work done at
Sandia. In a technology advance disclosure submitted to Sandia, there are
34 additional potentially patentable concepts in existence now. These concepts
were determined with the criteria that they be useful, non-obvious, and reduced
to practice. A majority of the concepts relate to making the user interface, 3D
windowing system, and navigation intuitive to a user. Several of the potentially
patentable ideas relate to haptic rendering techniques and other haptic
concepts. In working with a patent council, we expect that the most valuable of
the concepts will lead to strong additional patents.
It is also expected that soon after receiving funding, Novint will develop and
reduce to practice other areas of IP, which will add strong value to its
existing base. This is expected due to the expertise in the field of haptics
present within Novint, the new challenges that will be presented when moving
into a commercial area such as internet applications, and Novint's technical
team's ability and history in solving such problems. Again, a large part of the
IP protection will be focused on the human-computer interface which will help to
protect the ease of use for the Web Browser Application (an essential component
to a mainstream market) from competitors, and will help to protect the e-Touch
programming interface.
17
XXXX - CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE B
DESCRIPTION OF EXISTING NOVINT
INTELLECTUAL PROPERTY
(subsequently developed IP to be included)
TRADEMARKS:
1. Application for Xxxx "e-Touch".
2. Application for Xxxx "Novint".
3. Application for Logo.
PATENTS:
COPYRIGHTS:
18
XXXX - CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE C: DETAILED BUDGET
MILESTONES timeline begins - July, 2000 Web Browser beta release (2/2001)
EXPENSE CATEGORY EXPENSE NAME RATE FT PT WHEN 1 2
---------------- ------------ ---- -- -- ---- ---------- --------
EMPLOYEES
Engineering Chief Technology Officer 110,000.00 1 15 - -
Programmer - Haptics 85,000.00 1 2 - 7,083.33
Programmer - Graphics 80,000.00 1 1 6,666.67 6,666.67
Programmer - Network 65,000.00 1 4 - -
Student 20,000.00 1 1 1,666.67 1,666.67
Student 20,000.00 1 2 - 1,666.67
Hardware Tech 45,000.00 1 9 - -
QA / Test 65,000.00 1 18 - -
Sys Admin 50,000.00 1 13 - -
SDK Tech Writer 45,000.00 1 18 - -
Marketing / Biz Dev VP Marketing 125,000.00 1 14 - -
Product Manager 100,000.00 1 18 - -
VP Sales/Biz Dev Mgr 125,000.00 1 1 10,416.67 10,416.67
PR/Marcom/Programs 48,000.00 1 13 - -
Administration CE0 90,000.00 1 1 7,500.00 7,500.00
President 135,000.00 1 8 - -
Office Mgr 45,000.00 1 18 - -
Controller 75,000.00 1 20 - -
Administrative Assistant 30,000.00 1 2 - 2,500.00
Total Heads 17 4 7
Total NEW Heads 4 3
Total Direct Headcount 17 26,250.00 37,500.00
Fringe @ 30% 7,875.00 11,250.00
TOTAL HEADCOUNT 34,125.00 48,750.00
TOTAL CUM HEADCOUNT 34,125.00 82,875.00
OTHER EXPENSES
Licensing fees - -
Cash for initial VAR purchases - -
Rent - 5,000.00
Equipment 20,000.00 15,000.00
Furniture - 1,000.00
Travel & Entertainment 4,000.00 8,000.00
Phone/Fax 300.00 500.00
Printing 200.00 200.00
Consultants 2,000.00 2,000.00
Web Development 3,000.00 -
Legal 20,000.00 5,000.00
Reimbursements - -
Patents 15,000.00 15,000.00
Bookkeeping 200.00 200.00
Recruiters - 5,000.00
Market Research - 3,000.00
PR 2,000.00 2,000.00
TOTAL OTHER EXPENSES 66,700.00 61,900.00
TOTAL CUM OTHER 66,700.00 128,600.00
PREVIOUS EXPENSES 80,000.00
EMPLOYEES + OTHER 100,825.00 110,650.00
CUMULATIVE TOTAL 180,825.00 291,475.00
FINANCING (START AT $300,000).
RECEIVED AT BEGINNING OF GIVEN
MONTH.
CUMULATIVE FINANCING (NOTE:
MUST BE MORE THAN CUMULATIVE
TOTAL ABOVE) 300,000.00 300,000.00
EXPENSE CATEGORY EXPENSE NAME 3 4 5 6
---------------- ------------ -------- -------- -------- --------
EMPLOYEES
Engineering Chief Technology Officer - - - -
Programmer - Haptics 7,083.33 7,083.33 7,083.33 7,083.33
Programmer - Graphics 6,666.67 6,666.67 6,666.67 6,666.67
Programmer - Network - 5,416.67 5,416.67 5,416.67
Student 1,666.67 1,666.67 1,666.67 1,666.67
Student 1,666.67 1,666.67 1,666.67 1,666.67
Hardware Tech - - - -
QA / Test - - - -
Sys Admin - - - -
SDK Tech Writer - - - -
Marketing / Biz Dev VP Marketing - - - -
Product Manager - - - -
VP Sales/Biz Dev Mgr 10,416.67 10,416.67 10,416.67 10,416.67
PR/Marcom/Programs - - - -
Administration CE0 7,500.00 7,500.00 7,500.00 7,500.00
President - - - -
Office Mgr - - - -
Controller - - - -
Administrative Assistant 2,500.00 2,500.00 2,500.00 2,500.00
Total Heads 7 8 8 8
Total NEW Heads 0 1 0 0
Total Direct Headcount 37,500.00 42,916.67 42,916.67 42,916.67
Fringe @ 30% 11,250.00 12,875.00 12,875.00 12,875.00
TOTAL HEADCOUNT 48,750.00 55,791.67 55,791.67 55,791.67
TOTAL CUM HEADCOUNT 131,625.00 187,416.67 243,208.33 299,000.00
OTHER EXPENSES
Licensing fees - - - -
Cash for initial VAR purchases - - - -
Rent 5,000.00 5,000.00 5,000.00 5,000.00
Equipment 15,000.00 4,000.00 4,000.00 4,000.00
Furniture 1,000.00 1,000.00 1,000.00 1,000.00
Travel & Entertainment 10,000.00 10,000.00 10,000.00 10,000.00
Phone/Fax 500.00 500.00 500.00 500.00
Printing 200.00 200.00 200.00 200.00
Consultants 2,000.00 2,000.00 2,000.00 2,000.00
Web Development 300.00 300.00 300.00 300.00
Legal 3,000.00 3,000.00 3,000.00 3,000.00
Reimbursements - - - -
Patents 15,000.00 - - -
Bookkeeping 200.00 200.00 200.00 200.00
Recruiters - - 10,000.00 -
Market Research 3,000.00 3,000.00 3,000.00 3,000.00
PR 2,000.00 2,000.00 2,000.00 2,000.00
TOTAL OTHER EXPENSES 57,200.00 31,200.00 41,200.00 31,200.00
TOTAL CUM OTHER 185,800.00 217,000.00 258,200.00 289,400.00
PREVIOUS EXPENSES
EMPLOYEES + OTHER 105,950.00 86,991.67 96,991.67 86,991.67
CUMULATIVE TOTAL 397,425.00 484,416.67 581,408.33 668,400.00
FINANCING (START AT $300,000).
RECEIVED AT BEGINNING OF GIVEN
MONTH. 200,000.00 200,000.00
CUMULATIVE FINANCING (NOTE:
MUST BE MORE THAN CUMULATIVE
TOTAL ABOVE) 500,000.00 700,000.00 700,000.00 700,000.00
EXPENSE CATEGORY EXPENSE NAME 7 8 9 10
---------------- ------------ --------- --------- --------- ---------
EMPLOYEES
Engineering Chief Technology Officer - - - -
Programmer - Haptics 7,083.33 7,083.33 7,083.33 7,083.33
Programmer - Graphics 6,666.67 6,666.67 6,666.67 6,666.67
Programmer - Network 5,416.67 5,416.67 5,416.67 5,416.67
Student 1,666.67 1,666.67 1,666.67 1,666.67
Student 1,666.67 1,666.67 1,666.67 1,666.67
Hardware Tech - - 3,750.00 3,750.00
QA / Test - - - -
Sys Admin - - - -
SDK Tech Writer - - - -
Marketing / Biz Dev VP Marketing - - - -
Product Manager - - - -
VP Sales/Biz Dev Mgr 10,416.67 10,416.67 10,416.67 10,416.67
PR/Marcom/Programs - - - -
Administration CE0 7,500.00 7,500.00 7,500.00 7,500.00
President - 11,250.00 11,250.00 11,250.00
Office Mgr - - - -
Controller - - - -
Administrative Assistant 2,500.00 2,500.00 2,500.00 2,500.00
Total Heads 8 9 10 10
Total NEW Heads 0 1 1 0
Total Direct Headcount 42,916.67 54,166.67 57,916.67 57,916.67
Fringe @ 30% 12,875.00 16,250.00 17,375.00 17,375.00
TOTAL HEADCOUNT 55,791.67 70,416.67 75,291.67 75,291.67
TOTAL CUM HEADCOUNT 354,791.67 425,208.33 500,500.00 575,791.67
OTHER EXPENSES
Licensing fees - - - -
Cash for initial VAR purchases - - - 40,000.00
Rent 5,000.00 5,000.00 5,000.00 5,000.00
Equipment 4,000.00 4,000.00 4,000.00 4,000.00
Furniture 1,000.00 1,000.00 1,000.00 1,000.00
Travel & Entertainment 10,000.00 15,000.00 15,000.00 15,000.00
Phone/Fax 500.00 500.00 500.00 500.00
Printing 200.00 200.00 200.00 200.00
Consultants 4,000.00 4,000.00 4,000.00 4,000.00
Web Development 300.00 300.00 300.00 300.00
Legal 3,000.00 3,000.00 3,000.00 3,000.00
Reimbursements - - - -
Patents 15,000.00 - 15,000.00 -
Bookkeeping 500.00 500.00 500.00 500.00
Recruiters - - - -
Market Research 3,000.00 3,000.00 3,000.00 3,000.00
PR 2,000.00 2,000.00 4,000.00 6,000.00
TOTAL OTHER EXPENSES 48,500.00 38,500.00 55,500.00 82,500.00
TOTAL CUM OTHER 337,900.00 376,400.00 431,900.00 514,400.00
PREVIOUS EXPENSES
EMPLOYEES + OTHER 104,291.67 108,916.67 130,791.67 157,791.67
CUMULATIVE TOTAL 772,691.67 881,608.33 1,012,400.00 1,170,191.67
FINANCING (START AT $300,000).
RECEIVED AT BEGINNING OF GIVEN
MONTH. 400,000.00 400,000.00
CUMULATIVE FINANCING (NOTE:
MUST BE MORE THAN CUMULATIVE
TOTAL ABOVE) 1,100,000.00 1,100,000.00 1,100,000.00 1,500,000.00
EXPENSE CATEGORY EXPENSE NAME 11 12 TOTALS
---------------- ------------ --------- -------- ----------
EMPLOYEES
Engineering Chief Technology Officer - - -
Programmer - Haptics 7,083.33 7,083.33 77,916.67
Programmer - Graphics 6,666.67 6,666.67 80,000.00
Programmer - Network 5,416.67 5,416.67 48,750.00
Student 1,666.67 1,666.67 20,000.00
Student 1,666.67 1,666.67 18,333.33
Hardware Tech 3,750.00 3,750.00 15,000.00
QA / Test - - -
Sys Admin - - -
SDK Tech Writer - - -
Marketing / Biz Dev VP Marketing - - -
Product Manager - - -
VP Sales/Biz Dev Mgr 10,416.67 10,416.67 125,000.00
PR/Marcom/Programs - - -
Administration CE0 7,500.00 7,500.00 90,000.00
President 11,250.00 11,250.00 56,250.00
Office Mgr - - -
Controller - - -
Administrative Assistant 2,500.00 2,500.00 27,500.00
Total Heads 10 10
Total NEW Heads 0 0 10
Total Direct Headcount 57,916.67 57,916.67 558,750.00
Fringe @ 30% 17,375.00 17,375.00 167,625.00
TOTAL HEADCOUNT 75,291.67 75,291.67 726,375.00
TOTAL CUM HEADCOUNT 651,083.33 726,375.00
OTHER EXPENSES
Licensing fees - - -
Cash for initial VAR purchases - - 40,000.00
Rent 5,000.00 5,000.00 55,000.00
Equipment 4,000.00 4,000.00 86,000.00
Furniture 1,000.00 1,000.00 11,000.00
Travel & Entertainment 15,000.00 15,000.00 137,000.00
Phone/Fax 500.00 500.00 5,800.00
Printing 200.00 200.00 2,400.00
Consultants 4,000.00 4,000.00 36,000.00
Web Development 300.00 300.00 6,000.00
Legal 3,000.00 3,000.00 55,000.00
Reimbursements - - -
Patents - 15,000.00 90,000.00
Bookkeeping 500.00 500.00 4,200.00
Recruiters - - 15,000.00
Market Research 3,000.00 3,000.00 33,000.00
PR 4,000.00 4,000.00 34,000.00
TOTAL OTHER EXPENSES 40,500.00 55,500.00 610,400.00
TOTAL CUM OTHER 554,900.00 610,400.00
PREVIOUS EXPENSES 80,000.00
EMPLOYEES + OTHER 115,791.67 130,791.67 1,336,775.00
1,416,775.00
CUMULATIVE TOTAL 1,285,983.33 1,416,775.00
FINANCING (START AT $300,000).
RECEIVED AT BEGINNING OF GIVEN
MONTH.
CUMULATIVE FINANCING (NOTE:
MUST BE MORE THAN CUMULATIVE
TOTAL ABOVE) 1,500,000.00 1,500,000.00
19
XXXX - CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE D
PROVISIONS REGARDING RETURN OF STOCK
(To Be Established by July 30, 2000)
A. Return of Novint Stock. The Novint Stock delivered to MHTX shall be
subject to return by MHTX in accordance with the following:
If MHTX fails to fund (or procure the funding of) $1.5 million of
the Research and Development Fee within 9 months of June 24, 2000,
then MHTX shall return the Novint Stock ratably in proportion to the
amount of such $1.5 million that MHTX has not funded by such time
Accordingly, until such time as such $1.5 million has been funded, MHTX shall
hold and not transfer any portion of the Novint Stock that could become
returnable pursuant to the foregoing.
B. Return of MHTX Stock. The MHTX Stock delivered to Xxxxxxxx shall be
subject to return by Xxxxxxxx in accordance with the following:
(1) 250,000 shares of the MHTX Stock shall be returned to MHTX if Novint
fails to deliver the Web Browser Applications portion of the First
Major Milestone within 15 months of June 24, 2000.
(2) 250,000 shares of the MHTX Stock shall be returned to MHTX if Novint
fails to deliver the Content Creation Applications portion of the
First Major Milestone within 18 months of June 24, 2000.
Accordingly, until such time as Novint and Xxxxxxxx complete the First Major
Milestone, Xxxxxxxx shall hold and not transfer any portion of the MHTX Stock
that could become returnable pursuant to the foregoing.
20
XXXX - CONFIDENTIAL TREATMENT REQUESTED
