Document:

Colombia
      Clean Power & Fuels,
inc

                

        

      

    

     

    December
3, 2010

     

    Barry M.
Kitt

    Pinnacle
Family Office Investments, L.P.

    4965
Preston Park Blvd

    Suite
240

    Plano,
TX  75093

     

    Dear
Barry:

     

    This
letter (the “Letter”) supplements the Subscription Agreement dated December 3,
2010 (the “Agreement”) by and between Colombia Clean Power & Fuels, Inc.
(the “Issuer”) and Pinnacle Family Office Investments, L.P. (“Pinnacle”),
subject to the terms and conditions set forth herein.  Capitalized
terms herein shall have the same meaning as the Agreement.

     

    1.      Right of First
Refusal.  The Issuer hereby grants to Pinnacle the right of
first refusal to purchase up to 12.5% of any offering of New Securities (defined
herein), subject to the limitations, terms and conditions set forth
herein.

     

    a.      Subject
to the limitations set forth in Section 1.b., “New Securities” shall mean any
Preferred Securities, Debt Securities or Common Stock (each as defined herein)
issued by the Issuer after the date of the Agreement.

     

    (i)         “Preferred
Securities” shall mean any preferred stock of the Issuer, and rights,
convertible securities, options or warrants to purchase such preferred
stock;

     

    (ii)        “Debt
Securities” shall mean any convertible or non-convertible indebtedness of the
Issuer, whether accompanied by warrants or otherwise, and rights, convertible
securities, options or warrants to purchase such indebtedness; and

     

    (iii)       “Common
Stock” shall mean any shares of common stock of the Issuer, and rights, convertible securities, options or
warrants to purchase such Common Stock.

     

    b.      The
term “New Securities” shall not include:

     

    (i)         the
Notes and the Investor Warrants;

     

    (ii)        the
Common Stock or the Preferred Stock (as such term is defined in the Notes)
issuable upon conversion of the Notes or exercise of the Investor Warrants, as
applicable;

     

    
      (iii)      
securities
issued or issuable to officers, employees, directors, consultants, placement
agents, and other service providers of the Issuer (or any subsidiary) pursuant
to stock grants, option plans, purchase plans, agreements or other employee
stock incentive programs or arrangements approved by the Board of Directors of
the Issuer;

    

    

    
      4265 San
Felipe Street, Suite 1100 ▪ Houston, TX 77027
▪
info@colombiacleanpower.com 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Page 2 of 3

     

    (iv)        securities
issued pursuant to the conversion or exercise of any convertible or exercisable
securities outstanding as of the date of this Agreement;

     

    (v)         securities
offered pursuant to a bona fide, firmly underwritten public offering pursuant to
a registration statement filed under the Securities Act;

     

    (vi)        securities
issued or issuable pursuant to the acquisition of another corporation by the
Issuer by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture agreement, provided, that such issuances
are approved by the Board of Directors of the Issuer;

     

    (vii)        securities
issued or issuable to banks, equipment lessors or other financial lending
institutions pursuant to a commercial leasing or debt financing transaction
approved by the Board of Directors of the Issuer; and

     

    (viii)       any
right, option or warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to subsections (i)
through (vii) above.

     

    c.      If
the Issuer proposes to issue New Securities, it shall give the Subscriber
written notice of its intention, describing the type of New Securities, their
price and the general terms upon which the Issuer proposes to issue the New
Securities.  The Subscriber shall have fifteen (15) days after any
such notice is mailed or delivered to agree to purchase up to the applicable
percentage of such New Securities for the price and upon the terms specified in
the notice by giving written notice to the Issuer and stating therein the
quantity of New Securities to be purchased.

     

    d.      If
the Subscriber fails to exercise fully the right of first refusal within such
fifteen (15) day period (the “Election Period”), the Issuer shall have one
hundred and twenty (120) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within one hundred and twenty (120) days from the date of such
agreement) to sell that portion of the New Securities with respect to which the
Subscriber’s right of first refusal option set forth herein was not exercised,
at a price and upon terms no more favorable to the purchasers thereof than
specified in the Issuer’s notice delivered pursuant to this
Letter.  If the Issuer has not sold within such one hundred and twenty
(120) day period following the Election Period, or such one hundred and twenty
(120) day period following the date of such agreement, the Issuer shall not
thereafter issue or sell any New Securities without again offering such
securities to the Subscriber as provided in this Letter.

     

    e.      The
Right of First Refusal granted herein shall expire on the earlier of: (i) the final closing of an offering of New
Securities with minimum gross proceeds of ten million dollars ($10,000,000), or
(ii) the second anniversary of the
date of the Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Page 3 of 3

     

    If the
foregoing is in accordance with your understanding, please sign two copies and
return one to me, whereupon this letter shall constitute a binding agreement
between the Issuer and Steelhead.

     

    
      
        	 
      	
                Sincerely
      yours,

              
	 
      	 
      
	 
      	
                COLOMBIA
      CLEAN POWER & FUELS, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Edward P. Mooney

              
	 
      	
                Name: 
       Edward P. Mooney

              
	 
      	
                Title:   
       Chief Executive Officer

              

      

    

    

    Confirmed
and agreed to this 3rd day of
December, 2010

    

    PINNACLE
FAMILY OFFICE INVESTMENTS, L.P.

    

    
      
        	
                By:

              	
                /s/Barry M. Kitt

              	 
      
	
                Name:

              	
                Barry
      M. Kitt

              	 
      
	
                Title:

              	
                Manager,,
      Pinnacle Family Offices, L.L.C.

              	 
      
	 
      	
                the
      General Manager of Pinnacle Family Office Investments,
L.P.

              	 
      
	 
      	
                dba
      Pinnacle III InvestmentsUnassociated Document

    

    Exhibit
10.31

    

    [ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

    

    FIRST
AMENDMENT TO THE LICENSE AGREEMENT BETWEEN THE BOARD OF TRUSTEES OF THE
UNIVERSITY OF ILLINOIS AND QUARK BIOTECHNOLOGY, INC.

    

    THIS
FIRST AMENDMENT TO THE EXCLUSIVE LICENSE AGREEMENT (the “First Amendment”) is
made and entered into as of March 23, 2007 (“Amendment Date”) by and between THE
BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS, a body corporate and politic of
the State of Illinois, 1737 W. Polk St., Chicago, IL 60612 (“UNIVERSITY”) and
QUARK BIOTECH, INC a California corporation, with a principal place of business
at 6536 Kaiser Drive, Fremont, CA 94555 (“LICENSEE”).

    

    WHEREAS,
UNIVERSITY and LICENSEE entered into an EXCLUSIVE LICENSE AGREEMENT effective
September 3, 1999 dated (“Agreement”) to license certain
technology;

    

    WHEREAS,
UNIVERSITY and LICENSEE wish to amend the Agreement in the manner set forth in
this First Amendment;

    

    NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree to amend the Agreement as follows:

    

    Amendments:

    

    I.   ARTICLE IV- PAYMENTS
- Sections 4.1 and 4.6 of the Agreement shall be deleted and replaced with the
following:

    

    
      	
              4.1

            	
              For
      the rights, privileges and licenses granted hereunder, LICENSEE shall pay
      to the UNIVERSITY, in the manner hereinafter provided, on a country by
      country basis, until the end of the last to expire patent of the Patent
      Rights in such country, or until this Agreement shall be terminated, as
      hereinafter provided, whichever occurs
first:

            

    

    

    
      	
               
      

            	
              a)

            	
              in
      the event of sales of Licensed Products or Licensed Processes by LICENSEE
      or any Affiliate -a royalty in an amount equal to [ * ] of the aggregate
      Net Sales by LICENSEE or any Affiliate, of the Licensed Products or
      Licensed Processes.

            

    

    

    
      	
               
      

            	
              b)

            	
              in
      the event of a Sublicense -

            

    

    

    (i) a [ *
] share of all lump-sum payments received from sublicensees, including but not
limited to upfront fees and milestone payments, and a pass-through royalty in an
amount equal to [ * ] of the royalty payments received by LICENSEE from
sublicensees, based on sales of Licensed Products or Licensed Processes by
sublicensees, exclusive of income or transfer interests for value covered by
Section 4.1(b)(ii) below; and amounts received by

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    LICENSEE
as reimbursement of costs and expenses related to research or development of
Licensed Products;

    

    (ii) a [
* ] share of all equity received from sublicensees that are attributable to this
License.  No payments will be made under this Section 4.1(b)(ii) to
the extent already covered under Section 4.1(b)(i); and

    

    (iii) a [
* ] license fee payment due within [ * ] of execution of a sublicense agreement
granting a third party an exclusive Sublicense for [ * ].

    

    
      	
               
      

            	
              c)

            	
              a [
      * ] license fee to be payable within [ * ] of execution of this First
      Amendment.

            

    

    

    
      	
               
      

            	
              d)

            	
              a [
      * ] license fee payment due within [ * ] of [ *
  ].

            

    

    

    It is
clarified that the above milestone payments will be due [ * ] Licensed Product
to achieve the relevant milestone event, and [ * ] shall be due hereunder with
respect to each milestone events [ * ] such Licensed Products that achieve such
milestone [ * ] countries in which they are achieved.

     

    
      	
              4.6

            	
              In
      the event that the LICENSEE’s, the Affiliate’s or its Sublicensee’s
      development, manufacture, use or sale of a Licensed Product or Licensed
      Process would constitute an infringement of patent right or intellectual
      property right of any third party, the Parties shall together use their
      reasonable endeavors to obtain an appropriate license from such third
      party. If such license requires LICENSEE to pay royalties to such third
      party, the royalty due and payable to UNIVERSITY under Sections 4.1(a) and
      (b) of this Agreement for sale of the Licensed Product or Licensed Process
      shall be reduced by [ * ] the amount which the LICENSEE is required to pay
      to said third party, provided that the royalty due to the UNIVERSITY
      hereunder shall not be reduced by more than [ * ]. The UNIVERSITY
      acknowledges for the purposes of this section 4.6, that the LICENSEE has
      obtained from Atugen AG and Alnylam Pharmaceuticals Inc. licenses for RNAi
      technology and relevant intellectual
property.

            

    

    

     

    II.   ARTICLE XIII-
TERMINATION - Section 13.4 shall be added to Article XIII:

     

    

    13.4         Upon
termination of this Agreement for any reason, all Sublicenses shall
terminate.  Provided that a Sublicensee is in compliance in all
material respects with the terms of its Sublicense in effect on the date of
termination, the UNIVERSITY will grant such Sublicensee that so requests, a
license with royalty terms and such use rights and other terms as are
substantially similar to this Agreement.  In no event shall UNIVERSITY
have any obligations of any nature whatsoever with respect to (i) any past,
current or future obligations that LICENSEE may have had, or may in the future
have, for the payment of any obligations owing to Sublicensee pursuant to such
Sublicense, (ii) any past obligations whatsoever, and (iii) any future
obligations to Sublicensee beyond

     

    [ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    those to
LICENSEE as set forth herein.

     

    

    

    All other
terms set forth in the Agreement shall remain unchanged.

    

    IN
WITNESS WHEREOF, the parties have executed this First Amendment effective as of
March 23, 2007.

    

    

    THE
BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS

    

    
      	
              By

            	 
      	
              /s/
      Walter K. Knorr

            	 
      	
              Date:

            	 
      	
              4/9/07

            
	 
      	 
      	
              Walter
      K. Knorr, Comptroller

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              By

            	 
      	
              /s/
      Michele M. Thompson

            	 
      	
              Date:

            	 
      	
              4/9/07

            
	 
      	 
      	
              Michele
      M. Thompson, Secretary

            	 
      	 
      	 
      	 
      

    

    

    

    QUARK
BIOTECH, INC.

    

    

    
      	
              By

            	 
      	
              /s/
      D. Zurr

            	 
      	
              Date:

            	 
      	
              4/10/07

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Printed
      Name:

            	 
      	
              Daniel
      Zurr, Ph.D.

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Title:

            	 
      	
              President
      & CEO

            	 
      	 
      	 
      	 
      

    

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

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