Document:

exhibit10_1.htm

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”), initially entered into as of the 1st day of August 2010, by and between John Wiley & Sons, Inc., a New York corporation, with offices at 111 River Street, Hoboken, New Jersey 07030 (hereinafter referred to as the “Company”), and Mark J. Allin presently residing at xxxxxxxxxx , (hereinafter referred to as “Executive”), is hereby amended and restated this 1st  day of June 2015.

WHEREAS, the executive is currently employed as President and CEO of the Company, and Executive desires to serve the Company in such capacity.

 

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.           Employment.  The Company agrees to employ Executive and Executive agrees to be employed by the Company for the Period of Employment (as defined below) and upon the terms and conditions provided in this Agreement.

 

2.           Position and Responsibilities.

 

(a)           During the Period of Employment, Executive will serve as President and CEO of the Company, and subject to the direction of the Company’s Board of Directors (“Board”) will perform such duties and exercise such supervision with regard to the business of the Company as are associated with such position, as well as such other duties as may be prescribed from time to time by the Board.  Executive shall be subject to and shall observe and carry out such reasonable rules, regulations, policies, directions and restrictions consistent with the duties to be performed by Executive hereunder as the Company shall from time to time establish.

 

(b)           Executive will, during the Period of Employment, devote Executive’s full business time and attention to the faithful and competent performance of services for the Company.  Executive hereby represents and warrants to the Company that Executive has no obligations under any existing employment or service agreement and that Executive’s performance of the services required of Executive hereunder will not conflict with any other existing obligations or commitments.  Nothing in this Agreement shall preclude Executive from engaging, consistent with Executive’s duties and responsibilities hereunder, in charitable and community affairs.

 

(c)           Executive shall perform the duties contemplated hereunder at the principal executive office of the Company and at such other locations as may be reasonably necessary to the performance of such duties, and Executive shall do such traveling as may be reasonably required of Executive in the performance of such duties.

 

3.           Period of Employment.  The period of Executive’s employment under this Agreement (the “Period of Employment”) will begin on June 1, 2015 (the “Commencement Date”), and end on the second anniversary thereof, subject to earlier termination and further renewal as provided in this Agreement.  Executive’s Period of Employment shall automatically renew for subsequent two year periods, subject to the terms of this Agreement, unless either party gives written notice 90 days or more prior to the expiration of the then existing Period of Employment of Executive’s or the Company’s decision not to renew.  A decision by the Company not to renew other than as a result of Executive’s death or Disability (as defined below), and other than in circumstances which would give rise to a Termination for Cause (as defined below) shall be treated as a Without Cause Termination (as defined below), and so governed by the provisions of Section 9 hereof.

 

4.           Compensation and Benefits.  For all services rendered by Executive pursuant to this Agreement during the Period of Employment, including services as an executive, officer, director or committee member of the Company or any of its subsidiaries or affiliates, Executive will be compensated as follows:

 

(a)           Base Salary.  The Company will pay Executive a fixed base salary (“Base Salary”) of not less than $750,000 per annum.  Executive will be eligible to receive annual increases as deemed appropriate by the Executive Compensation and Development Committee of the Board, in accordance with the Company’s customary procedures regarding the salaries of senior officers.  Base Salary will be payable according to the customary payroll practices of the Company but in no event less frequently than once each month.

 

  

  

  

 

(b)           Executive Compensation Plans.  Executive shall be eligible to participate in all of the Company’s executive compensation plans in effect on the date hereof in which any senior executive of the Company is eligible to participate, including but not limited to the Company’s Executive Annual Incentive Plan (the “EAIP”), the Company’s Annual Strategic Milestones Incentive Plan, and the Company’s Executive Long Term Incentive Plan (the “ELTIP”), or equivalents, as such plans are amended or restated from time to time, for so long as such plans remain in effect.  Nothing in this Agreement shall require the Company or its affiliates to establish, maintain or continue any executive compensation plan or restrict the right of the Company or any of its affiliates to amend, modify or terminate any such plan.

 

(c)           Participation in Benefit Plans.  To the extent that Executive’s participation or coverage is not duplicative of that provided under an executive compensation plan or arrangement in which Executive is eligible to participate, the Company shall afford Executive with an opportunity to participate in any health (medical, dental and vision) benefits, disability insurance, life insurance, accident insurance,  qualified savings and non-qualified deferred compensation and any other employee benefits plans, policies or arrangements which the Company maintains for its employees in accordance with the written terms of such plans, policies or arrangements.  Nothing in this Agreement shall require the Company or its affiliates to establish, maintain or continue any benefit plans, policies or arrangements or restrict the right of the Company or any of its affiliates to amend, modify or terminate any such benefit plan, policy or arrangement.

 

Because the Executive has been a participant in the Company’s UK and US retirement plans at various points during his tenure at Wiley, his retirement benefit and benefit under the SERP will be governed by Attachment A.  The terms and conditions of Attachment A are incorporated herein by reference and made a part of this Agreement as if fully set forth herein.

 

(d)           Paid Time Off, Holidays or Temporary Leave. Executive shall be entitled to take up to 30 days of paid time off per calendar year, or such greater amount, if any, as provided in the policies of the Company then applicable to Executive, without loss or diminution of compensation.  Such planned paid time off shall be taken at such time or times consistent with the needs of the Company’s business.  Executive shall further be entitled to the number of paid holidays, and leaves for illness or temporary disability in accordance with the Company’s policies as such policies may be amended from time to time or terminated in the Company’s sole discretion.

 

5.           Other Offices.  Executive agrees to serve without additional compensation, if elected or appointed thereto, as an officer or director of any of the Company’s subsidiaries or affiliates or as any other officer of the Company.

 

6.           Business Expenses.  The Company will reimburse Executive for all reasonable travel and other expenses incurred by Executive in connection with the performance of Executive’s duties and obligations under this Agreement.  Executive will comply with such limitations and reporting requirements with respect to expenses as may be established by Company from time to time and will promptly provide all appropriate and requested documentation in connection with such expenses.

 

7.           Disability.  If Executive becomes Disabled (as defined below) during the Period of Employment, the Company may, in its discretion, hire a permanent replacement to fill the position previously held and to perform the duties previously performed by Executive, provided, however, the Company shall continue Executive’s employment with the Company on an inactive basis to the extent necessary to continue to maintain Executive’s eligibility for benefits available under the Company’s  Group Long-Term Disability Insurance Plan or under any generally similar plan then in effect (the “LTD Plan”) and such other employee benefit plans that are generally available to employees receiving benefits under the LTD Plan, in accordance with the terms of  such plan(s) as they may be amended from time to time.  For purposes of this Agreement, “Disabled” or “Disability” means Executive’s inability, because of mental or physical illness or incapacity, whether total or partial, to perform one or more of the primary duties of Executive’s employment, with or without reasonable accommodation, for a length of time that the Company determines is sufficient to satisfy such obligations as it may have under the Family and Medical Leave Act (“FMLA”) and such “reasonable accommodation” obligations it may have under federal, state or local disability laws.  Upon Executive’s entitlement to receive benefits available under the LTD Plan and such other benefits generally available to employees receiving benefits under the LTD Plan, the Company’s obligation to provide Executive compensation and other benefits pursuant to Section 4 hereof shall cease.  In the event that Executive ceases to be Disabled and Executive is able to return to work and Executive’s former position is not open, the Company will endeavor to find, and will work interactively with Executive to find, a position of comparable responsibility, compensation and benefits and to reinstate Executive to such position, if such a position is available at the conclusion of Executive’s disability leave of absence.  Prior to restoration of Executive to active employment with the Company, Executive shall cooperate in obtaining all fitness for duty certifications from Executive’s treating physician(s) and such other physicians as the Company may request in accordance with the FMLA and federal, state and local disability and worker’s compensation laws.  Within fifteen (15) days of receipt of all medical certification(s) requested by the Company, if the Company does not restore Executive to active employment with the Company, then at that time Executive’s employment with the Company will be deemed to have terminated. Under the policy currently in effect for employees of the Company, such termination will be treated as a Without Cause Termination in accordance with Paragraph 9(a) below, provided the Executive has not then attained the age of 65.  Nothing in this Agreement shall require the Company to continue such policy, and such termination shall be treated in accordance with the policy applicable at the time the Executive becomes disabled.

 

  

  

  

 

8.           Death.  In the event of the death of Executive during the Period of Employment, the Period of Employment will end and the Company’s obligation to make payments under this Agreement will cease as of the date of death, except that the Company will pay Executive’s beneficiary designated for purposes of Executive’s basic life insurance provided by the Company or absent such designation to Executive’s estate, Executive’s Base Salary until the end of the month in which Executive dies, shipment of household goods and air travel for Executive’s family from the US to the UK, and except for any rights and benefits of Executive under the benefit plans and programs of the Company including, without limitation, the SERP (as defined below) in which Executive is a participant, as determined in accordance with the terms and provisions of such plans and programs.  The payout under the EAIP, or equivalent, for the fiscal year in which Executive’s death occurs, shall be paid at the normal time to Executive’s estate pro rata to the date of death.  The payment, in shares, for any executive long term incentive plan established by the Company, the plan cycle of which ends within 12 months after the date of Executive’s death, shall be paid based on actual performance within 2 1⁄2 months after the end of the plan period to Executive’s estate.

 

9.           Effect of Termination of Employment.

 

(a)           Without Cause Termination and Constructive Discharge Absent a Change of Control.  If Executive’s employment terminates during the Period of Employment prior to the occurrence of a Change of Control (as defined below) due to a Without Cause Termination (as defined below) or a Constructive Discharge (as defined below), subject to Executive executing a general release of claims as more fully described in Section 9(e) hereof, then the Company will pay or provide Executive (or Executive’s surviving spouse, estate or personal representative, as applicable) the following payments and/or benefits upon such event:  (i) Base Salary earned but unpaid as of the effective date of such termination of employment; (ii) a lump sum payment equal to the Severance Pay Amount (as defined below); (iii) accelerated vesting of all earned but unvested restricted performance shares/units under any executive long term incentive plan established by the Company; (iv) all payments and benefits to which Executive may be entitled pursuant to the terms and conditions of the SERP; (v) shipment of household goods and air travel for Executive and his family from the US to the UK; and (vi) coverage during the Benefits Continuation Period (as defined below) under the following employee benefit plans or provisions for comparable benefits outside such plans, but only to the extent comparable coverage is not provided by any new employer, (x) the Company’s Group Health Plan, (y) the LTD Plan (as provided under such plan, Executive shall be required to pay the premium), and (z) the Company’s Group Life and Accidental Death and Dismemberment Insurance (at the levels in effect at the date of termination of employment). If coverage under clause (vi) cannot be provided on a tax-advantaged basis under the Company’s employee benefit programs [or would be at unreasonable cost for the Company or not available under the terms of the applicable insurance policies], the Company will make a supplemental lump-sum payment to the Executive such that his after-tax cost of coverage will be no greater than the cost for such coverage to a similarly-situated active employee under the respective program.  Any increase in premium cost resulting from a change in the Executive’s coverage election shall be borne by the Executive.  In order to receive such continued health benefits coverage, the Executive must be eligible for and elect continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985  (“COBRA”) under the terms of the applicable program for the first 18 months of such coverage, and such coverage shall be “alternative coverage” for purposes of COBRA.

 

  

  

  

 

(b)           Without Cause Termination and Constructive Discharge Following a Change of Control.  If Executive’s employment terminates during the Period of Employment due to a Without Cause Termination or a Constructive Discharge within the twenty-four (24) month period following a Change of Control, then, subject to Executive executing a general release of claims as more fully described in Section 9(e) hereof, in addition to the payments and benefits described in 9(a) hereof, but excluding 9(a)(iii) thereof, the Company will provide Executive (or Executive’s surviving spouse, estate or personal representative, as applicable) the following payments and/or benefits upon such event:  (i) the “target incentive amount” under any executive annual incentive plan established by the Company for the fiscal year in which Executive’s termination of employment occurs, prorated to reflect Executive’s partial year of employment; (ii) accelerated vesting of all “target” restricted performance shares awarded to Executive prior to June 2011 under any executive long term incentive plan established by the Company outstanding on the date of Change in Control but not yet vested; (iii) accelerated vesting of all “target” restricted performance shares/units awarded to Executive on or after June 2011under any executive long term incentive plan established by the Company  outstanding on the date of Change in Control but not yet vested in cases where the acquiring company is not a publicly traded company or the acquiring company does not assume or replace the outstanding equity; (iv) accelerated vesting of all other stock options and restricted shares/units granted to Executive prior to June 2011 under any executive long term incentive plan established by the Company outstanding on the date of the Change in Control but not yet vested on the effective date of termination of employment; and (v) accelerated vesting of all other stock options and restricted shares/units granted to Executive on or after June 2011 under any executive long term incentive plan established by the Company outstanding on the date of the Change in Control but not yet vested on the effective date of termination of employment, in cases where the acquiring company is not a publicly traded company or the acquiring company does not assume or replace the outstanding equity.

 

(c)           Termination for Cause; Resignation.  If Executive’s employment terminates due to a Termination for Cause (as defined below) or a Resignation (as defined below), Base Salary earned but unpaid as of the date of such termination will be paid to Executive in a lump sum and the Company will have no further obligations to Executive hereunder.  In the event any termination of Executive’s employment for any reason, Executive if so requested by the Company agrees to assist in the orderly transfer of authority and responsibility to Executive’s successor.

 

(d)           Definitions.  For purposes of this Agreement, the following capitalized terms have the following meanings:

 

(i)           “Benefits Continuation Period” means that number of months which is equal to the number of months of Base Salary that Executive receives as a lump sum severance payment in accordance with Sections 9(a) or 9(b) hereof.

 

(ii)           “Change of Control” shall have the meaning set forth in the SERP.

 

(iii)           “Constructive Discharge” means:  (A) any material failure by the Company to fulfill its obligations under this Agreement (including, without limitation, any reduction of Base Salary, as the same may be increased during the Period of Employment, or other material element of compensation);  (B) a material and adverse change to, or a material reduction of, Executive’s duties and responsibilities to the Company;  or (C) the relocation of Executive’s primary office to any location more than fifty (50) miles from the Company’s principal executive offices, resulting in a materially longer commute for Executive.  Executive will provide the Company a written notice which describes the circumstances being relied upon for all terminations of employment by Executive resulting from any circumstances claimed to be a Constructive Discharge thirty (30) days after the event giving rise to the notice.  The Company will have thirty (30) days after receipt of such notice to remedy the situation prior to Executive’s termination of employment due to a Constructive Discharge, and Executive must resign no later than thirty (30) days after the end of such 30-day period.

 

(iv)           “Resignation” means a termination of Executive’s employment by Executive, other than in connection with Executive’s Disability pursuant to Section 7 hereof, Death pursuant to Section 8 hereof or Constructive Discharge pursuant to Sections 9(a) or 9(b) hereof.  A termination of Executive’s employment under this Agreement shall mean the ceasing of employment with the Company.  For purposes of this Agreement:

 

  

  

  

 

	
  

	
(A)

	
the Executive shall not be treated as having incurred a voluntary termination of employment while on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company is provided either by statute or by contract.  If the period of leave exceeds six months and the right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

 

	
  

	
(B)

	
Whether the Executive shall have incurred a termination of employment shall be determined based on all relevant facts and circumstances.  In situations in which the Executive continues to be carried on the payroll of the Company but performs only nominal services, or ceases to be an employee but continues to provide substantial services in another capacity, such as pursuant to a consulting agreement, the determination of whether a termination of employment has occurred shall be determined in accordance with Final Regulations Section 1.409A-1(h)(1)(ii), or any successor thereto.

 

(v)           “SERP” means the Company’s 2005 Supplemental Executive Retirement Plan, as amended or restated from time to time.

 

(vi)           “Severance Pay Amount” means, with respect to a termination of employment covered under Section 9(a), the Executive’s then current Base Salary payable during one month multiplied by twenty four (24).  “Severance Pay Amount” means, with respect to a termination of employment covered under Section 9(b), the sum of Executive’s then current Base Salary payable during one month, plus one-twelfth of Executive’s most recent target annual incentive under any executive annual incentive plan established by the Company, multiplied by twenty-four (24).

 

(vii)           “Termination for Cause” means:  (A) Executive’s refusal or willful and continued failure to substantially perform Executive’s material duties to the best of Executive’s ability under this Agreement (for reasons other than death or disability), in any such case after written notice thereof; (B) Executive’s gross negligence in the performance of Executive’s material duties under this Agreement; (C) any act of fraud, misappropriation, material dishonesty, embezzlement, willful misconduct or similar conduct; (D) Executive’s conviction of or plea of guilty or nolo contendere to a felony or any crime involving moral turpitude; or (E) Executive’s material and willful violation of any of the Company’s reasonable rules, regulations, policies, directions and restrictions.

 

(viii)           “Without Cause Termination” or “Terminated Without Cause” means termination of Executive’s employment by the Company other than in connection with Executive’s Disability pursuant to Section 7 hereof, death pursuant to Section 8 hereof or Constructive Discharge pursuant to Sections 9(a) or 9(b) hereof, or the Company’s Termination for Cause of Executive.

 

(e)           Conditions to Payment.  All payments and benefits due to Executive under this Section 9 shall be contingent upon the execution by Executive (or Executive’s beneficiary or estate) of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates, and their current and former officers, directors, employees and agents in such form as determined by the Company in its sole discretion.

 

(f)           No Other Payments.  Except as provided in this Section 9, Executive shall not be entitled to receive any other payments or benefits from the Company due to the termination of Executive’s employment, including but not limited to, any employee benefits under any of the Company’s employee benefits plans or arrangements (other than at Executive’s expense under COBRA or pursuant to the written terms of any pension benefit plan in which Executive is a participant in which the Company may have in effect from time to time) or any right to severance benefits.  Notwithstanding the foregoing sentence, in the event of a termination of employment by Executive under the circumstances described in Section 9(b) hereof following a Change of Control, nothing in this Agreement shall reduce Executive’s entitlement, if any, to any payment or benefit pursuant to the ELTIP resulting from Executive’s termination of employment following a Change of Control.

 

 (g)           Timing of Severance Payments and Compliance with Code Section 409A.

 

(i)           Payments of earned but unpaid Base Salary required to be made under Section 9(a)(i) shall be made as of the next regular payroll date following the Executive’s termination of employment.

 

(ii)           Payments of Severance Pay Amounts required to be made under Section 9(a)(ii) shall be made within ten business days following the later of the date the Company receives the release of claims described in Section 9(e) properly executed by the Executive, and the expiration of any period permitted for the Executive to revoke the Agreement after its execution; provided, however, that in no event may Executive return the executed release of claims later than 60 days after termination of employment (or, if earlier, the end of the second month following the later of the end of the Company’s taxable year or the Executive’s taxable year).

 

(iii)           The reimbursement of an eligible expense hereunder shall be made promptly upon the Executive’s submission of request for reimbursement, accompanied by evidence of such expense reasonably acceptable to the Company, but in any event on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; provided, however, that the supplemental payment with respect to the tax cost of continuation employee benefit coverage under Section 9(a) shall be paid under Section 9(g)(ii) above.

 

(iv)           The payment of “earned but unvested restricted performance shares/units” as described in Section 9(a)(iii) “target incentive amounts” as described in Section 9(b)(i) and “target” restricted performance shares/units as described in Sections 9(b)(ii) shall be made as described in Section 9(g)(ii).

 

(v)           Each of the payments and benefits under Section 9(a) or (b) above are designated as separate payments for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F), the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), and the exemption for medical expense reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B).  As a result, (1) any payments that become vested as a result of a qualifying termination that are made on or before the 15th day of the third month following the later of the end of the Company’s taxable year or the end of the Executive’s taxable year in which occurs the Executive’s termination of employment, (2) any additional payments that are made on or before the last day of the second calendar year following the year of the Executive’s termination and do not exceed the lesser of two times Base Salary or two times the limit under Code Section 401(a)(17) then in effect, and (3) the payment of medical expenses within the applicable COBRA period, are exempt from the requirements of Code Section 409A.  If Executive is designated as a “specified employee” within the meaning of Code Section 409A and Section 1.19 of the SERP, to the extent that any deferred compensation payments to be made during the first six month period following Executive’s termination of employment exceed such exempt amounts, the payments shall be withheld and the amount of the payments withheld will be paid in a lump sum (with interest at the rate paid on 12-month Treasury bills as of the date of Executive’s termination of employment), during the seventh month after Executive’s termination.  The Company shall identify in writing delivered to the Executive any payments it reasonably determines are subject to delay under this Section 9(g)(v).  In no event shall the Company have any liability or obligation with respect to taxes for which the Executive may become liable as a result of the application of Code Section 409A.

 

  

  

  

 

10.           Other Duties of Executive During and After the Period of Employment.

 

(a)           Non-Competition and Non-Disclosure Agreement.  Simultaneously with the execution of this Agreement, Executive agrees to execute and to comply with the terms of the Non-Competition and Non-Disclosure Agreement (hereinafter referred to as the “Non-Competition Agreement”) in the form provided to Executive by the Company.  The terms and conditions of the Non-Competition Agreement are incorporated herein by reference and made a part of this Agreement as if fully set forth herein.

 

(b)           Agreement To Arbitrate.  Simultaneous with the execution of this Agreement, Executive agrees to execute and to comply with the terms of the Agreement to Arbitrate (hereinafter referred to as the “Agreement to Arbitrate”) in the form provided to Executive by the Company.  The terms and conditions of the Agreement to Arbitrate are incorporated herein by reference and made a part of this Agreement as if fully set forth herein.

 

11.           Indemnification.  The Company will indemnify Executive to the fullest extent permitted by the laws of the state of the Company’s incorporation in effect at that time, or the certificate of incorporation and by-laws of Company, whichever affords the greater protection to Executive.

 

12.           Mitigation.  Executive will not be required to mitigate the amount of any payment provided for hereunder by seeking other employment or otherwise, nor will the amount of any such payment be reduced by any compensation earned by Executive as the result of employment by another employer after the date Executive’s employment hereunder terminates.

 

13.           Withholding Taxes.  Executive acknowledges and agrees that the Company may directly or indirectly withhold from any payments under this Agreement all federal, state, city or other taxes that will be required pursuant to any law or governmental regulation.

 

14.           Effect of Prior Agreements.  This Agreement, together with the Non-Competition Agreement and the Agreement to Arbitrate, constitute the sole and entire agreements and understandings between Executive and the Company with respect to the matters covered thereby, and there are no other promises, agreements, representations, warranties or other statements between Executive and the Company in respect to such matters not expressly set forth in these agreements.  These agreements supersede all prior and contemporaneous agreements, understandings or other arrangements, whether written or oral, concerning the subject matter thereof.  Upon execution of this Agreement, Executive’s existing employment agreement with the Company shall be superseded by this Agreement in its entirety and shall be of no further force and effect.

 

15.           Notices.  Any notice required, permitted, or desired to be given pursuant to any of the provisions of this Agreement shall be deemed to have been sufficiently given or served for all purposes if delivered in person or sent by registered or certified mail, return receipt requested, postage and fees prepaid, as follows:

 

If to the Company, at:

John Wiley & Sons, Inc.

111 River Street

Hoboken, New Jersey 07030

Attention:  EVP, Human Resources

with a copy to:

John Wiley & Sons, Inc.

111 River Street

Hoboken, New Jersey 07030

Attention: EVP and General Counsel

If to Executive, at:

Mark Allin

xxxxxxxxxxxx

Either of the parties hereto may at any time and from time to time change the address to which notices shall be sent hereunder by notice to the other party.

 

  

  

  

 

16.            Assignability.  The obligations of Executive may not be delegated and, except as expressly provided in Section 8 hereof relating to the designation of a beneficiary in the event of death, Executive may not, without the Company’s written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest therein.  Any such attempted delegation or disposition shall be null and void and without effect.  The Company and Executive agree that this Agreement and all of the Company’s rights and obligations hereunder may be assigned or transferred by the Company to and may be assumed by and become binding upon and may inure to the benefit of any affiliate of or successor to the Company.  The term “successor” shall mean (with respect to the Company or any of its subsidiaries) any other corporation or other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or a material part of the assets of the Company.  Any assignment by the Company of its rights or obligations hereunder to any affiliate of or successor to the Company shall not be a termination of employment for purposes of this Agreement.

 

17.           Modification.  This Agreement may not be modified or amended except in writing signed by the parties.  No term or condition of this Agreement will be deemed to have been waived except in writing by the party charged with waiver.  A waiver will operate only as to the specific term or condition waived and will not constitute a waiver for the future or act on anything other than that which is specifically waived.

 

18.           Governing Law.  This Agreement will be construed and interpreted pursuant to the laws of the State of New York, without regard to such State’s conflict of law rules.

 

19.           Separability.  All provisions of this Agreement are intended to be severable.  In the event any provision or restriction contained herein is held to be invalid or unenforceable in any respect, in whole or in part, such finding will in no way affect the validity or enforceability of any other provision of this Agreement.  The parties hereto further agree that any such invalid or unenforceable provision will be deemed modified so that it will be enforced to the greatest extent permissible under law, and to the extent that any court of competent jurisdiction determines any restriction herein to be unreasonable in any respect, such court may limit this Agreement to render it reasonable in the light of the circumstances in which it was entered into and specifically enforce this Agreement as limited.

 

20.           No Waiver:  No course of dealing or any delay on the part of the Company or Executive in exercising any rights hereunder shall operate as a waiver of any such rights.  No waiver of any default or breach of this Agreement shall be deemed a continuing waiver of any other breach or default.

 

21.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

  

  

  

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered, effective as of the date first indicated above by a duly authorized officer of the Company.

 

	EXECUTIVE: 	JOHN WILEY & SONS, INC. 	 	 	 
	 	 	 	 	 
	By:// Mark Allin	By: // Peter B. Wiley	 	 	 
	Signature 	Signature 	 	 	 
	 	 	 	 	 
	Mark J. Allin	Peter B. Wiley	 	 	 
	Print name 	Print name 	 	 	 
	 	 	 	 	 
	April 13, 2015	Chairman	 	 	 
	Date signed 	Title 	 	 	 
	 	 	 	 	 
	 	April 13, 2015	 	 	 
	 	Date signedEXHIBIT 10.1

 

LICENSE AGREEMENT

 

This License Agreement (this “Agreement”) is entered into as of this 1 day of August, 2014 (the “Effective Date”), by and between Graphene Materials Ltd., a company incorporated under the laws of Israel, having a place of business at 3 Yaakov Meridor St., Tel Aviv 6941153, Israel (“Licensor”); and Advance Graphene Ltd., a company incorporated under the laws of Israel, having a place of business at 98 Yigal Alon St., Tel Aviv 67891, Israel (“Licensee”).

 

The Licensor and the Licensee are also collectively referred to herein as the “Parties,” and each individually as a “Party.”

 

WHEREAS, the Licensee desires to receive from the Licensor, and the Licensor wishes to grant to the Licensee, an exclusive, non-sublicensable (subject to the terms herein), non-transferable, worldwide, royalty-bearing license to develop, exploit, utilize and Commercialize the Licensed IP and the Licensed Products, in the Field; and

 

WHEREAS, the Parties wish to set forth herein the terms and conditions of their research and economic collaboration;

 

NOW, THEREFORE, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

	
1.

	
GENERAL

	
 

	 
	
1.1

	
The preface and Appendices to this Agreement constitute an integral part hereof.

	
 

	 
	
1.2

	
The headings of the sections and subsections of this Agreement are for convenience and reference purposes only, and shall not be used for the interpretation thereof.

	
 

	 
	
1.3

	
This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof, and cancels all prior or pre-existing negotiations, declarations, presentations, commitments and agreements, whether written or oral, whether explicit or implied, between the Parties, with respect to such subject matter.

	
 

	 
	
1.4

	
In this Agreement, unless otherwise required or indicated by the context, the singular shall include the plural and vice-versa, the masculine gender shall include all other genders.

	
 

	 
	
1.5

	
In this Agreement, the following expressions shall have the meanings appearing alongside them, unless the context otherwise requires:

  

	 	
1.5.1

	
“Affiliate” - shall mean with respect to any Person, any other Person that directly or indirectly, through one or more intermediary Persons, Controls or is Controlled by or is under common Control with such Person.

	 	
 

	 
	 	
1.5.2

	
“Agreement”- shall mean this agreement together with all the appendices and annexes hereto.

	 	
 

	 
	 	
1.5.3

	
“Commercialize (d)” - shall mean to manufacture, have manufactured, market, distribute, sell, lease and/or make any other disposition of Licensed Products.

	 	
 

	 
	 	
1.5.4

	
“Commercially Reasonable Efforts” – shall mean reasonable, diligent, good faith efforts to accomplish a given objective as similar entities would normally use in the ordinary course of business, to accomplish a similar objective under similar circumstances.

	 	
 

	 
	 	
1.5.5

	
“Development Plan” – shall mean the development plan described in Schedule 1.5.5 attached hereto to be undertaken by the Licensee. 

  

	 
	
1

	

  

	 	
1.5.6

	
“Control” – shall mean the power to direct or manage, either alone or together with others, the affairs of the relevant entity, and/or the beneficial ownership, alone or together with others, of more than fifty percent (50%) of such entity by voting share, equity interest, partnership interests, contract or otherwise, and/or the power to appoint or elect a majority of the members of the board of directors or other managing body of the relevant entity.

	 	
 

	 
	 	
1.5.7

	
“Existing Patents” or “Licensed Patents” – shall mean (a) patent application no. 61/887,469 entitled "A Method for the Large Scale Production of Graphene," filed on October, 7 2013; and (b) all divisions, continuations, continuations-in-part, re-examinations and reissues of the above; and (c) all patents which may be granted pursuant to any of the foregoing patent application.

	 	
 

	 
	 	
1.5.8

	
“Exit Event” - shall mean (a) any event of change of Control in the Licensee, such as for example following the sale or issuance of securities of the Licensee, consolidation, merger or reorganization of the Licensee with or into any other entity following which the Licensee’s then current shareholders hold less than 50% of the issued and outstanding share capital of the surviving entity; (b) an IPO; (c) the sale or transfer of all or substantially all of the assets of the Licensee; (d) any dissolution, winding-up or liquidation of the Licensee; and/or (b) any foreclosure by creditors of the Licensee on all or substantially all assets of, or equity interests in the Licensee, all whether voluntarily or involuntarily.

	 	
 

	 
	 	
1.5.9

	
“Exit Income” – shall mean any and all amounts and other rights and/or assets (including securities) actually received by the Licensee and by each of the then-current shareholders in connection with an Exit Event.

	 	
 

	 
	 	
1.5.10

	
“Field” – shall mean the large scale production process of Graphene sheets based on the Licensed IP that uses the production method of exfoliation by Tip Sonication.

	 		 
	 	
1.5.11

	
“First Commercial Sale” – shall mean the first sale of a Licensed Product by a Licensee Party to a Third Party.

	 	
 

	 
	 	
1.5.12

	
“IPO” – shall mean the closing of a sale of the Licensee’s shares to the public in a bona fide, underwritten, public offering pursuant to a registration statement under the U.S. Securities Act of 1933, as amended, the Israeli Securities Law or similar securities laws of another jurisdiction and the listing of such shares for trading on a recognized stock exchange, or the listing thereof on NASDAQ or another recognized, automated quotation system.

	 	
 

	 
	 	
1.5.13

	
“Initial Research” – shall mean the initial research performed by or on behalf of the Licensor, which shall be limited to research directly related to the Field, and as further detailed in the Development Plan set forth in Schedule 1.5.5 attached hereto.

	 	
 

	 
	 	
1.5.14

	
“Initial Research Results” – shall mean the results of Initial Research, and Intellectual Property embodied therein and Intellectual Property discovered or acquired in the course of the performance of the Initial Research.

	 	
 

	 
	 	
1.5.15

	
“Intellectual Property” or “IP” - shall mean any and all intellectual property, whether or not registered or protected by patent rights, including, but not limited to, trade secrets, procedures, protocols, inventions, moral rights, drawings, trademarks, databases, know-how, improvements, discoveries, conceptions, ideas, techniques, designs, products, developments, specifications, methods, drawings, diagrams, models, software programs, data, data analysis, data interpretation, written reports, compounds, compositions, substances, processes, rights relating to the protection of confidential information, information and other results of whatsoever nature and all rights therein and rights associated with works of authorship, including copyright, copyright applications, copyrights restrictions, mask work rights, mask work applications and mask work registrations patent, patent applications, patent rights, database rights, rights in designs and all registrations and applications therefore, rights analogous to those set forth herein and any other proprietary rights relating to intangible property, and all continuations, continuations in part, divisional applications, extensions, and renewals of any of the foregoing (as applicable) now existing or hereafter filed, issued, or acquired, in any part of the world.

  

	 
	
2

	

  

	 	
1.5.16

	
“License” - shall mean the license granted under Section 2 below.

	 	
 

	 
	 	
1.5.17

	
“Licensed IP” – shall mean the application (in the Field only) of the Licensed Patents, any Initial Research Results, any know-how and information related thereto, and New IP. 

	 	
 

	 
	 	
1.5.18

	
“Licensed Product(s)” - shall mean: (a) any Product the manufacture, use or sale of which without a license from Licensor would infringe upon any Licensed Patent; (b) any Product which embodies, comprises, contains, uses or was developed using the Licensed IP; (c) any Product which embodies, comprises, contains, uses or was developed using Intellectual Property developed independently by the Licensee that is based on the Licensed IP; (d) any Product which embodies, comprises, contains, uses or was developed using Intellectual Property developed independently by the Licensee and "relating to" any of the above Products referenced in Sub-Sections (a) through (c) above; and/or (e) any improvement to any of the foregoing Products referenced in Sub-Sections (a) through (d) above. It is hereby recorded that the phrase "relating to" in this Section 1.5.18 shall mean –dominated by, or, not independent of (the Licensed Patent or the relevant Product, as the case may be).

	 	
 

	 
	 	
1.5.19

	
“Licensee IP” – shall mean any Intellectual Property developed and/or acquired independently by the Licensee, but excluding for the avoidance of doubt any Licensed IP.

	 	
 

	 
	 	
1.5.20

	
“Licensee Parties” – shall mean the Licensee and all Sub licensees (to the extent a Sublicense is approved by the Licensor).

	 	
 

	 
	 	
1.5.21

	
“Net Sales” – shall mean all amounts actually received by the Licensee from a Third Party in connection with the Commercialization of the Licensed IP including all amounts actually received by the Licensee from a Third Party which are generated from sales of Licensed Products; less the following: (a) customary trade, quantity, or cash discounts to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, import, export, delivery, or use in direct relation to the Licensed Product which is paid by or on behalf of the Licensee; and (d) outbound transportation and delivery charges, as well as prepaid freight (including shipping insurance) actually incurred by the Licensee in connection to the shipment by the Licensee of Licensed Products; provided, however, that

	 	
 

	 
	 	
 

	
(i) in any transfer of a Licensed Product between the Licensee and an Affiliate of the Licensee, Net Sales shall be equal to the total amount invoiced by such Affiliate on resale to an independent Third Party purchaser, after deducting the amounts referred to in Sub-Sections (a) through (d) above, to the extent applicable; and

	 	
 

	 
	 	
1.5.22

	
(ii) in the event that the Licensee receives non-monetary consideration, or in the case of transactions not at arm’s length with a Third Party, or in the event that the Licensee shall make self-use of a Licensed Product, then in all these events Net Sales shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business. To avoid any doubt, it is clarified that in calculating the amount of Net Sales described above, no deduction shall be made from the gross amounts invoiced by the Licensee in respect of any tax based upon the income of the Licensee, whether paid by the Licensee or withheld by the Third Party at source. “New IP” – shall mean Research Results pertaining to the patent applications contemplated as defined under “Existing Patents” and/or the inventions described and claimed therein, as well as patentable IP and/or new patents filed and/or registered therewith, directly related to the Field. (“New Patents”).

  

	 
	
3

	

  

	 	
1.5.23

	
“NIS” – shall mean New Israel Shekels.

	 	
 

	 
	 	
1.5.24

	
“Person” – shall mean an individual, partnership, corporation, limited liability company, association, joint stock company, trust, probate estate, joint venture, unincorporated organization, governmental authority or any other entity.

	 	
 

	 
	 	
1.5.25

	
“Product” – shall mean any product and/or device and/or service, and/or any system containing more than one product/device/ service, and/or any combination of the foregoing.

	 	
 

	 
	 	
1.5.26

	
“Quarter” - shall mean any of the customary fiscal quarters of the calendar year; i.e., the periods from January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31.

	 	
 

	 
	 	
1.5.27

	
“Sublicense” – shall mean any rights granted by the Licensee under the License to Third Parties with respect to the Licensed IP and/or the Licensed Products upon receipt of prior written approval from the Licensor.

	 	
 

	 
	 	
1.5.28

	
“Sublicensee” – shall mean a Third Party to whom the Licensee grants a Sublicense and any Affiliate of such Third Party.

	 	
 

	 
	 	
1.5.29

	
“Sublicensee Net Sales” - shall have the same meaning as “Net Sales” (mutatis mutandis), except that it refers to amounts collected by a Sublicensee from a Third Party in connection with the sale, lease, or any other disposition of Licensed Products by the Sublicensee (as opposed to any amounts collected by the Licensee).

	 	
 

	 
	 	
1.5.30

	
“Sublicense Other Income” – shall mean all amounts received by the Licensee from a Sublicensee attributable to the grant of a Sublicense and which are not attributed to Sublicensee Net Sales.

	 	
 

	 
	 	
1.5.31

	
“Sublicense Income” - all amounts actually received by the Licensee from a Sublicensee attributable to the grant of a Sublicense.

	 	
 

	 
	 	
 

	
In the event that the Licensee receives Sublicense Income in the form of non-cash consideration, the equivalent cash value of such non-cash consideration shall be determined based on the fair market value assuming an arm’s length transaction made in the ordinary course of business.

	 	
 

	 
	 	
 

	
To avoid any doubt, it is clarified that in calculating the amount of Sublicense Income, no deduction shall be made from the gross amounts invoiced by the Licensee, in respect of any tax based upon the income of the Licensee, whether paid by the Licensee or withheld by the Sublicensee at source.

	 	
 

	 
	 	
1.5.32

	
“Third Party” – shall mean any Person other than the Parties and their respective Affiliates.

	 	
 

	 
	 	
1.5.33

	
“USD” or “$” – shall mean United States dollars.

  

	 
	
4

	

  

	
2.

	
GRANT OF LICENSE

	
 

	 
	
2.1

	
Subject to full compliance by the Licensee with all the terms and conditions of this Agreement, Licensor hereby grants to the Licensee, an exclusive, non-sublicensable (unless explicitly authorized in writing by Licensor, such authorization not to be unreasonably denied; however, it is understood and acknowledged by Licensee that a further sublicense is subject to third party consent), non-transferable and non-assignable (unless otherwise permitted pursuant to Section 12 below), worldwide, royalty-bearing license to develop, exploit, utilize and Commercialize the Licensed IP and the Licensed Products in the Field only.

	
 

	 
	
2.2

	
Other than the rights expressly licensed hereunder to the Licensee, no other rights or interest whatsoever in the Licensed IP are transferred or granted to the Licensee.

	
 

	 
	
3.

	
SUB-LICENSES

	
 

	 
	
3.1

	
Subject to the terms and conditions of this Section 3 and Licensor’s prior written approval, the Licensee shall be entitled to grant Sublicenses under the License. Such Sublicenses shall in all cases be pursuant to written agreements (each such agreement, a “Sublicense Agreement”) consistent with the terms and conditions of this Agreement.

	
 

	 
	
3.2

	
Accordingly, any act or omission by any Sublicensee, which are not remedied within 45 (forty-five) days from the date of receipt of written notice by Licensor to the Licensee of such act/omission (including, if necessary the termination of such Sublicense Agreement, in which case any Sublicense rights contemplated thereunder shall return to the Licensee) and which would have constituted a breach of this Agreement by the Licensee had it been the act/omission of the Licensee, shall constitute a breach of this Agreement by the Licensee unless the Licensee has terminated the relevant Sublicense Agreement, and in which case the Licensee shall have no further liabilities in this respect.

	
 

	 
	
4.

	
CONSIDERATION AND PAYMENT TERMS

	
 

	 
	
4.1

	
In consideration for the rights granted under this Agreement, the Licensee shall pay the Licensor the following fees and payments:

  

	 	
4.1.1

	
Annual License Fee. With regard to each of the first three (3) calendar years following the Effective Date the Licensee shall pay Licensor an annual license fee of USD $7,500 (seven thousand five hundred United States Dollars); thereafter, with respect to any calendar year the Company shall pay Licensor an annual license fee of USD $20,000 (twenty thousand) (“Annual License Fee”).

	 	
 

	 
	 	
4.1.2

	
Running Royalties. The Licensee shall pay the Licensor the following amounts of all Net Sales (“Running Royalties”):

	 	
 

	 
	 	
(a)

	
3% of all Net Sales - in respect of sales by the Licensee of Licensed Products which are raw materials, i.e. Graphene;

	 	
 

	 
	 	
(b)

	
4% of all Net Sales - in respect of sales by the Licensee of Licensed Products which are NOT raw materials recorded in Section 4.1.2(a) above of up to an aggregate amount of USD $20 million; or

	 	
 

	 
	 	
(c)

	
5% of all Net Sales - in respect of sales by the Licensee of Licensed Products which are NOT raw materials recorded in Section 4.1.2(b) above exceeding in the aggregate USD $20 million (where such percentage will only be applied to and commencing from the first dollar above USD $20 million).

  

	 
	
5

	

  

	 	
4.1.3

	
Minimum Royalties. Starting from the calendar year in which an aggregate net amount of USD $50,000 was achieved from sales of Licensed Products (together by all Licensee Parties), or termination of 4 years from the date of Effective Date, the earlier of the foregoing the Licensee shall pay Licensor an annual minimum royalty as follows the Licensee shall pay the Licensor an annual minimum royalty as follows: USD $20,000 (twenty thousand United States Dollars) per year with regard to each of the first 3 calendar years in which minimum royalties are due as above-mentioned (USD $60,000 in the aggregate for all said three years); and USD $35,000 (thirty five thousand) with regard to any year thereafter (all such amounts: “Minimum Annual Royalties”). The Minimum Annual Royalties shall be creditable against the aggregate sum of the Running Royalties paid to the Licensor with respect to that specific calendar year.

	 	
 

	 
	 	
4.1.4

	
Expenses. The Licensee shall pay the Licensor the following amounts: a. For the first year of the initial research and development of the continuous production of graphene sheets as detailed in Schedule 1.5.5, the Licensee will pay the Licensor an amount of $150,000 on August 13, 2014, and $50,000 for each of the subsequent four quarters starting October 1 (the “Initial Research Period”). b. Following the Initial Research Period, for any additional research and development to be performed by the Licensor upon the request of the Licensee necessary in order to complete the Research and Development Plan as detailed and contemplated in Schedule 1.5.5, the Licensor will provide the Licensee with an estimated budget for such activities. This budget will include all mutually agreed upon research and development costs and reasonable overhead costs. Patent Filing and Search, Maintenance and Prosecution Expenses. In addition to the expenses set forth above in Section 4.1.4, the Licensee shall reimburse the Licensor for any and all reasonable costs incurred by the Licensor necessary in the respect of patent filing and Search, maintenance and prosecution of any patents contemplated under the Licensed IP and reasonable overhead costs. In respect hereof, the Licensor will provide the Licensee with at least fourteen (14) days prior notice of its obligation to pay such expenses, where such notice will include an estimate of the amount to be paid. The Licensee shall pay said amount within fourteen (14) days of receiving the notice.

	 	
 

	 
	 	
4.1.5

	
Payments on Sublicense Income. If and when applicable, the parties shall negotiate in good faith the royalties payable by the Licensee to the Licensor with respect to Sublicense Income.

  

	
4.2

	
VAT shall be added to all payments due under this Agreement to the extent required by law.

	
 

	 
	
4.3

	
All payments due under this Agreement shall be payable in USD. Payment shall be made as follows:

  

	 	
4.3.1

	
License Fees shall be paid on the first day of the applicable month.

	 	
 

	 
	 	
4.3.2

	
Running Royalties shall be paid by the Licensee to the Licensor no later than thirty (30) days after the end of the Quarter in which the underlying amounts are actually received by the Licensee. Minimum Annual Royalties shall be paid in 4 equal installments no later than fourteen (14) days following the end of each Quarter.

	 	
 

	 
	 	
4.3.3

	
Exit Consideration shall be paid by the Licensee to the Licensor no later than sixty (60) days after the date in which the underlying amounts are actually received by the Licensee and/or Founders.

	 	
 

	 
	 	
4.3.4

	
In the event that conversion from foreign currency is required in calculating a payment under this Agreement, the exchange rate used shall be the conversion rate for the foreign currency as published by the Bank of Israel, at the end of the last business day immediately prior to the date in which payment is effected to the Licensor.

  

	 
	
6

	

  

	
4.4

	
Without derogating from the Licensor’s rights hereunder or by law to any other additional remedy or relief, if any payment due to the Licensor under this Agreement is not paid within 60 days after its due date of payment, the overdue monies shall bear monthly interest at the monthly rate of one percent (1%) (calculated over a period of up to twelve (12) months) as of the payment due date until actual payment; provided however that the Licensor shall have first sent written notice of said default in payment.

	
 

	 
	
4.5

	
Each payment due to the Licensor under this Agreement shall be made by wire transfer to the Licensor’s account in accordance with written instructions as provided from time to time by the Licensor, and shall be net and free of any set-offs, deductions or withholdings, except as set forth in Section 4.6 below.

	
 

	 
	
4.6

	
If applicable laws require that taxes be withheld from any amounts due to the Licensor under this Agreement, the Licensee shall: (a) deduct these taxes from the remittable amount, (b) pay the taxes to the appropriate tax authority, and (c) promptly deliver to the Licensor a statement including the amount of tax withheld and justification therefore, and such information as may be necessary for tax credit purposes. Each Party agrees to assist the other Party in claiming exemption from such deductions or withholdings.

	
 

	 
	
4.7

	
Without derogating from any termination terms set forth herein, the foregoing royalties shall be payable on a country-by-country basis, for the longer of: (a) fifteen years from date of the First Commercial Sale of the Licensed Product in such country, or (b) until the expiration of all the Licensed Patents.

	
 

	 
	
5.

	
COMPANY REPORTS AND RECORDS

	
 

	 
	
5.1

	
Reports and Records

  

	 	
5.1.1

	
Within sixty (60) days after the conclusion of each Quarter, beginning after the earlier of a First Commercial Sale, the Licensee shall deliver to Licensor a report containing the following information:

	 	
 

	 
	 	
(a)

	
the Licensed Products Commercialized by all Licensee Parties in each country for the applicable Quarter;

	 	
 

	 
	 	
(b)

	
the gross amount billed for the Licensed Products Commercialized by all Licensee Parties in each country during the applicable Quarter;

	 	
 

	 
	 	
(c)

	
a calculation of Net Sales for the applicable Quarter in each country, including a list of any and all applicable deductions;

	 	
 

	 
	 	
(d)

	
the amount of Sublicense Income received for the applicable Quarter (including with reference to the amount of Sublicense Other Income and the amount of Sublicense Income attributed to Sublicensee Net Sales);

	 	
 

	 
	 	
(e)

	
the total amount payable to Licensor in USD for the applicable Quarter, together with exchange rates used for conversion, if such rates apply;

	 	
 

	 
	 	
(f)

	
If no amounts are due to Licensor for the relevant Quarter, a corresponding statement shall be added.

	 	
 

	 
	 	
5.1.2

	
Licensee shall maintain complete and accurate records of Licensed Products Commercialized under this Agreement, any amounts payable to the Licensor and/or its Affiliates in relation to the foregoing and all Income received by the Licensee and/or its Affiliates; which records shall contain sufficient information to permit Licensor to confirm the accuracy of any reports or notifications delivered to Licensor under Section 5.1.1 above as well as any payments due to Licensor under this Agreement.

 

	 
	
7

	

  

	
5.2

	
FINANCIAL & TECHNICAL AUDIT RIGHTS

  

	 	
5.2.1

	
Licensor shall have the right, not more than once a year, at Licensor’s expense and by providing the Licensee with prior written notice of at least 30 (thirty) days, to cause an independent, certified public accountant reasonably acceptable to the Licensee, who is bound by a suitable confidentiality arrangement with the Licensee, to audit the Licensee’s relevant records during normal business hours for the purpose of verifying any reports and payments delivered under this Agreement and/or its performance.

	 	
 

	 
	 	
5.2.2

	
The Parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit as well as interest in accordance with Section 4.4 above.

	 	
 

	 
	 	
5.2.3

	
Notwithstanding the aforementioned and without derogating from Licensor’s rights hereunder or by law to any other additional remedy or relief, in the event that such an audit reveals an underpayment to Licensor by more than five percent (5%), the Licensee shall pay all costs of such audit. In addition, if an audit reveals an underpayment to Licensor by more than ten percent (10%), then with respect to any such audit the Licensee shall also pay to Licensor liquidated damages of twenty five percent (25%) of the outstanding sums; it being noted that such liquidation damages shall not be due for the first audit in which such (10%) underpayment was revealed.

  

	
6.

	
DEVELOPMENT AND COMMERCIALIZATION

	
 

	 
	
6.1

	
The Licensee undertakes, at its own expense, to carry out the Licensee Development Plan as detailed in Schedule 1.5.5, and which may be reasonably amended by the Licensee from time to time - and all other steps and actions necessary in order to Commercialize the Licensed Products.

	
 

	 
	
6.2

	
Without derogating from the provisions of Section 6.1 above, the Licensee shall exert Commercially Reasonable Efforts to develop and to introduce the Licensed Products into the commercial markets as soon as practicable and thereafter, until the expiration of this Agreement, to make all Commercially Reasonable Efforts and endeavors to keep the Licensed Products reasonably available to the public.

	
 

	 
	
6.3

	
The Licensee shall provide the Licensor with annual written reports, which shall detail the development results and other related work performed by the Licensee during the twelve months prior to the report. Such report shall also set forth a general assessment regarding the development of the Licensed Product and the marketing thereof. Notwithstanding the above, during the first 24 months as of the Effective Date, the reports subject of this Section 6.3 shall be provided on a semi-annual basis (i.e. once every six months commencing on the Effective Date) and the Parties shall in good faith discuss such reports and future actions of the Licensee, and the Licensee shall take into reasonable consideration the reasonable suggestions of Licensor, as shall be communicated during such good faith discussions.

	
 

	 
	
6.4

	
The Licensee shall submit to Licensor a written notice with regard to the First Commercial Sale within thirty (30) days thereafter specifying its date, the country in which such sale took place and the type of Licensed Product sold. The Licensee shall also submit to the Licensor a written notice with regard to the first achievement of an aggregated annual amount of USD $50,000 from sales of Licensed Products (together by all Licensee Parties), within thirty (30) days from the date of such achievement.

	
 

	 
	
7.

	
TITLE TO IP

	
 

	 
	
7.1

	
All rights, title and interest in and to the Licensed IP (including without limitation the Initial Research Results and New IP), and to any improvements, modifications, enhancements, and/or derivatives thereof and thereto, shall be owned by Licensor and/or its designee/s and/or third-party licensors. The Licensee undertakes not to represent in any manner that it possesses any ownership interest in the said IP nor shall any action taken by the Licensee or on the Licensee’s behalf create in the Licensee’s favor any right, title or interest in and to the aforesaid IP, other than in respect of the License granted under Section 2 above.

  

	 
	
8

	

  

	
7.2

	
All rights, title and interest in and to the Licensee IP shall be owned by the Licensee and/or its designee/s and/or its third party licensors. Licensor undertakes not to represent in any manner that it possesses any ownership interest in the said IP nor shall any action taken by the Licensor or on the Licensor’s behalf create in the Licensor’s favor any right, title or interest in and to the aforesaid IP except the right to received payments due under Section 4 of this Agreement.

	
 

	 
	
7.3

	
Restriction on Transfer. During the term of this Agreement, the Licensee shall not be entitled to license and/or sell and/or transfer and/or convey and/or create any encumbrance, lien, mortgage, pledge or any other rights in or over the Licensed IP or any part thereof to any third party in any way whatsoever whether for consideration or otherwise.

	
 

	 
	
8.

	
REPRESENTATIONS AND WARRANTIES OF THE PARTIES

	
 

	 
	
8.1

	
Each Party represents to the other that (i) it has all the corporate powers required to enter into this Agreement, (ii) it has taken all necessary corporate action on its part required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder; (iii) the Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation of such Party and is enforceable against it in accordance with its terms and (iv) entering into this Agreement and the performance of its obligations in accordance with its terms will not cause such Party to breach any obligation it has towards any third party. Except as otherwise expressly provided in this Agreement, no Party makes any warranty, express or implied, with respect to any technology, patents, goods, services, rights or other subject matter of this Agreement, including inter alia the Licensed IP, and hereby disclaims warranties of merchantability, fitness for a particular purpose with respect to any and all of the foregoing.

	
 

	 
	
8.2

	
DISCLAIMER. TO THE MAXIMUM EXTENT PERMITTED BY THE APPLICABLE LAW, OTHER THAN THE WARRANTIES SET FORTH EXPLICITLY HEREIN, IN PARTICULAR IN THIS SECTION 8 AND SECTION 10 BELOW, NEITHER PARTY MAKES ANY WARRANTIES OF ANY KIND. IN PARTICULAR, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR NON INFRINGEMENT.

	
 

	 
	
9.

	
CONFIDENTIAL INFORMATION

	
 

	 
	
9.1

	
Concurrently with the signature hereof, the Parties shall execute a non-disclosure agreement (“NDA”) in the form attached hereto as Schedule 9.1.

	
 

	 
	
10.

	
LIABILITY, INDEMNITY AND INSURANCE

	
 

	 
	
10.1

	
Nothing in this Agreement shall impose upon Licensor liability for any Licensed Products Commercialized by any Licensee Party.

	
 

	 
	
10.2

	
The Licensee hereby declares that it assumes any and all liabilities and responsibilities, under any applicable laws, for any Licensed Products Commercialized by or on behalf of the Licensee. Without derogating from the generality of the aforesaid, the Licensee shall be responsible to obtain, at its own risk and expense, any and all licenses and/or official authorizations, including without limitation with respect to standards and/or quality, required with respect to the development and Commercialization of the Licensed Products in accordance with any applicable laws, rules and regulations.

  

	 
	
9

	

  

	
10.3

	
All warranties in connection with the Licensed Products, if made, shall be made by the Licensee as manufacturer and seller or service provider, and shall not directly or by implication obligate Licensor or any of Licensor’s officers, directors, agents, employees, shareholders, successors or assignees (collectively with Licensor, the “Licensor Indemnitees”).

	
 

	 
	
10.4

	
No Licensor Indemnitee shall be liable for any claim, demand, liability, cost, loss, damage or expense (including legal costs and attorneys’ fees) of whatever kind or nature (collectively, “Liabilities”) caused to or suffered by any Person (including any Licensee Party) that directly or indirectly arise out of or result from or are encountered in connection with the exercise of the License and/or the Commercialization of any Licensed IP, including directly or indirectly arising out of or resulting from or encountered in connection with the development or Commercialization of any of the Licensed Products and/or Licensed IP by any Licensee Party, or any Person acting in the name of or on behalf of any Licensee Party, or acquiring, directly or indirectly, any of the Licensed Products from any Licensee Party.

	
 

	 
	
10.5

	
In the event that any Licensor Indemnitee should incur or suffer any Liabilities in a court of final, non-appealable judgment or settlement that directly arise out of or are encountered as described in Section 10.4 above, or shall be obliged to pay to any Person any amount whatsoever in connection with any Liabilities as aforesaid in Section 10.4 above, then the Licensee shall defend, indemnify and hold harmless such Licensor Indemnitee from and against any and all such Liabilities. The indemnification obligations of the Licensee are conditioned (except as stated otherwise) upon: (a) prompt notice by a Licensor Indemnitee to the Licensee of the cause of action for any claim, provided that failure to notify the Licensee as aforementioned shall not relieve the Licensee from any liability hereunder (i) if the Licensee had actual notice of such action or proceeding, or (ii) unless and only to the extent of any forfeiture by the Licensee of substantial rights and defenses resulting therefrom, and will not in any event relieve the Licensee from any obligation or liability that the Licensee may have to any Licensor Indemnitee otherwise than on account of the indemnity obligation hereunder; (b) the Licensee shall be granted with sole control of the defense of the claim and the settlement thereof, provided that no settlement shall be made without the prior written consent of the Licensor Indemnitee which consent shall not be unreasonably withheld and provided that the Licensee diligently pursues the defense of such claim; and (c) the Licensor Indemnitee provides reasonable assistance and cooperation as requested by the Licensee and at the Licensee's expense.

	
 

	 
	
10.6

	
Without limiting the generality of the foregoing, the Licensee’s indemnification as aforesaid shall include product liability claims and demands for Liabilities attributable to death, personal injury or property damage.

	
 

	 
	
10.7

	
The Licensee shall at its own expense obtain commercial insurance, commensurate with such level of risk as should reasonably be anticipated in the present and the foreseeable future, to insure against those Liabilities described above during the period immediately beginning prior to any Commercialization and continuing during the entire period that the License is in force, plus any additional period thereafter during which any Licensed Product continues to be Commercialized by any Licensee Party. Such insurance shall be in reasonable amounts and on reasonable terms in the circumstances, having regard, in particular, to the nature of the Licensed Products, and shall be subscribed for from a reputable insurance company. The Licensor shall be included as additional insured under such insurance, and the beneficiaries thereof shall include also the respective employees, officers and directors of the Licensor. Said insurance policy shall include a “cross-liability” provision pursuant to which the insurance is deemed to be separate insurance for each named insured (without right of subrogation as against any of the insured under the policy, or any of their representatives, employees, officers, directors or anyone in their name) and shall further provide that the insurer will be obliged to notify each insured in writing at least thirty (30) days in advance of the expiry or cancellation of the policy or policies. The Licensee hereby undertakes to comply with all obligations imposed upon it under such policy or policies and in particular, without limiting the generality of the foregoing, to pay in full all premiums and other payments for which it is liable pursuant to such policy or policies. Upon request, the Licensee shall submit to the Licensor a certificate of insurance evidencing the aforesaid within thirty (30) days of the date of issue of each such policy.

  

	 
	
10

	

 

	
10.8

	
LIMITATION OF LIABILITY. WITH THE EXCEPTION OF ANY BREACH OF SECTIONS 9 AND/OR 10 HERETO, NEITHER PARTY SHALL BE LIABLE (WHETHER UNDER CONTRACT, OR TORT (INCLUDING NEGLIGENCE) FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO BUSINESS EARNINGS, LOST PROFITS OR GOODWILL AND LOST OR DAMAGED DATA OR DOCUMENTATION, SUFFERED BY ANY PERSON, ARISING FROM AND/OR RELATED WITH THIS AGREEMENT, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY'S AGREGATE LIABILITY UNDER, ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL NOT EXCEED AN AMOUNT EQUAL TO $250,000.

	
 

	 
	
11.

	
TERM AND TERMINATION

	
 

	 
	
11.1

	
The term of this Agreement shall commence on the Effective Date and, unless terminated under this Section 11, shall continue in full force and effect on a country-by-country basis until the later of the following: (a) the date of expiration of both the last of the Licensed Patents and the last of the New Patents in the relevant country; or (b) 15 (fifteen) years from the date of the First Commercial Sale in such country (the “Term”).

	
 

	 
	
11.2

	
Each Party shall be entitled to terminate this Agreement (without prejudice to other rights and remedies to which it may be entitled pursuant to this Agreement and/or applicable law) by giving notice in writing to the other Party in any of the following events:

  

	 	
11.2.1

	
Such other Party passed a resolution for voluntary winding up or a winding up application is made against it and not dismissed within sixty (60) days thereafter;

	 	
 

	 
	 	
11.2.2

	
A receiver or liquidator is appointed for such other Party;

	 	
 

	 
	 	
11.2.3

	
Such other Party is declared bankrupt or a receiver or an interim receiver of a material part of its assets is appointed, and the petition in bankruptcy is consented to, acquiesced in or remains undismissed for, or such appointment is not removed within a period of, sixty (60) days.

 

	
11.3

	
Each Party undertakes to notify the other Party of any event detailed in Section 11.2 above within 2 (two) business days of its occurrence.

	
 

	 
	
11.4

	
Either Party shall be entitled to terminate this Agreement (without prejudice to other rights and remedies to which it may be entitled pursuant to this Agreement and/or applicable law) by giving notice in writing to the other Party, if the other Party has committed any breach of this Agreement that is not cured (if capable of being cured) within a sixty (60) days period after receipt of written notice thereof from the terminating Party. In the event of a material breach incurable in nature, termination shall become effective upon such written notice, and the aforesaid 60-day period shall not apply and this Agreement shall immediately revert back to Licensor.

	
 

	 
	
11.5

	
Upon the expiration or termination of this Agreement, howsoever arising (without prejudice to any additional rights or remedies available to either Party pursuant to this Agreement and/or under applicable law):

 

	 	
11.5.1

	
Each Party shall, within thirty (30) days of the effective date of expiration or termination, return to the other Party, or otherwise dispose of as the other Party may instruct, copies of all confidential information disclosed to it, including, inter alia, documentation, technical pamphlets, photographs, specifications and other materials, documents and papers whatsoever, relating to the Licensed IP and/or to the business of the other Party (either directly or indirectly, through its Affiliates or sublicensees) and/or anyone on its behalf may have in their possession or under their control.

  

	 
	
11

	

  

	 	
11.5.2

	
All rights in and to the Licensed IP shall automatically revert to the Licensor, and the Licensee shall thereafter be prohibited from directly making any use of the Licensed IP and/or manufacturing, marketing, selling or distributing the Licensed Products.

	 	
 

	
 

	 	11.5.3	
Upon the termination of this Agreement the Licensor will have the option to purchase any or all of the equipment belonging to the Licensee in connection with this Agreement at either book value or for equity ownership in the Licensee, as shall be agreed upon in good faith by the Parties.

  

	
11.6

	
Expiration or termination of this Agreement shall neither: (a) relieve the Parties of obligations accrued prior to such expiration or termination; nor (b) relieve the Licensee of its obligation to report and pay any royalties and/or other payments due to the Licensor prior to the termination of this Agreement, notwithstanding that the relevant payment date of such royalties and/or other payments may occur after the expiration or the termination of this Agreement.

	
 

	 
	
11.7

	
The Parties’ respective rights under Sections 4, 5 (up to 180 days following termination of this Agreement), 7, 9, and 10-14 (inclusive) shall survive any expiration or termination of this Agreement.

	
 

	 
	
12.

	
ASSIGNMENT

	
 

	 
	
12.1

	
None of the Parties may assign this Agreement or its respective rights, duties and obligations hereunder nor any part thereof to any Third Party without the prior written consent of the other Parties.

	
 

	 
	
12.2

	
Any purported assignment in contravention of the provisions of this Section 12 above shall be null and void, ab initio, and shall constitute a material breach of this Agreement.

	
 

	 
	
13.

	
GOVERNING LAW, MEDIATION AND ARBITRATION

	
 

	 
	
13.1

	
This Agreement, its interpretation, validity and breach shall be governed exclusively by the laws of the State of Israel without regard to its conflict of laws rules.

	
 

	 
	
13.2

	
Any disputes or controversy or claim arising under, out of or in connection with this Agreement (and subsequent amendments thereof), its valid conclusion, binding effect, interpretation, performance, breach or termination, including tort and unjust enrichment claims, shall be exclusively submitted to, and finally settled by the courts of the City of Tel Aviv, Israel. Notwithstanding the aforesaid, either Party shall be entitled to resort to courts of competent jurisdiction to apply for an injunction, or any equivalent remedy, in order to restrain the breach of any restrictive covenants pursuant to this Agreement.

	
 

	 
	
14.

	
MISCELLANEOUS

	
 

	 
	
14.1

	
If any provision contained in this Agreement is determined to be invalid or unenforceable, in whole or in part, the remaining provisions and any partially enforceable provision will, nevertheless, be binding and enforceable, and the Parties hereby agree to substitute for the invalid provision a valid provision which most closely approximates the intent and the economic effect of the invalid provision.

	
 

	 
	
14.2

	
The Parties undertake, during the term of this Agreement, to comply with all applicable laws, regulatory requirements and codes of practice in carrying out their respective obligations under this Agreement and in all matters relating hereto.

  

	 
	
12

	

  

	
14.3

	
The failure or delay of a Party to the Agreement to claim the performance of an obligation of the other Party shall not be deemed a waiver of the performance of such obligation.

	
 

	 
	
14.4

	
No amendment or alteration of the Agreement shall be valid unless agreed in advance in writing by all Parties hereto.

	
 

	 
	
14.5

	
Notices to be given by one Party to another shall be deemed properly given if reduced to writing and transmitted to the Party’s address appearing in the first page of this Agreement, by regular mail, certified registered mail - all to be effective 5 (five) days after their sending date, or by facsimile or electronic mail with confirmation receipt - to be effective at the first business day following the date of transmission, or by messenger with confirmation receipt - to be effective at the date of the confirmation receipt. The addresses of the Parties, listed in page 1 (one) of this Agreement, shall be subject to any change of such address notified in writing by one Party to the other, according to the procedure stipulated in this Section 14.5.

 

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IN WITNESS THE HANDS OF THE PARTIES 

 

			
	ADVANCE GRAPHENE LTD.		GRAPHENE MATERIALS LTD.
	 	 			 
	BY: 	MARK RADOM		BY:	JAKOB ZECHARIA
	TITLE:	 DIRECTOR		TITLE:	DIRECTOR
	DATE: 	____________________		DATE:	 ____________________

 

	 
	
14

	

 

SCHEDULE 1.5.5; LICENSEE DEVELOPMENT PLAN 
[ATTACHED] 

 SCHEDULE 9.1; NDA 
[ATTACHED]

 

 

15

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