Document:

EXHIBIT 10.39

 

MASSACHUSETTS
INSTITUTE OF TECHNOLOGY

 

and

 

SONTRA
MEDICAL, INC.

 

PATENT
LICENSE AGREEMENT

 

 

(EXCLUSIVE)

 

 

 

 

TABLE
OF CONTENTS

 

	
  WITNESSETH

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2

  	
  GRANT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3

  	
  DILIGENCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4

  	
  ROYALTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5

  	
  REPORTS
  AND RECORDS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  6

  	
  PATENT
  PROSECUTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  7

  	
  INFRINGEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  8

  	
  PRODUCT LIABILITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  10

  	
  NON-USE OF NAMES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  11

  	
  ASSIGNMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  12

  	
  DISPUTE
  RESOLUTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  13

  	
  TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14

  	
  PAYMENTS,
  NOTICES AND OTHER COMMUNICATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  16

  	
  CONFIDENTIAL
  INFORMATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX A

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX B

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX C1

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX C2

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX D

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX E

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX F

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX G

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX H

  	
   

  	
   

  

 

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

and

SONTRA MEDICAL, INC.

PATENT
LICENSE AGREEMENT

 

This
Agreement is made and entered into this 30th of June 1998, (the “EFFECTIVE
DATE”) by and between the MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a corporation
duly organized and existing under the laws of the Commonwealth of Massachusetts
and having its principal office at 77 Massachusetts Avenue, Cambridge,
Massachusetts 02139, U.S.A. (hereinafter referred to as “M.I.T.”), and SONTRA
MEDICAL, INC. a corporation duly organized under the laws of Delaware and
having its principal office at 21 Erie Street, Suite 22, Cambridge, MA 02139
(hereinafter referred to as “LICENSEE”).

WITNESSETH

 

WHEREAS, M.I.T. is the owner
of certain PATENT RIGHTS (as later defined herein) relating to M.I.T. Case No.
4126, “Ultrasound Enhancement of Transdermal Drug Delivery,” by Joseph Kost,
Robert S. Langer and Drora Levy and has the right to grant licenses under said
PATENT RIGHTS, subject only to a royalty-free, nonexclusive license heretofore
granted to the United States Government;

 

WHEREAS, M.I.T. desires to
have the PATENT RIGHTS developed and commercialized to benefit the public and
is willing to grant a license thereunder;

 

WHEREAS, LICENSEE has
represented to M.I.T., to induce M.I.T. to enter into this Agreement, that LICENSEE
is experienced in the start-up and building of companies that develop, produce,
manufacture, market and sell medical device and biopharmaceutical products,
medical products similar to the LICENSED PRODUCT(s) (as later defined herein)
and/or the use of the LICENSED PROCESS(es) (as later defined herein) and that
it shall commit itself to a thorough, vigorous and diligent program of
exploiting the PATENT RIGHTS so that public utilization shall result therefrom;

 

WHEREAS, Robert Langer an
inventor of the PATENT RIGHTS, how holds or shall shortly acquire an equity
position in LICENSEE, and will be remaining at M.I.T. as a Professor in the
department of Chemical Engineering, has signed the Conflict Avoidance Statement
attached hereto as APPENDIX C1;

 

WHEREAS, James Weaver an
inventor of the PATENT RIGHTS, how holds or shall shortly acquire an equity
position in LICENSEE, and will be remaining at M.I.T. as a Senior Research
Scientist in HST, has signed the Conflict Avoidance Statement attached hereto
as APPENDIX C2;

 

3

 

WHEREAS Robert Langer,
Joseph Kost, Samir Mitragotri, inventors of the PATENT RIGHTS, now hold or
shall shortly acquire an equity position in LICENSEE, their waiver’s of
participation in M.I.T.’s institutional equity share are attached hereto as
APPENDICES D, E, and F;

 

WHEREAS, M.I.T. is accepting
equity in partial lieu of royalties, M.I.T.’s Vice President for Research has
granted his approval; and

 

WHEREAS, LICENSEE desires to
obtain a license under the PATENT RIGHTS upon the terms and conditions
hereinafter set forth.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:

1 - DEFINITIONS

 

For the purposes of this Agreement,
the following words and phrases shall have the following meanings:

 

1.1  “AFFILIATE” shall mean any legal entity
(such as a corporation, partnership or limited liability company) that is
controlling, controlled by, or under common control with LICENSEE.  For the purposes of this definition, the
term “control” means (i) beneficial ownership of at least fifty percent (50%)
of the voting securities of a corporation or other business organization with
voting securities of (ii) a fifty percent (50%) or greater interest in the net
assets or profits of a partnership or other business organization without
voting securities.

 

1.2  “BLOCKING PATENT” shall mean any issued and
unexpired patent not within the PATENT RIGHTS the claims of which cover a
LICENSED PRODUCT or any method, process or procedure within the PATENT RIGHTS
and, but for rights and license granted by the party that owns or controls such
patent, would be infringed by the manufacture, use or sale of such LICENSED
PRODUCT or the practice of any method, process or procedure within the PATENT
RIGHTS.

 

1.3  “EP COMPANY” shall mean a company which has
licensed at least half of the WEAVER PATENTS and is actively working toward
commercializing them in the field of electroporation.

 

1.4  “EXCLUSIVE PERIOD” is defined as commencing
on the EFFECTIVE DATE and continuing in full force and effect until expiration,
revocation or invalidation of the last patent within the PATENT RIGHTS licensed
to LICENSEE, unless terminated earlier pursuant to this Section 13.

 

1.5  “FIELD OF USE” shall mean all fields.

 

4

 

1.6  “LICENSED PROCESS” shall mean any process
which is covered in whole or in part by a VALID CLAIM contained in the PATENT
RIGHTS.

 

1.7  “LICENSED PRODUCT” shall mean any product or
part thereof which:

 

a.                                       is covered in
whole or in part by an issued, VALID CLAIM contained in the PATENT RIGHTS in
the country in which any such product or part thereof is made, used or sold; or

b.                                      is manufactured
by using a process or is employed to practice a process which is covered in
whole or in part by an issued, VALID CLAIM contained in the PATENT RIGHTS in
the country in which any LICENSED PROCESS is used or in which such product or
part thereof is used or sold.

1.8  “LICENSEE” shall mean SONTRA MEDICAL, INC.

 

1.9  “M.I.T. HOLDER” shall mean those entities
listed in APPENDIX G.

 

1.10  “NET SALES” shall mean the gross revenues
actually received by LICENSEE or AFFILIATES from the SALE of LICENSED PRODUCTS,
less the sum of the following:

 

a.                         normal and
customary rebates, and cash and trade discounts;

 

b.                        sales, use
and/or other excise taxes or duties actually paid;

 

c.                         the cost of any
packages and packing;

 

d.                        insurance costs
and outbound transportation charges prepaid or allowed;

 

e.                         import and/or
export duties actually paid; and

 

f.                           amounts allowed
or credited due to returns.

 

No deductions shall be made
for commissions paid to individuals whether they be with independent sales
agencies or regularly employed by LICENSEE and on its payroll, or for cost of
collections.  NET SALES shall occur when
a LICENSED PRODUCT or LICENSED PROCESS shall be actually paid.

 

1.11  “PATENT RIGHTS” shall mean all of the
following M.I.T. intellectual property:

 

(a)                    the United States and
international patents listed on Appendix A;

 

(b)                   the United States and
international patent applications listed on Appendix A and the resulting
patents;

 

(c)                    any divisionals,
continuations, continuation-in-part applications, and continued prosecution
applications (and their relevant international equivalents) filed after the
EFFECTIVE DATE of the patent applications listed on Appendix A to the extent
the claims are directed to subject matter specifically described in the patent
applications listed on Appendix A, and the resulting patents;

 

5

 

(d)                   any patents resulting from
reissues, reexaminations, or extensions (and their relevant international
equivalents) of the patents described in (a), (b), and (c) above; and

 

(e)                    international (non-United
States) patent applications filed after the EFFECTIVE DATE and the relevant
international equivalents to divisionals, continuations, continuation-in-part
applications and continued prosecution applications of such patent applications
to the extent the claims are directed to subject matter specifically described
in the patents or patent applications referred to in (a), (b), (c), and (d)
above, and the resulting patents.

1.12  “SALE” or “SELL” or “SOLD” shall mean the
transfer or disposition of a LICENSED PRODUCT for value to a party other than
LICENSEE or a AFFILIATE, which transfer or disposition would, but for the
rights and license granted hereunder, infringe a VALID CLAIM in the Country in
which such LICENSED PRODUCT is transferred or disposed.

 

1.13  “SUBLICENSE FEES” shall mean all cash
license fees paid or payable to LICENSEE or to an AFFILIATE upon execution of a
sublicense between  LICENSEE or a
AFFILIATE and a third party relating to LICENSED PRODUCTS and/or the PATENT
RIGHTS, and any later fees paid under such sublicense, but such fees shall not
include royalties, advances against future royalties that are to be credited
against future running royalties to be paid by SUBLICENSEE on sale of LICENSED
PRODUCTS, LICENSED PRODUCT development funds, equity investments, or scientific
benchmark payments or payments for past research expenditures relating to
development of LICENSED PRODUCTS. 
“SUBLICENSEE FEES” shall include shares of stock, or any other types of
securities receiving by LICENSEE for such sublicenses.

 

1.14  “SUBLICENSEE” shall mean any non-AFFILIATE
sublicensee of the rights granted to LICENSEE under paragraph 2.1 of this
Agreement.

 

1.15  “TERRITORY” shall mean worldwide.

 

1.16  “VALID CLAIM” shall mean either (a) a claim of
an issued and unexpired patent included within the PATENT RIGHTS, which has not
been held unenforceable, unpatentable or invalid by a court or other
governmental agency of competent jurisdiction, and which has not been admitted
to be invalid or unenforceable through reissue, disclaimer or otherwise, or (b)
a claim in a hypothetical issued patent corresponding to a pending claim in a
patent application within the PATENT RIGHTS, provided that if such pending
claim has not issued as a claim of an issued patent within the PATENT RIGHTS
within six (6) years after the filing date from which such patent application
takes priority, such pending claim shall not be a VALID CLAIM for purposes of
this LICENSE AGREEMENT.  In the event
that a claim of an issued patent within the PATENT RIGHTS is held by a court or
other governmental agency of competent jurisdiction to be 

 

6

 

unenforceable, unpatentable or invalid, and
such holding is reversed on appeal by a higher court or agency of competition
jurisdiction, such claim shall be reinstated as a VALID CLAIM hereunder.

 

1.17  “WEAVER PATENT” shall mean U.S. Patent
Numbers: 5,019,034, 5,389,069, 5,547,467, 5,667,470, 5,749,847, and patents
resulting from U.S. patent serial numbers: 08/695,367, 08/695,032, 09/083,497,
and corresponding foreign equivalent patents directed toward subject matter
described in the above referenced U.S. patents and patent applications.

2 - GRANT

 

2.1  M.I.T. hereby grants to LICENSEE and to it
AFFILIATES the exclusive right and license in the TERRITORY for the FIELD OF
USE to practice under the PATENT RIGHTS and, to the extent not prohibited by
other patents, to make, have made, use, lease, sell and import LICENSED
PRODUCTS and to practice the LICENSED PROCESSES, until the expiration of the
last to expire of the PATENT RIGHTS, unless this Agreement shall be sooner
terminated according to the terms hereof. 
This exclusive license shall be subject to the license rights of the
U.S. Government under P. 2.3 below, and the rights of M.I.T. reserved under P.
2.4 below.

 

2.2  LICENSEE agrees, to the extent required by
law, that LICENSED PRODUCTS leased or sold in the United States shall be
manufactured substantially in the United States.

 

2.3  In order to establish a period of
exclusivity for LICENSEE, M.I.T. hereby agrees that it shall not grant any
other license to make, have made, use, lease, sell and import LICENSED PRODUCTS
or to utilize LICENSED PROCESSES subject to the royalty-free, nonexclusive
license rights of the United States Government per FAR 52.227-11, in the
TERRITORY for the FIELD OF USE.

 

2.4  M.I.T. also grants to LICENSEE a first
option to add to this Agreement patent rights to new improvement inventions
arising from the Laboratory of Professor Robert Langer before August 28, 1998,
which are dominated by the PATENT RIGHTS of this Agreement existing as of the
Effective Date, provided that:

(a)                    For each new invention,
LICENSEE’s option shall extend for ninety (90) days from the date at which M.I.T.
shall notify LICENSEE of the invention.

 

(b)                   The Option for each new
invention shall be exercisable for a License Issue Fee to be negotiated in good
faith, based on the importance of the improvement, but not to exceed Fifteen
Thousand Dollars ($15,000) and patenting costs.  If LICENSEE exercises its option, the patent rights of the new
invention shall be added by Amendment to Appendix A of this Agreement.

 

(c)                    The options granted to
LICENSEE under this P. 2.4 shall, however, be subject to any rights granted to
sponsors of the research leading to the new inventions, and this P. 2.4 shall
not restrict M.I.T.’s right to prospectively grant options or licenses to such
invention to sponsors of the research prior to the existence of the new
inventions.

 

7

 

2.5  M.I.T. reserves the right to practice under
the PATENT RIGHTS for noncommercial research purposes.

 

2.6  LICENSEE and any AFFILIATE may grant and
authorize sublicenses within the scope of the right and license granted to
LICENSEE pursuant to this LICENSE AGREEMENT. 
LICENSEE and any AFFILIATE, if applicable, shall monitor the operations
of their respective SUBLICENSEES in connection with the obligations of LICENSEE
and any AFFILIATE pursuant to this LICENSE AGREEMENT, and shall take all
reasonable steps to ensure that such SUBLICENSEES comply fully with such
obligations.  LICENSEE shall promptly
inform M.I.T. of the name and address of each such SUBLICENSEE.  Any SUBLICENSEE shall also be required to
indemnify and hold harmless M.I.T. and to carry insurance pursuant to Article 8
of this Agreement.  Upon termination of
this LICENSE AGREEMENT, any and all existing sublicenses granted by LICENSEE or
any AFFILIATE, if applicable, shall survive; provided that such SUBLICENSEES
promptly agree in writing to be bound by the terms of this License Agreement
including payment of license maintenance fees under P. 4.1 and payment of
patenting costs under Article 6, with such payments prorated by SUBLICENSEES as
appropriate.

 

2.7  LICENSEE agrees to incorporate Articles 2,
5, 7, 8, 9, 10, 12, 13, 15 and 16 of this Agreement into its sublicense
agreements, so that these Articles shall be binding upon such SUBLICENSEES as
if they were parties to this Agreement.

 

2.8  LICENSEE agrees to forward to M.I.T. a copy
of any and all sublicense agreements promptly upon execution by the parties.

 

2.9  If at any time following five (5) years
after the Effective Date of this Agreement, M.I.T. establishes a bona fide
detailed plan to develop a product covered by the PATENT RIGHTS (a “PLANNED
PRODUCT”), or receives such a plan from a reputable third party with resources
reasonably necessary to develop and commercialize such PLANNED PRODUCT, M.I.T.
may give written notice to LICENSEE of such event.  If LICENSEE, an AFFILIATE, or a SUBLICENSEE is not then
developing, producing or using a LICENSED PRODUCT that is substantially similar
to or intended for a similar purpose as the PLANNED PRODUCT that M.I.T. or such
third party proposes to develop, and the development or sublicensing of such a
product similar to a PLANNED PRODUCT is not within LICENSEE’S, its AFFILIATES,
or SUBLICENSEE’S business plans or activities for development and
commercialization on a schedule that either reasonably approximates that of
such third party or is more favorable than that of such third party, LICENSEE
shall elect one of the following options, within 120 days of M.I.T.’s notice:

 

a.                                       Undertake
reasonable efforts to undertake research within a reasonable period of time toward
the development of such PLANNED PRODUCT (directly or indirectly through third
parties); or

 

8

 

b.                                      Enter into good
faith negotiations with the third party for a sublicense to the PATENT RIGHTS
in the third party’s field of use.  If
such a sublicense has not been granted within six months after such
notification, LICENSEE shall release its exclusive rights under this LICENSE
AGREEMENT to such third party in the appropriate field of use, and M.I.T. may
negotiate with the third party to grant such a sublicense, provided that any
sublicense granted by M.I.T. shall:

 

i.                                          Be confined to
a single class of therapeutic products not competitive with any LICENSED
PRODUCT under development or sold by LICENSEE, an AFFILIATE, or a SUBLICENSEE
at the time of granting of the sublicense or within LICENSEE’s business plans
or activities for development and commercialization; and

 

ii.                                       Be
nonexclusive; and

 

iii.                                    Require the
third party to commit to a development plan in the third party field of use
committing a minimum of $250,000 per year in development funds beginning within
six months of the granting of the sublicense; and

 

iv.                                   Require running
royalties no less than those specified for LICENSEE in subparagraph 4.1 (c)
below.

Any revenue derived by
M.I.T. in M.I.T.’s sublicensing of the PATENT RIGHTS as specified in this
Section 2.10 shall be shared equally between M.I.T. and LICENSEE.

 

2.11  M.I.T.’s notice to LICENSEE under this
Paragraph shall also include notice of the product and medical indication for
which the sublicense is requested.

 

2.12  Nothing in this Agreement shall be construed
to confer any rights upon LICENSEE, its AFFILIATES, or it’s SUBLICENSEES by
implication, estoppel or otherwise as to any technology or patent rights of
M.I.T. or any other entity other than the PATENT RIGHTS, regardless of whether
such patent rights shall be dominant or subordinate to any PATENT RIGHTS.

 

3 - DILIGENCE

 

3.1  LICENSEE shall use its best efforts, or
shall cause its AFFILIATES and SUBLICENSEES to use their best efforts, to bring
one or more LICENSED PRODUCTS or LICENSED PROCESSES to market through a
thorough, vigorous and diligent program for exploitation of the PATENT RIGHTS
and to continue active, diligent marketing efforts for one or more LICENSED
PRODUCTS or LICENSED PROCESSES throughout the life of this Agreement.

 

3.2  LICENSEE shall raise a cumulative total
at each date below of investment capital and/or research and development funds
and/or other funds of at least Two Million Five Hundred Thousand Dollars
($2,500,000) within two years of the EFFECTIVE DATE.

 

9

 

3.3  LICENSEE agrees to enter into good faith
negotiations with an EP COMPANY for the purpose of granting the EP COMPANY a
license to M.I.T. Case 6792, “Transport Enhancement By Simultaneous Application
of Electric And Acoustic Fields,” by Joseph Kost, Robert S. Langer, Jr., Samir
Mitagotri, Uwe Pliquett, and James C. Weaver so that the EP COMPANY may
practice electroporation in combination with sonophoresis, as described in
M.I.T. Case 6792, provided that the EP COMPANY negotiates in good faith with
LICENSEE for a license to the WEAVER PATENTS so that LICENSEE may practice
sonophoresis in combination with electroporation as described in M.I.T. case
6792.

 

3.4  LICENSEE’s failure to perform in accordance
with either Paragraphs 3.1 or 3.2 above shall be grounds for M.I.T. to
terminate this Agreement pursuant to Paragraph 13.3 hereof.

 

3.5  LICENSEE’s failure to perform in accordance
with Paragraph 3.3 above shall be grounds for M.I.T. to terminate LICENSEE’s
rights to case 6792.

 

4 - ROYALTIES

 

4.1  For the rights, privileges and license
granted hereunder, LICENSEE shall pay royalties to M.I.T. in the manner
hereinafter provided to the end of the term of the PATENT RIGHTS or until this
Agreement shall be terminated:

 

(a)                                  License
Maintenance Fees of Twenty Five Thousand Dollars ($25,000) per year payable on
January 1, 1999 and on January 1 of each year thereafter; provided, however,
that Running Royalties subsequently due on NET SALES for each said year, if
any, shall be creditable against the License Maintenance Fee for said
year.  License Maintenance Fees paid in
excess of Running Royalties shall be creditable to Running Royalties for future
years.

 

(b)                                 Running
Royalties in an amount equal to:

 

i.                                          Two Percent
(2%) of NET SALES of the LICENSED PRODUCTS and LICENSED PROCESSES used, leased
or sold by and/or for LICENSEE and/or its AFFILIATES.

 

ii.                                       One percent
(1%) of NET SALES attributed to SALES of LICENSED PRODUCTS by SUBLICENSEES of
either LICENSEE or of an AFFILIATE.

 

(c)                                  A share of
SUBLICENSEE FEES received by LICENSEE for sublicensing of rights granted
hereunder, equal to:

 

(i)                                     Twenty Five
percent (25%) if the PATENT RIGHTS per se are sublicensed without substantial
and essentially simultaneous sublicensing of technology or patents owned by
LICENSEE or its AFFILIATES; or

 

(ii)                                  Ten Percent
(10%) if the PATENT RIGHTS per se are sublicensed with  substantial
and essentially simultaneous sublicensing of technology or patents owned by
LICENSEE or its AFFILIATES.

 

10

 

(d)                                 Equity.

 

(i)                                     Initial Grant.  On or before the EFFECTIVE DATE, LICENSEE
shall issue a total of Two Hundred Sixty Three Thousand One Hundred and Fifty
Eight (263,158) shares of Common Stock of LICENSEE, $[.01] par value per share, (the “Shares”) in
the name of M.I.T. and of such persons as M.I.T. shall direct (“M.I.T.
HOLDER”), and each M.I.T. HOLDER shall receive such number of shares as M.I.T.
shall direct.

 

LICENSEE represents and
warrants to M.I.T. that, as of the Effective Date, the aggregate number of
Shares equals Five Percent (5%) of the LICENSEE’s issued and outstanding Common
Stock calculated on a “Fully Diluted Basis.” 
For purposes of this Section 4.1(d), “Fully Diluted Basis” shall mean
that the total number of issued and outstanding shares of the LICENSEE’s Common
Stock shall be calculated to include conversion of all issued and outstanding
securities then convertible into common stock, the exercise of all then
outstanding options and warrants to purchase shares of common stock, whether or
not then exercisable, and shall assume the issuance or grant of all securities
reserved for issuance pursuant to any LICENSEE stock or stock option plan in
effect on the date of the calculation.

 

LICENSEE further represents
and warrants to M.I.T. that LICENSEE’s articles of incorporation, attached
hereto as Appendix H are the true and complete articles of incorporation on the
EFFECTIVE DATE, and that LICENSEE shall not change them in such a way as to
change the rights and privileges of the shares of stock issued to the M.I.T.
HOLDERS.

 

(ii)                                  Anti-Dilution
Protection.  LICENSEE
shall issue additional shares of Common Stock to M.I.T. and each M.I.T. Holder
pro rata, such that M.I.T.’s and each M.I.T. Holders’ ownership of outstanding
Common Stock shall not fall below Five Percent (5%) on a Fully Diluted Basis,
as calculated after giving effect to the anti-dilutive issuance.  Such issuances shall continue until and
including the date upon which a total of Two Million Five Hundred Thousand
Dollars ($2,500,000) in cash in exchange for LICENSEE’s capital stock (the
“Funding Threshold”) shall be received by LICENSEE.  Thereafter, no additional shares shall be due to M.I.T. or any
M.I.T. Holder pursuant to this section.

 

(iii)                               Participation
in Future Private Equity Offerings.  After the date of the Funding Threshold, the M.I.T. Holders shall
have the right to purchase additional shares of the LICENSEE’s Common Stock in
any private offering by the LICENSEE of its equity securities in exchange for
cash, to maintain its pro rata ownership as calculated immediately prior to
such offering on a Fully Diluted Basis, pursuant to the terms and conditions at
least as favorable as those granted to the other offerees.  All rights granted to M.I.T. pursuant to
this Section 4.1(e)(iii) shall terminate immediately prior to a firm commitment
underwritten public offering of the LICENSEE’s common stock resulting in gross
proceeds to the LICENSEE of at least $10 million.

 

11

 

4.2  All payments due hereunder shall be paid in
full, without deduction of taxes or other fees which may be imposed by any
government, except as otherwise provided in Paragraph 1.5(b).

 

4.3  Running Royalties under P. 4.1 (c) shall be
reduced by half (50%) for LICENSED PRODUCTS made in a country in which PATENT
RIGHTS are pending or issued and unexpired, but sold in a country in which there
are no pending or issued, unexpired PATENT RIGHTS.  No Running Royalties shall be due on LICENSED PRODUCTS which are
both made and sold in countries in which no pending, (but not in excess of
seven years), or issued and unexpired PATENT RIGHTS exist.

 

4.4  No multiple royalties shall be payable
because any LICENSED PRODUCT, its manufacture, use, lease or sale are shall be
covered by more than one PATENT RIGHTS patent application or PATENT RIGHTS
patent licensed under this Agreement. 
No royalty shall be payable under Paragraph 4.1(c)i and Paragraph
4.1(c)ii above with respect to the SALE of LICENSED PRODUCTS between or among
LICENSEE and AFFILIATES, provided that such LICENSED PRODUCTS are to be resold
to unrelated third parties, or with respect to any fees or other payments paid
between or among LICENSEE and AFFILIATES.

 

4.5  Royalty payments shall be paid in United
States dollars in Cambridge, Massachusetts, or at such other place as M.I.T.
may reasonably designate consistent with the laws and regulations controlling
in any foreign country.  If any currency
conversion shall be required in connection with the payment of royalties
hereunder, such conversion shall be made by using the exchange rate prevailing
at the Chase Manhattan Bank (N.A.) on the last business day of the calendar
quarterly reporting period to which such royalty payments relate.

 

4.6  LICENSEE shall have the right to deduct from
the royalties payable to M.I.T. under Section 4.1(c) the amount which LICENSEE,
AFFILIATES or a SUBLICENSEE of either LICENSEE or a AFFILIATE, as the case may
be, is paying to a third party for rights and license under a BLOCKING PATENT
to manufacture, use or sell such LICENSED PRODUCTS or practice of any method,
process or procedure within the PATENT RIGHTS. 
However, by reason of this Paragraph 4.6, the royalty payable to M.I.T.
under Paragraph 4.1(c) shall not be reduced to less than one percent (1%) of
NET SALES attributed to SALES of LICENSED PRODUCTS by LICENSEE and/or
AFFILIATES, and the royalty payable to M.I.T. under Paragraph 4.1(c)i and/or
Paragraph 4.1(c)ii shall not be reduced to less than one half of one percent
(0.5%) of NET SALES attributed to SALES of LICENSED PRODUCTS by SUBLICENSEES of
either LICENSEE or a AFFILIATE.

 

12

 

5 - REPORTS AND RECORDS

 

5.1  LICENSEE shall keep, and shall cause its
AFFILIATES and SUBLICENSEES to keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing the
amounts payable to M.I.T. hereunder. 
Said books of account shall be kept at LICENSEE’s principal place of
business or the principal place of business or the appropriate division or
AFFILIATE of LICENSEE to which this Agreement relates.  Said books and the supporting data shall be
open at all reasonable times for five (5) years following the end of the
calendar year to which they pertain, to the inspection of M.I.T. or its
accountants for the purpose of verifying LICENSEE’s royalty statement or
compliance in other respects with this Agreement.  Should such inspection lead to the discovery of a greater than
Ten Percent (10%) discrepancy in reporting to M.I.T.’s detriment.  LICENSEE agrees to pay the full cost of such
inspection.

 

5.2  LICENSEE shall deliver to M.I.T. true and
accurate reports, giving such particulars of the business conducted by
LICENSEE, its AFFILIATES and its SUBLICENSEES under this Agreement as shall be
pertinent to diligence under Article 3 and royalty accounting hereunder:

 

a.                                       before the
first commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, annually, on
January 31 of each year; and

 

b.                                      after the first
commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, quarterly, within
sixty (60) days after March 31, June 30, September 30 and December 31, of each
year.

 

These reports shall include
at least the following:

 

a.                                       number of
LICENSED PRODUCTS manufactured, leased and sold by and/or for LICENSEE, its
AFFILIATES, and SUBLICENSEES;

 

b.                                      accounting for
all LICENSED PROCESSES used or sold by and/or for LICENSEE its AFFILIATES, and
SUBLICENSEES;

 

c.                                       accounting for
NET SALES, noting the deductions applicable as provided in Paragraph 1.5;

 

d.                                      Running
Royalties due under Paragraph 4.1(b);

 

e.                                       Payments on
SUBLICENSEE FEES due under paragraph 4.1(c);

 

f.                                         total royalties
due; and

 

g.                                      names and
addresses of all AFFILIATES and SUBLICENSEES of LICENSEE.

 

5.3  With each such report submitted, LICENSEE
shall pay to M.I.T. the royalties due and payable under this Agreement.  If no royalties shall be due, LICENSEE shall
so report.

 

13

 

5.4  On or before the ninetieth (90th) day
following the close of LICENSEE’s fiscal year, LICENSEE shall provide M.I.T.
with LICENSEE’s certified financial statements for the preceding fiscal year
including, at a minimum, a balance sheet and an income statement.

 

5.5  The amounts due under Articles 4 and 6
shall, if overdue, bear interest until payment at a per annum rate One Percent
(1%) above the prime rate in effect at the Chase Manhattan Bank (N.A.) on the
due date.  The payment of such interest
shall not foreclose M.I.T. from exercising any other rights it may have as a
consequence of the lateness of any payment.

 

6 - PATENT PROSECUTION

 

6.1  M.I.T. shall apply for, seek prompt issuance
of, and maintain the PATENT RIGHTS during the term of this Agreement.  Appendix B is a list of the foreign
countries in which patent applications corresponding to the United States
Patent applications listed in Appendix A shall be filed.  Appendix B may be amended by mutual
agreement of both parties.  The filing,
prosecution and maintenance of all PATENT RIGHTS applications and patents shall
be the primary responsibility of M.I.T.; provided, however, LICENSEE shall have
reasonable opportunities to advise M.I.T. and shall cooperate with M.I.T. in
such filing, prosecution and maintenance.

 

6.2  LICENSEE shall reimburse M.I.T. for all
patent costs for the PATENT RIGHTS prior to the EFFECTIVE DATE which were not
previously reimbursed by former licensees. 
LICENSEE shall pay such fees and costs to M.I.T. within thirty (30) days
of invoicing.

 

6.3  LICENSEE shall reimburse M.I.T. for all
patenting costs incurred in the filing prosecution and maintenance of the
PATENT RIGHTS incurred after the Effective Date.  Such reimbursement shall be within thirty (30) days of invoicing.

 

6.4  At any time during the term of this
Agreement, LICENSEE may elect to assume responsibility for prosecution of the
PATENT RIGHTS in M.I.T.’s name at LICENSEE’s expense by so notifying M.I.T. in
writing.  Such prosecution shall be
conducted in M.I.T.’s best interests, and LICENSEE shall not abandon any
substantive claim without prior written permission from M.I.T., such permission
not to be unreasonably withheld.

 

7 - INFRINGEMENT

 

7.1  Notification of Infringement.  Each party agrees to provide written notice
to the other party promptly after becoming aware of any infringement of the
PATENT RIGHTS.

7.2  Rights to Prosecute Infringements.

 

(a)           LICENSEE Right to Prosecute.  So long as LICENSEE remains the exclusive
licensee of the PATENT RIGHTS in the FIELD OF USE in the TERRITORY, 

 

14

 

LICENSEE, to the extent permitted by law,
shall have the right, under its own control and at its own expense, to
prosecute any third party infringement of the PATENT RIGHTS in the FIELD OF USE
in the TERRITORY, subject to Section 7.4. 
If required by law, M.I.T. shall permit any action under this Section to
be brought in its name, including being joined as a party-plaintiff, provided
that LICENSEE shall hold M.I.T. harmless from, and indemnify M.I.T. against,
any costs, expenses, or liability that M.I.T. incurs in connection with such
action.

 

Prior
to commencing any such action, LICENSEE shall consult with M.I.T. and shall
consider the views of M.I.T. regarding the advisability of the proposed action
and its effect on the public interest. 
LICENSEE shall not enter into any settlement, consent judgment, or other
voluntary final disposition of any infringement action under this Section
without the prior written consent of M.I.T.

(b)           M.I.T. Right to Prosecute.  In the event that LICENSEE is unsuccessful
in persuading the alleged infringer to desist or fails to have initiated an
infringement action within a reasonable time after LICENSEE first becomes aware
of the basis for such action, M.I.T. shall have the right, at its sole
discretion, to prosecute such infringement under its sole control and at its
sole expense, and any recovery obtained shall belong to M.I.T.

7.3  Declaratory Judgment Actions.  In the event that a declaratory judgment
action is brought against M.I.T. or LICENSEE by a third party alleging
invalidity, unenforceability, or non-infringement of the PATENT RIGHTS, M.I.T.,
at its option, shall have the right within twenty (20) days after commencement
of such action to take over the sole defense of the action at its own
expense.  If M.I.T. does not exercise
this right, LICENSEE may take over the sole defense of the action at LICENSEE’s
sole expense, subject to Section 7.4.

7.4  Recovery.  Any recovery obtained in an action brought by LICENSEE under
Sections 7.2 or 7.3 shall be distributed as follows:  (i) each party shall be reimbursed for any expenses incurred in
the action (including the amount of any royalty or other payments withheld from
M.I.T. as described below), (ii) as to ordinary damages, LICENSEE shall receive
an amount equal to its lost profits or a reasonable royalty on the infringing
sales, or whichever measure of damages the court shall have applied, and
LICENSEE shall pay to M.I.T. based upon such amount a reasonable approximation
of the royalties and other amounts that LICENSEE would have paid to M.I.T. if
LICENSEE had sold the infringing products, processes and services rather than the
infringer, and (iii) as to special or punitive damages, the parties shall share
equally in any award.  LICENSEE may
offset a total of fifty percent (50%) of any expenses incurred under Sections
7.2 and 7.3 

 

15

 

against any payments due to M.I.T. under
Article 4, provided that in no event shall the such payments under Article 4,
when aggregated with any other offsets and credits allowed under this
Agreement, be reduced by more than fifty percent (50%) in any reporting period.

 

7.5  Cooperation.  Each party agrees to cooperate in any action
under this Article which is controlled by the other party, provided that the
controlling party reimburses the cooperating party promptly for any costs and
expenses incurred by the cooperating party in connection with providing such
assistance.

 

7.6  Right to Sublicense.  So long as LICENSEE remains the exclusive
licensee of the PATENT RIGHTS in the FIELD OF USE in the TERRITORY, LICENSEE
and any AFFILIATE shall have the sole right to sublicense any alleged infringer
in the FIELD OF USE in the TERRITORY for future use of the PATENT RIGHTS in
accordance with the terms and conditions of this Agreement relating to
sublicenses.  Any upfront fees shall be
treated as set forth in Article 4.

 

8 - PRODUCT LIABILITY

8.1  Indemnification.

 

(a)           Indemnity. 
LICENSEE shall indemnify, defend, and hold harmless M.I.T. and its
trustees, officers, faculty, students, employees, and agents and their
respective successors, heirs and assigns (the “Indemnitees”), against any
liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with
any claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions in the form of tort, warranty,
or strict liability and regardless of whether such action has any factual
basis) concerning any product, process, or service that is made, used, sold, or
imported pursuant to any right or license granted under this Agreement.

 

(b)           Procedures. 
The Indemnitees agree to provide LICENSEE with prompt written notice of
any claim, suit, action, demand, or judgment for which indemnification is
sought under this Agreement.  LICENSEE
agrees, at its own expense, to provide attorneys reasonably acceptable to
M.I.T. to defend against any such claim. 
The Indemnitees shall cooperate fully with LICENSEE in such defense and
will permit LICENSEE to conduct and control such defense and the disposition of
such claim, suit, or action (including all decisions relative to litigation,
appeal, and settlement); provided, however, that any Indemnitee shall have the
right to retain its own 

 

16

 

counsel, at the expense of LICENSEE, if
representation of such Indemnitee by the counsel retained by LICENSEE would be
inappropriate because of actual or potential differences in the interests of
such Indemnitee and any other party represented by such counsel.  LICENSEE agrees to keep M.I.T. informed of
the progress in the defense and disposition of such claim and to consult with
M.I.T. with regard to any proposed settlement.

 

8.2  Insurance.  LICENSEE shall obtain and carry in full force and effect
commercial general liability insurance, including product liability and errors
and omissions insurance which shall protect LICENSEE and Indemnitees with
respect to events covered by Section 8.1(a) above.  Such insurance (i) shall be issued by an insurer licensed to practice
in the Commonwealth of Massachusetts or an insurer pre-approved by M.I.T., such
approval not to be unreasonably withheld, (ii) shall list M.I.T. as an
additional named insured thereunder, (iii) shall be endorsed to include product
liability coverage, and (iv) shall require thirty (30) days written notice to
be given to M.I.T. prior to any cancellation or material change thereof.  The limits of such insurance shall not be
less than One Million Dollars ($1,000,000) per occurrence with an aggregate of Three
Million Dollars ($3,000,000) for bodily injury including death; One Million
Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars
($3,000,000) for property damage; and One Million Dollars ($1,000,000) per
occurrence with an aggregate of Three Million Dollars ($3,000,000) for errors
and omissions.  In the alternative,
LICENSEE may self-insure subject to prior approval of M.I.T. LICENSEE shall
provide M.I.T. with Certificates of Insurance evidencing compliance with this
Section.  LICENSEE shall continue to
maintain such insurance or self-insurance after the expiration or termination
of this Agreement during any period in which LICENSEE or any AFFILIATE or
SUBLICENSEE continues (i) to make, use, or sell a product that was a LICENSED
PRODUCT under this Agreement or (ii) to perform a service that was a LICENSED
PROCESS under this Agreement, and thereafter for a period of five (5) years.

 

9 - EXPORT CONTROLS

 

LICENSEE acknowledges that
it is subject to United States laws and regulations controlling the export of
technical data, computer software, laboratory prototypes and other commodities
(including the Arms Export Control Act, as amended and the United States
Department of Commerce Export Administration Regulations).  The transfer of such items may require a
license from the cognizant agency of the United States Government and/or
written assurances by LICENSEE that LICENSEE shall not export data or
commodities to certain foreign countries without prior approval of such agency.  M.I.T. neither represents that a license
shall not be required nor that, if required, it shall be issued.

 

17

 

10 - NON-USE OF NAMES

 

LICENSEE, its AFFILIATES and
SUBLICENSEES shall not use the names or trademarks of the Massachusetts
Institute of Technology or Lincoln Laboratory, nor any adaptation thereof, nor
the names of any of their employees, in any advertising, promotional or sales
literature without prior written consent obtained from M.I.T., or said employee,
in each case, except that LICENSEE may state that it is licensed by M.I.T.
under one or more of the patents and/or applications comprising the PATENT
RIGHTS.

 

11 - ASSIGNMENT

 

This LICENSE AGREEMENT may
not be assigned by LICENSEE without the prior written consent of M.I.T., which
consent shall not be unreasonably withheld, except to a party that succeeds to
all or substantially all of LICENSEE’s business or assets whether by sale,
merger, operation of law or otherwise; provided that such assignee or transferee
promptly agrees in writing to be bound by the terms and conditions of this
LICENSE AGREEMENT.

 

12 - DISPUTE RESOLUTION

 

12.1  Except for the right of either party to
apply to a court of competent jurisdiction for a temporary restraining order, a
preliminary injunction, or other equitable relief to preserve the status quo or
prevent irreparable harm, any and all claims, disputes or controversies arising
under, out of, or in connection with the Agreement, including any dispute
relating to patent validity or infringement, which the parties shall be unable
to resolve within ninety (90) days after notice by one party to the other in
writing of the nature of the dispute shall be mediated in good faith.  The party raising such dispute shall
promptly advise the other party of such claim, dispute or controversy in a
writing which describes in reasonable detail the nature of such dispute.  By not later than five (5) business days
after the recipient has received such notice of dispute, each party shall have
selected for itself a representative who shall have the authority to bind such
party, and shall additionally have advised the other party in writing of the
name and title of such representative. 
By not later than ten (10) business days after the date of such notice
of dispute, the party against whom the dispute shall be raised shall select a
mediation firm in the Boston area and such representatives shall schedule a
date with such firm for a mediation hearing. 
The parties shall enter into good faith mediation and shall share the
costs equally.  If the representatives
of the parties have not been able to resolve the dispute within fifteen (15)
business days after such mediation hearing, then any and all claims, disputes
or controversies arising under, out of, or in connection with this Agreement,
including any dispute relating to patent validity or infringement, shall be
resolved by final and binding arbitration in Boston, Massachusetts under the
rules of the 

 

18

 

American Arbitration Association, or the
Patent Arbitration Rules if applicable, then obtaining.  The arbitrators shall have no power to add
to, subtract from or modify any of the terms or conditions of this Agreement,
nor to award punitive damages.  Any
award rendered in such arbitration may be enforced by either party in either
the courts of the Commonwealth of Massachusetts or in the United States
District Court for the District of Massachusetts, to whose jurisdiction for
such purposes M.I.T. and LICENSEE each hereby irrevocably consents and submits.

 

12.2  Notwithstanding the foregoing, nothing in
this Article shall be construed to waive any rights or timely performance of
any obligations existing under this Agreement.

 

13 - TERMINATION

 

13.1  Should LICENSEE fail to make any payment
whatsoever due and payable to M.I.T. hereunder, M.I.T. shall have the right to
terminate this Agreement effective on ninety (90) days’ notice, unless LICENSEE
shall make all such payments to M.I.T. within said ninety (90) day period.  Upon the expiration of the ninety (90) day
period, if LICENSEE shall not have made all such payments to MALT., the rights,
privileges and license granted hereunder shall automatically terminate.

 

13.2  Upon any material breach or default of this
Agreement by LICENSEE (including, but not limited to, breach or default under
Paragraph  3.3), other than those
occurrences set out in Paragraphs 13.1 and 13.2 hereinabove, which shall always
take precedence in that order over any material breach or default referred to
in this Paragraph 13.2, M.I.T. shall have the right to terminate this Agreement
and the rights, privileges and license granted hereunder effective on ninety
(90) days’ notice to LICENSEE.  Such termination
shall become automatically effective unless LICENSEE shall have cured any such
material breach or default prior to the expiration of the ninety (90) day
period.

 

13.3  LICENSEE shall have the right to terminate
this Agreement at any time on ninety (90) days’ notice to M.I.T., and upon payment
of all amounts due M.I.T. through the effective date of the termination.

 

13.4  Upon termination of this Agreement for any
reason, nothing herein shall be construed to release either party from any
obligation that matured prior to the effective date of such termination; and
Articles 1, 8, 9, 10, 12, 13.3, 13.4, 15, and 16 shall survive any such
termination.  LICENSEE, its AFFILIATES
and SUBLICENSEES may, however, after the effective date of such termination, sell
all LICENSED PRODUCTS, and complete LICENSED PRODUCTS in the process of
manufacture at the time of such termination and sell the same, 

 

19

 

provided that LICENSEE shall make the
payments to M.I.T. as required by Article 4 of this Agreement and shall submit
the reports required by Article 5 hereof.

 

14 - PAYMENTS,
NOTICES AND OTHER COMMUNICATIONS

 

Any payments, notice or
other communication pursuant to this Agreement shall be sufficiently made or
given on the date of mailing if sent to such party by certified first class
mail, return receipt requested, postage prepaid, addressed to it at its address
below or as it shall designate by written notice given to the other party:

 

	
  In the case of M.I.T.:

  	
   

  	
  In the case of LICENSEE:

  
	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  President & CEO

  
	
  Technology Licensing
  Office

  	
   

  	
  SONTRA MEDICAL, INC.

  
	
  Massachusetts Institute of
  Technology

  	
   

  	
  21 Erie Street, Suite 22

  
	
  77 Massachusetts Avenue,
  Room E32-300

  	
   

  	
  Cambridge, MA 02139

  
	
  Cambridge, Massachusetts
  02139

  	
   

  	
   

  

 

15 - MISCELLANEOUS PROVISIONS

 

15.1 All disputes arising
out of or related to this Agreement, or the performance, enforcement, breach or
termination hereof, and any remedies relating thereto, shall be construed,
governed, interpreted and applied in accordance with the laws of the
Commonwealth of Massachusetts, U.S.A., except that questions affecting the
construction and effect of any patent shall be determined by the law of the
country in which the patent shall have been granted.

 

15.2  The parties hereto acknowledge that this
Agreement sets forth the entire Agreement and understanding of the parties
hereto as to the subject matter hereof, and shall not be subject to any change
or modification except by the execution of a written instrument signed by the
parties.

 

15.3  The provisions of this Agreement are
severable, and in the event that any provisions of this Agreement shall be
determined to be invalid or unenforceable under any controlling body of the
law, such invalidity or unenforceability shall not in any way affect the
validity or enforceability of the remaining provisions hereof.

 

15.4  LICENSEE agrees to mark the LICENSED
PRODUCTS sold in the United States with all applicable United States patent
numbers.  All LICENSED PRODUCTS shipped
to or sold in other countries shall be marked in such a manner as to conform
with the patent laws and practice of the country of manufacture or sale.

 

15.5  The failure of either party to assert a
right hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition by the other party.

 

20

 

16 - CONFIDENTIAL
INFORMATION

 

The parties may, from time
to time, in connection with this LICENSE AGREEMENT disclose to each other
CONFIDENTIAL INFORMATION. “CONFIDENTIAL INFORMATION” shall mean any information
disclosed in writing by a party to either this LICENSE AGREEMENT to any of the
other parties to either this LICENSE AGREEMENT, and marked by the disclosing
party with the legend “CONFIDENTIAL” or other similar legend sufficient to
identify such information as confidential proprietary information of the
disclosing party.  In the case of disclosure
of CONFIDENTIAL INFORMATION by LICENSEE to M.I.T. under this Agreement.  LICENSEE agrees that these terms apply only
when such information is disclosed to the M.I.T. Technology Licensing Office
and not to any other entity at M.I.T. 
M.I.T., in turn, agrees that it will not disclose such information from
LICENSEE outside of the Technology Licensing Office.  Each party will use efforts similar to those used to protect its
own CONFIDENTIAL INFORMATION to prevent the disclosure of the other party’s
CONFIDENTIAL INFORMATION to third parties; provided that LICENSEE may disclose
M.I.T.’s CONFIDENTIAL INFORMATION to the extent reasonably necessary to exploit
the rights and license granted to LICENSEE hereunder; and provided further that
the recipient party’s obligations under this Section 16 shall not apply to
CONFIDENTIAL INFORMATION that:

 

a.                                       is disclosed
orally; provided, however, that the recipient party’s obligations under this
Article 16 shall apply to information disclosed orally if such information is
reduced to Writing and marked with the legend “CONFIDENTIAL” by the disclosing
party within thirty (30) days after disclosure thereof;

 

b.                                      is in the
recipient party’s possession at the time of disclosure thereof as demonstrated
by documentary evidence;

 

c.                                       is or later
becomes part of the public domain through no fault of the recipient party;

 

d.                                      is received
from a third party having no obligations of confidentiality to the disclosing
party;

 

e.                                       is developed
independently by the recipient party without access to the disclosing party’s
CONFIDENTIAL INFORMATION; or

 

f.                                         is required by
law or regulation to be disclosed; provided, however that the party subject to
such disclosure requirement has provided written notice to the other party
promptly to enable such other party to seek a protective order or otherwise
prevent disclosure of such CONFIDENTIAL INFORMATION

LICENSEE agrees that
LICENSEE shall not disclose to a third party CONFIDENTIAL INFORMATION of any of
the other party, unless such third party has executed a confidentiality
agreement with LICENSEE containing terms and conditions substantially similar
to this Article 16, 

 

21

 

or, with respect to governmental agencies or
other regulatory bodies, other usual and customary procedures in the medical
products industry are utilized to protect such CONFIDENTIAL INFORMATION.  The obligations of the parties pursuant to
this Article 16 with respect to CONFIDENTIAL INFORMATION of the other party
shall continue in full force and effect for a period of five (5) years after
expiration or termination of the later of this AGREEMENT.

 

IN WITNESS WHEREOF, the
parties have duly executed this Agreement the day and year set forth below.

 

	
  MASSACHUSETTS INSTITUTE OF
  TECHNOLOGY

  	
   

  	
  SONTRA MEDICAL, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ J. David Litster

  	
   

  	
  By

  	
  /s/ Shawn E. Stovall

  	 

	
  Name

  	
  J. DAVID LITSTER

  	
   

  	
  Name

  	
  SHAWN E. STOVALL

  	 

	
  Title

  	
  VICE PRESIDENT FOR
  RESEARCH

  	
   

  	
  Title

  	
  GENERAL MANAGER

  	 

	
  Date

  	
  8-31-98

  	
   

  	
  Date

  	
  8-27-98

  	 

 

22

 

APPENDIX A

 

PATENT
RIGHTS on the EFFECTIVE DATE

 

UNITED STATES PATENT RIGHTS

 

M.I.T. Case 4126

Patent No. 4,767,402, Issued
August 30, 1988

“Ultrasound Enhancement of
Transdermal Drug Delivery”

By Joseph Kost, Robert S.
Langer and Drora Levy

 

M.I.T. Case 4266

Patent No. 4,780,212, Issued
October 25, 1988

“Ultrasound Enhancement of
Membrane Permeability”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case 4484

Patent No. 4,948,587, August
14, 1990

“Ultrasound Enhancement of
Transbuccal Drug Delivery”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case 6718

U.S.S.N. 08/507,060, Filed
July 25, 1995

“Transdermal Protein
Delivery Using Low-Frequency Sonophoresis”

U.S.S.N. 08/511,583, Filed
August 4, 1995

U.S.S.N. 08/545,236, Filed
October 19, 1995

“Transdermal Protein
Delivery or Measurement Using Low-Frequency Sonophoresis”

By Daniel Blankschtein,
Robert S. Langer and Samir Mitragotri

 

M.I.T. Case No. 6792

U.S.S.N. 08/626021, Filed
June 12, 1998

“Effect Of Electric Field
And Ultrasound For Transdermal Drug Delivery”

by Joseph Kost, Robert S.
Langer, Jr., Samir Mitagotri, Uwe Pliquett,

And James C. Weaver

 

M.I.T. Case 6822

“Enhanced Antimicrobial
Activity By Ultrasound for Dental Decay and

Periodontal Disease
Prevention and Treatment”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case 7222

U.S.S.N. 08/574377, Filed
December 18, 1995

“Chemical and Physical
Enhancers and Ultrasound for Transdermal Drug Deliver”

By Daniel Blankschtein, Mark
E. Johnson, Robert S. Langer, Jr., Samir S. Mitragotri,

And Michael Pishko

 

 

FOREIGN PATENT RIGHTS

 

M.I.T. Case 4126

Canada Patent No. 1,324,051,
Issued November 9, 1993

Japan Patent No. 2,710,281,
Issued October 24, 1997

“Ultrasound Enhancement of
Transdermal Drug Delivery”

By Joseph Kost, Robert S.
Langer and Drora Levy

 

M.I.T. Case 6718

PCT/US96/12244, Filed July
25, 1996

EPC Serial No. 96925491.1,
Filed July 25, 1996

AU Serial No. 65987/96,
Filed July 25, 1996

CAN Serial No. 2200984,
Filed July 25, 1996

JP Serial No. 9-507744,
Filed July 25, 1996

“Enhanced Transdermal
Transfer Using Ultrasound

By Daniel Blankschtein,
Robert S. Langer and Samir Mitragotri

 

M.I.T. Case 7222

PCT/US96/12244, Filed July
25, 1996

EPC Serial No. 96925491.1,
Filed July 25, 1996

AU Serial No. 65987/96,
Filed July 25, 1996

CA Serial No. 2200984, Filed
July 25, 1996

JP Serial No. 9-507744,
Filed July 25, 1996

“Enhanced Transdermal
Transfer Using Ultrasound”

By Daniel Blankschtein, Mark
E. Johnson, Robert S. Langer, Jr., Samir S. Mitragotri,

And Michael Pishko

 

 

APPENDIX B

 

DESIGNATED
FOREIGN COUNTRIES

 

Foreign countries in which
PATENT RIGHTS shall be filed, prosecuted and maintained in accordance with
Article 6:

 

Europe (EPO)

Japan

Canada

Australia

 

 

APPENDIX C1

 

 

CONFLICT AVOIDANCE STATEMENT

 

	
  Name:

  	
   

  	
  Robert S. Langer

  
	
   

  	
   

  	
   

  
	
  Dept. or Lab.:

  	
   

  	
  Chemical Engineering

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
  SONTRA MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  21 Erie Street, Suite 22

  
	
   

  	
   

  	
  Cambridge, MA 02139

  

 

Licensed Technology:

 

M.I.T. Case 4126

Patent No. 4,767,402, Issued
August 30, 1988

“Ultrasound Enhancement of
Transdermal Drug Delivery”

By Joseph Kost, Robert S.
Langer and Drora Levy

 

M.I.T. Case 4266

Patent No. 4,780,212, Issued
October 25, 1988

“Ultrasound Enhancement of
Membrane Permeability”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case 4484

Patent No. 4,948,587, August
14, 1990

“Ultrasound Enhancement of
Transbuccal Drug Delivery”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case 6718

U.S.S.N. 08/507,060, Filed
July 25, 1995

“Transdermal Protein
Delivery Using Low-Frequency Sonophoresis”

U.S.S.N. 08/511,583, Filed
August 4, 1995

U.S.S.N. 08/545,236, Filed
October 19, 1995

“Transdermal Protein
Delivery or Measurement Using Low-Frequency Sonophoresis”

By Daniel Blankschtein,
Robert S. Langer and Samir Mitragotri

 

M.I.T. Case 6822

“Enhanced Antimicrobial
Activity By Ultrasound for Dental Decay and

Periodontal Disease
Prevention and Treatment”

By Joseph Kost and Robert S.
Langer

 

M.I.T. Case No 6792

“Transport Enhancement By
Simultaneous Application

Of Electric And Acoustic
Fields”

by Joseph Kost, Robert S.
Langer, Jr., Samir Mitagotri,

Uwe Pliquett, And James C.
Weaver

 

 

M.I.T. Case 7222

U.S.S.N. 08/574377, Filed
December 18, 1995

“Chemical and Physical
Enhancers and Ultrasound for Transdermal Drug Deliver”

By Daniel Blankschtein, Mark
E. Johnson, Robert S. Langer, Jr., Samir S. Mitragotri,

And Michael Pishko

 

 

Because
of the M.I.T. license granted to the above company and my equity* position and
continuing relationship with this company, I acknowledge the potential for a
possible conflict of interest between the performance of research at M.I.T. and
my contractual or other obligations to this company.  Therefore, I will not:

1)            use students at M.I.T. for
research and development projects for the company;

2)            restrict or delay access to
information from my M.I.T. research;

3)            take direct or indirect
research support from the company in order to support my activities at M.I.T.;
or

4)            employ students
at the company, except in accordance with Section 2.12.2, “Relations of Faculty
and Students,” in the Policies and Procedures Guide.

 

In addition, in order to avoid the appearance
of a conflict, I will attempt to differentiate clearly between the intellectual
directions of my M.I.T. research and my contributions to the company.  To that end, I will expressly inform my
department head/laboratory director annually of the general nature of my
activities on behalf of the company.

 

	
   

  	
  Signed:

  	
  /s/ Robert S. Langer

  
	
   

  	
  Date:

  	
  6/25/98

  

 

	
  Approved by:

  	
  /s/ Robert C. Armstrong

  	
   

  
	
   

  	
   

  	
   

  
	
  Name (print):

  	
  Robert C. Armstrong

  	
   

  
	
  (Dept. Head or Lab Dir)

  	
   

  	
   

  
				

 

Conf
Avoid Stmnt 941017

 

* “Equity” includes stock, options, warrants
or other financial instruments convertible into Equity, which are directly or
indirectly controlled by the inventor.

 

 

APPENDIX C2

 

 

CONFLICT AVOIDANCE STATEMENT

 

	
  Name:

  	
   

  	
  James C. Weaver

  
	
   

  	
   

  	
   

  
	
  Dept. or Lab.:

  	
   

  	
  Harvard - M.I.T. Health
  Sciences

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
  SONTRA MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  21 Erie Street, Suite 22

  
	
   

  	
   

  	
  Cambridge, MA 02139

  

 

Licensed
Technology:

 

M.I.T.
Case 4126

Patent
No. 4,767,402, Issued August 30, 1988

“Ultrasound
Enhancement of Transdermal Drug Delivery”

By
Joseph Kost, Robert S. Langer and Drora Levy

 

M.I.T. Case 4266

Patent
No. 4,780,212, Issued October 25, 1988

“Ultrasound
Enhancement of Membrane Permeability”

By
Joseph Kost and Robert S. Langer

 

M.I.T. Case 4484

Patent
No. 4,948,587, August 14, 1990

“Ultrasound
Enhancement of Transbuccal Drug Delivery”

By
Joseph Kost and Robert S. Langer

 

M.I.T. Case 6718

U.S.S.N.
08/507,060, Filed July 25, 1995

“Transdermal
Protein Delivery Using Low-Frequency Sonophoresis”

U.S.S.N.
08/511,583, Filed August 4, 1995

U.S.S.N.
08/545,236, Filed October 19, 1995

“Transdermal
Protein Delivery or Measurement Using Low-Frequency Sonophoresis”

By
Daniel Blankschtein, Robert S. Langer and Samir Mitragotri

 

M.I.T. Case 6822

“Enhanced
Antimicrobial Activity By Ultrasound for Dental Decay and

Periodontal
Disease Prevention and Treatment”

By
Joseph Kost and Robert S. Langer

 

M.I.T. Case No. 6792

“Transport
Enhancement By Simultaneous Application

Of
Electric And Acoustic Fields”

by
Joseph Kost, Robert S. Langer, Jr., Samir Mitagotri,

Uwe
Pliquett, And James C. Weaver

 

 

M.I.T. Case 7222

U.S.S.N.
08/574377, Filed December 18, 1995

“Chemical
and Physical Enhancers and Ultrasound for Transdermal Drug Deliver”

By
Daniel Blankschtein, Mark E. Johnson, Robert S. Langer, Jr., Samir S.
Mitragotri,

And
Michael Pishko

 

 

Because
of the M.I.T. license granted to the above company and my equity* position and
continuing relationship with this company, I acknowledge the potential for a
possible conflict of interest between the performance of research at M.I.T. and
my contractual or other obligations to this company.  Therefore, I will not:

1)            use students at M.I.T. for
research and development projects for the company;

2)            restrict or delay access to
information from my M.I.T. research;

3)            take direct or indirect
research support from the company in order to support my activities at M.I.T.;
or

4)            employ students at the
company, except in accordance with Section 2.12.2, “Relations of Faculty and
Students,” in the Policies and Procedures Guide.

 

In addition, in order to
avoid the appearance of a conflict, I will attempt to differentiate clearly
between the intellectual directions of my M.I.T. research and my contributions
to the company. To that end, I will expressly inform my department
head/laboratory director annually of the general nature of my activities on
behalf of the company.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signed:

  	
  /s/ James C. Weaver

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
  08-27-98

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Approved by:

  	
  /s/ Martha L. Gray

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name (print):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Dept. Head or Lab Dir)

  	
   

  	
   

  	
   

  	
   

  
									

 

Conf
Avoid Stmnt 941017

 

* “Equity” includes stock, options, warrants
or other financial instruments convertible into Equity, which are directly or
indirectly controlled by the inventor.

 

 

APPENDIX D

WAIVER

 

For good and valuable
consideration, including the grant of a license to SONTRA MEDICAL, INC. (the
“LICENSEE”), the undersigned hereby releases all rights, title and interest
he/she, his/her heirs and assigns may have as an inventor/author under M.I.T.’s
Guide to the Ownership, Distribution and Commercial Development of M.I.T.
Technology, as that policy may be amended from time to time, to receive my
inventor’s share of M.I.T.’s institutional equity for the License for M.I.T.
Case 4126, Patent No. 4,767,402, Issued August 30, 1988, “Ultrasound
Enhancement of Transdermal Drug Delivery,” By Joseph Kost, Robert S. Langer and
Drora Levy; M.I.T. Case 4266, Patent No. 4,780,212, Issued October 25, 1988,
“Ultrasound Enhancement of Membrane Permeability,” By Joseph Kost and Robert S.
Langer; M.I.T. Case 4484, Patent No. 4,948,587, August 14, 1990, “Ultrasound
Enhancement of Transbuccal Drug Delivery,” By Joseph Kost and Robert S. Langer;
M.I.T. Case 6718, U.S.S.N. 08/507,060, Filed July 25, 1995, “Transdermal
Protein Delivery Using Low-Frequency Sonophoresis,” U.S.S.N. 08/511,583, Filed
August 4, 1995, “Transdermal Protein Delivery or Measurement Using
Low-Frequency Sonophoresis,” By Daniel Blankschtein, Robert S. Langer and Samir
Mitragotri; M.I.T. Case 6822, “Enhanced Antimicrobial Activity By Ultrasound
for Dental Decay and Periodontal Disease Prevention and Treatment,” By Joseph
Kost and Robert S. Langer; and M.I.T. Case 7222, U.S.S.N. 08/574377, Filed
December 18, 1995, “Chemical and Physical Enhancers and Ultrasound for
Transdermal Drug Deliver,” By Daniel Blankschtein, Mark E. Johnson, Robert S.
Langer, Jr., Samir S. Mitragotri, And Michael Pishko.

 

	
  Witness:

  	
  /s/ Shawn E. Stovall

  	
   

  	
  Signed:

  	
  /s/ Robert S. Langer

  
	
   

  	
   

  	
  Name:

  	
  Robert S. Langer

  
	
   

  	
   

  	
  Date:

  	
  8-21-98

  

 

 

APPENDIX E

WAIVER

 

For good and valuable
consideration, including the grant of a license to SONTRA MEDICAL, INC. (the
“LICENSEE”), the undersigned hereby releases all rights, title and interest
he/she, his/her heirs and assigns may have as an inventor/author under M.I.T.’s
Guide to the Ownership, Distribution and Commercial Development of M.I.T.
Technology, as that policy may be amended from time to time, to receive my
inventor’s share of M.I.T.’s institutional equity for the License for M.I.T.
Case 4126, Patent No. 4,767,402, Issued August 30, 1988, “Ultrasound
Enhancement of Transdermal Drug Delivery,” By Joseph Kost, Robert S. Langer and
Drora Levy; M.I.T. Case 4266, Patent No. 4,780,212, Issued October 25, 1988,
“Ultrasound Enhancement of Membrane Permeability,” By Joseph Kost and Robert S.
Langer; M.I.T. Case 4484, Patent No. 4,948,587, August 14, 1990, “Ultrasound
Enhancement of Transbuccal Drug Delivery,” By Joseph Kost and Robert S. Langer;
M.I.T. Case 6718, U.S.S.N. 08/507,060, Filed July 25, 1995, “Transdermal
Protein Delivery Using Low-Frequency Sonophoresis,” U.S.S.N. 08/511,583, Filed
August 4, 1995, “Transdermal Protein Delivery or Measurement Using
Low-Frequency Sonophoresis,” By Daniel Blankschtein, Robert S. Langer and Samir
Mitragotri; M.I.T. Case 6822, “Enhanced Antimicrobial Activity By Ultrasound
for Dental Decay and Periodontal Disease Prevention and Treatment,” By Joseph
Kost and Robert S. Langer; and M.I.T. Case 7222, U.S.S.N. 08/574377, Filed
December 18, 1995, “Chemical and Physical Enhancers and Ultrasound for
Transdermal Drug Deliver,” By Daniel Blankschtein, Mark E. Johnson, Robert S.
Langer, Jr., Samir S. Mitragotri, And Michael Pishko.

 

	
  Witness:

  	
  /s/ Shawn E. Stovall

  	
   

  	
  Signed:

  	
  /s/ Joseph Kost

  
	
   

  	
   

  	
  Name:

  	
  JOSEPH KOST

  
	
   

  	
   

  	
  Date:

  	
  8/19/98

  

 

 

APPENDIX F

WAIVER

 

For good and valuable
consideration, including the grant of a license to SONTRA MEDICAL, INC. (the
“LICENSEE”), the undersigned hereby releases all rights, title and interest
he/she, his/her heirs and assigns may have as an inventor/author under M.I.T.’s
Guide to the Ownership, Distribution and Commercial Development of M.I.T. Technology,
as that policy may be amended from time to time, to receive my inventor’s share
of M.I.T.’s institutional equity for the License for M.I.T. Case 4126, Patent
No. 4,767,402, Issued August 30, 1988, “Ultrasound Enhancement of Transdermal
Drug Delivery,” By Joseph Kost, Robert S. Langer and Drora Levy; M.I.T. Case
4266, Patent No. 4,780,212, Issued October 25, 1988. “Ultrasound Enhancement of
Membrane Permeability,” By Joseph Kost and Robert S. Langer; M.I.T. Case 4484,
Patent No. 4,948,587, August 14, 1990, 
“Ultrasound Enhancement of Transbuccal Drug Delivery,” By Joseph Kost
and Robert S. Langer; M.I.T. Case 6718, U.S.S.N. 08/507,060, Filed July 25,
1995, “Transdermal Protein Delivery Using Low-Frequency Sonophoresis,” U.S.S.N.
08/511,583, Filed August 4, 1995, “Transdermal Protein Delivery or Measurement
Using Low-Frequency Sonophoresis,” By Daniel Blankschtein, Robert S. Langer and
Samir Mitragotri; M.I.T. Case 6822. 
“Enhanced Antimicrobial Activity By Ultrasound for Dental Decay and
Periodontal Disease Prevention and Treatment,” By Joseph Kost and Robert S.
Langer; and M.I.T. Case 7222, U.S.S.N. 08/574377, Filed December 18, 1995,
“Chemical and Physical Enhancers and Ultrasound for Transdermal Drug Deliver,”
By Daniel Blankschtein, Mark E. Johnson, Robert S. Langer, Jr., Samir S.
Mitragotri, And Michael Pishko.

 

	
  Witness:

  	
  /s/ Shawn E. Stovall

  	
   

  	
  Signed:

  	
  /s/ Samir Mitragotri

  
	
   

  	
   

  	
  Name:

  	
  Samir Mitragotri

  
	
   

  	
   

  	
  Date:

  	
  8/19/98

  

 

 

APPENDIX G

M.I.T.
HOLDERS

	
  Blankschtein

  	
   

  	
  5684
  Shares

  
	
  Johnson

  	
   

  	
  2132
  Shares

  
	
  Levy

  	
   

  	
  3552
  Shares

  
	
  M.I.T.

  	
   

  	
  245394
  Shares

  
	
  Pishko

  	
   

  	
  2132
  Shares

  
	
  Piquett

  	
   

  	
  2132
  Shares

  
	
  Weaver

  	
   

  	
  2132
  Shares

  

 

 

 

APPENDIX H

ARTICLES OF INCORPORATION

 

 

 

 

 

State of Delaware

 

Office of the Secretary of State

 

 

I, EDWARD J. FREEL,
SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS
A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF “NEWCORP MEDICAL, INC.”,
CHANGING ITS NAME FROM “NEWCORP MEDICAL, INC.” TO “SONTRA MEDICAL, INC.”, FILED
IN THIS OFFICE ON THE THIRTIETH DAY OF JUNE, A.D., 1998, AT 5 O’ CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.

	
   

  	
   

  	
  /s/ Edward J. Freel

  
	
   

  	
  Edward
  J. Freel, Secretary of State

  
	
   

  	
   

  	
   

  	
   

  
	
  2878224  8100

  	
   

  	
  AUTHENTICATION:

  	
  9176901

  
	
  981257808

  	
   

  	
  DATE:

  	
  07-02-98

  

 

 

AMENDED
AND RESTATED

CERTIFICATE
OF INCORPORATION

OF
NEWCORP MEDICAL, INC.

 

The undersigned, being the
Secretary of NEWCORP MEDICAL, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
“Corporation”) originally incorporated March 31, 1998;

 

DOES HEREBY CERTIFY:

 

FIRST:  That the Board of Directors of the
Corporation, by the unanimous written consent of its members, dated as of June
12, 1998, adopted a resolution proposing and declaring advisable that the
Corporation’s Certificate of Incorporation be amended and restated as set forth
in Exhibit A hereto:

 

SECOND:  That in lieu of a meeting and vote of the
Stockholders of the Corporation, such Stockholders have given Majority Written
Consent to said amendment and restatement of the Corporation’s Certificate of
Incorporation in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.

 

THIRD:  That the aforesaid amendment was duly
adopted in accordance with Sections 242 & 245 of the General Corporation
Law of the State of Delaware.

	
   

  	
  NEWCORP MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Shawn Stovall

  
	
   

  	
  Name:

  	
  Shawn Stovall

  
	
   

  	
  Title:

  	
  Secretary

  

 

 

 

FIRST
AMENDED AND RESTATED

CERTIFICATE
OF INCORPORATION

 

OF

 

NEWCORP MEDICAL, INC.

ARTICLE
I

 

The name of the corporation
is Sontra Medical, Inc.

 

ARTICLE
II

 

The address of the
Corporation’s registered office in the State of Delaware is c/o The Corporation
Trust Company, 1209 Orange Street, Wilmington; Delaware 19801, County of New
Castle.  The name of its registered
agent at such address is The Corporation Trust Company.

 

ARTICLE
III

 

The purpose of the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.

 

ARTICLE
IV

 

The aggregate number of
shares of capital stock which the Corporation shall have the authority to issue
is 15,000,000 shares of common stock (“Common Stock”), par value $.01 per
share.  Shares of Common Stock of the
Corporation may be issued for such consideration and for such corporate
purposes as the Board of Directors of the Corporation may from time to time
determine.  By resolution of its Board
of Directors, the Corporation shall have the authority to issue a class of
preferred stock and multiple series thereof and a second class of common stock,
the preferences and relative rights of all of which shall be 

 

 

 

designated by the Board of Directors in its
resolution authorizing the creation and issuance thereof.

 

In the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or
winding-up of the Corporation, the holders of the Common Stock shall be
entitled to receive all the assets of the Corporation, tangible and intangible,
of whatever kind available for distribution to stockholders, ratably in
proportion to the number of shares of Common Stock held by each.

 

Each holder of Common Stock
shall have one vote in respect of each share of Common Stock held by such
holder on each matter voted upon by the stockholders.

 

ARTICLE V

 

The name and mailing address
of the incorporator is as follows:

 

	
  Name

  	
   

  	
  Mailing
  Address

  
	
   

  	
   

  	
   

  
	
  James R. McNab, Jr.

  	
   

  	
  Reprogenesis, Inc.

  
	
   

  	
   

  	
  10 Sylvan Drive, Suite 27

  
	
   

  	
   

  	
  St. Simons Island, GA
  31522

  

 

ARTICLE VI

 

The powers of the
incorporator shall terminate upon the filing of this Certificate of
Incorporation and the names and mailing addresses of the persons who are to
serve as directors until the first annual meeting of stockholders or until
their successors are elected and qualify are:

 

	
  Name of
  Director

  	
   

  	
  Mailing
  Address

  
	
   

  	
   

  	
   

  
	
  Robert Langer

  	
   

  	
  77 Lombard Street

  
	
   

  	
   

  	
  Newton, MA 02158

  
	
   

  	
   

  	
   

  
	
  Joseph Kost

  	
   

  	
  26 Searle Avenue

  
	
   

  	
   

  	
  Brookline, MA 02146

  
	
   

  	
   

  	
   

  
	
  James R. McNab, Jr.

  	
   

  	
  Reprogenesis, Inc.

  
	
   

  	
   

  	
  10 Sylvan Drive, Suite 27

  
	
   

  	
   

  	
  St. Simons Island, GA
  31522

  

 

 

2

 

ARTICLE VII

 

In furtherance and not in
limitation of the powers conferred by law, the Board of Directors shall have
the power, and is expressly authorized, to adopt, amend or repeal the Bylaws of
the Corporation.

 

ARTICLE VIII

 

To the fullest extent
permitted by the Delaware General Corporate Law as the same exists or may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of duty as a director.  Without limiting
the foregoing in any respect, a director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of duty as a director, except for liability (a) for any breach of
the director’s duty of loyalty to the Corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (c) under Section 174 of the General Corporation
Law of the State of Delaware, as the same exists or hereafter may be amended,
or (d) for any transaction from which the director derived an improper personal
benefit.  If the General Corporation Law
of the State of Delaware is amended after the date of filing of this
Certificate of Incorporation to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation, in addition to the limitation on personal
liability provided herein, shall be eliminated or limited to the fullest extent
permitted by the amended General Corporation Law of the State of Delaware.  The indemnities provided and granted herein
shall not be exclusive of any other rights or protections afforded an
individual under any bylaw, contract or vote of shareholders or disinterested
directors or otherwise.  Any repeal or
modification of this Article VIII by the stockholders of the Corporation shall
be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.

 

3Exhibit 4.9

 

SKANDINAVISKA RAFFINADERI AKTIEBOLAGET SCANRAFF

 

SHAREHOLDERS’ AGREEMENT

 

Among

 

Preem Petroleum AB

 

Hydro Aluminium Conductor AB (changing its corporate name to Hydro
R&M Holding AB)

 

Skandinaviska Raffinaderi Aktiebolaget
Scanraff

 

Dated April 17, 2002

 

 

SKANDINAVISKA RAFFINADERI
AKTIEBOLAGET SCANRAFF

 

SHAREHOLDERS’ AGREEMENT

 

This is an AGREEMENT dated as
of April 17, 2002 among Preem Petroleum AB (herein called “Preem”), Hydro
Aluminium Conductor AB, changing its corporate name to R&M Holding AB
(herein called “Hydro”), Preem and Hydro sometimes individually called a
“Shareholder” and collectively called the “Shareholders”, and Skandinaviska
Raffinaderi Aktiebolaget Scanraff (herein called “Scanraff”).

 

WITNESSETH:

 

WHEREAS, after various
assignments, new issues, and transfers Preem owns 1,711,050 and Hydro owns
570,350 shares of the stock of Scanraff, which numbers also, for the purpose of
this agreement, include shares that the parties have committed to subscribe in
accordance with the Transaction Structure Agreement dated April 17 2002, but
are not subscribed or issued on the date of entering into this agreement; and

 

WHEREAS, the Parties have made
separate arrangements facilitating the merger between Scanraff and
Skandinaviska Kracker Aktiebolaget Scancracker, in which Scanraff will be the
acquiring company; and

 

WHEREAS, Preem, Hydro, and
Scanraff desire to set forth in this Agreement the terms and conditions of
their co-operation and joint undertaking with respect to Scanraff.

 

NOW, THEREFORE each
Shareholder agrees with the other Shareholder and Scanraff agrees with both
Shareholders as follows:

 

PART ONE:

 

SUBJECT MATTER OF THIS AGREEMENT:

DEFINITION AND RULES OF CONSTRUCTION

 

1.1                                 Subject Matter.  The
subject matter of this Agreement is the petroleum refinery owned by Scanraff,
in direct ownership and or through affiliates, and located on the Lyse
Peninsula in Bohuslän, north of Lysekil, Sweden, having an authorized capacity
to refine ten million (10,000,000) metric tons of crude oil per annum.

 

1.2                                 Definitions.  For
purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, the terms defined in this Article 1.2 have the
meaning herein assigned to them, the capitalized 

 

2

 

terms defined in
the Recitals and subsequent Articles by inclusion in quotation marks and
parentheses have the meaning so ascribed to them.

 

“Affiliate”, with
respect to any Shareholder, means:

 

(i)            any other Person which beneficially
owns, directly or indirectly, all of such Shareholder’s voting stock, or

 

(ii)                                  any other Person all of the voting stock of
which is beneficially owned, directly or indirectly, either by such Shareholder
or by an Affiliate of such Shareholder as defined in the preceding clause (i).

 

“Board of
Directors” means the Board of Directors of Scanraff.

 

“By-Laws” means the
duly registered By-Laws of Scanraff as in effect from time to time.

 

“Managing Director”
means the managing director of Scanraff.

 

“Person” means any
individual, corporation, partnership, joint venture, trust, estate,
unincorporated organization, cooperative, or government or any agency or
political subdivision thereof.

 

“Processing
Agreement” means the Processing Agreement of even date herewith among Preem,
Hydro and Scanraff.

 

“Processing Rights”
means the rights of a Shareholder to process its percentage of capacity of
crude oils and feedstocks through the Refinery as provided for in the
Processing Agreement.

 

“Refinery” means the
petroleum refinery and related facilities owned by Scanraff, which is the
subject matter of this Agreement as the same may exist from time to time during
the term of this Agreement.

 

“Share” means a
share of One Hundred (100) Kronor per value capital stock of Scanraff.

 

“Share Percentage”
as applied to each Shareholder means that percentage of all the Shares at any
time issued and outstanding which is owned by such Shareholder at the time the
definition is applied (except that if two (2) or more Shareholders are
Affiliates, their respective percentages as aforesaid shall be combined, and
they shall be treated as a single Shareholder for purposes of this Agreement).

 

“Shareholder”
means, at the time the definition is applied, the owner of one or more issued
and outstanding Shares (subject to the definition of Share Percentage).

 

3

 

1.3                                 Rules of Construction. 
For purposes of this Agreement, unless the context otherwise requires,
(i) all terms defined herein include the plural as well as the singular and
(ii) reference to any Person include successors of such Person by
consolidation, merger and transfer. 
Reference to Parts and Articles are, unless otherwise specified, to
Parts and Articles of this Agreement.  References
to any other agreement or other instrument shall, unless the context otherwise
requires, or the definition thereof otherwise specifies, be deemed reference to
the same as it may from time to time be changed, amended or extended in
accordance with its terms and such other agreement or instrument when referred
to shall be deemed to be incorporated herein by reference.  Neither of the captions to Parts, Articles
or Subdivisions thereof, nor the Index shall be deemed to be a part of this
Agreement.

 

PART TWO:

 

SHAREHOLDINGS, RIGHTS OF SHAREHOLDERS

AND FINANCIAL OBLIGATIONS

 

2.1                                 Shareholders and Share Percentages. 
The Shareholders and their Share Percentages are as follows:

 

Preem:    Seventy-five (75.0 %)

               percent

 

Hydro:    Twenty-five (25.0 %)

                percent

 

4

 

2.2                                 Transferability of Shares by Shareholders.

 

(a)                                  Except as provided in Article 2.2 (c) no
Shareholder may assign, sell or otherwise transfer any Shares held by it or any
other interest in or obligation under this Agreement without the prior written
consent of all of the Shareholders, unless such transfer is made to an
Affiliate. Transfers to an Affiliate shall be permitted notwithstanding any
provisions to the contrary in the Scanraff By-laws, and any necessary waiver of
an option to purchase the Share shall be deemed to have been given. In respect
of transfers contemplated hereunder that require prior written consent, such
consent to assign, sell or otherwise transfer Shares shall be given unless the
new Shareholder is, according to reasonable standards, commercially
unacceptable.  The Shareholders whose
consent to transfer is being sought shall respond within 3 weeks after such
request was received, provided, however, that such Shareholders may consent to
the transfer subject to the observance of the procedures applicable to
transfers as specified below.

 

If at any time
during the term of this Agreement, a Shareholder desires to sell a Share other
than to an Affiliate, he shall offer the other Shareholders to purchase the
Share.  Such offer shall be made by
written notice, which shall specify the number of Shares to be transferred, the
price per Share and other terms of the transfer.  If an agreement with a third party has been entered into, the
name of such party shall be disclosed. 
The notice may request those who wish to exercise their option, to
notify in writing the offering Shareholder hereof within two months from the
day they were notified by such Shareholder.

 

An exercise of
rights to purchase hereunder must be made with respect to all the Shares
offered.  If more than one Shareholder
exercises an option to purchase Shares, the Shares so offered shall be
allocated between the Shareholders exercising their rights to purchase in
proportion to the Shares they already own.

 

The option price
and other terms and conditions shall be as stated in the notice.  If a Shareholder cannot accept this purchase
price such Shareholder may request that an arbitration panel shall decide the
fair market value of the Shares.  The
arbitration proceedings shall follow the procedures of Article 7.4.  Such arbitration panel shall be appointed
within three weeks after receipt of the offering notice and the panel shall be
requested to conclude the proceedings and to render their award within five
weeks thereafter.

 

5

 

An offering
Shareholder may at any time before signature of a final transfer agreement with
Shareholders who have exercised their options hereunder, withdraw from his
offer, provided, however, that he shall reimburse the other Shareholder for all
external costs incurred in exercising their option and provided further that
any agreement for a transfer of Shares made between the offering Shareholder
and a third party shall also be deemed to be terminated as of the date of the
withdrawal.

 

If the rights to
purchase the Shares have not been exercised, then, subject to such third party
not being unacceptable as stated in the first paragraph of this Article 2.2.
(a), the Shareholder desiring to sell may transfer the Shares to a third party
on such terms and conditions as stated in the notice given to the other
Shareholders.

 

The content of and
the fact that any procedure under this Article 2.2 (a) has been launched shall
be kept confidential and the Shareholders and the arbitrators shall sign a
confidentiality agreement when requested, provided that nothing herein shall
prevent the arbitration panel from establishing the “fair market value of the
Shares” as aforesaid.

 

(b)                                 If shares or any other interest in this
Agreement are transferred in accordance with this Article 2.2 paragraph (a) or
(c) the transferor shall cause the transferee to agree in writing to assume all
of the obligations of the transferor under this Agreement and the Processing
Agreement.

 

(c)                                  In the event a Shareholder (“Optionor”) is
declared a bankrupt, the other Shareholder (“Optionee”) shall have the option
to purchase all of the Optionors’ Shares (“Option Shares”) on the terms set
forth in this Article 2.2 (c).  The
price per Option Share shall be equal to the fair market value, to be
determined by arbitration as provided for in Article 7.3 if the parties cannot
agree as to the fair market value (the “Purchase Price”).  If the Optionee desires to purchase Option
Shares it may within 90 days following the bankruptcy give notice to the
receiver that it is instituting arbitration proceedings to determine the
Purchase Price.  The option shall be
made within a 30-day period following the determination of the Purchase Price
by giving notice thereof to the receiver.

 

2.3                                 Certificates for Shares. A certified copy of this Agreement
shall be filed with the Managing Director, and Scanraff shall cause to be
placed on the face of each certificate for Shares hereafter issued an
appropriate legend indicating that ownership thereof is subject to 

 

6

 

the provisions of
this Agreement and specifically Articles 2.2 and 2.5.

 

2.4                                 Terms of Financing the Refinery

 

The Parties have agreed
that, as of July 1, 1991 Scanraff shall be financed through processing fees,
equity and Shareholders’ loans in amounts and on terms as agreed from time to
time.  Except in the case of financing
from third party lenders, all financing shall be provided by the Shareholders
(or their Affiliates) in proportion to each Shareholders’ Processing Rights or
ownership shares as the case may be.

 

2.5                                 Obligations of Shareholders. 
Each Shareholder shall always hold its Shares, take action, give its
consent or require the Directors nominated by it to vote in such manner that
the provisions of this Agreement and the Processing Agreement can be satisfied.

 

PART THREE

 

MANAGEMENT AND CONTROL OF SCANRAFF

 

3.1                                 Number and Representation of Directors of
Scanraff.

 

(a)                                  The Board of Directors shall at all times be
composed of six (6) members, four (4) of whom shall be nominees of Preem, and
one (1) of whom shall be a nominee of Hydro. 
The sixth member of the Board of Directors shall be the Managing
Director of Scanraff.  In addition,
there shall also be six (6) Deputy Directors, four (4) nominated by Preem and
two (2) by Hydro.  A Deputy Director
nominated by a Shareholder may never act for a Director that was nominated by
another Shareholder.

 

(b)                                 The Board of Directors shall also include such
number of Employee Directors and Deputy Employee Directors as may be required
from time to time by law.

 

3.2                                 Officers of the Board. 
The Board shall appoint a chairman and a vice chairman. In addition, the
Board of Directors shall select a Secretary of the Board (who may also be a
Board member but need not be). The Secretary shall be responsible for keeping
all records necessary for the orderly administration of the Board of Directors,
including the preparation, retention of minutes of meetings, resolutions
adopted, agenda and notices. All fees and other expenses otherwise payable by
Scanraff to Directors or Deputy Directors other than Managing Director,
Employee Director or Deputy Employee Directors, shall be borne by the
Shareholder nominating such Directors or Deputy Directors.

 

7

 

3.3                                 Authority of the Board. 
Without prejudice for the obligations and the responsibility of the
Managing Director, the Management and control of Scanraff and all aspects of
its operations shall be carried out through the Scanraff Board of Directors and
such committees as may be established by the Board of Directors from time to
time.  No action may be taken by the
Board of Directors except by majority vote and provided at least one Director
nominated by each of Preem and Hydro agrees to such action.

 

3.4                                 Executive Committee.

 

(a)                                  An Executive Committee (herein called the
“Excom”) shall be established by the Board of Directors and shall be composed
of three (3) members (hereinafter “Member” or “Members”) one (1) to be selected
by each Shareholder and the third Member to be the Managing Director of
Scanraff.  One Employee Director or
Deputy Employee Director shall have the right to attend meetings.  In the event that the Excom cannot
unanimously agree on a matter, or if the Members are unable to hold a meeting
called pursuant to a written notice given as provided herein, the matter so
contemplated shall be referred to the Board of Directors.  Each Shareholder shall notify the Board of
Directors from time to time, in writing, of the name of the individual who it
has selected to be its Member, together with the name of one alternate who
shall have power to act in the absence of its Member.

 

(b)                                 The Responsibilities of the Excom, in addition
to any other matter that may be delegated to it, shall be to:

 

(i)                                     review one year production budget, investments,
manpower and expense budgets for submission to the Board of Directors;

 

(ii)                                  approve revisions of the following procedures:

Import/Export
procedure

Product allocation
procedure

Approval schedule

Percentage of
capacity entitlement

Percentage for
allocation of fixed costs;

 

(iii)                               approve rated capacities of units in the
Refinery;

 

(iv)                              approve procedures for new or modifications to
standard yields for imported blendstock and crude oil or crude oils processed;

 

(v)                                 approve procedures for determining
acceptability of grades of crude oil for processing;

 

8

 

(vi)                              approve the manner, frequency and form in which
customary operating reports shall be made by Scanraff;

 

(vii)                           approve control accounting systems and
procedures;

 

(viii)                        approve appropriation requests for investment
expenditures covered by approved capital budget in excess of the Managing
Director’s authority as may be in effect from time to time;

 

(ix)                                approve additions to or deletions from the
refinery product slate and changes in product specification;

 

(x)                                   approve conditions for processing hydrocarbon
feedstock other than crude oil;

 

(xi)                                approve procedures and conditions for the
transfer of capacity utilization and for economic use of any refinery capacity
that is surplus to any Shareholder;

 

(xii)                             approve the appointment, transfer or dismissal
of all key personnel (as defined from time to time in the Approval schedule)
other than the Managing Director;

 

(xiii)                          authorize those technical and other services
provided for in Part Four of this Agreement;

 

(xiv)                         approve insurance programs.

 

(c)                                  Meetings of the Excom shall be held at such
times and in such manner as is necessary to properly carry out its
responsibilities, and for this purpose may be called by any Member upon two
weeks’ prior written notice.  Matters
that are the responsibility of the Excom may be submitted to it by any Member,
for consideration and vote without holding a meeting, provided such matter is
submitted in writing to the other Members. 
In such event, the Members may vote by giving written advice of their
vote to the Managing Director.  No
action may be taken by the Excom without the affirmative vote of all its
Members appointed by Shareholders.

 

(d)                                 The Excom shall appoint such technical,
financial, accounting, tax, legal or other subcommittees as it deems
appropriate for studies, analysis, and reports on matters pertaining to the
Refinery and its operation.

 

9

 

3.5           Scanraff Management.

 

(a)                                  The day-to-day management of Scanraff shall be
the responsibility of the Managing Director. 
In addition, there may be a Vice Managing Director, and such other
officers as the Board of Directors shall appoint.  The Scanraff management shall be responsible for the operation of
the Refinery and in so doing shall carry out all programs approved by the Board
of Directors or the Excom in a safe, diligent, good and workmanlike manner.

 

(b)                                 Scanraff’s management shall:

 

(i)                                     prepare all appropriation requests, propose
budgets, and maintenance and operating programs, including forecasts of crudes
to be processed and products to be manufactured;

 

(ii)                                  carry out all operating and capital investment
programs within approved budgets;

 

(iii)                               keep the Refinery and all petroleum stock free
and clear of all mortgages, pledges, liens or other encumbrances, except as may
be authorized by the Board of Directors; and

 

(iv)                              furnish to the Shareholders such financial,
statistical and operational reports and forecasts as any of them shall
reasonably request.  Financial reports
shall be prepared consistent with generally accepted accounting principles as
may be in effect in Sweden from time to time but, to the extent such reports
are required by Hydro, the reports shall also be prepared in accordance with
generally accepted accounting principles in effect in the United States from
time to time.

 

3.6           Right of Inspection.

 

(a)                                  Each Shareholder shall have the right to
inspect the Refinery from time to time, provided any such inspection does not
unreasonably interfere with day-to-day operations.

 

(b)                                 Each Shareholder shall have the right to audit,
on a periodic basis, Refinery operating records and all other Scanraff books,
accounts and records.

 

3.7                                 Swedish Auditors. 
Auditors of Scanraff shall be Swedish authorized public accountants or
accounting firms. Each Shareholder shall have the right to nominate one (1)
Auditor and one (1) Deputy Auditor.  The
audit shall be 

 

10

 

sufficient in scope
to meet the requirements of all Shareholders.

 

11

 

PART FOUR:

 

TECHNICAL AND OTHER SERVICES

 

4.1           Project Review and Shareholders’ Services.

 

(a)                                  Each Shareholder shall have the right to review
at any time in detail all design, construction and engineering projects
associated with or undertaken by Scanraff.

 

(b)                                 To the extent that technical and other services
are available in a Shareholder, Scanraff shall be obligated to call for these
services from such Shareholder in lieu of either (i) setting up facilities
within Scanraff which significantly duplicate services available from such
Shareholder or (ii) contracting for comparable services from others unless it
can be demonstrated that Scanraff will benefit therefrom.

 

(c)                                  To the extent Preem or Hydro shall provide
technical and other services requested by Scanraff as contemplated herein,
Preem and Hydro shall, with the approval of the other Shareholder, which
approval shall not be unreasonably withheld, enter into a contract for such
services under terms and conditions which shall give the providing Shareholder
full cost coverage.

 

(d)           (i)             Payment for services, including
additional technical assistance, use of research laboratories and engineering
offices, and/or personnel shall be in an amount which would include all costs
and overheads incurred by Preem or Hydro as the case may be and its Affiliates
in connection with making such services and personnel available.  Personnel costs shall include salaries,
related employee benefits (including sick pay and normal vacation), and all
personal and travel expenses for the full period of time that such personnel
are away from their regular assignments. 
Such time shall include travel time to and from their place of regular
assignment and cost of home leave granted in accordance with then existing
policies of Preem or Hydro as the case may be and its Affiliates, as
appropriate, including salary and transportation for the employee and eligible
dependants.

 

(ii)                                  Where Hydro provides services and the payments
specified in Subdivision (i) of this Article 4.1 (d) are subject to Swedish
taxes or other fiscal charges, including 

 

12

 

with-holding and
added value taxes but not corporate taxes of Hydro, such taxes or charges shall
be for Scanraff’s account, unless they can be recovered.

 

(iii)                               When requested by Scanraff in writing, Preem or
Hydro as the case may be shall give Scanraff, to the extent possible, estimates
of the cost for services to be rendered pursuant to Article 4.1.  Unless Scanraff shall request otherwise, the
rendering of such services by Preem or Hydro as the case may be shall not be
delayed while the estimate is being prepared and reviewed.

 

(iv)                              On or before the 20th day of the month
following the month in which services are performed, Preem or Hydro as the case
may be will forward to Scanraff a detailed billing statement reflecting the
total amounts due per subdivisions (i) and (ii) of this Article 4.1 (d)
specifying the currencies expended in providing such agreed services.  Payment by Scanraff of such billing shall be
made on or before the 30th day of the same month to such bank or banks as Preem
or Hydro as the case may be may specify from time to time.  At Scanraff’s option, payment may be made in
the currency reflected in the billing statement or in Swedish kronor.

 

4.2           Liability and Indemnity.

 

(a)                                  Except in the case of gross negligence, no
Shareholder or its Affiliates, their agents and employees, shall be liable to
Scanraff for any loss or damage of whatsoever nature sustained by Scanraff or
for any third party claims (including another Shareholder) arising out of, in
connection with or related to the performance by or on behalf of such
Shareholder or its Affiliates, their agents and employees, of their obligations
under Part Four of this Agreement.

 

(b)                                 Scanraff shall keep each Shareholder and its
Affiliates, their agents and employees, fully indemnified against any claim,
demand, action or proceeding brought or instituted against such Shareholder and
its Affiliates, their agents and employees, by any third party (including
another Shareholder) in connection with the performance by or on behalf of such
Shareholder or its Affiliates, their agents and employees, of their obligations
under Part Four of this Agreement, except in the case of gross negligence of
such Shareholder and its Affiliates, their agents and employees.

 

13

 

PART FIVE:

 

WORKING CAPITAL AND CAPITAL ADDITIONS

 

5.1           Working Capital.

 

Any deficiency in
working capital not provided by the normal processing fees and required by
Scanraff shall be provided by an increase in or a surcharge on the processing
fee unless the Board of Directors shall elect to finance such deficiency in
another way.

 

5.2           Expansion and Additions of the Refinery.

 

(a)                                  The Shareholders agree in principle to
participate on a pro rata basis (in the same percentage as their Processing
Rights) in any Refinery expansion, alteration, addition or improvement
(hereinafter “Modification”) which may be required, according to commercial
necessity and in the exercise of good business judgement in order to enable the
Refinery to manufacture and supply on a competitive basis, petroleum products
to meet product and quality requirements. 
In such event the Shareholders will make available to Scanraff on a pro
rata basis (on the same percentage as the Shareholders’ Processing Rights) the
funds necessary for such Modification to the extent such funds are not provided
for through Scanraff or otherwise.  The
method of making such funds available shall be agreed upon by the Shareholders
at the appropriate time.

 

(b)                                 In the event that a Shareholder does not wish
to participate in a Modification (the “Non-Participating Shareholder”), then
provided (i) the Shareholder in favour of the Modification (the “Participating
Shareholder”) agree to make available to Scanraff all of the funds necessary
for such Modification, (ii) such Modification is made in a manner such that the
Non-Participating Shareholder’s Processing Rights are not adversely affected in
respect of quantity, quality and cost, by such Modification, (iii) each
Non-Participating Shareholder’s other rights in respect of Scanraff and the
Refinery, are adjusted to reflect such disproportionate investment, and (iv)
the consent of the Non-Participating Shareholder is obtained, which consent,
taking into account the foregoing conditions, shall not be unreasonably
withheld, then the Non-Participating Shareholder shall be obligated to take
whatever steps are necessary to express its authorization to Scanraff for the
Modification.  If the Modification is
capable of being utilized solely by the Participating Shareholder, without
affecting the Processing Rights of the Non-Participating Shareholder, then 

 

14

 

the
Non-Participating Shareholder shall have no right to process in or through the
Modification nor any obligation with respect to the maintenance, repair or
operating costs of the Modification and the Modification shall be devoted
exclusively to the Participating Shareholder and to the extent necessary the
Processing Agreement shall be amended to reflect the Modification and the
Participating Shareholder’s exclusive right in the same.  Unless the Shareholders should agree
otherwise, the Share Percentage shall not be affected by the foregoing.  If the Non-Participating Shareholder
subsequently desires to participate in the Modification, it may do so provided
(x) the participation does not adversely and significantly affect the
Modification or the Participating Shareholder, in respect of capacity, quality,
cost or completion date, (y) it notifies the Participating Shareholder 90 days
after completion of the Modification and (z) it pays to the Participating
Shareholder a pro rated amount (in the same percentage as the Non-Participating
Shareholder’s Processing Rights) of the funds made available by the
Participating Shareholder to Scanraff, plus interest thereon calculated on a
per annum basis at 6 months STIBOR + 1⁄2 % during the period between the
advancement of funds by the Participating Shareholder and the payment by the
Non-Participating Shareholder of its share of the cost of the Modification.

 

5.3                                 Replacement and Renewal of Equipment. 
Notwithstanding the provisions of Article 5.2, so long as the
Shareholders have an interest in Scanraff or the Refinery, they agree to make
available to Scanraff, in proportion to their Processing Rights such funds as
are required from time to time to operate or maintain the Refinery in an
efficient and safe manner.  For the
purpose of this Article 5.3, operation and maintenance means such measures as
are necessary to maintain the Refinery in working order at basically the same
technological level, capacity, yield structure and product slate.

 

5.4                                 Strategic business plan and yearly plan for
Investments and Financing.  A strategic business plan
shall be presented to the Board of Directors for approval on a yearly basis.
Before the end of each year the Board of Directors shall consider and approve
an investment budget and a financing plan covering the following year.

 

PART SIX:

 

BUNKERING

 

6.1                                 Bunkering of Vessels. 
Each of the Shareholders and any Affiliate shall have the right to
bunker vessels owned 

 

15

 

by, time or demise
chartered by, or otherwise under the effective control of such Shareholder or
its Affiliate.  In respect of the supply
of bunkers at the crude port or product port servicing the Refinery to other
marine vessels, each Shareholder is free to seek such business for their own
respective accounts.

 

PART SEVEN:

 

MISCELLANEOUS

 

7.1                                 Dissolution.

 

(a)                                  In the event of liquidation, expropriation,
sale or other dissolution of Scanraff (hereinafter “Dissolution”) for any
reason, the assets of Scanraff shall be disposed of as and in the order listed
below:

 

(i)                                     all secured creditors shall be paid in full to
the extent that the security is sufficient therefor; and

 

(ii)                                  all other creditors shall be paid in full,
including any ordinary Shareholders’ loans; and

 

(iii)                               subordinated Shareholders’ loans shall be paid
in full; and

 

(iv)                              the balance of the assets shall be distributed
to the Shareholders in accordance with their Share Percentage at the time of
distribution.

 

(b)                                 In the event there has been a modification
under Article 5.2 (b) but the Share Percentage has not been adjusted on account
of such modification, then, as part of the payments contemplated under Article
7.1 (a), each Shareholder shall be entitled to receive as a creditor of
Scanraff a payment equal to that proportion of the assets less amounts payable
under Article 7.1 (a) (i) - (iii) prior to the application of this Article 7.1
(b), which the value of any portion of the Refinery (just prior to Dissolution)
attributable to a Modification, if any, made by the particular party, under
Article 5.2 of this Agreement bears to the total value of the Refinery just
prior to Dissolution.

 

7.2                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of
Sweden.

 

7.3                                 Arbitration.  All
disputes arising under or in connection with this Agreement shall be finally
settled by arbitration in Stockholm in accordance with the Swedish Arbitration
Act in force from time to time.

 

16

 

7.4                                 Term.

 

(a)                                  Except as otherwise expressly provided, this
Agreement shall become effective on the date of signing and shall remain in
full force and effect until December 31, 2023, but no termination shall affect
any rights or liabilities, theretofore accrued hereunder or pursuant hereto.  Upon this Agreement coming into effect, the
Shareholders’ Agreement by and between the Parties dated as of 20 May 1999
shall be terminated, and be replaced by this Agreement.

 

(b)                                 No later than December 31, 2021, the
Shareholders and Scanraff shall in good faith commence negotiations in order to
reach a new arrangement concerning their respective interests in Scanraff and
the Refinery.  Should the Shareholders
and Scanraff fail to reach an arrangement by December 31, 2023, then the
Shareholders shall cause Scanraff to be liquidated in a manner contemplated in
Section 7.1 of this Agreement.

 

7.5                                 Notices.  All
notices or communications hereunder shall be given by letter sent by mail,
telex or telefax (important notices to be sent by registered mail) and shall be
deemed given when the letter is sent by ordinary mail, the telex dispatched or
the telefax sent, postage or charges prepaid, and directed to the party or
parties for whom intended at the respective address set forth below in each
case until changes by notice given hereunder:

 

	
  To Preem:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Preem Petroleum AB

  
	
   

  	
   

  	
  S-115 90  STOCKHOLM, Sweden

  

 

	
  To Hydro:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hydro R&M Holding AB

  
	
   

  	
   

  	
  c/o Norsk Hydro ASA, N-0240
  OSLO, Norway

  

 

	
  To Scanraff:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Skandinaviska Raffinaderi AB Scanraff

  	
   

  	
   

  
	
   

  	
   

  	
  S-453 81  LYSEKIL, Sweden

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

7.6                                 Severability of Obligations. 
The obligations of the Shareholders hereunder are not joint but several,
and default in performance by any one of such Shareholders shall in no way
affect the obligations of any other Shareholder.

 

7.7                                 Beneficiaries.  This
Agreement shall only inure to the benefit of, and may only be enforced by, the
parties hereto and shall not, in any event, inure to the benefit of, or be
enforceable by, any other Person whatsoever.

 

17

 

7.8                                 Changes in Writing.  No
modification, variation or amendment of this Agreement, no determination,
evaluation, approval, waiver or other action permitted or taken hereunder and
no further agreement contemplated hereby shall be of any force unless the same
is in writing and has been signed by (i) all the parties in the case of
modification, variation or amendment or (ii) the applicable Person in such
other cases.

 

IN WITNESS WHEREOF, the parties hereto have caused this Shareholders’
Agreement to be executed as of the date first above written, in three
originals, one for each party concerned.

 

	
  For PREEM PETROLEUM AB

  	
   

  	
  For SKANDINAVISKA

  	 

	
   

  	
  RAFFINADERI AB SCANRAFF

  	 

	
   

  	 

	
  By 

  	
  /s/Lars Nelson, /s/Per Höjgård

  	
   

  	
  By 

  	
  /s/Lars Nelson, /s/Pål
  Sunde

  	 

	
   

  	
   

  	 

	
  Title 

  	
   

  	
   

  	
  Title 

  	
   

  	 

	
   

  	 

	
  For HYDRO ALUMINIUM
  CONDUCTOR AB (changing its corporate name to HYDRO R&M HOLDING AB)

  	 

	
   

  	 

	
  By 

  	
  /s/Pål Sunde

  	
   

  	 

	
   

  	 

	
  Title 

  	
   

  	
   

  
									

 

18

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