Document:

exhibit10-1.htm

Exhibit 10.1

 

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

 

	
Written Agreement by and between

 

CIT GROUP INC.

New York, New York

 

and

 

FEDERAL RESERVE BANK OF

   NEW YORK

New York, New York

 

 
	
 

 

 

 

          Docket No. 09-114-WA/RB-HC

WHEREAS, CIT Group Inc., New York, New York (“Bancorp”), a registered bank holding company, owns and controls CIT Bank, Salt Lake City, Utah (the “Bank”), a state chartered nonmember bank, and various nonbank subsidiaries;

WHEREAS, it is the common goal of Bancorp and the Federal Reserve Bank of New York (the “Reserve Bank”) to maintain the financial soundness of Bancorp so that Bancorp may serve as a source of strength to the Bank;

WHEREAS, Bancorp and the Reserve Bank have mutually agreed to enter into this Written Agreement (the "Agreement"); and

WHEREAS, on August 12, 2009, Bancorp’s board of directors, at a duly constituted meeting, adopted a resolution authorizing and directing the Chief Executive Officer to consent to this Agreement on behalf of Bancorp, and consenting to compliance with each and every applicable provision of this Agreement by Bancorp
and its institution-affiliated parties, as

 

 

 

defined in sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

NOW, THEREFORE, Bancorp and the Reserve Bank agree as follows:

Corporate Governance

1.           Within 75 days of this Agreement, Bancorp shall provide the Reserve Bank with a written plan (the “Corporate Governance Plan”) outlining the specific actions Bancorp will take, including timeframes, to
strengthen Bancorp’s management and corporate governance consistent with the responsibility of Bancorp’s board of directors to effectively and adequately oversee Bancorp’s senior management and business affairs. The Corporate Governance Plan shall, at a minimum, address, consider and include:

(a)           The adequacy of staffing levels, including an assessment of whether the audit, risk management and control functions of Bancorp are adequately staffed and provided with adequate resources;

(b)           measures to enhance Bancorp’s board of directors’ oversight of risk management processes in order that risk appetite decisions and the setting of risk tolerance levels, including, but not limited to, credit and liquidity risk exposures
of the business lines and on a consolidated basis, are made and documented with an identification and consideration of, new and emerging risks, adverse trends, and the additional risk management controls needed to manage such risks and trends;

(c)           measures to enhance the identification and reporting to Bancorp’s board of directors and senior management of deviations from established risk limits and risk management objectives; and

(d)           steps so that compensation and other incentives provided to senior

 

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management and other employees are risk sensitive and aligned with the long-term prudential interests of Bancorp.

Credit Risk Management

2.           Within 60 days of this Agreement, Bancorp shall submit to the Reserve Bank an acceptable credit risk management plan to address and correct weaknesses identified by the Reserve Bank in Bancorp’s risk rating
process and to improve the accuracy of assigned credit risk ratings (the “Credit Risk Management Plan”). The Credit Risk Management Plan shall describe the specific actions that Bancorp proposes to take, and the timeframes for these actions. The Credit Risk Management Plan shall, at a minimum, address, consider and include:

(a)           Measures to enhance the internal credit risk rating system so that it is (i) commensurate with the complexity of lending activities; (ii) adequately integrated into the institution's overall analysis of capital adequacy; and (iii) supported by sufficient
quantitative analysis;

(b)           strategies to minimize credit losses and reduce levels of problem assets;

(c)           measures to enhance the accuracy and consistency of loan risk ratings assigned by loan officers;

(d)           measures to require that all documentation necessary to adequately assess the current status and quality of each loan is maintained in the loan files; and

(e)           measures to address weaknesses identified by the Reserve Bank in problem loan accounting practices, including, but not limited to: loan reporting, troubled debt restructuring identification process, use of specific loan loss reserves, and nonaccrual
and charge-off practices.

 

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Allowance for Loan and Lease Losses

3.        (a)           Within 60 days of this Agreement, Bancorp shall review and revise, as appropriate, its consolidated allowance for loan and lease
losses (“ALLL”) methodology to assure that it is consistent with relevant supervisory guidance, including the Interagency Policy Statements on the Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR 06-17). Bancorp shall submit a description of the methodology to the Reserve Bank upon adoption.

(b)           Within 60 days of this Agreement, Bancorp shall submit to the Reserve Bank an acceptable written program to be implemented for determining, documenting, and recording an adequate consolidated ALLL. The program shall include policies and procedures
to ensure adherence to the consolidated ALLL methodology and provide for periodic reviews and updates to the consolidated ALLL methodology, as appropriate. The program shall also provide for a review of the consolidated ALLL by the board of directors on at least a quarterly calendar basis. Any deficiency found in the consolidated ALLL shall be remedied in the quarter it is discovered, prior to the filing of any required regulatory reports, by additional provisions. The board of directors, acting through the Audit
Committee, shall maintain written documentation of its review, including the factors considered and conclusions reached by the Bancorp or any nonbank subsidiary in determining the adequacy of the consolidated ALLL. During the term of this Agreement, Bancorp shall submit to the Reserve Bank, within 30 days after the end of each calendar quarter, a written report regarding the board of directors’ quarterly review of the consolidated ALLL and a description of any changes to the methodology used in determining
the amount of consolidated ALLL for that quarter.

(c)           Bancorp shall, by the end of the quarter following the receipt of any

 

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federal report of inspection, or more frequently if warranted, charge off all assets classified or identified as “loss” unless otherwise approved in writing by the Reserve Bank.

Capital Plan

4.           Within 15 days of this Agreement, Bancorp shall submit to the Reserve Bank an acceptable written plan (the “Capital Plan”) to maintain sufficient capital at Bancorp, on a consolidated basis, and at the
Bank, as a separate legal entity on a stand-alone basis. The Capital Plan shall describe the specific actions that Bancorp proposes to take, and the timeframes for these actions. The Capital Plan shall, at a minimum, address, consider, and include:

(a)           The consolidated organization’s and the Bank’s current and future capital requirements, including Bancorp’s compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure,
Appendices A and D of Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines for the Bank issued by the Bank’s federal regulator;

(b)           the adequacy of Bancorp’s and the Bank’s capital, taking into account the volume of classified credits, concentrations of credit, ALLL, current and projected asset growth, and projected net income and retained earnings;

(c)           enhancements to Bancorp’s stress testing and scenario analysis practices;

(d)           the source and timing of additional funds necessary to fulfill the consolidated organization’s and the Bank’s future capital requirements, as well as the impact that the actions to generate such funds will have on projected net income and
retained earnings;

 

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(e)           supervisory requests for additional capital at the Bank and the requirements of any supervisory action imposed on the Bank by its federal regulator; and

(f)           the requirements of section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. § 225.4(a)) that Bancorp serve as a source of strength to the Bank.

5.           Bancorp shall notify the Reserve Bank in writing, no more than 30 days after the end of any quarter in which any of Bancorp’s or the Bank’s capital ratios (total risk based, Tier 1 risk-based, or leverage)
fall below the Capital Plan’s minimum ratios. Together with the notification, Bancorp shall submit an acceptable written plan that details the steps that Bancorp and/or the Bank will take to increase Bancorp’s and/or the Bank’s capital ratios to or above the plan’s minimums.

Liquidity and Funds Management

6.           Within 15 days of this Agreement, Bancorp shall submit to the Reserve Bank an acceptable written plan designed to improve management of the consolidated entity’s liquidity position and funds management practices
(the “Liquidity Plan”). The Liquidity Plan shall describe the specific actions that Bancorp proposes to take and the timeframes for these actions. The Liquidity Plan shall, at a minimum, address, consider, and include:

(a)           Measures to enhance the monitoring and measurement of the consolidated entity’s liquidity positions, including cash flow projections to address future needs;

(b)           measures to enhance the consolidated entity’s ability to meet short-term funding needs, including the maintenance of an adequate liquidity cushion;

(c)           a longer-term funding plan that includes strategies that do not rely on U.S. government funding programs or regulatory or supervisory waivers or exemptions;

 

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(d)           a contingency funding plan that includes adverse scenario planning and periodic reporting;

(e)           specific liquidity targets and parameters, and the maintenance of sufficient liquidity to meet contractual obligations and unanticipated demands;

(f)            procedures to ensure discipline in adhering to liquidity targets and parameters;

(g)           systems to ensure that the consolidated organization's liquidity risk management process addresses off-balance sheet exposures and funding alternatives in a contingency liquidity plan; and

(h)           measures to ensure periodic written reports to Bancorp’s board of directors and senior management on the consolidated entity’s current and projected liquidity positions, including, but not limited to: (i) a complete review of the consolidated
entity’s liquidity position that includes the potential impact of demand upon liquidity arising from all contingent exposures; (ii) an analysis of strategies or steps taken or to be taken to address variances from targets and parameters; and (iii) a discussion of contingency plans if actual sources or uses of funds vary materially from projections.

Business Plan

7.           Within 75 days of this Agreement, Bancorp shall submit to the Reserve Bank a business plan to improve Bancorp’s overall financial condition (the “Business Plan”). The Business Plan shall, at a minimum,
provide for or describe:

(a)           a comprehensive budget for the remainder of calendar year 2009 and the calendar year 2010, including income statement and balance sheet projections;

 

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(b)           the operating assumptions that form the basis for, and adequately support, major projected income, expense and balance sheet components; and

(c)           a detailed description of any proposed restructuring (including any sales of lines of business) of Bancorp's activities.

Dividends and Distributions

8.         (a)           Bancorp shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision
and Regulation (the “Director”) of the Board of Governors.

(b)           Bancorp shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.

(c)           Bancorp and its nonbank subsidiaries shall not make any distributions of interest, principal or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.

(d)           All requests for prior written approval shall be received at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities. All requests
shall contain, at a minimum, current and projected information, as appropriate, on Bancorp’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings, and ALLL needs; and identification of the sources of funds for the proposed payment or distribution. For requests to declare or pay dividends, Bancorp must also demonstrate that the required declaration or payment of dividends is consistent with the Board of Governors’ Policy Statement on the

 

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Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

Debt and Stock Redemption

9.        (a)           Bancorp, and any nonbank subsidiary, shall not, directly or indirectly, incur, increase, or guarantee any debt outside the ordinary
course of business without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

(b)           Bancorp shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

Compliance with Laws and Regulations

10.      (a)           In appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the
officer would assume a different senior executive officer position, Bancorp shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).

(b)           Bancorp shall comply with the restrictions on indemnification and severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359).

Compliance with the Agreement

11.           Within 10 days of this Agreement, Bancorp’ s board of directors shall appoint a committee (the “Compliance Committee”) to monitor and coordinate Bancorp’s compliance with

 

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the provisions of this Agreement. The Compliance Committee shall include a majority of outside directors who are not executive officers or principal shareholders of Bancorp or the Bank, as defined in sections 215.2(e)(1) and 215.2(m)(1) of Regulation O of the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and
215.2(m)(1)). The Compliance Committee shall meet at least monthly, keep detailed minutes of each meeting, and report its findings to Bancorp’s board of directors.

Approval and Implementation of Plans and Program

12.      (a)           Bancorp shall submit written plans and a program that are acceptable to the Reserve Bank as follows: (i) within 15 days of this Agreement,
plans addressing paragraphs 4 and 6; and (ii) within 60 days, a plan and program addressing paragraphs 2 and 3. Within 75 days of this Agreement, Bancorp shall submit written plans addressing paragraphs 1 and 7.

(b)           Within 10 days of approval by the Reserve Bank (or submission with respect to paragraphs 1 and 7), Bancorp shall adopt the plans and program referred to in paragraph 12(a). Upon adoption, Bancorp shall promptly implement the plans and program, and
thereafter fully comply with them.

(c)           During the term of this Agreement, the plans and program shall not be amended or rescinded without the prior written approval of the Reserve Bank.

Progress Reports

13.      (a)           Within 30 days after the end of each calendar quarter following the date of this Agreement, Bancorp shall submit to the Reserve Bank written
progress reports detailing the form and manner of all actions taken to secure compliance with this Agreement and the results thereof.

 

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(b)           On an ongoing basis, Bancorp shall promptly provide the Reserve Bank with the following reports as they become available: (i) minutes of the meetings of Bancorp’s board of directors; (ii) minutes of the meetings of the audit and risk management
committees of Bancorp’s board of directors; (iii) minutes of the monthly meetings of the asset liability committee; (iv) minutes of the quarterly meetings of the capital committee; (v) daily cash position reports; (vi) weekly parent-only cash flow forecasts; (vii) weekly consolidated cash flow forecasts; (viii) daily liquidity update reports showing client funding requests and loan/credit collections by business segment, business unit, and by facility type, ongoing initiatives on new funding and asset sales,
and derivative terminations; monthly reports of debt maturities; (ix) enterprise risk management reports; (x) rating agency action releases; (xi) reports of all contacts and discussions with rating agencies; (xii) secured borrowing facilities reports; (xiii) monthly reports of margin sensitivity analysis; (xiv) monthly reports of business segment income; (xv) standardized board and board level committee liquidity risk management reporting packages; and (xvi) monthly derivative valuation reports.

Communications

14.           All communications regarding this Agreement shall be sent to:

	  	
(a)
	
Lance Auer

	  	  	
Vice President

	  	  	
Federal Reserve Bank of New York

	  	  	
33 Liberty Street

	  	  	
New York, NY 10045

	  	  	  
	  	
(b)
	
Robert Ingato

	  	  	
Executive V.P., General Counsel and Secretary

	  	  	
CIT Group Inc.

	  	  	
One CIT Drive

	  	  	
Livingston, NJ 07041

 

 

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Miscellaneous

15.           Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to Bancorp to comply with any provision of this Agreement.

16.           The provisions of this Agreement shall be binding upon Bancorp and its institution-affiliated parties, in their capacities as such, and their successors and assigns.

17.           Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

18.           The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any other action affecting Bancorp, the Bank,
any nonbank subsidiary of Bancorp, or any of their current or former institution-affiliated parties and their successors and assigns.

19.           Pursuant to Section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 12th day of August, 2009.

 

	
CIT GROUP INC.
	  	
FEDERAL RESERVE BANK

OF NEW YORK

	  	  	  
	  	  	  
	  	  	  
	
By:
	
/s/ Jeffrey M. Peek
	  	  	
By:
	
/s/ William L. Rutledge
	  
	 	Jeffrey M. Peek	 	 	 	William L. Rutledge	 
	 	
Chairman and Chief Executive Officer
	 	 	 	
Executive Vice President
	 

12Wood to Ethanol Research Consortium (WERC)

EXHIBIT 10.1

Wood to Ethanol Research Consortium (WERC)

MEMBERSHIP AGREEMENT

This Agreement is made by and between North Carolina State University at Raleigh, NC (hereinafter called “UNIVERSITY”) and Evolution Resources, Inc., a Nevada Corporation (hereinafter called “COMPANY”).

WHEREAS, the parties to this Agreement intend to join together in a cooperative effort to support a WOOD TO ETHANOL RESEARCH CONSORTIUM (hereinafter called “CONSORTIUM”) at UNIVERSITY to continue the process engineering analysis of a simplified Repurposed mill scheme; verify critical information through comprehensive laboratory experimentation; improve on the process and raw material efficiencies and develop fundamental understanding and possible solution of the low softwood hydrolysis efficiency. The Consortium is proposed as a two year commitment by the project sponsors to fund research as outlined in the attached proposal.

NOW, therefore, for the mutual benefits and considerations each to the other, the parties hereto agree to the following terms and conditions:

1.

CONSORTIUM OPERATION 

A.

CONSORTIUM will be a fully integrated UNIVERSITY program administered by UNIVERSITY through the Dept. of Wood and Paper Science, College of Natural Resources and operated with the support of UNIVERSITY and members of the CONSORTIUM (“MEMBERS”). 

B.

CONSORTIUM will be operated in accordance with the CONSORTIUM Bylaws, which are incorporated herein by reference and which may be amended in accordance with the provisions set forth in the Bylaws. 

2.

MEMBERSHIP 

A.

Membership in the CONSORTIUM shall be open to all companies on an annual basis. MEMBER agrees to join Consortium with the intention of remaining a dues-paying member for at least two (2) years. 

B.

COMPANY agrees to pay nonrefundable annual membership dues of $25,000 for the period of June 1, 2009 - May 31, 2010 and membership dues of $25,000 for the period of June 1, 2010- May 31, 2011, which will be paid within 30 days of receiving NCSU Invoice thereby becoming a MEMBER entitled to the privileges detailed in this Membership Agreement and the CONSORTIUM’S Bylaws. Membership dues shall be made payable to North Carolina State University. Payment should be sent to Office of Contracts and Grants, 2701 Sullivan Drive, Administrative Services III, 

Page 1 of 6

Suite 240, Box. 7514, Raleigh, NC 27695-7514, with reference to WERC MEMBER clearly indicated.

C.

COMPANY may leave the Consortium at any time with giving UNIVERSITY a 120 (hundred and twenty) days written termination notice.

3.

PATENTS AND COPYRIGHTS 

A.

CONSORTIUM RESEARCH is defined as research supported solely by membership dues and does not include 1) research carried out under separate contract; 2) supported by public funds; or 3) carried out independently by a MEMBER. 

B.

Title to any invention or discovery made or conceived in the performance of CONSORTIUM RESEARCH solely by a UNIVERSITY employee (“UNIVERSITY INVENTION”) shall remain with the University, provided, however, that the UNIVERSITY shall grant to each MEMBER whose membership dues are not over-due on the date such Invention is made a non-exclusive, royalty-free license for its internal research and development use (but not to make, use, or sell products or processes for commercial purposes) of such invention or discovery. This license may be extended to MEMBER'S Affiliates without additional charge, and there shall be no right to grant sublicenses under this license. 

If an invention or discovery is made solely by an employee of MEMBER'S organization as a direct result of such employee's participation in CONSORTIUM RESEARCH (“MEMBER’S INVENTION”), the title to the invention shall remain with the MEMBER, and the MEMBER shall grant to the UNIVERSITY a non-exclusive, royalty-free license for use of the invention or discovery for its own internal non-commercial educational and research purposes. 

Any invention or discovery made or conceived in the performance of CONSORTIUM RESEARCH jointly by employees of the UNIVERSITY and employees of MEMBER shall be deemed a joint invention with both parties sharing in the rights thereto according to U.S. patent law. 

C.

UNIVERSITY INVENTIONS resulting from CONSORTIUM RESEARCH shall be promptly disclosed to MEMBERS by UNIVERSITY in writing on a confidential basis. UNIVERSITY shall file for and prosecute patent applications on behalf of CONSORTIUM if patent protection is desired. UNIVERSITY shall consult with MEMBERS regarding the manner and extent of filing and prosecuting the patent and its subsequent maintenance. Each MEMBER shall have sixty (60) days from receipt of the UNIVERSITY'S invention disclosure to notify UNIVERSITY of that MEMBER'S interest in acquiring license rights beyond those provided under Article 3. B. and willingness to support the cost of patent filings. MEMBERS agreeing to share in the costs of patenting such 

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inventions shall have certain rights and options as delineated in Articles 3. D. and E. of this agreement. 

D.

MEMBERS participating in the costs of filing, prosecuting and maintaining a patent application in respect of UNIVERSITY INVENTIONS ("PARTICIPATING MEMBERS") shall have an option for a period of six (6) months after filing of the patent application to acquire a royalty- bearing license to make, have made, use and sell products or processes for commercial purposes including the right to sublicense, said license to be exclusive among those PARTICIPATING MEMBERS electing to license the technology (hereinafter a "LIMITED EXCLUSIVE LICENSE") and to be upon the same terms and conditions in respect of each of them. The cost of filing, prosecution and maintenance of patent applications shall be paid by the LIMITED EXCLUSIVE LICENSEES. 

E.

If no LIMITED EXCLUSIVE LICENSE is granted under Article 3. D, then those PARTICIPATING MEMBERS shall have a right to a non-exclusive, non-sublicensable, non-transferable, fee or royalty-bearing license to commercialize the UNIVERSITY INVENTION (“NON-EXCLUSIVE LICENSE”), but only so long as that PARTICIPATING MEMBER continues to meet its full obligation to pay an equal share of the costs associated with filing, prosecuting, and maintaining the patent. The terms and conditions of any such NON-EXCLUSIVE LICENSE, including fee or royalty rates, shall be negotiated on commercially reasonable terms. In granting non-exclusive licenses to any entity that is not a PARTICIPATING MEMBER, which UNIVERSITY is free to do in cases where no LIMITED EXCLUSIVE LICENSE is granted, the terms of any such non-exclusive license may be no more favorable to that licensee than are the terms of the NON-EXCLUSIVE LICENSE granted to PARTICIPATING MEMBERS under this Article 3. E. Any such PARTICIPATING MEMBER shall be entitled to a copy of such license to verify compliance herewith. The cost of filing, prosecution and maintenance of patent applications shall be allocated in the NON-EXCLUSIVE LICENSE. 

F.

If no LIMITED EXCLUSIVE LICENSE is granted under Article 3. D., then those MEMBERS that did not participate in the cost of filing, prosecuting and maintaining a patent application, but who subsequently wish to use the patented invention for commercial purposes, may become PARTICIPATING MEMBERS and be granted NON-EXCLUSIVE LICENSES as provided in Article 3. E. by 1) paying the CONSORTIUM any unpaid membership dues from the date the invention is made, if any, and an additional sum equal to 1.5 times the share paid by each PARTICIPATING MEMBER for support of the filing, prosecution and maintenance of the patent to date; and 2) by agreeing to the terms and conditions of the NON-EXCLUSIVE LICENSE; and 3) agreeing to participate equally with the other PARTICIPATING MEMBERS in future costs associated with the filing, prosecution and maintenance of the patent. 

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G.

If no LIMITED EXCLUSIVE LICENSE is granted under Article 3. D., and no PARTICIPATING MEMBER nor another entity has negotiated and signed a NON-EXCLUSIVE LICENSE under Articles 3 E. and F. above within two years of the filing of the last-filed patent application included within such supported patent, then the UNIVERSITY may terminate the options granted under Article 3. E. and F. upon written notice to the PARTICIPATING MEMBERS and license such UNIVERSITY PATENT to any entity and in any manner that it sees fit. Each PARTICIPATING MEMBER is responsible for the payment of its share of such patent costs and expenses incurred up to the effective date of termination and accordingly such patent costs and expenses already paid by PARTICIPATING MEMBERS will not be refunded. Upon termination of support, the PARTICIPATING MEMBERS will retain the internal research and development rights described in Article 3. B. above. 

H.

For the purposes of this Agreement, MEMBER’S “Affiliate” shall mean (1) any corporation or other legal entity owning, directly or indirectly, fifty percent (50%) or more of the voting capital shares of that MEMBER; (2) any corporation or other legal entity fifty percent (50%) or more of the voting capital shares (or equivalent control) of which is owned, directly or indirectly, by that MEMBER; or (3) any corporation or other legal entity fifty percent (50%) or more of the voting capital shares (or equivalent control) of which is owned, directly or indirectly, by a corporation or other legal entity owning, directly or indirectly, fifty percent (50%) or more of the voting capital shares of that MEMBER. 

4.

PUBLICATIONS 

A.

A "publication" shall be deemed to mean any written, oral or other public disclosure of research results, including the public use or sale of an invention based on the research results, if that event could bar the availability of protection in foreign jurisdictions or trigger the one-year grace period in the U.S. within which a U.S. patent application must be filed, and “publish” shall have a corresponding meaning. 

B.

UNIVERSITY shall be free to use the results of CONSORTIUM RESEARCH for its own teaching and educational purposes without payment of royalties or other fees provided that it does nothing which could bar the availability of patent protection in respect of a MEMBER’S INVENTION or joint invention. UNIVERSITY is free to publish at its own discretion the results of CONSORTIUM RESEARCH except those that would constitute an enabling disclosure of a MEMBER’S INVENTION on which a patent application has not been filed. In such cases, the UNIVERSITY may not publish without the prior written consent of the MEMBER concerned (which consent shall not be unreasonably withheld) after having reviewed the full text proposed to be published. UNIVERSITY shall provide each MEMBER a confidential copy of any manuscript generated as a result of CONSORTIUM RESEARCH at the time of submission to any journal or other publication, including conference abstract collections. 

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C.

Under no circumstances will publication of a student's thesis, for which funds are derived from the CONSORTIUM, be delayed for longer than ninety (90) days after conferral of his or her degree. 

5.

CONFIDENTIALITY 

A.

In the normal and routine operation of the CONSORTIUM as detailed in this Agreement and the Consortium By-Laws, there may be the need for one party to disclose information that is proprietary and confidential to the disclosing party. All such information must be disclosed by the disclosing party in writing and designated as confidential or, if disclosed orally, must be identified as confidential at the time of disclosure and confirmed in writing as being confidential within thirty (30) days of such disclosure. Except as otherwise provided herein, for a period of three (3) years following the date of such disclosure, the receiving party agrees to use the confidential information only for purposes of this Agreement and further agrees that it will not publish or otherwise disclose such information. The restrictions of this §5(A) shall not apply to: 

(i)

information which is or becomes publicly known through no fault of the receiving party; 

(ii)

information learned from a third party entitled to disclose it; 

(iii)

information already known to or developed by receiving party before receipt from disclosing party, as shown by receiving party's prior written records; 

(iv)

information for which receiving party obtains the disclosing party's prior written permission to publish or which is disclosed in the necessary course of the prosecution of patent applications based upon inventions developed pursuant to this Agreement; 

(v)

information required to be disclosed by court order or operation of law, including, but not limited to, the North Carolina Public Records Act; or 

(vi)

information that is independently developed by the receiving party’s personnel who are not privy to the disclosing party’s confidential information. 

The receiving party must use a reasonable degree of care to prevent the inadvertent, accidental, unauthorized or mistaken disclosure or use by its employees of confidential information disclosed hereunder.

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6.

OTHER CONSORTIUM-RELATED PROJECTS

Nothing in this Agreement shall be deemed to prevent CONSORTIUM and any MEMBER or any group of MEMBERS from entering into a separate sponsored research agreement, as outlined in the By-Laws. In the event of any inconsistency between the terms of the separate agreement, the CONSORTIUM Bylaws and the Member Agreement, the terms of such separate agreement shall take precedence insofar as such separate agreement does not adversely affect the rights to intellectual property or confidentiality granted to the MEMBER companies under the terms of Sections 2, 3, 4 and 5 of this Agreement.

7.

VARIATION

No addition to or variation of this Agreement shall be of any force or effect unless it is expressly recorded in writing signed by non-electronic hand-written signatures of both parties hereto.

8.

GOVERNING LAW

This Agreement shall in all respects be exclusively governed by and interpreted according to the substantive laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first hereinabove written.

NORTH CAROLINA

STATE UNIVERSITY

COMPANY

By: _________________________

By: ____________________________

Name:__________________________

Name: Kit Chambers

Title: ___________________________

Title: Executive Vice President

Date: ___________________________

Date: August 4, 2009

Contact Information for NCSU :

Contact Information for the COMPANY:

Larisa Oktyabrsky

Kit Chambers

Coordinator, Centers and Institutes

Executive Vice President

Campus Box 7514 / Administrative Services III,

3001 Knox St, Suite 403

2701 Sullivan Drive, Suite 240

Dallas, TX 75205

Raleigh, NC 27695-7514

Phone: 214-634-6238

Telephone: 919-515-9333

Fax: 214-389-9805

Fax: 919-515-7721

Email: kchambers@evoresources.com

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