Document:

INTC ex10.4 10Q 3.28.2015

Exhibit 10.4

INTEL CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
UNDER THE INTEL CORPORATION 2006 EQUITY INCENTIVE PLAN
(for RSUs granted on or after January 23, 2015 under the Executive OSU program)

		
	1.
	TERMS OF RESTRICTED STOCK UNIT

This Restricted Stock Unit Agreement (this “Agreement”), the Notice of Grant delivered herewith (the “Notice of Grant”) and the Intel Corporation 2006 Equity Incentive Plan (the “2006 Plan”), as such may be amended from time to time, constitute the entire understanding between you and Intel Corporation (the “Corporation”) regarding the Restricted Stock Units (“RSUs”) identified in your Notice of Grant.  
		
	2.
	SIGNATURE

If you are instructed by the administrators of the 2006 Plan to accept this Agreement and you fail to do so in the manner specified by the administrators within 180 days of the Grant Date, the RSUs identified in your Notice of Grant will be cancelled, except as otherwise determined by the Corporation in its sole discretion. 
		
	3.
	VESTING OF RSUs

Provided that you remain continuously employed by the Corporation or a Subsidiary from the Grant Date specified in the Notice of Grant through the vesting date that is three years and one month after the Grant Date (as specified in the Notice of Grant), then as of the vesting date the RSUs will vest and be converted into the right to receive the number of shares of the Corporation’s Common Stock, $.001 par value (the “Common Stock”), determined by multiplying the target number of shares as specified in the Notice of Grant (the “Target Number of Shares”) by the conversion rate as set forth below, and except as otherwise provided in this Agreement.  If a vesting date falls on a weekend or any other day on which the Nasdaq Stock Market ("NASDAQ") is not open, affected RSUs will vest on the next following NASDAQ business day.  
RSUs will vest to the extent provided in and in accordance with the terms of the Notice of Grant and this Agreement.  If your status as an Employee terminates for any reason except death, Disablement (defined below) or Retirement (defined below), prior to the vesting date set forth in your Notice of Grant, your unvested RSUs and dividend equivalents will be cancelled.
		
	4.
	CONVERSION OF RSUs 

		
	(a)
	The conversion rate of RSUs into the right to receive a number of shares of Common Stock depends on the Corporation’s Total Stockholder Return (“Intel TSR”) relative to the “Total Stockholder Return” of the Tech 15 (“Tech 15 TSR”) at the end of the “Performance Period,” as those terms are defined in this Section 4.  The conversion rate of RSUs into the right to receive a number of shares of Common Stock will be determined in accordance with following: 

		
	(1)
	If the Intel TSR and Tech 15 TSR are within 1 percentage point, the conversion rate will be 100%.  

		
	(2)
	If the Intel TSR is greater than the Tech 15 TSR, the conversion rate will be 100% plus four times the difference in percentage points between the Intel TSR and the Tech 15 TSR; provided that the maximum conversion rate is 200%.

		
	(3)
	If the Tech 15 TSR is greater than the Intel TSR, the conversion rate will be 100% minus two times the difference in percentage points between the Intel TSR and the Tech 15 TSR; provided that, if the Tech 15 TSR exceeds the Intel TSR by more than 25 percentage points, then the conversion rate will be 0%.

		
	(4)
	In the event that the conversion rate results in the right to receive a partial share of Common Stock, the conversion rate will be rounded down so that the RSUs will not convert into the right to receive the partial share.

By way of illustration, assume the Tech 15 TSR is 100% at the end of the Performance Period in the following examples.  
		
	•
	If the Intel TSR equals 100.5%, the difference between the Intel TSR and the Tech 15 TSR is within 1 percentage point.  As a result, the conversion rate is 100%, such that your RSUs convert into the right to receive 100% of the Target Number of Shares.  

		
	•
	If the Intel TSR is 105%, the difference between the Intel TSR and the Tech 15 TSR is 5 percentage points.  As a result, the conversion rate is 120%, such that your RSUs convert into the right to receive 120% of the Target Number of Shares.  

		
	•
	If the Intel TSR is 90%, the difference between the Intel TSR and the Tech 15 TSR is 10 percentage points.  As a result, the conversion rate is 80%, such that your RSUs convert into the right to receive 80% of the Target Number of Shares.

  
		
	•
	If the Intel TSR is 70%, the difference between the Intel TSR and the Tech 15 TSR is more than 25 percentage points.  As a result, the conversion rate is 0%, such that your RSUs convert into the right to receive 0% of the Target Number of Shares.

		
	(b)
	“Intel TSR” is a percentage (to the third decimal point) derived by:

		
	(1)
	A numerator that is the difference between the average closing sale price of Common Stock during the 3 months following and including the Grant Date subtracted from the average closing sale price of Common Stock during the 3 months prior to and including the end of the Performance Period, plus any dividends paid or payable with respect to an ex-dividend date that occurs during the Performance Period; and 

		
	(2)
	A denominator that is the average closing sale price of Common Stock during the 3 months following and including the Grant Date.

		
	(c)
	“Tech 15 TSR” is the median TSR (as defined below) of the fifteen technology companies included in the Corporation’s peer group for determining executive compensation, as determined by the Compensation Committee prior to the Grant Date, and regardless of any subsequent change after the Grant Date.

“Total Stockholder Return” or “TSR” of each stock for purposes of the Tech 15 TSR is a percentage (to the third decimal point) derived by:
		
	(1)
	A numerator that is the difference between the average closing sale price of common stock during the 3 months following and including the Grant Date subtracted from the average closing sale price of common stock during the 3 months prior to and including the end of the Performance Period, plus any dividends paid or payable with respect to an ex-dividend date that occurs during the Performance Period; and 

		
	(2)
	A denominator that is the average closing sale price of common stock during the 3 months following and including the Grant Date; and 

		
	(d)
	For purposes of determining the “Total Stockholder Return” or “TSR” of any company (including the Corporation):

		
	(1)
	Any dividend paid or payable in cash will be valued at its cash amount (without any deemed reinvestment and without any adjustments for applicable taxes or tax withholding).  Any dividend paid in securities with a readily ascertainable fair market value will be valued at the market value of the securities as of the dividend ex-dividend date.  Any dividend paid 

in other property will be valued based on the value assigned to such dividend by the paying company for tax purposes.  

		
	(2)
	Any company included in the Tech 15 TSR on the Grant Date that does not have a stock price that is quoted on a national securities exchange at the end of the Performance Period will be factored into the median calculation based on its TSR from the Grant Date until the last date on which its stock price was last quoted on a national securities exchange in the United States.

		
	(3)
	The Compensation Committee may equitably adjust a company's TSR for equity restructuring transactions including, but not limited to, a stock split, combination of shares, extraordinary dividend of cash and/or assets, recapitalization or reorganization.

		
	(4)
	Any company included in the Tech 15 TSR on the Grant Date that has a price of stock or a price of a security backed by stock that is quoted on a national securities exchange in the United States and on a national securities exchange outside the United States will be factored into the median calculation based on its price of stock or a price of a security backed by stock quoted on the national securities exchange in the United States.  

		
	(e)
	Performance Period is the period beginning with the Grant Date and ending three years later on the third anniversary of the Grant Date.  If the third anniversary of the Grant Date falls on a weekend or any other day on which the NASDAQ is not open, the Performance Period will end on the next following NASDAQ business day. If for any reason the Corporation (including any successor corporation) ceases to have its stock price quoted on a national securities exchange, the Performance Period will end as of the last date that the stock price is quoted on a national securities exchange. 

		
	5.
	DIVIDEND EQUIVALENTS

Dividend equivalents will vest at the same time as their corresponding RSUs and convert into the right to receive shares of Common Stock.  Dividend equivalents will be paid on the number of shares of the Corporation’s Common Stock into which this RSU is converted by determining the sum of the dividends paid or payable on such number of shares of Common Stock with respect to each ex-dividend  date that occurs between the Grant Date and the vesting date specified in the Notice of Grant (without any interest or compounding), divided (to the third decimal point) by the average of the highest and lowest sales prices of the Common Stock as reported by NASDAQ on the last day of the Performance Period.  The quotient derived from the previous sentence will be rounded down so that dividend equivalents will convert into the right to receive whole shares of Common Stock.  
		
	6.
	SETTLEMENT INTO COMMON STOCK

Shares of Common Stock will be issued or become free of restrictions as soon as practicable following the vesting date of the RSUs and dividend equivalents (or, in the event of vesting acceleration for death, Disablement, or Retirement, the original vesting date that is three years and one month after the Grant Date (as specified in the Notice of Grant)), provided that you have satisfied your tax withholding obligations as specified under Section 12 of this Agreement and you have completed, signed and returned any documents and taken any additional action that the Corporation deems appropriate to enable it to accomplish the delivery of the shares of Common Stock.  The shares of Common Stock will be issued in your name (or may be issued to your executor or personal representative, in the event of your death or Disablement), and may be effected by recording shares on the stock records of the Corporation or by crediting shares in an account established on your behalf with a brokerage firm or other custodian, in each case as determined by the Corporation.  In no event will the Corporation be obligated to issue a fractional share.
Notwithstanding the foregoing, (i) the Corporation will not be obligated to deliver any shares of the Common Stock during any period when the Corporation determines that the conversion of a RSU or the delivery of shares hereunder would violate any laws of the United States or your country of residence or employment and/or may issue shares subject to any restrictive legends that, as determined by the Corporation’s counsel, is necessary to comply with securities or other regulatory requirements, and (ii) the date on which shares are issued or credited to your account may include a delay in order to provide the Corporation such 

time as it determines appropriate to calculate Intel TSR and Tech 15 TSR, for the Committee (as defined below) to certify performance results, to calculate and address tax withholding and to address other administrative matters.  The number of shares of Common Stock into which RSUs and dividend equivalents convert as specified in the Notice of Grant will be adjusted for stock splits and similar matters as specified in and pursuant to the 2006 Plan.  
		
	7.
	SUSPENSION OR TERMINATION OF RSU FOR MISCONDUCT

If at any time the Committee of the Board of Directors of the Corporation established pursuant to the 2006 Plan (the "Committee"), including any Subcommittee or “Authorized Officer” (as defined in Section 8(b)(vi) of the 2006 Plan) notifies the Corporation that they reasonably believe that you have committed an act of misconduct as described in Section 8(b)(vi) of the 2006 Plan (embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Corporation, breach of fiduciary duty or deliberate disregard of Corporation rules resulting in loss, damage or injury to the Corporation, an unauthorized disclosure of any Corporation trade secret or confidential information, any conduct constituting unfair competition, inducing any customer to breach a contract with the Corporation or inducing any principal for whom the Corporation acts as agent to terminate such agency relationship), the vesting of your RSUs and dividend equivalents may be suspended pending a determination of whether an act of misconduct has been committed. If the Corporation determines that you have committed an act of misconduct, all RSUs and dividend equivalents not vested as of the date the Corporation was notified that you may have committed an act of misconduct will be cancelled and neither you nor any beneficiary will be entitled to any claim with respect to the RSUs and dividend equivalents whatsoever. Any determination by the Committee or an Authorized Officer with respect to the foregoing will be final, conclusive, and binding on all interested parties. 
		
	8.
	TERMINATION OF EMPLOYMENT

Except as expressly provided otherwise in this Agreement, if your employment by the Corporation or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than on account of death, Disablement (defined below) or Retirement (defined below), all RSUs and dividend equivalents not then vested will be cancelled on the date of employment termination, regardless of whether such employment termination is as a result of a divestiture or otherwise.   For purposes of this Section 8, your employment with any partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the Corporation or a Subsidiary is a party will be considered employment for purposes of this provision if either (a) the entity is designated by the Committee as a Subsidiary for purposes of this provision or (b) you are specifically designated as an employee of a Subsidiary for purposes of this provision.
For purposes of this provision, your employment is not deemed terminated if, prior to sixty (60) days after the date of termination from the Corporation or a Subsidiary, you are rehired by the Corporation or a Subsidiary on a basis that would make you eligible for future grants of Intel RSUs and dividend equivalents.  In addition, your transfer from the Corporation to any Subsidiary or from any one Subsidiary to another, or from a Subsidiary to the Corporation is not deemed a termination of employment.  
		
	9.
	DEATH

Except as expressly provided otherwise in this Agreement, if you die while employed by the Corporation or any Subsidiary, your RSUs and dividend equivalents will become one hundred percent (100%) vested.
		
	10.
	DISABLEMENT 

Except as expressly provided otherwise in this Agreement, if your employment terminates as a result of Disablement, your RSUs and dividend equivalents will become one hundred percent (100%) vested upon the later of the date of your termination of employment due to your Disablement or the date of determination of your Disablement.  

For purposes of this Section 10, “Disablement” will be determined in accordance with the standards and procedures of the then-current Long Term Disability Plan maintained by the Corporation or the Subsidiary that employs you, and in the event you are not a participant in a then-current Long Term Disability Plan maintained by the Corporation or the Subsidiary that employs you, “Disablement” will have the same meaning as disablement is defined in the Intel Long Term Disability Plan, which is generally a physical condition arising from an illness or injury, which renders an individual incapable of performing work in any occupation, as determined by the Corporation.
		
	11.
	RETIREMENT

For purposes of this Agreement, if your employment terminates as a result of Retirement, your RSUs and dividend equivalents will become one hundred percent (100%) vested upon the date of your Retirement.  For purposes of this Section 11, “Retirement” will mean:
		
	(a)
	You terminate employment with the Corporation at or after age 60 (“Standard Retirement”); or

		
	(b)
	You terminate employment with the Corporation and as of the termination date your age plus years of service (in each case measured in complete, whole years) equals or exceeds 75 (“Rule of 75”).

		
	12.
	TAX WITHHOLDING

To the extent RSUs and dividend equivalents are subject to tax withholding obligations, the taxable amount will be based on the Market Value on the date of the taxable event.  RSUs and dividend equivalents are taxable in accordance with the existing or future tax laws of the country in which you reside or are employed on the grant or vest dates, or during the vesting period.  Your RSUs and dividend equivalents may be taxable in more than one country, based on your country of citizenship and the countries in which you resided or were employed on the Grant Date, vest date or during the vesting period.  
You will make arrangements satisfactory to the Corporation (or the Subsidiary that employs you, if your Subsidiary is involved in the administration of the 2006 Plan) for the payment and satisfaction of any income tax, social security tax, payroll tax, social taxes, applicable national or local taxes, or payment on account of other tax related to withholding obligations that arise by reason of granting or vesting of RSUs and dividend equivalents or sale of Common Stock shares from vested RSUs and dividend equivalents (whichever is applicable).
The Corporation will not be required to issue or lift any restrictions on shares of the Common Stock pursuant to your RSUs and dividend equivalents or to recognize any purported transfer of shares of the Common Stock until such obligations are satisfied.  
Unless provided otherwise by the Committee, these obligations will be satisfied by the Corporation withholding a number of shares of Common Stock that would otherwise be issued under the RSUs and dividend equivalents that the Corporation determines has a Market Value sufficient to meet the tax withholding obligations.  In the event that the Committee provides that these obligations will not be satisfied under the method described in the previous sentence, you authorize UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc., or any successor plan administrator, to sell a number of shares of Common Stock that are issued under the RSUs and dividend equivalents, which the Corporation determines is sufficient to generate an amount that meets the tax withholding obligations plus additional shares to account for rounding and market fluctuations, and to pay such tax withholding to the Corporation.  The shares may be sold as part of a block trade with other participants of the 2006 Plan in which all participants receive an average price.  For this purpose, "Market Value" will be calculated as the average of the highest and lowest sales prices of the Common Stock as reported by NASDAQ on the day your RSUs and dividend equivalents vest.  The future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty.

You are ultimately liable and responsible for all taxes owed by you in connection with your RSUs and dividend equivalents, regardless of any action the Corporation takes or any transaction pursuant to this Section 12 with respect to any tax withholding obligations that arise in connection with the RSUs and dividend equivalents. The Corporation makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting or settlement of the RSUs and dividend equivalents or the subsequent sale of any of the shares of Common Stock underlying the RSUs and dividend equivalents that vest. The Corporation does not commit and is under no obligation to structure the RSU program to reduce or eliminate your tax liability.  
		
	13.
	RIGHTS AS A STOCKHOLDER

Your RSUs and dividend equivalents may not be otherwise transferred or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise, and may not be subject to execution, attachment or similar process.  Any attempt to transfer, assign, hypothecate or otherwise dispose of your RSUs and dividend equivalents other than as permitted above, will be void and unenforceable against the Corporation.
You will have the rights of a stockholder only after shares of the Common Stock have been issued to you following vesting of your RSUs and dividend equivalents and satisfaction of all other conditions to the issuance of those shares as set forth in this Agreement.  RSUs and dividend equivalents will not entitle you to any rights of a stockholder of Common Stock and there are no voting or dividend rights with respect to your RSUs and dividend equivalents.  RSUs and dividend equivalents will remain terminable pursuant to this Agreement at all times until they vest and convert into shares.  As a condition to having the right to receive shares of Common Stock pursuant to your RSUs and dividend equivalents, you acknowledge that unvested RSUs and dividend equivalents will have no value for purposes of any aspect of your employment relationship with the Corporation or a Subsidiary.  
		
	14.
	DISPUTES

Any question concerning the interpretation of this Agreement, your Notice of Grant, the RSUs or the 2006 Plan, any adjustments required to be made thereunder, and any controversy that may arise under this Agreement, your Notice of Grant, the RSUs or the 2006 Plan will be determined by the Committee (including any person(s) to whom the Committee has delegated its authority) in its sole and absolute discretion.  Such decision by the Committee will be final and binding unless determined pursuant to Section 17(e) to have been arbitrary and capricious. 
		
	15.
	AMENDMENTS

The 2006 Plan and RSUs and dividend equivalents may be amended or altered by the Committee or the Board of Directors of the Corporation to the extent provided in the 2006 Plan.
		
	16.
	DATA PRIVACY

You explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document and any other RSU grant materials (“Data”) by and among, as applicable, the Corporation, the Subsidiary that employs you and any other Subsidiary for the exclusive purpose of implementing, administering and managing your participation in the 2006 Plan.

You hereby understand that the Corporation holds certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Corporation, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor for the purpose of implementing, administering and managing the 2006 Plan.  You hereby understand that Data will be transferred to UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. and any other third parties assisting in the implementation, administration and management of the 2006 Plan, that these recipients may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country.  You hereby understand that 

you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative.  You authorize the Corporation, UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. and any other possible recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the exclusive purpose of implementing, administering and managing your participation in the 2006 Plan, including any requisite transfer of such Data as may be required to another broker or other third party with whom you may elect to deposit any shares of Common Stock acquired under your RSUs.  You hereby understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the 2006 Plan.  You hereby understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative.  

Further, you understand that you are providing the consents herein on a purely voluntary basis.  If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Subsidiary that employs you will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Corporation would not be able to grant you RSUs or other equity awards or administer or maintain such awards.  Therefore, you hereby understand that refusing or withdrawing your consent may affect your ability to participate in the 2006 Plan.  For more information on the consequences of your refusal to consent or withdrawal of consent, you hereby understand that you may contact the human resources representative responsible for your country at the local or regional level.

		
	17.
	THE 2006 PLAN AND OTHER TERMS; OTHER MATTERS

		
	(a)
	Certain capitalized terms used in this Agreement are defined in the 2006 Plan.  Any prior agreements, commitments or negotiations concerning the RSUs and dividend equivalents are superseded by this Agreement and your Notice of Grant.  You hereby acknowledge that a copy of the 2006 Plan has been made available to you.

The grant of RSUs and dividend equivalents to an employee in any one year, or at any time, does not obligate the Corporation or any Subsidiary to make a grant in any future year or in any given amount and should not create an expectation that the Corporation or any Subsidiary might make a grant in any future year or in any given amount.
		
	(b)
	To the extent that the grant of RSUs and dividend equivalents refers to the Common Stock of Intel Corporation, and as required by the laws of your country of residence or employment, only authorized but unissued shares thereof will be utilized for delivery upon vesting in accord with the terms hereof.

		
	(c)
	Notwithstanding any other provision of this Agreement, if any changes in law or the financial or tax accounting rules applicable to the RSUs and dividend equivalents covered by this Agreement will occur, the Corporation may, in its sole discretion, (1) modify this Agreement to impose such restrictions or procedures with respect to the RSUs (whether vested or unvested), the shares issued or issuable pursuant to the RSUs and dividend equivalents and/or any proceeds or payments from or relating to such shares as it determines to be necessary or appropriate to comply with applicable law or to address, comply with or offset the economic effect to the Corporation of any accounting or administrative matters relating thereto, or (2) cancel and cause a forfeiture with respect to any unvested RSUs and dividend equivalents at the time of such determination.

		
	(d)
	Nothing contained in this Agreement creates or implies an employment contract or term of employment upon which you may rely.

		
	(e)
	Because this Agreement relates to terms and conditions under which you may be issued shares of Common Stock of Intel Corporation, a Delaware corporation, an essential term of this Agreement is that it will be governed by the laws of the State of Delaware, without regard to choice of law principles of Delaware or other jurisdictions.  Any action, suit, or proceeding relating to this Agreement or the RSUs and dividend equivalents granted hereunder will be brought in the state or federal courts of competent jurisdiction in the State of California.  

		
	(f)
	Notwithstanding anything to the contrary in this Agreement or the applicable Notice of Grant, your RSUs and dividend equivalents are subject to reduction by the Corporation if you change your employment classification from a full-time employee to a part-time employee.

		
	(g)
	RSUs and dividend equivalents are not part of your employment contract (if any) with the Corporation or any Subsidiary, your salary, your normal or expected compensation, or other remuneration for any purposes, including for purposes of computing severance pay or other termination compensation or indemnity. 

		
	(h)
	In consideration of the grant of RSUs and dividend equivalents, no claim or entitlement to compensation or damages will arise from termination of your RSUs and dividend equivalents or diminution in value of the RSUs and dividend equivalents or Common Stock acquired through vested RSUs and dividend equivalents resulting from termination of your active employment by the Corporation (for any reason whatsoever and whether or not in breach of local labor laws) and you hereby release the Corporation from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then you will be deemed irrevocably to have waived your entitlement to pursue such claim.

		
	(i)
	Notwithstanding any terms or conditions of the 2006 Plan to the contrary, in the event of involuntary termination of your employment (whether or not in breach of local labor laws), your right to receive the RSUs and dividend equivalents and vest in RSUs and dividend equivalents under the 2006 Plan, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary termination of employment (whether or not in breach of local labor laws), your right to sell shares of Common Stock that converted from vested RSUs and dividend equivalents after termination of employment, if any, will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law.

		
	(j)
	Notwithstanding any provision of this Agreement, the Notice of Grant or the 2006 Plan to the contrary, if, at the time of your termination of employment with the Corporation,  you are a “specified employee” as defined in Section 409A of the Internal Revenue Code ("Code"), and one or more of the payments or benefits received or to be received by you pursuant to the RSUs and dividend equivalents would constitute deferred compensation subject to Section 409A, no such payment or benefit will be provided under the RSUs and dividend equivalents until the earliest of (A) the date which is six (6) months after  your "separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of your death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code) or (C) the effective date of a “change in the ownership or effective control” of the Corporation (as such term is used in Section 409A(a)(2)(A)(v) of the Code).  The provisions of this Section 17(j) will only apply to the extent required to avoid your incurrence of any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder.  In addition, if any provision of the RSUs would cause you to incur any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Corporation may reform such provision to maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code.

		
	(k)
	Copies of Intel Corporation's Annual Report to Stockholders for its latest fiscal year and Intel Corporation's latest quarterly report are available, without charge, at the Corporation's business office.

		
	(l)
	Chile.  If you are employed in or a resident of Chile, please note:  NEITHER INTEL CORPORATION NOR ANY OF ITS SHARES ARE REGISTERED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (THE "SVS") NOR SUBJECT TO THE CONTROL OF THE SVS.

		
	(m)
	France.  If you are employed in or a resident of the France, you will not be required to hold the shares of Common Stock issued to you for the vest of these RSUs for the minimum required holding period of the ‘régime fiscal de faveur’.

		
	(n)
	The People’s Republic of China.  If you are employed in and a citizen of the People’s Republic of China, you authorize the Corporation to instruct UBS Financial Services Inc., or any successor plan administrator, to sell all of your shares of Common Stock that are issued under these RSUs, and are in your brokerage account established with UBS Financial Services Inc., or any successor plan administrator on the 90th day following your termination of employment or as soon as administratively feasible after the 90th day, including termination of employment due to death, Disablement or Retirement.   Furthermore, you authorize UBS Financial Services Inc., or any successor plan administrator to send the net proceeds from such sale (after the payment of any tax withholding amounts and expenses of sale) to the Corporation on your behalf for payment through payroll, unless the Corporation's counsel determines that local laws do not necessitate such payments through payroll.  The shares may be sold as part of a block trade with other participants in which all participants receive an average price.  

		
	(o)
	Vietnam.  If you are employed in or a resident of Vietnam, you authorize UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. or any successor plan administrator, to sell all of your shares of Common Stock that are issued under the RSUs, and are in your brokerage account established with UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. or any successor plan administrator, as soon as administratively feasible after your termination of employment, death, Disablement or Retirement.  

By acknowledging this award or your acceptance of this Agreement in the manner specified by the administrators, you and Intel Corporation agree that the RSUs identified in your Notice of Grant are governed by the terms of this Agreement, the Notice of Grant and the 2006 Plan.  You further acknowledge that you have read and understood the terms of the RSUs set forth in this Agreement.
IF YOU ARE INSTRUCTED BY THE ADMINISTRATORS OF THE 2006 PLAN TO ACCEPT THIS AGREEMENT  AND YOU FAIL TO DO SO IN THE MANNER SPECIFIED BY THE ADMINISTRATORS WITHIN 180 DAYS OF THE GRANT DATE, THE RSUS IDENTIFIED IN YOUR NOTICE OF GRANT WILL BE CANCELLED, EXCEPT AS OTHERWISE DETERMINED BY THE CORPORATION IN ITS SOLE DISCRETION. (SEE SECTION 2 OF THIS AGREEMENT).ex101to8k08066001_04212015.htm

Exhibit 10.1

 

LICENSE AGREEMENT

 

This License Agreement (the “License Agreement”) is entered into as of the 21st day of April 2015, by and between SG Blocks, Inc., a Delaware corporation, having an address at 3 Columbus Circle, 16th Floor, New York, NY 10019 (“Licensor”) and Red Cardinal Holdings, Inc. a Wyoming corporation, having an address at 1330 Avenue of the Americas, 23rd Floor, New York, NY 10019 (“Licensee”) or its affiliated assignee, with reference to the following premises.

 

PREMISES

 

A.           Licensor is engaged in the business of developing, manufacturing, advancing and promoting code-engineered containers for safe and sustainable construction of buildings using certain proprietary methods and technology (“Licensor Technology”).

 

B.           Licensee is a multi-national holding company engaged in infrastructure development, green energy development and operations, oil camp, workforce and consumer housing, and master planned real estate development;

 

C.           Licensee recognizes the value of the Licensor Technology and that all rights to the Licensor Technology belong exclusively to Licensor;

 

D.           Licensee desires to have the license to use the Licensor Technology, on and in connection with the manufacture and distribution of code-engineered containers for safe and sustainable construction of buildings in the Territory (as defined below);

 

E.           Licensor is willing to grant such license subject to the terms and conditions set forth below; and

 

F.           Licensor has agreed to enter into a strategic partnership with Licensee and its wholly owned subsidiary Endaxi Capital Partners, Inc. for the purpose of providing technical expertise to Licensor’s program management contracts in Iraq.

 

NOW THEREFORE, in consideration of these premises and the mutual covenants herein expressed, and for other good and valuable consideration, which the parties hereby acknowledge, the parties hereby agree as follows.

 

ARTICLE 1.

DEFINITIONS

 

“Actual Revenues” means total revenue received on each executed contract before any deductions or allowances, as for rent, cost of goods sold, taxes, etc.

 

“Affiliate” means, with respect to either party, a person or entity that now or hereafter directly or indirectly controls, is controlled by, or is under common control with such party.

 

“Agreement” means this License Agreement.

 

  

  

  

 

“Buildings” means all structures built using the Licensor Technology.

 

“Confidential Information” shall have the meaning specified in Paragraph 10.1.

 

“Effective Date” shall mean the date upon which the First Executed Contract becomes effective.

 

“Guaranteed Minimum” shall have the meaning specified in Paragraph 2.3.

 

“Internet Uses” shall have the meaning specified in Paragraph 8.1.

 

“Law” means any international, federal, state, regional, municipal, or local statute, code, regulation, rule, ordinance, decree, permit, registration, order, or other such law, rule or regulation.

 

“Licensee” means Red Cardinal Holdings, Inc. or its affiliated assignee.

 

“Licensor” means SG Blocks, Inc.

 

“Licensor Technology” shall have the meaning specified in the Premises.

 

“Term” means the duration of this Agreement, as specified in Paragraph 3.1.

 

“Territory” means those territories listed on Exhibit A as may be amended from time to time.

 

“Trade Secrets” means any and all information, including any and all business plans, formulas, customer information, compilations, programs, devices, methods, techniques, or processes, that provide their owner independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from their disclosure or use, and that are the subject of efforts that are reasonable under the circumstances to maintain their secrecy.

 

ARTICLE 2.

GRANT OF LICENSE

 

2.1           License.

 

	
  

	
(a)

	
Subject to all of the obligations and conditions contained in this Agreement, Licensor hereby grants to Licensee a non-exclusive license in the Territory (the “Licensed Territory”) during the Term, to use the Licensor Technology in connection with: (a) the manufacture of Buildings in the Licensed Territory; and (b) the construction of Buildings using the Licensor Technology in the Licensed Territory.

 

	
  

	
(b)

	
Upon full satisfaction of the Debentures (as defined below), Licensee shall be granted an exclusive license in the Licensed Territory during the remaining portion of the Term.  Licensor represents and warrants to Licensee that Licensor has not had any negotiations with third parties regarding the granting of an exclusive license in the Licensed Territory.

 

  

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2.2           First Executed Contract.  Licensee shall, within ninety (90) days of the execution of this Agreement, enter into a contract for the manufacture of Buildings in an amount not less than ten million US dollars (US$10,000,000.00)  (the “First Executed Contract”). Should Licensee fail to do so, Licensor shall have the option to terminate this Agreement.

 

2.3           Reservations.  This Agreement does not constitute a grant of any rights other than those set forth in Paragraph 2.1 above.  In particular, Licensor does not grant to Licensee:

 

(a)           the right to use any derivative of or modification to the Licensor Technology unless approved in writing by Licensor prior to use;

 

(b)           the right to form a business entity whose name includes the name of Licensor, or any names confusingly similar thereto, unless approved in writing by Licensor prior to use; or

 

(c)           an assignment of any right, title or interest in or to the Licensor Technology.

 

2.4           Sublicense. Licensee shall have the right to sublicense all or any part of its rights or obligations under this Agreement, without the prior written consent of Licensor. For any such sublicense, Licensee shall remain primarily liable to Licensor for all payments and obligations under this License Agreement and all other terms and conditions of this Agreement. Licensee’s obligations in connection with the Guarantee are not transferable without the written consent of Licensor.

 

ARTICLE 3.

TERM

 

3.1           Term.  The term of this Agreement shall commence on the date hereof, and shall continue for a period of fifteen (15) years, unless otherwise terminated under the terms of this Agreement. 

 

ARTICLE 4.

DESIGN AND MANUFACTURING

 

4.1           Approvals.  Except for the issue of meeting local building codes, Licensor shall have no approval over the Buildings using the Licensor Technology.  It is expressly agreed that Licensor’s primary responsibility under this Agreement is insuring that the Buildings meet code and that any engineering or design services rendered hereunder are of a first class standard.

 

4.2           Overall Commitment to Quality.  Licensee agrees that Buildings will be of industry standard quality as to workmanship, design and materials used therein, and will be at least equal in quality, workmanship, appearance, design and material as is appropriate for the Territory.

 

  

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4.3           Submissions for Approval.  Licensee may manufacture Buildings, or cause the same to be manufactured or constructed, only in accordance with Licensor’s approved specifications. 

 

4.4           Compliance with Applicable Laws – Generally.  All Buildings manufactured and distributed by, or on behalf of, Licensee using the Licensor’s Technology shall be manufactured in accordance with all applicable Laws in the Territory. It shall be Licensor’s responsibility to insure that the Buildings’ specifications meet or exceed local building codes and Licensee’s sole responsibility to assure compliance with all such applicable Laws.

 

ARTICLE 5.

SALES AND MARKETING

 

5.1           Best Efforts.  Licensee will use its commercially reasonable efforts to exploit this license throughout the Territory.  

 

5.2           Public Announcements.  All press releases and other public announcements involving reference to Licensor or the Licensor Technology are subject to the prior written approval of Licensor.

 

ARTICLE 6.

ROYALTIES AND RELATED FEES

 

6.1           Royalty.  Licensee shall pay to Licensor a royalty of Ten Percent (10.0%) (“Royalty”) of Actual Revenues collected by Licensee in connection with manufacturing, distributing and selling of Buildings using the Licensor Technology.   As set forth in Section 6.4 herein, Licensee shall permit Licensor to have access to said books, records and materials of Licensee in order to enable Licensor to calculate Actual Revenues and Royalties.

 

6.2           Guaranteed Minimums.  In order to maintain the license in the Licensed Territory, Licensor’s annual Actual Revenues from the sales of Buildings shall be ten million US dollars (US$10,000,000.00) annually (“Guaranteed Minimum”).  The Guaranteed Minimum Royalty shall not begin until the delivery of the first units under the First Executed Contract of this Agreement.

 

6.3           Taxes.  Licensee will bear all taxes, duties and other governmental charges in the Territory relating to or arising under this Agreement, including without limitation, any state or federal income taxes, any stamp or documentary taxes or duties, turnover, sales or use taxes, value added taxes, excise taxes, customs or exchange control duties and any other taxes and charges relating to the manufacture, sale, distribution, import, export, and/or construction of Buildings hereunder.

 

6.4           Books and Records.  Licensee will, at its sole cost and expense, maintain complete and accurate books and records covering all transactions directly arising out of or directly relating to this Agreement.  Licensor will have the right, during normal business hours and upon reasonable notice, but not more than once per any 12-month period, to examine and copy said books and records and all other documents and materials in the possession of and/or under the control of Licensee related to the subject matter and terms of this Agreement. The exercise by Licensor of any right to audit at any time or times, or the acceptance by Licensor of any statement or payment, shall be without prejudice to any of Licensor’s rights or remedies and shall not bar Licensor from thereafter disputing the accuracy of any payment or statement. Licensee will remain fully liable for any and all amounts due under this Agreement.

 

  

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6.5           Underpayments/Overpayments.  If, upon any examination of Licensee’s books and records, Licensor discovers any underpayment by Licensee, Licensee will make all payments required to be made to correct and eliminate such underpayment within thirty (30) days after Licensor’s demand.  In addition, if said examination reveals any underpayment of five (5%) percent or more, for any royalty period, Licensee will reimburse Licensor the reasonable cost of said examination within thirty (30) after Licensor’s demand.  If any overpayment is discovered, Licensee may credit the amount of the overpayment towards future Royalty payment due.  If none are due, Licensor shall reimburse Licensee the discrepancy within thirty (30) days.

 

ARTICLE 7.

INTELLECTUAL PROPERTY RIGHTS

 

7.1           Registrations.  Licensor may obtain, or cause to be obtained at its own expense, trademark, copyright or other proprietary protection for the Licensor Technology as Licensor deems appropriate in its discretion.

 

7.2           No Dispute by Licensee. Licensee shall not directly or indirectly dispute the validity of Licensor’s ownership of or title to the Licensor Technology, or related rights of Licensor, or oppose any application by Licensor, to register or protect the Licensor Technology, or related rights. Licensee shall not, directly or indirectly, take any action that might impair ownership of or rights in the Licensor Technology, or related rights.

 

7.3           Protecting the Licensor Technology.  Licensee shall reasonably cooperate in good faith with Licensor for the purpose of securing, preserving and protecting Licensor’s rights in and to the Licensor Technology. At the request of Licensor, Licensee shall execute and deliver to Licensor any and all documents and do all other acts and things that Licensor deems reasonably necessary or appropriate to make fully effective or to implement the provisions of this Agreement relating to the ownership of the Licensor Technology.

 

7.4           Infringement.  Licensee must promptly notify Licensor of any infringement or other misuse of the Licensor Technology or the use by any person of technology confusingly similar to the Licensor Technology that comes to its attention.  Licensor will take such action as it deems advisable, and Licensee will assist in such action, as Licensor may reasonably request, at Licensor’s expense. In no event, however, will Licensor be required to take any action if it deems it inadvisable to do so, and Licensee will have no right to take any action in relation to the Licensor Technology without the prior written consent of Licensor.

 

ARTICLE 8.

WEBSITES AND SOCIAL MEDIA ACCOUNTS

 

8.1           Licensee’s Websites and Social Media Accounts. Licensee shall be allowed to operate websites and social media accounts in the Territory. In the event Licensee uses the Licensor name in Licensee’s websites, social media sites, and related materials pertaining thereto (“Internet Uses”) then Licensor shall have approval rights over their initial “look and feel”.  In all other instances, Licensor shall have no approval rights over Licensee’s Internet Uses.

 

  

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8.2           Cost of Internet Uses. Except as otherwise set forth in this Agreement, Licensee shall be solely responsible for all costs associated with any of its activities pursuant to this Agreement, including without limitation costs related to all Internet Uses, website development costs, domain name costs, operational costs, and so forth.

 

8.3           Compliance with Laws. The operation and maintenance of all Internet Uses shall comply with all applicable Laws. Licensee shall obtain and maintain, at Licensee's expense, all licenses and permits necessary for the operation of all Internet Uses.

 

8.4           Consumer Privacy. In relation to its Internet Uses, Licensee will comply with all Laws and implement appropriate industry standards within the Territory to maintain the confidentiality and privacy of any customer information it obtains.

 

ARTICLE 9.

REPRESENTATIONS AND WARRANTIES

 

9.1           Representations and Warranties of Each Party. The parties each represent and warrant that: (a) each party has the right and power to enter into and perform this Agreement; (b) this Agreement does not violate any Law applicable to such party, and does not conflict with, or result in any breach or termination of (i) any agreement, instrument, order, or judgment, or (ii) any other restriction to which such party is a party or by which such party is bound; and (d) no notice to, filing with, authorization of, exemption by, or consent of any government agency is required in order for such party to consummate the transactions contemplated by this Agreement.

 

9.2           Representations and Warranties of Licensee.  Licensee represents and warrants that: (a) it has or will obtain all rights, licenses, registrations, permissions, consents and releases required from third parties (including without limitation all governmental entities) in connection with Licensee’s activities under this Agreement; (b) as of the Effective Date, there are no actions, suits, disputes, proceedings or governmental investigations pending or threatened against the transactions contemplated by this Agreement or restricting or limiting the use, manufacture, sale or import of the Buildings within the Territory; (c) Licensee’s activities hereunder do not and will not infringe, misappropriate, or otherwise violate any intellectual property, publicity, privacy, or other rights of any third party; (d) Licensee has sought or will seek the advice of qualified legal counsel to review (i) all of Licensee’s advertising claims, and (ii) Licensee’s freedom to make, use, sell, offer for sale, distribute, copy, transmit, display, perform, import, and/or otherwise exploit the Buildings within the Territory; and (e) Licensee shall comply with all Laws in connection with its activities under this Agreement.

 

9.3           Representations and Warranties of Licensor.  Licensor hereby represents, warrants and covenants that it is the beneficial owner of the Licensor Technology and has the full right, power and authority to enter into this Agreement, and to perform all of its obligations hereunder. Licensor further represents that it will cooperate with Licensee in transitioning its operations into a global infrastructure development platform to service Licensee’s business.

 

  

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ARTICLE 10.

CONFIDENTIALITY

 

10.1           Confidentiality.  During the Term of this Agreement, a party may deliver or provide, or cause to be delivered or provided, to the other party (“Receiving Party”) certain confidential or proprietary information of the party delivering or providing such information (“Disclosing Party”).  Any of such information delivered or provided by or on behalf of a Disclosing Party shall be referred to as “Confidential Information”.

 

10.2           Confidential Information. Except as set forth below, Confidential Information shall include, but is not limited to, all information about Disclosing Party’s businesses, operations, products, processes, finances, properties, employees, relationships with third parties, ideas, plans, designs, drawings, sketches, specifications, customers, suppliers, production partners, intellectual property, Trade Secrets and “know-how”, and all other information, documents and materials that are or, prior to the date hereof, have been delivered or otherwise disclosed by or on behalf of Disclosing Party to Receiving Party, whether oral, written, visual or in some other form, and whether or not identified as confidential. Notwithstanding the foregoing, Confidential Information shall not include any information:

 

(a)           That has become generally available to the public without breach of this Agreement by Receiving Party, except that Confidential Information shall not be deemed to be in the public domain merely because any part of said information is embodied in general disclosures or because individual features, components or combinations thereof are now known or became known to the public;

 

(b)           Which at the time of disclosure to Receiving Party was known to Receiving Party to be free of restrictions as evidenced by documentation in Receiving Party’s possession;

 

(c)           That is disclosed to Receiving Party by a third party, (without any breach of any confidentiality agreement or obligation to the other party) who did not unlawfully acquire or receive such information on a confidential basis; or

 

(d)           That is independently developed by the Receiving Party without any breach of this Agreement.

 

10.3           Receiving Party’s Obligations. As a condition to Disclosing Party furnishing Receiving Party with any Confidential Information, and for other good and valuable consideration, Receiving Party agrees to:

 

(a)           Hold the Confidential Information in confidence and not disclose the same to any other party, with the exception of Receiving Party’s Affiliates who need to review such material and have such information for the purpose of assisting Receiving Party in performing its obligations under this Agreement, but only after Receiving Party has informed its Affiliates of the confidential nature of the Confidential Information and has directed and obligated them to treat such material and information confidentially in accordance with the terms of this Agreement;

 

  

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(b)           Exercise a degree of care over the Confidential Information not less than the care used by Receiving Party to protect its own confidential information, which in no event shall be less than reasonable care; and

 

(c)           Use the Confidential Information only for the purpose of performing its obligations under this Agreement.

 

10.4           Legal Proceedings. In the event that Receiving Party or any of Receiving Party’s Affiliates are requested or required in any legal proceeding (by interrogatories, deposition, requests for information or documents, subpoena or similar process) to disclose any Confidential Information of the Disclosing Party, Receiving Party shall furnish Disclosing Party with prompt notice of such request(s) (to the extent legally permissible) so that Disclosing Party may seek an appropriate protective order or other similar relief and/or waive compliance with the provisions of this Agreement. Receiving Party shall provide all reasonable cooperation to Disclosing Party in Disclosing Party’s efforts to obtain a protective order or other such relief to prevent or limit the disclosure of Confidential Information. If, in the absence of a protective order or similar relief or waiver by Disclosing Party, Receiving Party or any of Receiving Party’s Affiliates are nonetheless compelled to disclose the Confidential Information, Receiving Party or Receiving Party’s Affiliates may, without liability hereunder, disclose only that portion of the Confidential Information which, based upon the advice of Receiving Party’s counsel, is required to be disclosed.  Any such permitted disclosure shall not affect or impair the Receiving Party’s obligations of confidentiality with respect to the Confidential Information except as provided above.

 

10.5           Responsibility for Affiliates. Receiving Party agrees to be responsible for any breach of this Agreement by it or its Affiliates.

 

ARTICLE 11.

INSOLVENCY

 

11.1           Effect of Proceeding in Bankruptcy.  If either party institutes for its protection or is made a defendant in any proceeding under bankruptcy, insolvency, reorganization or receivership law, or if either party is placed in receivership or makes an assignment for benefit of creditors or is unable to meet its debts in the regular course of business, the other party may elect to terminate this Agreement immediately by written notice to the other party without prejudice to any right or remedy the terminating party may have, including, but not limited to, damages for breach.

 

11.2           Rights Personal.  The license and rights granted hereunder are personal to Licensee.  No assignee for the benefit of creditors, receiver, trustee in bankruptcy, sheriff or any other officer or court charged with taking over custody of Licensee’s assets or business, shall have any right to continue performance of this Agreement or to exploit or in any way use the Licensor Technology if this Agreement is terminated, except as may be required by law.

 

11.3           Trustee in Bankruptcy.  Notwithstanding the provisions of Paragraph 11.2 above, in the event that, pursuant to applicable bankruptcy Law, a trustee in bankruptcy, receiver or other comparable person, of Licensee, or Licensee, as debtor, is permitted to assume this Agreement and does so and, thereafter, desires to assign this Agreement to a third party, which assignment satisfies the requirements of the applicable bankruptcy Law, the trustee or Licensee, as the case may be, must notify Licensor. Said notice shall set forth the name and address of the proposed assignee, the proposed consideration for the assignment and all other relevant details thereof.  The giving of such notice will be deemed to constitute an offer to Licensor to have this license assigned to it or its designee for such consideration, or its equivalent in money, and upon such terms as are specified in the notice. Licensor may accept the aforesaid offer only by written notice given to the trustee or Licensee, as the case may be, within fifteen (15) days after Licensor’s receipt of the notice. If Licensor fails to deliver such notice within the said fifteen (15) days, such party may complete the assignment referred to in its notice, but only if such assignment is to the entity named in said notice and for the consideration and upon the terms specified therein. Nothing contained herein will be deemed to preclude or impair any rights that Licensor may have as a creditor in any bankruptcy proceeding.

 

  

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ARTICLE 12.

TERMINATION

 

12.1           Other Rights Unaffected.  Termination of this Agreement will not affect any obligation of Licensee to make payments to Licensor hereunder accruing prior to such termination, and will not prejudice any other right of Licensor hereunder including, without limitation, injunctive relief or damages for breach. Except as required by law, no assignee for the benefit of creditors, receiver, liquidator, sequestrator, trustee in bankruptcy, sheriff or any other officer of the court of official charged with taking over custody of Licensee’s assets shall have the right to continue the performance of this Agreement.

 

12.2           Termination Without Right to Cure by Licensor.  Licensor will have the right to immediately terminate this Agreement by giving Licensee a notice of termination, without giving Licensee any right to cure, if Licensee:

 

(a)           institutes proceedings seeking relief under a bankruptcy act or any similar law.

 

12.3           Termination with Right to Cure.  If either party breaches any of its other material obligations, representations or warranties under this Agreement, the non-breaching party will have the right to terminate this Agreement by giving the breaching party notice of intention to terminate. Termination will become effective automatically and without further notice unless Licensee cures the breach within thirty days (30) days after the giving of such notice.

 

12.4           Effect of Termination.  Upon termination of this Agreement for any reason whatsoever:

 

(a)           All of the rights of Licensee under this Agreement will terminate and immediately revert to Licensor. Licensee, except as specified below, will immediately discontinue use of the Licensor Technology, whether in connection with the sale, or advertisement of Buildings.  However, Licensee shall have the right to complete any contracts in process to their completion provided Licensee pays a twenty percent (20%) premium to the Royalty contemplated by this Agreement.

 

  

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(b)           All Royalties on sales of licensed products theretofore made will become immediately due and payable in the normal course.

 

ARTICLE 13.

INDEMNIFICATION AND INSURANCE

 

13.1           Indemnification by Licensee.  Licensee will indemnify, defend, and hold harmless Licensor, and its Affiliates, directors, officers, employees, agents, officials and related companies from and against any and all losses, liability, claims, causes of action, damages and expenses (including reasonable attorneys’ fees and expenses in actions involving third parties or between the parties hereto) that they or any of them may incur or be obligated to pay in any action, claim or proceeding against them or any of them, for or by reason of any acts, whether of omission or commission, that may be committed by Licensee or any of its servants, agents or employees: (a) in connection with or in any way related to Licensee’s performance of this Agreement; (b) in connection with the Buildings constructed using the Licensor Technology. If any action or proceeding is brought or asserted against Licensor in respect of which indemnity may be sought from Licensee under this Paragraph, Licensor will promptly notify Licensee thereof in writing, and Licensee will assume and direct the defense thereof. Licensor may thereafter, at its own expense, be represented by its own counsel in such action or proceeding. Licensor and Licensee will keep each other fully advised of all developments and shall cooperate fully with each other and in all respects in connection with any such defense. The provisions of this Paragraph and Licensee’s obligations hereunder will survive any termination of this Agreement.

 

13.2           Indemnification by Licensor.  Licensor will indemnify, defend, and hold harmless Licensee, and its Affiliates, directors, officers, employees, agents, officials and related companies from and against any and all losses, liability, claims, causes of action, damages and expenses (including reasonable attorneys’ fees and expenses in actions involving third parties or between the parties hereto) that they or any of them may incur or be obligated to pay in any action, claim or proceeding against them or any of them, for or by reason of any acts, whether of omission or commission, in connection the use of the Licensor Technology as provided for in this Agreement. If any action or proceeding is brought or asserted against Licensee in respect of which indemnity may be sought from Licensor under this Paragraph, Licensee will promptly notify Licensor thereof in writing, and Licensor will assume and direct the defense thereof. Licensee may thereafter, at its own expense, be represented by its own counsel in such action or proceeding. Licensor and Licensee will keep each other fully advised of all developments and shall cooperate fully with each other and in all respects in connection with any such defense. The provisions of this Paragraph and Licensor’s obligations hereunder will survive any termination of this Agreement.

 

13.3           Insurance.  Without limiting Licensee’s liability pursuant to the indemnity provisions of this Agreement, Licensee or its sublicensee(s) or subcontractor will maintain comprehensive general liability insurance in the amount of at least US$5,000,000 combined single limit per occurrence and a per annum aggregate limitation of not less than $10,000,000. This insurance must include contractual liability, personal injury liability, advertising injury, construction defect, products and completed operations liability. Licensor shall be named as an additional insured on the required policy(ies) purchased by Licensee and such coverage shall apply to Licensor on a primary basis.  All insurance must be obtained from an insurance company with a minimum A.M. Best Rating of A-VII. Licensee shall notify Licensor at least thirty (30) days prior to the cancellation of, or any material modification in, such insurance policy that would affect Licensor’s status or benefits thereunder. No later than the date of the first executed contract hereof, Licensee shall furnish a certificate of insurance to Licensor evidence such coverage

 

  

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ARTICLE 14.

MISCELLANEOUS

 

14.1           Benefit.  This Agreement will inure to the benefit of and be binding upon the parties hereto, and to their permitted successors and assigns.

 

14.2           Manner of Notice.  Any notices, consents or other communications required or permitted to be given under the terms of this agreement must be in writing and will be deemed to have been delivered   upon   receipt   if   delivered   personally,   sent   by facsimile   (with   written confirmation of transmission), sent by nationally recognized overnight courier service or sent by certified mail, return receipt requested, postage prepaid, in each case properly addressed to the applicable party at its address set forth above (or to such other address for a party as shall be specified by like notice.

 

14.3           Suspension of Obligations (Force Majeure).  If Licensee is prevented from performing any of its obligations because of governmental regulation or order, or by strike or war, declared or undeclared, state of emergency, civil disturbance, terrorism or threat thereof, or other calamities such as fire, earthquake, or similar acts of God, or because of other similar or dissimilar cause beyond the control of Licensee, including but not limited to embargos, labor controversy or delay of common carrier, Licensee’s obligations will be suspended during the period of such condition. If such condition continues for a period of more than sixty (60) days, Licensor will have the right to terminate this Agreement. If the force majeure does not impact Licensee directly but it prevents Licensee from manufacturing and/or delivering licensed products, whether due to an inability to obtain materials, destruction of manufacturing facilities, inability to deliver finished product or similar conditions, Licensee shall have a period of no more than ninety (90) days to find alternate sources, and Licensee will advise Licensor on a weekly basis of the progress it has made in that regard. If, in Licensor’s reasonable opinion, Licensee fails to diligently proceed to obtain alternate sources, or if the condition continues for more than ninety (90) days, whichever first occurs, Licensor shall have the right to terminate this Agreement.

 

14.4           Relationship of the Parties.  The relationship of the parties under this agreement is that of independent contractors.  The parties will not be considered partners, co-venturers or agents of each other for any purpose

 

14.5           Entire Agreement; Amendment; Waiver.  This Agreement, and the Exhibits attached hereto, set forth the entire agreement and understanding of the parties and supersede all prior written or oral agreements or understandings with respect to the subject matter hereof. No amendment of any of the terms of this Agreement, or any waiver thereof, will be valid unless in writing and signed by the parties. The failure of either party to enforce at any time any term, provision or condition of this Agreement, or to exercise any right or option herein, will in no way operate as a waiver thereof, nor will any single or partial exercise preclude any other right or option herein

 

  

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14.6           Assignment Without Consent.  Licensor and Licensee may assign this Agreement, or any of its rights or obligations hereunder, to any third party upon notice to the other party.

 

14.7           Licensor Debt.

 

a.           Reference is made to Licensor’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2015 and amended on March 31, 2015, which discloses convertible debentures issued by Licensor to Hillair Capital Investments, L.P and other investors (collectively, the “Debentures”).  As of December 31, 2014, the total amount (principal and interest) owed by Licensor in connection with the Debentures was $3.996 million.  On the Effective Date and during the term of this Agreement, Licensee hereby irrevocably and unconditionally agrees to pay in full, assume or otherwise satisfy (including all accrued interest and penalties incurred by its actions) to the holders of the Debentures (the “Holders”) (without duplication of amounts theretofore paid by the Licensor), all amounts as and when due under the Debentures, regardless of any defense (except the defense of payment by the Licensor), right of set-off or counterclaim that the Licensor may have or assert (any such payment, a “Guarantee Payment”).  Licensee’s obligation hereunder to make a Guarantee Payment is referred to herein as the “Guarantee” and may be satisfied by direct payment of the required amounts by the Licensee to the Holders of the Debentures. 

 

b.           All Guarantee Payments made from time to time with respect to this Guarantee shall be in U.S. dollars and shall be payable free and clear of, and without deduction or withholding for, or on account of, any and all present or future taxes, duties, assessments, levies and other governmental charges of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed by or on behalf of any jurisdiction from which such payments are made, or any territory or political subdivision thereof, unless such deduction or withholding is required by law.

 

c.           Licensor will not object to Licensee contacting the Holders in connection with Licensee purchasing the debt evidenced by the Debentures from the Holders.  Licensor agrees to facilitate introductions between Licensee and the Holders.

 

d.           Licensee shall have the right to pay amounts owed to the Holders, in whole or in part, out of the Royalties due to Licensor.

 

14.8           Consulting.  During the first year of the Agreement and to the extent needed, in addition to the Royalty set forth in Section 6.1, Licensee will pay Licensor an advance of One Million Dollars ($1,000,000) in connection with management and consulting services provided by employees of Licensor which advance may be offset against Royalties due to Licensor.

 

14.9           Severability.  If any provision or any portion of any provision of this Agreement is construed to be illegal, invalid, or unenforceable, such shall be deemed stricken and deleted from this Agreement to the same extent and effect as if never incorporated herein, but all other provisions of this Agreement and any remaining portion of any provision which is not deemed illegal, invalid or unenforceable in part shall continue in full force and effect.

 

  

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14.10           Governing Law and Jurisdiction.  This Agreement will be governed by and construed and interpreted in accordance with the laws of the State of New York, without giving effect to its conflicts of law rules that would require the application of the laws of another jurisdiction. Each of the parties hereby  irrevocably  and  unconditionally  submits,  for  itself and  its  property,  to  the exclusive jurisdiction of any state or federal court sitting in the County of New York, State of New York in any action or proceeding arising out of or relating to this agreement, and  each  of  the  parties hereby  irrevocably  and  unconditionally  (a)  agrees  not  to commence any such action or proceeding except in such courts, (b) agrees that any claim in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such federal court, (c) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such New York state or federal court, and (d) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such action or proceeding in any such New York state or federal court.

 

14.11           Exhibits.  All Exhibits are incorporated into this Agreement.

 

14.12           Headings.  The headings of the Articles and Paragraphs of this Agreement are for convenience only and in no way limit or affect the terms or conditions of this Agreement.

 

14.13           Counterparts.  This agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will be considered one and the same agreement.  Facsimile or .pdf signatures will have the same force and effect as original signatures.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties have signed this Agreement as of the Effective Date set forth above.

 

	
SG BLOCKS, INC.

	  	
RED CARDINAL HOLDINGS, INC.

	  	  	  
	  	  	  
	  	  	  
	
By:

	/s/ Paul M. Galvin	  	
By:

	/s/ Joseph Rosa
	  	  	  	  	  
	
Name:

	

Paul M. Galvin

	  	
Name:

	

Joseph Rosa

	  	  	  	  	  
	
Title:

	

Chief Executive Officer

	  	
Title:

	

President

	  	  	  	  	  

 

  

14

  

 

Exhibit A

 

Territory

 

Licensed Territory:

 

Non-Exclusive License - The world.

 

Exclusive License – Upon satisfaction of the Debentures, the world except for the United States and the European Union and a Non-Exclusive License to the United States and the European Union.

 

 

 

  

15

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