Document:

Exhibit 10.38

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

AMENDED AND RESTATED

LIMITED EXCLUSIVE

SUBLICENSE AND CROSS-LICENSE AGREEMENT

 

For

 

DIELECTRIC WALL ACCELERATOR TECHNOLOGY

 

Between

 

TOMOTHERAPY INCORPORATED

 

And

 

COMPACT PARTICLE ACCELERATION CORPORATION

 

 

TABLE OF CONTENTS

 

	
1.
    	
BACKGROUND
    	
1
    
	
2.
    	
DEFINITIONS
    	
3
    
	
3.
    	
LICENSE GRANT
    	
10
    
	
4.
    	
SUBLICENSING RIGHTS AND OBLIGATIONS
    	
10
    
	
5.
    	
FEES, ROYALTIES, AND PAYMENTS
    	
11
    
	
6.
    	
DUE DILIGENCE
    	
13
    
	
7.
    	
ROYALTY AND PROGRESS REPORTS
    	
17
    
	
8.
    	
BOOKS AND RECORDS
    	
19
    
	
9.
    	
LIFE OF THE AGREEMENT
    	
20
    
	
10.
    	
TERMINATION
    	
21
    
	
11.
    	
DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION
    	
21
    
	
12.
    	
PATENT PROSECUTION AND MAINTENANCE
    	
22
    
	
13.
    	
PATENT INFRINGEMENT
    	
25
    
	
14.
    	
USE OF NAMES AND TRADEMARKS
    	
28
    
	
15.
    	
LIMITED WARRANTY
    	
28
    
	
16.
    	
INDEMNIFICATION
    	
29
    
	
17.
    	
INSURANCE
    	
30
    
	
18.
    	
WAIVER
    	
31
    
	
19.
    	
ASSIGNABILITY
    	
31
    
	
20.
    	
LATE PAYMENTS
    	
32
    
	
21.
    	
NOTICES
    	
32
    
	
22.
    	
GOVERNING LAWS; VENUE; ATTORNEYS FEES
    	
33
    
	
23.
    	
PATENT MARKING
    	
33
    
	
24.
    	
GOVERNMENT APPROVAL OR REGISTRATION
    	
34
    
	
25.
    	
COMPLIANCE WITH LAWS
    	
34
    
	
26.
    	
FORCE MAJEURE
    	
34
    
	
27.
    	
UNITED STATES PREFERENCE
    	
35
    
	
28.
    	
PROPRIETARY INFORMATION
    	
35
    
	
29.
    	
MISCELLANEOUS
    	
36
    
	
 
    	
 
    	
 
    
	
EXHIBIT A - LICENSED PATENTS
    	
A-1
    
	
EXHIBIT B - RIGHTS GRANTED AND PERFORMANCE   OBLIGATIONS
    	
B-1
    
	
EXHIBIT C - FEES AND ROYALTIES
    	
C-1
    
	
EXHIBIT D - SCHEDULE
    	
D-1
    

 

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AMENDED AND RESTATED

LIMITED EXCLUSIVE SUBLICENSE AND CROSS-LICENSE AGREEMENT

FOR DIELECTRIC WALL ACCELERATOR TECHNOLOGY

 

This Amended and Restated Sublicense and Cross-License Agreement (this “Agreement”) is effective as of April 20, 2012 (the “Effective Date”) by and between TomoTherapy Incorporated, a wholly-owned subsidiary of Accuray Incorporated (“TomoTherapy”), and Compact Particle Acceleration Corporation (“CPAC”).  TomoTherapy and CPAC are referred to jointly as “Parties.”

 

1.                                      BACKGROUND

 

1.1                               Lawrence Livermore National Security, LLC (“LLNS”) has granted to TomoTherapy pursuant to that certain Limited Exclusive Patent License Agreement dated as of February 23, 2007, as amended by Amendment One on April 8, 2008 and Amendment Two on February 10, 2011, and as supplemented by Supplement One on July 2, 2008, Supplement Two on March 6, 2009, Supplement Three on January 11, 2010, Supplement Four on January 28, 2010, Supplement Five on May 19, 2010, Supplement Six on September 30, 2010, Supplement Seven on January 6, 2011, Supplement Eight on March 4, 2011 and Supplement Nine on September 30, 2011 (as amended and supplemented, the “Underlying License”), an exclusive license under those patents and patent applications listed in Exhibit A (LICENSED PATENTS) of this Agreement, and any additional patents, patent applications, and copyrightable works that are either added as a result of expansion of the fields of use or are developed under the Statement of Work of the CRADA (as defined below) and by the LLNL DWA team on related projects that would be useful for the development, manufacture, and use of such technology.  This Agreement and the resulting license are subject to overriding obligations to the Federal Government pursuant to the provisions of TomoTherapy’s exclusive license agreement with LLNS and LLNS’s Contract No. DE-AC52-07NA27344 with the DOE for the operation of the Lawrence Livermore National Laboratory (“LLNL”).

 

1.2                               Certain inventions characterized as Dielectric Wall Accelerator technology (“Invention”) described in LLNL patent applications and patents listed in Exhibit A (LICENSED

 

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PATENTS) were made at LLNL, are covered by Patent Rights as defined in Article 2 (DEFINITIONS), and are subject to the Underlying License.

 

1.3                               The U.S. Government has previously been granted a nontransferable, paid-up, nonexclusive, irrevocable license to use the Invention by, or on behalf of, the U.S. Government throughout the world.

 

1.4                               TomoTherapy and LLNL have been parties to a cooperative research and development agreement referred to hereafter as the “CRADA” Agreement No. TC02109.0 as amended, for purposes of developing a Particle and Radiotherapy System based on LLNL’s DWA technology.  Concurrent with the execution of the Original Sublicense (as defined below), the CRADA transferred from TomoTherapy to CPAC pursuant to a separate Transfer Agreement by and among CPAC, TomoTherapy and LLNL.

 

1.5                               CPAC and TomoTherapy have entered into that certain Limited Exclusive Patent License Agreement dated as of April 25, 2011 (the “Original Sublicense”) for those patents and patent applications listed in Exhibit A (LICENSED PATENTS) of this Agreement, and any additional patents, patent applications, and copyrightable works that are either added as a result of expansion of the fields of use or are developed under the Statement of Work of the CRADA and by the LLNL DWA team on related projects that would be useful for the development, manufacture, and use of technology.  The Original Sublicense was subject to the understanding that TomoTherapy’s ability to amend the terms and conditions of the Original Sublicense is subject always to LLNS’s agreement and incorporation of any amendments or modifications in the Underlying License.

 

1.6                               CPAC and TomoTherapy have entered into that certain Cross-License Agreement dated as of August 4, 2009 (the “Original Cross-License”) pursuant to which each granted to the other certain licenses in the Medical Field of Use and in the Other Fields.

 

1.7                               Concurrently herewith, CPAC and TomoTherapy are entering into an agreement dated as of the Effective Date assigning the right of first refusal to expand the Field of Use to include the Commercial DWA and National Security DWA fields of use as set forth in Paragraph B.1.2.2 of the Underlying License to enable CPAC to negotiate a license directly from LLNS under the Licensed Patents in the Commercial DWA and National Security DWA fields of use (the “Expanded Field Assignment Agreement”).

 

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1.8                               CPAC and TomoTherapy desire to amend the restate the Original Sublicense and the Original Cross-License on the terms and conditions set forth in this Agreement.

 

1.9                               The Parties intend that royalties due under this Agreement will be calculated and paid on Sales of the Licensed Products or Licensed Services by CPAC.

 

1.10                        CPAC recognizes the need to practice due diligence in the commercialization of Licensed Patents in accordance with this Agreement’s terms and conditions to maintain the sublicense of the LLNL Patents and the license of the TomoTherapy IP and to acquire rights to additional fields of use.  In addition, both Parties acknowledge that the U.S. Government has certain march-in rights in accordance with 48 CFR 27.304-1 (g) and 15 USC 3710a(b)(1)(B) and (C).

 

1.11                        As of the Effective Date, TomoTherapy has no knowledge of any pending or threatened claim related to the Licensed Patents or the Licensed Method, and it has not granted to any third party any license, option, or other right that conflicts with, or could conflict with, if exercised, the license, options, and other rights granted by it under this Agreement.

 

THEREFORE, the Parties agree as follows:

 

2.                                      DEFINITIONS

 

As used in this Agreement, the following terms, whether used in the singular or plural, will have the following meanings:

 

2.1                               “Affiliate” of CPAC means any entity which, directly or indirectly, Controls CPAC, is Controlled by CPAC, or is under common Control with CPAC. “Control” means (i) having the actual, present capacity to elect a majority of the directors of such affiliate, (ii) having the power to direct at least fifty percent (50%) of the voting rights entitled to elect directors, or (iii) in any country where the local law will not permit foreign equity participation of a majority, ownership or control, directly or indirectly, of the maximum percentage of such outstanding stock or voting rights permitted by local law.  CPAC does not include “Affiliate.”

 

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2.2                               “Category 1 Patents” means patents resulting from patent applications and records of invention in the Field of Use that were generated by the LLNL DWA team and in existence prior to the effective date of the Underlying License.

 

2.3                               “Category 2 Patents” means patents resulting from patent applications and records of invention in the Field of Use that were generated by the LLNL DWA team during the course of the CRADA, but funded by parties other than TomoTherapy or CPAC.  CPAC understands that since Category 2 Patents are generated by funds from parties other than TomoTherapy or CPAC, access to Category 2 Patents entails the possibility of additional license fees due at the time that Category 2 Patents may be added to this Agreement by amendment, such additional license fees being subject to the limitations described in this Agreement.

 

2.4                               “Category 3 Patents” means patents resulting from patent applications and records of invention generated by the LLNL DWA team since the effective date of the Underlying License and during the course of the CRADA in the Field of Use funded by TomoTherapy or CPAC.

 

2.5                               “Copyrighted DWA Works” means all original works of authorship that are fixed in a tangible form of expression that are related to the design, construction, function, or use of the DWA.

 

2.6                               “DWA” means Dielectric Wall Accelerator technology.

 

2.7                               “DWA IP” means any and all DWA Patents, Copyrighted DWA Works, DWA Trade Secrets, and DWA Technology Rights.

 

2.8                               “DWA Licensed Product” means all kits, compositions of matter, materials, articles of manufacture, and products the manufacture, use, Sale, offer for Sale, or import of which, but for the licenses granted in this Agreement, would infringe, or contribute to or induce the infringement of any DWA TomoTherapy Patents, or would require the performance of the Licensed Method that involves use of any DWA TomoTherapy Patent or that otherwise uses any DWA TomoTherapy IP.

 

2.9                               “DWA Patent” means a patent or patent application whose claims specify the design, construction, function, or use of a DWA or any component thereof, together with any 

 

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continuation or continuation-in-part, divisional, and any patent issuing thereon, including a re-issue, patent of addition, or any registration or confirmation patent corresponding thereto.

 

2.10                        “DWA Technology Rights” means all technical information, know-how, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, software, designs, drawings, or data that are not covered by the relevant DWA Patent(s), but that are necessary for practicing the invention covered by the relevant DWA Patent(s).

 

2.11                        “DWA TomoTherapy IP” means the DWA IP owned by TomoTherapy or owned by third party and licensed to TomoTherapy and as to which TomoTherapy is authorized to grant sublicenses within the scope of the licenses granted by TomoTherapy hereunder, including the DWA TomoTherapy Patents.

 

2.12                        “DWA TomoTherapy Patents” means the DWA Patents owned by TomoTherapy or owned by third party and licensed to TomoTherapy and as to which TomoTherapy is authorized to grant sublicenses within the scope of the licenses granted by TomoTherapy hereunder.

 

2.13                        “DWA Trade Secret” means information possessed by a party, including, without limitation, a compilation, program, device, method, system, technique, or process, to which all of the following apply:  (i) the information is related to the design, construction, function, or use of the DWA or any component thereof, (ii) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (iii) the information is the subject of efforts to maintain its secrecy that are reasonable under the circumstances.

 

2.14                        “Field of Use” is the applications or uses defined in Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS).

 

2.15                        “First Commercial Acceptance” means the first sign-off of an acceptance of a Licensed Product by a customer of CPAC or a sublicensee that is not an Affiliate.

 

2.16                        “Joint Venture” means any separate legal entity established pursuant to an agreement between a third party and CPAC and/or sublicensee to constitute a vehicle for a joint

 

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effort, in which the separate entity manufactures, uses, purchases, Sells, or acquires Licensed Products from CPAC.  CPAC does not include “Joint Venture.”

 

2.17                        “Licensed Method” means any process or method the use or practice of which, but for the license granted in this Agreement, would infringe, or contribute to, or induce the infringement of, any Patent Rights.

 

2.18                        “Licensed Patents” means LLNL Patents and DWA TomoTherapy Patents.

 

2.19                        “Licensed Product” means a DWA Licensed Product or a LLNL Licensed Product.

 

2.20                        “Licensed Service” means the use of Licensed Products or Licensed Method to provide a service.  Neither Licensed Service nor Licensed Method includes the maintenance or servicing of a Licensed Product.

 

2.21                        “LLNL Licensed Product” means all kits, compositions of matter, materials, articles of manufacture, and products the manufacture, use, Sale, offer for Sale, or import of which, but for the licenses granted in this Agreement, would infringe, or contribute to or induce the infringement of any Patent Rights (other than those that relate to DWA Patents), or would require the performance of the Licensed Method that does not involve use of any DWA Patent.

 

2.22                        “LLNL Patents”

 

2.22.1              Patents and patent applications specified in Exhibit A (LICENSED PATENTS), and patents resulting from these applications, continuations of these applications, divisionals, and continuation-in-part applications resulting from these applications only to the extent, however, that Valid Claims in the continuation-in-part applications are entirely supported in the specification and entitled to the priority date of the parent application;

 

2.22.2              reissues of 2.22.1.

 

2.22.3              foreign patent applications filed under Article 12 (PATENT PROSECUTION AND MAINTENANCE) claiming priority to the patent and applications of Sections 2.22.1 and 2.22.2 and patents resulting from these applications, continuations of these applications, divisionals, and continuation-in-part

 

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applications only to the extent, however, that Valid Claims in the continuation-in-part are entirely supported in the specification and entitled to the priority date of the patent application; provided CPAC has not breached any obligation to pay foreign fees set forth in this Agreement.

 

2.23                        “Medical Field of Use” means medical applications of all types, including without limitation both human and animal diagnostics and therapeutic applications and all research uses designed to lead to such applications.

 

2.24                        “Monterey Milestone” has the meaning assigned to that term in the Shareholder Agreement.

 

2.25                        “Net Invoice Price” means the gross invoice selling price by the ultimate seller (whether CPAC or a sublicensee) for the Sale of a Licensed Product or Licensed Service, less the following items, but only to the extent that they actually pertain to the Sale of such Licensed Product or Licensed Service:

 

2.25.1              Allowances actually granted to customers for rejections, returns, and prompt payment and volume discounts (in amounts customary to the trade);

 

2.25.2              Freight, transport packing, insurance charges associated with transportation; and

 

2.25.3              Taxes (including without limitation, sales and use taxes), tariffs or import/export duties based on Sales when included in the gross invoice price, but not value-added taxes or taxes assessed on income derived from Sales.

 

2.26                        “Net Sale” means the Net Invoice Price, except in the instances described in Subparagraphs 2.26.1, 2.26.2, 2.26.3 and 2.26.4 of this Paragraph.

 

2.26.1              For any Relationship-Influenced Sale of a Licensed Product or Licensed Service, Net Sales will be based on the Net Invoice Price at which the Relationship-Influenced Sale Purchaser resells such Licensed Product or Licensed Service;

 

2.26.2              In those instances where Licensed Product or Licensed Service is not Sold, but is otherwise exploited, the Net Sales for such Licensed Product or Licensed Service will be the Net Invoice Price of products or services of similar kind and quality, Sold in similar quantities, currently being offered for Sale by CPAC  and/or any

 

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sublicensee.  Where such products or services are not currently Sold or offered for Sale by CPAC  and any sublicensees, or others, then the Net Sales will be CPAC’s and/or any sublicensee’s cost of manufacture of Licensed Product or the cost of conducting the service, determined by CPAC’s and/or any sublicensee’s customary accounting procedures, plus CPAC’s average gross margin less any amounts attributable to the items set forth in Paragraphs 2.25.1 through 2.25.3 above;

 

2.26.3              In those instances where CPAC or a sublicensee acquires and subsequently Sells Licensed Product or Licensed Service previously Sold to which an earned royalty accrued hereunder, Net Sales will mean the Net Invoice Price upon Sale of such Licensed Product or Licensed Service, as applicable, by CPAC or the sublicensee, less the Net Invoice Price of the immediately preceding Sale to CPAC or such sublicensee.

 

2.26.4              In those instances where CPAC or a sublicensee leases Licensed Products or otherwise provides Licensed Products or Licensed Services to a third party for consideration paid over a period of time, Net Sales will mean the Net Invoice Price of each such discrete payment actually made by the third party to CPAC, less any amounts attributable to the items set forth in Paragraphs 2.25.1 through 2.25.3 above.

 

2.27                        “New Developments” means inventions, or claims to inventions, which constitute advancements, developments or improvements, whether or not patentable and whether or not the subject of any patent application, which are:  (a) not sufficiently supported by the specification of a previously-filed patent or patent application within the Patent Rights to be entitled to the priority date of the previously-filed patent or patent application; and (b) not otherwise commercially valuable to CPAC’s commercialization of the Licensed Patents within the Field of Use.

 

2.28                        “Option Period” has the meaning set forth in the Shareholder Agreement dated as of the date hereof, by and between CPAC and TomoTherapy, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

2.29                        “Other Fields” means all fields of application other than the Medical Field of Use.

 

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2.30                        “Particle and Radiotherapy Field of Use” means the medical use of x-rays, protons, and light and heavy ion charged particles in therapeutic applications.

 

2.31                        “Patent Rights” means the Valid Claims of Licensed Patents to the extent licensed to TomoTherapy by LLNS or that constitute DWA TomoTherapy Patents.  This definition of Patent Rights excludes any rights in and to New Developments.

 

2.32                        “Related Party” means a corporation, firm or other entity with which, or individual with whom, CPAC  and or any sublicensee (or any of their respective stockholders, subsidiaries or Affiliates) have an agreement, understanding, or arrangement (for example, but not by way of limitation, an option to purchase stock or other equity interest, or an arrangement involving a division of revenue, profits, special discounts, rebates, or allowances) which is entirely unrelated to the Sale or exploitation of the Licensed Products or Licensed Services without which such other agreement, understanding, or arrangement, the amounts, if any, charged by CPAC or sublicensee to such entity or individual for the Licensed Product or Licensed Service would be higher than the Net Invoice Price actually received.

 

2.33                        “Relationship-Influenced Sale” means a Sale of a Licensed Product, or any exploitation of the Licensed Product or Licensed Method, by CPAC  and/or any sublicensee to (i) an Affiliate; (ii) a Joint Venture; or (iii) a Related Party.

 

2.34                        “Relationship-Influenced Sale Purchaser” means the purchaser of Licensed Product or Licensed Service in a Relationship-Influenced Sale.

 

2.35                        “Sale” means the act of selling, leasing or otherwise transferring, providing, or furnishing for use for any consideration.  Correspondingly, “Sell” means to make or cause to be made a Sale, and “Sold” means to have made or caused to be made a Sale.  It shall not be deemed a Sale under this Agreement for CPAC to transfer any Licensed Products to a customer, where the customer utilized the Licensed Products predominantly for research purposes and CPAC receives for such Licensed Products an amount equal to or less than CPAC’s actual cost to manufacture such Licensed Products.

 

2.36                        “Shareholder Agreement” means the Second Amended and Restated Shareholder Agreement dated as of the date hereof, by and among CPAC, TomoTherapy and the

 

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shareholders of CPAC, as the same may be amended, restated, supplemented or otherwise modified from time to time

 

2.37                        “Underlying License” has the meaning set forth in Paragraph 1.1.

 

2.38                        “Valid Claim” means a claim of a patent or patent application in any country that (i) has not expired; (ii) has not been disclaimed; (iii) has not been cancelled or superseded, or if cancelled or superseded, has been reinstated; and (iv) has not been revoked, held invalid, or otherwise declared unenforceable or not allowable by a tribunal or patent authority of competent jurisdiction over such claim in such country from which no further appeal has or may be taken.

 

3.                                      LICENSE GRANT

 

3.1                               The license rights granted to  CPAC by TomoTherapy are set forth in Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS).

 

3.2                               The license granted hereunder will be subject to the overriding obligations to the U.S. Government including those set forth in 35 U.S.C. §200-212 and applicable governmental implementing regulations and the obligation to report on utilization of the Invention set forth in 37 CFR §401.14(h).

 

4.                                      SUBLICENSING RIGHTS AND OBLIGATIONS

 

4.1                               The sublicensing rights granted to CPAC by TomoTherapy are set forth in Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS), Paragraph B.2 (Sublicensing Rights).

 

4.2                               CPAC must include in any sublicense all the rights and obligations set forth in Paragraphs 1.10 and 3.2 of this Agreement.

 

4.3                               CPAC must require sublicensees to provide it with copies of all progress reports and royalty reports in accordance with the provisions of the Underlying License and this Agreement, and CPAC will collect and deliver to TomoTherapy all such reports due from sublicensees.

 

4.4                               CPAC must include in all sublicenses the notice that upon termination of this Agreement or the Underlying License for any reason, either TomoTherapy or LLNS, at its sole

 

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discretion, will determine whether any or all sublicenses will be canceled or assigned to TomoTherapy or LLNS.

 

4.5                               CPAC will notify TomoTherapy of each sublicense granted hereunder and provide TomoTherapy with a complete copy of each executed sublicense within thirty (30) days of issuance of the sublicense.

 

4.6                               Consideration owed to TomoTherapy will be paid to TomoTherapy on or before the due date of the royalty report applicable to the quarter in which consideration was finally due and owing to CPAC under the sublicense.  CPAC will collect from the sublicensees and will pay to TomoTherapy all fees, royalties, and the cash equivalent of any consideration due TomoTherapy.

 

5.                                      FEES, ROYALTIES, AND PAYMENTS

 

5.1                               Fees and royalties due on Net Sales of Licensed Products or Licensed Services will be as specified in this Article 5, Exhibit C (FEES AND ROYALTIES), and Article 7 (ROYALTY AND PROGRESS REPORTS) of this Agreement.

 

5.2                               As partial consideration for the rights granted to CPAC, CPAC will pay to TomoTherapy milestone payments as set forth in Exhibit C.

 

5.3                               As partial consideration for all the rights granted to CPAC, CPAC will pay TomoTherapy minimum annual royalties as set forth in Exhibit C.

 

5.4                               As partial consideration for all the rights granted to CPAC, CPAC will pay to TomoTherapy earned royalties at the rate set forth in Exhibit C.

 

5.5                               Earned royalties shall accrue when CPAC receives payment for Licensed Products or Licensed Services, or if no such payment is to be received, when such Licensed Products or Licensed Services are delivered in a manner constituting a Net Sale as defined in Article 2 (DEFINITIONS), Paragraph 2.24, and no further deliverables are due to the customer by CPAC or sublicensee.

 

5.6                               Payments on earned royalties pursuant to Exhibit C, Paragraphs C.2.1.2 and C.2.2.2, for the sale of the first five DWA units shall be deferred until the second anniversary of the date of the first sale.  Payment for other earned royalties will include all royalties accrued

 

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up to the last day of the most recently completed calendar quarter, and such payment shall be made on the dates specified below:

 

February 28 for the calendar quarter ending December 31;

 

May 31 for the calendar quarter ending March 31;

 

August 31 for the calendar quarter ending June 30; and

 

November 30 for the calendar quarter ending September 30.

 

5.7                               All consideration due TomoTherapy shall be payable in United States dollars.  When Licensed Products or Licensed Services are sold for monies other than United States dollars, earned royalties will first be determined in the foreign currency of the country in which such Licensed Products or Licensed Services were Sold and then converted into equivalent United States dollars.  The exchange rate will be the one actually used by CPAC to record such sale on its financial statements.

 

5.8                               Earned royalties on Sales of Licensed Products or Licensed Services occurring in any country outside the United States shall not be reduced by any taxes, fees, or other charges imposed by the government of such country except those taxes, fees, and charges allowed under the provisions of Paragraph 2.25 (Net Invoice Price).  CPAC also will be responsible for all bank transfer charges.

 

5.9                               Notwithstanding the provisions of Article 26 (FORCE MAJEURE), if at any time legal restrictions prevent prompt remittance of any earned royalties or other consideration owed to TomoTherapy by CPAC with respect to any country where a sublicense is issued or a Licensed Product or Licensed Service is Sold, then CPAC will convert the amount owed to TomoTherapy into United States dollars and will pay TomoTherapy directly from another source of funds in order to remit the entire amount owed to TomoTherapy.  Notwithstanding the previous sentence, if CPAC is prohibited itself by such legal restrictions from collecting the Net Invoice Price for the sale of any Licensed Product or Licensed Service or any royalty or fee from a sublicense, CPAC shall not be obligated to convert such amount owed, but rather will send written notice to TomoTherapy of such legal restrictions and of the amount owed.  Upon removal of such legal restrictions,

 

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CPAC will convert said amount owed to TomoTherapy into United States dollars and will remit the entire amount owed to TomoTherapy.

 

5.10                        No earned royalties will be collected or paid hereunder to TomoTherapy on Licensed Products or Licensed Services Sold to the account of the U.S. Government.  CPAC and its sublicensee will reduce the amount charged for Licensed Products or Licensed Services Sold to the U.S. Government by an amount equal to the royalty for such Licensed Products or Licensed Services otherwise due TomoTherapy.  CPAC will provide TomoTherapy with U.S. Government contract numbers and a written statement by CPAC’s contracting officer that Sale of Licensed Products to the U.S. Government were reduced by the amount of royalty due TomoTherapy.

 

5.11                        If TomoTherapy must pursue legal means to obtain payments owed by CPAC, CPAC will pay TomoTherapy for all reasonable legal costs and any other related costs expended by TomoTherapy to collect payments owed by CPAC.

 

5.12                        In the event that any patent or any claim thereof included within the Patent Rights is held invalid in a final decision by a court of competent jurisdiction and last resort and from which no appeal has or can be taken, all obligation to pay royalties based on such patent or claim or any claim patentably indistinct there from will cease as of the date of such final decision.  CPAC will not, however, be relieved from paying any royalties that accrued before such final decision and CPAC will be obligated to pay the full amount of royalties due hereunder to the extent that TomoTherapy licenses one or more Valid Claims within the Patent Rights to CPAC  with respect to Licensed Products or Licensed Services.

 

6.                                      DUE DILIGENCE

 

6.1                               CPAC, upon execution of this Agreement, will use all commercially reasonable efforts to (i) diligently proceed with the development, manufacture, and Sale of the LLNL Licensed Products and related Licensed Services and use of related Licensed Methods, and will use all commercially reasonable efforts to earnestly and diligently market the same after execution of this Agreement and in quantities sufficient to meet the market demands therefor (the “LLNL Licensed Products Diligence Obligation”) and (ii)

 

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diligently proceed with the development, manufacture, and Sale of the DWA Licensed Products and related Licensed Services and use of related Licensed Methods, and will use all commercially reasonable efforts to earnestly and diligently market the same after execution of this Agreement and in quantities sufficient to meet the market demands therefor (the “DWA Licensed Products Diligence Obligation”); provided that, until CPAC achieves the Monterey Milestone, CPAC will use all commercially reasonable efforts to achieve the Monterey Milestone and will apply substantially all of its available technology and product development resources to achievement of the Monterey Milestone (the “Monterey Milestone Diligence Obligation”).

 

6.2                               CPAC will meet the specific performance obligations and milestones specified in Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS), in accordance with the terms and conditions therein (including, without limitation, the cure periods and potential modifications to such time periods therein).  If CPAC is unable to meet such milestones in accordance with Exhibit B, CPAC may negotiate with LLNL or LLNS for a new schedule and the conditions for continuation of the Underlying License, subject always to TomoTherapy’s right to approve such new schedule and conditions with LLNS under the Underlying License.  CPAC shall copy TomoTherapy on all written communications (including emails) from CPAC to LLNL or LLNS that relate to negotiations of a new milestone schedule or the conditions for continuation of the Underlying License and will promptly provide to TomoTherapy copies of all written communications (including emails) that CPAC receives from LLNL or LLNS that relate to negotiations of the terms of the Underlying License or any remedies or other steps that LLNL or LLNS is taking or may take by reason of any failure of TomoTherapy to meet any milestone schedule or conditions for continuation of the Underlying License and that LLNL or LLNS did not directly forward to TomoTherapy, including any notice regarding the exercise of conversion or termination rights in favor LLNS in Sections 6.2.2, 6.2.3 or 6.6 of the Underlying License.  TomoTherapy will promptly provide to CPAC copies of all written communications (including emails) that TomoTherapy receives from LLNL that relate to any notices with respect to Sections 6.1, 6.2.2, 6.2.3 or 6.6 of the Underlying License. Without limiting the generality of the foregoing, CPAC shall keep TomoTherapy timely apprised of all material developments in the negotiation of a new

 

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milestone schedule or the conditions for continuation of the Underlying License with LLNL or LLNS or otherwise respect to the exercise by LLNL or LLNS of any rights or remedies with respect to the Underlying License. Notwithstanding the foregoing or any other provision of this Agreement, nothing herein affects to obligations of LLNL or LLNS, as applicable, to provide directly to TomoTherapy any and all notices given by LLNL or LLNS under the Existing License. Notwithstanding the foregoing, if LLNL or LLNS provides notice to TomoTherapy or CPAC that LLNL or LLNS will not agree to extend any milestone date set forth in Exhibit B to the Underlying Sublicense to a date by which CPAC is able to achieve such milestone;  or LLNL or LLNS otherwise provide notice of a failure to meet the obligations Paragraph 6.1, 6.2.2, 6.2.3 of the Underlying License; or LLNL or LLNS otherwise provide notice of an intent to exercise any of the conversion or termination rights in favor LLNS in Sections 6.1, 6.2.2, 6.2.3 or 6.6 of the Underlying License or if CPAC and LLNL or LLNS fail to reach agreement on a extended milestone schedule at least thirty (30) days before LLNS is permitted under Paragraph 6.2.2 or 6.2.3 of the Underlying Licensed to convert the limited exclusive license granted thereunder to TomoTherapy to a non-exclusive license or to terminate the Underlying License, TomoTherapy thereafter shall have the right to actively participate along with CPAC in all subsequent discussions and negotiations with LLNL and LLNS with respect to such matters and TomoTherapy and CPAC agree in such event to reasonably cooperate with each other in connection with such joint discussions and negotiations with LLNL and LLNS.

 

6.3                               If the terms of the Underlying License are modified due to a missed milestone, then the terms of this Agreement shall be modified to the same extent.

 

6.4                               CPAC will comply with all applicable governmental laws and obtain all necessary governmental approvals in each country where Licensed Products or Licensed Services are manufactured, used, Sold, imported, or offered for Sale.

 

6.5                               If LLNL notifies TomoTherapy that LLNL was approached by a third party seeking a license to make, use, or sell the Invention or the Licensed Products in the Fields of Use in which rights have been granted to CPAC under Exhibit B hereto because commercial demand is not then being met, then CPAC  will  negotiate in good faith with that third

 

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party to grant a sublicense for any Licensed Patents in the market for which CPAC and existing sublicensees are not meeting commercial demand.  The determination to grant a sublicense may be based on CPAC’s business interests, and may be granted or denied in CPAC’s reasonable business judgment, provided, however, that CPAC provides LLNL and TomoTherapy with a justification (which shall be treated as Proprietary Information) for denying any such sublicense.

 

6.6                               During the term of this Agreement, CPAC will conduct normal, continuous business operations.  If CPAC seeks protection under any United States bankruptcy proceedings during the term of this Agreement, CPAC will notify TomoTherapy in writing no later than seventy-two (72) hours after the bankruptcy filing.  Upon filing bankruptcy, the license terminates at TomoTherapy’s option as stated in Article 9 (LIFE OF THE AGREEMENT), Paragraph 9.2.

 

6.7                               If TomoTherapy receives any notice pursuant to Paragraph 6.6 of the Underlying License, TomoTherapy shall promptly forward such notice to CPAC and shall allow CPAC to negotiate directly with LLNL to cure any deficiencies.

 

6.8                               If CPAC breaches the LLNL Licensed Products Diligence Obligation, the DWA Licensed Products Diligence Obligation or the Monterey Milestone Diligence Obligation under Paragraph 6.1, TomoTherapy will have the right and option to:  (a), in the case of a breach of the LLNL Licensed Products Diligence Obligation, (1) convert the limited exclusive sublicense for LLNL Licensed Patents to a nonexclusive sublicense; or (2) terminate the limited exclusive sublicense for LLNL Licensed Patents, (b) in the case of a breach of the DWA Licensed Products Diligence Obligation, (1) convert the limited exclusive license for DWA TomoTherapy IP to a nonexclusive license; or (2) terminate the limited exclusive license for DWA IP; or (c), in the case of a breach of the Monterey Milestone Diligence Obligation, (1) convert the limited exclusive sublicense for the LLNL Licensed Patents and/or the DWA TomoTherapy IP to a nonexclusive sublicense; or (2) terminate the limited exclusive sublicense for LLNL Licensed Patents and/or terminate the limited exclusive license for DWA TomoTherapy IP.  To exercise any right to terminate the limited exclusive sublicense for LLNL Licensed Patents or the limited exclusive license for DWA TomoTherapy IP or to convert the limited exclusive

 

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sublicense for LLNL Licensed Patents or the limited exclusive license for DWA TomoTherapy IP to a nonexclusive license, in each case, for breach of any of the diligence obligations set forth in Paragraph 6.1, TomoTherapy will give CPAC written notice, setting forth specific details as to the nature of the alleged deficiency.  In the case of a breach of the LLNL Licensed Products Diligence Obligation, CPAC has sixty (60) days after TomoTherapy gives CPAC written notice of the alleged deficiency to cure the deficiency and CPAC shall provide to TomoTherapy written tangible evidence that such breach has been cured by the end of the (60) day period; provided that, if LLNL agrees in writing to an extension of the sixty (60)-day period specified in Paragraph 6.6 of the Underlying License during which TomoTherapy may cure any deficiency in the performance of its diligence obligations under Article 6 of the Underlying License, the period during which CPAC will be permitted to cure any breach of the LLNL Licensed Products Diligence Obligation set forth in Paragraph 6.1 hereof automatically will be extended to the same extent as such agreed extension to the sixty (60) day cure period in Paragraph 6.6 of the Underlying License.  In the case of a breach of the DWA Licensed Products Diligence Obligation or breach of the Monterey Milestone Diligence Obligation, CPAC has one hundred and twenty (120) days after TomoTherapy gives CPAC written notice of the alleged deficiency to cure the deficiency and CPAC shall provide to TomoTherapy written tangible evidence that the deficiency has been cured by the end of the one hundred and twenty (120) day period.  If, at this point, TomoTherapy determines that CPAC has failed to cure the deficiency, then TomoTherapy may, at its option, immediately exercise the termination or conversion rights specified above in this Paragraph 6.8 by giving written notice to CPAC.

 

7.                                      ROYALTY AND PROGRESS REPORTS

 

7.1                               CPAC will submit to TomoTherapy an annual progress report as described in Paragraph 7.2 below covering activities by CPAC  and its sublicensees related to the development and testing of all Licensed Products and Licensed Services.  Such progress report will be signed by CPAC’s President or Chief Executive Officer or his/her designee attesting to the accuracy of the information in the report.  If either party terminates this Agreement before any Licensed Products or Licensed Services are Sold or before this Agreement’s

 

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expiration, a final progress report covering the period prior to termination must be submitted within thirty (30) days of termination.

 

7.2                               The progress reports submitted under Paragraph 7.1 above will include, but not be limited to, a reasonably detailed summary of the following topics:

 

·                  Summary of work completed toward commercialization of Licensed Patents;

 

·                  Schedule of anticipated events or milestones, including status of those events or milestones.  Should CPAC wish to change the schedule of events or milestones specified in Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS), CPAC must request advance written approval from TomoTherapy;

 

·                  A financial statement showing the investments made in the commercialization effort to date;

 

·                  Anticipated and actual market introduction dates of each Licensed Product or Licensed Service;

 

·                  Summary of marketing and sales activities, including copies of marketing and sales literature; and

 

·                  Activities of the sublicensees, if any.

 

7.3                               CPAC also will report to TomoTherapy in its immediately subsequent progress report the date of first Sale or other exploitation of a Licensed Product or Licensed Service in each country.

 

7.4                               Beginning with the quarter following First Commercial Acceptance, CPAC will provide quarterly royalty reports and payments to TomoTherapy on or before each February 28, May 31, August 31, and November 30 of each year.  If there were no Sale of Licensed Products or Licensed Services, the report will state that.  Royalty reports will be signed by CPAC’s General Manager or chief financial officer, or their designee, attesting to the accuracy of the report.  Each such royalty report will cover the most recently completed calendar quarter (October through December covered in the February 28th report, January through March in the May 31st report, April through June in the August 31st report, and July through September in the November 30th report) and will show:

 

7.4.1                     the gross invoice prices and Net Sales of Licensed Products or Licensed Services Sold or otherwise exploited by CPAC and its sublicensees during the most recently completed calendar quarter;

 

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7.4.2                     the number of Licensed Products or Licensed Services Sold or otherwise exploited by CPAC and its sublicensees during the most recently completed calendar quarter;

 

7.4.3                     the place of manufacture of Licensed Products or practice of Licensed Services;

 

7.4.4                     the royalties, in U.S. dollars, payable hereunder with respect to Net Sales;

 

7.4.5                     the method used to calculate the royalty, specifying all deductions taken and the dollar amount of each such deduction; and

 

7.4.6                     the exchange rates used, if any.

 

7.5                               CPAC  will provide TomoTherapy with an annual statement of royalty accounts within sixty (60) days after the financial closing of CPAC’s fiscal year.  TomoTherapy will protect such statements, and any of the other reports provided to TomoTherapy pursuant to Article 7, as Proprietary Information and not disseminate them unless required by law or permitted by this Agreement.  If a disclosure is required by law, TomoTherapy will give CPAC the opportunity to seek a protective order preventing or limiting such disclosure.

 

8.                                      BOOKS AND RECORDS

 

8.1                               CPAC will keep books and records accurately showing all payments due TomoTherapy and all Licensed Products and Licensed Services manufactured (including place of manufacture), used, offered for Sale, imported, and/or Sold under the terms of this Agreement.  Such books and records will be preserved for at least five (5) years after the date of the payment to which they pertain and will be open to inspection by LLNL, LLNS or TomoTherapy, and their respective representatives or agents, at reasonable times and upon reasonable prior notice to determine their accuracy and assess CPAC’s compliance with the terms of this Agreement.

 

8.2                               The fees and expenses of representatives of TomoTherapy performing such an examination will be borne by TomoTherapy.  If, however, an underpayment error in royalties of more than five percent (5%) of the total royalties due for any year is discovered, CPAC will bear the reasonable costs associated with the examination and

 

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will remit such underpayment to TomoTherapy within thirty (30) days of the examination result.

 

8.3                               CPAC will provide TomoTherapy with an annual audited financial statement of CPAC, including at a minimum a balance sheet and operating statement or CPAC’s annual report, and TomoTherapy will treat such reports as Proprietary Information to the extent the same is not part of a public filing.  Such statement will be due to TomoTherapy within one hundred twenty (120) days following the close of CPAC’s fiscal year to which such statement relates.

 

9.                                      LIFE OF THE AGREEMENT

 

9.1                               Unless otherwise terminated by operation of law, Paragraph 9.2, or by acts of the Parties in accordance with the terms of this Agreement, this Agreement will remain in effect from the Effective Date until the expiration or abandonment of last of the Patent Rights licensed hereunder, at which point this Agreement will expire.

 

9.2                               This Agreement will terminate at TomoTherapy’s option upon the filing of a petition for relief under the United States Bankruptcy Code by CPAC.  If the bankruptcy petition is filed against CPAC by a third party, CPAC has sixty (60) days from the date of the petition to have such third-party bankruptcy filing dismissed.  If at the end of the sixty (60) day period, CPAC fails to have the third party filing dismissed, this Agreement will terminate.

 

9.3                               Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles:  Article 2 (DEFINITIONS), Article 5 (FEES, ROYALTIES, AND PAYMENTS), Article 8 (BOOKS AND RECORDS), Article 9 (LIFE OF THE AGREEMENT), Article 11 (DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION), Article 14 (USE OF NAMES AND TRADEMARKS), Article 15 (LIMITED WARRANTY), Article 16 (INDEMNIFICATION), Article 17 (INSURANCE), Article 21 (NOTICES), Article 22 (GOVERNING LAWS; VENUE; ATTORNEYS’ FEES),  Article 28 (PROPRIETARY INFORMATION) and Paragraph B.3 of Exhibit B.2 (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS), subject to any time limitations set forth in those Articles.  Notwithstanding anything

 

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herein to the contrary, CPAC shall have no obligation to pay any amount under this Agreement unless such amount was due and owing prior to the termination or expiration of this Agreement.

 

9.4                               The termination or expiration of this Agreement will not relieve CPAC of its obligation to pay any fees, royalties, and reimbursements for foreign filing costs, or other payments owed to TomoTherapy at the time of such termination or expiration and will not impair any accrued right of TomoTherapy.

 

10.                               TERMINATION

 

10.1                        Termination by CPAC:  CPAC will have the right at any time to terminate this Agreement by providing a Notice of Termination to TomoTherapy  and paying any outstanding fees owed TomoTherapy.  Termination of this Agreement will be effective sixty (60) days after the date such notice takes effect.

 

10.2                        This Agreement will terminate, effective ten (10) days after the effective date of notice by TomoTherapy, if CPAC is dissolved or liquidated.

 

10.3                        TomoTherapy shall have the right to terminate the 1imited exclusive sublicense for LLNL Licensed Patents and/or the limited exclusive license of the DWA TomoTherapy IP as provided in Paragraph 6.8. If TomoTherapy, pursuant to Paragraph 6.8, terminates both the 1imited exclusive sublicense for LLNL Licensed Patents and the limited exclusive license of the DWA TomoTherapy IP, TomoTherapy shall have the right to terminate this Agreement effective upon written notice to CPAC.

 

11.                               DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION

 

11.1                        Upon termination of this Agreement pursuant to Article 10 (TERMINATION), CPAC may Sell all previously made or partially made Licensed Products (and such partially made Licensed Products may be completed prior to Sale), but will not make or Sell additional Licensed Products, provided, however, that the Sale of such Licensed Products will be subject to the terms of this Agreement including, but not limited to, the payment of earned royalties at the rates and at the times provided herein and the rendering of reports in connection therewith.  CPAC will also be permitted to provide Licensed

 

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Services for so long as is reasonably necessary to complete those contractual obligations of CPAC accruing prior to termination or expiration of this Agreement, provided that CPAC’s providing of such Licensed Services will be subject to the terms of this Agreement, including, but not limited to, the payment of earned royalties at the rates and at the times provided herein and the rendering of reports in connection herewith.

 

11.2                        Within thirty (30) days after termination of this Agreement by either Party pursuant to Article 10 (TERMINATION), CPAC will provide TomoTherapy with a written inventory of all Licensed Products in process of manufacture or in stock on the date of termination.  CPAC may complete Licensed Products in the process of manufacture at the time of termination, and may dispose of Licensed Products provided that CPAC pays royalties to TomoTherapy on such dispositions.

 

11.3                        Upon termination of this Agreement pursuant to Article 10 (TERMINATION), CPAC may not practice Licensed Methods after the date of termination of this Agreement except as necessary to complete the manufacture of Licensed Products as permitted under Paragraph 11.2 and to provide Licensed Services as described in Paragraph 11.1.

 

12.                               PATENT PROSECUTION AND MAINTENANCE

 

12.1                        LLNS Patents

 

12.1.1              LLNS will prosecute patent applications and maintain the LNLL Patents licensed under this Agreement.  CPAC and LLNL will review and amend Exhibit A (LICENSED PATENTS) in this License from time to time so that the amended list of LNLL Patents will be those that both Parties believe are necessary for commercialization of Licensed Products, subject always to agreement by LLNS and inclusion of such patents as licensed patents in the Underlying License.  The cost to file and prosecute U.S. LLNL Patents will be as follows:

 

12.1.1.1                Category 1 Patents:  CPAC will reimburse TomoTherapy $10,000 for each Category 1 Patent that CPAC and LLNL believe are necessary for the commercialization of Licensed Products and are included in the LNLL Patents.  Payment for those Category 1 Patents will be made following the successful completion and testing of the sub-scale prototype.

 

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12.1.1.2                Category 2 Patents:  CPAC may be required to pay an additional fee for Category 2 Patents added to this License.

 

12.1.1.3                Category 3 Patents:  CPAC is responsible for prosecution costs of U.S. patents.

 

12.1.2              As the party solely responsible for the commercialization of the Invention, CPAC will pay all of the expenses associated with patent interferences, patent appeals to the USPTO Board of Appeals, patent appeals to a Federal Court, patent re-examinations, and patent re-issues, as long as the LNLL Patent remains on Exhibit A (LICENSED PATENTS) and CPAC  maintains its exclusive license.

 

12.1.3              CPAC may request foreign rights in the LNLL Patents, if such rights are available.  CPAC must request such rights in writing, and specify the countries in which it wants rights, within seven (7) months after the filing date of the U.S. applications.  Failure to request such rights will be considered an election not to seek foreign rights.  LLNS may file patent applications at its own expense in any country in which CPAC has not elected to secure foreign rights, and CPAC has no rights to any such foreign applications and resultant patents, unless such foreign rights are still available and CPAC pays for such rights.

 

12.1.4              All costs of preparing, filing, prosecuting, and maintaining foreign LNLL Patents and applications covering the Inventions listed in Exhibit A (LICENSED PATENTS) will be borne by CPAC, subject to the terms of this Agreement.  All such patents will be held in the name of LLNS.  The costs of any interferences and oppositions for foreign patents will be considered prosecution expenses and also will be borne by CPAC.  An advance fee (Fee) will be invoiced to CPAC by TomoTherapy for any future foreign filing of LNLL Patents listed in Exhibit A (LICENSED PATENTS).  TomoTherapy is authorized to pay the incurred fees from the Fee.  As evidence of expenses incurred, TomoTherapy will supply invoices for foreign filing requested by CPAC to CPAC.  TomoTherapy shall credit to CPAC  any remaining balance of the Fee not used for foreign filing expenses incurred.  The Fee is not an advance against any other fees or royalties due TomoTherapy under this Agreement.    TomoTherapy shall invoice CPAC for payment of costs for foreign patent application preparation, filing, prosecution, and maintenance.  If such payment is not received within ninety (90) days, such foreign license rights shall be

 

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excluded from this Agreement, unless such foreign license rights are still available and CPAC pays for such rights.  TomoTherapy shall not be liable in any manner for the loss of such foreign license rights arising due to CPAC’s failure to pay such fees on a timely manner.  Any overpayments by CPAC for foreign patent filing and maintenance costs shall be credited towards CPAC’s future foreign patent cost obligations.

 

12.1.5              Notwithstanding any previous payment of fees or election to pursue such rights, CPAC may, at its sole discretion, terminate its license to any foreign LNLL Patents or application(s)  and its obligation to pay any further costs for those corresponding foreign rights, upon thirty (30) days written notice to TomoTherapy.  TomoTherapy, LLNS or the U.S. Government may, at their sole discretion and expense, continue prosecution and/or maintenance of any patents or applications for which CPAC has relinquished rights.

 

12.2                        DWA TomoTherapy Patents

 

12.2.1              CPAC agrees to reimburse TomoTherapy towards the costs incurred by TomoTherapy in filing, prosecuting and maintaining the DWA TomoTherapy Patents in the United States that are included in the Licensed Patents; provided that, upon written notice from CPAC to TomoTherapy that CAPC is electing not to pay the costs of filing, prosecuting or maintaining any DWA TomoTherapy Patent, such DWA TomoTherapy Patent shall thereafter be excluded from the Licensed Patents licensed to CPAC hereunder.  CPAC will pay to TomoTherapy such costs within thirty (30) days of receiving an invoice from TomoTherapy for said costs.

 

12.2.1.1                TomoTherapy is not obligated to make or maintain any foreign filing of the DWA TomoTherapy Patents.  If CPAC wants TomoTherapy to make or maintain such foreign filings, CPAC must, at least three (3) months prior to the expiration of the deadline for making such foreign filings, notify CPAC in writing indicating those countries in which CPAC desires TomoTherapy to pursue foreign patent protection.  In addition, CPAC must reimburse TomoTherapy towards the costs incurred by TomoTherapy in filing, prosecuting and maintaining the foreign patents.  After the issuance of any foreign filed DWA TomoTherapy Patents that CPAC has elected to pursue, CPAC will be billed annually for any applicable annuity payments at the actual rate determined by the applicable country.  CPAC will pay to TomoTherapy the invoiced annuity amount within

 

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thirty (30) days of receipt.  If CPAC fails to pay such amount by the invoice due date, TomoTherapy will have the right to abandon the foreign filed patent and remove it from the Licensed Patents.

 

12.2.1.2                TomoTherapy reserves the right to file a patent application, at its own expense, in any countries not requested by CPAC pursuant to this Paragraph 12.  Such patent applications and any resulting patents will not be included in the Licensed Patents.

 

12.2.1.3                TomoTherapy will prosecute all patent applications it files at Licensee’s request pursuant to this Paragraph 12.  TomoTherapy will use reasonable efforts to provide to CPAC the right to review and comment on any significant prosecution actions and correspondences received pertaining to the filing, prosecution and maintenance of any DWA TomoTherapy Patents in the Licensed Patents. TomoTherapy will use reasonable efforts to promptly forward a copy of such actions and correspondence to CPAC within thirty (30) days of their receipt by TomoTherapy. TomoTherapy shall give good faith consideration to carrying out the instructions, opinions and proposals submitted by CPAC with respect to any prosecution actions if such instructions, opinions and proposals are provided to TomoTherapy.  If TomoTherapy decides to abandon prosecution or maintenance of any patent or patent application under the DWA TomoTherapy Patents in a country in which CPAC has requested TomoTherapy to make and maintain such filing, TomoTherapy shall assign said application to CPAC prior to any such abandonment, and CPAC shall have the right to continue prosecution of said application, at its own expense.

 

13.                               PATENT INFRINGEMENT

 

13.1                        LNLL Patents

 

13.1.1              In the event that either CPAC or TomoTherapy learns of infringement that it believes may have potential commercial significance to any LNLL Patent, the knowledgeable party will provide the other party (i) with written notice of such infringement and (ii) with any evidence of such infringement available to it (the “Infringement Notice”).

 

13.1.2              TomoTherapy will have the first right, at its option, to undertake and control efforts to obtain a discontinuance of misappropriation or infringement of the LNLL

 

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Patents, including the bringing of a lawsuit for misappropriation or infringement and to undertake and control efforts to obtain a discontinuance of infringement. In the event TomoTherapy does not desire to exercise such first right, it shall provide prompt notice thereof to CPAC, and will provide to CPAC whatever rights TomoTherapy has under the Underlying License to undertake and control such efforts to obtain a discontinuance of misappropriation or infringement of the LNLL Patents.  Each party, at its own expense, will cooperate in any action or lawsuit brought by the other under this Paragraph, and each consents to being named a party and joining as a party plaintiff in the same. Each party’s responsibility to cooperate includes, without limitation, releasing information and documents relevant to such action or lawsuit, appearing as witnesses therein, filing actions, and taking other actions as may be reasonably necessary for that party to maintain the action or lawsuit.

 

13.1.3              Any recovery or settlement received in connection with any suit will first be allocated to cover the litigation costs incurred by CPAC and TomoTherapy and required to be paid under this Agreement.  Any recovery in excess of litigation costs will be shared between CPAC and LLNL as set forth in the Underlying License, replacing CPAC for TomoTherapy; provided that any recoveries (after payment of litigation expenses) retained by CPAC (including any settlement recoveries) shall be treated as revenue from the sale of Licensed Products to which the royalty obligations of CPAC under Paragraph C.2 of Exhibit C hereto shall be applicable.

 

13.1.4              Any agreement made by CPAC for purposes of settling litigation or other dispute shall comply with the requirements of Article 4 (SUBLICENSING RIGHTS AND OBLIGATIONS) of this Agreement.

 

13.2                        DWA TomoTherapy Patents

 

13.2.1              In the event that either CPAC or TomoTherapy learns of infringement that it believes may have potential commercial significance to any DWA TomoTherapy Patent, the knowledgeable party will provide the other party (i) with written notice of such infringement and (ii) with any evidence of such infringement available to it (the “Infringement Notice”).

 

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13.2.2              TomoTherapy will have the first right, at its option, to undertake and control efforts to obtain a discontinuance of misappropriation or infringement of the DWA TomoTherapy Patents, including the bringing of a lawsuit for misappropriation or infringement and to undertake and control efforts to obtain a discontinuance of infringement. In the event TomoTherapy does not desire to exercise such first right, it shall provide notice thereof to CPAC, and will thereafter promptly provide to CPAC the right to control efforts to obtain a discontinuance of misappropriation or infringement of the DWA TomoTherapy Patents.  Each party consents to being named a party and joining as a party plaintiff in the action if necessary to obtain an action for the discontinuance of misappropriation or infringement of the DWA TomoTherapy Patents.

 

13.2.3              If TomoTherapy elects to commence an action for infringement as described above in Paragraph 13.2.2, CPAC shall cooperate fully with TomoTherapy in connection with any such action.  Moreover, TomoTherapy shall prosecute such action at its own expense, controlling such action and retaining all recoveries there from. TomoTherapy shall reimburse CPAC for any reasonable out-of-pocket costs and expenses incurred by CPAC at TomoTherapy’s request as part of CPAC’s full cooperation in connection with an action brought by TomoTherapy against third parties.  All other costs and expenses incurred by CPAC in carrying out CPAC’s obligations under this Agreement shall be paid by CPAC, without reimbursement from TomoTherapy.

 

13.2.4              If CPAC elects to commence an action for infringement as provided above in Paragraph 13.2.2, TomoTherapy shall cooperate fully with CPAC in connection with any such action.  Moreover, CPAC shall prosecute such action at its own expense, controlling such action and retaining all recoveries there from; provided that any recoveries (after payment of litigation expenses) retained by CPAC (including any settlement recoveries) shall be treated as revenue from the sale of Licensed Products to which the royalty obligations of CPAC under Paragraph C.2 of Exhibit C hereto shall be applicable. CPAC shall reimburse TomoTherapy for any reasonable out-of-pocket costs and expenses incurred by TomoTherapy at CPAC’s request as part of TomoTherapy’s full cooperation in connection with an action brought by CPAC against third parties.  All other costs and expenses incurred by TomoTherapy in carrying out TomoTherapy’s obligations under this Agreement shall be paid by TomoTherapy, without reimbursement from CPAC.

 

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14.                               USE OF NAMES AND TRADEMARKS

 

Nothing contained in this Agreement will be construed as conferring any right to either Party to use in advertising, publicity, or other promotional activities any name, trade name, trademark, or other designation of the other Party or LLNL or LLNS (including a contraction, abbreviation or simulation of any of the foregoing).  Unless consented to in writing by LLNL or LLNS, the use by CPAC of the name “Lawrence Livermore National Laboratory” by CPAC in advertising, publicity, or other promotional activities is expressly prohibited.  Unless consented to in writing by TomoTherapy or Accuray Incorporated, the use by CPAC of the name “TomoTherapy” or “Accuray” by CPAC in advertising, publicity, or other promotional activities is expressly prohibited.

 

15.                               LIMITED WARRANTY

 

15.1                        TomoTherapy warrants to CPAC that it has the lawful right to grant the sublicense granted to CPAC under this Agreement.

 

15.2                        Except as expressly set forth in this Agreement, the licenses and the associated Invention, Patent Rights, Licensed Products, Licensed Services, and Licensed Methods are provided by TomoTherapy WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY OF ANY KIND,  EITHER EXPRESS OR IMPLIED.  TOMOTHERAPY MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY THAT THE INVENTION, PATENT RIGHTS, LICENSED PRODUCTS, OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHTS.

 

15.3                        Nothing in this Agreement is or will be construed as:

 

15.3.1              a warranty or representation by TomoTherapy as to the validity, enforceability, or scope of any Patent Rights; or

 

15.3.2              a warranty or representation that anything made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents, copyrights, or other rights of third parties; or

 

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15.3.3              an obligation to bring or prosecute actions or suits against third parties for patent infringement except as provided in Article 13 (PATENT INFRINGEMENT); or

 

15.3.4              conferring by implication, estoppel, or otherwise any license or rights under any patents or other rights of TomoTherapy other than Patent Rights, regardless of whether such patents are dominant or subordinate to Patent Rights; or

 

15.3.5              an obligation to furnish any New Developments, know-how, technology, or technological information not provided in Patent Rights.

 

15.4                        LIMITATION OF LIABILITY — TOMOTHERAPY, LLNL, LLNS OR DOE WILL NOT BE LIABLE FOR ANY LOST PROFITS, COSTS OF PROCURING SUBSTITUTE GOODS OR SERVICES, LOST BUSINESS, ENHANCED DAMAGES FOR INTELLECTUAL PROPERTY INFRINGEMENT, OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR OTHER SPECIAL DAMAGES SUFFERED BY CPAC, SUBLICENSEES, JOINT VENTURES, OR AFFILIATES ARISING OUT OF OR RELATED TO THIS AGREEMENT, FOR ALL CAUSES OF ACTION OF ANY KIND (INCLUDING TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY) EVEN IF TOMOTHERAPY, LLNL, LLNS OR DOE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

16.                               INDEMNIFICATION

 

CPAC will, and will require its sublicensees to (to the extent permitted by Federal or applicable State law without the consent of a legislative body, an elected official, or governmental unit), indemnify, hold harmless, and defend TomoTherapy, LLNS, LLNL, DOE, their officers, employees, and agents; the sponsors of the research that led to the Invention; and the inventors of any invention claimed in the patent under Patent Rights (including the Licensed Products, Licensed Services, and Licensed Methods contemplated thereunder) and their employers against any and all amounts paid pursuant to any claims, suits, losses, damage, costs, fees, and expenses alleging that any Licensed Product or Licensed Service infringes the intellectual property of another party or has injured any other party.  TomoTherapy will, and will require all other parties to be

 

29

 

indemnified pursuant to this paragraph, immediately surrender to CPAC the prosecution or defense of any such claim or suit, and CPAC will pay any and all costs, including reasonable attorneys’ fees, incurred by TomoTherapy in enforcing this indemnification.  This indemnification will include, but will not be limited to, any product liability.

 

17.                               INSURANCE

 

17.1                        CPAC will insure its activities relating to this Agreement at its own cost with an insurance company reasonably acceptable to TomoTherapy.  CPAC will obtain, keep in force, and maintain insurance as follows with an insurance company reasonably acceptable to TomoTherapy or an equivalent program of self-insurance:  Comprehensive or Commercial Form General Liability Insurance, including contractual liability and product liability, with coverage as follows:

 

17.1.1              Each occurrence coverage of not less than Five Million Dollars ($5,000,000); and

 

17.1.2              Product Liability Insurance:  Completed operations aggregate coverage of not less than Ten Million Dollars ($10,000,000); and

 

17.1.3              Personal and Advertising Injury:  Coverage of not less than Five Million Dollars ($5,000,000); and

 

17.1.4              General Aggregate (Commercial Form only):  Coverage of not less than Ten Million Dollars ($10,000,000).

 

17.2                        These coverages do not limit the liability of CPAC to TomoTherapy in any way.  CPAC will provide TomoTherapy, upon request, with certificates of insurance or self-insurance, including renewals that show compliance with these requirements.  CPAC’s failure to maintain such required insurance will be considered a material breach of this Agreement.

 

17.3                        If the required insurance is written on a claims-made form, coverage must provide a retroactive date of placement before or coinciding with the Effective Date of this Agreement.

 

17.4                        CPAC will maintain the general liability insurance specified in this Article 17 during the period that the Licensed Patents of TomoTherapy are being used and/or Licensed

 

30

 

Products are being sold or otherwise commercially distributed by CPAC, and for a period of not less than three (3) years thereafter.

 

17.5                        CPAC’s insurance coverage must:

 

17.5.1              Provide for at least thirty (30) days advance written notice to TomoTherapy of cancellation or any modification; and

 

17.5.2              Indicate that DOE, LLNS, LLNL, TomoTherapy, and their respective officers, employees, students, and agents, are endorsed on the policy as additional insureds; and

 

17.5.3              Include a provision that the coverage is primary and does not participate with or is in excess of any valid and collectible insurance, program, or self-insurance carried or maintained by TomoTherapy.

 

18.                               WAIVER

 

18.1                        No provision of this Agreement is deemed waived and no breach excused unless such waiver or consent is made in writing and signed by the waiving or consenting Party.

 

18.2                        Failure on the part of either Party to exercise or enforce any right of such Party under this Agreement will not be a waiver by such Party of any right, or operate to bar the enforcement or exercise of the right at any time thereafter.

 

19.                               ASSIGNABILITY

 

This Agreement is binding on and inures to the benefit of each of the Parties and its successors and assigns.  TomoTherapy may transfer or assign its rights and obligations under this Agreement to Accuray Incorporated, any entity which , directly or indirectly, Controls, is Controlled by or is under common Control with Accuray Incorporated or a third-party by any method for any reason (including but not limited to merger or sale of majority assets) without the consent of CPAC.  CPAC may transfer or assign all of its rights and obligations under this Agreement: i) to a purchaser of all or substantially all of the assets and business of CPAC; or ii) to an acquiror of all of the outstanding shares of common stock of CPAC (whether by stock purchase or merger); or iii) to a purchaser of all of that part of CPAC’s business to which the rights granted under this Agreement

 

31

 

relate. Except as permitted in the immediately preceding sentence of this Paragraph 19, any assignment or transfer by CPAC of any of its rights or obligations, in whole or in party, to any Person without the written consent of TomoTherapy is prohibited and shall be void ab initio.

 

20.                               LATE PAYMENTS

 

In the event that royalty payments, fees, or other monies owed to TomoTherapy are not received by TomoTherapy when due, CPAC will pay to TomoTherapy interest at a rate of ten percent (10%) simple interest per annum.  Such interest will be calculated from the date payment was due until actually received by TomoTherapy.  Such accrual of interest will be in addition to, and not in lieu of, enforcement of any other rights of TomoTherapy due to such late payment.  CPAC will pay any reasonable costs incurred by TomoTherapy in collecting late payments.

 

21.                               NOTICES

 

21.1                        Any notice or payment required to be given to either Party will be deemed to have been properly given and to be effective:

 

21.1.1              on the date of delivery if delivered in person; or

 

21.1.2              on the date of mailing if mailed by first-class certified mail, postage paid; or

 

21.1.3              on the date of mailing if mailed by any global express carrier service that requires the recipient to sign the documents demonstrating the delivery of such notice of payment;

 

to the respective addresses given below, or to another address as designated in writing by the Party changing its address.

 

32

 

In the case of CPAC:                                          Compact Particle Acceleration Corporation

c/o Jim Schultz
 6336 Patterson Pass Road
 Suite B
 Livermore, CA 94550

 

In the case of TomoTherapy:                           TomoTherapy Incorporated

c/o Accuray Incorporated
 1310 Chesapeake Terrace
 Sunnyvale, CA 94089
 Attention: Darren J. Milliken
 Senior Vice President, General Counsel & Corporate Secretary

 

22.                               GOVERNING LAWS; VENUE; ATTORNEYS FEES

 

22.1                        The Parties will attempt to jointly and promptly resolve any disputes arising from this Agreement.  If the Parties are unable to resolve a dispute within a reasonable time from one Party’s written notice to the other that dispute resolution has begun, then either Party may commence proceedings in a court of competent jurisdiction.

 

22.2                        THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that would direct the application of the laws of another jurisdiction, but the scope and validity of any patent or patent application will be governed by the applicable laws of the country of such patent or patent application.

 

23.                               PATENT MARKING

 

CPAC will mark all Licensed Products and their containers that are made, used, Sold, or otherwise disposed of under this Agreement in accordance with applicable patent marking laws.

 

33

 

24.                               GOVERNMENT APPROVAL OR REGISTRATION

 

If this Agreement or any associated transaction is required by the law of any nation to be either approved, permitted, or registered with any governmental agency, CPAC will assume all legal obligations to do so.  CPAC will notify TomoTherapy if CPAC becomes aware that this Agreement is subject to a United States or foreign government reporting, permitting, or approval requirement.  CPAC will make all necessary filings and pay all costs including fees, penalties, and all other out-of-pocket costs associated with such reporting, permitting, or approval process, unless otherwise specified in this Agreement.

 

25.                               COMPLIANCE WITH LAWS

 

25.1                        CPAC will comply with all applicable international, national, state, regional and local laws and regulations in performing its obligations hereunder and in its use, manufacture, Sale, or import of the Licensed Products, Licensed Services, or practice of the Licensed Method.

 

25.2                        CPAC will comply with all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data and the provision of Licensed Services to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR).

 

25.3                        CPAC will manufacture Licensed Products and practice the Licensed Method in compliance with applicable government importation laws and regulations of a particular country for Licensed Products made outside the particular country in which such Licensed Products are used or Sold.

 

25.4                        TomoTherapy will provide reasonable assistance to CPAC, at CPAC’s expense, in completing any applications or seeking any approvals of the type described in this Article 25.

 

26.                               FORCE MAJEURE

 

26.1                        Except for CPAC’s obligation to make any payments to TomoTherapy hereunder, the Parties will not be responsible for any failure to perform due to the occurrence of any events beyond their reasonable control which render their performance impossible or

 

34

 

onerous, including, but not limited to:  accidents (environmental, toxic spill, etc.); acts of God; biological or nuclear incidents; casualties; earthquakes; fires; floods; governmental acts, orders or restrictions; inability to obtain suitable and sufficient labor, transportation, fuel and materials; local, national, or state emergency; power failure and power outages; acts of terrorism; strike; and war.

 

26.2                        Either Party to this Agreement, however, will have the right to terminate this Agreement upon thirty (30) days’ prior written notice if either Party is unable to fulfill its obligations under this Agreement due to any of the causes mentioned in Paragraph 26.1, where such identified cause has prevented the performance of its obligations for a consecutive period of one (1) year.

 

26.3                        In the event that an event described in Paragraph 26.1 occurs, the Parties agree that any time-sensitive obligations, including, without limitation, the Performance Obligations set forth in Exhibit E and the payment of minimum annual royalties set forth in Exhibit C, shall be tolled for a mutually agreed upon time, taking into account the nature of the occurrence, but in no event, for a time period shorter than the duration of the event giving rise to such tolling.

 

27.                               UNITED STATES PREFERENCE

 

CPAC  agrees that any Licensed Products embodying the Invention or produced through the use thereof will be manufactured substantially in the United States.

 

28.                               PROPRIETARY INFORMATION

 

Other than as specified hereunder, the terms of this Agreement shall be considered proprietary information (“Proprietary Information”).  TomoTherapy shall not disclose the royalties paid, royalty reports, or development reports submitted by CPAC, or any of the information contained in those reports, without CPAC’s prior written consent, except that TomoTherapy may disclose all such information to LLNS in accordance with its obligations under the Underlying License.  Either party may disclose the terms of this Agreement to the extent required by law, including but not limited to any applicable securities laws and regulations.

 

35

 

29.                               MISCELLANEOUS

 

29.1                        The headings of the several sections are inserted for convenience of reference only and are not intended to affect the meaning or interpretation of this Agreement.

 

29.2                        No amendment or modification of this Agreement will be valid or binding upon the Parties unless made in writing and signed on behalf of each Party.

 

29.3                        This Agreement with the attached Exhibits A, B, C, D and E embodies the entire understanding of the Parties and supersedes all previous communications, representations, or understandings, whether oral or written, between the Parties relating to the subject matter hereof.  The Original Sublicense and the Original Cross-License are hereby terminated in their entirety and superseded by the terms and conditions of this Agreement.

 

29.4                        If any of the provisions contained in this Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provisions hereof, and this Agreement will be construed as if such invalid or illegal or unenforceable provisions had never been contained herein.

 

29.5                        No provisions of this Agreement are intended or will be construed to confer upon or give to any person or entity other than TomoTherapy and CPAC any rights, remedies, or other benefits under, or by reason of, this Agreement.

 

29.6                        In performing their respective duties under this Agreement, each of the Parties will be operating as an independent contractor.  Nothing contained herein will in any way constitute any association, partnership, or joint venture between the Parties hereto, or be construed to evidence the intention of the Parties to establish any such relationship.  Neither Party will have the power to bind the other Party or incur obligations on the other Party’s behalf without the other Party’s prior written consent.

 

[Signature Page Follows]

 

36

 

In witness whereof, both TomoTherapy and CPAC have executed this Agreement, in duplicate originals, by their respective officers hereunto duly authorized, on the date and year hereinafter written.

 

	
TOMOTHERAPY   INCORPORATED
    	
COMPACT   PARTICLE ACCELERATION CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
(Signature)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date   signed:
    	
                                ,   2012.
    	
 
    	
Date   signed:
    	
                           ,   2012.
    
								

 

[Signature Page to Amended and Restated Limited Exclusive

Sublicense and Cross-License Agreement]

 

 

EXHIBIT A - LICENSED PATENTS

 

CATEGORY 1 PATENTS

 

UNITED STATES PATENTS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
Patent
   Number
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing
   Date
    	
 
    	
Issue
   Date
    
	
IL-9938
    	
 
    	
6,331,194
    	
 
    	
Process   for Manufacturing Hollow Fused-Silica Insulator Cylinder
    	
 
    	
Stephen E. Sampayan, Michael L. Krogh, Steven C.   Davis
    	
 
    	
07/08/97
    	
 
    	
12/18/01
    
	
IL-10368
    	
 
    	
7,173,385
    	
 
    	
Compact   Accelerator
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Hugh C. Kirbie
    	
 
    	
01/14/05
    	
 
    	
02/06/07
    
	
IL-11372
    	
 
    	
7,576,499
    	
 
    	
Sequentially   Pulsed Traveling Wave Accelerator
    	
 
    	
George   J. Caporaso, Scott D. Nelson, Brian R. Poole
    	
 
    	
10/24/06
    	
 
    	
8/18/09
    
	
IL-11514
    	
 
    	
7,615,942
    	
 
    	
Castable   Dielectric Composite Linear Accelerator
    	
 
    	
David   M. Sanders, Stephen E. Sampayan, Kirk Slenes, H. M. Stoller
    	
 
    	
11/14/06
    	
 
    	
11/10/09
    
	
IL-11585A
    	
 
    	
7,710,051
    	
 
    	
Compact   Articulated Accelerator for Medical Therapy
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Yu-Jiuan Chen, Steven A. Hawkins, Art Paul
    	
 
    	
10/24/06
    	
 
    	
5/4/10
    
	
IL-11482A
    	
 
    	
7,893,541
    	
 
    	
Optically   Initiated Silicon Carbide High Voltage Switch
    	
 
    	
James   S. Sullivan, George J. Caporaso, Stephen E. Sampayan, David M. Sanders
    	
 
    	
10/24/06
    	
 
    	
2/22/11
    

 

UNITED STATES PATENT APPLICATIONS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
Patent
   Application
   Number
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing Date
    
	
IL-11372
    	
 
    	
11/586,377
    	
 
    	
Single   Pulse Traveling Wave Accelerator
    	
 
    	
George   J. Caporaso, Scott D. Nelson
    	
 
    	
10/24/06
    
	
IL-11864
    	
 
    	
12/136,721
    	
 
    	
Beam   Transport System and Method for Linear Accelerators
    	
 
    	
Yu-Jiuan   Chen, George Caporaso, Scott Nelson
    	
 
    	
6/10/08
    
	
IL-11482B
    	
 
    	
12/952,949
    	
 
    	
Method   of Controlling the Spatial Distribution of Large Electric Fields at   Conductor-Insulator Junctions
    	
 
    	
James   S. Sullivan, George J. Caporaso, Stephen E. Sampayan, David M. Sanders
    	
 
    	
11/23/10
    

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

A-1

 

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

PROVISIONAL PATENT APPLICATIONS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
Provisional Patent
   Application No.
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing
   Date
    
	
IL-11849
    	
 
    	
60/936256
    	
 
    	
{*****}
    	
 
    	
Mark   Alan Rhodes
    	
 
    	
6/18/07
    
	
IL-11868
    	
 
    	
60/936895
    	
 
    	
{*****}
    	
 
    	
George   Caporaso, Scott D. Nelson
    	
 
    	
6/21/07
    

 

FOREIGN PATENT APPLICATIONS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
International
   Serial Number
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing Date
    
	
IL-10368
    	
 
    	
PCT/US05/01548
    	
 
    	
Improved   Compact Accelerator
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Hugh C. Kirbie
    	
 
    	
01/18/05
    
	
IL-10368
    	
 
    	
05722455.2   EP
    	
 
    	
Improved   Compact Accelerator
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Hugh C. Kirbie
    	
 
    	
01/18/05
    
	
IL-10368
    	
 
    	
2006-549689   JP
    	
 
    	
Improved   Compact Accelerator
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Hugh C. Kirbie
    	
 
    	
01/18/05
    
	
IL-10368
    	
 
    	
2550552   CA
    	
 
    	
Improved   Compact Accelerator
    	
 
    	
George   J. Caporaso, Stephen E. Sampayan, Hugh C. Kirbie
    	
 
    	
01/18/05
    
	
IL-11372
    	
 
    	
PCT/US06/41548
    	
 
    	
Sequentially   Pulsed Traveling Wave Accelerator
    	
 
    	
George   J. Caporaso, Scott D. Nelson
    	
 
    	
10/24/06
    
	
IL-11482
    	
 
    	
PCT/US06/41814
    	
 
    	
Optically-Initiated   Silicon Carbide High Voltage Switch
    	
 
    	
James   Sullivan, George Caporaso, Stephen Sampayan, David Sanders
    	
 
    	
10/24/06
    
	
IL-11514
    	
 
    	
PCT/US06/44297
    	
 
    	
Castable   Dielectric Wall Accelerator
    	
 
    	
David   M. Sanders
    	
 
    	
11/14/06
    
	
IL-11585
    	
 
    	
PCT/US07/21380
    	
 
    	
Compact   Accelerator for Medical Therapy
    	
 
    	
George   J. Caporaso,
   Stephen E. Sampayan,
   Yu-Jiuan Chen, Steven A. Hawkins, Arthur Carl Paul
    	
 
    	
10/05/07
    
	
IL-11585
    	
 
    	
96139662   TW
    	
 
    	
Compact   Accelerator for Medical Therapy
    	
 
    	
George   J. Caporaso,
   Stephen E. Sampayan,
   Yu-Jiuan Chen, Steven A. Hawkins, Arthur Carl Paul
    	
 
    	
10/05/07
    

 

A-2

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

The following Records of Inventions (ROIs) are to be included as Category 1 Patents upon filing of the associated patent application with the USPTO.

 

INVENTION DISCLOSURES

 

	
Invention
   Disclosure
   Number
    	
 
    	
Patent
   Application
   No.
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing Date
    
	
IL-11369
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
George   J. Caporaso, Brian R. Poole, James S. Sullivan
    	
 
    	
TBD
    
	
IL-11400
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
Scott   D. Nelson, George J. Caporaso, Brian R. Poole, James S. Sullivan
    	
 
    	
TBD
    
	
IL-11690
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
Mark   A. Rhodes
    	
 
    	
TBD
    
	
IL-11740
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
Stephen   Sampayan
    	
 
    	
TBD
    
	
IL-11795
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
Arthur   Carl Paul, John R. Harris
    	
 
    	
TBD
    
	
IL-11896
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
George   J. Caporaso, Brian R. Poole, Steven A. Hawkins
    	
 
    	
TBD
    

 

CATEGORY 2 PATENTS

 

NONE CURRENTLY

 

CATEGORY 3 PATENTS

 

UNITED STATES PATENT APPLICATIONS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
Patent
   Application
   Number
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing Date
    
	
IL-11968
    	
 
    	
12/426,143
    	
 
    	
System   and Method of Modulating Electrical Signals Using Photoconductive Wide   Bandgap Semiconductors as Variable Resistors
    	
 
    	
John   R. Harris, George Caporaso, Stephen E. Sampayan
    	
 
    	
4/17/09
    
	
IL-12001
    	
 
    	
12/537,897
    	
 
    	
Improvements   to Multilayer Vacuum Insulators
    	
 
    	
John   R. Harris, David M. Sanders, Steven A. Hawkins, Steve Falabella
    	
 
    	
8/7/2009
    

 

A-3

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

	
IL-12083
    	
 
    	
12/761,607
    	
 
    	
Virtual   Gap Dielectric Wall Accelerator
    	
 
    	
George   J. Caporaso, Yu-Jiuan Chen, Scott D. Nelson, James S. Sullivan, Steven A.   Hawkins
    	
 
    	
4/16/2010
    
	
IL-12108
    	
 
    	
12/775,156
    	
 
    	
Photoconductive   Switch Package
    	
 
    	
George   J. Caporaso
    	
 
    	
5/6/2010
    
	
IL-12276
    	
 
    	
13/152,216
    	
 
    	
Generalized   Focusing and Deflection Method Utilizing Deformed Conducting Electrodes
    	
 
    	
Steven   A. Hawkins, George J. Caporaso, Yu-jiuan Chen
    	
 
    	
6/2/11
    
	
IL-12264
    	
 
    	
13/253,944
    	
 
    	
Proton   Kicker for Injection into a Single RF Period of an RFQ
    	
 
    	
Gary   Guethlein
    	
 
    	
10/5/11
    
	
IL-12286
    	
 
    	
13/253,940
    	
 
    	
Proton   Grating by Energy Shift into a Single RF Period of an RFQ
    	
 
    	
Gary   Guethlein
    	
 
    	
10/5/11
    
	
IL-12149A
    	
 
    	
13/171,372
    	
 
    	
High   Voltage Photo-Switch Package Module
    	
 
    	
High   Voltage Photo-Switch Package Module
    	
 
    	
6/28/11
    

 

PROVISIONAL PATENT APPLICATIONS:

 

	
Invention
   Disclosure
   Number
    	
 
    	
Provisional Patent
   Application No.
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing
   Date
    
	
IL-12348/IL-12349
    	
 
    	
61/429,681
    	
 
    	
{*****}
    	
 
    	
Yu-Jiuan   Chen
    	
 
    	
1/4/11
    
	
IL-12149B
    	
 
    	
61/549,603
    	
 
    	
{*****}
    	
 
    	
James   S. Sullivan, David M. Sanders, Steven A. Hawkins, Stephen E. Sampayan
    	
 
    	
10/20/11
    
	
IL-12537
    	
 
    	
61/566,986
    	
 
    	
{*****}
    	
 
    	
Yu-Jiuan   Chen
    	
 
    	
12/5/11
    

 

INVENTION DISCLOSURES

 

	
Invention
   Disclosure
   Number
    	
 
    	
Patent
   Application
   No.
    	
 
    	
Title
    	
 
    	
Inventors
    	
 
    	
Filing Date
    
	
IL-12091
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
John   R. Harris, David M. Sanders, Steven A. Hawkins, Marcelo Norona
    	
 
    	
TBD
    
	
IL-12149C
    	
 
    	
TBD
    	
 
    	
TBD
    	
 
    	
James   S. Sullivan, David M. Sanders, Steven A. Hawkins, Stephen E. Sampayan
    	
 
    	
TBD
    
	
IL-12511
    	
 
    	
TBD
    	
 
    	
{*****}
    	
 
    	
Gary   Guethlein
    	
 
    	
TBD
    

 

A-4

 

EXHIBIT B - RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS

 

B.1                             Rights Granted by TomoTherapy (Sublicense under Existing License)

 

B.1.1                   Subject to the limitations set forth in this Agreement, TomoTherapy hereby grants to CPAC an exclusive, nontransferable (other than in accordance with the terms and conditions contained herein), worldwide, royalty-bearing, license under its rights in the Underlying License (including, without limitation, the Patent Rights other than the DWA Patents included therein)  (a) to make, have made, use, Sell, have sold, offer for Sale, and import or export, subject to compliance with Article 25, LLNL Licensed Products and related Licensed Services in the Current Field of Use; and (b) to practice Licensed Methods (other than those that relate to the DWA Patents) in the Current Field of Use.

 

B.1.2                   “Current Field of Use” means the Particle and Radiotherapy Field of Use.

 

B.1.2.1                     To maintain exclusivity in the Current Field of Use, CPAC will have to submit a commercialization plan for each particle therapy application (e.g., carbon-12, heavy ion particle, etc.) even if the plan simply involves sublicensing, in accordance with the terms of TomoTherapy’s corresponding obligations under the Underlying License.

 

B.2                             Rights Granted by TomoTherapy (License under DWA IP).

 

B.2.1                   Subject to the limitations set forth in this Agreement, TomoTherapy hereby grants to CPAC a worldwide, exclusive, royalty-bearing license under the DWA Patents and the DWA Technology Rights owned or controlled by TomoTherapy in the Particle and Radiotherapy Field of Use, including (i) to make, have made, use, Sell, have sold, offer for Sale, and import or export, subject to compliance with Article 25, DWA Licensed Products and related Licensed Services in the Particle and Radiotherapy Field of Use; and (b) to practice Licensed Methods relating to the DWA Patents in the Particle and Radiotherapy Field of Use.

 

B.2.2                   Subject to the limitations set forth in this Agreement, TomoTherapy hereby grants to CPAC a worldwide, exclusive, royalty-bearing, to copy the Copyrighted DWA Works

 

B-1

 

owned or controlled by TomoTherapy and make derivative works based on such Copyrighted DWA Works in the Particle and Radiotherapy Field of Use.

 

B.2.3                   Subject to the limitations set forth in this Agreement, TomoTherapy hereby grants to CPAC a worldwide, exclusive, royalty-free license to use in the Particle and Radiotherapy Field of Use the DWA Trade Secrets owned or controlled by TomoTherapy.

 

B.2.4                   CPAC and TomoTherapy agree that, as it relates to their respective rights to jointly owned DWA IP, CPAC will pay royalties to TomoTherapy at the rates specified Paragraph C.2 of Exhibit C if CPAC sells any products or provides any services that use the jointly owned DWA IP.

 

B.3                             Rights Granted by CPAC (License under DWA IP and Photon Therapy Field).

 

B.3.1                   CPAC hereby grants to TomoTherapy a perpetual, worldwide, non-exclusive, royalty-bearing license under the DWA Patents, DWA Technology Rights, Copyrighted DWA Works, DWA Trade Secrets, or DWA IP owned or controlled by CPAC in the Particle and Radiotherapy Field of Use.  TomoTherapy agrees not to exercise this grant of license unless or until (i) CPAC becomes a debtor in a case under the United States Bankruptcy Code or makes an assignment for the benefit of creditors or a receiver is appointed for all or a substantial part of its assets; (ii) CPAC liquidates, dissolves or ceases doing business; or (iii) completely ceases all efforts to develop or commercialize any Licensed Products (it being understood that a temporary suspension of such efforts does not constitute a complete cessation of all such efforts). If CPAC decides to abandon prosecution or maintenance of any patent or patent application under the DWA Patents or DWA Technology Rights owned or controlled by CPAC, CPAC shall assign such patent or patent application to TomoTherapy prior to such abandonment, and TomoTherapy shall have the right to continue prosecution or maintenance of such application or patent, at its own expense.

 

B.3.2                   If CPAC owned or licensed DWA IP or other intellectual property acquired or developed by CPAC between August 4, 2009 and the date on which the Option Period ends, and would be useful for the treatment of tumors or lesions with photons (as reasonably determined by TomoTherapy), CPAC shall exclusively license to TomoTherapy such

 

B-2

 

DWA IP or other intellectual property for photon radiation therapy use on commercially reasonable terms if TomoTherapy does not otherwise already have the rights to such DWA IP or other intellectual property; provided, however, the obligation to exclusively license DWA IP or other intellectual property that is owned by a third party and licensed to CPAC shall only apply to the extent permitted under the license between CPAC and the party from whom CPAC obtained its rights to such licensed DWA IP or other intellectual property.  The exercise by TomoTherapy of its license rights under this Paragraph B.3.2 is subject to TomoTherapy and CPAC entering into a separate agreement that sets forth the commercially reasonable terms applicable to TomoTherapy’s use of such CPAC intellectual property for photon radiation therapy.

 

B.4                             Sublicensing Rights

 

Each of TomoTherapy and CPAC grants to the other the right to issue sublicenses of the rights granted to the other in Paragraph B.1., Paragraph B.2 and Paragraph B.3. above, as applicable, to Affiliates, Joint Ventures, and third parties (“sublicensees”) in the relevant fields of use, having rights no greater than those granted to the party that is granting such rights, provided that, at the time of sublicensing, CPAC retains exclusive rights in the relevant Field of Use for the Licensed Patents, Licensed Services, or Licensed Methods that are the subject of such sublicense; provided that, prior to expiration of the Option Period, CPAC may grant sublicenses under the rights granted to it in Paragraph B.1. and Paragraph B.2 only if (i) the rights sublicensed by CPAC are sublicensed solely on a non-exclusive basis; and (ii) such sublicenses are by their terms terminable by CPAC or its successor without liability to CPAC (or its successor) following the acquisition of CPAC by Accuray pursuant to the exercise of the Stock Option Acquisition or the Merger Acquisition Option (as each such term is defined in the Shareholder Agreement).  For the avoidance of doubt, Affiliates and Joint Ventures shall have no licenses under the Patent Rights unless such Affiliates and Joint Ventures are granted a sublicense.

 

B.5                             Rights Granted Pursuant to the Underlying License

 

Any current and future rights that are licensed to TomoTherapy pursuant to the Underlying License but not specifically sublicensed or granted elsewhere in this Agreement to CPAC are hereby granted to CPAC.

 

B-3

 

B.6                             Future Rights

 

B.6.1                   CPAC may make a written request to TomoTherapy to add some Category 2 Patents to this License, and TomoTherapy agrees to amend Exhibit A of this License accordingly provided that CPAC pays any additional fees if required, as provided in Paragraph 12.1.2 of this Agreement, and provided further that LLNS agrees to amend the Underlying License accordingly.

 

B.6.2                   CPAC may make a written request to TomoTherapy to add Category 3 Patents to this Agreement for no additional license fees, and TomoTherapy agrees to amend Exhibit A of this Agreement accordingly, provided that CPAC pays patenting costs in accordance with Article 12 of this License, and provided further that LLNS agrees to amend the Underlying License accordingly.  To the extent that copyrightable material maybe needed to successfully commercialize the Invention, such copyrights will be included in Exhibit A.

 

B.6.3                   At the conclusion of the CRADA, either through termination or six (6) months after completion, CPAC will have the opportunity to review all inventions generated during the course of the CRADA, to decide which inventions are needed to commercialize the Invention, and to seek amendment to Exhibit A to include such inventions, at which time all the future rights identified in this Paragraph B.6.3 would have been listed in Exhibit A, subject to LLNS’ agreement to amend the Underlying License accordingly.  Other Future Rights beyond those discussed herein must be negotiated in a separate Agreement.

 

B.5                             Performance Obligations

 

B.5.1                   CPAC will develop with TomoTherapy by the completion of the DWA subscale prototype, and in consultation with LLNS, a more detailed schedule (Exhibit D “SCHEDULE”) that provides dates for each of the following obligations.  To maintain exclusivity, specific dates must be mutually agreed to by TomoTherapy and CPAC and LLNS by when the DWA subscale prototype is completed (“DWA Subscale Completion”).  This Agreement must be amended with the SCHEDULE within sixty (60) days of the DWA Subscale Completion.  It is expected that the SCHEDULE will be updated at least once annually using a form provided in the SCHEDULE during the

 

B-4

 

course of the CRADA as new information is developed.  Both parties signing the updated SCHEDULE form will be considered an amendment to the SCHEDULE.

 

B.5.1.1                     A 2009 milestone that is related to the full-scale development of the DWA.

 

B.5.1.2                     The estimated time after the successful testing of the full-scale DWA when the first therapy system incorporating the DWA will be installed at a location to be determined by the Parties.

 

B.5.1.3                     The date when CPAC will submit the required Federal Drug Administration (“FDA”) notification/application.

 

B.5.1.4                     The date when CPAC will achieve First Commercial Acceptance, estimated to be one year after FDA approval.

 

B.5.1.5                     A mutually-agreed process to jointly amend the SCHEDULE.

 

B.5.2                   CPAC will hire or contract with the people it believes to be reasonably necessary to commercialize the DWA technology within sixty (60) days of the DWA Subscale Completion.

 

B.5.3                   CPAC will be subject to, and will perform, TomoTherapy’s obligations to locate the first prototype system at a facility in accordance with Paragraph B.5.3 of the Underlying License.

 

B.5.4                   CPAC will achieve cumulative commercial acceptances of Ten (10) units of proton therapy systems three years after First Commercial Acceptance, subject to Paragraph 5.6 below.

 

B.5.5                   CPAC will perform other performance obligations for applications beyond proton therapy based on CPAC’s commercialization plan pursuant to Paragraphs B.1.2.1.

 

B.5.6                   The sales requirements specified above shall be amended and/or extended if, and to the same extent that, LLNS amends and/or extends TomoTherapy’s obligations in the Underlying License.

 

B.5.7                   [Intentionally omitted].

 

B-5

 

B.5.8                   CPAC  will proceed commercially diligently to develop, file relevant regulatory applications for and attempt to obtain relevant regulatory commercialization approvals with respect to the manufacturing, marketing, and sale of Licensed Products.

 

B.5.9                   CPAC will submit a commercialization plan for applications beyond proton therapy, as provided in Paragraphs B.1.2.1 through B.1.2.3.

 

B-6

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

EXHIBIT C - FEES AND ROYALTIES

 

C.1                             Milestone Payments

 

C.1.1                   As partial consideration for this Agreement, CPAC will pay Milestone Payments for the Particle and Radiotherapy Field of Use based on the following schedule of events:

 

C.1.1.1               {*****} within thirty (30) days of the date on which the parties and LLNS all agree they have {*****}.

 

C.1.1.2               {{*****}, within thirty (30) days of the date on which the parties and LLNS all agree they have {*****}.

 

C.1.1.3               {*****}, within thirty (30) days of the date on which the parties and LLNS all agree they have {*****}.

 

C.1.2                   The Milestone Payments will not be credited against any other royalty or fee due from CPAC to TomoTherapy.

 

C.2                             Earned Royalties

 

C.2.1                   Earned Royalties on Licensed Products.  CPAC will pay TomoTherapy an earned royalty of:

 

C.2.1.1  Pass-through Earned Royalties to LNLL.  {*****} of LLNL Licensed Products in the {*****}.  If the royalty rate on Net Sales of Licensed Products owed to LLNL under the Underlying License is amended, than this subsequent amended royalty rate owed to LNLL will replace the 2% royalty under this Paragraph.  Payments of earned royalties will be in accordance with the requirements of Article 5 (FEES, ROYALTIES AND PAYMENTS) and Article 7 (PROGRESS AND ROYALTY REPORTS) of this Agreement.

 

C.2.1.2  Royalties to TomoTherapy.  {*****} of Licensed Products in the {*****}, with the exception that no royalties under this paragraph are owed for sales of Licensed

 

C-1

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

Products to TomoTherapy, Accuray their affiliates. Payments of earned royalties will be in accordance with the requirements of Article 5 (FEES, ROYALTIES AND PAYMENTS) and Article 7 (PROGRESS AND ROYALTY REPORTS) of this Agreement.

 

C.2.2                  Earned Royalties on Licensed Services.  In addition to the Milestone Payments, CPAC will pay TomoTherapy an earned royalty of:

 

C.2.2.1 Pass-through Earned Royalties to LNLL. {*****} of Licensed Services relating to the Licensed Patents other than DWA Patents in the {*****}.  If the royalty rate on Net Sales of Licensed Services owed to LLNL under the Underlying License is amended, than this subsequent amended royalty rate owed to LNLL will replace the {*****} royalty under this Paragraph.  Payments of earned royalties will be in accordance with the requirements of Article 5 (FEES, ROYALTIES AND PAYMENTS) and Article 7 (PROGRESS AND ROYALTY REPORTS) of this Agreement.  If CPAC has paid earned royalties on a sale of a Licensed Product pursuant to Paragraph C.2.1.1, TomoTherapy will not accrue an earned royalty for the use of the Licensed Product by the purchaser for such a transaction as a Licensed Service under this Paragraph.

 

C.2.2.2 Royalties to TomoTherapy.  {*****} of Licensed Services in the {*****}, with the exception that no royalties under this paragraph are owed for sales of Licensed Services to TomoTherapy, Accuray their affiliates. Payments of earned royalties will be in accordance with the requirements of Article 5 (FEES, ROYALTIES AND PAYMENTS) and Article 7 (PROGRESS AND ROYALTY REPORTS) of this Agreement. If CPAC has paid earned royalties on a sale of a Licensed Product pursuant to Paragraph C.2.1.2, TomoTherapy will not accrue an earned royalty for the use of the Licensed Product by the purchaser for such a transaction as a Licensed Service under this Paragraph.

 

C-2

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

C.2.3                   Provisions for Earned Royalty Re-Evaluation.

 

C.2.3.1                     Uncertainty of Clinical System Development Costs at UCDHS.  In the event that CPAC’s sole combined costs (outside of funds contributed by LLNL) to develop the full-scale DWA and the clinic system exceed {*****}, the Parties agree to re-evaluate the Earned Royalty Rate provided in Paragraph C.2.1 and amend it as mutually agreed to by the Parties.

 

C.2.3.2                     Uncertainty of Production Costs of Licensed Products.  In the event that the current earned royalties put the Licensed Products at a competitive disadvantage, the Parties agree to re-evaluate the Earned Royalty Rate provided in Paragraph C.2.1 and amend it as mutually agreed to by the Parties, taking into account the production costs, the commercial market of the DWA, and the likely price modifications necessary to make the Licensed Products more competitive in the marketplace.  Specifically, TomoTherapy agrees to reduce the Earned Royalty Rate to the same extent LLNL does.

 

C.2.4                   In the event that CPAC grants sublicenses, CPAC will pay to TomoTherapy earned royalties from such sublicensing in accordance with the terms and conditions in this Agreement.

 

C.3                             Minimum Annual Royalties

 

C.3.1                   Subject to the terms and conditions of this Agreement, CPAC will pay to TomoTherapy a minimum annual royalty according to the requirements of Article 5 and the schedule below.  The minimum annual royalty paid to TomoTherapy during a calendar year will be credited against the earned royalty due and owing for the calendar year in which the minimum payment was made.

 

C-3

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

	
Calendar year
    	
 
    	
Minimum annual royalty
    	
 
    	
Due date
    
	
2012
   (First Commercial Acceptance)
    	
 
    	
{*****}
    	
 
    	
February 28, 2012
    
	
2013
    	
 
    	
{*****}
    	
 
    	
February 28, 2013
    
	
2014
    	
 
    	
{*****}
    	
 
    	
February 28, 2014
    
	
2015
    	
 
    	
{*****}
    	
 
    	
February 28, 2015
    
	
2016
    	
 
    	
{*****}
    	
 
    	
February 28, 2016
    
	
2017
    	
 
    	
{*****}
    	
 
    	
February 28, 2017 and every February 28 thereafter for the   life of this Agreement
    

 

C.3.2                   The dates for First Commercial Acceptance and beyond, and the corresponding minimum annual royalties starting with {*****}, may be modified pursuant to Exhibit E (SCHEDULE).  If the First Commercial Acceptance is modified to a later year, then the minimum annual royalty for the original year that had the First Commercial Acceptance would be {*****} more than that of the year immediately preceding the original year that had the First Commercial Acceptance.  For example, if the First Commercial Acceptance has been modified to 2013, then the {*****} minimum annual royalty would start in 2013, and 2012 will have a minimum annual royalty of {*****} more than the 2011 minimum annual royalty).

 

C.4                             Royalties Payable by TomoTherapy for CPAC Licensed Products.

 

C.4.1                   TomoTherapy shall pay CPAC an earned royalty of {*****} of CPAC Licensed Products (as defined below) in the Particle and Radiotherapy Field of Use.  Payments of earned royalties will be in accordance with the requirements of Article 5 (FEES, ROYALTIES AND PAYMENTS) and Article 7 (PROGRESS AND ROYALTY REPORTS) of this Agreement except that TomoTherapy will be paying the royalties with respect to CPAC Licensed Products and providing the related royalty reports to CPAC instead of CPAC

 

C-4

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.

 

paying royalties with respect to Licensed Products to TomoTherapy and providing related royalty reports to TomoTherapy.  For the purposes of this Paragraph C.4.1, (i) the definition of {*****}shall be deemed to refer to “CPAC Licensed Products” rather than “Licensed Products” and to refer to TomoTherapy rather than CPAC; and (ii) “CPAC Licensed Product” means all kits, compositions of matter, materials, articles of manufacture, and products the manufacture, use, Sale, offer for Sale, or import of which, but for the licenses granted by CPAC in Paragraph B.3.1 of this Exhibit B, would infringe, or contribute to or induce the infringement of any DWA Patents, DWA Technology Rights, Copyrighted DWA Works, DWA Trade Secrets or other DWA IP owned or controlled by CPAC or would require the performance of the Licensed Method that involves use of any DWA Patent or other DWA IP owned or controlled by CPAC.

 

C-5

 

EXHIBIT D - SCHEDULE

 

Pursuant to Paragraph B.5.1 of Exhibit B (RIGHTS GRANTED AND PERFORMANCE OBLIGATIONS), CPAC will develop with LLNL a more detailed schedule (“SCHEDULE”) that provides for Performance Obligations.

 

D.1                             Amendment Process (Reference B.5.1.5)

 

D.1.1                   Periodic reviews of the development of both the DWA and the proton therapy system will be conducted by Parties and LLNS.

 

D.1.2                  The Parties and LLNS will review and update this schedule during the course of the CRADA at least once annually by September 30 and amend this Agreement accordingly.

 

D.1.3                   By the termination or completion of the CRADA, dates must be furnished, mutually agreed to by the Parties and LLNS, and entered into this License Schedule.

 

D-1Exhibit 10.2

 

SUSSER PETROLEUM PARTNERS LP

 

2012 LONG TERM INCENTIVE PLAN

 

Section 1.                                         Purpose of the Plan.  The Susser Petroleum Partners LP 2012 Long-Term Incentive Plan (the “Plan”) has been adopted on August 31, 2012 (the “Effective Date”) by Susser Petroleum Partners GP LLC, a Delaware  limited liability company, the general partner (“General Partner”) of Susser Petroleum Partners LP, a Delaware limited partnership (the “Partnership”).  The Plan is intended to promote the interests of the General Partner, the Partnership and their Affiliates by providing to Employees, Consultants and Directors incentive compensation awards to encourage superior performance.  The Plan is also contemplated to enhance the ability of the General Partner, the Partnership and their Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership and to encourage them to devote their best efforts to advancing the business of the Partnership.

 

Section 2.                                          Definitions.  As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)                                 “409A Award” means an Award that constitutes a “deferral of compensation” within the meaning of the 409A Regulations, whether by design, due to a subsequent modification in the terms and conditions of such Award or as a result of a change in applicable law following the date of grant of such Award, and that is not exempt from Section 409A of the Code pursuant to an applicable exemption.

 

(b)                                 “409A Regulations” means the applicable Treasury regulations and other interpretive guidance promulgated pursuant to Section 409A of the Code.

 

(c)                                  “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

(d)                                 “Award” means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, Unit Award, Substitute Award, Other Unit Based Award or Cash Award granted under the Plan or Performance Awards and includes, as appropriate, any tandem DERs granted with respect to an Award (other than a Restricted Unit or Unit Award).

 

(e)                                  “Award Agreement” means the written or electronic agreement by which an Award shall be evidenced.

 

(f)                                   “Board” means the Board of Directors of the General Partner.

 

(g)                                  “Cash Award” means an award denominated in cash.

 

 

(h)                                 “Change of Control” means, and shall be deemed to have occurred upon one or more of the following events:

 

(i)                                     any “person” or “group” within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than members of the General Partner, the Partnership, or an Affiliate of either the General Partner or the Partnership, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the voting power of the voting securities of the General Partner or the Partnership;

 

(ii)                                  the limited partners of the General Partner or the Partnership approve, in one transaction or a series of transactions, a plan of complete liquidation of the General Partner or the Partnership;

 

(iii)                               the sale or other disposition by either the General Partner or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than an Affiliate;

 

(iv)                              the General Partner or an Affiliate of the General Partner or the Partnership ceases to be the general partner of the Partnership;

 

(v)                                 any other event specified as a “Change of Control” in the equity incentive plan maintained by Susser Holdings Corporation at the time of such “Change of Control”;

 

(vi)                              any other event specified as a “Change of Control” in an applicable Award Agreement.

 

Notwithstanding the above, with respect to a 409A Award, a “Change of Control” shall not occur unless that Change of Control also constitutes a “change in the ownership of a corporation,” a “change in the effective control of a corporation,” or a “change in the ownership of a substantial portion of a corporation’s assets,” in each case, within the meaning of 1.409A-3(i)(5) of the 409A Regulations, as applied to non-corporate entities.

 

(i)                                     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

(j)                                    “Committee” means the Board or such committee as may be appointed by the Board to administer the Plan, which alternative committee may be the board of directors or managers of any Affiliate or a committee therefore.

 

(k)                                 “Consultant” means an individual who renders consulting or advisory services to the General Partner, the Partnership or an Affiliate of either.

 

(l)                                     “Director” means a member of the Board or the board of directors of an Affiliate of the General Partner who is not an Employee or a Consultant (other than in that individual’s capacity as a Director).

 

(m)                             “Distribution Equivalent Right” or “DER” means a contingent right, granted alone or in tandem with a specific Award (other than a Restricted Unit or Unit Award), to receive with respect to each Unit subject to the Award an amount in cash, Units and/or Phantom Units, as determined by the Committee in its sole discretion, equal in value to the distributions made by the Partnership with respect to a Unit during the period such Award is outstanding.

 

2

 

(n)                                 “Effective Date” has the meaning set forth in Section 1.

 

(o)                                 “Employee” means an employee of the General Partner or an Affiliate of the General Partner.

 

(p)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(q)                                 “Fair Market Value” means, on any relevant date, the closing sales price of a Unit on the principal national securities exchange or other market in which trading in Units occurs on the last market trading day prior to the applicable day (or, if there is no trading in the Units on such date, on the next preceding day on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee).  If Units are not traded on a national securities exchange or other market at the time a determination of Fair Market Value is required to be made hereunder, the determination of Fair Market Value shall be made by the Committee in good faith using a “reasonable application of a reasonable valuation method” within the meaning of the 409A Regulations (specifically, Section 1.409A-l(b)(5)(iv)(B) of the 409A Regulations).

 

(r)                                    “General Partner” has the meaning set forth in Section 1.

 

(s)                                   “Option” means an option to purchase Units granted under the Plan.

 

(t)                                    “Other Unit Based Award” means an Award granted to an Employee, Director or Consultant pursuant to Section 6(f).

 

(u)                                 “Participant” means an Employee, Consultant or Director granted an Award under the Plan.

 

(v)                                 “Partnership” has the meaning set forth in Section 1.

 

(w)                               “Performance Award” means a right granted to an Employee, Director or Consultant pursuant to Section 6(i), to receive an Award based upon performance criteria specified by the Committee.

 

(x)                                 “Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, governmental agency or political subdivision thereof or other entity.

 

(y)                                 “Phantom Unit” means a notional Unit granted under the Plan which upon vesting entitles the Participant to receive, at the time of settlement, a Unit or an amount of cash equal to the Fair Market Value of a Unit, as determined by the Committee in its sole discretion.

 

(z)                                  “Plan” has the meaning set forth in Section 1.

 

(aa)                          “Qualified Member” means a member of the Committee who is a “nonemployee director” within the meaning of Rule 16b-3(b)(3).

 

(bb)                          “Restricted Period” means the period established by the Committee with respect to an Award during which the Award remains subject to forfeiture and is either not exercisable by or payable to the Participant, as the case may be.

 

3

 

(cc)                            “Restricted Unit” means a Unit granted under the Plan that is subject to a Restricted Period.

 

(dd)                          “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act or any successor rule or regulation thereto as in effect from time to time.

 

(ee)                            “SEC” means the Securities and Exchange Commission, or any successor thereto.

 

(ff)                              “Substitute Award” means an award granted pursuant to Section 6(h) of the Plan.

 

(gg)                            “Unit Distribution Right” or “UDR” means a distribution made by the Partnership with respect to a Restricted Unit.

 

(hh)                          “Unit” means a common unit of the Partnership.

 

(ii)                                  “Unit Appreciation Right” means a contingent right granted under the Plan that entitles the holder to receive, in cash or Units, as determined by the Committee in its sole discretion, an amount equal to the excess of the Fair Market Value of a Unit on the exercise date of the Unit Appreciation Right (or another specified date) over the exercise price of the Unit Appreciation Right.

 

(jj)                                “Unit Award” means a grant of a Unit that is not subject to a Restricted Period.

 

Section 3.                                          Administration.

 

(a)                                 Authority of the Committee.  The Plan shall be administered by the Committee.  A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee.  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of any Award, consistent with the terms of the Plan, which terms may include any provision regarding the acceleration of vesting or waiver of forfeiture restrictions or any other condition or limitation regarding an Award, based on such factors as the Committee shall determine, in its sole discretion; (v) determine whether, to what extent, and under what circumstances Awards may be vested, settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.  The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or an Award Agreement in such manner and to such extent as the Committee deems necessary or appropriate. The determinations of the Committee on the matters referred to in this Section 3(a) shall be final and conclusive.

 

(b)                                 Manner and Exercise of Committee Authority.  At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Partnership may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a

 

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Qualified Member abstaining or recusing himself or herself from such action; provided, however, that upon such abstention or recusal the Committee remains composed solely of two or more Qualified Members.  Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for all purposes of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including, without limitation, the General Partner, the Partnership, any Affiliate, any Participant, and any beneficiary of a Participant.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting the power or authority of the Committee. Subject to the Plan and any applicable law, the Committee, in its sole discretion, may delegate any or all of its powers and duties under the Plan, including the power to grant Awards under the Plan, to the Chief Executive Officer of the General Partner, subject to such limitations on such delegated powers and duties as the Committee may impose, if any, and provided that the Committee may not delegate its duties where such delegation would violate state corporate law, or with respect to making Awards to, or otherwise with respect to Awards granted to, Participants who are subject to Section 16(b) of the Exchange Act. Upon any such delegation, all references in the Plan to the “Committee,” other than in Section 7, shall be deemed to include the Chief Executive Officer.  Any such delegation shall not limit the Chief Executive Officer’s right to receive Awards under the Plan; provided, however, the Chief Executive Officer may not grant Awards to himself, a Director or any executive officer of the General Partner or an Affiliate, or take any action with respect to any Award previously granted to himself, an individual who is an executive officer or a Director. Under no circumstances shall any such delegation result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Partnership.

 

(c)                                  Limitation of Liability.  The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the General Partner, the Partnership or their Affiliates, the General Partner’s or the Partnership’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan.  Members of the Committee and any officer or employee of the General Partner, the Partnership or any of their Affiliates acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the General Partner with respect to any such action or determination.

 

(d)                                 Exemptions from Section 16(b) Liability. It is the intent of the General Partner that the grant of any Awards to, or other transaction by, a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 or another applicable exemption (except for transactions acknowledged by the Participant in writing to be non-exempt). Accordingly, if any provision of the Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 or such other exemption as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b) of the Exchange Act.

 

Section 4.                                          Units.

 

(a)                                 Limits on Units Deliverable.  Subject to adjustment as provided in Section 4(c) and Section 7, the number of Units that may be delivered with respect to Awards under the Plan is 1,092,500;

 

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provided, however, that on January 1 of each calendar year occurring after the Effective Date and prior to the expiration of the Plan, the total number of Units reserved and available for issuance under this Plan shall increase by 500,000 Units if, and only if, the Company completed a sale or any other disposition of Units during the previous calendar year, including, but not limited to, (i) an issuance of Units as consideration for an asset purchase or a merger, (ii) a public offering of Units (other than the Company’s initial public offering completed in 2012), (iii) an offering of Units under Rule 144A or Regulation D of the Securities Act of 1933, as amended, or (iv) any other offering of Units in a private placement, in each case, to any unaffiliated, non-employee, third party.  Units withheld from an Award or surrendered by a Participant to satisfy the Partnership’s or an Affiliate’s tax withholding obligations (including the withholding of Units with respect to Restricted Units) or to satisfy the payment of any exercise price with respect to the Award shall not be considered to be Units delivered under the Plan for this purpose.  If any Award is forfeited, cancelled, exercised, settled in cash, or otherwise terminates or expires without the actual delivery of Units pursuant to such Award (the grant of Restricted Units is not a delivery of Units for this purpose), the Units subject to such Award shall again be available for Awards under the Plan (including Units not delivered in connection with the exercise of an Option or Unit Appreciation Right).   There shall not be any limitation on the number of Awards that may be granted and paid in cash.

 

(b)                                 Sources of Units Deliverable Under Awards.  Any Units delivered pursuant to an Award shall consist, in whole or in part, of Units acquired in the open market, from any Affiliate, the Partnership or any other Person, or any combination of the foregoing, as determined by the Committee in its discretion.

 

(c)                                  Anti-dilution Adjustments.  Notwithstanding anything contained in Section 7, with respect to any “equity restructuring” event that could result in an additional compensation expense to the General Partner or the Partnership pursuant to the provisions of FASB Accounting Standards Codification, Topic 718 if adjustments to Awards with respect to such event were discretionary, the Committee shall equitably adjust the number and type of Units covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria (if any), of such Award to equitably reflect such restructuring event and shall adjust the number and type of Units (or other securities or property) with respect to which Awards may be granted after such event.  With respect to any other similar event that would not result in an accounting charge under FASB Accounting Standards Codification, Topic 718 if the adjustment to Awards with respect to such event were subject to discretionary action, the Committee shall have complete discretion to adjust Awards in such manner as it deems appropriate with respect to such other event.  In the event the Committee makes any adjustment pursuant to the foregoing provisions of this Section 4(c), the Committee shall make a corresponding and proportionate adjustment with respect to the maximum number of Units that may be delivered with respect to Awards under the Plan as provided in Section 4(a) and the kind of Units or other securities available for grant under the Plan.

 

(d)                                 Additional Issuances.  Except as hereinbefore expressly provided, the issuance by the General Partner or the Partnership of Units for cash, property, labor or services, upon direct sale, or upon the conversion of Units or obligations of the General Partner or the Partnership convertible into such Units, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Units subject to Awards theretofore granted pursuant to the Plan.

 

Section 5.                                          Eligibility.  Any Employee, Consultant or Director shall be eligible to be designated a Participant and receive an Award under the Plan.  If the Units issuable pursuant to an Award are intended to be registered with the SEC on Form S-8, then only Employees, Consultants, and Directors

 

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of the Partnership or a parent or subsidiary of the Partnership (within the meaning of General Instruction A.1(a) to Form S-8) will be eligible to receive such an Award.

 

Section 6.                                          Awards.

 

(a)                                 General.  Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 7(a)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant, or termination of the Participant’s service relationship with the General Partner, the Partnership, or their Affiliates, and terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan; provided, however, that the Committee shall not have any discretion to accelerate the terms of payment of any Award that provides for a deferral of compensation under Section 409A the Code and the 409A Regulations if such acceleration would subject a Participant to additional taxes under Section 409A the Code and the 409A Regulations.

 

(b)                                 Options.  The Committee may grant Options that are intended to comply with Section 1.409A-l(b)(5)(i)(A) of the 409A Regulations only to Employees, Consultants or Directors performing services on the date of grant for the Partnership or a corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has a “controlling interest” in another corporation or entity in the chain, starting with the Partnership and ending with the corporation or other entity for which the Employee, Consultant or Director performs services.  For purposes of this Section 6(b), “controlling interest” means (i) in the case of a corporation, ownership of stock possessing at least 50% of total combined voting power of all classes of stock of such corporation entitled to vote or at least 50% of the total value of shares of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at least 50% of the profits interest or capital interest of such partnership; (iii) in the case of a sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of a trust or estate, ownership of an actuarial interest (as defined in Section 1.414(c)-2(b)(2)(ii) of the 409A Regulations) of at least 50% of such trust or estate.  The Committee may grant Options that are otherwise exempt from or compliant with Section 409A of the Code to any eligible Employee, Consultant or Director.  The Committee shall have the authority to determine the number of Units to be covered by each Option, the purchase price therefore and the Restricted Period and other conditions and limitations applicable to the exercise of the Option, including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the Plan.

 

(i)                                     Exercise Price.  The exercise price per Unit purchasable under an Option that does not provide for the deferral of compensation under the 409A Regulations shall be determined by the Committee at the time the Option is granted but, except with respect to Substitute Awards, may not be less than the Fair Market Value of a Unit as of the date of grant of the Option.  For purposes of this Section 6(b)(i), the Fair Market Value of a Unit shall be determined as of the date of grant.  The exercise price per Unit purchasable under an Option that does not provide for the deferral of compensation by reason of satisfying the short-term deferral rule set forth in the 409A Regulations or that is compliant with Section 409A of the Code shall be determined by the Committee at the time the Option is granted.

 

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(ii)                                  Time and Method of Exercise.  The Committee shall determine the exercise terms and the Restricted Period with respect to an Option grant, which may include, without limitation, a provision for accelerated vesting upon the achievement of specified performance goals or other events, and the method or methods by which payment of the exercise price with respect thereto may be made or deemed to have been made, which may include, without limitation, cash, check acceptable to the General Partner, withholding Units from an Award, a “cashless-broker” exercise through procedures approved by the General Partner, or any combination of the above methods, having a Fair Market Value on the exercise date equal to the relevant exercise price.

 

(iii)                               Forfeitures.  Except as otherwise provided in the terms of the Award Agreement, upon termination of a Participant’s employment or service to the General Partner and its Affiliates or membership on the Board or the board of directors of an Affiliate, whichever is applicable, for any reason during the applicable Restricted Period, all unvested Options shall be forfeited by the Participant.  The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Options; provided that the waiver contemplated under this Section 6(b)(iii) shall be effective only to the extent that such waiver will not cause the Participant’s Options that are designed to satisfy Section 409A of the Code to fail to satisfy such Section.

 

(c)                                  Unit Appreciation Rights.  The Committee may grant Unit Appreciation Rights that are intended to comply with Section 1.409A-l(b)(5)(i)(B) of the 409A Regulations only to Employees, Consultants or Directors performing services on the date of grant for the Partnership or a corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has a “controlling interest” in another corporation or entity in the chain, starting with the Partnership and ending with the corporation or other entity for which the Employee, Consultant or Director performs services.  For purposes of this Section 6(c), “controlling interest” means (i) in the case of a corporation, ownership of stock possessing at least 50% of total combined voting power of all classes of stock of such corporation entitled to vote or at least 50% of the total value of shares of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at least 50% of the profits interest or capital interest of such partnership; (iii) in the case of a sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of a trust or estate, ownership of an actuarial interest (as defined in Section 1.414(c)-2(b)(2)(ii) of the 409A Regulations) of at least 50% of such trust or estate.  The Committee may grant Unit Appreciation Rights that are otherwise exempt from or compliant with Section 409A of the Code to any eligible Employee, Consultant or Director.  The Committee shall have the authority to determine the Employees, Consultants and Directors to whom Unit Appreciation Rights shall be granted, the number of Units to be covered by each grant, whether Units or cash shall be delivered upon exercise, the exercise price therefor and the conditions and limitations applicable to the exercise of the Unit Appreciation Rights, including the following terms and conditions and such additional terms and conditions as the Committee shall determine, that are not inconsistent with the provisions of the Plan.

 

(i)                                     Exercise Price.  The exercise price per Unit Appreciation Right that does not provide for the deferral of compensation under the 409A Regulations shall be determined by the Committee at the time the Unit Appreciation Right is granted but, except with respect to Substitute Awards, may not be less than the Fair Market Value of a Unit as of the date of grant of the Unit Appreciation Right.  For purposes of this Section 6(c)(i), the Fair Market Value of a Unit shall be determined as of the date of grant.  The exercise price per Unit Appreciation Right that does not provide for the deferral of compensation by reason of satisfying the short-term deferral

 

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rule set forth in the 409A Regulations or that is compliant with Section 409A of the Code shall be determined by the Committee at the time the Unit Appreciation Right is granted.

 

(ii)                                  Time of Exercise.  The Committee shall determine the Restricted Period and the time or times at which a Unit Appreciation Right may be exercised in whole or in part, which may include, without limitation, accelerated vesting upon the achievement of specified performance goals or other events.

 

(iii)                               Forfeitures.  Except as otherwise provided in the terms of the Award Agreement, upon termination of a Participant’s employment with or service to the General Partner, the Partnership and their Affiliates or membership on the Board or the board of directors of an Affiliate, whichever is applicable, for any reason during the applicable Restricted Period, all outstanding Unit Appreciation Rights awarded to the Participant shall be automatically forfeited on such termination.  The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Unit Appreciation Rights.

 

(d)                                 Restricted Units and Phantom Units.  The Committee shall have the authority to determine the Employees, Consultants and Directors to whom Restricted Units or Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted to each such Participant, the Restricted Period, the conditions under which the Restricted Units or Phantom Units may become vested or forfeited and such other terms and conditions as the Committee may establish with respect to such Awards.

 

(i)                                     UDRs.  To the extent provided by the Committee, in its discretion, a grant of Restricted Units may provide that the distributions made by the Partnership with respect to the Restricted Units shall be subject to the same forfeiture and other restrictions as the Restricted Unit and, if restricted, such distributions shall be held, without interest, until the Restricted Unit vests or is forfeited with the UDR being paid or forfeited at the same time, as the case may be.  In addition, the Committee may provide that such distributions be used to acquire additional Restricted Units for the Participant. Such additional Restricted Units may be subject to such vesting and other terms as the Committee may prescribe. Absent such a restriction on the UDRs in the Award Agreement, UDRs shall be paid to the holder of the Restricted Unit without restriction at the same time as cash distributions are paid by the Partnership to its unitholders.  Notwithstanding the foregoing, UDRs shall only be paid in a manner that is either exempt from or in compliance with Section 409A of the Code.

 

(ii)                                  Forfeitures.  Except as otherwise provided in the terms of the applicable Award Agreement, upon termination of a Participant’s employment with or services to the General Partner and its Affiliates or membership on the Board or the board of directors of an Affiliate, whichever is applicable, for any reason during the applicable Restricted Period, all outstanding, unvested Restricted Units and Phantom Units awarded to the Participant shall be automatically forfeited on such termination.  The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Restricted Units and/or Phantom Units; provided that the waiver contemplated under this Section 6(d)(ii) shall be effective only to the extent that such waiver will not cause the Participant’s Restricted Units and/or Phantom Units that are designed to satisfy Section 409A of the Code to fail to satisfy such Section.

 

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(iii)                               Lapse of Restrictions.

 

(A)                               Phantom Units.  No later than the 15th calendar day following the vesting of each Phantom Unit, subject to the provisions of Section 8(b), the Participant shall be entitled to settlement of such Phantom Unit and shall receive one Unit or an amount in cash equal to the Fair Market Value of a Unit (for purposes of this Section 6(f)(iii), as calculated on the last day of the Restricted Period), as determined by the Committee in its discretion.

 

(B)                               Restricted Units.  Upon the vesting of each Restricted Unit, subject to satisfying the tax withholding obligations of Section 8(b), the Participant shall be entitled to have the restrictions removed from his or her Award so that the Participant then holds an unrestricted Unit.

 

(e)                                  Unit Awards.  The Committee shall have the authority to grant a Unit Award under the Plan to any Employee, Consultant or Director in a number determined by the Committee in its discretion, as a bonus or additional compensation or in lieu of cash compensation the individual is otherwise entitled to receive, in such amounts as the Committee determines to be appropriate.

 

(f)                                   Other Unit Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Units, as deemed by the Committee to be consistent with the purposes of this Plan, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Units, purchase rights for Units, Awards with value and payment contingent upon performance of the Partnership or any other factors designated by the Committee, and Awards valued by reference to the book value of Units or the value of securities of or the performance of specified Affiliates of the General Partner or the Partnership.  The Committee shall determine the terms and conditions of such Awards.  Units delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(f) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Units, other Awards, or other property, as the Committee shall determine.  Cash awards, as an element of or supplement to, or independent of any other Award under this Plan, may also be granted pursuant to this Section 6(f).

 

(g)                                  DERs.  To the extent provided by the Committee, in its discretion, an Award (other than a Restricted Unit or Unit Award) may include a tandem DER grant, which may provide that such DERs shall be paid directly to the Participant, be reinvested into additional Awards, be credited to a bookkeeping account (with or without interest in the discretion of the Committee) subject to the same vesting restrictions as the tandem Award, or be subject to such other provisions or restrictions as determined by the Committee in its discretion.  Absent a contrary provision in the Award Agreement, DERs shall be paid to the Participant without restriction at the same time as ordinary cash distributions are paid by the Partnership to its unitholders.  Notwithstanding the foregoing, DERs shall only be paid in a manner that is either exempt from or in compliance with Section 409A of the Code.

 

(h)                                 Substitute Awards.  Awards may be granted under the Plan in substitution for similar awards held by individuals who become Employees, Consultants or Directors as a result of a merger, consolidation or acquisition by the Partnership or an Affiliate of another entity or the assets of another entity.  Such Substitute Awards that are Options or Unit Appreciation Rights may have exercise prices less than the Fair Market Value of a Unit on the date of the substitution if such substitution complies with Section 409A of the Code and the 409A Regulations and other applicable laws and exchange rules.

 

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(i)                                     Performance Awards.  The right of a Participant to receive a grant, and the right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee.  The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions.

 

(i)                                     Performance Goals Generally.  The performance goals for such Performance Awards shall consist of one or more business criteria or individual performance criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 6(i).  The Committee may determine that such Performance Awards shall be granted, exercised, and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards.  The Committee shall establish any such performance conditions and goals based on one or more business criteria for the General Partner and/or the Partnership, on a consolidated basis, and/or for specified Affiliates or business or geographical units of the Partnership, as determined by the Committee in its discretion.  Any of the performance goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee.  Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.

 

(ii)                                  Performance Periods.  Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to ten years, as specified by the Committee.  Performance goals shall be established by the Committtee not later than 90 days after the beginning of any performance period applicable to such Performance Awards.

 

(iii)                               Settlement.  At the end of each performance period, the Committee shall determine the amount, if any, of the amount of the potential Performance Award otherwise payable to each Participant and such amount shall be paid to the Participant no later than March 15 of the year following the year that included the last day of the performance period.  Settlement of such Performance Awards shall be in cash, Units, other Awards or other property, in the discretion of the Committee.  The Committee may, in its discretion, reduce or increase the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant prior to the end of a performance period or settlement of Performance Awards.

 

(j)                                    Certain Provisions Applicable to Awards.

 

(i)                                     Stand-Alone, Additional, Tandem and Substitute Awards.  Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Partnership or any Affiliate.  Awards granted in addition to, in substitution for, or in tandem with other Awards or awards granted under any other plan of the Partnership or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. If an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award. Awards under the Plan may be granted in lieu of cash compensation, including in lieu of cash

 

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amounts payable under other plans of the General Partner, the Partnership, or any Affiliate, in which the value of Units subject to the Award is equivalent in value to the cash compensation, or in which the exercise price, grant price, or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Units minus the value of the cash compensation surrendered. Awards granted pursuant to the preceding sentence shall be designed, awarded and settled in a manner that does not result in additional taxes under Section 409A the Code and the 409A Regulations.

 

(ii)                                  Limits on Transfer of Awards.

 

(A)                               Except as provided in Section 6(j)(ii)(C) below, each Option and Unit Appreciation Right shall be exercisable only by the Participant during the Participant’s lifetime, or by the Person to whom the Participant’s rights shall pass by will or the laws of descent and distribution.

 

(B)                               Except as provided in Section 6(j)(ii)(C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the General Partner, the Partnership or any Affiliate.

 

(C)                               To the extent specifically provided by the Committee with respect to an Option or Unit Appreciation Right, an Option or Unit Appreciation Right may be transferred by a Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and conditions as the Committee may from time to time establish.

 

(iii)                               Term of Awards.  The term of each Award shall be for such period as may be determined by the Committee.

 

(iv)                              Form and Timing of Payment under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award agreement, payments to be made by the General Partner, the Partnership, or any Affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including without limitation cash, Units, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis; provided, however, that any such deferred payment will be set forth in the agreement evidencing such Award and/or otherwise made in a manner that will not result in additional taxes under Section 409A the Code and the 409A Regulations.  Except as otherwise provided herein, the settlement of any Award may be accelerated, and cash paid in lieu of Units in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (in addition to a Change of Control).  Installment or deferred payments may be required by the Committee (subject to Section 7(a) of the Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions established by the Committee and in compliance with Section 409A the Code and the 409A Regulations.  Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of DERs or other amounts in respect of installment or deferred payments denominated in Units.  This

 

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Plan shall not constitute an “employee benefit plan” for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

 

(v)                                 Issuance of Units.  The Units or other securities of the Partnership delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the Committee in its sole discretion, including, but not limited to, in the form of a certificate issued in the name of the Participant or by book entry, electronic or otherwise and shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Units or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be inscribed on any such certificates to make appropriate reference to such restrictions.

 

(vi)                              Consideration for Grants.  Awards may be granted for such consideration, including services, as the Committee shall determine.

 

(vii)                           Exemptions from Section 16(b) Liability.  It is the intent of the General Partner that the grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act shall be exempt from such Section pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant).  Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b) of the Exchange Act.

 

(viii)                        Delivery of Units or other Securities and Payment by Participant of Consideration.  Notwithstanding anything in the Plan or any Award Agreement to the contrary, delivery of Units pursuant to the exercise, vesting and/or settlement of an Award may be deferred for any period during which, in the good faith determination of the Committee, the General Partner is not reasonably able to obtain Units to deliver pursuant to such Award without violating applicable law or the applicable rules or regulations of any governmental agency or authority or securities exchange.  No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including, without limitation, any exercise price or tax withholding) is received by the General Partner.

 

(ix)                              Additional Agreements.  Each Employee, Consultant or Director to whom an Award is granted under this Plan may be required to agree in writing, as a condition to the grant of such Award or otherwise, to subject an Award that is exercised or settled following such Person’s termination of services with the General Partner, the Partnership or their Affiliates to a general release of claims and/or a noncompetition agreement in favor of the General Partner, the Partnership, and their Affiliates, with the terms and conditions of such agreement(s) to be determined in good faith by the Committee.

 

(x)                                 Termination of Employment.  Except as provided herein, the treatment of an Award upon a termination of employment or any other service relationship by and between a Participant and the General Partner, the Partnership, or any Affiliate shall be specified in the Award Agreement controlling such Award.

 

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Section 7.                                          Amendment and Termination.  Except to the extent prohibited by applicable law:

 

(a)                                 Amendments to the Plan and Awards.  Except as required by applicable law or the rules of the principal securities exchange, if any, on which the Units are traded, the Board or the Committee may amend, alter, suspend, discontinue, or terminate the Plan in any manner, including increasing the number of Units available for Awards under the Plan, without the consent of any partner, Participant, other holder or beneficiary of an Award, or any other Person.  Notwithstanding the foregoing, the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided that no change, other than pursuant to Section 7(b), 7(c), 7(d), 7(e), or 7(g) below, in any Award shall materially reduce the rights or benefits of a Participant with respect to an Award without the consent of such Participant.

 

(b)                                 Subdivision or Consolidation of Units.  The terms of an Award and the number of Units authorized pursuant to Section 4 for issuance under the Plan shall be subject to adjustment from time to time, in accordance with the following provisions:

 

(i)                                     If at any time, or from time to time, the Partnership shall subdivide as a whole (by reclassification, by a Unit split, by the issuance of a distribution on Units payable in Units, or otherwise) or in the event the Partnership distributes an extraordinary cash dividend the number of Units then outstanding into a greater number of Units, then, as appropriate, (A) the maximum number of Units available for the Plan or in connection with Awards as provided in Sections 4 shall be increased proportionately, and the kind of other securities available for the Plan shall be appropriately adjusted, (B) the number of Units (or other kind of securities) that may be acquired under any then outstanding Award shall be increased proportionately, and (C) the price (including the exercise price) for each Unit (or other kind of securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

 

(ii)                                  If at any time, or from time to time, the Partnership shall consolidate as a whole (by reclassification, by reverse Unit split, or otherwise) the number of Units then outstanding into a lesser number of Units, (A) the maximum number of Units for the Plan or available in connection with Awards as provided in Sections 4 shall be decreased proportionately, and the kind of other securities available for the Plan shall be appropriately adjusted, (B) the number of Units (or other kind of securities) that may be acquired under any then outstanding Award shall be decreased proportionately, and (C) the price (including the exercise price) for each Unit (or other kind of securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

 

(iii)                               Whenever the number of Units subject to outstanding Awards and the price for each Unit subject to outstanding Awards are required to be adjusted as provided in this Section 7(b), the Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of Units, other securities, cash, or property purchasable subject to each Award after giving effect to the adjustments.  The Committee shall promptly provide each affected Participant with such notice.

 

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(iv)                              Adjustments under Sections 7(b)(i) and (ii) shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive.  No fractional interest shall be issued under the Plan on account of any such adjustments.

 

(c)                                  Recapitalizations.  If the Partnership recapitalizes, reclassifies its equity securities, or otherwise changes its capital structure (a “recapitalization”) without a Change of Control, the number and class of Units covered by an Award theretofore granted shall be adjusted so that such Award shall thereafter cover the number and class of Units and securities to which the holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the holder had been the holder of record of the number of Units then covered by such Award and the Unit limitations provided in Section 4 shall be adjusted in a manner consistent with the recapitalization.

 

(d)                                 Additional Issuances.  Except as expressly provided herein, the issuance by the Partnership of units of any class or securities convertible into units of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of units or obligations of the Partnership convertible into such units or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Units subject to Awards theretofore granted or the purchase price per Unit, if applicable.

 

(e)                                  Change of Control.  Notwithstanding any other provisions of the Plan or any Award Agreement to the contrary, upon a Change of Control the Committee, acting in its sole discretion without the consent or approval of any holder, may affect one or more of the following alternatives, which may vary among individual holders and which may vary among Awards: (i) remove any applicable forfeiture restrictions on any Award; (ii) accelerate the time of exercisability or the time at which the Restricted Period shall lapse to a specific date, before or after such Change of Control, specified by the Committee; (iii)  require the mandatory surrender to the General Partner or the Partnership by selected holders of some or all of the outstanding Awards held by such holders (irrespective of whether such Awards are then subject to a Restricted Period or other restrictions pursuant to the Plan) as of a date, before or after such Change of Control, specified by the Committee, in which event the Committee shall thereupon cancel such Awards and pay to each holder an amount of cash per Unit equal to the amount calculated in Section 7(f) (the “Change of Control Price”) less the exercise price, if any, applicable to such Awards; provided, however, that to the extent the exercise price of an Option or a Unit Appreciation Right exceeds the Change of Control Price, no consideration will be paid with respect to that Award; (iv) cancel Awards that remain subject to a Restricted Period as of the date of a Change of Control without payment of any consideration to the Participant for such Awards; or (v) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change of Control (including, but not limited to, the substitution of Awards for new awards); provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Awards then outstanding.

 

(f)                                   Change of Control Price.  The “Change of Control Price” shall equal the amount determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows:  (i) the per Unit price offered to Unit holders in any merger or consolidation, (ii) the per Unit value of the Units immediately before the Change of Control without regard to assets sold in the Change of Control and assuming the General Partner or the Partnership, as applicable, has received the consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed per Unit in a dissolution transaction, (iv) the price per Unit offered to Unit holders in any tender offer or exchange offer whereby a Change of Control takes place, or (v) if such Change of Control occurs other than pursuant to a transaction described in clauses (i),

 

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(ii), (iii), or (iv) of this Section 7(f), the Fair Market Value per Unit of the Units that may otherwise be obtained with respect to such Awards or to which such Awards track, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Awards.  In the event that the consideration offered to unitholders of the Partnership in any transaction described in this Section 7(f) or Section 7(e) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

 

(g)                                  Impact of Corporate Events on Awards Generally.  In the event of changes in the outstanding Units by reason of a recapitalization, reorganization, merger, consolidation, combination, exchange or other relevant change in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 7, any outstanding Awards and any Award Agreements evidencing such Awards shall be subject to adjustment by the Committee at its discretion, which adjustment may, in the Committee’s discretion, be described in the Award Agreement and may include, but not be limited to, adjustments as to the number and price of Units or other consideration subject to such Awards, accelerated vesting (in full or in part) of such Awards, conversion of such Awards into awards denominated in the securities or other interests of any successor Person, or the cash settlement of such Awards in exchange for the cancellation thereof.  In the event of any such change in the outstanding Units, the aggregate number of Units available under this Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.

 

Section 8.                                          General Provisions.

 

(a)                                 No Rights to Award.  No Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants.  The terms and conditions of Awards need not be the same with respect to each recipient.

 

(b)                                 Tax Withholding.  Unless other arrangements have been made that are acceptable to the General Partner or an Affiliate, the Partnership or Affiliate is authorized to deduct, withhold, or cause to be deducted or withheld, from any Award, from any payment due or transfer made under any Award or from any compensation or other amount owing to a Participant the amount (in cash, Units, Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of the grant or settlement of an Award, its exercise, the lapse of restrictions thereon, or any other payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the General Partner or Affiliate to satisfy its withholding obligations for the payment of such taxes.  Notwithstanding the foregoing, with respect to any Participant who is subject to Rule 16b-3, such tax withholding automatically shall be effected by the General Partner either by (i) “netting” or withholding Units otherwise deliverable to the Participant on the vesting or payment of such Award, or (ii) requiring the Participant to pay an amount equal to the applicable taxes payable in cash.

 

(c)                                  No Right to Employment or Services.  The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the General Partner or any Affiliate, to continue providing consulting services, or to remain on the Board, as applicable.  Furthermore, the General Partner or an Affiliate may at any time dismiss a Participant from employment or his or her service relationship free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or other agreement.

 

(d)                                 Governing Law.  The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles.

 

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(e)                                  Severability.  If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Participants who are subject to Section 16(b) of the Exchange Act), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3).

 

(f)                                   Other Laws.  The Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules of the principal securities exchange on which the Units are then traded, or entitle the Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the General Partner by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

 

(g)                                  No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the General Partner or any Affiliate and a Participant or any other Person.  To the extent that any Person acquires a right to receive payments from the General Partner or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the General Partner or such Affiliate.

 

(h)                                 No Fractional Units.  No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine in its sole discretion whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated with or without consideration.

 

(i)                                     Headings.  Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

 

(j)                                    Facility of Payment.  Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such individual, or may be applied for the benefit of such individual in any manner that the Committee may select, and the General Partner shall be relieved of any further liability for payment of such amounts.

 

(k)                                 Allocation of Costs.  Nothing herein shall be deemed to override, amend, or modify any cost sharing arrangement, omnibus agreement, or other arrangement between the General Partner, the Partnership, and any Affiliate regarding the sharing of costs between those entities.

 

(l)                                     Gender and Number.  Words in the masculine gender shall include the feminine gender, the plural shall include the singular and the singular shall include the plural.

 

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(m)                             Compliance with Section 409A.  Nothing in the Plan or any Award Agreement shall operate or be construed to cause the Plan or an Award to fail to comply with the requirements of Section 409A of the Code. The applicable provisions of Section 409A the Code and the 409A Regulations are hereby incorporated by reference and shall control over any Plan or Award Agreement provision in conflict therewith.  All 409A Awards shall be designed to comply with Section 409A of the Code.

 

(n)                                 Specified Employee under Section 409A of the Code.  Subject to any other restrictions or limitations contained herein, in the event that a “specified employee” (as defined under Section 409A of the Code and the 409A Regulations) becomes entitled to a payment under an Award which is a 409A Award on account of a “separation from service” (as defined under Section 409A of the Code and the 409A Regulations), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service.  Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest.

 

(o)                                 No Guarantee of Tax Consequences.  None of the Board, the Committee, the Partnership nor the General Partner makes any commitment or guarantee that any federal, state or local tax treatment will (or will not) apply or be available to any Participant.

 

Section 9.                                          Term of the Plan.  The Plan shall be effective on the date on which it is adopted by the Board and shall continue until the earliest of (i) the date terminated by the Board, (ii) all Units available under the Plan have been delivered to Participants, or (iii) the 10th anniversary of the date the Plan is adopted by the Board.  However, any Award granted prior to such termination, and the authority of the Board or Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date.

 

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