POET Technologies Inc.

That Maintenance Fee sounds like a good deal for UCONN, does it not?

 

It is not a lot of money (in my opinion) considering that the POET design was developed by Dr Taylor who was employed by the University. If I am interpreting the formula correctly then it would take 39 years for the annual fee to reach the maximum rate of $1 million. This assumes that POET products begin selling in 2017 which would be the Beta prototypes.

 

Section 3.1 Annual Maintenance Fees. OPEL shall pay to UCONN an annual maintenance fee of Fifty-Thousand Dollars ($50,000.00) (the “Annual Maintenance Fee”), The first such payment shall be due on March 31st following the first year in which OPEL ships One Hundred Thousand Dollars ($100,000) of Product based on the revenue received for such Product by OPEL and thereafter payable on each subsequent March 31st. The amount of the Annual Maintenance Fee shall be increased by 25% every two years, up to a maximum of one million dollars ($1,000,000) per year. The first such increased payment shall be due March 31st following the third year after the first Annual Maintenance Fee is due.

 

	*1000
2018	$50
2019	$50
2020	$63	1.25
2021	$63
2022	$78	1.25
2023	$78
2024	$98	1.25
2025	$98
2026	$122	1.25
2027	$122
2028	$153	1.25
2029	$153
2030	$191	1.25
2031	$191
2032	$238	1.25
2033	$238
2034	$298	1.25
2035	$298
2036	$373	1.25
2037	$373
2038	$466	1.25
2039	$466
2040	$582	1.25
2041	$582
2042	$728	1.25
2043	$728
2044	$909	1.25
2045	$909
2046	$1,146	1.26
	$9,841

 

 The real money is the 3% royalty. Which is applied to any revenue other than money which is provided by a third party for product development of POET or an equity stake in POET. The agreement when first written was really based upon the sublicensing model where POET did not build and sell POET products. The amendment dated March 26, 2014 has been adjusted in scope to address POET becoming both a supplier of products and licensing POET.

 

The amendment to the agreement is written in such a way as to qualify revenue from multiple sources of products built and developed from the POET platform ether directly by POET or other entities.

 

Section 1.10 “Revenues” means any payments and/or the fair market value at the time of receipt by Opel of other consideration that OPEL receives from a third party not a Related Company in consideration for the exploitation of Intellectual Property rights granted OPEL under this Agreement, including without limitation, product sales, license or sublicense fees, royalties, milestone royalty payments that are not made in consideration for engineering services performed by or on behalf of OPEL, and license maintenance fees, but excluding (i) the payments

specifically committed to research relating to a Product and (ii) investments by any person(s) in equity or debt or similar investments convertible into equity of Opel.

 

 

Section 3.2 Revenue. OPEL shall pay to UCONN an amount equal to three percent (3%) of the Revenue it receives.

 

Below is section 1.10 that was replaced by the amendment above.

 

Section 1.10 “Sublicense Revenues” means any payments and/or the fair market value at the time of receipt by Opel of other consideration that OPEL receives from a Sublicensee in consideration for a sublicense of Intellectual Property rights granted OPEL under this Agreement, including without limitation license fees, royalties, milestone royalty payments that are not made in consideration for engineering services performed by or on behalf of OPEL, and license maintenance fees, but excluding (i) the payments specifically committed to research relating to a Product and (ii) investments by any Sublicensee(s) in equity or debt or similar investments convertible into equity of Opel.