Item
1.01. Entry into a Material Definitive Agreement.
On
February 25, 2021, SINTX Technologies, Inc. (the “Company”) announced that it had entered into a Patent License Agreement
(the “Agreement”) with O2 Design, Inc. (“O2 Design”), to commercialize face masks and mask filters that
incorporate the Company’s sintered silicon nitride intended to inactivate the SARS-CoV-2 virus.
Under
the terms of the Agreement, the Company granted O2 Design an exclusive world-wide license under certain of the Company’s
patents to make, use, and sell face masks and mask filters incorporating the Company’s proprietary silicon nitride materials
for the purpose of enhancing the anti-viral properties of the face masks and mask filters, in partial consideration of an upfront
fee by O2 Design, royalties on the sale of face masks and mask filters incorporating silicon nitride materials and potential performance-based
milestone payments. There can be no assurances that a mask will be developed or that any of these milestones will be met. The
date by when the payment schedules for the upfront fees and royalties will go into effect shall be the same date as when a face
mask incorporating silicon nitride becomes available to sell. The Agreement also contains certain commercial diligence milestones
with respect to timing for development of the face mask and minimum net sales to be met in order to retain the exclusive license
to the Company patents.
The
Company will be the exclusive supplier of silicon nitride to O2 Design. The Company has agreed to supply to O2 Design its commercially
reasonable requirements of the Company’s sintered silicon nitride powder (the “Material”). The Company has agreed
to exercise commercially reasonable efforts to manufacture the Material more efficiently and to pass on any savings to O2 Design.
The parties agreed to enter into a commercially standard supply agreement (“Supply Agreement”) within 30 days of execution
of the Agreement. The Supply Agreement will address, among other things, reasonable forecasting requirements and commitments,
requirements, and specifications relating to the delivery of the Material, shipping requirements, product acceptance, rejection
and returns, recalls, quality control and assurance, regulatory matters, returns, liability, indemnification, and other topics
addressed in industry standard supply agreements for comparable types of products to be used in the medical industry.
O2
Design has agreed to indemnify the Company, and hold harmless and defend the Company and its officers, directors, trustees, employees
and agents against any and all claims, suits, losses, damages, costs, liabilities, fees and expenses based on, resulting
from or arising out of: (i) the exercise of any license granted under the Agreement; and, (ii) any act, error or omission of O2
Design, or its officers, directors, employees or agents, including any breach of the Agreement, any claim or negligent acts or
omissions or misconduct, and product liability claim to the extent any such claims result from grossly negligent acts or omissions
or willful misconduct.
Unless
earlier terminated, the Agreement will expire on February 18, 2023. The Company may terminate the Agreement if O2 Design should:
(a) fail to deliver to the Company any statement or report required when due; (b) fail to make any payment at the time that the
same should be due; (c) violate or fail to perform any material covenant, condition, or undertaking of the Agreement to be performed
by it; (d) cease use of commercially diligent efforts to commercialize a product; (e) file a bankruptcy action, or have
a bankruptcy action against it, or become insolvent; or (f) enter into a composition with creditors, or have a receiver appointed
for it. The Company may give written notice of such default to O2 Design. If O2 Design should fail to cure such default within
ninety (90) days of such notice, the rights, privileges, and license granted under the Agreement will automatically terminate.
Additionally, if O2 Design ceases to carry on its business with respect to the rights granted in the Agreement, the Agreement
will terminate upon thirty (30) days written notice by the Company. No termination of this Agreement by the Company will relieve
O2 Design of its obligation to pay any monetary obligation due or owing at the time of such termination and shall not impair any
accrued right of the Company.
O2
Design may terminate this Agreement, in whole or as to any specified patent, at any time and from time to time without cause,
by giving written notice thereof to the Company. Such termination shall be effective one hundred twenty (120) days after such
notice and all O2 Design’s rights associated therewith shall cease as of that date. Any termination by O2 Design will not
relieve O2 Design of any obligation or liability accrued hereunder prior to such termination or rescind or give rise to any right
to rescind any payments made or other consideration given to the Company prior to the time such termination becomes effective.
Upon
expiration or termination of the Agreement by either party, O2 Design will provide Company with a written inventory of all product
in process of manufacture, in use or in stock. O2 Design may dispose of any such product within the ninety (90) day period following
such expiration or termination, provided, however, that O2 Design will pay royalties and render reports to Company in the manner
specified in the Agreement.
The
foregoing description of certain terms of the Agreement does not purport to be complete and is qualified in its entirety by reference
to the Agreement that the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the period ended March
30, 2021, or other report that the Company may file with the Securities and Exchange Commission (the “SEC”). The Company
intends to claim confidential treatment for certain portions of the Agreement pursuant to Item 601(b)(10) of Regulation S-K.