EXHIBIT 10.2
PATENT LICENSING AGREEMENT
EXCLUSIVE PATENT LICENSE
THIS LICENSE AGREEMENT made and entered into this 2nd day of June 1998
by and between Imaging Diagnostic Systems, Inc., a Florida Corporation
("LICENSEE") and Xxxxxxx Xxxxxx, an Individual ("XXXXXX").
WHEREAS, XXXXXX, is the owner of the following described patents:
Patent number 5,692,511, issued on December 2, 1987, as more fully described on
Exhibit A hereto and incorporated herein (the "Patent").
WHEREAS, LICENSEE is a medical technology company that has developed
a Computed Tomography Laser Mammography( system for detecting breast cancer
through the skin in a non-invasive and objective procedure, which incorporates
the use of the Patent (the "CTLM").
WHEREAS, XXXXXX and LICENSEE had previously entered into an oral
agreement, which was to be set forth in, written form by LICENSEE's former
general counsel, whereby LICENSEE was to receive an exclusive License for the
use of the Patent.
WHEREAS, LICENSEE's former general counsel did not provide the
required License Agreement.
WHEREAS, LICENSEE has expended substantial funds, time and effort in
developing the CTLM(.
WHEREAS, XXXXXX has expended substantial funds, time and effort in
developing the Patent.
WHEREAS, XXXXXX and LICENSEE wish to enter into a formal, written
licensing agreement granting LICENSEE the exclusive License to use the patent,
upon the terms and conditions contained herein.
NOW THEREFORE, the parties hereto in consideration of $10.00 and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and the promises and covenants contained herein, agree as
follows:
1. GRANT. XXXXXX grants to LICENSEE the exclusive right to modify, customize,
maintain, incorporate, manufacture, sell, and otherwise utilize and practice
the above stated Patent, all improvements thereto and all technology related
to the process, throughout the world. This license shall apply to any
extension or re-issue of the Patent.
2. TERM. This License shall be for the life of the Patent and any renewal
thereof, subject to termination as provided for herein.
3. CONSIDERATION.
(a) Common Stock As consideration for the License granted
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hereunder LICENSEE shall issue to XXXXXX, 7,000,000 shares of the LICENSEE's
Common Stock (the "Shares") as follows:
1. 3,500,000 shares upon execution of this Agreement;
2. 3,500,000 shares one year from the date of this Agreement.
The Shares shall be valued at fair market value as of the date of this
Agreement,
(b) Protection Against Dilution. Upon the occurrence of any stock
dividend, stock split, combination or exchange of shares, reclassification or
recapitalization of the Company's common stock, reorganization of the Company,
consolidation with or merger into or sale or conveyance of all or
substantially all of the Company's assets to another corporation or any other
similar event which serves to decrease the number of Shares issued pursuant to
this Agreement (the "Event"), Xxxxxx shall receive, as additional
consideration, that number of shares equal to the difference between the
7,000,000 Shares issued hereunder and the number of Shares Xxxxxx has
remaining subsequent to the event.
(c) In addition, the LICENSEE shall pay to Xxxxxx a royalty based
upon the net selling price of all products and goods in which the Patent is
used, before taxes and after deducting the direct cost of the product and
commissions or discounts paid (the "Royalty"). The Royalty shall be as
follows:
GROSS SALES PERCENTAGE
$0 to $1,999,999 in gross sales 10%
$2,000,000 to $3,999,999 in gross sales 9%
$4,000,000 to $6,999,999 in gross sales 8%
$7,000,000 to $9,999,999 in gross sales 7%
Greater than $10,000,000 in gross sales 6%
For purposes of this paragraph Net Sales shall mean the dollar amount earned
from the sale by the Company, both international and domestic, before taxes
minus the cost of the goods sold and commissions or discounts paid.
(1) In the event that such products are used by the LICENSEE
directly, or are disposed of in another manner than sale, the royalty shall be
calculated on the customary price for similar goods. In the event that any
products made under the license are sold to a corporation, which is controlled
by or is a subsidiary of LICENSEE, the royalty shall be determined by the
re-sale price.
(2) Beginning the second year of this Agreement the minimum annual
Royalty shall be $250,000. In the event that the minimum is not paid in the
first three quarterly payments in each year, sufficient funds shall be paid in
the final quarter's payment. Sums shall not carry over from year to year.
(3) Royalties shall be paid on a quarterly basis, with a report of
sales and payment due no later than 15 days after the end of the quarter.
LICENSEE shall permit XXXXXX, and XXXXXX'x agents reasonable access to any
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and all of the records of LICENSEE related to the use of the patent and to
Royalties. Such accountings shall be deemed to be final if no objection or
request for audit is received by LICENSEE within 1 year following receipt of
such accounting. In the event of a dispute, the parties shall appoint a
disinterested certified public accountant to conduct an audit. Each party may
present argument or materials to the certified public accountant. The decision
of the certified public accountant shall be final and may be entered as a
judgment in any court with jurisdiction. The prevailing party shall pay the
cost of the audit. In the event that the parties cannot agree on a
disinterested certified public accountant, each party shall appoint a
certified public accountant and the two shall appoint a third certified public
accountant, and the majority of those persons shall appoint the single
disinterested Certified Public Accountant. The expense of the panel of
appointment shall be borne by each party equally. Interest at the highest
legal rate shall accrue on any unpaid royalties.
(4) LICENSEE shall have this Agreement ratified by its Shareholders at its
next special or annual meeting of Shareholders. Upon obtaining such
ratification, the Royalties set forth above shall take the place of the
Development Royalties set forth in the Amendment to Xxxxxx'x Employment
Agreement dated February 23, 1995, and such Amendment shall become void and
have no effect.
5. IMPROVEMENTS. In the event of any improvement of the Patent, these
improvements shall be disclosed to the LICENSEE by XXXXXX, and the LICENSEE
shall have the right to use and practice the improvements.
6. ASSISTANCE. XXXXXX shall provide reasonable cooperation and assistance to
LICENSEE as to the practice and use of the patent.
7. ACKNOWLEDGEMENTS
(a) LICENSEE acknowledges and agrees that XXXXXX is the sole owner of
the Patent and all proprietary information in connection with the Patent and
that such information constitutes trade secrets of XXXXXX'x, which are
revealed to the LICENSEE in confidence and that no right is given to or
acquired by the LICENSEE to disclose, duplicate, license, sell or reveal any
portion thereof, except as contemplated by this Agreement.
(b) XXXXXX acknowledges and agrees that, except for the Patent and
the proprietary information set forth in 7(a) above, the LICENSEE is the sole
owner of all present and future patents and proprietary information in
connection with the CTLM( and that such proprietary information constitutes
trade secrets of the LICENSEE which are revealed to XXXXXX in confidence and
that no right is given to or acquired by XXXXXX to disclose, duplicate,
license, sell or reveal any portion thereof, except as contemplated in this
Agreement.
8. BOOKS AND RECORDS. LICENSEE shall maintain full and accurate books and
records showing production and sales of the CTLM( and shall furnish weekly
reports with respect thereto in a form that may be reasonably specified from
time to time by XXXXXX, LICENSEE shall afford XXXXXX or its representatives a
reasonable opportunity once every week, during business hours and on at least
24 hours' prior notice, to conduct an examination of LICENSEE's books and
records relating to this Agreement in order to ensure that LICENSEE is meeting
its obligations to XXXXXX as provided in this Agreement. In the event that any
review of the books and records of LICENSEE indicates that it has failed to
properly account to XXXXXX and the amount due XXXXXX is in
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excess of 5% of the total amount due, LICENSEE shall promptly pay to XXXXXX
the sum due together with 18% per annum interest calculated on a 360 day year
and any costs including professional fees incurred by XXXXXX in reviewing the
books and records of LICENSEE.
9. CONFIDENTIALITY. It is understood and agreed that any of XXXXXX trade
secrets or Proprietary Information that may from time to time be made
available to become known to LICENSEE are to be treated as confidential, are
to be used solely in connection with LICENSEE's performance under the terms of
this Agreement and are not to be disclosed to any persons other than employees
of LICENSEE who have a reasonable need for access thereto in connection with
LICENSEE's performance of its duties hereunder. Reasonable measures shall be
taken to protect the confidentiality of XXXXXX'x trade secrets, Proprietary
Information and any memoranda or papers containing trade secrets or
Proprietary Information of XXXXXX that LICENSEE may receive in connection
herewith are to be returned to XXXXXX upon request. LICENSEE's obligations and
duties under this section shall survive any termination of this Agreement. If
this LICENSEE is a corporation or other legal entity, LICENSEE shall have all
officers, directors, partners and beneficial owners of any equity interest to
execute such agreement as may be prepared by XXXXXX agreeing to be bound by
paragraphs 10, 11 and 12 of this Agreement.
10. INDEMNIFICATION OF XXXXXX LICENSEE shall indemnify and save harmless
XXXXXX and his employees and agents from and against any loss, claim or damage
including reasonable attorney's fees, resulting from any negligence or breach
of warranty by LICENSEE in connection with the preparation, packaging, sale or
distribution of the CTLM( or other product of LICENSEE. With respect to the
risks thus assumed, LICENSEE shall maintain a policy of contractual liability
insurance in the minimum amount of $1,000,000 single unit coverage with an
insurer satisfactory to XXXXXX, and shall cause this insurer to provide XXXXXX
within 15 days after the date of this Agreement with an appropriate
certificate of insurance evidencing this contractual liability insurance
coverage, which may not be materially modified or canceled on less than 30
days prior written notice to XXXXXX. At the request of XXXXXX, LICENSEE will
defend XXXXXX and his employees and agents in connection with any claim, suit,
action or proceeding covered by this indemnification.
11. TRADE SECRETS AND PROPRIETARY INFORMATION. Subject to the foregoing,
LICENSEE acknowledges the validity of and ownership by XXXXXX of the trade
secrets and Proprietary Information in connection with the sale of the CTLM(
and agrees to take no action that would prejudice or interfere with the
validity or ownership. All use of the trade secrets and Proprietary
Information by LICENSEE under this Agreement shall inure to the exclusive
benefit of XXXXXX.
12. INJUNCTIVE RELIEF. XXXXXX shall have the right to injunctive relief to
enforce the covenants of paragraphs 10 and 11 of this Agreement, without
having to plead or prove irreparable harm or lack of adequate remedy at law in
addition to any other relief to which it may be entitled at law or in equity.
13. ABSOLUTE RESTRICTION ON TRANSFER WITHOUT XXXXXX'X CONSENT. The grant of
the license hereunder is unique to LICENSEE and may not be transferred, or in
effect transferred in whole or in part, whether by independent agreement,
acquisition by another party of LICENSEE's capital stock or assets, mortgage
pledge, lease or other assignment as security, merger, consolidation or other
reorganization, the succession by another party to LICENSEE's business by
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operation of law, as a consequence of any transaction that results in a change
in the ownership or right of control of LICENSEE or otherwise unless XXXXXX
has expressly consented in writing thereto.
In the event that there is an acquisition by another party of LICENSEE's
capital stock or assets, mortgage pledge, lease or other assignment as
security, merger, consolidation or other reorganization, the succession by
another party to LICENSEE's business by operation of law, as a consequence of
any transaction that results in a change in the ownership or right of control
of LICENSEE or otherwise, without Xxxxxx'x specific written consent as to that
event or occurrence, Xxxxxx, at his sole option may immediately terminate this
Agreement.
This Agreement shall immediately terminate, without further action on the part
of any party, in the event that insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary,
designating LICENSEE as the bankrupt or insolvent, are instituted, pending or
threatened or if LICENSEE makes an assignment for the benefit of creditors or
takes any action with a view to, or that would constitute the basis for, the
institution of any such insolvency proceedings.
14. TERMINATION BY XXXXXX UPON NOTICE. This Agreement may be terminated at any
time by XXXXXX in the event that LICENSEE shall fail to perform any of the
covenants and obligations herein. Upon written notice of termination delivered
to LICENSEE by XXXXXX, stating the nature and character of the breach and
allowing LICENSEE an opportunity to cure such failure within 15 days after
giving notice, if the failure has not been corrected by LICENSEE within the 15
day period XXXXXX may terminate this Agreement forthwith without the
requirement of any additional notice to LICENSEE to that effect.
Notwithstanding the above, XXXXXX is not required to give LICENSEE the
opportunity to correct a default that is a repetition within any 12 month
period of a prior default for the same cause and may terminate this Agreement
forthwith by written notice.
15. WAIVER. The failure of either party to give notice of nonperformance or
termination shall not constitute a waiver of the covenants, terms or
conditions herein or of the rights of either party thereafter to enforce those
covenants, terms or conditions or to terminate this Agreement upon any
subsequent occurrence or date.
16. ACTIONS TO BE TAKEN UPON TERMINATION OF LICENSE. Upon the termination of
this Agreement, except as may otherwise be provided herein, the license and
all rights and privileges granted to LICENSEE under this Agreement shall
immediately cease and terminate and LICENSEE in the absence of a renewal
agreement shall thereupon immediately discontinue forever (i) the production
and sale of the CTLM( and (ii) the use of the Patent trade secrets and
Proprietary Information in connection with LICENSEE's business.
17. ASSIGNMENT AND TRANSFER. This License may not be assigned or transferred
by LICENSEE except with the prior approval of XXXXXX, which shall be at his
sole discretion.
18. FURTHER ASSURANCES. The parties agree to execute and deliver from time to
time at the request of any of the other parties to this Agreement and without
further consideration, such additional documents and to take such other action
necessary to consummate the transactions contemplated herein.
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19. NOTICES. All notices, offers, acceptance and any other acts under this
Agreement (except payment) shall be in writing, and shall be sufficiently
given if delivered to the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by
certified mail, return receipt requested, as follows:
LICENSEE Imaging Diagnostic Systems, Inc.
0000 XX 00xx Xxxxx
Xxxxxxxxxx Xxxxxxx 00000
XXXXXX Xxxxxxx X. Xxxxxx
00000 XX 00xx Xxxxx
Xxxxxxxxxx Xxxxxxx 00000
or to such other address as either of them, by written notice to the other may
designate from time to time. The transmission confirmation receipt from the
sender's facsimile machine shall be conclusive evidence of successful
facsimile delivery. Time shall be counted to, or from, as the case may be, the
delivery in person or by mailing.
20. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided herein or performance shall
be brought in a court of competent jurisdiction in Broward County, Florida and
governed or interpreted according to the internal laws of the State of
Florida.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between
the parties and supersedes all prior oral or written agreements regarding the
same subject matter.
22. SEVERABILITY CLAUSE. In the event any parts of this Agreement are found to
be void, the remaining provisions of this Agreement shall nevertheless be
binding with the same effect as though the void parts were deleted.
23. SUCCESSORS. Subject to the provisions of this Agreement, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
24. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
25. AMENDMENT. This Agreement may be amended only by an instrument in writing
executed by all parties hereto.
26. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. The execution of this Agreement may be
by actual or facsimile signature, provided however that original signatures
must be provided within five business days from the date of signing.
IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement
as of the date and year first above written.
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/s/ Xxxxxxx X. Xxxxxx
Individually
Imaging Diagnostic Systems, Inc
By: /s/ Xxxxx X. Xxxxxxxx
Executive Vice President
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