SUB-LICENSE AGREEMENT
THIS SUB-LICENSE AGREEMENT ("Agreement") is made this _______ day of
_______, 1998, by and between Prevent-X, Inc. (the "Sub-Licensor") whose address
is 0000 X..X. 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000, Empyrean Diagnostics, Inc. (the
"Sub-Licensee") whose address is 0000 Xxxx Xxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000, as to sub-paragraphs 4.4 and 6.9 only, Empyrean
Diagnostics, LTD, (hereinafter "EDL") whose address is 0000 Xxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx, 00000 and as to sub-paragraph 6.10 only, GEDA
International Marketing Co. LTD., based upon the following:
RECITALS
WHEREAS, Sub-Licensor is the exclusive distributor of GEDA LOTION
("Lotion") in the United States of America, as well as all United States
Territories and Possessions, all as more specifically set forth and defined in
the Distribution Agreement between GEDA INTERNATIONAL MARKETING CO., LTD.
("GIMCO") ("The Distribution Agreement")( a copy of which is attached hereto and
incorporated herein as Exhibit "A") and Sub-Licensor dated March 20,1997; and
WHEREAS, Sub-Licensor desires to appoint Sub-Licensee as its exclusive
sub-licensee and assign its rights and delegate its duties under the
Distribution Agreement to Sub-Licensee and Sub-Licensee desires to undertake
said duties and obtain said rights from Sub-Licensor.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
SECTION 1 GRANT OF SUB-LICENSE/TRANSFER OF DISTRIBUTION AGREEMENT RIGHTS.
1.1 Subject to the provisions of this Agreement and the
performance of its covenants and obligations, Sub-Licensor hereby appoints
Sub-Licensee as its exclusive sub-licensee to sell, market and distribute the
Lotion in Sub-Licensor's Territory, as defined under the Distribution Agreement,
under such product name or names as are agreed to by the parties. Licensee
agrees to obtain , prior to the commencement of it sub-licensee business, all
licenses, approvals, inspections, permits or any other certification which may
be required by any competent public authority for the lawful operation of its
business and to keep the same in good standing during the Term of this
Agreement. Sub-Licensee shall also have the right to formulate and manufacture
the Lotion in the Territory in accordance with Sub-Licensee's prior agreements
with GIMCO. Sub-Licensee shall have the right to assign its rights and duties
hereunder subject to the provisions of paragraph 6.8 hereunder.
1.2 So long as Sub-Licensee is not in material breach of this
Agreement on the expiration date of the Term as defined in Section 3 below, and
so long as this Agreement has not been otherwise terminated, Sub-Licensor agrees
that on the expiration of the Term, all rights it may have under the
Distribution Agreement with GIMCO shall be transferred from Sub-Licensor to
Sub-Licensee without the necessity of further documentation or consideration,
provided, however, if requested by Sub-Licensee or by GIMCO, Sub-Licensor shall
cooperate with Sub-Licensee and/or GIMCO by taking any action reasonably
required to effect such transfer.
SECTION 2 REPRESENTATIONS OF SUB-LICENSOR AND SUB-LICENSEE.
2.1 Sub-Licensor represents to Sub-Licensee and warrants that:
(a) Sub-Licensor is authorized to sub-license to Sub-Licensee
the rights to sell, market and distribute the Lotion in the Territory.
(b) Sub-Licensor has the authority to enter into this
Agreement upon the terms and conditions, including duration of term and
establishment of royalty contained herein.
(c) Sub-Licensor has not granted any right with respect to the
formulation, manufacture and sale of the Lotion which are inconsistent with the
rights granted to Sub-Licensee hereunder.
2.2 Sub-Licensee represents to Sub-Licensor and warrants that
Sub-Licensee has the authority to enter into this Agreement upon the terms and
conditions contained herein.
SECTION 3 TERM.
3.1 The term of this Agreement shall begin on the date first
set forth above and shall continue for a period of ten (10) years (the "Term").
SECTION 4 ROYALTIES AND PAYMENTS.
4.1 For the term of this Agreement, and for as long thereafter
as the Sub-Licensee shall formulate, manufacture, distribute or sell the Lotion
or any derivative hand or body lotion-type products containing Benzalkonium
Chloride and or Octoxynol-9 (hereinafter cumulatively referred to as the
"Lotion"). Sub-Licensee shall pay to Sub-Licensor a royalty which shall be
computed as five percent (5%) of Net Sales of the Lotion. Royalties shall be
paid to Sub-Licensor by Sub-Licensee within thirty (30) days after the last day
of each calendar quarter.
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4.2 "Net Sales" shall be defined as the total gross sales of
the Lotion at the invoice selling price, net of normal and reasonable cash,
trade and quantity discounts and returns for credit, and without deductions for
costs incurred in manufacturing, selling, distributing or advertising or for
uncollectible accounts.
4.3 As further consideration for entering into this Agreement,
Sub-Licensee shall pay to Sub-Licensor the sum of Fifty Thousand Dollars
($50,000) upon execution of this Agreement.
4.4 As further consideration for entering into this Agreement,
upon execution of this Agreement, EDT, which owns 100 percent of Sub-Licensee,
shall issue to Sub-Licensor's shareholders two hundred and twenty-five thousand
(225,000) unregistered shares of EDT Common Stock, no par value. Said 225,000
shares of EDT stock shall be issued in three separate certificates as follows:
123,750 shares to Xxxx and Xxxxx Xxxxxxxx; 78,750 shares to Xxxxxx and Xxxx
Xxxxxx and 22,500 shares to Xxxxx Xxx. All of the shares issued to Sub-Licensee
shareholders pursuant to this paragraph shall be cumulatively referred to as the
"PX Stock" . The PX Stock shall have the following "piggy-back" registration
rights:
(A). Whenever EDT proposes to register any of its Common Stock under
the Securities Act whether for its own account, for a public offering whether as
a primary or secondary offering or pursuant to registration rights granted to
holders of other securities of EDT, EDT shall cause to be included in such
registration the PX Stock, provided however, the holders of PX Stock, as a
condition of such registration, if requested by the underwriter(s), agree to
subject the PX Stock to a lock-up provision for a period not to exceed
twenty-four months from the effective date of the registration statement,
provided that such lock-up is required by other EDT shareholders.
(B). EDT shall have no obligation to require the underwriter(s) in any
underwritten public offering of the Common Stock to sell the PX Stock as part of
such public offering. In the event the underwriter(s) agrees to sell the Common
Stock held by any other shareholder of EDT in the public offering, EDT will
afford the holders of PX Stock the right to participate as a selling stockholder
as part of such offering, subject to any priority selling rights previously
given by EDT to any other stockholders. Subject to such priority selling rights,
if the total number of shares of stock which all selling stockholders of EDT
request be sold as part of such public offering exceeds the number of shares
which the underwriter(s) allows to be sold, then the shares so included shall be
apportioned pro rata among the electing selling shareholders according to the
total number of shares of Common Stock requested to be included in such public
offering by said selling stockholders, or in such other proportions as shall be
mutually agreed to by such selling stockholders.
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(C). EDT shall bear all registration and qualification fees and all
expenses related to the registration of the shares, provided however, that if
the holders of PX Stock sell shares as part of such public offering, they shall,
if requested by EDT, bear such portion of the underwriting commissions paid to
the underwriter(s) as the number of shares of Common Stock sold as part of such
public offering by such selling shareholders bears to the total number of shares
of Common Stock sold in such offering. In addition, each holder of PX Stock
selling shares as part of such public offering shall bear the fees and costs of
his or her own counsel.
4.5 Within thirty (30) days after the end of each calendar
quarter, irrespective of whether any Net Sales have been made or whether any sum
is then due to Sub-Licensor, Sub-Licensee shall deliver to Sub-Licensor a
complete and accurate written statement setting forth the amount of Lotion sold,
the gross price at which the Lotion was sold, the amount of any discount or
allowances given consistent with the terms of this Agreement, and the credit for
Lotion allowed to be returned and other deductions allowed herein to compute Net
Sales in specific detail, so as to allow an audit of underlying documents,
together with Sub-Licensee's calculation of the amount of royalties then due
Sub-Licensor for the period covered by such report.
4.6 Sub-Licensee shall keep or cause to be kept accurate,
complete and up-to-date books of accounts separately stating by clear means
records of all sales of the Lotion including records pertaining to invoiced
amounts by customer and records pertaining to all freight charges, discounts,
allowances, and returns allowed by Sub-Licensee. Such books and records of
account shall reflect that a sale of the Lotion shall be deemed to have occurred
as of the date the Lotion was invoiced to Sub-Licensee's customers.
4.7 Sub-Licensor or its authorized representatives shall have
the right, once each calendar quarter, to inspect all such records of
Sub-Licensee with respect to the sales of the Lotion and to make copies of said
records utilizing Sub-Licensee's facilities without charge and shall have free
and full access thereto on reasonable notice during Sub-Licensee's normal
business hours. In the event that such inspection or audit reveals an
underpayment by Sub-Licensee of any amounts due Sub-Licensor under this
Agreement, Sub-Licensee shall immediately pay to Sub-Licensor the balance of all
such amounts found to be due pursuant to such audit or inspection together with
interest thereon at the rate of eighteen percent (18%) per annum from the date
such amounts first became due to Sub-Licensor until all such amounts have been
paid in full. Further, if such inspection or audit discloses that, for the
period reviewed or audited, Sub-Licensee has underpaid or understated its
obligation under this Agreement by ten percent (10%) or more, then Sub-Licensee
shall also pay the reasonable professional fees of the independent
representatives engaged to conduct or review such inspection or audit.
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SECTION 5 INDEMNIFICATION
5.1 Sub-Licensee agrees to defend and indemnify and hold
Sub-Licensor, its officers, directors, employees and agents (collectively the
"Sub-Licensor Indemnified Party") harmless against any charges, damages, costs,
expenses (including attorney's fees and court costs), liability or loss
(including loss of profits), judgments, penalties, liabilities or losses of any
kind which may be sustained or suffered by any Sub-Licensor Indemnified Party by
reason of the breach of any covenant, representation, warranty, term or
agreement contained herein. In any action or proceeding relating to the
foregoing indemnity and brought against any Sub-Licensor Indemnified Party, the
Sub-Licensor Indemnified Party shall have the right at Sub-Licensor's cost and
expense to (i) participate in the defense of such action or proceeding with
attorneys of its own choosing or (ii) defend itself in any such action or
proceeding with attorneys of its own choosing.
SECTION 6 MISCELLANEOUS.
6.1 This Agreement shall be deemed to be made in, and in all
respects shall be interpreted, construed and governed by and in accordance with
the laws of the state of Florida.
6.2 Any action or proceeding arising out of or relating to
this Agreement shall be submitted by the parties to binding arbitration before
the American Arbitration Association in Miami-Dade County, Florida. The
arbitrator shall have the authority to permit discovery upon request of a party
and shall render his decision in accordance with the law of the state of
Florida. The prevailing party in any such action shall be entitled to recover
its attorneys's fees, costs and expenses including through appeals if any of the
arbitrator's award, and this provision shall be enforced and included in any
award. The arbitration award issued by the arbitrator may be enforced in any
court having jurisdiction over the subject matter of the controversy.
6.3 All notices, demands, requests, consents, approvals or
other communications ("Notices") given hereunder shall be in writing, and shall
be given by personal delivery or by express mail, Federal Express, DHL or other
similar form of recognized airborne/overnight delivery service (which forms of
Notice shall be deemed to have been given upon delivery), or by telex or
facsimile transmission (which forms of Notice shall be deemed delivered upon
confirmed transmission), or by mailing in the mail by registered or certified
mail, return receipt requested, postage prepaid (which forms of Notice shall be
deemed to have been given upon the fifth (5th) business day following the date
mailed). Notices shall be addressed to the parties at the addresses set forth in
the introductory section of this Agreement or to such other address as to which
any party hereto may have notified the others in writing.
6.4 The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
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6.5 For the convenience of the parties to this Agreement, this
document may be executed by facsimile signatures and in counterparts which shall
together constitute the agreement of the Parties as one and the same instrument.
6.6 If any provision of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and application of such provision to
the other party or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law.
6.7 This Agreement, including the Exhibits hereto, embodies
the entire agreement and understanding among the Parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings related thereto. The Parties hereto recognize and agree that no
representations or warranties have been made except as set forth in this
Agreement and the Exhibits hereto. This Agreement may be modified only by a
written instrument signed by each of the Parties.
6.8 The relationship between the Parties is that of
licensor/licensee and distributor/sub-distributor. Sub-Licensor and Sub-Licensee
are not, and shall not be considered as joint ventures, partners, or agents of
each other and neither shall have the power to bind or obligate the other, other
than as set forth in this Agreement. The parties specifically agree that
application for and ownership of all approvals from the FDA or any other
governmental agency which passes on the Lotion obtained by Sub-Licensee for the
Lotion shall be in the name of the Sub-Licensee (the Intellectual Property).
Sub-Licensee shall have the authority to use the Intellectual Property in
connection with its efforts to manufacture, sell, market and distribute the
Lotion only so long as it complies with all of the terms and conditions of this
Agreement. If Licensee is in breach of this Agreement it is prohibited from
using or exploiting the Intellectual Property and upon termination of this
Agreement (other than after the conclusion of the Term) Sub-Licensee shall
surrender all of its rights to sell, market or distribute the Lotion or to
otherwise use or rely upon the Intellectual Property obtained pursuant to this
Agreement. Sub-Licensee is prohibited from assigning, transferring,
hypothecating or pledging the Intellectual Property or any of its rights and or
delegating any of its duties hereunder without the prior written consent of
Sub-Licensor which shall not be unreasonably withheld. A precondition of
Licensor's consent will be the assignee's affirmative assumption of all of
Sub-Licensee's obligations to Sub-Licensor under this Agreement including but
not limited to the provisions of paragraphs 4.1, 4.5, 4.6, 4.7 and 5.1.
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6.9 Sub-Licensee's failure to comply with the terms and
conditions of this Agreement and or EDT's failure to comply with the provisions
of paragraphs 4.4 (A), (B) and (C) shall constitute a breach of this Agreement.
In the event of a breach, Sub-Licensor shall provide written notice of said
breach to Sub-Licensee or EDT who shall have 20 days from the date of said
notice to cure the breach. In the event Sub-Licensee fails to cure the breach
within 20 days from the date of the notice or within such additional time as
agreed to by Sub-Licensor in writing, then in that event, Sub-Licensor shall be
entitled to pursue all remedies available under law and equity and in addition
to all of such remedies, may declare this Agreement terminated. No failure or
delay on the part of Sub-Licensor in exercising any right, power or privilege
hereunder and no course of dealing between the parties shall operate as a waiver
thereof and nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof.
6.10 By signing in the space provided below, GIMCO hereby
grants its full consent to the terms and conditions of this Agreement including
but not limited to Sub-Licensor's assignment of its rights and duties under The
Distribution Agreement of March 20,1997 ( Exhibit "A" hereto) to Sub-Licensee
and hereby agrees that pages 4 and 5 of The Distribution Agreement are hereby
deemed amended and modified by eliminating the provisions of Article V titled
"Obligations of Distributor" in their entirety.
6.11 For so long as this Agreement is in effect, Sub-Licensor
shall refrain from manufacturing, marketing or selling Lotion anywhere in the
world.
6.12 Sub-Licensor hereby assigns to Sub-Licensee all of its
right, title and interest to any and all Lotion ordered but not yet received
from GIMCO. Sub-Licensor represents that it has no other inventory-on-hand of
Lotion.
6.13 Sub-Licensor hereby assigns to Sub-Licensee all of
Sub-Licensor's rights, title and interest in and to the name "Prevent-X" and
Sub-Licensor shall cease to use the name "Prevent-X" in connection with the sale
and marketing of any product. Sub-Licensee shall have until December 31, 1999 to
decide if it wishes to use the name "Prevent-X" in connection with the sale and
marketing of the Lotion. If prior to December 31,1999 Sub-Licensee does not
affirmatively elect to utilize the name "Prevent-X" in connection with the sale
and marketing of the Lotion, all rights, title and interest in and to the name
"Prevent-X" will revert back to Sub-Licensor. Upon receipt of written notice
from Sub-Licensee of its intent to utilize the name "Prevent-X" in connection
with the sale and marketing of the Lotion, Sub-Licensor shall take whatever
action is necessary to amend its corporate charter to change its name.
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IN WITNESS WHEREOF, the Parties hereto have executed or caused this
Sub-License Agreement to be executed as of the date first above written.
"SUB-LICENSOR"
PREVENT-X, INC.
By:
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"SUB-LICENSEE"
EMPYREAN DIAGNOSTICS INC.
By:
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GEDA INTERNATIONAL MARKETING CO. LTD,
(ONLY AS TO PARAGRAPH 6.10)
By:
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EMPYREAN DIAGNOSTICS LTD.
By:
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