Exhibit 99.1
COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT
This Agreement, dated and effective as of this 11th day of November, 2004
(Effective Date), is made by and between INFOTONICS TECHNOLOGY CENTER INC., a
not-for-profit corporation having an office and place of business at 0000 Xxxxxx
Xxxxx, Xxxxxxxxxxx, XX 00000 (Infotonics) and MEDISCIENCE TECHNOLOGY CORP., a
for-profit corporation having an office and place of business at 0000 Xxxxxxxxx
Xxx, Xxxxxx Xxxx, XX 00000, through its New York City subsidiary, MEDI-PHOTONICS
DEVELOPMENT LLC (collectively, MDSC).
RECITALS;
A. Infotonics and MDSC wish to collaborate with one another in the conduct of a
research program involving the development of commercially viable miniature
devices for Mediscience Technology Corp. that will make use of ultraviolet light
to diagnose the health of living tissue remotely monitoring the health/status of
various medical environments, e.g., the detection of various types of cancer and
the monitoring of body functions. The Parties also wish to develop from the
research program commercially viable miniature devices for other markets, such
as the sensing of biological and chemical species like bacteria and pollutants
among others, and other non-medical applications that will benefit the public
good.
B. Infotonics has experience, skill and ability in the field of microsystems
technology and has been a significant sponsor of research by Dr. Xxxxxx Xxxxxx,
Distinguished Professor of Science and Engineering at The City University of New
York in furtherance of the development of the Compact Photonic Explorer, a
"photonic sensor" that will use ultraviolet light to remotely monitor the health
of human tissue in various environments.
C. MDSC desires to engage Infotonics in a research project in accordance with
the scope of work described in Appendix A (Research).
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D. Both Parties agree that the Research is of mutual interest and benefit and
will further the research and economic development objectives of Infotonics in a
manner consistent with its status as a tax-exempt organization organized and
operated pursuant to Section 501(c)(3) of the Internal Revenue Code.
E. Both Parties anticipate that the participants and the public as a whole will
benefit from the Research by advancing science and engineering through discovery
and development of commercially viable devices.
1. Scope of Work
-------------
MDSC grants to Infotonics and Infotonics accepts support for applied research
investigation under the direction of Xx. Xxx Xxxxxxxxxxx (Principal
Investigator), who shall be responsible for the direction and conduct of the
Research as described in the Appendix A. Infotonics undertakes the Research in
furtherance of its goal of advancing scientific research and generating economic
development through collaborations that lead to commercialization of
microsystems technology.
2. Compensation
------------
As consideration for Infotonics' exerting its good faith efforts to carry out
the Research, MDSC will issue to Infotonics (i) 1,000,000 shares of the common
capital stock of MEDISCIENCE TECHNOLOGY CORP having a market value based on the
average of the closing prices over a thirty (30) day period ending three (3)
days before the date of signing of this agreement pursuant to a share issuance
agreement in the form attached hereto as Appendix B (ii) a warrant exercisable
to purchase at $3.00 a share for 1,000,000 shares of the common capital stock of
MEDISCIENCE TECHNOLOGY CORP., pursuant to a warrant in the form attached hereto
as Appendix C (collectively, the Stock), and will pay fees in U.S. dollars, net
of taxes or imposts, for specific research services to be determined by
Infotonics based upon detailed Statements of Work, to be agreed upon as the
Research progresses
3. Period of Performance
---------------------
Research under this Agreement will be performed commencing upon the Effective
Date and will terminate upon completion of the Research, currently estimated to
be five years.
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4. Technical Representatives
-------------------------
MDSC's technical representative shall be Xxxxxxx Xxxxxxxxx (MDSC Representative)
or such other representative as MDSC may subsequently designate in writing.
Infotonics' technical representative shall be the Principal Investigator.
5. Consultation with MDSC's Representatives
----------------------------------------
During the period of this Agreement, MDSC's Representative and other
representatives may have reasonable access to consult informally with the
Principal Investigator regarding the Research both personally and by telephone.
Access to work carried on at the Infotonics Technology Center in the course of
the Research shall be entirely under the control of Infotonics' personnel;
MDSC's representatives shall be permitted to visit the laboratories in the
Infotonics Center only as mutually agreed during usual hours of operation.
6. Technical Reports
-----------------
The Principal Investigator shall make up to four (4) reports, written or oral,
each year if requested by MDSC's Representative. The Principal Investigator and
MDSC's Representative may also make other reporting arrangements. Within sixty
(60) days after the expiration of this Agreement, the Principal Investigator
shall submit a comprehensive final report to MDSC.
7. Publicity
---------
Neither Party shall issue publicity releases in connection with work performed
under this Agreement, nor use the name of the other in connection with any
products, promotions or advertising, without the prior written approval of the
other, except that MDSC may make public filings factually describing its
relationship with Infotonics as required by law or regulation or the rules of
public stock exchanges. In any such statement the relationship of the Parties
and the scope and nature of their participation shall be accurately and
appropriately described.
8. Publication
-----------
Each Party shall have the right to publish and otherwise publicly disclose
information it has gained in the course of the Research, provided such
disclosures shall constitute full and fair disclosure of information to the
public as required by law or regulation or the rules of public stock exchanges
or other applicable governmental body or agency. Furthermore, to permit MDSC an
opportunity to determine if patentable inventions are disclosed, the Principal
Investigator will provide MDSC with advance copies of reports or articles
written by project personnel reporting on the Research prior to submission for
publication. Provided MDSC informs Infotonics and the Principal Investigator
within 30 days after receipt of such reports or articles, their publication will
be delayed for a
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reasonable time, not to exceed six (6) months, to permit the filing of any
applicable patent applications.
9. Intellectual Property
---------------------
a) Definitions
-----------
The following definitions apply to this Agreement and to the other
documents specifically incorporated by reference into this Agreement.
1) Technology means the entire body of technical knowledge, methods and
materials related to the Research, whether communicated verbally or in writing,
whether or not patentable or copyrightable or of a public or confidential
nature. Technology includes Intellectual Property and Technical Information and
encompasses both Background Technology and Research Technology.
2) Background Technology means all Intellectual Property and Technical
Information of a Party (1) in existence prior to the Effective Date, or (2)
developed during the period of performance of the Research but separate and
apart from the Research, which is relevant to and useful in the performance of
work on the Research and which the Party has a right to license or sublicense
and has agreed to make available for the Research as identified in Appendix D,
as it may be amended from time to time.
3) Research Technology means all Intellectual Property and Technical
Information developed in the course of performance of the Research.
4) Intellectual Property means any patent application(s) and resulting
issued patent(s), including but not limited to any continuation,
continuation-in-part (to the extent the claims are specifically directed to the
subject matter in the patent or patent application to which it claims priority),
divisional, reissue, reexamination, and renewal patent, and all foreign
counterparts thereof, and any registered and unregistered copyrights and mask
works.
5) Technical Information means any writing, recording, computer storage
media or printout, flowcharts, development notes or logs, formal or informal
engineering drawings, designs, schematics, blueprints, memoranda, laboratory or
engineering notes or manuals, software (including source code and object code),
mask works, cost and financial information, and all other printed or
electronically-stored data. Technical Information includes that intangible
information base commonly referred to as trade secrets and know-how.
6) Necessary Background Technology means that Background Technology in the
possession of a Party which is necessary for and essential to the
implementation, use, and commercialization of Research Technology.
b) Proprietary Disclosures
-----------------------
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If a Party (discloser) discloses its Technology or other information to the
other Party (receiver) and identifies the Technology and such information as
proprietary and/or confidential by use of an appropriate stamp, legend or other
marking or notice (Confidential Information), the receiver agrees that the
rights and obligations of the Parties with respect to the Confidential
Information shall be governed by the terms and conditions of the Master
Confidentiality and Mutual Disclosure Agreement between the Infotonics and MDSC
dated May 6, 2004, attached hereto as Appendix E. It is agreed by Infotonics and
MDSC that the disclosure of Confidential Information shall be solely for the
purposes of this Agreement and shall not be construed as a grant of any right or
license with respect to the Confidential Information except as set forth
otherwise herein or in a duly executed license agreement
c) Background Technology.
----------------------
Each Party's existing experience and knowledge base will be important in
achieving the successful performance of the objectives of this Agreement, and
each Party is expected to contribute from its experience and knowledge base to
maximize the benefits from the Research. Within this framework, each Party
retains sole discretion regarding disclosure of its Technology. If disclosed by
a Party, Background Technology shall remain the property of the disclosing Party
but shall be provided to the other Party and qualified affiliates, subsidiaries
and contractors in accordance with the following terms and conditions.
1) Application of Appendix D.
Appendix D identifies each Party's Background Technology and specifies the terms
and conditions under which each item of Background Technology will be made
available for use in the Research and thereafter. Unless otherwise clearly
restricted in Appendix D, each Party may use all Background Technology as set
forth in paragraph 9(c)(4) below. During the term of the this Agreement, any
Party may propose additions of Background Technology items to its portion of
Appendix D by providing the other Party with an appropriate description and
conditions for use. Such additions will be reflected in a revised and
superseding Appendix D.
2) Necessary Background Technology. Each Party represents that, prior to
the initiation of the Research, it has made a good-faith effort to identify to
the other Party the existence of any Necessary Background Technology possessed
by the first Party, and that it shall promptly identify to the other Party the
existence of any Necessary Background Technology possessed by the first Party
which may subsequently come to its attention.
3) Licensing of Background Technology to MDSC Subject to limitations set
forth in Appendix D, MDSC may use Infotonics' Background Technology on a
royalty-free basis in the performance of the Research and in commercial
exploitation of Research Technology and may authorize their majority-owned and
controlled affiliates and subsidiary entities throughout the world to use
Background Technology in a like
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manner, provided such affiliates and subsidiary corporations maintain all
restrictive markings and otherwise comply with the restrictions placed on use of
the Background Technology. Also, unless otherwise noted in Appendix D, MDSC may
disclose Background Technology to independent contractors, subcontractors, and
suppliers in order that it may beneficially use such information on a
royalty-free basis in the performance of the Research and in the commercial
exploitation of Research Technology. Disclosure is further limited by the
provision that such independent contractors, sub-contractors, and suppliers must
agree in writing to maintain all restrictions placed on MDSC's use of Background
Technology. The foregoing notwithstanding, Infotonics shall not be required to
license or otherwise make available any Background Technology or Necessary
Background Technology listed on Appendix D for which a technology of comparable
utility is available from other sources in reasonable quantities and at
reasonable prices, or for which there is a commercially available product which
reasonably satisfies MDSC's needs.
4) Infotonics' Noncommercial Research License to Background Technology:
Subject to the limitations stated in Appendix D, MDSC grants to Infotonics
royalty-free, nonexclusive, noncommercial, internal use research licenses to use
Background Technology to the degree to which it is able to do so, and for so
long as such Background Technology is necessary or appropriate for the conduct
of the Research. MDSC represents and warrants to Infotonics that all necessary
permissions have been obtained for granting such nonexclusive research licenses,
and upon Infotonics request will provide written proof thereof. The
aforementioned research licenses to MDSC's Background Technology shall be
subject to any agreements with third parties in effect before the Effective
Date.
5) Commercialization Licenses of Background Technology to Infotonics:
Subject to the limitations stated in Appendix D, MDSC shall negotiate in good
faith on commercially reasonable terms, nonexclusive or exclusive, commercial
licenses, with sub-licensing rights, to use Background Technology to the degree
necessary and appropriate for Infotonics to commercialize the results of the
Research. The commercialization licenses to MDSC's Background Technology shall
be subject to any agreements with third parties in effect before the Effective
Date.
6) Licensing of the U.S. Government. Should the Parties decide to enter
into an agreement(s) with a U.S. Government entity and should access to a
Party's Background Technology be necessary, such Party shall negotiate with the
Government entity for the purpose of granting licenses to its Background
Technology under terms and conditions the Party, in its sole discretion, deems
reasonable.
d) Research Technology
-------------------
1) Technical Information. Subject to fulfillment of contractual
obligations hereunder, all Technical Information developed or generated in
connection with the Research solely by a Party`s employees or contractors shall
be owned by such Party. Any Technical Information developed jointly by one or
more employees or contractors of one Party with one or more employees or
contractors of the other Party shall be jointly
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owned. The Parties shall disclose all Technical Information developed or
generated in connection with the Research to each other. Until such time as the
owner, or one of the joint owners, first releases or publishes such information
to the general public, the Parties shall treat such Technical Information as
Confidential Information as previously cited herein. Before release of any
Technical Information developed or generated in connection with the Research
which includes any Party's Confidential Information, or extract or derivative
thereof, the other Party shall take reasonable steps to ensure that any such
release of information will not jeopardize any proprietary rights of the other
Party. However, nothing herein shall prevent Infotonics from fulfilling its
obligation under the laws of the United States to make the results of research
it supports available to the public. Following such release, each Party shall
have the right to use, duplicate, or disclose such released Technical
Information, in whole or in part, in any manner and for any purpose whatsoever
and to have and permit others to do so.
2) Ownership. Inventorship and creation of all Intellectual Property
developed or generated in connection with the Research will be determined in
accordance with U. S. Patent and other laws, and ownership shall follow
inventorship/authorship. Any Intellectual Property developed solely by a Party
shall belong to the Party. Any Intellectual Property developed jointly shall be
jointly owned. No Party shall have any duty to account to the other Party for
any jointly owned Intellectual Property.
3) Disclosure of Inventions. Each Party shall provide (and shall require
any persons and/or contractors performing work on the Research to provide) the
other Party with a written invention disclosure report concerning each invention
it has developed within one month of conception or first actual reduction to
practice, whichever occurs first. Such invention disclosure report shall be
sufficiently complete in technical detail to convey a clear understanding to the
extent known of the nature, purpose, operation, and the physical, chemical,
biological or electrical characteristics of the invention. Such report shall
identify any past and proposed disclosure, sale, or use of the invention.
4) The Parties shall agree on a case-by-case basis regarding the content
and cost-sharing of any patent, know-how, copyright or trademark registration
activities. If the owner of the Intellectual Property does not elect to file a
U.S. patent application or foreign patent application in any country or
community of countries within six (6) months of the date of disclosure to the
other Party, the other Party may elect to file at its own expense wherever the
owner has elected not to file. Any filing involving joint property ownership
must reference both Parties as legally designated and identified co-owners
and/or co-assignees, co-licensees. The non-filing Party shall continue to enjoy
a license in and to such Party owned and jointly owned property as set forth
below. The foregoing notwithstanding, if the Research is supported by U. S.
Government funding and none of the Parties has elected to file and thereby
retain title within two (2) years of Infotonics' disclosure of the invention to
the U.S. Government, the Government may elect to obtain title to the invention.
5) Fees and Costs. Certain rights in this Section 9(d) are subject to the
owner(s) paying all associated filing fees and costs, including costs of patent
preparation, prosecution, and maintenance and copyright and mask works
registration. Should the
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owner or one of the joint owners decide at any time to cease necessary payments
on patent, copyright or mask works applications or maintenance of any patent
obtained pursuant to this Section, it shall offer to the other joint owner or
Party the opportunity to assume responsibility for all of such expenses. If the
other joint owner or Party chooses to assume responsibility for such expenses,
the owner or other joint owner shall assign to the Party assuming the expenses
all rights to the applicable Intellectual Property, including, but not limited
to, the right to xxx for past infringement.
6) MDSC's License. MDSC assures Infotonics that it will exert due
diligence in bringing licensed Research Technology to practical application in a
commercially reasonable period of time. In particular, Mediscience shall perform
the tasks described on Appendix F attached hereto. Subject to fulfillment of its
contractual obligations hereunder and payment of all associated patent filing
fees and costs, MDSC shall have a paid up, royalty-free, worldwide, exclusive
(but for Infotonics' non-exclusive license for research and educational
purposes) license in and to Research Technology developed jointly or solely by
Infotonics for all applications related to the health of human tissue, including
the detection of cancer types as well as monitoring of various physiological
body functions (MDSC Field of Use) and a paid up, royalty-free, worldwide,
non-exclusive license in all other fields of use. The license to MDSC shall
include the right to make, have made, use, and sell articles and as well as the
right to copy, distribute and make derivative works and to use any mask works.
MDSC shall be free to sublicense to majority-owned and controlled affiliates and
subsidiary entities throughout the world subject to Section 9(d)( 8).
7) Infotonics' License. Subject to fulfillment of its contractual
obligations hereunder, Infotonics shall have a paid up, royalty-free, worldwide,
non-exclusive license, with sub-licensing rights subject to Section 9(d)( 8), in
and to Research Technology developed jointly or solely by MDSC for all
applications outside the MDSC Field of Use and within the MDSC Field of Use for
research and educational purposes.
8) Licensing of the U.S. Government. As applicable, any and all grants of
rights relative to inventions made under this Collaborative Research Project
Agreement shall be subject to the reservation of a non-exclusive,
nontransferable, irrevocable, paid-up license to practice or have practiced for
or on behalf of the United States for governmental non-commercial purposes
throughout the world.
9) Warranty of Sublicense(s) to Subsidiaries of Parties. Each Party which
sublicenses or otherwise extends its rights under the clauses of this Section
9(d) to its qualified affiliate or subsidiary entity warrants that such entity
will honor all relevant obligations under this Agreement. When a Party's
affiliate or subsidiary entity no longer qualifies as described herein, such
affiliate or subsidiary entity will be afforded the same rights to Research
Technology and Background Technology as are terminating/terminated Parties as
set forth in Section 23.
10) Intellectual Property Enforcement.
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The owner of any Intellectual Property, including any joint owner, shall have
the first right to enforce it. The other Party shall promptly notify the Party
owning any Intellectual Property related to the Research of any suspected
infringement of any such Intellectual Property of which the other Party becomes
aware. If, within six (6) months of receiving notice of such infringement, the
owner(s) does not file suit or cause such alleged infringement to cease, then
such owner(s) shall grant to the other Party who is a joint owner of, or has a
license to, such Intellectual Property the right to initiate legal action
against any such infringer, or otherwise enforce such Intellectual Property in
its own name, at its own expense, and for its own benefit. The owner(s) further
shall take such steps as are necessary to enable such Party to attain standing
to bring suit against any such infringer, or otherwise enforce such Intellectual
Property, subject to such Party's commitment to reimburse the owner for any
out-of-pocket costs incurred in such efforts. Any monetary recoveries resulting
from such enforcement and/or suit shall go first to the Parties to reimburse
them for any cost incurred and then to the Party who initiated the suit, who
shall be the sole beneficiary of any surplus monetary recoveries resulting from
such enforcement and/or suit.
10. Future Development Services
---------------------------
MDSC hereby grants to Infotonics the right of first refusal to perform all
subsequent research and development and pilot manufacturing services related to
the Compact Photonic Explorer ("Future Development Services"). If at any time,
MDSC receives an offer to perform Future Development Services from a party other
than Infotonics ("Third Party") and such offer is acceptable to MDSC, then, MDSC
shall forward a copy of such offer (the "Acceptable Offer") to Infotonics.
Infotonics shall have a period of 30 days after receiving a copy of the
Acceptable Offer within which to notify MDSC that Infotonics elects to match the
price, performance, cost and quality criteria of the Acceptable Offer in all
material respects. Following such notice MDSC and Infotonics shall negotiate a
contract for such Future Development Services as were required in the Acceptable
Offer. If Infotonics waives its right of first refusal or does not notify MDSC
within the 30-day period mentioned above of Infotonics' election to so match the
Acceptable Offer, MDSC shall be free to obtain Future Development Services from
the Third Party on the terms specified in the Acceptable Offer. If MDSC and the
Third Party fail to enter into a non-contingent, binding agreement within 30
days after (i) Infotonics has waived its right of first refusal, or (ii) the
30-day period for Infotonics to respond has expired, Infotonics shall again be
entitled to the right of first refusal to perform Future Development Services.
11. First Right and Right of First Refusal for Manufacturing
--------------------------------------------------------
a) If MDSC wishes to commence the commercial marketing and sale of any device
resulting from the Research, it shall first work collaboratively with Infotonics
to develop and to implement a plan for manufacturing such device in New York
State, and for a period of not less than 90 days, MDSC shall (i) not solicit
offers from, or provide information to, or enter into any agreement or
understanding with, any other party with respect to manufacturing such device
(ii) not otherwise pursue any matter or transaction that would likely interfere
with Infotonics' ability to develop and implement a plan for
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manufacturing such device, and (iii) work and negotiate in good faith with
Infotonics for Infotonics to develop and implement such a plan.
b) MDSC hereby grants to Infotonics the right of first refusal to deliver
manufacturing services related to the Compact Photonic Explorer ("Manufacturing
Services"). If at any time, MDSC receives an offer for Manufacturing Services
from a party other than Infotonics ("Third Party") and such offer is acceptable
to MDSC, then, MDSC shall forward a copy of such offer (the "Acceptable Offer")
to Infotonics. Infotonics shall have a period of 30 days after receiving a copy
of the Acceptable Offer within which to notify MDSC that Infotonics elects to
match the price, performance, cost and quality criteria of the Acceptable Offer
in all material respects. Following such notice MDSC and Infotonics shall
negotiate a contract to deliver such Manufacturing Services as were required in
the Acceptable Offer. If Infotonics waives its right of first refusal or does
not notify MDSC within the 30-day period mentioned above of Infotonics' election
to so match the Acceptable Offer, MDSC shall be free to obtain Manufacturing
Services from the Third Party on the terms specified in the Acceptable Offer. If
MDSC and the Third Party fail to enter into a non-contingent, binding agreement
within 30 days after (i) Infotonics has waived its right of first refusal, or
(ii) the 30-day period for Infotonics to respond has expired, Infotonics shall
again be entitled to the right of first refusal to perform Manufacturing
Services.
12. Indemnification
---------------
MDSC shall indemnity, defend, and hold harmless Infotonics and its present and
former officers, directors, trustees, employees, and agents, and hereby waives
any damages, from any claim, loss, cost, expense, or liability of any kind,
including reasonable attorney's fees (whether incurred as the result of a third
party claim or a claim to enforce this provision), arising out of or connected
with this Agreement or the Research, including, without limitation, product
liability claims relating to commercialization of the Research. It shall be a
condition of the indemnification obligation that Infotonics promptly notify MDSC
of any such claim and cooperate with MDSC and its insurance carrier in the
defense of the claim. MDSC shall consult with Infotonics regarding the defense
of such claim and shall submit any proposed settlement to Infotonics in advance
of its approval whenever Infotonics' interests are materially and adversely
affected.
13. Warranties; Limitation of Liability
-----------------------------------
a) INFOTONICS MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION, ORIGINALITY, OR
ACCURACY OF THE RESEARCH OR ANY INVENTION(S) OR PRODUCT(S), WHETHER TANGIBLE OR
INTANGIBLE, CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS AGREEMENT; OR THE
OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH
OR ANY SUCH INVENTION OR PRODUCT. INFOTONICS SHALL NOT BE LIABLE FOR ANY DIRECT,
CONSEQUENTIAL, OR OTHER DAMAGES SUFFERED BY MDSC, ANY LICENSEE, OR ANY OTHERS
RESULTING FROM THE USE OF THE RESEARCH OR ANY SUCH
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INVENTION OR PRODUCT. INFOTONICS' MAXIMUM LIABILITY TO MDSC FOR ANY CAUSE OF
ACTION OR OTHER CLAIM DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR
THE RESEARCH IS LIMITED TO ONE-HALF OF INFOTONICS' REALIZED MARKET VALUE OF THE
STOCK DURING THE 12 MONTHS IMMEDIATELY PRECEDING NOTICE OF ANY SUCH CAUSE OR
CLAIM.
b) MDSC MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE CONDITION, ORIGINALITY, OR ACCURACY OF THE
RESEARCH OR ANY INVENTION(S) OR PRODUCT(S), WHETHER TANGIBLE OR INTANGIBLE,
CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS AGREEMENT; OR THE OWNERSHIP,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH OR ANY SUCH
INVENTION OR PRODUCT. EXCEPT FOR MDSC'S INDEMNIFICATION OBLIGATIONS UNDER
SECTION 12, MDSC SHALL NOT BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL, OR OTHER
DAMAGES SUFFERED BY INFOTONICS, ANY LICENSEE, OR ANY OTHERS RESULTING FROM THE
USE OF THE RESEARCH OR ANY SUCH INVENTION OR PRODUCT.
14. Independent Contractor
----------------------
For the purposes of this Agreement and all services to be provided hereunder,
each Party shall be, and shall be deemed to be, an independent contractor and
not an agent or employee of the other Party. Neither Party shall have authority
to make any statements, representations or commitments of any kind, or to take
any action, which shall be binding on the other Party, except as may be
explicitly provided for herein or authorized by the other Party in writing.
15. Governing Law; Disputes
-----------------------
The validity and interpretation of this Agreement and the legal relations of the
Parties to it shall be governed by the laws of the State of New York, and
applicable U.S. Federal Law, without regard to its conflict of laws principles
or rules. If a dispute arises out of or relates to this Agreement, or the breach
thereof, and if the dispute cannot be settled through negotiation, the parties
agree to submit such dispute for full, binding and final resolution in
accordance with the Commercial Rules of the American Arbitration Association,
with the venue of the arbitration to be located in the proximity of the
principal place of business of the Respondent.
16. Assignment
----------
This Agreement shall not be assignable by either Party without the prior written
consent of the other Party. Any and all assignments not made in accordance with
this section shall be void.
17. Notices
-------
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Any notice or report required or permitted to be given under this Agreement
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail to the following addresses of either
Party:
Infotonics Technology Center Inc. Mediscience Technology Corp.
0000 Xxxxxx Xxxxx /Medi-Photonics LLC
Xxxxxxxxxxx, XX 00000 000 Xxxx 00xx Xxxxxx
Xxxxxxxxx: Xxx Xxxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Phone (000) 000-0000
Fax (000) 000-0000 Phone (000) 000.0000
E-mail xxx.xxxxxxxxxxx@xxxxxxxxxx.xxx
------------------------------ Fax (000) 000.0000
With copy to: E-mail xxxxxxxxxx@xxxxxxxxxxxxxxx.xxx
Xxxxxxx X. Xxxxxx, Legal Counsel
0000 Xxxxxx Xxxxx With a copy to:
Xxxxxxxxxxx, XX 00000 Xxxxx Xxxxxxxxx, CEO
xxxx.xxxxxx@xxxxxxxxxx.xxx 0000 Xxxxxxxxx Xxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Fax (000) 000.0000
or to such other addresses as shall hereafter have been furnished by
written notice to the other Party.
18. Export Controls
---------------
It is understood that Infotonics is subject to United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes, and other commodities, and that its obligations hereunder
are contingent on compliance with applicable U.S. export laws and regulations
(including the Arms Export Control Act as amended, and the Export Administration
Act of 1979). The transfer of certain technical data and commodities may require
a license from the cognizant agency of the United States Government and/or
written assurances by MDSC that MDSC will not re-export data or commodities to
certain foreign countries without prior approval of the cognizant government
agency. While Infotonics shall cooperate in securing any license which such
agency deems necessary in connection with this Agreement, Infotonics cannot
guarantee that such licenses will be granted.
19. Force Majeure
-------------
Infotonics shall not be responsible to MDSC for failure, to perform any of the
obligations imposed by this Agreement, provided such failure shall be occasioned
in whole or in part by fire, flood, explosion, lightning, windstorm, earthquake,
subsidence of soil, failure or destruction of machinery or equipment, or failure
of supply of materials, discontinuity in the supply of power, governmental
interference, civil commotion, riot, war, strike, labor disturbance,
transportation difficulty, labor shortage, or any cause beyond the reasonable
control of Infotonics.
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20. No Oral Modification
--------------------
No change, modification, extension, termination, or waiver of this Agreement, or
any of the provisions herein contained, shall be valid unless made in writing
and signed by duly authorized representatives of the Parties hereto.
21. Paragraph Headings
------------------
The section headings are provided for convenience and are not to be used in
construing this Agreement.
22. Survivorship
------------
The provisions of Sections 2, 7, 8, 9, 10, 11, 12, 13, 15, 17, 18, 22, and 23
shall survive any expiration or termination of this Agreement.
23. Term and Termination
--------------------
a) This Agreement shall expire on completion of the Research, currently
estimated to be five years unless extended or sooner terminated in accordance
with the provisions of this Section.
b) Either Party may terminate this Agreement by giving the other Party ninety
(90) days' prior written notice of its election to terminate. In addition,
Infotonics may terminate this Agreement immediately if circumstances beyond its
control, in its sole discretion, preclude continuation of the Research.
c) If MDSC fails to meet any of its obligations under this Agreement and fails
to remedy the failures within sixty (60) days after receipt of written notice
thereof, Infotonics shall have the option of terminating this Agreement upon
written notice thereof, and such right to terminate shall be Infotonics' sole
remedy at law or in equity. If Infotonics fails to meet its obligations under
this Agreement and fails to remedy these failures within sixty (60) days after
receipt of written notice, MDSC shall have the option of terminating this
Agreement upon written notice, and such right to terminate shall be MDSC's sole
remedy at law or in equity.
d) Upon termination by one Party under Section 9(b) or (c) above, licenses to
the Research Technology and Background Technology previously provided by the
voluntarily terminating or involuntarily terminated Party to other Party shall
continue in effect. Licenses to the Research Technology and Background
Technology previously provided by other Party to the voluntarily terminating or
involuntarily terminated Party shall be revoked, but the voluntarily terminating
or involuntarily terminated Party shall be entitled to negotiate for
royalty-bearing licenses from the other Party under terms and conditions that
the other Party, in its sole discretion, deems fair and reasonable.
24. Entire Agreement
----------------
Page 15 of 39
This instrument contains the entire agreement between Parties with respect to
the Research and related matters. No verbal agreement, conversation or
representation between any officers, agents, or employees of the Parties either
before or after the execution of this Agreement shall affect or modify any of
the terms or obligations herein contained.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
duly authorized representatives as of the Effective Date.
Infotonics Technology Center Inc. Mediscience Technology Corp./Medi-
Photonics LLC
By: /s/ Xxxxx X. Xxxxx By /s/ Xxxxx Xxxxxxxxx
------------------------------ ---------------------------------
Name: Xxxxx X. Xxxxx Name Xxxxx Xxxxxxxxx
---------------------------- -------------------------------
Title CEO Title Chairman/CEO
---------------------------- ------------------------------
11/11/04 11/9/04
Page 16 of 39
Appendix A--Scope of Work
-------------------------
Compact Photonic Explorer
Beta Prototype Research and Development
Task 1 Assessment and Development of Alpha and Beta prototypes.
Infotonics will conduct an evaluation of the existing CUNY alpha-prototype of
the Compact Photonic Explorer (CPE) and current, FDA-approved ingestible
diagnostic devices (e.g. Given PillCam(TM)). The evaluation will be used to map
technological status of the CPE against viable commercial devices and to provide
a roadmap for the viable incorporation of UV LED and, if possible, propulsion
systems into the diagnostic pill envelope.
Infotonics will also conduct a detailed analysis of the 300nm ultraviolet light
emitting diode (UV LED) research and development status. The analysis will
include an assessment of existing sources: Boston University, which is funded as
a subcontractor to CUNY under the current Infotonics research grant, Los Alamos
National Laboratory, and CREE. The maturity of the devices will be determined.
The objective of this subtask will be to determine the commercial viability of
the existing technologies and produce a technology development roadmap
consistent with MediScience commercialization objectives.
Critical technical questions that must be answered include:
o Power consumption of the UV LED options.
o Size and configuration of the subcomponent options.
o UV intensity required to produce a sufficiently high signal/noise
ratio to ensure detection of abnormal tissue.
o Availability of suitable power sources (batteries, energy
harvesters).
o Required on-board logic circuitry.
o Biocompatibility.
o Optical design.
Task 2 Design and integration of a beta-prototype
Infotonics will incorporate the results of Task 1 into the design and
integration of a beta-prototype CPE. The specific research and development
tasking will be determined by the priorities identified in Task 1. The objective
of Task 2 is to reduce the size of the device envelope to a size consistent with
existing commercial device. This size is optimal for "self propelled" passage
through the gastrointestinal tract. The beta prototype will contain UV
diagnostic capability. Propulsion capability will be added in a later phase, or
incorporated in an increased scope in this Task 2 if market research dictates
its increased importance.
Page 17 of 39
Appendix B--Share Issuance Agreement
------------------------------------
SHARE ISSUANCE AGREEMENT
This SHARE ISSUANCE AGREEMENT (this "Agreement") dated as of __________,
2004 (the "Effective Date"), is by and between Infotonics Technology Center
Inc., a New York not-for-profit corporation (the "Center") and Mediscience
Technology Corp., a New Jersey corporation (the "Company").
WITNESSETH
WHEREAS, in connection with the Center's provision of present and future
services to the Company under that certain Collaborative Research Agreement of
even date herewith (the "Collaborative Research Agreement"), the parties desire
to provide for the issuance to the Center of shares of capital stock of the
Company and certain related rights.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree to the following:
1. Certain Definitions. The following capitalized terms used in this
Agreement have the following meanings:
"Act" means the Securities Act of 1933, as the same may be amended
from time to time.
"Common Stock" means common stock of the Company, par value $0.01
per share.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
Capitalized terms not specifically defined herein shall have the same
meaning as set forth in the Collaborative Research Agreement. In the event of
any inconsistency between the terms of this Agreement and the Collaborative
Research Agreement, the terms hereof shall prevail.
2. Grant of Consideration Shares. In consideration for agreeing to provide
to the Company the services described in the Collaborative Research Agreement,
upon execution of this Agreement, the Company shall issue to the Center one
million (1,000,000) shares of Common Stock on the Effective Date (collectively,
the "Consideration Shares"). For tax reporting purposes, the parties acknowledge
and agree that the fair market value of the Consideration Shares is the average
of the closing prices over a thirty (30) day period ending three (3) days before
the date of the signing of the Collaborative Research Agreement .
Page 18 of 39
3. Registration Rights. For so long as the Center is the holder of any
Consideration Shares, in the event that the Company grants to any Person any
right or rights to register under the Act any class of capital stock then held
by such Person, whether mandatory, piggy-back or otherwise, the Company shall,
and is hereby deemed to automatically, without further action, grant the same
rights on the same terms and conditions to the Center with respect to the
Consideration Shares.
4. Observer Rights. Whether or not the Center has a designee on the board
of directors of the Company, and so long as the Center is the holder of a
minimum of 500,000 Consideration Shares, the Company shall notify the Center of
all meetings of the board of directors on or prior to the date the directors
receive notice, and one representative of the Center shall have a right to
attend the meetings of the board of directors as an observer at the cost of the
Center.
5. Information Rights.
(a) The Company shall maintain a comparative system of accounts in
accordance with GAAP applied on a consistent basis, and keep full and complete
financial records. Reflected in its SEC 10-Q and 10-K filings (fiscal yr. Feb.
28)
(b) The Company shall furnish to the Center the following reports:
(i) as soon as such becomes available but in any event within
10 days after the accepted XXXXX filing of each fiscal quarter commencing with
the quarter ending March 31, 2005, a copy of the unaudited balance sheet of the
Company as at the close of such quarter, together with a statement of operations
and a statement of cash flow of the Company for such quarter, prepared in
accordance with GAAP consistently applied, and a brief containing the Company's
MD&A discussion and analysis by management of such quarterly or year end
financial statements;
(ii) as soon as such becomes available but in any event within
25 days after the end of each fiscal quarter commencing with the quarter ending
on March 31, 2005, the Company will furnish to the Center, in a form reasonably
acceptable to the Center, a brief written discussion and analysis by management
of the performance of the business during that calendar month and its prospects
for the next month and thereafter, and such written statement shall include a
discussion by management of any major issues that could impact the operation of
the business or the value of the Company's capital stock;
(iii) as soon as such becomes available, but in any event at
least 30 days prior to commencement of each fiscal year starting with the fiscal
year commencing on January 1, 2005, the Company shall furnish to the Center a
copy of the Company's budget and strategic plan as pertains to the scope of the
Research under the Collaborative Research Agreement;
(iv) as soon as such becomes available but in any event within
120 days after the end of each fiscal year commencing with the fiscal year
ending on
Page 19 of 39
February 28, 2005, the balance sheet of the Company as at the end of such fiscal
year and the related statement of operations of stockholders' equity and
statement of cash flows for the fiscal year then ended, in each case prepared in
accordance with GAAP consistently applied and certified by the Company's
independent public accountants, and to include a brief written discussion and
analysis by management of such annual financial statements.
6. Inspection Rights. The Company will, upon reasonable prior notice,
permit authorized representatives of the Center, so long as the Center holds any
Consideration Shares, to visit and inspect any of the properties of the Company,
including its books of account (and to make copies thereof and take extracts
therefrom), and to discuss its affairs, finances and accounts with its officers,
administrative employees and independent accountants, all at such reasonable
times during normal business hours and not more than two times in any calendar
year. The provisions of this section shall not be in limitation of any rights
which the Center may have with respect to books and records of the Company, or
to inspect its properties or discuss its affairs, finances and accounts, under
the federal securities laws or the laws of the jurisdiction in which the Company
is organized.
7. Other Covenants of the Company.
(a) The Company will cause each person now or hereafter employed by
it or any subsidiary with access to confidential information to enter into a
proprietary information and inventions agreement substantially in the form
approved by the board of directors of the Company.
(b) [Deliberately left blank]
(c) The Company shall not compensate any person, directly or
indirectly, in excess of an amount that is reasonable in relation to the
services provided by such person to the Company, nor shall any person receive
reimbursement for any expense not directly related to providing services to the
Company.
(d) The Company shall not, without the approval of the disinterested
members of the Company's Board of Directors, engage in any loans, leases,
contracts or other transactions with any director, officer or key employee of
the Company, or any member of any such person's immediate family, including the
parents, spouse, children and other relatives of any such person, on terms less
favorable than the Company would obtain in a transaction with an unrelated
party, as determined in good faith by the Board of Directors.
(e) The Company will at all times reserve and keep available, solely
for issuance and delivery to the Company, all of the Consideration Shares.
8. Representations and Warranties of the Company. In order to induce the
Center to enter into this Agreement, the Company represents and warrants to the
Center that as of the Effective Date:
Page 20 of 39
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey. The Company has
all required corporate power and authority to own its property, to carry on its
business as presently conducted, to enter into and perform this Agreement and
the agreements contemplated hereby, and generally to carry out the transactions
contemplated hereby and thereby. The copies of the Certificate of Incorporation
and By-laws of the Company, as amended to date and as delivered to the Center
concurrently herewith are correct and complete at the Effective Date. The
Company is not in violation of any term of its Certificate of Incorporation or
By-laws. The Company is in full compliance with all applicable laws, including
without limitation, all of the rules and regulations promulgated under the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended.
(b) The execution, delivery and performance of this Agreement and
all agreements and instruments contemplated hereby and the issuance of the
Consideration Shares have been duly authorized by all necessary corporate action
of the Company.
(c) The Company is not in default in the performance of any
obligation, agreement, covenant or condition contained in any material contract
or other instrument to which it is a party, or by which any it or its properties
may be bound; no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by the Company
of the transactions contemplated by this Agreement; and the execution, delivery
and performance of this Agreement by the Company will not conflict with or
constitute a breach of, or default under, any material contract or other
instrument to which it is a party or by which it is bound, nor will such action
result in any violation of the certificate of incorporation or bylaws of the
Company, or any law, administrative regulation or decree.
(d) The Consideration Shares, when issued by the Company to the
Center pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable.
9. Representations and Warranties of the Center.
(a) The Center acknowledges that the Consideration Shares have not
been registered under the Securities Act of 1933, as amended, or applicable
state securities laws and are being offered and sold pursuant to exemptions from
such registration requirements based in part upon the Center's representations
contained in this Agreement and that such shares will carry the SEC legend
restricted per Rule 144 and be so recorded by Mediscience Transfer Agent
Registrar & Transfer Co. Inc
SUMMARY OF Rule 144:o Applies to affiliates or non-affiliates o Must be
beneficial owner for at least one year o Affiliates must have an "open window"
to sell . o Must comply with volume limitations - 1% of the outstanding shares
or the average of the last 4 weeks trading volume, whichever is greater . o Can
only clear restrictions from the
Page 21 of 39
stock currently being sold -- Required paperwork signed by the shareholder: o
Form 144 o 144 Seller's Representation Letter o Stock power (if certificate is
not signed).
(b) The Center acknowledges that it must bear the economic risk of
this investment indefinitely unless the Consideration Shares are registered
pursuant to the Securities Act or an exemption from registration is available.
(c) The Center understands that the Company has no present intention
of registering the Consideration Shares, and understands that there is no
assurance that any exemption from registration under the Securities Act will be
available in the future.
(d) The Center represents that it is familiar with the Company's
business affairs and financial condition and has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of this investment.
(e) The Center represents that it is acquiring the Consideration
Shares for its own account for investment only, and not with a view towards
distribution thereof in violation of applicable securities laws.
(f) The Center represents that, by reason of its relationship with
the Company and the Center's business and financial experience, it has the
capacity to protect its own interests in connection with the transactions
contemplated by this Agreement.
10. General Provisions.
(a) This Agreement and the Exhibits hereto contain the entire
agreement between the parties, superseding in all respects any and all prior
oral or written agreements or understandings, pertaining to the subject matter
hereof and transactions contemplated hereby, and can be amended or modified only
by a written instrument signed by the parties.
(b) No waiver by either party of any condition, breach, covenant,
representation, or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or construed as a
further and continuing waiver of any such condition, breach, covenant,
representation, or warranty.
(c) All covenants and agreements of the Company or the Center made
herein shall survive until fully discharged. All covenants, agreements
representations and warranties of the Company, shall bind the Company's
successors and assigns, whether so expressed or not, and, except as otherwise
provided in this Agreement, all such covenants, agreements, representations and
warranties shall inure to the benefit of the Center's successors and assigns and
to transferees of the Consideration Shares, whether so expressed or not. The
representations and warranties made by the Center in Section 9
Page 22 of 39
of this Agreement shall survive the delivery of the Consideration Shares and
shall bind the Center's successors and assigns and shall inure to the benefit of
the Company's successors and assigns.
(d) The Center and the Company shall be deemed independent
contractors with respect to this Agreement and nothing herein contained shall be
construed as creating a joint venture between them or as empowering either party
to act as the agent of the other party.
(e) This Agreement and the legal relations between the parties shall
be governed by and construed in accordance with the laws of the State of New
York, and applicable U. S. Federal law, without regard to its conflict of laws
principles or rules.
(f) If a dispute arises out of or relates to this Agreement, or the
breach thereof, and if the dispute cannot be settled through negotiation, the
parties agree to submit such dispute for full, binding and final resolution in
accordance with the Commercial Rules of the American Arbitration Association,
with the venue of the arbitration to be located in the proximity of the
principal place of business of the Respondent.
IN WITNESS WHEREOF, the Center and the Company have each caused this
Agreement to be signed by its duly authorized officers, all as of the day and
year first above written.
INFOTONICS TECHNOLOGY CENTER INC. MEDISCIENCE TECHNOLOGY CORP
By: By:
-------------------------------- ---------------------------------
Name: Name:
------------------------------ -------------------------------
Title: Title:
----------------------------- ------------------------------
Page 23 of 39
Appendix C--Stock Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE ASSIGNED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS THE TRANSACTION RELATING THERETO COMPLIES WITH OR
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS AND THE
COMPANY IS PROVIDED AN OPINION OF COUNSEL TO THAT EFFECT WHICH IS SATISFACTORY
TO IT.
__________, 200_ ("Issuance Date")
Right to Purchase one million (1,000,000) Shares of
Common Stock, par value $0.01 per share @ $3.00 per share
MEDISCIENCE TECHNOLOGY CORP.
Common Stock Purchase Warrant
Mediscience Technology Corp., a New Jersey corporation (the "Company"),
hereby certifies that, for value received, Infotonics Technology Center Inc.
("Holder") is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time before 5:00 P.M., eastern standard
time, through sixth (6th) anniversary of the Issuance Date, up to one million
(1,000,000) fully paid and non-assessable shares of Common Stock, par value
$0.01 per share, of the Company, at a purchase price per share of three dollars
($3.00) (such purchase price per share as adjusted from time to time as herein
provided is referred to herein as the "Purchase Price"). The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. The term "Company" shall include Mediscience
Technology Corp. and any corporation which shall succeed or assume the
obligations of the Company hereunder.
1. Exercise
(a) Exercise for Cash. This Warrant may be exercised from time to time in
whole or in part by Holder by surrender of this Warrant, with the form of
subscription at the end hereof duly executed by Holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or official
bank check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then
exercisable and being exercised by the Purchase Price then in effect. In the
event that this Warrant is exercised in respect of less than all of the shares
specified herein at any time prior to the date of expiration of this Warrant, a
new Warrant will be issued to Holder for the remaining number of shares
specified in the Warrant so surrendered.
Page 24 of 39
(b) Cashless Exercise.
(i) Holder may, at its option, elect to exercise this Warrant,
in whole or in part and at any time or from time to time, on a cashless basis,
by surrendering this Warrant, with the form of subscription at the end hereof
duly executed by Holder, at the principal office of the Company, or at such
other office or agency as the Company may designate, by canceling a portion of
this Warrant in payment of the Purchase Price payable in respect of the number
of Warrant Shares purchased upon such exercise. In the event of an exercise
pursuant to this Section 1(b), the number of Warrant Shares issued to Holder
shall be determined according to the following formula:
X = Y(A-B)
------
A
Where: X = the number of Warrant Shares that shall be issued to Holder;
Y = the number of Warrant Shares for which this Warrant is
being exercised (which shall include both the number of
Warrant Shares issued to Holder and the number of
Warrant Shares subject to the portion of the Warrant
being cancelled in payment of the Purchase Price);
A = the Fair Market Value (as defined below) of one share of
Common Stock; and
B = the Purchase Price then in effect.
(ii) The Fair Market Value per share of Common Stock shall be
determined as follows:
(1) If the Company's Common Stock is listed on a
national securities exchange, the Nasdaq National Market or another nationally
recognized trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the closing prices
over a thirty (30) day period ending three (3) days before the date of
calculation.
(2) If the Company's Common Stock is actively traded
over-the-counter as of the Exercise Date, the Fair Market Value per share of
Common Stock shall be deemed to be the average of the closing bid or sales price
(whichever is applicable) over the thirty (30) day period ending three days
before the date of calculation.
(3) If the Company's Common Stock is not listed on a
national securities exchange, the NASDAQ National Market or another nationally
recognized trading system and is not actively traded over-the-counter as of the
Exercise Date, the Fair Market Value per share of Common Stock shall be
determined in good faith by the Board of Directors of the Company (the "Board");
and, upon request of Holder, the Board (or a representative thereof) shall, as
promptly as reasonably
Page 25 of 39
practicable but in any event not later than 10 days after such request, notify
Holder of the Fair Market Value per share of Common Stock and furnish the Holder
with reasonable documentation of the Board's determination of such Fair Market
Value.
(c) Expiration. This Warrant shall expire and be of no further force
or effect on the sixth (6th) anniversary of the Issuance Date
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, the Company will cause to be
issued in the name of and delivered to the holder hereof a certificate or
certificates for the number of fully paid and non-assessable shares of Common
Stock to which such holder shall be entitled on such exercise. All such shares
will carry the SEC legend restricted per Rule 144 and be so recorded by
Mediscience Transfer Agent Registrar & Transfer Co. Inc
SUMMARY OF Rule 144:o Applies to affiliates or non-affiliates o Must be
beneficial owner for at least one year o Affiliates must have an "open window"
to sell . o Must comply with volume limitations - 1% of the outstanding shares
or the average of the last 4 weeks trading volume, whichever is greater . o Can
only clear restrictions from the stock currently being sold -- Required
paperwork signed by the shareholder: o Form 144 o 144 Seller's Representation
Letter o Stock power (if certificate is not signed)..
3. Reorganization, Consolidation, Merger, etc.
(a) In case at any time or from time to time, the Company shall, (i)
effect a reorganization, (ii) consolidate with or merge into any other person,
(iii) sell all or substantially all of its assets or have all or substantially
all of its stock sold or (iv) dissolve (each a "Major Transaction") then, in
each such case, the holder of this Warrant, on the exercise hereof as provided
in Section 1, shall receive, in lieu of the Common Stock issuable on such
exercise prior to such transaction, the stock and other securities and property
(including cash) to which such holder would have been entitled upon consummation
of such transaction if such holder had so exercised this Warrant, immediately
prior thereto, all subject to further adjustment thereafter as provided in
Section 4. In each such case, appropriate adjustment (as determined in good
faith by the Board of Directors of the Company) shall be made in the application
of the provisions herein set forth with respect to the rights and interests
thereafter of the holder of this Warrant to the end that the provisions set
forth herein (including those relating to adjustments of the Purchase Price)
shall thereafter be applicable, as near as reasonably may be, in relation to any
shares or other property deliverable upon the exercise hereof as if this Warrant
had been exercised immediately prior to such transaction.
(b) Notwithstanding the foregoing or anything in this Warrant to the
contrary, in connection with a Major Transaction, the Company may, in its sole
discretion, give notice to the holder that this Warrant will terminate if not
exercised prior to or simultaneously with the closing or consummation of such
Major Transaction. Any such notice shall be in writing, shall generally describe
the consideration to be received in
Page 26 of 39
such Major Transaction and shall be given in accordance with Section 5 at least
thirty (30) days before the closing or consummation of such Major Transaction.
If the holder fails to exercise this Warrant prior to simultaneously with the
closing or consummation of such Major Transaction, this Warrant shall terminate
and be of no further force or effect.
4. Adjustment for Stock Split or Stock Dividend. In the event that the
Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock, or (iii) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The holder of this Warrant shall thereafter, on the exercise hereof as provided
in Section 1, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (x) the numerator is the Purchase Price which
would otherwise (but for the provisions of this Section 4) be in effect, and (y)
the denominator is the Purchase Price in effect on the date of such exercise.
5. Notices. Any notice pursuant to this Warrant by the Company or by the
holder shall be in writing and shall be deemed to have been duly given on the
date of delivery or refusal indicated on the return receipt if delivered or
mailed by certified mail, return receipt requested:
(a) If to the holder addressed to 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxx Xxxx, 00000, Attention: Xxxxxxx X. Xxxxxx, Esq. ______________.
(b) If to the Company addressed to it at Xxxxxxxxx Xxx, Xxxxxx Xxxx,
Xxx Xxxxxx, 00000, Attention: Xxxxx Xxxxxxxxx, Esq., Chairman/CEO _____________.
A party may from time to time change the address to which notices to it are to
be delivered or mailed hereunder by notice in accordance herewith to the other
party.
6. Reservation of Stock, etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock up to One
Million (1,000,000) from time to time issuable on the exercise of this Warrant.
7. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the
Page 27 of 39
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
8. No Impairment. The Company will not avoid or seek to avoid the
observance or performance of any of the terms of the Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
9. Negotiability, etc. This Warrant is issued upon the following terms, to
all of which each holder or owner hereof by the taking hereof consents and
agrees:
(a) title to this Warrant may be transferred by endorsement (by the
holder hereof executing the form of assignment at the end hereof) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered
to transfer absolute title hereto by endorsement and delivery hereof to a
bona fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of each
such bona fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder hereof as the absolute owner
hereof for all purposes, notwithstanding any notice to the contrary.
10. Miscellaneous. This Warrant and any term hereof may be changed, waived
or discharged only by an instrument in writing signed by the party against which
enforcement of such change, waiver or discharge is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of the State
of New York, and applicable U.S. Federal law, without regard to its conflict of
laws principles or rules.. If a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled through
negotiation, the parties agree to submit such dispute for full, binding and
final resolution in accordance with the Commercial Rules of the American
Arbitration Association, with the venue of the arbitration to be located in the
proximity of the principal place of business of the Respondent. The headings in
this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. This Warrant is being executed as an
instrument under seal. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
Page 28 of 39
MEDISCIENCE
TECHNOLOGY CORP.
By:
---------------------------------
Name:
-------------------------------
Its:
--------------------------------
Page 29 of 39
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: MEDISCIENCE TECHNOLOGY CORP.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ____________
shares of Common Stock of Mediscience Technology Corp., and herewith makes
payment of $________________ therefor, and requests that the certificates for
such shares be issued in the name of the undersigned and delivered to
______________________________________________.
Dated:
-------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-------------------------------
(Address)
Page 30 of 39
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ____________________________ the right represented by the within Warrant to
purchase ________________ shares of Common Stock of Mediscience Technology
Corp., to which the within Warrant relates, and appoints
________________________________ Attorney to transfer such right on the books of
Mediscience Technology Corp., with full power of substitution in the premises.
Dated:
----------------------- -----------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-----------------------------------
(Address)
Signed in the presence of:
------------------------------
Page 31 of 39
Appendix D--Background Technology
---------------------------------
1. Infotonics Background Technology: Infotonics' IP rights under a certain
Agreement entered into with the Research Foundation of the City University of
New York on February 27, 2003, as amended, which are summarized as follows:
A royalty-free, non-exclusive commercialization license, with sub-licensing
rights, to use U.S. Patent No. 6,240, 312 ("Remote-controllable, micro-scale
device for use in vivo medical diagnosis and/or treatment", Xxxxxx et al., filed
May 29, 2001) for the purpose of developing and/or commercializing the CPE
Technology, through February 26, 2008, renewable thereafter in a good faith
negotiation.
A royalty-free, non-exclusive commercialization license, with sublicensing
rights, together with the first option for a royalty-free, exclusive
commercialization license, with sublicensing rights, to use any invention or
other Intellectual Property generated by CUNY as a result of the Compact
Photonic Explorer project sponsored by Infotonics under the above referenced
Agreement for the purpose of developing and/or commercializing the CPE
Technology, through February 26, 2008, renewable thereafter in a good faith
negotiation. Infotonics also has the right to negotiate royalty-bearing
commercial sublicenses with third parties subject to payment of a fair share of
net royalty income to The Research Foundation of CUNY ("RFCUNY"). (See full
contract for details.)
Special conditions applicable to MDSC: Infotonics releases its above-described
IP Rights to non-exclusive and exclusive licenses from RFCUNY in favor of MDSC
in the MDSC Field of Use as defined in this Agreement, to wit: "all applications
related to the health of human tissue, including the detection of cancer types
as well as monitoring of various physiological body functions." Such release
shall be subject to survival in the same manner as a license upon Termination as
provided in Section 23(d).
2. MDSC's Background Technology: Medical Diagnostic Optical technology
1) #4,930,516, Xxxxxx 0, 0000, Xxxxxx for Detecting Cancerous Tissue Using
Visible Native Luminescence: Reexamination Certificate for patent issued June 5,
1990.
2) US Patent Pending "Xxxxxx-Shift Fluorescence spectroscopy for detection of
disease and physiological state of specimen", also filed INTERNATIONAL PCT
APPLICATION.
3) #5,042,494, August 27, 1991, Method and Apparatus for Detecting Cancerous
Tissue using Luminescence Excitation Spectra, X. X. Xxxxxx.
4) #5,131,398, July 21, 1992, Method and Apparatus for Distinguishing Cancerous
Tissue from Benign Tumor Tissue, Benign Tissue or Normal Tissue using Native
Fluorescence, X. X. Xxxxxx, X. Xxx, X. Xxxx.
5) #5,261,410, November 16, 1993, Method for determining if a Tissue is a
Malignant Tumor Tissue, a Benign Tumor Tissue, or a Normal Benign Tissue using
Raman Spectroscopy, X. X. Xxxxxx, C.-X. Xxx, X. X. Xxxxxxxx.
Page 32 of 39
6) #5,293,872, Xxxxx 00, 0000, Xxxxxx for Distinguishing between Calcified
Atherosclerotic Tissue and Fibrous Atherosclerotic Tissue or Normal
Cardiovascular Tissue Using Raman Spectroscopy, X. X. Xxxxxx, X. X. Xxx.
7) #5,348,018, September 20, 1994, Method for determining if Tissue is Malignant
as opposed to Non-Malignant using Time-Resolved Fluorescence Spectroscopy, X. X.
Xxxxxx, X. Xxxxxxx, X. X. Xxxx, X. Xxxx, X. Xxxxxxxx, X. X. Xxx.
8) #5,413,108, May 9, 1995, Method and Apparatus for Mapping a Tissue Sample for
and Distinguishing Different Regions thereof based on Luminescence Measurements
of Cancer-indicative Native Fluorophor, X. X. Xxxxxx.
9) #5,467,767, November 21, 1995, Method for Determining if Tissue is Malignant
as opposed to Non-Malignant using Time-resolved Fluorescence Spectroscopy, X. X.
Xxxxxx, Xxxxx Xxxxxxx, X. X. Xxxx, X. Xxxx, X. Xxxxxxxx, X. X. Xxx.
10) #5,635,402, June 3, 1997. Technique for Determining whether a Cell is
Malignant as opposed to Non-malignant using Extrinsic Fluorescence Spectroscopy,
X. X. Xxxxxx, Xxxxx X. Xxx, Xxx X. Sha, Xxxx Xxxxxxxx.
11) #5,769,081, June 23, 1998, Method for Detecting Cancerous Tissue using
Optical Spectroscopy and Fourier Analysis, X. X. Xxxxxx, X. Xxxx, X. Xxxx.
12) #5,849,595, December 15, 1998, Method for Monitoring the Effects of
Chemotherapeutic Agents on Neoplasmic Media, X. X. Xxxxxx, X. X. Xxxx, X. X.
Xxxxxxx.
13) #5,983,125, November 9, 1999, Method and apparatus for in vivo examination
of subcutaneous tissues inside an organ of a body using optical spectroscopy, X.
X. Xxxxxx, X. Xxxxxxxx.
14) #6,006,001, December 21, 1999, Fiber optic assembly useful in optical
spectroscopy, X. X. Xxxxxx, S. Demos, X. Xxxxx.
15) #6,080,584, June 27, 2000, Method and apparatus for detecting the presence
of cancerous and precancerous cells in a smear using native fluorescence
spectroscopy, Xxxxxx X. Xxxxxx, Xxxxxxxxxxx Xxxxxxx, and Xxxx Xxxxxxxx.
16) #6,091,985, July 18, 2000, Detection of cancer and precancerous conditions
in tissues and/or cells using native fluorescence excitation spectroscopy,
Xxxxxx X. Xxxxxx, Xxxxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxx Xxxxxxxx.
And future Intellectual Property arising from MDSC's sponsored research
activities at CUNY that are necessary for and essential to the implementation
and use of the Research Technology.
Page 33 of 39
Special Conditions:
Infotonics' collaborative use of the above patents is limited to the specific
purposes of this Agreement.
All listed patents except the "516" patent, which is owned by MDSC, arose out of
sponsored research activities at CUNY and are subject to the terms of certain
research agreements. A research agreement provided that all patent rights on any
cancer detection inventions conceived or discovered through 1991 shall vest in
MDSC, subject to a royalty payable to RFCUNY. Beginning in 1992 new inventions
and patentable discoveries were assigned to RFCUNY, and MDSC was (or will be)
granted an exclusive worldwide license to exploit the inventions, subject to
royalties payable to RFCUNY. RFCUNY owns all copyright and publication rights to
the results of the research, subject to MDSC's right to produce, translate and
use all materials copyrighted by RFCUNY for MDSC's own purposes on a
royalty-free, non-transferable, and non-exclusive basis. If MDSC has not made
any lawful sale of any products or sublicensed any patents at or above
reasonable market price within 5 years from the date of patent application, MDSC
has agreed to negotiate a minimum royalty or return all rights with respect
thereto to RFCUNY. (See full contracts for details.)
Page 34 of 39
Appendix F--MDSC's Tasks
------------------------
Task 1: Fielding and FDA approval of beta-prototypes.
MediScience will use prototype devices, as is common in the industry, to gain
FDA approval for the use of UV light to diagnose cancers in the digestive tract.
Results of the clinical trials will be used to provide new objectives for
research and development intended to lead to a commercial device.
Task 2: Market dynamics, performance, and competition.
MediScience will lead the market evaluation efforts. The objective of this Task
is to define the performance parameters necessary to lead the R&D effort to a
viable device configuration, manufacturing approach, cost and performance. The
market evaluation efforts will include the development of a detailed
understanding of:
o Disease demographics - incidence, prevalence, screening volume
o Delivery of care dynamics - current protocols by presentation
o Product performance (sensitivity, specificity, ease of
localization of specimen capture)
o Service requirements demanded from product suppliers
o Pricing and reimbursement models
o Unmet needs, specifically targeting the above parameters
o Visible direct competition from enhanced pill-based products
or direct auto digestive tract diagnostics and the impact on
the screening protocol
o Visible substitute competition from vaccines, etc. and the
impact on the screening demand and/or protocol
> Assess receptivity of the market to the screening product profile
o Specimen localization impact on sensitivity
o Supplemental data collection impact on specificity
o Readiness to adapt procedure within existing protocols
o Reimbursement and pricing potential
o Top-line financial projections of ultimate unit and revenue
forecast
> Assessment of current confirmation diagnostics market
o Delivery of care dynamics
o Product performance
o Current pricing and reimbursement
o Unmet needs
o Visible direct and substitute competition and the impact on
the confirmation protocol
> Assessment of receptivity of the market to the application in confirmation
o Performance requirements (sensitivity, specificity)
o Point of care attraction - a valuable benefit or not
o Overall protocol adaptation requirements
o Pricing ceilings
Page 35 of 39
o Top-line revenue projections
> Presentation of top-line performance profile requirements to FDA
consultants for incorporation into development plan
> Top-line commercialization requirements
o Order of magnitude of potential target clinician sites
o Field force assets required
o Other service assets required (e.g.: reimbursement assistance,
leasing, applications, etc.)
> Surface primary commercialization options available based on publicly
available data and knowledge base (for example)
o Internal build of field force and service assets
o Lease-to-buy field force and service assets
o Co-marketing/Co-promotion/Joint Venture with existing
diagnostic, pharmaceutical companies
o Utilization of distributor organizations (Medlink and other
specialty distributors)
> Review commercialization options against strategic and financial
considerations to Mediscience
o Strategic fit and long term value
o Top-line potential financial requirements - order of magnitude
o Potential market reaction based on comparable scenarios
Page 36 of 39
