AMENDMENT NO.1 TO LICENSING AGREEMENT
This Amendment No.1 dated as of January 22, 1999 to that certain Licensing
Agreement (this "Amendment"), dated as of March 31, 1995, by and between
EMBRYO DEVELOPMENT CORPORATION, a Delaware corporation (the "Company" or
"Licensee"), and XXXXX X. XXXXX, M.D. (the "Licensor").
W I T N E S S E T H :
WHEREAS, the Company and the Licensor have entered into a Licensing
Agreement dated as of March 31, 1995 (the "Licensing Agreement"), whereby the
Licensor has licensed the exclusive rights to develop, manufacture and sell
products covered by U.S. Patent No. 5,256,152 (the "Patent") also known as
the Safety Needle and Method for Using Same (the "Invention").
WHEREAS, the Company and the Licensor desire to amend the Licensing
Agreement to effect changes provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged ,
the parties hereto agree as follows:
1. Effective as of the date hereof, the Licensing Agreement is hereby
amended by eliminating the "Minimum Payment Obligation," as that term is defined
in the Licensing Agreement under Section 5. The last such payment due by
Licensee shall be the payment which was due in September 30,1998 in the
amount of $50,000. Such payment shall be made upon the execution of this
Amendment. If this payment is not made or the funds associated with this
payment are not available to Licensor within thirty days from the date of
this Amendment then this entire Amendment shall be null and void.
2. In consideration for eliminating Minimum Payment Obligation, the
parties hereto agree to the following:
a) An increase in the amount of the Royalty as defined in the
License Agreement under Section 4.2 to 10%;
b) The Company shall pay to Licensor, in lieu of any and all other
minimum Royalty obligations under the Licensing Agreement, a
maximum aggregate sum of four hundred and fifty thousand dollars
($450,000) to be paid as follows:
(i) $2,500 per month until no balance remains, the first
payment to be made in February 1, 1999. Subsequent payments shall
be made on the first of each month thereafter. If such payments
are not made the Company shall be deemed in breach of the Amendment if
such amounts are not made current within five (5) days of receipt
of written notice of breach by Licensor. Any such amount which are
past due shall bear an interest rate of 10% per annum;
(ii) 10% of the net proceeds received by the Company from any
Capital Raise by the Company subsequent to January 7, 1999
excluding the first $600,000 raised during the period January 7,
1999 through February 28, 1999. For purposes of this Amendment,
the term "Capital Raise" shall be defined as the sale of any equity
securities issued by the Company whether in a private or public
transaction, or the proceeds from any new long-term debt financing of
the Company, the sale of any of the remaining shares of HDS common
stock owned by the Company, or the sale of substantially all of
the Company's assets. Such amounts due under this section 2(b)(ii)
shall be due thirty days from the time such funds become available to
the Company and a schedule illustrating the calculation of any
amounts due hereunder shall be provided to the Licensor along with
any payments. The Company shall provide the Licensor with notice
of any such Capital Raise as soon as practicable;
(iii) 10% of the Net Income Before Taxes on a consolidated basis of
the Company (as defined using generally accepted accounting practices
typical of the medical device industry), to be paid within 90 days
after fiscal year-end; and
(iv) Payments made under the provisions of section 2(b) of this
Amendment shall not be applied to any amounts due under section 2(a)
of this Amendment; and
(v) Any failure by the Company to make any payment under section
2(b) of this Amendment if not cured within 30 days after receipt of
written notice by Licensor shall permit the Licensor to immediately
terminate this Amendment and the Licensing Agreement.
The aggregate sum of $450,000 shall not bear any interest.
c) If the Licensing Agreement is terminated for any reason by the
Licensor, the remaining balance due under section 2(b) above shall
be reduced by the lesser amount of $125,000 or the remaining balance
due and all possessions owned by the Company related to the Invention,
including but not limited to documents, engineering reports and
drawings, prototypes, molds, models, data, and other information
acquired by the Company with respect to the Invention (collectively
hereinafter referred to as the "Know How") shall be given to the
Licensor and become the Licensor's property free and clear of any
liens or encumbrances. If the Company terminates this Amendment or
the Licensing Agreement for any reason then the Licensor shall have
the option to acquire the Know-How for a reduction in the remaining
balance due under section 2(b) above equal to the lesser amount of
$125,000 or the remaining balance due.
d) If the Company does not obtain the necessary government approvals
to market the Invention within 24 months from the date hereof then the
License Agreement shall automatically terminate unless the Company is
current with all of its obligations under section 2(b) of this
Amendment and pays the Licensor an additional fee of $250,000, paid by
the last day of the 24th month of the date of this agreement, and
thereby extends this regulatory approval requirement by an
additional 24 months. If the Company extends this regulatory
approval requirement and the Company does not obtain the necessary
government approvals to market the Invention within 48 months from
the date hereof then the License Agreement shall automatically
terminate.
e) The Licensor acknowledges that this Amendment and the terms
contained herein fully satisfy any prior obligations owed to Licensor
by the Company including, but not limited to, the Minimum Payment
Obligations with respect to the Invention and any other products or
inventions currently or previously licensed by the Company from the
Licensor.
3. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
law.
4. Except as otherwise specifically set forth herein, all of the terms
and provisions of the Licensing Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
EMBRYO DEVELOPMENT CORPORATION
By:/s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
Title: CEO
/s/ Xxxxx Xxxxx
_____________________________
Xxxxx X. Xxxxx, M.D.
