JOINT DEVELOPMENT AGREEMENT
This JOINT DEVELOPMENT AGREEMENT ("Agreement") is entered into
effective as of the "Effective Date" (as defined below), by and between INMEDICA
DEVELOPMENT CORPORATION, a Utah corporation ("InMedica"), XXX XXX TECHNOLOGY
CO., LTD. (formerly known as Xxx Xxx Plastics Industrial Co., Ltd.), a
corporation duly organized and existing under the laws of the Republic of China
("Xxx Xxx"), MICROCOR, INC., a Utah corporation ("MicroCor"), and WESCOR INC., a
Utah corporation ("Wescor"). The "Effective Date" shall be the date on which the
last of the above-named parties executes this Agreement as evidenced by the
dates set forth on the signature page hereof.
RECITALS
InMedica is a medical products research and development company.
Through its subsidiary, MicroCor, it has developed a method for measuring
hematocrit non-invasively (without drawing blood) and has applied for and
received four (4) patents from the U.S. Patent and Trademark Office. As of
December 12, 1995, MicroCor's application for a patent entitled "Method and
Apparatus for Non-Invasively Determining Hematocrit" was allowed by the U.S.
Patent and Trademark Office, and such patent issued on June 18, 1996, as Patent
No. 5,526,808 with a term of 17 years and an expiration date of June 18, 2013.
MicroCor has been issued three additional patents, Patent No. 5,642,734, Patent
No. 6,128,518 and Patent No. 6,766,191, each of which claims priority from
October 4, 1990, the date of the first patent's filing, and each of which has an
expiration date of October 4, 2010.
Pursuant to a Development, Licensing and Manufacturing Agreement dated
May 10, 2001 (the "2001 Agreement"), Xxx Xxx and InMedica pursued additional
development on the non-invasive hematocrit technology. The methods and
procedures to measure hematocrit non-invasively, including without limitation,
the patents and technologies incorporated in the patents and patent applications
described above and the development work pursued by Xxx Xxx and/or InMedica, are
collectively referred to herein as the "Hematocrit Technology."
InMedica is a publicly traded corporation. Xxx Xxx is a major
shareholder of InMedica, owning one-third of the issued and outstanding shares
of InMedica's common stock. MicroCor is a privately held corporation with
5,000,000 shares of common stock (the "MicroCor Stock") authorized under its
Articles of Incorporation and no other class or series of stock authorized.
InMedica and Xxx Xxx own all of the issued and outstanding shares of the
MicroCor Stock (147,101 shares), with InMedica owning 117,681 shares (80%) and
Xxx Xxx owning 29,420 shares (20%). In order to facilitate further development
of the Hematocrit Technology described in this Agreement, InMedica and Xxx Xxx
propose to transfer, assign, or license their respective interests in the
Hematocrit Technology to MicroCor.
Wescor employs or has access to researchers and engineers to develop
medical devices, equipment and products based on the Hematocrit Technology (the
"Products"), and to conduct clinical trials of such products with the results
thereof to be submitted to the U.S. Food and Drug Administration (the "FDA") to
obtain clearance for marketing in the United States. It has the financial and
managerial assets and experience to be capable of managing the process of
developing and manufacturing the Products.
The parties desire to enter into this Agreement with the intent of
accomplishing the following purposes (as more fully described below): (1) to
transfer to MicroCor all rights relating to the Hematocrit Technology now owned
by InMedica; (2) to license to MicroCor all rights relating to the Hematocrit
Technology now owned by Xxx Xxx; (3) to provide for the sale to Wescor of a
portion of the shares of the MicroCor Stock owned by InMedica and Xxx Xxx; (4)
to assign to Wescor the rights and duties of managing the operations of
MicroCor; (5) to assign to Wescor the rights and duties to continue, or to cause
MicroCor to continue, the development of the Hematocrit Technology and to
thereby earn additional shares of the MicroCor Stock in phases upon (a) the
completion of a working prototype of the Products capable of meeting FDA
requirements, (b) the completion of clinical trials for such Products,
submission of the results thereof to the FDA, and obtaining the FDA's clearance
to market such Products, and (c) manufacturing and initial introduction into the
U.S. market of such Products; (6) to provide for the granting of an option to
Wescor to purchase the MicroCor Stock held by InMedica and Xxx Xxx upon
completion of the final two phases (described in (b) and (c) above) of the
development of the Products; (7) to provide for the granting of a right of first
refusal to Wescor in the event MicroCor or its shareholders receive a bona fide
offer to acquire MicroCor or its assets; and (8) to provide for an option on the
part of InMedica and Xxx Xxx to purchase Wescor's MicroCor Stock in the event
the exercise of the option granted to Wescor is deemed to be at a price that is
too low.
AGREEMENT
In consideration of the foregoing recitals, the mutual covenants
described herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. Ownership and Licensing of Hematocrit Technology.
1.1 Transfer of Hematocrit Technology. InMedica hereby
transfers, assigns and conveys to MicroCor all of its right, title and
interest in and to the Hematocrit Technology and any derivative
thereof, including, without limitation, ownership, licensing,
marketing, sales, distribution and manufacturing rights. The foregoing
transfer, assignment and conveyance is intended by the parties to cover
all of the rights, title and interests of InMedica in the Hematocrit
Technology and any derivative thereof, whether such rights, title or
interests are held jointly or separately by InMedica, and whether such
rights, title or interests are in and to a part or whole of any element
of the Hematocrit Technology. The obligation of InMedica to transfer,
assign and convey as described in this Section 1.1 shall include, but
not be limited to, the obligation to cause any agents, independent
contractors and research partners (including Medical Physics, Inc., and
Xxxxxxxx & Associates) to transfer, assign and convey to MicroCor any
such rights in the Hematocrit Technology, including rights to
government grants. The parties acknowledge and agree that no royalty or
other compensation is due or payable to InMedica arising from the
Hematocrit Technology or any Product developed therefrom, except as
expressly set forth herein in Section 6. Upon execution of this
Agreement, InMedica acknowledges and agrees that the 2001 Agreement is
hereby superceded and terminated and that all obligations of the
parties thereunder have been performed, waived, fulfilled, or otherwise
relieved.
1.2 License of Hematocrit Technology. Xxx Xxx hereby grants to
MicroCor, its successors and assigns, an exclusive, worldwide,
royalty-free right and license (the "Xxx Xxx License") in and to all of
its right, title and interest in and to the Hematocrit Technology and
any derivative thereof, to make, have made, use, sell, offer to sell,
and import Products and to practice methods covered by or included in
the Hematocrit Technology for the life of any protectable rights in the
Hematocrit Technology. MicroCor shall have the right to sublicense,
assign or transfer the Xxx Xxx License to third parties. The Xxx Xxx
License is intended by the parties to cover all of the rights, title,
and interests of Xxx Xxx in the Hematocrit Technology and any
derivative thereof, whether such rights, title, or interests are held
jointly or separately by Xxx Xxx, and whether such rights, title, or
interests are in and to a part or whole of any element of the
Hematocrit Technology. Xxx Xxx agrees that it shall take all actions
reasonably necessary to maintain the rights included within the Xxx Xxx
License and to diligently and vigorously defend and protect such rights
from infringement, improper use, depreciation, or other loss of right
due to the acts of third parties or the public in general, including,
without limitation, pursuing appropriate patents and other applicable
protections; provided, however, that any and all reasonable and
appropriate costs and expenses incurred in the defense and protection
of such rights, including but not limited to legal fees, shall be borne
by MicroCor if Xxx Xxx obtains MicroCor's prior written consent before
incurring any such costs and expenses, which consent shall not be
unreasonably withheld in view of the cost involved and in view of
MicroCor's products, business and marketing practices, and business and
marketing plans. Notwithstanding the foregoing, Xxx Xxx has no
obligations to take any action to protect or defend any right included
within the Xxx Xxx License if MicroCor does not consent to bear the
costs and expenses to be incurred in such defense and protection. Xxx
Xxx further agrees that it shall take no action, with respect to the
rights included within the Xxx Xxx License, that would have the effect
of negatively impacting the right of MicroCor to use exclusively, such
rights. In the event Xxx Xxx or MicroCor learns of any event, any act
of a third party, or any action or proceeding, whether such event, act
or action has occurred, been commenced or is being threatened, that
would negatively impact the rights included within the Xxx Xxx License
(a "Negative Action"), then such party shall give the other party
written notice of such Negative Action. Xxx Xxx agrees to retain
counsel acceptable to MicroCor, at MicroCor's expense and with
MicroCor's prior written consent, to take all reasonable and necessary
steps to protect or defend against such Negative Action. If Xxx Xxx
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fails to retain counsel or to take other reasonable and necessary
protective and defensive actions within five (5) business days
following the date MicroCor delivers written notice to Xxx Xxx
requesting such actions, MicroCor shall have the right, at its own
expense, to take such actions in the name of Xxx Xxx or in MicroCor's
own name, as may be appropriate. Nothing herein shall authorize
MicroCor to settle such Negative Actions without the prior written
consent of Xxx Xxx, if by any such settlement Xxx Xxx is obligated to
make any monetary payment, to assume any other obligation, to part with
any property or any interest therein, to be subject to any injunction,
or to grant any license or any right included within the Xxx Xxx
License. Notwithstanding the foregoing, Xxx Xxx has no obligations to
take any action to protect or defend against any Negative Action if
MicroCor does not consent to bear the costs and expenses to be incurred
in such defense and protection, nor does Xxx Xxx have any obligations
to take any action to defend against any action, threat, claim or
proceeding alleging that the Products have infringed any patent or
other intellectual property right of any third party due to any causes
other than the rights included within the Xxx Xxx License. The
obligation of Xxx Xxx to license the rights included within the Xxx Xxx
License shall include, but not be limited to, the obligation to cause
any agents, independent contractors, and research partners (including
Medical Physics, Inc., and Xxxxxxxx & Associates) to similarly license
to MicroCor any such rights. The parties acknowledge and agree that the
rights included within the Xxx Xxx License do not include any rights in
new developments, discoveries or other intellectual property rights
developed or discovered as a result of future work done by MicroCor or
Xxx Xxx, their agents, independent contractors, and research partners
after the execution of this Agreement pursuant to any government grants
concerning the Hematocrit Technology, and that all such developments,
discoveries and intellectual property rights shall be the sole property
of MicroCor. The rights included within the Xxx Xxx License include,
without limitation, any rights still remaining under any licenses
granted to it under the 2001 Agreement to sell and distribute the
Products in "Asia," as defined in Section 6.2.4. The parties
acknowledge and agree that no royalty or other compensation is due or
payable to Xxx Xxx arising from the Hematocrit Technology or any
Product developed therefrom, except as expressly set forth herein in
Section 6. Upon execution of this Agreement, Xxx Xxx acknowledges and
agrees that the 2001 Agreement is hereby superceded and terminated and
that all obligations of the parties thereunder have been performed,
waived, fulfilled, or otherwise relieved.
2. MicroCor Finances and Capital Structure. InMedica shall take all
reasonable action, or cause MicroCor to take all reasonable action, as soon as
is reasonably practicable before or upon the execution of this Agreement to (i)
terminate any agreements, resolve any disputes, pay any liabilities and perform
any obligations of MicroCor existing as of the time immediately prior to the
effectiveness of this Agreement such that, after the transfer described in
Section 1, MicroCor's only assets and liabilities shall be the Hematocrit
Technology and the related rights and duties described in or reasonably arising
from this Agreement; (ii) effect a restructuring and split of the issued and
outstanding shares of the MicroCor Stock so that immediately after such
restructuring and split the total outstanding shares of MicroCor will be
2,500,000 shares with InMedica owning 2,000,000 shares and Xxx Xxx owning
500,000 shares of the MicroCor Stock; and (iii) recall all certificates
representing issued and outstanding shares of MicroCor Stock and re-issue new
certificates to the holders of such shares in the new share amounts described in
the preceding clause (ii) and include on such new certificates a conspicuous
reference to the existence of this Agreement and the fact that it restricts the
transfer of the shares and affects the management of MicroCor. All certificates
representing shares of the MicroCor Stock issued during the term of this
Agreement shall include a conspicuous reference to the existence of this
Agreement and the fact that it restricts the transfer of the shares and affects
the management of MicroCor. Xxx Xxx shall reasonably cooperate with InMedica to
the extent necessary to accomplish the purposes described in this Section.
3. Stock Restrictions. During the term of this Agreement:
3.1. Transfers Prohibited. Without obtaining the prior written
consent of all parties hereto, each of InMedica, Xxx Xxx and Wescor
shall be prohibited from transferring, conveying, pledging,
hypothecating or otherwise assigning, and each of InMedica, Xxx Xxx and
Wescor hereby covenants and warrants that it shall not transfer,
convey, pledge, hypothecate or otherwise assign, any part or all of its
interest in any shares of the MicroCor Stock, whether now held or
hereafter acquired, to or for the benefit of any party or third party
except as expressly provided herein. The provisions of this Section are
subject to the provisions of Section 3.4.
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3.2. Newly Authorized or Issued Stock Prohibited. Without
obtaining the prior written consent of all parties hereto, MicroCor
shall be prohibited from authorizing or issuing, and MicroCor hereby
covenants and warrants that it shall not authorize or issue, any shares
of MicroCor Stock or any shares of any other class or series of the
capital stock of MicroCor to or for the benefit of any party or third
party except as expressly provided herein.
3.3. MicroCor Board Composition. During the term of this
Agreement, regardless of the number of shares of MicroCor Stock held by
the parties, the Board of Directors of MicroCor shall consist of
exactly five (5) directors, three (3) of whom shall be chosen by
InMedica, one (1) of whom shall be chosen by Xxx Xxx, and the remaining
one (1) director shall be chosen by Wescor. InMedica, Xxx Xxx and
Wescor shall take all necessary action, in their capacities as
shareholders of MicroCor, to accomplish the foregoing provisions of
this Section. Only upon the written consent of InMedica, Xxx Xxx and
Wescor, may the size or composition of MicroCor's Board of Directors be
changed during the term of this Agreement.
3.4. Right of First Refusal. The provisions of this Section
3.4 shall apply in the event the parties have received an offer for the
acquisition of MicroCor that InMedica and Xxx Xxx have approved and
intend to accept (an "Acquisition Offer"). An Acquisition Offer must be
a bona fide offer from a qualified third party to (i) purchase all of
the outstanding MicroCor Stock, (ii) purchase all or substantially all
the assets of MicroCor, or (iii) merge or otherwise combine MicroCor
with one or more entities upon the consummation of which the holders of
MicroCor Stock immediately prior thereto would hold less than 50% of
the shares of the voting stock or other ownership interests in the
surviving entity. The value equivalent in the case of a merger or
combination or where the consideration is other than cash as set forth
in the Acquisition Offer must be supported by a fairness opinion
rendered by a recognized business valuation expert. Upon the receipt of
an Acquisition Offer, InMedica and Xxx Xxx shall give Wescor written
notice (the "Acquisition Offer Notice") thereof and of their intent to
accept the Acquisition Offer. InMedica and Xxx Xxx hereby grant Wescor
a right of first refusal (the "First Refusal Right") to purchase all
(but not less than all) of the MicroCor Stock held by both InMedica and
Xxx Xxx. Any First Refusal Right shall exist from the date the
Acquisition Offer Notice is delivered to Wescor and shall expire sixty
(60) days thereafter. To exercise a First Refusal Right, Wescor shall,
prior to its expiration, give InMedica and Xxx Xxx written notice (the
"Exercise Notice") of Wescor's intent to exercise the First Refusal
Right. The terms of such First Refusal Right shall be as follows:
3.4.1. Purchase Price. The purchase price of
InMedica's and Xxx Xxx'x MicroCor Stock shall be calculated
as: (x) the total number of shares of MicroCor Stock held by
InMedica and Xxx Xxx divided by the total number of
outstanding shares of MicroCor Stock, (y) multiplied by the
purchase price (or its value equivalent in the case of a
merger or combination or where the consideration is other than
cash) set forth in the Acquisition Offer, (z) multiplied by
90%.
3.4.2. Purchase Terms. Terms for payment of the
purchase price shall be, at Wescor's option, either: (i)
twenty percent (20%) of the purchase price paid within 60 days
following the delivery of the Exercise Notice, and the balance
paid in equal monthly payments over twelve (12) months
(beginning one month following the 20% payment), with such
balance bearing interest at an annual rate of two percent (2%)
plus the Prime Rate; or (ii) payment terms that are no less
favorable to InMedica and Xxx Xxx than they would be for the
acquirer as set forth in the Acquisition Offer. As used in
this Agreement, the term "Prime Rate" shall mean the "prime
rate" as reported in the Wall Street Journal on the date
closest to the date the installment payments begin.
3.4.3. Merger Alternative. As an alternative to the
payment of the purchase price, InMedica, Xxx Xxx and Wescor
agree to negotiate in good faith to attempt to agree upon a
merger of InMedica, MicroCor and Wescor. In such a merger, the
value attributed to MicroCor shall be the purchase price (or
value equivalent) in the Acquisition Offer without reducing by
multiplying by 90% as described in clause (z) of Section
3.4.1; the respective values attributed to InMedica and Wescor
shall be established by a fairness opinion rendered by a
recognized business valuation expert, as to whom none of the
parties has a reasonable objection.
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3.4.4. Agreement Terminated. In the event the First
Refusal Right is exercised, this Agreement shall be terminated
except for the royalty provisions described in Section 6,
which shall survive.
3.5 Disclosure of Potential Acquisition Transactions. Each of
InMedica, Xxx Xxx and Wescor covenant and agree that during the term of
this Agreement if it intends to solicit an offer or if it receives an
offer or other indication of interest from a third party that is
reasonably likely to develop into a serious offer or agreement to
purchase or acquire a substantial portion of the assets of MicroCor or
of the MicroCor Stock, or to combine or merge with MicroCor (a
"Potential Acquisition Transaction"), then it shall give the other
parties to this Agreement notice of such solicitation, offer or
interest as soon as is reasonably possible and shall continue to give
such other parties notice of changes or developments in the
negotiations concerning such Potential Acquisition Transaction. Such
notices shall include details as to the terms of such Potential
Acquisition Transactions. The parties agree that if a party hereto
shall fail to give the notices required under this Section the
Potential Acquisition Transaction shall not be entered into without the
written consent of any party who did not receive the required notice.
The parties acknowledge that during the term of this Agreement each
party is permitted to solicit offers from and communicate interest to
third parties concerning Potential Acquisition Transactions, although
the consummation of such transactions can only be accomplished pursuant
to the express terms set forth in other sections of this Agreement.
Nothing in this Section shall be interpreted to give a party any right
to enter into a transaction that is otherwise prohibited by this
Agreement.
4. Wescor Purchase of MicroCor Stock.
4.1. From InMedica. InMedica hereby sells to Wescor and Wescor
hereby purchases from InMedica 300,000 shares of MicroCor Stock. As
partial consideration for such purchase and sale, Wescor shall pay
InMedica $300,000 as follows: (i) $30,000 upon the execution of this
Agreement, and (ii) 18 monthly payments of $15,000 with the first such
monthly payment due and payable on the first day of the month following
the Effective Date and each successive monthly payment due on the first
day of each successive month until all 18 payments are made.
4.2. From Xxx Xxx. Xxx Xxx hereby sells to Wescor and Wescor
hereby purchases from Xxx Xxx 75,000 shares of MicroCor Stock. As
partial consideration for such purchase and sale, Wescor shall pay Xxx
Xxx $75,000 as follows: (i) $7,500 upon the execution of this
Agreement, and (ii) 18 monthly payments of $3,750 with the first such
monthly payment due and payable on the first day of the month following
the Effective Date and each successive monthly payment due on the first
day of each successive month until all 18 payments are made.
4.3. Special Provision for Repayment of Loan to InMedica.
InMedica and Wescor acknowledge and agree that Wescor has loaned
InMedica certain sums of money which remain outstanding as of the date
this Agreement is executed (the "Wescor Loans"). InMedica shall pay
Wescor 20% of each installment payment (including the initial payment
due upon execution) due from Wescor to InMedica under Section 4.1 as
partial performance of its repayment obligations of the Wescor Loans.
At InMedica's election, InMedica may direct Wescor to pay only 80% of
each such installment payment in satisfaction of InMedica's obligation
under this Section.
5. Management of MicroCor; Issuance of New Stock; Options to Acquire
Remainder of MicroCor.
5.1. Management Rights and Duties of Wescor. InMedica, Xxx Xxx
and Wescor, as the current and future (pursuant to the terms of this
Agreement) majority shareholders of MicroCor, agree that upon execution
of this Agreement Wescor shall assume the management of MicroCor as
described in this Section 5.1.
5.1.1. Rights and Duties. Wescor shall have the right
and obligation to manage the day-to-day operations of
MicroCor, including the hiring and firing of its officers and
employees and contracting for employees or independent
contractors. Wescor shall use its best efforts with all
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reasonable speed and efficiency to develop or cause MicroCor
to develop the Products as described herein. Wescor's
obligation to fund the expenses of MicroCor's operations
("Wescor Funding Obligations") shall be as follows: (i) Wescor
shall not be responsible for funding expenses related solely
to manufacturing or sales and marketing operations
("Manufacturing and Sales Expenses"); (ii) except to the
extent that expenses are reasonably includable as
Manufacturing and Sales Expenses, Wescor shall be responsible
for and shall contribute funds to MicroCor to pay expenses
incurred by MicroCor for research and development of the
Products ("R&D Expenses"), including, but not limited to,
costs related to development of the Prototype (as defined
below), costs related to obtaining FDA Clearance (as defined
below), and R&D Expenses related to First Production (as
defined below). Notwithstanding the fact that Wescor has no
obligation to fund Manufacturing and Sales Expenses, Wescor
agrees to exercise its commercially reasonable best efforts to
arrange for the financing of the Manufacturing and Sales
Expenses and of any royalty payment obligations under Section
6 ("Wescor Financing Commitment"), subject to approval of the
Board of MicroCor. In arranging for any such financing, Wescor
shall not be obligated to loan any funds itself or to
separately guarantee or provide separate security for any such
loans which are arranged for MicroCor by Wescor.
5.1.2. Board Authority. MicroCor's Board reserves the
authority to approve or disapprove actions by MicroCor (or by
Wescor on MicroCor's behalf) (i) to acquire or dispose of
capital assets, or to incur capital expenditures or debt if
such actions would involve in the aggregate more than $20,000
during any 12-month period; (ii) to contract with a third
party to perform part or all of the manufacturing, marketing
and selling functions necessary to accomplish the intent of
this Agreement; or (iii) to assign, transfer, license,
sub-license, pledge as collateral, mortgage, hypothecate or
otherwise encumber part or all of the Hematocrit Technology or
any other intellectual property interest owned by or licensed
to MicroCor. MicroCor (or Wescor on MicroCor's behalf) shall
not take any action described in the preceding sentence
without first delivering to all members of MicroCor's Board
written notice of its intent to take such action. If no Board
member objects within fifteen (15) business days of receipt of
such notice by delivering a written notice to Wescor, Wescor
may proceed to take such action. If a Board member objects,
Wescor shall not take such action until after the Board has
acted to determine whether to consent to such action. In
addition to other forms of notice permitted by this Agreement,
the giving of notices and communicating of objections
described in this Section may be accomplished by facsimile
machine transmission or by email if a confirmation of
successful delivery or transmission is received by the sender.
5.1.3. Termination of Management Duties. If not
earlier terminated hereunder, if (i) no Prototype has been
completed (as defined and described in Section 5.2) by the
date that is twelve (12) months following the Effective Date,
(ii) no FDA Clearance (as described in Section 5.3) has been
received by the date that is eighteen (18) months following
the Effective Date (subject to the extension of such period
pursuant to Section 5.3), (iii) there has been no First
Production (as defined in Section 5.4.1) of a Product by the
date that is twenty four (24) months following the Effective
Date (subject to the extension of such period pursuant to
Section 5.3), or (iv) Wescor has not fulfilled the Wescor
Funding Obligations within a reasonable period following the
date such obligations become due from time to time, then the
Board of Directors of MicroCor shall have the right to review
Wescor's actions in fulfilling its obligations to manage
MicroCor, and shall have the right to make such changes in the
management as it deems appropriate. The parties acknowledge
and agree that such changes may, in the Board's discretion,
include termination of this Agreement, in which case the Board
of Directors of MicroCor shall thereafter have complete and
autonomous control over the management and operations of
MicroCor. The parties further acknowledge and agree that a
failure by Wescor to comply with its covenants under the
Wescor Financing Commitment may result in MicroCor's Board
assuming the rights and duties pertaining to the Wescor
Financing Commitment and terminating Wescor's rights and
duties thereunder.
5.2. Development of FDA Prototype; Stock Purchase and
Issuance. Wescor shall use its best efforts with all reasonable speed
and efficiency to develop, or cause MicroCor to develop, a prototype or
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prototypes of the Product(s) (the "Prototype") suitable for conducting
the clinical trials necessary to prepare for submission or the
Product(s) to the FDA for regulatory review and marketing clearance.
Upon such completion of the Prototype, MicroCor shall issue to Wescor,
500,000 new shares of MicroCor Stock. The consideration for the shares
issued to Wescor shall be the amounts contributed to MicroCor to fund
the Wescor Funding Obligations incurred to the date of completion of
the Prototype. Such shares shall be deemed fully paid and not subject
to any assessment.
5.3. FDA Clearance. Wescor shall use its best efforts with all
reasonable speed and efficiency to conduct and complete, or cause
MicroCor to conduct and complete, such actions as are reasonably
necessary to gather data and prepare a 510(k) Premarket Notification
submission to the FDA covering the Product(s) and to obtain the
necessary clearances from the FDA to market such Product(s) in the
United States market ("FDA Clearance"). In the event MicroCor's Board
of Directors determines that Wescor has acted in good faith in the
performance of its obligations to obtain FDA Clearance but such FDA
Clearance has not been obtained, and the Board of Directors further
determines that it is reasonable to expect that FDA Clearance will be
obtained in the future, the Board of Directors may extend for six (6)
months the period described in clause (ii) of Section 5.1.3, which
extension would also automatically extend the period described in
clause (iii). Upon subsequent identical determinations by MicroCor's
Board of Directors, additional six-month extensions may be granted in
the Board's discretion.
5.3.1. Stock Issuance. Upon obtaining FDA Clearance,
MicroCor shall issue to Wescor, 500,000 new shares of MicroCor
Stock. The consideration for the shares issued to Wescor shall
be the amounts contributed to MicroCor to fund the Wescor
Funding Obligations incurred to the date of obtaining FDA
Clearance. Such shares shall be deemed fully paid and not
subject to any assessment.
5.3.2. Option and Xxxxx Option to Acquire MicroCor
Stock. Upon obtaining FDA Clearance, Wescor shall have the
option (the "Option") to purchase all (but not less than all)
of the MicroCor Stock held by InMedica and Xxx Xxx pursuant to
the provisions of this Section 5.3.2. To exercise the Option:
a. Notice. Wescor shall deliver a written
notice (the "Option Notice") of its election to
exercise the Option to both InMedica and Xxx Xxx
within ninety (90) days following receipt of the
first formal notice of FDA Clearance of the
Product(s).
b. Purchase Price. The purchase price under
the Option shall be the pro rata portion of the total
value of MicroCor attributable to the total shares of
MicroCor Stock held by InMedica and Xxx Xxx (as
compared to the total outstanding shares of MicroCor
Stock). The value of MicroCor (the "MicroCor Option
Value") shall be determined as follows: (i) Wescor
may choose to pay for and obtain an appraisal of the
value (the "Option Appraisal Value") of MicroCor from
a nationally recognized appraisal firm, as to whom
neither InMedica nor Xxx Xxx have a reasonable
objection, and the MicroCor Option Value shall equal
the Option Appraisal Value multiplied by 90%; or (ii)
Wescor may suggest a reasonable value for MicroCor
(the "Option Suggested Value"), and the MicroCor
Option Value shall equal the Option Suggested Value
(not multiplied by 90%). Wescor shall, within thirty
(30) days following the delivery of the Option
Notice, deliver to InMedica and Xxx Xxx written
notice (the "Option Value Notice") of the MicroCor
Option Value and all reports and data that support
its determination of such value. InMedica and Xxx
Xxx, at their expense, shall have the right to obtain
a fairness opinion ("Fairness Opinion") from a
recognized business valuation expert as to whom
Wescor has no reasonable objection concerning the
Option Appraisal Value or the Option Suggested Value,
as appropriate. If the Fairness Opinion determines
that either the Option Appraisal Value or the Option
Suggested Value, as applicable, is not within a fair
range of value, the Option shall terminate. In the
event the Option is exercised, any holders of the
MicroCor Stock other than InMedica and Xxx Xxx, who
have obtained MicroCor shares in compliance with the
provisions of Section 3.1, shall have the right to
require Wescor to purchase their MicroCor Stock at
the same pro rata price per share.
7
x. Xxxxx Option. Notwithstanding Wescor's
right to exercise the Option, upon receipt of the
Option Value Notice, or, if a Fairness Opinion is
obtained, upon receipt of a Fairness Opinion that
does not terminate the Option, InMedica and Xxx Xxx
jointly, or InMedica by itself (but not Xxx Xxx by
itself) shall then have the option (the "Xxxxx
Option") to terminate Wescor's Option by purchasing
all (but not less than all) of the MicroCor Stock
held by Wescor. To exercise the Xxxxx Option, either
InMedica or InMedica and Xxx Xxx together, shall
deliver a written notice (the "Xxxxx Option Notice")
to Wescor within thirty (30) days following the
receipt of the Option Value Notice. In the event a
Fairness Opinion is being obtained, the period during
which a Xxxxx Option Notice may be given shall extend
to thirty (30) days following receipt of such
Fairness Opinion. The purchase price under the Xxxxx
Option shall be the pro rata portion of the total
value of MicroCor attributable to the total shares of
MicroCor Stock held by Wescor (as compared to the
total outstanding shares of MicroCor Stock). The
total value of MicroCor for purposes of the Xxxxx
Option shall be 110% of the Option Appraisal Value or
the Option Suggested Value, as appropriate, as set
forth in Wescor's Option Value Notice. The purchase
price under the Xxxxx Option shall be paid to Wescor
as follows: 20% within thirty (30) days following the
delivery of the Xxxxx Option Notice, and the
remainder in equal monthly installments of principle
and interest on the first day of each successive
month for thirty six (36) months. Interest accruing
on such remainder shall be an annual rate equal to
two percent (2%) plus the Prime Rate. In the event
InMedica and Xxx Xxx exercise the Xxxxx Option
jointly, they shall participate in the same
proportions as their individual ownership of MicroCor
Stock bears to their aggregate ownership of MicroCor
Stock. If the Xxxxx Option is exercised, this
Agreement shall then automatically terminate.
d. Option Revival. Notwithstanding the
provisions of the preceding Paragraph c, Wescor shall
have the right to revive an Option (an "Option
Revival") terminated by the Xxxxx Option by
increasing by at least ten percent (10%) the purchase
price provision of the Option and delivering a new
Option Value Notice to InMedica and Xxx Xxx within
fifteen (15) days following the delivery of a Xxxxx
Option Notice. Such new Option Value Notice shall
terminate the Xxxxx Option, and shall be treated as
if it were an original Option Value Notice under this
Agreement. InMedica, or InMedica and Xxx Xxx jointly,
shall again have the right to exercise the Xxxxx
Option pursuant to Paragraph c, based on the
increased purchase price provision in the new Option
Value Notice. The Option, Xxxxx Option and Option
Revival may be repeated as many times as is
necessary.
e. Option Payment Terms. If a Xxxxx Option
Notice is not delivered within the time allowed by
InMedica or by InMedica and Xxx Xxx, the Xxxxx Option
shall expire. Wescor shall then be obligated to
exercise the Option by paying the purchase price
under the Option as follows: 20% within thirty (30)
days following the deadline for the Xxxxx Option
Notice, and the remainder in equal monthly
installments of principle and interest on the first
day of each successive month for thirty six (36)
months. Interest accruing on such remainder shall be
an annual rate equal to two percent (2%) plus the
Prime Rate.
f. Merger Alternative. As an alternative to
the payment of the purchase price under the Option,
InMedica, Xxx Xxx and Wescor agree to negotiate in
good faith to attempt to agree upon a merger of
InMedica, MicroCor and Wescor. In such a merger, the
value attributed to MicroCor shall be 100% of either
the Option Appraisal Value or the Option Suggested
Value; the respective values attributed to InMedica
and Wescor shall be established by appraisals from a
recognized appraisal firm, as to whom none of the
parties has a reasonable objection. The parties
8
acknowledge that InMedica shall have no obligation to
agree to a merger the terms of which are not
determined to be fair pursuant to a fairness opinion
from a recognized business valuation expert as to
whom none of the parties has a reasonable objection.
g. Effect on Agreement. If the Option is not
exercised, this Agreement shall continue in full
force and effect. If the Option is exercised, this
Agreement shall be automatically terminated except
for the royalty provisions set forth in Section 6,
which shall survive, and the Board of Directors of
MicroCor shall thereafter have complete and
autonomous control over the management and operations
of MicroCor.
5.4. Product Launched in Market. After obtaining FDA Clearance
of a Product, Wescor shall use its best efforts with all reasonable
speed and efficiency to cause MicroCor to begin manufacturing,
marketing and selling such Product in the market. The manufacturing,
marketing and selling functions shall be the right and responsibility
of MicroCor, which may, in the discretion of its Board of Directors,
contract with third parties for part or all of the manufacturing,
marketing and selling of the Products.
5.4.1. Stock Issuance. Upon the first completed
production run of units of the Products for which FDA
Clearance has been received and upon preparation of such units
for sale (the "First Production"), MicroCor shall issue to
Wescor, 700,000 new shares of MicroCor Stock. The
consideration for the shares issued to Wescor shall be the
amounts contributed to MicroCor to fund the Wescor Funding
Obligations incurred to the date of the First Production. Such
shares shall be deemed fully paid and not subject to any
assessment.
5.4.2. Second Option and Xxxxx Option to Acquire
MicroCor Stock. After the First Production and issuance of the
shares to Wescor pursuant to section 5.4.1 Wescor shall have a
second option (the "Second Option"), subject to the Xxxxx
Option, pursuant to the same terms as described above in
Section 5.3.2, except that the Second Option shall be
triggered by the First Production, and the Second Option
Notice shall be delivered within ninety (90) days following
the date of the First Production.
5.4.3. Termination of Management. Upon the First
Production: (i) Wescor's rights and duties under Section 5.1
to manage MicroCor, including the Wescor Funding Obligations
and the Wescor Financing Obligations, shall automatically
terminate, (ii) MicroCor shall operate as a stand-alone
company subject to the autonomous control of its Board of
Directors, and (iii) the size and composition of MicroCor's
Board of Directors shall thereafter be determined pursuant to
applicable corporate law, provided that the parties to this
Agreement hereby agree that shareholders shall have the right
to vote their shares cumulatively in subsequent elections of
MicroCor's Board of Directors. InMedica, Xxx Xxx and Wescor
shall take all necessary action, in their capacities as
shareholders of MicroCor, to accomplish the foregoing
provision of this Section.
6. Grant of Royalties.
6.1. Minimum Royalty. MicroCor hereby grants and shall pay to
InMedica and Xxx Xxx a minimum annual royalty (the "Minimum Royalty")
as defined and divided below in Sections 6.1.1 and 6.1.2 as a minimum
amount until the Revenue Royalty (as defined in Section 6.2) reaches
the amounts described below.
6.1.1. InMedica Minimum Royalty. MicroCor hereby
grants to InMedica a portion of the Minimum Royalty (the
"InMedica Minimum Royalty"). The InMedica Minimum Royalty
shall be in the amount of $160,000 per year, but shall be paid
in equal monthly royalty payments, with the first such monthly
royalty payment beginning and first due on the date that is
eighteen (18) months following the Effective Date. The
InMedica Minimum Royalty shall have the same term of existence
as the Revenue Royalty (as defined in Section 6.2), and shall
terminate on the same date the Revenue Royalty terminates.
InMedica shall pay Wescor 20% of each such monthly royalty
9
payment due under this Section 6.1.1 as partial performance of
its repayment obligations of the Wescor Loans until such time
as the Wescor Loans are fully repaid. At InMedica's election,
InMedica may direct Wescor to pay only 80% of each such
monthly royalty payment with the remaining 20% thereof being
credited against InMedica's obligation under the Wescor Loans.
6.1.2. Xxx Xxx Minimum Royalty. MicroCor hereby
grants to Xxx Xxx the remaining portion of the Minimum Royalty
(the "Xxx Xxx Minimum Royalty"). The Xxx Xxx Minimum Royalty
shall be in the amount of $40,000 per year, but shall be paid
in equal monthly royalty payments, with the first such monthly
royalty payment beginning and first due on the date that is
eighteen (18) months following the Effective Date. The Xxx Xxx
Minimum Royalty shall have the same term of existence as the
Revenue Royalty (as defined in Section 6.2), and shall
terminate on the same date the Revenue Royalty terminates.
6.2. Revenue Royalty. MicroCor hereby grants and shall pay to
InMedica and Xxx Xxx an annual royalty (the "Revenue Royalty") based on
"Revenues" (as defined in Section 6.2.1) as divided in Sections 6.2.3
and 6.2.4. The Revenue Royalty shall be effective immediately and shall
continue for all Revenues received or accrued through the latest
expiration date of the currently existing U.S. Patents on the
Hematocrit Technology, which the parties acknowledge and agree include
the following U.S. Patents with the following expiration dates: (i)
Patent No. 5,526,808 expiring June 18, 2013, (ii) Patent No. 5,642,734
expiring October 4, 2010, (iii) Patent No. 6,128,518 expiring October
4, 2010, and (iv) Patent No. 6,766,191 expiring October 4, 2010.
6.2.1 Revenues Defined. "Revenues" shall mean the
sum of (i) Royalty Revenues, and (ii) Sales and Licensing
Revenues.
a. Royalty Revenues. "Royalty Revenues"
shall mean payments received by MicroCor and its
assignees and successors in the nature of royalties
from licensees, sub-licensees and other third-parties
("Third-Party Licensees") based on sales or other
dispositions by Third-Party Licensees of Products or
any other goods or services incorporating any portion
of the Hematocrit Technology.
b. Sales and Licensing Revenues. "Sales and
Licensing Revenues" shall mean revenues received by
MicroCor and its assignees and successors that are
(i) net sales revenues from the sale or other
disposition of all Products or any other goods or
services incorporating any portion of the Hematocrit
Technology, (ii) revenues from the licensing of any
portion of the Products or the Hematocrit Technology
(where such revenues are not Royalty Revenues), and
(iii) any other revenues (but excluding Royalty
Revenues) generated by the Products, the Hematocrit
Technology, or any right or interest therein. Net
sales revenues, as a component of Sales and Licensing
Revenues, shall be the invoice price of all Products
sold less (i) standard trade discounts and returns
actually allowed, (ii) all sales commissions or sales
discounts actually allowed, (iii) taxes applicable to
such sales, and (iv) shipping charges which are to be
paid by MicroCor or its assignees or successors and
not separately invoiced. Revenue from only one arms
length sale of the same Product unit may be included
in Sales and Licensing Revenues, and, in cases where
a Product unit is sold more than once, only the
revenue from the first arms length sale (the "First
Sale") of such Product unit will be included in Sales
and Licensing Revenues; that is, revenue from a sale
of a Product unit by a purchaser of such unit shall
not be included in Sales and Licensing Revenues if
the revenue from the sale of such Product unit to the
purchaser (or to a prior seller) has already been
included in Sales and Licensing Revenues. Further, if
the Product or use of the Hematocrit Technology is
only a portion of a larger product or system, or if a
license is granted to include a Product or use of the
Hematocrit Technology in a larger product or system,
then only that portion of the revenue reasonably
attributable to the Product or Hematocrit Technology
(as part of a larger product or system) will be
included in Sales and Licensing Revenues. In such
instances where a larger product or system is
involved, the parties may further agree as to the
portion of revenues from such product or system that
is to be included in Sales and Licensing Revenues.
10
6.2.2 Calculation and Payment of Revenue Royalty. The
total Revenue Royalty payments payable by MicroCor, including
both the InMedica Revenue Royalty (described in Section 6.2.3)
and the Xxx Xxx Revenue Royalty (described in Section 6.2.4)
(the "Total Revenue Royalties"), shall be calculated as
follows: The sum of (i) in any given calendar year, four
percent (4%) of the first $5,000,000 in Sales and Licensing
Revenues, three percent (3%) of Sales and Licensing Revenues
in amounts exceeding $5,000,000 but not exceeding $20,000,000,
and two percent (2%) of Sales and Licensing Revenues in
amounts exceeding $20,000,000; plus (ii) twenty five percent
(25%) of all Royalty Revenues. Revenue Royalty payments shall
be paid by MicroCor to InMedica and/or Xxx Xxx by the end of
each month following the month in which there are any Revenues
to which the Revenue Royalty applies. In order to verify the
Revenues described in this Section 6.2, MicroCor agrees to
make or cause the accounting books and records of MicroCor and
its assignees and successors available to InMedica and Xxx Xxx
or to their agents, including independent auditors, in
reasonable form and at reasonable times and places.
6.2.3. InMedica Revenue Royalty. MicroCor hereby
grants to InMedica a portion of the Revenue Royalty (the
"InMedica Revenue Royalty"). The InMedica Revenue Royalty for
any given period shall equal the Total Revenue Royalties
multiplied by a fraction, the numerator of which is the
worldwide Revenues less the "Asian Revenues" (as defined in
Section 6.2.4) for such period, and the denominator of which
is the worldwide Revenues for such period. The InMedica
Revenue Royalty shall be effective immediately and shall
continue for all non-Asian Revenues received or accrued
through the date of termination of the Revenue Royalty as
described in Section 6.2 above.
6.2.4. Xxx Xxx Revenue Royalty. MicroCor hereby
grants to Xxx Xxx the remaining portion of the Revenue Royalty
(the "Xxx Xxx Revenue Royalty"). The Xxx Xxx Revenue Royalty
for any given period shall equal the Total Revenue Royalties
multiplied by a fraction, the numerator of which is the "Asian
Revenues" (as defined below) for such period, and the
denominator of which is the worldwide Revenues for such
period. "Asian Revenues" shall mean (i) Royalty Revenues
received from a Third-Party Licensee for sales or other
dispositions made by such Third-Party Licensee in "Asia" (as
defined below), (ii) Sales and Licensing Revenues that are net
sales revenues from a First Sale made in Asia where, at the
time of such First Sale, the seller does not reasonably know
that the ultimate sale to the end user will be to a purchaser
outside of Asia, (iii) Sales and Licensing Revenues that are
net sales revenues from a First Sale made outside of Asia
where, at the time of such First Sale, the seller reasonably
knows that the ultimate sale to the end user will be to a
purchaser in Asia, and (iv) any other Sales and Licensing
Revenues that are not net sales revenues that are received
from a Third-Party Licensee whose main office or headquarters
is located in Asia. "Asia" shall mean the following
geographical areas: Australia, New Zealand and the countries
of Asia (including without limitation, Indonesia, Malaysia and
the island countries of the Western Pacific Rim; but excluding
Russia, Turkey and the countries of the Middle East from Iran
and to the west). No Xxx Xxx Revenue Royalty shall be owed for
any month in which there are no Asian Revenues. The Xxx Xxx
Revenue Royalty shall be effective immediately and shall
continue for all Asian Revenues received or accrued through
the date of termination of the Revenue Royalty as described in
Section 6.2 above.
6.2.5 Asian Marketing Right. Xxx Xxx, at its option,
and upon giving thirty (30) days written notice to MicroCor,
Wescor and InMedica, shall have the right to terminate the Xxx
Xxx Revenue Royalty and the Xxx Xxx Minimum Royalty
permanently in exchange for the exclusive right to distribute
and sell the Products in Asia (the "Asian Marketing Right").
Xxx Xxx shall exercise the foregoing right to exchange the Xxx
Xxx Revenue Royalty and the Xxx Xxx Minimum Royalty rights for
the Asian Marketing Right, if at all, by the date that is
eighteen (18) months following the Effective Date. The Asian
Marketing Right, if elected, shall then be effective
immediately and shall continue through the date of termination
of the Revenue Royalty as described in Section 6.2 above. In
the event Xxx Xxx exchanges the Xxx Xxx Revenue Royalty and
the Xxx Xxx Minimum Royalty rights for the Asian Marketing
Right, the InMedica Revenue Royalty payable to InMedica shall
be based on only non-Asian Revenues.
11
6.3. Minimum Royalty Credit. Notwithstanding anything to the
contrary in this Section 6, the parties acknowledge and agree that the
Revenue Royalty payments are intended to be in place of - and not in
addition to - the Minimum Royalty payments, to the extent that the
Revenue Royalty payments exceed the Minimum Royalty payments.
Accordingly, (i) InMedica Minimum Royalty payments made in any given
calendar year shall be a credit against InMedica Revenue Royalty
payments in such calendar year, and InMedica Revenue Royalty payments
shall only be paid to the extent that they exceed the InMedica Minimum
Royalty payments for such calendar year; and (ii) Xxx Xxx Minimum
Royalty payments made in any given calendar year shall be a credit
against Xxx Xxx Revenue Royalty payments in such calendar year, and Xxx
Xxx Revenue Royalty payments shall only be paid to the extent that they
exceed the Xxx Xxx Minimum Royalty payments for such calendar year.
6.4 Royalty Buyout Right. In the event of the occurrence of a
"MicroCor Change of Control," the provisions of this Section 6.4 shall
apply. "MicroCor Change of Control" shall mean the acquisition by any
party or third party of more than eighty percent (80%) of the assets or
equity securities of MicroCor, or the merger of MicroCor with any party
or third party where the parties to this Agreement own in the aggregate
less than twenty percent (20%) of the equity securities of the
surviving entity. Upon the occurrence of a MicroCor Change of Control,
MicroCor, or its successors or assigns, shall have the right (the
"Buyout Right"), notwithstanding any contrary provisions in this
Section 6, to purchase and terminate the Minimum Royalty, the Revenue
Royalty and, if applicable, the Asian Marketing Right from InMedica and
Xxx Xxx. MicroCor (or its successors or assigns) shall exercise the
Buyout Right, if at all, within twelve (12) months following the
occurrence of a MicroCor Change of Control by giving InMedica and Xxx
Xxx thirty (30) days prior written notice of its intent to exercise,
and by paying to InMedica and Xxx Xxx, upon the expiration of such
thirty (30) days, the following amounts:
(i) to InMedica, the greater of:
(a) $800,000, or
(b) 80% of five (5) times the sum of the Minimum
Royalty payments payable for the immediately
preceding twelve (12) months plus the
Revenue Royalty payments payable for the
immediately preceding twelve (12) months;
and
(ii) to Xxx Xxx:
(A) if Xxx Xxx has not exercised its option for
the Asian Marketing Right, the greater of:
(a) $200,000, or
(b) 20% of five (5) times the sum of the
Minimum Royalty payments payable
for the immediately preceding twelve
(12) months plus the Revenue Royalty
payments payable for the immediately
preceding twelve (12) months, or
(B) if Xxx Xxx has exercised its option for the
Asian Marketing Right, the greater of:
(a) $200,000 or
(b) one (1) times the gross revenue Xxx
Xxx has generated in the immediately
preceding twelve (12) months through
its exercise of the Asian Marketing
Right.
In order to verify the relevant values described in this Section 6.4,
the parties agree that they shall make their accounting books and
records available to each other or to the parties' agents, including
independent auditors, in reasonable form and at reasonable times and
places.
7. Title to Hematocrit Technology. Notwithstanding anything to the
contrary contained herein, this Agreement shall not be construed to be a
transfer of the Hematocrit Technology to Wescor, and the parties acknowledge and
warrant that subject to Section 1 hereof, the Hematocrit Technology is and will
be owned by or licensed to MicroCor at all times during the term of this
Agreement. The term "Hematocrit Technology" shall include the Hematocrit
Technology as presently constituted plus any and all additions, enhancements,
improvements, and developments, whether developed or discovered by MicroCor,
Wescor, InMedica, Xxx Xxx, or any employee, agent, contractor, subsidiary,
successor or assignee thereof.
12
8. Disclosure of Hematocrit Technology. InMedica and Xxx Xxx shall
disclose to MicroCor and Wescor all aspects of their existing research and
findings, as well as the research and findings in their possession performed by
others, with respect to the Hematocrit Technology. MicroCor and Wescor shall
keep all such information confidential and shall not disclose any of such
information to third parties except to the extent allowed hereunder or required
by law. Nothing herein shall be construed to be, and InMedica and Xxx Xxx hereby
expressly disclaim any, warranty or representation as to the current or
potential function, success, accuracy, marketability, profitability or possible
sales of the Hematocrit Technology or any Products. Wescor and MicroCor hereby
acknowledge that they have not relied on any such warranty or representation and
further acknowledge that there is a significant amount of risk that the
Hematocrit Technology and the Products will not be developable, will not receive
FDA Clearance, or cannot be manufactured and marketed profitably, and that there
are other significant risk factors involving research, regulatory, business and
economic variables over which InMedica and Xxx Xxx have no control that could
negatively impact the success of the Hematocrit Technology and the Products.
9. Condition Precedent. Notwithstanding anything to the contrary
contained herein, the rights granted and obligations assumed hereunder are
conditioned upon the approval by the shareholders of InMedica of the
transactions described herein. InMedica represents and warrants that it shall
act with all reasonable speed and diligence to obtain such approval pursuant to
all applicable corporate and securities laws and regulations as advised by its
legal counsel. Xxx Xxx, Xxxxx X. Xxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxxxxx
covenant and agree that they shall each vote their respective shares of InMedica
stock in favor of approving the transactions described herein. InMedica shall
deliver to the other parties to this Agreement a written notice of the results
of seeking shareholder approval within ten (10) days following the relevant
shareholder action. If InMedica delivers a notice stating that its shareholders
have not approved the transactions, or if no written notice (regardless of its
contents) has been delivered by the date that is forty five (45) days following
the date this Agreement is executed by all parties, this Agreement shall
automatically terminate. Before the end of such 45-day period (and any
successive 45-day extension period), InMedica may deliver a written notice to
the other parties extending such deadline by forty five (45) days if the
Securities and Exchange Commission has not acted on InMedica's request that the
appropriate information statement and/or proxy statement be approved for use in
connection with seeking the shareholder approval described in this Section. In
the event of such automatic termination, the parties shall take all reasonable
actions to return any items, repay any funds or otherwise put each other back
into the same situation they were in prior to the execution of this Agreement.
10. Audit of Financial Records. For purposes of confirming performance
of obligations under this Agreement, InMedica and Xxx Xxx shall have the right,
at their expense, at all reasonable times and from time to time, to review, or
engage an independent auditor to review, the accounting and operational records
of MicroCor and Wescor. MicroCor and Wescor shall keep and maintain accurate
records of their accounting data that shall reasonably and accurately reflect
their operations and shall maintain such records for at least three (3) years
following the close of each relevant accounting period. MicroCor and Wescor
shall make all such information available to InMedica or Xxx Xxx upon such
party's written request either by providing access thereto at the offices of
MicroCor or Wescor, or by copying all such information and delivering it to the
requesting party. Either InMedica or Xxx Xxx shall have the right to terminate
this Agreement if either MicroCor or Wescor fails to perform its obligations
under this Section, or provides inaccurate or false records under this Section.
11. Miscellaneous.
11.1. Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement shall bear its respective
expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of agents, representatives, counsel,
and accountants.
11.2. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be
deemed to have been duly given when (a) delivered by hand, (b) sent by
facsimile machine, provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if
sent by a nationally recognized overnight delivery service, in each
case to the appropriate addresses and facsimile machine telephone
numbers set forth below (or to such other addresses and facsimile
machine telephone numbers as a party may designate by notice to the
other parties):
13
InMedica: /s/ Xxxxx Xxxxxx
Xx. Xxxxx Xxxxxx, President
InMedica Development Corporation
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Xxx Xxx: /s/ Mao-Song Xxx
Facsimile No.:
MicroCor:
Facsimile No.:
Wescor:
Facsimile No.:
11.3. Jurisdiction; Service of Process. Any action or
proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement shall be brought only in the state or
federal courts located in the County of Salt Lake, State of Utah, and
each of the parties hereby consents and agrees to the sole jurisdiction
of such courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
11.4. Further Assurances. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such other
acts and things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the documents
and transactions referred to in this Agreement. Each party agrees to
use its best efforts in good faith to fulfill its obligations hereunder
in a timely and efficient manner.
11.5. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor
any delay by any party in exercising any right, power, or privilege
under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement.
14
11.6. Entire Agreement; Modification. This Agreement
supersedes all prior agreements between the parties with respect to its
subject matter and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by
the party to be charged with the amendment.
11.7. Assignment; Successors; No Third-Party Rights. Except
for MicroCor's right to sublicense, assign or transfer the Xxx Xxx
License described in Section 1.2, and except for any other rights
described in this Agreement that by their express terms are assignable
or transferable, no party hereto may assign any of its rights under
this Agreement without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement shall apply to, be
binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or
referred to in this Agreement shall be construed to give any person or
entity other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to
this Agreement and their successors and assigns.
11.8. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement shall remain in full force and
effect. Any provision of this Agreement held invalid or unenforceable
only in part or degree shall remain in full force and effect to the
extent not held invalid or unenforceable.
11.9. Section Headings; Construction. The headings of Sections
in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding
words or terms.
11.10. Time of Essence. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the
essence.
11.11. Governing Law. This Agreement shall be governed by the
laws of the State of Utah without regard to conflicts of laws
principles.
11.12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement. Execution and delivery of
this Agreement by facsimile machine shall be deemed as effective as
delivery of an original, signed document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date(s) set forth below, to be effective as of the Effective
Date defined in Section 9.
INMEDICA DEVELOPMENT CORPORATION, a Utah
corporation
Date: 9/7/04 By:/s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
XXX XXX TECHNOLOGY CO., LTD., a corporation
organized and existing under the laws of
the Republic of China
Date:2004/9/7 By:/s/ Mao Song Xxx
Name: Mao-Song Xxx
Title: President
MICROCOR, INC., a Utah corporation
Date:9/7/04 By:/s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
WESCOR INC., a Utah corporation
Date: 7 Sep 2004 By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President/CEO
By signing below, the following individuals indicate their agreement to be bound
only by the provisions expressly referring to them in Section 9 of this
Agreement, and acknowledge that their agreement to be so bound is supported by
adequate consideration.
Date: 9/5/04 /S/ XXXXX X. XXXXX
XXXXX X. XXXXX
Date: 9/5-04 /S/ XXXXX XXXXXX
XXXXX XXXXXX
Date: 5 Sept 2004 /S/ XXXXXXX XXXXXXXXX
XXXXXXX XXXXXXXXX
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