EXHIBIT 10(dd)
STOCK TRANSFER AGREEMENT
This STOCK TRANSFER AGREEMENT (the "Agreement") is entered into
effective this 28th day of January, 1997 by and between COMPUTERIZED THERMAL
IMAGING, INC., a Nevada corporation ("CTI") and THERMAL MEDICAL IMAGING,
INC., a Nevada corporation ("TMI"). CTI and TMI are sometimes hereafter
referred to singularly as a "Party" and collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, CTI currently owns approximately 19.8% of the outstanding stock
of TMI in consideration of capital contributions at formation to TMI and will
be assigned, upon the execution hereof, additional shares and options granted
to General Xxxxxx and Xxxxx Xxxxxxxx as directors of TMI;
WHEREAS, the remaining shares are held by TMI employees or directors,
who agreed to serve as employees or directors of TMI in exchange for such
shares contemplating an AmCap private offering and subsequent public offering
which did not succeed; and
WHEREAS, TMI has borrowed demand loans, as further stated on EXHIBIT A,
from CTI for working capital, and TMI requires additional capital to continue
the development of its technology for marketing in North America; and
WHEREAS, CTI is willing to contribute the additional working capital, as
necessary, to TMI to complete certain phases of its remaining initial
business plan activities, all on the condition that CTI be entitled to obtain
in exchange therefor a controlling eighty percent (80%) interest in the
common stock of TMI;
NOW, THEREFORE, in consideration of the premises and in consideration of
the mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt, sufficiency and adequacy of which is
hereby acknowledged, CTI and TMI do hereby covenant and agree as follows:
1. TERMS. TMI hereby agrees to convey to CTI 25,500,000 shares of the
common stock of TMI, which will convey to CTI controlling ownership of more
than 80% of the outstanding common stock of TMI fully diluted, in
consideration for which CTI agrees to cancel TMI's outstanding indebtedness
and to contribute from time to time certain funds needed to accomplish the
objectives of the TMI business plan to present its technology to the FDA and
receive a Pre Market Approval ("PMA"). No additional shares will be issued
to CTI for subsequent contributions made for the purpose of enabling TMI to
achieve its objective of completing clinical trials and obtaining a PMA from
the FDA. The parties acknowledge that CTI and TMI will cooperate to enable
TMI to conduct clinical trials and proceed to further develop its technology
and business plan.
2. TMI OPERATIONS. The Board of Directors of TMI shall continue to
have the authority for managing and operating the business of TMI and to
determine the appropriate application of resources which are made available
to it by CTI, or which are owned or developed or by TMI. TMI shall have the
right to arrange for supplemental working capital debt financing from third
party sources for the development of its business if CTI chooses not to
contribute for particular expenses or disagrees with the need for any
financing desired by the TMI Board of Directors. In such case(s), however,
TMI shall notify CTI of its intention to obtain such third party debt
financing, after which CTI shall have for a period of fifteen (15) days the
exclusive right to advance such funds or arrange alternative debt financing
on the same terms.
3. TRANSFER OF SHARES. Within ten (10) days after execution hereof,
TMI shall issue a share certificate representing the number of shares
purchased by CTI set forth in paragraph 1, duly executed by authorized
officers of TMI. All such shares when issued shall be fully paid and
non-assessable shares of TMI.
4. DILUTION. TMI represents that there are 96 million shares of common
stock authorized, and there are 6,453,000 common shares outstanding. There are
outstanding options for issuance of up to an additional 880,000
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shares. TMI agrees that at all times while CTI owns at least 80% of the
outstanding shares of TMI, TMI will not issue any additional shares of stock
of TMI to any other party, whether in a private or public offering or
otherwise, without the express prior written consent of CTI, which shall not
be unreasonably withheld if required according to paragraphs 5 or 10.
5. OBJECTIVE TO ACHIEVE FDA APPROVAL. The objective of TMI's business
plan is to achieve a PMA from the FDA for TMI's use of its technology for the
detection of breast cancer. It is the intention, although not the
obligation, of CTI that all of the funds it deems reasonably necessary to
achieve TMI's business plan to receive FDA approval shall be contributed to
TMI by CTI. If CTI is unable or unwilling to contribute the funds reasonably
required as needed (at least a quarter in advance) to achieve the PMA, then
TMI may negotiate to obtain such additional funds from third parties on terms
its Board of Directors deem advisable. If equity financing is arranged, TMI
shall notify CTI of the terms of such proposal, which may include amounts
greater than needed for the quarter, and CTI shall have the right to first
refusal to reasonably match such offer or proposal within 20 days, or TMI may
proceed to accept such offer after the 20 days and issues shares or equity
accordingly. In such case where equity financing is required from a third
party to operate TMI in such a manner to enable TMI to achieve the PMA from
the FDA, (provided TMI has expended all of its available funds only for
operations and development required to produce its technology and to achieve
the PMA) only CTI's interest shall be diluted and the Board of Directors may
issue shares, or CTI shall surrender such shares, as required to prevent the
other shareholders from further dilution.
6. PRIOR LOANS CANCELLED. At present, demand loans from CTI to TMI in
the outstanding principal amount of about $700,000 (the "Loan") are
outstanding. Those loans were made to enable TMI to proceed toward clinical
trials. CTI hereby contributes the existing balance of the Loan to TMI as a
contribution to capital.
7. ORIGINAL LICENSE AGREEMENT. TMI and CTI entered into a License
Agreement (the "Original License Agreement") under which CTI licensed certain
thermal imaging technologies to TMI. TMI agreed to purchase thermal imaging
units from CTI on terms and conditions set forth therein, and to pay an
initial license fee of $2,500,000.00 (the "Initial License Fee"). In lieu of
payment of the Initial License Fee, TMI executed in August 1996 in a
Promissory Note (the "License Fee Note") in the original principal amount of
$2,500,000.00 payable to CTI in one year. CTI hereby contributes such
indebtedness evidenced by the License Fee Note to TMI as a contribution to
capital and will cancel the License Fee Note. This cancellation of
indebtedness constitutes additional consideration for the execution of this
Agreement.
8. NEW LICENSE AGREEMENT. Due to changed circumstances, the Parties
hereby agree to enter into a novation of the Original License Agreement by
entering a new license agreement for the purpose of redefining the Parties
rights and obligations (the "New License Agreement"). The New License
Agreement shall achieve the essential purposes of the Original License
Agreement, which are to obligate CTI to license all of its rights, title, and
interest in its CTI technology and trade secrets with respect to the
operation of its Computerized Thermal Imaging units and quantative thermal
assessment laboratory and protocol concepts solely and exclusively for use
for detection of breast cancer in North America. The New License Agreement
will provide, among other things:
(a) There will be no Initial License Fee charged to TMI but TMI shall
compensate CTI on a reasonable basis for its license;
(b) The thermal imaging units will not be priced or sold to TMI on a
per unit basis, but instead CTI shall be compensated on some
other mutually agreeable or reasonable formula, such as a
per/unit or software royalty or percentage of Hospital Use
Agreement revenue stream;
(c) CTI will reserve to TMI all manufacturing rights for production
of the thermal imaging hardware units and of the software
developed for breast cancer related applications;
(d) CTI may not compete with the public with TMI in North America,
and TMI cannot use technology licensed to TMI by CTI to compete
outside of North America without CTI's consent.
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(e) There shall be cross licenses of all technology for use not in
competition. All technology developed by TMI shall be licensed
to CTI for use worldwide not in competition with TMI in North
America; CTI shall be obligated to license to TMI all technology
which it may subsequently develop which may benefit TMI for use
in breast cancer imaging in North America, including data base
development technology.
(f) CTI shall have only reasonable operational control to protect its
rights under this Agreement, but TMI shall otherwise have the
right to determine its marketing strategies. Any changes to
Hospital Use Agreements to be employed by TMI must be made only
with the consent of CTI, which consent shall not be unreasonably
withheld, to enable CTI to protect its products for other medical
uses and to prevent unauthorized competition or pricing practices
that reasonably would impair the long term value of CTI's
products.
(g) All TMI units and software licensed from CTI placed or sold shall
be with the express restriction that such units may not be used
except for breast cancer detection in North America;
(h) CTI shall indemnify, defend, and hold harmless TMI from any
litigation or claims which might be initiated by contractors with
CTI and there shall be a mutual covenant from TMI;
(i) Either TMI or CTI may patent in its name the technology that it
develops, or if the developer chooses not to prosecute the
patent, the other Party may prosecute the patent in its name,
which technology shall be subject to the cross license; and
(j) An arbitration clause shall resolve any disputes, including the
setting of any royalty or revenue sharing percentages as shall be
deemed reasonable as may be required for subsequent adjustments.
9. EQUIPMENT FINANCING FOR TMI. The contributions to be made by CTI
do not include any equipment financing. The equipment financing requirements
of TMI are separate. CTI may or may not arrange or guarantee equipment
financing on behalf of TMI, but the terms of such guaranty or consideration
are separate and distinct from the consideration set forth under this
Agreement. If TMI arranges third party financing to achieve equipment
financing or working capital financing to achieve its business plan of
receiving FDA approval, TMI must give at least twenty (20) days notice to CTI
to allow CTI the exclusive right to arrange substitute financing on the same
or better terms. Nevertheless, CTI may arrange third party financing to
achieve a material portion of the anticipated funds.
10. FURTHER DILUTION. The Parties acknowledge that three employees of
TMI currently have agreements limiting dilution of their shares in TMI until
after this issuance of shares to CTI. Therefore, CTI acknowledges that Xxx
Xxxx, Xxxxxx Xxxxxxxxx, and Xxxx Xxxxx will be issued additional shares
subsequent to the transfer of the shares required by paragraph 1 of this
Agreement, to comply with such employment terms. TMI shall issue 1,820,000
shares to Xx. Xxxx and 500,000 each to the other two employees. In addition,
some additional shares or options or warrants may be issued, as deemed
advisable by the TMI Board of Directors to compensate employees or to induce
appropriate vendors or health care experts to render necessary services to
TMI to complete the testing needed to receive a PMA from the FDA. TMI may
issue such shares only according to paragraph 4 and to the extent CTI's fully
diluted shares equal at least 80% of the outstanding stock. The Parties
acknowledge that CTI shall still own, after full dilution, at least 80% of
the outstanding common stock of TMI, taking into account all outstanding
stock warrants and stock options, as if exercised and other forms of equity
issued or to be issued prior to receipt of the PMA from the FDA, provided
there are no additional shares issued to third parties pursuant to paragraph
5.
11. NOTICES. All notices, requests or other communications required or
permitted to be delivered hereunder shall be in writing, delivered
personally, by registered mail or via confirmed facsimile or similar means of
transmission, as follows:
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(a) If to CTI:
Xxxxx X. Xxxxxxxx, President
Computerized Thermal Imaging, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
WITH A COPY TO:
Xx. Xxxxxx X. Xxxxxx
Looper, Reed, Xxxx & XxXxxx
Nine Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
(b) If to TMI:
Xx. Xxxxxxx X. Xxxx
Thermal Medical Imaging, Inc.
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
WITH A COPY TO:
Xx. Xxxxxxx Xxxxxxx
_____________________________________
_____________________________________
_____________________________________
Any notice shall be effective upon receipt at the address stated above. Any
party hereto may from time to time designate by notice, as herein provided,
any other address to which such notice, request or other communication
addressed to it shall be sent.
12. ASSIGNMENT; SUCCESSORS. The rights and obligations of the parties
hereunder and under the documents executed in connection herewith are
assignable and transferable in whole but not in part without the prior
written consent of the other parties. Subject to the foregoing, this
Agreement shall be binding upon, and shall inure to the benefit of, the
respective parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. Except the parties hereto
and their respective permitted assigns and transferees, no other parties
shall benefit from or be entitled to enforce any provisions of this Agreement
or other rights and obligations arising in connection with this Agreement and
the documents executed in connection herewith.
13. CHOICE OF LAWS; JURISDICTION; VENUE. This Agreement shall be
construed in accordance with and governed by the laws of the State of Texas,
without regard to conflicts of laws principles thereof, which substantive
laws shall govern any dispute or claim arising under or related to this
Agreement.
14. ARBITRATION. THE PARTIES KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
AGREE THAT ANY DISPUTES OR CONFLICTS IN ANY WAY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE PERFORMANCE OR BREACH OF ANY OF THE MATTERS DESCRIBED
HEREIN SHALL BE RESOLVED BY BINDING ARBITRATION AT THE WRITTEN ELECTION OF
EITHER PARTY HERETO. THE PARTIES IRREVOCABLY AGREE TO BE BOUND BY ALL
FINDINGS OF FACT AND CONCLUSIONS OF LAW OF THE ARBITRATOR SELECTED. THE
ELECTION OF A PARTY UNDER THIS PARAGRAPH SHALL BE BY DELIVERY OF WRITTEN
NOTICE TO THE OPPOSING PARTY; PROVIDED THAT IF A LEGAL PROCEEDING RELATING TO
THE SUBJECT DISPUTE HAS PREVIOUSLY BEEN FILED IN ANY COURT OF COMPETENT
JURISDICTION, THEN SUCH NOTICE OF ELECTION UNDER THIS PARAGRAPH SHALL BE
DELIVERED WITHIN SIXTY (60) DAYS OF THE DATE THE ELECTING PARTY RECEIVES
SERVICE OF PROCESS IN SUCH LEGAL PROCEEDING. ANY ARBITRATION SHALL PROCEED
IN ACCORDANCE WITH THE RULES OF THE JUDICIAL ARBITRATION AND MEDIATION
SERVICES ("JAMS/ENDISPUTE"), WHICH SHALL BE THE ADMINISTRATIVE AND APPOINTING
BODY. JAMS/ENDISPUTE SHALL APPOINT A SOLE ARBITRATOR TO RESOLVE ANY DISPUTE,
INCLUDING (1) THE DETERMINATION OF A REASONABLE ROYALTY PERCENTAGE OR FEE
THAT MAY BE IN DISPUTE FOR CONTINUED PERFORMANCE UNDER THE NEW LICENSE
AGREEMENT WHICH MAY CALL FOR REASONABLE ADJUSTMENTS OR FEES BETWEEN THE
PARTIES, AND (2) THE ACTUAL TERMS FOR THE NEW LICENSE AGREEMENT IF THE
PARTIES RESTRUCTURING THE
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ORIGINAL LICENSE AGREEMENT ARE UNABLE TO REACH A MUTUAL AGREEMENT ON ALL
TERMS. THE ARBITRATION SHALL PROCEED IN ACCORDANCE WITH THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION.
15. HEADINGS. Headings used in this Agreement are used for convenience
only and do not constitute substantive matters to be considered in construing
the terms of this Agreement.
16. SEVERABILITY. In case any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, any other provisions in this Agreement shall be
construed as if such invalid, illegal or unenforceable provisions had never
been contained herein. Such invalid, illegal or unenforceable provisions
shall be given effect to the maximum extent then permitted by law.
17. ENTIRE AGREEMENT. This Agreement, together with any exhibits,
attachments or documents executed in connection herewith, supersedes any and
all prior or contemporaneous understandings, statements, representations,
warranties and agreements, whether written or oral, between the Parties
hereto respecting the subject matter hereof.
18. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument. A facsimile
signature shall be effective in all respects.
19. AMENDMENTS. This Agreement may not be altered, modified or amended
except pursuant to a written instrument executed by all Parties hereto.
20. FURTHER ASSURANCES. Each of the Parties hereto shall, at any time
and from time to time after the date hereof, upon request by legal counsel to
CTI or TMI and without further consideration, execute and deliver such
instruments of transfer or other documents and take such further action as
may be reasonably required in order to effectuate and consummate the
transactions contemplated hereby. TMI hereby represents that the execution
of this Agreement has been properly authorized to bind XXX.
00. THIRD PARTY BENEFICIARIES. Only as expressly set forth in this
Agreement, a person or entity not a party to this Agreement shall have rights
under this Agreement as a third party beneficiary or otherwise.
IN WITNESS WHEREOF, the parties hereby have duly executed this Agreement
effective as of the day and year above first written.
CTI:
By: /s/ Xxxxxxx. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------
Title: President
------------------------
TMI:
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
------------------------
Title: President
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EXHIBITS:
A - Demand Loans
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EXHIBIT "A" TO
STOCK TRANSFER AGREEMENT
Each loan made by CTI to cover operating costs of TMI were made on terms
that they would be repaid upon demand and that they would not bear interest,
subject to a subsequent review depending upon the time over which the loans must
remain outstanding before TMI is able to obtain capitalization.
After the initial capitalization contribution from CTI at $211,636, CTI has
made loans to TMI of the following amounts:
Item Date Loan Purpose
1. October 29, 1996 $ 47,000.00 Wire transfer from CTI to satisfy
payroll obligations of TMI pending
capitalization.
2. November 11, 1996 $105,700.00 Wire transfer from CTI to cover
accrued TRW expenses and other TMI
operating expenses.
3. August 26, 1996 $157,000.00 TMI employees and expenses
based by check.
4. January 1997 $ 36,000.00 Transfer for compensation to TMI
----------- employees.
Total Loans Reflected by
Promissory Notes: $345,700.00
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Other amounts spent by CTI for the benefit of TMI
but not reflected by promissory notes.
5. March 1996 $217,000.00 Infrared camera system delivered to
TMI for use and study at HUH.
6. June 1996 $ 95,000.00 Delivery of 1 additional systems to TMI
for clinical study and software
development and integration.
7. June 1996 $ 24,877.00 CTI Technical Support Equipment
8. May 1996 $ 40,000.00 Paid to AmCap for preparation of TMI
Securities Offering under contract
payable by TMI.
9. May 1996 $ 10,000.00 Legal fees to Counsel for AmCap pursuant
----------- to contract required payment by TMI.
TOTAL $732,577.00
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