EX-10.8
License Agreement dated November 12, 1999
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EXHIBIT 10.8
LICENSE AGREEMENT
(Random Metering System)
THIS LICENSE AGREEMENT ("Agreement") is made this 12'h day of November,
1999, by and between NVID International, Ins., a Delaware corporation
("Co-Licensor" or "Licensors") and EHPC IONIZATION, Ltd, an English corporation
("Co-Licensor" or "Licensors") 'and Innovative Medical Services, a California
corporation ("Licensee").
WHEREAS, Licensors holds, marketing and distribution rights to the products
known as RMS ("RMS" or the "Licensed Product'). RMS is patent pending in the
USA, Canada, Australia, Japan, New Zealand, EP and several other countries (to
be disclosed by the closing date), for the killing of bacterial and other
biological contaminants from a water system as more particularly described in
the attached Exhibit A: PATENT and EHPC IONIZATION Ltd., License Agreement; and
WHEREAS, Licensors desires to license certain marketing and distribution rights
to the Licensed Product to the Licensee on the terms and conditions set forth
herein.
THEREFORE, Licensors and Licensee agree as follows:
1. Representations And Warranties Of Licensee
As an inducement to, and to obtain the reliance of Licensors, Licensee
represents and warrants as follows:
1.1. Organization, Good Standing, Power, Etc. Licensee (i) is a
corporation duly organized, validly existing and in good standing under the law
of the State of California; (ii) is qualified or authorized to do business as a
foreign corporation and is in good standing in all jurisdictions in which
qualification or authorization may be required; and (iii) has all requisite
corporate power and authority, licenses and permits to own or lease and operate
its properties and carry on its business as presently being conducted and to
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby.
1.2. Capitalization. The authorized capital stock of Licensee consists
solely of 20,000,000 shares of Common Stock, no par value, (the "Licensee Common
Stock"), of which, on the date hereof shares are issued and outstanding and no
shares are held in the treasury of Licensee. In addition the Company has
5,000,000 shares of Preferred Stock authorized, none of which are presently
outstanding. All of such issued and outstanding shares of the Licensee Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable with no personal liability attaching to the ownership thereof and
were not issued in violation of the preemptive or other rights of any person.
1.3. Authorization of Agreement. This Agreement has been or will
be at closing duly and validly authorized, executed and delivered by Licensee.
1.4. Compliance with Applicable Laws. The conduct by Licensee of their
business does not violate or infringe on any domestic (federal, state or local)
or foreign law, statute, ordinance or regulation now in effect, or, to the
knowledge of Licensee proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of its properties or
assets.
1.5. Exchange Act Filings and Financial Statements. Licensee has filed
all reports required of it with the United States Securities and Exchange
Commission (the SEC) pursuant to Section 12(g) of the Securities Exchange Act of
1934 (the 1934 Act) including without limitation, registration statements,
10-KSB's, 10 QSB's, Form 8's, etc. for each of the annual, quarterly or other
fiscal periods from the first to latest such filings since Licensee first so
registered as a public company.
1.6. Recognition of Licensors Trade Secrets.
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1.6.1. Licensee acknowledges and agrees that the documentation
and data provided pursuant to the Test Marketing Period described below
are "Licensors Trade Secrets" and constitute valuable property rights
of Licensors.
1.6.2. Licensee agrees that during the term of this Agreement,
or following its termination and for all times thereafter, it will keep
secret and confidential all Licensors Trade Secrets which it knows or
may hereafter come to know as a result of the relationship established
by this Agreement. The Licensors Trade Secrets shall not be disclosed
by Licensee to third parties and shall be kept secret and confidential
except (i) to the extent that the same have entered into the public
domain by means other than improper actions by Licensee or (ii) to the
extent that the disclosure thereof may be required pursuant to the
order of any court or other governmental body.
1.6.3. It is understood and recognized by Licensee that in the
event of any violation by Licensee of the provisions of subparagraph
1.6 above, Licensors' remedy at law will be inadequate and Licensors
will suffer irreparable injury. Accordingly, Licensee consents to
injunctive and other appropriate equitable relief upon the institution
of legal proceedings therefore by Licensors in order to protect the
Licensors Trade Secrets. Such relief shall be in addition to any other
relief to which Licensors may be entitled at law or in equity.
1.6.4. Licensee shall cause their employees who shall have
access to Licensors Trade Secrets hereof, to sign appropriate Trade
Secrecy Agreements in the form of Exhibit "A" annexed hereto and made a
part hereof.
2. Representations And Warranties Of Licensors
As an inducement to, and to obtain the reliance of LICENSEE, LICENSORS
represents and warrants as follows:
2.1. Organization, Good standing, Power, Etc. Licensors (i) is a
corporation duly organized, validly existing and in good standing under the laws
of their respective federal, state, local or foreign governmental or regulatory
bodies and (ii) has all requisite corporate power and authority, licenses,
permits and franchises to own or lease and operate its properties and carry on
its business as presently being conducted and to execute, deliver and perform
this Agreement and consummate the transactions contemplated hereby.
2.2. Authorization of Agreement. This Agreement has been or will
be at closing duly and validly authorized, executed and delivered by Licensors.
2.3. Material Contracts There has not occurred any default by Licensors
or any event which with the lapse of time or the election of any person other
than Licensors will become a default, except defaults, if any, which will not
result in any material loss to or liability of Licensors.
2.4. Permits, Licenses, Etc. Licensors has all permits, licenses,
orders and approvals of federal, state, local or foreign governmental or
regulatory bodies that are required in order to permit it to carry on their
business as presently conducted.
2.5. Compliance with Applicable Laws. The conduct by Licensors of its
business does not violate or infringe upon any domestic (federal, state or
local) or foreign law, statute, ordinance or regulation now in effect, or, to
the knowledge of Licensors proposed to be adopted, the enforcement of which
would materially and adversely affect its business or the value of its
properties or assets.
2.6. Litigation. There is no material claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or to the knowledge of Licensors
threatened, against, relating to or affecting Licensors or any of its properties
or business, or the transactions contemplated by this Agreement; nor to the
knowledge of Licensors is there any basis for any such material claim, action,
suit, proceeding, arbitration, investigation or inquiry which may have any
adverse effect upon the assets, properties or business of Licensors, or the
transactions contemplated by this Agreement. Neither Licensors nor any officer,
director, partner or employee of Licensors, has been permanently or temporarily
enjoined by order, judgment or decree of any court or other tribunal or any
agency from engaging in or continuing any conduct or practice in connection with
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the business engaged in by Licensors. There is not in existence at present any
order, judgment or decree of any court or other tribunal or any agency enjoining
or requiring Licensors to take any material action of any kind or to Licensors
and its business, properties or assets are subject or bound. Licensors is not in
default under any order, license, regulation or demand of any federal, state or
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court which would have a materially adverse impact
upon Licensors' operations or affairs.
2.7. Other Information. None of the information and documents which
have been furnished or made available by LICENSORS, or any of its
representatives to LICENSEE or any of their representatives in connection with
the transactions contemplated by this Agreement is materially false or
misleading or contains any material misstatements of fact or omits any material
fact necessary to be stated in order to make the statements therein not
misleading.
2,8. Covenant to Refrain from Trading in Licensee Securities. The
Licensors, its executive officers and directors represent and warrant that since
August 1, 1999 they have not engaged in trading of Licensee securities and until
such time that Licensee has announced the Closing of this Agreement, the
Licensors, its executive officers and directors will not engage in trading of
Licensee securities.
2.9. Authority to grant a License Pursuant to the Licensors', the
holder of the patents for the Licensed Product and the knowledge and consent
thereof, the Licensors has the right and authority to grant the license set
forth in this Agreement to the Licensees.
2.10. Compliance with Environmental Laws Licensors has not caused or
permitted its business, properties, or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance (as such term is defined herein)
except in compliance with all applicable laws, rules, regulations, orders,
judgments, and decrees, and has not caused or permitted the Release of any
Hazardous Substance on or off the site of any property of Licensors. The term
'Hazardous Substance' shall mean any hazardous waste, as defined by 42 U.S.C. '
6903(5), any hazardous substance, as defined by 42 U.S.C.' 601(14), any
pollutant or contaminant, as defined by 42 U.S.C.' 9601(33), and all toxic
substances, hazardous materials, or other chemical substances regulated by any
other* law, rule, or regulation. The term 'Release' shall have the meaning set
forth in 42 U.S.C. ' 9601(22).
3. Marketing, Manufacturing and Distribution Licenses
3.1.1. Grant of License far R MS. Subject o Closing of this
Agreement as set forth below, Licensors grants to the Licensee a three
year, exclusive license for Australia, North, Central and South America
and a non-exclusive license for the Mexico and other World markets to
market and distribute RMS for the Markets as set forth below. Provided
there has been no breach of this Agreement by the Licensee which has
not been cured within thirty days of written notice of such breach,
this geographic license shall automatically renew on terms herein for
subsequent additional three year terms.
3.1.2. Internet Market. IMS shall have the right to market via
the Internet at it's sole discretion
3.1.2.1. The Market The Healthcare Market shall be
all water purification and disinfections systems for the
killing of bacterial and other biological contaminants and the
removal of bio-film for commercial/private: hospitals,
clinics, surgical centers, doctors' offices or medical or
health related facilities, including military and medical and
health facilities.
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3.1.2.2. Registration Certification or Licensing
Payments. Upon Closing of this Agreement and except as
set forth below, Licensors (NVID) agrees to bear the cost of
any registration, certification or licensing fees or
payments required to market and sell RMS to the Healthcare
Market. (UL or Edison Testing Lab certification)
3.1.2.3. Licensing Fee. Licensee will pay to
Licensors, a Licensing Fee totaling $210,000, payable at the
rate of One Thousand, Five Hundred dollars ($1,500.00) per RMS
System sold plus sixteen and one half percent (16.5%) of the
manufactured cost of the RMS system sold by the Licensee. At
such time that the Licensee has paid $210,000 of Continuing
Licensee Fees, the Continuing Licensing Fee shall be sixteen
and one half percent (16.5%) of the manufactured cost of the
RMS system sold by the Licensee.
3.1.2.4. RMS Research Agreement payment. Upon Closing
of this Agreement, Licensee shall reimburse Fifteen Thousand
Four Hundred dollars ($15,400) to NVID (paid 8-26-99 to Dr.
Yu) for testing the effectiveness of the RMS against
Legionella. Dr Yu and his staff will establish a Veterans
Administration Hospital Research Protocol for testing the RMS.
3.1.2.5. Maintenance of License Licensee shall
maintain its license for RMS by meeting or exceeding the
following annual performance criteria:
3.1.2.5.1. $250,000 in gross sales within the I" year; and
3.1.2.5.2. $400,000 in gross sales within the 2"(degree)year;
and
3.1.2.5.3. $650,000 in gross sales within the 3`d year.
In the event, Licensee meets or exceeds the performance criteria during the
initial term of the license, the license shall automatically renew for
subsequent three years terms.
4. Closing.
4.1. The Closing The Closing of this Agreement shall take place on or
before the thirtieth (30) calendar day following execution of this Agreement or
such date as may be agreed upon by the parties, (herein called the "Closing
Date"), at the offices of the Licensee. At the Closing, each of the respective
parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any agreements, resolutions, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
5. Special Covenants
5.1. Me Diligence. The parties hereto shall have up to and including
the date prior to Closing within which to complete their due diligence
investigations on the other party and the transaction contemplated hereunder. In
the event either party hereto decides, in its sole discretion, not to proceed
with the Closing based on its due diligence investigation, it shall notify the
other in writing of such decision and this Agreement shall terminate without
obligation to the other party except as to the confidentiality provisions.
5.2. Exchange of Information. Each party shall cooperate fully by
exchanging information requested by the other party in a timely manner. Without
in any manner reducing or otherwise mitigating the representations contained
herein, each party and/or its attorneys shall have the opportunity to meet with
the accountants and attorneys of the other party to discuss its respective legal
and financial condition and this transaction. If this transaction is not
completed, all documents received by each party and/or its attorney shall be
returned to the other party and all such information so received shall be
treated as confidential in accordance with Paragraph 8.10.
5.3. Distributor Agreement. After Closing, the order, purchase,
shipment, payment and other terms relevant to the wholesale purchase and sale of
the Licensed Products pursuant to this Agreement shall be governed by the terms
of the form of Purchase Order attached hereto as Exhibit "B" and the Uniform
Commercial Code.
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6. Conditions Precedent To Obligations Of Parties
6.1. Licensors' Closing Conditions. The obligations of Licensors
hereunder are subject to fulfillment prior to or at the Closing of each of the
following conditions:
6.1.1. Representations and Warranties. The representations
and warranties of Licensee made pursuant to Paragraph
1 above, shall be true and accurate in all material respects as of the
Closing Date.
6.1.2. Performance. Licensee shall have performed and
complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or at
the Closing.
6.1.3. No Adverse Change. There shall not have been, since
the date of the latest audited financial statements of
Licensee, any materially adverse change in Licensee's financial
condition, assets, liabilities or business.
6.1.4. Opinion of Licensee' Counsel. Licensee shall have
delivered to Licensors an opinion of Licensee's counsel, Dennis
Brovarone, Attorney at Law, dated the Closing Date to the effect that:
(i) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, has all
requisite power to carry on its business as now being conducted and to
execute, deliver and perform this Agreement and to perform its
obligations; (ii) Licensee is duly qualified to do business as a
foreign corporation and is good standing in each jurisdiction in which
the nature of the business conducted by it or the property owned,
operated or leased by it makes such qualification necessary; (iii) this
Agreement has been duly authorized by all necessary corporate action on
the part of Licensee, has been duly executed and delivered by IMS and
constitutes the legal, valid and binding obligation of Licensee
enforceable in accordance with its terms except as enforceability
thereof may be limited by the insolvency or other laws affecting the
rights of creditors and the enforcement of remedies; (iv) Licensee has
prepared and filed with the SEC all periodic reports required of it
under the 1934 Act; (v) neither the execution, delivery and performance
by Licensee of this Agreement, nor compliance by Licensee with the
terms and provisions hereof, will conflict with, or result in a breach
of the terms, conditions or provisions of, or will constitute a default
under, the Articles of Incorporation or Bylaws of Licensee or any
agreement or instrument known to such counsel to which Licensee is a
party or by which IMS or any of its properties or assets are bound;
(vi) there are no actions, suits or proceedings pending or, to the
knowledge of such counsel, threatened against Licensee before any court
or administrative agency, which have, in the opinion of such counsel,
if adversely decided, will have any material adverse effect on the
business or financial condition of Licensee or which questions the
validity of this Agreement. In rendering his opinion, counsel shall be
allowed to rely on written representations of officers and directors of
the Licensee as to factual matters without independent verification
thereof.
6.1.5. Current Status with Sec and Exchange Commission.
Licensee shall have prepared and fled with the SEC all periodic reports
required under the 1934 Act pursuant to Section 12(g) thereof.
6.1.6. Due Diligence. Licensors shall have completed and be
satisfied with its due diligence investigation of Licensee pursuant
to Paragraph 5.1.
6.2. Licensee's Closing Conditions. The obligations of Licensee
hereunder are subject to fulfillment prior to or at the Closing of
each of the following conditions:
6.2.1. Representation and Warranties. The representations
and warranties of Licensors made pursuant to Paragraph
2 above, shall be true and accurate in all material respects as
of the Closing Date.
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6.2.2. No Adverse Changes, There shall not have been, since
the date of the latest audited financial statements of Licensors, any
materially adverse change in their financial condition, assets,
liabilities or business.
6.2.3. Opinion of Licensors' Counsel. Licensors shall have
delivered to Licensee, an opinion of their respective legal counsels,
respectively, dated the Closing Date to the effect that: (i) Licensors
is a corporation duly organized, validly existing and in good standing
under the laws of their respective states, has all requisite power to
carry on its business as now being conducted and to execute, deliver
and perform this Agreement and to perform its obligations; (ii)
Licensors are duly qualified to do business and are in good standing in
each jurisdiction in which the nature of the business conducted by it
or the property owned, operated or leased by it makes such
qualification necessary; (iii) this Agreement has been duly authorized
by all necessary corporate action on the part of Licensors, has been
duly executed and delivered by Licensors and constitutes the legal,
valid and binding obligation of Licensors, enforceable in accordance
with its terms except as enforceability thereof may be limited by the
insolvency or other laws affecting the rights of creditors and the
enforcement of remedies; (iv) neither the execution, delivery and
performance by Licensors of this Agreement, nor compliance by Licensors
with the terms and provisions hereof, will conflict with, or result in
a breach of the terms, conditions or provisions of, or will constitute
a default under, the Articles of Incorporation or Bylaws of Licensors
or any agreement or instrument known to such counsel to which Licensors
is a party or by which Licensors or any of its properties or assets are
bound; (v) there are no actions, suits or proceedings pending or, to
the knowledge of such counsel, threatened against Licensors before any
court or administrative agency, which, in the opinion of such counsel,
if adversely decided, will have any material adverse effect on the
business or financial condition of Licensors or which questions the
validity of this Agreement. In rendering their opinion, counsel shall
be allowed to rely on written representations of officers and directors
of the Licensors as to factual matters without independent verification
thereof.
6.2.4. Due Diligence. Licensee shall have completed and be
satisfied with its due diligence investigation of Licensors pursuant
to Paragraph 5.1.
7. Patent and Copyright Indemnity.
7.1. Licensors warrants that the use of the Licensed Product by the
Licensee pursuant to the terms hereof shall not constitute an infringement of
any existing patent, copyright or other right. Subject to the limitation set
forth below, Licensors hereby agrees to defend or settle any suit, proceeding or
claim brought against the Licensee based on a claim that the use of the Licensed
Products or any part thereof by the Licensee constitutes an infringement of any
existing patent, copyright or other right. Subject to the limitation set forth
below, Licensors shall pay all damages or costs awarded against or expenses,
including attorneys' fees, incurred by the Licensee in such suit, proceeding or
claim. The prior written consent of the Licensee shall be obtained prior to
Licensor engaging legal counsel with respect to a claim or settlement thereof.
7.2. In the event the Licensed Products or any part thereof shall be in
Licensors' opinion likely to or shall become the subject of a claim for patent,
copyright, or other infringement, Licensors shall, at its option and expense,
procure for the Licensee the right to continue using such affected part of the
Licensed Products or modify such affected part to become non-infringing. Should
Licensors elect to remove or modify such infringing part of the Licensed
Products, Licensors shall forthwith replace such part with a functionally
equivalent non-infringing part or take other appropriate action to insure that
the Licensed Products conforms to the Specifications to the Licensee's
satisfaction, without cost to the Licensee.
7.3. In the event that Licensors shall refuse or shall be unable to
supply or shall be prevented from supplying the Licensed Products or any part
thereof to the Licensee, or in the event that the Licensee's continued use of
the Licensed Products shall be prohibited or enjoined at any time, Licensors
shall promptly replace all affected parts of the Licensed Products with
functionally equivalent non-infringing parts or shall take such other action to
insure that the Licensed Products conforms to the Specifications to the
Licensee's satisfaction, without cost to the Licensee.
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7.4. Licensors warrants that the Licensee shall suffer no interruption of its
normal business activities or cycles as a result of any claimed infringement,
any litigation referred to in Paragraph 7 hereof or any replacement of items
contemplated in Paragraphs 7 hereof.'
8. Miscellaneous
8.1. Expenses and Further Assurances. The parties hereto shall each
bear their respective costs and expenses incurred in connection with the
transactions contemplated by this Agreement. Each party hereto will use its best
efforts provide any and all additional information, execute and deliver any and
all documents or other written material and perform any and all acts necessary
to carry out the intent of this Agreement and to comply with U.S. and Brazilian
law.
8.2. Survival of Representations, Warranties and Covenants. All of
the representations, warranties and covenants made as of the date of this
Agreement and as of Closing, shall survive the closing of this transaction.
8.3. Successors and Assigns. All representations, warranties,
covenants and agreements in this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns whether so expressed or not.
8.4. Governing Law. This Agreement and the legal relations among the
Parties hereto shall be governed by and construed in accordance with the laws of
the State of California and that the State or Federal Courts of California shall
be the jurisdiction in which any legal proceedings relative to this Agreement
shall be brought. The foregoing notwithstanding, the Parties agree that prior to
litigation, they will arbitrate any disputes relative to this Agreement through
the services of the offices of the American Arbitration Association in and for
San Diego, California.
8.5. Attorney's Fees In any action brought to enforce the terms and
conditions of this Agreement, the prevailing party shall be entitled in addition
to any other remedies, its reasonable attorneys fees incurred in the prosecution
or defense of the action.
8.6. Section and Other Headings. The section and other headings
herein contained are for convenience only and shall not be construed as part
of this Agreement.
8.7. Counterparts. This Agreement may be executed in any number
of counterparts and each counterpart shall constitute an original instrument,
but all such separate counterparts shall constitute but one and the same
instrument.
8.8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof. This Agreement may not be amended or modified, except
by a written agreement signed by all parties hereto.
8.9. Sever. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffectual
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
8.10. Confidentiality. Each party hereto agrees with the other parties
that, unless and until this Agreement has been consummated, or for a period of
one (1) year from the date of this Agreement if the transaction contemplated by
this Agreement is not consummated it and its representatives will hold in strict
confidence all data and information obtained with respect to the other party
from any representative, Officer, Director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except: (i) to the extent
such data or information has theretofore been publicly disclosed, is a matter of
public knowledge or is required by law to be publicly disclosed; and (ii) to the
extent that such data or information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement. The foregoing
notwithstanding, Licensee shall be authorized to publicly announce the execution
and closing of this Agreement, details thereof and a description of Licensors
and the business conducted thereby.
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IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective Officers, hereunto duly authorized, as of the
date first above written.
NVID INTERNATIONAL, INC.
By: David J Larson, President
By: Michael Redden, Secretary
EHPC IONIZATION, Ltd.,
By: Bruce Milden, Managing Director
By: Carolyn Wilden, Company Secretary
INNOVATIVE MEDICAL SERVICES
By: Michael L. Krall, President
By: Dennis Atchley, Secretary
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