EXHIBIT 10.2
LICENSE AGREEMENT
THIS AGREEMENT, entered into this 28 day of October, 1992, by and
between ASTD CORPORATION, a Minnesota corporation (hereinafter "Licensor") and
DENTAL RESOURCES, INC., a Minnesota corporation (hereinafter "Licensee").
WHEREAS, Licensor owns all right and title in and to an anti-snoring
device covered by United States Patent No. 5,003,994 issued April 2, 1991 and
the invention claimed and disclosed therein and referred to in such patent as
"Oral Appliance For Improving Breathing And Methods Of Using And Making Same",
and which is currently marketed as the "Cook Anti-Snoring Device", and also
Licensor owns all right, title and interest in and to the trade name for such
device, all know how, technical information and drawings, associated goodwill,
marketing and trade business information, contract rights and all other rights,
properties and privileges associated with such device (hereinafter collectively
"ASTD Technology Property"); and
WHEREAS, Licensor is willing to exclusively license in the region of
all of North America its rights in the ASTD Technology Property to the Licensee
on the terms contained herein.
WHEREAS, Licensee desires to organize a marketing program to execute
and create a market and demand for these devices, and is accordingly interested
in producing and selling the ASTD Technology Property device under this
exclusive license during at least the term provided for in this agreement.
NOW THEREFORE, for valuable consideration and upon the mutual promises
and covenants contained herein, the parties to this License Agreement agree as
follows:
1. The products licensed in this Agreement include all products and
devices manufactured, sold or used by the Licensee that are associated with such
ASTD Technology Property; and the licensed know how covered by this Agreement
includes all factual knowledge, technological information, trade secrets,
drawings, sketches, and other data related to the manufacture, marketing,
installation, fitting and use of the Cook Anti-Snoring Device, whether presently
in the possession, or subsequently coming into the possession, or developed by
Licensor, during the term of this Agreement.
2. The "license royalty" to be paid under this Agreement is a fee paid
to the Licensor (or its successor in interest) by the Licensee for each unit of
the licensed products that the Licensor has the right to manufacture, use and
sell under the terms of this Agreement. For purposes of determining the license
royalty, each "year" shall be measured in respect to the annual date on which
this Agreement is effective.
3. License Grant - For a three-year term commencing on the date of this
Agreement, the Licensor hereby grants to the Licensee an exclusive license to
produce, use and sell the products covered by this License Agreement, and all
patents and know how pertaining thereto, throughout the entire North American
region.
4. Cooperation of Licensor - Licensor agrees to cooperate fully and to
use its best efforts, including referring current distribution or other
marketing contacts of Licensor to Licensee, and in providing any reasonable
assistance to Licensee in solving any technical problems arising in connection
with the production, use and installation of the Licensed Products. Licensor
will also assist Licensee as necessary with certain training sessions to be
agreed to by the parties hereto as the need arises, provided that Licensee shall
pay Licensor or George Cook for any out-of-pocket expenses incurred by them
incident to assisting with such training or assisting with solving technical
problems.
5. Royalties - Licensee shall make the following royalty payments to
Licensor consisting of common stock purchase Warrants and cash payments:
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i) Upon execution of this Agreement, Licensee agrees to
pay Licensor 25,000 Common Stock Purchase Warrants
which will have a term of 5 years and be exercisable
anytime during this 5-year term for $.25 per share,
and shall be exercisable in whole or in part anytime
and from time to time during this 5-year term.
ii) A cash license royalty per unit or device of Licensed
Product sold or used by Licensee which shall be equal
to Thirty Percent (30%) of Licensee's wholesale price
to customers purchasing such devices from Licensee,
which base price shall be flexible and mutually
agreed upon by the parties hereto for the purpose of
determining such royalty payments du6 hereunder. Such
cash royalty payments shall be made quarterly during
each year of this Agreement, and payment shall be
made to Licensor by Licensee within 10 days of the
end of each quarter. Licensee shall not be required
to pay cash royalties on free sample devices used in
promotions, or for damaged or defective products.
iii) When sales of the licensed product by Licensee equal
500 units or devices, Licensee shall grant Licensor
an additional Stock Purchase Warrant to purchase
another 50,000 common shares of Licensee with such
Warrants having the same terms as the above paragraph
i).
iv) When sales of the licensed product by Licensee
cumulatively equal 1,000 units or devices, Licensee
shall grant Licensor another Stock Purchase Warrants
to purchase another 50,000 common shares of Licensee
with such Warrants having the same terms as the above
paragraph i). At this point, total Warrants would be
for the purchase of 125,000 common shares with each
set of Warrants to have a 5-year term from the time
they are granted.
v) All of the foregoing Warrants shall be authorized by
resolution of the Board of Directors of Licensor
within 30 days of the execution of this Agreement so
that they will be available to be granted to Licensor
as earned under this Agreement; and all of such
Warrants shall have anti-dilutive terms to prevent
dilution to Licensor in the event of future stock
splits, stock dividends, mergers, reclassifications,
business combinations or other reorganizations.
Business Records: Licensee hereby agrees to keep business records
showing the manufacture and sale or other disposition of the Licensed Products
in sufficient detail to enable the License Royalty to be accurately and fairly
determined, and further agrees to permit its books and records to be examined
from time to time, during normal business hours and with reasonable notice, to
the extent necessary for Licensor to verify that Licensee is complying with the
requirements and obligations of this Agreement. If material omissions or errors
are discovered incident to any such verification examinations, Licensee shall be
responsible for all costs of such examinations by Licensor or its accounting
representative. At a minimum, such business records shall show all customer
names and addresses purchasing Licensed Products from Licensee, and the amount
of the Licensed Products purchased by them from Licensee. Any business record
knowledge acquired by Licensor, or business operational information pertaining
to Licensee, shall be treated by Licensor on a strictly confidential basis and
not disclosed to any other party without he permission of Licensee.
6. Marketing - The Licensee will use its best efforts to diligently
promote and market the Licensed Products herein, and Licensee shall not make any
warranties, representations or claims regarding the Licensed Products without
the approval of Licensor. Any governmental approval needed to market the
Licensed Products in any federal, state, or local governmental area shall be
obtained by Licensee at its expense. The Licensee assumes all risks and
liabilities arising out of any warranty, guaranty, or other representation made
by Licensee in the marketing or promotion of the Licensed Products; and Licensee
will indemnify and hold harmless Licensor in respect to any lawsuit, claim or
proceeding arising out of any such warranty, guaranty or representation of
Licensee in the sale or
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promotion of the Licensed Products, or arising out of the use of the Licensed
Product by anyone derived from sales thereof made by Licensee.
Licensee will set aside and expend at least $5,000 to develop and
package the Licensed Products for proper marketing by Licensee; and in addition
Licensee will set aside and expend an additional $10,000 for marketing and
distribution of the Licensed Product during the first year hereof.
7. Renewal - Licensor hereby agrees to renew the royalty payments due
on sales of the Licensed Products after the end of the 3-year term of this
Agreement, with such renewal terms to be mutually agreed upon by both parties
hereto.
8. Transfer of Rights - All license rights under this Agreement shall
be binding upon any successor in interest of the Licensor. The Licensee shall
have no right to sublicense or assign the license rights hereunder without the
express written consent of the Licensor.
9. Termination - During the 3-year term of this exclusive license, the
Licensee may terminate and release its license rights hereunder only upon
providing sixty (60) days advance notice in writing to the Licensor. It is
mutually understood and agreed between the parties hereto that the failure of
the Licensee to comply with the terms of this Agreement shall give the Licensor
the right to cancel this Agreement by giving Licensee thirty (30) days notice in
writing of such cancellation; provided, however that if within such 30-day
period Licensee shall have corrected such contract default leading to the
cancellation by Licensor, this Agreement shall remain in full force and effect.
Upon termination for default, Licensee shall not be relieved of any prior
obligations hereunder and Licensee shall pay all royalty payments due at
termination and for any products sold by Licensee after termination. Licensor
shall have the right to make a final inspection of business records of Licensee
upon such termination for the purpose of verifying all royalties have been
accounted for and paid by Licensee as required by this Agreement.
10. Potential Patent Claims. If any claims are brought by third parties
alleging patent infringement by sale or use of the Licensed Products, Licensor
and Licensee shall share equally the costs of opposing such third party claims;
provided, however, that Licensor shall not be liable for any more than a total
of $2,500 for its share of such costs in opposing any and all of such potential
claims of infringement.
11. Ramp Molds. In the event Licensor enters into a license agreement
with a party other than the Licensee herein after the expiration of the 3-year
term of this Agreement, Licensor shall then purchase from Licensee the ramp
Molds for the Licensed Products at their original cost to Licensee.
12. General Matters -
a. Notices: All notices provided for herein shall be
given in writing and hand delivered or sent by
certified mail, directed as follows:
To Licensor: George Cook
P.O. Box 70
Holdingford MN 56340
To Licensee: Dental Resources Inc. -
c/o Douglas Murphy
530 South River St.
Delano MN 55328
b. Parties In Interest: This Agreement shall inure to
the benefit of and bind the parties hereto, and their
respective successors and assigns as the case may be.
c. Waiver: Any failure on the part of either party
hereto to comply with any of the obligations or
conditions of this Agreement may be waived in writing
by the other party.
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d. Governing Law: The Agreement shall be construed and
enforced in accordance with the laws of the State of
Minnesota.
e. Severability: If any part of this Agreement is deemed
to be unenforceable for any reason, the balance of
the Agreement shall remain in full force and effect.
f. Relationship of Parties: The relationship between the
parties hereto is strictly that of Licensor and
Licensee, and the Licensee shall have no right to
bind or in any way obligate the Licensor in respect
to any contract or understanding with another party.
g. Entire Agreement: This Agreement contains the entire
agreement between the parties hereto and supersedes
all previous understandings, negotiations and
commitments between the parties hereto in respect to
the subject matter of this Agreement; and this
Agreement may not be released, discharged, abandoned,
changed or modified in any manner except by a written
instrument duly executed by each party hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this License
Agreement as hereinafter appearing.
ASTD CORPORATION, Licensor
By /s/ George Cook By /s/ Douglas Murphy - Pres
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President President
DENTAL RESOURCES, INC.
October 28, 1992
