Washington, D.C. 20549
----------
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 15, 1998
----------
SCANTEK MEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware 000-27592 84-1090126
(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
321 Palmer Road, Denville, New Jersey 07834
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973)366-5250
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
By agreement dated as of May 15, 1998 (the "Settlement Agreement"), Scantek
Medical, Inc. (the "Company") amended the License Agreement, as defined below,
with its exclusive licensee, HumaScan, Inc. ("HumaScan"), pursuant to which
agreement HumaScan has the exclusive rights to manufacture and distribute the
Company's adjunctive breast disease screening device in the U.S. and Canada.
The Settlement Agreement resolved certain matters which were the subject of
mediation between the Company and HumaScan, Inc. and provide both the Company
and HumaScan with a package of financial adjustments and other benefits. The
Settlement Agreement gives HumaScan some additional time and financing to pursue
its marketing and distribution of the 'BreastAlert' product, while increasing
the Company's interest in HumaScan.
Pursuant to the Settlement Agreement, during the first two years of royalty
payments, the minimum payments by HumaScan to the Company of $150,000 and
$300,000 will not be required and, while the royalty payments due to the Company
ranging from 3% to 10% remain unchanged, the Company will credit 50% of the
earned royalty payments up to $550,000. The parties also agreed to certain
adjustments with respect to the third year minimum royalty payment upon
occurrence of certain events.
In addition, the Company requested certain language changes to the License
Agreement and received 400,000 warrants to purchase shares of HumaScan common
stock at $4.725 per share in exchange for reducing by $375,000 certain licensing
fees due by early 1999, and other payment adjustments. The warrants vest over a
ten month period and are exercisable for five (5) years from vesting.
The foregoing is a general summary of the Settlement Agreement and does not
purport to be a complete description of such amendments. Reference is made to
the Settlement Agreement, which has been filed as an exhibit to this report.
Reference is also made to the "License Agreement" which consists of (i) the
Second Amended License Agreement, dated as of October 20, 1995 (which amended
and restated the prior license agreements between the parties) and (ii) the
extension to the Second Amended License Agreement, dated April 29, 1996, both as
filed as exhibits to the Company's Form 10-SB dated May 14, 1996, and (iii) the
Further Amendment to the Second Amended License Agreement, filed May 31, 1996,
as filed as an exhibit to the Company's Form 10-SB/A-1, filed July 13, 1996.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
10.1 Settlement Agreement between Scantek Medical, Inc. and HumaScan, Inc.,
dated as of May 15, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SCANTEK MEDICAL INC.
By: /s/ Patricia B. Furness
---------------------------------------
Patricia B. Furness, Vice President
Date: May 27, 1998
<PAGE>
Exhibit Index
10.1 Settlement Agreement between Scantek Medical, Inc. and HumaScan, Inc.,
dated as of May 15, 1998.
Settlement Agreement
(Scantek/HumaScan)
WHEREAS, the undersigned parties Scantek Medical Inc. ("Scantek" or
"Licensor") and HumaScan Inc. ("HumaScan" or "Licensee") are parties to a
License Agreement dated March 17, 1995, an Amended License Agreement dated July
31, 1995, a Second Amended License Agreement dated as of October 20, 1995, and
three extensions to the Second Amended License Agreement dated respectively,
February 26, 1996, March 17, 1996, and April 29, 1996, and the Further Amendment
to the Second Amended License Agreement dated May 31, 1996, (hereinafter
together with this Settlement Agreement collectively the "License Agreement"), a
true dated and initialed copy of which is next hereto as Exhibit A and which
comprises a complete and authentic record of the License Agreement; and
WHEREAS, certain disputes have arisen under the License Agreement and the
parties wish to resolve all such disputes and to modify and amend the License
Agreement as hereinafter set forth but in all other respects to have the License
Agreement, as amended, continue to be binding and enforceable in accordance with
its terms; and
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the mutual release of certain claims and resolution of disputes as
hereinafter indicated, the parties agree as follows, using Defined Terms as
defined in the License Agreement except to the extent otherwise defined herein:
1. Licensee acknowledges that its rights to manufacture or sell the
Invention or other products based on any of the licensed patents, know-how,
Authorization, the Licensed Product or the Licensed Process (collectively
sometimes herewith referred to as the "Products"), or to otherwise exploit such
patents, know-how, Authorization, the Licensed Products or the Licensed Process
or information identified in the License Agreement as proprietary or
confidential information, are solely within the territories and possessions of
the United States and Canada. HumaScan shall not knowingly directly or
indirectly cause, or assist others to directly or indirectly sell or distribute
the Products outside of the Exclusive Territory, and Scantek shall not knowingly
directly or indirectly cause, or assist others to directly or indirectly sell or
distribute the Products within the Exclusive Territory. Any violation of this
provision shall be a default under the term of the License Agreement.
2. Licensee agrees that to the extent it has not already done so, it will
promptly require Physician Sales & Service, Inc. ("PSS") or any other
distributor or sub-licensee engaged in sales and marketing of the Products to
others, to execute the agreement required pursuant to paragraph II(A) of the
License Agreement prior to delivery of any substantial quantities of the
Products to such distributors, sub-licensees or marketers. Licensee hereby
acknowledges that any entity to whom it sells in excess of 50,000 units on an
annual calendar year basis shall be required to execute the agreement required
by Paragraph II(A) of the License Agreement
<PAGE>
promptly after the receipt of an order which would result in a sale, or
cumulative sales in excess of 50,000 units in any calendar year (hereinafter an
"Order Requiring Notice"), and prior to delivery of that order. Copies of each
such executed agreement, any executed sub-license agreement, and the name and
address of any customer who has placed an Order Requiring Notice shall be
delivered to Scantek within the quarterly report required by Paragraph VI of the
License Agreement.
3. In place and instead of license fees and royalty payments and the
scheduled dates of those payments provided in Sections V(A), V(B) and V(C) of
the License Agreement, the parties have agreed to substitute the following:
V(A) In consideration of $50,000, paid from HumaScan to Scantek on the
signing of this Settlement Agreement, Licensor grants Licensee a
paid up license to all existing patents held by the Licensor
related to the Licensed Products or the Licensed Process for the
lives of those patents.
V(B) In consideration of the continuing right and License to use the
technological know-how previously disclosed, prior consulting
services, prior product developmental activities, and the
Authorization, the value and receipt of which are hereby
acknowledged by the Licensee, and irrespective of whether said
know-how or other proprietary information shall have fallen into
the public domain prior to or after such disclosure, the Licensee
shall pay the amounts, and shall issue the Warrants, as set forth
on Schedule A, and shall pay the royalties as set forth on
Schedule B, copies of which are attached hereto and incorporated
by reference herein.
V(C) Subject to the provisions of paragraph 4. of this Settlement
Agreement, all payments and vesting of all Warrants due pursuant
to Schedules A are due and payable on the dates specified without
set-off, or reduction of any kind except as expressly provided
herein. Failure to pay or vest on the date specified shall be a
default under terms of the License Agreement. Anything in this
paragraph to the contrary notwithstanding, the rights of HumaScan
under Paragraph V(J) of the License Agreement are not revoked or
diminished.
The provisions of this Paragraph shall not modify or eliminate or effect the
application of any payment made, or to be made, or any securities delivered, or
to be delivered, prior to December 31, 1997, under the prior terms of the
License Agreement.
4. The Earned Royalties payable as set forth on Schedule B shall be reduced
by an amount of up to a maximum of $550,000 (the "Royalty Credit") at the rate
of .50 (cent) for each dollar
2
<PAGE>
of Earned Royalty payable until the amount of $550,000 has been deducted (the
"Royalty Adjustment").
5. Paragraph V(F) of the Second Amended License Agreement is hereby deleted
and instead of that paragraph, the following is substituted:
"Notwithstanding the provisions of Schedule B of this Section, there shall
be paid the following minimum royalty payments (the "Minimum Royalties") with
respect to each Royalty Year
Year Minimum Royalty
---- ---------------
1 $0
2 $0
3 $400,000
4 $500,000
5 $600,000
Earned Royalties paid pursuant to Schedule B for the period in question
shall be credited against the Minimum Royalties. In the event of a failure of
Licensee to pay the Minimum Royalties, Licensor shall have the right to convert
the License to Licensee, and sublicensees under Section II to a nonexclusive
license subject to the terms and conditions of the License (including the
payment of Earned Royalties under Schedule B but expressly excluding the payment
of Minimum Royalties under this Paragraph) (the "Conversion Option"). Licensor
shall exercise the foregoing Conversion Option by written notice to Licensee on
or before ninety (90) days after the end of any calendar quarter in which the
Minimum Royalties due hereunder are not paid, provided that within thirty (30)
days from receipt by Licensee of said written notice from Licensor, Licensee may
pay the difference between the actual Earned Royalties and the applicable
Minimum Royalties for such period to maintain the exclusive license and other
rights granted under the License Agreement. If such payment is made by Licensee
to Licensor within said 30-day period, said Conversion Option, shall have no
force or effect and the License Agreement shall continue in full force and
effect.
Notwithstanding the forgoing, with respect to year three, should the Earned
Royalties be less than the Minimum Royalties, Licensee's obligation shall be to
pay the Earned Royalty and to reduce the Royalty Credit by an amount equal to
50% of the difference between the year three Earned Royalties and the year three
Minimum Royalty, but only to the extent that the Royalty Credit remains unpaid.
This credit shall be applied first to any balance of the Royalty Credit
3
<PAGE>
following year two. If after application of this credit there remains any unpaid
balance of the Royalty Credit, then the Royalty Adjustment shall apply."
6. Licensee acknowledges that it is settling any and all claims (a) with
respect to Licensor's consulting services, product development services, and
guarantees (including without limitation the guarantees of Section IX(A) of the
License Agreement, which Section is hereby deleted in its entirety, but
excluding the guaranty in Section IX(B) of the License Agreement), and no
further consulting, product development or other services or information is due
from Licensor to Licensee, and (b) relating to alleged delays and defects in the
Manufacturing Line, the Product and the Licensor's Production Systems. To the
extent that any such delays or defects or attempts to correct any such delays or
defects cause increases in Costs of Production above those established by the
Schedule of Licensed Product Costs Elements, such increases shall not be
considered as part of Costs of Production for purposes of Section IX B. However,
should Licensee require information in connection with any regulatory issue,
Licensor will provide reasonable cooperation in providing any such information.
7. For purposes of Section X(A) of the License Agreement, the Manufacturing
Line is deemed to have been accepted, and the Licensee's Proxy is hereby
terminated. The obligation of Licensee to use its best efforts to cause the
election of Licensor's nominee to the Board of Directors contained in Section
X(A) is terminated effective as of consummation of Licensees IPO in August 1996.
8. In Paragraph IX(B), the sentence which reads "No Cost Overrun Royalty
Reductions shall be made with respect to any Quarter following the first four
consecutive Quarters of production at Licensee's Production Center in which
Minimum Production is calculated," is hereby changed to read "No Cost Overrun
Royalty Reductions shall be made with respect to any Quarter following the first
four consecutive Quarters of production at Licensee's Production Center in which
Minimum Production is achieved."
9. Licensee acknowledges the absence of any representations or warranties
of any nature whatsoever (including any representations or warranties to induce
the execution of the License Agreement), other than the representations and
warranties expressly contained in the License Agreement, and acknowledges that
Licensor expressly disclaims any representation or warranty with respect to the
value, cost, effectiveness of manufacture or function of the Invention, the
Licensed Product, the Licensed Process or the technology or know-how, or of any
other information or right granted in the License Agreement. Licensor shall have
no liability to Licensee for any claim whatsoever other than a claim arising
from an express representation or warranty labeled as a representation or
warranty in the body of this Settlement Agreement or the License Agreement.
Licensee hereby acknowledges that it has no right whatsoever to rely on any
other representation , warranty, comment, belief, document or information of any
kind provided by the Licensor to the Licensee.
4
<PAGE>
10. Nothing in the License Agreement or this Settlement Agreement shall be
construed to prohibit or restrict any action of Licensor taken within the
Exclusive Territory or outside the Exclusive Territory in furtherance of the
exercise of Licensor's rights outside the Exclusive Territory, including,
without limitation, the development, manufacture or operation of machinery for
the production of the Licensed Product to be sold outside the Exclusive
Territory, or the disclosure of Proprietary or Confidential information where
necessary or convenient in furtherance of Licensor's exercise of its rights
under the terms of the License Agreement, as modified by the Settlement
Agreement. Notwithstanding the foregoing, Licensor shall not do anything in the
Exclusive Territory which will diminish Licensee's rights within the Exclusive
Territory.
11. Notwithstanding any provision in the License Agreement to the contrary,
no default under the terms of the License Agreement shall cause termination of
the License except as set forth herein. In the event of a default, after
applying the Notice and Cure provisions contained in the License Agreement, the
License Agreement shall not terminate until a decision that termination should
occur is rendered by an arbitration panel before whom the parties bring their
dispute pursuant to paragraph XIX of the License Agreement. In the event that
the arbitration panel finds the existence of a default, and that the default was
not willful, then the arbitration panel shall not terminate the License, but
shall impose such other remedies or damages as the arbitration panel believes
will fully return the parties to the same position they would be in had no
default occurred in the first instance. Should the arbitration panel find that
the default was willful, then the arbitration panel must, in addition to the
relief set forth above, award the successful party the full amount of attorneys
fees incurred against the defaulting party. In the event of a second or further
default by Licensee, should the arbitration panel find the default was willful
for a second time, then the arbitration panel shall terminate the license
effective as of a date, either before or after the date of its opinion, as
provided by the arbitration panel. However, in the event of any default in
payments, or delivery, or vesting of warrants required by Paragraph 3.c., then
in connection with each and every such default the arbitration panel shall
provide that unless payment, plus interest is made of all amounts due pursuant
to Paragraphs 3.c. and 11 of this Settlement Agreement within fifteen (15)
business days after the arbitration panel's decision, then the License shall
terminate without any further notice or order. Termination of the License
Agreement shall not relieve Licensee of any obligation to make payments or
deliver warrants due prior to the date of termination.
12. The parties hereto agree that no arbitration shall be commenced prior
to a good faith effort to mediate before Judge John Gibbons. After two mediation
sessions, either party may terminate the mediation and proceed to arbitration.
If Judge Gibbons is unavailable, then the parties shall first attempt to agree
upon a mutually acceptable alternate mediator and failing such agreement, either
side may request the New York City office of JAMS/Endispute to designate a
mediator. However, in the event that the mediation shall not be concluded within
30 days from a notice of default or written request for mediation, either side
shall be entitled to commence arbitration without further delay.
5
<PAGE>
13. In consideration of the foregoing the parties have executed mutual
releases annexed hereto as Exhibit B.
14. In the event that any of the payments called for on Schedule A or any
of the earned royalties required to be paid as set forth on Schedule B subject
to the Royalty Adjustment provided in paragraph 4 herein, are not paid when due,
then in that event, the Royalty Adjustment set forth in paragraph 4 shall be
eliminated and all of the Earned Royalties as set forth on Schedule B shall
immediately be due and owing, and a Minimum Royalty shall be due for year 1,
1998, in the amount of $150,000, and for year 2, 1999 in the amount of $300,000
to the extent that the earned royalties for 1998 and or 1999 are not equal to
the minimum royalties, said minimum royalties shall also be due and owing.
15. The Warrants listed on Schedule A shall be exercisable at 20% above the
market value per share at the closing price on the date of this Settlement
Agreement and shall vest on the dates and in the amounts as set forth on
Schedule A; shall have a term of five (5) years from date of vesting and shall
be adjusted from time to time as necessary to reflect stock splits, stock
dividends, consolidation, combination or reclassification of the common stock of
HumaScan. The Warrants shall also be exercisable on a cashless basis and such
cashless exercise provision shall be similar to that contained in options
granted by HumaScan to its officers, directors and employees. HumaScan shall use
its best efforts to register the underlying shares of common stock for resale
under the Securities Act of 1933, as amended ("Securities Act"), and the "blue
sky" laws of such States as are reasonably requested by the holders, within six
months after this Settlement Agreement, provided that HumaScan shall not be
required to register such shares in any State in which such registration would
cause (x) HumaScan to be obligated to register or license to do business in such
State or (y) the principal stockholders of HumaScan to be obligated to escrow
their shares of capital stock of HumaScan. HumaScan shall bear all fees and
expenses attendant to registering the shares of common stock underlying the
Warrants but the holders of such shares shall pay any commission and expenses of
any underwriter representing the holders and the fees and expenses of any legal
counsel representing them in connection with the sale of such shares. HumaScan
and such holders shall provide each other with customary indemnification, and
HumaScan shall cause any registration statement filed pursuant to such
registration rights to remain effective until the earlier of (x) the date on
which all of the underlying shares have been sold by the holders thereof, or (y)
the first date on which all shares of Common Stock underlying the Warrants are
eligible for resale by the holders pursuant to the provisions of Rule 144(k)
under the Securities Act. To the extent any warrants are otherwise issuable to
Scantek or Sagi, they will have the same registration rights as the Warrants.
16. The Parties agree to negotiate in good faith over further clarification
and restatement of the terms of the License Agreement and to mediate any
continuing disagreement arising from negotiations before Judge John Gibbons
should he be available to do so. Unless and until any agreement between the
parties in writing with respect to any modification, clarification or
re-statement, the terms of the License Agreement as amended by the Settlement
Agreement
6
<PAGE>
shall remain in full force and effect. If Judge John Gibbons is unavailable,
then the parties shall either pursue such mediation effort before a mediation
mutually selected by the parties. Absent mutual agreement as to such mediation,
the parties shall ask the New York City office of JAMS/Endispute to designate a
mediator.
17. Except to the extent expressly provided herein, by entering into this
Settlement Agreement, neither Scantek nor HumaScan shall be deemed to have made
any admission against its respective interest, or admitted any alleged
liability, wrongdoing or violation of any rule, regulation or statute.
18. This Settlement Agreement sets forth the entire understanding between
the parties, and all previous discussions, understandings, representations,
negotiations, and agreements with respect to the matters included in this
Settlement Agreement are merged herein.
19. Should any provision of this Settlement Agreement require
interpretation or construction, it is agreed that because both parties, by their
respective attorneys, have fully participated in the preparation of all
provisions of this Settlement Agreement, any court or arbitration panel, in
interpreting or construing this Settlement Agreement, shall not apply any
presumption based upon the rule of construction that a document is to be
construed more strictly against the party who itself or through its agents
prepared the same.
Dated: May 15, 1998 Scantek Medical Inc.
By s\ Zsigmond L. Sagi
-----------------------------------
Zsigmond L. Sagi, President
By direction of the Board
HumaScan Inc.
By s\ Donald Brounstein
-----------------------------------
Donald Brounstein, President
By direction of the Board
7
<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF MORRIS )
On the 15th day of May, in the year one thousand nine hundred and ninety
eight before me personally came Zsigmond L. Sagi, to me known, who, being by me
duly sworn, did depose and say that he resides at 19 Lockley Crt., Mtn Lakes,
NJ, and is the President of Scantek Medical Inc., the corporation described in
the above instrument and that he executed the above instrument in that capacity
at the direction of the Board of Directors.
s\ Robert Stein
- -----------------------------------
Notary Public
ROBERT STEIN
NOTARY PUBLIC OF NEW JERSEY
My commission Expires Aug. 9, 1998
<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF UNION )
On the 15th day of May, in the year one thousand nine hundred and ninety
eight before me personally came Donald Brounstein, to me known, who, being by me
duly sworn, did depose and say that he resides at 129 Hillcrest Ave., Summit, NJ
07901, and is the President of HumaScan, Inc., the corporation described in the
above instrument and that he executed the above instrument in that capacity at
the direction of the Board of Directors.
s\Lisa M. Grimes
- -----------------------------------
Notary Public
LISA M. GRIMES
Notary Public of New Jersey
My Commission Expires July 29, 2002
<PAGE>
Schedule A to Scantek Agreement with Humascan
Dated May 15, 1998
- --------------------------------------------------------------------------------
Cash to be Paid by Warrants of its Stock
Date or Event HumaScan to Scantek to be Vested in Scantek
- --------------------------------------------------------------------------------
Signing $125,000.00(1) 175,000
- --------------------------------------------------------------------------------
06/30/98 $75,000.00 0
- --------------------------------------------------------------------------------
09/30/98 $50,000.00 100,000
- --------------------------------------------------------------------------------
10/31/98 $75,000.00 0
- --------------------------------------------------------------------------------
12/31/98 $75,000.00 75,000
- --------------------------------------------------------------------------------
01/31/99 $0.00 0
- --------------------------------------------------------------------------------
03/31/99 $25,000.00 50,000
- --------------------------------------------------------------------------------
06/30/99 $25,000.00 0
- --------------------------------------------------------------------------------
09/30/99 $25,000.00 0
- --------------------------------------------------------------------------------
12/31/99 $50,000.00 0
- --------------------------------------------------------------------------------
03/30/00 $0.00 0
- --------------------------------------------------------------------------------
06/30/00 $0.00 0
- --------------------------------------------------------------------------------
Totals $525,000.00 400,000
- --------------------------------------------------------------------------------
- ----------
(1) Exclusive of $50,000 payable pursuant to Paragraph 3(a) of this
Settlement Agreement
<PAGE>
Schedule B to Scantek Agreement with Humascan
Dated May 15, 1998
Commencing with the first day of the first month in which Licensed Product
is sold (the "royalty Date") and for each year ending on the anniversary of the
Royalty Date (hereinafter referred to as a "Royalty Year") through and including
the Termination Date, and subject to the provisions of subsection I of this
Section V, Licensee agrees to pay to Licensor earned royalties (the "Earned
Royalties") based on the Net Sales Price of all Sales of the Licensed Products
(the "Net Licensed Product Sales") during the Royalty Years as follows:
(i) with respect to the first $2,000,000 of Net Licensed Product Sales, 3%
of the aggregate of all such Net Licensed Product Sales;
(ii) if the Net Licensed Product Sales exceed $2,000,000 but are less than
$4,000,000, 4% of the aggregate of such Net Licensed Product Sales;
(iii) if the Net Licensed Product Sales exceed $4,000,000 but are less than
$6,000,000, 5% of the aggregate of such Net Licensed Product Sales:
(iv) if the Net Licensed Product Sales exceed $6,000,000 but are less than
$8,000,000, 6% of the aggregate of such Net Licensed Product Sales:
(v) if the Net Licensed Product Sales exceed $8,000,000 but are less than
$10,000,000, 8% of the aggregate of such Net Licensed Product Sales:
(vi) if the Net Licensed Product Sales exceed $10,000,000, 10% of the
aggregate of such Net Licensed Product Sales:
<PAGE>
EXHIBIT A
The Second Amended License Agreement, dated as of October 20, 1995 and the
extension to the Second Amended License Agreement, dated April 29, 1996 were
both filed as exhibits to the Company's Form 10-SB dated May 14, 1996. The
Further Amendment to the Second Amended License Agreement, filed May 31, 1996,
was filed as an exhibit to the Company's Form 10-SB/A-1, filed July 13, 1996.
<PAGE>
EXHIBIT B
<PAGE>
LIMITED RELEASE
This Release is made as of May 15, 1998 by HumaScan, Inc. ("HumaScan") in
favor of Scantek Medical, Inc. ("Scantek") and is made pursuant to an Agreement
of Settlement made between the parties dated as of May 15, 1998 (the "Settlement
Agreement"), and for good and sufficient consideration including the exchange of
mutual releases, the receipt of which are hereby acknowledged. All defined terms
are used with the same meaning as provided in the Settlement Agreement or the
License Agreement.
HumaScan, for itself and for its present and former parents, subsidiaries,
shareholders, officers, directors, employees and agents, and their successors
and assigns (the "RELEASORS"); releases and discharges Scantek and each of its
present and former parents, subsidiaries, officers, directors, employees and
agents, and their successors and assigns including in particular Zsigmond L.
Sagi, (the "RELEASEES") from all actions, causes of action, suits, debts, dues,
sums of money, accounts, reckoning, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, representations, warranties,
statements, omissions, variances, trespasses, damages, judgments, executions,
claims, obligations, liabilities and demands whatsoever, in law or equity,
whether known or not known, suspected or claimed, which against any of them, as
against the RELEASEES the RELEASORS ever had, now have or may have for, upon, or
by reason of any matter, action, inaction, event, cause or thing whatsoever from
the beginning of the world to the date of this Release, including without
limitation any claims concerning
<PAGE>
a) Any representation, warranty, statement, projection, act or omission to
act or disclose made or not made in connection with or to induce the signing of
the License Agreement.
b) Any statement, representation or warranty, whenever made, concerning the
Invention, the Licensed Product, the Licensed Process, know-how, or the
technology, value, cost, effectiveness, manufacture or function thereof.
Excepting solely any express representation or warranty expressly labeled a
representation or warranty in the body of the Settlement Agreement or the
License Agreement.
c) Any delay in the delivery or operation of any machinery used by Humascan
in its operations.
d) Any defect of any kind in the Invention, the Licensed Product, the
Licensed Process, the technology or know-how, including without limitation any
defect in the chemical composition of the Invention or the Licensed Product,
whether related to manufacturing requirements, shelf-life or otherwise.
e) Any inadequacy in the quantity or quality of any information,
consulting, or other services provided or not provided by Scantek or Sagi.
Provided that this Release shall not extend to (a) the right to exercise
the License granted in the License Agreement pursuant to the terms of the
License Agreement, as modified by the Settlement Agreement, (b) the rights and
obligations contained in the Settlement Agreement, or (c) as to any act, or
inaction on or after the date hereof which is in violation of the rights and
obligations contained in the License Agreement as modified by the Settlement
Agreement.
-2-
<PAGE>
This Release may not be changed orally. This Release is made in New York
and shall be interpreted under the laws of New York, except for the law relating
to choice of law.
Notwithstanding the foregoing, nothing in this Release shall release or
discharge Scantek's or HumaScan's obligations under the Settlement Agreement.
IN WITNESS WHEREOF, HumaScan has caused this Release to be executed by its
duly authorized officer on May 15, 1998. By executing this Release, the
undersigned acknowledges (a) that he is authorized to execute this Release by
action of the directors of HumaScan, (b) that HumaScan is represented by counsel
and has discussed this Release with counsel, and (c) that HumaScan understands
the terms and the effect of this Release.
HUMASCAN, INC.
By: s\ Donald Brounstein
----------------------------------
Donald Brounstein, President
-3-
<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF UNION )
On the 15th day of May, in the year one thousand nine hundred and ninety
eight before me personally came Donald Brounstein, to me known, who, being by me
duly sworn, did depose and say that he resides at 129 Hillcrest Ave., Summit, NJ
07901, and is the President of HumaScan, Inc., the corporation described in the
above instrument and that he executed the above instrument in that capacity at
the direction of the Board of Directors.
s\Lisa M. Grimes
- -----------------------------------
Notary Public
LISA M. GRIMES
Notary Public of New Jersey
My Commission Expires July 29, 2002
<PAGE>
LIMITED RELEASE
This Release is made on May 15, 1998 by Scantek Medical, Inc. ("Scantek")
in favor of HumaScan, Inc. ("HumaScan") and is made pursuant to an Agreement of
Settlement made between the parties dated as of May 15, 1998 (the "Settlement
Agreement"), and for good and sufficient consideration including the exchange of
mutual releases, the receipt of which are hereby acknowledged. All defined terms
are used with the same meaning as provided in the Settlement Agreement or the
License Agreement.
Scantek, for itself and for its present and former parents, subsidiaries,
shareholders, officers, directors, employees and agents, and their successors
and assigns (the "RELEASORS"); releases and discharges HumaScan and each of its
present and former parents, subsidiaries, officers, directors, employees and
agents, and their successors and assigns (the "RELEASEES") from all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckoning, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
representations, warranties, statements, omissions, variances, trespasses,
damages, judgments, executions, claims, obligations, liabilities and demands
whatsoever, in law or equity, whether known or not known, suspected or claimed,
which against any of them, as against the RELEASEES the RELEASORS ever had, now
have or may have for, upon, or by reason of any matter, action, inaction, event,
cause or thing whatsoever from the beginning of the world to the date of this
Release, including without limitation any claims concerning
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a) Any representation, warranty, statement, projection, act or omission to
act or disclose made or not made in connection with or to induce the signing of
the License Agreement.
b) Any statement, representation or warranty, whenever made, concerning the
Invention, the Licensed Product, the Licensed Process, know-how, or the
technology, value, cost, effectiveness, manufacture or function thereof.
Excepting solely any express representation or warranty expressly labeled a
representation or warranty in the body of the Settlement Agreement or the
License Agreement.
c) Any and all claims of default under the terms of the License Agreement
as of the date of this Release
Provided that this Release shall not extend to (a) the right to exercise
any rights granted in the License Agreement pursuant to the terms of the License
Agreement, as modified by the Settlement Agreement, (b) the rights and
obligations under the Settlement Agreement, (c) any act, or inaction on or after
the date hereof which is in violation of the rights and obligations contained in
the License Agreement as modified by the Settlement Agreement, or (d) the right
to receive stock or Warrants if any were due and not delivered prior to the date
of this Release.
This Release may not be changed orally. This Release is made in New York
and shall be interpreted under the laws of New York, except for the law relating
to choice of law.
Notwithstanding the foregoing, nothing in this Release shall release or
discharge HumaScan's or Scantek's obligations under the Settlement Agreement.
IN WITNESS WHEREOF, Scantek has caused this Release to be executed by its
duly authorized officer on May 15, 1998. By executing this Release, the
undersigned acknowledges
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(a) that he is authorized to execute this Release by action of the directors of
Scantek, (b) that Scantek is represented by counsel and has discussed this
Release with counsel, and (c) that Scantek understands the terms and the effect
of this Release.
SCANTEK, INC.
By: s\ ZsigmondL. Sagi
-----------------------------------
Zsigmond L. Sagi, President
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<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF MORRIS )
On the 15th day of May, in the year one thousand nine hundred and ninety
eight before me personally came Zsigmond L. Sagi, to me known, who, being by me
duly sworn, did depose and say that he resides at 19 Lockley Crt., Mtn Lakes,
NJ, and is the President of Scantek Medical Inc., the corporation described in
the above instrument and that he executed the above instrument in that capacity
at the direction of the Board of Directors.
s\ Robert Stein
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Notary Public
ROBERT STEIN
NOTARY PUBLIC OF NEW JERSEY
My commission Expires Aug. 9, 1998
