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EXHIBIT 10.29
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT ("Agreement") is by and between DENTAL
MEDICAL DIAGNOSTIC SYSTEMS, INC. ("DMD") a corporation having a principal place
of business in Westlake Village, California and Chrysalis, Inc. ("CI") a Utah
corporation having a principal place of business in Salt Lake City, Utah and is
effective as of the date first written below.
WHEREAS CI has created new and improved tooth whitening products which can
be utilized without a gingival dam for home-use, or use in a dental office,
which may utilize a dental tray ("New Home-use Whitening Products");
WHEREAS DMD is desirous of acquiring the exclusive world wide rights to
market, sell, distribute the New Home-use Whitening Products; and
WHEREAS CI has represented to DMD that said New Home-use Whitening
Products are secret and proprietary to CI and that patent protection is being
sought for the inventions embodied in said New Home-use Whitening Products:
THEREFORE the parties agree as follows:
X. XXXXX OF LICENSE AND RIGHT OF FIRST REFUSAL
1.1 CI hereby grants DMD the exclusive world wide license to market, sell
and distribute the New Home-use Whitening Products under pending applications
for Letters Patent or Letters Patent maturing therefrom including continuations,
continuations-in-part, divisionals thereof, as well as any and all proprietary
trade secret information, whether in the United States of America or in
countries foreign to the Unites States of America.
1.2 Any improvements to New Home-use Whitening Products sought or
suggested by DMD shall be funded by DMD and shall automatically be made part
of this Agreement subject to the same royalty schedule set forth herein. Any
improvement to the New Home-use Whitening Products made independently by CI
may be licensed to DMD under a separate agreement subject to a royalty schedule
set forth therein. CI shall not, without the express consent and approval of
DMD, develop new or related technology and market it competitive with the
technology licensed herein without giving DMD the right of first refusal to
exclusively market, sell and distribute the
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new or related technology. CI may, however, in its discretion, conduct ongoing
research and development. For any such competitive technology, DMD, in its
absolute discretion, may exercise such right of first refusal and determine not
to market, sell or distribute such new technology during the period that DMD
enjoys the exclusive rights granted herein.
1.3 In the event that CI develops an improvement and DMD determines not to
exploit the improvement, CI shall be entitled to file for, receive, and maintain
Letters Patent covering such improvement and make, have made, import, market,
sell and distribute such improvements.
1.4 DMD shall be responsible to ensure that appropriate patent and
trademark notices, numbers and/or registrations be prominently placed on
appropriate product, product packaging, product literature and any other
materials associated with the products manufactured under this Agreement.
II. CONSIDERATION AND PAYMENT
2.1 As and for consideration for the license granted herein DMD will:
a. provide to CI [*] shares of the registered free trading DMD
stock;
b. pay to CI an annual minimum royalty of [*] for the first three
years; and
c. pay to CI earned royalty of [*] of the customary sales price on
the transfer of all New Home-use Whitening Products kits for
over-the-counter purchase, in-office use or distribution by
dentists. If however, five years from the date of the agreement
have elapsed and no Letters Patent have issued covering the New
Home-use Whitening Products and no application for Letters Patent
is then pending, the royalty rate
will drop to [*] and
*CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
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d. purchase all of DMD's requirements for the New Home-Use
Whitening Products for resale or distribution from CI or
its designated manufacture,
and:
i. DMD shall pay [*] including packaging, for
each New Home-use Whitening Products kit
(including Home-use Whitenings for a 5-day,
over-the-counter home-use whitening of upper
and lower arches, i.e., (10) Home-use
Whitenings) per whitening kit), F.O.B.,
Salt Lake City, Utah; and
ii. DMD shall pay [*] including package, for
each New Home-use Whitening Products kit
(including Home-use Whitenings for a 5-day,
in-office use or dentist-dispensed home-use
whitening of upper and lower arches, i.e.,
(10) Home-use Whitenings) per whitening
kit), F.O.B., Salt Lake City, Utah.
2.2 DMD shall deliver stock certificates for the shares of stock of
section 2.1.a upon execution of this Agreement.
2.3 Earned royalties shall be credited against minimum royalties and to
the extent that earned royalties in any quarter fail to exceed the minimum, the
minimum shall be paid. Earned royalties in excess of the quarterly minimum shall
be credited against future minimums.
2.5 Earned and minimum royalties are due and payable within thirty
(30) days after the close of each quarter.
2.6 Payment of royalties shall be in United States Dollars.
*CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
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III. EXPORTING
3.1 DMD shall be responsible for compliance with all export and import
regulations and laws, both foreign and domestic, and payment of any related
taxes of any government or governing body related to DMD's export or import,
marketing, sales and distribution of product under this Agreement. DMB shall
comply with the export regulations of the U.S. Department of Commerce,
including but not limited to any restrictions on the exchange of know-how and
other information provided under this Agreement. DMD hereby gives its assurance
to CI that DMD will not knowingly, unless prior authorization is properly
obtained from the U.S. Office of Export Control, and if necessary from CI,
re-export directly or indirectly any technical data received from CI under this
Agreement, and will not export directly the product of such technical data to
any restricted countries as said countries may be listed, from time to time, by
the U.S. Government and agencies thereof.
IV. TERM AND TERMINATION
4.1 The initial term of this agreement shall be twenty years, commencing
on the tenth day following the receipt of prototypes for testing, receipt of
which is acknowledged. If, prior to the tenth day after receipt of the received
prototypes DMD elects to forego entering into this agreement, DMD must give CI
such notice in writing before the expiration of the tenth day. DMD, upon ninety
(90) days notice, shall have the option to renew this agreement for an
additional term.
4.2 After December 31, 2000, should DMD fail to pay any installment of
any the minimum royalty when due, CI shall have the option to immediately
convert the exclusive license granted herein into a non-exclusive license to
license to market, sell and distribute the New Home-use Whitening Products for
an earned royalty only and shall be excused of any further obligation of a
minimum royalty.
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V. CONSULTING OBLIGATIONS OF XX. XXXXXXXX AND XXXXX XXXXXX
5.1 The principal investigators and inventors of the New Home-use
Whitening Products [Illegible] are Dr. [Illegible] Xxxxxxxx and Xxxxx XxXxxx
[Illegible] reasonable notice. DMD shall compensate inventor(s) at his customary
and usual rate and shall pay all reasonable costs and expenses in connection
therewith.
VI. RECORD KEEPING AND AUDITS
6.1 DMD shall maintain books and records adequate to verify royalties
earned or owed hereunder. Within thirty days after the close of each quarter,
DMD shall submit a report certified by an officer setting forth the number of
transfer of New Home-use Whitening Products kits for the quarter and the
royalty due. Such report shall be accompanied by a payment (if any) of earned
royalties due and owing or a payment of the minimum quarterly royalty.
6.2 CI shall have the right to audit DMD's books and records to verify the
accuracy of the reports through a qualified representative at the expense of
CI. Such audit may be conducted no more often than twice yearly on reasonable
notice. In the event that the audit determines a discrepancy in favor of CI in
an amount greater than 10% of the amount reported, the discrepancy shall be paid
within 30 days and the cost of the audit shall be borne by DMD.
VII. DISPUTES
7.1 All disputes shall be referred to a forum of alternative dispute
resolution including, but not limited to arbitration under the Code of Civil
Procedure of the State of California. The laws of the State of Utah or
California shall be applied and jurisdiction of such shall be either California
or Utah.
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7.2 In the event of an accusation of breach, the party accused of breach
shall be informed in writing of the circumstances considered to be a breach and
such accused party shall have forty-five days within which to cure or propose an
acceptable plan to cure. No action to enforce this agreement shall be taken
until after such period has elapsed.
7.3 In the event of breach of the terms of this Agreement or a failure
to cure or propose an acceptable plan after an accusation of breach, CI may
terminate this license with sixty (60) days written notice.
VIII. NOTICE
8.1 All notices required to be given shall be sent by facsimile or
e-mail with a written confirmation by first class certified mail, return
receipt requested. Notice shall be deemed given when the transmission of the
facsimile or e-mail is confirmed. The notices shall be sent to:
CI:
Dr. Xxxx Xxxxxxxx
Chrysalis, Inc.
00000 Xxxxx X'Xxxxx Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Phone: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
e-mail: xxxxxxx@xxxxxxx.xxx
DMD:
Xxxxxxx X. Xxxx, CFO
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
000 X. Xxxxxxxx Xxxx. #000
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
e-mail xxxxxx@xxxxxxx.xxx
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with a copy to:
XXXXXX X. XXXXXXXXX
XXXXXXXXX & XXXXXX LLP
0000 Xxxxxxx Xxxx X. #0000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
e-mail: xxx@xx-xxxxx.xxx
or at a new or different address provided to either party by the other.
IX. WARRANTIES AND REPRESENTATIONS
9.1 To the best of CI's knowledge, the making, using or selling of the
New Home-use Whitening Products, if used in the manner taught by CI's patent
disclosure documents, does not infringe the known intellectual property rights
of any third party. If DMD wishes to defend against any allegations of
infringement of third party rights, CI agrees to cooperate with DMD in the
defense. If a license is required to permit DMD to continue to market, sell and
distribute the New Home-use Whitening Products, any royalty that must be paid
shall be deducted from the earned royalty otherwise due CI, but in no event
shall the royalty earned by CI fall below 4%. To the extent possible, DMD will
seek insurance coverage and will tender any defense to an insurer affording
coverage.
9.2 To the best of CI's knowledge, the making, using or selling of the
New Home-use Whitening Products, if used in the manner taught by CI's patent
disclosure documents is safe and effective and does not cause lasting pain or
damage to users. If DMD defends itself or CI against any personal injury claims
arising out of use of the New Home-use Whitening Products, CI agrees to
cooperate with DMD in the defense. DMD will obtain product liability insurance
coverage including coverage of the New Home-use Whitening Products and will
tender any defense to an insurer affording coverage.
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X. PATENT INFRINGEMENT BY OTHERS
10.1 DMD shall have the initial exclusive right and option at its expense,
to institute infringement or other appropriate legal actions against alleged
prospective or actual infringers under the patent laws of the relevant
jurisdiction and to retain all monetary recovery received therefrom. Any
recovery of lost profits or lost sales less costs and expenses of litigation
shall be deemed a transfer of New Home-use Whitening Products kits upon which an
earned royalty is due and payable to CL. Such earned royalty is to be paid to
CI within sixty (60) days of receipt of any monetary judgment payment.
10.2 In the event DMD declines to institute infringement or other
appropriate legal action against alleged prospective or actual infringers within
ninety (90) days after receiving a written notice or request to do so from CI.
CI shall have the right and option to take whatever action it deems appropriate
and retain all recoveries and DMD agrees to permit joinder of DMD in any legal
action at the request of CI for purposes of jurisdiction or obtaining complete
relief all at CI's expense.
XI. GENERAL PROVISIONS
11.1 This Agreement represents the entire understanding of the parties. No
modification, amendment or waiver shall be binding without the written consent
of the parties.
11.2 If any provision of this Agreement shall for any reason be adjudged
by any tribunal to be invalid or unenforceable, such judgment shall not affect
impair or invalidate the remainder of this Agreement but shall be confined in
its operation to the provision of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
11.3 The obligations under this Agreement shall not be assigned by DMD
without the express written consent of CI, except in the case of a transaction
under the terms of which substantially all of the assets of DMD are being
transferred.
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11.4 This Agreement may be executed in multiple original counterparts,
each of which shall be deemed to be an original but all of which shall
constitute the same agreement.
Date: September ___, 1999
CHRYSALIS, INC.
/s/ XXXX X. XXXXXXXX
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XXXX X. XXXXXXXX, D.D.S.
DENTAL MEDICAL DIAGNOSTIC SYSTEMS, INC.
/s/ XXXXXXX X. XXXX
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XXXXXXX X. XXXX
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