License Agreement - MedStrong International Corp. and Jerry R. Farrar/Cargril Acceptance Corp.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is made as of April 1, 2004 (the
"Effective Date") by and between MedStrong International Corporation, having an
address at 500 Silver Spur Road, Suite 101, Rancho Palos Verdes, CA 90274
("MedStrong") and Jerry R. Farrar/Cargril Acceptance Corporation, or assignee
(herein "Licensee), having an address at 3340 Palos Verdes Drive East, Rancho
Palos Verdes, CA 90275 ("Licensee").
RECITALS
WHEREAS, MedStrong owns and has the right to license the Patient Data Quickly
(PDQ) Software Rights (defined below); WHEREAS, MedStrong desires to exclusively
license to Licensee, and Licensee desires to obtain a license from MedStrong to,
the PDQ Software Rights;
NOW, THEREFORE, the parties agree:
ARTICLE I. DEFINITIONS
The terms, as defined herein, shall have the same meanings in both their
singular and plural forms.
1.1 "Affiliate" means any corporation or other business entity in which
Licensee owns or controls, directly or indirectly, more than fifty
percent (50%) of the outstanding stock or other voting rights entitled
to elect directors, or in which Licensee is owned or controlled
directly or indirectly by more than fifty percent (50%) of the
outstanding stock or other voting rights entitled to elect directors.
For purposes of this Agreement, MedStrong shall not be deemed to be an
Affiliate of Licensee.
1.2 "Combination Product" means any product which is a Licensed Products
and Services and contains other service(s) or product(s) or service or
product component(s) that (i) the sale, use or import by itself does
not contribute to or induce the infringement of Software Rights; (ii)
can be sold separately; and (iii) enhances the market price of the
final product(s) sold, used or imported.
1.3 "Gross Net Margin" means the total of the gross invoice prices of
Licensed Products and Services sold by Licensee, or an Affiliate, less
agents' commissions and cancellations.
1.4 "Licensed Field" means medical information.
1.5 "Licensed Products and Services" means any products or services for
which the use, sale, offer for sale, or importation would constitute,
but for the license granted to Licensee by MedStrong herein, an
infringement of any Valid Claim within the Software Rights.
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1.6 "Software Rights" means any and all PDQ Software and Software
applications listed on Exhibit A.
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1.7 "Retained Field" means any products outside of the Licensed Field.
1.8 "Sublicense Income" means all consideration, including, but not limited
to royalties, sublicense issue fees, sublicense maintenance fees and
sublicense milestone payments received by Licensee in consideration for
the grant of a sublicense under the Software Rights to a sub licensee
pursuant to this Agreement; provided, however, that Sublicense Income
shall not include: (i) payments made for the performance of research or
development activities; (ii) payments made at fair market value in arms
length transactions representing equity investments in Licensee or the
proceeds of debt instruments; and (iii) payments received to reimburse
Licensee for Software expenses. Notwithstanding the foregoing, any
royalties paid from Affiliates to Licensee shall not be considered
Sublicense Income.
ARTICLE 2. GRANT
2.1 License. MedStrong hereby grants to Licensee, and Licensee hereby
accepts, a worldwide, exclusive, perpetual license, under the Software
Rights, to make, use, sell, offer for sale and export Licensed Products
and Services and practice any methods covered by the Software Rights,
solely within the Licensed Field; provided, that this license does not
include the right to use the name "MedStrong" in any manner.
2.2 Delivery. MedStrong will deliver to Licensee all necessary PDQ software
codes, unencumbered, for the Software Rights in the Licensed Field.
MedStrong shall also assign, transfer and sell the equipment listed on
Schedule B hereto to Licensee.
2.3 Change of Name of Web Site. Licensee shall, within thirty (30) days of
the Effective Date, change the name of MedStrong's web site and shall
similarly change all promotional materials used by Licensee so as not
to use the name "MedStrong" in any manner in conducting its business
under this Agreement.
2.4 Indemnification. Licensee shall defend, indemnify and hold MedStrong,
its affiliates, and its and their employees, agents, officers,
directors, successors and assigns harmless from and against any and all
losses, liabilities, damages, judgments, penalties, fines, claims, fees
(including attorneys fees) and expenses, including, without limitation,
all amounts paid in investigation, defense or settlement, that result
from or arise in connection with a claim, suit or other proceeding
resulting from actions of Licensee in sale of or its business
operations with respect to the above Software Rights under this
Agreement.
ARTICLE 3. PAYMENTS
3.1 Upfront Payment. Licensee shall pay to MedStrong Sixty-Five Thousand
Dollars ($65,000) within three (3) days of the Effective Date.
3.2 Royalties.
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(a) Royalty Amount. Licensee shall pay to MedStrong, on a
monthly basis, royalties equal to Thirty-Five (35%) Percent of the Gross Net
Margin of Licensed Products and Services up to Two Hundred Thousand ($200,000)
Dollars of Gross Net Margin and Fifty (50%) Percent of Gross Net Margin
thereafter until Licensee has paid One Hundred Ninety Thousand ($190,000)
Dollars in royalties (the "Minimum Royalty Payment"), after which the applicable
percentage shall be One (1%) of gross net margin, with right of offset for any
client cancellations, overpayments or other moneys due one party or the other.
(b) Royalty Payments and Reports. After the first commercial
sale of a Licensed Products and Services anywhere in the world, Licensee shall
submit royalty payments and reports to MedStrong within Twenty Five (25) days of
the close of the previous month's licensed business beginning Sixty (60) days
from the effective date. Each royalty report shall contain any information
reasonably necessary to calculate accurately the royalty amounts to be paid to
MedStrong.
(c) Royalty Stacking. In the event that Licensee reasonably
determines that in any country any Licensed Products and Services infringes upon
the Software rights (including rights under Software applications) of a third
party, and Licensee obtains a license under such third party rights, then
Licensee shall have the right to deduct from the royalties otherwise due and
payable under Section 3.3 arising from the sale of Licensed Products and
Services and Services in such country, the amount, up to a maximum of fifty
(50%) of the royalties otherwise payable, that Licensee is obliged to pay under
the third party license in order to obtain rights from such third party in such
country. 3.3 Sublicensing Income. Licensee shall pay to MedStrong, on a
quarterly basis, fifty percent (50%) of any Sublicense Income received by
Licensee. 3.4 Payment Terms. Unless otherwise expressly specified, payments due
on a quarterly basis shall be due within thirty (30) days of such calendar
quarter.
ARTICLE 4. AUDIT RIGHTS
4.1 Records & Audits.
(a) Licensee shall use reasonable efforts to keep accurate and
correct records of all Licensed Products and Services sold, and sublicense fees
received under this Agreement. Such records shall be retained by Licensee for at
least two (2) years following a given reporting period.
(b)All records of Licensee and its Affiliates and Sub licensees
shall be available during normal business hours for inspection at the expense of
MedStrong by a nationally recognized certified public accountant selected by
MedStrong and acceptable to Licensee for the sole purpose of verifying reports
and payments or other compliance issues. Such inspector shall not disclose to
MedStrong any information other than information relating to the accuracy of
reports and payments made under this Agreement or other compliance issues. In
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the event that any such inspection shows an underreporting and underpayment in
excess of ten percent (10%) for any twelve (12) month period, then Licensee
shall pay the cost of the audit as well as any additional sum that would have
been payable to MedStrong had Licensee reported correctly.
ARTICLE 5. TERMINATION OF THE AGREEMENT
5.1 Term. Unless terminated earlier in accordance with this Article, this
Agreement shall be effective beginning on the Effective Date and ending on the
expiration date of the longest-lived Valid Claim.
5.2 Termination by MedStrong. If Licensee materially fails to perform or
materially violates any term of this Agreement, then MedStrong may give written
notice of default ("Notice of Default") to Licensee. If Licensee fails to cure a
payment default (pursuant to Section 3.1, 3.2 or 3.3, a "Payment Default")
within thirty (30) days, or a material default other than a Payment Default,
within sixty (60) days of the Notice of Default, MedStrong may terminate this
Agreement and the license granted herein by a second written notice ("Notice of
Termination") to Licensee. If a Notice of Termination is sent to Licensee, this
Agreement shall automatically terminate on the effective date of that notice;
provided, that, if Licensee has made royalty payments in an amount at least
equal to the Minimum Royalty Payment, MedStrong's sole remedy in the event of a
default by Licensee shall be to declare Licensee's rights under this Agreement
to be non-exclusive.
5.3 Termination by Licensee. Licensee shall have the right at any time and for
any reason, or no reason at all, to terminate this Agreement upon a ninety (90)
day written notice to MedStrong. Said notice shall state Licensee's reason for
terminating this Agreement.
5.4 Disposition of Licensed Products and Services on Hand. Upon termination of
this Agreement, Licensee shall return to MedStrong any software codes relating
to the Software Rights in the Licensed Field.
5.5 Treatment of Sublicenses. MedStrong shall in good faith cooperate with
Licensee to provide comfort to any Licensee sublicenses of the consequences of
the termination of this Agreement.
ARTICLE 6. REPRESENTATIONS AND WARRANTY
6.1 Representations and Warranties.
(a) MedStrong represents and warrants:
(1) that it is the sole owner of the Software Rights and has the lawful right
to grant this license;
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(2) that none of the Software Rights are the subject of any pending
interference, encumbrances, opposition, cancellation or other challenge or
adversarial proceeding;
(3) it has neither assigned nor granted any license or other rights to the
Software Rights and it is under no obligation to grant any such license or
rights to any third party;
(4) there are no outstanding liens, encumbrances, third party rights,
agreements or understandings of any kind, either written, oral or implied,
regarding the Software Rights which are inconsistent or in conflict with any
provision of this Agreement; and
(5) the execution and delivery of this Agreement, and the performance by
MedStrong of its obligations hereunder have been duly authorized by all
necessary corporate or other action on the part of MedStrong, and no consents,
waivers, or permissions that have not already been granted are required for such
actions.
6.2 MEDSTRONG HEREBY DISCLAIMS ANY IMPLIED WARRANTIES WITH RESPECT TO THE
SOFTWARE RIGHTS, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 Correspondence. Any notice or payment required to be given to
either party under this Agreement shall be deemed to have been properly given
and effective:
(a) on the date of delivery if delivered in person, or
(b) five (5) days after mailing if mailed by first-class or certified mail,
postage paid, to the respective addresses given below, or to such other address
as is designated by written notice given to the other party.
If sent to Licensee, Inc.:
Jerry Farrar
Cargril Acceptance Corporation
3340 Palos Verdes Drive East
Rancho Palos Verdes, CA 90275
If sent to MedStrong:
MedStrong International Corporation
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500 Silver Spur Road, Suite 101
Rancho Palos Verdes, CA 90274
Attention: President
7.2 Assignability. Except as otherwise expressly provided under this
Agreement, neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law or
otherwise) by either party, without the prior express written consent of the
other party; provided, however, that either party may, without such consent,
assign this Agreement and its rights and obligations hereunder in connection
with the transfer or sale of all or substantially all of its business, whether
through merger, reorganization or otherwise.
7.3 No Waiver. No waiver by either party of any breach or default of any
covenant or agreement set forth in this Agreement shall be deemed a waiver as to
any subsequent and/or similar breach or default.
7.4 Failure to Perform. In the event of a failure of performance due under
this Agreement and if it becomes necessary for either party to undertake legal
action against the other on account thereof, then the prevailing party shall be
entitled to reasonable attorney's fees in addition to costs and necessary
disbursements.
7.5 Governing Laws/Venue. THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, without regard to the
conflicts of laws principles thereof, but the scope and validity of any Software
or Software application shall be governed by the applicable laws of the country
where the Software or Software application is commercialized. The sole
jurisdiction and venue for actions related to the subject matter of this
Agreement shall be the state and US federal courts having within their
jurisdiction the county of Los Angeles, California. Both parties consent to the
jurisdiction of such courts and agree that process may be served in the manner
provided herein for giving notices or otherwise as allowed by the California
state or US federal law.
7.6 Force Majeure. A party to this Agreement may be excused from any
performance required herein if such performance is rendered impossible or
unfeasible due to any catastrophe or other major event beyond its reasonable
control, including, without limitation, war, riot, and insurrection; laws,
proclamations, edicts, ordinances, or regulations; strikes, lockouts, or other
serious labor disputes; and floods, fires, explosions, or other natural
disasters. When such events have abated, the non-performing party's obligations
herein shall resume.
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7.7 Headings. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
7.8 Entire Agreement. This Agreement embodies the entire understanding of
the parties and supersedes all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.
7.9 Amendments. No amendment or modification of this Agreement shall be
valid or binding on the parties unless made in writing and signed on behalf of
each party.
7.10 Severability. In the event that any of the provisions contained in this
Agreement is held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if the invalid,
illegal, or unenforceable provisions had never been contained in it.
IN WITNESS WHEREOF, both MedStrong and Licensee have executed this Agreement, in
duplicate originals, by their respective and duly authorized officers on the day
and year written.
Jerry Farrar MedStrong International Corporation
Cargril Acceptance Corporation
/s/ Jerry R. Farrar /s/ Joel San Antonio
By By
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(Signature) (Signature)
Name: Name
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President Chairman
Title: Title:
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