LICENSE AGREEMENT

 

                                                                    Exhibit 10.1

 

                                LICENSE AGREEMENT

 

         THIS LICENSE AGREEMENT ("Agreement") is entered into as of the 14th day

of January, 2002, (the "Effective Date") by and between PROFILE, LLC, a Delaware

limited liability company ("Profile") and PRO URO CARE INC., a Minnesota

corporation ("Licensee").

 

                                    RECITALS

 

         WHEREAS, Profile owns or has licensed the Licensed Technology (defined

below); and

 

         WHEREAS, the parties desire for Licensee to be granted an exclusive

license to the Licensed Technology in the defined field of use, subject to the

terms and conditions of this Agreement.

 

         NOW THEREFORE, in consideration of the foregoing and the covenants and

premises contained in this Agreement, the parties agree as follows:

 

                                    ARTICLE 1

 

                                   DEFINITIONS

 

         As used herein, capitalized terms will have the meanings set forth

below.

 

         1.1 "Affiliate" shall mean any entity that controls, is controlled by

or is under common control with a party hereto. "Control" shall mean the

possession of the power to direct or cause the direction of the management and

policies of such entity, whether through the ownership of voting securities, by

contract or otherwise. Profile represents that each of ArMed, Inc. and ArMed

L.L.C. are not an Affiliate of Profile, within the meaning of this definition.

 

          1.2 "Confidential Information" shall mean any confidential or

proprietary information embodied in the Devices or Licensed Technology, and any

information which relates to any research project, work in process, future

development, scientific, engineering, manufacturing, marketing, business plan,

financial or personnel matter relating to either party, its present or future

products, sales, suppliers, customers, employees, investors or business, whether

in oral, written, graphic or electronic form.

 

         1.3 "Devices" shall mean any composition of matter, material or product

that is either covered by the Licensed Patents or the Licensed Know-how, or

whose manufacture, use or sale would constitute, but for the license granted to

Licensee pursuant to this agreement, an infringement of any pending or issued

claim within the Licensed Patents.

 

         1.4 "Field of Use" shall mean the diagnosis of and the treatment of (a)

benign prostatic hyperplasia; (b) prostatitis; (c) prostate cancer; or (d) any

other conditions of or disorders of the prostate, whether healthy or diseased,

and any other condition of urologic disorder which may be diagnosed, imaged or

treated using any diagnostic or imaging process.

 

         1.5 "Licensed Know-how" means all techniques, inventions, practices,

methods, knowledge, skill, experience, bench testing information, and all other

information and data relating to the Licensed Patents or the Field of Use, and

which are now or in the future owned or licensed, by Profile or its Affiliates.

 

         1.6 "Licensed Names" means any Names as defined in Section 2.3 which

are included in the license, made hereunder pursuant to the provisions of

Section 2.3 (it being understood that there may be no such Names).

 

 

 

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         1.7 "Licensed Patents" means (a) the patents and patent applications

listed on Exhibit A hereto, (b) any future patents and patent applications

pertaining to or that have application in the Field of Use, and which are owned

or licensed, by Profile, and (c) all foreign counterparts, all substitutions,

extensions, reissues, renewals, continuations and continuations in part relating

to any Licensed Patents and their foreign counterparts, and which are owned or

licensed, by Profile or its Affiliates. Exhibit A shall be updated by the

parties as needed from time to time during the term of this Agreement.

 

         1.8 "Licensed Technology" means (a) the inventions, discoveries,

processes, devices and/or claims covered under the Licensed Patents; and (b) the

Licensed Know-how, and (c) the Licensed Names (if any).

 

         1.9 "Net Sales" means all revenues recognized in accordance with

generally accepted accounting principles relating to the sale of Devices by or

for Licensee, less transportation charges, discounts actually taken, credits

allowed for defective or returned goods, and other allowances (actually paid or

allowed, including but not limited to, prompt payment and volume discounts,

charge backs from wholesalers and other allowances granted to the end commercial

customer of the Devices, whether in cash or trade), insurance and sales and

other taxes based on sales prices when included in gross sales, but not

including taxes assessed on income derived from such sales.

 

                                    ARTICLE 2

 

                      GRANT OF LICENSE AND OTHER OBLIGATIONS

 

         2.1 License Grant. Subject to the terms and conditions of this

Agreement, Profile hereby grants to Licensee an exclusive, worldwide,

royalty-bearing, limited license under the Licensed Technology to make, have

made, import, use, sell and have sold the Devices solely within the Field of

Use.

 

         2.2 Degree of Exclusivity. Except as otherwise provided herein, the

license granted in Section 2.1 shall be exclusive for the life of the Agreement.

As used herein, "exclusive" shall mean that Profile may not grant any other

license to any other third party of the Licensed Technology, in whole or in

part, within the Field of Use, and that Profile and its Affiliates may not

practice any claim encompassed within the foregoing within the Field of Use.

Notwithstanding the foregoing, Profile and other third parties reserve the right

to make, to have made, use or sell, directly or through others, for any products

embodying or otherwise using the Licensed Technology for applications outside

the Field of Use.

 

         2.3 Name License. To the extent Profile owns any name, trade name,

trademark or other designation (collectively, "Names") that are used in

connection with the Licensed Technology, said Names shall be included in and

subject to the license granted in Section 2.1.

 

         2.4 Sublicense. Licensee may grant to third parties a sublicense to

manufacture, use, import or sell Devices, provided that a least a majority of

the members of Licensee's Board of Directors (the "Board") approves such

sublicense.

 

         2.5 Licensed Know-how. Profile will provide or make available all

Licensed Knowhow to Licensee in a timely manner.

 

 

 

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                                     ARTICLE 3

 

                                    OWNERSHIP

 

         Licensee acknowledges and agrees that, as between Profile and Licensee,

Profile shall retain all rights to the Licensed Technology, and Licensee shall

have no rights in the Licensed Technology other than those rights expressly

granted to Licensee under this Agreement.

 

                                    ARTICLE 4

 

                                  CONSIDERATION

 

         4.1 Calculation and Payment of Royalties. Beginning on the Effective

Date, Licensee shall pay to Profile an ongoing royalty pursuant to this Section

4.1.

 

                  (a) Calculation of Royalties. Within thirty (30) days after

the end of each calendar quarter, Licensee shall pay to Profile a royalty at the

percentage indicated in the chart below on the Net Sales of all Devices sold or

distributed during such calendar quarter. The applicable percentage rate depends

on the level of Net Sales achieved during each calendar year, and is as follows:

 

                   Sales During Calendar Year              Royalty Rate

                  --------------------------              ------------

 

                  From $0 to $30,000,000                    3.05%

 

                  $30,000,001 to $100,000,000               2.05%

 

                  Over $100,000,000                         1.05%

 

                  (b) Payment of Royalties. At the same time that it makes

payments of royalties due with respect to a calendar quarter, Licensee shall

deliver to Profile a true and complete accounting of sales of Devices and

receipts from those sales during the quarter, with a separate accounting of

sales and receipts by country and a calculation of the royalty payment due

Profile for such calendar quarter. If no sales of Devices were made in such

quarter, then Licensee's statement shall be a statement to such effect. Licensee

hereby covenants that if it desires to sell, lease or otherwise place any

Devices in exchange for consideration in a manner that makes it impractical to

calculate the royalty due, it will not do so without first devising a mechanism

for the calculation of royalties thereon and obtaining Profile's prior written

consent for such mechanism.

 

         4.2 Foreign Payments. In transactions giving rise to an obligation to

make payment hereunder with respect to which Licensee receives payment in a

currency other than U.S. Dollars, all payments required to be made by Licensee

under Section 4.1 shall be. converted, prior to payment, into U.S. Dollars at

the applicable rate of exchange of Citibank, N.A., in New York, New York, on the

last day of the calendar quarter in which such transaction occurred. If Licensee

is prevented from making any payment under this Agreement by virtue of the laws

of the country from which the payment is to be made, Licensee may deposit the

amount that has accrued to Profile's account in the currency of such country in

a bank in such country that is acceptable to Profile.

 

         4.3 Overdue Payments. Payments due to Profile hereunder shall, if not

paid when due under the terms of this Agreement, bear simple interest at the

lesser of 1.5% per month or the highest rate permitted by law, calculated on the

basis of a 360-day year for the number of days actually elapsed, beginning on

the due date and ending on the day prior to the day on which payment is made in

full. Interest accruing under this Section shall be due to Profile on demand.

The accrual or receipt by Profile of interest under this Section shall not

constitute a waiver by Profile of any right it may otherwise have to declare a

default under this Agreement or to terminate this Agreement.

 

 

 

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                                    ARTICLE 5

 

                                OTHER OBLIGATIONS

 

         5.1 Licensee Responsibility. Licensee shall direct, and shall

diligently proceed with the development, manufacture, and sale of Devices within

the Field of Use and shall earnestly and diligently endeavor to market the same

within a reasonable time after execution of this Agreement and in quantities

sufficient to meet the market demands therefor. During the time period

commencing on the Effective Date and ending on the earlier of December 31, 2002

or the date of a Qualifying Transaction, as defined in Section 7.2 below, it is

agreed that Licensee will fund development of the Licensed Technology for the

Field of Use at an average rate of not less than $25,000 per month and not in

excess of $35,000 per month. The parties acknowledge that the nature of such

development means that payments will not necessarily be incurred on a regular

monthly basis. Therefore, compliance with the requirements of this Section shall

be determined based on average monthly expenditures during six (6) month

periods, with the first such period to commence on the Effective Date, the

second such period to commence on the date six (6) months after the Effective

Date, and so on.

 

         5.2 Patent Protection and Prosecution. Commencing on the Effective

Date, Licensee shall be responsible for the patent prosecution and legal work

necessary to maintain the Licensed Patents for applications in the Field of Use.

In connection with these activities, the parties have the following agreements

and understandings:

 

                  (a) During the time period commencing on the Effective Date

and through the date of a Qualifying Transaction, all decisions about

prosecution of any patent or patent application will be made jointly by Profile

and Licensee, with the decisions to be mutually acceptable to both parties. In

this connection, it is understood that expenditures shall be determined in the

exercise of the parties' reasonable business judgment, taking into account

expected returns from the expenditures. After the date of a Qualifying

Transaction, the decisions regarding prosecution of any patents or patent

applications shall be made by the board of Licensee in the exercise of its

reasonable business judgment. Wherever the Board of Licensee makes a decision

that it will not continue to maintain a patent, Licensee shall promptly advise

Profile of this decision so that Profile may decide whether or not it wishes to

pay the maintenance fees.

 

                  (b) Where an expenditure is of a nature that it will provide

benefits which apply both in the Field of Use and outside the Field of Use, the

parties shall reach agreement as to how the expenditure shall be shared between

Profile and Licensee, based upon a reasonable apportionment of such expenses

between Licensee and Profile. Licensee shall not be responsible for patent

prosecution and legal work relating to the Licensed Patents outside of the Field

of Use, and Profile shall determine, in its discretion, whether it wishes to

incur such expenses.

 

                  (c) Exhibit B attached hereto outlines the expenditures which

are expected to be required during the next twelve (12) months. The parties have

agreed that these are the expenditures which will be made in or about this time

period.

 

                  (d) The Board of Licensee shall determine the nature and

extent of expenditures which will be incurred by Licensee pursuant to this

section, in the exercise of the Board's reasonable business judgment. For these

purposes, the Board shall consider and take into account the amount and timing

of expenses, and the potential benefit to Licensee, considering both possible

revenues which might be received, the risk that the revenues will not be

achieved, and the expected cost; as well as other germane factors.

 

 

 

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                  (e) Profile represents that Exhibit C attached hereto lists,

in reasonable detail, the type and amount of expenditures made by Profile, or

its predecessors in interest, with respect to the Licensed Technology for patent

prosecution and legal work for applications in the Field of Use.

 

                  (f) The parties agree that Licensee shall determine the

professionals to be used for patent prosecution and activities under this

Section, subject to the consent of Profile, such consent not to be unreasonably

withheld or delayed. Without limiting Licensee's right to designate other

professionals, Profile hereby consents to the use of firm of Fish & Richardson

for these purposes.

 

                  (g) Licensee will keep Profile informed on a regular basis of

the status of the License Patents and the actions taken under this Section.

 

         5.3 Government Approvals. As between the parties, Licensee shall be

solely obligated to obtain all necessary governmental approvals for the

manufacture, use, and sale of Devices within the Field of Use in the United

States or any other countries. It is understood that decisions on what

governmental approvals should be obtained shall be made by Licensee in the

exercise of its reasonable business judgment.

 

         5.4 Progress Reports. Beginning at the end of the first anniversary of

the Effective Date and annually thereafter, Licensee shall submit to Profile a

summary progress report covering Licensee's activities in the preceding year

related to the development and testing of all Devices within the Field of Use

and Licensee's progress, if any, in obtaining governmental approvals necessary

for marketing such products. Such progress reports shall include, but not be

limited to, a summary of the following topics: research and development work

completed; key scientific discoveries; work in progress; current schedule of

anticipated events or milestones; and market plans for introduction of new or

additional Devices.

 

         5.5 Patent Marking. Licensee shall mark all Devices made, used, or sold

under the terms of this Agreement, or their containers, in accordance with 35

U.S.C. ss. 287(a) or any other successor statute in the United States and the

applicable patent marking laws of any other country. Upon Profile' written

request, Licensee shall furnish reasonable and representative samples of the

Devices to demonstrate compliance with this Section.

 

         5.6 Insurance. Licensee, at its sole cost and expense, shall insure its

activities in connection with the exercise of its license under this Agreement

in an appropriate amount at all times. Without limiting the foregoing, Licensee

shall obtain, keep in force, and maintain, at a minimum, Comprehensive or

Commercial Form General Liability Insurance (contractual liability included) or

an equivalent program of self-insurance with appropriate limits, which limits

will increase as needed depending on the activities of Licensee (i.e., more

coverage once human testing begins). Licensor shall be named as an additional

insured on any such policies.

 

                                    ARTICLE 6

 

                                 CONFIDENTIALITY

 

         6.1 Confidentiality. During the term of this Agreement and thereafter,

each party hereto will maintain in confidence all Confidential Information

disclosed by the other party hereto. Neither party will use, disclose or grant

use of such Confidential Information except as expressly authorized by this

Agreement. To the extent that disclosure is authorized by this Agreement, the

disclosing party will obtain prior agreement from its employees, agents or

consultants to whom disclosure is to be made to hold in confidence and not make

use of such information for any purpose other than those permitted by this

Agreement. Each party will use at least the same standard of care as it uses to

protect its own Confidential Information to ensure that such employees, agents

or consultants do not disclose or make any unauthorized use of such Confidential

Information. Each party will promptly notify the other upon discovery of any

unauthorized use or disclosure of the Confidential Information.

 

 

 

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         6.2 Exceptions. The obligations of confidentiality contained in Section

6.1 will not apply to the extent that it can be established by the receiving

party by competent written proof that such Confidential Information:

 

                  (a) was already known to the receiving party, other than under

an obligation of confidentiality, at the time of disclosure by the other party;

 

                  (b) was generally available to the public or otherwise; part

of the public domain at the time of its disclosure to the other party;

 

                  (c) became generally available to the public or otherwise part

of the public domain after its disclosure and other than through any act or

omission of the receiving party in breach of this Agreement;

 

                  (d) was disclosed to the receiving party, other than under an

obligation of confidentiality, by a third party who had no obligation to the

other party not to disclose such information to others.

 

         The parties agree that the material financial terms of this Agreement

will also be considered Confidential Information of both parties.

 

         6.3 Authorized Disclosure. Each party may disclose the Confidential

Information to the extent such disclosure is reasonably necessary in complying

with applicable governmental regulations, provided that if such party is

required to make any such disclosure of the Confidential Information it will to

the extent practicable give reasonable advance notice to the other party of such

disclosure requirement so that confidential treatment of the information

required to be disclosed may be secured.

 

                                     ARTICLE 7

 

                                TERM; TERMINATION

 

         7.1 Term. This Agreement will commence on the Effective Date and,

unless sooner terminated as provided hereunder, will terminate upon the later of

(i) the date of the expiration of the last to expire patent included in the

Licensed Technology, or (ii) the date that the Licensee permanently ceases the

sale of Devices hereunder.

 

         7.2 Termination by Profile. Profile may terminate this Agreement in

accordance with the following:

 

                  (a) Failure to Make Timely Payment. Profile ma; y terminate

this Agreement upon ten (10) days written notice if Licensee fails to timely

make any payment to Profile required by this Agreement and fails to cure the

nonpayment within ten (10) days of written notice thereof from Licensee.

 

                  (b) Failure to Capitalize. Profile may terminate this

Agreement upon thirty (30) days written notice to Licensee, unless on or before

December 31, 2002 (i) Licensee has obtained equity financing in an amount which

is not less than $5,000,000, and (ii) Licensee has t least $1,500,000, which is

available and designated for the development of a diagnostic system based on the

Licensed Technology under budgets approved by the Board of Licensee. (For

purposes of this Agreement, achievement of these requirements is referred to as

a "Qualifying Transaction". In this connection, it is understood that Licensee

may obtain financing referred to in this Section, either through direct

investments by investors, or by a merger or other form of acquisition of

business combination, which results in the requisite amounts being obtained.

 

 

 

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<PAGE>

 

         Notwithstanding the foregoing, if before the expiration of the 30 day

period referred to in the notice, Licensee achieves a Qualifying Transaction

(even if it is after December 31, 2002), the termination shall not be effective,

and this License shall remain in full force and effect.

 

          7.3 Termination by Either Party. This Agreement may be terminated by

either party upon written notice if the other party breaches a material

provision of this Agreement, and does not cure such breach within sixty (b0)

days of written notice thereof.

 

          7.4 Effect of Termination.

 

               (a) Termination of License. Upon termination or expiration of

this Agreement for any reason, the license granted to Licensee pursuant to

~3,ection 2.1 shall automatically terminate. Licensee shall immediately cease

all use of the Licensed Technology, including all Licensed Technology included

in the Devices, and shall provide a written account to Profile of the following

within fifteen (15) days of termination:

 

               (1) All development in progress; sales of Devices made but not

shipped; inventory of Devices on hand as well as work in process;

 

               (2) Royalties due but not paid up to date of termination.

 

               (b) Return of Confidential Information. Within thirty (30) days

of termination of this Agreement for any reason, both parties shall return or

destroy all copies of the other party's Confidential Information and shall

provide written certification of such destruction upon request of the other

party.

 

               (c) Royalty Obligation. Licensee acknowledges that the

termination of this Agreement by either party for any reason shall not absolve

Licensee of its payment and other obligations under Section 4.1(b).

 

               (d) Survival. In the event of termination of this Agreement,

Articles 3, 4, b, 8, 9,10,11 and 12 shall survive.

 

               (e) Return of Stock. In the event of any termination of this

Agreement other than pursuant to clauses (i) or (ii) of Section 7.1, Profile

shall promptly return and reconvey to Licensee all shares of stock of Licensee

which have been issued to Profile, including any such shares issued