Exhibit 10.4

 

TECHNOLOGY ROYALTY AGREEMENT

 

This Technology Royalty Agreement (hereinafter referred to as the “Agreement”),
is entered into as of the 24th day of July, 2017 by and among Paul M. DiPerna,
an individual (“DiPerna”) and Quasuras, Inc., a Delaware corporation (the
“Company”) and Modular Medical, Inc., a Nevada corporation and owner of all of
the issued and outstanding capital stock of the Company (“Modular”). DiPerna,
Modular and the Company are sometimes collectively referred to as the “Parties”,
and individually as a “Party”.

 

RECITALS:

 

WHEREAS, DiPerna, the Company and Modular have entered into an Intellectual
Property Assignment Agreement dated as of July 24, 2017 (the “IP Assignment
Agreement”) pursuant to which DiPerna is assigning and transferring to the
Company all of DiPerna’s right, title and interest in and to certain
intellectual property and related items.

 

NOW, THEREFORE, in consideration for the promises set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, do hereby agree as
follows:

 

AGREEMENT

 

1. Definitions.

 

1.1 The capitalized terms “Assigned IP”, “Intellectual Property” and
“Intellectual Property Rights” as used herein shall have the meaning set forth
in the IP Assignment Agreement.

 

1.2 “Royalty Product” shall mean (i) any product or device which is covered in
whole or claimed in any of the Assigned IP; (ii) any product or device
incorporating, utilizing or made by any process which utilizes the Assigned IP,
the Intellectual Property, or the Intellectual Property Rights and (iii) any
other insulin or diabetes related product or device sold, licensed or otherwise
commercialized by the Company, Modular or any of their respective subsidiaries
during the term of this Agreement. For the avoidance of doubt, “Royalty Product”
shall not include any devices or products of any entity that acquires the
Company or Modular that are in existence on the date of such acquisition;

 

2. Royalties. In consideration for the assignment by DiPerna to the Company of
the Assigned IP, the Intellectual Property and the Intellectual Property Rights
pursuant to the IP Assignment Agreement, Company shall pay DiPerna royalties as
follows:

 

2.1 Royalty Rate.  Subject to the Royalty Cap set forth in Section 2.2, the
Company shall pay DiPerna a royalty on sales of any Royalty Product sold by the
Company and/or Modular and each of their respective, subsidiaries and/or
affiliate companies anywhere in the world equal to: (i) US $0.75 on each Sale of
a Royalty Product, or (ii) five percent (5%) of the Gross Sales Price of a
Royalty Product, whichever is less. For purposes of this Agreement, a “Sale” of
a Royalty Product shall be deemed to have been made when the Royalty Product is
delivered to a customer and the Company and/or its parents, subsidiaries and/or
affiliate companies receives payment and such funds clear and become immediately
available funds from the customer. “Gross Sales Price” means the gross amount of
money received by the Company and/or its parents, subsidiaries and/or affiliate
companies in connection with the Sale of a Royalty Product to customers, minus
sales, use, V.A.T. and other taxes, shipping, insurance and related costs and
expenses paid by the Company, its parents, subsidiaries relating to such Royalty
Product. Royalty Product sold by a sublicensee pursuant to a sublicense
agreement are subject to the royalties due DiPerna hereunder.

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2.2 Royalty Cap. Payment of the royalties set forth in Section 2.1 shall cease,
and this Agreement shall terminate, at such time as the total sum of royalty
payments actually paid to DiPerna pursuant to this Agreement equals Ten Million
Dollars (US $10,000,000); provided, however, that the Company shall have the
option to terminate this Agreement at any time upon the payment to DiPerna of
the difference between (i) the total royalty payments actually paid to DiPerna
to date and (ii) $10,000,000.

 

2.3 Best Efforts.  The Company shall use its commercially reasonable best
efforts to promote and market the sale of Royalty Product and to maximize
royalty payments to DiPerna pursuant to this Section 2.  “Best efforts” means,
with respect to a given goal, the efforts consistent with the practice of
comparable technology companies with respect to similar products of comparable
market potential that a reasonable person in the position of the Company would
use so as to achieve that goal as expeditiously as possible.

 

2.4 Effective Date. This Agreement shall have no force and effect until such
time that the Company and/or Modular sells or licenses its first Royalty
Product, at which time this Agreement shall become effective. For the avoidance
of doubt, DiPerna shall be paid the royalty payment due hereunder on the first
sale or license of a Royalty Product.

 

3. Payments, Reporting and Records.

3.1 Payment of the royalties specified in Section 2.1, if any such royalty is
due, for the preceding calendar quarter shall be made by the Company to DiPerna
within forty-five (45) days after March 31, June 30, September 30 and
December 31 of each year during the term of this Agreement. After termination or
expiration of this Agreement, a final payment shall be made by the Company
covering the last whole or partial calendar quarter. Each quarterly payment
shall be accompanied by a written statement of royalties due, as described in
Section 3.4 hereunder.      

3.2 All monetary payments due hereunder are expressed in and shall be paid by
check or wire transfer payable in United States dollars, without deduction of
exchange, collection or other charges, to DiPerna.     

3.3 The Company shall keep and preserve, in accordance with U.S. Generally
Accepted Accounting Principles (GAAP), consistently applied, complete and
accurate books, records and accounts containing particulars that are necessary
for the purpose of showing the amounts payable to DiPerna hereunder. Said books,
records and accounts shall be kept at the Company’s principal place of business
or the principal place of business of the appropriate division of the Company to
which this Agreement relates. No more than once per annum said books and
supporting data shall be open, upon reasonable notice at all reasonable times
and places during business hours for two (2) years following the end of the
calendar year to which they pertain, to the inspection of an independent auditor
engaged at DiPerna’s cost mutually agreeable to the parties for the purpose of
verifying the Company’s royalty statement or compliance in other respects with
this Agreement.

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3.4 The Company shall, within forty five (45) days after March 31, June 30,
September 30 and December 31, of each year, deliver to DiPerna true and accurate
reports, giving such particulars of the business conducted by the Company and
its sublicensees during the preceding calendar quarter under this Agreement as
shall be pertinent to a royalty accounting hereunder. These reports shall be
duly signed by an authorized signatory of the Company on behalf of the Company
and shall include at least the following: (a) true and accurate information
regarding sales of Royalty Product sufficient to determine and verify the
royalties due and owing, if any, pursuant to Section 2.1; (b) total royalties
due, if any; and (c) names and addresses of all sublicensees of the Company.
     

3.5 With each such report submitted, the Company shall pay to DiPerna the
royalties due and payable under this Agreement. If no royalties are due, the
Company shall so report.

4. [Reserved]

 

5. [Reserved].   

 

6. Assignment. During the term of this Agreement, neither Party shall assign any
benefit or burden under this Agreement without prior written consent of the
other Party, which shall not be unreasonably withheld, delayed or conditioned,
except that (i) the Company may assign its rights and obligations under this
Agreement to Modular or any company or person with which it may merge or
consolidate or to any company or person to whom it may transfer substantially
all of its assets or to any company or person which may acquire such Party
(including, in each case, any company created as a new vehicle upon any such
merger, transfer or acquisition), and (ii) DiPerna may freely assign his royalty
payment amount (and related information access, audit and other rights) in
whole  or in part but not to any direct and/or indirect competitor of the
Company and/or affiliate, officer, director, employee or shareholder of such
competitor.  Any assignment by any Party of any benefit or burden under this
Agreement in accordance with the provisions of this Section 6 shall not release
the assigning Party from any of its obligations under this Agreement. This
Agreement shall be binding on and inure to the benefit of the Parties hereto and
their respective permitted successors and assigns.

 

7. Dispute Resolution.

7.1 This Agreement is entered into in and shall be governed, construed and
enforced in all respects solely and exclusively under the laws of the State of
New York, without giving effect to any law which would result in the application
of a different body of law.      

7.2 Any and all claims, disputes or controversies arising under, out of, or in
connection with this Agreement, including any dispute relating to patent
validity or infringement, which the Parties shall be unable to resolve within
sixty (60) days, shall be mediated in good faith. The Party raising such dispute
shall promptly advise the other Party of such claim, dispute or controversy in a
writing which describes in reasonable detail the nature of such dispute. By not
later than five (5) business days after the recipient has received such notice
of dispute, each Party shall have selected for itself a representative who shall
have the authority to bind such Party, and shall additionally have advised the
other Party in writing of the name and title of such representative. By not
later than ten (10) business days after the date of such notice of dispute, the
Party against whom the dispute shall be raised shall select a mediation firm in
New York, New York and such representatives shall schedule a date with such firm
for a mediation hearing. The Parties shall enter into good faith mediation and
shall share the costs equally.      

7.3 If the representatives of the Parties have not been able to resolve a
dispute within fifteen (15) business days after a mediation hearing, as set
forth in Section 7.2, the Parties shall have the right to pursue any other
remedies legally available to resolve such dispute solely and exclusively in,
and the parties hereby irrevocably consent to the exclusive jurisdiction and
proper venue of, the state and federal courts located in the County of New York,
State of New York, USA, and waive any objections thereto based on any ground
including improper venue or Forum Non-Conveniens. The Parties agree that service
of process may be effected in accordance with Section 8.1. Any decision rendered
by such court shall be binding, final and conclusive upon the Parties, and a
judgment thereon may be entered in, and enforced by, any court having
jurisdiction over the Party against which an award is entered or the location of
such Party’s assets.      

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7.4 Notwithstanding anything to the contrary herein, each Party shall be
entitled to seek injunctive or other equitable relief, wherever such Party deems
appropriate in any jurisdiction, in order to preserve or enforce such Party’s
rights for any breach or threatened breach of the other Party of any of the
provisions of this Agreement.

8. Miscellaneous.

 

8.1 Notices.  Any payment, notice or other communication pursuant to this
Agreement shall be sufficiently made or given on the date of delivery if sent to
such Party by recognized overnight courier or delivery service for next day
delivery, addressed to it at its address below or as it shall designate by
written notice given to the other Party as follows:

 

If to DiPerna:

Paul M. DiPerna

17995 Bear Valley Lane

Escondido, CA 92027

Email: pmdiperna@gmail.com

 

If to Company or Modular:

3 West Hill Place

Boston, MA 02114

Attention: Morgan Frank

Email: mfrank@mgfund.com 

8.2 Integration.  This Agreement constitutes the entire understanding and
agreement among the Parties with respect to the transactions contemplated herein
and supersede any and all prior or contemporaneous oral or written
communications with respect to the subject matter hereof, all of which are
merged herein.  This Agreement shall not be modified, amended or in any way
altered except by an agreement in writing signed by authorized representatives
of the Party to be bound. 

 

8.3 No Joint Venture.  Nothing contained herein will be deemed to create a joint
venture or partnership or agency relationship among the Parties.  Neither Party
will have the right or authority to, and each Party will not, assume or create
any obligation or responsibility, express or implied, on behalf of or in the
name of the other Party or to bind the other Party in any manner.

 

8.4 Severability.  If any provision hereof is found invalid or unenforceable
pursuant to a judicial decree or decision, the remainder of this Agreement will
remain valid and enforceable according to its terms.  Where any provision herein
has been adjudicated to exceed the maximum force allowable by law, the court
will interpret such provision as providing the maximum allowable protection
provided by law.

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8.5 Attorneys’ Fees.  The prevailing Party in any action or proceeding among the
Parties arising out of or related to this Agreement shall be entitled to recover
from the other Party all of its costs and expenses including, without
limitation, its actual attorneys’ fees and costs incurred in connection with
such action, including any appeal of such action.

 

8.6 Nonwaiver. The Parties agree that no failure to exercise, and no delay in
exercising any right, power, or privilege under this Agreement on the part of
any Party shall operate as a waiver of any right, power, or privilege
hereunder.  The Parties further agree that no single or partial of any right,
power, or privilege under this Agreement shall preclude further exercise
thereof. 

 

8.7 Authority.  Each person executing this Agreement on behalf of a Party has
the authority of the entity to execute this Agreement.

 

8.8 Time Is Of The Essence.  The Parties agree that time is of the essence with
respect to each and every term and provision set forth in this Agreement.

 

8.9 Recitals Incorporated.  The foregoing recitals are incorporated herein by
reference and made a part of this Agreement.

 

8.10 Amendments, Modifications. This Agreement may not be modified or amended in
any manner except by an instrument in writing specifically stating that it is a
supplement, modification or amendment to the Agreement and signed by each of the
Parties, provided, however, that only Morgan C. Frank shall be permitted to sign
for Modular, and if Mr. Frank is no longer an officer or director of Modular,
this Agreement may only be modified, amended or supplemented with the express
written consent of Manchester Management Company, LLC.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first set forth
above.

        PAUL M. DIPERNA          

QUASURAS, INC., a Delaware

Corporation 

            By:         

Paul M. DiPerna,

Chief Executive Officer

           

MODULAR MEDICAL, INC., a Nevada Corporation

            By:        

Morgan C. Frank,

Director

 

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