Exhibit 10.1

 

JOINT DEVELOPMENT AGREEMENT

 

THIS JOINT DEVELOPMENT AGREMENT (this “Agreement”) is made as of November 1,
2013 (the “Effective Date”) by and between CDx, Inc., a Deleware corporation
with its principal place of business at 4225 Executive Square Suite 600, La
Jolla, CA 92037 (“CDX”), and Next Dimension Technologies, Inc., a California
corporation with its principal place of business at 1 West Mountain Street, #11,
Pasadena, CA 91103 (“NDT”). CDX and NDT are sometimes referred to herein
individually as the “Party” or collectively as the “Parties”.

 

WHEREAS, CDX would like to engage NDT to develop chemical sensors and peripheral
sensing equipment and software for the detection and characterization of
cannabis and compounds associated with cannabis; and

 

WHEREAS, NDT has accepted such responsibilities, in accordance with the terms
and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the Parties hereto agree as follows:

 

1.           Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:

 

“Detection Materials” means chemical vapor detection systems, chemical sensors,
or their associated hardware, software, or signal processing technology, their
progeny and unmodified derivatives, or related information and know-how.

 

“Field” shall mean the use of sensors and their associated hardware, software,
or signal processing technology to characterize cannabis or to detect or to
quantify compounds in cannabis except for applications in law enforcement.

 

“Intellectual Property Rights” means patents, applications for patents, utility
models, applications for utility models, trademarks or trading names (whether or
not registered or registrable), domain names, rights in know-how (including
trade secrets, technology, methods of manufacture, specifications and other
information relevant to the Field), designs (registered or umegistered and
including applications for registered designs), copyright (including rights in
computer software), topography rights and other rights in semiconductor chips,
design rights, rights in inventions, the right to claim damages for past
infringements of any or all such rights, the right to claim priority for any or
all such rights, and all rights having equivalent or similar effect wherever
situated.

 

“Arising Intellectual Property Rights” means such Intellectual Property Rights
as are developed or created pursuant to this Agreement.

 

“Existing Intellectual Property Rights” means any Intellectual Property Rights
owned by or licensed to CDX or NDT prior to the Effective Date or created or
resulting after the Effective Date otherwise than under or pursuant to this
Agreement.

 

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2.           Services.

 

2.1           NDT Services. NDT shall carry out consultancy, research,
development, and/or other services to progress the work set forth in Exhibit A.
NDT will use reasonable efforts to satisfy its duties and provide the
deliverables for each Task set forth in Exhibit A; provided, however, that NDT
does not represent or warrant that it will be able successfully to complete its
assigned duties or deliverables.

 

2.2           Task Authorization. NDT must not undertake any Task as defined in
Exhibit A until CDX has provided written authorization to NDT to do so.
Notwithstanding the foregoing, NDT is authorized to undertake Task 1.1 as set
forth in Exhibit A.

 

3.           Payments and Expenses

 

3.1           Payments for Services. Inconsideration of NDT providing the
services hereunder as described in Exhibit A, CDX shall make non-refundable
payments to NDT in accordance with the schedule of payments associated with each
Task as set forth in Exhibit A.

 

3.2           Invoice Submission. NDT shall submit invoices to CDX for the full
amount of each payment associated with each Task as set forth in in Exhibit A.
All invoices shall be payable ten (10) days after receipt by CDX.

 

4.           Intellectual Property. The Parties agree to the applicable
provisions as to ownership, use and/or exploitation oflntellectual Property
Rights as follows:

 

4.1           Disclosure. Ifduring the Term of this Agreement either Party (or
an authorized sub-contractor of it) develops or creates (whether with or without
others and whether jointly with the other Party or not) any Arising Intellectual
Property Rights, they shall forthwith disclose any such Arising Intellectual
Property Rights to the other.

 

4.2           Arising IP Belonging to NDT. Any Arising Intellectual Property
Rights outside of the Field shall belong to NDT, and any Arising Intellectual
Property Rights relating to improvements to Detection Materials shall belong to
NDT. To the extent that CDX would otherwise be the owner in whole or in part of
any such rights, CDX shall promptly upon request from NDT assign its entire
right, title and interest to any and all such Arising Intellectual Property
Rights to NDT for a nominal (less than $100.00) consideration.

 

4.3           Arising IP Belonging to CDX. Any Arising Intellectual Property
Rights other than those covered by Paragraph 4.2 shall belong to CDX. To the
extent that NDT would otherwise be the owner in whole or in part of any such
Arising Intellectual Property Rights, NDT shall promptly upon request from CDX
assign its entire right, title and interest to any and all such Arising
Intellectual Property Rights to CDX for a nominal (less than $100.00)
consideration.

 

4.4           Arising IP Rights Granted to CDX. To the extent that it is
necessary to do so to enable CDX to use and exploit its respective Arising
Intellectual Property Rights, NDT hereby grants CDX a perpetual, irrevocable,
exclusive, and royalty free license (including the right to assign the license
and to grant sub-licenses) to use and exploit NDT’s Arising Intellectual
Property Rights in the Field.

 

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4.5           Notice oflP Infringement. During the term of this Agreement and
upon their knowledge of the occurrence of any infringement or suspected or
threatened infringement of any of the Arising Intellectual Property Rights or
the Existing Intellectual Property Rights in the Field, or any proceedings or
suspected or threatened proceedings for the revocation or involving the validity
of any of the Intellectual Property Rights, the Party with this knowledge shall
notify the other and provide all details within their knowledge with respect to
the same and thereafter the Parties will assist each other in taking such steps
as either Party may reasonably consider to be appropriate at the expense of the
Party that considers such steps to be appropriate.

 

4.6           Reverse Engineering. CDX shall not reverse engineer, copy,
disassemble, modify, decompile, or make any other attempt to ascertain the
composition or the properties and characteristics of the prototypes, software,
or other tangible objects which are provided or developed pursuant to this
Agreement by NDT. In the event any such actions nevertheless occur, all data and
results and/or any inventions, discoveries, or works arising there from shall be
solely owned by NDT and CDX shall, at its expense, assign any such inventions or
discoveries to NDT.

 

4.7           Evaluation. CDX shall not conduct any tests, evaluations or
research outside of the Field using prototypes, software, or other tangible
objects which are provided pursuant to this Agreement to CDX by NDT. In the
event any such actions nevertheless occur, all data and results and/or any
inventions, discoveries, or works arising there from shall be solely owned by
NDT and CDX shall, at its expense, assign any such inventions or discoveries to
NDT.

 

4.8           Licensing of Existing Intellectual Property Rights. The Parties
agree to the applicable provisions as to the licensing, use and/or exploitation
of Existing Intellectual Property Rights as set forth in Exhibit B.

 

5.           Confidentiality.

 

5.1           Non-Disclosure. The non-disclosure agreement between the parties
in effect as of April 20, 2012 (the “Non-Disclosure Agreement”) will apply
throughout and survive the termination or expiration of this Agreement.
“Confidential Information” shall have the same meaning in this Agreement as it
has in the Non-Disclosure Agreement.

 

5.2           Disclosers. “Discloser” shall mean either Party or any of its
affiliates disclosing Confidential Information to the Recipient.

 

5.3           Recipients. “Recipient” shall mean either Party or any of its
affiliates receiving Confidential Information from the Discloser.

 

5.4           Disclosure of Confidential Information. Each Party will disclose
to the other such Confidential Information as it considers necessary to further
the purpose of this Agreement. The terms of this Agreement shall be considered
Confidential Information of both Parties.

 

5.5           Use of Confidential Information. The Recipient shall only use
Confidential Information to further the purpose of this Agreement and for no
other purpose.

 

5.6           Obligation of Recipient. The Recipient shall not without the prior
written consent of the Discloser communicate or otherwise make available the
Confidential Information to any third party save in so far as is necessary for
an application for registration of an Arising Intellectual Property Right. The
Recipient shall forthwith notify the Discloser of any such application and the
Discloser may refuse permission to allow publication. However, such permission
may not be reasonably refused.

 

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5.7           Use of Company Names and Logos. Neither Party will, without the
prior written consent of the other Party: (a) use in advertising, publicity, or
otherwise in connection with products developed in accordance with this
Agreement, any trade name, logo, trademark, trade device, service mark, or
symbol owned by the other Party; or (b) represent, either directly or
indirectly, that any product or service of the other Party is a product or
service of the representing Party, or vice versa.

 

6.           Return of Data and Samples

 

6.1           Except as set forth in the Non-Disclosure Agreement, each Party
shall return to the other upon demand any remaining samples, prototypes and all
copies of Confidential Information and will destroy all notes and any other
written reports or documents which may have been made by the Recipient to the
extent they contain any part of or reference to the Confidential Information in
whole or part except as authorized in writing by the Discloser or if required by
law.

 

7.           Warranties and Indemnification

 

7.1           Warranties to Both Parties. Each Party warrants to the other that:

 

(a)          it has full right and authority to enter this Agreement, that it
has had an opportunity to review this Agreement and that it understands and
agrees to each of the provisions herein; and

 

(b)          to its knowledge, its execution and performance of this Agreement
does not and will not cause it to be in breach of any obligation whether
contractual, statutory or otherwise.

 

7.2           Warranties by NDT. NDT further warrants to CDX that:

 

(a)          it possesses the necessary skill and expertise to perform the
services under this Agreement and shall devote to the services under this
Agreement all of the reasonable time, attention and skill as may be necessary
for the proper performance of the services set forth in Exhibit A;

 

(b)          there is no known litigation pending or threatened in relation to
any of its Existing Intellectual Property Rights which are in or relevant to the
Field; and

 

(c)          in carrying out its obligations under this Agreement, it shall not
knowingly infringe the Intellectual Property Rights of any third party

 

7.3           Disclaimer of Warranty. DETECTION MATERIAL DELIVERED BY NDT TO CDX
PURSUANT TO THIS AGREEMENT IS PROVIDED “AS IS.” EXCEPT AS EXPRESSLY PROVIDED IN
PARAGRAPHS 7.1 AND 7.2, NDT PROVIDES NO WARRANTIES FOR THE DETECTION MATERIAL,
EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR
OTHERWISE, AND NDT SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AND
ANY IMPLIED WARRANTY OF NON-INFRINGEMENT. ALL CHARACTERISTICS OF THE DETECTION
MATERIAL ARE NOT FULLY UNDERSTOOD AND ITS USE MAY INVOLVE RISKS OR DANGERS THAT
ARE NOT KNOWN OR FULLY APPRECIATED. EXCEPT AS EXPRESSLY PROVIDED IN PARAGRAPHS
7.1 AND 7.2, DETECTION MATERIAL DELIVERED BY NDT TO CDX PURSUANT TO THIS
AGREEMENT IS BEING PROVIDED WITHOUT WARRANTY OF ANY SORT, EXPRESS OR IMPLIED.

 

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7.4           Indemnification by CDX. CDX shall indemnify and hold harmless NDT,
its officers, directors, employees, agents, and affiliates from any and all
third-party claims, including attorneys’ fees, related to: CDX’s negligent,
reckless, or intentional action or inaction related to this Agreement; or CDX’s
breach of this Agreement.

 

7.5           Indemnification by NDT. NDT shall indemnify and hold harmless CDX,
its officers, directors, employees, agents, and affiliates from any and all
third-party claims, including attorneys fees, related to: NDT’s negligent,
reckless, or intentional action or inaction related to this Agreement; or NDT’s
breach of this Agreement.

 

7.6           Conditions of Indemnification. The indemnification obligations
Paragraphs 7.4 and 7.5 are conditioned upon: (a) The indemnifying Party is
notified promptly in writing of any claim against the indemnified Party; (b) The
indemnifying Party shall control any settlement, defense or prosecution of the
claim and is permitted to defend, compromise, or settle such claim, as long as
such action does not adversely impact the other Party; and (c) The indemnifying
Party is given all available information, cooperation, assistance, and authority
as reasonably necessary to carry out its obligations.

 

7.7           No Guarantee of Success. The Parties will use reasonable efforts
to satisfy their respective duties and provide the deliverables for each
effective project; provided, however, that neither Party represents or warrants
that it will be able successfully to complete its assigned duties or
deliverables.

 

8.           Assignment.

 

8.1           Assignment of Agreement. Neither Party may assign or otherwise
directly or indirectly transfer this Agreement or the rights and obligations
hereunder to any person or entity other than a wholly-owned subsidiary without
the prior written consent of the other Party. Notwithstanding the above:

 

(a)          CDX may assign this Agreement, without consent, (a) in whole or in
part, to an affiliate or subsidiary or (b) in the event of a change of
controlling ownership (either directly or indirectly) in CDX or in the event of
merger, recapitalization, consolidation, other business combination or sale of
all or substantially all of the assets of CDX.

 

(b)          NDT may assign this Agreement, without consent, (a) in whole or in
part, to an affiliate or subsidiary or (b) in the event of a change of
controlling ownership (either directly or indirectly) in NDT or in the event of
merger, recapitalization, consolidation, other business combination or sale of
all or substantially all of the assets of NDT.

 

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9.           Term and Termination.

 

9.1           Term. This Agreement shall become effective on the Effective Date
and shall expire two years following the Effective Date.

 

9.2           Termination at End of Tasks. Either Party shall have the right to
terminate this Agreement at its own discretion upon the completion of all Tasks
in Exhibit A that have been authorized in accordance with the terms of Paragraph
2.2. Notwithstanding this provision, before or upon the successful completion of
Phase 3, the parties will work to conclude a suitable Supply Agreement by which
NDT will supply CDX with sensors on a commercial basis. In the event that NDT is
unable to supply the sensors, NDT agrees to negotiate in good faith with CDX a
worldwide license in the Field to any NDT Existing Intellectual Property Rights
necessary to make, have made, use, sell or offer for sale the sensors.

 

9.3           Termination By Either Party. This Agreement may be terminated
forthwith upon notice being given by either Party to the other if:

 

(a)          the other goes into liquidation, commences bankruptcy proceedings,
or if a receiver or administrative receiver or administrator is appointed in
respect of the whole or any part of its assets; or

 

(b)          the other makes an assignment for the benefit of or composition
with its creditors generally or threatens to do any of these things or does or
suffers any similar occurrence in any other jurisdiction; or

 

(c)          the other commits a breach of any term of this Agreement which is
incapable of remedy or, in the case of a breach capable of being remedied, shall
have failed within thirty (30) days after receipt of notice from the other Party
so to do, to remedy such breach to the reasonable satisfaction of the other
Party.

 

9.4           Survival of Termination. Termination (or expiration) of this
Agreement shall be without prejudice to any assignment or license of
intellectual property granted under or pursuant to this Agreement and to any
rights either Party may have accrued as at the date of such termination (or
expiration). In particular the provisions relating to intellectual property
(Paragraph 4, inclusive), confidentiality (Paragraph 5, inclusive), and return
of data and samples (Paragraph 6, inclusive) shall survive termination (or
expiration) of this Agreement.

 

10.         General Provisions.

 

10.1         Notices. All notices pursuant to this Agreement shall be deemed
properly given:

 

(a)          When personally delivered;

 

(b)          Upon receipt of a facsimile or electronic message and confirmed by
first-class mail, postage prepaid;

 

(c)          Upon receipt by overnight delivery; or

 

(d)          When sent by Certified or Registered mail, postage prepaid and
properly addressed to the representatives named below at the appropriate address
first written above or at such other address as the parties may so notify in
writing:

 

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CDX:Attention:   Daniel Yazbeck

Title:   President

 

NDT:Attention:   William Royea

Title:   President

 

10.2         Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes any and all prior agreements or understanding of
the parties, either written or oral, regarding the subject of this Agreement.

 

10.3         Waiver. This Agreement may be modified or amended only by the
written agreement of the Parties hereto. A waiver by any Party of any default or
breach by another Party of any provision of this Agreement shall not be
considered as a waiver of any subsequent default or breach of that same
provision or of any other provision hereof. The failure by any Party to object
to or to take affirmative action with respect to any conduct of another Party
which is in violation of any provision of this Agreement shall not be construed
as a waiver thereof, nor of any future breach or subsequent wrongful conduct.

 

10.4         Severability. Each provision of this Agreement is severable and
distinct from the others and if any provision is or at any time becomes to any
extent or in any circumstances invalid, illegal or unenforceable for any reason,
it shall to that extent or in those circumstances be deemed not to form part of
this Agreement, but the validity, legality and enforceability of all other
provisions of this Agreement shall not otherwise be affected or impaired, it
being the Parties’ intention that every provision of this Agreement shall be and
remain valid and enforceable to the fullest extent permitted by law.

 

10.5         Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.

 

10.6         Choice of Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to its
conflicts of laws provisions. In the event of any disputes both parties will use
all reasonable endeavors to settle all matters in dispute amicably. Any dispute
which cannot be resolved amicably by the parties will be submitted to the
exclusive jurisdiction of the federal courts of the State of California and the
parties agree to submit to the exclusive jurisdiction of the federal courts of
the State of California.

 

10.7         Force Majeure. In the event either Party is unable, in whole or in
part, to carry out its obligations under this Agreement, those obligations
insofar as they are affected by such an Act of God, shall be suspended during
the continuance of any such disability, and such Party shall not be liable to
any other Party hereto if the cause of such disability is remedied insofar as
reasonably possible with reasonable dispatch, except that the settlement of any
strike, lockout, or other industrial disturbance shall be conclusively deemed to
be wholly within the discretion of the Party whose obligations are suspended by
reason hereof. The term “Act of God” as employed herein shall mean any event
which is not reasonably within the control of the Party affected. In the event
that the failure of either Party hereto to perform any obligation hereunder by
reason of an Act of God continues for more than thirty (30) days, the other
Party hereto may terminate this Agreement upon ten (10) business days’ notice
following that thirty (30) day period.

 

10.8         Non-Agency Relationship. Nothing in this Agreement shall be deemed
to constitute a partnership, joint venture or agency relationship between the
parties. Each Party shall be conclusively deemed to be an independent contractor
and not under the control or supervision of any other Party.

 

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10.9         Exhibits. The Exhibits form part of this Agreement and shall have
full force and effect as if expressly set out in the body of this Agreement and
reference to this Agreement shall include the attached Exhibits.

 

10.10         Non-Assignment. Except as expressly provided herein, this
Agreement is not assignable except with the prior written consent of the
parties.

 

10.11         Non-Transfer of Rights. Except as expressly provided herein, this
Agreement does not transfer any rights in Confidential Information, Intellectual
Property Rights, or constitute an offer to sell or create other obligations.

 

10.12         Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.

 

In Witness Whereof, the Parties have caused their duly authorized
representatives to execute this Agreement.

 

CDX, Inc.   Next Dimension Technologies, Inc.       By:          By:      

 

Name: Daniel Yazbeck   Name: William Royea           Title: President   Title:
President           Date: November 1, 2013   Date: November 1, 2013

 

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Exhibit A: Statement of Work

 

Summary

 

Task description   Pe,formance time   Budget Task 1.1: Development of a testing
platform for off-site, laboratory-based testing of cannabis   28 weeks     Task
1.2: Development of a sensor array for quantitative detection of THC and CBD  
18 weeks     Task 2.1: Development of a novel sampling sub-system for vapor
phase analysis of cannabis vapor   18 weeks    

 

Additional tasks shall be added upon mutual written agreement.

 

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Task 1.1: Development of a testing platform for off-site, laboratory-based
testing of cannabis

 

Task objective

NDT will develop: (1) a      capable of discriminating between 10 different
strains of simulated cannabis, (2) a laboratory-based testing system that can be
interfaced to standard, commercially available measurement instruments and allow
testing of the sensor array with samples of cannabis flower, and (3) software to
control and allow collection of raw data from the laboratory-based testing
system. At the conclusion of the task, NDT will deliver the laboratory-based
testing system to CDX for further testing and data collection at an off-site
laboratory facility.

Key deliverables and deadlines

·    Development of a sensor array that is capable of detecting 3 strains of
cannabis (completed by week 13)

·    Development of a sensor array that is capable of detecting 10 strains of
cannabis (completed by week 28)

·    Development of a laboratory-based testing system that can be interfaced to
standard, commercially available measurement instruments and allow for testing
of the sensor array with samples of cannabis flower (completed by week 28)

·    Development of software to control and collect raw data from the
laboratory-based testing system (completed by week 28)

·    Delivery of an oral presentation on the status of the 3-strain sensor array
(to be scheduled following week 10)

·    Delivery of an oral presentation on the status of the 10-strain sensor
array and laboratory-based testing system (to be scheduled following week 24)

·    Delivery of the laboratory testing system, associated software, and three
(3) sensor arrays to a delivery address to be provided by CDX (shipped by week
28).

Performance time 28 weeks Anticipated start date November 1, 2013 Anticipated
completion date May 16, 2014 Total budget Payment schedule

·   $    upon completion of week 22 (due within 10 days of invoice)

·    $    upon shipment oflaboratory-based testing system (due within 10 days of
invoice)

Disclaimer NDT will use reasonable efforts to achieve the performance goals
specified by CDX. Notwithstanding, the proposed work is developmental in nature,
and thus NDT makes no representation and provides no guarantee that the
performance goals specified by CDX will be attained.

 

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Task 1.2: Development of a sensor array for quantitative detection of THC and
CBD

 

Task objective

NDT will develop a        that is capable of        detecting THC and CBD in
cannabis flower samples. At the conclusion of the task, NDT will deliver samples
of the final sensor array to CDX for further testing and evaluation.

Key deliverables and deadlines

·    Delivery of an oral presentation on the status of the sensor array
development program (to be scheduled following week 6)

·    Delivery of an oral presentation on the status of the sensor array
development program (to be scheduled following week 12)

·    Delivery of an oral presentation on the status of the sensor array
development program (to be scheduled following week 18)

·    Delivery of five (5) sensor arrays with associated measured performance
data to a delivery address to be provided by CDX (shipped by week 18).

Performance time 18 weeks Anticipated start date May 19, 2014 Anticipated
completion date September 30, 2014     Payment schedule

·   upon completion of week 6 (due within 10 days of invoice)

·   upon completion of week 12 (due within 10 days of invoice)

·   upon completion of week 18 (due within 10 days of invoice)

Disclaimer NDT will use reasonable efforts to achieve performance goals
specified by CDX. Notwithstanding, the proposed work is developmental in nature,
and thus NDT makes no representation and provides no guarantee that the
performance goals specified by CDX will be attained.

 

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Task 2.1: Development of a novel sampling sub-system for vapor phase analysis of
cannabis vapor

 

 Task objective

NDT will design a new sampling sub-system for use in an integrated, portable
cannabis detector. The system will consist of: (1) a        can be integrated
into an electronic readout system, (2) a        (3) a     switch (optional,
depending on the overall detector architecture), and (4)           that
interfaces to the sensor        and provides electrical connection to the
readout electronics. The system will be optimized and tested for cannabis and
compounds associated with cannabis. The components for three (3) completed
sampling sub-systems will be delivered to CDX for further testing and
evaluation. Key deliverables and deadlines

·   Delivery of an oral presentation on the design and development of the
sampling sub-system (to be scheduled following week 6)

·   Delivery of an oral presentation on the design and development of the
sampling sub-system (to be scheduled following week 12)

·   Delivery of an oral presentation on the design and development of the
sampling sub-system (to be scheduled following week 18)

·   Delivery of three (3) completed sampling sub-systems along with associated
measured performance data to a delivery address to be provided by CDX (shipped
by week 18).

Performance time 18 weeks Anticipated start date May 19, 2014 Anticipated
completion date September 30, 2014 Total budget   Payment schedule

·         upon completion of week 6 (due within 10 days of invoice)

·         upon completion of week 12 (due within 10 days of invoice)

·         upon completion of week 18 (due within 10 days of invoice)

Disclaimer NDT will use reasonable efforts to achieve performance goals
specified by CDX. Notwithstanding, the proposed work is developmental in nature,
and thus NDT makes no representation and provides no guarantee that the
performance goals specified by CDX will be attained.

 

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Exhibit B: Option to exclusive license in the Field

 

1.          NDT hereby grants to CDX an option to negotiate a royalty-bearing,
exclusive license to any Existing Intellectual Property Rights owned by or
licensed to NDT that are required to commercialize products in the Field (the
“Option”). During the Option Term, as defined below, CDX shall have the right to
use the NDT’ s Existing Intellectual Property Rights for internal research and
evaluation purposes only. Subject to the rights, if any, of the United States
Government pursuant to 35 U.S.C. §200, et seq., as well as any rights reserved
elsewhere by the U.S. Government to use the Existing Intellectual Property
Rights, NDT shall not offer a license under the Existing Intellectual Property
Rights in the Field to any third party which is inconsistent with the Option
granted herein.

 

2.          The term for the exercise of the Option shall commence on the
Effective Date of this Agreement and shall continue for a period of twelve (12)
months, unless earlier terminated by the exercise of the Option hereunder or the
written notice by CDX to NDT that the Option is terminated (“Option Term”).

 

3.          In consideration of the Option granted hereunder, CDX agrees to pay
to NDT the sum of           sand dollars ($) within ten (10) business days of an
invoice from NDT to be submitted on or after March 31, 2014. Such amounts shall
be nonrefundable and noncreditable against any future license consideration.

 

4.          CDX may exercise the Option upon written notice to NDT during the
Option Term. Upon NDT’s receipt of such written notice, the parties agree,
within a ninety (90) day period, to negotiate in good faith to attempt to
establish the terms of a license agreement granting CDX exclusive rights to
make, have made, use and sell products in the Field under NDT’s Existing
Intellectual Property Rights. Such license agreement shall include at least the
following provisions as detailed in Exhibit C: license fee, annual maintenance
payments/minimum royalties, milestone payments (where applicable) and royalty
payments, payment of all past and future costs incurred by NDT associated with
the prosecution and maintenance of the Existing Intellectual Property Rights, a
commitment by CDX to exert their best efforts to commercialize licensed products
in the Field as soon as practicable, the right of NDT to terminate the license
agreement should CDX not meet specified due diligence milestones or should CDX
challenge the validity of the Existing Intellectual Property Rights, a
commitment to maintain the confidentiality of the Patent Rights, and indemnity
and insurance provisions satisfactory to NDT and its insurer. Notwithstanding
anything in this Option Agreement to the contrary, the exercise of the Option
hereunder by CDX shall only require the parties to negotiate in good faith to
attempt to enter into a license, and shall not require either party to enter
into such a license unless the terms and conditions for such license are
satisfactory to each party at its sole discretion. If such license agreement has
not been executed within ninety (90) days from NDT’ s receipt of CDX’ s written
notice to exercise the Option, this Option Agreement shall be deemed terminated
and NDT shall be free to enter into an exclusive or non-exclusive license to the
Existing Intellectual Property Rights in the Field with any other company.

 

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Exhibit C: Contemplated terms for Exclusive License Agreement

 

#   Terms   Details 1   Parties   Licensor: Next Dimension Technologies (NDT)
Licensee: CDX (CDX)           2   Not Legally Binding  

·  This term sheet is not a legally binding contract

·  The parties have no obligations to each other and should not undertake any
relevant obligations unless and until a formal agreement is executed

·  This term sheet states concepts to be reflected in formal contracts, but not
the actual wording.

          3   Technology Description   Chemical sensing technology.           4
  Expected Licensable IP   All patent rights licensed to NDT relating to
chemical sensing technology in the CDX Field of Use.           5   CDX Field of
Use   The use of sensors and their associated electronics and signal processing
technology to characterize cannabis or to detect or to quantify compounds in
cannabis for applications in all markets except for law-enforcement.           6
  Territory   Worldwide           7   Exclusivity   Exclusive rights where NDT
has the ability to grant exclusivity. Non-exclusivity where NDT lacks the
ability to grant exclusivity.           8   Rights Covered   Make, use, sell,
have made, offer for sale and import.           9   Term   Last to expire of the
currently licensed NDT patents.           10   License fees  
                     up-front license fee due within 30 days of execution of the
license agreement           11   Royalty  

·  Royalties on gross sales of products that utilize Existing Intellectual
Property Rights as follows:

 

-  % royalty on disposable sensors / sensor arrays

 

-  % royalty on devices that utilize sensors / sensor arrays

 

-  % royalty on accessories for devices that utilize sensors / sensor arrays

          12   Minimum royalties  

·  CDX shall pay to NDT a minimum royalty of $  K per year, paid in equal
quarterly installments.

 

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·  The minimum royalty due in accordance with this paragraph shall increase to
$      per year beginning two years after execution of the license agreement, or
upon the date of first sale of products using licensed NDT technology, whichever
occurs sooner.

 

·  The royalty on product sales shall be creditable towards minimum royalty
payments. For partial years, all amounts will be determined on a pro-rata basis.

          13   Milestone payments  

·  CDX shall make a $      milestone payment to NDT upon recognizing $5M in
cumulative gross sales of product(s) utilizing licensed NDT technology.

 

·  CDX shall make a $      milestone payment to NDT upon recognizing $1OM in
cumulative gross sales of product( s) utilizing licensed NDT technology.

 

·  CDX shall make a $      milestone payment to NDT upon recognizing $25M in
cumulative gross sales of product(s) utilizing licensed NDT technology.

          14   Performance milestones  

·  CDX shall invest at least $      per year in research and development towards
the commercialization of product(s) in the Field until annual gross of
product(s) in the Field equals or exceeds $5M.

 

·  For purposes of this paragraph, R&D investments include moneys expended by
CDX both internally and externally (e.g. through joint-development efforts
funded by CDX)

          15   IP rigts
revers10
n  

Licensed IP rights revert to NDT under the following conditions:

·  Non-payment of payments due under license agreement

·  Non-compliance with commercialization due diligence

          16   IP prosecution and maintenance   CDX shall reimburse NDT for
ongoing prosecution and maintenance costs and fees incurred by NDT on or after
the effective date of the license agreement.

 

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