EXHIBIT 10.6
LICENSING AGREEMENT
AND NOW, this 24TH day of AUGUST , 1996, it is hereby stipulated and
agreed by and between XXXXXX X. XXX III and XXXXXX XXX RESEARCH (hereinafter
referred to as "Licensor(s)" or "Xxx"), residing at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxx 00000, and XXXXXXX CORPORATION (hereinafter referred to as
"Licensee" or "XXXXXXX"), with a place of business at 00 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000, that:
WHEREAS, XXX is the holder and sole owner of various United States
Letters Patent including Patent 4,503,070, originally issued on March 5, 1985,
later surrendered and subsequently reissued on November 27, 1990 as Reissue
Patent Number 33,495;
WHEREAS, Reissue Patent Number 33,465 (hereafter referred to as "The
Patent") is the operative patent under which this license is to be granted;
WHEREAS, XXXXXXX is the manufacturer, producer, and distributor of
certain lozenge products which are marketed under various trademarks, including
"Cold-Eeze" and "Cold-Eezer Plus", and is desirous of producing and marketing
lozenges containing zinc gluconate under license granted by XXX;
NOW THEREFORE, in consideration of the mutual promises and the
licensing agreement herein contained, and intending to be legally bound hereby,
the parties do agree as follows;
1. PURPOSE OF AGREEMENT - This agreement is to provide
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XXXXXXX with sole and exclusive rights to make, use, and sell various products,
including lozenges, under The Patent by license granted by Licensor.
2. DURATION OF AGREEMENT - This Agreement shall be and becomes
effective upon execution hereof, and shall remain in effect until expiration of
The Patent which occurs at the latest on March 5, 2002, or until The Patent is
held invalid on a decision which is not subject to appeal. XXX releases XXXXXXX
from any liability whatsoever prior to the effective date of this agreement.
3. SOLE RELEVANT AND NECESSARY PATENT -
a. It is agreed that Reissue Patent Number 33,465 incorporates all
rights that belonged to XXX under Patent 4,503,070 (which is no longer in force
as a separate patent, having been surrendered to the U.S. Patent and Trademark
Office when the reissue application was filed).
b. It is also agreed that Reissue Patent 33,465 is the sole U.S. patent
or patent application which belongs to XXX which contains patent claims that
cover or apply to the lozenges being sold by XXXXXXX, and that XXXXXXX does not
need a license to any other patent or patent application owned by XXX in order
to sell lozenges which contain zinc gluconate or a zinc gluconate-glycine
mixture as the only zinc salts in such lozenges.
x. XXX hereby warrants and guarantees to XXXXXXX that (1) Reissue
Patent 33,465 is and remains valid; (2) the last and final maintenance fee,
which is due to be paid to the US. Patent
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Office by September 5, 1996, will be paid before that deadline; (3) XXX is not
aware of any reason to doubt the validity of The Patent, or of any legal action
that has been taken by any party to declare The Patent invalid; and (4) The
Patent is and remains, and has been at all times since its issuance, the sole
and exclusive property of XXX.
4. CONSIDERATION: ROYALTIES -
a. In exchange for sole licensing rights under The Patent, XXX shall
receive one of the two following alternative royalty payments:
(1) three percent (3%) of gross sales (as defined below) of products
containing zinc gluconate (including but not limited to "Cold-Eeze" or
"Cold-Eezer Plus" lozenges) which are made, used, or sold by XXXXXXX for the
term of The Patent, if royalties continue to be paid by XXXXXXX to Xxxx Xxxxxxx
or to any person related to or entity controlled by Xxxx Xxxxxxx under Xxxxxxx'x
U.S. patent 4,684,528; OR,
(2) five percent (5%) of gross sales (as defined below) of products
containing zinc gluconate which are made, used, or sold by XXXXXXX for the term
of The Patent, if royalties are no longer being paid by XXXXXXX to Xxxx Xxxxxxx
or to any entity controlled by Xxxx Xxxxxxx under Xxxxxxx'x U.S. patent
4,684,528.
b. The decision as to whether XXXXXXX will continue paying royalties to
Xxxx Xxxxxxx, under Xxxxxxx'x U.S. patent 4,684,528, will be at the sole
discretion of XXXXXXX, which shall however have a good-faith obligation to
obtain counsel from a third-party
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patent attorney who specializes in biochemical or pharmaceutical patents as to
whether such royalty obligations are due to Xxxxxxx under Xxxxxxx'x patent. The
patent attorney shall consult with XXX during the attorney's evaluation, but XXX
shall have no control or authority over such patent attorney.
c. "Gross sales" as defined herein includes all payments that are
received by XXXXXXX for zinc gluconate-containing products, less shipping
charges, broker commissions and outside contracted repackaging services. Such
payments become subject to a royalty payment to XXX when payment is received by
XXXXXXX.
d. Royalties shall be paid by XXXXXXX to XXX on a quarterly basis.
Payment shall be made within forty-five days following the end of each quarter.
Such payments shall be processed through Xxxxxxx X. Xxxxx, Esq., of St. Louis,
Missouri, who is XXX'x attorney of record in the civil action listed below in
Clause 6, unless other agreement is made in writing by both parties.
e. Minimum annual royalties of $30,000, beginning with sales made
during calendar year 1997, shall be paid to XXX by XXXXXXX. If an additional
payment is required to complete the minimum annual royalty payment, after
payment of the royalty payment for the last quarter of each calendar year, then
XXX shall notify XXXXXXX in writing of any such deficit, by certified mail, and
such deficit shall be paid by XXXXXXX within 30 days after such notification is
received. Failure to pay the minimum annual royalties specified herein shall not
terminate XXXXXXX'x
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rights to continue selling lozenges or other cold-treatment or anti-viral
products containing zinc gluconate. Instead, such failure shall render this
Agreement non-exclusive, and shall entitle XXX to subsequently grant other,
additional non-exclusive licenses to other parties, unless such right is waived
by XXX in exchange for other consideration, to be negotiated and agreed upon by
both parties.
5. CONSIDERATION: STOCK - In addition to royalty payments as provided
in Clause 4, XXX shall also be paid both of the following:
a. Fifty thousand (50,000) shares of Rule 144-restricted common stock
in XXXXXXX, which will not be salable by XXX until 2 years after issuance to
XXX; and,
b. Ten thousand (10,000) shares of unrestricted common stock in
XXXXXXX.
Such stock shares shall provide full and adequate consideration for any
royalties due to XXX on any and all sales by XXXXXXX prior to the execution date
of this Agreement.
6. PAYMENT AND TRANSFERAL OF STOCK - XXXXXXX shall tender stock
certificates to XXX, as provided in Clause 5, upon dismissal with prejudice of a
civil legal action entitled Xxxxxx X. Xxx and Xxxxxx Xxx Research v. Walgreen
Drugstores, Inc. and The Xxxxxxx Corporation, Civil Action Number
4:96CV01530(SNL), filed July 30, 1996 in the United States District Court for
the Eastern District of Missouri, upon execution of this Agreement.
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Stock shares shall be transferred to XXX through XXX'x attorney of record.
7. ANNOUNCEMENTS, PUBLICITY, ETC. -
a. Any announcement of a settlement, or any other press
release or other statement in written or electronic form by either XXXXXXX or
XXX (including any information posted on an Internet site or comparable
electronic forum) must be approved by the other party, in advance of being
released, if it:
(1) mentions the other party by name;
(2) lists the number of any patent owned by XXX, in a
release by XXXXXXX; or,
(3) relates to zinc gluconate, glycine, or any other ingredient in any
product being sold by XXXXXXX, in a release by XXX.
b. Such approval will not be withheld unreasonably, and any such public
statement shall be deemed to be approved if not objected to within five (5)
business days after transmittal by facsimile or electronic mail, by the
requesting party to the other party.
c. Both parties hereby agree to promptly review their electronic
Internet sites and any other sources of information under their control, and to
treat any postings or other written or electronic releases of information which
mention the other party by name, or in any other identifiable manner, as being
subject to this clause from that date forward.
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d. Any statements that were made or released by either party, prior to
the date of this agreement, which would be covered by this agreement if made
after the date of this agreement, are hereby agreed to be exempt from this
agreement and from any claims of liability. Both parties hereby agree and
covenant that they will endeavor to work cooperatively, in good faith, from the
date of this agreement, to present a public image that encourages confidence in
zinc-containing lozenges as an effective treatment for the common cold.
8. WARRANTIES AND COVENANTS OF LICENSEE -
x. XXXXXXX hereby warrants and covenants that it will use its best
efforts to successfully market products covered by this Licensing Agreement
which contain zinc gluconate, including "Cold-Eeze" and "Cold-Eezer Plus"
lozenges, and shall use reasonable business judgment in its practices in the
production, packaging, and marketing of said products covered by this Licensing
Agreement.
x. XXXXXXX hereby warrants and covenants that, after depletion of
existing packages, XXXXXXX will properly xxxx any products covered by The Patent
as being covered by "US Patent Re. 33,465" in a manner that satisfies the
requirements of 35 USC 287.
x. XXXXXXX assumes and bears full and exclusive liability in any legal
or regulatory action against any product that is manufactured or sold by
XXXXXXX, and XXXXXXX agrees to indemnify and defend XXX against any action taken
by any person,
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governmental authority, or other legal entity, if such action involves a product
sold by XXXXXXX.
9. WARRANTIES AND COVENANTS OF LICENSOR -
x. XXX hereby warrants and covenants that he will not interfere with
XXXXXXX'x rights to exclusively manufacture and sell products which contain zinc
gluconate under this Agreement.
x. XXX shall not, throughout the duration of this Agreement, offer
and/or grant, assign, or sell a license or licensing rights under The Patent to
another person or entity, unless such action becomes lawful due to a failure of
XXXXXXX to pay a minimum yearly royalty as specified by Clause 4(e), above.
10. OTHER AND FUTURE PRODUCTS -
x. XXX and XXXXXXX both hereby recognize and agree that this agreement
is limited to cold treatment or anti-viral products containing zinc gluconate.
XXX retains the right to continue selling and otherwise commercially exploit
lozenges containing zinc acetate, and certain other zinc salts, which are
covered by separate patents owned by XXX. Both parties agree that (1) sales or
other use of lozenges containing zinc acetate or other zinc salts, by XXX, do
not violate the conditions of this Agreement and (2) any potential license of
XXX'x patent rights to allow sales, by XXXXXXX, of lozenges containing any zinc
salt other than zinc gluconate shall be covered by a separate and subsequent
licensing agreement, if such an agreement is desired by both parties.
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x. XXX shall have an obligation to promptly disclose to XXXXXXX any
scientific or technical improvements in treatments for colds which involve zinc
gluconate. XXX'x obligation may be satisfied by sending to XXXXXXX a copy of any
patent application filed by XXX on any such development, within 15 days after
XXX receives notification that the patent application has been granted a filing
date and a serial number by the U.S. Patent Office.
c. If XXXXXXX wishes to license any such improvement created and owned
by XXX, XXX shall provide to XXXXXXX a right of first refusal, which shall
entitle XXXXXXX to obtain such a license under terms that are not less favorable
than XXX may offer to any other company.
11. WARRANTIES AND COVENANTS OF LICENSEE AND LICENSOR -
a. Both XXXXXXX and XXX warrant and covenant that neither party will
interfere in the patent, legal, personal, or business rights of the other upon
and thereafter execution of this Agreement, except as may be provided for in
this Agreement.
b. Both XXXXXXX and XXX recognize that it is in the mutual interests of
both Licensor and Licensee for products that are made, used and sold under The
Patent to be marketed successfully.
12. ASSIGNMENT OF RIGHTS - XXXXXXX shall maintain the right to assign,
sub-license, sub-contract, or otherwise commercially exploit its rights under
The Patent in any manner that XXXXXXX deems most appropriate, but only if the
royalty obligations provided herein remain intact and apply to any such
sub-licensee
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or sub-contractor. XXX shall not infringe upon such rights of XXXXXXX.
13. MEDIATION OR ARBITRATION OF DISPUTES -
a. If XXXXXXX and XXX are unable after reasonable efforts to reach an
agreement on the interpretation or implementation of any portion of this
agreement, the dispute shall be submitted to a mediator, who shall attempt to
help the parties negotiate a mutually satisfactory agreement.
b. If an agreement cannot be reached with mediation, or if both parties
agree to bypass mediation, a dispute arising hereunder shall be submitted to
binding arbitration, under the auspices of a member of the American Arbitration
Association.
c. In order to minimize travel expenses and inconvenience, any mediator
or arbitrator used hereunder shall be located in Philadelphia, and XXXXXXX shall
be obliged to pay for a business- class round-trip plane ticket between Austin
and Philadelphia, for XXX for the first meeting of a mediation on any new issue.
d. Any mediator or arbitrator used as provided herein shall be
acceptable to both parties. If the parties are unable to agree upon an
acceptable mediator or arbitrator, the highest- ranking or most senior official
of the American Arbitration Association working in Philadelphia shall designate
a mediator or arbitrator.
e. Unless otherwise agreed in writing, the costs of mediation or
arbitration will be divided equally among XXX and XXXXXXX. However, this shall
exclude any expenses for attorneys
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or witnesses for either side; any such expenses will be borne by the party that
obtains such services. Each party shall cooperate and shall promptly make
available, to the other party and to a mediator or arbitrator, any information
or assistance necessary to settle any such dispute.
f. To satisfy the obligation of making information available hereunder,
a party must mail a photocopy of all document(s) which are directly related to
the dispute, and which are not legally privileged, to the other party,
accompanied by a signed statement stating either (1) that all known information
which is directly relevant to the dispute is included, or (2) that certain
documents were withheld because they are legally privileged. In addition, the
party supplying the information must make the relevant nonprivileged business
records available, at its offices, for inspection and copying by the other party
and/or by a legal or accounting representative of the other party.
14. APPLICABLE LAW - This agreement shall be governed by and construed
according to the laws of the Commonwealth of Pennsylvania.
15. AMENDMENT - This agreement cannot be changed or amended except by
agreement of both parties, in writing, signed by both parties.
16. NOTICE - Any notice required or permitted hereunder shall be deemed
sufficient if given in writing and delivered personally or sent by registered or
certified mail, return
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receipt requested, postage prepaid, to the addresses shown below or to such
other addresses as are specified by similar notice:
If to Licensor: With a copy to:
Xxxxxx X. Xxx III Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxx Research 33 Xxxxx Oaks
0000 Xxxxxxxxx Xxxxxx Xx. Xxxxx, XX 00000
Xxxxxx, XX 00000
If to Licensee: With copies to:
The XXXXXXX Corporation Xxxxxxx X. XxXxxxxx, Esq.
00 Xxxxx Xxxxxxx Xxxxxx XxXxxxxx & Associates, P.C.
Xxxxxxxxxx, XX 00000 0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxx X. X. XxxXxxxx, Esq.
Xxxxxxxx and Xxxx
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
17. ACCESS TO FINANCIAL RECORDS - Xxxxxxx will provide to XXX a copy of
the quarterly financial records that are used to calculate XXX'x royalty
payments. In addition, as a stockholder of the company, XXX shall have the right
to reasonable access to the company's financial records.
18. SEVERABILITY - In the event that any provision of this Agreement
shall be held to be invalid, such invalidity shall not affect in any respect
whatsoever the validity of the remainder of this Agreement.
19. CAPTIONS - Any article or paragraph titles or captions contained in
this Agreement are for convenience only and shall not be deemed to amplify,
modify or give full notice of the provisions thereof.
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20. PARTIES BOUND - This Agreement shall inure to the benefit of, and
be binding upon, all the parties, their respective assigns, successors in
interest, personal representatives, estates, heirs and successors.
21. INTERPRETATION - When the context in which words are used in this
Agreement indicate that such is the intent, words in the singular shall include
the plural and the plural shall include the singular. Words in the masculine
gender shall include the feminine and neuter genders.
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22. ENTIRE AGREEMENT - All parties stipulate and agree that this
document constitutes the entire Agreement between the parties.
ACCEPTED AND AGREED:
/S/ XXXXXX X. XXX III AUG. 24, 1996
----------------------------------------- --------------
Xxxxxx X. Xxx III, in behalf of himself Date
and in behalf of XXXXXX XXX RESEARCH
/S/ XXX XXXXXXX AUG. 28, 1996
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Xxx Xxxxxxx, President, in behalf of Date
THE XXXXXXX CORPORATION
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STATE OF TEXAS :
: SS
COUNTY OF XXXXXX :
On this 24TH day of AUGUST , 1996, before me personally appeared XXXXXX
X. XXX III, to me known to be the person described in the foregoing document,
who executed this document as his free act and deed.
In witness thereof, I have hereunto set my hand and affixed my notary
seal the day and year last above written.
/S/ XXXXXXX X. XXXXX
--------------------
Notary Public
My commission expires: 6/6/97
STATE OF PENNSYLVANIA :
: SS
COUNTY OF BUCKS :
On this 3RD day of SEPTEMBER , 1996, before me personally appeared XXX
XXXXXXX, to me known to be the person described in the foregoing document, who
executed this document as his free act and deed.
In witness thereof, I have hereunto set my hand and affixed my notary
seal the day and year last above written.
/S/ XXXX X. CONDUIT
-------------------
Notary Public
My commission expires:
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