Exhibit 10.6
THIS ASSIGNMENT OF PATENTS AGREEMENT, dated May 23,1997 (as the same
may be supplemented, modified, amended and/or restated from time to time, this
"Agreement"), is by and between (1) MikeCo, Inc., a New York corporation (the
"Company"), whose offices are now located at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxx
Xxxx 00000, (2) Xxxx Laboratories, Inc., a New York corporation ("Xxxx") whose
offices are now located at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 and
(3) H. Xxxxxx Xxxx ("ETroy"), a shareholder of Xxxx and/or the Company.
WHEREAS, the Company is principally engaged in the business of
producing, marketing and distributing Natural Relief-1222, a patented medicinal
product (NR-1222"), the composition and methods of use of which are covered by
United States Patent No. 5,032,400 (the "Patent"). NR-1222 was developed and
patented (as the named inventors) by ETroy and Xxxxxxx Weirsum, M.D., and the
Patent was originally issued to Erie Laboratories, Inc., a Virginia corporation
("Erie"). NR-1222 is currently contemplated to be used to treat (or to be
adapted for use in the treatment of) arthritis; acne, herpes, fungus, warts and
athletes foot in human beings (among other applications);
WHEREAS, by an assignment instrument, dated January 20, 1994,
acknowledged January 29, 1994 and recorded in the United States Patent and
Trademark Office on February 4, 1994 (the "Purported Assignment"), Erie assigned
its rights to the Patent to ETroy and (jointly with ETroy) Xxxxxxxx X. Xxxxxx,
Xxxxxxx Aji and Xxxxxx X. Xxxxx (the "Patent Claimants"). In an action styled
ERIE LABORATORIES, INC. AND H. XXXXXX XXXX V. XXXXXXXX X. XXXXXX, XXXXXXX AJI
AND XXXXXX X. XXXXX pending in the Supreme Court of the State of New York,
Onondaga County (Index No. 95-1497); plaintiffs Erie and ETroy are seeking to
have the Purported Assignment declared null and void and to have Erie be
declared the lawful owner of the Patent. The Patent Claimants (INTER ALIA) deny
the ineffectiveness of the Purported Assignment and claim an equal right of
ownership of the Patent with ETroy (the "Patent Claims"). Effective May 16,
1995, Erie merged with and into Xxxx, with Xxxx being the surviving corporation;
WHEREAS, under that certain Marketing and Distribution Agreement, dated
February 24, 1995 (as amended by that certain amendment instrument dated
November 1, 1996 between the Company and Xxxx (the "First Amendment") and the
Annex 1 executed by the Company and Xxxx (the "Second Amendment") to that
certain letter agreement (captioned "Option Agreement"), dated 5 December 1996,
as amended from Global Health Alternatives, Inc. addressed to the Company and
Xxxx) (such Marketing and Distribution Agreement, as amended by the First
Amendment and the Second Amendment, the "Existing License"), Xxxx engaged the
Company as Troy's exclusive agent to market and sell products under the Patent
throughout the world for an indefinite period of time (such rights as are
provided for under the Existing License, the "NR Marketing Rights");
WHEREAS, by an assignment instrument, dated March 24, 1997, and
recorded in the United States Patent and Trademark Office on May 22, 1997, ETroy
assigned its rights to the Patent to Xxxx;
WHEREAS, the Company desires to purchase from Xxxx, and Xxxx desires to
sell to the Company, any and all of Troy's interest in, to and under the Patent
and any and all patents to be obtained therefor;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and the representations and warranties, conditions, covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. ASSIGNMENT OF PATENTS. (a) On the Closing Date (as defined in
Section 6), Xxxx shall execute and deliver to the Company an Assignment of
Patents in the form of Exhibit A hereto (the "Patent Assignment") and thereby
(among other things) sell, transfer, grant, convey, assign and set over to the
Company, and its successors and assigns forever, and the Company shall purchase
and receive from Xxxx, free and clear of any and all liens, security interests,
mortgages, pledges, covenants, easements, encumbrances, defects in title,
agreements and claims and rights of third parties ("Liens") (other than the
Patent Claims and the rights of Xxxx and ETroy under Sections 2 and 3), all of
the right, title and interest of Xxxx in, to and under the Patent, the names
"Natural Relief-1222" and "NR-l 222", all goodwill associated therewith and all
other NR Ownership Rights (as hereinafter defined), all as the same shall exist
on the Closing Date (the foregoing being hereinafter sometimes collectively
referred to as the "Patent Rights").
(b) For purposes of this Agreement, the term "NR Ownership
Rights" means any and all Intellectual Property Rights (as hereinafter defined)
(including full rights to manufacture, market, distribute, sell and otherwise
exploit) in, to and under (i) the Patent, (ii) NR-1222 and all other products
under the Patent, (iii) all products that may be directly or indirectly
derivative of NR- 1222 and/or the Patent (the products described in the
foregoing clauses (ii) and (iii), the "NR Products") and (iv) all know-how that
may be incorporated, embodied, employed, used and/or exploited in (or in the
preparation or production of) any NR Products (collectively, the "NR Ownership
Rights") and the term "Intellectual Property Rights" means all registered and
unregistered patents, patent applications, trade names, service marks,
trademarks, trademark applications, copyrights, copyright applications,
inventions, trade secrets, computer software, logos, slogans, proprietary
processes and formulae and all other proprietary, technical and other
information, know-how and intellectual property rights, whether patentable or
unpatentable, owned, licensed or used by Xxxx and all goodwill of Xxxx
associated with any of the foregoing.
2. CONSIDERATION. (a) In consideration of Troy's sale of the Patent
Rights to the Company, the Company shall pay to Xxxx and ETroy royalties and
minimum royalties on all sales of a topical analgesic containing shark oil,
garlic oil, almond oil and soybean oil, the use of which is covered by a claim
of U.S. Patent No. 5,032,400, as follows:
2
--------------- ----------------------------------------- ---------------------------------------
365-day Royalty to ETroy Royalty to Xxxx
period
after the
Closing
Date ----------------- ----------------------- ------------------ --------------------
Per Ounce Minimum for Period Per Ounce Minimum for Period
--------------- ----------------- ----------------------- ------------------ --------------------
First $.25 $187,000 $.50 $ 500,000
--------------- ----------------- ----------------------- ------------------ --------------------
Second $.25 $312,000 $.50 $ 625,000
--------------- ----------------- ----------------------- ------------------ --------------------
Third $.25 $500,000 $.50 $1,000,000
--------------- ----------------- ----------------------- ------------------ --------------------
Fourth $.25 $750,000 $.50 $1,500,000
--------------- ----------------- ----------------------- ------------------ --------------------
Thereafter $.25 $750,000 $.50 $1,500,000
--------------- ----------------- ----------------------- ------------------ --------------------
(b) The minimum royalties to ETroy shall be payable monthly in arrears
on the 7th day following the end of each month and shall be applied against the
per ounce royalties to ETroy which shall be payable quarterly in arrears on the
30th day following the end of each quarter. The minimum royalties to Xxxx shall
be payable quarterly in arrears on the 7th day following the end of each quarter
and shall be applied against the per ounce royalties to Xxxx which shall be
payable quarterly in arrears on the 30th day following the end of each quarter.
In the event any dispute arises as to whom royalties should be paid, the Company
may pay the royalties to an escrow account, and such payment shall be deemed as
due payment of the royalties.
3. REVERSIONARY RIGHT. (a) Should the Company, or successors in its
interest in the NR Ownership Rights (the "Rights Holder"), fail to make the
payments provided for in Section 2, and shall fail to remedy such arrearage
within 60 days, then, upon Troy's and/or ETroy's election and notification to
the Rights Holder of such election, the NR Ownership Rights shall revert to Xxxx
(the "Reversion"). Any such Reversion of the NR Ownership Rights shall be
subject to the perpetual, worldwide, non-exclusive right and! license of the
Rights Holder (and its successors and assigns) to manufacture, market,
distribute, sell and otherwise exploit (including through third party
sublicensees and contractors) NR-1222, all other products under the Patent and
all products that may be directly or indirectly derivative of NR-1222 and/or the
Patent (the "Reversion License") provided that: (i) any arrearage in the royalty
payments due under Section 2 shall have been paid; and (ii) the Rights Holder
shall continue to pay the per ounce (but not the minimum) royalty payments due
under Section 2 in respect of all future sales by it (or through its rights).
(b) In the event of such Reversion of the NR Ownership Rights under the
foregoing Section 3(a): (i) the Rights Holder shall execute and deliver to Xxxx
an assignment of the Patent in a form acceptable for recordation in the United
States Patent and Trademark Office; (ii) the Rights Holder shall execute and
deliver such other agreements, instruments or other documents as shall be
reasonably requested by Xxxx in order to further or better evidence and effect
the Reversion; and (iii) Xxxx shall execute and deliver such agreements,
instruments or other documents as shall be reasonably requested by the Rights
Holder in order to further or better evidence and effect the Reversion License.
3
4. REPRESENTATIONS AND WARRANTIES OF XXXX AND ETROY. Xxxx and ETroy,
jointly and severally, hereby represent and warrant to the Company as follows,
and acknowledge and confirm that the Company is relying upon such
representations and warranties in connection with its execution, delivery and
performance of this Agreement, notwithstanding any investigation made by the
Company or on its behalf:
(a) Xxxx is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York. Xxxx has the full corporate
power and authority to own, lease and operate its properties and assets, and to
carry on businesses as presently conducted;
(b) Neither the execution and delivery by Xxxx of this Agreement, the
Patent Assignment or any of the other agreements, instruments, certificates or
other documents executed and delivered by Xxxx in connection with this Agreement
(collectively, the "Xxxx Documents"), nor the performance by Xxxx of its
obligation hereunder or thereunder, require any governmental authority or
private party consent waiver, approval, authorization or exemption
(collectively, "Consents") or the giving of notice ("Notice") applicable to Xxxx
(as opposed to the Company) except for such Consents and Notices that have been
duly obtained (in the case of Consents) or give (in the case of Notices) and are
unconditional and in full force and effect. This Agreement has been, and from
and after the Closing each other Xxxx Document will be, duly authorized,
executed and delivered by Xxxx and constitutes the legal, valid and binding
obligations of Xxxx, enforceable against Xxxx in accordance with its terms,
except as such enforceability may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance or similar laws of general application
relating to or affecting the enforcement of creditors' rights. The execution and
delivery by Xxxx of this Agreement and each Xxxx Document, and the performance
by Xxxx of its obligations hereunder and thereunder, does not and will not
contravene, conflict or be inconsistent with, result in a breach, constitute a
violation of or default under, or require or result in any right of acceleration
or create or impose any lien under: (x) Troy's certificate or articles of
incorporation or by-laws, each as amended and in effect on the date hereof; (y)
any laws applicable or relating to Xxxx or any of the businesses or assets of
Xxxx; or (z) any contract, agreement or instrument to which Xxxx is a party or
by which it is bound; and
(c) INTELLECTUAL PROPERTY RIGHTS. Xxxx owns all the Intellectual
Property Rights, free and clear of all liens, except for the Patent Claims. The
are no pending or threatened claims (x) against Xxxx or ETroy by any person or
entity claiming any adverse right of ownership or use of any of the Intellectual
Property Rights (other than the Patent Claims), or (y) that Xxxx or ETroy is
infringing any rights in or to the intellectual property of any other person or
entity; and, no valid basis for any such claim exists. Xxxx is the sole and
exclusive owner of the NR Ownership Rights and all Ancillary Rights and Assets
(as hereinafter defined), free and clear of all Liens (other than the Patent
Claims and the Existing License). For purposes of this Agreement, the term
"Ancillary Rights and Assets" means any and all (i) Intellectual Property Rights
associated with the marketing or other use of any NR Products, (ii) inventory
and work-in-process of NR Products and (iii) packaging materials, descriptive
materials, advertising copy and sales literature and other similar items
relating to any NR Products.
4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Xxxx and ETroy as follows, and acknowledges and
confirms that Xxxx and ETroy are relying upon such representations and
warranties in connection with their execution, delivery and performance of this
Agreement notwithstanding any investigation made by any of Xxxx or ETroy or on
behalf of any of them:
a. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York. The Company has the full
corporate power and authority to own, lease and operate its properties and
assets, and to carry on its businesses as presently conducted.
b. Neither the execution and delivery by the Company of this
Agreement or any of the other agreements, instruments,
certificates or other documents executed and delivered by the
Company in connection with this Agreement (collectively, the
"Company Documents"), nor the performance by the Company of its
obligations hereunder or thereunder, require any Consent or the
giving of any Notice applicable to the Company (as opposed to
Xxxx and ETROY) except for such Consents and Notices that have
been duly obtained (in the case of Consents) or given (in the
case of Notices) and are unconditional and in full force and
effect. This Agreement has been, and from and after the Closing
each other Company Document will be, duly authorized, executed
and delivered by the Company and constitutes the legal, valid
and binding obligations of the Company, enforceable against it
in accordance with its terms, except as such enforceability may
be limited by bankruptcy, reorganization, insolvency, fraudulent
conveyance or similar laws of general application relating to or
affecting the enforcement of creditors' rights. The execution
and delivery by the Company of this Agreement and each Company
Documents and the performance by the Company of its obligations
hereunder and thereunder, does not and will not contravene,
conflict or be inconsistent with, result in a breach of,
constitute a violation of or default under, or require or result
in any right of acceleration or create or impose any lien under:
(x) the Company's certificate or articles of incorporation or
by-laws, each as amended and in effect on the date hereof; (y)
any laws applicable or relating to the Company or any of the
businesses or assets of the Company; or (z) any contract,
agreement or instrument to which the Company is a party or by
which it is bound.
6. CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 10:00 A.M., local time, at such place and on such
date mutually agreed upon by the Company and Xxxx (the "Closing Date").
7. INDEMNIFICATION. From and after the Closing Date, Xxxx shall
indemnify the
5
Company and its directors, officers, employees and agents (collectively,
Company's Indemnified Persons"), against, and hold the Company's Indemnified
Persons harmless from, any and all losses, claims, liabilities, damages,
judgments, payments, costs and expenses directly or indirectly incurred,
suffered, sustained or required to be paid, or sought to be imposed upon, any of
the Company's Indemnified Persons resulting from, relating to or arising put of
any breach of the representations and warranties of Xxxx or ETroy set forth in
Section 4(c) hereof. If any amount is due to any of the Company's Indemnified
Persons under this Section 7, then the Company shall have the right to set its
royalty payment obligations to Xxxx against such amount due to any of the
Company's Indemnified Persons.
8. RECORDS AND INSPECTION. The Company agrees during the term of this
Agreement to keep full and accurate records for Xxxx and ETroy showing all sales
of topical analgesic containing shark oil, garlic oil, almond oil and soybean
oil, the use which is covered by a claim of U.S. Patent No. 5,032,400, and/or
such other information as provides the basis for the calculation of the
royalties hereunder and the reporting thereon. Such records shall be maintained
for a period of three (3) years after each royalty payment or, in the event of a
dispute between the parties, until such disputes resolved, whichever occurs
later. These records shall be open to inspection by Troy's or ETroy's
representative or certified public accountant, not reasonably objectionable to
the Company, during reasonable business hours, not more than once each calendar
year, for the purpose of verifying the amount of royalty payments paid
hereunder. Xxxx and/or ETroy shall be responsible for its own costs and expenses
in connection with a such verification, except that the Company shall reimburse
Xxxx and/or ETroy for all such costs and expenses in connection with such
verification which determines that the Company's actual payments with respect to
two out of any four consecutive quarters were less than the amounts payable
according to the verification by an amount to equals or exceeds ten percent
(10%) of the amounts payable according to the verification for such quarter.
9. ENTIRE AGREEMENT. This Agreement, which includes the Exhibit hereto,
and the other Xxxx Documents and Company Documents contain the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof,
and supersedes all prior agreements, arrangements and understandings with
respect thereto.
10. NOTICES. Any notice or other communication which is required or
permitted Thereunder or under any other Xxxx Document or Company Document shall
be in writing and shall be deemed to have been delivered and received (x) on the
day of (or, if not a business day, the first business day after) its having been
personally delivered or telecopied to the following address or telecopy number,
(y) on the first business day after its having been sent by overnight delivery
service to the following address, or (z) if sent by regular, air, registered or
certified mail, when actually received at the following address:
If to the Company:
[c/o] MikeCo, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
6
ATTENTION: __________________
Telecopier No. _________________
Telephone No. _________________
with a copy to:
Xxxxxxxxx Xxxxx Xxxxx Xxxxxxx & Xxxxxx, LLP
000 XxXxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
ATTENTION: Xxxxxx X. Xxxxx, Esq.
Telecopier No. (000) 000-0000
Telephone No. (000) 000-0000
If to Xxxx or ETroy:
[c/o] Xxxx Laboratories, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
ATTENTION: ___________________
Telecopier No. _______________
Telephone No. _______________
with a copy to:
Xxxxxxxxx Xxxxx Xxxxx Xxxxxxx & Xxxxxx, LLP
000 XxXxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
ATTENTION: Xxxxxx X. Xxxxx, Esq.
Telecopier No. (000) 000-0000
Telephone No. (000) 000-0000
Any party may by notice change the address or telecopier number to which
notices or other communications to it are to be delivered, telecopied or sent.
11. GOVERNING LAW AND FORUM. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (other than the
choice of law principles thereof). Any claim, action, suit or other proceeding
initiated by the Company against Xxxx or ETroy or by Xxxx or ETroy against the
Company in connection with this Agreement may be asserted, brought, prosecuted
and maintained in any federal or state court in the State of New York, as the
party bringing such action, suit or proceeding shall elect, having jurisdiction
over the subject matter thereof, and each of the parties hereto hereby
irrevocably (i) submits to the jurisdiction of such courts, (ii) waives any and
all rights to object to the laying of venue in any such court, (iii) waives any
and all rights to claim that any such court may be an inconvenient forum, and
(iv) agrees that service of process on it, him or her in any such action, suit
or
7
proceeding may be effected by the means by which notices may be given to it
under this Agreement.
12. ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written consent of the other parties, except that all of the
Company's right, title and interest in this Agreement may be assigned to (i) any
direct or indirect successor to the business of the Company or (ii) any
purchaser of all or substantially all the assets or capital stock of the
Company, which successor or purchaser ("Assignee") shall thereafter be deemed
substituted for the Company as the party hereto, MUTATIS MUTANDIS, effective
upon such assignment. In the case of the assignments contemplated in clauses (i)
and (ii) hereof, the Assignee shall assume (and the Company shall cause the
Assignee to assume) all of the obligations of the Company hereunder. This
Agreement shall inure to the benefit of and be binding upon the parties, and
their respective successors and permitted assigns.
13. LICENSING. In the case of any licensing or sub-licensing of the
Company's rights hereunder, the Company shall cause such licensee or
sub-licensee to take such license or sub-license subject to the obligations of
the Company under this Agreement
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument but all such counterparts together shall constitute but one
agreement.
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
MIKECO, INC.
By:
--------------------------------
Name:
Title:
XXXX LABORATORIES, INC.
By:
--------------------------------
Name:
Title:
------------------------------------
H. Xxxxxx Xxxx
9
