Exhibit 10.4
ROYALTY AND INVESTMENT AGREEMENT
MILLENNIUM BIOTECHNOLOGIES, INC.
This Investment Agreement (this "Agreement") is entered into as of January
11, 2001 by and between Millennium Biotechnologies, Inc., a Delaware corporation
(the "Company") and Xxxx Xxxx (the "Investor").
RECITALS
WHEREAS, the Company is a recently formed development stage enterprise
which expects to develop, produce and market nutraceutical supplements which
compliment traditional therapeutic treatment of infectious diseases;
WHEREAS, the Investor for an aggregate purchase price of $25,000 (the
"Securities Purchase Price") has agreed to purchase 3,000,000 shares of the
Company's common stock, $.00001 par value, and 800,000 five year common stock
purchase warrants exercisable at $.50 per share;
WHEREAS, in consideration of an additional investment in the amount of
$25,000 (the "Royalty Investment") the Company has agreed to pay to the Investor
a perpetual royalty based upon sales of the Company's products.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Issuance of Shares and Warrants. The Company shall, upon
execution of this Agreement and receipt of the Securities Purchase Price, issue
to the Investor (i) 3,000,000 shares of common stock $.00001 par value (the
"Shares") which Shares shall be fully paid and non assessable and (ii) 800,000
five year common stock purchase warrants with an exercise price of $.50 per
share (the "Warrants"). The Shares and the Warrants are collectively referred to
herein as the "Securities".
Section 2. Royalty. In consideration of the Royalty Investment, the
Company shall pay to the Investor, a royalty ("Royalty") which shall be based
upon (a) sale of the Company's initial product offering under the name of
Resurgex(TM) which Royalty shall equal the product of .033 and the gross sales
of Resurgex(TM) (net of discounts and returns) in each calendar quarter; and (b)
sale of any additional products ("Additional Products") for which the Royalty
shall equal the product of .033 and gross profit ("Gross Profit") from sale of
Additional Products in each calendar quarter. Gross Profit from sale of
Additional Products shall mean the gross sales (net of
discounts and returns) less the direct cost of production of such Additional
Products. Direct cost of production shall mean the cost to the Company of raw
materials, labor, shipping and packaging. For purposes of calculating the
Royalty, a sale of Resurgex(TM) or Additional Products of the Company shall be
deemed to have been consummated upon receipt of payment therefor. The Royalty
shall be payable within thirty days following the end of each calendar quarter
with respect to the sales completed during such calendar quarter. The Company's
obligation to pay the Royalty shall be perpetual. In the event the Company shall
enter into a joint venture, partnership or other form of arrangement for the
manufacture, sale or marketing of Resurgex(TM) or the Additional Products, or in
the event the Company shall license or sell any rights to any such products, the
Company shall remain liable to the Investor for the payment of the Royalty based
upon the gross sales price of Resurgex(TM) or the Gross Profit of Additional
Products received by any such licensee, joint venture, partner or other
successor to the Company.
Section 3. Representations and Warranties of the Company. The Company
represents and warrants to the Investor as follows:
(a) Organization and Standing.The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or the assets
and properties owned or leased by it require such qualification.
(b) Authorization. The Company is fully authorized to execute this
Agreement, and to complete the transactions contemplated herein. This Agreement
constitutes the valid and binding obligation of the Company enforceable by the
Investor against the Company in accordance with its terms.
(c) Binding Agreement. This Agreement has been duly executed and
delivered and constitutes a legal, valid and binding obligation enforceable in
accordance with its terms.
(d) No Conflicts. The execution and delivery of this Agreement and
the issuance of the Securities to the Investor as contemplated hereby will not
(i) require any consent authorization or approval of or filing with any
governmental entity or third party, or (ii) result in any violation of, be in
conflict with or constitute a default under, the charter or by-laws of the
Company or any law, statute, regulation, ordinance, contract, agreement,
instrument, judgment, decree or order to which the Company is a party or by
which the Company is bound.
(e) Compliance with Securities Laws. Subject to the accuracy of the
representations and warranties of the Investor contained in Section 3 hereof,
the issuance of the Securities to the Investor hereunder is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "1933 Act"), and any applicable state securities and blue sky
laws.
Section 4. Representations and Warranties of the Investor. The Investor
hereby represents and warrants to the Company as follows:
(a) Review of Agreement. THE INVESTOR HAS READ CAREFULLY AND
UNDERSTANDS THIS AGREEMENT AND HAS CONSULTED THE INVESTOR'S OWN ATTORNEY,
ACCOUNTANT OR INVESTMENT ADVISER WITH RESPECT TO THE INVESTMENT CONTEMPLATED
HEREBY AND ITS SUITABILITY FOR THE INVESTOR.
(b) Long-Term Investment. The Investor understands that the
Securities have not been registered under the 1933 Act and, therefore, cannot be
resold unless they are subsequently registered under the 1933 Act or unless
exemption from such registration is available; that the Investor is obtaining
the Securities for investment for the account of the Investor and not with a
view toward resale or other distribution thereof, that the Investor agrees not
to resell or otherwise dispose of all or any part of the Securities acquired by
the Investor except as permitted by law, including, without limitation, any
regulations under the 1933 Act; that the Company does not have any intention of
registering the Securities under the 1933 Act or of supplying the information
which may be necessary to enable the Investor to sell any Securities; and that
Rule 144 under the 1933 Act may not be available as a basis for exemption from
registration of any Securities thereunder until at least one (1) year from the
date of acquisition of the Securities.
Section 5. Piggy Back Registration Rights. If the Company at any time
during the exercise period of the Warrants proposes to register any of its
common stock (a "Registration") under the Securities Act (other than pursuant to
a registration statement on Form S-4 or Form S-8 or any successor forms thereto,
in connection with an offer made solely to existing Security holders or
employees of the Company), for sale to the public in a Public Offering, it will,
on each such occasion, give prompt written notice to the Investor of its
intention do do so. Upon the written request of the Investor to include-either
the Shares, the shares underlying execution of the Warrant or if the Warrant has
been previously exercised, the shares delivered to the Investor (the
"Registrable Securities") under such registration statement (which request shall
be made within fifteen (15) Business Days after the receipt of any such notice
and shall specify the Registrable Securities intended to be disposed of by the
Investor), the Company will effect the registration of the Registrable
Securities as part of the Registration.
Section 6. Restrictions on Transfer.
Legends. The Investor hereby agrees that each outstanding
certificate representing the Securities acquired hereunder shall bear the
following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH
RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING
OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAW.
Section 7. Miscellaneous.
(a) This Agreement is governed by and construed in accordance with
the internal laws of the State of New York (excluding its conflicts of laws
principles).
(b) The representations and warranties contained in this Agreement
shall survive the execution, delivery and performance of this Agreement.
(c) This Agreement or any term hereof may not be amended or waived
except with the written consent of the Company and the Investor.
(d) Unless otherwise specifically provided herein, all
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent by
facsimile transmission to the number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (iii) on the day
after delivery to Federal Express or similar overnight courier, or (iv) on the
fifth day after mailing, if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, and properly
addressed, return receipt requested, to the party as follows:
If to the Company: Millennium Biotechnologies, Inc.
One Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxxx, X J 07924
If to the Investor: Xxxx Xxxx
0 Xxxxx Xxxx
Xxxxxxx, XX 00000
(e) This Agreement may be executed in two (2) or more counterparts,
and with counterpart signature pages, each of which shall be deemed an original,
and all of such counterparts together constitute but one (1) and the same
agreement. One (1) or more counterparts may be delivered by facsimile with the
same force and effect as an original.
IN WITNESS WHEREOF, the parties have executed this Investment Agreement as
of the date set forth above.
MILLENNIUM BIOTECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: President
/s/ Xxxx Xxxx
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Xxxx Xxxx
