Exhibit 10.25
AMENDMENT NO. 3 TO ROYALTY AGREEMENT
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This AMENDMENT NO. 3 TO ROYALTY AGREEMENT ("Amendment") is entered into
as of October 15, 2004 by and between MED ENCLOSURES, LLC, a Nevada limited
liability company ("XXX"), and XXX X. XXXXXXX, an individual ("Xxxxxxx"), with
reference to the following facts and on the following terms and conditions:
R E C I T A L
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A. The parties hereto have previously entered into that certain Royalty
Agreement dated July 28, 2000, as amended by that certain Amendment No. 1 to
Royalty Agreement dated July 13, 2001 and that certain Amendment No. 2 to
Royalty Agreement dated October 29, 2002 (together, the "Royalty Agreement").
B. The parties hereto desire to further amend the Royalty Agreement to
increase the percentage royalty due thereunder.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the parties agree as follows:
1. Section 1 of the Royalty Agreement is hereby amended by adding the following
subparagraph to immediately follow subparagraph (d) of Section 1:
"(e) In the event of a Change in Control (as defined below), XXX shall
be obligated to pay to Xxxxxxx a minimum royalty of $4,000,000 per year payable
as follows. Commencing on the first day of the first full calendar quarter
following the Change in Control, XXX shall be obligated to pay to Xxxxxxx a
minimum royalty of $1,000,000 per calendar quarter ("Minimum Royalty Amount")
payable in advance on the first business day of each calendar quarter. In the
event, that royalty payments on Net Sales under subparts (a) and (b) of Section
1 above in any calendar quarter exceed the Minimum Royalty Amount, no payments
in addition to the payments of the Minimum Royalty Amount shall be paid until
the end of the calendar year, at which time XXX shall pay Xxxxxxx the royalties
on Net Sales earned under subparts (a) and (b) of Section 1 above for such
calendar year in excess of the Minimum Royalty Amounts paid on the calendar
quarters of such year. For purposes of this Agreement, the term "Change of
Control" means the occurrence, after the date of this Amendment, of any of the
following circumstances: (i) any person or two or more persons acting in concert
acquire beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities of
either XXX or MEL's parent, CPC of America, Inc., a Nevada corporation ("CPC"),
representing 50% or more (on a fully-diluted basis) of the combined voting power
of all securities of either entity; or (ii) the sale of substantially all of the
assets of either XXX or CPC."
2. Section 2 of the Royalty Agreement is hereby amended by deleting it
in its entirety and replacing it with the following new Section 2.
"2. TIME OF PAYMENT. Prior to the occurrence of a Change in Control,
payments under subparts (a) and (b) of Section 1 above shall be made by Med
Close to Xxxxxxx, or his assigns, within forty-five (45) days of the end of each
calendar quarter commencing with the first full calendar quarter following
execution of this Royalty Agreement. Upon a Change in Control, the Minimum
Royalty Amount payments under subpart (e) of Section 1 above shall be made by
Med Close to Xxxxxxx, or his assigns, on the first business day of each calendar
quarter, and XXX shall pay to Xxxxxxx within forty-five (45) days of the end of
each calendar year the royalties on Net Sales earned under subparts (a) and (b)
of Section 1 above for such calendar year in excess of the Minimum Royalty
Amounts paid on the calendar quarters of such year. Each payment hereunder shall
include a written report from Med Close indicating the basis upon which the
royalty was computed."
3. This Amendment may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4. Except as set forth in this Amendment, all other provisions of the
Royalty Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
MED ENCLOSURES, LLC,
A NEVADA LIMITED LIABILITY COMPANY
By: CPC of America, Inc., a Nevada corporation,
Its Manager
By: /S/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx, President
XXXXXXX
/S/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx
