ROYALTY SHARING AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into effective the 21st
day of November, 1995, by and among OXBORO MEDICAL INTERNATIONAL, INC., a
Minnesota corporation ("MEDICAL"), OXBORO OUTDOORS, INC., a Minnesota
corporation (the "OUTDOORS"), (collectively referred to as the "COMPANY") XXXXX
X. XXXXXXXXX ("XXXXXXXXX"), and XXXXXX XXXXX ("XXXXX").
WHEREAS, OUTDOORS and XXXXXXXXX have entered into an Exclusive License and
Royalty Agreement effective April 17, 1993, as subsequently amended, (the
"Royalty Agreement"), with respect to compensation to be paid to XXXXXXXXX for
the development and/or contribution to the development of various Products (as
defined in the Royalty Agreement), and
WHEREAS, MEDICAL and XXXXXXXXX have entered into an Exclusive License
Agreement effective April 1, 1990, as subsequently amended (the "License
Agreement"), with respect to compensation to be paid to XXXXXXXXX for the
development and/or contribution to the development of various Products (as
defined in the License Agreement), and
WHEREAS, MEDICAL and XXXXX have entered into a Product Development
Incentive Agreement effective 11/8 , 1995, (the "Incentive Agreement"), with
respect to compensation to be paid to XXXXX for the development and/or
contribution to the development of various Products (as defined in the Incentive
Agreement), and
WHEREAS, XXXXX has contributed considerable time and effort to the
marketing of the products and the support services provided in connection with
the development, manufacture, and marketing of the Products; and
WHEREAS, the COMPANY and XXXXXXXXX desire that XXXXX continue to render
such services, believing such services are essential to the ultimate success of
the COMPANY and the Products; and
WHEREAS, in order to reward XXXXX for his efforts in connection with the
production and promotion of the Products, XXXXXXXXX has agreed to forfeit his
right to a portion of the compensation payable to him under the Royalty
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter contained, the parties hereto agree as follows:
1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below:
1.01 The term "Products" shall include all items for which XXXXXXXXX
has been paid an advance royalty or a percentage royalty under
the Royalty Agreement and/or License Agreement, all such products
to be set forth in one or more attachments to the Royalty
Agreement and License Agreement, which attachments are hereby
incorporated herein by reference. The term Products as used
herein shall include "Additional Products" as defined in Section
3.2 of the Royalty Agreement and in Section 1.1 of the License
Agreement.
1.02 The term "Annual Sales" shall mean, for any fiscal year, the
gross invoice or billing price for all Products sold by the
COMPANY during such fiscal year, with no deductions except for
(i) freight charges, (ii) trade, quantity, and cash discounts,
(iii) any sales tax applicable to the sale of the Products, and
(iv) such credits or allowances, if any, given or made because of
the rejection or return of any Products previously delivered to a
customer by the COMPANY.
1.03 The term "Royalty" or "Royalties" shall refer to the compensation
to be paid to XXXXX and XXXXXXXXX hereunder, which shall be based
upon the Percentage Royalties payable to XXXXXXXXX pursuant to
the Royalty Agreement, as defined in Section 4.1(b) thereof and
pursuant to Section 4.1 of the License Agreement and upon the
Incentive Payments payable to XXXXX pursuant to the Incentive
Agreement.
1.04 The Royalties to be paid to Xxxxxxxxx for Products hereunder
shall not be subject to the three (3) Product limitation relative
to his Royalty Agreement, License Agreement, and/or Employment
Agreement, all as amended.
2. Payment of Royalties.
2.01 No Royalties shall accrue or shall be paid to XXXXX under the
terms of this Agreement until and after the date of XXXXX'x
termination of employment with the COMPANY unless such
termination is voluntary by XXXXX and occurs within five (5)
years of the date hereof, then such Royalties shall commence
accruing and shall be paid on the fifth (5th) anniversary of this
Agreement.
2.02 With respect to Products which are jointly developed by XXXXX and
XXXXXXXXX from OUTDOORS, which products are to be sold through
MEDICAL and its successors and are identified on Exhibit A
attached hereto and made a part hereof, and which Exhibit may be
amended from time to time upon mutual agreement of the Board of
Directors of the COMPANY, XXXXX and XXXXXXXXX, to the extent that
Royalties are earned on such Products under the Royalty
Agreement:
(1) Prior to XXXXX'x termination of employment from MEDICAL,
XXXXXXXXX shall receive all Royalties (4% or one-half of the
applicable Royalty as provided in the License Agreement,
whichever is greater), and XXXXX shall receive no Royalties
paid with respect to all such Products listed on Exhibit A;
and
(2) Upon XXXXX'x termination of employment from MEDICAL, and
from and after such termination date, XXXXX shall receive
one-half of all Royalties (3% or one-half of the applicable
Royalty as provided in the License Agreement, whichever is
greater), and XXXXXXXXX shall receive one-half of such
Royalties (3% or one-half of the applicable Royalty as
provided in the License Agreement, whichever is greater),
paid with respect to all such Products listed on Exhibit A.
2.03 With respect to Products which are jointly developed by XXXXX and
XXXXXXXXX from MEDICAL, which Products are to be sold through
MEDICAL and its successors are identified on Exhibit B attached
hereto and made a part hereof, and which Exhibit may be amended
from time to time upon mutual agreement of the Board of Directors
of the COMPANY, XXXXX and XXXXXXXXX, to the extent that Royalties
are earned on such Products under the License Agreement:
(1) Prior to XXXXX'x termination of employment from MEDICAL,
XXXXXXXXX shall receive all Royalties (4% or the applicable
Royalty as provided in the License Agreement, whichever is
greater) with respect to Products described as Duo
Instrument Guards, MIS Instrument Guards and Specialty
Instrument Guards and all Royalties paid on all other
Products to be added to Exhibit B and XXXXX shall receive no
Royalties; and
(2) Upon XXXXX'X termination of employment from MEDICAL, and
from and after such termination date, XXXXX shall receive
one-half of all Royalties (3% or one-half of the applicable
Royalty as provided in the License Agreement, whichever is
greater) and XXXXXXXXX shall receive one-half of such
Royalties (3% or one-half of the applicable Royalty as
provided in the License Agreement, whichever is greater)
paid with respect to all such Products listed on Exhibit B.
2.04 With respect to Products which are medical Products jointly
developed by XXXXX and XXXXXXXXX from MEDICAL, which Products are
to be sold through OUTDOORS and its successors and are identified
on Exhibit C attached hereto and made a part hereof, and which
Exhibit may be amended from time to time upon mutual agreement of
the Board of Directors of the COMPANY, XXXXX and XXXXXXXXX to the
extent that Royalties are earned on such Products under the
Royalty Agreement;
(1) Prior to XXXXX'x termination of employment and prior to
XXXXXXXXX'X retirement from employment from MEDICAL,
XXXXXXXXX shall receive a royalty of 4 1/2% and XXXXX shall
receive no Royalties paid with respect to all Products
listed on Exhibit C; and
(2) If, on April 1, 1998 or thereafter, XXXXXXXXX'X Consulting
Agreement commences and XXXXX'X employment with the Company
continues, then XXXXXXXXX shall receive all Royalties (9%)
and XXXXX shall receive no Royalties paid with respect to
all products listed on Exhibit C; and
(3) When both XXXXX'X and XXXXXXXXX'X Consulting Agreements are
in effect, then XXXXX shall receive one-half (4 1/2%) of all
Royalties and XXXXXXXXX shall receive one-half (4 1/2%) of
such Royalties paid with respect to all such Products listed
on Exhibit C.
2.05 Except as set forth above, Royalties under the License Agreement
and Royalty Agreement shall be paid according to their terms.
3. Records; Audit Rights. The COMPANY agrees to keep true and detailed
records containing all information required for the computation and
verification of Royalties to be paid by the COMPANY under this
Agreement. The Company shall furnish monthly, along with the Royalty
payment(s), copies of sales documentation and workpapers calculating
the Royalties. Upon written notice from either XXXXXXXXX or XXXXX, the
COMPANY will make all records containing information required for the
computation of Royalties available to XXXXXXXXX and/or XXXXX or a
designated agent of either for review and verification. If any party
hereto requests an audit and if such audit reveals any deficiency in
Royalties paid under this Agreement, then the COMPANY will pay the
costs and expenses of the audit and will pay any Royalty deficiency
within five (5) business days of completion of the audit. If such
audit reveals any overpayment in Royalties paid under this Agreement,
then the person requesting the audit will pay the costs and expenses
of the audit, and XXXXX and/or XXXXXXXXX will reimburse the COMPANY
for any overpayments each or either has received within fifteen (15)
business days of the completion of the audit. If the audit reveals
that the Royalty payments were correct, then the party requesting the
audit will pay the costs and expenses of the audit.
4. Default. This Agreement may be terminated by any party hereto in the
event of a breach or a default in the performance of any material
provision, term, or condition of this Agreement and the giving of
written notice specifying the alleged breach or default, if the party
in breach or default fails to cure the alleged breach or default
within thirty (30) days of receipt of notice or fails to commence good
faith efforts to cure the breach or default within such thirty (30)
day period and thereafter diligently pursues such cure to completion.
In the event of such termination or in the event of termination under
paragraph 6 below, then Royalties shall be paid according to the terms
of the License Agreement and Royalty Agreement without regard to this
Agreement and Products listed on Exhibits A and B, as amended, shall
be deemed to be Additional Products under the License Agreement and
Products listed on Exhibit C, as amended, shall be deemed to be
Additional Products under the Royalty Agreement.
5. Term of Royalty Payments. Except as otherwise provided herein,
Royalties shall be paid hereunder for the life of the Products.
6. Actions in Bad Faith. This Agreement shall be terminated if at any
time XXXXX or his successors or assigns or legal representatives take
any action to challenge the Agreement or its terms and provisions, and
such action is determined by an arbitrator or a court of competent
jurisdiction to have been taken in bad faith.
7. Notices. All notices given hereunder shall be in writing and shall be
personally served or sent by registered or certified mail, return
receipt requested. Notice to the COMPANY shall be given to the COMPANY
at its corporate headquarters, which as of the date of this Agreement
is 00000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxx, Xxxxxxxxx 00000. Notices
to XXXXX or XXXXXXXXX shall be addressed to their respective residence
addresses as the same appear from time to time on the records of the
COMPANY. Notices to any party under this Agreement shall be sent to
such other address as such party shall specify in writing to the
others in accordance with this Agreement.
8. No Effect on Other Agreements. Except for the provisions regarding the
allocation of Royalties to XXXXX and XXXXXXXXX under the terms of this
Agreement, this Agreement shall have no effect on the terms and
provisions of the Royalty Agreement, License Agreement or Incentive
Agreement.
9. Miscellaneous.
9.01 This Agreement is the entire contract between the parties
concerning the subject matter hereof and supersedes and replaces
any existing contract agreement between the parties hereto
relating to the subject matter hereof, except with regard to the
Royalty Agreement, the License Agreement, and the Incentive
Agreement.
9.02 No provision of this contract may be modified, waived, or
discharged unless such modification, waiver, or discharge is
agreed to in writing signed by the party against whom such
provision is to be enforced. No waiver by or noncompliance with
any condition or provision of this Agreement to be performed by
any party shall be deemed a waiver of a similar or dissimilar
provision or condition at the same or any prior or subsequent
time.
9.03 No failure by any party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise of any right hereunder
by any party preclude any other or further exercise thereof, or
the exercise of any other right.
9.04 It is agreed and understood by the parties hereto that if any
part, term, or provision of this Agreement is held unenforceable
in any jurisdiction in which a party seeks enforcement of the
Agreement, this Agreement shall be construed as if not containing
the invalid provision or provisions. The invalidity or
unenforceability of any portion or provision of this Agreement
shall not affect the validity or enforceability of the remaining
provisions of this Agreement, which shall remain in full force
and effect and shall govern the rights and obligations of the
parties hereto.
9.05 Any controversy or claim arising out of, or relating to, this
Agreement or its breach shall be settled by arbitration in
accordance with the governing rules of the American Arbitration
Association then in effect. Judgment upon the award rendered
shall be binding upon the parties hereto and may be entered in
any court of competent jurisdiction. Costs and attorney's fees
shall be paid as the arbitrator's award shall specify. As the
sole exception to arbitration, each party shall have the right to
obtain injunctive relief, only, from any court having
jurisdiction so as to preserve such party's right for resolution
in any pending or imminent arbitration proceedings, but no such
injunction shall prohibit such arbitration proceedings and any
injunction may be modified or vacated as a result of the
arbitration award.
9.06 This Agreement shall be construed and enforced in accordance with
the laws of the State of Minnesota, and the parties hereby agree
and submit to personal jurisdiction in the State of Minnesota for
the purposes of any suit or proceeding brought to enforce the
terms and conditions of this Agreement and agree that any such
suit or proceeding shall be venued in Hennepin County, Minnesota.
9.07 The rights and obligations of the parties hereto cannot be
assigned without the prior written consent of each of the other
parties, which consent shall not be unreasonably withheld. The
terms, conditions, and covenants of this Agreement shall be
binding upon the heirs and personal representatives of XXXXX and
XXXXXXXXX and the successors or assigns of the COMPANY or any
subsidiary or affiliate of the COMPANY.
9.08 This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one and the same contract.
9.09 Except as may be otherwise determined pursuant to Section 9.05
hereof, in the event that any legal action must be taken by any
party to enforce this Agreement, all costs and expenses of the
prevailing party in connection with any such action, including,
but not limited to, reasonable attorney's fees and legal
expenses, shall be paid on demand and presentation of appropriate
evidence by the nonprevailing party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the date and year first above written.
OXBORO MEDICAL INTERNATIONAL, INC. OXBORO OUTDOORS, INC.
By: /s/ Xxxxx Xxxxx By: Oxboro Medical International,
Its: Director Its: Sole Shareholder
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxx X. Xxxxxx
Its: Director
/s/ Xxxxx Xxxxxxxxx Director /s/ Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
ROYALTY SHARING AGREEMENT
EXHIBIT A
OXBORO OUTDOORS, INC. SHARED PRODUCTS
1. Handheld Shower Holder
2. Small Item Hanger
3. Large Item Hanger
4. Beverage Holder
5. Universal Holder
ROYALTY SHARING AGREEMENT
EXHIBIT B
OXBORO MEDICAL INTERNATIONAL, INC.
SHARED PRODUCTS
1. DUO Instrument Guards
2. MIS Instrument Guards
3. Specialty Instrument Guards
ROYALTY SHARING AGREEMENT
EXHIBIT C
OXBORO MEDICAL INTERNATIONAL, INC.
SHARED PRODUCTS
1. Endoscopic Instrument Holder
2. I.V. Tube/Wire Holder
3. Small Pocket Holder
4. Poly Bags w/Adhesive
5. Poly Bags w/o Adhesive
6. Cloth Bags Large
7. Double Pocket Holder
8. Disposable Towel
9. Universal Holder
