Exhibit 10.5
PATENT PURCHASE AGREEMENT
This Patent Purchase Agreement (the Agreement), dated May 21, 1990 is between
RMED International, Inc. (the Company), a Colorado corporation and Xxxxxx
Enterprises, Ltd. (Xxxxxx), an Illinois corporation.
1. For a purchase price of $225,000 the Company is selling to Xxxxxx a 50%
interest in the pending "Flushable Diaper Device and Method" patent (the
Patent). The purchase price will be payable as follows:
On March 26, 1990 $50,000
On April 6, 1990 $25,000
On April 30, 1990 $25,000
On May 10, 1990 $25,000
On June 10, 1990 $50,000
On July 10, 1990 $50,000
Failure to pay any amount of the above sums will result in a reduction of the
percentage of ownership and a reduction of the royalty rates discussed below by
the percentage of the unpaid amount of the original sum of $225,000.
2. All rights to the use and licensing of the patent remain with Company
and Xxxxxx. If the Company is dissolved or liquidated or if the Company is
declared insolvent or bankrupt or the Company makes an assignment for the
benefit of creditors or a receiver is appointed or any proceeding is demanded
under any provision of any bankruptcy laws, the Company and the principal
officers of said Company acknowledge and agree that these rights for their 50%
interest shall revert to Xxxxxx.
3. The Company will have the exclusive right to purchase Brandy's 50%
interest in the Patent. Xxxxxx will give the Company sixty (60) days notice of
their intention to sell. If this share should be sold to a party other than the
Company, they will have the same rights as set forth in paragraph 2 of this
Agreement.
4. The Company will pay Xxxxxx a royalty of 50% of the net profits from
the sale of diapers made under pending "Flushable Diaper Device and Method"
patent. Net profits are defined as gross sales of "Flushable Diaper Device and
Method" diapers less the following: 1) direct costs related to such sales
including credit card fees, sales returns and allowances, and trade discounts;
2) costs to manufacture such "Flushable Diaper Device and Method" diapers
including raw materials, labor, and packaging; 3) direct distribution costs
related to sales of "Flushable Diaper Device and Method" diapers including sales
commissions, advertising and promotion; 4) general administrative costs
allocated to sales of "Flushable Diaper Device and Method" diapers based on the
percentage of sales of "Flushable Diaper Device and Method" diapers to total
sales of all products of the Company; and 5) federal and state income taxes
allocated based on the same method used in number 4) above without giving effect
to income tax benefits relating to operating loss carryforwards generated
in all tax years prior to fiscal 1991. Payments of royalties will be paid within
30 days after the end of each calendar quarter.
5. Xxxxxx has the option to exchange its ownership of the Diaper Patent
for $225,000 of the Company's common or preferred stock based on the closing bid
price of the Company's common stock on May 18, 1990. At the time of the
exchange, this Agreement will no longer be in effect and the Company will become
the sole owner of the Patent; however, if the Company is dissolved or liquidated
or if the Company is declared insolvent or bankrupt or the Company makes an
assignment for the benefit of creditors or a receiver is appointed or any
proceeding is demanded under any provision of any bankruptcy laws, the Company
and the principal officers of said Company acknowledge and agree to allow Xxxxxx
to repurchase its 50% interest in the Patent for $1 and surrender such common or
preferred stock as exchanged previous.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
RMED International, Inc.
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Chairman and President
Xxxxxx Enterprises, Ltd.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
President
