EXHIBIT 6.1 ROYALTY AGREEMENT
ROYALTY AGREEMENT
THIS AGREEMENT made as of the 17th day of December, 1996.
BETWEEN:
KINeSYS PHARMACEUTICAL INC., a body corporate incorporated under the
laws of the Province of Alberta and having an office in the City of
Vancouver, in the Province of British Columbia
(hereinafter referred to as "KPI")
- and -
KINeSYS PHARMACEUTICAL (CANADA) INC., a body corporate incorporated
under the laws of the Province of British Columbia and having an office
in the City of Vancouver, in the Province of British Columbia
(hereinafter referred to as the "Corporation")
WHEREAS KPI, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx have entered into a
share purchase and sale agreement (the "Share Purchase Agreement") pursuant to
which Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx have agreed to purchase certain common
shares in the capital of the Corporation from KPI; and
WHEREAS it is a condition of the Share Purchase Agreement that this
Agreement be entered into; and
WHEREAS the Corporation has agreed to grant KPI a royalty of 2.5% of
the North American gross revenues of the Corporation on the terms and conditions
set forth in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. INTERPRETATION
1.1 The headings of the Articles of this Agreement are inserted
for convenience of reference only and shall not affect the construction or
interpretation hereof. All references to Articles, Sections and Schedules are
to Articles and Sections of and Schedules to this Agreement, The words
"Agreement", "hereof", "herein", "hereunder", "hereby", "hereto" and similar
expressions means and refer to this Agreement as the same may be amended,
modified or supplemented at any time or from time to time.
1.2 Words importing the singular include the plural and vice
versa, and words importing gender including the masculine, feminine and neuter
genders.
1.3 All dollar amounts referred to in this Agreement are
expressed in lawful money of Canada except where otherwise stated.
2. ROYALTY
2.1 Commencing the beginning of the fiscal year after the first
year the Corporation achieves annual gross revenues from its North American
operations of $1,000,000, the Corporation shall pay to KPI a royalty equal to
2.5% of the gross revenues of the Corporation in North America (the "Royalty").
2.2 The Royalty shall be payable by the Corporation to KPI until:
(a) KPI has received a total of $1,250,000 in royalty
payments from the Corporation, provided these royalty
payments are received by KPI prior to October 1,
2001; or
(b) KPI has received a total of $1,500,000 in royalty
payments from the Corporation.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
3.1 The Corporation represents and warrants to KPI as follows:
(a) the Corporation has been duly incorporated and
organized, is validly existing and is up to date with
all of its filings required under the laws of its
jurisdiction of incorporation, has all necessary
corporate power and authority and is duly qualified
to own or lease its properties and assets and to
carry on its business as now being conducted;
(b) the Corporation has the requisite power, capacity and
authority to enter into this Agreement and to pay the
Royalty to KPI; and
(c) this Agreement, when executed and delivered by the
Corporation and when duly and properly executed and
delivered by KPI, will be a valid and binding
agreement, enforceable against the Corporation in
accordance with its terms.
4. METHOD OF PAYMENT OF ROYALTY
4.1 Subject to the foregoing provisions, the Royalty shall be
payable by the Corporation by a certified cheque of the Corporation to the
registered office of KPI within 30 days of each fiscal quarter of the
Corporation (the payments therefore are to be made by April 30, July 30,
October 30 and January 30).
5. ROYALTY DISPUTE
5.1 The Corporation agrees to provide KPI, its representatives
and its agents with access to al financial records of the Corporation during
the term of this Agreement, upon two business days written notice.
5.2 In the event KPI disagrees with the amount of or raises any
other dispute with respect to the royalty payments, KPI may refer the matter
to an independent chartered accounting firm selected by KPI (the "Auditor"),
and the parties agree the decision of the Auditor shall be final and binding
upon the parties.
6. MISCELLANEOUS
6.1 Time shall be of the essence of this Agreement.
6.2 This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. The
Corporation acknowledges that KPI may assign its rights under this Agreement
to any other party without the consent of the Corporation.
6.3 Each of the parties hereto shall from time to time, at the re
6.4 This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia.
6.5 Any notice required or permitted to be given hereunder
shall be in writing and shall be effectively given if (i) delivered
personally, (ii) sent by prepaid courier service or mail, or (iii) sent by
prepaid telecopier, telex or other similar means of electronic communication
(confirmed on the same or following day by prepaid mail), addressed in the
case of notice to the Parties as follows:
If to the Corporation: Xxxxxxx & Xxxxxxx Xxxxxxx
P5 - 0000 X. 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Telecopier: (000) 000-0000
With a copy to: Burstall Ward
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to KPI: KINeSYS Pharmaceutical Inc.
#000, 0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any notice so given shall be deemed conclusively to have been given and received
on the date that it is so personally delivered or sent by telex, telecopier or
other similar means of electronic communication, or on the second day following
the date which it is sent by private courier or mail. Either party hereto may
change its address for notice by giving notice to the other parties hereto in
the manner aforesaid.
6.6 If any provision of this Agreement shall be invalid, illegal
or unenforceable in any respect in any jurisdiction, the validity7, legality or
enforceability of such provision in any other jurisdiction and the validity,
legality or enforceability of any other provision of this Agreement shall not be
affected.
6.7 This Agreement may be executed in on or more counterparts,
each of which shall constitute an original and all of which shall constitute
one and the same Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first above written.
KINeSYS PHARMACEUTICAL (CANADA) INC.
Per:
---------------------------------
Name:
--------------------------------
Title:
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KINeSYS PHARMACEUTICAL INC.
Per:
---------------------------------
Name: Xxxxxxx Xxxx
Title: Director
