ROYALTY AGREEMENT
Exhibit
10.5
This Royalty Agreement (this
"Agreement") is entered into effective as of December 31, 2009 (the "Effective
Date") by and between WS Technologies LLC, an Oregon limited liability company,
doing business as Windswept Technologies (the "Company") and Aequitas Capital
Management, Inc., an Oregon corporation ("Aequitas").
RECITALS
A. Pursuant
to a Contribution Agreement dated December 30, 2009, Aequitas transferred to the
Company all right, title and interest in and to the Zero Interest Recourse
software product that incorporates the proprietary CarePayment System, a
specialized accounting system designed to interface with multiple systems to
receive and submit data and process that data in such a way that all accounting
and settlement activity are supported, and which contains several proprietary
algorithms to support the allocation of account transactions and account
settlements with hospitals and funding sources (the "Software").
B. The
Company agrees to pay Aequitas a royalty based on new products (the "Products")
developed by the Company or co-developed by the Company and Aequitas or its
affiliates and that are based on or use the Software.
NOW, THEREFORE, the parties agree as
follows:
1. Royalty. The
Company will pay Aequitas a royalty (the "Royalty") equal to (i) 1.0% of
the Net Revenue received by the Company and generated by the Products that
utilize funding from Aequitas or any of its affiliates and (ii) 7.0% of the
face amount, or such other percentage as the parties may agree, of receivables
that do not utilize funding from Aequitas or any of its affiliates that are
serviced by the Company through use of the Software. The Royalty will
be calculated solely on Net Revenue received. "Net Revenue" means the
total gross sales price and/or monetary equivalent of any other consideration
actually received by the Company, less discounts, rebates, refunds or reserves
applicable thereto.
2. Term. The
term of this Agreement will commence on the Effective Date and shall continue in
effect until the parties mutually agree in writing to
termination. Either party may also terminate this Agreement by
written notice to the other upon: (i) failure by the other party to
perform any material term, covenant or condition of this Agreement, or breach of
any representation or warranty of the other party in this Agreement, and such
failure or breach continues for a period of more 30 days after the receipt of a
notice of such failure, or (ii) upon the initiation of a proceeding against the
other party under any bankruptcy law by or against the other party, or if that
party is adjudged insolvent or makes an assignment for the benefit of
creditors.
3. Payment Terms and
Report. The Company will pay Aequitas Royalty payments
monthly, within 30 days after the end of each calendar month, based on Net
Revenue received in the preceding calendar month. The Company will
provide Aequitas with a monthly report of the Net Revenue received from sales of
the Products and the calculation of Royalty payments based on such Net
Revenue.
4. Miscellaneous.
4.1 Severability. Any
part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or
warranty of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties to this Agreement waive any
provision of law which prohibits or renders void or unenforceable any provision
of this Agreement. If the invalidity of any part, provision,
representation or warranty of this Agreement shall deprive any party of the
economic benefit intended to be conferred by this Agreement, the parties shall
negotiate in good faith to develop a structure the economic effect of which is
as nearly as possible the same as the economic effect of this Agreement without
regard to such invalidity.
4.2. Notices. Each
notice, consent, request, or other communication required or permitted under
this Agreement will be in writing, will be delivered personally or sent by
certified mail (postage prepaid, return receipt requested) or by a recognized US
overnight courier, and will be addressed as follows:
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If
to the Company:
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WS
Technologies LLC
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Attn: President
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0000
XX Xxxxxxx Xxxx, Xxxxx 000
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Xxxx
Xxxxxx, XX 00000
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If
to Aequitas:
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Aequitas
Capital Management, Inc.
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Attn: Legal
Department
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0000
XX Xxxxxxx Xxxx, Xxxxx 000
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Xxxx
Xxxxxx, XX 00000
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Each
notice, consent, request, or other communication will be deemed to have been
received by the party to whom it was addressed (a) when delivered if delivered
personally; (b) on the second business day after the date of mailing if mailed;
or (c) on the date officially recorded as delivered according to the record of
delivery if delivered by overnight courier. Each party may change its
address for purposes of this Agreement by giving written notice to the other
party in the manner set forth above.
4.3 Counterparts. This
Agreement may be executed in counterparts. Each counterpart will be
considered an original, and all of them, taken together, will constitute a
single Agreement. This Agreement may be delivered by facsimile or
electronically, and any such delivery will have the same effect as physical
delivery of a signed original. At the request of any party, the other
party will confirm facsimile or electronic transmission signatures by signing an
original document.
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4.4 Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Oregon, without giving effect to
conflicts of laws principles thereunder.
4.5 Venue/Jurisdiction. Each
of the parties hereby irrevocably agrees that any dispute arising under or in
any way relating to this Agreement shall be litigated solely and exclusively in
a federal or state court sitting in Multnomah County, Oregon. Each
party hereby agrees that if it attempts to commence any action regarding a
dispute arising under or in any way relating to this Agreement in any court
other than a federal or state court sitting in Multnomah County, Oregon, the
other party may obtain an immediate order dismissing such action for improper
venue or an order transferring venue to a federal or state court sitting in
Multnomah County, Oregon. Each of the parties hereby irrevocably
submits to the personal jurisdiction of any federal or state court sitting in
Multnomah County, Oregon, in any action or proceeding arising out of or in any
way relating to this Agreement. Each of the parties agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each party also irrevocably waives the right to a
trial by jury in connection with any action brought to construe or enforce this
Agreement.
4.6 Amendments. This
Agreement may be amended from time to time by a written instrument signed by the
Company and Aequitas and no waiver of any of the terms hereof by any party shall
be effective unless it is in writing and signed by the other
parties.
4.7 Integration. This
Agreement comprises the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to such
subject matter, superseding all prior oral or written
understandings.
4.8 Agreement
Effectiveness. This Agreement shall become effective upon
delivery of fully executed counterparts hereof to each of the parties
hereto.
4.9 Headings Descriptive;
Interpretation. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Agreement. All references in this Agreement to "Section" or
"Sections" without additional identification refer to the Section or Sections of
this Agreement. The words "will" and "shall" have the same
meaning. The words "include," "includes" and "including" shall not be
deemed to be terms of limitation, but rather shall be deemed to be followed by
the words "without limitation."
4.10 Advice from Independent
Counsel. The parties hereto understand that this Agreement is
a legally binding agreement that may affect such party's rights. Each
party hereto represents to the other that it has received legal advice from
counsel of its choice regarding the meaning and legal significance of this
Agreement and that it is satisfied with its legal counsel and the advice
received from it.
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4.11 Judicial
Interpretation. Should any provision of this Agreement require
judicial interpretation, it is agreed that a court interpreting or construing
the same shall not apply a presumption that the terms hereof shall be more
strictly construed against any person by reason of the rule of construction that
a document is to be construed more strictly against the person who itself or
through its agent prepared the same, it being agreed that all parties hereto
have participated in the preparation of this Agreement.
4.12 Further
Assurances. The parties agree to execute such other documents
as may be necessary to implement this Agreement and carry out the intent of the
parties to this Agreement.
4.13 Survival. Each
provision of this Agreement that expressly or by its nature provides for rights,
obligations or remedies that extend beyond the expiration or earlier termination
of this agreement, will survive and continue in full force and effect after this
Agreement expires or is earlier terminated.
4.14 Attorney
Fees. In the event arbitration, suit or action is instituted
to enforce or determine the parties' rights or duties in connection with this
Agreement, the prevailing party shall recover from the losing party all costs
and expenses, including reasonable attorney fees, incurred in such proceedings,
including any appellate or bankruptcy proceedings.
[Signatures
on following page]
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WHEREAS, the parties have entered into
this Royalty Agreement as of the date first written above.
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AEQUITAS
CAPITAL MANAGEMENT, INC.
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By
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/s/ Xxxxxx X. Jesenik
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Xxxxxx
X. Jesenik, President
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WS
TECHNOLOGIES LLC, DBA
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WINDSWEPT
TECHNOLOGIES
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By
microHelix, Inc., its Manager
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By
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/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx,
Secretary
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