Exhibit 10.7
AGREEMENT
Agreement made the ___ day of April, 1998, among GLOBAL HEALTH
ALTERNATIVES, INC. ("GHA") and MIKECO, INC. ("MikeCo"), XXXX LABORATORIES, INC.
("Xxxx"), H. XXXXXX XXXX ("X. Xxxx"), XXXXX XXXXXXXXX ("Xxxxxxxxx") and XXXXXXX
XXXXXXXX ("Xxxxxxxx").
WITNESSETH
WHEREAS, pursuant to the Assignment of Patents Agreement (the
"Assignment") dated May 23, 1997 among XxxxXx, Xxxx and E. Xxxx, Xxxx agreed,
among other things, to assign United States Patent No. 5,032,400 (the "Patent")
to MikeCo, Inc. (the "Assignment Agreement"); and
WHEREAS, pursuant to the Assignment of Patents dated May 23, 1997, Xxxx
assigned the Patent to MikeCo; and
WHEREAS, pursuant to the Agreement and Plan of Reorganization dated May
23, 1997 by and among GHA, MikeCo, E. Troy, Killorin, Underwood, Xxxx Xxxxxx,
Xxx Xxxxx and Xxxxxxx Xxxxxx, GHA acquired all of the capital stock of MikeCo
(the "Reorganization Agreement"); and
WHEREAS, the parties are desirous of modifying the Assignment
Agreement, the Reorganization Agreement and the agreements executed among the
parties in connection therewith (collectively, the "Prior Agreements").
NOW, THEREFORE, in consideration of the mutual premises and the sum of
ten ($10) dollars and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. WAIVER
Xxxx, E. Troy, Xxxxxxxxx and Xxxxxxxx hereby waive any and all defaults
by GHA and MikeCo through the date hereof in connection with the Prior
Agreements. Except as otherwise indicated herein, Xxxx, E. Troy, Xxxxxxxxx and
Xxxxxxxx waive any and all rights to amounts due from GHA and MikeCo in
connection with the Prior Agreements through the date hereof and the closing of
the transactions contemplated hereunder.
2. INCONSISTENCY
The Prior Agreements shall remain in full force and effect except as
modified by the terms of this Agreement. However, in the event of any
inconsistency or ambiguity between this Agreement and the Prior Agreements, the
terms and conditions of this Agreement shall govern.
3. MODIFICATION OF ASSIGNMENT AGREEMENT
(a) The capitalized terms in this paragraph 3 shall have the meanings
ascribed to such terms in the Assignment Agreement.
(b) Paragraph 2 of the Assignment Agreement is hereby deleted in its
entirety and is amended to read as follows:
2. CONSIDERATION. (a) In consideration of Troy's sale of the
Patent Rights to the Company, the Company shall pay to Xxxx royalties
on all sales of a topical analgesic containing shark oil, garlic oil,
almond oil and soybean oil, the use of which is covered by a claim of
U.S. Patent No. 5,032,400, as follows on Net Sales commencing on or
after April 1, 1998:
(A) Three (3%) percent of Net Sales until Net Sales equals
$2,000,000;
(B) Two (2%) percent of Net Sales in excess of $2,000,000
until Net Sales are equal to $4,000,000; and
(C) One (1%) percent of Net Sales in excess of $4,000,000.
2(a)(i). Net Sales shall mean gross sales actually received by
the Rights Holder in connection with the sale of the products
incorporating the Patent less discounts, allowances, bad debts,
chargebacks, credits, returns and other customer off-the-top deductions
from gross sales.
2(a)(ii). In the event that gross sales equals or exceeds
$1,000,000 per month, the Company agrees to re-evaluate the royalty
structure provided for in this paragraph 2(a) and to consider
increasing the royalties payable to Xxxx.
(c) Paragraph 3(a) of the Assignment Agreement is hereby deleted in its
entirety and is amended to read as follows:
3. REVERSIONARY RIGHT. (a) Should the Company, or successors
in its interest in the NR Ownership Rights (the "Rights Holder"), fail
to make the payments provided for in Section 2, and shall fail to
remedy such arrearage within 60 days after written notice, then, upon
Troy's election and notification to the Rights Holder of such election,
the NR Ownership Rights and the Patent Rights shall revert to Xxxx (the
"Reversion").
2
4. CREDIT AGAINST ROYALTIES
The Assignment Agreement is hereby modified to provide as follows:
(a) The royalties payable to Xxxx pursuant to paragraph 2 of the
Assignment Agreement shall be reduced by the payments made, payments to be made,
and the amounts assumed, by GHA pursuant to paragraphs 5 through 8 of this
Agreement (the "GHA Obligations").
(b) Notwithstanding the foregoing, in the event that the GHA
Obligations in any twelve month period exceed 90% of the amounts due to Xxxx
pursuant to paragraph 2(a) of the Assignment Agreement, then GHA shall pay to
Xxxx 10% of the amount due to Xxxx pursuant to paragraph 2(a) of the Assignment
Agreement and any amount in excess of 90% of the amount due to Xxxx pursuant to
paragraph 2(a) of the Assignment Agreement shall be credited against the
royalties due to Xxxx pursuant to paragraph 2(a) of the Assignment Agreement in
succeeding periods.
5. REPAYMENT OF DEBT
(a) GHA shall within, two (2) days of the date hereof, pay the sum of
$140,000 to First National Bank of Rochester (the "Rochester Debt") in reduction
of a loan in the amount of $240,000 from First National Bank of Rochester to
Patco Corp., a corporation controlled by Xxxxxxxx. GHA shall pay to Xxxxxxxx the
sum of $25,000 on June 30, 1998, $50,000 on September 30, 1998 and $25,000 on
December 31, 1998.
(b) GHA shall within two (2) days of the date hereof, pay to the First
National Bank of Lisbon a loan in the amount of approximately $185,000 owed by
Xxxx, Xxxxxxxx and X.Xxxx to the First National Bank of Lisbon (the "Lisbon
Debt").
6. E. TROY CONSULTING AGREEMENT
MikeCo hereby agrees to employ E. Troy as a consultant and E. Troy
hereby accepts such consultancy. The term of such consultancy shall be one year.
E. Troy shall be paid a consulting fee of $100,000, of which $50,000 shall be
payable within two (2) days of the date hereof and the balance of which shall be
paid in equal monthly payments commencing May 15, 1998 to (i) E. Troy, or (ii)
in the event of the death of E. Troy, his estate. E.Troy shall devote up to ten
(10) hours per week to the business of MikeCo, or such time as reasonably
requested by MikeCo to perform his consulting services, subject to his
availability due to his health.
7. AGREEMENTS WITH XXXXXXXX
3
(a) GHA shall within, two (2) days of the date hereof , pay to Xxxxxxxx
the sum of $25,000. GHA agrees to pay $50,000 to Xxxxxxxx in equal monthly
payments commencing May 15, 1998 over a 12 month period from the date hereof
together with interest thereon at the prime rate plus 1% of Citibank, N.A.
(b) The employment agreement between GHA (or MikeCo/Natural Health
Laboratories, Inc.) and Xxxxxxxx is hereby terminated and no further benefits,
salary or payments shall be due thereunder.
(c) GHA agrees to guarantee and assume the lease payments for
Xxxxxxxx'x Lexus. Xxxxxxxx shall surrender the car to GHA within ten (10) days
of the date hereof.
(d) Xxxxxxxx agrees to use his best efforts to provide assistance in
negotiating payments of the various obligations pursuant to Schedule A.
8. ASSUMPTION OF MISCELLANEOUS DEBT
GHA agrees to assume the miscellaneous debt of Xxxx in accordance with
Schedule A, annexed hereto, up to a maximum amount of $35,000 which amount shall
be verified through documentation to be supplied by Xxxx and/or Xxxxxxxx and as
agreed by GHA. GHA has assumed legal fees due to Xxxxx, Oviatt, Gilman, Xxxxxxx
and Xxxxxx, LLP, attorneys, which were incurred in connection with litigation
between Erie Laboratories and H. Xxxxxx Xxxx vs. Xxxxxxxx X. Xxxxxxx, Xxxxxxx
Aji, and Xxxxxx X. Xxxxx in addition to the other obligations assumed under this
paragraph 8.
9. XXXXXXXXX EMPLOYMENT AGREEMENT
(a) The employment agreement dated May 23, 1997 between MikeCo and
Xxxxxxxxx is hereby terminated.
(b) MikeCo and Xxxxxxxxx hereby agree to enter into a one year
employment agreement, which shall provide for a base salary to Xxxxxxxxx of
$70,000 plus commissions of 8% of net sales generated by Xxxxxxxxx. The base
salary shall be contingent upon minimum performance standards to be determined
by Xxxxxxxxx and GHA. Pursuant to the employment agreement, Xxxxxxxxx'x present
arrangement regarding a company car and health insurance for his family will
remain as presently in place. However, the failure of Xxxxxxxxx and GHA to agree
on the terms of the employment agreement shall not otherwise affect this
Agreement.
10. REVERSIONARY RIGHT. Should GHA, or successors in its interest in the NR
Ownership Rights, as defined in the Assignment Agreement fail to:
(i) make the payment provided for in (A) the first sentence of
paragraph 5(a),
4
(B) paragraph 5(b), (C) the first sentence in paragraph 7(a),
or (D) make the $50,000 payment which is due within two (2)
days of the date hereof provided for in Section 6; and shall
fail to remedy such arrearage within six (6)days after written
notice, or
(ii) shall breach any of its other obligations under this
Agreement and shall fail to remedy such breach within thirty
(30) days after written notice;
then, upon Troy's election and notification to the Rights Holder, as defined in
the Assignment Agreement, of such election, the NR Ownership Rights and the
Patent Rights, as defined in the Assignment Agreement, shall revert to Xxxx (the
"Reversion").
11. INDEMNITY
GHA agrees to indemnify and hold harmless Xxxx, E. Troy, Xxxxxxxxx and
Xxxxxxxx from any and all liability for debts or obligations solely pursuant to
the obligations assumed by GHA pursuant to this Agreement and the agreements to
be executed in connection herewith. Such indemnification shall extend to any
counsel fees, costs or disbursement incurred by any party in defending any
action commenced against the indemnified parties by the holder of any debt or
obligation expressly assumed by GHA hereunder, as well as reasonable counsel
fees and disbursements incurred in enforcing this indemnification.
E. Troy, Xxxxxxxxx, Xxxx and Xxxxxxxx hereby agrees to indemnify and
hold harmless GHA and MikeCo from any and all liability for debts or obligations
for any liability to any shareholder of Xxxx as a result of the execution of
this Agreement.. Such indemnification shall extend to any counsel fees, costs or
disbursement incurred by any party in defending any action commenced against the
indemnified parties, as well as reasonable counsel fees and disbursements
incurred in enforcing this indemnification.
12. MEDIATION
The parties agree that any disputes, differences or disagreements
regarding this Agreement shall first be submitted to non-binding mediation with
C. Xxxxxx Xxxxxx, Esq., and Xxxxxx Xxxxxx, Esq., and /or designees acting as
mediators.
13. ARBITRATION
This Agreement shall be construed in accordance with the laws of the
State of New York. In the event that any dispute arises under this Agreement
which cannot be resolved by negotiation and/or mediation as provided herein, the
parties agree to arbitrate under the auspices of the American Arbitration
Association ("AAA") in New York, New York.
5
14. ASSIGNMENT
Except in connection with a merger, consolidation, recapitalization,
sale of all or substantially all of the assets of GHA, or other form of
corporate reorganization, this Agreement may not be assigned to any other person
or entity by GHA without the prior written consent of Xxxx, which consent shall
not be unreasonably withheld or delayed.
15. MODIFICATION
This Agreement may not hereinafter be amended or modified except by
written consent of all parties. Each party agrees that any attempt at oral
modification of this Agreement, shall be null and void and shall not change the
relative rights, duties and obligations of any party hereto. Notwithstanding
this paragraph, any future agreements regarding royalties may be modified in
writing by GHA and Xxxx.
16. EXPENSES
Except as otherwise provided herein, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
17. NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or mailed if delivered personally or by nationally recognized
courier or mailed by registered mail (postage prepaid, return receipt requested)
or by telecopy to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice, except that notices of
changes of address shall be effective upon receipt):
(a) If to GHA or MikeCo.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Teleceopier No.(000)000-0000
with copies to:
Xxx Xxxxx Xxxxxxx
00 Xxxxxxx Xxxxxx X0X 0XX
0
Xxxxxx, Xxxxxxx
Telecopier No. 011-44-171-486-6217
XxXxxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier No.:(000) 000-0000
(b) If to the other parties to this Agreement then to:
C. Xxxxxx Xxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
18. AUTHORITY TO ENTER AGREEMENT. This Agreement and the transactions
contemplated hereunder, have been duly authorized, validly executed and
delivered on behalf of the parties hereto and is a valid and binding agreement
on each of the parties hereto in accordance with its terms.
19. WAIVER
Any party may (a) extend the time for the performance of any of the
obligations or other acts of the other party and (b) waive compliance with any
of the agreements or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby.
20. HEADINGS
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
21. SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect.
7
22. ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement and supersede all
prior agreements and undertakings, both written and oral, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any other person any rights or remedies hereunder.
23. BENEFIT
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
24. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York.
25. COUNTERPARTS
This Agreement may be executed in one or more counterparts, and by the
different parties in separate counterparts, each of which when executed shall be
deemed to be an original but all of which when taken together shall constitute
one and the same agreement.
26. PAYMENTS UNDER THIS AGREEMENT
Xxxx, X. Xxxx, Xxxxxxxxx and Xxxxxxxx hereby agree that any amounts
sent to Ali, Xxxxxx & Xxx, P.C. by the Company shall be credited towards the
amounts due pursuant to this Agreement.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
8
27. FURTHER ASSURANCES.
From time to time after the date of this Agreement, each of the parties
hereto, at the request of the other, and without further consideration, shall
execute and deliver such further documents or instruments and shall take such
other actions as the requesting party may reasonably request in order to effect
complete consummation of the transactions contemplated by this Agreement
IN WITNESS WHEREOF, the parties have set this hands and seal this ___
day of April, 1998.
GLOBAL HEALTH ALTERNATIVES, INC.
By:
----------------------------------------
Name:
Title:
MIKECO, INC.
By:
----------------------------------------
Name:
Title:
XXXX LABORATORIES, INC.
By:
----------------------------------------
Name:
Title:
--------------------------------------------
H. XXXXXX XXXX
--------------------------------------------
XXXXX XXXXXXXXX
--------------------------------------------
XXXXXXX XXXXXXXX
