EXHIBIT 6.5
CNBP, INC. ROYALTY AGREEMENT
ROYALTY AGREEMENT
THIS AGREEMENT is between CNBP, Inc. CNBP, Inc., a Connecticut corporation with
principal place of business at 00 Xxxxxx Xxxxx Xx. Xxxx, Xxxxxxx, XX 00000
("CNBP") and HeartSTAT Technology, Inc. ("HeartSTAT"), a Delaware corporation
with offices at 0 Xxxxxxx, #000, Xxxxxxxxx, XX 00000, effective March 18, 2004,
(the "Effective Date"). Xxx X. Xxxxxxx, a/k/a Xxxxxxxx X. Xxxxxxx ("Xxxxxxx"),
who jointly owns CNBP with his spouse, is a party hereto solely insofar as
expressly admitted by the provisions herein below set forth.
WHEREAS, Xxxxxxx invented, filed for patents, and substantially developed the
hemodynamic monitoring technology of HeartSTAT ("Technology") prior to its
incorporation; and
WHEREAS, on February 6, 2004, TEC Factory, Inc. (now HeartSTAT Technology, Inc.)
entered into an Asset Purchase Agreement with the INTERESTHOLDERS REPRESENTED BY
XXXXXXX, who own 100% of the HEARTSTAT TECHNOLOGY AND RELATED ASSETS which is a
medical technology for the non invasive monitoring of blood pressure and blood
flow that HeartSTAT intends to develop and commercialize.
NOW, THEREFORE, in consideration of the foregoing premises, the PARTIES
hereto, intending to be legally bound, agree as follows:
1. ROYALTY PAYMENTS. As part of the consideration for Xxxxxxx'x Technology and
the HeartSTAT agreement, HeartSTAT will pay to CNBP in perpetuity a royalty
equal to two and 2/10ths percent (2.2%) of total net revenues (net of product
returns) and any third-party license royalties of HeartSTAT.
2. REPORTING. Within 30 days after March 31, June 30, September 30, and December
31, beginning immediately after the Effective Date and the first product revenue
shipment or licensee royalty receipt of HeartSTAT, HeartSTAT shall deliver to
CNBP a true and accurate written report, even if no payments are due CNBP,
giving the particulars of the Product shipment and licensee royalty receipts of
HeartSTAT during the preceding 3 calendar months under this Agreement as are
pertinent to calculating payments hereunder. This report will include at least:
a. the quantity for each product model that were sold during the preceding
quarter;
b. the calculation of royalties thereon; and
c. the total royalties computed and due from HeartSTAT.
Simultaneously with the delivery of each report, HeartSTAT shall pay to CNBP the
amount, if any, due for the period of each report.
3. RECORDS/AUDIT. HeartSTAT agrees to keep complete and accurate records of its
revenues and its licensee royalty receipts in sufficient detail to enable the
royalties payable hereunder to be determined, and to permit verifying the
product revenues of any report required under this Agreement relative to
financially reported revenues of HeartSTAT. HeartSTAT agrees to permit CNBP or
its representatives, at CNBP's expense, to periodically examine its books,
ledgers, and records during regular business hours for the purpose of and to the
extent necessary to verify product revenues of any report required under this
Agreement relative to financially reported revenues of HeartSTAT. If the amounts
due to CNBP are determined to have been underpaid by more than five (3%) percent
and more than $5000, then HeartSTAT will pay the cost of the examination.
4 TERMINATION. This Agreement will terminate, only at the option of CNBP, upon
written notice of termination from CNBP to HeartSTAT, pursuant to any breach or
default by HeartSTAT on any obligation under this Agreement, unless HeartSTAT
has cured the default or breach; or it will terminate at any time by mutual
written agreement of the parties. Nothing herein will be construed to release
HeartSTAT of any obligation matured prior to the effective date of the
termination.
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5. CONFIDENTIAL INFORMATION. CNBP, Xxxxxxx and HeartSTAT shall treat proceedings
and details of payments, to the extent that such information is not required by
law to be disclosed, as Confidential Information that is not to be disclosed to
third parties without the mutual agreement of CNBP and Xxxxxxx.
6. MISCELLANEOUS ITEMS:
6.1 Except as expressly permitted hereby, HeartSTAT may not assign or transfer
any obligations, duties, or rights hereunder without the prior written consent
of CNBP or Xxxxxxx. This Agreement is binding upon and will inure to the benefit
of the successors, assigns, executors, and personal representatives of the
parties hereto.
6.2 Both parties shall comply with all applicable Federal laws in connection
with the performance of each's respective obligations hereunder.
6.3 The laws of the State of Connecticut shall apply to the interpretation and
performance of this Agreement. Any controversy or claim arising out of or
relating either to this Agreement, or any purchase order issued hereunder, or
the breach thereof, which cannot be settled by agreement of the parties shall be
settled by mandatory arbitration in the State of Connecticut.
6.4 Headings contained herein are for convenience only and shall not be used in
construing any term of this Agreement.
6.5 Failure by either party hereto to enforce any of the provisions of this
Agreement or any rights with respect thereto, or failure to exercise any
election provided herein shall in no way be considered a waiver of such
provisions, rights, or elections or in any way affect the validity of this
Agreement. The failure by any party to enforce any of said provisions, rights,
or elections shall not prejudice such party from later enforcing or exercising
the same or any other provisions, rights, or elections it may have under this
Agreement.
6.6 CNBP, Xxxxxxx and HeartSTAT acknowledge and agree that this Agreement would
be, were HeartSTAT to become the subject of a bankruptcy case under Title 11,
United States Code (the "Bankruptcy Code"), within the scope of is Section 365
(n) of said Title 11. CNBP and Xxxxxxx further acknowledge that if it/he becomes
a debtor in possession or a trustee in Bankruptcy in a case under the Bankruptcy
Code rejects this Agreement, HeartSTAT may elect to retain its rights under this
Agreement and this Agreement as provided in Section 365 (n) of the Bankruptcy
Code. Upon written request of HeartSTAT to CNBP and Xxxxxxx or the Bankruptcy
Trustee, CNBP, Xxxxxxx or such Bankruptcy Trustee shall not interfere with the
rights of HeartSTAT as provided in this Agreement, which may be exercised to the
fullest extent permitted by said Section 365 (n).
6.7 Nothing in this Agreement is intended to, or shall be construed to
constitute HeartSTAT and CNBP as partners or joint venturers; it being intended
that the relationship of CNBP to HeartSTAT shall at all times be that of an
independent contractors.
6.8 If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby.
6.9 This Agreement may not be modified except pursuant to a written instrument
executed by a duly authorized representative of each of the parties hereto.
7. NOTICES. All notices which are required to be given by either party to the
other hereunder shall be deemed to have been duly given when made in writing
three days after having been deposited in the United States mails, postage
prepaid, certified or registered mail return receipt requested and addressed to
the other party at the address provided below, or to such other address as the
other party shall, by like notice, specify from time to time. Should either
party wish they may use a form of express delivery
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service such as Federal Express in order to give notice, in which case notice
is deemed to have been given one business day after such a missive is actually
received. The parties may also use FAX transmissions to give notice but a
confirmatory copy shall be required to be sent by registered or certified return
receipt mail and shall be deemed to have been given one business day after it is
actually received. All notices provided for herein shall be addressed as
follows.
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In the case of HeartSTAT: In the case of CNBP and Xxxxxxx:
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Chief Executive Officer CNBP, Inc. or Xxx X. Xxxxxxx
HeartSTAT Technology Inc. Attn: Xxx X. Xxxxxxx, President
0000 Xxxx Xxxxxxx, #000 FAX 000 000-0000 (call ahead)
Xxxxxxxxx, XX 000000 00 Xxxxxx Xxxxx Xx. Xxxx
Xxxxxxx, XX 00000
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IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this Agreement.
CNBP, INC. Xxx X. Xxxxxxx: HeartSTAT Technology, Inc.
By: By: By:
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Xxx X. Xxxxxxx, President Xxx X. Xxxxxxx Directors Resolution by HeartSTAT Technology
Date: March 18, 2004 Date: March 18, 2004. Date: March 18, 2004.
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