EXHIBIT 10.20
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ROYALTY AGREEMENT
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THIS AGREEMENT is made as of this 31st day of August, 1994, by and
between ▇▇▇ PHARMACEUTICALS, INC., a California corporation ("▇▇▇") and THE
FLEETWOOD COMPANY, a Delaware corporation ("Fleetwood").
RECITALS
WHEREAS, ▇▇▇ has acquired certain Assets, including the Products from
Fleetwood pursuant to an Asset Purchase and Sale Agreement between ▇▇▇ and
Fleetwood, dated August 31, 1994 (the "Purchase Agreement");
NOW, THEREFORE, it is agreed by and between the parties hereto as
follows:
1. DEFINITIONS.
(a) "Products" means those Products set forth in Purchase
Agreement.
(b) "Net Sale Price" means the gross sales price paid by any
independent purchaser of the Products less any discount, allowances or returns
and taxes.
(c) "Fiscal Period" shall mean the five (5) fiscal years
commencing on September 1, 1994 and ending on August 31, 1999.
(d) "Fiscal Year" shall mean each fiscal year during the Fiscal
Period with the first Fiscal Year beginning on the first day in the Fiscal
Period.
(e) "Royalty Period" shall be each fiscal quarter during the
Fiscal Period with the first Royalty Period beginning on the first day in the
Fiscal Period.
(f) "Territory" shall mean the United States, its territories
and possessions including Puerto Rico and the U.S. Virgin Islands.
(g) Other terms not defined herein shall have the meaning set
forth in the Purchase Agreement.
2. ROYALTIES.
(a) ROYALTY RATE. ▇▇▇ shall pay royalties to Fleetwood for all
Products sold or otherwise disposed of subsequent to the date of this Agreement
by ▇▇▇ in the Territory during the Fiscal Period, at the rate equal to twelve
percent (12%) of the Net Sales Price of each Product so sold during the Fiscal
Period in the Territory (the "Royalties") ; provided, however, ▇▇▇ shall pay a
"Minimum Royalty" for the first three Fiscal Years as set forth in Section 2(b)
hereof. To the extent that the aggregate amount of Royalties actually earned
for any of such Royalty Period, or any prior Royalty Period, exceeds the Minimum
Royalty due for such respective Royalty Period, such excess amounts which have
not been previously used to credit towards a Minimum Royalty for a Royalty
Period, shall be applied against the Minimum Royalty due in any subsequent
Royalty Period.
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EXHIBIT 10.20
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(b) MINIMUM AND MAXIMUM ROYALTIES. Notwithstanding Section 2(a)
hereof, ▇▇▇ shall pay Fleetwood Minimum Royalties in an amount equal to Two
Hundred Forty-Seven Thousand Seven Hundred Twenty-Five Dollars ($247,725),
payable in thirty-six (36) monthly installments, at the rate of Six Thousand
Eight Hundred Eighty-One Dollars and Twenty-Five Cents ($6,881.25) beginning on
September 30, 1994 and continuing on the last day of each month for the next
thirty-five (35) months. In no case shall the Royalties payable under Section
2(a) hereof and this Section 2(b) exceed in the aggregate Two Hundred Forty-
Seven Thousand Seven Hundred Twenty-Five Dollars ($247,725).
(c) ROYALTY PAYMENT. The aggregate amount of Royalties accruing
during each Royalty Period pursuant to Section 2(a) hereof is hereinafter
referred to as the "Royalty Payment." The Royalty Payment shall be made by ▇▇▇
to The Fleetwood Company, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(at such place as Fleetwood shall notify ▇▇▇ in writing) within thirty (30) days
of the end of each Royalty Period included within the Fiscal Period in which a
sale or other disposition of a Product takes place in the Territory for such
Royalty Period, at which time there shall be delivered to Fleetwood an
accounting of the operations upon which such Royalty Payment is based, certified
by an officer of ▇▇▇, which accounting and certification shall be in form and
substance reasonably satisfactory to Fleetwood.
(d) ROYALTY TERM. Unless otherwise terminated sooner, this
Agreement and all obligations of ▇▇▇ to pay Royalties on sales of the Product in
the Territory shall terminate on August 31, 1999 (except payments due up to and
including, but not paid by August 31, 1999) or when an aggregate of Two Hundred
Forty-Seven Thousand Seven Hundred Twenty-Five Dollars ($247,725) of total
royalty payment has been made.
3. FUTURE PATENTS. All inventions registered with the United States
or any foreign patent office and any and all rights thereunder, both domestic
and international, relating to the Products or the method of manufacturing,
using or selling the Products that may be obtained, discovered or made by ▇▇▇
during the term of this Agreement shall be the property of ▇▇▇ and Fleetwood
shall have no rights therein, except the rights to the Royalties.
4. PROTECTION OF CONFIDENTIAL INFORMATION. ▇▇▇ and Fleetwood shall
each take all steps which are necessary or reasonable to safeguard the secrecy
and confidentiality of information related to the Products.
5. RIGHTS. After this Agreement terminates, ▇▇▇ shall have the
right to manufacture and sell anywhere in the world, the Products without
payment of any further royalties.
6. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of California.
7. ENTIRE AGREEMENT. This Agreement and the Purchase Agreement
contain the entire agreement of the parties with respect to the subject matter
hereof. This Agreement may not be changed orally, but only by written agreement
of both parties hereto.
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EXHIBIT 10.20
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8. SEVERABILITY. In the event that any provision of this Agreement
is adjudicated invalid, illegal or unenforceable, such adjudication will not
affect the validity, legality or enforceability of any other provision, and this
Agreement will be construed as though such invalid, illegal or unenforceable
provisions had never been contained herein.
9. RELATIONSHIP OF PARTIES. Nothing in this Agreement will be
deemed to create a relationship of employment or agency or to constitute the
parties as partners or joint venturers.
10. CAPTIONS. The underlined captions are included herein for
convenience and do not constitute a part of this Agreement.
11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
12. EXPENSES OF PROCEEDINGS. In the event that any party hereto
brings any type of proceeding to enforce the terms and conditions of this
Agreement, the prevailing party in such proceeding shall be entitled to recover
from the unsuccessful party all incidental costs and reasonable attorneys' and
paralegal's fees incurred by said prevailing party.
13. NOTICES. Notices will be deemed given when received if sent by
telecopy, hand delivery, or mailed, first class and postage prepaid to the
following address or to such other address as either party may notify the other
in writing:
If to ▇▇▇:
▇▇▇ PHARMACEUTICALS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, President
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Jeffer, Mangels, ▇▇▇▇▇▇ & Marmaro
2121 Avenue of the Stars
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Fleetwood:
THE FLEETWOOD COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Aronberg Goldgehn Davis & Garmisa
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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EXHIBIT 10.20
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
▇▇▇ PHARMACEUTICALS, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇, President
THE FLEETWOOD COMPANY
By: ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
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