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Royalty Agreement

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MEDOVEX CORP. | Debride, Inc

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Title: CONTRIBUTION AND ROYALTY AGREEMENT
Governing Law: Florida     Date: 9/8/2014

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Exhibit 10.6

 

CONTRIBUTION AND ROYALTY AGREEMENT

 

THIS CONTRIBUTION AND ROYALTY AGREEMENT (this "Agreement") is   made as of January 31, 2013 (the "Effective Date") by and between Scott M. W. Haufe, M.D., a resident of Florida ("Contributor"), and Debride, Inc., a corporation under the laws of the State of Florida ("Corporation").

 

RECITALS

 

Contributor wishes to (i) contribute all of his right, title and interest in and good title to the Contributed Assets (as defined herein), to Corporation as a contribution to Corporation's capital, and Corporation wishes to accept, acquire and receive good title to such Contributed Assets; and (ii) receive in consideration for such contribution a certain amount of equity securities to be issued by the Corporation, in accordance with the Subscription and Stock Purchase Agreement of even date herewith; and (iii) receive royalty payments, all as set forth herein.

 

AGREEMENT

 

Now, THEREFORE, for and in consideration of the mutual covenants contained herein, the parties agree as follows:

 

1.Definitions. As used herein the following terms shall have the meaning set forth below:

 

"Audit" has the meaning set forth in Section 5(b). "Audited Period" has the meaning set forth in Section 5(c).

 

"Closing Dale" means the earlier of the first date on which the Corporation accepts subscriptions for the issuance of its Series A Preferred Stock or the Corporation closes a transaction providing financing for the Corporation.

 

"Contributed Assets" means the (i) Patent; and (ii) all Intellectual Property Rights described in, related to or associated with the Patent, including without limitation, all Intellectual Property Rights in and to and all rights to Practice the Debrider Device and the Intellectual Property Rights described in or evidenced by the Patent; and (iii) all Know-How and all technical and other information that is necessary, useful, or convenient to Practice the Debrider Device or the Intellectual Property Rights described in or evidenced by the Patent, in each case to the extent owned or held by Contributor as of the Effective Date.

 

"Debrider Device" means that certain instrument which is the subject of the Patent.

 

"Encumbrance" means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity, trust, equitable interest, claim, license, preference, right of possession, lease, tenancy, license, encroachment, covenant, infringement, interference, order, proxy, option, right of first refusal, preemptive right, community property interest, legend, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the transfer of any asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

 

"Improvement Patents" means all patents or patent applications disclosing and claiming any Improvements and all future patent applications, patents, divisions, reissues, continuations, continuations-in-part, renewals, and extensions validly claiming priority to any such patents or patent applications.

 

"Improvements" means any enhancements, additions, changes, supplements or other improvements to the Debrider Device, whether or not patentable, that are now existing or otherwise developed by Contributor or Corporation.

 

 

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"Intellectual Property" means any patent, patent application, trademark (whether registered or unregistered and whether or not relating to a published work), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, copyright (whether registered or unregistered), copyright application, trade secret, Know-How, customer list, franchise, system, computer software, code, URLs, web sites, works of authorship, and other forms of technology invention, design, blueprint, engineering drawing, proprietary product, technology, proprietary right or other intellectual property right or intangible asset (whether or not embodied in any tangible form and including all tangible embodiments of the foregoing such as instruction manuals).

 

"Intellectual Property Rights" means and includes all rights of the following types, which may exist or be created under the laws of any jurisdiction in the world: (a) rights associated with works of authorship, including exploitation rights, copyrights, moral rights, and mask works; (b) trademark and trade name rights and similar rights; (c) trade secret rights; (d) patents and industrial property rights; (e) other proprietary rights in Intellectual Property of every kind and nature; and (f) all registrations, renewals, extensions, continuations, divisions, or reissues of, and applications for, any of the rights referred to in clauses (a) through (e) above.

 

"Know-How" means all technical and other information, or knowledge that is necessary, useful, or convenient to Practice the Debrider Device or any Intellectual Property Rights described or disclosed in the Patent, including, without limitation, concepts, discoveries, data, designs, formulae, ideas, inventions, methods, models, assays, research plans, procedures, processes, designs for experiments and tests and results of experimentation and testing (including, without limitation, results of research or development), processes (including, without limitation, manufacturing processes, specifications, and techniques), laboratory records, chemical, clinical, analytical, and quality data, trial data, case report forms, data analyses, reports, manufacturing data or summaries, and information contained in submissions to and information from regulatory authorities, and includes any rights including, without limitation, copyright, database, or design rights protecting any of the foregoing.

 

"Patent" means United States Patent No. US 8,167,879 B2 issued May 1, 2012, and all continuations, continuations-in-part, divisions, re-examinations, and reissues thereof, and any corresponding foreign patents and foreign patent applications currently filed or filed in the future and any patent rights issuing, granted or registered thereon.

 

"Practice" means to make, have made, manufacture, have manufactured, use, offer to sell, sell, market, distribute, import, or export.

 

"Quarter" means a calendar quarter commencing on January 1, April 1, July 1 and October 1 of any year.

 

"Revenues" means, as the same may be applicable, the purchase order, invoice or contract price actually paid in connection with the sale of the Debrider Device less: (a) sales, use, turnover, excise, value added, and all other foreign, federal, state, or local taxes (except income tax); (b) custom duties or consular fees; (c) transportation, freight, and handling charges and insurance on shipments to customers; (d) trade, cash, or quantity discounts or rebates in the ordinary course to the extent actually granted; (e) refunds and credits for any damaged, rejected, or returned products; and (f) commissions, in any form, paid in connection with the sale of the Debrider Device.

 

"Royalty" has the meaning set forth in Section 4(a).

 

"Royally Period" means the period commencing on the Closing Date and ending on September 6, 2030; provided that the Royalty Period shall terminate if the Patent shall be deemed invalid or shall be abandoned for any reason.

 

"Stock" has the meaning set forth in Section 3.

 

 

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"Third Party" means any Person other than the Corporation and Contributor.

 

 

2.Contribution of Contributed Assets.

 

(a)   Contributor does hereby irrevocably contribute, transfer, assign and convey to Corporation, its successors and assigns, free and clear of any Encumbrances, to have and hold forever, all of Contributor's right, title and interest in and good and marketable title to the Contributed Assets.

 

(b)   Corporation hereby accepts the contribution, transfer, assignment and conveyance to it of the Contributed Assets. Corporation agrees that the Contributed Assets shall be a contribution to the capital of Corporation by Contributor.

 

(c)   On or prior to the Effective Date, Contributor shall deliver to Corporation all tangible embodiments of the Contributed Assets.

 

(d)   Contributor shall execute and cause to be delivered to the Corporation such instruments and other documents, and shall take such other actions, as the Corporation may reasonably request for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement, including instruments of transfer and conveyance for recordation with the United States Patent Office ("USPTO") to evidence the transfer of the Patent to the Corporation, in the form attached hereto as Exhibit A. Contributor is signing such Patent Assignment contemporaneously with the execution of this Agreement, to be delivered to the USPTO on or after the Closing Date. If the Closing Date does not occur within six (6) months following the Effective Date, then Contributor shall have the right, exercisable within ten (10) days thereafter by written notice to the Corporation, to rescind the transactions contemplated by this Agreement, and thereafter the Corporation shall convey, transfer and assign the Contributed Assets to Contributor, free and clear of any Encumbrances, and Contributor shall convey, transfer and assign to the Corporation of all of Contributor's right, title, and interest in and to the Stock, which the Corporation shall be entitled to cancel on its books and records upon receipt of the rescission notice.

 

(e)   Contributor shall not itself, nor shall it directly or indirectly assist or permit any Third Party to, Practice in any respect the Debrider Device or any device or product competitive therewith or any Intellectual Property Rights described or disclosed in the Patent or represented thereby.

 

(f)   The Corporation shall own all right, title and interest in and to all Improvements, Improvement Patents and Intellectual Property Rights therein developed by Contributor (whether in whole or in part) including without limitation: all preliminary designs and drafts, all other writings and works of authorship, all copies of such works in whatever medium such copies are fixed or embodied, all inventions, all derivative works and patentable and unpatentable inventions and improvements, all programs and processes, program modifications, ideas or creations, devices, techniques, and all worldwide copyrights, trademarks, patents or other intellectual property rights in and to such works. Corporation shall own and may seek to obtain Improvement Patents in its own name. In the event any right, title or interest in and to any of the Improvements, Improvement Patents or Intellectual Property Rights therein does not vest automatically in and with the Corporation, Contributor agrees to and hereby does irrevocably assign, convey, and otherwise transfer to the Corporation, and the Corporation's respective successors and assigns, all such right, title and interest therein and thereto with no requirement of further consideration from or action by Contributor or the Corporation. The Corporation shall have the exclusive worldwide right to register, in all cases as "claimant" and when applicable as "author", all copyrights in and to any copyrightable element of the Improvements, Improvement Patents or Intellectual Property Rights therein, and file any and all applicable renewals and extensions of such copyright registrations. The Corporation shall also have the exclusive worldwide right to file applications for and obtain (i) patents on and for any of the Improvements, Improvement Patents or Intellectual Property Rights therein in Contributor's name or otherwise and (ii) assignments for the transfer of the ownership of any such patents to the Corporation.

 

 

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3.              Equity Issuance. In consideration for the contribution of the Contributed Assets under Section 2 of this Agreement and the payment of all sums due under the Subscription Agreement between Contributor and the Corporation, Corporation shall issue to Contributor Seven Hundred Seventy-Five Thousand (775,000) shares of Corporation's Common Stock (the "Stock") subject to the terms of the Common Stock Term Sheet dated on or about January 18, 2013 and the conditions set forth therein, including the execution by Contributor of all agreements contemplated thereby.

 

4. Royalty.

 

(a)   The Corporation shall, as additional consideration for the assignment of the Contributed Assets to the Corporation, pay to Contributor a royalty in the amount of 1% of Revenue actually received by the Corporation during the Royalty Period from sales of the Debrider Device ("Royalty"). In the event the Corporation grants to any Third Party the right to Practice the Debrider Device, such Third Party shall be obligated to pay the Royalty to Contributor in accordance with the terms hereof, on all Revenue received by such Third Party from sales of the Debrider Device during the Royalty Period. Notwithstanding anything herein to the contrary, Corporation shall pay only one Royalty, and Contributor shall not receive double or multiple Royalties from the sale of the same Debrider Device.

 

(b)   The Royalty is earned when the Revenue derived from the sale of a Debrider Device is paid to the Corporation. The Royalty shall be payable within thirty (30) days after the end of each calendar Quarter during the Royalty Period based on Revenues received by the Corporation during the preceding Quarter. The Royalties shall be payable by check or by wire transfer at Corporation's option.

 

(c)   Notwithstanding anything to the contrary herein, the Royalty shall be offset and reduced, dollar for dollar, by the amount of any expenses incurred and royalties or license fees paid by the Corporation to any third party in connection with or in order to obtain the right to Practice the Debrider Device or the Intellectual Property Rights described or disclosed in the Patent.

 

5. Audits.

 

(a)   Corporation shall generate and maintain in an accurate, complete, and organized manner all such records (the "Records") as are reasonably necessary to substantiate the Corporation's compliance with the terms and conditions of this Agreement regarding the determination and payment of the Royalty pursuant to Article 4 (the "Purpose"). Such Records shall be retained by Corporation for a period of not less than five (5) years after the last day of the Quarter to which they pertain.

 

(b)   During the Royalty Period and for a period of not less than one (1) year after the last day of the Royalty Period, Corporation shall make all of the Records available for inspection and audit by Contributor or its authorized representatives for the Purpose (each, an "Audit") on not less than ten (10) business days' prior written notice to Corporation. In this regard, Contributor and its authorized representatives shall be permitted reasonable access to Corporation's accounting offices during normal business hours and such Records as are reasonably necessary for the Purpose.

 

(c)   Contributor may not conduct an Audit more than twice during each twelve (12) month period after the Effective Date unless such Audit reveals errors, omissions, and/or non-compliance by Corporation with its obligations to pay to Contributor any portion of the Royalty to which Contributor is entitled under Article 4, or with regard to any prior period greater than eight consecutive Quarters. The period audited shall be referred to herein as the "Audited Period."

 

(d)   Contributor shall bear the cost of each Audit in the first instance unless as a result of such Audit it is determined that there is a deficiency of five percent (5%) or more in the total amount of the Royalty paid by Corporation for the Audited Period, in which case Corporation shall be obligated to reimburse Contributor for its reasonable costs and expenses actually incurred in connection with such Audit.

 

 

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(e)   Corporation shall be obligated to pay to Contributor, within thirty (30) days after its receipt of written notice demanding the same with supporting details, any deficiency found to exist in the payment of the Royalty pursuant to Article 4 and, if applicable pursuant to Section 5(d), the costs of the Audit pursuant to the presentation of an invoice therefor.

 

6.Representations and Warranties of Contributor. Contributor represents and

warrants to Corporation as follows:

 

(a)   This Agreement constitutes the valid and legally binding obligation of Contributor, enforceable against Contributor in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

 

(b)   The execution, delivery of, and performance of the obligations of Contributor under this Agreement does not (i) violate or conflict with, or cause a default under any agreement, instrument, order or decree to which Contributor is a party or by which Contributor is bound, and (ii) violate any statute, regulation, rule or other law.

 

(c)   Contributor owns and has good and marketable title to each item of the Contributed Assets, free and clear of any Encumbrances, and has the capac


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