Am I missing something on the royalty rate doubling. The response was 2 x 0 = 0. But,
Pursuant to the terms of the Agreement, the Company was granted the exclusive
right to modify, customize, maintain, incorporate, manufacture, sell, and
otherwise utilize and practice the Patent, all improvements thereto and all
technology related to the process, throughout the world. This license shall
apply to any extension or re-issue of the Patent. The term of the license is for
the life of the Patent and any renewal thereof, subject to termination, under
certain conditions. As consideration for the License, the Company issued to Mr.
Grable 3,500,000 shares of common stock and is required to issue and additional
3,500,000 shares in June 1999. In addition, the Company has agreed to pay to Mr.
Grable, a royalty based upon the net selling price (the dollar amount earned
from the sale by the Company, both international and domestic, before taxes
minus the cost of the goods sold and commissions or discounts paid), of all
products and goods in which the Patent is used, before taxes and after deducting
the direct cost of the product and commissions or discounts paid (the "Royalty")
as follows:
GROSS SALES PERCENTAGE
----------- ----------
$0 to $1,999,999 in gross sales 10%
$2,000,000 to $3,999,999 in gross sales 9%
$4,000,000 to $6,999,999 in gross sales 8%
$7,000,000 to $9,999,999 in gross sales 7%
Greater than $10,000,000 in gross sales 6%
During the second year of the Agreement there is a minimum royalty provision of
$250,000. In order for the Royalties set forth above to take the place of the
Development Royalties set forth in the Amendment to Grable's Employment
Agreement dated February 23, 1995, and for such Amendment to become void and
have no effect, the Company is required to have the Agreement ratified by its
Shareholders at its next special or annual meeting of Shareholders. Not
withstanding the need for shareholder ratification for the substitution of the
Royalties, the Patent Licensing Agreement does not require shareholder approval in order to be valid. |
