Document:

Exhibit 10.41

 

ROYALTY AGREEMENT

 

This Royalty

Agreement (hereafter this “Agreement”) is made and entered into by and between

MONTEREY PASTA COMPANY (“Monterey”), a Delaware corporation with its principal

place of business at 1528 Moffett Street, Salinas, California, and TOSCANA

FOODS, LLC, a Utah limited liability company, with its principal place of

business in Salt Lake County, State of Utah.

 

RECITALS

 

WHEREAS,

Monterey manufactures Italian food products for wholesale; and

 

WHEREAS,

Toscana is the developer of certain recipes “(Recipes”) and manufacturing

concepts (“Concepts”) for ravioli with unique rough chopped filling

(“Products”); and

 

WHEREAS,

Monterey desires to obtain the right to use the Recipes and Concepts for the

purpose of manufacturing and selling the Products to its customers; and

 

WHEREAS,

Toscana has agreed, under the terms and conditions set forth below, to disclose

the Recipes and Concepts to Monterey and to grant it the right to use the

Recipes and Concepts to manufacture the Products and other similar items for

wholesale to its customers.

 

AGREEMENT

 

NOW,

THEREFORE, for good and valuable consideration, the receipt and sufficiency of

which are hereby acknowledged, Monterey and Toscana agree as follows:

 

1.                                      Definitions

 

For

convenience and brevity, certain terms used in various parts of this Agreement

are listed in alphabetical order and defined or referred to below (such terms

to be equally applicable to both singular and plural forms of the terms

defined).

 

“Concepts” means

all technical information, instructions, specifications, and practices

necessary to produce the Products.

 

“Monthly Net Sales”

means the monthly gross sales, less all discounts and allowances, made by

Monterey of the Products to any of its customers, including COSTCO WHOLESALE,

INC., measured by the cumulative wholesale dollar value of all Products

invoiced to any of Monterey’s customers, less said discounts and allowances.

 

“Products”

means ravioli with a unique rough, chopped filling consisting of at least two

ingredients which shall be referred to by the parties as “Rough Chopped

Ravioli,” or “Chunky

 

1

 

Ravioli,” or words of similar

import, and manufactured by Monterey or any other related entity using the

Recipes, Concepts, or any variations or modifications, that are supplied by

Toscana.  The parties acknowledge that

Monterey manufactures similar products which are not intended to be subject to

the Agreement, and therefore agree that only ravioli manufactured and sold

under the applicable project name or names referenced above shall be subject to

the Agreement.

 

“Recipes”

means the list of ingredients and instructions provided by Toscana to Monterey,

which are necessary to produce the Products.

 

“Term”

is defined in Section 4.

 

2.                                      Ownership

 

2.1.

(a)           License

 

Toscana

retains ownership of the Recipes and Concepts but grants to Monterey the

exclusive right to use the Recipes and Concepts for the sole purpose of

manufacturing Products for sale to Monterey’s customers. Without limiting the

generality of the foregoing, Monterey has the exclusive right (Exclusive”)

worldwide to (i) manufacture Products using the Recipes, Concepts or any

modifications thereof and (ii) promote, market, distribute, and sell the

Products. This Exclusive will continue for so long as Monterey manufactures or

markets the Products.

 

2.1

(b)              Acknowledgement

 

If Monterey’s

customer accepts and Monterey determines it is appropriate for strategic

reasons, Monterey will affix the phrase “Marco Rossi Signature Pasta” to the

front label of Products.  In the event

the forgoing phrase is not acceptable to Monterey or its customer, then the

back label of the Products will include the phrase “in collaboration with Toscana

Foods” or words to that effect.

 

2.2.                            Marketing

 

Monterey will

use its best efforts to manufacture, market, and sell the Products as Monterey

determines to be appropriate for its business goal, but makes no guarantee as

to the success of such efforts and may discontinue such efforts at any time and

for any reason.

 

2

 

3.                                      Compensation

 

3.1.                            Royalties

 

For the use of

the Recipes and Concepts, Monterey will pay to Toscana a Royalty as follows:

 

	

  Net Sales

  	

   

  	

  Royalty

  	

   

  
	

  Initial $300,000 from start of term

  	

   

  	

  2

  	

  %

  
	

  Any sales above initial $300,000

  	

   

  	

  1

  	

  %

  

 

3.2.         Payment

 

The Royalties

shall be computed on a calendar-quarter basis (e.g., January through March,

April through June, July through September, and October through December) based

upon Monterey’s Monthly Net Sales during such quarter. For each calendar

quarter in which Monterey has sold any of the Products, Monterey shall pay to

Toscana the royalties computed hereunder within thirty (30) days after the end

of such quarter.

 

3.3.         Records; Audit

 

Upon giving

advance written notice of not less than five (5) business days, and not more

frequently than twice in any twelve (12) month period, Monterey shall allow the

Managers and Members of Toscana, or their designated agents, access during

Monterey’s normal business hours to the sales records maintained by Monterey

regarding its Monthly Net Sales in order to verify the accuracy of Monterey’s

Royalty computation.  The information

contained in such records is confidential and proprietary to Monterey. Toscana

shall maintain the confidentiality of such information and shall contractually

obligate its members and duly authorized agents to not disclose such

information to any third party without Monterey’s prior consent and to not use

such information for any purpose other than verification of the royalties due.

In the event such review of Monterey’s records discloses any underpayment of

royalties to Toscana, Monterey shall promptly pay to Toscana any underpayment

of royalties due under the terms of this Agreement. Toscana shall likewise

promptly refund to Monterey any overpayment of royalties made to Toscana under

this Agreement.

 

3.4.         Full Compensation

 

Payment of the

amount specified in this Section 3 shall constitute full compensation to

Toscana for the use and sale of the Recipes and Concepts.  Upon the disbursement of the first payment

for Royalty, Monterey will cease the payment of consulting fees paid pursuant

to that Independent Consulting Agreement dated April 1, 1998.

 

3.5.         Independent Contractor Relationship.

Toscana shall at all times act as and be an

independent contractor.  Nothing in this

Agreement shall be construed to place Monterey and Toscana in a relationship of

partners, joint venturers, principal and agent, or employer and employee.  Neither party shall have the right to

obligate or bind the other party in any manner whatsoever. Toscana shall be

solely and completely liable for the withholding and

 

3

 

payment of any federal and

state tax liabilities, including FICA or FUTA withholding taxes, if required,

which may arise as a result of payments hereunder by Monterey to Toscana.

 

4.             Term

 

4.1.         Term.  The term of this Agreement (the “Term”) shall

commence on the date of this Agreement and, subject to termination as provided

below, the payment provisions shall continue for period of five years or for so

long as Monterey manufactures, markets, and sells the Products, whichever is

earlier.

 

4.2          Termination.   Either party may

terminate this Agreement upon thirty days written notice, if after twelve

months from date Agreement is executed, Monterey is unable to manufacture the

Products with at least a 50 day shelf life after strictly adhering to the

Recipes, Concepts, instructions, and directions provided by Toscana.  Sections 3.1, 3.2, 3.3, 3.4, 3.5, 6.3, and 7

shall survive such termination for any Products developed from proprietary

Recipes provided by Toscana during the first twelve months of the Agreement.

 

5.            Toscana Expenses.  Toscana shall be allowed to be reimbursed

for its out-of-pocket expenses from Monterey, provided such expenses are

approved in advance by Monterey’s Chief Executive Officer and are submitted for

payment accompanied by proper receipts. 

Such reimbursement shall be within 30 days of receipt of invoice for

said expenses by Monterey at its Salinas, California headquarters.

 

6.             Representations;

Indemnification; Limitation of Liability

 

6.1.         Toscana

 

Toscana

represents and warrants to Monterey that:

 

6.1.1.      Toscana has the

full power and authority to enter into and perform the obligations under this

Agreement;

 

6.1.2.      This Agreement

has been duly authorized, executed and delivered by Toscana and constitutes a

valid, binding and enforceable agreement of Toscana;

 

6.1.3.      Toscana has not

granted any other license or right to use the Recipes or distribute the

Products;

 

6.2.         Monterey

 

Monterey

represents and warrants to Toscana as follows:

 

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6.2.1.      Monterey has the

full power and authority to enter into and perform its obligations under this

Agreement; and

 

6.2.2.      This Agreement

has been duly authorized, executed and delivered by Monterey and constitutes a

valid, binding and enforceable agreement of Monterey.

 

6.3.         Indemnity

 

Monterey and

Toscana shall indemnify, defend and hold harmless the other party from any and

all claims, costs, judgments, damages and expenses (including reasonable

attorney’s fees) which arise out of any breach or alleged breach of that

party’s representations and warranties set forth in Sections 6.1 or

6.2.  The party seeking indemnification

shall promptly notify the indemnifying party of any such claim, permit the

indemnifying party to control the defense and settlement of such claim and

shall cooperate with the indemnifying party in such defense.

 

7.             Confidentiality.  During the term of

the Agreement and thereafter the confidentiality provisions of this agreement

shall remain in full force and effect after the termination of the

Agreement.  Toscana and Monterey shall

not, without prior written permission of the other, disclose to anyone any

confidential information including any proprietary information such as, but not

limited to, formulas, specifications, manufacturing methods, documentation

produced, business affairs, future plans, process information, customer lists,

and any other information which is a valuable, special, and unique asset of the

Company, including any information Toscana or Company is specifically told is

confidential.  Confidential information

shall not include information that is disclosed by Monterey or Toscana without

restriction, becomes publicly available through no act of the other party, or

is received rightfully from a third party.

 

Toscana agrees

the Toscana will not at any time or in any manner, either directly or

indirectly, use any such information for Toscana’s own benefit.  Toscana will protect such information and

treat it as strictly confidential.  A

violation of this paragraph shall be a material violation of the Agreement.

 

If it appears

that either party has disclosed (or threatened to disclose) information in

violation of the Agreement, the other party shall be entitled to an injunction

to restrain the disclosing party from disclosing, in whole or in part, such

information, or from providing any services to any party to whom such

information has been disclosed or may be disclosed.  The parties shall not be prohibited by this provision from

pursuing other remedies, including a claim for loss and damages.

 

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8.             Miscellaneous

 

8.1.         Notices

 

Any notice,

request, demand, waiver, consent, approval or other communication which is

required or permitted hereunder shall be in writing and shall be deemed given

only if delivered personally to the address set forth below (to the attention

of the person identified below) or sent by telegram, by registered or certified

mail, postage prepaid, or by overnight courier service, or by facsimile with

written facsimile transmission confirmation as follows:

 

If to Monterey to:

 

Monterey Pasta Company, Inc.

1528 Moffett Street

Salinas, California

ATTN: Lance Hewitt

Telephone No.: (831) 753-6262 (ext. 130)

Facsimile No.:  (831) 753-6257

 

If to Toscana to:

 

Marco Rossi

268 Kathryn Circle

Sandy, Utah 84092

Telephone No.: (801) 550-5283

 

With a Copy to:

James F. Wood, Esq.

STOEL RIVES, LLP

201 South Main Street, Suite 1100

Salt Lake City, Utah 84111

Telephone No.: (801) 328-3131

Facsimile No.:  (801) 578-6999

 

or to such

other address as the addressee may have specified in a notice duly given to the

sender and to counsel as provided herein. 

Such notice, request, demand, waiver, consent, approval or other

communication will be deemed to have been given as of the date so delivered or

telegraphed or, if mailed, three (3) business days after the date so mailed or,

if sent by overnight courier service or facsimile, one (1) business day after

the date so sent.

 

8.2.         Assignment; Successors and Assigns

 

This Agreement

shall not be assigned by Monterey without the prior written consent of

Toscana.  Subject to the foregoing, all

of the terms and provisions of this Agreement shall be binding upon and inure

to the benefit of and be enforceable by the parties and their respective

successors and assigns.

 

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8.3.         Entire Agreement

 

This

Agreement, together with any documents referred to herein, sets forth the

entire agreement of the parties hereto with respect to the Products.  This Agreement may not be amended except by

an instrument signed by the parties hereto, and no claimed amendment,

modification, termination or waiver shall be binding unless in writing and

signed by the party against whom or which such claimed amendment, modification,

termination or waiver is sought to be enforced.

 

8.4.         Applicable Law

 

This Agreement

shall be governed by and interpreted in accordance with the laws of the State

of Utah without reference to its choice of law principles.  Each party hereby irrevocably consents to

the jurisdiction and venue of the courts of the State of Utah, Salt Lake

County, the United States District Court for the District of Utah, and all

applicable appellate courts, in connection with any action to interpret or

enforce, or otherwise arising out of or relating to, this Agreement.

 

8.5.         Section Headings and Gender

 

All section

headings and the use of a particular gender are for convenience only and shall

in no way modify or restrict any of the terms or provisions hereof.  Any reference in this Agreement to a Section

shall be deemed to be a reference to a Section of this Agreement unless the

context otherwise expressly requires.

 

8.6.         Cooperation

 

Subject to the

provisions hereof, the parties hereto shall use their best efforts to take, or

cause to be taken, such action to execute and deliver, or cause to be executed

and delivered, such additional documents and instruments and to do, or cause to

be done, all things necessary, proper or advisable under the provisions of this

Agreement and under applicable law to consummate and make effective the transactions

contemplated by this Agreement.

 

8.7.         Counterparts

 

This Agreement

may be executed in two or more counterparts, each of which is an original and

all of which together shall be deemed to be one and the same instrument.  This Agreement shall become binding when one

or more counterparts taken together shall have been executed and delivered by

all the parties.  It shall not be

necessary in making proof of this Agreement or any counterpart thereof to

produce or account for any of the other counterparts.

 

8.8.         Interpretation

 

This Agreement

and each of the terms and provisions hereof are deemed to have been explicitly

negotiated among the parties and the language in all parts of this Agreement

shall in all cases be construed according to its fair meaning and not strictly

for or against any party.

 

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IN WITNESS

WHEREOF, the parties have executed this Royalty Agreement as of the 18th day of

January 2002.

 

 

	

  Monterey Pasta Company, Inc. a

  Delaware corporation:  

  	

   

  	

  Toscana Foods, LLC, a Utah limited

  liability company: 

  

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By: 

  	

   

  	

   

  	

  By: 

  	

   

  
	

   

  	

  Lance

  Hewitt, President/CEO

  	

   

  	

   

  	

  Marco Rossi,

  Member

  

 

8Exhibit

10.69

 

CERTIFICATE OF CORRECTION

FILED TO CORRECT

A CERTAIN ERROR IN THE AMENDED CERTIFICATE OF

DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES C CONVERTIBLE PREFERRED STOCK

OF

VCAMPUS CORPORATION (f/k/a UOL PUBLISHING, INC.)

FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE

ON

JUNE 29, 1998

 

 

VCampus Corporation, a corporation organized and

existing under and by virtue of the General Corporation Law of the state of

Delaware,

 

DOES HEREBY CERTIFY:

 

1.             The

name of the corporation is VCampus Corporation.

 

2.             That an Amended Certificate of Designations,

Preferences and Rights of Series C Convertible Preferred Stock (the

“Certificate of Designations”) was filed with the Secretary of State of

Delaware on June 29, 1998 under the name UOL Publishing, Inc., and that said

Certificate of Designations requires correction as permitted by Section 103 of

the General Corporation Law of the state of Delaware.

 

3.             The inaccuracy or defect of said Certificate of

Designations, and the required correction, is that the provision in Section

4(a) stating that “. . . each holder of Series C Preferred Stock [is] entitled

to one vote for each share of Series C Preferred Stock held by such holder . .

..” inadvertently failed to include the parenthetical requiring adjustment of

such number of votes in the event of a stock dividend, stock split or similar

event with respect to the common stock of the corporation, and that such

parenthetical needs to be added.

 

4.             Section 4(a) of the Certificate of Designations is

hereby corrected to read as follows:

 

“(a) Except as otherwise

provided by law or by subsection 4(b), the holders of the Series C Preferred

Stock shall be entitled to vote on all matters submitted to the stockholders

for a vote together with the holders of the Common Stock voting together as a

single class, with each holder of Common Stock entitled to one vote for each

share of Common Stock held by such holder and each holder of Series C Preferred

Stock entitled to one vote for each share of Series C Preferred Stock held by

such holder at the time the vote is taken (as ratably adjusted for stock

splits, combinations, consolidations, recapitalizations, reorganizations,

reclassifications, stock distributions, stock dividends or other similar events

with respect to the Common Stock occurring after the Issue Date).”

 

 

IN WITNESS WHEREOF, said VCampus Corporation has

caused this Certificate of Correction to be signed by its authorized

representative, this       day of July 2002.

 

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

  VCAMPUS CORPORATION

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Title:

  	

   

  
									

 

2

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