EXHIBIT 10.1
ASSUMPTION, PAYMENT AGREEMENT AND
AMENDED AND RESTATED ROYALTY AGREEMENT
This Assumption, Payment Agreement and Amended and Restated Royalty Agreement
("this Assumption and Agreement") is entered into as of January 25, 1996, by and
between Xxxxxx X. Xxxxxxxxx, individually ("Xxxxxxxxx"), and American Compact
Lighting, L.L.C., a Virginia limited liability company. Hereinafter, "ACL" shall
refer to American Compact Lighting, L.L.C., its successor, or its permitted
assign, as the case may be. Xxxxxxxxx and ACL are referred to hereinafter as,
individually, "Party" and, collectively, "Parties."
W I T N E S S E T H
WHEREAS, ACL and Small wood entered into a Royalty Agreement, dated July
15, 1994 (the "Royalty Agreement"), under which ACL agreed to provide Xxxxxxxxx
with a certain royalty in return for the consideration described in an
Assignment, dated January 10, 1994, executed by Xxxxxxxxx (the "Assignment") to
ACL of certain rights of Xxxxxxxxx in the field of electronic ballasts; and
WHEREAS, ACL owed X. Xxxx Price, IV ("Price") the sum of $212,000.00 and
Xxxxxxx X. Xxxxx ("Xxxxx") the sum $73,000.00 for monies loaned to ACL by price
and Xxxxx; and
WHEREAS, in connection with two promissory notes executed by Xxxxxxxxx on
December 28, 1995, Xxxxxxxxx assumed ACL's obligation to pay such sums to Price
and Xxxxx in consideration of ACL's willingness to amend and restate the Royalty
Agreement; and
WHEREAS, the Parties desire to amend and restate the Royalty Agreement to
reflect Xxxxxxxxx'x assumption of the above stated obligations of ACL and the
royalty to be paid Xxxxxxxxx.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:
1. Xxxxxxxxx hereby confirms his assumption of the obligation of ACL to
pay Price the sum of $212,000.00 and Xxxxx the sum of $73,000.00 and has
contemporaneously with his execution of this Assumption and Agreement executed
the promissory notes (the "Notes") attached as Exhibit A hereto, replacing the
promissory notes, dated December 28, 1995.
2. (a) In consideration for the rights, title and interests assigned to
ACL under the Assignment and Xxxxxxxxx'x obligations to pay Price and Xxxxx as
set forth in Paragraph 1, above, ACL hereby reaffirms its prior obligations and
agrees to pay Xxxxxxxxx a royalty (the
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"Royalty") of five percent (5.00%) on all Royalty Revenue (as defined in
Paragraph 6 below) received by ACL during the Royalty Term (as defined in
Section 7 below) until such time as Xxxxxxxxx receives from ACL a total payment
of $585,000 from ACL's Available Funds, pursuant to clauses (a) and (c) of
Paragraph 3, below, or from any other source in ACL's sole and absolute
discretion. If Xxxxxxxxx has received from ACL an aggregate of $585,000 from
ACL's Available Funds, pursuant to clauses (a) and (c) of Paragraph 3, below, or
from any other source in ACL's sole and absolute discretion, the Royalty due
Xxxxxxxxx pursuant to the immediately preceding sentence of this Paragraph 2
shall be reduced prospectively for the Royalty Term to a percentage equal to the
sum of (x) four and one-tenth percent (4.10%), plus (y) any percentage amount
(expressed in a percentage on all Royalty Revenue) Xxxxxxxxx is obligated to pay
Xxxxxxx X. Xxxxxx, which percentage amount shall at no time exceed
fifteen-hundredths percent (0.15%) for an aggregate reduced Royalty of no more
than four and twenty-five hundredths percent (4.25%) on all Royalty Revenue.
Until Xxxxxxxxx receives from ACL an aggregate of $585,000 from ACL's Available
Funds, pursuant to clauses (a) and (c) of Paragraph 3, below, or from any other
source in ACL's sole and absolute discretion, the Royalty due Xxxxxxxxx pursuant
to the first sentence of this Paragraph 2 shall remain at five percent (5.0%)
for the Royalty Term on all Royalty Revenue received by ACL for the Royalty
Term.
(b) ACL covenants and agrees to use reasonable efforts to make the
$585,000 payment due Xxxxxxxxx pursuant to pursuant to Section 3, below,
on or before January 10, 1997.
3. To the extent that, at the end each calendar quarter, any money remain
after all costs and expenses at ACL are paid as determined by the management of
ACL in their sole and absolute discretion, including without limitation,
employee salaries and the Royalty set forth in Paragraph 2, above (the
"Available Funds"), ACL shall at the end of each calendar quarter pay Xxxxxxxxx
an amount (in addition to the Royalty) equal to the sum of the following
amounts; (a) $71,250.00, until a total of $285,000 is paid to Xxxxxxxxx
pursuant to this clause (a), plus (b) all increase, if any, due Price and Xxxxx
under the Notes as of to end of such calendar quarters until the Notes are
entirely paid in full, plus (c) $75,000.00, until a total if $300,000.00 is paid
to Xxxxxxxxx pursuant to this clause (c) of this Paragraph 3 by January 10,
1997, nine percent (9.0%) per annum interest beginning on January 11, 1997, on
any outstanding amount due Xxxxxxxxx under clause (c) of this Paragraph 3. If,
at the end of a calendar quarter, such remaining Available Funds are less than
the entire amounts due Xxxxxxxxx under clauses (a), (b), (c) and (d) of this
Paragraph 3, then ACL shall pay Xxxxxxxxx pro rata portions of the amounts
otherwise due under such clauses (a), (b), (c), and (d), which portions when
combined equal such remaining Available Funds. Notwithstanding the foregoing,
ACL shall not be required to pay Xxxxxxxxx any amount further under the
foregoing clauses (a) and (c) of this Paragraph 3 once all payments made under
such clauses equal or exceed $585,000.00. However, the payments under clause (b)
shall remain until such time as the Notes are paid in full.
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4. All amounts (including the Royalty) to be paid by ACL to Xxxxxxxxx
under this Assumption and Agreement shall be payable within ten (10) calendar
days after the end of each calendar quarter and shall be reconciled annually to
audited records of ACL within (90) days after the end of each calendar year.
Xxxxxxxxx shall have the right to examine the books and records of ACL to
determine the accuracy of all payments under this Assumption and Agreement, upon
reasonable request and subject to reasonable confidentiality arrangements. The
royalties payable under this Assumption and Agreement shall be in addition to
any other consulting fees, salaries, other royalties or other amounts that may
be paid or payable to Xxxxxxxxx for services to ACL.
5. The rights and obligations of ACL under this Assumption and Agreement
shall be binding upon and inure to the successors and permitted assigns of ACL.
Xxxxxxxxx agrees that ACL may assign its obligations under this Assumption and
Agreement to Logic Laboratories, Inc., a Delaware corporation. Except as
provided in the foregoing sentence, this Assumption and Agreement may not be
assigned by either Party without the written consent of the other Party.
6. As used in this Assumption and Agreement, "Royalty Revenue" means gross
revenue actually received by ACL, prior to any deductions for any expenses of
ACL including without limitation taxes, rents, and employee salaries and
bonuses, if any, but after deductions for rebates, warranties, tariffs, and
other shipping costs, from the domestic and international sale, licensing,
manufacturing and any other sources if income to ACL resulting from the
technology evidenced by the patents on Exhibit B attached hereto (the
"Patents"). The Parties acknowledge and agree that not Royalty shall be due
Xxxxxxxxx hereunder from any income derived by ACL from technology other than
that listed on Exhibit B.
7. The Royalty due Xxxxxxxxx hereunder shall terminate on the date which
is the expiration date of the last of the Patents listed on Exhibit B (the
"Royalty Term"). The amount due Xxxxxxxxx pursuant to Section 3, above, shall
continue until satisfied in full; provided, however, such amounts shall become
due and payable in full immediately upon the merger, consolidation, dissolution,
or sale of substantially all of the assets of Logic Laboratories, Inc., once
this Assumption and Agreement has been assigned to Logic Laboratories, Inc.
8. This Assumptions and Agreement constitutes the entire agreement between
the Parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, proposals, offers, negotiations and discussions,
whether oral and written, between the Parties, including without limitation the
Royalty Agreement (which this Assumptions and Agreement amends and restates) and
the Memorandum to Xxxxxxx X. Xxxxxxxxxx from Xxxxxxxxx, Price and Xxxxx, dated
December 6, 1995, with respect to the subject matter hereof.
9. This Assumptions and Agreement cannot be amended, modified to
terminated without the written consent of ACL, Xxxxxxxxx and the holders of the
Notes.
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IN WITNESS WHEREOF, the Parties have caused this Assumptions and Agreement
to be executed on the date first above written
American Compact Lighting, L.L.C. Xxxxxx X. Xxxxxxxxx, individually
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx Date: Jan. 25, 1996
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Title: Mgr
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Date: Jan. 25, 1996
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