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EXHIBIT 10.5
AGREEMENT
This Agreement made this 18th day of December, 1986, K & K International,
a Michigan Corporation, herein called K & K and Xxxxxxx Xxxxxxx, herein called
Xxxxxxx (K & K and Xxxxxxx collectively herein called Inventor) and Xxxx X.
Xxxxx, III and Xxxx X. Xxxxx, XX, called Xxxxxx.
WHEREAS, "Inventor" has developed and begun to market two playing card
games, commonly known as Xxxxx 00 and Caught-Cha and collectively referred to
herein as "the product"; and,
WHEREAS, Xxxxxx are experienced in the development and exploitation of
markets for similar kinds of products; and
WHEREAS, Inventor is desirous of using Xxxxxx' experience and expertise in
increasing the sales volume for the product; and,
WHEREAS, Xxxxxx are desirous of assuming responsibility for all of the
manufacturing and marketing of the product, under such terms and conditions
that follow, and except as may specifically be excluded hereafter.
NOW THEREFORE, it is agreed as fo1lows:
1. Inventor shall retain K-Mart as its exclusive customer. Accordingly,
Inventor shall continue to be responsible for calling upon and servicing the
needs of K-Mart as they relate to the product and arranging for shipping all of
the product that is needed to fulfill the orders of K-Mart and absorbing all
expenses related thereto. Xxxxxx shall manufacture the product sold to K-Mart
and, shall supply the same to K-Mart at the direction of Inventor. Xxxxxx shall
xxxx all shipping charges directly to Inventor. All gross proceeds arising from
the sale of the product to K-Mart shall be paid by K-Mart to Inventor and
Xxxxxx jointly and forwarded to Bank One, Lafayette, Indiana, for deposit into
account number 0-000000-0, said funds to then be distributed by said bank,
twelve percent (12%) thereof to go to Inventor as his commission, the remainder
to Xxxxxx. The parties shall execute and deliver to said bank and K-Mart joint
written directions to fulfill the terms of this paragraph.
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2. Except as otherwise provided in paragraph 1 above, Inventor hereby
grants to Xxxxxx the exclusive right to represent, market or sell the product
throughout the entire world.
3. Xxxxxx shall, at their cost, provide for the manufacture and shipping
of all of the product sold by them, or by such other people or entities
authorized by them. Xxxxxx shall further be responsible for all record keeping
and billing service related to such sale of the product.
4. Xxxxxx shall, during the term of this contract or any extension
thereof, exercise their judgment and best efforts in development and commercial
exploitation of the product. Inventor recognizes that Xxxxxx are and will
continue to be engaged in other business pursuits, some of which involve the
manufacture and/or sale of other game products. Xxxxxx shall not, therefore, be
obligated to devote their entire efforts to the manufacture and sale of the
product but are obligated to devote such amount as may be reasonably required
to develope and service a broader market for the product than now exists. In
the event Xxxxxx, in their discretion, determine that the further marketing of
the product will not be commercially feasible or profitable for Xxxxxx, Xxxxxx
may terminate this Agreement upon sixty (60) days written notice to Inventor.
5. Xxxxxx, in the exercise of their sales, marketing and product
development skills are encouraged by Inventor to improve and modify, for
greater sales, the package design, size and shape, color selection and art
work.
6. Inventor shall cooperate with the efforts of Xxxxxx with regard to the
promotion and marketing of the product. Inventor shall, upon reasonable request
of Xxxxxx, participate in such promotions, public relations, presentations,
sales call, productions, seminars, advertisements and the like as are deemed
necessary and appropriate by Xxxxxx, for the purpose of promoting the product.
All travel expenses of Inventor incurred at the request of Xxxxxx shall be paid
by Xxxxxx.
7. The initial term of this contract shall be ten (10) years from the date
hereof. This contract shall automatically renew for successive five (5) year
terms unless otherwise terminated by Xxxxxx by written notice to Inventor no
less than ninety (90) days prior to end of the then current term hereof or
unless otherwise terminated in accordance with other provisions of this
Agreement.
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8. Inventor grants to Xxxxxx the right to use, copy or reproduce, without
cost to Xxxxxx except for the direct cost of copying or reproduction, all
materials which have been developed and are presently being used in the
manufacturing process for the product, specifically including but not limited
to the plates, films, separations, mechanicals, photography, dies, die drawings
and art work.
9. In consideration for the exclusive rights granted to Xxxxxx hereunder
and the further covenants and promises made to Xxxxxx herein, specifically
including paragraph 11 hereof, Xxxxxx shall pay to Inventor the sum of Sixty
Thousand Dollars ($60,000.00), payable on or before January 5, 1987. In
addition, Xxxxxx shall pay to Inventor a royalty equal to six (6%) percent of
all gross revenue received by Xxxxxx as a result of the sale of the product,
including that sold to K-Mart. Quarterly, beginning no later than sixty (60)
days after the date of receipt by Xxxxxx of the first revenues from the sale of
the product, Xxxxxx shall provide to Inventor an accounting of all sales of the
product and revenues received. Gross revenue is defined as gross selling price
less returns, freight, advertising, promotional allowances and other customary
allowances given to the customer in the toy business. Royalty payments for any
order shall be paid, within thirty (30) days after receipt by Xxxxxx of payment
for said order. Inventor and its accountant or other representative shall have
the right, upon reasonable notice and during business hours, to examine the
books of account and records covering the sales and revenues relating to the
product in such a manner as to not unduly disrupt the normal business
activities of Xxxxxx. Such an audit may take place no more frequently than once
per calendar year and shall be at the expense of Inventor.
10. Inventor warrants that the product and the marketing thereof does not
infringe upon any presently existing patent, copyright or trademark. Inventor
shall, to the extent the same has not already been accomplished, take all
actions necessary to provide maximum protection for the product available under
the patent, copyright or trademark laws. Inventor agrees to indemnify and hold
harmless Xxxxxx, their affiliates, successors and assigns from any and all
liabilities, obligations, losses, damage, penalties, claims, action suits,
costs, expenses and disbursements, including reasonable attorneys fees and
expenses, resulting from any infringement or alleged infringement of the
product upon any existing patent, copyright, trademark or other proprietary
right.
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11. Inventor grants to Xxxxxx a right of first refusal to manufacture and
market any new game related items developed by Inventor from the date of this
Agreement through the termination thereof, all under the same terms and
conditions contained herein and relating to the product.
12. Xxxxxx shall have the right, in furtherance of their rights and
obligations contained in this Agreement to use Inventor's name, logo, trademark
and any and all names, logos or trademarks which are a part of the product,
either directly or indirectly.
13. Xxxxxx acknowledge that Inventor is and shall remain the owner of the
product and that the rights of Xxxxxx with respect to the product are only
those granted by this Agreement.
14. Inventor shall promptly forward to Xxxxxx all inquiries with respect
to the product received from any person or entity except K-Mart or its
employees. Inventor shall further provide to Xxxxxx a list of all customers or
customers contacts made by Inventor to the date hereof with reference to the
product.
15. If at any time during the term of this Agreement or any extension
thereof, Inventor discontinues calling upon, servicing and providing all of
either playing card game to K-Mart, Xxxxxx shall have the right to assume
responsibility for the further development of a market for said playing card
game with K-Mart, the manufacture of the playing card game to suit the needs of
K-Mart, the shipping of the playing card game, the maintenance of all necessary
records and the billing and collecting of the price of said playing card game.
Under such conditions all expenses of manufacture, shipping and billing shall
be the responsibility of Xxxxxx and all gross proceeds from the sale of the
playing card game to K-Mart shall be payable to Xxxxxx and shall be the sole
and only property of Xxxxxx. Xxxxxx shall pay to Inventor a royalty as setforth
in paragraph 9 above based upon gross revenue from K-Mart as a result of the
sale of the playing card game.
16. In the event either party violates the terms of this Agreement, the
other party shall notify the defaulting party of its default, in writing. If
such default has not been cured within thirty (30) days from the date of
receipt of said notice, the non-defaulting party shall have the right to cancel
this Agreement and to exercise any other right it may have at law or equity.
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17. Neither this Agreement, nor any right or obligation thereunder, shall
be assigned by Xxxxxx without the prior written consent of Inventor, which
consent shall not be unreasonably withheld. Notwithstanding this provision,
Xxxxxx may assign this Agreement to any entity which they, considered together,
have at least a fifty-one (51%) percent ownership interest.
18. Inventor may not assign all or any part of this Agreement or the
rights or obligations thereunder without the prior written consent of Xxxxxx,
which consent shall not be unreasonably withheld. It is understood and agreed
by the parties, that Inventor shall at all times continue to have the full
responsibility for calling on and securing the K-Mart account and if and when
Inventor chooses to discontinue that responsibility, said responsibility may
not be assigned to any third party but the provisions of paragraph 15 shall
govern.
19. Xxxxxx shall have the right of first refusal to purchase from Inventor
all right, title and interest in and to either or both playing card games. In
the event Inventor receives a bona fide, written, arms length offer to purchase
either such game, Inventor shall give Xxxxxx written notice of said offer.
Xxxxxx shall have sixty (60) days from the receipt of said notice to agree to
purchase said game upon the same terms and conditions as contained in said
offer. If they do not exercise said right, Inventor may then, within the next
sixty (60) days conclude a sale pursuant to the terms of said offer. Any such
sale shall not effect the rights of Xxxxxx hereunder and any purchase shall be
bound by the terms hereof. If said sale is not concluded within said sixty (60)
days period, the right of first refusal shall again be effective.
20. The terms and conditions of this contract shall be governed by the
laws of the State of Indiana.
21. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceabillity without
rendering invalild or unenforceable the remaining terms and provisions of this
Agreement or effecting the validity or enforceabililty of any of the terms or
provisions of this Agreement in any other jurisdiction.
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22. All notices and communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered personally or sent by certified mail return receipt requested,
post prepaid, to the parties at the following addresses or to such other
address as either party shall hereafter specify by notice, in writing, to the
other party:
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
K & K INTERNATIONAL
/s/ Xxxx X. Xxxxx, III /s/ Xxxxxxx Xxxxxxx
__________________________________ By:__________________________________
Xxxx X. Xxxxx, III
/s/ Xxxx X. Xxxxx, III /s/ Xxxxxxx Xxxxxxx
__________________________________ ____________________________________
Xxxx X. Xxxxx, XX Xxxxxxx Xxxxxxx
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ADDENDUM TO AGREEMENT
This Addendum to Agreement by and between K & K International, a Michigan
corporation and Xxxxxxx Xxxxxxx, herein collectively called "Inventor", and
Xxxx X. Xxxxx, III and Xxxx X. Xxxxx, XX, herein collectively called "Xxxxxx".
WHEREAS, Inventor and Xxxxxx entered into an Agreement dated 18th day of
December, 1986, wherein Xxxxxx obtained exclusive worldwide rights to
manufacture and market certain products created by Inventor; and
WHEREAS, the parties have agreed to a modification of such Agreement.
NOW THEREFORE, in consideration of the mutual covenants of the parties it
is agreed as follows:
1. Xxxxxx agree that the total royalties and commissions paid pursuant to
the terms of paragraph 9 of the original Agreement shall equal or exceed,
during each calendar year of the Agreement, the sum of Thirty Thousand Dollars
($30,000.00).
2. In the event, during any calendar year of this Agreement, the total
payments of royalties and commissions does not equal or exceed Thirty Thousand
Dollars ($30,000.00), Xxxxxx, in their sole discretion, may:
a. Pay to Inventor, on or before February 1 of the year following
the calendar year in question, a sum equal to Thirty Thousand Dollars
($30,000.00) less the total amount of commissions and royalties paid
during said preceding calendar year; or
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b. Elect, in writing, on or before February 1 of the year following
the calendar year in question, to terminate the original Agreement of
December 18, 1986. In the event Xxxxxx choose this option, Xxxxxx shall
have no further rights or obligations under said Agreement.
In all further respects the parties ratify and confirm the terms of the
original Agreement dated December 18, 1986.
K & K INTERNATIONAL
/s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
/s/ Xxxx X. Xxxxx, III /s/ Xxxx X. Xxxxx, XX
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Xxxx X. Xxxxx, III Xxxx X. Xxxxx, XX
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