EXHIBIT 10.4
XXXXXX MADE ROYALTY AGREEMENT - AS AMENDED
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This Amendment between Xxxxxx Made Golf Company ("Xxxxxx Made") and
Carbite Golf Company ("Carbite"), effective as of March 04, 1997, amends the
agreement ("Original Agreement") entered into between the Parties ("Parties"
refers to both Xxxxxx Made and/or Carbite) which was originally effective
January 1,1995.
RECITALS
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X. Xxxxxx Made desires to continue with the license arrangement entered into
by the Original Agreement.
X. Xxxxxx Made would like to extend the period of exclusivity, under the same
terms and conditions as the Original Agreement.
X. Xxxxxx Made desires, without minimum quantity requirements, to be able to
purchase the Carbite Inserts from a third party and pay a per-insert royalty
rather than purchasing the Carbite Inserts through Carbite.
D. Carbite desires to continue the period of exclusivity.
E. Carbite desires to effect a royalty payment on a per insert basis.
Now, therefore, in consideration of the mutual covenants, agreements and
conditions herein stated, Xxxxxx Made and Carbite agree as follows:
TERMS
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Xxxxxx Made and Carbite hereby amend the Original Agreement as described
below. For those paragraphs not mentioned in this Amendment, those paragraphs
will remain as originally drafted in the Original Agreement. The amended
language takes effect on March 04, 1997.
A. Changes to Paragraph 1(a). "Grant of License": The period of exclusivity
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described in Paragraph 1(a) of the Original Agreement shall be extended for a
period of three (3) additional years. The amended period of exclusivity shall
continue until December 31, 1999. The terms of exclusivity shall be as stated in
the Original Agreement.
B. Changes to Paragraph 2. "Xxxxxx Made's Obligations": Sub-paragraph (a) is
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deleted in its entirety and substituted with the following Sub-paragraph (a):
"(a) Xxxxxx Made agrees to pay a license fee on a per insert basis, as
described in Paragraph 4, 'Price'. Xxxxxx' Made has no further obligation to
purchase any quantity of Carbite inserts from Carbite. Current 10,523 returned
inserts stemming from already past due P.O. numbers 306188 and 306174
respectively, will be treated as following:
25% of the 10,523 returned inserts (or 2,631 inserts) will be refunded by PSM
to Carbite. Since PSM will not be able to supply any parts until July, 1997,
Carbite has agreed to provide replacement of these 2,631 pieces via Cloyes
within three months' from the effective date of this contract. This agreement
is subject to TMG acceptance of the remaining returned inserts. The remaining
75% of the 10,523 returned inserts (or 7,892 inserts) TMC will perform a 100%
inspection, all acceptable parts will be sent to Hitchiner, and the remaining
rejected parts will be destroyed at Xxxxxx Made expenses.
Sub-paragraph (b) through (d) remain unchanged.
C. Changes to Paragraph 3. "Carbite's Obligations": Sub-paragraph (c) is
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modified as follows: Carbite agrees to Xxxxxx Made purchasing inserts
directly from the supplier subject to the work in process exception
described in Paragraph 2(a). As to the Carbite Inserts that qualify as work
in process, Carbite has a continuing obligation to correct any problems or
defects identified by Xxxxxx Made, and will use its best efforts to correct
such problems or defects arising from non sand blasted inserts which are
non-conforming to Carbite's specification.
D. Changes to Paragraph 4. "Price": Sub-paragraph (a) shall remain in its
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entirety.
Insert Sub-paragraphs (1)) and (c):
"(b) As of the effective date of this Amendment, Carbite
shall continue to supply Carbite Inserts to Xxxxxx Made, only as
described in Paragraph 2(a) above, according to the price
schedule 5 & forth in Exhibit B, as mutually agreed upon by the
Parties."
"(c) As of the effective date of this Amendment, Xxxxxx Made
Golf shall pay Carbite a royalty of 52.00 per Carbite Insert that
Xxxxxx Made purchases directly from a third party. Payment terms
will be the same as those for Xxxxxx Made's future insert
suppliers. For example, if payment is based on a Net 30 term,
then payment will be processed 30 days after receipt of subject
inserts. Outstanding payments due Carbite will be based on final
count of 100% inspected inserts by Xxxxxx Made." Xxxxxx Made
will pay $10,000 to Carbite upon execution of this Amendment, as
an advance payment for the first 5,000 Carbite Inserts. On March
04, of each succeeding year during the Term, Xxxxxx Made will
make an advance payment of $10,000 for the first 5,000 Carbite
Inserts as long as Xxxxxx Made, in its sole discretion, projects
that at least 5,000 Carbite Inserts will be purchased during that
year.
E. Paragraph 5. "Confidential Information": Paragraph 5 remains in its
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entirety.
F. Remaining Paragraphs: All remaining paragraphs, including Paragraphs 6
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through 10 of the Original Agreement remain in their entirety.
In witness whereof, the Parties have by their duly authorized representatives
executed this Agreement as of March 04,1997.
XXXXXX MADE GOLF COMPANY, INC.
Xxxx Xxxx
Vice President Industrial
CARBITE GOLF COMPANY
Xxxxxxx X. Xxxxxxxxxxxx President
Original Xxxxxx Made Agreement
AGREEMENT
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This Agreement is between Xxxxxx Made Golf Company, a Delaware corporation,
located and doing business at 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000
(hereinafter "Xxxxxx Made") and Carbite Golf Co., a California corporation,
located and doing business at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000 (hereinafter "Carbite") and is effective as of January 1, 1995 ("Effective
Date")
WHEREAS, Carbite represents it has developed and owns certain technology
relating to bronze high friction inserts (hereinafter "Carbite Inserts") for use
in connection with golf clubs and methods for manufacturing the same, which
technology includes the U.S. and foreign patents, listed on Exhibit A attached,
as well as trade secret and confidential information and know-how (hereinafter
collectively referred to as the "Carbite Technology/")
WHEREAS, Xxxxxx Made is a leading manufacturer of golf clubs and golf related
equipment and has the ability to market and advertise golf clubs on a national
and international basis;
WHEREAS, Carbite represents that it is capable of manufacturing and supplying
Carbite Inserts under the Carbite Technology to Xxxxxx Made for use in Xxxxxx
Made's golf clubs;
WHEREAS, Xxxxxx Made desires to have the exclusive right to use and sell golf
clubs having Carbite Inserts made with the Carbite technology under the Xxxxxx
Made brand names, and Carbite is willing to grant such an exclusive right to
Xxxxxx Made, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein and
other good and valuable consideration, the sufficiency of which is acknowledged
by the parties, Xxxxxx Made and Carbite agree as follows:
1. Grant of License
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a. Carbite hereby grants Xxxxxx Made an exclusive license to use Carbite
Inserts manufactured in accordance with the Carbite Technology in the
manufacture, marketing and sale of certain golf clubs, commonly referred to as
irons, for a period of two years from the Effective Date of this Agreement,
provided that, Carbite, and its licensee Bullet Golf Company, shall have the
ability to market golf clubs, including irons, containing Carbite Inserts solely
under Carbite's or Bullet's own names during the period of this Agreement
b. At the end of said two year period, Xxxxxx Made and Carbite shall negotiate,
in good faith, to extend the period of exclusivity for an additional three
years. If Xxxxxx Made elects not to pursue further exclusivity, Xxxxxx Made will
continue to have access to the Carbite Technology and the right to sell golf
club irons containing Carbite Inserts manufactured according to the Carbite
Technology on a non-exclusive basis, until December 31, 1999.
2. Xxxxxx Made's Obligations
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x. Xxxxxx Made agrees to purchase all its requirements of Carbite Inserts from
Carbite, unless otherwise agreed upon by the parties. If Carbite refuses or is
unable to supply Xxxxxx
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Made's requirements of Carbite Inserts on a timely basis [8 weeks] at any time
during the term of this Agreement, Xxxxxx Made shall have the right to
manufacture or have manufactured by others, Carbite Inserts according to the
Carbite Technology, in order to fulfill its requirements.
x. Xxxxxx Made agrees to devote reasonable marketing and promotional
resources, including tour resources, to develop and promote its golf clubs with
Carbite Inserts
x. Xxxxxx Made will, in press releases, hangtags, advertising and
promotional literature relating to the golf club products using the Carbite
Inserts, acknowledge Carbite by a phrase, such as "Licensee of Carbite Golf".
x. Xxxxxx Made will indemnify Carbite from claims based upon defects in
Xxxxxx Made's manufacture of clubs using the Carbite Insert and the use of such
clubs by customers, as well as Xxxxxx Made's improper use of the Carbite name.
3. Carbite's Obligations
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a. Carbite agrees to provide Xxxxxx Made with all information, including
confidential and trade secret information relating to the Carbite Technology, as
well as copies of any patents covering such Technology, necessary to allow
Xxxxxx Made to develop and market its golf club products, including the Carbite
Inserts. Carbite represents that it owns the Carbite Technology and agrees to
indemnify Xxxxxx Made from any claims for patent infringement based on its use
of the Carbite Inserts.
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b. Carbite agrees to make available an officer or engineer thoroughly familiar
with the Carbite Technology to consult with Xxxxxx Made, its manufacturers,
engineers and foundry, up to 6 days per year, to achieve development of irons
containing Carbite Inserts and to address any problems encountered by Xxxxxx
Made in the development or incorporation of the Carbite Inserts into Xxxxxx
Made's golf clubs (thereafter at Carbite's published consulting rate) . Xxxxxx
Made shall bear all expenses for travel and lodging for such person or persons
during the period of time required to assist in development of Xxxxxx Made clubs
including the Carbite Insert.
c. Carbite agrees to supply Xxxxxx Made with all its requirements for Carbite
Inserts for golf clubs, manufactured according to the Carbite Technology, on a
timely basis and according to a schedule agreed upon by the parties. If Xxxxxx
Made becomes aware of any problems or defects in connection with the Carbite
Inserts, Carbite agrees to promptly use its best efforts to correct such
problems or defects arising from inserts which are non-conforming to Carbite's
insert specification.
4. Price.
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a. Carbite shall supply Carbite Inserts to Xxxxxx Made according to the price
schedule set forth in Exhibit B, as mutually agreed upon by the parties.
5. Confidential Information
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a. It is understood by the parties that, in the course of developing golf
clubs for Xxxxxx Made containing the Carbite
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Inserts, the parties may provide the other with certain Confidential Information
relating to engineering, research, marketing and/or business information. Each
party agrees to keep any such Confidential Information, disclosed by the other,
in confidence and to take reasonable steps to insure that it is not used,
disclosed, communicated or made available to any third party, other than as
necessary to develop, manufacture, or market the golf clubs with Carbite Inserts
to be sold by Xxxxxx Made. The parties agree that Confidential Information shall
not include any information that 15: a) publicly available as of the date of
this agreement; b) becomes publicly available other than as a result of
unauthorized disclosure by a party; c) was lawfully known to a party prior to
disclosure hereunder; d) was lawfully obtained from a third party without breach
of any confidentiality obligation by such third party; or e) is independently
developed by either party.
6. Fees.
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a. As consideration for this Agreement and License, Xxxxxx Made agrees to pay
Carbite a fee of $5,000 as follows:
$2,500 having been already paid prior to execution of this agreement
by all parties; and, $2,500 on April 1, 1995.
7. Term.
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a. This Agreement shall commence on the Effective Date set forth above, and
shall continue in full force and effect until December 31, 1999. At the end of
this period, Xxxxxx Made and Carbite will negotiate in good faith to continue
the Agreement on
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a non-exclusive basis, for an additional 3-year period, unless the parties agree
otherwise.
8. Severability.
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(a) If any provision of this Agreement is determined to be invalid
or unenforceable, the remaining provisions shall not be
affected thereby and shall be binding upon the parties.
9. Entire Agreement Amendment.
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a. This Agreement constitutes the entire Agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior written and
oral proposals, communications, letters or understandings regarding the
same. This Agreement may be modified only by a writing signed by the duly
authorized representative of each of the parties hereto.
10. Transferability; Successors
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a. This Agreement shall not be assigned or transferred by either
party apart from a sale of substantially all of the assets of its business
without the consent of the other party, which shall not be unreasonably
withheld, provided that, Xxxxxx Made may allow its parents and/or subsidiary
corporations to assume its responsibilities and obligations hereunder
b. This Agreement shall be binding upon the parties and their
successors, assigns, heirs, subsidiaries and licensees to the extent permitted
under paragraph 10(a) above.
9.
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IN WITNESS WHEREOF, the parties have by their duly authorized
representatives executed this Agreement as of the effective date.
Xxxxxx Made Golf Company, Inc.
By
Its
Carbite Golf Co.
By:
Its:
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