AMENDMENT TO CONSUMER BATTERY LICENSE AGREEMENT
Exhibit 10.27
AMENDMENT TO CONSUMER BATTERY LICENSE AGREEMENT
This Amendment to the Consumer Battery License Agreement of August 8, 2006 (the “Amendment to CBLA”) effective as of May 22, 2009 (“Amendment Effective Date”), by and between Ovonic Battery Company, Inc. a corporation of the state of Delaware, the United States of America, 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx 00000 (‘OBC”) and TMK Power Industries Ltd, a Chinese company, having a place of business at San-Jun Industrial Park, Hua-Wang Road, Xx-Xxxx, Long-Hua Town, Xxxxxxxx 000000, Xxxxxxx Xxxxxxxx of China (“TMK”).
Recitals
WHEREAS, TMK and Ovonic entered into the Consumer Battery License Agreement (“CBLA”) pursuant to which, among other things, TMK was obligated (i) make the up-front license fee payments as set forth in Appendix II attached to the CBLA, and (ii) pay to OBC running royalties on, among other things, its worldwide sales of Licensed Consumer Batteries;
WHEREAS, as a result of TMK’s delinquent payment to OBC of both up-front license fees and running royalty payments, OBC and TMK have had discussions to amicably resolve their differences and relist TMK on Ovonic’s website; and
WHEREAS, pursuant to their discussions, OBC and TMK desire to restructure Appendix II to the CBLA in the manner and based upon the consideration set forth herein.
NOW, THEREFORE, based on the premises and mutual promises and obligations set forth herein, the parties hereto, hereby agree as follows:
1. Definitions
1.1 Capitalized Terms. As used herein, unless specifically noted, all capitalized terms shall have the meanings set forth in the CBLA.
2. New Terms and Conditions
2.1 New Terms. Appendix II is hereby replaced in its entirety by the following Amended Appendix II. Pursuant to this Amended Appendix II, effective upon OBC’s receipt of the initial twenty thousand US dollar (US$20,000) payment, the
running royalty to be paid by TMK on the Net Selling Price of its Licensed Consumer Batteries shall be 2.5% .
Amended Appendix II
| Cumulative | Running | ||
| Payment | Up-front | Up-front | Royalty |
| Schedule | Payment | Payment | Rate |
| May, 2009 | US$20K | US$20K | 2.5% |
| August, 2009 | US$40K | US$60K | 2.5% |
| December, 2009 | US$40K | US$100K | 2.5% |
| February 1, 2010*(see Section 2.3) | 0 | US$100K | 2.0% |
Future Royalty Reductions and Up-front Fees
| Gross Sales reach $30M/Yr | US$200K | US$300K | 1.5% |
| Gross Sales reach $50M/Yr | US$500K | US$800K | 0.50% |
| Gross Sales reach $75M/Yr | US$1M | US$1.8M | 0.50% |
| Gross Sales reach $150M/Yr | US$1.5M | US$3.3M | 0.50% |
| Gross Sales reach $250M/Yr | US$1.7M | US$5M | 0.50% |
2.2 Reinstatement. Immediately upon receipt by Ovonic of the first up-front license fee payment of twenty thousand US dollars (US$20,000), Ovonic shall reinstate TMK as a licensee in good-standing and to reflect that status, Ovonic will reinstate TMK’s name on its internet web page of Ovonic licensees.
2.3 Further Royalty Reduction. In the event that TMK timely makes two consecutive semiannual royalty payments to Ovonic on or before February 1, 2010, Ovonic shall further reduce TMK’s running royalty rate to two percent (2%) without TMK’s payment of any additional up-front fee.
2.4 Other Details.
| a) |
Retroactive to November 1, 2008, royalties based on TMK’s worldwide sales of Licensed Consumer Batteries shall be reported and paid semiannually: | ||
| i) |
Royalties for November 1, 2008 through April 30, 2009 shall be paid by June 30, 2009; and | ||
| ii) |
Royalties for May 1, 2009 through October 31, 2009 shall be paid by December 31, 2009. | ||
| b) |
The CBLA and this Amendment to CBLA shall cover TMK’s worldwide sales of all NIMH batteries for Consumer Applications. Specifically, all | ||
|
TMK nickel metal hydride (Ni-MH) products are royalty bearing, including sales in the Peoples Republic of China. | ||
| c) |
The royalty rates to be paid by TMK to Ovonic on TMK’s worldwide sales of Licensed Bicycle Batteries are not effected by the reductions set forth in Appendix II above. Those royalty rates shall remain fixed at three and one-half percent (3.5%). |
2.5 Integration Clause. This Amendment to CBLA embodies the entire understanding of the parties with respect to the specifically stated subject matter set forth herein and supersedes the terms in all other prior agreements with respect to such specifically stated subject matter; provided, however that related terms and understandings set forth in the CBLA remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment CBLA to be executed by their duly authorized representatives.
| TMK POWER INDUSTRIES LTD. | OVONIC BATTERY COMPANY, INC. |
| BY:________________________ |
BY:__________________________ |
| Xxxxxxx X. Xxxxxxxx | |
| TITLE:_____________________ | TITLE: President |
| DATE: _____________________ | DATE:________________________ |
