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Exhibit: 10.13FD
REVENUE PARTICIPATION AGREEMENT
This Agreement is made as of August 27, 1998 between FUNDEX GAMES,
LTD., a Nevada corporation with an address of 0000 Xxxxxxxxx Xxx, Xxxxxxxxxxxx,
Xxxxxxx 00000 ("Borrower"), and LIBERTY BIDCO INVESTMENT CORPORATION, a Michigan
corporation, with an address of 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000 ("BIDCO").
RECITALS
A. BIDCO has loaned Borrower an amount of One Million Dollars
($1,000,000.00). Borrower has executed a Business Loan Note
with Covenants (the "Note"), a Continuing Security Agreement
and other documents relating thereto (the Note, Continuing
Security Agreement and all other documents related thereto are
referred to collectively as the "Loan Documents"); and
B. As additional consideration for BIDCO making the loan to
Borrower, Borrower has agreed to pay BIDCO revenue
participation fees (the "Revenue Participation Fees") as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:
1. Term. The term of this Agreement shall commence immediately
and shall terminate upon the later of payment in full of sums due under the Loan
Documents or five (5) years from the date hereof.
2. Revenue Participation Fees.
a. During the term hereof Borrower agrees to pay to
BIDCO Revenue Participation Fees equal to the greater
of the Monthly Minimum Fee for the indicated period
set forth below or one and twenty-five one-hundredths
percent (1.25%) of the Gross Revenues of (i) Borrower
and (ii) any other entity with which Borrower or its
management, directly or indirectly, own or control an
equity interest which is in substantially the same
business to Borrower (collectively, the Revenue
Entities):
Calendar Year Monthly Minimum Fee
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1998 $ 4,000.00
1999 5,500.00
2000 7,000.00
2001 8,500.00
2002 10,000.00
2003 11,500.00
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b. The term "Gross Revenues" shall mean all revenues
of any type received by the Revenue Entities directly
or indirectly resulting from operations of its
businesses, whether payment is received in cash,
merchandise, services, income or credit minus
returns, allowances, trade discounts and cash
discounts. No other deductions, offsets or credits
may be made from Gross Revenues for purposes of
calculating the Revenue Participation Fee due
hereunder.
c. The Revenue Participation Fees shall be paid
monthly on or before the fifteenth of the following
month during the term hereof. In the event payment of
the Revenue Participation Fees are not received by
BIDCO on or before the date due, interest shall
accrue on the late payment at twelve percent (12%)
per annum until the Revenue Participation Fees due
and accrued interest are paid in full. In the event
payment of the Revenue Participation Fees are not
received by BIDCO within thirty (30) days after the
date due, interest shall then begin to accrue on the
late payment at the rate of eighteen percent (18%)
per annum until the Revenue Participation Fees due
and accrued interest are paid in full.
d. Upon receipt of the annual audited financial
statements required by Section 6.4(B) of the Note, if
the Gross Revenues upon which the Revenue
Participation Fees are calculated, are shown to be
incorrect, the Borrower shall immediately pay any
shortfall, if any, in Revenue Participation Fees and
if there was an overpayment, Borrower may deduct the
overpayment from its next due payment(s) of Revenue
Participation Fees. However, in no event shall the
recalculated fees in any month be less than the
monthly minimum fees set forth in Section 2.a.
3. Termination. This Agreement may not be terminated prior to
the expiration of its term without the written agreement of the parties. If the
Note is prepaid, the remaining payments hereunder shall be due in their original
amounts for the remainder of the term.
4. Default and Remedies Upon Default. In the event Borrower is
in default of any of the Loan Documents, Borrower shall be in default of this
Agreement. If Borrower shall be in default of this Agreement, BIDCO shall have
all the remedies provided in the Loan Documents.
5. Notices. Any notice to be given hereunder by either party
to the other shall be in writing and personally delivered, sent by certified
mail, return receipt requested or by reliable overnight delivery service, to the
respective address above or to any other address required by the respective
party, or by facsimile transmission with confirmation of receipt, and notice
shall be deemed given on the earlier of: a) three (3) business days after notice
is mailed as set forth above; or, b) upon actual receipt.
6. Deemed Interest. It is not intended by the parties hereto
that the payments due under this Agreement be deemed to constitute "interest" on
the Note or other Loan
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Documents. However, in the event a Court of competent jurisdiction determines
that the Revenue Participation Fees due and payable hereunder are deemed to be
"interest" arising with respect to the obligations evidenced by the Note and
other Loan Documents, and as a direct result thereof such payments under this
Agreement results in Borrower having paid interest in excess of that permitted
by applicable law, then all excess amounts theretofore collected by BIDCO shall
be credited on the principal balance owing under the Note and remaining Loan
Documents (or, if all sums owing thereunder have been paid in full, refunded to
Borrower), and the amounts thereafter collectible under this Agreement shall
immediately be deemed reduced, without the necessity of the execution of any new
document so as to comply with applicable law and permit the recovery of the
fullest amount otherwise called for hereunder.
7. Security Interest. To secure payment of Borrower's
obligations under this Agreement, Borrower pledges and grants to BIDCO a
continuing security interest in those assets set forth in the Continuing
Security Agreement, of even date, executed by Borrower. This Agreement is also
secured by Guaranties executed by certain of Borrower's shareholders.
8. Jurisdiction. The terms and provisions of this agreement
shall be governed by Michigan law without giving effect to any choice or
conflict of law provision or rule (whether of Michigan or any other
jurisdiction) that would cause the application of the laws of any other
jurisdiction other than Michigan to apply.
Each of the parties submits to the exclusive jurisdiction of
the United States District Courts for the Southern and Eastern Districts of
Michigan, or if subject matter jurisdiction is not available in the Oakland
County Circuit Court in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined through such courts. Each party also agrees not to
bring any such action or proceeding arising out of or relating to this Agreement
in any other court. Each of the parties waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought.
IN WITNESS WHEREOF, the parties have executed this Agreement upon the
date set forth above.
WITNESS FUNDEX GAMES, LTD.
a Nevada corporation
[ILLEGIBLE] By: /s/ Xxxx X. Xxxxx, XX
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Xxxx X. Xxxxx, XX, President
LIBERTY BIDCO INVESTMENT CORPORATION,
a Michigan corporation
[ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
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