EXHIBIT 10.58
THIRD AMENDMENT TO
OPEN-ENDED PRODUCT AGREEMENT
This Third Amendment to Open-Ended Product Agreement (the "Second
Amendment") is entered into this 30th day of June, 2001 by and between Xxxx Xxxx
Financial Corporation a Nevada Corporation or its assigns (collectively,
"WCFC"), and Xxxx X. Xxxx a married individual, or assigns ("Xxxx"),
(collectively, the "Parties").
Recitals
A. WCFC and Xxxx enter into an Open-Ended Product Agreement dated March 20, 1998
(the "Product Agreement") pursuant to which Xxxx granted WCFC a non-exclusive
worldwide license to all intellectual property described in Exhibit A of the
Product Agreement.
B. WCFC and Xxxx entered into an Amendment to Open-Ended Product Agreement dated
May 7, 1999 (the "First Amendment") pursuant to which Xxxx amended his royalty
rate of ten percent (10%) of all gross sales for Products licensed under the
Product Agreement to a yearly royalty that is the greater of $5,000,000 or five
percent (5%) of gross sales revenue received from sales of such Products. WCFC
and Xxxx subsequently entered into a Second Amendment to Open-Ended Product
Agreement dated December 15, 2000, pursuant to which Xxxx again amended his
royalty rate to 3.5% of gross sales revenue.
X. Xxxx is a substantial shareholder in WCFC and as such, has a vested interest
in the continuing profitability of WCFC. WCFC and xxxx desire to again amend
Xxxx'x royalty rate under the Product Agreement as amended.
Agreement
In consideration of the foregoing recitals and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows:
1. Amendments
1.1 Royalties. The Parties agree that the first paragraph of Section
5 of the Product Agreement, as amended, shall be deleted in its entirety and
replaced with the following:
WCFC shall pay Xxxx a royalty of up to five percent (5%) of gross sales
revenue received from sales of products listed hereunder minus refunds,
returns and sales taxes collected, if any ("Gross Sales Revenue");
provided, the company is profitable at the end of each calendar quarter in
which Gross Sales Revenue is received. No royalties shall be due on Product
given away for free. Royalties shall be paid quarterly on or before May 1,
August 1, November 1, and February 1 for all Gross Sales Revenue received
in the quarter ending the previous March 31, June 30, September 30, and
December 31, respectively. Xxxx shall be entitled to take draws against
royalties up to a maximum of $500,000.00 per quarter.
1.2 Investments Assigned to Xxxx in Lieu of Unpaid Royalties. WCFC
and Xxxx agree that certain investments made by WCFC or any of its subsidiary
entities may be assigned to Xxxx in lieu of payment of royalties; provide,
however, that such investments only
Third Amendment to Open-Ended Product Agreement Page 1 of 2
may be assigned in lieu of royalties due hereunder if both Xxxx and WCFC agree
upon such assignment. The Parties further agree that is such an assignment of
investments takes place, the initial book value of the investments assigned, as
reflected on WCFC's books, shall be used to determine how much should be applied
against any royalties otherwise due Xxxx under the Product Agreement, as
amended.
1.3 Modification of Exhibit A. The Parties agree that Exhibit A to
the Product Agreement is hereby deleted and shall be replaced in its entirety
with a new exhibit substantially in the form attached hereto and incorporated
herein as Exhibit A.
2. Effective Date. The effective date of this Amendment shall be July 1,
2001.
3. Capitalized Terms. Any capitalized terms not defined herein shall have
the same meaning ascribed to such terms in the Product Agreement.
4. Couterparts. This Amendment and any other document or instrument
related to the Product Agreement to be executed by the Parties may be executed
in counterparts, each of which shall constitute an original.
5. Remaining Terms Unchanged. All other terms of the Product Agreement,
as amended, remain binding and in effect.
EXECUTED as of the date first written above.
Xxxx Xxxx Financial Financial Corporation,
a Washington corporation
/s/ Xxxxxxx X. Xxxxxxx, CFO
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By: Xxxxxxx X. Xxxxxxx
Its: Chief Financial Officer
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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