Exhibit 10.9
ROYALTY AGREEMENT
This Royalty Agreement ("Agreement") is dated as of March 15, 1999
between PC DYNAMICS CORPORATION, a Texas corporation ("PC Dynamics"), and PC
DYNAMICS OF TEXAS, INC., a Texas Corporation ("BUYER").
WHEREAS, PC DYNAMICS and BUYER have entered into that Certain
Agreement dated the date hereof (the "Purchase Agreement") with respect to
the sale and purchase of certain of PC Dynamics' assets; and
WHEREAS, as partial consideration for the transactions contemplated by
she Purchase Agreement. BUYER has agreed to pay PC DYNAMICS a royalty on the
sale of Products (as defined herein).
NOW, THEREFORE, far and in consideration of the obligations and
payments recited herein, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed as follows:
1. Royalty Payments. BUYER hereby agrees to pay to PC Dynamics an
amount equal to 8.5% of she Net Invoice Value (as defined below) of all
Products (as hereinafter defined) sold by BUYER or any affiliate (as defined
in Rule l2b-2 under the Securities Exchange Act of 1934) of BUYER from March
26, 1999 (products sold by PC Dynamics On or after March 16, 1999 through
the Closing Date (as defined in the Purchase Agreement) shall be considered
sales by Buyer) trough October 31, 2000, such payments to be made on or
prior to the end of she first week of the third month following such month
of sale; provided that BUYER shall not be required to pay PC Dynamics in
excess of $500,000 in aggregate royalty payments pursuant in this Section 1.
BUYER further agrees to pay interest on any overdue royalty payments
pursuant to this Section 1 at a rate per annum equal to the greater of: (i)
the Prime Rate (as defined below) from time to time in effect plus 5% and
(ii) 15%. All royalty and interest payments pursuant to this Section 1 are
payable in lawful money of the United States of America and in immediately
available funds to PC Dynamics as 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx.
Xxxxxxxx 00000. In the event BUYER fail to collect the Net Invoice Value of
any Product within 120 days after the sale of such Product, then upon
written notice from BUYER to PC DYNAMICS, PC DYNAMICS agrees to reimburse
BUYER for 8.5% of such Net Invoice Value provided that PC DYNAMICS
previously received royalty payments pursuant to this Section 1 based on
such Net Invoice Value. Notwithstanding anything in this Section 1 to the
contrary, in the event that BUYER purchases the Facility (as defined in the
Agreement) in accordance with the provisions of the Lease (as defined in the
Agreement), whether before or after [the end of The eighteenth month
following the month of the Closing Date], then BUYER hereby agrees (in lieu
of the foregoing) to pay to PC DYNAMICS an amount equal to the difference
between (i) $500,000 and (ii) the aggregate royalty payments paid to PC
DYNAMICS prior to the date of such purchase, such amount to be paid in
monthly installments of $25,000 on the first day of each calendar month
until paid in full, commencing with the first day of the first month
following such purchase.
