Exhibit 10.5
E L L E N T R A C Y
As of September 8, 1998
Gargoyles, Inc.
0000 Xxxxx 000xx Xxxxxx
Xxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxx Xxxxxxxxxxx
Xx. Xxxxxxx X. Xxxxx
Ladies and Gentlemen:
Reference is made to that certain License Agreement between Xxxxx Xxxxx,
Inc. ("Xxxxx Xxxxx") and Gargoyles Acquisition Corporation II, now known as
Private Eyes Sunglass Corporation ("Licensee"), a wholly-owned subsidiary of
Gargoyles, Inc. ("Gargoyles"), dated as of May, 1997 (the "Agreement"). Defined
terms used herein shall have the same meanings as in the Agreement.
This shall confirm that, by mutual agreement of Xxxxx Xxxxx and Licensee,
the Agreement shall terminate as of September 8, 1998 (the "Termination Date").
All accrued but unpaid Guaranteed Minimum Royalties in the amount of $214,375.00
shall be paid to Xxxxx Xxxxx by delivery concurrently with the execution hereof
of (i) a Promissory Note made by Licensee, and (ii) a Guaranty, made by
Gargoyles, guaranteeing Licensee's obligations under such Promissory Note. On
the Termination Date, all rights granted to Licensee pursuant to the Agreement
shall revert to Xxxxx Xxxxx. Pursuant to Section 20(a) of the Agreement,
Licensee agrees that, following the Termination Date, Licensee shall cease all
manufacturing, by itself or by any third party with whom it has contracted, of
any Licensed Articles, other than Licensed Articles which are part of the August
line which are to be delivered in October and November of 1998, and shall
destroy or efface any items used to reproduce Licensed Properties. Furthermore,
upon countersignature of this letter and delivery thereof to Xxxxx Xxxxx,
Licensee will deliver to Xxxxx Xxxxx (a) any and all artwork used or created by
it in connection with the Agreement, and (b) if Licensee has any unsold Licensed
Articles in inventory on the Termination Date, a complete and accurate statement
of the kinds and numbers of such unsold Licensed Articles. Provided that
Licensee has delivered to Xxxxx Xxxxx the Promissory Note referred to above for
an amount equal to the Owed Royalties and Gargoyles has delivered the Guaranty
referred to above, Licensee may continue to sell such unsold inventory for a
limited period of 180 days following the Termination Date (the "Sell-Off
Period") and shall pay Xxxxx Xxxxx Actual Royalties with respect to any such
sales. If any such inventory remains unsold at the end of the Sell-Off Period,
such Licensed Articles either shall be destroyed or all Licensed Properties
removed or obliterated therefrom. In no event may Licensee sell or distribute
any Licensed Articles following the expiration of the Sell-Off Period.
E L L E N T R A C Y
Gargoyles, Inc.
As of September 8, 1998
Page 2
Xxxxx Xxxxx and Licensee hereby each waive all defaults (if any) occurring
prior to the Termination Date and hereby release each other and their respective
affiliates, successors, assigns, directors, officers and agents from any and all
liabilities for payments of royalties and all other obligations of the parties
arising under the Agreement prior to the Termination Date, other than (i) those
obligations of the parties set forth in this letter and in the Promissory Note
and Guaranty referred to above, and (ii) Licensee's obligation to pay Xxxxx
Xxxxx Actual Royalties with respect to sales of Licensed Articles during the
Sell-Off Period.
This letter agreement contains the entire understanding of the parties
regarding the termination of the Agreement and supersedes all prior agreements
and understandings of the parties relating thereto.
Please acknowledge your agreement with the foregoing by signing, in the
space below, the enclosed two copies of this letter and returning one to the
undersigned.
Very truly yours,
XXXXX XXXXX, INC.
By: /s/ Xxxxxx Xxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxx
AGREED TO:
GARGOYLES, INC., on behalf of itself and its wholly-owned subsidiary,
GARGOYLES ACQUISITION CORPORATION II, now known as
Private Eyes Sunglass Corporation
By: /s/ Xxx Xxxxxxxxxxx
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Xxx Xxxxxxxxxxx, CEO & CFO
