SUBLICENSE AGREEMENT
THIS AGREEMENT made and entered into this 13th day of June, 2003, by
and between ENTERTAINMENT MANAGEMENT SERVICES, INC., a New York corporation with
its principal office at 000-000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 or designee
("Licensor") and STONE PARK ENTERTAINMENT, a Illinois corporation with its
principal place of business at 0000 Xxxx Xxxxxx, Xxxxx Xxxx, Xxxx Xxxxxx,
Xxxxxxxx ("Licensee").
W I T N E S S E T H:
WHEREAS, LICENSOR is the exclusive licensee of the SCORES trademarks
and related intellectual property listed on Exhibit A (the "Scores Trademarks")
and has the right to sublicense the same on the terms set forth herein; and
WHEREAS, LICENSEE is the owner and operator of an adult-entertainment
night club to be located at 0000 Xxxx Xxxxxx, Xxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxx
(the "Location") which will conduct business under the name "Scores"; and
WHEREAS, LICENSEE will hereby receive the right and license to use the
Scores Trademarks in connection with the operation of the Location, and the sale
of certain merchandise, for the Term (as defined below) (the "Business");
NOW, THEREFORE, for and in consideration of the promises, covenants,
and agreements contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged by both parties, the parties agree as
follows:
1. LICENSE GRANT.
(a) Business. Licensor hereby grants to Licensee and Licensee accepts,
a non-exclusive (except as provided in subparagraph (c) below) license
to use the Scores Trademarks during the Term in connection with the
Business subject to the terms and conditions of this License Agreement.
(b) Merchandising. Licensor hereby grants to Licensee, on the terms and
conditions set forth herein, a non-exclusive license during the Term to
use the Scores Trademarks in connection with the retail sale of
commercial merchandise, including tee-shirts, sweatshirts, sweat pants,
jackets, baseball hats, key rings, and other similar merchandise, all
to be sold at and out of the Business including the right to sell any
merchandise utilizing the Scores Trademarks relative to the Business
over the Internet on a site maintained by the Business and by mail
order, catalog or at any other location or in any other channel
specific to the Business, provided further, that Licensee will purchase
all merchandise from Licensor at cost plus a 25% markup.
(c) Exclusivity in Xxxx County. Subject to the approval of additional
locations by Licensor which shall not be unreasonably withheld,
Licensee will have during the term hereof the exclusive right to open
additional locations within Xxxx County, and specifically within a
twenty five (25) mile radius of 0000 Xxxx Xxxxxx, Xxxxx Xxxx, Xxxx
Xxxxxx, Xxxxxxxx. Additional locations will be required to enter into
an agreement with Licensor substantially similar to this Agreement with
respect to the terms and conditions hereof related to the license
granted and royalties and general terms and conditions, subject to the
final agreement between the parties hereto.
2. ROYALTIES:
(a) Amount. Licensor agrees that during the first sixty (60) days of
operation of the business the Licensee will not be required to pay a
license fee to the Licensor. On the sixty first (61st) day of operation
and for the remainder of the term hereof the Licensee agrees to pay
$2,500.00 per week or four and 99/100 percent (4.99%) of the Gross
Revenues of Licensee earned at the Location whichever is greater. Gross
Revenues means 100% of Licensee's receipts received from the Business'
operation, less $25,000.00 per week, less all actual local sales taxes
paid, amounts specifically designated by customers on credit card
receipts as "tips for service," credit card discount fees,
complementary food and beverage sales. Gross Revenues include all
revenues from operation of the Business including, but not limited to,
Liquor Revenue, Beer Revenue, Champagne Revenue, Shot Girl House Fees,
Wine Revenue Non-Alcoholic Beverage Revenue, Food Revenue, Party
Revenue, Admission Fees Club, Admission Fees Private Rooms, Room
Rental, Humidor Revenue, Cigar Revenue, Cigarette Revenue, Candy
Revenue, Novelty Revenue, Valet Revenue, Coat Check Revenue, Concession
- Cigarette, Concession - Bathroom, Concession - Massage, Concession -
Tarot, Dressing Room Rent, House Fees Entertainers, House Fees DJ's,
House Fees Floor Manager, House Fees Service Personnel, Feature -
Calendar, Feature - Novelty, Feature - Video, Feature - Cigar and
Internet Revenue and will also include the fee charged to customers for
the purchase of Diamond Dollars (R) and the fee paid by entertainers
for cashing in Diamond Dollars (R).
(b) Royalty Reports. Licensee shall furnish Licensor with written
reports describing in detail all sales relative to the Business. The
reports shall be prepared and sent to Licensor not later than seven (7)
days following the 15"' and last day of each month. Reports will be
adjusted on a quarterly basis (if necessary), not later than ten (10)
days after each calendar quarter period ending in March, June,
September and December of each year.
(c) Payment. Payment of royalties due under this Paragraph shall be
made within ten (10) days of the issuance of each royalty report set
forth above.
3. APPROVAL BY LICENSOR. In order to preserve the value, goodwill and
reputation of the Scores Trademarks, Licensee and Licensor shall
consult each other during the Term hereof with regard to any marketing,
advertising or promotional activities pursuant to the Business and
Licensor. will have the right to approve all advertisements,
promotional, marketing and other similar materials, including but not
limited to the images and format of Diamond Dollars (R) for the
Location. Furthermore, prior to releasing or using any promotional,
marketing, advertising or other similar materials which have not been
approved by Licensor in the twenty-four (24) month period preceding the
proposed use or in the event Licensee intends to utilize any such
materials which have been used in the past 24 months but intends to do
so in a media not used by Licensor in the 24-month period preceding the
proposed use, Licensee shall first obtain the prior written consent of
Licensor for such use, which shall not be unreasonable withheld. In
connection with obtaining such consent, Licensee shall send copies of
all materials and media for the proposed use so that Licensor can
thoroughly evaluate the proposed use. Licensor agrees to inform the
Licensee of its decision regarding any approvals within twenty four
(24) hours of receiving all materials and media for approval.
4. COMPLIANCE WITH APPLICABLE LAWS AND STANDARDS. Licensee is
responsible for the compliance with all applicable laws and safety
standards regarding the operation of the Business, the Location, other
licensed locations and the use of the Scores Trademarks herein.
Licensor's approval of submissions pursuant to Paragraph 3 above in no
way affects, alters, diminishes or waives Licensee's obligations
hereunder or under Licensee's obligation to indemnify Licensor as set
forth herein below.
5. BOOKS AND RECORDS. Licensee shall, for a minimum of three (3) years
from their rendition, keep full and accurate books of account, records,
data and memoranda representing Licensee's sales. Licensee further
gives Licensor the right, at its own cost and expense, to examine said
books and records on reasonable notice, such examination to be
conducted in such a manner as to not unreasonably interfere with the
business of Licensee. Licensee shall reasonably cooperate with Licensor
in the event the owner of the Scores Trademarks requests an audit.
Licensor or its representatives shall not disclose to any other person,
firm, or corporation any information acquired as a result of any
examination, provided, however, that nothing contained herein shall be
construed to prevent Licensor and/or its duly authorized
representatives from using or disclosing said information in any court,
arbitration, or other action instituted to enforce the rights of
Licensor hereunder.
6. INTELLECTUAL PROPERTY RIGHTS.
(a) All copyrights, trademarks and/or patents in the Scores Trademarks
and related intellectual property belong solely to Licensor and are
within the scope of the license granted herein. Upon termination of
this Agreement all intellectual property rights and rights granted
herein in the Scores Trademarks immediately revert to Licensor or the
owner of the Scores Trademarks and Licensee agrees to return to
Licensor all original artwork, models, samples, prototypes, renderings
and drawings incorporating the Scores Trademarks. All use by Licensee
of the intellectual property rights of the Scores Trademarks shall
inure to the sole benefit of Licensor and the owner of the Scores
Trademarks. Licensee shall execute any and all documents necessary to
confirm said reversions of rights and hereby appoints Licensor its
attorney-in-fact to execute any such documents in the event Licensee is
unwilling or unable to do so. Licensee acknowledges the exclusive
ownership of all intellectual property rights in and to the Scores
Trademarks by the owner of the Scores Trademarks and will not take any
action to interfere with or challenge said ownership, including but not
limited to registering or attempting to register the same or similar
marks or properties anywhere in the World, nor commence or participate
in cancellation or opposition proceedings.
7. WARRANTY.
(a) Licensor hereby warrants that, to the best of its knowledge, the
granting of the license hereunder or the subsequent commercial
exploitation of the license does not violate the intellectual property
or contract rights of any third party. Licensor further warrants that
it his not intentionally violated the rights of any third party in
granting Licensee this license.
(b) Licensee hereby warrants that any goods sold by it bearing the
Scores Trademarks and each component thereof shall be of good quality
and free of defects in design, materials, workmanship and shall comply
with all applicable laws and safety standards.
8. OFFENSIVE LITIGATION. Licensee agrees to give Licensor prompt
notification of any third party's actions which would constitute an
infringement of the rights granted to it by this Agreement. Licensor
shall prosecute, at its own discretion, infringement actions against
any third party infringers and any recoveries obtained therein shall
belong exclusively to Licensor. Licensee shall, at Licensor's expense,
cooperate in all respects with Licensor's prosecution of said suits,
including but not limited to being named as a party in any such suit,
producing documents, appearing as witnesses, etc.
9. INDEMNIFICATION.
(a) Licensor agrees to indemnify and hold harmless Licensee from and
against any and all damage, loss, and expense incurred as a result of
the breach of any of Licensor's warranties herein. This indemnification
shall become operative only after a final judgment, order or decree is
issued which contains a finding that Licensor intentionally infringed
upon the rights of a third party. Any claims made against Licensee
which would result in Licensor becoming obligated to indemnify Licensee
hereunder shall not permit Licensee to withhold any amounts due
Licensor hereunder.
(b) Licensee agrees to indemnify, defend, and hold harmless Licensor,
its agents and employees from and against any and all loss and expense
arising out of any claims of personal injury, product liability,
wrongful death, negligence, strict liability or other similar action,
in addition to the breach of any of its warranties hereunder or the
violation of any applicable law or safety standard based on the use of
the Scores Trademarks by or on behalf of Licensee and/or its
subsidiary, affiliated, controlled company. Licensee shall maintain, at
its sole cost and expense, premises liability, liquor liability,
xxxxxxx'x compensation (in the amount required by the State of
Illinois), plate glass insurance (as per Licensee's lease), commercial
liability coverage and other customary insurance. The premises,
commercial, and liquor policies must provide coverage of at least
$3,000,000/$3,000,000, naming Licensor as an additional insured, and
providing that such policy cannot be canceled without thirty (30) days
prior written notice to Licensor. In the event any claim is made
against Licensor in excess of the limits of Licensee's insurance set
forth above, Licensor may, at Licensee's expense, retain counsel of its
own choosing to defend said claims. All insurance shall be primary and
not contributory. Licensee agrees to provide Licensor with a copy of
the insurance declarations and/or certificates within 20 days following
the date of this Agreement.
10. TERMINATION.
(a) In case either party fails to perform under or commits or allows to
be committed a breach of any of the several covenants and conditions
herein contained, the other party shall notify such party in writing of
such failure or default and such party shall then have the right to
remedy such failure or default within thirty (30) days. If the default
has not been cured within said thirty (3 0) days of notice to the
defaulting party, then the aggrieved party may terminate this Agreement
by giving five (5) days advance notice of termination in writing to the
defaulting party. If Licensor shall send notice of default to Licensee
based on a failure to pay royalties, then Licensee shall cure such
default within ten (10) days of notice.
(b) In the event that Xxxxxx X. XxXxxx ceases his association with
Licensee, or in the event that his ownership of the equity of Licensee
becomes less than fifty percent (50%) of such equity ("XxXxxx Event"),
then Licensee shall give prompt notice of the XxXxxx Event to
16. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement, nor any of the rights,
interests or obligations hereunder shall be assigned by Licensee
without the prior written consent of Licensor, and any attempts to do
so without the consent of Licensor shall be void and of no effect.
17. ENTIRE AGREEMENT. This writing constitutes the entire agreement and
understanding between the parties. No other oral or written agreements
or representations exist or are being relied upon by either party, all
being merged herein. Any modifications or additions hereto must be made
in writing and signed by both parties.
18. MISCELLANEOUS.
(a) The paragraph headings used herein are for reference purposes only
and do not effect the meaning or interpretation of this Agreement. If
any provisions of this Agreement are for any reason declared to be
invalid or illegal, the remaining provisions shall not be affected
thereby.
(b)The failure of either party to enforce any or all of its rights
hereunder as they accrue shall not be deemed a waiver of those rights,
all of which are expressly reserved.
(c)This Agreement may be executed in more than one counterpart, all of
which shall be deemed to be originals.
19. SECURITY INTEREST.
(a) In order to induce Licensor to enter into this Agreement and to
secure the complete and timely performance of Licensee's obligations
hereunder, Licensee hereby grants to Licensor a security interest in
the license granted under this Agreement as well as Licensee's
receivables in connection therewith. In the event Licensee defaults
under this license and Agreement, Licensor may enforce against Licensee
all the rights and remedies of a secured creditor upon default under
all applicable laws. In the event Licensee files for bankruptcy under
the U.S. Bankruptcy laws, Licensor may enforce all rights and remedies
of a secured creditor under the U.S. Bankruptcy Code.
(b) Licensee agrees to execute any and all documents necessary to
perfect Licensor's security interest in this license including, but not
limited to, Financing Statement Form UCC-1 and any other security
agreements and financing statements evidencing said security interests
in such form as may be recorded and perfected according to the laws of
the State of New York and the U.S. Patent and Trademark Office.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Seven (7)
pages as of the date first written above.
ENTERTAINMENT MANAGEMENT SYSTEMS, INC.
By:
Title:
STONE PARK ENTERTAINMENT, Inc.
By:
Title:
