THROUGHOUT THIS AGREEMENT, WHERE INFORMATION HAS BEEN REPLACED BY AN ASTERISK
(*), THAT INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE
OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
EXHIBIT 10.73
COSMETIC LICENSE AGREEMENT
This COSMETIC LICENSE AGREEMENT ("Agreement") is made and effective as of
the 11TH DAY OF MAY, 2005 (the "effective date"), by and between XXXXX XXXXXX
ENTERTAINMENT INC., with offices at 000 Xxxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx
Xxxxx, XX 00000 ("Licensor"), and XXXXXX XXXXXXXXXX, INC., a public Delaware
corporation with offices at 0000 X.X. 00xx Xxxxxx, Xx. Xxxxxxxxxx, Xx. 00000
("Licensee") (together the "Parties").
W I T N E S S E T H :
WHEREAS, by way of a master license (the "Master License") from Ms. Xxxxx
Xxxxxx, an individual with a mailing address of c/o Ms. Xxxxx Xxxxx, 000 Xxxxx
Xxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx Xxxxx, XX 00000, to Licensor, Licensor has the
sole and exclusive rights to license the Licensed Xxxx (as hereinafter defined)
pursuant to the terms hereof; and,
WHEREAS, the Parties entered into a license agreement on May 21, 2004 in
which Licensor granted Licensee the sole and exclusive rights to manufacture and
distribute fragrances and related products bearing the Licensed Xxxx( the
"Fragrance License"); and,
WHEREAS, the Parties entered into a license agreement on January 6, 2005 in
which Licensor granted Licensee the sole and exclusive rights to manufacture and
distribute watches and other timepieces bearing the Licensed Xxxx ( the "Watch
License"); and,
WHEREAS, the Fragrance License provided Licensee with a right of first
refusal for cosmetics, skin care products and home/environmental products such
as candles, potpourri and incense; and,
WHEREAS, Licensee is familiar with the business of manufacturing, promoting
and selling cosmetics, skin care and treatment products and now Licensee desires
to obtain the exclusive right and license to use the Licensed Xxxx in the
Territory (as hereinafter defined) in connection with the manufacture,
promotion, distribution and sale of such products; and,
WHEREAS, Licensor is willing to grant the license pursuant to the terms
contained herein.
Page 1
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
The following definitions shall apply:
A. TERRITORY. All countries of the world and all duty-free-shops, ships,
airplanes, military bases and diplomatic missions of every country of the world,
including the world-wide web.
B. ARTICLES. Cosmetics, skin care and skin treatment products. The
parties acknowledge that Licensor has an agreement with Hollywood Prescription
Corp. that runs through December 31, 2005 (and may be extended for up to 2 years
through December 31, 2007), copy attached, providing that Licensor and Xxxxx
Xxxxxx cannot promote any other lip treatment (i.e., lip exfoliant, lip balm,
lip gloss or lip-enhancing serum), which agreement has be amended in accordance
with the attached modification and thus the definition of Articles is limited,
if at all, in accordance with the attached modification of the Hollywood
Prescription Corp. contract amendment.
C. LICENSED XXXX. The trademark XXXXX XXXXXX and such other trademarks as
are, from time to time, agreed to by Licensor. Licensor's current applications
in various parts of the World for the Licensed Xxxx are detailed on the annexed
Exhibit A. In Germany, Austria, Switzerland and Italy (collectively, the
"Restricted Countries") Licensor and Xxxxx Xxxxxx are precluded from endorsing,
selling or licensing any products that are not sold under the XXXXX XXXXXX
trademark. Thus, in the Restricted Countries, all Articles sold pursuant to this
Agreement must be sold under the XXXXX XXXXXX trademark and none other.
D. NET SALES. The sales price at which Licensee or any Subsidiary or
Affiliate (as hereinafter defined) bills its Non-Subsidiary or Affiliate
customers for Articles less: (i) all returns of damaged, defective or other
merchandise, uncollectible accounts, trade and cash discounts and allowances,
and taxes directly applicable to the sale of Articles (such as sales, use, value
added or similar taxes); (ii) all freight and shipping charges, insurance costs
and duties and other governmental charges paid by the Licensee to the extent
stated separately on any invoice; (iii) all receipts from the sale of
discontinued and close-out merchandise (which shall include only Articles sold
at a discount of 25% or more from the normal price charged to that specific
customer and then only to the extent that the aggregate gross sales thereof in
any contract year do not exceed fifteen percent (15%) of total gross sales);
and, (iv) all receipts from the sale of samples, displays, brochures,
gift-with-purchase and similar advertising and promotional materials and
packaging supplies. Notwithstanding the terms of sub-section (iii) above,
Licensee shall not be excused from paying royalties on the sales of the Articles
in which the Licensee
Page 2
receives a minimum gross margin of 25%, in which gross margin is defined as
sales price to the customer less Licensee's cost of goods and shipping. For
purposes of calculating royalties, any sales of Articles that are not at
arms-length shall have a royalty amount charged to them at Licensee's
arms-length cost.
E. SUBSIDIARY. Any corporation or other entity which is 100% directly or
indirectly owned by Licensee.
F. AFFILIATE. Any corporation or other entity which is at least 50% owned
by Licensee.
ARTICLE 2
GRANT OF LICENSE RIGHTS
RIGHTS GRANTED. Upon the terms and conditions of this Agreement, Licensor
hereby grants to Licensee, during the term of this Agreement, the sole and
exclusive right and license to use the Licensed Xxxx in the Territory as a
trademark in connection with the manufacture, promotion, sale and distribution
solely of the Articles and on all packaging materials, containers and
promotional materials related to the Articles and in connection with the
publicity, sales and advertising of the Articles, including in newspapers,
magazines, radio, television, cinema and similar media presently existing or
that may exist in the future. Articles may be sold through the channels
customarily used to sell similar products of comparable prestige and quality in
the ordinary course of business as described in paragraph A of Article 7 below.
Licensor shall not, during any period this Agreement is in effect, grant any
rights to any third party in connection with the Articles for the Trademark or
any other trademark which includes XXXXX XXXXXX or any derivative thereof.
Notwithstanding the foregoing, Licensee acknowledges that Licensor and
Xxxxx Xxxxxx have an agreement with Hollywood Prescription Corp. that runs
through December 31, 2005 (and may be extended for up to 2 years through
December 31, 2007) providing that Licensor and Xxxxx Xxxxxx cannot promote any
other lip treatment (i.e., lip exfoliant, lip balm, lip gloss or lip-enhancing
serum) and thus such goods are excluded from the definition of Articles in this
Agreement. Specifically, the Hollywood Prescription Corp. agreement provides
that: During the Term of the Agreement, neither... [Licensor nor Xxxxx Xxxxxx]
will authorize (and... [Licensor and Xxxxx Xxxxxx] represent and warrant that
neither... has previously authorized, which authority is still in effect) the
use of... [XXXXX XXXXXX'x] name, picture, image, likeness or voice, nor during
the Term of the Agreement will... [Xxxxx Xxxxxx] render any services, give any
testimonials or endorsements in any advertising in any medium, nor engage in any
promotional activities, in connection with: (i) any other lip treatment (i.e.
lip exfoliant, lip xxxx, lip gloss or lip-enhancing serum) or (ii) any other
product or services that in its advertising or publicity denigrates [Hollywood
Prescription Corp.] or the Products.
Page 3
ARTICLE 3
EXCLUSIVITY OF LICENSE
Other than as previously disclosed herein, Licensor will not grant any
other license effective during the term of this Agreement for the use of the
Licensed Xxxx on or in connection with the Articles in the Territory. Licensor
and Ms. Xxxxx Xxxxxx may use or grant others the right to use the Licensed Xxxx
on or in connection with goods of all other types and descriptions (with the
acknowledgement that Licensor has previously granted various licenses to
Licensee for a variety of goods in the Territory). Licensor acknowledges that
Licensee may manufacture and/or distribute in parts of the Territory goods
similar to the Articles covered by this Agreement which bear other trademarks.
Licensor further acknowledges and consents to Licensee obtaining other
additional licenses for the manufacture and/or distribution of other similar
lines of goods during the term of this Agreement. Licensee will not, during the
term of this Agreement and thereafter, attack either Licensor's and/or Xxxxx
Xxxxxx'x title in and to the Licensed Xxxx or the validity of this License.
Notwithstanding the foregoing, Licensee acknowledges that Ms. Xxxxx Xxxxxx
has entered into an agreement with the company Guess?, Inc. to act as a model
and spokesperson for their products, some of which may be Articles. Such
agreement terminates on April 30, 2005.
ARTICLE 4
TERM OF AGREEMENT
Subject to the rights of termination set forth in this Agreement, the
initial term of this Agreement shall be for five (5) years commencing on the
execution date above and terminating on January 15, 2011 (the "Initial Term").
Licensee shall have the option to renew this Agreement for an additional
five-year period as long as the Minimum Royalties (as hereinafter defined) for
the Initial Term have been fully paid. Licensee shall notify Licensor of its
intent to either renew or not renew no later than June 30, 2010. Each twelve
(12) month period commencing on each January 16th and ending on January 15th
shall constitute and be referred to herein as an "Annual Period." However, the
initial Annual Period shall commence on the execution date above and shall
terminate on January 15, 2007.
ARTICLE 5
CONFIDENTIALITY
The Parties acknowledge that all information relating to the business and
operations of Licensor and Licensee which they learn or have learned during or
prior to the term of this Agreement is confidential. The Parties acknowledge the
need to preserve the confidentiality and secrecy of such information and agree
that, both during the term
Page 4
of this Agreement and after the expiration or termination hereof, they shall not
use or disclose same, and shall take all necessary steps to preserve in all
respects such confidentiality and secrecy. The provisions of this paragraph
shall not apply with respect to any information which has entered the public
domain through no fault of Parties. The provisions of this paragraph shall
survive the expiration or termination of this Agreement.
ARTICLE 6
DUTIES OF LICENSEE
A. BEST EFFORTS. During the term of this Agreement, Licensee will use its
best efforts to exploit the rights herein granted throughout the Territory and
to sell the maximum quantity of Articles therein consistent with the high
standards and prestige represented by the Licensed Xxxx.
B. DESIGN AND SAMPLE MAKING. Licensor shall not be responsible for the
production, design or sample making of the Articles and Licensee shall bear all
costs related thereto.
ARTICLE 7
QUALITY STANDARDS
A. MANUFACTURE OF ARTICLES; QUALITY CONTROL.
(i) The contents and workmanship of Articles shall be at all times
of the highest quality consistent with the reputation, image and prestige of the
Licensed Xxxx and Articles shall be distributed and sold with packaging and
sales promotion materials appropriate for such high quality Products. The
parties agree that the Articles shall be of such premium quality, prestige and
price similar to that of MAC, XXXXX XXXXXX and SMASHBOX products.
(ii) All Articles shall be manufactured, labeled, sold, distributed
and advertised in accordance with all applicable national, state and local laws
and regulations.
(iii) Licensee shall submit to Licensor for approval the proposed
Articles, along with the proposed packaging and other material, designs,
sketches, colors, tags, containers and labels (the "Approval Package") for
Licensor's review, which approval shall not be unreasonably withheld. In the
event that Licensor does not respond to Licensee within 10 days of the receipt
of any and all items within the scope of the Approval Package, any such item
shall be deemed approved.
(iv) During the term of this Agreement, upon Licensor's request,
Licensee shall submit, free of charge to Licensor, the then current production
samples of each Article marketed. Production samples submitted by Licensee for
this purpose may be retained by Licensor. Further, Licensee shall provide
Licensor with 100 samples of the various Articles being distributed each year
for Licensor to use for public relations
Page 5
and promotional purposes. All Articles to be sold hereunder shall be at least
equal in quality to the Approval Package presented to Licensor. Licensor and its
duly authorized representatives shall have the right, upon reasonable advance
notice and during normal business hours, at Licensor's expense, to examine
Articles in the process of being manufactured.
B. REQUIRED MARKINGS. Licensee shall cause to appear on all packaging of
Articles, (i) "the trademark, XXXXX XXXXXX" is licensed to "Xxxxxx Xxxxxxxxxx,
Inc."; and such additional legends, markings and notices complying with the
requirements of any law or regulation in the Territory and (ii) such legends,
markings and notices as Licensor, from time to time, may reasonably request.
C. DISTRIBUTION. In order to maintain the reputation, image and prestige
of the Licensed Xxxx, Licensee's normal distribution patterns shall consist of
those retail establishments whose location, merchandising and overall operations
are consistent with the products described in paragraph A (i) of Article 7
above.
D. SALES FORCE. During the term of this Agreement, Licensee shall
maintain a non-exclusive sales force suitable to carry out the purpose of this
Agreement.
ARTICLE 8
GUARANTEED MINIMUM ROYALTY
In consideration of both the license granted and the services to be
performed by Ms. Xxxxx Xxxxxx hereunder, Licensee shall pay to Licensor an
annual Guaranteed Minimum Royalty during the initial Term of the Agreement of $
* per Annual Period, with payment of 50% for the first Annual Period due upon
execution hereof and the balance of the Guaranteed Minimum Royalties payable as
specified below:
TOTAL ANNUAL
ANNUAL PERIOD ANNUAL MIN. ROYALTY DUE GUARANTEED MIN ROYALTY
--------------------------- ----------------------- ----------------------
First: Execution to 1/15/07 $ * upon execution; $ *
$ * on 7/15/05
Second: 1/16/07 to 1/15/08 1/16/07 $ *
Third: 1/16/08 to 1/15/09 1/16/08 $ *
Fourth: 1/16/09 to 1/15/10 1/16/09 $ *
Fifth: 1/16/10 to 1/15/11 1/16/10 $ *
In the event that the Initial Term of this Agreement is extended for an
additional five-year term (January 16, 2011 through January 15, 2016, the
"Extended Term") the Guaranteed Minimum Royalty for each Annual Period of the
Extended Term shall be $ *.
The Guaranteed Minimum Royalty payable to Licensor for each Annual Period
in the Extended Term shall be payable upfront on January 16th of the beginning
of each Annual Period in the Extended Term. For example, the Guaranteed Minimum
Royalty
Page 6
payable for the Annual Period from January 16, 2011 through January 15, 2012
shall be payable $ * on January 16, 2011.
Subject to the exception in Article 9(C) below, the Guaranteed Minimum
Royalty for each Annual Period shall be credited against the Sales Royalty for
only the same Annual Period as provided in Article 9 below.
ARTICLE 9
SALES ROYALTY; WITHHOLDING TAXES; COMMISSION TO XXXX XXXXXX
A. Licensee shall pay to Licensor a Sales Royalty on each Annual Period's
Net Sales of * . The Sales Royalty payable hereunder shall be accounted for and
paid on a quarterly basis within forty-five (45) days after the close of the
prior quarter's sales, along with the Guaranteed Minimum Royalty that may be
due. In other words, the actual Sales Royalty will be paid 45-days in arrears
computed on the basis of Net Sales during the quarter ending 45 days before the
period upon which royalties are being paid, with a credit for any Guaranteed
Minimum Royalty and Sales Royalty payments previously made to Licensor.
B. If applicable, Licensee shall compute any payment, on behalf of
Licensor, for all taxes (other than United States Federal, state or local income
taxes) which any governmental authority in the Territory may impose on Licensor
with respect to royalties paid by Licensee to Licensor. The amount of such taxes
shall be deducted from payments of royalties, provided that Licensor is entitled
under applicable law to credit the amount of such taxes against its United
States Federal Income Tax obligations. Licensee shall furnish Licensor with an
official receipt (together with a translation thereof if not in English)
promptly after each such payment of taxes. In the event such taxes are not paid
when due, all resulting penalties and interest shall be borne by Licensee.
C. Up to 50% of Sales Royalty for any Annual Period in excess of payments
of Guaranteed Minimum Royalty for the same Annual Period shall be credited
against the Guaranteed Minimum Royalty due to Licensor for any other future
Annual Period if the actual Sales Royalty for that period does not reach such
period's Guaranteed Minimum Sales.
D. Payment of the initial Guaranteed Minimum Royalty shall be as follows
in the time frames specified above:
(1) $ * to: "Xxxx Xxxxxx" c/o Ms. Xxxxx Xxxxx, 000 Xxxxx Xxxxx Xxxxx,
0xx Xxxxx, Xxxxxxx Xxxxx, XX 00000; and,
(2) $ * to: Xxxxx Xxxxxx Entertainment Inc. c/o Ms. Xxxxx Xxxxx, 000
Xxxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx Xxxxx, XX 00000.
Page 7
In other words, upon execution hereof $ * shall be payable to Xxxx Xxxxxx and $
* shall be payable to Licensor with the balance of such first Annual Period
Guaranteed Minimum Royalties payable on July 15, 2005.
E. All other Guaranteed Minimum Royalties and other Royalties shall be
paid as follows:
(1) 5% of amounts due to: "Xxxx Xxxxxx" c/o Ms. Xxxxx Xxxxx, 000
Xxxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx Xxxxx, XX 00000; and,
(2) 95% of amounts due to: Xxxxx Xxxxxx Entertainment Inc. c/o Ms.
Xxxxx Xxxxx, 000 Xxxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx Xxxxx, XX
00000.
F. In addition to the Sales Royalty and Guaranteed Minimum Royalties that
Licensee is obligated to pay pursuant to the terms hereof, Licensee shall
further pay Mr. Xxxx Xxxxxx, a commission for negotiating this Agreement of * of
the actual Sales Royalty and Guaranteed Minimum Royalty (paid to Licensor and
Xxxx Xxxxxx) throughout the term of this Agreement and any extensions thereof.
This * commission shall be paid to Xxxx Xxxxxx at the time that the Sales
Royalty is due to Licensor. The * commission shall be paid on the initial
Guaranteed Minimum Royalty due upon execution hereof, so that Xxxx Xxxxxx shall
receive $ * (Guaranteed Minimum Royalty) plus $ * (commission) upon execution
hereof, or $ * (and $ * on July 15, 2005). For the avoidance of doubt, Licensee
shall be paying a total of 105% of the Guaranteed Minimum Royalty and Sales
Royalty hereunder.
ARTICLE 10
ADVERTISING
Licensee agrees to spend in the United States for "Consumer Advertising"
(as defined below) * of Net Sales during each Annual Period.
For the other markets in the Territory, Licensee or its distributors will
jointly spend not less than * of Net sales in such markets during each Annual
Period.
"Consumer Advertising" shall be understood to include newspapers,
magazines, television, radio, billboards (including related artwork and
production charges for these five categories), retailer demonstration charges,
retailer's catalogues, gifts-with-purchase including the gift aspect of value
sets, direct mail, remittance envelopes, billing inserts , product samples,
pamphlets, free goods (including those to Licensor for events and other public
relation activities), window and counter displays (including testers, dummies,
counter cards and other visual aids), special events, contests, publicity and
promotions and cooperative advertising.
Page 8
Licensor undertakes at Licensee's request to make Ms. Xxxxx Xxxxxx ("PH")
available at reasonable intervals and for reasonable periods (which shall
involve a maximum of three (3) appearances during the first Annual Period and a
maximum of two (2) appearances each Annual Period thereafter) for promotional
tie-ins serving to associate PH with the Articles. Licensee shall also be
entitled to the use of PH's likeness for advertising and promotional purposes
upon Licensor's approval first being obtained in each instance, which approval
shall not be unreasonably withheld or delayed. Licensor shall make every
reasonable effort, in light of PH's busy schedule, at the request of the
Licensee, to arrange for PH's cooperation for publicity photographs, launch
parties, personal appearances and radio and TV interviews (which shall be
included in PH's obligations of three (3) and two (2) appearances discussed
above). Licensee shall reimburse Licensor for the reasonable costs involved in
providing PH plus one other individual, selected by Licensor, plus her Mother
and Father if they wish to attend, with first-class travel, lodging, food and
other related expenses mutually agreed upon in advance of each appearance
attended by PH at Licensee's request, which shall include the cost for hair and
makeup personnel and security personnel. If PH fails to appear for a scheduled
Licensor approved event, Licensee will have the right to deduct up to $20,000 of
its non-refundable out of pocket expenses incurred in connection with each
specific event from the Sales Royalty. The failure to appear at a scheduled
event could have a material adverse effect on the Licensee's ability to market
the Articles.
ARTICLE 11
SALES STATEMENT; BOOKS AND RECORDS; AUDITS
A. SALES STATEMENT. Licensee shall deliver to Licensor at the time each
Sales Royalty payment is due, a reasonably detailed report signed by a duly
authorized officer of Licensee indicating by quarter the Net Sales and a
computation of the amount of Sales Royalty payable hereunder for said period.
Such statement shall be furnished to Licensor whether or not any Articles have
been sold during the period of which such statement is due.
Licensee shall deliver to Licensor, not later than ninety (90) days after
the close of each Annual Period during the term of this Agreement (or portion
thereof in the event of prior termination for any reason), a statement signed by
a duly authorized officer relating to said entire Annual Period, setting forth
the same information required to be submitted by Licensee in accordance with the
first paragraph of this Article and also setting forth the information
concerning expenditures for the advertising and promotion of Articles during
such Annual Period required by Article 10 hereof.
B. BOOKS AND RECORDS; AUDITS. Licensee shall prepare and maintain, in
such manner as will allow its accountants to audit same in accordance with
generally accepted accounting principles, complete and accurate books of account
and records (specifically including without limitation the originals or copies
of documents supporting entries in the books of account) in which accurate
entries will be made covering all transactions, including advertising
expenditures, arising out of or relating to this Agreement. Licensee shall keep
separate general ledger accounts for such matters that do not include matters or
Page 9
sales related to this Agreement. Licensor and its duly authorized
representatives shall have the right, for the duration of this Agreement and for
one (1) year thereafter, during regular business hours and upon seven (7)
business days advance notice (unless a shorter period is appropriate in the
circumstances), to audit said books of account and records and examine all other
documents and material in the possession or under the control of Licensee with
respect to the subject matter and the terms of this Agreement, including,
without limitation, invoices, credits and shipping documents, and to make copies
of any and all of the above. All such books of account, records, documents and
materials shall be kept available by Licensee for at least two (2) years after
the end of the Annual Period to which they relate. If, as a result of any audit
of Licensee's books and records, it is shown that Licensee's payments were less
than the amount which should have been paid by an amount equal to * or more of
the payments actually made with respect to sales occurring during the period in
question, Licensee shall reimburse Licensor for the cost of such audit and shall
make all payments required to be made to eliminate any discrepancy revealed by
said audit within ten (10) days after Licensor's demand therefore.
ARTICLE 12
INDEMNIFICATION AND INSURANCE
A. INDEMNIFICATION OF LICENSOR. Licensee hereby agrees to save and hold
Licensor, Xxxxx Xxxxxx and their agents (the "Indemnified Parties") harmless
from and against and to indemnify them against any and all claims, suits,
injuries, losses, liability, demands, damages and expenses (including, subject
to subparagraph D below, Licensor's reasonable attorneys' fees and expenses)
which the Indemnified Parties may incur or be obligated to pay, or for which
either may become liable or be compelled to pay in any action, claim or
proceeding against them, for or by reason of any acts, whether of omission or
commission, that may be committed or suffered by Licensee or any of its
servants, agents or employees in connection with Licensee's performance of this
Agreement, including but not limited to those arising out of the alleged defect
in any Article produced by Licensee under this Agreement, the manufacture,
labeling, sale, distribution or advertisement of any Article by Licensee in
violation of any national, state or local law or regulation or the breach of
Article 5 hereof. The provisions of this paragraph and Licensee's obligations
hereunder shall survive the expiration or termination of this Agreement.
B. INSURANCE POLICY. Licensee shall procure and maintain at its own
expense in full force and effect at all times during which Articles are being
sold, with a responsible insurance carrier acceptable to Licensor, a public
liability insurance policy including products liability coverage with respect to
Articles with a limit of liability not less than $3,000,000. It shall be
acceptable if such coverage is provided by a product liability policy and an
additional umbrella policy. Such insurance policies shall be written for the
benefit of Licensee, Licensor and Xxxxx Xxxxxx and shall provide for at least
thirty (30) days prior written notice to said parties of the cancellation or
substantial modification thereof. Licensor shall be a named insured on each such
policy. Such
Page 10
insurance may be obtained by Licensee in conjunction with a policy which covers
products other than Articles.
C. EVIDENCE OF INSURANCE. Licensee shall, from time to time upon
reasonable request by Licensor, promptly furnish or cause to be furnished to
Licensor evidence in form and substance satisfactory to Licensor of the
maintenance of the insurance required by subparagraph B above, including, but
not limited to, copies of policies, certificates of insurance (with applicable
riders and endorsements) and proof of premium payments. Nothing contained in
this paragraph shall be deemed to limit in any way the indemnification
provisions of the subparagraph A above.
D. NOTICE. Licensor will give Licensee notice of any action, claim, suit
or proceeding in respect of which indemnification may be sought and Licensee
shall defend such action, claim, suit or proceeding on behalf of Licensor. In
the event appropriate action is not taken by Licensee within thirty (30) days
after its receipt of notice from Licensor, then Licensor shall have the right,
but not the obligation, to defend such action, claim, suit or proceeding.
Licensor may, subject to Licensee's indemnity obligation under subparagraph A
above, be represented by its own counsel in any such action, claim, suit or
proceeding. In any case, the Licensor and the Licensee shall keep each other
fully advised of all developments and shall cooperate fully with each other in
all respects in connection with any such defense as is made. Nothing contained
in this paragraph shall be deemed to limit in any way the indemnification
provisions of the subparagraph A above except that in the event appropriate
action is being taken by Licensee by counsel reasonably acceptable to Licensor,
with respect to any not-trademark or intellectual property, action, claim, suit
or proceeding. Licensor shall not be permitted to seek indemnification from
Licensee for attorneys' fees and expenses incurred without the consent of
Licensee. In connection with the aforesaid actions, claims and proceedings, the
parties shall, where no conflict of interest exists, seek to be represented by
common reasonably acceptable counsel. In connection with actions, claims or
proceedings involving trademark or other intellectual property matters which are
subject to indemnification hereunder, Licensor shall at all times be entitled to
be represented by its own counsel, for whose reasonable fees and disbursements
it shall be entitled to indemnification hereunder.
ARTICLE 13
THE LICENSED XXXX
X. Licensee shall not join any name or names with the Licensed Xxxx so as
to form a new xxxx, unless and until Licensor consents thereto in writing.
Licensee acknowledges the validity of the Licensed Xxxx, the secondary meaning
associated with the Licensed Xxxx, and the rights of Licensor with respect to
the Licensed Xxxx in the Territory in any form or embodiment thereof and the
goodwill attached or which shall become attached to the Licensed Xxxx in
connection with the business and goods in relation to which the same has been,
is or shall be used. Sales by Licensee shall be deemed to have been made by
Licensor for purposes of trademark registration and all
Page 11
uses of the Licensed Xxxx by Licensee shall inure to the benefit of Licensor.
Licensee shall not, at any time, do or suffer to be done, any act or thing which
may in any way adversely affect any rights of Licensor in and to the Licensed
Xxxx or any registrations thereof or which, directly or indirectly, may reduce
the value of the Licensed Xxxx or detract from its reputation. Licensee will use
its best efforts to distribute Articles in the proper channels comparable to
those of similarly situated brands as discussed in Article 7 A (i) herein.
B. At Licensor's request, Licensee shall execute any documents, including
Registered User Agreements, reasonably required by Licensor to confirm the
respective rights of Licensor and Ms. Xxxxx Xxxxxx in and to the Licensed Xxxx
in each jurisdiction in the Territory and the respective rights of Licensor and
Licensee pursuant to this Agreement. Licensee shall cooperate with Licensor, in
connection with the filing and the prosecution by Licensor of applications to
register or renew the Licensed Xxxx for Articles sold hereunder in each
jurisdiction in the Territory where Licensee has reasonably requested the same.
Such filings and prosecution shall be in the name of Licensor or Ms. Xxxxx
Xxxxxx, as they may decide, the expense of which shall be paid for by Licensee.
Nothing contained herein shall obligate Licensor to prosecute any trademark
application outside the U.S. which is opposed or rejected in any country after
the application is filed, provided, however, that any such prosecution shall go
forward if (a) Licensee requests same; (b) Licensee pays for same directly; and
(c) such prosecution is in Licensor's (or Ms. Xxxxx Xxxxxx'x) name and directed
by Licensor. Licensor shall cooperate fully with any such prosecution. Licensee
agrees to retain and employ on Licensor's behalf the firm of Xxxxxx & Xxxxxx,
LLP of New York City to file and prosecute the various trademark applications
around the World for the Trademark, as long as such fees charged by Xxxxxx &
Xxxxxx, LLP are competitively priced with other intellectual property law firms.
Xxxxxx & Xxxxxx, LLP shall work with Licensee's paralegal to keep such paralegal
apprised of its progress in connection with the application and registration
work referenced herein. Xxxxxx & Xxxxxx, LLP shall enter into a retainer
agreement with Licensee that is mutually acceptable to Licensee and Xxxxxx &
Xxxxxx, LLP providing, inter alia, that a retainer amount of $5,500 shall be
paid to Xxxxxx & Xxxxxx, LLP for the first 12 months and $3,500 for the second
12 months for work to be done by Xxxxxx & Xxxxxx, LLP in connection with foreign
application work.
C. Licensee shall use the Licensed Xxxx in each jurisdiction in the
Territory strictly in compliance with the legal requirements obtained therein
and shall use such markings in connection therewith as may be required by
applicable legal provisions. Licensee shall cause to appear on all Articles and
on all materials on or in connection with which the Licensed Xxxx is used, such
legends, markings and notices as may be reasonably necessary in order to give
appropriate notice of any trademark, trade name or other rights therein or
pertaining thereto.
D. Licensee shall never challenge the validity of the Licensed Xxxx or
any application for registration thereof, or any trademark registration hereof,
or any rights of Licensor therein. The foregoing shall not be deemed to prevent
Licensee from asserting, as a defense to a claim of breach of contract brought
against Licensee by Licensor for
Page 12
failure to perform its obligations hereunder, that its ceasing performance under
this Agreement was based upon Licensor's failure to own the Licensed Xxxx in the
United States of America, provided that it is established in a court of law that
Licensor does not own the Licensed Xxxx, that the Licensed Xxxx is owned by a
third party so as to preclude the grant of the license provided herein.
E. In the event that Licensee learns of any infringement or imitation of
the Licensed Xxxx or of any use by any person of a trademark similar to the
Licensed Xxxx, it promptly shall notify Licensor thereof. In no event, however,
shall Licensor be required to take any action if it deems it inadvisable to do
so.
F. Licensor shall not be required to protect, indemnify or hold Licensee
harmless against, or be liable to Licensee for, any liabilities, losses,
expenses or damages which may be suffered or incurred by Licensee as a result of
any infringement or allegation thereof by any other person, firm or corporation,
other than by reason of Licensor's breach of the representations made and
obligations assumed herein. Licensor and Ms. Xxxxx Xxxxxx make no warranties or
representations as to the registrability of the Licensed Xxxx in the various
trademark offices around the World, except that Licensor warrants and represents
that Ms. Xxxxx Xxxxxx has pending trademark applications as shown on the annexed
Exhibit A.
ARTICLE 14
DEFAULTS; TERMINATION
A. The following conditions and occurrences shall constitute "Events of
Default" by Licensee:
1. the failure to pay Licensor the full amount due it under any of
the provisions of this Agreement by the prescribed date for such payment;
2. the failure to deliver full and accurate reports pursuant to any
of the provisions of this Agreement by the prescribed due date therefore;
3. the making or furnishing of a knowingly false statement in
connection with or as part of any material aspect of a report, notice or request
rendered pursuant to this Agreement;
4. the failure to maintain the insurance required by Article 12;
5. the use of the licensed xxxx in an unauthorized or unapproved
manner;
6. Licensee's use of other trademarks or in association with the
Articles, without prior written consent of Licensor;
7. the commencement against Licensee of any proceeding in
bankruptcy, or similar law, seeking reorganization, liquidation, dissolution,
arrangement, readjustment, discharge of debt, or seeking the appointment of a
receiver, trustee or custodian of all or any substantial part of Licensee's
property, not dismissed within sixty (60) days, or Licensee's making of an
assignment for the benefit of creditors, filing of a
Page 13
bankruptcy petition, its acknowledgment of its insolvency or inability to pay
debts, or taking advantage of any other provision of the bankruptcy laws;
8. the material breach of any other material promise or agreement
made herein.
B. In the event Licensee fails to cure (i) an Event of Default within
thirty (30) days after written notice of default is transmitted to Licensee
under Article 14 A.3, A.5, A.6, or A.7; or (ii) Licensee fails to cure any other
Event of Default within sixty (60) days after written notice of default is
transmitted to Licensee or within such further period as Licensor may allow,
this Agreement shall, at Licensor's option, be terminated, on notice to
Licensee, and all the prorated Guaranteed Minimum Royalties for the Annual
Period as in Article 8 above shall become due, without prejudice to Licensor's
right to receive other payments due or owing to Licensor under this Agreement or
to any other right of Licensor, including the right to damages and/or equitable
relief.
C. Upon the termination of this Agreement, in the event this Agreement is
not renewed as provided in Article 4 above, or in the event of the termination
or expiration of a renewal term of this Agreement, Licensee, except as specified
below, will immediately discontinue use of the Licensed Xxxx, will not resume
the use thereof or adopt any colorable imitation of the Licensed Xxxx or any of
its parts, will promptly deliver and convey to Licensor (free of all liens and
encumbrances) (i) all plates, engravings, silk-screens, or the like used to make
or reproduce the Licensed Xxxx and the Designs, but not the bottle mold or
tooling which Licensor shall be entitled to purchase or recover as provided
below; and(ii) all items affixed with likeness or reproductions of the Licensed
Xxxx, whether Articles, labels, bags, hangers, tags or otherwise, and, upon
request by Licensor, will assign to Licensor such rights as Licensee may have
acquired in the Licensed Xxxx. In the event that this Agreement expires or is
terminated by Licensor due to Licensee's default, Licensor shall have an option,
but not an obligation, to purchase the bottle mold and tooling for the Articles,
free of all liens and other encumbrances, at a price equal to Licensee's cost
for same established by submission of xxxx(s) from supplier and satisfactory
proof of payment for same. Licensor shall pay such cost as follows: 50% (fifty)
at closing and the balance paid by six (6) equal monthly payments. Licensor
shall, at the time it exercises its purchase option, enter into a security
agreement with Licensee with respect to the mold, which shall entitle Licensee
to foreclose on its security interest in the mold in the event Licensor fails to
make any installment payment due within fifteen (15) days after receiving notice
of default. Licensor shall exercise its aforesaid option within thirty (30) days
after Licensee's submission of documents establishing cost. Notwithstanding the
foregoing, if Licensor has terminated this Agreement due to Licensee's default,
Licensor, at its option, shall be entitled, in exercising its purchase option,
to deduct from the cost price an amount equal to the sales and guaranteed
minimum royalties Licensor is entitled to recover, for which deduction Licensee
shall receive a credit. In the event Licensor exercises its aforesaid option,
Licensee shall be precluded forever from using the bottle molds or tools and
from selling or otherwise transferring or licensing any rights whatsoever in the
molds or tools to any third party. In the event that Licensor does not exercise
its aforesaid option, Licensee shall not use the bottle molds or tools or sell
or otherwise transfer or license any
Page 14
rights whatsoever in the bottle mold or tools to any third party for a period of
two (2) years after the determination of the fair market value. In the event of
any permitted use of the bottle mold and/or tools by Licensee, Licensee shall
not use in connection therewith the Licensed Xxxx, any trademark confusingly
similar thereto, any trade dress associated with the Articles, any advertising
or promotional materials used in connection with the Articles or any other
markings or materials which would cause a reasonable consumer to believe that
any new items sold using the bottle mold and tools are authorized by Licensor or
in some way associated with the Licensed Xxxx. Any permitted sale or license of
the bottle mold and/or tools by Licensee shall prohibit in writing the purchaser
or licensee from using the Licensed Xxxx, and confusingly similar trademark and
any such trade dress, advertising, promotional materials, markings or other
materials and shall expressly make Licensor a third party beneficiary of such
provision.
ARTICLE 15
RIGHTS ON EXPIRATION OR TERMINATION
A. If this Agreement expires or is terminated, Licensee shall cease to
manufacture Articles (except for work in process or to balance component
inventory) but shall be entitled, for an additional period of twelve (12) months
only, on a non-exclusive basis, to sell and dispose of its inventory subject,
however, to the provisions of paragraph D of this Article. Such sales shall be
made subject to all of the provisions of this agreement and to an accounting for
and the payment of Sales Royalty thereon but not to the payment of Guaranteed
Minimum Royalties. Such accounting and payment shall be made monthly.
B. In the event of termination in accordance with Article 14 above,
Licensee shall pay to Licensor, the Sales Royalty then owed to it pursuant to
this Agreement or otherwise.
C. Notwithstanding any termination in accordance with Article 14 above,
Licensor shall have and hereby reserve all rights and remedies which it has, or
which are granted to it by operation of law, to enjoin the unlawful or
unauthorized use of the Licensed Xxxx, and to collect royalties payable by
Licensee pursuant to this Agreement and to be compensated for damages for breach
of this Agreement.
D. Upon the expiration or termination of this Agreement, Licensee shall
deliver to Licensor a complete and accurate schedule of Licensee's inventory of
Articles and of related work in process then on hand (including any such items
held by Subsidiaries, Affiliates or others on behalf of Licensee) (hereinafter
referred to as "Inventory). Such schedule shall be prepared as of the close of
business on the date of such expiration or termination and shall reflect
Licensee's cost of each such item. Notwithstanding anything contained to the
contrary in this Agreement, Licensor thereupon shall have the option,
exercisable by notice in writing delivered to Licensee within thirty (30) days
after its receipt of the complete Inventory schedule, to purchase
Page 15
any or all of the Inventory, free of all liens and other encumbrances, for an
amount equal to Licensee's cost plus 20%. In the event such notice is sent by
Licensor, Licensee shall deliver to Licensor or its designee all of the
Inventory referred to therein within thirty (30) days after Licensor's said
notice and, in respect of any Inventory so purchased, assign to Licensor all
then outstanding orders from Licensee to its suppliers and to Licensee from its
customers. Licensor shall pay Licensee for such Inventory within twenty (20)
days after the delivery of such Inventory to Licensor. No Sales Royalty shall be
payable to Licensor with respect to any such inventory purchased by Licensor.
ARTICLE 16
SUBLICENSING AND DISTRIBUTION
A. (i) This Agreement and the License or other rights granted
hereunder may be assigned, sublicensed, joint ventured or transferred by
Licensee, upon the approval of Licensor in advance, in writing, which approval
will not be unreasonably denied or delayed. Any transferee shall be required to
prove to Licensor that it is capable of meeting the financial obligations
contained herein.
(ii) CONSOLIDATION. Notwithstanding anything contained to the
contrary in this Agreement, this Agreement shall not terminate if Licensee is
merged or otherwise consolidated into another entity which is the surviving
entity of equal or superior financial strength.
B. Licensee shall be entitled to use distributors in connection with its
sale of Articles under this Agreement without approval of Licensor. No such
distributor, however, shall be entitled to exercise any of Licensee's rights
hereunder except for the sale of Articles which have been approved by Licensor
hereunder.
ARTICLE 17
MISCELLANEOUS
A. REPRESENTATIONS. The parties respectively represent and warrant that
they have full right, power and authority to enter into this Agreement and
perform all of their obligations hereunder and that they are under no legal
impediment which would prevent their signing this Agreement or consummating the
same. Licensor represents and warrants that it has the right to license the
Licensee the Licensed Xxxx and that Licensor has not granted any other existing
license to use the Licensed Xxxx on products covered hereunder in the Territory
and that no such license will be granted during the term of this Agreement
except in accordance with the provisions hereof.
B. LICENSOR'S RIGHTS. Not withstanding anything to the contrary contained
in this Agreement, Licensor shall not have the right to negotiate or enter into
agreements with third parties pursuant to which it may grant a license to use
the Licensed Xxxx in connection with the manufacture, distribution and/or sale
of products covered hereunder
Page 16
in the Territory or provide consultation and design services with respect to
such products in the Territory prior to the termination or expiration of this
Agreement.
C. LICENSOR'S RETAIL STORES. In the event Licensor (or Ms. Xxxxx Xxxxxx)
opens one or more retail stores or boutiques selling various products bearing
the Licensed Xxxx, Licensee agrees to sell Articles to Licensor for sale in such
stores at the established U.S. retail price for the specific Article, less an
additional * discount. Licensee further agrees that any sales pursuant to this
paragraph shall be included in the computation of Net Sales for any applicable
Annual Period hereunder.
D. GOVERNING LAW; ENTIRE AGREEMENT. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Florida applicable to
agreements made and to be performed in said State, contains the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof, supersedes all prior oral or written understandings and
agreements relating thereto and may not be modified, discharged or terminated,
nor may any of the provisions hereof be waived, orally.
E. NO AGENCY. Nothing herein contained shall be construed to constitute
the parties hereto as partners or as joint venturers, or either as agent of the
other, and Licensee shall have no power to obligate or bind Licensor in any
manner whatsoever.
F. NO WAIVER. No waiver by either party, whether express or implied, of
any provision of this Agreement, or of any breach or default thereof, shall
constitute a continuing waiver of such provision or of any other provision of
this Agreement. Acceptance of payments by Licensor shall not be deemed a waiver
by Licensor of any violation of or default under any of the provisions of this
Agreement by Licensee.
G. VOID PROVISIONS. If any provision or any portion of any provision of
this Agreement shall be held to be void or unenforceable, the remaining
provisions of this Agreement and the remaining portion of any provision held
void or unenforceable in part shall continue in full force and effect.
I. CONSTRUCTION. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Agreement to be drafted. If any words or phrases in this Agreement shall have
been stricken out or otherwise eliminated, whether or not any other words or
phrases have been added, this Agreement shall be construed as if those words or
phrases were never included in this Agreement, and no implication or inference
shall be drawn from the fact that the words or phrases were so stricken out or
otherwise eliminated.
H. FORCE MAJEURE. Neither party hereto shall be liable to the other for
delay in any performance or for the failure to render any performance under the
Agreement (other than payment to any accrued obligation for the payment of
money) when such delay or failure is by reason of lockouts, strikes, riots,
fires, explosions, blockade, civil commotion, epidemic, insurrection, war or
warlike conditions, the elements, embargoes,
Page 17
act of God or the public enemy, compliance with any law, regulation or other
governmental order, whether or not valid, or other similar causes beyond the
control of the party effected. The party claiming to be so affected shall give
notice to the other party promptly after it learns of the occurrence of said
event and of the adverse results thereof. Such notice shall set forth the nature
and extent of the event. The delay or failure shall not be excused unless such
notice is so given. Notwithstanding any other provision of this Agreement,
either party may terminate this Agreement if the other party is unable to
perform any or all of its obligations hereunder for a period of six (6) months
by reason of said event as if the date of termination were the date set forth
herein as the expiration date hereof. If either party elects to terminate this
Agreement under this paragraph, Licensee shall have no further obligations for
the Guaranteed Minimum Royalty beyond the date of termination (which shall be
prorated if less than an Annual Period is involved) and shall be obligated to
pay any Sales Royalty which is then due or becomes due.
J. BINDING EFFECT. This Agreement shall inure to the benefit of and shall
be binding upon the parties, their respective successors, Licensor's transferees
and assigns and Licensee's permitted transferees and assigns.
K. RESOLUTION OF DISPUTES. Any controversy or claim arising out of, in
connection with, or relating to this Agreement, shall be determined by
arbitration by a three person arbitration panel at the office of the American
Arbitration Association. Both Parties shall share equally the cost of such
arbitration (except each shall bear its own attorney's fees). Any decision
rendered by the arbitrators shall be final and binding, and judgment may be
entered in any court having jurisdiction.
L. CONSOLIDATION. Notwithstanding anything contained to the contrary in
this Agreement (a) this Agreement shall not terminate if Licensor is merged or
otherwise consolidated into another entity which is the surviving entity. (b)
Licensor shall be entitled to assign this Agreement to any Corporation to which
the Licensed Xxxx is assigned.
M. SURVIVAL. The provisions of Articles 11, 12A, 12D, 13, 15, 16, and 17
shall survive any expiration or termination of this Agreement.
N. PARAGRAPH HEADINGS. The paragraph headings in this Agreement are for
convenience of reference only and shall be given no substantive effect.
ARTICLE 18
NOTICES
Any notice or other communications required or permitted by this Agreement
to be given to a party will be in writing and will be considered to be duly
given when sent by any recognized overnight courier service to the party
concerned to the following persons or addresses (or to such other persons or
addresses as a party may specify by notice to the other):
Page 18
TO LICENSOR Ms. Xxxxx Xxxxxx c/o Ms. Xxxxx Xxxxx
000 Xxxxx Xxxxx Xx. 0xx Xxxxx,
Xxxxxxx Xxxxx, XX 00000
WITH A COPY TO: Xxxxxx X. Xxxxxx, Esq., Xxxxxx & Xxxxxx, LLP
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000
Tel: 000-000-0000; Fax: 000-000-0000.
XXxxxxx@XxxxxxXxxxxx.xxx
TO LICENSEE XXXXXX XXXXXXXXXX, INC.
0000 XX 00XX Xxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx, 00000
Attention: Xxxx Xxxxxx
Chairman & CEO
Fax: (000) 000-0000
WITH A COPY TO: Xxxxxxxx Xxxxxxx & Associates
Tower 56, 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Notice of the change of any such address shall be duly given by either
party to the other in the manner herein provided.
EXECUTED as of the day and year first written above:
XXXXXX XXXXXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxxxx, Executive Vice President / COO / CFO
XXXXX XXXXXX ENTERTAINMENT INC.
By: /s/ Xxxxx Xxxxxx
----------------------
Xxxxx Xxxxxx, President
Page 19
Compliance with the terms of this Agreement shall constitute compliance
with the terms of the Master License. In the event of a termination of the
Master License granted to Licensor, prior to the expiration of this Agreement
(and any extensions thereof) Ms. Xxxxx Xxxxxx warrants and represents that the
successor entity to the rights to the XXXXX XXXXXX trademark shall assume the
obligations and succeed to the rights of the Licensor and the rights of Licensee
shall continue unaffected.
ACKNOWLEDGE AND APPROVED:
/s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx
Page 20
