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EXHIBIT 10.43
PRODUCT DEVELOPMENT AND LICENSING AGREEMENT
THIS AGREEMENT, is made and entered into as of this 1st day of
January, 1997, by and between GOLDEN BEAR GOLF, INC., a Florida corporation,
whose address is ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ("GB Golf") and GARGOYLES, INC., a Washington corporation, whose mailing
address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Gargoyles").
W I T N E S S E T H:
WHEREAS, Gargoyles currently designs, manufactures, markets and
distributes various lines of high performance eyewear, including specialty
eyewear for sports enthusiasts;
WHEREAS, GB Golf, through its business activities and the professional
activities of its principal, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Nicklaus"), has developed unique
expertise with respect to the requirements of professional and serious amateur
golfers for equipment and accessories;
WHEREAS, Gargoyles and GB Golf are desirous of developing a new line
of specialty eyewear for golfers as identified in Schedule "1" annexed hereto
(the "Licensed Products"), which Licensed Products will be designed to
Nicklaus' standards by Gargoyles in consultation with GB Golf and will be
manufactured and distributed by Gargoyles using certain brands developed by GB
Golf and the endorsement of Nicklaus.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth herein, the parties hereto agree as
follows:
1. DESIGN CONSULTATION
Promptly after the execution and delivery of this Agreement, GB Golf
and Gargoyles will begin a joint and cooperative effort to create and develop
the Products. Such collaboration will include, but not be limited to,
consultation between Nicklaus and other designated representatives of GB Golf
and Gargoyles's staff and outside design consultants regarding technical design
ideas, performance characteristics, materials, styles and colors, in order to
develop a complete line of Licensed Products. It is anticipated by the parties
that the efforts of Gargoyles and its independent design consultants will be
undertaken at Gargoyles' design and manufacturing facilities
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where necessary to make use of Gargoyles' testing and manufacturing equipment,
and that any consulting services to be rendered personally by Nicklaus,
including review of designs and prototypes, may be rendered whenever
appropriate from such locations as may be convenient to him. All costs
incurred in connection with the design of the Licensed Products, including
prototype development, product testing and regulatory approvals, shall be
solely borne by Gargoyles. Gargoyles acknowledges that GB Golf's consultation
in the design process for the Products shall not relieve Gargoyles from its
legal obligations to provide those engineering and design services required to
develop merchantable products, fit for their intended purposes, in conformity
to all applicable laws and regulations governing the design and manufacture of
eyewear. The parties agree that neither GB Golf nor Nicklaus, by virtue of
consulting services rendered by them under this Agreement or otherwise, will
assume any professional responsibility or products liability with respect to
the Licensed Products or any other products manufactured or distributed by
Gargoyles.
2. GRANT OF TRADEMARK AND ENDORSEMENT RIGHTS
GB Golf represents and warrants to Gargoyles that it is the exclusive
licensee of Golden Bear International, Inc. ("GBI"), and that GBI is the owner
of trademark and service ▇▇▇▇ rights in those trademarks identified in Schedule
"2" annexed hereto and made a part hereof (the "Trademarks"), and has developed
substantial goodwill in connection with its use of such Trademarks for a
variety of goods and services worldwide. GB Golf has full right and authority
to sub-license the Trademarks to Gargoyles for use by Gargoyles in accordance
with the terms of this Agreement. Subject to the terms and conditions of this
Agreement, GB Golf hereby grants to Gargoyles the right during the term of this
Agreement: (i) to affix the Trademarks to Licensed Products to be marketed in
and sold in the "Territory" (as defined in Section 6, below), and (ii) to
utilize the Trademarks and the name, likeness and signature of Nicklaus and
other information, artwork and materials approved in writing by GB Golf
(collectively, the "Nicklaus Endorsement") to indicate Nicklaus' endorsement of
the Licensed Products marketed within the Territory.
3. PRODUCT DESIGN AND APPROVALS
GB Golf shall have the right to approve all Licensed Products prior to
sale by Gargoyles under this Agreement, which approval shall be in writing in
accordance with the procedures set forth herein. As set forth in Section 1,
above, GB Golf shall assist Gargoyles in the conceptual development of the
Licensed Products and Gargoyles shall consult with GB Golf on an ongoing basis
during all phases of the design and development of the Licensed Products.
Without limiting the generality of
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the foregoing, GB Golf and Gargoyles shall agree upon conceptual design and
performance criteria for each new or materially changed model of the Licensed
Products in advance of the commencement of the design process. Gargoyles shall
be responsible for integrating reasonable comments and suggestions made by GB
Golf into the design of each model of this Licensed Products, including
providing the design and engineering services reasonably required to implement
such matters with existing know-how and research of Gargoyles. Unless
otherwise agreed by GB Golf, Gargoyles shall furnish to GB Golf, free of
charge, working prototypes of each new or materially changed model of the
Licensed Products for review, testing and approval prior to Gargoyles'
commitment to manufacture such model on other than a prototype basis.
Gargoyles shall also furnish to GB Golf for its approval a final production
sample of each model of the Licensed Products before production in commercial
quantities. GB Golf shall have ten (10) working days from receipt of any
working prototype to approve or disapprove of such prototype, and shall have
ten (10) working days from receipt of any production sample to approve or
disapprove such sample. If no written disapproval of a prototype is received
by Gargoyles within the required time period, Gargoyles shall be authorized to
prepare the corresponding model for final production. Gargoyles shall not
prepare production samples of Licensed Products until corresponding prototypes
have been approved by GB Golf, and Gargoyles shall not manufacture, distribute
or sell any Licensed Products in commercial quantities until corresponding
production samples have been approved by GB Golf. Approvals under this section
shall in no event be unreasonably withheld or delayed, and if withheld, the
reasons therefor shall be clearly explained to Gargoyles. Gargoyles agrees
that all Licensed Products to be distributed, sold, promoted, or manufactured
under this Agreement shall substantially conform to the latest production
samples approved, or deemed to be approved, by GB Golf, and to those additional
quality standards and controls applied by Licensee in general to similar
products manufactured and marketed by Licensee.
4. ADVERTISING/PROMOTIONAL DEVELOPMENT AND APPROVALS
Gargoyles acknowledges that it is essential for the protection of the
interests of GB Golf in the Nicklaus Endorsement that GB Golf have a continuing
control over the design and content of all labelling, packaging, advertising,
and promotional materials (collectively, "Promotional Material") used in
connection with marketing of the Licensed Products, including, without
limitation, any brand name, trademark or trade name used by Gargoyles in
connection therewith to promote itself as a source of the Licensed Products.
Accordingly, Gargoyles agrees that: (i) GB Golf shall have a continuing right
to approve or disapprove of any Promotional Material used in connection with
the Licensed Products, whether used by Gargoyles or provided by
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Gargoyles to any distributor, retailer, or other party selling the Licensed
Products; and (ii) Gargoyles will not use and will not extend to others the
right to use any Promotional Material of any type whatsoever without the prior
approval thereof by GB Golf as provided in this Section. In the event that GB
Golf in good faith requests Gargoyles to terminate further use of Promotional
Material which had been approved prior to the time of such request, the parties
will use their best efforts to negotiate a mutual agreement for phasing out
further use of such Promotional Material in a manner which minimizes the
negative impact of such material on GB Golf and recognizes the financial and
marketing interests of Gargoyles in use of such materials for a reasonable
period. Prior to the creation of any Promotional Material, Gargoyles shall
consult with GB Golf regarding the appropriate uses of the Nicklaus Endorsement
and marketing ideas for the Licensed Products. Gargoyles shall submit
conceptual descriptions for proposed Promotional Material for approval by GB
Golf as soon as reasonably practicable. After approval of such concepts,
Gargoyles shall prepare samples of each item of Promotional Material so
approved, which shall reflect the artwork, photography, and text to be used for
labelling, packaging and print media and scripts and storyboards for
broadcasting media. GB Golf shall have ten (10) working days from receipt of
such samples to approve or disapprove of such samples. Approvals under this
section shall in no event be unreasonably withheld or delayed, and if withheld,
the reasons therefor shall be clearly explained to Gargoyles. Gargoyles shall
not commit to production or media run any Promotional Material without the
prior approval of such Promotional Material GB Golf, and it is understood that
all Promotional Material shall conform to the samples approved by GB Golf or to
revised samples submitted to and approved by GB Golf as provided herein.
Gargoyles shall use reasonable efforts to inform GB Golf of any unauthorized
use of Promotional Material by its customers, and upon request of GB Golf, to
assist GB Golf in its efforts to eliminate any unauthorized use of any part of
the Nicklaus Endorsement in connection with the Licensed Products.
5. STANDARDS OF QUALITY
Gargoyles acknowledges that it shall not be authorized to use any part
of the Nicklaus Endorsement or any of the Product Marks (as defined in Section
11, below) except to identify and promote those Licensed Products meeting the
standards of quality adopted by GB Golf in connection with the product approval
process set forth in this Agreement. GB Golf and/or its representatives shall
have reasonable access to any manufacturing or distribution facility used by
Gargoyles in connection with the Licensed Products for the purpose of verifying
Gargoyles' ongoing adherence to the standards of quality imposed by this
Agreement.
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6. TERRITORY
The Territory shall initially consist of the United States domestic
market and those countries identified in Schedule "3" annexed hereto, which
Gargoyles represents and warrants to be its primary territories for
distribution of its current product lines. GB Golf agrees that Gargoyles shall
have the exclusive right to expand the initial Territory by giving GBI
reasonable prior notice of any proposed sales activities which Licensee intends
to conduct in any jurisdiction outside of those countries expressly identified
in Schedule "3", and provided that GB Golf shall have the right to determine,
in its discretion, whether or not to request GBI to proceed with the
registration of the Trademarks in such jurisdiction based upon the projected
costs of such registration and the amount of compensation which Gargoyles
reasonably expects to generate from its proposed activities. GBI shall not be
responsible for any loss or liability incurred for trademark infringement
incurred by Gargoyles as a result of its distribution of Licensed Products into
any new jurisdiction prior to confirmation by GB Golf that no conflict exists
in such jurisdiction with respect to the proposed use of a Trademark. In the
event that any person not authorized by GBI asserts any interest in a Trademark
or in any similar or conflicting trademark under the trademark laws or
regulations of such a jurisdiction, GB Golf may withdraw such jurisdiction from
the Territory granted to Licensee hereunder unless the parties reach a mutual
determination as to their common business interest in defending GBI's ownership
rights in the Trademark or resolving any conflict with the other trademark
based upon the proposed activities to be conducted in such jurisdiction under
this Agreement or by GBI under any related Agreement. If the parties determine
to proceed with the distribution of Licensed Products into such jurisdiction,
GB Golf shall cause GBI to use its best efforts to secure the trademark rights
required for the proposed activities in such jurisdiction, provided that GB
Golf and Gargoyles will each be required to contribute one-half (1/2) of the
reasonable expenses and attorneys' fees required by GBI to secure such rights.
Notwithstanding the foregoing, it is understood that GBI, as the sole owner of
the Trademarks, and GB Golf, as its master licensee, reserve the right to take
such action at their sole cost and expense as each of them may deem prudent in
order to protect its trademark rights in any jurisdiction, whether included in
the Territory or not.
7. DISTRIBUTION CHANNELS
The Licensed Products will initially be sold for distribution to
sunglass specialty stores and dispensing optical retailers in Gargoyles
existing distribution channels, to on course golf pro shops and off course
specialty golf retailers, and to such other channels as may be mutually agreed
upon in writing by the parties.
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Gargoyles agrees to work with GB Golf and the existing licensees of the
Nicklaus Endorsement for golf equipment and apparel with respect to golf retail
channels in order to avoid conflicts with existing distribution activities in
such channels, provided that the agreement of Gargoyles to enter into any
distribution arrangements for the Licensed Products with other licensees shall
be subject to its reasonable satisfaction with such licensees and the terms of
such arrangements, and provided further, that the delegation of distribution
duties to such licensees or common sales representatives shall not relieve
Gargoyles of its obligations to meet its distribution requirements under this
Agreement. GB Golf agrees that it will not unreasonably refuse to agree to any
new channels proposed by Gargoyles, provided that the proposed distribution
does not conflict with Nicklaus' professional image or reputation for quality
or the brand image of GB Golf. Gargoyles shall use its best efforts to assure
the integrity of the distribution channels selected, and to prevent
transshipment and ▇▇▇▇ market sales by its customers and distributors through
unauthorized distribution channels. Distribution of the Licensed Products,
including but not limited to the cost thereof, shall be the exclusive
responsibility of Gargoyles.
8. COMPENSATION AND EXPENSES
The parties agree that, in consideration for the performance of this
Agreement by GB Golf, Gargoyles will provide compensation and expense
reimbursements as provided in this Section. As an independent contractor, GB
Golf agrees to be responsible for all other overhead and expenses incurred in
connection with the performance of this Agreement, and GB Golf will be
responsible for payment of all taxes due with respect to the payments received
under this Agreement and for making all employer's withholding deposits in
connection with payments made to its staff, including Nicklaus, for services
rendered in support of this Agreement.
(a) As compensation for the design consulting and marketing
services to be performed by GB Golf under this Agreement, Gargoyles agrees to
pay GB Golf annual consulting fees (the "Consulting Fees") in the amounts set
forth on Schedule "4" annexed hereto for each calendar year during the term.
In addition to the Consulting Fees, Gargoyles hereby agrees to pay GB Golf
guaranteed royalties (the "Minimum Royalties") for each calendar year in the
amounts set forth on Schedule "4" for the intangible rights licensed to
Gargoyles under this Agreement. The Consulting Fee and Minimum Royalty for
each year (collectively, the "Annual Retainer") shall be paid to GB Golf in
equal quarterly installments due and payable in advance, with the first
installment of the Annual Retainer for 1997 due upon execution of this
Agreement, and subsequent installment payments due on or before the first (1st)
day of each calendar quarter thereafter. All Annual Retainer payments made to
GB Golf
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hereunder shall be guaranteed and non-refundable, provided that Annual Retainer
payments will be credited against Percentage Compensation due from Gargoyles as
provided in subsection (b) hereof. In the event that this Agreement is
terminated due to a breach by GB Golf, in which case that portion of the
aggregate Annual Retainer attributable to periods of time subsequent to such
termination shall be repaid to Licensee if in excess of actual Percentage
Compensation earned under subsection (b) hereof.
(b) Within thirty (30) days following the end of each calendar
quarter, commencing with the first quarter in which shipments of Licensed
Products are actually made, Gargoyles shall deliver to GB Golf a statement
setting forth the total amount of shipments of Licensed Products by Gargoyles
during such quarter and for the applicable calendar year on a cumulative basis
and also setting forth the amount of discounts, allowances and returns given
and received with respect to Licensed Products during such quarter and year on
a cumulative basis. All amounts shall be set forth in U.S. Dollars, and any
amounts denominated in foreign currency shall be converted using the exchange
rates actually used by Gargoyles for such conversion. Gargoyles shall at the
same time pay to GB Golf compensation (the "Percentage Compensation") with
respect to such shipments, which Percentage Compensation shall be earned at the
rate of [*] of the actual invoice price thereof, less trade and cash discounts,
sales or similar transaction taxes (if any) which Gargoyles is required to
collect from its customers, freight charges if separately invoiced, and returns
and allowances actually given and received (hereinafter called "Net Sales").
GB Golf acknowledges that the full amount of Annual Retainer payments actually
received by GB Golf for each calendar year shall be credited against the
obligations of Gargoyles to pay Percentage Compensation hereunder with respect
to the Net Sales for such calendar year through the quarter covered by each
statement, and that Gargoyles shall only be required to pay GB Golf the net
balance of Percentage Compensation due under this subsection for the year to
date Net Sales made during such License Year after crediting Annual Retainer
Payments and any additional payments of Percentage Compensation for prior
quarters of such calendar year. Any Annual Retainer payments not applied
against Percentage Compensation earned during the calendar year for which such
Annual Retainer is paid shall not be subject to refund or application against
future Percentage Compensation earned by GB Golf.
(c) Gargoyles shall keep and maintain such books of account as
shall be necessary to record all sales and shipments of Licensed Products and
for the accurate
_______________________
[*] Confidential Treatment Requested
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computation of Net Sales and Percentage Compensation with respect thereto
pursuant to the terms of subsection (b), above, which books of account shall be
open for inspection and copying during reasonable business hours by GB Golf and
its representatives until the conclusion of the twelve (12) month period
following the effective date of the termination of this Agreement.
(d) In addition to the Annual Retainers and Percentage
Compensation due to GB Golf under this Section, Gargoyles shall advance or
promptly reimburse GB Golf and Nicklaus for all out-of-pocket expenses (other
than normal postage and telecommunication expenses) approved in writing by
Gargoyles which are incurred by them in connection with their participation in
the development and marketing of Licensed Products under this Agreement,
including, without limitation, travel expenses incurred in connection with
travel to Gargoyles' principal office and any other location where the parties
may agree that GB Golf shall render particular services to Gargoyles under this
Agreement. GB Golf shall provide Gargoyles with an estimate of expenses to be
incurred under this subsection prior to making any binding commitments to
undertake activities which require GB Golf or Nicklaus to incur such expenses,
and GB Golf shall not be required to undertake a proposed activity if Gargoyles
fails to approve such expenses as required under this subsection. Unless
approved expenses are otherwise paid directly by Gargoyles, GB Golf shall
provide Gargoyles on a periodic basis with invoices including customary
supporting information for all expenses subject to this subsection, and
Gargoyles shall pay all such invoices within fifteen (15) days of receipt
thereof.
9. TERM
The term of this Agreement shall commence upon the execution hereof
and continue until June 30, 2002, unless earlier terminated pursuant to this
Section or renewed as provided in Section 17, below.
(a) Either party may terminate this Agreement on thirty (30) days
written notice to the other in the event of a material breach by such other
party of any of its general obligations or undertakings under this Agreement,
unless the party receiving such notice cures the breach identified therein
within such thirty (30) day period. In the event that (1) Gargoyles shall fail
to make any payment required to be made under this Agreement within fifteen
(15) days of the date the same falls due, or (2) proceedings are instituted by
Gargoyles under any bankruptcy or insolvency law or other law for the benefit
of creditors or the relief of debtors, or involuntary bankruptcy proceedings
are commenced against Gargoyles and such proceedings are not dismissed within
sixty (60) days of the commencement thereof, or Gargoyles shall
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make an assignment for the benefit of its creditors, or Gargoyles shall be
adjudicated bankrupt or insolvent, or (3) Gargoyles shall transfer all or a
substantial part of the employees, or convey all or a substantial part of the
assets or intangible rights necessary to perform this Agreement, to any other
party without the prior written consent of GB Golf, which consent shall not be
unreasonably withheld; then in any such event, GB Golf shall have the right, at
its election, then or at any time thereafter and while such event or events
shall continue, to terminate this Agreement upon written notice to Gargoyles,
without prejudice to any other right or remedy GB Golf may have as a result of
such event or events.
(b) In addition to the foregoing termination rights, either party
shall have a special right to terminate this Agreement in the event that
Gargoyles fails to make sufficient Net Sales during any period of two (2)
consecutive calendar years to generate royalties in excess of the minimum
annual retainer payments required under Schedule "4" annexed hereto despite the
best efforts of Gargoyles to meet its distribution obligations under this
Agreement. Such right may be exercised by written notice from the party
electing to terminate to the other party, and will be deemed waived unless the
required notice is given within ninety (90) days after GB Golf's receipt of the
fourth quarterly payment with respect to Net Sales made by Gargoyles in the
second calendar year of any such period. In addition to the foregoing rights,
either party shall have a special right to terminate this Agreement in the
event that Nicklaus dies or becomes disabled prior to the first public
introduction of Licensed Products by Gargoyles. Such right may be exercised by
written notice from the party electing to terminate to the other party, and
will be deemed waived unless such notice is given within thirty (30) days
following the death or disability of Nicklaus or thirty (30) days prior to the
first scheduled public introduction of Licensed Products, whichever shall first
occur.
(c) Following the effective date of any termination of this
Agreement, and except as otherwise hereinafter expressly provided in subsection
(d) of this Section in the event of a termination by GB Golf, Gargoyles shall
no longer utilize any Product ▇▇▇▇ (as defined below) or any other part of the
Nicklaus Endorsement in connection with the manufacture, sourcing,
advertisement, promotion, or sale of any products (whether or not such products
were originally manufactured as Licensed Products), and all rights of Gargoyles
hereunder shall cease absolutely. It is further understood that Gargoyles'
right to sell Licensed Products incorporating technical improvements for which
proprietary rights have been reserved by GB Golf under this Agreement shall
cease in the same manner. Nonetheless, it is understood that distributors and
retailers may continue to promote and sell such Licensed Products as they may
then have in their own inventory. Nothing herein, however, shall be deemed to
limit the
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right of Gargoyles to sell any eyewear products (whether or not such products
were originally manufactured as Licensed Products) subsequent to the
termination of this Agreement, without utilizing any Product ▇▇▇▇ or any part
of the Nicklaus Endorsement, or any proprietary rights reserved by GB Golf, so
long as all reference to Nicklaus and GB Golf (or any symbol associated in the
mind of the public with such parties) has been removed therefrom at Gargoyles'
sole cost and expense.
(d) In the event of an early termination of this Agreement by GB
Golf, any Licensed Products which have been manufactured by or for Gargoyles
pursuant to the terms hereof and are in the inventory of GB Golf prior to the
termination of this Agreement may be sold (but only in the same distribution
channels and under the same pricing policies theretofore applicable to the sale
of Licensed Products and subject to all of the obligations and restrictions
imposed by this Agreement) and shipped by Gargoyles during the six (6) month
period next following the date of such termination, provided that within forty
five (45) days next following the date of such termination, Gargoyles shall
have notified GB Golf in writing of the amount, description, and location of
all existing inventory of such Licensed Products, and provided further, that
Gargoyles timely pays and accounts for compensation in the manner and at the
rate specified in Section 8, above, with respect to such sales of Licensed
Products. Upon the expiration of such six (6) month period, all rights of
Gargoyles hereunder to distribute or otherwise deal with Licensed Products
shall cease absolutely.
(e) In the event of a termination of this Agreement, the parties
agree that GB Golf may contract with others with respect to matters which GB
Golf has contracted with Gargoyles hereunder, effective at any time after the
effective date of the termination of this Agreement and prior to the original
expiration date of this Agreement. Such right shall not be deemed to authorize
GB Golf to disclose any confidential information reserved by Gargoyles under
this Agreement, or to authorize GB Golf or any third party to incorporate any
patented improvement owned and incorporated by Gargoyles in any Licensed
Products except as provided in Section 10, below.
10. PROPRIETARY RIGHTS OF THE PARTIES
In recognition of the cooperative nature of the design and development
efforts to be conducted by the parties under this Agreement, they have agreed
to the provisions of this Section in order to protect their respective
interests in the ownership and use of intellectual property other than
trademarks which is involved in the creation of Licensed Products.
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(a) It is understood and acknowledged by GB Golf that Gargoyles
has heretofore developed and may hereafter continue to develop proprietary
rights in patents, trade secrets and manufacturing know-how relating to the
design and manufacture of eyewear, and that Gargoyles intends to maintain such
rights in the event of a termination of this Agreement. It is understood and
acknowledged by Gargoyles that GB Golf has heretofore developed and may
hereafter continue to develop proprietary rights in trade secrets and technical
know-how relating to the requirements of serious recreational and professional
golfers, and that GB Golf intends to maintain such rights in the event of a
termination of this Agreement. The incorporation by Gargoyles in any of the
Licensed Products of proprietary rights reserved by Gargoyles shall not be
deemed to create a waiver of such rights or to give GB Golf permission to use
such rights in the creation of any other eyewear product developed by or in
consultation with GB Golf. The disclosure of proprietary rights by GB Golf in
connection with the design and development of Licensed Products under this
Agreement shall not be deemed to create a waiver of such rights or to give
Gargoyles permission to make any use of such rights in any product other than
Licensed Products developed and distributed under this Agreement. Without the
prior express written consent of the other party, neither party shall disclose
any matters relating to the proprietary rights of the other party which have
been disclosed by such party in confidence in the performance of this
Agreement. It is the understanding of the parties that Gargoyles, as the party
responsible for technical matters relating to the design and manufacture of the
Licensed Products, shall not be required to generally disclose confidential
matters to GB Golf or Nicklaus in the performance of their responsibilities
hereunder, and that Gargoyles shall provide GB Golf with written notice in the
event that Gargoyles finds it necessary to make any disclosures subject to the
terms of this Section. Such notice shall identify the proprietary rights
claimed and the confidential information to be disclosed with reasonable
particularity, in such detail as to reasonably enable GB Golf to abide by its
responsibilities with respect thereto. It is the further understanding of the
parties that GB Golf, as the party responsible for consulting with Gargoyles'
technicians on matters relating to the design of the Licensed Products, will
generally be making disclosures to Gargoyles in the performance of GB Golf's
responsibilities hereunder regarding matters which GB Golf deems confidential,
and that Gargoyles shall be required to hold such disclosures in confidence
unless the parties agree in writing that particular matters to be disclosed by
GB Golf or Nicklaus shall not be subject to the terms of this Section.
(b) To the extent that patented designs and/or processes owned or
licensed by Gargoyles or any part of its proprietary toric curve technology are
used to implement design recommendations of GB Golf with respect to the
Licensed Products, GB Golf shall not acquire any interest in underlying patents
or such toric
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curve technology by virtue of such use, provided however, that this provision
shall not prevent GB Golf from implementing similar design recommendations with
other parties after termination of this Agreement by use of any non-infringing
technology. To the extent that design recommendations of GB Golf with respect
to Licensed Products suggest a newly patentable design feature for eyewear, GB
Golf agrees to assign its rights in such invention to Gargoyles for the
purposes of obtaining patent protection for such feature, provided however,
that such assignment shall be subject to the further terms of this subsection.
In the event that this Agreement is terminated prior to the expiration of its
term, except as a result of a material breach by GB Golf, Gargoyles shall not
utilize any such patent to preclude GB Golf from using or licensing others to
use, or otherwise contest GB Golf's right to use and license others to use, any
invention developed as a result of the collaboration of the parties hereunder
for the limited purpose of manufacturing and selling eyewear products similar
to the Licensed Products after termination of this Agreement. To the extent
required under applicable law in order to carry out the intent of the parties,
this subsection shall be deemed to grant a non-exclusive license to GB Golf to
utilize patents and related technology jointly developed by the parties to the
extent of the contributions of GB Golf and Nicklaus thereto on a royalty free
basis, with the understanding that such license shall not include the right to
utilize any proprietary information contributed to such invention by Gargoyles
unless otherwise agreed by the parties, which agreement may be conditioned upon
the payment of a reasonable royalty for such right.
(c) Neither party shall, by virtue of this Agreement, be entitled
to prevent or restrict the use by the other party, after the effective date of
any termination of this Agreement, of any idea, concept, or technology which is
already known in the prior art of eyewear design or manufacturing, which has
become a part of the public domain other than through a violation of this
Section by a party, or which would otherwise be obvious to a knowledgeable
individual from inspection and/or use of the Licensed Products. It is
understood that the purpose of this Section is to prevent unfair competition
between the parties in the event of a termination of this Agreement, and not to
restrict either party from utilizing technologies in the public domain to meet
the competition of third parties free to utilize such technologies.
11. TRADEMARK AND ENDORSEMENT RIGHTS OF THE PARTIES
The parties intend to introduce the Licensed Products utilizing the
marketing impact associated with both of their respective brands, with the
understanding that this limited association of their brands shall not be deemed
to create any waiver of the respective trademarks or related rights of the
parties. GB Golf acknowledges that
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Gargoyles is the sole and exclusive owner of the entire right, title and
interest in and to the name "Gargoyles" and those trademarks set forth in
Schedule "5" annexed hereto (collectively, the "Gargoyles Marks"), and that all
rights arising out of the use of any Gargoyles Marks by Gargoyles under this
Agreement shall inure to the sole and exclusive benefit of Gargoyles.
Gargoyles agrees that GB Golf shall have the right to approve any use of the
Gargoyles Marks as a trademark for any of the Licensed Products, and that
Gargoyles shall not use or adopt any other trademark owned or claimed by
Gargoyles to identify the Licensed Products. Gargoyles acknowledges that GBI
is the sole and exclusive owner, and that GB Golf is the exclusive master
licensee, of the entire right, title and interest in and to the Nicklaus
Endorsement, that GBI shall have the exclusive right under its agreements with
GB Golf to adopt and own all new trademarks to be used to identify the Licensed
Products (the "Product Marks"), and that all rights arising out of the use of
any part of the Nicklaus Endorsement and/or any of the Product Marks by
Gargoyles under this Agreement shall inure to the sole and exclusive benefit of
GBI and GB Golf as its master licensee. Upon adoption of any Product ▇▇▇▇, or
later registration thereof by GBI, this Agreement shall be deemed to include a
license of the trademark rights of GB Golf and GB Golf subject to the terms of
this Agreement governing Gargoyles' use of the Nicklaus Endorsement, which
license shall permit the use of such Product Marks in connection with the
Licensed Products without requirement of any compensation to GB Golf in
addition to the compensation otherwise payable under Section 8, above. GB Golf
agrees not to contest, either directly or indirectly, Gargoyles' exclusive
right, title and interest in and to the Gargoyles Marks. Gargoyles agrees not
to contest, either directly or indirectly, GBI's title or GB Golf's exclusive
right and interest in and to the Nicklaus Endorsement and/or the Product Marks.
12. INDEMNIFICATION; INSURANCE
Gargoyles hereby agrees to indemnify GB Golf, GBI and Nicklaus
against, and hold them harmless from, all suits, claims, investigations,
administrative actions, settlements, judgments, obligations and liabilities,
including attorneys' fees and other costs and expenses incurred by them in
connection with the defense or settlement of any such matter, which result
from, or arise out of, or in connection with, the design, manufacture,
distribution and/or sale of the Licensed Products. Gargoyles will obtain
general liability insurance (including products liability coverages) covering
the Licensed Products in the amount of at least $2,000,000 combined single
limit, or such other amounts as may be agreed to from time to time by the
parties, which insurance shall name GB Golf, GBI and Nicklaus as additional
insured parties. Gargoyles shall furnish GB Golf with a certificate of such
insurance from the insurance carrier, which certificate will require the
insurance carrier to give GB Golf prior written notice of
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any cancellation, reduction or material limitation of such insurance. The
indemnification rights provided under this section shall survive the expiration
or earlier termination of this Agreement and inure to the benefit of the
parties and their successors in interest.
13. PREMIUM MARKET
Gargoyles agrees that it will not offer Licensed Products for sale as
a premium in the Premium Market, except in support of promotions developed or
expressly approved by GB Golf or its affiliates. For the purpose of this
Agreement, the "Premium Market" shall be deemed to mean sales of Licensed
Products to consumers or businesses in the Territory where the product is to be
used as a part of a premium promotion or "traffic builder" designed to build
public recognition or goodwill for a purchaser's business through the
association with GB Golf, to serve as a reward or incentive for job
performance, or to induce the ultimate consumer of the product: (i) to come to
or contact a certain place of business under circumstances where the seller is
interested primarily in selling or exposing such consumer to products or
services other than Licensed Products, or (ii) to purchase a service or product
other than Licensed Products.
14. USE OF LICENSED PRODUCTS
GB Golf will make reasonable efforts to directly promote the Licensed
Products by displaying and making gifts of such products as appropriate to its
business purposes and by encouraging Nicklaus and key management personnel to
promote and make use of the Licensed Products where appropriate. In order to
permit GB Golf to carry out its obligations under this Section, Gargoyles
agrees to furnish GB Golf with reasonable quantities of Licensed Products for
such promotional uses, which Licensed Products will be provided without charge.
15. ASSIGNMENT
This Agreement will be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that neither this
Agreement nor any rights hereunder may be assigned directly or indirectly by
either party without first receiving the prior written consent of the other
party. Notwithstanding the foregoing, without such consent: (i) Gargoyles may
assign its rights under this Agreement to any party of comparable financial
ability who acquires all or substantially all of its business and assets or
capital stock, provided that such assignment is made as party of such
acquisition and the acquiring party agrees to be bound by the terms and
conditions of this Agreement, and (ii) GB Golf may assign its rights to any
party who
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acquires all or substantially all of its rights to license the Nicklaus
Endorsement with respect to eyewear products, provided that such assignment is
made as a part of such acquisition and the acquiring party agrees to be bound
by the terms and conditions of this Agreement.
16. RELATIONSHIP OF PARTIES
This Agreement does not create nor constitute a partnership, joint
venture or agency relationship between GB Golf and Gargoyles. Neither party
shall have any right to obligate, bind or commit the other party in or to any
matter, cause or thing whatsoever, without such party's express written
consent, and nothing herein shall grant, or is intended to grant, any rights of
any nature to any third party.
17. OPTION TO RENEW AGREEMENT
Subject to the due performance of its obligations hereunder and to the
further terms and conditions of this Section, Gargoyles shall have the first
option to negotiate a renewal of this Agreement for an additional term of five
(5) years, commencing July 1, 2002 (the "Renewal Term"). Gargoyles shall
exercise such option by providing GB Golf with written notice of its intention
to negotiate a renewal of this Agreement, which notice shall be given during
the period commencing January 1 and ending June 30, 2000, unless otherwise
agreed in writing by GB Golf. If such option is timely given by Gargoyles, GB
Golf shall negotiate in good faith with Gargoyles the terms and conditions to
be applicable under this Agreement during the Renewal Term, including without
limitation the Minimum Annual Retainers to be paid by Gargoyles under Schedule
"4", which negotiations shall be exclusive for a period of six (6) months
following the date of GB Golf's receipt of such notice. In the event that
Gargoyles fails to exercise its option as required by this Section, or if the
parties are unable to reach a mutual agreement regarding any material term or
condition to be applicable during the Renewal Term during the exclusive
negotiation period, GB Golf shall be free to negotiate and enter into
agreements with third parties regarding the manufacture, distribution and
marketing of products similar to the Licensed Products, provided that no such
agreement shall permit the introduction of such products into any part of the
Territory prior to the expiration or earlier termination date of this Agreement
without the prior express written consent of Gargoyles, which consent may be
withheld in its discretion to protect its exclusive marketing rights under this
Agreement with respect to the Licensed Products.
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18. MISCELLANEOUS
(A) CHOICE OF LAW; ARBITRATION
This agreement shall be construed and enforced in accordance with the
internal laws of the State of Florida without regard to conflicts of laws rules
which might otherwise be applied. The parties agree, except as otherwise
expressly set forth herein, that all disputes involving the construction or
enforcement of this Agreement shall be resolved by binding arbitration before a
single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") and the Federal and Florida Arbitration Acts.
The parties agree that the location of any such arbitration shall be at a site
selected by the arbitrator in Palm Beach County, Florida, unless otherwise
agreed at the time the dispute is submitted to the AAA. In accordance with the
Federal and Florida Arbitration Acts, any party may apply to any court of
competent jurisdiction to compel arbitration in accordance with this subsection
or to enforce any award rendered by the arbitrator in a proceeding conducted
hereunder in accordance with its terms. Unless otherwise agreed in writing by
the parties, legal action to compel any arbitration involving the construction
or enforcement of this Agreement may be brought by either party in that State
or Federal Court having subject matter jurisdiction over the cause which is
located in Palm Beach County, Florida, and each of the parties to this
Agreement hereby agrees to submit to the personal jurisdiction of such Courts
regardless of the domicile of such party at the time such action is filed. In
any arbitration under this subsection, the arbitrator shall have the authority
to award to the prevailing party attorneys' fees and expenses in accordance
with the provisions of subsection (e) of this Section. Nothing in this
subsection 15(a), however, shall deprive a court of competent jurisdiction of
the authority to issue a temporary restraining order or preliminary injunction
prohibiting a violation of this Agreement prior to any arbitration proceeding
required hereunder.
(B) NOTICES
Any notice to be given under this Agreement shall be made in writing
and shall be sent to the address of the intended recipient as set forth at the
beginning of this Agreement or the facsimile number set forth on the signature
page, or to such other address or facsimile number as may be designated in a
written notice meeting the requirements of this subsection. Notices under this
subsection will be effective: (i) if mailed by certified mail, return receipt
requested, three (3) days after the date the notice is deposited, postage paid
with the United States Postal Service, as shown by its receipt for certified
mail; (ii) if sent via courier service or express delivery, upon the
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date of actual delivery as endorsed by the carrier or person accepting such
delivery for the recipient of such notice, or (iii) if sent via facsimile to
the telephone numbers given by the recipients of such notice, on the date of
transmission as shown by the confirmation forms printed by the sending machine
showing the recipients' station identification and verification of error free
communication, provided that confirmation copies of the notice are sent to the
recipient via certified mail or courier as provided above not later than the
day following the date of such confirmed-facsimile transmission.
(C) ENTIRE AGREEMENT; AMENDMENT
This Agreement and the annexed schedules constitute the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may not be amended or modified, or any right or obligation of a party
hereunder waived or released, except in a written document signed by the party
to be charged with such amendment, modification, waiver or release.
(D) COUNTERPARTS
This agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(E) EXPENSES; ATTORNEYS' FEES
Except as otherwise expressly provided in this Agreement, each party
shall be responsible for payment of its own expenses (including, without
limitation, the fees and expenses of their agents, representatives, counsel and
accountants) incidental to the preparation and carrying out of this Agreement.
In the event any a party is required to retain the services of an attorney to
enforce the rights of such party under this Agreement, or to require a
construction of this Agreement or declaration or determination of the rights of
any party hereunder, the prevailing party or parties in any subsequent
litigation involving such matter shall be entitled to receive an award of all
attorneys' fees incurred by them in connection with such matter, including any
fees incurred for review, negotiation, settlement, preparation of pleadings,
trial or appeal.
(F) SECTION HEADINGS
The section headings are inserted for convenience of reference only,
and shall not affect the interpretation or construction of any of the express
terms of this Agreement.
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(F) DISCLOSURE
The parties agree to mutually agree upon the text of a press release
to be issued as soon as reasonably possible after execution of this Agreement
in order to meet the requirements of the parties to communicate significant
developments to their public investors. Each party hereby consents to the
disclosure of this Agreement in public filings with the Securities and Exchange
Commission to the extent either party is required to make such disclosure or to
include this Agreement as an exhibit in connection with any filing which such
party is obligated to make under applicable securities laws and regulations.
The parties agree to consult with each other and their respective counsel prior
to making any such disclosure, and if requested by either party during such
consultation, to use their reasonable efforts to obtain confidential treatment
by the SEC of any terms of this Agreement deemed confidential by either party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
GARGOYLES, INC. GOLDEN BEAR GOLF, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- -------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- -------------------------
Title: Senior Vice President Title: President
------------------------- -------------------------
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SCHEDULE "1"
LIST OF LICENSED PRODUCTS
Premium Sunglasses
Optical Frames
Net Cords
Eyeglass Cases
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SCHEDULE "2"
LIST OF TRADEMARKS
NICKLAUS(TM) WORDMARK
NICKLAUS (TM)
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SCHEDULE "3"
DESCRIPTION OF FOREIGN TERRITORY
--------------------------------
Canada
Other countries Worldwide to be added
subject to limitations of Section 6 and this Schedule
NOTE: As predecessor to GB Golf, GBI authorized JNJ, Inc., a Japanese
corporation affiliated with GB Golf and its Japanese apparel
licensee, Kosugi Sangyo Co., Ltd., to sublicense eyewear to
Sunreeve, Ltd. in the territory of Japan on an exclusive basis
through May 31, 2000. GB Golf has further agreed in principle to
permit Sunreeve to export eyewear manufactured under such
sublicense to the following countries through September 30, 1997:
Hong Kong, Indonesia, Singapore, South Korea, Taiwan and Thailand.
As successor in interest to GBI under the JNJ agreements, GB Golf
will use its best efforts to obtain rights for Gargoyles to
distribute the Licensed Products in Japan upon the expiration or
earlier termination of JNJ's sublicense with Sunreeve, and to add
the above referenced export territories to the list of countries
available for distribution under Section 6 after the agreed
termination date of such export rights.
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SCHEDULE "4"
MINIMUM ANNUAL RETAINERS
CALENDAR YEAR CONSULTING FEE MINIMUM ROYALTY ANNUAL RETAINER
------------- -------------- --------------- ---------------
1997 [*] [*] [*]
1998 [*] [*] [*]
1999 [*] [*] [*]
2000 [*] [*] [*]
2001 [*] [*] [*]
2002* [*] [*] [*]
* Represents a short fiscal year consisting of the first two (2) calendar
quarters ending June 30, 2002, and is payable in two (2) equal quarterly
installments due January 1 and April 1, 2002.
__________________________________
[*] Confidential Treatment Requested
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SCHEDULE "5"
List of Gargoyles Trademarks
Gargoyles (R) Wordmark and Design ▇▇▇▇
[LOGO] (TM) Design ▇▇▇▇
Gargoyles Performance Eyewear (TM) Wordmark
Gargoyles Wrapback Toric Curve (TM) Wordmark
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