TRADEMARK LICENSE AND PRODUCT PROMOTION AGREEMENT
This Agreement is made and entered into this 17 day of December, 2001,
by and between KOBRA INTERNATIONAL, LTD., a New York corporation with office at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter, "KOBRA"), f/s/o
XXXXXX XXXXXX, an individual (hereinafter, "XXXXXX XXXXXX"), and SEL-LEB
MARKETING, INC. a New York corporation with offices at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter, "SEL-LEB").
RECITALS
WHEREAS, XXXXXX XXXXXX is a shareholder, executive officer and employee
of KOBRA, and KOBRA has the right to license the name, likeness, autograph,
portrait and picture (hereinafter collectively referred to as the "Xxxxxx
Rights") of XXXXXX XXXXXX and to provide the services of XXXXXX XXXXXX as
provided for hereunder; and,
WHEREAS, KOBRA is the owner of the trademark "Xxxxxx Xxxxxx" and
certain simulations and variations thereof as described in Schedule "A" hereto
(hereinafter referred to as the "Marks").
WHEREAS, SEL-LEB is in the business of, INTER ALIA, manufacturing
celebrity endorsed consumer products and distributing same through a number of
Electronic Retailers (as hereinafter defined); and
WHEREAS, SEL-LEB desires to obtain a license from KOBRA to use the
Marks and Xxxxxx Rights on and in connection with the promotion and sale of the
Licensed Products (as hereinafter defined) in the Territory (as hereinafter
defined);
WHEREAS, SEL-LEB desires to obtain the services of XXXXXX XXXXXX, to
assist in the design of and endorse and promote the Licensed Products on
Electronic Retailers' Programming Services (as hereinafter defined) throughout
the Territory;
WHEREAS, SEL-LEB acknowledges that the Marks, Xxxxxx Rights and
associated goodwill are of great significance and value to KOBRA and that strict
adherence to the quality control standards provided in this Agreement is
essential to the maintenance of the significance and value of the Marks, Xxxxxx
Rights and associated goodwill; and,
WHEREAS, KOBRA desires to grant a license for the Marks and Xxxxxx
Rights to SEL-LEB, and provide the services of XXXXXX XXXXXX, as hereinafter
provided upon the terms and conditions hereafter set forth.
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NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. DEFINITIONS.
"Close-Out Sales" as used herein shall mean sales of Licensed
Products by SEL-LEB for less than 75% of its regular wholesale price to discount
retailers with the consent of KOBRA.
"Electronic Retailers" as used herein shall mean entities
which sell a variety of consumer products by means of live programming services,
via satellite transmissions, broadcast television stations, and via affiliated
cable television systems, including only QVC, Home Shopping Network, and
NBC@HOME within the United States and the affiliates, partners and joint
venturers or each of the foregoing outside of the United States, unless
otherwise mutually agreed by the parties hereto.
"Electronic Retailers' Programming Services" as used herein
shall mean programming services of a Electronic Retailers' via satellite
transmissions, broadcast television stations, and via affiliated cable
television systems.
"Indemnified Party" as used herein shall mean a party seeking
indemnification.
"Indemnifying Party" as used herein shall mean a party from
whom indemnification is sought.
"Inventory" as used herein shall mean any and all remaining
(i.e. on hand or in stock) Licensed Products and tangible items bearing the
Marks or Xxxxxx Rights, including but not limited to, raw material, "Works in
Progress" (as hereinafter defined), labels, tags, etc.
"Licensed Products" as used herein shall mean all jewelry
categories, excluding watches, made with the following: sterling silver, 10k
gold 14k gold and 18 kt gold, and all precious stones and semi precious stones
as well as diamonds and synthetic stones such as cubic zirconia and synthetic
colors stones, in each instance subject to Section 2(g) below.
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"Marks" as used herein shall mean registered and common law
trademarks belonging to KORBRA as set forth on Schedule A annexed hereto and
incorporated herein by reference.
"Xxxxxx Rights" as used herein shall mean the name, likeness,
autograph, portrait and picture of XXXXXX XXXXXX.
"Net Sales" as used herein shall mean the gross dollar amount
of all sales by SEL-LEB of Licensed Products (hereinafter "Gross Sales"), less
(i) freight and insurance charges, value added taxes, sales taxes, and/or other
similar taxes and duties, (ii) rebates, charge-backs, (iii) advertising and
other discount and markdown or margin allowances actually given to customers,
and (iv) approved credits, credits allowed customers for returns, and allowances
for damaged or defective goods. Notwithstanding the foregoing, deductions from
Gross Sales under subsection (iii) of the foregoing sentence shall not exceed
ten (10%) percent of Gross Sales to any one customer in any "Year" (as defined
in Section 4(c) below). In the event any purchaser of the Licensed Products
makes any deduction from monies paid on account of matters not directly related
to the sales of the Licensed Products, such amount shall be added back in
determining Net Sales. Any sales or transfers of Licensed Products made by
SEL-LEB to any person or entity that does not deal at arm's length with SEL-LEB
shall be computed, for the purpose of determining Net Sales, at an amount equal
to the price at which SEL-LEB would have invoiced or charged purchasers who deal
at arm's length with SEL-LEB and all Royalties shall be paid to KOBRA thereon.
By way of example only, SEL-LEB may sell 100,000 units of Licensed Products to a
customer within the Territory at a total invoice price of $1,000,000 with terms
of 1% Net 30. The shipment has a damage factor of 3%; therefore the customer
must only pay for 97,000 units at an extended cost of $970,000. The customer
deducts one percent (1%) for meeting SEL-LEB's payment terms and in full
satisfaction of the invoice, pays SEL-LEB $960,300.00. Therefore, Net Sales for
the aforementioned example were $960,300.00 from which KOBRA's Royalty (as
hereinafter defined) is calculated. Notwithstanding the foregoing, sales to
KOBRA, its subsidiaries, licensees or affiliates shall be included in "Net
Sales" only if such entity purchases Licensed Products for cash, at listed
wholesale rates, with the most favorable discounts, rebates and terms available
to third parties.
"Personal Appearances" as used herein shall mean appearances
by XXXXXX XXXXXX at promotional and related social events in order to promote
the Licensed Products.
"Promotional Segments" as used herein shall mean excerpts and
modifications made by SEL-LEB and/or the Electronic Retailers to the live
appearances and Promotional Spots by editing, dubbing, adding to, subtracting
from and integrating any or all of XXXXXX XXXXXX'x performances hereunder,
subject to Section 2(g) below.
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"Promotional Spots" as used herein shall mean television
commercials or promotional spots and/or print photography produced in connection
with Taping Days.
"Property Rights" as used herein shall mean the trade names,
trademarks, service marks, materials and other property interests relating to
the Licensed Products, which are created by SEL-LEB hereunder, subject to
Section 9 below.
"Sell-Off Period" as used herein shall mean the nine (9) month
period following the expiration or earlier termination of this Agreement;
PROVIDED, HOWEVER, if this Agreement is terminated by KOBRA due to the Material
Default of SEL-LEB, there shall be no Sell-Off Period, as defined herein.
"Territory" as used herein shall mean Electronic Retailer's
Programming Services throughout the world; retail stores either owned or
licensed by KOBRA; and other traditional retailers located in North America,
including specialty stores and department stores; PROVIDED, HOWEVER, SEL-LEB
will obtain the consent of KOBRA prior to distributing Licensed Products to
specialty stores or departments stores.
"Taping Days" as used herein shall mean a day or portion
thereof devoted to the rendering of services in connection with the production
of Promotional Spots.
"Use" (or "Used," "Uses" or "Using") shall mean (1) the
placement of the Marks or Xxxxxx Rights on the Licensed Products; and (2) the
use of the Marks and the Xxxxxx Rights in the broadest sense of publication,
that is any visual and aural form which to the average person would indicate
that the Licensed Products are associated with the Marks or Xxxxxx Rights,
including, but not limited to, print media, labels, tags, point of sale and
showroom displays, signage, packaging, stationery, business cards and forms, and
electronic media (including, without limitation, television, film, video tape,
radio and the like) now known or hereafter devised, and the form and content of
the subject matter associated with all the aforementioned; and (3) all other
uses of the Marks and Xxxxxx Rights approved by KOBRA in accordance with Section
2(g) below.
"Visits" as used herein shall mean travel to Electronic
Retailers' facilities to appear live on Electronic Retailers' Programming
Services to promote or otherwise endorse the Licensed Products.
"Works in Progress" as used herein shall mean Licensed
Products, which are in the process of manufacture at the time notice of
termination is received or given by SEL-LEB.
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2. PROMOTIONAL SERVICES AND LICENSE.
(A) LIVE APPEARANCES AT ELECTRONIC RETAILERS' STUDIOS.
From time to time during the term of this Agreement, KOBRA
agrees to make XXXXXX XXXXXX available to make Visits. The dates of such Visits,
as well as the duration thereof, shall be subject to XXXXXX XXXXXX'x
availability and will be determined by mutual agreement of the parties. For the
purpose of clarification, each Visit shall consist of up to three (3)
consecutive days, including travel. KOBRA and XXXXXX XXXXXX understand and agree
that, in connection with the coordination of the Visits, SEL-LEB will incur
substantial risk and expense and therefore the cancellation of a scheduled Visit
by KOBRA and/or XXXXXX XXXXXX (other than due to acts of God, illness or injury
which would prevent or otherwise materially inhibit XXXXXX XXXXXX'x performance,
death or travel related delays beyond KOBRA and/or XXXXXX XXXXXX'x control)
shall constitute a material breach of this Agreement and KOBRA and XXXXXX XXXXXX
agree to indemnify and hold SEL-LEB harmless from and against any and all
losses, damages, claims, causes of action and liabilities incurred as a result
of such material breach. Sel-Leb may terminate this Agreement, effective upon
notice to KOBRA, in the event (i) SEL-LEB receives notice from the Electronic
Retailer who's Electronic Retailers' Programming Services XXXXXX XXXXXX was to
appear on in connection with the cancelled Visit, that such Electronic Retailer
would not schedule any additional Visits, or (ii) SEL-LEB is able to reschedule
the cancelled Visit within ninety (90) days of the originally scheduled date for
such Visit, and KOBRA is unable to provide the services of XXXXXX XXXXXX on such
rescheduled date. Dates for which XXXXXX XXXXXX will be unavailable on an annual
basis are attached hereto as Schedule "B".
(B) PRINT AND VIDEO PROMOTIONAL SPOTS.
In addition to the Visits described in Section 2(a), by the
mutual agreement of the parties KOBRA agrees to make XXXXXX XXXXXX available
from time to time for Taping Days to produce Promotional Spots to be used in
connection with promotion and marketing of the Licensed Products, subject to
Section 3 below. The specific dates for Taping Days shall by determined by
mutual agreement of the parties. KOBRA and XXXXXX XXXXXX understand and agree
that the coordination of Taping Days will put SEL-LEB to considerable expense
and therefore the cancellation of a scheduled Taping Day by KOBRA and/or XXXXXX
XXXXXX (other than due to acts of God, significant illness or injury, death or
travel related delays beyond KOBRA and/or XXXXXX XXXXXX'x control) with less
than fourteen (14) days written notice to SEL-LEB shall constitute a material
breach of this Agreement KOBRA and XXXXXX XXXXXX agree to indemnify and hold
SEL-LEB harmless from and against any and all losses, damages, claims, causes of
action and liabilities incurred as a result of such material breach.
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(C) USE OF PROMOTIONAL SPOTS.
As to each of the live appearances in connection with the
Visits described in Section 2(a) and the Promotional Spots produced in
connection with the Taping Days pursuant to Section 2(b), SEL-LEB shall have the
right to make, or cause to have made, such number of Promotional Segments,
subject to Section 2(g) below, for use only with regard to the sale of the
Licensed Products, subject to Section 3 hereof. During the term of this
Agreement, SEL-LEB shall have the right to the unlimited use and reuse of any
and all of the Promotional Segments, as SEL-LEB may elect, in connection with
the promotion, advertising and distribution of the Licensed Products within the
Territory, including but not limited to, use as spot announcements on Electronic
Retailers' Programming Services, commercial advertisements for the Electronic
Retailers' Programming Services on other broadcast and cable programming, insert
statement stuffers, national and local media space advertising and other direct
marketing print methods in connection with the general promotion of the Visits,
and the Licensed Products within the Territory, generally.
(D) USE OF MARKS AND XXXXXX RIGHTS.
Subject to Section 2(g) below, KOBRA and XXXXXX XXXXXX hereby
grant exclusive permission to SEL-LEB, its subsidiaries, and manufacturing and
other affiliates of SEL-LEB agreed to by the parties to use, during the term of
this Agreement, the Marks and Xxxxxx Rights in connection with the Licensed
Products in the Territory, including, but not limited to, the right to package,
produce, promote, advertise, sell and distribute the Licensed Products in the
Territory, subject to Section 2(g) below.
(E) ADDITIONAL PROMOTIONAL SERVICES.
At SEL-LEB's request, from time to time during the term of
this Agreement, KOBRA agrees to use reasonable commercial efforts to make XXXXXX
XXXXXX available to make Personal Appearances. The specific days and events will
be determined by mutual agreement of the parties and subject to XXXXXX XXXXXX'x
availability. KOBRA and XXXXXX XXXXXX understand and agree that, in connection
with the coordination of the Personal Appearances, SEL-LEB will incur
substantial risk and expense and therefore the cancellation of a scheduled Visit
by KOBRA and/or XXXXXX XXXXXX (other than due to acts of God, significant
illness or injury, death or travel related delays beyond KOBRA and/or XXXXXX
XXXXXX'x control) shall constitute a material breach of this Agreement KOBRA and
XXXXXX XXXXXX agree to indemnify and hold SEL-LEB harmless from and against any
and all losses, damages, claims, causes of action and liabilities incurred as a
result of such material breach.
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(F) OTHER SERVICES.
SEL-LEB shall provide the services of one (1) or more
professional designers to design the Licensed Products on a non-exclusive Basis.
Without additional cost to SEL-LEB, KOBRA shall cause XXXXXX XXXXXX and its
other employees and agents to dedicate commercially reasonable time to assisting
the professional designer(s) provided by SEL-LEB in connection with the
designing of the Licensed Products.
(G) RIGHT OF APPROVAL.
KOBRA and XXXXXX XXXXXX shall have all rights of approval,
which shall not be withheld unreasonably, in connection with any product SEL-LEB
intends to offer as a Licensed Product, the content of any Promotional Segment,
and/or any Use of the Marks, Xxxxxx Rights or other results of XXXXXX XXXXXX'x
services hereunder. Before offering for sale any product SEL-LEB intends to
offer as a Licensed Product, and before committing to a Use of the Marks, Xxxxxx
Rights or any Promotional Segment, SEL-LEB shall obtain KOBRA'S prior written
approval of such product, Use and/or Promotional Segment. Such approval shall be
deemed to have been given if KOBRA or its designated representative does not
disapprove in writing within ten (10) business days of receiving a written
request therefor. For purposes of this Section 2(g) a request by SEL-LEB for
approval from KOBRA shall be effective as of the date same is sent by either
facsimile or e-mail, or received by KOBRA via hand delivery or any nationally
recognized overnight carrier. Notwithstanding the foregoing, the withholding of
approval by KOBRA hereunder shall not be deemed to be unreasonable in the event
such is withheld based upon aesthetic and quality standards used by KOBRA in its
core business. From time-to-time during the term hereof KOBRA may request
additional samples of Licensed Products previously approved pursuant to this
Agreement, at no cost and solely for the purpose of ensuring that the quality of
such samples is consistent with that of the previously approved samples; and, if
KOBRA reasonably determines that the quality has not remained consistent may
withdraw it earlier approval.
3. SEL-LEB'S MARKETING RIGHTS.
KOBRA and XXXXXX XXXXXX hereby grant to SEL-LEB, during the
term hereof, an exclusive license to use the Marks and Xxxxxx Rights in
connection with the production, manufacture, advertising, merchandising,
promotion, distribution and sale solely of Licensed Products, in the Territory;
and further, KOBRA agrees that, during the term of this Agreement, SEL-LEB shall
have the exclusive right to market and sell the Licensed Products in the
Territory, and to use the Marks, Xxxxxx Rights and Promotional Segments in
connection therewith (the "License").
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4. TERM.
(A) The term of this Agreement shall commence on the date
hereof and shall continue, unless sooner terminated as provided herein, up to
and including three (3) years from the date of the first Visit by Xxxxxx Xxxxxx
pursuant to the terms hereof (the "Initial Term"). The Initial Term may be
extended at the option of SEL-LEB for an additional period of three (3) years
(the "Extended Term"), provided (i) SEL-LEB is in full compliance with all the
terms and conditions of this Agreement immediately prior to the exercise of the
option to extend, and (ii) SEL-LEB gives KOBRA notice of its desire to renew at
least six (6) months prior to the end of the Initial Term. Thereafter, this
Agreement shall be extended automatically for successive periods of one (1) year
each (the "Successive Term" or the "Successive Terms") unless either party
provides written notice to the other, no less than one hundred and eighty (180)
days prior to the expiration of the Extended Term or any Successive Term that it
does not wish to extend or further extend the term of this Agreement. Such
extension of the Initial Term, Extended Term or any Successive Term of this
Agreement shall be upon the same terms and conditions in force and effect
hereunder at the time of each such extension or as otherwise agreed to in
writing by the parties. Should KOBRA at any time exercise its right under this
Agreement to terminate the rights of SEL-LEB, all options to extend the term
shall likewise be terminated.
(B) Notwithstanding anything in Section 2(a) to the
contrary, if SEL-LEB has not received a commitment for the first Visit by XXXXXX
XXXXXX hereunder within six (6) months of the date hereof, either party shall
have the option, within ten (10) business days after such date, to terminate
this Agreement upon the delivery of notice thereof to the other, rendering the
Agreement null and void and no longer of force or consequence, but shall not
result in the reimbursement of the "Advance Royalty" (as defined in Section 6(b)
below).
(C) The Initial Term, Extended Term, if any, Successive
Term(s), if any, and the Sell-Off Period, if any, shall collectively be referred
to as the "Licensed Term." The First Year of the Licensed Term shall commence on
the date of the first Visit by Xxxxxx Xxxxxx pursuant to the terms hereof, and
each twelve (12) month period thereafter, shall hereinafter be referred to as a
"Year," such as Second Year, Third Year, etc. The period preceding the first
Visit by Xxxxxx Xxxxxx hereunder shall be considered the "Start-Up Period". The
first quarter of the First Year shall consist of the Start-Up Period and the
first three (3) months immediately thereafter. The remaining quarters of the
Term shall be every three (3) month period thereafter.
5. TERMINATION.
Subject to the continuing obligations arising from a breach
hereof and those terms and obligations that survive cessation of this Agreement
by the clear import of their language, this Agreement and all rights relevant
thereto shall cease upon the earlier of termination, for
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whatever reason, or expiration, except that the exercise of any right of
termination under this Section 5 shall not affect any rights which have accrued
prior to termination and shall be without prejudice to any other legal or
equitable remedies to which either party may be entitled by reason of such
rights.
(A) BY SEL-LEB.
(i) WITHOUT CURE. SEL-LEB may terminate this
Agreement effective immediately (without right to cure by KOBRA) at any time
following the time that it becomes aware that, following the date of this
Agreement, KOBRA and/or XXXXXX XXXXXX has committed any act or become involved
in any situation or occurrence which brings KOBRA, XXXXXX XXXXXX, the Licensed
Products and/or SEL-LEB into public disrepute, scandal or ridicule, or shocks or
offends the community, or derogates from the public image of any of the
foregoing by giving written notice to KOBRA of such termination.
(ii) WITH CURE. SEL-LEB shall have the right to
terminate this Agreement, after notice to KOBRA and expiration of a thirty (30)
day cure period for all other material defaults (but excluding any non-curable
default as set forth in Section 5(b)(i) above which shall not be subject to this
Section 5(b)(ii)) if said defaults are capable of being cured upon the breach of
any of the terms or conditions of this Agreement by KOBRA
(B) BY KOBRA.
(i) WITHOUT CURE. KOBRA shall have the right to
terminate this Agreement effective immediately (without right to cure by
SEL-LEB) (1) upon SEL-LEB'S receipt of written notice from KOBRA in the event of
any affirmative act of insolvency by SEL-LEB; or (2) upon the appointment of any
receiver or trustee to take possession of the properties of SEL-LEB; or (3) upon
the decision of a court of first impression having competent jurisdiction to
permanently enjoin SEL-LEB'S unlawful use of the Marks and/or Xxxxxx Rights or
use of the Marks and/or Xxxxxx Rights in a manner specifically denied in this
Agreement, or adjudges such use to be violative of the trademark or other rights
of any third party; or (4) upon performance by SEL-LEB of any act specifically
set forth in this Agreement as a non-curable breach.
(ii) WITH CURE. KOBRA shall have the right to
terminate this Agreement, after notice to SEL-LEB and expiration of a seven (7)
day cure period for payment and/or reporting defaults and expiration of a thirty
(30) day cure period for all other defaults (but excluding any non-curable
default as set forth in Section 5(c)(i) above which shall not be subject to this
Section 5(c)(ii)) if said defaults are capable of being cured, ( 1 ) upon the
breach of any of the terms or conditions of this Agreement by SEL-LEB, or (2) if
SEL-LEB takes any act or fails to act, and such action or omission is, in the
reasonable opinion of KOBRA, materially harmful
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to the Marks, Xxxxxx Rights or the business of KOBRA, or KOBRA'S other
licensees, or the brand. If a breach is not capable of being cured, then
termination shall become effective as of the date of notice
(D) If this License is terminated by KOBRA (i) with no
right to cure by SEL-LEB, or (ii) following SEL-LEB's failure to timely cure a
payment default (unless non-payment is related to a good faith dispute by
SEL-LEB of the amount alleged to be owing by KOBRA), then SEL-LEB shall have no
right to a Sell-Off Period. During the Sell-Off Period, in the event the Marks
or Xxxxxx Rights are imprinted, affixed or otherwise physically integrated with
or into the Inventory, SEL-LEB shall have the right to dispose of any Inventory
which is on hand at the time of expiration or termination. SEL-LEB shall pay
compensation to KOBRA with respect to Net Sales during the Sell-Off Period at
the rate of seven percent (7%) of Net Sales. During the Sell-Off Period, SEL-LEB
may continue to use the Marks, Xxxxxx Rights and the Promotional Segments to
promote the sale of the Licensed Products. Notwithstanding the foregoing, in the
event KOBRA causes XXXXXX XXXXXX to make Visits during the Sell-Off Period,
SEL-LEB shall pay compensation to KOBRA with respect such sales at the
applicable percentage of Net Sales at the time of termination or expiration of
the Agreement.
(E) Upon the expiration or termination of this Agreement
and the Sell-Off Period, if any, SEL-LEB agrees immediately to discontinue all
Use of the Marks, Xxxxxx Rights, Promotional Segments and copyrights of KOBRA
and any term, trademark or trade dress confusingly similar thereto.
6. COMPENSATION.
(A) ROYALTY.
In consideration of KOBRA's grant to SEL-LEB of the License
and XXXXXX XXXXXX'x performance and service in connection with the sale of the
Licensed Products hereunder, SEL-LEB shall pay as a royalty to KOBRA a sum equal
to seven (7%) percent of Net Sales of the Licensed Products (hereinafter, the
"Royalty") in accordance with this Section 6.
(B) GUARANTEED MINIMUM ROYALTIES.
SEL-LEB shall pay to KOBRA, pursuant to Section 6(c) below,
the greater of either the earned Royalty or the Guaranteed Minimum Royalty
(hereinafter "GMTR") as follows:
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(i) Initial Term:
(A) $105,000.00 for the First Year, $10,000
of which shall be paid upon execution
of this Agreement (the "Advance
Royalty"), with the balance paid in
equal quarterly installments;
(B) $25,000.00 per Visit made during the
Second Year, PROVIDED, HOWEVER, if
during the Second Year, XXXXXX XXXXXX
makes six (6) or more Visits, the GMTR
for the Second Year shall be $200,000;
(C) $35,000.00 per Visit made during the
Third Year, PROVIDED, HOWEVER, if
during the Third Year, XXXXXX XXXXXX
makes eight (8) or more Visits, the
GMTR for the Second Year shall be
$400,000.
(ii) Extended Term, if any:
(A) $40,000.00 per Visit made during the
First Year of the Extended Term, if
any;
(B) $45,000.00 per Visit made during the
Second Year of the Extended Term, if
any;
(C) $50,000.00 per Visit made during the
Third Year of the Extended Term, if
any;
In the event KOBRA has not earned the maximum GMTR in the Second Year
or Third Year of the Initial Term, $200,000 and $400,000 respectively, then
KOBRA shall have the right, but not the obligation, to terminate this Agreement,
which option must be exercised, if at all, by written notice delivered to
SEL-LEB within ten (10) business days of receipt by KOBRA of the Quarterly
Report for the fourth quarter of the year for which KOBRA had not earned the
maximum GMTR. Notwithstanding the preceding sentence, SEL-LEB may avoid
termination of this Agreement by paying to KOBRA, within ten (10) business days
of SEL-LEB's receipt of such termination notice, the difference between the
amount earned by KOBRA in such year and the maximum GMTR for such year.
(C) PAYMENT.
Royalties due and payable to KOBRA hereunder shall be paid by
SEL-LEB on a quarterly basis no later than the twentieth (20th) day of the month
immediately following the quarter in which said Net Sales are made. Each Royalty
payment shall be accompanied by a "Quarterly Report" (as defined below).
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(D) QUARTERLY REPORTS.
No later than the twentieth (20th) day of the month
immediately following each quarter of the Licensed Term, SEL-LEB shall submit to
KOBRA a written report on a form acceptable to KOBRA in its reasonable
discretion which shall include a written statement of SEL-LEB's Net Sales during
such quarterly period showing the number and type of Net Sales of each Licensed
Product, a calculation of the Royalty due based thereon, and all other
information requested by KOBRA in this Agreement (hereinafter "Quarterly
Report"). Each Quarterly Report shall be accompanied by the remittance to KOBRA
of the Royalties shown to be due thereon, shall be sent via overnight courier,
and shall be certified as correct by the Chief Executive Officer or Chief
Financial Officer of SEL-LEB or such other officers or employees of SEL-LEB as
shall be reasonably designated by KOBRA. In the event of an inquiry by KOBRA
regarding any such report, SEL-LEB shall comply promptly with KOBRA'S reasonable
request for information in the manner reasonably requested. Within twenty (20)
days after any expiration or termination of this Agreement, SEL-LEB shall
provide KOBRA a Quarterly Report for the last whole or partial quarterly period
during the Term, and SEL-LEB shall continue to submit such reports and all
Royalty payment obligations to KOBRA within twenty (20) days following each
thirty (30) day period during the Sell-Off Period, if any.
(E) AUDIT.
(i) KOBRA, no more than two (2) times per
calendar year, at its own cost and expense, upon five (5) days' notice to
SEL-LEB, and during reasonable hours, will have the right to inspect the books
and records of SEL-LEB as they relate to the sales of the Licensed Products to
the extent necessary to verify SEL-LEB'S Quarterly Reports and payments of
Royalties. All materials designated as confidential by SEL-LEB, which are
reviewed and copied hereunder, shall be held in confidence by KOBRA and not used
for any purpose except for purposes of enforcing the terms of this Agreement. In
the event that an audit conducted by KOBRA's representatives concludes that the
amount of Royalties due was greater than the amount reported by SEL-LEB in any
Quarterly Report furnished pursuant to Section 6(c), KOBRA shall promptly
furnish to SEL-LEB a copy of the report of its accountant setting forth the
amount of the deficiency showing, in reasonable detail, the basis upon which
such deficiency was determined. Unless the results of the audit are disputed by
SEL-LEB in accordance with Section 6(d)(iv) below, SEL-LEB shall promptly remit
to KOBRA a sum equal to such deficiency, together with interest thereon at the
rate of 8 percent per annum from the date such Royalty was due until the date of
such remittance. In addition, if the audit reveals underpayment by more than
five percent (5%) of the Royalties in any quarterly period, SEL-LEB shall pay to
KOBRA the cost of such audit. The audit shall be conducted by Certified Public
Accountants licensed by the State of New York.
12
(ii) If any such audit reveals an underpayment of
ten percent (10%) or more for the period subject to audit, then, in addition to
any and all other rights, legal and/or equitable, or KOBRA, KOBRA shall have the
right, effective immediately upon giving notice to such effect to SEL-LEB, to
terminate the term of this Agreement.
(iii) If, as a result of such audit, KOBRA'S
accountant determines that the amount of Royalties paid was greater than the
amount actually due, such overpayment will be promptly refunded to SEL-LEB
(iv) SEL-LEB shall have the right to review and
the opportunity to challenge the results of an audit conducted in accordance
with Section 6(a)(i) above within fifteen (15) days after KOBRA makes any demand
for reimbursement pursuant to the terms of the immediately preceding paragraph.
In the event of any dispute between the SEL-LEB and KOBRA concerning the results
of such audit, such dispute shall be resolved by a firm of certified public
accountants mutually acceptable to the parties and unaffiliated with either of
them. The determination of such accountants shall be final and binding upon the
SEL-LEB and KOBRA. If the parties are unable to agree on a firm of certified
public accountants within ten (10) business days following notice to KOBRA by
SEL-LEB of its dispute with the results of such audit, then SEL-LEB and KOBRA
shall each choose one firm of certified public accountants, which two firms
shall designate a mutually agreeable firm within five (5) business days of their
own respective appointments. The certified public accounting firm selected in
accordance with the foregoing procedures shall deliver its written determination
to both the SEL-LEB and the KOBRA. The submitting party shall pay the costs of
any audit conducted under this Section 6(e)(iv). Any payment due from one party
to the other shall be made by the party from which payment is due within fifteen
(15) business days after its receipt of the determination that such amount is
due.
(F) OPTION TO INCREASE ROYALTY.
Notwithstanding Section 6(a) above, the Royalty may be
increased by two (2%) percent of Net Sales at the election of KOBRA anytime
after the First Year of the Initial Term, provided KOBRA agrees in writing, in a
form acceptable to SEL-LEB in its reasonable discretion, to, during the Licensed
Term, (i) pay SEL-LEB (on terms similar to the obligations of SEL-LEB under this
Section 6) two percent (2%) of Net Sales of products sold by KOBRA, its
subsidiaries and affiliates to Electronic Retailers in the United States and any
foreign jurisdiction in which SEL-LEB has sold Licensed Products hereunder; and
(ii) to use its best efforts to cause SEL-LEB to be paid a fee not less than two
percent (2%) of Net Sales of products sold by other KOBRA licensees to
Electronic Retailers in the United States and any foreign jurisdiction in which
SEL-LEB has sold Licensed Products hereunder (for purposes of this provision,
KOBRA shall be deemed to have exercised its best efforts if it refuses to
provide the services of XXXXXX
13
XXXXXX to appear, on an Electronic Retailers Programming Services, for the
purposes of promoting or otherwise endorsing the product for which SEL-LEB has
not, or will not be paid at least two percent (2%) of Net Sales). The increase
in Royalty resulting from an election by KOBRA hereunder shall apply only to Net
Sales generated after such election. Further, any election made by KOBRA
pursuant to this Section 6(e) shall be irrevocable during the Licensed Term
without the written consent of SEL-LEB.
(D) CLOSE-OUT SALES.
The reduced Royalty on Close-Out Sales shall be three (3%)
percent.
7. TRAVEL AND OTHER EXPENSES.
SEL-LEB shall be responsible for the reasonable travel
expenses of XXXXXX XXXXXX and one companion in connection with the Visits,
Promotional Appearances, Taping Days and other promotional services hereunder,
including first-class airfare, and lodging (if reasonably required under the
circumstances), meals, reasonable and direct out-of-pocket expenses and private
coach ground transportation to and from airports, hotels, Electronic Retailers'
studios, and Personal Appearances; PROVIDED, HOWEVER, in the event an Electronic
Retailer purchases products other than Licensed Products in connection with a
Visit, SEL-LEB shall only be responsible for the percentage of those travel and
other expenses in connection with Visit equal to the percentage of Gross Sales
of Licensed Products relative to Gross Sales of all products (including Licensed
Products) purchased by an Electronic Retailer in connection with such Visit.
8. BEST EFFORTS.
(A) KOBRA AND XXXXXX XXXXXX. SEL-LEB will consult with
KOBRA with respect to the dates for all Visits, Taping Days, Personal Appearance
and other promotional activities. During the Licensed Term KOBRA and XXXXXX
XXXXXX will exercise their best efforts in rendering the services hereunder and
make XXXXXX XXXXXX available for Visits, Taping Days, Personal Appearances and
other promotional activities so as to best promote, market, sell and distribute
the Licensed Products via an Electronic Retailers' Programming Services. Upon
the dates for Visits, Taping Days, Personal Appearance and other promotional
activities mutually being agreed upon, such dates will be reserved and KOBRA and
XXXXXX XXXXXX agree to coordinate XXXXXX XXXXXX'x schedule and other business
commitments so as not to conflict with XXXXXX XXXXXX'x performance hereunder.
Once the date has been reserved for a Visit, Taping Day or Personal Appearance,
a default in appearance by KOBRA and/or XXXXXX XXXXXX will cause SEL-LEB to
suffer extraordinary monetary loss; therefore, the cancellation of such date
(with respect to a scheduled Taping Day, the cancellation with less than
fourteen (14)
14
days written notice to SEL-LEB) or non-appearance by KOBRA and/or XXXXXX XXXXXX
(other than due to acts of God, significant illness or injury, death or travel
related delays beyond the control of KOBRA and/or XXXXXX XXXXXX) shall
constitute a material breach of this Agreement and KOBRA and XXXXXX XXXXXX agree
to indemnify and hold SEL-LEB harmless from and against any and all losses,
damages, claims, causes of action and liabilities incurred as a result of such
material breach. KOBRA agrees to make XXXXXX XXXXXX available to attend and
participate in pre-production conferences and meetings, make-up and other
activities reasonably necessary or appropriate for the proper performance of
services to be rendered.
(B) SEL-LEB. During the Licensed Term, SEL-LEB will use
its best efforts to exploit the License granted herein throughout the Territory,
and promote and market the Licensed Products so as to maximize the compensation
to KOBRA.
9. OWNERSHIP OF CERTAIN RIGHTS.
(A) SEL-LEB acknowledges the ownership of the Marks and
Xxxxxx Rights by KOBRA, agrees that it will do nothing inconsistent with such
ownership, and that all Use (and any other use thereof) of the Marks and Xxxxxx
Rights by SEL-LEB and all good will developed therefrom shall inure to the
benefit of and be on behalf of KOBRA. SEL-LEB agrees that nothing in this
Agreement shall give SEL-LEB any right, title, or interest in the Marks and
Xxxxxx Rights other than the exclusive right to Use the Marks and Xxxxxx Rights
in accordance with this Agreement and SEL-LEB agrees that it will not attack the
title of KOBRA to the Marks, the validity of the Marks, any rights of KOBRA that
may have arisen from this Agreement, or the validity of this Agreement. SEL-LEB
shall not, at any time, knowingly do or suffer to be done any act or thing which
may in any way adversely affect any rights of KOBRA and XXXXXX XXXXXX in and to
the Marks and Xxxxxx Rights or which, directly or indirectly, may reduce the
value thereof or detract from KOBRA's or XXXXXX XXXXXX'x reputation. KOBRA
reserves all rights in and to the Marks and Xxxxxx Rights except as specifically
granted herein to SEL-LEB; and, subject to the License and terms hereof, KOBRA
and XXXXXX XXXXXX may exercise such rights at any time. In the event of any
dispute between SEL-LEB and any other licensee of KOBRA and/or XXXXXX XXXXXX
with respect to the Marks and Xxxxxx Rights and products covered by their
respective licenses, XXXXXX XXXXXX shall mediate such dispute in good faith.
(i) Whenever requested by KOBRA, whether during
the Licensed Term or thereafter, SEL-LEB shall execute such documents or
applications as KOBRA may reasonably deem necessary to confirm KOBRA'S ownership
of the Marks and Xxxxxx Rights, to maintain the validity of the Marks, and to
obtain, or maintain any registration thereof.
15
(ii) SEL-LEB shall comply with reasonable
conditions set forth in writing from time-to-time by KOBRA with respect to the
style, appearance and manner of use of the Marks. All labels, hangtags and/or
packaging (hereinafter collectively "labeling" or "label(s)") and Promotional
Materials bearing the Marks shall contain a notice or notices acceptable to
KOBRA, in its reasonable discretion, identifying the licensed use under this
Agreement and the proprietary rights of KOBRA. Nothing herein shall require
SEL-LEB to cancel or amend orders of Licensed Products not yet filled, or to
dispose of inventory already received from manufacturers of the Licensed
Products, provided that KOBRA previously approved the samples for those Licensed
Products.
(iii) In the event the Territory includes
countries in which one or more of the Marks have not yet been registered, KOBRA
has the right, but not the obligation, to obtain trademark registration of any
of the Marks in such countries. KOBRA makes no representation or warranty that
the Marks will be registered or are registerable in the Territory, and the
failure to obtain or maintain registrations thereof shall not be deemed a breach
hereof by KOBRA.
(B) It is understood and agreed that SEL-LEB shall be the
sole and exclusive owner of all right, title and interest in and to the Property
Rights. Nothing contained in this Agreement shall be construed as an assignment
from SEL-LEB to KOBRA or XXXXXX XXXXXX of any right, title or interest in and to
the Property Rights belonging to SEL-LEB, other than those expressly granted
herein. KOBRA and XXXXXX XXXXXX recognize the value of the goodwill, which
exists or will be developed in connection with the Licensed Products, and that
the Property Rights and all rights therein and the goodwill pertaining thereto
belong exclusively to the SEL-LEB.
(C) SEL-LEB shall own, and KOBRA and XXXXXX XXXXXX hereby
grant, all rights of every kind and nature in and to all results and proceeds of
KOBRA's and XXXXXX XXXXXX'x services hereunder, worldwide, in perpetuity,
subject to the limitations provided in Section 3 of this Agreement. In
connection therewith, KOBRA acknowledges that XXXXXX XXXXXX'x services hereunder
are specially ordered and commissioned by SEL-LEB as a "work made for hire" for
the sole and exclusive benefit of SEL-LEB.
(D) SPECIAL RULES FOR LICENSED PRODUCT DESIGNS.
Notwithstanding anything to the contrary herein contained, any intellectual
property rights attaching to the design of any product designed, in whole or in
part, by SEL-LEB or designers engaged by SEL-LEB shall be considered, for
purposes of this Agreement "SEL-LEB Designs", and any design for product
designed exclusively by XXXXXX XXXXXX, which SEL-LEB offers as a Licensed
Product, shall be considered, for purposes of this Agreement, "KOBRA Designs".
16
(i) KOBRA agrees that it shall not exploit, or
permit any other person or entity to exploit, any KOBRA Designs other than under
this Agreement.
(ii) SEL-LEB agrees that it shall not exploit any
SEL-LEB Designs other than under this Agreement.
(iii) Within 30 days of the expiration or earlier
termination of this Agreement, either party may elect, by delivery of written
notice to the other party, to purchase any one or more SEL-LEB Designs and/or
KOBRA Designs for exploitation other than under this Agreement. The price shall
be equal to an amount equal to ten (10) times the Net Sales of such SEL-LEB
Designs and/or KOBRA Designs elected to be purchased during the twelve-month
period prior to the date of the termination or expiration of this Agreement. In
the event both parties hereto desire to purchase identical SEL-LEB Designs
and/or KOBRA Designs, the party whose election notice is first delieverd to the
other party, shall have the prior right to purchase such SEL-LEB Designs and/or
KOBRA Designs, provided such transaction is completed within thirty (30) days of
delivery of such election notice.
(iv) This Section 9(d) shall survive expiration
or earlier termination of this Agreement.
10. RESTRICTIVE COVENANT.
(A) Provided KOBRA has not exercised its option for an
increased royalty pursuant to Section 6(f) above, during the term of this
Agreement KOBRA agrees that it shall not provide the services of XXXXXX XXXXXX
to appear, or otherwise suffer an appearance by XXXXXX XXXXXX, on an Electronic
Retailers' Programming Services in the United States or in any foreign
jurisdiction in which SEL-LEB has sold Licensed Products under this Agreement,
for the purposes of promoting, marketing, or otherwise endorsing any products on
Electronic Retailers' Programming Services, other than Licensed Products
hereunder; PROVIDED, HOWEVER, the term of this Agreement and for a period of
twelve (12) months following termination or expiration hereof, KOBRA agrees that
it will only provide the services of XXXXXX XXXXXX to appear, for the purposes
of promoting, marketing, otherwise endorsing products, on the Electronic
Retailers' Programming Services of the Electronic Retailer to whom SEL-LEB is
exclusively selling Licensed Products to at such time.
(B) Provided this Agreement is not terminated by KOBRA
without the right cure by SEL-LEB, for a period of twelve (12) months following
expiration or earlier termination of this Agreement, KOBRA and XXXXXX XXXXXX
agree that they will not promote, market, otherwise endorse directly or
indirectly, any Licensed Products, or any product which is competitive with the
Licensed Products, on Electronic Retailers' Programming Services.
17
(C) KOBRA and XXXXXX XXXXXX acknowledge that the services
and rights which they are granting SEL-LEB hereunder are extraordinary and
unique and cannot be replaced or adequately compensated in money damages, and
any breach by KOBRA or XXXXXX XXXXXX of this Agreement will cause irreparable
injury to SEL-LEB. Therefore, KOBRA and XXXXXX XXXXXX agree that in the event of
a breach of this Section 10, SEL-LEB, in addition to any other remedies that
might be available to it, shall be entitled, in additional to bringing suit at
law or equity for money or other damages, to obtain injunctive or other
equitable relief and, where appropriate, prevent the violation of any of the
provisions of this Section 10, prevent XXXXXX XXXXXX from performing similar
services for, furnishing material to or granting conflicting rights to others
that are prohibited by this Agreement. In any action to enforce the provisions
of this Agreement, KOBRA and XXXXXX XXXXXX shall waive the defense that there is
an adequate remedy at law or equity and agrees that SEL-LEB shall have the right
to obtain injunctive or other equitable relief without being required to prove
actual damages.
(D) SEL-LEB recognizes that the Marks and Xxxxxx Rights
possess special, unique and extraordinary character, which make difficult the
assessment of monetary damages which KOBRA might sustain by an unauthorized use.
Therefore, SEL-LEB agrees that in the event it should Use the Marks and/or
Xxxxxx Rights other than as expressly provided herein, KOBRA and XXXXXX XXXXXX,
in addition to any other remedies that might be available to them, shall be
entitled, in additional to bringing suit at law or equity for money or other
damages, to obtain injunctive or other equitable relief and, where appropriate,
prevent the further or continued violation of the provisions of this Agreement
concerning or limiting its Use of the Marks and Xxxxxx Rights. In any action to
enforce any provision of this Agreement concerning or limiting SEL-LEB's Use of
the Marks and/or Xxxxxx Rights, SEL-LEB shall waive the defense that there is an
adequate remedy at law or equity and agrees that KOBRA and XXXXXX XXXXXX shall
have the right to obtain injunctive or other equitable relief without being
required to prove actual damages.
11. INDEMNIFICATION.
(A) KOBRA agrees to indemnify, defend and hold harmless
SEL-LEB, its successors and assigns, and any entity owning or controlling
SEL-LEB and its officers, directors, employees, agents and representatives
(hereinafter individually or collectively referred to as "SEL-LEB Corporate"),
from all demands, claims, actions, or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and court costs (including attorneys' fees and expenses),
asserted against, resulting to or incurred, directly or indirectly, with respect
to: (i) any failure by XXXXXX XXXXXX to perform any of it obligations under this
Agreement, (ii) any words spoken or acts done by XXXXXX XXXXXX in connection
with any live appearance under this Agreement (other than as directed or
instructed by SEL-LEB or any of its respective employees or agents), and (iii)
any violation or infringement (or alleged violation
18
or infringement) of any third party's copyright, trademark, trade name, license
or other similar intangible property rights resulting from SEL-LEB's Use of the
Marks and/or Xxxxxx Rights in compliance with all the terms and conditions of
this Agreement Marks and/or Xxxxxx Rights licensed by KOBRA to SEL-LEB under the
terms of this Agreement.
(B) SEL-LEB agrees to indemnify, defend and hold harmless
KOBRA, its successors and assigns, and any entity owning or controlling KOBRA
and its owners, officers, directors, employees, agents and representatives
(hereinafter individually or collectively referred to as "KOBRA Corporate") from
all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties and court costs (including attorneys' fees and expenses), asserted
against, resulting to or incurred by KOBRA and/or KOBRA Corporate, directly or
indirectly, with respect to: (i) any failure by SEL-LEB to perform any of its
obligations under this Agreement, (ii) any mismarkings or defects in the
Licensed Products manufactured and sold by SEL-LEB, (iii) any words spoken or
acts done by KOBRA and/or XXXXXX XXXXXX at the direction of SEL-LEB in
connection with any live appearances under this Agreement, and (iv) any
violation or infringement (or alleged violation or infringement) of any third
party's copyright, trademark, trade name, license or other similar intangible
property rights provided to KOBRA by SEL-LEB under the terms of this Agreement.
(C) An Indemnified Party shall give prompt written notice
to the Indemnifying Party of any claim, suit or action to which said
indemnification may relate. The Indemnifying Party may not settle, or appeal,
any claim, suit or action or otherwise compromise such claim, suit or action
without the Indemnified Party's prior written approval, which shall not be
unreasonably withheld. The Indemnified Party, at its own expense, shall have the
right to participate in the defense of any claims, suits, or actions. The above
indemnities are and will be deemed and construed to be continuing indemnities
and will survive for a period of five (5) years following the termination or
expiration of this Agreement.
12. INFRINGEMENT.
SEL-LEB shall notify KOBRA promptly of any actual or
threatened infringements, imitations, or unauthorized use of the Marks by third
parties of which SEL-LEB becomes aware. KOBRA shall have the sole right, but not
the obligation, at its expense, to bring any action on account of any such
infringements, imitations or unauthorized use, and SEL-LEB shall cooperate with
KOBRA, at KOBRA'S expense, as KOBRA may reasonably request, in connection with
any such action brought by KOBRA. KOBRA shall retain any and all damages,
settlement and/or compensation paid in connection with any such action brought
by KOBRA.
19
13. CONFIDENTIALITY.
(A) As of the date of this Agreement, a confidential
relationship shall arise and exist between the parties. During the term hereof
and for three (3) years following the expiration of the term of this Agreement,
each party shall hold (and shall require its agents, employees and
representatives to hold) in confidence any Confidential Information (as
hereinafter defined) disclosed to them by the other party or any of such other
parties, officers, directors, employees, agents, subsidiaries or affiliates.
Without limiting the generality of the foregoing, the parties shall be under a
continuing non-delegable duty not to disclose, directly or indirectly, or permit
the disclosure, directly or indirectly, of such Confidential Information to any
third party, and not to knowingly use or permit the use of such Confidential
Information for a purpose not covered by this Agreement. Each party may however
disclose the terms of this Agreement to their accountants, attorneys, business
advisors or others who have a legitimate reason to know. Such individuals shall
be fully advised as to the confidential nature of the information that is being
disclosed and agree to maintain such confidentiality.
(B) For purposes of this Agreement, "Confidential
Information" means all information relating to each party's (and its
affiliates') existing and proposed business(es) which they deem to be
proprietary and confidential, including without limitation, the terms of this
Agreement, all technology, trade secrets, product formulas or design
specifications, packaging designs, procedures, formats, data, customer lists,
market research, market strategies and the like whether disclosed orally, in
writing or by inspection. Notwithstanding anything to the contrary herein
stated, the provisions of the Uniform Trade Secrets Act ("UTSA") shall govern.
(C) In the event either party (or any of such party's
officers, directors, employees, agents or representatives, to whom Confidential
Information is disclosed) breaches this Section 13, the other party shall be
entitled to bring suit to recover any and all damages that may be sustained and,
in addition, shall be entitled to specific performance and/or a temporary or
permanent injunction prohibiting and enjoining the further violation of this
Agreement. The enumeration on any remedy or remedies herein shall not prevent
the non-breaching party from obtaining other damages or remedies allowable or
available to it under the law.
(D) The provisions of this Section 13 shall not apply
with respect to any information or concepts which are or become generally known
or available in the parties' trade through no fault of the other party, or which
have entered or subsequently enter the public domain through no fault of the
other party.
20
14. COMMISSIONS OR OTHER FEES.
(A) KOBRA represents that KOBRA has not used the services
of or incurred any obligations to an agent, broker, or finder in connection with
the transactions contemplated by this Agreement. If KOBRA has used the services
of or incurred any obligations to an agent broker or finder, then KOBRA shall be
liable to such person and SEL-LEB shall be under no obligation for payment to
such person on account of this Agreement.
(B) SEL-LEB shall be liable to any agent, broker, or
finder it has engaged in connection with the transactions contemplated by this
Agreement and KOBRA shall be under no obligation for payment to such person on
account of this Agreement.
15. INDEPENDENT CONTRACTOR STATUS.
(A) KOBRA agrees that KOBRA is an independent contractor
of SEL-LEB; that any and all contracts of employment made by KOBRA and any and
all other contracts which may be made on behalf of KOBRA, for and in connection
with KOBRA's and XXXXXX XXXXXX'x performance under this Agreement, shall be made
by KOBRA as principal and not as an agent of SEL-LEB; and that KOBRA will make
full payment of compensation and other amounts payable in connection with any
matter on XXXXXX XXXXXX'x part to be performed under any such arrangement.
(B) SEL-LEB agrees that SEL-LEB is an independent
contractor of KOBRA; that any and all contracts of employment made by SEL-LEB
and any and all other contracts which may be made on behalf of SEL-LEB, for and
in connection with SEL-LEB's performance under this Agreement, shall be made by
SEL-LEB as principal and not as an agent of KOBRA.
16. ATTORNEYS' FEES.
If any litigation or other proceeding is commenced to enforce
any provision of this Agreement or to seek a declaration of the rights of the
parties hereunder, the prevailing party shall be entitled to recover from the
non-prevailing party its reasonable costs, expenses and attorneys fees incurred
in connection with such litigation or proceeding.
17. WAIVER.
No waiver, delay, omission or forbearance in exercising any
right, option, duty or power under this Agreement shall affect or impair any
party's rights in respect of any default or breach of any of the provisions of
this Agreement or any subsequent default or breach of the same or a different
kind.
21
18. BINDING EFFECT; NON-ASSIGNABILITY.
This Agreement is binding on the parties and their respective
executors, administrators, legal representatives and successors. This Agreement
and the respective duties and responsibilities of KOBRA and XXXXXX XXXXXX
hereunder are not assignable, in whole or in part. SEL-LEB shall have the right
to assign this Agreement to any person acquiring all or a significant portion of
the assets of SEL-LEB or to a subsidiary or affiliated company in which SEL-LEB
shall have a controlling interest, provided that notice of such assignment is
given to KOBRA. Notwithstanding anything to the contrary contained herein, KOBRA
may assign its rights to collect revenues hereunder to an entity owned and
controlled by XXXXXX XXXXXX, provided (i) that such entity agrees to be bound by
the restrictions contained herein; and (ii) KOBRA obtains the prior written
consent of SEL-LEB, which shall not be unreasonably withheld or delayed.
19. CAPTIONS.
The captions for the various provisions of this Agreement are
provided for convenience of reference only and shall not be used in interpreting
any such provision.
20. NOTICES.
All notices or other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been given
on the date of delivery, if personally delivered, or one (1) business day after
the date of deposit, if sent by private overnight express carrier, such as
Federal Express, next business day delivery, or five (5) business days after
having been mailed postage prepaid to the recipient party by United States
registered or certified mail, and, in each a case, addressed as follows:
If to SEL-LEB: Sel-Leb Marketing, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn:
------------------------------
with a copy to: Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx & Roshco, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
22
If to KOBRA: KOBRA INTERNATIONAL, LTD.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx
with a copy to: Xxxxx Xxxxxxxxx, Esq.
Olshan Xxxxxxxx, et al
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such address for a party set forth in a notice given to the other party in
accordance with this Section 18, provided, however, that notice given in any
other manner shall be deemed effective upon receipt by the recipient. Delivery
of the copies shall not be necessary for effective notice.
21. GOVERNING LAW.
This Agreement and the legal relationship among the parties
shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to conflicts of law principles.
22. ARBITRATION.
Any controversy or claim arising under or in relation to this
Agreement, or the breach thereof, or the relations between SEL-LEB and KOBRA or
SEL-LEB and XXXXXX XXXXXX (excluding disputes falling within Section 10, above)
shall be settled by arbitration by a panel of three arbitrators (unless the
amount in dispute is less than Twenty-Five Thousand Dollars ($25,000) in which
case there shall be only one arbitrator) in the City of New York, New York,
administered by the American Arbitration Association under the then applicable
General Arbitration Rules of the Council of the Textiles and Apparel Industries
(or if said Rules no longer exist, then the equivalent applicable arbitration
rules generally accepted by the apparel industry), and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof; PROVIDED, HOWEVER, that the arbitrator(s) shall be bound by the laws of
the State of New York and, regarding any questions related thereto, the
trademark statutes of the United States of America, and shall have no power to
extend this Agreement beyond its termination date, nor to order reinstatement or
other continuation of the parties' relationship after termination, nor to award
punitive, consequential, multiple, incidental or any other damages in excess of
the economic damages actually sustained by the claimant. If, and only if, the
arbitrator(s) shall determine that either party's position in arbitration was
not maintained in good
23
faith, then the arbitrators shall award the other party a reasonable attorney's
fee. The choice of law governing any and all questions and issues in any way
related to this Agreement, except as set forth in the foregoing sentence) shall
be the laws of the State of New York and the trademark statutes of the United
States of America.
23. SEVERABILITY.
If any provision is declared invalid or otherwise determined
to be unenforceable for any reason, such provision shall be deemed to be
severable from the remaining provisions, which shall otherwise remain in full
force and effect.
24. ENTIRE AGREEMENT; AMENDMENT & MODIFICATION.
This Agreement sets forth the entire understanding and
agreement of the parties with respect to the subject matter covered herein,
superseding all prior and contemporaneous understandings and agreements, whether
oral or written. This Agreement may not be modified or amended except by a
written instrument executed by both parties.
25. FORCE MAJEURE.
Except with respect to obligations to make payments hereunder,
neither party shall be liable for delays, defaults or failures in rendering
performance hereunder if such delays, defaults or failures are the result of
fire, flood, earthquake, or similar catastrophe; civil commotion, strike, labor
dispute, or embargo; lack or failure of transportation facilities, shortage of
suitable parts, materials, or labor, or any law, proclamation, or order of any
governmental agency; or any other event beyond such party's reasonable control,
including but not limited to any delay caused by the other party.
26. DESIGN AND MANUFACTURE OF LICENSED PRODUCTS; QUALITY CONTROL.
(A) The contents and workmanship of Licensed Products and
Promotional Materials shall at all times be of the highest quality and Licensed
Products shall be distributed and sold with packaging and sales promotion
materials appropriate for highest quality Licensed Products.
(B) Any and all Uses and manufacture of the Licensed
Products shall be in compliance with all necessary governmental approvals and
all applicable laws, rules and regulations, including, but not limited to, Title
29, section 212 of the United States Code and the Xxxxxxxx-Xxxx Warranty Act as
to express and implied warranties. SEL-LEB shall pretest all proposed and
approved Licensed Products and shall cause truthful labeling regarding care,
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maintenance, and use to be affixed to the Licensed Products, along with any
other disclosures required by law or reasonably required by KOBRA (including,
but not limited to, copyright and trademark ownership notices which shall be
included with any Use of the Marks at all times, the legend "Manufactured by
[name of SEL-LEB] under license from Xxxxxx Xxxxxx" on all Licensed Products
[hangtags, labels or packaging as appropriate] to disclose the relationship
established by this Agreement, and any legally required Xxxxxxxx-Xxxx warranty
notices clearly identifying SEL-LEB as responsible for the warranty). SEL-LEB
shall immediately inform KOBRA in writing of any material complaint by any
consumer or governmental body relevant to the Licensed Products, and the status
and resolution thereof. SEL-LEB shall move expeditiously to resolve any such
complaint.
(C) Licensed Products may only be manufactured by SEL-LEB
at a facility it does not own or lease if and only if it notifies KOBRA that
such third-party manufacturer shall be retained, and further submits to KOBRA
such information, specifications and samples as KOBRA reasonably. KOBRA reserves
the right to reject, in the exercise of its reasonable discretion, any such
third-party manufacturer. KOBRA may demand that SEL-LEB impose reasonable
restrictions on such third-party manufacturers of products relating to the
Marks, including, but not limited to, having such manufacturers and their key
production managers execute confidentiality and anti-pirating agreements in
connection with same. Any Licensed Product caused by SEL-LEB to be manufactured
outside the United States shall be imported into the United States under the
name of SEL-LEB and only SEL-LEB. Any and all Licensed Products imported under a
name other than that of SEL-LEB shall be deemed counterfeit by KOBRA and
SEL-LEB, and may be so represented to U.S. Customs Service and prosecuted
accordingly. In order to prevent the importation of counterfeit merchandise,
SEL-LEB shall use a customs broker for all Licensed Merchandise imported under
this Agreement. SEL-LEB shall promptly notify KOBRA of the identity of each such
customs broker as SEL-LEB shall use from time to time during the Term for
Licensed Merchandise imported hereunder. KOBRA shall not be liable for any acts
of or transactions with said broker. SEL-LEB agrees that it will not engage in
"unlawful transshipment" of merchandise, as that term is defined by the U.S.
Customs Service, or utilize manufacturers that engage in such "unlawful
transshipment." SEL-LEB further agrees that all merchandise manufactured outside
the United States will have labels permanently affixed thereto that reflect the
actual "country of origin" as that term is defined by the U.S. Custom Service.
27. APPOINTMENT OF REPRESENTATIVES.
KOBRA shall have the right at any time to appoint in writing
an authorized representative or representatives who shall be empowered to act on
behalf of the KOBRA with regard to any matter pertaining to this Agreement. It
is understood that such appointment shall be strictly limited to the provisions
of the written appointment, that the representative shall have no
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authority beyond the scope of such appointment, and that SEL-LEB shall act only
in accordance with such written appointment.
28. SAMPLES.
Upon request, SEL-LEB shall furnish to KOBRA a reasonable
number of samples of each such Licensed Product, for use by KOBRA's salespeople,
in its showroom, in catalogues, and in fashion and design shows. In connection
with any such use by KOBRA, SEL-LEB shall receive such credit, as it shall
reasonably specify from time-to-time.
29. SALES OF LICENSED PRODUCT TO KOBRA.
Sales of Licensed Products by SEL-LEB to KOBRA, its
subsidiaries, licensees or affiliates shall at listed wholesale rates, with the
most favorable discounts, rebates and terms available to third parties. Further,
at the close of each season during the Licensed Term KOBRA, its subsidiaries,
licensees and affiliates shall have the right to exchange Licensed Products
originally purchased for retail sale for other Licensed Products.
30. CONSTRUCTION.
This Agreement's terms and conditions were freely negotiated.
SEL-LEB drafted the Agreement for the convenience of the parties only. As such,
the language shall be interpreted without regard to any rule, law or presumption
requiring the language to be construed, interpreted or applied against SEL-LEB.
31. USE OF COUNSEL.
The parties hereto represent that they have each consulted
with counsel of their own choosing in connection with the negotiation and
execution of this agreement or have knowingly chosen not to do so.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date and year first written above.
SEL-LEB MARKETING, INC. KOBRA INTERNATIONAL, LTD.
BY: /s/ Xxx Xxxxxxxxx BY: /s/ Xxxxxx Xxxxxxx
---------------------------------- -------------------------------------
NAME: Xxx Xxxxxxxxx NAME: Xxxxxx Xxxxxxx
TITLE: Chairman of the Board TITLE: President
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UNDERTAKING BY XXXXXX XXXXXX:
TO INDUCE SEL-LEB MARKETING, INC. TO ENTER INTO THE FOREGOING AGREEMENT
WITH KOBRA, I ACKNOWLEDGE THAT I HAVE READ THE FOREGOING AGREEMENT AND I HEREBY
APPROVE ITS TERMS. FURTHER, I AGREE TO PERFORM THE OBLIGATIONS AND ABIDE BY THE
RESTRICTIONS CONTAINED THEREIN WHICH ARE APPLICABLE TO ME SPECIFICALLY, THOSE
CONTAINED IN SECTIONS 2, 3, 8, 9, 10, 13, AND 15. I CONFIRM THAT KOBRA IS
AUTHORIZED AND EMPOWERED TO ACT ON MY BEHALF IN CONNECTION WITH THE FOREGOING
AGREEMENT AND THAT ANY COMPENSATION DUE ME FOR MY SERVICES TO BE PERFORMED
HEREUNDER IS SOLELY THE RESPONSIBILITY OF KOBRA AND NOT OF SEL-LEB MARKETING,
INC.
/s/ Xxxxxx Xxxxxx
---------------------------
XXXXXX XXXXXX, INDIVIDUALLY
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