CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10.17 AS INDICATED BY
'***', PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND HAS BEEN FILED
SEPARATELY WITH THE COMMISSION.
LICENSE AGREEMENT
THIS AGREEMENT is made and entered into effective April 28, 1998 by and
between XXXXXXX LOGISTICS, INC., a Delaware corporation, and THE XXXXXXX WORKS,
a Connecticut corporation, with the principal place of business at 0000 Xxxxxxx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000 (collectively "OWNER"); and JORE
CORPORATION, a Montana corporation with its principal place of business at 00000
Xxxxxxx 00 Xxxxx, Xxxxx, Xxxxxxx 00000 ("LICENSEE"). The parties hereby agree
as follows:
1. DEFINITIONS.
1.1. LICENSED ARTICLES means each of the articles of merchandise or products,
and their packaging or component parts, bearing the PROPERTY as set forth
in EXHIBIT 1.
1.2. PROPERTY means the names, symbols, designs, logos, artwork, copyrights,
trade dress and trademarks set forth in SCHEDULE A.
1.3. LICENSED TERRITORY means the country or countries set forth in EXHIBIT 2.
1.4. NET SALES means gross sales at the invoice price billed to any of
LICENSEE's customers less actual discounts, actual returns and separately
listed applicable taxes and shipping/handling costs. Quantity discounts
are limited in the aggregate to *** of the total of the regular list price
for all of the LICENSED ARTICLES sold during each calendar year. No
deduction shall be taken for cash discounts, early payment discounts,
year-end rebates, costs incurred in manufacturing, selling, distributing,
or advertising (including cooperative and promotional allowances),
uncollectible accounts, commissions, or any other amounts. At the written
request of LICENSEE, OWNER may allow a deduction for an advertising
allowance granted to customers for the broadcast of a local or national
television spot promoting the LICENSED ARTICLES.
1.5. ROYALTY PAYMENTS means the total NET SALES of all LICENSED ARTICLES sold
during the preceding calendar quarter, multiplied by the applicable ROYALTY
RATE.
1.6. ROYALTY RATE means the percentage of NET SALES to be paid by LICENSEE to
OWNER as provided on Exhibit 3.
1.7. SECONDS means merchantable LICENSED ARTICLES not suitable for sale at list
price because they contain minor production or material flaws not affecting
proper usage of the PROPERTY or the LICENSED ARTICLE.
1.8. PREMIUMS means any product sold at cost or near cost, given away for free
or otherwise used for the purpose of increasing the sale, promoting, or
publicizing any other product, or any service, including but not limited to
incentives for sales forces, trade and consumer promotions and incentives
for fundraising.
2. GRANT OF LICENSE.
2.1. EXCLUSIVE LICENSE. OWNER hereby grants to LICENSEE an exclusive license
to use the PROPERTY in the LICENSED TERRITORY solely upon or in connection
with LICENSED ARTICLES pursuant to the terms and conditions of this
Agreement. Provided LICENSEE earns and pays the Minimum Royalties required
hereunder each calendar year, this Agreement shall remain exclusive as just
described. In the event LICENSEE fails to earn or pay such Minimum Royalties in
any calendar year, this Agreement shall, by written notice from OWNER, become
non-exclusive.
2.2. TERM. The terms of the license granted by this Agreement shall be for
the period set forth on EXHIBIT 2, unless sooner terminated in accordance
with the provisions hereof.
In the event LICENSEE has earned and paid ROYALTY PAYMENTS in an amount
equal to the GUARANTEED PAYMENTS as set forth under EXHIBIT 3 for the year 2003
and provided, that LICENSEE is not in breach of any provision of the Agreement,
then LICENSEE may renew this Agreement for a term of five (5) years.
2.3. LIMITATIONS ON LICENSE. No license is granted hereunder for the use of the
PROPERTY for any purpose other than upon or in connection with the LICENSED
ARTICLES. The license does not give LICENSEE any right, title or interest in
the PROPERTY other than the right to use the PROPERTY in accordance with the
license. No license is granted hereunder for the manufacture, sale or
distribution of LICENSED ARTICLES to be used as PREMIUMS, in combination sales,
or to be disposed of under similar methods of merchandising.
3. ROYALTIES, MINIMUM GUARANTEES, REPORTS AND PAYMENTS, DISTRIBUTION AND
MARKETING AND SALE TO OWNER
3.1. ROYALTY RATES. LICENSEE agrees that it will pay to OWNER an amount
equal to the percentage set forth on EXHIBIT 3 of all NET SALES of LICENSED
ARTICLES made during the TERM of this Agreement and during any period of
extension or renewal (hereinafter the "ROYALTY PAYMENTS"). The ROYALTY RATE
to be paid on all sales made on a letter of credit or F.O.B. basis shall be
at 140% of the ROYALTY RATE set forth herein. Payments shall be sent and
made payable to The Beanstalk Group, Inc., in accordance with Paragraph 3.7.
3.2. ADVANCE PAYMENT. LICENSEE will pay OWNER the amount set forth on
EXHIBIT 3 on the date specified therein, as a non-refundable advance payment
to be credited against ROYALTY PAYMENTS to become due during the initial term
hereof. Such advance payment shall be sent and made payable to The Beanstalk
Group, Inc., in accordance with Paragraph 3.7.
3.3. MINIMUM ROYALTIES. LICENSEE agrees to pay OWNER the minimum guaranteed
ROYALTY PAYMENTS set forth on EXHIBIT 3, according to the payment schedule
set forth therein, for the initial term and the renewal term, if any. Minimum
guaranteed ROYALTY PAYMENTS shall be applied only against the period they
relate to and shall not be applicable to any other period.
2
The minimum ROYALTY PAYMENTS set forth in this Paragraph are obligations of
LICENSEE to OWNER and are fully earned by OWNER upon execution of this
Agreement. If such minimum ROYALTY PAYMENTS are not achieved as set forth in
each calendar year and each territory, if applicable, the difference between
such minimum ROYALTY PAYMENTS and the actual ROYALTY PAYMENTS for each calendar
year and each country, if applicable, shall be paid to OWNER within thirty (30)
days from the end of each calendar year.
If this Agreement is terminated by OWNER because of any breach by LICENSEE, all
of the minimum ROYALTY PAYMENTS set forth in this section for the then current
term shall be deemed to be fully earned and shall be paid to OWNER within thirty
(30) days from the effective date of any such termination.
3.4. MINIMUM NET SALES. LICENSEE shall maintain minimum sales of LICENSED
ARTICLES in each annual period as set forth on EXHIBIT 4.
3.5. ROYALTY REPORT FORM. All ROYALTY REPORTS shall be sent to The Beanstalk
Group, Inc. pursuant to Paragraph 3.6 and to OWNER pursuant to Paragraph 16 and
shall be in the form of SCHEDULE B ("ROYALTY REPORT"), or a substantially
similar alternative format approved by OWNER. LICENSEE agrees that OWNER shall
have the right, at its sole discretion, upon thirty (30) days advance written
notice to LICENSEE, to change the form of ROYALTY REPORT. Such change of the
ROYALTY REPORT may include an electronic form to be provided by OWNER.
3.6. REPORTS AND PAYMENTS. Within thirty (30) days from the end of each
calendar quarter, LICENSEE shall furnish ROYALTY REPORTS and make corresponding
ROYALTY PAYMENTS to The Beanstalk Group, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, U.S.A., on behalf of OWNER, with copies to OWNER, in U.S. Dollars at
LICENSEE's sole expense. ROYALTY REPORTS shall be furnished to OWNER whether or
not any LICENSED ARTICLES have sold and whether or not royalties are due and
payable for the calendar quarter.
3.7. METHOD OF PAYMENT. All ROYALTY PAYMENTS, other payments and any applicable
interest shall be made payable to The Beanstalk Group, Inc., 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, U.S.A., or Citibank N.A., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Account No.: 00000000, ABA No.: 000000000, with copies to
OWNER, utilizing check or electronic bank transfer of funds.
Written confirmation of each electronic transfer and all ROYALTY REPORTS and any
other reports of payments as required by this Agreement shall be signed by
LICENSEE's authorized officer and certified as accurate, and shall be sent to
OWNER pursuant to Paragraph 16 on or before the due date.
If any inconsistencies or mistakes are discovered in such ROYALTY REPORT or
payments, they shall immediately be rectified and the appropriate payment made
by LICENSEE if any
3
underpayment was made, or set off against LICENSEE's next ROYALTY PAYMENT and/or
other payment to OWNER if an overpayment was made by LICENSEE.
3.8. INTEREST DUE ON ALL PAST DUE AMOUNTS. Any past due amount by LICENSEE
whether due pursuant to this Paragraph or any other Paragraph of this Agreement
shall bear interest at the then current prime rate plus five percent (5%) per
annum as quoted by Citibank, New York, N.Y., United States of America, which is
applicable from the due date until the date of payment.
3.9. CONVERSION INTO DOLLARS AND MISCELLANEOUS PROVISIONS.
(for contracts covering countries outside U.S.)
LICENSEE agrees that all currency conversions into U.S. dollars for sales
made outside the U.S. in currency other than U.S. dollars shall be made by
utilizing the exchange rate in effect on the last business day of the period for
which such royalties are due as reported in THE WALL STREET JOURNAL.
The cost of conversion of all local currencies into U.S. dollars shall be
the sole expense of LICENSEE. Any cost of conversion built into a bank's
exchange rate must be accounted for with a corresponding increase in the amount
being converted so that all the costs of conversion of all local currencies into
U.S. dollars shall be the sole expense of LICENSEE.
LICENSEE shall withhold as taxes on all payments to be made to OWNER only
such amounts as are absolutely required to be withheld by law in the country
from which payment is being made. LICENSEE shall submit to OWNER originals of
the remittance voucher and the official receipt evidencing the payment of the
corresponding taxes. LICENSEE shall fully cooperate with OWNER and provide such
information and records as OWNER may require in connection with any application
by OWNER to the tax authorities in any country of the LICENSED TERRITORY and/or
the United States of America including but not limited to, the obtaining of a
credit for any withholding tax paid in the LICENSED TERRITORY or any country
from which ROYALTY PAYMENTS and any other payments are being made by LICENSEE to
OWNER pursuant to this Agreement.
3.10. BUSINESS PLAN. Upon thirty (30) days from OWNER's written request,
LICENSEE shall provide OWNER a written business plan detailing information
including, but not limited to, LICENSEE's product development plans,
advertising, merchandising and promotional activities and breakdown of sales
by accounts.
3.11. DISTRIBUTION AND MARKETING OF LICENSED ARTICLES. LICENSEE recognizes
that the PROPERTY has a reputation for high quality products, and that the
distribution, sale and marketing of LICENSED ARTICLES might affect the
reputation of the PROPERTY. The nature and quality of all LICENSED ARTICLES
and all related advertising, promotion, distribution, sale, marketing and
other related uses shall conform to the standard set by, and be under the
control of, OWNER, who might, at its sole discretion and subject to
applicable laws and
4
regulations, restrict or limit the distribution and sale of the LICENSED
ARTICLES to certain channels or means of distribution, sale or marketing. This
license is granted only for sale in the channels of distribution set forth on
EXHIBIT 4.
3.12. SALE TO OWNER. LICENSEE agrees to sell to OWNER such quantities of
the LICENSED ARTICLES as OWNER reasonably requires at the lowest
published/invoiced wholesale price and on as good terms as LICENSEE sells
similar quantities of the LICENSED ARTICLES to the general trade.
4. RECORDS, AUDIT AND AUDITOR'S CERTIFICATION.
4.1. RECORDS. During the TERM of this Agreement and for at least three (3)
years thereafter, LICENSEE shall keep in its possession or under its control
accurate records covering all transactions relating to this Agreement. Records
shall include, but not be limited to, invoices, correspondence, financial
information, inventory records, manufacturing, quality control and approvals.
LICENSEE shall consistently use a separate symbol or number to identify all
LICENSED ARTICLES.
4.2. AUDIT. OWNER shall have the right to conduct an audit and make copies of
all records listed in Paragraph 4.1., above, and to make a physical inventory
count of LICENSED ARTICLES in production and/or storage. If the audit reveals a
royalty underpayment of three percent (3%) or more or if LICENSED ARTICLES were
sold during the audit period without final approval, LICENSEE agrees to
reimburse OWNER for all of its out-of-pocket costs and expenses of the audit.
OWNER shall invoice LICENSEE and LICENSEE shall pay such invoice within thirty
(30) days.
Audits may be performed by OWNER's own employees and/or its designated
independent auditor, all of whom shall hold LICENSEE's audit information in
confidence, pursuant to Paragraph 12. Audit information shall only be used for
purposes of this Agreement, including, without limitation, judicial enforcement
of the obligations of LICENSEE.
5. APPROVALS.
5.1. APPROVAL PROCESS. LICENSEE, at is expense, shall submit to OWNER all items
including, but not limited to, products, packaging, labeling, point of sale
materials, trade show displays, sales materials and advertising, bearing the
PROPERTY, and if such items are in a foreign language, certification that the
translations of such items are accurate, for OWNER's advance written approval
prior to sale or distribution at all stages listed below.
CONCEPT Rough sketches or layout concepts;
PROTOTYPE Prototypes or finished artwork; and
FINAL Pre-production sample.
The following rules shall apply to ALL STAGES of the approval process:
5
1. LICENSEE shall not make any use of, sell or distribute such items as
listed in this Section 5.1, prior to OWNER granting final written
approval.
2. OWNER shall have twenty (20) business days from OWNER's actual receipt
to review and respond in writing to each of LICENSEE's submissions.
3. OWNER, in its sole discretion, reserves the right to reject an item
approved at a prior stage if it departs from the approved sample.
4. In the event of any modification or change in quality of the items,
whether during the approval process or after final approval has been
granted, such items shall be re-submitted for approval.
5. LICENSEE shall disclose all sources for any artwork not supplied by
OWNER.
6. All submissions become the property of OWNER.
7. Upon LICENSEE's written request, OWNER shall return prototypes and
final artwork at LICENSEE's expense provided LICENSEE supplies
photographs of same.
8. LICENSEE shall not have any rights against OWNER for damages or other
remedy by reason of OWNER's failure or refusal to grant any approval
referred to in this Paragraph.
9. LICENSEE shall not advertise in any publication or communications
medium which could damage the goodwill of the PROPERTY, in OWNER's
sole discretion.
10. LICENSEE shall supply OWNER with twelve (12) production samples of
each LICENSED ARTICLE.
11. No facsimile transmissions will be accepted for approval.
12. LICENSEE agrees not to use the PROPERTY or the OWNER's trademarks,
artwork and/or designs or any component thereof in any business sign,
business cards, stationery or forms nor as part of the name of the
LICENSEE's business or any division thereof.
13. All press releases and/or public announcements by LICENSEE in
connection with the subject matter of this Agreement shall be subject
to prior written approval by OWNER, both as to the content, timing and
distribution of any such release. LICENSEE shall not have any rights
against OWNER for damages or other remedy by reason of OWNER's failure
or refusal to grant approval of any press release.
6
14. LICENSEE agrees to furnish to OWNER its DHL, Federal Express and/or
UPS number for OWNER to use to transmit samples to expedite the
approval process.
5.2. RIGHT TO SUSPEND APPROVAL PROCESS. In addition to its other remedies,
OWNER reserves the right to suspend the approval process after OWNER has given
LICENSEE notice of breach of this Agreement, until LICENSEE has cured the
breach.
5.3. NO WAIVERS. Approvals granted by OWNER under this Paragraph shall extend
only to LICENSEE's use of the PROPERTY. The provisions for indemnity under this
Agreement and LICENSEE's other obligations shall not be waived by approval of
LICENSED ARTICLES by OWNER.
5.4. INSPECTION. LICENSEE shall allow OWNER or its designees to enter
LICENSEE's premises and/or the premises where the LICENSED ARTICLES are being
manufactured and/or packaged during regular business hours for the purpose of
inspecting the LICENSED ARTICLES and the promotional and packaging material
relating to the LICENSED ARTICLES in order that OWNER may determine that the
provisions of this Agreement are being observed by LICENSEE.
6. QUALITY CONTROL.
6.1. LICENSEE COMPLIANCE WITH APPLICABLE LAW AND SCHEDULE D. All LICENSED
ARTICLES shall be manufactured, sold, labeled, packaged, distributed and
advertised in accordance with all applicable laws and regulations and Schedule D
hereto.
6.2. SECONDS AND DISPOSAL. If, during the manufacture of the LICENSED
ARTICLES, any SECONDS are produced, LICENSEE shall destroy such SECONDS unless
OWNER, in its sole discretion, provides LICENSEE with express written
instructions to otherwise dispose of such SECONDS. All products, packaging,
labeling, point of sale, sales materials and advertising bearing trademarks,
artwork and/or designs of OWNER produced by LICENSEE which are not suitable for
use or sale pursuant to this Agreement shall be promptly destroyed.
7. ARTWORK.
7.1. RIGHT TO USE AND ASSIGNMENT TO OWNER. OWNER, in its sole discretion, will
provide LICENSEE, at LICENSEE's expense, available artwork and designs which
LICENSEE can only use on LICENSED ARTICLES.
LICENSEE irrevocably and in perpetuity assigns to OWNER all worldwide
right, title and interest in and to any artwork, concept, design, image,
model or the like (collectively "Artwork") incorporating, in whole or in
part, the PROPERTY. OWNER has the sole and exclusive right to use, change,
license or modify such Artwork, without any obligation,
7
financial or otherwise, to LICENSEE. Artwork which qualify as a
"work-made-for-hire" under applicable copyright laws in the LICENSED
TERRITORY are agreed to be "work-made-for-hire" owned by OWNER.
If such Artwork is made by a third party for LICENSEE, LICENSEE shall
obtain an assignment from such third party using SCHEDULE C (Artwork
Assignment Agreement,) and shall use its best efforts to have such Artwork
made as a "work-made-for-hire."
LICENSEE, at its expense, shall provide OWNER with reproducible materials
of all such Artwork within thirty (30) days of OWNER's written request.
This Paragraph does not give OWNER any right, title or interest in or to
the copyrights, trade dress or trademarks of LICENSEE.
8. LICENSED ARTICLE MARKINGS.
8.1. LABELING REQUIREMENTS. LICENSEE shall use and display the PROPERTY only in
such form and manner as are specifically approved by OWNER. LICENSEE shall
cause to appear on all LICENSED ARTICLES produced hereunder and on their tags,
packaging, advertising and promotional materials such legends, markings and
notices as OWNER may request, which unless otherwise notified by OWNER shall be
set forth in EXHIBIT 7.
9. INTELLECTUAL PROPERTY PROTECTION.
9.1. PROTECTION. LICENSEE acknowledges the ownership, validity, great value and
goodwill of the PROPERTY and acknowledges that all rights therein (including
trademark and copyright) and good will attached thereto belongs exclusively to
OWNER, that the PROPERTY has secondary meanings in the minds of the public and
that all use of the PROPERTY will inure to the benefit of OWNER. LICENSEE shall
not, during the term of this Agreement or thereafter, attack or put in issue the
title or any rights of OWNER in and to the PROPERTY.
LICENSEE covenants that, notwithstanding any other provision of this
Agreement, it will never take any action which it knows or has reason to know
would threaten to injure the image or reputation of OWNER or any of its
copyrights, trade dress, trademarks or products.
9.2. REGISTRATIONS. LICENSEE shall assist OWNER at OWNER's expense, to the
extent necessary in OWNER's opinion, in procuring, protecting and defending any
of OWNER's rights in the PROPERTY, in the filing and prosecution of any
trademark application, copyright application or other applications for the
PROPERTY, the recording or canceling of this Agreement, and the publication of
any notices or the doing of any other act or acts with respect to the PROPERTY,
including the prevention of the use thereof by an unauthorized person, firm or
corporation, that in the judgment of OWNER may be necessary or desirable. For
these purposes, LICENSEE shall supply to OWNER, free of cost to OWNER, such
samples, containers, labels and similar materials
8
as may reasonably be required in connection with any such actions. OWNER, at
its sole expense, shall file all trademark applications, and register the
PROPERTY in the United States with respect to the LICENSED ARTICLES, and shall
do the same to the extent necessary in OWNER's opinion, in countries outside the
United States.
9.3. NOTICE OF INFRINGEMENT. LICENSEE shall notify OWNER promptly in writing of
any alleged infringements or imitations by others of the PROPERTY in the
LICENSED TERRITORY which come to LICENSEE's attention. OWNER shall have the
sole right to determine what, if any, actions shall be taken on account of any
such infringements or imitations. If OWNER so desires it may prosecute any
claims or suits in its own name or join LICENSEE as a party thereto, all at
OWNER'S expense.
LICENSEE shall not institute any suit or take any action on account of any
such infringements or imitations. LICENSEE shall not have any rights against
OWNER for damages or other remedy by reason of OWNER's decision not to prosecute
any alleged infringements or imitations by others of the PROPERTY or OWNER's
artwork and designs. LICENSEE assumes the risk that there may be counterfeit
and/or infringing articles of manufacture in the LICENSED TERRITORY.
9.4. DAMAGES FOR UNAUTHORIZED USE. LICENSEE acknowledges that the PROPERTY
possesses special, unique, and extraordinary characteristics which make
difficult the assessment of monetary damages which OWNER would sustain by
LICENSEE's unauthorized use. LICENSEE recognizes that OWNER would suffer
irreparable injury by such unauthorized use and agrees that injunctive and
other equitable relief is appropriate in the event of a breach of this Agreement
by LICENSEE. Such remedy shall not be exclusive of any other remedies available
to OWNER, nor shall it be deemed an election of remedies by OWNER.
10. WARRANTIES AND INDEMNIFICATION.
10.1. WARRANTIES. LICENSEE hereby warrants and represents to OWNER that:
1. ALL LICENSED ARTICLES, packaging, labeling, advertising and sales
materials are free from defects, merchantable, fit for their intended
use, materially conform to samples which received final approval,
comply with all legally applicable treaties, laws, regulations,
standards and guidelines including, but not limited to, health,
product safety and labeling, and that LICENSEE has obtained the
necessary approvals and certification(s) throughout the LICENSED
TERRITORY.
2. All Artwork of LICENSEE created pursuant to Paragraph 7.1. are
original; not in the public domain; not previously published; not a
violation, infringement, unauthorized use or misappropriation of any
intellectual property of any third party; not libelous or contrary to
law; and to the best of LICENSEE's knowledge not the subject of any
litigation or claim; and
9
3. Pursuant to Paragraph 7.1., it has obtained a written assignment to
OWNER of all Artwork made by a third party.
10.2. INDEMNIFICATION BY LICENSEE. LICENSEE shall indemnify and hold
harmless OWNER, its officers, directors, employees and agents ("Indemnified
Parties") with respect to any matter which arises out of any lawsuit, action,
legal proceeding, claim or demand based upon:
1. Any alleged defect in the LICENSED ARTICLES or the use or condition
thereof;
2. Any alleged violation, infringement, unauthorized use or
misappropriation of any intellectual property of any third parties
arising under or in conjunction with the manufacture, sale and/or use
of any LICENSED ARTICLES; or
3. Any breach or violation of any warranty, representation, term or
condition of this Agreement by LICENSEE.
This indemnification shall include all damages, interest, reasonable
attorney's fees, costs and expenses which may be levied against or incurred
by Indemnified Parties, including costs of collection of all amounts owed
to OWNER by LICENSEE and costs of all actions by OWNER against LICENSEE to
enforce LICENSEE's compliance with this Agreement.
This obligation to indemnify and hold harmless Indemnified Parties shall
not apply to any lawsuit, action, legal proceeding, claim or demand which
is solely due to the negligence or wrongful acts of the Indemnified Parties
or any alleged copyright or trademark infringement which is based on a
claim that the approved use by LICENSEE of the PROPERTY infringes the
copyright or trademark rights of such third parties.
LICENSEE and its officers, agents and employees shall cooperate fully with OWNER
in the defense of any such lawsuit, action, legal proceeding, claim or demand.
Compliance by LICENSEE with the insurance provision of this Agreement shall not
relieve LICENSEE from liability under this indemnity provision.
LICENSEE shall undertake and conduct the defense of any such lawsuit, action,
legal proceeding, claim or demand and shall have sole responsibility therefore.
10.3. INDEMNIFICATION BY OWNER. OWNER shall indemnify and hold harmless
LICENSEE, its officers, directors, employees and agents ("LICENSEE Indemnitees")
with respect to any matter which arises out of any lawsuit, action, legal
proceeding, claim or demand based upon:
10
1. Any alleged copyright or trademark infringement arising out of the
approved use of the PROPERTY as authorized in this Agreement; or
2. Any breach or violation of any warranty, representation, term or
condition of this Agreement by OWNER.
This indemnification shall include all damages, interest, reasonable attorney's
fees, costs and expenses which may be levied against or incurred by LICENSEE
Indemnitees.
OWNER shall undertake and conduct the defense of any such lawsuit, action, legal
proceeding, claim or demand, and shall have the sole responsibility therefor.
10.4. COOPERATION. This obligation to indemnify and hold harmless LICENSEE
Indemnitees shall not apply to any lawsuit, action, legal proceeding, claim
or demand that is solely due to the negligence or wrongful acts of the
LICENSEE Indemnitees.
Each party, and its officers, agents and employees, shall cooperate fully with
the other party in the defense of any lawsuit, action, legal proceeding, claim
or demand. Each party claiming a right of indemnification shall given notice to
the other party within fifteen (15) days after learning of such lawsuit, action,
legal proceeding, claim or demand.
11. INSURANCE. Upon execution of this Agreement, LICENSEE shall have and
maintain at its sole cost and expense throughout the term of this Agreement, and
the post-termination or expiration Sell-off Period, and for two (2) years
thereafter, standard liability insurance from a recognized insurance company
acceptable to OWNER. This insurance coverage shall provide a minimum
comprehensive general liability insurance for each occurrence, bodily injury,
property damage, personal injury, product liability, contractual liability and
advertising injury liability in the amount set forth on EXHIBIT 5.
Such insurance coverage shall name OWNER as additional insured party against any
and all claims, demands, causes of action, or damages, including reasonable
attorney's fees.
The stipulated limits of coverage above shall not be construed as a limitation
of any potential liability of LICENSEE to OWNER or third parties, and failure to
request evidence of this insurance shall in no way be construed as a waiver of
LICENSEE's obligation to provide the insurance coverage specified.
Such insurance policy shall provide that it may not be canceled or amended in a
manner which restricts the existing coverage without at least thirty (30) days
prior written notice to OWNER.
Within thirty (30) days after this Agreement is fully executed, (and thereafter
at least thirty (30) days prior to the expiration of insurance coverage),
LICENSEE shall furnish to OWNER a Certificate of
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Insurance evidencing the foregoing coverage and specifically listing OWNER as
additional insured party.
12. CONFIDENTIALITY. Neither party shall disclose, reveal, divulge, use or by
whatever means make available, except as required to perform its obligations
pursuant to this Agreement, the terms and conditions of this Agreement and
information of the other party which was denominated or marked as "confidential"
at the time of disclosure or confirmed in writing as "confidential" within
thirty (30) days from an oral disclosure obtained from the other party during
the TERM of this Agreement and for a period of three (3) years after this
Agreement expires or is terminated for any reason without prior written
permission from the other party. Each party hereto may disclose confidential
information from the other party to its affiliates subject to all the terms and
conditions of this Paragraph.
The obligations of confidentiality shall not apply to information which:
(i) Is, or subsequently becomes, available to the public through no fault
of the receiving party.
(ii) The receiving party can show was previously known to it at the time
of disclosure.
(iii) Is subsequently obtained from a third party who has obtained the
information through no fault of the receiving party.
(iv) Is independently developed as evidenced by the written records of the
receiving party.
(v) Is disclosed to a third party by the disclosing party without a
corresponding obligation of confidence.
(vi) Is required to be disclosed by the receiving party pursuant to a
requirement, order or directive of a government agency or by
operation of law subject to prior consultation with the disclosing
party's legal counsel.
13. NO RIGHT TO ASSIGN OR TO SUBLICENSE. This Agreement and all rights and
duties herein are personal to LICENSEE and are not assignable, in whole or in
part, by LICENSEE without OWNER's prior written consent. The rights and
duties hereunder may not be mortgaged or otherwise encumbered. Except as
provided herein, any grant or attempted grant by LICENSEE of any assignment
of part or all of this Agreement, a sublicense, a subcontract or any other
act of LICENSEE which in any way attempts to encumber or transfer, or, in
fact, encumbers or transfers any of LICENSEE's rights and obligations
hereunder, or the sale or attempted sale of a controlling interest in the
shares of LICENSEE constitutes a breach of this Agreement. Any change in the
control of LICENSEE, either directly or indirectly, without notice to and the
prior written consent of OWNER constitutes a breach of this Agreement. Any
assignment or other change approved by OWNER shall make this Agreement fully
binding upon and enforceable against any successors or assigns.
14. TERMINATION. Without prejudice to any other rights, OWNER shall have the
right to terminate this Agreement upon written notice to LICENSEE at any time
if:
12
(i) LICENSEE shall fail to make any payment (including any payment for
artwork or other allowable expenses) due hereunder or to timely deliver any
of the statements or ROYALTY REPORTS herein referred to, and if such
default shall continue for a period of five (5) business days after written
notice of such default is sent by OWNER via certified or registered mail to
LICENSEE.
(ii) LICENSEE shall discontinue its business, LICENSEE shall make any
assignment for the benefit of creditors, or shall file any petition under
Chapters 10, 11 or 12 of Xxxxx 00, Xxxxxx Xxxxxx Code, or file a voluntary
petition in bankruptcy, or be adjudicated a bankrupt or insolvent, or if
any receiver is appointed for its business or property, or if any trustee
in bankruptcy, or insolvency shall be appointed under the laws of the
United States government or of the several states. In such case
termination shall be effective immediately.
(iii) Notwithstanding anything to the contrary set forth herein, if
LICENSEE shall fail to maintain the required minimum NET SALES as provided
in EXHIBIT 4.
(iv) If LICENSEE shall fail to perform any other material term or condition
of this Agreement and not cure such failure within twenty (20) days after
notice.
(v) If for any six (6) month period LICENSEE does not diligently and
commercially distribute and sell all categories of LICENSED ARTICLES
included in EXHIBIT 1 of this Agreement throughout each country in the
LICENSED TERRITORY.
(vi) If OWNER or LICENSEE is ordered to withdraw, discontinue, remove or
recall any LICENSED ARTICLE from the market by a government or governmental
agency, regulatory body, court or the like.
(vii) If during any twelve (12) month period OWNER gives more than two
(2) termination notices to LICENSEE pursuant to this Paragraph regardless
of cure by LICENSEE.
(viii) If LICENSEE does not begin the bona fide manufacture,
distribution and sale of the LICENSED ARTICLES on a national basis on or
before the date specified in EXHIBIT 4.
(ix) If LICENSEE does not provide customer service with respect to the
LICENSED ARTICLES at the same general standard as it provides customer
service with respect to other of its products similar to the LICENSED
ARTICLES and such is not corrected within ten (10) business days after
notice by OWNER. LICENSEE will exercise its best efforts promptly to
resolve any consumer complaints regarding the quality or performance of any
LICENSED ARTICLE, and shall periodically report such complaints and their
resolution to OWNER. LICENSEE shall notify OWNER immediately of any
complaints regarding the LICENSED ARTICLES that involve bodily injury or
death or serious property damage and will cooperate
13
with OWNER in the resolution of such complaints. OWNER reserves the right
to participate in the resolution of all complaints, but the exercise of
such right shall not relieve LICENSEE of its indemnification obligations
hereunder.
Termination of the Agreement under the provisions of this Paragraph shall
be without prejudice to any rights which OWNER may otherwise have against
LICENSEE. Upon the termination of the license granted herein, notwithstanding
anything to the contrary herein, all royalties on sales theretofore made shall
become immediately due and payable and no minimum royalties shall be repayable
and balances owing on minimum guarantees shall be immediately due and payable.
Notwithstanding any termination or expiration of this Agreement, OWNER shall
have and hereby reserves all rights and remedies which it has or which are
granted to it by operation of law, to enjoin the unlawful or unauthorized use of
the PROPERTY.
In the event this license is so terminated, LICENSEE, its receivers,
representatives, trustees, agents, administrators, successors and/or assigns
shall have no right to sell, exploit or in any way deal with any of the LICENSED
ARTICLES or any carton, container, packing or wrapping material, advertising,
promotional or display material pertaining thereto, except with and under the
special consent and instruction of OWNER, in writing, which they shall be
obligated to follow.
14.1. SELL-OFF PERIOD. After expiration or termination of the license under
this Agreement, LICENSEE shall have no further right to manufacture, advertise,
distribute, sell, or otherwise deal in any LICENSED ARTICLES which utilize the
PROPERTY, except as hereinafter provided.
(i) LICENSEE shall prepare a fully written inventory list and submit same
to OWNER within ten (10) days of the expiration or termination of the
license under this Agreement. Such list will include orders on hand, work
in process, as well as finished LICENSED ARTICLES.
(ii) OWNER shall have twenty (20) days thereafter to decide whether to
purchase any or all inventory at the lower of cost or fair market value.
If OWNER exercises such right of purchase, LICENSEE shall deliver the
inventory referred to in OWNER's notice within ten (10) days after OWNER's
said notice with the exception of inventory necessary to fulfill orders on
hand. OWNER shall pay LICENSEE for such delivered inventory as is in
marketable condition within twenty (20) days after its receipt thereof.
(iii) Upon said expiration or termination, and if OWNER does not elect
to purchase the inventory, unless the expiration or termination shall occur
as a result of a violation of Paragraph 3, 5 or 11 hereof, LICENSEE, on a
non-exclusive basis, may dispose of LICENSED ARTICLES which are on hand or
in process at the time of such expiration or termination, for a period of
ninety (90) days therefrom, provided all payments with respect to that
ninety (90) day period are made in accordance with Paragraph 3 hereof.
14
15. DISTRIBUTION REQUIREMENTS. LICENSEE agrees to use its best efforts to
sell, distribute and supply the LICENSED ARTICLES within the LICENSED
TERRITORY hereof. LICENSEE must begin the bona fide manufacture,
distribution and sale of the LICENSED ARTICLES on a national basis on or
before the date specified on EXHIBIT 4. LICENSEE further undertakes to make
and maintain adequate reasonable arrangements for the broadest possible
distribution of LICENSED ARTICLES throughout the LICENSED TERRITORY through
all regular and permitted channels of distribution for sales to consumers and
other organizations (as set forth on EXHIBIT 4). LICENSEE agrees to maintain
adequate inventories of the LICENSED ARTICLES as an essential part of its
distribution program. In the event OWNER advises LICENSEE that a special
promotional effort is to take place in one individual store or chain,
LICENSEE agrees to make arrangements for the supply of LICENSED ARTICLES to
said store or chain in such quantities as may be required for such effort.
16. NOTICES. All notices, ROYALTY REPORTS, confirmations and statements to be
given and all payments to be made hereunder, shall be given or made at the
respective address of the parties as set forth below unless notification of a
change of address is given in writing and shall be sent by both generally
recognized overnight courier service and confirmed facsimile transmission and
shall be deemed to have been given when received.
If to OWNER: The Xxxxxxx Works
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Director of Global Licensing
Fax: (000) 000-0000
Xxxxxxx Logistics, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Vice-President, Licensing
Fax: (000) 000-0000
If to LICENSEE: To the name and address set
forth on EXHIBIT 6.
16.1 NOTICE OF MANDATED RECALL OF LICENSED ARTICLES. Any notice received by
LICENSEE, or any entity working for LICENSEE, ordering the withdrawal,
discontinuance, removal or recall of any LICENSED ARTICLES from the market by a
government or governmental agency, a regulatory body, court or the like shall be
immediately reported to OWNER in writing.
15
17. FORCE MAJEURE. Neither party shall be liable for failure to perform any of
their obligations hereunder when such failure is caused by or results from (i)
strike, blacklisting, boycott or sanctions however incurred; (ii) acts of God,
public enemies, authority of law, embargo, quarantine, riot, insurrection or
war; (iii) inability to obtain raw materials; or (iv) any other cause beyond
their respective control.
In the event either party is unable to perform its obligations as a consequent
of any of the contingencies set forth in this Paragraph for a period of six (6)
months or more, either party hereto may terminate this Agreement, which
termination shall relieve each party of any liability to the other based upon
such termination; however, LICENSEE shall not be released from any of its
obligations to make ROYALTY PAYMENTS or any other payments to OWNER pursuant to
the terms and conditions of this Agreement.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties hereto and terminates and supersedes any prior
agreement or understanding relating to the subject matter hereof between OWNER
and LICENSEE. None of the provisions of this Agreement can be waived or
modified except in writing signed by both parties, and there are no
representations, promises, agreements, warranties, covenants or undertakings
other than those contained herein. Neither the tender of this Agreement by
OWNER to LICENSEE nor the encashment by OWNER of LICENSEE's ADVANCE PAYMENT
shall be binding, provided in the latter case that repayment is made in a
commercially prompt and reasonable manner. Only upon delivery to LICENSEE of a
fully-executed agreement shall this Agreement be binding.
19. NO JOINT VENTURE. Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers or agents, and
LICENSEE shall have no power to obligate or bind OWNER in any manner whatsoever.
20. APPLICABLE LAW AND JURISDICTION. The terms and provisions of this
Agreement shall be interpreted in accordance with and governed by the laws of
the State of Connecticut, United States of America (without reference to any
conflict of law provisions thereof). Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, or otherwise
related to this Agreement may be brought against any of the parties only in the
Superior Court of the State of Connecticut, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of
Connecticut, and each of the parties consents to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to jurisdiction or venue laid therein.
Process in any action or proceeding referred to in the
16
preceding sentence may be served on any party anywhere in the world and such
process shall be effective to confer jurisdiction on such courts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
JORE CORPORATION THE XXXXXXX WORKS
By: /s/ Xxxx Xxxx BY: /s/ Xxxxxxx X. [illegible]
------------------------------- ---------------------------
TITLE: Pres. TITLE: Director of Licensing
XXXXXXX LOGISTICS, INC.
BY: /s/ Xxxxxxx X. [illegible]
---------------------------
TITLE: Vice President
17
EXHIBIT 1
LICENSED ARTICLES:
---------------------
DRILLING SYSTEMS, SPECIFICALLY, LAUNCH YEAR
*** ***
EXHIBIT 2
LICENSED TERRITORY:
------------------
***
TERM OF AGREEMENT:
-----------------
May 1, 1999 through December 31, 2004
19
EXHIBIT 3
ROYALTY RATE:
------------
*** of Net Sales
If License Net Sales are *** in the year ***, Licensee has the option to renew
the agreement for a term of ***. Annual guarantees during the renewal term will
be *** annually, adjusted upward or downward in accordance with the Consumer
Price Index for durable goods published by the United States Department of
Labor, Bureau of Labor Statistics.
ADVANCE PAYMENT:
---------------
***
***
GUARANTEED PAYMENTS:
-------------------
Guarantee: No less than *** during the initial term payable as follows:
On or before *** ***
On or before *** ***
On or before *** ***
On or before *** *** Royalty Payments earned in
*** but no less than
On or before *** *** Royalty Payments earned in
*** but no less than
minimum guarantee.
During the renewal term, if any, payable as follows:
adjusted at the start of each calendar year upward or downward in accordance
with the Consumer Price Index for durable goods published by the United States
Department of Labor, Bureau of Labor statistics.
The annual Guaranteed Payments will be remitted quarterly, as follows:
On or before March 31st, *** of the total guarantee,
On or before June 30th, *** of the total guarantee,
On or before September 30th, *** of the total guarantee,
On or before December 31st, *** of the total guarantee.
20
EXHIBIT 4
MINIMUM SALES:
-------------
***
DISTRIBUTION CHANNEL(S) AND REQUIREMENTS:
----------------------------------------
*** and other channels approval by OWNER.
DISTRIBUTION START DATE:
-----------------------
1999 Products by ***; 2000 Products by
***; 2001 Products by ***
Any sub-category of Licensed Articles for which the bona-fide distribution has
not commenced by the Distribution Start Date shall be eliminated from this
Agreement by written notice to LICENSEE by OWNER.
21
EXHIBIT 5
INSURANCE:
---------
Five million ($5,000,000) combined single limit
22
EXHIBIT 6
NOTICES:
-------
Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Xxxxx, XX 00000
Attention: Xxxx Xxxx, President, CEO
23
EXHIBIT 7
LABELING REQUIREMENTS:
---------------------
Standard Form:
-------------
"[list trademarks used] are the trademarks of The Xxxxxxx Works and
subsidiaries."
Short Form (to be used with OWNER's prior written consent):
----------------------------------------------------------
-TM-TSW and subs.
24
SCHEDULE A
PROPERTY:
--------
XXXXXXX-Registered Trademark- AND THE XXXXXXX LOGO.
[LOGO]
[LOGO]
[LOGO]
This schedule may be amended by OWNER upon one hundred twenty (120) days
notice to LICENSEE or expanded upon written approval by OWNER.
TIME PERIOD COVERED_______________
SCHEDULE B
ROYALTY REPORT FORM (BY COUNTRY)
SKU# Description Price/Unit Units Sold Total Sales Less Returns Less Net Sales
Allowances
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Total Net Sales_______________
x Royalty Rate_______________%
Royalties Due_________________
Less Advances ( )
Total Royalties Due $_________
_________________________________
Signature of Authorized
Officer Certifying foregoing
to be accurate
Name:_____________________________
Title:____________________________
Date:_____________________________
26
SCHEDULE C
ARTWORK ASSIGNMENT AGREEMENT
IN CONSIDERATION OF One Dollar ($1.00) and other good and valuable consideration
paid or to be paid to ____________________________________(the "Contractor") by
______________________________________________("Company"), the parties hereto
agree as follows:
(a) Contractor represents and warrants that Contractor will create all ______
to be submitted by Contractor hereafter to Company, including, without
limitation, all
__________________________________ and __________________________done and
to be done in connection with a property of _______________________ known
as _____________________________. (All such materials created by
Contractor and all drafts, outlines, and other preparatory materials shall
collectively be called the "Work" herein). Contractor warrants and
represents that the Work shall be original with Contractor and shall not
infringe the rights of any third parties; and that
_________________________has the exclusive right forever and throughout the
universe to exploit the Work and the results and proceeds of Contractor's
services rendered in connection therewith.
(b) The Work is and shall be considered a work made for hire for
____________________ and ________________________owns and shall own all
right, title and interest in and to the Work and the results and proceeds
of Contractor's services rendered in connection therewith, including,
without limitation, all copyrights and renewals and extensions of copyright
therein.
(c) To the extent that any such ownership in such Work does not vest in ______
by reason of Contractor's status as an employee for hire: Contractor hereby
assigns and transfers in whole to _____________________, all right, title,
and interest in and to such Work and the results and proceeds thereof to
the extent that Contractor has, had, or will have any interest therein,
including without limitation, all copyrights and renewals and extensions of
copyright therein.
(d) The Work may be registered for copyright in the name of
____________________, and ____________________________ shall own and
possess all physical material in which or on which the Work is embodied or
reproduced, by or on behalf of Contractor. __________________ shall have
the exclusive right forever throughout the universe to change, adapt,
modify, use, combine with other material, and otherwise exploit the Work in
all media and by all means, whether now known or hereafter invented or
developed. Contractor hereby waives any and all claims that Contractor may
have now or may hereafter have in any jurisdiction to so-called "moral
rights" or "droit moral" with respect to the Work, and to the results and
proceeds thereof.
(e) Any further compensation paid or to be paid to Contractor for services
rendered in connection with the Work shall be described in a separate
writing or writings. This Agreement shall constitute the entire
understanding between the parties. This Agreement may not be altered,
modified or changed in any way without the express written consent of
both parties and shall be construed in accordance with the laws of the
State of New York applicable to agreements executed and wholly performed
therein.
(f) When requested by Company, or _______________________, Contractor shall
perform all such acts and things and sign all documents and certificates
which the Company may reasonably request in order to carry out the intent
and purpose of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
COMPANY: CONTRACTOR:
BY:___________________________ BY:______________________________
ITS:__________________________ ITS:_____________________________
DATE:_________________________ DATE:____________________________
[to be notarized]
SCHEDULE D
THE XXXXXXX WORKS AND XXXXXXX LOGISTICS, INC.
ENGAGEMENT CRITERIA FOR PARTNERS & SOURCES
The Xxxxxxx Works and Xxxxxxx Logistics, Inc. are global
organizations that has a tradition of excellence in its products, in the
development of its workforce, and in the high ethical standards that guide our
business practices. As we broaden our reach through expanded selling and
sourcing operations throughout the world, we insist those we do business with
meet those standards and ethical practices that have been associated with our
company.
Partners and sources will be selected on the basis of a shared
approach to business. An approach that is ethical, recognizes human rights, and
protects the environment. Otherwise, we would compromise the reputation of our
company, undermine our values and place our stakeholders at risk.
ENGAGEMENT CRITERIA
-------------------
The following Engagement Criteria addresses issues primarily under the
control of our business partners, sources and vendors. A prior examination of
the social, political and business environment in the countries in which we wish
to source will also be a factor in our decision to do business in a country.
Where applicable, The Xxxxxxx Works and Xxxxxxx Logistics, Inc.
existing policies and procedures will apply. The standard of performance in
this document agrees with those policies and procedures. In many cases,
standards defined under the Engagement Criteria will also apply to
subcontractors of our partners and sources.
1. ETHICAL STANDARDS. We will only do business with those who
use sound and legal practices, minimize the potential for conflicts of
interest, prohibit the giving or receiving of gifts and gratuities,
place the utmost importance in truth and full disclosure, and comply
with all specifications, quality criteria and product requirements.
2. HEALTH & SAFETY. Our business partners must be committed to
a safe and healthy work place and must comply with all applicable laws
and regulations that apply to health and safety. Further, there must
be an appropriate method of dealing with hazardous materials. Our
partners who provide residential facilities must also maintain those
facilities in a healthy and safe manner.
3. ENVIRONMENTAL. Our partners must be committed to
environmentally safe practices and must be in compliance with all
applicable laws and environmental regulations. Care must be taken
with any environmentally sensitive substances or processes.
4. EMPLOYMENT PRACTICES. We will only do business with those
who do not subject their workers to physical risks, recognize the
right of free association, and do not exploit their workers.
WAGES & BENEFITS: Must comply with the law and/or prevailing local
practices. All fees and/or wage deductions must be fair and
reasonable.
WORKING HOURS: Must be present on a daily, weekly and monthly basis
with compensation for overtime. Usually this means no more than a 60
hour work-week with one (1) day off within a seven (7) day period.
CHILD LABOR: Use by our partners or sources or their sources of
vendors of child labor is forbidden. A "child" is a person under the
age of 16 years.
FORCED LABOR: Use by our partners or sources or their sources or
vendors of forced or prison labor is forbidden.
DISCIPLINARY PRACTICES: We will not do business with those who use
mental or physical threats. Physical punishment of any kind is
forbidden.
NON-DISCRIMINATION: We believe in cultural diversity and support
employment practices based on individual skills and abilities. We
will not do business with those you discriminate in any way.
5. GENERAL. Our intent is to do business with partners,
sources and vendors who contribute to the betterment of their
communities and who train and develop their workers.
OUR COMMITMENT
Partners and Sources who do business with The Xxxxxxx Works and
Xxxxxxx Logistics, Inc. can expect the following:
A professional approach to business that emphasizes customer satisfaction,
product quality, and recognizes the right of our partners and sources to
receive a fair return for their efforts.
Regular contact with The Xxxxxxx Works and Xxxxxxx Logistics, Inc.
personnel for program and management and technical support.
Business conducted in an open and truthful way with conduct that is ethical
at all times and under all circumstances.