EXHIBIT 10.5
LICENSE AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of January
1997, by and between HACHETTE FILIPACCHI PRESSE (hereinafter referred to as
"Licensor") having an address c/o Hachette Filipacchi Magazines, Inc. of 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and T.K. MAB INCORPORATED of 0000 Xxxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as "Company");
WITNESSETH:
WHEREAS, Licensor is the owner of the ELLE trademark and owns all
rights therein, and is exclusively entitled to license the rights to manufacture
and sell merchandise identified with the "Licensed Property," as hereinafter
defined; and
WHEREAS, ELLE magazine is published in the United States by Elle
Publishing L.P. under license from Licensor; and
WHEREAS, Company desires to obtain from Licensor a license to
manufacture and sell certain articles using the Licensed Property;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
Article I. Definitions. For purposes of this Agreement the following
definitions shall apply:
(a) "Products" shall mean those articles of merchandise grouped into
categories, as follows:
i) "Ladies' swimwear" consisting of one-piece and two-piece
ladies' swimwear designed and manufactured expressly for
swimming (hereinafter referred to as "Swimwear Products");
ii) "Ladies' swimwear coverups" consisting of casual tops
designed using fabrics, colors and styles which are similar
to and coordinate with "Ladies' swimwear" (defined
immediately above) and which are sold together with such
"Ladies' swimwear" in the swimwear sales area (hereinafter
referred to as "Coverup Products"); and
iii) "Activewear" consisting of sweatsuits, fleece tops and
bottoms, sweatshirts, t-shirts, exercise tights and
leotards, long sleeve and short sleeve knit tops and
coordinated knit wear, and all articles of clothing (not
including any articles of footwear, socks or hosiery)
appropriate to be worn while participating in exercise
activity (hereinafter referred to as "Activewear Products").
(b) "Licensed Products" shall mean all Products manufactured
by or on behalf of Company which are identified with the Licensed
Property or which are sold to consumers in a container or
packaging which incorporates the Licensed Property. Licensed
Products consisting of "Swimwear Products" are hereinafter
referred to as "Category A Products" and Licensed Products which
consist of "Coverup Products" and "Activewear Products" are
hereinafter collectively referred to as "Category B Products."
(c) "Territory" shall mean the United States of America, its
territories and possessions, and Canada, subject to the
provisions set forth in Article II (d) below.
(d) "Licensed Property" shall mean and be limited to the
name, logo and identification of ELLE Magazine.
(e) "Initial Period" shall mean that period of time which
shall be deemed to have commenced January 1, 1997 and which shall
continue until December 31, 1999.
(f) "Renewal Period" shall mean that period of time
commencing on January 1, 2000, and continuing until December 31,
2002.
(g) "Contract Period" shall mean the Initial Period and, if
this Agreement is renewed in accordance with Article VII below,
the Renewal Period, collectively.
(h) "Contract Year" shall mean a period of twelve (12)
successive months commencing on any first day of January during
the Contract Period.
Article II. Grant of Rights. (a) Licensor hereby grants to Company,
during the term of the Contract Period, subject to all of the terms and
conditions set forth in this Agreement, those rights to the Licensed Property as
are set forth in Section A of the attached Standard Terms and Conditions.
(b) Company hereby agrees that Company shall distribute and sell
Licensed Products only through department stores, mail order catalogues and
specialty apparel stores located in the Contract Territory. Company agrees, in
particular, that Company shall not distribute or sell Licensed Products through
any chain of mass market general retail stores (which for these purposes shall
include JC Penney) or through liquidation stores, or by sales through discount
merchandisers. If Company desires to conduct end-of-season inventory clearance
sales through any retail outlet which does not regularly sell Licensed Products
in-season, then Company shall request Licensor's advance written approval of the
particular retail outlet at which Company proposes to conduct such end-of-season
inventory clearance sales.
(c) Company agrees that Company shall distribute and sell Coverup
Licensed Products only in association with Swimwear Licensed Products (in the
swimwear sales area of the relevant retail sales location).
(d) The definition of the "Territory" as set forth above shall exclude
Guam, Saipan, and duty-free sales locations. Company agrees that Company will
not distribute or sell Licensed Products through duty-free retailers, including
without limitation those retailers listed in Exhibit A. "Duty Free" shall be
defined as:
i) duty and tax free shops in the International areas (across
the border) of ports and airports, duty and tax free
pre-order counters of ports and airports,
ii) duty and tax free on board sales, duty and tax free mail
order catalogues managed by airlines or duty free operators,
and
iii) outlets managed downtown by major duty free operators, of
which the list is attached as Exhibit A (and as amended in
writing from time to time by mutual agreement between the
parties).
(e) Company acknowledges that the foregoing rights shall not include
the right of Company to print, publish or distribute any mail order catalogue
identified as an "ELLE" catalogue.
Article III. Guaranteed Minimum Royalty. As compensation to Licensor
for the grant to Company of the above rights, Company shall pay to Licensor, in
the manner set forth in Section G of the attached Standard Terms and Conditions,
with respect to each Contract Year during the Contract Period, and with respect
to each separate "Category" of Licensed Products, guaranteed minimum annual
royalties as follows:
Guaranteed Royalty
Category A Category B
Contract Year Products Products
First US$25,000 US$125,000
Second US$35,000 US$150,000
Third US$45,000 US$200,000
If renewed pursuant to Article VII below
Fourth US$50,000 US$250,000
Fifth US$50,000 US$300,000
Sixth US$50,000 US$350,000
The guaranteed minimum annual royalty for each Contract Year shall be payable in
four equal annual installments due on or before January 31, April 30, July 31
and October 31 during each Contract Year.
Article IV. Earned Royalty. As compensation to Licensor for the rights
hereinbefore granted, Company agrees to pay to Licensor an earned royalty at the
rate of six percent (6%) of the "Net Wholesale Sales" (as that term is defined
in the attached Standard Terms and Conditions) of all Licensed Products sold
hereunder by Company during each Contract Year; provided, however, that the full
amount of the guaranteed minimum annual royalty which is payable by Company to
Licensor pursuant to Article III above which is applicable to the relevant
Contract Year, and to the particular Category of Licensed Products, shall first
be credited against the payment of any earned royalties with respect to sales of
Licensed Products within the relevant Category made during such Contract Year.
No part of any guaranteed minimum annual royalty shall be carried forward (or
back) as a credit from one Contract Year to another, nor shall any be carried
over as a credit from one category of Licensed Products to another. Earned
royalties shall be payable within thirty (30) days following the end of each
calendar year quarter with respect to sales made during such calendar year
quarter.
Article V. Identified Retailers. At any time during the Contract
Period, Licensor shall have the right, upon written notice to Company, to
require company to discontinue further or additional sales of Licensed Products
to any retailer (the "Identified Retailer") which may at that time advertise,
promote and distribute Licensed Product as a retail account of Company for
Licensed Products. Licensor represents, however, that Licensor shall not require
Company to discontinue distributing Licensed Product to any Identified Retailer
unless Licensor shall believe, in its reasonable good faith business judgment,
that continued efforts to distribute and sell Licensed Products through the
Identified Retailer will have the result of lessening the overall image and
reputation of Licensed Products by reason of conflict (at the Identified
Retailer) between sales of articles of ladies apparel (produced and sold by
third parties which have advertised in ELLE magazine) and the distribution and
sale of Licensed Products identified with the name and trademark of ELLE
magazine.
Article VI. Licensed Tights. Company agrees that as to all Activewear
Products consisting of "exercise tights" Licensed Products (hereinafter referred
to as "Licensed Tights"), Company shall advertise, distribute and sell such
items only as items of sports apparel for use while participating in active
sports and, as such, Company agrees that Licensed Tights shall be distributed
and sold only through sports apparel departments of department stores, specialty
sporting goods stores, sporting goods catalogues, and other sports specialty
apparel stores. Company acknowledges and agrees that Licensor has retained the
right to grant to a third party (the "Fashionwear Licensee") the right and
license to use the Licensed Property throughout the Contract territory during
the Contract Period in connection with the advertisement, distribution and sale
of ladies tights as articles of "fashionwear" for everyday use by the consumer
engaging in casual leisure-time activities. Licensor represents and agrees that
such Fashionwear Licensee shall be limited to distribution and sale of such
ladies tights (identified with the Property) only in the fashionwear,
casual-wear and general hosiery departments of department stores, specialty
apparel stores and other retail sales locations not to include sports apparel
departments of any such retailers.
Article VII. Renewal. Provided that Company is not then in default of
any material obligation set forth in this Agreement, and provided that Company
shall, during the Initial Period, achieve sales of Licensed Products in an
amount sufficient to produce for Licensor at least US$1,000,000 in earned
royalties (that is, US$1,000,000 of total earned royalties before application of
any guaranteed minimum royalty as a credit; not US$1,000,000 in earned royalties
in excess of the guaranteed minimum royalty); then and in such event the
Contract Period of this Agreement shall be automatically renewed and extended
for the Renewal Period described above. If during the Initial Period, the amount
of sales of Licensed Products shall have produced less than US$1,000,000 in
earned royalties (before the application of any guaranteed minimum annual
royalty as a credit), then Licensor shall have the right and option, at its
election, to elect to renew and extend the Contract Period of this Agreement for
the Renewal Period, such option to be effective upon written notice of renewal
delivered by Licensor to Company no later than the date ninety (90) days prior
to the last day of the Initial Period.
Article VIII. Liability Insurance. Company represents and warrants
that the liability insurance which will be acquired and maintained by Company
pursuant to Section M of the attached Standard Terms and Conditions shall be in
the amount of no less than US$1,000,000 (the "Insured Coverage").
Article IX. Non-Competition. Company agrees that during the Contract
Period, Company shall not manufacture, advertise, promote, distribute or sell
any one or more items of "Products" (as hereinafter defined) with the use of any
name, logo or trademark which is identified with any women's fashion periodical
(other than the Licensed Property as herein defined).
Article X. Licensed Products Designs. During the twenty-four (24)
month period next following the last day of the Contract Period, Company agrees
it will not distribute and sell anywhere in the Territory any "collection" of
ladies' swimwear which consists of swimsuits which are substantially identical
in styles, designs and colors to Licensed Products distributed and sold by
Company during the Contract Period.
Article XI. Licensed Products for Use of Licensor. Company agrees that
it will supply to Licensor at Licensor's offices in New York, New York, as
indicated below, free of charge, and at no cost or expense, with three (3) units
of each item of Licensed Products distributed and sold pursuant to this
Agreement by Company. Company shall pay all delivery costs, customs duties, and
any other fees or expenses in connection with the delivery of these items to
Licensor.
Article XII. Standard Terms and Conditions. This Agreement is subject
to all of the provisions of the Standard Terms and Conditions which are attached
to and made a part of this Agreement.
Article XIII. Execution and Delivery Required. This instrument shall
not be considered to be an agreement or contract nor shall it create any
obligation whatsoever on the part of Licensor and Company, or either of them,
unless and until it has been signed by a representative of Licensor and by a
representative of Company and delivery has been made of a fully signed original.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the day and year first above written.
HACHETTE FILIPACCHI PRESSE T.K. MAB INCORPORATED
By: /S/ By: /S/
Xxxxx Xxxxx Xxxxx X. Dear, CEO
V.P. Marketing
EXHIBIT A
Major Duty-Free Operators
DFS (USA)
Nuance (Switzerland)
Allders (UK)
Xxxxxxxxx (Switzerland)
Van Brugge House (Honolulu)
International Access (Guam)
Continental Micronesia (Saipan)
STANDARD TERMS AND CONDITIONS
FOR
ELLE MAGAZINE LICENSE AGREEMENT
WITH
T.K. MAB INCORPORATED
SECTION X. XXXXX OF RIGHTS.
(1) Sales within the Territory. Licensor hereby grants to Company,
during the term of the Contract Period, and any extension thereof, subject to
all of the terms and conditions set forth in this Agreement, including these
Standard Terms and Conditions, the right and license to use the Licensed
Property, within the Territory only, on and in connection with the manufacture,
advertising, promotion, distribution and sale of the Licensed Products, and
Licensor hereby agrees that except as set forth in Section B of these Standard
Terms, Licensor will not grant to anyone other than Company the right to use the
Licensed Property on or in connection with the advertisement, promotion,
distribution or sale of Licensed Products (as hereinbefore defined) within the
Territory during the Contract Period. Licensor further hereby grants to Company
the non-exclusive right to have Licensed Products manufactured anywhere outside
the Territory, provided that such Licensed Products are distributed and sold
only within the Territory subject to all of the terms and conditions set forth
in this Agreement.
(2) Sales Outside the Territory. Company agrees that Company will not
sell Licensed Products to any party whom Company believes, or has reasons to
believe, will export the Licensed Products for resale outside of the Territory.
Without limiting the generality of the foregoing, where Company learns that any
of the Licensed Products have been exported out of the Territory, Company shall
not in future make any sale to the party to whom Company sold such Licensed
Products nor, in the event of a chain of sales of such Licensed Products, to any
party within the chain to whom such goods were resold. Furthermore, where
Company learns from a source other than Licensor that any party, to whom the
Licensed Products have been sold or resold, is involved, directly or indirectly,
in the export of the Licensed Products outside the Territory, Company shall
immediately communicate to Licensor all information available concerning such
party, including its name and address.
SECTION B. PREMIUM SALES BY LICENSOR/COMPANY.
(1) "Premium" Defined. For the purposes of this Agreement, a "premium"
use of Licensed Products shall mean the sale or supply of Licensed Products to
any third party where such Licensed Products are intended to be given away free
of charge, sold or distributed as a part of any plan intended to promote the
merchandise, services or business of such third party. A "premium" use shall
also include the sale or supply of Licensed Products to a third party where such
third party intends to package Licensed Products together with other items of
merchandise and to sell the combination thereof as a single product (hereinafter
sometimes referred to as a "combination sale").
(2) Premium Uses by Company. If at any time during the Contract Period
hereof, Company so wishes to sell or supply Licensed Products for use by any
third party as a Premium (whether to be given away free-of-charge, sold at a
discount, or used in a combination sale, as aforesaid), or if Company, itself,
wishes to make any "premium" use of Licensed Products, Company agrees to so
notify Licensor in writing in advance and to disclose to Licensor the nature and
terms of such proposed Premium arrangement. Licensor shall have the right to
approve or disapprove any such proposed premium arrangement in advance within
fifteen (15) days of receipt of Company's notice in its sole and absolute
discretion. Failure of Licensor to deliver approval in writing shall constitute
disapproval.
(3) Premium Sales by Licensor. If, at any time during the Contract
Period of this agreement, any other licensee of Licensor (or Licensor itself)
shall intend or desire to use as "premiums" (as hereinbefore defined) any items
of merchandise which incorporate the Licensed Property and which are of the same
generic type as Licensed Products, then Licensor agrees to require its licensee
to negotiate (or Licensor itself shall negotiate) in good faith with Company the
terms and conditions under which Company may be retained to supply such licensee
(or Licensor) with Licensed Products to be used as premiums. If Company does not
deliver to the licensee concerned (or to Licensor, as the case may be) its
commitment to supply such licensee (or Licensor) with sufficient quantities of
relevant Licensed Products for use as premiums as aforesaid, whether due to
Company's inability to supply such items in the quantities required, of the
quality required, on a timely basis, or at prices competitive with other sources
of supply, then Company acknowledges that such licensee (or Licensor) shall be
authorized to contract with third parties for the manufacture and supply of
Products bearing the Licensed Property for use as premiums as aforesaid.
SECTION C. MARKETING EFFORTS.
Company agrees that, during the Contract Period, it will use its
diligent efforts to actively and aggressively promote the sale of Licensed
Products throughout the Territory. Company agrees that it will continue to
manufacture, advertise, promote and distribute commercially substantial
quantities of Licensed Products continuously throughout the entire duration of
the Contract Period. Company understands and agrees that Company may use the
Licensed Property only in connection with Licensed Products and only as
specifically permitted by the terms hereof.
SECTION D. APPROVAL PROCEDURES FOR LICENSED PRODUCTS AND ADVERTISING
MATERIALS.
(1) Approval of Licensed Products. Company agrees that Licensor shall
have the right to approve or disapprove in advance of sale the quality, style,
design, colors, appearance, materials, workmanship, and all other aspects of all
Licensed Products and the components thereof, and to approve or disapprove any
and all trademarks, trade names, designs and logos used on or in connection with
Licensed Products. Company shall not distribute or sell any such Licensed
Product which has not been approved by Licensor or which is, at any time,
disapproved by Licensor in accordance with the provisions below. Company
represents that Licensed Products will be of high quality and superior fit and
finish for similarly-priced articles of merchandise.
(2) Submission of Licensed Products. Before selling or distributing
any Licensed Products hereunder, Company shall submit to Licensor, at such
address or addresses as Licensor may from time to time designate, for its
examination and approval or disapproval, a prototype or production sample
thereof together with any related or associated items. Licensor agrees that it
will promptly examine and either approve or disapprove such samples, and that
Licensor will promptly notify Company of its approval or disapproval. Licensor
agrees that it will not unreasonably disapprove any item and, if any is
disapproved, that Company will be notified in writing of the specific
modifications (to the extent these can be readily identified or expressed) which
are required to obtain approval. Company will resubmit disapproved items until
approval is obtained.
(3) Maintenance of Quality. Company shall, from time-to-time, at the
request of Licensor, but nor more often than once during each semi-annual period
during each Contract Year, submit current production samples of Licensed
Produces produced hereunder in order that Licensor may assure itself of the
maintenance of quality standards hereunder. Company represents and warrants that
all Licensed Products which are advertised, distributed and sold to consumers in
accordance with this agreement shall be substantially identical to and of no
lesser quality than the sample thereof which was previously submitted to and
approved by Licensor in accordance with this section.
(4) Approval of Advertising Materials. The term "Advertising
Materials" shall mean all advertising and promotional materials and all
packaging, wrapping and labeling materials for the Licensed Products (including,
by way of illustration but not limitation, catalogs, trade advertisements,
flyers, sales sheets, labels, package inserts, hangtags and displays) which are
produced by or for the Company and which make any use of, or which are proposed
to be used in connection with, the Licensed Property. Company agrees that
Licensor shall have the right to approve or disapprove in advance the contents,
appearance and presentation of any and all Advertising Materials. Company agrees
that it will not produce, publish or in any manner use or distribute any such
Advertising Materials which have not been previously submitted to and approved
by Licensor in accordance with this section.
(5) Submission of Advertising Materials. Before producing, publishing
or distributing any Advertising Materials hereunder, Company shall first submit
to Licensor, at such address or addresses as Licensor may from time to time
designate, for its examination and approval or disapproval, a sample thereof
together with the text, coloring and a copy of any photograph proposed to be
used. Licensor agrees that it will promptly examine and either approve or
disapprove such sample Advertising Material, and that Licensor will promptly
notify Company of its approval or disapproval. Licensor agrees that it will not
unreasonably disapprove any sample Advertising Material and, if any is
disapproved, that Licensor will notify Company in writing of the specific
modifications (to the extent these can be readily identified or expressed) which
must be made in order to obtain approval. Company will resubmit disapproved
items until approval is obtained.
(6) Inadequate Quality. Failure by Company to comply with the
provisions of this Section D shall constitute a material breach of this
Agreement and shall be grounds for termination of this Agreement by Licensor, as
provided in Section O.
(7) Photography. Company acknowledges and agrees that if Company
should desire to use in its Advertising Materials any one or more photographs
which depict any identifiable individual, it shall be the sole and exclusive
responsibility of Company to obtain from such individual whatever copyright
approval, license, photographic waiver or release may be required to permit
Company to use such photograph in Advertising Materials for Licensed Products.
Company further agrees that it shall be the sole and exclusive responsibility of
Company to obtain from the photographer or other copyright owner of such
photograph whatever copyright approval, license, photographic waiver or release
may be required to permit Company to use such photograph in advertising for
Licensed Products.
(8) Advertising/Design Indemnity. Company hereby agrees to protect,
defend, indemnify and save harmless Licensor and Licensor's authorized agent,
and their related and affiliated entities and their officers, directors,
employees, shareholders and representatives, or any of them, from and against
any and all expenses, damages, claims, suits, actions, judgments and costs
whatsoever, including reasonable attorneys fees, arising out of, or in any way
connected with, any alleged infringement by Company of the patent rights, design
rights, trademarks, copyrights, personal or proprietary rights of any third
party (any party other than Licensor), provided that Company shall be given
prompt notice of any such action or claim, and further provided that Company
shall defend any such action or claim with counsel approved in advance by
Licensor, which approval will not be unreasonably withheld or delayed.
SECTION E. NOTICES AND SUBMISSIONS.
Unless and until Licensor shall notify Company to the contrary, all
notices and all submissions of advertising materials and sample Licensed
Products to be made or delivered by Company to Licensor hereunder, and a copy of
each check, sales report or other notification of payment delivered to Licensor
at the address set forth in Section G below, shall be delivered to Licensor's
representative, as follows:
International Merchandising Corporation
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxxx
with a copy of all notices to be sent at the same time to:
Hachette Filipacchi Presse
c/o Hachette Filipacchi Presse, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Vice President/Marketing
with a copy thereof to:
Hachette Filipacchi Presse
c/o Hachette Filipacchi Presse, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxxxx
General Counsel
All materials submitted shall be delivered free of all charges such as, for
example, shipping charges and customs duties.
SECTION F. EARNED ROYALTIES; SALES REPORTS.
(1) Basis for Computation of Royalties. "Net Wholesale Sales" as that
term is used in this agreement shall mean Company's invoiced billing price to
its customers or distributors, deducting only the following items (and only if
separately stated in the relevant invoice issued by Company): shipping charges,
freight, duties, insurance, discounts actually given, sales taxes, value-added
taxes, and credits allowed for returned or defective merchandise (but no reserve
for returns). All royalties due to Licensor shall accrue upon the sale of the
Licensed Products, regardless of the time of collection by the Company. For
purposes of this Agreement, the Licensed Product shall be considered "sold" as
of the date on which such Licensed Product is billed, invoiced, shipped, or paid
for, whichever event occurs first. If any Licensed Products are consigned to a
distributor by Company, the Licensed Product shall be considered "sold" by
Company as of the date on which such distributor bills, invoices, ships, or
receives payment for any of the Licensed Products, whichever first occurs.
(2) Sales to Related Parties. If Company sells any Licensed Products
to any party affiliated with Company, or in any way directly or indirectly
related to or under common control with Company, at a price less than the
regular price charged to other parties, the royalties payable to Licensor
hereunder shall be computed on the basis of the regular price charged to other
parties.
(3) Uncollectable Accounts. There shall be no deduction either from
Company's "Net Wholesale Sales" for Licensed Products or from the royalties
payable to Licensor hereunder for uncollectable accounts.
(4) Sales Reports. Company shall submit to Licensor a sales report
with respect to all sales of Licensed Products sold during each calendar year
quarter, said sales reports to be delivered to Licensor within thirty (30) days
following the conclusion of each calendar year quarter. Said sales report shall
indicate, for each category of Licensed Products, and for each of Company's
primary accounts (Company's top twenty (20) accounts), the number of each item
of Licensed Products sold during each month, the gross wholesale sales price of
each such Licensed Product, and any deductions allowed in accordance with
subparagraph (1) immediately above in arriving at "Net Wholesale Sales" and the
total "Net Wholesale Sales" of all such items.
SECTION G. PAYMENTS.
Unless and until Licensor advises Company to the contrary, all sales
reports and payments hereunder shall be made to Licensor's authorized agent,
International Merchandising Corporation. Sales reports and payments to Licensor
hereunder shall be made by way of check payable to the order of "International
Merchandising Corporation" which shall be mailed to Licensor's authorized agent
at the following address:
International Merchandising Corporation
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: Treasurer
Past due payments shall bear interest at the rate of (i) one and one-half
percent ("1-2") per month, or (ii) the maximum interest rate permissible under
law, whichever is less. If in connection with any payment to be made hereunder
by Company, Company is obligated to deduct withholding tax at source, Company
shall promptly after making such withholding deliver to Licensor at the address
set forth above the receipt evidencing payment of such withholding tax.
SECTION H. BOOKS OF ACCOUNT; AUDITS.
(1) Books of Account. Company agrees to keep and maintain complete and
accurate books of account, records and other documents with respect to sales of
Licensed Products achieved by Company during each calendar year. Such books of
account, records and other documents shall be available for inspection, audit
and copying by Licensor, by its duly authorized agents and representatives,
during ordinary business hours during the relevant calendar year and during the
two (2) year period following the conclusion of the calendar year during which
such sales of Licensed Products were achieved.
(2) Audits by Licensor. If any audit of Company's books and records
reveals that Company has failed properly to account for and pay royalties owing
to Licensor hereunder, and the amount of any royalties which the Company has
failed properly to account for and pay for any quarterly accounting period
exceeds, by three percent (3%) or more, the royalties actually accounted for and
paid to Licensor for such period, Company shall, in addition to paying Licensor
such past due royalties, reimburse Licensor for its direct out-of-pocket
expenses incurred in conducting such audit, together with interest on the
overdue royalty amount at the rate of (i) one and one-half percent (1-2%) per
month, or (ii) the maximum interest rate permissible under law, whichever is
less.
SECTION I. TRADEMARKS.
(1) Definition of "Trademarks". For all purposes of this Agreement,
the "Trademarks" shall mean and include all trademark rights, including common
law rights, and all trademark applications and registrations, filed or obtained
by Licensor for the ELLE name and identification.
(2) Goodwill in Licensed Property. All trademark uses of the Licensed
Property by Company shall inure to the benefit of Licensor, which shall own all
Trademarks and trademark rights created by such uses. Company hereby assigns and
transfers to Licensor all Trademarks and trademark rights created by such uses
of the Licensed Property, together with the goodwill of the business in
connection with which such Trademarks are used. Company shall not take any
action which would be detrimental to the goodwill developed by Licensor in the
Licensed Property.
(3) Trademark Registrations. Licensor shall have the right, but not
the obligation, to file in the appropriate offices of countries of the
Territory, at its own expense, trademark or design applications relating to the
use or proposed use by Company of any of the Trademarks in connection with the
Licensed Products, such filings to be made in the name of Licensor or in the
name of any third party selected by Licensor.
(4) Trademark Notices. Company agrees to affix or to cause its
authorized manufacturing sources to affix to the Licensed Products and to the
Advertising Materials such trademark and design notices (that is, 7 or J, as the
case may be) as may be designated by Licensor. Company agrees to affix or to
cause other authorized manufacturing sources to affix to the Licensed Products
or the containers the legend "Manufactured under license from Hachette
Filipacchi Presse" together with the name and address of Company. (In Canada,
the foregoing notice shall read "Manufactured under License from France Canada
Editions et Publications.")
SECTION J. INFRINGEMENTS.
(1) Notice of Infringement. Company agrees to notify Licensor in
writing of any articles similar to the Licensed Products which are advertised,
promoted or sold by any third party in the Territory which in Company's opinion
may constitute an infringement of the Licensed Property or a passing off of the
rights to the Licensed Property herein granted to Company.
(2) Legal Action Against Infringements. Licensor shall control
absolutely all infringement litigation as well as the settlement of all claims
involving the Licensed Property. If Licensor elects to institute legal action in
accordance with the foregoing, then Licensor shall do so through counsel of its
own selection, at its own cost and expense. Company shall have the right at its
election to join in such action through counsel of its own selection, at its own
cost and expense.
(3) Cooperation by Company. If, in accordance with the foregoing,
Company joins with Licensor in such action, Company acknowledges that it shall
in no event have the right, without the prior written consent of Licensor, to
acknowledge the validity of any claim of any infringer, to seek or obtain a
license from any infringer, or to take any other action relating in any way to
the Licensed Property which may in any way derogate from the rights of Licensor
or which might impair the ability of Licensor to contest such claim if it so
elects.
SECTION K. LIABILITY INSURANCE.
(1) Company hereby represents and warrants to Licensor that Company
has the full power to enter into this Agreement; that Licensor will not be
obligated to make any payments to or on behalf of any third party in connection
with the manufacture, advertising, promotion, distribution or sale of Licensed
Products by Company pursuant to this Agreement; and that the Licensed Products
shall be manufactured, distributed and sold in compliance with any statutory or
regulatory laws, orders or regulations applicable thereto in the jurisdiction in
which such items are manufactured, distributed and sold.
(2) Company agrees to protect, defend, indemnify and save harmless
Licensor and Licensor's authorized agent, and their parents, subsidiaries and
affiliates and their officers, directors, employees, shareholders and
representatives, or any of them, from and against any and all expenses, damages,
claims, suits, actions, judgments and costs whatsoever, including reasonable
attorneys' fees, arising out of, or in any way connected with, any claim or
action for personal injury, death or other cause of action involving alleged
defects in Licensed Products, including any packaging and/or advertising
therefor, and any alleged breach by Company of any statutory obligation, and any
default by Company of its representations and warranties set forth in
subparagraph (1) immediately above, provided that Company shall be given prompt
notice of any such action or claim which is brought to Licensor's attention, and
further provided that Company shall defend any such action or claim with counsel
approved in advance by Licensor, which approval will not be unreasonably
withheld or delayed.
(3) Company agrees to acquire and maintain, throughout the entire
Contract Period hereof, and for the two (2) year period next following the last
day of the Contract Period, at Company's sole cost and expense, comprehensive
general liability insurance (including product, personal injury, advertising and
contractual liabilities) on an occurrences basis, for claims arising under the
circumstances described in subsection (2) immediately above, with limits of no
less than the "Insured Coverage" (as defined in Article IX hereinabove) and
within ten (10) days following the execution of this Agreement, Company shall
submit to Licensor a fully-paid policy or certificate of insurance naming
Licensor, and Licensor's authorized agent, and their constituent entities and
their officers, directors, employees, shareholders and representatives, or any
of them, as additional insured parties, and requiring that the insurers shall
not terminate or materially modify such policy without written notice to
Licensor at least thirty (30) days in advance thereof.
SECTION L. DISTRIBUTORS/SUBCONTRACTORS.
Company shall not have the right to sublicense any of the rights
granted to it under this Agreement, but Company shall have the right to make
arrangements for subcontracting the manufacture, finishing, packaging and
storing of Licensed Products, and to appoint distributors for the Licensed
Products within the Territory, provided that Company shall ensure that no such
subcontractor or distributor shall take any action contrary to or inconsistent
with the terms and conditions set forth in this Agreement, and further provided
that no company name, trade name or brand name other than Company's may be used
on or in connection with Licensed Products.
SECTION M. USE OF LICENSED PROPERTY AFTER TERMINATION.
(1) From and after the expiration or other termination of the Contract
Period, and except as provided in Section N below, all of the rights of Company
to the use of the Licensed Property shall cease absolutely, and Company shall
not thereafter manufacture, distribute or sell any item whatsoever with the use
of the Licensed Property or use the Licensed Property in any way whatsoever.
(2) Company acknowledges that the failure by Company to discontinue
the manufacture, sale or distribution of Licensed Products or any class or
category thereof at the termination or expiration of the Contract Period of this
Agreement will result in immediate and irreparable damage to Licensor and to the
rights of any subsequent licensee of Licensor. Company acknowledges and admits
that there is no adequate remedy at law for such failure to cease manufacture,
sale or distribution, and Company agrees that, in the event of such failure,
Licensor shall be entitled to equitable relief by way of injunctive relief and
such other relief as any court with jurisdiction may deem just and proper.
SECTION N. INVENTORY OF LICENSED PRODUCTS ON TERMINATION.
Any Licensed Products that may have been manufactured by or for
Company prior to the expiration or other termination of the Contract Period, or
which were in the process of manufacture by Company, or were required to fill
purchase orders from customers accepted by Company prior to the date of
termination, may be sold by Company during a six (6) month sell-off period
immediately following the date of termination, provided that:
(a) Company is not in default of any material
term or condition of this Agreement;
(b) the quantity of such Licensed Products in
inventory at the time of such termination is not in excess of
a reasonable quantity taking into account Company's sales
requirements for Licensed Products;
(c) Company shall furnish to Licensor within thirty
(30) days after the effective date of expiration or
termination of the Contract Period a written statement of the
number and description of such Licensed Products in inventory
and in the process of manufacture and Licensed Products
ordered as of the effective date of termination, provided,
however, that Licensor, at its own expense, may conduct a
physical inventory in order to ascertain or verify such
inventory and/or statement, and in the event that Company
refuses to permit Licensor to conduct such physical inventory,
then Company shall forfeit its rights hereunder to dispose of
such inventory;
(d) Company shall continue to pay to Licensor with
respect to such sales earned royalties at the rate specified
above;
(e) Company shall during the sell-off period continue
to make payments to Licensor and render sales reports to
Licensor on a calendar year quarterly basis;
(f) Company shall, within thirty (30) days after the
end of said sell-off period, deliver to Licensor a final
accounting with respect to sales of Licensed Products during
the sell-off period and, at the same time, shall pay to
Licensor any earned royalty amounts due but not theretofore
paid; and
(g) any items of Licensed Products which remain in
Company's inventory as of the last day of the said sell-off
period shall be destroyed or, at the election of Licensor,
shall be delivered to Licensor in return for payment to
Company for such items calculated at Company's
cost-of-goods-sold for such items.
SECTION O. TERMINATION FOR DEFAULT.
(1) Non-Payment. If either party at any time during the period of this
Agreement shall fail to make any payment of any sum of money or render any
accounting herein specified to be made or rendered, then the non-defaulting
party may terminate this Agreement if such payment is not made or such
accounting is not rendered within ten (10) days after the aggrieved party shall
have delivered to the other party written notice of such failure to make payment
or to render an account.
(2) Non-Performance. If either party at any time during the period of
this Agreement shall fail to observe or perform any of the covenants, agreements
or obligations of such party hereunder (other than the payment of money or
rendering of an account), then the non-defaulting party may terminate this
Agreement if such default is not cured within fifteen (15) days after the
aggrieved party shall have delivered to the other party written notice
specifying in reasonable detail the nature of such default.
(3) No Waiver. Failure to terminate this Agreement pursuant to this
section shall not constitute a waiver of any rights or remedies the
non-defaulting party would have been entitled to demand in the absence of this
section, whether by way of damages, termination or otherwise. Termination of
this Agreement pursuant to this section, for whatever reason, shall not
constitute a waiver of any other rights or remedies to which either party is
entitled at law, in equity or otherwise. In the event of termination of this
Agreement pursuant to the provisions of this Section O, all amounts payable by
Company to Licensor, including earned royalties on sales of Licensed Products
theretofore achieved, shall immediately be due and payable.
(4) Immediate Termination. Notwithstanding the provisions of
subparagraph (2) immediately above, Company hereby agrees that Licensor shall
have the immediate right to terminate the Contact Period of this Agreement, upon
written notice to Company, immediately (and without any obligation on the part
of Licensor to provide Company with a period for cure of such default) in the
event that Company should:
(a) Make, sell, offer for sale, use
or distribute any Licensed Products or Advertising
Materials after receiving written notice from
Licensor denying or withdrawing approval of same;
(b) Fail, after receipt of written
notice from Licensor, immediately to discontinue the
distribution or sale of Licensed Products or the use
of any Advertising Material that does not contain the
appropriate legal legend;
(c) Be subject to any voluntary or
involuntary order of any government agency involving
the recall of any of the Licensed Products because of
safety, health or other
hazards or risks to the public;
(d) Breach any of the provisions of
this Agreement relating to the unauthorized assertion
of rights in the Trademark;
(e) Breach any provision of the
Agreement prohibiting Company from directly or
indirectly assigning, transferring, sublicensing or
otherwise encumbering this Agreement or any of its
rights or obligations hereunder.
SECTION P. MISCELLANEOUS PROVISIONS.
(1) Reservation of Rights. All rights in and to the Licensed Property
are retained by Licensor for its own use, except for the specific rights which
are granted to Company under this Agreement.
(2) Restriction on Assignments. This Agreement shall bind and inure to
the benefit of Licensor, and its successors and assigns. The rights granted
Company hereunder shall be personal to it and shall not, without the prior
written consent of Licensor, or by operation of law, be sublicensed or
transferred to or assigned to any other party. If Company desires to assign this
Agreement or any rights hereunder, Company shall give written notification
thereof to Licensor, and Licensor shall have the right to approve or disapprove
any such proposed assignment in Licensor's sole and exclusive discretion.
(3) Merger; Sale of Business. In the event of the merger or
consolidation of Company with any other entity which is not a subsidiary nor a
company related to or affiliated with Company as of the date of the execution of
this Agreement, or in the event Company shall intend to sell, assign or
otherwise dispose of its business related to Licensed Products, Company shall so
notify Licensor no later than thirty (30) days prior to the event, and Licensor
shall have the right to approve or disapprove such transaction by written notice
to Company within fourteen (14) days after receiving written notice of such
proposed merger, consolidation, sale, assignment or transfer. If Licensor
disapproves of the transaction, Licensor may terminate this Agreement
immediately.
(4) Bankruptcy. If Company shall become bankrupt or insolvent, if
Company makes an assignment for the benefit of creditors, or if Company's
business shall be placed in the hands of a receiver or trustee, whether by
voluntary act of Company or otherwise, the Contract Period shall, at the option
of Licensor, immediately terminate.
(5) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York, United States of America,
without giving effect to conflict of laws. The parties hereby irrevocably
consent to submit to the jurisdiction of all state and federal courts within New
York City for the resolution of any disputes between them.
(6) Waiver. The failure of either party at any time or times to demand
strict performance by the other of any of the terms, covenants or conditions set
forth herein shall not be construed as a continuing waiver or relinquishment
thereof and each made any time demand strict and complete performance by the
other of said terms, covenants and conditions.
(7) No Joint Venture. This Agreement does not constitute and shall not
be construed as constituting a partnership or join venture between Licensor and
Company. Neither party shall have any right to obligate or bind the other party
in any manner whatsoever.
(8) Entire Understanding. This Agreement comprises the entire
understanding of the parties with respect to the subject matter herein
contained. Any and all prior agreement between the parties and all oral
representations or agreements by any agent or representative of either party
shall be null and void.
