LICENSE AGREEMENT
THIS AGREEMENT MADE IN XXX XXXX XX XXX XXXX XXXXX XX XXX XXXX,
THIS __th DAY OF __________, 1996 BY AND BETWEEN HOUBIGANT INC., a Delaware
corporation, duly incorporated and having a principal place of business at 1135
Pleasant View Terrace West, Ridgefield, New Jersey (referred to as the
"Grantor") and herein represented by Xxxxxxx X. Xxxxxxx, a Houbigant Vice
President-Special Projects, duly authorized for the purposes of these presents
as he so declares; AND HOUBIGANT (1995) LIMITEE, a Canadian corporation, duly
incorporated and wholly-owned subsidiary of Cosmar Corporation, having a
principal place of business at 0000 Xxx Xxxxxx Xxxxx (Xxxxxx), X0X 0X0 Xxxxxx
(hereinafter referred to as the "Licensee") and herein represented by Xxxxxx
XxXxxxxxx, its Vice President, duly authorized for the purposes of these
presents as he so declares;
WHEREAS, Grantor is the owner of certain letters patent, trade
marks, trade names, registrations, and/or applications therefore as well as all
rights therein and all technical knowledge with respect thereto as further set
forth in this Agreement; and
WHEREAS, on November 18, 1993, Grantor and several affiliated
domestic corporations filed petitions for reorganization under chapter 11 of the
Bankruptcy Code with the Clerk of the Bankruptcy Court, Southern District of New
York (the "Bankruptcy Court"), which proceedings remain pending as of the date
hereof; and
WHEREAS, Grantor, from time to time and in the ordinary course
and in furtherance of its general business licenses to manufacture and sell the
Grantor's Products (as that term is hereinafter defined) in the Territory (as
that term is hereinafter defined) for various durations; and
WHEREAS, pursuant to that certain License Agreement, as
amended (the "Initial Agreement") heretofore approved by order of the Bankruptcy
Court dated June 2, 1994, Grantor, subject to the terms and provisions of the
Initial Agreement, granted Parfums Parquet Incorporated ("PPI"), an affiliate of
the Licensee, a license of such letters trade marks, trade names and/or
applications therefor and the technical knowledge with respect thereto owned and
controlled by Grantor (the "Initial License") to enable PPI to manufacture and
sell certain perfumes and fragrance products of Grantor's "Parfums Parquet"
division primarily in the Western Hemisphere (excluding Canada) (the "Initial
Territory); and
WHEREAS, pursuant to that certain License Agreement, as
amended (the "Worldwide Agreement") heretofore approved by order of the
Bankruptcy Court dated September 21, 1994, Grantor, subject to the terms and
provisions of the Worldwide Agreement, granted PPI a license of such letters
trade marks, trade names and/or applications therefor and the technical
knowledge with respect thereto owned and controlled by Grantor (the "Worldwide
License") to enable Licensee to manufacture and sell certain perfumes and
fragrance products of Grantor's "Parfums Parquet" division throughout the world,
excluding the Initial Territory and Canada (the "Worldwide Territory"); and
WHEREAS, PPI was merged with and into New Xxxx Acquisition
Corp.,
1
pursuant to a Plan and Agreement of Merger, dated as of March 25, 1996, which
then changed its name to Xxxx Perfumes Corp.; and
WHEREAS, all references to Parfums Parquet Incorporated or PPI
shall include its successor-in-interest, by operation of law, Xxxx Perfumes
Corp., a Delaware corporation; and
WHEREAS, Licensee desires and intends to manufacture and sell
in the Territory certain of Grantor's Products and desires and requires a
license from Grantor under the letters patent, trade marks, trade names and/or
applications therefor and the technical knowledge with respect thereto owned or
controlled by Grantor applicable to such Products; and
WHEREAS, the purpose of this Agreement is that Grantor shall
provide to Licensee a license of such letters patents, trade marks, trade names
and/or applications therefor and the technical knowledge with respect thereto
owned and controlled by Grantor to the extent necessary to enable Licensee to
manufacture and sell the subject Products in the expanded Territory under the
letters patent, trade marks, trade names and/or applications therefor and the
technical knowledge with respect thereto defined and/or scheduled in this
Agreement;
WHEREFORE, in consideration of the mutual promises and
covenants contained in this Agreement, and other good and valuable
considerations, the receipt and sufficiency of which is acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
In this Agreement,
(a) "Effective Date" means the date on and by
which all the conditions referred to in
paragraph "38" hereinbelow will have been
fulfilled;
(b) "Know-How" includes, among other things, all
technical information, procedures,
processes, trade secrets, formulae for the
perfume oil (commonly known as a "hec") and
the bulk of all of the Products, methods,
practices, techniques, information, bills of
parts, diagrams, drawings, specifications,
blueprints, lists of materials, labor and
general costs, production manuals and data
relating to the design, manufacture,
production, inspection and testing of the
Products known by, available to, used or
owned by Grantor;
(c) "Net Sales" shall mean in respect of any
particular period the greater of (i) the
gross invoice price of the Products sold by
Licensee, less any charges appearing on said
invoice for value added or sales taxes or
other similar taxes payable on the amounts
so charged, freight, insurance, and less any
returns, trade discounts
2
and allowances, or (ii) two-thirds (2/3rds)
of the gross invoice price of the Products
sold by Licensee; notwithstanding the
foregoing, in the event that the amounts
calculated under "(ii)" hereof exceed the
amount calculated under "(i)" hereof because
of returns to the Licensee of Products not
in the normal course of business and which
Products are to be repackaged or relaunched
by the Licensee under new packaging or
promotional programs, then the provisions of
"(ii)" hereof shall not apply.
(d) "Products" shall be deemed to be perfumes
and fragrance products and related
promotional products developed by Grantor
and sold within its "Parfums Parquet"
division under the Trademarks or such other
perfumes and fragrance products of Grantor
as may otherwise be hereafter approved by
Grantor, in writing, for distribution and
sale in the Territory, and such other items
of Grantor as may be approved from time to
time as the parties hereto may agree.
(e) "Relevant Country" shall mean Canada.
(f) "Territory" shall mean all Canada; and
(g) "Trade Marks" shall refer to those U.S. and
foreign trade marks, service marks,
imprints, logos, trade dress and trade names
whether or not registered, and all issued
registrations and pending applications
relating thereto as set forth on Schedule
"A" annexed hereto.
2. GRANT OF LICENSE
(1) EXCLUSIVE GRANT: Grantor grants to Licensee the
exclusive right and license in the Territory under the Trade Marks to:
(a) manufacture in the Territory the Products
covered by the Trademarks;
(b) distribute, use and sell throughout the
Territory the Products covered by the
Trademarks so manufactured; and
(c) use the Trade Marks in conjunction with and
as they relate to the Products and all
advertising and letter heads and collateral
promotional material throughout the
Territory.
(2) Grantor grants to Licensee the exclusive rights to
use and exploit the Know-How in the manufacture of the Products within the
Territory.
3
(3) Grantor grants to Licensee, and any sub-licensee
thereof, during the term of this Agreement and any renewals thereof, the
non-exclusive right to use and exhibit the name "Houbigant," whether as a
trademark, trade name, or otherwise, in connection with the sale, packaging,
advertising or promotion of any of the Products in the Territory.
(4) Licensee acknowledges that some or all of the
Know-How has been disclosed and delivered to Licensee in confidence prior to and
in contemplation of the execution and Effective Date of this Agreement. The
remainder of the Know-How shall be furnished to Licensee as soon as practicable
after the date of execution of this Agreement but no later than the Effective
Date.
(5) The obligation to furnish the Know-How shall extend
to Know-How existing at the date of this Agreement and to any Know-How which
later during the term hereof and to the extent relevant hereto is acquired by
Grantor.
(6) Grantor warrants that there are no other subsisting
licenses for the Trade Marks in the Territory, and Grantor covenants that no
further disclosure to third parties will be made by it of the Know-How relating
to the Trade Marks for the Territory while this Agreement is in full force and
effect, and Grantor shall
(a) to the extent it owns any rights to the
tooling and molds previously used by
contracted suppliers of components in the
Territory, and has a right to do so, issue
instructions to such suppliers so identified
not to further use the tooling or molds
otherwise then under purchase order from
Licensee or Grantor and will provide to the
Licensee a full list of such suppliers not
later than three (3) weeks after the date
hereof; and
(b) to the extent it holds all copyright and
similar rights in respect of items to be
provided under paragraph "6(1)" hereinbelow,
grant Licensee to use such rights within the
Territory during the term of this Agreement;
PROVIDED, HOWEVER, Grantor shall be under no
obligation whatsoever to file copyright or
similar registration applications in the
Territory in respect of items provided under
paragraph "6(1)" hereinbelow.
(7) Grantor warrants that the Know-How will be sufficient
and suitable to the manufacture of the Products to a quality comparable to the
quality of the sample Products furnished to the Licensee by Grantor, provided
that Licensee at all times conforms strictly to and with the Know-How.
4
(8) No further, other or different rights or licenses,
such as the use of any of Grantor's patents, are granted or implied except as
otherwise provided in this Agreement.
3. SUB-LICENSES
(1) Licensee may in its discretion appoint sub-licensees
for the Products within the Territory, PROVIDED, HOWEVER, that in the case of
the appointment of a manufacturing sub-license:
(a) Any such sub-licensees will be acceptable to
Grantor, whose approval shall be sought and
obtained in writing prior to implementation
of any such sub-license, which approval
shall not be unreasonably withheld.
(b) Any such sub-license agreement shall include
terms imposing on the sub-licensee all of
the same obligations of Licensee pursuant to
this Agreement and shall reserve to Grantor
all the rights of Grantor. Licensee and any
sub-licensee shall become and be jointly and
severally liable for all non-economic
obligations hereunder or otherwise to
Grantor.
(c) Any such sub-license agreement shall be
terminable at the option of Grantor by
Grantor in the event of the rightful
termination by Grantor of this Agreement and
shall provide that if it is not terminated
by Grantor on the termination of this
Agreement, the sub-license agreement may at
the option of and with such modifications as
required by Grantor as may be reasonably
acceptable to sub-licensee, continue in full
force and effect as a license agreement
between Grantor and the sub-licensee.
(2) For purposes hereof, an authorized distributor or
wholesaler or like middleman shall not be deemed a "sub-licensee" hereunder.
4. TERM OF AGREEMENT
(1) Subject to the provisions for early termination of
this Agreement as set forth herein, this Agreement shall remain in full force
and effect for a period of approximately five (5) years commencing on the
Effective Date and terminating on June 30, 2001 so as to render this Agreement
co-terminus with the initial term of the Initial Agreement.
(2) RENEWALS: This Agreement shall be automatically
renewed upon its expiry for seven (7) successive five (5) year terms, and
thereafter as the parties hereto may agree, PROVIDED, HOWEVER, that PPI shall
have contemporaneously renewed the Initial Agreement, shall
5
have paid all Royalties (as hereinafter defined) due Grantor in accordance with
both paragraph "7" of the Initial Agreement and paragraph "9" hereinbelow, shall
have paid the required Minimum Royalties (as hereinafter defined) pursuant to
paragraph "7" of the Initial Agreement and paragraph "7" hereinbelow and so long
as this Agreement shall otherwise be in full force and effect. No bona fide
dispute between the parties with respect to the payment of Royalties or other
matters shall be deemed to impair the ability of Licensee to extend this
Agreement. Upon any such renewal, the terms and conditions of this Agreement
shall remain the same with the exception of the Minimum Royalty requirement as
provided in paragraph "7" of the Initial Agreement and paragraph "7" hereinbelow
and otherwise except to the extent mutually agreed by the parties hereto. In the
event that Licensee does not wish to renew this Agreement for any period
following the initial term or any subsequent renewal period, Licensee shall give
Grantor one hundred eighty (180) days' written notice prior to the expiry of the
initial term of the Agreement or any renewal period thereof.
(3) RELATION BACK: When this Agreement becomes effective,
the following shall occur (i) the License Agreement between Houbigant, Inc. and
ACB Mercantile, Inc., a Canadian Corporation ("ACB"), dated as of April 1, 1993,
the ("Old License") heretofore transferred and assigned by ACB to Licensee will
be deemed terminated as of December 12, 1994; (ii) this License Agreement will
be deemed effective retroactive to December 12, 1994; and (iii) Houbigant will
be barred from taking any action to interfere with the right of Licensee to
effectuate and enjoy the benefits of either the transfer and assignment of the
Old License or the rights under this Agreement. The foregoing notwithstanding,
nothing in this paragraph shall affect the right of Houbigant to enforce all of
its rights under this Agreement.
5. IMPROVEMENT
(1) DISCLOSURE: Each party hereto agrees to advise the
other any and all technical data and information relating to any and all
developments or improvements of the Trade Marks or the Products (whether or not
patentable) and of the Know-How that it may develop, identify or acquire during
the term of this Agreement to the extent that such disclosure is not restricted
or prohibited by law, by any undertaking given to, or any condition, restriction
or restraint imposed by third parties, or by considerations relating to the
validity of any Trade Marks or patent in respect of which application is about
to be made.
(2) GRANT UNDER IMPROVEMENTS: Grantor shall grant to
Licensee an exclusive license to manufacture and sell the Products in the
Territory under all improvements and developments to be furnished to Licensee,
together with an ancillary grant of the right to use any associated Know-How,
provided, however, that in the case of any such improvement or development, such
disclosure by Grantor may be subject to any restrictions, legal prohibitions,
undertakings given to or conditions, restrictions or restraints imposed by third
parties or considerations relating to the validity of any patent in respect of
which application is about to be made, any grant by Grantor to Licensee under
this provision shall be limited accordingly.
6
(3) FEED-BACK LICENSE: Under all developments or
improvements of the Know-How for the Trade Marks or the Products to be furnished
by Licensee to Grantor, the following additional terms shall apply:
(a) Grantor shall have the exclusive
royalty-free license on any such
improvements on the Know-How for the Trade
Marks or Products now owned or hereafter
made or acquired by Licensee during the term
of this Agreement upon the expiry of this
Agreement or any renewal period thereof and
other agreements to which Grantor and
Licensee are a party. Licensee further
covenants and agrees to notify Grantor of
any improvement and to execute promptly and
without compensation and without expense to
it any and all papers and documents and to
perform whatever lawful acts may be
reasonably deemed necessary by Grantor in
connection with the filing of any
application for letters patent or that may
be necessary or desirable to effect and
maintain Grantor's licensed rights or the
rights of any of Grantor's sub-licensees in
said improvements and application for
letters patent and in all letters patent
issuing from said applications for letters
patent. Except to the extent that Grantor
retains or subsequently reobtains the right
to manufacture, distribute and/or sell the
products covered by the Trademarks, it shall
make no use of such improvements prior to
the expiry of the Agreement or any renewals
hereof. All costs and expenses incurred as
the result of the subsequent use thereof by
Grantor shall be borne by Grantor.
(b) Licensee shall be entitled to apply the
Trade Marks to and to sell the Products
within such form of containers and packaging
which in Licensee's discretion it deems fit
and proper for the particular market within
the Territory towards which such Products
are to be directed.
(4) INFORMATION FROM THIRD PARTIES: Where technical data
and information relating to any developments or improvements of the Products is
legally obtained or obtainable from an unrelated party only upon payment, there
shall be no obligation on either party hereto to make such payment in order to
obtain such technical data and information for disclosure to the other party,
PROVIDED, HOWEVER, that if the party does make such payment, such technical data
and information shall be disclosed to the other party.
7
6. OBLIGATIONS OF GRANTOR
(1) MARKETING INFORMATION: To the extent they exist and
are available, Grantor shall provide at its cost to the Licensee sample
marketing information such as installation instructions, technical data and
manuals as may be necessary to promote the sale of the Products, including trade
advertisements and promotional literature, if requested by Licensee. Grantor, if
requested by Licensee, shall also furnish Licensee at Grantor's cost with
available art work, transparencies, and the like, used by Grantor in any
advertising and merchandising campaigns related to the Products. In addition, to
the extent such items used by Grantor's previous distributors in their
advertising and merchandising campaigns related to the Products and for their
packaging are not in the possession of Grantor, if such materials are requested
by Licensee, Grantor shall use its best efforts to obtain and deliver same and
shall charge Licensee no more than its own cost therefor. Licensee shall be
responsible for any model fees or other third party charges for use of same in
the Territory after the Effective Date of this Agreement.
(2) ASSISTANCE: Grantor agrees to assist Licensee and its
customers within the limits of its reasonable ability in solving any problems
they may have in connection with the Products.
(3) TECHNICAL ASSISTANCE: Upon the written request of
Licensee, Grantor shall render all Know-How, training and technical assistance
necessary to be provided by Grantor under this Agreement at times and places
mutually agreed upon and subject to the availability of Grantor's personnel and
facilities. Licensee shall be responsible for the travel, meals and lodging
expenses of Grantor's personnel. Grantor does not warrant or agree that any of
its personnel to be furnished or to be made available to Licensee under this
Agreement will speak any language other than English. Licensee shall obtain any
and all necessary visas, work permits, residence permits or other permits or
approvals necessary for the entry into and working in the Territory of all
technical personnel who are to be provided by Grantor under the terms of this
Agreement.
(4) PROMOTE SALES: Grantor shall, within the limits of
its reasonable ability, assist Licensee in the promotion of the sales of the
Products in the Territory, and conduct its business in a manner so as to enhance
the reputation of the Products and Trade Marks, but only to the extent that
there is no cash expenditure required by Grantor. Grantor shall also require
that all subsequently engaged licensees outside the Territory take no action
which would have the effect of damaging the reputation of the Trademarks and
Know-How within the Territory.
(5) QUALITY CONTROLS: Grantor shall use its best efforts
to maintain the standards of design, materials, quality control, production and
safety testing and inspection of its perfumes and fragrance products at least
equal to applicable international perfume standards.
8
7. LICENSEE'S DUTIES
(1) PROMOTE SALES: Licensee shall, within the limits of
its reasonable ability, promote the sales of the Products in the Territory, and
conduct its business in a manner so as to enhance the reputation of the Products
and Trade Marks. With respect to new products which do not use the Trade Marks
and are sold by Grantor or its affiliates through its or their "Parfums Parquet"
division, Licensee may, in Grantor's discretion, be given the right to
manufacture and sell such new products of Grantor in the Territory on the same
terms of this Agreement and as if such new products and their associated trade
marks were respectively included in the definitions of "Products" and "Trade
Marks", PROVIDED, HOWEVER, that the parties hereto shall have first agreed upon
adjusted Minimum Royalties and Royalties (or shall have agreed not to adjust
same).
(2) QUALITY CONTROLS: Licensee shall maintain appropriate
standards of design, materials, quality control, production and safety testing
and inspection, and Grantor, at its own expense, shall be permitted to inspect
the production line while in operation and to call for and inspect samples of
the Products manufactured by the Licensee, and to inspect Licensee's operations
generally, in order to determine if Licensee has adhered to such standards. In
the event that Licensee, in the sole and reasonable opinion of Grantor, fails to
adhere to such standards, Grantor may give Licensee thirty (30) days written
notice of demand to comply, and if Licensee fails to comply (or if compliance by
its nature requires a period longer than thirty (30) days, then if Licensee
fails to commence complying or discontinues the process of correcting the
non-compliance), then Grantor, in addition to any and all other remedies, may
immediately issue a notice of termination of this Agreement by notice in
writing, subject to the provisions of paragraph 20 hereinbelow.
Packaging by Licensee of the Products shall be in such manner
that their distinctiveness, validity and reputation shall not be adversely
affected. Grantor agrees that the foregoing duty shall be incorporated in any
other subsequently executed license agreements with respect to any other
Products for any other territories that Grantor might enter into with any other
licensee(s).
(3) PROMOTION AND ADVERTISING: Licensee agrees diligently
to promote the sale of the Products under this Agreement. Licensee further
agrees that its advertising expenditures for the promotion of the Products
during the course of each fiscal year during the term of this Agreement and any
renewal periods thereof, shall be in an amount at least equal to or greater than
such amount (on a percentage basis) that Licensee spends for promotion and
advertising for like kind products in the Relevant Country in its portfolio
during the fiscal year. A reasonably detailed report concerning such advertising
shall be made to Grantor as reasonably requested in writing by Grantor but no
less frequently than once a year for the preceding period(s).
It is understood that costs for advertising and promotion
shall include the following: (i) national advertising; (ii) cooperative
advertising; (iii) inserts; (iv) remits; (v) gifts
9
with purchase; (vi) testers; (vii) samples; (viii) in-store modeling; (ix)
demonstration allowance; (x) point of sale materials, (xi) promotional monies,
(xii) consumer contests, and (xiii) such other sell-through expenditures as the
parties hereto may mutually agree.
(4) COMPLIANCE WITH LOCAL LAWS: Licensee shall procure
and maintain all approvals, licenses, permissions and permits necessary:
(a) for the sale of the Products in such
Relevant Country; and
(b) for Licensee to maintain and operate a place
of business in the Relevant Country (and at
the Licensee's expense).
The reasonable costs and expenses of obtaining and/or maintaining any such
required approvals, licenses, permissions and permits shall be incurred,
advanced and paid by Licensee. If and to the extent that either Grantor or
Licensee become aware of any changes in laws or regulations within any Relevant
Country which may affect the promotion, sales, services or maintenance of the
Products, the parties hereto shall inform the other. Notwithstanding the
obligations contained in paragraph "7(4)(a)" hereinabove, any requirement in a
Relevant Country for an approval of the Products in the nature of the local
equivalent of an FDA approval shall be the responsibility of Licensee who shall
use its best endeavors to obtain the same promptly at its expense.
(5) U.S. LAWS: Licensee shall not knowingly take any
action which will cause Grantor to be in violation of any law of any
jurisdiction including but not limited to the U.S. Foreign Corrupt Practice Act,
the U.S. Export Control laws and the U.S. Anti-Boycott laws.
(6) LOCATION OF PRODUCTION FACILITIES: Licensee must keep
Grantor informed of the locations of its production facilities in a timely
manner.
(7) PURCHASE OF PERFUME OILS AND EXISTING INVENTORY:
Purchase of Perfume Oils: Licensee may purchase any and all perfume oil (hec)
used in the Products manufactured by Licensee from any source, PROVIDED,
HOWEVER, that Grantor shall be given a fair opportunity to bid on hec supply
contracts of the Licensee.
(8) MINIMUM ROYALTIES: During the term of this Agreement
and any renewals hereof, Licensee agrees to pay Grantor or its assigns, in the
aggregate, for each "Contract Year" indicated in Column 1 below, a royalty
amounting to the "Minimum Royalty" for that period as indicated in Column 2
below:
10
(Column 1) (Column 2)
CONTRACT YEAR MINIMUM ROYALTY
------------- ---------------
Year 1 $525,000(1)
-------
Second (2nd) through 104% of prior year's
Forty-Second (42nd) minimum
Contract Year
Licensee's obligation to pay Minimum Royalties for Contract Year 1 shall be pro
rated by Licensee and Grantor upon the "Effective Date" of this Agreement, as
defined in Paragraph 38 hereinbelow.
Licensee, as a condition of retaining the license granted by this Agreement,
shall pay to Grantor within thirty (30) days from the end of each Contract Year
an amount determined by the following formula:
A - (B+C +D) - E
where:
"A" is the Minimum Royalty payable for the applicable Contract Year;
"B" are the Royalties already paid for that Contract Year plus C (if any);
"C" is any withholding tax deducted from such preceding quarterly Royalties as
permitted under paragraph "9(5)" hereinbelow;
"D" is any withholding tax which applies to the payment of the balance of the
Minimum Royalty under the above formula; and
"E" is all costs and expenses properly paid by Licensee on behalf or for the
benefit of Grantor entitled to reimbursement under this Agreement.
If Licensee fails to pay such sum within the time prescribed, the remedy of
Grantor, in addition to any other remedies Grantor may have, shall be to
terminate this Agreement subject to the provisions of paragraph "20"
hereinbelow. For purposes of this Agreement, a Contract Year shall be a fiscal
year from July 1, to June 30, except that the First Contract Year shall commence
on the
------------------------
1 Calculated in Canadian dollars.
11
Effective Date and shall terminate on June 30, 1995. If the result of the
aforesaid formula is negative, no payment shall be due thereunder.
8. GRANTOR AND LICENSEE'S PROHIBITIONS
Neither Grantor nor any of its affiliates or licensees shall
knowingly sell, directly or indirectly, any Products inside the Territory, or
establish any branch or maintain any office or depot in relation to the Products
anywhere inside the Territory and Initial Territory.
9. CONSIDERATION
(1) ROYALTIES: As consideration for the license of the
Trade Marks for the Territory granted under this Agreement, Licensee agrees to
pay the Grantor an ongoing and periodic royalty equal to seven (7%) percent of
the first $8.5 million (Canadian) of all Net Sales (as defined in paragraph 1(c)
of this Agreement), six (6%) percent of the next $5.0 million (Canadian) of all
Net Sales, and five (5%) percent of all Net Sales exceeding $13.5 million
(Canadian), of any Products manufactured and/or sold by or on behalf of the
Licensee or its sub-licensees in the Territory (the "Royalties") each and every
year.
(2) PAYMENT PROCEDURES: The Chase Manhattan Bank, as
agent for itself and Fleet Bank (collectively, the "Banks"), has security
interests in and liens upon all assets of Grantor including, without limitation,
any rights to receive the Royalties under any licensing arrangements. Grantor
does hereby direct Licensee to make any and all payments of Royalties to which
Grantor may be entitled by wire transfer, in accordance with instructions to be
provided at or prior to closing to The Chase Manhattan Bank as Agent. Licensee
shall be fully protected in making payments in accordance with this provision.
The direction set forth herein shall be irrevocable unless revoked or altered by
Grantor with a written consent of the Banks. The provisions of this section
shall apply for so long as any amounts are owed by Grantor to the Banks. Upon
retirement of the indebtedness of Grantor to the Banks, which shall be
acknowledged to Licensee in writing by the Banks, all payment obligations of
Licensee hereunder shall immediately be tendered to Grantor or its designee.
(3) PAYMENT PERIOD: Within thirty (30) days of the end of
each quarter in each year, (I.E., within thirty (30) days of 31st March, 30th
June, 30th September and 31st December in each year), Licensee shall deliver to
Grantor and the Banks a report setting out the aggregate Net Sales of each
Product manufactured by or on behalf of Licensee or its sub-licensees and sold
by Licensee or sub-licensees (whether separately or as part of any larger unit
or product) during such preceding quarter. Concurrently with the making of each
such report, Licensee shall remit the Royalties then due to Grantor in respect
of the Products sold by or on behalf of Licensee in the preceding quarter in
accordance with the immediately preceding paragraph. The balance of any
Royalties due shall be payable no later than thirty (30) days after the
Grantor's fiscal year (I.E., June 30).
12
(4) SAMPLES: No Royalties shall be payable in respect of
Products sold or otherwise disposed of by Licensee for the purpose of customary
samples or BONA FIDE tests on such Products. Notwithstanding the foregoing,
Royalties shall be payable with respect to Products with a unit cost to Licensee
of more than $.50 (US) that are included or packaged by Licensee with any
Products or other products sold by Licensee that are not the subject of this
Agreement.
(5) NO DEDUCTIONS FOR TAX: All payments to Grantor under
this Agreement shall be made without any deduction of any kind except for
withholding taxes, if any, applicable to the payments, or unless specifically
chargeable against Grantor. Licensee undertakes to take all reasonable steps to
assist Grantor to obtain the benefit of any double taxation agreement which may
apply to any of the payments under this Agreement and to minimize the impact of
any taxation in respect of such payments, without cost to Licensee or so long as
such cost is reimbursed by Grantor.
(6) WITHHOLDING TAXES: In the event that withholding
taxes are applicable to any payments under this Agreement, Licensee shall
withhold the withholding taxes required and shall promptly remit such taxes to
the appropriate taxing authority in the Territory. Upon any such remittance,
Licensee shall promptly provide Grantor with documentation evidencing the
payment of such taxes, and any other documentation that Grantor shall reasonably
require so as to obtain a foreign tax credit in the United States and which can
reasonably be obtained by Licensee.
10. CURRENCY OF PAYMENT
(1) WHERE CONVERTIBLE: To the extent that the Royalties
shall be determined by Net Sales expressed in a currenc(ies)y other than U.S.
Dollars, Royalties shall be computed in U.S. Dollars with respect to each
non-U.S. currency in which there are Net Sales transactions in any quarterly,
royalty reporting period. The Royalties statement shall be accompanied by
Licensee's payment of Royalties in U.S. Dollars, with conversion to be made at
the rate published in the Wall Street Journal on the business day next following
the end of the quarterly, royalty reporting period.
11. WARRANTY RE: TRADE MARKS AND KNOW-HOW
(1) POWER TO GRANT RIGHTS: Grantor warrants that it has the
right to grant the rights granted in this Agreement and that it has granted no
other rights or licenses (other than as expressly set forth in this Agreement)
which would derogate from the rights granted in this Agreement.
(2) ACKNOWLEDGMENT OF VALIDITY: Licensee acknowledges
Grantor's assertion as to the validity and ownership of the Trade Marks and
Know-How in the Territory and further acknowledges that the Trade Marks and
Know-How are and shall remain the property of Grantor. The use of any Trade
Marks by Licensee shall inure to the benefit of Grantor.
13
(3) LICENSEE NOT TO INFRINGE: Licensee shall not, after
appropriate inquiry, knowingly in any way do anything to infringe upon, harm, or
contest the validity of the Trade Marks, or any patents or the Know-How owned by
Grantor.
(4) NOTICE OF INFRINGEMENT: Each party hereto shall
advise the other promptly of any instances of infringements, limitations,
illegal use or misuse of any Trade Xxxx. Licensee shall have the right to
commence legal action for the enforcement of any such Trade Marks in the
Territory, but prior to the commencement of any such action by Licensee,
Licensee shall advise Grantor by notice in writing of its intention to do so.
Grantor shall have the option to be exercised by delivery of notice in writing
to Licensee for Grantor to assume carriage of any such action and appoint
counsel of its choice at any time prior to or during the action, PROVIDED,
HOWEVER that Grantor reimburses Licensee for all reasonable legal costs incurred
by Licensee in connection therewith up to the date of Grantor's intervention.
Grantor and Licensee shall cooperate fully in the prosecution of any such action
free of charge, and each agrees that it shall be joined as a party plaintiff to
the action and authorizes such joinder. Each shall have the right at its own
expense to retain independent counsel or shall designate an individual of its
choosing who shall be kept fully informed of all issues in the action, who shall
be advised in advance of each new step in the action, and who shall be entitled
promptly to receive copies of all pleadings, documents and correspondence
regarding the action. In the event that any such action is successfully
prosecuted against an infringer, any damages, accounting of profits, award of
legal costs or other recovery shall be applied first to reimburse the party
having carriage of the action for its reasonable legal expenses, including any
amounts paid by Grantor to Licensee in assuming carriage of the action, and any
remaining amounts shall then be divided between Grantor and Licensee in
proportion to the damages suffered by Licensee and the Royalties lost by Grantor
with respect to the infringing conduct, subject to arbitration if the parties
are unable to agree upon such proportion. In the event that any such action is
unsuccessful, whoever has initiated or assumed carriage of the action shall be
responsible for paying any legal costs which may be awarded to the successful
defendant.
(5) If for any reason other than the fault of the
Licensee, Licensee is prohibited from using any of the Trade Marks within
Canada, the parties shall promptly meet to determine an equitable adjustment of
the minimum annual royalties payable by Licensee hereunder. In the event the
parties cannot agree, the same shall be submitted to arbitration as hereinafter
provided and the decision of the arbitrator shall be final and binding.
(6) ABANDONMENT OF TRADEMARKS: If in the Grantor's
reasonable judgment the Licensee's failure to use a registered trademark in
Canada renders that Trademark subject to cancellation for abandonment, lack of
use or similar grounds (the "abandonment"), Grantor shall furnish Licensee with
written notice thereof in the manner set forth in this Agreement. Licensee shall
thereupon have a period of sixty (60) days from its receipt of notice to furnish
Grantor with written notice in the prescribed manner of its intention
(a) Not to use the Trademark in the jurisdiction
in which case all of
14
Licensee's rights to exploit the Trademark
in the jurisdiction under this Agreement
shall immediately terminate and revert to
the Grantor; or
(b) To use the Trademark in the jurisdiction in
a manner reasonably calculated to cure the
abandonment within a period not to exceed
six (6) months from the date of Licensee's
notice. If, in the Grantor's reasonable
judgment, Licensee has failed to
substantially cure the abandonment by the
end of said six (6) month period, all of
Licensee's rights to exploit the Trademark
in the jurisdiction under this Agreement
shall immediately terminate and revert to
the Grantor subject to a right of the
Licensee to arbitrate the issue pursuant to
paragraph 24 hereinbelow.
(7) ADDITIONAL REPRESENTATIONS AND WARRANTIES OF GRANTOR:
SUBJECT TO THOSE STIPULATIONS, ACKNOWLEDGMENTS AND RELEASES CONTAINED IN THAT
CERTAIN "AMENDMENT, MODIFICATION AND SETTLEMENT AGREEMENT" DATED
_______________, 1996, AND RELATED DOCUMENTS AND EXHIBITS, BETWEEN, AMONG
OTHERS, GRANTOR AND LICENSEE,
(a) Each Trademark is, and all registrations and
applications relating thereto are, to the
best of Grantor's knowledge and belief,
valid and subsisting and in full force and
effect as of the date hereof.
(b) To the best of Grantor's knowledge and
belief, no Trademark and none of the
Know-How infringes upon the rights of any
other person, firm or entity within the
Territory nor has any person claimed that
any Trademark or any know-know has infringed
the rights of any person, firm or entity in
the Territory within the past three (3)
years.
(c) Annexed hereto as Schedule "D" hereof is a
true, accurate and complete schedule and
copies of all registrations and applications
for each U.S. Trademark and to the best of
Grantor's knowledge and belief for each
foreign Trademark within the Territory,
including a schedule of the dates of the
applications or registrations or renewals
thereof as the case may be, and the
expiration dates of each Trademark.
(d) All of the U.S. Trademarks and, to the best
of Grantors knowledge and belief, all
foreign Trademarks, are owned by the Grantor
free and clear of all claims, liens and
encumbrances except as set forth in Schedule
"E" hereof.
15
(e) The Products manufactured and/or sold by
Grantor in the Territory prior to the
Effective Date are, to the best of Grantor's
knowledge and belief, fit for the use
intended, have been manufactured, sold and
distributed in compliance with all
applicable law, rules and regulations within
the Territory including, but not limited to,
all requirements of the U.S. Food and Drug
Administration and the U.S. Bureau of
Alcohol Tobacco and Firearms and conform in
all respects to all applicable laws within
the Territory.
(f) Except as set forth in Schedule "F" hereof,
Grantor has not granted in the Territory any
license, franchise or permit to any third
party to use any of the Trademarks or
Know-How.
(g) None of the Trademarks in the U.S. and to
the best of Grantor's knowledge and belief
outside the U.S. in the Territory, is
subject to any outstanding order, decree,
judgment, stipulation, restriction, or
agreement limiting the scope or the use of
any of the Trademarks.
12. INDEMNITY FOR TRADE XXXX ACTIONS
(1) INDEMNITY RE TRADE MARKS: Grantor will defend
Licensee, its subsidiaries, affiliates, sublicensors, customers, distributors,
directors, officers, representatives, agents, successors and assigns against any
claim that the sale of any of the Products infringes Trade Marks in the
Territory in which Grantor has registered its Trade Marks, and Grantor will pay
resulting costs, damages and legal fees finally awarded up to a maximum of the
Royalties to which Grantor is entitled under this Agreement (and exclusive of
any royalties otherwise due under the Initial Agreement), PROVIDED, HOWEVER,
that Licensee shall promptly notify Grantor in writing of the claim; and Grantor
has sole control of the defense and all related settlement negotiations subject
to adhering to the reasonable requirements of Licensee.
13. REGISTRATIONS, MAINTENANCE AND FILINGS
(1) REGISTRATIONS AND APPROVALS OF TRADE MARKS: Grantor
shall be responsible for maintaining the Trade Marks in full force and effect
throughout the term of this Agreement, and, at Grantor's expense and Licensee's
reasonable request, for registering its Trade Marks beyond registrations which
already subsist in the Territory.
(2) MAINTENANCE OF TRADE MARKS: Licensee shall follow-up
and advance all renewal registration fees and otherwise maintain the rights in
the Trade Marks in the Territory where presently maintained. Grantor further
agrees (a) to instruct its local trade xxxx and patent agent(s) to keep Licensee
fully and completely informed of all action taken or scheduled to be taken in
respect of the trade marks and to cooperate with Licensee to take such actions
as need be taken to maintain such trade marks, and (b) to notify Licensee at the
time it makes an application
16
for a patent or trade xxxx or acquires any right in a patent or trade xxxx which
is or becomes subject to the terms of this Agreement.
(3) FILING FOR PROTECTION: In the event that either
Grantor or Licensee decides not to file for patent protection for any invention
or discovery relating to the Products, Grantor or Licensee, as the case may be,
agree to notify the other party and the Banks within thirty (30) days after such
decision in order to allow such other party to pursue any rights to such
invention or discovery.
(4) ABANDONMENT OF PATENTS: If either Grantor or Licensee
intends to dispose of or abandon any of the patents, rights in the patents,
patent application or the right to file under the Paris Convention for a foreign
patent, if any (the "Patent Interest") which would be covered by this Agreement,
Grantor or Licensee, as the case may be, shall promptly notify the other party
and the Banks of such intention and give such other party sufficient notice to
permit it to take all steps necessary to preserve such Patent Interest. Such
other party shall then have the right during a sixty (60) day period commencing
with such notification to assume any such Patent Interest which the notifying
party intends to dispose of or abandon and to undertake the procuring or
preserving of such Patent Interest to itself. The notifying party will cooperate
with the other party in such endeavor (including making an assignment of full
right, title and interest in the Patent Interest) provided that such other party
shall bear all costs (including any tax liability) in connection therewith.
Subject to paragraph "13(6)" below, nothing in this Agreement shall prevent
Grantor from assigning or selling its rights to receive Royalties or its
reversionary rights in anticipation of termination of the license granted by
this Agreement.
(5) ASSISTANCE RE: PROSECUTION: Each of Licensee and
Grantor shall render all reasonable assistance if so requested by the other in
the prosecution of any future patent applications in the Territory and shall do
all things in its power towards maintaining the validity and enforceability of
any patents which may have issued or which may issue in respect of such patent
applications. Licensee shall render all practicable assistance, if so requested
by Grantor, in connection with and in support of any application by Grantor for
the extension of the terms of any patent without substantial cost to Licensee.
(6) PRE-EMPTION RIGHT RE TRADE MARKS: If during the term
of this Agreement Grantor determines to transfer its reversionary interest in
the Trade Marks (or related patents) (or any of the same), it shall not effect
such transfer before first offering for sale that reversionary interest to
Licensee at a price and on terms no higher than the best BONA FIDE offer for the
same then received by Grantor, and Grantor shall act in the utmost good faith to
Licensee in regard to all matters relating to this pre-emption right. If and in
the event that Licensee determines to accept such offer, Grantor shall ensure
that the sale of such reversionary interest proceeds without delay at the
offered price. In connection with the foregoing, Grantor shall provide Licensee
with true, correct and complete copies of the bona fide written offer and all
related documents that it receives and the Licensee shall then have ten (10)
business days from its receipt of all of such information to determine whether
to elect to purchase the Grantor's reversionary interest in the
17
Trademarks, on the terms and conditions in the bona fide written offer. In the
event the Licensee elects to purchase the reversionary interest, it shall send
the Grantor written notice thereof within the ten (10) business day period and
thereafter the parties shall close the transaction at the price and on the terms
and conditions set forth in the bona fide written offer. In the event that the
Licensee shall fail to elect to purchase within the aforesaid time period, the
Grantor shall be free to sell its reversionary interest in the Trademarks
(subject to this License Agreement) only on the precise terms and conditions of
the bona fide written offer. In the event of any change in any of the terms or
conditions of the bona fide written offer, the Grantor shall provide the
Licensee with a copy of the amended bona fide written offer and shall provide
the Licensee with a new right to elect to purchase the Grantor's reversionary
interest in the Trademarks at the price and on the terms and conditions of the
amended bona fide written offer under the procedures set forth above.
(7) Grantor shall be responsible for any and all
reasonable costs and expenses which may be incurred in connection with and in
furtherance of the duties and obligations of Grantor to register, maintain and
file the Trademarks in the countries within the Territory under this Agreement
and the Initial Agreement.
14. TRADE MARKS AND OTHER PROPRIETARY MARKS
(1) DESCRIPTION AS AUTHORIZED LICENSEE: Licensee is
authorized, but not obligated, to describe, refer to and advertise itself as a
licensee of Grantor for the manufacture of the Products in the Territory.
(2) DISPLAY OF TRADE XXXX: Licensee agrees to display
prominently on all of the packaging and containers for Products manufactured and
offered for sale, the Trade Marks (see Schedule "A" hereof). Where reasonable or
appropriate, uses of the Trademarks by License shall indicate either "TM" or
"R", as is appropriate. Below this identification or trade xxxx Licensee may
affix an additional xxxx showing that the manufacture has been made in the
workshops of Licensee. Text and size, however, shall not exceed one-half of the
size of the Trade Marks.
(3) APPLICATION FOR REGISTRATION OF TRADE XXXX: In the
event that Grantor decides to apply for registration of any one or more of the
Trade Marks in connection with the Products in the Territory, Grantor shall
notify Licensee in writing and may request and obtain Licensee's advice and
assistance if required, and keep Licensee informed of pertinent developments
and/or the issuance of registration. The cost of any such registration of trade
marks shall be for the account of Grantor and all such registrations shall be
applied for and issued in the name of and as the sole property rights of
Grantor.
(4) NEW TRADE MARKS: If any Trade Marks of Grantor are
used by Licensee, alone or in combination with other trade marks of Grantor or
Licensee, in such manner as to be distinctive by reason of design, color, format
or any other reason, such distinctive features and associated good will shall
become the property of and enure to the benefit of Grantor, and
18
Licensee agrees that it will, without any payment or other consideration, sign
and execute such documents as are necessary to transfer and assign all rights
thereto to Grantor.
(5) TRANSFER TO GRANTOR: Should the law or regulations of
any part of the Territory invest Licensee with any property rights to any of the
Trade Marks, Licensee shall promptly, freely and cooperatively relinquish to
Grantor any and all such rights upon proper termination of this Agreement for
any reason, without recourse or cost to either Grantor or Licensee and shall
thereafter refrain from any claim of right in or further usage of the said Trade
Marks.
15. LICENSEE'S INDEMNITY OF GRANTOR - INSURANCE
(1) NO WARRANTY: Except as otherwise set forth in this
Agreement, Grantor makes no warranty with respect to the Know-How or Products,
and Licensee is strictly prohibited from representing that such a warranty
exists. Except as otherwise set forth in this Agreement, Grantor strictly
disclaims any liability arising out of errors or omissions in the Know-How or in
information provided to Licensee. Licensee shall further indemnify and save
Grantor harmless from all loss, costs or damages which Grantor may suffer or pay
as a result of claims or suits arising out of any injuries to persons and/or
damage to property due to or arising out of or relating to any acts, duties or
obligations or omissions of Licensee or of any personnel employed or otherwise
engaged by Licensee to perform Licensee's obligations under this Agreement, and
Licensee shall, at the request of Grantor, assume the defense of any demand,
claim, action, suit or proceeding brought against Grantor by any reason thereof
and pay any and all damages assessed against or that are payable by Grantor as
the result of the disposition of any such demand, claim, action, suit or
proceeding. Without limiting the generality of the foregoing, Licensee agrees to
indemnify and save Grantor, its directors, officers, employees and agents and
their respective heirs, executors, administrators, successors and assigns and
each of them harmless of and from any and all manner of action, causes of
action, claims, liabilities, debts, covenants, contracts, accounts, duties,
demands, damages or expenses whatsoever, directly or indirectly suffered by it
or them in connection with or otherwise related to product liability, personal
injury and property loss of, to or experienced by third parties in relation to
the Products manufactured after the closing, save and except where the cause of
action is due to a design flaw with respect to the hecs as a result of an act or
omission of Grantor, its officers or employees, as distinct from the manufacture
or application of the Product. Grantor agrees to indemnify, defend and save
Licensee, its directors, officers, employees and agents and their respective
heirs, executors, administrators, successors and assigns and each of them
harmless of and from any and all manner of action, causes of action, claims,
liabilities, debts, covenants, contracts, accounts, duties, demands, damages or
expenses whatsoever, directly or indirectly suffered by it or them in connection
with or otherwise related to product liability, personal injury and property
loss of, to or experienced by third parties in relation to the Products
manufactured prior to closing.
(2) INSURANCE POLICY: For the carrying out of the
covenant contained above, but without limiting the generality thereof, Licensee
shall procure and maintain, in full force and
19
effect, a comprehensive general liability insurance policy or policies with
personal injury liability blanket, contractual liability and completed
operations liability insurance endorsements protecting Licensee and Grantor and
their officers and employees against any loss, liability or expense due to
personal injury, death or property damage or otherwise arising out of or
occurring in connection with the business of Licensee. Grantor shall be an
additional insured in such policy or policies which shall be written by a
responsible insurance company or companies licensed to do business in the
Territory and meeting with the reasonable approval of Grantor, with a combined
single limit (which insurance shall also include all other territories wherein
Licensee has rights from Houbigant) of not less than two million ($2,000,000)
dollars plus a ten million ($10,000,000) dollar umbrella (or its equivalent) for
bodily injury or death and for property damage. Any general liability policy or
policies procured by Licensee in accordance herewith shall name the Banks and
their officers and employees as additional insureds thereunder. Such policy or
policies shall provide that they will not be canceled or altered without at
least thirty (30) days' prior notice to Grantor. Prior to commencing shipments
and within thirty (30) days after the Effective Date, Licensee shall furnish
Grantor and the Banks with a certificate or certificates of such insurance,
together with evidence that the premiums therefor have been paid. Maintenance of
such insurance and the performance by Licensee of its obligations under this
paragraph shall not relieve Licensee of liability under the indemnity provisions
set forth in this Agreement.
16. CONFIDENTIALITY
(1) CONFIDENTIAL INFORMATION: All information, including
the Know-How, other than information generally known in the industry or
information made known by a third party to Licensee other than a consequence of
Licensee's relationship with Grantor ("Confidential Information") supplied by or
on behalf of Grantor pursuant to this Agreement shall be treated as confidential
by Licensee and shall be used solely to enable Licensee to manufacture, use,
sell and develop a market for the Products in accordance with this Agreement,
and all documents containing or disclosing such Confidential Information shall
at all times be and remain the property of Grantor; provided, however, that
Grantor shall not during the continuance of this Agreement demand the delivery
of such documents from Licensee.
(2) DUTY NOT TO DISCLOSE: Licensee covenants and agrees
that no Confidential Information given to it by or on behalf of Grantor in the
manner described or otherwise shall be disclosed to anyone outside the
organization of Licensee without the prior written consent of Grantor unless
otherwise required by law but only after notice of same to Grantor and except as
provided herein with respect to sub-licensees.
(3) REASONABLE EFFORTS: Licensee agrees to use all
reasonable efforts to take such actions as may be appropriate to prevent the
unauthorized use and disclosure of, and to keep confidential all such
Confidential Information, including:
(a) ensuring that such Confidential Information
is disclosed only to responsible employees
of Licensee who have first been properly
20
instructed to maintain such Confidential
Information in confidence;
(b) save as above not disclosing to any third
party the terms and conditions of this
Agreement;
(c) save as above not disclosing methods of
manufacture or sale of the Products
including production and marketing plans;
and
(d) safeguarding as far as practicable the
confidential information against theft,
damage or access by unauthorized persons.
(4) PERMITTED DISCLOSURE: Nothing contained in this
Agreement shall prevent Grantor or Licensee from making disclosure of any of the
Confidential Information to:
(a) any authorized body for the sole purpose of
obtaining registration of any patent for any
invention or discovery which is the subject
of this Agreement; or
(b) any other person, firm or corporation for
the purpose of promoting the sale or use of
Products by Grantor and any of its other
licensees or by Licensee and any of its
permitted sub-licensees, provided, however,
that Licensee shall obtain from the persons
to whom such disclosure is made a covenant
of nondisclosure in favor of both Grantor
and Licensee; or
(c) except as required by law.
17. BOOKS AND RECORDS
(1) DUTY TO KEEP BOOKS: Licensee shall keep at its
principal place of business, clear and proper books of account showing all sales
of Products under this Agreement and agrees that within thirty (30) days
following the last days of March, June, September and December, it will submit
to Grantor at its offices a written statement giving the Net Sales of the
Products for the quarter being reported (but subject to post quarter adjustment,
for example in respect of returned merchandise).
(2) RIGHT OF ACCESS TO BOOKS: Grantor, at its cost and
expense, may designate and regularly retain an independent accounting firm to
(i) review all Royalties reports and reportings as and when issued and received
and (ii) inspect from time to time Licensee's relevant books and records to
ascertain the accuracy of Licensee's Royalties reporting not more than one (1)
time in each Contract Year, and then on not less than ten (10) days notice.
Licensee shall maintain its principal place of business and its books and
records within the United States. The audit shall be conducted at Licensee's
premises where the relevant books and records are
21
maintained during its regular office hours. Licensee shall make available to the
auditor reasonable working space, access to a personal computer or adding
machines, reproduction equipment and telephone lines, PROVIDED, HOWEVER, that if
any audit under this Agreement shall reveal a discrepancy in Licensee's favor of
more than ten (10%) percent of the amount due, Grantor shall thereafter, for the
next two (2) Contract Years have the right to audit up to two (2) times in each
such Contract Year. If Grantor shall fail to audit, or if it audits and fails to
object within one hundred-eighty (180) days from the receipt of the final
royalty report for the Contract Year with respect to which any Royalties
report(s) was rendered for that Contract Year, the Royalties report(s) shall be
deemed final and conclusive and not subject to any further review or
adjustments, except that if any audit shall reveal a discrepancy in Licensee's
favor of more than twenty-five (25%) percent of the amount due with respect to a
prior Contract Year(s), then in that event the Royalties report(s) for that
Contract Year(s) shall be subject to appropriate adjustment. If the auditor
shall discern a discrepancy between the amount of the Net Sales and/or Royalties
reported and Licensee's books and records, the auditor shall promptly notify
both Grantor and Licensee of the perceived discrepancy together with the
auditor's detailing of the asserted discrepancy. At the request of either party
hereto, any such discrepancy perceived in the auditor's report shall be the
subject of a prompt meeting between Grantor, Licensee and the auditor at which
meeting the parties shall discuss the purported discrepancies and attempt to
resolve any dispute concerning it. If the parties shall be unable to resolve the
dispute, then at the request of either party it shall be deemed a dispute
subject to the provisions of paragraph "24" hereinbelow. If any audit under this
Agreement shall reveal a discrepancy in Licensee's favor of ten (10%) percent or
more of the amount due, then all reasonable costs of the audit shall be assessed
against and paid by Licensee.
18. WARRANTY
(1) NO OTHER REPRESENTATIONS TO BE MADE: Licensee shall
not make any representation or warranty to customers which shall differ from or
exceed in any way those made by Grantor, in its published literature or in its
terms and conditions of sale, in either case which will be binding upon the
Grantor.
19. LICENSEE'S STATUS
(1) BUYER AND SELLER ONLY: The relationship between
Licensee and Grantor is intended to be and shall be that of buyer and seller,
and Licensee and its employees, agents and representatives shall under no
circumstances be considered agents, partners, joint venturers or representatives
of Grantor. Neither party shall act or attempt to act, or represent itself,
directly or by implication, as agent, joint venturer, partner or representative
of the other or in any manner assume or attempt to assume or create any
obligations or liability of any kind, nature or sort, express or implied, on
behalf of or in the name of the other.
(2) NO FRANCHISE: The relationship created by this
Agreement does not constitute the granting of a franchise to Licensee by Grantor
and no federal or provincial franchise
22
statute, law, regulation or rule is intended to or has been applied by the
parties, nor shall any such franchise, statute, law, regulation or rule be
deemed or construed to apply to the formation, operation, administration or
termination of this Agreement.
20. TERMINATION
(1) In the event that either party hereto believes that
the other party is in default in any material respect in the performance of any
of its material obligations under this Agreement or otherwise commits any
material breach of this Agreement then the following procedures shall apply:
(a) The party claiming a breach or default (the
"Claiming Party") shall immediately notify
the other party (the "Respondent") and the
Banks, in writing of the claimed default or
breach in as specific detail as is
reasonably possible specifying the precise
nature of the claimed breach or default and
shall provide the Respondent with a right to
cure the claimed default or breach, if
curable, within five (5) business days with
respect to defaults in the payment of
monetary obligations and fifteen (15)
business days with respect to non-monetary
defaults.
(b) In the event that the claimed breach or
default is cured to the satisfaction of the
Claiming Party, the Claiming Party shall so
acknowledge, in writing, its satisfaction,
and the Respondent shall not have any
further duty, liability or obligation with
respect to such claimed breach or default.
(c) In the event that the Respondent shall
dispute the validity of the claimed breach
or default in writing or shall dispute in
writing whether the Claiming Party had the
right to provide such notice for whatever
reason, the parties shall meet to discuss
the same within ten (10) days of the receipt
of the written response from the Respondent.
In the event that the parties are unable to
resolve the issue(s), the subject matter of
the dispute shall be submitted to
arbitration in accordance with this
Agreement, unless such arbitration shall
have been at any time preempted by the
commencement of judicial proceedings in the
U.S. Bankruptcy Court, Southern District of
New York, or other court of competent
jurisdiction solely to the extent a request
for equitable relief is being sought
therefrom. If, as and when, as a result of
any such arbitration, the arbitrator
determines that there was no default or
breach, then no party shall have any further
rights or obligations with respect thereto
except that all reasonable costs and
expenses
23
(including attorneys fees) of the
arbitration proceeding for both parties
shall be borne by the Claiming Party. In the
event that the arbitrator determines that
there was or is a default or breach, then
notwithstanding anything in this Agreement
to the contrary, the Respondent shall have a
reasonable time after the arbitrator's final
decision to cure the default or breach and
if the default or breach is cured within a
reasonable time or as otherwise specified by
the arbitrator, neither party shall have any
further rights or obligations with respect
thereto.
(d) In the event that after the decision of the
arbitrator that there was a default or
breach, Respondent shall fail to cure the
same within a reasonable time or as
otherwise specified by the arbitrator, then
the Claiming Party may terminate the
Agreement upon written notice.
(2) Grantor, with the consent of the Banks, shall have
the right to terminate this Agreement, effective upon notice to Licensee as
provided herein in the event of (i) Grantor's termination of the Initial
Agreement in accordance with its terms, (ii) Licensee's insolvency or the making
by Licensee of an assignment for the benefit of creditors, (iii) the appointment
of a receiver for all or a substantial portion of Licensee's property, (iv) the
assumption of custody, attachment, sequestration by a court of competent
jurisdiction of all or a significant portion of Licensee's property, or (v)
Licensee ceasing to carry on its business. No assignee for the benefit of
creditors, receiver, liquidator, trustee in bankruptcy, sheriff or any other
officer of the court or official charged with taking over custody of Licensee's
assets or business, shall have any right to continue performance of this
Agreement, and this Agreement may not be assigned by operation of law.
21. EVENTS UPON TERMINATION
(1) Upon termination of this Agreement for any cause
whatsoever,
(a) all Royalties, including Royalties due on
the Products sold for which reports have not
yet been issued, shall immediately become
due and payable;
(b) Licensee shall be entitled for a period of
thirty (30) days following termination to
complete the assembly of Products and shall
then have a further period of one hundred
twenty (120) days to complete the sale of
the Products (such aggregate one hundred
fifty (150) day period hereinafter referred
to as the "Relevant Period"), which sales
shall be subject to the payment to Grantor
of appropriate Royalties;
24
(c) Subject to the rights contained in
subparagraph "b" hereinabove, Grantor will
have the right to require Licensee to sell
to it at Licensee's cost price such of the
assembled or part assembled merchantable
Products as shall not have been disposed of
by Licensee at the date of exercise of such
option and, if Grantor so requires, such
cost price shall be paid within forty-five
(45) days of delivery of the assembled or
part assembled Products; and
(d) Licensee shall forthwith, and not later than
thirty (30) days thereafter, return free of
any charge to Grantor, the technology of the
Know-How and Trade Marks; further, Licensee
agrees that it will forthwith discontinue
the use of and refrain from using,
disclosing or exploiting the Know-How and
any technical data and information
pertaining thereto or any improvements or
development in respect thereof disclosed to
it under this Agreement by Grantor and from
manufacturing or selling the Products, and
Grantor shall forthwith have the right to
institute proceedings for infringement of
any of its Trade Xxxx rights then in force;
(2) After the earlier of the expiry of the Relevant
Period and the completion of Grantor's purchase of all assembled and part
assembled Products:
(a) Licensee shall turn over to Grantor all sale
inquiries and unfilled orders and the
parties hereto shall negotiate the amount of
compensation, if any, which Licensee may
receive therefor;
(b) Licensee shall cease trading in the Products
and shall notify all dealers and other
interested parties of the termination, and
Licensee shall further cease to make any
representations to the public; and
(c) Licensee shall immediately cease using the
Trade Marks and all other tradenames and
trademarks of Grantor in any manner
whatsoever, and all rights to the name,
labels, style, dress and appearance of the
containers, cartons, advertising material,
packages and other distinctive materials
such as at present exist or such as are
created, developed or acquired subsequent to
the date hereof by Grantor or Licensee
relative to the Products, shall immediately
and automatically become the sole and
exclusive property of Grantor or its
successor, and that Licensee, as well as its
successors and sub-licensees, shall
immediately cease and desist from the use of
said names, labels, style, dress and
appearance of the containers, cartons,
advertising matter and packages used
hereunder.
25
(3) Notwithstanding any such termination:
(a) all warranties set out in this Agreement and
all obligations of indemnification shall
survive and continue to bind the parties
hereto for two (2) years after the date of
termination of this Agreement;
(b) Licensee shall honor any remaining payment
obligations set out in this Agreement; and
(c) Grantor shall use its best efforts to
acquire and carry on the operations of
Licensee in order to ensure the
uninterrupted supply of products to
customers.
22. CONFORMITY WITH LOCAL LAWS
(1) MODIFICATIONS ON NON-CONFORMANCE: The rights and
obligations of the parties under this Agreement shall be subject to all
applicable laws, orders, regulations, directions, restrictions and limitations
of the governments having jurisdiction of the parties. In the event, however,
that any law, order, regulation, direction, restriction or limitation,
expropriation, seizure or interpretation thereof shall in the reasonable
judgment of either party hereto substantially alter the relationship between the
parties under this Agreement, or the advantages derived from such relationship,
either party hereto may request the other party to modify this Agreement, and
if, within fifteen (15) days subsequent to making such request, the parties are
unable to agree upon a mutually satisfactory modification hereof, then the
adversely affected party may terminate this Agreement on fifteen (15) days
notice given to the other party, not later than thirty (30) days following the
end of such thirty (30) day period; provided further, that if the parties are
unable to agree on whether the law, order, regulation, direction, restriction or
limitation, appropriation, seizure or interpretation substantially alters the
relationship between the parties and/or a mutually satisfactory modification of
this Agreement on account of such law, order, etc., then the issues as to which
there is disagreement shall be determined by arbitration in accordance with the
provisions hereof and the decision of the arbitrator with respect thereto shall
be final and binding.
(2) RECORDING OF AGREEMENT: Licensee, at its own expense,
shall take such steps as may be required to satisfy the laws and requirements of
the respective countries wherein the Grantor presently does not directly exploit
the Products with respect to declaring, recording or otherwise rendering this
Agreement valid and enforceable. If such steps are taken by Licensee within
jurisdictions wherein Grantor presently directly exploits the Products, the
reasonable costs and expenses incurred by License shall be reimbursable by
Grantor solely to the extent of deducting same from Royalties due the Grantor.
26
23. DISCLOSURE
This Agreement may be filed with any governmental agency or
official as determined to be appropriate by either party hereto on prior notice
and only as may be required by law or court order.
24. DISPUTE RESOLUTION
All disputes, controversies or claims arising out of or in
connection with or in relation to this Agreement, including any questions
regarding its existence, validity or termination, but excluding any disputes,
controversies or claims arising out of or in connection with or in relation to
the terms and provisions of paragraph "38" hereinbelow, may be submitted to and
be subject to binding arbitration under the auspices of the American Arbitration
Association. One (1) arbitrator shall be chosen by Grantor and one (1)
arbitrator shall be chosen by Licensee. The third arbitrator shall be jointly
chosen by the arbitrators selected by Grantor and Licensee. The arbitration
shall be held in the State and City of New York. The decision of the arbitrators
shall be final and binding on the parties hereto and may be enforced by any
court of competent jurisdiction, unless such arbitration procedure, either
before the commencement or prior to the issuance of the arbitrator's finding(s)
and award is preempted by the commencement of judicial proceedings in the U.S.
Bankruptcy Court, Southern District of New York, or other court of competent
jurisdiction solely to the extent a request for equitable relief is being sought
therefrom.
25. EXTENDED MEANINGS
Words importing the singular number include the plural and
vice versa, and words importing gender include all genders.
26. INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement into paragraphs and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
27. APPLICABLE LAWS
This Agreement shall be deemed to have been made, executed and
delivered in New York, New York and any controversy arising under or in relation
to this Agreement shall be subject to the jurisdiction of the U.S. Bankruptcy
Court, Southern District of New York (so long as the chapter 11 case of Grantor
remains open) and shall be governed by and construed in accordance with
applicable federal law and the laws of the State of New York.
27
28. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject-matter hereof and, except as to the relevant
incorporation by reference of the Initial Agreement and other agreements between
the parties, and certain terms and provisions thereof as stated in this
Agreement and in the instruments and documents to be executed and delivered
pursuant to it, this Agreement contains all of the representations, undertakings
and agreements of all parties respecting the subject-matter hereof. There are no
representations, undertakings or agreements of any kind between the parties
hereto respecting the subject-matter hereof except those contained in this
Agreement.
29. SEVERABILITY
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
or the Agreement as a whole.
30. CURRENCY
Unless otherwise specifically provided in this Agreement, all
references to dollar amounts or other money amounts are expressed in terms of
lawful money of the United States.
31. NOTICES
(1) Any notice or other documents required or permitted
to be given under this Agreement shall be in writing and shall be delivered,
mailed by pre-paid registered mail, return receipt requested or sent by telex or
telecopy addressed to the party or parties to whom it is to be given at the
address shown below or at such other address or addresses as the party or
parties to whom such writing or documents is to be given shall have last
notified all other parties in accordance with the provisions of this paragraph:
(a) if to Licensee at:
Houbigant (1995) Limitee
c/o Xxxx Perfumes Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) if to Grantor at:
Houbigant, Inc.
x/x Xxxx, Xxxxxxx, Xxxxxxx, Xxxx
& Handler
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
28
(c) if to the Banks at:
The Chase Manhattan Bank as Agent
c/o Stroock & Stroock & Xxxxx
Seven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
(2) Any such notice or other document shall:
(a) if delivered, be deemed to have given and received at
the place of receipt on the date of delivery,
provided that if such date is a day other than a
business day in the place of receipt, such notice or
documents shall be deemed to have been given and
received at the place of receipt on the first
business day in the place of receipt, thereafter;
(b) if transmitted by telex or telecopy, be deemed to
have been given and received at the place of receipt
on the next business day in the place of receipt,
thereafter;
(c) if mailed, be deemed to have been given and received
at the place of receipt on the date of actual
receipt.
(3) In the event of postal disruption, such notices or
documents must either be delivered personally or sent by telex or telecopy.
32. AMENDMENT OF AGREEMENT
None of the terms, conditions or provisions of this Agreement
shall be held to have been changed, waived, varied, modified or altered by any
act or knowledge of either party hereto, their respective agents servants or
employees unless done so in writing signed by both parties hereto. Through and
until the Banks receive all payments and property anticipated to be required
under Grantor's expected chapter 11 plan of reorganization, any material
amendment or modification of Licensee's obligations under this Agreement shall
require the prior written consent of the Banks thereto.
29
33. WAIVER OF BREACH
No waiver on behalf of any party hereto of any breach of the
provisions shall be effective or binding on such party unless the same shall be
expressed in writing and any waiver so expressed shall not limit or affect such
party's rights with respect to any future breach of any of the provisions of
this Agreement.
34. FURTHER ASSURANCES
Each of the parties hereto covenants and agrees that he, his
heirs, executors, administrators, successors and permitted assigns will execute
such further documents and do and perform or cause to be done and performed such
further and other acts as may be necessary or desirable from time to time in
order to give full effect to the provisions of this Agreement.
35. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and enure to the benefit of
the successors and assigns of both parties hereto and all persons or
corporations succeeding to or acquiring the business now carried on by Grantor
or Licensee. Licensee shall not be entitled to assign this Agreement in whole or
in part without the prior consent in writing of Grantor and the Banks. Moreover,
Licensee shall not be entitled to, and hereby agrees that it shall not sell,
transfer or dispose or cause the sale, transfer and disposition of the ownership
and control (other than as may result from an initial public offering) of
Licensee for a period of two (2) years following the Date of the Initial License
Agreement, PROVIDED, HOWEVER, that any such dispositions to the extent they do
not include the sale or transfer of this Agreement or the rights thereunder
shall not be limited hereby. Subsequent to the aforesaid two (2) year
proscription, in the event the controlling stock of Licensee or its parent is
sold or transferred (other than as may result from an initial public offering)
to a third party, this paragraph "35" prohibiting the direct or indirect
assignment of this Agreement shall not prevent same to occur PROVIDED, HOWEVER,
that the Minimum Royalties required hereunder pursuant to paragraph "7(8)"
hereinabove shall be immediately adjusted upon the effective date of such sale
or transfer so as to require the Minimum Royalties thereafter to be calculated
and paid at the greater of (i) the Minimum Royalty in effect as at the Effective
Date of such sale or transfer or (ii) the means of (x) the previous full year's
actual Royalties plus (y) the Minimum Royalties then in effect. For purposes of
this Agreement and this paragraph "35", a sub-license by Licensee of the Trade
Marks and Know-How of the Products for portions of the Territory from which the
aggregate Net Sales so generated represent more than fifty (50%) percent of all
Royalties for the entire Territory in any given year shall be deemed a "sale"
hereunder.
30
36. TIME
When calculating the period of time within which or following
which any act is to be done or step taken, the date which is the reference day
in calculating such period shall be excluded.
37. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
38. CLOSING OF AGREEMENT AND CONDITIONS THERETO
(1) The Closing of this Agreement shall occur as soon as
practicable following the occurrence of all of the following events (with the
date on which the last of all said conditions shall have occurred referred to as
the "Effective Date"), the failure to timely achieve any of the foregoing being
grounds for the termination AB INITIO of this Agreement (except to the extent
waivable and waived hereunder);
(a) The issuance of an Order of the U.S.
Bankruptcy Court, Southern District of New
York, which has not been stayed, approving
this Agreement and authorizing its
implementation;
(b) the approval of this Agreement by The Chase
Manhattan Bank and Fleet Bank, not later
than two (2) business days prior to the
hearing scheduled to consider approval of
this Agreement, which approval Grantor will
use its best efforts to obtain;
(c) Licensee obtaining a report reasonably
satisfactory to it from its appointed trade
xxxx and patents agents in respect of the
Trade Marks and Grantor shall forthwith
instruct its own trade xxxx and patent
agent(s) to provide all assistance as may be
required for that exercise;
(d) Licensee approving the contents of Schedule
"A" hereof, whose approval will be deemed
evidenced by the execution hereof;
(e) The issuance by the Banks of an "estoppel
certificate", in form and substance
reasonably satisfactory to Grantor and
Licensee.
(f) The issuance of resolutions of the Board of
Directors and Shareholders of the Grantor,
in form and substance reasonably
satisfactory to Grantor and Licensee,
approving the transactions herein
contemplated, which resolutions shall be
certified by a duly authorized officer of
the Grantor.
31
(g) The issuance of a certificate, in form and
substance reasonably satisfactory to Grantor
and Licensee, of a duly authorized officer
of Grantor certifying that (a) all
representations and warranties of the
Grantor contained in paragraph "11"
hereinbefore upon which Licensee has relied
are materially true and correct on the
Closing Date as if made on and as of such
date, (b) Grantor has complied in all
material respects with all covenants,
agreements and conditions to be complied
with from the date of this Agreement to the
Closing Date, and (c) all other conditions
required for Closing hereunder have been
met.
(h) The issuance of an officer's certificate, in
form and substance reasonably satisfactory
to Grantor and Licensee, that there are no
liens, claims or encumbrances against any of
the Trade Marks, Know-How, or any of the
other assets to be purchased by Licensee
from Grantor under paragraph "7(b)"
hereinabove, other than the liens, claims or
encumbrances of and held by the Banks and
the following other holders of perfected and
enforceable liens and interests as set forth
in Schedule "E" hereto.
(i) The delivery of Forms UCC-1 and related
security agreements as may be reasonably
requested by Licensee, in form and substance
reasonably satisfactory to Grantor and the
Banks, pursuant to which Licensee will be
granted a duly perfected security interest
in the Trade Marks in the United States and
elsewhere, subject only to the prior liens
and interests of the Banks or of other
holders, if any, of perfected and
enforceable liens and interests, as set
forth in Schedule "E" hereto.
(j) An agreement, in form and substance
reasonably satisfactory to Grantor and
Licensee, to the effect that in the event of
a subsequent voluntary chapter 11 case of
the Grantor, and unless such action shall
have already been taken pursuant to the
Initial Agreement whereupon the provisions
of this sub-paragraph "(j)" shall be null
and void, each of the then equity holders
and directors of the Grantor shall take all
appropriate action to enable the Licensee,
at its option, to assert and elect one (1)
additional member to the Board of Directors
of the Grantor, which newly appointed member
shall participate in the activities and
serve in meetings of the Board of Directors
of the Grantor only on the subject and in
the matter of any consideration by the Board
of Directors of the Grantor to
32
authorize the rejection and disaffirmance
pursuant to ss. 365 of the Bankruptcy Code
of this Agreement, and in connection with
which said newly appointed member shall be
entitled to exercise a veto in any vote
thereon by the Board of Directors of the
Grantor.
(k) An agreement, in form and substance
reasonably satisfactory to the Licensee, to
the effect that after the Closing Date, the
Grantor will continue to operate in the
ordinary course of business as a licensor of
its trademarks, patents and other
proprietary rights and interests and as a
designer, marketer and distributor of
perfumes, fragrance products and related
products and will not enter into
transactions unrelated to its and those
business.
(2) In the event that the aforesaid conditions are not
all fulfilled within ninety (90) days from the date of this Agreement, either
Licensee or Grantor (but subject in the latter case to Grantor having complied
with its obligations in this paragraph "38") shall be entitled to terminate this
Agreement on written notice to the other.
The conditions contained in subparagraph "c" hereinabove shall be waivable by
Grantor in its sole discretion.
39. GRANTOR'S ACCOUNTS RECEIVABLE:
Licensee shall use its reasonable efforts to assist Grantor in
the collection in the Territory of Grantor's and its affiliates existing
accounts receivable relating to the Products if any. Any such accounts
receivables collected by Licensee shall be remitted to Grantor. Licensee shall
also provide reasonable assistance and cooperation to Grantor in connection with
Grantor's efforts to collect outstanding monies due it from any prior licensees
(and anyone related thereto or affiliated therewith) for the Products in the
Territory.
40. RIGHT OF LAST REFUSAL
In the event Grantor shall undertake to sell, albeit subject
to the terms and provisions of this Agreement, those assets which comprise the
terms of this Agreement (i.e., ownership of the Trade Marks), Grantor hereby
grants unto Licensee the right to receive the last opportunity to acquire the
assets provided that Licensee shall be required to conform its proposal to the
entire substance and structure then contemplated by Grantor and the third-party
purchaser. In addition, Grantor hereby grants unto Licensee the right of last
refusal to acquire the post-confirmation issued stock of Grantor (except such
stock which may be held or retained by Grantor's institutional creditors) after
it has been allocated pursuant to Grantor's anticipated court-approved plan of
reorganization (which shall be confirmed to Licensee in writing), except if such
stock is sold or transferred among related/affiliated entities or in a public
offering of Grantor.
33
41. EXCLUSIVE DEALINGS
Subsequent to the date of this Agreement and through and until
the date this Agreement (i) becomes effective in accordance with its terms or
(ii) is rendered a nullity by mutual consent, court order or other events, the
parties hereto agree that unless required by law or court order, neither shall
engage in any discussions or negotiations or provide any information, oral or
written, to any known potential licensee of the Products for the Territory
having as their purpose a transaction of the kind contemplated by this Agreement
or of any other nature whatsoever with such third party.
42. RETENTION OF MANAGEMENT
Due to the relationship of licensor/licensee and, in
particular, the relationship established by this Agreement, Grantor agrees to
use its best efforts to retain and employ, whether through employment,
consulting arrangement, or ownership, Xxxxxxx X. Xxxxxxx in such capacity and in
such office which would facilitate, INTER ALIA, his respective supervision and
assistance in implementation of this Agreement and the rights granted
thereunder.
43. FINANCIAL REPORTING BY GRANTOR
Licensee shall be entitled to receive copies of regularly
issued financial statements of the Grantor, from time to time and as and when
reasonably requested, provided, however, that such requests shall be no more
frequently than quarterly and that such financial statements, when received,
shall be deemed confidential and shall not be disseminated to or permitted to be
used by any other parties, other than officers, employees and agents of
Licensee.
44. GUARANTEE
Prior to the Closing Date, Renaissance Cosmetics, Inc. shall
execute a guarantee of payment, in form and substance reasonably satisfactory to
Grantor, Licensee and the Banks, for the benefit of Grantor and Banks, of all of
the financial obligations of Licensee under this Agreement, including without
limitation, the payment of Royalties. The guarantee will further provide that
through and including the date on which the Banks shall have received all
payments and property anticipated to be required under the Grantor's expected
chapter 11 plan of reorganization, Renaissance Cosmetics, Inc. must maintain a
minimum net worth at all times of not less than ten million $10,000,000)
dollars.
45. REIMBURSEMENT OF EXPENSE ADVANCES
Notwithstanding anything to the contrary herein, any and all
reasonable costs and expenses related thereto deemed under this Agreement to be
the responsibility of the Grantor shall be performed and funded by Licensee and
shall be reimbursable, if in fact advanced by Licensee, by Grantor in the
Contract Year such cost or expense is incurred solely to the extent of deducting
34
such amount(s) from the royalties due the Grantor under this Agreement, without
carryover and on a non-cumulative basis.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
HOUBIGANT, INC.
Grantor
Per: /S/ XXXXXXX X. XXXXXXX
----------------------------
Xxxxxxx X. Xxxxxxx
Vice President-Special Projects
HOUBIGANT (1995) LIMITEE
Licensee
Per: /S/ XXXXXX XXXXXXXXX
----------------------------
Xxxxxx XxXxxxxxx
Vice President
35
SCHEDULE "A"
------------
TRADE MARKS
-----------
Chantilly
Lutece
Raffinee
Demi-jour
English Waterlillies
French Garden Flowers
Monsieur Musk
Bistro De Chantilly
French Vanilla
Presence
Parfums Parquet
Ciao
