EXHIBIT 10.43
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LICENSE AGREEMENT
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THIS PRODUCT PURCHASE AND LICENSE AGREEMENT (the "Agreement") is made
effective as of June 19, 2001 (the "Effective Date"), by and among Xxxx Xxxxx
("Xxxxx"), XxxxxxXxxxxxx.xxx, a Delaware corporation ("HealthCentral"), and
Sunglass Products Of California, a California corporation ("Cable Car").
RECITALS
A. On April 11, 2000, Xxxxx, Brand Optical Corporation ("Brand Optical")
and HealthCentral entered into an Assignment and Amendment Agreement whereby the
license to utilize the "Xx. Xxxx Xxxxx" trademark, name and likeness
(collectively, the "Xxxxx Xxxxx") were assigned from Brand Optical to
HealthCentral. The term of the Assignment and Amendment Agreement extends
through December 31, 2006 and grants to HealthCentral, among other rights, the
right to sublicense the Xxxxx Xxxxx.
B. Pursuant to the Sales and Distribution Agreement, by and between
HealthCentral and Cable Car, dated April 11, 2000, HealthCentral granted to
Cable Car the exclusive right to purchase eyewear products including, without
limitation, reading glasses and sunglasses bearing or utilizing the "Xx. Xxxx
Xxxxx" name (the "Products") for sale to physical, brick-and-mortar, retail
locations as well as mail order and internet distribution channels operated on
behalf of Cable Car's customers who operate physical, brick-and-mortar retail
locations or as otherwise approved by HealthCentral (collectively, the "Field").
Pursuant to the Sales and Distribution Agreement, HealthCentral agreed not to
sell Products, directly or indirectly, other than through Cable Car, to
purchasers in the Field. Cable Car agreed, in the Sales and Distribution
Agreement, that, except in the event of a default thereunder, it would purchase
the Products from HealthCentral.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
ARTICLE I
LICENSE AND ROYALTY
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1.1. Grant of License. HealthCentral hereby grants to Cable Car the exclusive
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right (the "License") to manufacture, distribute, market and sell reading
glasses and sunglasses under the Xxxxx Xxxxx within the United States, Canada,
Mexico and Puerto Rico (collectively, the "Territory") during the period from
the Effective Date through December 31, 2006 and any extension thereof (the
"License Term"). In the event that HealthCentral extends its agreement
with Xxxxx, HealthCentral agrees to automatically extend this agreement for a
like period of time.
1.2. HealthCentral to Use Best Efforts to Facilitate License Extension.
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HealthCentral agrees that it will use its best efforts to facilitate in a timely
manner an extension to the License to the Xx. Xxxx Xxxxx Eyewear Brand, in
conjunction with Xxxxx, and that HealthCentral will allow Cable Car to contract
directly with Xxxxx in this regard. The anticipated extension is expected to be
for *** Xxxxx anticipates receiving in return for the license extension the
greater of *** annually or *** during the extension time period. Payments to
Xxxxx will be made by Cable Car quarterly within *** of each quarter's end.
1.3. Trademark and License Rights.
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(a) HealthCentral. HealthCentral hereby represents and warrants that it
owns the exclusive license to use the Xxxxx Xxxxx in the Field and Territory,
and that it has all right, title and interest in and to the Xxxxx Xxxxx
necessary to grant the License to Cable Car.
(b) Xxxxx. Xxxxx hereby represents and warrants that he is the owner of
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all right, title and interest, other than the rights held by HealthCentral
described above and in the Assignment and Amendment Agreement, in and to the
Xxxxx Xxxxx.
1.4. Indemnification. HealthCentral and Xxxxx shall each indemnify Cable Car
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and shall hold it harmless from any loss, liability, damage, cost, or expense
including, without limitation, attorneys' fees arising out of any claims or
suits which may be brought or made against Cable Car by reason of the breach by
HealthCentral or Xxxxx of their respective representations and warranties set
forth in Section 1.3 above, provided that Cable Car shall give prompt written
notice and full cooperation and assistance to Health Central or Xxxxx, as the
case may be, relative to any such claim or suit.
*** Material has been omitted pursuant to a request for confidential treatment.
1.5. Royalty.
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(a) In consideration of the License granted hereunder, during the License
Term Cable Car shall pay to HealthCentral a royalty equal to *** (the
"Royalty"). As used herein, "Net Sales of Products" shall mean the aggregate of
Cable Car's net invoice price for sales of the Products less (i) any taxes
included in the net invoice price; (ii) actual shipping and handling costs paid
to a third party; (iii) returns of products; and (iv) discounts and allowances
provided in good faith by Cable Car. This obligation is limited to product
purchased after March 31, 2001 by Cable Car from third party suppliers and sold
to its customers. Additionally, on a quarterly basis, beginning April 1, 2001,
Cable Car will pay a contract maintenance fee (the "Maintenance Fee") of *** in
arrears.
(b) The Royalty and Maintenance Fee shall be payable to HealthCentral
quarterly within 45 days of the end of each calendar quarter for Net Sales of
Products during the calendar quarter just ended (the "Quarterly Payment"). That
is, Quarterly Payment shall be due on May 15 (for sales occurring in the first
calendar quarter), August 14 (for sales occurring in the second calendar
quarter), November 14 (for sales occurring in the third calendar quarter), and
February 14 (for sales occurring in the fourth calendar quarter of the previous
year).
(c) In addition to each Quarterly Payment of the Royalty, Cable Car shall
submit a statement of Net Sales of Products during the calendar quarter just
ended certified by its President or Treasurer which statement shall detail the
sales of the Products, taxes, shipping and handling, returns of products, and
discounts and allowances provided in good faith by Cable Car.
(d) For the sole purpose of ensuring compliance with this Article I, and
no more than once in any calendar year and upon no less than ten (10) business
days' prior written request, Cable Car shall provide HealthCentral with
information relevant to the verification of the amounts payable under this
Section 1.5 and solely to the extent necessary to allow an independent certified
public accounting firm chosen and compensated by HealthCentral to audit such
information; provided however, that the independent auditor agrees to maintain
the Confidentiality of any information provided by Cable Car. Any such access
requested by HealthCentral shall occur during normal business hours. Cable Car
shall have 30 days following its receipt from HealthCentral of the results of
such audit to challenge the results. If such audit reveals an underpayment, then
Cable Car shall promptly pay the outstanding amounts, and if the underpayment
exceeds ***, then Cable Car will also reimburse HealthCentral for the costs of
such audit.
1.6. First Right of Negotiation. In the event HealthCentral desires to appoint
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a distributor for the Products outside of the Territory, Cable Car will be given
the first opportunity to negotiate an acceptable agreement to be such
representative.
*** Material has been omitted pursuant to a request for confidential treatment.
1.7. Minimum Requirements. Cable Car agrees to pay an annual minimum dollar
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amount in the Royalty and Maintenance Fee as listed in Schedule B hereto
("Minimum Royalty and Maintenance Fee Payment Requirements"). The minimum
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amounts shall be invalid if the FDA or other such government agency prohibits or
significantly restricts the sale of reading glasses. If Xx. Xxxx Xxxxx becomes
incapacitated or his public or commercial appeal declines and as a result there
is a substantial decline in sales as agreed upon by the parties the minimum
amounts shall be invalid.
ARTICLE II
PRODUCT
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2.1. Product. HealthCentral is authorized to sell inventory it holds on March
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31, 2001 through any channel that is available to liquidate its inventory
holdings other than to current significant customers of Cable Car as listed on
Schedule A attached hereto, or to other entities that, to HealthCentral's
knowledge, intend to sell to significant customers of Cable Car. The sales may
be made at any price acceptable to HealthCentral.
After such inventory is liquidated, HealthCentral may only sell Products via its
on-line pharmacy, and through any owned retail channels including catalogs and
stores. If HealthCentral sells Products and periodic discount promotions exceed
*** of the total until sales in any given quarter, Cable Car will be entitled to
a credit for an amount equal to the average discount from the suggested retail
price for those products that exceed the *** of total units threshold.
HealthCentral will provide Cable Car with quarterly sales reports which detail
sales amounts, units and average discounts. Cable Car shall have the right to
audit this information in a process similar to the one described in 1.5(d).
In the event that HealthCentral is unable to sell its existing inventory through
its own efforts, and HealthCentral has sufficient inventory of items in the then
current line and can timely fulfill Cable Car's orders in accordance with
section 2.2, beginning January 2002 and continuing at least through December
2003, Cable Car will purchase *** of product per month from HealthCentral. After
December 2003, Cable Car agrees to use its best efforts to purchase Products
from the HealthCentral inventory, before purchasing such products from any other
sources. The price to Cable Car does not include any federal, state or local
taxes directly applicable to the sale by HealthCentral to Cable Car of the
Products. When HealthCentral has the legal obligation to collect such taxes, the
appropriate amount shall be added to Cable Car's invoice and paid by Cable Car
unless Cable Car provides HealthCentral with a valid tax exemption certificate
authorized by the appropriate taxing authority. Such purchase requirements shall
be terminated if the Federal Drug Administration or any other governmental
agency prohibits or significantly restricts the sale of the Products.
2.2. Shipping. Cable Car shall deliver purchase orders to HealthCentral for
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any Products purchased by Cable Car from HealthCentral. Such Products shall be
delivered F.O.B Hollister, CA by HealthCentral to Cable Car prepackaged,
suitably packed and ready for shipment to Cable Car's customers on the date
specified in the purchase order. Title to the Products so purchased shall pass
to Cable Car upon physical delivery by HealthCentral or its designated courier
to Cable Car's designated facility as set forth on the purchase order.
2.3. Rejection and Returns. Cable Car shall inspect all Products promptly upon
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receipt thereof and may reject any Product that fails to meet the relevant
specifications. Any Product not properly rejected within 30 days of receipt of
that Product by Cable Car (the "Rejection Period") shall be deemed accepted. To
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reject a Product, Cable Car must, within the Rejection
*** Material has been omitted pursuant to a request for confidential treatment.
Period, notify HealthCentral of its rejection and detail the reasons for such
rejection. As promptly as possible but no later than 30 working days after
receipt of properly rejected Products, HealthCentral shall, at its option and
expense, replace the Products. HealthCentral shall pay the shipping charges
back to Cable Car for properly rejected Products. In the event that
HealthCentral does not timely replace the rejected Products, Cable Car shall
have the right to cancel the purchase order and source product elsewhere.
2.4. Invoicing. Beginning when Cable Car places its first order for Product
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from HealthCentral pursuant to this Section 2, HealthCentral will prepare and
deliver to Cable Car weekly invoices for Products shipped to Cable Car.
2.5. Payment. For future purchases of Product from HealthCentral, after the
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date of this agreement, full payment for invoices shall be in United States of
America dollars. Payment terms shall be *** and payment shall be made by wire
transfer, check or other instrument approved by HealthCentral. Any invoiced
amount not paid when due shall be subject to a service charge at *** per month.
If Cable Car fails to timely make any payment to HealthCentral, HealthCentral
may cancel or delay any future shipments to Cable Car until such delinquent
payment is made, in addition to any other remedies HealthCentral may have.
ARTICLE III
TERM AND TERMINATION
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3.1. Term of Agreement. The parties' respective rights and obligations shall
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commence on the Effective Date hereof and continue in full force and effect
until December 31, 2006, unless terminated earlier under the provisions of this
Article III or other applicable termination provision of this Agreement;
provided, however, that if HealthCentral extends its rights to the Xxxxx Xxxxx
for eyewear, HealthCentral agrees to extend the License for the same time period
as the extension obtained by HealthCentral.
3.2. Termination For Cause.
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(a) With respect to Product purchases in accordance with Article I
hereof, if either party defaults in the performance of any material provision of
Article I, then the non-defaulting party may give written notice to the
defaulting party that if the default is not cured within 60 days (the "Cure
Period") the non-defaulting party may, without affecting the remaining
provisions of this Agreement, terminate the provisions of Article I.
(b) With respect to the provisions hereof related to the License, if
Cable Car defaults in the performance of its material obligations and has not
cured such default within the Cure Period, then the License granted hereunder
will automatically terminate on the date eighteen (18) months after the end of
the Cure Period. During such period, Cable Car's obligations to pay the Royalty
shall continue and apply to all sales of the Products bearing the Xxxxx Xxxxx
during such period. If HealthCentral defaults in the performance of its material
obligations or there is a breach of a warranty given by HealthCentral hereunder
and HealthCentral has not
*** Material has been omitted pursuant to a request for confidential treatment.
cured such default within the Cure Period, then Cable Car may, at its sole and
absolute discretion, terminate the License granted hereunder.
3.3. Termination For Insolvency. Either party may terminate this Agreement in
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the event that the other party becomes insolvent, files a petition in
bankruptcy, is declared bankrupt, makes an assignment for benefit of creditors
or there is reasonable evidence indicating the imminent possibility of such
filing or assignment, during the term that this Agreement is in effect.
Termination under this provision shall be effective 20 days following written
notice that this Agreement is being terminated for the reason stated in this
Section 3.3.
3.4. Effect of Termination; Limitation of Liability. Except as set forth in
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this Section 3.4, in the event of termination by either party in accordance with
any of the provisions of this Agreement, neither party shall be liable to the
other, because of such termination, for compensation, reimbursement or damages
on account of the loss of prospective profits or anticipated sales or on account
of expenditures, inventory, investments, leases or commitments in connection
with the business or goodwill of HealthCentral or Cable Car. Sections 3.1, 3.4,
3.5 and Articles IV - VII shall survive termination, as will all obligations
incurred prior to the termination. Both Cable Car and HealthCentral shall be
entitled to cancel all purchase orders outstanding at the date of termination,
to the extent Products have not been delivered to Cable Car; provided, however,
that, (i) Cable Car is not in material breach of the Agreement; and (ii) subject
to payment in advance to HealthCentral, Cable Car shall be entitled to receive
Products necessary to fulfill valid and binding purchase orders accepted by
Cable Car prior to notification of termination of this Agreement. Prior to
filling orders for such Products, HealthCentral shall be entitled to request and
receive documentary evidence of all such outstanding purchase orders and an
accounting of Cable Car's existing inventory of Products.
3.5. Post-Termination Use of Materials. After termination of this Agreement,
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neither party shall use any signs, equipment, advertising matter or other
material which refer to or are related to the other party and each party shall
refrain from acts and omissions that indicate or suggest a relationship with the
other party and shall immediately return to the other party all of such other
party's property, promotional material, and proprietary information.
ARTICLE IV
WARRANTY WITH RESPECT TO PRODUCTS; DISCLAIMER; INDEMNIFICATION
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4.1. Standard Limited Warranty. HealthCentral warrants to Cable Car that the
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Products purchased from HealthCentral will conform to the specifications
therefor for a period of 30 days from delivery. This warranty is contingent
upon proper use of the Products in the application for which the Products were
intended and does not cover Products that were modified without HealthCentral's
approval, or that were subjected to unusual physical, chemical or electrical
stress.
4.2. No Other Warranty. WITH RESPECT TO THE PRODUCTS, EXCEPT FOR THE EXPRESS
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LIMITED WARRANTY SET FORTH ABOVE AND SUBJECT TO THE
REPRESENTATIONS AND WARRANTIES MADE IN SECTION 1.3 HEREOF, HEALTHCENTRAL GRANTS
NO WARRANTIES FOR THE PRODUCTS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND HEALTHCENTRAL SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY INCLUDING ANY WARRANTY OF QUALITY, WARRANTY OF
MERCHANTABILITY, OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
4.3. Limitation of Liability. HEALTHCENTRAL'S LIABILITY UNDER THE LIMITED
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WARRANTY SET FORTH IN SECTION 4.1 ABOVE SHALL BE LIMITED TO A REFUND OF THE
CUSTOMER'S PURCHASE PRICE. IN NO EVENT SHALL HEALTHCENTRAL BE LIABLE TO CABLE
CAR OR ANY THIRD PARTY FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS BY CABLE
CAR OR ANY OF ITS CUSTOMERS OR FOR ANY INDIRECT, SPECIAL, EXEMPLARY,
CONSEQUENTIAL OR INCIDENTAL DAMAGES (EVEN IF HEALTHCENTRAL HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES) ARISING FROM OR RELATING TO PROVIDING THE
PRODUCTS HEREUNDER.
4.4. Cable Car Warranties. Cable Car may make warranties on its behalf,
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provided that (a) such warranties shall impose no liability on HealthCentral,
and (b) Cable Car shall not make any false or misleading representations to
customers or others regarding the Products.
4.5. Indemnification. Cable Car agrees to indemnify and hold HealthCentral,
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its officers, directors, and employees and Xxxxx harmless from and against any
and all losses resulting from claims made by any person or entity arising out of
the marketing, distribution, sale or use of the Products (including claims that
the sale or use of the Products infringe upon the intellectual property rights
of a third party other than a claim based on infringement of the Xxxxx Xxxxx,
claims arising from the failure to meet product specifications, and claims based
upon inherent defects). The indemnifying party shall have the right to defend
or, at its option, to settle such claims, and if it chooses to exercise such
right, it shall have sole control over defense of any such claim or settlement
negotiations.
ARTICLE V
NOTICES
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5.1. Addresses. All notices given under this Agreement and the provisions
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contained herein shall be sent by first class registered airmail, postage
prepaid and return receipt requested, by Federal Express, or by Telecopier, or
Facsimile as directed below:
To: HealthCentral
Marketplace Tower
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: C. Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
when directed to HealthCentral;
To: Sunglass Products of California
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx
Attention: Xxxx Xxxx, Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
when directed to Cable Car; and
To: Xx. Xxxx Xxxxx
00 Xxxxxxx Xxx
Xxx Xxxxxx, XX 00000
Telephone:
Facsimile:
when directed to Xxxxx.
5.2. Delivery. All notices required or permitted to be given under this
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Agreement shall be regarded as properly given by personal service or by
facsimile, certified or registered mail (return receipt requested), or express
courier to the addresses set forth above.
ARTICLE VI
PROPRIETARY INFORMATION
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6.1. Confidentiality. Each party acknowledges that it has or will have access
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to valuable proprietary information of the other party, including but not
limited to, technical data and customer and marketing information, all of which
are the property of the other party, have been maintained confidential, and are
used in the course of such other party's business. Each party shall not, either
during the term of the Agreement or thereafter, disclose the other party's
proprietary information to anyone other than those of its employees having a
need to know and shall refrain from use of such information other than in the
performance of the Agreement. In addition, the receiving party shall take all
reasonable precautions to protect the value and confidentiality of such
information to the originating party. All records, files, notes, drawings,
prints, samples, advertising material and the like relating to the business,
products or projects of the originating party and all copies made from such
documents, shall remain the sole and exclusive property of the originating party
and shall be returned to the originating party immediately upon written request
thereby. Each party agrees to continue to maintain all proprietary information
in confidence for a period of five years following termination of the Agreement,
unless written authorization to so disclose any such information is first
obtained from the originating party hereunder.
6.2. Non-Proprietary Information. Neither party shall be obligated or required
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to maintain in confidence any information which it can demonstrate with written
records (a) is in the public domain or known to the receiving party prior to
disclosure by the originating party, (b) becomes known to the public after
disclosure by the originating party, other than through breach of the Agreement,
(c) becomes known to the receiving party from a source other than the disclosing
party without breach of any obligation of confidence, or (d) is or has been
furnished to a third party by the originating party without restriction on the
third party's right to disclose.
ARTICLE VII
MISCELLANEOUS
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7.1. Assignment. A mutually agreed consideration for HealthCentral's and
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Xxxxx'x entering into this Agreement is the reputation, business standing, and
goodwill already honored and enjoyed by Cable Car and, accordingly, Cable Car
agrees that Cable Car's rights and obligations under this Agreement may not be
transferred or assigned directly or indirectly without the prior written consent
of HealthCentral except in connection with the merger of Cable Car into a
successor corporation or the sale of materially all of the assets of Cable Car.
Subject to the foregoing sentences, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
7.2. Attorney Fees. The prevailing party in any legal action brought by one
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party against the other and arising out of this Agreement shall be entitled, in
addition to any other rights and
remedies that such prevailing party may have, to reimbursement for reasonable
expenses incurred by such prevailing party, including court costs and reasonable
attorneys' fees.
7.3. Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall be deemed an original and all of which together shall
constitute one instrument.
7.4. Partial Invalidity. If any provision of this Agreement is held to be
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invalid, then the remaining provisions shall nevertheless remain in full force
and effect. The parties agree to renegotiate in good faith any term held invalid
and to be bound by the mutually agreed upon substitute provision.
7.5. Titles and Subtitles. The titles and subtitles used in this Agreement are
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used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.6. Changes and Additions to Agreement. This Agreement and the exhibits
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hereto constitute the final agreement between the parties and supersede all
prior agreements and understandings, oral or written, all of which are merged
herein. No modification, assignment, or any future representation, promise or
agreement in connection with the subject matter of the Agreement shall be
binding on HealthCentral, Xxxxx and Cable Car unless made in writing and signed
by an authorized signatory of each.
7.7. Governing Law and Jurisdiction. The Agreement shall be governed by, and
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construed and interpreted in accordance with, the laws of the State of
California, United States of America, without reference to conflict of laws
principles. Any dispute or claim arising out of or in connection with the
Agreement or the performance, breach or termination thereof, shall be finally
settled in the courts located in or for Alameda County, California.
7.8. Independent Contractor Relationship. It is understood that both parties
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hereto are independent contractors and engaged in the operation of their own
respective businesses. Neither party hereto is to be considered the agent of
the other party for any purpose whatsoever, and neither party has any authority,
express or implied, to enter into any contracts or assume any obligations for
the other party, to pledge the credit, or make any warranties or representations
on behalf of the other party except where expressly authorized in writing to do
so. Nothing in the Agreement or in the activities of either party shall be
deemed to create an agency, partnership, or joint venture relationship.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
XXXXXXXXXXXXX.XXX, a Delaware corporation
By: /s/ C. Xxxx Xxxxx
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C. Xxxx Xxxxx, President
SUNGLASS PRODUCTS OF CALIFORNIA, a
California corporation
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, Chairman
Confirmed with respect Sections 1.2, 1.3,
1.4, 3.2(b), Article VI and Article VII
only, by:
XXXXX
/s/ Xxxx Xxxxx
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Xxxx Xxxxx, M.D.
Schedule A
Cable Car Significant Customers
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***
*** Material has been omitted pursuant to a request for confidential treatment.
Schedule B
Minimum Royalty and Maintenance Fee Payment Requirements
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Year Minimum Royalty and Maintenance Fee
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2001 ***
2002 ***
2003 ***
2004 ***
2005 ***
2006 ***
*** Material has been omitted pursuant to a request for confidential treatment.
