1
EXHIBIT 10.12
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and entered into this 28th day of
June, 1999 by and between S2 GOLF INC., a corporation duly constituted under the
laws of New Jersey, United States of America, having its principal place of
business at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, X.X.X. ("Licensor"),
and XXXXXXX XXXXXxX LTeE/LTD., a corporation duly constituted under the laws of
Canada, having its principal place of business at 0000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxx, Xxxxxx, X0X 0X0 ("Licensee").
PREAMBLE
--------
WHEREAS the Licensor is the owner of the trademarks SQUARE TWO in the United
States and Canada and S2(logo) in the United States for use with various
products;
WHEREAS the Licensee desires to use the trademarks SQUARE TWO and S2(logo) for
the marketing, sale and distribution of clothing articles as further described
in this Agreement; and
WHEREAS the parties hereto wish to enter into the present Agreement for their
mutual advantage.
NOW, THEREFORE, in consideration of the above premises and the covenants and
agreements herein contained, the parties hereto agree as follows:
1. INTERPRETATION.
1.1 DEFINITIONS.
As used herein, the following terms have the meanings set
forth below:
1.1.1 "Articles" means the following goods: golf clothes
for men, women and children, ski clothes for men,
women and children, and sports clothes for men, women
and children, except for clothing produced by the
Licensor for promotional purposes in quantities of
fewer than one hundred (100) pieces. The parties
agree that headwear, belts and shoes are not included
in the Articles.
1.1.2 "Principal Term" means the three (3) year period
commencing on August 1, 1999 and ending on July 31,
2002, subject to the terms of the following Section
3.
1.1.3 "Trademark" means either the SQUARE TWO trademark or
the S2(logo) and "Trademarks" means the SQUARE TWO
trademark and the S2(logo),
2
the particulars of which are set forth in Schedule A
hereto, and any confusingly similar term or
designation.
1.2 SCHEDULES.
The following schedule is attached hereto and incorporated by
reference and deemed to be part hereof:
Schedule Description
-------- -----------
"A" Description of Trademarks
2. RIGHTS GRANTED.
2.1. LICENSE FOR USE.
Subject to the terms and conditions contained in this
Agreement, the Licensor grants to the Licensee an exclusive
non-transferable license to manufacture Articles bearing the
Trademarks for sale in the United States and Canada and to
distribute, market, advertise, export and sell the Articles
bearing the Trademarks in the United States and Canada.
2.2. LICENSE FOR ADVERTISING AND PROMOTION.
The Licensor further grants to the Licensee (i) the right to
reproduce and use the Trademarks on display materials, and in
advertising and promotional materials related to the Articles,
and (ii) the right to include the Trademarks in any
description of the Licensee's business activities as related
to the Articles, provided that, if used in any description of
Licensee's business activities, attribution be given to
Licensor as the owner of the marks, said attribution being in
the form of a footnote appearing on the same page as the first
appearance of the Trademarks and including the following text:
"`SQUARE TWO' and `S2(logo)' are trademarks of S2 Golf Inc.,
used in this report under license to Xxxxxxx Xxxxxxx Ltee/Ltd.
with the permission of S2 Golf Inc."
2.3 COVENANTS OF THE LICENSEE.
2.3.1 Licensee agrees to use the Trademarks only in a
manner approved by Licensor and Licensor shall
provide guidelines on their use, including their
presentation, size and style, in another document.
Unless Licensor otherwise agrees in writing, each use
of either of the Trademarks shall be immediately
followed by (i) the symbol "(TM)" or, (ii) if the
Trademark is registered in the country in which the
Articles are to be sold, the symbol (R) or
equivalent.
2
3
2.3.2 Licensee agrees that it will use the Trademarks only
in connection with the Articles and will not use the
Trademarks, including use in countries outside of the
United States and Canada, in any manner except as
permitted by this Agreement. Licensee expressly
recognizes that the use of the Trademarks confers no
rights to the Trademarks to Licensee and that all use
by Licensee shall inure to the benefit of Licensor.
Licensee shall not take any action that would be
inconsistent with, or tend to impair, Licensor's
rights in the Trademarks.
2.3.3 Licensee agrees not to contest, question or challenge
the ownership of the Trademarks by Licensor anywhere
in the world, except the right to use same pursuant
to the terms of this Agreement.
3. DURATION.
The present Agreement will remain in full force during the Principal
Term and the Renewal Terms, as defined herein, unless earlier
terminated for any reason provided in this Agreement. At the end of the
Principal Term, this Agreement shall be renewed for an additional three
(3) year term (the "First Renewal Term") (i) automatically if wholesale
sales of the Articles by the Licensee in the period beginning on July
1, 2001 and ending on June 30, 2002 are at least Five Hundred Thousand
United States Dollars ($500,000), or (ii) at the sole discretion of the
Licensor if wholesale sales of the Articles by the Licensee in the
period beginning on July 1, 2001 and ending on June 30, 2002 are less
than Five Hundred Thousand United States Dollars ($500,000). At the end
of the First Renewal Term, if any, this Agreement shall be renewed for
an additional three (3) year term (the "Second Renewal Term") (i)
automatically if wholesale sales of the Articles by the Licensee in the
period beginning on July 1, 2004 and ending on June 30, 2005 are at
least One Million United States Dollars ($1,000,000), or (ii) at the
sole discretion of the Licensor if wholesale sales of the Articles by
the Licensee in the period beginning on July 1, 2004 and ending on June
30, 2005 are less than One Million United States Dollars ($1,000,000).
(The First Renewal Term and the Second Renewal Term, together, the
"Renewal Terms," and either, alone, a "Renewal Term.")
4. ROYALTIES.
4.1 ROYALTY RATE.
During the Principal Term and the Renewal Terms, if any, the
Licensee shall pay to the Licensor a royalty of nine percent
(9%) of the Licensee's FOB shipping point cost, as defined
herein, of each Article manufactured by or for the Licensee
pursuant to this Agreement. The Licensee's FOB shipping point
cost shall mean the per-Article cost to the Licensee to
manufacture the Articles and to take delivery of them at the
shipping point. The parties agree that Licensee shall not pay
such royalty to Licensor on Articles (i) supplied free of
charge by Licensee or Licensor to Ladies Professional Golf
Association golfers for promotional purposes or (ii)
manufactured as sample pieces.
3
4
4.2 PAYMENTS OF ROYALTIES; STATEMENTS.
Royalties will be payable in United States currency, within
thirty (30) days of the arrival of the Articles at their first
port of entry into the United States and Canada. The Licensee
agrees to provide to the Licensor, with the said payments, a
statement showing the quantities of Articles manufactured, the
manufacturing, shipping and handling costs, and the royalties
applicable thereto. The Licensee also agrees to give the
Licensor such reasonable access to the Licensee's financial
books and records related to the Articles, for the purpose of
conducting an audit thereof, as the Licensor shall request
from time to time.
5. FIRST REFUSALS.
5.1 DURING THE TERM OF THE AGREEMENT.
The Licensor hereby grants to the Licensee a right of first
refusal with respect to use of the Trademarks during the
Principal Term and any Renewal Term (i) on Articles to be
distributed or sold in Europe, and (ii) on any categories of
clothing not already included in the Articles, except for
headwear, belts and shoes. The Licensor agrees to notify the
Licensee promptly of any decision (i) to market in Europe
Articles bearing the Trademarks or (ii) to expand the list of
products that may be associated with the Trademarks. The
Licensee may then exercise its right of first refusal by
providing to the Licensor, within thirty (30) days, a written
notice of its intent to exercise. Any license with respect to
such expanded geographic region or new products will be the
subject matter of a separate agreement between the parties.
The parties agree to use reasonable efforts to agree upon the
royalty, payment, Trademark usage and other terms of such
separate agreement. If the parties fail to agree upon the
terms of such separate agreement within sixty (60) days after
the notification by the Licensor of its decision to market in
Europe or to expand the list of Products that may be
associated with the Trademarks, as explained above, neither
party shall be obligated to enter into said separate agreement
and the Licensor shall be free to enter into an agreement with
a third party.
5.2 AFTER THE TERM OF THE AGREEMENT.
If at any time within the first six (6) months after the end
of the Second Renewal Term, if there is any such Second
Renewal Term, any third party offers to enter into a licensing
agreement with the Licensor for the use of the Trademarks on
sports clothes for men, women or children, including golf and
ski clothes but excluding headwear, belts and shoes, on terms
that are more favorable to the Licensor than the terms of the
present Agreement (a "Third Party Offer"), the Licensor agrees
(i) to notify the Licensee of such offer, and (ii) to enter
into a subsequent licensing agreement with the Licensee on the
same terms as those of the Third Party Offer if (a) within
thirty (30) days the Licensee provides to the
4
5
Licensor a written notice of the Licensee's intent to enter
into such subsequent licensing agreement and (b) the terms of
such subsequent licensing agreement are acceptable to both
parties.
6. QUALITY OF ARTICLES.
6.1 QUALITY STANDARDS.
The Licensee agrees that Articles bearing the Trademarks will
be manufactured in accordance with high standards of quality,
style, appearance and durability, and in no event less than
(i) the quality standards of similarly priced clothing
articles produced by others, and (ii) the quality standards of
the clothing articles manufactured and sold by the Licensor
itself that do not include the Trademarks. Licensee further
agrees that all Articles bearing the Trademarks will be
manufactured, sold, distributed and exported in accordance
with all applicable laws and regulations.
6.2 DESIGN APPROVAL.
The Licensee agrees to submit the design for each Article to
bear the Trademarks, in artist's rendering or in written form
as appropriate, plus any information relevant to the quality
of the finished Article, such as fabric type and weight, to
the Licensor for approval, and agrees further that it will not
commence the manufacture of any Article bearing the Trademarks
prior to the Licensor's approval of the design therefor. The
Licensor agrees that it will timely provide such approvals,
and that it will not withhold unreasonably its approval of any
design.
6.3 QUALITY INSPECTION.
The Licensee agrees that prior to any sale or other
distribution of any Article bearing the Trademarks it will
provide the Licensor with one piece from each manufacturing
lot of each Article for the purpose of the Licensor's quality
inspection. Licensor shall also have the right to inspect,
from time to time, and at least once annually, Licensee's
manufacturing facilities to determine the quality of Articles
bearing the Trademarks. Licensee shall permit such inspection.
Licensee shall recall (if substandard quality articles have
been shipped) and destroy any and all Articles bearing the
Trademarks that the Licensor reasonably finds to be of
substandard quality.
6.4 TIME TO REMEDY.
If Licensor determines that Licensee has failed to maintain
the quality of Articles as defined herein, it shall notify
Licensee in writing. Licensee shall have sixty (60) days from
the date of such notice in which to remedy the failure to
Licensor's satisfaction.
5
6
7. TERMINATION.
7.1. FAILURE TO CONFORM.
Should a party to the present Agreement fail to respect any of
the terms of the present Agreement, the other party shall
provide to the defaulting party a written notice (the
"Notice") informing it of said failure. Should the defaulting
party fail to correct the said failure within ten (10) days of
having received the Notice (or, in the case of a notice
pursuant to Section 6.4, sixty (60) days), the other party,
without prejudice to any other right or remedy available to
it, shall have the right at any time thereafter to terminate
this Agreement by providing a thirty (30) day prior written
notice to that effect.
7.2 INSOLVENCY.
The parties, without prejudice to any other right or remedy
available to them, shall also have the right at any time to
terminate this Agreement by giving to the other party a
written notice thereof, if the latter makes any assignment for
the benefit of creditors, files a petition in bankruptcy, is
adjudged bankrupt, becomes insolvent, is placed in
receivership, or if the equivalent of any such proceedings or
acts occurs.
7.3 CHANGE OF CONTROL.
Unless the parties agree otherwise in writing, this Agreement
shall terminate immediately (i) upon the transfer of the
beneficial ownership of more than sixty five percent (65%) of
the issued and outstanding shares in the capital of Licensor
or Licensee; (ii) upon the dissolution or winding up of
Licensor or Licensee; (iii) upon the transfer of the assets of
Licensor or Licensee other than in the ordinary course of
business; or (iv) upon the merger of Licensor or Licensee with
any other person or entity.
8. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION.
8.1 UNSOLD INVENTORY.
If the Licensee has any manufactured but unsold Articles
bearing the Trademarks in inventory on the date of
termination, it shall provide a statement in writing of the
kinds and quantities of such unsold Articles to the Licensor
within five (5) days from the date of termination. Within
fifteen (15) days from the date of receipt of the said
statement, the Licensor shall have the exclusive option to
acquire from the Licensee the inventory of said unsold
Articles, in part or in whole, at the Licensee's manufacturing
cost. If the Licensor chooses not to exercise this option, the
Licensee shall have the right to sell and deliver such
Articles.
6
7
8.2 CEASE USE OF TRADEMARKS.
Upon the expiration or termination of this Agreement for any
reason, Licensee shall immediately cease all use of the
Trademarks and shall not use the Trademarks thereafter,
provided that Licensee shall have the right to complete any
work-in-process inventory in accordance with the provisions of
this Agreement.
8.3 SURVIVAL OF COVENANTS.
Sections 2.3.2 and 2.3.3 shall survive the termination or
expiration of this Agreement for any reason whatsoever.
9. WAREHOUSE AND SHIPPING SERVICES.
The Licensor agrees to provide warehouse and shipping services to the
Licensee on the terms provided in this paragraph. The Licensor agrees
to provide to the Licensee the use of not less than One Thousand Five
Hundred (1,500) square feet of warehouse space in the Licensor's
existing buildings at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx, X.X.X.,
for the purposes of the storage and distribution of the Articles,
provided that if the Licensee uses such warehouse space, the Licensor
also shall provide to the Licensee Handling Services, as defined
herein, for the Articles at the rate of Seventy Five U.S. Cents ($0.75)
per Article (the "Handling Fee"). As used herein, "Handling Services"
means sorting the Articles, packing them in boxes or other appropriate
containers, addressing such containers for shipment, and arranging for
their shipment to destinations in the United States and Canada. The
Handling Fee does not include the cost of packaging materials or
freight.
10. TRADEMARK INFRINGEMENT.
If a charge or notice of infringement of a trademark or other
proprietary right of a third party is directed to Licensee, or if a
suit for infringement of a trademark or other proprietary right of a
third party is instituted against Licensee which charge, notice or suit
is based upon Licensee's use of the Trademarks, Licensee agrees to
notify Licensor in writing ("Notice by Licensee") within five (5) days
from Licensee's receipt of the first notice of such charge, notice or
suit. Licensor may, at its option, within thirty (30) days of receiving
Notice by Licensee, initiate action to dispose of the charge, notice or
suit. To dispose of any such charge, notice or suit, Licensor shall
have the option to require that Licensee immediately discontinue its
use of the Trademarks, in which case (i) Licensor and Licensee can
agree to use other Trademarks and continue under the terms of this
Agreement, or (ii) terminate this Agreement. Licensee shall notify
Licensor promptly upon obtaining knowledge of any unauthorized use of
the Trademarks.
11. INDEMNIFICATION.
7
8
The Licensee shall indemnify the Licensor and hold it harmless from and
against any and all claims, expenses, losses or damages arising out of
or in connection with the Licensee's use of the Trademarks and
manufacture and sale of the Articles pursuant hereto, including any
charge or notice of trademark infringement.
12. MISCELLANEOUS.
12.1 WAIVERS.
A waiver by either of the parties at any time of a breach of
any provision of this Agreement shall not apply to any breach
of any other provision of this Agreement or imply that a
breach of the same provision at any other time has been or
will be waived.
12.2 RELATIONSHIP.
This Agreement shall not be construed to create a partnership,
joint venture, employment or agency relationship between the
parties hereto. Neither party hereto shall be liable for any
of the debts or obligations of the other party hereto, and
neither party shall have the right to bind, make any
representations or warranties, accept service of process or
perform any act for or on behalf of the other party hereto,
except as otherwise expressly provided herein. Each party
hereto acknowledges that it is an independent entity and not
subject to the control of the other party except as otherwise
expressly provided herein.
12.3 MODIFICATION OR EXTENSIONS OF THIS AGREEMENT.
Except as otherwise provided herein, this Agreement can only
be extended or modified by a written document to that effect
executed by both parties.
12.4. APPLICABLE LAW AND JURISDICTION.
This Agreement shall be construed and interpreted according to
the laws of the State of New Jersey, in the United States of
America. The parties hereby irrevocably submit to the personal
jurisdiction of the United States District Court for the
District of New Jersey, Northern Division or the Courts of the
State of New Jersey, County of Essex in any action or
proceeding arising out of or relating to this Agreement, and
the parties irrevocably agree that all claims in respect of
any such action or proceeding may be heard and determined in
either such court.
12.5 NOTICES.
Any communication (including any notice, consent, approval or
instructions) provided for under this Agreement may be given
to the person to whom it is addressed by delivering the same
to or for such person at the address or facsimile number of
such person as set out hereinafter or at such other address or
number as
8
9
such person shall have notified to the other party hereto,
provided that a copy of any communication sent by fax shall be
immediately deposited in the mail. Any communication so
addressed and delivered as aforesaid shall be deemed to have
been sufficiently given or made on the date on which it was
delivered.
If to Licensor: S2 GOLF INC.
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
X.X.X.
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
Facsimile number: (000) 000-0000
With a copy to: Xxxx Xxx Xxxxxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
U.S.A.
Facsimile number: (000) 000-0000
If to Licensee: Xxxxxxx Xxxxxxx Ltee/Ltd.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx, X0X 0X0
Attention of: Xxx. Xxxxx Xxxxxxx
Facsimile number: (000) 000-0000
With a copy to: Xx. Xxxxxxx X. Xxxxx
Leger Xxxxx Xxxxxxx
00 Xx. Xxxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx, X0X 0X0
Facsimile number: (000) 000-0000
12.6 ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the
parties and fully supersedes any and all prior agreements or
understandings between the parties pertaining to the subject
matter hereof.
12.7 NO ASSIGNMENT; BINDING ON SUCCESSORS.
No party shall assign this Agreement or any right accruing to
it hereunder without the prior written consent of the other
party, which shall not be withheld unreasonably. This
Agreement shall inure to the benefit of and be binding upon
9
10
the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
12.8 LANGUAGE.
The present Agreement has been drafted in the English language
at the request of the parties. Le present contrat a ete regide
en langue anglaise a la demande des parties. All contracts,
correspondence and information relating to or required by this
Agreement shall be in the English language.
12.9 COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date and year
first above written.
LICENSOR:
S2 GOLF INC.
Per:
/s/ XXXXXXX X. XXXXXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
XXXXXXX XXXXXXX LTEE/LTD.
Per:
/s/ XXXXX XXXXXXX
----------------------------------
Name: Xxxxx Xxxxxxx
Title: President
10