REFERENCE 10.4
GOLD'S GYM INTERNATIONAL, INC. MERCHANDISE LICENSE AGREEMENT
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GOLD'S GYM INTERNATIONAL, INC.
000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, 00000
Telephone (000) 000-0000 Facsimile (000) 000-0000
MERCHADISE LICENSE AGREEMENT
Licensee: Nova Pharmaceutical Inc. a California Corporation
Date: , 1999
Address: 00000 Xxxxxx Xxxxx, Xxxxx 0X
Telephone (000) 000-0000
Xxxx Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
DEFINITIONS
For the purpose of the Agreement, the following definitions shall apply:
1. Advertising Material: All catalogs, advertisements, and promotional
materials displaying or pertaining to the Products.
2. Ancillary Rights: All packaging, labels, logos, art work, designs,
trademarks, copyrights, or patents resulting from the Products.
3. Authorized Distributors: Distributors licensed by Gold for redistribution of
the Products.
4. Effective Date: March 1, 1999.
5. Extended Term: The three- (3) year period commencing upon the expiration of
the Initial Term.
6. GGE: Gold's Gym Enterprises, Inc., a California corporation.
7. Gold: Gold's Gym International, Inc., a California corporation.
8. Gyms: Gold's Gym gym licensees and franchises.
9. Information: Confidential or proprietary information or property
disclosed or furnished to Licensee consisting of, without limitations,
concepts, formulas, designs, styles, patterns, colors, marketing decisions
and directions, trade secrets, and proposed trademarks.
10. Initial Term: The period commencing on the Effective Date and
continuing until June 1, 2002.
11.License Period: Unless specified otherwise, a twelve- (12) month period
commencing on the effective Date or the anniversary thereof.
12.Manufacturer's Cost: Fifty percent (50%) of Licensee's then listed wholesale
prices.
13. Minimum Sales: The amount set forth in paragraph 7 hereof.
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14. Net Sales: The extended invoice sales price for the Products
(including, without limitation, any irregulars, seconds, etc) less reasonable
and customary quantity discounts, as actually calculated on the invoice, and
returns actually made or allowed. No deductions shall be made for cost
incurred in manufacturing, selling, distributing, or advertising the Products
(including cooperative and promotional allowances) or for uncollectible
accounts, taxes, cash discounts, commissions, or similar allowances. In the
case of sales to or use of the Products by a Related Party of License, the
invoice sales price regularly charged to the Licensee's independent bona fide
customers.
15.Ownership Interest: Shares of stock in the event that the Licensee is a
corporation, interest in partnership capital or profits in the events that
Licensee is a partnership.
16. Products: Nutritional Supplements bearing the Trademark.
17. Related Party: Any (a) director, officer, employee, shareholder,
partner, or owner of the subject party or (b) a corporation, partnership,
trust, or any other entity in which the subject party or any director,
officer, employee, shareholder, partner, or owner of the subject party owns,
directly or indirectly, any interest.
18. Retail: Sales of the Products directly to the ultimate consumer
including sales by audio, video, print, or other media.
19. Sales Royalty: Seven percent (7%) of the Net Sales of Products. 20. Sell
Through Period: The ninety- (90) day period immediately following
the expiration or termination of this Agreement.
21.Term: The Initial Term and also the Extended Term, provided that the Initial
Term is extended as provided in Paragraph 28 hereof.
22. Territory: United States.
23. Trademarks: The trademarks set forth in Exhibit "A" attached hereto. 24.
Trade Show Fee: The amount determined by Gold based upon the costs
incurred and amount of space utilized by Licensee at trade shows.
25. Wholesale: Sales of the Products other than the ultimate consumer.
RECITALS
A. GGE is the owner of the Trademarks. Under the terms and conditions of a
license agreement by and between GGE and Gold, Gold has been granted the
exclusive authority to grant licenses for the use of the Trademarks as
contemplated by this Agreement.
B. GGE and Gold have expended large sums of money as well as substantial
effort over a period of many years developing and establishing public
recognition and identification of the Trademarks and the goodwill associated
therewith.
C. Gold desires to grant and Licensee desires to acquire a license to
manufacture and distribute various goods specified below using the Trademarks
under the terms and conditions provided herein.
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NOW, THEREFORE, in consideration of the foregoing the mutual covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereby agree as follows:
1. Grant of License
1.1 Gold hereby grants to Licensee, during the Term, the nonexclusive right to
use the Trademarks in connection with the design, manufacture, marketing, sale
at wholesale, and distribution of the Products only within the territory and
subject to the terms and conditions set forth in this Agreement. Licensee shall
have no right to sell the Products at retail.
1.2. Licensee shall immediately cease the manufacture of any Products which
Licensee has not commenced distribution of prior to the end of the first License
Period ("Terminated Products"). The Terminated Products shall thereafter be
excluded from the definition of the "Product" for purposes of this Agreement,
provided however, that Licensee may continue to distribute its current inventory
of the Terminated Products subject to the provisions of Paragraph 10.3 (a)
hereof. A Terminated Product shall not cause any adjustment to the Minimum
Royalty of Minimum Sales.
Neither Licensee nor any Related party of Licensee shall manufacture,
distribute, or sell any merchandise (a) of any other health club, fitness
center, or gym (e.g. Bally's, World's Gym, Crunch Gym, 24 Hour Fitness, etc.);
(b) of any health or fitness brand (e.g., Speedo or Everlast); or (c) which
incorporates, in whole or in part, any Information of the Trademarks or any
derivation thereof. The preceding sentence shall not apply to the manufacture
only of non-Related Third Party as a private label manufacturer, provided that
Licensee or Related Party of Licensee does not sell, market, or distribute
private label items.
Gold reserves all rights to exploit the Trademarks throughout the world
except the expressly granted herein to Licensee.
Trademark Rights and Usage
2.1 Gold reserves all rights in the Trademarks, and any use of Trademarks
by Licensee shall be subject at all times to the terms and conditions of this
Agreement and shall inure to the benefit of Gold. The Ancillary Rights shall be
included in the definition of the "Trademarks." Licensee hereby assigns to Gold
any Ancillary Rights and shall execute such documents as requested by Gold in
order that Gold shall be sole owner of all Ancillary Rights. Licensee represents
and warrants to Gold that the Ancillary Rights do not and shall not infringe on
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the rights of any third party and that no third party has or shall have interest
therein. No provision herein shall restrict Gold's use of Ancillary Rights
whether during or after the Term.
1.2 Each and every use of the Trademarks by Licensee shall clearly (a) indicate
the registration or ownership of the Trademarks by the appropriate registration
identification symbol of an "R" within a circle or a "TM," as the case may be;
and (b) display the statement "Manufactured and distributed under license from
Gold's Gym International, Inc."
The license granted herein pertains only to the Trademarks as set out in
Exhibit "A" and does not include any other trademarks in which GGE or Gold has
interest.
Licensee recognizes and agrees the Trademarks are valid and that GGE is
the sole and rightful owner thereof. Licensee shall neither represent nor claim
any title in the Trademarks or right to use the Trademarks except pursuant to
this Agreement. Any use of the Trademarks by Licensee shall not vest in Licensee
any interest or title in any of the Trademarks or right or presumptive right to
continue such use other than as expressly provided in this Agreement. Licensee
shall, at Gold's request, execute such documents, which Gold deems necessary to
protect and preserve GGE's and Gold's rights in the Products Trademarks.
Licensee shall promptly notify Gold, in writing, of any conflicting or
infringing use of the Trademarks, or any similar xxxx or symbol by any third
party in the Territory, or of any claim by any third party that Licensee' use of
the Trademarks as provided herein infringes any rights of such third party. Upon
receipt of such notice, Gold shall take action, as Gold shall determine,
including institution of legal proceedings, pertaining to such infringing use or
such claim of infringement, as the case may be, all at Gold's expense, and
Licensee shall cooperate fully in such action. The commencement, conduct,
resolution, or settlement of such action shall be in the sole discretion of
Gold, and any recovery therefrom shall be the sole property of Gold. Gold hereby
agrees to indemnify, defend (with counsel of Gold's choice), and hold Licensee
harmless from and against any monetary judgement rendered in such action which
may be brought against Licensee by a third party claiming an interest in the
Trademarks, providing however, that notwithstanding any other provisions
contained in this Agreement, in no event shall GGE or Gold be liable to Licensee
for any lost profits, start up or other costs and expenses, or consequential
damages resulting from any limitation or diminishment in the rights granted to
licensee hereunder. If as the result on any action referred to in this paragraph
Licensee's rights to use the Trademarks have been materially limited or
diminished, then Licensee may terminate the Agreement upon ninety- (90) day's
prior written notice to Gold. Only for purpose of this paragraph, the term
"Trademark" shall not include the Ancillary rights.
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Licensee shall not, directly or indirectly, do anything which may have an
adverse effect on Gold's rights in the Trademarks, or any rights appurtenant
thereto, or which may diminish or dilute the value, reputation, or goodwill
associated therewith. Licensee (a) shall use the Trademarks only in their
stylized form as displayed in exhibit "A" attached hereto; (b) shall not use any
abbreviated or varied from of the Trademarks; (c) shall not use other name,
word, letter, number, xxxx, inscription, or designed whatsoever with the
Trademarks; (d) shall not use any of the Trademarks in connection with any other
merchandise other than the products; (e) shall not use the Trademarks in any
manner that, in gold's opinion, may infringe upon any enforceable rights of any
third party or weaken or impair Gold's or GGE's rights in the trademarks of the
Products; and (f) shall not include any of the Trademarks, or any derivation
;thereof, in any trade name, business name, or fictitious business name.
If Gold determines, in gold's sole discretion, that Licensee's use of the
Trademarks or the Products violates the provisions of this paragraph, Licensee
shall, upon notice from Gold, immediately terminate or modify such use in
accordance with Gold's instructions without any damage or offset in connection
with this Agreement.
Advertising Materials and Trade Show Fees
3.1 Advertising Materials - Licensee may print and distribute Advertising
Materials, provided however, that any Advertising Materials shall be submitted
to Gold for its prior written approval at least fourteen (14) days in advance of
its intended productions. Such approval shall be in the sole judgment of Gold,
and any revisions modifications requested by Gold shall be made by Licensee
before such use. In the event Licensee does not receive from Gold a written
approval of an Advertising Material within such fourteen- (14) days period, such
Advertising Material shall be deemed disapproved.
1.2 Trade Show Feeds - Throughout the Term, Licensee shall participate in the
Gold's Gym annual convention by providing staff, product, and other support
reasonably requested by Gold. The Trade Show Fee shall be due and payable within
thirty- (30) days following Licensee's receipt of an invoice from Gold.
Manufacturing Restrictions
1.1 Any Products manufactured by Licensee under the term of this Agreement shall
be subject to Gold's prior written approval as to quality, style, color,
materials, placement of the Trademarks, method and quality of imprinting the
Trademarks, labels, packaging, containers, etc. Licensee acknowledges and agrees
that the quality standards which Gold's will use to evaluate the Product samples
shall be comparable to those followed by major retail department stores in the
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Territory. Gold shall provide Licensee with standard approval forms which shall
be used by the parties for Gold's approval of the Products as provided herein.
The procedures and timing of approvals for Advertising Materials set forth in
Paragraph 3.1 hereof also shall apply to all approvals under Paragraph 4 hereof.
Licensee shall provide to Gold, at Licensee's sole cost, an approved
sample of each approved design for Gold's historical sample line, and such
approved samples shall be standard by which future production quality shall be
judged. Only an approved sample shall constitute a Product for purpose of this
Agreement. Except for insignificant manufacturing variance, Licensee shall not
depart from approved sample in any respect without Gold's prior written consent.
If Gold reasonably determines that any Products fail to conform to the
quality and design standards of the approved samples, upon written notice from
Gold, Licensee shall immediately cease any and all manufacturing, advertisement,
promotion, offerings for sale, sales, shipment, and distribution of such
nonconforming Products. If any nonconforming Products are in the offerings for
sale, sales, shipment, and distribution of such nonconforming Products. If any
nonconforming Products are in the marketplace, Gold may either (a) require
Licensee to recall such products at Licensee's sole expense; or (b) purchase
such Products and Licensee shall pay to Gold, within ten (10) days following
Gold's written demand, the purchase price and all other costs incurred by Gold
in connection with such purchase. Neither of the foregoing shall result in an
adjustment to the minimum Royalty.
Upon Gold's written request from time to time, but no more than once
during any calendar quarter, Licensee shall deliver to Gold up to four (4)
complete sample sets of the Products, together with any labels, cartons,
containers, advertisements and display materials used in connection therewith.
As to any calendar quarter, the first two (2) sample sets shall be at no cost to
Gold, and the second two (2) sample sets shall be at the Manufacturer's Cost.
Licensee shall not contract or subcontract the performance of any of its
obligations under this Agreement, except that Licensee may contract for the
manufacture of the Products, provided that (a) the acts and omissions of such
third party manufacturer shall be deemed to be those of Licensee for purposes of
this Agreement; and (b) any agreements between Licensee and a third party
manufacturer shall in all events be subject to the terms and conditions of this
Agreement and shall contain provisions which adequately protect GGE's and Gold's
interest in and to the Products and Trademarks.
Licensee shall permit, upon at least forty-eight (48) hour notice, duly
authorized representatives of Gold to inspect the premise of Licensee or any
place where Products are manufactured or held on behalf of Licensee. The costs
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to Gold of such inspection (e.g., airfare, meals, lodging, etc.) are the
responsibility of and shall be paid entirely by Licensee. Any agreement between
Licensee and a third party manufacturer shall include a provision incorporating
Gold's right of inspection hereunder. Gold's right of inspection hereunder. Gold
and Licensee agree that any costs incurred hereunder. Gold and Licensee agree
that any costs incurred hereunder ant the frequency of the inspections conducted
hereunder shall be reasonable.
Distribution Restrictions
1.1 Licensee's right to distribute the Products under the terms of this
Agreement shall be limited only to the Authorized Distributors, retailers, and
Gyms located within the Territory. Gold specifically reserves the right to
disapprove the distribution of the Products to any Authorized distributor,
retailer, or Gym, and upon receipt of such written disapproval from Gold,
Licensee shall immediately cease and desist from distributing any of the
Products to such disapproval Authorized Distributor, retailer, or Gym.
All sales of the Products to the Authorized Distributors shall be at
Licensee's then distributor price and shall not be subject to a royalty.
Licensee agrees that in order to protect the Trademarks and enhance the
reputation of Gold, Licensee shall distribute the Products only through channels
of trade directed to retailers of high repute and those who follow high
standards of merchandising in the sale of goods to the public. Licensee shall
not distribute or sell the Products to any factory outlet stores or for sale at
any warehouse sales, parking lot sales, swap meets, flea markets, or similar
sale or disposal venues.
Licensee shall ship all orders for the Products on a timely basis. As to
all orders received by Licensee during any License Period, Licensee shall ship
at least eighty-five (85%) of such orders within the terms state on a credit
approved and accepted purchase order, and if none, the within thirty (30) days
of their respective order dates. The Net Sales as well as the number of units
shall both be used as separate tests to determine the percentage of the Products
shipped, and both tests must be satisfied in order to comply with the terms of
this paragraph. If during any License Period, Licensee fails to comply with the
terms of this paragraph, than this Agreement shall terminate upon written notice
by Gold.
Licensee shall not market, sell, or distribute the Products outside the
Territory or within the Territory for resale or redistribution outside the
Territory. Licensee shall not maintain branch offices or distribution facilities
for the products outside the Territory.
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Licensee shall not use the Trademarks or any of the Products in any way to
promote enhance the distribution or sale of any other merchandise sold by
Licensee including the use of the Trademarks or products as a loss leader or
promotional attraction to Licensee's other merchandise.
General Obligations of Licensee
(a) Use its best effort to promote the sale, distribution, and use of the
Products in the Territory;
(b) Licensee shall manufacture and distribute the Products in such quantities
as may be required to satisfy the demands of its distributees, including
Gold and the Authorized Distributor;
(c) Licensee shall not engage, participate, or otherwise become involved in
any activity or course of action which, in Gold's sole opinion, diminishes
or tarnishes the goodwill, image, or reputation of the Products or
Trademark; and
(d) Licensee shall comply with all federal, state, and local laws, rules,
regulations, and orders applicable to the products, Licensee's use of the
Trademarks, or Licensee's business as it pertains to the manufacture or
distribution of the Products.
Minimum Sales, Minimum Royalty, and Marketing Commitment-Not withstanding
any other provision in this Agreement, the aggregate of the net sales
of the of the Products distributed by Licensee during any License
Period shall not be less than the applicable Minimum Sales. Licensee's
failure to satisfy the Minimum Sales of any License Period shall
constitute a material breach of this Agreement, and Gold shall have the
right, notwithstanding Licensee's payment of the royalty, to terminate
this Agreement upon written notice to Licensee. In such event the
aggregate of the Net Sales during any License Period exceeds the
applicable Minimum Sales for such License Period, such excess shall not
reduce or be applied to the Minimum sales for any preceding or
succeeding License Period.
For purposes of the Agreement, the following terms shall be the indicated
amounts for the applicable License Period:
License Period Minimum Sales Minimum Royalty Marketing
Commitment
Effective $2,000,000.00 $140,000.00 As per paragraph
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Date through points 1 through
June 1, 2000 9 of Exhibit "C"
June 2, 2000 $4,000,000.00 $280,000.00 30% of Gross
through Sales, as per
June 1, 2001 paragraph point
10 of Exhibit "C"
attached hereto
June 2, $6,000,000.00 $420,000.00 30% of Gross
2001 Sales, as per
through paragraph point
June 1, 2002 10 of Exhibit "C"
attached hereto
The minimum Sales for each License Period during the Extended Term shall
be one hundred ten percent (110%) off the greater of (a) the aggregate of the
Net Sales of the Products distributed or sold by Licensee during the immediately
preceding License Period, or (b) the Minimum Sales for the immediately preceding
License Period. The Minimum royalty for each License Period during the Extended
Term shall be seven percent (7%) of the Minimum sales for the applicable License
Period. Concerning Licensee's Marketing commitment, a written Marketing Report
executed by a duly authorized officer of Licensee shall be provided to Gold by
Licensee on or before the twenty fifth (25th) day of the calendar month
immediately following the preceding calendar quarter and shall indicate how the
corresponding Marketing Commitment was computed and expended for the applicable
quarter, as well as year-to-date for the current License Period.
8.Royalty
8.1 Throughout the Term, as well as the Sell Through Period if applicable,
Licensee shall pay gold, at its address for notice purposes, a royalty equal to
the greater of (a) the Sales Royalty for Products distributed during a calendar
month; or (b) the Minimum Royalty for the applicable License Period regardless
of the Net Sales of the Products divided by the total number of calendar months
(including any partial calendar month) included in such License Period, provided
however, that during any License Period the aggregate of the royalties due and
paid exceeds the Minimum royalty during the sell through period, then the
Minimum Royalty for the remainder of that License Period shall be zero (0). The
Minimum royalty during the sell through period, then the Minimum Royalty for the
remainder of that License Period shall be zero (0). The royalty for the last
calendar month of each License Period shall be an amount equal to the excess, if
any, of the greater of (a) the aggregate of the Sales Royalties for such License
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Period; or (b) the Minimum Royalty for such License Period, less the royalties
already due and paid pertaining to such License Period.
8.2 The royalty shall be paid in United States funds and shall be due and
payable on the fifteenth (15th) day following the end of each calendar month.
Any royalty not paid by its due date shall bear interest at the rate of eighteen
percent (18%) per annum (but in no event greater than the maximum rate of
interest allowed by law) from such due date until receipt of the royalty in
full. Any payment shall be applied first to accrued interest and then to the
delinquent royalty. Notwithstanding the foregoing, the no royalty payment shall
be due hereunder until July 1, 1999.
8.3 In the event any royalty or other amount specified in the paragraph is not
paid to gold when due, the parties hereto agree that it would be impracticable
or extremely difficult to fix the actual damages caused Gold for such late
payment. Therefore, for each and every month Licensee fails to pay any royalty
or other amount due under this Paragraph 8, Licensee agrees to pay to Gold as a
late charge and as liquidated damages, and not as a penalty, the sum of two
hundred fifty dollars ($250), which represents a reasonable compensation for the
monthly loss incurred because of late payment. The late charge due hereunder
shall be paid on or before the tenth (10th) day of the month following the month
for which the late charge is assessed. The right to collect such a late charge
shall be in addition to any other rights or remedies available to Gold at law,
in equity, and under this Agreement.
8.4 A written report executed by a duly authorized officer of Licensee shall
accompany each royalty payment and shall include the following:
(a) A Royalty Report, in a standard form provided by Gold, indicating how the
royalty was computed for the current calendar month and year-to-date for the
current License Period.
(b) A Product Shipping Report which shall include the total units and total
dollar sales of each Product shipped to all customer.
(c) A Customer Shipping Report which shall include the name of each customer
shipped and total sales of the Product shipped to each customer.
(d) An Order Backlog Report, a standard form provided by Gold, indicating the
amount of Products on hand, the amount of orders received for the next six (6)
months, by month, and the total projected or expected orders for the next six
(6) months, by month.
(e) Such other reports and additional information, in a form as Gold may specify
in writing from time to time, to verify Licensee's compliance with the terms and
conditions of this agreement.
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8.5 Licensee shall keep proper books and records in accordance with Generally
Accepted Accounting Principles as promulgated by the American Institute of
Certified public Accountants. Licensee's records shall include sales and
inventories of the Products including, without limitations, a customer purchase
order register maintained on a daily basis. Within sixty (60) days following the
end of Licensee's fiscal year, Licensee shall, throughout the Term, provide to
Gold copies of Licensee's financial statements (including a balance sheet,
statement of income and expenses, changes in shareholder's equity, cash flow,
and the related thereto) for such fiscal year. The financial statements provided
by Licensee to Gold shall consist of a compilation, as that term is defined
under Generally Accepted Accounting Principles, with accompanying footnotes. The
compilation so prepared shall be attested to and reconciled to the corresponding
fiscal year's federal tax return by a certified public accountant. Gold shall
keep such financial statements confidential and shall only disclose them to
those individuals with a "need to know" such information. Throughout the Term
and for a period of three (3) years following the expiration or termination of
the Term, Gold, or a duly appointed agent or representative of Gold, shall have
access, during Licensee's normal business hours, to all books, records,
financial statements of Licensee including, without limitation, loan and
factoring agreements, to inspect, audit, copy, extract, and verify Licensee's
overall financial condition and compliance under this Agreement. As an
alternative, Gold may require Licensee to supply Gold with any of the above
information, and Licensee shall deliver the same to Gold within fourteen (14)
days of Gold's written request.
8.6 If as a result of an inspection or audit by Gold the royalty payments and
Trade Show Fees due under this Agreement exceed the amount actually paid to
Gold, Licensee shall within five (5) days of receipt of notice from Gold pay
such excess plus interest. In the event such excess exceeds the aggregate of the
royalty payment and Trade Show Fees due hereunder for the applicable License
Period (a) by five (5%) or more, Licensee shall pay for all costs and expenses
associated with such inspection or audit; and (b) by seven (7%) or more, Gold
shall have the right, notwithstanding Licensee's payment of such excess, to
terminate this Agreement upon written notice to Licensee.
9. Disclaimer: Product and Warranty Liability: Indemnification: And
Insurance
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9.1 Disclaimer. Neither Gold nor GGE, nor any Gold or GGE Related Party, shall
be liable to Licensee or to any other person with respect to the manufacture,
distribution, or sale of the products by licensee or its distributes, including,
without limitation, the performance, characteristics, fitness, or suitability of
any of them for any purpose. Gold and GGE expressly disclaim any liability for
incidental or consequential damages or losses of any sort arising from the
manufacture, distribution, sale or use of the Products whether or not arising
from defects, malfunctions, or failures to conform to specifications. 9.2
Product and Warranty Liability; Liability; Indemnification Licensee assumes all
product and warranty liability in connection with the Products whenever and
wherever incurred or asserted. Licensee hereby agrees to indemnify, defend, and
hold Gold, GGE, any Related Party of Gold or GGE harmless from and against any
and all causes of action, liabilities, losses, claims, costs, damages, or
expenses, including attorneys' fees, whatsoever which may be brought or made
against Gold, GGE or any Related party of Gold or GGE or which may be sustained,
paid, or incurred as a result of or in any way connected with Licensee's use of
the trademarks or the manufacture, distribution, sale or performance of
products. 9.3 Insurance Within ten (10) days after the date hereof, licensee
shall acquire and maintain in full force and effect, throughout the Term as well
as the sell Through Period if applicable, product liability insurance in the
minimum amount of One Million Dollars ($1,000,000.00) per each occurrence and
Two Million ($2,000,000.00) in the aggregate, in order to exceed Ten Thousand
Dollars ($10,000.00) per each occurrence and Twenty Thousand ($20,000.00) in the
aggregate with a deductible not to exceed Ten Thousand ($10,000.00) per each
occurrence and Twenty Thousand ($20,000.00) in aggregate, in order to protect
Licensee, Gold and GGE against any liability for damages or injuries suffered
which arise out of or involve the Products or Licensee's use of Trademarks. Such
coverage shall be on an "occurrence" basis and shall provide that it cannot be
canceled, terminated, reduced, or amended without the insurer giving Gold
thirty- (30) day's advance written notice thereof. Licensee shall cause Gold and
GGE to be named as additional insured on any such policy and shall deliver to
Gold a certificate evidencing Licensee's compliance with the terms of this
paragraph. Licensee shall immediately notify Gold in writing of any claims paid
or reservations made by the insurer under any policy required hereunder.
10. Termination
10.1 Licensee expressly acknowledges and agrees that the occurrence of any of
the following events, whether known or unknown to Gold, shall constitute a
material breach of this Agreement and shall cause this Agreement to immediately
cease and terminate without prior notice or action by Gold: (a) Licensee makes
any assignment for the benefit of creditors;
(b) The appointment of a trustee or receiver to administer or conduct Licensee's
business or affairs, Licensee voluntarily files any petition under any
bankruptcy act, or an involuntary petition in bankruptcy is filed against
Licensee and not stayed, withdrawn, or terminated within thirty (30) days,
except to the extent that the Bankruptcy code makes unenforceable any provision
terminating a license agreement upon the filing of a petition in bankruptcy
under federal law;
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(c) Licensee's current liabilities exceed its current assets as determined in
accordance with generally accepted accounting principles;
(d) Licensee's liabilities exceed its assets as determined in accordance with
generally accepted accounting principles; or
(e) A cumulative total of fifty percent (50%) or more of the Ownership Interest
in Licensee, as of the Effective Date, is issued, sold, exchanged, or otherwise
transferred, during the Term, by or to Licensee or any of its owners. Not
withstanding the foregoing, Licensee's shareholders may transfer any of their
Ownership Interest between and among existing shareholders, their family members
and/or trusts established for the benefit of said shareholders or their family
members provided, however, that such a transfer is not to or for the benefit of
any market competitor of Gold's or of any Gold's Related Party.
Licensee expressly acknowledges and agrees that the occurrence of any of the
following events shall constitute a material breach of this Agreement and Gold
may, at its option, terminate the Agreement upon written notice to Licensee:
(a) Licensee's failure to pay Promotional or Trade Show Fee, royalty, or
interest as provided herein, provided however, that if all past due amounts are
paid in full within five (5) days after such notice to Licensee, then such
notice shall be of no further force or effect;
(b) Licensee's failure to comply with any provisions of Paragraph 4.6, 5.4, 7,
8.6, 9.3, 17 hereof;
(c) Licensee's failure to comply with any other provision of this Agreement
applicable to Licensee, provided however, that if Licensee corrects such breach
to Gold's satisfaction within thirty (30) days after such notice to Licensee,
than such notice shall be of no further force or effect; or
(d) Licensee's failure to comply with any provisions of this Agreement,
including those subject to a cure period but for this clause, if Licensee has at
any time during the Term cured a breach hereunder as to the same provision.
Upon the termination, for whatever cause, or expiration of this Agreement:
(a) Licensee shall immediately cease the manufacture and distribution of the
Products, provided however, that upon the expiration of the Term or upon
termination of this Agreement other than by default of Licensee, Licensee may,
subject to the terms of this Agreement, complete any work in process bearing the
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Trademarks and continue to distribute and sell through the same approved
channels of distribution, on a nonexclusive basis, its inventory of the products
existing as of such expiration or termination, as the case may be, during the
Sell Through Period. At the expiration of Sell Through Period or upon
termination of this Agreement by default of Licensee, all or any portion of the
existing inventory of the Products and any work in process bearing the
Trademarks, shall be, at Golds' option, either (i)destroyed by Licensee at
Licensee's expense, or (ii) purchased by Gold or its designee at the
Manufacturer's Cost for finished goods and Licensee's raw material cost for work
in process, less any amounts owed by Licensee to gold. To the extent Licensee
destroys any Products as required under this Agreement, Licensee shall promptly
provide to Gold, in writing, certification, duly signed by Licensee's authorized
representative, under penalty or perjury, that such Product destruction has
taken place. Such certificate shall include a detailed description and quality
of each Product so destroyed and the method, location, and date of such
destruction.
(b) Within seven (7) days following such expiration or termination and the
expiration of the Sell Through Period if applicable, Licensee shall provide to
gold a written statement setting forth, as of the date of termination or
expiration (i) the inventories of work on process, finished goods, and garment
identification labels pertaining to the Products: (ii) open orders for the
Products (iii) all future production and distribution schedules; and (iv) all
future advertising and promotional schedules.
(c) Within seven (7) days following such termination or the expiration of the
Sell Through Period of applicable, Licensee shall deliver to Gold all packaging,
labels, tags, and other materials relating to the Products and Trademarks for
destruction or other disposition or use as Gold may elect in its sole
discretion.
(d) All trademark rights granted herein shall immediately revert to Gold, and
any and all rights of Licensee in any of the Trademarks shall be immediately
terminated. Licensee shall no longer use or have the right to use the
Trademarks, any variation or derivation or use as Gold may elect in its sole
discretion.
(e) Upon termination of this Agreement by default of Licensee including, without
limitation, Licensee's failure to satisfy the Minimum Sales, Licensee shall,
within thirty (30) days following such termination, pay Gold an amount equal to
the Minimum Royalty and Trade Show Fee due for the remainder of the then License
Period. The termination of this Agreement by Gold or such payment to gold shall
not prejudice Gold's right to pursue any and all remedies against Licensee
including, without limitation, the collection of all unpaid Minimum Royalties
and Trade Show Fees for the remainder of the Term.
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Representative and Warranties of Licensee Licensee hereby represents and
warrants to Gold that:
(a) It is currently engaged in the business of the production and
distribution of Nutritional Supplement;
(b) It understands the business risks, costs, and profit potential of such
business;
(c) It is entering into the Agreement in reliance upon its own investigation and
is not relying upon any projections or other information or statistics furnished
by Gold; and
(d) Exhibit "B" attached hereto is a complete and accurate list of all of the
shareholders, including shares owned, directors, and officers of Licensee as of
the Effective Date.
Relationship This Agreement creates a right to use the Trademarks by
Licensee, and the relationship between parties shall be solely that of
licensor and licensee. No joint venture, franchise, or other
relationship other than that of licensor and licensee is intended or
shall be created hereby. Licensee shall be entitled to describe itself
at Gold's "licensee" of the Products but shall not hold itself out as
Gold's agent or as being entitled to bind Gold in any way.
Entire Agreement This document constitutes the entire agreement between
the parties, all oral and written representations being merged herein,
and supersedes all prior oral and written representations.
Confidentiality The information is a valuable, special, and unique asset
of Gold and is either nonpublic, confidential, or proprietary in
nature. Licensee shall have no rights or claims in the Information and
shall at all times keep the information confidential. Licensee shall
not disclose, and shall have no rights or claims in the information and
shall at all times keep the Information confidential Licensee shall not
disclose, and shall not permit any of its officers, directors, agents,
employees, independent contractors, or associates to disclose, any of
the Information to any person, firm, or entity for any reason or
purpose. Licensee may only disclose the Information to those
individuals within its organization in with a "need to know", and
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Licensee shall advise any recipient of the disclosure restrictions set
forth in this paragraph. The provisions of this paragraph shall survive
the expiration or termination of this Agreement.
Amendment The provisions of this Agreement may be modified at any time but
only if in writing and signed by the party against whom enforcement of
the modification or discharge is sought.
Waiver Either party may waive the other party's failure to perform any
provisions or to satisfy and condition to this Agreement, provided
however, that any waiver shall not be effective unless in writing and
signed by the waiving party. A waiver shall not be considered to waive
any future performance, breach, or condition under this Agreement
including the one being waived. Failure of a party to complain, notify,
or declare that the other party is in breach of the terms hereof or
failure of a party to give or withhold its constant or approval.
Neither party will be liable to the other by reason of any failure in
performance of this Agreement if the failure arises out of acts of God,
acts of governmental authority, fires, strikes, delays in
transportation, riots, wars, or any cause beyond the reasonable control
of that party. If any such delays performance, the time allowed for
each performance shall be appropriately extended.
Nonassignability Licensee shall not sublicense, assign, or transfer any of
the right granted herein without Gold's prior written consent which may
be withheld for any reason. Licensee shall not pledge, hypothecate,
mortgage, grant any liens or security interest in, use as collateral,
or otherwise borrow upon any of Licensee's rights under the Agreement.
Succession Subject to provisions otherwise contained in the Agreement,
this Agreement shall inure to benefit of and be binding on successors
and permitted assigns of the respected parties hereto.
Notice Any and all notices, demands, or other communications by any party
shall be in writing and shall be validly given or made to another party
at the respective addresses or facsimile numbers of the parties as set
forth above. Such notice, demand, or other communication shall be
conclusively deemed given and received (a) at the time or personal
service or receipt of facsimile, followed by delivery by mail or
courier; (b) five business days after deposit thereof in the United
States mail (certifies or registered, return receipt requested); or (c)
two (2) business day after the deposit thereof with a reputable
overnight delivery service.
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Attorney's Fees If the service of an attorney are required (a) to secure
the performance hereof or otherwise upon the breach or default of any
party; (b) to prevent or stop Licensee's unauthorized use of the
trademarks, or any colorable imitation or derivation thereof, during or
subsequent to the Term; (c) if any judicial remedy or arbitration is
necessary, to enforce or interrupt the provisions of this agreement or
the rights or duties of any person in relationship thereto; or (d) to
enforce a judgment rendered in connection with the Agreement, the
prevailing party/judgement creditor shall be entitled to recover its
attorneys' fees, cost, and other expenses, in addition to any relief to
which such party may be entitled. Clause (d) above shall be separate
from all other provisions of this Agreement, shall survive any
judgement, and shall not be deemed merged into the judgment.
Severability If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement shall continue in full force and effect and shall in no
way be impaired or invalidated.
Incorporation All exhibits to which reference is made are deemed
incorporated in the Agreement whether or not actually attached.
Authorization In the event that Licensee is a corporation or partnership,
the undersigned warrants that the Board of Directors or requisite
number of partners, as the case may be, of Licensee have passed a
resolution or voted authorizing Licensee to enter into this Agreement
and the undersigned is authorized to sign on behalf of Licensee.
Governing Law; Form for Litigation
10.1 The rights and obligations of the parties and the interpretation and
performance of the Agreement shall be governed by the laws of the State of
California as applied to agreements among California residents which are
entered into and performed entirely within California.
The parties hereby consent, freely and voluntarily, to the
personal jurisdiction of any state or federal court within the counties
of Los Angeles or Sacramento, California and further agree that venue
for purposes of any legal action is proper in either of these two
Counties.
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Specific Performance Each party's obligations under this Agreement are
unique. Each party acknowledges that if any party should default in the
performance of the duties and obligations imposed by this Agreement,
monetary damages would be inadequate, and it would be extremely
difficult and impracticable to measure or ascertain the resulting
damages. Accordingly, the non defaulting party, in addition to any
other available rights or remedies, may xxx in equity for specific
performance of such duty and obligation, and the parties, in addition
to any other available rights or remedies, may xxx in equity for
specific performance of such duty and obligation, and the parties each
expressly waive the defense that a remedy in damages will be adequate.
In addition, Licensee expressly agrees that such default in performance
shall entitle either GGE or Gold, or both of them, to enjoin such
default in performance and further use of the Trademarks hereunder.
Counterparts This Agreement may be executed in any number of counterparts
with the same effect as if the parties had all signed the same
document. All counterparts shall be construed together and shall
constitute one agreement.
Time Time is of the essence of this Agreement and each and every
provision; hereof.
Option to Extend Provided that Licensee is in compliance with all the
terms and conditions of this Agreement including, but not limited to,
satisfaction of the requirements of paragraphs 7 and 8 hereof for each
year during the Initial Term, Licensee shall have an option ("Option"),
subject to the provisions of this paragraph 28, to extend the Term for
the Extended Term on the terms and conditions set forth this Agreement.
Licensee shall exercise the Option by providing written notice
("Notice") to Gold of such exercise no later than four (4) months and
no earlier than six (6) months prior to the expiration of the Initial
Term. Any rights of Licensee to extend the Term as set forth in this
paragraph shall be null and void, and the Term shall expire at the
expiration of the Initial Term, if Licensee is in breach or violation
of any of the terms or conditions of this Agreement at any time during
the period commencing with the giving of the Notice and ending on the
expiration of the Initial Term.
Executed this__22nd______day of _March____1999 Executed this_________day of
___________1999
At Venice California Licensee at Lake
Elsinore, CA.
Gold's Gym International, Inc.
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By: /s/ Xxxxxx Xxxxxx
By:_/s/ Xxxxx Mann______
Title: Director of Product Licensing_________ Title: President
By: __/s/ Xxxxx Grymkowski___________
Title: ___President__________________
Guaranty
FOR VALUE RECEIVED and in consideration of Gold entering into the preceding
Merchandise License Agreement, the undersigned guarantees the full and timely
observation and performance by Licensee of all the obligations on the part of
the Licensee under the Merchandise Licensee Agreement in accordance with the
terms thereof.
/s/ Xxxxx Xxxx
-----------------------------------
Xxxxx Xxxx
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EXHIBIT "A"
GOLD'S GYM LOGOS
EXHIBIT "B"
The following are all of the shareholders, and their respective number of
shares of stock issued and outstanding, of Licensee as of Effective Date:
Xxxxx Xxxx 5,600,000; Showtime Partners 4,150,000; and various
non-affiliated small shareholders.
Xxxxx Xxxx controls 88% of shares.
The following are all of the directors of Licensee as of the Effective
Date:
Xxxxx Xxxx, CEO & President; Xxxxx Xxxxx, Senior Vice President &
Corporate Secretary; Xxxxxx Xxxxxxxx, Controller; Xx. Xxxxxx Xxxxxxx, Outside
Board Member; Xxxxx Xxxxxxx, Outside Board Member.
The following are all of the officers of Licensee as of the Effective
Date:
Xxxxx Xxxx, CEO & President; Xxxxx Xxxxx, Senior Vice President &
Corporate Secretary; Xxxxxx Xxxxxxxx, Controller.
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