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EXHIBIT 10.31
LICENSE AGREEMENT
AGREEMENT ("Agreement") made and effective this 21st day of May, 1996 by
and between White Consolidated Industries, Inc., a Delaware corporation having
its principal office at 00000 Xxxxx Xxxx, Xxxxxxxxx, Xxxx 00000 ("Licensor"),
and Salton/Maxim Housewares, Inc., a Delaware corporation having its principal
office at 000 Xxxxxxxx Xxxxxx Xxxxx, Xx. Xxxxxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Licensee").
WHEREAS, Licensor is the owner of the trademark White-Westinghouse and
associated designs and trade dress (together, the "Trademark"), and is using
the Trademark throughout the World; and
WHEREAS, Licensor has the right to grant Licensee the license, right and
permission to use the Trademark; and
WHEREAS, Licensee is in the business of manufacturing, distributing and
selling articles described and specified on Exhibit A hereto (the "Products"),
and desires to secure the license, right and permission to use the Trademark
upon, and in connection with, the manufacturing, distributing and selling of
such Products; and
WHEREAS, the Products that are the subject of this Agreement have been
defined by the parties as listed on Exhibit A hereto (and any other articles
which the parties mutually agree to be subject to the provisions of this
Agreement which, in accordance with the terms of this Agreement, bear the
Trademark (collectively, the "Trademarked Product"); and
WHEREAS, Licensor desires to grant to Licensee, and Licensee desires to
accept from Licensor, a license to use the Trademark in the design,
manufacture, advertising, sale and promotion of the Products, subject to each
of the terms, provisions and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
provisions herein contained and wishing to be bound hereby, the parties hereto
do hereby agree as follows:
Article 1
GRANT OF LICENSE AND DESIGNATION OF TRADEMARK PRODUCTS
Effective upon the execution of this Agreement, Licensor hereby grants to
Licensee, for the period hereinafter specified and upon the terms, provisions
and conditions of this Agreement, the exclusive right and license to use the
Trademark within the geographic area described in Article 2 hereof, in the
design, manufacture, advertising, sale and promotion of the Trademarked
Product.
In the event of any good faith disputes between the parties to this Agreement
regarding the definition of Trademarked Product, the final decision regarding
such definition shall rest in
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Licensor's sole and absolute discretion. The rights granted to Licensee herein
are limited to use on or in connection with the Trademarked Product and
Licensee specifically agrees not to use the Trademark in any manner or
on any product, service or item, except as set forth in this Agreement.
Licensee recognizes that Licensor sells products of the same description as
some of the products licensed herein, namely, humidifiers and air cleaners.
Licensee agrees not to challenge Licensor's continued right to sell such
products under the Trademark.
ARTICLE 2
GEOGRAPHIC AREA
The rights granted to Licensee hereunder may be exercised by Licensee within
the USA and Canada (the "Territory"), and Licensee shall have exclusive rights
with respect to the use of the Trademark in connection with the Trademarked
Product. Upon Licensee's request, Licensor may, in its discretion, extend the
areas in which Licensee may exercise said rights, but any such extension shall,
in each instance, be evidenced by a written and duly executed amendment to this
Agreement for such periods and upon such terms and conditions as shall be
determined by Licensor. From time to time Licensor may wish to purchase
Trademarked Product for sale outside the Territory. Licensee agrees to sell
Trademarked Product to Licensor at the same price Licensee sells Trademarked
Product to its best customer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LICENSOR
3.1 ORGANIZATION AND POWER. Licensor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Licensor has all corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
3.2 AUTHORIZATION. The execution, delivery and performance by Licensor of this
Agreement and the consummation of the transaction contemplated hereby has been
duly and validly authorized by all requisite corporate action, and no other
corporate act or proceeding on the part of Licensor is necessary to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transaction contemplated hereby.
3.3 NO VIOLATION. Licensor is not subject to nor obligated under its
certificate of incorporation or bylaws, any applicable law, rule or regulation
of any governmental authority, or any agreement, instrument, license or permit,
or subject to any order, writ, injunction or decree, which would be breached or
violated by its execution, delivery or performance of this Agreement.
3.4 OWNERSHIP OF TRADEMARK. Licensor is the owner of the Trademark and, to
Licensor's knowledge, the use of the Trademark in the design, manufacture,
advertising, sale and promotion of any of the Trademarked Product will not
infringe any intellectual property or any other rights of any third party.
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3.5 RIGHT TO GRANT LICENSE. Licensor has the full right, power and authority
to grant the license as set forth in Article 1 hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LICENSEE
4.1 ORGANIZATION AND POWER. Licensee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Licensee has all corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
4.2 AUTHORIZATION. The execution, delivery and performance by Licensee of this
Agreement and the consummation of the transaction contemplated hereby has been
duly and validly authorized by all requisite corporate action, and no other
corporate act or proceeding on the part of Licensee is necessary to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transaction contemplated hereby.
4.3 NO VIOLATION. Licensee is not subject to nor obligated under its
certificate of incorporation or bylaws, any applicable law, rule or regulation
of any governmental authority, or any agreement, instrument, license or permit,
or subject to any order, writ, injunction or decree, which would be breached or
violated by its execution, delivery or performance of this Agreement.
ARTICLE 5
TERM OF AGREEMENT
5.1 CONTRACT TERM. The Contract Term for each of Category 1, Category 2 and
Category 3 Trademarked Product commences on the date first mentioned above and
ends on December 31, 1998 at midnight Eastern Standard Time, unless sooner
terminated pursuant to the terms of this Agreement.
5.2 EXTENSION TERMS. Licensor hereby grants to Licensee the option to extend
the term of this Agreement for up to thirteen (13) one (1) year periods
commencing as of January 1,1999 and ending on December 31, 2011, at midnight
Eastern Standard Time, unless sooner terminated pursuant to the terms
of this Agreement with such extended term(s) to be subject to the same terms
and conditions as provided herein except that as a condition to the extension
term(s), Licensee must achieve specified levels of Minimum Sales during the
then preceding Contract or Extension Term of this Agreement as set forth in
Article 8 hereof. Such option to extend the term of this Agreement must be
exercised by Licensee, if at all, by giving written notice to Licensor at least
one hundred and twenty (120) days prior to the expiration of the then preceding
Contract Term of this Agreement. Licensor may terminate this Agreement without
cause, in respect of some or all of the Trademarked Product provided however,
that such termination shall not be permitted within the first 5 (five years)
following the Effective Date of this Agreement. Notice of termination must be
given in writing to the other Party hereto 1 (one) year prior to the
termination date. Licensee shall have the right to sell off inventory of
Trademarked Product in accordance with Article 21. Neither Licensor nor
Licensee shall be liable for any compensation or damages by reason of such
early termination.
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ARTICLE 6
ROYALTIES
6.1 EARNED ROYALTIES OF CATEGORIES 1 AND 3 OF TRADEMARKED PRODUCT. Subject to
Article 7 hereof, Licensee shall pay to Licensor for the rights granted
hereunder a sum equal to the following percentages of the Net Invoice Value of
Trademarked Product sold by Licensee (the "Royalties"):
TRADEMARKED PRODUCT - WHOLESALE PRICE
-------------------------------------
UNDER $10.00/UNIT $10.00 OR MORE/UNIT
Contract Term 2.0% 3.0%
First Extension Term 3.0% 3.0%
Second and Third Extension Term(s) 3.0% 3.5%
Fourth and Future Extension Term(s) 3.0% 4.0%
The Royalties shall be remitted in accordance with Article 7.4 of this
Agreement.
6.2 EARNED ROYALTIES CATEGORY 2. Subject to Article 7 hereof, Licensee shall
pay to Licensor for the rights granted hereunder a sum equal to two percent
(2%) of the Net Invoice Value of Trademarked Product sold by Licensee (the
"Royalties"). The Royalties shall be remitted in accordance with Article 7.4
of this Agreement.
6.3 DEFINITION OF NET INVOICE VALUE. As used throughout this Agreement, the
term "Net Invoice Value" shall mean the aggregate of the invoiced amounts of
Trademarked Product sold by Licensee, less (a) returned goods, refunds, credits
and allowances actually made or allowed to customer with respect to Trademarked
Product, (b) freight or handling charges charged to customers or incurred on
returned goods, and (c) sales and excise taxes actually paid ("NIV").
ARTICLE 7
MINIMUM ROYALTY PAYMENTS
7.1 MINIMUM ROYALTIES. The minimum royalties for the Contract Term shall be
paid as follows:
Category 1: Sixty-five thousand dollars ($65,000) in advance upon execution
of this Agreement. The Minimum Royalty for each Extension Term as shown below
shall be payable in four (4)
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equal installments each by the thirtieth day of March, June, September and
December of the respective Term.
Category 2: Eighty-five thousand dollars ($85,000) in advance of execution of
this Agreement and the balance of fifteen thousand dollars ($15,000) payable on
or before December 31, 1998. The Minimum Royalty for each Extension Term as
shown below shall be payable in four (4) equal installments each by the 30th
day of March, June, September and December of the respective term.
Category 3: Forty-thousand dollars ($40,000) in advance on execution of this
Agreement and the balance in eight (8) equal installments of $5,125 each by
the 30th day of March, June, September and December of 1997 and 1998. The
Minimum Royalty for each extension term shall be paid in four (4) equal
installments each by the 30th day of March, June, September and December of the
respective term.
Category 1 Category 2 Category 3
----------------- ----------------- -----------------
Minimum Royalties Minimum Royalties Minimum Royalties
----------------- ----------------- -----------------
Term Year
------- ------
Initial 1996/8 $65 Thousand $100 Thousand $83 Thousand
Ext. 1 1999 78 Thousand 000 Xxxxxxxx 00 Xxxxxxxx
Xxx. 2 2000 106 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 3 2001 127 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 4 2002 159 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 5 2003 193 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 6 2004 228 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 7 2005 273 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 8 2006 318 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 9 2007 363 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 10 2008 409 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 11 2009 454 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 12 2010 499 Thousand 000 Xxxxxxxx 000 Xxxxxxxx
Xxx. 13 2011 545 Thousand 800 Thousand 749 Thousand
7.2 INITIAL ROYALTY PAYMENT. Licensee shall pay Licensor an Initial Royalty
Payment of: Category 1: Sixty-five thousand ($65,000); Category 2:
Eighty-five thousand ($85,000); Category 3: forty thousand dollars ($40,000)
upon execution of this Agreement. The Initial Royalty Payment for each
Category shall be applied against the first royalties payable for that Category
respectively, pursuant to Article 7.4 of this Agreement.
7.3 MINIMUM ROYALTY PAYMENTS. To the extent that the aggregate, cumulative,
Minimum Royalties set forth above exceeds the aggregate, cumulative Earned
Royalties paid to Licensor by the end of the Contract Term or Extension Term,
as applicable, Licensee shall pay Licensor such excess with the Royalty payment
for the last fiscal quarter of the Contract Term or such Extension Term, as
applicable, in accordance with Article 7.4.
7.4 APPLICATION OF EARNED ROYALTIES. The Earned Royalties to be paid under
Article 6 shall be applied against the Minimum Royalties due under this Article
7, and Licensee shall pay by each due date specified in this Article 7 the sum
of: (i) the Minimum Royalties as specified
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above; plus (ii) the excess, if any, of the Earned Royalties (per Article 6)
over the Minimum Royalties for the then current term payable by such due date
(such sum hereinafter referred to as the "Royalty Payment"). Each Royalty
Payment, payable in U.S. currency, shall be remitted by check at Licensor's
address as provided in this Agreement.
7.5 QUARTERLY REPORTS OF SALES AND ROYALTY PAYMENTS. On or before the twentieth
(20th) day of each January, April, July and October during the Contract Term
and any Extension Term, Licensee shall deliver to Licensor the following:
(i) a written statement, certified to be true and correct by the Chief
Financial Officer of Licensee, setting forth the Gross and NIV sales for each
Trademarked Product during the preceding calendar quarter and a calculation of
the Royalties payable under Article 6 and 7 of this Agreement for such period,
and (iv) a check payable to Licensor in full payment of the amount due under
Articles 6 and 7 of this Agreement for such period. Each Royalty payment,
payable in U.S. currency, shall be remitted by check at Licensor's address
as provided in this Agreement.
7.6 QUARTERLY REPORT OF SALES AND ROYALTY PAYMENTS. Licensee shall report
Gross and NIV sales separately for Category 1, Category 2 and Category 3 of
Trademarked Product, respectively, in accordance with Article 7.4, and also
report Consolidated Gross and NIV sales ("Consolidated Sales") which shall
include Gross and NIV sales of Category 1, Category 2 and Category 3 of the
Trademarked Product, in accordance with Article 7.4.
ARTICLE 8
MINIMUM SALES OF TRADEMARKED PRODUCT
8.1 FAILURE TO MEET MINIMUM SALES IN CATEGORY 1, CATEGORY 2 AND CATEGORY 3 OF
TRADEMARKED PRODUCT. Licensee shall use its best efforts to advertise and sell
Trademarked Product in the Territory during the Term of this Agreement. Should
Licensee fail to achieve a level of NIV sales equal to the combined minimum
sales of Category 1, Category 2, and Category 3 of Trademarked Product, as set
for below, which, for purposes of this Paragraph 8.1, Licensee may accumulate
over any two consecutive Terms, then Licensor may, at its option, elect to
terminate Licensee's grant in, of or to that Category(ies) of Trademarked
Product for which Licensee shall not have achieved minimum sales for two
consecutive Terms by written notice delivered to Licensee within sixty (60) days
after the end of any period in which Licensee failed to maintain such required
Minimum Sales. Such termination shall be effective upon delivery of said
notice but shall not affect Licensee's outstanding indebtedness to Licensor or
any of the provisions relating thereto, nor shall it affect Category(ies) of
Trademarked Product for which Licensee achieves the Minimum NIV Sales as set
forth below in this Article 8.1.
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Category 1 Category 2 Category 3
------------- ------------- -------------
Term Year Minimum Sales Minimum Sales Minimum Sales
------- ------ ------------- ------------- -------------
Initial 1996/8 $4.0 Million $5.0 Million $5.0 Million
Ext. 1 1999 4.0 Million 5.0 Million 5.0 Million
Ext. 2 2000 5.0 Million 6.0 Million 6.0 Million
Ext. 3 2001 6.0 Million 7.0 Million 7.0 Million
Ext. 4 2002 7.0 Million 9.0 Million 9.0 Million
Ext. 5 2003 8.5 Million 10.0 Million 10.0 Million
Ext. 6 2004 10.0 Million 12.0 Million 12.0 Million
Ext. 7 2005 12.0 Million 15.0 Million 15.0 Million
Ext. 8 2006 14.0 Million 18.0 Million 18.0 Million
Ext. 9 2007 16.0 Million 21.0 Million 21.0 Million
Ext. 10 2008 18.0 Million 26.0 Million 25.0 Million
Ext. 11 2009 20.0 Million 31.0 Million 28.0 Million
Ext. 12 2010 22.0 Million 37.0 Million 31.0 Million
Ext. 13 2011 24.0 Million 40.0 Million 33.0 Million
ARTICLE 9
ADVERTISING AND ART WORK
9.1 ADVANCE SUBMISSION. Licensee shall submit to Licensor for approval all
advertising and promotional items, programs and materials relating to the
Trademarked Product at least fourteen (14) days prior to intended usage.
Licensor shall provide Licensee with written approval or disapproval within
ten (10) business days after Licensor's receipt thereof. Should Licensor
disapprove, its written notice shall explain in detail the reasons for
disapproval so that Licensee may prepare and submit new advertising and art
work.
9.2 ART WORK. Licensor shall make available to Licensee any and all necessary
film, photostats, artwork and full color reproductions of its Trademark,
artwork, designs and other materials necessary for Licensee's use in accordance
with this Agreement.
9.3 EXPENSE REIMBURSEMENT. Licensee shall reimburse Licensor's reasonable
out-of-pocket expenses, including, reasonable hourly charges for creative
personnel incurred by Licensor in the preparation for Licensee, when and if
required, of new artwork, mechanical, and film. All charges shall be agreed to
prior to the time such expenses are incurred, and all sums due to Licensor
under this Article 9 shall be paid by Licensee upon receipt of an appropriate
invoice.
ARTICLE 10
LICENSEE'S RECORDS
Licensee shall keep and maintain at its regular place of business separate and
complete books and records of all business transacted by Licensee in connection
with Category 1, Category 2, Category 3 of Trademarked Product, including, but
not limited to, books and records relating to Gross and NIV of sales and orders
for Trademarked Product. Such books and records shall be maintained in
accordance with generally accepted accounting principles and procedures
consistently applied. Licensor or its duly authorized agents or
representatives shall have the
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right to inspect said books and records at Licensee's premises during
Licensee's regular business hours upon reasonable prior notice to Licensee.
ARTICLE 11
LICENSEE'S ANNUAL REPORTS AND ANNUAL ROYALTY PAYMENTS
On or before the fifteenth (15th) day of the second (2nd) month following the
end of Licensee's fiscal year, Licensee shall render to Licensor a statement
certified by Licensee's Chief Financial Officer disclosing gross and NIV value
of sales. Royalties due and Royalties paid for Licensee's preceding fiscal
year, and for any Contract or Extension Term which ended within said fiscal
year, relating to Category 1, Category 2 and Category 3 of Trademarked Product.
If said statement discloses that Licensee has paid Royalties in excess of the
amounts required to be paid, Licensor shall apply said excess to the next
Royalty payment or, if no further Royalty payments are due, such excess shall
be remitted to Licensee.
ARTICLE 12
AUDIT BY LICENSOR
If Licensor so chooses, it may (at its expense, except as provided below) cause
its independent accountants to audit or review, upon reasonable prior notice to
Licensee, all books and records of Licensee pertaining Trademarked Product.
Licensor shall deliver to Licensee not later than sixty (60) days from
Licensor's receipt of the applicable Report a statement describing its
objections (if any) to Licensee's determination of the Royalties for the
applicable period. Each of Licensor and Licensee shall use reasonable efforts
to resolve any such disputes, but if a final resolution is not obtained within
thirty (30) days after Licensor has submitted its objections, any remaining
disputes will be resolved by an accounting firm mutually agreeable to Licensor
and Licensee (the fees and expenses of such firm to be paid by Licensor, except
as provided below). If Licensor and Licensee are unable to mutually agree on
such an accounting firm, a "big-six" accounting firm shall be selected by lot
after eliminating one firm designated as objectionable by each of Licensor and
Licensee. The determination of any accounting firm so selected shall be
conclusive and binding upon the parties. In the event any such audit or review
as finally determined pursuant to this Article 12 shall disclose that Licensee
has underpaid Royalties for any reporting period, Licensee shall forthwith upon
written demand of Licensor pay the amount, if any, by which the Royalties owing
exceed Royalties paid, plus interest of ten percent (10%) per annum on such
amounts, accruing from the date on which such amounts were due to the date on
which sum amounts are paid. Should such audit disclose that the Royalties paid
exceeded the Royalties due, any excess amount revealed by such audit will be
remitted to Licensee. If Licensor causes its own independent accountants to
review the Reports described herein and the effect of such review as finally
determined pursuant to this Article 12 is that the amount of the Royalties for
the applicable period is understated by two percent (2%) or more, then Licensee
shall pay the reasonable costs of Licensor's independent accountant and the
reasonable costs of any mutually selected accountant or other accountant
selected pursuant to this Article 12.
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ARTICLE 13
LICENSEE OBLIGATIONS
13.1 LICENSEE DILIGENCE. Licensee shall design, manufacture, advertise, sell
and ship Trademarked Product and shall continuously and diligently during the
Term hereof procure and maintain facilities and trained personnel sufficient and
adequate to accomplish the foregoing all to the extent and in a manner no less
thorough, diligent and professional than the same accorded by Licensee for
Licensee's most favored premium products and/or services. Cessation of the
above for a continuous period of ninety (90) days shall be grounds for
termination by Licensor without notice. The marketing of Trademarked Product
shall be conducted in a manner consistent with enhancing the long-term value of
the Trademark. It is in the interest of the parties that Trademarked Product
be sold simultaneously through a wide range of retailers. Accordingly, Licensee
shall continuously and diligently design, price and promote differentiated
versions of Trademarked Product, i.e., "White-Westinghouse Elite" to retailers
in all major classes of trade including department stores (i.e., Macy's,
Burdine's, Bloomingdale's, etc.), regional discounters (i.e., Caldor, Bradlees,
etc.), specialty electronic chains (i.e., The Wiz, etc.), mail order, premium
and television shop services. Licensee shall exhibit Trademarked Product in
exhibit or booth space at the annual Housewares Show and other appropriate
trade shows.
13.2 LICENSOR INSPECTION RIGHTS. Licensor shall have the right upon reasonable
prior notice to Licensee to inspect any of Licensee's facilities pertaining to
the Trademarked Product during regular business hours. Licensor shall conduct
such inspection in the presence of an officer, partner or authorized
representative of Licensee.
13.3 NO COMPETITION WITH TRADEMARKED PRODUCT. During the term of this
Agreement, Licensee shall not enter another license Agreement for products
that would directly compete with the Trademarked Product.
13.4 FORFEITURE OF CATEGORIES OF TRADEMARKED PRODUCT FOR NON-USE. Licensee's
failure to introduce for sale, by the commencement of the First Extension Term,
any of the eleven (11) Trademarked Product listed on Exhibit A shall be deemed
a forfeiture of its grant to use the Trademark on that Product. Failure of
Licensee to ship any of the Trademarked Product listed on Schedule A for a
period of one (1) year shall be deemed a forfeiture of its Grant to use the
Trademark on that Product.
13.5 FINANCIAL STANDARDS. Licensee shall provide its financial statements to
Licensor annually or as requested by Licensor, which are to be prepared in
accordance with U.S. GAAP. Should Licensee's net worth fall below $* Dollars,
Licensor may, at its option, terminate this Agreement. Likewise, Licensor
may terminate this Agreement immediately if Licensee incurs net operating
losses for three or more consecutive years.
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ARTICLE 14
APPROVALS AND QUALITY STANDARDS
14.1 ADVANCE APPROVAL. Prior to any use of any Trademark, Licensee shall, at
Licensee's expense, submit to Licensor, for Licensor's written approval, the
following: (a) two (2) specimens of each Product on which the Trademark is to
appear (the "Specimens"); (b) all artwork which Licensee intends to use in
connection with the Trademark; and (c) all packaging, advertising and
promotional literature which Licensee intends to use in the marketing or
merchandising of the Trademarked Product. Licensor shall give Licensee written
notice of approval or disapproval within ten (10) business days of its receipt
of the Specimens, and should Licensor disapprove, its written notice shall
explain in detail the reasons for disapproval so that Licensee may prepare and
submit new specimens and/or samples.
14.2 STANDARDS. After Licensor has given its written approval of said
Specimens, then the approved product, quality, packaging, advertising and
promotional literature shall be the standard for all Trademarked Product
produced thereafter (the "Approved Quality").
14.3 PERIODIC SAMPLES. Thereafter, consecutively at four (4) month intervals,
Licensee shall, at Licensee's expense, submit to Licensor not less than two (2)
randomly selected production run samples of the Trademarked Product.
14.4 APPROVED QUALITY STANDARDS. Without the prior written approval of
Licensor, Licensee shall not sell or distribute any Trademarked Product which
deviates from the Approved Quality more than the deviation which would occur
as a result of normal deviations in raw material characteristics.
14.5 SERVICING AND REPAIRS. Licensee will propose, in a timely manner, a
mechanism by which Licensee will respond to inquires from consumers and third
party appliance repair vendors regarding the operation of Trademarked Product
and the procedures for obtaining parts for, or repairs to, Trademarked Product
which mechanism shall be designed to minimize any confusion with Licensor's
existing customer service operations.
14.6 PERIODIC REVIEW MEETINGS. Licensee will conduct periodic meetings with
Licensor to review Licensee's progress and performance under the terms of this
Agreement.
ARTICLE 15
RESTRICTIONS UPON SUBCONTRACTS
Licensee shall not enter into subcontracts for the manufacture of Trademarked
Product without the express written consent of Licensor, which consent shall
not be unreasonably withheld. Licensee is responsible for the work of any
subcontractor and for any debts, obligations or liabilities incurred by any
such subcontractor in connection with the Trademarked Product. Licensee shall
discontinue using any subcontractor who shall fail to comply with the Approved
Quality standards.
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ARTICLE 16
ASSIGNMENT; TRANSFERS; SUBLICENSE
Except as otherwise explicitly provided herein, Licensee may not enter into any
sublicense for the use of the Trademark by others. This Agreement shall not be
assignable by Licensee without the prior written consent of Licensor. Such
consent shall not be unreasonably withheld, except that no such prior written
consent shall be required for any assignment of this Agreement by Licensee to a
successor in interest of Licensee as a result of any merger, consolidation or
other corporate reorganization involving Licensee or a sale by Licensee of a
substantial part of its assets provided that no more than twenty percent (20%)
of the business of such successor (measured by revenues) competes directly with
Licensor.
ARTICLE 17
NO DILUTION OF TRADEMARK OR ATTACK UPON TRADEMARK
17.1 LIMIT ON USE. Licensee shall not at any time use, promote, advertise,
display or otherwise publish any Trademark or any material utilizing or
reproducing any Trademark in whole or in part, except as specifically provided
in this Agreement, without the prior written consent of Licensor, which consent
shall not be unreasonably withheld.
17.2 NOTICE. Licensee shall cause to appear on all Trademarked Product and on
all materials on, or in connection with which, any Trademark is used, such
legends, markings, and notices as may be required by law to give appropriate
notice of all trademark, trade name or other rights therein or pertaining
thereto.
17.3 MATERIALS AND DOCUMENTS. Licensee shall provide all materials and execute
all documents required by law incident to the maintenance and/or preservation
of the Trademark and Licensor's rights therein.
17.4 NO CONTEST OF TRADEMARK VALIDITY. Licensee shall not contest the validity
of the Trademark or any rights of Licensor therein, nor shall Licensee willingly
become an adverse party in litigation in which others shall contest the
Trademark or Licensor's said rights. In addition thereto, Licensee shall not
in any way seek to avoid its obligations hereunder because of the assertion or
allegation by any persons, entities or government agencies, bureaus, or
instrumentalities that any Trademark is invalid or ineffective or by reason of
any contest concerning the rights of Licensor therein.
17.5 NO OTHER TRADEMARK PROTECTION. Licensee shall not seek any state, federal,
foreign or other statutory trademark or service xxxx or other protection for
the Trademark as they are used in connection with the Licensee's goods or
services and all use of the Trademark shall be for the sole benefit of
Licensor.
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ARTICLE 18
INFRINGEMENT AND OTHER TRADEMARK LITIGATION
18.1 TRADEMARK DEFENSE. Licensee shall apprise Licensor immediately upon
discovery of any possible infringement of the Trademark which comes to the
attention of Licensee. Licensor, at its sole cost and expense, and in its own
name, may prosecute and defend any action or proceeding which Licensor deems
necessary or desirable to protect the Trademark, including but not limited to
actions or proceedings involving their infringement. Upon written request by
Licensor, Licensee shall join Licensor at Licensor's sole expense in any such
action or proceeding. However, Licensee shall not commence any action or
proceeding to protect the Trademark or any action or proceeding alleging
infringement thereof without the prior written consent of Licensor. Licensee
may prosecute and defend, at its sole expense and in its own name, any action
or proceeding to protect its designs or styles. Any and all damages recovered
in any action or proceeding commenced by Licensor shall belong solely and
exclusively to Licensor.
18.2 NO LIABILITY FOR VIOLATION. Licensor shall have no liability to
Licensee or any other person, nor shall there be by any right of contribution
against Licensor therefor, for any action or proceeding alleging any violation
of any antitrust, trade regulation, or similar statute, or for unfair
competition. Furthermore, in the event of any threatened or actual action or
proceeding in which Licensee and Licensor are or may be charged with jointly
violating any antitrust, trade regulation or similar statute, or any law
pertaining to unfair competition, Licensee may, at its option, elect to be
represented in such threatened or actual action or proceeding by Licensor's
counsel at no cost to Licensee for fees, costs or expenses. Should Licensee
elect in such event to be represented by Licensor's counsel, then Licensee
shall relinquish any right to control or direct such threatened or actual
action or proceeding and Licensor shall maintain full control thereof. Such
representation of Licensee shall continue only so long as Licensor's counsel,
in its sole and absolute discretion, believes that it may properly and
ethically represent both Licensor and Licensee. In the event that Licensor's
counsel decides that it may no longer properly and ethically represent both
Licensor and Licensee, then Licensor's counsel shall continue to represent
Licensor only, and Licensee's continued defense shall be at Licensee's sole
expense and shall be conducted by separate counsel.
ARTICLE 19
ADDITIONAL RESTRICTIONS UPON USE OF THE TRADEMARK
It is the intention of the parties hereto and the purpose of this Article 19
that all of the Trademarked Product be identified to the general public by the
Trademark. Licensee shall use a registration indicator in the form of a
circled-R or "TM" symbol in conjunction with the Trademark when so instructed
by the Licensor. Licensee further agrees to assist Licensor, at Licensor's
expense, in obtaining registrations for the Trademark in the event any
Trademark is not yet registered for the Trademarked Product. Licensee shall
use notice language in the manufacture, sale, advertising or other promotion of
the Trademarked Product as follows:
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"White-Westinghouse" is a registered trademark of White Consolidated Industries,
Inc., and is used under license" or other such language as Licensor designates
in writing.
ARTICLE 20
DEFAULTS BY LICENSEE
20.1 DEFAULTS. Except as otherwise expressly provided in this Agreement, in the
event Licensee shall default in the performance of any of the terms, conditions
or obligations to be performed by Licensee hereunder, and if such default
involves the payment of money and the same shall not be cured within ten (10)
days after Licensor gives written notice to Licensee of such default, or if
such default involves performance other than the payment of money and the same
is not cured within fifteen (15) days after Licensor gives written notice to
Licensee of such default, then and in any such event, Licensor may immediately
and without prior notice terminate this Agreement and all of the rights and
obligations hereunder (except as otherwise expressly provided by this
Agreement). In the event that a Receiver is appointed to, or one or more
creditors take possession of all, or substantially all, of the assets of
Licensee, or if Licensee shall make a general assignment for the benefit of
creditors, or if any action is taken or suffered by Licensee under any state
or federal insolvency or bankruptcy act, then this Agreement and all of the
rights and obligations hereunder (except as otherwise expressly provided by
this Agreement) shall immediately and without notice or need of any further
action by any party hereto, terminate.
20.2 TIME FOR PERFORMANCE. The time for performance of any act required of
either party, shall be extended by a period equal to be period during which
such party was reasonably prevented from performance by fire, flood, storm, or
other like casualty beyond such party's control.
ARTICLE 21
LICENSOR'S RIGHTS UPON TERMINATION
21.1 RIGHTS UPON TERMINATION. In the event this Agreement is terminated
for any reason, or expires according to its terms, Licensee shall assign,
transfer and transmit to Licensor any and all rights of Licensee in the
Trademark, including associated goodwill, and shall not thereafter manufacture,
sell, or use the Trademark in any manner; provided that Licensee may continue
to use the Trademark in connection with the advertising and sale of Trademarked
Product and may continue to use the Trademark in connection with the
manufacture of Trademarked Product, which are in the process of being completed
at time of said termination, for two hundred and seventy (270) days after the
termination of this Agreement; further provided, however, that all sums then
due to Licensor pursuant to this Agreement have first been paid; and further
provided that Licensee shall, within thirty (30) days after said termination,
deliver to Licensor a detailed schedule of all inventory of Trademarked
Product in Licensee's possession (constructive or otherwise). After the
expiration of the aforesaid 270 day period, Licensee shall destroy all
Trademarked Product and packaging and promotional material remaining in
Licensee's possession which are identified in any manner by or with the
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Trademark. Notwithstanding the above, Licensor shall have the right to
purchase such excess stock of Trademarked Product, in whole or in part, prior
to any sale or offer of sale by Licensee to any third party, for an amount
equal to the wholesale cost of such Trademarked Product as indicated in
Licensee's then current catalogue.
21.2 CONTINUATION OF AGREEMENT TERMS. Licensee shall continue to abide by the
terms of this Agreement with respect to such Trademarked Product during the
270 day period specified in Section 21.1 of this Agreement. Upon termination of
the aforesaid 270 period, all labels, signs, packages, wrappers, cartons,
circulars, advertisements, and other items bearing or containing any
reproduction or representation of any Trademark shall automatically and without
cost to Licensor become the property of Licensor, and Licensee shall
immediately deliver the same to Licensor's place of business or other location
designated by Licensor. The reasonable cost of such delivery shall be paid by
Licensor.
21.3 LICENSEE'S OBLIGATIONS. The termination of this Agreement for any reason
shall not relieve Licensee of any accrued obligations to Licensor nor shall
such action relieve Licensee of any obligation or duty which accrued on or
after the termination or expiration of this Agreement.
21.4 NO RIGHT IN LICENSEE. Except for the right to use the Trademark as
specifically provided for in this Agreement, (i) Licensee shall have no right,
title or interest in or to the Trademark; and (ii) upon and after the
termination of this Agreement, all rights granted to Licensee hereunder,
together with any interest in and to the Trademark that Licensee may acquire,
shall forthwith and without further act or instrument be assigned to and revert
to the Licensor. In addition, Licensee shall execute any instruments requested
by Licensor to accomplish or confirm the foregoing. Any such assignment,
transfer or conveyance shall be without consideration other than the mutual
agreements contained herein.
21.5 SURVIVAL OF TERMS. The provisions of this Article 21 shall survive the
termination (or expiration) of this Agreement.
ARTICLE 22
LICENSOR COVENANT
During the Contract Term or Extension Term hereof, Licensor agrees that
it will not, either alone or acting together with a third party, manufacture,
market, sell or distribute any Product in the Territory, provided that during
the final ninety (90) days of any Contract or Extension Term hereof, and upon
prior written notice to Licensee, Licensor shall have the right to design and
manufacture such products and to negotiate and conclude such agreements as it
desires pursuant to which it may grant licenses to any party or parties of any
or all of the rights herein granted to Licensee; provided, however, that no such
products shall be shipped by Licensor or any third party other than Licensee
prior to the expiration or termination of this Agreement (exclusive of the
additional two hundred and seventy (270) day period as provided in Article 21
hereof).
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ARTICLE 23
GOODWILL
Licensee acknowledges and recognizes that the Trademark is of substantial
significance and value to Licensor and that said Trademark has acquired
valuable secondary meaning, value and goodwill. Except as may be otherwise
specified in this Agreement, Licensee shall not use any Trademark or any name
or symbol similar thereto as part of its name or symbol or as part of the name
or symbol of any corporation, partnership, joint venture, proprietorship or
other entity or person which it controls or with which it is affiliated.
ARTICLE 24
INSURANCE
Licensee shall at all times carry product liability insurance with respect to
the Trademarked Product with a limit of liability of not less than $2 million
and Licensor shall be named therein as an additional insured as its interests
may appear. Such insurance may be obtained in connection with a policy of
product liability insurance which covers products other than the Trademarked
Product and shall provide for at least thirty (30) days' prior written notice
to Licensor of the cancellation or substantial modification thereof. Licensee
shall deliver to Licensor a certificate evidencing the existence of such
insurance policies promptly after their issuance.
ARTICLE 25
AGENTS, FINDERS AND BROKERS
Each of the parties to this Agreement shall be responsible for the payment of
any and all agent, brokerage and/or finder commissions, fees and related
expenses incurred by it in connection with this Agreement or the transactions
contemplated hereby and shall indemnify the other and hold it harmless from any
and all liability (including, without limitation, reasonable attorney's fees
and disbursements paid or incurred in connection with any such liability) for
any agent, brokerage and/or finder commissions, fees and related expenses
claimed by its agent, broker or finder, if any, in connection with this
Agreement or the transactions contemplated hereby. Licensor's sole
agent/finder/broker in connection with this Agreement is Leveraged Marketing
Corporation of America ("LMCA") with offices at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. All commissions, fees, and/or other monies due LMCA in
connection with this Agreement shall be borne exclusively by Licensor as per
the Agency Agreement of March 1, 1995.
ARTICLE 26
RESERVED RIGHTS
Rights not herein specifically granted to Licensee are reserved by Licensor and
may be used by Licensor without limitation. Any use by Licensor of such
reserved rights, including but not limited to the use or authorization of the
use of any Trademark in any manner whatsoever not
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inconsistent with Licensee's right hereunder, shall not be deemed to be
interference with or infringement or any of Licensee's rights.
ARTICLE 27
APPLICABLE LAW
This Agreement shall be construed and governed, in all respects, by the law of
the State of Ohio applicable to contracts made and to be performed in that
state without reference to any provisions relating to conflicts of law. Any
legal action or proceeding of any sort against Licensor by or on behalf of
Licensee shall be brought in a court of competent jurisdiction in Cuyahoga
County, Ohio.
ARTICLE 28
NON-AGENCY OF PARTIES
This Agreement does not constitute or appoint Licensee as the agent or legal
representative of Licensor, or Licensor as the agent or legal representative of
Licensee, for any purpose whatsoever. Licensee is not granted any right or
authority to assume or to create any obligation or responsibility, express or
implied, on behalf of or in the name of, Licensor or to bind Licensor in any
manner or thing whatsoever, nor is Licensor granted any right or authority to
assume or create any obligation or responsibility, express or implied, on
behalf of or in the name of Licensee, or to bind Licensee in any manner or
thing whatsoever. No joint venture or partnership between the parties hereto
is intended or shall be inferred.
ARTICLE 29
AMENDMENTS AND WAIVERS
This Agreement may be amended or modified only in a writing executed by the
parties hereto, and either party hereto may waive any of its rights hereunder
or performance by the other party of any of its obligations hereunder, only by
instrument in writing. In the event either party hereto shall at any time
waive any of its rights under this Agreement or the performance by the other
party of any of its obligations hereunder, such waiver shall not be construed
as a continuing waiver of the same rights or obligations, or a waiver of any
other rights or obligations.
ARTICLE 30
ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties as to the
Trademark Products, and supersedes all prior agreements and understandings
relating to the subject matter hereof.
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ARTICLE 31
SEPARABILITY OF PROVISIONS
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provisions shall be fully
severable. This Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provisions had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid or enforceable.
ARTICLE 32
COUNTERPARTS; HEADINGS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument. The headings herein are set out for convenience of reference only
and shall not be deemed a part of this Agreement.
ARTICLE 33
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and, subject to the provisions of Article 16 of this Agreement,
their respective permitted successors and assigns.
ARTICLE 34
INDEMNIFICATION
34.1 LICENSOR INDEMNIFIED PARTIES; BASIC INDEMNIFICATION. For purposes of this
Section, "Licensor Indemnified Parties" refers to Licensor and officers,
directors, employees and agents of Licensor. Licensee shall indemnify and hold
harmless the Licensor Indemnified Parties and each of them from and against the
costs and expenses (including, without limitation, reasonable attorneys' fees
and costs) of any and all claims, suits, losses, damages, costs, demands,
obligations, investigations, causes of action, and judgments arising out of:
(a) the actual or alleged unauthorized use by Licensee of any trademark
(including, without limitation, the Trademark), patent, process,
method or device;
(b) the actual or alleged infringement by Licensee of any copyrights, trade
name or patent or any act by Licensee held to constitute libel, slander
or defamation; the invasion by Licensee of the right of privacy,
publicity, or other property right;
(d) the failure to perform of, or any defect in, or use of, the Trademarked
Product, including without limitation any injuries to the person or to
property arising therefrom;
(e) the infringement or breach of other personal or property right of any
person, firm or corporation by Licensee, its officers, employees,
agents, or anyone directly or indirectly acting by, through, on behalf
of, or pursuant to contractual or any other relationship with Licensee;
and
(f) Licensee's sales and/or promotional efforts; provided; however, that
the indemnification obligations of Licensee pursuant to this Article 34
shall not apply with
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respect to any of the events set forth in (a) through (f) above to the extent
that such event is attributable to any event described under Section 34.2
hereof as to which Licensor shall indemnify Licensee.
34.2 LICENSEE INDEMNIFIED PARTIES; BASIC INDEMNIFICATION. For purposes of this
Section, "Licensee Indemnified Parties" refers to Licensee and officers,
directors, employees and agents of Licensee. Licensor shall indemnify and hold
harmless the Licensee Indemnified Parties and each of them from and against the
cost and expenses (including, without limitation, reasonable attorneys' fees
and costs) of any and all claims, suits, losses, damages, costs, demands,
obligations, investigations, causes of action, and judgments arising out of any
assertion or allegation by any persons, entities or government agencies that
any Trademark infringes any trademark, trade name or any other personal or
property right of a third party.
34.3 INDEMNIFICATION FOR BREACH. Each party hereto shall indemnify and forever
hold harmless the other party against and from any and all claims, suits,
losses, damages, costs, obligations, liabilities, judgments, damages and
expenses, including, without limitation, reasonable attorneys' fees arising out
of breach or alleged breach by such party of any provision of this Agreement,
or any misrepresentation made by such party herein or any act not expressly
authorized herein.
34.4 SURVIVAL OF TERMS. The provisions of this Article 34 shall survive the
termination (or expiration) of this Agreement.
ARTICLE 35
INFORMATION
35.1 CONFIDENTIALITY. Licensor and Licensee may from time to time disclose to
each other sales, engineering, applications, drawings, designs and any other
knowledge, information, techniques, know-how or data pertaining to the
manufacture, use, application, marketing, distribution and sale of the
Trademarked Product or other products of Licensor or Licensee (the
"Information"). Each party hereto shall hold in confidence all such data and
information and shall not disclose such data and information except to such
personnel and employees as are necessary for the effective performance of this
Agreement or as otherwise permitted by this Agreement. Licensor and Licensee
shall cause all data, documents or other written or printed
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materials embodying the Information to be plainly marked to indicate the
secret and confidential nature thereof and to prevent unauthorized access
thereto, or reproduction or use thereof. Licensor and Licensee shall take
any necessary action, including court proceedings, to comply and to compel
compliance with the provisions of this Article 35. The obligations undertaken
by Licensor and Licensee pursuant to this Article 35 shall not apply to any
such data or information which is or becomes published or otherwise generally
available to the public without fault of a party hereto or is otherwise
lawfully acquired by a party hereto and such obligations shall, as so limited,
survive the expiration or termination of this Agreement. Upon termination of
this Agreement, either party hereto may request the prompt return of all
written materials received from the other party including originals, copies,
extractions, translations and reproductions thereof. This Agreement is not
intended to and shall not be construed to give either party any vested right,
title or interest in the Trademarked Product or the Information.
35.2 CONFIDENTIALITY OF TERMS OF AGREEMENT. Licensee shall not disclose to any
third party information relating to the terms and conditions of this Agreement,
including royalty rates, the amounts of Minimum NIV Sales or Minimum Royalties
or the amount of the Initial Royalty Payment pursuant to this Agreement.
35.3 SURVIVAL OF TERMS. The provisions of this Article 35 shall survive the
termination of this Agreement.
ARTICLE 36
ANNOUNCEMENTS
36.1 PUBLIC ANNOUNCEMENTS. Unless expressly approved in advance in writing by
the other party, neither party shall make any public announcement regarding the
subject matter or existence of this Agreement except as required by law. If
such announcement is required by law, the announcing party shall give the other
party reasonable notice of such announcement and shall consult with the other
party regarding such announcement.
36.2 IMMEDIATE DISCLOSURE OF PUBLIC ANNOUNCEMENTS. Licensee shall include
Licensor and its agent, LMCA, among its list of recipients for press releases
and all other public announcements regarding its
ARTICLE 37
ADDRESSES FOR NOTICE
All notices, statements, consents, instructions or other documents required or
authorized to be given hereunder shall be in writing, and shall be delivered
personally to an officer, partner or authorized representative of the other
party or by facsimile and confirmed by certified mail, return receipt
requested, addressed to the parties concerned as follows:
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to Licensee at: Salton/Maxim Housewares, Inc.
000 Xxxxxxxx Xxxxxx Xxxxx
Xx Xxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
with copies to: Xxxx Xxxxxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: 312-876-7934
and to Licensor at: White Consolidated Industries, Inc.
00000 Xxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
with copies to: Ms. M. Xxxxxx Xxxxxxxx, Trademark Counsel
White Consolidated Industries, Inc.
00000 Xxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
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and Xx. Xxxxx X. Xxxxxxx
Leveraged Marketing Corporation of America
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
and shall be deemed to have been given upon receipt.
IN WITNESS WHEREOF, this Agreement is executed on the day and year
first written above.
White Consolidated Industries, Inc. (Licensor)
__________________________________________________
By: Xxxxxxx X. Xxxxxx
Assistant Secretary
Salton/Maxim Housewares, Inc. (Licensee)
__________________________________________________
By: Xxxxxxx X. Xxx
Senior Vice President/COO
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EXHIBIT A
Effective: May 21, 1996
Category 1: Personal Care
1. Hair Dryers
2. Hair Curlers
3. Curling Wands and brushes
4. Make-up Mirrors
5. Nail, Face Feet and Body Care Products
6. Massagers
Category 2: Fans and Heaters
7. Portable Cooling Fans
8. Portable Room Heaters and Heater/Fan Combinations
Category 3: Tabletop Air Cleaners and Humidifiers
9. Portable Room Air Cleaners
10. Portable Room Air Ionizers and Air Cleaner/Ionizer
Combinations
11. Portable Room Humidifiers
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