LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as of this 12th day of March, 1998, by
and between The Xxxxx Group, Inc., ("Licensor"), having an office at 000
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 and CREATIVE EXPRESSIONS GROUP, INC.
("Licensee"), having an office at 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxxxx, XX 00000.
WHEREAS, Licensor is the sole owner of the Marks (as hereinafter
defined);
WHEREAS, Licensee desires to be granted all of Licensor's rights to
and in the Marks and to exclusively use the Marks during the License Term (as
hereinafter defined) on or in association with the manufacture, advertising,
promotion, distribution, offering for sale and sale of Licensed Products (as
hereinafter defined) throughout the world; and
WHEREAS, Licensor desires to grant to Licensee an exclusive license to
use the proprietary rights in and to the Marks subject to and upon the terms,
covenants and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the respective representations,
warranties, covenants, agreements, and conditions contained herein and other
good and valuable consideration, the receipt of which are hereby acknowledged,
Licensor and Licensee hereby agree to the following:
1. GRANT OF LICENSE; LICENSED PRODUCTS.
1.1 Licensor hereby grants to Licensee for the period and upon
the terms, covenants and conditions hereinafter set forth, the exclusive right
and license (the "License") throughout the world to use the trademarks,
tradenames and service marks set forth on Exhibit A (the "Marks") and each of
them solely in connection with the design, manufacture, advertising, promotion,
distribution and sale of disposable party goods (collectively, the "Products"),
subject, however, to the non-exclusive right retained by Licensor to use the
Marks during the Transition Period (as hereinafter defined) as set forth in
Section 3 hereof. As used herein, the term "Licensed Products" shall mean
Products sold or promoted in connection with the Marks.
1.2 Licensor retains all rights to use and to grant to others
rights to use the Marks on products other than, and non-competitive with, the
Licensed Products; provided, however, that all such uses of the Marks shall be,
and any license thereof shall be granted and enforced, in a manner consistent
with the maintenance by Licensor of the standards of quality, style and design
imposed on Licensee pursuant to this Agreement.
2. DESIGN.
2.1 Licensed Products shall at all times reflect the standards
and reputation embodied in the design, content, quality, style, price point and
value which Products bearing
the Marks have come to represent in the minds of the trade and the public.
Licensee shall have no right hereunder to alter or modify the Marks, nor to
create derivative works thereof; except, however, to the extent expressly
authorized in this Agreement.
3. TRANSITION PERIOD.
3.1 Notwithstanding anything contained in this Agreement to the
contrary, Licensor retains the non-exclusive rights to manufacture, invoice
and distribute, on behalf of Licensee, the Licensed Products for a period not
to exceed six months following the date hereof or such later date as the
parties shall mutually agree (the "Transition Period").
3.2 As payment for Licensor's services pursuant to Section
3.1 hereof, Licensee shall pay to Licensor an amount equal to (i) Licensor's
fully absorbed cost to manufacture the Licensed Products and (ii) Licensor's
actual cost with respect to any selling, general or administrative services
performed by Licensor on behalf of Licensee, plus 15% (collectively, the
"Transition Payment"). The Transition Payment shall be paid to Licensor on the
first day of each month through the expiration or sooner termination of the
Transition Period. In addition, at any time during the Transition Period,
Licensee shall, at Licensor's election, purchase all of Licensor's inventory
relating to the Licensed Products for an amount equal to Licensor's fully
absorbed cost of such inventory.
4. TERM.
4.1 The initial term of this Agreement shall commence on the
date hereof and continue through the date which is the fifth anniversary of the
last day of the First Period (the "Initial Term") unless renewed or sooner
terminated as provided herein. As used herein, the term (i) "First Period"
shall mean the period commencing on the date hereof and ending on the last day
of Licensee's 1998 fiscal year; and (ii) "Annual Period" shall mean the First
Period, and each succeeding fiscal year during the License Period (as
hereinafter defined).
4.2 Provided that no Event of Default on the part of Licensee
has occurred and is continuing at the date of renewal, Licensee may, upon
notice to Licensor given at least six months prior to the expiration of the
Initial Term, or if this Agreement has been renewed, the then current term of
this Agreement, extend the term of this Agreement for up to five additional
successive renewal periods of one year each, so as to finally expire on the
tenth anniversary of the last day of the First Period. The Initial Term,
together with any renewal periods hereunder, are together referred to as the
"License Period."
5. ROYALTIES.
5.1 During the License Period, Licensee shall pay Licensor a
royalty (the "Royalty") in an amount equal to 5% of Licensee's earnings before
interest, taxes, depreciation and amortization as determined in accordance with
generally accepted accounting principles and as reported on Licensee's
financial statements for each Annual Period. During the License Period,
Licensee shall, at the time that Licensee sends to
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Licensor the reports required by Sections 5.3 and 5.4, deliver therewith
payment of the amount, if any, by which the Royalty exceeds the aggregate
Interim Payments previously paid for the applicable Annual Period. In the event
that the aggregate Interim Payments for such Annual Period exceed the Royalty,
such excess amount shall be applied to reduce the Royalty payable for the next
Annual Period.
5.2 Licensee shall pay Licensor on account of the Royalty,
$10,000 on the first day of each month during the License Period (the "Interim
Payment").
5.3 Within 45 days after the end of each quarterly period
during the License Period (commencing with the first quarter-end during the
First Period), Licensee shall deliver to Licensor a quarterly report certified
by the Chief Financial Officer of Licensee calculating the Royalty payable for
such period and certifying and attaching Licensee's financial statements with
respect to such period.
5.4 Within 90 days after the close of each Annual Period,
Licensee shall deliver to Licensor a report setting forth information
equivalent to that contained in quarterly reports specified in 5.3 hereof for
the preceding Annual Period or, in the case of termination of this Agreement,
such information for the period ending at termination. Each such annual
statement shall be certified by the Licensee's Chief Financial Officer and have
attached thereto the financial statements of Licensee as audited by Licensee's
independent public accountants.
5.5 The provisions of this Section 5 shall survive the
expiration or sooner termination of this Agreement.
6. PRESERVATION OF MARKS.
6.1 Licensee will use the Marks in compliance in all material
respects with applicable legal requirements. Licensee shall cause to appear on
all Licensed Products, such legends, markings and notices as may be required by
applicable law.
6.2 Licensor shall take all action as is or may become necessary
to the maintenance of trademark protection for the Marks in the geographic area
in which the Licensed Products are being or are likely to be manufactured,
transported, distributed or sold. Licensee shall take any action reasonably
requested by Licensor to assist Licensor in preserving and protecting
Licensor's rights in and to the Marks or any registration thereof. Without
limiting the generality of the foregoing, at Licensor's reasonable request
Licensee shall promptly execute any documents, agreements and applications to
record Licensee as a registered user, to confirm Licensor's ownership of all
rights in and to the Marks and the respective rights of Licensor and Licensee
pursuant to this Agreement. Licensor shall reimburse Licensee for all costs and
expenses of complying with any request by Licensor under this Section.
6.3 Licensee will not challenge Licensor's ownership of or the
validity of the Marks or any application for registration thereof, or any
trademark registrations thereof
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insofar as the rights granted to Licensee are not affected. Licensee agrees
that it shall not during the License Period or thereafter, register or apply to
register any of the Marks anywhere in the world.
6.4 Each party shall give notice to the other as soon as
practicable of any infringement of any of the Marks of which such party has
knowledge. Licensor, at its sole cost and expense and in its own name, may, in
its sole judgment, prosecute any action or proceeding that Licensor deems
necessary or desirable to protect the Marks, including but not limited to
actions or proceedings involving infringement of the Marks. Licensee may join
Licensor in any such action or proceeding, except that, in an action or
proceeding involving counterfeit Licensed Products Licensee may itself take
such action as it deems appropriate. Licensee shall cooperate with Licensor in
all respects at Licensor's reasonable request in connection with any action or
proceeding prosecuted by Licensor involving the rights granted Licensee
hereunder. If Licensor fails to take any such action, Licensee shall have the
right to do so at Licensee's sole cost and expense.
7. DEFAULTS.
Each of the following shall constitute an event of default
under this Agreement (each an "Event of Default"):
7.1 If Licensee shall fail to pay any Royalty or other
obligation owing to Licensor pursuant to this Agreement within 30 days of
receipt of notice of non-payment; or
7.2 If either party shall fail in any material respect to
perform or observe any material term, condition, agreement or covenant in this
Agreement on its part to be performed or observed (other than as specifically
provided in Section 7.1), or if any representation or warranty on its part
shall be or become false in any material respect, and such default is curable,
but is not cured within 30 days after notice thereof from the non-defaulting
party, unless such default is not capable of being cured through the defaulting
party's diligent and continuous effort within such 30 day period, and such
party immediately commences to cure such default, and thereafter applies its
diligent and continuous best efforts to cure such default, and does in fact
cure such default within 90 days of the initial notice of default; or
7.3 If Licensee or Licensor shall institute proceedings to be
adjudicated a voluntary bankrupt or insolvent, or shall consent to the filing
of a bankruptcy proceeding against it, or shall file a petition or answer
seeking reorganization or arrangement under any bankruptcy act or any other
similar applicable law of any country, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency for
it, or any of its property, or shall make an assignment for the benefit of
creditors, or shall be unable to pay its debts generally as they become due, or
shall cease doing business as a going concern, or corporate action shall be
taken by it in furtherance of any of the foregoing purposes; or
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7.4 If an order, judgment or decree of a court having
jurisdiction shall have been entered adjudicating Licensee or Licensor a
bankrupt or insolvent, or approving, as properly filed, a petition seeking
reorganization of Licensee or Licensor or of all or a substantial part of its
properties or assets under any bankruptcy act or other similar applicable law,
as from time to time amended, or appointing a receiver, trustee or liquidator of
Licensee, and such order, judgment or decree shall remain in force, undischarged
and unstated for a period of 90 days, or any writ or warrant or attachment shall
be issued or levied against a substantial part of its property and the same
shall not be released, vacated or bonded within 30 days after issue or levy; or
7.5 If either party shall, without the prior consent of the
other first had and obtained, sell (regardless of how designated) all or
substantially all of its assets, or shall merge or consolidate with another
corporation or entity not an affiliate prior to such transaction, whether in a
single transaction or as the aggregate result of a series of transactions.
8. TERMINATION.
8.1 If an Event of Default shall occur and be continuing, the
non-defaulting party may at its option after 10 days' prior notice, terminate
this Agreement. In such event, Licensee shall promptly pay to Licensor all
Royalties due hereunder through the date of termination. Such payment shall
constitute Licensor's sole and exclusive remedy hereunder and shall be retained
as liquidated damages and Licensee shall not have any other liability of
whatever kind hereunder. Notwithstanding the foregoing, each of the parties
shall have and hereby reserves all rights and remedies which it has or which
are granted to it by operation of law or in equity to: (i) enjoin the unlawful
or unauthorized use of the Licensed Property and Marks; and (ii) be compensated
for all reasonable attorneys' fees and expenses and court costs in connection
with the enforcement of either party's rights of termination.
8.2 On the expiration or sooner termination of this Agreement,
the License and all rights of Licensee in and to the Marks shall terminate
forthwith and shall revert immediately to Licensor, and Licensee shall
immediately cease and desist and discontinue all use of the Marks, and shall no
longer have the right to use the Marks or any variation thereof; provided,
however, that Licensee shall have the continuing right, for a period of 24
months following the date of termination, to, upon and subject to the terms,
covenants and conditions of this Agreement dispose of all Licensed Products then
in the possession of Licensee, and all Licensed Products on order or in the
process of manufacture on the effective date of such termination. Within 30 days
following the effective date of termination hereof, Licensee shall provide
Licensor with a statement setting forth the number and description of Licensed
Products then in Licensee's possession, on order or in the process of
manufacture. Licensee shall pay Licensor any Royalty coming due with respect to
the sale of all such Licensed Products.
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9. REPRESENTATIONS AND WARRANTIES.
9.1 Each of Licensee and Licensor represents and warrants to the
other that:
(i) it is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and is duly qualified
and authorized to do business as a foreign corporation in good standing in all
jurisdictions in which the nature of its assets or business requires such
qualification;
(ii) it has full right, power and authority to enter into this
Agreement and to perform all of its obligations hereunder; and
(iii) its execution, delivery and performance of this Agreement
have been duly and properly authorized by all necessary actions and this
Agreement constitutes its valid and binding obligation, enforceable against it
in accordance with its terms.
9.2 Licensor additionally represents and warrants that
(i) it has the sole and exclusive right to license the Marks as
contemplated by this Agreement; and
(ii) there are no pending claims, actions, suits, proceedings
or to Licensor's knowledge, investigations instituted by or against Licensor or
any of its affiliates challenging Licensor's ownership of the Marks.
10. INDEMNIFICATION.
10.1 Each party (an "Indemnifying Party") hereby indemnifies
the other party and its officers, directors, agents, employees, successors and
permitted assigns (hereinafter collectively an "Indemnified Party" or
"Indemnified Parties"), and shall hold it and them harmless against any and all
losses, claims, suits, proceedings, liabilities, causes of action, damages,
costs, expenses (including reasonable attorneys' fees and expenses)
(collectively, "claims") arising out of or in connection with the breach or
inaccuracy of, or failure to comply with, any of the representations,
warranties, covenants, agreements, terms or conditions (including those in
Section 9) on the part of the Indemnifying Party contained in this Agreement.
Notwithstanding the foregoing, Licensee shall not be obligated to, and shall
not, indemnify Licensor for any claims arising out of or related to any alleged
defect in any of the Licensed Products approved or deemed approved by Licensor
hereunder.
10.2 The Indemnified Party shall give prompt notice to the
Indemnifying Party of any claim with respect to which it seeks indemnification
but the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of any liability except, however, to the extent, if any,
that it is actually prejudiced by such delay. The Indemnifying Party shall
assume, at its sole cost and expense, the defense of such claim with counsel
reasonably satisfactory to the Indemnified Party. The Indemnifying Party will
not be subject
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to any liability for any settlement made without its consent (but such consent
will not be unreasonably withheld). The Indemnifying Party shall not, without
the consent of the Indemnified Party (which consent shall not be unreasonably
withheld), effect any settlement or discharge or consent to the entry of any
judgment, unless such settlement or judgment includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
general release from all liability in respect of such claim or litigation.
11. SITUS OF ACTIONS, APPLICABLE LAW.
11.1 The State and Federal courts sitting in the State, City and
County of New York shall have exclusive jurisdiction in any action arising
out of or connected in any way with this Agreement and Licensee and Licensor
hereby irrevocably consent to personal jurisdiction of and venue in such courts
in any such matter. The service of process or of any other papers with respect
to such proceedings upon either party by mail in accordance with the notice
provisions hereof shall be deemed to have been duly given to and received by
them five days after the date of mailing by certified mail-RR, and shall for
all purposes constitute good, proper and effective in personam service.
11.2 This Agreement shall be considered as having been entered into in
the State of New York, and shall be construed and interpreted in accordance with
the internal laws of that State applicable to agreements made and to be wholly
performed therein, without reference to conflict of laws considerations.
12. MISCELLANEOUS.
(a) This Agreement does not constitute either party as the agent or
legal representative of the other for any purpose whatsoever, and neither party
is granted any right or authority to assume or to create obligation or
responsibility, express or implied, on behalf of or in the name of the other or
to bind the other in any manner or thing whatsoever. No joint venture or
partnership between Licensor and Licensee is intended or shall be inferred.
(b) Each party represents to the other that it has not incurred any
obligation to any broker or finder in connection with this Agreement and hereby
agrees to indemnify the other party against any and all such payments and any
loss, cost, expense or liability including reasonable attorneys' fees related
thereto.
(c) All notices between Licensor and Licensee shall be effective only
if in writing and delivered by hand or by certified mail, return receipt
requested, addressed to Licensee or Licensor at the respective addresses set
forth below, and shall be effective upon receipt:
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Licensor: The Xxxxx Group, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Licensee: Creative Expression Group, Inc.
00000 Xxxxx xxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Any person entitled to notice hereunder may change its address by giving
written notice to all others entitled to notice.
(d) Failure on the part of either party hereto to meet any of the
terms and conditions contained herein because of any governmental restriction,
strike or major labor disturbance, war, revolution, riot, earthquake, fire,
flood or any other causes beyond the control of the party involved shall not
constitute a breach of this Agreement and shall excuse the party involved from
any action by the other party hereto, based upon the said failure to perform.
(e) Each of Licensee and Licensor acknowledges that during the term of
this Agreement it shall receive information of a business or technical nature
with respect to the business of the other and its affiliates, including without
limitation business plans, designs, sketches, materials, colors, costs,
pricing, customers, production techniques, sources of supply and other
documents, non-public information and trade secrets, which were acquired,
designed and/or developed by them at great expense, are secret, confidential
and unique, and constitute the trade secrets and exclusive property of such
party and its affiliates, and that any use by either party, or any of its
affiliates or subcontractors, of any such trade secrets and property other than
for the sole purpose of manufacturing, advertising, merchandising, promoting,
selling and distributing Licensed Products in accordance with the terms of this
Agreement would be wrongful and would cause irreparable injury to the other
party and its affiliates. Neither party shall at any time disclose or divulge
to any third party or use or suffer the use by any third party, any
confidential financial information obtained from the other hereunder. For
purposes of this Section, all financial terms of this Agreement shall be deemed
confidential financial information. Neither party shall make any public
announcement relating to the License or this Agreement without the prior
written approval of the other party.
(f) The definitions in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine
and neuter forms. All references herein to Articles, Sections, Paragraphs,
Annexes, Exhibits and Schedules shall be deemed to be references to Articles,
Sections and Paragraphs of, and Annexes, Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. All Annexes, Exhibits and
Schedules attached hereto shall be deemed incorporated herein as if set forth
in
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full herein. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." All accounting terms not
defined in this Agreement shall have the meanings determined by United States
generally accepted accounting principles as in effect from time to time. The
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to a person or entity are
also to its permitted successors and permitted assigns. Unless otherwise
expressly provided herein, any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein.
(g) In the event either party shall at any time waive any of its
rights under this Agreement or waive 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.
(h) This Agreement (which includes the Schedules hereto) constitutes
the entire agreement between the parties as to Licensed Products and merges and
supersedes all prior discussions between the parties as to the subject matter
hereof. This Agreement may not be changed or terminated orally.
(i) Any provision of this Agreement that shall be or is determined to
be invalid shall be ineffective, but such invalidity shall not affect the
remaining provisions hereof.
(j) The titles to the paragraphs hereof are for convenience only and
have no substantive effect.
(k) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither party shall, directly or indirectly, in whole or in part,
assign or transfer this Agreement or any of its rights, duties or interest
hereunder without the prior written approval of the other party. Any approved
third party shall agree in writing to be bound as Licensee or Licensor
hereunder, as the case may be. No assignment hereunder shall relieve the
assigning party of any liability hereunder.
(l) This Agreement may be executed in two or more counterparts, each
of which shall constitute an original and all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
The Xxxxx Group, Inc.
By: /s/Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Senior Vice President
Creative Expression Group, Inc.
By: /s/Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Secretary
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EXHIBIT A
MARKS
Chesapeake, Splash and Party Creations and all designs related thereto.
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