EXHIBIT 10.10
LICENSE AND OPTION AGREEMENT
AGREEMENT dated this 31st day of October 2000 by and between Alarmex
Holdings, L.L.C., a Delaware limited liability company ("Licensee"), and Century
Business Credit Corporation., a New York corporation ("Licensor").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of a Factoring Agreement by and between
Licensor and Periscope Sportswear, Inc. ("Periscope"), dated as of August 10,
1999, as amended (the "Factoring Agreement"), Licensor acquired a first priority
security interest in and to all or substantially all of the assets and
properties of Periscope; and
WHEREAS, certain events of default have occurred and are continuing under
the Factoring Agreement and Periscope, simultaneously with the execution of this
Agreement, shall grant to Licensor, as Periscope's senior secured creditor,
peaceful possession or certain assets of Periscope pursuant to a peaceful
possession letter (the "Possession Agreement"), a copy of which is attached
hereto as Exhibit A ; and
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WHEREAS, Licensee desires to purchase from Licensor and Licensor desires to
sell to Licensee, certain of Periscope's right, title and interest in and to
certain assets of Periscope (the "Assets") pursuant to a Secured Party General
Conveyance and Xxxx of Sale (the "Purchase Agreement") in a transaction under
Section 9-504 of the Uniform Commercial Code as adopted in the State of New York
("UCC") in which Licensee shall obtain title to the Assets free and clear of all
claims, liens, charges and encumbrances junior to Licensor and free and clear of
all claims, liens, charges and encumbrances of Licensor as secured party, other
than pursuant to this Agreement; and
WHEREAS, pursuant to a Trademark Assignment (the "Trademark Assignment"), a
copy of which is attached hereto as Exhibit B, Periscope has conveyed to
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Licensor all of Periscope's right, title and interest in and to certain
trademarks owned by Periscope (the "Trademarks") and pursuant to the Possession
Agreement has granted to Licensor peaceful possession of certain other general
intangibles owned by Periscope (with respect to which a security interest
therein may be perfected under Article 9 of the UCC), which such general
intangibles include, without limitation (to the extent owed by Periscope), the
following: tradenames, trade dress, patents, claims, goodwill, relations with
vendors, suppliers and customers, (including merchant and vendor id numbers),
computer software, systems and other means of doing business (including, without
limitation, as more fully set forth on Schedule A hereto) and all such other
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general intangibles necessary or appropriate (i) for completion of certain
contracts in process, (ii) creation of new contracts, (iii) fulfillment of such
contracts in the ordinary course of business, and (iv) continuation of the
business and goodwill of Periscope heretofore conducted under such names and
with such assets and property substantially as heretofore conducted by
Periscope, which shall, together with the Trademarks and Additional Trademarks
(as hereafter defined), be referred to collectively as the "Licensed Property";
and
WHEREAS, as a condition to the closing of the Purchase Agreement, Licensor
has agreed to license to Licensee all rights possessed by Licensor that may be
necessary or appropriate to operate a newly established business enterprise for
the purposes of utilizing the Licensed Property as well as Assets acquired
pursuant to the Purchase Agreement and under the names heretofore utilized by
Periscope and grant the licenses provided herein, including, without limitation,
the exclusive worldwide right to manufacture, make, have made, use and sell
products based on the Licensed Property and Licensee desires to utilize such
assets and properties in continuation of the lines of business heretofore
operated by Periscope, pursuant to its business plans therefor; and
WHEREAS, Licensor and Licensee have entered into the New Factoring
Agreement (as hereafter defined) pursuant to which Licensee has assumed the
obligation for the Initial Advance for the procurement of inventory prior to the
date hereof and the Purchase Advance in connection with the deferral of an
amount due and owing under the Purchase Agreement, which obligations shall
become due and payable in accordance with the terms of the Purchase Agreement.
NOW, THEREFORE, the parties hereto, intending legally to be bound, agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms
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shall have the following meanings:
1.1. "Additional Trademarks" shall mean any marks hereafter adopted
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and used by Licensee for wearing apparel or related goods which are
confusingly similar to any Trademark (including but not limited to any xxxx
which includes the words DIRECTIVE, DIRECTIVES or FIBERGENICS).
1.2. "Affiliate" of an entity shall mean any corporation, limited
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liability company, partnership, joint venture or other entity that
controls, is controlled by or is under common control with such entity.
1.3. "Century Adjusted Deficiency Amount" shall mean the amount of
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the overadvance existing under the Factoring Agreement on the date of this
Agreement (but not more than $7.0 million) as shown in the financial
records of Licensor, less (without duplication and without giving effect to
any cash collateral applications to such overadvance made by Licensor) (i)
all amounts received by Licensor in collected funds on and after the date
hereof in payment of Periscope's obligations to Licensor under the
Factoring Agreement (the "Periscope Obligations"); (ii) all amounts
received in collected funds by Licensor on and after the date hereof
pursuant to Section 3 of this Agreement and in respect of purchase price
payments under the Purchase Agreement; (iii) all amounts received in
collected funds by Licensor on and after the date hereof in reduction of
the Periscope Obligations which are paid under any guaranty, indemnity,
surety, policy of insurance, bond or right of set-off, (iv) all amounts
received in collected funds by Licensor on and after the date hereof (net
of all costs and expenses associated with such disposition) arising out of
Licensor's sale or other disposition of collateral granted to Licensor
under the Factoring Agreement and (v) all royalty payment reductions
expressly
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permitted by the provisions of Section 3.5 hereof. For the absence of
doubt, by way of example (and without limitation), the Century Adjusted
Deficiency Amount shall be reduced in the amount of and from the following
sources (without duplication): (i) payment of the purchase price under the
Purchase Agreement in the amount actually received by Licensor in collected
funds; (ii) proceeds of sales of Periscope inventory by Licensor or on
Licensor's behalf by Licensee, in the net amount thereof (after deduction
of costs and expenses of sale) actually received by Licensor in collected
funds; (iii) proceeds of accounts receivable of Periscope actually received
by Licensor in collected funds on and after the date hereof (net of
discounts, charge backs and allowances) and (iv) royalties actually
received by Licensor in collected funds under and in accordance with
Section 3 hereof.
1.4. "Contract Period" shall mean the period beginning with the date
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of this Agreement and ending on the date on which this Agreement terminates
in accordance with the provisions of Section 7 hereof.
1.5. "Current Orders" shall have the meaning set forth in Section
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3.2 hereof.
1.6. "Excluded Product" shall mean any product that is not made,
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used or sold in reliance on any of the licenses hereunder.
1.7. "Initial Advance" shall mean the amount of $200,000 advanced by
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Licensor to Periscope on October 6, 2000 for the procurement of goods that
constitute Current Orders.
1.8. "Licensed Product" shall mean any product that is made, used or
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sold in reliance on the trademarks and tradenames licensed hereunder as set
forth on Exhibit C hereto.
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1.9. "Maximum Royalty Amount" shall mean the lesser of (i) $7.0
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million or (ii) the Century Adjusted Deficiency Amount.
1.10. "Net Sales" shall mean the invoiced price of finished products
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(after deduction of credits for returns of defective products and customary
shipping expenses, including shipping insurance) that comprise (or to which
are attached) Licensed Products sold to ultimate customers by or on behalf
of Licensee and its Affiliates, less discounts, credits allowances, give-
backs, rebates, transportation expenses, insurance costs, customs duties,
export license fees, sales or excise taxes or fees, duties assessments or
other charges in the nature of the foregoing (without duplication);
provided that, for purposes of this definition, (i) if Licensee shall sell
any Licensed Product through an Affiliate, the invoiced price subject to
royalties under Section 3 hereof shall be that charged to the ultimate
customer by or on behalf of such Affiliate, and (ii) if a Licensed Product
sold by or on behalf of Licensee or an Affiliate is attached to another
finished product, then Net Sales for purposes of determining royalties
under Section 3 hereof shall be based on the revenues to Licensee and its
Affiliates derived from the invoiced price of that portion of such finished
product representing the portion attributable to the Licensed Product.
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1.11. "New Factoring Agreement" means that certain factoring
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agreement and related agreements entered into as of the date hereof by and
between Licensor and Licensee, as amended, modified and supplemented from
time to time.
1.12. "Purchase Advance" means the amount of $250,000 due and owning
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from Licensee to Licensor under the Purchase Agreement which constitutes a
deferred portion of the Purchase Price payable by Licensee to Licensor
under and is defined in the Purchase Agreement and which constitutes and
obligation of Licensee to Licensor under the New Factoring Agreement.
2. Grant of Exclusive License. In consideration of Licensee's
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agreements hereunder, and subject to the terms and conditions hereof, Licensor
hereby grants to Licensee an exclusive worldwide right and license (without any
retained right in Licensor, other than Licensor's ownership interest) to use the
Licensed Property in connection with the manufacture, advertising, promotion,
use, sale and distribution of Licensed Products. This grant includes the full
right to grant sublicenses to others, but only pursuant to a written
sublicensing agreement which shall be approved in advance by Licensor (which
approval shall not be unreasonably withheld). This grant includes the right to
have completed and sell Licensed Products in process and to utilize vendors and
subcontractors without restriction. Licensee shall promptly advise Licensor if
and when any Additional Trademarks are adopted and used. Licensee understands
and agrees that Licensor shall own all such Additional Trademarks, subject to
the rights of Licensee under this Agreement. If Licensee wishes to have Licensor
register any Additional Trademarks, it shall notify Licensor of its desire for
such registration, and Licensor shall cooperate with Licensee, and execute all
documents reasonable and necessary, in connection with any such application.
Registration of any Additional Trademarks shall be at the expense of Licensee.
3. Royalties. In consideration of the grant of the exclusive
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license under Section 2 hereof, Licensee shall make payments (the "Royalty
Payments") to Licensor as follows, provided, however, that the total of all such
payments shall not exceed the Maximum Royalty Amount:
3.1. Current Order Payments. Commencing on the date hereof during
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the Contract Period, Licensee shall pay Licensor royalties, payable monthly
as provided in Section 4.2 hereof, in an amount equal to five percent (5%)
of Net Sales of Licensed Products constituting Current Orders.
Notwithstanding the foregoing, solely with respect to the three (3)
purchase orders constituting Current Orders assigned by Midisys, Inc. to
Licensee pursuant to a Xxxx of Sale dated and as in effect on the date
hereof, Net Sales shall be calculated without giving effect to the four
percent (4%) over billing relating thereto.
3.2. "Current Orders" for the purposes hereof, shall consist of the
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booked sales orders identified on Exhibit D hereto.
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3.3. Earned Royalties. Licensee shall pay Licensor earned royalties
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("Earned Royalties"), during the Contract Period, payable as provided in
Section 4.2 hereof, at the rate of two (2%) percent on all Net Sales of
Licensed Products other than Current Orders ("New Orders").
3.4. Payments. Payments shall be made in such manner and to such
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parties in accordance with this Agreement as shall be directed by Licensor
pursuant to written instructions certified by a suitable officer of
Licensor. In the absence of direction, Licensee shall make all payments to
Licensor in immediately available funds in accordance with the following
wire transfer instructions:
Bank: The Chase Manhattan Bank
ABA#: 000000000
Account: 003-002330
For the Account of: Century Business Credit Corporation
Unless payment in another currency is agreed, all payments hereunder shall
be in U.S. Dollars at the exchange rate published in the Wall Street
Journal three (3) days prior to the date required for payment.
3.5. Royalty Payment Reductions. Notwithstanding anything contained
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in this Agreement to the contrary, (a) in the event Licensee incurs and
actually pays to the United States Customs Service ("Customs") duty fees
and/or other amounts (collectively, the "Customs Duties") arising solely
out of Customs Duties attributable to Periscope (but not paid by Periscope)
and Licensee provides to Licensor supporting evidence therefor reasonably
satisfactory to Licensor in the exercise of its good faith discretion (the
"Licensee Customs Payments"), then Licensee shall be permitted to deduct
from Royalty Payments then and thereafter owing by Licensee to Licensor an
aggregate amount equal to fifty percent (50%) of all Licensee Customs
Payments actually paid by Licensee to Customs together with reasonable
attorneys' fees incurred by Licensee in connection with such Custom Duties;
and (b) in the event Licensee incurs and actually pays to Xxxxxxx Xxxxxxxxx
("RM") any amounts arising out of any settlement negotitations relating to
a threatened claim or any amounts arising out of any litigation instituted
by RM against Licensee relating in any manner whatsoever to RK's employment
agreement (as in effect on the date hereof) with Periscope and/or incurs
and actually pays any reasonable attorneys fees in connection with the
defense and/or settlement of any such litigation and Licensee provides to
Licensor supporting evidence therefor reasonably satisfactory to Licensor
in the exercise of its good faith discretion (the "Licensee Kuslansky
Payments"), then Licensee shall be permitted to deduct from Royalty
Payments then and thereafter owing by Licensee to Licensor an aggregate
amount equal to all Licensee Kuslansky Payments actually paid by Licensee;
provided, however, Licensee shall consult in good faith with Licensor and
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Giant Group, Ltd. ("Giant") in connection with such defense and/or
settlement and shall not enter into any such settlement without Giant's and
Licensor's prior written approval (which such approval shall not be
unreasonably withheld or delayed).
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3.6. Option. Licensor hereby grants to Licensee an exclusive
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irrevocable option to acquire the entire right, title and interest in and
assignment of all Licensed Property, in such form as is appropriate for the
conveyance thereof and recordation with the Patent and Trademark office or
other appropriate registration office, for the sum of $1.00 following
Licensor's receipt of royalty payments under and in accordance with the
terms of Section 3 hereof in an amount sufficient to reduce the Century
Adjusted Deficiency Amount to zero ($0), but in no event in an aggregate
amount greater than $7,000,000.
4. Records, Reports, Payments and Inspection.
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4.1. Records. Licensee shall keep adequate and complete books and
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records showing the dates and amounts of Net Sales of Licensed Products and
the customers to whom such sales are made.
4.2. Reports and Payments. Licensee shall, within ten (10) days
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after the end of each calendar month during the Contract Period, furnish to
Licensor certified written reports showing Net Sales by or for it and its
Affiliates during such calendar month; and (i) other than with respect to
payments required to be made in accordance with the provisions of the
following clause "(ii)", Licensee shall pay to Licensor, in immediately
available funds, within the aforementioned 10-day period, the royalty
payments required pursuant to Section 3 hereof in respect of Net Sales made
during such calendar month for which payment has been received by Licensee
or its Affiliates; and (ii) with respect to New Orders arising during the
period commencing on the date hereof and ending on October 24, 2001 (the
"Specified Period"), Licensee shall pay to Licensor, in immediately
available funds, within ten (10) days after the last day of the Specified
Period, the cumulative amount of Earned Royalties (without any interest
thereon) which have accrued during the Specified Period and are payable to
Licensor pursuant to Section 3.3 hereof. If the Contract Period ends other
than on the last day of a calendar month, a certified written report with
respect to the period during the Contract Period not covered as of the
preceding report shall be furnished, and if the Contract Period ends other
than on the last day of a calendar month, payment of outstanding royalties
due hereunder for such period shall be made, within ten (10) days after the
end of the Contract Period. If Licensee sells remaining inventory after the
Contract Period is ended, certified written reports with respect to each
calendar month or portion thereof within such sell-off period (the "Sell-
Off Period") shall be furnished to Licensor, and if the Sell-Off Period
ends other than on the last day of a calendar month, payment of outstanding
royalties due hereunder for such period shall be made, within ten (10) days
after the end of the Sell-Off Period. All reports shall be substantially in
the form of Exhibit E hereto, with such modifications as are reasonably
required by Licensor or Licensee.
4.3. Inspection. All books and records kept pursuant to Section 4.1
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hereof shall be open to inspection by Licensor during reasonable business
hours to the extent necessary for the purpose of verifying dates and
amounts of Net Sales and any other information furnished by Licensee to
Licensor pursuant to Section 4.2 hereof. In addition, an inspection of all
books and records kept pursuant to Section 4.1 hereof may
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be made not more often than once in each calendar year, at Licensor's
expense (except as otherwise provided in Section 4.4 hereof), by a
qualified accountant appointed by Licensor to whom Licensee has no
reasonable objection. Licensee shall not be required to retain any such
books and records for more than five (5) years after the close of any
calendar quarter to which such books and records relate unless they are the
subject of a dispute between Licensor and Licensee, in which case such
books and records shall be retained until such dispute has been finally
resolved. Nothing contained herein shall limit in any manner whatsoever
Licensor's inspection rights granted under the Factoring Agreement and the
New Factoring Agreement.
4.4. Reimbursement of Deficiencies. If any inspection conducted
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pursuant to Section 4.3 hereof reveals a deficiency in any reports or
payments by Licensee pursuant to Section 4.2 hereof during any month in an
amount of $25,000 or more, Licensee shall reimburse Licensor for all
reasonable out-of-pocket costs of such inspection and for any further
reasonable costs incurred by Licensor directly as a result of any such
reporting deficiencies, and Licensee shall pay any such payment deficiency
to Licensor with interest thereon accruing from the original due date to
but not including the date of payment at a per annum rate equal to 10% or,
if lower, the highest rate permitted under applicable law.
4.5. Reports by Licensor. Licensor shall keep adequate and complete
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books and records showing the dates and amounts of all credits and
transactions affecting the amount owing by Periscope and its Affiliates
under the Factoring Agreement, including the amount of the Century Adjusted
Deficiency Amount. Licensor shall, within thirty (30) days after the end of
each calendar month during the Contract Period, furnish to Licensee
certified written reports showing the amount of the Century Adjusted
Deficiency Amount and the calculation thereof. All books and records kept
pursuant to this Section 4.5 shall be open to inspection by Licensee during
reasonable business hours to the extent necessary for the purpose of
verifying dates and amounts of credits and adjustments and any other
information furnished by Licensor to Licensee pursuant to this Section 4.5.
5. Third-Party Infringement.
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5.1. If either party shall become aware of any infringement,
dilution or other actionable misuse of any Licensed Property, then such
party shall promptly give notice thereof to the other party and the parties
shall consult in good faith as to whether to assert any claim or commence
legal action.
5.2. Licensee shall have the initial right to prosecute any such
claim, and to select legal counsel with respect thereto. Licensee shall pay
all legal fees and costs in connection therewith and shall keep Licensor
reasonably informed about the status of the claim or litigation. Licensor
shall join as a party to any litigation, if reasonably requested by
Licensee, and shall fully cooperate in its prosecution, with Licensee
paying all legal fees and costs in connection therewith. Any monetary
recovery from any such litigation shall be retained by Licensee.
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5.3. If, after notice given in accordance with subparagraph 5.1,
Licensee elects not to assert any claim, Licensor shall have the right to
do so in its own name. If Licensor prosecutes any such claim, it shall
select legal counsel and pay all costs and fees in connection therewith.
Licensee shall join as a party to the litigation if Licensor deems it
necessary or desirable, and shall fully cooperate in its prosecution, with
Licensor paying all legal fees and costs in connection therewith. Any
monetary recovery from any such litigation shall be retained by Licensor.
5.4. Neither party shall settle any action relating to the Licensed
Property if by virtue of such settlement any party to this Agreement is
required to acknowledge an infringement or pay any damages or assume any
other obligation that affects its business or reputation, without the
express written consent of such party.
6. Liability Indemnification/Quality Controls. (a) Licensor
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assumes no responsibility for the manufacture, product specifications or end-use
of any products that are manufactured, used or sold by or for Licensee or its
Affiliates under the Licensed Property. No warranties made in connection with
any such products by Licensee, its Affiliates or their respective agents, as
manufacturer and/or seller, shall directly or impliedly obligate Licensor.
(b) Licensor makes no representations or warranties with respect to the
Licensed Property licensed hereunder other than that (i) Licensor has received
no notice that any third-party license or consent is required by or for the
manufacture, use or sale of Licensed Products by or on behalf of Licensee, and
(ii) pursuant to (a) the Trademark Assignment, Periscope sold and conveyed to
Licensor all of Periscope's right, title and interest in and to the Trademarks
identified on Exhibit C attached hereto and (b) the Possession Agreement,
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Periscope granted peaceful possession to Licensor of all other assets of
Periscope constituting Licensed Property and as a result thereof Licensor may
convey to Licensee all of Periscope's right, title and interest in and to the
Licensed Property, free and clear of all security interests, mortgages, liens,
claims, charges, restrictions, equities, easements, pledges, rights-of-way and
encumbrances subordinate to Licensor's security interest in the Licensed
Property and can sell to Licensee the property under the Purchase Agreement and
grant the license and option hereunder of Licensed Property to License pursuant
to this Agreement (collectively, "Security Interests") subject only to those
Security Interests that would be subject to the exclusive license granted
hereunder.
(c) Licensor further represents and warrants in each case to the best of
its knowledge, without making any independent investigation, that it has no
actual knowledge that (i) Periscope in connection with its business uses any
trademarks, services marks, tradenames, patents or copyrights or applications
therefor, other than the Trademarks and tradenames specifically set forth on
Exhibit C attached hereto (the "Marks"), (ii) any Xxxx is subject to any
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license, royalty arrangement or dispute, (iii) any product manufactured, used or
sold by Periscope or any manufacturing process heretofore used by Periscope
infringes or conflicts with the right of any third party, (iv) any product
manufactured, used or sold by, or manufacturing process used by, any person,
firm or entity infringes or conflicts with any Xxxx, (v) it has not received
written
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notification of Periscope's infringement of the rights of any third party or any
other party's infringement of any Xxxx; and (vi) any Xxxx infringes any
trademark or tradename of others in the United States of America or any other
county in which such Xxxx has been used by Periscope in connection with
Periscope's manufacture, use or sale of any product or otherwise.
(d) In the event a claim is made against Licensee and such claim
constitutes a breach by Licensor of one or more of the representations or
warranties made by Licensor to Licensee under this Section 6, upon Licensee's
promptly advising Licensor of any such claim and providing Licensor with the
right to defend such claim at Licensor's sole cost and expense by counsel of
Licensor's choosing, then with respect to Licensor's breach of such warranty and
representation Licensor shall be liable to Licensee to the extent of damages, if
any, actually suffered by Licensee, but limited nevertheless to an amount equal
to (a) that portion of the Purchase Price actually received by Licensor under
and as defined in the Purchase Agreement minus (b) any and all amounts
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theretofore paid by Licensor to Licensee in connection with a breach by Licensor
of its representations and warranties to Licensee under the Purchase Agreement.
(e) Licensee hereby covenants and agrees that the Licensed Property that
it shall hereafter manufacture, use or sell shall be of high standard and of
such quality and appearance as shall, in the reasonable judgment of Licensor, be
reasonably adequate and suited to their exploitation to the advantage and to the
protection and enhancement of the Licensed Property, and the goodwill pertaining
thereto. Upon request of Licensor, Licensee shall forward to Licensor production
samples of Licensed Products, and shall permit Licensor or its designated agents
access, upon reasonable advance notice, to Licensee's facilities during regular
business hours, and shall comply with Licensor's reasonable instructions with
respect to quality and production issues relating to Licensed Property. Licensee
covenants and agrees that it will not take any action that would denigrate the
value of, or render invalid, the Licensed Property. Licensee acknowledges that
Licensor owns the Licensed Property, agrees it will do nothing inconsistent with
such ownership and agrees to assist Licensor in recording this Agreement with
appropriate government authorities. Licensee agrees that it will not attack the
title of Licensor to the Licensed Property.
7. Term and Termination; Effects of Termination.
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7.1. Term. Unless sooner terminated in a manner herein provided,
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this Agreement and the licenses herein granted shall continue in force
until such time as Licensor's receipt of royalty payments under and in
accordance with the terms of Section 3 hereof in an amount sufficient to
reduce the Century Adjusted Deficiency Amount to zero ($0), but in no event
in an aggregate amount greater than $7,000,000.
7.2. Termination. This Agreement may be terminated at any time prior
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to the term set forth in Section 7.1. hereof, as follows:
7.2.1. By Agreement. If at any time after the effective date
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of this Agreement Licensor and Licensee, jointly upon mutual
agreement, elect to
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terminate this Agreement in a writing setting forth the effective date
of such termination.
7.2.2. By Breach. If Licensee or Licensor shall breach any of
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the covenants contained in this Agreement to be performed by either of
them, Licensee or Licensor, as the case may be, may terminate this
Agreement, at its option and without prejudice to any of its other
legal or equitable rights and remedies, by giving the other party
thirty (30) days' prior written notice of such breach and termination
unless the other party within such period shall have rectified such
breach to the other party's reasonable satisfaction.
7.2.3. By Bankruptcy. If Licensee shall become insolvent,
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suspend business, file a voluntary petition, file an answer admitting
the material allegations of, or consent to, an involuntary petition
pursuant to (or purporting to be pursuant to) any reorganization or
insolvency law of any jurisdiction, make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver
or trustee of a substantial part of its property, then to the extent
permitted by law Licensor may immediately terminate this Agreement by
giving written notice of such termination to Licensee.
7.2.4 By Payment Deficiency. If at the end of any yearly
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anniversary of this Agreement during the Contract Term, Licensee shall
not have paid and Licensor shall not have received in collected funds
royalty payments pursuant to Section 3.3 hereof ("Royalties") in an
amount at least equal to $500,000 for each such twelve-month period,
giving effect during the first twelve-month period hereto to Earned
Royalties accrued but not paid pursuant to Section 4.2 hereof, then
Licensor may terminate this Agreement and the license granted
hereunder, at its option, by giving Licensee thirty (30) days' prior
written notice, provided, however, that Licensee may, at its option,
make all payment of Royalties to Licensor during such period (taking
into account such Earned Royalties) in which case such notice of
termination shall not be effective.
7.3. Effects of Termination. Upon termination of this
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Agreement for any reason, the license granted under Section 2 hereof
shall be terminated but, notwithstanding such termination, Licensee's
obligation to pay Licensor any amounts payable hereunder with respect
to Net Sales made prior to such termination, and the parties'
respective obligations under Sections 6, 8 and 9 hereof, shall in each
case survive such termination.
8. Confidential Information. Licensee and Licensor shall each treat
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as confidential, use only in connection with this Agreement and not disclose to
any unauthorized third parties, any and all Confidential Information disclosed
to it or any of its Affiliates until three (3) years after the end of the
Contract Period. All Confidential Information disclosed by Licensor shall be
either disclosed in writing and designated "confidential" or, if disclosed
orally, confirmed by Licensor in writing and designated "confidential" within
thirty (30) days after such disclosure. For purposes of this Section 8,
"Confidential Information" shall mean: (i) any infor-
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mation pertaining to the Licensed Property or any know-how related thereto
disclosed by Licensor to Licensee or any of its Affiliates to the extent that,
as of the date of such disclosure, such information is not (a) otherwise known
to Licensee, (b) in the public domain, (c) required to be disclosed by Licensee
or such Affiliate by governmental regulation or court order or (d) obtained by
Licensee or such Affiliate from a third party without binder of secrecy and
having no confidentiality obligation to Licensor; (ii) any information
concerning sales, products and royalty amounts disclosed by Licensee in the
monthly reports furnished to Licensor pursuant to Section 4.2 hereof to the
extent that, as of the date of such disclosure, such information is not (a)
otherwise known to Licensor, (b) in the public domain, (c) required to be
disclosed by Licensor by governmental regulation or court order or (d) obtained
by Licensor from a third party without binder of secrecy and having no
confidentiality obligation to Licensee or its Affiliates; and (iii) the terms of
this Agreement (provided that Licensor may publicly announce that this Agreement
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has been entered into with Licensee, subject to Licensee's prior approval, and
may include additional information which Licensee agrees may be included in such
announcement); provided that information shall no longer constitute Confidential
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Information when, through no fault or omission of Licensee or any of its
Affiliates or of Licensor, as the case may be, such information either (1)
enters the public domain or (2) is required to be disclosed by governmental
regulation or court order.
9. Miscellaneous Provisions.
------------------------
9.1. Assignment. This Agreement is not assignable by either party
----------
hereto without the other party's prior written consent except by Licensor
to an entity that is acquiring substantially all of Licensor's business and
assets. Any purported assignment not complying with the terms of this
Section 9.1 shall be void.
9.2. Applicable Law. This Agreement shall be construed, governed,
--------------
interpreted and applied in accordance with the internal laws of the State
of New York without regard to principles of conflicts of laws.
9.3. Non-Use of Names; Marking. Licensee shall not use the name of
-------------------------
Licensor or any adaptation thereof in any advertising, promotional or sales
literature without the prior written consent of Licensor, except that
Licensee may in its marketing and other literature reasonably acknowledge
that it is licensed by Licensor under the Licensed Property.
9.4. Licensee agrees to defend, indemnify and hold Licensor, its
employees and agents harmless from and against all claims, damage, suits
and expenses (including without limitation reasonable attorneys' fees,
court costs and other litigation expenses) arising by reason of or in
connection with the manufacturing, distribution, advertising or promotion
by Licensee of the Licensed Products on and after the date of this
Agreement. The insurance coverage provided by Licensee to Licensor under
the New Factoring Agreement shall include product liability insurance from
a qualified insurance company against any and all claims, demands and
causes of action arising out of any alleged defects in or failure to
perform by the Licensed Products or any material used in connection
therewith. Such insurance shall be in the amount of at least $2,000,000 for
11
bodily injury and $2,000,000 for property damage per occurrence worldwide.
Licensor shall be named as additional insured party as its interests may
appear. Such insurance policy shall provide that it may not be modified or
canceled except upon thirty (30) days' advance written notice by the
insurer to Licensor. Licensee shall furnish Licensor with a certificate of
insurance evidencing the aforesaid insurance coverage.
9.5. Severability. If any provision of this Agreement shall be
------------
adjudicated invalid or unenforceable, such invalidity or unenforceability
shall not in any manner affect or render invalid or unenforceable any other
provision of this Agreement and such adjudication shall apply only in the
particular jurisdiction in which such adjudication is made, and this
Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein; provided, however, to the extent any
-------- -------
provision hereof is deemed unenforceable by virtue of its scope in terms of
area or length of time, but may be enforceable with limitation thereon, the
parties agree that the same shall nevertheless be enforceable to the
fullest extent permissible under the laws and public policies applied in
such jurisdiction in which enforcement is sought.
9.6. Notices. All notices and communications provided for hereunder
-------
shall be deemed given when sent in writing if mailed with return receipt
requested or delivered by hand, by courier or by overnight delivery or by
facsimile transmission (with electronic confirmation of receipt) to the
following addresses or such other address as may be fixed by notice:
To Licensor: Century Business Credit Corporation
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Facsimile:
with a copy to: Xxxx & Hessen, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxxx, Esq.
Facsimile: 000-000-0000
To Licensee: Alarmex Holdings, L.L.C.
Madison Partners, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx and Xxxxxx Xxxxx
9.7. Benefits. All terms and provisions of this Agreement shall bind
--------
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12
9.8. Counterparts. This Agreement may be executed simultaneously in
------------
one or more counterparts, each of which shall be deemed to be original but
all of which together shall constitute one and the same agreement.
9.9. Headings; References. The headings in this Agreement are
--------------------
intended solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement. References to
sections are to sections of this Agreement, as amended from time to time,
unless otherwise indicated.
9.10. Entire Understanding; Waiver and Amendment. This Agreement
------------------------------------------
constitutes the entire understanding between the parties hereto with
respect to the subject matter hereof. No waiver or amendment of any
provision hereof or release of any right hereunder shall be valid unless
the same is in writing and is consented to by the party to be bound
thereby. No waiver by either party hereto in respect of any breach of this
Agreement shall constitute a waiver in respect of any other breach of this
Agreement.
[SIGNATURE LINES ON NEXT PAGE]
13
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
CENTURY BUSINESS CREDIT CORPORATION
By: /s/ XXXXXXXXXXX XXXX
----------------------------------
Name: Xxxxxxxxxxx Xxxx
Title: Senior Vice President
ALARMEX HOLDINGS, L.L.C.
By: /s/ X. XXXXX
----------------------------------
Name: X. Xxxxx
Title: Attorney
AGREED TO AND ACCEPTED:
PERISCOPE SPORTSWEAR, INC.
By: /s/ XXX XXXXXXXXX
---------------------------
Name: Xxx Xxxxxxxxx
Title: Vice President
GIANT GROUP, LTD.
By: /s/ XXXXX XXXXXXXX
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice Chairman
14
EXHIBIT A
---------
Possession Agreement
October 31, 2000
Century Business Credit Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Pursuant to the terms of a Factoring Agreement by and between the
undersigned and you dated as of August 10, 1999, the undersigned is indebted to
you in the sum of approximately $14,387,000 plus interest from October 1, 2000
and costs, secured by security interests in your favor in all accounts,
inventory, machinery, equipment, general intangibles and all other assets of the
undersigned (the "Collateral"). Because of the inability of the undersigned to
currently pay its accelerated debts and obligations to you, the undersigned
herewith grants to you, effective as of 12:01 a.m. on October __, 2000, all
rights of possession in and to the Collateral of the undersigned to be disposed
of, as you, in your best discretion, deem advisable and for you to credit the
net proceeds resulting from any sale or other disposition to the account of the
undersigned with you. Any such net proceeds remaining after application thereof
to the undersigned's indebtedness to you (together with interest and costs)
shall be remitted to the undersigned.
Subject to the rights of any landlord, this letter also serves as an
authorization to any employee of the undersigned or any third party to grant
you, and the undersigned hereby grants you, full and complete access to any
premises where the Inventory is located to allow you to take possession of any
such Inventory in order to enforce your rights against and collect the liability
due to you from the undersigned. In addition, you may designate a custodian who
shall have the right, among other things, to change the locks on all gates and
doors providing access to such premises or the Inventory.
The undersigned further acknowledges that it has defaulted in the
payment of its accelerated debts and obligations to you and hereby waives and
renounces all of its rights to notification under Section 9-504 of the Uniform
Commercial Code ("UCC") as to the sale or other disposition by you of the
Inventory and under Sections 9-505 and 9-506 of the UCC regarding acceptance of
collateral as discharge of the obligations of the undersigned to you and waiver
of the undersigned's right to redeem collateral, respectively.
15
The undersigned knowingly and intelligently waives any rights it may
have to notice and a hearing before a court of competent jurisdiction and
consents to your entry on the premises where the Inventory is located for the
purposes set forth herein.
Very truly yours,
PERISCOPE SPORTSWEAR, INC.
By /s/ Xxx Xxxxxxxxx
------------------------
Name: Xxx Xxxxxxxxx
Title: Vice President
16
CONSENT OF GUARANTOR
The undersigned as a guarantor of the debts and obligations of
Periscope Sportswear, Inc. ("Client") to Century Business Credit Corporation
("Century") hereby consents to the aforesaid letter granting peaceful possession
described therein and hereby waives and renounces all of its rights to
notification under (S)9-504 of the Uniform Commercial Code ("UCC") as to the
sale or disposition by Century of the above described Inventory, and under
(S)(S)9-505 and 9-506 of the UCC regarding acceptance of the Inventory as
discharge of the obligations of Client to Century, and waiver of the right to
redeem the Inventory, respectively.
GIANT GROUP, LTD.
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice Chairman
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this 31 day of October, 2000, before me personally came Xxx
Xxxxxxxxx to me known, who, being by me duly sworn, did depose and say that he
is the Vice President of PERISCOPE SPORTSWEAR, INC., the entity described in and
which executed the foregoing instrument and that he is authorized to execute
said instrument on behalf thereof.
/s/ Xxxxxx Xxxxxx
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 31 day of October, 2000, before me personally came Xxxxx
Xxxxxxxx, to me known, who, being by me duly sworn, did depose and say that he
is the Vice Chairman of GIANT GROUP, LTD., the corporation described in and
which executed the foregoing instrument and that he is authorized to execute
said instrument on behalf of said corporation.
/s/ Xxxxxx Xxxxxx
------------------------------
NOTARY PUBLIC
18
EXHIBIT B
---------
TRADEMARK ASSIGNMENT
--------------------
WHEREAS, PERISCOPE SPORTSWEAR, INC., a Delaware corporation, having
its principal place of business at 0000 Xxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx
00000 (hereinafter referred to as the "Debtor") owns and has used in its
business certain trademarks, as listed on Schedule "A" hereto (hereinafter
referred to as the "Trademarks"); and
WHEREAS, Debtor is in default under the terms of the a Factoring
Agreement dated as of August 10, 1999, as amended from time to time (hereinafter
referred to as the "Factoring Agreement") between the Debtor and CENTURY
BUSINESS CREDIT CORPORATION (hereinafter referred to as the "Secured Party"),
the Trademark Collateral Security Agreement dated as of August 10, 1999 and all
documents executed in connection therewith (hereinafter collectively referred to
as the "Security Documents"); and
WHEREAS, Secured Party, pursuant to its rights as a secured party
under the Factoring Agreement, the Security Documents, and pursuant to and in
exercise of its rights as a secured party under the New York Uniform Commercial
Code, has chosen to exercise its rights upon default,
NOW, THEREFORE, for good and valuable consideration, the full receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, Debtor does hereby absolutely sell, assign, transfer and convey
unto Secured Party all of the Debtor's rights, title and interest in and to the
Trademarks, together with the goodwill of the business symbolized by the
Trademarks, and the right to xxx and recover for past infringement thereof.
IN WITNESS WHEREOF, PERISCOPE SPORTSWEAR, INC. has caused this
Assignment to be duly executed by its officer thereunto duly authorized as of
the ___ day of ___________, 2000.
PERISCOPE SPORTSWEAR, INC.
BY:_______________________________
Name:
Title:
19
Schedule A
----------
For information on this schedule, please contact
Xxxxx X. Xxxxxxxx
Vice President, CFO
Giant Group LTD
0000 Xxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
(000) 000-0000
20
EXHIBIT C
---------
I. Registrations/Applications
--------------------------
Trademarks Reg. No. or Xxx.Xx. Filing Date Country
---------- ------------------- ----------- -------
DIRECTIVE SPORTS 2,089,412 11/26/96 USA
DIRECTIVE SPORTS PLUS DESIGN 2,127,046 11/26/90 USA
DNA FIBERGENICS IT'S IN YOUR GENES 75/549,507 09/08/98 USA
DIRECTIVES PLUS DESIGN 2,090,488 11/08/95 USA
II. Other
-----
Any and all patents, trademarks, service marks, copyrights, licenses,
applications, together with any renewals or extensions thereof, any registration
of, application for continuations, continuations-in-part, divisional or reissues
for any of the foregoing, any and all other technical information, proprietary
rights, secret formulas, trade secrets, source codes, know-how, product
formations, product specifications, test information, processes (whether written
or oral) or device, all inventions, ideas and improvements, business plans or
methods, confidential information (including, for example and without
limitation, customer and vendor lists) and any rights in or to any of the
foregoing, brand names and trade names, possessed by, developed by or on behalf
of, used by or the rights to which are otherwise possessed or used by Periscope.
All software in connection with all computers and computer systems utilized
by Periscope in its business.
Tradenames
----------
Periscope
PS
Performance Team
PFP
21
EXHIBIT D
---------
For information on this exhibit, please contact
Xxxxx X. Xxxxxxxx
Vice President, CFO
Giant Group LTD
0000 Xxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
(000) 000-0000
Current Orders
Purchase Orders
1. Sam's Warehouse Lot 2418 (PO 79001) 72,000 Units Style 2699 10.25/Unit
2. Sam's Warehouse Lot 2419 (PO79002) 72,000 Units Style 2684 10.25/Unit
3. Sam's Warehouse Lot 2420 (PO79003) 144,000 Units Style 2759 10.10/Unit
22
EXHIBIT E
---------
Licensee ROYALTY REPORT
Licensee Name: ___________________________________
Address: ___________________________________ Period Reported: ___________________________________
Phone Number: ___________________________________
Fax Number: ___________________________________
Contact Person: ___________________________________
------------------------------------------------------------------------------------------------------------------------------------
1. Total 2. Fees 3. 4. 5. Product Earned Royalties
Purchase Included Customer Customer Description
Order (1) Code(s) Country (Include
Amount Product
Code)
------------------------------------------------------------------------------------------------------------------------------------
Net ( x ) ( = )
Sales Royalty Royalties
% Earned
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------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Amount Payable
------------------------------------------------------------------------------------------------------------------------------------
23
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Total ( ) Credit Payment
Royalties for Period Enclosed
Earned
------------------------------------------------------------------------------------------------------------------------------------
Totals
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CERTIFIED AS COMPLETE AND CORRECT
____________________________________________
Duly Authorized Officer
-24-