AMENDED AND RESTATED LICENSE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AGREEMENT ("Agreement"), is dated as of
December 21, 2000 (the "Effective Date") by and between MacMark Corporation,
a Delaware corporation ("MacMark"), Equilink Licensing Corporation, a
Delaware corporation ("Equilink") and Sport Supply Group, Inc., a Delaware
corporation ("SSG").
WITNESSETH:
WHEREAS, MacMark is the owner of the Trademarks (as defined below);
WHEREAS, Equilink has exclusive rights to use and license the Trademarks (as
defined below), except for such rights granted to SSG by this Agreement and
the rights granted pursuant to the Other License Agreements (as defined
below);
WHEREAS, MacMark, Equilink and BSN Corp. ("BSN") entered into a Perpetual
License Agreement, a Trademark Maintenance Agreement, and a Master Agreement
(the "1992 Master Agreement"), all dated as of February 19, 1992
(collectively the "1992 Agreements");
WHEREAS, BSN assigned the 1992 Agreements to SSG;
WHEREAS, the February 19, 1992 Perpetual License Agreement and Trademark
Maintenance Agreement were twice amended, once by Amendment No. 1 dated as
of November 1, 1992 and once by Amendment No. 2 dated as of October 8, 1998;
WHEREAS, disputes have arisen between MacMark and Equilink, on the one hand,
and SSG, on the other hand, concerning the 1992 Agreements, as amended;
WHEREAS, the parties have resolved those disputes and others pursuant to a
Settlement Agreement dated as of December 21, 2000 (the "Settlement
Agreement");
WHEREAS, this Agreement is entered into in accordance with the terms of the
Settlement Agreement;
WHEREAS, this Agreement is intended to amend and restate, in their entirety,
the 1992 Agreements, as previously amended, as those agreements pertain to
SSG, MacMark and Equilink, but not to otherwise affect the 1992 Master
Agreement as it pertains to any other parties to that agreement;
NOW, THEREFORE, in consideration of the mutual covenants made herein and for
other good and valuable consideration, the delivery, receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Prior Agreements. This Agreement amends, restates and replaces, in
their entirety, the 1992 Agreements and all amendments of the 1992
Agreements that predate the Effective Date of this Agreement, as those
agreements pertain to SSG, MacMark and Equilink, but not to otherwise
affect the 1992 Master Agreement as it pertains to any other parties to
that agreement.
2. Definitions. For the purposes of this Agreement, the following terms
shall have the meanings set forth below. The singular includes the
plural and vice versa as indicated by the context. Any term defined
elsewhere in this Agreement shall have the meaning set forth in that
definition wherever the term is used in this Agreement.
2.1 "Brick and Mortar Retailer" shall mean a business, including the
advertisement, offer for sale, sale and distribution of products,
that: i) is conducted through sales in a physical store (as
contrasted with a virtual store operated using E-Commerce); and
ii) where the business solely intends to sell products exclusively
to individuals for their personal use.
2.2 "Brick and Mortar Retail Store" shall mean a means or method of
doing business, including the advertisement, offer for sale, sale
and distribution of products, that: i) is conducted through sales
in a physical store (as contrasted with a virtual store operated
using E-Commerce); and ii) where the business solely intends to
sell products exclusively to individuals for their personal use.
2.3 "Channels of Trade" shall mean conducting business (including the
advertisement, offer for sale, sale and distribution of products)
through any and all means and methods that currently exist or may
exist in the future, including but not limited to E-Commerce.
2.4 "Closeouts" shall mean MacGregor-branded Products sold by SSG that
satisfy one or more of the following: i) the MacGregor-branded
Product is no longer included in SSG's regularly scheduled
catalogs (but excluding any closeout catalogs); ii) SSG's current
intention is to neither reorder the MacGregor-branded Product nor
to offer it for sale other than as a closeout or discontinued
item; or iii) SSG advertises it as a "closeout," a "discontinued
item," an "overstocked item"or "while supplies last" item.
2.5 "Domestic Territory" shall mean the United States (including its
current and future territories, possessions, and military posts
worldwide), Canada, and Mexico.
2.6 "E-Commerce" shall mean conducting business (including the
advertisement, offer for sale, sale and distribution of products)
through a global, international, national, local or other
electronic network (such as the Internet, private network or
corporate intranet), or any subpart thereof, which may be accessed
or created now or in the future, and any other current or future
means or method of advertisement, sale, order taking or
distribution via an electronic means.
2.7 "Exclusive Customers" shall mean: (a) institutional sporting
goods customers, including, but not limited to, athletic teams,
boys and girls groups (including without limitation JCC's, PTA's,
and YMCA's), businesses (that are not Excluded Customers), camps,
churches, coaches, community centers, community service groups,
dealers (that are not Excluded Customers), educational
institutions and those that buy for and that are buying for
educational institutions or for students in connection with
programs sponsored by educational institutions (including without
limitation grade schools, high schools, colleges, administrators,
teachers, and coaches), federal and state governmental
subdivisions and agencies (including without limitation military
installations and prisons), health and sports clubs, hospitals,
hotels, human services, park and recreation departments, parks,
property management (including condominium, apartment and
community associations), recreational departments, resorts,
retirement homes, social organizations, team sports associations
and leagues (such as little leagues), youth sports leagues, and
those that buy for and are buying for institutional sporting goods
customers; and (b) any and all customers that: i) will resell or
who will offer to resell Products (as hereinafter defined) to
institutional sporting goods customers, and who also sell sporting
goods products to customers other than institutional sporting
goods customers; or ii) will resell or who will offer to resell
Products (as hereinafter defined) exclusively to institutional
sporting goods customers. In no instance shall Exclusive
Customers include any Excluded Customers.
2.8 "Excluded Customers" shall mean and be limited to those specific
entities listed on Exhibit C hereto and any other entity located
in the Domestic Territory that: i) sells exclusively to individual
consumers for their personal use; and ii) is not an On-Line Seller
(as hereinafter defined).
2.9 "Otherwise Licensed Products" shall mean and be limited to
products listed on Exhibit B-2 hereto and any products MacMark or
Equilink licenses to another licensee after SSG elects not to
exercise its right of first refusal under paragraph 9 so long as
such third party license is in effect.
2.10 "Footstar Agreement" shall mean that License Agreement between
Equilink and Footstar dated March 4, 1998, a true, correct and
complete copy of which MacMark shall deliver to SSG prior to the
execution and delivery of this Agreement.
2.11 "Individual Customers" shall mean any and all individual consumers
who are purchasing a Product (as hereinafter defined) other than
for resale and that are not Exclusive Customers.
2.12 "International Territory" shall mean all places other than the
Domestic Territory.
2.13 "K-Mart Agreement" shall mean that License Agreement between
Equilink and K-Mart dated January 23, 1989, as amended and
supplemented by the First Supplemental Agreement, Second
Supplemental Agreement and Third Supplemental Agreement dated
November 16, 1989, August 30, 1990, and June 30, 1994,
respectively, a true, correct and complete copy of which MacMark
shall deliver to SSG prior to the execution and delivery of this
Agreement.
2.14 "MacGregor-branded Product(s)" shall mean Product(s) (as
hereinafter defined) bearing or otherwise identified by the
Trademarks (as hereinafter defined).
2.15 "On-Line Sellers" shall mean any and all entities that sell, offer
to sell, resell or offer to resell a Product (as hereinafter
defined) through E-Commerce and that are not; i) Exclusive
Customers; ii) Brick and Mortar Retailers selling goods through
their own website. The parties agree and stipulate that an entity
that sells, offers to sell, resells or offers to resell a Product
through E-Commerce, but also meets the definition of Exclusive
Customer in paragraph 2.7, will be considered an Exclusive
Customer for purposes of this Agreement.
2.16 "Other License Agreements" shall mean the Regent Agreement, the K-
Mart Agreement and the Footstar Agreement.
2.17 "Outbound Freight" shall mean SSG's Average Freight Percentage
multiplied by total sales of MacGregor-branded Products in each
Royalty Year. As used in this paragraph 2.17, "SSG's Average
Freight Percentage" means SSG's total cost of outbound freight
divided by SSG's net revenues in each Royalty Year. By way of
example only, in fiscal year 2000, SSG's Average Freight
Percentage calculated under this formula was approximately 7.61%.
2.18 "Product(s)" shall mean the products listed on Exhibit B-1 hereto
and such additional products approved pursuant to paragraph 8.2 or
added pursuant to paragraphs 9 or 10.
2.19 "Regent Agreement" shall mean that License Agreement between
Equilink and Regent Sports dated September 24, 1999, a true,
correct and complete copy of which MacMark shall deliver to SSG
prior to the execution and delivery of this Agreement.
2.20 "Royalty Year" shall mean the one-year period beginning on August
1 and ending on July 31. The first Royalty Year shall begin on
August 1, 2000.
2.21 "Trademarks" shall mean the trademark MACGREGOR, the trademark THE
ATHLETE'S CHOICE, the "M" & Design trademark, all stylized
versions and variations of these trademarks, all updated or new
stylized versions of such trademarks, all combinations of these
trademarks, and all present and future registrations or
applications for registration therefore, and shall include, but
not be limited to, the trademarks and registrations listed on
Exhibit A-1 hereto (the "MacMark Trademarks" and "MacMark
Registrations," respectively) and the trademarks and registrations
listed on Exhibit A-2 hereto (the "MacGregor Corporation
Trademarks" and the "MacGregor Corporation Registrations,"
respectively).
3. Grant of License. Subject to the applicable use restrictions imposed
by the Settlement Agreement dated April 9, 1981, among MacGregor
Sporting Goods, Inc., XxxXxxxxx-Xxxxxxx Inc., and The Brunswick
Corporation, MacMark and Equilink hereby grant to SSG:
3.1 Exclusive License/Exclusive Customers/Domestic. The exclusive
(including as to MacMark and Equilink) right and license to
promote, advertise, merchandise, offer for sale, sell, and
distribute all MacGregor-branded Products, through all Channels of
Trade other than a Brick and Mortar Retail Store, to Exclusive
Customers located in the Domestic Territory. MacMark and Equilink
acknowledge that the right and license granted herein, includes,
but is not limited to, the right for Exclusive Customers, who have
purchased or agreed to purchase Macgregor-branded Products from
SSG, to resell and distribute MacGregor-branded Products through
all Channels of Trade (including, but not limited to, through E-
Commerce and Brick and Mortar Retail Stores) and to any person or
entity.
3.2 Exclusive License/Individual Customers and On-Line
Sellers/Domestic. The exclusive (including as to MacMark and
Equilink) right and license to promote, advertise, merchandise,
offer for sale, sell, and distribute all MacGregor-branded
Products, except the Otherwise Licensed Products, through all
Channels of Trade other than a Brick and Mortar Retail Store, to
Individual Customers and On-Line Sellers located in the Domestic
Territory. MacMark and Equilink acknowledge that the right and
license granted herein includes, but is not limited to, the right
for On-Line Sellers, who have purchased or agreed to purchase
Macgregor-branded Products from SSG, to resell and distribute
MacGregor-branded Products, except the Otherwise Licensed
Products, to any person or entity through E-Commerce.
3.3 Non-Exclusive License/All Customers/International. Subject to the
requirements of the next sentence of this paragraph 3.3, the non-
exclusive right and license to promote, advertise, merchandise,
offer for sale, sell and distribute all MacGregor-branded
Products, through all Channels of Trade, to any person or entity
of any type located in the International Territory. This right
and license is limited to promoting, advertising, merchandising,
and offering for sale MacGregor-branded Products through English
language catalogs, mailers, advertising and promotions;
salespeople; and E-Commerce (including, but not limited to, the
nonexclusive right and license to accept orders from customers who
receive English language catalogs, mailers, advertising and
promotions in the International Territory or who place orders
through E-Commerce from the International Territory) and to
fulfilling such orders by shipping MacGregor-branded Products to
such customers located in the International Territory.
Notwithstanding the foregoing, this right and license does not
include the right of salespersons to make in-person sales visits
to the premises of Brick and Mortar Retailers located in the
International Territory that sell exclusively to Individual
Customers for the purpose of selling MacGregor-branded Products.
SSG recognizes that the rights granted under this paragraph 3.3
are nonexclusive and that MacMark may license others to sell
MacGregor-branded products to customers located in the
International Territory, subject to SSG's rights under paragraphs
9, 10 and 11 of this Agreement.
3.4 Non-Exclusive License to Display and Advertise. The non-exclusive
right and license for SSG, customers of SSG who have or may
purchase MacGregor-branded Products from SSG, and others
authorized by SSG to display and otherwise promote, advertise,
merchandise, and offer for sale all MacGregor-branded Products,
through all Channels of Trade, anywhere in the Domestic Territory
or the International Territory, to any person or entity of any
type, including but not limited to Exclusive Customers, Individual
Customers, On-Line Sellers, Excluded Customers, and the general
public.
3.5 Non-Exclusive License to Manufacture, Source, Import and Export.
The non-exclusive right and license to use, or to authorize others
to use, the Trademarks anywhere in the world in connection with
manufacturing, sourcing, importing and exporting of the Products
anywhere in the world.
3.6 Domain Names. The exclusive right and license to promote,
advertise, merchandise, offer for sale, sell, and distribute all
MacGregor-branded Products using the domain names
xxxxxxxxxxxxx.xxx, XxxXxxxxxXxxxXxxxxx.xxx, and
XxxXxxxxxXxxxxx.xxx in all cases and combination of cases and
using all top level domains and suffixes (e.g., .sports, .earth,
.USA, .biz, .info, .pro, .coop, .name, etc.) that are now
available or may become available in the future (the "Domain
Names"). SSG shall also have the exclusive right to register,
administer and use, in the Domestic Territory and the
International Territory, the Domain Names; provided, however, that
the Domain Names shall be the property of MacMark. SSG will
register MacMark as the owner of the Domain Names used by SSG.
SSG's use of the Domain Names during the term of the Agreement
will inure to the benefit of MacMark, and, in the event this
Agreement is terminated, SSG will transfer the administration of
the Domain Names to MacMark.
3.7 Excluded Rights. Notwithstanding paragraphs 3.1 through 3.6, SSG
shall have no right to sell or distribute MacGregor-branded
Products to Excluded Customers in the Domestic Territory or to
sublicense others to sell or distribute MacGregor-branded Products
to Excluded Customers in the Domestic Territory. The rights
granted to SSG herein also specifically exclude, without the prior
written consent of MacMark or Equilink, the following: (a) the
ability to own a Brick and Mortar Retailer using any of the
Trademarks as part of the name of the store, and (b) the ability
to use any of the Trademarks as part of SSG's corporate name.
Neither SSG's use of the phrases "MacGregor Team Sports Licensee."
"MacGregor Team Sports," "MacGregor Sports" nor SSG's use of the
Domain Names, including such use on catalogs, advertisements, the
Internet, web pages, business cards, letterhead, facsimile cover
sheets, stationery, phone messages and telephone usage, shall be
deemed to conflict with this paragraph 3.7.
3.8 Procedure For Otherwise Licensed Products. SSG will implement
reasonable procedures to ensure that Otherwise Licensed Products
are not sold by SSG to Individual Customers in the Domestic
Territory. MacMark and Equilink acknowledge that SSG's procedures
will be sufficient if they are substantially similar to the
procedures outlined in Exhibit D.
3.9 Premiums. SSG shall have the right to distribute MacGregor-
branded Products to all or any customers without charge as
promotional premiums in connection with purchases by those
customers of other products from SSG, so long as the value of such
premiums (based on the lowest sales price of the MacGregor-branded
Product) does not exceed 10% of SSG's annual gross sales of
MacGregor-branded Products in any single Royalty Year. In the
event the value of such premiums (based on the lowest sales price
of the MacGregor-branded Product) does exceed 10% of SSG's annual
gross sales of MacGregor-branded Products in any single Royalty
Year, SSG will include the value of the premiums (based on the
lowest sales price of the MacGregor-branded Product and excluding
Outbound Freight, taxes, returns and sales credits) over the 10%
limit as a sale for purpose of calculating the Annual Royalty due
under paragraph 4 for that Royalty Year. Notwithstanding the
foregoing, this paragraph 3.9 shall not apply to the distribution
of MacGregor-branded Products as samples and not as premiums.
3.10 Customer Classification. In the event a customer or a potential
customer could fall within more than one customer classification,
then the parties agree that the customer will be considered in the
customer classification that provides SSG with the greatest rights
to promote, advertise, merchandise, offer for sale, sell and
distribute MacGregor-branded Products to that customer, provided
that SSG complies with the provisions of paragraphs 3.1, 3.2 and
3.3.
4. Royalty and Royalty Reports. SSG will pay to Equilink an annual
royalty (the "Annual Royalty") of 2% of annual gross sales (after
deducting Outbound Freight, taxes, returns and sales credits) of
MacGregor-branded Products that exceed, for the applicable Royalty
Year, $17 million; provided, however, that once SSG's annual sales of
MacGregor-branded Products exceed $22 million, SSG is permitted to pay
a reduced annual royalty of 1% on gross sales (after deducting Outbound
Freight, taxes, returns and sales credits) of Closeouts of MacGregor-
branded Products in those Royalty Years where SSG sells MacGregor-
branded Products as Closeouts. In no event shall the 1% royalty apply
to more than 10% of total annual sales (after deducting Outbound
Freight, taxes, returns and sales credits) of MacGregor-branded
Products in excess of $22 million. The guaranteed minimum Annual
Royalty shall be One Hundred Thousand Dollars (U.S. $100,000.00) (the
"Guaranteed Minimum Annual Royalty"), and the Guaranteed Minimum Annual
Royalty shall be credited against the total Annual Royalty payable in
any Royalty Year. The Annual Royalty shall be paid as follows:
(a) Fifty Thousand Dollars (U.S. $50,000) on or before January 31 of
each Royalty Year; (b) Twenty-Five Thousand Dollars (U.S. $25,000) on
or before April 30 of each Royalty Year; (c) Twenty-Five Thousand
Dollars (U.S. $25,000) on or before July 31 of each Royalty Year; and
(d) the balance of any Annual Royalty due for a Royalty Year on or
before the first September 30 following such Royalty Year.
In connection with its September 30 payment, SSG shall submit to
Equilink a report of its annual gross sales (after deducting Outbound
Freight calculated in accordance with paragraph 2.17, taxes, returns
and sales credits) of MacGregor-branded Products during the preceding
Royalty Year, which report shall be accompanied by a statement from
SSG's chief financial officer, controller, principal accounting
officer, treasurer, chief operating officer, president or chairman that
the report is correct in all material respects. SSG shall keep, for a
period of at least three (3) years after the conclusion of the Royalty
Year, accounting records showing the sales of MacGregor-branded
Products in that Royalty Year. Upon receipt of a written request from
Equilink, SSG will make available to Equilink or its authorized
representative, at Equilink's sole expense, such accounting records of
SSG and its affiliates, assigns and sublicensees, reasonably necessary
to verify SSG's annual sales of MacGregor-branded Products in a Royalty
Year for which SSG is obligated to maintain its accounting records
under this Agreement as of the time the request is made. Once during
each Royalty Year after the Effective Date of this Agreement and once
after the termination of the Agreement in accordance with paragraph 6,
Equilink shall be entitled to an independent audit of SSG's accounting
records by a Big 5 public accounting firm or a regional accounting firm
that is mutually acceptable to the parties and, in either case, that is
not the auditor for Equilink or any of its affiliates, including but
not limited to MacMark and Xxxxxxx Sports, Inc., to determine SSG's
sales of MacGregor-branded Products for the previous two (2) Royalty
Years. The audit shall be limited to the determination of SSG's sales
of MacGregor-branded Products for the previous two (2) Royalty Years,
shall not include any Royalty Year previously audited, shall not
include any period prior to July 31, 2000, and shall be conducted
during normal business hours at SSG's home office at a date and time to
be mutually agreed upon by the parties. The cost of the audit shall be
paid by Equilink unless the audit shows that SSG has understated sales
of MacGregor-branded Products or overstated deductions for the Royalty
Year in question by more than 10%, in which case SSG shall pay all of
Equilink's costs of the audit and any additional royalty that is due.
Equilink, MacMark and its auditors agree to maintain the
confidentiality of and not disclose to third parties the information
SSG provides in connection with any such audit.
5. Term. The "Term" of this Amended and Restated License Agreement shall
commence as of the Effective Date and shall continue in full force and
effect for a period of forty (40) years unless terminated pursuant to
paragraph 6 of this Agreement. This Agreement shall be automatically
renewed for successive forty (40) year periods unless terminated
pursuant to and in accordance with paragraph 6 of this Agreement.
6. Termination. This Agreement shall be terminable only in accordance
with the provisions of this paragraph 6.
6.1 Material Breach of Agreement. In the event of any material breach
of this Agreement, the aggrieved party shall promptly provide
written notice of the specific material breach, and, except as set
forth in paragraph 6.2, the party committing such breach shall
have sixty (60) days after its receipt of the written notice of
the specific material breach to effect a cure thereof. If such a
material breach is not cured within such sixty (60) day period,
the aggrieved party shall have the right to terminate this
Agreement by written notice of termination, provided, however, if
such material breach is of a nature that it is unable to be cured
within such sixty (60) day period despite the good faith efforts
of the party receiving the notice, then the aggrieved party may
not terminate this Agreement so long as the other party is
diligently procuring such cure and, in fact, subsequently effects
such cure within a reasonable period of time. A material breach
of this Agreement is not subject to the dispute resolution
provision in paragraph 21.
6.2 Nonpayment of Royalty. SSG's failure to pay the Guaranteed
Minimum Annual Royalty (or any portion thereof) in accordance with
the provisions of paragraph 4 shall be considered a material
breach of this Agreement that is subject to cure within ten (10)
business days after SSG's receipt of a written notice of such
breach. SSG's failure to pay any material amount due under
paragraph 4 of this Agreement other than the Guaranteed Minimum
Annual Royalty shall be considered a material breach of this
Agreement that is subject to cure within sixty (60) days after
SSG's receipt of a written notice of the specific amount due to
Equilink, provided, however, if: i) there is a good faith dispute
about the amount that is due to Equilink under paragraph 4, then
SSG's failure to pay the disputed amount will not be a material
breach of this Agreement unless SSG fails to pay to Equilink any
amount ultimately deemed due within sixty (60) days of the final
resolution of the good faith dispute; or ii) as a result of an
audit conducted in accordance with paragraph 4 of this Agreement,
it is determined that SSG owes Equilink an additional amount under
paragraph 4, then SSG's failure to pay that amount will not be a
material default of this Agreement unless SSG fails to pay to
Equilink any amount ultimately deemed due within thirty (30) days
of the final resolution of the audit.
6.3 Non-Material Breaches. In the event of any non-material breach
under this Agreement, the aggrieved party shall promptly provide
written notice of the non-material breach. The parties agree that
non-material breaches cannot be a basis for terminating this
Agreement and shall be subject to the dispute resolution provision
in paragraph 21, except as provided in paragraphs 6.4, 6.2 and
6.1. The parties further agree that the matters that may result
in non-material breaches include, but are not limited to, the
following:
6.3.1 Whether SSG has complied with the procedures referenced in
paragraph 3.8;
6.3.2 Whether SSG has sold a MacGregor-branded Product to a
customer that is not covered by SSG's license under this
Agreement;
6.3.3 Whether SSG has sold a MacGregor-branded product that is not
covered by SSG's license under this Agreement;
6.3.4 Whether a product advertised, offered or sold by SSG is a
new product that requires approval under paragraph 8.2 or is
already a Product as defined in this Agreement;
6.3.5 Whether a customer is an Excluded Customer, Exclusive
Customer, Individual Customer or On-line Seller as defined in
this Agreement;
6.3.6 Whether SSG or Equilink has complied with the approval
provisions of paragraph 8, including paragraph 8.1 (quality
of product), paragraph 8.2 (new product approval) and
paragraph 8.3 (advertising approval);
6.3.7 Whether SSG has complied with the requirements of paragraph
12 (use of Secondary Marks);
6.3.8 Whether SSG has complied with the provisions of paragraph
13;
6.3.9 Whether SSG has complied with the provisions of paragraph
3.9 (Premiums);
6.3.10 Whether a third-party manufacturer meets the requirements
of paragraph 14 and/or whether SSG has complied with the
requirements of paragraph 14;
6.3.11 Whether SSG has complied with the requirements of paragraph
19;
6.3.12 Whether SSG or MacMark have complied with the requirements
of paragraph 16 (Trademark and Registration Maintenance); and
6.3.13 Whether SSG, MacMark or Equilink have complied with the
requirements of paragraph 21 (Dispute Resolution Procedure
for Certain Disputes).
6.4 Reoccurring, Intentional or Reckless Non-material Breaches. If
SSG has: i) intentionally and willfully, or ii) recklessly failed
to obtain the approval required under paragraph 8.2 for more than
five (5) products in any single Royalty Year, then such
intentional and willful failure shall constitute a material breach
of the Agreement that is subject to the provisions of paragraph
6.1. In that case, SSG will be deemed to have cured the breach by
either obtaining Equilink's approval for the products in
accordance with the provisions of paragraph 8.2 or by stopping
future sales of the products within sixty days of SSG's receipt of
the notice required by paragraph 6.1.
6.5 Failure To Reach Target Revenues. Any party may terminate this
Agreement on sixty (60) days prior written notice if SSG's gross
revenues from the sale or other distribution of MacGregor-branded
Products for any Royalty Year beginning with the Royalty Year
ending July 31, 2005 are less than the Target Revenues (as defined
below).
For the Royalty Year ended July 31, 2005, "Target Revenues" shall
be $8,250,000. For each Royalty Year thereafter, "Target
Revenues" shall be increased or decreased, as applicable, by the
percentage change in the U.S. Bureau of Labor Statistics, Producer
Price Index for Selected Commodities (Annual) - Miscellaneous
Products _ Toys, Sporting Goods, Small Arms, Etc. for the calendar
year immediately preceding the calendar year for which "Target
Revenues" are being calculated, provided that in no event shall
such adjustment exceed 3% of the then applicable "Target Revenues.
" If the adjustment would have exceeded 3%, but for the
foregoing, such amount in excess of 3% shall be carried forward
and, subject to the 3% annual adjustment, be used to increase or
decrease future adjustments.
6.6 Voluntary Termination By SSG. SSG may terminate this Agreement
effective on the tenth (10th) year anniversary of this Agreement
and on each subsequent fifth (5th) year anniversary (i.e., the
10th, 15th, 20th, 25th year anniversary, etc.) by giving 180 days
written notice to MacMark and Equilink prior to such anniversary.
7. Rights Upon Termination. Upon termination of this Agreement, unless
otherwise permitted by MacMark or Equilink, SSG shall discontinue using
the Trademarks in connection with the manufacture, advertisement, sale,
distribution and promotion of the MacGregor-branded Products, with the
following exceptions:
7.1 Catalog Fulfillment. SSG and its authorized agents and
sublicensees shall be permitted to use the Trademarks in
accordance with the provisions of this Agreement to fulfill any
orders for MacGregor-branded Products received as a result of
catalogs then in circulation, including catalogs published by
customers of SSG.
7.2 Inventory Depletion. For twenty-four (24) months (the "Sell-Off
Period") following the termination of this Agreement in accordance
with the provisions of paragraph 6, SSG shall be permitted to
advertise, sell or otherwise distribute (a) SSG's inventory of all
MacGregor-branded Products and unfinished Products meant to be
MacGregor-branded Products when finished, including the right to
finish any work-in-process and use supplies of raw materials on
hand or ordered, (b) all MacGregor-branded Products ordered from a
supplier prior to termination under purchase orders which cannot
be cancelled without penalty to or a claim against SSG and (c) all
MacGregor-branded Products ordered prior to termination under
binding sales orders outstanding at the time of such termination
which sales orders cannot be cancelled without penalty to or a
claim against SSG.
7.3 Continuing Obligations. The parties agree that during the Sell-
Off Period, they shall abide by and uphold their rights and
obligations accrued or existing as of termination of the
Agreement. The parties further agree that the representations,
rights and obligations contained in paragraphs 6, 7, 25, 26, 28,
30 and 33 will survive the termination of this Agreement.
7.4 Royalty Obligation. At the conclusion of the Sell-Off Period,
SSG's obligation to pay Equilink any future royalty, including the
Guaranteed Minimum Annual Royalty, shall terminate, provided,
however, this provision will not affect SSG's obligation to pay
Equilink any royalty due and owing as of the end of the Sell-Off
Period. If the Sell-Off Period ends at any time other than the
end of a Royalty Year, the Guaranteed Annual Minimum Royalty for
that Royalty Year will be pro-rated based on a fraction, the
numerator of which is the number of months of the Royalty Year
that occurred prior to the end of the Sell-Off Period and the
denominator of which will be 12.
7.5 Notice To Suppliers. On or before the 90th day after the valid
termination of this Agreement in accordance with the provisions of
paragraph 6, SSG will send written notice, at their last known
address, to those suppliers who, in the twelve (12) months
immediately prior to the effective date of the termination, have
supplied MacGregor-branded Products to SSG, that the Agreement has
been terminated and that any further rights to manufacture
MacGregor-branded Products are limited to the rights contained in
paragraph 7 of this Agreement, and SSG will in writing certify to
MacMark that such notices have been sent. Further, after the
Sell-Off-Period, SSG will reasonably cooperate with MacMark to
confirm whether a company subsequently accused of infringement of
the Trademarks was a SSG supplier prior to the termination of this
Agreement and whether such company received notice under this
paragraph 7.5.
8. Quality Control, New Product Approval and Advertising Approval. For so
long as SSG shall manufacture, sell and advertise any MacGregor-branded
Products:
8.1 Quality Control and Inspection. The use by SSG of the Trademarks
and the manufacture and sale of any Products in association
therewith, shall substantially conform to the standards of quality
employed by SSG as of the Effective Date. SSG shall permit
Equilink and its designees, on prior written notice to SSG, one
(1) visit per calendar year at Equilink's sole expense to inspect
all the facilities and equipment used in connection with the
manufacture of MacGregor-branded Products, and to make such
additional inspections upon SSG's consent, which shall not be
unreasonably withheld, in order to assure that such MacGregor-
branded Products substantially conform to these standards.
8.2 New Product Approval. If SSG desires to use a Trademark in
connection with a product that is not covered by this Agreement,
then SSG, subject to the terms of this paragraph, may make
available a sample of the product to Equilink for approval, which
approval shall not be withheld unless (a) another party holds the
exclusive right and license to use the Trademark on the proposed
new product; (b) the proposed new product exposes Equilink or
MacMark to an unreasonable risk of liability that is not covered
by the insurance required by paragraph 18 below; or (c) the new
product is not of the same quality as the MacGregor-branded
Products offered by SSG as of the date of this Agreement. For any
proposed new product with a standard freight rating equal to or
less than FAK 50, SSG shall send a sample of the product and a
completed New Product Approval Request Form substantially in the
form attached as Exhibit E to Equilink, c/o Xxxx Xxxxxxx, 0000
Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxx, 00000 (or such other person
designated by Equilink in accordance with the notice provisions of
paragraph 24) and a picture of the product to Equilink, c/o Xxxxxx
Xxxxx, St. Xxxx Xxxxxxx Xxxxxxxx & Reens, L.L.C., 000 Xxxxxxx
Xxxx, Xxxxxxxx Xxxxxxxxxxx 00000 (or such other person designated
by Equilink in accordance with the notice provisions of paragraph
24). For any proposed new product with a standard freight rating
greater than FAK 50, SSG shall submit a picture of a sample of the
proposed new product to Equilink at both addresses specified
above, along with a written notice advising where Equilink can (at
Equilink's option and expense), inspect a sample of the proposed
new product. If Equilink fails to object in writing to the
quality of proposed product within ten (10) days after its receipt
of the New Product Approval Request Form, then SSG's use of the
Trademarks on the new product will be deemed approved and the
definition of Products will be deemed amended to include the new
proposed product. Color changes, model changes, style and grade
designations, cosmetic type changes, or changes that do not
materially alter the specifications of a Product will not
constitute a new product that requires Equilink's approval under
this paragraph. The interim approvals given by MacMark and
Equilink through its counsel during the negotiation of this
Agreement are ratified by MacMark and Equilink.
8.3 Materials Approval. MacMark and Equilink acknowledge that they
have approved SSG's current use of the Trademarks in advertising
and promotional materials, including but not limited to: (a) SSG's
uses on business cards, letterhead, facsimile cover sheets, and
stationery, examples of which are attached hereto as Exhibit F;
and (b) the uses in the catalogs and web pages listed on Exhibit
G. SSG will provide to Equilink (c/o Xxxxxx Xxxxx, St. Xxxx
Xxxxxxx Xxxxxxxx & Reens, L.L.C, 000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxxxxxx 00000, or such other person designated by Equilink in
accordance with the notice provisions of paragraph 24), for
approval, a preproduction print of any advertising, catalog page
or other promotional material that contains a use of the
Trademarks that was not previously approved and a completed New
Advertising and Promotional Approval Request Form substantially in
the form attached as Exhibit H; provided, however any use by SSG
or others (in accordance with paragraph 3.4) of the Trademarks
that does not materially differ from the uses by SSG previously
approved by Equilink or MacMark (including but not limited to
replicating such uses on Internet web pages, fliers, mailers and
other advertising pieces) will not require any additional
approvals. Equilink will not withhold its approval of the
proposed use of the Trademarks unless: (a) such proposed use would
violate the applicable use restrictions imposed by the Settlement
Agreement, dated April 9, 1981, among MacGregor Sporting Goods,
Inc., XxxXxxxxx-Xxxxxxx Inc., and The Brunswick Corporation;
(b) such proposed use does not depict the Trademarks in a type
style previously in use or otherwise approved; or (c) such
proposed use of the Trademarks identifies products which are not
defined in Exhibit B-1 or otherwise subject to this Agreement. If
Equilink does not object in writing to the proposed new uses of
the Trademarks within ten (10) days after its receipt of the
material, the proposed new uses will be deemed approved. The
interim approvals given by MacMark through its counsel during the
negotiation of this Agreement are ratified by MacMark and
Equilink.
9. Right Of First Refusal _ Additional Products. Equilink and MacMark
grant to SSG the first right to obtain a license to use the Trademarks
in connection with any products not included in the definition of
"Products" in this Agreement or otherwise approved by MacMark or
Equilink and on which Equilink or MacMark may license the Trademarks,
except (a) a license for the right to sell sneakers, athletic and other
types of street shoes (but excluding cleats and rollerblades) under the
Trademarks; or (b) a license to a third-party (including Regent) for
the right to sell any products under the Trademarks whereby sales by
the prospective third-party licensee of said products are strictly
limited to Brick and Mortar Retailers that are not SSG's Exclusive
Customers and whereby said products may not be advertised, displayed,
promoted, merchandised, offered for sale, sold or distributed by the
prospective third-party licensee through E-Commerce. Any third-party
license that is limited as set forth in (b) above, will set forth the
limitations in writing and provide that the third-party licensee cannot
circumvent these limitations by arrangements that would result in the
licensed products being sold via E-Commerce without the owner of the
Brick and Mortar Retailer first purchasing the goods from the licensee.
SSG recognizes that a Brick and Mortar Retailer who legitimately
purchases goods from another licensee will have the ability to resell
the goods on the Brick and Mortar Retailer's own web site. Both
Equilink and MacMark shall give SSG sixty (60) days prior written
notice of any intent to license to a third-party the use of the
Trademarks in connection with a specified product not included in the
definition of Products in this Agreement. Unless SSG notifies Equilink
or MacMark within sixty (60) days after SSG receives the notice from
Equilink or MacMark that SSG intends to sell such product, Equilink or
MacMark may proceed to license such third party. If SSG notifies
Equilink or MacMark within sixty (60) days after SSG receives the
notice from Equilink and/or MacMark that SSG intends to sell such
product but fails to offer for sale such product as a MacGregor-branded
Product within six (6) months from SSG's notice to Equilink or MacMark,
Equilink or MacMark may proceed to license such third party. In the
event that SSG elects to sell the product as a MacGregor-branded
Product, the terms of this Agreement will apply to such product for so
long as SSG advertises and offers for sale the product and the product
shall be deemed added to the definition of Products set forth in this
Agreement; provided, however, that if the product is not a sporting
goods product or a sporting goods accessory, then SSG's license with
respect to such product will be on the same financial terms (royalty
rate, minimums, and term of years) as that proposed by the third party
unless otherwise agreed between the parties in writing. In the event
SSG does not exercise its right of first refusal as set forth above and
Equilink or MacMark then fails to license the proposed third party
licensee within 180 days, then SSG's right of first refusal on such
product will be revived and the product will again be subject to the
provisions of this paragraph. Similarly, in the event SSG does not
exercise its right of first refusal as set forth above and Equilink or
MacMark then grants a license to the proposed third party licensee,
then when that license terminates SSG's right of first refusal on such
product will be revived and the product will again be subject to the
provisions of this paragraph
10. Regent Products and Classes Of Customers.
10.1 Right of First Refusal. Equilink and MacMark grant to SSG the
right of first refusal to all rights Regent Sports has or obtains
under and in connection with the Regent Agreement, including all
products licensed to Regent Sports, all classes of customers to
whom Regent Sports is authorized to advertise and sell products
and all Channels of Trade in which Regent Sports is authorized to
advertise and sell products (the "Regent Rights"), in the event
that the Regent Agreement is terminated, expires, or otherwise is
no longer effective. To exercise this right of first refusal, SSG
must match either (a) the best bona fide, third party offer
Equilink or MacMark receives for the Regent Rights within ninety
(90) days after the termination of the Regent Agreement (including
any offer by Regent during that time period); or (b) if there is
no such bona fide, third party offer, the original terms of the
Regent Agreement. In the event SSG and MacMark, in connection
with SSG's exercise of this right of first refusal, agree to
extend or expand the terms of the rights SSG acquires pursuant to
this right of first refusal (for example, the length of the new
agreement covering such rights), then such extended or expanded
terms shall be subject to the mutual agreement of the parties. In
the event SSG does not elect to exercise its right of first
refusal, then Equilink and MacMark may enter into an agreement on
the same terms offered to SSG (the "Offered Agreement"), provided
however: i) the Offered Agreement will not conflict with this
Agreement, including the rights granted to SSG in this paragraph
10; and ii) if Equilink and MacMark do not enter into the Offered
Agreement within ninety (90) days of SSG notifying Equilink and
MacMark that SSG is not exercising its right of first refusal,
then SSG's right of first refusal will be revived and the
provisions of this paragraph 10.1 will continue to apply to any
offer for all or part of the Regent Rights.
10.2 Nonexclusive Right To Sell Regent Products To Individuals and
On-Line Sellers. In the event that the Regent Agreement is
terminated, expires, or otherwise is no longer effective and SSG
does not exercise its right of first refusal for all of the rights
granted to Regent Sports as set forth in paragraph 10.1 above,
then Equilink and MacMark grant to SSG the nonexclusive right and
license to promote, advertise, merchandise, offer for sale, sell
and distribute the Otherwise Licensed Products (and all other
products licensed to Regent Sports under the Regent Agreement) to
Individual Customers and On-Line Sellers in the Domestic
Territory, pursuant to the terms of this Agreement, with SSG
paying royalties as set forth in paragraph 4 herein. In the event
that SSG elects not to exercise its right of first refusal under
paragraph 10.1 above, then Equilink and MacMark shall not: a) sell
or offer to sell, or b) license any rights to offer for sale or
sell, the Otherwise Licensed Products (or any other products
licensed to Regent Sports under the Regent Agreement) via E-
Commerce although SSG recognizes that a Brick and Mortar Retailer
who purchases the Otherwise Licensed Products from a licensee will
have the ability to resell the Otherwise Licensed Products on the
Brick and Mortar Retailer's own web site. Stated otherwise,
neither Equilink nor MacMark will license to a third-party the
right to sell the Otherwise Licensed Products (or any other
products licensed to Regent Sports under the Regent Agreement) via
E-Commerce, provided, however, SSG recognizes that a Brick and
Mortar Retailer who purchases the Otherwise Licensed Products from
a licensee will have the ability to resell the Otherwise Licensed
Products on the Brick and Mortar Retailer's own web site.
10.3 No Waiver Of Regent Breaches. Equilink and MacMark agree not to
(a) waive any material defaults by Regent Sports that would
automatically terminate the Regent Agreement pursuant to Section
14 of that Agreement or that would give Equilink or MacMark the
right to terminate the Regent Agreement, (b) materially extend any
deadlines for Regent Sports if doing so would prevent or delay the
implementation of the right of first refusal set forth in this
paragraph, or (c) extend the term of the Regent Agreement beyond
the definitive periods of time currently reflected in the Regent
Agreement.
11. MacMark's and Equilink's Covenant Concerning Other License Agreements.
In no instance shall Equilink or MacMark grant any additional licenses
or expand any existing licenses to use the Trademarks, including
expanding the grants in the Other License Agreements, to include any
Products not already licensed to the existing licensee under its
existing license, except to the extent such license (a) is strictly
limited to sales by the prospective third-party licensee to Brick and
Mortar Retailers that are not SSG's Exclusive Customers and (b) does
not include the right for the third-party licensee to advertise,
display, promote, merchandise, offer for sale, sell or distribute
through E-Commerce. Any license permitted under the prior sentence
will provide that the licensee cannot circumvent these limitations by
arrangements that would result in the additionally licensed goods being
sold through E-Commerce on the Brick and Mortar Retailer's own web site
without the Brick and Mortar Retailer first purchasing the goods from
the licensee. SSG recognizes that a Brick and Mortar Retailer who
purchases the Otherwise Licensed Products from a licensee will have the
ability to resell the Otherwise Licensed Products on the Brick and
Mortar Retailer's own web site.
12. Cobranding Provision - Secondary Marks. SSG agrees not to use another
designation on any MacGregor-branded Product without MacMark's or
Equilink's permission as set forth below. In connection with the
execution of this Agreement, Equilink and MacMark have approved SSG's
use, in any combination with the Trademarks, of all designations of any
type used in connection with a MacGregor-branded Products as shown in
the catalogs or on the websites listed on Exhibit G and the designation
76C1-P on baseballs (previously the subject of an interim approval).
Any use of any other designation on a MacGregor-branded Product will
require Equilink's or MacMark's approval, which approval shall not be
withheld unless such use would: i) violate the applicable use
restrictions imposed by the Settlement Agreement, dated April 9, 1981,
among MacGregor Sporting Goods, Inc., XxxXxxxxx-Xxxxxxx Inc., and The
Brunswick Corporation; ii) infringe the trademark rights of another
party; or iii) be a scandalous use that would tarnish the Trademarks.
Notwithstanding the foregoing, neither Equilink nor MacMark shall be
responsible for ascertaining whether such other designation is
available for use, and the approval of such use shall not mean the xxxx
is available for use. During the term of the Agreement, SSG shall
remain solely responsible for ascertaining if such other designation is
available for use and shall indemnify Equilink and MacMark for any
charges of infringement as set forth in paragraph 17. If Equilink or
MacMark does not object in writing to a proposed new use of another
designation on any MacGregor-branded Product within ten (10) days after
its receipt of notice from SSG of the intended use, the proposed new
use will be deemed approved. With respect to all current and future
instances where SSG is using another designation with a Trademark on a
MacGregor-branded Product, SSG's use of such other designations in
conjunction with the Trademarks during the term of the Agreement will
inure to the benefit of MacMark. Notwithstanding the foregoing, in no
event will this paragraph apply to give MacMark or Equilink any rights,
nor will MacMark hold or acquire any rights in, the name Sport Supply
Group, Inc. or any other name (other than the Trademarks) under which
SSG does business or will do business in the future, any xxxx on which
SSG holds or has applied for a registration, any xxxx licensed to SSG
by another party, or any style or grade designations unless such style
or grade designation is used on the Product as prominently as a
Trademark. Further, in no event will this paragraph give MacMark any
right to use the other designations prior to the termination of this
Agreement. The names under which SSG does business at the current
time, the marks on which SSG holds or has applied for a registration,
and the marks licensed to SSG by another party are listed on Exhibit I.
Further, nothing in this Agreement constitutes a representation or
stipulation by SSG that any of the other designations are protectable
as trademarks or have acquired secondary meaning or an agreement by
MacMark or Equilink that SSG owns or has rights in the other
designations.
13. Assignment and Sublicensing by SSG. SSG may assign, sublicense and/or
subcontract its right under this Agreement to any direct or indirect,
wholly-owned subsidiary of SSG by providing Equilink or MacMark with
written notice thereof. Notwithstanding anything to the contrary in
this Agreement, SSG may assign, sublicense and/or subcontract its
rights or any part of its rights under this Agreement to any other
entity provided that it obtains prior written consent from Equilink or
MacMark, which consent a) will not be unreasonably withheld; and b)
will be provided within ten (10) days of Equilink's or MacMark's
receipt of written notice from SSG. For purposes of this Agreement,
neither a merger nor a change of control of SSG (including, without
limitation, a sale of all or substantially all assets or a majority of
the voting stock of SSG, or of any permitted assignee, sublicensee or
subcontractor) shall be deemed a transaction requiring Equilink's or
MacMark's consent or that affects the validity or effectiveness of this
Agreement. In the event of an assignment, sublicense, subcontract,
merger or change of control of SSG in accordance with the provision of
this paragraph 13, the Agreement will remain binding on MacMark and
Equilink and SSG's successors.
14. Third-Party Manufacturers. Any third-party manufacturer that provides
SSG with MacGregor-branded Products will manufacture MacGregor-branded
goods of at least the same quality of MacGregor-branded Products
offered by SSG as of the date of this Agreement.
15. Goodwill. SSG recognizes: (i) the goodwill inherent in the Trademarks
and acknowledges that the goodwill attached thereto does not belong to
SSG; and (ii) the Trademarks have secondary meaning in the mind of the
public. SSG agrees that during the term of this Agreement and
thereafter, SSG will not attack or contest the Trademarks on the basis
that they fail to function as Trademarks to identify the source, origin
or sponsorship of a product. Notwithstanding the foregoing, SSG, after
the termination of this Agreement, shall have the right to contest
MacMark's ownership of the Trademarks (including any alleged
abandonment of the Trademarks), MacMark's and Equilink's right and
authority to license the Trademarks, and whether there is a likelihood
of confusion between the Trademarks and any other marks.
16. Trademark Registration and Maintenance. During the term of this
Agreement, MacMark shall use its best efforts to obtain, maintain and
renew the Trademarks and the registrations thereof and shall not permit
other persons to use the Trademarks in any manner that would conflict
with SSG's rights under this Agreement. MacMark agrees to promptly
file and prosecute an application in the United States Patent and
Trademark Office (the "USPTO") to register the xxxx previously covered
by registration number 1,388,926, which registration has been canceled,
and to promptly file and prosecute an application in the USPTO to
register the "MacGregor Pro" xxxx. In addition, upon SSG's request,
MacMark will promptly apply for additional registrations for the
Trademarks in the Domestic Territory or the International Territory.
SSG shall pay one-half of the cost to obtain, maintain and renew the
trademark registrations that SSG has requested, provided, however,
SSG's share of such costs shall not exceed $1,000. MacMark can request
that SSG cooperate with it to obtain such trademark registrations as
may be necessary to protect the Trademarks in those countries where SSG
is using the Trademarks. In those instances where MacMark and SSG
determine that a trademark registration should be filed, SSG will pay
one-half (1/2) of the cost to obtain such registration, which cost of
each application shall be capped at one thousand dollars ($1,000) for
each party. SSG shall cooperate with MacMark in order to obtain,
maintain and renew trademark registrations, including providing
evidence of use of the trademarks if required by the relevant trademark
office. Each party shall promptly notify the other of any and all
infringements, imitations, illegal use or misuse of the Trademarks,
which come to the party's attention. MacMark shall determine the
manner of handling any infringements or claims involving the Trademarks
and shall promptly notify SSG of its course of action. SSG may be
represented in any pending or threatened action or proceeding relating
to any infringements or claims concerning the Trademarks at its own
expense, by its own counsel, provided that SSG shall, at all times,
cooperate with MacMark and its counsel with respect to any
infringements or claims. Upon MacMark's request and at MacMark's
expense, SSG shall join as a party to any litigation where SSG's
joinder is required by Rule 19 of the Federal Rules of Civil Procedure
or the similar applicable state rule of procedure. If MacMark
determines not to take any action with respect to any infringements or
claims concerning the Trademarks, then SSG may, at its own option and
sole expense, take such action as it deems appropriate and MacMark
shall cooperate with SSG in connection with said action. In such
instances where SSG takes action, upon SSG's request and at SSG's
expense, MacMark shall join as a party to any litigation where
MacMark's joinder is required by Rule 19 of the Federal Rules of Civil
Procedure or the similar applicable state rule of procedure. Any
recovery as a result of any such action by MacMark or SSG shall belong
solely to the party participating in the action except to the extent:
(i) any recovery shall first be used to reimburse those persons paying
the expenses and attorneys' fees of the litigation; and (ii) any
recovery represents damage to the other party, in which event such
recovery shall belong solely to the other party. Notwithstanding the
foregoing, SSG shall have no obligation to pay any costs or expenses
incurred in connection with recording security interests, security
interest releases or assignments in connection with applications and
registrations for the Trademarks or otherwise rectifying any defect in
the chain of title of any of the applications and registrations for the
Trademarks.
17. Indemnification by SSG. SSG shall be solely responsible for and agrees
to indemnify MacMark, Equilink and their respective officers,
directors, agents and employees, and to hold each of them harmless from
any claims, damages, causes of action or damages, including reasonable
attorneys' fees, arising out of or in connection with SSG's or its
assignees, or sublicensees' manufacture, sale, distribution, or
advertising of the MacGregor-branded Products, including, without
limitation, product liability and claims based solely on the use by SSG
during the term of the Agreement of any other designation with the
Trademarks, but excluding any claims for use of any Trademark in
violation of another's rights.
18. Insurance. SSG agrees that, throughout the term of this Agreement and
for not less than three (3) years following the termination of this
Agreement, it will maintain liability insurance against claims based
upon products liability for the MacGregor-branded Products with
reputable insurance companies at the following levels.
----------------------------- --------------------------------------
Criteria Required Level of Insurance
As of the Effective Date of Insurance of not less than
this Agreement $500,000 per occurrence and
$1,000,000 in the aggregate,
in each case with such
deductions or self-insured
retainages as are customary
in the industry
----------------------------- --------------------------------------
gross sales (after deducting Insurance of not less than
Outbound Freight, taxes, $500,000 per occurrence and
returns and sales credit) of $1,000,000 in the aggregate,
MacGregor-branded Products in in each case with such
any Royalty Year are less deductions or self-insured
than $50 million retainages as are customary
in the industry
----------------------------- --------------------------------------
gross sales (after deducting Insurance of not less than
Outbound Freight, taxes, $500,000 per occurrence and
returns and sales credit) of $2,000,000 in the aggregate,
MacGregor-branded Products in in each case with such
any Royalty Year exceed $50 deductions or self-insured
million retainages as are customary
in the industry
----------------------------- --------------------------------------
for each incremental increase increase in aggregate
over $50 million of $25 insurance level by $1
million in gross sales (after million, with such deductions
deducting Outbound Freight, or self-insured retainages as
taxes, returns and sales are customary in the industry
credit) of Macgregor-branded
Products in any Royalty Year
----------------------------- --------------------------------------
for the three years following Insurance in the same amount
the valid termination of this as required for the Royalty
Agreement in accordance with Year immediately preceding
the provisions of paragraph 6 the valid termination of this
Agreement in accordance with
the provisions of paragraph 6
----------------------------- --------------------------------------
In any instance when this paragraph requires an increase or reduction
in insurance based on the gross sales (after deductions) in a given
Royalty Year, the change in insurance shall be effective from six (6)
months after the end of that Royalty Year until another change in
insurance is required. With regard to products' liability, SSG will
request that such insurance policies be endorsed, and in force from
the Effective Date, to name MacMark, Equilink and their respective
officers, directors, employees and agents thereof as additional
insured with respect to claims arising under Paragraph 17.
19. Indemnification by MacMark and Equilink Against Trademark Infringement.
MacMark and Equilink shall defend, indemnify and save harmless SSG, its
agents, distributors, sublicensees, officers, directors, employees,
shareholders, successors and assigns, and each of them, from and
against any and all claims, actions and suits, whether groundless or
otherwise, and from and against any and all liabilities, judgments,
lawsuits, damages, costs, charges, attorneys' fees, and other expenses
of every nature and character by reason of violation or infringement of
any trademarks and/or service marks held by third parties, based on SSG
exercising its rights related to the Trademarks granted pursuant to
this Agreement (other than claims based solely on SSG's use during the
term of the Agreement of other designations with the Trademarks),
provided that a) SSG notifies MacMark and Equilink of such claim
promptly after SSG learns of same; b) Equilink and MacMark have
exclusive control over the defense and monetary settlement of any
proceeding related to such claim; and c) SSG provides MacMark and/or
Equilink such assistance in relation to such proceeding as MacMark or
Equilink may reasonably request.
20. Encumbrance of Trademarks and Assignment By MacMark and Equilink.
MacMark and Equilink represent and agree that they have not, and
neither they nor any successor will, sell, assign, transfer or
otherwise encumber any of their rights in the Trademarks or create any
lien, pledge or security interest in the Trademarks, or any part
thereof, or permit the Trademarks or any part thereof to be or become
subject to any lien, pledge or security interest, attachment or other
encumbrance without the express written consent of SSG, which consent
will not be unreasonably withheld. It shall not be unreasonable for
SSG to withhold consent if, among other things: i) the person or entity
to which MacMark proposes to sell, assign, transfer, pledge, xxxxx x
xxxx or security interest in or otherwise encumber the Trademarks is a
competitor of SSG, is of poor or unsatisfactory financial condition, is
in a scandalous or unsavory business, or has a poor reputation; or ii)
MacMark proposes to pledge, xxxxx x xxxx or security interest in or
otherwise encumber the Trademarks without first agreeing to give and
giving SSG, in a form and substance acceptable to SSG, a first lien
security interest in the Trademarks to secure MacMark's and Equilink's
performance under this Agreement and to secure any damages that would
accrue to SSG in the event of a rejection of this Agreement in any
bankruptcy proceeding. Without limiting SSG's discretion to consent or
withhold consent to any of the foregoing, no security interest or other
lien created by MacMark or Equilink in the Trademarks will be valid
until the secured party has agreed in writing with SSG that the secured
party's rights and interests in the Trademarks will be subordinate to
the rights of SSG in the Trademarks as provided in this Agreement and
pursuant to any security interest to be granted to SSG pursuant to the
immediately preceding sentence. Notwithstanding the foregoing: i)
MacMark and Equilink have the right to assign and pledge the royalties
due to it under this Agreement and to direct SSG to pay such royalties
to another party so long as such assignment and pledge do not
constitute an encumbrance or lien on or a pledge of the Trademarks; and
ii) neither a merger nor a change of control of Xxxxxxx Sports, Inc.
(including, without limitation, a sale of all or substantially all
assets or a majority of the voting stock of Xxxxxxx Sports, Inc.) shall
be deemed a transaction requiring SSG's consent (unless such
transaction would result in the sale, assignment, or transfer of the
Trademarks or a lien, pledge, or security interest in the Trademarks)
or that affects the validity or effectiveness of this Agreement. SSG
agrees that a sale of all of the stock of MacMark and Equilink, as part
of the sale by Xxxxxxx Sports, Inc. of a majority of the voting stock
or the sale of all or substantially all of the assets to the same
purchaser of one or more of: i) Xxxxxxx Sports, Inc., a Delaware
corporation ii) Xxxxxxx, Inc., an Illinois corporation iii) or All
American Sports Corporation, a Delaware corporation is not a sale,
assignment, or transfer of the Trademarks or a lien, pledge, or
security interest in the Trademarks that requires SSG's consent under
this paragraph 20 so long as such sale is not to a competitor of SSG or
to a person or entity who is of poor or unsatisfactory financial
condition, is in a scandalous or unsavory business, or has a poor
reputation. In the event of a sale, transfer, assignment, pledge,
lien, merger or change of control made in accordance with the provision
of this paragraph 20, this Agreement will remain binding on the parties
and their successors.
21. Dispute Resolution Procedure For Certain Disputes. Any and all
disputes, claims, demands, causes of action, controversies and other
matters in question between the parties arising out of or relating to
any non-material breach of this Agreement, including but not limited to
the matters set out in paragraph 6.3 (regardless of whether (a)
allegedly extra-contractual in nature, (b) sounding in contract, tort
or otherwise, (c) provided for by applicable law or otherwise or (d)
seeking damages or any other relief, whether at law, in equity or
otherwise) (collectively, "Arbitrable Disputes") shall be resolved as
set forth in this paragraph 21. A material breach of this Agreement is
not subject to this paragraph 21 (including, but not limited to the
provisions of paragraph 21.5).
21.1 Level 1 Dispute Procedure. Upon the written request of any party
to this Agreement (the "Dispute Notice"), SSG, on the one hand,
and MacMark and Equilink, on the other hand, shall each appoint a
designated representative whose task shall be to meet the other
party's designated representative (by conference telephone call or
in person at a mutually agreeable site) in an endeavor to resolve
any Arbitrable Dispute ("Level 1 Dispute Procedure"). The
designated representatives shall meet as often as the parties
reasonably deem necessary to discuss the Arbitrable Dispute and
negotiate in good faith in an effort to resolve the Arbitrable
Dispute without the necessity of any formal proceeding.
21.2 Level 2 Dispute Procedure. If resolution of the Arbitrable Dispute
is not resolved within sixty (60) days from the date of the
Dispute Notice (as may be mutually extended) a chief executive
officer or President (or a functional equivalent) of each of the
parties shall meet (by conference telephone call or in person at a
mutually agreeable site) within seventy-five (75) days after the
date of the Dispute Notice (as may be mutually extended) for the
purpose of endeavoring to resolve such unresolved Arbitrable
Dispute.
21.3 Submission of Dispute to Mediation. If the parties are unable to
resolve the Arbitrable Dispute within eighty-five (85) days after
the date of the Dispute Notice (as may be mutually extended), the
parties shall thereafter immediately submit the Arbitrable Dispute
to mediation in accordance with the Commercial Mediation Rules of
the AAA and shall bear equally the costs of the mediation. The
parties will act in good faith to jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
AAA as necessary. The parties agree to participate in good faith
in the mediation and negotiations related thereto for a period of
thirty (30) days commencing with the selection of the mediator and
any extension of such period as mutually agreed to by the parties.
21.4 Arbitration. If the parties cannot agree to a mediator within
ninety-five (95) days of the Dispute Notice (as may be mutually
extended) or if the Arbitrable Dispute is not resolved within 30
days after the beginning of the mediation and any extension of
such periods as mutually agreed to by the parties, the Arbitrable
Dispute shall be submitted to, and finally determined by, binding
arbitration in accordance with the following provisions of this
paragraph, regardless of the amount in controversy or whether such
Arbitrable Dispute would otherwise be considered justiciable or
ripe for resolution by a court or arbitration.
Any such arbitration shall be conducted by the AAA in accordance
with its current Commercial Arbitration Rules, including the
optional rules for Expedited Procedures (E-1 through E-10) (the
"AAA Rules"), except to the extent that: i) the AAA Rules conflict
with the provisions of this paragraph, in which event the
provisions of this paragraph shall control; or ii) the AAA Rules
conflict with the Federal Rules of Evidence (and any rules they
incorporate, adopt or refer to) regarding privileges and
exemptions, which rules will apply.
The arbitration shall be conducted by one neutral arbitrator who
shall be appointed in accordance with the AAA Rules (the "Basic
Qualifications").
Should an Arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this paragraph, a
substitute Arbitrator possessing the Basic Qualifications shall be
appointed by the AAA in accordance with the AAA Rules. If an
Arbitrator is replaced after the arbitration hearing has
commenced, then a rehearing shall take place in accordance with
the provisions of this paragraph and the AAA Rules.
If SSG sends the Dispute Notice, the arbitration shall be
conducted in New York, New York; provided that the Arbitrator may
from time to time convene, carry on hearings, inspect property or
documents and take evidence at any location that the Arbitrator
deems appropriate. If MacMark or Equilink sends the Dispute
Notice, the arbitration shall be conducted in Dallas, Texas;
provided that the Arbitrator may from time to time convene, carry
on hearings, inspect property or documents and take evidence at
any location that the Arbitrator deems appropriate.
Within thirty (30) days after the closing of the arbitration
hearing, the Arbitrator shall prepare and distribute to the
parties a written award, setting forth the Arbitrator's findings
of facts and conclusions of law relating to the Arbitrable
Dispute, including the reasons for the giving or denial of any
requested remedy or relief. The Arbitrator shall have the
authority to award any remedy or relief that a court of competent
jurisdiction could order or grant; provided however, the
Arbitrator shall not have authority to: i) determine, declare or
enter an award finding that the Agreement is terminated; ii) enter
any award that is inconsistent with a non-material breach of the
Agreement; or iii) grant or award indirect, consequential,
punitive or exemplary damages of any kind.
To the extent that the relief or remedy granted in an award
rendered by the Arbitrator is relief or a remedy on which a court
could enter judgment, a judgment upon the award rendered by the
Arbitrator may be entered in any court having jurisdiction
thereof. Otherwise, the award shall be binding upon the parties in
connection with their obligations under this Agreement and in any
subsequent arbitration or judicial proceedings between the
parties.
Notwithstanding the choice of law provision set forth in paragraph
28 of this Agreement, The Federal Arbitration Act, 9 U.S.C. SS1 to
14, except as modified by this paragraph 21, shall govern the
enforcement this paragraph 21.
21.5 Recourse to Courts and Other Remedies. Notwithstanding the dispute
resolution procedures contained in this paragraph, any party may
apply to any court having jurisdiction (a) to enforce this
Agreement to arbitrate, (b) to preserve a superior position with
respect to other creditors (c) to enforce any final judgment or
award of the Arbitrator or (d) to challenge or vacate any final
judgment, award or decision of the Arbitrator that does not
comport with the express provisions of this paragraph.
21.6 Attorneys' Fees And Costs. The prevailing party in the
Arbitration shall be entitled to recover reasonable attorneys'
fees, expert witness fees, arbitrator fees, and other costs
incurred in the Arbitration, in addition to any other relief to
which it may be entitled.
22. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their successors and assigns, to the
extent successors and assigns are permitted by this Agreement.
23. No Implied Waivers. The failure of any party, at any time, to require
performance by the other parties of any provision hereof shall not
affect in any way the right to require such performance at any time in
the future, nor shall the waiver by either party of a breach of any
provision hereof be taken or held to be a waiver of such provision. A
waiver by any of the parties hereto of any breach of the Agreement
shall not be construed to be a waiver of any succeeding breach thereof.
24. Notices. Except as otherwise specifically provided in paragraphs 8.2
(New Product Approval) and 8.3 (Materials Approval), all notices
required or permitted to be given by this Agreement shall be in writing
and shall be deemed given and received: a) when personally delivered
with proof of delivery, b) when received if transmitted by facsimile
with proof or delivery, or c) on the third business day after being
mailed when mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by notice given to the other
parties pursuant to this provision):
If to MacMark or Equilink: MacMark Corporation
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
with a copy to: St. Xxxx Xxxxxxx Xxxxxxxx & Reens, L.L.C.
000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
If to SSG: Sport Supply Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Attn: General Counsel
with a copy to: Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: R. Xxxxxxx Xxxxxx
25. Representations, Warranties and Covenants of MacMark, Equilink and (for
purposes of paragraph 25.5) Xxxxxxx. Notwithstanding any investigation
or due diligence by SSG, MacMark and Equilink represent, warrant and
covenant to SSG as follows:
25.1 Organization and Authorization. MacMark and Equilink are both
corporations duly organized, validly existing and in good standing
under the laws of the state of Delaware, and are wholly owned
subsidiaries of Xxxxxxx Sports, Inc. MacMark and Equilink have
corporate power to enter into and carry out their obligations
under this Agreement. This Agreement will be a valid and binding
obligation of MacMark and Equilink when executed by all parties.
25.2 Conflicts With Other Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereunder will conflict with, violate or
constitute a default under any agreement or instrument to which
MacMark or Equilink is a party, individually, or jointly, or by
which MacMark's or Equilink's rights, title and interest in the
Trademarks may be affected. To the extent MacMark has previously
granted to Equilink any rights inconsistent with this Agreement,
MacMark and Equilink agree those right are hereby revoked.
Specifically, but without limitation, MacMark and Equilink
represent that where MacMark is given the right and obligation in
this Agreement to approve products and advertising, MacMark, and
not Equilink, has the right and power to give such approvals.
25.3 No Insolvency. Neither MacMark nor Equilink are insolvent and
this Agreement is not being entered into in contemplation of
either company's insolvency nor are such transactions being
consummated with any intent to hinder, delay or defraud any of
their creditors.
25.4 Other. MacMark owns the entire right, title and interest in and
to the MacMark Trademarks and the MacMark Registrations listed on
Exhibit A-1, free and clear of all liens, claims or encumbrances
of any kind, the MacMark Registrations listed on Exhibit A-1 are
valid and subsisting, and Equilink has exclusive rights to license
the MacMark Trademarks. MacMark is one of two members of
MacGregor Corporation, a Delaware nonstock corporation ("MacGregor
Corporation"), and MacMark has the right to appoint three (3) of
the six (6) members of the Board of Directors of MacGregor
Corporation. MacGregor Corporation owns the entire, right, title
and interest in and to the MacGregor Corporation Trademarks listed
on Exhibit A-2, free and clear of all liens, claims or
encumbrances of any kind, the MacGregor Corporation Registrations
listed on Exhibit A-2 are valid and subsisting, and MacMark, as
the successor to MacGregor Sporting Goods, Inc. ("MSG") under that
certain License Agreement between MacGregor Corporation and MSG
dated June 8, 1984 (the "MSG Agreement") and otherwise, has the
exclusive right to use, and to sublicense others to use, the
MacGregor Corporation Trademarks on all athletic products other
than golf clubs, golf balls, golf bags and other products used
exclusively in connection with the sport of golf. The License
Agreement between Equilink (as the successor to Netlink, Inc., a
Texas corporation) and MacMark dated April 18, 1988 and amended
July 30, 1992 and November, 1992 is a valid and subsisting
agreement between the parties to that agreement, and that
agreement, the Other License Agreements, the MSG Agreement, and
this Agreement constitute all of the license agreements concerning
the Trademarks to which MacMark or Equilink is a party or under
which MacMark or Equilink has rights or obligations with respect
to the Trademarks. SSG's use of the Trademarks in accordance with
and for the purposes set forth in this Agreement will not infringe
the contractual or proprietary rights of any third party or
conflict with the Other License Agreements. To MacMark's and
Equilink's knowledge, there is no infringement of the Trademarks
by any third party. The Trademarks are all of the trademarks
containing the "MacGregor" name or any derivation thereof that
MacMark or Equilink owns or has the right to use.
25.5 Operations of MacMark and Equilink. Xxxxxxx Sports, Inc.
("Xxxxxxx"), MacMark and Equilink represent, warrant and covenant
to SSG that: i) Xxxxxxx owns all of the stock of MacMark and
Equilink free and clear of any liens, claims or encumbrances; and
ii) without SSG's written consent, which will not be unreasonably
withheld, neither MacMark nor Equilink will engage in any business
activity other than the ownership, maintenance and licensing of
the Trademarks.
26. Representations and Warranties of SSG. Notwithstanding any
investigation or due diligence by MacMark or Equilink, SSG represents
and warrants to MacMark and Equilink as follows:
26.1 Organization and Authorization. SSG is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Delaware. SSG has the corporate power to enter into
and carry out its obligations under this Agreement. This
Agreement will be a valid and binding obligation of SSG when
executed by all parties.
26.2 Conflicts With Other Agreements. Neither the execution nor
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with, violate or
constitute a default under any agreement or instrument to which
SSG is a party.
26.3 Insolvency. SSG is not insolvent and this Agreement is not being
entered into in contemplation of its insolvency nor are such
transactions being consummated with any intent to hinder, delay or
defraud any of its creditors.
27. Entire Agreement; Amendment. This Agreement, including all Exhibits
referred to in the Agreement, contains the entire understanding between
the parties with respect to the subject matter hereof and amends,
restates and supersedes all prior and contemporaneous written or oral
negotiations and agreements between them regarding the subject matter
hereof except as otherwise expressly provided in paragraph 1 of this
Agreement. Any reliance by any party on any prior or contemporaneous
written or oral negotiations or statements would be unintended and
unjustified. This Agreement may be amended only by a writing signed by
all of the parties hereto.
28. Governing Law and Jurisdiction. The parties hereby consent to non-
exclusive jurisdiction of any federal court of New York. This
Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of New York.
29. Captions. The captions of the paragraphs and subsidiary paragraphs of
this Agreement are included for reference purposes only and are not
intended to be a part of this Agreement or in any way to define, limit
or describe the scope or intent of the particular provision to which
they refer.
30. Remedies. Except as otherwise provided in this Agreement, including
without limitation paragraphs 6 and 21, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in lieu
of any other remedies available to any party at law, in equity or
otherwise.
31. Consent to Limited Assignment. Equilink and MacMark consent to SSG's
limited assignment by SSG to SSG's lender(s) of SSG's rights under this
Agreement, so long as such limited assignment is substantially in the
form of the Limited Assignment attached as Exhibit J.
32. Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, in whole or in part, then the
parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties is that this Agreement will be
deemed amended by modifying any such illegal, unenforceable or void
provision to the extent necessary to make it legal and enforceable
while preserving its intent, or if such is not possible, by
substituting therefor another provision that is legal and enforceable
and achieves the same objectives. Notwithstanding the foregoing, the
remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision
not so affected will be enforced to the extent permitted by law.
33. Attorneys' Fees. If any legal proceeding (other than an arbitration
under paragraph 21) is brought for the enforcement of this Agreement,
or because of an alleged breach, default or misrepresentation in
connection with any provision of this Agreement or other dispute
concerning this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred
in that proceeding, in addition to any other relief to which it may be
entitled. In any arbitration under paragraph 21, the provisions of
that paragraph will govern the award of attorneys' fees.
34. Force Majeure. MacMark and Equilink understand and acknowledge that
SSG may not be liable for any loss, damage, detention, delay or failure
to perform (including but not limited to any failure to meet the Target
Revenue provision of paragraph 6.5) or cure in whole or in part
resulting from causes beyond SSG's control, including, but not limited
to, fires, strikes, insurrections, riots, embargoes, shortages or
delays in transportation, inability to obtain supplies of raw
materials, or requirements or regulations of the United States
government or any other governmental, civil or military authority.
Furthermore, it is understood that in no event shall SSG be liable for
consequential damages. In the event any party is unable to take any
action within a specified time as required by this Agreement (including
but not limited to any failure to meet the Target Revenue provision of
paragraph 6.5 or to cure an alleged breach) as a result of causes
beyond the party's control, including, but not limited to, fires,
strikes, insurrections, riots, embargoes, shortages or delays in
transportation, inability to obtain supplies of raw materials, or
requirements or regulations of the United States government or any
other governmental, civil or military authority, then the time for such
party to take such action shall be extended by the length of time such
conditions exist.
35. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has caused its authorized
representative to execute this Agreement to be effective as of the Effective
Date.
MACMARK CORPORATION
BY:__________________________________
PRINTED NAME:______________________
TITLE:_______________________________
EQUILINK LICENSING CORPORATION
BY:__________________________________
PRINTED NAME:______________________
TITLE:_______________________________
SPORT SUPPLY GROUP, INC.
BY:__________________________________
PRINTED NAME:______________________
TITLE:_______________________________
XXXXXXX SPORTS, INC. (AS TO PARAGRPAH 25.5 ONLY)
BY:__________________________________
PRINTED NAME:______________________
TITLE:_______________________________
