TRADEMARK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made this 14th day of September,
1998, by and between Klear Knit Sales Inc., a Connecticut corporation, with a
business address of 00 Xxxx Xxxx Xxxx, Xxxxxxxx, XX, hereinafter, "Klear Knit,"
and Pivot Rules, Inc., a New York corporation, with a business address of 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX, hereinafter, "Pivot Rules."
WHEREAS, Pivot Rules is the owner of the trademarks and trademark
registrations and application set forth on Schedule A attached hereto, and
incorporated herein by reference, hereinafter the "Trademarks"; and
WHEREAS, Pivot Rules desires to sell to Klear Knit and Klear Knit
desires to purchase from Pivot Rules the Trademarks upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the stipulations and agreements
contained herein, the parties agree as follows:
1. CONVEYANCE OF THE TRADEMARKS. Subject to the terms and conditions
contained in this Agreement, Pivot Rules shall sell, transfer and assign to
Klear Knit, and Klear Knit shall purchase and acquire from Pivot Rules, Pivot
Rules' entire right, title and interest in and to the Trademarks. Simultaneous
with the execution of this Agreement, Pivot Rules shall execute and deliver to
Klear Knit the Assignment attached hereto, in addition to any other documents
reasonably requested and necessary to transfer and convey the Trademarks to
Klear Knit.
2. PURCHASE PRICE. The purchase price for the Trademarks shall be as
follows:
(a) Upon execution of this Agreement, Klear Knit shall pay to
Pivot Rules the sum of $400,000.00; and
(b) During each of the first five years following execution of
this Agreement (including the first year), Klear Knit shall pay to Pivot Rules
two-percent (2%) of the amount of its Gross Revenues, as defined herein, that
exceeds $2,500,000.00 during any year, provided, however, that total payments
during the five year period, in the aggregate, will be capped at $290,000.00,
and Klear Knit's payment obligation to Pivot Rules shall automatically
terminate upon payment to Pivot Rules of said amount or upon expiration of said
five year period, whichever shall first occur. If Klear Knit's Gross Revenues
exceed $2,500,000.00 in the first year, the first year's payment to Pivot Rules
pursuant to this paragraph 2(b) shall be made within thirty (30) days following
the first anniversary of this Agreement. Payments related to years 2-5, if any,
shall be made pursuant to paragraph 2(b)(ii) herein.
(i) GROSS REVENUES. Gross Revenues shall mean the gross
invoice amount billed customers by Klear Knit or any affiliate of Klear Knit,
or any licensing fees or other revenues received by Klear Knit or any affiliate
of Klear Knit, on products sold which incorporate or otherwise make use of the
Trademarks, after deduction of customary discounts, allowances and returns.
(ii) QUARTERLY STATEMENTS. During years 2-5 following
execution of the Agreement, or until termination of Klear Knit's payment
obligation hereunder, Klear Knit agrees to provide Pivot Rules with quarterly
statements of its Gross Revenues, as defined herein, and to make quarterly
payments to Pivot Rules of any sums due hereunder. Any quarterly payments due
hereunder shall be made within thirty (30) days from the close of the calendar
quarter during which any such payments have accrued.
(iii) AUDIT. During years 2-5 following execution of the
Agreement, or until termination of Klear Knit's payment obligation hereunder,
and for a period of six (6) months thereafter, Pivot Rules shall have the
right, at its sole expense and not more than once per calendar year, to inspect
Klear Knit's books and records relating to Gross Revenues, as defined herein,
covering the immediately preceding 24 month period. In the event any such
inspection should reveal a discrepancy of greater than $5,000.00 in any amounts
owed to Pivot Rules, and such deficiency is substantiated, Klear Knit agrees to
pay the reasonable cost of the inspection, which shall not exceed $5,000.00,
unless such discrepancy is the result of fraud, gross negligence or bad faith,
in which case Klear Knit agrees to pay the reasonable cost of the inspection.
Any such inspection conducted hereunder by Pivot Rules shall be upon at least
ten (10) business days written notice to Klear Knit and shall take place during
reasonable business hours. Pivot Rules agrees that all information learned
during any inspection shall be confidential and agrees not to make any use,
directly or indirectly, of such information or disclose such information to any
third party, except to the extent that such disclosure is required by law or to
the extent such disclosure is required to prosecute any action against Klear
Knit regarding payments claimed to be owed pursuant to this Agreement, in which
case this limitation shall not apply.
(c) MAXIMUM PURCHASE PRICE. The parties agree that the maximum
total purchase price for the Trademarks shall not exceed $690,000.00.
3. REPRESENTATIONS AND WARRANTIES OF PIVOT RULES. Pivot Rules hereby
makes the following representations and warranties, each of which is true and
correct on the date hereof and each of which shall survive the execution of
this Agreement and the transactions contemplated hereby.
(a) POWER AND AUTHORITY. Pivot Rules is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, with full corporate power to enter into this Agreement and to perform
its obligations hereunder. The execution, delivery and performance of this
Agreement by Pivot Rules has been duly authorized and approved by all necessary
valid and continuing action.
(b) BINDING EFFECT. This Agreement has been duly executed and
delivered by Pivot Rules and is a legal, valid and binding obligation of Pivot
Rules.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Pivot Rules has
obtained all requisite governmental and third-party consents and approvals for
consummation of the transactions contemplated by this Agreement and neither the
execution, delivery or performance of this Agreement by Pivot Rules nor the
consummation of any of the transactions contemplated hereunder will (i)
conflict with Pivot Rules' Certificate of Incorporation or By-Laws (or other
similar charter documents), (ii) violate any contract to which Pivot Rules is a
party, (iii) violate any applicable law or regulation, or (iv) violate or
conflict with any provision of any judgment,
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injunction, decree, determination or award of any court or government agency
binding on Pivot Rules and/or affecting the Trademarks.
(d) TRADEMARKS. With respect to the Trademarks, Pivot Rules
specifically represents as follows:
(i) Schedule A contains a correct and summary description of
each of the Trademarks;
(ii) There are no license or other agreements with respect
to the Trademarks other than the two Settlement Agreements which
give rise to the restrictions referred to in paragraph 5 herein
and set forth in Schedule B attached hereto and agreements
relating to the fulfillment of existing purchase orders for Pivot
Rules' products or liquidation of existing Pivot Rules'
inventory;
(iii) Pivot Rules has, and Klear Knit shall have upon
execution of the Assignment contemplated hereunder, the right to
use the Trademarks in connection with at least the goods or
services identified in the respective registrations or
application, with the exception only of the limitations referred
to in paragraph 5 herein and set forth in Schedule B attached
hereto;
(iv) Pivot Rules has good and marketable title to the
Trademarks, free and clear of all options, defenses, liens,
charges, security interests, covenants, conditions, agreements,
restrictions and other encumbrances, with the exception only of
the limitations referred to in paragraph 5 herein and set forth
in Schedule B attached hereto;
(v) There are no restrictions on the transfer of the
Trademarks and Pivot Rules is not aware of any restrictions on
the use of the Trademarks, with the exception only of the
limitations referred to in paragraph 5 herein and set forth in
Schedule B attached hereto;
(vi) No challenges, proceedings or infringement or other
suits have been filed and served on Pivot Rules and Pivot Rules
is unaware of any existing or threatened actions with respect to
the Trademarks;
(vii) No person or party has a right to receive a royalty or
any other type of fee or payment with respect to the Trademarks
or any use thereof, except as relates to the fulfillment by Pivot
Rules of existing purchase orders or the liquidation of Pivot
Rules' remaining inventory in accordance with the Agreement;
(viii) Pivot Rule's is not aware of any claims of
infringement or other violations relating to the Trademarks, and,
to the best of its knowledge, no other person or party is
infringing upon any trademark or intellectual property right of
Pivot Rules with respect to the Trademarks;
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(ix) Pivot Rules is not aware of any violations of any
applicable laws and regulations concerning its use and
registration of the Trademarks in the United States and, to the
best of its knowledge, has taken no action nor omitted to take
any action such as would invalidate or render unenforceable any
of the Trademarks; and
(x) Pivot Rules is not aware of any fact that would
invalidate or render unenforceable any of the Trademarks.
(e) LITIGATION. There is no judgment, suit, claim, action or
proceeding filed and served upon Pivot Rules or, to the best of its knowledge,
otherwise existing or threatened to which Pivot Rules is a party or which may
result in any adverse effect on any of the Trademarks.
(f) BROKER'S FEES. Pivot Rules acknowledges that a finder's fee
in connection with this Agreement may be owed to Xxxx Xxxxxxx. Pivot Rules
acknowledges that it is responsible for payment of such fee and agrees to
indemnify and hold Klear Knit harmless from any claims made by Xx. Xxxxxxx or
any other broker of a fee or commission due in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF KLEAR KNIT. Klear Knit hereby
makes the following representations and warranties, each of which is true and
correct on the date hereof and each of which shall survive the execution of
this Agreement and consummation of any of the transactions contemplated hereby.
(a) POWER AND AUTHORITY. Klear Knit is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut with the necessary corporate power to enter into this Agreement and
to perform its obligations hereunder. The execution, delivery and performance
of this Agreement by Klear Knit has been duly authorized and approved by all
necessary valid and continuing corporate action.
(b) BINDING EFFECT. This Agreement has been duly executed and
delivered by Klear Knit and is a legal, valid and binding obligation of Klear
Knit.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Klear Knit has obtained
all requisite governmental and third party consents and approvals for
consummation of the transactions contemplated by this Agreement. Neither the
execution, delivery or performance of this Agreement by Klear Knit nor the
consummation of any of the transactions contemplated hereunder will (i)
conflict with Klear Knit's Certificate of Incorporation or By-Laws (or other
similar charter documents), (ii) violate any contract to which Klear Knit is a
party, (iii) violate any applicable law or regulation, or (iv) violate or
conflict with any provision of any judgment, injunction, decree, determination
or award of any court or government agency binding on Klear Knit and/or
affecting the Trademarks.
(d) EXPLOITATION OF THE TRADEMARKS. Klear Knit agrees that it
will use reasonable efforts to exploit the Trademarks.
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(e) SUFFICIENT FUNDS. Klear Knit has and will have access to
sufficient funds to fulfill all of its payment obligations hereunder and
neither the execution and delivery of this Agreement nor the performance of its
payment obligations hereunder shall render it insolvent.
5. LIMITATIONS ON USE OF THE TRADEMARKS. Klear Knit acknowledges that
Pivot Rules has disclosed to it certain limitations of use with respect to the
PIVOT RULES and THE RULES HAVE CHANGED trademarks only. These restrictions are
set forth in Schedule B attached hereto and made a part hereof by reference
thereto. The parties agree that the sale of the Trademarks hereunder and the
representations of Pivot Rules with respect thereto is subject to these
restrictions.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY PIVOT RULES. Pivot Rules will indemnify,
defend and hold harmless Klear Knit, its affiliated and related companies and
their directors, officers, employees or agents, from and against all claims,
liabilities, losses, costs, deficiencies or expenses, including reasonable
attorneys' fees, interest, costs and penalties in connection therewith, arising
from: (i) the breach of any agreement, covenant, representation, warranty or
other obligation of Pivot Rules made or incurred under or pursuant to this
Agreement or any document delivered or executed by any party pursuant hereto,
or any facts or circumstances constituting such a breach, and/or (ii) the
conduct of Pivot Rules' business in the use of the Trademarks at any time prior
to the date of this Agreement, provided, however, that this indemnification
shall not apply to any such claims that are the result of or arise from a
breach by Klear Knit of any representation or warranty contained in this
Agreement. Any claim for indemnification hereunder shall not exceed, in the
aggregate, the greater of $400,000.00 or the total payments made by Klear Knit
to Pivot Rules under this Agreement. With the exception of claims relating to
fraud, the breach of any representation or warranty contained in this Agreement
and/or grossly negligent conduct, the right of indemnification provided for
herein shall terminate three (3) years following execution of this Agreement.
(b) INDEMNIFICATION BY KLEAR KNIT. Klear Knit will indemnify,
defend and hold harmless Pivot Rules, its affiliated and related companies and
their directors, officers, employees or agents from and against all claims,
liabilities, losses, costs, deficiencies or expenses, including reasonable
attorneys' fees, interest, costs and penalties in connection therewith, arising
from: (i) the breach of any agreement, covenant, representation, warranty or
other obligation of Klear Knit made or incurred under or pursuant to this
Agreement or any document delivered or executed by any party pursuant hereto,
or any facts or circumstances constituting such a breach, and/or (ii) the
conduct of Klear Knit's business in the use of the Trademarks from and after
the date of this Agreement, including without limitation, any claims relating
to the use restrictions set forth in Schedule B attached hereto, provided,
however, that this indemnification shall not apply to any such claims that are
the result of or arise from a breach by Pivot Rules of any representation or
warranty contained in this Agreement. Any claim for indemnification hereunder
shall not exceed, in the aggregate, the greater of $400,000.00 or the total
payments made by Klear Knit to Pivot Rules under this Agreement. With the
exception of claims relating to fraud, the breach of any representation or
warranty contained in this Agreement and/or grossly negligent conduct, the
right of indemnification provided for herein shall terminate three (3) years
following execution of this Agreement.
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7. FURTHER DOCUMENTS AND INSTRUMENTS. Pivot Rules agrees, upon request
and without any out-of-pocket expense to Pivot Rules, to execute any further
documents and instruments that may, from time to time, be required to carry out
the transactions contemplated by this Agreement, including the transfer the
Trademarks to Klear Knit, and/or the recordal of the Assignment with the United
States Patent and Trademark Office. Within thirty (30) days following execution
of this Agreement, Pivot Rules will arrange for transfer of all file materials
relating to the Trademarks, including without limitation, original certificates
of registration, applications and all file wrapper materials, to Klear Knit or
its attorney. In addition, Pivot Rules agrees to take all action necessary to
maintain the WE PLAY GOLF. WHEN IT RAINS WE MAKE CLOTHES trademark application
until such time as all file materials relating thereto have been transferred.
8. SAMPLES. Upon execution of this Agreement, Pivot Rules agrees to
provide Klear Knit, at no additional cost, substantially all of its entire
inventory of samples from all available lines, in addition to drawings,
specifications, color charts, presentation documents, labels, hang tags and all
other related materials.
9. CESSATION OF USE OF TRADEMARKS AND TRADE NAME BY PIVOT RULES. Upon
execution of this Agreement, Pivot Rules will cease all use of the Trademarks,
including in connection with its Internet activities, provided, however, that
Pivot Rules shall be permitted to use the Trademarks for the limited purpose of
liquidating its existing inventory - as of the date of this Agreement - which
right shall expire on December 31, 1998. In addition, Pivot Rules agrees to
cease all use of the Pivot Rules trade name as soon as the necessary corporate
actions relating thereto can reasonably be carried out, and in this regard,
Pivot Rules shall use its best efforts. It shall not be a violation of this
Agreement for Pivot Rules, after the change of its Pivot Rules trade name, as
required hereunder, to inform its customers and the public that it was formerly
known as Pivot Rules, Inc., provided that after the Pivot Rules trade name is
changed, as provided for herein, the name is not used in connection with any
advertising, with the exception of previously placed ads (which shall not be
renewed), stationary, letterhead and the like.
10. AGREEMENT BINDING ON PREDECESSORS, SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their predecessors, successors and assigns.
11. WAIVER. No waiver by either party of any default hereunder shall
be deemed as a waiver of any prior or subsequent default of the same or other
provisions of this Agreement.
12. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by a court of competent jurisdiction, such invalidity shall
not affect the validity or operation of any other provision and such invalid
provision shall be deemed to be severed from the Agreement.
13. JURISDICTION AND DISPUTES. The Agreement shall be governed by the
laws of the State of New York in any action brought by Klear Knit against Pivot
Rules and the State of Connecticut in any action brought by Pivot Rules against
Klear Knit and all disputes hereunder shall be resolved in the applicable state
or federal court of such respective jurisdictions. The
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parties consent to the jurisdiction of such courts, agree to accept service of
process by mail, and waive any jurisdictional or venue defenses otherwise
available.
14. COUNTERPARTS. This Agreement may be executed in one or more
identical counterparts, each of which shall be deemed an original but all of
which will constitute one and the same instrument.
15. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of the Agreement.
16. INTEGRATION. This Agreement constitutes the entire understanding
of the parties, and revokes and supersedes all prior agreements between the
parties and is intended as a final expression of their agreement. The Agreement
shall not be modified or amended except in writing signed by the parties hereto
and specifically referring to this Agreement. This Agreement shall take
precedence over any other documents which may be in conflict therewith.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have each caused to be affixed hereto its or his/her hand and seal the
day indicated.
KLEAR KNIT SALES INC. PIVOT RULES, INC.
BY /s/ Xxxxxxx. X. Xxxxxxxx BY /s/ Xxxxxxxx Xxxxxx
------------------------ -------------------
Xxxxxxx X. Xxxxxxxx Print Name: Xxxxxxxx Xxxxxx
Its President Title: Executive Vice President
Date: 9/14/98 Date: 9/14/98
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SCHEDULE A
U.S. Reg. No. Reg. Date Xxxx
------------- --------- ----
1,934,069 November 7, 1995 PIVOT RULES
1,718,326 September 22, 1992 THE RULES HAVE CHANGED
1,971,664 April 30, 1996 I.M. GOLFER
2,051,362 Xxxxx 0, 0000 XXXXXXX TO PLAY A ROUND IN
1,734,089 November 17, 1992 MALE GOLFER Logo
2,002,691 September 24, 1996 FEMALE GOLFER Logo
1,832,801 April 26, 1994 THREE-GOLFER AND FLAG Logo
1,773,046 May 25, 1993 THREE-GOLFER Logo
U.S. Ser. No. Filing Date Xxxx
------------- ----------- ----
75-398713 December 2, 1997 WE PLAY GOLF. WHEN IT
RAINS WE MAKE CLOTHES
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SCHEDULE B
LIMITATIONS ON USE OF PIVOT RULES AND
THE RULES HAVE CHANGED TRADEMARKS
THE RULES HAVE CHANGED
The trademark THE RULES HAVE CHANGED (Reg. No. 1,718,326, Reg.: 9/22/92) shall
not be used on or in conjunction with the manufacture or sale of motor
vehicles. No applications to register such xxxx shall be filed with the Patent
and Trademark Office as a trademark for use in connection with motor vehicles
nor shall any licenses to use such xxxx be granted to any third party without
inclusion of the foregoing limitation and appropriate assurances from the
licensee that such limitation will not be violated.
PIVOT RULES
The word PIVOT shall always be immediately followed by the word RULES. All
visual uses of the names PIVOT RULES and PIVOT RULES, INC. shall conform to the
following:
a. for depictions of the trade name PIVOT RULES in a continuous
horizontal, circular or diagonal format, the spacing between the word
PIVOT and the word RULES may be no more than the width of one (1)
character. For depictions of the trade name PIVOT RULES in a
continuous vertical format, the spacing between the word PIVOT and the
word RULES may be no more than the height of one (1) character;
b. for depictions of the trade name PIVOT RULES in a stacked vertical
format, the vertical spacing between the word PIVOT and the word RULES
can be no more than two-thirds (2/3) of the height of the word PIVOT
as used in the name. For depictions of the trade name PIVOT RULES in a
side-by-side vertical format, the spacing between the word PIVOT and
the word RULES can be no more than the width of one (1) character;
c. for depictions of the trade name PIVOT RULES in a stacked vertical
format, the word RULES will lie entirely between a boundary defined by
the left edge of the letter "P" in the word PIVOT and the right edge
of the letter "T" in the word PIVOT;
d. the word PIVOT shall appear in the same font as the word RULES;
e. the word RULES shall be no less than ninety percent (90%) the height
or width of the word PIVOT;
f. in the word PIVOT, the height of the stem of the letter "P" (defined
as the distance from the base of the letter "P" to the lower edge of
the loop of the letter "P") must be equal to at least thirty-four
percent (34%) of the total height of the letter "P";
g. the interior space of the letter "O" must be free from any design
element.
ASSIGNMENT
FOR ONE DOLLAR ($1.00) and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Pivot Rules, Inc., a New York
Corporation with an office and place of business at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000 (hereinafter "Assignor"), hereby assigns to Klear Knit Sales
Inc., a Connecticut corporation, having a business address of 00 Xxxx Xxxx
Xxxx, Xxxxxxxx, XX 00000 (hereinafter "Assignee"), Assignor's entire right,
title and interest in and to the following trademarks and to the following
trademark registrations and application:
U.S. Reg. No. Reg. Date Xxxx
------------- --------- ----
1,934,069 November 7, 1995 PIVOT RULES
1,718,326 September 22, 1992 THE RULES HAVE CHANGED
1,971,664 April 30, 1996 I.M. GOLFER
2,051,362 Xxxxx 0, 0000 XXXXXXX TO PLAY A ROUND IN
1,734,089 November 17, 1992 MALE GOLFER Logo
2,002,691 September 24, 1996 FEMALE GOLFER Logo
1,832,801 April 26, 1994 THREE-GOLFER AND FLAG Logo
1,773,046 May 25, 1993 THREE-GOLFER Logo
U.S. Ser. No. Filing Date Xxxx
------------- ----------- ----
75-398713 December 2, 1997 WE PLAY GOLF. WHEN IT
RAINS WE MAKE CLOTHES
together with the good will of the business symbolized by said marks to be held
and enjoyed by said Assignee for its own use and benefit and for the use and
benefit of its successors and assigns
as fully and as entirely as the same would have been held and enjoyed by
Assignor had the assignment not been made.
ASSIGNOR COVENANTS and AGREES that it will, at any time upon request,
without any compensation, execute and deliver any and all papers or instruments
that in the reasonable opinion of the Assignee may be necessary to secure to
said Assignee the full enjoyment of the rights, title and interest hereby
conveyed or intended to be conveyed
Signed, Sealed and Delivered at New York, New York, this 14th day of
September, 1998.
PIVOT RULES, INC.
By /s/ Xxxxxxxx Xxxxxx
----------------------------
Print Name: Xxxxxxxx Xxxxxx
Title: Executive Vice President
State of New York )
) ss:
County of New York )
On the 14th day of September, 1998, before me personally came Xxxxxxxx
Xxxxxx, to me known and known to me to be the Exec. Vice Pres. of the Assignor
above named, and duly acknowledged to me that he executed the foregoing
Assignment on behalf of said Assignor and pursuant to authority duly received.
/s/ Xxxxx X. Xxxxx
------------------
Notary Public
Xxxxx X. Xxxxx
Notary Public, State of New York
No. 00-0000000
Qualified in Westchester County
Commission Expires July 31, 1999
(AFFIX SEAL)
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