LICENSE AGREEMENT
Exhibit 10.19
THIS AGREEMENT is made this 30th day of June, 2003 (the “Effective Date”) by and between XXXX
CORPORATION, a Delaware corporation with its principal place of business at 0000 Xxxxx Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the “LICENSOR”) and SONIGEM PRODUCTS, INC., a corporation
organized under the laws of the Province of Ontario, with its principal place of business at 000
Xxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X 0X0(xxx “LICENSEE”).
WHEREAS, LICENSEE desires to obtain the right to use certain trademarks of LICENSOR in
connection with the marketing and sale of certain of LICENSEE’s products; and
WHEREAS, LICENSOR is willing to grant such rights to LICENSEE upon the terms and conditions
set forth below;
NOW, THEREFORE, for and in consideration of the premises and of the mutual promises and
conditions herein contained, the parties hereby agree as follows:
| 1. | DEFINITIONS. |
For purposes of this Agreement, unless the context otherwise requires, the following terms
shall have the meanings set forth below:
1.1 “Licensed Trademarks” mean the “Xxxx” trademarks listed on Exhibit A to this
Agreement.
1.2 “Products” mean the consumer electronic products of LICENSEE set forth on Exhibit
B to this Agreement.
1.3 “Licensed Products” mean all Products of LICENSEE that have the Licensed Trademarks
affixed or attached thereto in any manner.
1.4 “Territory” means Canada.
1.5 “Contract Period” means the period beginning on the Effective Date and ending on June 30,
2008 and any applicable renewal period.
1.6 “Contract Year” means the fiscal year of Xxxx Corporation (July 1-June 30).
1.7 “Calendar Quarter” means each three-month period during the term of this Agreement, with
the first Calendar Quarter beginning on July 1, 2003 (i.e., July 1, 2003 through September 30,
2003; October 1, 2003 though January 31, 2004, etc.).
| 2. | GRANT OF LICENSE; LICENSOR’S SALES. |
2.1 Subject to the terms and conditions of this Agreement, LICENSOR hereby grants to LICENSEE
the exclusive right and license to use the Licensed Trademarks within the
Territory during the Contract Period in connection with, and only with, the manufacture,
promotion, distribution and sale of the Licensed Products.
2.2 LICENSEE will not make or authorize any use, direct or indirect, of the Licensed
Trademarks outside of the Territory; provided, however, that subject to the provisions of Section
2.3 below, LICENSEE has the right to have the Licensed Products manufactured outside the Territory
solely for sale by LICENSEE inside the Territory.
2.3 LICENSEE has the right to subcontract the manufacture of the Licensed Products to another
entity, provided that such entity executes a letter agreement in form substantially similar to
Exhibit C attached hereto. LICENSEE shall not grant any other subcontracting rights other
than as provided in this Section 2.3.
2.4 LICENSEE agrees to sell Products and Licensed Products to LICENSOR at a price equal to the
price LICENSEE pays for such Products or Licensed Products, plus ten percent (10%), payment terms
of net ninety (90) days. Notwithstanding anything to the contrary set forth in this Agreement, any
schedule or Exhibit hereto, or any other document, LICENSOR and LICENSEE acknowledge and agree that
LICENSOR has the right, without any restrictions and on terms acceptable to LICENSOR in its sole
discretion, to sell Products or Licensed Products (i) within the Territory or outside of the
Territory to the U.S. military or U.S. government or any other military or governmental agency (ii)
by direct mail or out of any of LICENSOR’s outlet stores existing now or in the future, or (iii)
directly to customers or end-users through LICENSOR’s web site or otherwise via the Internet.
| 3. | LICENSEE’S OBLIGATIONS. |
3.1 LICENSEE will not manufacture, advertise, promote, distribute or sell any Licensed
Products:
| (a) | in violation of any law or regulatory restriction; or | ||
| (b) | in any manner that damages the image, reputation or goodwill of the Licensed Trademarks or of LICENSOR or portrays LICENSOR or the Licensed Products in a false or poor light. |
3.2 During the Contract Period, LICENSEE will diligently manufacture, promote, distribute and
sell Licensed Products and make and maintain adequate arrangements for the distribution, repair and
servicing of the Licensed Products throughout the Territory. LICENSEE and LICENSOR shall each
inform the other party of their respective toll-free customer service telephone numbers, and shall
inform customers who have mistakenly telephoned one party of the other party’s customer service
telephone number.
3.3 LICENSEE will not sell refurbished Products labeled with the Licensed Trademarks unless
such Products are clearly and conspicuously labeled as refurbished merchandise.
3.4 At the request of LICENSOR, LICENSEE will pay to LICENSOR in advance all translation
costs, filing fees and all other fees, costs and expenses associated with “registered user” filings
within the Territory.
3.5 A breach of LICENSEE’s obligations regarding the Licensed Trademarks may result in
irreparable injury for which there may be no adequate remedy at law. Therefore, in the event of
any breach or threatened breach of LICENSEE’s obligations regarding the Licensed Trademarks,
LICENSOR will be entitled to seek equitable relief in addition to its other available legal
remedies in a court of competent jurisdiction.
| 4. | APPROVAL OF LICENSED PRODUCTS. |
4.1 LICENSOR has the right to approve or disapprove, in the manner provided herein in advance
of sale, the quality, style, appearance, material and workmanship of all Licensed Products and the
packaging therefor, and to approve or disapprove in advance any and all trademarks, trade names,
designs and logos (whether included in the Licensed Trademarks or not) used in connection with the
Licensed Products. LICENSEE shall not advertise, distribute or sell any such Licensed Product that
has not been approved by LICENSOR. Before selling or distributing any Licensed Product, LICENSEE
shall submit to LICENSOR for its approval, artist renderings of the proposed Products and/or
mock-ups with full engineering specifications together with packaging, labels and the like. Within
twenty (20) business days after receipt of each of the renderings and/or mock-ups, LICENSOR will
approve or disapprove such Products in writing, failing which such products shall be deemed to have
been approved. After LICENSOR has approved the proposed Products and LICENSEE has obtained tooling
for the proposed Products, LICENSEE shall provide LICENSOR with off-tool and/or production samples
of the Products and LICENSOR shall disapprove such samples in writing within twenty (20) business
days after LICENSOR’s receipt of such items or else LICENSOR shall be deemed to have approved them.
LICENSEE shall also provide to LICENSOR, at no cost to LICENSOR, three (3) working samples of each
Product within thirty (30) days of the commencement of production of such Product. Licensed
Products that are sold or distributed by LICENSEE under this Agreement will be of no lesser quality
than the corresponding samples approved by LICENSOR. LICENSOR will not unreasonably withhold
approval required by LICENSOR under this Section 4.1.
4.2 During the Contract Period, LICENSEE shall take all actions reasonably necessary to cure
any defects in the Licensed Products and will act to preserve the image, reputation and goodwill of
the Licensed Trademarks and of LICENSOR.
4.3 LICENSEE shall make such warranties as are legally required in connection with the sale of
the Licensed Products, including all manufacturer’s warranties to customers.
| 5. | APPROVAL OF ADVERTISING, APPEARANCE AND USE OF LICENSED TRADEMARKS. |
5.1 LICENSOR has the right to approve or disapprove, in advance of LICENSEE’s commercial use
of the Licensed Products, the contents, appearance and presentation of all advertising materials
that incorporate the Licensed Trademarks or that make reference in any
way to the Licensed Trademarks or Licensed Products. Before producing, publishing or
distributing any advertising materials hereunder, LICENSEE shall submit to LICENSOR, for its
approval, line art and color specifications for the materials. LICENSOR will, within twenty (20)
business days after receipt, approve or disapprove such material in writing, failing which such
material shall be deemed to have been approved, provided that LICENSOR’s approval shall be subject
to submission and approval of LICENSEE’s final packaging materials. LICENSOR will not unreasonably
withhold approval required by LICENSOR under this
Section 5.1.
5.2 LICENSEE agrees to protect, indemnify and save harmless LICENSOR, LICENSOR’s parent,
subsidiaries and affiliates and all officers, directors, agents, employees and representatives
thereof, from and against any and all expenses, damages, claims, suits, actions, judgments and
costs whatsoever, including reasonable attorneys’ fees, arising out of, or in any way connected
with, any claim or action relating to the contents of LICENSEE’s advertising or of the Licensed
Products, whether or not approved by LICENSOR hereunder, but not including claims that the Licensed
Trademarks infringe a third party’s intellectual property rights.
5.3 LICENSOR has the right to include a full line catalog of LICENSOR’s products within each
Product to which the Licensed Trademarks are affixed and distributed by LICENSEE. A sample of the
full line catalog will be provided to LICENSEE, who shall instruct LICENSOR on a quarterly basis as
to the quantity of full line catalogs needed and the destination where they should be shipped for
LICENSEE’s packaging purposes. LICENSOR also has the right to include promotional coupons for
certain of LICENSOR’s products on a quarterly basis except as prohibited by specific retailers.
Such coupons shall be provided in a manner similar to that set forth above for the full line
catalog and are to be included in every product bearing the Licensed Trademarks and distributed by
LICENSEE.
5.4 LICENSEE will provide to LICENSOR a copy of LICENSEE’s most recent list of holders of
warranties on all Products distributed by LICENSEE. LICENSOR agrees to keep such information
confidential and to use it solely for soliciting direct mail consumer sales.
| 6. | ROYALTIES; PAYMENT; RENEWAL. |
6.1 During each Calendar Quarter of the term of this Agreement, LICENSEE will pay to LICENSOR
as royalties (“Royalties”) the greater of (1) the royalty rate percentage of net sales of the
Licensed Products as set forth in Exhibit B to this Agreement, and (2) the Minimum
Quarterly Royalty in Section 6.2 below. The term “net sales” with respect to the Licensed Products
means the total amount invoiced by LICENSEE for sales of the Licensed Products less (a) the total
amount of returns of the Licensed Products, as exemplified on Exhibit D to this Agreement,
(b) volume rebate credits and co-operative advertising allowances (which LICENSEE shall provide to
LICENSOR on the quarterly commission schedule), and (c) any sales taxes (i.e., provincial sales tax
and GST) included in the price of the Licensed Products. No Royalties will be due on sales of
products from LICENSEE to LICENSOR.
6.2 During the applicable Contract Year, the minimum quarterly Royalties (“Minimum Quarterly
Royalties”) for each Calendar Quarter during that Contract Year are as follows:
| Contract Year | Minimum Quarterly Royalties | |
July 1,
2003 — June 30, 2004 |
U.S. $12,500 | |
July 1,
2004 — June 30, 2005 |
U.S. $18,750 | |
July 1,
2005 — June 30, 2006 |
U.S. $25,000 | |
July 1,
2006 — June 30, 2007 |
U.S. $31,250 | |
July 1,
2007 — June 30, 2008 |
The greater of U.S. $37,500 or the Minimum Quarterly Royalties paid by LICENSEE for July 1, 2006 — June 30, 2007 |
If at the end of any Calendar Quarter, the cumulative total Royalties paid by
LICENSEE to LICENSOR do not equal or exceed the cumulative Royalty for such Calendar
Quarter as set forth in Exhibit E, then LICENSEE shall pay to LICENSOR the
difference between the Minimum Quarterly Royalties for such Calendar Quarter and the
Royalties paid by LICENSEE to LICENSOR for such Calendar Quarter within thirty (30)
days following the end of such Calendar Quarter.
6.3 If as of June 30, 2008, LICENSOR elects to renew this Agreement as hereinafter provided
for an additional two (2) year period, LICENSEE shall pay to LICENSOR the following Minimum
Quarterly Royalties:
| Contract Year | Minimum Quarterly Royalties | |
July 1, 2008 — June 30, 2009
|
The greater of U.S. $39,375 or the Minimum Quarterly Royalties paid by LICENSEE for July 1, 2007 — June 30, 2008 | |
July 1, 2009 — June 30, 2010
|
The greater of U.S. $41,344 or the Minimum Quarterly Royalties paid by LICENSEE for July 1, 2008 — June 30, 2009 |
If at the end of any Calendar Quarter, the cumulative total Royalties paid by LICENSEE to
LICENSOR do not equal or exceed the cumulative Royalty for such Calendar Quarter as set
forth in Exhibit E, then LICENSEE shall pay to LICENSOR the difference between the
Minimum Quarterly Royalties for such Calendar Quarter and the Royalties paid by LICENSEE to
LICENSOR for such Calendar Quarter within thirty (30) days following the end of such
Calendar Quarter.
6.4 LICENSEE shall make payment of Royalties quarterly on or before the 20th day following the
end of each Calendar Quarter of each Contract Year during the term of this Agreement (i.e., January
20, April 20, July 20 and October 20) and within thirty (30) days after the expiration or earlier
termination of this Agreement, in respect of all Licensed Products shipped during such quarter.
6.5 LICENSEE’s payment of all Royalties must be in United States dollars. The late payment of
any Royalties will bear interest at the rate of one and one-half percent (1-1/2%) per month, or at
the highest rate permitted by applicable state law, whichever is lower.
| 7. | BOOKS, RECORDS, AND STATEMENTS. |
7.1 LICENSEE shall maintain for three (3) years following the close of each Contract Year
accurate books and records that disclose, at a minimum, the following: the cost of sales of the
Licensed Products, the amount of sales of the Licensed Products, the amount of credits for returns,
trade discounts and customers’ shipping costs, the amount of all Royalties payable hereunder by
LICENSEE and the manner in which such Royalties were determined.
7.2 LICENSEE shall deliver to LICENSOR with each quarterly payment a detailed accounting
statement showing the calculation of such Royalties payment. Such statement must be in sufficient
detail to be audited from the books of LICENSEE maintained pursuant to Section 7.1. By the 15th
day of each month during each Contract Year during the term of this Agreement, LICENSEE shall also
provide LICENSOR with a preliminary tabulation of the sales and returns by customer and by Product
model number for the prior month, for LICENSOR’s use and analysis.
7.3 Within ninety (90) days after the close of each Contract Year, LICENSEE shall furnish to
LICENSOR a statement, certified to be true and correct by LICENSEE’s Chief Financial Officer, that
the accounting for sales is complete and correct, and the total sales of the Licensed Products to
each retail account.
7.4 LICENSOR, at its expense, has the right at any time during regular business hours after
the end of any Contract Year, upon five (5) days written notice to LICENSEE, to have a
representative of LICENSOR examine or audit the books, accounts and records of LICENSEE that
pertain to the manufacture, distribution and sale of the Licensed Products and the amount of credit
for returns, trade discounts and customers’ shipping costs with respect thereto, and other books
and records as they may be reasonably required by LICENSOR’s accountants to verify the figures
reported in any statements furnished to LICENSOR pursuant to this Section 7. LICENSEE shall make
such books of account and records available to LICENSOR and its accountants at LICENSEE’s office
located as herein stated or such other place as the parties mutually agree. LICENSEE shall render
all possible assistance to LICENSOR and its accountants for the purpose of facilitating the
checking or auditing of net sales and of the figures set forth in any of LICENSEE’s statements. If
the examination or audit reveals the underpayment of any Royalties, LICENSEE shall immediately pay
LICENSOR the amount of the deficiency with interest, and if the deficiency exceeds five percent
(5%) of the amount of Royalties paid with respect to such year or years audited, LICENSEE shall pay
the cost of the examination or audit.
| 8. | TRADEMARKS. |
8.1 LICENSEE will imprint irremovably and legibly on each Licensed Product manufactured,
distributed or sold under this Agreement (including, but not limited to, advertising, promotional,
packaging and wrapping material and any other such material wherein
the Licensed Trademarks may appear), the appropriate trademark and/or copyright notices, as
designated in writing in advance by LICENSOR. LICENSEE will deliver to LICENSOR upon request, free
of cost, samples of each Licensed Product together with their packaging and wrapping material for
approval and for trademark and/or copyright registration purposes.
8.2 LICENSEE will not, during the term of this Agreement or thereafter, file any application
for trademark registration or otherwise obtain or attempt to obtain ownership of any name, design,
logo, trademark or trade name, within the Territory or in any other country of the world, which
includes or is confusingly similar to or suggestive of the Licensed Trademarks.
8.3. LICENSEE will not, directly or indirectly, challenge or contest LICENSOR’s ownership of
or rights in the Licensed Trademarks, whether for the Licensed Products or otherwise.
8.4 All use of the Licensed Trademarks by LICENSEE inure to the benefit of LICENSOR, and
LICENSEE does not and will not acquire any rights therein adverse to LICENSOR.
| 9. | MAINTENANCE OF LICENSED TRADEMARKS. |
LICENSEE shall promptly notify LICENSOR in writing of any infringement by others of the
Licensed Trademarks on articles similar to the Licensed Products if and when such infringement
becomes known to LICENSEE and shall provide LICENSOR with any available evidence of such
infringement. Only LICENSOR has the right to commence legal proceedings against such infringer.
In any infringement action, proceeding or claim brought by LICENSOR, LICENSEE, at its expense,
shall make available to LICENSOR any relevant books, records, papers, information, designs,
samples, specimens, and the like and shall cause any of LICENSEE’s employees to be deposed or to
testify, whenever requested to do so by LICENSOR.
| 10. | INDEMNIFICATION AND INSURANCE. |
10.1 LICENSEE shall protect, indemnify and save harmless LICENSOR, LICENSOR’s parent,
subsidiaries and affiliates and all officers, directors, agents, employees and representatives
thereof, and any of them, from and against any and all expenses, damages, claims, suits, actions,
judgments and costs whatsoever, including reasonable attorneys’ fees, arising out of, or in any way
connected with, any claim or action for the violation by LICENSEE of any statutory or regulatory
obligation, any claim or action for injury or damage to property, personal injury, death or other
cause of action involving alleged defects in Licensed Products, and any other claim or action
arising out of LICENSEE’s activities pursuant to this Agreement or other conduct of its business,
including infringement claims.
10.2 LICENSEE shall, within thirty (30) calendar days after the execution of this Agreement,
obtain from an insurance company reasonably acceptable to LICENSOR, and maintain during the term of
this Agreement and for a period of twenty-four (24) months following the expiration or termination
of this Agreement, public and products liability insurance with a limit of liability of not less
than Two Million ($2,000,000) U.S. dollars per occurrence to protect LICENSOR against any
liabilities with which it may be charged because of damage or
injuries suffered by any servants, agents, contractors, employees or customers of LICENSEE or
by the general public, resulting from the use or sale of the Licensed Products manufactured,
distributed, advertised, leased or sold by LICENSEE or by LICENSEE’s contractor. LICENSEE shall
include LICENSOR’s name in such policy as an additional named insured and an additional loss payee,
and shall deliver to LICENSOR a certificate thereof. Said insurance shall provide that it cannot
be canceled without the insurer first giving LICENSOR twenty (20) calendar days’ advance written
notice thereof. LICENSEE shall furnish or cause to be furnished to LICENSOR evidence of the
maintenance and renewal of the insurance required herein, including, but not limited to, copies of
policies, certificates of insurance, with applicable riders and endorsements, and proof of premium
payments.
| 11. | DEFAULT; TERMINATION. |
11.1 In the event of a default by either party in the performance of any of its obligations
pursuant to this Agreement, the non-defaulting party shall give written notice of such default to
the defaulting party. Within 30 days of its receipt of such notice, the defaulting party shall
cure the default. If the defaulting party does not take such corrective actions or cure the
default within 30 days, the non-defaulting party has the right to terminate this Agreement by
providing written notice to the defaulting party. The right to remedy a default does not apply to
LICENSEE’s breach of Sections 4, 5, 6 or 7 of this Agreement, which will give LICENSOR the right to
treat such breach as a non-curable default and to terminate this Agreement.
11.2 Either party has the right to terminate this Agreement upon ten (10) days prior notice
upon the occurrence of any of the following events:
| (a) | If the other party becomes insolvent or makes an assignment for the benefit of creditors or becomes the subject of receivership, bankruptcy or other insolvency or debtor relief proceedings, or any similar proceedings; | ||
| (b) | If the other party ceases to do business; or | ||
| (c) | Except as permitted under Section 14 below, if the other party attempts to assign any of its rights under this Agreement. |
A party’s exercise of its right, pursuant to this Section 11.2, to terminate this Agreement is
without prejudice to any other legal or equitable remedy such party may hold against the other
party by reason of the other party’s breach of any term or condition of this Agreement.
11.3 LICENSEE has the right to terminate this Agreement at any time by giving written notice
to LICENSOR during the course of any Contract Year, in which case this Agreement will continue in
full force and effect for an additional one (1) Contract Year after December 31 of the Contract
Year in which the notice of termination was given. The Minimum Quarterly Royalties in effect at
the time of the notice of termination will remain constant for the remaining Contract Years of this
Agreement.
11.4 Commencing with the Contract Year starting January 1, 2005, LICENSOR has the right to
terminate this Agreement during the Course of any Contract Year if one of the following thresholds
is not met with regard to the Royalties paid by LICENSEE for the periods
referenced below: (i) LICENSEE’s average Royalties from the two (2) most recent Contract Years
do not exceed 110% of the average annual Minimum Quarterly Royalties from the same two (2) year
period, or (ii) LICENSEE’s actual Royalties for the most recent Contract Year do not exceed 70% of
the actual Royalties for the immediately preceding Contract Year. In the event of such notice of
termination from LICENSOR, this Agreement will continue in full force and effect for an additional
one (1) Contract Year after December 31 of the Contract Year in which the notice of termination was
given. The Minimum Quarterly Royalties in effect at the time of the notice of termination will
remain constant for the remaining Contract Years of this Agreement.
11.5 No assignee for the benefit of creditors, receiver, liquidator, trustee in bankruptcy,
sheriff or any other officer of the court or official charged with taking over custody of
LICENSEE’s assets or business, has any right to continue performance of this Agreement, and this
Agreement may not be assigned by operation of law.
11.6 Failure to terminate this Agreement pursuant to this Section 11 does not effect or
constitute a waiver of any remedies the non-defaulting party is entitled to demand, whether by way
of damages, termination or otherwise. Termination of this Agreement is without prejudice to the
rights and liabilities of either party to the other in respect of any matter arising under this
Agreement.
| 12. | RIGHTS AFTER TERMINATION. |
12.1 Except as provided in Section 12.2 below, from and after the termination of this
Agreement, whether because of non-renewal, default or otherwise, all of the rights of LICENSEE to
the use of the Licensed Trademarks will, except as hereinafter expressly provided, cease
absolutely, and LICENSEE must not thereafter manufacture, advertise, promote, distribute or sell
any item in connection with the Licensed Trademarks. It is further agreed that following such
termination, LICENSEE shall not manufacture, advertise, promote, distribute or sell any item in
connection with the use of any name, figure, design, logo, trademark or trade name similar to or
suggestive of the Licensed Trademarks.
12.2 Notwithstanding Section 12.1 above, so long as LICENSOR does not terminate this Agreement
as set forth in Sections 11.1 and 11.2 above, any Licensed Products for which as of the date of any
other termination LICENSEE has non-cancelable open orders may be sold by LICENSEE on a
non-exclusive basis during the 9-month period following the date of termination. LICENSEE shall
continue to pay Royalties to LICENSOR with respect to such sales at the rate and in the manner
specified in this Agreement. Within 30 days of the date of termination, LICENSEE shall provide to
LICENSOR a complete listing of the inventory in transit and the warehoused inventory. LICENSEE has
no right to manufacture any additional Licensed Products after the date of termination.
| 13. | NOTICE. |
All notices required or provided for in this Agreement must be in writing and must be given by
registered mail, prepaid and properly addressed to the last known address of the party to be served
herewith, or by telecopy facsimile and confirmed by regular mail, and will be deemed
to have been given on the third (3rd) day after mailing or on the same day as the
facsimile transmission is received. Notices sent to LICENSOR shall be addressed as follows:
XXXX Corporation
0000 Xxxxx Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
Fax No.: (000) 000-0000
0000 Xxxxx Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
Fax No.: (000) 000-0000
Notices sent to LICENSEE shall be addressed as follows:
Sonigem Products, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: President
Fax No.: 000-000-0000
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: President
Fax No.: 000-000-0000
| 14. | ASSIGNMENT. |
This Agreement binds and inures to the benefit of LICENSOR, and the successors and assigns of
LICENSOR. The rights granted LICENSEE hereunder are exclusive to it and may not, without the prior
written consent of LICENSOR, be transferred or assigned to any other entity. In the event of the
merger or consolidation of LICENSEE with any other entity, LICENSOR has the right to terminate this
Agreement by so notifying LICENSEE in writing on or before sixty (60) days after LICENSOR has
received written notice of such merger or consolidation.
| 15. | INDEPENDENT CONTRACTORS. |
The relationship of LICENSOR and LICENSEE established by this Agreement is that of independent
contractors, and nothing contained in this Agreement will be construed to (a) give either party the
power to direct and control the day-to-day activities of the other, (b) constitute the parties as
partners, joint venturers, co-owners, or otherwise as participants in a joint or common
undertaking, or (c) allow LICENSEE or LICENSOR to create or assume any obligation on behalf of the
other party for any purpose whatsoever, unless otherwise expressly provided in this Agreement.
| 16. | CONFIDENTIALITY. |
16.1 Definition of Confidential Information. Each party may receive (the “Recipient”)
confidential or proprietary information from the other party (the “Disclosing Party”) in the course
of performing its obligations under this Agreement. Confidential information includes the terms of
this Agreement and any information from the Disclosing Party that: (i) is marked as “Confidential”
or “Proprietary,” (ii) is reasonably identifiable as the confidential information of the Disclosing
Party, (iii) is not generally known in the businesses and industries in which the Recipient is
engaged, or (iv) under the circumstances of the disclosure should reasonably be considered as
confidential or proprietary information of the Disclosing Party. Confidential information does not
include any information that is: (a) rightly and lawfully known to the Recipient before receipt
from
the Disclosing Party; (b) publicly available through no fault of the Recipient; (c) rightly
and lawfully received by the Recipient from a third party without a duty of confidentiality; or (d)
independently developed by the Recipient without use of or access to the Disclosing Party’s
confidential information.
16.2 Obligations of Confidentiality. Both parties will take reasonable care, but in
no event less care than the party uses to protect its own confidential information, to preserve in
strict confidence any confidential or proprietary information obtained by them, their agents or
employees. Each party will use the confidential information only in the course of performing its
obligations under this Agreement, unless otherwise agreed to by the Disclosing Party in writing.
Disclosure of confidential information required by a government body or court of law is not a
violation of this Section 16 if the Recipient gives prompt notice of the required disclosure to the
Disclosing Party (and a reasonable opportunity for the Disclosing Party to obtain a protective
order) and the Recipient discloses only the amount of confidential information required to comply
with the government body or court of law.
16.3 Obligations Upon Termination. Each party shall at its own expense return to the
other party or otherwise dispose as the Disclosing Party may instruct, any information sent by the
Disclosing Party (including electronically sent) to the Recipient.
| 17. | MISCELLANEOUS. |
17.1 Section headings contained herein are solely for the purpose of aiding in location of
subject matter and are not to be given weight in the construction of this Agreement.
17.2 This writing constitutes the entire Agreement between the parties regarding the subject
matter of this Agreement and may not be changed or modified except by a writing signed by the
parties to this Agreement.
17.3 If and to the extent that any provisions of this Agreement are prohibited or
unenforceable under any applicable law, such provisions shall be ineffective to the extent of such
prohibition or unenforceable without invalidating the remaining provisions hereof or affecting the
validity or enforceability of any other provision hereof.
17.4 The failure of either party at any time or times to demand strict performance by the
other of any of the terms, covenants or conditions set forth herein shall not be construed as a
continuing waiver or relinquishment thereof and each may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
17.5 This Agreement is governed by the substantive laws of the State of Wisconsin (regardless
of laws that might be applicable under principles of conflicts of laws) as to all matters,
including but not limited to matters of validity, construction, effect and performance. Resolution
of any and all disputes between LICENSOR and LICENSEE arising from or in connection with this
Agreement, whether based on contract, tort, common law, equity, statute, regulation, order or
otherwise, will be governed by and settled in accordance with binding arbitration by three (3)
arbitrators; provided, however, that the three arbitrators selected must each have extensive
knowledge in the area of federal trademark law. If the parties cannot agree on the selection of
three arbitrators, each party shall select one arbitrator, and those two
arbitrators together shall select the third arbitrator, and the three arbitrators, shall
resolve the dispute as provided herein. The arbitrators’ findings and decisions must be limited to
the subject matter of the dispute, and such findings and decisions must be in writing and are final
and binding on the parties hereto, and must specify the reasons for and facts on which such
findings and decisions were reached. The parties hereto shall bear equally the arbitrators’ fees
and charges, and each party shall bear its other costs and expenses for the arbitration, including
attorneys’ fees. The arbitration must be conducted in Milwaukee, Wisconsin. To the extent that
the parties hereto need to enforce the arbitration provisions in this Agreement or need to enforce
or otherwise give effect to any arbitration finding, decision or award, any such action or
proceeding must be adjudicated before a federal or state court located in Milwaukee, Wisconsin, and
the parties hereby submit to the exclusive jurisdiction of the courts of the State of Wisconsin
located in Milwaukee, Wisconsin, and of the federal courts located in Milwaukee, Wisconsin, with
respect to any such action or proceeding commenced by either party. The parties hereto irrevocably
waive any objection they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is an inconvenient forum,
and hereby consent to the service of process in any such action or proceeding by means of
registered or certified mail, return receipt requested, in care of the applicable address set forth
under the notice provisions in this Agreement.
17.6 No delay, failure or default in performance of any obligation by either party will
constitute a breach of this Agreement to the extent caused by an act of God, natural disaster,
civil disturbance or other cause beyond the party’s reasonable control and that the party could not
have prevented by reasonable precautions. If a force majeure event prevents LICENSEE from
performing under this Agreement for more than 90 days, LICENSOR may terminate this Agreement by
providing written notice of such termination to LICENSEE.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed as of the
Effective Date.
| XXXX CORPORATION | ||||
| By: /s/ Xxxxxxx X. Xxxx | ||||
| Xxxxxxx X. Xxxx | ||||
| Title: President and CEO | ||||
| SONIGEM PRODUCTS, INC. | ||||
| By: /s/ Xxxxxx Xxxxx | ||||
| Xxxxxx Xxxxx | ||||
| Title: President and CEO | ||||
EXHIBIT A
XXXX (Plain Block Letters) (as shown in U.S. Registration No. 1,821,035)
XXXX (Stylized) (as shown in U.S. Registration No. 1,850,556)
XXXX & Design (as shown in U.S. Registration No. 2,070,098)
EXHIBIT B
Description of Products to be sold under LICENSOR’s Trademark.
1. Video Products. Includes, but is not limited to (i) Televisions using Cathode Ray
Tube, Liquid Crystal Display, Plasma and Projection Technology, and (2) Video Cassette
Recorders/Players (VCRs).
2. Communications Products. Includes, but is not limited to (i) Telephones (line
operated whether corded or cordless handsets), (ii) Answering Machines with or without an
Integrated Telephone, and (iii) Two-way Radios whether in FRS, GMRS or MURS Technology Formats.
EXHIBIT C
TO:
FROM: (Subcontractor) Manufacturing Factory
RE: Use of the “Xxxx” Brandname
The purpose of this letter is to acknowledge that has the right to manufacture
Licensed Products, as defined in the License Agreement between Sonigem Products, Inc. (“Sonigem”)
and Xxxx Corporation dated , 2003 (“License Agreement”), bearing the “Xxxx”
brandname and trademarks only for the account of Sonigem and only as a subcontract manufacturer
pursuant to Sections 2.2 and 2.3 of the License Agreement and for no other purpose. We agree that
we will not use the “Xxxx” name on any products other than those manufactured for Sonigem’s
account. agrees that neither it nor any affiliated or related individual or entity
(i) will, at any time, file any application for trademark registration or otherwise obtain or
attempt to obtain ownership of the “Xxxx” brandname or trademarks, or any name or xxxx that is
confusingly similar thereto, anywhere in the world or (ii) directly or indirectly challenge or
contest Xxxx Corporation’s ownership of or rights in the “Xxxx” brandname and tradenames, whether
for the Licensed Products or otherwise.
EXHIBIT D
Calculation of Quarterly Royalties Payment (in U.S. Dollars)
| Products | Total Sales | Returns | Net Sales | Royalty Rate | ||||||||||||
Video Products |
$ | _____ | $ | _____ | $ | _____ | 1 | % | ||||||||
Communications
Products |
$ | _____ | $ | _____ | $ | _____ | 1.5 | % | ||||||||
TOTAL ROYALTIES PAYMENT U.S. $
EXHIBIT E
Cumulative Royalty Schedule
| Calendar Quarter | Cumulative Royalty | |||
July 1, 2003 — September 30, 2003 |
$ | 12,500 | ||
October 1, 2003 — December 31, 2003 |
$ | 25,000 | ||
January 1, 2004 — March 31, 2004 |
$ | 37,500 | ||
April 1, 2004 — June 30, 2004 |
$ | 50,000 | ||
July 1, 2004 — September 30, 2004 |
$ | 68,750 | ||
October 1, 2004 — December 31, 2004 |
$ | 87,500 | ||
January 1, 2005 — March 31, 2005 |
$ | 106,250 | ||
April 1, 2005 — June 30, 2005 |
$ | 125,000 | ||
July 1, 2005 — September 30, 2005 |
$ | 150,000 | ||
October 1, 2005 — December 31, 2005 |
$ | 175,000 | ||
January 1, 2006 — March 31, 2006 |
$ | 200,000 | ||
April 1, 2006 — June 30, 2006 |
$ | 225,000 | ||
July 1, 2006 — September 30, 2006 |
$ | 256,250 | ||
October 1, 2006 — December 31, 2006 |
$ | 287,500 | ||
January 1, 2007 — March 31, 2007 |
$ | 318,750 | ||
April 1, 2007 — June 30, 2007 |
$ | 350,000 | ||
July 1, 2007 — September 30, 2007
|
The greater of $387,500 or $350,000 + the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2006 — June 30, 2007 (the “17th Minimum Quarterly Royalty”) | |
October 1, 2007 — December 31, 2007
|
The 17th Minimum Quarterly Royalty + the greater of (i) $37,500 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2006 — June 30, 2007 (the “18th Minimum Quarterly Royalty”) | |
January 1, 2008 — March 31, 2008
|
The 18th Minimum Quarterly Royalty + the greater of (i) $37,500 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2006 — June 30, 2007 (the “19th Minimum Quarterly Royalty”) | |
April 1, 2008 — June 30, 2008
|
The 19th Minimum Quarterly Royalty + the greater of (i) $37,500 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2006 — June 30, 2007 (the “20th Minimum Quarterly Royalty”) |
| Calendar Quarter | Cumulative Royalty | |||
July 1, 2008 — September 30, 2008
|
The 20th Minimum Quarterly Royalty + the greater of (i) $39,375 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2007 — June 30, 2008 (the “21st Minimum Quarterly Royalty”) | |||
October 1, 2008 — December 31, 2008
|
The 21st Minimum Quarterly Royalty + the greater of (i) $39,375 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2007 — June 30, 2008 (the “22nd Minimum Quarterly Royalty”) | |||
January 1, 2009 — March 31, 2009
|
The 22nd Minimum Quarterly Royalty + the greater of (i) $39,375 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2007 — June 30, 2008 (the “23rd Minimum Quarterly Royalty”) | |||
April 1, 2009 — June 30, 2009
|
The 23rd Minimum Quarterly Royalty + the greater of (i) $39,375 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2007 — June 30, 2008 (the “24th Minimum Quarterly Royalty”) | |||
July 1, 2009 — September 30, 2009
|
The 24th Minimum Quarterly Royalty + the greater of (i) $41,344 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2008 — June 30, 2009 (the “25th Minimum Quarterly Royalty”) | |||
October 1, 2009 — December 31, 2009
|
The 25th Minimum Quarterly Royalty + the greater of (i) $41,344 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2008 — June 30, 2009 (the “26th Minimum Quarterly Royalty”) | |||
January 1, 2010 — March 31, 2010
|
The 26th Minimum Quarterly Royalty + the greater of (i) $41,344 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2008 — June 30, 2009 (the “27th Minimum Quarterly Royalty”) | |||
April 1, 2010 — June 30, 2010
|
The 27th Minimum Quarterly Royalty + the greater of (i) $41,344 and (ii) the average Minimum Quarterly Royalties paid by LICENSEE for July 1, 2008 — June 30, 2009 (the “28th Minimum Quarterly Royalty”) | |||
