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EXHIBIT 10.12
LICENSE AGREEMENT
BETWEEN
MARIZ GESTAO E INVESTIMENTOS LIMITADA
AND
WEIDER NUTRITION GROUP LIMITED
Dated as of This 1st Day of December, 1996
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THIS AGREEMENT is dated as of the 1st day of December, 1996 and made between:
1. MARIZ GESTAO E INVESTIMENTOS LTDA, a Madeira corporation, whose
registered address is Xxxx xxx Xxxxxx, 00, 000 Xxxxxxx, Xxxxxxx,
Xxxxxxxx ("Licensor"); and,
2. WEIDER NUTRITION GROUP LIMITED, a United Kingdom corporation,
whose registered address is Sceptre House 000/000 Xxxxxx Xxxxxx,
Xxxxxx ("Licensee").
WHEREAS:
A. Licensor is the exclusive licensee for the territories ("Territories")
identified in Schedule 3 hereto with respect to the Trademarks
("Trademarks") identified in Schedule 1 attached hereto.
B. Licensee has requested a sublicense with respect to the Trademarks for
the purpose of exclusively advertising, marketing and distributing the
Products identified in Schedule 2 in the Territories.
C. Licensor has agreed to grant such a license to Licensee on the terms set
forth in this Agreement.
THIS AGREEMENT IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. DEFINITIONS
In this Agreement the following terms shall have the following meanings:
"TRADEMARKS" shall mean the Trademarks as listed in Schedule 1.
"NET RECEIPTS" shall mean the actual amounts collected by Licensee (or
its affiliated or subsidiary companies) from sales of Products in the
Territories.
"PRODUCTS" shall mean the products identified in Schedule 2 carrying the
Trademarks and which are to be sold in the Territories.
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"ROYALTIES" shall mean the payments to be made in accordance with Clause
3.1(c).
"ROYALTY YEAR" shall mean each twelve (12) month period commencing June
1, 1999.
"SCHEDULES" shall mean the Schedules attached hereto which form part of
this Agreement.
"TERRITORIES" shall mean those countries together with all relevant
colonies dependencies and protected territories, if any, as set out in
Schedule 3.
"TRADE XXXX IMAGE" shall mean the image as defined in Clause 6.7. "$"
shall mean United States Dollars.
2. GRANT
2.1 Subject to the following terms and in consideration of the
obligations undertaken by Licensee under this Agreement, Licensor
grants to Licensee an exclusive sublicense with respect to the
Trademarks which grant shall consist of the exclusive right to
distribute, advertise, promote and market the Products only in the
Territories.
2.2 Licensor warrants that, subject to clause 2.4 below, this
Agreement is the valid and binding obligation of Licensor
enforceable against it in accordance with its terms, that no other
person or entity has any rights to the Trademarks and that the
execution, delivery and performance of this Agreement does not
violate the rights of any person or entity.
2.3 Licensee shall not directly or indirectly market, distribute,
promote or advertise the Products in any country other than the
Territories, except that nothing contained herein shall prohibit
Licensee's affiliated entities from conducting their business
operations in Canada, the United States, Mexico, Spain and
Portugal and using trademarks identical to, or substantially the
same as, the Trademarks.
2.4 Licensee acknowledges that in some countries of the Territory
there are persons and entities conducting business activities
consisting of the sale and distribution of products which are
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the same as, or substantially similar to, Products and utilizing
trademarks (the "Unavailable Trademarks") which are the same as,
or substantially similar to, the Trademarks. Licensor covenants
and agrees to use its best efforts to terminate, at Licensor's
sole cost and expense, the rights of such persons or entities to
conduct business activities using the Unavailable Trademarks and,
where possible, but subject to the provisions of the final
sentence of this Clause 2.4, to acquire the Unavailable
Trademarks, whereupon, if Licensor is successful in such efforts,
each such acquired trademark shall become a "Trademark" subject to
this Agreement. Notwithstanding the foregoing, Licensor shall be
under no obligation to acquire any Unavailable Trademark unless:
(i) if Licensor is obligated to, and does, pay a price for such
acquisition, Licensee shall, for the five (5) year period from the
date of acquisition, pay Licensor, at the same times referred to
in Clause 3.4 i.e. on an annual basis, a minimum royalty equal to
one fifth (1/5th) of purchase price so paid by Licensor; and (ii)
if the purchase price for the acquisition of the Unavailable
Trademarks exceeds forty thousand U.S. dollars ($40,000.00), the
Licensee shall, at Licensor's request, advance funds to Licensor
equal to such excess, to enable Licensor to pay such price, said
advance to be repaid by Licensor to Licensee, without interest, in
five (5) annual installments by way of deductions from Royalties
otherwise payable by Licensee to Licensor pursuant to this
Agreement, provided that any purchase of Unavailable Trademarks
pursuant to this Clause 2.4 shall require the prior approval of
the Licensee.
3. ROYALTIES, PAYMENT AND AUDIT RIGHTS
3.1 In consideration of the rights granted by Licensor pursuant to
this Agreement and subject to Licensor using its best efforts to
comply with its obligations hereunder, Licensee shall pay Licensor
as follows:
(a) The sum of three hundred sixty thousand United States
dollars ($360,000) as a one time fee for the option
provided for in Clause 14.6, which shall be paid upon
signature of this Agreement.
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(b) For the period December 1, 1996 through November 30, 1998,
the sum of one United States dollar ($1.00).
(c) For the period December 1, 1998 through May 31, 1999
("Partial Royalty Year") and in each Royalty Year
commencing June 1, 1999, Royalties shall be paid as
follows:
(i) In connection with Net Receipts received by Licensee
(or its affiliated or subsidiary companies) from
sales of Products in the Territories aggregating not
more than $33 million, the Royalty owing by Licensee
to Licensor shall be four percent (4%) of Net
Receipts.
(ii) In connection with Net Receipts received by Licensee
(or its affiliated or subsidiary companies) from
sales of Products in the Territories aggregating
more than $33 million, but not more than $66 million
the Royalty shall be three and one-half percent
(3.5%) of Net Receipts.
(iii) In connection with Net Receipts received by Licensee
(or its affiliated or subsidiary companies) from
sales of Products in the Territories aggregating
more than $66 million but not more than $100 million
the Royalty shall be three percent (3%) of Net
Receipts.
(iv) In connection with Net Receipts received by Licensee
(or its affiliated or subsidiary companies) from
sales of Products in the Territories aggregating
more than $100 million, the Royalty shall be two and
one-half percent (2.5%) of Net Receipts.
3.2 The Royalties described in Sub-item c (and the sub-items thereof)
of Clause 3.1, shall, subject to the next sentence, apply in the
Partial Royalty Year and thereafter in each
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Royalty Year. The Partial Royalty Year shall be pro-rated with the
result that the Royalty Rate of 3.5% shall apply in the Partial
Royalty Year if Net Receipts are more than $16,500,000 which is
6/12ths of $33,000,000. The foregoing may be illustrated by the
following example: If in the Partial Royalty Year which commences
December 1, 1998 and continues through May 31, 1999, the Net
Receipts equaled $15,000,000.00, the Royalties owing by the
Licensee to the Licensor for that Partial Royalty Year would be
$600,000.00. However, if in the Royalty Year commencing June 1,
1999, the Net Receipts received by the Licensee from sales of
Products in the Territories were $32,000,000.00 (with the result
that in the Partial Royalty Year and first Royalty Year, the
aggregate Net Receipts were $47,000,000.00), the Royalty for that
first full Royalty Year in this example would still be four
percent (4%) of Net Receipts, or $1,280,000.00.
3.3 In connection with Royalties owing pursuant to Clause 3.1(c), the
Licensee shall, commencing December 1, 1998, pay the Licensor a
monthly Royalty on account of forty-thousand dollars ($40,000)
which shall be paid no later than the first day of each month from
and after December 1, 1998.
3.4 (a) Within ninety (90) days following the end of the Partial
Royalty Year and thereafter within ninety (90) days
following each Royalty Year commencing June 1, 1999, to the
extent that the amounts theretofore paid by Licensee to the
Licensor under Clause 3.3 is less than the Royalties
otherwise due and owing by the Licensee to the Licensor
(pursuant to Clause 3.1(c) above), the difference shall be
paid by the Licensee to the Licensor.
(b) If the amounts paid by the Licensee to the Licensor under
Clause 3.3 exceed the Royalties otherwise due and owing by
the Licensee to Licensor pursuant to Clause 3.1(c), for the
Partial Royalty Year or any Royalty Year, as the case may
be, the amount of the over payment shall be paid by the
Licensor to the Licensee within ninety (90) days following
the end of the Partial Royalty Year, or Royalty Year as the
case may be, in which the payments under Clause 3.3
exceeded the Royalties otherwise owing.
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3.5 Payments of Royalties pursuant to Clause 3.4 (a) shall be
accompanied by a Royalties Statement setting forth the
number of units of the Products sold for the period with
respect to which the Statement relates together with such
other information reasonably necessary to enable Licensor
to verify the accuracy of the payment.
3.6 Subject to reasonable notice and at a reasonable time
during the business day Licensee shall (not more often than
once in each Royalty Year) make available its books and
management accounts applicable to Net Receipts for
inspection by Licensor or its representatives to enable
Licensor to verify the accuracy of the Royalties
theretofore paid by Licensee. if the investigation reveals
an under payment of Royalties, the amount of the under
payment shall be paid by Licensee within thirty (30) days
following receipt of notification from Licensor, together
with interest at the annual rate of ten percent (10%) on
the shortfall from the date it was due to date of payment.
4. TERM
This Agreement shall continue until May 31, 2002. On June 1, 2002, this
Agreement shall automatically renew for successive one (1) year terms
unless earlier terminated as provided for in Clause 10, or unless this
Agreement terminates as provided for in Clause 14.6.
5. LICENSEE'S OBLIGATIONS AS TO QUALITY
5.1 Licensee, if and when reasonably requested to do so by Licensor,
shall promptly deliver to Licensor, or any entity designated by
Licensor ("Licensor's Representative" herein) free of charge
samples of the Products including their wrappings, packaging and
all advertising and promotional materials in connection therewith,
and shall not commence advertising, promotion or distribution of
the Products if Licensor's Representative disapproves any aspect
of these items, or the Products.
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6. USE AND PROTECTION OF TRADEMARKS
6.1 The Trademarks shall be used as follows:
6.1.1 The Products shall prominently display the applicable Trade
Xxxx.
6.1.2 No marks other than the applicable Trade Xxxx or product
brand name shall be affixed by Licensee to the Products.
6.2 Licensee shall not during the Term:
6.2.1 Register in the Territories any of the Trademarks in its
own or any third party's name as proprietor, unless it
exercises the option provided for in Clause 14.6.
6.2.2 Claim any right, title or interest in and to the Trademarks
in the Territories save as is granted by this Agreement,
unless it exercises the option provided for in Clause 14.6.
6.2.3 Assign or grant any sub-license to the benefit of this
Agreement to any non-affiliated person or entity without
the prior written approval of Licensor which shall not be
unreasonably withheld.
6.2.4 Use the Trademarks in any manner inconsistent with this
Agreement or on or in connection with any products or
services other than the Products.
6.3 Licensee shall promptly call to the attention of Licensor the use
of any part of the Trademarks by any third party or any activity
of any third party which might in the opinion of Licensee amount
to infringement or passing off.
6.4 Where requested by Licensor, Licensee shall use its best endeavors
to assist Licensor to effect any trade xxxx or other intellectual
property restoration in the Territories that is relevant to this
Agreement. Subject to the foregoing, it shall be the obligation of
the Licensor throughout the Term, at its sole cost and expense, to
maintain current the registrations applicable to the Trademarks
and to take all steps necessary to protect the Trademarks and
shall, where
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appropriate, take action against persons or entities who infringe
on the Trademarks anywhere in the Territories, in a manner
inconsistent with the rights granted by the Licensor to the
Licensee pursuant to this Agreement. It shall be the obligation of
the Licensee, however, to obtain appropriate health clearance and
other licenses and permits to sell Products in the Territories.
The Licensor makes no warranties or representations to the
Licensee that any of the Products may be sold in any of
Territories.
6.5 Intentionally Deleted.
6.6 Intentionally Deleted.
6.7 The Trade Xxxx Image is the worldwide popular perception of the
name "Weider" - the Parties accept that the popular perception is
one that will expect the Products to be of the highest standard of
quality and to be the state of the art with respect to each
relevant industry.
7. LICENSEE NOT TO USE LICENSOR'S NAME
Licensee shall not, except with the prior written consent of Licensor,
make use of the name of Licensor in any connection in the Territories
otherwise than is expressly permitted by this Agreement.
8. LICENSEE'S OBLIGATIONS AS TO MARKETING
8.1 It is agreed by Licensee that the Products will be sold to
recognized wholesale firms for resale or to retail firms for
resale to the public or direct to the public and Licensee shall
provide Licensor with a list of all such wholesale and retail
firms upon reasonable request and shall cease to do business with
any of them with respect to the Products if, for valid business
reasons, Licensor requests Licensee in writing to cease such
business relationships.
8.2 Licensee shall ensure so far as it is reasonably practicable that
the Products are not supplied to other manufacturers or to
hawkers, peddlers, street vendors and the like or to any
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person intending to distribute the Products gratuitously or for,
or in connection with, any immoral or illegal purposes.
8.3 Licensee shall at all times use its best endeavors to promote and
sell the Products in the Territories and to maximize the market
penetration by the Products in each of the Territories.
8.4 All marketing plans and advertising campaigns for the Products to
be undertaken by Licensee shall be submitted to Licensor by
Licensee only if Licensor requests the same, the Licensor acting
reasonably in this connection and thereafter the same shall be
subject to the prior reasonable written approval of Licensor's
Representative.
9. ACTION AGAINST THIRD PARTIES.
9.1 As a material term of this Agreement, if reasonably requested to
do so by the Licensee, the Licensor shall take all actions as
shall be necessary to protect the Trademarks against infringement
by unauthorized persons or entities in the Territories, such as
filing and prosecuting law suits against such infringers. The
Licensee shall, if requested to do so by the Licensor, cooperate
fully with the Licensor in the performance by the Licensor of its
obligations under this Clause 9.1. Notwithstanding the foregoing,
however, the Licensee's request shall not be considered
"reasonable" unless the infringement is taking place in a country
of the Territory which is material, in the reasonable and good
faith opinion of Licensee, to the ongoing business activities of
the Licensee in connection with the Trademarks and, from the
standpoint of good business judgment, there is a realistic
possibility of financial recovery from the infringer. All amounts
actually recovered in such suits, net of Licensor's legal expenses
incurred in prosecuting such suits, shall be shared equally
between the parties.
9.2 If the Licensor does not comply with its obligations set forth in
Section 9.1 (and elsewhere herein with respect to protection of
the Trademarks and actions against infringers of Trademarks, as
the case may be), the Licensee shall have the right to take such
action in its, Licensee's name, and the
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Licensee shall, in that event, be entitled to retain any and all
amounts recovered by the Licensee in any such infringement
actions. Provided, however, that if the Licensee takes such
actions against the infringers which it was the Licensor's
obligation to take, as set forth in Section 9.1, the Licensee
shall be entitled to deduct, from the next amounts otherwise
payable to the Licensor pursuant to this Agreement, the out of
pocket court costs, legal costs and other reasonable attorneys
fees incurred by the Licensee in taking such actions.
9.3 Licensee shall in no circumstances settle any claim or action
against third parties without the prior written consent of
Licensor which shall not be unreasonably withheld.
10. TERMINATION
10.1 Notwithstanding 4 above in the event of any of the following
breaches by Licensee, Licensor shall be entitled to terminate this
Agreement upon written notice and, immediately thereupon, this
Agreement shall cease to have effect, but without prejudice to the
rights and remedies of Licensor in respect of the breach or
antecedent breach by Licensee of any of its obligations under this
Agreement.
10.1.1 Failure on the part of Licensee to make any payment due to
Licensor under this Agreement for 21 days after such
payment shall have become due.
10.1.2 Breach by Licensee of any other provision of this Agreement
and Licensee's failure to cure the same within forty-five
(45) days of the receipt of written notice from Licensor
identifying the breach and calling upon Licensee to remedy
it.
10.1.3 The voluntary or compulsory liquidation of Licensee or the
appointment of a receiver of its assets.
10.2 Notwithstanding anything to the contrary set forth herein, this
Agreement shall forthwith terminate upon the exercise by the
Licensee of the option referred in Clause 14.6.
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11. CONSEQUENCES OF TERMINATION
11.1 Subject to Clauses 11.2 and 11.3 and subject further to Clause
10.2, immediately on termination of this Agreement, as provided
for in Clause 10.1 (but not 10.2), Licensee shall discontinue all
use of the Trademarks.
11.2 If Licensee shall have any remaining stocks (inventory) of the
Products at the time of termination they may be disposed of by
Licensee in compliance with the terms of this Agreement, but not
otherwise.
11.3 Any Products in the course of manufacture at the time of
termination may be completed within 120 days and disposed of in
compliance with the terms of this Agreement, but not otherwise.
12. INDEMNITY
12.1 Licensor's Right to Indemnity.
Licensee shall indemnify Licensor against all actions, claims, costs,
damages and expenses which it may suffer or sustain as a result of the
actions of Licensee or the breach by Licensee of any provision of this
Agreement.
12.2 Licensee's Right to Indemnity.
Licensor shall indemnify Licensee against all actions, claims, costs,
damages and expenses arising out of Licensee's use the Trademarks in
accordance with the terms of this Agreement or arising out of any breach
by Licensor of this Agreement.
13. INSPECTION
Licensee shall permit Licensor at all reasonable times to inspect
Licensee's premises in order to satisfy itself that Licensee is complying
with its obligations under this Agreement.
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14. MISCELLANEOUS
14.1 No Waiver.
No waiver by Licensor of any of Licensee's obligations under this
Agreement shall be deemed effective unless made by Licensor in writing
nor shall any waiver by Licensor in respect of any breach be deemed to
constitute a waiver of or consent to any subsequent breach by Licensee of
its obligations under this Agreement.
14.2 Severance
In the event that any provision of this Agreement is declared by any
judicial or other competent authority to be void, voidable illegal the
remaining provisions shall continue to apply unless Licensor, in
Licensor's discretion, decides that the effect is to defeat the original
intentions of the parties in which case it shall be entitled to terminate
this Agreement by 30 days' notice.
14.3 No Agency or Partnership
The parties are not partners or joint venturers nor is Licensee entitled
to act as Licensor's agent nor shall Licensor be liable in respect of any
representation act or omission of Licensee of whatever the nature.
14.4 Notice
Any notice to be served on either of the parties by the other shall be
sent by pre-paid recorded delivery or registered post or by telex or
facsimile to the address stated above and shall be deemed to have been
received by the addressee within 72 hours of posting or 24 hours if sent
by telex or facsimile transmission to the correct number (with correct
answerback) of the addressee.
14.5 Governing Law
This Agreement is made subject to the laws of England and all questions
including formation, interpretation and enforcement shall be referred to
Arbitration which shall take place in London
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England, according to the arbitration rules of the International Chamber
of Commerce. Each of the parties shall be entitled to select one
arbitrator and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitration tribunal shall be by majority
decision and shall be final, binding and conclusive between the parties.
Any arbitration award issued by such arbitration tribunal shall include
an award of reasonable attorneys fees to the prevailing party in that
arbitration.
14.6 Irrevocable Option
Licensee is hereby granted an irrevocable option to purchase the
Trademarks subject to the following: (i) the option may not be exercised
prior to May 31, 2002; (ii) the purchase price shall be the greater of
$7,000,000 U.S. or 6.5 times the Royalties paid (or due, as the case may
be) for the Royalty Year immediately preceding the date of exercise of
the option; and (iii) the option shall be exercised by the Licensee by
providing written notice of the exercise thereof to the Licensor. Upon
receipt of the written notice of exercise by Licensor the following shall
apply: Within sixty (60) days following the notice of exercise, the
Licensee shall pay the purchase price to the Licensor. Thereafter, within
one hundred and twenty (120) days following such payment, the Licensee
shall pay the Licensor any and all Royalties which have accrued and not
been theretofore paid, as of the date on which the purchase price was
paid. If the purchase price is not paid by the Licensee to the Licensor
within the said sixty (60) day period referred to herein, the Licensee
shall pay to the Licensor, in addition to the purchase price, interest on
the unpaid amount calculated at the rate of fifteen percent (15%) per
annum from the date on which the amount should have been paid to the date
of payment. The Licensor shall obligated to take all steps necessary to
transfer title in and to the Trademarks to the Licensee following the
date of the said payment of the purchase price as provided for herein.
14.7 Withholding Taxes
Licensor and Licensee agree that the Licensee will not be liable for any
withholding tax, including any interest, penalties or other associated
costs (hereinafter referred to as "Withholding Costs"),
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relating to any withholding tax obligation imposed by the government or
taxing authority of any country, state, province, municipality or any
other government jurisdiction arising as a result of this Agreement.
Licensor further agrees to indemnify, reimburse and otherwise hold
harmless, the Licensee for any such costs imposed on the Licensee.
Licensee agrees to use its best efforts to lawfully structure its sales
of Products and payments hereunder in such a manner as to avoid the
necessity of paying a withholding tax to any authority, and agrees to
consult with Licensor in connection with such structures.
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For and on behalf of For and on behalf of
Mariz Gestao E. Investimentos Limitada Weider Nutrition Group, Ltd.
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SCHEDULE 1
The Trademarks
Trademarks and master brand names used in the United States and countries
comprising the "Territories" as defined in Schedule 3 on or prior to December 1,
1996, by companies affiliated with Weider Health and Fitness, a Nevada
Corporation, in the advertising, labeling, marketing and distribution of
"Products" as defined in Schedule 2.
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SCHEDULE 2
Products
Nutritional Supplement products such as drinks, powders, vitamins, tablets,
sports nutrition products, and the like
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SCHEDULE 3
Territories
All countries of the world except Canada, the United States (and its
possessions) Mexico, Spain and Portugal.
The parties acknowledge that, until such time as the license agreements
hereinafter referred to can be legally terminated, the following countries are
not part of this Territory as a result of pre-existing license agreements
involving Trademarks which are the same as, or substantially similar to, the
Trademarks: Japan, Australia, New Zealand and South Africa.
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