EXHIBIT 10.12
TRADEMARK LICENSE AGREEMENT
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THIS TRADEMARK LICENSE AGREEMENT (hereinafter this "Agreement") is entered
into as of the 16/th/ day of September, 1999 by and between DAIWA SEIKO, INC.,
a Japanese corporation with offices at 00-00, Xxxxxxx 0-xxxxx, Xxxxxxxxxxxxx
Xxxx, Xxxxx, Xxxxx ("Daiwa") and Carbite Inc., a United States company organized
and existing under the laws of the State of California and having its principal
office at 0000 Xxxxx Xxxxx Xx., Xxxxx 000, Xxx Xxxxx, XX 00000, U.S.A.
("Carbite").
WHEREAS:
(1) Pursuant to an exclusive distribution agreement between Daiwa and
Carbite dated as of the 16/th/ day of September, 1999 (the "Distribution
Agreement"), Carbite is acting as the exclusive distributor in the Territory (as
defined therein) of the Daiwa Original Products (as defined therein);
(2) In addition to acting as such distributor in the Territory of the
Daiwa Original Products, Carbite wishes to assemble or have assembled or
otherwise procure golf clubs and certain other products bearing the trademarks
of Daiwa for distribution within the Territory;
(3) For such purpose, Daiwa is willing to grant a license to Carbite for
the rights to use the Trademarks (as defined below) on the Licensed Products (as
defined below) and Carbite so wishes to license the rights to use the
Trademarks;
(4) Daiwa and Carbite wish to enter into a written agreement setting out
the terms and conditions under which Carbite shall act as such licensee of the
Trademarks in the Territory.
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NOW IT IS HEREBY AGREED as follows:
1. Definitions
All capitalized terms herein shall have the same meaning as in the
Distribution Agreement, except that the following terms shall have the following
meanings in this Agreement:
(a) The "Licensed Products" shall mean any or all golf clubs, golf bags,
golf gloves, golf wear and accessories
(i) bearing any of the Trademarks and assembled by or for Carbite
using any parts and/or components ("Daiwa Original Parts")
purchased from Daiwa; or
(ii) bearing any of the Trademarks and manufactured by or for Carbite
by Qualified Manufacturers (as defined in the Distribution
Agreement) for distribution within the Territory.
(b) The "Trademarks" shall mean those trademarks of Daiwa as are listed in
Exhibit A attached hereto.
2. License for Use of Trademarks
(a) Daiwa hereby grants to Carbite an exclusive license to use the
Trademarks in the Territory for the purposes of distribution, assembly and/or
manufacture of the Licensed Products, and outside the Territory for the sole
purpose of having the Licensed Products assembled and/or manufactured by
Qualified Manufacturers for distribution by Carbite in the Territory. Carbite
may not use the Trademarks except as specifically provided in this Agreement.
(b) Carbite shall not distribute or have distributed outside the Territory
the Licensed
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Products or any products identical or confusingly similar in design and/or
appearance to the Licensed Products. In accordance with Article 2 (b) of the
Distribution Agreement, Carbite shall ensure that its distributors and
manufacturers/suppliers shall comply with this restriction during the term of
this Agreement.
(c) Carbite shall not use in any way, in connection with the sale of the
Licensed Products, any trademarks or tradenames other than the Trademarks or
those approved in advance by Daiwa; Carbite shall not put such trademarks or
tradenames on the Licensed Products.
(d) Carbite may also use the Trademarks in connection not only with the
distribution of the Licensed Products but with the advertising, merchandising
and promotion of the Licensed Products.
3. Manufacture/Assembly of Licensed Products
(a) The parties hereby agree that Carbite may assemble or manufacture or
have Qualified Manufacturers assemble or manufacture the Licensed Products for
distribution within the Territory. Provided, however, that nothing herein shall
grant to Carbite the right to sub-license or otherwise transfer the rights
hereunder; provided further that Carbite makes best efforts to ensure that any
Licensed Products assembled or manufactured by it or by Qualified Manufacturers
do not in any way infringe the intellectual property rights of a third party;
and provided further that samples of any Licensed Products manufactured or
assembled by Carbite or by Qualified Manufacturers chosen by Carbite be
submitted to Daiwa prior to their distribution for approval, which shall not be
unreasonably withheld by Daiwa.
(b) Carbite shall permit Daiwa and its subsidiaries and affiliates to
purchase any Licensed Products manufactured or assembled by Carbite or by
Qualified Manufacturers on terms mutually acceptable to Daiwa and Carbite for
distribution outside the Territory by Daiwa and/or by its subsidiaries and
affiliates.
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4. Royalty Payments
(a) In consideration for the license granted herein, Carbite shall pay
Daiwa a minimum royalty fee each Contract Year (the "Minimum Royalty"), as
follows:
Contract Year Minimum Royalty
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September 16, 1999-
September 15, 2000 US $ 75,000
September 16, 2000-
September 15, 2001 US $ 225,000
September 16, 2001-
September 15, 2002 US $ 250,000
September 16, 2002-
September 15, 2003 US $ 375,000
September 16, 2003-
September 15, 2004 US $ 450,000
(b) In calculating the above Minimum Royalty, the following rules shall
apply:
(i) For Licensed Products which are
(a) manufactured or assembled with Daiwa Original Parts,
Distributor shall receive a credit of 6% of the FOB price
towards the Minimum Royalty for the relevant Contract Year;
or
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(b) other than those described in (a) above, Carbite shall pay
Daiwa six percent (6%) of the FOB price of such Licensed
Products.
The royalty for Daiwa golf clubs, consisting of head, shaft and
grip, shall be calculated based upon the accumulated total of FOB
or invoiced prices of those 3 major parts, not including labor
charges and other charges.
(ii) Distributor shall also receive a credit of 6% of the FOB price of
Daiwa Original Products which Distributor may purchase under the
Distribution Agreement towards the Minimum Royalty for the
relevant contract year.
(c) Amounts in excess of those stated in (a) above may not be carried
forward and credited against the Minimum Royalty for the succeeding Contract
Year. Products are considered purchased when invoiced by Daiwa or other
Qualified Manufacturers.
(d) Within six (6) months of the end of the term of this Agreement or any
extension thereof, Daiwa and Carbite shall discuss and negotiate the Minimum
Royalty for the following term.
(e) Royalty payments shall be made as follows:
(i) Royalty payments and the corresponding liability shall be
calculated and accrue quarterly. Carbite shall send its quarterly
statement of the royalty due to Daiwa by the fifteenth (15/th/ )
day of the following month, in the case of purchase from parties
other than Daiwa, together with evidence of the invoiced prices
to establish the relevant royalty amount due. In the event that
the quarterly royalty amount due based upon purchases does not
exceed one quarter (1/4) of the minimum royalty for the
applicable year, then the royalty payment due shall be one
quarter (1/4) of the minimum royalty of the applicable year.
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(ii) Royalty payments to be made by Carbite to Daiwa shall be made
quarterly, within thirty (30) days of the end of the relevant
quarter.
(iii) Carbite will deposit in immediately available funds the royalty
payments due for each period designated in the preceding
paragraph to an account with a bank in Tokyo as designated by
Daiwa.
(iv) Each remittance shall be in United States dollars. When currency
conversion is necessary for determining amounts payable in
Japanese Yen, the rate of \105.00 = US$1 shall be applied.
Should the TTB official exchange rate as announced in New York,
New York, U.S.A. fall below \85.00 = US$1 or rise above \125.00
= US$1 for two (2) consecutive months, the parties shall re-
negotiate the Minimum Royalty amounts.
(v) Daiwa shall have the right to request that a certified public
accountant in California, U.S.A. agreeable to both parties
inspect Carbite's books and records relating to the Licensed
Products to ascertain the correctness of the royalty payments.
(vi) Daiwa will bear the income tax (if any) which is levied on the
royalty payments in California, U.S.A. according to applicable
federal and/or state tax law and the tax treaty between the
U.S.A. and Japan. In case Carbite pays the income tax for the
account of Daiwa, Carbite shall deduct the same amount from the
royalty payment at the time of remittance. Carbite shall send
the tax receipt to Daiwa immediately after the tax payment as
proof of payment.
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5. Other Obligations of Carbite
(a) Should Carbite place any orders with Qualified Manufacturers for
Licensed Products, Carbite shall send a copy of such order to Daiwa plus a copy
of the relevant shipping documents, including bills of lading, once received by
Carbite.
(b) Carbite shall provide at its expense sufficient facilities in the
Territory for after-sales services of the Licensed Products to satisfy
reasonable requirements for such services by the retail purchasers in the
Territory. For such purposes, for the term of this Agreement and for three (3)
years following the termination hereof, Carbite shall maintain such stock of
spare parts as are necessary to keep the Licensed Products in serviceable
condition, deal with customer complaints and honor warranties to purchasers of
the Licensed Products.
(c) Carbite will conduct its business in accordance with the highest
business standards and shall not perform any act which will or may reflect
adversely upon the "Daiwa" name, the Trademarks or Daiwa's business integrity or
goodwill.
6. Intellectual Property Rights; Indemnity
(a) Both parties agree that should any claim, demand or suit be made or
filed against Carbite by a third party regarding the Licensed Products
(including, but not limited to, claims pertaining to patent, trademark and other
intellectual property rights), Carbite shall be fully responsible for the
defense of any such claim and shall bear all costs and expenses related thereto.
Notwithstanding the foregoing however, with respect to any claims, demands or
suits where the products contain Daiwa Original Parts, Carbite shall not make
any admission of liability and shall give Daiwa immediate notice of any claim,
provided that if Daiwa so elects, Daiwa may co-operate in the defense of such
claim. In the case of any claim, demand or suit where the products in question
are Licensed Products using Daiwa Original Parts and pertain exclusively to
Daiwa Original Parts, the provisions of Article 8(e) of the Distribution
Agreement
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with respect to the handling of claims shall apply. In the event that the
distribution of the Licensed Products is adjudged to infringe a patent of a
third party, Daiwa may terminate this Agreement forthwith.
(b) Carbite shall indemnify Daiwa during and after the term of this
Agreement against all claims, liabilities (including settlements entered into in
good faith) and expenses (including reasonable attorneys' fees) arising out of
Carbite's activities hereunder or out of any defect (whether obvious or hidden)
in a Licensed Product or arising from personal injury or any infringement of any
rights (including, but not limited to, patent, trademark and other intellectual
property rights) of Daiwa or of any other person by the manufacture, sale,
possession or use of the Licensed Products or by the Carbite's failure to comply
with applicable laws; provided that such claim shall not apply to Licensed
Products using Daiwa Original Parts if any such cause of indemnity pertains
exclusively to Daiwa Original Parts. The parties indemnified hereunder shall
include Daiwa, its subsidiaries (both direct and indirect) and its affiliates
and its and their officers, directors, employees and agents. The indemnity shall
not apply to any claim or liability relating to any infringement of the
copyright of a third party caused by Carbite's utilization of the Licensed
Products and the Trademarks in accordance with the provisions hereof.
(c) No warranty or indemnity is given by Daiwa with respect to any
liability or expense arising from any claim that sale of the Licensed Products
or use of the Trademarks on or in connection with the Licensed Products
hereunder or that any packaging, advertising or promotional material infringes
any trademark right of any third party or otherwise constitutes unfair
competition by reason of any prior rights acquired by such third party other
than rights acquired from Daiwa. It is expressly agreed that it is Carbite's
responsibility to carry out such investigations as it may deem appropriate to
establish that the Licensed Products, packaging, promotional and advertising
material which are manufactured or created hereunder, including any use made of
the Licensed Products and the Trademarks therewith, do not infringe such rights
of any third party, and Daiwa shall not be liable to Carbite if such
infringement occurs.
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7. Term and Termination
(a) This Agreement shall be effective for five (5) years from the date
first above written until August 31, 2004. Distributor shall be given an option
to extend for an additional 5-year term if Distributor has met all the
obligations and the conditions of the Exclusive Distribution Agreement and the
Trademark License Agreement. Distributor must execute such option four (4)
months prior to the end of the initial period unless previously terminated in
accordance with the terms hereof. The Minimum Royalty for each extended Contract
Year must be reviewed and mutually agreed upon 6 months before the termination
of the first contract period, but in no event may the Minimum Royalty be
increased more than 20% over that applicable to the previous year as a baseline
for the contract extension. If no agreement is reached 6 months prior to the end
of the initial period, then this Agreement will be terminated on August 31,
2004. If and when the term of this Agreement is extended beyond such date, this
Agreement shall thereafter be extended automatically from year to year unless
notice of intention to terminate in accordance with this Agreement is given by
either party to the other not less than 6 months prior to the end of the initial
extended period or any other extension thereof, or unless previously terminated
in accordance with the terms hereof. Provided, however, that in the absence of
an agreement by the parties otherwise, the minimum royalty applicable to such
extended Contract Year shall be that applicable to the last year of the
preceding term of this Agreement.
(b) This Agreement shall automatically terminate immediately in the event
of the
(i) insolvency or bankruptcy of either party;
(ii) termination of the Distribution Agreement;
(iii) withdrawal of Carbite from the business of manufacturing,
selling or distributing Daiwa Products;
(iv) laying of criminal charges against either party;
(v) transfer of control of Carbite to a direct golf and/or Fishing
Tackle competitor of Daiwa without the prior approval of Daiwa;
or
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(vi) if any of the Licensed Products are adjudged definitively to
infringe the patent rights of a third party.
(c) If Carbite shall fail to make the Minimum Royalty payments for two (2)
consecutive quarters, Daiwa may in its sole discretion terminate this Agreement
forthwith by giving a written notice to Carbite within three (3) months after
the end of such consecutive quarters.
(d) Unless otherwise provided herein, if at any time either party fails to
comply with any of its obligations under this Agreement, and if such defaulting
party has not remedied such default within thirty (30) days after the date of
the receipt by such party from the other party of notice of default giving
reasonable particulars of the alleged default, then the party not in default may
terminate this Agreement by notice to that effect at any time after the
aforesaid period of thirty (30) days.
(e) Neither party shall be released from any debts or liabilities which
have accrued under this Agreement or the Distribution Agreement at the time of
the termination and which are outstanding.
8. Governing Law and Arbitration
This Agreement shall be governed by the laws of Japan. Any dispute, if it
cannot be amicably settled by consultation and negotiation, shall be settled by
arbitration. Unless the parties otherwise agree in writing, in the event that
Distributor is the claimant, arbitration shall take place in Tokyo, Japan, under
the rules of the Japan Commercial Arbitration Association. In the event that
Daiwa is the claimant, arbitration shall take place in San Diego, California,
under the rules of the American Arbitration Association. The language of
arbitration shall be English. The outcome of such arbitration shall be final and
without any right of appeal.
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9. Notices
All notices, requests and other communications hereunder shall be in the
English language in writing, and shall be deemed to have been duly given if
delivered by hand with proof of receipt at the time of receipt; if communicated
by facsimile, cable or similar electronic means to the facsimile number or cable
identification number as previously provided by each party to the other, at the
time that receipt thereof has been confirmed by return electronic communication
or signal that the message has been clearly received; or if mailed, ten (10)
days after dispatched by registered airmail, postage prepaid, from any post
office in Japan or the United States of America, as the case may be, addressed
as follows:
If to Daiwa: 00-00, Xxxxxxx 0-xxxxx
Xxxxxxxxxxxxx Xxxx
Xxxxx, Xxxxx
Attention: Xx. Xxxxxxxxx Dekura
If to Carbite: 0000 Xxxxx Xxxxx Xx., Xxxxx 000
Xxx Xxxxx, XX 00000
U.S.A.
Attention: Xx. Xxxx Xxxxxxxxxxx
Either party may change its facsimile number, cable identification
number or address by a notice given to the other party in the manner set forth
above.
10. Warranties of the Parties
Each party warrants to the other that it has the full right and power to
enter into this Agreement and that the performance of this Agreement will not
violate any rule, regulation, law
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or other governmental restriction to which it is bound and will not violate any
agreement between that party and any third party.
11. No Waiver
No waiver of any right or remedy in respect of any occurrence or event on
any one occasion will be deemed a waiver of such right or remedy in respect of
such occurrence or event on any subsequent occasion.
12. Force Majeure
If either party is prevented from or delayed in performing any obligation
of this Agreement as a result of circumstances beyond its control, including but
not limited to Acts or God, governmental order or restriction, war, war-like
conditions, hostilities, sanctions, mobilizations, blockage, embargo, detention,
revolution, riot, strike, lockout, epidemic, fire or flood, such obligation
shall be suspended for so long and to such an extent as may be justified in the
circumstances and thereafter such obligation shall be performed pursuant to the
terms of this Agreement.
13. Language and Counterparts
This Agreement may be executed in multiple counterparts in the English
language, and each counterpart shall be deemed an original of this Agreement.
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14. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes all previous agreements and negotiations, commitments,
communications and contracts in respect thereof. This Agreement may be amended
only in writing signed by the parties hereto.
15. Headings
The headings of articles used in this Agreement are inserted for
convenience of reference only and shall not affect the interpretation of the
respective articles of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above, and this Agreement shall be deemed dated as of such date.
DAIWA SEIKO, INC.
By: __________________________________
Its: _________________________________
Carbite Inc.
By: __________________________________
Its: _________________________________
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