1
EXHIBIT 10.9
XXXXX & WESSON CORP.
TRADEMARK LICENSE AGREEMENT
This Agreement is effective as of December 1, 1995, by and between XXXXX &
WESSON CORP., a Delaware Corporation with its principal office at 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000, (hereinafter called "Licensor"),
and Xxxxxx Cutlery, a Corporation, having its principal office at 0000 Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (hereinafter called "Licensee"). In
consideration of the mutual promises herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Licensor and Licensee, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
a. "Marks" shall mean those trademarks and service marks
identified in Exhibit A, attached hereto, and all of
Licensor's rights in such Marks including, without limitation,
common law rights, and registrations and applications for
registration of any such Marks in any state, federal or other
jurisdiction.
b. "Licensed Articles" shall mean the articles of merchandise
listed in Exhibit B, attached hereto, and marked with one or
more of the Marks.
c. "Net Sales Price" shall be the invoiced price at which
Licensed Articles are sold by Licensee, less any sales tax,
and less any credits for returns actually made or allowed,
provided that such returns relate to sales which were
previously included in royalty calculations under this
Agreement. There shall be no deduction from the Net Sales
Price on which royalties are due hereunder for uncollectible
accounts, advertising expenses or other expenses of any kind
except those specifically identified in this Section.
d. "Territory" is the geographic area identified in Section 2(a)
of this Agreement.
e. "Minimum Guaranteed Royalties" shall have the meaning set
forth in Section 3(d) of this Agreement.
f. "Contract Year" and "First Contract Year" shall have the
meanings given those respective terms set forth in Section
2(b) of this Agreement.
DECEMBER 1. 1995
----------------
2
2
2. Grant of License, Term, Licensee's Duties
-----------------------------------------
a. Licensor hereby grants to Licensee an exclusive,
nontransferable license to use the Marks in connection with
the retail sale as a worldwide agreement of Licensed Articles.
Licensee shall not use, or permit the use of, the Marks on any
other product or for any service, except as specifically
provided in this Agreement. Since Licensor grants Licensee any
rights to use the marks in any jurisdiction outside of the
United States, Licensee shall take all steps and timely notify
Licensor of all steps as shall be necessary to protect
Licensor's trademark rights in such marks, and assure
Licensor's exclusive ownership, in such jurisdiction.
b. The term of this Agreement shall be for five years commencing
December 1, 1995 and ending December 31, 2000 at midnight
Eastern Standard Time, unless sooner terminated. Each period
from January 1 through December 31 during the term hereof is
hereinafter referred to as a "Contract Year", with the
exception of the "First Contract Year", which shall be for the
period from the date hereof through December 31, 1996. This
Agreement shall be automatically extended for successive
one-year periods unless Licensor or Licensee gives the other
party written notice of its intention not to extend this
Agreement, at least 90 days prior to the expiration date of
the Agreement or any extension thereof. The contract can only
be cancelled with cause.
c. Licensee shall use its best efforts to promote the sale of
Licensed Articles in the Territory and shall maintain
facilities and trained personnel sufficient and adequate to
accomplish Licensee's obligations hereunder.
d. Except as may be specifically provided in this Agreement,
nothing in this Agreement shall be construed to prevent
Licensor from using, or granting exclusive or nonexclusive
licenses to any other persons to use, any of the Marks in
connection with any goods or services other than those so
stated in Exhibit B.
3. Royalties and Payment, Minimum Guaranteed Royalties, Reporting
--------------------------------------------------------------
a. Licensee shall pay Licensor a royalty equal to (7%) seven
percent of the Net Sales Price of all Licensed Articles sold
or otherwise distributed by Licensee during or after the term
of this Agreement.
b. On or before the thirtieth day of the first month of each
calendar quarter, Licensee shall furnish to Licensor full and
accurate statements, certified by the Chief Financial Officer
of Licensee, showing the number, description and total Net
Sales Prices of the Licensed Articles sold or otherwise
distributed by Licensee during the preceding calendar quarter.
Licensee shall, simultaneously with such statements, pay to
Licensor the royalties
3
3
due thereon. Licensee may credit against any such payment any
Minimum Guaranteed Royalty previously paid by Licensee for the
Contract Year covered by such quarterly statement, Any Minimum
Guaranteed Royalty paid for any Contract Year shall not be
refunded to Licensee, and may be credited to royalties due in
the next Contract Year.
On or before the thirtieth day of the third month following
the end of each Contract Year, Licensee shall furnish to
Licensor a statement certified by the Chief Financial Officer
of Licensee showing total sales of Licensed Articles,
royalties due and royalties paid, for the preceding Contract
Year. If such statement discloses that the amount of royalties
paid during any period to which such statement relates were
less than the amount required to be paid, Licensee shall pay
such deficiency concurrently with the delivery of the
statement.
c. For purposes of this Agreement, a Licensed Article shall be
considered sold when such Article has been shipped,
distributed, paid for, billed or invoiced, whichever first
occurs.
d. Notwithstanding anything to the contrary set forth herein,
Licensee shall pay to Licensor minimum royalties ("Minimum
Guaranteed Royalties"), as follows:
First Contract Year $70,000.00
Second Contract Year $77,000.00
Third Contract Year $84,700.00
Fourth Contract Year $93,200.00
Fifth Contract Year and each
subsequent Contract Year, or portion
thereof, included in the term of this
Agreement, until changed by mutual
written agreement of the parties $102,450.00
The Minimum Guaranteed Royalty for the First Contract Year and
for each year that this Agreement is in effect shall be paid
at the end of the quarter during which they were earned,
pursuant to Section 3(b) of this Agreement, during such
contract year.
e. Any delinquent amounts under this Agreement shall bear simple
interest at the rate of 1.5 percent per month, or if lower,
the highest rate permitted by law, from the due date thereof
until paid.
4
4
4. Protection of Marks
--------------------
a. Licensee acknowledges Licensor's exclusive right, title and
interest in and to the Marks, both at common law and under
other applicable laws, and will not, either directly or
indirectly, at any time, do anything to discredit any part of
such right, title or interest or challenge the validity of
this License. Licensee agrees that its use of the Marks will
inure entirely to the benefit of Licensor. Licensee shall
assist Licensor, to the extent necessary, upon request by
Licensor, in the procurement of any protection of Licensor's
rights in the Marks. Upon Licensor's request from time to
time, Licensee shall provide Licensor with six specimens of
any Xxxx used on Licensed Articles and whatever other
documentation or information may be requested by Licensor for
the registration of any Xxxx in any category into which the
Licensed Articles fall.
b. Licensee shall use the Marks only in the form and manner and
with appropriate legends as prescribed from time to time by
Licensor, and shall not use any other trademark or service
xxxx in combination with any Xxxx without prior written
approval of Licensor. In any written materials, such as the
packaging, advertising materials, catalogs, brochures and the
like associated with the Licensed Articles, in addition to the
"(R)" or "TM" symbol displayed adjacent to the Xxxx, as
appropriate, Licensee shall use the following notice at least
once in each such document: "Licensed Trademark of Xxxxx &
Wesson Corp."
c. Licensee recognizes that the XXXXX & WESSON name and
associated marks are world famous and that, even if not
registered in any country, the unauthorized use thereof would
seriously dilute the distinctiveness of such name and the
Marks.
d. Licensee shall immediately notify Licensor in writing of any
infringements or imitations by other persons of any Xxxx, of
which Licensee becomes aware. Licensor shall have the sole
right to determine whether or not any action shall be taken on
account of such infringements or imitations. Licensee shall
not institute any suit or take any action on account of any
such infringements or imitations without first obtaining the
written consent of Licensor to do so.
5. Assignment of Marks
If Licensee shall acquire any rights in the marks in any country,
Licensee shall notify Licensor and immediately assign such right to
Licensor. Licensee shall not permit any other person to use any of the
Marks without Licensor's prior written consent, and shall cause any
manufacturer or other person involved in the production, promotion or
sale of Licensed Articles to agree to assign to Licensor any rights in
any Xxxx acquired by such manufacturer or other person.
5
5
6. Indemnification
---------------
a. Licensee shall at all times, and to the fullest extent
permitted by law, indemnify and hold harmless Licensor and its
successors, assigns, franchisees, subsidiaries, affiliates,
licensing agents and distributors, and the directors,
officers, agents and employees of each of the foregoing
entities, from and against any and all damages, demands,
claims, suits, actions, investigations, charges, costs and
expenses including, without limitation, attorneys fees and
court costs, settlement amounts, judgments, compensation for
damage to Licensor's reputation, and any losses of any nature,
which arise out of or are based upon any of the following:
(1) Any actual or alleged design defect, manufacturing
defect, failure to warn or instruct, breach of
warranty, negligence, strict liability in tort or any
other product liability legal theory associated with
the Licensed Articles;
(2) The infringement, alleged infringement or any other
violation or alleged violation of any patent,
trademark or copyright rights or other proprietary
rights owned or controlled by third parties by reason
of the manufacture, use, advertising, sale or
distribution of the Licensed Articles except for
trademark actions arising out of Licensee's approved
use of the Marks;
(3) The violation, or alleged violation, of any federal,
state or local law, regulation, ruling, standard or
directive or of any industry standard with respect to
the Licensed Articles;
(4) Licensee's breach of any warranty, representation,
agreement or obligation hereunder; or
(5) Any other acts or omissions of Licensee, or its
agents, servants or contractors with respect to the
manufacture, promotion or sale of Licensed Articles.
b. Licensee shall promptly give Licensor notice of any action,
suit, proceeding, claim, demand, inquiry or investigation
relating to the Marks or the Licensed Articles. Licensor may
at its sole option, elect to undertake the defense of any such
action, suit, proceeding, claim, demand, inquiry or
investigation, provided that such an undertaking by Licensor
shall not diminish Licensee's obligation hereunder to
indemnify Licensor and to hold it harmless. Licensor may, at
any time and without notice, order or consent to a recall, the
making of refunds or settlements, or the giving of notice to
consumers or similar remedies with respect to the Licensed
Articles. All losses and expenses incurred under this Section
shall be chargeable to
6
6
Licensee pursuant to its obligations of indemnity under this
Section, regardless of any actions, activity or defense
undertaken by Licensor or Licensee or the subsequent success
or failure of such actions, activity or defense.
c. Licensor assumes no liability whatsoever for the acts and
omissions of Licensee, or any of those with whom Licensee may
contract for the manufacture, distribution or sale of Licensed
Articles, notwithstanding any prior consent by Licensor to
such contract.
7. Insurance
---------
Licensee shall maintain, throughout the term of this Agreement, at its
own expense, liability insurance, from an insurance company, with such
liability coverages and limits, as are acceptable to Licensor. Such
policies shall name Licensor as an additional insured and shall provide
that Licensor shall receive at least 30 days prior written notice of
intent to cancel, alter or amend such policy. Licensee shall provide
Licensor upon execution of this Agreement and upon Licensor's request
from time to time thereafter, with certificates or other evidence of
insurance required by this Section. Licensee shall keep all insurance
coverages required by this Agreement in full force and effect for a
period of three years after the termination of this Agreement.
8. Quality of Licensed Articles
----------------------------
a. Licensee agrees, and represents and warrants to Licensor, that
all Licensed Articles shall be competitive and at a quality
level in line with the retail price, and of high safety and
structural standards, of such style, appearance, quality and
consistency as shall be suitable for distribution and
satisfactory for consumer usage, and otherwise merchantable
and fit for the purposes for which they are intended to be
used. Before manufacturing any Licensed Article, and upon
Licensor's request from time to time, Licensee shall submit to
Licensor, for its written approval of the Xxxx usage, samples
of each Licensed Article together with any labeling or
packaging in which such Licensed Article is to be marketed or
sold. The number of samples to be furnished by Licensee shall
be such reasonable number as Licensor may from time to time
request. All samples shall be provided without charge to
Licensor. No Licensed Article shall be distributed or sold
pursuant to this Agreement until Licensee has obtained
Licensor's written approval of the samples submitted. Licensor
will forward written approval/disapproval within 15 working
days.
b. All Licensed Articles shall be of the same quality and
workmanship as the approved sample, and in the manufacture
thereof, Licensee shall cause to be used state-of-the-art
manufacturing processes, techniques and quality control
procedures in order to ensure that the Licensed Articles will
7
7
consistently comply with the highest product quality
standards. Under no circumstances shall Licensee sell,
distribute, give away or otherwise deal in Licensed Articles
that are seconds, that bear a distortion of the Marks or that
do not comply with this Agreement.
c. Licensor has a clear policy of meeting our customer's needs
and expectations. We must insist that this policy be espoused
by any Xxxxx & Wesson licensee, as to act otherwise would
undermine the Licensor's corporate commitment to customer
satisfaction. Any licensee must provide Licensor with a
reasonable and refillable supply of no-charge merchandise for
us to quickly initiate exchanges when necessary. We also will
when required refund the purchase price of a product deemed
unacceptable by the user/consumer and expect to be reimbursed
for any such costs by the product's supplier. Licensor will
supply a quarterly accounting of any and all transactions
relating to customer satisfaction with the specific supplier.
d. Licensee shall consistently distinguish the Licensed Articles
from other products manufactured and sold by Licensee and
shall avoid confusing similarity between such other products
and the Licensed Articles. Licensee shall take such actions as
are necessary to maintain the Licensed Articles as separate
and distinct lines of styling, design and merchandising from
any other product manufactured or sold by Licensee applicable
to all future products.
e. Licensee shall, no later than 180 days before the expiration
of any original or extended term of this Agreement, furnish
Licensor a statement showing the number and description of
Licensed Articles in inventory and in process.
9. Compliance with Government Standards and Product Testing
--------------------------------------------------------
a. Licensee agrees that the manufacture, distribution and sale of
the Licensed Articles will conform at all times to all
applicable federal, state and local laws, regulations,
industry standards, ordinances and other enactments,
including, without limitation, those relating to product
safety.
10. Promotional Material
--------------------
Licensee shall not use the Marks or any reproduction thereof in any
advertising, promotional or display material without Licensor's prior
written approval. Under no circumstances will promotional materials or
programs be used by Licensee that reflect unfavorably on the Marks. All
advertising, display or promotional copy utilizing or in any way
connected with the Marks, shall carry a notice that the Marks are the
property of Licensor. One copy of such advertising, display or
promotional copy shall be submitted to Licensor for prior written
approval in advance of production and upon Licensor's request from time
to time thereafter.
8
8
Any approval granted by Licensor under this Section will extend only to
Licensee's use of the Marks. Licensor shall not be liable for content
or accuracy of such advertising, promotional or display material nor
for infringement of patents, copyrights, trademarks, or any other
proprietary rights owned, used, or controlled by third parties, by
reason of Licensee's promotional activities.
11. Records
-------
a. Licensee shall keep accurate books of account and records
covering all transactions relating to the license herein
granted. Licensor and its duly authorized independent
accountants or other representatives shall have the right at
reasonable times, upon Licenser's request from time to time,
to examine such books of account and records and all other
documents and material in Licensee's possession or under its
control with respect to Licensee's activities in connection
with this Agreement, and such persons shall have free and full
access for such purposes and may make copies thereof or
extracts therefrom. Licensee shall keep all such records
available to Licensor for at least three years after
expiration or termination of this Agreement. Licensee will
designate a symbol or number which will be used exclusively in
connection with the Licensed Articles and with no other
articles which Licensee may manufacture, sell or distribute,
and that duplicates of all xxxxxxxx by Licensee to its
customers with respect to Licensed Articles shall be kept by
Licensee for inspection as is herein provided.
b. If any audit by Licensor shall reveal a shortfall of royalties
paid by Licensee against royalties actually due in accordance
with this Agreement, Licensee shall immediately, upon demand
by Licensor, make payment to Licensor or such shortfall, plus
simple interest at prime rate per month or if lower, the
highest rate permitted by law, for the period of such
shortfall. In addition, if such audit shall reveal a shortfall
of more than five percent of royalty due, Licensee shall
reimburse Licensor for the services of its accountant and for
any other expenses of Licensor incident thereto including,
without limitation, any attorney's fees and costs of
collection.
12. Termination
-----------
In addition to any other rights which Licensor may otherwise have,
Licensor may terminate this Agreement at any time, immediately upon
written notice:
a. If within three months from the date of this Agreement,
Licensee shall not have begun the bona fide production,
distribution and sale of the Licensed Articles; or
9
9
b. If Licensee shall thereafter fail for a consecutive period in
excess of three months to continue the bona fide distribution
and sale of the Licensed Articles; or
c. If Licensee shall fail to make any payment due hereunder or to
deliver any of the statements required hereunder, and if such
default shall continue for a period of 15 days after notice of
such default by Licensor to Licensee or if such a failure
shall occur twice in any 12-month period even if both failures
are corrected as provided hereunder; or
d. If Licensee or its property, where appropriate:
1) Becomes subject to a receiver or trustee; or
2) Becomes insolvent; or
3) Becomes subject to an involuntary or voluntary
petition under the United States Bankruptcy Laws, as
amended; or
4) Makes an assignment for the benefit of its creditors;
or
e. If there is any deliberate deficiency in the Licensee's
reporting which affects royalties payable or any other aspect
of this Agreement; or
f. If any warranty, representation or covenant made by Licensee
hereunder, or any information as to product quality or safety
provided by Licensee hereunder, is false or misleading; or
g. If Licensee fails to comply with any term or condition of this
Agreement, other than those specifically set forth in clauses
a through f above, and such non-compliance continues for a
period of 15 days after notice thereof is given by the
Licensor.
Any termination by Licensor shall be without prejudice to any of
Licensor's other rights or remedies.
13. Effect of Termination
---------------------
a. After expiration or other termination of this Agreement,
Licensee shall have no further right to manufacture,
distribute, sell, exploit or otherwise deal in any Licensed
Articles which utilize the Marks except that Licensee may
dispose of Licensed Articles which are on hand or in process
at the time of expiration or termination so long as (1)
Licensee reports in writing to Licensor, no later than 30 days
after termination of this Agreement, the total number of
Licensed Articles which will be disposed of, (2) the sale
thereof is completed within six months, (3) all payments when
due are made to Licensor, (4) such disposal of Licensed
Articles shall be in accordance with the terms of this
agreement, and (5) statements and royalty payments with
respect to that period are made by Licensee in
10
10
accordance with Section 3. Notwithstanding the foregoing, in
the event this Agreement is terminated pursuant to Sections
12(c), 12(d), 12(e), 12(f), or 12(g), Licensee shall not
dispose of any Licensed Articles which are on hand or in
process at the time of termination, but shall instead
immediately deliver and turn over such Licensed Articles to
Licensor. A final statement and payment shall be made by
Licensee within 15 days after the end of such six-month
period. Upon expiration of such six-month period herein, any
remaining inventory of Licensed Articles and all molds,
plates, prints and other materials used to reproduce the Marks
for the manufacture of the Licensed Articles shall be
destroyed and evidence of such destruction shall be given to
the Licensor.
b. In the event this Agreement expires or is otherwise terminated
for any reason, Licensee shall, and hereby does, assign to
Licensor any and all rights of Licensee in the Marks,
including associated goodwill, and the designs and styles of
the Licensed Articles to the extent such design or styles
contain or employ any of the Marks, and shall not thereafter
manufacture or sell any such designs or styles or use the
Marks in any manner.
c. Except as provided in subsection a), upon the expiration or
termination of this Agreement, Licensee shall immediately
cease all further use of the Marks and any names, trademarks,
characters, symbols, designs, likenesses or visual
representations as might be likely to cause confusion or
deceive purchasers or prospective purchasers or dilute any
trade name, trademark or service xxxx of Licensor including,
without limitation, Licensor's corporate and private names,
other trademarks, symbols, designations, indices, slogans and
other means of identifying products or services of Licensor,
whether or not identified herein as a Xxxx.
d. Licensee agrees that the Marks are distinctive and possess
special, unique and extraordinary characteristics which make
difficult the assessment of the monetary damages that Licensor
would sustain by unauthorized use. Licensee recognizes that
irreparable injury would be caused to Licensor by unauthorized
use of the Marks and agrees that injunctive and other
equitable relief would be appropriate in the event of a breach
of this Agreement by Licensee, provided, however, that such
remedy shall not be exclusive of other legal remedies
otherwise available.
e. Licensee's obligations and agreements set forth in Sections 3
through 11, 13, 14, 17, 19 and 20 survive any termination or
expiration of this Agreement.
11
11
14. Notices
-------
All notices and statements to be given hereunder shall be in writing,
and any such notice or statement shall be deemed duly given if mailed
by certified mail, return receipt requested, if to Licensor, at:
Xxxxx & Wesson Corp.
0000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx
Director of Licensing
and if to Licensee, at:
Xxxxxx Cutlery
0000 Xxxxx Xxxxxxx Xxxx
X.X. 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
President
15. No Joint Venture
----------------
Nothing in this Agreement shall be construed to place the parties in
the relationship of partners or joint ventures, and Licensee shall have
no power to bind Licensor in any manner whatsoever.
16. Cancellation
------------
Licensee acknowledges that Licensor and its subsidiaries, affiliates
and franchisees use the Marks to advance and promote Licensor's
business, and that Licensor has a paramount obligation to preserve its
ability to so use such Marks. Should the use by Licensee of any Xxxx on
Licensed Articles be deemed by Licensor to be in violation of any
federal, state or local law or to adversely affect the reputation of
Licensor or affect the validity, enforceability or distinctiveness of
the Xxxx as a designation of origin for Licensor's own products, then
Licensor may terminate this Agreement on 15 days notice to Licensee in
the event of an actual violation.
17. Assignments. Transfers and Sublicenses
--------------------------------------
Without the prior written consent of Licensor, which may be withheld in
Licensor's sole discretion, a) Licensee shall not voluntarily or by
operation of law, assign or transfer this Agreement or any of
Licensee's rights or duties hereunder or any interest of Licensee
herein, nor shall Licensee enter into any sublicense for use of the
Marks by other persons; b) Licensee shall not sell or otherwise
transmit or
12
12
transfer to any party engaged in the design or manufacture of items
similar to any of the Licensed Articles, any design, style, know-how,
technology or other item or knowledge of a technical or competitive
nature, furnished to Licensee by or through Licensor. Any transfer of
any interest in Licensee to any entity in which the present controlling
shareholders of Licensee do not have voting control shall be deemed an
assignment prohibited hereunder. The consent of Licensor to one
assignment, transfer or sublicense shall not be deemed to be consent to
any subsequent assignment, transfer or sublicense. Nothing provided
herein shall limit Licensor's right to transfer and assign any of its
rights hereunder. Any transfer of interest in Licensee would only be
permissible with the consent of Licensor.
18. Scope and Modification
----------------------
This Agreement sets forth the entire agreement between the parties, and
supersedes all prior agreements and understandings between the parties,
relating to the subject matter hereof. None of the terms of this
Agreement may be waived or modified except as expressly agreed in
writing by both parties.
19. Severability
------------
Should any provision of this Agreement be declared void or
unenforceable, the validity of the remaining provisions shall not be
affected thereby.
20. Governing Laws
--------------
This Agreement shall be interpreted in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
The parties hereto have executed this Agreement as the date at the
beginning hereof.
Licensor:
Witnessed By: XXXXX & WESSON CORP.
/s/ Xxxxx X. Xxxxxx by: /s/ Xxxxxx X. Xxxxx
--------------------------------------- -----------------------------
(Title) V.P. Sales & Mktg.
-------------------------
Licensee:
/s/ (signature not legible) by: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------- -----------------------------
(Title) Owner
-------------------------
13
13
EXHIBIT A - Licensed Marks
Xxxxx & Wesson
.357 Magnum
Magnum
LadySmith
Airweight
Kit Gun
Chiefs Special
Combat Magnum
44 Magnum
Service Kit Gun
Target Kit Gun
.357 Combat Magnum
Distinguished Combat Magnum
Distinguished Service Magnum
14
14
EXHIBIT B - Licensed Articles
Cutlery
Cutlery/Gift Sets
