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EXHIBIT 10.14
EXCLUSIVE TRADEMARK LICENSE AGREEMENT
This agreement is entered into and made by World Key, Inc., a California
corporation (Licensor) and XxxxxxxXxxxx.xxx, Inc. a California corporation
(Licensee), the "parties".
In consideration of the mutual promises and covenants set forth below,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 Affiliate: any company, corporation, or business in which Licensee
or Licensor owns or controls at least fifty percent (50%) of the voting stock or
other ownership. Unless otherwise specified, the terms Licensee and Licensor
includes Affiliates.
1.2 Trademark, World Key Trademark: the World Key trademark consists of
the name, the logo, the usage in manner as registered with the United States
Patent and Trademark Office
1.3 Licensor: World Key, Inc. a corporation organized under the laws of
the State of California
1.4 Licensee: XxxxxxxXxxxx.xxx, Inc., a corporation organized under the
laws of the State of California.
1.5 Sublicensee: any legal entity to which XxxxxxxXxxxx.xxx extends its
rights and responsibilities contained in this Agreement.
1.6 Territory: the United States of America and its possessions.
ARTICLE II
REPRESENTATIONS
2.1 Licensor in the owner of the World Key trademark.
2.2 Licensee wishes to secure the exclusive right to use the World Key
trademark in its course of business and to sublicense its right to retail travel
agencies throughout United States of America and its possessions.
2.3 Licensor acquired and has maintained its rights to the World Key
trademark since 1978 and has a substantial financial interest in protecting and
maintaining the integrity of the World Key trademark.
2.4 Licensee recognizes the value and integrity of the World Key
trademark.
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2.5 Licensor is agreeable to granting Licensee exclusive right to use of
World Key trademark conditioned upon the terms of this agreement.
ARTICLE III
GRANT OF RIGHTS
3.1 Licensor hereby grants to Licensee and Licensee accepts, subject to
the terms and conditions hereof, in the territory:
(a) an exclusive commercial license to use the World Key
trademark in its course of business, and;
(b) a license to sublicense its rights and responsibilities under
this Agreement to retail travel agencies located in the territory.
(c) Licensee will provide Licensor with a copy of any sublicense
agreement it proposes to use in the granting of a sublicense and agrees
to conform its sublicense agreement to this Agreement.
3.2 The granting and exercise of this license is subject to the
following conditions:
(a) Licensee hereby agrees not to use the World Key trademark in
any manner that would degrade the value of trademark.
(b) Licensee hereby agrees to use its best efforts to follow all
laws, rules and regulations to which it is subject in its course of
business so as not to endanger the value or the ownership of the
trademark.
(c) Licensee hereby agrees to require any Sublicensee to adhere
to all the terms and conditions contained herein pertaining to the use
of the World Key trademark.
ARTICLE IV
CONSIDERATIONS AND ROYALTIES
4.1 In consideration for Licensor granting Licensee the license
contained herein, at the time Licensee grants the first sublicense of the
license contained herein, Licensee shall pay to Licensor $25,000.
4.2 During the term of this agreement, Licensee shall pay, in advance,
to Licensor an annual fixed royalty of $250.00 for each sublicense it has
granted to a retail travel agency.
4.3 No later than 30 days after the conclusion of a calendar month in
which a sublicense has been granted, Licensee shall pay to Licensor the royalty
payment(s) as required.
ARTICLE V
REPORTING
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5.1 No later than the 10th day of each month, Licensee shall provide
Licensor with a report inclusive of the name, address, telephone number, and
principal contact of each travel agency to which Licensee has granted a
sublicense during the previous calendar month.
5.2 Licensee shall immediately report to Licensor any legal action to
which it is a party, in which the value or the integrity of the World Key
trademark may be impacted.
5.3 All such reports shall be maintained in confidence by Licensor
except as required by law; however, Licensor may include in its usual financial
reports annual amounts of royalties paid. Late payments shall be subject to a
charge of one and one half percent (1 1/2%) per month.
ARTICLE VI
RECORD KEEPING
6.1 Licensee shall keep, and shall require its sublicensees to keep,
accurate records (together with supporting documentation) of all public uses of
the World Key trademark as granted under this Agreement, appropriate to
determine that the use of trademark is in conformance with trademark law and
provisions of this agreement.
6.2 Licensee shall also keep accurate accounting records of all
sublicenses granted and shall make such records available for review upon
reasonable notice by Licensor at Licensor's expense. If such examination shows
an underreporting or underpayment, Licensee shall pay the cost of such
examination, as well as any additional sum that would have been payable to
Licensor had Licensee reported correctly, plus interest on said sum at the rate
of one and one half per cent (1 1/2%) per month, plus a $50.00 fee per
sublicense unreported.
ARTICLE VII
DOMESTIC FILING AND MAINTENANCE
7.1 During the term of this Agreement, Licensor agrees to, at Licensor's
expense, undertake all domestic filing requirements to maintain the World Key
trademark in full force and effect.
ARTICLE VIII
INFRINGEMENT
8.1 With respect to the trademark that is exclusively licensed to
Licensee pursuant to this Agreement, Licensee shall have the right to prosecute
in its own name, and at its own expense, any infringement of the trademark, so
long as such license is exclusive at the time of the commencement of such
action. The parties agree to notify the other promptly of each infringement of
trademark of which either becomes aware. Before Licensee commences an action
with respect to any infringement of such patents, Licensee shall give careful
consideration to the views of Licensor and to potential effects on the
Licensor's interest in making its decision whether or not to xxx.
8.2 If Licensee elects to commence an action as described above:
(a) Licensor may, to the extent permitted by law, elect to join
as a party in that action. Regardless of whether Licensor elects to join
as a party, Licensor shall cooperate fully with Licensee in connection
with any such action.
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(b) if Licensor elects to join as a party pursuant to
subparagraph (a), Licensor shall jointly control the action with
Licensee.
(c) Licensee shall reimburse Licensor for any costs Licensor
incurs, including reasonable attorneys' fees, as part of an action
brought by Licensee, irrespective of whether Licensor becomes a
co-plaintiff.
8.3 No settlement, consent judgment or other voluntary final disposition
of the suit may be entered into without the prior written consent of Licensor,
which shall not be unreasonably withheld.
8.4 Recoveries or reimbursements from actions commenced pursuant to this
Article shall first be applied to reimburse Licensee and Licensor for litigation
costs. Any remaining recoveries or reimbursements shall be shared equally by
Licensee and Licensor.
8.5 If Licensee elects not to exercise its right to prosecute an
infringement of the trademark pursuant to this Article, Licensor may do so at
its own expense, controlling such action and retaining all recoveries therefrom.
Licensee shall cooperate fully with Licensor in connection with any such action.
8.6 Without limiting the generality of paragraph 8.5 in, Licensor may,
at its election and by notice to Licensee, establish a time limit of sixty (60)
days for Licensee to decide whether to prosecute any infringement of which
Licensor is, or becomes aware. If, by the end of such sixty (60)-day period,
Licensee has not commenced such an action, Licensor may prosecute such an
infringement at its own expense, controlling such action and retaining all
recoveries therefrom. With respect to any such infringement action prosecuted by
Licensor in good faith, Licensee shall pay over to Licensor any payments
(whether or not designated as "royalties") made by the alleged infringer to
Licensee under any existing or future sublicense authorizing the use of the
trademark, up to the amount of Licensor's unreimbursed litigation expenses
(including, but not limited to, reasonable attorneys' fees).
8.7 If a declaratory judgment action is brought naming Licensee as a
defendant and alleging invalidity of the trademark, Licensor may elect to take
over the sole defense of the action at its own expense. Licensee shall cooperate
fully with Licensor in connection with any such action.
ARTICLE IX
PURCHASE OPTION
9.1 Licensor hereby grants to Licensee an Option to Purchase outright
all rights and title to the World Key Trademark. Said Option may only be
exercised per the following terms and conditions.
(a) Licensee must be in compliance with all terms and conditions
contained in this Agreement.
(b) Licensee agrees to take title to the Trademark "as is" at the
time Licensee elects to exercise this option.
(c) Licensee agrees that the indemnification provisions contained
in paragraphs 11.4 and 11.8 shall continue for a period of 48 months
from the exercise of this Option.
9.2 As consideration for the transfer of the Trademark upon exercise of
the Option, Licensee shall pay Licensor the following amounts:
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(a) Simultaneously with the exercise of the Option, Licensee
shall pay Licensor an amount equal to the product of (i) $2,500.00
multiplied by (ii) the number of sublicenses which Licensee has granted
through the date of exercise; and
(b) On September 30 of each calendar year after the date of
exercise of the Option to and including September 30, 2004, Licensee
shall pay Licensor an amount equal to the product of (i) $2,500.00
multiplied by (ii) the number of sublicenses which Licensee grants after
the date of exercise and through September 30, 2004; provided that the
aggregate amount payable by Licensee to Licensor under this paragraph
9.2 shall not exceed $6,250,000.00
Any royalty payments which Licensee has paid to Licensor within the preceding 12
months prior to the exercise of this option, shall be deducted from the total
calculated consideration.
9.3 Licensor agrees to accept common stock of Licensee in the numerical
quantity required to equal the cash value of the option purchase price
calculated at the market value of the Licensee's stock on the day of exercise,
provided that Licensee's stock is trading for no less than $5.00 per share.
9.4 This Option shall expire 36 months from the date set forth below as
the execution date of this Agreement.
9.5 Licensee shall notify Licensor no less than 60 days prior to its
intent to exercise this option.
9.6 Licensee shall undertake to receive all regulatory approvals
required to issue stock, should Licensee wished to exercise purchase of
trademark using Licensee's common stock per paragraph 9.3.
9.7 Licensor agrees to submit any required documentation that would the
required for Licensee to receive approval of the stock transaction. Should said
documentation include audited financial statements, and Licensor does not have
audited financial statements, it will provide access to its financial
documentation, books and records so that an audit may be conducted by an
accounting firm selected by Licensee and at Licensee's expense.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 This Agreement, unless terminated as provided herein, shall remain
in effect until the World Key trademark has expired or been abandoned, or for a
period of ten years, which ever occurs first.
10.2 Licensor may terminate this Agreement as follows:
(a) If Licensee does not make a payment due hereunder and fails
to cure such non-payment (including the payment of interest in
accordance with paragraph 5.3) within forty-five (45) days after the
date of notice in writing of such non-payment by Licensor.
(b) If Licensee defaults in its obligations to protect the value
and integrity of trademark.
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(c) If, at any time Licensor determines that the Agreement should
be terminated due to Licensee's failure in its obligations under its
granted rights contained in Article III.
(d) If Licensee shall become insolvent, shall make an assignment
for the benefit of creditors, or shall have a petition in bankruptcy
filed for or against it. Such termination shall be effective immediately
upon Licensor giving written to Licensee.
(e) If an examination by Licensor's accountant pursuant to
Article VI shows an underreporting or underpayment by Licensee in excess
of 20% for any twelve (12) month period.
(f) If Licensee is convicted of a felony.
(g) Except as provided in subparagraphs (a), (b), (c), (d), (e)
and (f) above, if Licensee defaults in the performance of any
obligations under this Agreement and the default has not been remedied
within ninety (90) days after the date of notice in writing of such
default by Licensor.
10.3 Licensee shall provide, in all sublicenses granted by it under this
Agreement, that Licensee's interest in such sublicenses shall, at Licensor's
option, terminate or be assigned to Licensor upon termination of this Agreement.
10.4 Licensee may terminate this Agreement by giving ninety (90) days
advance written notice of termination to Licensor and paying a termination fee
of $25,000. Upon termination, Licensee shall submit a final Royalty Report to
Licensor and any unpaid royalty payments shall become immediately payable.
10.5 Upon termination pursuant to Paragraph 9.2, whether by Licensor or
by Licensee, Licensee shall cease all use of the trademark and shall, upon
request, return or destroy (at Licensor's option) all World Key trademarked
material under its control or in its possession.
ARTICLE XI
GENERAL
11.1 Licensor does not warrant the validity of the trademark licensed
hereunder and makes no representations whatsoever with regard to the scope of
the licensed trademark, or that such trademark may be exploited by Licensee or
Sublicensee, without infringing other trademarks.
11.2 LICENSOR EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS
WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OF THE TRADEMARK. Further, Licensor has made
no investigation and makes no representation that the trademark is free from
liability for trademark infringement.
11.3 Licensee shall not sublicense trademark to others except to further
the purposes of this Agreement. Licensee shall protect the trademark at least as
well as it protects its own valuable, tangible personal property and shall take
measures to protect the trademark from any claims by third parties, including
creditors and trustees in bankruptcy.
11.4 Indemnification.
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(a) Licensee shall indemnify, defend and hold harmless Licensor
and its current or former directors, officers, staff, employees, and
agents and their respective successors, heirs and assigns (collectively,
the "Indemnitees"), against any liability, damage, loss or expenses
(including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the Indemnitees or any of them in connection
with any claims, suits, actions, demands or judgments arising out of any
use of trademark (including, but not limited to, actions in the form of
tort, warranty, or strict liability) granted under this Agreement.
(b) Licensee shall, at its own expense, provide attorneys
reasonably acceptable to Licensor to defend against any actions brought
or filed against any Indemnitee hereunder with respect to the subject of
indemnity contained herein, whether or not such actions are rightfully
brought.
11.5 Licensee shall not use World Key, Inc. name in any advertising,
promotional or sales literature without the prior written approval of World Key,
Inc.
11.6 Without the prior written approval of Licensor in each instance,
neither this Agreement nor the rights granted hereunder shall be transferred or
assigned in whole or in part by Licensee to any person, whether voluntarily or
involuntarily, by operation of law or otherwise. This Agreement shall be binding
upon the respective successors, legal representatives and assignees of Licensor
and Licensee.
11.7 The interpretation and application of the provisions of this
Agreement shall be governed by the laws of the State of California.
11.8 Licensee shall comply with all applicable laws and regulations and
will defend and hold Licensor harmless in the event of any legal action of any
nature occasioned by such violation.
11.9 Licensee agrees (i) to obtain all regulatory approvals required for
the sublicense of the trademark (ii) to utilize appropriate trademark marking on
any use of trademark. Licensee also agrees to register or record this Agreement
as is required by law or regulation in any jurisdiction where the license is in
effect.
11.10 Any notices to be given hereunder shall be sufficient if signed by
the party (or party's attorney) giving same and either (a) delivered in person,
or (b) mailed certified mail return receipt requested, or (c) faxed to other
party if the sender has evidence of successful transmission and if the sender
promptly sends the original by ordinary mail, in any event to the following
addresses:
If to Licensee:
XxxxxxxXxxxx.xxx, Inc.
0000 Xxxxx Xx. Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
000 000 0000 fax 000 000 0000
If to Licensor:
World Key, Inc.
000 Xxxxx Xxxxx X.
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Xxxxxxxxx, XX 00000
000 000 0000 fax 000 000 0000
By such notice either party may change their address for future notices.
Notices delivered in person shall be deemed given on the date delivered.
Notices sent by fax shall be deemed given on the date faxed. Notices mailed
shall be deemed given on the date postmarked on the envelope.
11.11 Should a court of competent jurisdiction later hold any provision
of this Agreement to be invalid, illegal, or unenforceable, and such holding is
not reversed on appeal, it shall be considered severed from this Agreement. All
other provisions, rights and obligations shall continue without regard to the
severed provision, provided that the remaining provisions of this Agreement are
in accordance with the intention of the parties.
11.12 In the event of any controversy or claim arising out of, or
relating to any provision of this Agreement or the breach thereof, the parties
shall try to settle such conflict amicably between themselves. Subject to the
limitation stated in the final sentence of this section, any such conflict which
the parties are unable to resolve promptly shall be settled through arbitration
conducted in accordance with the rules of the American Arbitration Association.
The demand for arbitration shall be filed within a reasonable time after the
controversy or claim has arisen, and in no event after the date upon which
institution of legal proceedings based on such controversy or claim would be
barred by the applicable statute of limitation. Such arbitration shall be held
in Camarillo, California. The award through arbitration shall be final and
binding. Either party may enter any such award in a court having jurisdiction or
may make application to such court for judicial acceptance of the award and an
order of enforcement, as the case may be. Notwithstanding the foregoing, either
party may, without recourse to arbitration, assert against the other party a
third-party claim or cross-claim in any action brought by a third party, to
which the subject matter of this Agreement may be relevant.
11.13 This Agreement constitutes the entire understanding between the
parties and neither party shall be obligated by any condition or representation
other than those expressly stated herein or as may be subsequently agreed to by
the parties hereto in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives this 24th day of September,
1999.
For World Key, Inc. For XxxxxxxXxxxx.xxx, Inc.
___________________________________ ___________________________________
Xxx Xxxxx, Chairman Xxx Xxxxx, Chairman & CEO
___________________________________ ___________________________________
Xxxx Xxxxx, Secretary Xxxx Xxxxx, Secretary
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