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GOLD'S GYM INTERNATIONAL, INC.
000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, 00000
Telephone (000) 000-0000 Facsimile (000) 000-0000
MERCHADISE LICENSE AGREEMENT
Licensee: Nova Pharmaceutical Inc. a California Corporation
Date: , 1999
Address: 00000 Xxxxxx Xxxxx, Xxxxx 0X
Telephone (000) 000-0000
Lake Elsinore, CA 92530
Facsimile: (000) 000-0000
DEFINITIONS
For the purpose of the Agreement, the following definitions shall
apply:
1. Advertising Material: All catalogs, advertisements, and promotional
materials displaying or pertaining to the Products.
2. Ancillary Rights: All packaging, labels, logos, art work, designs,
trademarks, copyrights, or patents resulting from the Products.
3. Authorized Distributors: Distributors licensed by Gold for
redistribution of the Products.
4. Effective Date: March 1, 1999.
5. Extended Term: The three- (3) year period commencing upon the
expiration of the Initial Term.
6. GGE: Gold's Gym Enterprises, Inc., a California corporation.
7. Gold: Gold's Gym International, Inc., a California corporation.
8. Gyms: Gold's Gym gym licensees and franchises.
9. Information: Confidential or proprietary information or property
disclosed or furnished to Licensee consisting of, without
limitations, concepts, formulas, designs, styles, patterns, colors,
marketing decisions and directions, trade secrets, and proposed
trademarks.
10. Initial Term: The period commencing on the Effective Date and
continuing until June 1, 2002.
11. License Period: Unless specified otherwise, a twelve- (12) month
period commencing on the effective Date or the anniversary thereof.
12. Manufacturer's Cost: Fifty percent (50%) of Licensee's then listed
wholesale prices.
13. Minimum Sales: The amount set forth in paragraph 7 hereof.
14. Net Sales: The extended invoice sales price for the Products
(including, without limitation, any irregulars, seconds, etc) less
reasonable and customary quantity discounts, as actually calculated
on the invoice, and returns actually made or allowed. No
deductions shall be made for cost incurred in manufacturing,
selling, distributing, or advertising the Products (including
cooperative and promotional allowances) or for uncollectible
accounts, taxes, cash discounts, commissions, or similar
allowances. In the case of sales to or use of the Products by a
Related Party of License, the invoice sales price regularly charged
to the Licensee's independent bona fide customers.
15. Ownership Interest: Shares of stock in the event that the Licensee
is a corporation, interest in partnership capital or profits in the
events that Licensee is a partnership.
16. Products: Nutritional Supplements bearing the Trademark.
17. Related Party: Any (a) director, officer, employee, shareholder,
partner, or owner of the subject party or (b) a corporation,
partnership, trust, or any other entity in which the subject party
or any director, officer, employee, shareholder, partner, or owner
of the subject party owns, directly or indirectly, any interest.
18. Retail: Sales of the Products directly to the ultimate consumer
including sales by audio, video, print, or other media.
19. Sales Royalty: Seven percent (7%) of the Net Sales of Products.
20. Sell Through Period: The ninety- (90) day period immediately
following the expiration or termination of this Agreement.
21. .Term: The Initial Term and also the Extended Term, provided that
the Initial Term is extended as provided in Paragraph 28 hereof.
22. Territory: United States.
23. Trademarks: The trademarks set forth in Exhibit "A" attached
hereto.
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24. Trade Show Fee: The amount determined by Gold based upon the costs
incurred and amount of space utilized by Licensee at trade shows.
25. Wholesale: Sales of the Products other than the ultimate consumer.
RECITALS
A. GGE is the owner of the Trademarks. Under the terms
and conditions of a license agreement by and between GGE and Gold, Gold
has been granted the exclusive authority to grant licenses for the use
of the Trademarks as contemplated by this Agreement.
B. GGE and Gold have expended large sums of money as well
as substantial effort over a period of many years developing and
establishing public recognition and identification of the Trademarks
and the goodwill associated therewith.
C. Gold desires to grant and Licensee desires to acquire
a license to manufacture and distribute various goods specified below
using the Trademarks under the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the foregoing the mutual
covenants contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. Grant of License
1.1 Gold hereby grants to Licensee, during the Term, the
nonexclusive right to use the Trademarks in connection with the design,
manufacture, marketing, sale at wholesale, and distribution of the
Products only within the territory and subject to the terms and
conditions set forth in this Agreement. Licensee shall have no right
to sell the Products at retail.
1.2. Licensee shall immediately cease the manufacture of
any Products which Licensee has not commenced distribution of prior to
the end of the first License Period ("Terminated Products"). The
Terminated Products shall thereafter be excluded from the definition of
the "Product" for purposes of this Agreement, provided however, that
Licensee may continue to distribute its current inventory of the
Terminated Products subject to the provisions of Paragraph 10.3 (a)
hereof. A Terminated Product shall not cause any adjustment to the
Minimum Royalty of Minimum Sales.
Neither Licensee nor any Related party of Licensee shall
manufacture, distribute, or sell any merchandise (a) of any other
health club, fitness center, or gym (e.g. Bally's, World's Gym, Crunch
Gym, 24 Hour Fitness, etc.); (b) of any health or fitness brand (e.g.,
Speedo or Everlast); or (c) which incorporates, in whole or in part,
any Information of the Trademarks or any derivation thereof. The
preceding sentence shall not apply to the manufacture only of non-
Related Third Party as a private label manufacturer, provided that
Licensee or Related Party of Licensee does not sell, market, or
distribute private label items.
Gold reserves all rights to exploit the Trademarks throughout
the world except the expressly granted herein to Licensee.
Trademark Rights and Usage
2.1 Gold reserves all rights in the Trademarks, and any use of
Trademarks by Licensee shall be subject at all times to the terms and
conditions of this Agreement and shall inure to the benefit of Gold.
The Ancillary Rights shall be included in the definition of the
"Trademarks." Licensee hereby assigns to Gold any Ancillary Rights and
shall execute such documents as requested by Gold in order that Gold
shall be sole owner of all Ancillary Rights. Licensee represents and
warrants to Gold that the Ancillary Rights do not and shall not
infringe on the rights of any third party and that no third party has
or shall have interest therein. No provision herein shall restrict
Gold's use of Ancillary Rights whether during or after the Term.
2.2 Each and every use of the Trademarks by Licensee
shall clearly (a) indicate the registration or ownership of the
Trademarks by the appropriate registration identification symbol of an
"R" within a circle or a "TM," as the case may be; and (b) display the
statement "Manufactured and distributed under license from Gold's Gym
International, Inc."
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The license granted herein pertains only to the Trademarks as
set out in Exhibit "A" and does not include any other trademarks in
which GGE or Gold has interest.
Licensee recognizes and agrees the Trademarks are valid and
that GGE is the sole and rightful owner thereof. Licensee shall
neither represent nor claim any title in the Trademarks or right to use
the Trademarks except pursuant to this Agreement. Any use of the
Trademarks by Licensee shall not vest in Licensee any interest or title
in any of the Trademarks or right or presumptive right to continue such
use other than as expressly provided in this Agreement. Licensee
shall, at Gold's request, execute such documents, which Gold deems
necessary to protect and preserve GGE's and Gold's rights in the
Products Trademarks.
Licensee shall promptly notify Gold, in writing, of any
conflicting or infringing use of the Trademarks, or any similar mark or
symbol by any third party in the Territory, or of any claim by any
third party that Licensee' use of the Trademarks as provided herein
infringes any rights of such third party. Upon receipt of such notice,
Gold shall take action, as Gold shall determine, including institution
of legal proceedings, pertaining to such infringing use or such claim
of infringement, as the case may be, all at Gold's expense, and
Licensee shall cooperate fully in such action. The commencement,
conduct, resolution, or settlement of such action shall be in the sole
discretion of Gold, and any recovery therefrom shall be the sole
property of Gold. Gold hereby agrees to indemnify, defend (with
counsel of Gold's choice), and hold Licensee harmless from and against
any monetary judgement rendered in such action which may be brought
against Licensee by a third party claiming an interest in the
Trademarks, providing however, that notwithstanding any other
provisions contained in this Agreement, in no event shall GGE or Gold
be liable to Licensee for any lost profits, start up or other costs and
expenses, or consequential damages resulting from any limitation or
diminishment in the rights granted to licensee hereunder. If as the
result on any action referred to in this paragraph Licensee's rights to
use the Trademarks have been materially limited or diminished, then
Licensee may terminate the Agreement upon ninety- (90) day's prior
written notice to Gold. Only for purpose of this paragraph, the term
"Trademark" shall not include the Ancillary rights.
Licensee shall not, directly or indirectly, do anything which
may have an adverse effect on Gold's rights in the Trademarks, or any
rights appurtenant thereto, or which may diminish or dilute the value,
reputation, or goodwill associated therewith. Licensee (a) shall use
the Trademarks only in their stylized form as displayed in exhibit "A"
attached hereto; (b) shall not use any abbreviated or varied from of
the Trademarks; (c) shall not use other name, word, letter, number,
mark, inscription, or designed whatsoever with the Trademarks; (d)
shall not use any of the Trademarks in connection with any other
merchandise other than the products; (e) shall not use the Trademarks
in any manner that, in gold's opinion, may infringe upon any
enforceable rights of any third party or weaken or impair Gold's or
GGE's rights in the trademarks of the Products; and (f) shall not
include any of the Trademarks, or any derivation ;thereof, in any trade
name, business name, or fictitious business name.
If Gold determines, in gold's sole discretion, that Licensee's
use of the Trademarks or the Products violates the provisions of this
paragraph, Licensee shall, upon notice from Gold, immediately terminate
or modify such use in accordance with Gold's instructions without any
damage or offset in connection with this Agreement.
Advertising Materials and Trade Show Fees
3.1 Advertising Materials - Licensee may print and distribute
Advertising Materials, provided however, that any Advertising Materials
shall be submitted to Gold for its prior written approval at least
fourteen (14) days in advance of its intended productions. Such
approval shall be in the sole judgment of Gold, and any revisions
modifications requested by Gold shall be made by Licensee before such
use. In the event Licensee does not receive from Gold a written
approval of an Advertising Material within such fourteen- (14) days
period, such Advertising Material shall be deemed disapproved.
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Trade Show Feeds - Throughout the Term, Licensee shall participate in
the Gold's Gym annual convention by providing staff, product, and other
support reasonably requested by Gold. The Trade Show Fee shall be due
and payable within thirty- (30) days following Licensee's receipt of an
invoice from Gold.
Manufacturing Restrictions
Any Products manufactured by Licensee under the term of this Agreement
shall be subject to Gold's prior written approval as to quality, style,
color, materials, placement of the Trademarks, method and quality of
imprinting the Trademarks, labels, packaging, containers, etc.
Licensee acknowledges and agrees that the quality standards which
Gold's will use to evaluate the Product samples shall be comparable to
those followed by major retail department stores in the Territory.
Gold shall provide Licensee with standard approval forms which shall be
used by the parties for Gold's approval of the Products as provided
herein. The procedures and timing of approvals for Advertising
Materials set forth in Paragraph 3.1 hereof also shall apply to all
approvals under Paragraph 4 hereof.
Licensee shall provide to Gold, at Licensee's sole cost, an approved
sample of each approved design for Gold's historical sample line, and
such approved samples shall be standard by which future production
quality shall be judged. Only an approved sample shall constitute a
Product for purpose of this Agreement. Except for insignificant
manufacturing variance, Licensee shall not depart from approved sample
in any respect without Gold's prior written consent.
If Gold reasonably determines that any Products fail to conform to the
quality and design standards of the approved samples, upon written
notice from Gold, Licensee shall immediately cease any and all
manufacturing, advertisement, promotion, offerings for sale, sales,
shipment, and distribution of such nonconforming Products. If any
nonconforming Products are in the offerings for sale, sales, shipment,
and distribution of such nonconforming Products. If any nonconforming
Products are in the marketplace, Gold may either (a) require Licensee
to recall such products at Licensee's sole expense; or (b) purchase
such Products and Licensee shall pay to Gold, within ten (10) days
following Gold's written demand, the purchase price and all other costs
incurred by Gold in connection with such purchase. Neither of the
foregoing shall result in an adjustment to the minimum Royalty.
Upon Xxxx's written request from time to time, but no more than once
during any calendar quarter, Licensee shall deliver to Gold up to four
(4) complete sample sets of the Products, together with any labels,
cartons, containers, advertisements and display materials used in
connection therewith. As to any calendar quarter, the first two (2)
sample sets shall be at no cost to Gold, and the second two (2) sample
sets shall be at the Manufacturer's Cost.
Licensee shall not contract or subcontract the performance of any of
its obligations under this Agreement, except that Licensee may contract
for the manufacture of the Products, provided that (a) the acts and
omissions of such third party manufacturer shall be deemed to be those
of Licensee for purposes of this Agreement; and (b) any agreements
between Licensee and a third party manufacturer shall in all events be
subject to the terms and conditions of this Agreement and shall contain
provisions which adequately protect GGE's and Gold's interest in and to
the Products and Trademarks.
Licensee shall permit, upon at least forty-eight (48) hour notice, duly
authorized representatives of Gold to inspect the premise of Licensee
or any place where Products are manufactured or held on behalf of
Licensee. The costs to Gold of such inspection (e.g., airfare, meals,
lodging, etc.) are the responsibility of and shall be paid entirely by
Licensee. Any agreement between Licensee and a third party
manufacturer shall include a provision incorporating Gold's right of
inspection hereunder. Xxxx's right of inspection hereunder. Gold and
Licensee agree that any costs incurred hereunder. Gold and Licensee
agree that any costs incurred hereunder ant the frequency of the
inspections conducted hereunder shall be reasonable.
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Distribution Restrictions
2.1 Licensee's right to distribute the Products under the terms of this
Agreement shall be limited only to the Authorized Distributors,
retailers, and Gyms located within the Territory. Gold specifically
reserves the right to disapprove the distribution of the Products to
any Authorized distributor, retailer, or Gym, and upon receipt of such
written disapproval from Gold, Licensee shall immediately cease and
desist from distributing any of the Products to such disapproval
Authorized Distributor, retailer, or Gym.
All sales of the Products to the Authorized Distributors shall be at
Licensee's then distributor price and shall not be subject to a
royalty.
Licensee agrees that in order to protect the Trademarks and enhance the
reputation of Gold, Licensee shall distribute the Products only through
channels of trade directed to retailers of high repute and those who
follow high standards of merchandising in the sale of goods to the
public. Licensee shall not distribute or sell the Products to any
factory outlet stores or for sale at any warehouse sales, parking lot
sales, swap meets, flea markets, or similar sale or disposal venues.
Licensee shall ship all orders for the Products on a timely basis. As
to all orders received by Licensee during any License Period, Licensee
shall ship at least eighty-five (85%) of such orders within the terms
state on a credit approved and accepted purchase order, and if none,
the within thirty (30) days of their respective order dates. The Net
Sales as well as the number of units shall both be used as separate
tests to determine the percentage of the Products shipped, and both
tests must be satisfied in order to comply with the terms of this
paragraph. If during any License Period, Licensee fails to comply with
the terms of this paragraph, than this Agreement shall terminate upon
written notice by Gold.
Licensee shall not market, sell, or distribute the Products outside the
Territory or within the Territory for resale or redistribution outside
the Territory. Licensee shall not maintain branch offices or
distribution facilities for the products outside the Territory.
Licensee shall not use the Trademarks or any of the Products in any way
to promote enhance the distribution or sale of any other merchandise
sold by Licensee including the use of the Trademarks or products as a
loss leader or promotional attraction to Licensee's other merchandise.
General Obligations of Licensee
(a) Use its best effort to promote the sale, distribution, and use
of the Products in the Territory;
(b) Licensee shall manufacture and distribute the Products in such
quantities as may be required to satisfy the demands of its
distributees, including Gold and the Authorized Distributor;
(c) Licensee shall not engage, participate, or otherwise become
involved in any activity or course of action which, in Gold's sole
opinion, diminishes or tarnishes the goodwill, image, or reputation of
the Products or Trademark; and
(d) Licensee shall comply with all federal, state, and local laws,
rules, regulations, and orders applicable to the products, Licensee's
use of the Trademarks, or Licensee's business as it pertains to the
manufacture or distribution of the Products.
Minimum Sales, Minimum Royalty, and Marketing Commitment-Not
withstanding any other provision in this Agreement, the aggregate of
the net sales of the of the Products distributed by Licensee during any
License Period shall not be less than the applicable Minimum Sales.
Licensee's failure to satisfy the Minimum Sales of any License Period
shall constitute a material breach of this Agreement, and Gold shall
have the right, notwithstanding Licensee's payment of the royalty, to
terminate this Agreement upon written notice to Licensee. In such event
the aggregate of the Net Sales during any License Period exceeds the
applicable Minimum Sales for such License Period, such excess shall not
reduce or be applied to the Minimum sales for any preceding or
succeeding License Period.
For purposes of the Agreement, the following terms shall be the
indicated amounts for the applicable License Period:
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License Period Minimum Sales Minimum Royalty Marketing Commitment
Effective Date through
June 1, 2000 $2,000,000.00 $140,000.00 As per paragraph points
1 through 9 of Exhibit "C"
June 2, 2000 through
June 1, 2001 $4,000,000.00 $280,000.00 30% of Gross Sales, as per
paragraph point 10 of Exhibit
"C" attached hereto
June 2, 2001 through
June 1, 2002 $6,000,000.00 $420,000.00 30% of Gross Sales, as per
paragraph point 10 of Exhibit
"C" attached hereto
The minimum Sales for each License Period during the Extended
Term shall be one hundred ten percent (110%) off the greater of (a) the
aggregate of the Net Sales of the Products distributed or sold by
Licensee during the immediately preceding License Period, or (b) the
Minimum Sales for the immediately preceding License Period. The
Minimum royalty for each License Period during the Extended Term shall
be seven percent (7%) of the Minimum sales for the applicable License
Period. Concerning Licensee's Marketing commitment, a written
Marketing Report executed by a duly authorized officer of Licensee
shall be provided to Gold by Licensee on or before the twenty fifth
(25th) day of the calendar month immediately following the preceding
calendar quarter and shall indicate how the corresponding Marketing
Commitment was computed and expended for the applicable quarter, as
well as year-to-date for the current License Period.
8.Royalty
8.1 Throughout the Term, as well as the Sell Through Period if
applicable, Licensee shall pay gold, at its address for notice
purposes, a royalty equal to the greater of (a) the Sales Royalty for
Products distributed during a calendar month; or (b) the Minimum
Royalty for the applicable License Period regardless of the Net Sales
of the Products divided by the total number of calendar months
(including any partial calendar month) included in such License Period,
provided however, that during any License Period the aggregate of the
royalties due and paid exceeds the Minimum royalty during the sell
through period, then the Minimum Royalty for the remainder of that
License Period shall be zero (0). The Minimum royalty during the sell
through period, then the Minimum Royalty for the remainder of that
License Period shall be zero (0). The royalty for the last calendar
month of each License Period shall be an amount equal to the excess, if
any, of the greater of (a) the aggregate of the Sales Royalties for
such License Period; or (b) the Minimum Royalty for such License
Period, less the royalties already due and paid pertaining to such
License Period.
8.2 The royalty shall be paid in United States funds and shall be
due and payable on the fifteenth (15th) day following the end of each
calendar month. Any royalty not paid by its due date shall bear
interest at the rate of eighteen percent (18%) per annum (but in no
event greater than the maximum rate of interest allowed by law) from
such due date until receipt of the royalty in full. Any payment shall
be applied first to accrued interest and then to the delinquent
royalty. Notwithstanding the foregoing, the no royalty payment shall
be due hereunder until July 1, 1999.
8.3 In the event any royalty or other amount specified in the
paragraph is not paid to gold when due, the parties hereto agree that
it would be impracticable or extremely difficult to fix the actual
damages caused Gold for such late payment. Therefore, for each and
every month Licensee fails to pay any royalty or other amount due under
this Paragraph 8, Licensee agrees to pay to Gold as a late charge and
as liquidated damages, and not as a penalty, the sum of two hundred
fifty dollars ($250), which represents a reasonable compensation for
the monthly loss incurred because of late payment. The late charge due
hereunder shall be paid on or before the tenth (10th) day of the month
following the month for which the late charge is assessed. The right
to collect such a late charge shall be in addition to any other rights
or remedies available to Gold at law, in equity, and under this
Agreement.
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8.4 A written report executed by a duly authorized officer of
Licensee shall accompany each royalty payment and shall include the
following:
(a) A Royalty Report, in a standard form provided by Gold,
indicating how the royalty was computed for the current calendar month
and year-to-date for the current License Period.
(b) A Product Shipping Report which shall include the total units
and total dollar sales of each Product shipped to all customer.
(c) A Customer Shipping Report which shall include the name of each
customer shipped and total sales of the Product shipped to each
customer.
(d) An Order Backlog Report, a standard form provided by Gold,
indicating the amount of Products on hand, the amount of orders
received for the next six (6) months, by month, and the total projected
or expected orders for the next six (6) months, by month.
(e) Such other reports and additional information, in a form as
Gold may specify in writing from time to time, to verify Licensee's
compliance with the terms and conditions of this agreement.
8.5 Licensee shall keep proper books and records in accordance with
Generally Accepted Accounting Principles as promulgated by the American
Institute of Certified public Accountants. Licensee's records shall
include sales and inventories of the Products including,
without limitations, a customer purchase order register maintained on a
daily basis. Within sixty (60) days following the end of Licensee's
fiscal year, Licensee shall, throughout the Term, provide to Gold
copies of Licensee's financial statements (including a balance sheet,
statement of income and expenses, changes in shareholder's equity, cash
flow, and the related thereto) for such fiscal year. The financial
statements provided by Licensee to Gold shall consist of a compilation,
as that term is defined under Generally Accepted Accounting Principles,
with accompanying footnotes. The compilation so prepared shall be
attested to and reconciled to the corresponding fiscal year's federal
tax return by a certified public accountant. Gold shall keep such
financial statements confidential and shall only disclose them to those
individuals with a "need to know" such information. Throughout the
Term and for a period of three (3) years following the expiration or
termination of the Term, Gold, or a duly appointed agent or
representative of Gold, shall have access, during Licensee's normal
business hours, to all books, records, financial statements of Licensee
including, without limitation, loan and factoring agreements, to
inspect, audit, copy, extract, and verify Licensee's overall financial
condition and compliance under this Agreement. As an alternative, Gold
may require Licensee to supply Gold with any of the above information,
and Licensee shall deliver the same to Gold within fourteen (14) days
of Gold's written request.
8.6 If as a result of an inspection or audit by Gold the royalty
payments and Trade Show Fees due under this Agreement exceed the amount
actually paid to Gold, Licensee shall within five (5) days of receipt
of notice from Gold pay such excess plus interest. In the event such
excess exceeds the aggregate of the royalty payment and Trade Show Fees
due hereunder for the applicable License Period (a) by five (5%) or
more, Licensee shall pay for all costs and expenses associated with
such inspection or audit; and (b) by seven (7%) or more, Gold shall
have the right, notwithstanding Licensee's payment of such excess, to
terminate this Agreement upon written notice to Licensee.
9. Disclaimer: Product and Warranty Liability: Indemnification:
And Insurance
9.1 Disclaimer. Neither Gold nor GGE, nor any Gold or GGE Related
Party, shall be liable to Licensee or to any other person with respect
to the manufacture, distribution, or sale of the products by licensee
or its distributes, including, without limitation, the performance,
characteristics, fitness, or suitability of any of them for any
purpose. Gold and GGE expressly disclaim any liability for incidental
or consequential damages or losses of any sort arising from the
manufacture, distribution, sale or use of the Products whether or not
arising from defects, malfunctions, or failures to conform to
specifications.
9.2 Product and Warranty Liability; Liability;
Indemnification Licensee assumes all product and warranty liability in
connection with the Products whenever and wherever incurred or
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asserted. Licensee hereby agrees to indemnify, defend, and hold Gold,
GGE, any Related Party of Gold or GGE harmless from and against any and
all causes of action, liabilities, losses, claims, costs, damages, or
expenses, including attorneys' fees, whatsoever which may be brought or
made against Gold, GGE or any Related party of Gold or GGE or which may
be sustained, paid, or incurred as a result of or in any way connected
with Licensee's use of the trademarks or the manufacture, distribution,
sale or performance of products.
9.3 Insurance Within ten (10) days after the date hereof,
licensee shall acquire and maintain in full force and effect,
throughout the Term as well as the sell Through Period if applicable,
product liability insurance in the minimum amount of One Million
Dollars ($1,000,000.00) per each occurrence and Two Million
($2,000,000.00) in the aggregate, in order to exceed Ten Thousand
Dollars ($10,000.00) per each occurrence and Twenty Thousand
($20,000.00) in the aggregate with a deductible not to exceed Ten
Thousand ($10,000.00) per each occurrence and Twenty Thousand
($20,000.00) in aggregate, in order to protect Licensee, Gold and GGE
against any liability for damages or injuries suffered which arise out
of or involve the Products or Licensee's use of Trademarks. Such
coverage shall be on an "occurrence" basis and shall provide that it
cannot be canceled, terminated, reduced, or amended without the insurer
giving Gold thirty- (30) day's advance written notice thereof.
Licensee shall cause Gold and GGE to be named as additional insured on
any such policy and shall deliver to Gold a certificate evidencing
Licensee's compliance with the terms of this paragraph. Licensee shall
immediately notify Gold in writing of any claims paid or reservations
made by the insurer under any policy required hereunder.
10. Termination
10.1 Licensee expressly acknowledges and agrees that the
occurrence of any of the following events, whether known or unknown to
Gold, shall constitute a material breach of this Agreement and shall
cause this Agreement to immediately cease and terminate without prior
notice or action by Gold:
(a) Licensee makes any assignment for the benefit of
creditors;
(b) The appointment of a trustee or receiver to administer
or conduct Licensee's business or affairs, Licensee voluntarily files
any petition under any bankruptcy act, or an involuntary petition in
bankruptcy is filed against Licensee and not stayed, withdrawn, or
terminated within thirty (30) days, except to the extent that the
Bankruptcy code makes unenforceable any provision terminating a license
agreement upon the filing of a petition in bankruptcy under federal
law;
(c) Licensee's current liabilities exceed its current
assets as determined in accordance with generally accepted accounting
principles;
(d) Licensee's liabilities exceed its assets as determined
in accordance with generally accepted accounting principles; or
(e) A cumulative total of fifty percent (50%) or more of
the Ownership Interest in Licensee, as of the Effective Date, is
issued, sold, exchanged, or otherwise transferred, during the Term, by
or to Licensee or any of its owners. Not withstanding the foregoing,
Licensee's shareholders may transfer any of their Ownership Interest
between and among existing shareholders, their family members and/or
trusts established for the benefit of said shareholders or their family
members provided, however, that such a transfer is not to or for the
benefit of any market competitor of Gold's or of any Gold's Related
Party.
Licensee expressly acknowledges and agrees that the occurrence of any
of the following events shall constitute a material breach of this
Agreement and Gold may, at its option, terminate the Agreement upon
written notice to Licensee:
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(a) Licensee's failure to pay Promotional or Trade Show
Fee, royalty, or interest as provided herein, provided however, that if
all past due amounts are paid in full within five (5) days after such
notice to Licensee, then such notice shall be of no further force or
effect;
(b) Licensee's failure to comply with any provisions of
Paragraph 4.6, 5.4, 7, 8.6, 9.3, 17 hereof;
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(c) Licensee's failure to comply with any other provision
of this Agreement applicable to Licensee, provided however, that if
Licensee corrects such breach to Gold's satisfaction within thirty
(30) days after such notice to Licensee, than such notice shall be of
no further force or effect; or
(d) Licensee's failure to comply with any provisions of
this Agreement, including those subject to a cure period but for this
clause, if Licensee has at any time during the Term cured a breach
hereunder as to the same provision.
Upon the termination, for whatever cause, or expiration of this
Agreement:
(a) Licensee shall immediately cease the manufacture and
distribution of the Products, provided however, that upon the
expiration of the Term or upon termination of this Agreement other than
by default of Licensee, Licensee may, subject to the terms of this
Agreement, complete any work in process bearing the Trademarks and
continue to distribute and sell through the same approved channels of
distribution, on a nonexclusive basis, its inventory of the products
existing as of such expiration or termination, as the case may be,
during the Sell Through Period. At the expiration of Sell Through
Period or upon termination of this Agreement by default of Licensee,
all or any portion of the existing inventory of the Products and any
work in process bearing the Trademarks, shall be, at Golds' option,
either (i)destroyed by Licensee at Licensee's expense, or (ii)
purchased by Gold or its designee at the Manufacturer's Cost for
finished goods and Licensee's raw material cost for work in process,
less any amounts owed by Licensee to gold. To the extent Licensee
destroys any Products as required under this Agreement, Licensee shall
promptly provide to Gold, in writing, certification, duly signed by
Licensee's authorized representative, under penalty or perjury, that
such Product destruction has taken place. Such certificate shall
include a detailed description and quality of each Product so destroyed
and the method, location, and date of such destruction.
(b) Within seven (7) days following such expiration or
termination and the expiration of the Sell Through Period if
applicable, Licensee shall provide to gold a written statement setting
forth, as of the date of termination or expiration (i) the inventories
of work on process, finished goods, and garment identification labels
pertaining to the Products: (ii) open orders for the Products (iii)
all future production and distribution schedules; and (iv) all future
advertising and promotional schedules.
(c) Within seven (7) days following such termination or
the expiration of the Sell Through Period of applicable, Licensee shall
deliver to Gold all packaging, labels, tags, and other materials
relating to the Products and Trademarks for destruction or other
disposition or use as Gold may elect in its sole discretion.
(d) All trademark rights granted herein shall immediately
revert to Gold, and any and all rights of Licensee in any of the
Trademarks shall be immediately terminated. Licensee shall no longer
use or have the right to use the Trademarks, any variation or
derivation or use as Gold may elect in its sole discretion.
(e) Upon termination of this Agreement by default of
Licensee including, without limitation, Licensee's failure to satisfy
the Minimum Sales, Licensee shall, within thirty (30) days following
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(f) such termination, pay Gold an amount equal to the
Minimum Royalty and Trade Show Fee due for the remainder of the then
License Period. The termination of this Agreement by Gold or such
payment to gold shall not prejudice Gold's right to pursue any and all
remedies against Licensee including, without limitation, the collection
of all unpaid Minimum Royalties and Trade Show Fees for the remainder
of the Term.
Representative and Warranties of Licensee Licensee hereby represents
and warrants to Gold that:
(a) It is currently engaged in the business of the
production and distribution of Nutritional Supplement;
(b) It understands the business risks, costs, and profit
potential of such business;
(c) It is entering into the Agreement in reliance upon its
own investigation and is not relying upon any projections or other
information or statistics furnished by Gold; and
(d) Exhibit "B" attached hereto is a complete and
accurate list of all of the shareholders, including shares owned,
directors, and officers of Licensee as of the Effective Date.
Entire Agreement This document constitutes the entire agreement between
the parties, all oral and written representations being merged herein,
and supersedes all prior oral and written representations.
Confidentiality The information is a valuable, special, and unique
asset of Gold and is either nonpublic, confidential, or proprietary in
nature. Licensee shall have no rights or claims in the Information and
shall at all times keep the information confidential. Licensee shall
not disclose, and shall have no rights or claims in the information and
shall at all times keep the Information confidential Licensee shall not
disclose, and shall not permit any of its officers, directors, agents,
employees, independent contractors, or associates to disclose, any of
the Information to any person, firm, or entity for any reason or
purpose. Licensee may only disclose the Information to those
individuals within its organization in with a "need to know", and
Licensee shall advise any recipient of the disclosure restrictions set
forth in this paragraph. The provisions of this paragraph shall
survive the expiration or termination of this Agreement.
Amendment The provisions of this Agreement may be modified at any time
but only if in writing and signed by the party against whom enforcement
of the modification or discharge is sought.
Waiver Either party may waive the other party's failure to perform any
provisions or to satisfy and condition to this Agreement, provided
however, that any waiver shall not be effective unless in writing and
signed by the waiving party. A waiver shall not be considered to waive
any future performance, breach, or condition under this Agreement
including the one being waived. Failure of a party to complain,
notify, or declare that the other party is in breach of the terms
hereof or failure of a party to give or withhold its constant or
approval. Neither party will be liable to the other by reason of any
failure in performance of this Agreement if the failure arises out of
acts of God, acts of governmental authority, fires, strikes, delays in
transportation, riots, wars, or any cause beyond the reasonable control
of that party. If any such delays performance, the time allowed for
each performance shall be appropriately extended.
Nonassignability Licensee shall not sublicense, assign, or transfer any
of the right granted herein without Gold's prior written consent which
may be withheld for any reason. Licensee shall not pledge,
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hypothecate, mortgage, grant any liens or security interest in, use as
collateral, or otherwise borrow upon any of Licensee's rights under the
Agreement.
Succession Subject to provisions otherwise contained in the Agreement,
this Agreement shall inure to benefit of and be binding on successors
and permitted assigns of the respected parties hereto.
Notice Any and all notices, demands, or other communications by any
party shall be in writing and shall be validly given or made to another
party at the respective addresses or facsimile numbers of the parties
as set forth above. Such notice, demand, or other communication shall
be conclusively deemed given and received (a) at the time or personal
service or receipt of facsimile, followed by delivery by mail or
courier; (b) five business days after deposit thereof in the United
States mail (certifies or registered, return receipt requested); or (c)
two (2) business day after the deposit thereof with a reputable
overnight delivery service.
Attorney's Fees If the service of an attorney are required (a) to
secure the performance hereof or otherwise upon the breach or default
of any party; (b) to prevent or stop Licensee's unauthorized use of the
trademarks, or any colorable imitation or derivation thereof, during or
subsequent to the Term; (c) if any judicial remedy or arbitration is
necessary, to enforce or interrupt the provisions of this agreement or
the rights or duties of any person in relationship thereto; or (d) to
enforce a judgment rendered in connection with the Agreement, the
prevailing party/judgement creditor shall be entitled to recover its
attorneys' fees, cost, and other expenses, in addition to any relief to
which such party may be entitled. Clause (d) above shall be separate
from all other provisions of this Agreement, shall survive any
judgement, and shall not be deemed merged into the judgment.
Severability If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement shall continue in full force and effect and shall in no
way be impaired or invalidated.
Incorporation All exhibits to which reference is made are deemed
incorporated in the Agreement whether or not actually attached.
Authorization In the event that Licensee is a corporation or
partnership, the undersigned warrants that the Board of Directors or
requisite number of partners, as the case may be, of Licensee have
passed a resolution or voted authorizing Licensee to enter into this
Agreement and the undersigned is authorized to sign on behalf of
Licensee.
Governing Law; Form for Litigation
24.1 The rights and obligations of the parties and the interpretation
and performance of the Agreement shall be governed by the laws of the
State of California as applied to agreements among California residents
which are entered into and performed entirely within California.
The parties hereby consent, freely and voluntarily, to the personal
jurisdiction of any state or federal court within the counties of Los
Angeles or Sacramento, California and further agree that venue for
purposes of any legal action is proper in either of these two Counties.
Specific Performance Each party's obligations under this Agreement are
unique. Each party acknowledges that if any party should default in
the performance of the duties and obligations imposed by this
Agreement, monetary damages would be inadequate, and it would be
extremely difficult and impracticable to measure or ascertain the
resulting damages. Accordingly, the non defaulting party, in addition
to any other available rights or remedies, may sue in equity for
specific performance of such duty and obligation, and the parties, in
addition to any other available rights or remedies, may sue in equity
for specific performance of such duty and obligation, and the parties
each expressly waive the defense that a remedy in damages will be
94
adequate. In addition, Licensee expressly agrees that such default in
performance shall entitle either GGE or Gold, or both of them, to
enjoin such default in performance and further use of the Trademarks
hereunder.
Counterparts This Agreement may be executed in any number of
counterparts with the same effect as if the parties had all signed the
same document. All counterparts shall be construed together and shall
constitute one agreement.
Time. Time is of the essence of this Agreement and each and every
provision; hereof.
Option to Extend Provided that Licensee is in compliance with all the
terms and conditions of this Agreement including, but not limited to,
satisfaction of the requirements of paragraphs 7 and 8 hereof for each
year during the Initial Term, Licensee shall have an option ("Option"),
subject to the provisions of this paragraph 28, to extend the Term for
the Extended Term on the terms and conditions set forth this Agreement.
Licensee shall exercise the Option by providing written notice
("Notice") to Gold of such exercise no later than four (4) months and
no earlier than six (6) months prior to the expiration of the Initial
Term. Any rights of Licensee to extend the Term as set forth in this
paragraph shall be null and void, and the Term shall expire at the
expiration of the Initial Term, if Licensee is in breach or violation
of any of the terms or conditions of this Agreement at any time during
the period commencing with the giving of the Notice and ending on the
expiration of the Initial Term.
Executed this__22nd______day of _March____1999 Executed
this_________day of ___________1999
At Venice California
Licensee at Lake Elsinore, CA.
Gold's Gym International, Inc.
By: /s/ Xxxxxx Xxxxxx
By:_/s/ Xxxxx Xxxx______
Title: Director of Product Licensing_________
Title: President
By: __/s/ Xxxxx Xxxxxxxxxx___________
Title: ___President__________________
GUARANTY
FOR VALUE RECEIVED and in consideration of Gold entering into the
preceding Merchandise License Agreement, the undersigned guarantees the
full and timely observation and performance by Licensee of all the
obligations on the part of the Licensee under the Merchandise Licensee
Agreement in accordance with the terms thereof.
/s/ Xxxxx Xxxx
___________________________________
Xxxxx Xxxx
EXHIBIT "A"
GOLD'S GYM LOGOS
EXHIBIT "B"
The following are all of the shareholders, and their respective number
of shares of stock issued and outstanding, of Licensee as of Effective
Date:
Xxxxx Xxxx 5,600,000; Showtime Partners 4,150,000; and various non-
affiliated small shareholders.
Xxxxx Xxxx controls 88% of shares.
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The following are all of the directors of Licensee as of the Effective
Date:
Xxxxx Xxxx, CEO & President; Xxxxx Xxxxx, Senior Vice President &
Corporate Secretary; Xxxxxx Xxxxxxxx, Controller; Xx. Xxxxxx Xxxxxxx,
Outside Board Member; Xxxxx Xxxxxxx, Outside Board Member.
The following are all of the officers of Licensee as of the Effective
Date:
Xxxxx Xxxx, CEO & President; Xxxxx Xxxxx, Senior Vice President &
Corporate Secretary; Xxxxxx Xxxxxxxx, Controller.
