LICENSE AND EXCLUSIVE DISTRIBUTION AGREEMENT
This Agreement, dated effective as of December 31, 1996 (the
"Effective Date"), is by and between EMERSON RADIO CORP., a Delaware
corporation, having a place of business at Nine Entin Road, Parsippany, New
Jersey 07054 and CARGIL INTERNATIONAL CORP., a Florida corporation, having a
place of business at 6812 N.W. 77th Court, Miami, Florida 33166.
Licensor (as hereinafter defined), directly and through affiliates,
distributes a variety of consumer electronics products and microwave ovens in
numerous countries throughout the world. Licensor is the owner of certain
valuable and well-known trademarks, and the goodwill associated therewith;
Licensee (as hereinafter defined) desires to obtain a license of
certain of Licensor's trademarks in connection with the manufacturing,
marketing, sale and exclusive distribution of certain consumer electronics and
other products as specifically set forth on Exhibit A annexed hereto, together
with replacement parts which may bear the trademarks (collectively referred to
herein as the "Goods");
Licensee desires to sell the Goods bearing the trademarks in the
geographic regions set forth in Exhibit B ("Territory") and use certain of
Licensor's trademarks in conjunction therewith;
Licensor is agreeable to license the use of certain of its trademarks
with respect to the manufacturing, marketing, exclusive distribution and sale of
the Goods by Licensee in the Territory, subject to the terms and conditions of
this Agreement.
In consideration of the foregoing premises and the mutual agreements
contained herein, the following is agreed to:
1. DEFINITIONS
1.1 "Affiliate" means a person or entity who directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a specified person or entity.
1.2 "Confidential Information" means any and all information, data,
specifications, customer lists, products and services information, sales and
marketing information, vendor data, and information regarding either Licensor,
Licensee or their respective Affiliates (collectively, the "Information")
except:
(a) Information which at the time of disclosure is in the
public domain;
(b) Information which, after disclosure, through no fault
of the party receiving same, is published or otherwise
becomes part of the public domain;
(c) Information which the receiving party can document as
having been in its possession prior to the time of
disclosure to it by the other party;
(d) Information which the receiving party can document as
having been received by it on a non-confidential basis
from a third party; or
(e) Data, specifications, customer lists, products and
services information and vendor data which the receiving
party created on its own or through independent third
parties without use of the Information.
1.3 "Contract Year" means, (i) as to the first Contract Year, the period
commencing on the Effective Date of this Agreement and ending on March 31, 1998;
and (ii) each immediately subsequent full year during the term of this Agreement
commencing April 1, 1998.
1.4 "Contract Quarter" means each calendar quarter or part thereof within
each of the Contract Years.
1.5 "Goods" means those first quality new "A" stock consumer electronics
and other goods as specifically set forth on Exhibit A annexed hereto, which
Exhibit may be amended from time to time by mutual agreement to reflect
additions to or the obsolescence of one or more of the Goods.
1.6 "Sale" means sale, lease, rental, transfer, exchange or other
disposition of the Goods by Licensee. A Sale will be deemed to have occurred
when the Goods are shipped or are invoiced, whichever occurs first.
1.7 "Trademarks" means the Emerson and G-Clef design in the form set forth
on Exhibit C and all future form(s) of same adopted by Licensor.
1.8 "Licensor" means Emerson Radio Corp.
1.9 "Licensee" means Cargil International Corp.
2. GRANT
2.1 (a) Subject to the terms and conditions of this Agreement, Licensor
hereby grants to Licensee an exclusive (to the extent contemplated by Section
8.1) non-transferable license to utilize the Trademarks solely upon and in
connection with the manufacturing, sale, marketing and distribution of the Goods
in the Territory.
(b) In the event Licensor is desirous of introducing into the
Territory a new category of products not previously offered to Licensee under
the terms of this Agreement ("New Product(s)"), Licensor hereby grants to
Licensee a right of first refusal with respect to the manufacture, sale,
marketing and distribution of such New Product(s) in the Territory. In such
event, Licensor shall furnish Licensee with a description of the New Product(s)
and related specifications. Licensee shall have 30 days after receipt of such
notice to advise Licensor in writing whether it is interested in acquiring an
exclusive license for such New Product(s) for the Territory, which shall be in
accordance with the terms of this Agreement, pursuant to such notice; if
Licensee is interested in acquiring such a license, it shall include with the
written notice of its interest a.) reasonable and realistic monthly sales
projections for the 12 month period beginning with product availability; b.) a
market study; and c.) detailed assumptions supporting the projections, all of
which must be in a form acceptable to Licensor. In the event Licensor accepts
the market study, related sales projections and the assumptions underlying same,
Licensor shall provide Licensee with written confirmation that the New
Product(s) is added to the list of Products set forth on Exhibit A and subject
to the terms of this Agreement. Should Licensee (i) refuse such offer or (ii)
fail to exercise its rights hereunder by providing Licensor with written notice
and an acceptable market study, sales projection or underlying assumptions
within the prescribed time period, then, in any such event, Licensee's rights
hereunder with respect to such New Product(s) shall be waived and Licensor, in
its sole discretion, shall be free to sell or grant distribution or trademark
license rights with respect to such New Product(s) within the Territory.
2.2 Licensee shall not use the Trademarks, or purport to give consent to
the use of the Trademarks, in any manner or on any product, items or services,
except as specifically set forth in this Agreement.
2.3 Licensee agrees that the Goods bearing the Trademarks shall not,
directly or indirectly, be distributed, sold, or otherwise transferred or
disposed of outside of the Territory by the Licensee. Licensee shall inform its
customers and distributors that the Goods cannot be distributed, sold or
otherwise disposed of outside of the Territory. Licensee agrees that it shall
not sell the Goods to any customer or distributor that may distribute, sell or
otherwise dispose of the Goods outside of the Territory. Notwithstanding the
above and Licensor's right to terminate this Agreement as set forth in Section
10.2 in the event Goods are sold or otherwise disposed outside of the Territory,
Royalties (as hereafter defined) shall be due on any and all such sales of
Goods.
3. TERM
Subject to the earlier expiration or termination of this Agreement as
provided in Section 10 or otherwise herein, this Agreement shall be effective as
of the Effective Date and expire as of the close of business on March 31, 2002
(the "Initial Term"), but shall be automatically renewed for successive five
(5)-year periods provided (i) Licensee has paid to Licensor all Royalties (as
hereinafter defined) payable for each Contract Year as set forth herein in a
timely manner and in accordance with the payment schedule, and (ii) Licensee has
satisfied and/or complied with all of its obligations hereunder. Each successive
five-year period shall hereinafter be referred to as a "Renewal Term." "Initial
Term" and "Renewal Term" shall collectively be referred to as the "Term."
4. GOODS
4.1 Licensee shall maintain and comply with the quality standards for the
Goods as set forth in Exhibit D hereto. However, it is understood by the
parties that Licensor shall be performing quality control services for the Goods
it sources as set forth in the Supply and Inspection Agreement executed by the
parties simultaneously with this Agreement and that as to such Goods sourced and
inspected by Licensor, the quality standard of such Goods shall be acceptable
under this Agreement.
4.2 To assure Licensor that the provisions of this Agreement are being
observed, Licensee shall allow Licensor either itself or, if Licensor elects in
its sole discretion, by a third party, to take any and all action necessary for
the purpose of inspecting or otherwise ensuring the quality of the Goods. [It
is understood by the parties that Licensor shall be performing quality control
services for the Goods it sources as set forth in the Supply and Inspection
Agreement executed by the parties simultaneously with this Agreement and that as
to such Goods sourced and inspected by Licensor, the quality standard of such
Goods shall be acceptable under this Agreement.] If said quality standards are
not being maintained at any time during the Term or the Termination Period, then
upon written notice from Licensor, Licensee shall immediately discontinue the
sale and distribution of the Goods that do not meet said quality standards. Any
Goods which are defective or dangerous and fall below the quality standards
shall immediately be removed from sale and if already sold, recalled. Goods, in
inventory or elsewhere, not meeting quality standards shall not be distributed
or sold. Licensee shall take the above actions at its own expense. Since
monetary damages would not be sufficient to remedy a breach of this covenant,
Licensor shall be entitled to an immediate temporary restraining order and/or
preliminary injunction, without bond or security, to prevent Licensee from
violating the terms hereof. Licensee shall promptly reimburse Licensor for the
costs of such legal action, including costs and attorneys' fees.
4.3 Licensee shall ensure that the manner of sale, distribution and/or
exploitation by Licensee shall in no manner reflect adversely upon the good name
or value of Licensor or any of the Trademarks.
4.4 Licensee shall comply with all applicable laws and regulations
relating to the manufacture, use, sale and distribution of the Goods throughout
the Territory (and, if applicable, where the Goods are manufactured), whether
foreign, federal, state or local, including but not limited to those of the FCC,
Underwriters Laboratory and CSA, as required. Such requirements shall include,
but not be limited to, obtaining all necessary regulatory and/or governmental
approvals, as well as any registrations, permits or licenses that may be
required. Upon request, Licensee shall provide Licensor with copies of all such
approvals, registrations, permits or licenses. In any license, registration or
request for government or regulatory approval, Licensor shall be identified as
the owner of the Trademarks.
4.5 Licensee shall, promptly after its initial commercial production of
the Goods (or earlier, if available, but in no event later than sixty (60) days
prior to Licensee's first sale of any of the Goods) deliver to Licensor (without
cost to Licensor) at its facilities in Parsippany, New Jersey, U.S.A., or such
other location designated by Licensor, or to Licensor's facilities in Hong Kong
following written approval by Licensor permitting Licensee to submit same to
such facilities, 3 representative samples of each of the Goods or particular
Goods bearing the Trademarks as well as the related packaging, advertising,
labels, promotional or any other printed material used in conjunction with the
sale of the Goods. Licensor, at its sole discretion, may disapprove of the use
of any of the Goods, the quality of which is not consistent with the quality
standards set forth in this Section 4 or Goods which fail to comply with proper
usage of the Trademarks as defined herein. Licensor's approval shall be deemed
given if Licensor does not notify Licensee of Licensor's disapproval of any
Goods within 15 days after receipt of same.
4.6 All of the Goods, and all advertising, promotion, packaging or any
written material distributed by or through Licensee will, unless otherwise
specifically agreed to in writing by Licensor, bear the following legend:
"EMERSON AND THE G-CLEF LOGO ARE REGISTERED TRADEMARKS OF EMERSON
RADIO CORP., PARSIPPANY, NEW JERSEY, U.S.A."
4.7 In all cases where Licensee desires artwork involving Goods to be
prepared, the cost of such artwork and the time for the production thereof shall
be borne by Licensee. All artwork and designs involving the Trademarks, or any
reproduction thereof, shall be and remain the property of Licensor.
5. ROYALTIES TO LICENSOR
5.1 [redacted]
5.2 (a) Licensee shall also pay to Licensor as royalties ("Royalties") a
sum equal to the royalty rate for the particular category of Goods on Exhibit E
hereto multiplied by the "Gross Sales Value" of the Goods sold by Licensee for
each particular category of Goods. The term "Gross Sales Value" shall mean the
gross invoice price of the applicable Goods, as translated into U.S. Dollars
using an average monthly exchange rate based upon the exchange rate as listed in
the Wall Street Journal. Licensee shall be required to pay certain minimum
royalties for each Contract Year as set forth on Exhibit F. Such Royalties shall
be non-refundable and paid in accordance with the minimum royalty payment
schedule set forth on Exhibit G. If the Royalties paid to Licensor for any
payment period do not equal or exceed the minimum Royalty for the period as set
forth on Exhibit G, Licensee shall pay to Licensor as Royalties the difference
between the Royalties actually paid for the period and the minimum Royalty for
the period, upon delivery of the quarterly report delivered pursuant to Section
5.5 for the Contract Quarter of the Contract Year. If Licensee does not pay any
particular minimum Royalty when due, Licensor shall have the right to terminate
this Agreement pursuant to Section 10.2.
(b) All costs and expenses incurred in the manufacture, sale,
distribution or exploitation of the Goods, or otherwise incurred by Licensee,
and all taxes, duties, levies and assessments, including sales, value added and
use taxes, pertaining to the sale of the Goods, except for taxes on the net
income realized by Licensor under this Agreement, shall be paid by Licensee. No
such costs, expenses or taxes shall be deducted from, or diminish in any way, or
result in the reduction of, any Royalties payable to Licensor. Licensee shall be
responsible for completing in a timely manner all documentation necessary to
(i) permit Licensor to refrain from collecting taxes or assessments it would
otherwise be obligated to collect in the Territory or (ii) to assist Licensor in
deriving duty drawbacks. Licensee shall pay any such taxes and file any reports,
forms or tax returns required under the income or value added tax laws of the
jurisdictions or countries within the Territory in a timely manner. Licensee
shall provide Licensor with copies of all duly executed reports, forms or tax
returns, and proof of payment of any such taxes, within 45 days after such
reports, forms or tax returns are due.
5.3 If any sale of products is made at a special price to any of
Licensee's subsidiaries or to any other person, firm or corporation affiliated
in any manner with Licensee or its officers, directors or major stockholders,
there shall be a royalty paid on such sales based upon the price generally
charged the trade by Licensee, provided that no further royalties shall be paid
on the re-sale of such products.
5.4 Royalties are payable for each Contract Quarter, and shall be due on
the 30th day of the month following the end of each Contract Quarter during the
Term of this Agreement. Payment of Royalties shall accompany the quarterly
statements required to be delivered by Section 5.5 below. The acceptance by
Licensor of any of the statements furnished pursuant to this Agreement or of any
Royalties paid hereunder shall not preclude Licensor from questioning the
accuracy thereof at any time during the Term or within one (1) year after the
termination of this Agreement; provided that Licensor must question the accuracy
of a statement within two (2) years after the date of receipt or its right to
challenge same shall thereafter be waived.
5.5 Within fifteen (15) days after the end of each month, Licensee shall
furnish to Licensor a Monthly Royalty Statement in the form attached as Schedule
5.5, certified to be accurate by Licensee, providing all of the information
required by such Schedule. Within thirty (30) days after each Contract Quarter,
Licensee shall furnish to Licensor complete and accurate statements in the form
attached as Schedule 5.5, certified to be accurate by Licensee, describing the
Goods distributed and/or sold by Licensee during the preceding Contract Quarter.
All of the foregoing statements shall be furnished to Licensor whether or not
any of the Goods have been sold during the month or Contract Quarter in
question. On an annual basis, within 90 days after the close of Licensee's
fiscal year, Licensee will provide Licensor with Licensee's financial
statements, audited by the regularly retained independent certified public
accountants of Licensee, and prepared in accordance with generally accepted
accounting principles, consistently applied. Within 90 days after the end of
each Contract Year, Licensee shall furnish to Licensor an Annual Royalty
Statement in the form annexed as Schedule 5.5, certified to be accurate by a
national independent Certified Public Accounting firm.
5.6 Licensee shall keep, maintain and preserve accurate books of account
and records including without limitations those covering all transactions
relating to the license hereby granted, and Licensor and its duly authorized
representatives shall have the unqualified right during each Contract Year to
conduct two (2) examinations of all books and records of Licensee; an
examination shall be permitted to take place at all reasonable hours of the day,
to examine, copy and extract said books of account and records and of all other
documents and materials in the possession or under the control of Licensee with
respect to the subject matter and terms of this Agreement. The books of account
and records for Licensee's then current and prior fiscal year shall be kept
available for inspection by Licensor, and the books of account and records for
all prior fiscal years shall be available, following 30 days written notice from
Licensor, for six years after the annual audit of such books and records. If
Licensor's duly authorized representatives shall discover a discrepancy of 5% or
more pursuant to any such examination, in addition to payment of the discrepancy
as set forth in Section 5.7, Licensee shall pay to Licensor the cost of such
examination or audit upon presentation of documentation appropriate to evidence
such discrepancy.
5.7 Royalties found to be due as a result of Licensor's examination of (a)
any statement provided pursuant to Paragraph 5.6 above or (b) Licensee's books
of accounts and records, shall be paid immediately in good funds. Any and all
late payments of Royalties shall bear interest, commencing on the date
originally due and payable pursuant to the terms hereof, at an annual interest
rate equal to the prime rate as listed in the Wall Street Journal, plus three
percent (3%).
6. LIMITATION OF USE AND AUTHORITY
6.1 This Agreement does not grant Licensee any right of ownership, title
or interest in the Trademarks, nor does this Agreement authorize Licensee to use
the Trademarks except for the purpose of manufacturing, marketing, selling and
distributing in accordance with this Agreement the Goods in the Territory and
for advertising and promotional purposes as described herein. The Trademarks,
all rights therein and the goodwill pertaining thereto, whether developed by the
Licensor or the Licensee, shall inure to the benefit of and be the exclusive
property of Licensor. Licensee shall not register or attempt to register the
Trademarks in its own name or the name of any third party. If applicable,
Licensee shall assign to Licensor all the Trademarks and incidental rights
created by their use, together with the goodwill relating to that part of the
business in connection with which the Trademarks are used. Licensee shall
execute and deliver to Licensor such documents as Licensor requires to register
Licensee as a registered or permitted user thereof, in accordance with any
applicable laws, rules, requirements or regulations of any of the jurisdictions
in the Territory.
6.2 Neither Licensee nor any of its Affiliates will directly or indirectly
sell, manufacture or distribute any goods whatsoever under a mark similar to the
Trademark. Licensee will not register or attempt to register in its name or that
of any other person or entity affiliated with it any name or mark, corporate
name or any designation of any kind, in any language, which is the same as,
similar to or a derivative of, or otherwise utilizing any portion of the
trademarks or trade names of Licensor or any of its Affiliates. Licensee
acknowledges that it does not have and has not acquired any rights in or to the
Trademark, product names, likenesses or any derivations of the foregoing.
Licensee shall not incorporate or form any corporation or use any name which is
the same as, or which is likely to cause confusion or mistake with, any
corporate name of Licensor or of any of its Affiliates or subsidiaries. The
Trademark shall be displayed by Licensee, without alteration, on all Goods sold
by Licensee and all use of such Trademark shall inure directly to the benefit of
Licensor. Licensee shall not re-label any of the Goods. Any copyright which may
be created in any article, design, label or the like, bearing any Trademark
shall be subject to the prior approval before use, and be the property of
Licensor. Licensee shall not use any trademark, brand or trade dress which is
the same as, or which is likely to cause confusion or mistake with any
trademark, brand or trade dress of Licensor.
6.3 Licensee shall provide Licensor with the date of the first use of the
Trademarks on the Goods in commerce in each jurisdiction of the Territory and
provide Licensor with all necessary documents or information which Licensor may
request for the purpose of perfecting Licensor's title to any Trademark
registrations.
7. TRADEMARK INFRINGEMENT; INDEPENDENT CONTRACTOR
7.1 Licensee will notify Licensor promptly of any of the following that
may come to Licensee's knowledge:
(a) Any alleged infringement by Licensor or Licensee of the
rights of any third parties arising out of the activities undertaken
in connection with this Agreement;
(b) Any alleged infringement of any of the Trademarks of
Licensor; or
(c) Any other factors or events which reasonably may be
expected to have a material adverse effect on the promotion of the
Goods under any of the Trademarks or on Licensor's rights and
interests in any of the Trademarks.
7.2 Except with respect to Licensor's warranty that it has good title to
the Trademarks as set forth in Paragraph 14(b), if any third party files a
lawsuit, claim or any other type of proceeding against Licensee claiming that
the use by Licensee of the Trademarks infringes upon a valid intellectual
property right belonging to such third party, Licensee shall defend such actions
at its own expense and hold Licensor harmless against the valid claims of any
such third party. Licensor may choose to settle such lawsuit, claim or other
proceeding and Licensee shall cooperate to effect any such settlement provided
that such settlement does not materially affect Licensee's rights hereunder.
Should any of the Goods covered by this Agreement become or in Licensor's
opinion be likely to become the subject of such a claim, Licensor may, at its
option, either procure for Licensee the right to continue selling or using such
product, or replace or modify the product so that it becomes non-infringing.
Notwithstanding the foregoing, Licensor shall have no right to admit any
liability on behalf of Licensee or to create any kind of duty, obligation or
promise concerning the future sale of the product on behalf of Licensee without
Licensee's prior written consent, which shall not be unreasonably withheld or
delayed. However, to the extent that any settlement, judgment or decree
prohibits or restricts Licensor's right to sell the goods covered hereby, it
shall be released and discharged from any duty to Licensee to supply the same.
Notwithstanding the foregoing, Licensee shall be responsible for costs and
expenses associated with any such lawsuit, claim or proceeding. Licensor will
promptly notify Licensee of, and provide details concerning, any condition, of
which it learns or becomes aware, affecting use of the Trademarks on the Goods
in the Territory, including any regulation, ordinance, law, treaty,
international agreement or other governmental act or edict.
7.3 If, in the opinion of Licensor, it becomes desirable to enforce any of
the Trademarks against a third party, Licensor may use reasonable efforts to do
so. If Licensor fails to enforce such Trademarks, Licensee may bring an action
against such third party in its own name or in the name of Licensor. Any such
action or other proceedings shall be at Licensee's sole expense and any monetary
relief or monetary award obtained as a result thereof shall be apportioned
between the parties to the extent of their respective losses. Licensor,
however, shall at any time have the right to take over the prosecution of any
such action and, in such event, any monetary relief or monetary award shall
inure to the benefit of Licensor. If Licensor takes over the prosecution of
such action initiated by Licensee, Licensor shall reimburse Licensee for
reasonable expenses incurred by Licensee in prosecution of such action.
7.4 Licensee shall furnish all reasonable assistance, at Licensor's
request or direction, to enable Licensor to assert and prosecute any claims or
defend against any action arising in connection with or related to the
Trademarks and the matters described in Sections 7.1 through 7.3 above. Such
assistance shall include, but not be limited to: monitoring and reporting to
Licensor any improper or unauthorized use of the Trademarks, signing documents,
giving testimony, joining such action and asserting claims with respect to the
licensed Trademarks against third parties.
7.5 Licensee shall not use the name or credit of Licensor in any manner
whatsoever, nor incur any obligation in Licensor's name. Nothing herein
contained shall be construed to constitute the parties joint venturers, nor
shall any similar relationship be deemed to exist between them. Nothing herein
contained shall be construed as constituting Licensee as Licensor's agent or as
authorizing Licensee to incur financial or other obligations in Licensor's name
without Licensor's specific authorization in writing. Under no circumstances
shall any power be granted, or be deemed to be granted to Licensee, be deemed to
be a power coupled with an interest. The rights and powers retained by Licensor
to supervise or otherwise intervene in Licensee's activities, all as hereinabove
provided, are retained because of the necessity of protecting Licensor's
copyrights, trademarks, properties and property rights generally, and
specifically to conserve the goodwill and good name of Licensor and of the
Trademarks.
8. EXCLUSIVITY
8.1 Subject to Cargil's right of first refusal set forth in Section 2.1,
nothing in this Agreement shall be construed to prevent Licensor from using or
granting any other licenses for the use of the Trademarks or from utilizing the
Trademarks in any manner whatsoever, except that Licensor shall not use nor
grant any other license of the Trademarks effective during the Term of this
Agreement within the Territory in connection with the sale of the Goods listed
in Exhibit A prior to any breach of this Agreement by Licensee or termination of
this Agreement, excluding the Termination Period, as hereinafter defined.
8.2 Licensor agrees that it shall not knowingly sell Goods to any
customers if it has actual knowledge that such customers intend to ship such
Goods into the Territory, and it will take reasonable steps to ensure that its
distributors do not breach this covenant, in each such case so long as the
actions of the Licensor are in compliance with applicable laws, treaties and
international agreements relating to free trade and commerce among nations.
However, Licensee acknowledges that it is aware that one of Licensor's
customers, Wal-Mart Stores, Inc., maintains facilities in various countries in
the Territory to which various product sold to Wal-Mart Stores, Inc. may be
transferred from time to time. Licensee agrees that these sales shall not be
considered a breach of this Agreement.
9. GOODWILL
Licensee recognizes the great value of the goodwill associated with the
Trademarks and that the Trademarks have a secondary meaning in the mind of the
public. Licensee further recognizes, acknowledges and agrees that a breach by
Licensee of any of its covenants, agreements or undertakings hereunder will
cause Licensor irreparable damage, which cannot be readily remedied in damages
in an action at law, and may, in addition thereto, constitute an infringement of
Licensor's copyrights or trademarks, and agrees that, as a result, Licensor
shall be entitled to equitable remedies, costs and attorneys' fees.
10. TERMINATION
10.1 This Agreement shall immediately terminate by its own force without
notice from Licensor upon the occurrence of any one or more of the following
events: (i) an assignment by Licensee for the benefit of creditors; (ii) a
public admission by Licensee of its insolvency; (iii) dissolution of Licensee or
loss of its charter by forfeiture or otherwise; (iv) adjudication of Licensee as
bankrupt or insolvent; (v) appointment of a trustee, liquidator or receiver for
the Licensee or a material or substantial portion of its assets, subsidiaries or
property; (vi) exercise by any court or governmental agency of jurisdiction over
the property or business of the Licensee or any substantial part thereof; (vii)
the commencement of any proceedings for the reorganization, dissolution,
liquidation or winding up of the Licensee not dismissed within 60 days; (viii)
the filing by Licensee of a voluntary petition in bankruptcy under any
bankruptcy or insolvency law or any law providing for Licensee's reorganization,
dissolution, liquidation or winding up, or (ix) consent by Licensee to the
appointment of a receiver or trustee of itself or of its property or any
substantial part thereof.
10.2 If Licensee: (i) without prior written consent of Licensor sells, or
permits or has reason to believe a party to whom it sells Goods shall sell, any
Goods outside the Territory bearing the Trademarks; (ii) has intentionally or
negligently rendered or renders an incorrect, material representation or report
in connection with the rights granted to Licensee hereunder; (iii) commits
intentional or negligent material damage or omits or fails to take steps within
its power to prevent such damage to Licensor's business, reputation, vendor
relationships, customers or client base, distribution channels or assets or the
value of any of Licensor's tradenames, trademarks, service marks, symbols,
signs, or other distinctive marks, or the goodwill associated therewith; (iv)
fails to provide insurance substantially in accordance with the terms of Section
17; (v) fails to pay any Royalties set forth in Section 5 when due; (vi)
registers or attempts to register in its own name or the name of a third party a
Trademark or any other trademark owned by the Licensor or similar to such a
trademark, or any name or mark, corporate name or any designation of any kind
which is the same as, similar to or a derivative of, or otherwise utilizing any
portion of the Trademark or trade names of Licensor or any of its Affiliates;
(vii) assigns or transfers this Agreement, including by operation of law,
without the prior written consent of Licensor; or (viii) breaches any of its
obligations hereunder, then, in addition to the rights available under law or in
equity, Licensor may notify Licensee in writing that Licensee is in default
under the terms of the Agreement. If such default is not remedied within 15
days after the delivery of such notice, Licensor shall have the right to
terminate this Agreement effective upon delivery to Licensee of notice that the
Agreement is terminated. However, if Licensee disputes such default following
receipt of notice of termination by Licensor, Licensee shall provide Licensor
with immediate written notice that Licensee intends to arbitrate such dispute
within thirty (30) days. Following such notice, the dispute shall be
immediately submitted for arbitration to be held within such thirty days to a
panel of arbitrators before the American Arbitration Association to be held in
New Jersey. Each party shall be entitled to select one arbitrator each and both
parties shall mutually agree upon the third arbitrator. The decision of such
arbitrators shall be binding on both parties as to Licensee's default. In this
instance, each party shall be liable for its own costs of such arbitration. In
the event that it is determined by the arbitrators that Licensee has defaulted
under this Agreement, Licensor shall have the right to terminate this Agreement
upon immediate written notice to Licensor.
10.3 Upon termination of this Agreement, Licensor shall have the right to
retain all monies paid hereunder to date, to receive all monies to which it is
entitled and to avail itself of any legal or other remedy or relief available
to it including, but not limited to, equitable relief to enjoin the use of the
Trademarks and the manufacture, sale and distribution of Goods utilizing the
Trademarks. Licensee shall be responsible for all costs of such enforcement. All
remedies available to Licensor hereunder are cumulative, and Licensor may
exercise any one or more remedies or rights available to it cumulatively. The
termination of this Agreement shall be without prejudice to the rights and
remedies of either party with respect to any obligation incurred or breach
committed prior to such termination, including the right to recover for damages
caused by the other party's breach.
10.4 Upon termination of this Agreement, Licensee shall promptly deliver
to Licensor any and all property of the Licensor in the possession, custody or
control of Licensee, including all promotional material, original artwork,
product manuals and any other material bearing the Trademarks in the possession
of Licensee, subject to the provisions of Section 10.6.
10.5 Within ten (10) days of the termination of this Agreement, a
statement showing the number and description of Goods on hand or in process
shall be delivered by Licensee to Licensor. Licensor shall have the right to
take a physical inventory to ascertain or verify such statement, and refusal by
Licensee to submit to such physical inventory to Licensor shall forfeit
Licensee's right to dispose of such inventory as provided in Section 10.6
hereof.
10.6 In the event of termination by Licensor by reason of any cause
contained in Section 10.1 or 10.2 or as set forth on Exhibit F, Licensee, its
receivers, representatives, trustees, agents, administrators and successors
shall have no further right to sell, exploit or in any way deal in or with any
advertising matter, packing material, boxes, cartons or other documentation
relating thereto bearing the Trademarks, without the express written consent of
Licensor; provided, however, Licensee shall be entitled (subject to the
obligation to timely pay all Royalties, including the Guaranteed Minimum
Royalties as set forth on Exhibit F) to dispose of Goods on hand or on order at
the date of termination bearing the Trademark for a period of 15-months from
the date of termination. This 15-months period shall be referred to herein as
the "Termination Period". Nothing contained herein shall be deemed to permit the
manufacture of any Goods for Licensee during the Termination Period, or the sale
of any such improperly manufactured Goods during the Termination Period.
11. DISTRIBUTION OF GOODS
11.1 Licensee shall use its best efforts to achieve the total gross sales
projections set forth on Exhibit H. Licensee shall, during the Term, diligently
and continuously market, manufacture (or cause to be manufactured), distribute
and sell the Goods and shall make and maintain adequate arrangements for their
distribution throughout the Territory.
11.2 Licensee acknowledges that its failure to cease (or cause to cease)
the marketing, manufacture, assembly and packaging, sale or distribution of
Goods or any class or category thereof using the Trademark at the termination
of this Agreement, other than as set forth in Section 10.6, will result in
immediate and irreparable damage to Licensor and to the rights of any subsequent
licensee. Licensee acknowledges and admits that there is no adequate remedy at
law for such failure and that, in the event of such failure, Licensor shall be
entitled to equitable relief by way of temporary and permanent injunctions and
such other further relief as any court with jurisdiction may deem just and
proper and Licensee shall be responsible for all costs thereof.
12. SUBCONTRACTORS
The Licensee shall obtain satisfactory written evidence from any
subcontractor that is retained by Licensee that such subcontractor will not use
the Trademarks in any manner not permitted under this Agreement, in the form set
forth on Schedule 12.1, in those instances where the subcontractor furnishes
Goods or packaging for the Goods bearing the Trademarks. Licensee shall use its
best efforts to assist and cooperate with Licensor with respect to any action by
Licensor to enforce its rights to the Trademarks against any one or more of
Licensee's subcontractors.
13. SERVICE AND SPARE PARTS
Licensee shall establish and monitor such independent service agents and
centers in the Territory as may be necessary to the service of Goods. Licensee
shall maintain a sufficient inventory of spare parts for the Goods taking into
account any order lead, requiring same, during the Term and the Termination
Period. During the Term and subsequent to the expiration or termination of this
Agreement, Licensee shall provide for after sales warranty service, if required,
and maintain a sufficient inventory of spare parts for the Goods for the
respective periods required by applicable federal or local law or Licensee's
warranty in the particular countries or regions throughout the Territory.
14. REPRESENTATIONS AND WARRANTIES OF LICENSOR
Licensor hereby represents and warrants to Licensee that:
(a) Licensor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation.
(b) Licensor has the full power and authority to execute and deliver
this Agreement and to perform all of its obligations hereunder. Licensor
has good right, title and interest in and to the Trademarks, and has not
entered into any agreements or commitments which are inconsistent with or
conflict with the rights granted to Licensee herein. To the best of
Licensor's knowledge, Licensee shall be entitled to use the Trademarks in
accordance with the terms of this Agreement without disturbance from the
material claims of third persons.
(c) The execution and delivery of this Agreement has been duly
authorized by all necessary corporate action of Licensor and constitutes
the valid and legally binding obligation of Licensor enforceable against
Licensor in accordance with it terms.
(d) This Agreement shall be binding on the successors, assigns and
legal representatives of Licensor.
15. REPRESENTATIONS AND WARRANTIES OF LICENSEE
15.1 Licensee hereby represents and warrants to Licensor that:
(a) Licensee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization.
(b) Licensee has the full power and authority to execute and deliver
this Agreement and to perform all of its obligations hereunder and entry
into this Agreement and the performance of its obligations hereunder do not
and shall not contravene, conflict with or result in a breach of its
certificate of incorporation, by-laws, or any other agreement to which
Licensee is a party.
(c) The execution and delivery of this Agreement has been duly
authorized by all necessary action of Licensee and constitutes the valid
and legally binding obligation of Licensee enforceable against Licensee in
accordance with its terms.
(d) This Agreement shall be binding on the successors, assigns and
legal representatives of Licensee, if any.
16. DISCLAIMER AND INDEMNIFICATION
16.1 Licensee shall not and does not grant any warranty or guaranty binding
Licensor or creating any liability for Licensor. Licensee will make no
statements or representations whatsoever to any third parties which, expressly
or impliedly, states or suggests that Licensor is making any warranties with
respect to the Goods. Licensor expressly disclaims any implied warranties,
including the implied warranties of merchantability and fitness for a particular
purpose.
16.2 Except as set forth herein and in the Supply and Inspection
Agreement, Licensor shall have no liability or responsibility to Licensee or any
other person and/or entity arising out of or relating to the rights granted to
Licensee pursuant to this Agreement. Each party shall defend, indemnify and
hold harmless the other party, its employees, officers, directors, stockholders,
licensees, representatives, successors and assigns from and against any and all
claims, demands, judgments, liabilities, damages, losses, costs and expenses of
any nature (including attorneys' fees and expenses), including without
limitation, death, personal injury, bodily injury, sickness, disease, property
damage, loss of use of property or product liability arising from or related to
any (i) claim, action or omission of such party, its agents, employees or their
families, affiliates, distributors or subcontractors arising under this
Agreement and/or the Supply & Inspection Agreement executed by the parties
simultaneously herewith, (ii) such party's failure to comply with its
obligations set forth herein, (iii) such party's misrepresentation of any
warranties or representations, or (iv) any action or omission arising out of the
operation of the such party's business.
17. INSURANCE
Prior to the distribution or sale of any Goods, Licensee shall purchase and
maintain or cause to be maintained, at its own cost, insurance reasonably
satisfactory to Licensor of the kinds and in the amounts specified in Schedule
17 or in amounts required by law, whichever is greater, and furnish Licensor
with certificates of insurance as evidence thereof, in the prescribed form prior
to the commencement of distribution of the Goods and annually thereafter not
less than thirty (30) days prior to the expiration dates of said policies. No
change shall be made in the certificate of insurance without Licensor's prior
written approval. Licensor shall receive copies of all insurance policies.
18. CONFIDENTIALITY
18.1 Each party will use the Confidential Information received by the
other party solely for the purpose of carrying out this Agreement. Further,
neither party will disclose the Confidential Information to third parties
without the express written consent of an officer of the other party, unless
compelled by law, required by applicable securities rules or regulations or, in
the written opinion of counsel such disclosure is required by law. In such
event, each party shall inform the other party as far in advance as possible
prior to making any such disclosure. Notwithstanding the foregoing, Licensor
shall not be required to inform or obtain the consent of Licensee for the
issuance of any press release which utilizes, refers to or discloses sales or
royalty information relating to this Agreement.
18.2 Each party shall cause each of their respective officers, directors,
agents or employees to whom a disclosure of Confidential Information is made or
any subcontractor, including the manufacturer(s) of the Goods, to adhere to the
terms and conditions of this Section 18 as if, and to the same extent as if, he
or she were a party to this Agreement.
18.3 Upon expiration or termination of this Agreement, each party shall
return to the other party all copies of the Confidential Information of the
other party in its possession or control, except that Licensor shall not be
required to return Confidential Information provided by Licensee which has
become a part of Licensor's books and records and which pertains to historical
sales and royalty information.
19. FORCE MAJEURE
19.1 Neither party will have any liability to the other by reason of any
failure or delay in performance of any provision of this Agreement, if and to
the extent that such failure or delay is due to any occurrence (other than
financial) beyond the reasonable control of the party failing or delaying to
perform. "Beyond reasonable control" shall mean acts of God, civil
disturbances, fires, floods, explosions, or riots, war, rebellion or sabotage.
The provisions of this paragraph shall not apply to payment obligations under
this Agreement.
19.2 A party seeking relief pursuant to this Section 19 shall, as soon as
practicable after the impediment and its effect on such party's ability to
perform become known, give written notice to the other party. Written notice
shall also be given when the impediment ceases. In any event, either party may
cancel this Agreement if the impediment continues for a period of 120
consecutive days.
20. LICENSOR'S LINE OF BUSINESS
Licensee acknowledges that Licensor is presently in the business of selling
consumer electronic products, microwave ovens and other consumer products and is
seeking alliances, joint venture partners and/or licensees with the goal of
distributing other consumer products throughout the world. Licensee acknowledges
that marketing and distribution of the foregoing (as well as any other products
which Licensor may distribute) with the Trademarks, excluding the sale of Goods
in the Territory covered by this Agreement and subject to the provisions of this
Agreement, shall not constitute a breach of this Agreement.
21. ASSIGNMENT AND SUBLICENSING
21.1 The license herein granted is personal to Licensee and may not be
assigned, transferred, sub-licensed, pledged, mortgaged or otherwise encumbered
by Licensee in whole or in part without Licensor's prior written consent. For
the purposes of this Section 21.1, the term "assigned" shall include without
limitation, transfers of (i) control, whether by merger, consolidation,
reorganization or change of management and (ii) ownership of fifty percent (50%)
or more of the outstanding securities of Licensee. It is understood by Licensor
that, in the event Licensee goes public with an offering of securities on a
Nationally recognized securities exchange, such offering shall not constitute a
prohibited assignment, solely on the condition that 1) the present shareholders
of Licensee shall retain at least twenty-five per cent (25%) of the ownership of
securities of Licensee for which they shall have sole voting power for such
shares and for which there shall be no voting agreement in effect; and 2) the
present shareholders of Licensee shall retain a majority of the seats on or the
power to appoint a majority of the seats of the Board of Directors of Licensee.
Notwithstanding the foregoing, the sale of Products by the Licensee to
unaffiliated third parties, or unaffiliated third party distributors, for
resale in the Territory (either at wholesale or retail) shall not be considered
such assignment, transfer, or sublicense in violation of this Agreement. In the
event of appointment of such unaffiliated third party distributors, Licensee
shall obtain from each such distributor satisfactory written evidence that such
party shall not use the Trademarks in any manner not permitted under this
Agreement, in the form set forth in Schedule 12.1. Appointment of any
unaffiliated third party distributors shall not affect any of Licensee's
obligations to Licensor under this Agreement, including the payment of any
Royalties hereunder.
21.2 Notwithstanding the restriction set forth in Section 21.1 above,
Licensee shall notify Licensor in writing prior to any proposed change in
control or transfer of ownership of fifty percent (50%) or more of the
outstanding securities of Licensee. If Licensee is interested in continuing the
terms of this Agreement, Licensor shall have fifteen (15) business days from the
date of receipt of all due diligence materials required by Licensor concerning
the proposed transfer of control or ownership to determine whether Licensor will
approve, in its sole discretion, such change of ownership or control. Such
materials shall be provided by Licensee and include without limitation (i)
organizational documents of the transferee, (ii) audited financial statements of
the transferee for the preceding three fiscal years, (iii) interim financial
statements for the period subsequent to the date of the latest annual financial
statement, (iv) recent public filings, if applicable, for the preceding three
years, (v) tax returns of the transferee for the preceding three years, and (vi)
such other materials as Licensor may reasonably request. Any proposed
transferee must be financially sound, knowledgeable of the type of business of
Licensee, not a competitor of Licensor, committed to quality and positioned to
grow the business. Upon Licensor's approval in its sole discretion, control may
be transferred. If Licensor does not approve such proposed change in control or
transfer of ownership, and the proposed change in control or transfer of
ownership occurs, this Agreement may terminate upon a date established at
Licensor's sole discretion.
22. MISCELLANEOUS
22.1 No provision of this Agreement may be changed, amended or waived,
except in a writing signed by both parties.
22.2 Any waiver on the part of any party of any right or interest
hereunder shall not imply the waiver of any subsequent breach or the waiver of
any other rights. No waiver by either party of a breach hereof or a default
hereunder shall be deemed a waiver by such party of a subsequent breach or
default of like or similar nature.
22.3 Should any provision of this Agreement prove to be invalid or
unenforceable under existing or future law, the remaining provisions of the
Agreement will remain in force in all other respects.
22.4 All notices will be in writing and in English and will be served
personally or by registered or certified mail, return receipt requested, or by
overnight courier or by facsimile transmission to each other party at its
address herein set forth, or at such other address as each party may provide to
the other in writing from time to time:
(a) If to Licensor:
Emerson Radio Corp.
Nine Entin Road
Parsippany, NJ 07054
Attention: Eugene I. Davis
President
[Facsimile No. (201) 428-2019]
With a copy to:
Wolff & Samson, P.A.
5 Becker Farm Road
Roseland New Jersey 07068
Attention: Jeffrey Davis, Esq.
[Facsimile No. (201) 740-1407]
(b) If to Licensee:
Cargil International Corp.
6812 N.W. 77th Court
Miami, Florida 33166
Attention: Giraldo Leyva
President
[Facsimile No. (305) 718-0707]
With a copy to:
Baker & McKenzie
701 Brickell Avenue
Suite 16
Miami, Florida 33131
Attention: Charles Lea Hume, Esq.
[Facsimile No. (305) 789-8953]
Any such notice will be effective upon actual receipt or three (3) days after it
is deposited in the mail, postage prepaid, properly addressed and certified,
whichever occurs first.
22.5 Together with the Supply and Inspection Agreement executed by the
parties simultaneously herewith, this Agreement is the entire and sole agreement
and understanding of both parties and supersedes all other agreements,
understandings and communications, whether oral or written, regarding the
subject matter hereof.
22.6 This Agreement may be executed in any number of counterparts or by
facsimile, but all counterparts and facsimiles hereof will together constitute
but one agreement. In proving this Agreement, it will not be necessary to
produce or account for more than one counterpart executed by both parties.
22.7 All disputes between the parties concerning this Agreement will be
resolved under the laws of the State of New Jersey, U.S.A., excluding the
conflicts of laws provisions thereof, and, except as otherwise set forth in
Section 10.2, the courts of New Jersey will have sole and exclusive jurisdiction
over the parties in any such dispute and venue shall lie exclusively in Morris
County, New Jersey. However, it is expressly understood that this Section and
Section 10.2 shall not preclude Licensor's right to make application for, and
seek enforcement of, injunctive relief in any court having jurisdiction.
22.8 Licensee shall strictly and fully comply with all export controls
imposed by the United States or any country or organization of nations within
whose jurisdiction Licensee operates or does business.
22.9 The respective indemnities, agreements, representations, warranties
and other statements of each of the parties hereto and the undertakings set
forth in or made pursuant to this Agreement will remain in full force and
effect, and will survive the termination of this Agreement.
22.10 Licensee shall not disseminate any press release or other
announcement relating to the transaction contemplated by this Agreement without
Licensor's prior written consent as to the contents thereof.
22.11 All payments shall be made directly by Licensee to Licensor and
shall be in U.S. Dollars.
22.12 The parties have requested that this Agreement be drawn up and
interpreted in the English language.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representative of each party effective as of the date set forth above.
EMERSON RADIO CORP.
A Delaware Corporation
By: /s/ Eugene I. Davis
Eugene I. Davis
President
CARGIL INTERNATIONAL CORP.
A Florida Corporation
By: /s/ Giraldo Leyva
Giraldo Leyva
President