LICENSE AGREEMENT
This Agreement, dated effective as of March 30, 1998 (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 TEL-SOUND
ELECTRONICS, INC., a Florida corporation, having a place of business at
2400 W. Copans Road #9, Pompano Beach, FL 33069.
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
distribution of certain consumer electronics and other products as specifically
set forth on EXHIBIT A, 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 on 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, 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 August 31,
1999; and (ii) each immediately subsequent full year during the term of this
Agreement commencing September 1, 1999.
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, 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 "Landed Cost" means the product F.O.B. price, plus duty and ocean freight,
charged to Licensee, net of any discounts, allowances or rebates.
1.7 "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.
1.8 "Sales Price" means the undiscounted invoice price of the Goods without
consideration for any form of allowances or discounts, whether stated on the
invoice or not.
1.9 "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.
1.10 "Licensor" means Emerson Radio Corp.
1.11 "Licensee" means Tel-Sound Electronics, Inc.
2. GRANT
2.1 Subject to the terms and conditions of this Agreement, Licensor hereby
grants to Licensee an exclusive (to the extent contemplated by SECTION 8) 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.
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 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, if Goods are sold or
otherwise disposed outside of the Territory, royalties 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 August 31, 2001 (the
"Initial Term"), but shall be automatically renewed, on condition that the
parties mutually agree in writing as to the minimum royalties for any Renewal
Term, for successive three (3)-year periods provided (i) Licensee has paid to
Licensor all royalties payable for each Contract Year as set forth herein in a
timely manner and in accordance with the payment schedule, (ii) Licensee has
satisfied and/or complied with all of its obligations hereunder, and (iii)
Licensee has satisfactorily performed under the projected business plan of
Licensee, which shall be required for the Initial Term and any Renewal Term (as
hereinafter defined), and which business plan and any subsequent revisions or
updates, shall be submitted within the time frame set forth by Licensor and be
subject to Licensor's prior review and approval. Each successive three (3)-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.
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. If
said quality standards are not being maintained at any time during the Term or
the Termination Period (as hereinafter defined), 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, three (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 business 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 Royalties due to Licensor by Licensee for the sale of Goods shall be
calculated based upon the classification of the Goods into two product
categories: (1) voice activated products and (2) core products. Voice activated
products shall be all Goods which are activated utilizing a voice recognition
feature and do not require manual activation, and core products shall be all
Goods which are not voice activated products.
5.2 Voice activated product royalties shall be calculated based upon a
percentage of Licensee's Gross Profits as set forth in Exhibit E. For purposes
of calculating such royalties "Gross Profits" shall mean the product Sales Price
less the product's Landed Cost, as these terms are defined in Sections 1.6 and
1.8, respectively. Payment of royalties on voice activated products are due
within ten (10) calendar days after the end of each month and shall be
accompanied by a certified monthly royalty statement in the form attached as
Schedule 5.2. Such royalty statements shall be required whether or not sales of
any voice activated products have taken place during the reporting period.
5.3 Core product royalties shall be calculated based upon the royalty rates set
forth in Exhibit E, multiplied by the product Sales Price, as defined in Section
1.8, of the Goods sold by Licensee. Payment of royalties due on core products
shall accompany the quarterly statement set forth in this paragraph. Licensee
shall furnish to Licensor a certified monthly royalty statement within ten (10)
calendar days after the end of each month in the form annexed as Schedule 5.3
setting forth the sales of core products for the previous month. A certified
quarterly royalty statement in the form annexed as Schedule 5.3 shall be due
within thirty (30) calendar days after the end of each Contract Quarter, or if
terminated, within thirty (30) days after such termination, along with payment
of any royalties due in excess of the minimum royalty payments due pursuant to
Exhibit F. A certified annual royalty statement in the form annexed as Schedule
5.3 shall be due within sixty (60) calendar days after the last day of each
Contract Year and shall be certified by an independent certified public
accounting firm.
5.4 Minimum royalty payments as set forth on Exhibit F shall be due for each of
the Contract Years and shall be nonrefundable and payable in accordance with the
minimum royalty payment schedule set forth on Exhibit F. The Licensee shall be
required to pay Licensor on a quarterly basis the greater of the royalties
actually reported in Section 5.3 for the sales of core products only, or the
minimum royalty payments due. If Licensee does not pay any minimum, monthly or
quarterly royalty when due, Licensor shall have the right to terminate this
agreement pursuant to Section 10.2.
5.5 No costs, taxes or expenses incurred by Licensee in the manufacture, sale,
distribution or exploitation of the Goods, or otherwise incurred by Licensee,
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 assist Licensor in deriving
duty drawbacks. Licensee shall be responsible for and pay any taxes and file any
reports, forms or tax returns required under the income or value added tax laws
of the Territory in a timely manner. Upon written request, 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.
5.6 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
three (3) years after the termination of this Agreement. Royalties shall be due
on any sales of products made at a special price to Licensee's subsidiaries, or
to any other person, firm or corporation affiliated in any manner with Licensee,
its officers, directors or major stockholders, and shall be based upon the
market pricing normally charged to unaffiliated parties. On an annual basis,
within 60 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.
5.7 Licensee shall keep, maintain and preserve accurate books of account and
records 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 shall be kept available for inspection by 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
5.8, Licensee shall pay to Licensor the cost of such examination or audit upon
presentation of documentation appropriate to evidence such discrepancy.
5.8 Royalties found to be due as a result of Licensor's examination of (a) any
statement provided pursuant to this Section 5 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 authorize Licensee to use the Trademarks except
for the purposes set forth in this Agreement. Licensee acknowledges that it does
not have and has not acquired any rights in or to the Trademarks, product names,
likenesses or any derivations of the foregoing. The Trademarks, all rights
therein and use thereof, 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. If applicable, Licensee shall assign to Licensor
all the Trademarks and incidental rights created by its use, together with the
goodwill relating to that part of the business in connection with which the
Trademarks are used and 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 the Territory. The Trademark shall be displayed by Licensee,
without alteration, on all Goods sold by Licensee. 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.
Upon request, Licensee shall provide Licensor with all necessary documents or
information for the purpose of perfecting Licensor's title to any Trademark
registrations, including the date of the first use of the Trademarks on the
Goods in commerce 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.
- register or attempt to register the Trademarks in its own name or the
name of any third party.
- 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.
- 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.
- re-label any of the Goods.
- 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.
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 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, Licensor
shall defend such actions at its own expense and hold Licensee 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. 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.
7.3 If, in the opinion of Licensee, 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 award obtained 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 award shall inure to the benefit of Licensor and 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
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.
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 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, 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; (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
16; (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.
10.3 Upon, and notwithstanding, termination of this Agreement, Licensor shall
have the right to retain all moneys paid hereunder to date, to receive all
moneys 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
Licensor's rights and remedies with respect to any obligation incurred or breach
committed prior to such termination, including the right to recover for damages
caused by Licensee'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, Licensee shall
deliver to Licensor a statement showing the number and description of Goods on
hand or in process. 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 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, 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) to
dispose of Goods on hand or on order at the date of termination bearing the
Trademark for a period of one year from the date of termination. This one-year
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 for core products set forth on Exhibit G. 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, 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
Each party hereby represents and warrants to the other that:
(a) It is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
(b) It has the full power and authority to execute and deliver this
Agreement and to perform all of its obligations hereunder, and that 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 it
is a party.
(c) The execution and delivery of this Agreement has been duly authorized
by all necessary corporate action of the party and constitutes the valid
and legally binding obligation of the party enforceable against the party
in accordance with it terms.
(d) This Agreement shall be binding on the successors, assigns and legal
representatives of both parties.
15. DISCLAIMER AND INDEMNIFICATION
15.1 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.
15.2 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. Licensee shall defend, indemnify and hold
harmless Licensor, 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 Licensee, its agents, employees or their families,
affiliates, distributors or subcontractors arising under this Agreement, (ii)
Licensee's failure to comply with its obligations set forth herein, (iii)
Licensee's misrepresentation of any warranties or representations, or (iv) any
action or omission arising out of the operation of Licensee's business.
16. 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
16 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.
17. CONFIDENTIALITY
17.1 Each party will use the Confidential Information received by the other
party solely for the purpose of carrying out this Agreement. 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, or for the reporting or filing of this Agreement in
accordance with applicable securities regulations. 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 17 as if, and to the same extent as if, he or she were a party to this
Agreement.
17.2 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.
18. FORCE MAJEURE
18.1 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.
18.2 A party seeking relief pursuant to this SECTION 18 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, upon written notice, if the impediment continues for a
period of 120 consecutive days.
19. 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 shall not constitute a breach
of this Agreement.
20. ASSIGNMENT AND SUBLICENSING
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, 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. Notwithstanding these restrictions, 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 determine, following receipt of all financial or
other documents or due diligence materials requested by Licensor concerning the
proposed transfer of control or ownership, whether Licensor will approve, in its
sole discretion, such change of ownership or control. 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. Absent Licensor's approval, any change in control or transfer of
ownership which occurs shall entitle Licensor to terminate this Agreement upon a
date established at Licensor's sole discretion.
21. MISCELLANEOUS
21.1 No provision of this Agreement may be changed, amended or waived, except
in a writing signed by both parties.
21.2 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.
21.3 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.
21.4 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: Legal Department
[Facsimile No. (973) 428-2022]
(b) If to Licensee:
Tel-Sound Electronics, Inc.
2400 W. Copans Road #9
Pompano Beach, FL 33069
Attention: Allan Weinstein, President
[Facsimile No. (954) 984-1755]
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.
21.5 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.
21.6 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.
21.7 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 the federal and state 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, or the
United States District Court for the District of New Jersey. However, it is
expressly understood that this Section shall not preclude Licensor's right to
make application for, and seek enforcement of, injunctive relief in any court
having jurisdiction.
21.8 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.
21.9 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.
21.10 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.
21.11 All payments shall be made directly by Licensee to Licensor and shall be
in U.S. Dollars.
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/ John J. Raab
John J. Raab
Senior Vice-President - International
TEL-SOUND ELECTRONICS, INC.
A Florida Corporation
By: /s/ Allan Weinstein
Allan Weinstein
President
UNCONDITIONAL AND CONTINUING GUARANTEE
For good and valuable consideration, the receipt of which is hereby
acknowledged, and to induce Emerson Radio Corp. to enter into the annexed
License Agreement with Tel-Sound Electronics, Inc., the undersigned Guarantors,
which include all of the shareholders of Licensee, jointly and severally,
unconditionally guarantee the due and timely payment in full, including all
interest, fees, and charges (including but not limited to costs of collection
and attorneys' fees), of all royalty and other payment obligations (hereinafter
"obligations") of Licensee set forth in the annexed License Agreement between
Emerson Radio Corp. as Licensor ("Licensor"), and Tel-Sound Electronics, Inc. as
Licensee ("Licensee"), which is being entered into simultaneously with this
Guaranty. Guarantors further agree that if these obligations are not paid by
Licensee, the Guarantors shall, jointly and severally, pay same unconditionally
and upon demand and without set-off or counterclaim.
Guarantors further understand that this is a continuing guarantee and shall
cover all payment obligations of Licensee. If any of the obligations are not
paid when due, Licensor shall not be required to exhaust any other remedies for
recovery and collection of the guaranteed obligations, or to commence any action
or obtain a judgment against Licensee, before looking to Guarantors for payment.
Guarantors shall promptly pay any monies due upon receipt of notice and demand
therefore from Licensor. Guarantors hereby waive notice of the acceptance of
this Guaranty, notice of demand and maturity of payments to become due, notice
of default in payment by the Licensee, notice of adverse changes in the
Licensee's financial condition or prospects, or any fact which may increase the
Guarantors' liability or risk, and all such other notices required or
customarily given under like circumstances. Guarantors expressly consent that
the time of payment and performance of any obligations hereby secured may be
extended, waived or modified from time to time without notice to or consent from
the Guarantors, and Guarantors shall not be released or discharged, either in
whole or in part, notwithstanding any extension, waiver, settlement or
modification, or by Licensor's failure or delay in any respect. Nothing shall
discharge or satisfy the liability of Guarantor hereunder except the full
performance and payment of the obligations with interest.
Guarantors, for themselves, their heirs, administrators, successors and assigns,
represent that they are financially interested in Licensee and agree to be held
responsible for said obligations, precisely as if the same had been contracted
and due and owing by the Guarantors themselves, and agree to pay the obligations
on demand, for any balance that may be due and payable at any time from the
Licensee to Licensor.
This is a continuing Guaranty and shall extend to cover any renewals of the
License Agreement, any claims, demands or other matters guaranteed under this
instrument, or the extension of time of payment or performance thereof, and
shall remain in full force and effect from the effective date of the License
Agreement until any termination or expiration. Notwithstanding any such
termination or expiration, the Guarantors shall continue to remain liable for
all obligations and amounts outstanding as of such termination or expiration and
all credit and forbearances extended to the Licensee, and all costs of
collection and enforcement of such obligations and sums against the Licensee and
Guarantors.
The Guarantors represent and warrant that execution and delivery of this
instrument does not violate any provision of law, restriction or provision
contained in any instrument or agreement binding upon the Guarantors. This
Guaranty will not render the Guarantors insolvent or unable to pay their debts
as they mature, or leave them with inadequate capital. Guarantors acknowledge
that entry into this guaranty agreement is a condition to Licensor's entry into
the License Agreement with Licensor and agree to waive any defenses to the
enforcement of this Guaranee or any rights of Licensor created hereby.
This document sets forth the entire understanding between the parties with
respect to its subject matter. It may not be modified, amended or superseded,
and no provision hereof may be waived, except by a writing executed by
Guarantors and by Licensor which, by its terms makes specific reference hereto.
This document shall be construed under the laws of the State of New Jersey
applicable to contracts executed and to be fully performed in such jurisdiction,
without reference to any conflicts of laws provisions thereof. Guarantors
consent to the personal jurisdiction and venue of the courts of the State of New
Jersey, in the County of Morris, and to the personal jurisdiction and venue of
the United States District Court for the District of New Jersey. Notices and
process to Guarantors may be given by certified mail at the addresses set forth
below.
IN WITNESS WHEREOF, the Guarantors have duly executed and delivered this
Guarantee, effective as of March 30, 1998.
Allan Weinstein
/s/ Allan Weinstein /s/ Judy Bryant
(Signature) (Notary Public)
(seal)
Residing at 2400 W. Copan Rd. #9
Pompano Beach FL 33069
Harold Tattleman
/s/ Harold Tattleman /s/ Cathleen Balka
(Signature) (Notary Public)
(seal)
Residing at 807 Willow Hills Lane
Prospect Hghts. ILL 60070
Leslie Sugar
/s/ Leslie Sugar /s/ Cathleen Balka
(Signature) (Notary Public)
(seal)
Residing at 2197 Lake Shore Cir.
Arlington Hts. IL 60004