LICENSE AGREEMENT
This Agreement, dated effective as of March 31, 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 WW MEXICANA, S.A.
de C.V., a corporation duly organized under the laws of Mexico, having a place
of business at Carr. Picacho Ajusco No. 238 - 7o. piso, Col. Jardines en la
Montana, C.P. 14210, Mexico, D.F.
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
region 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 June 30, 1999;
and (ii) each immediately subsequent full year during the term of this Agreement
commencing July 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 "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 WW Mexicana.
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 if Licensee has actual knowledge that such customer or
distributor 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 (as hereafter defined) shall be due on any
and all such sales of Goods which have been made in violation of the provisions
of this paragraph.
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 June 30, 2001 (the
"Initial Term"). At the end of the Initial Term, if (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, (ii) Licensee has satisfied and/or complied with all of its
obligations hereunder, (iii) Licensee is not in substantial default of the gross
sales projections set forth on Exhibit G, and (iv) Licensee has satisfactorily
performed under the projected business plan of Licensee, which shall be required
for the Initial Term and the 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, then this Agreement shall be automatically renewed for one three
(3)-year period which shall hereinafter be referred to as "Renewal Term."
"Initial Term" and "Renewal Term" shall collectively be referred to as the
"Term." A condition precedent to such renewal shall be the mutual agreement in
writing by both parties as to the minimum royalties, as defined herein, and the
gross sales projections, both of which shall be required for any Renewal Term,
provided, however, that the gross sales projections for the Renewal Term shall
be reasonable and in accordance with the economic, marketing and other factors
then prevailing in the market of the Territory in accordance with Licensee's
projections and analysis of such market conditions. In the event the parties do
not mutually agree upon such minimum royalties and gross sales projections for
the Renewal Term prior to the expiration of the Initial Term, this Agreement
shall expire at the end of the Initial 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. A breach or threatened breach of this
provision may be enjoined or restrained without bond or proof of actual damages
in any court having jurisdiction. and Licensee shall promptly reimburse Licensor
for all costs of such legal action.
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, provincial, state or local, 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 Licensee shall pay to Licensor by wire transfer, within ten (10) days after
the signing of this Agreement, as an advance royalty payment, the amount of
$100,000. The initial royalty payment shall be non-refundable and shall be
credited solely against the first year minimum royalty payment as set forth
herein.
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 directly or indirectly
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 F. If the Royalties payable to
Licensor for any Contract Quarter pursuant to Section 5.4 exceed the Minimum
Royalty for the period as set forth on EXHIBIT F, Licensee shall pay to Licensor
the difference between the Royalties actually payable for the Contract Quarter
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 or other 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
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.
5.4 Except for the Minimum Royalties which shall be paid in accordance with
the payment schedule set forth on Exhibit F, 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 with the final
payment due within thirty (30) days of the termination date of this Agreement.
Payment of Royalties shall accompany the quarterly statements required 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 two (2) years after the termination of this Agreement.
5.5 Within ten (10) 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 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. Within 60 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 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 three 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 5.5 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.
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, unless
otherwise mutually agreed to by the parties. Licensor acknowledges that Licensee
will incur substantial expense and effort promoting and marketing the licensed
Goods in the Territory during the Term of this Agreement. Therefore, Licensor
agrees that it shall not sell, distribute, or otherwise make available any of
the first quality new "A" stock Goods listed on Exhibit A, either directly or
indirectly, through direct sales or distribution or through sales or
distribution by any other entity in the Territory during the Term 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 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 shall provide written notice to Licensee that Licensee is in
default under the terms of the Agreement. The written notice to Licensee shall
specify with particularity the nature of the default and the actions required to
be taken by Licensee to remedy such default to Licensor's satisfaction in its
sole discretion. Licensee shall have thirty (30) days after the delivery of such
notice to remedy such default in compliance with the requirements of Licensor.
Thereafter, in the event Licensee has not remedied the default as set forth
above, Licensor shall have the right to terminate this Agreement effective upon
delivery to Licensee of notice that the Agreement is terminated. The parties
may, by written agreement, agree to extend beyond such thirty (30)-day period,
the period of time by which Licensee must remedy a default hereunder.
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 and all legal,
equitable or other remedies, rights or relief available to it, cumulatively,
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.
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 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 upon termination of this Agreement, any use of
the Trademarks, 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. In the event of any such use of the Trademarks following termination,
Licensor may seek any equitable or other relief, including enjoining such
activity, in any court having jurisdiction and Licensee shall be responsible for
all costs thereof.
12. SUBCONTRACTORS
Licensee shall obtain the written agreement, in the form set forth on SCHEDULE
12, from any subcontractor that is retained by Licensee to furnish Goods or
packaging using the Trademarks, as to the proper use of the Trademarks. If
necessary, Licensee shall use its best efforts to assist and cooperate with
Licensor to enforce its rights to the Trademarks against any 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 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 empowering document or
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
Licensee will, at all times during the Term of this Agreement, and where
specified for the period following expiration or termination of this Agreement,
maintain the following insurance:
1. COMMERCIAL GENERAL LIABILITY insurance, with Limits of Liability of at
least $250,000 for Bodily Injury or Property Damage and
Personal/Advertising Injury. Coverage is to be afforded for CONTRACTUAL
LIABILITY (coverage will be maintained for not less than three (3) years
following expiration or termination); COMPLETED OPERATIONS AND PRODUCTS
LIABILITY (coverage will be maintained for not less than three (3) years
following expiration or termination); and INDEPENDENT CONTRACTORS (Owner's
Protective) Liability. Licensor shall be named as ADDITIONAL INSURED for
all policy coverages. Coverage will be maintained by Licensee as respects
all its operations, premises and products in the territory in which
Licensee is authorized to operate and sell products.
2. WORKERS' COMPENSATION insurance providing statutory benefits as required by
Social Security or other laws of the jurisdiction(s) in which operations
will be performed, and EMPLOYER'S LIABILITY insurance as is obtainable
under the Commercial General Liability insurance required herein.
3. PHYSICAL LOSS OR DAMAGE insurance, covering Stock, Merchandise, Inventory,
Parts and Accessories while in transit from suppliers, manufacturers or
vendors, while at warehouse, store, storage or other premises, and while
in transit to Licensee's customers.
4. "EMPLOYEE DISHONESTY" (also known as "Fidelity") insurance in an amount
sufficient to protect against any loss which may occur as a result of
employee dishonesty, covering all officers, partners,
directors and employees of Licensee. Licensee shall maintain those
requirements and safeguards necessary to ensure against such losses.
All insurance required herein shall provide that Licensee has waived all rights
of recovery against Licensor, any subsidiaries and affiliates thereof, the
stockholders or partners, directors, officers, employees, and agents of all of
them. Licensee hereby agrees to hold all parties stated herein harmless and
indemnify them for all costs and expenses incurred by any of them if any insurer
attempts subrogation despite this agreement by Licensee. Licensor will be
notified sixty (60) days in advance, by certified mail, return receipt
requested, of any cancellation, material change or non-renewal of coverage
evidenced by the certificate. A certificate or certificates of insurance from
the insurance company(ies) signed by an authorized agent or employee of the
insurance company, showing the required insurance is in force, will be provided
to Licensor prior to the distribution or sale of any Goods. All certificates of
insurance should be addressed to Licensor at the address set forth in Section
21.4(a) of this Agreement.
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 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,
national economic crisis (which restricts credit or makes it inaccessible with a
resulting currency devaluation in excess of 20%), 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 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
19.1 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. However, notwithstanding anything to the
contrary contained herein, Licensor agrees that during the Term of this
Agreement, Licensor shall not seek an alliance, joint venture partner and/or
licensees within the Territory with the goal of distributing the first quality
new "A" stock Goods listed on Exhibit A, and Licensor shall not, either directly
or indirectly, by itself or through others, distribute such Goods within the
Territory without the prior written consent of Licensee.
19.2 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, within 60 days after notifying Licensor of such interest,
Licensee shall provide Licensor with (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,
notwithstanding anything to the contrary in 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:
WW Mexicana, S.A. de C.V.
Carr. Picacho Ajusco No. 238 - 7o piso
Col. Jardines en la Montana
C.P. 14210, Mexico, D.F.
Attention: Fernando Sanchez-Navarro M., President
[Facsimile No. (52)(5) 630-0122]
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 York, U.S.A., excluding the
conflicts of laws provisions thereof, and the courts of New York will have sole
and exclusive jurisdiction over the parties in any such dispute and venue shall
lie exclusively in New York County, New York. However, it is expressly
understood that this Section shall not preclude Licensor's right to make
application for, and seek enforcement of, any judgment or any 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.
21.12 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/ John J. Raab
John J. Raab
Senior Vice President - International
WW MEXICANA, S.A. DE C.V.
A Mexican Corporation
By: /s/ Fernando Sanchez-Navarro M.
Fernando Sanchez-Navarro M.
President