LICENSE and DISTRIBUTION AGREEMENT
THIS AGREEMENT, is made at Aventura, Florida, as of the 28th day of
October, 1997, by and between
OTAM SpA, a corporation organized under the laws of Italy, with its
registered offices at Via S. Siro, 1, 16038 Santa Margherita Ligure (Ge),
Italy ("LICENSEE")
and
CIGARETTE RACING TEAM, INC., a corporation organized under the laws of the
State of Florida, U.S.A., with offices at 3131 N.E. 188th Street, Aventura,
Florida 33180, U.S.A. ("LICENSOR")
(hereinafter collectively referred to as ("The Parties")
RECITALS
LICENSEE and LICENSOR, have read this Agreement (hereinafter called
"Agreement") and understand and accept the terms, conditions, and covenants
contained in this Agreement as being reasonably necessary to maintain LICENSOR's
standards and business practices as it relates to the retaining of entities
utilizing the LICENSOR's Marks (hereinafter called ("Marks").
WHEREAS, LICENSOR is to the best of its knowledge and belief, the
registered owner of the trademarks, service marks, and business names, and
registrations for such trademarks, service marks and business names "Cigarette")
in International Class 12, as listed on Schedule A hereto; and
WHEREAS, LICENSEE is desirous of obtaining rights in LICENSOR's Mark for
use in connection with manufacturing, selling and/or distributing of specific
watercraft bearing such Mark which are, respectively 45 feet and 55 feet in
length as more specifically defined in Schedule B, hereto (the "Boats").
LICENSEE has investigated and become familiar with LICENSOR and desires
upon the terms and conditions set forth herein to enter into this Agreement.
LICENSEE acknowledges that it is essential to the maintenance of the high
standards of LICENSOR, that LICENSEE maintain and adhere to the standards,
procedures and policies described herein.
THEREFORE, The Parties, intending to be legally bound, for and in
consideration of the mutual covenants hereinafter following, do mutually
covenant and agree:
Page 1 of 12
1. GRANT OF LICENSE
LICENSOR grants to LICENSEE the exclusive, world-wide right and
license to use the LICENSOR's Mark in connection with manufacture, sale,
and/or distribution of the Boats. It is understood and agreed that LICENSEE
shall have no right of sublicense or assignment hereunder under any
condition.
2. NON-DISCLOSURE
As a condition of this Agreement, The Parties agrees that during the
term of this Agreement and any subsequent renewals as defined in Section 5
hereto, The Parties shall not disclose to any third party the terms of this
Agreement.
The Parties acknowledges that each individually would suffer
irreparable harm which could not be satisfied by monetary damages, should
either of The Parties violate the confidentiality of this Agreement and the
terms and conditions hereof, and the undertakings contemplated by this
Agreement.
3. QUALITY MAINTENANCE
LICENSEE agrees to notify LICENSOR by facsimile, first class mail or
overnight mail of any Sales Order (the "Sales Order") for the purchase of a
Boat and thereafter to further notify LICENSOR by same means of the
completion and delivery of such Boat as described in said Sales Order.
LICENSEE undertakes to manufacture the Boats in accordance with
descriptions set forth in Schedule B, applying the high quality standards
required for boats for their class and category and bearing the Mark. Upon
reasonable written request of LICENSEE, which written request shall be made
no more than three days after receipt of such notification in LICENSEE's
offices, the inspection of any Boat utilizing LICENSOR's Marks. If LICENSOR
disapproves of any product submitted for review under this Section 2,
LICENSOR shall notify LICENSEE of LICENSOR's disapproval in writing within
ten (10) days of receipt, in LICENSEE's offices, of such specifications.
Such written disapproval shall set forth in detail:
a) Each disapproval
b) Each defect of each disapproval, and
c) Non-binding, commercially reasonable suggestions for correcting
each such defect.
Page 2 of 12
4. TERM
A. Initial Term
The initial term of this Agreement shall be for a period of
twenty-four (24) months, commencing on the date first mentioned above,
subject to the terms and conditions set forth herein.
B. Renewal Option
LICENSEE shall have the option to renew this Agreement for two (2)
additional periods of twenty-four (24) months each. In all cases,
renewal shall require that: (i) LICENSEE not be in violation of this
Agreement or any other Agreement between LICENSOR and LICENSEE; (ii)
LICENSEE give written notice of their election to renew not less than
three (3) months prior to the end of the term then in effect, and
(iii) LICENSEE shall have paid to LICENSOR pursuant to Section 5B
hereof royalties of at least Six Hundred Thousand United States
(US$600,000) Dollars, during the initial term inclusive of the Advance
Royalty (as defined in Section 5A hereof). If any rules or laws
modifies, alters or amends all or part of the renewal provisions, then
such provisions shall be modified, altered or amended accordingly, so
as to be in full compliance with such rules and laws.
C. Subsequent Renewal Options
Subsequent to the periods as mentioned in Paragraph 4B hereto,
LICENSEE shall have the option to renew this Agreement for two (2)
additional periods of twenty-four (24) months each, if (i) LICENSEE
not be in violation of this Agreement or any other Agreement between
LICENSOR and LICENSEE; (ii) LICENSEE give written notice of their
election to renew not less than three (3) months prior to the end of
the term then in effect; and (iii) during the last term then in effect
LICENSEE shall have paid to LICENSOR pursuant to Section 5B a minimum
of Six Hundred Thousand United States (US$600,000) Dollars.
This Agreement shall continue in force and effect for as provided for
in Section 4 herein and subject to all other terms and conditions set forth
in this Agreement.
5. ROYALTY
A. LICENSEE shall, upon execution of this Agreement, pay to LICENSOR an
advance on royalties in the sum of Four Hundred Thousand United States
Dollars (US$400,000)(the "Advance Royalty").
Page 3 of 12
B. LICENSEE shall pay to LICENSOR as a royalty a percentage of the gross
revenues received by LICENSEE for each Boat sold which bears the Mark.
Said payment shall be made no later than fifteen (15) days after the
receipt of payment by LICENSEE. Payments are to be made at the offices
of LICENSOR, or to such other address as LICENSOR shall notify
LICENSEE, as follows:
(i) on the first three (3) Boats sold ten (10%) percent
(ii) on the fourth and fifth Boats sold nine (9%) percent
(iii) on the sixth Boat sold eight (8%) percent
(iv) any subsequent Boats sold seven and one-half
(7.5%) percent
C. On the sale of any Boats, until Four Hundred Thousand United States
Dollars (US$400,000) in royalties have been earned, the royalties
earned will be a credit against the Advance Royalty.
D. During the term hereof, LICENSEE shall deliver to LICENSOR a Report
(the "Report") of all monies received by LICENSEE during each calendar
quarter with respect to the sale of Boats, no later than 30 days of
the end of the then applicable calendar quarter. The Report shall
fully disclose the amount of income from the sale of the Boats for the
then applicable quarter.
E. LICENSEE shall not be obliged to pay any minimum royalties or monies
to LICENSOR except as explicitly required in this Section 5.
6. GOODWILL
A. LICENSEE recognizes the value of the goodwill associated with the
licensing of the Boats and that the Mark has a secondary meaning in
the mind of the public. LICENSEE acknowledges that the Mark (including
all rights therein and goodwill associated therewith) shall, as
between LICENSEE and LICENSOR, be and remain the exclusive and
complete property of the LICENSOR. LICENSEE will not, during the term
of this Agreement or thereafter, question or challenge the property
right of LICENSOR therein, or the validity of this Agreement.
B. LICENSEE acknowledges and agrees that:
(i) The Mark as owned by LICENSOR shall be and remain the sole and
complete property of LICENSOR;
(ii) LICENSEE shall not at any time acquire or claim any right, title
or interest of any nature whatsoever in the Mark by virtue of
this Agreement or of LICENSEE's uses thereof in connection with
the Boats;
Page 4 of 12
(iii) Any right, title or interest in or relating to the Mark which
comes into existence during the term hereof as a result of the
exercise by LICENSEE of any right granted to it hereunder shall
immediately and automatically vest in LICENSOR.
(iv) LICENSEE acknowledges the validity of the Mark and agrees never
to contest or assist others to contest the validity thereof.
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS:
A. LICENSEE represents, warrants and undertakes as follows:
(i) LICENSEE is free to enter into and fully perform this Agreement;
(ii) All designs, materials and intellectual property furnished by
LICENSEE in connection with each of the Boats will be of
LICENSEE's own and original creation (except for matters in the
public domain or material which LICENSEE is fully licensed to
use;
(iii) The Boats and the manufacture, advertisement, distribution and
sale thereof hereunder will not infringe upon or violate any
rights of any third party of any nature whatsoever;
(iv) The Boat will be of high standard in style, appearance and
quality, will be safe for users and will comply with all
applicable government rules, guidelines, safety codes and
regulations;
(v) The Boat will be manufactured, advertised, distributed and sold
in accordance with all applicable federal, state and local laws
in a manner that will not reflect adversely upon LICENSOR;
(vi) LICENSEE will use its best efforts to obtain the maximum sales
thereof during the term of this Agreement, will fill orders
promptly within industry standards and will provide a customer
service representative dedicated to the sales of the Boats; and
(vii) LICENSEE will not manufacture, advertise, distribute or sell and
will not authorize the manufacture, advertising, distribution or
sale of the Boats in any manner, at any time or in any place not
specifically licensed hereunder.
Page 5 of 12
B. LICENSOR warrants, represents and undertakes as follows:
(i) LICENSOR has the right to grant the license granted herein and it
is free to enter into and fully perform this Agreement; and
(ii) LICENSOR has applied for and obtained trademark registration for
the Mark and LICENSOR hereby agrees to maintain such registration
in full force and effect.
8. INDEMNITIES
A. LICENSEE will at all times indemnify and hold LICENSOR, its officers,
directors and employees and those with whom LICENSOR has contractual
arrangements with respect to the Boats harmless from and against any and
all claims, damages, liabilities, costs and expenses, (including attorneys
fees), arising out of any alleged defects (whether latent or patent) in the
Boats, or out of any breach or alleged breach by LICENSEE of any
representation, warranty, agreement or undertaking made by LICENSEE herein,
including but not limited to any infringement or violation of any third
party's rights with respect to any patent, design, intellectual property or
manufacture of the Boats.
B. LICENSOR will at all times indemnify and hold LICENSEE, its officers,
directors and employees and those with whom LICENSEE has contractual
arrangements from and against any and all claims, damages, liabilities,
costs and expenses, (including attorneys fees), arising out of any breach
or alleged breach by LICENSOR of any representation, warranty, agreement or
undertaking made by LICENSOR herein.
C. During the term hereof, and any subsequent renewals thereof, LICENSEE shall
cause to be furnished by a prime rate bank to LICENSOR a guarantee for the
maximum sum of Four Hundred Thousand United States Dollars (US$400,000),
covering the risk that a Boat owner may make a claim against LICENSOR in
connection with repairs caused by defects (both latent and patent) in the
manufacture of the Boats by LICENSEE.
9. INSURANCE
During the term hereof LICENSOR shall maintain product liability
insurance in the amount of Two Million United States Dollars (US$2,000,000)
at its own expense with a responsible insurance carrier. This insurance
shall name LICENSOR as an additional insured and will insure against any
claims, suits, losses, damages, costs and expenses (including attorneys
fees) involving or relating to any actual or alleged harm, death, injury to
any person
Page 6 of 12
or loss or damage to any property arising out of or resulting from any
defect or alleged defects in the Boats. The policy will also provide for at
least sixty (60) days prior written notice to LICENSOR and LICENSEE of the
cancellation or any substantial modification of the policy. As proof of
insurance, a fully paid certificate of insurance naming LICENSOR as an
insured party will be submitted to LICENSOR by LICENSEE before any Boats
are offered for sale.
10. DEFAULT, BANKRUPTCY AND FORCE MAJEURE:
A. Default: Upon the occurrence of any of the following events (each of
which is a "Default"), then in addition and without prejudice to any
rights which it may have at law, in equity or otherwise, LICENSOR
shall have the right to upon not less than sixty (60) days written
notice to LICENSEE specifying the basis for defaults, to terminate
this Agreement, and/or to require the immediate payment of any
royalties due or to become due hereunder:
(i) LICENSEE fails to make any payment of royalties or furnish any
statement in accordance herewith which failure extends for a
period in excess of thirty (30) days; or
(ii) LICENSEE fails to comply with any other of LICENSEE's obligations
hereunder or materially breaches any warranty made by it
hereunder and does not cure such failure or breach within thirty
(30) days after notice thereof.
B. Bankruptcy: If a voluntary petition in bankruptcy is filed by LICENSEE
and is not dismissed within thirty (30) days thereafter, a receiver or
trustee of any of LICENSEE's property is appointed and such
appointment is not vacated within (30) days thereafter, or LICENSEE
takes advantage of any insolvency law, then LICENSOR shall have the
right to terminate this Agreement, and/or to require the immediate
payment of any royalties due or to become due hereunder.
C. Force Majeure: In the event that LICENSEE is prevented from
manufacturing or distributing the Boat because of any act of God,
unavoidable accident, fire, epidemic, strike, lockout, or other labor
dispute; war, riot or civil commotion, act of public enemy, enactment
of any rule, law, order or act of governmental instrumentality
(whether federal, state, local or foreign), or other cause of a
similar or different nature beyond LICENSEE's control, and such
condition continues for a period of three (3) months or more, either
party hereto shall have the right to terminate this Agreement
effective at any time during the continuation of such condition by
giving the other party at least thirty (30) days notice to such
effect.
Page 7 of 12
D. LICENSEE may, in its discretion, terminate its license under this
agreement by giving at least sixty (60) days written notice to
LICENSOR.
11. NO JOINT VENTURE
Performance by the parties under this Agreement shall be as
LICENSOR-LICENSEE. No product or service developed pursuant to the terms of
this Agreement, and no provision contained herein, shall be construed to
constitute a joint venture or partnership between the parties, nor shall
either party act as the agent for each other for any purpose.
12. NOTICES
A. All notices, requests, demands, payments, consents and other
communications hereunder shall be transmitted in writing and shall be
deemed to have been duly given when sent by registered certified
United States mail, postage prepaid, or other form of delivery which
provides for a receipt, and sender is in receipt of a delivery notice,
signed by recipient, if addressed as follows:
LICENSOR: CIGARETTE RACING TEAM, INC.
3131 N.E. 188th Street
Aventura, Florida 33180 U.S.A.
LICENSEE: OTAM SpA
Via S. Siro, 1
16038 Santa Margherita Ligure (Ge),
Italy
B. Address Change
Either of The Parties may change his address by giving notice of such
change of address to the other, but must comply with all other terms
of this Agreement.
C. Notice by Telegram or Facsimile
In the case of any notice required to be given by The Parties to each
other, telegraphic notice or facsimile transmission, shall not be
sufficient notice hereunder.
Page 8 of 12
13. ADDITIONAL ACTIONS
The Parties agree to execute such other documents and perform such
further acts as may be necessary or desirable to carry out the purposes of
this Agreement.
14. HEIRS, SUCCESSORS, AND ASSIGNS
This Agreement shall be binding and inure to the benefit of the
parties, their heirs, successors, and assigns.
15. ENTIRE AGREEMENT
A. The undersigned acknowledges that they, and each of them, have read
this Agreement in full; are cognizant of each and every one of the
terms and provisions hereof and are agreeable thereto; that no
representations or agreements, whether oral or written, except as
hereinafter set forth, have been made or relied upon; that any and all
prior agreements or understandings between the parties, relating to
the subject matter of this Agreement, whether oral or written are
automatically canceled by the execution of this agreement; that the
signatures affixed hereto were affixed as the wholly voluntary act of
the persons who signed this agreement; and that the terms and
provisions of this agreement cannot be changed or modified unless in
writing signed by an authorized corporate officer, director or agent
of LICENSEE and LICENSOR. No modification or amendment of any
provision of this Agreement shall be construed as a waiver, breach or
cancellation of any other provision.
B. No modification or amendment or any provision of this Agreement shall
be construed as a waiver, breach or cancellation of any other
provision.
C. This Agreement constitutes the sole agreement between the LICENSOR and
LICENSEE hereto pertaining to the subject matter described herein, and
effective as of the date of this Agreement.
16. WAIVER OF RIGHTS
Failure by either of The Parties to enforce any rights under this
Agreement shall not be construed as the waiver of such rights. Any waiver,
including waiver of default, in any one instance, shall not constitute a
continuing waiver or a waiver in any other instance. Any acceptance of
money or other performance by either of The Parties, shall not constitute a
waiver of any default, except as to the payment of the particular payment
or performance so received.
Page 9 of 12
17. VALIDITY OF PARTS
Any invalidity of any portion of this Agreement shall not affect the
validity of the remaining portion, and unless substantial performance of
this Agreement is frustrated by any such invalidity, this Agreement shall
continue in effect.
18. HEADINGS AND CONSTRUCTION
The headings used herein are for purposes of convenience only and
shall not be used in interpreting the provisions hereof. As used herein,
the male gender shall include the female and neuter genders; the singular
shall include the plural, the plural, the singular and termination shall
include expiration.
19. EXECUTION BY THE PARTIES
This Agreement shall not be binding on either of The Parties, unless
and until it shall have been accepted and signed by authorized officers or
directors of LICENSEE and LICENSOR.
20. ATTORNEY'S FEES
If either of The Parties hereto commences an action against the other,
arising out of or in connection with this Agreement, the prevailing of The
Parties shall be entitled to have and recover from the other Party its
reasonable attorneys' fees and costs at all trial and appellate levels.
21. ASSIGNMENT
Neither of The Parties may delegate any obligation under this
Agreement or assign this Agreement or any interest or right hereunder
without the prior written consent of the other and any such assignment or
transfer shall be null and voided.
22. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Any provision of this Agreement which
may be determined by a court of competent jurisdiction to be prohibited or
nonenforceable in any jurisdiction shall, as to that jurisdiction, be
effective to the extent of the prohibition or nonenforceability, without
invalidating the remaining provisions of this Agreement.
Page l0 of 12
23. ARBITRATION
Any controversy arising out of or relating to this Agreement will be
settled by arbitration in New York, New York, U.S.A. under the Commercial
Arbitration Rules then in effect of the American Arbitration Association by
one or more arbitrators in accordance with its rules. Any order, decision
or award resulting from any such arbitration shall be final and binding on
the Parties and shall be enforceable in any court of competent
jurisdiction.
24. DISTRIBUTION
A. LICENSEE does hereby grant to LICENSOR the exclusive right to cause
the sale of the Boats through its sales organization as sales agent,
to be compensated through a commission of fifteen (15%) percent on the
sale of each Boat sold through its efforts. Said commissions to be
paid no later than fifteen (15) days after the receipt of any such
payments by LICENSEE. Payments are to be made at the offices of
LICENSOR, or to such other address as LICENSOR shall notify LICENSEE.
B. LICENSOR, at its election, as distributor, shall be compensated by the
profit realized after having purchased Boats at list price less
fifteen (15%) percent (list price as defined in Schedule C hereto).
C. If, for any reason, LICENSOR's sales organization fails to sell at
least two (2) Boats in any one (1) year period, LICENSEE may terminate
LICENSOR's right to sell the Boats.
D. As a condition hereof, LICENSEE agrees to provide to LICENSOR, at
LICENSEE's expense, one (1) 55' Boat, one (1) 45' Boat (or both, at
its election), to be used for furthering LICENSOR's selling efforts by
displaying the same at trade shows and in LICENSOR's showroom. The
first Boat, a 45' model, will be delivered in mid January 1998. The
Boats will enter the U.S. on temporary three (3) month import permits,
renewable from time to time. Should any Boat be returned to Italy,
LICENSOR will pay for the cost of transport. Title to the Boats will
remain in LICENSEE.
25. NO PROJECTIONS OR REPRESENTATIONS
The Parties acknowledge and represent that no projections or
representations regarding the amount of income, sale, or profits they can
expect to earn or receive by virtue of this Agreement, has been received
from either of The Parties. The Parties acknowledge that no representations
or warranties inconsistent with this Agreement were made to induce each
other to execute this Agreement.
Page 11 of 12
The Parties acknowledge that neither of the Parties nor any other
person can guarantee the success of the business. The undersigned, by
signing this Agreement, acknowledge that they have read same and that it
has been requested to state in writing hereafter any terms, claims,
covenants, promises, or representations, including representations as to
any income, sales, or profit projections, that were made by either of the
parties or its representatives contrary to the provisions of this
Agreement, including the persons making same, the location, and date
thereof.
26. ACKNOWLEDGMENTS
LICENSEE and LICENSOR have all requisite authority to enter into this
Agreement, whether arising under applicable Federal or State laws, rules or
regulations, to which either of The Parties may be subject.
27. SURVIVAL
The provisions of Section 8 and 9 hereof and the obligations to pay
royalties pursuant to Section 5 hereof shall survive any termination of
this Agreement with respect to any Boats made or sold prior to such
termination and Sections 20 and 23 hereof and this Section 27 shall survive
any termination.
IN WITNESS WHEREOF, The Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CIGARETTE RACING TEAM, INC. OTAM SpA
/s/ Adam C. Schild /s/ Ugo Casa
By: Adam C. Schild By: Ugo Casa
Its: Chairman of the Board, Its: President
Chief Operating Officer
Page 12 of 12