EXHIBIT 10.14
LICENSE AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of April, 1994, by and
between Winning Ways, Inc., a Missouri corporation, with offices at 9700
Commerce Parkway, Shawnee Mission, Kansas 66219, (hereinafter "Licensor"), and
Softwear Athletics, Inc., a Canada corporation, with offices located at 523
Cleveland Cres S.E., Calgary, Alberta, Canada T2G4RB (hereinafter "Licensee").
WHEREAS, Licensor is the owner of certain trademarks identified in Schedule
A hereto (the "Trademarks"), and any copyrights or other proprietary rights
associated with said Trademarks (hereinafter the "Rights"); and
WHEREAS, Licensee desires to use the Rights and/or the Trademarks on or in
association with the manufacture, offering for sale, sale, advertising,
promotion and distribution of certain products identified in Schedule B (the
"Licensed Products") in the countries identified in Schedule B (the "Licensed
Territory"); and
WHEREAS, Licensor is willing to grant Licensee such right to use the
Rights and/or the Trademarks on the Licensed Products in the Licensed Territory
in accordance with the terms and conditions recited herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions herein contained, it is hereby agreed as follows:
1. GRANT.
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(a) Licensor hereby grants to Licensee and Licensee hereby accepts the
exclusive, non-transferable, non-assignable license, without the right to grant
sublicenses, to use the Rights and Trademarks solely within the Licensed
Territory on the Licensed Products and/or in association with the manufacture,
advertising and promotion of the Licensed Products and the
offering for sale, sale, shipment and distribution of the Licensed Products: (i)
to retail stores and merchants for sale, shipment and distribution direct to the
public; and/or (ii) direct to the public. Licensee shall not knowingly permit
the Licensed Products to be sold or distributed outside of the Licensed
Territory.
(b) Licensor represents and warrants that it has the authority to
grant the Rights licensed herein. Licensor makes no representation that it has
the authority to grant, nor does it grant herein, the right to utilize the name,
symbol, or logo of any other licensee of Licensor, or reproductions of any
products produced by or for any other licensee of Licensor. Accordingly, it is
understood by the parties hereto that if any of the foregoing are to be utilized
in connection with the exercise of the license granted hereunder, it will be the
responsibility of Licensee to obtain all necessary permissions for the use of
such material.
(c) The license granted by Licensor to Licensee hereunder does not
include the right to, and Licensee shall not in any manner, use (or purport to
grant others the right to use) the Trademarks or the Rights for the purpose, in
whole or in part, of promoting any service or product other than the Licensed
Products. The license granted by Licensor to Licensee herein does not include,
and shall not be used by Licensee so as to imply, a testimonial or endorsement
of the Licensed Products or any other product or service by the Licensor.
(d) Nothing contained in Section 1(c) above shall prevent Licensee
from utilizing the Trademarks or the Rights in a non-endorsement and/or non-
testimonial manner in connection with the packages, cartons, advertising, point-
of-sale and/or promotional materials for the Licensed Products (the "Promotional
and Packaging Material") or require any separate payment in connection
therewith.
(e) All rights not expressly granted to Licensee in this Agreement
are specifically reserved to Licensor.
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2. TERM AND OPTIONS.
----------------
(a) This Agreement shall be effective and shall continue for an
initial term (the "First License Period") set forth on Schedule B, unless sooner
terminated pursuant to a provision of this Agreement.
(b) Licensor hereby grants to Licensee two (2) separately
exercisable options to extend the term of this Agreement for additional one-year
periods ("Second and Third License Periods, respectively). In order to exercise
each of the two options, Licensee must provide Licensor with written notice of
its intention to exercise each such option and such written notice must be
received by Licensor no earlier than one hundred twenty (120) days and no later
than ninety (90) days prior to the expiration of the License Period then in
effect. The attempted exercise of any option shall be void and of no effect if
Licensee (i) has breached or is then in breach of any of its obligations under
this Agreement, or (ii) fails during any License Period to make Net Sales
sufficient to generate Actual Royalties equal to or greater than the Guaranteed
Minimum Royalties as defined herein, or (iii) fails to make full and timely
royalty payments as provided herein. Licensee's performance in each License
Period shall be pursuant to the same terms and conditions recited in this
Agreement.
3. ROYALTIES.
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(a) Licensee agrees to pay Licensor a royalty at the percentage set
forth on Schedule B based on Net Sales (as defined in Subsection 3(b) below) of
the Licensed Products employing the Rights and/or the Trademarks by Licensee
(the "Actual Royalty"). Such Actual Royalty shall accrue when the Licensed
Products are sold, shipped, distributed, billed and/or paid for, whichever
occurs earlier, to a third party not affiliated with Licensee. For purposes of
this Agreement, "affiliated" means related in any manner through direct or
indirect ownership or control and includes joint venture arrangements.
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(b) "Net Sales" shall mean gross sales to third parties not
affiliated with Licensee at Licensee's regular price, less returns actually
credited. No other deductions shall be permitted. For example, there shall be no
deductions made for discounts, allowances, commissions, royalties, uncollectible
accounts, taxes, fees, assessments, impositions, payments or expenses of any
kind which may be incurred or paid by Licensee in connection with the royalty
payments due to Licensor hereunder, or for any costs incurred in the
manufacture, offering for sale, sale, advertising, promotion, shipment,
handling, distribution and/or exploitation of the Licensed Products. Licensee's
regular price shall include the royalty amount. Notwithstanding the foregoing,
Licensee shall be permitted to deduct the Canadian 10% withholding tax from the
royalties payable to Licensor.
(c) Actual Royalty payments shall be made by Licensee to Licensor
on all Licensed Products sold, shipped and/or distributed by Licensee, even if
not billed (such as in the case of introductory offers, promotions and the like
and sales, shipments and/or distributions to individuals and/or companies which
are affiliates or subsidiaries of Licensee), or if billed at less than
Licensee's regular price for such Licenced Products, based upon Licensee's
regular price for such Licensed Products sold to third parties not affiliated
with Licensee in the course of Licensee's normal distribution, shipment and
sales activities. Notwithstanding the foregoing, samples sold to salesmen shall
be subject to a royalty based on the price charged to the salesman.
(d) For each License Period of this Agreement, Licensee agrees to
pay Licensor a non-refundable guaranteed minimum royalty in the amount(s) and in
the manner set forth on Schedule B (the "Guaranteed Minimum Royalty"). Such
Guaranteed Minimum Royalty shall be paid as set forth on Schedule B. If, upon
termination or expiration of this Agreement or any License Period thereof, the
total royalties paid and/or payable by Licensee to Licensor
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during each such License Period is less than the Guaranteed Minimum Royalty,
Licensee shall immediately pay the amount of such difference to Licensor. Actual
Royalty payments based on Net Sales made during any License Period of this
Agreement shall be credited against the Guaranteed Minimum Royalty due for the
License Period in which such Net Sales were made.
4. STATEMENTS AND PAYMENTS.
-----------------------
(a) Licensee shall deliver to Licensor, at its offices, or to such
other address as Licensor may direct, on the fifteenth (15th) day following the
end of each calendar month during any License Period of this Agreement, and on
the fifteenth (15th) day of the month following termination or expiration of
this Agreement, a complete and accurate statement of its Net Sales of Licensed
Products, differentiated by product, for the immediately preceding calendar
month (or portion thereof) (the "Royalty Period"). Said statement shall be
certified as accurate by an officer of Licensee and shall include information
for gross sales of each product classification of the Licensed Products shipped,
distributed and/or sold by Licensee during the Royalty Period, returns actually
credited, computation of Net Sales and royalty due, and any other information
Licensor may from time to time reasonably request. Such statements shall be
furnished to Licensor whether or not any Licensed Products have been shipped,
distributed and/or sold, and whether or not Actual Royalties have been earned
during the Royalty Period. Statements shall be in a form acceptable to Licensor
and consistent with Schedule C hereto.
(b) The amount in United States dollars shown in Licensee's royalty
statements as being due Licensor shall be paid simultaneously with the
submission of such statements. In the event that the amount credited for returns
during any Royalty Period exceeds Licensee's royalty obligation to Licensor for
such period, Licensee may use such amount as a credit against future royalty
obligations of Licensee during the License Periods of this Agreement. In no
event, however, shall the amount credited for returns during any Royalty Period
be used upon
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termination or expiration of this Agreement as a credit against past royalty
obligations of or royalty payments made by Licensee. In no circumstances shall
Licensor be obligated to pay any amount to Licensee upon termination or
expiration of this Agreement on account of credits accrued by Licensee for
returns.
(c) Licensee's royalty statements and all amounts payable to Licensor by
Licensee shall be submitted to:
Winning Ways, Inc.
9700 Commerce Parkway
Lenexa, Kansas 66219
Attn: Larry Graveel
or such other address as the Licensor may direct.
(d) The receipt and/or acceptance by Licensor of any of the statements
furnished or royalties paid hereunder to Licensor (or the cashing of any royalty
checks paid hereunder) shall not preclude Licensor from questioning the
correctness thereof at any time and, in the event that any inconsistencies or
mistakes are discovered in such statements or payments, they shall immediately
be rectified by Licensee and the appropriate payment shall be made by Licensee.
(e) All payments made hereunder shall be in United States dollars,
unless otherwise specifically agreed upon by the parties. The exchange rate for
converting foreign currencies into United States dollars shall be the exchange
rate of the Royal Bank of Canada in effect on the royalty due date.
(f) Time is of the essence with respect to all payments to be made
hereunder by Licensee. Interest at a rate of the lesser of one and one-half
percent (1 1/2%) per month or the maximum rate allowed by law, compounded daily,
shall accrue on any amount due Licensor hereunder from and after the date upon
which the payment is due until the date of receipt of
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payment. Collection of interest by Licensor shall be without prejudice to any
other rights and remedies available to Licensor.
5. AUDIT.
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(a) Licensee agrees to keep accurate books of account and records
at its principal place of business covering all transactions relating to the
license granted herein and pertaining to the items required to be shown in the
Licensee's royalty statements to be submitted pursuant hereto, including without
limitation, invoices, correspondence, banking, financial and other records.
Licensor and its duly authorized representatives shall have the right, upon
reasonable notice, at all reasonable hours of the day, to audit Licensee's books
of account and records, and all other documents and material in the possession
or under the control of Licensee, with respect to the subject matter and the
terms of this Agreement and to make copies and extracts thereof. In the event
that any such audit reveals an underpayment by Licensee, Licensee shall
immediately upon demand remit payment to Licensor in the amount of such
underpayment plus interest calculated at the rate of the lesser of one and one-
half percent (1 1/2%) per month or the maximum rate allowed by law, compounded
daily, calculated from the date such payment(s) were actually due until the date
such payment is actually made. Collection of interest by Licensor shall be
without prejudice to any other rights and remedies available to Licensor. In the
event that any such underpayment is greater than Five Thousand Dollars ($5,000),
or two percent (2%) of the royalties due for the period audited, whichever is
less, Licensee shall reimburse Licensor for the costs and expenses of such
audit.
(b) All books of account and records of Licensee covering all
transactions relating to the license granted herein shall be retained by
Licensee for at least two (2) years after the expiration or termination of this
Agreement for possible inspection by Licensor.
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6. QUALITY, NOTICES, APPROVALS AND SAMPLES
---------------------------------------
(a) The Licensed Products and the Promotional and Packaging
Material: shall be of high quality in design, material and workmanship so as to
be suited to the favorable advantage, protection and enhancement of the
Trademarks and the Rights; in no event shall be of lesser quality than the best
quality of similar products and promotional, advertising, and packaging material
presently shipped, distributed, sold and/or used by Licensee in the Licensed
Territory; shall be safe and suitable for their intended purpose; and shall be
manufactured, sold and/or distributed in full conformance with all applicable
laws and regulations.
(b) Licensee may not manufacture, use, offer for sale, sell,
advertise, promote, ship and/or distribute any Licensed Products, or any
Promotional and Packaging Material relating to the Licensed Products, until it
has received written approval of same in the manner provided herein from
Licensor. Such approval shall not be unreasonably withheld. Should Licensor fail
to approve in writing any of the submissions furnished it by Licensee within
fourteen (14) business days from the date of submission thereof, such failure
shall be considered to be a disapproval thereof.
(c) Before commencing or authorizing third parties to commence the
design or development of Licensed Products or Promotional and Packaging Material
which have not been previously approved in writing by Licensor, Licensee shall
submit at its own cost to Licensor, for approval, a written description of the
concept of such Licensed Product and/or Promotional and Packaging Material,
including full information on the nature and function of the proposed item and a
general description of how the Rights and/or the Trademarks and other material
will be used thereon. Licensee shall next submit at its own cost to Licensor,
for approval, complete layouts and descriptions of the proposed Licensed
Products and/or Promotional and Packaging Material showing exactly how and where
the Rights and the
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Trademarks and all other art work and wording will be used. Thereafter,
Licensee shall submit at its own cost to Licensor, for approval, pre-production
models or prototype samples of the proposed Licensed Products and/or Promotional
and Packaging Material, if not adopted from Licensor's designs. Finally,
Licensee shall submit at its own cost to Licensor, for approval, actual proofs
or final pre-production samples of the proposed Licensed Products and/or
Promotional and Packaging Material. Licensee shall not proceed beyond any of
the above stages where approval is required without first securing the express
written approval of Licensor.
(d) Upon commencement of manufacture, shipment and distribution of
the Licensed Products and/or Promotional and Packaging Material relating to the
Licensed Products after all required approvals have been given by Licensor,
Licensee shall submit, at its own cost, to Licensor an additional twelve (12)
sets of the Licensed Products and two (2) sets of the Promotional and Packaging
Material.
(e) Licensor may periodically during any License Period of this
Agreement require that Licensee submit to Licensor, at no cost to Licensor, up
to twelve (12) additional sets of the Licensed Products, and the Promotional and
Packaging Material relating to the Licensed Products, for subsequent review of
the quality of and copyright and trademark usage and notice on same and for any
other purpose that Licensor deems appropriate.
(f) After the required approval has been secured from Licensor
pursuant to Section 6(c) above, Licensee shall not depart from the
specifications, quality or appearance thereof in any respect without first
obtaining the express prior written approval of Licensor. Licensee shall make
submissions to Licensor and obtain approvals in the manner required above each
time new or revised concepts, layouts, descriptions, art work, models, prototype
samples and/or production samples are created, developed and/or adopted by
and/or for Licensee.
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(g) Subject to reasonable obligations of confidentiality by
Licensor, Licensee agrees that to assure that the provisions of this Agreement
are being observed, it will allow Licensor or its designees to enter Licensee's
premises and/or the premises where the Licensed Products are being manufactured
and the facilities in which the Licensed Products are being packaged, during
regular business hours, and upon reasonable notice, for the purpose of
inspecting the Licensed Products and the Promotional and Packaging Material
relating to the Licensed Products.
(h) In order to ensure that the Licensed Products and the
Promotional and Packaging Materials are manufactured, offered for sale, sold,
advertised, promoted, shipped and/or distributed as set forth herein, in the
event that the quality standards and/or trademark and copyright usage and notice
requirements herein referred to are not met, or in the event that said quality
standards and/or trademark and copyright usage and notice requirements are not
maintained throughout the period of manufacture, offering for sale, sale,
advertising, promotion, shipment and/or distribution of any Licensed Products
hereunder, then, in addition to any other rights available to Licensor under
this Agreement or otherwise, upon receipt of written notice from Licensor,
Licensee shall immediately discontinue any and all manufacture, offering for
sale, sale, advertising, promotion, shipment and distribution of such Licensed
Products and/or Promotional and Packaging Material in connection with which the
said quality standards and/or trademark and copyright usage and notice
requirements have not been met.
7. ARTWORK.
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(a) The form and content of all artwork for use in any media shall
be subject to the express written approval of Licensor prior to its use by
Licensee in connection with the Licensed Products or the Promotional and
Packaging Material. If Licensee desires to use artwork previously approved by
Licensor on a different Licensed Product or on different
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Promotional and Packaging Material, Licensee shall first submit samples of such
proposed use to Licensor for approval thereof. Any artwork or graphics provided
to Licensee by Licensor may only be used by Licensee on the Licensed Products
which utilize Licensor's Trademarks.
(b) Except as provided in Section 18(c) of this Agreement,
notwithstanding any rights otherwise granted to Licensee by state or federal
trademark or copyright laws or otherwise, Licensee shall not without express
prior written permission of Licensor directly or indirectly use, or authorize
others to use, in any manner whatsoever, any of the artwork or designs or other
material involving the Rights and/or Trademarks, or any reproductions thereof,
following the expiration or termination of this Agreement, notwithstanding their
invention or use by Licensee, and Licensee shall destroy all such artwork and/or
designs and/or other material and furnish to Licensor satisfactory evidence of
their destruction, or deliver the same to Licensor. All artwork shall be deemed
created as a work made for hire in favor of Licensor and, to the extent it is
not, all rights in the artwork shall be assigned to Licensor. Licensee shall
represent that it has equivalent agreements in place for all personnel who are
not full-time employees of Licensee.
8. OWNERSHIP OF RIGHTS.
-------------------
(a) It is understood and agreed that Licensor is the sole and
exclusive holder of all right, title and interest in and to the Rights and/or
the Trademarks for the duration of this Agreement.
(b) Nothing contained in this Agreement shall be construed as an
assignment to Licensee of any right, title and/or interest in or to the Rights
and/or to the Trademarks, it being understood that all right, title and interest
relating thereto are expressly reserved by Licensor except for the Rights being
licensed hereunder.
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(c) No license is being granted hereunder as to any products other
than the Licensed Products and only in the Licensed Territory. Licensor reserves
for such use as it may determine all rights of any kind other than the Rights
herein licensed to Licensee.
(d) Licensee shall not use the Rights and/or the Trademarks other
than as permitted herein and, in particular, shall not incorporate the Rights
and/or the Trademarks in Licensee's corporate or business name or in any of
Licensee's other trademarks or service marks, in any manner whatsoever. Licensee
agrees that in using the Rights and Trademarks, it will in no way represent that
it has any rights, title and/or interest in and/or to the Rights and/or the
Trademarks other than those expressly granted under the terms of this Agreement.
Licensee further agrees that it will not use and/or authorize the use, either
during or after the term of this Agreement, of any configuration, trademark,
trade name or other designation confusingly similar to the Rights and/or any of
the Trademarks.
9. GOODWILL AND PROMOTIONAL VALUE.
------------------------------
(a) Licensee recognizes the value of the goodwill associated with the
Rights and/or the Trademarks and acknowledges that the Rights and/or the
Trademarks, and all rights therein and the goodwill pertaining thereto, belong
exclusively to Licensor. Licensee further recognizes and acknowledges that the
Rights and/or the Trademarks have acquired secondary meaning in the mind of the
public. Licensee agrees that during any License Period of this Agreement, or
thereafter, it will not dispute or attack the title or any rights of Licensor in
and to the Rights and/or the Trademarks or the validity of the license granted
herein.
(b) Licensee agrees that its use of the Rights and/or the Trademarks
shall inure to the benefit of Licensor and that Licensee shall not, at any time,
acquire any rights in the Rights and/or the Trademarks by virtue of any use it
may make of the Rights and/or of the Trademarks. Licensee hereby assigns to
Licensor any and all trademarks and trademark rights
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in the Trademarks and/or Rights created by such use, together with the goodwill
of the business in connection with which such Trademarks are used.
(c) Licensee acknowledges that Licensor is entering into this
Agreement not only in consideration of the royalties paid hereunder but also in
recognition of the intrinsic benefit to proper maintenance of the reputation of
Licensor as a result of the manufacture, offering for sale, sale, advertising,
promotion, shipment and distribution of the Licensed Products by Licensee in
accordance with the provisions of this Agreement. Licensee therefore
acknowledges that its failure to manufacture, offer for sale, sell, advertise,
promote, ship and distribute the Licensed Products in accordance with the
provisions of this Agreement, including without limitation its obligations to
protect and enhance the value of the Trademarks and the Rights, will result in
immediate and irreparable damage to Licensor in connection with promotion of the
Rights and/or the Trademarks, and that there will be no adequate remedy at law
for the failure by Licensee to abide by such provisions of this Agreement.
Accordingly, Licensee agrees that in the event of any breach by Licensee, in
addition to all other remedies available to it hereunder, Licensor may at its
sole option commence an action in any court having jurisdiction or an
arbitration proceeding, and shall be entitled to injunctive relief against any
such breach as well as such other relief as any arbitrator(s) or court with
jurisdiction may deem just and proper. Licensee waives all requirements of a
bond in connection therewith.
10. TRADEMARK AND COPYRIGHT PROTECTION.
----------------------------------
(a) The license granted herein is conditioned upon Licensee's full
and complete compliance with the provisions of the trademark and copyright laws
of the United States and any foreign country or countries in the Licensed
Territory.
(b) Licensee agrees to permanently affix to all Licensed Products and
all Promotional and Packaging Material the appropriate legends, markings and/or
notices as
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required by Licensor, to give appropriate notice to the consuming public of
Licensor's right, title and interest therein.
(c) Licensee agrees that it will not use, distribute or sell any
Licensed Products or distribute any Promotional or Packaging Materials which do
not carry notices meeting the requirements of this Agreement.
(d) Licensee shall use no other markings, legends and/or notices on
or in association with the Licensed Products or on or in association with the
Promotional and Packaging Material other than those specified above and such
other markings, legends and/or notices as may be specified by Licensor, without
first obtaining Licensor's express written approval.
(e) Licensor has the right, but not the obligation, to obtain at
its own cost, appropriate trademark and copyright protection for the Rights
and/or the Trademarks in association with the Licensed Products in any and all
countries of the Licensed Territory, in the name of Licensor or in the name of
any third party selected by Licensor.
(f) Licensee shall keep appropriate records (including copies of
pertinent invoices and correspondence), and advise Licensor, relating to the
dates when each of the Licensed Products is first placed on sale or sold in each
country of the Licensed Territory, and the dates of first use in each country of
each different Trademark and/or of the Rights on the Licensed Products and
Promotional and Packaging Material. If requested to do so by Licensor, Licensee
also agrees to supply Licensor with samples, facsimiles or photographs of the
trademark usages in question and other information which will enable Licensor to
complete and obtain trademark applications or registrations, or to evaluate or
oppose any trademark or design applications, registrations, or uses of third
parties.
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(g) Licensee agrees that it shall not at any time within the
Licensed Territory or anywhere else in the world apply for any copyright or
trademark protection which would affect Licensor's ownership of any rights in
the Rights and/or the Trademarks, nor file any document with any governmental
authority or assert directly or indirectly any right or take any other action
which could affect Licensor's ownership of the Rights and/or the Trademarks, or
aid or abet anyone else in doing so.
(h) Licensee agrees to cooperate in all reasonable respects with
Licensor in protecting and defending the Rights and/or the Trademarks. In the
event that any claim or problem arises with respect to the protection of the
Rights and/or the Trademarks in the Licensed Territory, Licensee shall promptly
advise Licensor on in writing of the nature and extent of same. Licensor has no
obligation to take any action whatsoever in the event that any claim or problem
arises with respect to the protection of the Rights and/or the Trademarks.
11. INFRINGEMENTS.
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(a) Licensee agrees to cooperate with Licensor in the enforcement
of Licensor's right in the Rights and/or the Trademarks. Licensee agrees to
promptly notify Licensor in writing of any infringements or imitations by third
parties of the Rights, the Trademarks, the Licensed Products and/or the
Promotional and Packaging Material which may come to Licensee's attention.
Licensor shall have sole right to determine whether or not any action shall be
taken on account of any such infringement or imitation. Licensor, if it so
desires, may commence or prosecute any claims or suits in its own name or in the
name of Licensee, or join Licensee as a party thereto; provided, however, that
Licensee shall not be required to incur more than nominal out-of-pocket expense
as a consequence of being joined as a party by Licensor. Licensee agrees not to
contact any third party, not to make any demands
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or claims, and not to institute any suit or take any other action on account of
such infringements or imitations without obtaining the prior express written
permission of Licensor.
(b) With respect to all claims and suits involving the Rights and/or
the Trademarks, including suits in which Licensee is joined as a party, Licensor
shall have the sole right to employ counsel of its choosing and to direct the
handling of the litigation and any settlement thereof. Licensor shall be
entitled to receive and retain all amounts awarded to Licensor as damages,
profits or otherwise in connection with such suits.
12. INDEMNIFICATION
---------------
Licensee hereby agrees to defend, indemnify and hold harmless
Licensor, its officers, directors, employees, partners and agents, from and
against any and all claims, demands, causes of action and judgments ("Claims")
arising out of or in connection with: (a) Licensee's design, manufacture,
distribution, shipment, advertising, promotion, offering for sale and/or sale of
the Licensed Products and/or the Promotional and Packaging Material, including
but not limited to any allegedly unauthorized use by Licensee of any trademark,
copyright, patent, process, idea, method, device, logo, symbol, insignia, name,
term or material other than those licensed herein; and (b) any alleged defect(s)
of the Licensed Products and/or the Promotional and Packaging Material.
With respect to the foregoing indemnity, Licensee agrees to defend and
hold Licensor harmless at no cost or expense to Licensor whatsoever, including,
but not limited to, attorneys' fees and court costs. Licensor shall have
approval over Licensee's selection of counsel and be kept apprised of all
developments. Under no circumstances shall Licensee have the right to settle or
otherwise compromise any claim without the prior written consent of Licensor.
Licensor shall have the right to defend itself in any such action or proceeding
with attorneys of Licensor's selection.
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13. INSURANCE.
---------
Licensee shall, throughout the License Period(s) of this Agreement
and for three (3) years after the expiration of this Agreement, obtain and
maintain at its own cost and expense from a qualified insurance company
acceptable to Licensor, comprehensive general liability insurance, the form of
which must be acceptable to Licensor, naming Licensor as an additional insured.
Such policy shall provide protection against any and all claims, demands and
causes of action arising out of any defects or failure to perform, alleged or
otherwise, of the Licensed Products or any material used in connection therewith
or any use thereof. The amount of coverage shall be a minimum of One Million
Dollars ($1,000,000) combined single limit. The policy shall provide for twenty
(20) days' notice to Licensor from the insurer by Registered or Certified Mail,
return receipt requested, in the event of any modification, cancellation or
termination. Licensee agrees to furnish Licensor a certificate of insurance
evidencing same within thirty (30) days after execution of this Agreement, and
in no event shall Licensee manufacture, offer for sale, sell, advertise,
promote, distribute, ship and/or distribute the Licensed Products or Promotional
and Packaging Material prior to receipt by Licensor of such evidence of
insurance.
14. EXPLOITATION BY LICENSEE.
------------------------
(a) Licensee agrees to commence distribution, shipment and sale of
all of the Licensed Products in sufficient quantities to meet the reasonably
anticipated demand therefor throughout the Licensed Territory within six (6)
months after the commencement of the First License Period of this Agreement. In
the event of Licensee's failure to comply with this requirement, in addition to
all other remedies available to it, Licensor shall have the option to terminate
this Agreement upon mailing notice of such termination to Licensee.
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(b) Licensee agrees that during all License Periods of this
Agreement, Licensee will continue to diligently and continuously distribute,
ship and sell each of the Licensed Products throughout the Licensed Territory
and that it will use its best efforts to make and maintain adequate arrangements
for the distribution, shipment and sale necessary to meet the demand for all
such Licensed Products throughout the Licensed Territory. Licensee further
agrees to exercise all reasonable efforts to advertise and promote the Licensed
Products at its own expense throughout the term of this Agreement as widely as
practicable within the Licensed Territory, to the best advantage and enhancement
of the Trademarks and the Rights.
(c) Licensee will not discriminate against the Licensed Products by
granting commissions/discounts to salesmen, dealers and/or distributors in favor
of Licensee's other similar products.
15. PREMIUMS, PROMOTIONS, COMBINATION PROGRAMS AND SECONDS.
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(a) Under no circumstances shall Licensee have any right to sell or
otherwise utilize the Licensed Products as premiums or promotional items.
Licensor shall have and retain the sole and exclusive right to utilize or
license third parties to utilize any of the Trademarks and Rights granted herein
in connection with any premium, giveaway, mail order, fund raising, promotional
arrangement or fan club (collectively referred to as "Promotional Products"),
which retained right may be exercised by Licensor concurrently with the Rights
granted to Licensee hereunder.
(b) Licensee agrees not to sell the Licensed Products in
combination with other products ("Combination Program") for one total
combination price without the prior written consent of Licensor. If such consent
is granted, the royalty shall be based upon the total combination price paid for
all of the products included in the Combination Program.
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(c) Licensee agrees not to offer for sale, sell, ship, advertise,
promote, distribute and/or use for any purpose whatsoever, and/or to permit any
third party to offer for sale, sell, ship, advertise, promote, distribute and/or
use for any purpose whatsoever, any Licensed Products and/or Promotional and
Packaging Material relating to the Licensed Products which are damaged,
defective, seconds or otherwise fail to meet the specifications and/or quality
standards and/or trademark and copyright usage and notice requirements of this
Agreement.
16. ASSIGNABILITY AND SUBLICENSING.
------------------------------
The license granted hereunder is and shall be personal to Licensee
and shall not be assigned by any act of Licensee or by operation of law or
otherwise encumbered. A change in the stock ownership of Licensee representing
fifty percent (50%) or more of the stock shall be deemed to be an assignment of
this License. Licensee shall not have the Licensed Products or any portion
thereof manufactured for Licensee by a third party unless Licensee first obtains
the express written approval of Licensor, and such manufacturer shall have
signed an agreement in the form attached hereto as Schedule D. Licensee shall
have no right to grant any sublicenses without Licensor's prior express written
approval. Any attempt on the part of Licensee to arrange for manufacture by a
third party or to sublicense (except as provided herein), assign, encumber or
alter its rights under this Agreement by operation of law or otherwise,
including without limitation entry by Licensee into any joint venture
arrangement or any material change in the ownership or key management of
Licensee, without reasonable notice to and prior written approval by Licensor
shall result in the automatic termination of this Agreement, and all rights
granted hereunder shall immediately revert to Licensor.
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17. TERMINATION.
-----------
(a) Licensor's Right of Termination.
-------------------------------
(i) Immediate Right of Termination. In addition to the
------------------------------
automatic termination provisions and/or termination rights provided elsewhere in
this Agreement, and notwithstanding any attempts by Licensee to cure defaults,
Licensor shall have the right immediately to terminate this Agreement by giving
written notice to Licensee if Licensee does any of the following:
a. Manufactures, offers for sale, sells, advertises,
promotes, ships, distributes and/or uses in any way any Licensed Product and/or
Promotional and Packaging Material without having the prior written approval of
Licensor as provided for in this Agreement;
b. Continues to manufacture, offer for sale, sell,
advertise, promote, ship, distribute and/or use in any way any Licensed Product
and/or Promotional and Packaging Material after receipt of notice from Licensor
disapproving same;
c. Fails to carry on the Licensed Products or
Promotional or Packaging Material the notices specified by Licensor, as required
herein;
d. Becomes subject to any voluntary or involuntary order
of any governmental agency involving the recall or citation of any of the
Licensed Products and/or Promotion and Packaging Material because of safety,
health or other hazards or risks to the public;
e. Directly or indirectly through its controlling
shareholders or any of its officers, directors or employees, takes any action in
connection with the manufacture, offering for sale, sale, advertising,
promotion, shipment and/or distribution of the
20
Licensed Products and/or the Promotional and Packaging Material which damages or
reflects adversely upon Licensor, the Rights and/or the Trademarks;
f. Breaches any of the provisions of this Agreement relating
to the unauthorized assertion of rights in the Rights and/or the Trademarks;
g. Two or more times during a twelve-month period fails to
make timely payment of royalties when due or fails to make timely submission of
royalty statements when due;
h. Uses the Trademarks or the Rights for the purpose, in
whole or in part, of promoting any service or product other than the Licensed
Products without the express prior consent of Licensor in writing; or
i. Fails to obtain or maintain insurance as required by the
provisions of this Agreement.
(ii) Curable Breaches by Licensee. If Licensee: commits a material
----------------------------
breach of any other terms of this Agreement; or files a petition in bankruptcy
or is adjudicated a bankrupt or insolvent, or makes an assignment for the
benefit of creditors, or an arrangement pursuant to any bankruptcy law, or
discontinues its business, or if a receiver is appointed for it or its business
and is not discharged within thirty (30) days; and Licensee fails to cure such
breach or event and furnish reasonable proof of its cure to Licensor within
fifteen (15) days after receiving written notice of breach and a demand to cure
from Licensor, Licensor shall then have the right to terminate this Agreement by
giving written notice to Licensee.
(b) Licensee's Right of Termination. If Licensor commits a
-------------------------------
material breach of any of the terms of this Agreement and fails to cure such
breach and furnish reasonable proof of its cure to Licensee within fifteen (15)
days after receiving written notice of breach, Licensee shall have the right to
terminate this Agreement by giving written notice to Licensor.
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Termination of this Agreement shall not relieve Licensee of any royalty
obligations which have accrued prior to termination.
18. POST-TERMINATION AND EXPIRATION RIGHTS AND OBLIGATIONS.
------------------------------------------------------
(a) Except as provided in Section 18(c) below, upon termination of
this Agreement, Licensee and its receivers, representatives, trustees, agents,
administrators, successors and/or permitted assigns shall have no right to
manufacture, offer for sale, sell, ship, advertise, promote and/or distribute
Licensed Products or to use in any way the Rights, the Trademarks, or any
Promotional and Packaging Material relating to the Licensed Products.
(b) Upon expiration of this Agreement or termination by Licensor,
notwithstanding anything to the contrary herein, all royalties on sales,
shipments and/or distributions theretofor made shall become immediately due and
payable and no Guaranteed Minimum Royalty paid to Licensor shall be refunded.
(c) Upon expiration of this Agreement, or upon termination of this
Agreement for any reason except those set forth in Section 16 or Section 17(a)
above, subject to the requirements of this Agreement with respect to payment and
reporting of royalties, Licensee may, for a period of six (6) months, dispose of
all finished Licensed Products which are on hand upon the expiration of the
License Period then in effect, and all Licensed Products which are in production
and in transit, provided that the royalties with respect to that period are paid
and the appropriate statements are furnished for that period. Licensee shall not
accelerate or increase the manufacture or production of Licensed Products in
anticipation of expiration of this Agreement. During such six (6) month period,
Licensor itself may use or license the use of the Rights and/or the Trademarks
in any manner at any time anywhere in the world as Licensor sees fit.
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(d) Subject to Section 18(c) above, after the expiration or
termination of this Agreement, Licensee shall refrain from further use of the
Rights and/or the Trademarks or any further reference to them, either directly
or indirectly, in connection with the manufacture, offering for sale, sale,
advertising, promotion, shipment and/or distribution of Licensee's products.
Licensee shall destroy all artwork, films, transparencies, separations, printing
plates, molds and other materials which reproduce the Licensed Products and/or
Promotional and Packaging Material relating to the Licensed Products, and shall
give evidence satisfactory to Licensor of their destruction or, at Licensor's
option, deliver the same to Licensor). Licensee shall be responsible to
Licensor for any damages caused by the unauthorized use by Licensee or by others
of all such materials which are not destroyed pursuant to this Agreement.
(e) Licensee acknowledges that its failure to cease the manufacture,
offering for sale, sale, advertising, promotion, shipment and/or distribution of
the Licensed Products and/or use in any way of the Promotional and Packaging
Material relating to the Licensed Products at the termination or expiration of
this Agreement will result in immediate and irreparable damage to Licensor and
to the rights of other licensees of Licensor. Licensee acknowledges and admits
that there is no adequate remedy at law for failure to cease such activities and
Licensee agrees that in the event of such failure, in addition to all other
remedies available to it hereunder, Licensor at its sole option may commence an
action in any court having jurisdiction or an arbitration proceeding, and shall
be entitled to equitable relief by way of injunctive relief and such other
relief as any arbitrator(s) or court with jurisdiction may deem just and proper.
Licensee waives all requirement of a bond in connection with Licensor's pursuit
of injunctive relief.
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19. FINAL STATEMENT UPON TERMINATION OR EXPIRATION.
----------------------------------------------
Within thirty (30) days after termination or expiration of this
Agreement, as the case may be, Licensee shall deliver to Licensor a statement
indicating the number and description of the finished Licensed Products which it
had on hand as of the expiration or termination date. Licensor shall have the
option upon prior written notice to Licensee of conducting a physical inventory
at the time of expiration or termination and/or at a later date in order to
ascertain or verify such statement. In the event that Licensee refuses to
permit Licensor or its agent to conduct such physical inventory, Licensee shall
forfeit any rights hereunder to dispose of such inventory. In addition to such
forfeiture, Licensor shall have recourse to all other remedies available to it.
20. NOTICES.
-------
All notices or other communications required or desired to be sent to
either party shall be in writing and sent by Registered or Certified Mail,
postage prepaid, return receipt requested, or by facsimile or telegram, charges
prepaid. Such notices, including facsimile or telegram, shall be effective on
the date sent, provided that any notice sent by facsimile also shall be sent by
regular mail. The addresses for Licensor and Licensee shall be as set forth on
Schedule B. Either party may change its address by notice in writing to the
other party.
21. RELATIONSHIP OF THE PARTIES.
---------------------------
This Agreement does not create a partnership or joint venture between
the parties and neither party shall have any power to obligate or bind the other
in any manner whatsoever.
22. APPLICABLE LAW AND ATTORNEY'S FEES.
----------------------------------
This Agreement shall be governed by the law of the state of Kansas
and any claims arising hereunder shall, at Licensor's election, be prosecuted in
the appropriate court of said state or in the United States District Court
having jurisdiction for causes of action arising
24
in the District in which the Licensor is located. In the event of any legal
dispute between the parties regarding this Agreement, the prevailing party shall
be entitled to recover reasonable attorney's fees and costs.
23. CAPTIONS.
--------
The captions used in connection with the Sections and Subsections of
this Agreement are inserted only for purpose of reference. Such captions shall
not be deemed to govern, limit, modify or in any other manner affect the scope,
meaning or intent of the provisions of this Agreement or any part thereof, nor
shall such captions otherwise be given any legal effect.
24. WAIVER.
------
(a) No waiver by either party of a breach or a default hereunder
shall be deemed a waiver by such party of a subsequent breach or default of a
like or similar nature.
(b) Resort by either party to any remedies referred to in this
Agreement or arising by reason of a breach of this Agreement by the other party
shall not be construed as a waiver by such party of its right to resort to any
and all other legal and equitable remedies available to it.
25. SURVIVAL OF THE RIGHTS.
----------------------
Any rights and obligations created by this Agreement and which by
necessary implication continue after its expiration or termination shall survive
such expiration or termination.
26. SEVERABILITY.
------------
In the event that any term or provision of this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision, and this Agreement shall be
25
interpreted and construed as if such term or provision, to the extent the same
shall have been held to be invalid, illegal or unenforceable, had never been
contained herein.
27. INTEGRATION.
-----------
This Agreement represents the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
previous representations, understandings or agreements, oral or written, between
the parties with respect to the subject matter hereof. This Agreement cannot
be modified except by a written instrument signed by the parties hereto.
28. NONCOMPETE.
----------
(a) For a period of three years immediately following the
termination of this Agreement, Licensee shall not sell Licensed products or
products similar to the Licensed Products to the customers that purchased
Licensed Products from Licensee during the term of this Agreement, unless such
customer was a customer of Licensee prior to the effective date of this
Agreement.
(b) During the term of this Agreement and for a period of three
years immediately following the termination of this Agreement, Licensee shall
not sell any products in the United States in the markets served by Licensor at
the time of termination, including, but not limited to, college bookstores,
resorts and corporate markets. Notwithstanding the foregoing, this restriction
shall not apply to sales by Licensee of products under the Softwear Athletics
brand to (i) the Richmont Corporation or its subsidiaries or affiliated
companies, or (ii) other customers that are not customers of Licensor.
26
By their execution below, the parties hereto have agreed to all of
the terms and conditions of this Agreement.
WINNING WAYS, INC. SOFTWEAR ATHLETICS, INC.
By: /s/ John L. Munglin By: /s/ [SIGNATURE APPEARS HERE]
------------------- -----------------------------
[BOTH PARTIES MUST ALSO SIGN SCHEDULE B]
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SCHEDULE A
----------
TRADEMARKS: GEAR FOR SPORTS
BIG COTTON
28
SCHEDULE B
----------
LICENSED PRODUCTS: Adult Apparel, Headwear, Bags
FIRST LICENSE PERIOD: April 1, 1994 to September 30, 1995
SECOND LICENSE PERIOD: October 1, 1995 to September 30, 1996
THIRD LICENSE PERIOD: October 1, 1996 to September 30, 1997
LICENSED TERRITORY: Canada
ROYALTY PERCENTAGE: 10%
GUARANTEED MINIMUM ROYALTY
FIRST LICENSE PERIOD:
AMOUNT: $100,000 (US Dollars)
DUE DATE: April 1, 1994 -$25,000
January 15, 1995 -$18,750
April 15, 1995 -$18,750
July 15, 1995 -$18,750
October 15, 1995 -$18,750
SECOND LICENSE PERIOD:
AMOUNT: $200,000 (US Dollars)
DUE DATE: January 15, 1996 -$50,000
April 15, 1996 -$50,000
July 15, 1996 -$50,000
October 15, 1996 -$50,000
THIRD LICENSE PERIOD:
AMOUNT: $300,000 (US Dollars)
DUE DATE: January 15, 1997 -$75,000
April 15, 1997 -$75,000
July 15, 1997 -$75,000
October 15, 1997 -$75,000
ADDRESSES FOR NOTICES
LICENSOR: LICENSEE:
WINNING WAYS, INC. SOFTWEAR ATHLETICS, INC.
9700 Commerce Parkway 523 Cleveland Cres S.E.
Lenexa, Kansas 66212 Calgary, Alberta
Attn: Larry Graveel Canada T2G 4RB
ACKNOWLEDGED AND APPROVED:
WINNING WAYS, INC. SOFTWEAR ATHLETICS, INC.
By: /s/ [SIGNATURE APPEARS HERE] By: /s/ [SIGNATURE APPEARS HERE]
----------------------------- ------------------------------
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