LICENSE AND PURCHASE AGREEMENT
AGREEMENT made on this 24th day of April, 2000 between Human Pheromone
Sciences, Inc., with offices located at 4034 Clipper Court, Fremont, California
94538 ("Licensor") and Niche Marketing, Inc., with offices located at 109
Lafayette Drive, Syosset New York 11791 ("Licensee") with respect to certain
merchandising rights pertaining to REALM(R) and innerREALM(R) fragrances and
toiletry products as more particularly described in this Agreement ("Licensed
Products").
1. Grant of License. Licensor grants an exclusive license to Licensee
under which Licensee shall have the right to produce or have produced, promote,
advertise and sell in all classes of trade, including but not limited to, retail
sales, mass market sales, close out sales, catalog sales, internet sales, and
direct response sales REALM(R) and innerREALM(R) fragrances and toiletry
products, line extensions and new products carrying the name of REALM(R) or a
variation thereof in the Territories ("Licensed Products") provided during the
license period of this Agreement. The license to use the names REALM(R) and
innerREALM(R) shall be granted free of all liens and encumbrances during the
term of this Agreement and each extension thereto. Licensee shall also have the
right of first refusal to sell the Licensed Products in the Excluded
Territories, in return for which Licensee grants to Licensor an exclusive
license for any Licensed Products developed by Licensee for Licensor's sale in
the Excluded Territories. Licensee shall sell such products to Licensor at
Licensee's manufacturing cost plus [**] percent.
2. Territories. The Territories shall include the Middle East
(including but not limited to India, Pakistan and Nepal), North, Central and
South America (to include Hawaii and the Caribbean), the territories of the
United States, Europe, (including the former Soviet Republics), Africa, the
Philippines, Australia and New Zealand. Specifically excluded are the countries
of Asia, including Japan, China, Korea, Taiwan, Hong Kong, Singapore, Macao,
Thailand, Viet Nam, Laos, Cambodia, Sri Lanka, and Indonesia. ("Excluded
Territories")
3. License Period. This Agreement shall commence upon the date of
execution. All sales and resulting gross profit from May 1, 2000 forward of the
Licensed Products shall accrue to Licensee and all selling, marketing,
advertising and distribution expenses (not considered "transition costs")
incurred after May 1, 2000 will be borne by Licensee. Licensor and Licensee
represent that the Officer(s) executing this Agreement have the authority of its
Board of Directors to do so. The Agreement shall continue to December 31, 2004,
unless extended, or terminated in accordance with the terms and conditions of
this Agreement (the initial "License Period"). At the option of Licensee the
License Period may be extended for two additional three-year terms. Any notice
of extension from Licensee shall be received by Licensor not less than one year
prior to the expiration date of the then current License Period.
4. Exclusion. Licensee's rights under this Agreement are restricted to
the trademark class, and shall not include the right to, and Licensee warrants
and represents that it will not, use the name of REALM(R)or innerREALM(R)or a
variation thereof
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 1
for the endorsement of any product or services outside the trademark class.
(except for promotional purposes of Licensed Products).
5. Payment. In consideration of this exclusive license, Licensee shall
make payments to Licensor in the amounts and at the times set forth in Exhibit 1
to this Agreement.
(a) Guaranteed Minimum Compensation: Licensee, based upon
historical sales returns levels, will pay to Licensor as
guaranteed minimum payments ("Guaranteed Minimum Payments")
the amounts in U.S. dollars set forth in Exhibit 1. Such
payments shall be payable in advance in accordance with the
schedule set forth in Exhibit 1 against the Percentage
Compensation as herein defined attributable to net sales made
by Licensee during the License Period. No portion of the
Guaranteed Minimum Payment shall be recoverable from or
refundable by Licensor unless there occurs a material breach
of this Agreement by Licensor, or otherwise provided for
herein.
Guaranteed Minimum Payments shall be made quarterly on a
pro-rata straight-line basis during each twelve-month period.
Commencing January 1, 2001, on a quarterly basis, Licensee
shall provide to Licensor detailed compilations of net sales,
together with the Guaranteed Minimum Payment within 30 days
from the end of such quarter.
(b) Percentage Compensation:
Licensee shall pay to Licensor, percentage compensation (but
in no event an amount less than the Guaranteed Minimum
Payment) based upon [**]% of all of Licensee's "net sales" of
the Licensed Products for the sales indicated on the detailed
compilations of net sales performed on a quarterly basis. Net
sales for all periods shall be defined as gross sales made to
unaffiliated third parties, less returns received from
unaffiliated third parties, products destroyed in the field
and sales taxes, if any. No other deductions shall be made,
including but not limited to, any costs incurred in the
production, distribution, sale, marketing or advertisement of
the Licensed Product or for uncollectible accounts.
At the end of the year, the royalty due to Licensor for the
entire year shall be calculated on an annual basis (the
"Earned Annual Royalty"). The royalty due Licensor at this
time shall be equal to [**] percent of the net sales for the
calendar year less the Guaranteed Minimum Payment.
The calculation of the Earned Annual Royalty for the periods
ending December 31, 2002, and December 31, 2003, only, are
each based upon the sum of $[**]. With these exceptions, if
the Earned Annual Royalty exceeds the previously paid sum of
the Guaranteed Minimum Payment
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 2
for the year, such incremental amount shall be paid to the
Licensor by the Licensee within 30 days of the end of that
year. In no event shall the Earned Annual Royalty be less than
the Guaranteed Minimum Payment indicated in Exhibit 1 hereto.
The final payment of Earned Annual Royalty, at term end, to be
made by Licensee shall be offset by an amount estimated in
good faith by the Licensee, taking into account past return
history, that will be required to cover deductions to be made
by retail accounts for unsold Products in the possession of
the Licensee's customers. Estimates regarding offset amounts
are to the revised up or down based upon actual returns. A
final reconciliation of the amount of such final payment shall
be provided to the Licensor within one hundred twenty (120)
days of the due date of the final payment and any additional
royalty shall be paid by Licensee to Licensor thirty (30) days
therefrom. If actual deductions exceed Licensee's good faith
estimate, Licensor will refund the excess royalty to Licensee
within thirty (30) days of the final reconciliation.
6. Additional Payments. In consideration for granting a license for
Territories outside of the United States of America, Licensee shall pay Licensor
a sum of $[**] on the earlier of its initial shipment to any such customers of
$25,000 or more of Licensed Products (excluding the Philippines and the Middle
East) or June 30, 2000.
7. Inventory Payments. The Licensee shall purchase from Licensor all
inventory items set forth on the Addendum to Exhibit 2 currently representing
$[**] in the United States and approximately $[**] outside the United States to
be adjusted through April 30, 2000. In addition, Licensee shall advise Licensor
of any additional inventory in the United States to be purchased that is
indicated as Potential Sets on the Addendum to Exhibit 2, not later than May 1,
2000. Licensor will provide Licensee its most current inventory lists as of
March 31, 2000. For inventory items outside the United States Licensee shall
have 60 days from the closing date of this Agreement to inspect and approve of
such inventory items, and the amounts to be paid on the following schedule shall
be adjusted downward for disapproved items. Adjustments will first be deducted
from the January 2001payment, and then the immediately preceding payments, if
necessary. Otherwise, the schedule of inventory payments will be as follows:
[**]
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 3
Licensor shall hold a lien on Product inventory in an amount
not to exceed the balance owed to Licensor, until the final amount of the
inventory transferred is fully paid. However, such lien will be subordinate to
any claim(s) of the Licensee's lending financial institution.
8. Accounts Receivable. The collection of accounts receivable from
trade customers for Products shipped by the Licensor prior May 1, 2000, other
than Father's Day gift sets, will be the responsibility of the Licensor and will
be for the account of the Licensor. The Licensee, however, will use its best
efforts to assist Licensor in obtaining payment for amounts that have not been
paid within normal trade terms.
9. Sales Returns. Licensor shall be responsible for the initial $[**]
of Product plus [**]% of net sales of Mothers Day gift sets (at wholesale
prices) physically returned by U.S. Department Store Customers or destroyed in
the field with the authorization of current sales management. Licensor shall be
responsible for all product returned from all other customers or destroyed in
the field with the authorization of other customers. Licensor has provided
Licensee a list of open approved return authorizations, and Licensee has
provided to Licensor a list of return authorizations to be issued through the
date of close. Any additional return authorizations shall be received by May 31,
2000. Inventory returned up to $[**] and greater than [**]% of net sales of
Mothers Day gift sets which can be refurbished for future sale will be so
refurbished by Licensor and sold to Licensee at Licensor's cost. Licensee will
pay Licensor the wholesale value of returns by U.S. Department Store Customers
physically accepted by Licensor or authorized as destroyed in the field by
Licensee above the initial $[**] plus [**]% of net sales of Mothers Day sets,
and such goods will be for the account of the Licensee, without further costs.
Licensee shall have the right to authorize return authorizations on
Licensor's behalf and to cancel Licensor's previously made return authorizations
subject to the provisions of the immediately preceding paragraph. However, such
right is conditioned upon Licensee's obligation to report any such actions
pertaining to old allowances and all new allowances authorized by Licensee on
Licensor's behalf. Allowance reports will be updated and reported to Licensor
within ten days of close, and on a thirty day basis thereafter subject to a
Licensor's right of audit pursuant to paragraph 40.
Payment due under this section will be made to Licensor by Licensee
within 30 (thirty) days of receipt of such inventory by Licensee.
10. Accounts Receivable - Northern Group and Affiliates. Reconciled
amounts outstanding for purchases made by Licensee or any of its affiliates as
of the closing date will be paid at such time by the Licensee to the Licensor.
Unreconciled amounts at the closing date will be paid within ten (10) days
thereafter provided both parties agree to a reconciled amount due. However,
payments for purchases made within thirty (30) days prior to closing shall be
payable on normal business terms. Amounts owed by Licensor to the Licensee or
any of its affiliates will be paid by Licensor in the same manner.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 4
11. Pledged Assets. The Licensor's inventory located in the United
States is currently pledged as collateral under a Revolving Credit Agreement
with Mid-Peninsula Bank. Simultaneously with the signing of the License
Agreement, the bank will release its claims against such inventory in exchange
for the Licensor paying all amounts due and outstanding under such Revolving
Credit Agreement. The bank's UCC releases will be deposited with Licensor's
attorney and will be provided Licensee at closing, providing Licensee has wire
transferred immediately available U.S. funds in the amount of not less that
$200,000 to Licensor's attorney's trust account. If such funds are not available
at such time, Licensor's attorney shall hold the bank's UCC releases until such
funds are received in his trust account Licensor represents and warrants that no
other liens are held on Licensor's inventory that will be purchased by the
Licensee and no items included in the inventory are on consignment from others.
There are no liens or encumbrances against the inventory currently located in
Europe. Licensor warrants that such inventory to be purchased by Licensee is of
commercial quality.
12. Open Purchase Orders. The Licensor will provide a listing of open
purchase orders to the Licensee at the closing of the Agreement, substantially
in the form of the document previously furnished. All such open purchase orders
are for goods required for the REALM(R) and innerREALM(R) product lines and such
purchase orders were placed in order to meet the expected Product requirements
included in the annual sales budget originally presented to the Licensor by the
Licensee. Such open purchase orders, not including inventory being purchased,
will become the responsibility of the Licensee at the signing of this License
Agreement and payment for such items will be made by Licensee to Licensor at
such time. For any goods or merchandise that Licensor has physically received
for which Licensee will assume payment responsibility, an adjustment will be
made in the value of the inventory at closing to avoid the Licensee making a
double payment for such goods. All Purchase Orders issued in connection with the
Products by the Licensor from March 17, 2000 to the commencement date of this
Agreement for greater than Five Thousand Dollars ($5,000) will have been
approved in advance by an authorized representative of Licensee.
13. Product Inventory not Purchased by Licensee. If the Parties are not
able to mutually agree on a purchase price for any of the items included in the
inventory, Licensor shall have the right to sell such items to a third party.
However, the Licensor shall not have the right to sell such Product inventory
into the U.S. Retail Market, to U.S. Catalogs or directly to consumers in the
United States without the express permission of the Licensee. Further, Licensee
shall have a one week period to exercise a first right of refusal to purchase
such items from the Licensor at the price negotiated by the Licensor with the
proposed unrelated third party purchaser. The Licensee shall make payment within
thirty (30) days of receipt of such Product inventory.
14. Pheromones. The product costs included in inventory do not include
the cost of the human pheromone components. Licensor will not charge Licensee
the cost of the pheromone components contained in the inventory being purchased
by Licensee pursuant to paragraph 7. Licensor will sell the human pheromones
components to
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 5
Licensee, in the same blend as currently used by Licensor to Licensee at a cost
to be agreed by the parties. Such cost initially will not be less than $[**] per
gram. Should it be necessary for the cost per gram to Licensee to fluctuate
during the License Period, Licensee agrees to pay for such additional amounts so
long as Licensor's per gram dollar profit remains the same. Licensor will not
enter into any agreement with any vendor producing human pheromone components to
artificially increase the price to Licensee. Licensee will not enter into any
agreement with any vendor that would artificially inflate the price of any
Licensed Product sold from Licensee to Licensor. Payment for pheromones will be
due 30 days from the date of shipment. For the current forecast of product needs
of the Licensee, the aggregated cost of such pheromones should approximate $[**]
for the first twelve (12) months of the License Agreement. Since the lead time
to produce pheromones is currently three (3) months, Licensee will provide a
forecast of quantities of each type of product to be produced and a purchase
order for the pheromones at least ninety (90) days prior to the commencement of
production. Licensor will attempt to keep at least a three (3) month supply of
such pheromones on hand at all times to permit timely delivery to Licensee.
Licensor agrees that the amount of pheromones shipped will be adequate to
produce the amount of Licensed Products indicated on a purchase order submitted
by Licensee in accordance with the terms of this paragraph.
Licensee, may at its option, order and purchase from Licensor up to two
years of its forecasted needs for human pheromone components. In that event
storage of such components shall, for security purposes, remain with Pherin
Pharmaceuticals, Inc.. All storage will be at Licensee's sole cost and expense.
Payment for stockpiled human pheromone components shall be within thirty days of
written notification from Licensor to Licensee of completion of their
production. Licensee understands and acknowledges that all stockpiled human
pheromone components will be stored without blending. The final blending
proportions and technical information associated therewith constitute
proprietary information and remain the sole property of Licensor. Licensee
represents and warrants to Licensor that it will not attempt to analyze or
reverse engineer human pheromone components nor any blends sold to Licensee for
use in the Licensed Products. Licensor represents that all amounts shipped to
Licensee will be usable for the period as a forecast by Licensee.
If the Licensor is unable to provide pheromones to Licensee on a timely
basis, providing a timely purchase order is received from Licensee, Licensee
shall have the right to purchase the pheromones directly from the Licensor's
vendor. In such event, Licensor shall fully cooperate with Licensee in locating
third party supplier(s) and permit such third party supplier(s) to complete
Licensor's supply requirement of Pheromones. In such event, Licensor agrees to
disclose to the third party supplier(s), pursuant to a confidentiality
agreement, all of the technical information necessary to enable the third party
supplier(s) to complete such supply.
15. Transition Period. The Parties agree that there will be a
transition period required for the Licensee to arrange to take physical
possession of the inventory, establish customer service, order processing
operations, EDI coordination with the department
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 6
stores and other functions at their facilities. Each Party shall bear its own
employee, facility and operating costs through April 30, 2000. Thereafter, the
Licensee will assume all costs, and expenses (including benefits) for those
employees of the Licensor in these areas which Licensee requests remain until
May 31, 2000 or such earlier date as anticipated in Exhibit 4, and make any
payments due to Licensor within 7 days of billing of such costs by the Licensor.
Licensor shall provide no transition assistance beyond May 31, 2000 unless the
appropriate employees agree to remain after May 31, 2000 and their total costs
are fully paid by Licensee on a weekly basis during such extended time. Licensor
may not charge Licensee for rent to its new executive offices. The charges,
costs and other associated expense items assumed by Licensee commencing May 1,
2000 shall be determined in accordance with the approved schedule attached to
this Agreement as Exhibit 4. Both Parties shall make every effort to minimize
the length of time of the transition period. Licensee shall provide to Licensor
a written letter of procedures regarding separation of receivables, chargebacks
and any announcement it wants to send to customers regarding payment
instructions in accordance with paragraph 39.
16. Purchase of Products by Licensor After the Close. Product
requirements of the Licensor for its personal needs (local donations, personal
gifts, etc.) or for sale into the Excluded Territories shall be communicated
[**] days in advance of need and accompanied by a purchase order. Licensee shall
sell such products to Licensor at Licensee's direct cost plus a markup of [**]
percent. Product to be sold by Licensor into the Excluded Territories will
either be manufactured by the Licensor or its designee outside the United States
and its territories or if purchased by Licensor from Licensee for subsequent
sale will bear different secondary packaging (outside carton).
17. Risk of Loss. Licensor will bear all risk of loss, damage or
destruction of the Product inventory prior to the commencement date of this
Agreement. Licensee will bear the risk of loss after the commencement date of
this Agreement. Licensor represents and warrants that none of the Licensed
Product is in its possession except for approximately $20,000.
18. Licensor Good Will and Protection. Licensee acknowledges that:
(a) The name, packaging, fragrances, toiletry products,
including trademarks, logos, and trade packaging and colors
associated with the products are unique and original and
Licensor is the owner thereof;
(b) As a result of the development, marketing and sale of the
products subject to this Agreement, Licensor has established a
substantial and valuable goodwill therein;
(c) The appearance, and character of the Licensed Products
have acquired a secondary meaning as trademarks uniquely
associated with the merchandise and product lines authorized
by Licensor, and as such have established identities separate
and distinct from any and all product prototypes upon which
they may have been based.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 7
(d) All rights in any additional advertising, packaging,
merchandising, or other changes in the Licensed Products which
may be created by or for Licensee shall, as between Licensor
and Licensee, be and will remain the exclusive property of
Licensor unless otherwise provided for in this Agreement.
(e) Any copyrights, trademarks, or patents previously obtained
by Licensor in connection with the Licensed Products are good
and valid. Licensor represents and warrants to Licensee that
copyrights, patents trademarks or trademark applications
listed on Exhibit 3 are valid, existing and to the best of
their knowledge, not now being infringed upon.
(f) Unless otherwise provided in this Agreement, as and
between Licensor and Licensee, Licensor shall be deemed to be
the owner of all materials created for the Licensed Products,
including but not limited to artwork. Licensee agrees that
such materials created and furnished by Licensee or it's
employees shall be considered "works made for hire" as that
phrase is used in ss. 101 and ss.201 of the U.S. Copyright
Revision Act 1976. Licensee shall have the rights to items it
creates such as molds, tools, and dies subject to the
condition that Licensee will agree to sell these items to
Licensor upon termination of this Agreement at the lower of
the unamortized cost of the item, or other amount to be agreed
by the parties. If any such materials or elements shall not be
deemed "works made for hire", Licensee hereby assigns and
transfers to Licensor or its designee, all rights, including
copyright, title and interest in and to all such materials and
elements.
(g) Licensee shall not, during the License Period, or any time
thereafter, dispute or contest, nor cause or assist or aid
others in disputing or contesting Licensor's exclusive right
and title to the intellectual property of or pertaining to the
Licensed Products, or any other rights of Licensor in and to
the subject matter of this Agreement, or breach the
confidentiality of the terms of this Agreement. Licensee will
fully cooperate with and assist Licensor should Licensor
choose to take steps to prevent or prosecute any infringement
of the rights of Licensor copyrights, trademark or patents as
may exist upon the commencement date of this Agreement; the
costs of which will be borne by Licensor, including attorneys
fees. Licensee will notify Licensor in writing of any known
manufacture, sale, distribution or advertisement which it
believes may constitute an infringement upon Licensor's
rights. Licensee shall not commence an action or proceeding
against any person or enter into a settlement relating to
Licensor's copyrights, trademarks or patents, without
Licensor's prior written consent. Licensee shall not have any
rights against Licensor for damages or otherwise for failure
to pursue, or
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 8
settle, any action or proceeding relating to alleged
infringements or violations of Licensor's rights herein nor
shall any such act or failure to act by Licensor affect the
validity or enforceability of this Agreement.
Should Licensor fail or refuse to enforce or defend any claims
against Licensor's copyrights, trademarks, patents or other
threatened infringement, then, in that event, Licensee shall
have the right to enforce or defend against any such claims at
its own cost and expense. Licensor will cooperate with
Licensee in the exercise of its rights hereunder at no cost or
expense to Licensor. Licensee shall have no authority to enter
into any settlement agreement or otherwise directly or
indirectly modify the rights of Licensor regarding its
copyrights, trademarks, or patents under this paragraph
without the express written consent of Licensor, which consent
shall not be unreasonably withheld.
19. Trademarks and Trade Names.
(a) Subject to the terms and conditions of this Agreement,
Licensor hereby further grants Licensee the exclusive right
and license to use the trademarks and copyrights depicted on
the attached Exhibit 3 solely in connection with the Licensed
Products and packaging, in the Territories identified in
paragraph 2, during the License Period.
(b) All rights in said trademarks other than those
specifically granted herein are reserved to Licensor for its
own use and benefit. Licensee agrees that it will not acquire
any rights in said trademarks as a result of Licensee's use,
and further agrees that all use of Licensor's trademarks by
Licensee shall inure to the benefit of Licensor.
(c) Licensee will at no time use or authorize the use of any
trademark, tradename, copyright or other designation identical
with or confusingly or colorably similar to Licensor's
trademarks or tradenames other than for Licensed Products.
(d) Upon the expiration or earlier termination of the License
Period of this Agreement, all rights to use Licensor's
trademarks, tradenames, and copyrights shall automatically
revert to Licensor and Licensee shall immediately discontinue
all use of said trademarks, tradenames, and copyrights, except
as may be allowed on a limited basis under paragraph 26.
(e) The license granted herein is personal and may not be
sublicensed, assigned, transferred, pledged, mortgaged or
otherwise encumbered by Licensee in whole or in part except as
approved by Licensor in advance in writing, which approval
shall not be unreasonably withheld. Notwithstanding the above,
and consistent with paragraphs 31 and 32,
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 9
Licensee may assign this license to a successor, subsidiary or
affiliate in which Licensee or the Northern Group, Inc. owns
50 percent or more of the stock, assets, membership, or
similar interest; or a parent of Licensee which owns 50
percent or more of the stock, assets, membership or similar
interest in Licensee or in the Northern Group Inc. Licensee
and Guarantor will continue to be fully responsible under the
terms of this Agreement and, such successor, subsidiary,
affiliate or parent shall sign this Agreement.
(f) Licensor will continue to bear the cost of registration
and maintenance of current trademark registrations for
REALM(R) and innerREALM(R) and bottle registrations, and the
copyrights for the secondary packaging. Should Licensor fail
to maintain current registrations and copyrights, Licensee may
proceed to do so. Costs associated with Licensee's maintenance
of Licensor's current registrations may be deducted from
Minimum Guaranteed Payments due to Licensor, based upon
initial royalties due on sales of products in the applicable
country(s). The responsibility and cost for any additional
trademark filings, patents or registration over that which is
currently being maintained will be borne by the Licensee.
20. Copyright and Trademark Notices.
(a) Licensee shall place or cause to be printed on all
Licensed Products and packaging where appropriate, the
complete copyright notice in the following form: "(C)" or
"Copyright" (including the applicable date), "all rights
reserved", or in such other name or form as Licensor shall
advise Licensee in writing. Licensor has provided a schedule
of trademarks, trademark applications, and a schedule of
copyrights attached to this Agreement as Exhibit 3.
(b) Licensee shall also place or cause to be imprinted on all
Licensed Products and packaging, where appropriate, the
appropriate trademark notice, either "TM", or " (R)" as
Licensor shall determine.
(c ) Licensee agrees that it shall use no markings, legends or
notices on or in connection with the Licensed Products and
packaging without first obtaining Licensor's prior written
approval which approval shall not be unreasonably withheld.
Such approval shall be deemed granted unless Licensee is
notified in writing within three business days of Licensor's
receipt of packaging containing such markings, legends or
notices from Licensee accompanied by a request for approval.
(d) Licensee, at its expense, will submit to Licensor, or its
designee, copies of all artwork and at least two (2)
production samples of the Licensed Products, Trade Packaging
and any and all material bearing
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 10
copyright and trademarks which it develops, and intends to
use, in order to be assured that these provisions are being
fulfilled. Licensee may not materially alter the primary and
secondary packaging of the Licensed Products (including
colors) without the express written consent of Licensor, which
consent shall not be unreasonably withheld. Such approval
shall be deemed granted unless Licensee is notified in writing
within three business days of Licensor's receipt of such
artwork or other material from Licensee accompanied by a
request for approval.
(e) Licensor has no obligation to obtain registration on new
materials developed by Licensee under (d) above. However,
Licensee will provide such other materials and documentation
as Licensor may request should it choose to effectuate such
registration. Copyright and trademarks on all such material,
and any new versions, translations and rearrangements of such
material under this paragraph 20 shall be owned by Licensor.
(f) Should Licensor elect not to register new trademarks or
copyrights, Licensee may proceed to do so. In such event
Licensor will fully cooperate, and will share one half of
associated legal costs of such registration with Licensee,
which will offset or be reduced by royalties generated
therefrom, until Licensor's obligation is fully satisfied.
(g) If, as a result of its exploitation of the Licensed
Products, Licensee acquires any trade rights, equities, titles
or other rights therein, Licensee shall immediately assign and
transfer same to Licensor upon the expiration or earlier
termination of this Agreement, without consideration, other
than the consideration of this Agreement.
(h) Under no circumstances during the term of this Agreement
may Licensee offer any other products for sale that claim to
contain a synthesized human pheromone or actual human
pheromones unless the product is licensed by Licensor. Under
no circumstances during the term of this Agreement may
Licensee offer any products for sale that claim to contain
animal pheromones; however, Licensee may offer for sale during
the term of this Agreement a product that contains animal
pheromones provided that the word "pheromone" does not appear
on any materials, including packaging, unless the inclusion of
the word "pheromone" is mandated by U.S. or other governmental
regulations in the market(s) in which the product containing
the animal pheromones is offered for sale. Any breach of this
paragraph shall be deemed to be a material breach of this
Agreement by the Licensee.
21. Advertising. Licensee shall not offer for sale, advertise or
publicize any Licensed Products via television, radio, newspapers, magazines, in
store promotional vehicles or catalogs or any other media, including electronic
media without Licensor's prior written approval in each instance, which approval
shall not be unreasonably
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 11
withheld. Such approval shall be deemed granted unless Licensee is notified to
the contrary within three business days of notification to Licensor. In no event
may Licensee under any circumstances make any direct or indirect pharmaceutical
or therapeutic claims for Licensed Products (including, without limitation, any
claim of affect on bodily functions or any claim of any biochemical or
physiological change), which would require regulatory approval by the United
States Food and Drug Administration, or equivalent agency outside the United
States, if it were marketed in the United States. Licensee shall not be liable
for advertisements made by third parties without Licensees authorization or
approval so long as Licensee has taken the necessary steps to advise the third
party in conjunction with any related transaction that such claims may not be
made. Should the third party initiate or continue unauthorized advertisements,
having been placed on notice by Licensee, Licensee shall terminate any
relationship with the third party pertaining to Licensed Products.
22. Licensee Obligations.
(a) Licensee shall have the right to produce or have produced,
promote, advertise and sell the Licensed Products in an
ethical manner and in accordance with the provisions and
intent of this Agreement, and shall not engage in unfair or
anti-competitive business practices. The Licensed Products
shall be produced, distributed and sold in accordance with all
applicable international, national, federal, state and a local
laws, treaties and governmental orders and regulations.
(b) Licensee shall not encumber or cause to be encumbered in
any manner, the Licensed Products, except for the lien as
noted in the last sentence of paragraph 7 above. Licensee
shall not cause or permit any expenses to be charged to
Licensor without Licensor's prior written approval in each
instance.
(c) Licensee shall exercise its best effort to produce or have
produced sufficient quantities of the Licensed Products to
meet the market demand of the Licensor in the Excluded
Territories for the Licensed Products and shall diligently and
continuously distribute and offer for sale the Licensed
Products to fulfill all orders.
(d) Licensee shall have the right to use all tools, dies,
molds, graphics, promotional materials, packaging, patterns,
displays, and the mechanicals to all chromes, maps, brochures,
kits, sales literature etc. during the term of the Agreement
just as Licensor has. Licensor has been advised by the
manufacturers of its bottles and caps that the tools, dies and
molds are in good condition as of the commencement date of
this Agreement. Licensee will have the right to purchase
Licensor's rights in these items from Licensor if Licensor
files for bankruptcy or otherwise is unable to perform under
the terms of this Agreement.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 12
23. Termination.
(a) Licensee Bankruptcy. If Licensee files a petition in
bankruptcy, or is deemed insolvent, or a petition in
bankruptcy is filed against Licensee, or Licensee makes an
assignment for the benefit of its creditors, or an arrangement
pursuant to any bankruptcy law, or Licensee discontinues its
business, or a receiver is appointed for Licensee or its
business, this Agreement and the license granted by its terms
shall, without notice, terminate automatically upon the
occurrence of any such event. In the event that the Agreement
so terminates, Licensee or its receivers, representatives,
trustees, agents, administrators, successors and/or assigns
may be extended limited rights by Licensor to produce, have
produced, distribute, sell, exploit, deal with any of the
Licensed Products or any packaging associated with Licensed
Products as provided in paragraph 25.
(b) Licensee's Material Breach of the Agreement. If Licensee
or any sublicensee shall materially breach any of the terms of
this Agreement, Licensor shall have the right to terminate
this Agreement and the license granted herein subject to the
terms and conditions set forth below. A material breach shall
include:
i) The failure to pay any monetary amount upon the
expiration of the cure period under the terms of this
Agreement.
ii) The making of, either directly or indirectly, any
pharmaceutical or therapeutic claim pertaining to Licensed
Products as more particularly described in paragraph 21.
iii) Any attempt to analyze or reverse engineer the
human pheromone components provided by Licensor, or
participate in or benefit by such activities.
iv) The infringement whether direct or indirect of
any of Licensor's trademark, copyright, or patents
registrations.
v) The sale, marketing, or shipment of Licensed
Products to Excluded Territories except as otherwise modified
in accordance with paragraph 1.
vi) The significant violation of any international,
national, federal, state, or local laws, treaties,
governmental orders or regulations.
vii) Any attempt to assign, transfer, sublicense,
sell, give up possession or control of the rights under this
Agreement except as provided in this Agreement.
viii) A failure by Licensee or any successor or
assign to obtain written confirmation for the benefit of
Licensor and Licensee or any successor or assign, from any
financial institution to which it intends to grant a lien on
inventory of Licensed Products or components thereto, that the
institution will recognize and be bound by Licensor's right to
repurchase products, components and inventory pursuant to
paragraphs 25, or 26 of this Agreement.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 13
ix) An election by any financial institution of
Licensee holding a lien on the inventory or components of
Licensed Products, or other judgement creditor claiming
attachment or similar rights thereto, to take possession of
the inventory or components of Licensed Products, or any part
thereof for the purposes of liquidation or sale.
x) The offer of any other products for sale that
claim to contain a synthesized human pheromone, actual human
pheromones or animal pheromones, unless the product is
licensed by Licensor, or as otherwise prohibited by paragraph
20 (h).
xi) Except for those matters contained in (ii)
through (x) above, any breach or default of any other terms
and conditions of this Agreement which remains uncured or
which Licensee has failed to remedy within thirty (30) days of
receipt of Licensor's notice. If the default or breach is one
which cannot be reasonably cured within thirty (30) days
receipt of Licensor's notice, then the failure to commence
such cure within said period and complete the cure within
sixty (60) days of such notice.
xii) If a default or breach under paragraph (xi)
cannot be reasonably cured by Licensee, then the repeated
default or breach by Licensee after receipt of written notice
from Licensor to Licensee to cease and desist any future or
threatened conduct of a same or similar nature.
(c) Intentionally omitted.
(d) Licensor's Material Breach of the Agreement. If Licensor
shall materially breach any of the terms and conditions of
this Agreement, Licensee shall have the right to terminate
this Agreement subject to the terms and conditions below. A
material breach shall include:
i) The breach or falsity of a representation or
warranty given to Licensee hereunder;
ii) Licensor's sale, marketing or shipment of
Licensed Products into any of the Territories;
iii) Licensor's grant to others of a license to the
Licensed Products in the Territories;
iv) Licensor's assignment of this Agreement in
violation of the terms hereof.
v) Except for those matters contained in (i) through
(iv) above, any breach or default of any other terms and
conditions of this Agreement which remains uncured or which
Licensee has failed to remedy within thirty (30) days of
receipt of Licensor's notice. If the default or breach is one
which cannot be reasonably cured within thirty (30) days
receipt of Licensor's notice, then the failure to commence
such cure within said period and complete the cure within
sixty (60) days of such notice.
vi) If a default or breach under paragraph (v) cannot
be reasonably cured by Licensor, then the repeated default or
breach by Licensor after
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 14
receipt of written notice from Licensee to Licensor to cease
and desist any future or threatened conduct of a same or
similar nature.
24. Intentionally Omitted
25. Effect of Termination or Expiration.
(a) Upon expiration or earlier termination of this Agreement,
all rights granted to Licensee shall revert to Licensor, and
except as provided in this Agreement Licensee shall not use or
refer to the name REALM(R), innerREALM(R) or a variation
thereof nor use any likeness of its packaging or bottling in
the production, sale or distribution of products of Licensee,
which in the opinion of the President of the Fragrance
Foundation or his/her designee is similar to that which is
licensed hereunder.
(b) Upon expiration or earlier termination of this Agreement,
Licensee will return to Licensor all rights previously
transferred to Licensee herein to all molds, dies, toolings
and other materials which reproduce the trade packaging and
bottles for the Licensed Products. If Licensee has developed
any molds, dies, toolings and other similar materials which
reproduce the trade packaging and bottles for Licensed
Products Licensee will sell its rights regarding such items to
Licensor, or at Licensor's election, Licensee will destroy
such items and provide such satisfactory evidence of their
destruction to Licensor. If Licensor elects to purchase such
items, the price shall be the lower of Licensee's unamortized
cost of the item, or other amount to be agreed by the parties.
Notwithstanding the terms of this paragraph, it is not
intended to affect the rights of Licensee under paragraph 26
to build out or round up inventory upon expiration or earlier
termination of this Agreement. Notwithstanding, if Licensor
elects not to purchase molds, dies and tooling which reproduce
the trade packaging and bottles for the Licensed Products
under the terms contained in this paragraph, Licensee may use
such molds, dies and tooling for products that in no way can
be construed to cause any confusion on the part of the
consumer with the Licensed Products. If Licensor and Licensee
are unable to agree on whether confusion may be caused, the
opinion of the President of the Fragrance Foundation or such
other independent and knowledgeable third party will prevail.
(c) Licensee's failure to cease the production, distribution,
sale or advertisement for sale of the Licensed Products upon
expiration or earlier termination of this Agreement except as
provided in this Agreement will result in an immediate and
irreparable damage to Licensor. Licensee acknowledges that no
adequate remedy at law exists for such failure and Licensee
agrees that Licensor shall be entitled to an injunction or
other equitable relief to prevent such breach of this
Agreement by Licensee.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 15
(d) If this Agreement is terminated in accordance herewith,
all percentage compensation, and guaranteed minimum payments
due Licensor through the date of termination hereunder shall
be immediately due and payable to Licensor within ten (10)
days of the effective date of termination.
(e) Notwithstanding the event of termination, Licensor's
rights arising out of this Agreement to compel the enforcement
of the continuing obligations of confidentiality between the
parties contained in this Agreement shall nevertheless
continue in full force and effect. In addition, each party
will retain the right to sue for damages caused by the other
party's default.
(f) Upon the event of termination, neither Licensee nor its
receiver, financial institutions, representatives, trustees,
agents, administrators, successors and/or assigns have any
right to sell, exploit or in anyway deal with any Licensed
Products or packaging hereunder unless or until the time
within which Licensor has to exercise a right of first refusal
to repurchase Licensed Products produced and possessed by
Licensee or on its behalf, pursuant to paragraph 26 has
expired.
26. Disposition on Expiration or Early Termination. Upon expiration or
earlier termination of this Agreement, Licensee shall have the right, for a
period of not more than [**] days after expiration or termination to dispose of
all unsold Licensed Products produced by it, or in its possession; provided that
Licensee pays to Licensor all Percentage Compensation accrued and thereafter
received for the sale of such products. Licensee will account for and report on
such sales consistent with the reporting requirements of this Agreement. In
addition, Licensor will extend to Licensee during this disposition period the
limited right to "build out" or "round off" its inventory and use bottles and
caps to maximize the production of merchantable Licensed Products for resale. It
is specifically understood that Licensee, in such instance, shall not sell or
dispose of any Licensed Product in job lots at reduced prices other than as is
customary in the ordinary course of business without first offering such
Licensed Products to Licensor or its designee, to be repurchased at wholesale
prices. In such event Licensor shall have [**] days from receipt of such offer
to repurchase such Licensed Products.
In the event that Licensee files for bankruptcy, is deemed insolvent,
breaches this Agreement in accordance with paragraph 25 above or otherwise
breaches any other financial agreement with a lending institution which holds a
security interest in inventory, or other Licensed Products, resulting in the
secured party's election to retake the collateral; Licensor shall retain a right
of first refusal to repurchase all inventory of Licensed Products from Licensee
at wholesale prices. In such event Licensor shall have one-hundred twenty (120)
days from receipt of such offer to repurchase such Licensed Products. In the
event of bankruptcy, Licensor shall have one-hundred twenty days from the date
the lending institution's relief from stay order allowing them to foreclose
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 16
becomes final, to elect to repurchase and perform, or Licensor's right of first
refusal will be lost.
27. Force Majeure. Licensee shall be released of its obligations under
this Agreement in the event that governmental regulations, act of God, war,
riot, fire, strike or other labor dispute, epidemic or other causes beyond the
control of Licensee, render performance by the Licensee impossible. In such
event all percentage compensation, if any, in excess of the Minimum Guaranteed
Payment shall become immediately due and payable and no portion of the minimum
guaranteed payment shall be re-payable or be returnable to Licensee. If such
event shall continue for a period in excess of three (3) months, Licensor shall
have the right to terminate this Agreement by giving Licensee thirty (30) days
prior written notice.
28. Insurance. Licensee shall obtain and maintain its sole cost and
expense throughout the license period and any disposal period, standard product
liability insurance, the form of which must be acceptable to Licensor. Such
insurance shall name Licensor as an additional named insured. The 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, relating
to the Licensed Products or any material used in connection therewith. The
amount of coverage shall be a minimum of [**] Dollars combined single limit for
each single occurrence for bodily injury and property damage. Licensee shall
provide a certified copy of said policy providing such coverage within fifteen
(15) days after the commencement date of this Agreement. Licensor shall receive
twenty (20) days written notice from the insurer in the event of any
modification, cancellation or termination of the policy.
29. Indemnity. Licensee will at all times indemnify, defend and hold
harmless Licensor from and against any and all claims, damages, litigation,
judgments, costs and expenses, including reasonable attorneys fees and costs,
caused by or arising out of any alleged defects in the Licensed Products which
Licensee produces or has produced for it, (except to the extent such claims,
damages, litigation, judgments, costs and expenses, reasonable attorneys fees
and costs, were caused by or arise out of any alleged defects in components
obtained from Licensor or it's designees); the unauthorized use of any patent,
process, method or device or out of the infringement of any copyrights, trade
name, trade mark, patent; or libel, including invasion of the right to privacy,
publicity or other property rights of any party, or the breach by Licensee of
any of the provisions of this Agreement in connection with the performance by
Licensee of its obligations under the Agreement. Licensor may at its election,
defend any action, by its counsel at its own expense. Licensee will cause its
counsel to cooperate fully with Licensor and their counsel in the defense of
such action. Licensee shall not admit any liability or compromise any proceeding
without first obtaining Licensor's consent in writing.
Licensor will at all times indemnify, defend and hold harmless Licensee
from and against any and all claims, damages, litigation, judgments, costs and
expenses, including
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 17
reasonable attorneys fees and costs, caused by or arising out of any alleged
defects in the products Licensee purchases from Licensor under this Agreement.
30. No Joint Venture. Licensee shall not use the name of Licensor in
any manner whatsoever, nor incur any obligation in Licensor's name. Nothing
herein contained shall be construed to constitute the parties as partners or
joint venturers, nor shall any similar relationship be deemed to exist between
them.
31. No Assignment. The license granted by this Agreement is not
assignable by any act of Licensee or by operation of law. Any attempt by
Licensee to grant a sublicense, to assign, or give up possession or control of
this license or any of its rights shall constitute a material breach. Licensor
may not assign this Agreement to any third party without the prior written
consent of Licensee, and any attempt by Licensor to assign the Agreement without
Licensee's consent will constitute a material breach. Notwithstanding, Licensee
and/or Licensor may assign this Agreement to any acquirer of more than 50
percent of the outstanding stock or assets of the Licensee or Licensor as
appropriate, or to a subsidiary or affiliate meeting such criteria without the
prior written approval of the other party, and such assignor shall remain
primarily responsible for the performance of the terms of this agreement. Any
other attempted assignment shall be void without the express written consent of
the other party, which consent shall not be unreasonably withheld. In addition,
it is expressly understood that any assignment made under this paragraph shall
not relieve either party or the Guarantor of its obligations under this
Agreement.
For the purposes of this Agreement the term "Licensee" shall
include Niche Marketing Inc., Northern Group, Inc. as well as any successor,
affiliate, parent, or approved assignee including but not limited to any
acquirer of more than 50 percent of the outstanding stock or assets of the said
Licensee.
32. Guaranty. As a direct inducement to enter into this Agreement under
the terms and conditions set forth herein, including Licensor's consent to
accept Niche Marketing, Inc. as the Licensee, and further assignments to
subsidiaries or affiliates under paragraph 31 above, Northern Group, Inc. hereby
personally guarantees each and every act, payment, covenant, representation,
warranty and required performance as called for by a Licensee or any successor
hereunder throughout the term of this Agreement, and any extensions provided
hereto.
33. Waiver; Modification. No waiver or modification of any of the terms
of this Agreement shall be valid unless in writing. No waiver by either party of
any breach or default of this Agreement shall be deemed a waiver by that party
of any other breach or defaults.
34. Entire Agreement. This Agreement including Exhibits represents the
entire understanding between Licensor and Licensee; it represents the
culmination of negotiations over an extended period of time and is intended to
be the final written fully
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 18
integrated agreement between the parties. It shall not be modified or amended
unless in writing signed by all parties.
35. Governing Law. This Agreement shall be governed by and construed in
accordance with a laws of the state of California as an agreement made and
performed in that state. In the event any legal action or other proceeding is
commenced to enforce any provision of this Agreement or as a result of the
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party shall be entitled, in addition to
any other relief to which the party may be entitled, recover reasonable
attorneys fees and costs of litigation incurred in such action or proceeding.
36. Notices. Notices by either party to the other shall be given by
fax, if possible, and by registered or certified mail, return receipt requested,
with proof of delivery, all charges prepaid, or by a recognized domestic or
international overnight mail provider (Federal Express etc.). All statements and
notices shall be sent to the respective addresses of Licensor and Licensee as
follows:
To Licensor:
Human Pheromone Sciences, Inc.
Attn.: Chief Executive Officer
4034 Clipper Court
Fremont, California 94538
With Copy To:
William B. Clayton, Jr. Esq. Julian N. Stern, Esq.
Clayton & McEvoy P.C. and Heller, Ehrman, White & McAuliffe
333 W. Santa Clara St. #950 525 University Ave. # 1100
San Jose, California 95113 Palo Alto, California 94301
To Licensee:
Niche Marketing, Inc./ Northern Group, Inc.
Attn: Mark Crames, CEO
Charles Famoso CFO
109 Lafayette Drive
Syosset, New York 11791
With Copy to:
Matthew S. Quinn Esq.
Zetlin & De Chiara LLP
801 Second Avenue
New York, NY 10017
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 19
37. Arbitration. Should a dispute arise between Licensor and Licensee
or Guarantor pertaining to the performance of any party or the interpretation of
any term of this Agreement that dispute shall be subject to binding arbitration.
The arbitration shall be conducted in Santa Clara County, California under the
Commercial Rules of the American Arbitration Association. Nothing in this
Agreement shall prevent any party from seeking extraordinary relief to compel or
prevent actions, activities or conduct of the other party in breach of this
Agreement. Judgment upon any award of the arbitrator may be entered in a court
of competent jurisdiction.
38. Closing Date. The signing of the Agreement shall occur no later
than April 24, 2000, unless extended by the written mutual consent of the
Parties. All sales and resulting gross profit from May 1, 2000 forward of
Licensed Products in the United States accrue to the Licensee and all selling,
marketing, advertising and distribution expenses (not considered transition
costs) after May 1, 2000 will be borne by the Licensee.
39. Confidentiality. The Parties agree to hold in confidence all terms
and conditions of this Agreement, except that the Parties may disclose
documents, materials or information to parties who are required to know that
information for the proper performance of their duties in effectuating the
license of the Products. However, the disclosing Party must notify and require
all parties to whom the information is disclosed that the information must be
kept confidential in accordance with the terms of this Paragraph and secure a
written non-disclosure agreement to that effect. Licensee specifically agrees
that any employees or persons reimbursed by the Licensor will not be made aware
of this Agreement without the express written consent of the Licensor. Neither
Party shall issue any press release or general announcement concerning the terms
or fact of this Agreement without first obtaining the consent of the other
Party, except as may be required by law.
Licensee acknowledges and understands that Licensor is a
publicly traded Corporation, and as such, is subject to certain restrictions
regarding the timing and content of any public announcement pertaining to this
Agreement. Therefore no announcement by Licensee will be allowed in any form or
content unless first approved by Licensor. Upon the execution of this Agreement,
the parties agree to work diligently on a joint announcement acceptable to
Licensor to be sent to all current customers and suppliers notifying them of the
License Agreement and any procedures they need to follow to effect the
transition.
40. Audit Rights. Licensee shall keep accurate and complete books and
records covering all transactions relating to the subject matter of this
Agreement in accordance with generally accepted accounting principles. Not more
than one time per year, to be completed within 120 days of the close of the
license year Licensor or its representative shall have the right to audit the
sales and returns data during normal business hours at Licensee's normal place
of business at Licensor's cost. However, if such audit indicates that there has
been a shortfall of more than five (5) percent in
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 20
Licensee's payments of royalties due to Licensor, the cost of such audit will be
borne by Licensee.
41. Severability. If any provision of this Agreement is declared by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, such
provision shall be severed from this Agreement and the other provisions shall
remain in full force and Effect.
42. Payment of Taxes. Licensee shall pay all sales, use, value added,
or other taxes, federal, state or otherwise, which are levied or imposed by
reason of the transaction contemplated by this Agreement, except taxes arising
from income of Licensor with respect to this Agreement.
43. Survival of Provisions. Notwithstanding the expiration or
termination of this Agreement it is agreed that those rights and obligations
which by their nature are intended to survive such expiration or early
termination shall survive, including, but not limited to acknowledgement of
ownership/title, indemnification, and confidentiality.
44. Contract Expenses. Each Party shall bear all of its expenses,
including attorney fees, in connection with the negotiation of the documentation
of this License Agreement.
45. Terms of Payment. Each Party shall deliver all amounts due to the
other Party by certified or cashier's check, wire transfer, or as otherwise
agreed by the parties.
46. Turnover of Materials.
(a) At the Closing, or sooner, the Licensor will provide
Licensee with an exploded Bill of Materials and thereafter will assist
the Licensee in the transfer of all vendor master files, purchasing
information and outstanding purchase orders, including assisting
Licensee in the assignment or transfer of pending purchase orders with
the bottle and cap companies. Licensor will also take appropriate steps
so that Licensee may have the same rights as Licensor to the tooling
and molds to the extent of Licensee's rights prior to this transaction.
Licensee will have such ownership rights for so long as this Agreement
is in existence. Licensee will have the right of the use of the tooling
and molds even if the Licensor is in Bankruptcy, if Licensor consents
to this Agreement remaining in existence. Upon termination of this
Agreement, for any reason by either Party, all such ownership rights
will immediately and automatically revert back to the Licensor.
(b) Prior to closing, Licensee acknowledges that Licensor has
provided all vendor master files, purchasing information, outstanding
purchase orders, an updated list of suppliers, a schedule of prices,
graphics, patterns, brochures, sales kits including sales literature to
Licensees authorized representative on site at Licensor's facility.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 21
(c) Upon execution of this Agreement, the parties will work
together for the expedient transfer of Licensor's existing Website
(www.realmfragrances.com), the domain name, and 888 number to Licensee.
The current reasonable estimate for transition of the Website is
approximately 15 days. Licensee shall be entitled to all sales from the
Territories received through the Website or 888 number from May 1,
2000.
(d) Upon termination of this Agreement, for any reason by
either Party, all such ownership and property rights to the items
identified in paragraph a, b, and c above will immediately and
automatically revert back to the Licensor.
"Licensor" "Licensee"
HUMAN PHEROMONE SCIENCES, INC. NICHE MARKETING, INC.
By /s/ William P. Horgan By /s/ Marc Crames
--------------------- ---------------
William P. Horgan, CEO Its Chief Executive Officer
The undersigned, as Guarantor, has read the terms and conditions of the
within License and Purchase Agreement executed by and between Niche Marketing,
Inc. as Licensee and Human Pheromone Sciences Inc. as Licensor, agrees to be
bound by its terms and to Guarantee the performance of Licensee as that term is
defined in the Agreement.
"Guarantor"
NORTHERN GROUP, INC.
By /s/ Mark Crames
---------------
Its Chief Executive Officer
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 22
Exhibit 1
Minimum Annual Royalties Due and Payment Schedule
[**]
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 23
Exhibit 2
Schedule of Inventory
List of various Inventory Items within and outside the United States.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 24
Exhibit 3
Trademarks, Trademark Applications, Copyrights
List of the Company's Trademarks, Trademark Applications and Copyrights with the
registration dates, numbers and country names.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 25
Exhibit 4
Schedule of Costs Associated with Transition Period
Schedule of personnel and non-personnel expenses associated with the transition
period.
- --------------------------------------------------------------------------------
THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMMITTED AND FILED SEPARATELY WITH THE COMMISSION. 26