Exhibit 10.49
LICENSE AGREEMENT
This Agreement is made effective this day of _________, 2001 (the
"Effective Date") by and between Rockford Corporation, an Arizona corporation,
having a principal place of business at 600 South Rockford Drive, Tempe, AZ
85281 (hereinafter "Rockford"), and Milwaukee Electric Tool Corporation, a
Delaware corporation, with its principal place of business at 13135 West Lisbon
Road, Brookfield, Wisconsin 53005-2550 (hereinafter "Milwaukee").
WHEREAS Milwaukee is in the business of designing, manufacturing and
distributing a wide variety of power tools and accessories, which it sells
primarily to and through wholesale distributors and retail stores, which
purchase Milwaukee's line of portable electric tools and accessories for resale
to professional and non-professional customer users (the "Milwaukee Channels of
Trade");
WHEREAS Rockford is in the business of designing, manufacturing and
distributing high performance mobile audio systems under the "Rockford Fosgate"
brand name, which it primarily sells through consumer electronics retailers,
such as Best Buy, Circuit City, the Wiz, Ultimate Electronics, Crutchfield, and
other consumer electronics, audio/video, and specialty dealers who sell car
audio products to consumers (the "Rockford Channels of Trade");
WHEREAS Milwaukee recently designed and is in the process of
introducing a portable radio boom-box, which is capable of being powered by
battery packs used in conjunction with portable electric tools (the "Product"),
and will be sold through the Milwaukee Channels of Trade;
WHEREAS Rockford has provided certain technical information
regarding the acoustic
characteristics of the Product, and access to its proprietary equalization
circuit known as Punch-bass boost (the "Circuit");
WHEREAS Milwaukee now desires to obtain, and Rockford is willing to
grant, a license to use the Rockford name, trade names, service names, and other
names listed on Exhibit A, (the "Names") in association with the sale of the
Product through the Milwaukee Channels of Trade throughout the world
(hereinafter the "Territory").
NOW, THEREFORE, in consideration of the mutual promises and
undertakings set forth herein, and intending to be legally bound hereby, the
parties agree as follows:
1. DEFINITIONS
1.1 The "Names" shall collectively refer to Rockford's name,
tradenames, service names & other names listed on
Exhibit A.
1.2 "Milwaukee Channels of Trade" shall mean sales made
through Milwaukee's wholesale distributors, and retail
stores, which sell Milwaukee's line of portable electric
tools and accessories, to professional and
non-professional customer users.
1.3 "Rockford Channels of Trade" shall mean sales through
consumer electronics retailers, such as Best Buy,
Circuit City, the Wiz, Ultimate Electronics,
Crutchfield, and other consumer electronics,
audio/video, and specialty dealers who sell consumer
electronic and car audio products to consumers.
1.4 "Product" shall mean a portable radio boom-box, which is
capable of being powered by Milwaukee's battery packs.
1.5 "Territory" shall mean the World.
2. LICENSE
2.1 Subject to the terms and conditions of this Agreement,
Rockford hereby grants to
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Milwaukee a nonexclusive, nontransferable, nonassignable
world-wide license to use the Names and Circuit in
association with the sale of the Product through the
Milwaukee Channels of Trade throughout the Territory.
2.2 In consideration of Rockford's grant of this License,
Milwaukee will pay Rockford a license fee of:
(a) one dollar and twenty-five cents ($1.25) per
unit sold by Milwaukee for the term of the
License Agreement for units that use the
Circuit and for so long as Milwaukee
incorporates the Names on, or otherwise
identifies Rockford with, the Product, its
advertising, or packaging for the Product.
(b) sixy-two and one-half cents ($0.625) per
unit sold by Milwaukee for the term of the
License Agreement for units that use the
Circuit but for which Milwaukee elects to
not incorporate the Names on, or identify
Rockford with, the Product, its advertising,
or the Packaging for the Product.
2.3 Such royalty payments will be paid on a quarterly basis.
Milwaukee will pay the royalty for each quarter within
30 days after the end of the quarter and will provide,
along with the payment, a report showing the computation
of the amount of the royalty. The report will include
appropriate detail showing shipments of new and
refurbished units for the quarter, and netting the
shipments against returns for the quarter, so that
Rockford is paid only once for each unit sold. Rockford
is not responsible for collections, so that a royalty is
due on each unit irrespective of whether Milwaukee
collects from the customer.
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2.4 Notwithstanding the foregoing, no royalty payment will
be due and owing for: a) any prototype, developmental,
or other Product that is not sold commercially or b) for
any Product sold outside of the United States provided
that Milwaukee does not, outside of the United States,
incorporate the Names on, or identify Rockford with, the
Product, its advertising, or the Packaging for the
Product.
2.5. In the event that the License Agreement terminates for
any reason, then upon its termination, Milwaukee shall
have the right to sell any remaining inventory of the
Product that utilizes the Names (subject to payment of
the license fee). After sale of the remaining inventory,
Milwaukee may continue to sell the Product without any
further obligation or payment of royalties to Rockford,
so long as Milwaukee does not incorporate the Names on,
or otherwise identify Rockford with, the Product, its
advertising, or the Packaging for the Product.
2.6 Rockford may, at its option, audit Milwaukee's reports
of sales of the Products up to once each year using
independent auditors reasonably acceptable to Milwaukee.
Milwaukee will make its records relating to sales of the
Products reasonably available to the independent
auditors during business hours. If the audit establishes
that Milwaukee has under-reported the sales of Product
by 5% or more, then Milwaukee will promptly pay the
additional royalty due, plus interest at the rate of 12%
per annum from the date when the royalty should have
been paid, and will also reimburse to Rockford the cost
of the audit. Otherwise, Rockford will bear the cost of
the audit.
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2.7 During the term of this Agreement, Rockford shall not
license the use of its Names to any power tool
competitor of Milwaukee for use on any similar products
that incorporate a radio, cassette player, and/or
CD-player.
2.8 During the term of the License Agreement, Milwaukee will
not sell the Product through the Rockford Channels of
Trade, provided, however, that Milwaukee may sell the
Product to any customer within the Rockford Channels of
Trade that also purchases and resells at retail material
quantities of Milwaukee's power tool products and
accessories. If Milwaukee wishes to sell the Product to
a customer that does not also purchase power tool
products, then Rockford will have the right to approve
the sale of the Product to such customer before
Milwaukee begins selling to such customer. The intention
of this section is (a) to allow Milwaukee to sell the
Product to bona-fide existing and new power tool
customers but (b) to provide Rockford the right to
assure that sales of the Products to other customers do
not create a channel conflict with Rockford's car audio
products. The parties will cooperate with each other to
avoid such a conflict.
2.9 All goodwill associated with the Names as a result of
the sale of the Products will inure solely to Rockford's
benefit, and all goodwill associated with Milwaukee's
tradenames and intellectual property as a result of the
sale of the Products will inure solely to Milwaukee's
benefit. If a party learns of an infringement of the
other's intellectual property, the party learning of the
infringement will give the other party notice of the
infringement and the other party is then exclusively
responsible for taking action to protect its
intellectual property.
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3. QUALITY CONTROL
3.1 Milwaukee will provide Rockford with initial samples of
each Product before any sale and Rockford must approve
the initial samples before any sale of a Product. The
quality and acoustic characteristics of the Products
sold by Milwaukee bearing the licensed Names shall be at
least equal to the quality and acoustic characteristics
of the Products initially approved by Rockford, and
shall conform to the sonic signature, and other
specifications of the Product that are approved by
Rockford.
3.2 Rockford may monitor Product sold under this Agreement
by either purchasing the Product in the marketplace or,
on a reasonable periodic basis, at Rockford's request,
having Milwaukee provide test samples for Rockford, to
inspect the quality of Milwaukee's Product sold under
this license in the Territory, and to confirm that the
Product continues to conform to the sonic signature and
other specifications of the Products as approved by
Rockford. If Rockford determines that a Product does not
conform to the sonic signature and other specifications
approved by Rockford, then Milwaukee will work with
Rockford to bring the quality of the Product up to the
required standards and, if it is unable to do so, then
Milwaukee will remove the Names from, and will refrain
from identifying Rockford with, the Products, its
advertising and public statements about the Product, and
the packaging for the Products.
3.3 Rockford will provide technical assistance, as Milwaukee
reasonably requests: (1) in preparing or modifying the
acoustical specifications for the Product, and (2) in
the testing of the initial production models for any
modification.
3.4 Milwaukee will use the Names only in a manner and form
approved before use in
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writing by Rockford. If Milwaukee wishes to propose a
new use or form of the Names, it must submit its
proposal in writing to Rockford. Rockford will promptly
review the proposed use and indicate its approval or
disapproval in writing. Any proposed use will be deemed
approved if Rockford does not object within 30 business
days after Milwaukee submits it to Rockford in writing
together with a written request for approval. If
Rockford approves the use, Rockford will own the new
form of the Names and the new form will automatically
become one of the Names licensed under this Agreement.
3.5 Milwaukee will provide its standard warranty for the
Product, will comply with any applicable Federal, state,
or regulatory provisions, and will obtain any necessary
regulatory approvals (e.g., UL approval) that may be
required in conjunction with the sale of the Product.
Milwaukee is solely responsible for assuring that the
Product is manufactured and distributed in a manner that
is in compliance with applicable labor, environmental,
and other law.
4. REPRESENTATIONS OF ROCKFORD 1
4.1 Rockford represents that it is free of any obligations
preventing it from providing Milwaukee the rights and
licenses granted herein.
4.2 Rockford is the owner of the Names identified in Exhibit
A, which Names, or any trademark applications that may
be filed for by Rockford, and which may be added to this
License.
4.3 Rockford represents that it is not aware of any existing
adversely held Names which might be infringed by the
marketing of the Products with the Names.
4.4 Rockford acknowledges that Milwaukee is the proprietary
and rightful owner of its trademarks and tradenames and
covenants not at any time directly or indirectly
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to challenge the rights of Milwaukee thereto as to the
validity or distinctiveness thereof. Subject to the
terms of the License, nothing herein shall give to
Rockford any proprietary right or interest in
Milwaukee's trademarks and tradenames.
5. REPRESENTATIONS OF MILWAUKEE
5.1 Milwaukee acknowledges that Rockford is the proprietary
and rightful owner of the Names, and covenants not at
any time directly or indirectly to challenge the rights
of Rockford thereto as to the validity or
distinctiveness thereof. Subject to the terms of the
License, nothing herein shall give to Milwaukee any
proprietary right or interest in the Names.
5.2 Milwaukee will display the Names prominently on the
Product, in a manner approved by Rockford and in such a
way as to avoid any confusion with Milwaukee's own
trademarks.
6. MUTUAL REPRESENTATIONS
6.1 The representations made herein shall survive the
execution and delivery of this Agreement, and the party
to which they are made shall be entitled to rely upon
them regardless of any investigation made by it or on
its behalf concerning their subjects.
6.2 Both parties will maintain, at their own cost, during
the term of this Agreement, all risk business and
products liability insurance policies, with limits of
liability that are appropriate to the types of risks
typically incurred in such industries and/or for such
Products. Milwaukee will name Rockford as an additional
named insured on its insurance policies related to
distribution of the Product and will provide Rockford of
evidence of its product-liability insurance reasonably
satisfactory to Rockford.
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6.3 Rockford shall indemnify, defend, and hold harmless
Milwaukee, its affiliated and Parent Companies,
officers, directors, and employees against all cost,
expense, and liability, including attorney's fees,
arising out of any claim or action based on actual or
alleged infringement of the rights of third parties
caused by Milwaukee's authorized use of the Names or the
Circuit in the Product, subject to the limitations
below.
6.4 Milwaukee shall indemnify, defend and hold harmless
Rockford, its affiliated and Parent Companies, officers,
directors, and employees against all costs, expenses,
liabilities, judgments, claims or demands for injuries
or damages to any person or property arising in any way
out of any claim or suit in which it is alleged that:
- the Product is defective or
otherwise deficient in any
respect in its manufacture,
design, assembly or otherwise;
- Milwaukee's manufacture or
distribution of the Product
fails to comply with applicable
law;
- Rockford has any warranty,
repair, or recall obligations
arising from the manufacture,
sale, or distribution of the
Products; or
- the Product infringes on any
third party patent, trademark,
or other intellectual property
rights, excluding any claim
arising from the use of the
Names on the Product in a manner
authorized by Rockford or the
use of the Circuit in the
Product.
6.5 Neither party will be liable or responsible to the other
for any incidental, indirect, special or consequential
damages that may arise out of or in connection with an
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alleged breach of this Agreement.
7. ENFORCEMENT OF NAME RIGHTS
7.1 During the Period of this Agreement, Rockford will
protect the Names from infringement and prosecute
infringers at its own expense when in its sole judgment
such action may be reasonably necessary, proper, and
justified. Milwaukee may by Notice request that Rockford
take reasonable steps to assert the Names against
infringement by third parties, provided that Milwaukee
supply to Rockford written evidence demonstrating prima
facie infringement of the Names to Rockford's reasonable
satisfaction.
7.2 In the event either party shall initiate or carry on
legal proceedings to enforce its trademarks against an
alleged infringer, the other party shall use reasonable
efforts to cooperate fully with and shall supply all
assistance reasonably requested by the party initiating
or carrying on such proceedings, at the initiating
party's expense. The party that initiates any proceeding
to protect or enforce its trademarks shall have sole
control of that proceeding and shall be responsible for
the reasonable expenses incurred by said other party in
providing such assistance and cooperation as is
requested.
7.3 Any agreement or understanding which resolves or settles
any dispute between an initiating party to this
Agreement and a third party concerning use of the Names,
may provide for a phase-out period by which such third
party may cease to use the Names. The length of any such
phase-out period shall be in the discretion of the
initiating party, but shall not be unreasonable.
8. EFFECTIVE DATE AND RENEWAL
8.1 The initial term of the License Agreement shall be five
(5) years, and will
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automatically renew for additional five (5) year terms
unless either party provides the other with at least
ninety (90) days written notice prior to the scheduled
renewal date of its intent to not renew the Agreement.
9. TERMINATION
9.1 Either party may terminate this Agreement upon not less
than ninety (90) days written Notice thereof to the
other party of a breach or default by the party in the
performance of this Agreement. Upon expiration of such
Notice period, this Agreement shall terminate without
the need for further action by either party; provided,
however, that if such breach or default shall have been
fully cured within such 90-day period, then such Notice
shall be deemed to have been rescinded, and this
Agreement shall remain in full force and effect.
9.2 Termination or rescission of this Agreement shall not
relieve any party of any obligation or liability to
another party arising before such termination.
10. INDEPENDENT CONTRACTORS
No party nor any of its officers, employees, agents or
representatives is an employee or agent of any other party for any purpose
whatsoever. Rather, each party is and shall at all times remain an independent
contractor.
11. NOTICES
All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in writing and
shall be deemed delivered (i) on the same day if delivered in person, by
same-day courier, or by fax, complete transmission of which can be confirmed,
(ii) on the next day if delivered by overnight mail or courier, or (iii) on the
date
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indicated on the return receipt, or if there is no such receipt, on the
third calendar day (excluding Sundays) if delivered by certified or registered
mail, postage prepaid, to the party for whom intended to the addresses of the
Parties as first set forth above, with copies to:
For Milwaukee:
Atlas Copco North America, Inc.
34 Maple Avenue
Pine Brook, New Jersey 07058
Attention: William J. Calore, Esq.
Fax: (973) 439-9188
For Rockford:
Rockford Corporation
600 S. Rockford Drive
Tempe, Arizona 85281
Attention: Vice President of Product Design and
Development
Fax: (480) 966-3983
With a copy to:
Steptoe & Johnson LLP
201 E. Washington, Suite 1600
Phoenix, Arizona 85004
Attention: Kevin Olson, Esq.
Fax: (602) 452-0903
Any party may by written notices given to the other in accordance
with this Agreement change the address and fax number to which notices to such
party are to be delivered.
12. CHOICE OF LAW AND ARBITRATION
Any and all disputes of whatever nature arising between the parties out of this
Agreement, including termination thereof, and which are not resolved between the
parties themselves, shall be submitted to binding arbitration in Phoenix,
Arizona before a single arbitrator in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, utilizing the Expedited
Procedures and the Optional Procedures for Large, Complex Commercial Disputes.
Judgment upon the award of the
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arbitrator may be entered in any court having jurisdiction thereof. Any and all
disputes shall be submitted to arbitration hereunder within 180 days from the
date the dispute first arose or shall be deemed barred. Arbitration hereunder
shall be in lieu of all other remedies and procedures available to the parties,
provided that either party hereto may seek preliminary injunctive or other
interlocutory relief prior to the commencement or during such proceedings.
13. ENTIRE UNDERSTANDING
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings between them with respect to the subject matter hereof. No
amendment of this Agreement shall be effective unless embodied in a written
instrument executed by all of the parties.
14. ASSIGNMENT
The rights and obligations of the parties under this Agreement shall
inure to the benefit of and be binding upon their respective affiliates,
successors and assigns, provided, however, that no party may assign its rights
or obligations hereunder without the prior written consent of the other party
(which shall not be unreasonably withheld), and any attempted assignment without
such consent shall be void.
15. MISCELLANEOUS
15.1 This Agreement may be executed in counterparts. When
each party has signed and delivered at least one such
counterpart, each counterpart shall be deemed an
original, and, when taken together with other signed
counterparts, shall constitute one Agreement which shall
be binding upon and effective as to all parties. No
counterpart shall be effective until all parties hereto
have executed and exchanged an executed counterpart
hereof.
15.2 The captions in this Agreement are inserted solely for
the purposes of facilitating
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easy reference and shall not be construed in any way as
part of the text, or as altering the provisions of this
Agreement.
15.3 A facsimile signature shall be as good as an original
signature for all purposes hereunder.
15.4 The invalidity and nonenforceability of any term or
provision of this Agreement shall in no way affect the
validity or enforceability of any other term or
provision. The waiver by either party of a breach of any
provision of this Agreement shall not be operated as or
be construed as a waiver of any subsequent breach
thereof. If any part, provision or term of this
Agreement should be determined to be illegal,
unenforceable, invalid or void, then such invalidity
will not invalidate the remaining provisions of the
Agreement.
16. From time to time, the parties may find it necessary, to disclose trade
secrets, and/or share confidential and/or proprietary information with the other
("Confidential Information"), in order to perform their obligations hereunder.
Therefore, both parties have agreed, as a precondition to providing any
information called for under this agreement, to enter into a confidentiality
agreement to protect such Confidential Information. A copy of this
Confidentiality Agreement is attached hereto as Exhibit 16. In addition, the
parties agree that neither party shall make any public statements (e.g.,
issuance of a press releases) regarding the terms of this License, or the
underlying business relationship without the obtaining the prior agreement of
the other party in writing, except to the extent disclosure is required by
applicable law (including disclosure requirements under applicable securities
laws), or in order to enforce the terms of this Agreement, or protect the rights
of both parties in the Names.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above mentioned.
ROCKFORD CORPORATION MILWAUKEE ELECTRIC TOOL CORPORATION
By: By:
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Title: Title:
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