EXHIBIT 10.7
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT ("Agreement") is made and entered into as of the
14th day of May, 1999 (the "Effective Date") by and between THE SPORTS
AUTHORITY, INC., a Delaware corporation with its principal place of business at
3383 North State Road 7, Fort Lauderdale, Florida 33319, U.S.A. ("TSA"), and THE
SPORTS AUTHORITY MICHIGAN, INC. a Michigan corporation with its principal place
of business at 306 South Washington, Suite 224, Royal Oak, Michigan 48067
("TSAMI"; or collectively, "Licensor"), and THESPORTSAUTHORITY.COM, INC., a
Delaware corporation with its principal office at 555 South Henderson Road, King
of Prussia, Pennsylvania 19406 ("TSA.COM" or "Licensee").
WHEREAS, TSAMI, its parent company TSA and TSA's other retailing
subsidiaries The Sports Authority Florida, Inc., Authority International Inc.
and The Sports Authority Canada, Inc. comprise the largest full-line sporting
goods retailer in the U.S. and Canada, each operating full line sporting goods
stores under the name and mark THE SPORTS AUTHORITY;
WHEREAS, TSAMI is the owner of certain Marks, Names and TSA Content (as
each is defined below) in the U.S., Canada and Japan; TSA is the owner of
certain Marks, Names and TSA Content throughout the world other than in the
U.S., Canada and Japan; and both TSAMI and TSA are the owners of certain TSA
Buying Power (as defined below);
WHEREAS, TSA and Global Sports Interactive, Inc. ("GSI") have agreed under
a certain E-Commerce Venture Agreement dated May 7, 1999 (the "EVA") to form
TSA.COM to develop and operate the "TSA Site" (as defined below) on the
"Internet" (as defined below);
WHEREAS, TSA and TSA.COM have agreed under a certain E-Commerce Agreement
dated May 14, 1999 (the "ECA") that TSA.COM shall create, develop, operate,
maintain, advertise and promote the TSA Site;
WHEREAS, GSI and TSA.COM have agreed under a certain E-Commerce Services
Agreement dated May 14, 1999 (the "ESA") that GSI shall perform many of the
services described in the ECA; and
WHEREAS, TSA.COM desires to license from TSA and TSAMI certain of the
Marks, Names, TSA Buying Power and TSA Content owned or controlled by TSA and
TSAMI for use in creating, developing, operating, maintaining, advertising and
promoting the TSA Site;
NOW, THEREFORE, in consideration of the mutual promises, undertakings and
covenants herein, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby respectively
grant, covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Advertising and Marketing Partners of Licensee" shall mean operators or
proprietors of search engines, portals, community sites, content sites, on-line
retailers, shopping, regional and industry directories, push sites, and other
Internet sites capable of attracting Customers for the TSA Site, or desirous of
attracting Customers from the TSA Site to their sites, with whom Licensee
contracts for exchanges of advertising and promotional services and any form of
compensation. For purposes of this Agreement, Licensee shall not contract with
TSA Competitors (as defined below) and the same shall be excluded from the
definition of Advertising and Marketing Partners of Licensee.
1.2 "Affiliate(s)" shall mean an entity directly or indirectly controlling
(through one or more intermediaries), controlled by or under common control with
a given "Party" (as defined below), where control means the ownership or
control, directly or indirectly, of fifty percent (50%) or more of all of the
voting power of the shares (or other securities or rights) entitled to vote for
the election of directors or other governing authority; provided that such
entity shall be considered an Affiliate only for the time during which such
control exists.
1.3 "Business Day(s)" shall mean any day which is not a Saturday, Sunday or
official federal holiday in the U.S.
2
1.4 "Customer" shall mean a consumer who purchases or otherwise receives
Services, Materials, General Merchandise or Own Brand Merchandise furnished by
Licensee from the TSA Site as permitted hereunder.
1.5 "Fiscal Year" shall mean Licensee's fiscal year. Licensee shall give at
least ninety (90) days advance notice to Licensor of any change in designation
of Licensee's Fiscal Year.
1.6 "General Merchandise" shall mean any goods offered, sold or furnished by
Licensee from the TSA Site as permitted hereunder, other than Own Brand
Merchandise.
1.7 "Net Sales" shall mean as defined by GAAP in the United States.
1.8 "Internet" shall mean a global network of interconnected computer networks,
each using the Transmission Control Protocol/Internet Protocol and/or such other
standard network interconnection protocols as may be adopted from time to time,
which is used to transmit content that is directly or indirectly delivered to a
computer or other digital electronic device for display to an end-user, whether
such content is delivered through on-line browsers, off-line browsers, or
through "push" technology, electronic mail, broadband distribution, satellite,
wireless or other successor technologies or means. Internet shall also mean on-
line services such as AOL, CompuServe and Prodigy.
1.9 "Licensed Property" shall mean the Marks, Names, TSA Buying Power and TSA
Content which Licensor has agreed to license to Licensee under Articles 2.1-2.4.
1.10 "License Guidelines And Restrictions" shall mean the clearance, form,
format and use restrictions and procedures set forth in Exhibit A, attached,
---------
which Licensee shall adhere to at all times in its use of the Licensed Property
on or in connection with the TSA Site and on or in connection with any site of
the Advertising and Marketing Partners of Licensee linked with or to the TSA
Site.
1.11 "Marks" shall mean:
(a) the mark THE SPORTS AUTHORITY in English in block letters and any
equivalent in foreign language characters, and certain THE SPORTS AUTHORITY
logotypes, and such other trademarks and service marks, which are
proprietary to Licensor, as shall be identified in writing by Licensor from
time to time, together with
3
associated trademark and service mark applications and registrations
therefor, all as more specifically described in Exhibit B attached hereto
---------
and incorporated herein, as Exhibit B may be modified from time to time in
---------
writing by Licensor as further set forth in Article 2.1(b);
(b) all related emblems, logos and symbols, and all combinations, forms
and derivations thereof as are currently or hereafter used by Licensor in
connection with Own Brand Merchandise (as defined below); and
(c) the Trade Dress (as defined below) inherent in the design, layout and
presentation of TSA Stores or in the TSA Content in the U.S.A. and Canada,
including, without limitation, such Trade Dress as may be subject to
protection under applicable intellectual property or industrial property
laws and regulations of countries within the Territory.
1.12 "Materials" shall mean exterior and interior signs, flags, banners,
packaging, labels, print, electronic and broadcast advertising and promotional
media, indexes and pages on Internet sites (whether visible or not to the
general public), meta-tags, manuals, brochures, flyers, posters, sales
literature, business forms, gift certificates, credit cards, debit cards,
membership or consumer loyalty program cards and related materials, stationery,
employee uniforms, badges, merchandise bags and boxes, baskets, trolleys and
carts, sales receipts and charge slips, tickets and tags, and the like, bearing
any of the Marks and used on or in connection with furnishing the Services,
General Merchandise, or Own Brand Merchandise or with the TSA Site.
1.13 "Names" shall mean the following Internet domain names or URLs registered
in the name of either TSAMI or TSA, or both, together with any additions as may
be notified to Licensee from time to time in writing by Licensor, or any
deletions as agreed by the Parties:
. http://www.sportsauthority.com
. http://www.thesportsauthority.com
. http://www.sportsauthority.org
. http://www.thesportsauthority.org
. http://www.sports-authority.org
. http://www.sportsauthority.net
. http://www.thesportsauthority.net
. http://www.sports-authority.net
. http://www.skiauthority.com
4
. http://www.theskiauthority.com
. http://www.skiauthority.org
. http://www.theskiauthority.org
. http://www.skiauthority.net
. http://www.theskiauthority.net
1.14 "Own Brand Merchandise" shall mean any and all goods bearing or otherwise
sold under or in connection with packaging or labels bearing the mark THE SPORTS
AUTHORITY, THESPORTSAUTHORITY.COM or the mark THE SPORTS AUTHORITY & Design, as
permitted hereunder and subject always to Licensor's prior written approval and
instructions.
1.15 "Party" shall mean the Licensor or Licensee; "Parties" shall mean both of
them.
1.16 "Related" company or companies shall mean any legal entity which holds
directly or indirectly more than fifty percent (50%) of the issued share capital
or capital stock of GSI or TSA, or of which GSI or TSA or their parent companies
hold directly or indirectly more than fifty (50%) of the issued share capital or
capital stock, in any event not to include Licensee. An entity shall be deemed
to hold shares indirectly if the shares are held by another entity that is
majority controlled, either directly or through other majority controlled
entities, by such first mentioned entity.
1.17 "Royalties" shall mean the following:
--------------------------------------------------
[*] PERCENT ([*]%) of any and all Net Sales during
any Fiscal Year (or portion thereof) during the
Term and any permitted extension.
--------------------------------------------------
The Royalties shall be paid by Licensee in consideration for use of the Marks,
TSA Content and TSA Buying Power hereunder, but not for use of the Names.
Licensor shall receive consideration for use of the Names as provided in Article
3.3 of the E-Commerce Venture Agreement. Upon request of any Party, the
Royalties may be reviewed from time to time to insure that they are commensurate
with the income derived by Licensee from use of the Licensed Property and to
ensure the Parties' compliance with applicable transfer pricing rules. The
Royalties may be amended only by mutual written agreement of the Parties.
5
1.18 "Services" shall mean those services:
(a) offered by Licensee to Customers at or through the TSA Site,
including, without limitation, retail store services in the fields of
sporting goods, athletic footwear, athletic apparel and related goods
as furnished on the Internet at the URL
"http://www.thesportsauthority.com," as well as sporting goods
assembly, repair and maintenance, racquet stringing, layaway,
delivery, customer loyalty programs, and related services; and
(b) those advertising and promotional services offered by Licensee to
Advertising and Marketing Partners of Licensee, including, without
limitation, services intended to increase Customer traffic at the TSA
Site, and services intended to attract Customers from the TSA Site to
the sites of Advertising and Marketing Partners of Licensee.
1.19 "Subsidiary" shall mean any company owned or controlled by Licensee, or by
Licensor.
1.20 "Term" shall mean the period commencing with the Effective Date and
continuing approximately fifteen (15) years through December 31, 2014 unless
this Agreement is otherwise earlier terminated as provided in Article 5.8 below.
1.21 "Territory" shall mean throughout the universe excluding Japan.
1.22 "TSA Buying Power" shall mean Licensor's volume purchasing power and
ability to obtain other favorable terms in procuring goods and services from
Licensor's vendors, including without limitation, favorable pricing, delivery,
exclusivity, makeup, display, advertising and promotion, defective allowance and
merchandise return terms and other consideration.
1.23 "TSA Competitor" shall mean: (a) any person, firm or corporation or other
entity (other than TSA and its retailing Subsidiaries) which either directly or
indirectly derives twenty percent (20%) or more of its revenues from the sales
or distribution of sporting goods, athletic apparel, athletic footwear or
related goods and services, whether operating from stores located in the U.S.,
Canada or Japan or any other nation in which the predominant language is English
or any other nation in which TSA establishes TSA Stores during the Term of this
Agreement, whether by mail order, home shopping through audio or video
programming, over the Internet or
6
otherwise; and (b) any retailing entity which would clearly be regarded as a
competitor of TSA by the U.S. Department of Justice under federal antitrust and
competition laws and regulations.
1.24 "TSA Content" shall mean:
(a) text, graphics, photographs, video, audio and/or other data or
information relating to any subject furnished by Licensor to Licensee
and intended solely for use in connection with the TSA Site;
(b) Licensor selected print advertisements for the TSA Stores or the
goods and services offered by Licensor in the TSA Stores, including
run of press and insert advertisements which appear in newspapers and
magazines, as well as printed in store signage, point of sale and
display signage and information promoting events and the goods and
services offered in the TSA Stores; and
(c) such information concerning the goods and services offered by
Licensor in the TSA Stores in the U.S. as Licensor possesses and has
the right to transfer and license to Licensee, and which Licensor
deems necessary to successful operation of the TSA Site, including,
without limitation, information which is related to the sourcing,
manufacturing, development, design, fabrication, construction, test
procedures, performance features, quality control standards,
merchandise specifications, reliability standards, distribution,
costs, allowances, rebates, sizes, colors, decoration, display,
pricing, margins, vendor economic information, and similar
information and know-how necessary to the procurement, merchandising,
inventory management and sales of such goods and services in the TSA
Stores.
1.25 "TSA Gift Certificates" shall mean gift certificates bearing the marks THE
SPORTS AUTHORITY and THE SPORTS AUTHORITY & Design, printed and distributed
under the auspices of Licensor, and redeemable at Licensor's TSA Stores.
1.26 "TSA Site" shall mean that certain Internet site currently accessible
through the URL "http://www.thesportsauthority.com," and any backup or mirror
Internet site operated by Licensee; it being understood that the TSA Site shall
be primarily targeted by Licensee at Customers, and not at persons, entities or
activities otherwise described in Article 2.6. Licensee agrees that the TSA
Site shall not be used by Licensee to furnish, sell, advertise or promote the
goods or services of any TSA Competitor.
7
1.27 "TSA Stores" shall mean any sporting goods retail store established and/or
operated by TSA or its retailing Subsidiaries under the name and mark THE SPORTS
AUTHORITY and related marks, and devoted to the sale of a broad assortment of
sporting goods, athletic footwear, athletic apparel and related goods, and to
provision of the related services.
1.28 "Trade Dress" shall mean the total appearance or look and feel of:
(a) Own Brand Merchandise and its packaging and labels;
(b) TSA Stores as operated by Licensor in the U.S.; and
(c) print and television advertisements, billboards, and interior or
exterior signage as used by Licensor in the U.S. to promote or
identify the TSA Stores or Licensor's goods and services.
ARTICLE II
LICENSES
2.1 Grant of License to Use Marks. (a) Subject to the terms and conditions
-----------------------------
set forth in this Agreement, Licensor hereby grants to Licensee, for the Term
only, and Licensee accepts from Licensor, upon the terms and conditions
specified herein, the non-transferable, exclusive (as to third parties but not
as to Licensor) right and license in the Territory only, to use the Marks on and
in connection with the Services, Materials and Own Brand Merchandise furnished
in or in connection with the TSA Site if, and only if, such Services, Materials
and Own Brand Merchandise comply with the quality standards set forth herein and
those approved and issued by Licensor from time to time. Licensor may monitor
and control the nature and quality of the Services, Materials and Own Brand
Merchandise, and Licensor may appoint one or more representatives to monitor and
exercise such control on Licensor's behalf. Such monitoring shall in no way
lessen or limit Licensee's obligation to use the Marks only as set forth herein.
No other, further or different license is granted or implied and no assignment
of any right or interest is made or intended herein. In particular, no license
is granted to sublicense or otherwise permit any third party to use the Marks.
Licensee may only use the Marks on or in connection with Services, Materials and
Own Brand Merchandise subject to Articles II and III and all other terms and
conditions hereof. Except for use of "TheSportsAuthority.com, Inc." as its
registered corporate or business name (subject always to the applicable terms
and conditions of this
8
Agreement), Licensee is prohibited from using the Marks or any name or mark
confusingly similar to the Marks, including any abbreviations of the Marks, as
part of Licensee's registered corporate or business name in any jurisdiction in
the Territory, or as part of any Internet domain name not otherwise registered
in Licensor's name.
(b) Changes to Exhibit B: Certain records in Exhibit B may be included for
-------------------- ---------
information purposes only and, as indicated in writing, shall be excluded from
the definition of Marks hereunder. Licensor and Licensee acknowledge that the
"core" Marks as set forth in Exhibit B are: AUTHORITY, THE SPORTS AUTHORITY,
---------
THESPORTSAUTHORITY.COM, SPORTSAUTHORITY.COM and THE SPORTS AUTHORITY & Design as
registered (or subject to pending applications to register) in the U.S. and
Canada. Licensor may make changes to Exhibit B from time to time as it sees fit
---------
to add Marks and to update information in records for existing Marks by
delivering an updated version of Exhibit B to Licensee. Licensor may only
---------
change Exhibit B to delete non-core Marks (or records for non-core Marks) by
---------
giving 30 days prior written notice (stating Licensor's reasons for the proposed
deletion(s) in reasonable detail) and an opportunity to object to Licensee. If,
at the end of 30 days, Licensee has failed to object in writing, the proposed
deletions may be made and Licensor shall deliver an updated Exhibit B to
---------
Licensee. If Licensee objects within the 30-day period, it shall do so by
delivering a written notice to Licensor which explains in reasonable detail the
basis for the objection. Licensor may accept the objection and forego the
deletion(s), but if not, Licensor and Licensee shall negotiate in good faith and
use their best efforts to achieve a mutually acceptable resolution.
Notwithstanding the foregoing, if Licensee has made a substantial and material
investment in a non-core Mark which Licensor proposes to delete, and the reason
for the proposed deletion is not a binding court order, judgment or other
injunction prohibiting Licensor's or Licensee's continued use of the subject
Mark, the Parties shall strive to preserve Licensee's continued right to use the
non-core Mark and to retain the non-core Mark as part of Exhibit B.
---------
2.2 Grant of License to Use Names. Subject to the terms and conditions set
-----------------------------
forth in this Agreement, Licensor hereby grants to Licensee, for the Term only,
and Licensee accepts from Licensor, upon the terms and conditions specified
herein, the non-transferable, exclusive (as to third parties but not as to
Licensor) right and license in the Territory only, to use the Names on and in
connection with the TSA Site if, and only if, such use complies with the License
Guidelines And Restrictions set forth in Exhibit A. In particular, Licensee
---------
shall use the Name "http://www.thesportsauthority.com" as its primary domain
name, and use the other Names, if at all, as pointers or immediate links to the
primary domain name. Licensor may monitor and control the nature and quality of
Licensee's use of the Names, and Licensor may appoint one or
9
more representatives to monitor and exercise such control on Licensor's behalf.
Such monitoring shall in no way lessen or limit Licensee's obligation to use the
Names only as set forth herein. No other, further or different license is
granted or implied and no assignment of any right or interest is made or
intended herein. In particular, no license is granted to sublicense or otherwise
permit any third party to use the Names. Licensee may only use the Names on or
in connection with TSA Site subject to Articles II and III and all other terms
and conditions hereof.
2.3 Grant of License to Use TSA Buying Power. Subject to the terms and
----------------------------------------
conditions set forth in this Agreement, Licensor hereby grants to Licensee, for
the Term only, and Licensee accepts from Licensor, upon the terms and conditions
specified herein, the non-transferable, non-exclusive right and license in the
Territory only, to use the TSA Buying Power on and in connection with the TSA
Site if, and only if, such use complies with the restrictions set forth in this
Agreement. Licensor may monitor and control the nature and quality of Licensee's
use of the TSA Buying Power, and Licensor may appoint one or more
representatives to monitor and exercise such control on Licensor's behalf. Such
monitoring shall in no way lessen or limit Licensee's obligation to use the TSA
Buying Power only as set forth herein. No other, further or different license is
granted or implied and no assignment of any right or interest is made or
intended herein. In particular, no license is granted to sublicense or otherwise
permit any third party to use the TSA Buying Power. Licensee may only use the
TSA Buying Power on or in connection with TSA Site subject to Articles II and
III and all other terms and conditions hereof.
2.4 Grant of License to Use TSA Content. Subject to the terms and conditions
-----------------------------------
set forth in this Agreement, Licensor hereby grants to Licensee, for the Term
only, and Licensee accepts from Licensor, upon the terms and conditions
specified herein, the non-transferable, non-exclusive right and license in the
Territory only, to use the TSA Content solely in connection with the TSA Site
if, and only if, such use complies with the restrictions set forth in herein.
Licensor may monitor and control the nature and quality of Licensee's use of the
TSA Content, and Licensor may appoint one or more representatives to monitor and
exercise such control on Licensor's behalf. Such monitoring shall in no way
lessen or limit Licensee's obligation to use the TSA Content only as set forth
herein. No other, further or different license is granted or implied and no
assignment of any right or interest is made or intended herein. In particular,
no license is granted to sublicense or otherwise permit any third party to use
the TSA Content. Licensee may only use the TSA Content on or in connection with
TSA Site subject to Articles II and III and all other terms and conditions
hereof.
2.5 Marking, Samples, Inspection, Quality Control
---------------------------------------------
10
(a) Marking Own Brand Merchandise and Materials. Licensee agrees to mark
-------------------------------------------
all Own Brand Merchandise and Materials in a manner complying with the License
Guidelines And Restrictions set forth in Exhibit A. Licensor reserves the right
---------
to change the provisions of Exhibit A as it sees fit in order to protect the
---------
Licensed Property, or Licensor's interests in the Licensed Property, and such
changes shall become binding upon Licensee upon receipt of written notice of
such changes. Licensee shall have a reasonable period, but no more than ninety
(90) days from first notice, to fully implement such changes. Without limiting
the foregoing, upon request from Licensor and with respect to TSA Content which
is created or owned by Licensor, Licensee shall place a notice of copyright on
each page of the TSA Site which displays TSA Content ("TSA Content Page") in
accordance with the License Guidelines and Restrictions. No TSA Content Page,
upon which a notice of copyright is placed pursuant to the preceding sentence,
shall contain any other copyright notice whatsoever except as mutually agreed to
and determined by the Parties. Licensee shall cooperate fully with Licensor in
connection with Licensor's obtaining appropriate copyright protection in the
name of Licensor for any TSA Content Page. Licensee acknowledges and agrees that
all copyrights and rights of copyright furnished by Licensor as TSA Content,
including any derivative works, shall be and remain the sole and complete
property of Licensor; that all such copyrights and rights of copyright in the
name of and/or owned by any copyright proprietor other than Licensor or Licensee
shall be and remain the sole and complete property of such copyright proprietor;
that Licensee shall not at any time acquire or claim any right, title or
interest of any nature whatsoever in any such copyright by virtue of this
Agreement or of Licensee's uses thereof in connection with TSA Content, the
Marks, Own Brand Merchandise, TSA Buying Power or any intellectual or industrial
property rights therein; and that any right, title or interest in or relating to
any such copyright which comes into existence as a result of, or during the term
of, the exercise by Licensee of any right granted to it hereunder shall
immediately vest in Licensor.
(b) Submission of Samples of Own Brand Merchandise and Materials; Approval
----------------------------------------------------------------------
Process. At any time upon request of Licensor, prior to introducing any Own
- -------
Brand Merchandise for sale and prior to producing and publishing or distributing
any Materials for the first time, Licensee shall furnish at Licensee's expense
samples of such Own Brand Merchandise and Materials, including the trademark,
copyright and disclaimer notices thereon and any other labels, tags or markings.
Further, Licensor shall have the right to inspect the TSA Site, including all
underlying code and data structures (solely for purposes of protecting its
interests in the Licensed Property and to ensure Licensee's compliance with the
terms hereof), and to inspect samples of General Merchandise or Own Brand
Merchandise, in order to assure compliance with
11
the quality standards established by Licensor. If so notified in writing by
Licensor, Licensee shall not offer or furnish any Services, Materials, General
Merchandise or Own Brand Merchandise whose nature or quality does not comply
with the quality standards established by Licensor in accordance with this
Agreement. Further, if Licensee proposes to alter the Marks in any way or to
deviate in any way from the forms in which the Marks have been furnished to
Licensee by TSAMI, Licensee shall first submit a sample of the proposed altered
Mark to Licensor for Licensor's prior review and written approval.
Licensor's changes (if any) to the quality standards established by Licensor in
accordance with this Agreement shall be reasonably necessary or reasonably
calculated to protect the Licensed Property or Licensor's interests in the
Licensed Property.
Licensor shall review in a timely manner all such samples and requests and use
its best efforts to communicate in writing its approval or disapproval as soon
as practicable after receiving the same. Failure to communicate approval within
fifteen (15) Business Days of receipt of the same shall be deemed a disapproval.
In no event, however, shall Licensee distribute or offer for sale the subject
General Merchandise, Own Brand Merchandise or Materials or use any altered Marks
until approval of the applicable sample is granted in writing by Licensor. If
Licensee intends to proceed, Licensee specifically agrees to amend to the
satisfaction of Licensor any sample of General Merchandise or Own Brand
Merchandise (including packaging and labels), Materials or any proposed
alterations of the Marks as may be directed by Licensor. A further sample shall
be provided to Licensor for its prior review and written approval if any
subsequent changes are made in approved General Merchandise, Own Brand
Merchandise or Materials or in the Marks. To the extent practicable, Licensor
and Licensee shall cooperate in good faith in developing standard manuals or
procedures setting forth approved formats for packaging and labels for Own Brand
Merchandise, and approved formats for Materials. Once established, Licensee
shall fully comply with such manuals or procedures and submit for Licensor's
review and approval any material deviation from such manual or procedures in the
manner provided herein.
(c) Approval Process for Changes in Quality. In the event Licensee wishes
---------------------------------------
to materially reduce the quality of an existing Service or item of Own Brand
Merchandise, and such reductions may have a materially adverse impact upon the
Licensed Property, or upon Licensor's interests in the Licensed Property,
Licensee shall advise Licensor in writing of the description of such Service or
item of Own Brand Merchandise and the proposed revised quality standard well in
advance of any such proposed change. Licensor's failure to advise Licensee in
writing of
12
Licensor's approval of such proposed change within thirty (30) days of receipt
of notice from Licensee, shall be deemed a disapproval.
(d) Line Reviews. Licensee shall inform Licensor of, and Licensor shall
------------
have the right to attend at its expense, Licensee's periodic line reviews of any
General Merchandise or Own Brand Merchandise offered or to be offered by
Licensee. Further, to ensure compliance with Licensor's standards and
instructions relating to the Licensed Property, Licensor, at its expense,
directly or through representatives, may inspect and test General Merchandise
and Own Brand Merchandise from time to time. Licensee shall reasonably cooperate
and aid Licensor in making such inspections and tests.
(e) Delegation. Without limiting or waiving Licensor's rights in any
----------
manner, Licensor delegates in part to Licensee the continuing duty to exercise
quality control regarding the nature and quality of the Services, Materials,
General Merchandise and Own Brand Merchandise and the nature and quality of
Licensee's use of the Marks and Names. Licensor may recommend and Licensee shall
adopt and comply with any reasonable procedures, tests, surveys or the like to
fulfill this delegation. Licensor may request reports, documentation, evidence
or other proof of Licensee's performance under this provision and Licensee shall
promptly furnish the same to Licensor.
2.6 License Exclusions: Licensee agrees and acknowledges that:
------------------
(a) Reservation of Rights. Taken together, Articles 2.1-2.4 grant to
---------------------
Licensee the exclusive right to use the Marks, Names, TSA Content and TSA Buying
Power to conduct the "E-Commerce Business," which shall mean the business of
creating, developing, operating, maintaining, advertising and promoting the TSA
Site (as further described in the ECA). Notwithstanding the foregoing, Licensor
reserves to itself, its Affiliate, Subsidiary and Related companies, and their
respective agents, distributors, representatives, licensees, franchisees,
customers, successors and assigns (now or hereafter existing), all rights to use
(and the right to license or otherwise authorize others to use) the Marks,
Names, TSA Buying Power and TSA Content for any and all purposes not
inconsistent with Licensee's rights as provided in Articles 2.1-2.4 hereof,
including without limitation, the right to use and exploit the Marks, Names, TSA
Buying Power and TSA Content throughout the universe, including in the
Territory:
13
(i) to manufacture, source, market, sell, furnish, advertise and promote
goods and services offered at or in connection with the TSA Stores,
including from kiosks or other externally networked devices located
within TSA Stores;
(ii) to manufacture, source, market, sell, furnish, advertise and promote
goods and services offered by means of mail order catalogs furnished
to consumers, vendors, employees and others by mail, or distributed
within TSA Stores;
(iii) to print, source, market, sell, furnish, advertise and promote TSA
Gift Certificates directly or indirectly, whether from TSA Stores,
by mail order, over the Internet, an intranet or extranet (except
from an Internet site owned or operated by Licensor directed at
consumers, as opposed to Licensor's employees or other businesses),
or otherwise;
(iv) to create, develop, operate and/or maintain, directly or indirectly
through any third party, any Internet site primarily devoted to
business-to-business transactions, or primarily devoted to the
provision of information and not otherwise directed at the purchase
of sporting goods, athletic apparel, athletic footwear or related
goods and services;
(v) to advertise and promote the TSA Stores and Licensor's goods and
services, and to display the Marks, on the Internet on sites other
than the TSA Site, provided that such advertisements, promotions or
displays shall attempt to direct all individual consumers (as
opposed to businesses or organizations) wishing to make purchases
from Licensor on the Internet to the TSA Site; and
(vi) to manufacture, source, market, sell, furnish, advertise and promote
goods and services offered by means of home shopping audio or video
programs or successor technologies (not on the Internet).
(b) Own Brand Merchandise. Nothing contained herein shall prevent or
---------------------
restrict Licensor or any Affiliate, Related or Subsidiary companies or third
parties licensed by Licensor from manufacturing, marketing, advertising or
selling Own Brand Merchandise, whether from stores, by mail order, over the
Internet, an intranet or extranet (except from an Internet site directed at
consumers, as opposed to Licensor's employees or other businesses), or
otherwise, it
14
being understood that the license granted with respect to Own Brand Merchandise
is wholly non-exclusive.
(c) Prohibited Use of TSA Content. Nothing contained herein shall permit
-----------------------------
Licensee (or its Affiliate, Subsidiary or Related companies) to use or permit
others to use the TSA Content in any manner on or in connection with any site of
any TSA Competitor. Licensee shall segregate and take all necessary measures to
prevent the TSA Content from being commingled with the content of any TSA
Competitor, and to prevent the unauthorized disclosure of such TSA Content as
would be deemed "Confidential Information" as defined in Article IV. Further, in
possessing and using the TSA Content, Licensee shall be responsible for
compliance with all antitrust, competition and similar laws and regulations
applicable to the use or misuse of the TSA Content by Licensee, its Affiliate,
Subsidiary and Related companies, and any third party (including any TSA
Competitors) which may have gained access to the TSA Content through any of
them.
(d) Prohibited Use of HEAD and TYROLIA Marks. Nothing contained herein
----------------------------------------
shall authorize or permit Licensee (or its Affiliate, Related or Subsidiary
companies) to use the trademarks HEAD or TYROLIA, or to offer for sale on the
TSA Site any goods, packaging or labels bearing the marks HEAD or TYROLIA.
(e) Licensor's Other Authorized Users. Licensor has entered into license
---------------------------------
agreements, sponsorship agreements, settlement agreements and other agreements
regarding use of the Marks by others, as further described in Exhibit C,
---------
attached. Licensor intends to renew such agreements where applicable, and to
continue entering into similar agreements during the Term which are not
otherwise inconsistent with Licensee's rights hereunder.
(f) No Embarrassment. Licensee shall not offer or sell General
----------------
Merchandise, Own Brand Merchandise or render the Services, or advertise or
promote the TSA Site, in any way associated with, or thought to be associated
with any illegal, vulgar, obscene, immoral, unsavory or offensive activities,
nor cause material embarrassment to be suffered by Licensor by reason of acts or
omissions of Licensee which are illegal, immoral or scandalous.
(g) No Other Uses. Licensee shall not use any Marks, Names, TSA Buying
-------------
Power or TSA Content for any purpose other than the creation, development,
operation, maintenance, advertising and promotion of the TSA Site. All Marks,
Names, TSA Buying Power and TSA Content shall remain the sole and exclusive
property of Licensor, and neither Licensee nor any
15
other person or entity shall acquire any rights in the Marks, Names, TSA Buying
Power or TSA Content except those rights specifically granted to Licensee under
this Agreement.
(h) No Exports to Japan. While the TSA Site may be accessible within Japan
-------------------
(such accessibility shall not, by itself, be considered a breach), except for
one time, individual quantity (not bulk or volume) purchases for personal use by
the subject Customer for delivery within the Territory but possible export to
Japan, Licensee shall not knowingly export or furnish General Merchandise, Own
Brand Merchandise or Services from the Territory into Japan or knowingly sell
General Merchandise, Own Brand Merchandise to any person or entity which it
knows or has reason to believe intends to export Own Brand Merchandise from the
Territory into Japan. Licensee acknowledges and agrees that the sale or
marketing of General Merchandise, Own Brand Merchandise or Services by it or by
persons authorized by it outside of the Territory shall materially damage
Licensor and its relationships with other licensees, and that, accordingly, any
such sales, if done knowingly, shall be deemed a material breach of this
Agreement.
(i) No Co-Branding. Licensee shall not "co-brand" the TSA Site or use the
--------------
Marks immediately adjacent to other trademarks on the TSA Site in a manner
which, in comparison, places less emphasis or imposes smaller dimensions upon
the Marks, without obtaining Licensor's prior approval in the manner described
in Article 2.5(b).
(j) Prohibition Of Gambling Activities. Licensee at no time shall
----------------------------------
publicize, advertise, distribute, transmit, promote or otherwise make
available information about gambling or lotteries in violation of any
federal, state, local or foreign law, regulation, order or act of
government or governmental instrumentality to which either Licensor or
Licensee is subject, nor shall Licensee engage in, aid or abet, any
such gambling or lottery activity in violation of any federal, state,
local or foreign law, regulation, order or act of government or
governmental instrumentality to which either Licensor or Licensee is
subject. Furthermore, Licensee shall not at any time permit or
authorize any links between the TSA Site and any Other Licensee Site
or any Third Party Site that publicizes, advertises, distributes,
transmits, promotes or otherwise makes available information about
gambling or lotteries in violation of any federal, state, local or
foreign law, regulation, order or act of government or governmental
instrumentality to which either Licensor or Licensee is subject.
ARTICLE III
16
STANDARD OF PERFORMANCE
3.1 Commercially Reasonable Efforts. Licensee shall use commercially
-------------------------------
reasonable efforts appropriate to an experienced e-commerce retailer, on a
continuous basis during the Term:
(a) to advertise, promote, sell and furnish the TSA Site, Services,
General Merchandise and Own Brand Merchandise in the Territory;
(b) to exercise all reasonable care and skill in the performance of such
duties;
(c) to review and progressively improve its Net Sales in the Territory;
(d) to exploit the rights granted herein throughout the Territory
consistent with the high standards and prestige represented by the
Marks; and
(e) to observe, protect and enhance the distinctive THE SPORTS AUTHORITY
image as communicated by Licensor.
3.2 High Standards; TSA Mission Statement. Licensee acknowledges that Licensor
-------------------------------------
maintains high standards for Own Brand Merchandise and services sold by and
through the TSA Stores. Further, Licensee acknowledges that Licensor maintains
high standards for its Own Brand Merchandise and Licensor's services, as
expressed in Licensor's Mission Statement, attached hereto as Exhibit D and as
---------
may be amended from time to time by Licensor (the "TSA Mission Statement").
Licensee agrees to maintain the quality of the Own Brand Merchandise, Services
and Materials sold or distributed by it pursuant to this Agreement, and the
nature and quality of Licensee's use of the Licensed Property, in conformity
with the TSA Mission Statement and as expressed in standards communicated by
Licensor to Licensee from time to time. Further, Licensee warrants that all Own
Brand Merchandise, Services and Materials shall continue to meet or exceed such
standards. Further, Licensee shall use its best efforts to ensure that: (a) all
Own Brand Merchandise, Services and Materials comply with the requirements of
Articles II and III and all applicable laws, rules and regulations; and (b)
neither the Own Brand Merchandise nor the manufacturing thereof shall violate or
infringe any right of any third party or the human rights of any person employed
to manufacture the same.
ARTICLE IV
CONFIDENTIALITY AND NON-DISCLOSURE
17
4.1 Confidential Information. For purposes of this Agreement, Confidential
------------------------
Information means: (i) business or technical information of either Party,
including but not limited to any information relating to either Party's product
plans, designs, product costs, other costs, product prices, product names,
allowances, rebates, finances, advertising plans, strategies or buys, marketing
plans or strategies, business opportunities, personnel, research, development or
know-how; (ii) any written information designated by either Party as
confidential or proprietary or, if orally disclosed, reduced to writing by the
disclosing Party within thirty (30) days of such disclosure; (iii) all materials
furnished by one Party in connection with any audit conducted hereunder; and
(iv) the terms and conditions of this Agreement.
4.2 Exclusions. Confidential Information shall not include: (i) information
----------
that is or becomes generally known or available by publication, commercial use
or otherwise through no fault or breach of this Agreement by the receiving
Party; (ii) information that is rightfully in the receiving Party's possession
prior to first receiving it from the disclosing Party; (iii) information that is
lawfully received by the receiving party from a third party, without restriction
on disclosure and without breach of a nondisclosure obligation; or (iv)
information that the receiving Party can prove with written evidence is
independently developed by the receiving Party, without use of or access to
Confidential Information of the disclosing Party.
4.3 Obligations. Each Party shall not use the other Party's Confidential
-----------
Information, except as expressly permitted under this Agreement and shall not
disclose such Confidential Information to any third party, except to its
employees and consultants with a need to know for such party's performance of
this Agreement (and only subject to binding use and disclosure restrictions at
least as protective as those set forth herein executed in writing by such
employees or consultants). However, each Party may disclose Confidential
Information of the other Party: (i) pursuant to an order or requirement, to
which it is subject, of a court, administrative agency or other governmental
body, provided that such Party gives reasonable notice to the other Party to
contest such order or requirement; (ii) on a confidential basis to legal and
financial advisors; provided, however, that prior to such disclosure, the Party
disclosing the Confidential Information shall use its best efforts to secure an
agreement from the third party receiving the Confidential Information to keep
such information confidential; and (iii) as required by any law, rule, or
regulation, to which it is subject.
18
4.4 The Parties' respective confidentiality obligations as set forth in this
Article IV shall continue in full force and effect notwithstanding expiration or
termination of this Agreement for any reason.
ARTICLE V
GENERAL PROVISIONS
5.1 Payments. Beginning with the Effective Date, during the initial Term, and
--------
if applicable, after termination of the Agreement to the extent any amounts are
accrued and unpaid, Licensee shall pay the Royalties to Licensor in the manner
and at the times specified below.
19
5.2 Reports; Royalties.
------------------
(a) Within forty-five (45) days after the end of each quarter of
Licensee's Fiscal Year, Licensee shall:
(i) Deliver to Licensor a report, certified by one of its corporate
officers, giving the following particulars concerning Net Sales during
the preceding quarter of Licensee's Fiscal Year, together with
documentary proof of payment of any applicable tax withheld and/or
paid by Licensee (including, without limitation, true copies of
receipts or certificates evidencing payment of such taxes):
(A) Net Sales of the TSA Site derived from sale of General
Merchandise, Own Brand Merchandise and Services to Customers;
(B) Net Sales of the TSA Site derived from advertising furnished by
Licensee to any Advertising and Marketing Partners of Licensee;
(C) Net Sales of the TSA Site derived from all other sources;
(D) Amount of Royalties due to Licensor with respect to the TSA Site
attributable to items (A), (B) and (C) above, and in the
aggregate; and
(E) Amount of tax of any kind properly withheld and/or paid to tax
authorities by Licensee.
(ii) Pay to Licensor the Royalties due for the quarter covered by such
report, in U.S. Dollars, in immediately available funds, by bank draft
or other means as reasonably directed by Licensor. Receipt or
acceptance of any report or payment shall not preclude Licensor from
questioning the correctness thereof at any time. In the event that any
inconsistency or mistake is discovered by either Licensor or Licensee
in such reports or payments, it shall be immediately rectified and,
within fifteen (15) Business Days, the appropriate report and payment
shall be made.
(b) Time is of the essence with respect to Licensee's duty to make all
payments when due and Licensee's obligations to make such payments are absolute,
unconditional and not subject to any right of reduction or set-off, except for
withholding taxes imposed on the
20
Royalties which Licensee is required by law to withhold. Licensee shall withhold
and pay in a timely manner such taxes to the proper tax authority at the rate
required by statute but reduced to the fullest extent as permitted by tax
treaty, and Licensee shall provide Licensor with official receipts of all
withholding tax payments sufficient to enable Licensor to claim appropriate
federal income tax credits. Without limiting the foregoing, Licensee shall pay
to Licensor interest at the rate of the lesser of (i) one and one half percent
(1.5%) per month, compounded monthly, or (ii) the maximum rate allowed by
applicable law, on so much of the Royalty as remains outstanding from time to
time beyond the period for payment set forth above. Written notice by Licensor
to Licensee as to any amount of the outstanding Royalty (including interest)
shall be prima facie evidence that said amount is unpaid as of the date of such
notice.
(c) Licensee shall respond in writing to any written inquiry from Licensor
with respect to any report or payment within fifteen (15) Business Days of
receipt thereof.
(d) If, in the course of an audit or inspection by Licensor or its
representative(s), any discrepancy shall appear with respect to any amount due
and payable by Licensee and the amount paid, the amount owed (including interest
computed as set forth in Article 5.2(b) above) shall be paid within fifteen (15)
Business Days after Licensee's receipt of notice of any such discrepancy.
(e) Within ninety (90) days after the end of each Fiscal Year of Licensee,
Licensee shall furnish Licensor a certificate from an independent certified
public accountant as to the accuracy of Licensee's Royalty payments and reports
for each such Fiscal Year.
5.3 Books and Audits.
----------------
(a) Licensee shall keep full, true and accurate books of account in
conformance with generally accepted accounting principles ("GAAP") in effect in
the U.S. and containing all particulars which may be necessary for the purpose
of reviewing Net Sales and computing the Royalties due and payable to Licensor.
Said books of account shall be kept at Licensee's principal place of business
and maintained by Licensee for a period of at least two (2) years following the
end of each subject year during the Term and shall be available for inspection
by Licensor, upon reasonable notice and during normal business hours.
21
(b) Licensee shall maintain accurate records of all sales from the TSA
Site, of its annual advertising and promotional expenditures, and of contracts
and orders placed by Customers, and shall make such records available to
Licensor upon request for use in enforcing, registering or protecting the
Licensed Property throughout the world.
(c) During the Term and for a period of three (3) years after expiration
or termination of this Agreement, Licensor or an independent certified public
accountant retained by Licensor, may audit all statements of account, records
and reports provided for in this Agreement, at least once per Fiscal Year of
Licensee, but no more than once unless an audit discloses a material
discrepancy. In such cases, Licensor may audit every six (6) months until the
results of the audit show that a material discrepancy no longer exists. Licensee
shall make available to Licensor or said certified public accountant for the
purposes of this paragraph any and all records reasonably necessary to the
verification of such reports. Any error(s) discovered by such audit shall be
corrected by Licensee within fifteen (15) Business Days after having been
notified of such error. The expenses of any and all such audits and inspections
shall be borne by Licensor. However, if the error(s) discovered represent an
underpayment by Licensee of more than [*] Dollars ($[*]) due in the Fiscal Year
in question, Licensee shall promptly reimburse Licensor for the reasonable costs
of such audit.
5.4 Representations, Warranties and Duties of Licensee. Licensee represents
--------------------------------------------------
and warrants to Licensor and agrees that:
(a) Licensee is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; and it has the
corporate power and is authorized under its Articles of Incorporation and its
Bylaws to carry on its business as now conducted and as contemplated under this
Agreement;
(b) Licensee has performed all corporate actions and received all
corporate authorizations necessary to execute and deliver this Agreement and to
perform its obligations hereunder;
(c) Licensee has and shall maintain the power and authority and all
material governmental licenses, authorizations, consents and approvals as
required in all jurisdictions within the Territory to own its assets, carry on
its business and to execute, deliver, and perform its obligations under this
Agreement;
22
(d) Licensee is in compliance, and shall remain in compliance with all
requirements of any U.S. and Canadian, or to the best of its knowledge, any
other law (statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a governmental authority, in each case applicable to or
binding upon it or any of its property or to which the Services or any of its
business related to the TSA Site is subject, except where failure to be in
compliance could not reasonably be expected to have a material adverse change
in, or a material adverse affect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of Licensee;
(e) There are no (A) nongovernmental third parties or (B) governmental or
regulatory entities in the U.S. or Canada who are entitled to any notice of the
transactions contemplated hereunder or whose consent is required to be obtained
by Licensee for the consummation of the transactions contemplated hereunder;
(f) Licensee does not currently, and shall not during the term of this
Agreement, represent or promote any services or products that intentionally
divert business away from the TSA Site. Licensee shall continuously conduct its
business in a manner that reflects favorably on the Licensed Property;
(g) Licensee shall fully comply at its sole cost and expense with any and
all quality standards set forth herein and that Licensor may set forth from time
to time with respect to the Licensed Property and the Own Brand Merchandise and
Materials and Services bearing or embodying the Licensed Property;
(h) As between Licensor and Licensee, for purposes of this Agreement,
Licensee shall be completely responsible for the payment of all sums of money
which may be due at any time to its own employees, contractors, vendors, agents
and representatives, and for all other claims made by such parties against
Licensor. Licensor shall not for any reason be liable under this Agreement in
any way for Licensee's termination of employment or other relationships with
such parties or other legal entities, nor for any goods or services furnished to
Licensee by Licensor or any third party or by Licensee to Licensor or any third
party;
(i) As between Licensor and Licensee, for purposes of this Agreement,
Licensee shall be completely responsible for the computation, notification,
withholding, payment, filing and reporting of all applicable taxes of any kind
whatsoever which may be due at any time in connection with Licensee's
activities, assets or operations as permitted hereunder, including, without
limitation, all sales and use taxes, all value added taxes, and all withholding
taxes.
23
(j) Except with respect to trademark and service mark applications and
registrations, domain name registrations, recording of this Agreement and
related registered user agreements, all of which are reserved exclusively to
Licensor, Licensee shall, at its own expense, secure any and all approvals,
licenses, registrations and/or permits required under the laws or regulations of
any governmental or similar entity having jurisdiction over Licensee or the TSA
Site, or over the shipment, export, import, sale or other distribution of goods
(including General Merchandise and Own Brand Merchandise) or provision of
Services within the Territory as these relate to operation of the TSA Site,
including, without limitation, compliance with all export and import control
regulations and applicable consumer product, content labeling, country of
origin, and health and safety laws and the like;
(k) Licensee shall, during the Term and for one (1) year following
expiration or termination of this Agreement, ensure the adequate provision of
after sales service and spare parts to Customers in the Territory, subject to
reasonable cooperation of Licensor to assist Licensee in obtaining access to
spare parts;
(l) As between Licensor and Licensee, in the Territory and in Japan, all
right, title, interest and ownership in and to the Licensed Property, and
present and future registrations thereof, as trademarks, service marks, trade
names, trade dress, copyrights or works or copyright (including derivative
works), industrial models, designs, and the like, are and shall remain in
Licensor and Licensee agrees to render all reasonable assistance in maintenance
of these rights. Further, Licensee agrees and acknowledges that all goodwill
associated with or created by use of the Licensed Property by Licensee has
inured and shall continue forever to inure to the benefit of Licensor. Upon
termination of this Agreement all rights in and to the Licensed Property,
including all right to the use thereof, and all goodwill associated with use of
the Licensed Property, shall thereupon revert back to Licensor and Licensor
shall thereafter enjoy those rights as if this Agreement had never been
executed. If, by operation of law or otherwise, any goodwill associated with
Licensee's use of the Licensed Property shall be deemed to accrue or have
accrued to Licensee, Licensee agrees to immediately and irrevocably assign
without condition such goodwill to Licensor. Licensor shall not be required to
compensate Licensee for reversion or assignment of the goodwill;
(m) Except with respect to authorized advertising and marketing programs
conducted by Licensee with the Advertising and Marketing Partners of Licensee
and any non-Internet advertising and marketing programs otherwise permitted
under this Agreement, Licensee shall
24
not sell, distribute or otherwise make available or permit any use of the
Licensed Property on or in connection with Own Brand Merchandise, Materials or
Services, outside of the TSA Site, whether inside or outside the Territory, and
Licensee shall cooperate with Licensor in preventing all such sales and
distribution by others. Before permitting any vendor or supplier to sell off or
otherwise dispose of surplus, defective or returned Own Brand Merchandise to
parties other than Licensee, Licensee shall require the vendor or supplier to
remove all of the Licensed Property from such Own Brand Merchandise; and
(n) Licensee shall not attack or impair or put at issue Licensor's rights
in the Licensed Property, or any of Licensor's applications or registrations
therefor, nor assist anyone else in doing so. Except as licensed hereunder,
Licensee shall not use or apply to register the Licensed Property or any
identical or deceptively or confusingly similar service marks, trademarks,
corporate names, trade names, domain names, trade dress, copyrights, industrial
models or designs, or any derivations thereof, during the Term and forever
hereafter. Further, Licensee shall not use the Licensed Property in any manner
likely to jeopardize the exclusiveness or distinctiveness of the Licensed
Property or Licensor's proprietorship thereof, and Licensee shall not register
or attempt to register its rights in the Licensed Property as granted hereunder.
Without limiting the foregoing, during and after the expiration or termination
of this Agreement, Licensee, upon Licensor's written request, shall execute all
such documents as may be necessary to further confirm or perfect Licensor's
rights in the Licensed Property. If Licensee shall fail to execute any such
documents within thirty (30) days after Licensor's request, Licensee hereby
confirms that Licensor shall automatically be considered Licensee's attorney-in-
fact for the purpose of executing such documents.
5.5 Representations, Warranties and Duties of Licensor. TSA and TSAMI each
--------------------------------------------------
represents, warrants and agrees that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and it has the
corporate power and is authorized under its Certificate of Incorporation and its
Bylaws to carry on its business as now conducted;
(b) it has performed all corporate actions and received all corporate
authorizations necessary to execute and deliver this Agreement and to perform
its obligations hereunder;
25
(c) it has and shall maintain the power and authority and all material
governmental licenses, authorizations, consents and approvals to be obtained
within the U.S to own its assets, carry on its business and to execute, deliver,
and perform its obligations under this Agreement;
(d) there are no (A) nongovernmental third parties and (B) governmental or
regulatory entities in the U.S. who are entitled to any notice of the
transaction, licenses and services contemplated hereunder or whose consent is
required to be obtained by Licensor for the consummation of the transaction
contemplated hereunder;
(e) to the best of its knowledge as of the Effective Date it and its
licensors are the sole and rightful owners of all right, title and interest in
and to the Marks and Names and it has the unrestricted right to market, license
and exploit the Marks and Names;
(f) as of the Effective Date, either TSA or TSAMI has obtained or applied
for trademark and service mark registrations for certain of the Marks throughout
much of the Territory, as further described in Exhibit B;
---------
(g) it shall not engage directly or indirectly in the "E-Commerce
Business" except as otherwise provided in Article 2.6 of this Agreement and as
otherwise provided in Article 13.1 of the E-Commerce Agreement;
(h) Other than as disclosed in Exhibit C, attached, as of the Effective
---------
Date, there are no material outstanding assignments, grants, licenses,
encumbrances, obligations or agreements of Licensor inconsistent with this
Agreement; and
(i) OTHER THAN THOSE SET FORTH ABOVE, LICENSOR MAKES NO WARRANTIES TO ANY
PERSON OR ENTITY WITH RESPECT TO ANY TSA CONTENT, TSA BUYING POWER, NAMES,
MARKS, GOODS, SERVICES, OR OTHER SUBJECT MATTER OF THIS AGREEMENT ALL OF WHICH
ARE PROVIDED "AS IS," AND LICENSOR HEREBY DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING, WITHOUT LIMITATION, ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE AND NONINFRINGEMENT.
26
5.6 Protection of Rights.
--------------------
(a) In the ordinary course of business, Licensee or its counsel may review
periodically the use and/or registration by others of any trademark, service
mark, trade name, domain name, trade dress, industrial model or design or
copyright in the Territory which is a copy of, identical or confusingly or
deceptively similar to the Licensed Property or any aspect thereof. Licensee
agrees to inform Licensor promptly of any possible infringement, or of any
passing off or unfair competition affecting said Licensed Property which comes
to the attention of Licensee. Further, Licensee agrees to fully cooperate and
assist Licensor in the protection and defense of any of Licensor's rights in the
Licensed Property, in the filing and prosecution (at Licensor's expense) of any
trademark, trade dress, service mark, trade name, copyright, domain name,
industrial model or design application, registration, renewal and the like, in
the recording of this Agreement or any other relevant agreements, including,
without limitation, registered user agreements, and in the doing of any other
act with respect to the Licensed Property, including the prevention of the use
thereof by any unauthorized person, that in the sole discretion and judgment of
Licensor may be necessary or desirable.
(b) Licensor deems the Licensed Property to be extremely valuable.
Licensor shall have the sole right to determine whether or not any action shall
be taken on account of any infringement, passing off or unfair competition
activities or other enforcement of Licensor's rights in the Licensed Property.
If Licensor so desires it may prosecute any actions, claims, lawsuits or
proceedings in its own name or join Licensee as a party thereto, all at
Licensor's expense. Licensor shall be entitled to recover any and all sums of
money awarded and materials delivered up as a result of such actions, claims,
lawsuits or proceedings.
(c) Licensee shall not institute any lawsuit or take any action on account
of any actual or alleged infringement, passing off or unfair competition
relating to the Licensed Property, and Licensee shall not have any right or
claim against Licensor for Licensor's failure to enforce its rights in the
Licensed Property or failure to prosecute any actual or alleged infringement,
passing off or unfair competition by others in relation to the Licensed
Property. Notwithstanding the foregoing, if, after Licensor is advised and has a
reasonable opportunity to investigate and attempt to resolve an instance of
actual or alleged infringement, passing off or unfair competition, yet Licensor
determines not to institute any lawsuit or take any further action or because,
in Licensor's reasonable opinion, the same are unwarranted or of no avail,
Licensee may institute a lawsuit or take any action, solely in its own name, to
remedy the actual or alleged infringement, passing off or unfair competition. As
a prerequisite to instituting such a lawsuit
27
and taking any such actions, Licensee shall deliver to Licensor a duly executed
guarantee from Global Sports, Inc. ("GSI") providing that GSI agrees to and
shall pay any and all costs, expenses and damages, including attorneys' fees,
expert fees and all court costs incurred by Licensee and by Licensor (including
Licensor's internal costs) in the matter. Licensee agrees to keep Licensor fully
informed regarding all such lawsuits and actions, and to obtain Licensor's prior
written approval of any proposed settlement which affects the Licensed Property
or Licensor's interest in the Licensed Property. Licensee shall apply any costs,
fees, damages or other sums recovered in any such action or lawsuit to reimburse
the amounts Licensee or GSI has expended in the action or lawsuit. Once Licensee
or GSI has been fully reimbursed, the balance shall be delivered as determined
by the court.
5.7 Indemnification.
---------------
(a) Licensee's Indemnification. Except as provided in Article 5.7(b)
--------------------------
below, Licensee agrees to defend, indemnify and hold harmless Licensor and its
Affiliate, Subsidiary and Related companies and each of their respective
directors, officers, employees, representatives and agents, at Licensee's
expense, from and against any and all actions, claims, proceedings or lawsuits
to the extent arising from or related in any way to Licensee's acts or
omissions. This indemnification shall include, without limitation, claims of
premises or product liability, claims of patent, copyright, trade name,
trademark, trade dress, service mark, right of personality or persona, or
industrial model or design infringement, negligence, defamation,
misrepresentation, false advertising, unfair competition, trade secret
misappropriation and failure to file, pay or report any applicable tax. Licensor
agrees to give Licensee timely notice of such actions, claims, proceedings or
lawsuits and Licensee has the right and obligation, at its sole expense, to
defend the same and shall be solely responsible for satisfying any monetary
judgments awarded or any settlements entered into as a result of such actions,
claims, proceedings or lawsuits. Licensor may at its sole election participate
in any such defense at its own expense. In any event, Licensee agrees to keep
Licensor fully informed regarding all actions, claims, proceedings or lawsuits
which affect or involve Licensor under this paragraph.
(b) Licensor's Indemnification. Licensor agrees to defend, indemnify and
--------------------------
hold harmless Licensee and its Affiliate, Subsidiary and Related companies and
each of their respective directors, officers, employees, representatives and
agents, at Licensor's expense, from and against any and all actions, claims,
proceedings or lawsuits to the extent arising from or related in any way to,
claims that Licensee's use of the Marks and/or Names hereunder infringes the
trademark, service mark, trade dress or trade name rights of third parties in
the U.S., its
28
territories and possessions, Puerto Rico, or Canada, provided, however, that
Licensor shall not bear any duty, obligation or liability pursuant to this
Article 5.7(b) to the extent that and with respect to any use by Licensee of any
of the Marks and/or Names is in a manner not authorized by this Agreement.
Licensee agrees to give Licensor timely notice of such actions, claims,
proceedings or lawsuits and Licensor has the right and obligation, at its sole
expense, to defend the same and shall be solely responsible for satisfying any
monetary judgments awarded or any settlements entered into as a result of such
actions, claims, proceedings or lawsuits. Licensee may at its election
participate in any such defense at its own expense, provided, however, that
Licensee shall comply with any reasonable request of Licensor to cooperate in
the defense of any such actions, claims, proceedings or lawsuits. In any event,
Licensor agrees to keep Licensee fully informed of any material information
regarding all actions, claims, proceedings or lawsuits which affect or involve
Licensee under this paragraph.
5.8 Term and Termination.
--------------------
(a) Initial Term. This Agreement shall begin on the Effective Date and
------------
continue in full force and effect for approximately fifteen (15) years through
and including December 31, 2014. This Agreement shall terminate of the first to
occur of 90 days prior notice given by one Party to the other Party on or after
December 31, 2014, or termination pursuant to any of Articles 5.8(b)-(f) below.
(b) Without prejudice to any other rights either Party may have, a Party
may terminate this Agreement for cause premised upon any one or more of the
reasons set forth in (i) through (iv) below by giving notice to the other Party
in accordance with (c), (d) or (e) below, as the case may be:
(i) if Licensee shall fail to make any payments when due or to deliver any
reports as required hereunder or if Licensee or Licensor otherwise
materially breaches in any manner the terms of this Agreement;
(ii) if Licensee shall be generally unable to pay its obligations as they
become due, or if either Party shall make any assignment for the
benefit of creditors, or shall file, or have filed against it, any
petition for protection or relief from creditors or any petition in
bankruptcy, or be adjudicated bankrupt or insolvent, or if any
receiver is appointed for its business or property or a substantial
portion thereof, or if any trustee in bankruptcy or insolvency shall
be appointed for a Party, or if a Party
29
shall be in default upon any material debt obligation and such
default shall be continuing beyond any applicable cure period;
(iii) if Licensee shall fail in any material respect to follow Licensor's
instructions regarding quality control and protection of the Licensed
Property as required under this Agreement; or
(iv) if Licensee has ceased to carry on and diligently pursue its day to
day business activities of operating and promoting the TSA Site
utilizing the Licensed Property.
(c) In the event of breach by a Party of any provision of this Agreement
as provided in (b)(i), (b)(iii) or (b)(iv) above, the non-breaching Party shall
give the breaching Party notice in writing to cure the breach within sixty (60)
days (the "Notice Period") or such longer period as may be agreed upon by the
Parties, and if the breach is not cured within such period, the non-breaching
Party shall be entitled to exercise any remedies it may have hereunder,
including, without limitation, its right to terminate this Agreement effective
upon expiration of the Notice Period, provided that if such breach is capable of
being cured but incapable, by reason of its nature, of being cured within the
Notice Period, the non-breaching Party may, in its discretion, delay taking
action so long as the breaching Party shall have begun in good faith to cure
such breach within the Notice Period and thereafter proceeds diligently to
complete the cure of the breach and such breach is cured within a reasonable
period thereafter.
(d) In the event of the occurrence of any event described in (b)(ii)
above, the complaining Party may terminate this Agreement effective upon
expiration of the Notice Period; provided, however, that the non- complaining
Party may avoid such termination if any adverse filing described in (b)(ii) is
stayed, dismissed or reversed within the Notice Period and Licensee provides
satisfactory evidence of same to Licensor within such period.
(e) This Agreement shall automatically terminate on the date that
Licensor ceases to have a direct or indirect ownership interest in Licensee or
on the date that any of the EVA, ESA or ECA agreements is terminated, whichever
is earlier.
(f) This Agreement may be terminated at any time by mutual written
agreement of the Parties.
30
(g) Expiration or termination of this Agreement for any reason shall not
affect obligations which (i) have accrued as of the date of expiration or
termination, (ii) arise out of occurrences prior to the termination date, (iii)
become effective upon termination or (iv) by their terms continue after
termination.
(h) Upon termination of this Agreement, the Parties shall mutually
cooperate to effect an orderly termination of their relationship as Licensor and
Licensee, and Licensee shall within thirty (30) days:
(i) Return to Licensor all TSA Content and Materials, and cease using the
Licensed Property in any manner and for any purpose and take all
steps necessary to delete any and all references to any Licensed
Property from its business licenses, permits, business forms,
packaging, labels, advertisements, promotions and other Materials;
(ii) As directed by Licensor, return to Licensor, destroy or obliterate
all Own Brand Merchandise (including packaging and labels) and
Materials bearing the Licensed Property and furnish sworn affidavits
attesting thereto as requested by Licensor;
(iii) Cease holding itself out as a licensee of Licensor or as an entity
otherwise authorized or permitted to use the Licensed Property; and
(iv) Cooperate with Licensor in obtaining the cancellation of any
registration of this Agreement and amendment or cancellation of any
registered user agreements and corporate, domain name or business
name registrations. Licensee, upon Licensor's written request, shall
execute all such documents as may be necessary to fulfill this
provision. If Licensee shall fail to execute any such documents
within thirty (30) days after Licensor's request, Licensee hereby
confirms that Licensor shall automatically be considered Licensee's
attorney-in-fact for the purpose of executing such documents.
(i) Notwithstanding the foregoing, upon termination or expiration of this
Agreement for any reason other than pursuant to Article 5.8(b)(i) or (b)(iii),
Licensee shall have, for a period of 180 days thereafter, the right to sell off,
on a nonexclusive basis, all of the unsold Own Brand Merchandise in Licensee's
inventory which was on hand prior to such termination or expiration; provided,
however, that Licensee shall, prior to disposing of such unsold Own Brand
31
Merchandise, furnish to Licensor an itemized and sworn statement setting forth
accurate descriptions and unit volumes of all such unsold Own Brand Merchandise.
Further, Licensee shall be entitled to phase out use of the Licensed Property
over the same 180 day period. Royalties shall accrue at the then current rate
and be paid by Licensee according to the quarterly schedule set forth in Article
5.2 and within thirty (30) days of the end of such 180 day period. All
dispositions of inventory and use of Licensed Property pursuant to this
paragraph shall strictly comply with all provisions of this Agreement. On the
181st day, Licensee:
(i) shall immediately transfer to Licensor, or destroy, at Licensor's
option, all remaining inventory of Own Brand Merchandise;
(ii) shall immediately transfer to Licensor all TSA Content; and
(iii) shall have completely and permanently ceased using the Licensed
Property.
(j) Should Licensee fail to cease using any Licensed Property upon
termination of this Agreement, or in any other manner fail to comply with
Articles 5.8(h) and (i) above, Licensee agrees and hereby specifically consents
to each and all of the following remedies and provisions, which shall be
cumulative and not mutually exclusive:
(i) Licensor may obtain a decree of any court of competent jurisdiction
ordering Licensee to immediately cease the use of the Licensed
Property and to otherwise comply with Articles 5.8(h) and (i) above,
to amend or cancel any registration of this Agreement and any
registered user agreements and to amend or cancel any corporate or
business name registrations and to change its business name
accordingly. Licensee's consent to this remedy is based upon express
recognition by Licensee that Licensor would otherwise suffer
irreparable harm and that monetary damages would therefore be an
inadequate remedy for Licensor;
(ii) Licensor shall have the right to collect actual direct damages
suffered by Licensor by reason of Licensee's failure to comply with
Articles 5.8(h) and (i) above;
(iii) Licensor may file an action asking the appropriate governmental
agency to impound any infringing Own Brand Merchandise and Materials
and to close or put on hold the TSA Site;
32
(iv) Licensor shall be entitled to any other relief which may be deemed
proper, whether at law or equity;
(v) No assignee for the benefit of creditors, custodian, receiver,
trustee in bankruptcy, sheriff or any other officer of the court or
official charged with marshalling or taking over custody of
Licensee's assets or business shall have any right to continue this
Agreement or to exploit in any way or use the Licensed Property; and
(vi) Licensee's performance under this Agreement is personal in nature and
Licensor is excused from accepting the performance of an entity other
than Licensee. The Parties agree that this Agreement is a
nonassignable contract of Licensee under section 365(c) of the
Bankruptcy Code of the U.S.A., or any amendment or successor thereto
(the "Bankruptcy Code"). Further, in the event that Licensee is a
debtor under the Bankruptcy Code, or any equivalent in any foreign
jurisdiction, and this Agreement has not been terminated, the Parties
agree that the adequate protection of Licensor's interest in this
Agreement and in the Licensed Property requires that Licensee fully
comply with all of the terms and conditions of this Agreement,
including, without limitation, timely making all Royalty payments
when due and maintaining the quality of Own Brand Merchandise and
Services sold by Licensee pursuant to this Agreement, and the nature
and quality of Licensee's use of the Licensed Property as required
hereunder.
5.9 Choice of Law and Forum. This Agreement shall be governed and construed
-----------------------
under federal laws of the U.S.A. and laws of the State of Michigan and for any
controversy, the Parties expressly submit to the exclusive jurisdiction of the
state and federal courts of the State of Michigan, U.S.A., and hereby waive any
claim of inconvenient forum. Without limiting the foregoing, Licensee also
submits to the jurisdiction of any court in Licensee's home state with authority
to hear and decide proceedings in relation to Licensor's specific or provisional
enforcement of this Agreement.
5.10 Waiver of Jury Trial. Each Party hereby knowingly, voluntarily,
--------------------
intentionally and irrevocably waives such right as any Party may have to a jury
trial in every jurisdiction in any action, proceeding or counterclaim brought by
either of the Parties hereto and/or their respective Affiliate, Subsidiary and
Related companies in respect of any matter arising out of or in connection with
this Agreement (including, without limitation, any action to cancel or rescind
33
this Agreement, and any claims or defenses asserting that this Agreement was
fraudulently induced or otherwise void or voidable).
5.11 Notices.
-------
(a) Any notice or request with respect to this Agreement shall be made
personally, by registered mail, by airborne express courier, or by confirmed
facsimile, and shall be directed by each Party to the other at its respective
address as follows:
If to Licensee, to:
TheSportsAuthority.com, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Tel: (610) 768-0900
Fax: (610) 768-0981
Attention: President
with a copy to:
Global Sports Interactive, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Tel: (610) 768-0900
Fax: (610) 768-0981
Attention: President
and if to Licensor, to:
The Sports Authority Michigan, Inc.
306 S. Washington, Suite 224
Royal Oak, Michigan 48067
Tel: (248) 414-9990
Fax: (248) 414-9993
Attention: Senior Vice President and General Counsel
and
The Sports Authority, Inc.
3383 North State Road 7
Ft. Lauderdale, Florida 33319
Tel: (954) 735-1701
Fax: (954) 730-4288
Attention: Chief Executive Officer and General Counsel
34
(b) Any notice or request shall be deemed to be given when actually
received. Either Party, by written notice to the other Party, may change the
address to which notices or requests shall be directed.
5.12 No Implied Warranties; Limitation on Liability. Neither party shall be
----------------------------------------------
liable to the other Party for incidental, consequential, punitive or exemplary
damages arising in connection with this Agreement or the performance, omission
of performance or termination hereof, even if the said Party has been advised of
the possibility of such damages and without regard to the nature of the claim or
the underlying theory or cause of action (whether in contract, tort or
otherwise). Neither Party makes any representation or warranty to the other
except as specifically set forth herein.
5.13 Further Documents. Each Party shall, upon request, make, execute and
-----------------
deliver such documents as shall be reasonably necessary to take such action as
may be reasonably requested to fully implement and carry out the purposes of
this Agreement. This Agreement may be executed in counterparts and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
5.14 Binding Effect. All covenants, agreements, representations, warranties and
--------------
indemnifications in this Agreement by and on behalf of either of the Parties
shall bind and inure to the benefit of the successors and permitted assigns of
Licensor and Licensee (if any). Upon termination of this Agreement, all
obligations and covenants of Licensee under this Agreement shall survive and be
enforceable.
5.15 No Partnership, No Joint Venture. This Agreement shall not be construed as
--------------------------------
creating a joint venture, partnership or agency between Licensor and Licensee.
5.16 Sublicensing; Prohibition on Assignment by Licensee. The licenses granted
---------------------------------------------------
herein are personal to Licensee and neither this Agreement nor any rights or
duties hereunder may be sublicensed, assigned, mortgaged or pledged by Licensee
without the prior written consent of an authorized officer of Licensor, which
consent may be withheld at Licensor's sole discretion. For purposes of this
Article 5.16, an assignment shall include any attempt to sublicense, assign,
mortgage or pledge by Licensee without the prior written consent of an
authorized officer of Licensor, and shall be null and void ab initio.
Notwithstanding the foregoing, Licensor may freely assign this Agreement and/or
its rights and duties hereunder to any Affiliate, Related or
35
Subsidiary company, provided Licensor gives timely notice of the same to
Licensee. Licensee's change in status from a privately held to a publicly held
company after an initial public offering shall not, in and of itself, be
considered a prohibited assignment, mortgage or pledge.
5.17 Waiver. Silence, acquiescence or inaction shall not be deemed a waiver of
------
any right. A waiver shall only be effective if it is in writing and signed by
the Party to be charged. Any such waiver shall not be construed as a continuing
waiver or as a waiver of any other breach of a same or similar nature.
5.18 Severability. In the event that any part or portion of this Agreement
------------
shall be deemed to be invalid or illegal, then such invalid or illegal portion
shall, so far as possible, not affect the validity or legality of the remainder
of this Agreement. Further, the Parties agree that they shall attempt to arrive
at a modification of any illegal or invalid part so as to render the same legal
and valid and within the keeping of the original tenor and spirit of the
Agreement.
5.19 Entire Agreement. This Agreement constitutes the entire agreement between
----------------
the Parties with respect to use and licensing of the Licensed Property, and
supersedes all prior negotiations, understandings and agreements, if any,
between the Parties, whether oral or written. This Agreement replaces in its
entirety the License Agreement, and the latter is hereby terminated. Except as
otherwise provided with respect to Exhibits A-D, this Agreement may only be
-------- - -
amended or modified by written instrument signed by authorized officers of both
Parties. Because both Parties are sophisticated and knowledgeable business
enterprises with ready access to legal counsel, the principle of construing an
ambiguous provision or provisions against the drafter shall be disregarded when
construing this Agreement.
5.20 Titles and Headings. Titles and headings herein are for convenience only
-------------------
and are not part of this Agreement.
5.21 Tax on Agreement. Any stamp duty or other tax or duty imposed on this
----------------
Agreement or on any related registered user agreement shall be the sole
responsibility of and shall be paid by Licensee.
5.22 Confidential Agreement. The terms of this Agreement are confidential and
----------------------
shall not be disclosed except for the purpose of enforcement or registration or
recording or as may be required by law.
36
5.23 Counterparts; Facsimiles. The Agreement may be executed in any number of
------------ -----------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one and the same
instrument. Each Party shall receive a duplicate original of the counterpart
copy or copies executed by it. For purposes hereof, a facsimile copy of this
Agreement, including the signature pages and Exhibits hereto, shall be deemed an
--------
original. Notwithstanding the foregoing, the Parties shall each deliver
original, execution copies of this Agreement to one another as soon as
practicable following execution thereof.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
THE SPORTS AUTHORITY, INC. THESPORTSAUTHORITY.COM, INC
By: /s/ Martin E. Hanaka By: /s/ Michael Rubin
------------------------------ ---------------------------------
Title: ____________________________ Title: _______________________________
THE SPORTS AUTHORITY MICHIGAN, INC.
By: /s/ Michael Lisi
------------------------------
Title: SVP, General Counsel & Secretary
--------------------------------
Acknowledged and Agreed to by: Acknowledged and Agreed to
with respect to Article 5.6(c) by:
GLOBAL SPORTS INTERACTIVE, INC. GLOBAL SPORTS, INC.
By: /s/ Michael Rubin By: /s/ Michael Rubin
------------------------------ ---------------------------------
Title: ___________________________ Title: _______________________________
37