LICENSE AGREEMENT
This License Agreement ("Agreement") is entered into as of the 16th day of
January, 2001 between ABC HOME FURNISHINGS, INC., a New York corporation having
its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("LICENSOR") and
▇▇▇▇▇▇ ELECTRONICS, INC. a New York corporation having its principal office at
Lyndhurst, New Jersey ("LICENSEE"). Sometimes LICENSOR and LICENSEE are referred
to in this Agreement individually as a "party" and collectively as the
"parties."
The parties agree to the following:
A. LICENSOR operates a store more commonly known as ABC CARPET & HOME (the
"Store") on premises referred to as ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the
"Building").
B. LICENSEE desires the privilege and a license to operate an electronics
department within the Store under the terms, covenants, and conditions set forth
in this Agreement (the "Department").
C. LICENSOR is willing to grant LICENSEE such privilege and license but
only upon the terms, covenants, and conditions set forth in this Agreement.
D. This Agreement supersedes and replaces any previous license agreement
between the parties for the Licensed Space.
In consideration of the mutual promises contained in this Agreement,
LICENSOR and LICENSEE agree as follows:
1. Grant of License. LICENSOR hereby grants to LICENSEE and LICENSEE
accepts the privilege to conduct and operate the Department in the Store and
other areas designated by LICENSOR for the display and retail sale of
audio/video, home theater, audio-visual furniture and the custom installation of
such furniture and equipment, consumer electronics and electronic accessories
(including audio/video furniture) and for no other purposes. It is anticipated
that the name of the licensed Department will be "▇▇▇▇▇▇ ELECTRONICS" or a name
substantially similar thereto. In no event may LICENSEE sell any other items
without the prior written consent of LICENSOR, which consent may be withheld at
the sole discretion of LICENSOR for any reason whatsoever. LICENSEE accepts this
Agreement subject and subordinate to any underlying lease, mortgage, deed of
trust, or other lien or encumbrance presently existing on the Store or hereafter
placed upon the Store. To the best of LICENSOR's knowledge, no permission,
approval, or consent by third parties or governmental authorities is required in
order for LICENSOR to enter into this Agreement.
2. Licensed Space. LICENSEE will initially occupy an area on the upper
mezzanine of the first floor of the Store consisting of approximately 4,500
square feet of lockable, useable space, inclusive of selling and display space
(the "Licensed Space"). The Licensed Space will be initially located in an area
of the Store that LICNESEE has been occupying up to the date of the execution of
this Agreement. The license of the Licensed Space includes all appurtenances and
existing means of access to and from, and all ways over the adjoining and
surrounding area of the Store and other public spaces immediately adjoining and
contiguous to the Licensed Space, and rights appurtenant to or used in
connection with the Licensed Space, including the use of all common areas, so
long as such use is consistent with LICENSEE's use of the Licensed Space in
accordance with the terms of this Agreement. In addition to the approximately
4,500 square feet of store space on the upper mezzanine level, LICENSOR will
make available to LICENSEE approximately 500 square feet of lockable storage
space in the sub-basement of the Building. All references in this Agreement to
the Licensed Space will include both the approximately 4,500 square feet of
store space on the upper mezzanine level and the approximately 500 square feet
of lockable storage space in the sub-basement of the Building. LICENSEE
acknowledges that from time to time LICENSOR may need to increase or decrease
the size of the Licensed Space and LICENSEE consents to such adjustments, so
long as if the amount of square footage in the upper mezzanine level area is
reduced by 10% or more, LICENSOR will be obligated to reduce the amount of base
license fees that LICENSEE pays LICENSOR hereunder proportionately. If LICENSOR
needs to decrease the size of the Licensed Space by more than 20%, LICENSOR must
first notify LICENSEE to determine whether LICENSEE will consent to such an
adjustment. If LICENSEE refuses to consent, LICENSOR will have the right not to
proceed with such a reduction in the Licensed Space by more than 20% and this
Agreement will continue in force and effect. On the other hand, if LICENSOR
insists on proceeding with the reduction of more than 20% in spite of LICENSEE's
refusal to consent, LICENSEE will have an option for a period of thirty days
immediately following receipt of written notice from LICENSOR that the Licensed
Space is going to be reduced by more than 20% to terminate this Agreement upon
one hundred and eighty days prior written notice, which notice must be sent
within such thirty day option period.
3. Term. The term of this Agreement (the "Term") will commence on January
1, 2001 (the "Commencement Date") and will continue until December 31, 2003.
Thereafter, this Agreement will continue in full force and effect under the same
terms and conditions until terminated by either party upon not less than one
hundred and eighty days' notice to the other party.
4. Collection of Sales Proceeds. LICENSEE will collect one hundred percent
(100%) of its gross sales proceeds derived from the Licensed Space and will be
responsible for paying all (i) applicable sales and excise taxes, (ii) credit
card and charge card charges, (iii) check approval verifications costs, (iv)
shipping and handling charges and (v) costs related customers' returns and
refunds, and (vi) the amount of license fees payable by LICENSEE to LICENSOR
hereunder. The term "gross sales," as used in this Agreement, means the total
amount in dollars derived by LICENSEE from all paid-in-full (i.e., finalized and
delivered) sales of merchandise and services originating from LICENSEE's sales
from the Licensed Space, regardless of whether the customer's order is filled by
shipment or delivery from or at the Licensed Space, or delivered from any other
place. In determining whether a sale has been finalized and license fees are
payable in accordance with the provisions of this Agreement, no deduction will
be made for any part or parts (or the whole) of the sales that are uncollected
or uncollectible. Notwithstanding anything contained in this Agreement to the
contrary, LICENSOR agrees that LICENSEE will not be required to include in its
computation of gross sales any amounts LICENSEE charges for in-store repairs and
maintenance of goods sold by LICENSEE, but LICENSEE will be required to disclose
on its financial statements all repair service income from the Licensed Space.
(a) Sales and Excise Taxes. LICENSEE will have the right to deduct from
gross sales any amounts collected by LICENSEE and paid out for any sales taxes
or excise taxes imposed by any duly constituted government authority. LICENSEE
agrees to promptly pay all applicable sales taxes and excise taxes as and when
due.
(b) Credit Card Charges. LICENSEE may deduct from gross sales any amounts
collected and paid out for any applicable credit card and charge card charges.
LICENSEE will also have the right to deduct its cost of check approval
verifications. Credit card and charge card charges are agreed to be calculated
at two and one quarter percent (2.25%) of LICENSEE's credit card and charge card
sales from the Licensed Space. To be deductible, all credit card, charge card,
and check approval verifications must be through LICENSOR's regular business
processes. As used in this Agreement, references to "credit cards" will also
apply to debit cards and similar types of cards.
(c) Shipping and Handling Charges, Returns and Refunds. LICENSEE may deduct
from gross sales all shipping and handling charges to customers and the cost of
customers' returns and refunds. LICENSEE may make all refunds thereof either in
cash, by check, or credit slips through LICENSEE's register and LICENSEE will
maintain appropriate records of such transactions.
(d) License Fees Payable. Beginning on the commencement date of the term of
this Agreement, LICENSEE shall pay LICENSOR a base license fee of $25,000 per
month, payable on the fifteenth day of each month, to cover all net sales up to
and including $3,000,000 per year. Each month LICENSEE will cause to be
generated a business report in a form reasonably acceptable to LICENSOR relating
to the sales by LICENSEE from the Licensed Space. The report will state the
amount of paid-in-full (i.e., finalized and delivered) net sales during the
month on which royalties are being paid, and will provide such additional
information as the parties may reasonably request and agree upon. Each report
will be certified as true by a duly authorized agent or officer of LICENSEE.
Said reports will indicate the total net sales for each monthly period and such
other pertinent information as LICENSEE may reasonably request. As used in this
Agreement, the term "net sales" means LICENSEE's gross sales less all permitted
deductions pursuant to this Section 4 for (i) sales and excise taxes, (ii)
credit card charges, (iii) shipping and handling charges, and (iv) in-store
repairs and maintenance of goods sold by LICENSEE. Additionally, LICENSEE shall
pay LICENSOR 10% of LICENSEE's net sales in excess of $3,000,000. Such
additional license fees will be payable annually each year by LICENSEE to
LICENSOR within sixty days of the end of LICENSOR's fiscal year end. If at any
time during the term of this Agreement, LICENSEE's net sales are less than
$2,100,000 of annualized sales (calculated for any nine month period based on
actual sales and extrapolated for twelve months), LICENSEE will have an option
for a period of thirty days immediately following the nine month time period
when such occurrence first happens to terminate this Agreement upon one hundred
and eighty days prior written notice to LICENSOR.
5. Maintenance of Sales Records.
(a) LICENSEE will provide, and at all times use and keep in good operating
order and condition, such systems of recording sales as LICENSOR, from time to
time, reasonably designates that will record sales on sequentially numbered and
daily dated invoices. LICENSEE covenants and agrees to preserve said daily dated
invoices for not less than one year after the end of the fiscal year of LICENSOR
to which they relate. LICENSEE further agrees that a duplicate copy of the
sequentially numbered invoice describing the items purchased and showing the
amount of the sale will be delivered to each customer for and at the time of
each sale. LICENSEE will record or cause to be recorded on LICENSEE's registers
all sales made by or in the Department or originating therefrom or attributable
thereto, regardless of whether for cash or other valuable consideration by means
of invoices as aforesaid, at the time of the sale.
(b) LICENSEE's failure to comply with the terms of this provision will be
an event of default and will constitute cause for LICENSOR's immediate
termination of this Agreement if LICENSEE fails to cure such event of default
within two business days of the date the event of default first occurs and
record on such registers all sales for the period of time LICENSEE was not in
compliance with the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, if LICENSEE is in violation or breach of
any of the terms of this Agreement and LICENSOR has sent written notice to
LICENSEE regarding each violation or breach two or more times within a
consecutive three hundred and sixty-five day period, regardless of whether such
violations or breaches are timely cured, such violations or breaches will, at
LICENSOR's election, be deemed deliberate and not curable on the second occasion
thereof.
(c) LICENSEE further covenants and agrees to record sales and other
transactions from LICENSEE's sales from the Licensed Space in permanent books of
account, in accordance with good accounting methods and practices. All invoice
records and book records must be maintained at the Licensed Space and LICENSOR
will have right to audit, examine, copy, and make abstracts of the same at any
time upon reasonable prior notice to LICENSEE. If a discrepancy of more than two
percent (2%) in underreporting of sales is determined as a result of such audit
or examination, LICENSEE will not only pay LICENSOR the amount of the shortfall,
plus interest at fifteen percent (15%) from the date the original amounts were
due and payable, but will also reimburse LICENSOR for the cost of the audit or
examination.
6. Operation of Licensed Space. LICENSEE shall keep the Department open for
the regular transaction of business, with adequate inventory in stock, and
staffed with an adequate number of trained personnel during such days of the
week as LICENSOR from time to time reasonably determines. Such business hours
for the operation of LICENSEE's business will generally be the same as those of
the Store. LICENSEE shall at all times have a competent manager in charge of the
Department who shall devote his or her entire business time and attention to the
conduct of the business thereof. Persistent understaffing of the Department will
constitute grounds for termination of this Agreement (within LICENSOR's
discretion). LICENSEE agrees that all merchandise exhibited in the Licensed
Space will be consistent with LICENSEE's past practices within the Licensed
Space. LICENSOR, by signing this Agreement, acknowledges that the merchandise
"mix" in the Licensed Space as of September 1, 1998 was acceptable to LICENSOR.
7. LICENSEE's Operational Expenses. Except as otherwise specifically
provided for in this Agreement, LICENSEE shall bear and promptly pay and
discharge all expenses and obligations in connection with the operation of its
business, including, but not limited to, (i) the purchase of all fixtures,
merchandise, materials, and supplies in the Licensed Space, (ii) the
compensation of its employees plus benefits, taxes, licenses, and permit fees
payable to public authorities, (iii) commission expenses paid to LICENSOR's
employees (in the amount of 2.5%) that are generated from the sale of LICENSEE's
goods and inventory, (iv) all other expenses regardless whether similar to the
foregoing that are incurred by either party in connection with the operation of
the Department, (v) its proportionate share of the agreed-upon cost of any
cooperative advertising (including direct mail) with LICENSOR at the
then-applicable rate paid by LICENSOR, and (iv) all shipping and handling
charges other than in connection with customer returns. LICENSEE is likewise
entitled to be paid commissions on sales of LICENSOR's goods and inventory by
LICENSEE's employees and LICENSOR agrees to credit LICENSEE for such amounts
against the commission expenses that are payable to LICENSOR for sales of
LICENSEE's goods and inventory by LICENSOR's employees. With regard to
LICENSOR's personal shoppers, LICENSOR agrees to use commercially reasonable
efforts to encourage such personal shoppers to promote the sale of LICENSEE's
furniture, fixtures, merchandise, and other goods and services.
8. LICENSEE's Employees. With regard to all LICENSEE's sales in the
Licensed Space, LICENSEE agrees to be solely responsible for providing adequate
accounting, recordkeeping, shipping, and receiving personnel for LICENSEE's
benefit. LICENSEE agrees to have each of its employees who work in the Licensed
Space sign an acknowledgement form at the time of hire stating that the employee
is aware of the fact that he or she is an employee of LICENSEE and not LICENSOR.
LICENSEE agrees to allow LICENSOR to review such acknowledgement forms at any
time during the Term or within five years after the end of the Term and LICENSEE
agrees to keep the original of such acknowledgement forms for a period of at
least five years after the end of the Term. LICENSEE agrees to assume all
responsibility and liability for all persons it employs. Nothing contained in
this Agreement will be deemed, either directly or indirectly, to construe
LICENSOR as the master or employer of any of LICENSEE's managers or employees,
agents or servants and in the event of a dispute regarding the construction of
this Agreement, it will be interpreted in a manner consistent therewith.
9. Keys; Access. LICENSEE will not be entitled to any keys or other means
of access to the Building, but will be entitled to have keys to the Licensed
Space but only on the condition that LICENSEE furnishes LICENSOR with at least
one key to the Licensed Space. In the event of an emergency, either a senior
manager or a general manager of LICENSOR will have the right to enter the
Licensed Space without LICENSEE's consent and without prior notice. In all other
instances, LICENSOR agrees to provide LICENSEE with prior notice of the need to
access the Licensed Space.
10. Merchandising, Pricing, and other Policies. All merchandising policies,
including, but not limited to pricing structure, grades, standards, and
qualities of merchandise and inventory of LICENSEE are subject to the approval
of LICENSOR, which consent will not be unreasonably withheld. It is agreed that
the pricing structure of such merchandise to be sold in the Licensed Space will
be priced at no higher than that of LICENSEE's existing store merchandise in
LICENSEE's other stores in Manhattan and will be consistent with LICENSEE's past
practices regarding its pricing, presentation, and mix of merchandise. LICENSEE
will not be permitted to sell any items not covered by the description in this
Agreement in the Licensed Space without the prior written consent of LICENSOR.
Additionally, LICENSEE shall conform to all the general business policies,
practices, and procedures of LICENSOR, as same may from time to time during the
Term be amended or modified by LICENSOR.
11. Advertising. All advertising by LICENSEE pertaining to its licensed
business hereunder in any form whatsoever during the Term must be consistent
with prior practices within the Store and will be subject to the approval and
discretion of LICENSOR, and LICENSEE agrees not to engage in any advertising
without LICENSOR's written consent. To the extent that LICENSOR incurs any
agreed-upon cooperative advertising expenses for the benefit of the Store and
all the Licensees, LICENSEE agrees that LICENSOR will ▇▇▇▇ LICENSEE for its
share of such advertising expenses and direct mail expenses and LICENSEE agrees
to pay any such amounts owed within ten days of the date of receipt of an
invoice. LICENSOR agrees that LICENSEE will have the right during the term of
this Agreement to use the name "▇▇▇▇▇▇ Inside ABC Home" in LICENSEE's
advertising. Moreover, to the extent that such action does not present a problem
with LICENSOR's other licensees, LICENSOR agrees to use commercially reasonable
efforts to list LICENSEE's name among LICENSOR's store names except in image
advertisements and linens advertisements.
12. Customer Complaints. LICENSEE covenants and agrees to promptly and
satisfactorily resolve any customer complaints relative to business transactions
conducted during day-to-day operation of LICENSEE's business in the Licensed
Space within fourteen days of LICENSEE receipt of same. Failure by LICENSEE to
satisfactorily resolve customer complaints and make to customers proper
allowances will constitute cause to terminate this Agreement. Satisfactory
resolution of complaints and customer allowances will be determined within the
reasonable discretion of LICENSOR. LICENSEE agrees to indemnify and hold
LICENSOR harmless for all customer related problems, complaints, and/or
discrepancies of any sort or description, including replacement or repair of any
product purchased from the Licensed Space.
13. Utilities. At its expense, LICENSOR will provide lighting, air
conditioning, and heat during normal business hours for the Department when, and
to the extent, in LICENSOR's reasonable judgment, necessary, but at least to the
extent provided for the rest of the Store. LICENSEE agrees that, at its own cost
and expense, it shall install and maintain a telephone for the purpose of making
outside telephone calls. LICENSOR agrees to provide to LICENSEE a separate
telephone extension for the purposes of identifying all of LICENSEE's outgoing
telephone calls made from the Licensed Space. LICENSOR agrees to provide a
telephone through the Store's main switchboard for incoming LICENSEE telephone
calls, with the initial installation costs to be incurred by LICENSEE. LICENSEE
agrees to pay for all telephone calls identified by its telephone extension
number. LICENSOR agrees to pay all real estate taxes on the Building during the
term of this Agreement and all charges for water used in the Building.
14. Insurance Coverages.
(a) LICENSEE shall procure and obtain commercial general liability
insurance coverage and products liability insurance from insurance companies or
carriers approved by LICENSOR of not less than one million dollars ($1,000,000)
combined single limit. Such coverage must include bodily injury, broad form
property damage, premises/operations, owner's protective coverage, blanket
contractual liability, products liability, and completed operations liability.
Such insurance must be obtained from companies and through brokers approved by
and acceptable to LICENSOR that are licensed to sell insurance in the State of
New York.
(b) Such insurance policies must further provide that copies of
cancellation or termination notices will be sent to LICENSOR no later than
thirty days prior to cancellation, modification, or termination. Such language
on the certificate of insurance will read as follows: "If any of the
above-referenced insurance policies are canceled before the expiration date
thereof or non-renewed, or if the coverage of such policies is changed, the
issuing company shall provide the additional insured with at least thirty days'
prior written notice thereof." LICENSEE also agrees to deliver a copy of each
insurance policy and all endorsements required in this Agreement to LICENSOR on
the Commencement Date or within thirty days of the date of this Agreement,
whichever is sooner, and annually thereafter during the Term, within at least
thirty days of the renewal of such insurance coverage.
(c) Duplicate copies of the policies will be delivered to LICENSEE and
LICENSOR within thirty days of the date of the execution of this Agreement or
within five business days of the date of LICENSEE's occupying the Licensed
Space, whichever is sooner, and annually thereafter within five business days of
the date such coverages are renewed.
(d) LICENSOR, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and his wife, ▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇ and
his wife, ▇▇▇▇▇▇▇▇ ▇▇▇▇, must be listed as additional named insureds on
LICENSEE's liability insurance coverages and as loss co-payees on LICENSEE's
casualty insurance coverages, as their interests may appear.
(e) To the extent permitted by state law, LICENSEE agrees to have its
insurers on any insurance coverages that LICENSEE is required to maintain under
the terms of this Agreement waive subrogation rights and provide proof of same
to LICENSOR in the form of a written notation on the certificate of insurance.
Likewise, to the extent permitted by state law, LICENSOR agrees to have its
insurers on any insurance coverages that LICENSOR is required to maintain under
the terms of this Agreement waive subrogation rights with respect to both
property damage and personal injury and provide proof of same to LICENSEE in the
form of a written notation on the certificate of insurance.
(f) To the extent any claims are paid on LICENSEE's insurance during a
policy year, LICENSEE agrees to immediately reinstate the minimum amount of
coverage so that the minimum amount of insurance coverage required in this
Agreement is in force at all times during the Term. The amount of the minimum
coverage to be maintained at all times during the Term is for an annual
aggregate amount. Accordingly, to the extent that a claim is paid on the
insurance policy at any time that reduces the amount of the annual aggregate,
LICENSEE agrees to immediately purchase additional coverage to maintain the
annual aggregate at the minimum limit throughout the remainder of the policy
year and provide LICENSOR with proof of having purchased such additional
coverage.
(g) All policies of insurance provided for in this Agreement must be issued
by insurance companies that have had a general policyholders' rating for the
five consecutive years immediately preceding and including the year the coverage
is written of not less than "A+" and with a financial rating of not less than
"A," as rated in the most current edition of A.M. Best Company's Insurance
Reports.
(h) Each insurance policy required under the terms of this Agreement to be
maintained by LICENSEE will state that it is: (i) primary coverage as respects
any claims, losses, or liabilities arising out of LICENSEE's use of the Licensed
Space; (ii) non-contributing; (iii) not supplemental to, nor in excess of,
coverage that LICENSOR may carry or that may be available to LICENSOR; and (iv)
that any insurance coverage carried by LICENSOR will be excess insurance.
(i) No insurance required by this Agreement to be maintained by LICENSEE
will be subject to more than a $10,000 deductible limit or self-insurance amount
without LICENSOR's prior written approval.
(j) Any insurance policy required of LICENSEE under this Agreement may be
furnished by LICENSEE under a blanket policy carried by LICENSEE, but only if
such blanket policy contains an "Aggregate Limit per Location" endorsement that
guarantees a minimum limit available for the coverage provided to LICENSOR equal
to the insurance amounts required in this Agreement for the Licensed Space.
(k) LICENSEE agrees that all insurance coverages provided for pursuant to
this Agreement will be on an "occurrence" basis and not on a "claims made"
basis.
(l) LICENSEE agrees that, if LICENSEE does not keep the required insurance
coverages in force during the Term, LICENSOR will have the right, in addition to
all other rights set out in this Agreement, but not the obligation, at any time
and from time to time, and without notice, to procure the required insurance
coverages and pay the premiums for the insurance, and that such premiums will be
repaid by LICENSEE to LICENSOR, as additional royalty, immediately upon demand
by LICENSOR. LICENSEE shall pay LICENSOR the cost of all such insurance premiums
incurred by LICENSOR, together with interest thereon at the rate of ten percent
(10%) per annum, along with any additional costs and expenses incurred by
LICENSOR in connection therewith, without prejudice to any other rights and
remedies of LICENSOR under this Agreement. LICENSEE also agrees that LICENSOR
has the right to offset the amount of any premiums paid for by LICENSOR on
LICENSEE's behalf under this provision against any amounts owed by LICENSOR to
LICENSEE. It is expressly understood that procurement by LICENSOR of any such
insurance coverage will not be deemed to waive or release the default of
LICENSEE, or the right of LICENSOR, at LICENSOR's option, to recover possession
of the Licensed Space by reason of such default as provided in this Agreement.
LICENSEE covenants and agrees to pay LICENSOR all damages that LICENSOR may have
sustained by reason of the failure of LICENSEE to obtain and maintain such
insurance coverage, it being expressly declared that the damages of LICENSOR
will not be limited to the amount of premiums paid by LICENSOR thereon.
(m) LICENSOR, its agents, and employees make no representations that the
limits of liability specified to be carried by LICENSEE pursuant to this
Agreement are adequate to protect LICENSEE. If LICENSEE believes that any of
such insurance coverage is inadequate, LICENSEE will obtain, at LICENSEE's sole
cost and expense, such additional insurance coverage as LICENSEE deems adequate.
LICENSEE acknowledges that the limits of insurance required in this Agreement
will not, however, limit the liability of LICENSEE either in tort or contract
under the terms of this Agreement with respect to LICENSEE's negligence and any
such damage or harm proximately caused thereby, it being expressly agreed that
none of the requirements contained in this Agreement as to the types, limits, or
LICENSOR's approval of insurance coverage to be maintained by LICENSEE is
intended to and will not in any manner limit, qualify, or quantify the
liabilities and obligations assumed by LICENSEE under this Agreement or
otherwise provided by law.
(n) LICENSOR represents to LICENSEE that LICENSOR maintains and will
maintain during the Term adequate insurance coverage to protect against
LICENSOR's risks associated with the performance of this Agreement and will
maintain adequate casualty insurance coverage on the Building during the Term.
15. Independent Status. LICENSEE shall conduct its business solely for its
own account and at its own risk, and LICENSOR will have no ownership or the
right, title, or interest in or liability with respect to the business thereof,
or (except as otherwise specifically provided in this Agreement with regard to
LICENSEE's obligations to pay commissions) in the receipts, proceeds, or losses
thereof, nor will LICENSOR be deemed to be a partner, joint venturer, or
principal of LICENSEE.
16. Credit. LICENSEE will have no right or power to pledge LICENSOR's
credit or to incur any obligations or make any commitments that will be binding
upon LICENSOR, without LICENSOR's express written consent, it being the intent
of this Agreement that the Department will constitute an independent and
separate business, belonging in its entirety to LICENSEE, notwithstanding the
fact that the Store and the departments thereof, including the Department, may
be advertised as though it is a single establishment under LICENSOR's ownership,
management, or otherwise. In the event of a dispute, this Agreement with be
construed to preserve LICENSEE's independent operation as a stand alone
business.
17. Compliance with Laws. LICENSEE agrees at all times and at its own cost
and expense to comply with all laws, ordinances, rules, and regulations of any
applicable governmental agency or public authority with respect to or affecting
(i) its use and occupancy of the Licensed Space, (ii) its hiring of employees
(including all Immigration laws), and (iii) LICENSEE's business or the conduct
thereof. Likewise, LICENSOR agrees to comply with all laws, ordinances, rules,
and regulations of any applicable governmental agency or public authority with
respect to or affecting (i) its use and occupancy of the Building, (ii) its
hiring of employees (including all Immigration laws), and (iii) LICENSOR's
business or the conduct thereof. Each party hereby agrees to defend and
indemnify the other party and save it harmless from any and all losses, damages,
liability, costs, or expenses resulting from any violation of any of the
foregoing by the non-complying party regardless whether such violations
originated before or after the date of this Agreement. LICENSEE will not be
responsible for interior or structural alterations that are required as a result
of any laws that are enacted subsequent to the date of this Agreement or changes
in law that occur after the date of this Agreement.
18. LICENSEE's Furniture, Fixtures, and Equipment. All plans for installing
fixtures and signs in the Licensed Space must be submitted to LICENSOR for its
prior written consent, which consent will not be unreasonably withheld. LICENSEE
shall, at its own cost and expense, purchase and install its furniture,
fixtures, and equipment to be used by it in the Licensed Space. Such furniture,
fixtures, and equipment may be located only within the Licensed Space and must
be substantially similar to LICENSEE's existing store(s) located in Manhattan.
Title to such furniture, fixtures, and equipment will be and remain in LICENSEE
at all times and LICENSEE will be totally responsible for the care and
maintenance thereof. Upon the termination of this Agreement, LICENSEE shall at
its own cost and expense remove all such furniture, fixtures, and equipment and
repair any damage to the Store that might be occasioned by such removal.
LICENSEE agrees to pay any and all personal property taxes on its furniture,
fixtures, equipment, and inventory in the Licensed Space and keep such items
fully insured at all times during the Term.
19. Alterations and Improvements.
(a) LICENSEE may not make any alterations or installations in or about the
Licensed Space or the Store without LICENSOR's prior written consent, which
LICENSOR agrees not to unreasonably withhold, delay, or deny. However, if
LICENSOR deems it necessary to retain architectural or engineering supervision
for the purpose of determining the structural soundness of any request made by
LICENSEE for remodeling or rebuilding, LICENSEE agrees to pay the cost thereof.
LICENSOR will be given a reasonable amount of time to review and approve the
contractor and the plans and specifications for the work proposed by LICENSEE,
which time will not be less than sixty days. If LICENSOR approves the contractor
and such alterations or improvements, LICENSEE agrees that the alterations and
improvements shall be performed by LICENSEE in a first-class and professional
manner, in compliance with all municipal codes, federal regulations, and
applicable building standards.
(b) LICENSEE agrees that any such work will be performed so as not to
adversely affect the structure, safety, systems, or services of the Store and
that all such work will comply with all building, safety, fire, and other codes
and governmental requirements as well as all insurance requirements.
Furthermore, LICENSEE agrees that all such work will be performed in a way that
will not adversely impact, interfere with, or disrupt either LICENSOR or any
other licensee in the Store and that LICENSOR will have the right to require
LICENSEE to take reasonable steps to minimize such disruptions and to keep the
construction work area free of dust and accumulation of debris and the hallways
and passageways open and passable at all times.
(c) On completion of any such work, LICENSEE shall provide LICENSOR with a
complete set of "as built" plans (to 1/8th inch scale), copies of all
construction contracts, and proof of payment for all labor and materials.
20. Maintenance and Repair of the Licensed Space.
(a) No rights have been granted to LICENSEE, except as set forth in this
Agreement, with respect to the outside walls, roof, doors, or windows of the
Store, and LICENSEE may not use them for any purpose whatsoever. LICENSEE will
not deface or damage any part of the Licensed Space or the Store. LICENSEE shall
take care to maintain the Licensed Space and any space that is immediately
adjacent thereto in the same condition in which the Licensed Space was
originally delivered to LICENSEE, reasonable wear and tear excepted.
(b) LICENSEE shall, at its own cost and expense, promptly make all repairs
to either the Licensed Space or the property of LICENSOR or other licensees or
tenants of the Store that may be required because of the negligence or misuse
thereof by LICENSEE, its agents, servants, employees, visitors, or customers.
LICENSOR will, at its own cost and expense, promptly make all repairs to the
property of LICENSEE that may be required by the gross negligence or intentional
acts of LICENSOR, its agents, servants, employees, visitors, or customers.
(c) LICENSOR represents to LICENSEE that the Building is in a good state of
repair taking into account the age of the Building, wear and tear excepted, and
that LICENSOR will keep the Building in as good a condition as existed on the
commencement of LICENSEE's occupancy of the Licensed Space, reasonable wear and
tear excepted, during the term of this Agreement so that LICENSEE's customers
will have access to the Licensed Space.
21. Release and Indemnification.
(a) Except for the willful acts of LICENSOR or the acts of gross negligence
by LICENSOR, its agents, servants, and/or employees, LICENSOR will not be under
any responsibility or liability for the safeguarding of LICENSEE's furniture,
fixtures, equipment, or inventory. LICENSEE hereby indemnifies LICENSOR and
covenants to hold it harmless from any and all liability, costs, charges, and
expenses of any kind, sort, or description arising directly or indirectly from
LICENSEE's breach of this Agreement or from LICENSEE's occupancy of the Licensed
Space, and from any liability, costs, charges, and expenses resulting from any
injury to person or damage to property occurring in the Licensed Space or in
connection with LICENSEE's use thereof, except for acts of gross negligence or
willful misconduct by LICENSOR, its agents, servants, and/or employees.
(b) LICENSOR hereby agrees to indemnify LICENSEE from any and all
liability, costs, charges, or expenses of any kind, sort, or description arising
directly or indirectly from LICENSOR's breach of this Agreement or from
LICENSOR's or LICENSOR's willful acts or the acts of gross negligence by
LICENSOR, its agents, servants, and/or employees.
(c) LICENSOR WILL NOT BE LIABLE, AND LICENSEE WAIVES ALL CLAIMS, FOR INJURY
TO OR DEATH OF PERSONS OR DAMAGE TO OR LOSS OF PROPERTY SUSTAINED BY LICENSEE OR
ITS INVITEES OR GUESTS RESULTING FROM THE IMPROVEMENTS OR ANY PART THEREOF OR
ANY OF LICENSOR'S EQUIPMENT OR APPURTENANCES BEING OUT OF REPAIR FOR WHICH
LICENSEE WAS RESPONSIBLE FOR REPAIRING, OR RESULTING DIRECTLY OR INDIRECTLY FROM
ANY ACT OR NEGLIGENCE OF LICENSEE OR ANY OCCUPANT OF THE BUILDING OR OF ANY
OTHER PERSON, OR FROM ANY OTHER CAUSE WHATSOEVER EXCEPT THE GROSS NEGLIGENCE OF
LICENSOR, INCLUDING WITHOUT LIMITATION SUCH CLAIMS FOR DAMAGE RESULTING FROM:
(i) equipment functioning improperly; (ii) LICENSOR's failure to keep the
Licensed Space repaired; (iii) injury done or occasioned by wind; (iv) any
defect in or failure of plumbing, heating, or air conditioning equipment,
electrical wiring, or installation thereof, gas, water, or steam pipes, stairs,
balconies, porches, railings, or sidewalks; (v) broken glass; the backing up of
any sewer pipe or downspout; the bursting, leaking, or running of any tank, tub,
wash stand, toilet, waste pipe, drain, or any other pipe or tank in, on, or
about the Licensed Space; the escape of steam or hot water; (vi) the falling of
any fixture, plaster, or stucco; and (vii) water, snow, or ice being on or
coming through the roof or any skylight, trap door, stairs, walks, or any other
place on or near the Licensed Space, the Store, or otherwise.
22. Representations. LICENSOR represents to LICENSEE that this Agreement
and the grant of the license hereunder will not conflict with or violate the
terms of any lease or other licensing arrangement relating to the Store within
which the Licensed Space is located. LICENSOR represents that it has proper
authority and has obtained all necessary consents to license the Licensed Space.
23. Relocation.
(a) Notwithstanding the above, LICENSOR reserves the right, in its sole
discretion, to change the Licensed Space, or any part or parts thereof, to other
areas located in the Store, upon thirty days' prior written notice to LICENSEE
by LICENSOR, which notice will include the date on which LICENSEE will be
required to relocate and a description of the space to which LICENSEE will be
relocated. Such subsequent space will have the same or substantially the same
square footage and configuration within the Store as the previous Licensed Space
and LICENSOR agrees to use commercially reasonably efforts to provide LICENSEE
with substantially equivalent space as the Licensed Space.
(b) LICENSOR will pay all out-of-pocket costs and expenses of relocating
LICENSEE (including the cost of preparing such reasonably comparable Licensed
Space for occupancy), provided LICENSEE furnishes to LICENSOR invoices,
receipts, or other evidence reasonably satisfactory to LICENSOR relating to such
out-of-pocket expenses. In the event of such relocation, such alternative space
will for all purposes be deemed the "Licensed Space" hereunder and this
Agreement will continue in full force and effect without any change in the other
terms or conditions of this Agreement and without any increase in the amount of
royalties. Upon LICENSEE's receipt of said notice of relocation, LICENSEE will
have the option for a period of five business days from and after the date of
receipt of such notice to elect to either cancel this Agreement or to cause all
of its furniture, fixtures, equipment, and inventory to be moved to the new
Licensed Space as designated in such notice, to be effected on or before the
effective date of such relocation.
(c) For the purposes of this Section 23, "comparable space" means (i) as to
the retail space, a segregated, lockable, and windowed space (i.e., windows into
the main showroom area) and having at least the same or substantially the same
square footage and configuration as the initial retail Space, including the same
number of acoustically segregated sound rooms; and (ii) as to the storage space
in the sub-basement, a space having access to the initial or replacement retail
space (as the case may be) substantially equivalent to or better than the access
from the initial storage space to the initial Licensed Space and having at least
the same or substantially the same square footage as the initial storage space.
(d) If LICENSOR needs to relocate LICENSEE to other licensed space,
LICENSOR must first notify LICENSEE to determine whether LICENSEE will consent
to such a relocation. If LICENSEE refuses to consent to the relocation, LICENSOR
will have the right not to proceed with such relocation and this Agreement will
continue in force and effect. On the other hand, if LICENSOR insists on
proceeding with the relocation in spite of LICENSEE's refusal to consent,
LICENSEE will have an option for a period of thirty days immediately following
receipt of written notice from LICENSOR that LICENSOR plans to proceed with the
relocation to terminate this Agreement upon one hundred and eighty days' prior
written notice, which notice must be sent within such thirty day option period.
24. Assignment and Subletting. This Agreement may not be assigned in whole
or part, or the Licensed Space sublet in any manner whatsoever, by LICENSEE
without the prior written consent of LICENSOR, which consent may be withheld for
any reason whatsoever, and any attempts to do so will, at LICENSOR's election,
be void and of no force and effect.
25. Interruption of Service; Fire and Other Casualty; Condemnation;
Termination of License.
(a) Except for acts of gross negligence by LICENSOR, LICENSOR will not be
liable to LICENSEE in any manner whatsoever for any interruption, failure, or
discontinuance of any service, facility, or supply that LICENSOR is required or
has undertaken to furnish to LICENSEE, or of the use by LICENSEE of the Licensed
Space. LICENSEE will not be entitled to any reimbursement, compensation,
damages, abatement, or royalties or other relief for any such interruption or
failure, discontinuance, or suspension of any such service, facility, or supply
or in the use of the Licensed Space.
(b) If the Licensed Space is damaged by fire or other casualty, LICENSOR
will not be liable for any loss, damage, or interruption of business that
LICENSEE suffers by reason thereof.
If during the Term, the Licensed Space (i) is substantially damaged or
destroyed by fire, wind, or other casualty, (ii) are substantially damaged or
destroyed by the negligence, gross negligence, or intentional tort of LICENSEE
or any person in or about the Licensed Space with LICENSEE's express or implied
consent, or (iii) if any mortgagee of LICENSOR requires that the insurance
proceeds payable as a result of a casualty be applied to the payment of the
mortgage debt or in the event of any material, uninsured loss to the Licensed
Space, then LICENSOR may elect, by written notice to LICENSEE sent no later than
sixty days from the date of the occurrence of the casualty loss, to terminate
this Agreement and the license fees will be abated for the unexpired portion of
this Agreement, effective as of the date of the casualty loss. Additionally, if
there is an early termination of this Agreement under this Section 25 because of
substantial damage to the Licensed Space or because the insurance proceeds are
required to be applied to the mortgage debt, both parties will automatically be
released from all further liability under this Agreement except as to matters of
liability that will have accrued and remain unsatisfied as of the date of such
termination and LICENSOR will have the right to retain all insurance proceeds it
collects. If LICENSOR elects not to terminate this Agreement, as provided for in
this Agreement, the provisions hereinafter stated will apply.
(c) If, during the Term, the Licensed Space is damaged by fire, wind, or
other casualty, but not to such an extent that rebuilding and repairs cannot be
completed within a reasonable period of time from the date of the casualty
damage, LICENSOR will, at LICENSOR's sole option, have the right to elect to
rebuild or repair the improvements located on the Licensed Space to
substantially the same condition that the improvements existed prior to such
damage or to terminate this Agreement by written notification to LICENSEE,
whereupon all rights and obligations under this Agreement will cease, except for
any outstanding obligations or indemnities assumed by LICENSEE under this
Agreement. LICENSOR will have sixty days from the date of receipt of written
notification from LICENSEE of the occurrence of the damage to make such election
and written notification of LICENSOR's decision on whether to restore and
reconstruct the Building situated on the Licensed Space will be communicated in
writing to LICENSEE within sixty days of the date of LICENSOR's receipt of
LICENSEE's notice of the occurrence of the damage.
(1) If LICENSOR elects to rebuild or repair the Building following a
casualty loss, the license fees payable under this Agreement will be adjusted
equitably by LICENSOR and LICENSEE from the date of the damage through the end
of the reconstruction period to reflect the diminished value of the Licensed
Space and the diminished value of the portion of the Building that was not
damaged. But, notwithstanding anything contained in this Agreement to the
contrary, LICENSOR will not be required to expend more for such repairs and
rebuilding than the net insurance proceeds actually received as a result of such
casualty that are allocable to the Licensed Space after any payment required to
be paid to the mortgagee under any mortgage. If LICENSOR elects to rebuild or
repair the Building following a casualty loss at any time within a period of one
year following the casualty loss, LICENSEE will have the right to continue to
occupy the Licensed Space for the balance of the Term on the same terms and
conditions set out in this Agreement.
(2) If LICENSOR elects not to rebuild or repair the Licensed Space, this
Agreement will terminate, except for any outstanding obligations or indemnities
assumed by LICENSEE, under this Agreement and the license fees will be abated
for the unexpired portion of this Agreement, effective as of the date set out in
the notice from LICENSOR to LICENSEE following the occurrence of the damage.
Additionally, if there is an early termination of this Agreement under the terms
of this section either because of substantial or partial damage or because the
insurance proceeds are required to be applied to the mortgage debt, both parties
will automatically be released from all further liability under this Agreement
except as to any outstanding obligations and matters of liability that will have
accrued and remain unsatisfied as of the date of such termination, including
claims of each party against the other for trade accounts (if any), payments of
license fees, reimbursements, indemnification, and obligations arising under any
promissory notes or security agreements.
(d) If the Store is condemned by any public authority, sold under threat of
taking by eminent domain, or if the lease under which LICENSOR occupies the
Store is canceled, non-renewed, or terminated by any reason whatsoever, then
this Agreement will, at LICENSOR's option, be canceled and terminated as of the
date of such condemnation, sale, or termination without the necessity of any
prior notice to LICENSEE. By signing this Agreement, LICENSEE acknowledges that
the Store is located on leased premises and that this Agreement is subject to
the terms and conditions of such lease agreement for the Store.
(e) If LICENSEE's ability to occupy the Licensed Space is completely
interrupted or totally discontinued for a period of more than seven business
days, LICENSEE may cancel this Agreement by written notice to LICENSOR.
26. Liens. LICENSEE may not suffer or permit any UCC filing or lien to
exist on the Store, the Licensed Space, or any of the furniture, fixtures,
signs, equipment, goods, and inventory located in the Licensed Space that would
in any way limit or restrict LICENSEE from complying with the terms of this
Agreement and being able to sell LICENSEE's goods and inventory in the ordinary
course of business. If any such UCC filing or lien is filed on LICENSEE's
furniture, fixtures, signs, equipment, goods, and inventory that unduly
restricts LICENSEE from complying with the terms of this Agreement and being
able to sell LICENSEE's goods and inventory in the ordinary course of business,
LICENSEE shall promptly discharge the same at LICENSEE's sole cost and expense
and LICENSEE agrees to indemnify and hold LICENSOR harmless regarding any UCC
filings that conflict with this Agreement. Notwithstanding the above, LICENSOR
agrees that LICENSEE will have the right to pledge its furniture, fixtures,
signs, equipment, goods, and inventory located in the Licensed Space to
LICENSEE's commercial lenders and LICENSOR agrees to waive any landlord's or
other liens that it might have on LICENSEE's furniture, fixtures, signs,
equipment, goods, and inventory located in the Licensed Premises.
27. Default by LICENSEE.
(a) If LICENSEE allows the license fees payable hereunder to be in arrears
more than ten days after the due date thereof, LICENSOR may, at its option,
without notice to LICENSEE, terminate this Agreement; or in the alternative,
LICENSOR may enter upon the Licensed Space by picking or changing locks if
necessary and take possession of the Licensed Space, without terminating this
Agreement, and expel or remove all persons and property therefrom, without being
(a) deemed guilty of any manner of trespass, (b) liable for prosecution, or (c)
liable on any claim for damages therefor, and relet the Licensed Space or any
part thereof, for all or any part of the remainder of the term of this
Agreement, or any renewal thereof, to a party satisfactory to LICENSOR, and at
such monthly license fees as LICENSOR may with reasonable diligence be able to
secure. If LICENSOR is unable to find another licensee for the Licensed Space
after reasonable efforts to do so, or if such license fees are less than the
license fees LICENSEE was obligated to pay under this Agreement, or any renewal
thereof, then LICENSEE shall pay to LICENSOR the amount of such deficiency plus
the expense of locating a new licensee without limitation, brokers' fees
incurred by LICENSOR in connection with finding a new licensee for the whole or
any part of the Licensed Space and all reasonable expenses incurred by LICENSOR
in enforcing LICENSOR's remedies, including reasonable attorneys' fees,
renovation expenses, and broker's commissions. However, notwithstanding anything
contained in this Agreement to the contrary, in event of default, such as
bankruptcy or insolvency, will not be deemed "cured" or being diligently
prosecuted while the bankruptcy proceeding is pending. If LICENSEE remains in
default under any other condition of this Agreement for a period of thirty days
after the date of receipt of written notice from LICENSOR, or if any other
person than LICENSEE secures possession of the Licensed Space, or any part
thereof, by reason of any receivership of LICENSEE, bankruptcy proceedings
involving LICENSEE, or other operation of law in any manner whatsoever, LICENSOR
may, at its option, without notice to LICENSEE, terminate this Agreement or
exercise any of the other remedies listed above in this Section 27.
(b) LICENSEE agrees that LICENSOR shall be entitled to the benefits of all
provisions of law respecting the speedy recovery of land and tenements held over
by LICENSEE, including proceedings for forcible entry and detainer. LICENSOR and
its agents shall not be subject to prosecution or liability as a result of said
entry or repossession, and LICENSEE shall compensate LICENSOR for its reasonable
expenses of making such entry and repossession.
(c) Notwithstanding anything to the contrary herein contained, if LICENSEE
is default under the terms of this Agreement five or more times within a one
hundred and eighty day period, regardless of whether such events of default are
timely cured, such defaults will be deemed deliberate and not curable on the
last occasion thereof, thereby giving LICENSOR the immediate right to have
recourse to all LICENSOR's remedies hereunder.
(d) The remedies of LICENSOR hereunder shall be deemed cumulative and no
remedy of LICENSOR, whether exercised by LICENSOR or not, shall be deemed to be
an exclusion of any other.
28. Default by LICENSOR. No default by LICENSOR hereunder shall constitute
an eviction or disturbance of LICENSEE's use and possession of the Licensed
Space or render LICENSOR liable for damages or entitle LICENSEE to be relieved
from any of LICENSEE's obligations hereunder (including the obligation to pay
the license fee) or grant LICENSEE any right of deduction, abatement, set-off,
or recoupment or entitle LICENSEE to take any action whatsoever with regard to
the Licensed Space or LICENSOR until twenty days after LICENSEE has given
LICENSOR written notice specifically setting forth such default by LICENSOR, and
LICENSOR has failed to cure such default within said twenty day period, or in
the event such default cannot reasonably be cured within said twenty day period
then within an additional reasonable period of time so long as LICENSOR has
commenced curative action within said twenty day period and thereafter is
diligently attempting to cure such default. In the event that LICENSOR fails to
cure such default within said twenty day period, or within said additional
reasonable period of time, LICENSEE shall have the right to proceed to cure such
default and deduct the cost of curing same, plus interest thereon at the rate of
ten percent (10%) per annum, from the next succeeding licensee fee
installment(s) owed by LICENSEE to LICENSOR hereunder.
29. Waiver of Default. No waiver by the parties of any default or breach of
any term, condition, or covenant of this Agreement shall be deemed to be a
waiver of any other breach of the same or other term, condition, or covenant
contained herein, nor shall any custom or practice which may grow up between the
parties in the administration of the terms hereof be construed to waive or
lessen the right of LICENSOR to insist upon the performance by LICENSEE in
strict accordance with the terms hereof. No provision of this Agreement may
under any circumstances be deemed to have been waived by either party here to
unless such waiver is in writing and signed by the party charged with such
waiver. LICENSEE agrees that the receipt by LICENSOR of the license fee, even
with the knowledge of the breach of any covenant or condition of this Agreement
by LICENSEE, shall not be deemed to be a waiver of such breach and no provision
of this Agreement shall be deemed to have been waived by LICENSOR unless such
waiver be in writing, and signed by LICENSOR.
30. Security Deposit. If LICENSEE defaults under any of the terms or
conditions of this Agreement more than two times during any twelve consecutive
months during the term of this Agreement, LICENSEE agrees, that in addition to
curing such event of default, it shall pay LICENSOR a security deposit equal to
$25,000 ("Security Deposit"), which will be held by LICENSOR without interest as
security for the full and faithful performance by LICENSEE of LICENSEE's
covenants and obligations under this Agreement, it being expressly understood
that such deposit is not an advance payment of license fees or a measure of
LICENSOR's damages if LICENSEE defaults again. Following the payment of the
Security Deposit, upon the occurrence of any event of default by LICENSEE,
LICENSOR may, from time to time, without prejudice to any other remedy provided
in this Agreement or by law, use the Security Deposit to the extent necessary to
make good any arrearages of payment owed by LICENSEE to LICENSOR or any amount
as to which LICENSEE is in default or for any other damage, injury, expense, or
liability caused to LICENSOR by such event of default, regardless whether such
damages or deficiency accrue before or after termination of this Agreement.
Following any such application of the Security Deposit, LICENSEE agrees to pay
to LICENSOR on demand the amount so applied in order to restore the Security
Deposit to its original amount and LICENSEE's failure to do so within ten days
of the date of demand will be, at LICENSOR's election, a material default under
this Agreement. If LICENSEE is not in default of this Agreement upon the
termination of this Agreement, LICENSOR agrees to return any remaining balance
of such Security Deposit to LICENSEE within thirty days of the date of the
termination of this Agreement. LICENSOR's deduction of any amounts owed by
LICENSEE to LICENSOR from the Security Deposit will in no event release LICENSEE
from being in default under the terms of this Agreement. LICENSOR will not be
required to keep this Security Deposit separate from its general funds. LICENSEE
agrees that it will not assign or encumber, or attempt to assign or encumber,
the monies deposited under this Agreement as security, and that LICENSOR and its
successors and assigns will not be bound by any such actual or attempted
assignment or encumbrance. If LICENSEE cures the event of default that triggered
the obligation to put up the $25,000 Security Deposit and is not then in
default, LICENSOR agrees to refund the $25,000 amount put as a Security Deposit
within ten days of the date of LICENSEE's request.
31. Termination of Agreement. Either party will have the right to terminate
this Agreement at any time, upon twenty-one days' prior notice in writing to the
other party mailed or sent by national overnight courier service for next day
delivery to the other party's principal offices, upon the occurrence of any one
of the following events:
(a) If either party is declared insolvent or bankrupt, or makes an
assignment for the benefit of creditors, or if a receiver is appointed or any
proceedings are initiated involving LICENSEE or LICENSOR pursuant to the United
States Bankruptcy Code or any amendment thereof.
(b) If either party materially defaults in the substantial performance of
any provision of this Agreement or if LICENSEE fails to conform to the general
business policies, practices, or procedures of LICENSOR, as same may from time
to time during the Term be amended or modified by LICENSOR, and such default is
not cured within ten business days after receipt of a written demand. If such
default cannot be cured reasonably within said ten business day period then the
defaulting party will have an additional reasonable period of time so long as
the defaulting party has commenced curative action within said ten business day
period and thereafter diligently attempts to cure such default.
(c) Additionally, at the election of LICENSOR, LICENSOR will have the right
to terminate this Agreement at any time, upon twenty-one days' prior notice in
writing to LICENSEE mailed or sent by national overnight courier service for
next day delivery to LICENSEE's principal offices, if the business of LICENSEE
is sold, leased, or for any reason passes from the actual possession or control
of LICENSEE, or if LICENSEE's ownership interest (excluding the ownership
interests of ▇▇▇▇▇▇ Acquisition Company, L.L.C.) undergoes a fifty percent (50%)
or more change during the Term. Upon the occurrence of such an event, LICENSEE
must notify LICENSOR immediately thereof. So long as LICENSEE's stock is
registered pursuant to the Securities Act of 1933 and such stock is regularly
traded on a national exchange, a fifty percent (50%) of more change in the
ownership of LICENSEE that occurs solely through the open trading of such stock
on a national exchange will not be deemed to be a violation of this Agreement.
32. Surrender of Licensed Space. Upon the expiration or other termination
of the Term, LICENSEE shall quit and surrender the Licensed Space to LICENSOR
broom clean, in good order and condition, ordinary wear and tear and acts of
negligence by LICENSOR excepted. All fixtures, furniture, equipment, and
inventory of LICENSEE must be promptly removed from the Licensed Space
immediately thereafter at the sole cost and expense of LICENSEE. No act or thing
done by LICENSOR or LICENSOR's agents during the Term will be deemed an
acceptance of a surrender of the Licensed Space and no agreement to accept such
surrender will be valid unless it is in writing and signed by LICENSOR. LICENSEE
shall notify LICENSOR in writing at least thirty days prior to vacating the
Licensed Space to arrange a mutually convenient time to meet LICENSOR for a
joint inspection of the Licensed Space prior to vacating. To the extent that
LICENSEE fails to comply with this provision of the Agreement and LICENSOR
incurs any expense in bringing the Licensed Space up to compliance with this
provision, LICENSEE agrees to pay to LICENSOR all such costs, including lost
royalties and penalties because of a delay in being able to turn the Licensed
Space over to a new licensee during the period of time necessary to clean the
Licensed Space. Any cost or expense incurred by LICENSOR as a result of
LICENSEE's delay in surrendering the Licensed Space, including lost royalties
and penalties, or involving the restoration of the Licensed Space to the
standards set forth in this Agreement, will be paid by LICENSEE to LICENSOR
immediately upon demand.
33. Right to Use Name. If LICENSEE ceases to be licensed by LICENSOR for
any reason, LICENSEE will not thereafter use or permit the use of the name
"▇▇▇▇▇▇ ELECTRONICS at ABC", or any combination with the word "ABC" in the name
or trademark of any corporation, partnership, or other business in which
LICENSEE is associated in any capacity, directly or indirectly. LICENSEE
covenants that it will not use, after the end of the Term, the name "ABC" in any
manner, shape, or form, in any business or employment, nor the designation
"Formerly with ABC" or any similar designation.
34. Non-Competition, Non-Interference, and Non-Solicitation Agreement.
During the Term LICENSEE may compete with LICENSOR in the retail sales of the
goods described in this Agreement, but only so long as any stores owned or
operated by LICENSEE as ▇▇▇▇▇▇ Electronics within the areas bounded by ▇▇▇▇
▇▇▇▇▇▇ on the North, Houston Street on the South, the East River on the East,
and the ▇▇▇▇▇▇ River on the West, are not expanded or enlarged by more than 110%
of the size of such stores on the date of the execution of this Agreement and so
long as LICENSEE does not open any new ▇▇▇▇▇▇ Electronics stores or commence
operations of any new electronics stores as ▇▇▇▇▇▇ Electronics on Manhattan,
within the area bounded by ▇▇▇▇ ▇▇▇▇▇▇ on the North, Houston Street on the
South, the East River on the East, and the ▇▇▇▇▇▇ River on the West, either on
its own account or as a partner or joint venturer, or as an agent or salesman
for any person or entity, or otherwise.
(a) Furthermore, LICENSEE agrees that it will not, either during the term
of the Agreement and for a period of one year immediately following the
expiration or termination of the Agreement, for any reason whatsoever, either
directly or indirectly, interfere with LICENSOR's business or operations and
will not solicit for hire or hire any of LICENSOR's employees or otherwise
interfere with or disrupt either the employment relationship between LICENSOR
and any of its employees, or the relationship between LICENSOR and any of its
vendors, supplies, or contractors. Likewise, LICENSOR agrees that it will not,
either during the term of the Agreement and for a period of one year immediately
following the expiration or termination of the Agreement for any reason
whatsoever, either directly or indirectly, interfere with LICENSEE's business or
operations and will not solicit for hire or hire any of LICENSEE's employees or
otherwise interfere with or disrupt either the employment relationship between
LICENSEE and any of its employees or the relationship between LICENSEE and any
of its vendors, suppliers, or contractors.
(b) LICENSEE agrees that a breach or violation of these covenants not to
compete by LICENSEE will entitle LICENSOR, as a matter of right to an injunction
issued by any court of competent jurisdiction, restraining any further or
continued violation of these covenants. Such right to an injunction will be
cumulative and in addition to, and not in lieu of, any other remedies to which
LICENSOR may show itself justly entitled. These covenants on the part of
LICENSEE will be construed as an agreement independent of any other provision of
this Agreement, and the existence of any claim or cause of action of LICENSEE
against LICENSOR, whether predicated on this Agreement or otherwise, will not
constitute a defense to the enforcement by LICENSOR of these covenants.
(c) If LICENSEE violates these restrictive covenants and LICENSOR brings
legal action for injunctive or other relief, LICENSOR will not, as a result of
the time involved in obtaining the relief, be deprived of the benefit of the
full one year period of the restrictive covenants. Accordingly, the restrictive
covenants and the covenants and agreements not to solicit or interfere will be
deemed to have a duration of one year as specified above, computed from the date
the relief is granted, but reduced by the time between the period when the
covenants or restrictions began to run and the date of the first violation of
the covenants or restrictions by LICENSEE.
(d) The parties agree that this covenant is reasonable in both time and
scope. However, if any court determines that the duration or geographical limit
of any restriction contained in this covenant not to compete or the
non-solicitation provision is unenforceable, it is the intention of the parties
that the restrictive covenants set forth in this Agreement will not thereby be
terminated but will be deemed amended to the extent required to render it valid
and enforceable, such amendment to apply only with respect to the operation of
this covenant not to compete or the non-solicitation provision and the
jurisdiction of the court that has made the adjudication.
(e) The parties expressly recognize and agree that the restraints imposed
in this Agreement (i) are reasonable both as to time and scope of activity to be
restrained; (ii) are reasonably necessary to the business relationship of the
parties and to protect their legitimate interests; and (iii) are not oppressive.
The parties also recognize that the failure by LICENSEE to observe and comply
with the covenants and agreements set out in this Agreement will cause
irreparable harm to LICENSOR; that it is and will continue to be difficult to
ascertain the degree of harm and damage to LICENSOR as a result of the violation
of these restraints, that the consideration paid and received by each party for
entering into these covenants and agreements is fair, and that the covenants and
agreements and their enforcement will not deprive either party of an ability to
operate their business. Each party further expressly acknowledges that it has
been encouraged to and has consulted or has had the opportunity to consult with
independent counsel and has reviewed and considered the terms of this Agreement
prior to executing this Agreement.
(f) The parties recognize that the covenants and agreements of each party
under this Agreement are special, unique, and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies that either party may have in the event of a breach of the
terms and conditions of this Agreement by the other party, the non-breaching
party will be entitled to demand and obtain specific performance, including,
without limitation, temporary and permanent injunctive relief, and all other
appropriate equitable relief against the breaching party in order to enforce
against the breaching party or in order to prevent any breach or any threatened
breach by a party of the covenants and agreements contained in this Agreement.
Additionally, the parties agree that if any covenant or condition contained in
this Agreement is held to be unenforceable, such covenant or agreement will be
reformed to the extent necessary to make such covenant or agreement enforceable,
and such covenant or agreement, as reformed, will be subject to the enforcement
provisions of this Agreement.
35. Jurisdiction. Notwithstanding the fact that one or both of the parties
is now or may become a resident or citizen of a different country or state, this
Agreement is to be interpreted in accordance with the laws of the State of New
York.
36. Jurisdiction and Service of Process. Each party hereby irrevocably
submits to the jurisdiction of the courts of the state of New York and of any
federal court located in such state in connection with any action or proceeding
arising out of or relating to this Agreement, and each party hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such state or federal court. Each party hereby irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing or the sending by national overnight courier service for next day
delivery of copies of such process to the party at its address as specified in
Section 40. Each party agrees that a final judgment in any such action or
proceeding will be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law. Each party further
waives any objection to venue in such state and any objection to an action or
proceeding in such state on the basis of forum non conveniens. Each party
further agrees that any action or proceeding brought against such party may be
brought only in a court of the state of New York or in a federal court located
in such state. Each party waives any right it may have to a jury trial.
37. Merger. All understandings and agreements heretofore entered into
between the parties regarding the subject matter of this Agreement are hereby
merged into this Agreement, which alone fully and completely expresses their
agreement with respect to the subject matter of this Agreement, and this
Agreement has been entered into after full investigation by all parties, and
neither party is relying upon any statements or representations by the other
party not embodied in this Agreement. This Agreement may not be modified, except
by an instrument in writing signed by the parties.
38. Non-Waiver.
(a) The failure of either party to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of, this
Agreement or of any of the provisions set forth or hereafter adopted by said
party will not prevent a subsequent act that would have originally constituted a
violation from having all the force and effect of any original violation. The
receipt by LICENSOR of royalties with knowledge of the breach of any covenant
will not be deemed to have been waived by LICENSOR unless such waiver is in
writing and signed by LICENSOR.
(b) No payment by LICENSEE or receipt by LICENSOR of a lesser amount of
royalties stipulated in this Agreement will be deemed to be other than on
account of the earliest stipulated royalties, nor will any endorsement or
statement of any check or any letter accompanying any check or payment as
royalties be deemed in accord and satisfaction, and LICENSOR may accept such
check or payment without prejudice to LICENSOR's right to recover the balance of
such royalties or pursue any other remedy provided in this Agreement.
39. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or construe this Agreement, the prevailing party will be
entitled to recover from the non-prevailing party reasonable attorneys' fees,
costs, and other disbursements reasonably incurred in such action in addition to
all other relief to which the prevailing party may be entitled.
40. Notice. Any notice required in this Agreement must be sent either by
national overnight courier service for next day delivery or by certified mail,
return receipt requested, postage prepaid, and such notice will take effect when
actually received or five business days after the date it is postmarked by the
United States Postal Service, whichever is sooner. The address of each party is
as follows:
LICENSOR LICENSEE
ABC Home Furnishings, Inc. ▇▇▇▇▇▇ Electronics, Inc.
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Lyndhurst, New Jersey 07071
Att'n: Comptroller Att'n: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with copy to:
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P. ▇▇▇▇▇, ▇▇▇▇▇▇ & Associates, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇. - ▇▇▇. ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
From time to time either party may designate another address within the
forty-eight contiguous states of the United States of America for all purposes
of this Agreement or add additional addresses by giving the other party not less
than thirty days' advance written notice, in accordance with the provisions of
this Agreement, of such change of address.
41. Recourse Limitation. The obligations incurred by LICENSOR under and
with respect to this Agreement do not and will not constitute personal
obligations, and do not and will not involve any personal liability on its part,
or on the part of any officer, director, or shareholder of LICENSOR. Likewise,
the obligations incurred by LICENSEE under and with respect to this Agreement do
not and will not constitute personal obligations, and do not and will not
involve any personal liability on its part, or on the part of any officer,
director, or shareholder of LICENSEE. LICENSEE specifically agrees to look
solely to LICENSOR's interest in the Building in the recovery of any judgment
from LICENSOR, it being agreed that LICENSOR will never be personally liable for
any such judgment.
42. Legal Construction. If any one or more of the provisions contained in
this Agreement is for any reason held to be invalid, illegal, or unenforceable
under present or future laws effective during the Term in any respect, and the
basis of the bargain between the parties is not destroyed or rendered
ineffective thereby, such invalidity, illegality, or unenforceability, to the
extent possible, will not affect any other provision of this Agreement.
Moreover, so far as is reasonable and possible, effect will be given to the
intent manifested by the portion held invalid, illegal, or unenforceable. It is
further the intention of the parties that if any provision of this Agreement is
capable of two constructions, one of which would render the provision invalid,
illegal, or unenforceable and the other of which would render the provision
valid, legal, or enforceable, then the provision will have the meaning that
renders it valid, legal, or enforceable.
43. General Rules of Construction. This Agreement will not be strictly
construed either for or against either LICENSOR or LICENSEE, but this Agreement
will be interpreted in accordance with the general tenor of the language of this
Agreement in an effort to reach an equitable result. No remedy or election given
by any provision in this Agreement will be deemed exclusive unless so indicated,
but each will, wherever possible, be cumulative with all other remedies in law
or equity. The parties acknowledge that this Agreement has been freely
negotiated by both parties and that each party (and its counsel, if any) has had
the opportunity to review and revise this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement or
any amendments or exhibits to this Agreement.
44. Captions. The headings and captions contained in this Agreement are
inserted for convenience of reference only, and are not to be deemed a part of
or to be used in construing this Agreement. The captions in no way define,
describe, amplify, or limit the scope or the intent of this Agreement or any of
the provisions of this Agreement. All references in this Agreement to sections
or subsections thereof refer to the corresponding section or subsection of this
Agreement unless specific reference is made to such sections or subsections of
another document.
45. Counterparts. This Agreement may be signed in multiple counterparts,
each of which will be an original and all such counterparts together will
represent but one and the same instrument; but in making proof of this Agreement
it will not be necessary to produce or account for more than one such
counterpart. The counterpart signed and held by LICENSOR will control in the
event of any dispute or in any cases of differences between the counterparts.
This Agreement becomes effective when one or more of the counterparts has been
signed by each of the parties and delivered to the other party.
46. Force Majeure. Neither LICENSOR nor LICENSEE will be required to
perform any term, condition, or covenant in this Agreement so long as such
performance is delayed or prevented by force majeure, which means acts of God,
strikes, material or labor restrictions by any governmental authority,
insurrections, war, court orders, civil riot, floods, requisition or order of
any governmental body or authority, and any other cause not reasonably within
the control of either LICENSOR or LICENSEE and that either LICENSOR or LICENSEE,
by the exercise of reasonable diligence, is unable, either wholly or in part, to
prevent or overcome. However, nothing in this Section 46 will relieve LICENSEE
of its responsibility to pay, on a timely basis, all monetary obligations owed
to LICENSOR, as set out in this Agreement, or its responsibility to provide the
insurance coverages required in this Agreement.
47. Time is of the Essence. In all instances where LICENSEE is required
under this Agreement to pay any amount or do any act at a particular indicated
time or within any indicated period of time, it is understood that time is of
the essence. All performance dates, time schedules, and conditions precedent to
exercising any right will be strictly adhered to without delay except where
otherwise expressly provided. In computing any period of time by days as
provided in this Agreement, the date of the act, event, or default from which
the designated period of time begins to run will not be included. The last day
of the period so computed will be included unless the last day of any time
period stated in this Agreement falls on either a Saturday or Sunday or falls on
a legal holiday recognized by the United States Postal Service, then the
duration of such time period will be extended so that it ends on the next
succeeding day that is not a Saturday, Sunday, legal holiday recognized by the
United States Postal Service.
48. Survival. LICENSOR and LICENSEE expressly agree that (i) all of
LICENSEE's obligations hereunder that have not been fully performed, (ii) all of
LICENSEE's warranties, representations, covenants, and indemnity provisions
contained in this Agreement, and (iii) all provisions of this Agreement that
contemplate performance by LICENSEE after the expiration or early termination of
this Agreement, will survive either the termination of this Agreement for any
reason, the surrender or return of possession of the Licensed Space by LICENSEE,
or the loss of LICENSEE's right of possession for any reason set out in this
Agreement.
49. Business Day. As used in this Agreement, the term "business day" means
any day of the week, Monday through Friday, that is not recognized by the United
States Postal Service as a national holiday and on which national banks are open
for business.
50. Successors and Assigns. The terms, provisions, and covenants contained
in this Agreement will apply to, inure to the benefit of, and be binding upon
the parties and their successors, and permitted assigns, but this provision will
in no way alter or affect the restrictions on assignment and subletting or
sublicensing to LICENSEE under this Agreement.
51. Expiration. LICENSEE's right to sign this Agreement will be
automatically revoked unless LICENSEE signs this Agreement and delivers same to
LICENSOR at its address set out in this Agreement on or before 5:00 p.m. CST on
____________, 2000.
LICENSOR: ABC HOME FURNISHINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ - COO
LICENSEE: ▇▇▇▇▇▇ ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇