EXHIBIT 10.18
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 27th day of August 1999,
by and between Famous Fixins, Inc. ("Licensee"), a corporation organized
under the laws of the State of New York, having its principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and ▇▇▇
▇▇▇▇▇▇ ("Licensor"), c/o ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
WHEREAS, Licensee manufactures celebrity food products and, subject to
the terms hereof, has been granted the right to the use of the name and
likeness of Licensor on and in connection with the development, manufacture,
distribution, promotion, and sale of a line of limited edition cereal (the
"Cereal") and related merchandise bearing the Licensed Subject Matter (as
hereinafter defined) (the "Merchandise," and together with the Cereal, the
"Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to use the
name, photograph, characterization, likeness, voice, image, and biographical
data of Licensor (the "Licensed Subject Matter") in connection with the
development, manufacture, distribution, promotion, and sale of the Products
("the License"). This License shall be effective worldwide and shall
continue from the date hereof until the end of the 1999-2000 NBA basketball
season, unless extended pursuant to the terms hereof or unless terminated in
accordance with the terms and conditions of Paragraphs 8 or 9 of this
Agreement (the "Term"), provided, however, that all terms, including without
limitation Paragraphs 12 and the representations and warranties set forth
herein, capable of surviving shall survive the Term of this Agreement.
Notwithstanding the foregoing, if sales of the Cereal reach 800,000 boxes,
the License Term shall be automatically extended through the 2000-2001 NBA
basketball season, provided that in such event, Licensor shall receive from
Licensee an additional Warrant (as hereinafter defined) with an expiration
date of five (5) years from the date of grant to purchase 30,000 shares of the
Company's unregistered common stock at a purchase price equal to 50% of
the average of the daily volume-weighted average prices of the Company's
common stock during the thirty trading days following the date of such
extension.
Licensee acknowledges and agrees that the rights granted herein are those
associated with a license and that this Agreement shall not be
deemed or construed to be an assignment of Licensor's rights. Accordingly,
Licensor shall retain all rights in and to the Licensed Subject Matter and
all rights incidental or related thereto. Notwithstanding the foregoing, the
parties acknowledge and agree that Licensee's rights to use Licensed Subject
Matter shall automatically revert to Licensor upon the earlier of the
expiration or termination of this Agreement. Licensor is not prohibited,
prevented or in any way restricted by this Agreement from using, permitting
or licensing others to use the Licensed Subject Matter in connection with any
advertisement, promotion, merchandising, or public relations, including
personal appearances, or the sale of any product, service, or business.
Licensee hereby acknowledges and agrees that this Agreement is subject to the
terms and conditions of the NBA Group License Agreement dated September 18,
1995 (and any successor agreement thereto), which, among other things, may
allow the Licensed Subject Matter to be featured or used in connection with
products competitive with the Products.
2. Licensee's Obligations. Subject to the terms hereof, Licensee shall
develop, manufacture, distribute, promote, and sell the Products as soon as
practicable after the date hereof, but in no event later than the start of
the 1999-2000 NBA season, provided, however, that Licensee shall, in the
exercise of its business judgment, have final decision-making authority with
respect to the following: (a) the type and quantity of Products to be
developed and manufactured, subject to the terms of Section 3 hereof and
Licensor's other professional relationships and sponsorship agreements; (b)
the markets in which the Products are to be distributed and sold; (c) the
manner of distribution and sale of the Products; and (d) the volume and
nature of advertising for the Products. Notwithstanding the foregoing,
Licensee agrees (a) to distribute, promote, and sell the Products, at a
minimum, in the greater San Antonio, Texas area, North Carolina (including,
without limitation, the greater Winston Salem area), and the U.S. Virgin
Islands, (b) to provide for the sale and distribution of Products on
Licensor's website (▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇) and (c) to consult in a meaningful
way with Licensor, to submit to Licensor proposals with respect to the
foregoing items and to use its best efforts to meaningfully respond to and
accommodate Licensor's reasonable objections and input with respect to such
proposals. Licensee shall pay all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the Products and Licensee shall handle all fulfillment
(including all check, money order and credit card transactions) and tracking
responsibilities from the sale of the Products, including, without
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limitation sales on Licensor's website. During the Term, Licensee agrees to
supply Licensor, at no expense, such quantities of Products as he may
reasonably request for his own personal use.
All rights, titles, and interests in and to the Cereal, their formulae and
secret ingredients shall be, and are specifically and entirely, reserved to
Licensee and may be fully exploited without regard to the extent to which
such rights may be competitive with this Agreement or the rights granted
hereunder, provided, however, that the type of Cereal bearing the Licensed
Subject Matter shall not be used in connection with any other licensor in any
market in which the Products are sold.
3. Approvals. All Products developed pursuant to the terms hereof shall
be developed in consultation with Licensor, and shall be subject to
Licensor's reasonable approval prior to Licensee's manufacture or marketing
of such Products. In addition, all materials created by public view or
distribution hereunder, including but not limited to the packaging, design,
advertising materials, press materials and all other materials to be used in
connection with the Products (the "Materials") shall be subject to Licensor's
review and prior approval. In order to facilitate Licensor's review and to
maintain the high standards, style, appearance, propriety and quality
association with Licensor, Licensee shall submit to Licensor (as applicable)
the drafts, samples, concept, keylines, artwork, video, audio and/or
storyboard for any proposed Products or Materials using or associated with
the Licensed Subject Matter before commencing production of any such
Materials or Products. After a proposal has been approved as set forth
above, Licensee shall not depart from the proposal in any respect without
Licensor's further review and prior approval. Licensee hereby acknowledges
and agrees that Licensor will not be shown on the Materials or the Products
in an NBA uniform without the express written consent of the National
Basketball Association.
4. Personal Appearance. Subject to Licensor's professional commitments,
Licensor shall appear at a press conference/launch party (the "Personal
Appearance"), not to exceed one (1) hour in length, in the city of San
Antonio, Texas at a time and at a site mutually acceptable to Licensor and
Licensee. During the Personal Appearance, Licensor agrees to autograph 50
jerseys to be provided by Licensee, provided, however, that any such
autograph shall be personalized and shall refer to each recipient by name.
During the Term, Licensor also agrees to autograph 150 boxes of cereal.
Licensee hereby acknowledges and agrees that any items autographed by
Licensor shall only be used by Licensee for promotional purposes and shall
not be made available for
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resale. The failure of Licensor to provide the Personal Appearance as set
forth herein, if such failure is due solely to Licensee's failure to request
such Personal Appearance in a timely fashion, shall not be deemed to be a
breach of this Agreement by Licensor.
5. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products.
6. Compensation. As full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement,
Licensee shall pay Licensor a license fee via cashier's check or wire
transfer (the "Licensing Fee") on or prior to September 26, 2000 (and, if the
Term is extended pursuant to the terms of Section 1 hereof, on or prior to
September 26, 2001) in an amount equal to seven percent (7%) of all gross
revenues received by Licensee from the sale of the Cereal, provided, however,
that in the event that sales of the Cereal equal or exceed 800,000 boxes at
any time during the Term, then Licensee shall immediately notify Licensor and
pay Licensor within thirty (30) days of such notification, an additional fee
in an amount equal to four percent (4%) of all gross revenues received by
Licensee from the sale of such 800,000 boxes of Cereal, and provided,
further, that, in such event, the Licensing Fee shall be increased from,
seven percent (7%) to eleven percent (11%) of all gross revenues
received by Licensee from sales of the Cereal in excess of 800,000 boxes.
Licensee shall also pay Licensor fifty percent (50%) of all gross profits
received by Licensee from the sale of the Merchandise (the "Merchandise
Royalty"). For purposes of this Paragraph 6, all payments not received on
the date due shall be deemed "past due". Such past due payments shall bear
interest from the date due until payment is received at a rate of four
percent (4%) per month or the maximum rate permissible by law, whichever is
less. The imposition of interest provided for in this Section shall be in
addition to any other remedies available to Licensor under this Agreement or
otherwise. In addition, as further consideration for this Agreement,
Licensor will receive a warrant (a "Warrant") to purchase 50,000 shares of the
Licensee's unregistered common stock at a purchase price equal to $.20 per
share with an expiration date of five years from the date hereof upon the
signing of this Agreement. A form of Warrant Agreement is attached hereto as
Exhibit A. Licensee agrees to pay all arbitration fees and reasonable
attorney's fees incurred by Licensor in the enforcement of Licensee's
obligations hereunder.
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7. Accounting. Licensee shall render a detailed accounting of all Product
sales to Licensor on a quarterly basis. Each accounting shall show both
quarterly and cumulative gross revenues for the Products. Licensee agrees
that it will keep accurate and complete records and books of account showing
all Products and merchandise shipped by it and prices thereof related to
Licensor. Licensor, or Licensor's representatives, shall have the right at
reasonable times and on reasonable notice to inspect and make copies of the
Licensee's books and records, at Licensor's expense, in so far as they relate
to the computation of Licensing Fees and Merchandise Royalties to be paid to
Licensor hereunder; provided, however, that if any such inspection discovers
an accounting discrepancy indicating that the aggregate amount of Licensing
Fees or Merchandise Royalties due to Licensor (but which remain unpaid by
Licensee) equals or exceeds Five Thousand Dollars ($5,000), then Licensee
shall pay, within ten (10) business days, all costs and expenses of said
inspection, as well as the full amount of unpaid Licensing Fees or
Merchandise Royalties, plus interest from the date such Licensing Fees or
Merchandise Royalties were originally due until the date of payment at a rate
of 4% above the Primate Rate as published from time to time in The Wall
Street Journal (East Coast Edition).
8. Most Favored Nation. Licensee hereby represents and warrants that the
aggregate amount of compensation, of any kind, including without limitation,
the amount of the Licensing Fee, the Merchandise Royalty, the number of
Warrants (including the Warrant exercise price) or any other equity of the
Licensee is equal to or greater than the aggregate amount of compensation,
warrants or licensing fees or royalties paid or incurred by Licensee to any
other licensor with respect to the advertisement, promotion, distribution and
sale of comparable quantities of products manufactured or sold by Licensee.
To the extent that any future agreement or amendment or other modification to
any existing Licensee agreement (written or oral) with any other licensor
provides compensation, licensing fees, royalties, or warrants (including the
warrant exercise price) or any such equity of the Licensee to any such
licensor greater than the aggregate compensation, licensing fees, royalties,
warrants or any other equity of Licensee paid to Licensor for sales of
comparable quantities of products, Licensee shall provide Licensor with
immediate notice of such greater compensation, licensing fees, royalties or
warrants (including the warrant exercise price) or any other equity of the
Licensee and Licensee agrees to amend the terms and conditions of this
Agreement, in Licensor's sole and absolute discretion, to provide the same
compensation, licensing fees, warrants or other equity. Such amendment is to
be effective as of
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the same day that the more favorable terms and conditions were effective with
respect to such other licensor.
9. Insurance. Licensee shall obtain and maintain (and provide Licensor
evidence of) insurance coverage for general liability in accordance with
industry standards and shall provide Licensor (a) with notice of the amount
of such insurance obtained (which shall not be less than $2,000,000), the
carrier thereof and any deductible, retention or co-insurance with respect
hereto and (b) written proof that such insurance specifically names Licensor
as an additional insured or loss payee, as appropriate. The obligations set
forth in this Paragraph 9 shall survive termination or expiration of this
Agreement.
10. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach, (b) Licensee becomes insolvent,
files a petition in bankruptcy or has a petition in bankruptcy filed against
it which is not dismissed within fifteen (15) days, (c) Licensee discontinues
production and distribution of the Products, (d) Licensee uses unapproved
Products or Materials, or (e) Licensee uses the Licensed Subject Matter on,
or in connection with, any product or service not licensed by Licensor under
this Agreement. The parties acknowledge and agree that Licensor's right to
terminate this Agreement upon the occurrence of any of the events set forth
above in this Paragraph 10 shall not waive or limit Licensor's rights or
remedies otherwise available, including, without limitation, Licensor's right
to seek monetary damages, equitable relief or any other remedy, in law or in
equity, against Licensee.
11. Licensee Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; or (b) Licensor has engaged in
conduct resulting in a conviction (after all appeals) of a felony crime
involving moral turpitude or a crime involving use or possession of
controlled substances. The parties acknowledge and agree that Licensee's
right to terminate this Agreement upon the occurrence of any of the events
set forth above in this Paragraph 11 shall not waiver or limit Licensee's
rights or remedies otherwise available, including, without limitation,
Licensee's right to seek monetary damages, equitable relief or any other
remedy, in law or in equity, against Licensor.
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12. Indemnification. Licensor shall have no responsibility or liability
whatsoever to any other party for any actions or omissions in the
manufacture, marketing, sale or use of any Products or for any death, bodily
or personal injury or loss occurring in connection with the manufacture,
marketing or sale of any Products. Licensee agrees to protect, indemnify and
hold Licensor, his agents and representatives, harmless from and against any
and all expenses, damages, claims, suits, actions, judgments and costs,
including reasonable attorney's fee, arising out of any action or proceeding
by any third party based upon: (a) any material breach or alleged breach by
Licensee of any representation, warranty, covenant or agreement made by it
herein; (b) Licensee's use of the Materials produced hereunder; (c) the
manufacture, marketing, sale or use of any Products, including, without
limitation, the Personal Appearance, conducted by Licensor in connection with
or on account of Licensor's obligations pursuant to this Agreement; (e) any
unauthorized use by Licensee of any individual intellectual property right,
trademark, service ▇▇▇▇, or copyright with respect to or used in connection
with the Licensed Subject Matter; (f) any materials supplied by Licensee in
connection with the services provided by Licensor hereunder; (h) any act or
omission of Licensee in connection with this Agreement; or (i) the
enforcement of Licensee's indemnification obligation hereunder. Licensee's
indemnification obligations hereunder shall survive the expiration and
termination of this Agreement.
13. Licensee Representations and Warranties. Licensee represents and
warrants that it has the full right, power, capacity and authority to enter
into and fully perform this Agreement with Licensor, and carry out each and
all of the terms and conditions hereof; that there is no contract or
understanding with any other person or entity which would interfere with
Licensee's performance of its obligations herein; and the consent of no other
person or entity is necessary for Licensee to enter into this Agreement.
Licensee hereby represents and warrants that the undersigned officer is
authorized to execute this Agreement on behalf of Licensee and, as executed,
this Agreement shall be a legally binding obligation of Licensee.
14. Assignment. Neither Licensor nor Licensee shall assign this Agreement
without the prior written consent of the other party, except that
Licensor shall have the right to assign the financial benefits of this
Agreement, without Licensee's consent, to any company owned or controlled by
him.
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15. Notices. For the purposes of this Agreement, any notice or demand
required to be given will be given in writing and shall be hand delivered,
sent by facsimile transmission or mailed by Certified Mail, postage prepaid,
to the address herein set forth, or to such other address as the parties may
hereafter substitute. Notice shall be deemed received on the date of hand
delivery or the date sent by facsimile transmission so long as written
documentation verifies such delivery.
If to Licensee: ▇▇▇▇▇ ▇▇▇▇▇,
c/o Famous Fixins
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Licensor: ▇▇▇ ▇▇▇▇▇▇
c/o ▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
16. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other, (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever. As an independent contractor and not an employee of
Licensee, Licensor shall be responsible for compliance with all federal,
state and local income tax laws, social security and unemployment benefits,
and worker's compensation insurance. There shall not be any withholding for
federal, state or local income tax purposes.
17. Governing Law and Jurisdiction. The validity, performance,
construction and effect of this agreement shall be governed by New York law,
without giving effect to any otherwise applicable principles of conflicts of
laws. Should a dispute arise regarding the terms of this Agreement or any
matter arising out of or relating to this Agreement, such dispute shall be
settle by arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. The parties agree that the decision of the
arbitrator is final and judgment upon award may be entered in any court
having jurisdiction thereof. In the
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event of any arbitration arising out of, or based upon this Agreement brought
by either party against each other, the prevailing party shall be entitled to
recover from the other its reasonable attorney's fees in connection therewith
in addition to the costs of such action.
18. Entire Agreement. This Agreement sets forth the entire understanding
of the parties with respect to its subject matter and supersedes all prior
discussion, understandings and agreements. No waiver, modification, or
addition to this Agreement shall be valid unless reduced to writing and
signing by both parties. If any provision of this Agreement shall be held
void, voidable, invalid, or inoperative, no other provision of this Agreement
shall be affected as a result thereof, and, accordingly, the remaining
provisions of this Agreement shall remain in full force and effect as though
such void, voidable, invalid, or inoperative provision had not been contained
therein.
19. Waiver. The failure of either party hereto to insist on compliance
with any provision of this Agreement shall not be considered as a waiver by
such party of subsequent compliance with the same or any other provision.
20. Section Headings. Section headings contained hereunder are solely for
the convenience of the parties and none shall be deemed to affect the meaning
or construction of any provisions herein.
21. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but both of which, taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
LICENSOR: By: /s/ ▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇ ▇▇▇▇▇▇
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