Sample Business Contracts

License Agreement - Kmart of Michigan Inc. and Kmart Corp.

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                                LICENSE AGREEMENT

         THIS AGREEMENT made and entered into from this 26th day of October
2000, by and between KMART OF MICHIGAN, INC. (Licensor"), a Michigan
corporation, having its sole place of business at 3250 West Big Beaver Road,
Suite 329, Troy, Michigan 48084, and KMART CORPORATION ("LICENSEE"), a Michigan
corporation, having its principal place of business at 3100 West Big Beaver
Road, Troy, Michigan 48084.


         WHEREAS, Licensor is the owner of the trademarks and service marks and
registrations and applications therefor (hereinafter referred to as the "Marks")
as further described in Schedule A (hereinafter "Licensed Products and
Services") attached hereto and made a part hereof;

         WHEREAS. The Marks have achieved widespread recognition among members
of the general public;

         WHEREAS, Licensee acknowledges the above facts and desires to use the

         NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:

         1.       OWNERSHIP

                  Licensor warrants that to its knowledge it has good and valid
                  title to the Marks.

         2        GRANT OF LICENSE

                  (a) Licensor hereby grants to licensee, and Licensee hereby
                  accepts, the exclusive right, license and privilege to use the
                  Marks in the United States and its territories upon the terms
                  and conditions set forth herein for the products and services
                  identified thereby in Licensor's federal registrations and
                  applications and as listed is Schedule A (hereafter, the
                  "Licensed Products and Services").

                  (b) Nothing contained in this agreement shall be constructed
                  as a assignment or grant to Licensee of any right, title, or
                  interest in the Licensed Properties, it being understood and
                  acknowledged by Licensee that all rights and goodwill relating
                  thereto are reserved by Licensor except for the license
                  granted hereunder expressly provided in this Agreement or
                  amendments hereto.

                  (c) Licensee acknowledges and affirms Licensor's ownership and
                  exclusive right, title, and interest in and to the Marks.
                  Licensee agrees that it will not directly or indirectly attack
                  or impair the title of Licensor to the Marks, the validity of
                  this Agreement, or any of Licensor's registration or
                  applications therefor.


                  Licensee further agrees not to file any state or federal
                  applications for any mark or trade name featuring the Marks or
                  any term confusingly similar thereto.

         3.       TERM

                  The initial term of this Agreement shall be from the date
                  above written until January 1, 2010. This License Agreement
                  shall automatically renew at the end of such initial term and
                  any renewal term for successive ten (10) years terms, provides
                  that Licensee has not given to the other party written notice
                  of its intention not to renew at least six (6) months prior to
                  the expiration of the initial term or any renewal terms of
                  this Agreement.

         4.       LICENSE FEES

                  (a) In consideration of the rights granted hereunder, Licensee
                  shall pay to Licensor License Fees in accordance with the
                  following schedule:

                           With respect to Kmart stores and Big Kmart stores,
                           the License Fees shall be 1.1% of Net Sales of all
                           departments except Department 33, Pantry, in which
                           case the License Fees shall be 0.5% of Net Sales.
                           With respect to Super Kmart stores, the License Fees
                           shall be 0.8% of Net Sales of all departments except
                           Department 33, Pantry, in which case the License Fees
                           shall be 0.5% of Net Sales and Department 47,
                           Meldisco footwear, in which case the License Fees
                           shall be 1.1% of Net Sales. "Net Sales" for purposes
                           of this Agreement means gross sales of all
                           departments in Licensee's Kmart, Big Kmart and Super
                           Kmart stores in the United States and its
                           territories, weather such sales are for cash, credit
                           or deferred payment, without diminution for credit
                           loses, excluding only sales, use or excise taxes
                           passed on the customers for credit. License Fees
                           shall be paid on or before the 12th business day of
                           each fiscal quarter with respect to Net Sales during
                           the preceding quarter.

                  (b) Licensee agrees to keep adequate and complete records
                  showing the sales of Licensed Products or Services and to
                  annually prepare and submit to Licensor a report of the same
                  in form satisfactory to Licensor. Such records shall include
                  all information necessary to verify the total amount and
                  computation of License Fees due and paid hereunder, and shall
                  be open to inspection by Licensor upon reasonable notice
                  during Licensee's regular business hours, as Licensor deems
                  appropriate to confirm such data.

                  (c) In the event of any dispute between the parties regarding
                  the payment or computation of License Fees, Licensee, shall
                  upon request, produce to Licensor such audited and unaudited
                  records as may be necessary to verify the information, and
                  shall meet with Licensor, in a good faith effort to resolve
                  such dispute. In the event the parties are unable to resolve
                  such dispute, the parties shall instruct an independent
                  accounting firm as the parties may agree upon to conduct an
                  audit of

                  the disputes License Fees. Such audit shall be made with
                  particular reference to all applicable terms of this Agreement
                  and the determination so made by such firm as to correct
                  computation of License Fees, shall be binding on both parties.
                  The cost of such audit shall be born equally by both Licensee
                  and Licensor.

         5.       QUALITY CONTROL

                  (a) Licensee warrants that all Licensed Products and Services
                  bearing the Marks shall be of a nature that shall be
                  consistent with the high standards of quality and excellence
                  established over the years with respect to the Marks. Licensee
                  shall comply to the Licensed Products and Services. The
                  initial quality standard for each Licensed Product and Service
                  shall be that currently maintained by Licensee. In the event
                  Licensee wishes to add a new product or service or change the
                  quality of an existing product or service, Licensee shall
                  advise Licensor of the description of such product or service
                  or the revised quality standard for an existing product or
                  service. Unless Licensor shall have advised Licensee in
                  writing of Licensor's objections to such new product or
                  service or changes to an existing product or service within
                  thirty (30) days of receipt, Licensor shall be deemed to have
                  approved such new product or service or change to existing
                  product or service.

                  (b) Licensee shall furnish or make available to Licensor a
                  reasonable number of representative samples of the Licensed
                  Product and Services to permit Licensor to determine that such
                  Licensed Products and Services meet the quality standards set
                  forth herein. The costs associated with the submission and
                  testing of such samples shall be borne by Licensee. Licensor
                  shall have the right to inspect Licensee's places of business
                  (during normal business hours) to assure compliance with the
                  quality standards established by Licensor. If so notified in
                  writing by Licensor, Licensee shall not offer or provide any
                  products or services whose nature or quality does not comply
                  with the quality standards established by Licensor.

                  (c) Licensee shall comply with such standards and instructions
                  as Licensor may establish from time to time with respect to
                  the style, appearance and manner of use of the Marks. Upon the
                  request of Licensor, copies or accurate reproductions of all
                  materials displaying the Marks such as labels, advertising and
                  promotional materials, letterhead, business cards, signs and
                  the like, shall be provided to Licensor for review as to form
                  and content. In accordance with Licensor's instructions,
                  Licensee shall cease or modify any use of the Marks that
                  Licensor deems not to be in compliance with the applicable
                  standards or instructions.

         6.       GOODWILL

                  (a) License recognizes the great value of the goodwill
                  associated with the Marks and acknowledges that the Marks and
                  all rights therein and goodwill


                  attached thereto, inure to, benefit and belong exclusively to
                  Licensor. Licensee shall at all times recognize the validity
                  of the Mark and Licensor's right and title therein. Licensee
                  shall not, during the term of this Agreement or thereafter,
                  attached, impair or put in issue the title or any rights of
                  Licensor in and to the Marks or attack the validity of the
                  license granted herein.

                  (b) The parties understand and agree that Licensor's primary
                  objective in entering into this Agreement is the further
                  protection and enhancement of its uniquely valuable trademarks
                  and service marks. Accordingly, the parties agree that it
                  would be the result of a mutual mistake of fact if any
                  activity permitted or contemplated hereunder threatened to
                  injure or diminish the image or reputation of Licensor or any
                  of its trademarks or service marks; and Licensee covenants and
                  agrees that, notwithstanding any other provision f this
                  Agreement, it shall never take or continue any action which it
                  knows or has reason to know would result in or cause a boycott
                  of any product or service bearing Licensor or any of its marks
                  or products or services (such as boycott, threatened injury,
                  and diminishment hereafter referred to as "Injury to
                  Licensor"). In the event any action taken or continued by
                  Licensee results, or threatens to result, in Injury to
                  Licensor, Licensee agrees promptly to take all steps necessary
                  to avoid or stop the occurrence of such Injury to Licensor.

         7.       PROTECTION OF RIGHTS

                  (a) Licensee agrees to assist Licensor in the protection and
                  defense of any of Licensor's rights in the Marks, in filing
                  and prosecution of any trademark applications, renewals, and
                  the like, in the recording of this Agreement or any other
                  relevant agreements, and in doing of any other acts with
                  respect to the marks, including the prevention of the use
                  thereof by any unauthorized persons and that in the judgement
                  of Licensor may be necessary or desirable under any law,
                  regulation or decree of the United States.

                  (b) Licensee shall notify Licensor promptly in writing of any
                  infringements or imitations by other of the Marks which come
                  to Licensee's attention and Licensor shall have the sole right
                  to determine whether or not any action shall be taken on
                  account of any infringements or imitations. If Licensor so
                  desires it may prosecute any claims or suits in its own name
                  or join Licensee as a party thereto, all at Licensor's

         8.       INDEMNIFICATION

                  (a) Licensee agrees to indemnify and hold harmless Licensor
                  from any and all claims arising from the manufacture,
                  purchase, distribution, sale or use by Licensee of Licensed
                  Products or Services under this Agreement. This
                  indemnification shall include but is not limited to claims of
                  product liability or patent, copyright, trademark or trade
                  dress infringement or claims of unfair competition or trade
                  secret misappropriation which are not directly caused by the


                  Marks. Licensor agrees to give Licensee prompt notice of such
                  claims and Licensee has the right and obligation, at its sole
                  expense, to defend such claims and shall be solely responsible
                  for satisfying any monetary judgements awarded or any
                  settlements entered into as a result of such claims. Licensor
                  may at its sole election participate in any such defense at
                  its own expense. In any event, Licensee agrees to keep
                  Licensor fully informed regarding such claims. Licensee shall
                  not, however, be liable for any actions, claims or cost
                  incurred solely from the exercise of the license rights
                  granted Licensee under this Agreement.

                  (b) Licensor agrees to indemnify and hold harmless Licensee
                  and its subsidiary companies from any and all claims of
                  patent, copyright, trademark or trade dress infringement or
                  claims of unfair competition or trade secret misappropriation
                  directly caused by Licensee's use of the Marks under this
                  Agreement. Licensee agrees to give Licensor prompt notice of
                  any such claims and Licensor has the right and obligation, at
                  its sole expense, to defend any such claims and shall be
                  solely responsible for satisfying any monetary judgement
                  awarded or any settlements entered into as a result of such
                  claims. Licensee may at its sole election participate in any
                  such defense at its own expense. In any event, Licensor agrees
                  to keep Licensee fully informed regarding such claims.

         9.       DISTRIBUTION

                  (a) In order to maintain and enhance the goodwill and image of
                  quality associated by the public with the Marks, Licensee
                  shall distribute or sell Licensed Products and render the
                  Licensed Services only from those establishments maintaining a
                  good business reputation and that are in no way associated, or
                  thought to be associated, with any illegal, vulgar, obscene,
                  immoral, unsavory or offensive activities.

                  (b) Licensee shall, throughout the term hereof, diligently
                  distribute and sell the Licensed Products and render the
                  Licensed Services. Nothing in this subparagraph, however,
                  shall restrict, limit or excuse the performance of any
                  obligations of Licensee set forth in this Agreement.

         10.      MANUFACTURERS

                  (a) Licensor acknowledges that Licensee shall obtain Licensed
                  Products from manufacturers of Licensee's own choice, or the
                  performance of Licensed Services from independent contractors
                  of License's own choice, and that the Marks shall be applied
                  or affixed to the Licensed Products by said manufacturers or
                  used rendering the Licensed Services, but only for sale or use
                  in Licensee's stores.

                  (b) Licensor may request and Licensee shall provide the
                  identity of each such manufacturer or independent contractor
                  used by Licensee.


                  (c) Licensee shall be fully responsible to Licensor for the
                  conduct of those with whom Licensee contracts to insure
                  compliance with this Agreement.

                  (d) Licensee warrants and agrees that it shall establish and
                  maintain a program and policy of requiring Licensee's
                  suppliers of Licensed Products and Services, domestic and
                  foreign, to enter into and sign Licensee's "Purchase Order
                  Terms and Conditions" as attached hereto as Schedule B, or a
                  substantially equivalent agreement (hereinafter, "purchase
                  agreement"). Licensee shall use its best efforts to obtain a
                  signed purchase agreement from each supplier of Licensed
                  Products or Services prior to sale of such supplier's products
                  or services in Licensee's stores. Upon request of Licensor,
                  Licensee shall furnish copies of such purchase agreements to

         11.      TERMINATION

                  (a) Without prejudice to any other rights Licensor may have,
                  Licensor may terminate this Agreement, pursuant to
                  subparagraph (c):

                           (i) If Licensee shall fail to make any payments sue
                           hereunder or to deliver any of the statements
                           required hereunder;

                           (ii) If Licensee shall be unable to pay its
                           obligations when due, or shall make any assignments
                           for the benefit of creditors, or shall file any
                           petition under Chapter 11 of Title 11, United States
                           Code, or shall file a voluntary petition in
                           bankruptcy, or be adjudicated bankrupt or insolvent,
                           or if any receiver is appointed for its business or
                           property, or if any trustee in bankruptcy or
                           insolvency shall be appointed for Licensee;

                           (iii) If the quality of the Licensed Products or
                           Services should become less than that as established
                           and approved by Licensor; or

                           (iv) If Licensee shall fail to follow Licensor's
                           instructions regarding appropriate use of the marks
                           in connection with the Licensed Products or Services.

                  (b) In the event this Agreement is terminated for any reason
                  stated above, Licensee, its receivers, representatives,
                  trustees, agents, administrators, successors and/or assigns
                  shall have no right to and shall not sell, exploit or in any
                  way deal with, or in, any of the Licensed Products or Services
                  which are subject of this Agreement, or any carton, container,
                  sign, packaging or wrapping material, advertising, promotional
                  or display material pertaining thereto, except with and under
                  the written consent and instructions of Licensor.

                  (c) In the event of breach by Licensee of any provision of
                  this Agreement, Licensor shall give Licensee notice in writing
                  to rectify the breach within forty-five (45) days and if the
                  breach is not rectified within such period, Licensor shall


                  be entitled to exercise any remedies it may have hereunder,
                  provided that if such breach is capable of being rectified but
                  incapable, for whatever reason, of being rectified within the
                  said forty-five (45) days, Licensor shall delay taking action
                  so long as Licensee shall have begun to rectify such breach
                  within such period and thereafter proceeds diligently to
                  complete the rectification of the breach and such breach is
                  rectified within a reasonable period thereafter.

                  (d) This Agreement may be terminated at any time by mutual
                  written agreement of the parties.

         12.      MARKINGS

                  Subject to Licensor's instructions and approval, Licensee
                  shall periodically inform all person from whom Licensee
                  obtains Licensed Products or Services of the appropriate
                  trademark and copyright notices to be used in connection with
                  the advertising, promotion, display and sale of the Licensed
                  Products and Services.


                  Licensee warrants and agrees that all Licensed Products and
                  Services shall comply with al applicable federal, state and
                  local statutes, standards, regulations and guidelines
                  pertaining to such products or services.

         14.      NOTICES

                  All notices and statements to be given and all payments to be
                  made pursuant to this Agreement shall be sent by First Class
                  Mail, Postage prepaid, if to Licensee, to:

                                    Kmart Corporation
                                    3100 West Big Beaver Road
                                    Troy, Michigan 48084

                  and if to Licensor, to:

                                    Kmart of Michigan, Inc.
                                    3250 West Big Beaver Road
                                    Suite 329
                                    Troy, Michigan 48084

         15.      CONTROLLING LAW


                  The terms and provisions of this Agreement shall be
                  interpreted in accordance with and governed by the laws of the
                  State of Michigan. Further, the parties agree that the
                  jurisdiction and venue for any action brought by either party
                  shall be in any state or federal court within the Eastern
                  District of Michigan, Southern Division.

         16.      NO IMPLIED WARRANTIES

                  Neither party makes any warranty or representation to the
                  other except as specifically set forth herein.


                  Nothing contained herein shall be construed to place the
                  parties in the relationship of franchiser/franchisee, partners
                  or joint ventures, it being agreed and understood as well that
                  each party is an independent contractor and is not an agent or
                  employee of the other party.

         18.      FURTHER DOCUMENTS

                  Each party shall, upon request, make execute and deliver such
                  documents as shall be reasonably necessary or take such action
                  as may be reasonably requested to fully implement and carry
                  out the purposes of this Agreement.

         19.      BINDING EFFECT

                  In the event of acquisition or merger, all convenants,
                  agreements, representations, warranties and indemnifications
                  in this Agreement by and on behalf of either of the parties
                  shall bind and inure to the benefit of their respective
                  successors and permitted assignments.

         20.      ASSIGNMENT

                  This License may be assigned or sublicensed, in whole or in
                  part, upon the mutual written consent of the parties. Licensor
                  reserves the right to approve or disapprove of any proposed
                  sublicensee and/or to impose additional conditions upon
                  sublicensees regarding control and use of the Marks.

         21.      WAIVER

                  Silence, acquiescence or inaction shall not be deemed a waiver
                  of any right of either party hereunder, and a waiver shall
                  only be effective if in writing signed by the party to be
                  charges and such waiver shall not be construed to contain a
                  continuing waiver of any other breaches of a same or similar
                  type of breach specifically set forth therein.


         22.      SEVERABILITY

                  In the event that any part of this Agreement shall be deemed
                  to be invalid or illegal, then such invalid or illegal portion
                  shall, so far as possible, not affect the validity or legality
                  of the reminder of this Agreement, but the parties agree that
                  they shall meet and attempt to arrive at the modification of
                  any illegal or invalid part so as to render the same legal and
                  valid and within the keeping of the original tenor and spirit
                  of the agreement of the parties.

         23.      FORCE MAJEURE

                  Neither party shall be liable for any loss or damage caused by
                  failure or delay in the performance, observance or fulfillment
                  of any terms, obligations, provisions or conditions of this
                  Agreement (including but not necessarily limited to, the
                  failure to make any payments specifies herein) if such failure
                  or delay arises either wholly or in part from any cause
                  reasonably beyond the control of such party.

         24.      ENTIRE AGREEMENT

                  This Agreement constitutes the entire agreement between the
                  parties with respect to the licensing of the Marks, and
                  supersedes all prior negotiations, understandings and
                  agreements, if any, between the parties. This Agreement may
                  only be amended or modified by written instrument signed by
                  the parties.

         25.      TITLES AND HEADINGS

                  Titles and headings herein are for convenient reference only
                  and are not part of this Agreement.

         26.      The parties agree that the terms and conditions of this
                  Agreement shall be confidential.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates indicated below by their duly authorized representatives.

                                   KMART OF MICHIGAN, INC.
Date: __________________________   By: ______________________________________

                                   Title: ___________________________________

                                   KMART CORPORATION
Date: __________________________   By: ______________________________________

                                   Title: ___________________________________