License Agreement - Parlux Fragrances Inc. and Cosmetic Essence Inc.
LICENSE AGREEMENT
THIS AGREEMENT MADE IN THE STATE OF NEW JERSEY, THIS 3rd DAY OF MARCH,
1998, BY AND BETWEEN PARLUX FRAGRANCES, INC., a Delaware Corporation, duly
incorporated and having a principal place of business at 3725 SW 30th Avenue,
Ft. Lauderdale, Florida 33312, (referred to as the "Grantor") AND COSMETIC
ESSENCE, INC. a New Jersey Corporation, duly incorporated and having a principal
place of business at 200 Clearview Avenue, Edison, New Jersey (hereinafter
referred to as the "Licensee") and;
WHEREAS, Grantor is the owner of certain trade marks, trade names,
registrations, and/or applications therefore as well as all rights therein and
all technical knowledge with respect to products produced or marketed in
connection therewith, as further set forth in this Agreement;
WHEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
In this Agreement,
(a) "Effective Date" means the date on which this
Agreement is executed.
(b) "Know-How" includes, among other things, all technical
information, procedures, processes, trade secrets,
formulae for the perfume oil and the bulk of all the
products, methods, practices, techniques, information,
bills of parts, diagrams, drawings, specifications,
blueprints, lists of materials, labor and general costs,
production manuals and data relating to design,
manufacture, production, inspection and testing of the
Products known by, available to, used or owned by Grantor;
(c) "Products" shall be deemed to be all products sold
under the Trademarks and the trademarked names limited to
"Class 3" products, including but not limited to
cosmetics; powders; toiletries; perfumes and fragrance
products; shampoo, soaps, shower and bath gels and other
bath products; creams and lotions related promotional
products, and similar products developed and sold now or
in the future under the Trademarked names or the
Trademarks.
(d) "Territory" shall mean worldwide and without
exclusion.
(e) "Trade Marks" shall refer to those U.S. and foreign
trade marks, service marks, imprints, logos, trade dress
and trade names whether or not registered, and all issued
registrations, pending applications, or future
applications as set forth on Schedule A hereto and
relating to the name "Alexandra de Markoff" and other
names as set forth on that Schedule, limited to the
Products.
2. GRANT OF LICENSE
(1) Exclusive Grant: Grantor grants to Licensee the exclusive
right and license worldwide to utilize and exploit the Trade Marks and know how
in connection with the manufacture, distribution, marketing and sale of
products, including but not limited to:
(a) manufacture the existing Products covered by the
Trademarks;
(b) design, create and manufacture new products to be
marketed, distributed and sold under the Trademarks;
(c) distribute, use, market and sell the Products covered
by the Trademarks so manufactured; and
<PAGE>
(d) use the Trade Marks in conjunction with and as they
relate to the Products and all advertising and letter
heads and collateral promotional material; and
(e) Except as otherwise provided in the Shared Technology
Agreement, Licensee shall , consistent with the reputation
and prestige of the Trademarks, be entitled to apply the
Trade Marks to and to sell the Products within such form
of containers and packaging which in Licensee's discretion
it deems fit and proper for the particular market within
the Territory towards which such Products are to be
directed.
(f) "Shared Technology Agreement" shall mean that certain
agreement dated September 21, 1995 between Grantor and
Revlon Holdings, Inc. as amended by letter dated December
6, 1996.
(g) "Shared Technology" and "Shared Technology Products"
shall have the meaning(s) ascribed to them in the Shared
Technology Agreement, as amended.
(2) Grantor grants to Licensee the exclusive rights to use and
exploit the Know-How in the manufacture distribution, marketing and sale of the
Products.
(3) Grantor grants to Licensee, and any sublicense thereof,
during the term of this Agreement and any renewals thereof, the exclusive right
with regard to the Products to use and exhibit the name "Alexandra de Markoff",
whether as a trademark, trade name, or otherwise.
(4) Licensee acknowledges that some or all of the Know-How has
been disclosed and delivered to Licensee in confidence prior to and in
contemplation of the execution and Effective Date of this Agreement. The
remainder of the Know-How shall be furnished to Licensee as soon as practicable
after the date of execution of this Agreement but no later than 30 days after
the Effective Date.
(5) The obligation to furnish the Know-How shall extend to
Know-How existing at the date of this Agreement and to any relevant Know-How
which is acquired by Grantor during the first six months after the Effective
Date.
(6) Grantor warrants that there are no other existing licenses
for the Trade Marks with regard to the Products covered by this Agreement, and
Grantor covenants that no further disclosure to third parties will be made by it
of the Know-How relating to the Trade Marks for the Products covered by this
Agreement and Grantor shall:
(a) to the extent it owns any rights to the tooling and
molds previously used by contracted suppliers of
components for the Products, and has a right to do so,
issue instructions to such suppliers so identified not to
further use the tooling or molds otherwise then under
purchase order from Licensee and will provide to the
Licensee a full list of such suppliers not later than
three (3) weeks after the date hereof; and
(b) to the extent it holds all copyright and similar
rights in respect of items to be provided under paragraph
"6(1)" hereinbelow, grant Licensee such rights for the
Products for the term of this Agreement and any extension
thereof.
(7) Grantor warrants that the Know-How will be sufficient and
suitable to the manufacture of the Products to a quality comparable to the
quality of the sample Products furnished to the Licensee by Grantor, provided
that Licensee at all times conforms strictly to and with the Know-How.
3. OBLIGATIONS TO MAINTAIN PRESTIGE OF TRADEMARKS
Each party agrees to take such actions reasonably necessary to
maintain the prestige of the Trademarks and the reputation of quality for
products marketed thereunder. Grantor agrees that it shall not enter into any
license agreement for, or itself produce any product(s) utilizing the Trademarks
or the Trademarked name, unless such products are to be of a nature and quality
consistent with the prestige and reputation of the Products. Grantor shall
include in any license agreement relating to the Trademarks a requirement that
the licensee thereunder produce products of the highest quality consistent with
the prestige of the Trademarks and Trademarked names, and that Licensee shall do
no act inconsistent with such prestige and reputation for quality.
<PAGE>
4. SUBLICENSES/ASSIGNMENTS
(1) Licensee may in its discretion assign this Agreement or
appoint sublicensees for the Products within the Territory. In the event of such
Sublicense or assignment, Licensee unless expressly released in writing by
Grantor, shall remain liable as a direct obligor for performance of all terms
under this Agreement, including but not limited to maintaining the quality and
prestige of the Trademarks and payment of all Licensing Fees.
5. TERM OF AGREEMENT
(1) Initial Term. The initial term of this Agreement shall
be ten years.
(2) First Extended Term. In the event there is no material
uncured default under the terms of this Agreement, this Agreement shall renew
for an additional ten year term. (The First Extended Term). In the event there
is a material uncured default, the non-defaulting party may elect to not renew
this Agreement upon written notice to the other at least 30 and not more than 60
days prior to the end of the Initial Term.
(3) Second Extended Term. In the event there is no material
uncured default under the terms of this Agreement, this agreement shall renew
for an additional five year term. (The Second Extended Term). In the event there
is a material uncured default, the non-defaulting party may elect to not renew
this agreement upon written notice to the other at least 30 and not more than 60
days prior to the end of the First Extended Term.
(4) Subsequent Terms. After the Second Extended Term, this
agreement shall renew for successive five year terms unless the Licensee
provides written notice to Grantor at least 180 days prior to the end of the
Second Extended Term or any subsequent renewal Term of its intent to not so
renew.
6. OBLIGATIONS OF GRANTOR
(1) Marketing Information: To the extent they exist and are
available, Grantor shall for a period of six months after the Effective Date
provide at its cost to the Licensee sample marketing information such as
installation instructions, technical data and manuals as may be necessary to
promote the sale of the Products, including trade advertisements and promotional
literature, if requested by Licensee. Grantor, if requested by Licensee, shall
also furnish Licensee at Grantor's cost with available art work, transparencies,
and the like, used by Grantor in any advertising and merchandising campaigns
related to the Products. In addition, to the extent such items were issued by
Grantor or Grantor's previous distributors in advertising and merchandising
campaigns related the Products and for their packaging. Grantor shall upon
request provide same to Licensee. If such items are not in the possession of
Grantor, it shall use its best efforts to obtain and deliver same and shall
charge Licensee no more than its own cost therefor. Licensee shall be
responsible for any model fees or other third party charges for use of same in
connection with the sale of the product to the extent such fees or charges are
incurred after the effective date of this Agreement.
(2) Transitional Assistance: Grantor agrees for a period of
six months to assist Licensee and its customers within the limits of its
reasonable ability in providing information related to solving problems they may
have in connection with the Products.
(3) Technical Assistance: For a period of six months after the
effective date of this Agreement, upon the written request of Licensee, Grantor
shall render all Know-How, training and technical assistance necessary to be
provided by Grantor under this Agreement at times and places mutually agreed
upon and subject to the availability of Grantor's personnel and facilities.
Licensee shall be responsible for the travel, meals and lodging expenses of
Grantor's personnel.
7. GRANTOR AND LICENSEE'S PROHIBITIONS
Neither Grantor nor any of its affiliates or licensees (or the
heirs, successors, or assigns of any of the foregoing) shall sell, directly or
indirectly, any Products under the Trademark, establish any branch or maintain
any office or depot in relation to the Products, or in any way seek to exploit
the Trademark or otherwise use the name "Alexandra de Markoff" in connection
with the sale of items competing with the Products.
8. CONSIDERATION
(1) As consideration for the license of the Trade Marks and
Know How and Grantor's other obligations hereunder, Licensee agrees to pay the
<PAGE>
Grantor a license fee of $500,000 each year of the Initial Term, the First
Extended Term, and the Second Extended Term that this Agreement is in effect and
$100,000 per year for each year of any subsequent terms after the Second
Extended Term. Said license fee shall be paid quarterly in arrears on the
following dates: May 1, August 1, November 1, February 1.
9. WARRANTY RE: TRADE MARKS AND KNOW-HOW
(1) Power to Grant Rights: Grantor warrants that it has the
right to grant the rights granted in this Agreement and that it has granted no
other rights or licenses which would derogate from the rights granted in this
Agreement.
(2) Notice of Infringement: Each party hereto shall advise the
other promptly of any instances of infringements, limitations, illegal use or
misuse of any Trade Mark. Licensee shall have the right to commence legal action
for the enforcement of any such Trade Marks in the Territory. Grantor and
Licensee shall cooperate fully in the prosecution of any such action free of
charge, and each agrees that it shall be joined as a party plaintiff to the
action and authorizes such joinder. Each shall have the right at its own expense
to retain independent counsel or shall designate an individual of its choosing
who shall be kept fully informed of all issues in the action, who shall be
advised in advance of each new step in the action, and who shall be entitled
promptly to receive copies of all pleadings, documents and correspondence
regarding the action.
(3) Additional Representations and Warranties of Grantor:
(a) Each Trademark is, and all registrations and
applications relating thereto are, to the best of
Grantor's knowledge and belief, valid and subsisting and
in full force and effect as of the date hereof.
(b) To the best of Grantor's knowledge and belief, no
Trademark and, except as disclosed in the Shared
Technology Agreement, none of the Know-How infringes upon
the rights of any other person, firm or entity within the
Territory nor has any person claimed that any Trademark or
any Know-How has infringed the rights of any person, firm
or entity in the Territory within the past five (5) years.
(c) Annexed hereto as Schedule "B" hereof is a true,
accurate and complete schedule and copies of all
registrations and applications for each U.S. Trademark and
to the best of Grantor's knowledge and belief for each
foreign Trademark within the Territory, including a
schedule of the dates of the applications or registrations
or renewals thereof as the case may be, and the expiration
dates of each Trademark. Grantor agrees to provide a
computer diskette containing all registration information
for use by Licensee.
(d) All of the U.S. Trademarks and, to the best of
Grantor's knowledge and belief, all foreign Trademarks,
are owned by the Grantor free and clear of all claims,
liens and encumbrances, except for certain liens in favor
of G.E. Capital Corp., Grantor represents and warrants
that it shall cause such lien to be satisfied and removed
no later than 30 days after receipt of the final payment
for inventory purchased by Licensee from Grantor under a
separate agreement between the parties regarding the Sale
of Certain Assets.
(e) The Products manufactured and/or sold by Grantor prior
to the Effective Date are, to the best of Grantor's
knowledge and belief, fit for the use intended, have been
manufactured, sold and distributed in compliance with all
applicable law, rules and regulations within the Territory
including, but not limited to, all Administration and the
U.S. Bureau of Alcohol Tobacco and Firearms and conform in
all respects to all applicable laws within the Territory.
(f) Grantor has not granted in the Territory any license,
franchise or permit to any third party to use any of the
Trademarks or Know-How as they relate to the Products
except in the ordinary course of its business.
(g) None of the Trademarks in the U.S. and to the best of
Grantor's knowledge and belief outside the U.S. in the
Territory, is subject to any outstanding order, decree,
judgment, stipulation, restriction, or agreement limiting
the scope or the use of any of the Trademarks.
<PAGE>
(h) Except as disclosed on Schedule C hereto, Grantor has
not entered into any agreement relating to the Trademarks
or Products.
(i) To the best of Grantor's knowledge there are no
pending or threatened claims relating to the Trademarks or
the manufacture, distribution or sale of the products,
except as are specifically disclosed in writing on the
annexed Schedule D.
10. INDEMNITY FOR TRADE MARK ACTIONS
(1) Indemnity re Trade Marks: For one year after the Effective
Date, Grantor will defend Licensee, its subsidiaries, affiliates, sublicensors,
customers, distributors, directors, officers, representatives, agents,
successors and assigns against any claim that the sale of any of the Products
infringes Trade Marks in the Territory in the Territory in which Grantor has
registered its Trade Marks, and Grantor will pay resulting costs, damages and
legal fees finally awarded up to a maximum of the Royalties to which Grantor is
entitled under this Agreement provided, however, that Licensee shall promptly
notify Grantor in writing of the claim.
11. REGISTRATIONS, MAINTENANCE AND FILINGS
(1) Registrations and Approvals of Trade Marks: Grantor shall
be responsible for maintaining the Trade Marks in full force and effect
throughout the term of this Agreement, and, for any registration of the Trade
Marks beyond registrations which already exist in the Territory. Licensee shall
reimburse Grantor its actual out of pocket costs for same within 45 days of
receiving an invoice for same. .
(2) Maintenance of Trade Marks: Grantor shall follow-up and
advance all renewal registration fees and otherwise maintain the rights in the
Trade Marks in the Territory where presently maintained. Grantor further agrees
(a) to instruct this local trade mark and patent agent(s) to keep Licensee fully
and completely informed of all action taken or scheduled to be taken in respect
of the trade marks and to cooperate with Licensee to take such actions as need
be taken to maintain such trade marks, and (b) to notify Licensee at the time it
makes an application for a patent or trade mark or acquires any right in a
patent or trade mark which is or becomes subject to the terms of this Agreement.
(3) Assistance re: Prosecution: Grantor shall render all
possible and reasonable assistance, if so requested by Licensee in the
prosecution of any future patent or Trademark applications in the Territory and
shall do all things in its power towards maintaining the validity and
enforceability of any Trademarks which may have issued or which may issue in
respect of such applications. Grantor shall render all practicable assistance,
if so requested by Licensee, in connection with and in support of any
application by Licensee for the extension of the terms of any Trademarks without
cost to Grantor. If Grantor will incur costs, it will so advise Licensee, and
Licensee may elect to pay same.
(4) Preemption right re: Trade Marks: Grantor shall have no
right to transfer mortgage, hypothecate, pledge, or otherwise create a lien in
or with regard to the Trademarks or Grantor's reversionary interest therein.
During the term of this Agreement and for one year thereafter,
except in the event of Licensees uncured default as set forth in paragraph 19
hereof. Grantor shall have a right of both first refusal and of last refusal in
the event Grantor wishes to sell its interests in the Trademark and Know How.
12.1 TRADE MARKS AND OTHER PROPRIETARY MARKS
(1) Description as Authorized Licensee: Licensee is
authorized, but not obligated, to describe, refer to and advertise itself as a
licensee of Grantor for the manufacture of the Products in the Territory.
(2) Display of Trade Mark: Licensee may display on all of the
packaging and containers for Products manufactured and offered for sale, the
Trade Marks (see Schedule "A" hereof). Where reasonable or appropriate, uses of
the Trademarks by Licensee shall indicate either "TM" or "R", as is appropriate.
Below this identification or trade mark Licensee may affix an additional mark
showing that the manufacture has been made in the workshops of Licensee. Text
and size, however, shall not exceed one-half of the size of the Trade Marks.
(3) Modification to the Trade Marks: Licensee shall not make
any material modifications to the Trade Marks without the express written
consent of the Grantor. Grantor shall not withhold its consent except based on
reasonable basis with objective criteria establishing a likelihood of damage to
<PAGE>
the value and prestige of the Trademarks. Failure by Grantor to object within 30
days of receipt of written notice of any proposed modification shall be the
equivalent of consent.
13. LICENSEE'S INDEMNITY OF GRANTOR
(1) No Warranty: Except as otherwise set forth in this
Agreement, Grantor makes no warranty with respect to the Know-How or Products.
Licensee shall indemnify and save Grantor harmless from all loss, costs or
damages which Grantor may suffer or pay as a result of claim or suits arising
out of any injuries to persons and/or damage to property due to or arising out
of or relating to any acts, duties or obligations or omissions of Licensee or of
any personnel employed or otherwise engaged by Licensee to perform Licensee's
obligations under this Agreement, and Licensee shall, at the request of Grantor,
assume the defense of any demand, claim, action, suit or proceeding brought
against Grantor by any reason thereof and pay any and all damages assessed
against or that are payable by Grantor as the result of the disposition of any
such demand, claim, action, suit or proceeding. Without limiting the generality
of the foregoing, Licensee agrees to indemnify and save Grantor, its directors,
officers, employees and agents and their respective heirs, executors,
administrators, successors and assigns and each of them harmless of and from any
and all manner of action, causes of action, claims, liabilities, debts,
covenants, contracts, accounts, duties, demands, damages or expenses whatsoever,
directly or indirectly suffered by it or them in connection with or otherwise
related to product liability, personal injury and property loss of, to or
experienced by third parties in relation to the Products manufactured after the
Effective Date. Grantor agrees to indemnify, defend and save Licensee, its
directors, officers, employees and agents and their respective heirs, executors,
administrators, successors and assigns and each of them harmless of and from any
and all manner of action, causes of action, claims, liabilities, debts,
covenants, contracts, accounts, duties, demands, damages or expenses whatsoever,
directly or indirectly suffered by it or them in connection with or otherwise
related to product liability, personal injury and property loss of, to or
experienced by third parties in relation to the Products manufactured prior to
the Effective Date or any wrongful acts or omission of Grantor, its officers,
directors, agents or employees. Grantor agrees for at least one year after the
Effective Date to continue to carry products liability insurance coverage
insuring against any such claim(s) with minimum limits of at least $1,000,000
per occurrence.
14. CONFIDENTIALITY
(1) Confidential Information: All information, including the
Know-How, (other than information generally known in the industry or
information) ("Confidential Information") supplied by or on behalf of Grantor
pursuant to this Agreement shall be treated as confidential by Grantor and shall
be used solely to enable Licensee to manufacture, use, sell and develop a market
for the Products in accordance with this Agreement.
(2) Duty Not to Disclose:Grantor covenants and agrees that no
Confidential Information by or on behalf of Grantor in the manner described or
otherwise shall be disclosed to anyone outside the organization of Licensee (or
to its attorneys and accountants so long as same are bound to keep such
information confidential) without the prior written consent of Licensee unless
otherwise required by law but only after reasonable prior written notice of same
to Licensee.
(3) Reasonable Efforts: Grantor agrees to use all reasonable
efforts to take such actions as may be appropriate to prevent the unauthorized
use and disclosure of, and to keep confidential all such Confidential
Information, including:
(a) ensuring that such Confidential Information is
disclosed only to responsible employees of Licensee who
have first been properly instructed to maintain such
Confidential Information in confidence;
(b) save as above not disclosing to any third party the
terms and conditions of this Agreement;
(c) save as above not disclosing methods of manufacture or
sale of the Products including production and marketing
plans; and (d) safeguarding as far as practicable the
confidential information against theft, damage or access
by unauthorized persons.
15. LICENSEE'S STATUS
(1) Independent Parties: The relationship between Licensee and
Grantor is intended to be and shall be that of independent parties, and Licensee
and its employees, agents and representatives shall under no circumstances by
<PAGE>
considered agents, partners, joint venturers, or representatives of Grantor.
Neither party shall act or attempt to act, or represent itself, directly or by
implication, as agent, joint venturer, partner or representative of the other or
in any manner assume or attempt to assume or create any obligations or liability
of any kind, nature or sort, express or implied, on behalf of or in the name of
the other.
(2) No Franchise: The relationship created by this Agreement
does not constitute the granting of a franchise to Licensee by Grantor and no
federal or provincial franchise statute, law, regulation or rule is intended to
or has been applied by the parties, nor shall any such franchise, statute, law,
regulation or rule be deemed or construed to apply to the formation, operation,
administration or termination of this Agreement.
16. APPLICABILITY OF SECTION 365; WAIVER OF DISCHARGE
The parties acknowledge that this contract is not an executory
contract.
The parties also acknowledge that they intend the grant of
rights and Know How to be a grant of intellectual property rights such that same
will fall within the provision of Section 365 (n) of the United States
Bankruptcy Code.
The parties in any event acknowledge and agree that during the
term hereof Licensee shall in reliance on the terms and conditions of this
agreement, invest substantial time, effort, and funds in maintaining, developing
and expanding the Trademark(s) and related Know How. In consideration of same
and of Licensee's obligations hereunder, and as material inducement to Licensee
to enter this Agreement, Grantor agrees and warrants that in the event Grantor
files for protection under the provisions of the United States Bankruptcy Code
(or of any other Country), it shall not seek to reject this contract or to avoid
or discharge its obligations under this agreement pursuant to Section 365
thereof or otherwise.
In the event CEI files for bankruptcy and thereafter this
contract is avoided or rejected, all rights in the Trademarks shall revert to
Grantor.
17. TRANSITIONAL PROVISIONS
(1) General: Each party agrees to provide the other its
cooperation and assistance for at least six months following the Effective Date
of this Agreement.
(2) Filling Purchase Orders: Grantor agrees to provide
Licensee all purchase orders relating to the Products received by Grantor after
the Effective Date of the Agreement. Said purchase orders shall be filled by and
for the account of Licensee.
(3) Allocation of Receipts: Grantor shall retain the right to
collect and retain payment for any goods shipped prior to the Effective Date.
Licensee shall have the right to collect and retain payment for any Products
filled or shipped after the Effective Date. Grantor agrees that for up to 30
days after the Effective Date, it will, at Licensee's request, perform invoicing
services on behalf of Licensee. Each party agrees that it shall promptly turn
over to the other remittances received by such party which properly belong to
the other.
(4) Returns: Licensee shall have full title and ownership
right in and to any product returned after the Effective Date. Licensee shall
assume responsibility for any credit or chargebacks occurring after the
Effective Date. Notwithstanding the foregoing in the event the returns received
after the Effective Date attributable to Product shipped by Grantor exceed the
aggregate of $100,000.00 (the "Excess"), Grantor shall be responsible for same.
Licensee may, at its option, take any such Excess as a credit on a dollar for
dollar basis against any monies due Grantor hereunder. If such Product is
reasonably reusable, said credit shall be after deducting the standard
production cost of Products returned, net of Licensee's hard refurbishing
charges. In the event of such credit, Licensee shall give Grantor detailed
written notice documenting such return. In no event will Grantor be responsible
or charged for Products authorized by Licensee or its agents to be "destroyed in
the field" after the Effective Date. In the event of a store closing, Licensee
will take reasonable steps to cause the store to sell through the Products
rather then returning same.
18. RECORDING OF AGREEMENT; DISCLOSURE
This Agreement may be recorded or filed with any governmental
agency or official as determined to be appropriate by either party hereto or as
may be required by law or court order.
<PAGE>
19. DEFAULT BY LICENSEE
In the event Licensee fails to make payment of any license fee
as required by paragraph 8 above or payment of any cost billed pursuant to
paragraph 10(1) hereof, , Grantor shall provide Licensee written notice thereof.
Licensee shall have 30 days after Licensee's receipt of such notice to cure such
nonpayment. Interest shall accrue on any late payment at an annual rate of 18%
from the date of such notice to the date paid.
In the event at any time two payments (or portions thereof)
aggregating $250,000 in license fee payments (exclusive of interest as provided
for above) remain outstanding at the expiration of the second cure period (i.e.
30 days after notice of the second outstanding payment), Grantor may terminate
this Agreement upon written notice to Licensee. Notwithstanding the provisions
of paragraph 26, said notice shall be effective if delivered by either (a) hand
delivery with evidence of receipt by Licensee; or (b) by certified mail, return
receipt requested.
In the event of such Default, Grantor shall have the right in
its option, to terminate this Agreement and purchase from Licensee at book
value, all then existing equipment and/or inventory and/or Products, or to deem
the First and Second Extension Terms to have been exercised and to accelerate
all unpaid License Fees for the Initial Term, First Extended Term and the Second
Extended Term in which event all such fees for such terms shall then be due in
full.
20. DISPUTE RESOLUTION
All disputes, controversies or claims arising out of or in
connection with or in relation to this Agreement, including any questions
regarding its existence, validity to termination may be submitted to and be
subject to binding arbitration under the auspices of the American Arbitration
Association. One (1) arbitrator shall be chosen by Grantor and one (1)
arbitrator shall be chosen by Licensee. The third arbitrator shall be jointly
chosen by the arbitrators selected by Grantor and Licensee. The arbitration
shall be held in the State of New Jersey. The decision of the arbitrators shall
be final and binding on the parties hereto and may be enforced by any court of
competent jurisdiction, unless such arbitration procedure, either before the
commencement or prior to the issuance of the arbitrator's finding(s) and award
is preempted by the commencement of judicial proceedings in the U.S. Bankruptcy
Court, or other court of competent jurisdiction solely to the extent a request
for equitable relief is being sought therefrom.
21. EXTENDED MEANINGS
Words importing the singular number include the plural and
vice versa, and words importing gender include all genders.
22. INTERPRETATION NOT AFFECT BY HEADINGS
The division of this Agreement into paragraph and the
insertion of heading are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
23. APPLICABLE LAWS
This Agreement shall be deemed to have been made, executed and
delivered in New Jersey and any controversy arising under or in relation to this
Agreement shall be subject to the jurisdiction of the State or Federal Courts of
New Jersey and shall be governed by and construed in accordance with applicable
federal law and the laws of the State of New Jersey.
24. ENTIRE AGREEMENT
This Agreement and a Contract For Sale of Assets related to
the Trademarks executed contemporaneous herewith constitute the entire agreement
of the parties hereto with respect to the subject-matter hereof. There are no
representations, undertakings or agreements of any kind between the parties
hereto respecting the subject-matter hereof except those contained in this
Agreement.
25. SEVERABILITY
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
or the Agreement as a whole.
<PAGE>
26. NOTICES
(1) Any notice or other documents required or permitted to be
given under this Agreement shall be in writing and shall be delivered, mailed by
prepaid registered mail, return receipt requested or sent by telex or telecopy
addressed to the party or parties to whom it is to be given at the address shown
below or at such other address or addresses as the party or parties to whom such
writing or documents is to be given shall have last notified all other parties
in accordance with the provisions of this paragraph:
(a) If to Licensee at:
Cosmetic Essence Inc.
200 Clearview Avenue
Edison, New Jersey 08818
Attn: John Croddick
with a copy to: W. Lane Miller, Esq.
Miller & Chudzik, Esqs.
3 Auer Court
East Brunswick, New Jersey 08816
(b) If to Grantor at:
Parlux Fragrances, Inc.
3725 SW 30th Avenue
Ft. Lauderdale, FL 33312
Attn: Zalman Lekach
with a copy to: Mitchell R. Schrage, Esq.
Issler & Schrager, L.L.P.
65 E 55 Street
New York, New York 10022
(2) Any such notice or other document shall:
(a) if delivered, be deemed to have given and received at
the place of receipt on the date of delivery, provided
that if such date is a day other than a business day in
the place of receipt, such notice or documents shall be
deemed to have been given and received at the place of
receipt on the first business day in the place of receipt,
thereafter;
(b) if transmitted by telex or telecopy, be deemed to have
been given and received at the place of receipt on the
next business day in the place of receipt, thereafter;
(c) if mailed, be deemed to have been given and received
at the place of receipt on the date of actual receipt.
(3) In the event of postal disruption, such notices or
documents must either be delivered personally or sent by
telex or telecopy.
27. AMENDMENT OF AGREEMENT
None of the terms, conditions or provisions of this Agreement
shall be held to have been changed, waived, varied, modified or altered by any
act or knowledge of either party hereto, their respective agents servants or
employees unless done so in writing signed by both parties hereto.
28. WAIVER OF BREACH
No waiver on behalf of any party hereto of any breach of the
provisions shall be effective or binding on such party unless the same shall be
expressed in writing and any waiver so expressed shall not be expressed in
writing and any waiver so expressed shall not limit or affect such party's
rights with respect to any future breach of any of the provisions of this
Agreement.
29. FURTHER ASSURANCES
Each of the parties hereto covenants and agrees that he, his
heirs, executors, administrators, successors and permitted assigns will execute
such further documents and do and perform or cause to be done and performed such
further and other acts as may be necessary or desirable from time to time in
order to give full effect to the provisions of this Agreement.
<PAGE>
30. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and enure to the benefit of
the successors and assigns of both parties hereto and all persons or
corporations succeeding to or acquiring the business now carried on by Grantor
or Licensee.
31. TIME
When calculating the period of time within which or following
which any act is to be done or step taken, the date which is the reference day
in calculating such period shall be excluded.
32. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
33. CLOSING OF AGREEMENT AND CONDITIONS THERETO
(1) The Closing of this Agreement shall be deemed to have
occurred upon delivery by Licensee to Grantor of the consideration set forth in
the Contract for Sale of certain Assets dated March 3, 1998.
34. LICENSEE ABLE TO PERFORM.
Licensee has had full disclosure and had opportunity to do due
diligence to the extent it determined to be necessary and reasonable in regard
to the Grantor's Alexandra de Markoff business. Licensee is familiar with
Grantor's efforts and difficulties concerning said business and Licensee
acknowledged that Grantor had made no representation as to the operation of said
business other than is contained herein. Licensee also acknowledges that they
are aware that the Grantor is presently in a redesign and repackaging phase of
the business and Licensee will assume such efforts to the extent it determines
to be appropriate or necessary.
Licensee represents that it is capable of manufacturing the Products,
has experience in the manufacturing of such products and is aware of the
difficulties inherent in the manufacturing, sale and distribution of a cosmetic
brand and that it has sufficient and adequate marketing staff, sales staff,
sales administration and customer service staff, forecasting, packaging
development and electronic data interchange capability sufficient to conduct the
anticipated cosmetic business.
Licensee acknowledges that Grantor shall have no liability in regard to
Licensee's success or failure of the anticipated cosmetic brand contemplated by
the subject license.
35. PARTIES RIGHT TO SET OFF:
The parties acknowledge that they anticipate executing
separate contracts in which Cosmetic Essence, Inc. (Licensee here) or one of its
affiliated companies will continue to render services for and on behalf of
Parlux Fragrances, Inc. (Grantor here).
The parties agree that either party may at any time cause
monies due from Parlux to Cosmetic Essence, Inc. to be applied as a credit
against the license fee due pursuant to this Agreement; however except as agreed
between the parties in a separate writing, said set off shall not during any
contract year exceed one half the annual license fee due.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
Parlux Fragrances, Inc.
Grantor
/s/ Zalman Lekach
Zalman Lekach, President & COO
Cosmetic Essence, Inc.
Licensee
/s/ John Croddick
John Croddick, President