License Agreement - Paris Hilton Entertainment Inc. and Parlux Fragrances Inc.
LICENSE AGREEMENT
This LICENSE AGREEMENT ("Agreement") is made and effective as of the
1st day of June, 2004, by and between PARIS HILTON ENTERTAINMENT INC., with
offices at 250 North Canon Drive, 2nd Floor, Beverly Hills, CA 90210
("Licensor"), and PARLUX FRAGRANCES, INC., a public Delaware corporation with
offices at 3725 S.W. 30th Avenue, Ft. Lauderdale, Fl. 33312 ("Licensee")
(together the "Parties").
W I T N E S S E T H :
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WHEREAS, by way of a master license (the "Master License") from Ms.
Paris Hilton, an individual with a mailing address of c/o Ms. Wendy White, 250
North Canon Drive, 2nd Floor, Beverly Hills, CA 90210, to Licensor, Licensor has
the sole and exclusive rights to license the Licensed Mark (as hereinafter
defined) pursuant to the terms hereof; and
WHEREAS, Licensee is engaged in the business of manufacturing,
promoting and selling Articles (as hereinafter defined) and Licensor desires to
obtain the services of Licensee in connection with the manufacture, promotion
and sale of the Articles bearing the Licensed Mark; and
WHEREAS, Licensor is willing to grant the license contained in this
Agreement and Licensee desires to obtain from Licensor, the exclusive right and
license to use the Licensed Mark in the Territory (as hereinafter defined) for
use on and in connection with the manufacture, promotion, distribution and sale
of Articles.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto covenant and agree as follows:
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ARTICLE 1
Definitions
The following definitions shall apply:
A. TERRITORY. All countries of the world and all duty-free-shops,
ships, airplanes, military bases and diplomatic missions of
every country of the world, including the world-wide web.
B. ARTICLES. Men's and women's fragrances and related personal
care products such as body lotion, body creme, body mist, hand
creme, bath and shower gel, massage oil, dusting powder, after
shave, after shave balm or gel, deodorant stick and bath soap,
which bear the Licensed Mark under this Agreement. Licensee
shall have the right of first refusal for cosmetics, skin care
products and home/environmental products such as candles,
potpourri and incense (the "Additional Products") pursuant to
Article 2 hereof.
C. LICENSED MARK. The trademark PARIS HILTON and such other
trademarks as are, from time to time, agreed to by Licensor.
Licensor has filed to register the Licensed Mark in the United
States Patent and Trademark Office in International Class 3
for fragrances on May 5, 2004, Serial No. 78/412749.
D. NET SALES. The sales price at which Licensee or any Subsidiary
or Affiliate (as hereinafter defined) bills its Non-Subsidiary
or Affiliate customers for Articles less: (i) all returns of
damaged, defective or other merchandise, uncollectible
accounts, trade and cash discounts and allowances, and taxes
directly applicable to the sale of Articles (such as sales,
use, value added or similar taxes); (ii) all freight and
shipping charges, insurance costs and duties and other
governmental charges paid by the Licensee to the extent stated
separately on any invoice; (iii) all receipts from the sale of
discontinued and close-out merchandise (which shall include
only Articles sold at a discount of 25% or more from the
normal price charged to that specific customer and then only
to the extent that the aggregate gross sales thereof in any
contract year do not exceed fifteen percent (15%) of total
gross sales); and, (iv) all receipts from the sale of samples,
displays, brochures, gift-with-purchase and similar
advertising and promotional materials and packaging supplies.
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Notwithstanding the terms of sub-section (iii) above, Licensee
shall not be excused from paying royalties on the sales of the
Articles in which the Licensee receives a minimum gross margin
of 25%, in which gross margin is defined as sales price to the
customer less Licensee's cost of goods and shipping.
E. SUBSIDIARY. Any corporation or other entity which is 100%
directly or indirectly owned by Licensee.
F. AFFILIATE. Any corporation or other entity which is at least
50% owned by Licensee.
ARTICLE 2
Grant Of License Rights
Rights Granted. Upon the terms and conditions of this Agreement,
Licensor hereby grants to Licensee, during the term of this Agreement, the sole
and exclusive right and license to use the Licensed Mark in the Territory as a
trademark in connection with the manufacture, promotion, sale and distribution
solely of the Articles and on all brand identifications, packing materials,
containers, promotional material, publicity, sales, advertising, newspaper,
magazine, radio, television, cinema and similar media presently existing or that
may exist in the future, in connection solely with the creation, manufacture,
introduction, marketing, distribution, sale and advertising of the Articles,
through the channels customarily used to manufacture, sell, distribute,
advertise and promote Articles of comparable prestige and quality in the
ordinary course of business as described in paragraph A of Article 7 below.
Licensor shall not, during any period this Agreement is in effect, grant any
rights to any third party in connection with the Articles for the Trademark or
any other trademark which includes PARIS HILTON or any derivative thereof.
Right of First Refusal. Licensee shall have the right of first refusal,
subject to the terms set forth below, to manufacture and distribute the
Additional Products within the Territory. If Licensor desires to appoint a third
party as the licensee for the Additional Products in all or part of the
Territory, Licensor shall first present Licensee with the third party's proposed
terms. Licensee shall, within thirty (30) days following receipt of such terms,
elect whether to become the licensee for such Additional Products or to decline
such opportunity.
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ARTICLE 3
Exclusively of License
Licensor will not grant any other license effective during the term of
this Agreement for the use of the Licensed Mark on or in connection with the
Articles in the Territory. Licensor and Ms. Paris Hilton may use or grant others
the right to use the Licensed Mark on or in connection with goods of all other
types and descriptions in the Territory. Licensor acknowledges that Licensee
presently manufactures and/or distributes in parts of the Territory articles
similar to the Articles covered by this Agreement which bear other trademarks.
Licensor further acknowledges and consents to Licensee obtaining other
additional licenses for the manufacture and/or distribution of other similar
lines during the term of this Agreement. Licensee will not, during the term of
this Agreement and thereafter, attack either Licensor's title in and to the
Licensed Mark or the validity of this License.
ARTICLE 4
Term of Agreement
Subject to the rights of termination set forth in this Agreement, the
initial term of this Agreement shall commence on June 1, 2004 and terminate on
June 30, 2009 (the "Initial Term").Licensee shall have the option to renew this
Agreement for an additional five-year period as long as the Minimum Royalties
(as hereinafter defined) for the Initial Term have been fully paid. Licensee
shall notify Licensor of its intent to either renew or not renew no later than
December 31, 2008.
Each twelve (12) month period commencing on each July 1st and ending on
June 30th shall constitute and be referred to herein as an "Annual Period."
However, the initial Annual Period shall commence on June 1, 2004 and shall
terminate on June 30, 2005.
ARTICLE 5
Confidentiality
The Parties acknowledge that all information relating to the business
and operations of Licensor and Licensee which they learn or have learned during
or prior to the term of this Agreement is confidential. The Parties acknowledge
the need to preserve the confidentiality and secrecy of such information and
agree that, both during the term of this Agreement and after the expiration or
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termination hereof, they shall not use or disclose same, and shall take all
necessary steps to preserve in all respects such confidentiality and secrecy.
The provisions of this paragraph shall not apply with respect to any information
which has entered the public domain through no fault of Parties. The provisions
of this paragraph shall survive the expiration or termination of this Agreement.
ARTICLE 6
Duties of Licensee
A. Best Efforts. During the term of this Agreement, Licensee will use
its best efforts to exploit the rights herein granted throughout the Territory
and to sell the maximum quantity of Articles therein consistent with the high
standards and prestige represented by the Licensed Mark.
B. Design and Sample making. Licensor shall not be responsible for the
production, design or sample making of the Articles and Licensee shall bear all
costs related thereto.
ARTICLE 7
Quality Standards
A. Manufacture of Articles; Quality Control.
(i) The contents and workmanship of Articles shall be at
all times of the highest quality consistent with the
reputation, image and prestige of the Licensed Mark
and Articles shall be distributed and sold with
packaging and sales promotion materials appropriate
for such highest quality Products. The parties agree
that the Articles shall be of such premium quality,
prestige and price similar to that of the Calvin
Klein, Ralph Lauren (excluding Purple Label), and
Tommy Hilfiger fragrances as of the date of this
Agreement.
(ii) All Articles shall be manufactured, labeled, sold,
distributed and advertised in accordance with all
applicable national, state and local laws and
regulations.
(iii) Licensee shall submit to Licensor for approval the
two sets of the fragrance, scent, packaging and other
material, designs, sketches, colors, tags, containers
and labels (the "Approval Package") for Licensor's
review, which approval shall not be unreasonably
withheld. In the event that Licensor does not respond
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to Licensee within 10 days of the receipt of any and
all items within the scope of the Approval Package,
any such item shall be deemed approved.
(iv) During the term of this Agreement, upon Licensor's
request, Licensee shall submit, free of charge to
Licensor, the then current production samples of each
Article marketed. Production samples submitted by
Licensee for this purpose may be retained by
Licensor. Further, Licensee shall provide Licensor
with 100 samples of the various Articles being
distributed each year for Licensor to use for public
relations and promotional purposes. All Articles to
be sold hereunder shall be at least equal in quality
to the samples presented to the Licensor. Licensor
and its duly authorized representatives shall have
the right, upon reasonable advance notice and during
normal business hours, at Licensor's expense, to
examine Articles in the process of being manufactured
and to inspect all facilities utilized by Licensee in
connection therewith.
B. Required Markings. Licensee shall cause to appear on all
packaging of Articles, (i) "the trademark, PARIS HILTON" is
licensed to "Parlux Fragrances, Inc."; and such additional
legends, markings and notices complying with the requirements
of any law or regulation in the Territory and (ii) such
legends, markings and notices as Licensor, from time to time,
may reasonably request.
C. Distribution. In order to maintain the reputation, image and
prestige of the Licensed Mark, Licensee's normal distribution
patterns shall consist of those retail establishments whose
location, merchandising and overall operations are consistent
with the products described in paragraph A (i) of Article 7
above.
D. Sales Force. During the term of this Agreement, Licensee shall
maintain a non-exclusive sales force suitable to carry out the
purpose of this Agreement.
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ARTICLE 8
Guaranteed Minimum Royalty
In consideration of both the license granted and the services to be
performed by Licensor hereunder, Licensee shall pay to Licensor an annual
Guaranteed Minimum Royalty as follows:
ANNUAL PERIOD GUARANTEED MINIMUM ROYALTY
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Year 1 (6/1/04-6/30/05) *(due upon execution hereof)
Year 2 (7/1/05-6/30/06) *
Year 3 (7/1/06-6/30/07) *
Year 4 (7/1/07-6/30/08) *
Year 5 (7/1/08-6/30/09) *
In the event that the Initial Term of this Agreement is extended for an
additional five-year term (July 1, 2009 - June 30, 2014, the "Extended Term")
the Guaranteed Minimum Royalty for each Annual Period of the Extended Term shall
be *.
The Guaranteed Minimum Royalty payable for each Annual Period shall be
paid to Licensor on a monthly basis in 12-equal installments on the first of
every month starting with the payment of the Guaranteed Minimum Royalty for Year
2 on July 1, 2005.
The Guaranteed Minimum Royalty for each Annual Period shall be credited
against the Sales Royalty for only the same Annual Period as provided in Article
9 below.
The Guaranteed Minimum Royalty for each renewal term will be limited to
the Guaranteed Minimum Royalty corresponding to the year in progress.
ARTICLE 9
Sales Royalty; Withholding Taxes
A. Licensee shall pay to Licensor a Sales Royalty on each Annual
Period's Net Sales of *. The Sales Royalty payable hereunder
shall be accounted for and paid on a quarterly basis within
forty-five (45) days after the close of the prior quarter's
sales, along with the Guaranteed Minimum Royalty that may be
due. In other words, the actual Sales Royalty will be paid
45-days in arrears computed on the basis of Net Sales during
the quarter ending 45 days before the period upon which
royalties are being paid, with a credit for
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any Guaranteed Minimum Royalty and Sales Royalty payments
previously made to Licensor.
B. If applicable, Licensee shall compute any payment, on behalf
of Licensor, for all taxes (other than United States Federal,
state or local income taxes) which any governmental authority
in the Territory may impose on Licensor with respect to
royalties paid by Licensee to Licensor. The amount of such
taxes shall be deducted from payments of royalties, provided
that Licensor is entitled under applicable law to credit the
amount of such taxes against its United States Federal Income
Tax obligations. Licensee shall furnish Licensor with an
official receipt (together with a translation thereof if not
in English) promptly after each such payment of taxes. In the
event such taxes are not paid when due, all resulting
penalties and interest shall be borne by Licensee.
C. No payment of Sales Royalty for any Annual Period in excess of
payments of Guaranteed Minimum Royalty for the same Annual
Period shall be credited against the Guaranteed Minimum
Royalty due to Licensor for any other Annual Period.
D. The addresses for all Royalty Payments, including the
Guaranteed Minimum Royalty shall be as follows:
(1) The initial Guaranteed Minimum Royalty of * payable upon
execution hereof:
* to: "Tucker & Latifi, LLP, as Counsel",
Robert L. Tucker, Esq., Tucker & Latifi, LLP,
160 East 84th Street, New York, NY 10028
* to: Paris Hilton Entertainment Inc. c/o Ms. Wendy
White, 250 North Canon Drive, 2nd Floor,
Beverly Hills, CA 90210
(2) All other Guaranteed Minimum Royalties and other
Royalties:
20% of amounts due to: Tucker & Latifi, LLP, as Counsel",
Robert L. Tucker, Esq., Tucker &
Latifi, LLP, 160 East 84th Street,
New York, NY 10028
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80% of amounts due to: Paris Hilton Entertainment Inc.
c/o Ms. Wendy White,
250 North Canon Drive, 2nd Floor,
Beverly Hills, CA 90210
ARTICLE 10
Advertising
Licensee agrees to spend in the United States for "consumer
advertising" (as defined below) * of Net Sales during each Annual Period.
For the other markets in the Territory, Licensee or its distributors
will jointly spend not less than * of Net sales in such markets during each
Annual Period.
"Consumer Advertising" shall be understood to include newspapers,
magazines, television, radio, billboards (including related artwork and
production charges for these five categories), retailer demonstration charges,
retailer's catalogues, gifts-with-purchase including the gift aspect of value
sets, direct mail, remittance envelopes, blow-ins, billing inserts (both scented
and unscented), product samples, pamphlets, free goods (including those to
Licensor for events and other public relation activities), window and counter
displays (including testers, dummies, counter cards and other visual aids),
special events, contests, publicity and promotions and cooperative advertising.
Licensor undertakes at Licensee's request to make Ms. Paris
Hilton ("PH") available at reasonable intervals and for reasonable periods
(which shall involve a maximum of seven (7) appearances during the first
contract year and a maximum of four (4) appearances each contract year
thereafter) for promotional tie-ins serving to associate PH with the Articles.
Licensee shall also be entitled to the use of PH's likeness for advertising and
promotional purposes upon Licensor's approval first being obtained in each
instance, which approval shall not be unreasonably withheld or delayed. Licensor
shall make every reasonable effort, in light of PH's busy schedule, at the
request of the Licensee, to arrange for PH's cooperation for publicity
photographs, launch parties, personal appearances and radio and TV interviews
(which shall be included in PH's obligations of seven (7) and four (4)
appearances discussed above). Licensee shall reimburse Licensor for the
reasonable costs involved in providing PH plus one other individual, selected by
Licensor, plus her Mother and Father if they wish to attend, with first-class
travel, lodging, food and other related expenses mutually agreed upon in advance
of each appearance attended by PH at Licensee's request. If PH fails to appear
for a scheduled Licensor approved event, Licensee will have the right to deduct
up to $50,000 of its non-refundable out of pocket expenses incurred in
connection with each specific event from the Sales Royalty. The failure to
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appear at a scheduled event could have a material adverse effect on the
Licensee's ability to market the Articles.
ARTICLE 11
Sales Statement; Books and Records; Audits
A. Sales Statement. Licensee shall deliver to Licensor at the
time each Sales Royalty payment is due, a reasonably detailed
report signed by a duly authorized officer of Licensee
indicating by quarter the Net Sales and a computation of the
amount of Sales Royalty payable hereunder for said period.
Such statement shall be furnished to Licensor whether or not
any Articles have been sold during the period of which such
statement is due.
Licensee shall deliver to Licensor, not later than ninety (90)
days after the close of each Annual Period during the term of
this Agreement (or portion thereof in the event of prior
termination for any reason), a statement signed by a duly
authorized officer relating to said entire Annual Period,
setting forth the same information required to be submitted by
Licensee in accordance with the first paragraph of this
Article and also setting forth the information concerning
expenditures for the advertising and promotion of Articles
during such Annual Period required by Article 10 hereof.
B. Books and Records; Audits. Licensee shall prepare and
maintain, in such manner as will allow its accountants to
audit same in accordance with generally accepted accounting
principles, complete and accurate books of account and records
(specifically including without limitation the originals or
copies of documents supporting entries in the books of
account) in which accurate entries will be made covering all
transactions, including advertising expenditures, arising out
of or relating to this Agreement. Licensee shall keep separate
general ledger accounts for such matters that do not include
matters or sales related to this Agreement. Licensor and its
duly authorized representatives shall have the right, for the
duration of this Agreement and for one (1) year thereafter,
during regular business hours and upon seven (7) business days
advance notice (unless a shorter period is appropriate in the
circumstances), to audit said books of account and records and
examine all other documents and material in the possession or
under the control of Licensee with respect to the subject
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matter and the terms of this Agreement, including, without
limitation, invoices, credits and shipping documents, and to
make copies of any and all of the above. All such books of
account, records, documents and materials shall be kept
available by Licensee for at least two (2) years after the end
of the Annual Period to which they relate.
If, as a result of any audit of Licensee's books and records, it is
shown that Licensee's payments were less than the amount which should have been
paid by an amount equal to * or more of the payments actually made with respect
to sales occurring during the period in question, Licensee shall reimburse
Licensor for the cost of such audit and shall make all payments required to be
made to eliminate any discrepancy revealed by said audit within ten (10) days
after Licensor's demand therefor.
ARTICLE 12
Indemnification and Insurance
A. Indemnification of Licensor. Licensee hereby agrees to save
and hold Licensor and its agents harmless of and from and to
indemnify them against any and all claims, suits, injuries,
losses, liability, demands, damages and expenses (including,
subject to subparagraph D below, Licensor's reasonable
attorneys' fees and expenses) which Licensor may incur or be
obligated to pay, or for which either may become liable or be
compelled to pay in any action, claim or proceeding against
it, for or by reason of any acts, whether of omission or
commission, that may be committed or suffered by Licensee or
any of its servants, agents or employees in connection with
Licensee's performance of this Agreement, including but not
limited to those arising out of the alleged defect in any
Article produced by Licensee under this Agreement, the
manufacture, labeling, sale, distribution or advertisement of
any Article by Licensee in violation of any national, state or
local law or regulation or the breach of Article 5 hereof. The
provisions of this paragraph and Licensee's obligations
hereunder shall survive the expiration or termination of this
Agreement.
B. Insurance Policy. Licensee shall procure and maintain at its
own expense in full force and effect at all times during which
Articles are being sold, with a responsible insurance carrier
acceptable to Licensor, a public liability insurance policy
including products liability coverage with respect to Articles
with a limit of liability not less than $3,000,000. It shall
be acceptable if such coverage is provided by a product
liability policy and an additional umbrella policy. Such
insurance policies shall be written for the benefit of
Licensee and Licensor and shall provide for at least thirty
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(30) days prior written notice to said parties of the
cancellation or substantial modification thereof. Licensor
shall be a named insured on each such policy. Such insurance
may be obtained by Licensee in conjunction with a policy which
covers products other than Articles.
C. Evidence of Insurance. Licensee shall, from time to time upon
reasonable request by Licensor, promptly furnish or cause to
be furnished to Licensor evidence in form and substance
satisfactory to Licensor of the maintenance of the insurance
required by subparagraph B above, including, but not limited
to, copies of policies, certificates of insurance (with
applicable riders and endorsements) and proof of premium
payments. Nothing contained in this paragraph shall be deemed
to limit in any way the indemnification provisions of the
subparagraph A above.
D. Notice. Licensor will give Licensee notice of any action,
claim, suit or proceeding in respect of which indemnification
may be sought and Licensee shall defend such action, claim,
suit or proceeding on behalf of Licensor. In the event
appropriate action is not taken by Licensee within thirty (30)
days after its receipt of notice from Licensor, then Licensor
shall have the right, but not the obligation, to defend such
action, claim, suit or proceeding. Licensor may, subject to
Licensee's indemnity obligation under subparagraph A above, be
represented by its own counsel in any such action, claim, suit
or proceeding. In any case, the Licensor and the Licensee
shall keep each other fully advised of all developments and
shall cooperate fully with each other in all respects in
connection with any such defense as is made. Nothing contained
in this paragraph shall be deemed to limit in any way the
indemnification provisions of the subparagraph A above except
that in the event appropriate action is being taken by
Licensee by counsel reasonably acceptable to Licensor, with
respect to any not-trademark or intellectual property, action,
claim, suit or proceeding. Licensor shall not be permitted to
seek indemnification from Licensee for attorneys' fees and
expenses incurred without the consent of Licensee. In
connection with the aforesaid actions, claims and proceedings,
the parties shall, where no conflict of interest exists, seek
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to be represented by common reasonably acceptable counsel. In
connection with actions, claims or proceedings involving
trademark or other intellectual property matters which are
subject to indemnification hereunder, Licensor shall at all
times be entitled to be represented by its own counsel, for
whose reasonable fees and disbursements it shall be entitled
to indemnification hereunder.
ARTICLE 13
The Licensed Mark
A. Licensee shall not join any name or names with the Licensed
Mark so as to form a new mark, unless and until Licensor
consents thereto in writing. Licensee acknowledges the
validity of the Licensed Mark, the secondary meaning
associated with the Licensed Mark, and the rights of Licensor
with respect to the Licensed Mark in the Territory in any form
or embodiment thereof and the goodwill attached or which shall
become attached to the Licensed Mark in connection with the
business and goods in relation to which the same has been, is
or shall be used. Sales by Licensee shall be deemed to have
been made by Licensor for purposes of trademark registration
and all uses of the Licensed Mark by Licensee shall inure to
the benefit of Licensor. Licensee shall not, at any time, do
or suffer to be done, any act or thing which may in any way
adversely affect any rights of Licensor in and to the Licensed
Mark or any registrations thereof or which, directly or
indirectly, may reduce the value of the Licensed Mark or
detract from its reputation. Licensee will use its best
efforts to distribute Articles in the proper channels
comparable to those of the brands outlined in Article 7 A (i)
herein.
B. At Licensor's request, Licensee shall execute any documents,
including Registered User Agreements, reasonably required by
Licensor to confirm the respective rights of Licensor and Ms.
Paris Hilton in and to the Licensed Mark in each jurisdiction
in the Territory and the respective rights of Licensor and
Licensee pursuant to this Agreement. Licensee shall cooperate
with Licensor, in connection with the filing and the
prosecution by Licensor of applications to register or renew
the Licensed Mark for Articles sold hereunder in each
jurisdiction in the Territory where Licensee has reasonably
requested the same. Such filings and prosecution outside the
U.S. shall be in the name of Licensor or Ms. Paris Hilton, as
they may decide, the expense of which will be split evenly
between the Licensor and Licensee. Nothing contained herein
shall obligate Licensor to prosecute any trademark application
outside the U.S. which is opposed or rejected in any country
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after the application is filed, provided, however, that any
such prosecution shall go forward if (a) Licensee requests
same; (b) Licensee pays for same directly; and (c) such
prosecution is in Licensor's (or Ms. Paris Hilton's) name and
directed by Licensor. Licensor shall cooperate fully with any
such prosecution.
C. Licensee shall use the Licensed Mark in each jurisdiction in
the Territory strictly in compliance with the legal
requirements obtained therein and shall use such markings in
connection therewith as may be required by applicable legal
provisions. Licensee shall cause to appear on all Articles and
on all materials on or in connection with which the Licensed
Mark is used, such legends, markings and notices as may be
reasonably necessary in order to give appropriate notice of
any trademark, trade name or other rights therein or
pertaining thereto.
D. Licensee shall never challenge the validity of the Licensed
Mark or any application for registration thereof, or any
trademark registration hereof, or any rights of Licensor
therein. The foregoing shall not be deemed to prevent Licensee
from asserting, as a defense to a claim of breach of contract
brought against Licensee by Licensor for failure to perform
its obligations hereunder, that its ceasing performance under
this Agreement was based upon Licensor's failure to own the
Licensed Mark in the United States of America, provided that
it is established in a court of law that Licensor does not own
the Licensed Mark, that the Licensed Mark is owned by a third
party so as to preclude the grant of the license provided
herein.
E. In the event that Licensee learns of any infringement or
imitation of the Licensed Mark or of any use by any person of
a trademark similar to the Licensed Mark, it promptly shall
notify Licensor thereof. In no event, however, shall Licensor
be required to take any action if it deems it inadvisable to
do so.
F. Licensor shall not be required to protect, indemnify or hold
Licensee harmless against, or be liable to Licensee for, any
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liabilities, losses, expenses or damages which may be suffered
or incurred by Licensee as a result of any infringement or
allegation thereof by any other person, firm or corporation,
other than by reason of Licensor's breach of the
representations made and obligations assumed herein. Licensor
and Ms. Paris Hilton make no warranties or representations as
to the registrability of the Licensed Mark in the various
trademark offices around the World, except that Licensor
warrants and represents that Ms. Paris Hilton has a pending
trademark application for the Licensed Mark in the United
States Patent and Trademark Office in International Class 3
for fragrances; Serial No. 78/412749. However, Licensor and
Ms. Paris Hilton, to the best of their knowledge, are not
aware of any registrations or pending registrations in
International Class 3 or otherwise, that would preclude or
restrict Licensee from selling the Articles anywhere in the
Territory.
ARTICLE 14
Defaults; Termination
A. The following conditions and occurrences shall constitute
"Events of Default" by Licensee:
1. the failure to pay Licensor the full amount due it
under any of the provisions of this Agreement by the
prescribed date for such payment; 2. the failure to
deliver full and accurate reports pursuant to any of
the provisions of this Agreement by the prescribed
due date therefore;
3. the making or furnishing of a knowingly false
statement in connection with or as part of any
material aspect of a report, notice or request
rendered pursuant to this Agreement;
4. the failure to maintain the insurance required by
Article 12;
5. the use of the licensed mark in an unauthorized or
unapproved manner;
6. Licensee's use of other trademarks or in association
with the Articles, without prior written consent of
Licensor;
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7. the commencement against Licensee of any proceeding
in bankruptcy, or similar law, seeking
reorganization, liquidation, dissolution,
arrangement, readjustment, discharge of debt, or
seeking the appointment of a receiver, trustee or
custodian of all or any substantial part of
Licensee's property, not dismissed within sixty (60)
days, or Licensee's making of an assignment for the
benefit of creditors, filing of a bankruptcy
petition, its acknowledgment of its insolvency or
inability to pay debts, or taking advantage of any
other provision of the bankruptcy laws;
8. the material breach of any other material promise or
agreement made herein.
B. In the event Licensee fails to cure (i) an Event of Default
within thirty (30) days after written notice of default is
transmitted to Licensee under Article 14 A.3, A.5, A.6, or
A.7; or (ii) Licensee fails to cure any other Event of Default
within sixty (60) days after written notice of default is
transmitted to Licensee or within such further period as
Licensor may allow, this Agreement shall, at Licensor's
option, be terminated, on notice to Licensee, and all the
prorated Guaranteed Minimum Royalties for the Annual Period as
in Article 8 above shall become due, without prejudice to
Licensor's right to receive other payments due or owing to
Licensor under this Agreement or to any other right of
Licensor, including the right to damages and/or equitable
relief.
C. Upon the termination of this Agreement, in the event this
Agreement is not renewed as provided in Article 4 above, or in
the event of the termination or expiration of a renewal term
of this Agreement, Licensee, except as specified below, will
immediately discontinue use of the Licensed Mark, will not
resume the use thereof or adopt any colorable imitation of the
Licensed Mark or any of its parts, will promptly deliver and
convey to Licensor (free of all liens and encumbrances)
(i) all plates, engravings, silk-screens, or the like
used to make or reproduce the Licensed Mark and the
Designs, but not the bottle mold or tooling which
Licensor shall be entitled to purchase or recover as
provided below; and
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(ii) all items affixed with likeness or reproductions of
the Licensed Mark, whether Articles, labels, bags,
hangers, tags or otherwise, and, upon request by
Licensor, will assign to Licensor such rights as
Licensee may have acquired in the Licensed Mark. In
the event that this Agreement expires or is
terminated by Licensor due to Licensee's default,
Licensor shall have an option, but not an obligation,
to purchase the bottle mold and tooling for the
Articles, free of all liens and other encumbrances,
at a price equal to Licensee's cost for same
established by submission of bill(s) from supplier
and satisfactory proof of payment for same. Licensor
shall pay such cost as follows: 50% (fifty) at
closing and the balance paid by six (6) equal monthly
payments. Licensor shall, at the time it exercises
its purchase option, enter into a security agreement
with Licensee with respect to the mold, which shall
entitle Licensee to foreclose on its security
interest in the mold in the event Licensor fails to
make any installment payment due within fifteen (15)
days after receiving notice of default. Licensor
shall exercise its aforesaid option within thirty
(30) days after Licensee's submission of documents
establishing cost. Notwithstanding the foregoing, if
Licensor has terminated this Agreement due to
Licensee's default, Licensor, at its option, shall be
entitled, in exercising its purchase option, to
deduct from the cost price an amount equal to the
sales and guaranteed minimum royalties Licensor is
entitled to recover, for which deduction Licensee
shall receive a credit. In the event Licensor
exercises its aforesaid option, Licensee shall be
precluded forever from using the bottle molds or
tools and from selling or otherwise transferring or
licensing any rights whatsoever in the molds or tools
to any third party. In the event that Licensor does
not exercise its aforesaid option, Licensee shall not
use the bottle molds or tools or sell or otherwise
transfer or license any rights whatsoever in the
bottle mold or tools to any third party for a period
of two (2) years after the date of termination of the
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fair market value. In the event of any permitted use
of the bottle mold and/or tools by Licensee, Licensee
shall not use in connection therewith the Licensed
Mark, any trademark confusingly similar thereto, any
trade dress associated with the Articles, any
advertising or promotional materials used in
connection with the Articles or any other markings or
materials which would cause a reasonable consumer to
believe that any new items sold using the bottle mold
and tools are authorized by Licensor or in some way
associated with the Licensed Mark. Any permitted sale
or license of the bottle mold and/or tools by
Licensee shall prohibit in writing the purchaser or
licensee from using the Licensed Mark, and
confusingly similar trademark and any such trade
dress, advertising, promotional materials, markings
or other materials and shall expressly make Licensor
a third party beneficiary of such provision.
ARTICLE 15
Rights on Expiration or Termination
A. If this Agreement expires or is terminated, Licensee shall
cease to manufacture Articles (except for work in process or
to balance component inventory) but shall be entitled, for an
additional period of twelve (12) months only, on a
non-exclusive basis, to sell and dispose of its inventory
subject, however, to the provisions of paragraph D of this
Article. Such sales shall be made subject to all of the
provisions of this agreement and to an accounting for and the
payment of Sales Royalty thereon but not to the payment of
Guaranteed Minimum Royalties. Such accounting and payment
shall be made monthly.
B. In the event of termination in accordance with Article 14
above, Licensee shall pay to Licensor, the Sales Royalty then
owed to it pursuant to this Agreement or otherwise.
C. Notwithstanding any termination in accordance with Article 14
above, Licensor shall have and hereby reserve all rights and
remedies which it has, or which are granted to it by operation
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of law, to enjoin the unlawful or unauthorized use of the
Licensed Mark, and to collect royalties payable by Licensee
pursuant to this Agreement and to be compensated for damages
for breach of this Agreement.
D. Upon the expiration or termination of this Agreement, Licensee
shall deliver to Licensor a complete and accurate schedule of
Licensee's inventory of Articles and of related work in
process then on hand (including any such items held by
Subsidiaries, Affiliates or others on behalf of Licensee)
(hereinafter referred to as "Inventory). Such schedule shall
be prepared as of the close of business on the date of such
expiration or termination and shall reflect Licensee's cost of
each such item. Notwithstanding anything contained to the
contrary in this Agreement, Licensor thereupon shall have the
option, exercisable by notice in writing delivered to Licensee
within thirty (30) days after its receipt of the complete
Inventory schedule, to purchase any or all of the Inventory,
free of all liens and other encumbrances, for an amount equal
to Licensee's cost plus 20%. In the event such notice is sent
by Licensor, Licensee shall deliver to Licensor or its
designee all of the Inventory referred to therein within
thirty (30) days after Licensor's said notice and, in respect
of any Inventory so purchased, assign to Licensor all then
outstanding orders from Licensee to its suppliers and to
Licensee from its customers. Licensor shall pay Licensee for
such Inventory within twenty (20) days after the delivery of
such Inventory to Licensor. No Sales Royalty shall be payable
to Licensor with respect to any such inventory purchased by
Licensor.
ARTICLE 16
Sublicensing and Distribution
A.(i) The performance of Licensee hereunder is of a personal nature.
Therefore, neither this Agreement nor the License or other
rights granted hereunder may be assigned, sublicensed or
transferred by Licensee, whether to a subsidiary or Affiliate
except as approved by Licensor in advance, in writing, which
approval will not be unreasonably denied. However, any
assignment of this Agreement or the rights granted hereunder
must be to an entity with equal or superior financial strength
to Licensee.
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(ii)Consolidation. Notwithstanding anything contained to the
contrary in this Agreement, this Agreement shall not terminate
if Licensee is merged or otherwise consolidated into another
entity which is the surviving entity of equal or superior
financial strength.
B. Licensee shall be entitled to use distributors in connection
with its sale of Articles under this Agreement without
approval of Licensor. No such distributor, however, shall be
entitled to exercise any of Licensee's rights hereunder except
for the sale of Articles which have been approved by Licensor
hereunder.
ARTICLE 17
Miscellaneous
A. Representations. The parties respectively represent and
warrant that they have full right, power and authority to
enter into this Agreement and perform all of their obligations
hereunder and that they are under no legal impediment which
would prevent their signing this Agreement or consummating the
same. Licensor represents and warrants that it has the right
to license the Licensee the Licensed Mark and that Licensor
has not granted any other existing license to use the Licensed
Mark on products covered hereunder in the Territory and that
no such license will be granted during the term of this
Agreement except in accordance with the provisions hereof.
B. Licensor's Rights. Not withstanding anything to the contrary
contained in this Agreement, Licensor shall not have the right
to negotiate or enter into agreements with third parties
pursuant to which it may grant a license to use the Licensed
Mark in connection with the manufacture, distribution and/or
sale of products covered hereunder in the Territory or provide
consultation and design services with respect to such products
in the Territory prior to the termination or expiration of
this Agreement.
C. Licensor's Retail Stores. In the event Licensor (or Ms. Paris
Hilton) opens one or more retail stores or boutiques selling
various products bearing the Licensed Mark, Licensee agrees to
sell Articles to Licensor for sale in such stores at the
established U.S. retail price for the specific Article, less
an additional 75% (seventy-five percent) discount. Licensee
further agrees that any sales pursuant to this paragraph shall
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be included in the computation of Net Sales for any applicable
Annual Period hereunder.
D. Governing Law; Entire Agreement. This Agreement shall be
construed and interpreted in accordance with the laws of the
State of Florida applicable to agreements made and to be
performed in said State, contains the entire understanding and
agreement between the parties hereto with respect to the
subject matter hereof, supersedes all prior oral or written
understandings and agreements relating thereto and may not be
modified, discharged or terminated, nor may any of the
provisions hereof be waived, orally.
E. No Agency. Nothing herein contained shall be construed to
constitute the parties hereto as partners or as joint
venturers, or either as agent of the other, and licensee shall
have no power to obligate or bind Licensor in any manner
whatsoever.
F. No Waiver. No waiver by either party, whether express or
implied, of any provision of this Agreement, or of any breach
or default thereof, shall constitute a continuing waiver of
such provision or of any other provision of this Agreement.
Acceptance of payments by Licensor shall not be deemed a
waiver by Licensor of any violation of or default under any of
the provisions of this Agreement by Licensee.
G. Void Provisions. If any provision or any portion of any
provision of this Agreement shall be held to be void or
unenforceable, the remaining provisions of this Agreement and
the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
H. Construction. This Agreement shall be construed without regard
to any presumption or other rule requiring construction
against the party causing this Agreement to be drafted. If any
words or phrases in this Agreement shall have been stricken
out or otherwise eliminated, whether or not any other words or
phrases have been added, this Agreement shall be construed as
if those words or phrases were never included in this
Agreement, and no implication or inference shall be drawn from
the fact that the words or phrases were so stricken out or
otherwise eliminated.
I. Force Majeure. Neither party hereto shall be liable to the
other for delay in any performance or for the failure to
render any performance under the Agreement (other than payment
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to any accrued obligation for the payment of money) when such
delay or failure is by reason of lockouts, strikes, riots,
fires, explosions, blockade, civil commotion, epidemic,
insurrection, war or warlike conditions, the elements,
embargoes, act of God or the public enemy, compliance with any
law, regulation or other governmental order, whether or not
valid, or other similar causes beyond the control of the party
effected. The party claiming to be so affected shall give
notice to the other party promptly after it learns of the
occurrence of said event and of the adverse results thereof.
Such notice shall set forth the nature and extent of the
event. The delay or failure shall not be excused unless such
notice is so given. Notwithstanding any other provision of
this Agreement, either party may terminate this Agreement if
the other party is unable to perform any or all of its
obligations hereunder for a period of six (6) months by reason
of said event as if the date of termination were the date set
forth herein as the expiration date hereof. If either party
elects to terminate this Agreement under this paragraph,
Licensee shall have no further obligations for the Guaranteed
Minimum Royalty beyond the date of termination (which shall be
prorated if less than an Annual Period is involved) and shall
be obligated to pay any Sales Royalty which is then due or
becomes due.
J. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon the parties, their respective
successors, Licensor's transferees and assigns and Licensee's
permitted transferees and assigns.
K. Resolution of Disputes. Any controversy or claim arising our
of, in connection with, or relating to this Agreement, shall
be determined by arbitration by a three person arbitration
panel at the office of the American Arbitration Association.
Both Parties shall share equally the cost of such arbitration
(except each shall bear its own attorney's fees). Any decision
rendered by the arbitrators shall be final and binding, and
judgment may be entered in any court having jurisdiction.
L. Consolidation. Notwithstanding anything contained to the
contrary in this Agreement (a) this Agreement shall not
terminate if Licensor is merged or otherwise consolidated into
another entity which is the surviving entity. (b) Licensor
shall be entitled to assign this Agreement to any Corporation
to which the Trademark is assigned.
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M. Survival. The provisions of Articles 11, 12A, 12D, 13, 15, 16,
and 17 shall survive any expiration or termination of this
Agreement.
N. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only and shall be given no
substantive effect.
ARTICLE 18
Notices
Any notice or other communications required or permitted by this
Agreement to be given to a party will be in writing and will be considered to be
duly given when sent by any recognized overnight courier service to the party
concerned to the following persons or addresses (or to such other persons or
addresses as a party may specify by notice to the other):
TO LICENSOR Ms. Paris Hilton c/o Ms. Wendy White
250 North Canon Dr. 2nd Floor,
Beverly Hills, CA 90210
WITH A COPY TO: Robert L. Tucker, Esq., Tucker & Latifi, LLP
160 East 84th Street, New York, NY 10028
Tel: 212-472-6262; Fax: 212-744-6509.
RTucker@TuckerLatifi.com
TO LICENSEE PARLUX FRAGRANCES, INC.
3725 SW 30TH Avenue
Ft. Lauderdale, Florida, 33312
Attention: Ilia Lekach
Chairman & CEO
Fax : (954) 316-8155
WITH A COPY TO: Bingham McCutcheon LLP
399 Park Avenue
New York, New York 10022
Attention: Francis A. Fuselier, Esq.
Fax: (212) 752-5378
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Notice of the change of any such address shall be duly given by either
party to the other in the manner herein provided.
PARLUX FRAGRANCES, INC.
BY: /s/ Frank A. Buttacavoli Date: May 27, 2004
--------------------------------------------
Frank A. Buttacavoli
Title: Executive Vice President / COO / CFO
PARIS HILTON ENTERTAINMENT INC.
BY: /s/ Paris Hilton Date: May 21, 2004
---------------------------------
Paris Hilton
Compliance with the terms of this Agreement shall constitute compliance
with the terms of the Master License. In the event of a termination of the
Master License granted to Licensor, prior to the expiration of this Agreement
(and any extensions thereof) Ms. Paris Hilton warrants and represents that the
successor entity to the rights to the PARIS HILTON trademark shall assume the
obligations and succeed to the rights of the Licensor and the rights of Licensee
shall continue unaffected.
ACKNOWLEDGE and APPROVED:
/s/ Paris Hilton
--------------------
Paris Hilton
Dated: May 21, 2004
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