Sublicense Agreement - Entertainment Management Services Inc. and DBD Management Inc.
SUBLICENSE AGREEMENT
THIS AGREEMENT, made and entered into this ______ day of _____________,
2004, by and between ENTERTAINMENT MANAGEMENT SERVICES, INC., a New York
corporation with its principal office at 533-535 West 27th Street, New York,
New York 10001, or designee ("Licensor"), and DBD MANAGEMENT, INC. ("Licensee").
W I T N E S S E T H
WHEREAS, Licensor is the exclusive owner of the right to sublicense the
SCORES Trademarks and related intellectual property listed on Exhibit "A" (the
"Scores Trademarks"), and has the right to sublicense the same on the terms set
forth herein; and
WHEREAS, Licensee is the owner and operator of a premium
adult-entertainment nightclub located at 3411 North Federal Highway (the
"Location"), which will conduct business under the name "Scores Ft. Lauderdale";
and
WHEREAS, Licensee hereby will receive the right and license to use the
Scores Trademarks in connection with the operation of the Location, and the sale
of certain merchandise, for the Term (as defined below) (the "Business");
NOW, THEREFORE, for and in consideration of the promises, covenants and
agreements contained herein, and for other good and valuable consideration,
receipt of which hereby is acknowledged by both parties, the parties agree as
follows:
1. LICENSE GRANT:
a. Business. Licensor hereby grants to Licensee and Licensee accepts,
a non-exclusive (except as provided in subparagraph (c) below)
license to use the Scores Trademarks during the Term in connection
with the Business subject to the terms and conditions of this
License Agreement. Licensor hereby grants to Licensee and Licensee
accepts, an exclusive lease of, and license to the
ScoresFtLauderdale.com URL for the website for the Business.
b. Merchandising. Licensor hereby grants to Licensee, on the terms
and conditions set forth herein, a non-exclusive (except as
provided in subparagraph (c) below) license during the Term to use
the Scores Trademarks in connection with the retail sale of
commercial merchandise, including tee-shirts, sweat shirts, sweat
pants, jackets, baseball hats, key rings and other similar
merchandise, all to be sold at and out of the Business, including
the right to sell any merchandise utilizing the Scores Trademarks
relative to the Business over the Internet on a site maintained by
the Business and by mail order, catalogue or at any other location
or in any other channel specific to the Business, provided
further, that Licensee will purchase all merchandise from Licensor
at cost plus a twenty-five percent (25%) markup, but not more than
what the Licensee currently pays for similar products.
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c. Licensee shall have exclusivity within twenty (20) miles of the
Location in Ft. Lauderdale, Licensor will not open any adult
entertainment nightclub, or license use of the Scores Trademarks
to any other person or entity, within a twenty (20) mile radius of
the Location.
d. Nothing contained herein shall prohibit Licensee from advertising
its location throughout the State of Florida, the United States,
and the world.
2. ROYALTIES:
a. AMOUNT. Beginning on the one hundred and twenty-first day (121st)
day of the first day of operation as SCORES-Fort Lauderdale, the
Licensee agrees to pay four and 99/100 percent (4.99%) of the
gross revenues of Licensee earned at the location during the term
hereof, above two hundred and fifty thousand dollars ($250,000.00)
per month (cumulative). After the 121st day, however, the minimum
payment per month shall be four thousand dollars ($4,000.00).
Gross Revenues shall mean one hundred percent (100%) of Licensee's
receipts received from the Business operation, less all actual
local sales taxes paid, and amounts specifically designated by
customers on credit card receipts as "tips for service", credit
card discount fees, complementary food and beverage sales. Gross
Revenues include all revenues from operation of the Business,
including, but not limited to, liquor revenue, beer revenue,
champagne revenue, shot girl house fees, wine revenue,
non-alcoholic beverage revenue, food revenue, party revenue,
admission fees club, admission fees private revenue, candy
revenue, concession-cigarette, concession-bathroom,
concession-massage, concession-tarot, dressing room rent, house
fees-entertainers, house fees-DJ's, house fees-floor manager,
house fees-service personnel, feature-calendar, feature-novelty,
feature-video, feature-cigar and internet revenue, and also will
include the fee charged to customers for the purchase of Diamond
Dollars (r) and the fee paid by entertainers for cashing in
Diamond Dollars (r).
b. MERCHANDISE ROYALTIES. Licensee will purchase all re-sellable
Merchandise from Licensor, or Licensor's authorized affiliate.
Licensee will pay for all such Merchandise on a cost plus
twenty-five percent (25%) markup basis, unless otherwise agreed,
but not more than what the current Licensee pays for similar
products.
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c. ROYALTY REPORTS. Licensee shall furnish Licensor with written
reports describing in detail all sales relative to the Business.
The reports shall be prepared and sent to the Licensor not later
than seven (7) days following the fifteenth (15th) and last day of
each month. Reports will be adjusted on a quarterly basis (if
necessary), not later than ten (10) days after each calendar
quarter period ending in March, June, September and December of
each year.
d. PAYMENT. Payment of royalties due under this Paragraph shall be
made within ten (10) days of the issuance of each royalty report
set forth above. Payment for merchandise will be under Licensor's
standard merchandise sale and payment terms.
3. APPROVAL BY LICENSOR:
In order to preserve the value, goodwill and reputation of the SCORES
Trademarks, Licensee and Licensor shall consult each other during the
Term hereof with regard to any marketing, advertising, or promotional
activities pursuant to the Business, and Licensor will have the right
to approve all advertisements, promotional, marketing, and other
similar materials, including, but not limited to the images and format
of Diamond Dollars (r) for the Location. Furthermore, prior to
releasing or using any promotional, marketing advertising or other
similar materials which not been approved by Licensor in the
twenty-four (24) month period preceding the proposed use, or in the
event Licensee intends to utilize any such materials which have been
used in the past twenty-four (24) months but intends to do so in a
media not used by Licensor in the twenty-four (24) month period
preceding the proposed use, Licensee first shall obtain the prior
written consent of Licensor for such use, which shall not be
unreasonably withheld. In connection with obtaining such consent,
Licensee shall send copies of all materials and media for proposed use
so that Licensor can evaluate thoroughly the proposed use. Licensor
agrees to inform the Licensee of its decision regarding any approvals
within twenty-four (24) hours of receiving all materials and media for
approval. The failure to receive notice from Licensor that it objects
to such materials in media shall be deemed its approval. Licensor also
will have general approval over the continuing operations of the
Business so as to preserve the value, goodwill and reputation of the
SCORES Trademarks, but will have no control over day-to-day operating
or hiring and firing, and will not do anything that violates the Lease
Agreement with M.J. Peters.
1. COMPLIANCE WITH APPLICABLE LAWS AND STANDARDS:
Licensee is responsible for the compliance with all applicable laws and
safety standards regarding the operation of the Business, the Location
other licensed locations and the use of the SCORES Trademarks herein.
Licensor's approval of submissions pursuant to Paragraph 3 above in no
way affects, alters, diminishes or waives Licensee's obligations
hereunder, or under Licensee's obligation to indemnify Licensor as set
forth herein below.
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5. BOOKS AND RECORDS:
Licensee shall, for a minimum of three (3) years from their rendition,
keep full and accurate books of account, records, data and memoranda
representing Licensee's sales. Licensee further gives Licensor the
right, at its own cost and expense, to examine said books and records
on reasonable notice, such examination to be conducted in such a manner
as to not unreasonably interfere with the business of Licensee.
Licensee shall reasonably cooperate with Licensor in the event the
owner of the SCORES Trademarks requests an audit. Licensor or its
representatives shall not disclose to any other person, firm, or
corporation any information acquired as a result of any examination,
provided, however, that nothing contained herein shall be construed to
prevent Licensor and/or its duly authorized representatives from using
or disclosing said information in any court, arbitration or other
action instituted to enforce the rights of Licensor hereunder.
1. INTELLECTUAL PROPERTY RIGHTS:
All copyrights, trademarks and/or patents in the SCORES Trademarks and
related intellectual property belong solely to Licensor and are within
the scope of the license granted herein. Upon termination of this
Agreement, all intellectual property rights and rights granted herein
in the SCORES Trademarks immediately revert to Licensor or the owner of
the SCORES Trademarks, and Licensee agrees to return to Licensor all
original artwork, models, samples, prototypes, renderings and drawings
incorporating the SCORES Trademarks. All use by Licensee of the
intellectual property rights of the SCORES Trademarks shall inure to
the sole benefit of Licensor and the owner of the SCORES Trademarks.
Licensee shall execute any and all documents necessary to confirm said
reversions of rights and hereby appoints Licensor its attorney-in-fact
to execute any such documents in the event Licensee is unwilling or
unable to do so. Licensee acknowledges the exclusive ownership of all
intellectual property rights in and to the SCORES Trademarks by the
owner of the SCORES Trademarks, and will not take any action to
interfere with or challenge said ownership, including but not limited
to registering or attempting to register the same or similar marks or
properties anywhere in the World, nor commence nor participate in
cancellation or opposition proceedings. 1. WARRANTY:
a. Licensor hereby warrants that, to the best of its knowledge, the
granting of the license hereunder or the subsequent commercial
exploitation of the license does not violate the intellectual
property or contract rights of any third party. Licensor further
warrants that it has not violated intentionally the rights of any
third party on granting Licensee this license.
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8. OFFENSIVE LITIGATION:
Licensee agrees to give Licensor prompt notification of any third
party's actions which would constitute an infringement of the rights
granted to it by this Agreement. Licensor shall prosecute, at its own
discretion, infringement actions against any third party infringers,
and any recoveries obtained therein shall belong exclusively to
Licensor. Licensee shall, at Licensor's expense, cooperate in all
respects with Licensor's prosecution of said suits, including but not
limited to being named as a party in any such suit, producing
documents, appearing as witnesses, etc.
9. INDEMNIFICATION:
a. Licensor agrees to indemnify and hold harmless Licensee from and
against any and all damage, loss, and expense incurred as a result
of the breach of any of Licensor's warranties herein. This
indemnification shall become operative only after a final
judgment, ----- order or decree is issued which contains a finding
that Licensor intentionally infringed upon the rights of a third
party. Any claims made against Licensee which would result in
Licensor's becoming obligated to indemnify Licensee hereunder
shall not permit Licensee to withhold any amounts due Licensor
hereunder.
b. Licensee agrees to indemnify, defend and hold harmless Licensor,
its agents and employees from and against any and all loss and
expense arising out of any claims of personal injury, product
liability, wrongful death, negligence, strict liability or other
similar action, in addition to the breach of any of its warranties
hereunder or the violation of any applicable law or safety
standard based on the use of the SCORES Trademarks by or on behalf
of Licensee and/or its subsidiary, affiliated, controlled company.
Licensee shall maintain, at its sole cost and expense, premises
liability, liquor liability, workers' compensation (in the amount
required by the State of Florida, plate glass insurance (as per
Licensee's Lease), commercial liability coverage and other
customary insurance. The premises, commercial, and liquor policies
must provide coverage of at least $3,000,000/$3,000,000, naming
Licensor as an additional insured, and providing that such policy
cannot be canceled without thirty (30) days prior written notice
to Licensor. In the event any claim is made against Licensor in
excess of the limits of Licensee's insurance set forth above,
Licensor may, at Licensee's expense, retain counsel of its own
choosing to defend said claims. All insurance shall be primary and
not contributory. Licensee agrees to provide Licensor with a copy
of the insurance declarations and/or certificates within twenty
(20) days following the date of this Agreement. This
indemnification shall become effective operative only after a
final judgment, order or decree is issued which contains a finding
that Licensee was liable or responsible of the alleged actions or
inactions. Any claims made against Licensor which result in
Licensee's becoming obligated to indemnify Licensor hereunder,
shall not permit Licensor to withhold any payments due hereunder.
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10. TERMINATION:
a. In case either party fails to perform under or commits or allows
to be committed a breach of any of the several covenants and
conditions herein contained, the other party shall notify such
party in writing of such failure or default, and such party then
shall have the right to remedy such failure or default within
thirty (30) days. If the default has not been cured within said
thirty (30) days of notice to the defaulting party, then the
aggrieved party may terminate this Agreement immediately by a
further notice in writing. If Licensor shall send notice of
default to Licensee based on a failure to pay royalties, then
Licensee shall cure such default within ten (10) days of notice.
b. Any termination under this Paragraph will be without prejudice to
the rights and remedies of either party with respect to any
provisions or covenants arising out of breaches committed prior to
such termination.
c. If a petition in bankruptcy is filed by or against Licensee or
Licensor, or Licensee or Licensor becomes insolvent, or makes an
assignment for the benefit of creditors, or any other arrangement
pursuant to any bankruptcy law, or if Licensee or Licensor
discontinues its business or if a receiver is appointed for it or
its business, to the fullest extent permitted by law at the time
of the occurrence, the license hereby granted shall terminate
automatically without any notice whatsoever being necessary. In
the event this license is so terminated, Licensee, its receivers,
representatives, trustees, agents, administrators, successors,
and/or assigns shall have no right to sell, use, exploit or in any
way deal with or in the SCORES Trademarks or anything relating to
it whatsoever except with and under the special consent and
instructions of Licensor in writing, which they shall be obliged
to follow.
d. Upon cessation of all business operations by the Licensee at the
Location for a period of greater than one hundred eighty (180)
days for any reason other than Force Majeure, this Agreement shall
terminate automatically.
e. Beginning with January 2005, the Licensee may, in its sole
discretion, terminate this Agreement, if it fails to earn and
receive $720,000.00 of net operating profit in any year. Licensor
may, at its option, make up the difference between the net
operating profit and $720,000.00 to cure this default.
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f. This agreement shall also terminate should Licensee sell the
business or the assets of the business. Upon such a termination,
Licensee shall give Licensor at least sixty (60) days advance
written notice. Upon such sale, all rights and obligations of the
parties relative to this agreement shall cease and be of no
further force or effect.
11. TERM:
Subject to Paragraph 10, the Term of this Agreement shall commence on
the date first written above and will continue for a united period of
ten (10) years. The term may be renewed by Licensee for another ten
(10) years by serving written notice at least six (6) months prior to
the end of the first term.
1. PRESENTATION:
It is expressly agreed and understood that neither party hereto is the
agent or legal representative of the other and neither party has the
authority, express or implied, to bind the other or pledge its credit.
This Agreement does not create a partnership or joint venture between
the two parties.
1. FORCE MAJEURE:
It is understood and agreed that in the event of an act of the
government, war, fire, flood or other natural disaster, or labor or
manufacturing strikes which prevent the performance of this Agreement,
such nonperformance will not be considered breach of this Agreement,
and such nonperformance shall not be excused while, but no longer than,
the conditions described herein prevail. The period of Force Majeure
shall not exceed twelve (12) months.
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1. NOTICES:
All notices, whenever required in this Agreement, will be in writing
and send by certified mail, return receipt requested to the addresses
set forth above. Notices will be deemed to have been given two (2)
business days following mailing. A copy of all notices to Licensor
shall be sent via regular mail to: .
1. CONTROLLING LAW:
This Agreement shall be construed in accordance with the laws
of the State of Florida, United States of America, and
jurisdiction over the parties and subject matter over any
controversy arising hereunder shall be in the Courts of the
State of Florida, County of Broward, or the Federal courts
therein. Both parties hereby irrevocably consent to said
jurisdiction and venue.
1. ASSIGNMENT:
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns,
but neither this Agreement, nor any of the rights, interests, or
obligations hereunder shall be assigned by Licensee without the prior
written consent of Licensor, and any attempts to do so without the
consent of Licensor shall be void and of no effect.
1. ENTIRE AGREEMENT:
This writing constitutes the entire agreement and understanding between
the parties. No other oral or written agreements or representations
exist or are being relied upon by either party, all being merged
herein. Any modifications or additions hereto must be made in writing
and signed by both parties.
18. MISCELLANEOUS:
a. The Paragraph headings used herein are for reference purposes only
and do not affect the meaning or interpretation of this Agreement.
If any provisions of this Agreement are for any reason declared to
be invalid or illegal, the remaining provisions shall not be
affected thereby.
b. The failure of either party to enforce any or all of its rights
hereunder as they accrue shall not be deemed a waiver of those
rights, all of which are expressly reserved.
c. This Agreement may be executed in more than one counterpart, all
of which shall be deemed to be originals.
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19. SECURITY INTEREST:
a. In order to induce Licensor to enter into this Agreement and to
secure the complete and timely performance of Licensee's
obligations hereunder, Licensee hereby grants to Licensor a
security interest in the license granted under this Agreement.
b. Licensee agrees to execute any and all documents necessary to
perfect Licensor's security interest in this license including,
but not limited to, Financing Statement Form UCC-1 and any other
security agreements and financing statements evidencing said
security interests in such form as may be recorded and perfected
according to the laws of the State of Florida and the U.S. Patent
and Trademark Office.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ENTERTAINMENT MANAGEMENT DBD MANAGEMENT, INC.
SYSTEMS, INC.
BY: BY:
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Licensor Licensee
TITLE: TITLE:
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