Merchandise License Agreement

Merchandise License Agreement

This Merchandise License Agreement (the Agreement) is entered into as of (date), 2000 (the Effective Date) by and between , a corporation organized and existing under the laws of the state of (name of state), with its principal office located at , referred to herein as the Licensor, and , a corporation organized and existing under the laws of the state of (name of state), with its principal office located at , referred to herein as the Licensee.

Whereas, the parties to this Agreement acknowledge that they enjoy a unique historical relationship to each other; and

Whereas, Licensor is the owner of all right, title and interest throughout the world to the trademarks and service marks, and variants thereof as represented on Exhibit A attached hereto and incorporated herein by reference (the Marks); and

Whereas, Licensor desires to license the use of the Marks to Licensee solely in connection with the retail sale of merchandise by Licensee and its Affiliates (as hereinafter defined) pursuant to the terms of this Agreement, and Licensee desires to accept such license from Licensor;

Now, therefore, for and in consideration of the foregoing and of the mutual promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, the parties agree as follows:

I. Incorporation of Recitals. The parties acknowledge and agree that the recitals to this Agreement are true and correct and are incorporated in and made a part of this Agreement.

II. Definitions. For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

A. Advertising Materials shall have the meaning set forth in Section IV.B.

B. Affiliate means any person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the person or entity specified.

C. Annual Period shall mean each period of one year beginning on the Effective Date and on each anniversary of the Effective Date.

D. Effective Date shall have the meaning set forth in the first paragraph of this Agreement.

E. License shall have the meaning set forth in Section III.

F. Licensee shall have the meaning set forth in the first paragraph of this Agreement.

G. Licensor shall have the meaning set forth in the first paragraph of this Agreement.

H. Marks shall have the meaning set forth in the second Recital to this Agreement.

I. Merchandise means retail merchandise which bears any of the Marks, including without limitation

K. Net Revenues means the gross revenues actually received by Licensee or any Affiliate of Licensee from retail sales of Merchandise pursuant to this Agreement, as determined in accordance with Licensee’s or such Affiliate’s invoice, less:

1. Sales, value added, use and similar taxes that are separately itemized, billed by Licensee or its Affiliate to its customers and required to be paid to the appropriate taxing authority by Licensee or its Affiliate;

2. Amounts paid by Licensee or its Affiliate and billed to its customers for insurance, shipping and similar charges; and

3. Credits for refunds and returns of Merchandise.

L. Packaging Materials shall have the meaning set forth in Section XI.2.

M. Royalties means royalty payments by Licensee to Licensor as provided in Section VI.

N. Term shall have the meaning set forth in Section V.

III. Grant of License. Licensor grants to Licensee during the Term the right and license (the License) to use the Marks solely for the design, manufacture, production, marketing, advertising, promotion and sale of Merchandise by Licensee or its Affiliates at the Licensed Locations.

IV. Licensor’s Approval Rights.

A. Licensee warrants that the Merchandise will be of good quality in design, materials and workmanship and suitable for its intended purpose, that no injurious or deleterious substances will be used in or on the Merchandise, that the Merchandise will not cause harm when used as intended and with ordinary care and that the Merchandise will be manufactured, marketed, advertised, promoted and sold or otherwise distributed in compliance with all applicable laws and regulations.

B. Prior to the proposed sale of any Merchandise which has not been previously approved by Licensor, or the proposed use of any advertising or promotional materials in connection with the Merchandise (Advertising Materials) which have not previously been approved by Licensor, Licensee shall submit the concepts for such Merchandise or Advertising Materials to Licensor for its review.

C. Licensor shall have the right to disapprove of any concepts for Merchandise or Advertising Materials if it determines, in the exercise of its reasonable good faith judgment, that the Merchandise or Advertising Materials would impair the value and goodwill associated with the Marks or Licensor’s associated copyrights or trademarks...

D. Licensee agrees to maintain the quality of all Merchandise manufactured pursuant to this Agreement up to the specifications, quality and finish of the production sample of such Merchandise approved by Licensor under Section IV.B...

E. Licensee shall not, and shall not permit its Affiliates, to use any other name, trademark or logo on any Merchandise or on the packaging of any Merchandise which contains, reflects or otherwise uses the Marks.

V. Term. The term of this Agreement (the Term) shall commence on the Effective Date and terminate on the fifth anniversary of the Effective Date, unless terminated earlier by Licensee at its option upon 60 days’ notice to Licensor.

VI. Royalty Payments. Licensee shall pay royalties (“Royalties”) to Licensor based on Net Revenues from sales of Merchandise during the Term or subsequent to the termination of this Agreement for any reason.

Royalty percentages:

(i) of Net Revenues up to $ accrued during the Term;

(ii) of Net Revenues between $ and $;

(iii) of Net Revenues in excess of $.

VII. Monthly Royalty Payments and Statements.

A. Licensee shall pay all Royalties due to Licensor under this Agreement in respect of sales of Merchandise during any month within 15 days following the end of such month.

B. The first such Royalty payment and statement shall be due no later than and shall include any sales of Merchandise between the Effective Date and .

C. If Licensee or its Affiliates sell any Merchandise at a price less than above Licensee’s manufactured cost, Net Revenues shall be deemed to reflect a retail selling price of above cost.

F. Licensee shall pay Licensor interest on late Royalty payments at an annual rate of above the prevailing prime interest rate of .

VIII. Records and Audit Rights.

B. Licensee shall be charged for the reasonable out-of-pocket expenses of any examination or audit that conclusively establishes an underpayment of Royalties in excess of of the Royalties reported and paid for the relevant calendar month.

IX. Exploitation of License; Restrictions on Sale.

B. The Merchandise shall be sold to the public only in the manner in which merchandise articles of the same general type are customarily sold to the public.

X. Trademark Protection.

C. Licensee agrees to affix to Merchandise and to the Advertising Materials the following notice or such other notice as may be specified in writing by Licensor: (Notice of Trademark).

XI. Copyright Provisions.

A. The authorization of Licensor to Licensee to make public distribution of the Merchandise and Advertising Materials is expressly conditioned upon the agreement of Licensee to place on all Merchandise and Advertising Materials the copyright notice in the name of Licensor as set forth in Section X.D.

XII. Representations and Warranties; Indemnification.

A. Each party represents and warrants to the other that this Agreement has been duly authorized, executed and delivered by such party and constitutes a valid and binding obligation of such party.

XIII. Reservation of Rights. All rights in and to the Marks are retained by Licensor for its own use, except for the specific rights in the Marks licensed to Licensee under this Agreement.

XIV. Infringements; Claims.

A. If Licensee learns that a party is making unauthorized use of the Marks, Licensee agrees to promptly give Licensor written notice.

XV. No Sublicensing; Agreements with Manufacturers.

B. Licensee and its Affiliates shall have the right to arrange with another party to manufacture Merchandise or components of Merchandise for exclusive sale, use and distribution by Licensee and its Affiliates.

XVI. Breach and Termination.

A. Licensor shall have the right to terminate this Agreement for any breach of this Agreement set forth below if after 30 days’ written notice from Licensor to Licensee specifying the breach and stating prominently that it is a NOTICE OF BREACH, Licensee fails to cure such breach.

XVII. General Provisions.

G. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of (name of state).

H. Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto.