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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-2
(Mark One)
/X/ Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1998
/_/ Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________________ to ____________________
Commission file number 0-21168
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK 13-3253392
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5 East 80th Street, New York, New York 10021
- -------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(212) 717-6544
--------------
(Registrant's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
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Purchase Rights for Class B Series 1 Preferred Stock, par value $0.001
----------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.|_|
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As of April 13, 1999, 15,477,471 shares of Common Stock, par value $0.001 per
share (the "Common Stock") of the registrant were outstanding and the aggregate
market value of the voting stock (computed based on the average of the last bid
and asked price on such date) held by non-affiliates was approximately
$77,138,355.
EXPLANATORY NOTE
This amendment is being filed to include Exhibit 10.23, License Agreement, dated
September 1, 1998, between the Company and Nordstrom., Inc., and Exhibit 10.24,
Agreement, dated December 13, 1996, between the Company and Gordon Laboratories,
Inc., which were omitted from the Company's Annual Report on Form 10-K/A filed
with the Securities and Exchange Commission on November 12, 1999.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) and (d)1. Financial Statements
The following Financial Statements of the Company are
included in Part II, Item 8 of this report:
Independent Auditors' Reports
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996
Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
(a) and (d)2. Financial Statements Schedules
All schedules have been omitted because they are not applicable, are
not required or because the required information is included in the
Financial Statements or notes thereto.
(b) Reports on Form 8-K:
Form 8-K**, dated November 12, 1998, announcing that the Company
executed a manufacturing agreement under which the manufacturer is the
exclusive manufacturer/assembler and packager of the two models of the
Company's instrument.
(c) The following exhibits are included in this report:
Number Description of Document
3.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (File
No. 33-54256), filed on November 5, 1992, as
amended (the "Registration Statement")).
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3.1.1 Certificate of Amendment to the Certificate of
Incorporation of the Company regarding the change
of the Company's name (incorporated by reference
to Exhibit 3.1.1 to the Registration Statement).
3.1.2 Certificate of Amendment to the Certificate of
Incorporation of the Company increasing the
authorized number of shares of Common Stock and
increasing the authorized number of shares of
Preferred Stock (incorporated by reference to
Exhibit 3.1.2 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31,
1996).
3.1.3 Certificate of Amendment to the Certificate of
Incorporation of the Company dated February 13,
1998 effecting the three-for-two Stock Split and
certain changes to the Class A Convertible
Preferred Stock (incorporated by reference to
Exhibit 3.1.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1997).
3.14 Certificate of Amendment to the Certificate of
Incorporation of the Company dated January 8, 1999
to fix the relative rights, preferences and
limitations with respect to the Class B Preferred
Stock of the Company, pursuant to the adoption of
the Shareholders' Rights Plan (incorporated by
reference as Exhibit 1 to the Form 8-A dated
January 5, 1999).
3.2 By-Laws of the Company (incorporated by reference
to Exhibit 3.2 to the Registration Statement).
4.1 Specimen form of the Common Stock Certificate
(incorporated by reference to Exhibit 4.1 to the
Registration Statement).
4.2 Shareholders' Rights Plan, adopted by the Company
on December 31, 1998 (incorporated by reference as
Exhibit 1 to the Form 8-A dated January 5, 1999).
9.1 Voting Proxy dated December 13, 1995, of David
Kenneth Macfarlane to Darby Simpson Macfarlane
(incorporated by reference to Exhibit 2 to
Schedule 13D of Darby Macfarlane and Ken
Macfarlane dated February 12, 1996).
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Number Description of Document
9.2 Voting Trust Agreement dated December 13, 1995,
between David Kenneth Macfarlane and Darby Simpson
Macfarlane (incorporated by reference to Exhibit 3
to Schedule 13D of Darby Macfarlane and Ken
Macfarlane dated February 12, 1996).
10.1* Form of Employment Agreement between the Company
and Darby Simpson Macfarlane (incorporated by
reference to Exhibit 10.1 to the Registration
Statement).
10.2* Form of Employment Agreement between the Company
and David Kenneth Macfarlane (incorporated by
reference to Exhibit 10.2 to the Registration
Statement).
10.3* Consulting Agreement, dated February 25, 1992,
between the Company and Dr. Fred W. Billmeyer, Jr.
(incorporated by reference to Exhibit 10.4 to the
Registration Statement).
10.4 Form of Indemnity Agreement between the Company
and its directors and officers (incorporated by
reference to Exhibit 10.6 to the Registration
Statement).
10.5 Know-How Agreement, dated September 3, 1992,
between the Company, Darby Simpson Macfarlane and
David Kenneth Macfarlane (incorporated by
reference to Exhibit 10.12 to the Registration
Statement).
10.6 Assignment, dated September 3, 1992 from Darby
Simpson Macfarlane to the Company regarding
Intellectual Property (incorporated by reference
to Exhibit 10.13 to the Registration Statement).
10.7** Agreement, dated April 16, 1992, between the
Company and IMS Cosmetics, Inc. (incorporated by
reference to Exhibit 10.14 to the Registration
Statement).
10.8 U.S. Patent No. 4,909,632 relating to Method for
Selecting Personal Compatible Colors (incorporated
by reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994).
10.9 U.S. Patent No. 5,311,293 relating to Method and
Instrument for Selecting Personal Compatible
Colors (incorporated by reference to Exhibit 10.18
to the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1994).
10.10 U.S. Patent No. 5,313,267 relating to Method and
Instrument for Selecting Personal Compatible
Colors (incorporated by reference to Exhibit 10.19
to the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1994).
10.11 The Australian Patent relating to Method of
Selecting
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Personal Compatible Color (incorporated by
reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994).
10.12 European Community Patent No. 0446512 relating to
Method for Selecting Personal Compatible Colors
(incorporated by reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994).
10.13 U.S. Patent No. 5,671,735 relating to Method and
Apparatus for Detecting and Measuring Conditions
Affecting Color (incorporated by reference to
Exhibit 10.13 to the Amendment to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1998).
10.14 Assignment, dated October 30, 1992, between Darby
Simpson Macfarlane and the Company relating to the
Avon litigation (incorporated by reference to
Exhibit 10.19 to the Registration Statement).
10.15 Know-How Assignment, dated October 30, 1992, from
Pink & Peach Computer Corp. to the Company
(incorporated by reference to Exhibit 10.20 to the
Registration Statement).
10.16 1992 Stock Option Plan (incorporated by reference
to Exhibit 10.1 to the Registration Statement on
Form 8-A (File No. 333-51697).
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Number Description of Document
10.17 Consulting Agreement dated January 6, 1995,
between the Company and Janssen-Meyers Associates,
L.P. (incorporated by reference to Exhibit 10.27
to the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1994).
10.18 Warrant Agreement dated January 6, 1995, between
the Company and Janssen-Meyers Associates, L.P.
(incorporated by reference to Exhibit 10.28 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994).
10.19 Warrant Agreement dated March 13, 1995, between
the Company and Janssen-Meyers Associates, L.P.
(incorporated by reference to Exhibit 10.29 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994).
10.20** Manufacturing Agreement, dated November 3, 1998,
between the Company and a third party manufacturer
(incorporated by reference as Exhibit 10.1 to the
Form 8-K dated November 12, 1998).
10.21 Rights Agreement, dated January 11, 1999, between
the Company and Continental Stock Transfer & Trust
Company (incorporated by reference as Exhibit 1 to
the Form 8-A dated January 5, 1999).
10.22 Subscription Agreement, dated April 15, 1999; Form
of 14% Convertible Debentures Due April 15, 2002
(to be filed supplementally).
10.23+ License Agreement, dated September 1, 1998,
between the Company and Nordstrom., Inc.
10.24+ Agreement, dated December 13, 1996, between the
Company and Gordon Laboratories, Inc.
18.1 Letter, dated April 21, 1998, from Wiss & Company,
LLP informing the Company that it would not stand
for re-election as the Company's principal
accountants (incorporated by reference as Exhibit
16 to the Form 8-K dated April 24, 1998).
18.2 Press Release, dated May 1, 1998, announcing that
the Company engaged BDO Seidman LLP as the
principal accountants for the Company
(incorporated by reference as Exhibit 99 to the
Form 8-K dated May 5, 1998).
21 Subsidiaries of the Company (incorporated by
reference to Exhibit 21 to the Company's Post
Effective Amendment No. 1 on Form SB-1 to the
Registration Statement filed on January 11, 1994).
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23 Consents of Independent Auditors.
27 Financial Data Schedule
* Management contract or compensatory plan or
arrangement required to be filed as an exhibit.
** Confidential treatment has been requested with
respect to certain information contained in this
agreement.
+ Filed herewith.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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<S> <C>
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
By: /s/ Darby S. Macfarlane Date: November 15, 1999
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Darby S. Macfarlane,
Chief Executive Officer
By: /s/ Leslie Foglesong Date: November 15, 1999
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Leslie Foglesong,
Treasurer
(Chief Financial and Accounting Officer)
In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Darby S. Macfarlane Date: November 15, 1999
-----------------------
Darby S. Macfarlane,
CEO; Chairman of the Board;
Assistant Treasurer; Director
By: /s/ David K. Macfarlane Date: November 15, 1999
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David K. Macfarlane,
Vice President, Research & Development;
Director
By: /s/ Leslie Foglesong Date: November 15, 1999
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Leslie Foglesong,
Secretary; Treasurer; Director
</TABLE>
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By: /s/ Edmund Vimond Date: November 15, 1999
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Edmund Vimond,
Director
By: /s/ Edward Mahoney Date: November 15, 1999
------------------
Edward Mahoney,
Director
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EXHIBIT 10.23
LICENSE AGREEMENT
This license agreement ("Agreement"), dated September 1, 1998, is by
and between Chromatics Color Sciences International, Inc., a New York
corporation, having its offices at 5 E. 80 St., New York, NY 10021
("Chromatics") and Nordstrom, Inc., a Washington corporation, having its offices
at 1617 6th Ave., Suite 500, Seattle, WA 98101 ("Nordstrom").
RECITALS
WHEREAS, Chromatics is the developer and owner of certain technology
and processes for skin and cosmetic product color analysis and custom color
formulation of cosmetics, whereby the color of various cosmetic products can be
coordinated to each other and to skin color;
WHEREAS, Nordstrom is a high quality specialty retailer of fashion wear
and related products including cosmetics and wishes to sell the Products defined
herein as a Nordstrom line of cosmetic products under the name C[2]O Color to
Order, a trademark solely owned by Nordstrom;
WHEREAS, Chromatics wishes to grant to Nordstrom and Nordstrom wishes
to accept from Chromatics, a license to use the software for the
Colormate(Registered) II System to sell the Products provided by Chromatics and
lease the Colormate(Registered) II System in the Territory for a Test Period
described in the Term of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purpose if this Agreement, the following terms shall have the meaning stated
below:
1.1 "Bulk Materials" means the lipsticks and foundations to be provided by
Chromatics for Nordstrom to sell which are recommended by the
Colormate(Registered) II System. Nordstrom shall approve the non-color related
formulations of these lipsticks and foundations within 30 days of signing this
Agreement providing such formulations are delivered to Nordstrom at least two
(2) weeks prior to the expiration of such thirty (30) days.
1.2 "Colormate(Registered) II System" refers to the Chromatics color measurement
units which measure and analyze skin color and based on such analysis select a
cosmetic color formulation which matches or compliments the skin color or other
Products.
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1.3 "Marketing Intangibles" means Nordstrom's trademark "C[2]O Color to Order,"
and all trademarks, trade names, brand names, logos, trade dress, art work,
designs, service marks, packaging, marketing strategies, customer lists,
customer identification information, marketing campaigns, sales promotions and
advertising materials created, owned and/or registered to or by Nordstrom
relating to the marketing of any Products including searches concerning any such
Marketing Intangibles and any copyrights, and other rights which may exist in or
otherwise protect such Marketing Intangibles. Nordstrom does not claim, and
shall not acquire, any rights in or ownership of any Technology or Products or
other property of Chromatics by virtue of the fact that such items are
referenced or described in any Marketing Intangibles.
1.4 "Products" means all cosmetic color products produced using the Technology,
which currently include foundation, concealer, blush, eyeshadow, face powder and
lipstick.
1.5 "Technology" means all technology, relating to the Colormate(Registered) II
System, its color measurement hardware and software including without limitation
the Product Color Recommendations and the Product Color Formulations of the
Products developed by Chromatics as part of the custom color cosmetic system
embodied in the Colormate(Registered) II System.
1.6 "Territory" means the four Nordstrom full line specialty stores in the
United States to be designated by Nordstrom within 30 days of the signing of
this Agreement.
1.7 "Specialty Retail Department Stores" means retailers other than Nordstrom
that sell apparel, footwear, cosmetics and/or similar merchandise in multiple
departments within one store such as The Bon Marche, J.C. Penney, Macys, Neiman
Marcus and similar stores. This excludes specialty chain stores, such as, The
Gap, The Limited and Victoria's Secret.
1.8 "Custom Blending" means the custom mixing and blending of cosmetic pigments
by the salesperson for the Product to make a particular shade and formula of the
Product at point of sale (a physical location at the time the Product is sold to
a particular customer) based on the Product Color Formulations and Product Color
Recommendations for that particular customer. This does not include a Product
(which may be claimed to be custom blended) but which is carried in a line of
cosmetic products and recommended and sold to a particular customer based on a
Product Color Formulation and a Product Color Recommendation for that particular
customer if it is not custom blended as specified above.
1.9 "Product Color Formulations" means the color formulations of the Products
produced using the Technology.
1.10 "Product Color Recommendations" means the cosmetic Product colors
recommended for a customer's use by the Technology.
2
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ARTICLE 2
GRANT
2.1 License Grant. Chromatics hereby grants to Nordstrom, and Nordstrom hereby
accepts, a non-exclusive license in the Territory to use the Technology solely
to sell the Products in the Territory in order to evaluate the Technology (the
"Test") for the six month term of this Agreement.
2.2 Additional Options. Chromatics hereby grants to Nordstrom for the six month
term of this Agreement and under terms acceptable to both parties the right of
first refusal for the exclusive use of the Technology for the sale of Products
in Specialty Retail Department Stores in the Territory and the exclusive right
to do Custom Blending of the Products in the Territory during the six month term
of this Agreement. In the event Chromatics at any time during the six month term
of this Agreement offers a license to any third party (except for this
non-exclusive six month license) for the use of the Technology, or any part
thereof as defined in Section 1.5, for the sale of Products in Specialty Retail
Department Stores and/or the Custom Blending of the Products in the United
States, Chromatics shall give Nordstrom written notice thereof, including the
terms of any proposed license or agreement that Chromatics desires to enter
into, and Nordstrom may exercise its right of first refusal by written notice to
Chromatics within thirty (30) days after receipt of such notice after which date
Nordstrom's right of first refusal for such license if not exercised will
expire. In the event Nordstrom exercises its right of first refusal hereunder,
the non-exclusive license granted in Section 2.1 shall become an exclusive
license as specified above for the remainder of the six month term of this
Agreement, under terms no less favorable than the terms offered or to be offered
to such third party.
ARTICLE 3
DUTIES OF NORDSTROM
3.1 Reasonable Efforts. During the term of this Agreement, Nordstrom shall give
and devote commercially reasonable efforts to the marketing, promotion and sale
of the Products under the name C[2]O Color to Order in the Territory. Nordstrom
shall provide computers capable of interfacing with the Colormate(Registered) II
Systems at each of the four (4) Nordstrom store locations of the Territory.
Chromatics can take credit publicly for the Technology, the
Colormate(Registered) II System, the Product Color Formulations and the Product
Color Recommendations of the Products providing, such credit shall not make use
of the Nordstrom name other than to say the technology is used in the Nordstrom
stores in any SEC filing, or related press release for public disclosure by
Chromatics or, unless otherwise agreed in advance in writing.
3.2 Equipment and Insurance. Nordstrom shall lease one Colormate(Registered) II
System unit from Chromatics for each of the four (4) Nordstrom full-line
specialty stores of the Territory, at a cost of Two Hundred Dollars U.S. ($200)
per month for four units for a three month period
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commencing on the date of delivery of the Colormate(Registered) II System units.
In the event of theft, loss or extensive damage to any Colormate(Registered) II
System unit while in Nordstrom's possession or control, Nordstrom will be
responsible for the replacement cost of $3,500 for each such unit.
3.3 Purchase Orders. Nordstrom shall place an initial order for six hundred
(600) each of thirty-five (35) lipsticks at a cost per lipstick of $3.00 and one
thousand (1,000) each of seventeen (17) foundations at a cost per foundation of
$3.00 for delivery no later than three (3) months from the date this Agreement
is fully executed.
3.4 License Fee. Nordstrom shall pay Chromatics $45,000 upon signing of this
Agreement for the six month non-exclusive license of: the software including the
Product Color Recommendations of the Colormate(Registered) II System, the
Technology, the Colormate(Registered) II System and the Product Color
Formulation of Products and Product Color Recommendations of the
Colormate(Registered) II System software program. This fee will include
Chromatics' inclusion of the pigments submitted to Chromatics by Nordstrom for
use in formulating certain eyeshadows, blush, face powder, concealer and
foundations in the Product Color Formulation of Products within three (3) months
of the date on which Chromatics receives thirty (30) unit doses of each shade of
such pigment formulations from Nordstrom.
ARTICLE 4
DUTIES OF CHROMATICS
4.1 Colormate(Registered) II Systems. Chromatics shall provide to Nordstrom no
later than three (3) months from the date this Agreement is fully executed, one
Colormate(Registered) II System unit each for the four Nordstrom full line
specialty stores of the Territory including Roosevelt Field, NY, Downtown
Seattle, WA and Dallas Galleria, TX, and one additional store in California to
be designated by Nordstrom within 30 days of the signing of this Agreement.
Chromatics shall also provide the software contained in the
Colormate(Registered) II System to Nordstrom in accordance with Section 3.4 and
4.3. During the term of this Agreement Chromatics shall repair or replace at its
own expense any Colormate(Registered) II System units that are not functioning
properly if due to defect in workmanship in the Colormate(Registered) II System,
promptly after receiving a request from Nordstrom. If such non-functioning unit
is due to damage caused by a negligent act of Nordstrom or of an employee or
agent of Nordstrom, Chromatics shall repair or replace any such
Colormate(Registered) II System unit at Nordstrom's expense.
4.2 Bulk Materials. Chromatics shall sell and deliver to Nordstrom, no later
than three (3) months from the date this Agreement is fully executed, the Bulk
Materials ordered by Nordstrom in accordance with Section 3.3 of this Agreement,
subject to the terms and conditions of 3.4.
4.3 Training and Operation. Chromatics shall provide Nordstrom with all
necessary training and operational information for the efficient use and
operation of the Colormate II System licensed, provided or purchased under this
Agreement at no additional cost, including but not
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limited to operational information for the use of the software that will collect
and store all contact information, Product Color Formulations and Product Color
Recommendations for each Nordstrom customer.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Chromatics represents that to the best of its knowledge and belief, the
Technology and Products do not infringe any rights owned or possessed by any
third party;
5.2 Chromatics represents that it is the sole and exclusive owner of the
Technology, all of which is free and clear of any liens, charges and
encumbrances, and no other person or entity has any claim of ownership with
respect to the Technology whatsoever;
5.3 Chromatics warrants that it has the full right, power and authority to enter
into this Agreement and to grant the interest in the Technology granted herein
and that it has registered the trademark "My Colors by Chromatics(Registered)"
and "Colormate(Registered);"
5.4 Chromatics represents that there are no claims, judgements, or settlements
to be paid by Chromatics or pending claims or litigation relating to the
Technology or Products;
5.5 Chromatics represents that foundations provided to Nordstrom under this
Agreement comply with the manufacturing and product safety standards described
in the Nordstrom purchase order attached as Exhibit A;
5.6 Chromatics represents that the Colormate(Registered) II System units, are
UL and FCC approved for use pursuant to this Agreement.
5.7 Nordstrom represents that it has filed an application for registration of
the trademark "C[2]O Color to Order" in the United States Patent and Trademark
Office ("PTO") and will take reasonable efforts to prosecute said application to
final determination by the PTO;
5.8 Nordstrom warrants that it has the full right, power and authority to enter
into this Agreement.
ARTICLE 6
PAYMENT
6.1 Amount of Payment. As full consideration for the rights and license granted
under this Agreement, Nordstrom shall pay Chromatics the License Fee of Section
3.4 and the lease
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payments for leased Colormate(Registered) II System units and the purchase price
of the Bulk Materials ordered from Chromatics in accordance with Sections 3.2,
3.3, 3.4, 6.1 and 6.2.
6.2 Terms of Payment. Nordstrom shall pay Chromatics its License fee on the date
of signing of this Agreement. Payment for the initial order of foundations shall
be made 1/2 at the time of the order and the balance within seven (7) days of
Nordstrom's receipt of an invoice from Chromatics or the delivery of such
foundations to Nordstrom, whichever is later. Payment for the initial order of
lipsticks shall be made as the lipsticks are sold, every thirty days during the
term of this Agreement and a final payment within thirty (30) days of the
expiration of the term of this Agreement. Any remaining unsold lipsticks will be
returned to Chromatics within thirty (30) days of the expiration of the term of
this Agreement. Any lipsticks not returned to Chromatics or not paid previously
for by Nordstrom to Chromatics will be paid for by Nordstrom to Chromatics in
the final payment.
ARTICLE 7
INTELLECTUAL PROPERTY OWNERSHIP
7.1 Ownership of Technology. Nordstrom acknowledges that all Technology, the
Product Color Formulations, and the Product Color Recommendations of the
Products, the Colormate(Registered) II System and its software are the exclusive
property of Chromatics, subject to the license hereby granted.
7.2 Ownership of Marketing Intangibles. Chromatics acknowledges that Marketing
Intangibles are and shall remain the exclusive property of Nordstrom. Chromatics
is the owner of the Product Color Formulations and Product Color
Recommendations, the trademarks "Colormate(Registered)" and "My Colors by
Chromatics" and the Colormate(Registered) II System as the color analysis system
for the Products. Chromatics shall not use the name "Nordstrom", the trademark
"C[2]O Color to Order," or any other trademark, trade name, service mark, logo,
or other intellectual property of Nordstrom for any purpose, except as
specifically authorized by Nordstrom in writing. Nordstrom shall not use the
name Chromatics, the trademarks, "Colormate(Registered)" or "My Colors by
Chromatics(Registered)" or any other trademark, trade name, service mark, logo,
Product Color Formulations and Product Color Recommendations of the
Colormate(Registered) II System or other intellectual property of Chromatics for
any purpose except as specifically authorized by Chromatics in writing.
ARTICLE 8
TERM & TERMINATION
8.1 Term. Unless earlier terminated in accordance with Section 8.2 below, this
Agreement shall continue in effect for a period of six (6) months from the date
of the signing of this Agreement (the "Test Period") as a non-exclusive license
and lease of the Colormate(Registered) II System
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and Technology. If sales of the Products are deemed successful during the Test
Period of this Agreement, then the term of this Agreement may be renewed until
December 31, 1999 upon terms mutually agreeable to both parties. Thereafter this
Agreement may be renewed annually for a period of one year on January I of each
subsequent year, and expanded to additional Nordstrom stores by written notice
given by Nordstrom to Chromatics thirty (30) days before January 1 of the
renewal year for a total additional period of five (5) years under terms
mutually acceptable to both parties. Sale of such Products will be deemed
successful if one-third of the quantities purchased in the initial order as
specified in Section 3.3 are sold during the term of this Agreement.
8.2 Termination Events. This Agreement may be terminated upon the occurrence of
any of the following events:
8.2.1 The parties may, at any time, mutually agree to terminate this
Agreement, such termination to be effective at such time as they deem
appropriate, however, Nordstrom will be responsible to Chromatics for
all payments in Sections 3.2, 3.3, 3.4, 6.1 and 6.2. Lease payments for
the Colormate(Registered) II System will be prorated to date of
termination.
8.2.2 Upon the breach or the discovery of a breach of a warranty set
forth in Article 5, either party may terminate this Agreement by
notice, to take effect immediately upon receipt thereof by the other
party, unless otherwise specified in the notice.
8.2.3 If either party makes any transfer in violation of Section 11.2,
the non-transferring party shall have the right to terminate this
Agreement immediately by giving written notice to the transferring
party.
8.2.4 If either party fails to perform any of its obligations or
covenants contained in this Agreement and fails to cure such default
within thirty (30) days after notice from the other party, the party
giving such notice shall have the right to terminate this Agreement
immediately by giving written notice to the defaulting party. Absence
of a notice of default or of a written notice of termination under this
Section shall not constitute a waiver of any rights arising as a result
of such default. An election to terminate the Agreement under this
Section shall not constitute a waiver of any damages that may be
available to the non-breaching party as a result of the default by the
other party.
8.3 Rights and Obligations of Termination.
8.3.1 Upon the expiration of this Agreement, Nordstrom shall return the
Colormate(Registered) II System units in good and working condition to
Chromatics, or pay for repair or replacement of any damaged unit.
8.3.2 Upon the termination of this Agreement, all right, title, and
interest in any Marketing Intangibles owned by Nordstrom shall remain
exclusively with Nordstrom.
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8.3.3 During the term of this Agreement (with the exception of the
non-exclusive six month license granted herein) and upon the
termination of this Agreement, all right, title, and interest in the
Technology, Colormate(Registered) II System, Product Color
Recommendations and Product Color Formulations, all of which have been
developed or are owned by Chromatics shall remain exclusively with
Chromatics.
8.4 In the event that the six month term of this Agreement is not renewed and a
customer who purchased from Nordstrom during the six month term of this
Agreement a Product of a particular shade recommended for that customer by the
Technology in the Colormate(Registered) II System wishes to purchase a Product
of the same particular shade after termination of this Agreement, Nordstrom
shall purchase the Product of that particular shade from Chromatics at the same
or a comparable cost at which the Product of that particular shade was
originally purchased from Chromatics unless (i) Chromatics is unable or
unwilling to provide the Product of that particular shade, or (ii) Chromatics
has been acquired by another company, in either event of which Nordstrom shall
have the right to have that cosmetic product of a shade matching that particular
shade of Product made for it by any party other than Chromatics and the right to
sell that matched cosmetic product solely to the customer who purchased the
Product of that particular shade during the six month term of this Agreement so
as to continue to serve that particular customer. Nothing in this paragraph or
this Agreement shall limit or restrict Nordstrom's rights to purchase cosmetic
products from others or to sell cosmetic products which compete with the
Products licensed under this Agreement as long as the sale of such competitive
cosmetic products by Nordstrom is not a breach of this Agreement, including
Exhibit B.
ARTICLE 9
REASONABLE PRECAUTIONS TO MAINTAIN SECRECY
9.1 Precautions. Nordstrom shall treat all Chromatics' Confidential Information
as provided in the "Confidential Agreement" attached as Exhibit B and shall use
the Confidential Information solely as specified in the Confidential Agreement
and in this Agreement and solely during the term of this Agreement or as
expressly provided for in Section 8.4 herein.
9.2 Survival. This Article 9 shall survive the termination of this Agreement,
regardless of the reason for such termination.
ARTICLE 10
INDEMNIFICATIONS
10.1 Indemnification. Chromatics shall defend (with counsel acceptable to
Nordstrom), indemnify, and hold Nordstrom harmless from any and all claims,
suits, liabilities, damages, losses or expenses, including attorneys' fees,
asserted against or incurred by Nordstrom by reason of, or arising out of, or
occurring in connection with any infringement or alleged infringement of
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intellectual property resulting from the use of the Technology and the
Colormate(Registered) II System or the manufacture, sale or use of the Products
(other than the Marketing Intangibles) by Nordstrom. In the event that Nordstrom
learns of any infringement or threatened infringement by the Technology and the
Colormate(Registered) II System, Nordstrom shall notify Chromatics forthwith.
Nordstrom agrees to cooperate and provide necessary information and assistance
to Chromatics at Chromatic's expense for actions that Chromatics may take to
defend Chromatics proprietary interest in the Technology and the
Colormate(Registered) II System. Chromatics agrees that Nordstrom may maintain
records of Chromatics compliance with the representations and warranties of
Chromatics made in this Agreement or otherwise, and that Nordstrom may at any
time, upon reasonable notice to Chromatics, undertake inspection of Chromatic's
manufacturing facilities for foundations, excluding lipsticks and equipment, in
order to determine such compliance with subsection 5.5 herein. The lipsticks
provided pursuant to this Agreement are ready for shipment and any inspection of
such lipsticks is limited to the finished product.
10.2 Indemnification. Nordstrom shall defend (with counsel acceptable to
Chromatics), indemnify and hold Chromatics harmless from any and all claims,
suits, liabilities, damages, losses or expenses, including attorneys' fees,
asserted against or incurred by Chromatics by reason of, or arising out of, or
occurring in connection with any infringement or alleged infringement of
intellectual properties resulting from the use of the Marketing Intangibles for
the sale of Products by Nordstrom. In the event that Chromatics learns of any
infringement or threatened infringement by Marketing Intangibles, Chromatics
shall notify Nordstrom forthwith. Chromatics agrees to cooperate and provide
necessary information and assistance to Nordstrom at Nordstrom's expense for
actions that Nordstrom may take to defend Nordstrom's proprietary interest in
the Marketing Intangibles.
10.3 Survival. This Article 10 shall survive the termination of this Agreement,
regardless of the reason for such termination.
ARTICLE 11
GENERAL PROVISIONS
11.1 Governing Law. This Agreement, and any disputes arising out of or in
connection with this Agreement, shall be governed by and construed in accordance
with the laws of the state of Washington.
11.2 Assignment. Neither party shall have the right or the power to assign,
delegate, or otherwise transfer any or all of its rights or obligations arising
under this Agreement without the prior written consent of the other party. The
transfer, assignment, or change in the beneficial ownership of stock or voting
control of Chromatics in the aggregate in excess of 50% shall constitute an
assignment hereunder.
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11.3 Legal Expenses. The prevailing party in any legal proceeding brought by one
party against the other party to this Agreement, and arising out of or in
connection with this Agreement, shall be entitled to recover its legal expenses
including costs and reasonable attorneys' fees.
11.4 Force Majeure. Neither party shall be liable to the other party for any
delay or omission in the performance of any obligation under this Agreement,
other than the obligation to pay monies, where the delay or omission is due to
any cause or condition beyond the reasonable control of the party who is obliged
to perform.
11.5 Purchase Order. The terms and conditions of Nordstrom's purchase order,
attached hereto as Exhibit A, shall be incorporated herein by reference. To the
extent of any inconsistency, the terms and conditions of the purchase order
shall override the specific terms of this Agreement. Subsection 10 of the
purchase order attached hereto as Exhibit A is deleted from this Agreement.
11.6 Notices. All notices required by this Agreement shall be in writing and
sent by facsimile and by certified U.S. mail, postage prepaid, return receipt
requested to Chromatics or Nordstrom at their addresses as listed herein, or to
such addresses as either party may from time to time advise the other party in
writing in accordance with this notice requirement.
To Chromatics: To Nordstrom:
Chromatics Color Sciences Nordstrom, Inc.
International, Inc. 1617 6th Ave., Suite 500
5 East 80 St. Seattle, WA 98101
New York, NY 10021 Attn: Dale Crichton
Attn: Darby Macfarlane
Tel. No.: (212) 717-6544 Tel. No.: (206) 628-1118
Fax No.: (212) 717-6675 Fax. No.: (206) 628-1105
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1998.
Chromatics Color Sciences. Nordstrom, Inc.
International, Inc.
BY: /s/ Darby Macfarlane BY: /s/ Dale C. Crichton
------------------------------ -----------------------------
Darby S. Macfarlane Dale C. Crichton
Chief Executive Officer Executive Vice President
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EXHIBIT A
NORDSTROM
TERMS AND CONDITIONS OF PURCHASE ORDER
The following terms and conditions, in addition to those on the front hereof,
are a part of this purchase order and are binding upon Seller.
ACCEPTANCE BY SELLER IS LIMITED TO THE TERMS OF THIS PURCHASE ORDER. PURCHASER
OBJECTS TO ANY DIFFERENT OR ADDITIONAL TERMS IN SELLER'S ACCEPTANCE OR ANY OTHER
DOCUMENT OR FORM TRANSMITTED ON BEHALF OF SELLER, UNLESS PURCHASER'S WRITTEN
CONSENT IS FIRST OBTAINED.
1. This order is not valid unless signed or otherwise authorized in writing by
the Purchaser's buyer and, when applicable, by Purchaser's Merchandise Manager.
2. Purchaser will not assume liability for any goods shipped to it or upon which
work is commenced by Seller prior to receipt by Seller of the order duty signed
or otherwise authorized.
3. In the event Seller is unable to deliver any part or all of the merchandise
called for by this order, Seller agrees to notify the Purchaser immediately.
Such notice will not limit the remedies available to Purchaser or the liability
of Seller for nonperformance.
4. Purchaser or Purchaser's agent may refuse delivery or return F.O.B.
Purchaser's dock:
a. Shipments made before the earliest ship date or after the cancel
date specified on the face of this order, time of shipment being
of the essence of this order.
b. Shipments of less than or in excess of quantities ordered.
c. Goods which are not according to sample or which are not specified
in this order.
d. Goods which are not as represented or as warranted.
e. Shipments which are not in compliance with the packing
instructions and invoicing instructions specified on the face of
this order.
f. Shipments which are not in compliance with the transportation
terms and conditions contained in this order or in the Nordstrom
Routing Guide.
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g. Goods which for any reason, except payment of applicable duties
and tariffs, will not be cleared for entry by U.S. Customs.
5. All goods furnished under this order shall be subject to inspection and
testing by representatives of Purchaser, its customers or agents. Payments for
goods prior to inspection shall not constitute acceptance and Purchaser reserves
the right to hold for Seller or return to Seller, at Seller's expense, any
rejected goods.
6. Seller warrants that the merchandise shipped under this order is fit and safe
for the use for which it was manufactured and that said merchandise or the
resale thereof by Purchaser does not and will not violate any laws, regulations,
orders or ordinances of the country of origin or of the United States or any
state or any agency or political subdivision thereof.
7. Seller warrants that it does not and will not in violation of applicable law,
custom or practice (a) discriminate in hiring on the basis of race, color,
national origin, gender, religion or sexual orientation, or (b) utilize child
labor, prison labor or indentured or force labor in the operation of its
business.
8. Seller warrants that the merchandise shipped under this order, including
packaging and labeling: (a) was produced in compliance with all applicable laws,
regulations, orders and ordinances of the country of origin and of the United
States and any state, or any agency or political subdivision thereof, including
without limitation any environmental or hazardous substance laws and
regulations, the Federal Fair Labor Standards Act and other state and local wage
and hour and wage payment laws and regulations; (b) does not and will not
infringe any patent, trademark, trade name, copyright, trade secret or other
similar right; (c) is accurately labeled and clearly identifies the country of
origin; and (d) is labeled in accordance with and complies in all respects with
any and all applicable federal, state and local laws, regulations, orders and
ordinances, including without limitation any applicable rules of the Federal
Trade Commission, the Consumer Products Safety Commission and the Department of
Health, Education and Welfare and the requirements of each of the following Acts
to which it may be subject: The Federal Food, Drug and Cosmetic Act, the Wool
Products Labeling Act of 1939, the Fair Packaging and Labeling Act, the Fur
Products Labeling Act, the Textile Fiber Products Identification Act, the
Federal Hazardous Substances Act and the Flammable Fabrics Act.
9. Seller agrees to defend (with counsel acceptable to Purchaser), indemnify and
save harmless the Purchaser from any and all claims, suits, liabilities,
damages, losses or expenses, including attorneys' fees, asserted against or
incurred by Purchaser by reason of, or arising out of or occurring in connection
with (a) any breach or alleged breach of any of the terms of conditions of this
order or any representations or warranties of Seller made in this order or
otherwise, (b) any act or omission of Seller, or the servants, agents or
subcontractors of Seller, in the furnishing of goods in the performance of work
hereunder, or (c) the use of Seller's merchandise by customers of Purchaser or
others. Seller agrees that Purchaser may maintain records of Seller's compliance
with the representations and warranties of Seller made in this order or
otherwise and that
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Purchaser may at any time, upon notice to Seller, undertake inspection of
Seller's facilities in order to determine such compliance.
10. The prices herein specified are guaranteed by Seller against manufacturer's
or Seller's own price decline and against legitimate competition until date of
shipment. In the event that prior to final shipment under this order Seller
sells or offers to sell to others goods substantially of the same kind as
ordered herein at lower prices and/or on terms more favorable to a third party
than those stated in this order, the prices and/or terms herein shall be
automatically revised to equal the lowest prices and/or most favorable terms at
which Seller shall have sold or shall have offered such goods and payment shall
be made accordingly. In the event Purchaser shall become entitled to such lower
prices, but shall have made payment at any price in excess thereof, Seller shall
promptly refund the differences in price to the Purchaser. Seller agrees to meet
the price of legitimate competition or accept cancellation of this order by
Purchaser. Unless otherwise provided in this order, prices include all charges
for packaging, boxing, crating and freight, F.O.B. destination.
11. Purchaser reserves the right to cancel all or any part of this order which
has not actually been shipped by Seller in the event Purchaser's business is
interrupted because of strikes, labor disturbances, lockout, riot, fire, act of
God, or the public enemy, or any other cause, whether like or unlike the
foregoing, if beyond the reasonable efforts of the Purchaser to control.
12. A waiver of and/or failure to perform any one or more of the conditions of
this order shall not constitute a waiver of or an excuse for nonperformance as
to any other part of this or any other order.
13. All dating except "end of month" begins at the date on which the merchandise
is received. "Eng of month" terming for shipments received after the 25th of the
month will be considered next month's business. Discount terms begin with the
receipt of invoice or goods, whichever is later.
14. In addition to any other remedies available to Purchaser, failure to comply
with any terms and conditions of this purchase order or the Nordstrom routing
Guide will result in additional handling charges and expenses being charged to
Seller. In any dispute hereunder, whether or not litigation is commenced, the
prevailing party shall be entitled to its costs and expenses incurred, including
reasonable attorneys' fees. The rights and remedies herein expressly provided
shall be in addition to any other rights and remedies given by law, including
without limitation the right to recover all incidental and consequential
damages. All warranties, representations and guaranties made by Seller herein
are in addition to any and all expenses or implied warranties provided by law.
15. In the event of any proceeding, voluntary or involuntary, in bankruptcy or
insolvency by or against the Seller, including any proceeding under the United
States bankruptcy laws, or any bankruptcy, insolvency or receivership laws of
any state or any foreign country, or any political
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subdivision thereof or in the event of the appointment with or without Seller's
consent of a receiver or an assignee for the benefit of creditors, Purchaser
may, at its option, cancel this order as to any undelivered portion of the
merchandise.
16. Seller agrees that it will not use any trademark or trade name of Purchaser,
including but not limited to "Nordstrom, "Nordstrom Rack," "Place Two," and
"Nordstrom Factory Direct" except in connection with merchandise shipped to
Purchaser in accordance with this order. Seller agrees that all trademarks and
trade names of Purchaser belong to Purchaser and Seller will make no claim of
ownership nor attempt to register any such trademark or trade name. Seller
agrees that merchandise rejected or returned for any reason pursuant to the
terms of this order, whether or not such rejection is disputed by Seller,
including but not limited to merchandise rejected or returned due to shipment
after the cancel date specified on the face of this order, will not be resold or
otherwise distributed by Seller unless all labels, tags, logos, monograms and
other items or characteristics identifying Nordstrom, Nordstrom Rack, Place Two,
Nordstrom Factory Direct, or any other trademark or trade name of Purchaser have
first been removed.
17. This order and the rights and obligations of the parties hereunder shall be
determined in accordance with the laws of the State of Washington and shall not
be subject to or governed by the U.N. Convention on Contracts for the
International Sale of Goods. If litigation arises hereunder or as a consequence
of any transaction contemplated or resulting from this or either party's
performance or breach thereof, jurisdiction and venue of such litigation shall
be in the Superior Court for the State of Washington for King County, or the
United States District Court for the Western District of Washington in Seattle,
at the option of Purchaser, and Seller hereby consents to such jurisdiction and
venue. Any award or judgment of any of said counts may be entered and enforced
in any other domestic or foreign court of competent jurisdiction, and shall be
awarded full faith and credit.
18. No claim, action or demand arising out of the transactions under this order
may be brought by Seller more than one year after the cause of action has
accrued.
19. Seller hereby assigns to Purchaser all assignable warranty rights with
respect to the merchandise in this order, including without limitation all
rights of Seller under warranties of any manufacturer of any of the merchandise
or any part or component thereof.
20. This order is enforceable by Purchaser directly against Seller, regardless
of whether the order was submitted directly to Seller by Purchaser or was
submitted to Seller by another party on behalf of Purchaser. No such other party
shall have any authority to act for Purchaser, bind Purchaser to any agreements
or modifications or otherwise act as agent for Purchaser.
Transportation Terms and Conditions
A. Routing mode specified on face of purchase order must be adhered to exactly
unless permission to deviate is given by Purchaser's Traffic Manager or Buyer,
or if there is a written
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agreement or exception signed by Purchaser on file. Authorized carrier selection
should be made from Nordstrom Routing Guide. Any questions should be directed to
the Regional Traffic Department. For questions concerning foreign shipments,
please contact the Corporate Traffic and Distribution Office.
B. Orders shipped F.O.B. city of purchase or any specific city and/or state will
be delivered free of charge to Purchaser's consolidator and will be considered
F.O.B. consolidator. Advance charges to the consolidation point will be Seller's
expense.
Orders shipped F.O.B. factory will not be free of charge to Purchaser's
consolidator and freight charges will be the responsibility of the Purchaser
from the shipper's door.
Orders shipped F.O.B. store will be delivered free of charge to Purchaser's
receiving facility and total freight charges will be at Seller's expense.
Notwithstanding any agreement to pay freight or other transportation charges,
delivery will not be deemed complete and all risk of loss shall remain with
Seller until the goods have been actually received and accepted by Purchaser.
C. All C.O.D. shipments will be refused.
D. For all domestic shipments:
(i) in addition to any other remedies available to Purchaser, any
deviation from the terms of this order or the Nordstrom routing Guide
will result in chargebacks to Seller for freight expenses and handling
charges.
(ii) Merchandise must be packed, shipped and described on bills of
lading in accordance with applicable freight tariffs, and shipment must
be without declared value except when shipping Parcel Post or UPS
prepaid. Any deviation will result in a chargeback to Seller.
(iii) Enter all packages forwarded during the same day to the same
final destination on one bill of lading or airbill. If more than one
page is needed, label "1 of 2", "2 of 2," etc., and include total
weight and number of cartons only on the last page of the bill of
lading or airbill. If shipping to several final destinations, a
separate bill of lading must be filled out for each address.
(iv) Prepaid shipments: All shipments to Purchaser via motor freight
must be sent "collect," except Parcel Post and UPS shipments, which by
their nature must be sent "prepaid." Purchaser will not reimburse
Seller for "prepaid" shipments via motor and air freight.
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(v) Shipping surface: Articles not authorized for air shipment must
follow Purchaser's shipping instructions for surface. Seller is
responsible for marking "surface" on the top of general bill of lading.
An air bill which is used for surface shipment must have the special
services requested box marked.
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EXHIBIT B
CONFIDENTIALITY AGREEMENT
This Agreement made this ____ day of September 1998, is between
Chromatics Color Sciences International, Inc. ("Chromatics"), and Nordstrom,
Inc. ("Nordstrom").
WHEREAS, Chromatics owns technology and information relating to skin
and cosmetic product color analysis and custom color formulations of cosmetics
so that the color of various cosmetic products can be coordinated to each other
and to skin color, which is not disclosed in Chromatics' patents or publications
or by a Product sold to an individual customer as recommended by the
Color-Mate(Registered) II system, and which Chromatics considers to be
confidential, proprietary and secret in nature, hereinafter referred to as the
"Confidential Information."
WHEREAS, Nordstrom acknowledges and recognizes the need to preserve the
confidential nature of the Confidential Information.
WHEREAS, Chromatics desires to disclose certain portions of the
Confidential Information to Nordstrom under the following terms and conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. Chromatics shall disclose the Confidential Information to Nordstrom in
confidence solely for the purpose of permitting Nordstrom to use and evaluate
the Confidential Information in accordance with the License Agreement entered
into by the parties concurrently herewith. Nordstrom shall be under an
obligation to treat as confidential and maintain in confidence the Confidential
Information disclosed by Chromatics to Nordstrom, provided such information is
(a) disclosed in written form and marked prominently as "Confidential", or (b)
if not disclosed in written form, is identified and designated as confidential
in a written notice received by Nordstrom within ten (10) business days of the
disclosure. Nordstrom shall take all precautions reasonably necessary to prevent
any unauthorized disclosure of the Confidential Information.
2. Nordstrom may disclose the Confidential Information disclosed by Chromatics
to those of its employees or independent agents whose access to the Confidential
Information is necessary in order to carry out the purpose of the aforesaid
License Agreement; provided, however, that prior to any such disclosure (a)
Nordstrom informs the employee or independent agent that the disclosure is of
Confidential Information and is subject to the obligations of confidentiality
and non-use set forth in this agreement and (b) Nordstrom obtains from such
employee or independent agent a written undertaking, in the form annexed hereto,
to comply with those obligations with respect to all Confidential Information
that comes into the employee's or independent agent's possession.
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3. Nordstrom shall not (a) directly or indirectly disclose or otherwise make
available to any third party the Confidential Information disclosed by
Chromatics to Nordstrom, in whole or in part; (b) permit any third party access
to any portion of the Confidential Information; or (c) use the Confidential
Information for any purpose other than the purpose of the aforesaid License
Agreement, without the prior written consent of Chromatics.
4. Nordstrom shall not copy, duplicate or otherwise replicate any of the
Confidential Information disclosed by Chromatics to Nordstrom, in whole or in
part, for any purpose other than the purpose of the aforesaid License Agreement,
without the prior written consent of Chromatics.
5 Upon the request of Chromatics, Nordstrom shall return to Chromatics all
tangible materials provided by Chromatics to Nordstrom, and shall certify to the
destruction of any writings, data, reports, records, plans, correspondence,
notes or memoranda of conversations, discussions, considerations or evaluations
which contain or summarize Confidential Information, including all copies and
all electronic, magnetic or other records thereof, within thirty (30) days after
Chromatics' request for their return and/or destruction.
6. The obligations of confidentiality and non-use set forth in this agreement
shall not apply to information which (a) was known to Nordstrom prior to
disclosure by Chromatics to Nordstrom, as evidenced by written records dated
prior to such disclosure, and was not acquired directly or indirectly from
Chromatics; (b) was publicly available or generally known in the trade at the
time of disclosure by Chromatics to Nordstrom, or becomes publicly available or
generally known in the trade after the disclosure by Chromatics to Nordstrom
through no act or fault of Nordstrom; (c) was rightfully received by Nordstrom
from a third party whose disclosure to Nordstrom did not violate any obligation
of confidentiality owed directly or indirectly to Chromatics; or (d) is
independently developed by or for Nordstrom and such independent development can
be shown by clear and convincing evidence. The fact that Nordstrom may be
relieved of its obligations of confidence under subparagraphs (a), (c) or (d)
above shall not prevent Chromatics from continuing to claim in its dealings with
third parties unrelated to Nordstrom or Nordstrom's suppliers or customers, in
appropriate situations, that the effected information remains confidential or
proprietary to Chromatics.
7. In the event that Nordstrom is requested or becomes legally compelled (by
oral questions, interrogatories, requests for information or documents,
subpoena, criminal or civil investigative demand or similar process) to disclose
any Confidential Information (including disclosures to regulatory agencies such
as the FDA), Nordstrom will, to the extent it is aware of such fact, provide
Chromatics with prompt written notice of such requirement and use reasonable
efforts to obtain a protective order or other appropriate remedy. Nordstrom also
agrees to cooperate with and assist Chromatics in any efforts it may make to
seek a protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained, Nordstrom shall furnish only
that portion of the Confidential Information which it is advised in writing by
counsel of its choice it is legally required to furnish.
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IN WITNESS WHEREOF, the parties have caused this agreement to be
executed as of the date first written above.
Chromatics Color Sciences
International, Inc. Nordstrom, Inc.
BY: /s/ Darby S. Macfarlane BY: /s/ Dale C. Crichton
--------------------------------- -------------------------------
Darby S. Macfarlane Dale C. Crichton
TITLE: Chief Executive Officer TITLE Executive Vice President
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UNDERTAKING
OF
-----------------------------------
I, , state that:
--------------------------------
1. My residence address is .
----------------------------------------------
My present employer is and the address of
----------------------------
my present employer is
------------------------------. My present
occupation is
---------------------------.
2. 1 have received a copy of the Confidentiality Agreement between
Chromatics Color Sciences International, Inc. ("Chromatics") and
Nordstrom, Inc. ("Nordstrom"), dated September , 1998 ("the
Confidentiality Agreement"). I have carefully read and understand the
provisions of the Confidentiality Agreement.
3. 1 will comply with all of the obligations set forth in the
Confidentiality Agreement, including those relating to confidentiality
and non-use with respect to the Confidential Information that comes
into my possession.
----------------------------------
Signature
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EXHIBIT 10.24
AGREEMENT
This Agreement effective as of December 13, 1996 is by and between
Gordon Laboratories, Inc. ("Gordon"), and Chromatics Color Sciences
International, Inc. ("Chromatics).
WHEREAS, Chromatics has designed and developed a device which analyzes
a consumer's skin tone and may be programmed to recommend the foundation
cosmetic shades best suited for each particular skin tone (the "Colormate
System");
WHEREAS, Gordon and Chromatics desire to utilize Chromatics's technical
expertise in the programming and operation of Colormate Systems for custom
blended cosmetic foundations, all of which shall remain the property of
Chromatics.
WHEREAS, the parties intend to set forth the terms and conditions under
which Chromatics will make available pursuant to the terms hereof the Colormate
System for use in a field test retail program as described herein.
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed thereto in Schedule 1 hereto.
NOW, THEREFORE, in consideration of the mutual covenants and terms
herein set forth, the parties agree as follows:
I. Colormate System Lease; Technology License
1. Unless sooner terminated pursuant to the terms hereof, the term of
this Agreement will be from the date hereof until six months after the later of
the date (i) Chromatics first notifies Gordon in writing that twenty (20)
Colormate Systems are immediately available for shipment for use in the Field
Test (the "Ship Notice"), (ii) that Gordon provides the "Final Samples" (as
defined in Article II), and (iii) that Gordon provides the twenty (20) Custom
Blended Foundation Cosmetic Product Dispensing Systems. During the term of this
Agreement, Chromatics shall lease for a term not to exceed the earlier of (i)
six months from the date of the lease and (ii) the date of termination of this
Agreement or the Field Test to Gordon's customers approved in writing by
Chromatics ("Gordon Approved Customers"), pursuant to lease documentation
satisfactory to Chromatics, a total of twenty (20) portable briefcase Colormate
Systems. In consideration of providing such Colormate Systems, Chromatics shall
receive from the "Budget Account" and pursuant to the "Budget" six equal
payments of $1,667 each on the first day of each month during the term hereof
commencing with the first day of the month following the month in which
Chromatics delivers the Ship Notice. Gordon Approved Customers will not be
charged any lease or rental fee under such leases for the use of the Colormate
Systems during the Term of the Field Test. The Colormate Systems will be
available for use by the date of the Ship Notice and will be shipped from
Chromatics directly to the Customer Location. One Colormate System shall be
provided by Chromatics for each Customer Location and shall be used pursuant to
the lease solely at such Customer Location and shall not be used at any other
location without
<PAGE>
prior written consent of Chromatics. The leases shall expressly provide that the
Colormate Systems shall be returned directly to Chromatics at the earlier of
conclusion of the Field Test, the expiration of the Lease or the termination of
this Agreement.
2. Beginning on the date of the signing of this Agreement and
continuing until six months after the later of the date (i) of the Ship Notice,
(ii) Gordon provides the Final Samples, and (iii) Gordon provides the twenty
(20) Custom Blended Foundation Cosmetic Product Dispensing Systems, unless
sooner terminated pursuant hereto, Chromatics agrees to grant to Gordon a
non-exclusive license solely in the contiguous states of the United States of
America for the Colormate Systems, "Software" (as defined in Article II
paragraph 1 below) and "Foundation Products Color Formulations" solely for use
in the marketing, distribution and sale to Gordon Approved Customers in the
"Specialty Store Market" at Customer Locations of Foundation Cosmetic Products
manufactured directly by Gordon for Chromatics under the terms specified in this
Agreement for a Field Test as described herein.
The Colormate Systems, Software and Foundation Product Color
Forumlations shall remain the property of Chromatics. Gordon acknowledges and
agrees that the Colormate Systems, Software, and Foundation Products Color
Formulations may not be used in any manner whatsoever by Gordon or by Gordon
Approved Customers other than in the Field Test, and may not be used
independently of each other. In this regard, and by way of example but without
limitation, the Foundation Products Color Formulations may not be used in any
manner whatsoever other than in conjunction with formulation and manufacture of
the Foundation Cosmetics Products for distribution in the Field Test, the
Software may not be used in any manner whatsoever other than in conjunction with
the Colormate System for marketing efforts in the Field Test, and the Colormate
System and Software may not be used in any manner whatsoever other than in
conjunction with making analyses and recommendations in the sale of the
Foundation Cosmetic Products in the Field Test. Under no circumstances may the
Colormate System, Software or Foundation Product Color Formulations be used to
develop, distribute, manufacture, market or sell any cosmetic product other than
the Foundation Cosmetic Product for sale in the Field Test. Gordon shall have no
right to subcontract, submanufacture, or otherwise retain any third party to
manufacture the Foundation Cosmetic Products, and shall not sublicense, assign,
pledge, transfer or dispose of in any manner whatsoever the license or any
portion thereof granted by Chromatics hereunder.
3. Beginning on the latest of the date of the Ship Notice, the date
Gordon provides the Final Samples, and the date Gordon provides the twenty (20)
Custom Blended Foundation Cosmetic Product Dispensing Systems, and continuing
for six months thereafter (the "Field Test"), Chromatics shall have available
for lease twenty (20) Colormate Systems, appropriately programmed with the
Software to recommend Foundation Cosmetic Products manufactured solely by Gordon
for Chromatics as required by paragraph 1 of Article II hereof, to Gordon
Approved Customers at the Customer Locations based on mutually agreed on
criteria. Gordon shall arrange for the schedules and on-site training in the
operation of the Colormate Systems of the Gordon Approved Customers personnel at
the Customer Locations at Gordon's sole cost and
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expense (but reimbursable as set forth in the Budget), utilizing up to two (2)
Gordon personnel so trained by Chromatics in the operation of the Colormate
Systems. Chromatics shall use its best efforts to so train such Gordon personnel
prior to the date of the Ship Notice. Chromatics shall not be paid any
additional compensation for training up to two (2) such Gordon personnel
(provided, however, that the Budget will provide for travel and expenses
incurred by Chromatics in training such Gordon personnel); any additional
training requirements or the training of additional personnel shall be at rates
to be agreed upon by the parties. Prior to any disclosure of any confidential
information of Chromatics, including, without limitation, any confidential
information contemplated by Article IV hereof, Gordon shall cause those of its
personnel and those of the Gordon Approved Customers receiving such training, to
enter into confidentiality agreements with Chromatics in the form annexed as
Schedule 2 hereto, and the lease agreement between Chromatics and Gordon
Approved Customers.
II. Field Test
1. On or before 30 days from the date hereof, Gordon shall provide
Chromatics with samples and specifications of basic Foundation Product
Formulations to be included in the Field Test, which Foundation Product
Formulations must be approved by Chromatics. Chromatics shall be entitled to
unilaterally terminate this agreement without penalty pursuant to Article VI
hereof by written notice to Gordon if such basic Foundation Product Formulations
have not been delivered by Gordon and approved by Chromatics within 60 days of
the date hereof. Upon approval, Chromatics shall perform chromaticity studies at
Chromatics' expense on the sample to determine the appropriate color
compatibilities ("Chromaticity Studies"). Upon completion of the Chromaticity
Studies (approximately three (3) months), Chromatics shall provide to Gordon a
written report of Foundation Product Color Formulations which report and
Foundation Product Color Formulations shall remain the property of Chromatics.
Promptly following receipt of such written report (but in no event later than 30
days from such receipt, plus an additional 30 days grace period), Gordon shall
provide to Chromatics, for review and approval by Chromatics, such number of
samples and reformulation of each Foundation Product Formulation as Chromatics
may request, until such samples shall meet Chromatics' specifications for the
Foundation Product Color Formulations (the "Final Samples"). Gordon shall not
manufacture quantities of any Foundation Cosmetic Products unless and until it
has received written notice from Chromatics that, based on the Final Samples,
all Foundation Product Formulations meet Chromatics, specifications. Chromatics
shall give, Gordon the Ship Notice within 30 days (plus an additional 15 days
grace period) of Chromatics receipt of the Final Samples. If Gordon fails to
deliver and have available twenty (20) Custom Blended Foundation Cosmetic
Product Dispensing Systems by the date of the Ship Notice, or fails to provide
Chromatics within thirty (30) days (plus an additional 30 days grace period)
following delivery to Gordon of the written report regarding the Chromaticity
Studies (but in no event later than the date of the Ship Notice) with Final
Samples for all Foundation Product Formulations that meet Chromatic's
specifications, Chromatics shall have the right, to unilaterally terminate this
Agreement pursuant to Article VI hereof without penalty or liability to either
party by written notice to Gordon. In the event that Chromatics has not
completed the Chromaticity Studies by April 1, 1997 (plus an additional 15 (days
grace
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period), or delivered the Ship Notice within 30 days (plus an additional 15 days
grace period) of receipt of the Final Samples, either Chromatics or Gordon may
unilaterally terminate this Agreement without penalty or liability to either
party pursuant to Article VI hereof on written notice to the other. All
Foundation Cosmetic Product manufactured by Gordon under the terms of this
Agreement will bear the label of Chromatics and will remain the property of
Chromatics. Gordon shall manufacture the initial inventory of Foundation
Cosmetic Product to implement the Field Test, together with, at no additional
cost, the bottle, cap, label and packaging, at a price of $1.25 per ounce of
Foundation Cosmetic Products, payable solely from the Budget Account (but in an
amount not to exceed $8,650) except as set forth in the last sentence of the
next paragraph. Gordon shall manufacture additional quantities of such inventory
and such related materials as agreed upon by both parties to be needed to
implement the Field Test at the same per ounce cost, payable from the Budget
Account.
The suggested wholesale price and retail resale price and other terms
of sales of the Foundation Cosmetic Products to be offered to Gordon Approved
Customers and their customers, respectively, to the extent not specifically set
forth herein, shall be mutually agreed upon by Gordon and Chromatics, including
without limitation providing written instructions directing such Gordon Approved
Customers to direct payment for Foundation Cosmetic Products invoiced by Gordon
to the Budget Account. At the end of the Field Test Chromatics will purchase
from Gordon all remaining inventory of Foundation Cosmetic Products manufactured
by Gordon under the Budget at a cost of $.625 per ounce of Foundation Cosmetic
Products, together with at no additional cost the bottle, cap, label and
packaging, dispenser and customer support/sales materials used in connection
with the Field Test, but only to the extent that (i) the foregoing have not been
invoiced to Gordon Approved Customers, (ii) any such purchase by Chromatics does
not exceed $4,325 in the aggregate, (iii) that the funds remaining in the Budget
Account are not sufficient therefor, and (iv) any such amount to be paid to
Gordon by Chromatics is in excess of amounts otherwise to be paid to Chromatics
pursuant hereto as contemplated by the Budget.
Chromatics shall develop software proprietary to Chromatics
recommending appropriate shades of the Foundation Cosmetic Products based on
skin tone (the "Software") for distribution and installation in the Colormate
Systems. The Software will provide a custom color formulation for each skin tone
that may be custom blended (pigments mixed with the basic Foundation Product
Formulation colors). At the conclusion of the Field Test, Chromatics shall
receive from the Budget Account and pursuant to the Budget in consideration of
developing and programming such Software the sum of $10,000.
2. During the Field Test, Chromatics' at its cost and expense shall
maintain and keep in good working order all Colormate Systems used in this test,
providing such maintenance is required as a result of normal wear and tear. Each
Gordon Approved Customer will insure, pursuant to the terms of the Chromatics
lease, the Colormate System for damage or replacement under their existing
policies and Chromatics will be named the beneficiary and loss payee under these
policies for this purpose. Each Colormate System also will be insured while
shipping for its
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replacement cost of $3,500.00 per System; payable to Chromatics, and the cost of
all such shipping and insurance will be paid from the Budget Account in
conformity with the Budget. In the event any Colormate System is damaged for
reasons other than normal wear and tear then Chromatics shall be reimbursed from
the insurance carrier.
3. During the term of this Agreement, Gordon shall provide the
following promotional, marketing, distribution, formulations, research and
merchandising functions for the consideration indicated below, payable solely
from the Budget Account and as set forth in the Budget as being payable to
Gordon:
a) Design, develop and provide prior to the date of the Ship
Notice in quantities necessary, (but in no event fewer than
twenty (20)), point of sale packaging and custom blending
dispensing system as approved in writing by Chromatics (the
"Custom Blended Foundation Cosmetic Product Dispensing
System") for Foundation Cosmetic Products to be used at
Customer Locations, for consideration as set forth in the
Budget (Item #10) (and not in excess of $4,375 in the
aggregate).
b) Provide twenty (20) Customer Locations which will utilize the
Chromatics Colormate System and the Foundation Product Color
Formulations solely in connection with the sale, utilizing the
Custom Blended Foundation Cosmetic Product Dispensing System,
of Foundation Cosmetic Products as described herein solely at
each such Customer Location for the term of the Field Test,
without additional compensation.
c) Design and supply any supporting promotional literature, to be
approved by Chromatics, not to be unreasonably withheld for
consideration as set forth in the Budget (Item #2); provided,
however, that Chromatics shall in all events have final legal
approval.
d) Supply and distribute the Foundation Cosmetic Product, the
supporting promotional literature and the printer paper rolls
supplied by Chromatics for computer print-outs in quantities
as needed for each Customer Location during the Field Test,
without additional compensation. Gordon Approved Customers
shall pay to Chromatics $2.00 per roll for each additional
roll beyond the first such roll provided by Chromatics
e) Compile and tabulate research/sales data relating to the Field
Test as specified in Exhibit A, without additional
compensation other than that approved for personnel in the
Budget (Item #1).
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f) Provide in-store training for each Customer Location during
the Field Test, at Gordon's cost and expense (but reimbursed
as set forth in the Budget) (Items #1 and 6) and utilizing
Gordon personnel trained by Chromatics as described above.
g) Provide a name, logo and mechanical art work for the Colormate
Systems to be used at Customer Locations. Cost of producing
and installing this into the Colormate Systems will be paid to
Chromatics as provided in the Budget (Item #3).
h) Provide Foundation Cosmetic Product tester kits for each of
twenty (20) Customer Locations for consideration as provided
in the Budget (Item #11).
i) Provide two (2) Foundation Product Formulations in 10 basic
color formulations specified by Chromatics and up to 3 pigment
formulations specified by Chromatics (all of which are to be
approved by Chromatics and which remain the property of and
proprietary to Chromatics and for use only in this Field Test
and under the terms of this Agreement) for aggregate
consideration of $10,000 payable at the conclusion of the
Field Test (Item #13).
j) Coordinate distribution and sales support and overall customer
support during the term of the Field Test, without additional
compensation other than as provided in the Budget (Items #1,
2, 4, 6).
k) Manage overall activities of the Field Test as approved by
Chromatics, without additional compensation other than as
provided in the Budget (Items #1, 5). Disbursement of Budget
items requires joint signatures by Chromatics and Gordon.
4. If The Field Test has met the requirements set forth in Exhibit A
hereto, Chromatics and Gordon intend to enter into good faith negotiations to
establish a joint venture under terms acceptable to both parties and which shall
include the terms referenced in Exhibit C hereto, it being expressly
acknowledged that there are no other obligations or agreements of the parties
with respect to the formation of any joint venture or other business
arrangement.
III. Budget Matters
1. Chromatics and Gordon will each contribute $37,500.00 (the "Initial
Payment") to the Budget on the date which is 30 days prior to the date
Chromatics reasonably anticipates delivering the Ship Notice (as notified in
writing to Gordon by Chromatics), to jointly finance this Field Test. The Budget
for the use of these funds including use of any sales income received from the
Field Test is attached hereto as Exhibit B. Any sales income generated by the
Field Test in excess of Field Test expenses in the Budget and reimbursement to
be provided to the parties as set forth herein and pursuant to the Budget shall
be shared equally by Chromatics and Gordon. It
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is agreed by the parties that should there be less sales income than projected
in the Budget or no sales income received from the Field Test to contribute to
the Budget, then each of Gordon and Chromatics will pay, in equal amounts, up to
$5,234 each (the "Additional Payment").
2. In no event will either Gordon or Chromatics be responsible to pay
an amount in excess of the sum of the Initial Payment and the Additional Payment
unless mutually agreed upon in writing by both parties. Gordon shall be entitled
to make payments from the Budget Account to third parties in the amounts
specified as set forth in Exhibit D hereto ("Approved Payments"). Any payments
from the Budget Account other than Approved Payments (including, without
limitation, any payments to either Gordon, Chromatics or their respective
affiliates, other than (i) $8,650 to Gordon for initial inventory, (ii) $4,375 t
o Gordon for the Custom Blended Foundation Cosmetic Product Dispensing Systems,
(iii) $10,000 in 6 monthly installments of $1,667 to Chromatics for the
Colormate II Systems, and (iv) $2,500 to Chromatics for repackaging the
Colormate II Systems, which amounts shall be paid by Gordon without additional
consent of Chromatics) shall require the consent of both parties.
IV. Additional Limitations and Confidentiality
1. a) Gordon may not grant any rights in any Software, Colormate System
or any custom blended foundation (including without limitation any Foundation
Product Color Formulation) or any Foundation Cosmetic Product or system
utilizing any color formulations or systems of color formulations or pigments
provided or disclosed to Gordon by Chromatics or permit anyone else to take
credit for the invention, development or design of such Colormate Systems or
formulations or pigments without the prior written approval of Chromatics.
Gordon acknowledges that the Colormate System and the Software, including,
without limitation, the processes, Foundation Product Color Formulations,
pigments, custom blended foundation colors, Foundation Cosmetic Product, color
formulations or systems of color formulations or pigments, techniques, programs,
parts, methods, color chart and swatch pack colors, designs and ideas embodied
therein are the proprietary products of Chromatics (and any licensor to
Chromatics), shall remain the property of Chromatics (and any such licensor) and
are furnished on a strictly confidential basis, for use exclusively in the Field
Test provided herein and agrees that no other use shall be made thereof. No
title to or ownership of any of the same or any rights therein, including all
rights to patents, trade names and copyrights applicable thereto, or any copies
thereof, in whole or in part, shall be transferred to Gordon. In addition,
Gordon shall keep confidential and use only for the Field Test and under the
terms of this Agreement all of the kinds of following information;
1) Hardware design, parts, and integration.
2) All aspects of software for systems.
3) Foundation Product Color Formulation, Foundation Color Pigments,
Chromaticity Studies, including the results of the Chromaticity
Studies.
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4) Color Consultant Training Techniques.
2. a) Nothing in this Agreement will restrict Gordon in the use or
treatment of any of Chromatics' confidential information:
(a) which is freely available to the public on a
unrestricted basis and without violation of any
confidentiality obligations prior to the disclosure
of same by Chromatics to Gordon; or
(b) which can be shown by written contemporaneous records
to have been known to Gordon prior to the date of
disclosure by Chromatics to Gordon of the same; or
(c) after such Chromatics confidential information
becomes freely available to the public on an
unrestricted basis through no fault of Gordon.
This paragraph shall not limit any patent protection Chromatics may have.
V. Indemnity
1. Chromatics shall indemnify and hold Gordon harmless from and against
any and all actions, causes of action, claims, demands, liabilities, losses,
judgments, damages or expenses and charges which Gordon shall or may at any time
incur, sustain, or become subject to by reason of any claim or claims against
Gordon arising out of any act or omissions of Chromatics related to this
Agreement, or the performance thereof (provided that Chromatics will not be
responsible for any of the foregoing attributable to failure to use the
Colormate System strictly in accordance with the training and instructions
provided by Chromatics) ; provided that Chromatics is given prompt notice of
such claims and has the right to manage and control all such claims with
attorneys of its own selection.
2. Gordon shall indemnify and hold Chromatics harmless from and against
any and all actions, causes of actions, claims, demands, liabilities, losses,
judgments, damages or expenses and charges which Chromatics shall or may at any
time incur, sustain, or become subject to by reason of any claim or claims
against Chromatics arising out of any act of omission of Gordon related to this
Agreement, or the performance thereof, including but not limited to claims
regarding: advertising or product claims or promises made by Gordon; consumer
use or purchase of Gordon manufactured products, including without limitation
Foundation Cosmetics Products; loss of business due to damage to the Colormate
Systems in transport and any act which is the responsibility of Gordon as
provided in this Agreement; provided, that Gordon is given prompt notice of such
claims and has the right to manage and control all such claims with attorneys of
its own selection.
VI. Miscellaneous
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1. This Agreement will be governed by the laws of the State of New York
without giving effect to the conflict of laws principles thereof. The parties
hereto hereby irrevocably submit to the jurisdiction of any New York State or
Federal court sitting in the County of New York, State of New York, in any
action or proceeding arising out of or relating to this Agreement, and the
parties hereby irrevocably agree that all claims in respect of such action or
proceeding shall be heard and determined in such New York State or Federal
court. The parties hereto irrevocably waive, to the fullest extent permitted by
law, any objection which they or any of them may now or hereafter have to the
laying of the venue of any such action or proceeding brought in any such court,
and any claim that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and binding on the
parties hereto.
2. This Agreement will continue in effect until six months after the
latest of the date (i) of the Ship Notice, (ii) Gordon delivers the Final
Samples, and (iii) Gordon delivers twenty (20) Custom Blended Foundation
Cosmetic Product Dispensing Systems, unless earlier terminated pursuant to
Article II hereof by Chromatics or Gordon, as applicable, provided the
provisions of Articles IV, V and VI, shall survive the termination of this
Agreement. In the event of such termination, all funds in the Budget Account
after any required payments to third party suppliers, shall be disbursed to
Gordon and Chromatics, in their capacity as creditors in accordance with the
Budget, and all other funds in the Budget Account shall be disbursed Fifty
Percent (50%) to Chromatics and Fifty Percent (50%) to Gordon. Upon the
termination of this Agreement, Gordon will immediately return to Chromatics all
documents and materials of Chromatics referred to in Article IV hereof and/or
otherwise provided to Gordon or its customers by Chromatics, including, without
limitation, the Colormate Systems provided by Chromatics and all documents,
including copies, extracts, or derivations thereof prepared by Gordon or such
customers, including without limitation any marketing material relating to the
Field Test whether or not provided by Chromatics.
3. Nothing contained herein shall place the parties in the relationship
of partners, joint venturers, principal-agent, or employer-employee and neither
party shall have any power to obligate or bind the other whatsoever.
4. None of the terms of this Agreement may be waived or modified, nor
may this Agreement be renewed or extended except by express agreement in writing
signed by both parties.
5. All notices which must or may be given pursuant to this Agreement
shall be delivered by hand or sent by certified or registered mail in the case
of Gordon to-
with a copy to:
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Lawrence Braun, Esq.
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
and in the case of Chromatics to:
Mrs. Darby Macfarlane
Chromatics Color Sciences International, Inc.
5 East 80th St.
New York, New York 10021
with a copy to:
Eric M. Lerner, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AGREED:
CHROMATICS COLOR SCIENCES
INTERNATIONAL, INC. GORDON LABORATORIES, INC.
By: /s/ By: /s/
--------------------------------- ---------------------------------
Title: President and CEO Title: President and CEO
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