SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 5, 1996
ACTIVE APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13002 13-3672716
(State of Incorporation) Commission File Number) (IRS Identification No.)
1350 Broadway Suite 2300, New York, New York 10018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 239-0990
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On June 5, 1996, Active Apparel Group, Inc., (the "Company") received a
fully executed copy of an agreement (the "Agreement") with MTV Networks, a
division of Viacom International, Inc. ("MTVN"), dated as of March 28, 1996.
Under the Agreement, MTVN granted the Company a license to use the trademarks
"MTVN's THE GRIND" and/or "THE GRIND", in MTVN's discretion (the "Marks"), in
connection with defined categories of activewear and accessories for sale in the
United States, its possessions and Canada to all department stores, specialty
stores, independent sport stores and other channels of distribution to which
MTVN consents. The license is exclusive as to all products, except that with
respect to t-shirts and caps it is non-exclusive until MTVN's existing license
agreement with another licensee expires.
The term of the license is from April 30, 1996 through January 31, 1999.
The Company is required to pay MTVN an 8% royalty on "Net Sales", with certain
guaranteed minimum royalty payments provided. Additionally, the Company
guarantees to commit 2% of net sales to an MTVN trade and/or consumer
advertising campaign. The Company has the right to renew the Agreement for an
additional two years, through January 31, 2001, provided that it is compliance
with its terms and has in excess of $3,500,000 of Net Sales prior to January 31,
1999.
The foregoing description is qualified in its entirety by the terms of the
Agreement, a copy of which is annexed as Exhibit 10.1 to this Current Report on
Form 8-K.
Items 7. Financial Statements and Exhibits
(c) EXHIBITS:
Exhibit 10.1 Agreement dated as of March 28, 1996 between the Company and
MTVN
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ACTIVE APPAREL GROUP, INC.
(Registrant)
Date June 21, 1996
By: /s/GEORGE HOROWITZ
------------------------
George Horowitz
Chairman and Chief
Executive Officer
EXHIBIT 10.1
Agreement dated as of March 28, 1996
between the Company and MTVN
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Agreement made as of this 28th day of March, 1996, by and between MTV
Networks, a division of Viacom International Inc., a Delaware corporation, with
offices at 1515 Broadway, New York, New York 10036 ("MTVN"), and Active Apparel
Group, Inc., a New York corporation, with offices at 1350 Broadway, Suite 2300,
New York, NY 10018 ("Licensee") .
BASIC PROVISIONS
LICENSED PROPERTY: At MTVN's discretion, "MTV's THE GRIND" and/or "THE
GRIND" name, trademark and logo.
LICENSED PRODUCTS: Activewear specifically described as follows:
Tops & bottoms, sports bras, t-shirts, caps,
accessories specifically described as backpacks,
bags, keychains, hand fitness towels and water
bottles.
LICENSED TERRITORY: United States, its territories and possessions and
Canada.
LICENSED CHANNELS OF All Department Stores, including but not limited to,
DISTRIBUTION: Sears Department Store and JC Penney Department
Store; Specialty stores; Independent Sport Stores
and with MTVN's prior written approval on a
case-by-case basis catalogs. Licensed Channels of
Distribution shall not include Mass Market
Merchandisers (i.e., Target, Walmart, K-Mart,
Bradlees).
LICENSE TERM: April 30, 1996 through January 31, 1999.
EXCLUSIVITY: With respect to tops & bottoms, sports bras,
backpacks, bags, keychains, hand fitness towels and
water bottles, license of Licensed Property shall be
exclusive to Licensee only with respect to the
specific Licensed Products in the Licensed Territory
and for the Licensed Channels of Distribution set
forth above. With respect to the Licensed Products
known as t-shirts and caps this license is in all
respects non-exclusive until such time as MTVN's
existing license agreement with another licensee for
such Licensed Products containing the Licensed
Property expires, and at such time, it shall be
exclusive.
PRESENTATION DATE TO
LICENSEE'S RETAILERS: August 1996
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INITIAL SHIP DATE TO December 1996
LICENSEE'S RETAILERS:
ROYALTY RATE: Eight percent (8%) Domestic of Net Sales (as defined
in the annexed Additional Terms and Conditions).
GUARANTEED MINIMUM The Guaranteed Minimum Royalty for the Term is Two
ROYALTY: Hundred Thousand Dollars ($200,000) and shall be
payable as follows:
$37,500 upon Licensee's execution hereof ("Advance");
$16,250 on or before October 1, 1996;
$16,250 on or before January 1, 1997;
$16,250 on or before April 1, 1997;
$16,250 on or before July 1, 1997;
$16,250 on or before October 1, 1997;
$16,250 on or before January 1, 1998;
$16,250 on or before April 1, 1998;
$16,250 on or before July 1, 1998;
$16,250 on or before October 1, 1998;
and $16,250 on or before January 1, 1999.
COPYRIGHT NOTICE: "(C) 19__ [Year of Publication] MTV Networks. All
Rights Reserved".
TRADEMARK NOTICE: "MTV's THE GRIND(TM)"and "THE GRIND(TM)". Licensee
shall also include the following notice on all
materials set forth in subparagraph 5(b) of the
ADDITIONAL TERMS AND CONDITIONS in proximity to the
Licensed Property. "MTV's THE GRIND and THE GRIND and
all related titles, logos and characters are
trademarks owned and licensed for use by MTV
Networks, a division of Viacom International Inc."
MTVN hereby agrees that such notice may appear on
hang tags to the Licensed Products in the event space
does not permit such notices to appear directly on
the Licensed Products.
ADDITIONAL TERMS: Licensee guarantees to commit two percent (2%) per
year of Net Sales to an MTVN trade and/or consumer
advertising campaign.
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This Agreement includes the Additional Terms and Conditions and the Riders
and Schedules, if any, annexed hereto and made a part hereof. All capitalized
terms in the Additional Terms and Conditions shall have the respective
definitions as set forth in the Basic Provisions herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Active Apparel Group, Inc. MTV NETWORKS, a division of
Viacom International Inc.
By: /s/ George Horowitz, Pres By: [Illegible]
-------------------------- -------------------------
Name: /s/ George Horowitz Name:
------------------------ -----------------------
Title: Pres, CEO, Chairman Title: EVP
----------------------- ----------------------
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ADDITIONAL TERMS AND CONDITIONS
1. LICENSE:
MTVN hereby grants to Licensee the non-exclusive (pursuant to the
Exclusivity paragraph in the Basic Provisions hereto) right with respect to
t-shirts and caps and the exclusive right with respect to the remaining Licensed
Products, subject to and as specifically set forth in the BASIC PROVISIONS
attached hereto and made a part hereof, and further subject to these ADDITIONAL
TERMS AND CONDITIONS to use the Licensed Property solely for the purpose of the
manufacture, distribution, sale and advertisement of the Licensed Products
through Licensee's Licensed Channels of Distribution in the Licensed Territory
during the License Term (the "License"). Licensee shall not have the right to
sublicense the rights granted hereunder.
2. RESERVATION OF RIGHTS:
MTVN retains all rights not expressly granted hereunder (including but not
limited to the right to distribute and sell the Licensed Products through
premium offers, combination and giveaway sales, direct response, direct mail,
home shopping type of networks, sales clubs, incentive programs and any MTVN or
its affiliated companies' retail outlets).
3. ROYALTIES, ACCOUNTING AND AUDIT:
(a) COMPUTATION:
(i) Royalties shall be payable at the Royalty Rate set forth in the Basic
Provisions on Net Sales of all Licensed Products. "Net Sales" shall mean gross
sales less customary trade promotional discounts and allowances and returns for
damaged goods only, the aggregate of which shall not exceed six percent (6%) of
gross sales. Except for those expressly provided for in this paragraph, there
shall be no deductions of any sort or kind, including but not limited to
deductions for returns, cash discounts, costs or expenses incurred in the
manufacture, distribution, sale or advertisement of the Licensed Products, or
for uncollected bills.
(ii) Royalty obligations shall accrue upon sale of the Licensed Products. A
Licensed Product is considered "sold" when it is invoiced, shipped, or paid for,
whichever event occurs first.
(iii) In the event that Licensed Products are sold to any party affiliated,
controlled, or in any way related to Licensee at a special price lower than the
average price charged to other parties, the royalty payable to MTVN shall be
based upon said average price.
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(b) PAYMENT
(i) Royalties shall be payable on a quarterly basis throughout the License
Term, within thirty (30) days after the close of each respective quarter.
Quarters shall be based on a standard calendar year. All amounts past due shall
be subject to a late charge of one percent (1%) per month (or the highest rate
allowed by law if lower), from the date such payments were due.
(ii) Licensee shall pay to MTVN a non-refundable Guaranteed Minimum Royalty
including an Advance as set forth in the Basic Provisions. All amounts past due
shall be subject to a late charge of one percent (1%) per month (or the highest
rate allowed by law if lower), from the date such payments were due.
(c) ACCOUNTING:
Within thirty (30) days after the close of each quarter, Licensee shall
furnish to MTVN complete and accurate statements of its sales of Licensed
Products and royalties due MTVN, in the form annexed hereto as Schedules A and B
("Quarterly Reports"). Quarterly Reports shall be furnished whether or not
Licensee has actual royalties to report for any quarter. All Quarterly Reports
shall be signed and certified as correct by an officer of Licensee. Acceptance
by MTVN of royalty payments and Quarterly Reports shall not preclude MTVN from
questioning the accuracy thereof.
(d) AUDIT:
(i) Licensee shall keep accurate books of account and records at its
principal place of business of all transactions relating to or affecting this
License, during the License Term and for a period of two years thereafter. MTVN
or its representative shall have the right during reasonable business hours to
examine and verify Licensee's physical inventory of the Licensed Products as
well as Licensee's books of accounts and records, and to make copies and
extracts thereof.
(ii) In the event that an audit by MTVN discloses an underpayment in
royalties due MTVN, Licensee shall promptly pay MTVN such discrepancy plus a
late charge of one percent (1 %) per month (or the highest rate allowed by law
if lower), from the day such payments were due. If such audit discloses a
discrepancy of five percent (5%) or more for any quarter, Licensee shall also
reimburse MTVN for all costs incurred by MTVN in connection with the audit.
4. QUALITY, SAMPLES, APPROVALS:
(a) The quality and style of all Licensed Products, and the manner in which
the Licensed Property may appear on the Licensed Products and on any packaging,
promotional materials, labels, advertising, publicity and display materials of
any kind used in connection with the Licensed Products are subject to MTVN's
prior written approval.
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(b) At each stage of development or production and prior to manufacture,
Licensee shall promptly provide MTVN with two (2) product photos and one (1)
swatch in the form of proofs and/or prototypes for each Licensed Product and all
related materials. MTVN shall advise Licensee in writing of its approval or
disapproval of such samples within fifteen (15) days of its receipt thereof. No
samples shall be deemed approved unless and until MTVN has given its approval in
writing. Licensee shall not proceed beyond any development or production stage
where approval is required without first securing such approval. In connection
with the submission of samples by Licensee for MTVN's approval, Licensee shall
also submit to MTVN a completed copy of the Licensed Product Approval Form
provided by MTVN as Schedule C. Once a sample has been approved, Licensee shall
not depart therefrom. Approval by MTVN shall not relieve Licensee of any of its
agreements, indemnities and warranties thereunder.
(c) Licensee shall promptly reimburse MTVN for any and all costs of artwork
and other creative materials requested by Licensee and prepared by MTVN in
connection with the Licensed Products.
(d) Concurrently with the initial shipment of each Licensed Product,
Licensee shall furnish to MTVN, at no cost to MTVN, two (2) samples of each
Licensed Product and each subsequent year of the License Term, two (2) samples
of each Licensed Product. At MTVN's request, Licensee shall furnish MTVN, at no
cost to MTVN, a reasonable number of samples of the Licensed Products. Any
Licensed Products requested by MTVN in excess of the foregoing amounts shall be
made available to MTVN at Licensee's cost.
(e) From time to time, upon MTVN's request and as agreed to between the
parties, Licensee shall include certain materials provided by MTVN relating to
MTVN's programs, programming services, or ancillary businesses in the packaging
of the Licensed Products.
5. MARKINGS:
(a) Licensee shall affix the Copyright and Trademark Notices set forth in
the Basic Provisions to all Licensed Products and to all packaging, labels,
promotional, advertising, publicity, and display materials used in connection
therewith, in accordance with instructions from MTVN. No Licensed Products or
related materials shall contain any other copyright, trademark or trade name
unless MTVN has given Licensee prior written consent thereto (other than
Licensee's copyright trademark or tradename). MTVN may at any time require an
addition to or change of the Copyright and Trademark Notices, effective not less
than thirty (30) days after receipt by Licensee of notice thereof, provided that
Licensee shall have the right to continue to distribute any inventory already
manufactured at the time it receives such notice. Licensee shall fully cooperate
with MTVN in connection with MTVN's obtaining or maintaining copyright and/or
trademark protection for the Licensed Property in MTVN's name.
(b) Licensee shall affix to the Licensed Products and all packaging,
labels, promotional materials, advertising, publicity, and display materials
used in connection therewith, any other
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legends, markings and notices required by any law or regulation in the Licensed
Territory or which MTVN reasonably may request.
6. OWNERSHIP:
(a) As between MTVN and Licensee, all right, title and interest in and to
the Licensed Property shall be and remain the sole and complete property of
MTVN. Licensee recognizes the value of the goodwill associated with the Licensed
Property, that the Licensed Property has secondary meaning in the mind of the
public, and that the trademarks and copyrights in the Licensed Property, and any
registrations therefor, are good and valid. All use by Licensee of the Licensed
Property shall inure to the benefit of MTVN. Licensee shall not, during the
License Term or thereafter, contest or assist others to contest, MTVN's rights
or interests in the Licensed Property or the validity of this License. Licensee
shall not seek any copyright or trademark registration for the Licensed
Property.
(b) Any copyright, trademark, or other proprietary rights owned by
Licensee and heretofore used by it, which are used in connection with the
Licensed Products as approved by Licensor pursuant to paragraph 5(a) above,
shall continue to be owned by Licensee and shall not become the property of
MTVN.
(c) All right, title, or interest in or to any copyright, trademark, or
other proprietary rights that come into existence during the License Term as a
result of the exercise by Licensee of any right granted to it hereunder, shall
immediately and automatically vest in MTVN.
(d) Except as otherwise provided and except those generic or basic garment
designs or silhouettes existing prior to the commencement of the License Term,
all creations, including but not limited to art work and designs, that come into
existence during the License Term, including any packaging, labels, and
promotional, advertising, publicity, and display materials used in connection
with the Licensed Products shall be deemed "works made for hire" for MTVN within
the meaning of the U.S. Copyright Law. All agreements entered into between
Licensee and third parties providing materials shall include similar "work made
for hire" language in favor of MTVN. To the extent that any such work does not
so qualify, for the consideration set forth herein, Licensee hereby irrevocably
and absolutely assigns to MTVN all rights throughout the universe in perpetuity
in all media now known or hereafter developed, including but not limited to the
copyright and any extensions and renewals thereof and the trademarks and the
goodwill associated therewith.
(e) Licensee agrees to execute and deliver to MTVN any documents which
MTVN may reasonably request to confirm MTVN's ownership of its rights hereunder.
Licensee hereby irrevocably appoints MTVN as its attorney-in-fact coupled with
an interest to sign any such documents in Licensee's name.
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7. INFRINGEMENTS:
Licensee shall promptly notify MTVN of any apparently unauthorized use or
infringement by third parties of any rights granted to Licensee herein, and will
cooperate fully in any action at law or in equity undertaken by MTVN with
respect to such unauthorized use or infringement. Licensee shall not institute
any suit in connection with any apparently unauthorized use or infringement
without first obtaining the written consent of MTVN to do so, which consent
shall not be unreasonably withheld and MTVN shall have the sole right to
determine whether or not any action shall be taken on account of any such
unauthorized uses or infringements.
8. REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS:
(a) Licensee represents, warrants, and undertakes as follows:
(i) It is free to enter into and fully perform this Agreement;
(ii) All ideas, creations, designs, materials and intellectual property
furnished by Licensee in connection with the Licensed Products will be
Licensee's own and original creation or fully licensed by Licensee;
(iii) The Licensed Products and all materials used in connection therewith
shall be of the highest standard reasonably suitable for goods of the type of
the Licensed Products. The Licensed Products will be safe for use by consumers
and will comply with all applicable governmental rules, guidelines, codes,
regulations, and warranties (express or implied) including, without limitation
those contained in the Child Safety Protection Act and/or adopted by the
Consumer Product Safety Commission;
(iv) The Licensed Products will be manufactured, distributed, sold and
advertised in accordance with all applicable federal, state and local laws and
in a manner that will not reflect adversely upon MTVN, and will not infringe
upon or violate any rights of any third parties;
(v) Licensee will use its best efforts to obtain maximum sales in the
Licensed Territory during the License Term.
(b) MTVN represents, warrants, and undertakes as follows:
(i) It is free to enter into and fully perform this Agreement;
(ii) The Licensed Property is original to and the sole property of MTVN,
and does not infringe upon or violate any copyright, trademark or proprietary
right of any third party.
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9. INDEMNITIES:
(a) Licensee will at all times indemnify and hold MTVN, its officers,
directors and employees harmless from and against any and all claims, damages,
liabilities, costs and expenses, including reasonable counsel fees, arising out
of any breach or alleged breach by Licensee of any representation, warranty or
undertaking made herein, or out of any defect (latent or patent) in the Licensed
Products, provided that MTVN shall give prompt written notice, cooperation and
assistance to Licensee relative to any such claim or suit, and provided further
that no settlement of any such claim or suit shall be made without the prior
written consent of MTVN, except that Licensee reserves all rights to settle any
and/or all claims on behalf of Licensee arising out of alleged product defects
without the prior consent of MTVN on behalf of Licensee, provided that such
settlement will not be binding on MTVN.
(b) MTVN will at all times indemnify and hold Licensee, its officers,
directors and employees harmless from and against any and all claims, damages,
liabilities, costs and expenses, including reasonable counsel fees, arising out
of any breach or alleged breach by MTVN of any representation, warranty or
undertaking made herein, provided that Licensee shall give prompt written
notice, cooperation and assistance to MTVN relative to any such claim or suit,
and provided further that MTVN shall have the option to undertake and conduct
the defense and/or settlement of any such claim or suit so brought and that no
settlement of any such claim or suit is made without the prior written consent
of MTVN.
10. INSURANCE:
Licensee shall obtain and maintain at its own cost and expense from a
qualified insurance company licensed to do business in New York, standard
Product Liability Insurance naming MTVN as an additional named insured, with
respect to all Licensed Products manufactured hereunder, whether sold during the
License Term or thereafter. Such policy shall provide protection against any and
all claims, demands and causes of action arising out of any defects or failure
to perform, alleged or otherwise, of the Licensed Products or any material used
in connection therewith or any use thereof. The amount of coverage shall be Two
Million Dollars ($2,000,000) combined single limit coverage, with a deductible
amount not to exceed One Million Dollars ($1,000,000) for each single occurrence
for bodily and/or for property damage. The policy shall provide for ten (10)
days notice to MTVN from the insurer by Registered or Certified Mail, return
receipt requested, in the event of any modification, cancellation or termination
thereof. Licensee agrees to furnish MTVN a certificate of insurance evidencing
same within thirty (30) days after execution of this Agreement and in no event
shall Licensee manufacture, distribute or sell the Licensed Products prior to
receipt by MTVN of such evidence of insurance.
11. DEFAULT:
(a) Upon the occurrence of any of the following events remaining uncured
for a period of thirty (30) days after written notice thereof (other than
paragraphs 11 (a)(i), (vii) and (viii) for
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which there shall be no cure period and paragraph 1 l(a)(iv) for which there
shall be a fifteen (15) day cure period (each of which is a "Default"), then in
addition and without prejudice to any rights which it may have at law, in equity
or otherwise, MTVN shall have the right to terminate this Agreement, to delete
from this Agreement any elements of the Licensed Property or any Licensed
Products and/or to require the immediate payment of any Guaranteed Minimum
Royalty and royalties due or to become due hereunder:
(i) Licensee fails to meet the Presentation Date To Licensee's Retailers or
the Initial Ship Date To Licensee's Retailers of the Licensed Products due to
delays through no fault of Licensee;
(ii) Licensee fails to actively manufacture, advertise, distribute or sell
the Licensed Products;
(iii) Licensee fails to make a payment or furnish a statement in accordance
herewith;
(iv) Licensee fails to comply with the approval, quality, and safety
requirements hereunder and/or the Licensed Products do not comply with such
requirement and/or the Licensed Products are the subject matter of adverse or
negative publicity due to such failure;
(v) Licensee fails to comply with any other of Licensee's material
obligations hereunder or breaches any warranty or representation made by it
hereunder;
(vi) Licensee sells or otherwise disposes of all or substantially all of
its business or assets to a third party, or George Horowitz is no longer the
President of Licensee;
(vii) Licensee sells or causes others to sell the Licensed Products outside
Licensee's Licensed Distribution Channels and/or outside the Licensed Territory;
or
(viii) Licensee fails to obtain or maintain product liability insurance in
the amount of the type provided for herein.
(b) In the event that the Licensed Products pose a safety threat to the
consumer, or are the subject of a claim or inquiry by the Consumer Product
Safety Commission or the Child Safety Protection Act or any other person, agency
or commission because of quality and/or safety concerns, or are the subject of
negative publicity due to poor quality and/or safety of the Licensed Products,
Licensee shall, upon MTVN's reasonable request, immediately recall such Licensed
Products from the market place, and take any other measures MTVN may reasonably
demand.
(c) If a petition in bankruptcy is filed by or against Licensee, or
Licensee is adjudicated bankrupt, which is not dismissed within thirty (30)
days, or Licensee makes any assignment for the benefit of creditors or becomes
insolvent, is placed in the hands of a trustee or receiver, or is
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unable to pay its debts as they become due, whichever is sooner, this License
shall automatically terminate forthwith without any notice whatsoever. Upon such
termination for any reason under this subparagraph 11 (c) Licensee, its
receiver, representatives, trustees, agents, administrators, successors and
assigns shall have no further rights hereunder, and neither this License nor any
right or interest herein shall be deemed an asset in any insolvency,
receivership, and/or bankruptcy.
12. FORCE MAJEURE:
In the event that Licensee is prevented from manufacturing, distributing or
selling the Licensed Products because of any act of God; unavoidable accident;
fire, epidemic; strike, lockout, or other labor dispute; war, riot or civil
commotion; act of public enemy; enactment of any rule, law, order or act of
government or governmental instrumentality (whether federal, state, local or
foreign); or other cause of a similar or different nature beyond Licensee's
control, and such condition continues for a period of two (2) months or more,
either party hereto shall have the right to terminate this Agreement effective
at any time during the continuation of such condition by giving the other party
at least thirty (30) days' notice to such effect. In such event, all royalties
on sales theretofore made shall become immediately due and payable and this
Agreement shall be automatically terminated.
13. EFFECT OF EXPIRATION OR TERMINATION:
Upon expiration or termination of this Agreement, all rights granted to
Licensee herein shall forthwith revert to MTVN, with the following consequences:
(a) No portion of any prior payments shall be repayable to Licensee, and
any and all payments due or to become due, including any royalties and
Guaranteed Minimum Royalty shall be immediately due and payable. If, at such
time, the total amount of royalties paid by Licensee during the License Term is
less than the Guaranteed Minimum Royalty, Licensee shall immediately pay such
difference to MTVN.
(b) After the expiration or termination of this Agreement, Licensee shall
not manufacture, advertise, distribute or sell the Licensed Products containing
or including the Licensed Property or any product which may infringe upon MTVN's
proprietary rights, or use any name, logo or design (other than those existing
generic or basic garment designs or silhouettes existing prior to the
commencement of the Licensee Term) which is substantially or confusingly similar
to the Licensed Property on any product in any place whatsoever. Licensee shall
promptly deliver to MTVN a statement indicating the number of Licensed Products
then currently on hand or in the process of being manufactured. MTVN shall have
the right to conduct a physical inventory in order to ascertain or verify such
inventory and/or statement. Except as provided in subparagraph (c), such
inventory shall at MTVN's option, be destroyed by Licensee or purchased by MTVN
at Licensee's cost of manufacture. Disposition of any plates, moulds, forms,
lithographs and other material relating to the Licensed Products then remaining
on hand shall be subject to written instructions from MTVN to Licensee either to
destroy or to deliver same to MTVN or its designee. In the event that MTVN
requests Licensee to destroy its
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inventory, the Licensed Property or materials relating thereto, MTVN may require
Licensee to deliver to MTVN an affidavit by an officer of Licensee, attesting to
such destruction in such form as MTVN may in its sole discretion require.
(c) Upon expiration of this Agreement, so long as Licensee is not in
default at time of expiration, Licensee may continue to sell any Licensed
Products, previously manufactured and on hand, on a non-exclusive basis during
the period of ninety (90) days thereafter subject to all of the terms and
conditions contained in this Agreement and provided that: (i) the Licensed
Products are sold in the ordinary course of business at prices not lower than
the prevailing wholesale price or prices charged by Licensee during the ninety
(90) day period immediately preceding expiration; (ii) no new Licensed Products
are manufactured during such sell-off period; and (iii) MTVN is paid its then
existing Royalty Rate on all Licensed Products sold during the sell-off period.
(d) All warranties, indemnification and any other applicable obligations of
Licensee shall survive the expiration or termination of this License.
14. PAYMENTS AND NOTICES:
All notices which either party hereto is required or may desire to give to
the other shall be given by addressing the same to the other at the address
first set forth above, or at such other address as may be designated in writing
by any such party in a notice to the other given in the manner prescribed in
this paragraph. All such notices shall be made in writing by mailing the same by
certified or registered mail, return receipt requested, and shall be effective
immediately upon receipt thereof. Any and all notices to MTVN shall be addressed
to Attention: Vice President, Consumer Products, MTV: Music Television, with a
copy to the Sr. Vice President, Business Affairs and General Counsel. A copy of
all notices to Licensee shall be sent to Edward R. Epstein, Esq., 450 Seventh
Avenue, New York, NY 10123. All payments and statements to MTVN hereunder shall
be addressed to the Attention: Financial Director, International and Ancillary
Sales, with a copy to the Vice President Consumer Products, MTV: Music
Television.
15. GENERAL CLAUSES:
(a) Any attempted or purported assignment or other transfer, sublicense,
mortgage or other encumbrance of this License and the rights granted herein by
Licensee without the prior written approval of MTVN shall be void and of no
effect. This Agreement and the rights and obligations of the parties hereunder
shall be binding upon and shall inure to the benefit of MTVN and Licensee and
their respective legal representatives, successors in interest and permitted
assigns.
(b) Nothing herein contained shall be construed to constitute a partnership
or joint venture between the parties hereto, and neither Licensee nor MTVN shall
become bound by any representation, act or omission of the other. Licensee is an
independent contractor in the manufacture, advertisement, sale and distribution
of the Licensed Products, and Licensee will pay all sales taxes and other taxes
or charges imposed on Licensee or MTVN, except for
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MTVN's corporate income tax, by any law, ordinance or requirement of any
government or governmental instrumentality in connection therewith.
(c) A waiver by either party of any terms or conditions of this Agreement
in any instance shall not be deemed or construed to be a waiver of such term or
condition for the future, or of any subsequent breach thereof. All remedies,
rights, undertakings, obligations and agreements contained in this Agreement
shall be cumulative, and none of them shall be in limitation of any other
remedy, right, undertaking, obligation or agreement of either party.
(d) This Agreement and all matters or issues collateral thereto shall be
governed by the laws of the State of New York applicable to contracts performed
entirely therein. Licensee hereby consents and submits to the jurisdiction of
the federal and/or state court located in New York.
(e) The entire understanding between the parties hereto relating to the
subject matter hereof is contained herein and no warranties, representations or
undertakings are made by the parties hereto except as expressly provided herein.
This Agreement cannot be changed except in writing signed by the parties.
(f) The paragraph titles of this Agreement are for convenience only and
shall not affect the interpretation of this Agreement or any paragraph thereof.
(g) The parties hereto agree to execute such other writings, documents and
instruments as may be necessary or desirable to effectuate the purposes of this
Agreement.
(h) Notwithstanding any termination, cancellation or expiration of this
Agreement, the provisions hereof that are intended to continue and survive,
shall continue and survive, including, but not limited to paragraphs:
3 (d); 6-10; 11 (b); and 13-15.
13
<PAGE>
Schedule A
(Due 30 Days After Quarter End)
MTV NETWORKS
QUARTERLY ROYALTY REPORT
Licensee (company name):
---------------------------------------------
Licensed Property:
---------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
Quarter:
---------------------------------------------
- --------------------------------------------------------------------------------
Quantity Gross
S.K.U. and Product Description Account of Sales Royalty Total
Units Price Rate % Royalty $
Sold
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please submit with payment to: Sub total:
------------------------
Less Advance/
Deductions
Guarantee:
------------------------
Plus interest:
MTV Networks ------------------------
Ancillary Sales Total Due
P.O. Box 13801
Newark, NJ 07188-0801 ------------------------
with copy to Vice President I hereby certify that the above information
Consumer Products, is true and accurate:
MTV: Music Television
-------------------------------------------
Submitted by:
------------------------------
(signature)
-------------------------------------------
(Print name/title/date)
14
<PAGE>
Schedule B
(Due 30 Days After Quarter End)
MTV NETWORKS
QUARTERLY SALES REPORT
Licensee (company name):
--------------------------------------------------
Licensed Property:
--------------------------------------------------
Address:
--------------------------------------------------
--------------------------------------------------
Quarter:
--------------------------------------------------
Quarter Actual Shipped Total 199[ ] Projection
(Revise each quarter)
$ $
I hereby certify that the
above information is
true and accurate:
-----------------------
-----------------------
Please submit with payment to: Submitted by: -----------------------
(signature)
MTV Networks
Ancillary Sales
P.O. Box 13801
Newark, NJ 07188-0801 -----------------------
(Print name/title/date)
with copy to Vice President
Consumer Products, MTV: Music Television
(same address)
15
<PAGE>
SCHEDULE C
[LOGO]
MUSIC TELEIVISON
MTV: Music Television(TM)
Consumer Products Approval Form
- --------------------------------------------------------------------------------
TO BE COMPLETED BY LICENSEE
- --------------------------------------------------------------------------------
Licensee: Date:
------------------------------- -------------------------
Licensee Contact: MTV Contact:
----------------------- ------------------
Materials Supplied: o Concept/Layout o ColorArt
o B/W Art o Preproduction Sample
o Other o Production Sample
Brand: o MTV: Music Television(TM) o MTV's Beavis & Butt-Head(TM) o Other
Description: (Characters, scenes, activity):
Specifications: (printing process, limitations, dimensions, etc.)
- --------------------------------------------------------------------------------
TO BE COMPLETED BY MTV CONSUMER PRODUCTS
- --------------------------------------------------------------------------------
Date Received: Date Due:
------------------------- ---------------------
Action Taken: Approved Resubmit Next step is:
--- --- ---
Approved with comments Proceed to Next Step
--- ---
Comments:
Copyright Notice For This Product Reads:
- ------------------------------------- -----------------------------------
MTV Signature Date
To the extent that artwork is accepted or preproduction or production samples
are approved, such does not constitute approval or acceptance of the use of any
artwork or design on any article or notations hereon described. MTV does not
approve artwork as such. Approval is only granted for artwork as incorporated
with a particular product. Approvals, disapprovals, comments or notations hereon
shall not imply that a binding agreernent exists with MTV.
(C)MTV:Music Television MTV Consumer Products 1515 Broadway, 23rd Floor,
NewYork, New York l0036 (212) 258-8564 Fax (212) 258-8563
16
<PAGE>
RIDER TO AGREEMENT DATED MARCH 28, 1996 BETWEEN MTV NETWORKS AND
ACTIVE APPAREL GROUP. INC. (the "Agreement")
RENEWAL OPTION:
Licensee shall have the option to renew the License Term for an additional two
year extension period (i.e. February 1, 1999 through January 31, 2001), provided
that (i) Licensee shall have satisfactorily performed its obligations under the
Agreement, including without limitation, the timely payment of all Guaranteed
Minimum Royalties and other amounts payable under the Agreement; and (ii)
provided further that Net Sales during the License Term shall exceed Three
Million Five Hundred Thousand Dollars ($3,500,00). Such renewal option shall be
exercisable by Licensee by providing MTVN with a written notice not later than
six months prior to expiration of the License Term. The guaranteed minimum
royalty for the extension period shall be Three Hundred Twenty Thousand Dollars
($320,000) and shall be payable as follows:
$50,000 on exercise of such renewal option ("Renewal Advance");
$33,750 on or before May 1, 1999;
$33,750 on or before August 1, 1999;
$33,750 on or before November 1, 1999;
$33,750 on or before February 1, 2000;
$33,750 on or before May 1, 2000;
$33,750 on or before August 1, 2000;
$33,750 on or before November 1, 2000; and
$33,750 on or before January 1, 2001.
17
