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 the earliest event reported)
March 7, 1996
____________________
The Stephan Co.
Florida 1-4436 59-0676812
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
1850 W. McNab Road
Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 971-0600
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
On March 7, 1996, the Registrant entered into a
Trademark License and Supply Agreement with Color Me
Beautiful, Inc. (CMB) to license select products of the
Registrant's Frances Denney Line and to supply the
requirements of CMB for such products. The Agreement gives
CMB the exclusive right to market and distribute certain
Denney products in certain retail chain stores in the United
States and Canada, for specified royalty payments based upon
net sales, as defined in the Agreement, with graduated,
guaranteed minimum royalty amounts payable throughout the
term of the Agreement. In addition, the Agreement provides
for the Registrant to be the exclusive supplier of products
sold under the agreement, so long as, among other things,
the Registrant's pricing structure and product quality
remains reasonably competitive.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
10.1 Trademark License and Supply Agreement between The Stephan
Co. and Color Me Beautiful, Inc., dated March 7, 1996.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the State of Florida on March 20, 1996.
The Stephan Co.
By:
David Spiegel
Chief Financial Officer
TRADEMARK LICENSE AND SUPPLY AGREEMENT
THIS TRADEMARK LICENSE AND SUPPLY AGREEMENT
(hereinafter referred to as the "AGREEMENT" or this
"AGREEMENT") is made by and entered into as of March 7,
1996, between COLOR ME BEAUTIFUL, INC., a Maryland
corporation, having its principal place of business at
Thunderbolt Place, Suite E, Chantilly, Virginia 22021
(hereinafter referred to as "LICENSEE"), and THE STEPHAN
CO., a Florida corporation, having its principal place of
business at 1850 West McNab Road, Ft. Lauderdale, Florida
33309 (hereinafter referred to as "LICENSOR").
WHEREAS, Licensor is the owner of the trademarks
listed on Schedule I hereto in the countries indicated on
such Schedule (hereinafter referred to as the "LICENSED
TRADEMARKS");
WHEREAS, Licensee desires to use the Licensed
Trademarks in connection with the sale and distribution of
the products listed on Schedule II hereto (hereinafter
referred to as the "LICENSED PRODUCTS") as provided for and
pursuant to the terms and conditions of this Agreement; and
WHEREAS, Licensee desires to purchase from
Licensor, and Licensor desires to supply Licensee, all of
Licensee's requirements for the Licensed Products pursuant
to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and promises contained herein, the parties hereto
agree as follows:
1. License.
(a) Licensor hereby grants to Licensee, during
the Term (as defined in Section 2 hereof) of this Agreement,
the exclusive right and license to use, subject to the terms
and conditions hereinafter set forth, the Licensed Trademarks on
and in connection with the sale and distribution of the Licensed
Products in the United States at the following retail stores
only: J.C. Penney; Sears; Thrift Drugs; Genovese; Ulta III;
Crowleys; Mervyns; Longs Drug; Troutman's Emporium;
and Cox Department Stores. Licensee may sell or distribute
the Licensed Products at or to other stores or through other
channels of distribution upon the prior written consent of Licensor.
(b) In addition to the grant provided in (a)
above, Licensor hereby grants to Licensee commencing January
1, 1998, and continuing as long as this Agreement remains in
effect, the exclusive right and license to use the Licensed
Trademarks on and in connection with the sale and distribution of
Licensed Products throughout North America at or to such additional
retail stores or retail outlets (the "Additional Stores") subject to
the following conditions:
(i) Licensee shall give at least
ninety (90) days' written notice to Licensor of
its intention to begin selling or distributing
Licensed Products at or to Additional Stores and
indicate the identity of any such Additional
Store; and
(ii) Licensor (or any of Licensor's
subsidiaries) shall not be selling or distributing
any Licensed Products to such Additional Store(s)
as of December 31, 1997, or shall have, as of the
date of the notice provided pursuant to 1(b)(i)
above, provided that the effective date of such
notice is not on or prior to December 31, 1997, discontinued,
the sale and distribution of Licensed Product to such
Additional Store(s). Licensee's right and license to sell
and distribute Licensed Products with respect to any
Additional Store(s) shall terminate as of December 31 of
each calendar year during the Term if, upon the request of
Licensor, Licensee fails, after reasonable notice, to provide
Licensor evidence, reasonably satisfactory to Licensor prior
to such date, that Licensed Products are included in such
Additional Stores' Plan-o-gram, or similar document, for the
next succeeding calendar year and Licensee does not maintain
an active and continuing business thereat. Licensee may
reinstate and exercise its right to sell at or to any Additional
Store(s) with respect to the next or any subsequent calendar year
by complying with this subsection 1(b)
(c) Licensee represents and agrees that the
Licensed Trademarks shall be used only as permitted by
paragraphs (a) and (b) of this Section, and that the
Licensed Trademarks shall not be used on any products other
than the Licensed Products or in any other way whatsoever.
2. Term.
The term of this Agreement (the "Term") shall
commence on the date hereof and shall, subject to Section
1(b) above, continue unless and until terminated in
accordance with the provisions of Section 11 hereof.
3. Consideration.
In consideration of the license granted hereby,
Licensee shall pay to Licensor the amounts specified below.
(a) Guaranteed Minimum Royalty.
(i) Licensee shall pay to Licensor the
guaranteed annual minimum royalty (the "Guaranteed Minimum
Royalty") set forth below:
Guaranteed
Annual Period Minimum Royalty
from the date hereof - 12/31/96........$75,000
1/1/97 - 12/31/97.....................$125,000
1/1/98 - 12/31/98.....................$160,000
1/1/99 - 12/31/99.....................$195,000
1/1/2000 - 12/31/2000.................$210,000
1/1/2001 - 12/31/2001.................$200,000
1/1/2002 - 12/31/2002.................$215,000
1/1/2003 - 12/31/2003
and each Annual Period
thereafter during the Term............$225,000
(ii) The Guaranteed Minimum Royalty shall be
payable as provided in paragraph (c) below regardless
of the level of Net Sales (as hereinafter defined).
However, the Guaranteed Minimum Royalty for each
Annual Period shall be credited against the Percentage
Royalty (set forth below) as provided in paragraph (b)
below with respect only to the same Annual Period.
(b) Percentage Royalty. Licensee shall pay Licensor
a royalty ("Percentage Royalty") for each Annual Period listed
below equal to a percentage of Licensee's Net Sales of Licensed
Products as set forth below:
Annual Period Percentage Royalty
1996 5%
1997 5%
1998 6%
1999 6%
2000 6%
2001 and each Annual
Period thereafter during
the Term 5%
(c) Percentage Royalty and Guaranteed Minimum Royalty
payments due hereunder shall be accounted for and paid quarterly
within thirty (30) days after the close of each quarter during
each Annual Period during the Term (or portion thereof in the
event of prior termination for any reason as provided in Section
12 hereof), commencing with the quarter ending March 31, 1996
(which shall cover all Net Sales through that date) irrespective
of Net Sales in the case of Guaranteed Minimum Royalties.
Payments with respect to any such quarterly period shall be in
an in amount not less than one quarter of the Guaranteed Minimum
Royalty due for the Annual Period with respect to such quarterly
period. Guaranteed Minimum Royalty payments for a quarter shall
be credited against the Percentage Royalty due for the same such
quarter. No payment of Percentage Royalty for any Annual Period
in excess of payments of Guaranteed Minimum Royalty for the same
Annual Period shall be credited against the Guaranteed Minimum
Royalty due Licensor for any other Annual Period.
(d) Net Sales. For purposes of this Agreement, "Net
Sales" of Licensed Products shall mean the gross sales of
Licensed Products by Licensee, less only returns for damaged or
defective merchandise for exchange evidenced by credit
memoranda, over-stock returns or returns resulting from store
closings. In determining Net Sales, no deduction shall be made
for early payments, bad debts, discounts, uncollectible
accounts, advertising allowances or special promotions of any
kind or for costs incurred by Licensee, in manufacture, sale,
advertising or promotion of the Licensed Products.
(e) United States Currency. All payments of
Guaranteed Minimum Royalties and Percentage Royalties (and such
other amounts due hereunder, including, but not limited to,
payments in respect of Licensor's supply of requirements to
Licensee) shall be paid in United States currency.
(f) Past Due Rate. Licensee shall pay interest at
the rate of 1.5% per month on the amount of any Royalty payments
not paid when due.
4. Royalty Statement.
(a) Licensee shall deliver to Licensor within thirty
(30) days following the end of each quarter during each Annual
Period, the Percentage Royalty for that quarter together with a
royalty statement verified and signed by the President or Chief
Financial Officer of Licensee and certified as accurate,
indicating by month, by individual Licensed Product, and by
Licensee's customers, the amount of Licensed Product sold during
such three month period and the price(s) therefor (itemized for
each Licensed Product and aggregated). Receipt or acceptance by
Licensor of any of the royalty statements furnished or of any
sums paid to Licensor pursuant to this Agreement will not
preclude Licensor from questioning their accuracy.
(b) Licensee shall deliver to Licensor, no later than
forty-five (45) days after the close of each Annual Period (or
portion thereof in the event of prior termination for any
reason), a statement verified, signed and certified by the
President or Chief Financial Officer of Licensee covering such
Annual Period and containing the same information required to be
contained in the statement referred to in paragraph (a) above.
5. Books and Records; Audit.
(a) Licensee, at its sole cost and expense, shall
prepare and maintain, in accordance with Generally Accepted
Accounting Principles consistently applied, complete and
accurate books of account and records (including, without
limitation, the originals or copies of documents supporting
entries in the books of account) covering all transactions
relating to the license hereby granted and to this Agreement.
Licensor and any duly authorized representative of Licensor
shall have the right, at least once during each quarterly period
for the duration of this Agreement and for three (3) years
thereafter, upon reasonable notice and during regular business
hours, to examine such books of account and records and all
other documents and materials in the possession or under the
control of Licensee with respect to the subject matter and the
terms of this Agreement including, but not limited to invoices,
credits and shipping documents and Licensor shall have free and
full access thereto for such purposes and for the purpose of
making extracts therefrom. All such books of account, records,
and documents shall be kept available by Licensee at least three
(3) years after the Annual Period to which they relate.
(b) If, as a result of any examination of Licensee's
books and records, it is established that Licensee's Percentage
Royalty payments for any period were less than the amount which
should have been paid for such period by an amount equal to two
(2%) percent or more of the payments actually paid for such
period, Licensee promptly shall reimburse Licensor for the
reasonable costs of such examination. All payments required to
be made to eliminate any discrepancy as revealed by such
examination shall be made immediately upon demand.
(c) Licensee shall deliver, within 90 days after
each Annual Period, annual audited financial statements setting
forth fairly the financial position of Licensee. Licensee shall
promptly notify Licensor of any material adverse change in the
financial condition of Licensee. Licensor agrees to maintain
Licensee's audited financial statements and other non-public
business or financial information of Licensee provided to
Licensor pursuant to this Agreement confidential and not to
disclose such information to any third party and not to use such
information for any purpose other than to verify compliance with
this Agreement. Likewise, Licensee agrees to maintain any
nonpublic business or financial information of Licensor provided
to Licensee pursuant to this Agreement confidential and not
disclose such information to any third party and not to use such
information other than in furtherance of the provisions of this
Agreement.
6. Supply of Licensed Products.
(a) Subject to the following sentence and
subsections 6(b) through 6(f) hereof, Licensee shall purchase
all of its requirements for Licensed Products from Licensor at
prices set forth on Exhibit A hereto, as such Exhibit may be
amended from time to time by Licensor as provided in Exhibit.
Licensee's obligation to use Licensor as its exclusive supplier
of its requirements for Licensed Products is subject to (i) Licensor
offering reasonably competitive pricing to Licensee, (ii)
Licensor's ability to meet mutually agreeable reasonable lead
times, (iii) The Licensed Products' and the requirements'
conformity with the product quality specifications and physical
standards evidenced by samples of the Licensed Products provided
to Licensee immediately prior to the date hereof with respect to
Products listed on Exhibit A hereto and from time to time with
respect to Products that hereafter become subject to this
Agreement (the "Standards") and (iv) Licensee delivering written
notice to Licensor of its desire to use another supplier and
specifying the reason(s) therefor as delineated in the preceding
clauses (i) through (iii) and providing for a reasonable period
of time during which Licensor may cure non-compliance with
clauses (i) through (iii); provided, however, that in the event
Licensee's right to use any other supplier stems from delays or
failures in performance by Licensor resulting from acts beyond
Licensor's reasonable control and without Licensor's fault or
negligence (a "Force Majeure Event"), Licensee's right to use
such other suppliers as provided for herein shall, subject to
existing contractual obligations of Licensee with respect to any
particular Licensed Product, terminate upon a reasonable time
following the cessation of such Force Majeure Event and
Licensee's and Licensor's obligations to the other as specified
herein with regard to supply and purchase of Licensed Products
pursuant to this paragraph (a) shall be reinstated. With
respect to the foregoing, the parties hereto acknowledge and
agree that (A) the prices listed on Exhibit A, as unamended,
hereto shall be deemed reasonably competitive for purposes of
clause (i) above for at least the longer of one (1) year from
the date hereof or with respect to any particular Licensed
Product, depletion of Licensor's current inventory thereof (the
amount of which shall be disclosed promptly upon execution of
this Agreement) and (B) in determining the reasonableness of any
cure period, prior defaults, if any, by Licensor may be taken
into account for purposes of reducing or eliminating any such
period.
(b) Licensor's failure to meet any of the conditions
specified in clause (i), (ii) or (iii) paragraph (a) above shall
not be deemed a material breach hereunder but shall only entitle
Licensee to use other suppliers to meet its need for
requirements for Licensed Products provided that such other
suppliers are not direct competitors of Licensor with respect to
cosmetics or hair and skin care products (it being acknowledged
that this provision is not intended to exclude all possible
suppliers) and provided further that all such goods and
requirements to be used in connection with the Licensed
Trademarks provided by third parties meet the Standards. In
order to facilitate the determination of whether another
supplier is a direct competitor of Licensor in the absence of
agreement that another supplier is not a direct competitor,
Licensee shall, prior to engaging any other supplier for
requirements for Licensed Products, submit to Licensor a list of at
least ten (10) but no more than twenty (20) companies that to the
knowledge of Licensee are not direct competitors of Licensor and
that are capable of supplying Licensed Products and/or
requirements therefor in conformity with the Standards.
Licensor shall, within twenty (20) days of receipt of such list,
have the right to strike up to sixty-five (65%) percent (rounded
to the nearest whole number) of the names from such list and
Licensee may utilize any of the remaining companies as a
supplier of requirements for Licensed Products.
(c) Licensee shall purchase all packaging,
components, brochures, promotional literature and inventory of
Licensed Products which are not defective from Licensor at
prices set forth on Exhibit A until Licensor depletes its existing
inventory of these items (which inventory shall be promptly disclosed to
Licensee). Thereafter, Licensee may purchase packaging,
components, brochures and promotional literature (provided that
such items do not detract from the quality of the Licensed
Products or the value of the Licensed Trademarks) directly from
other suppliers and have componentry shipped to Licensor for
filling.
(d) Upon execution hereof, Licensee shall deliver to
Licensor a purchase order with respect to Licensed Products and
its requirements therefor for the next two calendar quarters.
Thereafter, at least ten (10) days prior to the end of each
calendar quarter during the Term hereof, Licensee shall place
purchase orders for Licensed Product for the second succeeding
calendar quarter so that Licensee's orders at all times reflect
its requested requirements for the next two calendar quarters.
Licensee's purchase order shall indicate quarterly delivery
dates. Licensor shall use commercially reasonable efforts to
meet delivery dates specified in Licensee's orders but shall not
be deemed in default hereunder if it does not meet such dates;
provided, however, Licensee shall have the rights set forth in
Section 6(a) above in such event. Licensor shall ship "free on
board" Fort Lauderdale or Tampa, as applicable (either a "FOB
Point"). Licensee shall be responsible for selecting the
carrier for Licensed Product and shall bear all shipping costs
from the FOB Point. Legal title and risk of loss with regard to
Licensed Products furnished by Licensor shall pass to Licensee
upon delivery to the carrier at the FOB Point. Licensor shall
invoice Licensee upon delivery of Licensed Products and
requirements therefor to Licensee and full payment therefor
shall be due within 45 days from the date of invoice. Licensee
shall pay interest at the rate of 1.5% per month on amounts
outstanding more than 45 days from the date of invoice.
(e) Licensee may, with the prior written consent of
Licensor (which consent shall not be unreasonably withheld), at
Licensee's sole expense, subject to prior regulatory approval,
if applicable, upgrade or change formulations, create new
products, change packaging or modify or supplement product names
and descriptions necessary to meet the needs of the marketplace
provided such modifications, upgrades or changes are designed
and shown by appropriate consumer testing (i) To enhance the
salability of a Licensed Product or (ii) reduce the cost of such
Licensed Product (without adversely affecting the salability
thereof) and in any case do not detract from the quality of the
Licensed Products or the value of the Licensed Trademarks. The
expense of any formulation upgrade or change, packaging change
and new product creation (including any additional costs of
production resulting therefrom) consented to by Licensor at the
request of Licensee shall be borne by Licensee and the expense
of any such changes or modifications by Licensor not resulting
from the request of Licensee shall be borne by Licensor. Either
party may use any new formulations or packaging, names and
descriptions developed by the other.
(f) Licensor represents and warrants that all
Licensee Product shall, at the time of pick-up at the FOB Point,
be merchantable and conform with the Standards. Any liability
for failure to meet such Standards or breach of warranty of
merchantability shall be limited to repair or replacement of, or
refund for, the non-conforming item of Licensed Product (other
than as provided in Section 10(b) hereof with respect to third
party claims only). LICENSOR MAKES NO REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO THE LICENSED PRODUCTS EXCEPT AS
EXPRESSLY SET FORTH HEREIN. IN CONNECTION WITH THIS SECTION 6,
NEITHER LICENSOR NOR LICENSEE SHALL BE LIABLE FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES OR
LOSSES OF ANY KIND, NATURE OR DESCRIPTION WHATSOEVER, INCLUDING
BUT NOT LIMITED TO LOST PROFITS, OR FOR ANY CLAIM OR DEMAND MADE
AGAINST LICENSEE BY ANY THIRD PARTY FOR ANY CAUSE WHATSOEVER
(OTHER THAN AS EXPRESSLY PROVIDED IN SECTION 10(b) HEREOF)
REGARDLESS OF WHETHER ARISING FROM BREACH OF CONTRACT, WARRANTY,
TORT, STRICT LIABILITY OR OTHERWISE.
7. Marketing and Promotion of Licensed Products.
(a) Licensee and Licensor agree to cooperate with
each other and inform each other, on a timely basis, of
marketing plans and promotions. Neither party shall take any
action that may impede, interfere with or undermine the sales or
marketing of the Licensed Products by, or the profitability
thereof to, the other party excluding, subject to the other
terms of this Agreement, competition in the ordinary course of
business.
(b) Licensee shall use commercially reasonable
efforts (and in no event less effort or relative expense than
Licensee expends in promoting its other products) to promote and
advertise the Licensed Products and exploit the license granted
herein. Licensee may, upon sixty (60) days' prior written notice
to Licensor, delete an item of Licensed Product from Schedule II
as a result of unsatisfactory sales result but, upon such
deletion, shall forfeit its rights and license to market, sell
and distribute such deleted Product. In addition, Licensee
shall, upon notice from Licensor and a reasonable cure period,
forfeit its rights hereunder with respect to any Licensed
Products it fails to adequately promote and advertise in
accordance herewith. No deletion of a Licensed Product from
Schedule II hereof shall result in a diminution of the
Guaranteed Minimum Royalties due hereunder.
(c) Licensee shall submit to Licensor for review and
approval by Licensor prior to publication all new advertising
and promotional materials bearing or related to the Licensed
Trademarks (which approval shall not be unreasonably withheld or
delayed). If Licensor fails to respond within seven (7)
business days of receipt of such material(s), Licensor shall be
deemed to have no objections to such material(s). Licensor's
review of such advertising and promotional materials shall be
conducted in good faith and shall not constitute a waiver of
Licensor's rights or Licensee's duties under any provisions of
this Agreement. After advertising or promotional materials have
been approved, Licensee shall not depart in any material respect
therefrom.
8. Use of Licensed Trademarks.
(a) Licensee agrees and undertakes to use the
Licensed Trademarks in compliance with any and all applicable
trademark and other laws and to use such legends, markings or
notices in connection therewith as are required by law or
otherwise reasonably required by Licensor to protect Licensor's
rights. Upon expiration or termination of this Agreement for
any reason whatsoever, Licensee will execute and file any and
all documents required by Licensor regarding the Licensed
Trademarks which Licensor shall require. Licensor shall bear
all expenses reasonably incurred in preparing and recording any
such documents.
(b) Licensor's ownership of the Licensed Trademarks
shall be shown in connection with all uses of the Licensed
Trademarks by Licensee by means of an appropriate legend or
other designation approved by Licensor.
(c) Licensee shall not at any time use the Licensed
Trademarks or the Licensed Products, or any material utilizing
or reproducing the Licensed Trademarks or Licensed Products in a
manner that derogates the value, reputation or good will
associated with the Licensed Trademarks.
(d) Licensee shall not use the Licensed Trademarks,
in whole or in part, in close proximity with Licensee's or a
third party's trademark, trade name or corporate name or any new
trademark, trade name or corporate name so as reasonably to
create a net impression that a Licensed Trademark is modified or
a part of any new trademark, trade name or that a Licensed
Trademark is the property of the Licensee.
(e) Licensee shall not use any other trademarks,
trade names or corporate names which are confusingly or
deceptively similar to the Licensed Trademarks during the Term
or thereafter, as long as such Trademarks remain in effect.
(f) Licensee shall notify Licensor immediately of
any inquiry, investigation, litigation, inspection or any other
action by any governmental body or other person or entity, with
respect to the production, promotion, sale or distribution of
any Licensed Products bearing any Licensed Trademark which
pertains to product quality and/or safety or which relate to the
Licensed Trademarks.
(g) Licensee acknowledges that Licensor has reserved
the right to modify the Licensed Trademarks and Licensee agrees
to incorporate any such modifications in connection with all use
by it of the Licensed Trademarks and Licensee shall immediately
cease its use of the original Licensed Trademarks, provided that
Licensee shall be permitted to use all inventory of packaging
materials bearing the original Licensed Trademarks. Any artwork
and designs involving the Licensed Trademark shall, at all
times, be and remain the property of Licensor.
9. Representations and Warranties.
(a) Licensee warrants and represents as follows: (i)
it has all requisite power and authority to execute, deliver and
perform this Agreement, and that all necessary corporate
proceedings of Licensee have been duly taken to authorize the
execution, delivery and performance of this Agreement by
Licensee; (ii) this Agreement has been duly authorized, executed
and delivered by Licensee, constitutes the legal, valid and
binding obligation of Licensee, and is enforceable as to
Licensee in accordance with its terms; and (iii) none of the
execution and delivery of, or performance by, Licensee of this
Agreement conflicts with, or violates Licensee's Certificate of
Incorporation or by-laws or results in a violation or default
under any material agreement to which Licensee is a party.
(b) Licensor warrants and represents as follows: (i)
it has all requisite power and authority to execute, deliver and
perform this Agreement, and that all necessary corporate
proceedings of Licensor have been duly taken to authorize the
execution, delivery and performance of this Agreement by
Licensor; (ii) this Agreement has been duly authorized, executed
and delivered by Licensor, constitutes the legal, valid and
binding obligation of Licensor, and is enforceable as to
Licensor in accordance with its terms; (iii) none of the
execution and delivery of, or performance by, Licensor of this
Agreement conflicts with, or violates Licensor's Certificate of
Incorporation or by-laws or results in a material violation or
default under any agreement to which Licensor is a party; (iv)
Licensor owns all right, title and interest in and to the
Licensed Trademarks and has the full power and authority to grant the
rights afforded to Licensee pursuant to this Agreement; (v) the
Licensed Trademarks and Licensed Products do not, to the best of
Licensor's knowledge, infringe or violate any patent, copyright
or trademark of any person or entity; (vi) no claims or actions
exist to which Licensor is a party which relate to the Licensed
Trademarks; (vii) Licensor has complied with all laws in all
material respects with respect to the Licensed Products; and
(viii) the Licensed Trademarks have been duly registered and are
valid and have not been abandoned in the countries indicated on
Schedule I hereto.
10. Indemnification and Insurance.
(a) Licensee hereby agrees to indemnify Licensor and
undertakes to defend and hold Licensor, its affiliates and their
respective officers, directors, agents, and employees, harmless
from and against, and/or pay and reimburse such persons for, any
and all claims, suits, losses, damages and/or expenses,
including but not limited to attorneys' fees and disbursements
(collectively, "Losses"), that arise out of or relate to the
Licensed Trademarks or Licensed Products sold or distributed by
it on or after the date hereof, except to the extent that such
Losses are based on, arise out of, relate to, or involve claims
that Licensee's use of the Licensed Trademarks infringes a third
parties proprietary rights and except for Losses resulting from
or arising out of the gross negligence of Licensor or a breach
of Licensor's obligations or warranties specifically contained
herein.
(b) Licensor hereby agrees to indemnify Licensee and
undertakes to defend and hold Licensee, its affiliates and their
respective officers, directors, agents and employees, harmless
from and against, and or pay and reimburse such persons for, any
Losses that arise out of or relate to Licensed Products sold or
distributed prior to the date of this Agreement or which are not
sold or distributed by or on behalf of Licensee or that arise
out of or relate to or involve claims that Licensee's use of the
Licensed Trademarks infringes a third party's proprietary rights
or that result from or relate to the gross negligence of
Licensor or the breach of Licensor's obligations or warranties
specifically contained herein except Losses resulting from or
arising out of the gross negligence of Licensee or a breach of
Licensee's obligations or warranties contained herein.
(c) Licensee and Licensor shall each maintain at its
own expense through purchased insurance throughout the Term and
for a period four (4) years thereafter, comprehensive general
liability insurance, including product liability insurance, in a
minimum amount of Two Million Dollars ($2,000,000) combined
single limit for each single occurrence, for bodily injury and
property damage. During the term hereof, each party shall have
the other named as an additional insured on such policies.
Either party shall, upon request, provide the other a
certificate of such insurance from the insurance carrier which
sets forth the scope of coverage and the limits of liability
stated above without any provision for material deductibles or
self-insured retentions, and further provides that the policies
may not be materially changed or canceled without at least (30)
days prior written notice. Prior to any such cancellation,
Licensee or Licensor, as the case may be, shall provide the
other with a certificate of insurance evidencing that a new
insurance policy with the same coverage and terms described
above will be in place prior to such termination. Upon
reasonable request either party shall deliver to the other
evidence in form and substance reasonably satisfactory to the
requesting party, of the maintenance and renewal of the required
insurance, including without limitation, renewal certificates
and copies of those portions of policies, riders and endorsements
pertaining to this Agreement.
(d) Licensee agrees to be responsible for returns of
Licensed Products which occur after the date of this Agreement
except for Interlude Xmas Set (1995) and Hope Xmas Set (1995)
for which Licensor shall be responsible. Licensee shall not be
responsible for returns of any products other than the Licensed
Products (but only to the extent provided for in the preceding
sentence).
11. Termination.
The License hereby granted pursuant to this Agreement
may be terminated:
(a) By Licensor without notice in the event that (i)
Licensee (A) files a petition in bankruptcy or a petition in
bankruptcy is filed against Licensee, (B) becomes insolvent
under applicable state insolvency law or makes an assignment for
the benefit of its creditors, (C) makes an arrangement pursuant
to any bankruptcy law, or (D) discontinues its business, (ii) a
receiver is appointed for Licensee or for its business or (iii)
a "change of control" occurs with respect to Licensee without
the prior written consent of Licensor, such consent not to be
unreasonably withheld or delayed. For purposes of this
Agreement, "change of control" with respect to Licensee shall
mean any of (1) the sale or transfer of all or substantially all
of Licensee's assets, (2) a merger or consolidation of Licensee,
(3) a direct or indirect change of control of Licensee, or (4)
transfer of all or a controlling portion of the capital stock of
Licensee;
(b) By either party if there is a material breach by
the other party of any provision of this Agreement and a failure
by such breaching party to cure such breach within thirty (30)
days after written notice from the non-breaching party;
(c) By Licensee upon at least one hundred and eighty
(180) days prior written notice to Licensor; or
(d) By mutual written agreement duly executed by both
parties.
12. Effect of Termination or Expiration.
(a) Licensee agrees that upon expiration or earlier
termination of this Agreement for any reason, Licensee shall:
(i) remove all Licensed Trademarks from the packaging of
Licensed Products; (ii) refrain from further production or sale
of Licensed Products bearing the Licensed Trademarks; and (iii)
discontinue production, distribution and use of promotional
materials, advertising, packaging, signs, billboards and any
other material(s) which utilize the Licensed Trademarks. Upon
any such termination, other than as a result of a material
breach by Licensor or notice by Licensor pursuant to Section
11(c) or mutual agreement pursuant to 11(d) above, Licensee
shall be responsible for the Guaranteed Minimum Royalty payments
due through the effective date of such termination and such
Guaranteed Minimum Royalty Payments that would have come due but
for such termination for a period of one hundred and eighty
(180) days following such effective date of termination, less,
in the case of termination by Licensee on fewer than one hundred
and eighty (180) days notice, the number of days of actual
written notice given by Licensee (including, in all cases, any
pro rata portions thereof), in addition to any Percentage
Royalty which may be owing pursuant to Sections 3(c) and 12(c)
hereof; provided, however, that, in the event of any termination,
other than as a result of a material breach by Licensor, Licensee
shall at least be responsible for the Guaranteed Minimum Royalties
through and including March 31, 1997.
(b) Upon the expiration or termination of this
Agreement, Licensee immediately shall deliver to Licensor a
complete and accurate schedule of Licensee's inventory of
Licensed Product and packaging and components related to
Licensed Products (hereinafter referred to as "Inventory").
Such schedule shall be prepared as of the close of business on
the date of such expiration or termination. Licensor thereupon
shall have the option, exercisable by notice in writing
delivered to Licensee within thirty (30) days after Licensor's
receipt of the complete Inventory schedule, to purchase any or
all of the merchantable Inventory for an amount equal to the
lower of (i) the cost thereof to Licensee or (ii) its fair
market value. In the event such notice is sent by Licensor,
Licensee shall deliver, at its sole cost, to Licensor or its
designee all of the Inventory referred to therein within five
(5) days after Licensor's said notice. Licensor shall pay to
Licensee for such Inventory which is in marketable condition
within thirty (30) days after the delivery of such Inventory to
Licensor. No Percentage Royalty or any other royalty shall be
payable to Licensor with respect to any such Inventory purchased
by Licensor.
(c) Licensee shall be responsible for all purchase
orders placed with Licensor prior to any termination or
expiration of this Agreement, unless Licensor has not procured
requirements therefor and has not otherwise incurred any costs
in connection therewith. If this Agreement expires or is
terminated, Licensee shall be entitled, for an additional period
of one (1) year only, on a non-exclusive basis, to sell and
dispose of its Inventory and such other amounts of Licensed
Product delivered to Licensee pursuant to the preceding
sentence; provided, however, Licensee shall give Licensor the
right of first refusal to purchase Licensee's inventory of
Licensed Product prior to any divestiture or liquidation sale of
all or substantially all of such inventory. Such sales (other
than purchases by Licensor) shall be made subject to all of the
provisions of this Agreement and to an accounting for and the
payment of Percentage Royalties thereon. Such accounting and
payment shall be due within thirty (30) days after the close of
said three (3) month period. Notwithstanding anything to the
contrary herein, in the event that Licensor notifies Licensee of
its desire to purchase any of the Inventory pursuant to
paragraph(b) above, such notice shall apply only to that portion
of the Inventory remaining on the date said notice is received
by Licensee.
(d) Except as specifically provided in paragraph(c)
above, on the expiration or termination of this Agreement, all
of the rights of Licensee under this Agreement shall terminate
forthwith and shall revert immediately to Licensor and Licensee
shall discontinue forthwith all use of the Licensed Trademark,
no longer shall have the right to use the Licensed Trademarks or
any variation, derivation, enhancement or simulation thereof and
promptly shall transfer to Licensor, free of charge, all
registrations, filings and rights with regard to the Licensed
Trademark which it may have possessed at any time.
(e) Notwithstanding any termination in accordance
herewith, Licensor shall have and hereby reserves all rights and
remedies which it has, or which are granted to it by operation
of law, to enjoin the lawful or unauthorized use of the Licensed
Trademark, to collect royalties payable by Licensee pursuant to
this Agreement and each of Licensor and Licensee shall have and
hereby reserve all rights at law or equity, including, without
limitation, the right, subject to Section 6(f) hereof, to be
compensated for damages for breach of the Agreement, and for all
costs, including, without limitation, all legal fees and
expenses incurred as a result thereof; provided, however,
Licensee shall not be liable for any special, indirect,
consequential, incidental or punitive damages including lost
profits; provided further, however, that the foregoing
limitation shall not apply with respect to Licensee's
obligations under Section 10(a) hereof with respect to third
party claims or for breaches by Licensee that effect the
Licensed Trademarks. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, LICENSEE SHALL BE ENTITLED TO INJUNCTIVE
RELIEF IN THE EVENT OF A BREACH OF THIS AGREEMENT BY LICENSOR
AND IN THE EVENT INJUNCTIVE RELIEF IS NOT AVAILABLE, LICENSOR'S
LIABILITY TO LICENSEE ARISING FROM THIS AGREEMENT (NOT INCLUDING
OBLIGATIONS UNDER SECTION 10(b) WITH RESPECT TO THIRD PARTY
CLAIMS ONLY) SHALL NOT EXCEED A MAXIMUM OF THE NET PROFIT
DERIVED BY LICENSEE FROM SALES OF LICENSED PRODUCTS FOR THE
TWELVE MONTH PERIOD IMMEDIATELY PRECEDING SUCH BREACH.
13. Licensor's Title and Protection of Licensed
Trademarks
(a) Licensor shall maintain all trademark
registrations and other property rights in respect of the
Licensed Trademarks and monitor and use commercially reasonable
efforts to enforce any infringement of the Licensed Trademarks.
(b) Licensee acknowledges Licensor's exclusive
right, title and interest in and to the Licensed Trademarks and
in and to any registrations thereof in the jurisdictions
indicated on Schedule I hereto and agrees that it will not at
any time do, or cause to be done, any act or thing contesting or
in any way intending to impair the validity of or Licensor's
exclusive right, title and interest in and to the Licensed
Trademarks. Licensee will make no applications nor seek or
claim any registration or ownership rights in or to the Licensed
Trademarks in the United States or elsewhere.
(c) Licensee will not in any manner represent
that it owns the Licensed Trademarks, and hereby acknowledges
that its use of the Licensed Trademarks shall not create any
right, title, or interest in or to the Licensed Trademarks, but
that all such use shall inure to the benefit of Licensor.
(d) Licensee shall cooperate to a commercially
reasonable extent with Licensor with respect to maintaining,
renewing, protecting and/or enforcing the Licensed Trademarks
and associated good will and for vesting title thereto in
Licensor, its successors and assigns; provided, however, that
Licensee shall not be obligated or required to expend funds or
make payments to Licensor or any other party pursuant to this
subsection (d). Licensor shall do all commercially reasonable
acts with respect to maintaining, renewing, protecting and/or
enforcing the Licensed Trademarks and associated good will.
(e) Licensee shall not contest Licensor's ownership
of the Licensed Trademarks, any registrations of the Licensed
Trademarks by Licensor, or bring any act to cancel any such
registrations thereof or contest the validity thereof.
(f) Licensee shall give prompt written notice to
Licensor of any infringement, imitation or act inconsistent with
Licensor's ownership of the Licensed Trademarks by third
parties, or any act of unfair competition by third parties
relating to the Licensed Trademarks, wherever and whenever such
infringement or act shall come to Licensee's attention. After
receipt of such notice from Licensee, Licensor shall in its sole
discretion decide whether to take action with respect to such
infringement or act, and Licensee shall fully cooperate with Licensor
in such action and, if so requested by Licensor, shall join with Licensor
as a party to any such action brought by Licensor; provided, however,
that any such cooperation or joining as a party shall be at
Licensor's sole expense, including, without limitation, any
reasonable expenses of counsel of Licensee. Any recovery as a
result of such action shall belong solely to Licensor. Licensee
agrees that Licensor shall have the sole power to take legal or
other action before any court or governmental authority with
respect to the infringement and the protection of the Licensed
Trademarks.
14. Miscellaneous.
(a) This Agreement and/or the license granted herein
and all other duties hereunder may not be assigned, mortgaged,
sublicensed or otherwise transferred or encumbered by either
party without the prior written consent of the other, such
consent not to be unreasonably withheld; it being acknowledged
and agreed to that, in connection with any proposed assignment
by Licensee, Licensor may consider the creditworthiness of such
proposed assignee and whether the proposed assignment would, in
Licensor's reasonable judgment, impede the salability or growth
in sales of the Licensed Products. Any attempted violative
assignment, sublicense or transfer, whether voluntary or by
operation of law, shall be void and of no force and effect.
(b) Each party hereby recognizes and agrees that
monetary damages for breaches by it of its obligations hereunder
may be inadequate and that immeasurable injury may result from
either party's breach of this Agreement and that the other party
shall be entitled to injunctive relief, in addition to such
other right and remedies set forth in this Agreement and
available at law or in equity.
(c) No failure of Licensor or Licensee to strictly
enforce any of their respective rights under this
Agreement shall be deemed a continuing waiver and Licensor or
Licensee may thereafter strictly enforce any such rights.
(d) All notices requests, demands and other
communications required or permitted to be given under this
Agreement ("Communications") shall be in writing and shall be
deemed to have been duly given if delivered personally with
receipt acknowledged or sent by registered or certified mail,
return receipt requested, or by overnight courier for next day
delivery, to the parties at their respective addresses set forth
below or to such other or additional address as either party
shall hereafter specify by Communication to the other, or by
telecopier to the parties at their respective telecopier numbers
set forth below or to such other or additional numbers as either
party shall hereafter specify by Communication to the other
party:
If to Licensee to: Color Me Beautiful, Inc.
14000 Thunderbolt Place
Suite E
Chantilly, Virginia 22021
Telecopier No.: (703) 471-0127
Attn: Steve DiAntonio, President
with a copy to: Holland & Knight
2100 Pennsylvania Avenue, NW
Washington, D.C. 20037
Telecopier No.: (202) 955-5564
Attn: William J. Mutryn
If to Licensor to: The Stephan Co.
1850 West McNab Road
Fort Lauderdale,Florida 33309
Telecopier No.: (305) 971-9903
Attn: Mr. Frank Ferola, Sr.
Chairman, President and CEO
with a copy to: Hertzog, Calamari and Gleason
100 Park Avenue
New York, New York 10017
Telecopier No.: (212) 213-1199
Attn: Stephen Connoni, Esq.
Notice of change of address or telecopier number shall be
deemed given when actually received or upon refusal to accept
delivery thereof; all other communications shall be deemed to
have been given and received on the earliest of: (a) when
actually received or upon refusal to accept delivery thereof,
(b) on the date when delivered personally or sent by telecopier,
(c) one (1) business day after sending by recognized overnight
courier, or (d) four (4) business days after mailing, as
aforesaid.
(e) The obligations of Licensee and Licensor under
Sections 3, 5, 10, 12 and 13 herein shall survive expiration or
earlier termination of this Agreement.
(f) This Agreement expresses fully the understanding of
both parties and all prior understandings, agreements or
representations, oral or written, are hereby superseded and
canceled, and no changes in the terms of this Agreement shall be
valid except when and if reduced to writing and signed by both
Licensor and Licensee.
(g) This Agreement shall inure to the benefit of, and be
binding upon, Licensor and Licensee and their respective
successors and permitted assigns.
(h) This Agreement shall be construed and governed in
accordance with the laws of the State of Florida, without giving
effect to the choice of law principles thereof. Each of the
parties hereto (i) consents and submits to the jurisdiction of
the Courts of the State of Florida or of the Courts of the
United States of America for the Southern District of Florida
for all purposes of this Agreement, including, without
limitation, any action or proceeding instituted for the
enforcement of any right, remedy, obligation and liability
arising under or by reason of this Agreement and (ii) consents
and submits to the venue of such action or proceeding in the
City of Fort Lauderdale and County of Broward (or such judicial
district of a Court of the United States as shall include the
same).
(i) The headings and titles to the paragraphs of this
Agreement are not a part this Agreement and shall have no effect
upon the construction or interpretation hereof.
(j) Nothing contained in this Agreement shall in any way
be construed to create an agency relationship, partnership or
joint venture between the parties, and Licensee shall have no
power to obligate or bind Licensor in any manner whatsoever. In
any review or consultation conducted by or on behalf of Licensor
hereunder, Licensor is acting in an advisory capacity only and
shall have no responsibility for the operations of Licensee's
business or its manufacturing, distribution, sales or facility used in
connection therewith, whether upon the recommendation of
Licensor or otherwise.
(k) Licensor and Licensee make no representations, oral or
written, regarding the subject matter hereof, except as
expressly set forth herein.
(l) This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together
shall constitute one and same instrument.
(m) Licensee agrees and undertakes that, at any time and
from time to time, without further consideration, it will at
Licensor's written request take such actions and execute and
deliver such documents as Licensor deems reasonably necessary to
effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement.
LICENSEE:
COLOR ME BEAUTIFUL, INC.
By: _______________________
Name: Steve DiAntonio
Title: President
LICENSOR:
THE STEPHAN CO.
By: _______________________
Name: Frank Ferola, Sr.
Title: President and CEO
SCHEDULE I
LICENSED TRADEMARKS
CANADA UNITED STATES
MARK MARK
Frances Denney Frances Denney
Interlude Interlude
Fade Away
Hope
SCHEDULE II
LICENSED PRODUCTS
Hope Bath and Body Perfume
Hope Perfume/Cologne Hope
Dusting Power
Hope Body Lotion
Interlude Perfume/Cologne
Interlude Bath & Body Perfume
Interlude Dusting Powder
Interlude Body Lotion
Fade Away with SPF 15
Hope Spring Set
Interlude Spring Set
