Sample Business Contracts

Sublicense Agreement - Entertainment Management Services Iinc. and SMG Entertainment Inc.

Management Forms

                              SUBLICENSE AGREEMENT

         THIS AGREEMENT made and entered into this __ day of January, 2005, by
and between ENTERTAINMENT MANAGEMENT SERVICES, INC., a New York corporation with
its principal office at 533-535 West 27th Street, New York, NY 10001 or designee
("Licensor") and SMG Entertainment, Inc., a Florida corporation ("Licensee").

                                               W I T N E S S E T H:

         WHEREAS, LICENSOR is the exclusive licensee of the SCORES trademarks
and related intellectual property listed on Exhibit A (the "Scores Trademarks")
and has the right to sublicense the same on the terms set forth herein; and

         WHEREAS, Licensee is the owner and operator of an adult-entertainment
night club located at 17450 Biscayne Boulevard, North Miami, FL (the "Location")
that will conduct business under the name "Scores - Miami"; and

         WHEREAS, Licensee will hereby receive the right and license to use the
Scores Trademarks in connection with the operation of the Location, and the sale
of certain merchandise, for the Term (as defined below) (the "Business");

         NOW, THEREFORE, for and in consideration of the promises, covenants,
and agreements contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged by both parties, the parties agree as

         1. LICENSE GRANT.

         (a) Business. Licensor hereby grants to Licensee and Licensee accepts,
         a non-exclusive license to use the Scores Trademarks during the Term in
         connection with the Business subject to the terms and conditions of
         this License Agreement. Licensor hereby grants to Licensee and Licensee
         accepts, an exclusive lease of, and license to the URL
         for the website for the Business

         (b) Merchandising. Licensor hereby grants to Licensee, on the terms and
         conditions set forth herein, a non-exclusive license during the Term to
         use the Scores Trademarks in connection with the retail sale of
         commercial merchandise, including tee-shirts, sweatshirts, sweat pants,
         jackets, baseball hats, key rings, and other similar merchandise, all
         to be sold at and out of the Business including the right to sell any
         merchandise utilizing the Scores Trademarks relative to the Business
         over the Internet on a site maintained by the Business and by mail
         order, catalog or at any other location or in any other channel
         specific to the Business, provided further, that Licensee will purchase
         all merchandise from Licensor at cost plus a 25% markup. If Licensee
         desires to acquire any merchandise through any third-party, such third
         party must sign a license agreement approved in writing by Licensor,
         and any such acquisition must be approved, in writing, by Licensor, in
         Licensor's sole discretion.


         (a) License Fees. (i) Beginning on the one hundred twenty first (121st)
         day of operation as Scores Miami at the Location, Licensee agrees to
         pay the following as a license fee ("License Fee"):

                  On Gross Revenues greater than $1,500,000.00 per annum
                  ("Excess Gross Revenues"), the License Fee will be 4.99% of
                  Excess Gross Revenues (the "Excess Fee").

"Gross Revenues" means 100% of Licensee's receipts received from the Business'
operation, less all actual local sales taxes paid, amounts specifically
designated by customers on credit card receipts as "tips for service," credit
card discount fees, taxi cab commissions, complementary food and beverage sales
(subject to reasonable limitations). Gross Revenues include all revenues from
operation of the Business including, but not limited to, Liquor Revenue, Beer
Revenue, Champagne Revenue, Shot Girl House Fees, Wine Revenue Non-Alcoholic
Beverage Revenue, Food Revenue, Party Revenue, Admission Fees Club, Admission
Fees Private Rooms, Room Rental, Humidor Revenue, Cigar Revenue, Cigarette
Revenue, Candy Revenue, Novelty Revenue, Valet Revenue, Coat Check Revenue,
Concession - Cigarette, Concession - Bathroom, Concession - Massage, Concession
- Tarot, Dressing Room Rent, House Fees Entertainers, House Fees DJ's, House
Fees Floor Manager, House Fees Service Personnel, Feature - Calendar, Feature -
Novelty, Feature - Video, Feature - Cigar and Internet Revenue and will also
include the fee charged to customers for the purchase of Diamond Dollars(R) and
the fee paid by entertainers for cashing in Diamond Dollars(R).

         (b) Merchandise Royalties. Licensee will purchase all re-sellable
         Merchandise from Licensor, or Licensor's authorized affiliate. Licensee
         will pay for all such Merchandise on a cost plus twenty-five percent
         (25%) markup basis, unless otherwise agreed.

         (c) Website Maintenance. Licensee will pay a fee of $500.00 per month
         for website maintenance.

         (d) Royalty Reports. Licensee shall furnish Licensor with written
         reports describing in detail all sales relative to the Business. The
         reports shall be prepared and sent to Licensor not later than seven (7)
         days following the 15th and last day of each month. Reports will be
         adjusted on a quarterly basis (if necessary), not later than ten (10)
         days after each calendar quarter period ending in March, June,
         September and December of each year. Reports will set forth Gross
         Revenues on a weekly basis.

         (e) Payment. Payment of the Excess Fee shall be made within seven (7)
         days of the end of each month commencing in the month immediately
         following the month in which Licensee's Gross Revenues exceed
         $1,500,000.00 and continuing until the end of the then-current calendar
         year. Merchandise will be paid for as and when billed (net 30 days).
         Website maintenance will be payable monthly.


         3. APPROVAL BY LICENSOR. In order to preserve the value, goodwill and
         reputation of the Scores Trademarks, Licensee and Licensor shall
         consult each other during the Term hereof with regard to any marketing,
         advertising or promotional activities pursuant to the Business and
         Licensor will have the right to approve all advertisements,
         promotional, marketing and other similar materials, including but not
         limited to the images and format of Diamond Dollars (R) for the
         Location. Furthermore, prior to releasing or using any promotional,
         marketing, advertising or other similar materials which have not been
         approved by Licensor in the twenty-four (24) month period preceding the
         proposed use or in the event Licensee intends to utilize any such
         materials which have been used in the past 24 months but intends to do
         so in a media not used by Licensor in the 24-month period preceding the
         proposed use, Licensee shall first obtain the prior written consent of
         Licensor for such use, which shall not be unreasonable withheld. In
         connection with obtaining such consent, Licensee shall send copies of
         all materials and media for the proposed use so that Licensor can
         thoroughly evaluate the proposed use. Licensor agrees to inform the
         Licensee of its decision regarding any approvals within twenty-four
         (24) hours of receiving all materials and media for approval.

         responsible for the compliance with all applicable laws and safety
         standards regarding the operation of the Business, the Location, other
         licensed locations and the use of the Scores Trademarks herein.
         Licensor's approval of submissions pursuant to Paragraph 3 above in no
         way affects, alters, diminishes or waives Licensee's obligations
         hereunder or under Licensee's obligation to indemnify Licensor as set
         forth herein below.

         5. BOOKS AND RECORDS. Licensee shall, for a minimum of three (3) years
         from their rendition, keep full and accurate books of account, records,
         data and memoranda representing Licensee's sales. Licensee further
         gives Licensor the right, at its own cost and expense, to examine said
         books and records on reasonable notice, such examination to be
         conducted in such a manner as to not unreasonably interfere with the
         business of Licensee. Licensee shall reasonably cooperate with Licensor
         in the event the owner of the Scores Trademarks requests an audit.
         Licensor or its representatives shall not disclose to any other person,
         firm, or corporation any information acquired as a result of any
         examination, provided, however, that nothing contained herein shall be
         construed to prevent Licensor and/or its duly authorized
         representatives from using or disclosing said information in any court,
         arbitration, or other action instituted to enforce the rights of
         Licensor hereunder.


         (a) All copyrights, trademarks and/or patents in the Scores Trademarks
         and related intellectual property belong solely to Licensor and are
         within the scope of the license granted herein. Upon termination of
         this Agreement all intellectual property rights and rights granted
         herein in the Scores Trademarks immediately revert to Licensor or the
         owner of the Scores Trademarks and Licensee agrees to return to
         Licensor all original artwork, models, samples, prototypes, renderings
         and drawings incorporating the Scores Trademarks. All use by Licensee
         of the intellectual property rights of the Scores Trademarks shall
         inure to the sole benefit of Licensor and the owner of the Scores
         Trademarks. Licensee shall execute any and all documents necessary to
         confirm said reversions of rights and hereby appoints Licensor its
         attorney-in-fact to execute any such documents in the event Licensee is
         unwilling or unable to do so. Licensee acknowledges the exclusive
         ownership of all intellectual property rights in and to the Scores
         Trademarks by the owner of the Scores Trademarks and will not take any
         action to interfere with or challenge said ownership, including but not
         limited to registering or attempting to register the same or similar
         marks or properties anywhere in the World, nor commence or participate
         in cancellation or opposition proceedings.


         7. WARRANTIES.

         (a) Licensor hereby warrants that, to the best of its knowledge, the
         granting of the license hereunder or the subsequent commercial
         exploitation of the license does not violate the intellectual property
         or contract rights of any third party. Licensor further warrants that
         it has not intentionally violated the rights of any third party in
         granting Licensee this license.

         (b) Licensee hereby warrants that, the acceptance of the license
         granted hereunder or the subsequent commercial exploitation of the
         license does not violate the intellectual property or contract rights
         of any third party. Licensee further warrants that it has not
         intentionally violated, and will not intentionally violate, the rights
         of any third party in accepting this license.

         8. OFFENSIVE LITIGATION. Licensee agrees to give Licensor prompt
         notification of any third party actions that would constitute an
         infringement of the rights granted to it by this Agreement. Licensor
         shall prosecute, at its own discretion, infringement actions against
         any third party infringers and any recoveries obtained therein shall
         belong exclusively to Licensor. Licensee shall, at Licensor's expense,
         cooperate in all respects with Licensor's prosecution of said suits,
         including but not limited to being named as a party in any such suit,
         producing documents, appearing as witnesses, etc.


         (a) Licensor agrees to indemnify and hold harmless Licensee from and
         against any and all damage, loss, and expense incurred as a result of
         the breach of any of Licensor's warranties herein. Any claims made
         against Licensee which would result in Licensor becoming obligated to
         indemnify Licensee hereunder shall not permit Licensee to withhold any
         amounts due Licensor hereunder.

         (b) Licensee agrees to indemnify, defend, and hold harmless Licensor,
         its agents and employees from and against any and all loss and expense
         arising out of any claims of personal injury, product liability,
         wrongful death, negligence, strict liability or any other legal action,
         in addition to the breach of any of its warranties hereunder or the
         violation of any applicable law or safety standard based on the use of
         the Scores Trademarks by or on behalf of Licensee and/or its
         subsidiary, affiliated or controlled company (if any). Licensee shall
         maintain, at its sole cost and expense, premises liability, liquor
         liability, workman's compensation (in the amount required by the State
         of Illinois), plate glass insurance (as per Licensee's lease),
         commercial liability coverage and other customary insurance. The
         premises, commercial, and liquor policies must provide coverage of at
         least $3,000,000/$3,000,000, naming Licensor as an additional insured,
         and providing that such policy cannot be canceled without thirty (30)
         days prior written notice to Licensor. In the event any claim is made
         against Licensor in excess of the limits of Licensee's insurance set
         forth above, Licensor may, at Licensee's expense, retain counsel of its
         own choosing to defend said claims. All insurance shall be primary and
         not contributory. Licensee agrees to provide Licensor with a copy of
         the insurance declarations and/or certificates within 20 days following
         the date of this Agreement. Licensee shall indemnify, defend and hold
         harmless Licensor, its agents, employees and affiliate or parent
         corporations from and against any and all loss and expense arising out
         of any breach by Licensee of any term of, or warranty made in, this


         10. TERMINATION.

         (a) In case either party fails to perform under or commits or allows to
         be committed a breach of any of the several covenants and conditions
         herein contained, the other party shall notify such party in writing of
         such failure or default and such party shall then have the right to
         remedy such failure or default within thirty (30) days. If the default
         has not been cured within said thirty (30) days of notice to the
         defaulting party, then the aggrieved party may terminate this Agreement
         immediately by a further notice in writing. If Licensor shall send
         notice of default to Licensee based on a failure to pay royalties, then
         Licensee shall cure such default within ten (10) days of notice.

         (b) Any termination under this paragraph will be without prejudice to
         the rights and remedies of either party with respect to any provisions
         or covenants arising out of breaches committed prior to such

         (c) If a petition in bankruptcy is filed by or against Licensee, or
         Licensee becomes insolvent, or makes an assignment for the benefit of
         creditors, or any other arrangement pursuant to any bankruptcy law, or
         if Licensee discontinues its business or if a receiver is appointed for
         it or its business, to the fullest extent permitted by law at the time
         of the occurrence, the license hereby granted shall automatically
         terminate without any notice whatsoever being necessary. In the event
         this License is so terminated, Licensee, its receivers,
         representatives, trustees, agents, administrators, successors, and/or
         assigns shall have no right to sell, use, exploit or in any way deal
         with or in the Scores Trademarks or anything relating to it whatsoever
         except with and under the special consent and instructions of Licensor
         in writing, which they shall be obliged to follow.

         (d) Upon cessation of all business operations by the Licensee at the
         Location for a period of greater than one hundred eighty (180) days for
         any reason other than Force Majeure, this Agreement shall terminate

         (e) This agreement shall also terminate should Licensee sell the
         business or the assets of the business. Upon such a termination,
         Licensee shall give Licensor at least sixty (60) days advance written
         notice. Upon such sale, all rights and obligations of the parties
         relative to this agreement shall cease and be of no further force or

         11. TERM. Subject to Paragraph 10, the Term of this Agreement shall
         commence on the date the Business opens at the Location and continue
         for an initial term of three (3) years with successive three (3) year
         renewals which will be automatic unless the Agreement is terminated in
         accordance with its terms, or if Licensee is in default of its payment
         obligations. Upon cessation of operation by the Location for a period
         of greater than one hundred eighty (180) days for any reason other than
         Force Majeure, this Agreement shall automatically terminate. If the
         Business is not opened at the Location within 180 days of execution of
         this Agreement, Licensor may terminate this Agreement in its sole
         discretion. Licensee agrees to keep Licensor apprised of its progress
         to opening as Scores-Miami.


         12. REPRESENTATION. It is expressly agreed and understood that neither
         party hereto is the agent or legal representative of the other and
         neither party has the authority, express or implied to bind the other
         or pledge its credit. This Agreement does not create a partnership or
         joint venture between the two parties.

         13. FORCE MAJEURE. It is understood and agreed that in the event of an
         act of the government, war, terrorism, fire, flood or other natural
         disaster, or labor or manufacturing strikes which prevent the
         performance of this Agreement, such nonperformance will not be
         considered a breach of this Agreement, and such nonperformance shall be
         excused while, but not longer than, the conditions described herein
         prevail. The period of Force Majeure shall not exceed twelve (12)

         14. NOTICES. All notices, whenever required in this Agreement, will be
         in writing and sent by certified mail, return receipt requested to the
         addresses set forth above. Notices will be deemed to have been given
         two business days following mailing. A copy of all notices to Licensor
         shall be sent via regular mail to:

         15. CONTROLLING LAW. This Agreement shall be construed in accordance
         with the laws of the State of New York, United States of America and
         jurisdiction over the parties and subject matter over any controversy
         arising hereunder shall be in the Courts of the State of New York,
         County of York or the Federal courts therein. Both parties hereby
         irrevocably consent to said jurisdiction and venue.

         16. ASSIGNMENT. This Agreement shall be binding upon and inure to the
         benefit of the parties hereto and their respective successors and
         permitted assigns, but neither this Agreement, nor any of the rights,
         interests or obligations hereunder shall be assigned by Licensee
         without the prior written consent of Licensor, and any attempts to do
         so without the consent of Licensor shall be void and of no effect.

         17. ENTIRE AGREEMENT. This writing constitutes the entire agreement and
         understanding between the parties. No other oral or written agreements
         or representations exist or are being relied upon by either party, all
         being merged herein. Any modifications or additions hereto must be made
         in writing and signed by both parties.

         18. MISCELLANEOUS.

         (a) The paragraph headings used herein are for reference purposes only
         and do not effect the meaning or interpretation of this Agreement. If
         any provisions of this Agreement are for any reason declared to be
         invalid or illegal, the remaining provisions shall not be affected

         (b) The failure of either party to enforce any or all of its rights
         hereunder as they accrue shall not be deemed a waiver of those rights,
         all of which are expressly reserved.

         (c) This Agreement may be executed in more than one counterpart, all of
         which shall be deemed to be originals.



         (a) In order to induce Licensor to enter into this Agreement and to
         secure the complete and timely performance of Licensee's obligations
         hereunder, Licensee hereby grants to Licensor a security interest in
         the license granted under this Agreement as well as Licensee's
         receivables in connection therewith. In the event Licensee defaults
         under this license and Agreement, Licensor may enforce against Licensee
         all the rights and remedies of a secured creditor upon default under
         all applicable laws. In the event Licensee files for bankruptcy under
         the U.S. Bankruptcy laws, Licensor may enforce all rights and remedies
         of a secured creditor under the U.S. Bankruptcy Code.

         (b) Licensee agrees to execute any and all documents necessary to
         perfect Licensor's security interest in this license including, but not
         limited to, Financing Statement Form UCC-1 and any other security
         agreements and financing statements evidencing said security interests
         in such form as may be recorded and perfected according to the laws of
         the State of New York and the U.S. Patent and Trademark Office.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

ENTERTAINMENT MANAGEMENT                    SMG Entertainment, Inc.

By:                                         By:
   ------------------------------              -----------------------
Richard Goldring, President                                   , General Manager


                                   Schedule A

1.  U.S. Trademark Registration No. 1855829 for SCORES SHOWROOM with design
    (INT 25, 41, 42);

2.  U.S. Trademark Registration No. 1830135 for SCORES (INT. 6, 41, 42)