May 1, 1997
Signal Apparel Company, Inc.
Manufacturer's Road
Chattanooga, Tennessee 37405
Re: Fourth Interim Extension
Gentlemen:
This will serve to modify the letter agreement
dated January 31, 1997 ("Third Interim Extension
Agreement") between Joan Vass Inc. ("Vass") and you
("Signal") pursuant to which the June 1, 1992 License
Agreement ("License Agreement") between Vass and
Signal, as extended by March 29, 1996 Interim Extension
Agreement ("First Interim Extension Agreement") and
September 11, 1996 Interim Extension Agreement ("Second
Interim Extension Agreement"), was extended beyond its
May 31, 1996 termination date, as follows:
1. Paragraph 2 of the First Interim Extension
Agreement is modified so that the Term of the License
Agreement shall be deemed extended to May 30, 1998 and
shall be applicable to the Holiday 1997, Resort 1997,
Spring 1998 and Summer 1998 Collections (the "Third
Extended Collections").
2. Paragraph 2 of the Third Interim Extension
Agreement is amended to provide for the following
payment obligations due on and after the date hereof,
in place of the payment obligations set forth therein:
DATE OF PAYMENT OBLIGATION TO BE PAID
No later than the due Payment of third party
dates reflected on the expenses (as determined
invoices and approved by Vass) for
Vass' Spring 1998 Fashion
Show to be held in
November 1997, up to
a maximum of $70,000
("Fashion Show
Expenses"). (Signal
hereby indemnifies Vass
from liability for non-
payment of such Fashion
Show Expenses.)
May 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of April
1997
June 1, 1997 Payment of the sum of
$62,500
June 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
between March 1, 1997 and
May 30, 1997, in excess
of the payments scheduled
to be made April 30, 1997
and May 30, 1997
July 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of June 1997
August 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of July 1997
September 1, 1997 Payment of the sum of
$62,500
September 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
between June 1, 1997 and
August 30, 1997, in
excess of the payments
scheduled to be made
July 30, 1997 and
August 30, 1997
October 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of September
1997
November 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of October
1997
December 1, 1997 Payment of the sum of
$62,500
December 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
between September 1, 1997
and November 30, 1997, in
excess of the payments
scheduled to be made
October 30, 1997 and
November 30, 1997
January 30, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of December
1997
February 28, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of January
1998
March 1, 1998 Payment of the sum of
$62,500
March 30, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
between December 1, 1997
and February 28, 1998, in
excess of the payments
scheduled to be made
January 30, 1998 and
February 28, 1998
April 30, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of March
1998
May 30, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of April
1998
June 30, 1998 Payment of Royalty on Net
Sales of u.s.a. garments
between March 1, 1998
and May 30, 1998, in
excess of the payments
scheduled to be made
April 30, 1998 and
May 30, 1998
July 30, 1998 Payment of Royalty on Net
Sales during the
"Disposal Period" (as
defined in the License
Agreement) of u.s.a.
garments in the month of
June 1998
August 30, 1998 Payment of Royalty on Net
Sales during the Disposal
Period of u.s.a. garments
in the month of July 1998
September 30, 1998 Payment of Royalty on Net
Sales during the
Disposal Period of
u.s.a. garments between
June 1, 1998 and
August 30, 1998, in
excess of the payments
scheduled to be made
July 30, 1998 and
August 30, 1998
3. Paragraph 3 of the First Interim Extension
Agreement is hereby revised to read as follows:
"3. The parties recognize that in order that
prototypes of Joan Vass u.s.a. garments for the Third
Extended Collections be available to permit Signal to
manufacture sales samples for selling in a timely
fashion, it is necessary that Vass periodically work on
the development of the Third Extended Collections
prototypes at Signal's Heritage facility in Marion,
South Carolina. Vass agrees to undertake the
development of the prototypes subject to this letter
agreement upon the following conditions:
"a. Signal acknowledges that Vass'
designs for the Third Extended Collections are and at
all times shall be and remain the property of Vass.
"b. All prototypes, patterns and
specification sheets for garments for the Third
Extended Collections developed by Vass and Signal
(Heritage) shall at all times be and remain the
property of Vass. Upon the termination of the License
Agreement, the same shall be delivered to Vass at its
offices in New York within five (5) days of Vass'
written demand therefore. Vass shall be responsible
for the expense of shipping and shall have the option
to credit Signal for such shipping expense and the
direct expense of preparation of prototypes, patterns
and specification sheets against the amounts due and to
come due to it as Royalties under the License
Agreement, which direct expenses shall be the
responsibility of Vass if the above option is exercised
by Vass.
"c. The provisions of Section 4.5(a)
and (o) shall not be applicable during the period
covered by this Agreement except that Signal shall
continue the program of cooperative advertising of
u.s.a. garments for the Third Extended Collections
customarily offered by it during the Term of the
License Agreement to Signal customers.
"d. So long as Signal is in compliance
with the License Agreement and the terms of this letter
agreement, Signal shall be entitled to offer for sale
and accept any orders for the Holiday 1997, Resort
1997, Spring 1998 and Summer 1998 Collections garments
without further approval of Vass.
"e. Upon termination of the License
Agreement, (i) Vass shall have the option to purchase
all samples manufactured by Signal for the Third
Extended Collections, or any one or more of them, at
Signal's (Heritage's) direct cost; (ii) Vass shall have
the option to purchase at Signal's (Heritage's) cost
all inventoried yarns and other materials and
accessories, allocated to u.s.a. garments and (iii)
Vass shall also have the option to assume any yarn
contracts held by Signal (Heritage) allocated to u.s.a.
garments.
"Such options shall be exercised by Vass by
written notice following the termination of the License
Agreement given within twenty days (20) after receipt
of notice from Signal (Heritage) of the (a) inventory
of samples available for Vass' purchase and Signal's
(Heritage's) cost, (b) inventory of yarn, other
materials and accessories available for Vass' purchase
and Signal's (Heritage's) cost and (c) a description of
the yarn contracts held by Heritage which Vass may
assume. Vass shall also have the option to make any
payment required to be made by credit against the
amounts due and to come due to it as Royalties under
the License Agreement."
4. The first sentence of Paragraph 4 of the
First Interim Extension Agreement as modified to read
as follows:
"The applicability of the provisions of
Section 9 of the License Agreement are conditioned upon
timely compliance by Signal with the provisions of
Section 4.2 of the License Agreement governing the
payment of Royalties during the Disposal Period."
5. The provisions of Paragraph 6 of the Second
Interim Extension Agreement shall continue in full
force and effect.
6. Paragraph 13 of the License Agreement is
modified to read as follows:
"This Agreement may not be transferred,
assigned, pledged, mortgaged or otherwise disposed of
by Designer or Licensee in whole or in part."
7. Vass has been informed by Signal that it is
endeavoring to sell substantially all of the assets of
its Heritage Division, which assets are used in the
manufacture of the Licensed Products. The parties
agree that, upon the sale of the Heritage Division and
Vass entering into a license agreement with such
purchaser, this Fourth Interim Extension Agreement will
be modified so that Signal will have no responsibility
to manufacture the Licensed Products following the
effective date of sale of the assets of the Division.
The parties also recognize that an adjustment to
Signal's obligations to pay the $62,500 quarterly fee
also may be necessary in the event such a transaction
occurs.
8. The terms and provisions of the License
Agreement as modified by the First Interim Extension
Agreement, the Second Interim Extension Agreement, the
Third Interim Extension Agreement, and as further
modified by the provisions of this Fourth Interim
Extension Agreement are hereby ratified, affirmed and
approved.
Please signify your consent to and approval of the
foregoing by signing at the foot hereof.
Very truly yours,
JOAN VASS, INC.
By /s/ Joan Vass
---------------------
Joan Vass, President
Consented to and Agreed
SIGNAL APPAREL COMPANY, INC.
By /s/ Robert J. Powell
--------------------------
Vice President