EXHIBIT 10.19
(Jones - License)
LICENSE AGREEMENT, dated as of May 11, 1998 by and between PRL USA, INC.
("Licensor"), with a place of business at Suite 201, Wilmington, Delaware
19803, and Jones Apparel Group, Inc. ("Licensee"), a Pennsylvania corporation
with a place of business at 250 Rittenhouse Circle, Bristol, Pennsylvania 19007.
WHEREAS, Licensor is engaged in the business of manufacturing, selling and
promoting, and licensing others the right to manufacture, sell and promote, high
quality apparel and related merchandise under certain Polo/Ralph Lauren
trademarks and trade names; and
WHEREAS, Licensee desires to obtain, and Licensor is willing to grant, a
license pursuant to which Licensee shall have the right to use the Trademark
(as hereinafter defined) on the terms set forth herein;
1. Definitions. As used herein, the term:
1.1. "License" shall mean the exclusive, non-assignable right to use the
Trademark in connection with the manufacture and/or importation and sale of
Licensed Products in the Territory.
1.2. "Licensed Products" shall mean those items set forth on Schedule A
attached hereto and made a part hereof, and all bearing the Trademark. From
time to time Licensor may authorize Licensee to manufacture and distribute
products bearing the Trademark not expressly listed in Schedule A hereto.
Absent an agreement with respect to such products signed by Licensor and
Licensee, all such products shall be deemed Licensed Products for all
purposes hereunder, provided, however, that Licensee's rights with respect
to such products (i) shall be non-exclusive and (ii) may be terminated by
Licensor upon 90 days written notice.
1.3. "Licensor" shall mean PRL USA, Inc., a corporation organized under the
laws of the State of Delaware.
1.4. "Licensee" shall mean Jones Apparel Group, Inc., a corporation organized
under the laws of Pennsylvania.
1.5. "Territory"the United States of America, its territories and possessions.
From time to time Licensor may authorize Licensee to sell certain Licensed
Products to specific purchasers outside the Territory. Absent an agreement
with respect to such sales signed by Licensor and Licensee, all such sales
shall be made on all of the terms and conditions set forth in this Agreement;
provided, however, that Licensee's right to make such sales shall be non-
exclusive and may be terminated by Licensor immediately upon written notice
to Licensee. Any such termination shall not apply to orders already taken by
Licensee in accordance with Licensor's prior authorization. In the event that
Licensor wishes to use or license a third party to use the Trademark on
Licensed Products sold in Canada during the term hereof, Licensor shall grant
to Licensee a right of first refusal to act as the Licensee therefor. In the
implementation of said first refusal rights, Licensor shall give Licensee
notice of the Offer Terms upon which it proposes to grant a license ("Licensor's
Offer") for such products. Licensee shall have a period of forty-five (45) days
after the date of Licensor's notice of the Offer Terms to accept or reject
Licensors Offer in writing. If Licensee rejects Licensors Offer or if Licensee
initially accepts Licensors Offer but thereafter is unable to satisfy the Offer
Terms, then Licensor shall be free to make a substantially similar Licensors
Offer to any third party. If Licensor shall substantially (as determined in
Licensor's reasonable discretion) change the Offer Terms then, during the term
hereof, Licensee's right of first refusal as provided hereinabove shall apply
to such changed Offer Terms.
1.6. "Trademark" shall mean the trademark set forth on Schedule B hereto, and
no other trademark, regardless of whether such trademark is or includes any
reference to "Ralph Lauren" or any other trademark owned by Licensor or its
affiliates. Licensor shall have the sole right to determine the manner and use
each of the Trademark in connection with each particular Licensed Product.
2. Grant of License.
2.1. Subject to the terms and provisions hereof, Licensor hereby grants
Licensee and Licensee hereby accepts the License. Licensor shall neither use
nor authorize third parties to use the Trademark in connection with the
manufacture, sale and/or importation of Licensed Products in the Territory
during the term of this Agreement without Licensee's prior approval. To the
extent it is legally permissible to do so, no license is granted hereunder for
the manufacture, sale or distribution of Licensed Products to be used for
publicity purposes, other than publicity of Licensed Products, in combination
sales, as premiums or giveaways, or to be disposed of under or in connection
with similar methods of merchandising, such license being specifically reserved
for Licensor.
2.2. It is understood and agreed that the License applies solely to the use
of the Trademark on the Licensed Products, and that (i) except as may hereafter
be expressly agreed upon in a writing signed by both Licensor and Licensee, no
use of any other trademark of Licensor or of any of Licensor's affiliates
(including any trademark that uses the name "Ralph Lauren"), and (ii) no use
of the Trademark on any other products, is authorized or permitted. Licensor
reserves the right to use, and to grant to any other licensee the right to use,
the Trademark, whether within or outside the Territory, in connection with any
and all products and services, other than Licensed Products within the
Territory. Licensee understands and agrees that Licensor may itself manufacture
or authorize third parties to manufacture in the Territory, Licensed Products
for ultimate sale outside of the Territory. Subject to the terms of paragraph
17.4 hereof, Licensee may
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manufacture or cause to be manufactured the Licensed Products outside of the
Territory, but solely for purposes of sale within the Territory pursuant to
the terms of this Agreement.
2.3. Licensee shall not have the right to use Licensee's name on or in
connection with the Licensed Products, except with the prior approval by
Licensor of the use and placement of Licensee's name. Licensee shall, at the
option of Licensor, include on its business materials and/or the Licensed
Products an indication of the relationship of the parties hereto in a form
approved by Licensor.
2.4. Licensee shall not use or permit or authorize another person or entity
in its control to use the words "Polo" or "Ralph Lauren" as part of a corporate
name or tradename without the express written consent of Licensor and Licensee
shall not permit or authorize use of the Trademark in such a way so as to give
the impression that the name "Ralph Lauren," or the Trademark, or any
modifications thereof, are the property of Licensee.
2.5. In the event that (i) Sidney Kimmel is no longer the Chairman and Chief
Executive Officer of Licensee and (ii) Licensee, directly or indirectly, agrees
to manufacture, distribute, sell or advertise during the term of this Agreement
any items which bear the name or are associated with the name of any person or
entity listed on Schedule C hereto, Licensor shall have the right to terminate
the term of this Agreement upon sixty (60) days written notice.
2.6. Licensor represents and warrants that it has full right, power and
authority to enter into this Agreement, to perform all of its obligations
hereunder, and to consummate all of the transactions contemplated herein.
In the event that Licensee or Licensor is charged with infringement on account
of Licensee's use of any of the Trademark or, if in connection with the
development of Licensor's program in the Territory, Licensor determines that
the use by Licensee of the trademark should be discontinued upon reasonable
written notice to Licensee, this license under the Trademark shall be converted
to a license under other mutually agreeable "Ralph Lauren" trademark(s) or
label(s); in such event Licensee hereby accepts the exclusive license to use
such "Ralph Lauren" trademark(s) in connection with the manufacture and sale
of Licensed Products in the Territory subject to all other terms of this License
Agreement. In such event, Licensee shall immediately advise Licensor of its
inventory of Licensed Products labeled with the Trademark(s) and of its stock
of business materials bearing the Trademark(s) and Licensor shall, in its
reasonable discretion and judgment, determine whether and to what extent such
inventory and materials of Licensee may continue to be used by Licensee.
2.7. Licensee shall not purport to grant any right, permission or license
hereunder to any third party, whether at common law or otherwise. Licensee
shall not without Licensor's prior written approval sell any Licensed Products
bearing the Mark to any third party which, directly or indirectly, sells or
proposes to sell such Licensed Products outside the Territory. Licensee shall
use its best efforts to prevent any such resale outside the
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Territory and shall, immediately upon learning or receiving notice from Licensor
that a customer is selling Licensed Products outside the Territory, cease all
sales and deliveries to such customer.
2.8. Licensee recognizes that there are many uncertainties in the business
contemplated by this Agreement. Licensee agrees and acknowledges that other
than those representations explicitly contained in this Agreement, if any, no
representations, warranties or guarantees of any kind have been made to
Licensee, either by Licensor or its affiliates, or by anyone acting on their
behalf. Without limitation, no representations concerning the value of the
Licensed Products or the prospects for the level of their sales or profits
have been made and Licensee has made its own independent business evaluation
in deciding to manufacture and distribute the Licensed Products on the terms
set forth herein.
3. Design Standards and Prestige of Licensed Products.
3.1. Licensee acknowledges that it has entered into a design services
agreement ("Design Agreement"), of even date herewith, with Polo Ralph Lauren
Corporation (the "Design Company"), which provides for the furnishing to
Licensee by the Design Company of design concepts and other professional
services so as to enable Licensee to manufacture or cause to be manufactured
the Licensed Products in conformity with the established prestige and goodwill
of the Trademark. Licensee shall manufacture, or cause to be manufactured, and
sell only such Licensed Products as are made in accordance with the design and
other information approved under, and in all other respects in strict conformity
with the terms of, the Design Agreement.
3.2. Licensee acknowledges that the Trademark has established prestige and
goodwill and are well recognized in the minds of the public, and that it is of
great importance to each party that in the manufacture and sale of various lines
of Licensor's products, including the Licensed Products, the high standards and
reputation that Licensor and Ralph Lauren have established be maintained.
Accordingly, all items of Licensed Products manufactured or caused to be
manufactured by Licensee hereunder shall be of high quality workmanship with
strict adherence to all details and characteristics embodied in the designs
furnished pursuant to the Design Agreement. Licensee shall supply Licensor with
samples of the Licensed Products (including, if Licensor so requests, samples of
labeling and packaging used in connection therewith) prior to production and
from time to time during production, and shall, at all times during the term
hereof, upon Licensor's request, make its manufacturing facilities available
to Licensor, and shall use its best efforts to make available each
subcontractor's manufacturing facilities for inspection by Licensor's
representatives during usual working hours. No sales of miscuts or damaged
merchandise shall contain any labels or other identification bearing the
Trademark without Licensor's prior written approval, but sales of all products
of Licensor or the Design Company's design shall nonetheless be subject to
royalty payments pursuant to paragraph 6 hereof.
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3.3. In the event that any Licensed Product is, in the judgment of Licensor,
not being manufactured, distributed or sold with first quality workmanship or
in strict adherence to all details and characteristics furnished pursuant to
the Design Agreement, Licensor shall notify Licensee thereof in writing and
Licensee shall promptly repair or change such Licensed Product to conform
thereto. If a Licensed Product as repaired or changed does not strictly
conform after Licensors request and such strict conformity cannot be obtained
after at least one (1) resubmission, the Trademark shall be promptly removed
from the item, at the option of Licensor, in which event the item may be sold
by Licensee without payment of any royalty hereunder, provided such miscut or
damaged item does not contain any labels or other identification bearing the
Trademark. Notwithstanding anything in this paragraph 3.3 to the contrary,
sales of all products of Licensors or the Design Company's design, whether or
not bearing the Trademark, shall nonetheless be subject to royalty payments
pursuant to paragraph 6 hereof. Licensor hereby approves Licensee's sale of
excess inventory, cutups and clearly marked seconds or irregular merchandise,
on all the terms set forth herein: (i) first, upon request to Licensor's factory
outlet stores to the extent of their requirements (subject to a reasonable
assortment being purchased), at a discount off the regular wholesale price
equal to the discount given by Licensee to Licensor with respect to "Lauren"
merchandise pursuant to paragraph 4 of the letter agreement between Licensee
and Licensor dated November 17, 1997 (but Licensee shall not be responsible
for any royalty payments hereunder or for any compensation payments under the
Design Agreement with respect to such sales) and (ii) at such other locations
as Licensor may hereafter approve.
3.4. At the request of Licensor, Licensee shall cause to be placed on all
Licensed Products appropriate notice designating Licensor or the Design
Company as the copyright or design patent owner thereof, as the case may be.
The manner of presentation of said notices shall be determined by Licensor.
4. Marketing.
4.1. The distribution of the Licensed Products in the Territory shall be
performed by Licensee exclusively. The Licensed Products shall be sold by
Licensee only to those specialty shops, department stores and other retail
outlets which deal in products similar in quality and prestige to Licensed
Products, and whose operations will enhance the quality and prestige of the
Trademark, and only to those customers listed on Schedule D hereto and other
customers of similar quality and prestige. Licensor shall have the right to
object by notice to Licensee to any customer not listed on Schedule D hereto,
and Licensee shall not thereafter accept orders from such customer, (but
Licensee may fulfill orders accepted prior to Licensee's receipt of such
notice). In the event Licensor reasonably determines that the unauthorized
resale of Licensed Products through unauthorized distribution channels is
causing a negative impact on the reputation and desirability of Licensor's
products, Licensee shall consult with Licensor in good faith regarding what
steps, including the possibility of implementing an inventory marking system,
may be taken to remedy such negative impact. Licensee shall not market or
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promote or seek customers for the Licensed Products outside of the Territory and
Licensee shall not establish a branch, wholly owned subsidiary, distribution or
warehouse with inventories of Licensed Products outside of the Territory.
4.2. Licensee acknowledges that in order to preserve the good will attached to
the Ralph Lauren trademarks, the Licensed Products are to be sold at prices and
terms reflecting the prestigious nature of such trademarks, it being understood,
however, that Licensor is not empowered to fix or regulate the prices at which
the Licensed Products are to be sold, either at the wholesale or retail level.
4.3. Licensee shall maintain the high standards of the Trademark and the
Licensed Products, in all advertising, packaging and promotion of the Licensed
Products. Licensee shall not employ or otherwise release any of such advertising
or packaging or other business materials relating to any Licensed Products or
bearing the Trademark, unless and until Licensee shall have made a request, in
writing, for approval by Licensor. Licensor may, with respect to any
advertising, packaging or business materials submitted by Licensee, make such
suggestions as Licensor deems necessary or appropriate, or disapprove, in either
event by notice to Licensee. Any approval granted hereunder shall be limited to
use during the seasonal collection of Licensed Products to which such
advertising relates and shall be further limited to the use (e.g. TV or print)
for which approval by Licensor was granted. Licensee shall, at the option of
Licensor, include on its business materials an indication of the relationship
of the parties hereto in a form approved by Licensor.
4.4. Licensee shall use its best efforts to assure that all cooperative
advertising, whereby Licensee provides a customer with a contribution toward
the cost of an advertisement for Licensed Products, whether Licensee's
contribution be in the form of an actual monetary contribution, a credit
or otherwise, shall be subject to prior approval of Licensor under the same
terms and conditions as apply to advertising and promotional materials prepared
by or to be used by Licensee pursuant to paragraph 4.5 hereof; provided,
however, that in the event that Licensee is not as a matter of practice given
an opportunity to review the cooperative advertising due to time constraints,
then Licensee shall notify Licensor, in advance, of those customers with whom
it does cooperative Licensed Product advertising and/or promotion, and Licensee
at Licensor's request shall notify the named customer of the terms of this
Agreement which pertain to the said advertising or promotional materials.
4.5. Licensee shall exercise its best efforts to safeguard the established
prestige and goodwill of the name "Ralph Lauren" and the trademarks associated
therewith at the same level of prestige and goodwill as heretofore maintained.
"Image" as used herein refers primarily to quality and style of packaging,
advertising and promotion, creation and introduction of new products, type of
outlets with reference to quality of service provided by retail outlets and
quality of presentation of Licensed Products in retail outlets. Licensee shall
take all necessary steps, and all steps reasonably requested by Licensor, to
prevent
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or avoid any misuse of the Trademark by any of its customers, contractors or
other resources.
4.6. During each year of this Agreement, Licensee shall expend for the
advertising of Licensed Products, which shall consist of cooperative
advertising and national institutional and media advertising, an amount
that is not less than the "Annual Advertising Obligation", as hereinafter
defined, for such year. Licensor and Licensee shall consult with each other
regarding the creation, production and placement of all advertising of
Licensed Products, but all final decisions with respect thereto shall be made
by Licensor in its sole discretion. The "Annual Advertising Obligation" for
each year during the term hereof shall be [OMITTED; MATERIAL FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] of the aggregate net sales price
(as defined in paragraph 6.2 hereof) of Licensed Products sold during such
year. Licensee shall deliver to Licensor within sixty (60) days after the end
of each year hereof an accounting statement in respect of amounts expended by
Licensee on advertising for the prior year. Each such accounting statement
shall be signed, and certified as correct, by a duly authorized officer of
Licensee. Prior to each year hereof, Licensee shall submit Licensee's
advertising budget for the upcoming year, based on the aggregate net sales price
of Licensed Products during the year then ending and on sales projected for the
upcoming year. The Annual Advertising Obligation for such upcoming year will
initially be calculated and expended based upon such budget. If in any year
during the term hereof an amount less than the Annual Advertising Obligation
is expended on advertising for any reason whatsoever (including an underestimate
of the actual net sales for such year or because the actual cost of
Institutional Advertising, if any, produced and placed during such year is
less than the Annual Advertising Obligation), the entire amount not expended
shall be added to the Annual Advertising Obligation for the following year.
4.7. During the term of this Agreement, Licensee shall, in consultation with
Licensor, provide a budget for the design, construction, re-fits and seasonal
changeovers of in-store shops and fixtures to be used exclusively for the
presentation of Licensed Products, the design of which shall be subject to
Licensor's prior approval. Licensee's budget for such purposes shall be adequate
to present Licensed Products in a manner consistent with the high quality and
prestige associated with Licensor's trademarks and the price structure of the
Licensed Products.
4.8. To the extent permitted by applicable law Licensor may from time to time,
and in writing, promulgate reasonable rules and regulations to Licensee relating
to the manner of use of the Trademark Licensee shall comply with such rules and
regulations. Any such rules or regulations shall not be inconsistent with or
derogate from the terms of this Agreement.
4.9. Licensee agrees to make available for purchase and to sell on its
customary price, credit and payment terms all lines and styles of Licensed
Products to retail stores in the Territory bearing a trademark of Licensor or
its affiliates and to any stores or facilities operated or owned by Licensor
and its affiliates, which are authorized to sell the
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Licensed Products within such retail stores.
4.10. In consideration of the License granted herein, in the event Licensor
elects to offer Licensed Products for sale in mail-order catalogs, Licensee
shall sell and timely ship Licensed Products to Licensor or its affiliate for
such purposes at a price equal [OMITTED; MATERIAL FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]. All such sales shall be separately
reported by Licensee in its accounting statements pursuant to paragraph
6.2 hereof, and such sales shall not be subject to the royalty or advertising
obligations set forth herein, or to the compensation obligations set
forth in the Design Agreement.
4.11. Licensor shall respond to any requests for approvals or consents from
Licensee hereunder as promptly as reasonably practicable consistent with the
level of review required.
5. Trademark Protection.
5.1. All uses of the Trademark by Licensee, including, without limitation,
use in any business documents, invoices, stationery, advertising, promotions,
labels, packaging and otherwise shall require Licensor's prior written consent,
and be in accordance with paragraph 4 hereof.
5.2. All uses of the Trademark by Licensee in advertising, promotions, labels
and packaging shall include at Licensees option, a notice to the effect that
each Trademark is used by Licensee for the account and benefit of Licensor or
that Licensee is a registered user thereof or both such statements. The use of
the Trademark pursuant to this Agreement shall be for the benefit of Polo and
shall not vest in Licensee any title to or right or presumptive right to
continue such use. For the purposes of trademark registration, sales by
Licensee shall be deemed to have been made by Licensor.
5.3. Licensee shall cooperate fully and in good faith with Licensor for the
purpose of securing and preserving Licensor's rights in and to the Trademark.
Nothing contained in this Agreement shall be construed as an assignment or grant
to Licensee of any right, title or interest in or to the Trademark, or any of
Licensor's other trademarks, it being understood that all rights relating
thereto are reserved by Licensor, except for the License hereunder to Licensee
of the right to use the Trademark only as specifically and expressly provided
herein. Licensee shall not file or prosecute a trademark or service mark
application or applications to register the Trademark, for Licensed Products
or otherwise.
5.4. Licensee shall not, during the term of this Agreement or thereafter, (a)
attack Licensor's title or rights in and to Licensor's trademarks in any
jurisdiction or attack the validity of this License or Licensor's trademarks
or (b) contest the fact that Licensee's rights under this Agreement (i) are
solely those of a licensee, manufacturer and distributor and (ii) subject to
the provisions of paragraph 10 hereof, cease upon termination of this Agreement.
The provisions of this paragraph 5.4 shall survive the termination of this
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Agreement.
5.5. All right, title and interest in and to all samples, patterns, sketches,
designs, artwork, logos and other materials furnished by Licensor or the Design
Company, whether created by Licensor or the Design Company, and any logo or
crest associated with the Trademark, even if such logo or crest was designed
or furnished by Licensee, shall be the sole property of Licensor and/or the
Design Company, as the case may be. Licensee shall assist Licensor to the
extent necessary in the protection of or the procurement of any protection of
Licensor's rights to the Trademark, designs, design patents and copyrights
hereunder and Licensor, if Licensor so desires, may commence or prosecute any
claims or suits in Licensor's own name or in the name of Licensee or join
Licensee as a party thereto. Licensee shall promptly notify Licensor in
writing of any uses which may be infringements or imitations by others of the
Trademark on articles similar to those covered by this Agreement which may come
to Licensee's attention. Licensor shall have the sole right to determine whether
or not any action shall be taken on account of any such infringements or
imitations. Licensor shall bear one hundred percent (100%) of the costs of all
actions or proceedings it undertakes, and shall be entitled to all recoveries
in such actions. If Licensor declines to take action with respect to a
particular infringer Licensee is not obligated to but may, with Licensor's
prior written consent, undertake such action at Licensee's expense, in which
case Licensee shall be entitled to all recoveries in such action.
6. Royalties.
6.1. Licensee shall pay to Licensor minimum royalties for each year during the
term of this Agreement as compensation for the License granted hereunder for the
use of the Trademark in the manufacture and sale, and/or importation and sale,
of Licensed Products in the Territory. The minimum royalty for each year during
the term hereof shall be as follows:
[OMITTED; MATERIAL FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
Minimum royalties for each year shall be paid on a quarterly basis, beginning
with the minimum royalty payment to be made for the first calendar quarter of
2002, in the manner set forth in paragraph 6.2 below. No credit shall be
permitted against minimum royalties payable in any year on account of actual
or minimum royalties paid in any other year, and minimum royalties shall not
be returnable. Minimum royalties for each year of the "Renewal Term" (as defined
in paragraph 8 hereof) shall be [OMITTED; MATERIAL FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]. For the purposes of this Agreement, the
term "year" shall mean a period of twelve
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(12) months commencing on each January I during the term of this Agreement;
provided, however, that the "first year", or "Year V shall mean the period
commencing on the date hereof and expiring on December 31, 1999.
6.2. Licensee shall pay to Licensor earned royalties based on the net
sales price of all Licensed Products manufactured or imported and sold
by Licensee hereunder. Earned royalties shall equal [OMITTED; MATERIAL
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the net
sales price of all Licensed Products sold under this Agreement. Licensee
shall prepare or cause to be prepared statements of operations for the
first month in which Licensed Products are offered for sale to the trade,
and for each month thereafter for so long as Licensee is offering Licensed
Products for sale hereunder, which statements shall be furnished to Licensor
together with the earned royalties due for each such month on the last day
of the following month. The statement and royalty payment provided on the
last day of each April (for the month of March), July (for the month of
June), October (for the month of September) and January (for the month of
December) during the term shall also include Licensee's minimum royalty
obligation for the preceding calendar quarter, less the aggregate earned
royalties paid for such calendar quarter. The term "net sales price" shall
mean the gross sales price to retailers of all Licensed Products sold under
this Agreement or, with respect to Licensed Products that are not sold
directly or indirectly to retailers, other ultimate consumers (as in the
case of accommodation sales by Licensee to its employees or sales by Licensee
in its own shops), less trade discounts, merchandise returns, sales tax (if
separately identified and charged) and markdowns and/or chargebacks which,
in accordance with generally accepted accounting principles, would normally
be treated as deductions from gross sales, and which, in any event, do not
include any chargebacks or the like for advertising, fixture or retail shop
costs or contributions, or contributions for in-store personnel. No other
deductions shall be taken. Any merchandise returns shall be credited in the
month in which the returns are actually made. For purposes of this Agreement,
affiliates of Licensee shall mean all persons and business entities, whether
corporations, partnerships, joint ventures or otherwise, which now or
hereafter control, or are owned or controlled, directly or indirectly by
Licensee, or are under common control with Licensee. It is the intention of
the parties that royalties will be based on the bona fide wholesale prices at
which Licensee sells Licensed Products to independent retailers in arms'
length transactions. In the event Licensee shall sell Licensed Products to
its affiliates, royalties shall be calculated on the basis of such a bona
fide wholesale price irrespective of Licensee's internal accounting treatment
of such sale; provided, however, that royalties on sales to any outlet stores
owned by Licensee with Licensor's prior approval ("Licensee Outlet Stores")
shall be calculated on the basis of the actual invoice price to such stores,
but in no event less than an amount equal to [OMITTED; MATERIAL FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] less than the
regular wholesale price of such Licensed Products. Licensee shall identify
separately in the statements of operations provided to Licensor pursuant to
paragraph 7 hereof, all sales to affiliates and through Licensee Outlet
Stores. Notwithstanding anything to the contrary contained herein or
in the Design Agreement, Licensee may sell to its own employees involved in
the business contemplated hereunder, for their personal use, Licensed Products
at a discount of [OMITTED; MATERIAL FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] or more
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off the regular wholesale price thereof, without payment of royalties or
compensation to Licensor, provided that such sales do not exceed $1,000,000
in any year.
6.3. If the payment of any installment of royalties is delayed for any
reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date which is 10 days after the date the
same became due pursuant to paragraphs 6.1 or 6.2 hereof at the lower of
the highest rate permitted by law in New York and 2% per annum above the
prime rate of interest in effect from time to time at Chemical Bank, New
York, New York or any successor bank.
6.4. The obligation of Licensee to pay royalties hereunder shall be
absolute notwithstanding any claim which Licensee may assert against
Licensor or the Design Company. Licensee shall not have the right to
set-off, compensate or make any deduction from such royalty payments
for any reason whatsoever.
6.5. All payments of royalties due to Licensor shall, unless Licensor shall
otherwise direct by written notice to Licensee, be made by wire transfer on
the date due, which wire transfer shall be directed to PRL International, Inc.,
the general partner of Licensor, as follows:
Chase Manhattan Bank Delaware
1201 Market Street, Wilmington, Delaware, 19801-1167,
ABA#031100267
Account Name and Number: PRL USA, Inc.: 6301-225177-500
7. Accounting.
7.1. Licensee shall at all times keep an accurate account of all operations
within the scope of this Agreement and shall render a full statement of such
operations in writing to Licensor in accordance with paragraph 6.2 hereof.
Such statements shall account separately for each different product category
and shall include all aggregate gross sales, trade discounts, merchandise
returns, sales of miscuts and damaged merchandise and net sales price of all
sales for the previous month. Such statements shall be in sufficient detail
to be audited from the books of Licensee. Once annually, which may be in
connection with the regular annual audit of Licensee's books, Licensee shall
furnish an annual statement of the aggregate gross sales, trade discounts,
merchandise returns and net sales price of all Licensed Products made or
sold by Licensee certified by Licensee's independent accountant. Each monthly
financial statement furnished by Licensee shall be certified by the chief
financial officer or controller of Licensee.
7.2. Licensor and its duly authorized representatives, on reasonable notice,
shall have the right, no more than once in each year during regular business
hours, for the duration of the term of this Agreement and for three (3) years
thereafter, to examine the books of account and records and all other documents,
materials and inventory in the
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possession or under the control of Licensee and its successors with respect to
the subject matter of this Agreement. All such books of account, records and
documents shall be maintained and kept available by Licensee for at least the
duration of this Agreement and for three (3) years thereafter. Licensor shall
have free and full access thereto in the manner set forth above and shall have
the right to make copies and/or extracts therefrom. If as a result of any
examination of Licensee's books and records it is shown that Licensees payments
to Licensor hereunder with respect to any twelve (12) month period were less
than or greater than the amount which should have been paid to Licensor by an
amount equal to three and one-half percent (3-1/2%) of the amount which should
have been paid during such twelve (12) month period, Licensee will, in addition
to reimbursement of any underpayment, with interest from the date on which each
payment was due at the rate set forth in paragraph 6.3 hereof, promptly
reimburse Licensor for the cost of such examination. Licensee shall provide
Licensor each year with a copy of its annual report, as soon as it is made
available to Licensee's Shareholders.
8. Term.
8.1. The term of this Agreement shall commence as of the date hereof and
shall terminate on December 31, 2003; provided, however, that if no Event
of Default shall have occurred and not been cured or waived, and Licensee
has achieved the Minimum Renewal Volume (as such term is hereinafter defined)
for the period January 1, 2002 through December 31, 2002, Licensee shall have
the option, upon providing notice to Licensor on or before April 1, 2003, to
renew this Agreement for an additional three (3) year period (the "Renewal
Term") so as to expire on December 31, 2006, on the terms and conditions herein
except that there will be no further right to renewal. The minimum aggregate net
sales price which Licensee must achieve in connection with sales of Licensed
Products during the period from January 1, 2002 to December 31, 2002 to (the
"Minimum Renewal Volume') in order to be entitled to renew this Agreement for
a second term as hereinabove provided shall be [OMITTED; MATERIAL FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] (the "Renewal Volume").
In the event Licensee exercises its option for a Renewal Term, each of Licensor
and Licensee shall give the other notice, on or before January 1, 2006, of its
desire to extend the term hereof beyond December 31, 2006. In the event
Licensee does not achieve the Minimum Renewal Volume as hereinabove
provided, Licensee may nevertheless request an extension of the term
beyond December 31, 2003, and Licensor shall respond to such request
(which response shall be in Licensor's sole discretion) within thirty
(30) days after its receipt thereof. It is expressly understood that only
the company (which may be Licensee) whose licensed term covers the period
subsequent to the expiration of this Agreement shall be entitled to receive
designs for Licensed Products intended to be sold after the expiration of
this Agreement, and to make presentations of such Licensed Products during
the market presentation weeks that relate to such subsequent period, even if
such market presentation occurs prior to the termination of this Agreement.
Without limiting the generality of the foregoing, in the event the term hereof
is not renewed or extended at the end of the initial or any renewal term, the
last season for which Licensee shall be entitled to receive designs and,
during the term hereof, to manufacture and sell Licensed Products
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shall be the Cruise/Holiday season for the last year of the relevant period,
and Licensor shall be entitled to undertake, directly or through a successor
licensee, all activities associated with the design, manufacture and sale
Licensed Products commencing with the immediately following Spring season.
9. Default: Change of Control.
9.1. Each of the following shall constitute an event of default ("Event of
Default") hereunder:
(i) Any installment of royalty payments is not paid when due and such default
continues for more than fifteen (15) days after written notice thereof to
Licensee;
(ii) Licensee shall fail to timely present for sale to the trade a broadly
representative and fair collection of each seasonal collection of Licensed
Products designed by the Design Company under the Design Agreement or Licensee
shall fail to timely ship to its customers a material portion of the orders of
Licensed Products it has accepted;
(iii) Licensee defaults in performing any of the other terms of this Agreement
and continues in such default for a period of thirty (30) days after notice
thereof (unless the default cannot be cured within such thirty (30) day period
and Licensee shall have commenced to cure the default and proceeds diligently
thereafter to cure within an additional fifteen (15) day period);
(iv) Licensee fails within fifteen (15) days after written notice that
payment is overdue to pay for any Licensed Products or materials, trim, fabrics,
packaging or services relating to Licensed Products purchased by Licensee from
Licensor or, unless Licensee is contesting in good faith the amount due, any
agent or licensee of Licensor or any other supplier of such items;
(v) If Licensee shall use the Trademark in an unauthorized or improper manner
and/or if Licensee shall make an unauthorized disclosure of confidential
information or materials given or loaned to Licensee by Licensor and/or the
Design Company;
(vi) Licensee institutes proceedings seeking relief under a bankruptcy act or
any similar law, or consents to entry of any order for relief against it in any
bankruptcy or insolvency proceeding or similar proceeding, or files a petition
for or consent or answer consenting to reorganization or other relief under any
bankruptcy act or other similar law, or consents to the filing against it of any
petition for the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of it or of any substantial
part of its property, or a proceeding seeking such an appointment shall have
been commenced without Licensee's
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consent and shall continue undismissed for sixty (60) days or an order providing
for such an appointment shall have been entered, or makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts as
they become due or fails to pay its debts as they become due, or takes any
action in furtherance of the foregoing;
(vii) Licensee transfers or agrees to transfer substantially all of its
property in a transaction which results in ownership inconsistent with the
terms of paragraph 9.3 hereof;
(viii) The calling of a meeting of creditors, appointment of a committee of
creditors or liquidating agents, or offering a composition or extension to
creditors by, for or of Licensee;
(ix) There shall be a direct or indirect change in control of Licensee which
results in ownership inconsistent with the terms of paragraph 9.3 hereof;
(x) An event of default occurs under the Design Agreement, or any other
license agreement entered into between Licensor (or its predecessor-in-
interest or successors) and Licensee or design agreement between Licensee and
the Design Company (or its predecessor-in-interest or successors);
(xi) Licensee shall have failed to perform any material term, covenant or
agreement on its part to be performed under any agreement or instrument (other
than this Agreement) evidencing or securing or relating to any indebtedness
owing by Licensee, if the effect of such failure is to accelerate the maturity
of such indebtedness, or to permit the holder or holders of such indebtedness to
cause such indebtedness to become due prior to the stated maturity thereof.
9.2. If any Event of Default described in paragraphs 9.1 (i), (ii), (iii),
(iv), (v), (ix), (x) or (xi) shall occur, Licensor shall have the right,
exercisable in its sole discretion, to terminate this Agreement and the
License upon ten (10) days' written notice to Licensee of its intention to do
so, and upon the expiration of such ten (10) day period, this Agreement and the
License shall terminate and come to an end. If the Event of Default described in
paragraphs 9.1 (vi), (vii) or (viii) shall occur, this Agreement and the License
shall thereupon forthwith terminate and come to an end without any need for
notice to Licensee. This Agreement will terminate automatically upon the
expiration or termination for any reason whatsoever of the Design Agreement.
Any termination of this Agreement shall be without prejudice to any remedy of
Licensor for the recovery of any monies then due it under this Agreement or in
respect to any antecedent breach of this Agreement, and without prejudice to
any other right of Licensor including, without limitation, damages for breach
to the extent that the same may be recoverable and Licensee agrees to
reimburse Licensor for any costs and expenses (including attorneys' fees)
incurred by Licensor in
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enforcing its rights hereunder. No assignee for the benefit of creditors,
receiver, liquidator, sequestrator, trustee in bankruptcy, sheriff or any
other officer of the court or official charged with taking over custody of
Licensee's assets or business shall have any right to continue the
performance of this Agreement.
9.3. During the term of this Agreement, Licensee shall not dissolve, liquidate
or wind-up its business. In addition, in the event Licensee sells or transfers,
or suffers a sale or a transfer of, by operation of law or otherwise, directly
or indirectly, a controlling interest in Licensee (including, without
limitation, in any direct or indirect parent of Licensee), Licensee shall
promptly advise Licensor thereof in writing. If such sale or transfer results
in such controlling interest being owned by an entity which, directly or
indirectly, owns any trademark or tradename listed on Schedule C hereto, or
the exclusive right to use any of such trademarks or tradenames, in connection
with products similar to or competitive with Licensed Products, Licensee shall
so notify Licensor, and within sixty (60) days of its receipt of notice,
Licensor shall have the right to terminate this Agreement, such termination to
become effective thirty (30) days after the date notice of termination is
received by the Licensee.
10. Disposal of Stock Upon Termination or Expiration.
10.1. Within ten (10) days following the termination of this Agreement for any
reason whatsoever including the expiration of the term hereof, and on the last
day of each month during the disposal period set forth in paragraph 10.2 hereof,
Licensee shall furnish to Licensor a certificate of Licensee listing its
inventories of Licensed Products (which defined term for purposes of this
paragraph 10. 1 shall include, but shall not be limited to, all fabrics, trim
and packaging which are used in the manufacture and marketing of Licensed
Products).on hand or in process wherever situated. Licensor shall have the
right to conduct a physical inventory of Licensed Products in Licensee's
possession or under Licensee's control. Licensor or Licensor's designee shall
have the option (but not the obligation) to purchase from Licensee all or any
part of Licensee's then existing inventory of Licensed Products upon the
following terms and conditions:
(i) Licensor shall notify Licensee of its or its designee's intention to
exercise the foregoing option within fifteen (15) days of delivery of the
certificate referred to above and shall specify the items of Licensed
Products to be purchased.
(ii) The price for Licensed Products manufactured by or on behalf of License
on hand or in process shall be Licensee's standard cost (the actual
manufacturing cost) for each such Licensed Product. The price for all other
Licensed Products which are not manufactured by Licensee shall be Licensee's
landed costs therefor. Landed costs for the purposes hereof means the F. 0. B.
price of the Licensed Products together with customs, duties, and brokerage,
freight and insurance.
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(iii) Licensee shall deliver the Licensed Products purchased within fifteen
(15) days of receipt of the notice referred to in clause (i) above. Payment of
the purchase price for the Licensed Products so purchased by Licensor or its
designee shall be payable upon delivery thereof, provided that Licensor shall
be entitled to deduct from such purchase price any amounts owed it by Licensee
(and/or to direct payment of any part of such merchandise to any supplier of
Licensed Products in order to reduce an outstanding balance due to such supplier
from Licensee).
10.2. In the event Licensee that, pursuant to paragraph 10.1 hereof, Licensee
timely provides the certificate of inventory and Licensor chooses not to
exercise its option with respect to all or any portion of Licensed Products,
for a period of ninety (90) days after termination of this Agreement for any
reason whatsoever, except on account of breach of the provisions of paragraph
3, 4 or 6 hereof, Licensee may dispose of Licensed Products which are on hand
or in the process of being manufactured at the time of termination of this
Agreement, provided that (i) Licensee fully complies with the provisions of
this Agreement, including specifically those contained in paragraphs 3, 4 and
6 hereof in connection with such disposal, and (ii) said disposal takes place
within ninety (90) days after notice of termination is given or the expiration
of the term of this Agreement, as the case may be.
10.3. Notwithstanding anything to the contrary contained herein, in the event
that upon the expiration or termination of the term hereof for any reason
Licensee has not rendered to Licensor all accounting statements then due, and
paid (i) all royalties and other amounts then due to Licensor, (ii) all
compensation then due to Lauren under the Design Agreement and (iii) all
amounts then due to any affiliate of or supplier to Licensor or its affiliates
(collectively, "Payments"), Licensee shall have no right whatsoever to dispose
of any inventory of Licensed Products in any manner. In addition, if during any
disposal period Licensee fails timely to render any accounting statements,
or certificates of inventory required pursuant to paragraph 10.1 hereof, or
to make all payments when due, Licensee's disposal rights hereunder shall
immediately terminate without notice.
11. Effect of Termination.
11.1. It is understood and agreed that except for the License to use the
Trademark only as specifically provided for in this Agreement, Licensee shall
have no right, title or interest in or to the Trademark. Upon and after the
termination of this License, all rights granted to Licensee hereunder, together
with any interest in and to the Trademark which Licensee may acquire, shall
forthwith and without further act or instrument be assigned to and revert to
Licensor. In addition, Licensee will execute any instruments requested by
Licensor which are necessary to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without consideration other than
the mutual agreements contained herein. Licensor shall thereafter be free to
license to others the right to use the Trademark in connection with the
manufacture and sale of the Licensed Products covered hereby, and Licensee
will refrain from further use of the Trademark or
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any further reference to them, direct or indirect, or any other trademark, trade
name or logo that is confusingly similar to the Trademark, or associated with
the Trademark in any way, in connection with the manufacture, sale or
distribution of Licensee's products, except as specifically provided in
paragraph 10 hereof. It is expressly understood that under no circumstances
shall Licensee be entitled, directly or indirectly, to any form of
compensation or indemnity from Licensor, the Design Company or their
affiliates, as a consequence to the termination of this Agreement, whether as
a result of the passage of time, or as the result of any other cause of
termination referred to in this Agreement. Without limiting the generality of
the foregoing, by its execution of the present Agreement, Licensee hereby waives
any claim which it has or which it may have in the future against Licensor,
the Design Company or their affiliates, arising from any alleged goodwill
created by Licensee for the benefit of any or all of the said parties or
from the alleged creation or increase of a market for Licensed Products.
11.2. Licensee acknowledges and admits that there would be no adequate remedy
at law for its failure (except as otherwise provided in paragraph 10 hereof) to
cease the manufacture or sale of the Licensed Products covered by this Agreement
at the termination of the License, and Licensee agrees that in the event of such
failure Licensor shall be entitled to equitable relief by the way of temporary
and permanent injunction and such other and further relief as any court with
jurisdiction may deem just and proper.
12. Showroom.
Licensee represents that a separate showroom for the presentation and sale of
the Licensed Products will be established and staffed and Licensee agrees to
maintain, operate, decorate and staff the showroom in a manner consistent with
that of the showrooms established for the presentation and sale of Licensor's
other products. Licensor shall have a right of approval with respect to the
design, layout, decoration and staffing of the showroom and all expenses
incurred with respect to the design, construction, operation and maintenance
of such showroom shall be borne by Licensee. Licensee shall sell such Licensed
Products to Licensor's employees for their personal use (and not for resale) as
any such employee may reasonably request, at prices equal to the regular
wholesale price less a discount equal to not less than thirty percent (30%)
of such regular wholesale price. Licensee and Licensor shall mutually agree
upon a policy in respect of such sales that will address reciprocity and
avoid interference with Licensee's normal operations.
13. Indemnity.
13.1. Licensor shall indemnify and hold harmless Licensee from and against
any and all liability, claims, causes of action, suits, damages and expenses
(including reasonable attorneys' fees and expenses in actions involving third
parties or between the parties hereto) which Licensee is or becomes liable for,
or may incur solely by reason of its use within the Territory, in strict
accordance with the terms and conditions of this
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Agreement and the Design Agreement, of the Licensed Mark or the designs
furnished to Licensee by Licensor or Lauren, to the extent that such liability
arises through infringement of another's design patent, trademark, copyright or
other proprietary rights; provided, however, that Licensee gives Licensor
prompt notice of, and full cooperation in the defense against, such claim. If
any action or proceeding shall be brought or asserted against Licensee in
respect of which indemnity may be sought from Licensor under this paragraph
13.1, Licensee shall promptly notify Licensor thereof in writing, and Licensor
shall assume and direct the defense thereof. Licensee may thereafter, at its own
expense, be represented by its own counsel in such action or proceeding.
13.2. To the extent not inconsistent with paragraph 13.1 hereof, Licensee
shall indemnify and save and hold Licensor, the Design Company, PRL USA
Holdings, Inc. and Ralph Lauren, individually, and their assignees, directors,
officers, servants, agents and employees (collectively, "Indemnified Parties"),
harmless from and against any and all liability, claims, causes of action,
suits, damages and expenses (including reasonable attorneys' fees and expenses
in actions involving third parties or between the parties hereto), which they,
or any of them, are or become liable for, or may incur, or be compelled to pay
by reason of any acts, whether of omission or commission, that may be committed
or suffered by Licensee or any of its servants, agents or employees in
connection with Licensee's performance of this Agreement, including Licensee's
use of Licensee's own designs, in connection with Licensed Products manufactured
by or on behalf of Licensee or otherwise in connection with Licensee's business.
14. Insurance.
Licensee shall carry product liability insurance with limits of liability in
the minimum amount, in addition to defense costs, of $3,000,000 per occurrence
and $3,000,000 per person and each of the Indemnified Parties shall be named
therein as insureds, as their interests may appear. The maximum deductible
with respect to such insurance shall be $100,000. Licensee shall, promptly
after the signing of this Agreement, deliver to Licensor a certificate of such
insurance from the insurance carrier, setting forth the scope of coverage and
the limits of liability and providing that the policy may not be canceled or
amended without at least thirty (30) days prior written notice to each of the
Indemnified Parties.
15. Disclosure.
15.1. Licensor and Licensee, and their affiliates, employees, attorneys,
accountants and bankers shall hold in confidence and not use or disclose, except
as permitted by this Agreement, (i) confidential information of the other or
(ii) the terms of this Agreement, except upon consent of the other or pursuant
to, or as may be required by law, or in connection with regulatory or
administrative proceedings and only then with reasonable advance notice of
such disclosure to the other. Licensee shall take all reasonable precautions
to protect the secrecy of the material used pursuant to this Agreement prior
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to the commercial distribution or the showing of samples for sale, and shall not
sell any merchandise employing or adapted from any of said designs sketches,
artwork, logos, and other materials or their use except under the Trademark.
15.2. Licensee agrees that all press releases and other public announcements
related to Licensor's operations hereunder, shall be subject to approval by
Licensor, and that each request for a statement, release or other inquiry
shall be sent in writing to the advertising/publicity director of Licensor
for response.
16. Key Personnel.
16.1. At all times during the term hereof, Licensee shall employ a senior
executive, approved in advance by Licensor (such approval not to be unreasonably
withheld), whose primary responsibility shall be to manage all of Licensee's
operations pursuant to this Agreement.
16.2. At all times during the term hereof, Licensee shall employ a Design
Director, approved in advance by Licensor (such approval not to be unreasonably
withheld), whose primary responsibility shall be to work with Licensor and the
Design Company on the creation and implementation of designs for the Licensed
Products and related activities under this Agreement.
17. Miscellaneous.
17.1. All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been properly given or sent (i) on the
date when such notice, request, consent or communication is personally delivered
or (ii) five (5) days after the same was sent, if sent by certified or
registered mail or (iii) two (2) days after the same was sent, if sent by
overnight courier delivery or confirmed telecopier, as follows:
(a) if to Licensee, addressed as follows:
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
Attention: Mr. Sidney Kimmel
Telecopier: (215) 785-1795
with a copy to:
Jones Apparel Group, Inc.
1411 Broadway
New York, New York 10018
Attention: Mr. Herbert Goodfriend
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Telecopier: (212) 921-5370
b) if to Licensor, addressed as follows:
PRL USA, Inc.
103 Foulk Road
Suite 201
Wilmington, Delaware 19803
Telecopier: 302.778.1008
Attention: President
with a copy to:
Victor Cohen, Esq.
Eighth Floor
650 Madison Avenue
New York, New York 10022
Telecopier: 212-318-7183
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
17.2. Nothing herein contained shall be construed to place the parties in the
relationship of partners or joint venturers, and no party hereto shall have any
power to obligate or bind any other party hereto in any manner whatsoever,
except as otherwise provided for herein.
17.3. None of the terms hereof can be waived or modified except by an express
agreement in writing signed by the party to be charged. The failure of any party
hereto to enforce, or the delay by any party in enforcing, any of its rights
hereunder shall not be deemed a continuing waiver or a modification thereof
and any party may, within the time provided by applicable law, commence
appropriate legal proceedings to enforce any and all of such rights. All
rights and remedies provided for herein shall be cumulative and in addition
to any other rights or remedies such parties may have at law or in equity.
Any party hereto may employ any of the remedies available to it with respect
to any of its rights hereunder without prejudice to the use by it in the future
of any other remedy with respect to any of such rights. No person, firm or
corporation, other than the parties hereto and the Design Company (and, to
the extent set forth in paragraphs 13.1 and 13.2 hereof, Polo Ralph Lauren
Corporation and Ralph Lauren, individually), shall be deemed to have acquired
any rights by reason of anything contained in this Agreement.
17.4. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto. Licensor may assign
all or any portion of the royalties payable to Licensor hereunder, as
designated by Licensor, and in
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addition, Licensor may assign all of its rights, duties and obligations
hereunder to any entity to which the Trademark, or the right to use the
Trademark, has been transferred, or to an affiliate of any such entity. The
rights granted to Licensee hereunder are unique and personal in nature, and
neither this Agreement nor the License may be assigned by Licensee without
Licensor's prior written consent, which may be withheld in Licensor's sole
discretion. Any attempt by Licensee to transfer any of its rights or
obligations under this Agreement, whether by assignment, sublicense or
otherwise, without having received the prior written consent of Licensor
shall constitute an Event of Default, but shall otherwise be null and void.
Licensee may employ subcontractors subject to the prior written approval of
Licensor for the manufacture of the Licensed Products; provided, however,
that in any event, (i) the supervision of production of Licensed Products
shall remain under the control of Licensee, (ii) Licensee shall maintain
appropriate quality controls, (iii) such subcontractors shall comply with
the quality standards set forth herein and with the Operating Guidelines
annexed hereto as Schedule E, as such Operating Guidelines may be amended
from time-to-time, and (iv) such subcontractors shall comply with other
requirements of Licensor consistent with the terms of this Agreement,
including, but not limited to, the execution by subcontractor of the
Trademark and Design Protection Agreement attached hereto as Schedule F and
made a part hereof.
17.5. Licensee shall comply with all laws, rules, regulations and requirements
of any governmental body which may be applicable to the operations of Licensee
contemplated hereby, including, without limitation, as they relate to the
manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that Licensor may have approved such item or conduct.
Licensee shall advise Licensor in the event any Final Prototype does not comply
with any such law, rule, regulation or requirement.
17.6. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, applicable to contracts made and to be wholly
performed therein without regard to its conflicts of law rules.
17.7. The parties hereby consent to the jurisdiction of the United States
District Court for the Southern District of New York and of any of the courts
of the Southern District of New York and of any of the courts of the State of
New York located within the Southern District in any dispute arising under this
Agreement and agree further that service of process or notice in any such
action, suit or proceeding shall be effective if in writing and delivered as
provided in paragraph 17.1 hereof. Notwithstanding anything to the contrary
set forth herein, neither Polo Ralph Lauren Corporation nor any other general
or limited partner of Licensor shall be liable for any claim based on, arising
out of, or otherwise in respect of, this Agreement, and Licensee shall not have
nor claim to have any recourse for any such claim against any general or
limited partner of Licensor.
17.8. The provisions hereof are severable, and if any provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such provision, or part
thereof in such jurisdiction and
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shall not in any manner affect such provision in any other jurisdiction, or any
other provision in this Agreement in any jurisdiction. To the extent legally
permissible, an arrangement which reflects the original intent of the parties
shall be substituted for such invalid or unenforceable provision.
17.9. The paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
17.10. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
the same to be executed by a duly authorized officer as of the day and year
first above written.
PRL USA, INC.
By: /s/
JONES APPAREL GROUP, INC.
By: /s/ Jackwyn Nemerov
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Schedule A
LICENSED PRODUCTS
1. Licensed Products shall mean the following women's "better" apparel
products bearing the Trademark: dresses, shirts, blouses, skirts, jackets,
suits, sweaters, pants, vests, coats, outerwear, hats. Licensed Products shall
also include such other articles of women's apparel as Licensor shall, from
time to time, designate in its sole discretion.
2. Licensed products shall not include denim pants or shorts, and Licensee's
rights hereunder shall not be violated by virtue of the manufacture or sale by
Licensor or any of its affiliates or licensees of any jeanswear apparel sold as
part of a jeanswear line, or, subject to paragraph 3 of this Schedule A, other
womenswear line, notwithstanding the similarity of any such products to Licensed
Products.
3. Except as provided below, this Agreement does not cover any other trademark
of Licensor or in any way limit Licensor's right to engage in business with such
trademarks as it deems appropriate in its sole discretion. However, Licensor
agrees not to sell or license another complete line of women's apparel with a
"Ralph Lauren" trademark intended to be sold in the "better" area of women's
departments in direct competition with Licensed Products (a "Competing Line").
The foregoing restriction is intended to limit Licensor's ability to market an
equivalent line of "better" women's apparel under another name, and the parties
agree that any womenswear sold as part of any other line (and not individually
to be sold with "better" products) bearing any other trademark owned by Licensor
or its affiliates, so long as such line is not a Competing Line, shall not
violate the foregoing restriction, notwithstanding the similarity of
particular products and/or their price points to Licensed Products.
Notwithstanding anything to the contrary contained herein, the restriction on
Licensor set forth in this paragraph 3 with respect to a Competing Line shall
not apply to a line of "better" womenswear currently sold under the "Lauren"
mark (or to a successor line which may hereafter be sold under a different
trademark).
4. Licensor shall phase out its use in the Territory of the trademark "Ralph/
Ralph Lauren" for womenswear and thereafter during the term hereof shall not in
the Territory use or license to any third party the right to use the trademark
"Ralph/Ralph Lauren" for women's dresses, shirts, blouses, skirts, jackets,
suits, sweaters, pants, vests, coats, outerwear or hats.
5. Licensee shall not sell or market Licensed Products in "bridge" or
"collection" areas.
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Schedule B
TRADEMARK
"RALPH/RALPH LAUREN"
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Schedule C
Restricted Individuals and Entities
[OMITTED; MATERIAL FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
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Schedule D
Approved Customers
[OMITTED; MATERIAL FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
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Schedule E
OPERATING GUIDELINES
Polo Ralph Lauren (the "Company") is dedicated to conducting its operations
throughout the world on principles of ethical business practice and recognition
of the dignity of workers. We expect our business partners to respect and adhere
to the same standards in the operation of their business, and we will utilize
these criteria to evaluate our relationships with customers and suppliers.
WAGES / BENEFITS / WORKING HOURS. Our business partners must comply with all
laws regulating local wages, work hours and benefits. Wage and benefit
policies must be consistent with prevailing national standards, and also be
acceptable under a broader international understanding as to the basic needs
of workers and their families. We will not work with companies whose wage
structure violates local law or prevailing industry practice.
CHILD LABOR- Our business partners must not use child labor, defined as school
age children. Our business partners will not employ workers under the age of 14.
This provision extends to all partner facilities.
HEALTH & SAFETY. Our business partners must ensure that their workers are
provided a safe and healthy work environment, and are not subject to
unsanitary or hazardous conditions.
FREEDOM OF ASSOCIATION. Our business partners should respect the legal rights of
employees to freely and without harassment participate in worker organizations
of their choice.
PRISON OR FORCED LABOR- Our business partners will not work with or arrange for
purchase of any materials from business partners who utilize prison or forced
labor in any stage of the manufacture of our products.
DISCIPLINARY PRACTICES. Our business partners will not employ or conduct any
business activity with partners who employ any form of physical or mental
coercion or punishment against workers.
DISCRIMINATION. Our business partners will not practice nor do business with
business partners who practice any form of improper discrimination in hiring
and employment, including on the basis of age, race, color, gender, or
religion.
ENVIRONMENT. Our business partners must embrace a fundamental concern for
environmental protection and conduct their operations consistent with both
local and internationally recognized environmental practices.
LEGAL REQUIREMENTS. Our business relationship must be built on a mutual respect
for and adherence to legal requirements. Our business partners will observe
both local and applicable international standards.
ETHICAL STANDARDS. We intend to conduct all our business in a manner consistent
with the highest ethical standards, and we will seek and utilize partners who
will do likewise, as this contributes directly to our corporate reputation and
the collective success of our organization and selected business partners.
SUBCONTRACTING. Our business partners may not subcontract all or any part of
the work on our products without our express written consent, which will not
be given unless each subcontractor meets all of the criteria set forth herein.
CONFLICTS OF INTEREST. Our business partners may not give Company employees a
gift of value in excess of US$25.00, and may not bribe foreign officials to
benefit the Company or its business.
IMPLEMENTATION. We will apply these criteria in all business partner
determinations, and will continue to implement these policies in the conduct
of all activities. This will include our business partners sharing information
on production facilities and procedures, with the objective of improving our
collective service to customers in a responsible manner. Failure by a business
partner to meet these standards, will result in our taking appropriate actions,
up to and including cancellation of existing orders.
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Schedule F
TRADEMARK AND DESIGN PROTECTION AGREEMENT
Re: Orders for Polo/Ralph Lauren Merchandise
TO _______________________________
Our company may be entering into Purchase Order Contracts for samples and
various products with you in the near future and would like to take this
opportunity to call to your attention the basis upon which we will enter
such agreements.
Pursuant to our agreements we may be providing you with certain designs and
art work and requisitions for finished products (including samples), packaging,
and business materials, among other things. By accepting our orders or
contracts, your company will have agreed that it has only a limited, non-
transferable right to use any trademarks and/or designs and/or art work
(including specifically, colors, shapes, and textures) of Polo Ralph Lauren
Corporation and its affiliates ("Polo") as necessary for merchandise shipped
or services rendered under our orders or contracts. You agree that such
trademarks, designs, logos and art work shall not be used by your firm at
any time, whether or not they are used in conjunction with the Ralph Lauren
name or trademarks, for any purpose other than that for which they were placed
in your trust, i.e. in fulfillment of specific purchase orders, and you shall
exercise due diligence so that they are not made available to third parties.
No rights shall remain in your firm or its employees or agents as to such
trademarks, logos, art work, or designs of Polo and its affiliates and you agree
that to the extent your firm may acquire any rights to said marks, logos, art
work or designs, such rights shall revert to Polo or its affiliates, as the
case may be, without any further act of the parties hereunder. By accepting
our orders, you hereby agree to indemnify Polo and its affiliates for any
losses, costs or expenses (of any kind whatsoever) which may arise as a
result, directly or indirectly, of a breach of this Agreement.
Please place the acknowledgment signature of two (2) of your executive
officers in the space provided below and return one signed copy of this
letter to the undersigned as soon as possible.
Thank you for your cooperation.
Sincerely yours,
Polo Ralph Lauren, L.P.
By: Polo Ralph Lauren Corporation, General Partner
By:
We have read and accept and agree to the above in consideration of orders from
Polo Ralph Lauren, L.P.
CONTRACTOR NAME: _______________________
By: (1) _________________________________ and (2) ___________________________
Name: Name:
Date:
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