(Pillowtex)
THIS AGREEMENT made as of July 1, 1998, between Ralph Lauren Home
Collection, Inc. ("RLHC"), a Delaware corporation with a place of business
at 103 Foulk Road, Suite 201, Wilmington, Delaware 19803, Polo Ralph Lauren
Corporation ("PRLC"), a Delaware corporation with a place of business at 650
Madison Avenue, New York, New York and, Pillowtex Corporation, a Texas
corporation with a principal place of business at 4111 Mint Way, Dallas
Texas 75237 ("Company").
WITNESSETH:
WHEREAS, RLHC is a subsidiary of PRL USA Holdings, Inc., a Delaware
corporation ("Polo"); and
WHEREAS, Polo owns, and RLHC is the exclusive licensee of the rights
to use, the "Licensed Mark", hereinafter defined, in connection with the
manufacture and sale in the United States of certain items of home
furnishings, including the "Licensed Products", hereinafter defined; and
WHEREAS, Company desires to obtain, and RLHC is willing to grant, an
exclusive sublicense to use the Licensed Mark in connection with the
manufacture and sale of Licensed Products in the United States; and
WHEREAS, Company desires to obtain, and PRLC is willing to provide,
design, marketing and other services as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings hereinafter set forth, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, the term:
1.1. "Licensed Products" shall mean those items listed on Schedule
A attached hereto, all bearing the Licensed Mark, hereinafter defined.
1.2. "Licensed Mark" shall mean either the trademark "Ralph Lauren
Home Collection", "Ralph (Polo Player Design) Lauren", the representation
of the Polo Player Design or the trademark "Ralph Lauren" and unless the
context indicates otherwise, all of such trademarks, and any other trademark
RLHC may, from time to time at its sole discretion, specifically authorize
for use by Company. RLHC shall have the sole right to determine which
trademark shall be used in connection with each particular Licensed Product.
From time to time RLHC may authorize Company to manufacture and distribute
products bearing the Licensed Mark not expressly listed in Schedule A
hereto. Absent an agreement with respect to such products signed by RLHC
and Company, all such products shall be deemed Licensed Products for all
purposes hereunder; provided, however, that Company's rights with respect
to such products (i) shall be non-exclusive and (ii) may be terminated by
Company upon 90 days written notice.
1.3. "Territory" shall mean the United States of America and Canada;
provided, however, that Company shall have no right to sell any Licensed
Products, and RLHC shall be free to sell or authorize the sale of Licensed
Products, to hotels, motels and other lodging facilities for use in such
facilities (but not for retail sale at such facilities). From time to time
RLHC may authorize Company to sell certain Licensed Products to specific
purchasers outside the Territory. Absent an agreement with respect to such
sales signed by RLHC and Company, all such sales shall be made on all of the
terms and conditions set forth in this Agreement; provided, however, that
Company's right to make such sales shall be non-exclusive and may be
terminated by RLHC immediately upon written notice to Company. Any such
termination shall not apply to orders already taken by Company in accordance
with RLHC's prior authorization. In accordance with the foregoing, RLHC
hereby authorizes Company, on an exclusive basis, to sell Licensed Products
to Corporacion Telmar, RLHC?s distributor of various home furnishings in
Mexico.
2. Grant of License.
2.1. Subject to the terms and provisions hereof, RLHC hereby grants
Company, and Company hereby accepts, the exclusive, non-assignable right to
use the Licensed Mark for the term of this Agreement, in connection with the
manufacture and sale to the trade of Licensed Products in the Territory.
2.2. The sublicense granted herein applies solely to the use of the
Licensed Mark in connection with the manufacture and sale to the trade of
the Licensed Products. No use of any other trademark of RLHC, Polo or of
any of their affiliates, and no use of the Licensed Mark in connection with
the manufacture and sale of any other products, shall be authorized or
permitted pursuant to this sublicense.
2.3. RLHC reserves all rights granted to it under its agreement with
Polo which are not expressly and exclusively granted to Company hereunder,
and RLHC may grant sublicenses to others in the Territory in connection with
the items of home furnishings designated in such agreements, except for the
Licensed Products specifically licensed hereunder.
2.4. It is understood and agreed that all right, title and interest
in and to the Licensed Mark are reserved by Polo for its own use or for the
use of any other licensee, whether within or outside the Territory, in
connection with any and all products and services other than the rights
granted to Company herein. Without limiting the generality of the
foregoing, Company understands and agrees that RLHC or Polo may manufacture
or authorize third parties to manufacture, in the Territory, Licensed
Products for ultimate sale outside the Territory; provided, however, that
in the event that any licensee of Licensed Products outside the Territory
desires to produce Licensed Products within the Territory and does not have
any affiliates, subsidiaries or related companies within the Territory, then
Licensor shall suggest the services of Licensee for the production of
Licensed Products within the Territory for export outside the Territory.
2.5. Company shall not without RLHC'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. Company shall use its best efforts to prevent any such resale
outside the Territory and shall, immediately upon learning or receiving
notice from RLHC that a customer is selling Licensed Products outside the
Territory, cease all sales and deliveries to such customer.
2.6. RLHC shall not, without Company's consent, grant to others the
right and license to use a trademark which bears the words "Polo" or "Ralph
Lauren" in connection with the Licensed Products within the Territory. To
the extent that it is legally possible 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 rights being
specifically reserved for RLHC.
2.7. Except as provided in paragraph 23.4 hereof, Company shall not
purport to grant any right, permission or sublicense hereunder to any third
party, whether at common law or otherwise. In the event of any attempted
assignment or sublicense by Company without RLHC's prior written consent,
RLHC may at its option immediately terminate such sublicense and this
Agreement by written notice to Company to such effect; any such attempted
assignment or sublicense shall otherwise be null, void and of no force or
effect.
2.8. Company shall not use, or permit another person or entity in
its control to use, the words "Polo", "Ralph Lauren" or any initials
associated therewith (e.g., "RL" or "PRL") as part of a corporate name or
tradename and Company shall not otherwise permit use of the Licensed Mark
in such a way so as to give the impression that the names "Polo" or "Ralph
Lauren", or the Licensed Mark, or any modification thereof, is the property
of Company.
2.9. Company shall not have the right to use Company's name on the
Licensed Products, except with the prior approval by RLHC of the use and
placement of Company's name, in accordance with applicable laws. Company
shall, at the option of RLHC upon reasonable notice, include on its business
materials and/or the Licensed Products an indication of the relationship of
the parties hereto in a form approved by RLHC.
2.10. Notwithstanding anything to the contrary herein contained,
RLHC hereby reserves the right from time to time to authorize others to
manufacture and sell Licensed Products as part of a combination sale, or
premium or giveaway with certain products other than Licensed Products
bearing the Ralph Lauren name.
2.11. Company shall not, directly or indirectly, manufacture,
distribute, sell or advertise, during the term of this Agreement, any items
which bear or are associated with any of the following designers or brands:
[ * ], subject to the provisions of that certain letter agreement
between Company and RLHC dated October 31, 1997. Company shall not be deemed
to have violated the terms of this paragraph 2.11 by virtue of the
continuing manufacture and sale of towels bearing the Nautica trademark by
Leshner Corporation, a subsidiary of Company.
2.12. RLHC represents and warrants to Company that it has full legal
right, power and authority to grant the sublicense hereby granted by RLHC
to Company, to enter into this Agreement, to perform all of its obligations
hereunder, and to consummate all of the transactions contemplated herein.
2.13. Company represents and warrants to RLHC that it has full legal
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. Company further represents and covenants that it is
now and at all times shall be adequately capitalized so as to be able to
conduct its operations contemplated hereunder and to meet the requirements
of its suppliers in connection therewith.
2.14. Company recognizes that there are many uncertainties in the
business contemplated by this Agreement. Company 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 Company, either by RLHC, Polo or PRLC, 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 Company 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. PRLC shall provide services in connection with the creation and
design of Licensed Products, subject to the terms and provisions hereof, in
order to enable Company to exploit the rights granted to it under this
Sublicense Agreement and to manufacture Licensed Products in conformity with
the established prestige and good will of the Licensed Mark. All Licensed
Products manufactured or caused to be manufactured and sold by Company shall
be made in accordance with the design and other information approved under
this Agreement, and in all other respects in conformity with the terms
hereof. In addition to such design services, PRLC shall provide to Company
sales, advertising, promotional and other services as hereinafter set forth.
*Confidential portion omitted and filed separately with the Commission.
3.2. Company acknowledges that the Licensed Mark has established
prestige and good will and is well recognized in the trade and the public,
and that it is of great importance to RLHC that in the manufacture and sale
of the various lines of products bearing the Licensed Mark, including the
Licensed Products, the high standards and reputation Polo and PRLC have
established be maintained. The value of the Licensed Mark is derived in
part from the design services of PRLC. Accordingly, all items of Licensed
Products manufactured by Company hereunder shall be of high quality
workmanship with adherence to all details and characteristics embodied in
the designs furnished by PRLC pursuant to the provisions of this Agreement.
Company shall, upon RLHC's request, supply RLHC with samples of Licensed
Products (including 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 RLHC's request, make its
manufacturing facilities available to RLHC, Polo and/or PRLC, and shall use
its best efforts to make available each subcontractor's manufacturing
facilities, for inspection by representatives of RLHC, Polo and/or PRLC
during usual working hours. No sales of Licensed Products as miscuts,
damaged or defective merchandise shall contain any labels or other
identification bearing the Licensed Mark without Polo's prior written
approval.
3.3. The death or incapacity of Ralph Lauren shall not in any way
effect PRLC's obligation to provide its services hereunder, or Company?s
obligation to accept such services.
4. Marketing; Advertising.
4.1. RLHC requires that Company accept the services of and obtain
certain approvals from PRLC, in the manner hereinafter set forth, in
connection with the marketing, advertising and sale of Licensed Products.
Certain Licensed Products, to be designated by RLHC, shall be marketed and
sold only by PRLC sales group to accounts approved by PRLC. Company shall
have no marketing or selling responsibility for such Licensed Products, but
shall be the manufacturer of all Licensed Products sold in the Territory.
Company hereby approves PRLC?s authorization of returns of Licensed
Products during each year up to a cap equal to two percent (2%) of the
aggregate net sales price of Licensed Products sold in such year, other than
sales made pursuant to paragraph 10.7 hereof or through approved off-price
distribution. At Company's request, PRLC will provide Company with a list
of all approved accounts to which it has sold Licensed Products for that
season. PRLC will notify Company of any additions or deletions to the list.
Company shall reserve the right to refuse to ship any customer if they do
not meet Company's normal credit criteria; provided however that Company
shall first notify PRLC of its decision and Company shall give PRLC the
opportunity to assist in rectifying the credit situation. Certain Licensed
Products, to be designated by RLHC, shall be marketed and sold by Company
to accounts other than free-standing Polo/Ralph Lauren retail stores in a
manner consistent with the quality and prestige of the Licensed Mark and
only to those customers expressly approved by PRLC. Prior to the opening
of each selling season, Company shall submit a written list of its customers
to PRLC for PRLC's approval. It is understood that such approval shall not
be unreasonably withheld, and shall be based on considerations of quality
and prestige of the Licensed Mark. If Company shall decide during the
season to sell to customers not previously approved by PRLC, Company shall
so advise PRLC and shall not sell to such additional customers without the
approval of PRLC as aforesaid. Company shall not offer for sale or promote
the sale of Licensed Products through direct mail, the "Internet", or other
similar vehicles without PRLC's prior written approval.
4.2. Company shall maintain the high standards of the Licensed Mark
as applied to Licensed Products, in all packaging and promotion of the
Licensed Products. Company shall not employ or otherwise release any of
such packaging or other business materials relating to any Licensed Products
and bearing the Licensed Mark unless and until Company shall have made a
request to PRLC in writing for approval. Approval or disapproval of any
such proposed use shall be given by PRLC as promptly as reasonably
practicable after receipt of Company's request in connection therewith, but
in all cases within twenty-one (21) business days after receipt by PRLC of
Company's request; if neither approval nor disapproval has been given within
such time, approval shall be deemed to have been given. Any such approval
shall be effective until revoked by PRLC; provided, however, to the extent
PRLC's approval relates only to a seasonal collection of Licensed Products,
Company shall not thereafter use said packaging or business materials
without PRLC's further approval.
4.3. Provided approval to use the Licensed Mark as part of a
specific piece of packaging or business material remains effective, it shall
not be necessary to obtain prior approval for each separate, substantially
similar use of the Licensed Mark containing immaterial changes from the use
of the Licensed Mark so approved. Notwithstanding the foregoing, Company
shall, as soon as is reasonably possible, either prior to publication,
release or other public showing or immediately thereafter, deliver to PRLC
a tear sheet, proof or "mock-up" of any such changed use of the Licensed
Mark, which shall be subject to disapproval by PRLC; if such disapproval
shall be expressed, the same shall not be used at any later time unless
approval thereof shall be later obtained.
4.4. Anything in this Agreement to the contrary notwithstanding, as
between RLHC, PRLC and Company, PRLC shall prepare and place any and all
advertising of any nature with respect to the Licensed Products. Any and
all cooperative advertising campaigns supported or approved by Company shall
be subject to the prior approval of PRLC. In the event PRLC during the term
hereof authorizes Company to prepare and place any advertising with respect
to the Licensed Products, Company shall not place any such advertising
unless and until Company shall have made a request in writing to PRLC for
approval of such advertising detailing the use to be made of the advertising
material (e.g. TV, print, radio), and PRLC shall have approved the same in
writing. 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, print, radio) for which
approval by PRLC was granted.
4.5. Company shall maintain the highest quality and standards of the
Licensed Products and shall exercise its best efforts to safeguard the
established prestige and good will of the name Ralph Lauren and the Lauren
image at least at the same level of prestige and good will as heretofore
maintained. "Image", as used herein, refers primarily to quality and style
of packaging, shipping, customer service, promotion, selling tools, creation
and introduction of new products and types of outlets (with reference to
quality of service provided by retail outlets and quality of presentation
of Lauren merchandise in retail outlets). Company shall take all necessary
steps, and all steps reasonably requested by RLHC, to prevent or avoid any
misuse of the Licensed Mark by any of its customers, contractors or other
resources.
4.6. To the extent permitted by applicable law, RLHC may from time
to time, and in writing, promulgate uniform rules and regulations to Company
relating to the manner of use of the Licensed Mark. Company shall comply
with such rules and regulations.
4.7. Company 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 any trademark
of Polo or its affiliates pursuant to a license from Polo or any of its
affiliates and to any stores or facilities operated or owned by Polo and/or
its affiliates, which are authorized to sell Licensed Products within such
retail stores. Notwithstanding anything to the contrary contained herein,
in the event that any such Licensed Products are not so made available by
Company to such stores or facilities, and in addition to any other remedy
available to RLHC hereunder, such Licensed Products may be made available
to such stores by RLHC (or its affiliates or other licensees). RLHC will
not make available to any retail stores, affiliates or facilities as
described above, any Licensed Products under this Agreement from any other
licensee other than Company where the sole reason for Company's refusal to
ship was based on overdue payments or outstanding bad debts of that party
due to Company for Licensed Products, other than those based upon good faith
disputes.
4.8. At Company's request, PRLC will provide Company with projected
sales in order to assist Company with production planning. PRLC will work
diligently with Company to sell Licensed Products; provided however that
PRLC will bear no responsibility for any loss nor will PRLC guarantee to
Company the sale of the Licensed Products.
4.9. Company shall offer Licensed Products for sale to employees of
Polo and its licensees for the personal use of such employees at Company's
regular invoice price to unaffiliated retail accounts.
4.10. Company shall make a non-refundable contribution toward PRLC's
advertising expenses on the first day of each year during the term hereof,
as follows:
[ * ]
[ * ]
[ * ]
Except as otherwise agreed, Company?s contributions shall be used for
consumer advertising which features Licensed Products, although such
advertising may also include products of other RLHC licensees in order to
reflect RLHC design concepts and lifestyles.
5. Trademark and Copyright Protection.
5.1. All uses of the Licensed Mark by Company, including, without
limitation, use in any business documents, invoices, stationery,
advertising, promotions, labels, packaging and otherwise, shall be subject
to paragraph 4 hereof and shall require PRLC's prior written consent, and
all uses of the Licensed Mark by Company in advertising, promotions, labels
and packaging shall bear the notation, "Ralph (Polo Player design) Lauren",
the representation of the Polo Player Design, or "Ralph Lauren". Company
acknowledges and agrees that its use of the Licensed Mark shall at all times
be as sublicensee of RLHC for the account and benefit of RLHC, Polo and
PRLC. All uses of the Licensed Mark pursuant to this Agreement shall be for
the sole benefit of Polo and shall not vest in Company any title to or right
or presumptive right to continue such use. For the purposes of trademark
registrations, sales by Company or RLHC shall be deemed to have been made
by Polo.
*Confidential portion omitted and filed separately with the Commission.
5.2. Company will cooperate fully, at RLHC's, Polo's or PRLC's
expense, as the case may be, (provided that RLHC, Polo and/or PRLC shall not
be responsible for the cost of the time and effort expended by Company's
officers and employees, provided it is not excessive, in connection with
furnishing such assistance), and in good faith with RLHC for the purpose of
securing and preserving RLHC's and Polo's rights in and to the Licensed
Mark. Nothing contained in this Agreement shall be construed as an
assignment or grant to Company of any right, title or interest in or to the
Licensed Mark or any of RLHC's or Polo's other trademarks, and all rights
relating thereto are reserved by RLHC and Polo, relative to their respective
interests therein, except for the sublicense hereunder to Company of the
right to use the Licensed Mark only as specifically and expressly provided
herein. Company acknowledges that only Polo may file and prosecute a
trademark application or applications to register the Licensed Mark for
Licensed Products.
5.3. Company will not, during the term of this Agreement or
thereafter, (a) attack Polo's title or rights, or RLHC's rights, in and to
the Licensed Mark in any jurisdiction, or attack the validity of this
Sublicense or of the Licensed Mark, or (b) contest the fact that Company's
rights under this Agreement (i) are solely those of a manufacturer or
distributor, and (ii) subject to the provisions of paragraph 14 hereof,
terminate upon termination of this Agreement. The provisions of this
paragraph 5.3 shall survive the termination or expiration of this Agreement.
5.4. Except as set forth in paragraph 7.1 hereof, all right, title
and interest in and to all samples, sketches, designs, art work, logos and
other materials furnished by or to Polo, PRLC or RLHC, whether created by
Polo, PRLC, RLHC or Company, are hereby assigned in perpetuity to, and shall
be the sole property of, Polo, RLHC and/or PRLC, as the case may be.
Company will assist RLHC, Polo and PRLC, at RLHC's, Polo's or PRLC's
expense, as the case may be, (provided that RLHC, Polo and/or PRLC shall not
be responsible for the cost of the time and effort expended by Company's
officers and employees in connection with furnishing such assistance) to the
extent necessary in the protection of or the procurement of any protection
of the rights of Polo or PRLC, as the case may be, to the Licensed Mark or
the designs, design patents or copyrights furnished hereunder, as well as
to the rights of RLHC to the same. RLHC, Polo and PRLC, as their interests
may appear, may commence or prosecute any claims or suits in their own names
and may join Company as a party thereto at RLHC's, Polo's or PRLC's expense,
as the case may be, (provided that RLHC, Polo and/or PRLC shall not be
responsible for the cost of the time and effort expended by Company's
officers and employees in connection with any such claim or suit). Company
shall promptly notify RLHC and Polo in writing of any uses which may be
infringements or imitations by others of the Licensed Mark on articles
similar to those covered by this Agreement, and of any uses which may be
infringements or imitations by others of the designs, design patents and
copyrights furnished hereunder, which may come to the attention of Company.
As between Company and RLHC, RLHC shall have the sole right with respect
to the Licensed Mark, designs, design patents and copyrights furnished
hereunder, to determine whether or not any action shall be taken on account
of such infringements or imitations. Company shall not institute any suit
or take any action without first obtaining RLHC's written consent to do so.
6. Designs.
6.1. At any time or from time to time Company shall provide PRLC
with a list or lists setting forth those Licensed Products for which Company
shall require designing by PRLC.
6.2. At any time or from time to time within a reasonable period
following receipt by PRLC of the aforesaid lists or lists, PRLC shall
provide Company, with its program of suggested, broad design themes and
concepts with respect to the design of the Licensed Products ("Design
Concepts") which shall be embodied in verbal and/or written descriptions of
design themes and concepts and such other detailed designs and sketches
therefor, as PRLC deems appropriate. PRLC shall have full discretion with
respect to the manner in which the Design Concepts shall be formulated and
presented to Company. PRLC shall be available for consultation with Company
on Design Concepts for the purpose of making such modifications to the
Design Concepts as are required to meet PRLC's approval.
6.3. PRLC may engage such employees, agents, and consultants
operating under PRLC's supervision and control as it may deem necessary and
appropriate.
6.4. From time to time while this Agreement is in effect, PRLC may
(a) develop or modify and implement designs from PRLC, or (b) develop and
implement new designs.
6.5. If Company wishes to prepare a design for each of its lines of
Licensed Products, it shall submit to PRLC its proposed design therefor.
PRLC may, in its sole discretion, by written notice, approve any of the
designs so furnished, with such modifications as it shall deem appropriate,
or it may disapprove any or all of the designs.
6.6. All patents and copyrights on designs, and all art work,
sketches, logos and other materials depicting the designs or Design Concepts
shall only be applied for by PRLC, at its discretion and expense, and shall
designate PRLC as the patent or copyright owner, as the case may be,
thereof.
6.7. Company shall include within its collection of Licensed
Products each design designated by PRLC for inclusion therein. The
foregoing notwithstanding, in the event Company is unable, in good faith and
due only to physical impossibility or economic impracticability, to include
within a collection of Licensed Products a particular Licensed Product which
PRLC has designed or designated for inclusion in such collection, RLHC shall
be entitled to authorize third parties to manufacture and sell such Licensed
Products within the Territory and Company shall display and present such
Licensed Products in its showroom for Licensed Products.
7. Design Legends: Copyright Notice and Grant.
7.1. All designs, and all art work, sketches, logos and other
materials depicting the designs or Design Concepts created by PRLC, or
created by or for Company and reviewed and approved by PRLC or developed by
or for Company from Design Concepts or subsequent design concepts furnished
or approved by PRLC, shall be subject to the provisions of this paragraph
7 and shall be owned exclusively by PRLC; provided, however that all rights
(including copyrights) in designs, and all sketches, artwork and other
materials embodying such designs, first proposed by Company to PRLC which
are rejected by PRLC and which are not substantially similar to designs (i)
first proposed by PRLC or (ii) proposed by Company and accepted by PRLC in
whole or in part for use in connection with Licensed Products, shall be
owned exclusively by Company.
7.2. Company shall cause to be placed on all Licensed Products, when
necessary, appropriate notices designating PRLC as the copyright or design
patent owner thereof, as the case may be. Prior to use thereof by Company,
the manner of presentation of said notices must be reviewed and approved in
writing by PRLC.
7.3. PRLC hereby grants to Company the exclusive right, sublicense
and privilege in connection with Licensed Products in the Territory to use
the designs furnished hereunder and all copyrights, if any, therein, and
hereby sublicenses to Company the right to use all patents on such designs,
and shall execute and deliver to Company all documents and instruments
necessary to perfect or evidence such sublicense; provided, however, that
all such right, title and interest therein shall revert to PRLC upon
termination of this Agreement for any reason whatsoever, and Company shall
thereupon execute and deliver to PRLC all documents and instruments
necessary to perfect or evidence such reversions and, provided, further,
that such sublicense is limited to use in connection with Licensed Products
authorized to be manufactured and sold from time to time pursuant to this
Sublicense Agreement. Such sublicense shall continue only during the term
of this Agreement.
8. Licensed Products.
8.1. RLHC requires that Company shall obtain the written approval of
PRLC of all Licensed Products, by submitting a Prototype, as hereinafter
defined, of each different design or model of a Licensed Product, including,
but not limited to, the type and quality of materials, colors and
workmanship to be used in connection therewith, prior to any commercial
production thereof. In the event that PRLC rejects a particular Prototype
or Prototypes, Company shall be notified of the reasons for rejection and
Company may be provided with suggestions for modifying the particular
Prototype or Prototypes which PRLC is rejecting. Company shall promptly
correct said Prototype or Prototypes and resubmit said Prototype or
Prototypes for PRLC's approval under the same terms and conditions as set
forth herein with respect to the first submission of Prototypes. As used
herein, the term "Prototype" shall mean any and all models, or actual
samples, of Licensed Products; and the term "Final Prototype" shall mean the
actual final sample of a Licensed Product from which the first commercial
production thereof will be made and which has been approved by PRLC prior
to the first commercial production thereof pursuant to paragraphs 8 and 9
hereof.
8.2. The written approval of PRLC of the Prototypes for each
seasonal collection shall be evidenced by a written list, signed on behalf
of PRLC, setting forth those Prototypes that have been approved for
inclusion in such collection. Prototypes so approved shall be deemed Final
Prototypes in respect of such collection. Approval of any and all
Prototypes as Final Prototypes shall be in the sole discretion of PRLC.
Company shall present for sale, through the showing of each seasonal
collection to the trade, all Final Prototypes so approved in respect of such
collection.
8.3. The Licensed Products thereafter manufactured and sold by
Company shall strictly adhere, in all respects, including without
limitation, with respect to materials, colors, workmanship dimensions,
styling, detail and quality, to the Prototypes approved by PRLC.
8.4. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the
manufacture, distribution, sale or promotion of Licensed Products. Company
shall advise RLHC to the extent any Final Prototype does not comply with any
such law, rule, regulation or requirement.
8.5. Company shall make its personnel, and shall use its best
efforts to make the personnel of any of its contractors, suppliers and other
resources, available by appointment during normal business hours for
consultation with PRLC. Company shall make available to RLHC, upon
reasonable notice, marketing plans, reports and information which Company
may have with respect to Licensed Products. In addition, when requested by
PRLC, Company shall arrange meetings between PRLC and senior executive
personnel of Company to discuss and pursue in good faith the resolution of
problems encountered by PRLC in connection with this Agreement during the
term hereof.
9. Quality of Licensed Products.
9.1. RLHC requires that Company obtain from PRLC its approval of the
styles, designs, colors, materials, workmanship and quality of all Licensed
Products to insure that all Licensed Products manufactured, sold or
distributed are of the highest quality and are consistent with the highest
standards and reputation and established prestige and good will connected
with the name "Ralph Lauren". In connection with the production of each
item of Licensed Products, Company shall use only such materials as PRLC
shall have previously approved pursuant to the Final Prototype with respect
to such item of Licensed Products.
9.2. In the event that any Licensed Product is, in the judgment of
PRLC, not being manufactured or sold in adherence to the materials, colors,
workmanship, design, dimensions, styling, detail and quality embodied in the
Final Prototypes, or is otherwise not in accordance with the Final
Prototypes, PRLC shall notify Company thereof in writing and Company shall
promptly repair or change such Licensed Product to conform strictly thereto.
If an item of Licensed Product as repaired or changed does not strictly
conform to the Final Prototypes and such strict conformity cannot be
obtained after at least one (1) resubmission, the Licensed Mark shall be
promptly removed from the item, at the option of PRLC, in which event the
item may be sold by Company, subject to the royalty provisions of Paragraph
10 hereof, provided it is in no way identified as a Licensed Product.
9.3. RLHC and PRLC and their duly authorized representatives shall
have the right, upon reasonable notice during normal business hours, to
inspect all facilities utilized by Company (and its contractors and
suppliers) in connection with the preparation of Prototypes and the
manufacture, sale, storage or distribution of Licensed Products pursuant
hereto and to examine Licensed Products in the process of manufacture and
when offered for sale within Company's operations. Company hereby consents
to examination by RLHC and PRLC of Licensed Products held by Company's
customers for resale provided Company has such right of examination.
Company shall take all necessary steps, and all steps reasonably requested
by RLHC and PRLC, to prevent or avoid any misuse of the licensed designs by
any of its customers, contractors or other resources.
10. Royalties.
10.1. Company shall pay to RLHC minimum royalties each year during
the term of this Sublicense Agreement. The minimum royalty
a. for the first year (as hereinafter defined) shall be [ * ];
and
b. for the second year shall be [ * ]; and
c. for the third year shall be [ * ].
Minimum royalties for each year shall be paid in four equal quarterly
installments, on the last day of each quarter during the term hereof
commencing with the payment to be made on September 30, 1998. With respect
to any quarterly period ended the last day of September, December, March and
June of any year of this Agreement, any excess of the aggregate minimum
royalties over earned royalties, as described in paragraph 10.2 hereof, for
any quarterly period, shall be set off against earned royalties in the
subsequent quarterly periods of the same year; provided, however, that no
credit shall be permitted against minimum royalties payable in any year on
account of earned or minimum royalties paid in any other year and minimum
royalties shall not be returnable. For the purposes of this Agreement, a
"year" shall mean a period of twelve (12) months commencing on each July 1
during the term hereof.
* Confidential portion omitted and filed separately with the Commission.
10.2. In consideration of all rights granted and services rendered by
RLCH and PRLC hereunder, Company shall pay to RLHC and PRLC earned royalties
based on the Net Sales Price, as hereinafter defined, of all Licensed
Products sold hereunder. Except as may otherwise be agreed upon in writing,
earned royalties shall equal the following percentages of the Net Sales
Price of all Licensed Products sold pursuant to this Agreement, including
without limitation any sales made pursuant to the terms of paragraphs 3.3,
9.2 and 14 hereof: (i) [ * ] with respect to all sales by PRLC's
sales force; (ii) [ * ] with respect to all sales by Company's sales
force and with respect to all bed pillows and mattress pads (irrespective
of the sales force), and (iii) [ * ] with repsect toa ll down comforters
(irrespective of the sales force). Statements of operations shall be
prepared and furnished by Company to RLHC in accordance with the provisions
of paragraph 11 hereof, with respect to each quarterly period ended the
last day of September, December, March and June in each year hereof, and
shall be furnished to RLHC within thirty (30) days of the end of each such
period. Any excess of earned royalties over the minimum royalities
provided in paragraph 10.1 hereof, shall be remitted to RLHC within (30)
days after the end of each quarterly period. The term "Net Sales Price"
shall mean the gross sales price to retailers 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 Company to its employees), of all sales of Licensed Products sold under
this Agreement, less trade discounts actually taken, merchandise returns and
bad debts; provided, however, that bad debts may only be deducted in the
event that Company's debtor has commenced judicial proceedings seeking
relief under the Bankruptcy Code, and Company shall be liable for earned
royalties on all amounts, if any, it may eventually recover in such
proceedings, whether such recovery takes place during or after the term of
this Agreement. The Net Sales Price of any Licensed Products sold by
Company to affiliates of Company shall, for purposes of this Agreement, be
deemed to be the higher of (a) the actual gross sales price, or (b)
Company's regular selling price for such Licensed Products sold to
unaffiliated parties for sale at retail. Merchandise returns shall be
credited in the quarterly period in which the returns are actually made.
*Confidential portion omitted and filed separately with the Commission.
10.3. Company shall reimburse PRLC for all travel expenses incurred
by RLHC or PRLC with respect to design development and approval pursuant to
this Agreement, and for any additional trips made at Company's request;
provided, however, that all such travel shall be pre-approved by Company.
10.4. 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 on which the same became due
pursuant to paragraphs 10.1 and 10.2 hereof at the lower of the highest rate
permitted by law in New York and 2% per annum above the rate of interest
published from time to time by Chemical Bank, New York, New York (or any
successor bank) as its reference rate, or, if such rate is not published,
then the nearest equivalent rate thereto then published by Chemical Bank.
10.5. The obligation of Company to pay royalties hereunder shall be
absolute notwithstanding any claim Company may assert against RLHC, Polo,
Lauren or PRLC. Company shall not have the right to set off, compensate or
make any deduction from such royalty payments for any reason whatsoever.
10.6. All payments of royalties due to RLHC and PRLC shall, unless
RLHC shall otherwise direct by written notice to Company, be made by wire
transfer on the date due, which wire transfer shall be directed to RLHC, on
its own behalf and as agent for PRLC, as follows:
Chase Manhattan Bank Delaware
1201 Market Street, Wilmington, Delaware, 19801-1167,
ABA#031100267
Account Name and Number: Ralph Lauren Home Collection, Inc.: 6301-225193-500
10.7. In consideration of the rights granted herein, Company shall sell
and timely ship to "New Stores" (as hereinafter defined) such Licensed Products
as they may wish to purchase, at a discount not less than the following
percentages off the regular wholesale price: (i) [ * ] with
respect to Licensed Products on which the earned royalty rate pursuant to
paragraph 10.2 hereof is [ * ] or less, (ii) [ * ] with respect to
Licensed Products on which the earned royalty rate pursuant to paragraph
10.2 hereof is more than [ * ] but not more than [ * ], and
(iii) [ * ] with respect to Licensed Products on which the earned
royalty rate pursuant to paragraph 10.2 hereof is more than [ * ].
As used herein, the term "New Stores", including the one in Oakbrook,
Illinois, shall mean all full price free-standing stores operating under
any service mark or tradename associated with Ralph Lauren which opened or
is relocated on or after January 1, 1998, regardless of the product mix,
size, location or configuration of such stores and "free-standing stores"
shall mean stores which are operating as separate units not a department
or sub-unit of a larger store. No royalty shall be due pursuant to
paragraph 10.2 hereof with respect to any sales by Company to New Stores
pursuant to this paragraph 10.6, but Company shall as soon as reasonably
practical separately report all such sales in the accounting statements
required hereunder. Also in consideration of the rights granted herein,
Company shall sell and timely ship Licensed Products to "Polo Outlet Stores"
(as each such term is hereinafter defined), to the extent of their
* Confidential portion omitted and filed separately with the Commission
requirements on a priority basis in relation to any other secondary
distribution of Licensed Products, at a discount which shall
be negotiated on a case-by-case basis consistent with the prior dealings
between the parties in respect of excess and irregular inventory taking into
account the age, condition and quantity of merchandise to be disposed of.
All such sales shall as soon as reasonably practical be separately reported
by Company in its accounting statements pursuant to paragraph 10.2 hereof,
and such sales shall be subject to the royalty obligations set forth herein
unless otherwise agreed by RLHC and Company. "Polo Outlet Stores", as used
herein, shall mean all "outlet" or "factory" stores doing business under any
Polo/Ralph Lauren service mark or tradename.
11. Accounting; Records.
11.1. Company shall at all times keep an accurate account of all
operations within the scope of this Agreement and shall prepare and furnish
to RLHC full statements of operations with respect to each quarter in each
year during the term of this Agreement within thirty (30) days of the end
of such period. Such statements shall include, on a country-by-country basis,
all aggregate gross sales, trade discounts, merchandise returns and the Net
Sales Price of all sales of License Products for the previous quarterly
period. Such statements shall be in sufficient detail to be audited from
the books of Company and shall be certified by a financial officer of
Company. Once each year, which may be in connection with the regular annual
audit of Company's books, Company shall furnish an annual statement of the
aggregate gross sales, trade discounts, merchandise returns and Net Sales
Price of all sales of Licensed Products made by Company certified by the
independent public accountant of Company.
11.2 RLHC 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 possession or under the
control of Company 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 Company for at least the duration of this
Agreement and for three (3) years thereafter. RLHC 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 Company's books and records it is shown that Company's payments to RLHC
hereunder with respect to any twelve (12) month period were less than or
greater than the amount which should have been paid to RLHC by an amount
equal to two percent (2%) of the amount which should have been paid during
such twelve (12) month period, Company 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 RLHC
for the cost of such examination.
11.3. Company shall provide to RLHC in the form requested such
information as RLHC may reasonably request with respect to the manufacture,
distribution and sale of Licensed Products.
12. Term.
The initial term of this Agreement shall commence on the date hereof and
shall terminate on June 30, 2001, unless earlier terminated in accordance
with the terms hereof. It is expressly understood that only the company
(which may be Company) 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, the last season for which the Company
shall be entitled to receive designs and, during the term hereof, to
manufacture and sell Licensed Products shall be the Spring 2001 season, and
RLHC 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 Fall 2001 season.
13. Default; Change of Business.
13.1. Each of the following shall constitute an event of default
("Event of Default") hereunder:
(i) Royalty payments are not paid when due and such default
continues for more than ten (10) days after notice thereof;
(ii) Company 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 artnership or Company shall fail to
timely ship to its customers a material portion of the orders of Licensed
Products it has accepted;
(iii) Company fails within ten (10) days after written notice
from RLHC that payment is overdue to pay for any Licensed Products or
materials, trim, fabrics, packaging or services relating to Licensed Products
purchased by Company from RLHC or Polo or any agent or licensee of RLHC or Polo
or any other supplier of such items unless Company is in good faith contesting
the amount or liability for such payment;
(iv) If Company shall, after achieving distribution and sale of the
Licensed Products throughout the Territory, thereafter fail for a consecutive
period in excess of two (2) months to continue the bona fide manufacture,
distribution and sale of the Licensed Product; or
(v) If a deliberate deficiency in reported Net Sales occurs or if
any other deliberate misstatements are made in reports required or requested
hereunder; or
(vi) If the quality of the Licensed Products should become lower
than that in the approved Prototypes referred to in paragraph 8 hereof, and
such decline in quality is not cured within thirty (30) days after notice
thereof; or
(vii) If Company shall use the Licensed Marks in an unauthorized
or
improper manner and/or if Company shall make an unauthorized disclosure of
confidential information or materials given or loaned to Company by Polo,
the Design Partnership and or RLHC; or
(viii) Company defaults in performing any of the terms of this
Agreement and continue in default for a period of thirty (30) days after
notice thereof (unless the default cannot be totally cured within the initial
thirty (30) day period after notice and Company diligently and continuously
proceeds to cure and does in fact cure such default, but within no later than
ninety (90) days following such initial period);
(ix) Company institutes proceedings seeking relief under the
Bankruptcy Code or any similar law, or consents to entry of an order for
relief against it in any bankruptcy or insolvency proceeding or similar
proceeding, or files a petition or answer or consents for 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, sequestrator (or other similar official)
of it or of any substantial part of its property, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due, or takes any action in furtherance of the
foregoing;
(x) Company transfers or agrees to transfer a substantial part of
its property (except as provided in paragraph 13.3 below);
(xi) The calling of a meeting of creditors, appointment of a
committee of creditors or liquidating agents, or offering of a
composition or extension to creditors by, for, or of Company.
(xii) There shall be a change in control of Company such that
Charles Hansen is no longer in all material respects responsible with
individual authority as officer of Company, to unconditionally
bind Company in connection with the operations contemplated by
this Agreement, including, without limitation, the performance
of Company's duties and obligations under this Agreement;
provided, however, that no event of default under this
paragraph 13.1(xii) shall be deemed to have occurred if such
change of control occurs as a result of any assignment of this
Agreement made in accordance with all the terms and conditions
contained in paragraph 23.4 hereof.
13.2. If any Event of Default shall occur, RLHC, Polo or PRLC, or
any of them, shall have the right, exercisable in its discretion,
immediately to terminate this Agreement and the sublicense upon ten (10)
days written notice to Company of its intention to do so, and upon the
expiration of such ten (10) day period, this Agreement and the sublicense,
including, without limitation, all rights of Company in and to the Licensed
Mark, and in and to the designs furnished or used hereunder and all
copyrights therein and design patents thereon, shall terminate and come to
an end without prejudice to any remedy of RLHC for the recovery of any
monies (including attorneys' fees for collection) then due it under this
Agreement or in respect of any antecedent breach of this Agreement, and
without prejudice to any other right of RLHC, including without limitation,
damages for breach to the extent that the same may be recoverable. 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 Company's assets or business shall have
any right to continue the performance of this Agreement.
13.3. During the term of this Agreement, Company shall not dissolve,
liquidate or wind-up its business. In addition, Company shall not, without
prior written notice to RLHC, (i) merge or consolidate with or into any
other corporation, or (ii) directly or indirectly sell or otherwise dispose
of all or a substantial portion of its business or assets. RLHC shall have
the option, upon receipt of such notice, to terminate this Agreement unless
the same persons who shall have been working for Company with respect to
RLHC and the Licensed Products shall continue to perform such services after
either event (i) or (ii).
14. Disposal of Stock upon Termination or Expiration.
14.1. 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 14.2 hereof, Company shall furnish to RLHC a certificate
of Company listing its inventories of Licensed Products (which defined term
for purposes of this paragraph 14.1 shall include all materials, trim and
packaging which are used in the manufacture and marketing of Licensed
Products) on hand or in process wherever situated. RLHC shall have the
right to conduct a physical inventory of Licensed Products in Company's
possession or under Company's control. RLHC or RLHC's designee shall have
the option (but not the obligation) to purchase from Company all or any part
of Company's then existing inventory of Licensed Products upon the following
terms and conditions:
(i) RLHC shall notify Company of its or its designee's
intention to exercise the foregoing option within thirty
(30) 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 Company
or its affiliates on hand or in process shall be Company's standard
cost (the actual manufacturing cost) for each such Licensed Product.
The price for all other Licensed Products which are not manufactured
by Company or its affiliates shall be Company's landed costs therefor.
Landed costs for the purposes hereof means the F.O.B. price of the Licensed
Products together with customs, duties, brokerage, freight and insurance costs.
(iii) Company 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 RLHC or its designee shall be payable upon delivery thereof,
provided, that RLHC shall be entitled to deduct from such purchase price
any amounts owed it by Company (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 Company).
14.2. In the event RLHC chooses not to exercise the option referred
to in paragraph 14.1 hereof with respect to all or any portion of Licensed
Products, for a period of one hundred and twenty (120) days after
termination of this Agreement for any reason whatsoever, except on account
of breach of the provisions of paragraphs 3, 4 or 10 hereof, Company 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 Company
fully complies with the provisions of this Agreement, including specifically
those contained in paragraphs 3, 4 or 10 hereof in connection with such
disposal. Such sales shall be subject to the payment of earned royalties
pursuant to paragraph 10.2. Failure by Company to timely submit the
certificates of inventory as set forth in paragraph 14.1 hereof shall
deprive Company of its right of disposal of stock pursuant to this paragraph
14.
14.3. Notwithstanding anything to the contrary contained herein, in
the event that upon the expiration or termination of the term hereof for any
reason Company has not rendered to RLHC all accounting statements then due,
and paid (i) all royalties and other amounts then due to RLHC and (ii) all
amounts then due to any affiliate of or supplier to RLHC or its affiliates
(collectively, "Payments"), Company shall have no right whatsoever to
dispose of any inventory of Licensed Products in any manner. In addition,
if during any disposal period Company fails timely to render any accounting
statements or to make all Payments when due, Company's disposal rights
hereunder shall immediately terminate without notice, unless all accounting
statements are rendered and Payments made within three (3) days after
written notice.
14.4. In the event no Event of Default has occurred and not been
cured pursuant to paragraph 13.1 and RLHC elects not to renew the term of
this Agreement upon its expiration, RLHC shall endeavor to give Company
notice of such election not less than one hundred and eighty (180) days
prior to the expiration of the term. Company's sole remedy in the event
RLHC gives such notice of election less than one hundred and eighty (180)
days prior to the expiration of the term shall be to extend the disposal
period provided for in paragraph 14.2 by the number of days by which such
notice of election was late, up to a maximum extension of one hundred and
eighty (180) days.
15. Effect of Termination.
15.1. Except for the sublicense to use the Licensed Mark and the
designs furnished hereunder only as specifically provided in this Agreement,
Company shall have no right, title or interest in or to the Licensed Mark,
the designs furnished hereunder and design patents thereon, and all
copyrights licensed hereby. Upon and after the termination of this
sublicense, all rights granted to Company hereunder, including without
limitation all right, title and interest in or with respect to all designs,
art works, sketches and other materials depicting or relating to the
Licensed Products, together with any interest in and to the Licensed Mark
Company may acquire, shall forthwith automatically and without further
action or instrument be assigned to and revert to Polo, PRLC and RLHC, as
their interests may appear. Company will execute any instruments requested
by RLHC to accomplish or confirm the foregoing. Any such assignment,
transfer or conveyance shall be without consideration other than the mutual
agreements contained herein. RLHC shall thereafter be free to license to
others the use of the Licensed Mark in connection with the manufacture and
sale of the Licensed Products covered hereby, and Company will, except as
specifically provided in paragraph 14 hereof, (i) refrain from any further
use of the Licensed Mark or any reference to it, direct or indirect, or
anything deemed by RLHC or Polo to be similar to the Licensed Mark, (ii)
refrain from further use of any of the Design Concepts, and (iii) refrain
from manufacturing, selling or distributing any products (whether or not
they bear the Licensed Mark) which are confusingly similar to, or derived
from, the Licensed Products or Design Concepts, in connection with the
manufacture, sale or distribution of Company's products. Upon termination
of this Agreement, Company shall forthwith cease the use of the words "Ralph
Lauren" and/or the Polo Player Design in any and all respects. It is
expressly understood that under no circumstances shall Company be entitled,
directly or indirectly, to any form of compensation or indemnity from RLHC,
Ralph Lauren, Polo, PRLC 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, Company hereby waives any claim which
it has or which it may have in the future against RLHC, Polo, PRLC, Ralph
Lauren or their affiliates, arising from any alleged goodwill created by
Company for the benefit of any or all of the said parties or from the
alleged creation or increase of a market for Licensed Products.
15.2. Notwithstanding any termination or expiration of this
Agreement (whether by reason of the expiration of the stated term of this
Agreement, by earlier termination of this Agreement pursuant to paragraph
13 hereof, or otherwise) (a) RLHC shall have and hereby reserves all rights
and remedies which it may have, at law or in equity, with respect to the
collection of royalties or other funds payable by Company pursuant to this
Agreement and the enforcement of all rights relating to the establishment,
maintenance or protection of the Licensed Mark and the designs furnished
hereunder, and (b) Company and RLHC shall continue to have rights and
remedies with respect to damages for breach of this Agreement on the part
of the other.
16. Remedies.
Company acknowledges and admits that there would be no adequate
remedy at law for its failure (except as otherwise provided in paragraph 14
hereof) to cease the use of the Licensed Mark, or the designs, or the
manufacture and sale of the Licensed Products covered by this Agreement at
the termination or expiration hereof, and Company agrees that in the event
of such failure RLHC, Polo and PRLC, or any of them, shall be entitled to
equitable relief by way of temporary and permanent injunction and such other
and further relief as any court with jurisdiction may deem just and proper.
Such relief shall be in addition to and not in substitution of any other
remedies available to RLHC, Polo and PRLC, or any of them, pursuant to this
Agreement or otherwise.
17. Key Personnel.
Company shall at all times during the term hereof employ a vice
president reasonably satisfactory to RLHC whose sole material responsibility
shall be to oversee the entire business contemplated by this Agreement.
Company shall also employ at all times during the term hereof a business
manager for the bedding business contemplated herein reasonably satisfactory
to RLHC. In addition, Company shall consult in good faith with RLHC
regarding the establishment and filling of key positions with respect to all
aspects of the business contemplated herein.
18. Indemnity.
18.1. RLHC shall indemnify and hold harmless Company 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 Company 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
Agreement, of the Licensed Mark or the designs furnished to Company by RLHC
or PRLC, to the extent that such liability arises through infringement of
another's design patent, trademark, copyright or other proprietary rights;
provided that Company gives RLHC prompt notice of, and full cooperation in
the defense against, such claim. If any action or proceeding shall be
brought or asserted against Company in respect of which indemnity may be
sought from RLHC under this paragraph 18.1, Company shall promptly notify
RLHC thereof in writing, and RLHC shall assume and direct the defense
thereof. Company may thereafter, at its own expense, be represented by its
own counsel in such action or proceeding.
18.2. To the extent not inconsistent with paragraph 18.1 hereof,
Company shall indemnify and save and hold RLHC, Polo, PRLC and Ralph Lauren,
individually, (together, the ?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 Company or any of its servants, agents or employees in
connection with Company's performance of this Agreement, including Company's
use of Company's own designs, in connection with Licensed Products
manufactured by or on behalf of Company or otherwise in connection with
Company's business.
18.3. Company 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 $150,000.
Company shall, promptly after the signing of this Agreement, deliver to RLHC
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 the Indemnified Parties.
19. Disclosure.
RLHC and Company, and their affiliates, employees, attorneys and
accountants, 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. Company shall take all reasonable
precautions to protect the secrecy of the designs, art work, sketches and
other materials used pursuant to this Agreement prior to the commercial
distribution or the showing of samples for sale, and shall not sell any
merchandise employing, or adapted from or resulting from the use of any such
designs, art work, sketches or other material, except under the Licensed
Marks. All press releases and other public announcements shall be subject
to the prior approval of RLHC. Every request for a statement, release or
other inquiry shall be sent in writing whenever practicable to the
advertising/publicity director of RLHC for handling.
20. Brokers.
Each of RLHC and Company hereby represents and warrants to the other
that it has not employed or dealt with any broker or finder in connection
with this Agreement or the transactions contemplated hereby, and agrees to
indemnify the other and hold it harmless from any and all liabilities
(including, without limitation, reasonable attorneys' fees and disbursements
paid or incurred in connection with any such liabilities) for any brokerage
commissions or finders' fees in connection with this Agreement or the
transactions contemplated hereby, insofar as such liabilities shall be based
on the arrangements or agreements made by it or on its behalf.
21. Manufacture; Distribution; Sale.
Consistent with the high quality and prestige of the Licensed Marks
and products manufactured by, or under license from, Polo and its
affiliates, Company undertakes, during the term hereof, diligently to
manufacture and sell each and every Licensed Product listed in Schedule A,
to use its commercially reasonable best efforts to create a demand therefor,
supply such demand, and maintain adequate arrangements and facilities for
the distribution of Licensed Products throughout the Territory. As an
essential part of its distribution program, Company agrees to maintain
adequate inventories (consistent with good industry practice) of all such
Licensed Products at a single distribution point to satisfy the requirements
of its customers for a full line of such Licensed Products and to expedite
the delivery thereof. Company represents, warrants and covenants that it
is or shall be, on or before December 31, 2000, "Y2K" compliant, and
acknowledges that any failure of its computer systems as a result of
Company's failure to be Y2K compliant would, if such failure results in a
material interruption or adverse impact on its ordinary business operations
relating to Licensed Products, constitute a violation of Company's
obligations hereunder.
22. Showroom; Samples.
22.1. Company shall maintain its showroom at 1271 Avenue of the
Americas to present Licensed Products. The showroom shall be updated by
Company at its expense each season during the term hereof for market week,
in accordance with plans approved by RLHC.
22.2. Company shall provide, at no charge, samples for the RLHC New
York showroom (as well as Company's showroom) and for advertising and
editorials relating to Licensed Products. All normal expenses with respect
to shipping shall be the responsibility of Company. All items will be
inventoried by RLHC (although RLHC shall not be responsible for ordinary
damage or loss of such samples) and, at RLHC's discretion, (i) held in
storage for future use, (ii) sold at sample sales (in which case no royalty
shall be payable by Company), or (iii) returned to Company at Company's
expense. In the event of sale at a sample sale, RLHC shall deduct from
total revenues from the sale of Licensed Products the costs of such sale,
and shall remit to Company, within forty-five (45) days thereof, fifty
percent (50%) of the remaining balance. In addition, Company shall supply
at its own expense, such samples as may be reasonably necessary for RLHC
salesmen.
23. Miscellaneous.
23.1. 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 and acknowledged, or (ii) five (5)
days after the same was sent, if sent by certified or registered mail, or
(iii) one (1) day after the same was sent, if sent by overnight courier
delivery or confirmed telecopier as follows:
(a) If to RLHC addressed as follows:
Ralph Lauren Home Collection, Inc.
103 Foulk Road
Suite 201
Wilmington, Delaware 19803
Attention: President
Telecopier: 302.778.1008
(b) With a copy to Polo and PRLC, addressed as follows:
Victor Cohen, Esq.
650 Madison Avenue
New York, New York 10022
Attention: Victor Cohen, Esq.
Telecopier: 212.318.7183
(c) If to Company, addressed as follows:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Mr. Kevin Finlay
Telecopier: 214.330.8901
with a copy to:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: General Counsel
Telecopier: 214.467.0823
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.
23.2. Nothing herein contained shall be construed to place Company,
RLHC, Polo and/or PRLC in the relationship of partners or joint venturers,
and neither Company, RLHC, Polo nor PRLC shall have the power to obligate
or bind any other party in any manner whatsoever, except as expressly
provided herein.
23.3. 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 either party hereto to enforce, or the delay by either party in
enforcing, any of its rights hereunder shall not be deemed a continuing
waiver, modification hereof, or a waiver of any other right or remedy
hereunder, and either party may, within the time provided by applicable law,
commence appropriate legal proceedings to enforce any and all 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. Either 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 such rights.
Except as provided herein, no person, firm or corporation, other than the
parties hereto, shall be deemed to have acquired any rights by reason of
anything contained in this Agreement.
23.4. Each of RLHC and PRLC may assign all or any portion of the
respective royalties payable to it hereunder, and may assign all of its
rights, duties and obligations hereunder to any entity to which the
Trademarks, or the right to use the Trademarks, has been transferred, or to
an affiliate of any such entity. The rights granted to Company are personal
in nature, and neither this Agreement nor the sublicense may be assigned by
Company without the prior written consent of RLHC, Polo and PRLC. Company
may employ subcontractors for the manufacture of the Licensed Products with
the prior approval of RLHC, provided, however, that (i) Company shall not
employ any subcontractor for the manufacture of Licensed Products until such
subcontractor has executed a Trademark and Design Protection Agreement
substantially in the form annexed hereto as Schedule B, (ii) Company shall
maintain appropriate quality controls and comply with the quality
requirements set forth herein, (iii) such subcontractors shall comply with
the Operating Guidelines annexed hereto as Schedule C and made a part
hereof, as such Operating Guidelines may be amended from time-to-time, (iv)
Company shall not itself sell or otherwise dispose of, and shall be
responsible for preventing all subcontractors from selling or otherwise
disposing of, any seconds, irregulars or rejected merchandise except with
RLHC's prior written consent, (v) Company shall, in seeking RLHC's approval,
give RLHC prior written notice of the full name and address of each
subcontractor it proposes to use in connection with the manufacture of
Licensed Products, together with a complete list of Licensed Products
(and/or components thereof) to be manufactured by such subcontractor, and
Company shall, upon RLHC's request no more than once annually (and in any
event upon the expiration or termination of the term hereof), provide RLHC
with a complete list of all such subcontractors containing all such
information); (vi) Company, upon request from RLHC, shall cease placing
orders with any such subcontractor; and (vii) Company shall give RLHC notice
as required herein, but RLHC?s prior approval shall not be required, with
respect to any subcontractor which, directly or indirectly, is wholly-owned
by Company.
23.5. This Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the parties hereto.
23.6. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the
operations of Company contemplated hereby, including, without limitation,
as they relate to the manufacture, distribution, sale or promotion of
Licensed Products, notwithstanding the fact that RLHC may have approved such
item or conduct.
23.7. This Agreement shall be construed in accordance with the laws
of the State of New York applicable to contracts made and performed therein
without regard to principles of conflict of laws.
23.8 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 23.1 hereof. Notwithstanding
anything to the contrary set forth herein, neither Polo Ralph Lauren
Corporation nor any other general or limited partner of Polo or PRLC shall
be liable for any claim based on, arising out of, or otherwise in respect
of, this Agreement, and Company shall not have nor claim to have any
recourse for any such claim against any general or limited partner of Polo
or PRLC.
23.9. This Agreement contains the entire and only agreement between
the parties hereto concerning the subject matter hereof, and any oral
statements or representations or prior written matter with respect thereto
not contained herein shall have no force and effect, with the express
exception of that certain letter agreement dated October 31, 1997 between
Company and RLHC, the provisions of which shall, as set forth in paragraph
2.11 hereof, continue to apply throughout the term. The provisions of this
Agreement 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 shall not in any manner affect such provision in this
Agreement in any other jurisdiction.
23.10. 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.
23.11. 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 on the day
and year first set forth above.
RALPH LAUREN HOME COLLECTION, INC. PILLOWTEX CORPORATION
By: [Signature Illegible] By: Kevin M. Finlay
POLO RALPH LAUREN CORPORATION
By: [Signature Illegible]
SCHEDULE A
"LICENSED PRODUCTS"
(pursuant to paragraph 1.1)
The following decorative accessories (excluding those matched to sheets
made under license from RLHC, Polo or Ralph Lauren, and excluding
children?s bedding):
(a) bed covers
(b) bed and throw blankets of jacquard and other materials
(c) duvet and comforter covers
(d) shams and bedskirts, European squares
(e) dust ruffles
(f) bed spreads
(g) comforters and blanket covers
(h) down comforters
(i) decorative and bed pillows
(j) quilts;
(k) night spreads
(l) curtains, valances and draperies that coordinate with other
Licensed Products manufactured by Company
(m) shower curtains that coordinate with other Licensed Products
manufactured by Company
(n) bed pillows
(o) mattress pads
(p) bath rugs up to 30" X 60" in size and small accent rugs;
provided, however, that Company?s rights with respect to
small accent rugs shall be non-exclusive and may be
terminated by RLHC upon ninety (90) days notice, it being
understood that any such termination shall not prohibit
Company from fulfilling orders for approved Licensed Products
Company had taken, in accordance with the terms of this
Agreement, prior to receiving notice of termination.
Schedule B
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 Ralph Lauren Home Collection, Inc. 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,
Ralph Lauren Home Collection, Inc.
By: ___________________________
We have read and accept and agree to the above in consideration of orders
from Ralph Lauren Home Collection, Inc.
CONTRACTOR NAME: __________________________
By: (1) ____________________ and (2) ________________________
Name: Name:
Date: ________________
Schedule C
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.