EXHIBIT 10.25
PORTIONS OF THIS EXHIBIT MARKED BY *** HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT AND AGREEMENT
-----------------------
This Amendment and Agreement ("Agreement") is made and entered
into as of June 5, 2003 (the "Execution Date"), by and among Calvin Klein, Inc.,
a New York corporation with a principal place of business at 205 West 39th
Street, New York, New York 10018 ("CKI"), Phillips-Van Heusen Corporation, a
Delaware corporation with a principal place of business at 200 Madison Avenue,
New York, New York 10016 ("PVH"), Warnaco Inc., a Delaware corporation with a
principal place of business at 90 Park Avenue, New York, New York 10016
("Warnaco"), Calvin Klein Jeanswear Company, a Delaware corporation with a
principal place of business at 1385 Broadway, Suite #305, New York, New York
10018 ("CKJ"), and CKJ Holdings Inc., a Delaware corporation with a principal
place of business at 1385 Broadway, New York, New York 10018 ("CKJHI").
RECITALS
--------
WHEREAS, CKI and CKJ are parties to a certain License
Agreement dated August 4, 1994, as amended by the Settlement Agreement dated
January 22, 2001, among Warnaco, CKI and other parties (the "Settlement
Agreement"), letter agreements and other agreements (collectively referred to
herein as the "Jeanswear License").
WHEREAS, Warnaco and CKI are also parties to a certain
Administration Agreement, Trust Agreement and Quality Assurance Agreement, each
dated March 14, 1994, as amended (collectively the "Underwear Agreements"), and
a
certain Men's Accessories License Agreement, dated March 14, 1994, as amended
(the "Accessories License").
WHEREAS, the parties have conferred and wish to make certain
modifications to the terms and conditions of the Jeanswear License and the
Administration Agreement and the Accessories License all to and for their mutual
benefit; and they hereby memorialize and confirm the terms and conditions of
such agreement by entering into and executing this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and described herein, the parties agree as set forth below. All
references to "Licensor", "Licensee", "Articles" and "Warnaco Products" and
other capitalized terms not otherwise amended, modified or defined herein shall
be deemed to have the same meaning ascribed to them under the Jeanswear License
and the Underwear Agreements.
I. The Parties hereby amend the Jeanswear License, as follows:
1. Definitions
(a) The definition of "Close-Out Articles", as set forth in the
Jeanswear License is deleted in its entirety and the following
definition substituted in its place, in each case, effective as
of January 1, 2004:
"Effective as of the Annual Period commencing on January 1, 2004
and for all Annual Periods thereafter, "Close-Out Articles" shall
mean all Articles sold by Licensee to that certain channel of
distribution regularly dealing in the sale of off-price products,
including by way of illustration, TJ Maxx, Marshall's and Ross
Stores and other like stores but not including warehouse clubs.
Close-Out Articles shall not include sales of Articles to retail
outlet stores owned or operated by or under the direction or
control of Licensor or any of its Affiliates unless otherwise
agreed by Licensor and Licensee, in which event such sales shall
qualify for the reduced Percentage Fee applicable to Net Sales of
Close-Out Articles."
2
2. Exhibit B
Exhibit B ("Products"), to the Jeanswear License is hereby deleted in
its entirety and the new Exhibit B annexed hereto and made a part
hereof shall be substituted in its place. All references to Exhibit B
in the Jeanswear License, as amended hereby, shall be deemed to refer
to Exhibit B annexed hereto.
3. Licensor's Retention of Rights
Section 1.2(a) of the Jeanswear License is hereby amended to delete
items (iii) and (iv); and to delete the last full sentence of Section
1.2(b). The following paragraph shall be added as a new Section
1.2(c):
"(c) Licensee understands, acknowledges and agrees that nothing herein
is intended to or shall be construed as preventing or limiting
Licensor's ability itself or through others to manufacture,
market, advertise, distribute or sell sportswear or other lines
of apparel at any price (excluding only five pocket jeans in any
fabric, or apparel in denim, in each case of a jeans-type
construction that is constructed with welt seamed double needle
stitching) in accordance with the terms and conditions set forth
herein under any trademarks other than (i) "CALVIN KLEIN JEANS",
(ii) "CK/Calvin Klein Jeans", or (iii) any trademark
incorporating the name and mark "Calvin Klein" (including any
abbreviation or derivation thereof) together with the words
"jeans", "jeanswear" or any other words or symbols evocative of
or identified only with a jeanswear collection (e.g., "Calvin
Klein Denim"). Licensee further understands, acknowledges and
agrees that products so manufactured, marketed, distributed,
advertised and sold by or on behalf of Licensor or others
authorized by Licensor may be the same as, substantially similar
to or somewhat similar to Products produced herein and such shall
not in any way constitute a breach or default of the Jeanswear
License, provided such sportswear or other apparel is not
marketed, advertised or sold as jeanswear. In addition,
notwithstanding anything to the contrary contained herein,
nothing herein shall limit Licensor's ability to sell within
Licensor's designer collection stores (e.g., currently Licensor's
Madison Avenue and Dallas stores) in the Territory jeans and
jeanswear produced by Licensor's jeanswear licensees for Europe
and Asia or other sources if with respect to any proposed order
for Product for said stores, Licensee is unable or unwilling to
provide all such Products as specified in good faith by Licensor,
in terms of breadth of selection, nature, quantity,
specifications, timing/delivery requirements and/or price.
Licensor and Licensee will negotiate in good faith the terms of
any such proposed order of Licensor. If Licensor and Licensee
cannot reach an agreement on
3
such terms within five business days of Licensee's receipt of the
proposed order, Licensor will be free to outsource any portion of
such order on which the parties have not reached agreement with
no further obligation to Licensee."
4. "Khakis" and "Khaki Articles"
"Khaki" and "Khaki Articles" as described in the Jeanswear Agreement
shall be deleted from the definition of Articles and all rights
thereto shall revert to CKI. Warnaco's continuing right to produce any
"khaki" or "khaki related item" under the Jeanswear License shall only
be as allowed pursuant to Exhibit B. All references to "Khaki" or
"Khaki Articles" throughout the Agreement, including, without
limitation references to the use of any trademark containing the word
"Khaki", shall hereby be deleted.
5. Close-Outs
Section 7.1 of the Jeanswear License is hereby amended effective as of
and for the Annual Period commencing January 1, 2004 and for all
Annual Periods thereafter to provide that the reduced Percentage Fee
shall be applicable to Gross Sales of Close-Out Articles up to *** of
Licensee's total Gross Sales of Articles in any Annual Period.
Percentage Fees payable on Gross Sales by Licensee of Close-Out
Articles in excess of *** of Licensee's total Gross Sales in any
Agreement Year shall be computed and paid at the rate of *** of Gross
Sales as to such incremental amounts for the first Annual Period in
which Licensee's total Gross Sales of Close-Out Articles exceed ***,
and increasing thereafter by *** for each consecutive subsequent
Agreement Year in which Licensee's total Gross Sales of Close-Out
Articles exceed ***. Solely for the purpose of calculating Licensee's
total Gross Sales of Articles for determining the Percentage Fee on
Close-Out Articles, Licensee shall exclude from total Gross Sales ***.
Licensee's sales of Close-Out Articles in excess of *** of Gross Sales
in any Annual Period shall not give rise to any right of Licensor to
terminate the Jeanswear License, in whole or in part, but shall cause
Licensor and Licensee to confer in good faith to adopt a corrective
plan to address design, marketing and/or other issues contributing to
the generation of Close-Out Articles.
6. Central and South America
(a) The parties agree to amend the Jeanswear License with respect to
the manufacture, distribution and sale of Articles in Central and
South America (the "C/SA Amendment") to provide that the parties
shall negotiate in good faith a store license (the "C/SA Store
License") which shall permit Licensee to own or operate, directly
or indirectly, and to authorize others to operate, free
4
standing regular priced retail stores located anywhere in Central
and South America, at sites mutually agreed upon by Licensor and
Licensee, identified by one of the Licensed Marks in its Form and
dedicated exclusively to, the sale of Articles, Warnaco Products
and Swimwear Licensed Products (as hereinafter defined), together
with any other products authorized by Licensor, substantially in
accordance with the terms and conditions of CKI's and PVH's
standard retail store licensing provisions subject to the terms
expressly set forth in this Section 1.6. The C/SA Amendment shall
provide in lieu of Percentage Fees on Net Sales of Articles to
such stores, Licensee shall pay Licensor "Percentage Fees" at a
rate of *** of the "Net Sales" (as defined in the C/SA Store
License) at retail by such free standing retail stores as long as
the C/SA Store License is in effect.
(b) The C/SA Amendment and the C/SA Store License shall also provide
that in the event Licensee sublicenses all or any part of the
Central and South American Territory under the C/SA Amendment or
under the C/SA Stare License, the parties shall share all fees
and proceeds paid to Licensee thereunder and in connection
therewith as provided in Section 14.2 of the Jeanswear License;
provided, however, that in the case of any sublicensing of the
C/SA Store License, the Percentage Fee payable to Licensor shall
be no less than *** of "Net Sales" at retail of any such
sublicensee. Licensee agrees to use all commercially reasonable
efforts to obtain the maximum signing fee possible in connection
with any sublicense arrangement it proposes to enter into. This
Agreement provides and the C/SA Amendment shall provide (i)
confirmation that Licensor has granted a waiver of the minimum
aggregate Net Sales requirements for calendar years 2002, 2003,
2004 and 2005 and (ii) for the following minimum aggregate Net
Sales (each, the "Net Sales Threshold Amount") for the indicated
Annual Period:
2006: *** in South America and *** in Central America.
2007 and all Annual Periods thereafter: *** in South America and
*** in Central America.
All minimum aggregate Net Sales for Central and South America
shall be adjusted by COLA (as per the Exhibit hereto entitled
COLA Adjustment) beginning with the Annual Period commencing on
January 1, 2008 and for all Annual Periods thereafter. From and
after the Annual Period commencing on January 1, 2006, in the
event Licensee fails to have aggregate Net Sales of at least the
applicable Net Sales Threshold Amount in either South America or
in Central America, then Licensee shall timely pay Licensor in
accordance with the terms of Section 1.4 of
5
the Jeanswear License, an amount equal to the Percentage Fee
payable with respect to any shortfall between the actual
aggregate Net Sales and the applicable minimum aggregate Net
Sales Threshold Amount; provided, however, that Licensor shall
still have the right to cause reversion of the grant of the
license for the applicable Territory in accordance with the
timetable set forth in Section 1.4 of the Jeanswear License,
except that for the Annual Periods commencing January 1, 2006,
January 1, 2007 and January 1, 2008, Licensee may avoid a
reversion by so timely paying the shortfall.
7. Design and Approvals
(a) Notwithstanding anything to the contrary in the Jeanswear
License, including but not limited to all portions (including
subsections) of Sections 3 (Design) and 4 (Quality) of the
Jeanswear License, effective as of the Spring 2004 Collection,
the design and approval processes shall be governed by the
criteria and procedures annexed hereto in the Exhibit entitled
"Design Process and Procedures" which shall be applicable to all
Articles.
8. Sale of Articles to Warehouse Clubs
(a) The provisions of the Jeanswear License set forth in Sections
2(a) and 2(b) of the Settlement Agreement are hereby deleted and
the following substituted in their place as an amendment to the
Jeanswear License:
"Effective as of and for the Annual Period commencing x January
1, 2004 and for all Annual Periods thereafter, Licensee will
limit its total annual Gross Sales of Articles to warehouse clubs
in any Annual Period so that the percentage of such sales does
not exceed (in the aggregate) *** of Gross Sales of Articles
excluding all sales to Licensor's, its Affiliates or its
designees outlet stores for that Annual Period. ***. Without the
prior written approval of Licensor, Licensee shall not sell
Articles to mass merchandisers (defined as, for example, Kmart,
WalMart and Target), ***.
9. Supply to Licensor's Stores
Licensor operates, and Licensor, its Affiliates or designees will
hereafter operate, retail outlet stores ("Licensor's Outlet
Stores") and regular priced retail stores ("Licensor's Regular
Priced Stores") engaged in the sale of apparel and related goods
and accessories, as well as other products, bearing the CALVIN
KLEIN marks (or other derivative or formative) marks. The parties
hereto amend Section 3.3 of the Administration Agreement and
Section 3.7 of the Jeanswear License by deleting the third
6
sentence of Section 3.3 and by deleting the third through last
sentence of Section 3.7, and agree to undertake in the Swimwear
License (as defined below) as follows:
Licensee agrees that it will supply and sell Articles, Warnaco
Products and Swimwear Licensed Products (as defined below) at (i)
*** off Licensee's regular wholesale prices for Articles, Warnaco
Products or Swimwear Licensed Products *** for all of Licensor's
Outlet Stores ***, and (ii) *** off Licensee's regular wholesale
prices for such items to supply Licensor's Regular Priced Stores
***. Licensee shall fulfill all orders from Licensor in good
faith within negotiated windows or Licensor shall have a
cancellation right provided that in lieu thereof, Licensee may
offer and Licensor may, at its option, accept certain discounts
and/or allowances to be negotiated. Subject to the last full
sentence of this paragraph with respect to fashion Articles,
fashion Warnaco Products and fashion Swimwear Licensed Products,
Licensee shall treat Licensor generally as well as any and all
other customers to which Licensee sells any Articles, Warnaco
Products and/or Swimwear Licensed Products as to delivery and
fulfillment. Licensee's obligation to supply and sell such
products to Licensor is subject only to Licensor's placement of
orders within customary lead times and the absence of any
continuing force majeure event. If (i) Licensee cannot sell or
supply any Articles and/or Warnaco Products, due to a continuing
force majeure event or other event outside of Licensee's
reasonable control (i.e., more than thirty calendar days) or (ii)
Licensee fails to timely deliver for four consecutive quarters a
significant portion of the products so ordered, then during the
pendancy of such force majeure event or after such failures to
deliver, Licensor shall have the right, to manufacture, or have
manufactured for it by others, and to sell, distribute and
promote Articles and Warnaco Products through Licensor's Outlet
Stores as to "(i)" to the extent Licensee does not or cannot
timely supply the same, it being acknowledged that such right is
limited to the duration of the period of such force majeure event
(or other event outside of Licensee's reasonable control) and the
satisfaction of orders placed by Licensor during any such period;
***. Licensee shall supply such Articles, Warnaco Products and
Swimwear Licensed Products on open account; provided, however,
that in the event Licensor fails to timely pay Licensee for
Articles, Warnaco Products or Swimwear Licensed Products in
accordance with the terms set forth below (except in connection
with a bona fide dispute), then upon five (5) business days
written notice unless paid within said five (5) day period,
Licensee shall be permitted to offset any unpaid amounts against
other payments due to Licensor under the applicable agreement
(e.g., Percentage fees payable to Licensor under the Jeanswear
License with respect to sales to outlet stores of jeanswear
products, the fees payable to Licensor under the Administration
Agreement with respect to sales to outlet stores of Warnaco
Products, etc.). Licensor shall have a reciprocal right to offset
unpaid amounts against other payments due to Licensee and its
Affiliates. Licensor shall
7
pay Licensee for such Articles, Warnaco Products and Swimwear
Licensed Products on net thirty (30) day ROG terms. Licensor
agrees that commencing with the Annual Period beginning on
January 1, 2005 it shall cause the composition or mix of products
in the Licensor Outlet Stores not to be comprised of more than
*** Articles and *** Warnaco Products (underwear) sold by
Licensee on an Annual Period basis. Licensee shall be obligated
to sell such Articles, Warnaco Products and Swimwear Licensed
Products only to or for resale in those Licensor's Outlet Stores
located in outlet shopping centers which also contain stores
bearing the marks of and selling products associated with at
least two of those specified competitors identified in the
Exhibit annexed hereto entitled Specified Competitors. Licensee
shall not be obligated to supply fashion Articles, fashion
Warnaco Products or fashion Swimwear Licensed products until
eight (8) weeks after Warnaco first commences shipping such
Articles, Warnaco Products or Swimwear Licensed Products.
The sale of Articles, Warnaco Products and Swimwear Licensed
Products to the Licensor and its Affiliates for resale through
the Licensor's Outlet Stores shall not give rise to any
obligation on Licensee's part to pay Percentage Fees or Minimum
Advertising Expenditures under the Jeanswear License or the
Swimwear License or Administration Fees or Advertising under the
Underwear Agreements. However, all sales of Articles to Licensor
shall be counted in calculating Minimum Net Sales amounts under
the Jeanswear License.
The parties further agree to delete the rights of "first refusal"
with respect to Close-Out Articles set forth in Section 3.7 of
the Jeanswear License.
10. Approval by Licensor of Jeanswear Sub-license for Kids
Licensee has proposed that it sub-license to Happy Kids Inc. the
rights, benefits and obligations relating to the manufacture,
sourcing, distribution, advertising and sale of Articles for
children under the Jeanswear License; and Licensee has provided
the proposed sublicense (the "Sub-license") to Licensor for its
approval under the Jeanswear License. Licensor hereby confirms
that it approves the Sub-license as amended to reflect Licensor's
proposed modifications and will deliver to Licensee all written
acknowledgements and consents as Licensor and Licensee shall deem
reasonably necessary.
11. Swimwear License Agreement
Licensor and Licensee agree to negotiate in good faith, and to
conclude and execute a mutually agreed upon license agreement
(the "Swimwear License") on terms substantially similar to CKI's
and/or PVH's standard terms (subject to the terms expressly set
forth in this Section 1.11), pursuant to which Licensor will
grant to Licensee or a designated affiliate
8
of Licensee (with a guarantee from Warnaco) the exclusive right
to manufacture, source, advertise, distribute, promote and sell
under the CK/CALVIN KLEIN name and mark (or such other "CALVIN
KLEIN" derivative mark as Licensor designates to replace the
same) women's and juniors swimsuits together with, on a
nonexclusive basis, such swimsuit cover-ups, such as pareos or
wrap skirts, shorts and pants with elasticized waistbands and
tops designed specifically to be worn with the swimsuits as
seasonally approved in writing by Licensor for inclusion in the
swimwear collection ("Swimwear Licensed Products") for sale to
swimwear specialty retailers or swimwear departments and/or
swimwear buyers of Licensee's accounts) throughout the world as
of January 1, 2004, and under the "CALVIN KLEIN" name and mark
(or such other "CALVIN KLEIN" derivative mark as Licensor
designates to replace the same) as to "Europe" only as of January
1, 2004 and as to the rest of the world as and when the CALVIN
KLEIN name and mark is made available to Licensee upon expiration
or early termination of Licensor's existing third party license
agreement. The Swimwear License will reflect that in certain
instances, Licensee may in the ordinary course of business and
without reference to the Swimwear Licensed Products, produce
certain basic swimwear products substantially similar to the
Swimwear Licensed Products under its own labels or those of
others. The Swimwear License shall provide for a percentage fee
on Net Sales equal to ***. The Swimwear License will also provide
that when Licensee assumes responsibility for "CALVIN KLEIN"
Swimwear Licensed Products other than in Europe, Licensee will
manufacture to Licensor's order and specifications for sale at
Licensor's Regular Priced Stores and Licensor's Outlet Stores,
"CALVIN KLEIN" premium quality swimsuits with a manufacturer's
suggested retail price of $150 or more; shall require an annual
minimum advertising expenditure to be paid by Licensee to
Licensor equal to 3% of Net Sales for spending by Licensor, in
its discretion, on advertising and promotion including the
Swimwear Licensed Products (which may or may not include other
products); and shall require Minimum Guaranteed Royalties for
each Annual Period as reflected in the approved Business Plan
annexed hereto; and shall require that all media and public
relations events and activities shall be only as approved by
Licensor and conducted through and, at Licensor's discretion,
overseen by Licensor's advertising division, at fees commensurate
with those being charged by Licensor to its other licensees for
the same or similar services. The Swimwear License shall have an
initial term of five years and one five year renewal term. The
Swimwear License shall provide that Licensee shall have the
right, provided that the Licensee is not then in default of any
of the material provisions of the Swimwear License and has
achieved Net Sales of Swimwear Licensed Products of *** in North
America and the Caribbean and *** in the rest of the world in
calendar year 2007, to extend the Swimwear License for the
five-year renewal period. The Swimwear License shall further
provide that Licensor
9
and Licensee shall meet after the 2006 calendar year to negotiate
in good faith, and agree by March 31, 2007, to minimum Net Sales
and minimum guaranteed fee requirements for each trademark in
each territory (North/South/Central America; Europe; Asia)
covered under the Swimwear License for each year during the
renewal period based on Licensee's actual sales during calendar
year 2006 and projected growth, which shall in no event be less
than the aggregate Net Sales thresholds referenced above. In the
event Licensor determines to market girl's swimwear, Licensee
shall be granted the first right and opportunity to negotiate an
expansion of the Swimwear License to include girl's swimwear. The
Swimwear License shall also provide for inclusion of the mark
"CK" within the definition of Licensed Marks if Licensor decides
to produce a separate swimsuit line under such mark upon
submission to and approval of an acceptable business plan and
agreement as to terms (e.g., minimum guaranteed fees, net sales
thresholds). ***.
12. Men's Accessories
Notwithstanding the express terms and conditions of the
Accessories License, Licensor and Licensee hereby agree that
Licensor has reserved the right to use the Licensed Mark (as
defined in the Accessories License) in connection with the sale,
distribution and promotion of the Licensed
10
Products (as defined in the Accessories License) in Licensor
Outlet Stores and, in connection therewith, to manufacture
Licensed Products (as defined in the Accessories License) or
purchase Licensed Products (as defined in the Accessories
License) from any supplier it chooses.
13. No Other Modification to Any Other Agreement
(a) Except as specifically and expressly set forth herein, nothing
herein shall be construed, in any way to modify or amend, the
Jeanswear License and Underwear Agreements, the Accessories
License or any other agreement between the parties hereto.
(b) Except as specifically and expressly set forth herein, all other
terms and conditions of the Jeanswear License, the Underwear
Agreements and the Accessories License, shall remain in full
force and effect.
II. Arbitration. Except as specifically provided in the Underwear Agreements,
all disputes among the parties hereto, including all those arising under
this Agreement, and all disputes arising under the terms of any of the
licenses between the parties, shall be resolved through binding arbitration
pursuant to the rules of the International Chamber of Commerce before a
panel of three arbitrators, one of whom shall be appointed by CKI, one of
whom shall be appointed by Warnaco or CKJ, as applicable, and the third of
whom shall be appointed by the other two.
III. Releases. All the parties hereto each and all hereby release and discharge
the other, and the other's parents, subsidiaries and affiliates, and their
respective members, shareholders, officers, directors, employees, agents,
licensors, licensees, customers, predecessors, successors and assigns, and
all those in privity with any one or more of them from all claims, actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims,
costs (including reasonable attorneys fees), and demands whatsoever, in law
or in equity, which any party hereto ever had against the other, now has or
hereafter can, shall or may have, for, upon, or by reason of any matter,
cause or thing whatsoever relating to the Jeanswear License, the Underwear
Agreements or the Accessories License from the beginning of the world to
the day and execution and exchange of this Agreement, with the exception
of: (i) claims arising from any breach of this Agreement from and after the
Execution Date; (ii) monetary claims (but not termination provided each
such monetary claim is promptly resolved to Licensor's reasonable
satisfaction, with each party acting in good faith to resolve fairly and
quickly) for nonpayment or underpayment of Percentage Fees or other amounts
due under the Jeanswear License, the Underwear Agreements or the
Accessories License for periods from and after February 12, 2003, and (iii)
claims for indemnification under the Jeanswear License, the Underwear
Agreements or the Accessories License.
11
IV. Entire Agreement. This Agreement constitutes the entire agreement by and
among the parties relating to the subject matter hereof, and except as
specifically described and set forth herein, supersedes all prior
negotiations, discussions, proposals, representations, or otherwise
relating to the matters addressed herein. This Agreement shall not be
amended, altered, supplemented, modified, superseded, terminated, or
otherwise changed, and no provision may be waived, unless in writing
executed by the parties to such further amendment and expressly stating
that it is an amendment, alteration, supplement, modification, termination
or waiver of specific provisions of this Agreement.
V. Binding Effect. This Agreement shall be binding upon the parties, their
successors and assigns, parents, subsidiaries, affiliated companies, and
all of their officers, agents, servants and employees.
VI. Equal Participation. This Agreement was drafted with full and equal
participation from the parties, and no provision herein may be construed
against or in favor of any party because of the relevant bargaining
positions, strengths or sophistication thereof or because it drafted any
such provision.
VII. Notices. All notices, requests, consents, demands, approvals and other
communications, including the service of process, hereunder shall be deemed
to have been duly given, made or served if in writing and delivered
personally or sent by overnight carrier that requires the addressee to
acknowledge receipt thereof to the respective parties to this Agreement as
set forth below or as later amended in writing. Informal communications
between the parties may be properly transmitted by facsimile.
(a) If to CKI or PVH:
Calvin Klein, Inc.
205 West 39th Street
New York, New York 10018
Attn: Tom Murry, President
Fax No.: (212) 292-9933
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016
Attn: Mark Weber, President
Fax No.: (212) 381-3970
with a copy to:
Calvin Klein, Inc.
205 W. 39th Street
New York, New York 10018
Attn: General Counsel
Fax No.: (212) 764-6784
12
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016
Attn: General Counsel
Fax No.: (212) 381-3970
and:
(b) If to Warnaco, CKJ or CKJHI:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attn: General Counsel
Fax No.: (212) 503-8536
Calvin Klein Jeanswear Corporation
90 Park Avenue
New York, New York 10016
Attn: President
Fax No.: (212) 503-8536
VIII. Enforceability of a Term. If any term or provision of this Agreement is
held invalid or unenforceable by a court or tribunal of competent
jurisdiction, such invalidity shall not affect the validity or operation
of any other term or provision and any such invalid term or provision
shall be modified to the extent necessary to make it valid and/or
enforceable or severed from this Agreement if such modification is not
possible.
IX. Execution. This Agreement may be executed in counterparts and signatures
hereon may be exchanged and transmitted by facsimile transmission, which
counterparts and signatures shall, as between the parties, be deemed to be
originals constituting a single agreement and shall be deemed valid and
binding.
X. No Third Party Beneficiaries. Except as specifically set forth and
identified herein and in the Jeanswear License and Underwear Agreements,
there are no third party beneficiaries to this Agreement.
XI. Singular and Plural Forms. The meaning assigned to each term defined
herein shall be equally applicable to both the singular and the plural
forms of such term. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.
XII. Rights and Remedies. All rights and remedies that either party may have
hereunder or by operation of law are cumulative and the pursuit of one
right or remedy will not be deemed an election to waive or renounce any
other right or remedy.
13
XIII. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
principles of conflicts of law.
XIV. Confidentiality. The terms of this Agreement are and shall be kept
confidential. No party hereto shall make any press release or any other
disclosure of this Agreement and the terms hereof, except that each party
may disclose the same to such of its officers, directors, employees,
representatives, agents and contractors that need to know the same in
connection with such party's performance of this Agreement or of any of
the Jeanswear License, Underwear Agreements, Accessories License (or the
contemplated Swimwear License Agreement or the C/SA Store License). The
persons to whom information is disclosed shall be informed of the
confidential nature of the information prior to disclosure and must agree
to maintain its confidentiality. If any party, or any officer, director,
employee, representative, agent or contractor to whom a party discloses
information in accordance with this Section XIV becomes legally compelled
(including by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose any information
regarding this Agreement, the party under compulsion will provide the
other parties with prompt written notice of such requirement so that any
of the other parties may seek a protective order or other appropriate
remedy. If such protective order or other remedy is not obtained, the
disclosing party shall disclose (or cause its applicable director,
officer, employee, representative or agent to disclose) only the specific
information that the disclosing party is advised by counsel is legally
required or compelled to be disclosed, and the disclosing party agrees to
take all reasonable steps to preserve the confidentiality of the
information disclosed, including by obtaining an appropriate protective
order or other reliable assurance that confidential treatment will be
accorded to the information so disclosed. If a party determines it is
legally necessary to make any public disclosure regarding this Agreement
through a press release, or other means, the parties shall discuss the
press release or other public disclosure in good faith, and the party who
has determined that such disclosure is necessary to comply with applicable
law or regulation, including applicable stock exchange regulations, shall
incorporate in its public disclosure all comments reasonably requested by
the other parties. Nothing herein shall been deemed to limit the
confidentiality obligation of the parties under the Jeanswear License. The
parties agree that a breach of this Section XIV or the other
confidentiality provisions of the Jeanswear License could cause
irreparable injury to a party and that payment of money damages alone may
not be sufficient. The parties further agree that if a party hereto
breaches or threatens to breach this Section XIV or such other
confidentiality provisions, the other parties may seek injunctive and
other equitable relief, in accordance with Section II of this Agreement
and the rules of the International Chamber of Commerce.
14
XV. Single Restated Agreement. The parties will consider in good faith the
desirability and feasibility of commissioning a joint effort to combine
all of the operative amendments and modifications to the Jeanswear License
into a single restated agreement.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
CALVIN KLEIN, INC.
By: /s/ Mark D. Fischer
------------------------------------
Name: Mark D. Fischer
Title: Vice President
PHILLIPS-VAN HEUSEN CORPORATION
By: /s/ Mark D. Fischer
------------------------------------
Name: Mark D. Fischer
Title: Vice President
WARNACO INC.
By: /s/ Stanley P. Silverstein
------------------------------------
Name: Stanley P. Silverstein
Title: Senior Vice President
CALVIN KLEIN JEANSWEAR COMPANY
By: /s/ Stanley P. Silverstein
------------------------------------
Name: Stanley P. Silverstein
Title: President
CKJ HOLDINGS INC.
By: /s/ Stanley P. Silverstein
------------------------------------
Name: Stanley P. Silverstein
Title: President
16
EXHIBIT: COLA Adjustment
-------
All amounts subject to adjustment by COLA will be increased (or, in the case of
the Credit only, decreased, as applicable) on January 1, of each Annual Period
in the proportion that the CPI (as defined below) figure last published
immediately preceding such date bears to the CPI figure last published
immediately preceding January 1 of the prior Annual Period. "CPI" shall mean the
Consumer Price Index (All Urban) - Apparel Commodities (including footwear)
(1982/1984 = 1) published by the United States Government Bureau of Labor
Statistics or its successor.
17
EXHIBIT: Specified Competitors ([p] 6)
-------
***
and other comparable competitors reasonably agreed upon in good faith by
Licensor and Licensee.
18
Exhibit B
- ---------
"Products" shall mean:
Women's, Men's, Children's (i.e., boys and girls), Juniors, Infants and Toddlers
jeans and jeanswear (collectively, "Jeanswear") in all sizes (excluding men's
"big and tall" and women's "plus sizes" unless, Licensor's prior written
approval is obtained) namely:
i) jeans;
ii) jeans skirts, jeans overalls, jeans short-alls, jeans
skirt-alls, jeans shorts, jeans jackets, jeans-coats and jeans
dresses;
iii) casual woven shirts;
iv) knit tops and bottoms;
v) fleece shirts and pants;
vi) sweatshirts;
vii) t-shirts (as limited in subparagraph 4 below);
viii) baseball caps;
ix) ***; and
x) All such other items which Licensor and Licensee believe in
good faith fall within the "jeanswear" category (as such term
is and may become commonly understood in the apparel trade in
the United States).
The parties acknowledge and agree that the following shall apply to the
definition of Products ***:
1) The Products described herein and collections produced hereunder shall
always comprise and be limited to a "jeanswear" line (as such term is
and may become commonly understood in the apparel trade in the United
States.) All Products produced hereunder shall be of a kind, nature,
construction, fabrication, style and appearance as are typically found
in a jeanswear department or section of a multi-department retail store
which has a distinctly separate sportswear department or section.
2) Products shall only be designed, produced, distributed, marketed and
advertised as *** and are not to be sold in *** and shall be sold in
*** where available and always to *** buyers in Licensee's accounts.
Products shall be sold only in the *** of those stores which maintain
*** and if there is no *** in such store, a different *** of such store
***, subject to the following: (i) Licensee demonstrates that
competitive products of the same type *** are and continue to be
marketed in the respective *** of such store ***. Licensor further
agrees that in the event Licensor wishes to withdraw a consent,
previously granted, such revocation shall be effective upon *** months
notice only to enable orders previously accepted by Licensee or in
process to be shipped, at which time the Articles shall no longer be
sold in such account's ***, as the case may be. Licensor's *** products
shall be designed as a part of a *** and distributed and marketed as
*** and not advertised by Licensor as *** and shall be sold in ***
19
where available and/or to *** buyers in Licensor's accounts and/or in
*** or other *** of accounts (***).
3) All products produced hereunder shall include visible logo
identification or other external label identification that is visible
when worn in the intended fashion using the name "CALVIN KLEIN JEANS,"
"CK/Calvin Klein Jeans" or such other mark designated by Licensor
pursuant to Section 3 of this Agreement in the then approved Form
thereof.
4) "T-shirts" described above shall not be less than 5 1/2 ounces per
square meter; shall not be packaged; and may only be sold to jeanswear
buyers for jeanswear departments or jeanswear specialty stores, but not
to underwear buyers for underwear departments or specialty stores.
5) Any dispute or question between the parties as to whether a given
proposed Product constitutes an item within the Product grant, shall be
determined by Licensor in good faith based on the following criteria
only; ***. Licensor shall notify Licensee promptly if Licensor believes
any proposed Product falls outside of the Product definition herein and
will discuss the same with Licensee in good faith with due
consideration to Licensee's comments as to why Licensee believes that
the proposed Product properly falls within the definition of Products
before Licensor makes such determination final and requires withdrawal
of same.
6) From time to time, Licensor and Licensee shall jointly review the
retail marketplace to assess the marketing of Licensee's collections
with a view to determining *** the continuing application of the
restrictions on selling Product to the *** or ***.
20
***
***
21
CK / Calvin Klein Five Year Plan
North America and Caribbean Islands
2004 2005 2006 2007 2008
-------- -------- -------- -------- --------
Business Plan
- -------------
CK/Calvin Klein *** *** *** *** ***
Calvin Klein *** *** *** *** ***
Total *** *** *** *** ***
*** of Plan *** *** *** *** ***
- -----------
CK/Calvin Klein *** *** *** *** ***
Calvin Klein *** *** *** *** ***
Total *** *** *** *** ***
Percentage Royalty (***) *** *** *** *** ***
- ------------------------
CK/Calvin Klein *** *** *** *** ***
Calvin Klein *** *** *** *** ***
Total Minimum Royalty *** *** *** *** ***
- ---------------------
***
22
REV1
CK / Calvin Klein Five Year Plan
Rest of World
2005 2006 2007 2008
-------- -------- -------- --------
Business Plan
- -------------
CK/Calvin Klein *** *** *** ***
Calvin Klein *** *** *** ***
Total *** *** *** ***
*** of Plan *** *** *** ***
- -----------
CK/Calvin Klein *** *** *** ***
Calvin Klein *** *** *** ***
Total *** *** *** ***
Percentage Royalty (***) *** *** *** ***
- ------------------------
CK/Calvin Klein *** *** *** ***
Calvin Klein *** *** *** ***
Total Minimum Royalty *** *** *** ***
- ---------------------
***
23
Exhibit: Design Process and Procedures ([p] 4)
- -------
(a) The Jeanswear License, (including Section 3 thereto) is hereby amended
such that the design and approval processes for Articles shall be
governed by (x) the following criteria and procedures and (y) Exhibit
B, in each case which shall be applicable to all Articles:
(i) Licensor and Licensee shall continue to cooperate with each
other in connection with effectuating the design and
production of Articles. Licensor shall exercise all reviews
and deliver all approvals (and disapprovals, including
suggestions for modifications) in good faith, in a prompt and
timely manner with the primary objective of ensuring that (i)
the design aesthetic and reputation of Licensor and the
Licensed Marks are preserved and reflected in such Articles,
(ii) the quality standards under Section 4 of the Jeanswear
License (none of which are modified or deleted by this
Amendment) are maintained and (iii) the proposed Design
Concepts, Articles for Adoption, Prototypes (as defined
below), and Articles are developed and produced within the
Product definition (individually and collectively, the "Design
Objective"). ***. Except as otherwise indicated herein, the
approvals required pursuant to this Agreement may reflect
Licensor's subjective aesthetic standards, exercised in good
faith. Licensor will exercise its approval rights consistent
with the Design Objective and not disapprove completely all
Articles of a certain classification (i.e., category of
products (e.g., pants, shirts, shorts)) which qualify as
Product solely to afford Licensor or licensees of Licensor
a competitive advantage. Licensor and Licensee shall confer
in good faith at all times to develop, review and consider
changes to or modifications in the Collection ***.
***. If so requested by Licensor, Licensee shall resubmit such
modified item to Licensor so that Licensor can confirm
compliance with Licensors requests. Licensee agrees to design,
develop and produce the Articles at all times in accordance
with the Design Objective.
(ii) ***.
(iii) ***.
(iv) ***.
(v) ***.
(vi) ***.
(vii) ***.
(viii) ***.
(ix) ***.
***
24
Design Staff Exhibit
Calvin Klein, Inc.
Jeans Design Team
Womens/Mens/Juniors
CONTRACT
NAME HIRE DATE TITLE TERMS
*** ***
DESN DIR ***
*** *** SR DESNR
*** *** SKTCHART
*** *** DESNASST
*** ***
*** *** DESN DIR
*** *** TRIM MGR
*** *** GRPHDSNG
*** *** GRPHDSNR
*** *** GRPHDSNR
*** *** GRPHDSNR
*** *** GRPHTECH
*** ***
*** *** DESN DIR
*** *** DESIGNER
*** *** ASSOCDSGN
*** *** DGTLART
*** *** SKTCHART
*** ***
*** *** DESN DIR ***
*** *** SR DESNR
*** *** DESIGNER
*** *** ASSOCDSGN
*** *** DGTLART
*** ***
*** *** TEXTDSGN
*** *** TEXTDSGN
*** *** TEXDSNAST
*** *** TEXDSNAST
*** *** DIR JEAN
*** *** CKJEANSC
25