License - Chaps - Sportswear
AMENDED AND RESTATED LICENSE AGREEMENT, dated as of January 1,
1996 by and between Polo Ralph Lauren, L.P. "Licensor"), with a place of
business at 650 Madison Avenue, New York, New York 10022, and Warnaco Inc., with
a place of business at 90 Park Avenue, New York, New York 10016.
1. Definitions. As used herein, the term:
1.1. "License" shall mean the exclusive right to use the
Trademark in connection with the manufacture and sale of Licensed Products in
the Territory.
1.2. "Licensed Products" shall mean "Chaps Licensed Products",
which term shall mean (1) high quality men's sportswear with the exception of
(a) skiing or swimming items, and (b) heavy outerwear items commonly found in
outerwear departments, and (2) high quality men's dress furnishings consisting
of and limited to dress shirts and ties, with the exception of (a) formalwear
shirts, ties or accessories, all bearing the trademark "CHAPS by RALPH LAUREN"
or the CHAPS logo, as set forth on Exhibit A hereto. As used in this paragraph
1.2(A), the term "high quality men's sportswear" shall include a broad range of
such sportswear (other than as expressly excepted herein), including but not
limited to knit and woven shirts, jean and other casual bottoms and shorts,
sweaters, jackets and casual vests (but not tailored vests), hats and caps, all
in a broad range of materials, fabrications and constructions.
1.3. "Licensor" shall mean Polo Ralph Lauren, L.P., a limited
partnership organized under the laws of the State of Delaware.
1.4. "Licensee" shall mean Warnaco Inc., a corporation organized
under the laws of the State of Delaware.
1.5. "Territory" shall mean the United States of America, its
territories and possessions, including Puerto Rico.
1.6. "Trademark" shall mean the trademarks "Chaps by Ralph
Lauren" and/or the Chaps logo, as set forth on Exhibit A attached hereto, and
where the content so indicates, each of them. Licensor shall have the sole right
to determine which Trademark shall be used in connection with each particular
Licensed Product.
2. Grant of License.
2.1. Subject to the terms and provisions hereof, Licensor hereby
grants to Licensee and Licensee hereby accepts the License. Except as provided
in paragraph 17.4 hereof, Licensor shall neither use nor authorize third parties
to use the Trademarks in connection with the manufacture and sale and/or
importation of Licensed Products in the Territory during the term of this
Agreement without Licensee's prior approval. To the extent it is legally
permissible to do so, no license is granted hereunder for the manufacture, sale
or distribution of Licensed Products to be used for publicity purposes, other
than publicity of Licensed Products, in combination sales, as premiums or
giveaways, or to be disposed of under or in connection with similar methods of
merchandising such license being specifically reserved for Licensor.
2.2. It is understood and agreed that the License applies solely
to the use of the Trademarks on and in connection with the Licensed Products,
and that (i) no use of any other trademark of Licensor (including any other
trademark that uses the name "Ralph Lauren") or of any of Licensor's related
companies (as such term is defined in the Lanham Act), and (ii) no use of the
Trademarks on any other products, is authorized or permitted. Licensor reserves
the right to use, and to grant to any other licensee the right to use, the
Trademarks, whether within or outside the Territory, in connection with any and
all products and services, other than Licensed Products within the Territory.
Licensee understands and agrees that Licensor may itself manufacture or
authorize third parties to manufacture in the Territory, Licensed Products for
ultimate sale outside of the Territory.
2.3. Licensee shall not itself use or permit or authorize another
person or entity in its control to use the words "Chaps", "Polo" "Ralph" or
"Ralph Lauren" as part of a corporate name or tradename without the express
written consent of Licensor and Licensee shall not permit or authorize use of
the Trademarks in such a way so as to give the impression that the names,
"Polo", "Ralph Lauren," or the Trademarks, or any modifications thereof, are the
property of Licensee.
2.4. Licensee shall not sublicense any of the rights granted
hereunder without first obtaining Licensor's prior written consent in connection
therewith, which consent may be withheld by Licensor in its sole discretion.
2.5. Licensee shall not, directly or indirectly manufacture,
distribute, sell or advertise during the term of this Agreement, any items which
are comparable and/or competitive with Licensed
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Products which bear the name or are associated with the name of any fashion
apparel designer other than those names which are presently owned or under
license by Licensee without first notifying Licensor in writing.
2.6. Licensor represents and warrants that it has full right,
power and authority to enter into this Agreement, to perform all of its
obligations hereunder and to consummate all of the transactions contemplated
herein.
2.7. Licensee represents and warrants that it has full right,
power and authority to enter into this Agreement, to perform all of its
obligations hereunder, and to consummate all of the transactions contemplated
herein.
2.8. Licensee recognizes that there are many uncertainties in the
business contemplated by this Agreement. Licensee agrees and acknowledges that
other than those representations explicitly contained in this Agreement, if any,
no representations, warranties or guaranties of any kind have been made to
Licensee, either by Licensor or its affiliates, or by anyone acting on their
behalf. Without limitation, no representations concerning the value of the
Licensed Products or the prospects for the level of their sales or profits have
been made and Licensee has made its own independent business evaluation in
deciding to manufacture and distribute the Licensed Products on the terms set
forth herein.
3. Design Standards and Prestige of Licensed Products.
3.1. Licensee acknowledges that it has entered into a design
services agreement ("Design Agreement"), of even date herewith, with Polo Ralph
Lauren Enterprises, L.P. (the "Design Partnership"), which provides for the
furnishing to Licensee by the Design Partnership of design concepts and other
professional services so as to enable Licensee to manufacture or cause to be
manufactured the Licensed Products in conformity with the established prestige
and goodwill of the Trademarks. Licensee shall manufacture, or cause to be
manufactured, and sell only such Licensed Products as are made in accordance
with the design and other information approved under, and in all other respects
in strict conformity with the terms of, the Design Agreement.
3.2. Licensee acknowledges that the Trademarks have established
prestige and goodwill and are well recognized in the minds of the public, and
that it is of great importance to each party that in the manufacture and sale of
various lines of Licensor's products, including the Licensed Products, the high
standards and reputation that Licensor and Ralph Lauren have
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established be maintained. Accordingly, all items of Licensed Products
manufactured or caused to be manufactured by Licensee hereunder shall be of high
quality workmanship with strict adherence to all details and characteristics
embodied in the designs furnished pursuant to the Design Agreement. Licensee
shall supply Licensor with samples of the Licensed Products (including, if
Licensor so requests, samples of labeling and packaging used in connection
therewith) prior to production and from time to time during production, and
shall, at all times during the term hereof, upon Licensor's request, make its
manufacturing facilities available to Licensor, and shall use its best efforts
to make available each subcontractor's manufacturing facilities, for inspection
by Licensor's representatives during usual working hours. No sales of miscuts or
damaged merchandise shall contain any labels or other identification bearing the
Trademarks without Licensor's prior written approval, but sales of all products
of Licensor's or the Design Partnership's design shall nonetheless be subject to
royalty payment pursuant to paragraph 6 hereof.
3.3. In the event that any Licensed Product is, in the judgment
of Licensor, not being manufactured, distributed or sold with first quality
workmanship or in strict adherence to all details and characteristics furnished
pursuant to the Design Agreement, Licensor shall notify Licensee thereof in
writing and Licensee shall promptly repair or change such Licensed Product to
conform thereto. If a Licensed Product as repaired or changed does not strictly
conform after Licensor's request and such strict conformity cannot be obtained
after at least one (1) resubmission, the Trademarks shall be promptly removed
from the item, at the option of Licensor, in which event the item may be sold by
Licensee, provided such miscut or damaged item does not contain any labels or
other identification bearing the Trademark without Licensor's prior approval.
Notwithstanding anything in this paragraph 3.3 to the contrary, sales of all
products of Licensor's or the Design Partnership's design, whether or not
bearing the Trademark, shall nonetheless be subject to royalty payments pursuant
to paragraph 6 hereof.
3.4. At the request of Licensor, Licensee shall cause to be
placed on all Licensed Products appropriate notice designating Licensor or the
Design Partnership as the copyright or design patent owner thereof, as the case
may be. The manner of presentation of said notices shall be determined by
Licensor.
4. Marketing.
4.1. Any use of the License by any division, subsidiary or
affiliate of Licensee must be approved in writing by Licensor.
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The Licensed Products shall be sold by Licensee only to those specialty shops,
department stores and other retail outlets which deal in products similar in
quality and prestige to products bearing the Trademarks, whose operations are
consistent with the quality and prestige of the Trademarks and only to those
customers expressly approved by Licensor. Licensee's approved account list is
attached hereto as and made a part hereof. Prior to the opening of each selling
season (and whenever Licensee wishes to sell Licensed Products to a customer not
previously approved by Licensor), Licensee shall submit a written list of its
proposed customers to Licensor for Licensor's written approval, which shall be
given or withheld in Licensor's sole discretion based on considerations of the
quality and prestige of the Trademarks. In addition, Licensee shall have the
right to sell Licensed Products at outlet stores owned or controlled by
Licensee; provided, however, that (i) Licensee shall only sell overruns and
irregular Licensed Products at such outlet stores and shall not produce any
Licensed Products for such sales and (ii) the "net sales price" pursuant to
paragraph 6.2 with respect to all such sales shall be the actual price paid by
consumers at such outlet stores, less sales tax. Licensee shall not market or
promote or seek customers for the Licensed Products outside of the Territory and
Licensee shall not establish a branch, wholly owned subsidiary, distribution or
warehouse with inventories of Licensed Products outside of the Territory.
Licensee shall not without Licensor's prior written approval sell any Licensed
Products bearing the Trademark to any third party which, directly or indirectly,
sells or proposes to sell such Licensed Products outside the Territory. Licensee
shall use its best efforts to prevent any such resale outside the Territory and
shall, immediately upon learning or receiving notice from Licensor that a
customer is selling Licensed Products outside the Territory, cease all sales and
deliveries to such customer.
4.2. Licensee shall maintain the high standards of the Trademarks
and the Licensed Products, in all advertising, packaging and promotion of the
Licensed Products. Licensee shall not employ or otherwise release any of such
advertising or packaging or other business materials relating to any Licensed
Products or bearing the Trademarks, unless and until Licensee shall have made a
request, in writing, for approval by Licensor. Licensor may, with respect to any
advertising, promotional, packaging or business materials submitted by Licensee
make such suggestions as Licensor deems necessary or appropriate, or disapprove,
in either event by notice to Licensee. Any approval granted hereunder shall be
limited to use during the seasonal collection of Licensed Products to which such
advertising relates and shall be further limited to the use (e.g. TV or print)
for which approval by Licensor was granted. Licensee shall, at the
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option of Licensor, include on its business materials an indication of the
relationship of the parties hereto in a form approved by Licensor.
4.3. Licensee shall use its best efforts to assure that all
cooperative advertising, whereby Licensee provides a customer with a
contribution toward the cost of an advertisement for Licensed Products, whether
Licensee's contribution be in the form of an actual monetary contribution, a
credit or otherwise, shall be subject to prior approval of Licensor under the
same terms and conditions as apply to advertising and promotional materials
prepared by or to be used by Licensee pursuant to paragraph 4.2 hereof;
provided, however, that in the event that Licensee is not as a matter of
practice given an opportunity to review the cooperative advertising due to time
constraints, then Licensee shall notify Licensor, in advance, of those customers
with whom it does cooperative Licensed Product advertising and/or promotion, and
Licensee at Licensor's request shall notify the named customer of the terms of
this Agreement which pertain to the said advertising or promotional materials.
4.4. Licensee shall maintain the high standards of the Trademarks
in all packaging, advertising and promotion of the Licensed Products and shall
exercise its best efforts to safeguard the established prestige and goodwill of
the name "Ralph Lauren" and the Ralph Lauren image, at the same level of
prestige and goodwill as heretofore maintained. "Image" as used herein refers
primarily to quality and style of packaging, advertising and promotion, creation
and introduction of new products, type of outlets with reference to quality of
service provided by retail outlets and quality of presentation of Licensed
Products in retail outlets. Licensee shall take all necessary steps, and all
steps reasonably requested by Licensor, to prevent or avoid any misuse of the
Trademarks by any of its customers, contractors or other resources.
4.5. During each year of this Agreement, Licensee shall expend
for the production and placement of national, institutional and media
advertising of Licensed Products ("Institutional Advertising"), as designated by
Licensor, an amount that is not less than percent ( %) of the aggregate
net sales price (as defined in paragraph 6.2 hereof) of Licensed Products sold
in that year. Licensee shall deliver to Licensor within sixty (60) days after
the end of each year hereof an accounting statement in respect of amounts
expended by Licensee on advertising for the prior year. Each such accounting
statement shall be signed, and certified as correct, by a duly authorized
officer of Licensee. Prior to each year hereof, Licensee shall submit Licensee's
advertising budget for the
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upcoming year, based on the aggregate net sales price of Licensed Products
during the year then ending and on sales projected for the upcoming year. The
advertising expenditures for such upcoming year will initially be made based
upon such budget. If the actual aggregate advertising expenditures are less than
percent ( %) of the actual aggregate net sales price for such year, such
shortage shall be expended in the next following year in addition to the amount
otherwise to be expended in such next following year. Licensee shall place such
portions of Licensee's advertising budget as Licensor may request with such
advertising agencies or advertising carriers as may be designated by Licensor
for promotional campaigns of Licensed Products.
4.6. To the extent permitted by applicable law Licensor may from
time to time, and in writing, promulgate rules and regulations to Licensee
relating to the manner of use of the Trademarks. Licensee shall comply with such
reasonable rules and regulations.
4.7. Upon Licensor's request, Licensee agrees to make available
for purchase and to sell at its customary price, and on its customary credit and
payment terms all lines and styles of Licensed Products to retail stores in the
Territory bearing as a tradename a trademark of Licensor or its affiliates and
to any stores or facilities operated or owned by Licensor and its affiliates,
which are authorized to sell the 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 Licensee to such stores,
such Licensed Products may be made available to such stores by Licensor (or its
affiliates or other licensees).
4.8. Intentionally Omitted.
4.9. In consideration of the License granted herein, in the event
Licensor elects to offer Licensed Products for sale in mail-order catalogs or
other direct-to-consumer sales devices, such as telemarketing ("Catalog Sales"),
Licensee shall sell and timely ship Licensed Products to Licensor or its
affiliate for such purposes, to the extent of its requirements, at a price equal
to % less than the regular wholesale price therefor. All such sales shall be
separately reported by Licensee in its accounting statements pursuant to
paragraph 6.2 hereof, and such sales shall not be subject to the advertising
obligations set forth herein, but shall be subject to the royalty obligations
set forth herein and to the compensation obligations set forth in the Design
Agreement, and such sales shall be included within the renewal volumes set forth
in paragraph 8 hereof.
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4.10. In consideration of the License granted herein, in the
event Licensor elects to offer Licensed Products for sale in outlet stores owned
by Licensor or its affiliates or operated under license from Licensor or its
affiliates ("Outlet Stores"), Licensee shall sell and timely ship Licensed
Products to Outlet Stores for such purposes, to the extent of their
requirements, at a price equal to % less than the regular wholesale price
therefor. All such sales shall be separately reported by Licensee in its
accounting statements pursuant to paragraph 6.2 hereof, and such sales shall not
be subject to the advertising obligations set forth herein, but shall be subject
to the royalty obligations set forth herein and to the compensation obligations
set forth in the Design Agreement, and such sales shall be included within the
renewal volumes set forth in paragraph 8 hereof.
5. Trademark Protection.
5.1. All uses of the Trademarks by Licensee, including, without
limitation, use in any business documents, invoices, stationery, advertising,
promotions, labels, packaging and otherwise shall require Licensor's prior
written consent in accordance with paragraph 4.2 hereof.
5.2. All uses of the Trademarks by Licensee in advertising,
promotions, labels and packaging shall bear the notation "Chaps by Ralph
Lauren", as the case may be, and shall include at Licensor's option, a notice to
the effect that the Trademarks are used by Licensee for the account and benefit
of Licensor. The use of the Trademarks pursuant to this Agreement shall be for
the benefit of Licensor and shall not vest in Licensee any title to or right or
presumptive right to continue such use. For the purposes of trademark
registration, sales by Licensee shall be deemed to have been made by Licensor.
5.3 Licensee shall cooperate fully and in good faith with
Licensor for the purpose of securing and preserving Licensor's rights in and to
the Trademarks. Nothing contained in this Agreement shall be construed as an
assignment or grant to Licensee of any right, title or interest in or to the
Trademark, or any of Licensor's other trademarks, it being understood that all
rights relating thereto are reserved by Licensor, except for the License
hereunder to Licensee of the right to use and utilize the Trademarks only as
specifically and expressly provided herein. Licensee shall not file or prosecute
a trademark or service mark application or applications to register the
Trademarks, for Licensed Products or otherwise.
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5.4. Licensee shall not, during the term of this Agreement or
thereafter, (a) attack Licensor's title or rights in and to the Trademarks in
any jurisdiction or attack the validity of this License or the Trademarks or (b)
contest the fact that Licensee's rights under this Agreement (i) are solely
those of a licensee, manufacturer and distributor and (ii) subject to the
provisions of paragraph 10 hereof, cease upon termination of this Agreement. The
provisions of this paragraph 5.4 shall survive the termination of this
Agreement.
5.5. All right, title and interest in and to all samples,
sketches, designs, artwork, logos and other materials furnished by or to
Licensor or the Design Partnership, whether created by Licensor, the Design
Partnership or Licensee, are hereby assigned in perpetuity to, and shall be the
sole property of, Licensor and/or the Design Partnership as the case may be.
Licensee shall assist Licensor to the extent necessary in the protection of or
the procurement of any protection of Licensor's rights to the Trademarks, and
Licensor, if Licensor so desires, may, at Licensor's expense, commence or
prosecute any claims or suits in Licensor's own name or in the name of Licensee
or join Licensee as a party thereto. Licensee shall promptly notify Licensor in
writing of any uses which may be infringements or imitations by others of the
Trademarks on articles similar to those covered by this Agreement which may come
to Licensee's attention. Licensor shall have the sole right to determine whether
or not any action shall be taken on account of any such infringements or
imitations. Licensee shall not institute any suit or take any action on account
of such infringements or imitations without first obtaining Licensor's written
consent so to do, but in the event such consent is given, Licensee shall bear
the costs of such suit or action. Any recovery in any such action by Licensee
shall be applied first to reimbursing Licensee for the actual out-of-pocket
costs thereof (including reasonable attorneys' fees) and the balance, if any,
shall be divided equally between Licensee and Licensor.
6. Royalties.
6.1. Licensee shall pay to Licensor minimum royalties for each
year during the term of this Agreement, as compensation for the License granted
hereunder for the use of the Trademarks in the manufacture and sale, and/or
importation and sale, of Licensed Products in the Territory. The minimum royalty
for each year shall be as follows:
Year 1 (1996) $
Year 2 $
Year 3 $
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Year 4 $
Year 5 $
Year 6 $
Minimum royalties for each year shall be paid on a quarterly basis, on the last
day of each month following the end of each calendar quarter during the term
hereof (e.g., April 30 for the quarter ending March 31), commencing with the
first quarterly payment to be made on April 30, 1996. The amount of earned
royalties paid, pursuant to paragraph 6.2 hereof, with respect to sales of
Licensed Products in each calendar quarter, shall be deducted from the minimum
royalty payment due for such quarter, it being the parties' intent that Licensee
shall pay Licensor an amount equal to the greater of (i) aggregate minimum
royalties for each year of the initial term or (ii) aggregate earned royalties
for each year of the initial term. However, no credit shall be permitted against
minimum royalties payable in any year on account of actual or minimum royalties
paid in any other year, and minimum royalties shall not be returnable. For each
year during any renewal term of this Agreement, minimum royalties shall be an
amount equal to % of the aggregate earned royalties accrued with respect to
the sale of all Licensed Products during the immediately preceding year;
provided, however, that (i) the minimum royalty in each year shall in no event
be less than the minimum royalty due for the immediately preceding year and (ii)
the minimum royalty in each year shall in no event be less than $ . For
the purposes of this Agreement, the term "year" shall mean a period of twelve
(12) months commencing on each January l during the term hereof.
6.2. Licensee shall pay to Licensor earned royalties based on the
net sales price of all Licensed Products manufactured or imported and sold by
Licensee hereunder. Earned royalties shall equal percent
( %) of the net sales price of all Licensed Products sold under this
Agreement, including, without limitation, any sales made pursuant to the terms
of paragraphs 3.2 and 10 hereof; provided, however, that (i) the earned royalty
rate with respect to sales of Licensed Products on or before December 31, 1996
shall be percent ( %) and (ii) the earned royalty payable to Licensor on
Licensed Product design "close-outs", which were sold at least percent
( %) below Licensee's regular selling price shall be percent ( %)
of the net sales price of such Licensed Products. Licensee shall prepare or
cause to be prepared statements of operations for each month during the term
hereof, which shall be furnished to Licensor together with the earned royalties
due for each such month on the last day of the following month (e.g., July 31
for month of June). In addition, Licensee shall provide Licensor, for
informational purposes only, with a monthly
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statement reflecting retail sales of Licensed Products by account for each
month, within five (5) days after the end of such month. The term "net sales
price" shall mean the gross sales price to retailers who are not affiliates of
Licensee or, with respect to Licensed Products that are not sold directly or
indirectly to retailers, other ultimate consumers (as in the case of
accommodation sales by Licensee to its employees), of all sales of Licensed
Products under this Agreement, less trade discounts and allowances and
merchandise returns. No other deductions shall be taken. Any merchandise returns
shall be credited in the three (3) month period in which the returns are
actually made. Any excess of earned royalties, determined under this paragraph
6.2 over the minimum royalties provided in paragraph 6.1 hereof, shall be
remitted to Licensor within forty-five (45) days after the end of each such
three (3) month period. For purposes of this Agreement, affiliates of Licensee
shall mean all persons and business entities, whether corporations,
partnerships, joint ventures or otherwise, which now or hereafter control, or
are owned or controlled, directly or indirectly by Licensee, or are under common
control with Licensee. It is the intention of the parties that royalties will be
based on the bona fide wholesale prices at which Licensee sells Licensed
Products to independent retailers in arms' length transactions. In the event
Licensee shall sell Licensed Products to its affiliates, royalties shall be
calculated on the basis of such a bona fide wholesale price irrespective of
Licensee's internal accounting treatment of such sale. Licensee shall identify
separately in the statements of operations provided to Licensor pursuant to
paragraph 7 hereof, all sales to affiliates. Compensation for design services is
provided for separately in the Design Agreement.
6.3. If the payment of any installment of royalties is delayed
for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date on which the same became due pursuant to
paragraphs 6.1 or 6.2 hereof at the lower of the highest rate permitted by law
in New York and the prime rate of interest in effect from time to time at
Chemical Bank, New York, Hew York, or its successor.
6.4. Provided that (a) no event of default under this Agreement
has occurred and no default under this Agreement then exists and (b) this
Agreement and the License are then in full force and effect, and (c) Licensee
cooperates with Licensor, The Polo/Lauren Company ("PLC") and their licensees in
connection with the manufacture and sale of Chaps Licensed Products in Canada,
Licensor shall pay to Licensee an amount equal to ( %) percent of
net royalties paid to Licensor with respect to sales of Chaps Licensed Products
made in Canada by any licensee of Licensor (or PLC), other than Licensee.
Licensee's
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cooperation under clause (c) of the foregoing sentence shall consist of, but
shall not be limited to, the sharing of designs and information with respect to
suppliers and contractors in connection with Chaps Licensed Products. Payments
of royalties by Licensor to Licensee, if any, pursuant to this paragraph 6.4.
shall be made within thirty (30) days after Licensor's receipt thereof from its
foreign Licensee, if any, and shall be accompanied by a statement of the foreign
license payments received by Licensor (or PLC) pursuant to which the payment to
Licensee is being made.
6.5. The obligation of Licensee to pay royalties hereunder shall
be absolute notwithstanding any claim which Licensee may assert against Licensor
or the Design Partnership. Licensee shall not have the right to set-off,
compensate or make any deduction from such royalty payments for any reason
whatsoever.
7. Accounting.
7.1. Licensee shall at all times keep an accurate account of all
operations within the scope of this Agreement and shall render a full statement
of such operations in writing to Licensor in accordance with paragraph 6.2
hereof. Such statements shall account separately for each different product
category and shall include all aggregate gross sales, trade discounts,
merchandise returns, sales of miscuts and damaged merchandise and net sales
price of all sales for the previous three (3) month period. Such statements
shall be in sufficient detail to be audited from the books of Licensee. Once
annually, which may be in connection with the regular annual audit of Licensee's
books, Licensee shall furnish an annual statement of the aggregate gross sales,
trade discounts, merchandise returns and net sales price of all Licensed
Products made by Licensee certified by an officer of Licensee. Each financial
statement furnished by Licensee shall be certified by the chief financial
officer of Licensee or a certified public accountant, who may be in the employ
of Licensee. The books of account of Licensee with respect to such sales shall
be available for inspection and audit by Licensor or its agent at all reasonable
times, but such audit shall not be made more than once in each year and shall be
made by Licensor at its own expense; provided, however, that if there is an
error in favor of Licensee in excess of percent ( %) of royalties in
computing such royalties, all expenses in connection with such inspection and
audit shall be borne by Licensee.
7.2. At least once annually and no later than 90 days after the
close of Licensee's fiscal year, Licensee will furnish to Licensor, a profit and
loss statement and balance sheet covering Licensee's fiscal year both of which
shall be certified by the
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independent auditor for Licensee. All financial statements required to be
furnished herein shall be prepared in accordance with generally accepted
accounting principles and any officer's certificate relative thereto shall state
that such statements are true, complete and correct in all material respects and
present fairly the financial position of Licensee as of the respective date of
the balance sheets and the results of operations for the respective periods
covered.
8. Term, Solicitation of Employees.
8.1. The term of this Agreement shall commence on the date hereof
and shall terminate on December 31, 2001; provided, however, that if no Event of
Default shall have occurred and not been cured or waived, and Licensee has
achieved the Minimum Renewal Volume (as such term is hereinafter defined) for
the period January 1, 2000 to December 31, 2000, Licensee shall have the option,
upon providing notice to Licensor on or before April 1, 2001, to renew this
Agreement for an additional three (3) year period (the "Renewal Term") so as to
expire on December 31, 2004, on the terms and conditions herein except that
there will be no further right to renewal. The minimum aggregate net sales price
which Licensee must achieve in connection with sales of Licensed Products during
the period from January 1, 2000 to December 31, 2000 (the "Minimum Renewal
Volume") in order to be entitled to renew this Agreement for a second term as
hereinabove provided shall be $ . In the event either Licensor or
Licensee elects not to renew or extend the term hereof for any reason, it is
expressly understood that only the licensee whose licensed term covers the
period subsequent to the expiration of this Agreement shall be entitled to
receive designs for Licensed Products intended to be sold after the expiration
of the term hereof, and to make presentations of the Licensed Products during
the market period for which the related shipping period would occur after the
expiration or 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 Licensee shall be entitled to receive designs and to
manufacture and sell Licensed Products shall be the Cruise/Holiday 2001 season,
and Licensor shall be entitled to undertake, directly or through a successor
licensee, all activities associated with the design, manufacture and sale of the
Spring 2002 season.
8.2. Each of Licensor and Licensee agrees that during the term of
this Agreement and for a one (1) year period following the expiration or
termination of this Agreement, it shall refrain from soliciting for employment
in any capacity any person while such person is in the employ of the other.
However, nothing
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shall prevent either Licensor or Licensee from employing (i) any person whose
employment with the other has terminated or (ii) any person who has, without
being solicited, sought employment by the other.
9. Default; Change of Control.
9.1. Each of the following shall constitute an event of default
("Event of Default") hereunder:
(i) Any installment of royalty payments is not paid when
due and such default continues for more than ten (10) days after
notice thereof;
(ii) Licensee shall fail to timely present for sale to the
trade a broadly representative and fair collection of each
seasonal collection of Licensed Products designed by the Design
Partnership under the Design Agreement or Licensee shall fail to
timely ship to its customers a material portion of the orders of
Licensed Products it has accepted;
(iii) Licensee defaults in performing any of the other
terms of this Agreement and continues in such default for a
period of thirty (30) days after notice thereof (unless the
default cannot be cured within such thirty (30) day period and
Licensee shall have commenced to cure the default and proceeds
diligently thereafter to cure);
(iv) Licensee fails within ten (10) days after written
notice that payment is overdue to pay the amount due for any
Licensed Products or materials, trim, fabrics, packaging or
services relating to Licensed Products purchased by Licensee from
Licensor or any agent or licensee of Licensor or any other
supplier of such items;
(v) If Licensee shall use the Trademarks in an
unauthorized or improper manner and/or if Licensee shall make an
unauthorized disclosure of confidential information or materials
given or loaned to Company by Licensor, and/or the Design
Partnership;
(vi) Licensee institutes proceedings seeking relief under
a bankruptcy act or any similar law, or consents to entry of any
order for relief against it in any bankruptcy or insolvency
proceeding or similar proceeding, or files a petition for or
consent or answer consenting to reorganization or other relief
under any bankruptcy act or other similar law, or consents to the
filing against it of
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any petition for the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of it or of any substantial part of its property, or a
proceeding seeking such an appointment shall have been commenced
without Licensee's consent and shall continue undismissed for
sixty (60) days or an order providing for such an appointment
shall have been entered, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts
as they become due or fails to pay its debts as they become due,
or takes any action in furtherance of the foregoing;
(vii) Licensee transfers or agrees to transfer
substantially all of its assets;
(viii) The calling of a meeting of creditors, appointment
of a committee of creditors or liquidating agents, or offering a
composition or extension to creditors by, for or of Licensee;
(ix) There shall be a change in control of Licensee;
(x) An event of default occurs under the Design Agreement
or any other license agreement entered into between Licensor and
Licensee or design agreement between Licensee and the Design
Partnership; or
(xi) The Design Agreement is terminated for any reason
whatsoever.
9.2. If any Event of Default other than the Event of Default
described in paragraphs 9.1 (v), (vi), (vii) or (viii) shall occur, Licensor
shall have the right, exercisable in its sole discretion, to terminate this
Agreement and the License upon ten (10) days' written notice to Licensee of its
intention to do so, and upon the expiration of such ten (10) day period, this
Agreement and the License shall terminate and come to an end. If the Event of
Default described in paragraphs 9.1 (v), (vi), (vii) or (viii) shall occur, this
Agreement and the License shall thereupon forthwith terminate and come to an end
without any need for notice to Licensee. Any termination of this Agreement shall
be without prejudice to any remedy of Licensor for the recovery of any monies
then due it under this Agreement or in respect to any antecedent breach of this
Agreement, and without prejudice to any other right of Licensor including,
without limitation, damages for breach to the extent that the same may be
recoverable and Licensee agrees to reimburse Licensor for any costs and expenses
(including attorneys' fees) incurred by Licensor in enforcing its rights
hereunder. No assignee for the benefit of
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creditors, receiver, liquidator, sequestrator, trustee in bankruptcy, sheriff or
any other officer of the court or official charged with taking over custody of
Licensee's assets or business shall have any right to continue the performance
of this Agreement. For purposes of paragraph 9.1(ix) the term "change in control
of Licensee" shall not include (i) the sale or disposition of all or
substantially all of the voting stock or assets of The Warnaco Group, Inc. or
Warnaco Inc. or any successor thereto to (x) one or more subsidiaries or
affiliates of The Warnaco Group, Inc. or Warnaco Inc.; or (y) any other entity
controlled by The Warnaco Group, Inc. or Warnaco Inc. or its affiliates or any
successor thereto; nor (ii) a public offering, sale to underwriters or private
placement of capital stock by The Warnaco Group, Inc. or Warnaco Inc. or any
successor thereto or any acquisitions by any such company through merger,
purchase of assets or otherwise effected in whole or in part by issuance or
reissuance of such company's shares of capital stock.
9.3. During the term of this Agreement, Licensee shall not (i)
merge or consolidate with or into any other corporation, or (ii) directly or
indirectly sell or otherwise dispose of all or of a substantial portion of its
business or assets or (iii) suffer a change of control in its management without
prior written notice to Licensor. Licensor will discuss the occurrence of any of
the events described in (i), (ii) or (iii) above with Licensee at Licensee's
request, and in the event of any change in the persons having principal
authority to act for Licensee with respect to this Agreement Licensee shall
notify Licensor in advance of any such change and shall consult in good faith
with Licensor regarding the hiring of a suitable replacement.
10. Disposal of Stock Upon Termination or Expiration.
10.1. Within ten (10) days following the termination of this
Agreement for any reason whatsoever including the expiration of the term hereof,
Licensee shall furnish to Licensor a certificate of Licensee listing its
inventories of Licensed Products (which defined term for purposes of this
paragraph 10.1 shall include, but shall not be limited to, all fabrics, trim and
packaging which are used in connection with the manufacture and marketing of
Licensed Products) on hand, in transit, on order, or in process of being
manufactured wherever situated. Licensor shall have the right to conduct a
physical inventory of Licensed Products in Licensee's possession or under
Licensee's control. Licensor or Licensor's designee shall have the option (but
not the obligation) to purchase from Licensee all or any part of Licensee's then
existing inventory of Licensed Products upon the following terms and conditions:
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(i) Licensor shall notify Licensee of its or its
designee's intention to exercise the foregoing option within 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 or on
behalf of Licensee which are on hand, in transit, or in process
shall be Licensee's standard cost (the actual manufacturing cost)
for each such Licensed Product. The price for all other Licensed
Products which are not manufactured by Licensee shall be
Licensee's landed costs therefor. Landed costs for the purposes
hereof means the F.O.B. price of the Licensed Products together
with customs, duties, and brokerage, freight and insurance.
(iii) Licensee shall deliver the Licensed Products
purchased within fifteen (15) days of receipt of the notice
referred to in clause (i) above. Payment of the purchase price
for the Licensed Products so purchased by Licensor or its
designee shall be payable upon delivery thereof, provided that
Licensor shall be entitled to deduct from such purchase price any
amounts owed it by Licensee. It is not intended by the operation
of this provision or paragraph 6.5 that Licensor be entitled to
double payment of royalties or any other amounts owed by Licensee
hereunder.
10.2. In the event Licensor chooses not to exercise the option
referred to in paragraph 10.1 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 6 hereof, Licensee may dispose of
such Licensed Products which are on hand or in the process of being manufactured
at the time of termination of this Agreement, provided Licensee fully complies
with the provisions of this Agreement, including specifically those contained in
paragraphs 3 and 4 hereof in connection with such disposal. Notwithstanding
anything to the contrary contained herein, in the event that upon the expiration
or termination of the term hereof for any reason Licensee is in default because
it has not rendered to Licensor all accounting statements then due, and paid (i)
all royalties and other amounts then due to Licensor, (ii) all compensation then
due to the Design Partnership under the Design Agreement and (iii) all amounts
then due to any affiliate of or supplier to Licensor or its affiliates
(collectively, "Payments"), Licensee shall have no right whatsoever to dispose
of any inventory of Licensed Products in any manner. In addition, if during any
disposal period Licensee fails timely to render any accounting
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statements or to make all Payments when due, Licensee's disposal rights
hereunder shall immediately terminate without notice.
11. Effect of Termination.
It is understood and agreed that except for the License to use
the Trademarks only as specifically provided for in this Agreement, Licensee
shall have no right, title or interest in or to the Trademarks. Upon and after
the termination of this License, all right, title and interest in and to any and
all designs, design patents, artwork, and other materials depicting or relating
to the Licensed Products, and all rights granted to Licensee hereunder, together
with any interest in and to the Trademarks which Licensee may acquire, shall
forthwith and without further act or instrument be assigned to and revert to
Licensor. In addition, Licensee will execute any instruments requested by
Licensor which are necessary to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without consideration other than the
mutual agreements contained herein. Upon notice of termination Licensor shall be
free to license to others the right to use the Trademarks in connection with the
manufacture and sale of the Licensed Products covered hereby, and Licensee will
refrain from further use of the Trademarks or any further reference to them,
direct or indirect, or any other trademark, trade name or logo that is
confusingly similar to the Trademarks, or associated with the Trademarks in any
way, in connection with the manufacture, sale or distribution of Licensee's
products, except as specifically provided in paragraph 10 hereof. It is
expressly understood that under no circumstances shall Licensee be entitled,
directly or indirectly, to any form of compensation or indemnity from Licensor,
the Design Partnership or their affiliates as a consequence of the termination
of this Agreement, whether as a result of the passage of time, or as the result
of any other cause of termination referred to in this Agreement. Without
limiting the generality of the foregoing, by its execution of the present
Agreement, Licensee hereby waives any claim which it has or which it may have in
the future against Licensor, the Design Partnership or their affiliates, arising
from any alleged goodwill created by Licensee for the benefit of any or all of
the said parties or from the alleged creation or increase of a market for
Licensed Products.
11.2 Remedies. Licensee acknowledges and admits that there would
be no adequate remedy at law for its failure (except as otherwise provided in
paragraph 10 hereof) to cease the manufacture or sale of the Licensed Products
covered by this Agreement at the termination of the License, and Licensee agrees
that in the event of such failure Licensor shall be entitled to
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equitable relief by the way of temporary and permanent injunction and such other
and further relief as any court with jurisdiction may deem just and proper.
12. Liaison.
Licensee shall appoint a high level managerial person who shall
devote a substantial portion of his time to the production, merchandising,
distribution and promotion of the Licensed Product lines. Such person shall act
as liaison between Licensee and Licensor.
13. Indemnity.
13.1. Subject to the exclusions set forth in paragraph 7.1 of the
Design Agreement, Licensee shall indemnify and save and hold Licensor, the
Design Partnership, Polo Ralph Lauren Corporation and Ralph Lauren,
individually, and their assignees, directors, officers, servants, agents and
employees harmless of and from any and all liability, claims, causes of action,
suits, damages and expenses, (including reasonable attorneys' fees and expenses
in actions involving third parties or between the parties hereto), which they,
or any of them, are or become liable for, or may incur, or be compelled to pay
by reason of any acts, whether of omission or commission, that may be committed
or suffered by Licensee or any of its servants, agents or employees in
connection with Licensee's performance of this Agreement, in connection with
Licensed Products manufactured by or on behalf of Licensee or otherwise in
connection with Licensee's business, including without limitation, (i)
Licensee's use of Licensee's own designs which were submitted for approval
pursuant to the Design Agreement, and (ii) the unauthorized sale by Licensee of
Licensed Products outside the Territory.
13.2. Licensee shall carry product and general liability
insurance with limits of liability of not less than $ per occurrence
and $ per person and Licensor, the Design Partnership, Polo Ralph
Lauren Corporation and Ralph Lauren, individually, and their directors,
officers, servants, agents and employees shall be named therein as insureds as
their interests may appear. Licensee shall, promptly after the signing of this
Agreement, deliver to Licensor a certificate of such insurance from the
insurance carrier which sets forth the scope of coverage and the limits of
liability and further provides that the policy may not be cancelled or amended
without at least thirty (30) days' prior written notice to Licensor.
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14. Disclosure.
Licensor and Licensee, and their affiliates, employees,
attorneys, bankers 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. Licensee shall take all reasonable precautions to
protect the secrecy of the materials, samples, sketches, designs, artwork,
logos, 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 any of said designs, sketches,
artwork, logos, and other materials or their use except under the Trademarks.
All press releases and other public announcements shall be subject to the prior
approval of Licensor. Every request for a statement, release or other inquiry
shall be sent in writing whenever practicable to the advertising/publicity
director of Licensor for handling.
15. Showroom.
Licensee, at its sole cost and expense, shall continue to
maintain, operate and staff a showroom at 90 Park Avenue, New York, New York or
at such suitable location as Licensor shall consent to for the exclusive
presentation and sale of the Licensed Products. The showroom shall be
maintained, operated, staffed and decorated in a manner consistent with that of
Licensee's existing showrooms established for the presentation and sale of
Licensor's products. Licensor shall have a right of approval with respect to the
design and layout of the showroom and all expenses incurred with respect to the
design, construction, operation and maintenance of such showroom shall be borne
by Licensee.
16. Key Personnel.
16.1. At all times during the term hereof, Licensee shall employ
a divisional President, approved in advance by Licensor (such approval not to be
unreasonably withheld), whose sole responsibility shall be to manage all of
Licensee's operations pursuant to this Agreement. Such individual shall report
to the President of Licensee.
16.2. Intentionally Omitted.
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17. Miscellaneous.
17.1. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been properly given or
sent (i) on the date when such notice, request, consent or communication is
personally delivered 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, as follows:
(a) if to Licensee, addressed as follows:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: President
with a copy to:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: General Counsel
(b) if to Licensor, addressed as follows:
Polo Ralph Lauren, L.P.
650 Madison Avenue
New York, New York 10022
Attention: President
with a copy to:
Victor Cohen, Esq.
Eighth Floor
650 Madison Avenue
New York, New York 10022
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
17.2. Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers, and no party hereto
shall have any power to obligate or bind any other party hereto in any manner
whatsoever, except as otherwise provided for herein.
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17.3. None of the terms hereof can be waived or modified except
by an express agreement in writing signed by the party to be charged. The
failure of any party hereto to enforce, or the delay by any party in enforcing,
any of its rights hereunder shall not be deemed a continuing waiver or a
modification thereof and any party may, within the time provided by applicable
law, commence appropriate legal proceedings to enforce any and all of such
rights. All rights and remedies provided for herein shall be cumulative and in
addition to any other rights or remedies such parties may have at law or in
equity. Any party hereto may employ any of the remedies available to it with
respect to any of its rights hereunder without prejudice to the use by it in the
future of any other remedy with respect to any of such rights. No person, firm
or corporation, other than the parties hereto and the Design Partnership, shall
be deemed to have acquired any rights by reason of anything contained in this
Agreement.
17.4. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto. Licensor
may assign all of its rights, duties and obligations hereunder to any entity to
which the Trademarks or the right to use the Trademarks has been transferred,
subject to Licensee's rights hereunder. The rights granted to Licensee hereunder
are unique and personal in nature, and neither this Agreement nor the License
may be assigned by Licensee without Licensor's prior written consent. Any
attempt by Licensee to transfer any of its rights or obligations under this
Agreement, whether by assignment, sublicense or otherwise, without having
received the prior written consent of Licensor shall constitute an Event of
Default, but shall otherwise be null and void. Licensee may employ
subcontractors for the manufacture of Licensed Products; provided, however,
that: (i) the supervision of production of Licensed Products shall remain under
the control of Licensee, (ii) Licensee shall maintain appropriate quality
controls, (iii) such subcontractors shall comply with the quality standards set
forth herein, (iv) such subcontractors shall comply with other requirements of
Licensor consistent with the terms of this Agreement, including, but not limited
to, the execution by subcontractor of the Trademark and Design Protection
Agreement attached hereto and made a part hereof; (v) once each quarter and upon
the expiration or termination of this Agreement, Licensee shall provide Licensor
with a complete list setting forth the full name and address of each
subcontractor it uses in connection with the manufacture of Licensed Products,
together with a complete list of Licensed Products (and/or components thereof)
manufactured by each such subcontractor; and (vi) Licensee, upon request from
Licensor, shall cease placing orders for Licensed Products with any such
subcontractor.
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17.5. Licensee shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the operations
of Licensee contemplated hereby, including, without limitation, as they relate
to the manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that Licensor may have approved such item or conduct.
17.6. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, applicable to contracts made and
to be wholly performed therein without regard to its conflicts of law rules.
17.7. If any dispute between the parties leads to litigation, the
parties agree that the courts of the State of New York in the City of New York,
or the federal courts in that City, shall have the exclusive jurisdiction and
venue over such litigation. All parties consent to personal jurisdiction in the
State of New York, and agree to accept service of process outside of the State
of New York as if service had been made in that state. Any claim by Licensee
arising hereunder shall be asserted by Licensee exclusively against Licensor,
and Licensee shall not have nor claim to have any recourse for any such claim
against any general or limited partner of Licensor.
17.8. The provisions hereof are severable, and if any provision
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect only such provision, or
part thereof in such jurisdiction and shall not in any manner affect such
provision in any other jurisdiction, or any other provision in this Agreement in
any jurisdiction. To the extent legally permissible, an arrangement which
reflects the original intent of the parties shall be substituted for such
invalid or unenforceable provision. As of the effective date hereof, this
agreement supercedes the agreement dated as of January 1, 1995 between Licensee
and Licensor, but neither Licensee nor Licensor waives any rights arising under
such prior agreement. Licensee shall not be required to seek Licensor's approval
with respect to any Licensed Products or other materials approved by Licensor
pursuant to the prior agreement solely as a result of the execution of this
Agreement.
17.9. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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17.10. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused the same to be executed by a duly authorized officer as of
the day and year first above written.
POLO RALPH LAUREN, L.P.
By: Polo Ralph Lauren Corporation,
General Partner
By:
________________________________
WARNACO INC.
By:
________________________________
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