EXHIBIT 10.1
EXECUTION COPY
TRADEMARK LICENSE AGREEMENT
THIS IS A TRADEMARK LICENSE AGREEMENT dated as of August 9, 2000 between
LEVI STRAUSS & CO., a Delaware corporation located at 1155 Battery Street, San
Francisco, California 94111 ("LS&CO."), and Genesco Inc., a Tennessee
corporation located at Genesco Park, 1415 Murfreesboro Road, Nashville, TN 37217
("Licensee").
BACKGROUND
LS&CO. owns the trademarks (as defined in Section 1, the "Trademarks")
associated with the Dockers(R) brand. LS&CO. has developed the Trademarks and
brand to have an outstanding reputation and goodwill. Licensee is in the
business of designing, manufacturing, marketing and selling men's footwear
products. Licensee desires to obtain, and LS&CO. is willing to grant, a license,
under which Licensee may and shall use the Trademarks as described in this
Agreement.
LS&CO. AND LICENSEE AGREE AS FOLLOWS:
1. Grant of License
LS&CO. grants to Licensee, and Licensee accepts, an exclusive,
non-assignable right to use the Trademarks as described in this Agreement,
solely in connection with the manufacture, advertising, distribution and sale of
Products to Approved Retailers for resale by those Approved Retailers within the
Territory. "Trademarks" means: (i) all of the trademarks identified on Exhibit
A; (ii) any combination, form or derivative of those trademarks which LS&CO.
may, from time to time at its sole discretion, specifically authorize for use by
Licensee in a writing identifying the mark and referring to this Section 1; and
(iii) any other trademark LS&CO. may, from time to time at its sole discretion,
specifically authorize for use by Licensee in a writing identifying the mark and
referring to this Section 1, it being understood that LS&CO. may from time to
time remove or substitute individual trademarks from Exhibit A at its sole
discretion because of changes in marketing strategy, branding evolution or
otherwise. "Products" means those items identified on Exhibit B, all bearing or
incorporating one or more of the Trademarks. "Territory" means the United
States, it territories and possessions. "Approved Retailers" means retailers
approved under Section 8 to purchase Products from Licensee.
2. Term
2.1 Initial Term. The initial term of this Agreement shall begin as of
January 1, 2001 and shall end on December 31, 2004 (the "Initial Term"), unless
earlier terminated as provided in Section 13. It shall consist of four Annual
Periods. "Annual Period" shall mean, for the Initial Term and any renewal term,
the twelve- (12) month period beginning January 1 of a given year and ending
December 31 of that year.
2.2 Renewal Term. This Agreement shall be renewed, upon written request of
Licensee delivered to LS&CO. not earlier than April 1, 2004 and not later than
June 30, 2004, for one (1) additional four year term, commencing on January 1,
2005 and ending on December 31, 2008 ("Renewal Term"), if: (i) Net Sales of
Products for the Annual Period beginning January 1, 2003 are no less than
$60,000,000 and (ii) Licensee is in compliance with all terms and conditions
contained in this Agreement and there is no outstanding Event of Default
existing on the date Licensee delivers its notice of renewal or at any time
during the balance of the Initial Term. Licensee shall include with its renewal
notice data demonstrating that the renewal condition set out in clause (i) is
satisfied, a written certification by the president, a vice president or the
chief financial officer to the effect that the condition set out in clause (ii)
is met and Licensee's projections for sales of Products during the contemplated
Renewal Term. Within thirty (30) days after receipt of Licensee's renewal
notice, and again on the last day of the Initial Term, LS&CO. shall notify
Licensee whether or not the conditions to renewal set out in this Section 2.2
are satisfied or waived. If they are satisfied, then this Agreement shall be
considered renewed. If they are not satisfied, then this Agreement shall expire
and terminate at the end of the Initial Term. Licensee's failure to timely
deliver its notice of renewal shall be treated as a final decision by Licensee
that it has elected not to renew.
3. Royalties
3.1 Guaranteed Minimum Royalty. Licensee shall pay to LS&CO. a
non-recoupable guaranteed minimum royalty (the "Guaranteed Minimum Royalty") in
respect of each Annual Period. The Guaranteed Minimum Royalty shall be as
follows:
Annual Period Guaranteed Minimum Royalty
1st $2,850,000
2nd $3,050,000
3rd $3,250,000
4th $3,460,000
In the event that Earned Royalties for any quarter fall below one-fourth of the
above Guaranteed Minimum Royalty for the applicable Annual Period, Licensee will
pay any shortfall to LS&CO. no later than the 15th calendar day following the
close of each calendar quarter. If royalties actually paid during any Annual
Period equal or exceed the Guaranteed Minimum Royalty for that Annual Period,
subsequent royalty payments shall be made on the basis of actual sales only.
Should there be a renewal of this Agreement as contemplated by Section 2.2, the
Guaranteed Minimum Royalty in respect of each Annual Period during the Renewal
Term shall be an amount equal to [_______]* of the projected earned royalty for
such Annual Period, as reflected in the projections supplied by Licensee to
LS&CO. as contemplated by Section 2.2.
3.2 Earned Royalty.
(a) During each Annual Period of the Initial Term and the Renewal
Term, if any, Licensee shall pay to LS&CO. earned royalties on (i) first quality
Products, (ii) second
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COMMISSION
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quality, closeout, and end of season Products ("Second Quality"), and (iii)
Products specifically designed and approved for sale to LS&CO outlet stores
(currently operated by Designs, Inc. and MOST) ("Made for Outlet") in amounts as
follows:
- -------------------------------------------------------------------------------------------
Men's
- -------------------------------------------------------------------------------------------
Initial Term and First Quality Second Quality Made for Outlet
Renewal Term ------------- -------------- ---------------
----------------- (% of Aggregate (% of Aggregate (% of Aggregate
Net Sales) Net Sales) Net Sales)
1st Annual Period [____]* [____]* [____]*
- -------------------------------------------------------------------------------------------
In the event that LS&CO. notifies Licensee in writing that one or more of the
Trademarks will be removed from Exhibit A in one hundred fifty (150) days or
less, Licensee may sell Products bearing the formerly approved Trademarks as
closeout items only to those Approved Retailers approved under Section 8.3 for a
period of one hundred twenty (120) days after Licensee receives written notice
from LS&CO. of the removal of said Trademarks from Exhibit A ("Involuntary
Discontinuations.").
Licensee shall pay to LS&CO., no later than thirty (30) days after the end of
each quarterly period, an amount equal to the excess of earned royalties in a
quarter over the Guaranteed Minimum Royalty for that quarter. Licensee shall pay
Second Quality royalty rates on Involuntary Discontinuations. Licensee shall pay
First Quality royalty rates on Second Quality Products for any Annual Period to
the extent that sales of Second Quality Products (other than Involuntary
Discontinuations) are greater than [____]* of total Product sales (in terms of
dollars). For any such Annual Period, Licensee shall pay LS&CO., at the time it
delivers the annual statement for that Annual Period as described in Section
9.2, an amount equal to the amount during that Annual Period that the Licensee
owed for royalties on Second Quality Products in excess of the amount already
paid over the [____]*.
(b) "Net Sales" shall mean the gross sales of all Products sold,
less trade discounts actually taken and credits for merchandise returns actually
applied to subsequent payments required to be made to Licensee, with merchandise
returns being credited in the quarterly period in which the returns are actually
made. A Product shall be considered "sold" on the earlier of the date when the
Product is billed or invoiced, shipped, consigned or paid for. The terms of
payment or credit concerns relating to Approved Retailers or otherwise shall not
affect Licensee's royalty payment obligations.
3.3 Payment Mechanics. Licensee shall make royalty and all other
required payments to LS&CO. in U.S. Dollars by wire transfer to:
[____]*
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COMMISSION
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Licensee shall provide LS&CO. with written documentation of the wire transfer
within five (5) days of each such transfer. If a payment is not received when
due for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date on which it became due, at a rate equal to
1% over the base rate (expressed as an annual rate) announced from time to time
by Citibank N.A. New York (or its successor) as then in effect. If, upon any
examination of Licensee's books and records as provided by Section 9, LS&CO.
discovers any royalty underpayment by Licensee, then Licensee will make, within
twenty-two (22) days after LS&CO.'s demand, all payments required to be made to
correct and eliminate the underpayment. In addition, if that examination reveals
an underpayment of more than 1% for any quarterly period, then Licensee shall
reimburse LS&CO. for LS&CO.'s expenses in performing the examination.
3.4 Monthly Reporting. Within twenty (22) days after the end of each
calendar month, Licensee shall prepare and furnish to LS&CO. a monthly royalty
statement setting forth Net Sales by account, Net Sales by style, net returns by
account and net returns by style, and a calculation of royalties, for the
preceding month. Licensee shall include with each royalty statement a written
certification of statement accuracy by the chief' financial officer of Licensee
or Licensee's accounting firm. Licensee shall transmit such statement via such
method as may be designated by LS&CO. from time to time (whether by electronic
transmission, fax or mail). Currently, all reports shall be transmitted
electronically through the use of LicenseNet(R) software.
3.5 Royalty Statement. A Royalty Statement shall be prepared and furnished
by Licensee to LS&CO. with respect to each quarterly period ended the last
business day of March, June, September and December of the term, and shall be
furnished to LS&CO. within thirty (30) calendar days of the end of each such
period. The Royalty Statement shall include Net Sales by account, net returns by
account and a calculation of royalties. Licensee shall include with each royalty
statement a written certification of statement accuracy by the chief financial
officer of Licensee or Licensee's accounting firm.
3.6 Monthly Sales Reports. LS&CO. may, from time to time, revise the
report process and format described above. Upon notice from LS&CO., Licensee
shall comply with the revised reporting requirements as reasonably determined by
LS&CO.
4. Marketing and Sales
4.1 Sales Plan. On or before September 1 of each Annual Period, Licensee
shall deliver to LS&CO. a general plan showing aggregate net sales expectations
for the upcoming Annual Period. No later than thirty (30) days following
Licensee's delivery of the proposed sales plan, LS&CO. and Licensee shall meet
to discuss and complete a final sales plan (the "Sales Plan"), it being
understood that the line plan, list of retailers and specific marketing
materials and plans are subject to LS&CO.'s approval as provided elsewhere in
this Agreement and that actual sales performance may vary from that contemplated
by the Sales Plan in view of market conditions, customer relations and other
factors.
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4.2 Consumer Advertising. During each Annual Period, Licensee shall pay
to LS&CO., or to such other person or entity as LS&CO. may designate, an amount
equal to [____]* on projected Net Sales up to [____]*, [____]* on projected Net
Sales between [____]* and [____]*, and [____]* on projected Net Sales over [__]*
on men's products only (the "Marketing Contribution"). Licensee shall pay these
amounts to LS&CO. within thirty (30) days after receipt of invoices from LS&CO.,
it being understood that LS&CO. anticipates issuing these invoices at the time
of the underlying expenditure for marketing activities. If actual aggregate Net
Sales exceed projected Net Sales for any Annual Period, then Licensee shall pay
to LS&CO. an agreed percentage of the excess, with that amount payable in, and
for use during, the next Annual Period, in addition to the Marketing
Contribution otherwise due for that Annual Period. Marketing Contributions shall
be separate from and shall not be subject to credit for expenditures by Licensee
for cooperative advertising, trade advertising, fixture programs, trade shows,
sampling or any other promotional or sales material. LS&CO. shall use these
funds for consumer marketing of the brand and branded products through vehicles
and at the times and in the manner as LS&CO. may determine, Licensee
acknowledging that it may not receive any direct or pro rata benefit from its
Marketing Contributions.
4.3 Business Materials. Licensee shall not use any business materials,
including, without limitation, invoices, stationery, advertising, promotional
materials, sundries, labels, packaging, fixtures, posters or graphics, bearing
any of the Trademarks, unless such materials comply with LS&CO.'s trademark use
standards as contemplated by Section 11.7 and unless Licensee shall have first
obtained LS&CO.'s approval of the use. Any approval granted by LS&CO. shall be
effective until revoked by LS&CO.; to the extent LS&CO.'s approval relates only
to a seasonal collection of Products, however, Licensee shall not use such
packaging or business materials without LS&CO.'s separate specific approval
after completion of the season to which the collection relates.
4.4 Retailer-Level Advertising. Licensee shall work directly with the
Approved Retailers to plan and execute retailer-level advertising (including
cooperative advertising if requested by LS&CO.) and events. LS&CO. shall provide
guidelines for such advertising including, without limitation, acceptable
trademark and/or logo usage, recommendations of layout, models, styling, size
and placement of advertising. Licensee shall use reasonable efforts to ensure
Approved Retailer compliance with those guidelines. Licensee shall not use
cooperative advertising or other advertising materials prepared by Licensee for
Approved Retailers without first obtaining LS&CO.'s approval of such materials.
Any cooperative or other advertising developed under this Section 4.6 shall be
limited to use during the seasonal collection of Products to which such
advertising relates.
4.5 Retail and Visual Presentations
(a) Licensee, at its sole expense, shall develop all visuals used
at retail, including packaging, fixtures, point of sale materials and visual
merchandising materials. Licensee shall provide LS&CO. with a timetable for the
development of the materials. LS&CO. may provide reasonable guidelines for the
development of such materials, and use of all such materials shall be subject to
LS&CO.'s prior approval. Licensee at its expense may use the vendors and
creative agencies used by LS&CO. for similar projects. If Licensee decides not
to
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COMMISSION
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use such vendors, it shall nonetheless be required to comply with guidelines
provided by LS&CO. If LS&CO. reasonably determines that any materials produced
by a vendor selected by Licensee do not meet LS&CO.'s quality standards,
Licensee shall upon LS&CO.'s request select and use an alternate vendor approved
by LS&CO.
(b) Licensee shall use reasonable efforts to secure premium retail
locations, custom fixturing and strong image positioning for the Products on the
retail floor. Licensee shall work with retailers to update the location,
fixturing and positioning on a regular basis. Licensee shall not provide, both
during the term of this Agreement and after its expiration or termination,
packaging, fixtures, point of sale, visual merchandising or related materials to
any person other than to an Approved Retailer or, following expiration or
termination of this Agreement, to LS&CO.
4.6 Trade Advertising; Publicity
(a) Licensor shall be responsible for the development, at
Licensee's sole expense, of all advertising in trade or industry publications.
Licensor shall submit all such advertising to Licensee for its approval prior to
its submission to the publication. Licensee shall use LS&CO. branded apparel or
accessories in all Product advertising whenever a head to toe shot or visual
requiring other product categories is required. If LS&CO. or one of its
licensees does not have a product category required for the advertisement, then
LS&CO. and Licensee shall choose an alternate brand for that product category,
it being understood that Licensee shall: (i) be responsible for obtaining
appropriate legal advice concerning such use; (ii) cause all trademark or other
identifying marks or features visible on the item to be removed from or obscured
in the final image prior to publication; and (iii) be responsible in all
respects to the maker of the alternative product. If removing or obscuring the
mark is impossible because of the nature of the product or is unsatisfactory
from an aesthetic or legal perspective, then Licensee and LS&CO. shall select
another product.
(b) Licensee shall maintain editorial contacts within its industry
and shall use reasonable efforts to gain editorial coverage for Products in
relevant industry publications. Licensee shall not, however, make any press or
other public communications (except to the extent that in Licensee's reasonable
judgment disclosure is required by applicable law) regarding LS&CO., Dockers(R)
brand or Product plans and strategies, sales or earnings of the Products or the
status of the relationship between LS&CO. and Licensee, without in each case
first obtaining LS&CO.'s approval, it being understood that LS&CO. anticipates
that it will coordinate all major programs to publicize or promote the Products.
4.7 Merchandise Coordinators. At such time as LS&CO. and Licensee
mutually agree that the business requires it, Licensee shall provide, at its
sole expense, the services of merchandise coordinators to service retail
purchasers of Products. Licensee shall train such coordinators and sales
associates at its sole expense. Licensee shall use LS&CO. brand and trend
information to illustrate overall brand strategies in such training.
4.8 Marketing Coordination. The senior executives of Licensee
responsible for marketing the Products shall attend marketing coordination
meetings as requested by LS&CO.
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These meetings shall include discussion of marketing, publicity, promotion,
advertising, visual programs, and use of Trademarks, and development of annual
and seasonal marketing plans. Representatives from other licensees of the
Trademarks and creative vendors of LS&CO. may be present as LS&CO. may decide.
LS&CO. shall schedule marketing coordination meetings upon reasonable advance
notice and at times consistent with market calendars.
4.9 Research. LS&CO. may, at its discretion and sole expense, perform
research of consumer reaction to advertising or product initiatives involving
Products. LS&CO. shall inform Licensee in advance of such research; Licensee
shall participate if asked by LS&CO.
5. Product Designs
Licensee shall not produce or sell any Product unless LS&CO. approves of
the design and the collection under this Section 5. Licensee shall produce two
collections per Annual Period, for the Spring/Summer and Fall/Winter seasons and
not less than fifteen (15) Styles for each collection. (For purposes of this
Section 5, a "Style" shall mean a specific design in a particular fabrication.)
Licensee shall submit to LS&CO., for LS&CO.'s approval in accordance with the
design schedule attached as Exhibit C, all proposed designs and collections,
through vehicles and formats acceptable to LS&CO. If LS&CO approves but
specifies modifications in the designs or collections, then Licensee shall
incorporate those modifications in the final design and composition of the
collection. In addition, LS&CO. may submit proposed designs to Licensee.
Licensee shall in good faith consider these designs, and Licensee and LS&CO.
shall mutually decide whether to pursue and use the proposed design. LS&CO.
shall have the sole right to determine which Trademarks (and which combinations,
forms or derivatives of such trademarks) shall be used in connection with each
particular Product.
6. Products: Quality Control
6.1 Submission of Samples. Licensee shall not market or sell any
Products without first obtaining LS&CO.'s approval of the Products through the
process described in this Section 6. Licensee shall submit to LS&CO., at
Licensee's sole expense, one Sample of each different Style of a Product prior
to any commercial production of that Product. LS&CO. shall pay for any
additional Samples it requests at a price equal to Licensee's first factory cost
for the item. If LS&CO. rejects a Sample, whether on the basis of Trademark use,
style, design, dimensions, details, colors, materials, workmanship, quality or
otherwise, it shall give Licensee a brief explanation of the reasons for
disapproval, and it may make suggestions for modifying the particular item.
Licensee shall promptly correct such Sample and resubmit such Sample for
LS&CO.'s approval through the same process. "Sample" means a prototype or actual
sample of a Product from which commercial production will be made; a Sample
shall reflect product attributes including, without limitation, the type and
quality of materials, colors and workmanship. LS&CO. shall have no obligation to
approve, review or consider any item the submission of which did not comply with
the required submission procedure. Licensee shall either destroy Samples or
dispose of them through methods (for example, deposit in a sample archive or an
employee sample sale) not involving placement into the marketplace.
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6.2 Compliance with Sample. Licensee shall present for sale, through the
showing of each seasonal collection to the trade, Products identical in all
respects to approved Samples. Licensee shall ensure that all Products
manufactured and sold by Licensee adhere in all respects (including, without
limitation, use of Trademarks, materials, colors, workmanship, dimensions,
styling, detail and quality) to Samples approved by LS&CO. If any Product is, in
the sole discretion of LS&CO., not being manufactured or sold in adherence to
the Trademark uses, styles, designs, dimensions, details, colors, materials,
workmanship and quality embodied in the Samples or otherwise approved by LS&CO.,
LS&CO. shall notify Licensee in writing and Licensee shall immediately stop
selling the Product, and either (i) change the Product to so conform as
confirmed by LS&CO. or (ii) dispose of remaining inventory by selling the
Products as seconds to those Approved Retailers approved under Section 8.3 or by
destroying the Products.
6.3 Withdrawal of Approval. LS&CO. shall have the right, in its sole
discretion, to withdraw its approval of a Product, whether or not the Product is
non-complying as contemplated by Section 6.2. Upon receipt of written notice
from LS&CO. of its decision to withdraw approval, Licensee shall immediately
stop selling the Product as a first quality in-season Product and instead sell
the Product as a closeout item only to those Approved Retailers approved under
Section 8.3. Licensee may, however, complete work in process and utilize
materials on hand provided that it submits proof of that work in process to
LS&CO. and sells those Products as closeouts to those Approved Retailers
approved under Section 8.3.
6.4 Production Line. Licensee shall provide to LS&CO., at Licensee's
expense, one full production line of the initial season's collection of
Products, including each different Style of a Product. Licensee shall in every
subsequent season provide to LS&CO. one production line of any new or seasonal
Style for that season. Licensee shall provide to LS&CO. additional production
lines or portions of lines of Products at LS&CO.'s request upon payment by
LS&CO. of an amount equal to Licensee's first factory cost for the Products.
6.5 Seconds. In the case of second quality Products, Licensee, if
possible given the nature of the Product, shall remove the Trademarks from the
Product or prominently mark all such Products with the legend "second" or
"irregular," or a red-line. Licensee shall not sell any Products incorporating
any labels or other identification bearing any of the Trademarks as seconds,
damaged or defective merchandise without first obtaining LS&CO.'s approval.
6.6 Other Product Attributes. Licensee shall ensure that all Products
shall be suitable for their intended purposes; that no injurious, unlawfully
flammable, poisonous, deleterious or toxic substances or materials will be used
in or on the Products; that the Products in normal or foreseeable use will not
harm the user; and that the Products will be manufactured, advertised, labeled,
sold and distributed in compliance with all applicable laws and regulations and
in accordance with LS&CO. standards relating to flammability, detachable
hardware and other matters. Licensee shall not sell or shall immediately stop
selling any Product that does not meet or is later found not to meet these
requirements.
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7. Personnel and Cooperation
7.1 Designation of Managerial Personnel. Licensee shall at all times
employ a senior manager, reasonably satisfactory to LS&CO., who shall be
responsible for oversight of the production, merchandising, distribution and
promotion of the Products. Andy Gilbert shall be the initial manager.
7.2 Designation of Design Personnel. Licensee shall at all times employ
a designer [or designers], reasonably satisfactory to LS&CO., who shall be
responsible for oversight of Product design, direction and development. Dave
Malek shall be the initial designer.
7.3 Consultation. Licensee and LS&CO. shall make their respective
personnel, and shall use reasonable efforts to make the personnel of any of
their contractors, sub-licensees, suppliers and other resources, available for
consultation with the other party during normal business hours. When requested
by LS&CO., Licensee shall make available senior executives of Licensee to
discuss matters arising under this Agreement.
7.4 Computer Network. Upon LS&CO.'s reasonable request, Licensee will
enable itself to use and will use, with LS&CO. and other LS&CO. licensees, an
extranet or other electronic linkage system specified by LS&CO. Licensee will at
its expense (not to exceed $5,000 in any Annual Period) acquire and maintain
appropriate enabling hardware, software and enhancements.
7.5 LS&CO. Management Personnel. Upon Licensee's reasonable request,
LS&CO. will attempt to make key senior management personnel available to
participate in Licensee retailer visits, trade shows, or similar events.
Licensee will pay out of pocket expenses incurred by LS&CO., including, without
limitation, travel and lodging expenses, for those managers.
8. Distribution
8.1 Overview. The retail distribution of products bearing the Trademarks
is of critical importance to LS&CO. It affects the ability of LS&CO. to, among
other things, reach the target consumers of the Dockers(R) brand, maintain the
reputation and integrity of the Trademarks, enhance the image of the Dockers(R)
brand and facilitate consistency in product presentation and assortment. Those
concerns, and LS&CO.'s commercial need to maintain flexibility in its
distribution strategies and policies, underlie the provisions of this Section 8.
Accordingly, Licensee shall market, sell and distribute Products in the
Territory in accordance with its provisions. Retailers approved under Sections
8.2 and 8.3 of this Agreement and identified on Exhibits D and E, as the case
may be, are occasionally referred to as "Approved Retailers."
8.2 First Quality. Licensee may market, sell and distribute first
quality, in season Products only to: (i) the retailers listed on Exhibit D as in
effect at the time and (ii) LS&CO. and its affiliates. Licensee shall not
market, sell or distribute first quality, in season Products to any retailer
listed on Exhibit E1 without LS&CO.'s prior written approval. Licensee
acknowledges that LS&CO. may at its sole discretion, during discussion of the
Sales Plan or otherwise,
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determine that certain Products may be sold by Licensee only to selected
retailers listed on Exhibit D.
8.3 Second Quality. Licensee may market, sell and distribute second
quality and closeout or end of season Products only to: (i) the retailers listed
on Exhibit E1 as in effect at the time and (ii) LS&CO. and its affiliates.
Licensee shall not market, sell or distribute second quality and closeout
Products to any retailer listed on Exhibit D without LS&CO.'s prior written
approval.
8.4 Made for Outlet. Licensee may market, sell and distribute "Made for
Outlet" Products only to: (i) the retailers listed on Exhibit E2, as in effect
at the time and (ii) LS&CO. and its affiliates. Licensee shall not market, sell
or distribute Made for Outlet Products to any retailer not listed on Exhibit E2
without LS&CO.'s prior written approval.
8.5 Additional Approved Retailers. Licensee may ask LS&CO. at any time
to add additional retailers to Exhibits D, E1 or E2. Licensee shall give LS&CO.
a completed Account Approval Form, in the form attached as Exhibit F for each
proposed additional retailer and all additional information, including without
limitation, interior and exterior photographs and data about the retailer's
customer base, as LS&CO. may request. LS&CO. may approve or disapprove the
request in its sole discretion. If LS&CO. approves an additional retailer, then
LS&CO. shall prepare and distribute a new and governing Exhibit D ,Exhibit E1,
or Exhibit E2, as the case may be, which shall be effective going forward.
8.6 Withdrawal of Approval. LS&CO. may in its sole discretion withdraw
approval of any Approved Retailer by giving written notice to Licensee. After
Licensee's receipt of such notice, Licensee may ship Products to the retailer
for a period of one hundred twenty (120) days. If Licensee has executed supply
contracts with a disapproved retailer which require Licensee to ship beyond
thirty (30) days, Licensee shall provide LS&CO. with a copy of any such contract
for LS&CO.'s consent to ship beyond the thirty- (30) day period, and Licensee
may fulfill any non-cancelable portion of that supply contract or, at LS&CO.'s
option, LS&CO. may pay Licensee any cancellation penalty amounts due under the
supply contract and Licensee shall not fulfill the contract. Licensee recognizes
that LS&CO. may from time to time change its distribution profile and account
policies, or take actions in implementing and enforcing its account policies,
and that such actions may result in the withdrawal of approvals. If LS&CO.
withdraws approval of a retailer, then LS&CO. shall prepare and distribute a new
Exhibit D, Exhibit E1 or Exhibit E2, as the case may be, which shall be
effective going forward. If LS&CO. withdraws approval of a retailer of a size
and volume such that withdrawal will materially, adversely affect Licensee's
ability to achieve the minimum sales targets established herein, then the
parties shall negotiate in good faith to recalculate the Guaranteed Minimum
Royalties set forth in Section 3.1 and the minimum net sales threshold for
renewal set forth in Section 2.2.
8.7 Accommodation Sale. Licensee may make accommodation sales of
Products to its employees. Licensee shall pay LS&CO. a royalty on such
accommodation sales at the rates specified in Section 3.
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8.8 Prohibited Sales. Licensee shall not market, sell or distribute any
Products through or to any person or entity except as expressly provided in this
Section 8. For example, Licensee shall not sell Products (i) to any wholesaler,
jobber or exporter or (ii) directly to consumers except through a Licensee-owned
brick-and-mortar retail store approved under Section 8.2 or 8.3. Licensee shall
not, without LS&CO.'s prior approval, sell any Products to any third party
(including an Approved Retailer) which, directly or indirectly, sells or,
Licensee knows or has reason to know, proposes to sell, such Products outside
the Territory, or sell or proposes to sell Products through the Internet or any
other vehicle other than an approved brick-and-mortar retail store. Licensee
shall use reasonable efforts to prevent any such resale outside the Territory or
through an unauthorized vehicle and shall, immediately upon receiving notice
from LS&CO. or otherwise learning that an Approved Retailer is selling Products
outside the Territory or through an unauthorized vehicle, cease all sales and
deliveries to that Approved Retailer.
8.9 Sales to LS&CO. Licensee shall make available for purchase, and
shall sell at its customary price and on its customary credit and payment terms,
all lines and Styles of Products, to LS&CO., to any affiliate of LS&CO. and to
any person or firm operating any stores or facilities in the Territory under
license from LS&CO. which are authorized by LS&CO. to sell Products. LS&CO. and
any of its affiliates may market, sell and distribute Products directly to
consumers, including without limitation, catalog sales, sales through the
Internet and sales through LS&CO.-owned retail stores.
9. Inspection; Statements and Records
9.1 Inspection Rights. LS&CO. and its representatives may, during normal
business hours and upon reasonable advance notice, inspect all facilities used
by Licensee and its contractors, sublicensees and suppliers in connection with
Licensee's performance of its obligations under this Agreement including
compliance with Section 10. These facilities shall include, without limitation,
those used for preparation of Samples and for manufacture, sale, storage or
distribution of Products in the process of manufacture and when offered for
sale.
9.2 Accounting and Audit Rights. Licensee shall at all times keep an
accurate account of all operations and transactions within the scope of this
Agreement. Within thirty (30) days after the end of each quarter, Licensee shall
give to LS&CO.: a statement presenting (i) a listing of each retailer to which
Licensee sold Products in such period and the sales to each such retailer in
such period expressed in both units of each Product sold and aggregate Net Sales
for each Product sold and (ii) aggregate gross sales, aggregate trade discounts,
aggregate merchandise returns and aggregate Net Sales of all sales of Products
by product category. These statements shall be in sufficient detail to be
audited from the books of the Licensee and shall be certified by the chief
financial officer of Licensee. No later than forty five (45) days after the end
of Licensee's fiscal year, Licensee shall give to LS&CO.: (i) a statement,
certified by the chief financial officer of Licensee, showing aggregate gross
sales, aggregate trade discounts, aggregate merchandise returns and aggregate
Net Sales of Products made by Licensee; and (ii) copies of Licensee's audited
balance sheet, income statement, statement of cash flows and statement of
stockholders' equity, and the notes to those statements, as of the year-end and
for the twelve-month period then ended. During the term of this Agreement and
for a period of five (5) years
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after its termination or expiration, LS&CO. or its agents, at LS&CO.'s sole
expense, may inspect and audit all the books of account of Licensee relating to
performance by Licensee of its obligations under this Agreement, including,
without limitation, those relating to computation of Net Sales.
9.3 Records. Licensee shall provide to LS&CO., in the form requested by
LS&CO., such information as LS&CO. may reasonably request with respect to the
manufacture, distribution and sale of Products and Licensee's compliance with
the provisions of this Agreement. Licensee shall retain all books and records
relating to its performance of this Agreement during the term of this Agreement
and for a period of five (5) years after its termination or expiration.
10. Ethics Code and Global Sourcing and Operating Guidelines
10.1 LS&CO. Reputation. LS&CO. has and is determined to maintain a
world-wide reputation for ethical business conduct. To that end, LS&CO. adopted
a Code of Ethics and Global Sourcing and Operating Guidelines ("GSOG") setting
forth standards of conduct it requires from, among others, its licensees,
including Licensee. Licensee acknowledges that its conduct, and the conduct of
any subcontractor, must reflect positively on LS&CO.'s reputation and
accordingly agrees to the provisions of this Section 10.
10.2 Code of Ethics. Licensee represents and warrants that Licensee and
its key officers and managers have read and understand LS&CO.'s Code of Ethics,
a copy of which is attached to this Agreement as Exhibit G, and agrees that
Licensee shall, and shall cause its subcontractors to, abide by the provisions
thereof (as amended from time to time by LS&CO.) in conducting all aspects of
its operations under this Agreement.
10.3 Global Sourcing and Operating Guidelines. Licensee represents and
warrants that its key officers and managers have read and understand the GSOG
attached to this Agreement as Exhibit H, and agrees that Licensee shall, and
shall cause its permitted sub-contractors to, comply with the requirements of
the GSOG at all times.
10.4 Effect on Compliance with Laws. Licensee shall be fully responsible
for compliance with all local laws and regulations applicable to Licensee's
operations. If the requirements of the Code of Ethics or of the GSOG are
stricter than the requirements of applicable law, the requirements of the Code
of Ethics and the GSOG shall control.
10.5 Effect of Breach. This Section 10 is of the essence of this
Agreement. Any failure by Licensee or any of its subcontractors to comply with
the Code of Ethics or any failure by Licensee or any of its subcontractors to
comply with the GSOG shall be grounds for declaration of an Event of Default by
LS&CO. under Section 13.
11. Intellectual Property Matters
11.1 Permitted Use. The license granted under this Agreement applies only
to the use of the Trademarks by Licensee in connection with the manufacture,
advertising, distribution and
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sale of Products to retailers approved under Section 8. Licensee is not
authorized to use any other trademark of LS&CO. or any of its affiliates or to
use any Trademarks in connection with the manufacture and sale of any other
products, the sale of Products to any person or entity other than a retailer
approved under Section 8 or for any purpose other than as expressly provided in
this Agreement.
11.2 Reservation of Rights. LS&CO. owns the Trademarks and any related
registrations or applications. Except as specifically provided in this
Agreement, LS&CO. reserves all right, title and interest in and to the
Trademarks for its own use or for the use of any other licensee, whether within
or outside the Territory, in connection with any and all products and services.
By way of example and not of limitation, Licensee understands and agrees that:
(i) LS&CO. may manufacture, or authorize third parties to manufacture, in the
Territory, Products for ultimate sale outside the Territory; and (ii) LS&CO. may
grant licenses to others in the Territory in connection with items of the type
described in Exhibit B except for Products bearing the Trademarks manufactured
and sold to Approved Retailers.
11.3 No Sublicense. Licensee shall not grant to any third party any
right, permission, license or sublicense with respect to any of the rights
granted under this Agreement. Licensee may enter into a sublicense agreement or
purchase order arrangement with a third party with whom Licensee contracts for
the manufacture of Products, provided that that sublicense or purchase order
limits use of the Trademarks to only those uses as may be necessary for the
manufacture of Products for Licensee under this Agreement. Use of contractors
shall in no way limit or otherwise affect Licensee's obligations under this
Agreement; Licensee shall be responsible for all contractors and shall take all
steps necessary to ensure that contractors maintain the level of quality
required under this Agreement and otherwise comply with this Agreement. Licensee
shall ensure that all sundry items and other materials bearing the Trademarks
used by Licensee or any contractor are used only for purposes of manufacture of
Products, that Licensee and any contractors take appropriate steps to prevent
the loss, duplication or improper use of these sundries and materials and that
Licensee or any contractor not use these sundries and materials in making
products for Licensee other than the Products or for the account of any party
other than Licensee.
11.4 Other Uses; No Derivatives. Licensee shall not use any Trademarks in
such a way so as to give the impression that the names "Levi Strauss & Co." or "
Dockers", "Dockers Recode," or such Trademarks, or any combination, form or
derivative of a Trademark, is the property of Licensee. Neither the Products nor
any labeling or packaging shall bear any of Licensee's marks or other
identifiers except for the Trademarks or except as required by law. Licensee
shall not use the reputation and goodwill of the Trademarks or LS&CO. in
connection with or otherwise to influence the sales or distribution of any other
brand it manufactures or sells. Licensee may use the Trademarks on stationary
and business cards provided that such material clearly indicates that Licensee
is a licensee of LS&CO. (for example, by including the legend "Authorized Levi
Strauss & Co. Licensee" on the material) and does not give the impression that
Licensee and LS&CO. are otherwise related. The material shall be subject to
LS&CO.'s approval and shall be modified by Licensee pursuant to LS&CO.'s
instructions.
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11.5 No Use for Publicity. Unless expressly requested by LS&CO., Licensee
shall not manufacture, sell or distribute Products for use for publicity
purposes (other than publicity of Products), in combination sales, as premiums
or giveaways, or to be disposed of through similar methods of merchandising.
LS&CO. reserves the right to authorize the manufacture and sale of Products as
part of a combination sale, premium or giveaway with products (other than
Products) bearing the LS&CO. name or LS&CO. trademarks. These Products, however,
shall not: (i) be substantially similar to Products distributed by the Licensee
or (ii) unreasonably interfere with Licensee's distribution of Products. If
LS&CO. desires to authorize the manufacture of Products for these purposes,
LS&CO. shall provide Licensee notice and a first right of negotiation for the
manufacturing work. If LS&CO. and Licensee fail to reach a mutually acceptable
agreement within ten (10) days after such notice is given, LS&CO. may negotiate
and enter into an agreement with a third party for the manufacture of those
Products.
11.6 Rights to Trademarks. Licensee acknowledges and agrees that its use
of the Trademarks shall at all times be in its capacity as a licensee of LS&CO.,
for the account and benefit of LS&CO. Uses of the Trademarks shall not vest in
Licensee any title to the Trademarks or right or presumptive right to continue
use except as provided in this Agreement. For purposes of trademark
registrations, sales by Licensee or LS&CO. shall be considered to have been made
by LS&CO. Licensee shall not, during the term of this Agreement or after its
expiration or termination: (i) attack or question LS&CO.'s title or rights in
and to the Trademarks in any jurisdiction, or attack or question the validity of
this license or of the Trademarks, or (ii) contest the fact that Licensee's
rights under this Agreement (x) are solely those of a licensee entitled to
produce and sell products under contract and (y) terminate upon termination or
expiration of this Agreement. Licensee acknowledges that only LS&CO. may file
and prosecute a trademark application or applications to register any of the
Trademarks, and that registration decisions may be made by LS&CO. in its sole
discretion.
11.7 Standards. Licensee shall maintain the high standards of the
Trademarks in all marketing, packaging and promotion of the Products. LS&CO. may
issue uniform rules and regulations relating to the manner of use of the
Trademarks. Licensee shall comply with these rules and regulations. Licensee
shall take all appropriate actions, and all actions reasonably requested by
LS&CO., to prevent improper use of the Trademarks, in advertising, POS
presentations or otherwise by Approved Retailers and any others who come into
possession of the Products, and by subcontractors, vendors and any other
entities or persons engaged by Licensee in connection with this Agreement.
11.8 Counterfeiting. Licensee shall, at its own expense, take such
anti-counterfeiting measures as requested by LS&CO. from time to time and use
reasonable efforts to secure and protect from counterfeiting labels, sundries
and other materials used in connection with manufacturing, packaging and
marketing of the Products.
11.9 Design Ownership and Assignment. LS&CO. shall own, and Licensee
assigns to LS&CO., all copyright, patent, trade secret, know-how right, and all
other right, title and interest in and to, all artwork, sketches, color cards,
physical depictions of color stories, logos, labels, Samples and other materials
depicting designs or Products, whether created or furnished by Licensee or by
LS&CO., including any modifications or improvements created by Licensee or
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LS&CO. which are designed or intended for use with the Products and trademarks.
LS&CO. shall also own all right, title and interest to designs or design
elements that the parties agree in writing are to be exclusive to the Products.
All patent and copyright registrations in respect of designs and artwork,
sketches, logos, labels, Samples and other materials depicting the designs,
whether created or furnished by Licensee or LS&CO., shall only be applied for by
LS&CO., at LS&CO.'s discretion and expense, with the applications designating
LS&CO. as the patent or copyright owner, as the case may be. LS&CO. may use
these designs and other materials in any manner it desires, so long as the use
does not conflict with rights granted to Licensee under this Agreement,
including, without limitation, for products in jurisdictions outside the
Territory and on products other than Products in any jurisdiction. Licensee
shall cause to be placed on all Products and packaging, when necessary,
appropriate notices (reviewed and approved in advance by LS&CO.) designating
LS&CO. as the trademark, copyright or design patent owner, as the case may be.
11.10 Design License. LS&CO. grants to Licensee the exclusive right,
license and privilege to use the intellectual property owned by LS&CO. under
this Agreement and all related copyrights and design patents, if any, solely in
connection with Products sold to Approved Retailers in the Territory. LS&CO.
shall execute and deliver to Licensee all documents and instruments necessary to
document that license. Licensee shall have no right to use the licensed designs
under any other trademark or label or for any other product without first
obtaining the prior approval of LS&CO., including, without limitation, any
unique, signature design element or technical feature for the Products.
Notwithstanding the foregoing, nothing in this Agreement shall prevent use by
Licensee, during the term of this Agreement or after its termination or
expiration, of designs, design elements, technical features or styles that,
prior to their use in Products, Licensee has used in any of its other lines of
footwear or that are commonly used by other designers and manufacturers of
footwear.
11.11 Infringement. Licensee shall promptly notify LS&CO. in writing of
any use it learns of which may be infringements or imitations by others of the
Trademarks on articles similar to Products, and of any uses which may be
infringements or imitations by others of the related designs, design patents and
copyrights. LS&CO. shall have the sole right to determine whether or not any
action shall be taken on account of infringements or imitations. Licensee shall
not institute any suit or take any action unless LS&CO. in its sole discretion
authorizes Licensee to do so. Licensee shall not attempt to register any
infringing or confusingly similar trademark or corporate name, and shall use
reasonable efforts to ensure that no third party infringes or registers
confusingly similar trademarks or the LS&CO. corporate name. Licensee shall take
all appropriate actions, and all actions reasonably requested by LS&CO., to
prevent or avoid any misuse of the Trademarks or licensed designs by any of its
customers, contractors, sublicensees, suppliers or other resources.
11.12 Cooperation. Licensee shall, at LS&CO.'s expense (provided that
LS&CO. shall not be responsible for the cost of the time and effort expended by
Licensee's officers and employees in connection with furnishing such
assistance), assist and cooperate with LS&CO. in securing and preserving
LS&CO.'s rights in and to the Trademarks and in and to the designs, design
patents or copyrights described in Section 11.9. LS&CO. may commence or
prosecute any claims or suits in its own name and may join Licensee as a party
in these proceedings.
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12. Diligence; Other Relationships
12.1 Diligence. Licensee shall use its best efforts to exploit throughout
the Territory the license granted and to maintain the established prestige and
goodwill of the Trademarks and the reputation, standards and image of LS&CO.
Licensee shall maintain adequate design, sourcing, marketing, sales and customer
service resources, inventories and distribution facilities for Products to
ensure exploitation of the license and timely and complete performance of its
obligations under this Agreement.
12.2 Other Licenses. Licensee is a party to, or presently plans to become
a party to, certain licenses, sublicenses or similar arrangements giving
Licensee the right to manufacture or sell products of the type described in
Exhibit B. Those arrangements are described on Exhibit I. During the term of
this Agreement, Licensee shall not, except as approved by LS&CO. in its sole
discretion, become a party to any additional license, sublicense or similar
agreement giving Licensee the right to manufacture or sell, and shall not
manufacture or sell, any product of the type described in Exhibit B bearing
trademarks of or otherwise on behalf of Haggar, Savane, CK, Tommy Hilfiger, Liz
Claiborne, and Perry Ellis. In addition, if Licensee intends to enter into any
license or sublicense agreement giving Licensee the right to manufacture and
sell any product of the type described in Exhibit B for any other entity or
person and the product, in the reasonable judgment of Licensee, would compete in
the marketplace with the Products, Licensee shall, if not prevented by a
confidentiality agreement with the prospective licensor, notify LS&CO. in
writing of its intention as soon as practicable, but in no event less than
thirty (30) days prior to Licensee executing or entering into that license or
sublicense agreement. Licensee shall upon LS&CO.'s request discuss the proposed
arrangement with LS&CO.
13. Default; Termination
13.1 Event of Default. Each of the following shall constitute an event of
default ("Event of Default"):
(a) Licensee fails to make any payment of royalties (including
Guaranteed Minimum Royalties) or other amounts to LS&CO. when due;
(b) Licensee files a petition in bankruptcy, is adjudicated of
bankruptcy or files a petition or otherwise seeks relief under any bankruptcy,
insolvency or reorganization statute or proceeding, or a petition in bankruptcy
is filed against it and is not dismissed within sixty (60) days, or it becomes
insolvent or makes an assignment for the benefit of its creditors or a
custodian, receiver or trustee is appointed for it or a substantial portion of
its business or assets or admits in writing its inability to pay its debts as
they become due;
(c) Licensee, after achieving distribution and sale of Products
throughout the Territory, fails for a period of at least two (2) months to
continue the bona fide distribution and sale of Products;
16
(d) Licensee sells Products to any entity or person other than an
Approved Retailer or other than as provided in Section 8.9;
(e) Licensee's second quality and closeout or end of season sales
are greater than 20% of total Product sales (measured in units) during any
Annual Period;
(f) Licensee fails in any Annual Period to achieve enough sales to
generate earned royalties under Section 3.2 equal to or exceeding the Guaranteed
Minimum Royalty specified in Section 3.1 for that Annual Period;
(g) Licensee uses the Trademarks in a manner not authorized under
this Agreement or uses any other trademarks of LS&CO. on Products or otherwise;
(h) Licensee sells any Product Designs and Samples for which were
not approved by LS&CO. as provided by Sections 5 and 6 or the approval for which
was withdrawn as provided in Sections 6.2 or 6.3;
(i) Licensee commits any breach of its obligations in respect of
Confidential Information as specified in Section 17;
(j) Licensee sells Products not meeting product quality standards
as contemplated by Section 6;
(k) Licensee or any of its subcontractors commits any breach of
its obligations under Section 10;
(l) Licensee assigns or attempts to assign this Agreement
(including any deemed assignment resulting from a Change of Control as
contemplated by Section 18) in breach of its obligations under Section 18;
(m) any representation or warranty made by Licensee in this
Agreement is false in any material respect; or
(n) Licensee commits a material breach of any of its other
obligations under this Agreement.
13.2 Effectiveness and Cure. If any Event of Default specified in
Sections (b), (e), (f), (g), (h) or (i) occurs, then LS&CO. may immediately
terminate this Agreement, with that termination effective upon delivery of
notice to Licensee. If any other Event of Default occurs, or if LS&CO. decides
not to terminate immediately the Agreement in respect of an Event of Default
specified in Sections 13.1 (b), (e), (f), (g), (h) or (i) then Licensee, upon
written notice from LS&CO. to Licensee describing the circumstances giving rise
to that Event of Default, shall promptly and at its expense cure the Event of
Default as though it never occurred. If Licensee fails to cure such Event of
Default within that thirty (30) day period, then LS&CO. may terminate this
Agreement upon delivery to Licensee of a written notice to that effect, with
that termination effective upon delivery of notice to Licensee. It is understood
and agreed that
17
Licensee shall not have a right to cure if there occurs a second Event of
Default under the same subsection of Section 13.1 within two (2) years of a
prior Event of Default that did not, because of cure or otherwise, result in
termination of this Agreement.
14. Consequences of Termination
14.1 Option to Purchase. Licensee shall give LS&CO., no later than ten
(10) days following the termination of this Agreement (including by reason of
expiration), a listing of all Products on hand or in process. LS&CO. may conduct
a physical review of all finished and unfinished Products and roll goods,
labels, raw materials, sundries, embellishments, packaging, transparencies,
films and echtachromes that are used in connection with the manufacture and
packaging of the Products, artwork and negatives or transparencies previously
used or to be used in connection with the designs for the upcoming season and
prototypes and samples of the Products (collectively, the "Termination
Inventory"). LS&CO. or its designee shall have the option (but not the
obligation) in its sole discretion to purchase from Licensee either or both of:
(i) all or a portion of the finished Products and Samples and (ii) all or a
portion of the other Termination Inventory. If LS&CO. wishes to make a purchase,
LS&CO. shall notify Licensee of its or its designee's intention to exercise the
option within thirty (30) days of delivery after receipt of the Termination
Inventory listing. LS&CO. shall pay Licensee for any finished Products and
Samples at a price equal to actual manufacturing cost for those Products and
Samples. LS&CO. shall pay an amount equal to Licensee's book value for any
remaining items other than labeling and packaging materials bearing the
Trademarks, which Licensee will turn over to LS&CO. without payment by LS&CO.
Licensee shall at its expense deliver the purchased items to LS&CO. within
fifteen (15) days after receipt of LS&CO.'s exercise notice, with LS&CO. to pay
the purchase price to Licensee within ten (10) days after delivery of the
purchased items. LS&CO. shall be entitled to deduct from the purchase price any
amounts owed it by Licensee.
14.2 Disposal of Termination Inventory. If LS&CO. chooses not to purchase
all of the Products included in the Termination Inventory, then Licensee, for a
period of one hundred twenty (120) days after expiration or exercise of LS&CO.'s
option, may dispose of Products which are on hand or in the process of being
manufactured at the time of termination, to persons approved to purchase
Products under Section 8 and otherwise in accordance with this Agreement. If,
however, LS&CO. notifies Licensee that LS&CO. or a new licensee is selling
Products during that ninety (90) day period, or if the termination is by reason
of an Event of Default described in Section 13.1 (h) or (j), then Licensee shall
dispose of Products only to those Approved Retailers approved under Section 8.3.
Licensee shall pay earned royalties on such sales as provided in Section 3.
Licensee shall have no right to so dispose of Products unless it has complied
with the provisions of this Section 14. Notwithstanding the foregoing, if the
parties have mutually agreed to terminate this Agreement and no breach has
occurred, Licensee shall have a period of one hundred eighty (180) days to
dispose of inventory pursuant to this section.
14.3 Termination of Licenses. Upon termination of this Agreement, all
rights granted to Licensee under this Agreement, including, without limitation,
all license rights under Section 11.10 with respect to artworks, sketches and
other materials, together with rights to use the Trademarks, shall automatically
and without consideration or further action terminate and revert
18
to LS&CO. Licensee shall, except as required in connection with disposal of
Products included in the Termination Inventory as provided in Section 14.2: (i)
stop and refrain from all use of the Trademarks or any marks specified by LS&CO.
in its sole discretion as being similar to the Trademarks; (ii) stop and refrain
from further use of any of the artwork, sketches and other material covered by
Section 11.9 and the Product designs, which the parties have agreed will be used
exclusively for Products; and (iii) dispose of all sundries, labels, packaging
and other materials bearing the Trademarks in a manner approved by LS&CO.
14.4 Payment of Guaranteed Minimum Royalty. Licensee shall, no later than
thirty (30) days after the effective date of the termination, pay LS&CO. any
remaining installments of the entire Guaranteed Minimum Royalty for the Annual
Period in which LS&CO. gave notice of the termination.
14.5 Certain Events. No assignee for the benefit of creditors, custodian,
receiver, trustee in bankruptcy, sheriff or any other officer of the court or
official charged with responsibility for taking custody of Licensee's assets or
business may continue this Agreement or exploit or use any of the Trademarks
following the termination of this Agreement. Notwithstanding the provisions of
Sections 13 and 18, if, under the bankruptcy code or successor similar law, a
trustee in bankruptcy of Licensee, or Licensee, as debtor, is permitted to
assume this Agreement and does so and, thereafter, desires to assign this
Agreement to a third party in accordance with the bankruptcy code, the trustee
or Licensee, as the case may be (in either case, the "Debtor"), shall notify
Licensor. The notice shall set out the name and address of the proposed
assignee, the proposed consideration for the assignment and all other relevant
data about the proposed assignment. The giving of this notice shall constitute
the grant to LS&CO. of an option to have this Agreement assigned to LS&CO. or to
LS&CO.'s designee for the consideration, or its equivalent in money, and upon
the terms specified in the notice. The option may be exercised only by notice
given by LS&CO. to the Debtor no later than thirty (30) days after LS&CO.'s
receipt of the notice from the Debtor unless a shorter period is deemed
appropriate by the court in the bankruptcy proceeding. If LS&CO. does not
exercise its option in a timely manner, then the Debtor may complete the
assignment, but only if the assignment is to the entity named in the notice and
for the consideration and upon the terms specified in the notice. Nothing in
this Section 14.5 is intended to impair any rights which LS&CO. may have as a
creditor in the bankruptcy proceeding.
14.6 Transition Cooperation; Other Licenses. Licensee shall cooperate
with LS&CO. during the transition period following a termination of this
Agreement, including, for example, signing any documents reasonably requested by
LS&CO. to accomplish or confirm the outcomes (for example, reversions or
assignments of license or other intellectual property rights) contemplated by
Section 14. The right of Licensee to sell items of Termination Inventory is
non-exclusive and shall not limit LS&CO.'s rights to sell such items of
Termination Inventory or to enter into other licenses or transactions.
14.7 Remedies; Other Licenses: No Other Obligations
(a) Notwithstanding any other provision of this Agreement
(including, without limitation, Section 13), LS&CO. shall have all the rights
and remedies which it may
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have, at law or in equity, with respect to the termination of this Agreement,
the collection of royalties or other amounts payable by Licensee under this
Agreement, the enforcement of all rights relating to the establishment,
maintenance or protection of the Trademarks and the designs created or used
under this Agreement or in respect of damages or equitable relief in connection
with breach of this Agreement by Licensee, it being understood that termination
under Section 13 shall not be considered an exclusive remedy or in any way limit
LS&CO. from enforcing other rights or remedies, and that all decisions under
Section 13 by LS&CO. may be made by LS&CO. in its sole discretion.
(b) Licensee shall under no circumstance be entitled, directly or
indirectly, to any form of compensation or indemnity from LS&CO. as a
consequence of the termination or expiration of this Agreement for any reason,
including, without limitation, the circumstances contemplated by Section 13.
Licensee waives any claims it may have against LS&CO. arising from any alleged
goodwill created by Licensee for the benefit of Licensee or LS&CO. or from the
alleged creation or increase of a market for Products or other items bearing the
Trademarks.
(c) Notwithstanding anything to the contrary in this Agreement,
LS&CO. shall have the right, exercisable at any time, to negotiate and enter
into agreements with third parties under which it may grant a license to use the
Trademarks in connection with the manufacture, distribution and sale of Products
in the Territory, or to enter into whatever other transactions it desires for
the use of the Trademarks on Products without any obligation of any kind to
Licensee, if under such agreement the products will be sold after the date of
expiration or termination of the Agreement. Nothing in this Agreement shall be
construed to prevent any such third party licensee from showing these products
and accepting orders prior to the termination or expiration of this Agreement.
(d) It is understood and agreed that: (i) neither Licensee nor
LS&CO. shall be, as a result of entry into or performance under this Agreement
obligated to renew or extend this Agreement (other than as provided by Section
2.2) or business relationship in any respect, or to negotiate any such renewal
or extension, or, on the part of LS&CO., to offer a "first right of negotiation"
or "right of refusal" for a renewed or new license; (ii) subject to Section
12.2, Licensee shall be free to engage in negotiations and to enter into
agreements with other licensors or otherwise committing Product-devoted
resources, to commence upon expiration of this Agreement; and (iii) neither
Licensee nor LS&CO. shall have any right to compensatory, consequential, lost
profits, punitive or other damages of any other nature, or to obtain an
injunction, specific performance or other equitable remedy, whether to prevent
LS&CO. or Licensee, as the case may be, from entering into another agreement or
otherwise, should LS&CO. or Licensee, as the case may be, (a) decline to
negotiate or enter into a renewal or extension of this agreement (other than as
provided by Section 2.2) or (b) enter into a new agreement with a third party.
15. Indemnity
15.1 LS&CO. Indemnity. Except for matters as to which Licensee is
required to indemnify LS&CO. under Section 15.2, LS&CO. shall indemnify and hold
harmless Licensee and its affiliates, directors, officers, employees and agents
against any and all liability, claims,
20
causes of action, suits, damages and expenses (including reasonable attorneys'
fees and expenses in disputes or proceedings involving third parties or between
LS&CO. and Licensee) which Licensee is or becomes liable for, or may incur
solely by reason of its use within the Territory, in accordance with the terms
and conditions of this Agreement, of the Trademarks or the designs furnished to
Licensee by LS&CO., to the extent that such liability arises through
infringement of another's trademark rights (collectively, an "LS&CO. Indemnified
Claim"). If any LS&CO. Indemnified Claim shall be brought or asserted against
Licensee in respect of which indemnity may be sought from LS&CO. under this
Section 15.1, Licensee shall notify LS&CO. in writing not later than the earlier
of ten (10) days before a response is due or thirty (30) days after Licensee
receives notice of the LS&CO. Indemnified Claim, and LS&CO. shall assume and
direct the defense thereof. A failure or delay by Licensee in giving this notice
shall not reduce or otherwise affect LS&CO.'s indemnification obligations except
to the extent that the failure or delay shall have materially prejudiced
LS&CO.'s ability to defend or settle the Indemnified Claim. Licensee may, at its
own expense, be represented by its own counsel in such action or proceeding.
15.2 Licensee Indemnity. Except for matters as to which LS&CO. is
required to indemnify Licensee under Section 15.1, Licensee shall defend,
indemnify and save and hold harmless LS&CO. and its affiliates, directors,
officers, employees and agents against any and all liability, claims, causes of
action, suits, damages and expenses (including reasonable attorneys fees and
expenses in disputes or proceedings involving third parties or between LS&CO.
and Licensee), which LS&CO. is, or becomes liable for, or may incur, or be
compelled to pay by reason of any acts, whether of omission or commission, that
may be committed or suffered by Licensee or any of its servants, agents or
employees in connection with Licensee's performance of this Agreement, including
without limitation, Licensee's use of Licensee's own designs, advertising and
promotional material used by Licensee, manufacture, sale and consumer use of
Products or otherwise in connection with Licensee's business, whether that claim
based on laws relating to product liability, consumer protection, environmental
protection, tort, contract, trademark, patent, copyright, trade secret, tax,
employment, advertising, customs or any other law or basis (collectively, a
"Licensee Indemnified Claim"). If any Licensee Indemnified Claim shall be
brought or asserted against LS&CO. in respect of which indemnity may be sought
from Licensee under this Section 15.2, LS&CO. shall notify Licensee in writing
not later than the earlier of ten (10) days before a response is due or thirty
(30) days after LS&CO. receives notice of the Licensee Indemnified Claim. A
failure or delay by LS&CO. in giving this notice shall not reduce or otherwise
affect Licensee's indemnification obligations, except to the extent that the
failure or delay shall have materially prejudiced Licensee's ability to defend
or settle the claim. LS&CO. may, at its own expense, be represented by its own
counsel in such action or proceeding.
16. Insurance
16.1 Required Coverage. Licensee shall maintain, at its sole expense, the
following insurance coverage, with a financially sound insurance company having
an A.M. Best Rating of A or better, throughout the term of this Agreement and
for a period of three (3) years after its expiration or termination: (i)
worker's compensation, occupational disease, employer's liability (with limits
of not less than $1 million for bodily injury by accident for each accident, $1
million
21
for bodily injury by disease for each employee and a $1 million policy limit for
bodily injury by disease), disability benefit and other similar insurance
required under the laws of the state that apply to the activities to be
performed by Licensee under this Agreement; (ii) commercial general liability
insurance including products liability, blanket contractual liability, personal
injury and advertising liability coverage with a combined single limit of $1
million per occurrence for bodily injury, including death and property damage;
(iii) comprehensive automotive liability insurance for both owned and non-owned
vehicles used by Licensee either on or away from premises with a combined single
limit of $1 million per occurrence for bodily injury, including death and
property damage; and (iv) umbrella excess liability insurance, with a combined
single limit of $2 million per occurrence for bodily injury, including death and
property damage.
16.2 LS&CO. as Additional Insured. Licensee shall ensure that LS&CO., and
its directors, officers, employees, agents and assigns, shall be named as
additional insureds with respect to the insurance described in clause (ii)
through (iv) of Section 16.1. Licensee shall, within ten (10) days after
execution of this Agreement, deliver to LS&CO. a certificate of such insurance
from the insurance carriers, describing the scope of coverage and the limits of
liability, naming the additional insureds required by this Section 16 and
providing that the policy may not be canceled or amended without at least thirty
(30) days prior written notice to LS&CO.
17. Confidential Information
17.1 Confidential Information. Except as otherwise provided in this
Agreement, all information disclosed by one of the parties (the "Discloser") to
the other party (the "Recipient") is considered confidential and: (i) shall
remain the exclusive property of the Discloser; (ii) shall be used by the
Recipient only in connection with its performance under this Agreement; and
(iii) shall be maintained in confidence by Recipient as described in this
Section 17. "Confidential Information" means any formula, pattern, program,
method, marketing programs, profitability, corporate strategy, technique,
process, design, sketch, color card, color story, artwork, material, business
plan, customer or personnel list, or financial statement. Confidential
Information shall include, without limitation, information disclosed in
connection with this Agreement, but shall not include information that: (i) is
now or subsequently becomes generally available to the public through no
wrongful act or omission of Recipient; (ii) Recipient can demonstrate to have
had rightfully in its possession prior to disclosure to Recipient by Discloser;
(iii) is independently developed by Recipient without use, directly or
indirectly, of any Confidential Information; or (iv) Recipient rightfully
obtains from a third party who has the right to transfer or disclose it.
17.2 Limits on Use and Disclosure. Except as contemplated by this
Agreement or as specifically authorized by Discloser in writing, and except as
required by law, Recipient shall not reproduce, use, distribute, disclose or
otherwise disseminate Confidential Information. Upon expiration or termination
of this Agreement or upon request by Discloser, Recipient shall promptly deliver
to Discloser all Confidential Information (including copies) then in its
custody, control or possession, and shall deliver within five (5) days after
such termination or request a written statement to Discloser certifying
compliance with this Section 17.2.
22
17.3 Access. Licensee and LS&CO. shall use reasonable efforts to ensure
that access to Confidential Information is limited to those employees or other
authorized representatives of Recipient who need to know such Confidential
Information in connection with their work related to this Agreement. Recipient
shall use reasonable efforts to inform such employees or authorized
representatives of the confidential nature of Confidential Information.
17.4 Confidentiality of Agreement. Except as may be required under
applicable securities law and stock exchange regulations, Licensee shall not
issue any press release or other public announcements relating to this Agreement
in any respect or to the business relationship between LS&CO. and Licensee
without first obtaining the approval of LS&CO.
18. Assignment: Change of Control of Licensee
18.1 Licensor Assignment. Nothing in this Agreement limits LS&CO.'s
ability to sell or otherwise transfer the Trademarks to a third party or to
engage in any merger, consolidation, sale of assets, reorganization, sale of
stock or other transaction. LS&CO. may assign its rights and delegate its duties
under this Agreement as it sees fit, including, without limitation, in
connection with such a transaction.
18.2 Licensee Assignment. The rights granted to Licensee are personal in
nature. Licensee may not assign this Agreement or any rights granted under this
Agreement, or delegate any of its obligations under this Agreement, without
first obtaining the approval of LS&CO. Any such assignment without the prior
approval of LS&CO. shall be null and void and of no force or effect. Any "Change
of Control" (as defined in this Section 18.2) of Licensee shall be considered an
assignment of this Agreement by Licensee. "Change of Control" means: (i) any
consolidation or merger of Licensee in which Licensee is not the continuing or
surviving corporation or after which the shareholders of Licensee or the date
hereof cease to hold at least 50% or more of the combined voting power of
Licensee, (ii) any sale of all or substantially all the assets of Licensee to
any person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934)(the "Exchange Act") other than a then
existing shareholder or group of shareholders of Licensee owning 75% or more of
the combined voting power of Licensee's then outstanding securities or (iii) any
person, as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act
becomes or is discovered to be a beneficial owner (as defined in Rule 13d-3
under the Exchange Act as in effect on the date of this Agreement) directly or
indirectly of securities of Licensee representing 50% or more of the combined
voting power of Licensee's then outstanding securities on a fully converted,
fully diluted basis (unless that person is already a beneficial owner on the
date of this Agreement). Licensee shall notify LS&CO. of any Change in Control
within three (3) days after its occurrence. If the prior approval of LS&CO. is
not obtained with respect to any Change of Control of Licensee, LS&CO. shall be
entitled, in its sole discretion, to terminate this Agreement at any time during
the ninety (90) day period after the date upon which LS&CO. receives from
Licensee notice of the Change in Control or otherwise learns of the Change in
Control.
23
19. Approvals
This Agreement contains a number of provisions in which Licensee must
obtain LS&CO.'s approval of a particular item or matter. All requests for these
approvals must be made in writing by Licensee. Unless otherwise expressly stated
in the relevant provision, approval procedures shall be as described in this
Section 19. All approvals or disapprovals may be made by LS&CO. in its sole
discretion and must be communicated by LS&CO. in writing. If LS&CO. fails to
affirmatively approve or disapprove of an item or matter within ten (10)
business days after submittal to LS&CO., then Licensee shall contact LS&CO. and
confirm LS&CO. receipt. Any request for which approval is not given by LS&CO.
within fifteen (15) business days after confirmed receipt shall be considered
approved. LS&CO. shall have no obligation to review items or matters the
submission of which did not comply with this submission procedure. It is
understood and agreed that LS&CO.'s approval decisions under Sections 4, 5, 6
and 8 of this Agreement may be based solely upon LS&CO.'s subjective standards
as to aesthetics and image based upon its requirements for and the reputation
and prestige of products bearing the Trademarks, retail distribution of products
bearing the Trademarks and its commercial judgment generally. It is understood
that Product quality, style of packaging, shipping, customer service, promotion,
selling tools, creation and introduction of new products and service and
presentation at retail all may bear upon "image" as contemplated by this Section
19.
20. Dispute Resolution
20.1 Definitional Disputes. Licensee recognizes that LS&CO. has granted,
and may in the future grant, licenses to other parties to use the Trademarks or
one or more of LS&CO.'s other trademarks in connection with the manufacture,
promotion and sale of apparel, accessories or other items. If Licensee or the
licensee under any other such license notifies LS&CO. of what it believes is an
existing or potential conflict in the definition of merchandise covered by, or
the rights of the licensee under, their respective license agreements, LS&CO.
shall consider and resolve the issue by giving each of the affected parties a
written notice of its decision. LS&CO.'s decision shall be final and binding
upon Licensee. In addition, Licensee acknowledges that due to the nature of the
marketplace, the definition of Products may change over time or may not be
amenable to precise delineation, whether or not there exists a potentially
conflicting second license. Licensee agrees that if there is a dispute with
LS&CO. regarding the definition of Products, LS&CO. shall have authority to
resolve the dispute in its sole discretion; that decision shall be final and
binding upon Licensee.
20.2 Mediation. If there is any controversy, dispute or claim arising out
of or relating to interpretation or breach of this Agreement (except
controversies, disputes or claims relating to or affecting in any way the
ownership of or the validity of the Trademarks or any related registration or
application for registration, or fraud by either party), then Licensee and
LS&CO. promptly shall try to settle it. If the dispute cannot be resolved,
Licensee and LS&CO. promptly shall initiate and participate in mediation of the
dispute, with a mediator to be selected jointly by Licensee and LS&CO., or, if
they cannot agree upon a mediator, by the Regional Vice President of the San
Francisco-based division of the American Arbitration Association ("AAA-SF") or
his or her designee. If the dispute is not resolved within five (5) days after
completion of mediation,
24
then Licensee and LS&CO. promptly shall submit it to binding arbitration as
provided in Section 20.3.
20.3 Agreement to Arbitrate. The arbitration shall be conducted in San
Francisco or other location mutually chosen by Licensee and LS&CO. in accordance
with the then existing Rules of Commercial Arbitration of the American
Arbitration Association ("AAA"). There shall be a single arbitrator, who shall
be selected in accordance with the procedures of the AAA. He or she shall be a
retired or former judge of any federal court appointed under Article III of the
United States Constitution who presided in a court located in the state in which
the arbitration is conducted, or a retired or former judge of a trial court of
general jurisdiction or a higher court of the state in which the arbitration is
conducted. Judgment upon any award rendered by the arbitrator may be entered by
any State or Federal court having jurisdiction. Any controversy concerning
whether a dispute is an arbitrable dispute shall be determined by the
arbitrator. Licensee and LS&CO. intend that this agreement to arbitrate be
valid, specifically enforceable and irrevocable. The designation of a site or a
governing law for this Agreement or the arbitration shall not be deemed an
election to preclude application of the Federal Arbitration Act, if it would be
applicable. The decision of the arbitrator shall be binding and shall not be
subject to judicial review.
20.4 Injunctive Relief; Other Actions. Notwithstanding the other
provisions of this Section 20, both Licensee and LS&CO. may request a court of
competent jurisdiction to grant provisional injunctive relief solely for the
purpose of maintaining the status quo until an arbitrator can render an award on
the matter in question and the award can be confirmed by a court having
jurisdiction. It is understood and agreed that LS&CO. may seek injunctive relief
in matters involving use of the Trademarks or other trademarks of LS&CO. or
disclosure of confidential information. It is further understood and agreed that
nothing in Sections 20.1, 20.2, 20.3 or 20.4 shall in any way limit LS&CO.'s
rights under Sections 13 and 14 to terminate the Agreement upon the occurrence
of an Event of Default.
20.5 Expenses. The arbitrator shall award to the prevailing party in any
arbitration, and the court shall include in its judgment, if any, for the
prevailing party in any claim arising under this Agreement, the prevailing
party's costs and expenses (including, without limitation, expert witness
expenses and reasonable attorneys' fees and expenses for mediation) of
investigating, preparing and presenting such claim or cause of action. LS&CO.
and Licensee shall each bear their own expenses incurred in a mediation that
does not result in arbitration.
21. Brokers
Each of LS&CO. and Licensee represents and warrants to the other that it
has not employed or dealt with any broker or finder in connection with this
Agreement or the transactions contemplated by this Agreement. Each of LS&CO. and
Licensee agrees to indemnify the other and hold it harmless from any and all
liabilities (including, without limitation, reasonable attorneys' fees and
disbursements paid or incurred in connection with those liabilities) for any
brokerage commissions or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement, insofar as those liabilities shall
be based on
25
any arrangements or agreements made by, or purported or alleged to be made by,
it or on its behalf.
22. Taxes
Licensee shall pay, at the time and in the manner provided for in any
applicable legislation, all income or other taxes of whatever nature, together
with any related liabilities including interest and penalties imposed by the
United States or by a state or municipal government or by any taxation authority
thereof, payable on or in respect of its manufacture, sale or distribution of
Products or otherwise in connection with exercise of its rights and performance
of its obligations under this Agreement. Unless otherwise specifically provided
in this Agreement, Licensee shall promptly pay all taxes (whether income,
documentary, sales, stamp, registration, issue, capital, property, excise or
otherwise), levies, imposts, duties, fees, charges, deductions, withholding,
restrictions or conditions or any penalties, interest or additions thereto or
any nature whatsoever imposed, levied, collected, assessed or withheld by and
perform all obligations imposed by the United States or by a state or municipal
government or any taxation authority thereof in connection with the manufacture,
sale or distribution of Products or otherwise in connection with exercise of its
rights and performance of its obligations under this Agreement.
23. Representations and Warranties
23.1 By LS&CO. LS&CO. represents and warrants to Licensee that: (i)
LS&CO. holds various U.S. registrations for, and/or common law rights in and to,
the Trademarks; (ii) LS&CO. has full legal right, power and authority to grant
the license described in Section 1, to enter into this Agreement, to perform all
of its obligations under this Agreement and to consummate all of the
transactions contemplated by this Agreement; (iii) this Agreement has been duly
executed and delivered by LS&CO. and constitutes the legal, valid and binding
obligation of LS&CO., enforceable against it in accordance with its terms; and
(iv) LS&CO. is not a party to, subject to or bound by any agreement, contract,
license, indenture, law, regulation or commitment of any kind or any judgment,
order, writ, prohibition, injunction or decree of any court or other
governmental body that would prevent, or that would be breached or violated by,
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement.
26
23.2 By Licensee. Licensee represents and warrants to LS&CO. that: (i)
Licensee has full legal right, power and authority to enter into this Agreement,
to perform all of its obligations under the Agreement and to consummate all of
the transactions contemplated by this Agreement; (ii) this Agreement has been
duly executed and delivered by Licensee and constitutes the legal, valid and
binding obligation of Licensee, enforceable against it in accordance with its
terms; (iii) Licensee is not a party to, subject to or bound by any agreement,
contract, license, indenture, law, regulation or commitment of any kind or any
judgment, order, writ, prohibition, injunction or decree of any court or other
governmental body that would prevent, or that would be breached or violated by,
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement; (iv) except as described in Exhibit
J, Licensee is not a party to any license, sublicense or similar agreement or
arrangement giving Licensee the right to manufacture or sell any product of the
type described in Exhibit B
23.3 No Other Representations and Warranties. Licensee and LS&CO.
recognize that there are many uncertainties in the business of Licensee
contemplated by this Agreement. Licensee and LS&CO. agree and acknowledge that
other than those representations expressly made in this Agreement, no
representations, warranties, commitments or guarantees of any kind have been
made to either party by the other, or by anyone acting on its behalf, including,
without limitation, representations concerning the value of the Products or the
prospects for the level of their sales or profits. Licensee and LS&CO. each have
made its own independent business evaluation in deciding to license Licensee to
manufacture and distribute the Products on the terms described in this
Agreement.
24. General Provisions
24.1 Notice. All notices, approvals requests, consents and other
communications under this Agreement shall be in writing and shall be considered
properly given or sent: (i) on the date when the notice, request, consent or
communication is personally delivered and acknowledged; or (ii) on the date when
sent by confirmed facsimile if a business day or on the first business day
following if not; or (iii) five (5) days after transmission by certified or
registered mail; or (iv) the first business day after transmission by overnight
courier delivery, as follows:
If to LS&CO:
Murrey Nelson
Director of Licensing
Levi Strauss & Co.
1155 Battery Street, R13
San Francisco, CA 94111
Telephone No.: (415) 501-6000
Facsimile No.: (415) 501-1782
27
With copy to:
Thomas M. Onda
Associate General Counsel/Trademark Licensing
Levi Strauss & Co.
1155 Battery Street
San Francisco, CA 94111
Telephone No.: (415) 501-6000
Facsimile No.: (415) 501-7650
If to Licensee:
Andy Gilbert
Genesco Inc.
Genesco Park
Dockers Footwear
1415 Murfreesboro Road
Nashville, TN 37217
Telephone No.: (615) 367-7800
Facsimile No.: ( 615) 367-7822
With copy to:
Roger G. Sisson
Secretary and General Counsel
Genesco Inc.
Genesco Park
Dockers Footwear
1415 Murfreesboro Road
Nashville, TN 37217
Telephone No.: (615) 367- 8441
Facsimile No.: (615) 367-7073
These addresses may be changed by delivery of a notice to that effect to the
other party.
24.2 Relationship of the Parties. Licensee and LS&CO. are and will remain
independent commercial contracting parties; the arrangements contemplated by
this Agreement will not create a partnership, joint venture, employment,
fiduciary or similar relationship for any purpose. This Agreement is not
intended to and does not create any direct relationship between LS&CO. and any
employee, contractor, subcontractor or other person in a relationship with
Licensee. Neither Licensee nor LS&CO. shall have the power to obligate or bind
the other to a third party or commitment in any manner whatsoever, except as
expressly provided in Section 15 of this Agreement. LS&CO. shall not be
responsible, to Licensee or to any person, in any way for wages, benefits,
compensation, taxes or any other liability in respect of persons employed or
retained by Licensee in connection with performance of its obligations under
this Agreement or otherwise. LS&CO. shall not be responsible, to Licensee, to
Licensee's landlord or to any other
28
person, in any way for lease obligations, environmental compliance, personal
injuries or otherwise in respect of Showroom, sales office, manufacturing
facility, distribution facility or other space used by Licensee in connection
with performance of its obligations under this Agreement or otherwise.
24.3 Compliance with Laws. Licensee shall comply with all laws, rules,
regulations and requirements of any governmental body which may be applicable to
the manufacture, distribution, sale or promotion of Products or otherwise to the
performance of its obligations under this Agreement.
24.4 Entire Agreement; Modifications. This Agreement and its exhibits
contain the entire agreement between LS&CO. and Licensee, represent the final,
complete and exclusive statement of LS&CO. and Licensee and supersede any and
all prior or contemporaneous agreements, communications, arrangements or
understandings between LS&CO. and Licensee, including, without limitation, any
letter of intent. This Agreement may not be explained or supplemented by any
course of dealings between LS&CO. and Licensee or by usage or trade and shall
not be considered modified by provisions contained in other documents prepared
by LS&CO. and Licensee including, without limitation, royalty statements, Sales
Plans, retailer approvals and the like. This Agreement may be modified only as
stated in and by a writing signed by both LS&CO. and Licensee which refers
specifically to this Agreement and states that it is amending this Agreement.
24.5 Remedies. All rights and remedies provided for in this Agreement
shall be cumulative and in addition to any other rights or remedies LS&CO. and
Licensee may have at law or in equity. LS&CO. and Licensee may employ any of the
remedies available to it with respect to any of its rights without prejudice to
the use by it in the future of any other remedy. Except as expressly provided in
Section 15 of this Agreement, no person, other than LS&CO. and Licensee, shall
have any rights under this Agreement, it being understood that the respective
affiliates, directors, officers, employees and agents of each of them are direct
and intended beneficiaries of indemnification promises as provided in Section
15. Licensee's obligation to pay royalties shall be absolute notwithstanding any
claim Licensee may assert against LS&CO. Licensee may not set off, compensate or
make any deduction from any royalty payment for any reason whatsoever.
24.6 Submission to Jurisdiction. LS&CO. AND LICENSEE CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE CITY OF SAN
FRANCISCO, STATE OF CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY RELATED MATTER, OTHER THAN ANY
ACTION OR PROCEEDING REQUIRED BY SECTION 20 TO BE SUBMITTED TO MEDIATION AND
ARBITRATION, SHALL BE LITIGATED IN THOSE COURTS. LS&CO. AND LICENSEE EACH WAIVE
ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO SERVICE OF
PROCESS MADE IN THE MANNER DESCRIBED IN SECTION 24.1 . Nothing contained in this
Section 24.6 shall affect the right of either
29
LS&CO. or Licensee to serve legal process on the other in any other manner
permitted by law. Nothing contained in this Section 24.6 shall affect the rights
and obligations of LS&CO. and Licensee under Section 13 or in respect of
mediation and arbitration of disputes under Section 20.
24.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of LS&CO. and
Licensee.
24.8 Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of California.
24.9 Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
24.10 Survival. The following provisions of this Agreement shall survive
and remain effective after expiration or termination of this Agreement: 9, 11.1,
11.2, 11.4, 11.5, 11.9, 11.11, 11.12, 14, 15, 16, 17, 20, 21, 22 and 24.
24.11 Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
24.12 Force Majeure. Neither LS&CO. nor Licensee shall be liable for any
failure of or delay in the performance of its obligations under this Agreement
for the period that the failure or delay is due to acts of God, public enemy,
war, strikes or labor disputes, or any other cause beyond the party's reasonable
control, it being understood that lack of financial resources or Year 2000
problems shall not be deemed a cause beyond a party's control. Each of LS&CO.
and Licensee shall notify the other promptly of the occurrence of any such cause
and carry out the affected performance as promptly as practicable after the
cause of the problem is alleviated. It is understood, however, that the
occurrence of a force majeure event shall not in any case work an extension of
the term of this Agreement.
24.13 Days and Quarters. Unless expressed stated in a particular
provisions, references in this Agreement to "days" means calendar, not business,
days, and references to "quarters" means calendar quarters.
24.14 Counterparts. This Agreement may be signed in one or more
counterparts.
* * * *
30
IN WITNESS WHEREOF, LS&CO. and Licensee signed this Agreement on the
date appearing in the first paragraph of this Agreement.
LEVI STRAUSS & CO.
By: /s/ Jim Lewis
--------------------------------------
Jim Lewis
Title: President, Levi Strauss, The Americas
GENESCO INC.
By: /s/ Hal N. Pennington
--------------------------------------
Title: Ex. V.P. & COO
31
EXHIBIT A
TRADEMARKS
[Dockers Logo]
[Dockers Recode Logo]
EXHIBIT B
PRODUCTS
Footwear shall mean men's shoes and shoe trees, and boy's (youth 12 to boy's
6-1/2 ), including but not limited to boots, loafers, desert boots, deck shoes,
boat shoes, and sandals with the following construction:
- - leather uppers or seasonal materials other than leather (eg canvas);and
- - lace-up, buckle and strap, slip-on, velcro (hook and loop), or elasticized
closures.
Footwear shall not include:
- - women's footwear
- - performance athletic shoes, including but not limited to sneakers and
shoes for running, active sports, basketball, football, baseball, bowling,
aquatic sports, cross-training or golf
- - lounge/house slippers
- - rain shoes, rain boots, or rubbers.
EXHIBIT C
DEVELOPMENT CALENDAR
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT D1
RECODE DOCKERS ACCOUNTS
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT D2
CLASSIC DOCKERS ACCOUNTS
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT E1
SECOND QUALITY AND CLOSEOUT RETAILERS
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT E2
OUTLET ACCOUNTS
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT F
ACCOUNT APPROVAL FORM
[__________________________________________] *
* CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
EXHIBIT G
LICENSOR'S CODE OF ETHICS
Levi Strauss & Co. has a long and distinguished history of ethical conduct and
community involvement. Essentially, these are a reflection of the mutually
shared values of the founding families and of our employees.
Our ethical values are based on the following elements:
A commitment to commercial success in terms broader than merely financial
measures.
A respect of our employees, suppliers, customers, consumers and stockholders.
A commitment to conduct which is not only legal but fair and morally correct in
a fundamental sense.
Avoidance of not only real, but the appearance of conflict of interest.
From time to time, the Company will publish specific guidelines, policies and
procedures. However, the best test whether something is ethically correct is
whether you would be prepared to present it to our senior management and board
of directors as being consistent with our ethical traditions. If you have any
uneasiness about an action you are about to take or which you see, you should
discuss the action with your supervisor or management.
EXHIBIT H
GLOBAL SOURCING AND OPERATING GUIDELINES
LEVI STRAUSS & CO.'S
GLOBAL SOURCING & OPERATING GUIDELINES
Levi Strauss & Co. seeks to conduct its business in a responsible manner. We
believe this is an important element of our corporate reputation which
contributes to the strength of our commercial success. As we expand our
marketing activities abroad, and work with contractors and suppliers throughout
the world to help meet our customers' needs, it is important to protect our
Company's reputation in selecting where and with whom to do business.
Levi Strauss & Co.'s Global Sourcing & Operating Guidelines includes two parts:
the Business Partner Terms of Engagement, which address work place issues that
are substantially controllable by individual business partners; and the Country
Assessment Guidelines, which address larger, external issues beyond the control
of the individual business partners.
BUSINESS PARTNER TERMS OF ENGAGEMENT:
The TERMS OF ENGAGEMENT are tool that help protect Levi Strauss & Co.'s
CORPORATE REPUTATION and, therefore, its COMMERCIAL SUCCESS. They assist us in
selecting business partners* that follow work place standards and business
practices consistent with our Company's policies. As a set of guiding
principles, they also help to identify potential problems so that we can work
with our business partners to address issues of concern as they arise.
Specially, we expect our business partners to operate work places where the
following standards and practices are followed:
1. EMPLOYMENT STANDARDS:
We will only do business with partners whose workers are in all cases
present voluntarily, not put at risk of physical harm, fairly
compensated, allowed the right of free association and not exploited in
any way. In addition, the following specific guidelines will be
followed.
WAGES AND BENEFITS
We will only do business with partners who provide wages and
benefits that comply with any applicable law or match the prevailing
local manufacturing or finishing industry practices. We will also
favor business partners who share our commitment to contribute to
the betterment of community conditions.
WORKING HOURS
While permitting flexibility in scheduling, we will identify
prevailing local work hours and seek business partners who do not
exceed them accept for
appropriately compensated overtime. While we favor partners who
utilize less than sixty-hour work weeks, we will not use contractors
who, on a regularly scheduled basis, require excess of a sixty-hour
week. Employees should be allowed one day off in seven days.
CHILD LABOR
Use of child labor is not permissible. "Child" is defined as less
than 14 years of age or younger than the compulsory age to be in
school. We will not utilize partners who use child labor in any of
their facilities. We support the development of legitimate workplace
apprenticeship programs for the educational benefit of younger
people.
PRISON LABOR/FORCED LABOR
We will not knowingly utilize prison or forced labor in contracting
or subcontracting relationships in the manufacture of our products.
We will not knowingly utilize or purchase materials from a business
partner utilizing prison or forced labor.
DISCRIMINATION
While we recognize and respect cultural differences, we believe that
workers should be employed on the basis of their ability to do the
job, rather than on the basis of personal characteristics or
beliefs. We will favor business partners who share this value.
DISCIPLINARY PRACTICES
We will not utilize business partners who use corporal punishment or
other forms of mental or physical coercion..
HEALTH & SAFETY
We will only utilize business partners who provide workers with a
safe and healthy work environment. Business partners who provide
residential facilities for their workers must provide safe and
healthy facilities.
2. ENVIRONMENTAL STANDARDS:
We will only do business with partners who share out commitment to the
environment. (Note: We intend this standard to be consistent with
approved language of Levi Strauss & Co.'s Environmental Action Group).
3. ETHICAL STANDARDS:
We will only seek to identify and utilize business partners who aspire
as individuals and in the conduct of their business to a set of ethical
standards not incompatible with our own.
4. LEGAL STANDARDS:
We expect our business partners to be law abiding as individuals and to
comply with legal requirements relevant to the conduct of their
business.
5. COMMUNITY INVOLVEMENT:
We will favor business partners who share our commitment to contribute
to improving community conditions.
* Business partners are contractors and subcontractors who manufacture or finish
our products and suppliers who provide raw materials used in the production of
our products. We have begun applying the Terms of Engagement to business
partners involved in manufacturing and finishing, and plan to extend their
application to suppliers.
COUNTRY ASSESSMENT GUIDELINES:
The diverse cultural, social, political, and economic circumstances of the
various countries where Levi Strauss & CO. has existing or future business
interests raise issues that could subject our CORPORATE REPUTATION and
therefore, our BUSINESS SUCCESS, to potential harm. THE COUNTRY ASSESSMENT
GUIDELINES are intended to help us assess these issues. The GUIDELINES are tools
that assist us in making practical and principled decisions as we balance the
potential risks and opportunities associated with conducting business in a
particular country.
In making these decisions, we consider the degree to which our global CORPORATE
REPUTATION and COMMERCIAL SUCCESS may be exposed to UNREASONABLE RISK.
Specially, we assess whether the:
BRAND IMAGE would be adversely affected by a country's perception or image among
our customers and/or consumers;
HEALTH AND SAFETY of our employees and their families, or our Company
representatives would be exposed to unreasonable risk;
HUMAN RIGHTS ENVIRONMENT would prevent us from conducting business activities in
a manner that is consistent with the Global Sourcing Guidelines and other
Company policies;
LEGAL SYSTEM would prevent us from adequately protecting our trademarks,
investments or other commercial interests, or from implementing the Global
Sourcing Guidelines and other Company policies; and
POLITICAL, ECONOMIC AND SOCIAL ENVIRONMENT would threaten the Company's
reputation and/or commercial interest.
In making these assessments, we take into account the various types of business
activities and objectives proposed (e.g., procurement of fabric and sundries,
sourcing, licensing, direct investments in subsidiaries) and, thus, the
accompanying level of risk involved.
Levi Strauss & Co. is committed to continuous improvement in the implementation
of its Global Sourcing & Operating Guidelines. As we apply these tools
throughout the world, we will acquire greater experience and gain new insight
from a variety of sources. The knowledge will enable us to continue our efforts
to update our Guidelines, better address issues of concern, and meet new
challenges.
EXHIBIT I
OTHER RELATIONSHIPS
Johnston & Murphy
Nautica Footwear