AMENDMENT TO MANUFACTURING, DISTRIBUTION & LICENSE AGREEMENT
This Amendment to Manufacturing, Distribution and License Agreement
(the "Amendment") is made this 31st day of October, 2000 by and between
L.A. Gear, Inc. (the "Company") and West Coast Sports S.A. de C.V. (the
"Licensee").
WHEREAS, the parties entered into that certain Manufacturing,
Distribution and License Agreement dated as of March 12, 1998, as amended August
1, 1998, November 19, 1998, April 29, 1999, and November 16, 1999 (the
"Agreement"); and
WHEREAS, the parties wish to amend the Agreement.
NOW, THEREFORE, the parties agree as follows:
1. A new Section 5(g) is added to the Agreement:
"g) Licensee shall pay the Company in monthly installments only actual
Royalties during the period October I, 2000 through December 31, 2000
at a rate of 4(degree)/O of Net Sales. The differential between actual
Royalties and the Minimum Royalty that would have been due from October
1, 2000 through December 3 1, 2000 (which is $ 18,750.00) must be paid
at the end of the current license term, December 31, 2002. However, if
in any year prior to the expiration of the current license term the
Licensee's Net Sales exceed the Minimum Royalty in any one year, by an
amount equal to or greater than the amount to have been paid in the
period of October I, 2000 through December 3 1, 2000, the amount that
would have been due for this period will be canceled.
2. The following Section 14(h) is amended to read in its entirety:
"h) Notwithstanding the Company's right to terminate this Agreement as
provided herein, the Company shall have the right to terminate this
Agreement in the event any one of the following events occur:
(i) In the event there are no new L.A. GEAR branded footwear
sales by Licensee of either domestic or imported product in
the Territory by March I, 2001; or (ii) In the event actual
royalties paid by Licensee from December 1, 2000 through
November 30, 2001 are less than US$100,000; or (iii) In the
event actual royalties paid by Licensee from December I, 2001
through November 30, 2002 are less than US $ 150,000."
3. This Amendment may be signed in counterparts, each of which shall
be deemed an original. For the purposes of this Amendment, a
facsimile signature shall be deemed an original signature.
4. All other terms and conditions of the Agreement shall remain in full
force and effect. IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the date and year first written above.
"Licensee" "Company"
West Coast Sports S.A. DE C.V. L.A. Gear, Inc.
By /s/ Carol Kolozs By: /s/ William Sherman
-------------------- ---------------------------
Title: President Title: Vice-President
LA GEAR
Via Facsimilie: 011-525-260- 8408
November 16, 1999
Mr. Carol Kolozs
West Coast Sports
Lago Chalco 156
Col. Anahuac
11320 Mexico, D.F.
Re: Amendment to Manufacturing, Distribution & License Agreement
Dear Carol:
Reference is made to that certain Manufacturing, Distribution
& License Agreement dated as of March 12, 1998 by and between L.A.
Gear, Inc. (the "Company") and West Coast Sports S.A. de C.V.
("Licensee"), as amended August 1, 1998, November 19,1998 and Apri1 29,
1999 (the "Agreement"), This amendment to the Agreement formalizes your
verbal agreement with David Gatto regarding certain provisions of the
Agreement. References to Section numbers refer to the Section numbers
in the Agreement.
The Company and Licensee agree to amend the Agreement as
follows:
1. Section 5(e) is amended to delete any requirement for Licensee to
pay the Company Guaranteed Minimum Royalties through the Initial Term of
the Agreement.
2. A new Section 5(f) is added to the Agreement:
"f) The Company agrees that during the period July I, 1999 through
September 30, 2000, for Net Sales in excess of US $2,000,000, the Royalty
Rate shall be 2%."
3. Section 6(a) of the Agreement is amended to state in its entirety:
"a) Beginning with Licensee's November 1999 sales, royalties
shall be paid to the Company in monthly installments. The monthly
installments shall be due to the Company within sixty (60) days
following the end of the sales month and shall be deemed late if
payment is not received on or before ninety (90) days following the end
of the sales month. For example, a royalty payment for November 1999
sales shall be due on February 1, 2000 and shall be deemed late if not
paid on or before February 29, 2000.
In addition, with regard to past royalty payments due the
Company, Licensee agrees to pay the Company US $30,000 on or before
December 15, 1999. Such payments may be made in several payments or by
a lump sum payment so long as the funds are received by the Company
before December 15,1999.
4. The following sentence shall be added to Section 10(c):
"Licensee agrees to provide to the Company visual or written
proof that Licensee has expended not less that one percent (1%) of Net
Sales for the Contract Year; such proof may be through presentation of
photo shoots for the Licensed Articles, point of sale materials and
fixtures." 5. The following Section 14(h) is added to the Agreement:
"h Notwithstanding the Company's right to terminate this
Agreement as provided herein, the Company shall have the right to
terminate this Agreement in the event either of the two following
events occur:
(i) In the event there are no new L.A. Gear
branded footwear sales by Licensee of either
domestic or imported product in the Territory by
May 1,2000; or (ii) In the event actual royalties
paid by Licensee from the date hereof through
November 30, 2000 are less than US $75,000; or
(iii) In the event actual royalties paid by
Licensee from December 1, 2000 through November
30,2001 are less than US $100,000; or (iv) In the
event actual royalties paid by Licensee from
December 1, 2001 through November 30, 2002 are
less than US $150,000."
6. This Amendment may be signed in counterparts, each of which shall
be deemed and original. For the purposes of this Amendment, a facsimile
signature shall be deemed an original signature.
7. All other terms and conditions of the Agreement shall remain in
full force and effect. If the above correctly sets forth our agreement,
please sign in the space provided below and fax a signed copy to me at
310-253-7740.
Sincerely,
/s/ William R. Sherman
William R. Sherman
Vice President, General Counsel and Secretary
Agreed and accepted this -day of November 1999 by West Coast Sports
S.A. de C.V.
/s/ Carol Kolozs
Carol Kolozs
Cc: David Gatto
Garn Anderson
LA GEAR.
Carol Koloz April 29, 1999
West Coast Sports
Lago Chalco 156
Col. Anahuac
11320 Mexico D.F.C.P.;Mexico
Dear Carol:
As we discussed April 28, in principal we agree to your proposed
payment schedule; however, our acceptance has a condition and several
clarifications.
Since it still remains that your ultimate success with the L.A. GEAR
brand depends on securing adequate financing, our acceptance" is
conditioned upon your closing your current private placement financing.
We request for our files, that you provide us a copy of your escrow
statement when you break escrow at whatever level of finding you
achieve.
Also, I wish to clarify that the $100,000 minimum payment will be paid
by our fiscal year end of November 30, 1999 according to the following
schedule:
$20,000 by July 15. 1999
$20,000 by August 15. 1999
$20.000 by September 15, 1999
$20,000 by October 15.1999
$20,000 by November 15, 1999
and an additional $20,000 minimum payment by December 15. 1999.
Furthermore, royalties earned, at 15% of Net Sales for calendar year
1999 (up to a total of $150,000), will be paid on or before January 31,
2000, that the amount is greater than the minimums paid.
Finally, by September 1, 1999, we will agree on how to handle the
amount of current minimum royalties that have not been paid in 1999.
(i.e. the difference between $230.000 and what would have been paid).
Please acknowledge your acceptance of these terms by dating, signing
and returning this letter.
Best regards,
/s/ William R. Sherman
William R. Sherman
Vice President, General Counsel and Secretary
Agreed and accepted this 30 day of April, 1999 by West Coast Sports
/s/ Carol Kolozs Carol Kolozs
SECOND AMENDMENT TO MANUFACTURING, DISTRIBUTION AND LICENSE AGREEMENT
This Second Amendment to Manufacturing, Distribution and License
Agreement (the "Amendment") is made this 19th day of November by and
between L.A. Gear, Inc. (the "Company") and West Coast Sports S.A. de C. V.
("Licensee").
WHEREAS, the parties entered into that certain Manufacturing,
Distribution and License Agreement dated as of March 12, 1998, as amended
September 20, 1998 (the "Agreement"); and
WHEREAS, the parties wish to amend the Agreement.
-
NOW, THEREFORE, the parties agree as follows:
1. The Second Contract year and Third Contract Year Minimum Royalty
referred to in Section 5 (e) of the Agreement is amended to read as
follows:
Year Minimum Royalty
----------------------------------------------------------- --------
Second Contract Year $ 230,000*
Third Contract Year $ 230,000*
* The Second Contract Year and Third Contract Year Minimum Royalty
payments shall be made in equal quarterly installments of $57,500 each
on or before the following dates in 1999 and 2000: January 30, April
30, June 30 and October 30.
2. This Amendment may be signed in counterparts, each of which shall be
deemed an original. For the purposes of this Amendment, a facsimile
signature shall be deemed an original signature.
3. All other terms and conditions of the Agreement shall remain in
full force and effect
IN WITNESS WHEREOF, each of the parties hereto have executed this
Amendment as of the date and year first written above.
"LICENSE "COMPANY"
L.A. GEAR, INC. WEST COAST SPORTS S. A. DE C. V
By: /s/ illegible By:/s/ Carol Kolozs
----------------- ---------------------
Title:President Title: _President
AMENDMENT TO MANUFACTURING, DISTRIBUTION AND LICENSE AGREEMENT
"This Amendment to Manufacturing. Distribution and License Agreement
(the '. Amendment") is made this __day of August. 1998 by and between L.A.
Gear, Inc. (the "Company} and West Coast Sports S.A- dc C.V. (formerly
Africa Holding5 S.A. de C. V.)("Licensee").
WHEREAS, the parties entered into that certain Manufacturing,
Distribution and License Agreement dated as of March 12, 1998 (The
"Agreement"); and
WHEREAS, the parties wish, to amend the Agreement. NOW, THEREFORE, the
parties agree as follows:
1. License has notified the Company that it has changed its name from
Aarica Holdings S.A. de C. V. to West Coast Sports SA. de C. V. and the
Company acknowledges and agrees to the name change.
2. Section 5 (e) of the Agreement is amended to read as follows:
"e) Notwithstanding the provisions of Articles 5(b) and 5(c). Licensee
agrees to pay the Company a guaranteed minimum royalty with respect to the
Footwear and Non-Footwear Licensed Articles:
Year Minimum Cumulative Royalty Minimum Royalty
---- ------------------ ------------------------
First Contract Year $50.000 $ 50,000
Second Contract Year $150,000 $200,000
Third Contract Year $150,000 $350.000
Fourth Contract Year $150,000 $500,000
Fifth Contract Year $150,000 $650.000
In the event this Agreement is terminated on a date other than the last
day of a Contract Year, the Minimum Royalty shall be prorated through
the date termination. Licensee agrees to pay the remaining Minimum
Royalty of $25,000 for the first Contact Year on or before October 31,
1998 3. This Amendment may be signed in counterparts, each of which
shall be deemed an original. For the purpose of this Amendment, a
facsimile signature shall be deemed an original signature.
4. All other terms and conditions of the Agreement shall remain in
full force and effect. IN WITNESS WHEREOF, each of the parties hereto have
executed this Amendment as of the date and year first written above.
"LICENSEE" "COMPANY"
WEST COAST SPORTS S.A. C. V. L.A. GEAR INC.
By: /s/ Carol Kolozs By: _/s/ illegible_________
----------------- --------------------------
Title: _President_ Title: President___________
------------ ---------------- ---------
MANUFACTURING, DISTRIBUTION & LICENSE AGREEMENT BETWEEN L. A. GEAR,
INC. and AARICA HOLDING S.A. DE C. V. AGREEMENT, made as of the 12th day of
March, 1998, by and between L. A. Gear, Inc., a California corporation,
having its principal place of business at 2850 Ocean Park Boulevard, Santa
Monica, California 90405 ("Company") and Aarica Holding S.A. de C. V , a
corporation duly registered and existing under the laws and having its
principal office and business at Lago Chalco 156, Col. Anahuac, Mexico,
D.F.C.P. 11320 ("Licensee").
WHEREAS, Company is in the business of manufacturing, advertising,
distributing and selling athletic and leisure footwear, activewear and
accessories and is the exclusive owner of the valuable name and mark
"L.A. GEAR" both alone and in various logo forms, marks containing and
consisting of the designation "L.A." and other trademarks, of certain
trade names, and of various patents, logos and designs associated
therewith; and WHEREAS, Licensee desires to manufacture and sell in
Mexico on an exclusive basis, athletic and leisure footwear identical
or substantially identical to the footwear, activewear and accessories
manufactured by or for the Company and sold by the Company under the
"L.A. Gear" name and trademarks, and to obtain the advisory services
and assistance of the Company in connection therewith.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and promises herein contained, the Company and Licensee
agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following definitions shall
apply:
a) "Company Marks" shall mean all logos and trademarks, including
without limitation the name and mark "L. A. Gear", both alone and in
various logo forms and marks containing and consisting of the
designation "L.A.", names, emblems, symbols or identifying designs now
utilized or which shall be utilized in the future or which shall be
utilized in the future by the Company in connection with the conduct of
its business and the sale of its products. b) "Licensed Articles" shall
mean the athletic and leisure footwear, activewear and accessories
identical or substantially identical to the athletic and leisure
footwear, activewear and accessories manufactured by or for the Company
and sold by the Company. As set forth herein, athletic and leisure
footwear is sometimes referred to as "Footwear Licensed Articles" and
activewear and accessories is sometimes referred to as "Non-Footwear
Licensed Articles". c) "Net Sales" shall mean the dollar amount of
gross sales of all Licensed Articles bearing any of the Company Marks
invoiced by Licensee to its customers for all transactions including
without limitation all sales made pursuant to any bartering
arrangements, after deducting credits for returns, trade discounts and
related sales taxes. d) "Territory" shall mean Mexico.
e) "Contract Period" shall mean that period of time commencing on March
12, 1998 and ending on December 31, 2002. f) "Contract Year" shall mean
a period of twelve (12) successive months commencing on any first day
of January during the Contract Period and ending on December 31;
however, for the purposes of this Agreement, "First Contract Year"
shall mean March 12 through December 31, 1998.
g) "Contract Year Quarter" shall mean a three (3) month period
commencing on January 1, April, July I and October I of any Contract
Year.
2. GRANT OF LICENSE
-----------------
Company hereby grants to Licensee, subject to the terms and conditions
herein, the exclusive right and license to utilize the "Company Marks"
throughout the Territory during the Contract Period in connection with
the manufacture, advertisement, promotion, distribution and sale to the
wholesale and retail trade of Licensed Articles. This license does not
authorize and expressly forbids Licensee to manufacture, export,
distribute or sell such Licensed Articles in any other part of the
world, unless specifically authorized by Company in writing or required
by law. 3. USE OF COMPANY MARKS a) Licensee agrees to use the Company
Marks only within the Territory and during the Contract Period, and
only with respect to the manufacture, promotion, advertisement,
distribution and sale of the Licensed Articles and only after it has
received the written approval of the Company as to samples of the
Licensed Articles intended to be manufactured and sold by Licensee, and
as to the specific Company Marks Licensee intends to affix to
particular Licensed Articles and any and all other marks, names,
lettering, words, or designs of any description Licensee intends to use
on or in relation to the Licensed Articles. Licensee shall not
thereafter apply or use any new or additional marks, names, lettering,
words, or designs of any description on or in relation to the Licensed
Articles without the express prior written consent of the Company.
b) Licensee agrees that it will reasonably comply with the Company's
standards which may be published from time to time by the Company and
distributed to Licensee in the future. c) The license to use the
Company Marks is granted upon the express condition that all Licensed
Articles manufactured by Licensee bearing any of the Company Marks will
conform to the standards for grade, quality, and style reasonably
established from time to time by the Company. In the event the Company
reasonably changes its standards, Licensee shall have one hundred
eighty (180) days to comply with any new standards established by the
Company. Any Licensed Articles bearing any of the Company Marks
manufactured by Licensee which are seconds or irregulars shall not be
sold by Licensee without the prior written consent the Company, which
consent shall not be unreasonably withheld. d) The Company shall at any
and all times have the right to inspect the Licensed Articles bearing
any of the Company Marks manufactured by Licensee to determine whether
such Licensed Articles in fact conform to the established standards and
other terms of this Agreement. If at any time the Company shall be of
the opinion that Licensed Articles bearing .any of the Company Marks
manufactured by Licensee do not conform to the required standards, it
may give notice of the deficiency to Licensee which shall promptly
thereafter remove or cause to be removed any of the Company Marks from
such non-conforming products, shall cease to affix the Company Marks to
other Licensed Articles which do not meet the standards, and shall
cease thereafter to manufacture, promote, advertise, distribute or
offer for sale any such non- conforming Licensed Articles bearing any
of the Company Marks. All factories at which Licensee desires to have
Licensed Articles manufactured, and all agents from whom Licensee
desires to import Licensed Articles, shall be approved in advance in
writing by the Company. It is understood and specifically agreed that
upon termination of this Agreement, Licensee shall immediately cease
using the Company Marks in the manufacture, promotion, advertisement,
sale or distribution of the Licensed Articles, except as otherwise
provided In this Agreement.
4. TERM OF AGREEMENT
Unless sooner terminated pursuant to the provisions of this Agreement,
this Agreement shall remain in effect for the Contract Period. This
Agreement will automatically renew for an additional five (5) year term
beginning January 1, 2003 and ending December 31, 2007 provided: (i)
Licensee has not breached the Agreement during the initial term of the
Agreement, and (ii) Licensee agrees to pay a minimum royalty of $200,
000 per year (cumulative minimum royalty of$1,000,000) during the
additional five year term.
5. ROYALTIES
a) In consideration for the license granted to Licensee by the Company
herein, Licensee, for the First Contract Year, shall pay the Company a
royalty of $ 25,000 with respect to all Footwear Licensed Articles and
Non-Footwear Licensed Articles sold by Licensee. This lump sum royalty
shall be paid by Licensee to Company within sixty (60) days of the
execution of this Agreement.
b) Beginning with the First Contract Year, Licensee shall pay the
Company a royalty, less applicable withholding taxes, equal to the
following percent of the Net Sales made by Licensee of the Footwear and
Non-Footwear Licensed Articles (the "Earned Royalties").
FOOTWEAR AND NON-FOOTWEAR LICENSED ARTICLES
--------------------------------------------
FIRST CONTRACT YEAR 4 %
SECOND CONTRACT YEAR 4 %
THIRD CONTRACT YEAR 4 %
FOUR CONTRACT YEAR 4 %
FIFTH CONTRACT YEAR 4 %
c) In the event this Agreement is terminated on a date other than the
last day of a Contract Year, the Earned Royalties shall be based upon
actual Net Sales through the date of termination. d) Licensee shall
remove the Company Marks from any defective products which do not meet
the Company's standards for first or second quality merchandise and no
royalty shall be payable hereunder with respect to the sale of such
substandard products. This requirement to remove all Company Marks
shall be operative irrespective of the fact that such substandard
products may be customarily sold in the Territory for the same price as
first quality merchandise. The Company shall have the right to prohibit
Licensee from selling such substandard products, if, in the opinion of
the Company, such products may tend to be confused by the public with
any of the Licensed Articles manufactured under this Agreement bearing
Company Marks, or which, in the opinion of the Company, infringes in
any manner Company Marks. e) Notwithstanding the provisions of Articles
5(b) and 5(c), Licensee agrees to pay The Company a guaranteed minimum
royalty with respect to the Footwear and Non- Footwear Licensed
Articles:
MINJMUM CUMULATIVE
YEAR ROYALTY MINIMUM ROYALTY
---------------------------------------------------------------------
FIRST CONTRACT YEAR $75,000 $ 75,000
SECOND CONTRACT YEAR $120,000 $195,000
THIRD CONTRACT YEAR $140,000 $335,000
FOUR CONTRACT YEAR $150,000 $ 485,000
FIFTH CONTRACT YEAR $150,000 $ 635,000
In the event this Agreement is terminated on a date other than the last
day of a Contract Year, the Minimum Royalty shall be pro-rated through
the date of termination. 6. SCHEDULE OF ROYALTY PAYMENTS a) The Minimum
Royalty for each year shall be paid to the Company in quarterly
installments on or before the thirtieth (30th) day of the first month
of each Contract Year Quarter.
b) Licensee shall deliver to the Company on or before the fifteenth
(15th) day following the conclusion of each Contract Year Quarter a
complete and accurate itemized statement, certified by Licensee's chief
fiscal officer as accurate and complete, stating the number,
description, gross sales price, itemized deductions from gross sales
price and net sales price of the Licensed Articles manufactured,
distributed or sold by Licensee during the preceding Contract Year
Quarter. Concurrently with the delivery of the itemized statement for
the preceding Contract Year Quarter, Licensee shall pay the Company an
amount equal to the total Earned Royalties during the preceding
Contract Year Quarter, minus the Minimum Royalty paid to the Company
whether or not any Licensed Articles bearing any Company Marks have
been sold or distributed by Licensee during the preceding Contract Year
Quarter. Receipt or acceptance by the Company of any statements
furnished pursuant to this Agreement or any sums hereunder shall not
preclude the Company from questioning the accuracy thereof at any time,
and in the event that any inconsistency or mistake is discovered in
such statement or payments, they shall be rectified immediately and the
appropriate payments made by Licensee.
c) Licensee covenants and agrees that it will keep full and accurate
books of accounts and records covering all business transactions made
pursuant to this Agreement, including original invoices, production,
accounts receivable and other records, and these accounts and records
shall at all reasonable times be open and available to the Company and
its representatives for inspection, examination and audit. All books of
account and records shall be kept relative to this Agreement for a
period of not less than two (2) years after the termination of this
Agreement and Licensee agrees to allow the Company and its
representatives to examine same at reasonable times during such period.
In the event that any inspection, examination or audit conducted
pursuant to this paragraph discovers errors resulting in the
underpayment of royalties by Licensee to the Company of Five Percent
(5%) or more, all expenses of such inspection, examination or audit
(including travel and room and board) shall be paid by Licensee.
d) In addition to royalties, Licensee shall pay the Company for all
materials, samples, and merchandise furnished to Licensee pursuant to
Article 7(a) hereof in an amount ~equal to the cost of such items to
the Company, including the Company's cost of preparing, packing,
shipping and transporting such items. All such purchases by Licensee
from the Company shall be by letter of credit F.O.B. the nearest point
of exit, or, at the Company's sole discretion, by some other means of
payment, and payment shall be made not more than sixty (60) days after
shipment.
7. RESPONSIBILITY OF THE COMPANY
In order to facilitate the manufacture, distribution, promotion,
advertisement and sale of Licensed Articles by Licensee under this
Agreement, the Company shall use good faith efforts to: (a) furnish or
cause to be furnished to Licensee such information and advice, as in
the opinion of the Company, is necessary to implement this Agreement.
Such information and advice may include, but is not limited to,
drawings and specifications of the Licensed Articles, names and
addresses of suppliers of materials, copies of advertisements and sale
promotional material or such other information reasonably necessary to
carry out this Agreement. Licensee shall pay the Company promptly upon
billing for any articles supplied under this Article 7(a) in accordance
with Article 6(d); (b) at the Company's discretion, to permit one or
more of Licensee's representatives to attend, at Licensee's sole
expense, sales conferences or other sales events sponsored or attended
by Company representatives; (c) make arrangements under which
representatives of Licensee may, at their sole expense, visit one or
more factories in which products similar to the Licensed Articles are
being manufactured by or for the Company bearing the Company Marks to
enable the representatives to study methods of manufacture and related
matters. 8. LICENSEE'S USE OF THE COMPANY'S INFORMATION AND ADVICE a)
Licensee agrees that it will not, unless upon prior written consent of
the company, use, permit the use of, release, give or otherwise
distribute or disclose to any third party any of the information,
advice, reports, instructions, designs, specifications, technical
knowledge, methods, processes, samples or materials ("Trade Secrets")
furnished to it by the Company or the Company's contract manufacturers
or licensees, except in the manufacture, distribution, promotion,
advertisement, and sale of Licensed Articles bearing the Company Marks
pursuant to this Agreement.
b) All Trade Secrets shall remain the sole property of the Company and
shall be deemed to be strictly confidential and shall be treated
accordingly. c) The undertakings of Licensee as to the Company's Trade
Secrets shall not apply to information and materials which Licensee can
demonstrate by means of documentary evidence: (i) were already known at
or prior to the time this Agreement is executed; (ii) were known by
Licensee at or prior to the time this Agreement is executed; (iii)
become publicly known through no fault of Licensee after execution of
this Agreement; or (iv) through no fault of Licensee, are revealed to
Licensee by a third party who is not bound by this Agreement or
otherwise in privity with the Company as to the Trade Secrets.
9. ASSIGNMENT OF SUBLICENSE BY LICENSEE
None of Licensee's rights granted by this Agreement for the use of any
Company Marks, Trade Secrets, or other property may be assigned, sold,
sublicensed or otherwise disposed of by Licensee without the prior
written consent of the Company in each instance.
10. LICENSE SALES PROGRAM
a) Licensee shall faithfully, diligently and to the best of its
ability endeavor to promote, advertise, market and increase the sales of
Licensed Articles bearing the Company Marks in the Territory. It shall be
the responsibility of Licensee to provide active and continuous sales
representation in the Territory by actual salesman contact with customers,
both existing and prospective. Licensee shall maintain adequate
manufacturing, sales and service personnel and adequate inventory levels;
conduct advertising and promotional programs and perform such other
necessary functions to accomplish maximum sales and distribution of
Licensed Articles within the Territory. Licensee shall not adopt, engage
in, permit or otherwise use any pricing policies, advertising campaigns,
merchandising techniques or other commercial practices which are illegal
under the laws of the Territory or which, in the opinion of the Company
detract from the good will and reputation of the Company.
b) Licensee shall manufacture, distribute, promote, advertise and sell
Licensed Articles bearing the Company Marks only within the Territory
and shall not export or cause to be exported any products to other
countries without the express written permission of the Company. The
restrictions of this paragraph shall not apply if found contrary to
applicable law or held unlawful by a court, administrative tribunal,
commission, or other authorized public adjudicatory body of competent
jurisdiction.
c) During each Contract Year, Licensee shall expend reasonable sums of
money for advertising and promoting Licensed Articles bearing the Company
Marks. Such expenditures shall be spread over each Contract Year in a
manner consistent with advertising practices in this business in the
Territory. During each Contract Year the amount expended for said
advertising shall be not less than one percent (1 %) of Licensee's actual
Net Sales for the First Contract Year and one percent (1 %) of actual Net
Sales for each Contract Year thereafter. Licensee also agrees to keep the
Company continually informed as to all advertising, promotion and media
programs undertaken pursuant to this Agreement and agrees not to advertise
or promote any of the Licensed Articles without receiving the prior written
approval thereof from the Company, which approval shall not be unreasonably
withheld or delayed. In the event the Company has not commented on the
programs after fifteen (15) days, the programs shall be deemed approved.
All advertising copy and promotional material shall prominently feature the
Company's logos used in accordance with the Company's trademark policies
and in accordance with the Company's creative guidelines established from
time to time.
d) Licensee agrees to receive a minimum of one pair or unit sample of each
new product introduced by the Company. Licensee agrees to pay for the
cost and freight on the samples. Such samples shall be delivered by the
Company to Licensee when available.
e) Licensee agrees to provide the Company, no later than September 1 of
the Current Contract year for the subsequent Contract Year, Licensee's
sales, marketing and media plans, including promotions and advertising
(collectively the"Plans") for the subsequent Contract year. Company
shall have fifteen (15) days to approve or disapprove the Plans. In the
event the Company has not commented on the Plans after said fifteen (
15) days, the Plans shall be deemed approved.
f) Licensee agrees to provide the Company with a quarterly financial
report of results within sixty (60) days following the close of such
period. Such financial report shall include: sales by style by customer,
the selling price net of any returns and an inventory by style for all
Licensed Articles. In addition, Licensee shall provide Company with a copy
of its audited financial statements and all generally available public
information about Licensee's- financial standing on an annual basis within
sixty (60) days following the end of Licensee's fiscal year.
11. CURRENCY IN WHICH PAYMENTS ARE TO BE MADE
-----------------------------------------
a) All payments to the Company required to be made by Licensee
pursuant to this Agreement shall be made in currency of the United States
of America ("U.S. Funds"), payable by wire transfer to the L. A. Gear, Inc.
account with Bank of America, Los Angeles, Account Number 1235202240, or
such other account as may be designated by the Company from time to time.
If required, Licensee agrees it will seek the necessary government
approvals to make such payments to the Company in U.S. Funds.
b) If the actions of any government or public body make it impossible
for Licensee to pay the Company in U.S. Funds, the Company shall have
the following options:
(i) Terminate the Agreement with thirty (30) days written notice to Licensee;
(ii) Require Licensee to make payment in the currency of any other
country selected by the Company by whose currency Licensee may legally
pay; (iii) Require Licensee to deposit such payment to the Company's
account in a bank selected by the Company in or outside the Territory.
If the Company selects option (i) it may nevertheless require Licensee
to pay any sums then due or to become due in accordance with options
(ii) or (iii). In the event the Company selects option (i) or (ii),
Licensee shall pay the cost of any conversion of a foreign currency to
U.S. Funds 12. OWNERSHIP OF COMPANY PATENTS. TRADEMARKS AND DESIGNS a)
Licensee acknowledges that the Company is the exclusive owner of the
Company Marks and Company patents, and covenants that neither it nor
any person acting for or under it will ever contest such ownership or
the exclusive rights of the Company with respect thereto anywhere in
the world. The restrictions of this paragraph shall not apply if found
contrary to applicable law or held unlawful by a court, administrative
tribunal, commission, or other authorized public adjudicatory body of
competent jurisdiction.
b) Nothing in this Agreement shall constitute a warranty by the Company
that there are currently no infringements of any of the Company Marks
or Company patents within the Territory. Licensee agrees that during
the Contract Period it will diligently investigate any infringement or
threatened infringement of the Company patents, trademarks, logos, or
trade names within the Territory and shall notify the Company of any
such infringement or threatened infringement or of any act or
threatened act of unfair competition which may come to Licensee's
attention and Licensee shall use its best efforts to prevent such
infringement or act of unfair competition. Should litigation become
necessary to protect the Company's interests in this regard, Licensee
shall cooperate fully with the Company to the extent requested. Company
will reimburse Licensee for all reasonable expenses incurred in
connection therewith. The restriction of this paragraph shall not apply
if found contrary to applicable law or held unlawful by a court,
administrative tribunal, commission, or other authorized public
adjudicatory body of competent jurisdiction.
13. TERRITORIAL REGISTRATION OF THE COMP ANY TRADEMARKS
----------------------------------------------------
The Company has registered, or applied for registration of, certain of
its trademarks in the Territory. In this regard, Licensee agrees to
take all proper actions requested by the Company to facilitate and
expedite the registrations, provided that the Company reimburses
Licensee for all reasonable expenses incurred in connection therewith.
If the Company is prevented from registering its trademarks in the
Territory by virtue of the existence of this Agreement, Licensee
agrees, at the request of the Company, to seek registration in its own
name and convey to the Company all right, title and interest to the
trademarks which Licensee may thereby obtain, provided that the Company
shall reimburse Licensee for all reasonable expenses incurred. Licensee
recognizes and agrees that the Company makes no warranties of quiet
enjoyment regarding use of the Company Marks in the Territory.
14. RIGHT OF TERMINATION
In the event of the occurrence of anyone or more of the following, the
Company shall have the right to immediately terminate this Agreement by
written notice thereof to the other party but such termination shall
not prejudice the rights of the aggrieved party to monies due or to
become due under this Agreement.
a) insolvency, bankruptcy, reorganization, suspension of payments,
assignment for the benefit of creditors, appointment of a receiver,
institution of any proceedings by or against Licensee under bankruptcy
laws or other similar laws;
b) liquidation or dissolution of either party or discontinuance of the
active operation of the enterprise of either party; c) the transfer or
sale of all or a majority of the voting stock or other equitable
ownership of Licensee without the written consent of the Company, which
consent shall not be unreasonably withheld; d) failure of Licensee to
pay any royalty or other payment due the Company under this Agreement
for a period of thirty (30) days from the date such payment is due and
payable;
e) the failure of Licensee to comply with each of the following for
each Contract Year:
(i) Minimum Royalty commitment; or
(ii) Provide Contract Year Quarter financial data.
f) the manufacture, distribution, advertisement or sale by Licensee in
the Territory of athletic and. leisure footwear, activewear or
accessories other than pursuant to this License Agreement and not
previously approved in writing by the Company, which approval shall not
be unreasonably withheld. The subsection shall not be interpreted to
mean that Licensee may not conduct its existing businesses through its
wholly owned subsidiaries- g) the breach of or failure by either party
to perform or observe any of the other terms and conditions of this
Agreement, provided said breach or failure shall continue for a period
of thirty (30) days after written notice thereof from the other party.
15. EFFECT OF TERMINATION OR EXPIRATION a) From and after the
termination of this Agreement, whether by expiration of the Contract
Period or termination pursuant to Article 14 or for any other reason,
any and all rights acquired by Licensee to the use of the Company Marks
and Trade Secrets, shall terminate and cease absolutely, and except as
provided in subsection (b) of this Article, Licensee shall not
thereafter manufacture, advertise, promote, distribute or sell any
Licensed Articles in the Territory in connection with the Company
Marks. Licensee's obligations regarding use and dissemination of the
Company's Trade Secrets shall survive the termination of this
Agreement. b) Any Licensed Articles manufactured or in the process of
manufacture by Licensee prior to the expiration or termination of this
Agreement and as to which any of the Company Marks has been attached or
affixed may be sold by Licensee, but only during the one hundred-eighty
(180) day period next following the date of expiration or termination,
subject to the condition that Licensee pay to the Company all Earned
Royalties and other payments due and following the Company at the date
of expiration or termination and to the further condition that Licensee
continues to pay to the Company all Earned Royalties accruing during
such one hundred-eighty (180) day period within thirty (30) days
following the end of each calendar month and delivers to the Company at
the time of such payment an itemized statement in the form required by
Article 6(b) hereof for each such calendar month.
Notwithstanding anything to the contrary contained herein,
Licensee shall not manufacture, distribute, sell or dispose of any
articles licensed hereunder after the expiration or earlier termination
of this Agreement if Licensee departs from the standards required by
the Company in accordance with this Agreement. Licensee hereby
covenants that it will, upon termination of this agreement, promptly
assign and transfer to the Company any property rights which Licensee
may have acquired in the Company Marks and shall destroy or return all
drawings, molds, dies and similar equipment or materials in its control
or possession used for the production or reproduction or imprinting of
the Company Marks on the Licensed Articles and furnish to the Company
satisfactory evidence of such return or destruction. Licensee agrees,
subsequent to the expiration of this Agreement, not to register,
attempt to register or use, except as provided herein, any Company
Marks and trademarks that are confusingly similar to the Company Marks.
16. FINAL STATEMENT UPON TERMINATION OR EXPIRATION a) Licensee shall
deliver, as soon as practicable, to the Company a statement indicating
the number and description of Licensed Articles bearing any of the
Company Marks under this Agreement on hand or in process of manufacture
as of (i) sixty (60) days prior to the expiration of the Contract
Period; and (ii) sixty (60) days after receipt from the Company of any
notice terminating the license granted hereunder or, in the event no
such notice is required, sixty (60) days after the occurrence of any
event which terminated such license.
b) The Company shall have the option, at its expense, to have an
independent certified public accountant conduct a physical inventory
during reasonable business hours of Licensee's manufacturing and
distribution facilities in order to ascertain or verify such inventory
or statement. In the event Licensee refuses to permit the Company to
conduct such physical inventory, Licensee shall forfeit its right
hereunder to dispose of such inventory. In addition to such forfeiture
the Company shall have recourse to all other legal remedies available
to it. 17 COMPANY RIGHT OF INSPECTION OF LICENSEE FACTORIES a) The
Company shall have the right, at its own expense, to have its
representatives from time to time, during reasonable business hours,
visit and inspect the factory or factories of Licensee in which
Licensed Articles bearing any of the Company Marks are manufactured for
the purpose of observing the method of manufacture, quality of
materials used, products produced, and any other matters relevant under
this Agreement.
b) Licensee shall reimburse the Company for any expense for travel to
the Territory or elsewhere which may be incurred by representatives of
the Company at the request of Licensee and such payments shall be made
by Licensee to the Company in U.S. Funds within thirty (30) days from
billing thereof.
18. AGREEMENT COUNTERFEIT UNFAIR COMPETITION
-----------------------------------------
Licensee agrees to notify the Company, in writing, of any infringements
or counterfeits of, or any unfair competition affecting the trademarks
licensed hereunder immediately upon gaining knowledge thereof and to
cooperate fully in any action thereon which the Company, in its sole
discretion, deem appropriate. Licensee shall, however, be entitled to
take or institute any action thereon, either by way of informal protest
or legal, equitable or criminal proceedings, with the express written
approval of the Company, which approval shall not be unreasonably
withheld, but Licensee shall not be entitled to call upon the Company
to take action thereof; all such matters shall be entirety within the
discretion of the Company.
19 EMNIFICATION FOR PRODUCTS LIABILITY CLAIMS
a) Licensee agrees to indemnify the Company from any and all claims,
demands or judgments, including incidental costs and attorneys' fees
incurred in connection therewith against the Company for injuries or
damages to purchasers or users of the Licensed Articles manufactured by
Licensee. The foregoing indemnification of the Company by Licensee
shall extend to any and all products liability claims arising as a
result of the Company's ownership and control of the trademarks under
which the Licensed Articles are manufactured and sold by Licensee,
including, but not limited to, claims arising out of breach of implied
or express warranties, strict tort liability or negligence.
b) Licensee shall indemnify, defend and hold Company harmless from any
and all claims, demands or judgments, including incidental costs and
attorney's fees, incurred in connection with the use by Licensee of any
marks, names, lettering, words, designs of any description, other than
the Company Marks used by Licensee on or in relation to the Licensed
Articles.
c) Licensee shall, at its own cost, defend against any claims brought
or actions filed against the Company on a products liability theory
whether such claims or actions are rightfully or wrongfully brought or
filed, and the company shall execute all papers necessary in connection
with such suit and shall testify in any such suit whenever required to
do so by Licensee all, however, at the expense of Licensee with respect
to travel and similar out-of-pocket disbursements. d) The Company shall
promptly give written notice to Licensee of any claims against the
Company with respect to the subject of indemnity contained herein.
e) Licensee agrees that should insurance be required to be maintained
within ~ the Territory, it shall comply with such laws and regulations.
20. NOTICES
Any written notice authorized or required by this agreement shall be
deemed to be duly given when sent by registered mail, postage prepaid,
or by express mail or courier service, addressed to one party or the
other, as the case may be, as stated in this Article unless either
party shall previously have given to the other party written notice of
a change of such address.
COMPANY LICENSEE
L. A. Gear, Inc. Aarica Holding S.A. de C. v.
Lago Chalco 156 Col. Anahuac
2850 Ocean Park Boulevard
3rd Floor
Santa Monica, California 90405 Mexico, D.F.C.P. 11320
ATTN: CEO ATTN: Carol Kolozs
21. NO JOINT VENTURE
-----------------
Nothing contained herein shall be construed as creating a joint
venture, partnership, agency, employment relationship or other
enterprise between the parties and neither party shall have the power
to obligate or bind the other in any manner whatsoever.
22. APPLICABLE LAW
---------------
The parties agree that the State of California U.S.A. law governs the
provisions and interpretation of this Agreement and that the English
language version thereof shall be the controlling document.
23 ARBITRATION
The parties shall attempt to settle all controversies and disputes
arising hereunder amicably, promptly and fairly. Any controversy or
claim arising out of our relating directly or indirectly to this
Agreement, including but not limited to transactions pursuant thereto,
rights and obligations of the parties thereunder, the capacity or
authority of the parties thereto, the performance or breach thereof,
and the termination, renewal or non-renewal thereof, not capable of
satisfactory amicable resolution within thirty (30) days after written
notice sent by one party to the other setting forth with specificity
any such controversy or claim, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association. The
award shall be made by panel of three (3) arbitrators. It is expressly
agreed by the parties that arbitration shall be held in the offices of
the American Arbitration Association, in Los Angeles, California
U.S.A.,. or such other locations within the State of California as the
American Arbitration Association may direct. Such arbitration shall be
conducted in the English language and the arbitrators shall apply the
laws of the State of California. The institution of any arbitration
proceeding hereunder shall not relieve the Licensee of its obligation
to make payments accrued hereunder to the Company during the
continuance of such proceeding. The decision by the arbitrators shall
be binding and conclusive upon the parties, their successors and
assigns and they shall comply with such decision in good faith, and
each party hereby submits itself to the jurisdiction of the courts of
the place where the arbitration is held, but only for the entry of
judgment with respect to the decision of the arbitrators hereunder.
Notwithstanding the foregoing, judgment upon the award may be entered
in any court where the arbitration takes place, or any other court
having jurisdiction over the losing party.
24. SIGNIFICANCE OF HEADINGS
-------------------------
Paragraph headings contained herein are solely for the purpose in
aiding in speedy location of subject matter and are not in any sense to
be given weight tin the construction of the Agreement.
25. ASSIGNMENT NO W AIVER
----------------------
This Agreement and any rights herein granted shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors or assigns, provided, however, that this Agreement shall be
freely assignable by the Company but shall not be assigned,
sublicensed, or encumbered by Licensee without the written consent of
the Company. This Agreement constitutes the entire agreement and
understanding between the parties hereto and cancels, terminates and
supersedes any prior agreement or understanding relating to the subject
matter hereof. None of the provisions of this Agreement can be waived
or modified except expressly in writing signed by both parties hereto,
and there are no representations, promises, agreements, warranties,
covenants or undertakings other than those contained herein. No waiver
or modification of any right or obligation arising under this Agreement
shall be construed as a waiver or modification of any other right or
obligation. No waiver of any breach of this Agreement shall constitute
a waiver of any subsequent breach of the same or any other term or
condition hereof. Notwithstanding the above Licensee shall have the
right to assign this Agreement to a wholly owned subsidiary of Licensee
upon written notice to the Company.
26. MODIFICATIONS
No modification or cancellation of any term or condition of this
Agreement shall be effective unless executed in writing by the party
charged therewith.
27 FORCE MAJEURE
If either party to this Agreement is temporarily unable to perform its
obligations hereunder because of fire, strike, freight embargoes,
government restrictions or regulations, war, emergency or other cause
reasonably beyond its control, then no liability to the other party or
right to terminate shall exist for failure of the one party to perform
during such period.
28. GOVERNMENT APPROVAL
--------------------
Licensee shall be responsible for obtaining all necessary approvals
from the government(s) of Territory with respect to this Agreement.
Licensee warrants and agrees that it shall comply with all laws,
regulations, and rules of relevant public authorities in the Territory
and shall procure and maintain all licenses, permits, approvals and
authorizations necessary to lawfully conduct business under this
Agreement. In the event that Licensee is unable to obtain all such
approvals within one hundred-eighty (180) days of the execution of this
Agreement, the Company shall have the right to terminate the Agreement
immediately upon written notice to Licensee.
29. SEPARABILITY OF PROVISIONS
---------------------------
If any term or condition of this Agreement is held to be invalid or
unlawful by a court of competent jurisdiction, such a finding shall in
no way affect the remaining obligations of the parties hereunder and
the court may substitute a lawful term or condition for any provision
found to be unlawful, provided that any such substituted term or
condition shall not deny the parties the benefits arising to them under
this Agreement.
30. CAPACITY
Each of the parties represents and warrants that it has the capacity
and right to enter into this Agreement and that its entry into this
Agreement in no way violates the provisions of any existing Agreement
into which it has entered.
31. FULL NEGOTIATION
-----------------
The parties state and agree that this Agreement was fully negotiated
between them and that none of the provisions hereof shall be
interpreted as having been drafted by either party to the exclusion of
the other.
32. COUNTERPARTS
This Agreement may be executed in two (2) counterparts, each of which
will be deemed an original, but both of which together shall constitute
one and the same instrument.
33. STANDARD OF REVIEW
In reviewing any and all required or requested documentation, or
requests for information, which may be provided in accordance with the
terms of this Agreement, including but not limited to, budgets,
marketing plans, promotional campaigns, standards and procedures,
Company and Licensee agree to use the standard of a reasonably prudent
businessman in all such requests or review of materials provided
pursuant to such requests or requirements.
34. RIGHT OF FIRST REFUSAL
-----------------------
In the event the laws and regulations of the United States of America
are changed which would permit the granting of a license by the Company
for the territory of Cuba, Licensee shall have the right of first
refusal to accept such additional territory.
IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement as of the date and year first above written in duplicate
originals by its duly authorized representatives.
"LICENSEE" "COMPANY"
AARICA Holdings S.A. DE C.V. L.A. GEAR, INC.
By: /s/ illegible_______ By: /s/Carol Kolozs
------------- -------------------
Title: President Title: President
------------------- -------------------