TRADEMARK LICENSE
AND TECHNICAL ASSISTANCE AGREEMENT
AGREEMENT effective this 15th day of January 1998, by and between LATITUDE
LICENSING CORP., ("Licensor") a corporation to be organized under the laws of
the State of Delaware having its offices at 22 Carpenter Plaza - Suite 217 -
Wilmington, DE 19810.
and
I.C. ISAACS & COMPANY, L.P. ("Licensee"), limited partneship organized and
existing under the laws of Delaware having its offices at 3840 Bank Street,
Baltimore, Maryland 21224-2522 and 350 Fifth Avenue, Suite 1029 - New York
10118.
W I T N E S S E T H
WHEREAS, Licensor is the holder of all rights to license certain trademarks
and tradenames hereinafter defined (the "Marks") within the Territory
hereinafter defined (the "Territory") which Marks are known throughout the world
in connection with creative design and products of high quality in various
fields of fashion and accessories; and
WHEREAS, Licensor possesses certain technical know-how and expertise with
respect to the design, manufacture, promotion and marketing of the Products, as
said term is defined hereinafter; and
WHEREAS, Licensor, due to the character of its designers and the quality of
its techniques, has acquired worldwide recognition and prestige in the field of
fashion design, and Licensee is desirous of consulting and cooperating with
Licensor in the design and marketing of said Products; and
WHEREAS, Licensee wishes a license to engage in the manufacture,
importation, distribution, and sale of certain products that bear the Marks and
to avail itself of the creative design, know-how and quality control services of
Licensor; and
WHEREAS, Licensee is desirous of securing the design and technical
expertise and quality control services of Licensor in connection with
manufacturing and promoting the Products;
WHEREAS, Licensee has requested, and Licensor has agreed to grant to
Licensee, the right and license to use the Marks upon and subject to the terms
and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and undertakings
hereinafter set forth, the parties have agreed as follows:
1. Grant
1.1 Licensor hereby grants to Licensee, and Licensee hereby accepts, for
the term of this Agreement pursuant to the terms, conditions and covenants
hereinafter set forth, an exclusive license (even against Licensor and its
affiliated entities):
(a) to manufacture and/or cause to be manufactured anywhere in the world,
and to import, promote, distribute and sell within the territory with
exclusivity two of Licensor's collections of clothes as follows: a "men's Jean"
collection, and a "men's Casual" collection including outerwear, as further
described in Exhibit C (the "Products") fashioned after archival and newer
designs created by Licensor or an affiliate thereof, and designs provided or
recommended by Licensee and approved by Licensor (which approval shall not be
unreasonably withheld), under the terms and conditions hereinafter set forth and
bearing the trademarks set forth in Exhibit A attached hereto (the "Marks").
Licensee agrees to label the men's Jeans collection and the men's casual
collection differently so that there is some product line differentiation.
Products authorized by this Agreement shall include tops and bottoms which
incorporate active influences in terms of silhouettes, fabrics, details and
other technical influences as adapted to Jean wear and Casual wear including but
not limited to products such as tee-shirts, polo shirts, sweat shirts, sweat
pants, coats and trousers.
(b) To use and display the Marks within the Territory, but solely in
advertising and promoting the Products within the limits herein set forth, to
the specific exclusion of any use of said Marks in combination with any other
trademarks not approved by Licensor or in any form in connection with any other
products or with Licensee's overall business operation (except for accurate
references to the relationship between Licensor and Licensee and as required by
law) or in Licensee's trade or corporate names, except as may otherwise be
provided herein.
(c) To use the know-how, designs, copyrights, and patents, if any, of
Licensor and its affiliates in connection with the manufacture of the Products.
1.2 The License herein granted shall only extend to products designed,
manufactured, promoted, advertised and sold according to high standards of
quality and in full compliance with the terms and conditions hereof, so as to
maintain, enhance and protect the image and prestige associated with the Marks.
1.3 The Trademark Owner hereby represents to Licensee (i) that Licensor
has all necessary rights to grant to Licensee the exclusive license in the
Territory to import, promote, distribute and sell the Products in accordance
with the terms of this Agreement and that Trademark Owner will not, directly or
indirectly, take any action or cause others to take any action inconsistent
therewith, (ii) that Licensor, Trademark Owner or an affiliated entity has or
will secure the rights to authorize Licensee to manufacture products at least in
the countries listed in Exhibit B hereto (the "Manufacturing Countries"), (iii)
that Trademark Owner will take all
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reasonable and diligent steps in the Territory and the Manufacturing Countries
to obtain and maintain valid and in effect trademark registrations for the Marks
to cover all the Products, and (iv) that it will fully cooperate with Licensor
and Licensee in implementing the provisions of this Agreement which relate to
the protection of the Marks, in protecting the rights of Licensee to use the
Marks, and in preventing the importation into the Territory of Products
manufactured by or for other licensees of the Marks outside of the Territory.
Licensee will take reasonable and diligent steps to ensure that its foreign
manufacturers do not, directly or indirectly, distribute any merchandise branded
with the Marks which is manufactured for Licensee to anyone other than Licensee
(and its agents) for distribution in the Territory.
1.4 Notwithstanding any other provision of this Agreement, Licensor hereby
acknowledges that Licensee manufactures, promotes and distributes other
collections of apparel, including but not limited to the branded BOSS
collections and the Beverly Hills Polo Club collections, and that nothing in
this Agreement is intended to restrict in any way Licensee's ability to conduct
those other businesses as presently conducted or as they may be expanded in the
future in Licensee's regular course of business.
1.5 In connection with the development and implementation of the licensing
relationship between the parties and in order to resolve any potential issues
with respect to the labeling of certain of Licensee's Boss product lines,
Licensee acknowledges that Licensor or its affiliates own the horizontal,
rectangular label shown in Exhibit D hereto as positioned on the fly of pants.
In furtherance thereof, Licensee agrees that, commencing with garment
collections to be shown to the trade at the February 1999 Magic Show (USA) and
thereafter, Licensee will not manufacture or distribute any pants which have on
the fly of the pant a label which bears the horizontal rectangular shape and
size of the label shown in Exhibit D hereto. From and after February 1999,
Licensee may continue to distribute existing inventory of pants bearing the
horizontal, rectangular label shown in Exhibit D until such inventory is
exhausted, and Licensee's customers may likewise continue to sell products
bearing such labels which are in their possession or were on order prior to
February 1999 until such inventory is exhausted. Notwithstanding anything else
in this Agreement, Licensor (for itself and its affiliates) agrees that it will
not object to the use by Licensee (and its affiliates) of the particular labels
and markings to be positioned on the fly of pants which are shown on Exhibit E
attached hereto and others not limited by clor, or size (if larger) or design
(is similar).
2. Term and Territory
2.1 The initial term of this Agreement shall commence and become effective
as of the date first written above and shall expire on December 31, 1999 unless
sooner terminated as hereinafter provided. Licensor shall coordinate with the
prior Licensee of the Products in the Territory for a smooth transition so that
Licensee has the ability to fill orders for Products from existing and new
customers, without any gap in time, as soon as the former licensee ceases to
ship Products, and Licensor shall as soon as possible (and not later than 30
days after the date hereof) advise Licensee of the date in which shipments can
commence in accordance with this sentence (which date shall not be later than
May 1, 1998). Licensee shall have the option to renew this Agreement
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for an additional term of three years commencing on January 1, 2000 and ending
on December 31, 2002. In addition, Licensee shall the option to renew this
Agreement for an additional term of five years commencing on January 1, 2003 and
ending on December 31, 2007.
2.2 The License herein granted shall only extend to the United States of
America (Fifty states and the District of Columbia), Puerto Rico and the U.S.
Virgin Islands, and shall include sales made to all branches of the United
States military for distribution in United States military installations
anywhere (the "Territory").
2.3 Licensee shall promptly refer to Licensor all requests or inquiries
relating to the Products from outside the Territory or from within the Territory
if the request or inquiry concerns the possible sale or delivery outside the
Territory. Likewise, Licensor shall (and shall cause its affiliates to)
promptly refer to Licensee all requests or inquiries relating to the Products
from within the Territory or from outside the Territory if the request or
inquiry concerns the possible sale or delivery inside the Territory.
2.4 Licensee recognizes and acknowledges that similar products may be
under license to other licensees for areas outside the Territory and that no
Products will be sold, directly or for export, shipped to a destination or
delivered by Licensee outside the Territory. Licensee shall not, directly or
indirectly, market, distribute or sell products outside the Territory and shall
use its reasonable commercial efforts to ensure that products it has sold or
distributed are not resold or redistributed outside the Territory, nor shall
Licensee sell or distribute Products to any person or entity which it knows, has
reason to believe or has been notified by Licensor that such person or entity
has exported or intends to export Products from the Territory. Licensee shall
exercise reasonable commercial efforts to ensure that products manufactured by
or for other licensees of the Marks outside the Territory are not exported to
the Territory in violation of Licensee's exclusivity under this Agreement.
3. Use of the Trademarks
3.1 Licensee shall have the right, during the term of this Agreement, to
the use of the Marks with respect to and only with respect to the Products and
the Territory as defined herein (and in other parts of the world as it relates
to manufacturing Products bearing the Marks). All Products manufactured, sold
and distributed pursuant to this Agreement shall bear one or more of the Marks
except as hereinafter provided and no such Products shall be sold or otherwise
distributed by Licensee under any trademark other than one or more of the Marks.
Licensee shall not use the Marks on or in connection with products manufactured
from designs not approved pursuant to this Agreement.
3.2 The license herein granted shall apply only to those Marks included in
Exhibit A and shall not include nor be deemed to include any other trademarks
which Licensor or its affiliates and subsidiaries may now or hereafter own.
Licensor agrees during the term of this Agreement to maintain and uphold the
reputation and goodwill attendant to the Marks and not to
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take any action which is likely to adversely affect the public image of the
Marks and the quality of the products sold thereunder.
3.3 Except as provided herein, Licensee further agrees that it will not
reproduce or use the distinguishing styling features or the patterns provided by
Licensor or an affiliate or subsidiary of Licensor for the manufacture and sale
of Products under any label or trademark other than the Marks or for the
Products. Nothing in this Agreement is intended to preclude Licensee from
utilizing in any of its other product collections, any designs, markings,
garment features, coloring, method of fabrication, materials, construction, or
patterns that are common in the trade or merely functional or utilitarian in
nature.
3.4 Sales by Licensee shall be deemed to have been made by Licensor for
purposes of trademark registration and all uses of the Marks by Licensee shall
be deemed to inure to Licensor's benefit. Licensee will not, at any time,
knowingly do or suffer to be done any act or thing which may, in any way,
adversely affect any rights of Licensor in and to the Marks or any registration
thereof. Licensee further agrees that it shall not sell the Products as
miscuts, seconds, irregulars or as otherwise damaged merchandise except as
otherwise permitted under this Agreement, if it were detrimental in Licensor's
reasonable opinion to the goodwill embodied in the Marks.
3.5 Licensor reserves all rights to the Marks except as specifically
granted herein to Licensee and may exercise such rights at any time. Licensee
acknowledges that Licensor is the sole and rightful owner of all right, title
and interest in the Marks and shall not claim any title to the Marks nor any
right to use said Marks except as provided herein. Licensee shall not question,
attack, contest or otherwise impugn the validity of the Marks or their
registration(s), including, but not limited to, in connection with any action
brought seeking to enforce the terms of this Agreement. The use of the Marks
pursuant to or as specified in this Agreement shall be for the benefit of
Licensor, and shall not vest in Licensee any title to or right or presumptive
right to expand or continue such use. Licensee, for itself and its affiliated
companies, covenants and agrees that it shall, at no time, adopt or use any
trademark, tradename or corporate name which is likely to cause confusion with
any of the Marks except with the prior written consent of Licensor. The
provisions of this Paragraph shall survive the expiration or earlier termination
of this Agreement.
3.6 All Products bearing the Marks shall be manufactured exclusively from
designs and specifications provided by Licensor and its affiliates or otherwise
selected by Licensee from the archives of Licensor and its affiliates or created
by Licensee and submitted to Licensor for approval under the terms of this
Agreement (which approval shall not be unreasonably withheld). No Products
other than those manufactured in strict compliance therewith shall bear the
Marks. Licensee shall use only the Marks indicated in Exhibit A and only in
connection with the Products as defined in Article 1. The license herein
granted shall confer unto Licensee no proprietary rights whatsoever in the name
Marithe & Francois Girbaud, the Marks, logos or the goodwill now attached or
hereafter to become attached thereto. Without Limiting Licensee's ability to
conduct
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its other businesses, Licensee shall only use the Marks as provided herein and
in full compliance with the terms and conditions hereof and only for the
duration of this Agreement.
3.7 Notwithstanding any other provision of this Agreement, Licensor
acknowledges that Licensee intends to select from existing and archival designs,
fabrics and stylistic features associated with the Marks and the Products and
also to recommend to Licensor modifications, updates, and desirable additions to
those designs and stylistic features associated with the Marks and products
bearing the Marks so as to maintain the image for the Products, the Marks and
the tags, labels and other collateral used with the Products that is suitable
for successful distribution in the Territory at competitive price ranges.
Licensor agrees to consider in good faith and reasonably all such design and
stylistic feature recommendations made by Licensee and, unless they
significantly detract from the goodwill associated with the marks, to approve
the implementation of those recommendations by Licensee subject to Licensor's
right to review and approve samples under this Agreement. Licensee shall have
discretion to select designs and stylistic features associated with former
collections of apparel sold under the Marks for incorporation into Licensee's
Products and shall have no obligation to accept any designs, fabrics or
stylistic features that, in licensee's reasonable opinion, would not be
commercially successful in the Territory or would be too expensive to
manufacture in light of the expected marketability.
3.8 Subject to Section 3.7, the use of the Marks, including the specific
design, artwork or graphics thereof and any tags, wrappers, letterhead,
invoices, stationery or other items incorporating the Marks must be in full
compliance with the Licensor's written policies and procedures, as they are
communicated to Licensee from time to time, and is, in each instance, subject to
the prior written approval of Licensor, which approval shall not be unreasonably
withheld. Licensor can only promulgate policies and procedures that change the
guidelines for use of the Marks prospectively and not with respect to any
Products already approved by Licensor or for Product collections which have been
designed. The Marks may only be used by Licensee as part of an approved label
and may only be used in their entirety. Licensee shall not alter or modify the
Marks in any manner whatsoever nor shall Licensee add to, remove or abbreviate
any part or distinctive feature thereof including script, graphics, colors or
logos.
3.9 Licensee shall cooperate fully and in good faith with Licensor for the
purpose of securing, preserving and protecting Licensor's rights in and to the
Marks in the Territory and the Manufacturing Countries. Without limiting the
rights of Licensee under this Agreement, Licensee shall execute, deliver and/or
file any and all documents which Licensor reasonably requests to make fully
effective or to implement the provisions of this Agreement relating to the
ownership or registration of the Marks in the Territory and Manufacturing
Countries. All costs and expenses for any application for registration or
extension of registration with respect to the Products within the Territory and
Manufacturing Countries shall be borne by Licensor.
3.10 Licensee will use the Marks in the Territory strictly in compliance
with the legal requirements obtaining therein. Whenever any of the Marks is
used on any Product or item of packaging or labeling or in any advertisement or
other promotion material, it must be followed, in the case of a registered
trademark by the registration symbol, i.e. -Registered Trademark-, and in the
case of all other
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trademarks by the symbol -TM-, or other appropriate symbols of similar import
acceptable to Licensor. Licensee shall duly display all other notices with
respect to the Marks on the Products and otherwise as are or may be required by
the trademark laws and regulations applicable within the Territory or any
portion thereof.
3.11 Any copyright, design patent or any similar industrial or intellectual
property right which exist or may be created in any sketch, design, sample,
print, package, label, tag or the like used uniquely in connection with the
Products shall be the property of Licensor, and if not created by Licensor they
shall be deemed works made by Licensee for hire for Licensor. Licensee shall
place a copyright notice whenever required by Licensor to protect said
copyrights. Licensee shall not knowingly, at any time, do or cause to be done
any act or thing which may adversely affect any rights of Licensor in such
sketches, designs, samples, prints, packages, labels, tags and the like and will
do at Licensor's cost all things reasonably required by Licensor to preserve and
protect said rights. Nothing herein is intended to preclude Licensee from
utilizing in any of its other product collections, any designs, markings,
garment features, coloring, method of fabrication, materials, construction, or
patterns that are not uniquely associated with Licensor's products or which are
otherwise common in the trade or merely functional in nature, and Licensee shall
not assign any rights thereof to Licensor. Licensee does not warrant that any
proprietary rights will exist in any designs or other materials created by or
for it in connection with the Products.
4. Provision left blank intentionally.
5. Royalties
5.1 Subject to the provisions of Section 1.4 above, Licensee agrees to
exercise its best efforts to promote and maximize sales of the Products
throughout the Territory. Licensee shall conduct its activities pursuant to
this Agreement so as to enhance the goodwill and reputation of the Marks and
shall not engage in conduct known to be detrimental to the same.
5.2 In consideration of the rights granted to Licensee pursuant to this
Agreement, Licensee shall pay to the Licensor for each Calendar Year during the
Term, or any portion thereof, Royalties in an amount of 6.25% of all Net Sales
(the "Royalties"). The Royalties for close-out sales under Section 5.9 and
irregulars shall be 3.0% of Net Sales of the close-out Products. In no event
shall the amount of Royalties (including close-out Royalties) due and payable
for any Calendar Year be less than the minimum amount ("Minimum Royalties") set
forth for each Calendar Year as follows:
Minimum 1998 $1,200,000
1999 $1,500,000
2000 $2,000,000
2001 $2,500,000
2002 $3,000,000
2003 $3,000,000
2004 $3,000,000
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2005 $3,000,000
2006 $3,000,000
2007 $3,000,000
The term "Calendar Year" shall mean January 1 through December 31 of each
year of the term. For purposes of paying Royalties, the first Calendar Year of
this Agreement commences on January 1, 1998.
5.3 The term "Net Sales" shall mean the invoiced price (excluding sales
tax, insurance and shipping charges) for Products shipped or sold by Licensee or
any of its subsidiaries or affiliates, or authorized sub-licensees, during the
relevant period, less credits granted for Products actually returned and
accepted, and reasonable customary and usual trade discounts and mark-downs
actually granted to non-affiliated customers and an allowance for bad debt. Bad
debt shall consist of any accounts receivable of a customer who is under a
bankruptcy or insolvency proceeding, or which is otherwise uncollected despite
Licensee's collection efforts for at least 120 days after the due date, and
shall be considered a reduction of the invoiced price for Products only up to an
aggregate amount of 1.5% of Net Sales during each Calendar Year of the term and
any renewal of this Agreement. For purposes of calculating royalties due for
any sale, transfer or other distribution of Products made otherwise than at
arm's length, the "Net Sales" price of such Products shall be deemed to be the
"Net Sales" price of a corresponding sale to unaffiliated independent retailers.
The royalties herein provided shall be due and paid on sales of any and all
Products bearing the Marks by Licensee or its affiliates. Except as may be
otherwise provided herein, no deduction shall be made for any discount,
mark-down, advertising allowance, other allowances of any kind or for any
purpose whatsoever or costs incurred by Licensee. Royalties shall not be due to
Licensor on products sold by Licensee to Licensor under this Agreement.
5.4 In the event that Licensee sells Products in a currency or currencies
other than United States dollars, the "Net Sales" price, with respect to such
sales, shall be computed on the basis of the average exchange rates of said
currency or currencies into U.S. dollars, as of the close of business on the
last day of each of the three months of each applicable calendar quarter as
published in The Wall Street Journal.
5.5 The Minimum Royalties shall be paid in equal monthly payments on the
last day of each calendar month during the term. Payments for the initial term
will start on January 31, 1998, and there will be equal monthly payments of
$100,000 each, with the last payment for 1998 due on December 31, 1998. For all
other Calendar Years, there will be 12 equal monthly payments each in the amount
of 1/12 of the Minimum Royalties payable for that Calendar Year as stated above.
Actual Royalties shall be paid quarterly within thirty (30) days of the last day
of each calendar quarter with respect to sales of Products during said calendar
quarter. Within 30 days of the end of a calendar quarter commencing in Calendar
Year 1998, Licensee will calculate actual Royalties owed to Licensor based on
actual Net Sales of Products during the preceding calendar quarter and shall by
the 30th day following the end of the quarter remit to Licensor the difference
between the total Royalties paid during the calendar quarter as Minimum
Royalties and the actual Royalties due for that quarter. If the Minimum
Royalties are greater than the actual Royalties due
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in any quarter, then Licensee shall not owe Licensor any further payments for
that calendar quarter. There will be no deductions or set offs from any
payments whatsoever, unless agreed to by the parties.
5.6 Licensee shall, within thirty (30) days of the end of each calendar
quarter and within ninety (90) days of the end of each Calendar Year during the
term hereof, provide Licensor with a certified statement of sales of the
Products during the immediately preceding calendar quarter or Calendar Year, as
the case may be. Said statement shall be signed by a duly authorized officer of
the Licensee and be certified by said officer as true and accurate. Said
statement shall conform to a format agreed upon between the parties and, at the
option of Licensor, be subdivided by Product.
5.7 All royalties payable hereunder shall be paid directly to a bank
designated by Licensor, in writing, as depositary (the "Depositary").
5.8 Late payments of royalties shall bear interest at the Citibank, N.A.,
New York prime rate plus 3% per annum, but, in no event shall exceed the maximum
rate permitted under applicable law.
5.9 For the purpose of this Agreement, close-outs are defined as Products
sold at a reduction of twenty (20%) percent or greater from Licensee's regular
full list price of such Products and Licensee acknowledges that the excessive or
indiscriminate disposal of close-outs may adversely affect the prestige attached
to the Marks. Licensee shall therefore exercise its reasonable efforts to plan
and conduct its manufacturing and sales operations with a view to limiting the
quantity of close-outs and to disposing of all Products through normal channels
of distribution and otherwise only through stores specialized in high quality
close-outs, including outlets, such as Ross Stores, T.J. Maxx, Filene's
Basement, and the like, that offer for sale other similar designer labels. All
sales of close-outs shall comply with the terms specified herein.
5.10 Only genuine end-of-season close-outs may be sold under the label, or
with any reference to the Marks. No close-outs shall be shipped until at least
ninety (90) days shall have elapsed from the date of the first substantial
delivery by Licensee of a season's collection of which it is a part.
5.11 For purposes of calculating Royalties, the Net Sales price of such
authorized close-out sales shall be based on the actual reduced Net Sales price
for said Products. On excessive close-out sales (which shall be defined as
close out sales equivalent to more than 30% of Net Sales for the first Calendar
Year of this Agreement and to more than 10% for any subsequent Calendar Year of
this Agreement), the royalties shall be computed at the normal Net Sales price
as applied to the initial standard (i.e. non-close-out) selling price of the
Product. Within sixty (60) days of the close of each calendar quarter and
within ninety (90) days of the close of each Calendar Year, Licensee shall
furnish to Licensor a statement setting forth the amount of total regular sales
and total close-out sales. At the option of Licensor, said statement shall be
subdivided by Product class.
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5.12 Receipt or acceptance by Licensor of any royalty payments due
hereunder, in an amount or amounts which are less than amount or amounts due,
shall not constitute a waiver of Licensor's rights in or to the balance thereof
which shall remain due and payable pursuant to the terms of this Agreement. Any
excess Royalties paid by Licensee to Licensor hereunder during any Calendar Year
which were paid in error shall be counted as a credit against future Royalties
due to Licensor.
5.13 Licensee shall provide Licensor for each calendar quarter within
forty-five (45) days of the end of the preceding calendar quarter, reports
setting forth in reasonable detail sales by U.S. dollars and unit shipments with
respect to each product collection and models in each product collection,
aggregate sales to regular price customers, off-price customers, large
retailers, specialty retailers and sales by significant geographic segments.
Such report shall be in accordance with Licensee's current reporting
capabilities and format.
6. Designs and Technical Assistance
6.1 Licensor shall provide Licensee with recommendations for a full and
varied collection of Products (as a "collection" is customarily defined in the
trade) for each of the four seasons (fall, winter, spring, summer) that Licensor
in consultation with Licensee and subject to Section 3.7 above, shall deem
appropriate for sale in the Territory. Licensor shall develop each seasonal
collection in a timely manner so that Licensee shall have sufficient time to
produce the Products but in any event in accordance with the following minimum
lead times:
Collection Delivery Date by Licensor
Fall August 15
Winter November 15
Spring February 15
Summer May 15
6.2 The recommended collection will contain a basic core offering of jeans
and shirts in addition to a casual informal sportswear line of tops, bottoms and
outerwear pieces designed to be worn separately or collectively. Licensor will
be conscious in its design and selection of the Products for the Territory as to
the cost and commercial availability of the raw materials, the degree and
sophistication of the construction, the cost of manufacturing, and the current
fashion trends in vogue with the target customers in the Territory. The final
collections shall be determined by Licensor and Licensee in close consultation
with each other, with the final approval authority residing in Licensor who
shall act in good faith in considering Licensee's garment proposals and
Licensee's concern's with any designs or features proposed by Licensor.
6.3 Subject to the rights of Licensee under Section 3.7, Licensor shall
make available to Licensee in New York, on a basis sufficiently timely to meet
scheduled deliveries to customers
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as stated in section 6.1 above, such samples, patterns, sketches, photographs,
technical specifications and other materials and information relating to the
design and manufacture of the Products (all such materials and information are
hereinafter referred to as "Technical Information") as they may create in the
normal course of their operations and as may be reasonably necessary to enable
Licensee to carry out its obligations under this Agreement. Without limiting
the generality of the foregoing, the Technical Information will include the
basic cuttings for the collections, the patterns for each model, a sample of
each model in base size, technical specifications concerning the making and
fitting of each model and information concerning the selection, fabrication and
treatment of materials and fabrics (including the names and references of the
manufacturers) and supplies and accessories (labels, designs, etc.). If
Technical Information, including finished samples, is shown to any third person
with or without the prior written consent of Licensor, Licensee shall take any
and all action necessary to ensure that such third person fully conforms to all
applicable terms and conditions hereof, specifically to avoid any unauthorized
use of the Technical Information. All such Technical Information shall remain
the sole property of Licensor and Licensee shall have no ownership interest
therein subject to the second sentence of Section 3.3 above. Upon the
expiration or earlier termination of this Agreement, all Technical Information
in the possession or under the control of Licensee shall be immediately returned
to Licensor. In order to reimburse Licensor for its costs, and not as a
purchase price or with any transfer of ownership, Licensee shall pay to Licensor
an amount equal to two and one half (2.5) times the ordinary wholesale price for
any samples so ordered, F.O.B. place of shipment, plus shipping costs and
duties, of all samples furnished to Licensee hereunder. Such amounts shall be
paid within thirty (30) days of delivery. Licensor shall not request that
Licensee that Licensee make any material changes or modifications to product
designs approved by Licensor under this Agreement and any such changes shall be
prospective only.
6.4 Licensor must keep a current archive of products previously offered
under the Marks in an accessible location in the New York Metropolitan area.
Licensor will maintain in the New York Metropolitan area at least one
representatives of Licensor with authority to act for Licensor under this
Agreement and to facilitate consultation between Licensor and Licensee. Any
archive piece borrowed by Licensee from Licensor shall be logged by Licensor and
must be returned within three (3) months. Licensee acknowledges that the
failure to return any archive piece within the required time shall be
detrimental to Licensor, the Marks and the Products and may subject Licensee to
liability for damages to Licensor. Licensee may remove small pieces of fabric
from archival pieces for the purpose of sourcing the fabric necessary to
manufacture the Products.
6.5 Prior to manufacturing, selling or distributing any Products in any
seasonal collection, Licensee shall make available for inspection in New York by
Licensor CAD (computer aided design) samples (with proposed colors and fabrics)
of each Product in any proposed seasonal collection sufficiently far in advance
of first manufacture to permit Licensee to make any changes requested by
Licensor. Licensee shall notify Licensor of the date on which samples are made
available and of the scheduled first production date. Licensor shall inspect
said samples and either approve or reject the same, in writing, no later than
five (5) days after the inspection date. Any sample not rejected in a timely
fashion shall be deemed approved. Once a sample has been
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approved, Licensee shall not make any material changes (and Licensor shall not
require any changes) to the design thereof, including materials, fabrics, colors
and quality of workmanship, without Licensor's prior written approval. All
samples of Products submitted to Licensor pursuant to this Paragraph 6.5 shall
be provided at Licensee's sole cost and expense. As an alternative to the
process described herein, Licensee shall provide to Licensor a calendar of
product development, prototyping and manufacture similar to that which Licensee
follows in connection with its BOSS product lines, and Licensor shall have the
right to review and comment on the Products in New York as they go through
development at such points in the development process noted on the calendar as
Licensor deems appropriate, provided that Licensor must do so while there is
sufficient time for Licensee to make changes requested by Licensor. No Products
shall be displayed, manufactured, distributed (including offerings for samples)
and/or sold by Licensor unless such Products are at least equal in quality,
workmanship, fit and design to the samples previously approved by Licensor in
accordance with this Paragraph 6.5, all materials used shall conform to the
specifications indicated in the Technical Information concerning each Product
approved by Licensor.
6.6 In order to control the production and quality of manufacturing,
Licensor may, at its option, send one (1) representative to Licensee's
facilities, five (5) times a year, (corresponding to the five fashion seasons).
Licensor shall be responsible for the cost of business class round-trip air fare
for such visits from Europe to the United States and for all lodging and food
expenses related to such visits. The Licensee may, at its option and at its
cost, send technicians to Licensor's facilities, in order to obtain any
information necessary to the realization of the collection (but without
prejudice to Licensor's obligation to provide any necessary Technical
Information in New York). Such visit shall be at a date to be agreed upon by
both parties, on or before the delivery of each collection. Nothing in this
Section shall grant Licensor the right to inspect or visit any portion of any
facility where Licensee conducts its other lines of business.
6.7 Licensee agrees that it shall treat all non-public information
relating to the design, manufacture, marketing and sale of the Products as
Proprietary Information. No Proprietary Information other than manufacturing
specifications and finished samples, shall be shown to any third party without
the prior consent of Licensor. Licensee shall use its reasonable efforts to
ensure that its employees, agents, subcontractors (if any) and others subject,
directly or indirectly, to its control, do not disclose or make any unauthorized
use of any Technical Information. Likewise, Licensor shall treat all non-public
information relating to the manufacture, sourcing, marketing, forecasts and sale
of the Products by Licensee and its agents as Proprietary Information of
Licensee. No Proprietary Information shall be disclosed to any third party or
used for any purpose not related to this Agreement by Licensee or its agents.
6.8 Subject to the other provisions of this Agreement, any Designs and
other materials provided or approved by Licensor for use under this Agreement
shall remain the property of Licensor and are licensed hereunder solely and
exclusively for use in connection with the manufacture and sale of the Products
in the Territory. Licensor may use and permit others to use said Designs and
other material in any manner they desire, provided that such use does not
conflict with any rights granted to Licensee hereunder. Licensee specifically
acknowledges that
12
such Designs and other materials may be used by Licensor and other licensees on
the Products in jurisdictions outside the Territory and on products other than
Products anywhere in the world.
6.9 Licensee shall take all reasonable precautions to protect the secrecy
of the materials, samples, designs and Technical Information described in this
Article 6 prior to their commercial distribution or the showing of samples for
sale.
6.10 (a) In order to maintain the distinctiveness of the image, quality
and special characteristics of the Products, Licensor may recommend, but not
require, that Licensee use fabrics and yarns produced by manufacturers specified
by Licensor, so long as the quality of products and price and reasonable
delivery terms shall be equivalent to those offered by other manufacturers.
When Licensee elects to deal with such manufacturers, it shall also use its
reasonable commercial efforts to maintain a good commercial relationship with
these manufacturers. In this regard, Licensee undertakes, except in the case of
defective, low quality or untimely goods, not to make any changes or
cancellations of orders of such fabrics and yarns contrary to commercial usage.
(b) Certain collections of Products or certain particular Products
are and may in the future be fabricated in special fabrics and yarns, developed
by Licensor. These fabrics and yarns carry with them a particular name and are
or will be protected by the registration of a mark or fabrication patent. These
fabrics or yarns constitute an essential and distinctive element of such
Products and it is thereby necessary, to protect the originality and technical
components of such fabrics and yarns, to license a very limited number of
manufacturers with the right to use the technical components and the know-how to
produce these fabrics. Licensee shall consequently deal with certain
manufacturers designated by Licensor in order to manufacture such Products. A
copy of orders placed by Licensee with such manufacturers shall be sent at the
same time to Licensor. Licensee shall be entitled to quality of products and
price and delivery terms from such manufacturers equivalent to those given to
other licensees of Licensor outside the Territory. Licensee undertakes, except
in the case of defective, poor quality or late delivery of goods, to maintain a
good commercial relationship with these manufacturers and not to make any
changes or cancellations of orders of such fabrics and yarns contrary to
commercial usage.
7. Manufacture and Technical Data
7.1 Licensor shall consult with Licensee regarding the manufacturing
process, methods of production, treatment, fabrics and technical specifications
necessary for the production of high quality products from designs approved by
Licensor. All such information shall be strictly confidential and shall not be
disclosed by Licensee nor its agents and/or employees without the prior written
consent of Licensor.
7.2 The Products shall not be manufactured by anyone other than Licensee
and/or quality manufacturers chosen by Licensee. Licensee shall take reasonable
and diligent steps necessary to ensure that such manufacturer fully conforms to
all applicable terms and conditions hereof, that said manufacturer produces only
those Products specifically ordered by Licensee and in the quantities ordered
without over-runs or extra labels, and, that said manufacturer controls
13
the manufacture and production to avoid any possible use that might be
detrimental to the Marks, or unauthorized use of the Technical Information.
7.3 Licensor reserves the right to require Licensee to terminate a
manufacturer whose workmanship has suffered, in the reasonable opinion of
Licensor, a deterioration in quality which is not satisfactorily corrected
within thirty (30) days after notice thereof to Licensee, or any manufacturer
who, in Licensor's reasonable opinion fails to comply with any provision hereof
or whose conduct, if committed by Licensee, would constitute a breach of this
Agreement, provided that Licensor must make a reasonable allowance for
completion of current orders by the manufacturer.
7.4 No disapproved or otherwise defective Products shall be sold by
Licensee under or with any reference whatsoever to the Marks if it were
detrimental to the Marks. Should any Products manufactured and sold by Licensee
be defective, in the sole opinion of Licensor, Licensee shall, at its sole cost
and expense, take any and all reasonable action necessary to withdraw and remove
said Products from the market through repurchase or otherwise.
8 Advertising and Promotion
8.1 Throughout the duration of this Agreement, Licensee shall spend upon
advertising of the Products throughout the Territory an annual minimum of three
percent (3%) of Net Sales but no less than $500,000 per year, except that for
the time between the effective date and December 31, 1998, the minimum
advertising expense shall be only $350,000 (the "Minimum Advertising Expense").
This Minimum Advertising Expense is an independent obligation, and amounts spent
on advertising Licensee shall not be deducted from Royalties nor from any other
amounts due and owing from Licensee to Licensor under this Agreement.
8.2 Advertising expenses shall be defined as direct expenses for
promotions such as television, radio, printed press and billboards advertising,
celebrity endorsements, event sponsorships, in store point of sale items, store
promotions, and new shop in shop fixturing, at the exclusion of any other
expenses, except that the participation in trade shows described in Article 10
below shall be included in the Minimum Advertising Expenses.
8.3 Licensee shall exercise every reasonable effort to promote and
advertise the Products throughout the Territory and shall, prior to the end of
each calendar year, submit to Licensor, in reasonable detail, proposed plans and
budgets for the subsequent annual promotional campaign. Licensor shall
cooperate, as may reasonably be required by Licensee, in furnishing, at cost,
such advertising and promotional material, as is available to Licensor and which
appears suitable, in Licensor's opinion, for the Territory. Licensor and
Licensee shall cooperate closely in the creation and execution of advertising
programs.
8.4 Licensee shall submit to Licensor for review, prior to submission to
the advertising agency, any campaign briefing materials, and shall consult with
Licensor before accepting any creative response to such briefing materials.
Visual representation of Products and of the Trademarks shall be subject to
written approval by Licensor (which shall not be unreasonably
14
withheld) prior to public distribution or display in any medium provided,
however, that any advertising or promotional materials supplied by Licensor will
not require its approval prior to dissemination by Licensee. Except as
otherwise provided in this Agreement, all advertising campaigns in the Territory
shall correspond to the international advertising theme and image worldwide.
Licensor will make available to Licensee all advertising campaigns produced
worldwide. The Licensee shall cause its advertising staff and/or agency to
consult with Licensor's designated advertising agency and/or creative staff, at
least twice a year, for a review of Product image and with a view toward
coordinating and enhancing worldwide advertising strategy. Approved advertising
and promotional materials shall not be disapproved by Licensor for use within
the same campaign.
8.5 Licensee shall submit to Licensor, for its prior approval, not to be
unreasonable withheld, any and all advertising for any medium referring to the
Products before publication or dissemination thereof. Should Licensor deem said
materials appropriate for use outside the Territory, it shall have the right to
use the same, provided, however, any additional costs incurred thereby, if any,
for advertising agency fees, talent, residuals, copyright clearances,
photographers fees, or otherwise shall be paid and secured by Licensor.
8.6 Licensee shall, on January 31st of each year commencing January 31,
1999, inform Licensor of its expenditures in fulfillment of its advertising and
promotional obligations during the preceding year and shall account to Licensor
for the use thereof.
8.7 Failure on the part of Licensee to make the Minimum Advertising
Expenses required hereunder during any contract year shall constitute a material
breach hereof. Notwithstanding, Licensor may, at its sole discretion, permit
Licensee to cure such breach by either paying to Licensor the amount by which
the actual expenses fell short of the Minimum required or, by allowing Licensee
to increase its advertising obligations for the immediately subsequent year by
an amount equal to the deficiency.
8.8 Notwithstanding any other provision of this Agreement, Licensor
acknowledges and agrees that Licensee may primarily focus its advertising and
promotion of the Products on the Girbaud brand and is not required (i) to
implement or follow as its primary campaign for the Products in the Territory
the "BE" theme adopted by Licensor in other geographic areas, or (ii) to apply
the word "BE" to the Products themselves by either temporary or permanently
affixed means.
8.9 Licensor shall arrange. at Licensee's request, the participation of
one or both of the designers - Marithe and Francois Girbaud - when available, in
certain social events. Such participation shall be at Licensee's expense with
first class hotels and restaurants and first class air travel and local
transportation.
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9. Sales
9.1 Licensee shall keep Licensor fully and promptly informed of all its
successive price lists and sales policies relating to the Products which
information shall be kept by Licensor in strict confidence and not be used for
any purpose not relating to this Agreement. Licensee hereby acknowledges that
repeated untimely deliveries by Licensee to its customers (except for force
majeure) and/or the delivery, distribution and sale of defective Products would
adversely affect the reputation of the Licensor and the prestige of the Marks
and shall constitute a material breach of this Agreement.
9.2 All Products manufactured, distributed or sold by Licensee shall be
marked, labeled, packaged, advertised, distributed and sold in accordance with
the terms and conditions of this Agreement and in accordance with all laws,
rules and regulations applicable within the Territory and any subdivision
thereof and, in such a manner as to not mislead or deceive the public.
10. Trade Shows
10.1 Licensee shall participate in and contribute to the costs and expenses
of two (2) annual fashion shows in the Territory ("the Fashion Shows").
Licensee shall, within ten (10) business days of receipt of the invoice pay to
Licensor an amount of $75,000 twice per Calendar Year provided that Licensor
actually implements the Fashion Shows. Licensee's obligation to participate in
the Fashion Shows by paying the amounts indicated above shall be an independent
obligation and no sums incurred by Licensee under this provision shall be
deducted from Royalties payable to Licensor, nor from any other amounts due and
owing from Licensee to Licensor under the terms of this Agreement (except that
they will count under Section 8.2 above).
10.2 Licensee may participate, at its discretion, in other major trade
shows, which participation shall be at its sole cost and expense. Any
expenditures so incurred shall be considered advertising expenses pursuant to
Section 8.2 hereof. Should Licensor organize cooperative exhibitions at such
other trade shows in the Territory with its licensees, Licensee shall
participate in such shows and shall share in the cost and expense thereof in an
amount representing its pro rata cost and expense, which amount shall be agreed
upon prior to the event.
11. Access to Books and Records
11.1 Licensee shall, at its sole cost and expense, maintain complete and
accurate sets of books and records (including the originals or copies of
documents supporting entries herein) covering all transactions arising out of,
in connection with or relating to this Agreement.
11.2. Licensor and/or its duly authorized representatives shall have
the right (subject to confidentiality obligations reasonably acceptable to
Licensee) upon five (5) days prior written notice, to examine and audit said
books, records and all other documents in Licensee's possession or under
Licensee's control relating to the subject matter of and terms of this
Agreement. Said right shall be exercisable during normal business hours once
each Calendar Year during the term
16
hereof and, once a year during the three Calendar Years immediately following
the expiration or earlier termination hereof. All said books, records and
documents shall be kept and made accessible during the full term hereof and for
three years thereafter.
11.3 Any auditor designated by Licensor to audit and examine Licensee's
books, records and documents, shall be approved in advance by Licensee, such
approval not to be unreasonably withheld. In the event that an audit or
examination of Licensee's books, records and documents reveals an underpayment
of any Royalties due hereunder, Licensee shall immediately pay to Licensor the
amount of such deficiency, plus interest thereon from the date said Royalties
were due at the interest sale rate specified in Paragraph 5.8 hereof.
11.4 In the event that an audit of Licensee's books and records shall
reveal that Licensee's Royalties were underpaid by an amount equal to 5% or more
in any year, Licensee shall bear the cost of said audit.
12. Protection of the Marks
12.1 Licensor represents that the Marks are and shall be during the term of
this Agreement valid and enforceable trademarks in the Territory and the
Manufacturing Countries; that they are owned by Licensor or that Licensor is
authorized and empowered by the registered owner to grant the License herein
contained and that this Agreement does not conflict to any other Agreement to
which Licensor is a party, that the use of the Marks in the Territory will not
infringe upon any other trademark in the Territory and that the Licensor will
defend, indemnify and hold harmless Licensee against any claim against Licensee
(including by its manufacturers and customers) in connection with the use of the
Marks and any damages paid in settlement or as part of a judgment in such claim
(including attorney's fees and costs).
12.2 Licensee shall promptly notify Licensor, in writing, of any
infringement, threatened infringement, or otherwise unauthorized use or
threatened use of the Marks, or confusingly similar trademarks or tradenames,
whether in connection with the Products or otherwise, of which it may have
knowledge or suspicion. In the event of an infringement, threatened
infringement, or otherwise unauthorized use of the Marks, or confusingly similar
trademarks or tradenames in the Territory or Manufacturing Countries, Licensee
shall take such immediate action as may reasonably be necessary to protect the
Mark(s) and the rights of the Licensor therein, until Licensor is in a position
to take whatever action is required (provided that Licensor must act diligently
and promptly). Licensor and Licensee shall mutually decide what actions shall
be taken, including any actions in collaboration with investigators or U.S.
Customs, cease and desist correspondence, and application for injunctive relief,
and shall designate counsel for such purpose, and, in such case, Licensee shall
pay one half of the cost and expense incurred in such actions in the Territory
or Manufacturing Countries, up to and including an amount equal to 0.25% of Net
Sales, payable for each year during which any such actions are taken, brought
and/or pending, within thirty (30) days of receipt of the documented invoice.
Licensor warrants payment of the balance by Licensor. In the event of an award
of monetary damages, the proceeds thereof shall be shared pro rata to the
expenses paid by the parties. Licensee shall abide by regulations, laws and
17
practices applicable to the Products in force or use in the Territory in order
to safeguard Licensor's rights to the Marks.
12.3 Licensee shall cooperate with Licensor in any action based upon the
unauthorized manufacture, sale and/or use in the Territory or outside the
Territory by any of Licensee's manufacturers and suppliers of Products, labels
and tags bearing the Mark at Licensee's cost (but without further liability from
Licensee to Licensor provided that Licensee has met its obligations under this
Agreement).
12.4 Upon the expiration or earlier termination of this Agreement, Licensee
shall immediately and absolutely cease and discontinue the use of the Marks in
any manner or form whatsoever subject, however, to the provisions of Article 14
hereof.
13. Termination
13.1 In the event of a breach of a payment obligation by Licensee under
this Agreement not cured in all material respects within ten (10) days from the
receipt of a written notice thereof, or in the event of any other breach of this
Agreement by Licensee not cured in all material respects within forty-five (45)
days from the date of receipt of written notice thereof, this Agreement may be
terminated by the Licensor. The exercise or failure to exercise the
aforementioned right of termination during an extended period of time shall not
be considered a waiver by Licensor of any right to terminate this Agreement nor
of any other legal or equitable rights and remedies. A good faith payment
dispute shall not deemed a breach of this Agreement by Licensee. In the event of
a breach of this Agreement by Licensor not cured in all material respects within
forty-five (45) days from the date of receipt of written notice thereof, this
Agreement may be terminated by the Licensee. The exercise or failure to
exercise the aforementioned right of termination during an extended period of
time shall not be considered a waiver by Licensee of any right to terminate this
Agreement nor of any other legal or equitable rights and remedies.
13.2 This Agreement shall immediately terminate and, Licensor shall be
relieved of all liability to Licensee, if Licensee: (i) admits in writing its
inability, or is unable, to pay its debts as they mature, (ii) makes a general
assignment for the benefit of creditors, (iii) is adjudicated a bankrupt or
files a petition or answer, seeking reorganization or an arrangement with
creditors, (iv) files a petition or otherwise avails itself of any bankruptcy or
insolvency law or statute of any country or any state or subdivision thereof,
now or hereafter in effect, (v) suffers a petition or proceeding filed against
it under any provision of the Bankruptcy Act or any other insolvency law or
statute of any country or any state or subdivision thereof, which petition or
proceeding is not dismissed within sixty (60) days after the commencement
thereof, (vi) has a receiver, trustee, custodian, conservator or other person
appointed by any court to take charge of its affairs or assets or business and
such appointment is not vacated or discharged within sixty (60) days thereafter,
or (vii) discontinues its business as it relates to the Products or suspends it,
for whatever cause, for more than 120 consecutive days.
18
14. Remaining Inventory
14.1 Upon the expiration or earlier termination of this Agreement, for any
reason whatsoever, Licensee shall, within thirty (30) days thereof, deliver to
Licensor a complete and accurate schedule of Licensee's inventory of Products,
work in progress and raw materials. Such schedule shall be prepared as of the
close of business on the date of such termination.
14.2 Licensor shall thereupon have the option, exercisable by written
notice delivered to Licensee within thirty (30) days of receipt of the schedule
of inventory, to purchase any or all of the inventory for an amount equal to
Licensee's actual cost, F.O.B. factory or LDP with freight warehouse, as defined
according to Generally Accepted Accounting Principles of the United States.
Should Licensor send such notice, Licensee will ship to Licensor all of the
inventory specified therein, within thirty (30) days of receipt thereof for
inventory located in Licensee's facilities, or, for all other inventory,
promptly thereafter but no more than forty-five (45) days thereafter. Licensor
shall pay Licensee for such inventory within thirty (30) days of receipt.
14.3 In the event that Licensor elects not to exercise its option to
purchase the remaining inventory, Licensee shall have a period of six (6) months
from the effective date of termination to complete work in progress and to sell
and deliver to other purchasers its remaining inventory under Licensor's Marks
on a non-exclusive basis. Licensee will make its reasonable effort to sell only
to the previous season's customers and to sell only at regular prices.
Royalties on said sales shall be due on the 30th day following the sale thereof.
14.4 The right provided immediately above shall only apply to the remaining
inventory of Products as are in good saleable condition. Licensee shall not
commence the manufacture of Products during said period and, at the end of such
six (6) month period, shall not sell any of its then remaining inventory, unless
completely debranded by the removal of all labels, tags, lining, embroidery
which identifies the Mark(s).
14.5 If termination is due to the uncured defective quality of the Products
manufactured, imported, sold or distributed by Licensee or the unauthorized use
of Licensor's Marks by Licensee, Licensee shall be deemed to have waived the
provisions of this Article 14 and shall not sell or distribute any remaining
inventory, whatsoever, unless completely debranded.
14.6 All imprints, lettering, stationery, tags, labels, packaging, lining,
embroidery or other reproductions of or reference to the Marks shall be removed
from all inventory remaining after such six (6) month period and shall be
immediately returned to Licensor at no charge or shall be destroyed together
with such remaining inventory which cannot be debranded. Either operation shall
be conducted under the control of Licensor. In the event that Licensee shall be
deemed to have waived the six (6) month inventory liquidation period, as
provided in Paragraph 14.3 above, the provisions of this Paragraph 14.6 shall be
applicable immediately upon receipt of the Notice of Termination.
14.7 Upon the expiration or earlier termination of this Agreement, for any
reason whatsoever, all rights of Licensee under this Agreement shall terminate
forthwith and all Royalties
19
on sales theretofore made shall become immediately due and payable. Licensee
shall, subject to the provisions of Paragraph 14.3, immediately discontinue all
use of the Marks, any imitation or simulation thereof or any Marks similar
thereto (subject to the second sentence of section 3.7 above) and shall promptly
transfer to Licensor, at cost, all registrations, filings, and rights with
regard to the Marks it may have had.
14.8 Upon the expiration or earlier termination of this Agreement, Licensee
shall deliver to Licensor, freight and insurance charges at Licensee's expense
unless Licensor's default or its notice of non-renewal has caused such
termination, all technical information, fabric production information, patterns,
markers (provided that markers and graded patterns, with respect to which
Licensee has not recovered the value thereof, shall be purchased from Licensee
by Licensor at original invoice cost), sketches, designs, colors and the like in
its possession or control, designed or approved by Licensor, and, at cost, all
samples, labels, tags, packaging material, business supplies and advertising and
promotional materials bearing the Marks in Licensee's possession or control.
15. Force Majeure
(a) Neither party shall be responsible for any delay or failure in
performance of any part of this Agreement to the extent that such delay or
failure is caused by fire, flood, explosion, war, embargo, labor problems,
shortage, government requirement, civil or military authority, act of God, act
or omission of carriers or other similar causes beyond its control. If any such
event of force majeure occurs, the party delayed or unable to perform shall give
immediate notice to the other party, and shall resume performance once the
condition ceases with an option in the affected party to extend the period of
this Agreement up to the length of time the condition endured. During the event
of force majeure the parties shall consult with each other regarding efforts to
mitigate the force majeure and continue performance hereunder.
(b) Licensor shall have the right to terminate this Agreement in whole or
as to a portion thereof without further liability by Licensee.
(i) In the event that the sales operations of Licensee are suspended or
disrupted because of a recognized cause of force majeure (including strikes,
lockouts, war, natural disaster or other similar cause), and should such
suspension or disruption last for a consecutive period of 180 days, unless
Licensee shall forthwith take affirmative steps to rectify the situation, except
that if it is apparent at the time of such suspension or disruption that it
cannot be rectified within the 180 day period, Licensor may terminate forthwith.
(ii) In the event that payment to Licensor of any Royalties or other sums
due under this Agreement is prohibited or otherwise made impossible for a period
of ninety (90) days by the laws and/or regulations in effect in the Territory or
any portion thereof.
20
16. Assignment, Sublicenses
16.1 The License and rights granted hereunder are personal in nature.
Licensee recognizes and acknowledges that Licensor has agreed to contract with
Licensee in reliance upon the experience, reputation and personal qualities of
the management and shareholders of Licensee. Licensor shall have the right to
terminate this Agreement in the event Licensee (or an authorized assignee or
successor under the control of Licensee) shall no longer be under the control of
Licensee. Licensee shall not sell, transfer , sublicense or assign its rights
and interest hereunder, without the prior written consent of Licensor, which
consent shall not be unreasonably withheld; provided, however, that Licensee
shall be permitted, upon notice to Licensor, to transfer, sublicense or assign
its rights and interest hereunder to any corporation or other legal entity which
is under common control with Licensee. For the purpose of this Article 16,
"Control", shall mean majority ownership.
16.2 Any sale or other transfer of all or a majority of the outstanding
capital stock of Licensee, excluding sales of capital stock of Licensee in a
public offering that widely distributes such stock, but, including specifically,
without limitation, any merger, consolidation or similar combination, shall be
deemed an assignment of the Licensee's rights, interest and obligations under
this Agreement. However, an assignment to an entity controlled by Licensee
shall be permitted.
16.3 A sale or other transfer of all or substantially all of the assets of
Licensee shall be deemed an assignment of Licensee's rights and interest under
this Agreement, but such an assignment to an entity controlled by Licensee shall
be permitted.
16.4 Licensor shall, with the prior written consent of Licensee, which
consent shall not be unreasonably withheld (except as otherwise provided in this
Article 16) have a right to sell, transfer, lease or assign its rights and
interest in this Agreement, provided that no such consent shall be required in
the case of a sale, transfer, lease or assignment by Licensor to a corporation
in which Licensor beneficially owns a majority of the voting stock, and provided
further, that Licensor hereby agrees and acknowledges that their services are
personal in nature and essential to this Agreement. Sublicensing of the
Licensed Marks, Products and/or Territories shall not be permitted without the
express prior written consent of Licensor (but this does not prohibit the
subcontracting of manufacturing and other production tasks by Licensee).
17. Arbitration
17.1 Any claim controversy arising out of or relating to this Agreement
shall be resolved by binding arbitration in the City of New York pursuant to the
rules then obtaining of the American Arbitration Association. The panel of
Arbitrators appointed to settle any controversy or claim shall consist of three
(3) arbitrators experienced in agreements of this type.
17.2 The arbitrators sitting in any such controversy shall have no power or
jurisdiction to alter or modify any express provision of this Agreement or to
make any award which by its terms effects such alternation or modification.
21
17.3 The parties consent for award enforcement purposes to the jurisdiction
of the appropriate state and/or federal courts within the State of New York and
further consent that any demand for arbitration or any process or notice of
motion or other application to the court or a judge thereof, in connection with
the same, may be served in or out of the State of New York, by registered mail
or by personal service, provided a reasonable time for appearance is allowed.
17.4 The provision for arbitration herein shall not be deemed a waiver of
the rights of either party to any provisional remedy provided under state or
federal law. It is agreed that in the event of any violation hereof, the other
party hereto shall have the right to seek a preliminary injunction enjoining any
further violation of this Agreement pending arbitration.
18. Transfer of Existing Business in the Territory
Licensor will undertake all reasonable steps to assist in the transfer of
the existing business in the Territory and in coordinating the transition of the
business from VF and the provision to Licensee of all information in the
possession of VF necessary for Licensee to be able to continue servicing the
existing business under the Marks in the Territory. Licensee accepts no
liability with respect to any conduct of any business under the Marks by any
other entity at any time. Licensor shall indemnify and hold harmless Licensee
and any of its officers, directors, and agents for any claims or damages
(including attorneys' fees and costs) resulting from the conduct of the business
under the Marks by any third party.
19. Relationship
Nothing herein shall create or be deemed to create any agency, partnership,
joint venture or other similar relationship between the parties hereto.
Licensee shall not represent itself as the legal representative, agent or
partner of Licensor and shall have no right to create or assume any obligations
express or implied, on behalf of Licensor.
20. Merger
This Agreement sets forth the entire and complete Agreement among the
parties hereto with respect to its subject matter. This Agreement supersedes
and annuls all prior understandings, arrangements and agreements, oral or
written, between the parties relating to its subject matter. Neither this
Agreement nor any provision hereof may be modified, waived or discharged except
by subsequent written instrument signed by each party.
21. Severability
If for any reason whatsoever, any provision of this Agreement shall be
declared invalid, illegal or unenforceable, in whole or in part, such provision
shall be ineffective to the extent of such invalidity, illegality or
unenforceability without effecting the validity, legality or enforceability of
the remaining provisions hereof or any other portion thereof not declared
illegal or unenforceable shall remain in full force and effect.
22
22. Reversion of Rights and Territories
Upon the expiration or earlier termination of this Agreement and subject to
the other provisions of this Agreement, all rights with respect to the Marks,
Products and Territory shall immediately revert to Licensor.
23. Remedies and Waivers
No failure on the part of the Licensor or Licensee to exercise, and no delay on
its part in exercising any right or remedy under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right or
remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy. The rights and remedies provided herein are cumulative
and are not exclusive of any other rights or remedies provided by law or in
equity. 24.
24. Notices
All reports, approvals and notices required or permitted to be given under
this Agreement shall, unless specifically provided otherwise in this Agreement,
be deemed to have been given if mailed by (i) registered or certified mail,
return receipt requested (if such service is available), postage prepaid, or
(ii) telecopy, receipt confirmed, and follow up hard copy by overnight express,
to the party concerned at its address indicated below (or at such other address
or addresses as any party hereto may from time to time respectively designate by
notice in writing to the other party).
If to Licensor, to: LATITUDE LICENSING CORP.
22 Carpenter Plaza - Suite 217
Wilmington, DE 19810
With a copy to:
Martin & Maynadier, LLC
324 East 51st Street
New York, New York 10022
Fax- 212-754-3397
If to Licensee, to: I.C. ISAACS AND CO., L.P.
350 Fifth Avenue, Suite 1029
New York, New York 10118
Attn: Chairman and Co-CEO
Fax-212-695-7579
23
With a copy to:
I.C. Isaacs and Co., L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attn: President and Co-CEO
Fax- 410-558-2096
Robert J. Mathias, Esquire
Piper & Marbury L.L.P.
36 S. Charles Street
Baltimore, Maryland 21201
Fax- 410-539-0489
25. Governing Law
This Agreement shall be construed, and interpreted in accordance with and
as governed by the laws of the State of New York, without regard to the conflict
of laws provisions thereof.
26. Right of First Refusal
Should Licensor decide, at its initiative or upon an offer from a third
party, to introduce, market, import, manufacture and/or distribute, or cause to
be introduced, marketed, imported or manufactured, within the Territory, any of
the following additional products: Men's Active, Boys', Women's and Girls'
Jeans, Casual or Active collections, Licensee shall have a right of First
Refusal for a license for these products, with terms and royalty rates as
offered by the third party or otherwise to be discussed and agreed upon at that
time. Without limitation to the previous sentence, Licensor and Licensee shall,
at the option of Licensee, negotiate in good faith in August 1998 the financial
terms applicable to an extension of this Agreement to add Women's Jean and
Women's Casual collections to the Products commencing with products to be
presented at the February 1999 Magic Show in the USA.
24
27. Indemnification and Insurance
27.1 Licensee does hereby indemnify and hold harmless Licensor from and against
any and all losses, liability, damages and expenses (including reasonable
attorneys fees and expenses) which it may incur or be obligated to pay as a
result of or in defending any action, claim or proceeding against Licensor, for
or by reason of any acts or omissions committed by Licensee or any of its
servants, agents or employees in connection with Licensee's performance of this
Agreement. Licensee shall immediately notify Licensor of any claim or law suit
seeking damages in excess of $100,000. The provisions of this Paragraph and
Licensee's obligations hereunder shall survive the expiration or earlier
termination of this Agreement. In the event that a judgment, levy, attachment
or other seizure is entered against Licensor arising from any claim as to which
indemnification is provided hereunder, Licensor shall promptly post the
necessary bond to prevent execution against any property of Licensor.
27.2 Licensee shall procure and maintain in full force and effect, at its
sole cost and expense, at all times during which Products are being sold, a
product liability insurance policy with respect to the Products with a limit of
liability of not less that $1,000,000. Such insurance policy shall include
Licensor as an additional insured thereunder and shall provide for at least
thirty (30) days prior written notice to Licensor of the cancellation or
substantial modification thereof. Such insurance may be obtained by Licensee in
conjunction with a policy of products liability insurance which covers products
other than the Products. Licensee will deliver a certificate of such insurance
to Licensor promptly upon issuance of said insurance policy and shall, from time
to time upon reasonable request by Licensor, promptly furnish to Licensor
evidence of the maintenance of said insurance policy. Likewise, without
limitation of its indemnification obligations under this Agreement, Licensor
shall procure and maintain in full force and effect, at its sole cost and
expense, at all times during which Products are being sold, a product liability
insurance policy with respect to potential liability under this Agreement with a
limit of liability of not less that $1,000,000.
28. Limitation of Liability
EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS DUE TO THIRD PARTIES,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR SIMILAR DAMAGES ARISING FROM A BREACH OF THIS AGREEMENT OR OF
ANY ORDER HEREUNDER EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
29. Plural, Singular
Whenever the singular is used it shall include the plural and vice versa.
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30. Headings
The headings of the Articles and Paragraphs of this Agreement are for
convenience only and shall in no way be deemed to limit or affect the terms or
conditions of this Agreement.
31. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed, by their respective duly
authorized officers, this Agreement as of the day and year first above written.
LATITUDE LICENSING CORP. I.C. ISAACS & COMPANY, L.P.
By: /s/ Francois Girbaud By: I.C. ISAACS & COMPANY, INC.
----------------------- General Partner
Name:
Title:
/s/ Robert J. Arnot
---------------------------
Name: Robert J. Arnot
Title: Chairman & Co-CEO