EXHIBIT 10.33
DESIGN SERVICES AGREEMENT
THIS DESIGN SERVICES AGREEMENT (this "AGREEMENT") is made and entered
into on the 27th day of February, 2008, to be effective as of November 15, 2007
(the "EFFECTIVE DATE"), by and between (i) XXXXXXX XXXX SOURCING, LLC, a
California limited liability company, located at 000 Xxxx Xxxxxxxxx Xxxxxxxxx,
Xxx Xxxxxxx, XX 00000 (the "COMPANY"), and (ii) PARIS68 LLC, a New York limited
liability company ("DESIGNER"), XXXXX XXXXXXXXX ("JL") and XXXXXXXX XXXXXXXXX
"(ML"), each located at 000 XxXxxxxxx Xxxxx, Xxx Xxxx, XX 00000. The Company,
Designer, JL and ML are sometimes referred to herein as a "PARTY" and
collectively, as the "PARTIES."
RECITALS
A. The Company licenses rights to the trademark "Xxxxxxx Xxxx"
and is in the business of designing, sourcing the manufacture
of, and selling Xxxxxxx Xxxx(TM) branded apparel.
B. Designer, in part by utilizing the personal services of JL and
ML, provides design, sourcing, sampling, and marketing
services for apparel products.
C. The Company desires to engage Designer, and obtain the
personal services of JL and ML, to develop a full line of
men's and women's Xxxxxxx Xxxx(TM) branded apparel.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
1.1 "CONTRACT YEAR" means any of Contract Year 1, Contract Year 2
and Contract Year 3, where "CONTRACT YEAR 1" means the period
commencing on January 1, 2008 and continuing until December
31, 2008; "CONTRACT YEAR 2" means the period commencing on
January 1, 2009 and continuing until December 31, 2009; and
"CONTRACT YEAR 3" means the period commencing on January 1,
2010 and continuing until December 31, 2010.
1.2 "OFF-PRICE TRANSACTIONS" shall mean bona fide sales by the
Company of Products to unaffiliated third parties at a
discount of at least 40% off the Company's initial list price
for such Products.
1.3 "NET SALES" shall mean, for the applicable Royalty Period, (i)
100% of the gross sales price of the Products invoiced by the
Company during the Royalty Period in transactions other than
Off-Price Transactions, plus (ii) 70% of the gross sales price
of the Products invoiced by the Company during the Royalty
Period in Off-Price Transactions, LESS (iii) price allowances
and customary and usual trade discounts granted, returns
actually credited and freight separately charged during the
Royalty Period, LESS (iv) Uncollectable Amounts recognized
during the Royalty Period. Taxes on Net Sales such as value
added taxes or its equivalent shall be deducted and separately
listed. Any Uncollectable Amounts deducted in calculating Net
Sales for any Royalty Period and subsequently collected by the
Company shall be included in the calculation of Net Sales for
the Royalty Period during which the Company collects such
amount. Notwithstanding the foregoing, in calculating Net
Sales, no deduction from the gross sales price for the
Products shall be taken for costs incurred by the Company in
connection with the manufacture (i.e., costs of goods) or
sales, marketing or distribution (including internal sales
commissions) of the Products.
1.4 "PERSON" means any individual, partnership, joint venture,
corporation, limited liability company, trust, estate or
unincorporated organization.
1.5 "PRODUCT CATEGORIES" means, for each Season, a men's and
women's collection of apparel products comprised of styles in
one or more product categories (e.g., shirts, pants, skirts)
identified in writing by the Company in advance of such
Season.
1.6 "PRODUCTS" means men's and women's apparel products in the
Product Categories bearing the Trademark.
1.7 "SEASON" means one of the major divisions of the year when a
new collection of apparel products is first marketed for sale
to apparel wholesalers and retailers. The Seasons for each
Contract Year are identified on Exhibit A attached hereto.
1.8 "SERVICES" means the design, sourcing, sampling, and marketing
services for the Products in the Product Categories, as
further described in Exhibit B attached hereto. The Services
include the delivery by Designer to the Company for each
Season of the deliverables identified on Exhibit A at the
times identified on Exhibit A.
1.9 "TRADEMARK" means the trademark Xxxxxxx Xxxx(TM).
1.10 "UNCOLLECTABLE AMOUNTS" means, with respect to sales of the
Product, those sales invoiced to an unaffiliated third party
and unpaid by such third party and, thereafter, classified as
"bad debt" or "uncollectable amounts" on the Company's
financial statements; PROVIDED, that in no case shall any
unpaid amounts on any invoice be deemed an Uncollectable
Amount unless and until such amount is more than ninety (90)
days outstanding.
2. PROVISION OF SERVICES; EXCLUSIVITY.
2.1 SERVICES. Effective as of the Effective Date, the Company
hereby retains Designer to perform the Services for and on
behalf of the Company, and Designer hereby agrees to perform
the Services. Designer agrees that substantially all of the
Services performed by Designer hereunder shall be performed,
directed or managed by JL and ML, each of whom shall devote
such time, effort and skill as is necessary for the proper
delivery of the Services and compliance with this Agreement.
Designer, JL and ML will undertake commercially reasonable
efforts to ensure that all deadlines in respect of the design
and completion of each Season are met.
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2.2 APPROVALS. All Services will be performed subject to the
Company's reasonable approvals and controls (which such
approvals and controls shall not be unreasonably withheld,
conditioned or delayed), including with respect to category,
design, style, fabric, and pricing for each Season, and
Designer's performance will be measured against its delivering
Products that meet the Company's reasonable approved
specifications as communicated to Designer in writing from
time to time.
2.3 PROMOTIONAL SERVICES. As requested in writing by the Company
on reasonable advance notice, JL shall make public appearances
and perform other reasonable in-person services on up to ten
(10) calendar days (each day limited to six (6) hours in
duration, exclusive of travel time) per Contract Year at no
additional cost to the Company, other than prompt
reimbursement for reasonable third-party costs such as for
transportation and accommodations; PROVIDED, that all travel,
transportation and accommodations shall be at business class
or the equivalent standard or, if business class is not
available, at first class or the equivalent standard.
2.4 EXCLUSIVE TO THE COMPANY. Except as set forth herein,
Designer, JL and ML shall provide the Services exclusively for
the Company solely with respect to apparel in the Product
Categories, and shall not provide any Services for any other
brand or Person solely with respect to apparel in the Product
Categories, except for:
2.4.1 (i) J.Lindeberg(TM) branded apparel and any
derivative thereof, and (ii) one or more yet to be
launched brands of apparel with retail price-points
substantially different than the retail price-points
for the Products;
2.4.2 any Person manufacturing or designing apparel sold in
distribution channels other than the distribution
channels through which the Products are sold
(including, without limitation, Wal-Mart, or
departments within department stores that do not sell
brands similar to the Products at retail price-points
comparable to those at which the Products are sold);
and
2.4.3 any Person manufacturing or designing in the Product
Categories, with price-points substantially different
than the price-points for the Products, and not
using, utilizing, associated or otherwise distributed
in connection with the name Bologna68, Paris68, Xxxxx
Xxxxxxxxx or Xxxxxxxx Xxxxxxxxx.
Notwithstanding the foregoing, the Company acknowledges and agrees that
Designer, JL and ML may perform Services for other apparel and non-apparel
clients for: (a) apparel in categories not included in the Product Categories,
such as men's and women's tailoring, women's eveningwear, lingerie, underwear,
socks, swimwear, active sportswear, golfwear, skiwear, accessories or shoes, and
(b) high-end designer fashion, mass-market apparel, and lower-end price point
apparel, even if such apparel includes apparel in categories included in the
Product Categories.
2.5 NON-EXCLUSIVE TO DESIGNER. The Company shall have no
obligation to use Designer, JL or ML exclusively in the
performance of the Services, and may perform the Services
directly or engage a third party to perform the Services.
Notwithstanding the foregoing, upon the direct performance by
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the Company of the Services or the engagement of a third party
to perform the Services, the Company shall continue to fulfill
all of its obligations set forth under this Agreement. All
apparel that is the subject of such direct or third party
services pursuant to this SECTION 2.5 shall not constitute
Products under the Agreement.
2.6 PRODUCTION OBLIGATIONS BY THE COMPANY. With the exception of
one (1) set of the prototype samples per Season per Contract
Year, the production of which constitute part of the Services
to be provided by Designer hereunder, the Company will sample,
manufacture and distribute, at its sole cost and expense, all
of the Products derived from Designer's Services. The Company
shall bear all of the costs and expenses incurred in
connection with the manufacture and production of the Products
including, without limitation, the duplicate sampling,
manufacture and production of all trims, piece goods and other
materials used for the Products produced under this Agreement.
2.7 COMPLIANCE WITH LAW. The Company shall comply with all laws,
statutes, ordinances, orders, constitutions, charters,
treaties, rules or regulations relating to the manufacture,
production, marketing, advertising and distribution of the
Products ("APPLICABLE LAW"), and will promptly notify Designer
if the Company has received notice of any alleged violation of
or claim under any Applicable Law. The Company shall indemnify
and hold harmless Designer, JL and ML from any Claim (as
defined below) that any such Party may suffer or incur as a
result of the Company's failure to comply with or breach of
any Applicable Law.
3. COMPENSATION; AUDIT.
3.1 DESIGN FEES. For the Services, including, without limitation,
the delivery by Designer to the Company of the deliverables
identified on EXHIBIT A at the times set forth on EXHIBIT A,
the Company has paid Designer an aggregate of $400,000 in
design fees for the period from the Effective Date to the date
immediately preceding the date of this Agreement, shall pay
Designer design fees of $190,909.09 concurrently with the
execution and delivery of this Agreement, and shall pay
Designer the following design fees in the amounts set forth
below (collectively, the "DESIGN FEES"):
DATE (FOR THE PERIOD OF:) AMOUNT
------------------------- ------
March 1, 2008 - December 31, 2008 $1,909,090.90 ($190,909.09 per month)
January 1, 2009 - December 31, 2009 $2,000,000.00 ($166,666.67 per month)
January 1, 2010 - December 31, 2010 $2,000,000.00 ($166,666.67 per month)
All Design Fees are non-refundable and, to the extent not heretofore paid, shall
be due and payable in the monthly amounts set forth above on the fifteenth
(15th) day of the month in the periods set forth herein; PROVIDED, that Designer
has performed all of Designer's material obligations under this Agreement as of
the date such payment is scheduled to be made, including, without limitation,
the delivery by Designer of all deliverables that Designer is scheduled to
deliver to the Company as set forth on EXHIBIT A prior to such payment date. If
as of any payment date, Designer has not delivered all deliverables scheduled to
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be delivered by Designer as of such payment date, the Company may withhold
payment of all Design Fees until such deliverables have been delivered by
Designer in accordance with this Agreement.
3.2 ROYALTY. For the Services, and in addition to the Design Fees
payable as provided in SECTION 3.1 above, with respect to
Contract Year 2 and Contract Year 3 only, the Company shall
pay to Designer a royalty (the "ROYALTY") equal to the
Applicable Percentage of Net Sales of the Products, calculated
with respect to Contract Year 2 and Contract Year 3, as
follows:
NET SALES APPLICABLE PERCENTAGE
--------- ---------------------
First $7.5 million No Royalty
$7.5 million to $20 million 7.0%
Over $20 million 5.0%
The Royalty, if any, owed Designer shall be calculated on a quarterly calendar
basis (the "ROYALTY PERIOD") and shall be payable no later than forty-five (45)
days following the end of the applicable Royalty Period. An obligation by the
Company to pay a Royalty to Designer shall accrue when Products are sold
regardless of the time of collection by the Company; PROVIDED, that the amount
of Royalty shall be calculated only with respect to amounts actually collected
by the Company. Products shall be considered "sold" upon the date of billing,
invoicing, shipping or payment, whichever event occurs first. For each Royalty
Period, the Company shall provide Designer with a written royalty statement,
which statement shall provide a reasonably detailed calculation of the Net Sales
for the applicable Royalty Period and computation of the amount of Royalty, if
any, payable hereunder. For purposes of clarity, the Company's obligation to pay
Designer a Royalty shall apply only with respect to Net Sales that occur during
Contract Year 2 and Contract Year 3, notwithstanding that Net Sales may occur
during Contract Year 1 or after Contract Year 3.
Notwithstanding this SECTION 3.2 to the contrary, the Company shall have no
obligation to pay any portion of a Royalty if, immediately after the payment of
such Royalty, the cumulative amount of Design Fees and Royalties paid by the
Company to Designer from the inception of this Agreement exceeds an amount equal
to thirty-three percent (33%) of the cumulative amount of Net Sales from the
inception of this Agreement (the "ROYALTY CAP"). The Royalty Cap shall be
determined at the end of the Term (whether upon expiration or earlier
termination), and any Royalties paid by the Company to Designer in excess of the
Royalty Cap shall be refunded by Designer to the Company within thirty (30) days
following expiration or earlier termination of the Term.
3.3 AUDIT. Designer and/or its designated representative
(including its counsel and/or accountants) shall have the
right, upon at least five (5) days written notice and no more
than two (2) times per calendar year, to inspect the Company's
books and records and all other documents and material in the
possession of or under the control of the Company with respect
to the calculation of the Royalty, if any, payable to Designer
hereunder, at the place or places where such records are
normally retained by the Company. If such inspection reveals a
discrepancy in the amount of Royalty owed Designer from what
was actually paid, the Company shall pay such discrepancy. If
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such discrepancy is in excess of five percent (5%) of the
amount of the Royalty that should have been paid to Designer,
the Company shall also reimburse Designer for the cost of such
inspection including any attorneys' fees incurred in
connection therewith. All books and records related to the
Company's obligations hereunder shall be maintained and kept
accessible and available to Designer (and its representatives
and agents) for inspection for at least two (2) years after
termination of this Agreement.
3.4 PROCEDURE FOR RESOLVING DISAGREEMENTS. If the Company and
Designer cannot agree with respect to the calculation of any
Royalty paid pursuant to SECTION 3.2 following an audit
conducted in accordance with SECTION 3.3, then they shall
negotiate in good faith for a period of thirty (30) days from
the date Designer first notifies the Company of any such
disputed Royalty payment (the "RESOLUTION PERIOD") to resolve
any disagreement as to such Royalty. If the Company and
Designer are unable to resolve all disagreements with respect
to such Royalty during the Resolution Period, then such
disagreements shall be submitted for final and binding
resolution to a neutral nationally-recognized accounting firm
to resolve such disagreements (the "ACCOUNTING ARBITRATOR").
The Accounting Arbitrator shall be selected by mutual
agreement of the Company and Designer; provided, that if,
within thirty (30) calendar days after the termination of the
Resolution Period, the parties are unable to agree on a
neutral accounting firm to act as Accounting Arbitrator, then
the American Arbitration Association ("AAA") in Los Angeles,
California shall select the Accounting Arbitrator, who shall
make a determination as to the matters set forth in the notice
of disagreement in accordance with the Commercial Arbitration
Rules of the AAA. All AAA proceedings shall be conducted in
Los Angeles, California. The determination of the Accounting
Arbitrator shall be final and binding. The fees, expenses and
costs of the Accounting Arbitrator shall be paid by the party
whose final calculation of such disputed Royalty was different
by the greater amount from that of the Accounting Arbitrator.
3.5 EXPENSE REIMBURSEMENT. The Company shall reimburse Designer
for pre-approved (in writing), third party, out-of-pocket
expenses incurred by Designer in connection with Designer's
provision of Services hereunder (including, without
limitation, travel, samples, seamstress, prototype
development, pattern making and any design related services),
of up to $200,000 per Contract Year; provided, that any
expenses incurred by JL in performing the obligations set
forth under SECTION 2.3 shall not be deemed to be part of or
calculated under such cap on reimbursements. Unless otherwise
agreed to by the Company or as set forth herein, all expenses
incurred by Designer in performing Services excess of such
amount per Contract Year shall be paid by Designer.
4. TERM AND TERMINATION.
4.1 TERM. The term (the "TERM") of this Agreement shall commence
as of the Effective Date and continue for an initial period
expiring on December 31, 2010 unless earlier terminated as
provided herein. The Term may be extended for one or more
additional periods only upon the written agreement of the
Company and Designer.
4.2 TERMINATION FOR CONVENIENCE. The Company shall have the right,
exercisable by delivery of written notice to Designer no later
than September 30 of the then-current Contract Year, to
terminate this Agreement at December 31 of the then-current
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Contract Year. Designer shall have the right, exercisable by
delivery of written notice to the Company no later than
September 30, 2009, to terminate this Agreement at December
31, 2009. If either the Company or Designer exercises its
right to terminate this agreement for convenience, as provided
in this Section, Designer shall continue to provide the
Services through the end of the then-Contract Year (subject to
the Company's continuing satisfaction of its obligations under
the Agreement), and the Company shall continue to pay Designer
all Design Fees and Royalties due and payable through the end
of the then-Contract Year.
4.3 AUTOMATIC TERMINATION. This Agreement terminates automatically
on the occurrence of any of the following events: (i) the
bankruptcy, insolvency, liquidation or dissolution of the
Company or Designer; (ii) the death or disability (continuing
for more than 90 days) of JL.; or (iii) any loss by the
Company of its right to license the Trademark, including the
termination of any license relating to such Trademark by the
owner of such Trademark.
4.4 TERMINATION FOR BREACH. The Company may terminate this
Agreement immediately if any of Designer, JL or ML fails to
perform or comply with one or more of its, his or her material
obligations under this Agreement and fails to cure that breach
within thirty (30) days of written notice thereof. Designer
may terminate this Agreement immediately if the Company fails
to perform or comply with one or more of its material
obligations under this Agreement and fails to cure that breach
within thirty (30) days of written notice thereof.
5. CONFIDENTIALITY; PRESS RELEASE; NON-SOLICITATION.
5.1 CONFIDENTIAL MATERIAL. Designer acknowledges that the
Company's trade secrets, including, without limitation, price
lists, pricing information, customer lists, customer names and
contacts, trade knowledge, financial information, financial
projections, unprinted and printed data, and other tangible or
intangible property and all inventions, including, without
limitation, any and all processes, innovations, ideas,
designs, developments, methods, and other discoveries or
developments whether or not patentable, all know-how,
modifications or improvements to any of the foregoing, and all
related tangible or intangible property, constitute
confidential material (the "CONFIDENTIAL MATERIAL") which (i)
are valuable, confidential, proprietary and unique information
and trade secrets of the Company, and (ii) are and shall
remain the sole and exclusive property of the Company.
Designer further acknowledges that the Company shall have, in
addition to other remedies available at law, the right to
enjoin the use of the Confidential Material in any manner
conflicting with this Agreement or in derogation of the
Company's proprietary rights, and that other remedies are
inadequate to protect the Company's rights in the Confidential
Material.
5.2 NON DISCLOSURE. Other than in connection with the performance
of its obligations under this Agreement, or to the extent
required by law or judicial process, Designer shall not use
for its own benefit, nor disclose to any third party, any
Confidential Material. Designer shall inform its employees and
agents who may come into contact with the Confidential
Material that it is confidential in nature, and Designer shall
take reasonable precautions to prevent the unauthorized
exploitation, transfer, or disclosure by such employees and
agents. If Designer is requested by oral questions,
interrogatories, requests for information or documents,
subpoena, civil or criminal investigative demand or similar
process to disclose any Confidential Material, Designer will,
if legally permissible, provide the Company with immediate
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notice of such request so that the Company may consider
seeking a protective order in respect thereof. Designer agrees
to cooperate with the Company, at the Company's sole cost
(including reasonable attorney's fees of Designer), in
connection with any reasonable action undertaken by the
Company to protect any unauthorized disclosure or use of any
Confidential Material. Notwithstanding anything to contrary
set forth herein, Confidential Material or a disclosure in
breach of SECTION 5 shall not include: (a) any disclosure of
Confidential Material authorized by the Company, its agents or
employees or required by law or any regulatory or government
authority; (b) any Confidential Material already known or
independently developed by Designer, JL or ML or any of their
affiliates or subsidiaries; (c) any Confidential Material
obtained without restriction as to disclosure from a third
party legitimately in possession of it; or (d) any
Confidential Material which is or becomes part of the public
domain save by way of a breach of this Agreement.
5.3 PRESS RELEASE. The Company and Designer shall work together in
good faith to prepare and issue any press releases with
respect to this Agreement and the Services to be provided
hereunder, and no Party shall issue any such press release
and/or make any such public statement without the prior
written consent of the other Parties, which consent shall not
be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, the Company may disclose the
terms of this Agreement if and to the extent required by
applicable law or stock exchange rules, provided that the
Company shall use commercially reasonable efforts to obtain
"confidential treatment" of the Agreement with the SEC (or
equivalent treatment by any other governmental entity) and to
redact such terms as are reasonably requested by the other
party.
5.4 NON-SOLICITATION. From and after the Effective Date and
continuing until the first (1st) anniversary of the
termination or expiration of this Agreement, except in
connection with the Services to be provided by Designer, JL
and ML hereunder, neither the Company, on the one hand, or
Designer, JL or ML, on the other hand, nor any of its
affiliates or subsidiaries, shall solicit, hire or otherwise
engage any employee or consultant of the other Party, without
such other Party's prior written consent.
6. INTELLECTUAL PROPERTY RIGHTS.
6.1 RIGHTS TO THE TRADEMARK. As between Designer and the Company,
Designer acknowledges the Company's exclusive rights in the
Trademark and, further acknowledges that the Trademark is
unique and original to the Company and the Company is the
owner or licensee thereof. Designer shall not, at any time
during or after the Term of this Agreement, dispute or
contest, directly or indirectly, the Company's exclusive right
and title to the Trademark, or the validity thereof. Designer
agrees that its use of the Trademark inures to the benefit of
the Company and that the Designer shall not acquire any rights
in the Trademark.
6.2 DESIGN RIGHTS. Designer acknowledges and agrees that the
Company shall own all design rights relating to the Products,
regardless of whether such designs were created by the Company
or by or on behalf of Designer. Designer agrees to make,
procure and execute all assignments necessary to vest
ownership of design rights in the Company. All designs created
by Designer for the Products shall be used exclusively by
Designer for the Products and may not be used by Designer
under any other trademark or private label without the prior
written consent of the Company. Designer shall disclose and
freely make available to the Company any and all developments
or improvements it may make relating to the Products and to
their manufacture, promotion and sale.
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6.3 OWNERSHIP OF COPYRIGHT. Any copyrights created by or for
Designer under this Agreement in any sketch, design, print,
package, label, tag or the like designed and approved for use
in connection with the Products will be the property of the
Company. Designer may not, at any time, do or otherwise suffer
to be done any act or thing that will adversely affect any
rights of the Company in such copyrights and will at the
Company's written request (and at the Company's sole cost and
expense) do all things reasonably required by the Company to
protect such rights, including the placement of appropriate
notices of copyright ownership.
6.4 PROTECTING THE INTELLECTUAL PROPERTY. Designer, ML and JL
agree to execute any documents reasonably requested by the
Company to effect any of the above provisions, at the
Company's sole cost and expense.
6.5 RIGHTS TO JL AND ML NAME AND LIKENESS. The Company shall have
the right, but not the obligation, to use JL's and ML's name
and likeness to identify each of them as the designers of the
Products in connection with the promotion, marketing and sale
of the Products, but only with prior written approval of each
of JL and ML, which approval will not be unreasonably
withheld. JL and ML, respectively, shall have sole approval,
in his or her respective sole discretion, in the manner and
nature in which their respective name and likeness is used in
connection with any marketing, promotion and other activities
related to the sale and manufacture of the Products. The
Company and its employees and associates and its affiliates
and subsidiaries shall not, directly or indirectly, use the
brand name "J.Lindeberg" or any derivation thereof in any
communication (oral, written or otherwise) regarding the
Services. The Company hereby acknowledges that the name and
likeness of JL and ML and any intellectual property rights
associated therewith belong to and is owned solely by JL, ML
and Designer, subject only to the Company's limited rights
with respect thereto as described herein. The Company, and its
affiliates and subsidiaries, shall not, at any time during or
after the Term of this Agreement, dispute or contest, directly
or indirectly, JL's, ML's and Designer's exclusive ownership
and right to the name and likeness of JL and ML, or the
validity thereof. The Company agrees that its use of the name
and likeness of JL and ML inures to the benefit of each of JL,
ML and Designer and the Company shall not acquire any rights
in the name and likeness of JL and/or ML.
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS.
7.1 BY THE COMPANY. The Company represents, warrants, and
undertakes as follows: (i) it is free to enter into and fully
perform this Agreement, including granting the rights set
forth herein; (ii) it will use its commercially reasonable
efforts to manufacture, distribute, market, promote and sell
the Products; (iii) it will use its commercially reasonable
efforts to collect all amounts invoiced to third parties in
connection with sales of the Products; and (iv) any statement
made by the Company about any of Designer, JL or ML will be of
a positive nature and it will not, whether during the Term or
thereafter, intentionally do anything which disparages or
materially and adversely affects the image of the Designer, JL
or ML.
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7.2 BY DESIGNER, JL AND ML. Each of Designer, JL and ML
represents, warrants, and undertakes as follows: (i) such
Party is free to enter into and fully perform this Agreement
and to perform and provide the Services and other obligations
as set forth herein without violating the rights of any third
party whatsoever or the terms of any other agreement between
such Party and a third party; (ii) any designs provided by
such Party hereunder shall not infringe upon or violate any
intellectual property rights of any third party of any nature
whatsoever; and (iii) any statement made by such Party about
the Company and the Products will be of a positive nature, and
during the Term and thereafter, none of Designer, JL or ML
shall intentionally disparage such Party's present or past
association with the Company.
8. INDEMNITY. The Company hereby indemnifies and holds harmless each of
Designer, JL and ML from and against, any and all claims, demands,
costs, damages, liabilities, expenses, penalties (including without
limitation reasonable attorneys' fees) (each, a "CLAIM") arising out
of, or in connection with (i) a breach by the Company of any provision
of this Agreement, or (ii) the manufacture, distribution, marketing,
promotion, use or consumption of the Products (including the breach of
any Applicable Laws or any Claims arising out of the disclosures by the
Company made pursuant to SECTION 5.3), excluding any Claims arising out
of the gross negligence or willful misconduct of Designer, JL or ML.
Each of Designer, JL and ML hereby indemnifies and holds harmless the
Company, its agents and employees from all Claims arising out of, or in
connection with a breach by the Designer of any provision of this
Agreement, excluding any Claims arising out of the gross negligence of
willful misconduct of the Company, its agents or employees.
9. MISCELLANEOUS.
9.1 INDEPENDENT CONTRACTOR. It is the intention of the Parties
that Designer, JL and ML are, and shall be deemed to be,
independent contractors in connection with their engagement by
the Company, and nothing contained herein shall be deemed or
construed in any manner whatsoever as creating any
partnership, joint venture, employment or other similar
relationship between the Company and any of Designer, JL and
ML.
9.2 ASSIGNMENT. No party may transfer any rights or delegate any
duties provided for under the terms of this Agreement without
the prior written consent of the other Parties, which consent
shall not be unreasonably withheld. All terms and provisions
of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
transferees, successors and assigns.
9.3 NOTICES. All notices, requests, consents and other
communications that are required or permitted hereunder shall
be in writing and shall be delivered personally, sent by
telecopier or facsimile transmission and confirmed by mailing
a confirmation copy registered or certified air mail, postage
prepaid or mailed by certified or registered mail, postage
prepaid, return-receipt requested (in which case it shall be
deemed given two business days after mailing) to the addresses
listed in the introductory paragraph of this Agreement. Such
address may be changed from time to time by either party by
providing written notice to the other in the manner set forth
in this SECTION 9.3.
10
9.4 GOVERNING LAW. This Agreement and any contract of sale
concluded in accordance with this Agreement shall be
interpreted and their effects shall be determined in
accordance with the laws of the State of California, without
regard to the conflicts of laws and principles thereof.
9.5 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable for any reason or in any
respect whatsoever, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been
contained herein.
9.6 WAIVER. The waiver by any party hereto of any breach or
default shall not constitute a waiver of any different or
subsequent breach or default. No waiver to this Agreement
shall be effective unless stated in writing and signed by
authorized representatives of all parties.
9.7 ENTIRE AGREEMENT. This Agreement, when signed by the
authorized representatives of all parties hereto, shall
constitute the only agreement among them with respect to the
subject matter hereof and shall supersede all prior
agreements, oral or written, including the Memorandum of
Terms, dated as of October 18, 2007. This Agreement may be
amended only by a writing singed by all Parties hereto.
9.8 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.
11
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
XXXXXXX XXXX SOURCING, LLC,
a California limited liability company
By: /s/ Xxxxx Xxxx
-----------------------------------------
Xxxxx Xxxx
Its: Manager
PARIS68, LLC,
a New York limited liability company
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxx
Its: Manager
/s/ Xxxxx Xxxxxxxxx
----------------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxx
----------------------------------------------
Xxxxxxxx Xxxxxxxxx
12
EXHIBIT A
SEASONS AND DELIVERABLES
2008 2008 2008
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX FALL 1 START FALL 2 START HOLIDAY START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 07/19/07 07/19/07 07/19/07
Paris 68 First and subsequent reviews 09/02/07 09/02/07 09/02/07
Xxxxx 00 Finalize SKU PLAN- START First
Samples 09/16/07 09/16/07 09/16/07
Xxxxx 00 First Samples and Costings due 11/15/07 11/15/07 11/15/07
LINE FINALIZED 01/15/08 01/15/08 01/15/08
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 02/01/07 02/01/07 04/20/07
SELLING START 2/1/08 2/1/08 2/1/08
-------------------------------------------------------------------------
SELLING CUT OFF 3/25/08 4/28/08 6/28/08
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 3/3/08 5/3/08 7/3/08
Xxxxxxx Xxxx Production START 3/6/08 5/6/08 7/6/08
START DELIVERY 6/1/08 8/1/08 10/1/08
FINAL DELIVERY 7/30/08 9/30/08 11/30/08
2009 2009 2009
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX SPRING 1 START SPRING 2 START SUMMER START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 01/15/08 01/15/08 01/15/08
Paris 68 First and subsequent reviews 01/22/08 01/22/08 01/22/08
Xxxxx 00 Finalize SKU PLAN- START First
Samples 02/05/08 02/05/08 02/05/08
Xxxxx 00 First Samples and Costings due 03/06/08 03/06/08 03/06/08
LINE FINALIZED 04/05/08 04/05/08 04/05/08
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 06/21/08 06/21/08 06/21/08
SELLING START 7/1/08 7/1/08 7/1/08
-------------------------------------------------------------------------
SELLING CUT OFF 8/27/08 10/28/08 12/24/08
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 9/2/08 11/3/08 1/1/09
Xxxxxxx Xxxx Production START 9/5/08 11/6/08 1/4/09
START DELIVERY 12/1/08 2/1/09 4/1/09
FINAL DELIVERY 1/31/09 3/30/09 5/30/09
2009 2009 2009
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX FALL 1 START FALL 2 START HOLIDAY START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 05/10/08 05/10/08 05/10/08
Paris 68 First and subsequent reviews 06/24/08 06/24/08 06/24/08
Xxxxx 00 Finalize SKU PLAN- START First
Samples 07/08/08 07/08/08 07/08/08
Xxxxx 00 First Samples and Costings due 09/06/08 09/06/08 09/06/08
LINE FINALIZED 10/06/08 10/06/08 10/06/08
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 12/22/08 12/22/08 12/22/08
SELLING START 1/1/09 1/1/09 1/1/09
-------------------------------------------------------------------------
SELLING CUT OFF 2/27/09 4/28/09 6/28/09
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 3/3/09 5/3/09 7/3/09
Xxxxxxx Xxxx Production START 3/5/09 5/6/09 7/6/09
START DELIVERY 6/1/09 8/1/09 10/1/09
FINAL DELIVERY 7/30/09 9/30/09 11/30/09
2010 2010 2010
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX SPRING 1 START SPRING 2 START SUMMER START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 11/07/08 11/07/08 11/07/08
Paris 68 First and subsequent reviews 12/22/08 12/22/08 12/22/08
Xxxxx 00 Finalize SKU PLAN- START First
Samples 01/05/09 01/05/09 01/05/09
Xxxxx 00 First Samples and Costings due 03/06/09 03/06/09 03/06/09
LINE FINALIZED 04/05/09 04/05/09 04/05/09
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 06/21/09 06/21/09 06/21/09
SELLING START 7/1/09 7/1/09 7/1/09
-------------------------------------------------------------------------
SELLING CUT OFF 8/28/09 10/28/09 12/28/09
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 9/2/09 11/3/09 1/1/10
Xxxxxxx Xxxx Production START 9/5/09 11/6/09 1/4/10
START DELIVERY 12/1/09 2/1/10 4/1/10
FINAL DELIVERY 1/31/10 3/30/10 5/30/10
2010 2010 2010
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX FALL 1 START FALL 2 START HOLIDAY START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 05/10/09 05/10/09 05/10/09
Paris 68 First and subsequent reviews 06/24/09 06/24/09 06/24/09
Xxxxx 00 Finalize SKU PLAN- START First
Samples 07/08/09 07/08/09 07/08/09
Xxxxx 00 First Samples and Costings due 09/06/09 09/06/09 09/06/09
LINE FINALIZED 10/06/09 10/06/09 10/06/09
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 12/22/09 12/22/09 12/22/09
SELLING START 1/1/10 1/1/10 1/1/10
-------------------------------------------------------------------------
SELLING CUT OFF 2/28/10 4/28/10 6/28/10
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 3/3/10 5/3/10 7/3/10
Xxxxxxx Xxxx Production START 3/6/10 5/6/10 7/13/10
START DELIVERY 6/1/10 8/1/10 10/1/10
FINAL DELIVERY 7/30/10 9/30/10 11/30/10
2011 2011 2011
FINANCIAL XXXXX 00 IN CONJUNCTION WITH XXXXXXX XXXX SPRING 1 START SPRING 2 START SUMMER START
RESPONSIBILITY XXXXXXX XXXX
Paris 68 Initial Merchandising Review
and Initial SKU Plan 11/07/09 11/07/09 11/07/09
Paris 68 First and subsequent reviews 12/22/09 12/22/09 12/22/09
Xxxxx 00 Finalize SKU PLAN- START First
Samples 01/05/10 01/05/10 01/05/10
Xxxxx 00 First Samples and Costings due 03/06/10 03/06/10 03/06/10
LINE FINALIZED 04/05/10 04/05/10 04/05/10
Xxxxxxx Xxxx Sales Samples complete Sales Samples complete 06/21/10 06/21/10 06/21/10
SELLING START 7/1/10 7/1/10 7/1/10
-------------------------------------------------------------------------
SELLING CUT OFF 8/28/10 10/28/10 12/28/10
=========================================================================
Xxxxx 00 Fit Samples due- Final Tech Pack due Fitting Complete 9/2/10 11/3/10 1/1/11
Xxxxxxx Xxxx Production START 9/5/10 11/6/10 1/4/11
START DELIVERY 12/1/10 2/1/11 4/1/11
FINAL DELIVERY 1/31/11 3/30/11 5/30/11
A-1
EXHIBIT B
DESCRIPTION OF SERVICES
I. DESIGN SERVICES
A. INITIAL MERCHANDISING REVIEW. An in person meeting with the
Company to discuss sales history, trends, price points and
other information necessary for Designer to develop a SKU plan
for the applicable Season.
B. INITIAL SKU PLAN. Based on information obtained in the Initial
Merchandising Review, Designer shall develop and present to
the Company an initial SKU Plan that sets forth the target SKU
counts by category, pricing within a pre-determined range, and
the raw materials agreed to during the Initial Merchandising
Review. The SKU Plan will be maintained by Designer in a
format approved by the Company. The total amount of styles in
the SKU plan designed by the Designer shall not exceed 300 per
year including men's and women's collection.
C. FIRST AND SUBSEQUENT REVIEWS. One or more in person and
telephonic meetings with the Company at which Designer will
provide drawings, samples of raw materials and initial
prototype samples of garments identified in the initial SKU
Plan.
D. FINAL SKU PLAN. Upon final agreement of all components
included in the SKU Plan, Designer shall submit a final SKU
Plan for the applicable Season setting forth the final
agreement of the parties with respect to all relevant items.
II. SAMPLING SERVICES
A. FIRST SAMPLES. Designer will prepare and deliver for each
Season all first samples in accordance with the final SKU
Plan. The first samples will include an individual sample of
each Product fabrication included in the final SKU Plan.
B. COSTING. Designer will provide estimated FOB costing for each
Product at the time first prototype samples are delivered.
Designer will provide firm FOB costing for each Product at the
time final sales samples are delivered based on estimated
production order quantities communicated by the company and
any adjustments made after first prototype samples by the
Designer.
C. TECHNICAL SPECIFICATIONS. Designer will provide initial
technical specifications for each Product fabrication in the
format provided or agreed to by the Company at the time first
samples are delivered. This format needs to be agreed upon and
implemented before the start of the design process.
D. LINE FINALIZED. Following delivery of first prototype samples,
costing and technical specifications, Designer and the Company
shall meet and agree on modifications, if any, following which
Designer shall provide:
B-1
1. LINE SHEETS. Final line sheets for the Season's
Products in the format provided or agreed to by the
Company before the start of the design process
(Designer shall not be responsible for creating any
sales material beyond the line sheets needed for
production purposes and communication between the
client and the Designer); and
2. TECH PACKS. Final technical specifications for each
Product fabrication in the format provided or agreed
to by the Company.
E. FIT. Designer shall be responsible for fitting all samples to
standard size specifications.
F. FINAL SAMPLES. Designer shall deliver final and approved fit
samples for each Product fabrication reflecting all
modifications requested by the Company during the sampling
process.
III. SOURCING SERVICES
A. CONTRACTORS. Designer shall be responsible for introducing the
Company to sourcing agents for the production of each Product
included in the final SKU Plan for each Season (Company agrees
to provide a target LDP cost structure per category at the
beginning of the design process). At the time Designer
delivers Final Samples for a Season, Designer shall deliver to
the Company for each SKU for such Season:
1. The name, address, and principal contact person
(including individual's name, title, address,
telephone number, and email address) of the factory
at which such Product may be produced; and
2. The initial costing for production of each SKU.
B. RAW MATERIAL SUPPLIERS. Designer shall be responsible for
introducing the Company to a sourcing agent for the production
and delivery of raw materials used in the sales sample
production of each Product included in the final SKU Plan for
each Season, and will endeavor to locate raw material
suppliers with the expertise and cost structure appropriate
for production of the Products at the price points identified
by the Company. At the time Designer delivers Final Samples
for a Season, Designer shall deliver to the Company for each
SKU for such Season:
1. The name, address, and principal contact person
(including individual's name, title, address,
telephone number, and email address) of the suppliers
of all raw materials for Products that may be
produced for such Season; and
2. The initial costing for such raw materials.
B-2
(The Company is responsible for the production process after the samples have
been delivered to the Company by the Designer and the above information or
sourcing has been given to the Company. The Company is responsible for all
communication with suppliers after the above time except for communication
regarding pre-production fittings of the garments. The Company is responsible
for ensuring the suppliers of fabrics and raw materials as well as the suppliers
for production are given the order and pre-bookings from the company in a timely
manner in order to meet required deadlines. The Company will manage all
production after the sampling stage, including but not exclusively: logistics,
payments to any sourcing or production agents, final cost negotiations, customs
brokerage, letters of credit, production follow up and management in order to
ensure deadlines are met.)
IV. MARKETING SERVICES
A. Designer will assist the Company, as reasonably requested by
the Company from time to time, with the following marketing
services:
1. Preparation of press releases introducing new
Products and marketing campaigns
2. Event Marketing, including Product advertising,
promotions and sponsorships
3. Marketing Campaigns in all mediums, including
digital, print, point-of-purchase, and collateral
material.
The services in II, III, and IV are not included in SECTION 2 (Exclusivity) of
the Agreement and the Designer shall not be subject to any restrictions on such
services with respect thereto.
B-3
