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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
EXHIBIT 10.10
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS ARE DESIGNATED "[ * * * ]."
(BED & BATH -- NORTH AMERICA & EUROPE)
THIS AGREEMENT made as of July 1, 2000, between Xxxxx Lauren Home
Collection, Inc. ("RLHC"), a Delaware corporation with a place of business at
000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Xxxx Xxxxx Lauren
Corporation ("PRLC"), a Delaware corporation with a place of business at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, The Polo/Lauren Company, L.P., a New York
limited partnership with a place of business at 000 Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx ("XXX," together with RLHC hereinafter referred to
collectively as "PLC/RLHC") and WestPoint Xxxxxxx Inc., a Delaware corporation
with a principal place of business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Company").
WITNESSETH:
WHEREAS, RLHC is a subsidiary of PRL USA Holdings, Inc., a Delaware
corporation ("Polo"); and
WHEREAS, Polo owns, and RLHC is the exclusive licensee of the rights to
use, the "Licensed Xxxx", hereinafter defined, in connection with the
manufacture and sale in the United States of certain items of home furnishings,
including the "Licensed Products", hereinafter defined, and Company has for many
years been the licensee of RLHC and its predecessors with respect to Licensed
Products in the United States; and
WHEREAS, PLC owns the exclusive right to use the Licensed Xxxx in
connection with the manufacture and sale outside the United States of certain
items of home furnishings, including "Licensed Products", hereinafter defined;
and
WHEREAS, Company desires to obtain, and PLC/RLHC is willing to grant, an
exclusive sublicense, to use the Licensed Xxxx in connection with the
manufacture and sale of Licensed Products in the "Territory", hereinafter
defined; and
WHEREAS, Company desires to obtain, and PRLC is willing to provide, design,
marketing and other services as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings hereinafter set forth, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the term:
1.1. "Licensed Products" shall mean those items listed on Schedule A
attached hereto, all bearing the Licensed Xxxx, hereinafter defined.
1.2. "Licensed Xxxx" shall mean either the trademark "Xxxxx Lauren Home",
"Xxxxx (Polo Player Design) Lauren", the representation of the Polo Player
Design, "Xxxxx Xxxxxx" and "Xxxxxx/Xxxxx Xxxxxx" and unless the context
indicates otherwise, all of such trademarks, and any other trademark PLC/RLHC
may, from time to time at its sole discretion, specifically authorize for use by
Company. PLC/RLHC shall have the sole right to determine which trademark shall
be used in connection with each particular Licensed Product. From time to time
RLHC may authorize Company to manufacture and distribute products bearing the
Licensed Xxxx not expressly listed in Schedule A hereto. Absent an agreement
with respect to such products signed by RLHC and Company, all such products
shall be deemed Licensed Products for all purposes hereunder; provided, however,
that Company's rights with respect to such products (i) shall be non-exclusive
and (ii) may be terminated by Company upon 90 days
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written notice. Except for the trademarks in which rights are expressly granted
herein, all rights with respect to all other trademarks are expressly reserved
by PLC/RLHC, regardless of whether such trademarks include or refer to "Polo" or
"Xxxxx Lauren", subject to Company's rights of first refusal as set forth in
paragraph 2.15 hereof.
1.3. "RL Affiliates" shall mean, PLC, RLHC, Polo or any of their affiliates
or related companies (as such term is defined in the Xxxxxx Act).
1.4. "Territory" shall mean the United States, Mexico, Canada and "Europe"
(hereinafter defined); provided, however, that Company shall have no right to
sell any Licensed Products, and PLC/RLHC shall be free to sell or authorize the
sale of Licensed Products, to hotels, motels and other lodging facilities for
use in such facilities (but not for retail sale at such facilities). From time
to time PLC/RLHC may authorize Company to sell certain Licensed Products to
specific purchasers outside the Territory. Absent an agreement with respect to
such sales signed by PLC/RLHC and Company, all such sales shall be made on all
of the terms and conditions set forth in this Agreement; provided, however, that
Company's right to make such sales shall be non-exclusive and may be terminated
by PLC/RLHC immediately upon written notice to Company. Any such termination
shall not apply to orders already taken by Company in accordance with PLC/RLHC's
prior authorization. As used herein, "Europe" shall mean: United Kingdom, Spain,
Portugal, France, Germany, Ireland, Isle of Man, Benelux, Austria, Sweden,
Denmark, Channel Islands, Norway, Greece, Malta, Finland, Iceland, Switzerland,
Monaco, Cyrpus and Turkey.
2. Grant of License.
2.1. Subject to the terms and provisions hereof, PLC/RLHC hereby grants
Company, and Company hereby accepts, the exclusive, non-assignable right to use
the Licensed Xxxx for the term of this Agreement, in connection with the
manufacture and sale to the trade of Licensed Products in the Territory.
2.2. The sublicense granted herein applies solely to the use of the
Licensed Xxxx in connection with the manufacture and sale to the trade of the
Licensed Products. No use of any other trademark of PLC/RLHC, Polo or of any of
their affiliates, and no use of the Licensed Xxxx in connection with the
manufacture and sale of any other products, shall be authorized or permitted
pursuant to this sublicense.
2.3. PLC/RLHC reserves all rights granted to it under its agreement with
Polo which are not expressly and exclusively granted to Company hereunder, and
PLC/RLHC may grant sublicenses to others in the Territory in connection with the
items of home furnishings designated in such agreements, except for the Licensed
Products specifically licensed hereunder.
2.4. It is understood and agreed that all right, title and interest in and
to the Licensed Xxxx are reserved by Polo for its own use or for the use of any
other licensee, whether within or outside the Territory, in connection with any
and all products and services other than the rights granted to Company herein.
Without limiting the generality of the foregoing, Company understands and agrees
that PLC/RLHC or Polo may manufacture or authorize third parties to manufacture,
in the Territory, Licensed Products for ultimate sale outside the Territory.
2.5. Company shall not without PLC/RLHC's prior written approval sell any
Licensed Products bearing the Licensed Xxxx to any third party which, directly
or indirectly, sells or proposes to sell such Licensed Products outside the
Territory. Company shall use its best efforts to prevent any such resale outside
the Territory and shall, immediately upon learning or receiving notice from
PLC/RLHC that a customer is selling Licensed Products outside the Territory,
cease all sales and deliveries to such customer.
2.6. PLC/RLHC shall not, without Company's consent, grant to others the
right and license to use a trademark which bears the words "Polo" or "Xxxxx
Xxxxxx" in connection with the
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Licensed Products within the Territory. To the extent that it is legally
possible to do so, no license is granted hereunder for the manufacture, sale or
distribution of Licensed Products to be used for publicity purposes, other than
publicity of Licensed Products, in combination sales, as premiums or giveaways
or to be disposed of under or in connection with similar methods of
merchandising, such rights being specifically reserved for PLC/RLHC.
2.7. Company shall not purport to grant any right, permission or sublicense
hereunder to any third party, whether at common law or otherwise. In the event
of any attempted assignment or sublicense by Company without PLC/RLHC's prior
written consent, PLC/RLHC may at its option immediately terminate such
sublicense and this Agreement by written notice to Company to such effect; any
such attempted assignment or sublicense shall otherwise be null, void and of no
force or effect.
2.8. Company shall not use, or permit another person or entity in its
control to use, the words "Polo", "Xxxxx Xxxxxx" or any initials associated
therewith (e.g., "RL" or "PRL") as part of a corporate name or tradename and
Company shall not otherwise permit use of the Licensed Xxxx in such a way so as
to give the impression that the names "Polo" or "Xxxxx Lauren", or the Licensed
Xxxx, or any modification thereof, is the property of Company.
2.9. Company shall not have the right to use Company's name on the Licensed
Products, except with the prior approval by PLC/RLHC of the use and placement of
Company's name. Company shall, at the option of PLC/RLHC, include on its
business materials and/or the Licensed Products an indication of the
relationship of the parties hereto in a form approved by PLC/RLHC.
2.10. Notwithstanding anything to the contrary herein contained, PLC/RLHC
hereby reserves the right from time to time to authorize others to manufacture
and sell Licensed Products as part of a combination sale, or premium or giveaway
with fragrance and personal care products bearing the Xxxxx Lauren name.
2.11. Company shall not without RLHC's prior written approval, directly or
indirectly, manufacture, distribute, sell or advertise, during the term of this
Agreement, any items which bear or are associated with any of the following
trademarks: [ * * * ] or any other fashion apparel or home furnishings designer
whose products are sold primarily through department store distribution;
provided, however, that nothing contained herein shall prevent Company from
continuing its businesses under the following names and brands: French
Connection, Designers Guild, Xxx Xxxxx, Esprit, Xxxxx Xxxxx, Lucasfilm, or
Xxxxxx Xxxxxxxxx. In the event that during the term hereof Company shall desire,
directly or indirectly, to manufacture, distribute, sell or advertise any items
which bear the name or are associated with the name of any fashion apparel or
home furnishings designer other than those specifically named above in markets
outside of department store distribution, Company shall notify RLHC in writing
of the identity of the designer and the nature of the proposed transaction not
less than sixty (60) days prior to concluding an agreement with respect to such
transaction, and during such period shall discuss with RLHC in good faith any
reasonable concerns RLHC may have with respect thereto. The provisions of this
paragraph 2.11 shall not be deemed to prohibit Company from acquiring or merging
with any other entity, or engaging in any other transaction, which results in
Company directly or indirectly acquiring ownership of any trademark set forth in
this paragraph 2.11 or acquiring the right to use any such trademark in
connection in connection with products in the same categories as Licensed
Products; provided, however, that Company shall promptly notify RLHC in writing
of any such transaction and RLHC shall, for sixty (60) days after its receipt of
such notice, have the right to terminate this Agreement by written notice to
Company, such termination to become effective thirty (30) days after the date
notice of termination is received by Company.
2.12. RLHC represents and warrants to Company that it has full legal right,
power and authority to grant the sublicense hereby granted by RLHC to Company
with respect to the United States, to enter into this Agreement, to perform all
of its obligations hereunder, and to
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CONFIDENTIAL TREATMENT
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SEC FILE NO. 001-13057
consummate all of the transactions contemplated herein. PLC represents and
warrants to Company that it has full legal right, power and authority to grant
the rights hereby granted by PLC to Company outside the United States, to enter
into this Agreement, to perform all of its obligations hereunder, and to
consummate all of the transactions contemplated herein.
2.13. Company represents and warrants to PLC/RLHC that it has full legal
right, power and authority to enter into this Agreement, to perform all of its
obligations hereunder and to consummate all of the transactions contemplated
herein. Company further represents and covenants that it is now and at times
shall be adequately capitalized so as to be able to conduct its operations
contemplated hereunder and to meet the requirements of its suppliers in
connection therewith.
2.14. Company recognizes that there are many uncertainties in the business
contemplated by this Agreement. Company agrees and acknowledges that other than
those representations explicitly contained in this Agreement, if any, no
representations, warranties or guarantees of any kind have been made to Company,
either by PLC/RLHC, Polo or PRLC, or by anyone acting on their behalf. Without
limitation, no representations concerning the value of the Licensed Products or
the prospects for the level of their sales or profits have been made and Company
has made its own independent business evaluation in deciding to manufacture and
distribute the Licensed Products on the terms set forth herein.
2.15. In the event PLC/RLHC wishes to use or license a third party to use
in the Territory any trademark other than the Licensed Xxxx which includes or
refers to "Polo" or "Xxxxx Lauren" (a "New Xxxx") (e.g., "American Living/Xxxxx
Lauren") in connection with the manufacture or sale of Licensed Products during
the term hereof, and the proposed channel of distribution under such xxxx will
include "Mass Distribution" (as hereinafter defined), PLC/RLHC shall grant to
Company a right of first refusal to act: (i) as the licensee therefor, if
PLC/RLHC proposes to grant a license to a third party with respect to such New
Xxxx, or (ii) as the vendor of specific bedding or bath items bearing such New
Xxxx (a "Mass Product"), if PLC/RLHC or one of its affiliates proposes to
purchase such product directly from a vendor. In the implementation of said
first refusal rights for a license to use such New Xxxx, PLC/RLHC shall give
Company notice of the offer terms upon which it proposes to grant a license (a
"License Offer") for such products. Company shall have a period of forty-five
(45) days after the date of the License Offer to accept or reject such License
Offer in writing. If Company rejects such License Offer or if Company initially
accepts such License Offer but thereafter is unable to satisfy the offer terms,
then PLC/RLHC shall thereafter be free to make a substantially similar License
Offer to any third party. If PLC/RLHC shall substantially (as determined in
PLC/RLHC's reasonable discretion) change the offer terms then, during the term
hereof, Company's right of first refusal as provided hereinabove shall apply to
such changed offer terms. In the implementation of said first refusal rights to
act as the vendor with respect to a particular Mass Product, PLC/RLHC shall
present to Company the design for a proposed Mass Product, together with product
specifications and the required price point, and Company shall have a period of
seven (7) days in which to accept or reject the opportunity to supply such Mass
Product at such price point. If Company rejects such opportunity or initially
accepts such opportunity but thereafter is unable timely to deliver such Mass
Product, with the product specifications and price point designated by PLC/RLHC,
PLC/RLHC shall thereafter be free to obtain such Mass Product from any third
party on terms which are substantially the same as the terms last offered to
Company. The term "Mass Distribution", as used herein, shall mean broad
distribution channels other than department stores and specialty stores of the
sort which have traditionally distributed Licensed Products, and Mass
Distribution shall include (i) mass distribution such as [ * * * ], (ii) chain
store distribution such as [ * * * ] and (iii) warehouse clubs such as [ * * *
].
2.16. Company acknowledges that PLC/RLHC's affiliates in the United States
responsible for the operation of "Polo Retail Stores" (as defined in paragraph
4.9 hereof) have sought to produce directly for Polo Retail Stores certain
special Licensed Products which are not of the
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CONFIDENTIAL TREATMENT
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SEC FILE NO. 001-13057
sort typically produced by Company. Notwithstanding Company's exclusive rights
hereunder, such affiliates of PLC/RLHC shall be entitled to produce or purchase
a particular Licensed Product directly from a resource if such Licensed Product
will be sold solely in Polo Retail Stores (and, to the extent there is an excess
inventory thereof, such inventory will be disposed of in "Polo Outlet Stores"
and "Home Outlet Stores" as defined in paragraph 4.9 hereof); provided, however,
that Company shall be given a period of sixty (60) days after having been
presented with design specifications and intended price point in which to
develop any such product and notify PLC/RLHC of the price at which it will
supply such product, and PLC/RLHC and its affiliates shall not thereafter
purchase such product from another vendor unless such other vendor is willing to
deliver such product at a materially lower price.
3. Design Standards and Prestige of Licensed Products.
3.1. PRLC shall provide services in connection with the creation and design
of Licensed Products, subject to the terms and provisions hereof, in order to
enable Company to exploit the rights granted to it under this Sublicense
Agreement and to manufacture Licensed Products in conformity with the
established prestige and good will of the Licensed Xxxx. All Licensed Products
manufactured or caused to be manufactured and sold by Company shall be made in
accordance with the design and other information approved under this Agreement,
and in all other respects in conformity with the terms hereof. In addition to
such design services, PRLC shall provide to Company sales, advertising,
promotional and other services as hereinafter set forth.
3.2. Company acknowledges that the Licensed Xxxx has established prestige
and good will and is well recognized in the trade and the public, and that it is
of great importance to PLC/RLHC that in the manufacture and sale of the various
lines of products bearing the Licensed Xxxx, including the Licensed Products,
the high standards and reputation Polo, PLC and PRLC have established be
maintained. The value of the Licensed Xxxx is derived in part from the design
services of PRLC. Accordingly, all items of Licensed Products manufactured by
Company hereunder shall be of high quality workmanship with adherence to all
details and characteristics embodied in the designs furnished by PRLC pursuant
to the provisions of this Agreement. Company shall, upon PLC/RLHC's request,
supply PLC/RLHC with samples of Licensed Products (including samples of labeling
and packaging used in connection therewith) prior to production and from time to
time during production, and shall, at all times during the term hereof, upon
PLC/RLHC's request, make its manufacturing facilities available to PLC/RLHC,
Polo and/or PRLC, and shall use its best efforts to make available each
subcontractor's manufacturing facilities, for inspection by representatives of
PLC/RLHC, Polo and/or PRLC during usual working hours. No sales of Licensed
Products as miscuts, damaged or defective merchandise shall contain any labels
or other identification bearing the Licensed Xxxx without Polo's prior written
approval.
3.3. The death or incapacity of Xxxxx Xxxxxx shall not in any way effect
PRLC's obligation to provide its services hereunder, or Company's obligation to
accept such services.
4. Marketing; Advertising.
4.1. PLC/RLHC requires that Company accept the services of and obtain
certain approvals from PRLC, in the manner hereinafter set forth, in connection
with the marketing, advertising and sale of Licensed Products. Licensed Products
shall be marketed in a manner consistent with the quality and prestige of the
Licensed Xxxx and only to those customers expressly approved by PRLC. Prior to
the opening of each selling season, Company shall submit a written list of its
customers to PRLC for its approval. It is understood that such approval shall
not be unreasonably withheld, and shall be based on considerations of quality
and prestige of the Licensed Xxxx. If Company shall decide during the season to
sell to customers not previously approved by PRLC, Company shall so advise PRLC
and shall not sell to such additional customers without the approval of PRLC as
aforesaid. Company shall be responsible for directly
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SEC FILE NO. 001-13057
employing sales personnel, with expertise in selling utility bedding product,
which personnel shall be subject to PLC/RLHC's prior approval, which shall not
unreasonably be withheld.
4.2. Company shall maintain the high standards of the Licensed Xxxx as
applied to Licensed Products, in all packaging and promotion of the Licensed
Products. Company shall not employ or otherwise release any of such packaging or
other business materials relating to any Licensed Products and bearing the
Licensed Xxxx unless and until Company shall have made a request to PRLC in
writing for approval. Approval or disapproval of any such proposed use shall be
given by PRLC as promptly as reasonably practicable after receipt of Company's
request in connection therewith, but in all cases within twenty-one (21)
business days after receipt by PRLC of Company's request; if neither approval
nor disapproval has been given within such time, approval shall be deemed to
have been given. Any such approval shall be effective until revoked by PRLC;
provided, however, to the extent PRLC's approval relates only to a seasonal
collection of Licensed Products, Company shall not thereafter use said packaging
or business materials without PRLC's further approval.
4.3. Provided approval to use the Licensed Xxxx as part of a specific piece
of packaging or business material remains effective, it shall not be necessary
to obtain prior approval for each separate, substantially similar use of the
Licensed Xxxx containing immaterial changes from the use of the Licensed Xxxx so
approved. Notwithstanding the foregoing, Company shall, as soon as is reasonably
possible, either prior to publication, release or other public showing or
immediately thereafter, deliver to PRLC a tear sheet, proof or "mock-up" of any
such changed use of the Licensed Xxxx, which shall be subject to disapproval by
PRLC; if such disapproval shall be expressed, the same shall not be used at any
later time unless approval thereof shall be later obtained.
4.4. Anything in this Agreement to the contrary notwithstanding, as between
PLC/RLHC, PRLC and Company, PRLC shall prepare and place any and all advertising
of any nature with respect to the Licensed Products. Any and all cooperative
advertising campaigns supported or approved by Company shall be subject to the
prior approval of PRLC. In the event PRLC during the term hereof authorizes
Company to prepare and place any advertising with respect to the Licensed
Products, Company shall not place any such advertising unless and until Company
shall have made a request in writing to PRLC for approval of such advertising
detailing the use to be made of the advertising material (e.g. TV, print,
radio), and PRLC shall have approved the same in writing. Any approval granted
hereunder shall be limited to use during the seasonal collection of Licensed
Products to which such advertising relates and shall be further limited to the
use (e.g. TV, print, radio) for which approval by PRLC was granted.
4.5. Company shall maintain the highest quality and standards of the
Licensed Products and shall exercise its best efforts to safeguard the
established prestige and good will of the name Xxxxx Xxxxxx and the Lauren image
at least at the same level of prestige and good will as heretofore maintained.
"Image", as used herein, refers primarily to quality and style of packaging,
shipping, customer service, promotion, selling tools, creation and introduction
of new products and types of outlets (with reference to quality of service
provided by retail outlets and quality of presentation of Lauren merchandise in
retail outlets). Company shall take all necessary steps, and all steps
reasonably requested by PLC/RLHC, to prevent or avoid any misuse of the Licensed
Xxxx by any of its customers, contractors or other resources.
4.6. To the extent permitted by applicable law, PLC/RLHC may from time to
time, and in writing, promulgate uniform rules and regulations to Company
relating to the manner of use of the Licensed Xxxx. Company shall comply with
such rules and regulations.
4.7. Company agrees to make available for purchase, and to sell on its
customary price, credit and payment terms, all lines and styles of Licensed
Products to retail stores in the Territory bearing any trademark of Polo or its
affiliates pursuant to a license from Polo or any of its affiliates and to any
stores or facilities operated or owned by Polo and/or its affiliates, which
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are authorized to sell Licensed Products within such retail stores.
Notwithstanding anything to the contrary contained herein, in the event that any
such Licensed Products are not so made available by Company to such stores or
facilities, and in addition to any other remedy available to PLC/RLHC hereunder,
such Licensed Products may be made available to such stores by PLC/RLHC (or its
affiliates or other licensees).
4.8. Company shall offer Licensed Products for sale to employees of Polo
and its licensees for the personal use of such employees at Company's regular
invoice price to unaffiliated retail accounts.
4.9. In consideration of the rights granted herein, Company shall sell on a
priority basis and timely ship Licensed Products to "Polo Outlet Stores", "Home
Outlet Stores", "Polo Retail Stores", and "Polo's Direct to Consumer Business"
(as each such term is hereinafter defined), at the respective discounts off the
regular wholesale price therefor hereinafter set forth, to the extent of their
respective requirements. The discount off the regular wholesale price of
Licensed Products which Company shall give, is as follows:
Polo Outlet Stores [ * * * ]%
Home Outlet Stores [ * * * ]%
Polo Retail Stores [ * * * ]%
Polo's Direct to Consumer Business [ * * * ]%
it being understood that larger discounts may be negotiated in respect of excess
and irregular inventory purchased by Polo Outlet Stores and Home Outlet Stores,
taking into account the age, condition and quantity of merchandise to be
disposed of. All sales of Licensed Products pursuant to this paragraph 4.9 are
referred to herein as "Sales to Polo". All Sales to Polo shall be separately
reported by Company in its accounting statements pursuant to paragraph 10.2
hereof, but such sales shall not be subject to the royalty obligations set forth
herein. "Polo Outlet Stores", as used herein, shall mean all "outlet" or
"factory" stores in the United States doing business under any Polo/Xxxxx Lauren
service xxxx or tradename which are operated by a "Polo Affiliated Entity"
(hereinafter defined). "Home Outlet Stores", as used herein, shall mean all
"outlet" or "factory" stores doing business under any Polo/Xxxxx Lauren service
xxxx or tradename which are operated by a "Polo Affiliated Entity" and which
offer substantially solely Xxxxx Lauren Home products, up to a limit of seven
(7) stores. "Polo Retail Stores", as used herein, shall mean all stores in the
Territory (i) at which substantially solely products bearing Polo's trademarks
are sold, (ii) which bear any service xxxx owned by Polo or its affiliates and
(iii) which are operated by a Polo Affiliated Entity. "Polo's Direct to Consumer
Business" shall mean any direct-to-consumer selling enterprise (including,
without limitation, direct mail and selling over the Internet) operated by any
Polo Affiliated Entity. The term "Polo Affiliated Entity" shall mean any entity
in which Polo or any of its affiliates owns, directly or indirectly, an equity
interest in excess of 20%, or which operates under license from any such entity.
4.10. Company shall, in consultation with PLC/RLHC, develop, prototype,
build and finalize the presentation of a shop/fixture program for the retail
presentation of Licensed Products outside the United States. Such program shall
include re-fitting and renovating as necessary throughout the term hereof.
PLC/RLHC shall have the right to approve the final design of all shops, fixtures
and signage areas. Company shall bear all costs associated with such program.
With respect to each of Mexico and Canada, Company shall expend in connection
with such shop/fixture program during each year of the term hereof not less than
[ * * * ]% of the Net Sales Price of all Licensed Products sold in such year in
such country or such other amount as may be reflected in a business plan
approved by PLC/RLHC (which approval shall not unreasonably be withheld) which
specifies a shop/fixture program. With respect to Europe, Company shall expend
not less than [ * * * ]% of the Net Sales Price of all Licensed Products sold in
such year in Europe or such other amount as may be reflected in a business plan
approved by PLC/RLHC (which approval shall not unreasonably be withheld) which
specified a
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shop/fixture program; provided, however, that Company shall expend not less than
$[ * * * ] on such its shop/fixture program in Europe during the first two years
of the term hereof, and no less than $[ * * * ] in each year thereafter.
4.11. Company shall not offer for sale or promote the sale of Licensed
Products through direct mail, the "Internet", or other direct-to-consumer
vehicles ("Direct-to-Consumer Media") without RLHC's prior written approval, all
such rights, notwithstanding anything to the contrary contained herein, being
reserved by RLHC. In addition, Company shall inform each approved customer in
writing, that, as a condition of being approved to purchase Licensed Products
from Company, such customer may not sell or promote the sale of Licensed
Products through any Direct-to-Consumer Media without Company's prior written
approval. Company shall only approve the use of any Direct-to-Consumer Media
with RLHC's prior written approval. Company shall seek to enforce RLHC's policy
with respect to the use of Direct-to-Consumer Media, including, if necessary, by
refusing to sell or ship Licensed Products to any customer that does not adhere
to that policy.
4.12. During each year of the term hereof, Company shall expend for the
production and placement of national institutional and media advertising of
Licensed Products ("Institutional Advertising") the amounts hereinafter
specified (the "Advertising Obligation"). Except as may be expressly agreed in
writing, all decisions with respect to the creation, production and placement of
Institutional Advertising shall, throughout the Territory, be made by PLC/RLHC
in its sole discretion. Company shall deliver to RLHC within sixty (60) days
after the end of each year hereof an accounting statement in respect of amounts
expended by Company on advertising for the prior year. Each such accounting
statement shall be signed, and certified as correct, by a duly authorized
officer of Company. Prior to each year hereof, Company shall submit Company's
advertising budget for the upcoming year, based on the aggregate net sales price
of Licensed Products during the year then ending and on sales projected for the
upcoming year. The advertising expenditures for such upcoming year will
initially be made based upon such budget. If the actual aggregate net sales
price for such year should be greater than the projected aggregate net sales
price included in such budget, the appropriate percentage of such excess shall
be expended in the next following year in addition to the amount otherwise to be
expended in such next following year.
4.12.1. With respect to Canada, the Advertising Obligation shall be an
amount that is not less than [ * * * ] percent ([ * * * ]%) of the
aggregate net sales price (as defined in paragraph 10.2 hereof) of all
Licensed Products sold in Canada in each year, which amount shall be paid
by Company directly to PLC/RLHC on the first day of each year during the
term hereof. In addition, during each year of the term hereof Company shall
expend for cooperative advertising of Licensed Products in Canada an amount
that is not less than [ * * * ] percent ([ * * * ]%) of the aggregate net
sale price of all Licensed Products sold in Canada in that year, pursuant
to a plan for such cooperative advertising approved in advance by RLHC.
4.12.2. With respect to Mexico, the Advertising Obligation shall be an
amount that is not less than [ * * * ] percent ([ * * * ]%) of the
aggregate net sales price of all Licensed Products sold in Mexico in each
year, all of which shall, except as may otherwise be agreed, be expended on
cooperative advertising in Mexico, pursuant to a plan for such cooperative
advertising approved in advance by RLHC. With RLHC's prior written
approval, Company may apply a portion of its annual advertising obligation
in Mexico to retail advertising and public relations.
4.12.3. With respect to the United States, the Advertising Obligation
shall be an amount that is not less than [ * * * ] percent ([ * * * ]%) of
the aggregate net sales price of all Licensed Products sold in the United
States in each year; provided, however, that the Advertising Obligation
shall, with respect to Licensed Products bearing the "Lauren/Xxxxx
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CONFIDENTIAL TREATMENT
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Lauren" xxxx, be [ * * * ] percent ([ * * * ]%) of the aggregate net sales
price of all Licensed Product sold during calendar year 2001. With respect
to the Advertising Obligation in the United States, Company shall make a
minimum, non-refundable payment to PLC/ RLHC on January 1 in each year as
hereafter set forth in the following amounts:
2001........................................................ $[ * * * ]
2002........................................................ $[ * * * ]
2003........................................................ $[ * * * ]
2004........................................................ $[ * * * ]
2005........................................................ $[ * * * ]
and, if the term hereof is renewed in the manner set forth in paragraph 12
hereof:
2006........................................................ $[ * * * ]
2007........................................................ $[ * * * ]
2008........................................................ $[ * * * ]
4.12.4. With respect to Europe, the Advertising Obligation shall be an
amount that is not less than [ * * * ] percent ([ * * * ]%) of the
aggregate net sales price of all Licensed Products sold in Europe in each
year; provided, however, that the Advertising Obligation in each year
during the term hereof be not less than USD$[ * * * ]. In addition, Company
shall be responsible for all reasonable costs associated with photography
shoots and production undertaken specifically for Europe, provided that
Company has approved a budget therefor in advance, which approval shall not
unreasonably be withheld or delayed. In addition, during each year of the
term hereof Company shall expend for cooperative advertising of Licensed
Products in Europe an amount that is not less than [ * * * ] percent ([ * *
* ]%) of the aggregate net sale price of all Licensed Products sold in
Europe in that year, pursuant to a plan for such cooperative advertising
approved in advance by RLHC.
4.12.5. In addition to the foregoing obligations, upon the execution
of this Agreement, Company shall make a one-time, non-refundable
contribution to PLC/RLHC's marketing activities in the amount of $[ * * *
].
4.13. PLC/RLHC and its affiliates intend during the term hereof to open a
number of Polo Retail Stores devoted primarily to the sale of Xxxxx Lauren Home
products ("Home Stores"). While the schedule for opening Home Stores has not
been finalized, as of the execution of this Agreement the proposed schedule
calls for opening one (1) Home Store in 2001, two (2) Home Stores in 2002, and
one (1) Home Store in 2003. At such time during the term of this Agreement as
PLC/RLHC implements plans to open a Home Store, Company shall contribute to the
construction and buildout costs of such Home Store, at least sixty (60) days
prior to the intended opening date for such Home Store, the amount of $[ * * *
]; provided, however, that Company shall not, without its prior consent in its
sole discretion, be obligated hereunder to contribute to the construction and
buildout of more than four (4) Home Stores during the term hereof. Company shall
also contribute to the construction and buildout costs of a Xxxxx Xxxxxx Home
shop in the Polo/Xxxxx Lauren flagship store at 0 Xxx Xxxx Xxxxxx in London,
England, the amount of $[ * * * ], which amount shall be contributed at least
sixty (60) days prior to the intended opening of such Xxxxx Xxxxxx Home shop.
5. Trademark and Copyright Protection.
5.1. All uses of the Licensed Xxxx by Company, including, without
limitation, use in any business documents, invoices, stationery, advertising,
promotions, labels, packaging and otherwise, shall be subject to paragraph 4
hereof and shall require PRLC's prior written consent, and all uses of the
Licensed Xxxx by Company in advertising, promotions, labels and packaging shall
bear the notation, "Xxxxx (Polo Player design) Lauren", the representation of
the Polo Player Design, or "Xxxxx Xxxxxx". Company acknowledges and agrees that
its use of the
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Licensed Xxxx shall at all times be as sublicensee of RLHC and licensee of PLC
for the account and benefit of PLC/RLHC, Polo and PRLC. All uses of the Licensed
Xxxx pursuant to this Agreement shall be for the sole benefit of Polo and shall
not vest in Company any title to or right or presumptive right to continue such
use. For the purposes of trademark registrations, sales by Company or PLC/RLHC
shall be deemed to have been made by PLC or RLHC, as the case may be.
5.2. Company will cooperate fully and in good faith with PLC/RLHC for the
purpose of securing and preserving PLC/RLHC's and Polo's rights in and to the
Licensed Xxxx. Nothing contained in this Agreement shall be construed as an
assignment or grant to Company of any right, title or interest in or to the
Licensed Xxxx or any of PLC/RLHC's or Polo's other trademarks, and all rights
relating thereto are reserved by PLC/RLHC and Polo, relative to their respective
interests therein, except for the sublicense hereunder to Company of the right
to use the Licensed Xxxx only as specifically and expressly provided herein.
Company acknowledges that only Polo may file and prosecute a trademark
application or applications to register the Licensed Xxxx for Licensed Products.
5.3. Company will not, during the term of this Agreement or thereafter, (a)
attack Polo's title or rights, or PLC/RLHC's rights, in and to the Licensed Xxxx
in any jurisdiction, or attack the validity of this Sublicense or of the
Licensed Xxxx, or (b) contest the fact that Company's rights under this
Agreement (i) are solely those of a manufacturer or distributor, and (ii)
subject to the provisions of paragraph 14 hereof, terminate upon termination of
this Agreement. The provisions of this paragraph 5.3 shall survive the
termination or expiration of this Agreement.
5.4. All right, title and interest in and to all samples, sketches,
designs, art work, logos and other materials furnished by or to Polo, PRLC or
PLC/RLHC, whether created by Polo, PRLC, PLC/RLHC or Company, are hereby
assigned in perpetuity to, and shall be the sole property of, Polo, PLC/RLHC
and/or PRLC, as the case may be. Company will assist PLC/RLHC, Polo and PRLC, at
PLC/RLHC's, Polo's or PRLC's expense, as the case may be, (provided that PLC/
RLHC, Polo and/or PRLC shall not be responsible for the cost of the time and
effort expended by Company's officers and employees in connection with
furnishing such assistance) to the extent necessary in the protection of or the
procurement of any protection of the rights of Polo or PRLC, as the case may be,
to the Licensed Xxxx or the designs, design patents or copyrights furnished
hereunder, as well as to the rights of PLC/RLHC to the same. PLC/RLHC, Polo and
PRLC, as their interests may appear, may commence or prosecute any claims or
suits in their own names and may join Company as a party thereto. Company shall
promptly notify PLC/RLHC and Polo in writing of any uses which may be
infringements or imitations by others of the Licensed Xxxx on articles similar
to those covered by this Agreement, and of any uses which may be infringements
or imitations by others of the designs, design patents and copyrights furnished
hereunder, which may come to the attention of Company. As between Company and
PLC/RLHC, PLC/RLHC shall have the sole right with respect to the Licensed Xxxx,
designs, design patents and copyrights furnished hereunder, to determine whether
or not any action shall be taken on account of such infringements or imitations.
Company shall not institute any suit or take any action without first obtaining
PLC/RLHC's written consent to do so.
6. Designs.
6.1. At any time or from time to time Company shall provide PRLC with a
list or lists setting forth those Licensed Products for which Company shall
require designing by PRLC.
6.2. At any time or from time to time within a reasonable period following
receipt by PRLC of the aforesaid lists or lists, PRLC shall provide Company,
with its program of suggested, broad design themes and concepts with respect to
the design of the Licensed Products ("Design Concepts") which shall be embodied
in verbal and/or written descriptions of design themes and concepts and such
other detailed designs and sketches therefor, as PRLC deems appropriate. PRLC
shall have full discretion with respect to the manner in which the Design
Concepts shall be
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formulated and presented to Company but may undertake to prepare and provide
finished artwork with respect to the design of Licensed Products, in which case
Company shall reimburse PRLC for the costs incurred in connection with the
preparation of such finished artwork promptly after receiving proper
documentation of such costs, up to a cap of $[ * * * ] per year. PRLC shall be
available for consultation with Company on Design Concepts for the purpose of
making such modifications to the Design Concepts as are required to meet PRLC's
approval.
6.3. PRLC may engage such employees, agents, and consultants operating
under PRLC's supervision and control as it may deem necessary and appropriate.
6.4. From time to time while this Agreement is in effect, PRLC may (a)
develop or modify and implement designs from PRLC, or (b) develop and implement
new designs.
6.5. If Company wishes to prepare a design for each of its lines of
Licensed Products, it shall submit to PRLC its proposed design therefor. PRLC
may, in its sole discretion, by written notice, approve any of the designs so
furnished, with such modifications as it shall deem appropriate, or it may
disapprove any or all of the designs.
6.6. All patents and copyrights on designs, and all art work, sketches,
logos and other materials depicting the designs or Design Concepts shall only be
applied for by PRLC, at its discretion and expense, and shall designate PRLC as
the patent or copyright owner, as the case may be, thereof.
6.7. Company shall include within its collection of Licensed Products each
design designated by PRLC for inclusion therein. The foregoing notwithstanding,
in the event Company is unable, in good faith and due only to physical
impossibility or economic impracticability, to include within a collection of
Licensed Products a particular Licensed Product which PRLC has designed or
designated for inclusion in such collection, PLC/RLHC shall be entitled to
authorize third parties to manufacture and sell such Licensed Products within
the Territory and Company shall display and present such Licensed Products in
its showroom for Licensed Products.
7. Design Legends: Copyright Notice and Grant.
7.1. All designs, and all art work, sketches, logos and other materials
depicting the designs or Design Concepts created by PRLC, or created by or for
Company and reviewed and approved by PRLC or developed by or for Company from
Design Concepts or subsequent design concepts furnished or approved by PRLC,
shall be subject to the provisions of this paragraph 7 and shall be owned
exclusively by PRLC.
7.2. Company shall cause to be placed on all Licensed Products, when
necessary, appropriate notices designating PRLC as the copyright or design
patent owner thereof, as the case may be. Prior to use thereof by Company, the
manner of presentation of said notices must be reviewed and approved in writing
by PRLC.
7.3. PRLC hereby grants to Company the exclusive right, sublicense and
privilege in connection with Licensed Products in the Territory to use the
designs furnished hereunder and all copyrights, if any, therein, and hereby
sublicenses to Company the right to use all patents on such designs, and shall
execute and deliver to Company all documents and instruments necessary to
perfect or evidence such sublicense; provided, however, that all such right,
title and interest therein shall revert to PRLC upon termination of this
Agreement for any reason whatsoever, and Company shall thereupon execute and
deliver to PRLC all documents and instruments necessary to perfect or evidence
such reversions and, provided, further, that such sublicense is limited to use
in connection with Licensed Products authorized to be manufactured and sold from
time to time pursuant to this Sublicense Agreement. Such sublicense shall
continue only during the term of this Agreement.
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8. Licensed Products.
8.1. Company shall obtain the written approval of PRLC of all Licensed
Products, by submitting a Prototype, as hereinafter defined, of each different
design or model of a Licensed Product, including, but not limited to, the type
and quality of materials, colors and workmanship to be used in connection
therewith, prior to any commercial production thereof. In the event that PRLC
rejects a particular Prototype or Prototypes, Company shall be notified of the
reasons for rejection and Company may be provided with suggestions for modifying
the particular Prototype or Prototypes which PRLC is rejecting. Company shall
promptly correct said Prototype or Prototypes and resubmit said Prototype or
Prototypes for PRLC's approval under the same terms and conditions as set forth
herein with respect to the first submission of Prototypes. As used herein, the
term "Prototype" shall mean any and all models, or actual samples, of Licensed
Products; and the term "Final Prototype" shall mean the actual final sample of a
Licensed Product from which the first commercial production thereof will be made
and which has been approved by PRLC prior to the first commercial production
thereof pursuant to paragraphs 8 and 9 hereof.
8.2. The written approval of PRLC of the Prototypes for each seasonal
collection shall be evidenced by a written list, signed on behalf of PRLC,
setting forth those Prototypes that have been approved for inclusion in such
collection. Prototypes so approved shall be deemed Final Prototypes in respect
of such collection. Approval of any and all Prototypes as Final Prototypes shall
be in the sole discretion of PRLC. Company shall present for sale, through the
showing of each seasonal collection to the trade, all Final Prototypes so
approved in respect of such collection.
8.3. The Licensed Products thereafter manufactured and sold by Company
shall strictly adhere, in all respects, including without limitation, with
respect to materials, colors, workmanship dimensions, styling, detail and
quality, to the Prototypes approved by PRLC.
8.4. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the
manufacture, distribution, sale or promotion of Licensed Products. Company shall
advise PLC/RLHC to the extent any Final Prototype does not comply with any such
law, rule, regulation or requirement.
8.5. Company shall make its personnel, and shall use its best efforts to
make the personnel of any of its contractors, suppliers and other resources,
available by appointment during normal business hours for consultation with
PRLC. Company shall make available to PLC/RLHC, upon reasonable notice,
marketing plans, reports and information which Company may have with respect to
Licensed Products. In addition, when requested by PRLC, Company shall arrange
meetings between PRLC and senior executive personnel of Company to discuss and
pursue in good faith the resolution of problems encountered by PRLC in
connection with this Agreement during the term hereof.
9. Quality of Licensed Products.
9.1. PLC/RLHC requires that Company obtain from PRLC its approval of the
styles, designs, colors, materials, workmanship and quality of all Licensed
Products to insure that all Licensed Products manufactured, sold or distributed
are of the highest quality and are consistent with the highest standards and
reputation and established prestige and good will connected with the name "Xxxxx
Lauren". In connection with the production of each item of Licensed Products,
Company shall use only such materials as PRLC shall have previously approved
pursuant to the Final Prototype with respect to such item of Licensed Products.
9.2. In the event that any Licensed Product is, in the judgment of PRLC,
not being manufactured or sold in adherence to the materials, colors,
workmanship, design, dimensions, styling, detail and quality embodied in the
Final Prototypes, or is otherwise not in accordance with the Final Prototypes,
PLC/RLHC shall notify Company thereof in writing and Company shall
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CONFIDENTIAL TREATMENT
REQUESTED BY
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SEC FILE NO. 001-13057
promptly repair or change such Licensed Product to conform strictly thereto. If
an item of Licensed Product as repaired or changed does not strictly conform to
the Final Prototypes and such strict conformity cannot be obtained after at
least one (1) resubmission, the Licensed Xxxx shall be promptly removed from the
item, at the option of PRLC, in which event the item may be sold by Company,
subject to the royalty provisions of Paragraph 10 hereof, provided it is in no
way identified as a Licensed Product.
9.3. PLC/RLHC and PRLC and their duly authorized representatives shall have
the right, upon reasonable notice during normal business hours, to inspect all
facilities utilized by Company (and its contractors and suppliers) in connection
with the preparation of Prototypes and the manufacture, sale, storage or
distribution of Licensed Products pursuant hereto and to examine Licensed
Products in the process of manufacture and when offered for sale within
Company's operations. Company hereby consents to examination by PLC/RLHC and
PRLC of Licensed Products held by Company's customers for resale provided
Company has such right of examination. Company shall take all necessary steps,
and all steps reasonably requested by PLC/RLHC and PRLC, to prevent or avoid any
misuse of the licensed designs by any of its customers, contractors or other
resources.
10. Royalties.
10.1. Company shall pay to PLC/RLHC minimum royalties each year commencing
in calendar year 2001 during the term of this Sublicense Agreement. The minimum
royalty for each year during the term hereof shall be as follows:
U.S. U.S.
MEXICO CANADA (NON-UTILITY) (UTILITY) EUROPE
---------- ---------- ------------- --------- ----------
2001..................... $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ]
2002..................... $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ]
2003..................... $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ]
2004..................... $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ]
2005..................... $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ] $[ * * * ]
and, if the term hereof is renewed pursuant to paragraph 12 hereof:
2006..................... $[ * * * ] $[ * * * ] $[ * * * ] (Combined $[ * * * ]
2007..................... $[ * * * ] $[ * * * ] $[ * * * ] with Non- $[ * * * ]
2008..................... $[ * * * ] $[ * * * ] $[ * * * ] Utility) $[ * * * ]
Minimum royalties for each year shall be paid in four equal quarterly
installments, in the manner set forth in paragraph 10.2 hereof. No credit shall
be permitted against minimum royalties payable in any year on account of earned
or minimum royalties paid in any other year and minimum royalties shall not be
returnable. To the extent earned royalties exceed minimum royalties with respect
to any of the five constituent element of minimum royalties listed above, such
excess may not be used to offset the minimum royalty obligation for any other
constituent part of the minimum royalty obligation, it being the intent of the
parties that, with respect to each of the five constituent parts of the minimum
royalty obligation listed above, Company shall pay in each year an amount equal
to the greater of (a) minimum royalties dues for that constituent part for that
year and (b) the total earned royalty due for that constituent part for that
year; provided, however, that the minimum royalty obligation stated above with
respect to Non-Utility and Utility Bedding in the United States during the
renewal term is a combined minimum royalty obligation. For the purposes of this
Agreement, a "year" shall mean a period of twelve (12) months commencing on each
January 1 during the term hereof; provided, however, that the first year shall
commence on the date hereof and end on December 31, 2001.
10.2. In consideration of all rights granted and services rendered by
PLC/RLHC and PRLC hereunder, Company shall pay to PLC/RLHC and PRLC earned
royalties based on the Net Sales
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CONFIDENTIAL TREATMENT
REQUESTED BY
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Price, as hereinafter defined, of all Licensed Products sold hereunder,
including without limitation any sales made pursuant to the terms of paragraphs
3.3, 9.2 and 14 hereof; provided, however, that no royalties shall be due with
respect to sales of Licensed Products sold at a price equal to or less than [ *
* * ] percent ([ * * * ]%) off the regular wholesale price (although all such
discounted sales shall be separately reflected in Company's accounting
statements), but such royalty waiver shall apply only to the extent the total
volume of such discounted sales in each year of the term hereof does not exceed
[ * * * ] percent ([ * * * ]%) the aggregate Net Sales Price of all Licensed
Products sold during such year, less the aggregate Net Sales Price of all
Licensed Products sold during such year on which no earned royalty if due
hereunder. Earned royalties shall equal:
(a) In Canada and Mexico: [ * * * ] percent ([ * * * ]%) of the Net
Sales Price of all Licensed Products sold under this Agreement;
(b) In Europe: [ * * * ] percent ([ * * * ]%) of the Net Sales Price
of all Licensed Products sold under this Agreement; provided, however, that
in any year commencing with calendar year 2003 in which the aggregate Net
Sales Price of all Licensed Products sold in Europe during such year equals
or is less than $[ * * * ], the royalty rate with respect to all Licensed
Products sold during such year shall be [ * * * ] percent ([ * * * ]%),
and, at the same time at which it accounts for and pays royalties with
respect to December of such year, Company shall pay PLC/RLHC the full
amount of the adjusted royalty with respect to all sales during such year.
(c) In the United States, (i) [ * * * ] percent ([ * * * ]%) of the
Net Sales Price of all Bathroom Products sold hereunder, other than shower
curtains, (ii) [ * * * ] percent ([ * * * ]%) of the Net Sales Price of all
blankets (including throw blankets) sold hereunder, (iii) [ * * * ] percent
([ * * * ]%) of the Net Sales Price of all Bedroom Products and Unmatched
Bedding Accessories sold hereunder, and (iv) [ * * * ] percent ([ * * * ]%)
of the Net Sales Price of all Utility Bedding, other than blankets.
Company shall prepare or cause to be prepared statements of operations
for each month during the term hereof, which statements shall be furnished
to PLC/RLHC together with the earned royalties due for each such month on
the last day of the following month. The statement and royalty payment
provided on the last day of each April (for the month of March), July (for
the month of June), October (for the month of September) and January (for
the month of December) during the term shall also include Company's minimum
royalty obligation for the preceding calendar quarter (beginning in 2001),
less the aggregate earned royalties paid for such calendar quarter;
provided, however, that any payment of minimum royalties required hereunder
may be set off against any excess of earned royalties over minimum
royalties in any subsequent quarter of the same year, it being the parties
intent that at the end of each year during the term hereof Company shall
have paid PLC/RLHC with respect to each of Canada and Mexico (taken
separately) an amount equal to the greater of (i) the aggregate earned
royalties for the year or (ii) the minimum royalty obligation set forth in
paragraph 10.1 above. For the avoidance of doubt, to the extent earned
royalties with respect to only one country in the Territory exceed the
minimum royalty obligation with respect to such country, the amount of such
excess shall not in any way be used as a set-off or otherwise to reduce the
minimum royalty obligation in the other country. The term "Net Sales Price"
shall mean the gross sales price to retailers or, with respect to Licensed
Products that are not sold directly or indirectly to retailers, other
ultimate consumers (as in the case of accommodation sales by Company to its
employees), of all sales of Licensed Products sold under this Agreement,
less trade discounts actually taken and merchandise returns. The Net Sales
Price of any Licensed Products sold by Company to affiliates of Company
shall, for purposes of this Agreement, be deemed to be the higher of (a)
the actual gross sales price, or (b) Company's regular selling price for
such Licensed Products
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CONFIDENTIAL TREATMENT
REQUESTED BY
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sold to unaffiliated parties for sale at retail. Merchandise returns shall
be credited in the quarterly period in which the returns are actually made.
10.3. Company shall reimburse PRLC for all travel expenses incurred by
PLC/RLHC or PRLC with respect to design development and approval pursuant to
this Agreement, up to $[ * * * ] per year, and for any additional trips made at
Company's request.
10.4. If the payment of any installment of royalties is delayed for any
reason, interest shall accrue on the unpaid principal amount of such installment
from and after the date on which the same became due pursuant to paragraphs 10.1
and 10.2 hereof at the lower of the highest rate permitted by law in New York
and [ * * * ]% per annum above the rate of interest published from time to time
by Chemical Bank, New York, New York (or any successor bank) as its reference
rate, or, if such rate is not published, then the nearest equivalent rate
thereto then published by Chemical Bank.
10.5. The obligation of Company to pay royalties hereunder shall be
absolute notwithstanding any claim Company may assert against PLC/RLHC, Polo,
Lauren or PRLC. Company shall not have the right to set off, compensate or make
any deduction from such royalty payments for any reason whatsoever.
10.6. All payments of royalties due to PLC/RLHC and PRLC shall, unless
PLC/RLHC shall otherwise direct by written notice to Company, be made by wire
transfer on the date due, which wire transfer shall be directed to RLHC, on its
own behalf and as agent for PLC and PRLC, as follows:
Chase Manhattan Bank Delaware
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000-0000,
ABA#000000000
Account Name and Number: Xxxxx Xxxxxx Home Collection, Inc.:
0000-000000-000
10.7. All references to dollars in this Agreement shall, except as
otherwise expressly provided herein, mean U.S. dollars. All royalties due
hereunder shall be paid in U.S. dollars, and the currency conversion to U.S.
dollars for each quarter shall be made at the spot conversion rate published in
The Wall Street Journal for the last day of each such quarter. The amount of
royalties to be paid to PLC/RLHC by Company hereunder has been determined on the
understanding that Company will be entitled to deduct any required withholding
taxes and PLC/ RLHC will be entitled to a tax credit for United States federal
income tax purposes equal to the amount of any tax imposed in the Territory upon
PLC/RLHC's royalties, whether imposed by withholding or otherwise. Company shall
provide such documentation as may be necessary to reflect all taxes paid on
PLC/RLHC's behalf. In the event that any such tax is not so available as a
credit for United States federal income tax purposes for the period when paid,
the royalty to be paid hereunder shall be renegotiated to reflect the actual
loss of revenue to PLC/RLHC.
11. Accounting; Records.
11.1. Company shall at all times keep an accurate account of all operations
within the scope of this Agreement and shall prepare and furnish to PLC/RLHC
full statements of operations with respect to each quarter in each year during
the term of this Agreement within thirty (30) days of the end of such period.
Such statements shall include, on a country-by-country basis, all aggregate
gross sales, trade discounts, merchandise returns and the Net Sales Price of all
sales of License Products for the previous quarterly period. Such statements
shall be in sufficient detail to be audited from the books of Company and shall
be certified by a financial officer of Company. Once each year, which may be in
connection with the regular annual audit of Company's books, Company shall
furnish an annual statement of the aggregate gross sales, trade discounts,
merchandise returns and Net Sales Price of all sales of Licensed Products made
by Company certified by the independent public accountant of Company.
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11.2. PLC/RLHC and its duly authorized representatives, on reasonable
notice, shall have the right, no more than once in each year during regular
business hours, for the duration of the term of this Agreement and for three (3)
years thereafter, to examine the books of account and records and all other
documents, materials and inventory in the possession or under the control of
Company and its successors with respect to the subject matter of this Agreement.
All such books of account, records and documents shall be maintained and kept
available by Company for at least the duration of this Agreement and for three
(3) years thereafter. PLC/RLHC shall have free and full access thereto in the
manner set forth above and shall have the right to make copies and/or extracts
therefrom. If as a result of any examination of Company's books and records it
is shown that Company's payments to PLC/RLHC hereunder with respect to any
twelve (12) month period were less than or greater than the amount which should
have been paid to PLC/RLHC by an amount equal to [ * * * ] percent ([ * * * ]%)
of the amount which should have been paid during such twelve (12) month period,
Company will, in addition to reimbursement of any underpayment, with interest
from the date on which each payment was due at the rate set forth in paragraph
6.3 hereof, promptly reimburse PLC/RLHC for the cost of such examination.
11.3. Company shall provide to PLC/RLHC in the form requested such
information as PLC/ RLHC may reasonably request with respect to the manufacture,
distribution and sale of Licensed Products.
12. Term.
The initial term of this Agreement (the "Initial Term") shall commence on
the date hereof and shall terminate on December 31, 2005, unless earlier
terminated in accordance with the terms hereof; provided, however, (i) the term
shall not commence with respect to Utility Bedding or Unmatched Bedding
Accessories in the United States and Canada until July 1, 2001, (ii) the term
shall not commence with respect to Europe until January 1, 2001, and (iii) that
if no Event of Default shall have occurred and not been cured or waived, and
Company has achieved the Minimum Renewal Volume (as such term is hereinafter
defined) for the period January 1, 2004 to December 31, 2004, Company shall have
the option, upon providing notice to PLC/RLHC on or before April 1, 2005, to
renew this Agreement for an additional three (3) year period (the "Renewal
Term") so as to expire on December 31, 2008, on the terms and conditions herein
except that there will be no further right to renewal. The minimum aggregate Net
Sales Price which PLC/RLHC must achieve in connection with sales of Licensed
Products (irrespective of whether royalties are due on such sales) during the
period from January 1, 2004 to December 31, 2004 (the "Minimum Renewal Volume")
in order to be entitled to renew this Agreement for a second term as hereinabove
provided shall be $[ * * * ]. It is expressly understood that only the company
(which may be Company) whose licensed term covers the period subsequent to the
expiration of this Agreement shall be entitled to receive designs for Licensed
Products intended to be sold after the expiration of this Agreement, and to make
presentations of such Licensed Products during the market presentation weeks
that relate to such subsequent period, even if such market presentation occurs
prior to the termination of this Agreement. Without limiting the generality of
the foregoing, in the event the term hereof is not renewed or extended, the last
season for which the Company shall be entitled to receive designs and, during
the term hereof, to manufacture and sell Licensed Products shall be the Fall
season of the last year of the Initial Term or Renewal Term, as the case may be,
and PLC/RLHC shall be entitled to undertake, directly or through a successor
licensee, all activities associated with the design, manufacture and sale
Licensed Products commencing with the immediately following Spring season.
13. Default; Change of Business.
13.1. Each of the following shall constitute an event of default ("Event of
Default") hereunder;
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
(i) Royalty payments are not paid when due and such default continues
for more than ten (10) days after notice thereof;
(ii) Company shall fail to timely present for sale to the trade a
broadly representative and fair collection of each seasonal collection of
Licensed Products designed by PRLC or Company shall fail to timely ship to
its customers a material portion of the orders of Licensed Products it has
accepted;
(iii) Company fails within ten (10) days after written notice from
PLC/RLHC that payment is overdue to pay for any Licensed Products or
materials, trim, fabrics, packaging or services relating to Licensed
Products purchased by Company from PLC/RLHC or Polo or any agent or
licensee of PLC/RLHC or Polo or any other supplier of such items unless
Company is in good faith contesting the amount or liability for such
payment;
(iv) If Company shall, after achieving distribution and sale of the
Licensed Products throughout the Territory, thereafter fail for a
consecutive period in excess of two (2) months to continue the bona fide
manufacture, distribution and sale of the Licensed Product; or
(v) If a deliberate deficiency in reported Net Sales occurs or if any
other deliberate misstatements are made in reports required or requested
hereunder; or
(vi) If the quality of the Licensed Products should become lower than
that in the approved Prototypes referred to in paragraph 8 hereof; or
(vii) If Company shall use the Licensed Marks in an unauthorized or
improper manner and/or if Company shall make an unauthorized disclosure of
confidential information or materials given or loaned to Company by Polo,
PRLC and or PLC/RLHC; or
(viii) Company defaults in performing any of the terms of this
Agreement and continue in default for a period of thirty (30) days after
notice thereof (unless the default cannot be totally cured within the
initial thirty (30) day period after notice and Company diligently and
continuously proceeds to cure and does in fact cure such default, but
within no later than ninety (90) days following such initial period); or
(ix) Company institutes proceedings seeking relief under the
Bankruptcy Code or any similar law, or consents to entry of an order for
relief against it in any bankruptcy or insolvency proceeding or similar
proceeding, or files a petition or answer or consents for reorganization or
other relief under any bankruptcy act or other similar law, or consents to
the filing against it of any petition for the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
it or of any substantial part of its property, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due, or takes any action in furtherance of the
foregoing; or
(x) Company transfers or agrees to transfer a substantial part of its
property (except as provided in paragraph 13.3 below); or
(xi) The calling of a meeting of creditors, appointment of a committee
of creditors or liquidating agents, or offering of a composition or
extension to creditors by, for, or of Company; or
(xii) Company shall have failed to perform any material term, covenant
or agreement on its part to be performed under any agreement or instrument
(other than this Agreement) evidencing or securing or relating to any
indebtedness owing by Company, if the effect of such failure is to
accelerate the maturity of such indebtedness, or to permit the holder or
holders of such indebtedness to cause such indebtedness to become due prior
to the stated maturity thereof, regardless of whether or not such failure
to perform will be waived by the holder or holders of such indebtedness.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
(xiii) There shall be a change in control of Company such that (a)
Xxxxxxxx Green, Jr. no longer controls, in the aggregate, in excess of 25%
of the issued and outstanding voting stock of Company or in excess of 25%
of the equity interest of Company or (b) Mr. Xxxxxx Xxxx ("Xxxx") is no
longer in all material respects responsible with individual authority as
the chief operating officer of Company, to unconditionally bind Company in
connection with the operations contemplated by this Agreement, including,
without limitation, the performance of Company's duties and obligations
under this Agreement; provided, however, that (i) in the event Xxxx ceases
to have responsibility described herein for any reason, Company shall have
six (6) months to engage a successor to Xxxx, reasonably acceptable to
PLC/RLHC, to serve in such capacity, and (ii) no event of default under
this paragraph 13.1(xii) shall be deemed to have occurred if such change of
control occurs as a result of any assignment of this Agreement made in
accordance with all the terms and conditions contained in paragraph 23.4
hereof; or
(xiii) Company shall have failed to perform any material term,
covenant or agreement on its part to be performed under any agreement or
instrument (other than this Agreement) evidencing or securing or relating
to any indebtedness owing by Company, if the effect of such failure is to
accelerate the maturity of such indebtedness, or to permit the holder or
holders of such indebtedness to cause such indebtedness to become due prior
to the stated maturity thereof, regardless of whether or not such failure
to perform will be waived by the holder or holders of such indebtedness.
13.2. If any Event of Default shall occur, PLC/RLHC, Polo or PRLC, or any
of them, shall have the right, exercisable in its discretion, immediately to
terminate this Agreement and the sublicense upon ten (10) days written notice to
Company of its intention to do so, and upon the expiration of such ten (10) day
period, this Agreement and the sublicense, including, without limitation, all
rights of Company in and to the Licensed Xxxx, and in and to the designs
furnished or used hereunder and all copyrights therein and design patents
thereon, shall terminate and come to an end without prejudice to any remedy of
PLC/RLHC for the recovery of any monies (including attorneys' fees for
collection) then due it under this Agreement or in respect of any antecedent
breach of this Agreement, and without prejudice to any other right of PLC/RLHC,
including without limitation, damages for breach to the extent that the same may
be recoverable. No assignee for the benefit of creditors, receiver, liquidator,
sequestrator, trustee in bankruptcy, sheriff or any other officer of the court
or official charged with taking over custody of Company's assets or business
shall have any right to continue the performance of this Agreement. In addition,
and notwithstanding anything to the contrary contained herein, the term of this
Agreement shall automatically terminate without notice or the need for any other
act on the part of any party hereto in the event that the term of Company's
license agreement with RLHC with respect to Licensed Products in the United
States shall expire or be terminated for any reason.
13.3. During the term of this Agreement, Company shall not dissolve,
liquidate or wind-up its business. In addition, Company shall not, without prior
written notice to PLC/RLHC, (i) merge or consolidate with or into any other
corporation, or (ii) directly or indirectly sell or otherwise dispose of all or
a substantial portion of its business or assets. PLC/RLHC shall have the option,
upon receipt of such notice, to terminate this Agreement unless the same persons
who shall have been working for Company with respect to PLC/RLHC and the
Licensed Products shall continue to perform such services after either event (i)
or (ii).
14. Disposal of Stock upon Termination or Expiration.
14.1. Within ten (10) days following the termination of this Agreement for
any reason whatsoever including the expiration of the term hereof, and on the
last day of each month during the disposal period set forth in paragraph 14.2
hereof, Company shall furnish to PLC/RLHC a certificate of Company listing its
inventories of Licensed Products (which defined term for purposes of this
paragraph 14.1 shall include all materials, trim and packaging which are used in
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
the manufacture and marketing of Licensed Products) on hand or in process
wherever situated. PLC/RLHC shall have the right to conduct a physical inventory
of Licensed Products in Company's possession or under Company's control.
PLC/RLHC or PLC/RLHC's designee shall have the option (but not the obligation)
to purchase from Company all or any part of Company's then existing inventory of
Licensed Products upon the following terms and conditions:
(i) PLC/RLHC shall notify Company of its or its designee's intention
to exercise the foregoing option within thirty (30) days of delivery of the
certificate referred to above and shall specify the items of Licensed
Products to be purchased.
(ii) The price for Licensed Products manufactured by Company or its
affiliates on hand or in process shall be Company's standard cost (the
actual manufacturing cost) for each such Licensed Product. The price for
all other Licensed Products which are not manufactured by Company or its
affiliates shall be Company's landed costs therefor. Landed costs for the
purposes hereof means the F.O.B. price of the Licensed Products together
with customs, duties, brokerage, freight and insurance costs.
(iii) Company shall deliver the Licensed Products purchased within
fifteen (15) days of receipt of the notice referred to in clause (i) above.
Payment of the purchase price for the Licensed Products so purchased by
PLC/RLHC or its designee shall be payable upon delivery thereof, provided,
that PLC/RLHC shall be entitled to deduct from such purchase price any
amounts owed it by Company (and/or to direct payment of any part of such
merchandise to any supplier of Licensed Products in order to reduce an
outstanding balance due to such supplier from Company).
14.2. In the event PLC/RLHC chooses not to exercise the option referred to
in paragraph 14.1 hereof with respect to all or any portion of Licensed
Products, for a period of one hundred and twenty (120) days after termination of
this Agreement for any reason whatsoever, except on account of breach of the
provisions of paragraphs 3, 4 or 10 hereof, Company may dispose of Licensed
Products which are on hand or in the process of being manufactured at the time
of termination of this Agreement, provided Company fully complies with the
provisions of this Agreement, including specifically those contained in
paragraphs 3, 4 or 10 hereof in connection with such disposal. Such sales shall
be subject to the payment of earned royalties pursuant to paragraph 10.2.
Failure by Company to timely submit the certificates of inventory as set forth
in paragraph 14.1 hereof shall deprive Company of its right of disposal of stock
pursuant to this paragraph 14.
14.3. Notwithstanding anything to the contrary contained herein, in the
event that upon the expiration or termination of the term hereof for any reason
Company has not rendered to PLC/ RLHC all accounting statements then due, and
paid (i) all royalties and other amounts then due to PLC/RLHC and (ii) all
amounts then due to any affiliate of or supplier to PLC/RLHC or its affiliates
(collectively, "Payments"), Company shall have no right whatsoever to dispose of
any inventory of Licensed Products in any manner. In addition, if during any
disposal period Company fails timely to render any accounting statements or to
make all Payments when due, Company's disposal rights hereunder shall
immediately terminate without notice.
15. Effect of Termination.
15.1. Except for the sublicense to use the Licensed Xxxx and the designs
furnished hereunder only as specifically provided in this Agreement, Company
shall have no right, title or interest in or to the Licensed Xxxx, the designs
furnished hereunder and design patents thereon, and all copyrights licensed
hereby. Upon and after the termination of this sublicense, all rights granted to
Company hereunder, including without limitation all right, title and interest in
or with respect to all designs, art works, sketches and other materials
depicting or relating to the Licensed Products, together with any interest in
and to the Licensed Xxxx Company may acquire, shall forthwith automatically and
without further action or instrument be assigned to and revert to
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
Polo, PRLC and PLC/RLHC, as their interests may appear. Company will execute any
instruments requested by PLC/RLHC to accomplish or confirm the foregoing. Any
such assignment, transfer or conveyance shall be without consideration other
than the mutual agreements contained herein. PLC/RLHC shall thereafter be free
to license to others the use of the Licensed Xxxx in connection with the
manufacture and sale of the Licensed Products covered hereby, and Company will,
except as specifically provided in paragraph 14 hereof, (i) refrain from any
further use of the Licensed Xxxx or any reference to it, direct or indirect, or
anything deemed by PLC/RLHC or Polo to be similar to the Licensed Xxxx, (ii)
refrain from further use of any of the Design Concepts, and (iii) refrain from
manufacturing, selling or distributing any products (whether or not they bear
the Licensed Xxxx) which are confusingly similar to, or derived from, the
Licensed Products or Design Concepts, in connection with the manufacture, sale
or distribution of Company's products. Upon termination of this Agreement,
Company shall forthwith cease the use of the words "Xxxxx Lauren" and/or the
Polo Player Design in any and all respects. It is expressly understood that
under no circumstances shall Company be entitled, directly or indirectly, to any
form of compensation or indemnity from PLC/ RLHC, Xxxxx Xxxxxx, Polo, PRLC or
their affiliates, as a consequence to the termination of this Agreement, whether
as a result of the passage of time, or as the result of any other cause of
termination referred to in this Agreement. Without limiting the generality of
the foregoing, by its execution of the present Agreement, Company hereby waives
any claim which it has or which it may have in the future against PLC/RLHC,
Polo, PRLC, Xxxxx Lauren or their affiliates, arising from any alleged goodwill
created by Company for the benefit of any or all of the said parties or from the
alleged creation or increase of a market for Licensed Products.
15.2. Notwithstanding any termination or expiration of this Agreement
(whether by reason of the expiration of the stated term of this Agreement, by
earlier termination of this Agreement pursuant to paragraph 13 hereof, or
otherwise) (a) PLC/RLHC shall have and hereby reserves all rights and remedies
which it may have, at law or in equity, with respect to the collection of
royalties or other funds payable by Company pursuant to this Agreement and the
enforcement of all rights relating to the establishment, maintenance or
protection of the Licensed Xxxx and the designs furnished hereunder, and (b)
Company and PLC/RLHC shall continue to have rights and remedies with respect to
damages for breach of this Agreement on the part of the other.
16. Remedies.
Company acknowledges and admits that there would be no adequate remedy at
law for its failure (except as otherwise provided in paragraph 14 hereof) to
cease the use of the Licensed Xxxx, or the designs, or the manufacture and sale
of the Licensed Products covered by this Agreement at the termination or
expiration hereof, and Company agrees that in the event of such failure
PLC/RLHC, Polo and PRLC, or any of them, shall be entitled to equitable relief
by way of temporary and permanent injunction and such other and further relief
as any court with jurisdiction may deem just and proper. Such relief shall be in
addition to and not in substitution of any other remedies available to PLC/RLHC,
Polo and PRLC, or any of them, pursuant to this Agreement or otherwise.
17. Certain Employees.
17.1. At all times during the term of this Agreement, Company shall employ
a dedicated brand manager with respect to Licensed Products in each of the
Mexican and Canadian market, who shall be subject to RLHC's continuing approval
throughout the term hereof. In addition, Company shall for both the Mexican and
Canadian businesses relating to Licensed Products (i) employ adequate sales,
merchandising, customer service and operational personnel to support fully the
growth requirement of the business, (ii) consult with RLHC in good faith
regarding the current and anticipated staffing requirements of the business and
(iii) at RLHC's request, allow RLHC to participate in good faith in the
selection process for key sales and merchandising personnel.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
17.2. At all times during the term of this Agreement, Company shall employ
a dedicated account manager whose primary responsibility shall relate to
Licensed Products in Canada, who shall be subject to RLHC's continuing approval
throughout the term hereof.
17.3. At all times during the term of this Agreement, Company shall employ
in the United States individuals, dedicated solely to the Xxxxx Lauren Home
business, who shall be subject to RLHC's continuing approval throughout the term
hereof, in the following positions:
a. Vice President -- operations
b. Vice President -- merchandising
c. Business Manager -- sheets and accessories
d. Business Manager -- bath products
e. Business Manager -- utility bedding and blankets
f. Marketing Manager -- all Licensed Products
g. Vice President -- product development
h. Sourcing Manager -- all Licensed Products
i. Product Development Coordinator -- bedding products
j. Product Development Coordinator -- bath products
In addition, at all times during the term hereof, the Company shall reimburse
PLC/RLHC for 100% of the salary and benefits costs associated with a full-time
CADCAM operator who shall be employed by PLC/RLHC.
17.4.1. At all times during the term of this Agreement, with respect to
operations in Europe, Company shall contribute to the cost of PLC/RLHC's
employment of one design/product development associate, which contribution shall
be $30,000 per year, which amount shall be paid on the first day of each year.
17.4.2. In each year during the term hereof Company shall reimburse
PLC/RLHC for Company's share of "European Expenses", as hereinafter defined.
Company's reimbursement of European Expenses shall initially be made in four
equal quarterly installments, simultaneously with minimum royalty payments due
hereunder, based on the actual European Expenses incurred in the immediately
preceding year. If actual European Expenses in any year exceed the European
Expenses in the immediately preceding year, resulting in an underpayment by
Company of European Expenses, Company shall pay reimburse PLC/RLHC for the
difference within thirty (30) days after the end of such year. If actual
European Expenses incurred in any year are less than the European Expenses in
the immediately preceding year, resulting in an overpayment by Company of
European Expenses, Company may deduct the difference from its next payment of
European Expenses for the following year. In the first year hereof (calendar
2001), Company's share of European Expenses shall be [ * * * ] ([ * * * ]) of
total European Expenses for such year.
17.4.3. "European Expenses" shall mean the following expenses anticipated
to be incurred by PLC/RLHC, and such other expenses Company may approve:
Brand Director -- Europe
Salary & Benefits.................................... $[ * * * ] per year
Moving Costs......................................... $[ * * * ] one time expense
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
Creative Services Manager
Salary & Benefits.................................... $[ * * * ] per year
Trade Showroom Manager
Salary & Benefits.................................... $[ * * * ] per year
Advertising and PR Managers (3 people)
Salary & Benefits.................................... $[ * * * ] per year
Office Assistant
Salary & Benefits.................................... $[ * * * ] per year
Travel & Entertainment................................. $[ * * * ] per year
Office Space (for above staff and 4 Company employees)
Rent................................................. $[ * * * ] per year
Buildout............................................. $[ * * * ] one time expense
Administrative....................................... $[ * * * ] per year
Company hereby approves a cost of living increase for all salary and benefits
expenses listed above of up to [ * * * ] percent ([ * * * ]%) each year. In
addition, Company shall not unreasonably withhold its approval of including as
European Expenses reasonable increases in rent and administrative costs.
17.4.4. In each year during the term hereof commencing in calendar year
2002, Company's share of European Expenses shall be calculated by applying to
the total European Expenses for such year a fraction, the numerator of which is
the aggregate Net Sales Price of all Licensed Products sold by Company in Europe
in such year, and the denominator is the aggregate Net Sales Price of all Xxxxx
Xxxxxx Home products sold in Europe during such year.
17.4.5. In connection with its European business operations hereunder,
Company shall staff and support its personnel in a manner generally consistent
with the business plan Company presented to PLC/RLHC in April of 1998.
18. Indemnity.
18.1. PLC/RLHC shall indemnify and hold harmless Company from and against
any and all liability, claims, causes of action, suits, damages and expenses
(including reasonable attorneys' fees and expenses in actions involving third
parties or between the parties hereto) which Company is or becomes liable for,
or may incur solely by reason of its use within the Territory, in strict
accordance with the terms and conditions of this Agreement, of the Licensed Xxxx
or the designs furnished to Company by PLC/RLHC or PRLC, to the extent that such
liability arises through infringement of another's design patent, trademark,
copyright or other proprietary rights; provided that Company gives PLC/RLHC
prompt notice of, and full cooperation in the defense against, such claim. If
any action or proceeding shall be brought or asserted against Company in respect
of which indemnity may be sought from PLC/RLHC under this paragraph 18.1,
Company shall promptly notify PLC/RLHC thereof in writing, and PLC/RLHC shall
assume and direct the defense thereof. Company may thereafter, at its own
expense, be represented by its own counsel in such action or proceeding.
PLC/RLHC's liability pursuant to this paragraph 18.1 shall be limited to and
offset against the aggregate of all royalties (whether minimum or earned)
heretofore paid by Company to PLC/RLHC hereunder.
18.2. To the extent not inconsistent with paragraph 18.1 hereof, Company
shall indemnify and save and hold PLC/RLHC, Polo, PRLC and Xxxxx Xxxxxx,
individually, (together, the "Indemnified Parties") harmless from and against
any and all liability, claims, causes of action, suits, damages and expenses
(including reasonable attorneys' fees and expenses in actions involving third
parties or between the parties hereto), which they, or any of them, are or
become liable for, or may incur, or be compelled to pay by reason of any acts,
whether of omission or commission, that may be committed or suffered by Company
or any of its servants, agents or
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
employees in connection with Company's performance of this Agreement, including
Company's use of Company's own designs, in connection with Licensed Products
manufactured by or on behalf of Company or otherwise in connection with
Company's business.
18.3. Company shall carry product liability insurance with limits of
liability in the minimum amount, in addition to defense costs, of $[ * * * ] per
occurrence and each of the Indemnified Parties shall be named therein as
insureds, as their interests may appear. Company shall, promptly after the
signing of this Agreement, deliver to PLC/RLHC a certificate of such insurance
from the insurance carrier, setting forth the scope of coverage and the limits
of liability and providing that the policy may not be canceled or amended
without at least thirty (30) days prior written notice to the Indemnified
Parties.
19. Disclosure.
PLC/RLHC and Company, and their affiliates, employees, attorneys and
accountants, shall hold in confidence and not use or disclose, except as
permitted by this Agreement, (i) confidential information of the other, or (ii)
the terms of this Agreement, except upon consent of the other or pursuant to or
as may be required by law, or in connection with regulatory or administrative
proceedings and only then with reasonable advance notice of such disclosure to
the other. Company shall take all reasonable precautions to protect the secrecy
of the designs, art work, sketches and other materials used pursuant to this
Agreement prior to the commercial distribution or the showing of samples for
sale, and shall not sell any merchandise employing, or adapted from or resulting
from the use of any such designs, art work, sketches or other material, except
under the Licensed Marks. All press releases and other public announcements
shall be subject to the prior approval of PLC/RLHC. Every request for a
statement, release or other inquiry shall be sent in writing whenever
practicable to the advertising/publicity director of PLC/RLHC for handling.
20. Brokers.
Each of PLC/RLHC and Company hereby represents and warrants to the other
that it has not employed or dealt with any broker or finder in connection with
this Agreement or the transactions contemplated hereby, and agrees to indemnify
the other and hold it harmless from any and all liabilities (including, without
limitation, reasonable attorneys' fees and disbursements paid or incurred in
connection with any such liabilities) for any brokerage commissions or finders'
fees in connection with this Agreement or the transactions contemplated hereby,
insofar as such liabilities shall be based on the arrangements or agreements
made by it or on its behalf.
21. Manufacture; Distribution; Sale.
Consistent with the high quality and prestige of the Licensed Marks and
products manufactured by, or under license from, Polo and its affiliates,
Company undertakes, during the term hereof, diligently to manufacture and sell
each and every Licensed Product listed in Schedule A, to use its best efforts to
create a demand therefor, supply such demand, and maintain adequate arrangements
and facilities for the distribution of Licensed Products throughout the
Territory. As an essential part of its distribution program, Company agrees to
maintain adequate inventories (consistent with good industry practice) of all
such Licensed Products at distribution points adequate to satisfy the
requirements of its customers for a full line of such Licensed Products and to
expedite the delivery thereof. Company represents, warrants and covenants that
it is or shall be, on or before December 31, 2000, "Y2K" compliant, and
acknowledges that any failure of its computer systems as a result of Company's
failure to be Y2K compliant would, if such failure results in a material
interruption or adverse impact on its ordinary business operations relating to
Licensed Products, constitute a violation of Company's obligations hereunder.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX XXXXXX CORPORATION
SEC FILE NO. 001-13057
22. Showrooms; Samples.
22.1. In the United States, Company shall display its Licensed Products at
the showroom to be operated and maintained by RLHC on the ninth floor at 1185
Avenue of the Americas (hereinafter referred to as the "Home Collection
Showroom" or "Showroom"). Company shall also display at the Home Collection
Showroom products other than Licensed Products which comprise the Xxxxx Lauren
Home Collection and which are manufactured by other sublicensees of RLHC. The
parties acknowledge that it is of substantial benefit to the Company that the
"Collection" be displayed and sold as an entirety in order to create the
greatest demand for all Collection products, including Licensed Products, and to
promote the image of the Collection as a complete Xxxxx Xxxxxx lifestyle of
products.
22.2. Notwithstanding the provisions of paragraph 10.5 of this Agreement,
Company shall be entitled to deduct from earned royalties due each month
pursuant to paragraph 10.2 hereof [ * * * ] of the annual "Qualified Showroom
Expenses" (as hereinafter defined) for providing space and maintaining the Home
Collection Showroom referred to in paragraph 22.1 hereof. The term "Qualified
Showroom Expenses" shall mean the proportionate share (based on the square feet
of space actually occupied by RLHC) for rent and leasehold operating expenses
(i.e. building, utilities, water, taxes and cleaning, etc.) computed on a basis
consistent with current practices as of the execution of this Agreement with
respect to such Showroom. The term "Qualified Showroom Expenses" shall exclude,
however, any allocable cost of [ * * * ] square feet of storage space which
Company shall make available without charge at 1185 Avenue of the Americas for
storage of samples and stock, and exclude all other basement space which RLHC
may occupy from time-to-time pursuant to a separate agreement with Company. In
addition to the foregoing, Company shall be entitled to deduct from monthly
earned royalties $[ * * * ] for office services provided by WestPoint Xxxxxxx
Inc. to the Home Collection Showroom. Company shall, upon request, make
available for inspection by RLHC records substantiating the charges for rent,
leasehold operating expenses and office services.
22.3. Together with each monthly royalty remittance, the Company shall
submit to RLHC a separate statement, certified by a financial officer of the
Company, setting forth the computation of the Qualified Showroom Expenses and
charges for office services for the then-ended quarter. Within sixty (60) days
of the end of each year, Company shall submit to RLHC a statement setting forth
in reasonable detail the total Qualified Showroom Expenses for the year then
ended. If during the year Company shall have deducted in excess of the actual
total Qualified Showroom Expenses, Company's statement shall be accompanied by a
check in the amount of such excess. If there shall have been a shortage of the
aggregate deductions in relation to the total Qualified Showroom Expenses and
office service charges, RLHC shall, within fifteen (15) days of its receipt of
Company's statement, remit a check in the amount of the shortage.
22.4. Upon the expiration of this Agreement, at RLHC's option, exercisable
by notice in writing to Company given no later than 90 days prior to such
expiration, Company shall, subject to the approval of, and under the terms and
conditions required by, Company's landlord, continue to maintain and operate the
Home Collection Showroom with RLHC for a period not to exceed three (3) months
following such expiration, during which time RLHC may show and sell the Xxxxx
Xxxxxx Home Collection in such showroom. In the event this Agreement is
terminated by RLHC as a result of an Event of Default on the part of the
Company, RLHC shall be entitled to request in writing, given simultaneously with
its notice of termination to Company, that Company continue to maintain and
operate the Home Collection Showroom with RLHC for a period of up to twelve (12)
months after such termination. To the extent that RLHC requests an extension
hereunder, Company shall request approval therefor from its landlord. RLHC shall
on the first of each month of any such extension remit to Company one-twelfth of
the annual Qualified Showroom Expenses for maintaining and operating such
showroom, adjusted according to the terms and conditions required by the
landlord, if any, and the parties shall at the end of each three-month period
reconcile the aggregate amount actually paid by RLHC in relation to the total of
the actual Qualified Showroom Expenses, as adjusted.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
22.5. Company shall be responsible for all costs associated with the
initial design, construction and decoration of a showroom in the United States
for Utility Bedding, up to a one-time cap of $[ * * * ]. All plans and designs
with respect to such showroom shall be subject to PLC/RLHC's prior approval.
22.6. Company shall be responsible for all costs associated with the
initial buildout of a showroom in Europe for Licensed Products, up to a cap of
$[ * * * ]. All plans and designs with respect to such showroom shall be subject
to PLC/RLHC's prior approval. Thereafter, Company shall be responsible for all
costs associated with seasonal changeovers of such showroom (including props,
staff, construction and travel by PLC/RLHC personnel to assist in changeovers),
up to a cap of $[ * * * ] in year 1 (2001) and $[ * * * ] per year thereafter
during the term hereof. In addition, Company shall be responsible for rent costs
for such showroom, up to $[ * * * ] per year (subject to reasonable increases
over the term of this Agreement).
22.7. Company shall provide, at no charge, samples for all showrooms and
for advertising and editorials relating to Licensed Products. All normal
expenses with respect to shipping shall be the responsibility of Company and
Company may, at its option, insure the samples for risk of damage or loss
(including by theft) during shipment and while at the RLHC showroom, but RLHC
shall have no liability with respect thereto. All items will be inventoried by
RLHC and, at RLHC's discretion, (i) held in storage for future use, (ii) sold at
sample sales, or (iii) returned to Company at Company's expense. In the event of
a sale at a sample sale, RLHC shall remit to Company, within forty-five (45)
days thereof, [ * * * ] percent ([ * * * ]%) of the profits therefrom. In
addition, Company shall supply at its own expense, such samples as may be
reasonably necessary for RLHC salesmen.
23. Miscellaneous.
23.1. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been properly given or sent (i)
on the date when such notice, request, consent or communication is personally
delivered and acknowledged, or (ii) five (5) days after the same was sent, if
sent by certified or registered mail, or (iii) one (1) day after the same was
sent, if sent by overnight courier delivery or confirmed telecopier as follows:
(a) If to PLC/RLHC addressed as follows:
The Polo/Lauren Company, L.P. and
Xxxxx Xxxxxx Home Collection, Inc.
000 Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Telecopier: 302.778.1008
(b) With a copy to Polo and PRLC, addressed as follows:
Xxxx Xxxxx Xxxxxx Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopier: 212.318.7183
(c) If to Company, addressed as follows:
WestPoint Xxxxxxx, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxxx Xxxx
Telecopier: 212.930.3876
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
(d) With a courtesy copy to:
WestPoint Xxxxxxx Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Assistant General Counsel
Telecopier: 212.930.3551
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
23.2. Nothing herein contained shall be construed to place Company,
PLC/RLHC, Polo and/or PRLC in the relationship of partners or joint venturers,
and neither Company, PLC/RLHC, Polo nor PRLC shall have the power to obligate or
bind any other party in any manner whatsoever, except as expressly provided
herein.
23.3. None of the terms hereof can be waived or modified except by an
express agreement in writing signed by the party to be charged. The failure of
either party hereto to enforce, or the delay by either party in enforcing, any
of its rights hereunder shall not be deemed a continuing waiver, modification
hereof, or a waiver of any other right or remedy hereunder, and either party
may, within the time provided by applicable law, commence appropriate legal
proceedings to enforce any and all such rights. All rights and remedies provided
for herein shall be cumulative and in addition to any other rights or remedies
such parties may have at law or in equity. Either party hereto may employ any of
the remedies available to it with respect to any of its rights hereunder without
prejudice to the use by it in the future of any other remedy with respect to any
such rights. Except as provided herein, no person, firm or corporation, other
than the parties hereto, shall be deemed to have acquired any rights by reason
of anything contained in this Agreement.
23.4. Each of PLC, RLHC and PRLC may assign all or any portion of the
respective royalties payable to it hereunder, and may assign all of its rights,
duties and obligations hereunder to any entity to which the Trademarks, or the
right to use the Trademarks, has been transferred, or to an affiliate of any
such entity. The rights granted to Company are personal in nature, and neither
this Agreement nor the sublicense may be assigned by Company without the prior
written consent of PLC/RLHC, Polo and PRLC. Company may employ subcontractors
for the manufacture of the Licensed Products with the prior approval of
PLC/RLHC, provided, however, that (i) Company shall not employ any subcontractor
for the manufacture of Licensed Products until such subcontractor has executed a
Trademark and Design Protection Agreement substantially in the form annexed
hereto as Schedule B, (ii) Company shall maintain appropriate quality controls
and comply with the quality requirements set forth herein, (iii) such
subcontractors shall comply with the Operating Guidelines annexed hereto as
Schedule C and made a part hereof, as such Operating Guidelines may be amended
from time-to-time, (iv) Company shall not itself sell or otherwise dispose of,
and shall be responsible for preventing all subcontractors from selling or
otherwise disposing of, any seconds, irregulars or rejected merchandise except
with PLC/RLHC's prior written consent, (v) Company shall, in seeking PLC/RLHC's
approval, give PLC/RLHC prior written notice of the full name and address of
each subcontractor it proposes to use in connection with the manufacture of
Licensed Products, together with a complete list of Licensed Products (and/or
components thereof) to be manufactured by such subcontractor, and Company shall,
upon PLC/RLHC's request no more than once annually (and in any event upon the
expiration or termination of the term hereof), provide PLC/RLHC with a complete
list of all such subcontractors containing all such information); and (vi)
Company, upon request from PLC/RLHC, shall cease placing orders with any such
subcontractor.
23.5. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
23.6. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the operations
of Company contemplated hereby, including, without limitation, as they relate to
the manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that PLC/RLHC may have approved such item or conduct.
23.7. This Agreement shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed therein without
regard to principles of conflict of laws.
23.8. The parties hereby consent to the jurisdiction of the United States
District Court for the Southern District of New York and of any of the courts of
the Southern District of New York and of any of the courts of the State of New
York located within the Southern District in any dispute arising under this
Agreement and agree further that service of process or notice in any such
action, suit or proceeding shall be effective if in writing and delivered as
provided in paragraph 23.1 hereof. Notwithstanding anything to the contrary set
forth herein, neither Xxxx Xxxxx Xxxxxx Corporation nor any other general or
limited partner of Polo or PRLC shall be liable for any claim based on, arising
out of, or otherwise in respect of, this Agreement, and Company shall not have
nor claim to have any recourse for any such claim against any general or limited
partner of Polo or PRLC.
23.9. This Agreement contains the entire and only agreement between the
parties hereto concerning the subject matter hereof, and any oral statements or
representations or prior written matter with respect thereto not contained
herein shall have no force and effect. The provisions of this Agreement are
severable, and if any provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such provision, or part thereof, in such jurisdiction and shall not
in any manner affect such provision in this Agreement in any other jurisdiction.
23.10. The paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
23.11. 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.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused the same to be executed by a duly authorized officer on the day and year
first set forth above.
XXXXX XXXXXX HOME COLLECTION, INC.
By: /s/ XXXXXX X. XXXXXXXXXX
------------------------------------
Title: Assistant Secretary
THE POLO/LAUREN COMPANY, L.P.
By: PRL International, Inc.
By: /s/ XXXXXX X. XXXXXXXXXX
------------------------------------
Title: Assistant Treasurer
XXXX XXXXX LAUREN CORPORATION
By: /s/ F. XXXXX XXXXX
------------------------------------
Title: Vice Chairman
WESTPOINT XXXXXXX INC.
By: /s/ XXXXXX XXXX
------------------------------------
Title: Authorized Signatory
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
SCHEDULE A
"LICENSED PRODUCTS"
(PURSUANT TO PARAGRAPH 1.1)
Licensed Products shall mean the following:
1. Bathroom Products consisting of:
(a) bath towels (non-embellished)
(b) bath sheets (non-embellished)
(c) fingertip towels (non-embellished)
(d) hand towels (non-embellished)
(e) face cloths (non-embellished)
(f) tub mats
(g) men's and women's robes made from towels, it being understood
that Company's rights with respect to robes shall be non-exclusive and
shall be limited to the sale of robes in the same departments of stores
in which other Licensed Products are sold.
(h) shower curtains
In the event PLC/RLHC wishes to use or license a third party to use
in the Territory the Licensed Xxxx in connection with embellished
Bathroom Products, PLC/RLHC shall grant to Company a right of first
refusal with respect thereto. The implementation of such first refusal
rights shall be the same as the first refusal rights provided for in
paragraph 2.15 of this Agreement.
2. Bedroom Products consisting of:
(a) sheets
(b) pillow cases (but not pillows)
(c) The following bedroom products to the extent they match sheets
that are made under license from Polo ("Matched Bedding Accessories"):
(1) shams
(2) ruffles
(3) comforters
(4) bedspreads
(5) bed skirts
(6) night spreads
(7) comforter, duvet and blanket covers
(8) European squares
(9) valances and draperies
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CONFIDENTIAL TREATMENT
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SEC FILE NO. 001-13057
(d) The following bedroom products, not matched to sheets
("Unmatched Bedding Accessories"):
(1) bed covers
(2) Intentionally Omitted
(3) duvet and comforter covers
(4) shams
(5) bed skirts
(6) bed spreads
(7) comforters other than down comforters
(8) decorative pillows
(9) quilts
(10) night spreads
(11) curtains and draperies matched or coordinated to bedding
Licensed Products manufactured by Company hereunder
(e) The following items of utility bedding ("Utility Bedding"):
(1) bed pillows
(2) mattress pads
(3) down comforters
(4) feather beds
(5) bed and throw blankets (but excluding blankets for infants)
Licensed Products, with respect to Mexico, shall mean all Bathroom Products
and Bedroom Products described above, and shall also include the following items
("Utility Bedding"):
Except as may otherwise be agreed in writing by the parties hereto, through
July 1, 2001 Company's rights with respect to Unmatched Bedding Accessories in
Canada and Mexico, and with respect to Utility Bedding in Mexico, shall be
solely to purchase such products from Pillowtex Corporation, RLHC's current
licensee for such products in the United States, and to resell such products in
the Territory on the terms set forth herein. Otherwise, Company's rights with
respect to Unmatched Bedding Accessories and Utility Bedding shall not commence
until July 1, 2001, and shall be subject to the rights of Pillowtex Corporation
to sell-off its remaining inventory of Unmatched Bedding Accessories and Utility
Bedding pursuant to its license agreement with respect thereto, the term of
which expires on June 30, 2001, with sell-off rights continuing for 120 days
thereafter.
Notwithstanding anything to the contrary contained herein, PLC/RLHC shall
have the right to undertake or license a third party the right to undertake a
free-standing window treatment program, whether or not matched or coordinated to
bedding.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
SCHEDULE B
TRADEMARK AND DESIGN PROTECTION AGREEMENT
Re: Orders for Polo/Xxxxx Xxxxxx Merchandise
TO
------------------------------:
Our company may be entering into Purchase Order Contracts for samples and
various products with you in the near future and would like to take this
opportunity to call to your attention the basis upon which we will enter such
agreements.
Pursuant to our agreements we may be providing you with certain designs and
art work and requisitions for finished products (including samples), packaging,
and business materials, among other things. By accepting our orders or
contracts, your company will have agreed that it has only a limited,
non-transferable right to use any trademarks and/or designs and/or art work
(including specifically, colors, shapes, and textures) of Xxxxx Lauren Home
Collection, Inc. and its affiliates ("Polo") as necessary for merchandise
shipped or services rendered under our orders or contracts. You agree that such
trademarks, designs, logos and art work shall not be used by your firm at any
time, whether or not they are used in conjunction with the Xxxxx Xxxxxx name or
trademarks, for any purpose other than that for which they were placed in your
trust, i.e. in fulfillment of specific purchase orders, and you shall exercise
due diligence so that they are not made available to third parties. No rights
shall remain in your firm or its employees or agents as to such trademarks,
logos, art work, or designs of Polo and its affiliates and you agree that to the
extent your firm may acquire any rights to said marks, logos, art work or
designs, such rights shall revert to Polo or its affiliates, as the case may be,
without any further act of the parties hereunder. By accepting our orders, you
hereby agree to indemnify Polo and its affiliates for any losses, costs or
expenses (of any kind whatsoever) which may arise as a result, directly or
indirectly, of a breach of this Agreement.
Please place the acknowledgment signature of two (2) of your executive
officers in the space provided below and return one signed copy of this letter
to the undersigned as soon as possible.
Thank you for your cooperation.
Sincerely yours,
Xxxxx Lauren Home Collection, Inc.
By:
--------------------------------------
We have read and accept and agree to the above in consideration of orders from
Xxxxx Xxxxxx Home Collection, Inc.
CONTRACTOR NAME:
-----------------------------------------------------------------
By: (1) ------------------------- and (2) -------------------------
Name: Name:
Date:
---------------------------------------------
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
SCHEDULE C
OPERATING GUIDELINES
Xxxx Xxxxx Xxxxxx (the "Company") is dedicated to conducting its operations
throughout the world on principles of ethical business practice and recognition
of the dignity of workers. We expect our business partners to respect and adhere
to the same standards in the operation of their business, and we will utilize
these criteria to evaluate our relationships with customers and suppliers.
WAGES/BENEFITS/WORKING HOURS. Our business partners must comply with all
laws regulating local wages, work hours and benefits. Wage and benefit policies
must be consistent with prevailing national standards, and also be acceptable
under a broader international understanding as to the basic needs of workers and
their families. We will not work with companies whose wage structure violates
local law or prevailing industry practice.
CHILD LABOR. Our business partners must not use child labor, defined as
school age children. Our business partners will not employ workers under the age
of 14. This provision extends to all partner facilities.
HEALTH & SAFETY. Our business partners must ensure that their workers are
provided a safe and healthy work environment, and are not subject to unsanitary
or hazardous conditions.
FREEDOM OF ASSOCIATION. Our business partners should respect the legal
rights of employees to freely and without harassment participate in worker
organizations of their choice.
PRISON OR FORCED LABOR. Our business partners will not work with or
arrange for purchase of any materials from business partners who utilize prison
or forced labor in any stage of the manufacture of our products.
DISCIPLINARY PRACTICES. Our business partners will not employ or conduct
any business activity with partners who employ any form of physical or mental
coercion or punishment against workers.
DISCRIMINATION. Our business partners will not practice nor do business
with business partners who practice any form of improper discrimination in
hiring and employment, including on the basis of age, race, color, gender, or
religion.
ENVIRONMENT. Our business partners must embrace a fundamental concern for
environmental protection and conduct their operations consistent with both local
and internationally recognized environmental practices.
LEGAL REQUIREMENTS. Our business relationship must be built on a mutual
respect for and adherence to legal requirements. Our business partners will
observe both local and applicable international standards.
ETHICAL STANDARDS. We intend to conduct all our business in a manner
consistent with the highest ethical standards, and we will seek and utilize
partners who will do likewise, as this contributes directly to our corporate
reputation and the collective success of our organization and selected business
partners.
SUBCONTRACTING. Our business partners may not subcontract all or any part
of the work on our products without our express written consent, which will not
be given unless each subcontractor meets all of the criteria set forth herein.
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CONFIDENTIAL TREATMENT
REQUESTED BY
XXXX XXXXX LAUREN CORPORATION
SEC FILE NO. 001-13057
CONFLICTS OF INTEREST. Our business partners may not give Company
employees a gift of value in excess of US$25.00, and may not bribe foreign
officials to benefit the Company or its business.
IMPLEMENTATION. We will apply these criteria in all business partner
determinations, and will continue to implement these policies in the conduct of
all activities. This will include our business partners sharing information on
production facilities and procedures, with the objective of improving our
collective service to customers in a responsible manner. Failure by a business
partner to meet these standards, will result in our taking appropriate actions,
up to and including cancellation of existing orders.
33
